Tecnoglass(TGLS) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, demonstrate strong year-over-year growth in revenues and net income, with total assets increasing to $1.18 billion and shareholders' equity reaching $736.0 million Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1.18 billion and shareholders' equity significantly grew to $736.0 million, driven by investments and strong retained earnings Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $639,399 | $560,010 | | Property, plant and equipment, net | $421,954 | $344,433 | | Total Assets | $1,181,209 | $1,016,648 | | Total Current Liabilities | $320,481 | $265,826 | | Total Liabilities | $445,208 | $385,465 | | Total Shareholders' Equity | $736,001 | $631,183 | Condensed Consolidated Statements of Operations and Other Comprehensive Income The company reported strong year-over-year growth for Q2 and H1 2025, with Q2 operating revenues increasing 16.3% to $255.5 million and net income rising 25.8% to $44.1 million Q2 2025 vs Q2 2024 Performance (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $255,546 | $219,654 | 16.3% | | Gross Profit | $114,335 | $89,577 | 27.6% | | Operating Income | $61,204 | $51,134 | 19.7% | | Net Income | $44,083 | $35,028 | 25.8% | | Diluted EPS | $0.94 | $0.75 | 25.3% | H1 2025 vs H1 2024 Performance (in thousands, except EPS) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $477,834 | $412,281 | 15.9% | | Gross Profit | $211,860 | $164,237 | 29.0% | | Operating Income | $120,533 | $92,156 | 30.8% | | Net Income | $86,272 | $64,758 | 33.2% | | Diluted EPS | $1.84 | $1.38 | 33.3% | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, cash provided by operating activities was $64.8 million, while cash used in investing activities significantly increased to $48.6 million Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $64,760 | $67,945 | | Cash Used in Investing Activities | ($48,627) | ($27,802) | | Cash Used in Financing Activities | ($14,924) | ($40,327) | | Net Increase (Decrease) in Cash | $3,025 | ($2,703) | | Cash and Cash Equivalents - End of period | $137,907 | $126,805 | - Key drivers for investing activities in H1 2025 included $62.9 million for property and equipment acquisition and $6.8 million for a business acquisition[15] Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies and events, including the $10.4 million acquisition of Continental Glass Systems and an increase in project backlog to $820.0 million - On April 3, 2025, the company acquired assets of Continental Glass Systems, LLC for a purchase price of $10.4 million, resulting in $6.6 million of goodwill[34][35][37] - As of June 30, 2025, the company had $820.0 million of remaining performance obligations (backlog), which it expects to recognize as revenue over the next three years[48] Revenue by Geography - H1 2025 vs H1 2024 (in thousands) | Geography | H1 2025 | H1 2024 | | :--- | :--- | :--- | | United States | $454,801 | $393,701 | | Colombia | $13,035 | $11,069 | | Other | $10,000 | $7,511 | | Total Revenues | $477,834 | $412,281 | - The company declared a quarterly dividend of $0.15 per share on June 10, 2025[85] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q2 and H1 2025 performance to robust U.S. market activity and commercial backlog execution, with expanded gross margins and a strong liquidity position of $137.9 million in cash Results of Operations Q2 2025 revenues increased 16.3% to $255.5 million, driven by U.S. market growth, while gross margin expanded to 44.7% despite a 38.2% rise in operating expenses due to new tariffs - Q2 2025 revenue growth was driven by a $32.6 million (15.6%) increase in the U.S. market, with residential revenues up 14.5% and commercial revenues up 16.5%[100] - Gross margin for Q2 2025 expanded to 44.7% from 40.8% in Q2 2024, aided by better pricing, improved operating leverage, and favorable FX dynamics as the Colombian peso depreciated 7.0% against the USD[101][102] - Operating expenses in Q2 2025 increased by $14.7 million, largely due to an $8.2 million expense from recent U.S. tariffs, as well as higher personnel and shipping costs[103] Liquidity and Capital Resources The company maintains strong liquidity with $137.9 million in cash and $175.0 million available credit, supporting $62.9 million in H1 2025 capital expenditures and the Continental Glass Systems acquisition - As of June 30, 2025, the company had cash and cash equivalents of $137.9 million and approximately $175.0 million available under several lines of credit[117] - Capital investments in H1 2025 amounted to $62.9 million, which included $15 million for real estate in South Florida for the Continental Glass Systems operations[119] - The acquisition of Continental Glass Systems had a total purchase price of $10.4 million, of which $6.8 million was paid in cash during the period[120][124] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company faces primary market risks from foreign currency fluctuations, particularly COP/USD exchange rates, and volatile aluminum prices, while interest rate risk is minimal due to hedging - The company is exposed to foreign currency risk as approximately 25% of its costs are in Colombian pesos (COP) while revenues are primarily in USD; a hypothetical 5% appreciation of the COP would result in a $4.5 million decrease to net earnings based on H1 2025 results[128] - The company is subject to market risk from volatility in aluminum prices, a principal raw material, and attempts to mitigate this by aligning raw material costs with selling prices[132] - Interest rate risk is not significant as the majority of the company's variable-rate debt is covered by interest rate hedging instruments[127] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, excluding the newly acquired Continental Glass Systems, which will be integrated by fiscal year-end 2026 - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[134] - The internal control evaluation excluded the newly acquired Contiglass Asset Acquisition, LLC, in accordance with SEC guidance; Contiglass will be included in the assessment for the fiscal year ending December 31, 2026[135] Part II. Other Information Item 1. Legal Proceedings The company reports no material legal proceedings, with ongoing matters considered part of the ordinary course of business and not expected to have a material adverse effect - The company reports no material legal proceedings and states that any ongoing matters are part of the ordinary course of business[138] Item 1A. Risk Factors A new material risk factor highlights the potential adverse impact of recently imposed U.S. tariffs, including a 50% tariff on steel and aluminum and a 10% universal import tariff, on the company's costs and competitiveness - A new risk factor highlights the negative impact of recently imposed U.S. tariffs on the company's business[139] - Specific tariffs mentioned include a doubling of steel and aluminum tariffs to 50% ad valorem in June 2025 and a new universal 10% tariff on all imports from all countries, including Colombia, effective April 2025[139][140] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 2,800 shares at an average price of $76.9 per share during Q2 2025, with approximately $76.5 million remaining available under the buyback program Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 1,420 | $76.9 | | May 2025 | 930 | $76.9 | | June 2025 | 450 | $75.3 | | Total | 2,800 | $76.9 | - As of June 30, 2025, $76,527,637 remained available for repurchase under the company's share buyback program[143] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[144] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files (XBRL) - The report includes required certifications from the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL financial data[145]