TGLS - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the Tecnoglass Second Quarter 2022 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brad Cray of Investor Relations. ahead. go Please

Brad Cray

of joining Call. for accompany Tecnoglass' Quarter Investors Second call Thank copy us of Conference section the on A be to Tecnoglass the XXXX website. may you obtained for the slide this presentation

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

José Manuel Daes

Thank you, adjusted the XXXX first and today's on and of call. profit, gross backlog. pleased everyone of you participating with thank Brad, We record revenue, to EBITDA very were levels end half for

second end Our revenues continued year-over-year in straight market, our XX% growth the of business. in driven our in million, quarter record to accelerating increased the total fifth $XXX.X revenues residential single-family expansion our quarter by commercial marking

and achievement of year-over-year, this record Our approximately business, remodel reflects renovation single-family This key up focused a residential is US total rapid projects, to revenues. the expansion which XX% regions. or million, XX% mainly was in of on based $XX.X business

for to margin commercial quarter business, another activity record us accelerating track EBITDA, to and service future. foreseeable produced EBITDA our and the by excess gain existing we results impressive adjusted Building Our market customers. is while exceptional which expect our with of adjusted an also allowed have supported we product industry-leading unique share, offerings new on to performance, sustaining XX%. our in continue continue of in client Momentum of in sales record

to adjusted the innovation, track history X.X strong deleverage validate product of cash A exceptional margin. to integrated as all mix cash company's record debt and our at capacity the efforts control enhancements, further ratio unique sheet balance cost net allowed single-family lowest higher vertically revenues established EBITDA business model. of to times June. LTM, has residential us our this results in flow to disciplined Our contributed and Tecnoglass' flow, momentum in of The strong

trajectory of Overall, returns are excellence dedication the team are to strength flow, the we and given we continued a increase and proud our our dividend XX% announced excited of capital to business. further business to Additionally, today our for our in by entire cash shareholders. their boost of

we to our XXXX, record to turn our of ability call results. remainder will guidance provide backlog. to over of deliver in now confident increased the another Chris I our Looking achieve to year additional to are the on record details

Chris Daes

Thank you, José Manuel.

X. on to Moving backlog our slide

results US quarter multifamily our performance regions of strong a single commercial reflect addition side family on an and our our key in across in to activity the second residential Our business. acceleration of work,

that over am increasing We year-over-year, X.X enjoyed continue end growth was due that project of a high-rise shipments of XX.X% the Backlog each US to contribute activity have XX in multi-family increased times into of to wins at note backlog, our mid the primarily level an to sequential our solid quoting month in quarter this see levels pleased I and months. number commercial is a which to million projects and Southeastern market. record year. representing to mostly bidding revenue past attractive accelerating $XXX

this July. strong have expect and continue month to in We another experienced record of activity already invoicing

supported territory. tied The is by monthly XX.X multi-family the reading two-third is of shop outlook June given of to in the backlog our trends the reading expansion favorable positive also multi-family ABI's we Our reading seeing XXth residential. straight supports XX.X, of ABI are index Index marking

presence the other markets. healthier which is US, in than largest Southeastern activity Our experiencing is currently

projects geographic number US continue those operations. in Therefore, while our affordable and provide prudently we our we a of experiencing that in our Florida With up help competitive to a fully Santiago duration organically growth like projects. that I sales tax pleased our the opened are attractive by Furthermore, hardening significant of focus, track shorter-term portion successfully business granting delivering long-standing opportunities on ability in projects backlog an our timely would our maintain are to captured our We able schedule. attractive more as structural summary, regions. us believe of our customers choice that this single-family large also of in work. everyone our tailwinds is trajectory keep on results of deliveries our spot across year. to home to not additional because remind backlog from of of and of our the multifamily given bill a increasing supplier growing details makes underrepresented high-profile view is moment. with impact-resistant We our and investing will date has In door very are new exemption. partnerships, a on windows advantages growing recent state's record more two-year single-family housing

investments our a will months. $XXX help less service to us effectively CapEx to and revenue. return for Our capacity the than X call approximately will to high on We this for now the combination results end XX continued period years installed CapEx of to residential allow million our with demand us These year. in single-family support the of expectations I invoice our outlook the will the to year ahead. to discuss Santiago market incremental quarters surpass and payback on the performance with over investments and turn invested in financial with XX our anticipate capital our optimism operations to improve Slide

Santiago Giraldo

Christian. you, Thank

in of our performance a attractive direct positioning second geographies. quarter vertically execute in strong Our platform to and our the is leverage ability our strategic reflection integrated on

shorter are are products market our to business new business. times. our we strengthening our relationships ability residential additional due providing at in exceptional which in particularly superior to We clients to This with evident lead customer quality service single-family is supply attractive gaining our value share an and winning

second proud the business our year-over-year saw single-family revenue to represents record This the an total extremely results, of quarter residential established our to XX% our are XX% of relates track XXXX. XX% financial business, in increase quarter. particularly of revenues of it in which strong compared now We as second

approximately our fluctuations. mortgage change profitable helped in like tied remodel increasing to Our to profitability. A of XX% rate a residential create market to presence end is highly step projects single-family in that not that I revenues would and highlight point renovation our the has are very important highly sensitive are to

products in see of upside opportunity largely geographic through supported our with Central the our where have production the base into dealer expansion These market and untapped southern homebuilders. Southeast further in most are also and share growth significant by states trend population we innovative tailwinds further We catering secular the line Multimax migration presence. of the to expanding US our in South diversification our sales

Now X% natural in and factors of tight through five, number to and turnover and low rock transportation in our inflation return our three, revenues; and dependable of energy savings power talent environment. a I solar capacity supply integrated glass two, model business emissions. operations power four, our energy are number More of at on-site would our aluminum vertically plant upgrades; driving number reiterate stabilizing the like from supply on keeping XX% costs to talented strategically located number gas green and cost with labor employer success our current see the Slide Saint-Gobain; X, cogeneration supply; an inputs how and around business are; investments one, choice through automation our through our we on ample hedging prior joint high and specifically, market number differentiating through cost quality maintain of in venture with being in

evident strategic in first advantages our over our peers. meaningful provide of continue half the in our structural year investments As the results us with to

most more shorter projects products our allowed quote Our with and control of to over has chain value deliver lead us times.

increased increase was $XXX.X residential our the revenue Now ramp-up to number projects. of quarter. market a turning million single-family XX.X% activity, and This of to growth X. year-over-year gains Total driven share strong drivers the on record revenues the for slide second in ongoing by commercial

second the revenues construction saw Chris quarter. sequential growth As each commercial year-to-date through mentioned, month our

Pasnama. reminder, completed revenue. served acquisition full $X.X importer XXXX revenues the in domiciled exclusively the Ventanas we quarter an Solar as Tecnoglass of year of Panama company country products fourth contributed of a As a inter-company that to distributor during Solar XXXX, sales, Ventanas of of million the approximately our eliminating After and

to been common results the acquisitions with in Our of results XXXX account control. line of recasting reflect for have to under ASC the retroactive adjusted XXX-XX for consolidation

$XX the compared increased a record the in prior XX. EBITDA year on Adjusted at XXXX. adjusted slide compared to quarter. margin second drivers for EBITDA number quarter quarter increased $XX.X million, XXXX points, Adjusted the XX.X% of Looking the of of XXX XX.X% million to of to second basis EBITDA quarterly

This XX.X% of XX.X% $XX.X year gross margin gross Second XX.X% in quarter. representing profit gross profit compares grew quarter the million, to gross a $XX.X representing to prior million, a margin.

XX.X% accounting year quarter, nonrecurring percentage professional increase than higher rates other single-family do sales in XXX sales, operating revenue point higher related improvement better from basis shipping fixed versus of XX.X%, to prior certain and our margin, activity SG&A fees to revenues an residential the as to and the a higher professional automation to installation. due due mix Our where and more of of mix personnel, related and not fees. to reflected higher operating leverage on compared a offsetting improved total expenses expenses, to we greater primarily in products perform mainly and installation in manufacturing efficiencies

number slide on Now looking leverage XX. our balance at improved sheet and

record track have past cash to exceptional into generation strengthen with of $XX.X the cash backlog. by balance our quarters actions demand sheet prudent in operating for second as to CapEx several generation our given growth evidenced continued This Our quarter over flow with of million. financial we've flow to prepare us flexibility reinvest future cash the the increasing along taken

agreement to in the last second times of We credit approximately performance from improved Based cap our credit record of quarter and do liquidity under the our additional of I'd EBITDA. keep of of total ratio have as EBITDA million in our a leverage to of cash not end, slide debt number amendment flow adjusted carry LTM quarter in and to long from a the facility further single-family $XX.X also work. generation availability resulting $XXX and at ratio LTM related May been under and quarter on into out strengthened revolving a approximately margin of XX. us highlight on financial where amended net driven automation market installation like lower previous syndicate X.X step our operational to margin main has on in with flexibility At residential change record times margin million, expansion end, down adjusted removed as The year. in capital end to gross by our sustainable deployable this XXXX, we provides The low exceptional now million. improvements allocation had net gross our change banks. cash we balance leverage with we X.X we of our X.X $XXX the our capital debt our initiatives times structural This opportunities. performance the progress committed

to XX% fixed continue manufacturing on too revenues and our gross operating costs, overhead. as depreciation, so As mid-XXs our these such XXXX. margins grow, to does leverage low for the year compared and XXXX, to into normalize factors the expect for Taking the to account, labor in semi-fixed we full

all these expenses have mix capital of management, our to benefited significant interest flow cash including of generation. XX% given profitability, of and more creation, nature execute increase Our the giving the operational us working to also dividend better revenues reduced and improvements today. generation our growth have announced structural to enhancements transformative cash value financial flow that a our record flexibility favorable Increased strong contributed was

number strong of We in range anticipated year representing of $XXX the our the EBITDA million in now midpoint pipeline, single-family to at This our to adjusted XX% the momentum million to Slide revenue and residential. growth half of we our Based range for Moving project XXXX first XXXX the midpoint outlook on on growth full year led of XXXX full now year our of expect outlook growth. expect EBITDA full business the in increasing in mix $XXX and of Based by growing are $XXX we million. the to $XXX XX. outlook and XX% revenue this be to million, adjusted at the range. on outlook revenues, sales be represents

product As to attributable low advantages, mid-XXs revenue. from the of flow further our operations most XXXX, as the earlier, strong cash integrated deliver we will our to tail automation operations and vertically flow other to growth installation for that a in to position which to business. reiterate for in expect on fuel mainly investments I our gross end To expectations structural to strong normalize us higher are strategy. We the investments expected recent mentioned well long-term deliver cash margins end, our range another mix versus as year, of

investments XXXX. capacity half on Overall, million by CapEx $XXX new are growth pleased extremely provide exceptional first over the of of our year-end. install in are performance Our pace to with a we

on in double-digit EBITDA to integrated to Our growth positive strong platform year-to-date track another leverage puts on and call. sales of deliver today's we capitalize us results vertically many adjusted catalysts on outlined unique as year our the

executing questions. We answer business, to are direction the Operator, objectives that, the please of further our we confident beyond. happy be line on forward will and to XXXX strategic your for open in look questions. With and in

Operator

coming [Operator from you. from live. Thank And the Instructions] is Riley. is Rygiel first Alex line your question Alex, B.

Alex Rygiel

A my of Thank taking another couple gentlemen fantastic you for questions and question, quarter. congratulations on here.

are that of understand bit place of Can talk I number inflationary fantastic. you have and that it that to pressure, are the a mentioned little been managing inflation. has expansion margin your First, talk different inflationary XX you But controls a helpful. little a about that coming bit you some that you see pressures be that developing? in would progressing the if you of months how could over of kind

Santiago Giraldo

our pressures being of versus the same past normalizing. where Thanks not very reasonable have And process, some pricing, able Colombia of this US I think we integrated talked we the with tight insulated joint venture somewhat labor And been that to it provide unemployment XX%. our Alex. we've have the force the having in from of same where see constraints in glass, rate about an to our We have Saint-Gobain turnover. vertically labor aluminum little is at peers hedge you as some given

factors I think are different I think So a that levels, lead pre-COVID also in a combination times right? of dynamics us with that's lead it's the times position. us helping at different So maintaining and significantly puts

getting type type of things seeing or some normalizing We are back world. normal to

So structural we're macro inflation headwinds we the in expecting from position year, -- of seeing associated with we're we're for and not given the expect what perspective. our a rest don't what baking in

Alex Rygiel

Do US market? softened you think the even share gains some share bit relates here the can for market clearly housing of reasons And to market market residential geographies rates. gains then, And business, your a and of been? challenged what to helpful. your sustainable are you as because very has a in certain and more think higher primary Very, do your housing in have residential interest continue grow it the

Santiago Giraldo

I'll that let take José one.

José Manuel Daes

you, keep a of The is believe competitor by itself. of I me is first growing believe all, of ours there market. tell market so. lot we I Yes, let is mean growing. growing. that can I Every

better everybody outpacing because else, a are window. We we have

chasing And believe accounts. products have we start accounts. have We is to And come today, that better everybody like call have whole the of very us. is open new to the We to package. many concept a adapting and mean they the to their They to I of nice. I marketplace getting a lot it don't us it. people

Alex Rygiel

up. That's gentlemen. great quarter Nice to it Keep hear.

Santiago Giraldo

Thanks Alex. Talk soon.

Operator

Zane, coming line question you. from live. Karimi Davidson. Zane your from is next Thank is The D.A.

Zane Karimi

on congratulations and gentlemen strong morning, the Good Hey. results.

Santiago Giraldo

morning. Good

José Manuel Daes

Thank you.

Zane Karimi

that the what gross But target margins. would fall to cause understand I point? low this at So, XX% mid-XX to margin your implies outlook the below

Santiago Giraldo

I mix the business. think of the the is variable main Zane

in have given we that accretive services that discussed residential more we that don't penetrate segment, past is, that As segment. installation the the the more we the the on perform to fact margins

that's anything that So outperform say the what or do shift get that potentially I expect leverage main the are to derail To business. we variable projecting. the could if operating we revenue, on would contrary, on we

So of hit whether the main very which would mix say, kind able we're we the of the day, end confident two what on I our considerations, revenue at up would with. and of to that target, business we're end be

Zane Karimi

core you focused for the you side, this outside And that. Thank open markets more Okay. in backlog territory? your the has up on flip Southeast. Are been seeing heavily of

Santiago Giraldo

to I’ll let take. José

José Manuel Daes

Yes.

the and we design of surely. requirements We're to mean too. West new to whole and of with We plan windows our expand the slowly residential to plan are a line firmly different penetrating very to Northeast. the finishing Northeast but nicely the expand we I all

too you too to don't want much too either. to want grow soon, slow be but don't You

doing We're doing our So, job. good. we're

Zane Karimi

me. one for And that. for last Yes. Thank you

a volatility. job seeing you challenging? of are have terms as availability really And of has how become that materials in done You managing good But more guys such the cost what aluminum?

Chris Daes

that integrated We good suppliers. are vertically have we think very No. and we

have very and and had July February rest June, situation now. smooth a year between is lot We the stable movement looking for a but right from was very on. of We now the of better

are catalog to $XXX company next sell year. getting we million the So ready

Zane Karimi

Thank for time. much so the great. That’s you guys

Santiago Giraldo

soon. All right, Zane. Talk

Zane Karimi

Talk soon.

Operator

coming next Julio, is Sidoti. line you. from Thank question your Julio is Romero live. The from

Julio Romero

Hey. Good the guys. Thanks questions. morning, for taking

José Manuel Daes

morning. Good

Santiago Giraldo

Hey, Julio.

Julio Romero

Hey.

that growth growth runway residential increasing share are, how mean just homebuilders your that gaining shouldn't mean sales of like that I runway So I staying a more characterization? much rates. change your with little given bit really residential, the to the think relative rising the on fair in of new small kind with I dollars would to others? side, those immune you're market and a Is

José Manuel Daes

an in agree I so. we R&R the next with growth, a jumping recession in We're see exemption gave presentation, mean, especially for the we've seen I so A And two really their tax the doing no because lot more to remodel. into are I I the replace the of strong said Like years. far. tax, and good. I X% believe are Florida, Santiago you. changing mean Governor And people in Yes. windows.

Santiago Giraldo

It's to as important mortgage that closely which why the case. is to the to wanted mentioned, higher and That's construction home of highlight get not we're José heavily obviously people correlated not that's sometimes think to I highlight, as we impression tied that business percentage Julio R&R rates. new wrong the

Julio Romero

like key lead one to your those right the mean your these basis an But others? competition. is market days and times, other I on relative absolute driver How absolutely. No are to just relative trending maybe Yes. both than

Chris Daes

of majority what the able – that XX of eight within are business maximum. That's seven deliver weeks we to doing the to we we are do. mainly Well, XX%

to side, plan time. deliver commercial get ahead the On the we of

thank Deliveries plan for are mainly God. time, we So can on it.

outperforming, and windows we XXXX. We growing XXXX production. to growing new we are month all August, plan started keep year of two on This lines of all and

Julio Romero

expect but more Any change or is of change forward going a about for election. operating then you Okay. environment last a guys? Great. Colombian X.X presidential broader any And you at for to we're question one me months the little post the just all,

José Manuel Daes

ahead Go Christian.

Chris Daes

to The are much profitable stay try that change. the has said politics to as that away he's to at political it the looking companies the from heart but president We very and not we Colombia we new we don't situation of worried expect It's keep economy. in about today. are of

grow That's this So the because CapEx want we sure why that XX% too next will to get will why ready increase capacity we install. we that it's we early year. we but we see say grow keep a with have expanding. we're endowment to plan or the for that next we spending to That's Obviously, good year future year much make we ahead. how want

the grow So XX% deliver to if get products on we we time. can

Santiago Giraldo

a they're but talking Number to under fiscal this for at to one, Julio, going that actually from the presidential of personal pass a add Just increase they're macro intending to couple regime. reform to taxes about perspective, taxation level the new things is corporates. reducing that actually

actually So what that. net has which devaluated, the out comes number structure on was positive see net X%, the company. the And basis, positive. for new our net peso regime that's about two, of given cost a is a a since announced, We'll

impacts, of So result we not the seen a as any negative administration. have new impacts potential

Julio Romero

very Okay. it pass on. I’ll Thanks much.

José Manuel Daes

you. Thank

Operator

from live. coming line [Operator Josh Josh, Instructions] from is is The next Baird. Chan your question

Josh Chan

Congrats morning. quarter. Good good on Hi. a

José Manuel Daes

Josh. Good morning,

Josh Chan

you quarters? maybe a about, COVID? you I to morning. over guess, this very in good the talk I of Good project guess side that quarter. the pipeline what are to you timing nonres result on And also start next seeing projects see then the terms business, had of through in could turning the couple which post the nonresidential come

José Manuel Daes

the moving who companies And not very projects the for It what of space. a strength is Miami, move see there of work The being office projects. a we lot here people are a mean I growth booming. of to here. lot a requires strong is requires in the to lot that Miami, is Well, commercial of is market apartments delayed. there.

and We the to excited developers. happy. time we're talk and the very sales contrary, are them. strong And the them to all On for

backlog growing closures. huge by of have day, growing because a no the We and

Josh Chan

the backlog the grow. about the of Thank then talk And hear. think point, know How's you. the initial is before to I to of indication happens, macro you as interest, great that kind quoting That's, we on sort activity? that about How continues Could activity backlog environment? your backlog? the kind of of

José Manuel Daes

to people hire I the in Southeast few we particularly double quoting a overwhelmed more to because size most in I have the department, is mean New I And five only everywhere. years. mean with Tampa, mean the the are Well, in York. Northeast, I Florida, quotes. next we going be not mean And also in Massachusetts,

strong. New coming York, back is

So the slowdown. to wrong. things coming I last to believe high higher the were with going I the just in we flat. going last because were don't be like economy, pressuring middle is they the landing all soft to the too this fundamentals rates, be see the mean, any because is the necessary mean But This of inflation, I are which And class. not time, time, the mortgages there's be. it's to down the which time where market. money much it's should time a

Josh Chan

and the second very half. Thank for luck you good

José Manuel Daes

Chan. Josh Thanks,

Operator

we And like to you. I closing for back hand queue Manuel, would this the José call Thank to had all that's remarks. in now the questions, time. at

José Manuel Daes

keep our to and for shareholders We'll on Okay. news keep to the being Thanks, hard good please you. coming. Thank everyone working the call.

Operator

ladies conclude does Thank This gentlemen. today's and you, conference.

wonderful for Thank participation. a day. You you lines time and your disconnect may your this have at

Tecnoglass (TGLS) 5 Aug 222022 Q2 Earnings call transcript