Financial Data and Key Metrics Changes - Total revenues in the second quarter increased 33% year-over-year to $225.3 million, marking the tenth consecutive quarter of double-digit organic revenue growth [77][82] - Adjusted EBITDA for the second quarter increased 55.8% to a record $85 million compared to $54.6 million in the prior year quarter, with an adjusted EBITDA margin of 37.7% [33][86] - Gross profit increased 49% to $109.7 million, representing a gross margin of 48.7%, compared to a gross margin of 43.5% in the prior year quarter [33][84] Business Line Data and Key Metrics Changes - Single-family residential revenues grew organically by 15% year-over-year to a record $86.9 million, driven by dealership growth and geographic expansion [32][102] - Multifamily and commercial activity saw significant growth, contributing to the overall revenue increase [82][72] - The backlog at quarter end reached a record $797 million, up 19% year-over-year, indicating strong bidding activity and project wins [79][72] Market Data and Key Metrics Changes - The South region, where the company has its largest presence, saw an expansionary ABI reading of 50.5, supporting healthy levels of activity and demand [30] - The company noted strong quoting activity in regions like Florida, New York, Maryland, and Texas, while California showed a decline in quotes [17][18] Company Strategy and Development Direction - The company is focused on expanding its operational capacity by over 40% to meet growing demand for high-performance products [29][73] - There is a strategic emphasis on diversifying into the more profitable single-family residential market, which is expected to drive future growth [83][84] - The company plans to open more showrooms in Texas and other western states to capture additional market share [26][80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, indicating that 2024 could be the best year ever for the company, driven by strong demand and operational improvements [97][98] - The company expects gross margins to stabilize in the range of 48% to 50% for the full year 2023, despite some variability due to market conditions [84][86] - Management highlighted that the appreciation of the Colombian peso has positively impacted operating margins and is expected to remain stable [109][126] Other Important Information - The company maintained a low leverage ratio of 0.2 times net debt to LTM adjusted EBITDA, with total liquidity of approximately $275 million [13][110] - Cash flow from operations was strong, excluding the timing of annual tax payments, with expectations for improved cash flow generation in the second half of the year [35][112] Q&A Session Summary Question: Can you discuss the overall environment and backlog strength? - Management noted strong quoting activity across various regions, with a particularly strong performance in Florida and Texas, while California showed a decline [17][18] Question: What are the expectations for gross margins in the second half of the year? - Management expects gross margins to stabilize around the current levels achieved in Q2, influenced by the Colombian peso and product mix [39][40] Question: How is the residential market performing, especially outside Florida? - The company is gaining market share in new regions, with a focus on learning and adapting to new markets before scaling up operations [42][46] Question: What is the CapEx budget for 2023 and expectations for 2024? - The anticipated CapEx for 2023 is expected to be between $40 million to $45 million, with a significant reduction planned for 2024 [25][48] Question: How are the new showrooms performing? - The showrooms are performing well, with a focus on careful expansion to ensure quality service and product delivery [125][130]

PART I. [FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements, detailed notes, management's discussion and analysis, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Tecnoglass Inc., including the balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes explaining accounting policies, inventory, revenue recognition, intangible assets, debt, hedging activities, income taxes, related party transactions, and commitments [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific reporting dates **Total Assets:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :----------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | $819,457 | $734,308 | +$85,149 | | Total Current Assets | $500,990 | $432,134 | +$68,856 | | Total Long-term Assets | $318,467 | $302,174 | +$16,293 | **Total Liabilities:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :----------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Liabilities | $419,077 | $383,983 | +$35,094 | | Total Current Liabilities | $244,258 | $209,802 | +$34,456 | | Total Long-term Liabilities | $174,819 | $174,181 | +$638 | **Total Shareholders' Equity:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :----------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Shareholders' Equity | $400,380 | $350,325 | +$50,055 | [Condensed Consolidated Statements of Operations and Other Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income) This section details the company's financial performance, including revenues, gross profit, net income, and earnings per share over specified periods **Total Operating Revenues (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :----------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Total Operating Revenues | $202,639 | $134,548 | +$68,091 | +50.6% | **Gross Profit & Margin (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Gross Profit | $107,755 | $60,333 | +$47,422 | +78.6% | | Gross Profit Margin | 53.2% | 44.8% | +8.4 pp | | **Net Income & EPS (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Net Income | $48,372 | $20,953 | +$27,419 | +130.9% | | Basic Income per Share | $1.01 | $0.44 | +$0.57 | +129.5% | | Diluted Income per Share | $1.01 | $0.44 | +$0.57 | +129.5% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities **Cash Flow from Operating Activities (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Cash Provided by Operating Activities | $43,063 | $27,135 | +$15,928 | +58.7% | **Cash Flow from Investing Activities (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Cash Used in Investing Activities | $(15,688) | $(10,394) | -$(5,294) | +50.9% | **Cash Flow from Financing Activities (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Change | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Cash Used in Financing Activities | $(3,287) | $(18,318) | +$15,031 | -82.0% | **Net Increase in Cash (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | | :------------------ | :--------------------- | :--------------------- | :-------------------- | | Net Increase in Cash | $24,866 | $(580) | +$25,446 | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section tracks changes in the company's equity attributable to controlling interest, reflecting net income, dividends, and other comprehensive income adjustments **Shareholders' Equity Attributable to Controlling Interest:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :------------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | | Balance at Period End | $398,738 | $348,820 | +$49,918 | - Key changes in shareholders' equity for Q1 2023 include a net income contribution of **$48,235** thousand and positive foreign currency translation adjustments of **$7,811** thousand, partially offset by dividends of **$(4,291)** thousand and derivative financial instrument losses of **$(1,837)** thousand[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. General](index=9&type=section&id=Note%201.%20General) This note describes Tecnoglass Inc.'s core business as a manufacturer of architectural glass and windows for global construction markets - Tecnoglass Inc. manufactures hi-specification, architectural glass and windows for the global residential and commercial construction industries[20](index=20&type=chunk) - Products include tempered, laminated, thermo-acoustic, curved, silk-screened, acoustic, and digital print glass, as well as aluminum profiles, rods, tubes, bars, and plates[21](index=21&type=chunk) - The company exports most of its products to North, Central, and South America[20](index=20&type=chunk) [Note 2. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the accounting principles, consolidation policies, and significant estimates used in preparing the financial statements - Unaudited condensed consolidated financial statements are prepared in accordance with US GAAP and SEC interim reporting rules, relying on management estimates[23](index=23&type=chunk) - The company operates as a single reporting segment: Architectural Glass and Windows, encompassing design, manufacturing, distribution, marketing, and installation[25](index=25&type=chunk) - Consolidates entities with a controlling financial interest (majority voting interest); uses the equity method for affiliates with significant influence but no effective control[27](index=27&type=chunk) - FASB ASU 2020-04 (Reference Rate Reform) effective date deferred to after December **15**, **2024**, impacting LIBOR-based debt and derivative contracts[29](index=29&type=chunk) [Note 3. - Inventories, net](index=11&type=section&id=Note%203.%20-%20Inventories,%20net) This note details the composition and valuation of the company's inventories, including raw materials, work in process, and finished goods **Total Inventories, net:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :-------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Inventories, net | $143,057 | $124,997 | +$18,060 | - As of March 31, 2023, raw materials constituted the largest portion of inventories at **$101,067** thousand, followed by work in process at **$15,937** thousand and finished goods at **$8,185** thousand[31](index=31&type=chunk) [Note 4. – Revenues, Trade Accounts Receivable, Contract Assets and Contract Liabilities](index=11&type=section&id=Note%204.%20%E2%80%93%20Revenues,%20Trade%20Accounts%20Receivable,%20Contract%20Assets%20and%20Contract%20Liabilities) This note provides a breakdown of revenues by type and geography, along with information on trade accounts receivable and remaining performance obligations **Total Revenues by Type (Q1 2023 vs. Q1 2022):** | Revenue Type | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | Fixed price contracts | $29,093 | $18,851 | +$10,242 | +54.3% | | Product sales | $173,546 | $115,697 | +$57,849 | +50.0% | | Total Revenues | $202,639 | $134,548 | +$68,091 | +50.6% | **Total Revenues by Geography (Q1 2023 vs. Q1 2022):** | Geography | Q1 2023 (in thousands) | Q1 2022 (in thousands) | Change (in thousands) | YoY Growth | | :------------------ | :--------------------- | :--------------------- | :-------------------- | :--------- | | United States | $194,839 | $126,984 | +$67,855 | +53.4% | | Colombia | $5,740 | $4,025 | +$1,715 | +42.6% | | Panama | $270 | $799 | -$(529) | -66.2% | | Other | $1,790 | $2,740 | -$(950) | -34.7% | | Total Revenues | $202,639 | $134,548 | +$68,091 | +50.6% | **Trade Accounts Receivable, net:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Trade accounts receivable, net | $167,137 | $158,397 | +$8,740 | - As of March 31, 2023, remaining performance obligations totaled **$499.1** million, with **$358.1** million expected to be recognized in **2023**, **$114.6** million in **2024**, and **$26.5** million in **2025**[40](index=40&type=chunk) [Note 5. Intangible Assets](index=14&type=section&id=Note%205.%20Intangible%20Assets) This note details the company's intangible assets, their net carrying value, and the associated amortization expense **Net Intangible Assets:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :-------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Net Intangible Assets | $2,614 | $2,706 | -$(92) | **Amortization Expense:** | Period | Amortization Expense (in thousands) | | :-------------------- | :-------------------------------- | | Q1 2023 | $322 | | Q1 2022 | $475 | **Estimated Aggregate Amortization Expense (as of March 31, 2023):** | Year ending | Amount (in thousands) | | :---------- | :-------------------- | | 2023 | $793 | | 2024 | $722 | | 2025 | $416 | [Note 6. Supplier Finance Program](index=15&type=section&id=Note%206.%20Supplier%20Finance%20Program) This note describes the company's supplier finance program and the outstanding obligations related to it - The company allows suppliers to receive advanced payments from third-party finance providers, with payment terms to the finance provider remaining consistent with original supplier agreements (**30-60** days)[46](index=46&type=chunk) - As of March 31, 2023, outstanding obligations related to the supplier finance program amounted to **$2,335** thousand, recorded as current liabilities[47](index=47&type=chunk) [Note 7. Debt](index=15&type=section&id=Note%207.%20Debt) This note provides information on the company's borrowing arrangements, interest rates, and debt maturity schedule **Total Obligations under Borrowing Arrangements:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | | Total obligations under borrowing arrangements | $169,895 | $169,484 | +$411 | - The Senior Secured Credit Facility was amended in November **2021**, increasing borrowing capacity to **$150** million, reducing borrowing costs by approximately **130** basis points, and extending the maturity date to the end of **2026**[48](index=48&type=chunk) - The weighted average interest rate for credit facilities was **6.63%** as of March 31, 2023, which is **4.30%** net of interest rate swap contracts[49](index=49&type=chunk) **Debt Maturities (as of March 31, 2023):** | Year | Amount (in thousands) | | :--- | :-------------------- | | 2024 | $819 | | 2025 | $10,137 | | 2026 | $15,051 | | 2027 | $147,500 | [Note 8. Hedging Activity and Fair Value Measurements](index=16&type=section&id=Note%208.%20Hedging%20Activity%20and%20Fair%20Value%20Measurements) This note explains the company's use of derivative instruments for hedging interest rate and foreign currency risks, along with their fair value measurements - The company uses interest rate swap contracts to hedge interest rate fluctuations on **$125** million of outstanding debt through November **2026** and foreign currency non-delivery forward contracts to hedge Colombian Peso exchange rate fluctuations[52](index=52&type=chunk) - As of March 31, 2023, the fair value of the company's interest rate swap and foreign currency non-delivery forward contracts was in a net asset position of **$9.4** million[52](index=52&type=chunk)[54](index=54&type=chunk) - An amount of **$3.5** million from accumulated other comprehensive income is expected to be reclassified to earnings within the next twelve months[53](index=53&type=chunk) - Measurement of derivative assets and liabilities is considered a Level **2** measurement, based on LIBOR rates and interest rate swap curves[59](index=59&type=chunk) [Note 9. Income Taxes](index=19&type=section&id=Note%209.%20Income%20Taxes) This note details the company's income tax provision and effective tax rates for the reporting periods **Total Income Tax Provision (Q1 2023 vs. Q1 2022):** | Period | Income Tax Provision (in thousands) | | :-------------------- | :-------------------------------- | | Q1 2023 | $(24,671) | | Q1 2022 | $(10,558) | - The effective tax rate was **33.8%** for Q1 2023 and **33.5%** for Q1 2022, approximating the statutory rate[63](index=63&type=chunk) - The company files income tax returns in Colombia and the U.S.; Cayman Islands entities do not have tax obligations[62](index=62&type=chunk) [Note 10. Related Parties](index=19&type=section&id=Note%2010.%20Related%20Parties) This note discloses transactions and balances with related parties, including sales, purchases, and charitable contributions **Sales to Related Parties (Q1 2023 vs. Q1 2022):** | Related Party | Q1 2023 (in thousands) | Q1 2022 (in thousands) | | :------------------ | :--------------------- | :--------------------- | | Alutrafic Led SAS | $173 | $300 | | Studio Avanti SAS | $156 | $168 | | Total Sales | $333 | $526 | - Purchases from Vidrio Andino (joint venture) increased to **$6,345** thousand in Q1 2023 from **$5,093** thousand in Q1 2022[72](index=72&type=chunk) - Equity method income from Vidrio Andino was **$1,449** thousand in Q1 2023, compared to **$1,580** thousand in Q1 2022[72](index=72&type=chunk) - Charitable contributions to Fundacion Tecnoglass-ESWindows increased to **$664** thousand in Q1 2023 from **$356** thousand in Q1 2022[68](index=68&type=chunk) [Note 11. Shareholders' Equity](index=21&type=section&id=Note%2011.%20Shareholders'%20Equity) This note provides details on changes in shareholders' equity, including dividends declared and earnings per share - The company declared a regular quarterly dividend of **$0.09** per share in February **2023**, totaling **$0.36** per share on an annualized basis[74](index=74&type=chunk) **Earnings per Share (Q1 2023 vs. Q1 2022):** | Metric | Q1 2023 | Q1 2022 | Change | YoY Growth | | :-------------------------- | :------ | :------ | :----- | :--------- | | Basic earnings per ordinary share | $1.01 | $0.44 | +$0.57 | +129.5% | | Diluted earnings per ordinary share | $1.01 | $0.44 | +$0.57 | +129.5% | [Note 12. Commitments and Contingencies](index=21&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note outlines the company's significant contractual commitments and potential legal contingencies - As of March 31, 2023, the company had an outstanding obligation to purchase at least **$72,172** thousand of raw materials from a specific supplier before November **30**, **2030**[76](index=76&type=chunk) - The company has a **25.8%** interest in a joint venture with Saint-Gobain to build a new float glass plant, with a potential additional contribution of approximately **$12,500** thousand if needed[77](index=77&type=chunk)[78](index=78&type=chunk) - The company is involved in routine legal matters, which management believes are not currently material and are not expected to have a material adverse effect on the business[79](index=79&type=chunk) [Note 13. Subsequent Events](index=21&type=section&id=Note%2013.%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On April **4**, **2023**, the company entered into a settlement agreement related to a completed project, with associated expenses recorded as an accounts payable on the March 31, 2023 balance sheet and as an operating expense for the three months ended March 31, 2023[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the quarter ended March 31, 2023. It covers an overview of the business, detailed analysis of revenues, gross profit, expenses, and net income, as well as discussions on liquidity, capital resources, and cash flow activities [Overview](index=23&type=section&id=Overview) This section provides a general description of Tecnoglass's business, competitive advantages, market expansion, and sustainability commitments - Tecnoglass is a vertically integrated manufacturer, supplier, and installer of architectural glass, windows, and associated aluminum products for global commercial and residential construction markets[83](index=83&type=chunk) - The company was ranked as the third-largest glass fabricator serving the United States in **2022** by Glass Magazine and is the leading glass transformation company in Colombia[83](index=83&type=chunk) - Its structural competitive advantage is underpinned by a low-cost manufacturing footprint, vertically integrated business model, and strategic geographic location in Barranquilla, Colombia[86](index=86&type=chunk) - The company is actively expanding its presence in U.S. residential markets, which grew from less than **5%** of sales to nearly **45%** of revenues for the full year **2022**, and into other highly populated areas of the United States outside of Florida[88](index=88&type=chunk) - Tecnoglass is committed to sustainability (ESG), adhering to UN Global Compact Principles and pursuing a carbon-neutral strategy set by the Colombian government by **2050**[89](index=89&type=chunk) [RESULTS OF OPERATIONS](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance, including changes in revenues, gross profit, operating expenses, and net income - Operating revenues increased by **$68.1** million, or **50.6%**, to **$202.6** million for Q1 2023, driven by strong U.S. residential and commercial market activity[91](index=91&type=chunk)[92](index=92&type=chunk) - U.S. sales increased by **$67.9** million (**53.4%**) to **$194.8** million, with commercial market sales up **65.0%** to **$111.2** million and single-family residential sales up **40.1%** to **$83.6** million (**41.3%** of total sales)[92](index=92&type=chunk) - Gross profit increased by **$47.4** million (**78.6%**) to **$107.7** million, resulting in a gross profit margin of **53.2%** (up **840** basis points) due to operating leverage, favorable product pricing, efficiency efforts, and favorable foreign exchange rates[94](index=94&type=chunk) - Operating expenses increased by **$7.7** million (**29.2%**) to **$34.1** million, mainly due to higher personnel expense (**$2.7** million) and shipping expense (**$1.9** million) related to geographical expansion and higher sales volume[95](index=95&type=chunk) - Net income for Q1 2023 was **$48.4** million, compared to **$21.0** million for Q1 2022[99](index=99&type=chunk) [Liquidity](index=26&type=section&id=Liquidity) This section discusses the company's ability to meet short-term obligations, focusing on cash, cash equivalents, and available credit lines **Cash and Cash Equivalents:** | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------------------------ | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $128,538 | $103,671 | - The company has approximately **$170** million available under its committed lines of credit[101](index=101&type=chunk) - Working capital is anticipated to be a net benefit to cash flow for the full year ending December 31, 2023, providing ample flexibility to service obligations[102](index=102&type=chunk) [Capital Resources](index=26&type=section&id=Capital%20Resources) This section details the company's capital expenditures and investments in joint ventures for future growth - Total capital expenditures for Q1 2023 amounted to **$20.3** million, primarily invested in building and construction and machinery and equipment to automate production lines, add glass production lines, and expand aluminum facilities[103](index=103&type=chunk)[108](index=108&type=chunk) - The company maintains a **25.8%** interest in the Vidrio Andino joint venture for a new float glass plant, with a potential additional contribution of approximately **$12.5** million if needed[105](index=105&type=chunk) [Cash Flow from Operations, Investing and Financing Activities](index=26&type=section&id=Cash%20Flow%20from%20Operations,%20Investing%20and%20Financing%20Activities) This section provides a detailed breakdown of cash generated or used across operating, investing, and financing activities - Operating activities generated **$43.1** million in Q1 2023, a significant increase from **$27.1** million in Q1 2022, driven by higher profitability, enhanced working capital efforts, and a favorable mix of residential revenues[106](index=106&type=chunk) - The main source of operating cash in Q1 2023 was taxes payable, generating **$25.5** million, while the largest uses were other assets (**$14.3** million) and inventories (**$13.1** million)[107](index=107&type=chunk) - Investing activities used **$15.7** million in Q1 2023, primarily for the acquisition of property and equipment[108](index=108&type=chunk) - Financing activities used **$3.3** million in Q1 2023, a substantial decrease from **$18.3** million in Q1 2022, mainly due to lower debt repayments compared to the prior year[109](index=109&type=chunk) [Off-Balance Sheet Arrangements](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements - The company reported no off-balance sheet arrangements[110](index=110&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section outlines the company's exposure to market risks, including interest rate risk, foreign currency exchange rate risk, and commodity price risk, and discusses the potential impact of these risks on its financial performance - The company is exposed to interest rate risk due to variable interest rates on a significant portion of its debt; a **100** basis point increase in interest rates would decrease net earnings by approximately **$0.5** million (net of hedging)[111](index=111&type=chunk) - Foreign currency exchange rate risk exists as approximately **3%** of revenues and **36%** of costs and expenses are denominated in Colombian pesos; a **5%** appreciation of the Colombian Peso relative to the US Dollar would result in a **$2.5** million decrease to net earnings[112](index=112&type=chunk) - The company is subject to commodity price risk, particularly for aluminum, and aims to mitigate this by aligning raw material costs with selling prices based on the London Metals Exchange plus a manufacturing premium[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's assessment of the effectiveness of the company's disclosure controls and procedures - As of March 31, 2023, management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were effective[118](index=118&type=chunk) [Changes in Internal Control over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section discloses any material changes in the company's internal control over financial reporting during the period - For the quarter ended March 31, 2023, there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[119](index=119&type=chunk) PART II. [OTHER INFORMATION](index=29&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, unregistered sales of equity securities, and a list of filed exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the company's involvement in legal matters arising in the ordinary course of business - The company is periodically involved in legal matters arising in the ordinary course of business, including disputes related to construction projects, employment practices, and general liability[122](index=122&type=chunk) - Management believes that such matters are not currently material and are not expected to have a material adverse effect on the business, financial condition, or results of operations[122](index=122&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the company's share repurchase program and any related activity during the reporting period - On November **3**, **2022**, the Board of Directors authorized the purchase of up to **$50** million of the company's common shares[123](index=123&type=chunk) - During the three months ended March 31, 2023, the company repurchased **100** shares at an average price of **$40** per share[123](index=123&type=chunk) - As of March 31, 2023, **$50,000,000** remained available under the share repurchase program[123](index=123&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including required certifications and XBRL financial data - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of **2002**[124](index=124&type=chunk) - Financial statements from the Quarterly Report are provided in XBRL format, including Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Unaudited Condensed Consolidated Financial Statements[124](index=124&type=chunk) [SIGNATURES](index=31&type=section&id=Signatures) This section provides the official signatures of the company's executive and financial officers, certifying the report's contents - The report was signed on behalf of Tecnoglass Inc. by Jose M. Daes, Chief Executive Officer, and Santiago Giraldo, Chief Financial Officer[129](index=129&type=chunk) - The signing date for the report was May **8**, **2023**[129](index=129&type=chunk)

FORWARD LOOKING STATEMENTS ✓ Adj. net income increased 103.1% to $51.5 mm ✓ Solid single-family residential growth trajectory not fully captured in backlog given shorter term "spot" duration of projects Production Process ✓Multi-family and commercial construction in the U.S. increased $43.9 mm, or 65.2%, to $111.2 mm, accounting for 57% of U.S. sales in Q1'23, as we continue to execute on our growing backlog ✓ Q1'23 all-organic revenue growth of 50.6% to $202.6 mm. Growth continues to be fueled by strong U. ...

Tecnoglass Inc. (NYSE:TGLS) Q1 2023 Earnings Conference Call May 4, 2023 10:00 AM ET Company Participants Brad Cray - Investor Relations José Manuel Daes - Chief Executive Officer Chris Daes - Chief Operating Officer Santiago Giraldo - Chief Financial Officer Conference Call Participants Julio Romero - Sidoti & Company Brent Thielman - D. A. Davidson Alex Rygiel - B. Riley Tim Wojs - Baird Operator Hello, and welcome to the Tecnoglass, Inc. First Quarter 2023 Earnings Conference Call. [Operator Instructions ...

50 United Nations- New York, U.S. This presentation (including any information which has been or may be supplied in writing or orally in connection herewith or in connection with any further inquiries, this "Presentation") contains information regarding Tecnoglass Inc. and its subsidiaries, as applicable, where it holds a direct or indirect interest (together "Tecnoglass" or the "Company") that is confidential and proprietary to the Company. We have prepared this document solely for informational purposes. ...

Company Overview - Tecnoglass was rated the third largest glass fabricator in 2022 by Glass Magazine, with 96% of revenues coming from the United States[27]. - The company has a manufacturing facility of 4.1 million square feet in Barranquilla, Colombia, providing easy access to major markets[31]. - Tecnoglass was ranked as the third largest glass fabricator in the United States in 2022 by Glass Magazine[225]. - The company has almost 40 years of experience in architectural glass and aluminum profile structure assembly[226]. Market Presence - The company expanded its presence in U.S. residential markets from less than 5% of sales to nearly 43% for the full year 2022[35]. - Sales in Florida accounted for 91% of total U.S. revenue for the year ended December 31, 2022, with nearly 24% of the U.S. backlog for projects outside Florida[59]. - U.S. residential sales represented 43% of total sales for the year ended December 31, 2022, up from less than 5% in 2017 and 36% in 2021[62]. - The U.S. private residential construction market exceeded $950 billion in spending during the twelve months ended December 31, 2022[62]. - As of December 31, 2022, 98% of the company's sales were to customers outside Colombia, primarily in the United States and Panama[167]. Financial Performance - The company generated $141.9 million in cash from operating activities during the year ended December 31, 2022, attributed to record high operating profit margins and enhanced working capital management[73]. - The company has a $300 million Senior Secured Credit Facility, with a reduced borrowing cost of approximately 130 basis points after an amendment in November 2021, resulting in annual savings of about $15 million[75]. - The company had a total of 8,770 employees as of December 31, 2022, an increase from 6,908 employees in 2021, reflecting growth in operations[92]. - As of December 31, 2022, the company and its subsidiaries had a total debt of $173.2 million[150]. - The company’s reliance on temporary staffing could expose it to penalties and sanctions if labor laws are violated[118]. Operational Efficiency - Since 2012, Tecnoglass has invested over $400 million in technology to enhance production efficiency and product quality[49]. - Recent automation projects are expected to reduce on-site damage by 30% and increase aluminum capacity by approximately 400 tons/month[53]. - The company improved efficiency in glass production during 2021 and 2022 by automating key manufacturing processes, reducing material waste and lead times[65]. - The company has invested in technology, including a soft-coating facility for low emissivity glass, to meet growing demand for energy-efficient products[63]. - The company has implemented budget cuts and stricter controls on working capital to preserve cash in response to market conditions[204]. Sustainability and Compliance - The company has implemented a solar panel project generating approximately five megawatts of eco-friendly energy, reducing energy costs[45]. - The company has a strong commitment to sustainability, adhering to UN Global Compact Principles and aiming for carbon neutrality by 2050[36]. - The company maintains compliance with multiple safety and environmental regulations, which are critical for its operations in the construction market[89]. - The company has made significant capital expenditures in recent years, but there is no assurance that anticipated cost-saving initiatives will be achieved[111]. - The company has implemented compliance measures for U.S. export controls and trade sanctions, but failure to comply could result in legal and business consequences[188]. Risks and Challenges - The company faces risks related to the integration of acquired businesses, which may not perform as expected and could increase costs[109]. - The architectural glass industry is subject to cyclical market pressures, which could negatively impact the company's results of operations[128]. - The company may face significant liabilities from acquired businesses, including tax and environmental liabilities[110]. - The company is subject to various local, state, and federal regulations that could negatively affect sales and operations in the home building and repair sectors[114]. - The ongoing conflict between Russia and Ukraine has led to increased prices of oil and fluctuations in commodity markets, impacting the global economy[171]. Employee and Workplace Safety - Employee training programs have resulted in a workplace injury rate of one accident per 28 workers per year, significantly lower than the industry average[55]. - The Lost Time Injury Frequency Rate is 3.5%, significantly lower than the industry average of 9.5% for glass and metal manufacturing in Colombia, indicating effective safety management[92]. - The company has transitioned all employees back to physical presence at the workplace, mitigating certain risks associated with remote work[207]. Economic Environment - Colombia's real GDP increased by approximately 7.5% in 2022, while the annual inflation rate reached 13.1%[152]. - The Colombian Central Bank raised its monetary policy rate from 3% in December 2021 to 12% as of December 31, 2022[152]. - The Colombian Peso depreciated by 21% against the U.S. Dollar in 2022 and 16% in 2021, indicating significant currency volatility[162]. - The Colombian economy is vulnerable to fluctuations in commodity prices, particularly petroleum and gold, which are crucial for the balance of payments[166]. - Changes in Colombia's customs and foreign exchange laws could negatively impact the company's financial condition and results of operations[181].

Tecnoglass, Inc. (NYSE:TGLS) Q4 2022 Earnings Conference Call March 3, 2023 10:00 AM ET Company Participants Brad Cray - ICR Jose Daes - CEO & Director Christian Daes - COO & Director Santiago Giraldo - CFO & Head, IR Conference Call Participants Sam Darkatsh - Raymond James Tim Wojs - Baird Julio Romero - Sidoti Alex Rygiel - B. Riley Operator Greetings, and welcome to the Tecnoglass Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It i ...

FORWARD LOOKING STATEMENTS Certain of the financial information contained herein is unaudited and does not conform to SEC Regulation S-X. Furthermore, it includes EBITDA (earnings before interest, taxes, depreciation and amortization) which is a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Accordingly, such information may be materially different when presented in Tecnoglass' filings with the Securities and Exchange Commission. Te ...

THIRD QUARTER 2022 EARNINGS CONFERENCE CALL November 3, 2022 – TECNOGLASS INC. (NASDAQ: TGLS) Safe Harbor FORWARD LOOKING STATEMENTS This presentation includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Tecnoglass' current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual ...

Financial Data and Key Metrics Changes - The company reported record revenues of $201.8 million for Q3 2022, representing a 53.3% year-over-year increase [28] - Adjusted EBITDA more than doubled to a record $78.5 million, with an adjusted EBITDA margin of 38.9%, up 970 basis points from the previous year [29] - Gross profit increased to $105.3 million, reflecting a gross margin of 52.2%, compared to 39.2% in the prior year [30] - The leverage ratio improved to a record low of 0.4x net debt to LTM adjusted EBITDA, down from 0.9x in the previous year [34] Business Line Data and Key Metrics Changes - Single-family residential revenues increased by 44% year-over-year to a record $85.8 million, accounting for 43% of total revenues [25] - Commercial construction revenues have shown sequential growth in each quarter of 2022, with continued momentum expected [28] - The backlog reached a record $697 million, a 21% increase compared to the prior year, with approximately two-thirds related to medium- and high-rise residential buildings [18] Market Data and Key Metrics Changes - The ABI Index remains in expansionary territory for the 20th consecutive month as of September, indicating strong commercial demand [16] - The company is experiencing strong demand in both commercial and single-family residential markets, with a focus on geographic expansion [19] Company Strategy and Development Direction - The company aims to maintain its growth trajectory through investments in automation and capacity enhancements, targeting an installed production capacity equivalent to approximately $950 million in annual sales by mid-2023 [21][38] - The strategic focus includes diversifying the customer base and expanding into new markets, with plans to open additional showrooms [26] - The company is well-positioned to gain market share due to its low-cost vertically integrated operations and short lead times [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic pressures and maintain market share due to its efficient cost structure and ongoing investments [14][43] - The full-year 2022 revenue outlook has been increased to a range of $680 million to $700 million, representing a 39% growth at the midpoint [40] - Management anticipates continued strong cash flow generation and plans to return capital to shareholders through a new $50 million share repurchase program [12][37] Other Important Information - The company has maintained strong cash flow for 11 consecutive quarters, allowing for strategic capital allocation [12] - The gross margin is expected to remain in the mid- to high 40s range for 2022, driven by operational efficiencies and favorable pricing dynamics [42] Q&A Session Summary Question: Can you provide details on the highest invoicing month in October? - Management noted that invoicing has increased across all business aspects, with expectations for rapid growth in demand starting January [46] Question: Is the SG&A percentage sustainable going into 2023? - Management indicated that the SG&A percentage is sustainable based on sales levels and operational leverage [47] Question: What is the outlook for the Multimax product? - The company is seeing increased interest from builders, indicating strong growth potential for the Multimax product [48] Question: Is there a seasonal impact expected in Q4? - Management acknowledged that December is typically slower due to holidays, which is factored into the guidance [53] Question: How does the FX impact the cost structure? - Approximately 65% of costs are in U.S. dollars, benefiting from the weak Colombian peso, which has provided a gross margin benefit [54] Question: What is the pricing contribution for the quarter? - Pricing increases contributed a tailwind of about 3% for the quarter, with input costs also decreasing [56][59] Question: What is driving confidence in long-term gross margin upside? - Confidence stems from operational improvements and the ability to leverage higher sales, with FX dynamics also playing a role [61][64] Question: Can you elaborate on the new garage door product? - The new garage door product has seen significant success, with plans for further development and expansion into non-hurricane markets [68] Question: What is the plan for the share repurchase program? - The company plans to take a cautious approach to the buyback, assessing market conditions before proceeding [69] Question: What is the expected growth for single-family residential in 2023? - Management anticipates a growth rate of 10% to 15% driven by geographic expansion [73]