UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35436

TECNOGLASS INC.

(Exact Name of Registrant as Specified in Its Charter)

Cayman Islands

98-1271120

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

Avenida Circunvalar a 100 mts de la Via 40, Barrio Las Flores Barranquilla, Colombia

(Address of principal executive offices)

(57)(5) 3734000

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report):

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary Shares		TGLS		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of July 31, 2021, there were 47,674,773 ordinary shares, $0.0001 par value per share, outstanding.

TECNOGLASS INC.

FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2021

TABLE OF CONTENTS

		Page
Part I. Financial Information
	Item 1. Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Other Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Shareholders’ Equity	6
	Notes to Condensed Consolidated Financial Statements	7

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	23

	Item 4. Controls and Procedures	23

Part II. Other Information
	Item 1. Legal Proceedings	24

	Item 6. Exhibits	24
Signatures

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	June 30,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	100,295		$	66,899
Investments		2,078			2,387
Trade accounts receivable, net		91,233			88,368
Due from related parties		8,543			8,574
Inventories		74,717			80,742
Contract assets – current portion		24,068			26,288
Other current assets		16,946			13,545
Total current assets	$	317,880		$	286,803
Long-term assets:
Property, plant and equipment, net	$	149,566		$	152,266
Deferred income taxes		1,252			268
Contract assets – non-current		10,785			10,228
Due from related parties - long term		-			484
Long-term trade accounts receivable		4,361			2,985
Intangible assets		4,320			5,112
Goodwill		23,561			23,561
Long-term investments		49,414			47,535
Other long-term assets		4,537			2,783
Total long-term assets		247,796			245,222
Total assets	$	565,676		$	532,025
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	13,376		$	1,764
Trade accounts payable and accrued expenses		56,303			42,178
Accrued interest expense		4			7,175
Due to related parties		4,502			4,750
Dividends payable		1,353			1,352
Contract liability – current portion		36,670			24,694
Other current liabilities		11,806			9,630
Total current liabilities	$	124,014		$	91,543
Long-term liabilities:
Deferred income taxes	$	278		$	3,170
Long-term liabilities from related parties		656			645
Contract liability – non-current		884			977
Long-term debt		218,949			222,722
Total long-term liabilities		220,767			227,514
Total liabilities	$	344,781		$	319,057
SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	$	-		$	-
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 47,674,773 and 47,674,773 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		5			5
Legal Reserves		2,273			2,273
Additional paid-in capital		219,290			219,290
Retained earnings		59,104			34,326
Accumulated other comprehensive (loss)		(60,490	)		(43,512	)
Shareholders’ equity attributable to controlling interest		220,182			212,382
Shareholders’ equity attributable to non-controlling interest		713			586
Total shareholders’ equity		220,895			212,968
Total liabilities and shareholders’ equity	$	565,676		$	532,025

The accompanying notes are an integral part of these condensed consolidated financial statements.

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Income

(In thousands, except share and per share data)

(Unaudited)

	2021			2020			2021			2020
	Three months ended						Six months ended
	June 30,						June 30,
	2021			2020			2021			2020
Operating revenues:
External customers	$	120,136		$	81,590		$	230,395		$	167,696
Related parties		1,578			352			2,199			1,544
Total operating revenues		121,714			81,942			232,594			169,240
Cost of sales		73,087			50,146			138,824			107,017
Gross profit		48,627			31,796			93,770			62,223
Operating expenses:
Selling expense		(12,030	)		(8,961	)		(23,111	)		(18,629	)
General and administrative expense		(8,200	)		(7,610	)		(16,869	)		(15,220	)
Total operating expenses		(20,230	)		(16,571	)		(39,980	)		(33,849	)
Operating income		28,397			15,225			53,790			28,374
Non-operating income (expenses), net		(240	)		7			(81	)		(94	)
Equity method income (loss)		788			(166	)		1,879			94
Foreign currency transactions gains (loss)		190			13,309			145			(19,157	)
Gain (loss) on debt extinguishment		169			-			(10,978	)		-
Interest expense and deferred cost of financing		(2,442	)		(5,446	)		(5,964	)		(11,089	)
Income (loss) before taxes		26,862			22,929			38,791			(1,872	)
Income tax (provision)		(7,587	)		(6,875	)		(11,264	)		(742	)
Net income (loss)	$	19,275		$	16,054		$	27,527		$	(2,614	)
(Loss) Income attributable to non-controlling interest		(41	)		143			(127	)		45
Income (Loss) attributable to parent	$	19,234		$	16,197		$	27,400		$	(2,569	)
Comprehensive income:
Net income (loss)	$	19,275		$	16,054		$	27,527		$	(2,614	)
Foreign currency translation adjustments		(1,184	)		4,367			(16,819	)		(14,921	)
Change in fair value derivative contracts		-			2,618			(159	)		(1,447	)
Total comprehensive income	$	18,090		$	23,039		$	10,549		$	(18,982	)
Comprehensive income attributable to non-controlling interest		(41	)		143			(127	)		45
Total comprehensive income (loss) attributable to parent	$	18,049		$	23,182		$	10,422		$	(18,937	)
Basic income (loss) per share	$	0.40		$	0.35		$	0.58		$	(0.06	)
Diluted income (loss) per share	$	0.40		$	0.35		$	0.58		$	(0.06	)
Basic weighted average common shares outstanding		47,674,773			46,117,631			47,674,773			46,117,631
Diluted weighted average common shares outstanding		47,674,773			46,117,631			47,674,773			46,117,631

The accompanying notes are an integral part of these condensed consolidated financial statements.

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	2021			2020
	Six months ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	27,527		$	(2,614	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Allowance for bad debts		748			691
Depreciation and amortization		10,507			10,206
Deferred income taxes		424			(6,478	)
Equity method income		(1,879	)		(94	)
Deferred cost of financing		623			861
Other non-cash adjustments		(19	)		42
Loss on debt extinguishment		2,333			-
Unrealized currency translation losses		2,555			23,585
Changes in operating assets and liabilities:
Trade accounts receivables		(6,743	)		13,785
Inventories		(1,385	)		(8,252	)
Prepaid expenses		(2,024	)		(1,017	)
Other assets		(7,169	)		1,363
Trade accounts payable and accrued expenses		24,556			(10,358	)
Accrued interest expense		(7,171	)		(84	)
Taxes payable		3,396			(5,911	)
Labor liabilities		(148	)		(982	)
Contract assets and liabilities		14,677			11,246
Related parties		(23	)		(1,200	)
CASH PROVIDED BY OPERATING ACTIVITIES	$	60,785		$	24,789

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		166			364
Purchase of investments		(49	)		(167	)
Acquisition of property and equipment		(18,323	)		(7,395	)
CASH USED IN INVESTING ACTIVITIES	$	(18,206	)	$	(7,198	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend		(2,621	)		(1,265	)
Loss on debt extinguishment - call premium		(8,610	)		-
Deferred financing transaction costs		(88	)		-
Proceeds from debt		221,146			17,796
Repayments of debt		(216,676	)		(14,698	)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	$	(6,849	)	$	1,833

Effect of exchange rate changes on cash and cash equivalents	$	(2,334	)	$	(3,862	)

NET INCREASE IN CASH		33,396			15,562
CASH - Beginning of period		66,899			47,862
CASH - End of period	$	100,295		$	63,424

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	12,286		$	9,513
Income Tax	$	9,471		$	7,014

NON-CASH INVESTING AND FINANCING ACTIVITES:
Assets acquired under credit or debt	$	937		$	907

The accompanying notes are an integral part of these condensed consolidated financial statements.

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Amounts in thousands, except share and per share data)

(Unaudited)

				1		2		3		4			5			6			7		8
	Ordinary Shares, $0.0001 Par Value				Additional Paid in		Legal		Retained			Accumulated Other Comprehensive			Total Shareholders’			Non-Controlling		Total Shareholders’ Equity and Non-Controlling
	Shares		Amount		Capital		Reserve		Earnings			Loss			Equity			Interest		Interest
Balance at December 31, 2020		47,674,773		5		219,290		2,273		34,326			(43,512	)		212,382			586		212,968


Dividend		-		-		-		-		(1,311	)		-			(1,311	)		-		(1,311	)
Legal Reserve

Derivative financial instruments		-		-		-		-		-			(159	)		(159	)		-		(159	)

Foreign currency translation		-		-		-		-		-			(15,635	)		(15,635	)		-		(15,635	)

Net income		-		-		-		-		8,166			-			8,166			86		8,252

Balance at March 31, 2021		47,674,773		5		219,290		2,273		41,181			(59,306	)		203,443			672		204,115


Dividend		-		-		-		-		(1,311	)		-			(1,311	)		-		(1,311	)

Derivative financial instruments		-		-		-		-		-			-			-			-		-

Foreign currency translation		-		-		-		-		-			(1,184	)		(1,184	)		-		(1,184	)

Net income		-		-		-		-		19,234			-			19,234			41		19,275

Balance at June 30, 2021		47,674,773		5		219,290		2,273		59,104			(60,490	)		220,182			713		220,895

	Ordinary Shares, $0.0001 Par Value				Additional Paid in		Legal		Retained			Accumulated Other Comprehensive			Total Shareholders’			Non-Controlling			Total Shareholders’ Equity and Non-Controlling
	Shares		Amount		Capital		Reserve		Earnings			Loss			Equity			Interest			Interes
Balance at December 31, 2019		46,117,631		5		208,283		1,367		16,213			(39,264	)		186,604			606			187,210


Dividend		-		-		107		-		(1,344	)		-			(1,237	)		-			(1,237	)

Derivative financial instruments		-		-		-		-		-			(4,065	)		(4,065	)		-			(4,065	)

Foreign currency translation		-		-		-		-		-			(19,288	)		(19,288	)		-			(19,288	)

Net income		-		-		-		-		(18,766	)		-			(18,766	)		98			(18,668	)

Balance at March 31, 2020		46,117,631		5		208,390		1,367		(3,897	)		(62,617	)		143,248			704			143,952


Dividend		-		-		-		-		(1,267	)		-			(1,267	)		-			(1,267	)

Legal Reserve		-		-		-		906		(906	)		-			-			-			-

Derivative financial instruments		-		-		-		-		-			2,618			2,618			-			2,618

Foreign currency translation		-		-		-		-		-			4,367			4,367			-			4,367

Net income		-		-		-		-		16,197			-			16,197			(143	)		16,054