Tecnoglass(US:TGLS)2021-11-08 21:03Financial Data and Key Metrics Changes - Tecnoglass achieved record revenue of $130.4 million for Q3 2021, a 26% year-over-year increase, with U.S. revenues growing approximately 29% to $123.2 million compared to $95.7 million in the prior year quarter [36][10][12] - Adjusted EBITDA increased 36.1% to a record $38.7 million, with an adjusted EBITDA margin of 29.7%, reflecting a 220 basis points improvement year-over-year [38][12] - Gross profit rose 28.7% to $51.6 million, resulting in a gross margin of 39.6%, up from 38.8% in the prior year [39][12] Business Line Data and Key Metrics Changes - Single-family residential sales surged 213% year-over-year, accounting for 48% of Q3 U.S. revenues and 35% of U.S. sales on a last twelve months (LTM) basis [28][10] - The backlog reached a record level of $575.8 million, with over 86% of it related to U.S. projects, primarily in medium and high-rise residential and commercial projects [22][25] Market Data and Key Metrics Changes - The Architectural Billings Index (ABI) increased to 56.6 in September, indicating expansion in commercial activity for the eighth consecutive month [23][22] - The U.S. market continues to represent a significant majority of Tecnoglass's growth, with expectations for continued strength in single-family residential and commercial projects [46][12] Company Strategy and Development Direction - The company plans to leverage its vertically integrated platform to enhance customer relationships and penetrate the U.S. single-family residential market further [52][12] - Tecnoglass is focused on maintaining high margins while expanding its product offerings, including the new Multimax product line targeting production homebuilders [21][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve growth objectives while maintaining industry-leading margins, despite potential volatility in the housing market [52][12] - The company anticipates continued strong cash flow generation and plans to invest in growth CapEx to enhance operational capacity [26][12] Other Important Information - Tecnoglass has maintained stable lead times and has not faced significant material constraints, allowing for efficient service delivery [80][12] - The company has a conservative leverage profile, with a net debt to adjusted EBITDA ratio of 0.9 times, providing financial flexibility for future growth [44][12] Q&A Session Summary Question: What is the visibility for residential into next year? - Management believes that $60 million in quarterly sales is a proper baseline moving forward, with expectations for continued growth in the residential line [57][12] Question: How big is the Florida market for residential and what is the company's share? - The company estimates its market share in Florida to be around 20%, indicating significant upside potential [58][12] Question: What is the contribution of the Multimax product line to single-family sales? - The Multimax product line is currently contributing about $2 million per month, with expectations for continued ramp-up [69][12] Question: How is the backlog distributed regionally? - There has been a slowdown in commercial activity outside Florida, but recent trends indicate a recovery in those areas [71][12] Question: What are the 2022 CapEx expectations? - The company anticipates a decrease in CapEx to around $10 million to $15 million for 2022 [73][12] Question: How are lead times trending compared to competitors? - Lead times have remained steady at 6 to 8 weeks, with customers expressing satisfaction with the service [80][12] Question: What is the target leverage and cash priorities? - The company is comfortable with its leverage below one time and plans to continue investing in growth while considering debt repayment as needed [83][12] Question: What is the outlook for the U.S. commercial business in 2022? - The company expects commercial activity to be on par or slightly better than the previous year, particularly in Florida [102][12]