BARRANQUILLA, Colombia--(BUSINESS WIRE)--Tecnoglass, Inc. (NASDAQ: TGLS) ("Tecnoglass" or the "Company"), a leading manufacturer of architectural glass, windows, and associated aluminum products for the global residential and commercial construction industries, today announced financial results for the fourth quarter (“Q4”) and twelve months ended December 31, 2014.
José M. Daes, Chief Executive Officer of Tecnoglass, commented, "Our business activity has continued to accelerate since we became a U.S. listed company in late 2013. 2014 results were led by strong growth in the United States with margin improvement driven by our manufacturing and delivery cost advantages. We recorded record U.S. sales of $101.6 million in 2014, up 52.3% over 2013 and representing 51.5% of our total revenues.”
Mr. Daes continued, "While we do not believe it is represented in the stock price, the business continues to perform very well operationally and we are very optimistic about our company’s future. Backlog continues to grow via robust activity, and we are booked through 2016 at sizable step ups in both orders and expected profitability. As we mentioned last quarter, we have also made significant investments in our equipment, and in mid-2015 we expect a significant increase to our manufacturing capacity as well as a new coating line to come online in August. We have also benefitted from the strength of the U.S. dollar, as the majority of our revenues are in dollars while the majority of our costs are in Colombian Pesos. We believe that the business will generate strong profits and cash flow going forward, and we are committed to returning capital to shareholders in the form of cash dividends.
“To this end, our Board has approved a dividend policy of regular quarterly cash dividends of $0.125 per share, or $0.50 per share annually. In order to allow warrant holders an opportunity to participate in these dividends, the Board has also approved an exchange offer to acquire all of our outstanding warrants at an exchange rate of three warrants for one ordinary share. The exchange offer will remain open for a period of 30 days once exchange documentation is sent to warrant holders and the first quarterly dividend payment will be made to shareholders of record 15 days after the end of the exchange offer. Further details will be provided to security holders in our future filings with the Securities and Exchange Commission.”
Concluded Mr. Daes, “We are extremely pleased with our business and with our strategic positioning within the industry. Given the high visibility we have with regards to orders and general demand, we look forward to a strong 2015 and 2016 and to returning meaningful capital to our shareholders as we move forward.”
Fourth Quarter 2014 Results
Revenues for Q4 2014 declined to $44.2 million from $53.8 million in Q4 2013. Q4 2014 U.S. sales increased by $5.8 million to $26.9 million, driven by strong demand in South Florida and penetration of new U.S. markets including Texas, New York, New Jersey and California. Higher U.S. sales only partially offset lower Q4 2014 sales to Colombia, which declined by $14.1 million to $15.0 million as the country transitions from recently completed projects to the commencement of new projects later this year. Revenues in COP (Colombian Pesos) represented approximately 33.8% of total revenues in Q4 2014 as compared to 54.0% in Q4 2013. Q4 2014 revenues were also impacted by a 24.7% depreciation of the currency against the U.S. Dollar.
Gross profit was $13.7 million, or 31.1% of revenues, as compared to $15.8 million, or 29.4% of revenues, in Q4 2013. Gross profit as a percentage of revenues increased as a result of a higher concentration of revenues from U.S. markets, which demand high-margin products, and a higher degree of vertical integration in our manufacturing process.
Selling, general and administrative (SG&A) expenses in Q4 2014 rose to $10.4 million from $5.5 million in Q4 2013. The increase in SG&A was the result of higher IT and consulting expenses for the adjustment of the local GAAP ERP system to the International Reporting Financial Standards (IFRS) as required by new Colombian regulation, increased personnel costs driven by the growth in the Company’s operations, and higher public company expenses, including the adoption of new U.S. GAAP financial reporting standards and personnel.
Non-operating revenues rose to $8.8 million from $1.7 million in Q4 2014. This increase reflects the gain in exchange rate derived from US Dollar-denominated receivables.
Net income for Q4 2014 was $13.3 million, or $0.49 per diluted share, compared to net income of $13.4 million, or $0.49 per diluted share, in Q4 2013. Net income in Q4 2014 included an extraordinary, non-cash, non-operating gain of $5.1 million compared to $7.6 million in Q4 2013. These gains were the result of the decrease in the fair value of the warrant liability in the quarterly period ended December 31, 2014 and December 31, 2013 relative to its fair value at the end of the previous quarters ended September 30, 2014 and 2013, respectively. 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. There are no income tax effects as the Company is registered in the Cayman Islands.
Excluding the $5.1 million extraordinary gain for the warrant liability, net income for Q4 2014 was $8.3 million, or $0.30 per diluted share. Excluding the $7.6 million extraordinary gain for the warrant liability, net income for Q4 2013 was $5.8 million, or $0.21 per diluted share.
Adjusted EBITDA in Q4 2014 was $15.3 million, a 38.0% increase from $11.0 million in Q4 2013.
Revenues for 2014 increased 7.7% to $197.5 million from $183.3 million in 2013. Sales to the U.S. rose 52.3% to $101.6 million from $66.7 million in 2013, while sales to Panama rose 11.2% to $11.4 million from $10.2 million last year. Sales to Colombia declined to $80.1 million from $101.8 million in 2013 for the reasons cited above. Revenues in COP represented approximately 40.5% of total revenues in 2014, and were thus partially impacted by a 24.2% depreciation of the currency against the U.S. Dollar that primarily occurred during Q4 2014. Revenue in COP represented approximately 55.5% of total revenues in 2013.
Gross profit was $61.4 million, or 31.1% of revenues, as compared to $55.4 million, or 30.2% of revenues, in 2013. The improvement was due primarily to the reasons cited above.
SG&A expenses in 2014 rose to $34.2 million from $28.1 million in 2013, primarily for the reasons cited above.
Operating income was $27.2 million as compared to $27.3 million in 2013. Higher sales and improved gross margin were offset by an increase in SG&A expenses.
Non-operating revenues rose to $12.2 million from $4.0 million in 2013, reflecting the above-referenced gain in exchange rate derived from U.S. Dollar-denominated receivables.
Net income for 2014 was $20.3 million, or $0.73 per diluted share, compared to net income of $22.3 million, or $1.08 per diluted share, in 2013. Net income in 2014 included an extraordinary, non-cash, non-operating loss of $1.7 million related to the change in fair value of warrant liability, compared to a $7.6 million gain in 2013. Excluding these non-cash, non-operating items, net income in 2014 was $22.0 million, or $0.79 per diluted share, and net income in 2013 was $14.7 million, or $0.71 per diluted share.
Adjusted EBITDA in 2014 was $48.0 million, a 24.7% increase from $38.5 million in 2013.
No Offer or Solicitation
This announcement is for informational purposes only and does not constitute an offer to purchase nor a solicitation of an offer to tender any warrants, or an offer to sell nor a solicitation of an offer to buy any ordinary shares.
In connection with the offer to exchange warrants for ordinary shares, the Company will file with the Securities and Exchange Commission ("SEC") a tender offer statement on Schedule TO, which will include an offer to exchange, a related letter of transmittal and other offer documents (the “Exchange Offer Materials”). The solicitation of offers to tender warrants in exchange for shares will be made solely pursuant to the Exchange Offer Materials filed with the SEC. Investors and security holders of the Company are urged to read the Exchange Offer Materials and the other documents filed with the SEC by the Company carefully and in their entirety because they will contain important information. Investors and security holders will be able to obtain the documents free of charge at the website maintained by the SEC at www.sec.gov. Copies of the documents to be filed with the SEC by the Company also will be available free of charge on the Company’s website at http://www.tecnoglass.com or by contacting the Company at (305) 507-4422. You may also read and copy any reports, statements and other information filed with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC’s website for further information on its public reference room.
Management will host a conference call on Friday, April 17, 2015 at 11:00 am ET to discuss these results and other matters. Interested parties may participate in the call by dialing:
- (877) 423-9820 (Domestic)
- (201) 493-6749 (International)
The conference call will also be broadcast live via the Investor Information sector of Tecnoglass’s website at www.tecnoglass.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the website for approximately 90 days.
Tecnoglass is the #1 architectural glass transformation company in Latin America, providing hi-spec glass, windows and aluminum products for the global residential and commercial construction industries. Headquartered in Barranquilla, Colombia, Tecnoglass operates out of a 2.3 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to the Americas, the Caribbean, and the Pacific. Tecnoglass sells to more than 800 customers in North, Central and South America, with the United States accounting for approximately 51% of Company revenues in 2014. Tecnoglass’s tailored, high-end products are found on some of the world’s most distinctive properties, including the El Dorado Airport (Bogota), Imbanaco Medical Center (Cali), Trump Plaza (Panama), Trump Tower (Miami), and The Woodlands (Houston). For more information, please visit www.tecnoglass.com
Forward Looking Statements
This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Tecnoglass’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Tecnoglass’ business. These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass’s filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that Tecnoglass’ financial results in any particular period may not be indicative of future results. Tecnoglass is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.
Tecnoglass Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
(Amounts in thousands, except share and per share amounts)
Three Months Ended
|Cost of sales||30,481||38,002||136,021||127,875|
|Operating expenses net||10,435||5,459||34,199||28,149|
|Change in fair value of warrant liability||5,058||7,626||(1,711||)||7,626|
|Income before taxes||14,866||17,207||28,856||31,008|
|Income tax provision||1,534||3,794||8,538||8,696|
|Foreign currency translation adjustments||(12,030||)||(2,262||)||(16,001||)||(953||)|
|Total comprehensive income||$||1,302||$||11,151||$||4,317||$||21,359|
|Basic income per share||$||
|Diluted income per share||$||
|Basic weighted average common shares outstanding||24,470,268||20,953,849||24,347,620||20,677,067|
|Diluted weighted average common shares outstanding||27,670,926||27,169,721||27,737,679||20,714,275|
Tecnoglass Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
|Due from transfer agent||-||15,908|
|Trade accounts receivable, net||44,955||50,928|
|Unbilled receivables on uncompleted contracts||9,931||11,640|
|Due from related parties||28,327||21,418|
|Advances and other receivables||5,508||13,165|
|Deferred income taxes||5,373||2,321|
|Total current assets||141,496||154,848|
|Long term assets:|
|Property, plant and equipment, net||103,980||87,382|
|Long term receivables from related parties||4,220||5,722|
|Other long term assets||6,195||262|
|Total long term assets||114,395||93,366|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|Liabilities and shareholders’ equity|
|Short-term debt and current portion of long-term debt||$||54,925||$||29,720|
|Note payable to shareholder||80||80|
|Accounts payable and accrued expenses||33,493||29,285|
|Due to related parties||1,456||8,397|
|Deferred income taxes||8,416||6,698|
|Accrued liabilities and provisions||505||994|
|Current portion of customer advances on uncompleted contracts||5,782||28,470|
|Total current liabilities||113,036||108,497|
|Customer advances on uncompleted contracts||8,333||8,220|
|Total long term liabilities||67,597||74,597|
|Commitments and contingencies|
|Preferred shares, $0.0001 par value, 1,000,000|
|shares authorized, 0 shares issued and|
|outstanding at December 31, 2014 and 2013|
|Ordinary shares, $0.0001 par value, 100,000,000|
|shares authorized, 24,801,132 and 24,214,670 shares|
|issued and outstanding at December 31,|
|2014 and 2013, respectively||$||2||$||2|
|Additional paid capital||46,514||40,693|
|Accumulated other comprehensive income||(11,431||)||4,570|
|Total shareholders’ equity||75,258||65,120|
|Total liabilities and shareholders’ equity||$||255,891||$||248,214|
Adjusted EBITDA Reconciliation
Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA, in addition to operating profit, net income and other GAAP measures, is useful to investors to evaluate the Company’s results because it excludes certain items that are not directly related to the Company’s core operating performance. Investors should recognize that Adjusted EBITDA might not be comparable to similarly-titled measures of other companies. This measure should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G follows:
|Adjusted EBITDA||Depreciation||Adjusted EBIT||
|Interest Expense||Tax Provision||Net Income||Net Income w/o Warrants|
|Q4 2013||11,093||1,261||9,832||- 7,626||2,511||1,534||13,413||5,787|
|Q4 2014||15,086||765||14,321||- 5,058||2,253||3,794||13,332||8,274|