Tecnoglass(TGLS) - 2024 Q1 - Quarterly Report

Part I. Financial Information Financial Statements (Unaudited) Unaudited Q1 2024 financial statements show decreased revenues and net income, with assets increasing to $981.6 million and liabilities slightly down Condensed Consolidated Balance Sheets Total assets increased to $981.6 million by March 31, 2024, while total liabilities decreased to $407.9 million, and shareholders' equity rose to $573.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $549,645 | $535,760 | | Total Assets | $981,570 | $962,717 | | Total Current Liabilities | $235,661 | $235,886 | | Total Liabilities | $407,923 | $414,697 | | Total Shareholders' Equity | $573,647 | $548,020 Condensed Consolidated Statements of Operations and Other Comprehensive Income Q1 2024 total operating revenues decreased to $192.6 million, gross profit fell to $74.7 million, and net income was $29.7 million Q1 2024 vs Q1 2023 Performance (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $192,627 | $202,639 | | Gross Profit | $74,660 | $107,755 | | Operating Income | $41,022 | $73,680 | | Net Income Attributable to Parent | $29,730 | $48,235 | | Diluted Income Per Share | $0.63 | $1.01 | Condensed Consolidated Statements of Cash Flows Net cash from operations was $33.4 million, investing activities used $10.2 million, and financing activities used $16.7 million Cash Flow Summary (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $33,447 | $43,063 | | Cash Used in Investing Activities | $(10,192) | $(15,688) | | Cash Used in Financing Activities | $(16,686) | $(3,287) | | Net Increase in Cash | $6,373 | $24,866 | Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity increased to $573.6 million by March 31, 2024, driven by net income, partially offset by dividends - Shareholders' equity grew to $573.6 million in Q1 2024, mainly due to $29.7 million in net income[17] - The company declared and accounted for a dividend of $0.11 per share, totaling $5.2 million during the quarter[17] Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation showing product sales decline, US as primary market, debt, hedging, and commitments - The company operates in a single reportable segment: Architectural Glass and Windows[25] Revenue by Geography (in thousands) | Region | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | United States | $184,003 | $194,839 | | Colombia | $5,239 | $5,740 | | Other | $3,385 | $2,060 | Revenue by Market (in thousands) | Market | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Commercial | $119,473 | $119,044 | | Residential | $73,154 | $83,595 | - As of March 31, 2024, the company had $438.2 million of remaining performance obligations, expected to be recognized as revenue over the next three years[45] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 revenue decrease due to residential sales, gross margin contraction from FX and mix, and strong liquidity - The company's structural competitive advantages include a low-cost manufacturing footprint in Colombia, a vertically integrated business model, and a strategic geographic location[91] - A core part of the company's strategy is expanding its presence in the United States outside of its primary Florida market and growing its residential window offerings[94] Results of Operations Q1 2024 revenues decreased 4.9% to $192.6 million, gross profit fell to $74.7 million, and net income dropped to $29.7 million - Revenues decreased by $10.0 million (4.9%) YoY, mainly due to a $10.4 million (12.5%) drop in single-family residential revenues[97] - Gross margin fell from 53.2% to 38.8%, driven by 17.8% appreciation of the Colombian Peso (impacting margin by an estimated 308 basis points) and an unfavorable FX impact on inventory costing (197 basis points)[98] - The effective tax rate for Q1 2024 was 27.3%, down from 33.8% in Q1 2023, as Colombian subsidiaries with higher tax rates contributed a smaller portion of consolidated income[104] Liquidity and Capital Resources Q1 2024 liquidity remains strong with $135.9 million cash and $170.0 million credit, with $33.4 million operating cash flow - As of March 31, 2024, the company had cash and cash equivalents of $135.9 million and approximately $170.0 million available under various lines of credit[106] - Capital expenditures in Q1 2024 were $11.2 million, invested in automating glass and window assembly, expanding aluminum facilities, and adding new vinyl window lines[109] - During Q1 2024, the company used $15.2 million to repay debt from its Senior Secured Line of Credit and paid $4.2 million in dividends[113] Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from interest rates, foreign currency (COP), and commodity prices, with potential impacts on earnings - Interest Rate Risk: A 100 basis point increase in interest rates would reduce annual net earnings by about $0.3 million, net of hedging effects[115] - Foreign Currency Risk: Approximately 24% of costs are in Colombian Pesos (COP); a 5% appreciation of the COP against the USD would result in a $1.9 million decrease in quarterly net earnings[116] - Commodity Risk: The company is exposed to volatile aluminum prices, mitigating this by basing product pricing on the London Metals Exchange quoted price plus a premium, aiming to pass price changes to customers[119] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2024, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[121] - No changes occurred in the internal control over financial reporting during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, these controls[122] Part II. Other Information Legal Proceedings The company is involved in ordinary course legal matters, which management deems not material to financial condition or operations - The company is involved in legal matters from time to time in the ordinary course of business, but management does not currently consider them to be material[125] Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2024 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2024[126] Exhibits This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL financial statements - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL financial data[127]