To parse out the company’s success, and hopefully get a glimpse of what is to come for the company and its stakeholders, Loren Moss, Finance Colombia’s executive editor, traveled to the sprawling manufacturing complex of the company, near the waterfront where the Magdalena river exits into the Caribbean sea.

There, he had an in-depth conversation with Santiago Giraldo, the CFO of Tecnoglass, who has shepherded the company’s finances and investor relations through its growth from a micro-cap to a small-cap, to now, a mid-cap international company with global ambitions.

Finance Colombia: So, I’m here with Santiago Giraldo the CFO of Tecnoglass; great, to be back here and see you again. I know it’s been a busy year. I don’t want to come up here and interrupt you when you guys are busy growing and breaking records; continuing to break records. It’s amazing what you guys have done. Your results came out just last week for 2022 and it’s kind of it’s hard for me to write headlines as a journalist, because it’s like: Tecnoglass, breaks records…Tecnoglass breaks records…It is like a broken record itself because I keep saying the same thing over and over again, but that’s a good problem to have! So, give me a quick recap on 2022. I mean, you guys—I know a couple of years ago, you really entered in a strong way, the residential market, that was not something that Tecnoglass was originally built on. But that’s been a big motor for your growth. Maybe if you can unpack that little bit?

Santiago Giraldo: Absolutely, it was a record year and well beyond expectations, internal budget and everything that we had thought. And there were several factors that contributed there. You mentioned the residential segment, we basically have grown that from just $10 million dollars in 2017 to over $300 million in 2022. It’s been accelerated growth. We’re taking market share from others but also it helps that places like Florida and Texas in the southeast, tax-friendly states are seeing a lot of influx of people moving down there. So the activity behind the demographic shift that we’re seeing is playing a huge part into what we’re doing. So there’s just other secular trends, there’s demographic trends but there’s also other things that are playing a part. There’s tax incentives provided by the government for people to invest in impact resistant windows. There have been insurance incentives. For insurance companies, providing incentives to people that replace their windows to make sure that they are impact resistant as well.

Tecnoglass has a 3 million square foot headquarters and production facility in Colombia’s Atlantic port city of Barranquilla

So there’s been a combination of things that have helped us grow and take market share from others, we are situated in a different scenario if you will, as far as what’s taking place in the world with inflation, headwinds with supply chain disruptions, we labor constraints. As you can see here in Barranquilla, we pretty much do everything in-house, we are fully vertically integrated. And we haven’t had the same dynamics as far as labor constraints. As you know here in Colombia the unemployment rate runs above 12% and we have very little turnover. So all of those factors plus the fact that we have our good product with good quality and fast delivery times really lined up. It’s as if all the stars lined up for us and what you saw were the results as of 2022, where we were able to grow 44 percent. So there’s just not one factor that I could speak of, I mean, there are different things that basically played a huge part into what happened.

Finance Colombia: You know, it’s interesting because we saw interest, we see interest rates around the world, kind of rising. There’s been a lot of loose money policies with governments to fight the COVID pandemic. And now, we’re seeing the aftereffects of that. And the US government, of course, has raised their rates and we see as a result mortgage rates are going up. I would imagine that has—Have you seen any kind of damper effect on that because obviously mortgages rates…construction is very dependent upon them?

Santiago Giraldo: Yeah, it’s a headwind but if you look within our sales, roughly 67 to 70 percent of what we do is repair and remodeling. So we’re not relying on home builders, we’re not relying on new housing starts.  For that business to grow—I mean there’s obviously some correlation but when you think about it, repair and remodeling is more countercyclical in nature. In other words, if you’re at your house and you see that mortgage rates went up to 7%, you’re not going to go buy a new house and lock yourself up for 30 years into that rate. You’re more likely going to reinvest in your own home, knowing that prices are still high and then mortgage rates are much higher than what they were a year ago. So that plays into what we do because if you’re staying in your home and you’re carrying out some of those remodelings that you pushed out for years, that includes windows.

“…we basically have grown that from just $10 million dollars in 2017 to over $300 million in 2022.

So 70 percent of our windows or of our business is related to repair and remodeling. So that places us apart. The other thing is that we’re still rather small. If you think about it, we don’t need the market to grow or the industry to grow for us to grow, right? I mean if you think about our largest competitor in the state of Florida that they sell about $100 million. Here we are, you know, just getting north of $300 million which is rapid growth but we’re still nowhere close to the larger players in the state and in the country.

So there are still market share opportunities for us to take from these guys because those guys are constrained by labor are constrained by headwinds on inflation. There’s still supply chain disruptions. So we have an opportunity to continue gaining that market share. Despite the fact that as you mentioned, there are some challenges mainly on the new home construction side, which is still not the primary source of our income.

Finance Colombia:  Got it. And also, I mean, to mention the relative size of Tecnoglass, even though it’s one of the biggest companies in Colombia, I think the last time I saw the statistics you still had less than one percent market shares in the United States or something like that. So there’s so much room to grow and like you said, you don’t need—the market doesn’t have to grow for Tecnoglass to grow, you’re not even distributed in all 50 states yet.

Santiago Giraldo: That’s right. I mean that the industry as a whole is about $32 billion per year between manufacturing and installation. We ended up here s$770 million more or less. So we’re talking about, call it two percent, right? Obviously not everything is addressable because a lot of it is commoditized; its kind of like your typical big box store type project which we don’t supply. Everything that we do is built to suit, high value-added components. So that is not necessarily addressable, but by our calculation, at least $20 billion of that is addressable and another $700 million. We are still a small portion of the business like you mentioned, we are pressing throughout the US on the commercial side. We’ve been doing business throughout the US pretty much for the last 25 years, right? Obviously much stronger in the state of Florida and the southeast. So, there’s opportunities to grow the commercial side, but where the upside comes from is that we still haven’t tapped into anything outside of Florida on the residential side.

 “It’s as if all the stars lined up for us and what you saw were the results as of 2022, where we were able to grow 44%”

So, that $300 million that I mentioned on that segment is strictly Florida. So what we’re doing about that is opening up showrooms throughout the US so we can leverage our cost efficient platform to manufacture in Colombia and ship everywhere else in the US, and we have a showroom that is currently open in Manhattan, New York. We have a showroom that is currently open in Charleston, South Carolina. We’re about to sign a lease in California in Los Angeles to service that market, and the idea would be to open up showrooms in Texas, Arizona, and Nevada in the rest of 2023 and into 24. Right now, we have zero revenues in those states, anything that we get from there is outside, right? So you’re going from nothing to something. And we have the same competitive advantages that we have in Florida. They also play the same way in different parts of the US. Transportation is not an issue, right? We know that there is a trade imbalance between the US and Colombia. There are a lot more containers coming in than there are going out. So going into New York and even going to California through the Panama Canal is still efficient so we can penetrate those markets just the same as we have done in Florida. So that’s what we want to do.

Finance Colombia:  You mention something interesting and you talk about the trade imbalance between Colombia and the United States. I know that there’s a trade imbalance with some other countries as well, but right now, it’s recovered a little bit, but the peso last year took quite a dump. Especially, I think a lot of it was around election-related uncertainty that’s kind of, you know, built into the pricing now, but how much—in a lot of countries you know, the travel sector we follow closely and they’ve really taken a hit because of that, but I would imagine that it’s been helpful as a company that manufactures in Colombia because of labor and because of other costs, how much of a factor has the peso dollar relationship been in last year’s results?

Santiago Giraldo: That’s maybe the one aspect that we didn’t touch when I said earlier the stars lined up, obviously you don’t want your strategy to be predicated on what happens with the FX rates. But for us, when you’re selling 95 percent more or less, in US dollars and your cost and expenses are roughly 35-40 percent in the Colombian Peso, then anytime that the currency is devaluated and is weak, it’s a tailwind to the business, right? To the piece, a Tailwind to the P&L. So for us, what happened here over a year with the devaluation of the peso, I don’t think as a country we want to see that, obviously because of inflation and different dynamics of what’s taking place right now. But if you look at Tecnoglass, on a standalone basis it is hugely positive for the company and for P&L. We think that the currency is going to continue to be weak for the time being I think. As you mentioned some of it is related to what happened with the elections and some investors’ fears around that, I think that up until last week. I think that that was kind of coming down and the peso was revaluated again.

Above photo: Tecnoglass products make up the facade of distinctive architecture such as Fordham University (photo courtesy of Tecnoglass)

But aside from that, I think worldwide what you’re seeing from monetary policy, especially with the Fed continuing to raise rates and apparently, they’re not done yet, that’s keeping a lot of emerging market currencies low, and that’s going to be the case for the foreseeable future. So, that’s playing a part, it is definitely helping out and in is also helping  to be able to kind of price competitively if you need to, because you know that you have that extra cushion to do that. It hasn’t come to that.

I mean we expected prices to calm down a bit because input prices have come down since the peaks of the pandemic. Aluminum was at $4,000 dollars per ton, now it is at $2,400. So those sort of things would lead you to believe…I believe that pricing is going to come down. That hasn’t happened yet. I think our competitors are still seeing a lot of inflation. Wage inflation continues to be prevalent. So we’ll see what happens with that. But so far, you know, we continue to be able to hold pricing and selling in dollars, is just a huge plus.

Finance Colombia: That’s great. Now I’m talking to you here in your new showroom, we are at your headquarters, your operational headquarters in Barranquilla, and I didn’t see this before the last time I was here. And it’s really nice because I thought I had…I mean, I’m no architect or glass expert, but I thought I had a good idea of your product line, but really, I see it’s even more expansive than I thought. And this is a great idea to be able to show it and you make sure that you have these showrooms. Now, you’re building them throughout the United States. I know that the product is very efficient when it comes to solar energy, but in all the new showrooms you mentioned, don’t forget about the Midwest as you guys grow, I’m a Midwesterner! But still, you know, as you build out this this infrastructure to be able to showcase the products and things like that, you also mentioned 44 percent growth. Now you own your own factories, you own your facilities down here, but tell me about what kind of Investments, tell me about the capital Investments that you’re making to be able to keep up and to stay ahead of demand. So that you want your backlog to grow because you get new orders, but you don’t want your backlog to grow because you’ve exceeded capacity.

Santiago Giraldo: Yes. And I think that’s been the biggest challenge when people ask: what keeps you up at night? I think (COO & co-founder) Christian has been up at night the last two years because of the need to address that growth. Because to be honest with you, not only have we benefited from all the factors that we just discussed, but there’s such a shortage of windows as with anything else right now. Obviously,  the lead times have become longer, there’s such a shortage of windows, we have been getting kind of a proactive approach, but some of these potential clients that we wanted to go after, that are looking for us to be their providers. But when you have that and you have the demand in place, but you have to be able to make sure that you are able to address that demand.

And the only thing that you can do is basically invest in capex, to grow your footprint, to grow your operational capacity. And through the last two years, we have invested almost $125 million in growth capex to be able to get the factory where it is today, with the investments that we are completing right now. We are going to have operational capacity to get to $950 million, that’s going to be by April or May of this year, and we’ve been investing in land, investing in warehouse space.

We have been investing in automation. I mean, automation is a huge benefit whereas some of our lines were not automated. Now, we have four out of ten, eleven lines that are fully automated and that brings benefits from an operational capacity perspective but also It allows us to redeploy some headcount to other areas. It reduces material waste. So is what we’re doing right now and we’re having to assess what that’s going to look like essentially on a month-to-month basis because $950 million in operational capacity sounds like a lot, but if for whatever reason we are able to grow in a similar fashion as we did last year, we will be tapping against that capacity already.

So, we have to be very vigilant. The good thing is that mainly on the commercial side, you get a lot of leeway and you get some visibility as to what things are going to look like because anything that you booked into the backlog, today tells you what the activity is going to look like 12, 18 months out. So if we can continue growing, the pipeline grows in the backlog. We know that we’re going to have our hands full down the road. And we need to invest in capacity today, and that’s the main concern, because that brings a lot of challenges, right? You’re stressing the factory, you’re becoming more complex and logistically you’re travelling to many different—more places and that creates some challenges of its own. But hey, as you said earlier, it’s a good problem to have.

Finance Colombia: Now last year, we celebrated, your jump, if you will, from NASDAQ to the New York Stock Exchange. That’s an interesting move, because NASDAQ NYSE, of course, is the granddaddy of the exchanges at least in North America, opening I think in the late 1700s, it is in many ways the most prestigious of the exchanges. NASDAQ also has matured, it used to be kind of…well there used to be like three exchanges back in the old days, you remember. But still, that was an interesting move because companies don’t necessarily need to make that move. But you guys felt the need to do that. Maybe if you can, if you can recap what was behind that decision and then it was kind of a mid-year thing. How it’s been for you so far?

“We’re not making decisions for the next quarter, or the quarter after. I mean, I think we’re making sound decisions in line with our strategy, to make sure that this company is something much larger, bigger, better in 10 years to come, not necessarily what’s happening next quarter.”

Santiago Giraldo: You mean NYSE who was the granddaddy, you said NASDAQ just to just to clarify.

Finance Colombia: Yeah, I got confused!

Santiago Giraldo: So we made the move there to get more exposure right? I mean it’s obviously a broader audience. We also wanted to get more liquidity in the stock. if you look at what’s happening with liquidity we’re trading over $10 million dollars per day, 250,000 shares more or less on a daily basis, so we wanted to get that platform to be able to get to new faces, be able to be able to tap into in into new investors. You also get what’s called a market maker, which for us is the Citadel, which makes sure that there’s always going to be kind of a buying order a selling order and that helps with liquidity so it’s been good. It’s been a good relationship; obviously nothing but good things to say about NASDAQ. We started there 10 years ago, and they provided a great platform as well. They’re obviously very—kind of tech focused and I think they’re the best at it, but we felt that this was a good fit for Tecnoglass at a good point in time when the company continues to mature and become larger. Now today we can be considered a mid-cap company. Yeah you know, starting out from a micro-cap to a small-cap, now today we’re technically a mid-cap company and we can potentially get onto new investors’ radars, so we wanted to do all of that.

Finance Colombia: That’s great, you know, I got confused because in my mind I was thinking back to…I’m old enough to remember the American Stock Exchange because there was the ASE and NYSE and then NASDAQ came in, and ASE then merged with NYSE. So it’s kind of an old timer’s thing! But anyway, speaking of new markets: So tell me I mean Tecnoglass continues to expand throughout the United States, you’ve gone from residential—or from commercial into, expanding into residential—still, keeping commercial strong, but talking about new markets: what kind of new products; whether that’s new lines of business, or new types of products or even any new geographies outside of the United States…I don’t want to kind of lead the question. Just help me understand how you’re expanding. Not just in growth, in terms of vertical silos, but horizontally in terms of the breadth of your product lineup.

Santiago Giraldo: Yeah. This is a day-to-day occurrence. Last year we…earlier last year we basically developed a product for home builders called Multimax, which is essentially a product that is not targeted to a couple of million dollar home but maybe a Tract home that could be $300-400,000 dollars; very high quality, but not the same kind of value-added components that you will require for some of these larger homes, right?, So that’s been very well received, we’re already selling to seven or eight different home builders that have nationwide reach within the US, so that’s been very well received.

And we continue, we continuously invest in research and development, to make sure that we are developing products for new geographies; we mentioned earlier that we’re opening up showrooms throughout the US. Well, if you think about it, not all of those geographies require impact-resistant glass and windows,

When you’re talking about Miami it’s not the same thing as talking about selling a home in Los Angeles or selling a home in Arizona. All of those places require different products that are more specific to the conditions of those places. So for instance if you look to go into Arizona, where there’s extreme heat at some points of the year you’re going to look more for insulated glass that has some energy efficient qualities. So, there’s always product developing and you know we’re working on new technology for glass that is going to serve as solar panels for instance.

We’re working with different providers that have that technology so we can license that product and make sure that when the product becomes economically viable for mass production, kind of like the Tesla effect, that we are there. We want to make sure that we are present in that because that’s going to be a huge development. We’re working on other things that we should be announcing within the next couple of months, but it’s an ongoing process. You want to make sure that you’re up on top of what’s happening, and you’re not lagging behind.

Finance Colombia: You know, I hope to get back up here soon and talk to Christian, the co-founder and CEO of the company. You know, you guys have solar panels on everything, and I hope to talk about…Tecnoglass has a very significant social mission here, especially on the coast, here in Barranquilla which is like the industrial capital in many ways, of all of Colombia, but especially here on the coast, and there’s so much to talk about! Some of the things you’re doing here in the community as well, I hope to talk to Christian soon about that.

Is there anything that maybe you wanted to mention that I forgot to ask you? I mean there’s so much good news to cover, and it’s just good to be back up here and it’s exciting. You know, every time I get my on my phone I get my alerts and the stocks I follow, and no matter what other bad news is happening, I can count on some good news coming from TGLS.

Santiago Giraldo: I hope that continues to be the trend. I mean it’s kind of like, investors and all stakeholders tend to have short memories, right? Short term memory, so it’s like yeah you might come out with great news as we just did, but we’re already looking as to what we’re doing for the next quarter, the next year and the next decade.

That’s the good thing about Christian and (CEO) Jose. I think they’re looking for this company to be something much bigger in five, ten years out. We’re not making decisions for the next quarter, or the quarter after. I mean, I think we’re making sound decisions in line with our strategy, to make sure that this company is something much larger, bigger, better in 10 years to come, not necessarily what’s happening next quarter and how we’re going to report results.

I think that if you do that and you stick to your strategy, those things are going to come. The quarter to quarter results are going to come, so we’ll see. I mean, more to come. We continue to be bullish about the future; short-term and long-term, despite all the uncertainties in the world. Obviously from a macro perspective, there’s a lot of challenges, but we feel that we’re well positioned, we feel that we have structural advantages that will carry us through and we’re well positioned to withstand a down cycle if that was to come, so hopefully the news will continue to come. And next time you see an alert, despite what’s happening in the world you’ll get a smile on your face.

Finance Colombia: You know, you try to be as balanced as possible but it’s really always exciting to come up here, and talk to you guys, because not just what you can see in the financial results, but what you can see in the community and what you can see in the different things make it really…it’s literally fun to cover Tecnoglass, and it’s great to see the good things that you’re doing for investors, for the consumers of your product, and for the community here in Barranquilla.

Santiago Giraldo:  Yeah and hopefully, do follow up with Christian, because there’s so much, so many things to tell about ESG, about what we’re doing for the community. I’m obviously not going to steal his thunder and let him talk through all of that. But it’s been nice that not only is the company doing well, but the company gives back to the community. Now we are almost 10,000 employees, you know last time we talked I think we were maybe 6,000, so we’re generating a lot of employment, good employment for the local communities, and I think that’s going to continue so far as we can continue growing. You know it’s not the point that the company is doing well, you also want to see your environment and stakeholders doing well.

Finance Colombia: Absolutely. Well, Santiago Giraldo, the CFO of Tecnoglass, always a good “parcero,” (Colombian slang for a great friend) it’s great to talk to you in in Barranquilla and continue the success that you’re having and as I’m sure you will.

Santiago Giraldo: Thank you so much and come back anytime

Tecnoglass has international headquarters in Barranquilla, Colombia, and facilities in Miami, Florida

Total revenues for the full year 2022 increased 44.2% to a record $716.6 million compared to $496.8 million in the prior year. Changes in foreign currency exchange rates had a negligible impact on total revenues in the year.

Gross profit increased 72.5% year-over-year to a full year record of $349.5 million, representing a 48.8% gross margin, compared to $202.6 million, representing a 40.8% gross margin, in the prior year. Operating income for the full year 2022 was $226.4 million compared to $117.0 million in the prior year. Net income for the full year 2022 was $156.4 million, or a $3.28 per diluted share, compared to net income of $68.4 million, or $1.44 per diluted share, in the prior year. Adjusted net income¹ for the full year 2022 was $158.5 million, or $3.32 per diluted share, compared to $82.7 million, or $1.74 per diluted share, in the prior year. Adjusted EBITDA¹ for the full year 2022 improved to a record $265.7 million, or 37.1% of sales, compared to $150.3 million, or 30.2% of sales, in the prior year.

To view the Tecnoglass Q4 investor presentation, click here.

Investing in technology

During 2022, the company initiated enhancements at its glass and aluminum facilities to increase production capacity and automate operations. The company was successful in increasing installed production capacity to an amount equivalent to over $800 million of annual sales at the end of 2022, which is expected to be followed by a further expansion of installed production capacity to an amount equivalent to approximately $950 million of annual sales by the end of the second quarter of 2023.

Optimism for 2023

Tecnoglass CFO Santiago Giraldo explained: “Based on our current invoicing schedule and strong demand for our architectural glass products, we are pleased to introduce our full year 2023 outlook for revenues to grow organically to a range of $790 million to $830 million (approximately 13% at the mid-point of guidance) and for adjusted EBITDA to increase to a range of $300 million to $320 million. This implies adjusted EBITDA growth of approximately 17% at the midpoint. We believe the investments we have made in our production capabilities and structural advantages stemming from our vertically integrated platform will continue to help us drive above market growth and exceptional profit performance, allowing for continued strong cash flow generation in the full year 2023. Based on the board’s confidence in our projected performance and expected cashflow, we will continue to actively pursue effective ways to generate value for shareholders through growth investments, return of capital to shareholders and other value-enhancing actions.”

Strong Fourth Quarter Finish

Total revenues for the fourth quarter of 2022 increased 60.2% to $211.1 million compared to $131.8 million in the prior year quarter, driven by an increase in the company’s commercial activity, strong growth in single-family residential activity and market share gains. Single-family residential revenues increased approximately 59% year-over-year, representing 40.3% of total revenues for the fourth quarter, helped by market share gains and the continued positive demographic dynamics in our main markets. Changes in foreign currency exchange rates had an adverse impact of $0.6 million on both Colombia revenues and total revenues in the quarter.

“Our record fourth quarter results reflect an exceptional finish to another year of above market performance led by the focused execution of our dedicated team members and the resiliency of our vertically integrated business model. We continue to benefit substantially from our previously implemented high return automation and capacity enhancements, which contributed to record gross profit and Adjusted EBITDA for the quarter and full year. Additionally, our prudent working capital management and market share gains in our shorter cash cycle single-family residential business helped generate our 12^th consecutive quarter of robust cash flow. Our strong capital position has given us the flexibility to invest in further structural enhancements, increase our cash dividend, and improve our leverage profile with net debt to Adjusted EBITDA now at a record low 0.2x for full year 2022. As we look to 2023 and beyond, we remain confident in our ability to strengthen our existing customer relationships and expand our market share through geographical diversification, innovation, quality and stable lead times to produce another year of strong financial performance and returns for our shareholders,” said CEO and co-founder José Manuel Daes.

Gross profit for the fourth quarter of 2022 nearly doubled to $110.2 million, representing a 52.2% gross margin, compared to gross profit of $56.6 million, representing a 42.9% gross margin in the prior year quarter. The 930 basis-point improvement in gross margin mainly reflected operating leverage on higher sales, favorable pricing dynamics, greater operating efficiencies related to automation and a favorable FX trend given the recent depreciation of the Colombian peso. Selling, general and administrative expense (“SG&A”) was $33.4 million for the fourth quarter of 2022 compared to $23.7 million in the prior year quarter, with the majority of the increase attributable to higher shipping expenses as a result of a higher sales volume, higher shipping rates and a higher mix of sales going into the more fragmented single-family residential market. As a percent of total revenues, SG&A was 15.8% for the fourth quarter of 2022 compared to 18.0% in the prior year quarter with operating leverage more than offsetting higher transportation costs.

COO Christian Daes added: “Building on our solid momentum throughout 2022, we were pleased to produce record results for the fourth quarter and full year. This was largely attributable to our multi-year efforts to deepen our presence in the highly profitable single-family residential end markets in combination with capitalizing on rebounding commercial activity. Overall quoting and bidding activity in our markets remains strong and our record backlog position of $725 million puts us on solid footing with visibility on projects in our multifamily and commercial project pipeline into 2024. As we look forward, we remain committed to gaining additional share and expanding our geographic presence in single-family residential by advancing our product innovation, opening additional show rooms and doing our part to keep our customers on schedule with their projects. We believe these factors, along with our strong industry relationships and structural competitive advantages through our vertically integrated platform, collectively position us well to create additional shareholder value in 2023 and years ahead.”

Net income was $55.1 million, or $1.16 per diluted share, in the fourth quarter of 2022 compared to net income of $19.8 million, or $0.42 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction gain of $2.9 million in the fourth quarter of 2022 and a $4.6 million loss in the fourth quarter of 2021. As previously disclosed, these non-cash gains and losses are related to the accounting re-measurement of U.S. Dollar denominated assets and liabilities against the Colombian Peso as functional currency.

More cash, less debt

Tecnoglass ended 2022 with total liquidity of approximately $270 million, including cash and cash equivalents of $103.7 million and availability under its committed revolving credit facilities of $170 million. Given the company’s continued growth in Adjusted EBITDA and strong cash generation, debt leverage continues to trend lower and now stands at 0.2 times net debt to LTM Adjusted EBITDA, compared to 0.8 times in the prior year.

The company declared a quarterly cash dividend of $0.075 per share for the fourth quarter of 2022, which was paid on January 31, 2023 to shareholders of record as of the close of business on December 31, 2022.

Investor Conference Call

This morning, March 2, 2023 at 10am (NY & Bogotá time), Tecnoglass will host a webinar and conference call 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. For those unable to access the webcast, the conference call will be accessible by dialing 1-877-269-7751 (domestic) or 1-201-389-0908 (international). Upon dialing in, please request to join the Tecnoglass Fourth Quarter 2022 Earnings Conference Call.

If you are unable to listen live, a replay of the webcast will be archived on the website. You may also access the conference call playback by dialing 1-844-512-2921 (Domestic) or 1-412-317-6671 (International) and entering passcode: 13735775.        

Gross profit for the third quarter of 2022 nearly doubled to $105.3 million, representing a 52.2% gross margin, compared to gross profit of $51.5 million, representing a 39.2% gross margin in the prior year quarter. The 1,300 basis point improvement in gross margin mainly reflected operating leverage on higher sales, favorable pricing dynamics, greater operating efficiencies related to automation and a favorable FX trend given the recent strengthening of the US Dollar. Being a company with Colombian operations, the precipitous fall in the peso creates significant cost advantages for exporters like Tecnoglass.

Selling, general and administrative expense (“SG&A”) was $35.2 million compared to $21.7 million in the prior year quarter, with the majority of the increase attributable to higher shipping expenses as a result of a higher sales volume and higher shipping rates. Additionally, the company incurred a one-time settlement expense related to a project contracted in 2016 that is now fully resolved. As a percent of total revenues, SG&A was 17.4% compared to 16.5% in the prior year quarter. Excluding the settlement, SG&A as a percent of total revenues improved by 180 basis points compared to the prior year quarter.

“The structural enhancements in our business, our diversified revenue mix, and our prudent working capital management have helped us generate 11 straight quarters of exceptional cash flow. Based on the Board’s confidence in our strategy and cash generation, we are pleased to announce today the authorization of a new $50 million share repurchase program as an additional avenue to build value in our Company. As we move forward, we believe our structural advantages and highly profitable growth strategy will allow us to continue generating exceptional cash flow as we look to deliver value for our shareholders,” said CEO José Manuel Daes.

Net income was $46.9 million, or $0.98 per diluted share, in the third quarter of 2022 compared to net income of $20.7 million, or $0.43 per diluted share, in the prior year quarter, including a non-cash foreign exchange transaction loss of $0.5 million in the third quarter of 2022 and a $0.2 million gain in the third quarter of 2021. These non-cash gains and losses are primarily related to the accounting re-measurement of U.S. Dollar denominated assets and liabilities against the Colombian Peso as functional currency.

Adjusted EBITDA more than doubled to $78.5 million, or 38.9% of total revenues, in the third quarter of 2022, compared to $38.5 million, or 29.2% of total revenues, in the prior year quarter. The improvement was driven by higher sales and a stronger gross margin. Adjusted EBITDA included a $0.9 million contribution from the  joint venture with Saint-Gobain, compared to $0.8 million in the prior year quarter.

Tecnoglass ended the third quarter of 2022 with total liquidity of approximately $255 million, including cash and cash equivalents of $84 million and availability under its committed revolving credit facilities of $170 million. Given the continued growth in adjusted EBITDA and strong cash generation, debt leverage continues to trend lower and now stands at 0.4 times net debt to LTM adjusted EBITDA, compared to 0.9 times in the prior year quarter.

“We are extremely pleased with our ability to produce another quarter of record results and above market growth. Our results reflect our ability to capitalize on strengthening commercial activity in attractive high growth markets in addition to capturing solid demand and share gains through the expansion of our single-family residential business. Our track record of successfully delivering high profile projects and maintaining superb lead times for our customers has earned us an increasing number of opportunities across the U.S., demonstrated by our expanding backlog of multifamily and commercial projects, up 21.1% year-over-year. We are also thrilled with the continued momentum across our business into the fourth quarter, which is reflected in our increased full year 2022 growth outlook. With our innovative product portfolio, strong industry relationships and structural competitive advantages, we believe we are on the path to continue growing faster than our end markets into 2023 and beyond,” said Chief Operating Officer Christian Daes.

During 2022, Tecnoglass initiated enhancements at its glass and aluminum facilities to increase production capacity and automate operations. Based on the timing of capital investments, it maintains its expectation to increase installed production capacity to an amount equivalent to over $800 million of annual sales by the end of 2022, followed by a further expansion of installed production capacity to an amount equivalent to approximately $950 million of annual sales by the end of the second quarter of 2023.

Also today, the Tecnoglass board of directors authorized Tecnoglass to buy back up to $50 million of its common share, at its own discretion, and in compliance with the “safe harbor” provisions of Rule 10b-18 under the Exchange Act. The program does not obligate Tecnoglass to acquire any particular amount of its common stock, has no set expiration date and may be suspended or discontinued at any time subject to applicable securities laws.

“Based on our exceptional third quarter performance and expectations for continued growth for our products through year-end, we are increasing our full year 2022 growth outlook for revenues and adjusted EBITDA¹. We now expect 2022 revenues to grow to a range of $680 million to $700 million and for adjusted EBITDA to increase to a range of $240 million to $255 million. This implies adjusted EBITDA growth of approximately 67% at the midpoint. We expect to further build upon our strong track record of strategic execution and leverage our vertically integrated business model, which positions us to drive another year of record results and cash flow in the full year 2022,” said CFO Santiago Giraldo.

The Parque 93 building, Bogotá

Fourth quarter total revenues increased 28.0% year-over-year to $131.8 million USD, with 142% growth in single-family residential revenues, while net income reached $19.8 million, or $0.41 per diluted shares. Adjusted net income was a record $24 million, or $0.50 per diluted share. The company said that gross margin improved 710 basis points YoY to 42.9%.

Fourth quarter EBITDA increased 65.7% YoY to a record $42.2 million, or $32% of revenues. Cash flow from operations was $23.8 million, and the cash dividend increased 136% to $0.065 per share. The Colombian company also announced an amendment to its senior secured revolving credit facility, expanding borrowing capacity from $50 million to $150 million, reducing its cost of capital and extending debt maturities to 2026.

The order backlog for Tecnoglass includes 20 of the 22 tallest skyscrapers currently under construction or planning to break ground in South Florida.

For the full year, single family residential revenues increased by 151% YoY, representing 36% of total revenues for the year. The line of business is relatively new for Tecnoglass, which built its reputation on large commercial and high-rise multifamily residential projects. Total revenues are up 32% YoY to a record $496.8 million for 2021.

Gross margin is also a record 40.8%, up 380 basis points, and full year net income is $68.4 million, or $1.43 per diluted share. Adjusted net income is $82.7 million, or $1.75 per diluted share. Cash flow from operations is also a record $117.3 million.

“We can make glass that protects from the weather, while letting you have a great view. People like that you can now be in harmony with the surroundings.” – José M. Daes. Above: Suburban Miami’s beachfront Regalia condo tower, featuring Tecnoglass materials.

The company’s backlog of orders expands 7.2% to a record $584.6 million, including supplying energy efficient windows to 20 of the 22 tallest buildings currently under permitting or construction in South Florida.

“We are thrilled to report another quarter and year of record results for Tecnoglass. Strong fourth quarter performance reflects the combined benefit of our focused execution, prior investments in automation and capacity enhancements, and our ability to capitalize on strong residential demand. We continue to produce outstanding results in our shorter cash cycle single-family residential business, which in addition to our prudent working capital management, helped us generate our 8th straight quarter of exceptional cash flow. As we move into 2022, our strong capital position and structural advantages leave us well situated to further extend our leadership in the architectural glass industry and drive improved returns for our all our stakeholders for this year and beyond,” said CEO José Manuel Daes.

For the full year 2021, cash provided by operating activities of $117.3 million improved by $45.5 million compared to the prior year, attributable to higher profitability, more efficient inventory and working capital management, and interest expense savings. The company used a portion of its cash flow to voluntarily prepay $30 million under its Syndicated Term Loan facility during the year. The company ended 2021 with total liquidity of approximately $250 million, including cash and cash equivalents of $85.0 million and availability under its committed revolving credit facilities of $163 million. Given the company’s continued growth in adjusted EBITDA and strong cash generation, debt leverage continues to trend lower and now stands at 0.8 times LTM net debt to adjusted EBITDA, compared to 1.6 times in the prior year.

Headline photo: Tecnoglass COO Christian Daes & Colombian President Ivan Duque

Christian Daes, Chief Operating Officer of Tecnoglass, added, “We are extremely pleased with our 2021 accomplishments and the momentum in our business that has continued into 2022. Our success reflects rapid advances in our single-family residential revenues, which expanded 151% year-over-year and represented more than a third of our full year revenues. As we continue to win new customers in the single-family residential market, we are also poised for success in our high rise and commercial work, with Tecnoglass already contracted to supply architectural glass to 20 of the 22 tallest towers under construction in South Florida, and other geographies also showing positive trends. Looking ahead, we remain dedicated to leveraging our vertically integrated structure and innovative product development to create additional shareholder value.”

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “We are pleased to introduce our full year 2022 outlook for revenues to grow to a range of $575 million to $600 million and for adjusted EBITDA to increase to a range of $170 million to $190 million. This implies adjusted EBITDA growth of approximately 20% at the midpoint. We believe our structural advantages, partial insulation from some inflationary pressures and faster lead times will continue to drive our record of strong cash flow generation in the full year 2022.”

Short Seller Claims Shown False

Tecnoglass includes a joint venture with Saint Gobain and subsidiaries ES Windows and Energia Solar.

As previously announced on December 17, 2021 a Special Committee of the Board of Directors engaged Covington & Burling LLP who in turn engaged a leading Big 4 accounting firm to make an assessment on the allegations made against the Company and its Directors on December 9, 2021. Although the review is still being finalized, as of today, the assessment from these firms, which included a forensic evaluation and e-discovery process, has indicated no evidence of fraud associated with related party transactions or accounting irregularities.

Total revenues for the first quarter of 2021 increased 27.0% to $110.9 million, compared to $87.3 million in the prior year quarter. U.S. revenues of $100.8 million, which represented 91% of total revenues, grew 27.9% compared to $78.8 million in the prior year quarter, driven by strong growth in residential activity, recovering commercial construction activity, and market share gains. Colombia revenue, a majority of which is represented by long-term contracts priced in Colombian Pesos but indexed to the U.S. Dollar, was $7.7 million, an increase of 18.4% compared to $6.5 million in the prior year quarter. Changes in foreign currency exchange rates had a negligible impact on Colombia and total revenues in the quarter.

Strong Demand Drove Single-Family Residential Revenues Up 71% Year-Over-Year, with 19% Growth in Commercial Revenues

“I am extremely proud of our outstanding performance so far in 2021 and I have never been more optimistic about the future for Tecnoglass. We delivered record first quarter results across nearly all of our key operating metrics including total revenues, gross profit, operating profit, adjusted EBITDA¹ and operating cash flow. This success was largely driven by the continued positive reception of our single-family residential products, allowing for additional market share gains.

Christian Daes & Jose Manuel Daes (R), founders of Tecnoglass 

Furthermore, our vertically integrated architectural glass platform and prior automation investments continue to deliver significant structural advantages amid tight labor and material availability impacting our industry. We are optimally positioned to efficiently control our supply chain, manufacture products with shorter lead times and best serve customers in what we expect to be a year of significant growth in demand. Moving forward, we remain confident in our ability to maintain our industry leading margins and gain additional share in the quarters ahead,” said José Manuel Daes, Chief Executive Officer of Tecnoglass.

Christian Daes, the Chief Operating Officer of Tecnoglass, also added:  “In the first quarter, we were thrilled to see the positive momentum continue in our business as we reported a sharp acceleration of growth. Encouraging trends in housing starts and de-urbanization combined with our efforts to expand our customer relationships are all supporting the growth of our single-family residential revenue, which increased over 70% year-over-year. Additionally, we are pleased to see our large-scale projects resuming activity, in line with improving fundamentals and the ABI index climbing higher into expansion territory for the second consecutive month in March. Looking ahead, our momentum has continued into April and May as new business wins and record levels of backlog leave us well positioned for further value creation.”

First Quarter 2021 Results

Gross profit for the first quarter of 2021 grew 48.4% to $45.1 million, representing a 40.7% gross margin, compared to gross profit of $30.4 million, representing a 34.9% gross margin in the prior year quarter. The 590-basis point improvement in gross margin mainly reflected a higher mix of revenue from manufacturing versus installation activity as Tecnoglass increased its mix of single family residential products and included a full quarter of greater operating efficiencies from prior automation initiatives. Selling, general and administrative expense (“SG&A”) was $19.8 million compared to $17.3 million in the prior year quarter, primarily attributable to higher variable expenses related to ground and marine transportation. As a percent of total revenues, SG&A was 17.8% compared to 19.8% in the prior year quarter, primarily due to higher sales and better operating leverage on personnel, professional fees and other fixed expenses.

Net income was $8.2 million, or $0.17 per diluted share, in the first quarter of 2021 compared to net loss of $18.8 million, or $0.40 loss per diluted share, in the prior year quarter, including an after-tax non-cash foreign exchange transaction cost of $0.05 million in the first quarter of 2021 and a $32.5 million loss in the first quarter of 2020. As previously disclosed, these non-cash gains and losses are related to the accounting re-measurement of U.S. Dollar denominated assets and liabilities against the Colombian Peso as functional currency. Additionally, during the quarter, Tecnoglass recorded a one-time $8.6 million call option payment and a $2.5 million non-cash extinguishment of debt charge related to the retirement of its senior notes.

Adjusted net income¹ was $16.8 million, or $0.35 per diluted share, in the first quarter of 2021 compared to adjusted net income of $4.5 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 transaction gains or losses and other non-core items, along with the tax impact of adjustments at statutory rates, to better reflect core financial performance.

Record Cash Flow From Operations of $29.0 Million, Marking 4 Straight Quarters of Exceptional Cash Generation and Supporting Further Leverage Reduction to 1.4x Net Debt to Adjusted EBITDA

Adjusted EBITDA¹, as reconciled in the table below, increased 64.8% to $33.5 million, or 30.2% of total revenues in the first quarter of 2021, compared to $20.3 million, or 23.3% of total revenues, in the prior year quarter. The improvement was driven by higher sales and a stronger gross margin. Adjusted EBITDA¹ in the first quarter 2021 included $0.8 million in contribution from the Company’s joint venture with Saint-Gobain, compared to $1.0 million in the prior year quarter.

Dividend

The Company declared a quarterly cash dividend of $0.0275 per share for the first quarter of 2021, which was paid on April 30, 2021 to shareholders of record as of the close of business on March 31, 2021.

Balance Sheet & Liquidity

The Company ended the first quarter of 2021 with cash and cash equivalents of $85.2 million compared to $36.8 million in the prior year quarter. Cash provided by operating activities of $29.0 million improved by $28.4 million compared to the prior year quarter, attributable to higher profitability as well as more efficient inventory and working capital management.

In the first quarter of 2021, the Company redeemed in full its $210 million unsecured senior notes, which bore interest at a rate of 8.2%, following the step down in redemption price at the end of January 2021. The $8.6 million call option was fully paid in January alongside with the redemption of the notes. Giving effect to the redemption of the senior notes, annualized savings on cash interest expense are expected to approximate $11 million annually. Interest expense in the first quarter 2021 declined by 38% year-over-year reflecting a partial quarter of lower borrowings costs following the redemption of the senior notes. On a pro forma basis giving effect to the pay down of the unsecured senior notes, the Company had total liquidity of approximately $145.2 million, including cash of $85.2 million and availability under its revolving credit facilities of $60 million.

Backlog Expands to a Record $552 Million, Up 1.1% Year-Over-Year

Subsequent to the end of the first quarter and based on Tecnoglass’ leverage ratio as of March 31, 2021, the interest rate spread on the Company’s $300 million Senior Secured Credit Facility decreased 50 basis points to a spread of 2.50% in April 2021. Given the Company’s continued growth in adjusted EBITDA¹ and strong cash generation, debt leverage continues to trend lower and now stands at 1.4x LTM net debt to adjusted EBITDA¹.

Full Year 2021 Outlook

Tecnoglass CFO Santiago Giraldo (Photo credit: Liliana Padierna)

Santiago Giraldo, Chief Financial Officer of Tecnoglass, stated, “We are increasing our full year outlook for 2021 total revenues and adjusted EBITDA¹ growth to reflect Tecnoglass’ exceptional start to 2021, including strong demand into April and May and solid share gains. We now expect full year 2021 total revenues to grow to a range of $420 million to $435 million, primarily driven by strengthening U.S. demand. In addition, we now anticipate full year adjusted EBITDA¹ to grow to a range of $115 million to $125 million, implying growth of approximately 23% at the midpoint, and margin expansion. Our vertically integrated business model is providing us with significant competitive advantages, including the ability to actively manage costs and provide exceptional delivery lead times which should allow us to deliver above market growth in the quarters ahead. As we look to the remainder of the year, we are preparing Tecnoglass to accommodate significant demand beyond our current outlook. We are firmly on track to deliver exceptional results and continue our record of strong cash flow generation for the full year 2021.”

¹Adjusted net income (loss) and Adjusted EBITDA in both periods are reconciled in the financial statements that can be viewed here.

Quintero also thanked EPM’s Vice President of Strategy & Planning Mónica Ruiz Arbeláez for serving as interim CEO since February 1^st while a formal talent search was conducted to replace former CEO Álvaro Rendón, who was fired earlier this year by Quintero, leading to a bitter public dispute.

Calderón has a background in finance and investment, working as a credit analyst for Standard & Poor in Paris, serving as the Colombian consul in Boston, Massachusetts during the Juan Manuel Santos administration, and holding several investment banking roles in Bogotá at C&C Gold, Silk Investment Bank, and Grupo Pegasus. Calderón also served a stint working on mergers and acquisitions for Colombian petroleum company Ecopetrol. Calderón also served on the board of directors of Perú Minerals S.A.C.

Analysis

On one hand, investors may hope that a head with a background in banking and finance can bring much needed stability to EPM, a multinational utility owned by the city of Medellín that has been plunged into controversy in the past year due to perceived breakdowns in governance. The current board of directors, all appointed by Mayor Quintero, is relatively light on relevant corporate experience.

Quintero during his mayoral campaign insulted then CEO Jorge Londoño, implying he was corrupt, but the mayor’s chosen replacement lasted barely a year, falling out with the politico accusing him of violating the utility’s managerial independence.

One observation that stands out in Calderon’s background is, based on the biography provided by EPM, he has no utility or operational experience, having worked his entire career in deal making—investment banking and M&A. This in no way indicates that Calderón isn’t up for the job, but EPM’s challenges are its troubled Hidroituango hydroelectric project, the monumental operational task of rehabilitating recently acquired Electricaribe, and managing EPM’s vast utility holdings spanning from Chile in the south to México in the north.

The millions of customers that rely on EPM and its subsidiaries for reliable services along with the institutional bondholders who depend on EPM for timely payments will be counting on Calderón’s ability to pivot from a career doing deals to quite literally keeping the lights on, the water clean & flowing, and shielding EPM from populist political machinations from the other side of Medellín’s 55^th street that separates EPM’s headquarters from city hall.

“The EPM thing is not true, the manager has been doing a magnificent job in Empresas Públicas de Medellín and will continue to do so,” — Daniel Quintero

But now, Rendón is saying that yes, Quintero has repeatedly sought his resignation. The past year has been tumultuous and controversial for EPM, with mass board resignations, labor unrest, investigations, and at Quintero’s direction, a mammoth lawsuit against contractors currently building EPM’s troubled Hidroituango hydroelectric project.

In a scathing letter sent to the mayor, Rendón, who was until now seen as a puppet and conduit for Quintero’s micromanagement of EPM, acknowledged that the mayor has the right to fire him, but since Quintero instead was asking for his resignation, he would call an extraordinary meeting of the board of directors, all Quintero appointees, to discuss the request and its implications. Though EPM is owned by the city of Medellín, it operates as a multinational corporation owning several subsidiaries in Colombia and throughout Latin America. The utility also operates a telecommunications joint venture, TIGO UNE with international telecom company Millicom and issues billions of dollars of debt on the international capital markets.

Rendon’s letter is shown below translated, with an image of the original in Spanish, following.

Medellín, January 31, 2021

Doctor
DANIEL QUINTERO CALLE
Mayor of Medellín
City

Mister Mayor:

Regarding the request that you have made to me directly and by other means to resign from the position of General Manager of Grupo EPM, I want to express to you that I know and respect your authority legal to remove the official who exercises this position.

However, to the extent that you are requesting my voluntary participation in that decision, I want to express to you that the answer will be given to you officially after hearing from the distinguished members of the Board of Directors of the organization that I guide and evaluate the implications that an untimely exit may cause to all target audiences, and especially, the impact this may have on the capital markets, with the financial, investment and international rating consequences for EPM.

In order to evaluate these implications, and the resignation that you have repeatedly and by various means requested of me, and taking into account what the Framework Agreement for Relations between the Municipality of Medellin – Empresas Públicas de Medellín ESP says, I would like to request an extraordinary and urgent meeting of the Board of Directors.

I think it is necessary to analyze before that collegial body of company management, over which you preside, the possible effects of a resignation or removal, always thinking about the present and the future of EPM.

It is good to remember that the change of General Manager must respond to objective reasons, in accordance with the results of his management, and after carrying out an evaluation based on objective models, as prescribed by chapter 4.7 of the Corporate Governance code:

“EPM has an evaluation methodology for the General Manager, which is described in complementary documents that are part of the“ General Framework of the Group’s Corporate Governance ”, as explained in Annex No.3. In general terms, the Board of Directors carries out a systemic process that allows it to show achievements and challenges of the general manager’s stewardship in terms of their results and methods to obtain them (what and how), being able to use the General Manager’s self-evaluation, the evaluation by of the Board of Directors and the evaluation by the top-level management team; its results will be disclosed in the public rendering of accounts and in the Annual Corporate Governance Report. This mechanism will be applied at least annually.”

With this letter I reply to you and the country of the aforementioned request for resignation.

Sincerely,

ÁLVARO GUILLERMO RENDÓN LÓPEZ
General Manager EPM

CEO Alvaro Rendón Dares Medellín Mayor Daniel Quintero To Fire Him

CEO Alvaro Rendón Dares Medellín Mayor Daniel Quintero To Fire Him

In another interview, Sengar discusses the company’s strategy, recent big wins, including a new global client, and product innovations focused on enterprise security. In this interview, Sengar, a global citizen, describes what it’s like for him and his family to move to Colombia and adapt to life in Bogotá, both as a corporate leader and as a family.

El Peñon is an ancient granite batholith in Guatapé and El Peñol that attracts thousands of tourists every month. Spectacular views of the surrounding countryside await those hardy enough to ascend the 659 steps to the summit.

Guatapé is a lake front town that sits on EPM’s Represa de Guatapé, a hydroelectric reservoir; and at the foot of El Peñón de Guatapé, a granite basolith between Guatapé and the town of El Peñol. The town is easily reached by bus and is popular with both local and international tourists.

Jorge Londoño de la Cuesta is the CEO and general manager of EPM

“The construction of the Guatapé Malecón is a fundamental contribution to the dynamism and growth that we are experiencing in this municipality,” said EPM’s CEO Jorge Londoño De La Cuesta. “EPM wanted to participate in this effort, and now we present the work that opens a new panorama for the people; for those that live here and for the tourists that will now begin to add do their travel memories this new space that speaks very well to Paisa culture, a locality that for its characteristics really represents Antioquia and Colombia.”

The approximately $6 million USD project was paid primarily by EPM, who contributed 77.32% of the budget. That does not include a forthcoming boat dock on the frigid lake stocked with North American rainbow trout, that will cost another $2.4 million USD.

The town of Guatapé also recently received notoriety for banning polystyrene and single use plastics.

“With the realization of this project we don’t just improve the municipal and community infrastructure. In terms of cultural options, urban planning, displacement, and quality of life for the population, we also materialize the proposition of contributing to competitive and sustainable territories, generating regional development,” added Londoño.

3 years ago, before the new improvements were put in place, a tragic accident happened on the lake near the town, when a commercial tourist boat capsized with over 150 passengers on board, causing 7 deaths. Not only are the waters cold, but the bottom near the town is muddy, which can trap feet and legs. Swimming is not allowed from the shore of the lake facing Guatapé.

Photos courtesy EPM except El Peñon, by Loren Moss

Incoming Ecopetrol CEO Juan Carlos Echeverry

With extensive knowledge of economics, the ability to lead processes of change, experience in public administration and prior experience as member of the Board of the Company, Mr. Echeverry meets all the conditions to carry out the reforms that the current price environment demands and execute the institutional strategy re-alignment in which the company has been engaged in recent months.

Born in 1962, Juan Carlos Echeverry is an economist  from the Universidad de los Andes, and holds degrees in International Economy from the Kiel Institute for the World Economy and a PhD in Economics from New York University. He was Dean of the faculty of Economy at Universidad de los Andes and Head of the National Planning Department as well as Ministry of Finance and Public Credit. He has also been a consultant and commentator in economics and has advised several governments and companies. Until a few months ago he was Executive Director for Colombia and Ecuador at the Inter-American Development Bank.

Ecopetrol’s new Executive Vice President, Camilo Marulanda

The process of selection and appointment of the new CEO took place in three stages. The first involved the identification by a competent international executive search firm of candidates who fulfill the conditions consistent with the profile defined by the board. The second stage was the selection by the firm of a small number of candidates, two of whom the board decided to interview and the third stage included the election of the new CEO, who counted on the affirmative vote of six out of the nine members of the board. Following the decision, the board endorsed the appointment by consensus and instructed the management of Ecopetrol to carry out the corresponding splicing at the earliest.

The Board of Directors also appointed Camilo Marulanda as Executive Vice President. Born in 1978, Mr. Marulanda is an economist from the Universidad de los Andes, with Marketing studies and a MBA from this university. Prior to join to Ecopetrol´s Group in 2003, he worked at International Investment Intelligence and Procter Gamble.

Ecopetrol´s Board of Directors is comprised by the Ministry of Finance and Public Credit, the Ministry of Mines and Energy, the Head of the National Planning Department and six independent members of which one is appointed by the producing regions in Colombia and other by the minority shareholders.