Financial Data and Key Metrics Changes - The company reported record total revenues of $833 million for 2023, with adjusted EBITDA of $304 million and gross profit of $391 million, maintaining a gross margin of approximately 47% despite foreign exchange headwinds [32][33][80] - For the fourth quarter, total revenues decreased by 7.8% year-over-year to $194.6 million, primarily due to lower single-family residential revenues, while full-year revenues increased by 16.3% year-over-year [50][51] - Adjusted EBITDA for the fourth quarter was $62 million, representing a margin of 31.8%, while full-year adjusted EBITDA increased by 14.5% year-over-year to a record $304.1 million, with a margin of 36.5% [79] Business Line Data and Key Metrics Changes - Single-family residential revenues for the fourth quarter were $77.1 million, down from $85.1 million in the prior year quarter, attributed to higher interest rates affecting activity [47][76] - The multifamily and commercial business performed in line with internal expectations, contributing to the overall revenue growth [50] - The company expects the vinyl initiative to contribute $20 million to $25 million in total orders, with significant growth anticipated in the second half of the year [6][49] Market Data and Key Metrics Changes - The company has seen a notable increase in single-family housing permits in Florida, indicating resilient activity in key markets despite a challenging macroeconomic environment [75] - The backlog grew to a record $870.1 million at year-end, reflecting strong demand in multi-family and commercial projects [41][72] Company Strategy and Development Direction - The company aims to drive above-market growth through strategic entry into the vinyl window market, geographic diversification, and strengthening customer relationships [34][42] - The focus remains on maintaining industry-leading margins while expanding the dealer base and introducing new products [76][78] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another year of double-digit revenue growth, supported by a strong backlog and favorable demographic trends in key regions [84][88] - The company anticipates a stable FX rate and increased revenue mix from installations, which should positively impact gross margins in 2024 [57][86] Other Important Information - The company plans to reduce capital expenditures significantly in 2024, with expectations of $40 million to $45 million, allowing for flexibility in share buybacks and dividends [12][81] - A 22% increase in the quarterly dividend to $0.11 per share was approved, reflecting the company's commitment to returning cash to shareholders [53] Q&A Session Summary Question: What is the expected impact of the vinyl initiative on revenue growth? - Management indicated that the vinyl initiative is expected to contribute significantly to revenue, particularly in the second half of the year, with early feedback being encouraging [6][49] Question: How does the company view the current residential business environment? - Management noted that the residential business is expected to grow, with recent improvements in interest rates leading to increased enthusiasm among customers [7][8] Question: What are the expectations for gross margins and EBITDA in the first quarter of 2024? - Management expects gross margins to be in line with the fourth quarter, with EBITDA potentially being slightly lower due to the revenue mix [91][92]

Part I [Business](index=8&type=section&id=Item%201.%20Business%2E) Tecnoglass is a vertically integrated manufacturer of architectural glass, windows, and related aluminum/vinyl products for commercial and residential markets, primarily in the U.S. (95% of revenue) - Tecnoglass is a leading vertically integrated manufacturer of architectural glass and windows, with the United States accounting for **95% of its revenues**[29](index=29&type=chunk) - The company operates from a **5.6 million square foot**, state-of-the-art manufacturing complex in Barranquilla, Colombia[29](index=29&type=chunk)[33](index=33&type=chunk) - Tecnoglass has significantly penetrated the U.S. residential market, with sales growing from less than **5% in 2017 to 40.3% of total sales in 2023**[37](index=37&type=chunk)[64](index=64&type=chunk) - A key competitive advantage is its vertically integrated model, strengthened by a joint venture with Saint-Gobain, providing a secure supply of float glass[40](index=40&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) - As of December 31, 2023, the company had **8,531 employees**, none of whom are represented by a union[97](index=97&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors%2E) The company faces a range of risks, including intense market competition, volatility in raw material costs, reliance on third-party suppliers, and economic instability in Colombia - The company operates in highly competitive markets, facing pressure on pricing and margins from competitors like Viracon, PGT, and Oldcastle Glass[102](index=102&type=chunk) - Reliance on a single primary production facility in Barranquilla, Colombia, subjects the company to concentrated operational risks[126](index=126&type=chunk) - Operations are subject to economic, political, and currency risks associated with Colombia, with approximately **24% of 2023 expenses in Colombian pesos** and **97% of revenues from outside Colombia**[142](index=142&type=chunk)[155](index=155&type=chunk)[173](index=173&type=chunk) - The company is a "controlled company" as Energy Holding Corporation beneficially owns approximately **52.4% of outstanding ordinary shares**, giving it significant influence over shareholder-approved transactions[149](index=149&type=chunk)[206](index=206&type=chunk) - An anti-dumping duty investigation on aluminum extrusions from Colombia could adversely impact the company's results if duties are imposed[138](index=138&type=chunk) [Unresolved Staff Comments](index=49&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments%2E) The company reports no unresolved staff comments from the SEC - None[213](index=213&type=chunk) [Cybersecurity](index=49&type=section&id=Item%201C.%20Cybersecurity) Tecnoglass has implemented a cybersecurity risk management program based on the NIST Cybersecurity Framework, overseen by the Board's Audit Committee, and has not experienced material attacks to date - The company's information security framework is based on the NIST Cybersecurity Framework[214](index=214&type=chunk) - The Audit Committee of the Board oversees cybersecurity risk and receives regular reports from management[216](index=216&type=chunk) - To date, the company has not experienced any attacks that led to interruptions, delays in service, or loss of personal information[218](index=218&type=chunk) [Properties](index=50&type=section&id=Item%202.%20Properties%2E) The company owns and operates 5.6 million square feet of manufacturing facilities, including a 5.4 million square foot complex in Colombia and a 123,399 square foot facility in Florida - The main manufacturing complex in Barranquilla, Colombia, spans **5.4 million square feet**[220](index=220&type=chunk) - The company also owns a **123,399 square foot** manufacturing and warehousing facility in Miami-Dade County, Florida[220](index=220&type=chunk) [Legal Proceedings](index=51&type=section&id=Item%203.%20Legal%20Proceedings%2E) The company is involved in various legal matters arising from the ordinary course of business, none of which are expected to have a material adverse effect - The company is involved in legal matters from the regular course of business, but there are no indications that such claims will result in a material adverse effect[223](index=223&type=chunk) [Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures%2E) This item is not applicable to the company - Not Applicable[224](index=224&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities%2E) Tecnoglass's ordinary shares trade on the NYSE, and the company has paid regular quarterly dividends since August 2016, repurchasing **678,065 shares** for approximately **$23.5 million** in Q4 2023 - The company's ordinary shares are listed on the New York Stock Exchange under the symbol "**TGLS**"[226](index=226&type=chunk) - The company has paid regular quarterly dividends since August 2016, with future payments contingent on financial condition and Board discretion[228](index=228&type=chunk) Share Repurchase Activity (Q4 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | Approx. Dollar Value Remaining in Program | |:---|---:|---:|---:|---:| | Q4 2023 Total | 678,065 | $34.7 | 676,515 | $26,527,637 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=53&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) In fiscal year 2023, Tecnoglass's revenue grew **16.3% to $833.3 million**, with net income rising to **$183.5 million**, maintaining strong liquidity and investing **$87.3 million** in capital expenditures Consolidated Results of Operations (in thousands) | | 2023 | 2022 | 2021 | |:---|---:|---:|---:| | **Operating revenues** | **$833,265** | **$716,570** | **$496,785** | | Gross profit | $390,934 | $349,499 | $202,584 | | Operating income | $259,762 | $226,415 | $116,985 | | **Net income** | **$183,510** | **$156,412** | **$68,428** | | Income attributable to parent | $182,882 | $155,743 | $68,151 | - Cash and cash equivalents increased to **$129.5 million** as of December 31, 2023, from **$103.7 million** in 2022, with cash from operating activities at **$138.8 million** in 2023[253](index=253&type=chunk)[278](index=278&type=chunk) - Capital expenditures in 2023 were **$87.3 million**, primarily for automation of production lines, aluminum capacity expansion, and establishing new vinyl window assembly lines[256](index=256&type=chunk)[259](index=259&type=chunk) [Comparison of 2023 vs. 2022](index=59&type=section&id=Comparison%20of%20years%20ended%20December%2031%2C%202023%20and%20December%2031%2C%202022) For the year ended December 31, 2023, operating revenue increased by **16.3% to $833.3 million**, while gross margin declined by **190 basis points to 46.9%**, and net income rose to **$183.5 million** Financial Performance Comparison (2023 vs. 2022) | Metric | 2023 | 2022 | Change | % Change | |:---|---:|---:|---:|---:| | Operating Revenue | $833.3M | $716.6M | +$116.7M | +16.3% | | Gross Profit | $391.0M | $349.5M | +$41.5M | +11.9% | | Gross Margin | 46.9% | 48.8% | -190 bps | - | | Net Income | $183.5M | $156.4M | +$27.1M | +17.3% | - U.S. sales grew by **$106.7 million (15.5%)**, with commercial sales up **20.3%** and single-family residential sales up **9.5%**[261](index=261&type=chunk) [Comparison of 2022 vs. 2021](index=60&type=section&id=Comparison%20of%20years%20ended%20December%2031%2C%202022%20and%20December%2031%2C%202021) For the year ended December 31, 2022, operating revenue increased by **44.2% to $716.6 million**, gross profit rose **72.5% to $349.5 million**, and net income more than doubled to **$156.4 million** Financial Performance Comparison (2022 vs. 2021) | Metric | 2022 | 2021 | Change | % Change | |:---|---:|---:|---:|---:| | Operating Revenue | $716.6M | $496.8M | +$219.8M | +44.2% | | Gross Profit | $349.5M | $202.6M | +$146.9M | +72.5% | | Gross Margin | 48.8% | 40.8% | +800 bps | - | | Net Income | $156.4M | $68.4M | +$88.0M | +128.6% | - U.S. sales increased by **$232.0 million (50.8%)**, driven by a **72.8%** increase in single-family residential sales and a **36.9%** increase in commercial sales[269](index=269&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk%2E) The company is exposed to market risks from interest rates, foreign currency exchange rates, and commodity prices, with a **100 basis point** interest rate rise decreasing net earnings by **$0.5 million** and a **5%** COP appreciation decreasing net earnings by **$6.8 million** - A **100 basis point** increase in interest rates would decrease net earnings by approximately **$0.5 million**[295](index=295&type=chunk) - A **5%** appreciation of the Colombian Peso relative to the U.S. Dollar would result in a **$6.8 million** decrease to net earnings[296](index=296&type=chunk) - The company is subject to market risk from volatility in aluminum prices, a principal raw material[299](index=299&type=chunk) [Financial Statements and Supplementary Data](index=64&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%2E) This section contains the company's consolidated financial statements for fiscal years 2023, 2022, and 2021, along with the independent auditor's report from PwC - The consolidated financial statements and the report of the independent registered public accounting firm are included, starting on page F-1[301](index=301&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%209A.%20Controls%20and%20Procedures%2E) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with PwC also issuing an unqualified opinion - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[304](index=304&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO 2013 framework[307](index=307&type=chunk)[308](index=308&type=chunk) - No material changes were made to internal control over financial reporting during the most recent fiscal quarter[309](index=309&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=67&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance%2E) This section lists the company's directors and executive officers, confirms the adoption of a code of conduct, and identifies Julio Torres as the "audit committee financial expert" Directors and Executive Officers | Name | Position | |:---|:---| | José M. Daes | Chief Executive Officer and Director | | Christian T. Daes | Chief Operating Officer and Director | | Santiago Giraldo | Chief Financial Officer | | Lorne Weil | Non-Executive Chairman of the Board | | Luis Fernando Castro Vergara | Director | | Anne Louise Carricarte | Director | | Julio A. Torres | Director | | Carlos Alfredo Cure Cure | Director | - The company has a standing audit committee composed of independent directors Carlos Cure, Luis Fernando Castro, and Julio Torres[329](index=329&type=chunk) - The Board has determined that Julio Torres qualifies as an "audit committee financial expert"[330](index=330&type=chunk) [Executive Compensation](index=70&type=section&id=Item%2011.%20Executive%20Compensation%2E) Executive compensation is designed to attract and retain talent, with CEO José M. Daes and COO Christian T. Daes each receiving **$3,969,000** in total compensation for 2023, resulting in an **868 to 1** CEO-to-median-employee pay ratio 2023 Summary Compensation Table (Named Executive Officers) | Name and Principal Position | Year | Salary | Bonus | Total | |:---|---:|---:|---:|---:| | Jose M. Daes, CEO | 2023 | $2,940,000 | $1,029,000 | $3,969,000 | | Christian T. Daes, COO | 2023 | $2,940,000 | $1,029,000 | $3,969,000 | | Santiago Giraldo, CFO | 2023 | $594,000 | $207,900 | $801,900 | - The CEO pay ratio for 2023 was **868 to 1**, with the CEO's total compensation at **$3,969,000** and the median employee's at **$4,579**[351](index=351&type=chunk)[352](index=352&type=chunk) - As of December 31, 2023, no outstanding equity awards had been granted to any executive officers[353](index=353&type=chunk) - Non-employee directors receive annual cash compensation of **$75,522**, with additional fees for committee chairs and members[357](index=357&type=chunk) [Security Ownership of Certain Beneficial Owners and Management](index=77&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters%2E) As of December 31, 2023, Energy Holding Corporation, controlled by the Daes family, is the largest beneficial owner, holding **52.4%** of the company's ordinary shares, with **1,593,917** shares available for future issuance under the 2013 Long-Term Equity Incentive Plan - Energy Holding Corporation beneficially owns **24,628,108 ordinary shares**, representing **52.4%** of the company[364](index=364&type=chunk) - CEO José M. Daes and COO Christian T. Daes have indirect ownership interests through Energy Holding Corporation but hold no shares directly[364](index=364&type=chunk)[366](index=366&type=chunk) - The 2013 Long-Term Equity Incentive Plan has **1,593,917 ordinary shares** available for future issuance, with no awards granted as of year-end 2023[365](index=365&type=chunk)[367](index=367&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=81&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence%2E) The company engages in related-party transactions, including **$32.0 million** in material purchases from Vidrio Andino and **$3.3 million** in charitable contributions, with the board determining five directors are independent - In 2023, the company purchased **$32.0 million** of materials from its joint venture, Vidrio Andino, and had outstanding payables of **$3.9 million** at year-end[378](index=378&type=chunk) - The company made charitable contributions of **$3.3 million** to Fundacion Tecnoglass-ESWindows in 2023[370](index=370&type=chunk) - On November 10, 2023, the company acquired the remaining **30%** of ESMetals from Incantesimo SAS, a company affiliated with a senior manager, for **$5.5 million**[372](index=372&type=chunk) - The Board has determined that Messrs. Weil, Cure Cure, Castro Vergara, Torres and Ms. Carricarte qualify as independent directors[385](index=385&type=chunk) [Principal Accountant Fees and Services](index=84&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services%2E) The company paid its independent registered public accounting firm, PwC, a total of **$857,412** in fees for fiscal year 2023, primarily for audit services, all of which were pre-approved by the Audit Committee Accountant Fees (PwC) | Fee Type | 2023 | 2022 | |:---|---:|---:| | Audit Fees | $854,512 | $692,754 | | Audit-Related Fees | $0 | $376 | | All Other Fees | $2,000 | $2,900 | | **Total Fees** | **$857,412** | **$696,030** | - All audit and non-audit services provided by PwC were pre-approved by the company's audit committee[387](index=387&type=chunk)[389](index=389&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=85&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules%2E) This section provides an index of all financial statements, schedules, and exhibits filed with the Form 10-K, including articles of association, material contracts, and certifications - This section provides an index of all financial statements, schedules, and exhibits filed with the Form 10-K[390](index=390&type=chunk)[392](index=392&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=89&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PwC issued an unqualified opinion on Tecnoglass's consolidated financial statements and internal control over financial reporting, identifying "Revenue Recognition - Estimated Costs to Complete Fixed Price Contracts" as a Critical Audit Matter - The auditor, PwC, issued an unqualified opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting[407](index=407&type=chunk) - A Critical Audit Matter was identified related to "Revenue Recognition - Estimated Costs to Complete Fixed Price Contracts" due to the significant management judgment required in estimating costs[414](index=414&type=chunk)[415](index=415&type=chunk)[416](index=416&type=chunk) [Consolidated Balance Sheets](index=92&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets were **$962.7 million**, total liabilities **$414.7 million**, and total shareholders' equity grew substantially to **$548.0 million** Key Balance Sheet Items (in thousands) | | Dec 31, 2023 | Dec 31, 2022 | |:---|---:|---:| | Cash and cash equivalents | $129,508 | $103,671 | | Total Current Assets | $535,760 | $432,134 | | **Total Assets** | **$962,717** | **$734,308** | | Total Current Liabilities | $235,886 | $209,802 | | **Total Liabilities** | **$414,697** | **$383,983** | | **Total Shareholders' Equity** | **$548,020** | **$350,325** | [Consolidated Statements of Operations and Comprehensive Income](index=93&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the year ended December 31, 2023, total operating revenues were **$833.3 million**, operating income **$259.8 million**, net income **$183.5 million**, and diluted earnings per share **$3.85** Key Income Statement Items (in thousands) | | 2023 | 2022 | |:---|---:|---:| | Total operating revenues | $833,265 | $716,570 | | Gross profit | $390,934 | $349,499 | | Operating income | $259,762 | $226,415 | | **Net income** | **$183,510** | **$156,412** | | **Diluted income per share** | **$3.85** | **$3.27** | [Consolidated Statements of Cash Flows](index=96&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the year ended December 31, 2023, net cash provided by operating activities was **$138.8 million**, with **$76.0 million** used in investing activities and **$42.8 million** in financing activities, resulting in a **$25.8 million** net increase in cash Key Cash Flow Items (in thousands) | | 2023 | 2022 | |:---|---:|---:| | Cash Provided by Operating Activities | $138,827 | $141,920 | | Cash Used in Investing Activities | ($76,017) | ($72,584) | | Cash Used in Financing Activities | ($42,768) | ($44,801) | | **Net Increase in Cash** | **$25,837** | **$18,660** | | Cash at End of Period | $129,508 | $103,671 |

Exhibit 99.1 Tecnoglass Reports Record Financial Metrics Across the Board for Full Year 2023 - Full Year Revenues Increased 16% to a Record $833.3 Million Through Entirely Organic Growth - - Full Year Net Income of $183.5 Million, or $3.85 Per Diluted Share; Full Year Adjusted Net Income of $189.3 Million, or $3.98 Per Diluted Share - - Full Year Adjusted EBITDA up 15% to an all-time high of $304.1 Million, Representing 36.5% of Revenues - - Record Full Year Gross Profit of $390.9 Million, Producing Gross M ...

13 3 Year Average ROE 3 Year Average ROIC Notes: Evolution of Revenue & Adjusted EBITDA Revenues Adjusted EBITDA Investment in top-class manufacturing facility to produce high-spec insulated glass Entered into JV agreement with Saint Gobain for secure float glass supply Investments in automation began, $25 mm of Capex invested during 2019 COVID-19 Pandemic Sales reps in expanding geographies building relationships with targeted general contractors, developers, architects & glazers Revenue increase of 44% Yo ...

Revenue and Profitability - Operating revenues increased by $9.0 million, or 4.4%, from $201.8 million in Q3 2022 to $210.7 million in Q3 2023, driven by U.S. market activity[96] - Gross profit for Q3 2023 was $90.5 million, a decrease of $14.8 million, or 14.0%, from $105.3 million in Q3 2022, with a gross profit margin of 43.0% compared to 52.2% in the prior year[97] - Net income for Q3 2023 was $46.1 million, compared to $46.9 million in Q3 2022, reflecting a stable performance despite revenue fluctuations[104] - For the nine months ended September 30, 2023, operating revenues increased by $133.2 million, or 26.4%, from $505.5 million in 2022 to $638.7 million in 2023[105] - Gross profit for the nine months ended September 30, 2023, increased by $68.7 million, or 28.7%, to $308.0 million, resulting in a gross profit margin of 48.2%[107] - The company recorded a net income of $147.0 million for the nine months ended September 30, 2023, compared to $101.3 million for the same period in 2022, reflecting a year-over-year increase of approximately 45.2%[113] Operating Expenses and Cash Flow - Operating expenses decreased by $5.6 million, or 16.1%, from $35.2 million in Q3 2022 to $29.5 million in Q3 2023, improving the operating expenses as a percentage of sales from 17.4% to 14.0%[98] - Operating expenses for the nine months ended September 30, 2023, increased by $9.1 million, or 10.1%, from $89.7 million to $98.8 million, but the percentage of sales improved from 17.7% to 15.5%[108] - Operating activities generated approximately $94.5 million in cash flow for the nine months ended September 30, 2023, compared to $92.1 million in the same period of 2022, showing a growth of about 2.6%[117] - Financing activities used $20.9 million in cash during the nine months ended September 30, 2023, a decrease from $41.2 million in the same period of 2022, indicating improved cash management[119] Market Performance - U.S. commercial market revenues increased by $91.0 million, or 34.9%, from $260.6 million in 2022 to $351.6 million in 2023, indicating strong growth in this segment[106] - Revenues from Latin-American markets increased by $5.3 million, or 22.4%, from $23.5 million in 2022 to $28.8 million in 2023, reflecting successful market expansion[106] Investments and Capital Expenditures - The company invested $73.8 million in capital expenditures during the nine months ended September 30, 2023, a significant increase from $51.4 million in the same period of 2022, representing a rise of approximately 43.5%[116] - The company utilized $62.5 million in investing activities during the nine months ended September 30, 2023, primarily for automation and expansion efforts, compared to $48.1 million in 2022[118] Tax and Interest Expenses - Interest expense for the nine months ended September 30, 2023, increased by $1.5 million, or 27.4%, to $6.9 million, primarily due to rising floating interest rates[111] - The effective income tax rate for the nine months ended September 30, 2023, was 30.1%, down from 32.3% in 2022, reflecting a favorable tax environment due to increased profits from US subsidiaries[112] Future Outlook - The company anticipates continued positive cash flow from operating activities through the end of 2023, providing flexibility to meet obligations over the next twelve months[115] - The company expects that current manufacturing operating capacity has reached approximately $1 billion, excluding incremental installation revenue capacity, indicating significant growth potential[116] Currency Impact - A 5% appreciation of the Colombian Peso relative to the US Dollar would result in a $1.0 million increase in annual revenues but a $6.0 million increase in costs, leading to a $5.0 million decrease in net earnings[122]

Financial Data and Key Metrics Changes - Total revenues increased by 4.4% year-over-year to $210.7 million for the third quarter, driven by growth in multifamily and commercial activity, as well as single-family residential revenues [10][104] - Adjusted EBITDA for Q3 2023 was $71.3 million, or 33.8% of revenues, compared to $78.5 million, or 38.9% of revenues in the prior year quarter, primarily due to a non-cash foreign exchange impact on gross margins [11][20] - The leverage ratio remained low at 0.2 times net debt-to-LTM adjusted EBITDA, down from 0.6 times in the prior year quarter, with a cash balance of $119 million and total liquidity of approximately $289 million [13] Business Line Data and Key Metrics Changes - Multifamily and commercial revenue increased by 6% year-over-year to $122.9 million, while single-family residential revenues grew by 2% year-over-year to a record of $87.8 million [103][104] - The company announced its entry into the vinyl window market, which represents an estimated 60% of the $26 billion architectural window market, expected to provide significant revenue growth opportunities [3][85] Market Data and Key Metrics Changes - The backlog grew to a record of $836 million at quarter end, with approximately two-thirds composed of medium and high-rise residential buildings, indicating strong demand in key markets [104][112] - The company is experiencing healthy demand in the Southeastern US, with new business wins and a resumption of previously delayed projects contributing to backlog growth [112] Company Strategy and Development Direction - The company is expanding geographically, particularly in the Florida market, and has relocated its global headquarters to Miami to align with its US-centric strategy [109][110] - The strategic entry into the vinyl window market is expected to double the addressable market and enhance geographical expansion opportunities [4][85] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit growth in 2024, supported by a strong backlog and the anticipated impact of new vinyl products [22][122] - The company noted that while there have been project delays due to higher lending standards, the overall demand remains strong, particularly in the commercial sector [137][155] Other Important Information - The company has executed approximately 40% of its $50 million share repurchase program since mid-year, demonstrating a commitment to returning value to shareholders [106][130] - Management expects gross margins to be in the range of 47% to 49% for the full year 2023, with strong cash flow generation anticipated for the remainder of the year [14][119] Q&A Session All Questions and Answers Question: Can you provide specifics on the guidance for 2024 growth? - Management indicated that the guidance pertains to revenue growth, with expectations for double-digit growth across both residential and commercial segments [15][134] Question: What is the impact of customer project delays on sales and EBITDA? - Management noted that approximately $10 million in commercial projects were delayed due to banks not lending, but they expect these projects to proceed now that lending has resumed [17][137] Question: How do you see the market share in Florida and single-family orders? - Management reported steady growth in market share in the Southeast and noted that single-family orders are expected to increase significantly with the introduction of vinyl products [26][31] Question: What are the expectations for SG&A in Q4? - SG&A is expected to trend similarly to Q3, with lower shipping and commission expenses contributing to a more favorable cost structure [19][158] Question: How is the company addressing pricing pressures in the residential market? - Management stated that pricing has remained stable, with only minor reductions from some vendors to maintain competitiveness [79][147]

FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the quarterly period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35436 TECNOGLASS INC. (Exact Name of Registrant as Specified in Its Charter) Cayman Islands 98-1271120 (State or other jurisdiction ...

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. ...