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, 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.)

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 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 July 31, 2023, there were 47,673,433 ordinary shares, $0.0001 par value per share, outstanding.

TECNOGLASS INC.

FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2022

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)

	Junes 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	104,686		$	103,671
Investments		2,365			2,049
Trade accounts receivable, net		185,996			158,397
Due from related parties		1,616			1,447
Inventories		161,767			124,997
Contract assets – current portion		18,077			12,610
Other current assets		53,304			28,963
Total current assets	$	527,811		$	432,134
Long-term assets:
Property, plant and equipment, net	$	266,783		$	202,865
Deferred income taxes		112			558
Contract assets – non-current		6,089			8,875
Long-term trade accounts receivable		-			1,225
Intangible assets		2,525			2,706
Goodwill		23,561			23,561
Long-term investments		60,408			57,839
Other long-term assets		4,977			4,545
Total long-term assets		364,455			302,174
Total assets	$	892,266		$	734,308
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	645		$	504
Trade accounts payable and accrued expenses		113,803			90,186
Due to related parties		6,276			5,323
Dividends payable		4,336			3,622
Contract liability – current portion		62,907			49,601
Other current liabilities		47,022			60,566
Total current liabilities	$	234,989		$	209,802
Long-term liabilities:
Deferred income taxes	$	10,602		$	5,190
Contract liability – non-current		12			11
Long-term debt		169,003			168,980
Total long-term liabilities		179,617			174,181
Total liabilities	$	414,606		$	383,983
SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	$	—		$	—
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 47,673,433 and 47,674,773 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		5			5
Legal Reserves		1,458			1,458
Additional paid-in capital		219,234			219,290
Retained earnings		326,353			234,254
Accumulated other comprehensive loss		(71,152	)		(106,187	)
Shareholders’ equity attributable to controlling interest		475,898			348,820
Shareholders’ equity attributable to non-controlling interest		1,762			1,505
Total shareholders’ equity		477,660			350,325
Total liabilities and shareholders’ equity	$	892,266		$	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						Six months ended
	June 30,						June 30,
	2023			2022			2023			2022
Operating revenues:
External customers	$	224,788		$	168,657		$	427,094		$	302,679
Related parties		492			467			825			993
Total operating revenues		225,280			169,124			427,919			303,672
Cost of sales		(115,610	)		(95,492	)		(210,494	)		(169,707	)
Gross profit		109,670			73,632			217,425			133,965
Operating expenses:
Selling expense		(20,487	)		(16,616	)		(36,807	)		(29,984	)
General and administrative expense		(14,682	)		(11,529	)		(32,437	)		(24,528	)
Total operating expenses		(35,169	)		(28,145	)		(69,244	)		(54,512	)
Operating income		74,501			45,487			148,181			79,453
Non-operating income (expenses), net		1,625			161			2,912			503
Equity method income		1,119			1,669			2,568			3,249
Foreign currency transactions (loss) gains		889			2,503			(211	)		(406	)
Interest expense and deferred cost of financing		(2,321	)		(1,715	)		(4,594	)		(3,183	)
Income before taxes		75,813			48,105			148,856			79,616
Income tax provision		(23,248	)		(14,692	)		(47,919	)		(25,250	)
Net income	$	52,565		$	33,413		$	100,937		$	54,366
Income attributable to non-controlling interest		(120	)		(219	)		(257	)		(319	)
Income attributable to parent	$	52,445		$	33,194		$	100,680		$	54,047
Comprehensive income:
Net income	$	52,565		$	33,413		$	100,937		$	54,366
Foreign currency translation adjustments		27,238			(23,620	)		35,049			(9,987	)
Change in fair value of derivative contracts		1,823			1,710			(14	)		4,332
Total comprehensive income	$	81,626		$	11,503		$	135,972		$	48,711
Comprehensive (loss) income attributable to non-controlling interest		(120	)		(219	)		(257	)		(319	)
Total comprehensive income attributable to parent	$	81,506		$	11,284		$	135,715		$	48,392
Basic income per share	$	1.10		$	0.70		$	2.12		$	1.14
Diluted income per share	$	1.10			0.70		$	2.12		$	1.14
Basic weighted average common shares outstanding		47,674,041			47,674,773			47,674,403			47,674,773
Diluted weighted average common shares outstanding		47,674,041			47,674,773			47,674,403			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
	Six months ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	100,937		$	54,366
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses		1,899			580
Depreciation and amortization		9,914			10,462
Deferred income taxes		4,130			(1,016	)
Equity method income		(2,568	)		(3,249	)
Deferred cost of financing		610			726
Other non-cash adjustments		118			6
Unrealized currency translation (loss) gains		(14,609	)		911
Changes in operating assets and liabilities:
Trade accounts receivable		(24,778	)		(4,792	)
Inventories		(15,584	)		(31,343	)
Prepaid expenses		(1,660	)		(690	)
Other assets		(22,550	)		1,652
Trade accounts payable and accrued expenses		16,167			16,488
Taxes payable		(20,153	)		2,260
Labor liabilities		345			125
Other liabilities		(57	)		(2,047	)
Contract assets and liabilities		10,843			17,538
Related parties		210			1,020
CASH PROVIDED BY OPERATING ACTIVITIES	$	43,214		$	62,997

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments		(193	)		(933	)
Acquisition of property and equipment		(37,886	)		(26,250	)
CASH USED IN INVESTING ACTIVITIES	$	(38,079	)	$	(27,183	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend		(7,868	)		(6,196	)
Stock buyback		(56	)		-
Proceeds from debt		98			241
Repayments of debt		(6	)		(15,367	)
CASH USED IN FINANCING ACTIVITIES	$	(7,832	)	$	(21,322	)

Effect of exchange rate changes on cash and cash equivalents	$	3,711		$	(883	)

NET INCREASE IN CASH		1,014			13,609
CASH - Beginning of period		103,672			85,011
CASH - End of period	$	104,686		$	98,620

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	5,556		$	2,387
Income Tax	$	82,807		$	7,552

NON-CASH INVESTING AND FINANCING ACTIVITES:
Assets acquired under credit or debt	$	7,223		$	5,835

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)

	Shares			Amount		Capital			Reserve		Earnings			Loss			Equity			Interest		Interest
	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		350,325

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

Derivative financial instruments		-			-		-			-		-			(1,837	)		(1,837	)		-		(1,837	)

Foreign currency translation		-			-		-			-		-			7,811			7,811			-		7,811

Net income		-			-		-			-		48,235			-			48,235			137		48,372

Balance at March 31, 2023		47,674,773			5		219,290			1,458		278,198			(100,213	)		398,738			1,642		400,380

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

Share repurchase		(1,340	)		-		(56	)		-		-			-			(56	)		-		(56	)

Derivative financial instruments		-			-		-			-		-			1,823			1,823			-		1,823

Foreign currency translation		-			-		-			-		-			27,238			27,238			-		27,238

Net income		-			-		-			-		52,445			-			52,445			120		52,565

Balance at June 30, 2023		47,673,433			5		219,234			1,458		326,353			(71,152	)		475,898			1,762		477,660

	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, 2021		47,674,773		5		219,290		2,273			91,045			(68,751	)		243,862			836		244,698

Dividend		-		-		-		-			(3,099	)		-			(3,099	)		-		(3,099	)

Derivative financial instruments		-		-		-		-			-			2,622			2,622			-		2,622

Foreign currency translation		-		-		-		-			-			13,635			13,635			-		13,635

Net income		-		-		-		-			20,853			-			20,853			100		20,953

Balance at March 31, 2022		47,674,773		5		219,290		2,273			108,799			(52,494	)		277,873			936		278,809
Balance		47,674,773		5		219,290		2,273			108,799			(52,494	)		277,873			936		278,809

Dividend		-		-		-		-			(3,099	)		-			(3,099	)		-		(3,099	)

Legal Reserves		-		-		-		(815	)		815			-			-			-		-

Derivative financial instruments		-		-		-		-			-			1,710			1,710			-		1,710

Foreign currency translation		-		-		-		-			-			(23,620	)		(23,620	)		-		(23,620	)

Net income		-		-		-		-			33,194			-			33,194			219		33,413

Balance at June 30, 2022		47,674,773		5		219,290		1,458			139,709			(74,404	)		286,058			1,155		287,213
Balance		47,674,773		5		219,290		1,458			139,709			(74,404	)		286,058			1,155		287,213

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

Tecnoglass Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Note 1. General

Business Description

Tecnoglass Inc., a Cayman Islands exempted company (the “Company”, “Tecnoglass,” “TGI,” “we, “us” or “our”), manufactures hi-specification, architectural glass and windows for the global residential and commercial construction industries. Currently the Company offers design, production, marketing, and installation of architectural systems for buildings of high, medium, and low elevation size. Products include windows and doors in glass and aluminum, office partitions and interior divisions, floating facades and commercial window showcases. The Company exports most of its products to foreign countries, selling to customers in North, Central and South America.

The Company manufactures both glass and aluminum products. Its glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, acoustic glass,and digital print glass. Its Alutions plant produces mill finished, anodized, painted aluminum profiles and rods, tubes, bars, and plates. Alution’s operations include extrusion, smelting, painting and anodizing processes, and exporting, importing and marketing aluminum products.

The Company also designs, manufactures, markets, and installs architectural systems for high, medium and low-rise construction, glass and aluminum windows and doors, office dividers and interiors, floating facades and commercial display windows.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting purposes. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The year-end condensed balance sheet data was derived from the audited financial statements in the Annual Report on Form 10-K but does not include all disclosures required by US GAAP.

The preparation of these unaudited condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s financial statements. Actual results may differ from these estimates under different assumptions and conditions. Estimates utilized in the preparation of these unaudited condensed consolidated financial statements relate to the collectability of account receivables, the valuation of inventories, estimated earnings on uncompleted contracts, useful lives and potential impairment of long-lived assets. Changes in estimates are reflected in the periods during which they become known. Actual amounts may differ from these estimates and could differ materially. These financial statements reflect all adjustments that in the opinion of management are necessary for a fair statement of the financial position, results of operations and cash flows for the period presented, and are of a normal, recurring nature.

The Company has one operating segment, Architectural Glass and Windows, which is also its reporting segment, comprising the design, manufacturing, distribution, marketing and installation of high-specification architectural glass and window products sold to the construction industry.

Principles of Consolidation

These unaudited condensed consolidated financial statements consolidate TGI and its subsidiaries Tecnoglass S.A.S (“TG”), C.I. Energía Solar S.A.S E.S. Windows (“ES”), ES Windows LLC (“ESW LLC”), Tecnoglass LLC (“Tecno LLC”), Tecno RE LLC (“Tecno RE”), GM&P Consulting and Glazing Contractors (“GM&P”), Componenti USA LLC, ES Metals SAS (“ES Metals”), and Ventanas Solar S.A (“VS”), which are entities in which we have a controlling financial interest because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity and if we are not, the entity is evaluated under the voting interest model. All significant intercompany accounts and transactions are eliminated in consolidation, including unrealized intercompany profits and losses. The equity method of accounting is used for investments in affiliates and other joint ventures over which the Company has significant influence but does not have effective control.

TGI and certain wholly owned subsidiaries with functional currency different than the U.S. dollar have long-term intercompany loan balances denominated in foreign currencies that are remeasured at the exchange rate in effect at the balance sheet date. Such loan balances are not expected to be settled in the foreseeable future. Any gains and losses relating to these loans are included in the accumulated other comprehensive income (loss), which is reflected as a separate component of shareholders’ equity.

Derivative Financial Instruments

The Company recognizes all derivative financial instruments as either assets or liabilities at fair value on the condensed consolidated balance sheet. The unrealized gains or losses arising from changes in fair value of derivative instruments that are designated and qualify as cash flow hedges, are recorded in the condensed consolidated statement of comprehensive income. Amounts in accumulated other comprehensive loss on the condensed consolidated balance sheet are reclassified into the condensed consolidated statement of income in the same period or periods during which the hedged transactions are settled.

Accounting Standards Adopted in 2023

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The amendments in this Update provide optional expedients and exceptions for contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The interest rate on our credit facility was updated to SOFR plus the same spread of 1.5%. In addition, he Company amended the Interest Rate Swap contract from Libor plus spread to SOFR plus spread. The settlements of the instruments remain under the existing conditions; however, the fixed leg goes from 1.93% to 1.87%. The Company did not apply any of the optional expedients or exceptions allowed under this ASU.

Note 3. - Inventories, net

Schedule of Inventories

	June 30, 2023			December 31, 2022
Raw materials	$	107,355		$	93,360
Work in process		21,063			9,875
Finished goods		10,350			6,409
Spares and accessories		21,427			13,902
Packing material		1,737			1,563
Total Inventories, gross		161,932			125,109
Less: Inventory allowance		(165	)		(112	)
Total inventories, net	$	161,767		$	124,997

Note 4. – Revenues, Trade Accounts Receivable, Contract Assets and Contract Liabilities

Disaggregation of Total Net Sales

The Company disaggregates its sales with customers by revenue recognition method for its only segment, as the Company believes these factors affect the nature, amount, timing and uncertainty of the Company’s revenue and cash flows.

Schedule of Disaggregation by Revenue

	2023		2022		2023		2022
	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Fixed price contracts	$	32,330	$	22,525	$	61,423	$	41,376
Product sales		192,950		146,599		366,496		262,296
Total Revenues	$	225,280	$	169,124	$	427,919	$	303,672

The following table presents geographical information about revenues.

Schedule of Geographic Information

	2023		2022		2023		2022
	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Colombia	$	5,962	$	4,816	$	11,702	$	8,841
United States		214,725		161,478		409,565		288,461
Panama		314		1,003		584		1,803
Other		4,279		1,827		6,068		4,567
Total Revenues	$	225,280	$	169,124	$	427,919	$	303,672

Trade Accounts Receivable

In the ordinary course of business, we extend credit to customers on a generally non-collateralized basis. The Company maintains an allowance for expected credit losses which is based on management’s assessments of the amount which may become uncollectible in the future and is determined through consideration of our write-off history, specific identification of uncollectible accounts based in part on the customer’s past due balance (based on contractual terms), and consideration of prevailing economic and industry conditions. Uncollectible accounts are written off after repeated attempts to collect from the customer have been unsuccessful.

Trade accounts receivable consist of the following:

Schedule of Trade Accounts Receivable

	June 30, 2023			December 31, 2022
Trade accounts receivable		187,545			159,068
Less: Allowance for credit losses		(1,549	)		(671	)
Total	$	185,996		$	158,397

The changes in the allowance for credit losses for the six months ended June 30, 2023, are:

	Six months ended June 30, 2023
Balance at beginning of period	$	671
Provisions for credit losses		1,899
Deductions and write-offs, net of foreign currency adjustment		(1,021	)
Balance at end of period	$	1,549

Contract Assets and Liabilities

Contract assets represent accumulated incurred costs and earned profits on contracts with customers that have been recorded as sales but have not been billed to customers and are classified as current. In addition, a portion of the amounts billed on certain fixed price contracts that are withheld by the customer as a retainage until a final good receipt of the complete project to the customers satisfaction. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue, and represent amounts received in excess of sales recognized on contracts. The Company classifies advance payments and billings in excess of costs incurred as current, and deferred revenue as current or non-current based on the expected timing of sales recognition. Contract assets and contract liabilities are determined on a contract-by-contract basis at the end of each reporting period. The non-current portion of contract liabilities is included in long-term liabilities in the Company’s condensed consolidated balance sheets.

The table below presents the components of net contract assets (liabilities).

	June 30, 2023			December 31, 2023
Contract assets — current	$	18,077		$	12,610
Contract assets — non-current		6,089			8,875
Contract liabilities — current		(62,907	)		(49,601	)
Contract liabilities — non-current		(12	)		(11	)
Net contract assets	$	(38,753	)	$	(28,127	)

The components of contract assets are presented in the table below.

	June 30, 2023		December 31, 2022
Unbilled contract receivables, gross	$	7,142	$	5,738
Retainage		17,024		15,747
Total contract assets		24,166		21,485
Less: current portion		18,077		12,610
Contract Assets – non-current	$	6,089	$	8,875

The components of contract liabilities are presented in the table below.

	June 30, 2022		December 31, 2022
Billings in excess of costs	$	23,308		14,724
Advances from customers on uncompleted contracts		39,611		34,888
Total contract liabilities		62,919		49,612
Less: current portion		62,907		49,601
Contract liabilities – non-current	$	12		11

During the three and six months ended June 30, 2023, the Company recognized $2,669 and $5,941 of sales related to its contract liabilities on January 1, 2023, respectively. During the three and six months ended June 30, 2022, the Company recognized $3,421 and $5,503 of sales related to its contract liabilities on January 1, 2022, respectively.

Remaining Performance Obligations

As of June 30, 2023, the Company had $427.2 million of remaining performance obligations, which represents the transaction price of firm orders minus sales recognized from inception to date. Remaining performance obligations exclude unexercised contract options, verbal commitments, Letters of Intent or written mandates, and potential orders under basic ordering agreements. The Company expects to recognize 100% of sales relating to existing performance obligations within three years, of which $218.4 million are expected to be recognized during the year ending December 31, 2023, $198.6 million during the year ending December 31, 2024, and $20.2 million during the year ending December 31, 2025.

Note 5. Intangible Assets

Intangible assets include Miami-Dade County Notices of Acceptances (NOA’s), which are certificates issued for approved products and required to market hurricane-resistant glass in Florida. Intangibles assets also include the intangibles acquired during the acquisition of GM&P.

	June 30, 2023
	Gross		Acc. Amort.			Net
Notice of Acceptances (NOAs), product designs and other intellectual property		10,531		(8,006	)		2,525

	December 31, 2022
	Gross		Acc. Amort.			Net
Trade Names	$	980	$	(980	)	$	-
Notice of Acceptances (NOAs), product designs and other intellectual property		9,987		(7,281	)		2,706
Non-compete Agreement		165		(165	)		-
Customer Relationships		4,140		(4,140	)		-
Total	$	15,272	$	(12,566	)	$	2,706

The weighted average amortization period is 4.9 years.

During the three and six months ended June 30, 2023, the amortization expense amounted to $293 and $615, respectively, and was included within the general and administration expenses in our unaudited Condensed Consolidated Statement of Operations. Similarly, during the three and six months ended June 30, 2022, the amortization expense amounted to $314 and $789, respectively.

The estimated aggregate amortization expense for each of the five succeeding years as of June 30, 2023 is as follows:

Year ending	(in thousands)
2023	$	530
2024		775
2025		447
2026		350
2027		283
Thereafter		140
Total	$	2,525

Note 6. Supplier Finance Program

Tecnoglass, Inc. has established payment terms to suppliers for the purchase of goods and services, which normally range between 30 and 60 days. In the normal course of business, suppliers may require liquidity and manage, through third parties, the advanced payment of invoices. The Company allows its suppliers the option to payments in advance of an invoice due date, through a third-party finance provider or intermediary, with the purpose of allowing suppliers to obtain the required liquidity. For these purposes, suppliers present to Tecnoglass, Inc. the third-party finance provider or intermediary with whom they will carry out the finance program and establish an agreement, through which the invoices will be paid by the third-party finance provider or intermediary once Tecnoglass, Inc. has confirmed the invoices as valid. Once the Company confirms the invoices are valid, the third-party finance provider or intermediary proceeds with the payment to the supplier. Subsequently, Tecnoglass, Inc. pays the invoices for goods or services to the third-party finance provider or intermediary selected by the supplier. Payment times do not vary from those initially agreed with the supplier, as stated in the invoices factored by the supplier (i.e. between 30 and 60 days). Pursuant to the supplier finance programs, the Company has not been required to pledge any assets as security nor to provide any guarantee to third-party finance provider or intermediary.

As of June 30, 2023, the obligations outstanding related to the supplier finance program amount to $20,954, recorded as current liabilities, with $20,808 classified as Trade accounts payable and accrued expenses and $146 classified as Due to related parties.

Note 7. Debt

The Company’s debt is comprised of the following:

Schedule of Long Term Debt

	June 30, 2023			December 31, 2022
Revolving lines of credit	$	421		$	329
Finance lease		396			395
Senior Secured Credit Facility		172,500			172,500
Less: Deferred cost of financing		(3,669	)		(3,740	)
Total obligations under borrowing arrangements		169,648			169,484
Less: Current portion of long-term debt and other current borrowings		645			504
Long-term debt	$	169,003		$	168,980

In November 2021, the Company amended its Senior Secured Credit Facility to (i) increase the borrowing capacity under its committed line of credit from $50 million to $150 million, (ii) reduce its borrowing costs by an approximate 130 basis points and (iii) extend the initial maturity date by one year to the end of 2026. Borrowings under the credit facility now bear interest at a rate of LIBOR with no floor plus a spread of

SEC Form 10-Q filed by Tecnoglass Inc.