BARRANQUILLA, Colombia–(BUSINESS WIRE)– Tecnoglass, Inc. (NASDAQ:TGLS BVC:TGLSC) the Colombian manufacturer of architectural glass, windows, and associated aluminum products for the global residential and commercial construction industries, yesterday announced financial results for the fourth quarter and full year ended December 31, 2015.
Total revenues for the full year 2015 increased 21.2% to $239.4 million compared to the prior year, led by 40.1% growth in US revenues to $142.4 million. Total revenues increased 36.5% on a constant currency basis, excluding a $30.2 million impact from unfavorable foreign currency translation of Colombian revenues in the full year 2015.
Operating income rose to $39.6 million compared to $27.2 million in the prior year. Adjusted EBITDA increased 36.5% to $65.5 million compared to the prior year.
Net loss was $(1.4) million, or $(0.05) per diluted share, compared to $20.3 million, or $0.73 per diluted share in the prior year. As indicated above, full year 2015 net loss is preliminary, subject to finalization of the company’s audit of its accounting treatment of the warrant liability, and may be more or less once completed.
Net income, excluding the non-cash, non-operating loss associated with the warrants in both periods, was $23.5 million, or $0.84 per diluted share, compared to $22.0 million, or $0.79 per diluted share, in the prior year. The difference was primarily attributable to higher operating revenue and operating margins more than offset by lower non-operating revenue and a higher effective tax rate in full year 2015 compared to the prior year.
José M. Daes, Chief Executive Officer of Tecnoglass (above, right), commented, “Our strong momentum continued into the fourth quarter 2015 with total revenues up 68.2% on a constant currency basis. We grew our market share in a stronger demand environment and achieved good operating leverage on our low-cost, efficient operations. Our reported fourth quarter results were impacted by unfavorable foreign exchange dynamics but we were extremely pleased to deliver on our full year objectives as we continue to build on our position as a leader in US and Latin American markets. Our mix of revenue from the US expanded by 800 basis points to 60% for the year and we are firmly situated to drive an increasing mix of our business from this key region, while also growing our Latin American presence. Bidding activity remained strong throughout the year and into 2016, especially in the US. As a result, we entered 2016 with a record level of backlog providing us with strong visibility on our project pipeline. We are currently engaged, or contracted to perform projects in regions including Florida, Texas, New York, New Jersey, and Washington-Baltimore.”
Christian Daes, Chief Operating Officer of Tecnoglass (above, left) said, “During the fourth quarter 2015, we ramped up our new soft coat low-E glass manufacturing line according to plan with superb product quality and smooth operations. By the end of the first quarter 2016, we successfully scaled up production to meet all of our internal soft coat production needs, generating incremental savings which we expect to continue as we move forward in 2016. Furthermore, we remain committed to expand output of this increasingly in-demand product for external sales longer term. With respect to new products, the fourth quarter 2015 roll out of our ProBend product line was met with strong demand. ProBend allows for the production of high quality cylindrical safety glass and has the capability to produce large-sized bent tempered, heat strengthened and laminated glass. In the first half of 2016, we are on track to introduce our TecnoAir product line using a new technology to produce the thinnest safety glass in the world. Beyond these products we have a healthy R&D pipeline to build on our strong culture of innovation and further strengthen our market leading positions.”
“Into 2016, we are encouraged by our initial progress during the first quarter and thrilled to reiterate our outlook for Adjusted EBITDA growth to $85 million for the full year 2016. Our new credit facility improved our borrowing costs and established a more efficient capital source to invest in our growing operations, introduce new products and capture additional market share. The strategic investments we continue to make in out plant, products and people, combined with our business development activities and growing project portfolio, provide us with a firm foundation for future success,” concluded José M. Daes.
Fourth Quarter 2015 Results
Total revenues for the fourth quarter 2015 increased 50.2% to $66.4 million from $44.2 million in the prior year quarter. Total revenues increased 68.2% on a constant currency basis, excluding an $8.0 million impact from unfavorable foreign currency in the fourth quarter 2015. US revenues rose 27.9% to $34.4 million compared to the prior year quarter. Colombia revenues, a majority of which are represented by long-term contracts priced in Colombian Pesos (COP), increased 116.8% in terms of local currency in fourth quarter 2015. Unfavorable foreign currency resulted in reported Colombia revenues up 63.5% million to $24.5 million compared to the prior year quarter.
Gross profit improved to 28.3 million, or a gross margin of 42.5%, from $18.6 million, or a gross margin of 42.1%, in the prior year quarter, due primarily to operating efficiencies. Operating expenses increased to $16.7 million compared $15.3 million in the prior year quarter, mainly due to additional depreciation and amortization expenses, higher sales commissions, shipping costs, and advertising expenses related to higher revenues. As a percent of total revenue, operating expenses improved to 25.2% compared to 34.6% in the prior year quarter.
Fourth Quarter 2015 Highlights as Compared to Fourth Quarter 2014
- Total revenues increased 50.2% to $66.4 million; up 68.2% on a constant currency basis
- Adjusted EBITDA increased 2.8% to $13.2 million ($15.5 million excluding the impact of foreign currency);
- Operating income grew to $11.5 million compared to $3.3 million
- Backlog of $375.2 million, an increase of 34.0% from fourth quarter 2014 and 4.1% over third quarter 2015
- After the quarter end, Tecnoglass entered into a new $109.5 million credit facility in January 2016, which extended the maturity on credit facilities by 7 years, lowered borrowing costs and provided proceeds used to refinance $83.5 million of existing debt, with the remaining $26.0 million available for general corporate purposes
Beginning in the fourth quarter of 2015, and also reflected in fourth quarter 2014 for comparability, the tabulation of cost of goods sold and operating expenses have been revised to reallocate the portion of shipping costs, formerly included in cost of goods sold to operating expenses, amounting to $7.4 million and $4.9 million in fourth quarter 2015 and 2014, respectively. As a result of this reclassification for the fourth quarter 2015 and 2014, gross profit and operating expenses reflect the shift of the aforementioned shipping costs from cost of goods sold to operating expenses plus a catch up accrual of shipping costs included in cost of goods sold during the first nine months of 2015 and 2014, respectively, prior to this reallocation. There is no impact to operating income in any period given the neutral impact of commensurate increases in gross profit and operating expenses. Operating income rose to $11.5 million compared to $3.3 million in the prior year quarter.
Adjusted EBITDA increased 2.8% to $13.2 million compared to $12.8 million in the prior year quarter. Excluding the impact of FX, fourth quarter 2015 Adjusted EBITDA would have increased to $15.5 million.
Net loss was $(0.5) million, or $(0.02) per diluted share, compared to $13.3 million, or $0.48 per diluted share in the prior year quarter. Net loss in the fourth quarter 2015 was impacted by an extraordinary, non-cash, non-operating loss of $(3.4) million associated with the change in fair market value of the exchanged and remaining warrants during the period. The fourth quarter 2014 net income included a $5.1 million non-cash, non-operating gain associated with the warrants. The fair value of the warrant liability changes in response to market factors not directly controlled by the Company such as the market price of the Company’s shares and the volatility index of comparable companies. The fourth quarter 2015 net loss is preliminary, subject to finalization of the Company’s audit of its accounting treatment of the warrant liability, and may be more or less once completed.
Net income, excluding the non-cash, non-operating loss associated with the warrants in the fourth quarter of 2015 was $ 2.9 million, or $0.10 per diluted share, compared to a gain of $8.3 million, or $0.30 per diluted share, in the prior year quarter. This difference in adjusted net income was primarily due to a $2.3 million foreign currency transaction loss in the fourth quarter 2015 compared to an $8.7 million foreign currency gain in the prior year quarter and a higher effective tax rate in the fourth quarter 2015 compared to the prior year quarter.
Based on, among other factors, the Company’s financial performance during 2015, current market conditions, product demand, improving operating efficiencies, and backlog, Tecnoglass reiterates its full year 2016 outlook for total revenues to grow approximately 20% and Adjusted EBITDA to increase to $85 million.