The partnership creates a shared distribution network in the Americas and will allow Tecnoglass to manufacture and sell Schüco-branded products in North America and Latin America.

Tecnoglass will also supply glass and aluminum products to the German-headquartered company, which specializes in window, door, and facade systems for homes and buildings.

“This alliance is a remarkable opportunity for Tecnoglass to serve new markets and expand its offering of cutting-edge products,” said Christian Daes, chief operating officer of Tecnoglass.

READ MORE: Tecnoglass to Pay Dividend of $0.14 per Share on November 19

“This is a win/win for both companies,” he added. “Jointly we will be able to take advantage of Tecngolass’ state-of-the-art production facilities while sharing each other’s established distribution networks across the Americas.”

The payment will be made to shareholders of record at the close of business on October 26.

Tecnoglass shareholders can chose to receive the dividend in either cash or ordinary shares, with the election period beginning on October 29 and staying open until the close of business (Eastern Time) on November 9.

If shareholders don’t make a selection, their dividend will be paid in ordinary shares.

The value of shares paid out as a dividend will be determined by the average NASDAQ closing price of from the period of October 29 to November 9.

The dividend will be paid to all shareholders as the close of business on June 29. Tecnoglass is listed on the NASDAQ exchange as TGLS.

Shareholders can opt to receive either cash or ordinary shares for their payment. The number of shares paid out will be defined by the average closing price between July 6-19.

The election period for the type of preferred payment will begin on July 2 and stay open until 5:00 pm on July 19. If a shareholder does not make a selection, they will receive a dividend in ordinary shares, according to Tecnoglass.

GM&P, a glazing and consulting contractor in Miami that Tecnoglass had worked with for years, was cited by the company as a strategic purchase as the company pushed to strengthen its physical presence in the United States, which is its largest sales market.

The original agreement was signed in March 2017 and followed soon after Technoglass’ acquisition of E.S. Windows, LLC, another Miami company that was purchased, for $13 million USD, with an eye on vertical integration in the United States.

Tecnoglass initially paid $6 million USD of the total $35 million USD price for GM&P within the first 60 days of the agreement.

The remaining $29 million USD payment was made last week on May 4, according to the company, with $6 million USD in cash, $13 million USD in stock, and the execution of a $10 million USD junior subordinated note.

READ MORE: Tecnoglass Acquires Miami-Based Glazing Company for $35 Million USD

The $13 million USD was the equivalent of just under 1.3 million Tecnoglass ordinary shares, which represented “a 23% premium over the last sale price of the TGLS ordinary shares on the date of payment,” according to the company.

Tecnoglass CEO José M. Daes said that this payment structure “preserves significant financial flexibility to support our growth objectives” and praised the integration of GM&P as a acquisition that has “exceeded our initial expectations and contributed meaningfully to our U.S. revenue and backlog growth trajectory during the past 14 months.”

Photo: Tecnoglass international headquarters, seen here, are located in Barranquilla, Colombia. (Credit: Tecnoglass)

Despite the windfall, net income came in at just $5.7 million USD on adjusted EDBITDA of $62.0 Million USD. This was down from $23.2 million USD and $72 million USD, respectively, in 2016.

Some of this can be attributed to capital expenditures as well as approximately $3 million of invoicing that, due to Hurricane Irma, will be realized in 2018. The company’s backlog also expanded to $499 million USD in 2017, an increase of 26% compared to 2016.

In addition, revenue in Colombia “remained pressured,” said CEO José Manuel Daes, due to persistent macroeconomic challenges in the country. But he added that “we are beginning to turn the corner,” with fourth quarter results up 36.8% compared to the third quarter, and expected projects in 2018 that will allow the firm to “capitalize on significant pent-up demand in Colombia” and “ strong interest in our new products” in the nation.

Tecnoglass still managed to hit its $10 million USD sales target last year and expects to reach a range of $20 million USD to $25 million USD for 2018.

Looking more broadly, the company expects revenue growth to be even stronger in 2018, particularly in the first half of the year due “based on anticipated timing of invoicing in 2018 compared to 2017,” stated Tecnoglass.

In all, it has projected revenues of between $345 million USD to $365 million USD this year. This will lead to an estimated 22% jump in adjusted EBITDA to between $71 million USD to $81 million USD, according to internal projections.

“During 2017, we also took a number of steps to enhance our competitive advantages and improve our ability to generate attractive returns on higher expected revenues,” said Christian Daes, chief operating officer of Tecnoglass. “We implemented lean initiatives, eliminated waste and reduced fixed costs, which have already resulted in stronger operational performance in the second half 2017 compared to the first half 2017.”

The COO also highlighted the realized energy savings following a solar energy project and high hopes for a new range of “high-end products which will allow us to further diversify our revenue stream going forward.”

Photo: Tecnoglass manafactures windows, glass, and other homebuilding products from its plant in Barranquilla, Colombia. (Credit: Tecnoglass)

The dividend is up slightly from the $0.125 USD-per-share dividend the Colombian company paid in the first quarter of 2017.

All Tecnoglass shareholders of record on the close of business on March 29 will received the dividend, which can be paid in either cash or ordinary shares.

READ MORE: Tecnoglass Is Striving for Further Expansion into the United States

The election period for shareholders to decide the payment method will be open from April 2-18.

Dividends paid in shares will use the average of the closing price on the NASDAQ exchange from April 5-18. The default payment, if a shareholder fails to elect a method, will be ordinary shares.

Photo: A Tecnoglass employee working within the company’s factory in Barranquilla, Colombia (Photo credit: Liliana Padierna)

According to the New York-based “big three” rating agency, Tecnoglass’ rating of BB- reflects its good market position in windows and glass-based facades, low cost base, and long-term expected growth rate. Against Latin American corporates rated at the BB-, Tecnoglass’ financial profile compares favorably, the agency added.

Fitch Ratings said in a statement that key assumptions within rating case for the company include sales growth continues in 2018 and 2019, supported by existing backlog and growth in U.S. commercial construction. The agency also noted its assumptions for Tecnoglass’ to maintain positive cash flow from operations in 2017 and 2018, gross leverage remaining at or below 3.5x over the intermediate term, and net leverage remaining below 3.0x over the intermediate term.

Photo: A Tecnoglass employee working within the company’s factory in Barranquilla, Colombia (Photo credit: Liliana Padierna)

Earlier this year, in March, the company, whose shares are listed on the NASDAQ and the Colombian Bolsa de Valores, bought Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. (GM&P), a glazing and consulting contractor in Miami, for $35 million USD.

“The option to pay for the remaining $29 million USD of the acquisition amount of Giovanni Monti and Partners Consulting and Glazing Contractors Inc. in shares of Tecnoglass, either in whole or in part, provides Tecnoglass’ with the flexibility to choose some combination of funding so as to maintain its liquidity position,” stated Fitch.

This move was announced just three months after the company acquired Miami-based E.S. Windows, LLC for $13 million USD. The Florida company is the largest importer and reseller of the Barranquilla-based window and building materials maker’s products in the United States.

“It is important to see the credit that is given to our business model and cost structure,” said Santiago Giraldo, CFO of Tecnoglass. (Photo credit: Liliana Padierna)

Despite these new acquisitions, Fitch said that liquidity is considered adequate. “The company held $46 million USD in cash as of the second-quarter 2017 and faced no significant debt maturities until 2022 when $210 million USD of notes mature,” stated Fitch. “Recently completed investments mitigate the need for large capital expenditure in the next two to three years.”

Santiago Giraldo, who was named chief financial officer of Tecnoglass in August, said he was pleased with the affirmation in what has been a challenging year but one that has been weathered well given the ongoing diversification strategy of a company that makes about 80% of its total sales to the United States.

“We expect to grow approximately 6% compared to 2016,” said Giraldo. “Additionally, it is important to see the credit that is given to our business model and cost structure, where we continue to obtain the highest margins in the industry and which gives us the flexibility to continue growing.”

Fitch added that positive rating actions could be driven by a strengthening of Tecnoglass’ business and financial positions. “Stable operating cash flow generation through industry and economic cycles resulting in leverage levels of total debt/EBITDA at or below 2.0x and net debt/EBITDA below 1.5x would be considered positive.”

Tecnoglass grew rapidly from 2012, as it has gained new business, particularly in the United States. Its growth slowed in 2017 as new construction in Colombia contracted and its U.S. order backlog was deferred during the first half of 2017. The company’s 2017 EBITDA is expected to close at around $60 million USD, which compares unfavorably to $63 million USD as of 2016.

Despite lower 2017 EBITDA, Fitch estimates Tecnoglass EBITDA will expand to about $70 million USD in 2018 as its backlog is fulfilled. Tecnoglass’ order backlog expanded to $487 million USD as of June 30 of this year from $398 million USD a year ago.

Though Tecnoglass in recent years has been selling more products within Colombia, as well as Panama, its main market continues to be the United States. “The U.S. is such a big country and a powerful buyer that we still have a lot of growth to do in the U.S.” Tecnoglass COO Christian Daes told Finance Colombia in September. “The market for windows in the U.S. is over $30 billion USD, and we are hardly making 200 and some million dollars in sales. So that means there is still a long way for us to go.”

He will replace Joaquin Fernandez, who is remaining with Tecnoglass in the position of director of administration and finance for the firm’s operating subsidiaries. “His decision to step down as chief financial officer is not related to any issues regarding financial disclosures, accounting matters, or business issues,” said the company in a statement.

Breaking: See Finance Colombia’s exclusive interview with new Tecnoglass CFO Santiago Giraldo here.

Effective immediately, Giraldo, who had previously served as deputy chief financial officer, will now be tasked with overseeing Tecnoglass’ corporate finance, accounting, tax management, SEC reporting, and business development initiatives, said the company.

Before joining Tecnoglass, Giraldo served as CFO at Ocensa, a subsidiary of Ecopetrol S.A. He also has experience working as vice president at Citibank Colombia and in the corporate bank units of both JPMorgan Chase and Wells Fargo in the United States.

“Since joining Tecnoglass, Santiago has been instrumental in building a stronger financial department through his intricate understanding of our business and extensive financial experience,” said José Manuel Daes, chief executive officer of Tecnoglass. “He has designed and implemented stronger internal controls, reporting protocols, and accounting practices.”

Photo: Santiago Giraldo speaks in the Barranquilla office of Tecnoglass. (Credit: Liliana Padierna)

Tecnoglass’ profit dropped compared to last year, however, with gross profits coming in at $22.3 million USD compared to $24.7 million USD in the first quarter of 2016. The plunge in net income was even more pronounced. The first quarter of 2016 accounted for $14 million USD while the net income from January through March in 2017 was just $1 million USD.

The company said that much of the drop was related its $35 million USD acquisition of Miami-based glazing company Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. (GM&P). “The gross margin difference was primarily due to a higher mix of engineering and installation revenues attributable to GM&P project activity, additional D&A resulting from the robust growth capex program finalized in 2016, and higher direct labor costs,” said Tecnoglass in a statement.

This quarter, the company also moved forward a 12-megawatt solar energy project at its Barranquilla plant and opened two new branches. One branch is aiming to help the company enter new markets in the U.S. West Coast and the other is a sales office in Italy charged with pushing new business in Europe and the Middle East.

The overall picture increased operating expenses, which hit $15.4 million USD in 2017 compared to $12.9 million USD in the first quarter of 2016. In terms of operating expenses as a percent of total revenue, this represents an increase from 20.3% in the first quarter of 2016 to 23.4% this quarter.

Despite the lower income, Christian Daes, chief operating officer of Tecnoglass, believes the company has progress in needed areas and set itself up to continue seeing high margins for the foreseeable future through “high-return projects focused on innovation, productivity, and capacity expansion.”

The solar project in particular is something he believes will yield benefits. “Our recently initiated multi-year investment to convert a portion of our energy needs to solar should reduce our natural gas needs by over 20% over the next several years as well as provide tax incentives for the years to come,” said Christian Daes.

Record-high first-quarter revenue means that Tecnoglass is continuing to predict annual revenue to land in the range of $360 million USD to $390 million USD in 2017. This would be a significant increase over the $305 million USD in revenues for 2016 and lead to earnings (adjusted EBITDA) that come in between $82 million USD to $90 million USD, stated the firm.

“Overall, we are encouraged by the very sturdy foundation we continue to build for Tecnoglass, which supports our unchanged outlook for 2017,” said José Manuel Daes, chief executive officer of Tecnoglass.

With higher first-quarter revenue — up 3% over 2016 — Tecnoglass is also planning to increase its dividend. The company paid out a dividend of $0.125 per share on April 28 and will do the same on July 28. But for the third quarter, it will raise the dividend to $0.14 per share in a payment on September 29.

Photo credit: Tecnoglass

The dividend will be paid in cash or ordinary shares, two options that shareholders can chose during the election period that will last from March 31 through April 21 at 5:00 p.m. (Eastern Time). The default will be a dividend payment in ordinary shares if no choice is made.

In valuing the share payments, Tecnoglass will use a three-day average. “The value of the ordinary shares to be used to calculate the number of shares to be issued with respect to that portion of the dividend payable in ordinary shares shall be the average of the closing price of the company’s ordinary shares on NASDAQ during the three-day period from April 19, 2017 through April 21, 2017,” said Tecnoglass in a statement.