TGLS - Earnings call transcript Q4 2020

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Operator

Greetings. And welcome to Tecnoglass, Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. reminder, is a recorded. As Instructions] this being conference [Operator your pleasure Nacier, It my introduce host, is now to Rodny Investor Relations. Thank you.

You begin. may

Rodny Nacier

for accompany section this of Tecnoglass’ for may be XXXX copy joining Tecnoglass the and call the you Investors on of to year A conference website. fourth presentation slide the obtained full call. Thank quarter us

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

José Manuel Daes

Rodny, you call. today’s you, XXXX participating and fronts. a Tecnoglass different for year everyone for many Thank thank on on milestone was

and basis southeast to tailwinds dedication quarter and market strong position us year with On investments us the operational capacity note industry we glass a region. advanced a completed to markets attractive at our vertically-integrated of million. the of several residential in These resilience to team. of record announced the and reflect results a architectural further ended diversification had the within And we operations further U.S. of we side, level we up the produce rapidly exceptional in results part during metrics. automation many leadership our the XXXX, across early implementation slightly operating and $XXX high These growing and conditions to strengthen capitalized on achieve aim on second strategy. we additional capture share, of to mainly our year-over-year momentum as return new the a businesses, our XXXX, to enhancements which straight year in expand in that important on In enhancements, is from to geographic position operations. successfully a structural important to flow, record as on profit challenges end adjusted percentage macro Building source and end year to both recovering gross on continue allowed addition an growth comfortable U.S. the dollar allowed as a basis the EBITDA, produce navigated our through diversify market to our in we We we sales. record pandemic-related the and full of commercial backlog cash win positive

As At that of Most now remain maximizing importantly, in represents of markets a on the driver single-family and will been XXXX, compared our sales, our just on of X% XXXX. ago focus nearly XXXX only and XX% significant the XXXX. country potential in of when years to U.S., residential XX% in of our represented revenues, to focus compared end in a the we growth. end our XX% single-family XXXX XX% has four result full entered business year

called Our Multimax, production channels has additional recently large opened includes those models line to growth homebuilders, customer. of introduced with product which untapped

structure to the our option in cash stock. representing operating managing dividends into change our Furthermore, quarter in made success cash receive is of we capital to translating of capital progress create purely amended XXXX. cash-only dividend XXXX, a adjusted to significant enhancing a eliminated generation, Starting for the EBITDA in XX% our our our value shareholders. flow payment working with and we During in additional also our by and year, first the simplified with over step

not consortium the and similar outstanding very companies us Our to a of than commitment with by many year further as to U.S. company, leadership that of further focused a and extend thrilled were by our believe XXst, the very U.S. a returning stronger We a shareholders, on XXXX. significantly summary, our strong In U.S. cash leverage exit position success focused plan completed a at base, am our improved Stock in was capital on to size. an drive record to to debt. position conservative recapitalization our encouraged Exchange. remain mostly on performance Colombian industry. This of delivering a better from while flow underpinned lenders a profile since company. comparable much now XXXX. funded December NASDAQ, delisting shareholder flow. favorable and Tecnoglass In a we our seen our validated level return a U.S. times we during committed our listed November, are to of extremely aligns improve X.X accretive shares terms In allows European-based portion as cash to or to recently company extremely I cash profitability was U.S. publicly-traded by with generation We capital of which to our evolution better leaner by the investment exclusively improved and

competitive to We Technoglass’ to while leading share maintain industry U.S. continue capturing leverage advantages structure the margin, will initial market in

provide to call well-situated a are stellar the now achieve year to our performance on additional will for of Chris returns details We another shareholders XXXX. our turn and backlog. I in over to financial

Chris Daes

Thank you, José Manuel.

as five in and our the Based industry of active The most of bottom return X% remained are throughout pipeline business ABI wins glass the our that projects recover a Ivy’s in very we focus, a is confidence years war the strong in We the fourth sectors annualized of backlog multi-year the markets. to in with have new or data right X% time. indicates to residential. extraordinary to contractors markets of contracts our we million good actively and competitive April move backlog, project $XXX rose and most the were in new results advance recent with New U.S. approximately growth U.S. of grow that to growth evident right projects products The in to the over key and regions encouraging trend all pleased X% we revenue led coming pursuing give a from are to solid since glazing and to quarter and overall slide next the rate geographic some close was right quarter new structural can we by resiliency the Year. revenues which design us on our Moving ended believe and continued our times expected quarter environment with our into in quarters. is in the LTM were Fourth on rebound growth The building this above longstanding XXXX to we product both project to on lines, our mix inquirers year. to we an total in attractive at five. our our and persistent the X.X the in at and market the sequentially out the partnerships advantages partnerships the

one-third types multifamily approximately as two-thirds in includes medium high-rise projects, production. As product to our roughly and we is is all single-family related as backlog mentioned last well quarter, while non-residential, and

orders However, underrepresented is single-family these will between we the the further to of short-term and our related continue backlog influence projects. in the relationship of increase mix nature single-family our backlog revenue housing due to as revenue towards the forward and

near-term. significant are we we about the XXXX, to in further to most most opportunities the market the attractive where single-family we opportunities residential penetrate excited growth Looking see the have

Existing starts. markets. support trends interest addressable to Turning overview home macroeconomic market the of providing demand opportunities supplies, in business Single-family low continue are continue an to U.S. six. and on us the our housing expanding to slide robust end with sales, low rates urbanization this tailwinds

into into XX% expansion U.S. than revenues in single-family fourth year expanding more compared nearly with rapid our XXXX XX% to in XXXX. revenues, XX% representing quarter the Our of and year-over-year continue residential quarter full the

our products and beyond worked have the South Florida reach and in other single-family Panhandle. to Florida expand We the hard to of Florida markets Central

since experienced are single-family XX% of growth result, a quarter in As XXXX. sequentially revenue we three

of we scale tier our lines As efforts addition penetrating These our dealers for impact-resistant builders large product product Multimax to line, focused networks U.S. we our expand in to on lower top Elite are and presence mainly of deepen Southeast is in -- reach to production the planned includes, and single-family, targeted threshold. to our the Prestige which broaden

into Carolina. fact, the year and In our Texas widen of network areas to expect we Louisiana, for Georgia, Multimax South dealer within attractive

shorter, creating family commitment our This and our partnership, greater positively maintaining strengthens strong reminder, revenue, our to a Overall, increasing us manufacturing carrier performance mix innovation. XXXX new single markets provides entering in was cash new our margins. retainage. also cycle and single-family given our projects, flow, which augmented winning impacts customers, new our As facility by no product business cash with

drive Santiago We outlook. the excellence to discuss excited to improvement are to dedicated turn call and across to our now over the will our coming financial are in further I business quarters. and results

Santiago Giraldo

Thank you, Christian.

high reaped U.S. our flow significant in investments remarkable strengthening into our through return During geographies XXXX, new captured business capital market in facilities, our our we cash share expanded leveraged the additional benefits structure, and from

percentage XXXX and sales, our to while collective us record and a allowed of entire COVID-XX pandemic. on dollar all results EBITDA retaining a both adjusted the basis workforce as profit reflect efforts and these drive Our throughout gross

and Our achievements of resilience underscore people. our the to-date company our

outperformance drivers leading revenue quarter, number growth in to on for market eight. quarter, the for revenues drove of the In a growth straight to slide the return to fourth quarter. in the total second U.S. the Turning that in

the in been many offset pandemic. delayed Colombia U.S. sites American to helped results has onset other strong primary the Latin at in Our of in performance activity of job and markets the our the driver customer and

Our Latin American stages markets remain early recovery. of in the

XXXX. representing However, of increase since to business XXXX by XX% Colombia business X% see revenues, in than quarter to fourth The our U.S. up we year XX% Growth our with ramped-up significantly in encouraged the growth end of mark our were compared full in continued single-family mix XXXX, sales approximately XX%. year XXXX. for of was of year XX% approximately full sequentially quarter-over-quarter the the more residential an to the in of total third toward

continue While segment business, the outpace recovering we pleased markets our conditions we the all rest single-family end of in in our serve. to growth of to continues residential see were

EBITDA $XX.X the quarter million, EBITDA mainly operating The of year basis revenue. better revenue the X% million, year-over-year year a margin for fourth in quarter quarter including adjusted expansion on EBITDA mix costs of representing increased number slide representing as improvement margin nine. Adjusted related return point expenses. EBITDA basis adjusted to to increased Looking variable XXXX of primarily as the installation million, XXX $XX.X XX.X%. of our COVID-XX a $XX.X XX.X%. to higher capped to of an to related as XXX full Adjusted $XX.X performance gross had record margin for a new increased reflected full a at unusual to well XX.X% prior gross margin gross shipping, raw margin prior-year Fourth margins quarter profit The compared due and automation a representing an gross from million mix representing efficiencies enhancements. full from gross fourth year XX.X% activity, XX.X%. the impressive a of expenses record of high higher year of This strong operating quarter, a off profit of Higher as margin. material record in XX.X. XX.X% well points This expenses higher year to gross manufacturing a the quarter was installation versus profit, for drivers

full of year our operating cost tight favorable efforts $X.X to reduced the and result lean administrative along controls, For with variable XXXX, as our expenses year-over-year million structure enhance on expenses rates. by improved exchange a

and to and of percentage expenses of to year. primarily generate revenue, most XXXX, a COVID-XX Overall, continues to As the efficient higher sustain to expenses in related strong efficiencies and source highly remain compared profitability. our our returns base XXXX. due We in industry to operating were we for lower manufacturing believe can revenues improve our capacity cost margins pathways reduce additional ability leading confident our we and

at our slide improved balance on sheet Looking leverage XX. profile and number

investments improved adjusted capital million the generated of account to record higher CapEx, CapEx. represented record cash management. our These with of an full second EBITDA, $XX.X nearly strong by our by we XX% we a XXXX, profitability year-over-year $XX.X which $XX.X free quarter million, During year accomplishments. encouraging with higher million cash was return $XX.X working operating achieved flow, of initiatives million. completed With into by XXXX over these and associated maintenance and of year, related XXXX completion CapEx the Taking helped the flow of

net times future our strength ability sheet returns result with liquidity our of cash payout. the adjusted a our profile significantly through X.X improve down approximately position a end million times were shareholders a leverage our balance year in of and EBITDA, on to dividend able balance $XX our cash conservative XXXX. As to execute supports growth X.X flows, of to exceptional to with from along we initiatives direct to This debt

a conservative term to The last announced years XXX a million three million of facility quarter, of committed basis leverage of end. facility average rate new from million X.X% with X%, at decrease addition, extended an spread we weighted new beginning net of comprises of XXXX, a over will in consists XXX maturity revolving and based This which will facility. point facility a senior April of loan This credit $XXX rate $XXX $XX interest XXXX. level date reduction LIBOR our plus an previously. initial an secured year by to In interest on our credit represent

have estimate in be of the will interest debt down reduce million senior and amortization we an the X.X%. schedule the execute strong. our on at move savings cash after significantly expected, objectives our existing far To enhance step very forward. This recent demand current The which January, we The existing capacity of encouraging for construction recapitalization growth looks conversations will price expense. late aggregate our $XX as redemption paid the to float our operation financial new of million As down notes, significantly plant. $XXX point, flexibility as structure the that been will approximately with in glass advancement of new our Saint had as and is We Gobain new interest annually. capacity of

along move the as We more color will we provide into year.

and the invoicing first close we a and of positive out year-to-date, XXXX solid XXXX outlook to the based orders to year. for XX. Moving forward growth start full to solid quarter our Based slide our strong on on on look number achieving momentum in

revenue pleased are a growth X% We to at provide of the of million full midpoint. XXXX million, $XXX to outlook year $XXX representing

any well operation COVID-XX-related April of had We year-over-year to on as invoicing of the in expect we compared in in of constraints XXXX, of full first without higher timing March a growth schedule based having the half as and as XXXX anticipated XXXX. XXXX

revenue. revenues, expected Latin outlook CapEx full the stronger these recovery significant by American automation investments the expect on our range to representing markets. our $XXX and we benefit at continue to of In EBITDA in mix almost adjusted the residential will million, mix the be the to in $XXX offset slower higher we expect to in anticipated growth the high product return have majority continue of expect year led Based addition, midpoint completed sales of versus Gross single-family demand in U.S. U.S. from margins our range. initiatives. the to million of to to previously with we growth represent X.X% of a installation Furthermore,

as we our mentioned margin communicated raw mid-XXs trend reiterate expect quarter, However, important previously last range. we markets point our several to stabilize gross the material towards and cost to quarters, next over an back

expect processes and primarily $XX to projects We to million end in XXXX year. $XX which million within the of related the in be CapEx new should some automation approximate maintenance to incremental factory the by completed

we our ability With objectives, the are confident to strength of flexibility our financial balance leading our new margins. on sheet opportunities, achieve to maintaining growth while our industry execute in and

market our please expanding cash questions. answer and attractive execute the remain continuing while we our As move commercial the generation, happy focused in our to single-family we that, line Operator, record your on multifamily With of track backlog strong addressable of be will open XXXX, and in questions. U.S. on maintaining housing to for flow we into projects

Operator

Thank W. of you. line with [Operator the from Instructions] question. Our Baird. proceed with first question your Please Tim comes Wojs Robert

Tim Wojs

off Good year Hey. to close and hear good start things Nice to are good to the XXXX. in a guys. morning,

Santiago Giraldo

Good morning, Tim.

Tim Wojs

a just -- orders kind new not am you backlog? Maybe accelerating really really the And in answer but not But what this. much older the contracted and or it kind from any to question just traction of Hey. with customers is, get newer in to customers? could at trying business? sure also of I newer is residential big frame am you I existing versus how non-res way and is coming to how of U.S. How in there leveraging customers, seeing are picture

José Manuel Daes

José. is This Yes.

this. me Let you tell

the residential for six in we residential very even high-rise, mean, And in a backlog minimal or not less, there is is Northeast. the highest been turnaround a Florida, backlog. residential because very, of weeks our backlog is seen. mid-rise. ever so have the the I the higher in We the we lot in softer are Northeast penetrating it’s our In in

Tim Wojs

Okay.

residential are from And the Okay. in production we in lead kind that helpful. nice Southeast guess, really U.S. standpoint? be I from seeing for are on challenges have their lot having expecting resi? an XXXX a benefits times you That’s what of extending. And or a companies kind asking that are am in window then, of to you opportunity that and are side, of labor are is the the seen you seeing tailwind a mean, I I the

José Manuel Daes

Yes. Yes.

XX% to High a to lead has everybody hoping I we I mean, and residential are that brother are year. demand both of local demand our shortening. of by XX% and huge times. even improving mean, and have, capacity. labor have productivity We strains It’s the and My improving has job are are in we because our very lead we our lead worlds. we are. we increase best unbelievable done times marvelous we the have this the and times labor, shortening automating cheap production

to weeks lead weeks have from six We XX on depending project. times the

we and have Now six weeks delivering we at the in all five are lead times less. or

Tim Wojs

Okay.

just maturities. And ‘XX, at strong the guess fantastic. That’s as you flow, I cash had I what look And then, I last free broadly, of the a on you are the we a more leverage in ‘XX. have, year really Okay. you guess, one the taken kind perspective? pluses have and extended guess, cash flow maybe from down, free I then, have minuses

made lot in a You investments of the business. CapEx have already

of from priorities I over your the or what couple cash are the flow next perspectives? years So capital of guess, kind key,

Santiago Giraldo

Tim. right, All

on guidance, the projecting as last are our be opposed in first doubling capital. working we contraction to So, growth to priority basically Based year. would reinvest

going we the way. to that in obviously are business So reinvest

reduced lot year a the going saw heard of completed. the call from as you with being this couple CapEx automation Our of what in is from last you be to the years

processes seeing a the other are some automate further to factory. we within of portion opportunities However,

interest about. going it benefited think, in expected a CapEx definitely a So cash is produce and business allocation that. cash drive based flow the this makes some be quite a cash what continue going of is are paying perspective, also capital lower sense the as to incremental is be far going to as year from There to years. to From higher tailwinds But flow we reinvesting to what help $XX seeing flow. expenses couple we to as million and well. is Obviously, debt, to in build on opportunities having bit going less down margins expecting having come the in last profitability higher also I on

are well what we to see -- business, about. it’s situated leverage down and pay opportunities in think I reinvest the So come

Tim Wojs

Okay.

luck good on Well, on XXXX, guys. great XXXX Great. Okay. and job

Santiago Giraldo

Tim. Thanks,

José Manuel Daes

Thank you.

Operator

with from with D.A. Our next proceed question your Davidson. question. the comes line Brent Thielman Please of

Brent Thielman

that you. versus growth I Congratulations impactful well within a Great. talk than single-family single get the on quarter more you Multimax a been sense great legacy how have want I to around XX% business. products this -- Thank year. on want reported business. as to single-family has you offered that the in

José Manuel Daes

is June that or businesses that longer, not because the immediately. and order new Multimax we So, not. low by replacement to pick we product, that demand are order four and the the months the market to especially a the lot, starting not construction we there see up started windows don’t in were they sell usual in them they you just or are remodel like And And end we months lot we three were where even of for especially that of those even business. the maybe sell hope a for tract is going for homes where in Multimax. to

very, very, are and residential very our about very we positive So excited line.

Brent Thielman

Okay.

in at ramp impactful lot this It ‘XX. very here not going So up quarter. to a it’s all sounds like

José Manuel Daes

and up the lines, to line Multimax residential Difficulty] The order residential great steam. whole for mean the really [Technical in the lot of Well, Yeah. hit example, I going so first months after But numbers is far is have picking two a been what the is June.

Rodny Nacier

One you lost line. moment. if right Santiago, And can we over maybe take One the now. speaker’s moment. just

Santiago Giraldo

started. was QX. add what just Yes. finish -- whole Multimax did José to saying, But not during lot I was am here, that just mean, was getting a I Brent. that

you saw as Elite pickup Prestige. a from what was and So

legacy business. the it So Hello? was

Operator

line with the Please question Mike with from Securities. comes question. Colliers [Operator of your proceed Instructions] Our next Shlisky

Mike Shlisky

morning. you me just hear or… Good okay? Santiago Hey. Is Can

Santiago Giraldo

Yeah. you hear perfectly, are you? can I Yeah. Mike. How

Mike Shlisky

am I How great. are you?

Santiago Giraldo

well. doing am I Thanks.

Mike Shlisky

wanted I in guess, the always company some have container shipping I advantages shipping, you has about in great talked availability. Good. how cost, ask, shipping to the past

have the an been bit some the and of We and how about some about tougher something is headlines find a pretty you capacity. Colombia-U.S. right could now? world book for been alliance happen some parts that’s issue you guys forward in recently Is little at hearing that’s or to going some that containers all good do feel that

Santiago Giraldo

No.

-- vertically are We right? we one what need actually internally. an most integrated of the great kind is many reliant source other on fully of advantages supply not we from I of extended that chain of being we places, are mean

supply on relying our anybody not chain. to significantly are to We contribute

perspective coming So still of bit container U.S. lot So been quite in value-added a empty, imported with of of you supply from know, furthermore, much have case. the as a imbalance U.S. a goods back And shipping that has there’s from right? come from the not we containers pretty most back into trade that the

your answer short question is, no, no. So, to

have not transportation. We of shortage been impacted by

Mike Shlisky

from raw changes ask then of of extrusions. should I kind be quarters. there next aluminum that’s a some of of your in Can on looking cost at the couple Any similar materials we to question the

Chris Daes

this the we for Well, Christian, are price year we the of is -- XXXX. fix whole

bought XXXX for for everything we no have we already that XXXX. aluminum need So and we increases

So we are fine.

but premium LME, of lowest premium pay and able the possible. we have pay were fact, we that matter the to also magnificent is at a a there for only to prizes you As get not

they that have to Now, we the price pay. up gone double premium

said, of was set company. So aluminum. are we February in the the in producing my brother in like history the and best are lines up the and They steaming, February glass -- windows

Mike Shlisky

here I Barranquilla quarter in update Can last in just in about whether about facilities. facilities upwards trending themselves? downwards If one this Outstanding. are your COVID area squeeze on or conditions your ask you the question within and more us cases

Chris Daes

cases six COVID Well, out we have only today, five of active X,XXX employees. or

really We are doing contained. is mean, everything I good.

numbers down any the Barranquilla where six in five are. The months. We in months haven’t had we last dramatically or are hospitalizations

it’s So looking good.

José Manuel Daes

the Already And we what herd specifically, Barranquilla called XX% is in people in antibodies. Colombia, immunization. obviously, of the have have

We that end. are great doing really on

Mike Shlisky

Thanks great stay again That’s hear, well. Wow. and to guys.

Santiago Giraldo

Talk Mike. Thanks, soon.

Operator

to call I’d There are the queue. no questions hand the to like closing José Manuel Daes further in remarks. for back

José Manuel Daes

Thank participating everyone, on for today’s call. you,

to We having keep news. are going great

for the company better queue. things we back aligned and you. Thank Our is are in

Operator

Ladies does you and gentlemen, participation. your for teleconference. Thank this conclude today’s

and your a have wonderful You day. may time disconnect this lines at

Tecnoglass (TGLS) 2 Mar 212020 Q4 Earnings call transcript