TGLS - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to the Tecnoglass Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Brad Cray, Investor Relations. Please go ahead.

Brad Cray

Thank you for joining us for Tecnoglass' Third Quarter 2024 Conference Call. presentation Investors this website. section slide obtained may the the on of of to call accompany be Copy the Tecnoglass

speakers Chris are Daes; call Officer, for Officer, Our Manuel José Santiago Chief Giraldo. Chief and Daes; Executive Officer, Chief Financial Operating today's

information, remind the historical and Private including Reform of circumstances. forward-looking like Securities except are to in statements call, the statements uncertainty are current These subject Tecnoglass' beliefs XXXX, financial acquisitions. growth that Litigation future everyone I'd statements performance, regarding discussed in within matters changes this on for to are of future and or future meaning Act based expectations and

Actual uncertainties of of SEC. with contingencies and are These indicated other or business, affecting information in results from filings economic, is nature the The in risks the business. in discussed and/or call to operation those material time regulatory factors Tecnoglass' the changes time risks. and the implied presented competitive may Tecnoglass' uncertainties and expressed in risks, statements vary to a from by herein due such during light

Further, not investors future changes forward-looking indicative mind assumptions should disclaims expressly Tecnoglass results events, in Tecnoglass' to to whether or any statements, results. a or obligation under and be is no of new as future period information, particular obligation keep in any its otherwise. of financial update in may that alter result

beginning José I Slide will now Manuel, on turn to over call #X. the

Jose Daes

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

are that markets. consistently exceptional in showcases results to our quarter to another outperform of We ability our proud report

impressive capturing that the doing share, entirely included million, performance especially in continued market. success than record in $XXX.X quarter market achieved Our our through better U.S. This organic growth. demonstrates of performance broader regions are third revenues

differentiator, of million, a evolving business, to growth adapt representing quarterly Our record of our XX% allowing business the dynamics. cost controls key quickly year-over-year. $XXX.X market new residential revenues a vertically effectuate reached to and strong us In model remains integrated single-family robust

innovative This conditions reflects market our portfolio. product both for demand strong performance stabilizing and growing

for commercial $XXX.X million, marking has revenue October This and of the achieving positive We this our supported the by multifamily whole. revenue maintain and invoicing X.X% record segment. business robust bidding as a growth momentum commercial monthly multifamily outlook Our quoting delivered with activity. quarter our company fourth a our highest for for backlog and record quarter carried and second year-over-year into to business,

advanced results and growing while stable a growth margins benefit industry-leading the confident manufacturing strategic We Our show generate past These had year-over-year continue substantial enhanced year. and ability adjusted strong business. EBITDA. rates efficiency to our investments the operational profit over relatively gross sustain both automation in returns. our profitability through maintain to in to exchange in the and remain We ability leading of

Our in in generation to flexibility pursue strong and returning the today a management. dividend strong our growth million financial cash flow while residential fortified to our cash operating significant growth disciplined this generated increase to a $XX.X capital by shorter $X.XX This was capital Board's decision initiatives quarter. working cash provides driven position XX% This cycle shareholders. share. announce per We to business of solid

residential to we on growth both the are across see markets. capitalize positioned we conclusion, substantial our In strategically opportunities commercial and

growth market demand and operational Our leadership. and our for our confidence product and our portfolio to ability well the margins. us excellence XXXX industry-leading This the record delivering which extends with strong in above-market visibility, continue backlog, innovative demonstrates combined into gives products our validates

value is our model, long-term proven uniquely and trajectory. sheet we in believe to lasting The outlook growth ability shareholders. strong into for continued our robust With strengthened integrated vertically execute, pipeline and create momentum supports XXXX our reinforces October, which saw record Tecnoglass project our This invoicing. our positioned for to balance

will call to I provide operating to Chris highlights. turn now the over additional

Christian Daes

Manuel. you, Thank José

Slide #X. to Moving

the during performance trends. broader to business our macroeconomic the outperform reflects resilience of third quarter Our

growth residential innovative $XXX.X share. products, to record demand single-family exceptional to business for strong Our achieved another us reflects high-performance quarter XX% which increasing allow revenues our capture This million. with market year-over-year

also We at on prior end expiration to deliveries from June. of benefited sales of window tax products Florida's the exemption order the

to business. our Turning multifamily and commercial

across $X.XX quarter we us that early for we to The reputation This expect earn achieved pipeline end. million, backlog and backlog of to into sign another clear projects well continues result approximately in visibility geographies. on Our and record excellence XXXX provides $XXX.X billion opportunities new at XXXX. our growing revenues multiyear projects to into key of

Moving to #X. Slide

It has consecutive in has ratio completed approximately quarter Historically, of backlog following historically backlog months. XXXX. we are quarter book-to-bill largely momentum first, pipeline XXXX. X for strong The our each extends Our helped demonstrated of our windows above buildings. activity and no us in cancellations, our bidding of installed XX a is is project as X.Xx have X, noting record the worth consistent given since quarters. our ratio X/X X.Xx XX of maintaining growth virtually maintain This in typically track a project over that things: invoiced reported sequential

rate Second, the of to backlog that our fluctuations. projects believe we have of reduced majority consists interest sensitivity

on ratio deliveries, invoicing. a book-to-bill factors in future cause provides While external can strong visibility we temporary believe delays

XXXX. discuss to I will and call now to Santiago outlook for our turn results financial over the

Santiago Giraldo

Thank you, Christian.

single-family residential Slide to Turning #X. on

of Our Florida placed strong tax third prior compared record waiver. million improving XX million single-family increased of the of market $XX.X year-over-year trends the residential in a growth the primarily This the $XXX.X June sales quarter quarter. to the revenues reflects and year year-over-year for expiration orders to ahead XX% invoicing

our which in and growth addressable network, Southeast residential the expanding dealer in the growth opportunities vinyl the Looking organic geographic are strategic market. ahead, into has driven single-family our entry expanded our our significantly by market,

and expand our innovate continue for vinyl generate new We to awareness products. dealer relationships,

to incremental many of of We geographies. high-growth our an quote target continue number in projects new

expect to growing existing for demand growth and through ramping products. We these in year-end the we our as up years substantial expect meet deliveries network coming to leverage continue

to help growth which will drive also high-profile were during We this Pivot sales business. Windows pleased Door ES expect awards the several we additional industry win our see glass quarter, in

very were we public of and Materials company by be fastest-growing advantages. U.S. the This ability competitive in companies a pleased testament our the XXX recognized recognized the Additionally, in is one the our to strategy segment. only top XX and Fortune our as leverage sound to to

quarter Turning residential our and our history. to driven on third revenue million, The drivers Slide multifamily/commercial revenues the $XXX.X company's of was businesses. XX.X% to Total year-over-year #X. in single-family in revenue quarter the highest both increase for growth by increased

Adjusted quarter of third an representing the adjusted $XX.X was Looking the at margin EBITDA Slide EBITDA profit drivers million, #XX. XX.X%. for on

gross Third gross million, in million to gross year margin, profit profit quarter. representing $XXX.X quarter gross reached $XX.X a a XX% of and the prior margin XX.X% compared

related eliminated the not the XX The passed on We Commission reflects which foreign International by year-over-year expenses incur steady were primarily do have the determination incremental that on and for industry. negative was aluminum a subsequently customers number largely exchange stronger a aluminum margin which a imports from pricing, benefits based been through stable improvement mix products, these determined present small October of as risk rates. and Trade U.S. it product tariffs material raw favorable to cost, our on

we during comparisons unfavorable to seen XX the year-end. last the months, recent XX and this given quarter, continue have expect to quarters highlighted in in last relative through dissipated, the stability As currencies FX stability

million prior expenses $XX.X This transportation revenue $XX.X commission related reflects well were quarter. expenses with year implemented growth, increased our expenses salary personnel year increase million SG&A nonrecurring as expenses to higher beginning as from the at compared strategic operation, in and primarily associated the the to count announced adjustments of annual review. our larger to previously support a and certain head increased

We strong of on improved $XX.X increased third quarter cash flow revenues Now and driven profitability #XX. efficient our on looking million, generated flow operating Slide at capital strong working higher by and leverage cash management.

for business approximately included for drive million flagship purchased for Miami discretionary a new sold million land $XX.X expansion $X well capacity showroom headquarters, previously include as payments to which incremental of payment finance expenditures our a new capital under us activity. equipment help of potential and sellers' will future as opportunistic Our

sequentially these proactive expenditures year. in expectations the capital expenditures payments, of capital Excluding with the half to quarter-over-quarter, in line our decrease decreased for back

facility. million quarter, record the the of leverage to $XX.X X.XXx syndicated X.Xx our compared term voluntarily ratio a low in Net to prepaid dropped loan During we prior on quarter. year

of In shareholders million through addition, cash the we during period. $X.X dividends capital returned to

liquidity As ample financial had to and under value-enhancing position, million robust of million strong XXXX, $XXX with combined total initiatives. credit us pursue generation million, flexibility September we XX, liquidity our approximately provides including other growth initiatives a $XXX flow of with cash in This our facilities. revolving and $XXX available cash

shareholders, our in industry On X best-in-class broader Slide years. success last for showcase #XX, generating over we our the the outperforming returns

by cash outperformance generation. to continues investments and our strategic through consistently robust a business our returns This validated enhancing flow enhanced higher peers. than on track solid focus Our record of be through profitability is

cash As mentioned we business decided evaluation, in on and is strategic ongoing our business today, our U.S., gain continue value across forward growth is shareholder to through to organic product return high to maximize expand to review that alternatives path release have the the continue flow Based investments visibility, after of market leveraging and advantages sustainable the strategy. the our competitive Board generation, our best to projected has our offering. believe executing concluded broader earnings path careful forward on strong best its share

company's the based flexibility, strength to and of that will the financial on cash Concurrently, shareholders program buyback return the on million Board expanding to we dividend determined repurchases to execute increasing share business and opportunistically. has more the by XX% the the $XXX

execution revenues XXXX the our we midpoint in growth momentum our million and to $XXX full year to million, outlook Now updating X We range representing to expect organic through now entirely outlook. into months moving the of X% Slide first of at #XX. XXXX strong year on be approximately Based full are the the our range. on of $XXX year-end, of our

Additionally, we're to million to $XXX a target EBITDA $XXX million. updating range of adjusted our

Our on key predicated few assumptions. is outlook a

October, account into November. takes residential year-end performance our for scheduled and it ongoing in orders timetable strong our through execution for alongside orders in First, delivery incorporates commercial

and We quarter. by in vinyl strong our projects, order short expect commercial supported and related continued the term our momentum third revenues activity activity in small during stable

peso stable to mid-XX% maintained This range current the low and margins in Colombian outlook remain exchange assumes the rates gross within range to year. for the

the are quarter. majority particularly that expenditure sequentially our remainder we anticipate through in complete of decrease capital fourth the healthy expected expenditures investments to Additionally, flow now with the year, cash capital the generation given of

market our to challenging outperform margins quarter our performance industry-leading ability even third conclusion, In in conditions while maintaining demonstrates profitability. and

sustainable we to considerable we balance strong additional management, beyond, continued growth sheet, our in and remainder the record combined XXXX our expansion. flow generation, our avenues year for multiple beyond. create robust drive focused provides us shareholders and and backlog with single-family cost well growth for look into with positioned of our and the As residential, With to remain cash value

will we that, your for answer With the Operator, be questions. please happy open to questions. line

Operator

The Sam first from question James. Raymond [Operator Darkatsh with Instructions] is today

Sam Darkatsh

company associated private I And stock could. now. strategic A as that being question transaction using few versus looking market as the generally share prices. I'll right What the transaction a -- the start the would into current questions, review. valued you anticipate in at see selling raised, company. authorization do obvious with with at with the having the a if you presumably, I do been that repurchase mean, public repo involve markets of the you one the potentially were conclusion at

Santiago Giraldo

were said when first that to reveal just we the market, the table, of on we on not the sale one, options company. So this Sam, many necessarily different out the the

path growing be and determined the board returns option by the organically shareholders. for to was the and continuing So best

growth forward, implied a of we And it's have growth the clearly, for the going and the that organic view such. positive company that, with avenues for

determination the the end So at a the was day, based company. it of for prospects the on

that What warranted profile for trading better it's margin based on what think a depends based forward. outlook. is see the obviously we on multiple better that's going company the view do Right the now, growth premium, probably on and at again, growth we warranted, think think I and we on and

understand and forward what those that's for company's based value market going prospects. the the So determine obviously to on

Sam Darkatsh

Santiago, And sorry. I'm question, repo the

Santiago Giraldo

questions. repo The

be said, as flow and mainly. We that's obviously would reinvest As to organically. discussed we it capital on we And is invested stock buy be going the supported, there that before, the ways to that obviously highest. to if the business, there to have opportunistically, extent the return that. we opportunities depend when But definitely in to we've feel be see cash opportunities for we growing find the to that on continue will needs is

Sam Darkatsh

What's look your as gross obviously, question, question first we to and next margins at as look obvious EBITDA Okay. as guess guess Thank and -- first you into 'XX? answer. for initial is The margin that sales, 'XX. your to

Santiago Giraldo

be in -- the margins going So mid-XXs. low for to we said to was were gross XXXX

we'll process, QX expect generally, actually on and on our early for what XXXX. next when trend tell see going XXXX based in we the up. mid-XXs budgeting guidance. and for XXXX, saw margins probably You up Too you you give what we seeing can exactly achieving more we're through to we trending we're continue guys call, provide growth, with that to But obviously, color growth

Christian Daes

also, and jobs invoice than want we very add month. to what a And I every we backlog, have we keep more that closing good

So in too. we different geographies, and the market and ahead, backlog see growing, keeps strong a

Sam Darkatsh

down, available eventually ports break in are Coast sorts situation? are in And you Southeast was Florida the And shipping you product anticipating my If, final potential satisfy Southeast? what question, the of ports, if East and there port January, to and strike to good minimal. talks of was the news the options the ahead however, strike that mid-January obviously demand

Christian Daes

Well, we're about all that Miami. is can and the they is The go cost to between not same. will Savannah Miami there to that the using, the difference ports port but ports shipping compromise to through strike, they several Savannah we private, are with and the than cheaper even or are

way in. So a we still come to could find

always we our are products good the we But customers. always ahead a inventory of have, that we because keep of

point already the today, example, So at in X weeks in at any Miami. for we deliveries have stored port time,

Sam Darkatsh

helpful. Very

Operator

& is Company. Romero with question The Sidoti from next Julio

Unknown Analyst

Julio. on is for This Alex

Just follow-up, pursue review, to is to you're strategic there change any considering growth? what expected post a avenues

Santiago Giraldo

be Yes. I contemplating these some taking leveraging to also and advantages mean, able our more of share continuing obviously, But to enter markets number new tuck-in one. market we're is acquisitions opportunistic efficiently.

on valuation our obviously So perspective. organically. to is in has But gaining sense share table, from has make been strong everything the market strategy a

Unknown Analyst

follow-up. one And

would the same call? of raise increase And same the release you drivers the on press that the to in if SG&A do you the terms pace? continuing the to so, In year-over-year, see rise at and attribute mentioned

Santiago Giraldo

We do not.

we call, sequentially If at year, year. the you year-over-year increases higher not that, beginning had took from SG&A the like at effect And of salary as look discussed is of the the so QX, that for change in the previous is we drastic. that beginning reason this our

that at look one. high, the number sequentially, is it So change if that, not you

when number there associated were in there three, the were International Number two, with the expenses determination year were aluminum tariffs that by year, were Commission. some subsequently expensed nonrecurring some not we of were the And a in that put strategic incurred and those QX. review Trade -- last tariffs earlier reversed that in that place

expect year. don't through as forward going move we the So we that

Operator

with The next question is Baird. from Wojs Tim

Timothy Wojs

first the guess. tariffs, on just Maybe question I the Santiago,

that come be days to quarter? guess in couple mean a First, first do tariff obviously, but a has run ticket. that terms tariffs you've going fourth does question. kind the you President of I on from the back is of that's And President of incurred? then that that any in the the election, get we're I back

I know import. China kind but it could any so of just sort also focused, expand And been to of has

what any of do could you tariffs around have So kind prospective happen type general? just guys on flexibility imports of in that

Santiago Giraldo

think I And QX. lot of doing they be that significant us, same. first answer to were them will saw because those other question, what good we test And reflected there to in yes. fully a that the any that is clients, happened that a And is for Yes. without returned paid and the and get issue. on on passed competitors We the was

U.S. and to going that of via in our today. would the tariffs, with day, passed the I end imports given the expectation that probably is to reflected inflation. at be and same see right? fact that going pricing, markets to potentially be So that not self-sufficient that's are is clients is the what to you're the think on going continue seeing everybody those to the end required is boat, you So on be create And

Jose Daes

or either U.S., coal. add words, a like trade that U.S. $XX billion deficit the also, that In the And one in trade. ship countries with out with few that we commodities $X is billion balance of may that has coffee, do of the a in I oil, other bananas, is Colombia we the flowers,

expect said, I customers. that will customers. U.S. that on country actually, aluminum, tariff and it on. they wouldn't today from will a But Santiago are to are getting certainly all we And So the with a has like aluminum with if the back -- get it tariffs they when we pass we deficit would on XX% paying do,

Timothy Wojs

Okay.

you That's I backlog as now helpful. up think, conversion, think year-to-date. just is Okay. your north XX%, And of about backlog then

Your actually slightly. is think, commercial U.S. revenue, down I

should implied pretty And that in business we in backlog as starts commercial XXXX U.S. to the inflection so see convert? a big

Santiago Giraldo

I right? the some think these take of in not longer-dated projects that XX-month getting booked So towers get it's place, last in that And to Yes. longer put the a of are we an larger necessarily some discussed conversion. but are this call conversion that

building the essentially expectation just XXXX mentioned. already. that we're as José is But continue the generally backlog into going, So will

to because coming a is revenue doesn't reflect So will taking to extent backlog, that lot is as and necessarily it the revenues right? more get mean residential growth that the overall doesn't more the what single-family and The stream is that sequential of future revenue it captured other thing from going in is that, stream did continues to of that grow resi. be

magnitude and to backlog year-end. is answer obviously, for the based growing extending expectation complexity conversion the But And continue with composition, of backlog probably through those the projects. is your question, the on the more

Timothy Wojs

Okay.

just you are the on just us kind ramp where then remind one. Good. you Can within vinyl residential? of Okay. And last

Santiago Giraldo

Yes.

getting it's we're quotes good that than expected, still, feedback. slower but of a So encouraging very somewhat lot

discussed issue As the we the having was line. quarter, full last not main

So the care that's been vinyl taken doors, of. instance, for

we contributor a continue that So year. next be to to expect meaningful

Operator

is with Alex B. Rygiel FBR. question next from Riley The

Alexander Rygiel

A couple of quick questions.

effect sales First, the Santiago, waiver? to quantify can related the the pull-forward tax Florida expiration you of

Santiago Giraldo

Yes.

were about in the rate we look maybe million So going we if talking that million, you with, quarter run at QX. were $XX $XX per

discussed. level we is of that was but You is on about of side think mean was it million. if -- executed you that's The that right. orders And be QX. not all going in the as up it QX as XX%, that about in we June, expectation $XXX to reached I of some executed of

more would that good was related going right? did expect But maybe expect So well forward geographic we is encouraging coming QX. Alex, that of embedded I leveled say, have with businesses a I was forward. we and to as in QX, invoice million interest diversification. million, yes, in in have generally, going but say rates this million we're So more would that QX with QX hopefully, The $XX down, as pull what thing to just orders off, $XX $XX

Alexander Rygiel

is And is there any chance the reauthorized? waiver

Santiago Giraldo

We going side be Hopefully, do to it's not the more of but legislative kind that's determine that. to case, on know. the

the that activity think hurricanes possibility. a on certainly is recent of based I

think be tailwinds I And behind will see is definitely we something it that some if should extended, hopefully, needed. that. is

Alexander Rygiel

sort pull-through topic all? play us sort of on that over into opportunity your can at hurricanes, of of plays products can sort repairs out quarters And the next if and new for how of the couple that of vinyl window demand remind you

Jose Daes

and insurance There claims. taken that to Well, as lot is you of of has accept damages a lot assess movement a the on the the yet. know, time

like and started slowdown year. X There of that have pick X, of anything, expect the of doing Florida was now lot in Coast get again, on next a a we work nobody done to seen up West the weeks were to because hurricane. We orders

Operator

next D.A. is Ramirez The Instructions] Jean [Operator Davidson. from with question

Jean Paul Ramirez

longer Thielman. about Can half Yes, little projects more XXXX. the of the this it a more you I'll given the in you for Brent what is a to give looks have weighted rate visibility with context second little as take Jean that Thinking that start like? to revenue? pipeline backlog that. burn Is Yes, into going color

Santiago Giraldo

the is that first of Well, envelope get the XX I X/X back guess backlog the months. calculation of executed the within

from the call the many kind we're the that think first by commercial be XX% of based these projects going able projects I projects change maybe to composition have that slightly, perhaps determined also to multiyear. that's on of getting because how in here and but book it XX large could are backlog out composition months, light will

also you basis a book get spot months. X, projects on But delivered within that that XX X, you get

on So maybe commercial what right? and to basis. like that following to that's on maybe it's that the the we yet today, not more continue I on So going But over projects extent guess, light it we a gets XX to be XX%. months, then determined. that's projects still to longer-dated is I visibility can extended XX%, more is projects, based the day-to-day the have so up, executed then have commercial change, pick the get but booked like mean,

Jean Paul Ramirez

that And per regarding think a to have XXXX? contribution still vinyl, are million thought you it -- do is $XX million you target $X there of guys more be Or of? month will you guys in

Jose Daes

to up XXXX. Yes, we're pick expecting in

We no. the believe now the yes. a in from of year, months even products the slowest And line. months, maybe on, first we But then are of We're new be the complete which X have to couple prepared. better developing

Jean Paul Ramirez

relationship All more the a into right. P&L, to in and margins. your least preliminary Can show little up the thinking might and Saint-Gobain you expectations? with contribution at And they about just how possible color provide discount some

Santiago Giraldo

to with a supply Meaning them the or? glass cheaper we're able and market how relationship the than generally

Jean Paul Ramirez

thinking Right. guys expected But to are are that how them, contribution? guys terms wanted margin of just in know that discount from about the sort of get you you to

Santiago Giraldo

guys next for could able think the going XX% more should we And with going -- Well, the we because margin guidance. budgeting this hover being to year to market and discount around that process. we'll forward, that mean, through haven't color potentially kind we purchase quantify I But a next point, next leverage that full when I XX%, able give glass are be the asked we you were from of we be higher. operating at gross about at year. you percentages if provide I quarter earlier, mean

Operator

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

Jose Daes

everyone, participating good. doing really We're you. expect better news today's call. on Thank every for Thanks, Please quarter.

Operator

Thank The today's conference has you now for concluded. presentation. attending

You may now disconnect.

Tecnoglass (TGLS) 7 Nov 242024 Q3 Earnings call transcript