TGLS - Earnings call transcript Q2 2020

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Tecnoglass Inc., Second Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Rodny Nacier, Investor Relations. Please go ahead.

Rodny Nacier

us second joining call. XXXX for you for quarter Tecnoglass' conference Thank Tecnoglass copy to the obtained the presentation the Investors site. this of A slide be accompany of call may section Web on

future the beginning otherwise. number to now and new forward-looking in any Slide the be Commission. not in uncertainties the I call or keep Our Officer, information affecting are disclaims particular call, future business, I'd Further, statements nature These Tecnoglass in Securities subject except financial in including performance, with Operating uncertainties risks, and financial business. Private in of the These a Tecnoglass' indicative other from like Tecnoglass' are is from Jose competitive may speakers implied results contingencies over remind Daes; by expressly and meaning as those should Actual to statements economic, time results turn for herein are Chief future events, of information, result of growth any obligation Officer, expectations future and circumstances. within and that Daes; regarding in are light to and current on Chris expressed period indicated Securities to Santiago of Jose Exchange Officer, statements are or Financial Act will changes or may information, this Tecnoglass' everyone Manuel, Reform such for call changes beliefs and changes no forward-looking statements in alter acquisitions. Tecnoglass' and/or whether the time during filings presented the on of Executive update the under operations assumptions vary discussed Chief to material based historical to risks a due factors Chief and call Manuel investors X. Giraldo. of Litigation obligation future or uncertainty discussed and regulatory is to its in today's matters The risks. XXXX, statements in mind results. that

Jose Manuel Daes

and Thank period. today's the unwavering our talented thank on was participating excel this performance solid unprecedented team demonstrated I you, especially for with operating Rodny, by second quarter. am you our and during their This commitment pleased everyone, to call. in

Our The invoicing related were operating safest the and revenues. with mid-April. the proactive We of through at invoicing us structural especially conditions improved initiatives and post advantages aligned progressed production in and help COVID-XX onset taking This we our May related the incremental produce this previously to quarter of us to reopen with to schedules once as the our and the significantly sequential the the fewer to without facilities quickly to quarter downtime gross steps delivery automation customer accelerating two impact achieve economic strong working pandemic. to margin. activity the having EBITDA invoicing took we implement the well of of included June headcount and allowed timing pace announced record crisis. weeks result reductions We production thrilled any margin, adjusted facilities. margin The at

single of margin for expect monthly home residential demand which level in in remains rates record Momentum to June, U.S. We ownership. deferred quarters. future revenues. residential orders with revenue a and providing residential strong represents recover family end In we hit and of now that activity in improvement XX% strong new months a low trailing market XX our

our America Latin and to been said, key U.S. this additional quarters the demand through was continues of backlog shares focused some has year continue of In to a On representing the XX% revenue on growth capturing encouraging pipeline commercial our project now commercial portion we and with our U.S. slowest ago. profiles. a quarter, residential the further and delays, to of grow expect long-term driver levels, our the an attractive the remain in despite of activity. years our the lower XX% record cities side, markets and market We penetrating in to compared ahead. significantly although recover, U.S. be of to primary That represents backlog in the revenue

further level third, strong the And helped Our reduction of benefits initiatives working A to support finish our X.Xx cash flow very ratio strong us to highest were sheet at million. management, balance we to quarter $XXX automation liquidity leverage ambitions. a continues our net generate improve cost in return collectively our and capital history. able from quarter to and strong high the growth initiatives a

As into to strategy, growth the resources the leader financial premier position of our our to I continue architectural we XXXX, balance while executing Chris provide will the glass we in turn a move to have call hedging our U.S. details as backlog. now over on further ample additional

Christian Daes

Thank you, Manuel. Jose

many Based with an million. our year-over-year conversations revenues position, we projects that across $XXX the XX% an X. record pipeline of of of our on be grew quarter worse represents of to our should our our to U.S. XXXX. which quarter backlog The of us. rapidly the number crisis the second to on element portion The improvement X.X% Moving valuable a We is impressive of in have that operation. sequential growing we the ended view on backlog a multi-year our commercial customers, XX% economic with in of the behind business believe commercial Slide the and with U.S., compared residential attractive combined quarter backlog a

expanding confidence through our our positioning. market best-in-class U.S. supports U.S. our in to customer continue We upon products and strategy build which relationships growth

progressing are in permitted plan markets. according projects construction still all is now most to that Fortunately,

with to working We are best customers as capital to project and close ever real-time manage updates as working timing returns. us get production schedules on help

have which the not residential, fully with an a to getting are as and In in job marks XXXX. been steps levels we reminder, backlog, recent In Panhandle. our and our we the single-family products beyond Florida trend continued stayed by efficiently the market into and South possible. it's pre-COVID Bidding that penetration pleased in months, for captured We more quoting Central quickly sites just with has into and as critical our other Florida encouraging our activity U.S. have initial line taken in in end recovery. markets projects we since entered very

our is We rapidly in adds residential expand quick have data and to an time. additional footprint housing over Recent U.S. exciting opportunity catalyst place, to U.S. to replicate new a which in growing playbook relationships recovery taking suggests reputation residential. customer our our win geographic

how team Santiago, sure contribution. make the we hand to want that members to of their proud are call know I I over Before of all our

of impacted While vertically practices for employees, quickly facility partners. implemented other With we extremely and demonstrate our the include processes of a were maximizing of regular most protecting protection distancing social our reconfiguration invoice of pleased to best while to operation within downtime workplace The cadence of productivity. that and the we well-being our the commitment to campus, we the and to customers our our efficiently. same co-located integrated incorporate adapt able were quarter,

market our the stakeholders our recover. control safely outlook. economies value all local under we to While over additional financial results our turn and as now believe have with the customers factors to addressed many we our discuss creation persist delivering I will growing to and national continue call today, the to uncertainties and understandably Santiago

Santiago Giraldo

capital capital key with for reinforce for X. balance our Beginning you, quarter during that of approximately was excess million. EBITDA, adjusted resources us front. We priority operations sheet continued cash from on our great This and improvements aggressive was progress We in the as Thank Slide controls, of benefits. generated strength working on a success. A number $XX.X record management automation to such cash Christian. cost made flow reflecting tight

of XX% largely to in helped of to XXXX. with investments, through our maturities focus improve to maintenance with spend. million the CapEx allocation deleveraged at EBITDA, of sheet the quarter a no balance capital near-term of portion adjusted of approach compared a capital our perspective, a increase $XX our end June March. to at to total dividend. we our $XXX comfortable and was to net XX, end debt With level returning million recent X.Xx our prudent limited remain We business strength actions significant These second until From on phase the a shareholders an of completion representing further as liquidity growth significant collective over

the Looking of revenue drivers of to due at lower represented Slide primarily for of quarter the first during majority month. revenues on the non-invoicing April the the number weeks The month half two of X. the

compared in to the not invoiced projects that recovery quarter continue expect a safe in were As to represent during backlog, recover experienced mainly to $XX.X significant revenues active represented quarter million of remember important XX% that year from we drove It's Latin today's operations. which call, America a progressed. prior as majority to U.S. the quarter. revenue demand the in market believe in revenues weeks, sequential more improvement down the which high for those million U.S. U.S. revenues the was This sequential range, was monthly the quarters. construction quarter deliver the discussed was which being single-digit future revenue our as in with quarter improvement we for for two revenue the prepare of sites for $XX.X Adjusting our have on non-invoicing we percent we environment. revenue slow to of reflective

in required third slow revenue comparison. quarter. residential, with sites direction in experienced that COVID-XX which second U.S. highest Additionally, disruptions. Revenues In quarter represented have record on by preparations guidelines. part in into decline function in customers Colombia, the adapt about Latin difficult of adhere of our at remain the to to good our America so revenue delayed of a recovery. feel business the U.S. stages more and the in of year, a other In the the business single was been mid countries, we job steep early expensive many to down and was American modest a digits, Latin year-over-year XXXX significant July, our June quarter varying prior revenue for activity to provided We helped the

by and margin $XX.X at operating basis focus excellence margin gross a mostly with We percent primarily lower XX.X% the reduction million the XXX to million improvement offset in an by lower improved on quarter. during margins number initiatives, point on reflected a basis raw lower for $XX.X $X SG&A. aluminum to to XX.X% drivers EBITDA in The material in as of and prior dollar improvement was impressive efforts prices, points quarter. our sales revenue income adjusted and XXX and compared compared million in profit, material EBITDA revenues, of in XX.X% achieve a to labor to gross our automation quarter. of mix adjusted dollars the lower Slide record Looking from In EBITDA the We to favorable waste attributable X. strong direct operational adjusted adjusted gross year costs as EBITDA

the shipping, of less weak rest rest given the costs for was some primarily local improvement for in benefits margin currency year year-over-year in The continued automation reduction travel the variable our to year. related by to the driven and commissions sustainable investments lower expect given revenues and We related SG&A the quarter. of

improvements We place by our costs past over recovery. continue that to but we We can to in operations the lean, as we leading of us encouraged where and our great are months. integrated we believe markets areas look vertically a capitalize industry our highly margins to limit maintain monitor efficient leave couple in the

economies outbreak us. are in Consistent Looking in U.S. The recent the major at worst now behind we pandemic index, customers in impacts the normalizing market. improvement reopen continue impact an as had with up our many pick adverse XX. related economic has projects billing that on to number our activity Florida COVID-XX markets Slide projects. pace the and architectural trend is the of our in on that and revenue believe the activity on

promising by On reported side, order continue are as that strong. taking many public evidence strong housing trends we rebound increase the in long new demand and a starts homebuilders large runway, residential indicate the to residential provide a seeing place is that the that growth

XX% revenue Jose earlier, orders growing XX-day orders. invoicing and of of period. remain a represent our translate monthly to our Residential XX-day likely residential typically over fastest As mentioned in the We into see residential U.S. our reached to June business. record for portion we is now

Moving Slide on to number our XX. outlook

July. We our month are encouraged pace activity of by of into the

with the Based we schedule, our our outperform closely customers service we and invoicing projects we and markets. to to quarter. are momentum existing share monthly as revenue working grow sequential arise are We to through opportunities as move on expect in our current gaining third

the majority U.S. represent single-family led our expect of to residential the revenues through We with the by sales. year, significant growth

contributing returns exceptional performance Our which second gross as automation are initiatives planned. the quarter margin to in included results on

from benefited timing also of versus favorable quarter, the revenue. manufacturing input installation During we costs and

back the initiatives. to markets range factoring advantages, and As normalized margins. our a of positioned margins to This are summary, structural the stabilize, gross is level our In margin XXs leading trend from benefits normalized current range. that already our the previously expect strong mid unchanged industry communicated low in successfully toward environment navigate had to we position we with liquidity automation

execute open we strengthening on this during the serving balance to strategy for maintain With our returns costs, we safely sheet answer As our our managing period, for questions. questions. your aggressively focus line unprecedented be and that, we will will Operator, please happy customers, our shareholders. generating

Operator

you. Thank

from of Securities. We question will first now question-and-answer go session. begin Mike Shlisky comes [Operator the Instructions] ahead. Our Colliers Please

Mike Shlisky

you to was a any your that might gross the Do margin implementation margin going margin like I and your can comment EBITDA quarter, of sustainable to have appreciate much automation. way lot been quarter these and are how quantify due So growth lot the in comment have of it forward? a you on the EBITDA of the how in looks level

Christian Daes

Thanks, moving part. pieces Obviously, There quite plays mix few a of revenues Yes. our the a here. Mike. is

what on felt that of at we higher versus before, can basis think we least on that XXX year-over-year margin was automation, to we're I points the with the mix stable course I indicated sense place, ended mix, at is explaining, had pieces we attainable. depending achieve we the There a able at As going least points certainly margin probably with assuming as are that estimate points seeing on with. basis up the gross being XXX Based moving to rate basis reasonable make revenues I in how was run come of of depending XXXX XXX think but other year-over-year go could forward.

Mike Shlisky

the Panhandle. kind to about you that? the into into was might whether Thanks of your next guess, I'm I and of kind timing also Central of what's after ask if that I for that. Florida you're rapid plan your expansion wanted the in go curious seeing I as curious, opportunity it given fact accelerate here, of to share your that make expand be comes could some growth to that back there would any to gain some housing some the here. footprint market sense residential the market and

Jose Manuel Daes

expanding different Mike the different places as it are logistical a delivery and We outlook than our housing afford there the to commercial and the is can to do and small it. take logistics has many place as the totally the in team many on orders The to time residential different. and totally

expanding much and as are as we can. geographically fast as can we as So we

and move small up Coast are also, Jacksonville and to very line, we year. Carolinas. to moving to now planning here end Houston the the are in to the the East move to We to between the And way way next plan in year, now Pensacola we're up places all of and to we the along all

to you if do do do you better get it's designing be able a logistical areas as the to are start properly are We to not it failing, market, to all for into products it, than getting and those together it. we because

Mike Shlisky

cost makes this or color. on Maybe due Santiago, can Sure. your refinancing me. Thanks XXXX? of you there progress sense kind savings interest give that or other Any one last sense. of point? status you the of for process any renegotiating of that's That thoughts debt that one that have on parts or in the at the from

Santiago Giraldo

we much different depending we market for that that was on nothing certainly what Absolutely, we really opening was The are that volatility of Mike. could Clearly, there beginning seeing We've carry since that going will up is thing be been time exploring think expected that working where period And certain. the those year, we're were a of forward that the on the savings options. conditions, there our again. evaluating interest good do options now for company. so

with well to to we're working we're So able parties ahead, that. different be do

each event, cost place, be but be, at a we structure than have. haven't will alternatives what in the different in the We have will currently of we decided any that lower one

tailwind So year would going and next EPS from perspective forward. an a and an be that probably perspective, interest

Operator

Our next Josh question Please Raymond comes ahead. of go James. Wilson from

Josh Wilson

Could in seeing it different as quoting you geographic improvement in and the the regions you're talk about the U.S.? bidding to relates

Jose Manuel Daes

Hotels Yes. an month are the are country And around especially condominiums America, quality how and improvement I don't a the was in delayed of We in in closing York know were like top rest, believe condominiums, and and rentals, COVID July mean now don't office great, There of all March, see new back because June good, large small around doing the the And I we there in job sold where some better. being are because May. the South a also delay for in of lot New we're in even projects. of Florida I mixed-use of was hotels. But everybody all place. April long. lot a came I back. South areas and were. buildings XX% Boston quoting really where And and delayed. the even to was area buildings, we're there lot the

So I sooner is soon, country going the believe a to later resilient know, make going you it we're go mean, very to everything normal. I to back and than is U.S.

Josh Wilson

it office and that your to impacted infamously what more customers of on topic some from relates of are outlook the categories, multifamily? their And in you as terms hearing for

Jose Manuel Daes

Florida. South even and buying. Well, a a York coming in people Florida, we and seeing and of lot New multi-family on of We're the in depend here Boston outside lot from people Canada

largest the markets, being Russia. few And buildings are any one which not Latin and from seeing the are Venezuela Brazil, of a influence why we of that's still So is built. America, Colombia,

to we that. wait for have So

the of ready, it's going the a matter are the as the ready, reopens, we're that of GCs orders because developers going just a multitude up coming to are believe here. are have buildings people getting As soon I ready,

Josh Wilson

Got what it. for sense year? CapEx then Santiago, think And will you a be the give us can you of

Santiago Giraldo

Very minimal, Josh.

As and and growth the we operational initiatives had indicated CapEx now. fully have completed fully the before, automation been

installed a CapEx, as the basically we for much so And in to is with already had it anything good investments, So We're few of for had the that. be as really goes far completed our maintenance The delay rest having expected the dollars our phase. next not perhaps set couple what years. year, year. we thing with we're but that's of the completion mainly line than that these for more million not pretty the capacity would much of

is expectation we'll my So maintenance mainly stick CapEx. that rest just the way, the of to

Operator

Our next go question ahead. Wojs comes of Please from Tim Baird.

Tim Wojs

question, the Nice the just given points margin clarification, of is you expect the strength a what going job for go-forward gross on Santiago XXX kind comment just that full really the would My of year? or like of of forward, year-to-date, first profitability. a basis kind that kind is

Santiago Giraldo

No, a next I get couple basis think that we hundred couple for points up of can of XXXX ended what we with. the quarters, over

up if XX.X%, basically. low with I is mid new to ended think So the XXs norm we

I $XXXX but achievable, is back aluminum as were there in $XXXX. as earlier, I is Q, Obviously, control moving raw per we XXs last ton, prices saying was they're low think pieces to mid can't getting as the to the they here. few a

to little bit expect have revenues. we a installation more of revenues versus forward, manufacturing Going

to XXX to in to structural up I pieces, think ended things which with. XX% place. we that as also that that the So going there level, opposed XXX there equate is XXXX are so And to would XX%, few to gets be some is but us a or XX.X% moving

Tim Wojs

Okay.

you would year-over-year manufacturing? back still toward manufacturing of your or on on you then a steer Okay, think the that's fair. more half, And think it mix be normalized, will do basis, versus installation do

Santiago Giraldo

year. it'll was of I this large completing on first normalized to GM&P ramp think up, the schedule QX. more quarters during couple a there few backlog due and projects QX based be of our

XX.X% we quarters a expect mix that. the to and of why because XX%, wouldn't that's related tailwind partly gross you of next of So should to have for to less be reach margins, able couple

moving other in aluminum any for saying, be labor prices kind whatnot, and we we're to and like was So the But on the of as raw automation to saying and I trying I cost of others. event mid XXs. able the and understand pieces to was the should get normalizing because mix such tailwinds like

Tim Wojs

what of you. XXXX. Thank clear. to residential full flat any And it and just I That's view in half business, could and there orders actually to on year is Okay. now, a kind perform this second how June look be will in could those year business what that the now? residential up then on like mean, way the the frame basis be there

Jose Manuel Daes

not two and is that we residential day-by-day because we is have already predictable, because months most. the get we six the the weeks mean, weeks Well, the so maybe time to orders like on a there I eight at in order deliver operations. is where

perform. it we the July So starting is how after was mean, a I and that, market good. have performs to and depends really on wait we August month, how But great see.

growing, market window, paint and we so day-by-day you new for is with gaining if I to glass best finishes we're higher and what of we're producers. them better dealers not the in market keep lot Now, pressures, finishes, gaining distributors. have There going I I and and share the from market the we we're the residential market and of the the believe, range gaining me good the are in believe believe a ask new

I reason So we're to me, to. if is you ask not going no There believe keep growing.

Tim Wojs

going more I'm one to squeeze Okay. That's then And great. in.

guys you're My you times make sure. pressure any I not, productivity? or on are Just but want is of just sort labor seeing lead guess to

Jose Manuel Daes

the with and for a and right resources the in places, We're were not. he I all, the and lot expenses good doing we're things costs, efficiency marvelous the mean, margin, and in not of the automation the COO, not, worked for has useful that EBITDA company. I mean, put surgery the the on the the cut he for the of really Daes we're that Christian did efficiencies No, company

Operator

go from Jellison Please of Will D.A. comes Our Davidson. ahead. question next

Will Jellison

expense. guys wondering, and favorable benefit it a COVID, work the in home at and expected of rest reductions I'm stay to continue the something can that like year? was looks from administrative that general be pretty for that you to if selling, related is So had orders

Christian Daes

shipping you are variable that that, have cost, basically related and a and So, handling portion to commissions. of mainly

with as inch So expect to well. up that would you revenues the up, trending cadence of

the some related was Although there and some mentioning, COVID traveling of there majority related related being done But just would that are there of not of be, to XX%, this would related expenses be Jose efficiencies That kind are at instance XX% as and to for to company, that there of actually of was be and probably restructuring until so restructuring of is type cost. normality. say seeking said, things or the will would not this get to whatnot. was some variable a this lot I

we for under normalized to level. return and quarters revenue would So expect a more normalized more nominal full to monthly invoicing SG&A

Will Jellison

the float then And my pivot, question, I'd That's facility you have last updates on had that new you. put to like hold quarter? on do Thank great. glass last any helpful. Okay, you

Jose Manuel Daes

that We Yes, we on an the to we was We together with to there COVID, start nature. investment project do. no and do. put hold. time Due Saint-Gobain got of

first month example, that now do we out. Bogota them was mean, reassessing have actually the it. believe to do the was it. we month, necessity are sold Last float for we We that the do I should with

will demand next means make there plan that the the the again. go that that And two years increase means in ahead. is that to sales the in we So float with that plant

And relooking next year, are believe numbers we believe We I the the answer by March. we'll will by end of year an should at we start. be the I of January have when or now.

and the now of between that year. end decide will We the

Operator

the Jose session. like I back question-and-answer closing concludes would over to turn conference the for This any to Manuel remarks.

Jose Manuel Daes

for call. everyone participating today's in you Thank

will believe poised Thank having and making costs keep to I results, better margins. better keep news company great our you. give cutting extra for you. We is

Operator

today's conference call. concludes This

You day. for and Thank may pleasant disconnect have lines. you a participating your

Tecnoglass (TGLS) 9 Aug 202020 Q2 Earnings call transcript