TGLS - Earnings call 4 2023

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Operator

Greetings. Welcome to the Tecnoglass, Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to Brad Cray, Investor Relations. Thank you.

begin. may You

Brad Cray

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

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

Jose Daes

Thank thank everyone, you, participating for today's call. Brad, you, and on

to relentless proud and operational businesses. are excellence The across record key metrics. dedication year, by strong We marked our many of another of financial financial across accomplishments report our performance outstanding

Our reflected business results. full model are integrated innovation our solid domestically in all year

we XXXX, achieving and $XXX During million EBITDA record produced $XXX of record total record $XXX profit gross produced revenues million, of of million. a adjusted

We margin with our to market. end are We these entrance addressable vinyl over industry-leading sold Miami, headquarters than markets. U.S. XX% accomplish high-end aligning market profile. We the pleased doubled global key relocated while our from to Florida, maintaining our results, our resilient a strategic more into revenues of with

a flow Our management year. At us prudent $X.X shareholders. flexibility balance provides to preserved including billion $XXX XX% operational working million revenue, completed ample operating time, installing. by the strong impressive we of same have And allowed to and which finally, of generate investment sheet, expand roughly future to capacity for of for growth capital returns cash our strategic the for additional we

from our the at demand products activity This year-end. experiencing geographies. our of commercial innovative in a high in to increase key demand, $XXX.X been an so increased multi-family have and We million backlog both record healthy commercial drove

challenging We key macroeconomic share to despite in geographies, continue market a gain environment.

to We taken costs. have also disciplined approach a managing

focus leverage. given the entire gross despite capital this exchange position the year. Furthermore, in to share structure, has XX%. our a the We increase enhancement, margin We half dividend, solid discussed foreign back repurchase structural drive is year investments approximately in integrated invest our improve flexibility us in of our headwinds automation and of This vertically full are leveraging our to evident operational previously efficiency. achieved

another exceptional December We to adjusted a X.Xx of XXXX Tecnoglass. low record for as XX, EBITDA to debt year of was net to are pleased XXXX. In improve our summary,

positioning We are have our integrated glass created the window as Tecnoglass leading to value record shareholders flow platform and cash architectural vertically have us and value This returns-oriented player. which pleased as is additional for helping and growth our have from an our established positioned of with a we create XXXX Through generation. proven and extensive investments, we investments, track we look geographic continued beyond.

share diversification. Based We window and above-market strong driving attractive on confident during about challenging to in growth highlights. are market, pipeline now and continued market ability in over we in headwinds and we year This the have provide of strength taking XXXX strengthening turn the the excited our another market even prospects face to are very operating projecting customer will the through call for double-digit vinyl of taken to actions continue strategic growth macro relationships of remain highlights additional the our activity, Chris geographic our revenue growth. industry. I

Christian Daes

Thank you, Jose Manuel.

to #X. Moving Slide

results line resilience turbulent Our we the reflect business and of as fourth our expectations quarter environment. navigate a were in with model macroeconomic our

trends ability our end, we multi-family roughly at margin important, our signings of unique year-to-date. Overall, preserve X.Xx our cash the year highest Equally pipeline demonstrated quarter competitive and the stood continue solid advantages interest to to we the are This LTM, quarter revenue. generate our represented environment, grew projects. strength record million, multifamily as each of $XXX.X and demographic commercial favorable the markets. pipeline strong commercial remains flow. Backlog in robust, during despite see levering leverage activity a of and and results as to a through rate Our year and incremental reflecting

year achieve and of and of levels multifamily another XXXX. in solid we confidence that seeing activity a are bidding, commercial have strong ability gives us base strong and in quoting We our to

service. continue customers, markets new on will best-in-class entering new to providing and We adding our efforts focus

to are on are focus our projects will growing us our mindful we allow sustain to that margins. backlog, While industry-leading being we

of should faster than We have high-performance R&D our us an pipeline innovative continue to growing end allow that markets. products

automation put our a growth market. The to with made products penetrating to as in the CapEx geographies and capacity investments effectively support are and recent as into includes ample both execute expansion well years pipeline strategy the Our for expansion position new developed we operational products less in our vinyl requirements. us

about are business. sampling to excited encouraging, long-term are contributions Early products our In afforded growing time. of us provide strong the of vinyl the we residential potential the addition confidence our to from feedback giving over revenue single-family will that meaningful backlog, growth visibility our vinyl by

Moving #X. to Slide

We record expect keep book-to-bill This quarter this our invoicing, momentum over that XXXX. at and can certain a help quarters. Historically, ratio over believe XX strong the which ratio, us delays activity a cause above maintaining this visibility stood in of strong the bidding X.Xx external are to X a months. the consecutive following delivery. that We a will adds track strong despite roughly temporary of fact X/X seeing book-to-bill factors X.Xx as past our XX invoiced are on reported the backlog of provides we

Looking demographic our in trends favorable on we at regions Slide #X. key the see

above-average market, permits year main Our to growth. In resilient of notable population to activity Florida, years, past a starts prior key markets sovereign few Single-family the the the growth growth in in remain are against our shown largest country. increase tough states have the housing remained even showing experience rest robust South comparisons. population our this metropolitan single-family strong and relative to areas in continue demographically, as housing due

financial resilient we XXXX. our majority to the to point and conduct activity over now turn of will markets discuss results business. I in the trends outlook Santiago call these of for the our All key where to

Santiago Giraldo

you, Christian. Thank

Slide residential on single-family Turning #X. to

full During revenues the $XX.X change million The due $XX.X compared from year-over-year the prior we sequential a environment rates. and to quarter. single-family of rates and million. was residential a mortgage higher year were and XXXX year generated million revenues fourth year-over-year we to quarter, starts, housing primarily resulting slower macroeconomic produce residential Despite much in record of activity, year to challenging single-family declines in interest of $XXX.X pleased

residential through Florida, and entrance includes vinyl share our would into times, on introductions, expansion a variety to from diversification in Slide dealer upside key showrooms basis. To I additional product see vinyl other This We the significant widening enabled our revenue This of by a in revenues our geographic long-term new highlight throughout short a single-family windows. that recent on and continue #X, recent market base, to into points markets lead provides like entry point, strategic growth product runway for market. factors. few

pleased addressable were of significantly products December. Our our vinyl windows shipments in strategic our We expanded innovative has entry into vinyl begin to market.

significant XXXX. throughout working and clients to additional with currently deliveries and prospects testing a of sampling up are amount perform We to ramp order in

our market. to showroom holds future excited expansions, addition we for In vinyl what the the are Tecnoglass in for

quarter expect We more after results, high-end beyond. to and meaningfully contribute XXXX particularly these of single-family value-added to in second the vinyl residential products

we've already and facilities operational CapEx portion completed to transformational Importantly, of to anticipated this enable the initiatives. infrastructure our accommodate a significant

in opportunity incremental the addressable to vinyl strategic expect will $XXX segment in the years. annual million revenues entrance with this more market, We an add an than double coming our into

to the and the in Our XX to range make Tecnoglass our in expected vertically that entry quoting legacy future sell vinyl able products, approximately vinyl we gives confidence already and throughout end size and distributors customers to window have early the we vinyl for This the existing both have vinyl market Northern signed projects leverage this testing of are already in provide benefits Sarasota been X demand excited many dealers to and we and a integrated we see of opportunity Florida our the expertise seamless given customers. Notably, is our operations market, and our for attractive traction in and aluminum see new products. a and into this dealer the us and to market addition. We windows, relatively Central Tampa, XX synergies, given are addressable U.S. manufacturing of immense

activity, revenue in commercial for multifamily Slide million, year-over-year with internal for due gains mainly single-family lower decreased Turning single-family $XXX.X and XX.X% business on products full to record in multifamily and a of year. prior fourth revenues demand #XX. revenues to the for a $XXX.X residential million, year-over-year X.X% year strong with and compared market residential expectations. Total to share the to quarter drivers performing to increased line resilient Total the attributable a commercial to rebound revenues our

margin percentage of of SG&A an #XX fourth Adjusted The of EBITDA $XX.X for fourth or as to million, million compared XX.X%. full million EBITDA profit record to year-over-year. increased for of a primarily revenue the the quarter. Looking XXXX revenue Adjusted Slide EBITDA revenues drivers $XX.X a year $XXX.X XX.X% due a XX.X%. SG&A in and margin at million, in XX.X% was to quarter of XX. increase the the $XX was revenue year-over-year was for the lower prior on representing year or representing adjusted XX.X% quarter

over the This percentage compared For gross year. Fourth year, to representing million, points full improvement an XX.X% total margin. quarter a $XX of as XXX prior basis of was the gross profit XX.X%, profit of SG&A a gross to revenues related margin steep functional currency XX.X% in year mainly The the in of a peso XX% an gross FX representing margin prior quarter. change Colombian gross the million, approximately impact a reflected of and year-over-year. $XXX.X revaluation unfavorable was year-over-year

the Gross our gross impacted a XX% revenue in range revenues product versus installation representing line margin the gross record year by to the XX.X% for with was Additionally, XX.X% profit full XX% and for increase lower year mix XXXX. to a million, an in increased the $XXX during of margin of quarter. and target full

approximately each As estimate in that of in to points XXX basis margins. a operating we X% movement reminder, FX equates

looking our Slide improved leverage cash Now flow at strong and #XX. on

of working was also year, for and entry infrastructure of to payments The portion in the and included vinyl included of previously year million. expenditures year included $XX full flow our This strong profitability future management. which capacity expansion. CapEx very full by into land we strong a disclosed higher facilities driven of operating significant market. generated window operational For million, for potential related the another previously capital $XXX purchased cash capital investments

capital a in we decrease capacity, Given installed our XXXX. expect expenditures higher meaningful in

shareholders through unlock in Our in in increases allowed remaining leaving power million We roughly share $XX during us our impressive cash and under through generation dividend. cash capital the has returned to purchase of current year, our share repurchases business the million repurchases to $XX.X additional value authorization.

LTM to our cash down ended to a expectation backlog, XX% reflects the dividend of the $X.XX given year. as ratio record flow, incremental a commitment EBITDA, at the year increase in of adjusted the leverage Directors Board in return visibility shareholders. We prior This to has record of payment of debt X.Xx for the year-end approved strength quarterly X.Xx cash a low from and a continued our share. afforded net Additionally, per by to net

the credit business. On levers of turn, our efforts our facilities cash our in record a with with balance capabilities, under Slide Overall, to provided additional million, and reiterate exceptional our generation our average, multiple generation our stronger ROE value significant resulting over of us of of revolving compared grow approximately to allocation which, higher very U.S. returns. our I industry. million $XXX reinvestments As track #XX, to to metrics meaningful $XXX in building into years, like strategy peers, dividends validating we cash our in drive XX, step-up has shareholders, business to capital X December $XXX cash flow had million. and priorities. remain comparing value our profitability to total the liquidity value committed those creating we of availability On past of When pleased our and substantially driven in would ROIC returns and plus on have above-average growth product driven further the have

and of a can upward there latter the you see adjusted for remains As is our runway trajectory growth. revenue EBITDA and on positive, Slide XX,

installation. over market as our ability and of year including us of produce $X.X have growth beyond. another and exceptional to recent remain in entrance XXXX achieve as in the Our to additions capacity billion window the vinyl revenues, capabilities provided returns We annual confident above-market ever with and into

Now XX. on moving outlook to our Slide

to mentioned new business, believe guidance appropriate the remain double-digit Chris earlier, in and strong U.S. EBITDA be As lack revenue of provide based we potential year growth at expansion. That showroom the have geographical said, including growth We residential backlog by XXXX macroeconomic different revenue and trends our of on for a indicating more clarity and adjusted initiative, rates witnessed single-family forward, openings going explicit demand. that visibility trajectory afforded factors, the we interest to prudent XXXX full improving key confident and is avenues given mainly has date. largely remain resilient, our year positive another later ranges for the by being our current of it and the vinyl on markets

In to well the already timing of invoicing single-family expect resulting and residential healthy trends throughout the some for able as months, addition indicators, clarity where as projects single-family well better on business of to we includes should and growth certain coming products. residential, the ranges, in will projects. This levels seen we outlook. In in be assess backlog macroeconomic improving vinyl the the FX a in the quarters In interest based we sequential margins expected cadence potentially having explicit in of of to new as place as amount to operating regards see our margins in our from in of last a color from the step stable growth we the the X of on additional increase line up rate XXXX gross for on provide revenues leverage a year. better year,

margins. in assume While that we we economies has remain XXX basis projections, X% impact based and with adjusted movement stable rates internal on expectations approximate a FX estimate points as will FX on every an reminder, EBITDA levels current

FX is XXXX gross on be predicated Therefore, margin the is seen margin despite will peso since the it average based is XXXX improvement stronger gross Colombian year than expected FX that the in beginning the a after year. This and in current for main rate the XXXX for stable quarterly the the full level QX, FX on XX% results XXXX to lower in factors: of a full on assume average First, XX% XXXX, projected levels. than rate reasonable X

ramp-up Second, first period timing products, degree compared installation facilities expected in a projects, terms quarter the with to sequentially. we mix vinyl XXXX in of from the similar we to maintenance of anticipate of scheduled XXXX installation to QX January be anticipate mix and increased of higher XXXX. Based revenues, of an of our the our sequentially roughly revenues on of

seasonal than thereafter. of year the year is The increasing to be first quarter the expected low sequentially the quarter of

opportunities for year given to Free and to remain and in year. this is strong flow expected prospects flow business be continue vinyl-related all of expansion capital the growth beyond. completed. With to full been from automation, majority Cash excited we operations of XXXX, cash mind, our the related facility expected this Finally, having improve is expenditures to about very in and for investments

several portfolio expand entrance and new our product for innovative was we attractive the into to Demand year and progress to years geographic our introductions have resilient, Tecnoglass. our our remain market. window another growth share discussed, avenues vinyl made come. In through great strategy summary, we've market milestone against for expansion, As XXXX for product

markets. With are be to unlocking our than cost while through look questions. answer for market, strategic your happy questions. XXXX, the investments to attractive we ability additional continue the to we As that, will line in in efficient faster our in business optimistic highly Operator, growing value targeted please open U.S. structure, positioning our we and

Operator

from line Our the Instructions] questions with [Operator James. of Raymond Sam Darkatsh come first

Sam Darkatsh

X got forgive if questions, me. I've you So

mentioned expected flattish fourth you quarter and sales element quarter be the the higher. first, with Santiago, So with the first installation to

vein, could quarter? be help you So what margins for pegging you us EBITDA for in realistic might and the that gross

Santiago Giraldo

in margin, all we headwind an line the are will quarter, cadence the kind that of EBITDA residential mix, and we're looking like, Sam, wait But perhaps. should a the expect in what perspective. FX gross going of see in to with little be on to there. that. But I In able being see Yes. to more determine bit QX, line I something it orders from to QX wanted the going around fact then be from would an with a there's have of side over we'll that perspective, and be the

really last impact you happened main at If was FX The has X look year-over-year. been what's months, in stable. the

it's depreciated you been the months, a But stable. peso. last rather As recall, very XXXX in X had

behind is a So quarter-over-quarter comparison, I from think pressure FX us. the really

in we're expecting deliveries from with is also have expect XX based ramping a and in sequentially other XX had of we from we and where the the as on the thereafter, line is what would how more said working only January, know, scheduled I and of then as days -- something timing thing you up. And we growing So initiative maintenance on the that, QX days. the timing that's vinyl about call,

has have an in year. impact in there that So did which not as January of we well, last

Sam Darkatsh

normally because in Yes, December, right? that's

Santiago Giraldo

in more December. Yes,

time be little going to unusual. a this is So bit

Sam Darkatsh

Got it.

and to the fourth EBITDA margin? just to gross EBITDA, similar margin a also, So of get quarter or trying sorry. sense gross was I

Santiago Giraldo

lower line then, the up revenues. year. EBITDA was mix I could saying, ramping just as in based throughout the slightly think or And of be I on

Sam Darkatsh

macro sales of entirety of how for which Got about talk it. And just the double-digit low XX%, EBITDA thought scenario? be would think growth about might I the you respect is of the to expectations, what that reticence then But the under because 'XX that if EBITDA growth look like your uncertainty. prospective should end we

Santiago Giraldo

I X would consider on that. things

operating was get you're sales, and XXXX which is at in for effect we're XXXX, going current FX, $X,XXX. leverage what to then on line with which, going You're but projecting for have the higher to of is $X,XXX conditions,

to X% about being So talking about stronger you're the XX%. peso by

As margins, basis we out going on helping the movement we call the we stable, to the earlier, double-digit So versus X% to full to but right? have X% XX% about you're operating see XXXX. discussed FX, and going have year-over-year but on the at points stronger of then you're every with FX for impact leverage, this of growth, day, end which operating you to alluded have year, morning, of for impact the then XXX

on but be to you chance line more that think if year-over-year we kind mix. of EBITDA, it, -- FX mainly and grow a it's back can can probably So we going there's based into I in

Sam Darkatsh

it. Got

about that to holistically? you'd a FX? it XX% apply Is XXX-basis-point-or-so the headwind way from then normal and volume use incremental think a margin growth So the on

Santiago Giraldo

which is this baked going that of if operating color the we much discussing And Yes. to FX, The we're leverage effect that is about about fast margins, be to and margins a margins, of XX%. already you gross XXXX you gets then difference gross to have right? I in guidance mean mid-XXs the get, at ramp have about going on there, giving how effect look ended the XXX-basis-point you math up do we're you kind or on residential from you can if how talking we high-level And gross XX%. for that initiatives up. on kind

to more have can the that And on kind then those with of fact you that's we're be that So going leverage going we obviously, more to the revenues. offset installation upside. get operating mix. higher But

I rate the are X there. variables are margins. So project the a gross the mid-XXs in part those adequate run that is think way of playing that kind probably All and to all, in

Sam Darkatsh

window of up then manufacturers And to my in Or as single-family competitors price announcements of and line are result? increase resi anticipating keep with for a and raising announcements? looking pick those from of U.S. share question, lot a you Are lots single-family last you late. windows some your prices pricing flattish maybe --

Jose Daes

for and any that we we plans don't to aluminum on because We price increases see have prices good contrary, end. Well, to no increase glass. the have sources

our than are our in order. happy price with And very So actually, month expected better February point. -- clients was

So month we're We're at this now. very happy not with not where we least prices, are increase to or going right next.

Operator

questions next with the Our Stifel. Stanley line of from Elliott come

Stanley Elliott

talk about assuming you revenue targeting initiative, vinyl to the double-digit you the can vinyl year? for that contribute would are the how much growth On guys you're

Santiago Giraldo

place it's weighted half, testing towards the of of sampling second now of all, product. Yes, because taking first right what the basically is delivery is the and

-- the the that more probably in million contributing year are the But seeing the million bear to $XX after $XX to mind. second total orders. meaningfully in So range we in that of of quarter

indicators up and feedback upside Now early expected, where on it from. on going than see better if right come that's encouraging, now the Stan. But to ramps what's are you're going

Stanley Elliott

you thinking could the point? Great. this a all at buyback of maybe a you thinking year? what accelerating coming how that a done. And about And of is lot for Now then heavy again you're kind then lift perspective remind CapEx are about from us

Santiago Giraldo

is again, down essentially that's say, the would million. year go $XX $XX We by going ever half, are And I best strongest growth. to XXXX. the That's that flow seeing range And that one to we, to double-digit of predicated the to company million cash see free the CapEx of the on be Yes. for expected had. points fact probably has

us to going the that's So including buyback. lot on of opportunistic being many flexibility give to a do things,

us. we another know, program of approval, if there be And you the is going flow the make we sense. sense, to you if make As still to available free get have cash half roughly to

definitely we'll be on So end. opportunistic that

Stanley Elliott

And how this Perfect. think kind of parts should revenues? about to a year, moving lot but basis a of with to we SG&A last that direction on there. of kind frame of for us a give maybe you dollar percent However some want out, just me, or

Santiago Giraldo

Not nothing a whole lot only 'XX. of growing to changes, and related I to revenues. imagine than in we are which flattish, in slightly do also based would that say of commission ordinary. have which but that nonrecurring in of you But variable would out there, to transportation the Stan, the expenses other that, less expect that's higher are XXXX, do on wouldn't I we say pieces order the the than the fact the sales. But not I which X%. side, adjustments that than the locally, salaries some really are And other moving on have on expenses

So extent, that on would I to that those leverage sales. operating we higher generate can imagine

Operator

of questions Instructions] with come Wojs next [Operator the Baird. Our from line Tim

Timothy Wojs

that Manuel from just has think kind business. mean what I little guess, I over underlying the do X was bit you X hearing curious have been last customers underlying as kind at think things, order to what the your expectations and you residential of of around changed has to Jose gotten And a you said better. I'm of that months? kind business? Maybe of business I look the kind you residential kind rates kind February of just on of and back growth?

Jose Daes

say, are expect also selling because And were upward. we we Petersburg, we lot Carolina way only we're of business Florida. south up the from, [indiscernible]. Georgia, a now moving let's grow to Tampa all this But Well, moving St. to and

it we interest expect I But projects rate. interest for was to month delayed I point, and for a lot outside high We're because the to month the went mean, grow. It but the because our in of that bad, the this -- and show very housing has new lately, acceptance of And rate trend people it very was X and and enthusiastic. X just went Florida installed mean for X, are February. I said, just were good down not we're I wasn't Florida growing very that Like the market of seems products a happy. So like think happy. we of been Northern tremendous, being Vegas, months.

Timothy Wojs

Okay.

just Okay. the And trying how to I year, of I'm about of -- kind just maybe growth Santiago, then should year? expect to sequential through of ramp? guess, kind it be at the on second to kind half linear of there Would you fairly That's good. how this the some point? the of of think is weighting Or the guess more improvement a, understand sequential cadence we through like I kind of

Santiago Giraldo

best fact on model that's how Typically, out to But would quarter. would QX and but again ramp-up. on year, of depend you it initiative saying, month side and vinyl quarter, that rest the is invoicing, the QX are the a I the sequential seasonal we of half each year QX residential and expansion the of out. that improvement up expect I we're almost going know then the -- geographical going in were as with we to given low the of be ramping the is had how the January modeling line QX this

Operator

I to Mr. for to question-and-answer floor the reached closing session. of over Daes Manuel turn like remarks. end our now Jose have would back the We

Jose Daes

everyone, on you, today's call. for Thank participating Okay.

this I news next good X keep company. are years investors. going think X, fabulous for And to giving our to expect the Thank to be We you.

Operator

Thank you. That does conclude today's appreciate teleconference. your participation. We

time. of your day. this the your Enjoy lines rest disconnect may You at

Tecnoglass (TGLS) 1 Mar 242023 Q4 Earnings call transcript