This morning, Barranquilla, Colombia-based architectural glass & aluminum manufacturer Tecnoglass (NASDAQ: TGLS) announced record results for the 2nd quarter, 2021, buoyed by tremendous growth in the single-family residential sector.
Total revenues for the second quarter of 2021 increased 48.5% to $121.7 million, compared to $81.9 million in the prior year quarter. US revenues of $109.9 million, which represented 90% of total revenues, grew 38.8% compared to $79.1 million in the prior year’s quarter, driven by strong growth in single family residential activity, a continued recovery in 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, grew to $8.2 million, compared to $1.8 million in the prior year’s quarter. Changes in foreign currency exchange rates had a negligible impact on Colombia and total revenues in the quarter.
- Single-Family Residential Revenues Increased 159% Year-Over-Year, Representing 37% of U.S. Revenues
- Commercial Revenues Expanded 22% Year-Over-Year Driven by Continued End Market Recovery
- Total Revenues Up 49% Year-Over-Year to a Record $121.7 Million
- Record Second Quarter Gross Margin of 40.0%, Up 120 Basis Points Year-Over-Year
- Net Profit of $19.2 Million; Adjusted Net Income of $19.7 Million, or $0.41 Per Diluted Share
- Adjusted EBITDA Up 52.7% Year-Over-Year to a Record $35.6 Million, or 29.3% of Total Revenues
- Record Cash Flow From Operations of $31.8 Million –
- Backlog Expands to a Record $559 Million, Despite Single Family Residential Activity Largely Underrepresented in Backlog
- Full Year 2021 Growth Outlook to Adjusted EBITDA increased from $125 Million to $135 Million on Total Revenues of $450 Million to $465 Million
José Manuel Daes, Chief Executive Officer of Tecnoglass said on this morning’s earnings call: “I am thrilled to announce our most profitable quarter on record, building on our team’s outstanding performance which again drove record results in nearly all financial metrics. During the quarter, we were able to drive substantial operating leverage while expanding our mix of single-family residential sales in the US, resulting in another quarter of record revenues, margin expansion, and our 5th straight quarter of significant cash flow generation. Our strategically located, vertically integrated and low-cost operations have provided us with sustainable competitive advantages that truly differentiate Tecnoglass in the tight supply environment that our industry is experiencing.”
“We are winning new business and strengthening our existing customer relationships because we are able to supply superior quality products with short lead times at an attractive value, which is undoubtedly advancing our reputation as a global leader in both architectural glass innovation and service. Moving forward, we will continue to execute our proven strategy to capture elevated demand in the U.S., while approaching capital allocation with a returns-oriented mindset. Our strong balance sheet, very low leverage profile and ample capital resources squarely position us to do so as we plan to further invest in operational enhancements. The future remains extremely bright for Tecnoglass and we are firmly situated to deliver another year of record results in 2021,” José Manuel Daes continued.
Above photo: Co-founders Christian Daes & Jose Manuel Daes (R) of Tecnoglass
Gross profit for the second quarter of 2021 grew 52.9% to $48.6 million, representing a 40.0% gross margin, compared to gross profit of $31.8 million, representing a 38.8% gross margin in the prior year quarter. The 120-basis point improvement in gross margin mainly reflected greater operating efficiencies and a higher mix of revenue from manufacturing versus installation activity as Tecnoglass increased its mix of single family residential products. Selling, general and administrative expense (“SG&A”) was $20.2 million compared to $16.6 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 improved to 16.6% compared to 20.2% 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 $19.2 million, or $0.40 per diluted share, in the second quarter of 2021 compared to net income of $16.2 million, or $0.35 per diluted share, in the prior year quarter, including an after-tax non-cash foreign exchange transaction gain of $0.2 million in the second quarter of 2021 and a $13.3 million gain in the second quarter of 2020. Tecnoglass says 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.
Adjusted net income was $19.7 million, or $0.41 per diluted share, in the second quarter of 2021 compared to adjusted net income of $9.4 million, or $0.20 per diluted share, in the prior year quarter. Adjusted net income, 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.
“Our ability to timely deliver best-in-class products led to outsized revenue growth and market share gains in the U.S. during the second quarter.”-Christian Daes
Adjusted EBITDA increased 52.7% to $35.6 million, or 29.3% of total revenues in the second quarter of 2021, compared to $23.3 million, or 28.4% of total revenues, in the prior year quarter. The improvement was driven by higher sales, a stronger gross margin and operating leverage on SG&A. Adjusted EBITDA in the second quarter 2021 included a $0.5 million contribution from the company’s joint venture with Saint-Gobain, compared to $0.9 million in the prior year’s quarter.
Christian Daes, Chief Operating Officer of Tecnoglass elaborated: “Our ability to timely deliver best-in-class products led to outsized revenue growth and market share gains in the U.S. during the second quarter. Revenues in single-family residential increased by almost 160% year-over-year and nearly doubled compared to the second quarter of 2019. This accomplishment is a testament to the market leading platform we have created, and we could not be more pleased with our progress since we entered the single-family residential business four years ago. This attractive category now represents 34% of our total revenues compared to 19% in the prior year period. Additionally, we ended the second quarter with a record backlog across our growing footprint as large-scale commercial projects continue to resume construction activity. Looking to the remainder of 2021, we are pleased with our positioning and continue to expect strength in residential demand to drive the majority of our growth.”
Tecnoglass declared a quarterly cash dividend of $0.0275 USD per share for the second quarter of 2021, which was paid on July 30, 2021 to shareholders of record as of the close of business on June 30, 2021.
Total Revenues Up 49% Year-Over-Year to a Record $121.7 Million
Balance Sheet & Liquidity
Tecnoglass ended the second quarter of 2021 with total liquidity of approximately $167 million, including cash and cash equivalents of $100.3 million and availability under its committed revolving credit facilities of $66.9 million. Cash provided by operating activities of $31.8 million improved by $7.6 million compared to the prior year quarter, attributable to higher profitability as well as more efficient inventory and working capital management. Given the company’s continued growth in adjusted EBITDA and strong cash generation, debt leverage continues to trend lower and now stands at 1.1 times LTM net debt to adjusted EBITDA, compared to 2.2 times in the prior year quarter.
Full Year 2021 Outlook
Santiago Giraldo, Chief Financial Officer of Tecnoglass, said: “We are increasing our full year 2021 outlook for total revenues and adjusted EBITDA growth to reflect our continued outperformance in the first half of 2021, including strong demand into July and August and further share gains. We now expect full year 2021 total revenues to grow to a range of $450 million to $465 million. We now anticipate full year adjusted EBITDA to increase to a range of $125 million to $135 million, implying year-over-year growth of approximately 33% at the midpoint. We continue to believe our ability to efficiently manage costs while providing exceptional delivery lead times should collectively allow us to achieve above market growth and record results for the full year 2021.”
All above figures US Dollars
Tecnoglass Foundation Supports Olympic Athletes
Just a day before Tecnoglass announcing record results, Colombian athlete and Barranquilla resident Anthony Zambrano took the silver medal in the men’s 400-meter race at the Tokyo Olympics, making him the first male athlete representing Colombia to win a medal in an Olympic race.
Tecnoglass COO Christian Daes announced that the associated non-profit Tecnoglass Foundation would be rewarding Zambrano with a $50 million Colombian peso (approximately $13,000 USD) down-payment for the house the athlete says he wishes to buy for his mother.
Gracias @AZambrano400 por dejar en alto en nombre de BARRANQUILLA y COLOMBIA. De parte de la fundacion @TecnoglassSA cuenta con 50 millones para ayudar en la compra de la casa a tu mama. GRACIAS #AvisenleAlRestoQueSiSePuede pic.twitter.com/oupPh0SQmn
— Christian Daes (@ChrisDaes) August 5, 2021