Tecnoglass Sees Revenues Fall 4.9% in the First Quarter of 2024

Miami-based window and glass manufacturer Tecnoglass, Inc. (NYSE: TGLS) reported a 4.9% decrease in total revenues for the first quarter of 2024, bringing in $192.6 million USD compared to $202.6 million USD in the first quarter last year.

Gross profit in the quarter was also down, coming it $74.7 million USD (on a 38.8% gross margin) versus the $107.8 million USD (53.2% gross margin) reported in the first three months of 2023.

“The year-over-year change in gross margin reflected an unfavorable foreign exchange impact of nearly 800 basis points, reduced operating leverage on lower revenues, promotional activity on single-family residential products and an increased mix of installation and stand-alone product sales during the quarter partially related to the step down in single family activity during the period,” noted the company in an announcement accompanying its results.

Margins also continue to be affected by the “cash effect of a strong Colombian peso revaluation of approximately 18% year-over-year” as well as “non-cash effect related to an inventory mark-up associated with the valuation of inventory from when it was purchased in the fourth quarter of 2023 to when it was sold in the first quarter of 2024,” added Tecnoglass.

“The non-cash portion of the unfavorable currency effect during the quarter contrasted with a positive effect during the first quarter of 2023 and is related to the accounting of inventories in Pesos as the functional currency. On a sequential basis, gross margin compared to 42.6% in the fourth quarter of 2023 and was also impacted by a sequential Peso revaluation of approximately 5%.”

José Manuel Daes, chief executive officer of Tecnoglass, acknowledged the challenging environment and highlighted some of the positive news reflected in the results.

“I am proud of our team’s resilience to started off 2024,” he said. “In light of macroeconomic challenges, we maintained a steady course with our multi-family/commercial business executing against our record backlog while our single-family residential sales channel experienced inflationary constraints on consumer spending. That said, we were highly encouraged to see record levels of single-family residential orders during March and April, which we believe signals a positive shift in demand as we move into the second quarter.”

Commercial revenues were also up slightly, in line with scheduled project deliveries. Lower single-family residential revenues were impacted by slower activity resulting from end consumers experiencing higher interest rates and mortgage rates. Changes in foreign currency exchange rates had an adverse impact of $0.9 million on total revenues in the quarter.

These factors have led the executive to stay positive about a range of opportunities and strategic plans ahead in the 2024.

“We remain optimistic on the strength of our business, bolstered by vigorous quoting activity for our innovative vinyl windows and other offerings, strong customer partnerships, and substantial opportunities for geographic expansion in 2024 and beyond,” added Daes.

For his part, Christian Daes, the company’s chief operating officer, stressed the value of adaptability and said he expects deliveries to increase in the back half of the year.

“Our performance in the first quarter reflects our adaptability amidst a dynamic operating landscape,” he said. “We ended the quarter with another record multi-year backlog of $916 million, reflecting an expanding pipeline for multi-family/commercial projects into 2025.”

“Customer interest in our vinyl products continues to look very encouraging based on quoting activity,” added Christian, “and we are on track for deliveries to increase in the second half of 2024. Our strong backlog, strategic investments to broaden our product portfolio, and our best-in-class manufacturing capabilities give us confidence in our ability to drive further value creation in our business as we move forward.”

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