Tecnoglass is a leading brand in the market and a household name in Latin America. It is the #1 architectural glass transformation company in Latin America and the second-largest glass fabricator supplier in the U.S. Its main task is to produce architectural glass, windows, and associated aluminum products, providing service to multi-family, single-family, and commercial markets. As of November 8, the firm reported its quarterly results and, according to its CEO, they were exceptional.
“I could not be more proud of our exceptional third-quarter performance that marked our 4th consecutive quarter of year-over-year revenue growth and another period of record quarterly revenues and adjusted EBITDA. In addition, continued momentum in our U.S. single-family residential business combined with careful working capital management collectively helped generate our 7th straight quarter of robust cash flow, allowing us to pay down debt while further investing in automation capabilities and capacity enhancements to address expected growth.” stated Jose Manuel Daes, Chief Executive Officer
Total revenues for the third quarter thrived 26.2% compared to the same period last year, amounting to USD 130.4 million.
U.S revenues reached a total of $123.2 million, accounting for 94.5% of total revenues and increasing 28.8% vis-á-vis the prior-year quarter in which ended up at $95.7 million. This advance is mainly due to the strong growth in single-family residential activity and market share gains.
Colombia's revenue closed at $7.2 million, experiencing a slight decrease of 0.4 million against the same quarter last year. Variations in the exchange rate had practically null impact on Colombia and total revenues in the quarter.
Gross profit for the third quarter experienced an increase of 28.7%, going from US 40.1 million in 3Q20 to $51.6 million in this quarter. Likewise, gross margin closed at 39.6%, increasing 80 basis points in a YOY comparison. This growth is attributable to greater operating efficiencies and a higher mix of revenues from manufacturing versus installation activity as the firm increased its mix of single-family residential products.
Selling, general and administrative expenses (SG&A) went from 19.9 mm in the prior-year quarter to 21.5mm, growing by 8.0%. The increase is mostly explained by higher variable expenses related to ground and marine transportation. Nevertheless, as a percentage of total revenues, it represented 16.5% compared to 19.3% in the same period last year, reflecting higher sales and better operating leverage on personnel, professional fees, and other fixed expenses.
Net income leaped from $8.2 to $20.9, representing an increase of 154.6% in a YOY comparison. Likewise, diluted income per share amounted to $0.44 compared to $0.18 in the prior-year quarter.
Adjusted EBITDA rose 36.1% to US $ 38.7 mm compared to $28.5 million in the third quarter of 2020. While the adjusted EBITDA in 3Q20 accounted for 27.5% of total revenues, this quarter represented 29.7%. This improvement was driven essentially by higher sales, a stronger gross margin, and operating leverage on SG&A.
Tecnoglass ended the first half of the year with total liquidity of approximately US $150 mm, of which $86.5 corresponded to cash and cash equivalents. Cash provided by operating activities amounted to $32.6 million, experiencing an advance of $6.4 mm compared to the last year. These figures are result mainly due to higher profitability as well as more efficient inventory and working capital management.
Given the results in its Adjusted EBITDA and the firm cash generation, the debt EBITDA ratio stood at 0.9 x.
Full-year 2021 Outlook
The disclosures made by the CFO can give us some insight into the firms’ future.
Santiago Giraldo, Chief Financial Officer of Tecnoglass, declared, “Based on our strong third-quarter performance and expectations for a favorable growth environment across our end markets through year-end, we are increasing our full-year 2021 growth outlook for revenues and adjusted EBITDA. We now expect 2021 revenues to grow to a range of $485 million to $495 million. We now anticipate full-year adjusted EBITDA to increase to a range of $140 million to $145 million, implying year-over-year growth of approximately 46% at the midpoint. We continue to expect that robust demand for our products and services in the U.S. will be the primary driver of these anticipated record full-year 2021 results.”
The improvement in Tecnoglass performance was led mostly by U.S economic activity and by the stunning performance in the single-family residential segment. Taking into account that the firm deployed most of its activities in the US and the latter is one of the fewest countries using almost its entire capacity, the place in which the firm stands is unique. Moreover, after the approval of the infrastructure plan by the US House of Representatives, Tecnoglass is likely to benefit.
