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, 2023

☐	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.)

3550 NW 49th Street, Miami, Florida 33142, USA

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

(Address of principal executive offices)

+1 305 638 5151

(Issuer’s telephone number)

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 New York Stock Exchange

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 November 1, 2023, there were 47,099,133 ordinary shares, $0.0001 par value per share, outstanding.

TECNOGLASS INC.

FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2023

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	19

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	24

	Item 4. Controls and Procedures	25

Part II. Other Information
	Item 1. Legal Proceedings	26

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26

	Item 6. Exhibits	26
Signatures		27

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, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	118,973		$	103,671
Investments		2,479			2,049
Trade accounts receivable, net		174,148			158,397
Due from related parties		1,493			1,447
Inventories		165,846			124,997
Contract assets – current portion		16,539			12,610
Other current assets		57,668			28,963
Total current assets	$	537,146		$	432,134
Long-term assets:
Property, plant and equipment, net	$	299,120		$	202,865
Deferred income taxes		111			558
Contract assets – non-current		9,075			8,875
Long-term trade accounts receivable		-			1,225
Intangible assets		3,249			2,706
Goodwill		23,561			23,561
Long-term investments		61,516			57,839
Other long-term assets		5,278			4,545
Total long-term assets		401,910			302,174
Total assets	$	939,056		$	734,308
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	3,127		$	504
Trade accounts payable and accrued expenses		108,259			90,186
Due to related parties		4,108			5,323
Dividends payable		4,317			3,622
Contract liability – current portion		68,654			49,601
Other current liabilities		50,537			60,566
Total current liabilities	$	239,002		$	209,802
Long-term liabilities:
Deferred income taxes	$	13,876		$	5,190
Contract liability – non-current		13			11
Long-term debt		166,699			168,980
Total long-term liabilities		180,588			174,181
Total liabilities	$	419,590		$	383,983
SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	$	—		$	—
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 47,445,991 and 47,674,773 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		5			5
Legal Reserves		1,458			1,458
Additional paid-in capital		210,408			219,290
Retained earnings		367,925			234,254
Accumulated other comprehensive loss		(62,323	)		(106,187	)
Shareholders’ equity attributable to controlling interest		517,473			348,820
Shareholders’ equity attributable to non-controlling interest		1,993			1,505
Total shareholders’ equity		519,466			350,325
Total liabilities and shareholders’ equity	$	939,056		$	734,308

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)

	2023			2022			2023			2022
	Three months ended						Nine months ended
	September 30,						September 30,
	2023			2022			2023			2022
Operating revenues:
External customers	$	210,268		$	201,240		$	637,362		$	503,919
Related parties		475			540			1,300			1,533
Total operating revenues		210,743			201,780			638,662			505,452
Cost of sales		(120,216	)		(96,484	)		(330,710	)		(266,191	)
Gross profit		90,527			105,296			307,952			239,261
Operating expenses:
Selling expense		(15,724	)		(20,250	)		(52,531	)		(50,234	)
General and administrative expense		(13,791	)		(14,914	)		(46,228	)		(39,442	)
Total operating expenses		(29,515	)		(35,164	)		(98,759	)		(89,676	)
Operating income		61,012			70,132			209,193			149,585
Non-operating income, net		605			634			3,517			1,137
Equity method income		1,108			1,821			3,676			5,070
Foreign currency transactions (loss) gains		1,142			(450	)		931			(856	)
Interest expense and deferred cost of financing		(2,325	)		(2,249	)		(6,919	)		(5,432	)
Income before taxes		61,542			69,888			210,398			149,504
Income tax provision		(15,447	)		(22,966	)		(63,366	)		(48,216	)
Net income	$	46,095		$	46,922		$	147,032		$	101,288
Income attributable to non-controlling interest		(232	)		(196	)		(489	)		(515	)
Income attributable to parent	$	45,863		$	46,726		$	146,543		$	100,773
Comprehensive income:
Net income	$	46,095		$	46,922		$	147,032		$	101,288
Foreign currency translation adjustments		8,227			(22,054	)		43,276			(32,039	)
Change in fair value of derivative contracts		601			4,865			587			9,197
Total comprehensive income	$	54,923		$	29,733		$	190,895		$	78,446
Comprehensive loss attributable to non-controlling interest		(232	)		(196	)		(489	)		(515	)
Total comprehensive income attributable to parent	$	54,691		$	29,537		$	190,406		$	77,931
Basic income per share	$	0.97		$	0.98		$	3.09		$	2.12
Diluted income per share	$	0.97			0.98		$	3.09		$	2.12
Basic weighted average common shares outstanding		47,599,339			47,674,773			47,649,037			47,674,773
Diluted weighted average common shares outstanding		47,599,339			47,674,773			47,649,037			47,674,773

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)

	2023			2022
	Nine months ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	147,032		$	101,288
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses		2,537			541
Depreciation and amortization		15,841			15,089
Deferred income taxes		7,565			140
Equity method income		(3,676	)		(5,070	)
Deferred cost of financing		929			1,059
Other non-cash adjustments		157			(22	)
Unrealized currency translation (loss) gains		(23,280	)		9,482
Changes in operating assets and liabilities:
Trade accounts receivable		(10,351	)		(29,486	)
Inventories		(15,271	)		(53,911	)
Prepaid expenses		(2,028	)		(1,126	)
Other assets		(25,535	)		(1,646	)
Trade accounts payable and accrued expenses		8,371			14,637
Taxes payable		(21,670	)		23,962
Labor liabilities		2,425			1,629
Other liabilities		245			(1,851	)
Contract assets and liabilities		13,066			14,974
Related parties		(1,871	)		2,409
CASH PROVIDED BY OPERATING ACTIVITIES	$	94,486		$	92,098

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments		(303	)		(1,285	)
Acquisition of property and equipment		(62,194	)		(46,817	)
CASH USED IN INVESTING ACTIVITIES	$	(62,497	)	$	(48,102	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend		(12,158	)		(9,294	)
Stock buyback		(8,882	)		-
Proceeds from debt		109			59
Repayments of debt		-			(32,002	)
CASH USED IN FINANCING ACTIVITIES	$	(20,931	)	$	(41,237	)

Effect of exchange rate changes on cash and cash equivalents	$	4,243		$	(3,336	)

NET INCREASE IN CASH		15,301			(577	)
CASH - Beginning of period		103,672			85,011
CASH - End of period	$	118,973		$	84,434

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	8,543		$	4,136
Income Tax	$	94,914		$	25,377

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired under credit or debt	$	11,626		$	4,555

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
	Shares		Amount		Capital		Reserve		Earnings			Loss			Equity			Interest		Interest
Balance at December 31, 2022		47,674,773		5		219,290		1,458		234,254			(106,187	)		348,820			1,505.00		350,325

Dividend		-		-		-		-		(4,291	)		-			(4,291	)		-		(4,291	)

Derivative financial instruments		-		-		-		-		-

SEC Form 10-Q filed by Tecnoglass Inc.