Tecnoglass Inc

Previous wording

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 wording

Operating expenses increased $12.0 million, or 40.7%, from $29.5 million to $41.5 million for the quarters ended September 30, 2023 and 2024, respectively. The increase resulted primarily from higher administrative and selling expenses to support a larger operation and ongoing geographical expansion over the US market, as well as inflation adjusted increases on administrative expenses such as salaries and others.

Previous 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.

Current wording

During the three months ended September 30, 2024 and 2023, the Company recorded net non-operating income of $1.4 million and $0.6 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 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.

Current wording

During the three months ended September 30, 2024, the Company recorded a non-operating gain of $0.9 million associated with foreign currency transactions compared to a net non-operating gain of $1.1 million during the three months ended September 30, 2023.

Previous 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.

Current wording

Interest expense and deferred cost of financing decreased $0.5 million, or 22.1%, to $1.8 million during the quarter ended September 30, 2024, as the Company voluntarily prepaid $47.0 million during the year to reduce its debt balance and benefited from having a favorable interest rate hedge in place for 100% of its outstanding syndicated debt after giving effect to the voluntary prepayments.

Previous wording

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 wording

The effective income tax rate of 28.7% and 25.1% for the three months ended September 30, 2024, and 2023, respectively, are below the average statutory rates of 31.1% and 33.1% during each of those periods, respectively, as the proportion of our taxable income shift jurisdictions resulting from new developments of our product designs, trademarks and other intellectual property rights.

Previous 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.

Current wording

As a result of the foregoing, the Company recorded net income for the three months ended September 30, 2024, of $49.5 million compared to net income of $46.1 million for the three months ended September 30, 2023.

Previous wording

Comparison of six-month periods ended June 30, 2024 and 2023

Current wording

Comparison of nine-month periods ended September 30, 2024 and 2023

Previous wording

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 wording

Gross profit during the nine months ended September 30, 2024, was $273.5 million, a decrease of $34.5 million, or 11.2%, from $308.0 million during the nine months ended September 30, 2023. The gross profit margin during the nine months ended September 30, 2024, decreased to 42.0% from 48.2% during the nine months ended September 30, 2023, primarily related to a 9.8% 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 higher salaries which were adjusted at the beginning of the year and higher headcount to adjust for ongoing growth.

Previous wording

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 wording

Operating expenses increased $14.9 million, or 15.0%, from $98.8 million to $113.6 million for the nine months ended September 30, 2023 and 2024, respectively. The increase was mainly driven by administrative salary adjustments, operating headcount increase, and a negative effect in COP denominated amounts related to a 9.8% appreciation of the Colombian Peso against US Dollar over the period.

Previous wording

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 wording

During the nine months ended September 30, 2024 and 2023, the Company recorded non-operating income of $5.2 and $3.5 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.

Previous wording

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 wording

During the nine months ended September 30, 2024, the Company recorded a non-operating net loss of $4.9 million associated with foreign currency transactions, compared to a net gain of $0.9 million during the nine months ended September 30, 2023.

Previous wording

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.

Current wording

Interest expense and deferred cost of financing decreased $1.0 million, or 14.4%, to $5.9 million during the nine months ended September 30, 2024, from $6.9 million during the nine months ended September 30, 2023, as the Company voluntarily prepaid $47.0 million to reduce its debt balance and benefited from having a favorable interest rate hedge in place for 100% of its outstanding debt.

Previous wording

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 wording

The effective income tax rate of 27.6% and 30.1% for the nine months ended September 30, 2024, and 2023, respectively, are below the average statutory rates of 31.1% and 33.1% during each of those periods, respectively, as the proportion of our taxable income shift jurisdictions resulting from new developments of our product designs, trademarks and other intellectual property rights.

Previous wording

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.

Current wording

As a result of the foregoing, the Company recorded a net income for the nine months ended September 30, 2024 of $114.3 million compared to $147.0 million for the nine months ended September 30, 2023.

Previous 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.

Current wording

As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $122.1 million and $129.5 million, respectively. Additionally, we currently have approximately $175.0 million available under different lines of credit.

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 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.

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 nine months ended September 30, 2024 and 2023, we made investments primarily in building and construction and machinery and equipment in the amounts of $59.4 million and $73.8 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 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.

Current wording

During the nine months ended September 30, 2024, and 2023, operating activities generated approximately $109.4 million and $94.5 million, respectively. The main sources of operating cash during the nine months ended September 30, 2024, were driven by contract assets and liabilities, and trade accounts payable. Contract assets and liabilities generated $15.9 million during the nine months ended September 30, 2024, mostly due to an increase in billings in excess of costs, as main projects are being executed, and large projects from our backlog are starting operations; compared to $13.1 million generated during the nine months ended September 30, 2023, as we executed on our growing backlog. In addition, trade accounts payable generated $10.1 million during the nine months ended September 30, 2024 mainly as a result of our growing operation, while our days payable outstanding remain moderately stable and decreasing year over year, compared with $8.4 million generated during the nine months ended September 30, 2023. The largest use of cash in operating activities was trade accounts payable, which used $38.8 million in the nine months ended September 30, 2024, compared with a use of $10.4 million during the prior year period, driven by a pick up in pace of large commercial installation jobs during the third quarter of 2024, which entail longer cash cycles. Additionally, taxes payable used $22.2 million during the nine months ended September 30, 2024, resulted from taxes being paid during the period, as the Colombian subsidiaries fully paid their 2023 income tax during the second quarter of 2024.

Previous 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.

Current wording

We used $51.5 million and $62.5 million in investing activities during the nine months ended September 30, 2024, and 2023, respectively. The main use of cash in investing activities during the nine months ended September 30, 2024 was related to scheduled payments on previous investments to increase capacity and efficiency as well as new investments in land and equipment. During the nine months ended September 30, 2024, we paid $53.9 million to acquire property plant and equipment, which in combination with $5.5 million acquired under credit or debt, amount to total capital expenditures of $59.4 million. During the nine months ended September 30, 2023, we used $62.2 million for the acquisition of property and equipment. Including assets acquired with debt or supplier credit, total capital expenditures during the period were $73.8 million.

Previous 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.

Current wording

Financing activities used $63.4 million and $20.9 million during the nine months ended September 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 $14.6 million and $12.2 million of dividends to holders of our ordinary shares during the nine months ended September 30, 2024 and 2023, respectively. Additionally, during the nine months ended September 30, 2024, we used $49.0 million to repay debt from our Senior Secured Line of Credit and other smaller facilities.