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 March 31, 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)

00000

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 April 30, 2021, there were 47,674,773 ordinary shares, $0.0001 par value per share, outstanding.

TECNOGLASS INC.

FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 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 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	17

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

	Item 4. Controls and Procedures	21

Part II. Other Information
	Item 1. Legal Proceedings	22

	Item 6. Exhibits	22
Signatures		23

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	March 31,			December 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	85,160		$	66,899
Investments		2,235			2,387
Trade accounts receivable, net		90,033			88,368
Due from related parties		7,420			8,574
Inventories		71,317			80,742
Contract assets – current portion		23,530			26,288
Other current assets		13,537			13,545
Total current assets	$	293,232		$	286,803
Long-term assets:
Property, plant and equipment, net	$	141,967		$	152,266
Deferred income taxes		1,989			268
Contract assets – non-current		11,023			10,228
Due from related parties - long term		121			484
Long-term trade accounts receivable		3,435			2,985
Intangible assets		4,713			5,112
Goodwill		23,561			23,561
Long-term investments		48,626			47,535
Other long-term assets		3,942			2,783
Total long-term assets		239,377			245,222
Total assets	$	532,609		$	532,025
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	13,748		$	1,764
Trade accounts payable and accrued expenses		44,969			42,178
Accrued interest expense		6			7,175
Due to related parties		4,333			4,750
Dividends payable		1,352			1,352
Contract liability – current portion		29,287			24,694
Other current liabilities		9,778			9,630
Total current liabilities	$	103,473		$	91,543
Long-term liabilities:
Deferred income taxes	$	1,735		$	3,170
Long-term liabilities from related parties		651			645
Contract liability – non-current		999			977
Long-term debt		221,635			222,722
Total long-term liabilities		225,020			227,514
Total liabilities	$	328,493		$	319,057
SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 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 March 31, 2021 and December 31, 2020, respectively		5			5
Legal Reserves		2,273			2,273
Additional paid-in capital		219,290			219,290
Retained earnings		41,181			34,326
Accumulated other comprehensive (loss)		(59,305	)		(43,512	)
Shareholders’ equity attributable to controlling interest		203,444			212,382
Shareholders’ equity attributable to non-controlling interest		672			586
Total shareholders’ equity		204,116			212,968
Total liabilities and shareholders’ equity	$	532,609		$	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
	Three months ended
	March 31,
	2021			2020
Operating revenues:
External customers	$	110,259		$	86,106
Related parties		621			1,192
Total operating revenues		110,880			87,298
Cost of sales		65,737			56,871
Gross profit		45,143			30,427
Operating expenses:
Selling expense		(11,081	)		(9,668	)
General and administrative expense		(8,669	)		(7,610	)
Total operating expenses		(19,750	)		(17,278	)
Operating income		25,393			13,149
Non-operating income (expenses), net		159			(101	)
Equity method income		1,091			260
Foreign currency transactions losses		(45	)		(32,466	)
Loss on extinguishment of debt		(11,147	)		-
Interest expense and deferred cost of financing		(3,522	)		(5,643	)
Income (loss) before taxes		11,929			(24,801	)
Income tax (provision) benefit		(3,677	)		6,133
Net income (loss)	$	8,252		$	(18,668	)
Income attributable to non-controlling interest		(86	)		(98	)
Income (Loss) attributable to parent	$	8,166		$	(18,766	)
Comprehensive income:
Net income (loss)	$	8,252		$	(18,668	)
Foreign currency translation adjustments		(15,634	)		(19,288	)
Change in fair value derivative contracts		(159	)		(4,065	)
Total comprehensive income	$	(7,541	)	$	(42,021	)
Comprehensive income attributable to non-controlling interest		(86	)		(98	)
Total comprehensive income (loss) attributable to parent	$	(7,627	)	$	(42,119	)
Basic income (loss) per share	$	0.17		$	(0.40	)
Diluted income (loss) per share	$	0.17		$	(0.40	)
Basic weighted average common shares outstanding		47,674,773			46,117,631
Diluted weighted average common shares outstanding		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
	Three months ended March 31,
	2021			2020

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	8,252		$	(18,668	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Allowance for bad debts		537			368
Depreciation and amortization		5,289			5,241
Deferred income taxes		704			(9,031	)
Equity method income		(1,091	)		(260	)
Deferred cost of financing		255			440
Other non-cash adjustments		(3	)		40
Debt extinguishment		2,333			-
Unrealized currency translation losses		2,411			37,533
Changes in operating assets and liabilities:
Trade accounts receivables		(3,419	)		664
Inventories		2,564			(2,848	)
Prepaid expenses		(592	)		69
Other assets		(3,933	)		(4,940	)
Trade accounts payable and accrued expenses		12,911			(6,274	)
Accrued interest expense		(7,169	)		(4,546	)
Taxes payable		1,699			3,113
Labor liabilities		(559	)		(1,270	)
Contract assets and liabilities		7,849			2,352
Related parties		926			(1,435	)
CASH PROVIDED BY OPERATING ACTIVITIES	$	28,964		$	548

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		-			193
Purchase of investments		(42	)		(137	)
Acquisition of property and equipment		(5,696	)		(6,469	)
CASH USED IN INVESTING ACTIVITIES	$	(5,738	)	$	(6,413	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend		(1,311	)		-
Debt extinguishment - Call Premium		(8,610	)		-
Deferred financing transaction costs		(89	)		-
Proceeds from debt		221,118			14,353
Repayments of debt		(213,180	)		(15,073	)
CASH USED IN FINANCING ACTIVITIES	$	(2,072	)	$	(720	)

Effect of exchange rate changes on cash and cash equivalents	$	(2,893	)	$	(4,453	)

NET INCREASE (DECREASE) IN CASH		18,261			(11,038	)
CASH - Beginning of period		66,899			47,862
CASH - End of period	$	85,160		$	36,824

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	10,268		$	9,282
Income Tax	$	2,507		$	1,986

NON-CASH INVESTING AND FINANCING ACTIVITES:
Assets acquired under credit or debt	$	745		$	991

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, 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	)

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

Foreign currency translation		-		-		-		-		-			(15,634	)		(15,634	)		-		(15,634	)

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

Balance at March 31, 2021		47,674,773		5		219,290		2,273		41,181			(59,305	)		203,444			672		204,116

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

Balance at December 31, 2019

46,117,631

208,283

1,367

16,213

(39,264

)

186,604

606

187,210

SEC Form 10-Q filed by Tecnoglass Inc.