Tecnoglass(US:TGLS)2023-08-08 17:53Financial 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]