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 September 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)(605) 373 4000

(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 October 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 SEPTEMBER 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)

	September 30,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	86,520		$	66,899
Investments		2,038			2,387
Trade accounts receivable, net		100,039			88,368
Due from related parties		8,397			8,574
Inventories		80,142			80,742
Contract assets – current portion		21,927			26,288
Other current assets		18,308			13,545
Total current assets	$	317,371		$	286,803
Long-term assets:
Property, plant and equipment, net	$	156,864		$	152,266
Deferred income taxes		2,225			268
Contract assets – non-current		10,742			10,228
Due from related parties - long term		-			484
Long-term trade accounts receivable		4,387			2,985
Intangible assets		3,842			5,112
Goodwill		23,561			23,561
Long-term investments		50,705			47,535
Other long-term assets		4,545			2,783
Total long-term assets		256,871			245,222
Total assets	$	574,242		$	532,025
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	13,047		$	1,764
Trade accounts payable and accrued expenses		74,176			42,178
Accrued interest expense		3			7,175
Due to related parties		2,903			4,750
Dividends payable		1,353			1,352
Contract liabilities – current portion		34,507			24,694
Other current liabilities		20,985			9,630
Total current liabilities	$	146,974		$	91,543
Long-term liabilities:
Deferred income taxes	$	158		$	3,170
Long-term liabilities from related parties		662			645
Contract liabilities – non-current		605			977
Long-term debt		189,340			222,722
Total long-term liabilities		190,765			227,514
Total liabilities	$	337,739		$	319,057
SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at September 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 September 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		78,711			34,326
Accumulated other comprehensive loss		(64,513	)		(43,512	)
Shareholders’ equity attributable to controlling interest		235,766			212,382
Shareholders’ equity attributable to non-controlling interest		737			586
Total shareholders’ equity		236,503			212,968
Total liabilities and shareholders’ equity	$	574,242		$	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						Nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
Operating revenues:
External customers	$	129,738		$	102,980		$	360,133		$	270,676
Related parties		672			329			2,871			1,873
Total operating revenues		130,410			103,309			363,004			272,549
Cost of sales		78,765			63,188			217,589			170,205
Gross profit		51,645			40,121			145,415			102,344
Operating expenses:
Selling expense		(13,310	)		(10,534	)		(36,421	)		(29,163	)
General and administrative expense		(8,181	)		(9,381	)		(25,050	)		(24,601	)
Total operating expenses		(21,491	)		(19,915	)		(61,471	)		(53,764	)
Operating income		30,154			20,206			83,944			48,580
Non-operating income (expenses), net		139			(138	)		58			(232	)
Equity method income		1,291			695			3,170			789
Foreign currency transactions gains (losses)		188			(3,066	)		333			(22,223	)
Gain (loss) on debt extinguishment		175			-			(10,803	)		-
Interest expense and deferred cost of financing		(2,156	)		(6,147	)		(8,120	)		(17,236	)
Income before taxes		29,791			11,550			68,582			9,678
Income tax		(8,848	)		(3,279	)		(20,112	)		(4,021	)
Net income	$	20,943		$	8,271		$	48,470		$	5,657
(Income) loss attributable to non-controlling interest		(24	)		52			(151	)		97
Income attributable to parent	$	20,919		$	8,323		$	48,319		$	5,754
Comprehensive income:
Net income	$	20,943		$	8,271		$	48,470		$	5,657
Foreign currency translation adjustments		(4,023	)		(4,024	)		(20,843	)		(18,945	)
Change in fair value derivative contracts		-			506			(159	)		(941	)
Total comprehensive income (loss)	$	16,920		$	4,753		$	27,468		$	(14,229	)
Comprehensive (income) loss attributable to non-controlling interest		(24	)		52			(151	)		97
Total comprehensive income (loss) attributable to parent	$	16,896		$	4,805		$	27,317		$	(14,132	)
Basic income per share	$	0.44		$	0.18		$	1.02		$	0.12
Diluted income per share	$	0.44		$	0.18		$	1.02		$	0.12
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
	Nine months ended September 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	48,470		$	5,657
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Allowance for bad debts		1,056			1,035
Depreciation and amortization		15,605			15,421
Deferred income taxes		398			(7,612	)
Equity method income		(3,170	)		(789	)
Deferred cost of financing		994			1,306
Other non-cash adjustments		(25	)		158
Loss on debt extinguishment		2,333			-
Unrealized currency translation losses		4,582			24,197
Changes in operating assets and liabilities:
Trade accounts receivables		(16,961	)		6,353
Inventories		(8,761	)		(5,127	)
Prepaid expenses		(2,004	)		(686	)
Other assets		(10,210	)		12,455
Trade accounts payable and accrued expenses		41,337			(14,612	)
Accrued interest expense		(7,172	)		(4,678	)
Taxes payable		11,915			(569	)
Labor liabilities		1,056			5
Contract assets and liabilities		15,583			18,851
Related parties		(1,604	)		(341	)
CASH PROVIDED BY OPERATING ACTIVITIES	$	93,422		$	51,024

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		177			470
Purchase of investments		(63	)		(189	)
Acquisition of property and equipment		(32,064	)		(13,732	)
CASH USED IN INVESTING ACTIVITIES	$	(31,950	)	$	(13,451	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend		(3,932	)		(2,533	)
Loss on debt extinguishment - call premium		(8,610	)		-
Deferred financing transaction costs		(91	)		-
Proceeds from debt		221,135			17,747
Repayments of debt		(247,024	)		(30,453	)
CASH USED IN FINANCING ACTIVITIES	$	(38,522	)	$	(15,239	)

Effect of exchange rate changes on cash and cash equivalents	$	(3,329	)	$	(765	)

NET INCREASE IN CASH		19,621			21,569
CASH - Beginning of period		66,899			47,862
CASH - End of period	$	86,520		$	69,431

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	14,124		$	18,650
Income Tax	$	11,982		$	8,318

NON-CASH INVESTING AND FINANCING ACTIVITES:
Assets acquired under credit or debt	$	1,641		$	919

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)

Ordinary Shares, $0.0001

Par Value

Additional Paid in

Legal

Retained

Accumulated Other Comprehensive

Total Shareholders’

Non-Controlling

Total Shareholders’ Equity and Non-Controlling

Amount

Capital

Reserve

Earnings

SEC Form 10-Q filed by Tecnoglass Inc.