Tecnoglass Reports Third Quarter 2018 Results

- Raises Full Year 2018 Outlook for Total Revenues and Adjusted EBITDA¹ to a range of $360-$370 million and $79-82 million, respectively -

- Total Revenues Increase 16% to a Record $97.0 million -

- Adjusted EBITDA¹ Grows 29% to a Record $22.8 Million -

- Record Backlog of $506 Million; Up 3.6% Year-over-Year -

Third Quarter 2018 Highlights                                                                                                

• Total revenues increased 16% to $97.0 million on strong U.S. activity, marking the 6th consecutive quarter of record revenues
• Net income of $6.3 million, or $0.16 per diluted share, including non-cash FX losses during the period
• Adjusted net income¹ increased to $9.3 million, or $0.24 per diluted share, excluding non-cash FX losses and non-recurring costs in both periods
• Adjusted EBITDA¹ grew 29% to $22.8 million
• In October 2018, announced strategic alliance with Schüco USA LLLP, enabling Tecnoglass to manufacture and sell Schüco’s architectural systems in North America and Latin America

BARRANQUILLA, Colombia, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Tecnoglass, Inc. (NASDAQ: TGLS) (“Tecnoglass” or the “Company”), a leading manufacturer of architectural glass, windows, and associated aluminum products for the global commercial and residential construction industries, today reported financial results for the third quarter ended September 30, 2018.

José Manuel Daes, Chief Executive Officer of Tecnoglass, commented, "Gross margin improved to 35.8% and Adjusted EBITDA margin grew to 23.5% during the third quarter, further validating our vertically-integrated model, highly-efficient manufacturing capacity and sustainable access to talented employees. In addition, we are carefully balancing volume and price with a focus on margin enhancement as we continue to penetrate the US market. In the US, we achieved our 15th straight quarter of double-digit revenue growth year-over-year, reflecting our commitment to expanding our customer base, geographic presence, product portfolio and category exposure, including residential sales up over three times. The US represented 85% of total revenues during the quarter and is poised to remain a significant contributor to our growth trajectory based on the attractive mix of projects in backlog. In Colombia, while activity was soft during the quarter, sales were up 9% through the first nine months of 2018 and we ended the quarter with a stronger backlog in that region. Overall, we are very pleased with the continued strength of our industry-leading margin business and look forward to delivering on our upwardly revised outlook for full year 2018.”

Christian Daes, Chief Operating Officer of Tecnoglass, stated, “Commercial activity in the US remains favorable, particularly for impact-­resistant windows in coastal states and for energy-efficient architectural systems more broadly. During the past several years we have invested heavily in R&D to stay ahead of these evolving trends, allowing us to gain US market share, which we expect to continue. Our recent alliance with Schüco is another positive step, which provides us with a new global customer while also equipping us with a new suite of cutting-edge products to manufacture and sell through existing distribution networks. These top line catalysts are further supported by a more favorable pricing environment in the U.S. resulting from production and labor cost inflation for U.S based manufacturers. As we look forward, we are focused on continuous improvement across all aspects of our business, and see a range of opportunities to improve our position as a leader of high quality architectural products and innovative solutions.

Third Quarter 2018 Results

Total revenues for the third quarter of 2018 increased 16% to $97.0 million compared to $83.4 million in the prior year quarter. Foreign currency impacts for the quarter were immaterial to total revenues compared to the prior year quarter. U.S. revenues grew 20.7% to $82.2 million compared to $68.1 million in the prior year quarter, driven by stronger residential invoicing, continued healthy commercial activity, market share gains and slight pricing improvement.

Colombia revenue, a majority of which is represented by long-term contracts priced in Colombian Pesos but indexed to the U.S. Dollar, was $12.1 million compared to $13.3 million in the prior year quarter. While the Company experienced a tempered pace of invoicing in Colombia compared to the prior year quarter, the Company ended the quarter with sequential backlog growth in that region, attributable to improving bidding activity, resulting from pent-up activity and strengthening economic conditions.

Gross profit increased 27.6% to $34.7 million, representing a 35.8% gross margin, compared to $27.2 million, representing a 32.6% gross margin, in the prior year quarter. The improvement in gross margin reflected a favorable mix of higher margin products and slight pricing improvement on essentially stable raw material and labor costs per unit. Operating expenses were $19.4 million compared to $15.8 million in the prior year quarter. As a percent of total revenues, operating expenses were 20.0% compared to 18.9% in the prior year quarter, primarily due to higher ground transportation costs. Operating income increased 33.9% to $15.3 million compared to $11.4 million in the prior year quarter.

Net income of $6.3 million, or $0.16 per diluted share, compared to a net income of $6.9 million, or $0.19 per diluted share in the prior year quarter, including a non-cash foreign exchange loss in the third quarter of 2018 compared to a gain in the prior year quarter. Adjusted net income¹ improved to $9.3 million, or $0.24 per diluted share, compared to adjusted net income of $3.8 million, or $0.10 per diluted share, in the prior year quarter. Adjusted net income¹, as reconciled in the table below, excludes the impact of non-cash foreign exchange gains or losses, other non-core items and the tax impact of adjustments at statutory rates, to better reflect core financial performance.

Adjusted EBITDA¹, as reconciled in the table below, increased 29.5% to $22.8 million, compared to $17.6 million in the prior year quarter, primarily attributable to sales growth and higher gross profit.

Dividend

In September 2018, the Company declared a quarterly dividend of $0.14 per share for the third quarter of 2018, which will be paid on November 19, 2018 to shareholders of record as of the close of business on October 26, 2018.

Full Year 2018 Outlook

The Company continues to anticipate growth in construction end markets and additional market share gains for the full year 2018. Based on the Company’s performance through September 2018, it now expects to generate full year 2018 revenues in the range of $360 million to $370 million and Adjusted EBITDA in the range of $79 million to $82 million.

Conference Call

Management will host a conference call on Wednesday, November 7, 2018 at 10:00 a.m. eastern time (10:00 a.m. Bogota, Colombia time) to review the Company’s results. The conference call will be broadcast live over the Internet. Additionally, a slide presentation will accompany the conference call. To listen to the call and view the slides, please visit the Investor Relations section of Tecnoglass' website at www.tecnoglass.com. Please go to the website at least 15 minutes early to register, download and install any necessary audio software. To participate by telephone, please dial:

• (877) 705-6003 (Domestic)
• (201) 493-6725 (International)

If you are unable to listen live, a replay of the conference call will be archived on the website. You may also access the conference call playback by dialing (844) 512-2921 (Domestic) or (412) 317-6671 (International) and entering pass code: 13684082.  

About Tecnoglass

Tecnoglass Inc. is a leading manufacturer of architectural glass, windows, and associated aluminum products for the global commercial and residential construction industries. Tecnoglass is the #1 architectural glass transformation company in Latin America and the second largest glass fabricator serving the United States. Headquartered in Barranquilla, Colombia, the Company operates out of a 2.7 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to the Americas, the Caribbean, and the Pacific. Tecnoglass supplies over 900 customers in North, Central and South America, with the United States accounting for more than 70% of revenues. Tecnoglass' tailored, high-end products are found on some of the world’s most distinctive properties, including the El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), and Salesforce Tower (San Francisco). For more information, please visit www.tecnoglass.com or view our corporate video at https://vimeo.com/134429998.

Forward Looking Statements

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Tecnoglass’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Tecnoglass’ business. These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass’ filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that Tecnoglass’ financial results in any particular period may not be indicative of future results. Tecnoglass is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events and changes in assumptions or otherwise, except as required by law.

[1] Adjusted net income and Adjusted EBITDA in both periods are reconciled in the table below.

Tecnoglass Inc. and Subsidiaries
Consolidated Balance Sheets
 (In thousands, except share and per share data)
(Unaudited)

Tecnoglass Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
 (In thousands, except share and per share data)
(Unaudited)

Tecnoglass Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 (In thousands)
(Unaudited)

Revenues by Region
(Amounts in thousands)
(Unaudited)

Reconciliation of Non-GAAP Performance Measures to GAAP Performance Measures
(In thousands)
(Unaudited)

The Company believes that total revenues with foreign currency held neutral non-GAAP performance measures, which management uses in managing and evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, these non‑GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States.

Currency impacts on total revenues for the current quarter have been derived by translating current quarter revenues at the prevailing average foreign currency rates during the prior year quarter, as applicable.

Reconciliation of Adjusted EBITDA and Adjusted net (loss) income to net (loss) income
(In thousands, except share and per share data)
(unaudited)

Adjusted EBITDA and adjusted net (loss) income are not measures of financial performance under generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA and adjusted net (loss) income, in addition to operating profit, net (loss) income and other GAAP measures, is useful to investors to evaluate the Company’s results because it excludes certain items that are not directly related to the Company’s core operating performance. Investors should recognize that Adjusted EBITDA and adjusted net (loss) income might not be comparable to similarly-titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP.

Reconciliations of the non-GAAP measures used in this press release are included in the tables attached to this press release, to the extent available without unreasonable effort. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures.

A reconciliation of Adjusted EBITDA and Adjusted net (loss) income to the most directly comparable GAAP measure in accordance with SEC Regulation G follows, with amounts in thousands:

Investor Relations:                                                                                                                        

Santiago Giraldo
CFO
305-503-9062
investorrelations@tecnoglass.com