Tecnoglass Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
TGLS$43.94-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001493152-24-018466
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001493152-24-030759
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 40 previous paragraphs and 56 current paragraphs.
26 unchanged; 11 reworded; 14 added; 3 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Gross profit during the three months ended June 30, 2024 was $89.6 million, a decrease of $20.1 million, or 18.3%, from $109.7 million during the three months ended June 30, 2023. The gross profit margin during the three months ended June 30, 2024 was 40.8%, down from 48.7% during the second quarter of 2023, primarily related to a 11.4% appreciation of the Colombian Peso impacting our costs denominated in Colombian Pesos against our predominantly US Dollar revenue stream. In addition, our operational leverage was negatively affected by wage increase, over lower total sales, this effect accounted for 240-basis points deterioration of our gross margin.
Current report
Operating expenses increased $3.2 million, or 9.3%, from $35.2 million to $38.4 million for the quarters ended June 30, 2023 and 2024, respectively. The increase resulted primarily from higher administrative expenses to support a larger operation and ongoing geographical expansion over the US market, as well as administrative salary adjustments.
Current report
The effective income tax rate for the three months ended June 30, 2024, of 26.3% is below the statutory rate, as the proportion of our taxable income shifts jurisdictions resulting from new developments of our product designs, trademarks and other intellectual property rights. The effective tax rate for the three months ended June 30, 2023, of 30.7%, approximate the statutory rate.
Current report
Comparison of six-month periods ended June 30, 2024 and 2023
Current report
Revenues
Current report
Operating revenues during the six months ended June 30, 2024 was $412.3 million, compared to $427.9 million during the quarter ended June 30, 2023, a decrease of $15.6 million or 3.7%, year over year. The decrease was mainly related to lower commercial sales due to higher interest and mortgage rates, while single family residential in the US remained stable.
Current report
Gross profit
Current report
Gross profit during the six months ended June 30, 2024 was $164.2 million, a decrease of 53.2 million, or 24.5%, from $217.4 million during the six months ended June 30, 2023. The gross profit margin during the six months ended June 30, 2024 decreased to 39.8% from 50.8% during the first half of 2023, primarily related to a 14.7% appreciation of the Colombian Peso impacting our costs denominated in Colombian Pesos against our predominantly US Dollar revenue stream. Additionally, the year over year comparison was also impacted by the mix of revenues, and by higher salaries which were adjusted at the beginning of the year.
Current report
Expenses
Current report
Operating expenses increased $2.8 million, or 4.1%, from $69.2 million to $72.1 million for the six months ended June 30, 2023 and 2024, respectively. The increase was mainly driven by administrative salary adjustments and a negative effect in COP denominated amounts related to a 14.7% appreciation of the Colombian Peso against US Dollar over the period.
Current report
Interest Expense
Current report
Income Taxes
Current report
The effective income tax rate for the six months ended June 30, 2024, of 26.8%, is below the statutory rate, as the proportion of our taxable income shifts jurisdictions resulting from new developments of our product designs, trademarks and other intellectual property rights. The effective tax rate for the six months ended June 30, 2023, of 32.2%, approximate the statutory rate.
Current report
As a result of the foregoing, the Company recorded a net income for the six months ended June 30, 2024 of $64.8 million and $100.9 million for the six months ended June 30, 2023.
Removed paragraphs (3)
Previous report
Gross profit during the three months ended March 31, 2024, was $74.7 million, a decrease of $33.1 million, or 30.7%, from $107.8 million during the three months ended March 31, 2023. The gross profit margin during the three months ended March 31, 2024, of 38.8% was down from 53.2% during the first quarter of 2023, primarily related to a 17.8% appreciation of the Colombian Peso impacting our costs denominated in Colombian Pesos against our predominantly US Dollar revenue stream, accounting for an estimated 308-basis points year over year decrease on margin. Additionally, this unfavorable FX dynamic impacted inventories that were recorded into the balance sheet at a weaker Peso and then accounted for under raw material costs at a much stronger Peso, translating into more US Dollars at the time the revenues are recognized. This effect contributed to a 197-basis point decrease year-over-year when assessing the same effect during the comparable period. Finally, margins were impacted by our revenue mix which included more installation and stand-alone product sales during the current period. Installation revenues increased to 16.9% of total revenue, compared with 14.4% during the prior year quarter, and stand-alone architectural glass and frames sales increased to 10.9% of total sales, in comparison with 8.3%, as a result of recent manufacturing capacity expansion unlocking the opportunity to sell stand-alone product.
Previous report
Operating expenses decreased $0.4 million, or 1.3%, from $34.1 million to $33.6 million for the quarters ended March 31, 2023, and 2024, respectively. The decrease resulted primarily from $0.8 million decrease in Accounts receivable provision partially offset by mostly flat operating expenses, despite the unfavorable pressure on Colombian Peso denominated cost, as the peso strengthened 17.8% year over year.
Previous report
The effective income tax rate for 2024 and 2023, was 27.3% and 33.8%, respectively. The effective income tax rate of 27.3% during the three months ended March 31, 2024, is below the statutory rate as the Colombian subsidiaries which bear a higher corporate income tax rate recorded a proportionally lower share of the consolidated income.
Reworded paragraphs (11)
Previous wording
Operating revenues during the quarter ended March 31, 2024, was $192.6 million, compared to $202.6 million during the quarter ended March 31, 2023, a decrease of $10.0 million or 4.9%, year over year. The decrease was driven by seasonally slow single family residential revenues, down $10.4 million, or 12.5% year over year, impacted by high interest and mortgage rates. Despite the aforementioned higher rates, the commercial market actually grew slightly year over year as the Company continues to execute on its growing backlog.
Current wording
Operating revenues during the quarter ended June 30, 2024 was $219.7 million, compared to $225.3 million during the quarter ended June 30, 2023, a decrease of $5.6 million or 2.5%, year over year. The decrease was driven by lower commercial revenues, down $14.4 million, or 10.4% year over year, impacted by high interest and mortgage rates. Despite the aforementioned higher rates, the single-family residential market grew $8.8 million, or 10.1% year over year, as the Company continues to expand its footprint on the US residential market.
Previous wording
During the three months ended March 31, 2024, and 2023, the Company recorded non-operating income of $1.1 million and $1.3 million, respectively. Non-operating income is comprised of interest income from short term investments, as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.
Current wording
During the three months ended June 30, 2024 and 2023, the Company recorded net non-operating income of $2.7 million and $1.6 million, respectively. Non-operating income is comprised of interest income from short term investments, as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.
Previous wording
During the three months ended March 31, 2024, the Company recorded a non-operating loss of $0.2 million associated with foreign currency transactions compared to a net non-operating loss of $1.1 million during the three months ended March 31, 2023.
Current wording
During the three months ended June 30, 2024, the Company recorded a non-operating loss of $5.6 million associated with foreign currency transactions compared to a net non-operating gain of $0.9 million during the three months ended June 30, 2023.
Previous wording
Interest expense and deferred cost of financing decreased $0.2 million, or 7.3%, to $2.1 million during the quarter ended March 31, 2024, as the Company voluntarily prepaid $15 million to reduce its debt balance and benefited from having a favorable interest rate hedge in place for approximately 75% of its outstanding debt.
Current wording
Interest expense and deferred cost of financing decreased $0.3 million, or 13.6%, to $2.0 million during the quarter ended June 30, 2024, as the Company voluntarily prepaid $30 million during the year to reduce its debt balance and benefited from having a favorable interest rate hedge in place for approximately 90% of its outstanding debt after giving effect to the voluntary prepayments.
Previous wording
As a result of the foregoing, the Company recorded net income for the three months ended March 31, 2024, of $29.7 million compared to net income of $48.4 million for the three months ended March 31, 2023.
Current wording
As a result of the foregoing, the Company recorded net income for the three months ended June 30, 2024 of $35.0 million compared to net income of $52.6 million for the three months ended June 30, 2023.
Previous wording
As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $135.9 million and $129.5 million, respectively. Additionally, we currently have approximately $170.0 million available under different lines of credit.
Current wording
As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $126.8 million and $129.5 million, respectively. Additionally, we currently have approximately $170.0 million available under different lines of credit.
Previous wording
We anticipate that the Company will continue to generate positive cashflow from operating activities through, at least twelve months from the date of this report, which we believe, in addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months.
Current wording
We anticipate that the Company will continue to generate positive cashflow from operating activities through the remainder of the year, which we believe, in addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months.
Previous wording
We transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significant investments in state-of-the-art technology. During the Three months ended March 31, 2024 and 2023, we made investments primarily in building and construction and machinery and equipment in the amounts of $11.2 million and $20.3 million, respectively. These investments across our vertically-integrated operations include further automating our glass and window assembly production lines, adding glass production lines, expanding our aluminum facilities, putting new vinyl windows lines to penetrate this new product segment and purchasing land to grow beyond current installed capacity. The Company estimates that current manufacturing operating capacity has reached approximately $1.2 billion which does not account for incremental installation revenue capacity. Additionally, the Company expects the resulting increase in output to improve efficiency throughout its operations while reducing material waste and overall lead times.
Current wording
We transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significant investments in state-of-the-art technology. During the six months ended June 30, 2024 and 2023, we made investments primarily in building and construction and machinery and equipment in the amounts of $34.8 million and $45.1 million, respectively. These investments across our vertically-integrated operations include further automating our glass and window assembly production lines, adding glass production lines, expanding our aluminum facilities, putting new vinyl windows lines to penetrate this new product segment and purchasing land to grow beyond current installed capacity. The Company estimates that current manufacturing operating capacity has reached approximately $1.2 billion which does not account for incremental installation revenue capacity. Additionally, the Company expects the resulting increase in output to improve efficiency throughout its operations while reducing material waste and overall lead times.
Previous wording
During the three months ended March 31, 2024, and 2023, operating activities generated approximately $33.4 million and $43.1 million, respectively. The main sources of operating cash during the three months ended March 31, 2024, were driven by an improvement in working capital associated with inventories and trade accounts receivable. Inventories generated $13.7 million, mostly due to a faster raw material and Finished goods turnover during the three months ended March 31, 2024, as main projects are being executed; compared to a net use of $13.0 million during the three months ended March 31, 2023, as we procured materials to meet our growing operations. In addition, Trade Accounts receivable generated $3.8 million, compared with a use of $8.6 million during the three months ended March 31, 2023. The largest use of cash in operating activities were other assets, comprised primarily of prepaid taxes, which used $9.2 million during the three months ended March 31, 2024, resulting from a higher taxable income year over year for fiscal year that will be paid in 2024; and trade accounts payable which used an additional $8.0 million. Comparatively, other assets used $14.3 million during the three months ended March 31, 2023, and Trade accounts receivable used $9.7 million.
Current wording
During the six months ended June 30, 2024 and 2023, operating activities generated approximately $67.9 million and $43.2 million, respectively. The main sources of operating cash during the six months ended June 30, 2024 were driven by an improvement in working capital associated with inventories and trade accounts payable. Inventories generated $14.4 million, mostly due to a faster raw material and finished goods turnover during the six months ended June 30, 2024, as main projects are being executed; compared to a net use of $15.6 million during the six months ended June 30, 2024, as we procured materials to meet our growing operations. In addition, trade accounts payable generated $12.7 million, compared with $16.2 million generated during the six months ended June 30, 2023. The largest use of cash in operating activities were taxes payable, which used $37.0 million during the six months ended June 30, 2024, resulting from taxes paid during the period, as the Colombian subsidiaries fully paid their 2023 income tax during the second quarter of 2024.
Previous wording
We used $10.2 million and $15.7 million in investing activities during the three months ended March 31, 2024, and 2023, respectively. The main use of cash in investing activities during the three months ended March 31, 2024, related to the automation of our architectural system assembly processes further described above in the “Capital Resources” section. During the three months ended March 31, 2024, we paid $9.9 million to acquire property plant and equipment, which in combination with $1.3 million acquired under credit or debt, amount to total capital expenditures of $11.2 million. During the three months ended March 31, 2023, we used $15.5 million for the acquisition of property and equipment. Including assets acquired with debt or supplier credit, total capital expenditures during the period were $20.3 million.
Current wording
We used $27.8 million and $38.1 million in investing activities during the six months ended June 30, 2024, and 2023, respectively. The main use of cash in investing activities during the six months ended June 30, 2024, was related to our recent initiatives to increase capacity and efficiency. During the six months ended June 30, 2024, we paid $30.2 million to acquire property plant and equipment, which in combination with $4.6 million acquired under credit or debt, amount to total capital expenditures of $34.8 million. During the six months ended June 30, 2023, we used $37.9 million for the acquisition of property and equipment. Including assets acquired with debt or supplier credit, total capital expenditures during the period were $45.1 million.
Previous wording
Financing activities used $16.7 million and $3.3 million during the three months ended March 31, 2024 and 2023, respectively. We paid $4.2 million and $3.6 million of dividends to holders of our ordinary shares during the Three months ended March 2024 and 2023, respectively. Additionally, during the three months ended March 31, 2024, we used $15.2 million to repay debt from our Senior Secured Line of Credit.
Current wording
Financing activities used $40.3 million and $7.8 million during the six months ended June 30, 2024 and 2023, respectively. On April 10, 2024, we paid $2,500 to Incantesimo SAS, related to the acquisition of the remaining 30% equity interest of ES Metals. We paid $9.4 million and $7.9 million of dividends to holders of our ordinary shares during the six months ended June 30, 2024 and 2023, respectively. Additionally, during the six months ended June 30, 2024, we used $31.0 million to repay debt from our Senior Secured Line of Credit and other smaller facilities.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Non-operating income and expenses, net
Current report — wording carried from elsewhere
During the six months ended June 30, 2024 and 2023, the Company recorded non-operating income of $3.8 and $2.9 million, respectively. Non-operating income for the period is comprised primarily of interest income from short-term investments, income from rental properties and gains on sale of scrap materials as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.
Current report — wording carried from elsewhere
Foreign currency transaction gains and losses
Current report — wording carried from elsewhere
During the six months ended June 30, 2024, the Company recorded a non-operating net loss of $5.7 million associated with foreign currency transactions, compared to a net loss of $0.2 million during the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Interest expense and deferred cost of financing decreased $0.5 million, or 10.5%, to $4.1 million during the six months ended June 30, 2024, from $4.6 million during the six months ended June 30, 2023, as the Company voluntarily prepaid $30 million to reduce its debt balance and benefited from having a favorable interest rate hedge in place for approximately 90% of its outstanding debt.