UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

 

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

 

For the quarterly period ended March 31, 2020

 

[  ] 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 [X] 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 [X] 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 [X]
Non-accelerated filer [  ] Smaller reporting company [X]
  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 [X]

 

As of April 30, 2020, there were 46,117,631 ordinary shares, $0.0001 par value per share, outstanding.

 

 

 

   

 

 

TECNOGLASS INC.

 

FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2020

 

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 21
     
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 26
     
  Item 4. Controls and Procedures 26
     
Part II. Other Information  
  Item 1. Legal Proceedings 26
     
  Item 1A. Risk Factors  26
     
  Item 6. Exhibits 28
Signatures 29

 

 2 

 

 

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, 2020   December 31, 2019 
ASSETS          
Current assets:          
Cash and cash equivalents  $36,824   $47,862 
Investments   1,604    2,304 
Trade accounts receivable, net   104,416    110,558 
Due from related parties   8,463    8,057 
Inventories   68,341    82,714 
Contract assets – current portion   36,689    42,014 
Other current assets   27,734    29,340 
Total current assets  $284,071   $322,849 
           
Long-term assets:          
Property, plant and equipment, net  $128,426   $154,609 
Deferred income taxes   14,573    4,595 
Contract assets – non-current   10,743    7,059 
Due from related parties - long term   1,423    1,786 
Intangible assets   6,098    6,703 
Goodwill   23,561    23,561 
Long-term investments   45,856    45,596 
Other long-term assets   2,611    2,910 
Total long-term assets   233.291    246,819 
Total assets  $517.362   $569,668 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Short-term debt and current portion of long-term debt  $15,245   $16,084 
Trade accounts payable and accrued expenses   56,962    61,878 
Accrued interest expense   3,039    7,645 
Due to related parties   3,896    4,415 
Dividends payable   1,305    67 
Contract liability – current portion   13,957    12,459 
Due to equity partners   10,900    10,900 
Other current liabilities   14,278    15,563 
Total current liabilities  $119,582   $129,011 
           
Long-term liabilities:          
Deferred income taxes  $857   $411 
Long-term payable associated to GM&P acquisition   8,500    8,500 
Long-term liabilities from related parties   628    622 
Contract liability – non-current   148    187 
Long-term debt   243,695    243,727 
Total long-term liabilities   253,828    253,447 
Total liabilities  $373,410   $382,458 
           
SHAREHOLDERS’ EQUITY          
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2020 and December 31, 2019 respectively  $-   $- 
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 46,117,631 and 46,117,631 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively   5    5 
Legal Reserves   1,367    1,367 
Additional paid-in capital   208,390    208,283 
Retained earnings   (3,897)   16,213 
Accumulated other comprehensive (loss)   (62,617)   (39,264)
Shareholders’ equity attributable to controlling interest   143,248    186,604 
Shareholders’ equity attributable to non-controlling interest   704    606 
Total shareholders’ equity   143,952    187,210 
Total liabilities and shareholders’ equity  $517,362   $569,668 

 

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

 

 3 

 

 

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Income

(In thousands, except share and per share data)

(Unaudited)

 

   Three months ended 
   March 31, 
   2020   2019 
Operating revenues:          
External customers  $86,106   $104,808 
Related parties   1,192    2,360 
Total operating revenues   87,298    107,168 
Cost of sales   56,871    75,276 
Gross profit   30,427    31,892 
           
Operating expenses:          
Selling expense   (9,668)   (9,562)
General and administrative expense   (7,610)   (8,094)
Total operating expenses   (17,278)   (17,656)
           
Operating income   13,149    14,236 
           
Non-operating (expenses) income, net   (101)   275 
Equity method income   260    - 
Foreign currency transactions (losses) gains   (32,466)   3,286 
Interest expense and deferred cost of financing   (5,643)   (5,587)
           
(Loss) Income before taxes   (24,801)   12,210 
           
Income tax benefit (provision)   6,133    (4,879)
           
Net (loss) income  $(18,668)  $7,331 
           
(Income) Loss attributable to non-controlling interest   (98)   7 
           
(Loss) Income attributable to parent  $(18,766)  $7,338 
           
Comprehensive income:          
Net (loss) income  $(18,668)  $7,331 
Foreign currency translation adjustments   (19,288)   1,770 
Change in fair value derivative contracts   (4,065)   - 
           
Total comprehensive (loss) income  $(42,021)  $9,101 
Comprehensive (income) loss attributable to non-controlling interest   (98)   7 
           
Total comprehensive (loss) income attributable to parent  $(42,119)  $9,108 
           
Basic (loss) income per share  $(0.40)  $0.18 
           
Diluted (loss) income per share  $(0.40)  $0.18 
           
Basic weighted average common shares outstanding   46,117,631    40,295,687 
           
Diluted weighted average common shares outstanding   46,117,631    40,847,547 

 

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

 

 4 

 

 

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

   Three months ended March 31, 
   2020   2019 
        
CASH FLOWS FROM OPERATING ACTIVITIES          
Net (loss) income  $(18,668)  $7,331 
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:          
Provision for bad debts   368    153 
Depreciation and amortization   5,241    5,841 
Deferred income taxes   (9,031)   947 
Equity method income   (260)   - 
Deferred cost of financing   440    393 
Other non-cash adjustments   40    23 
Unrealized currency translation losses (gains)   37,533    (1,792)
Changes in operating assets and liabilities:          
Trade accounts receivables   664    (14,953)
Inventories   (2,848)   2,870 
Prepaid expenses   69    (820)
Other assets   (4,940)   (4,613)
Trade accounts payable and accrued expenses   (6,274)   8,187 
Accrued interest expense   (4,546)   (4,337)
Taxes payable   3,113    4,724 
Labor liabilities   (1,270)   (603)
Contract assets and liabilities   2,352    (7,905)
Related parties   (1,435)   (1,075)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES  $548   $(5,629)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Proceeds from sale of investments   193    295 
Purchase of investments   (137)   (307)
Acquisition of property and equipment   (6,469)   (3,701)
CASH USED IN INVESTING ACTIVITIES  $(6,413)  $(3,713)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Cash dividend   -    (760)
Proceeds from equity offering   -    33,050 
Proceeds from debt   14,353    6,693 
Repayments of debt   (15,073)   (1,349)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES  $(720)  $37,634 
           
Effect of exchange rate changes on cash and cash equivalents  $(4,453)  $380 
           
NET (DECREASE) INCREASE IN CASH   (11,038)   28,672 
CASH - Beginning of period   47,862    33,040 
CASH - End of period  $36,824   $61,712 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Cash paid during the period for:          
Interest  $9,282   $9,230 
Income Tax  $1,986   $1,840 
           
NON-CASH INVESTING AND FINANCING ACTIVITES:          
Assets acquired under credit or debt  $991   $1,468 

 

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

 

 5 

 

 

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,

2019

   46,117,631    5    208,283    1,367    16,213    (39,264)   186,604    606    187,210 
                                              
Cash dividend   -    -    107    -    (1,344)   -    (1,237)   -    (1,237)
                                              
Derivative financial insttruments   -    -    -    -    -    (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 

 

  

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, 2018   38,092,996    4    157,604    1,367    10,439    (37,058)   132,356    872    133,228 
                                              
Issuance of common stock   5,000,000    -    33,050    -    -    -    33,050    -    33,050 
                                              
Stock dividend   538,657    -    5,162    -    (6,109)   -    (947)   -    (947)
                                              
Foreign currency translation   -    -    -    -    -    1,770    1,770    -    1,770 
                                              
Net income   -    -    -    -    7,338    -    7,338    (7)   7,331 
                                              
Balance at March 31, 2019   43,631,653    4    195,816    1,367    11,668    (35,288)   173,567    865    174,432 

 

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

 

 6 

 

 

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 production 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. Alutions’ 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, 2019. The year-end condensed balance sheet data was derived from audited financial statements 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 inherent 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 product sold to the construction industry.

 

 7 

 

 

Principles of Consolidation

 

These unaudited condensed consolidated financial statements consolidate TGI, 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 (“Componenti”) and ES Metals SAS (“ES Metals”), 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, otherwise 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.

 

Derivative Financial Instruments

 

The Company recognizes all derivative financial instruments as either assets or liabilities at fair value on the 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 consolidated statement of comprehensive income. Amounts in accumulated other comprehensive loss on the consolidated balance sheet are reclassified into the consolidated statement of income in the same period or periods during which the hedged transactions are settled.

 

Impairment

 

We review goodwill and long-lived assets for impairment each year on December 31st or more frequently when events or significant changes in circumstances indicate that the carrying value may not be recoverable. The novel coronavirus global outbreak and its associated economic impact, including a significant decrease in the market price of our ordinary shares, is considered a triggering event requiring us to reassess our goodwill and long-lived asset valuations, as well as assumptions of future income from underlying assets. To the extent the impact of the pandemic depends on future developments which are highly uncertain we will continue to evaluate in future periods whether these assumptions are reasonable and will update the forecasts and impairment analysis as appropriate.

 

Based on our analysis as of March 31, 2020 we concluded that no impairment needs to be recorded to our goodwill using the market approach as the market capitalization of our company, which has a single reporting unit, exceeds the book value of shareholders equity.

 

Based on our analysis as of March 31, 2020 we concluded that no impairment needs to be recorded to our long-lived assets as their carrying value are below their realizable values based on projected future cashflows estimated with assumptions deemed reasonable by management based on information currently available. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company's market capitalization, and general industry, market and macro-economic conditions.

 

Recently Issued Accounting Pronouncements

 

In June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU represents a significant change in the allowance for credit losses accounting model by requiring immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The new model is applicable to all financial instruments that are not accounted for at fair value through net income, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, (with early application permitted). The FASB issued ASU 2019-10 and ASU 2019-11 during the fourth quarter of 2019 that will postpone the effective date to the year beginning after December 15, 2022. In February 2020, the FASB issued ASU 2020-02 “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842), which amends SEC Staff Accounting Bulletin No. 119 (SAB119) which contains interpretative guidance from the SEC aligned to the FASB’s ASC 326. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

 

 8 

 

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 8485): 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 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 amendments in this Update is effective for the Company on December 31, 2022 with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

 

Note 3. – Revised Presentation of Statement of Cash Flows

 

The Consolidated Statement of Cashflows for the three months ended March 31, 2019 has been revised to correct errors in the classification of the impact of unrealized foreign currency transaction gains and losses resulting from the remeasurement of our monetary assets and liabilities denominated in any currency other than the functional currency. The Company assessed the materiality of the misstatement and concluded it was not material to any previously reported quarterly or annual period financial statements.

 

Unrealized foreign currency transaction gains and losses, which include currency translation differences on monetary items that form part of investing or financing activities, such as long-term loans, are presented as a reconciling item from net income to cashflow from operating activities in the Consolidated Statement of Cashflows as of March 31, 2020 and 2019 contained herein,. The effect of exchange rate changes on cash and cash equivalents denominated in currencies other than the reporting currency has been and continues to be presented in a separate line item as part of the reconciliation of the change in cash equivalents during the period.

 

The revisions to the Consolidated Statement of Cashflows as of March 31, 2019, which had no effect on the net change in cash and cash equivalents, are summarized in the following table:

 

 9 

 

 

   Three months ended March 31, 2019 
   As previously reported   Revision adjustment   As revised 
             
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES  $(4,900)  $(729)  $(5,629)
CASH USED IN INVESTING ACTIVITIES   (3,661)   (52)   (3,713)
CASH PROVIDED BY FINANCING ACTIVITIES   36,853    781    37,634 
Effect of exchange rate changes on cash and cash equivalents  $380   $-   $380 
                
NET INCREASE (DECREASE) IN CASH   28,672    -    28,672 
CASH - Beginning of period   33,040    -    33,040 
CASH - End of period  $61,712   $-   $61,712 

 

 10 

 

 

Note 4. – Long-term Investments

 

Saint-Gobain Joint Venture

 

On January 11, 2019, we entered into a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino Holdings S.A.S (“Vidrio Andino”), a Colombia-based subsidiary of Compagnie de Saint-Gobain S.A. (“Saint-Gobain”). The purchase price for our interest in this entity was $45 million, of which $34.1 was paid in cash, and $10.9 million is to be paid with a piece of land near our existing facility in Barranquilla, which will be contributed by a related party owned by members of our Chief Executive Officer´s family with a third party valuation conducted to ensure arm´s length terms. The land will serve the purpose of developing a second float glass plant nearby our existing manufacturing facilities which we expect to carry significant efficiencies for us once it becomes operative. Vidrio Andino’s float glass plant located in the outskirts of Bogota, Colombia, has been one of our main suppliers of raw glass. We believe this transaction will solidify our vertical integration strategy by acquiring an interest in the first stage of our production chain, while securing ample glass supply for our expected production needs.

 

On May 3, 2019, we consummated the joint venture agreement acquiring a 25.8% minority ownership interest in Vidrio Andino with a cash payment of $34.1 million, and the land still to be contributed as of the end of first half of 2020  . As of that date, the Company recorded the investment within Long-term assets on the Company’s Consolidated Balance Sheet for $45.0 million and a liability for $10.9 million within current liabilities on the Company’s Consolidated Balance to be settled with the contribution of the aforementioned piece of land. Since the date of the acquisition, we have recognized the proportional share of Vidrio Andino’s net income using the equity method on the Consolidated Statement of Operations and Other Comprehensive Income as the Company is deemed to have significant influence, but does not have effective control of Vidrio Andino.

 

Establishment of a new subsidiary

 

In January 2019 we established E.S. Windows California, LLC., a wholly-owned U.S. entity to serve as a distributor of our products in certain jurisdictions within the U.S. markets.

 

In April 2019, ESMetals, a Colombian entity in which the Company has 70% equity interest began operations. ESMetals serves as a metalwork contractor to supply the Company with steel accessories used in the assembly of certain architectural systems as part of our vertical integration strategy. When the company owns a majority (but less than 100%) of a subsidiary’s stock, the Company includes in its Consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling interests’ proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to the non-controlling interests’ proportionate share of the subsidiary’s net assets. In determining the fair value, we used the income approach and the market approach which was performed by third party valuation specialists under management.

 

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Note 5. - Inventories, net

 

   March 31, 2020   December 31, 2019 
Raw materials  $37,166   $44,175 
Work in process   19,392    24,262 
Finished goods   4,529    5,203 
Stores and spares   6,734    8,130 
Packing material   570    981 
    68,391    82,751 
Less: Inventory allowance   (50)   (37)
   $68,341   $82,714 

 

Note 6. – Revenues, 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.

 

   Three months ended 
   March 31, 
   2020   2019 
Fixed price contracts  $25,027   $42,176 
Product sales   62,271    64,992 
Total Revenues  $87,298   $107,168 

 

The following table presents geographical information about revenues.

 

   Three months ended 
   March 31, 
   2020   2019 
Colombia  $6,472   $12,959 
United States   78,798    92,062 
Panama   680    763 
Other   1,348    1,384 
Total Revenues  $87,298   $107,168 

 

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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 and 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 other liabilities in the Company’s consolidated balance sheets.

 

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

 

   March 31, 2020   December 31, 2019 
Contract assets — current  $36,689   $42,014 
Contract assets — non-current   10,743    7,059 
Contract liabilities — current   (13,957)   (12,459)
Contract liabilities — non-current   (148)   (187)
Net contract assets  $33,327   $36,427 

 

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

 

   March 31, 2020   December 31, 2019 
Unbilled contract receivables, gross  $21,584   $20,729 
Retainage   25,848    28,344 
Total contract assets   47,432    49,073 
Less: current portion   36,689    42,014 
Contract Assets – non-current  $10,743   $7,059 

 

 

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

 

   March 31, 2020   December 31, 2019 
Billings in excess of costs  $1,599    2,077 
Advances from customers on uncompleted contracts   12,506    10,569 
Total contract liabilties   14,105    12,646 
Less: current portion   13,957    12,459 
Contract liabilities – non-current  $148    187 

 

During the three months ended March 31, 2020, the Company recognized $1,279 of sales related to its contract liabilities at January 1, 2020. During the three months ended March 31, 2019, the Company recognized $2,282 of sales related to its contract liabilities at January 1, 2019.

 

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Remaining Performance Obligations

 

As of March 31, 2020, the Company had $302.4 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 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 $227.4 million are expected to be recognized during the year ending December 31, 2020, $74.7 million during the year ending December 31, 2021.

 

Note 7. 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. Also, it includes the intangibles acquired from the acquisition of GM&P.

 

   March 31, 2020 
   Gross   Acc. Amort.   Net 
Trade Names  $980   $(604)  $376 
Notice of Acceptances (NOAs), product designs and other intellectual property   8,760    (4,519)   4,241 
Non-compete Agreement   165    (102)   63 
Customer Relationships   4,140    (2,722)   1,418 
Total  $14,045   $(7,947)  $6,098 

 

   December 31, 2019 
   Gross   Acc. Amort.   Net 
Trade Names  $980   $(555)  $425 
Notice of Acceptances (NOAs), product designs and other intellectual property   8,903    (4,323)   4,580 
Non-compete Agreement   165    (94)   71 
Contract Backlog   3,090    (3,090)   - 
Customer Relationships   4,140    (2,513)   1,627 
Total  $17,278   $(10,575)  $6,703 

 

The weighted average amortization period is 5.4 years.

 

During the three months ended March 31, 2020 and 2019, the amortization expense amounted to $550 and $1,211, respectively, and was included within the general and administration expenses in our Condensed Consolidated Statement of Operations.

 

The estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2020 is as follows:

 

Year ending  (in thousands) 
2020  $1,361 
2021   2,013 
2022   1,148 
2023   826 
2024   565 
Thereafter   185 
   $6,098 

 

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Note 8. Debt

 

The Company’s debt is comprised of the following:

 

   March 31, 2020   December 31, 2019 
Revolving lines of credit  $21,351   $17,455 
Finance lease   430    493 
Unsecured senior note   210,000    210,000 
Other loans   14,779    15,578 
Syndicated loan   14,999    19,999 
Less: Deferred cost of financing   (2,619)   (3,714)
Total obligations under borrowing arrangements   258,940    259,811 
Less: Current portion of long-term debt and other current borrowings   15,245    16,084 
Long-term debt  $243,695   $243,727 

 

As of March 31, 2020 and December 31, 2019, the Company had $258,105 and $259,574 of debt denominated in US Dollars with the remaining amounts denominated in Colombian Pesos.

 

The Company had $6,455 and $6,979 of property, plant and equipment pledged as collateral for various lines of credit as of March 31, 2020 and December 31, 2019, respectively.

 

On May 2, 2019, the Company closed a $30 million five-year term debt facility with Banco de Crédito del Perú and Banco Sabadell which bears interest at Libor +2.95%. Proceeds from this long-term debt facility were used towards refinancing short-term debt and partially supporting expected capital expenditure needs for capacity expansion and the automatization of some of our processes. This facility also contains a covenant requiring that the company maintain certain leverage and fixed charge coverage ratios measured biannually at December and June, with which the Company is in compliance  .

 

As of March 31, 2020, the Company was obligated under various finance leases under which the aggregate present value of the minimum lease payments amounted to $430 and $493 as of March 31, 2020 and December 31, 2019, respectively. In line with this, the Company recorded right-of-use assets related to computing equipment for $217 and $378 as of March 31, 2020 and December 31, 2019, respectively. The lease agreements include terms to extend the lease, however the Company does not intend to extend its current leases. The weighted average remaining lease term approximates 2.1 years. The right-of-use assets are depreciated and interest expense from the lease liability are recorded on our Condensed Consolidated Statement of Operations.

 

Additionally, as of March 31, 2020, the Company had a commitment for $17 under operating leases related to short term apartment leases, installation equipment and computing equipment which expire during the current year that have not been capitalized due to their short-term nature. Rental expense from these leases is recognized on our Condensed Consolidated Income Statement as incurred.

 

Maturities of long-term debt and other current borrowings are as follows as of March 31, 2020:

 

2021  $15,278 
2022   216,506 
2023   9,337 
2024   12,493 
2025   5,332 
Thereafter   2,613 
Total  $261,559 

 

The Company’s loans have maturities ranging from a few weeks to 10 years. Our credit facilities bear interest at a weighted average of rate 7.24%.

 

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Note 9. Hedging Activity and Fair Value Measurements

 

Hedging Activity

 

During the quarter ended September 30, 2019 we entered into several foreign currency non-delivery forward and collar contracts to hedge the fluctuations in the exchange rate between the Colombian Peso and the U.S. Dollar. Our contracts are designated as cash flow hedges since they are highly effective in offsetting changes in the cash flows attributable to forecasted Colombian Peso denominated costs and expenses.

 

Guidance under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an asset position by evaluating their financial position, including cash on hand, as well as their credit ratings.

 

As of March 31, 2020, the fair value of foreign currency non-delivery forward and collar contracts was in a net liability position of $5,228. We had 34 outstanding forward and collar contracts to exchange 48 million U.S. Dollars to Colombian Pesos through February 2021. We assessed the risk of non-performance of the Company to these contracts and determined it was insignificant and, therefore, did not record any adjustment to fair value as of March 31, 2020.

 

We assess the effectiveness of our foreign currency non-delivery forward and collar contracts by comparing the change in the fair value of the forward contract to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our foreign currency non-delivery forward and collar contracts is reported as a component of accumulated other comprehensive loss and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. The amount of losses, net, recognized in the “accumulated other comprehensive loss” line item in the accompanying condensed consolidated balance sheet as of March 31, 2020, that we expect will be reclassified to earnings within the next twelve months, is $5,228.

 

The fair value of our foreign currency hedges classified in the accompanying consolidated balance sheets as of March 31, 2020, are as follows:

 

   Derivative Assets    Derivative Liabilities
   March 31, 2020    March 31, 2020
Derivatives designated as hedging instruments under Subtopic 815-20:  Balance Sheet Location  Fair
Value
     Balance Sheet Location  Fair Value 
                 
Derivative instruments:                  
Non-Delivery forward and collar contracts  Other current assets  $-     Accrued liabilities  $(5,228)
Total derivative instruments  Total derivative assets  $-     Total derivative liabilities  $(5,228)

 

The fair value of our foreign currency hedges classified in the accompanying consolidated balance sheets as of December 31, 2019, are as follows:

 

   Derivative Assets     Derivative Liabilities
   December 31, 2019     December 31, 2019
Derivatives designated as hedging instruments under Subtopic 815-20:  Balance Sheet Location  Fair
Value
      Balance Sheet Location  Fair Value 
                  
Derivative instruments:                   
Non-Delivery forward and collar contracts  Other current assets  $749      Accrued liabilities  $- 
Total derivative instruments  Total derivative assets  $749      Total derivative liabilities  $- 

 

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The ending accumulated balance for the foreign currency non-delivery forward and collar contracts included in accumulated other comprehensive losses, net of tax, was $3,556 as of March 31, 2020, comprised of a derivative loss of $5,228 and an associated net tax benefit of $1,672.

 

The following table presents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three months ended March 31, 2020 and 2019:

 

    Derivatives in Cash Flow Hedging Relationships  
    Amount of Gain or (Loss)    

Location of Gain or (Loss)

Reclassified from

Accumulated

 

Amount of Gain or (Loss)

Reclassified from

 
    Recognized in OCI (Loss) on     OCI (Loss) into   Accumulated  
    Derivatives     Income   OCI (Loss) into Income  
    Three Months Ended         Three Months Ended  
    March 31,     March 31,         March 31,     March 31,  
    2020     2019         2020     2019  
                             
Non-delivery Forwards and Collar Contracts   $  (5,228 )   $  -     Operating Revenues   $ 677     $  -  

 

Fair Value Measurements

 

The Company accounts for financial assets and liabilities in accordance with accounting standards that define fair value and establish a framework for measuring fair value. The hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and advances from customers approximate their fair value due to their relatively short-term maturities. The Company bases its fair value estimate for long term debt obligations on its internal valuation that all debt is floating rate debt based on current interest rates in Colombia.

 

As of March 31, 2020, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See Note 8 - Debt. The fair value of long-term debt was calculated based on an analysis of future cash flows discounted with our average cost of debt which is based on market rates, which are level 2 inputs.

 

The following table summarizes the fair value and carrying amounts of our long-term debt:

 

   March 31, 2020   December 31, 2019 
Fair Value   210,857    259,814 
Carrying Value   243,695    243,727 

 

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Note 10. Income Taxes

 

The Company files income tax returns for TG, ES and ES Metals in the Republic of Colombia. GM&P, Componenti and ESW LLC are U.S. entities based in Florida subject to U.S. federal and state income taxes. The estimated combined state and federal income tax rate is estimated at a rate of 26.5% based on the recently enacted U.S. Tax Reform. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands do not currently have any tax obligations.

 

The components of income tax expense are as follows:

 

   Three months ended March 31, 
   2020   2019 
Current income tax          
United States  $(151)  $(512)
Colombia   (2,747)   (3,420)
    (2,898)   (3,932)
Deferred income Tax          
United States   (319)   169 
Colombia   9,350    (1,116)
    9,031    (947)
Total income tax benefit (provision)  $6,133   $(4.879)
           
Effective tax rate   25%   40%

 

The weighted average statutory income tax rate for the three months ended March 31, 2020 and 2019 was 31% and 33%, respectively. The effective income tax rate of 25% as of March 31, 2020 reflects 4.2 percentage point favorable impact of unrealized foreign currency transaction losses related remeasurement of to long-term liabilities of our Colombian subsidiaries which are expected to be realized at a later year in which a lower income tax rate is expected to apply.

 

Note 11. Related Parties

 

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

 

   Three months ended March 31, 
   2020   2019 
Sales to related parties  $1,192   $2,360 
           
Fees paid to directors and officers  $961   $809 
Payments to other related parties  $814   $926 

 

   March 31, 2020   December 31, 2019 
Current Assets:          
Due from VS  $5,102   $4,203 
Due from other related parties   3,361    3,854 
   $8,463   $8,057 
           
Long Term due from VS   1,423    1,786 
           
Liabilities:          
Due to related parties - current  $3,896   $4,415 
Due to related parties - Non current  $628   $622 

 

 

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The Company also has a note payable which matures in 2022 related to the acquisition GM&P for $8,500 due to the former owner who holds shares of the Company and a management position within the Company.

 

Ventana Solar S.A. (“VS”), a Panama Sociedad anónima, is an importer and installer of the Company’s products in Panama. Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to VS for the three months ended March 31, 2020 and 2019 were $643 and $670, respectively.

 

Payments to other related parties during the three months ended March 31, 2020 and 2019 include the following:

 

   Three months ended March 31, 
   2020   2019 
Charitable contributions  $349   $427 
Sales commissions  $259   $476 

 

Charitable contributions are donations made to the Company’s foundation, Fundación Tecnoglass-ESW.

 

Note 12. Shareholders’ Equity

 

Dividends

 

On March 2, 2020, the Company declared a regular quarterly dividend of $0.0275 per share, or $0.11 per share on an annualized basis, for the first quarter of 2020. The quarterly dividend will be paid in cash on April 30, 2020 to shareholders of record as of the close of business on March 31, 2020. Prior to this, the Company paid $0.14 per share on a quarterly basis, payable in cash or ordinary shares, to be chosen at the option of holders of ordinary shares during an election period.

 

Follow-on Equity Offering

 

On March 25, 2019, the Company closed an underwritten follow-on public offering of 5,000,000 ordinary shares at a price to the public of $7.00 per share. As a result of this offering, the Company received a net amount of $33,050 after deducting underwriting and other related fees, which were credited to share capital and additional paid in capital. Additionally, the Company granted the underwriters a 30-day option to purchase up to an additional 750,000 ordinary shares at the public offering price, less the underwriting discount, which option was exercised on April 3, 2019 with respect to 551,423 ordinary shares.

 

Proceeds from the offering were subsequently used to complete the joint venture transaction with Saint-Gobain discussed in “Note 4. Long-term Investments – Saint-Gobain Joint Venture.”

 

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Earnings per Share

 

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:

 

   Three months ended March 31, 
   2020   2019 
Numerator for basic and diluted earnings per shares          
Net Income (loss)  $(18,668)  $7,331 
           
Denominator          
Denominator for basic earnings per ordinary share - weighted average shares outstanding   46,117,631    40,295,687 
Effect of dilutive securities and stock dividend   -    551,860 
Denominator for diluted earnings per ordinary share - weighted average shares outstanding   46,117,631    40,847,547 
Basic earnings (loss) per ordinary share  $(0.40)  $0.18 
Diluted earnings (loss) per ordinary share  $(0.40)  $0.18 

 

The effect of dilutive securities as of March 31, 2019 includes the effect of 551,423 shares potentially issued in relation to the underwriters option of the follow-on equity offering described above.

 

Note 13. Commitments and Contingencies

 

Commitments

 

As of March 31, 2020, the Company had an outstanding obligation to purchase an aggregate of at least $17,111 of certain raw materials from a specific supplier before May 2026.

 

On May 3, 2019, we consummated the joint venture agreement with Saint-Gobain whereby we acquired a 25.8% minority ownership interest in Vidrio Andino. The purchase price for our interest in Vidrio Andino was $45 million, of which $34.1 million was paid in cash and $10.9 million to be paid through the contribution of land to be contributed on our behalf by a related party owned by members of our Chief Executive Officer by the end of the first half of 2020. The joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid between 2020 and 2021 if needed (based on debt availability).

 

General Legal Matters

 

From time to time, the Company is involved in legal matters arising in the regular course of business. Some disputes are derived directly from our construction projects, related to supply and installation, and even though deemed ordinary, they may involve significant monetary damages. We are also subject to other type of litigations arising from employment practices, worker’s compensation, automobile claims and general liability. It is very difficult to predict precisely what the outcome of these litigations might be. However, with the information at our disposition as this time, there are no indications that such claims will result in a material adverse effect on the business, financial condition or results of operations of the Company.

 

Note 14. Subsequent Events

 

In April 2020, the company took $9.2 million from non-committed lines of credit as a preventive measure to secure incremental liquidity in light of the coronavirus outbreak.

 

Management concluded that no additional subsequent events required disclosure other than those disclosed in these financial statements.

 

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

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us” or “our” are to Tecnoglass Inc. (formerly Andina Acquisition Corporation), except where the context requires otherwise. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this report.

 

Overview

 

We are a vertically-integrated manufacturer, supplier and installer of architectural glass, windows and associated aluminum products for the global commercial and residential construction markets. With a focus on innovation, combined with providing highly specified products with the highest quality standards at competitive prices, we have developed a leadership position in each of our core markets. In the United States, which is our largest market, we were ranked as the second largest glass fabricator in 2019 by Glass Magazine. In addition, we believe we are the leading glass transformation company in Colombia. Based on our analysis of third-party industry sources we had an estimated market share of over 49% of the Colombian market in 2018. Our customers, which include developers, general contractors or installers for hotels, office buildings, shopping centers, airports, universities, hospitals and multi-family and residential buildings, look to us as a value-added partner based on our product development capabilities, our high-quality products and our unwavering commitment to exceptional service.

 

We have more than 30 years of experience in architectural glass and aluminum profile structure assembly, we transform a variety of glass products, including tempered safety, double thermo-acoustic and laminated glass. Our finished glass products are installed in a wide variety of buildings across a number of different applications, including floating facades, curtain walls, windows, doors, handrails, interior and bathroom spatial dividers. We also produce aluminum products such as profiles, rods, bars, plates and other hardware used in the manufacturing of windows.

 

Our products are manufactured in a 2.7 million square foot, state-of-the-art manufacturing complex in Barranquilla, Colombia that provides easy access to North, Central and South America, the Caribbean and the Pacific. Our products can be found on some of the most distinctive buildings in these regions including El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), and Salesforce Tower (San Francisco). Our track record of successfully delivering high profile projects has earned us an increasing number of opportunities across the United States, evidenced by our expanding backlog and overall revenue growth.

 

Our structural competitive advantage is underpinned by our low-cost manufacturing footprint, vertically integrated business model and geographic location. Our integrated facilities in Colombia and distribution and services operations in Florida provide us with a significant cost advantage in both manufacturing and distribution, and we continue to invest in these operations to expand our operational capabilities. Our lower cost manufacturing footprint allows us to offer competitive prices for our customers, while also providing innovative, high quality and high value-added products, together with consistent and reliable service. We have historically generated high margin organic growth based on our position as a value-added solutions provider for our customers.

 

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We have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in Florida has primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated areas of the United States. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic growth with some acquisitions that have allowed us added control over our supply chain allowed for further vertical integration of our business and will act as a platform for our future expansion in the United States. In 2016, we completed the acquisition of ESW, which gave us control over the distribution of products into the United States from our manufacturing facilities in Colombia. In March 2017, we completed the acquisition of GM&P, a consulting and glazing installation business that was previously our largest installation customer.

 

On May 3, 2019, we consummated the joint venture agreement with Saint-Gobain, acquiring a 25.8% minority ownership interest in Vidrio Andino, a Colombia-based subsidiary of Saint-Gobain, solidifying our vertical integration strategy by acquiring an interest in the first stage of our production chain, while securing ample glass supply for our expected production needs. Additionally, in April 2019, ESMetals, a Colombian entity in which the Company has 70% equity interest began operations. ESMetals serves as a metalwork contractor to supply the Company with steel accessories used in the assembly of certain architectural systems as part of our vertical integration strategy.

 

The continued diversification of the group’s presence and product portfolio is a core component of our strategy. In particular, we are actively seeking to expand our presence in United States outside of Florida. We also launched a residential windows offering which, we believe, will help us expand our presence in the United States and generate additional organic growth. We believe that the quality of our products, coupled with our ability to price competitively given our structural advantages on cost, will allow us to generate further growth in the future.

 

On March 24, 2020, Colombia went into a mandatory lockdown as a result of the novel coronavirus outbreak. As a result, the Company temporarily suspended production at its facilities in Colombia through April 13, 2020 during the initial phase of the nationwide shelter-in-place order. While the shelter-in-place order was subsequently extended to May 25, 2020, the Company resumed full operations at its facilities on April 14, 2020 given its exempted designation as a supplier of critical products to essential business sectors such as infrastructure and construction. At the same time as most of our customers in the United States and Colombia are resuming their activities. During the period that production was suspended, vacation days were used to retain eligible employees and the Company used the time to implement broad safety measures before returning to normal operations.

 

The Company entered the pandemic with a strong financial position along with the flexibility required to support its global operations during this volatile period. As of March 31, 2020, we had had cash of $36.8 million plus an additional $66.4 million of availability under its existing lines of credit, providing sufficient access to capital. In addition, the Company has implemented strict cost controls, reduced operating expenses and limited all non-critical capital expenditures beyond the completion of initiatives started in 2019. The Company anticipates that working capital will be a net benefit to cash flow for the full year 2020.

 

RESULTS OF OPERATIONS

 

   Three months ended March 31, 
   2020   2019 
Operating Revenues  $87,298   $107,168 
Cost of sales   56,871    75,276 
Gross profit   30,427    31,892 
Operating expenses   (17,278)   (17,656)
Operating income   13,149    14,236 
Non-operating income and expenses, net   (101)   275 
Foreign currency transactions (losses) gains   (32,466)   3,286 
Equity method income   260    - 
Interest Expense and deferred cost of financing   (5,643)   (5,587)
Income tax benefit (provision)   6,133    (4,879)
Net (loss) income   (18,668)   7,331 
(Income) Loss attributable to non-controlling interest   (98)   7 
(Loss) Income attributable to parent  $(18,766)  $7,338 

 

 22 

 

 

Comparison of quarterly periods ended March 31, 2020 and 2019

 

Revenues

 

The Company’s operating revenues decreased $19.9 million or 18.5% from $107.2 million to $87.3 million for the quarter ended March 31, 2020 compared with the quarter ended March 31, 2019.

 

Sales in the U.S. markets decreased $13.3 million or 14.4% in the first quarter of 2020 to $78.8 million compared with $92.1 during the same period of 2019. The decrease resulted from having a lesser amount of production days given scheduled maintenance at the beginning of the period and the aforementioned mandatory lockdown at the end of March. Additionally, there was a lesser amount of installation work given the schedule of project completion at the beginning of the year. This was partially offset by an increase in residential market sales, which increased $1.5 million, or 12% year-over-year as a result of our established relationships with dealers and good reception of our products among end customers. U.S. revenues continue to represent the majority of our sales, at 90% and 86% of total sales during the first quarter of 2020 and 2019, respectively.

 

Colombian market sales were also down $6.5 million, or 50.1% year-over-year from $13.0 million to $6.5 million in the first quarter of 2019 and 2020, respectively, reflecting slow construction activity in this market with a stop of activity given the coronavirus pandemic in the middle of March 2020. Our sales to other territories in Latin America remained stable and continue to represent approximately 2% of our total sales.

 

Gross profit

 

Gross profit decreased $1.5 million, or 4.6% to $30.4 million during the three months ended March 31, 2020, compared with $31.9 million during the same period of 2019. Gross profit margins increased to 34.9% during the first quarter of 2020, from 29.8% during the first quarter of 2019 as a result of increased raw material efficiency and a $1.7 million year-over-year decrease in labor cost related to the streamlining of our operative processes during 2019, alongside with favorable foreign exchange rates positively impacting the cost of the majority of our workforce based in Colombia, as the Colombian peso depreciated 13% between the first quarter of 2019 and 2020. The decrease in labor cost as of the quarter ended March 31, 2020 does not include layoffs or furloughs related to the current coronavirus pandemic.

 

Expenses

 

Operating expenses decreased $0.4 million, or 2.1%, from $17.7 million to $17.3 million for the quarters ended March 31, 2019 and 2020, respectively. The decrease has been the result of our efforts to enhance our lean administrative structure paired with favorable exchange rates as a significant portion of our general and administrative expenses are denominated in COP. Sales commissions, which is a highly variable expense in nature, increased $0.4 million despite the decrease in sales because of a lag that is generated because we pay commissions when we collect payment from our customers as opposed to the time of invoicing.

 

Non-operating income and expenses, net

 

During the three months ended March 31, 2020 and 2019, the Company recorded net a non-operating expense of $0.1 million and non-operating income of $0.3 million, respectively. Non-operating income is comprised primarily of income from rental properties and gains on sale of scrap materials as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.

 

 23 

 

 

Foreign currency transaction gains and losses

 

During the quarter ended March 31, 2020, the Company recorded a non-cash loss of $32.5 million associated with foreign currency transactions. Most of this impact is associated with the remeasurement of a net liability position of $109.6 million U.S. dollar denominated monetary assets and liabilities held by the Company’s subsidiaries with the Colombian peso as their functional currency while the Colombian peso depreciated by 24% during the quarter. Comparatively, the Company recorded a net gain of $3.3 million during the three months ended March 31, 2019 while the Colombian peso appreciated 2.3% during the quarter.

 

Interest Expense

 

Interest expense and deferred cost of financing remained relatively stable at $5.7 million and $5.6 million during the quarters ended March 31, 2020 and 2019, respectively. This reflects an improvement in our overall cost of financing as out total indebtedness increased $11.0 million, or 4.5% between both periods.

 

Income Taxes

 

During the quarter ended March 31, 2020, the Company recorded an income tax benefit of $6.1 million related to a net loss before tax, largely associated with the large loss on foreign currency transactions during the period. Conversely, the Company recorded an income tax provision of $4.9 million during the quarter ended March 31, 2020

 

As a result of the foregoing, the Company recorded a net loss for the three months ended March 31, 2020 of $18.7 million compared to net income of $7.3 million in the three months ended March 31, 2019.

 

Liquidity

 

As of March 31, 2020, and December 31, 2019, we had cash and cash equivalents of approximately $36.8 million and $47.9 million, respectively. As of March 31, 2020, the Company had $66.4 million of borrowings available under several committed and uncommitted facilities with relationship banks. The Company examines its capital/debt profile from time to time and evaluates overall market conditions to assess if it is opportunistic to repurchase debt or shares in the open market when conditions are favorable to the company and its stakeholders. The Company will base its decisions on factors such as pricing, liquidity projections, general economic and market conditions, and other considerations, as determined by management.

 

We are actively focusing on expanding banking relationships to further diversify our sources of funding and optimize our cost of capital given the restrictions that some entities may have in lending in an efficient matter as a result of the coronavirus pandemic. In April 2020, the company took $9.2 million from non-committed lines of credit as a preventive measure to secure incremental liquidity in light of the coronavirus outbreak. We anticipate that working capital will be a net benefit to cash flow for the full year 2020, which in addition to our current liquidity position, is sufficient to serve our obligations through the next twelve months.

 

Capital Resources

 

We transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significant investments in state-of-the-art technology. During the quarter ended March 31, 2020 and 2019, we made investments primarily in building and construction, and machinery and equipment in the amounts of $7.5 million, and $5.2 million, respectively.

 

In 2019, we carried out enhancements at our glass and aluminum facilities to increase production capacity and automate operations. The Company completed this aluminum capacity expansion in July 2019 and implemented its glass transformation process automation initiative in January 2020. Additionally, it is completing the set up and testing phase of its automated warehousing systems, with the funding being executed since the end of 2018. The Company expects to continue funding the approximate $1.7 million remaining capital investments of this initiative with cash on hand.

 

 24 

 

 

On May 3, 2019, we consummated a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino, a Colombia-based subsidiary of Saint-Gobain. The purchase price for our interest in Vidrio Andino was $45 million, of which $34.1 million was paid in cash and $10.9 million to be paid through the contribution of land to be contributed on our behalf by a related party owned by members of our Chief Executive Officer’s family by the end of the first half of 2020. The joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid between 2020 and 2021 if needed (based on debt availability).

 

Cash Flow from Operations, Investing and Financing Activities

 

   Three months ended March 31, 
   2020   2019 
Cash Flow provided by (used in) Operating Activities  $548   $(5,629)
Cash Flow (used in) Investing Activities   (6,413)   (3,713)
Cash Flow (used in) provided by Financing Activities   (720)   37,634 
Effect of exchange rates on cash and cash equivalents   (4,453)   380 
Cash Balance - Beginning of Period   47,862    33,040 
Cash Balance - End of Period  $36,824   $61,712 

 

During the three months ended March 31, 2020, operating activities generated $0.5 million and used $5.6 million during the three months ended March 31, 2020 and 2019, respectively. For the quarter ended March 31, 2020 we have modified the way we present the impact of foreign currency transactions on our Statement of Cash Flows as there has been volatility and significant fluctuations in the exchange rates between the U.S. Dollar and the Colombian Peso, which is the functional currency of our subsidiaries that carry most of our operations.

 

Prior to March 31, 2020, the impact of unrealized foreign currency transaction gains and losses resulting from the remeasurement of our monetary assets and liabilities denominated in any currency other than the functional currency have been included within the individual line item affected within cashflows from operating activities, investing activities or financing activities, as appropriate. As of March 31, 2020, unrealized foreign currency transaction gains and losses, which include currency translation differences on monetary items that form part of investing or financing activities, such as long-term loans, are presented as a reconciling item from net income to cashflow from operating activities. While during prior periods, unrealized currency translation differences on monetary items that form part of operating activities, such as trade accounts receivables and payables, were presented within each line item, we are now presenting them within the reconciliation of net income to cashflow from operations, so as to better present the economic reality of the cashflows during the period. As a result of this, we have revised the cash flows for the three months ended March 31, 2019 and are currently reporting a use of $5.6 million, compared with an originally reported use of $4.9 million.

 

The main use of cash in operating activities during the three months ended March 31, 2020 were trade account payable which used $6.3 million as we made anticipated payments to some of our smaller suppliers to help them with the impact of the Coronavirus, and accrued interest expense which used $4.5 million due to the seasonality of our interest payments, most of which are paid bi-annually in January and September.

 

We used $6.4 million and $3.7 million in investing activities during the three months ended March 31, 2020 and 2019, respectively. The main use of cash in investing activities during the three months ended March 31, 2020 was related to scheduled maintenance Capex and the completion of our previously announced expansion and automation initiatives that are now mostly completed. We used $6.5 million for the acquisition or property and equipment. Including assets acquired under credit, total capital expenditures during the period were $7.5 million.

 

 25 

 

 

Financing activities used $0.7 million as we made some repayments on maturing debt. In contrast, during the three months ended March 31, 2019, financing activities generated $37.6 million as a result of an underwritten follow-on public offering of 5,000,000 ordinary shares, not including the underwriters’ over-allotment option, for net proceeds of $33.1 million which closed in March 2019.

 

During the quarter ended March 31, 2020 the main source of cash was the cash balance available at the beginning of period, which decreased $11.0 million, including the impact of unfavorable changes in exchange rates during the three months ended March 31, 2020, which resulted in a decrease of $4.5 million on our ending cash balance.

 

Off-Balance Sheet Arrangements

 

None

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

None

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We performed an evaluation required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of Tecnoglass, Inc.´s design and operating effectiveness of the internal controls over financial reporting as of the end of the period covered by this Quarterly Report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, were effective as of March 31, 2020, in order to provide reasonable assurance that the information disclosed in our reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

For the quarter ended March 31, 2020, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

General Legal Matters

 

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While management believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

 

Item 1A. Risk Factors

 

There have been no material changes to the risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 except as follows:

 

 26 

 

 

Risks Related to the Novel Coronavirus Outbreak

 

We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows.

 

We face various risks related to health epidemics, pandemics and similar outbreaks, including the global outbreak of coronavirus disease 2019 (“COVID-19”). In recent weeks, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted.

 

Since the outbreak of the COVID-19 situation in December 2019, we strictly adhered to mandates and other guidance from local governments and global health authorities. Effective March 24, 2020, the Colombian government issued a nationwide order to, among other actions, close certain non-essential business activities through April 13, 2020 in response to the rapid spread of COVID-19 to many parts of the world. This order was later extended through April 27, 2020 and subsequently through May 11, 2020. Certain industry exemptions to Colombia’s nationwide work stoppage provide for the continuation of some operations at our facilities in Barranquilla, as well as our Vidrio Andino joint venture. Our operations in Colombia resumed in the third week of April 2020.

 

In recent months, the Company has proactively implemented business continuity measures across its vertically integrated plant network to build the critical inventory to support its customers. During this time, the Company will continue to ship finished inventory of windows, architectural glass and aluminum products that are considered essential to customers’ active construction projects.

 

Most of Tecnoglass’ U.S. and Latin American customers remain operational with many construction projects typically considered by jurisdictions to be essential business activities. However, given the unprecedented nature of the COVID-19 pandemic, which is now impacting all aspects of business in every U.S. State and Latin American country, demand in all served markets slowed down in March 2020. The Company will continue to monitor and adjust plans for its business as the situation evolves.

 

As of March 31, 2020, Tecnoglass had total liquidity of $103.3 million, including cash of $36.9 million and $66.4 million of availability under various committed and uncommitted lines of credit, ensuring sufficient access to capital. If necessary, the Company may significantly reduce its variable costs if production has to be scaled down as a result of market conditions, and has implemented budget cuts and stricter controls on working capital to preserve cash.

 

We may be adversely affected by any disruption in our information technology systems. Our operations are dependent upon our information technology systems, which encompass all of our major business functions.

 

Increased global information technology security requirements, vulnerabilities, threats and a rise in sophisticated and targeted cybercrime pose a risk to the security of our systems, our information networks, and to the confidentiality, availability and integrity of our data, as well as to the functionality of our manufacturing process. Introduced or increased risk associated with remote work transition pose threats to workforce disruption, cybersecurity attacks and dissemination of sensitive personal data or proprietary confidential information to our business. A disruption in our information technology systems for any prolonged period could result in delays in executing certain production activities, logging and processing operational and financial data, communication with employees and third parties or fulfilling customer orders resulting in potential liability or reputational damage or otherwise adversely affect our financial results. We employ a number of measures to prevent, detect and mitigate these threats, which include employee education, password encryption, frequent password change events, firewall detection systems, anti-virus software in-place and frequent backups; however, there is no guarantee such efforts will be successful in preventing a cyber-attack.

 

 27 

 

 

We have transitioned for the first time a significant subset of our employee population to a remote work environment, in accordance with national government efforts to mitigate the spread of COVID-19. This transition allowed us to adequately maintain operations in our financial information systems and meant no significant changes to our internal control over financial reporting and disclosure control and procedures, enabled by our continuity plan adequate implementation which did not present any material incidents, challenges, expenditures or constraints. However, this transition may introduce and exacerbate certain risks to our business, including an increased demand for information technology resources, increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of personal data or proprietary or confidential information about us, our members or related third parties.

 

Item 6. Exhibits

 

Exhibit No.   Description
     
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32   Certification of Chief Executive Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101   Financial statements from the Quarterly Report on Form 10-Q of Tecnoglass Inc. for the quarter ended March 31, 2020, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity, (iv) Condensed Consolidated Statement of Cash Flows and (v) Notes to Unaudited Condensed Consolidated Financial Statements, as blocks of text and in detail.
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

 28 

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  TECNOGLASS INC.
     
  By: /s/ Jose M. Daes
    Jose M. Daes
    Chief Executive Officer
    (Principal executive officer)
     
  By: /s/ Santiago Giraldo
    Santiago Giraldo
    Chief Financial Officer
    (Principal financial and accounting officer)
     
Date: May 11, 2020    

 

 29 

 

 

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Jose M. Daes, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Tecnoglass Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
   
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 11, 2020

 

  /s/ Jose M. Daes
  Jose M. Daes
  Chief Executive Officer

 

   

 

 

 

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Santiago Giraldo, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Tecnoglass Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
   
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 11, 2020

 

  /s/ Santiago Giraldo
  Santiago Giraldo
  Chief Financial Officer
  (Principal financial and accounting officer)

 

   

 

 

 

EXHIBIT 32

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Tecnoglass Inc. (the “Company”) on Form 10-Q, for the period ended March 31, 2020 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated May 11, 2020

 

  By: /s/ Jose M. Daes
    Jose M. Daes
    Chief Executive Officer
    (Principal executive officer)
     
  By: /s/ Santiago Giraldo
    Santiago Giraldo
    Chief Financial Officer
    (Principal financial and accounting officer)

 

   

 

 

v3.20.1
Hedging Activity and Fair Value Measurements - Schedule of Gains (Losses) on Derivative Financial Instruments (Details) - Non-Delivery Forward and Collar Contracts [Member] - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Amount of Gain or (Loss) Recognized in OCI (Loss) on Derivatives $ (5,228)
Amount of gain or (Loss) Reclassified from Accumulated OCI (Loss) into Income $ 677
v3.20.1
Debt - Schedule of Long Term Debt (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Debt Disclosure [Abstract]    
Revolving lines of credit $ 21,351 $ 17,455
Finance lease 430 493
Unsecured senior note 210,000 210,000
Other loans 14,779 15,578
Syndicated loan 14,999 19,999
Less: Deferred cost of financing (2,619) (3,714)
Total obligations under borrowing arrangements 258,940 259,811
Less: Current portion of long-term debt and other current borrowings 15,245 16,084
Long-term debt $ 243,695 $ 243,727
v3.20.1
Intangible Assets (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]    
Weighted average amortization period 5 years 4 months 24 days  
Amortization expense $ 550 $ 1,211
v3.20.1
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Operating revenues:    
Total operating revenues $ 87,298 $ 107,168
Cost of sales 56,871 75,276
Gross profit 30,427 31,892
Operating expenses:    
Selling expense (9,668) (9,562)
General and administrative expense (7,610) (8,094)
Total operating expenses (17,278) (17,656)
Operating income 13,149 14,236
Non-operating (expenses) income, net (101) 275
Equity method income 260
Foreign currency transactions (losses) gains (32,466) 3,286
Interest expense and deferred cost of financing (5,643) (5,587)
(Loss) Income before taxes (24,801) 12,210
Income tax benefit (provision) 6,133 (4,879)
Net (loss) income (18,668) 7,331
(Income) Loss attributable to non-controlling interest (98) 7
(Loss) Income attributable to parent (18,766) 7,338
Comprehensive income:    
Net (loss) income (18,668) 7,331
Foreign currency translation adjustments (19,288) 1,770
Change in fair value derivative contracts (4,065)
Total comprehensive (loss) income (42,021) 9,101
Comprehensive (income) loss attributable to non-controlling interest (98) 7
Total comprehensive (loss) income attributable to parent $ (42,119) $ 9,108
Basic (loss) income per share $ (0.40) $ 0.18
Diluted (loss) income per share $ (0.40) $ 0.18
Basic weighted average common shares outstanding 46,117,631 40,295,687
Diluted weighted average common shares outstanding 46,117,631 40,847,547
External Customers [Member]    
Operating revenues:    
Total operating revenues $ 86,106 $ 104,808
Related Parties [Member]    
Operating revenues:    
Total operating revenues $ 1,192 $ 2,360
v3.20.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 13. Commitments and Contingencies

 

Commitments

 

As of March 31, 2020, the Company had an outstanding obligation to purchase an aggregate of at least $17,111 of certain raw materials from a specific supplier before May 2026.

 

On May 3, 2019, we consummated the joint venture agreement with Saint-Gobain whereby we acquired a 25.8% minority ownership interest in Vidrio Andino. The purchase price for our interest in Vidrio Andino was $45 million, of which $34.1 million was paid in cash and $10.9 million to be paid through the contribution of land to be contributed on our behalf by a related party owned by members of our Chief Executive Officer by the end of the first half of 2020. The joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid between 2020 and 2021 if needed (based on debt availability).

 

General Legal Matters

 

From time to time, the Company is involved in legal matters arising in the regular course of business. Some disputes are derived directly from our construction projects, related to supply and installation, and even though deemed ordinary, they may involve significant monetary damages. We are also subject to other type of litigations arising from employment practices, worker’s compensation, automobile claims and general liability. It is very difficult to predict precisely what the outcome of these litigations might be. However, with the information at our disposition as this time, there are no indications that such claims will result in a material adverse effect on the business, financial condition or results of operations of the Company.

v3.20.1
Inventories, Net (Tables)
3 Months Ended
Mar. 31, 2020
Inventory Disclosure [Abstract]  
Schedule of Inventories

    March 31, 2020     December 31, 2019  
Raw materials   $ 37,166     $ 44,175  
Work in process     19,392       24,262  
Finished goods     4,529       5,203  
Stores and spares     6,734       8,130  
Packing material     570       981  
      68,391       82,751  
Less: Inventory allowance     (50 )     (37 )
    $ 68,341     $ 82,714  

v3.20.1
General
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
General

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 production 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. Alutions’ 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.

v3.20.1
Hedging Activity and Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Schedule of Fair Value of Foreign Currency Hedges

The fair value of our foreign currency hedges classified in the accompanying consolidated balance sheets as of March 31, 2020, are as follows:

 

    Derivative Assets     Derivative Liabilities
    March 31, 2020     March 31, 2020
Derivatives designated as hedging instruments under Subtopic 815-20:   Balance Sheet Location   Fair
Value
      Balance Sheet Location   Fair Value  
                       
Derivative instruments:                          
Non-Delivery forward and collar contracts   Other current assets   $ -       Accrued liabilities   $ (5,228 )
Total derivative instruments   Total derivative assets   $ -       Total derivative liabilities   $ (5,228 )

 

The fair value of our foreign currency hedges classified in the accompanying consolidated balance sheets as of December 31, 2019, are as follows:

 

    Derivative Assets     Derivative Liabilities
    December 31, 2019     December 31, 2019
Derivatives designated as hedging instruments under Subtopic 815-20:   Balance Sheet Location   Fair
Value
      Balance Sheet Location   Fair Value  
                       
Derivative instruments:                          
Non-Delivery forward and collar contracts   Other current assets   $ 749       Accrued liabilities   $ -  
Total derivative instruments   Total derivative assets   $ 749       Total derivative liabilities   $ -  

Schedule of Gains (Losses) on Derivative Financial Instruments

The following table presents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three months ended March 31, 2020 and 2019:

 

    Derivatives in Cash Flow Hedging Relationships  
    Amount of Gain or (Loss)    

Location of Gain or (Loss)

Reclassified from

Accumulated

 

Amount of Gain or (Loss)

Reclassified from

 
    Recognized in OCI (Loss) on     OCI (Loss) into   Accumulated  
    Derivatives     Income   OCI (Loss) into Income  
    Three Months Ended         Three Months Ended  
    March 31,     March 31,         March 31,     March 31,  
    2020     2019         2020     2019  
                             
Non-delivery Forwards and Collar Contracts   $  (5,228 )   $  -     Operating Revenues   $ 677     $  -  
                                     

Summary of Fair Value and Carrying Amounts of Long Term Debt

The following table summarizes the fair value and carrying amounts of our long-term debt:

 

    March 31, 2020     December 31, 2019  
Fair Value     210,857       259,814  
Carrying Value     243,695       243,727  

v3.20.1
Revenues, Contract Assets and Contract Liabilities - Schedule of Contract Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Operating revenues:    
Unbilled contract receivables, gross $ 21,584 $ 20,729
Retainage 25,848 28,344
Total contract assets 47,432 49,073
Less: current portion 36,689 42,014
Contract Assets – non-current $ 10,743 $ 7,059
v3.20.1
Revenues, Contract Assets and Contract Liabilities (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2021
Dec. 31, 2020
Sales related to contract liabilities $ 1,279 $ 2,282    
Remaining performance obligation $ 302,400      
Performance obligation, percentage 100.00%      
Forecast [Member]        
Remaining performance obligation     $ 74,700 $ 227,400
v3.20.1
Shareholders' Equity (Tables)
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:

 

    Three months ended March 31,  
    2020     2019  
Numerator for basic and diluted earnings per shares                
Net Income (loss)   $ (18,668 )   $ 7,331  
                 
Denominator                
Denominator for basic earnings per ordinary share - weighted average shares outstanding     46,117,631       40,295,687  
Effect of dilutive securities and stock dividend     -       551,860  
Denominator for diluted earnings per ordinary share - weighted average shares outstanding     46,117,631       40,847,547  
Basic earnings (loss) per ordinary share   $ (0.40 )   $ 0.18  
Diluted earnings (loss) per ordinary share   $ (0.40 )   $ 0.18  

v3.20.1
Inventories, Net
3 Months Ended
Mar. 31, 2020
Inventory Disclosure [Abstract]  
Inventories, Net

Note 5. - Inventories, net

 

    March 31, 2020     December 31, 2019  
Raw materials   $ 37,166     $ 44,175  
Work in process     19,392       24,262  
Finished goods     4,529       5,203  
Stores and spares     6,734       8,130  
Packing material     570       981  
      68,391       82,751  
Less: Inventory allowance     (50 )     (37 )
    $ 68,341     $ 82,714  

v3.20.1
Hedging Activity and Fair Value Measurements
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Hedging Activity and Fair Value Measurements

Note 9. Hedging Activity and Fair Value Measurements

 

Hedging Activity

 

During the quarter ended September 30, 2019 we entered into several foreign currency non-delivery forward and collar contracts to hedge the fluctuations in the exchange rate between the Colombian Peso and the U.S. Dollar. Our contracts are designated as cash flow hedges since they are highly effective in offsetting changes in the cash flows attributable to forecasted Colombian Peso denominated costs and expenses.

 

Guidance under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an asset position by evaluating their financial position, including cash on hand, as well as their credit ratings.

 

As of March 31, 2020, the fair value of foreign currency non-delivery forward and collar contracts was in a net liability position of $5,228. We had 34 outstanding forward and collar contracts to exchange 48 million U.S. Dollars to Colombian Pesos through February 2021. We assessed the risk of non-performance of the Company to these contracts and determined it was insignificant and, therefore, did not record any adjustment to fair value as of March 31, 2020.

 

We assess the effectiveness of our foreign currency non-delivery forward and collar contracts by comparing the change in the fair value of the forward contract to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our foreign currency non-delivery forward and collar contracts is reported as a component of accumulated other comprehensive loss and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. The amount of losses, net, recognized in the “accumulated other comprehensive loss” line item in the accompanying condensed consolidated balance sheet as of March 31, 2020, that we expect will be reclassified to earnings within the next twelve months, is $5,228.

 

The fair value of our foreign currency hedges classified in the accompanying consolidated balance sheets as of March 31, 2020, are as follows:

 

    Derivative Assets     Derivative Liabilities
    March 31, 2020     March 31, 2020
Derivatives designated as hedging instruments under Subtopic 815-20:   Balance Sheet Location   Fair
Value
      Balance Sheet Location   Fair Value  
                       
Derivative instruments:                          
Non-Delivery forward and collar contracts   Other current assets   $ -       Accrued liabilities   $ (5,228 )
Total derivative instruments   Total derivative assets   $ -       Total derivative liabilities   $ (5,228 )

 

The fair value of our foreign currency hedges classified in the accompanying consolidated balance sheets as of December 31, 2019, are as follows:

 

    Derivative Assets     Derivative Liabilities
    December 31, 2019     December 31, 2019
Derivatives designated as hedging instruments under Subtopic 815-20:   Balance Sheet Location   Fair
Value
      Balance Sheet Location   Fair Value  
                       
Derivative instruments:                          
Non-Delivery forward and collar contracts   Other current assets   $ 749       Accrued liabilities   $ -  
Total derivative instruments   Total derivative assets   $ 749       Total derivative liabilities   $ -  

 

The ending accumulated balance for the foreign currency non-delivery forward and collar contracts included in accumulated other comprehensive losses, net of tax, was $3,556 as of March 31, 2020, comprised of a derivative loss of $5,228 and an associated net tax benefit of $1,672.

 

The following table presents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three months ended March 31, 2020 and 2019:

 

    Derivatives in Cash Flow Hedging Relationships  
    Amount of Gain or (Loss)    

Location of Gain or (Loss)

Reclassified from

Accumulated

 

Amount of Gain or (Loss)

Reclassified from

 
    Recognized in OCI (Loss) on     OCI (Loss) into   Accumulated  
    Derivatives     Income   OCI (Loss) into Income  
    Three Months Ended         Three Months Ended  
    March 31,     March 31,         March 31,     March 31,  
    2020     2019         2020     2019  
                             
Non-delivery Forwards and Collar Contracts   $  (5,228 )   $  -     Operating Revenues   $ 677     $  -  
                                     

 

Fair Value Measurements

 

The Company accounts for financial assets and liabilities in accordance with accounting standards that define fair value and establish a framework for measuring fair value. The hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and advances from customers approximate their fair value due to their relatively short-term maturities. The Company bases its fair value estimate for long term debt obligations on its internal valuation that all debt is floating rate debt based on current interest rates in Colombia.

 

As of March 31, 2020, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See Note 8 - Debt. The fair value of long-term debt was calculated based on an analysis of future cash flows discounted with our average cost of debt which is based on market rates, which are level 2 inputs.

 

The following table summarizes the fair value and carrying amounts of our long-term debt:

 

    March 31, 2020     December 31, 2019  
Fair Value     210,857       259,814  
Carrying Value     243,695       243,727  

v3.20.1
Hedging Activity and Fair Value Measurements - Summary of Fair Value and Carrying Amounts of Long Term Debt (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Carrying Value $ 258,940 $ 259,811
Fair Value, Inputs, Level 2 [Member]    
Fair Value 210,857 259,814
Carrying Value $ 243,695 $ 243,727
v3.20.1
Related Parties - Schedule of Related Parties (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Related Party Transactions [Abstract]      
Sales to related parties $ 1,192 $ 2,360  
Fees paid to directors and officers 961 809  
Payments to other related parties 814 $ 926  
Due from VS 5,102   $ 4,203
Due from other related parties 3,361   3,854
Due from related parties, current 8,463   8,057
Long Term due from VS 1,423   1,786
Due to related parties - current 3,896   4,415
Due to related parties - Non current $ 628   $ 622
v3.20.1
Commitments and Contingencies (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
May 03, 2019
Jan. 11, 2019
Mar. 31, 2020
Purchase of aggregate raw material     $ 17,111
Saint-Gobain Joint Venture Agreement [Member] | Vidrio Andino Holdings S.A.S [Member]      
Minority ownership interest 25.80% 25.80%  
Payments to acquire businesses, gross $ 34,100 $ 34,100  
Purchase price for acquiring minority interest 45,000 $ 45,000  
Business combination, consideration transferred $ 10,900    
Business combination, consideration description The joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid between 2020 and 2021 if needed (based on debt availability).    
v3.20.1
Inventories, Net - Schedule of Inventories (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Inventory Disclosure [Abstract]    
Raw materials $ 37,166 $ 44,175
Work in process 19,392 24,262
Finished goods 4,529 5,203
Stores and spares 6,734 8,130
Packing material 570 981
Total Inventories, gross 68,391 82,751
Less: Inventory allowance (50) (37)
Total inventories, net $ 68,341 $ 82,714
v3.20.1
Related Parties (Tables)
3 Months Ended
Mar. 31, 2020
Related Party Transactions [Abstract]  
Schedule of Related Parties

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

 

    Three months ended March 31,  
    2020     2019  
Sales to related parties   $ 1,192     $ 2,360  
                 
Fees paid to directors and officers   $ 961     $ 809  
Payments to other related parties   $ 814     $ 926  

 

    March 31, 2020     December 31, 2019  
Current Assets:                
Due from VS   $ 5,102     $ 4,203  
Due from other related parties     3,361       3,854  
    $ 8,463     $ 8,057  
                 
Long Term due from VS     1,423       1,786  
                 
Liabilities:                
Due to related parties - current   $ 3,896     $ 4,415  
Due to related parties - Non current   $ 628     $ 622  

Schedule of Payments to Other Related Parties

Payments to other related parties during the three months ended March 31, 2020 and 2019 include the following:

 

    Three months ended March 31,  
    2020     2019  
Charitable contributions   $ 349     $ 427  
Sales commissions   $ 259     $ 476  

v3.20.1
Revenues, Contract Assets and Contract Liabilities - Schedule of Contract Assets and Liabilities (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Operating revenues:    
Contract assets - current $ 36,689 $ 42,014
Contract assets - non-current 10,743 7,059
Contract liabilities - current (13,957) (12,459)
Contract liabilities - non-current (148) (187)
Net contract assets $ 33,327 $ 36,427
v3.20.1
Revenues, Contract Assets and Contract Liabilities
3 Months Ended
Mar. 31, 2020
Operating revenues:  
Revenues, Contract Assets and Contract Liabilities

Note 6. – Revenues, 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.

 

    Three months ended  
    March 31,  
    2020     2019  
Fixed price contracts   $ 25,027     $ 42,176  
Product sales     62,271       64,992  
Total Revenues   $ 87,298     $ 107,168  

 

The following table presents geographical information about revenues.

 

    Three months ended  
    March 31,  
    2020     2019  
Colombia   $ 6,472     $ 12,959  
United States     78,798       92,062  
Panama     680       763  
Other     1,348       1,384  
Total Revenues   $ 87,298     $ 107,168  

 

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 and 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 other liabilities in the Company’s consolidated balance sheets.

 

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

 

    March 31, 2020     December 31, 2019  
Contract assets — current   $ 36,689     $ 42,014  
Contract assets — non-current     10,743       7,059  
Contract liabilities — current     (13,957 )     (12,459 )
Contract liabilities — non-current     (148 )     (187 )
Net contract assets   $ 33,327     $ 36,427  

 

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

 

    March 31, 2020     December 31, 2019  
Unbilled contract receivables, gross   $ 21,584     $ 20,729  
Retainage     25,848       28,344  
Total contract assets     47,432       49,073  
Less: current portion     36,689       42,014  
Contract Assets – non-current   $ 10,743     $ 7,059  

 

 

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

 

    March 31, 2020     December 31, 2019  
Billings in excess of costs   $ 1,599       2,077  
Advances from customers on uncompleted contracts     12,506       10,569  
Total contract liabilties     14,105       12,646  
Less: current portion     13,957       12,459  
Contract liabilities – non-current   $ 148       187  

 

During the three months ended March 31, 2020, the Company recognized $1,279 of sales related to its contract liabilities at January 1, 2020. During the three months ended March 31, 2019, the Company recognized $2,282 of sales related to its contract liabilities at January 1, 2019.

 

Remaining Performance Obligations

 

As of March 31, 2020, the Company had $302.4 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 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 $227.4 million are expected to be recognized during the year ending December 31, 2020, $74.7 million during the year ending December 31, 2021.

v3.20.1
Income Taxes
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10. Income Taxes

 

The Company files income tax returns for TG, ES and ES Metals in the Republic of Colombia. GM&P, Componenti and ESW LLC are U.S. entities based in Florida subject to U.S. federal and state income taxes. The estimated combined state and federal income tax rate is estimated at a rate of 26.5% based on the recently enacted U.S. Tax Reform. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands do not currently have any tax obligations.

 

The components of income tax expense are as follows:

 

    Three months ended March 31,  
    2020     2019  
Current income tax                
United States   $ (151 )   $ (512 )
Colombia     (2,747 )     (3,420 )
      (2,898 )     (3,932 )
Deferred income Tax                
United States     (319 )     169  
Colombia     9,350       (1,116 )
      9,031       (947 )
Total income tax benefit (provision)   $ 6,133     $ (4.879 )
                 
Effective tax rate     25 %     40 %

 

The weighted average statutory income tax rate for the three months ended March 31, 2020 and 2019 was 31% and 33%, respectively. The effective income tax rate of 25% as of March 31, 2020 reflects 4.2 percentage point favorable impact of unrealized foreign currency transaction losses related remeasurement of to long-term liabilities of our Colombian subsidiaries which are expected to be realized at a later year in which a lower income tax rate is expected to apply.

v3.20.1
Subsequent Events (Details Narrative) - USD ($)
$ in Thousands
Apr. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Line of credit   $ 21,351 $ 17,455
Subsequent Event [Member]      
Line of credit $ 9,200    
v3.20.1
Income Taxes (Details Narrative)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Income Tax Disclosure [Abstract]    
Effective income tax rate reconciliation, percent 25.00% 40.00%
Weighted average statutory income tax rate 31.00% 33.00%
Unrealized foreign currency transaction losses 0.042  
v3.20.1
Related Parties - Schedule of Payments to Other Related Parties (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Payment to other related parties $ 814 $ 926
Charitable Contributions [Member]    
Payment to other related parties 349 427
Sales Commissions [Member]    
Payment to other related parties $ 259 $ 476
v3.20.1
Debt (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
May 02, 2019
Mar. 31, 2020
Dec. 31, 2019
Debt face amount   $ 258,105 $ 259,574
Present value of minimum lease payments   430 493
Right-of-use assets   $ 217 378
Weighted average remaining lease term   2 years 1 month 6 days  
Payments for rent   $ 17  
Loan maturity period   Few weeks to 10 years  
Debt, weighted average interest rate   7.24%  
Debt Facility [Member] | Banco de Credito del Peru and Banco Sabadell [Member]      
Repayments of lines of credit $ 30,000    
Debt instrument term 5 years    
Debt Facility [Member] | Banco de Credito del Peru and Banco Sabadell [Member] | London Interbank Offered Rate (LIBOR) [Member]      
Interest rate during period 2.95%    
Property, Plant and Equipment [Member]      
Debt instrument, collateral amount   $ 6,455 $ 6,979
v3.20.1
Revenues, Contract Assets and Contract Liabilities - Schedule of Contract Liabilities (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Operating revenues:    
Billings in excess of costs $ 1,599 $ 2,077
Advances from customers on uncompleted contracts 12,506 10,569
Total contract liabilities 14,105 12,646
Less: current portion 13,957 12,459
Contract liabilities - non-current $ 148 $ 187
v3.20.1
Hedging Activity and Fair Value Measurements - Schedule of Fair Value of Foreign Currency Hedges (Details) - Non-Delivery Forward and Collar Contracts [Member] - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Total derivative assets $ 749
Total derivative liabilities (5,228)
Other Current Assets [Member]    
Total derivative assets 749
Accrued Liabilities [Member]    
Total derivative liabilities $ (5,228)
v3.20.1
Basis of Presentation and Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies

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, 2019. The year-end condensed balance sheet data was derived from audited financial statements 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 inherent 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 product sold to the construction industry.

 

Principles of Consolidation

 

These unaudited condensed consolidated financial statements consolidate TGI, 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 (“Componenti”) and ES Metals SAS (“ES Metals”), 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, otherwise 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.

 

Derivative Financial Instruments

 

The Company recognizes all derivative financial instruments as either assets or liabilities at fair value on the 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 consolidated statement of comprehensive income. Amounts in accumulated other comprehensive loss on the consolidated balance sheet are reclassified into the consolidated statement of income in the same period or periods during which the hedged transactions are settled.

 

Impairment

 

We review goodwill and long-lived assets for impairment each year on December 31st or more frequently when events or significant changes in circumstances indicate that the carrying value may not be recoverable. The novel coronavirus global outbreak and its associated economic impact, including a significant decrease in the market price of our ordinary shares, is considered a triggering event requiring us to reassess our goodwill and long-lived asset valuations, as well as assumptions of future income from underlying assets. To the extent the impact of the pandemic depends on future developments which are highly uncertain we will continue to evaluate in future periods whether these assumptions are reasonable and will update the forecasts and impairment analysis as appropriate. Based on our analysis as of March 31, 2020 we concluded that no impairment needs to be recorded  to our goodwill using the market approach as the market capitalization of our company, which has a single reporting unit, exceeds the book value of shareholders equity. Based on our analysis as of March 31, 2020 we concluded that no impairment needs to be recorded to our long-lived assets as their carrying value are below their realizable values based on projected future cashflows estimated with assumptions deemed reasonable by management based on information currently available. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company’s market capitalization, and general industry, market and macro-economic conditions.

 

Recently Issued Accounting Pronouncements

 

In June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU represents a significant change in the allowance for credit losses accounting model by requiring immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The new model is applicable to all financial instruments that are not accounted for at fair value through net income, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, (with early application permitted). The FASB issued ASU 2019-10 and ASU 2019-11 during the fourth quarter of 2019 that will postpone the effective date to the year beginning after December 15, 2022. In February 2020, the FASB issued ASU 2020-02 “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842), which amends SEC Staff Accounting Bulletin No. 119 (SAB119) which contains interpretative guidance from the SEC aligned to the FASB’s ASC 326. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 8485): 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 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 amendments in this Update is effective for the Company on December 31, 2022 with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

v3.20.1
Income Taxes (Tables)
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense are as follows:

 

    Three months ended March 31,  
    2020     2019  
Current income tax                
United States   $ (151 )   $ (512 )
Colombia     (2,747 )     (3,420 )
      (2,898 )     (3,932 )
Deferred income Tax                
United States     (319 )     169  
Colombia     9,350       (1,116 )
      9,031       (947 )
Total income tax benefit (provision)   $ 6,133     $ (4.879 )
                 
Effective tax rate     25 %     40 %

v3.20.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES    
Net (loss) income $ (18,668) $ 7,331
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:    
Provision for bad debts 368 153
Depreciation and amortization 5,241 5,841
Deferred income taxes (9,031) 947
Equity method income (260)
Deferred cost of financing 440 393
Other non-cash adjustments 40 23
Unrealized currency translation losses (gains) 37,533 (1,792)
Changes in operating assets and liabilities:    
Trade accounts receivables 664 (14,953)
Inventories (2,848) 2,870
Prepaid expenses 69 (820)
Other assets (4,940) (4,613)
Trade accounts payable and accrued expenses (6,274) 8,187
Accrued interest expense (4,546) (4,337)
Taxes payable 3,113 4,724
Labor liabilities (1,270) (603)
Contract assets and liabilities 2,352 (7,905)
Related parties (1,435) (1,075)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 548 (5,629)
CASH FLOWS FROM INVESTING ACTIVITIES    
Proceeds from sale of investments 193 295
Purchase of investments (137) (307)
Acquisition of property and equipment (6,469) (3,701)
CASH USED IN INVESTING ACTIVITIES (6,413) (3,713)
CASH FLOWS FROM FINANCING ACTIVITIES    
Cash dividend (760)
Proceeds from equity offering 33,050
Proceeds from debt 14,353 6,693
Repayments of debt (15,073) (1,349)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (720) 37,634
Effect of exchange rate changes on cash and cash equivalents (4,453) 380
NET (DECREASE) INCREASE IN CASH (11,038) 28,672
CASH - Beginning of period 47,862 33,040
CASH - End of period 36,824 61,712
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
Interest 9,282 9,230
Income Tax 1,986 1,840
NON-CASH INVESTING AND FINANCING ACTIVITES:    
Assets acquired under credit or debt $ 991 $ 1,468
v3.20.1
Subsequent Events
3 Months Ended
Mar. 31, 2020
Subsequent Events [Abstract]  
Subsequent Events

Note 14. Subsequent Events

 

In April 2020, the company took $9.2 million from non-committed lines of credit as a preventive measure to secure incremental liquidity in light of the coronavirus outbreak.

 

Management concluded that no additional subsequent events required disclosure other than those disclosed in these financial statements.

v3.20.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2020
Apr. 30, 2020
Document And Entity Information [Abstract]    
Entity Registrant Name Tecnoglass Inc.  
Entity Central Index Key 0001534675  
Document Type 10-Q  
Document Period End Date Mar. 31, 2020  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   46,117,631
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2020  
v3.20.1
Revenues, Contract Assets and Contract Liabilities (Tables)
3 Months Ended
Mar. 31, 2020
Schedule of Disaggregation by Revenue

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.

 

    Three months ended  
    March 31,  
    2020     2019  
Fixed price contracts   $ 25,027     $ 42,176  
Product sales     62,271       64,992  
Total Revenues   $ 87,298     $ 107,168  

Schedule of Geographical Information of Revenue from External Customer

The following table presents geographical information about revenues.

 

    Three months ended  
    March 31,  
    2020     2019  
Colombia   $ 6,472     $ 12,959  
United States     78,798       92,062  
Panama     680       763  
Other     1,348       1,384  
Total Revenues   $ 87,298     $ 107,168  

Schedule of Contract Assets and Liabilities

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

 

    March 31, 2020     December 31, 2019  
Contract assets — current   $ 36,689     $ 42,014  
Contract assets — non-current     10,743       7,059  
Contract liabilities — current     (13,957 )     (12,459 )
Contract liabilities — non-current     (148 )     (187 )
Net contract assets   $ 33,327     $ 36,427  

Contract Liabilities [Member]  
Schedule of Contract Assets and Liabilities

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

 

    March 31, 2020     December 31, 2019  
Billings in excess of costs   $ 1,599       2,077  
Advances from customers on uncompleted contracts     12,506       10,569  
Total contract liabilties     14,105       12,646  
Less: current portion     13,957       12,459  
Contract liabilities – non-current   $ 148       187  

Contract Assets [Member]  
Schedule of Contract Assets and Liabilities

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

 

    March 31, 2020     December 31, 2019  
Unbilled contract receivables, gross   $ 21,584     $ 20,729  
Retainage     25,848       28,344  
Total contract assets     47,432       49,073  
Less: current portion     36,689       42,014  
Contract Assets – non-current   $ 10,743     $ 7,059  

v3.20.1
Long-Term Investments
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Long-Term Investments

Note 4. – Long-term Investments

 

Saint-Gobain Joint Venture

 

On January 11, 2019, we entered into a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino Holdings S.A.S (“Vidrio Andino”), a Colombia-based subsidiary of Compagnie de Saint-Gobain S.A. (“Saint-Gobain”). The purchase price for our interest in this entity was $45 million, of which $34.1 was paid in cash, and $10.9 million is to be paid with a piece of land near our existing facility in Barranquilla, which will be contributed by a related party owned by members of our Chief Executive Officer´s family with a third party valuation conducted to ensure arm´s length terms. The land will serve the purpose of developing a second float glass plant nearby our existing manufacturing facilities which we expect to carry significant efficiencies for us once it becomes operative. Vidrio Andino’s float glass plant located in the outskirts of Bogota, Colombia, has been one of our main suppliers of raw glass. We believe this transaction will solidify our vertical integration strategy by acquiring an interest in the first stage of our production chain, while securing ample glass supply for our expected production needs.

 

On May 3, 2019, we consummated the joint venture agreement acquiring a 25.8% minority ownership interest in Vidrio Andino with a cash payment of $34.1 million, and the land still to be contributed as of the end of first half of 2020  . As of that date, the Company recorded the investment within Long-term assets on the Company’s Consolidated Balance Sheet for $45.0 million and a liability for $10.9 million within current liabilities on the Company’s Consolidated Balance to be settled with the contribution of the aforementioned piece of land. Since the date of the acquisition, we have recognized the proportional share of Vidrio Andino’s net income using the equity method on the Consolidated Statement of Operations and Other Comprehensive Income as the Company is deemed to have significant influence, but does not have effective control of Vidrio Andino.

 

Establishment of a new subsidiary

 

In January 2019 we established E.S. Windows California, LLC., a wholly-owned U.S. entity to serve as a distributor of our products in certain jurisdictions within the U.S. markets.

 

In April 2019, ESMetals, a Colombian entity in which the Company has 70% equity interest began operations. ESMetals serves as a metalwork contractor to supply the Company with steel accessories used in the assembly of certain architectural systems as part of our vertical integration strategy. When the company owns a majority (but less than 100%) of a subsidiary’s stock, the Company includes in its Consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling interests’ proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to the non-controlling interests’ proportionate share of the subsidiary’s net assets. In determining the fair value, we used the income approach and the market approach which was performed by third party valuation specialists under management.

v3.20.1
Debt
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Debt

Note 8. Debt

 

The Company’s debt is comprised of the following:

 

    March 31, 2020     December 31, 2019  
Revolving lines of credit   $ 21,351     $ 17,455  
Finance lease     430       493  
Unsecured senior note     210,000       210,000  
Other loans     14,779       15,578  
Syndicated loan     14,999       19,999  
Less: Deferred cost of financing     (2,619 )     (3,714 )
Total obligations under borrowing arrangements     258,940       259,811  
Less: Current portion of long-term debt and other current borrowings     15,245       16,084  
Long-term debt   $ 243,695     $ 243,727  

 

As of March 31, 2020 and December 31, 2019, the Company had $258,105 and $259,574 of debt denominated in US Dollars with the remaining amounts denominated in Colombian Pesos.

 

The Company had $6,455 and $6,979 of property, plant and equipment pledged as collateral for various lines of credit as of March 31, 2020 and December 31, 2019, respectively.

 

On May 2, 2019, the Company closed a $30 million five-year term debt facility with Banco de Crédito del Perú and Banco Sabadell which bears interest at Libor +2.95%. Proceeds from this long-term debt facility were used towards refinancing short-term debt and partially supporting expected capital expenditure needs for capacity expansion and the automatization of some of our processes. This facility also contains a covenant requiring that the company maintain certain leverage and fixed charge coverage ratios measured biannually at December and June, with which the Company is in compliance  .

 

As of March 31, 2020, the Company was obligated under various finance leases under which the aggregate present value of the minimum lease payments amounted to $430 and $493 as of March 31, 2020 and December 31, 2019, respectively. In line with this, the Company recorded right-of-use assets related to computing equipment for $217 and $378 as of March 31, 2020 and December 31, 2019, respectively. The lease agreements include terms to extend the lease, however the Company does not intend to extend its current leases. The weighted average remaining lease term approximates 2.1 years. The right-of-use assets are depreciated and interest expense from the lease liability are recorded on our Condensed Consolidated Statement of Operations.

 

Additionally, as of March 31, 2020, the Company had a commitment for $17 under operating leases related to short term apartment leases, installation equipment and computing equipment which expire during the current year that have not been capitalized due to their short-term nature. Rental expense from these leases is recognized on our Condensed Consolidated Income Statement as incurred.

 

Maturities of long-term debt and other current borrowings are as follows as of March 31, 2020:

 

2021   $ 15,278  
2022     216,506  
2023     9,337  
2024     12,493  
2025     5,332  
Thereafter     2,613  
Total   $ 261,559  

 

The Company’s loans have maturities ranging from a few weeks to 10 years. Our credit facilities bear interest at a weighted average of rate 7.24%.

v3.20.1
Shareholders' Equity
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Shareholders' Equity

Note 12. Shareholders’ Equity

 

Dividends

 

On March 2, 2020, the Company declared a regular quarterly dividend of $0.0275 per share, or $0.11 per share on an annualized basis, for the first quarter of 2020. The quarterly dividend will be paid in cash on April 30, 2020 to shareholders of record as of the close of business on March 31, 2020. Prior to this, the Company paid $0.14 per share on a quarterly basis, payable in cash or ordinary shares, to be chosen at the option of holders of ordinary shares during an election period.

 

Follow-on Equity Offering

 

On March 25, 2019, the Company closed an underwritten follow-on public offering of 5,000,000 ordinary shares at a price to the public of $7.00 per share. As a result of this offering, the Company received a net amount of $33,050 after deducting underwriting and other related fees, which were credited to share capital and additional paid in capital. Additionally, the Company granted the underwriters a 30-day option to purchase up to an additional 750,000 ordinary shares at the public offering price, less the underwriting discount, which option was exercised on April 3, 2019 with respect to 551,423 ordinary shares.

 

Proceeds from the offering were subsequently used to complete the joint venture transaction with Saint-Gobain discussed in “Note 4. Long-term Investments – Saint-Gobain Joint Venture.”

 

Earnings per Share

 

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:

 

    Three months ended March 31,  
    2020     2019  
Numerator for basic and diluted earnings per shares                
Net Income (loss)   $ (18,668 )   $ 7,331  
                 
Denominator                
Denominator for basic earnings per ordinary share - weighted average shares outstanding     46,117,631       40,295,687  
Effect of dilutive securities and stock dividend     -       551,860  
Denominator for diluted earnings per ordinary share - weighted average shares outstanding     46,117,631       40,847,547  
Basic earnings (loss) per ordinary share   $ (0.40 )   $ 0.18  
Diluted earnings (loss) per ordinary share   $ (0.40 )   $ 0.18  

 

The effect of dilutive securities as of March 31, 2019 includes the effect of 551,423 shares potentially issued in relation to the underwriters option of the follow-on equity offering described above.

v3.20.1
Revenues, Contract Assets and Contract Liabilities - Schedule of Disaggregation by Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Total Revenues $ 87,298 $ 107,168
Fixed Price Contracts [Member]    
Total Revenues 25,027 42,176
Product Sales [Member]    
Total Revenues $ 62,271 $ 64,992
v3.20.1
Revised Presentation of Statement of Cash Flows - Summary of Difference Between the Prior and Current Presentation of Consolidated Statement of Cash Flows (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Significant Accounting Policies [Line Items]    
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 548 $ (5,629)
CASH USED IN INVESTING ACTIVITIES (6,413) (3,713)
CASH PROVIDED BY FINANCING ACTIVITIES (720) 37,634
Effect of exchange rate changes on cash and cash equivalents (4,453) 380
NET INCREASE (DECREASE) IN CASH (11,038) 28,672
CASH - Beginning of period 47,862 33,040
CASH - End of period $ 36,824 61,712
Originally reported [Member]    
Significant Accounting Policies [Line Items]    
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   (4,900)
CASH USED IN INVESTING ACTIVITIES   (3,661)
CASH PROVIDED BY FINANCING ACTIVITIES   36,853
Effect of exchange rate changes on cash and cash equivalents   380
NET INCREASE (DECREASE) IN CASH   28,672
CASH - Beginning of period   33,040
CASH - End of period   61,712
Revision adjustment [Member]    
Significant Accounting Policies [Line Items]    
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   (729)
CASH USED IN INVESTING ACTIVITIES   (52)
CASH PROVIDED BY FINANCING ACTIVITIES   781
Effect of exchange rate changes on cash and cash equivalents  
NET INCREASE (DECREASE) IN CASH  
CASH - Beginning of period  
CASH - End of period  
v3.20.1
Related Parties (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Sales revenue from related party $ 1,192 $ 2,360
Ventanas Solar SA [Member]    
Sales revenue from related party $ 670 $ 643
CEO, COO and Other Related Parties [Member]    
Equity percentage 100.00%  
Consulting and Glazing Contractors [Member]    
Notes payable $ 8,500  
v3.20.1
Shareholders' Equity - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Equity [Abstract]    
Net Income (loss) $ (18,668) $ 7,331
Denominator for basic earnings per ordinary share - weighted average shares outstanding 46,117,631 40,295,687
Effect of dilutive securities and stock dividend 551,860
Denominator for diluted earnings per ordinary share - weighted average shares outstanding 46,117,631 40,847,547
Basic earnings (loss) per ordinary share $ (0.40) $ 0.18
Diluted earnings (loss) per ordinary share $ (0.40) $ 0.18
v3.20.1
Debt - Schedule of Maturities of Long Term Debt (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Debt Disclosure [Abstract]    
2021 $ 15,278  
2022 216,506  
2023 9,337  
2024 12,493  
2025 5,332  
Thereafter 2,613  
Total obligations under borrowing arrangements $ 258,940 $ 259,811
v3.20.1
Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Income Tax [Line Items]    
Intangible assets, Gross $ 14,045 $ 17,278
Accumulated Amortization (7,947) (10,575)
Total 6,098 6,703
Trade Names [Member]    
Income Tax [Line Items]    
Intangible assets, Gross 980 980
Accumulated Amortization (604) (555)
Total 376 425
Notice of Acceptances (NOAs), Product Designs and Other Intellectual Property [Member]    
Income Tax [Line Items]    
Intangible assets, Gross 8,760 8,903
Accumulated Amortization (4,519) (4,323)
Total 4,241 4,580
Non-compete Agreement [Member]    
Income Tax [Line Items]    
Intangible assets, Gross 165 165
Accumulated Amortization (102) (94)
Total 63 71
Customer Relationships [Member]    
Income Tax [Line Items]    
Intangible assets, Gross 4,140 4,140
Accumulated Amortization (2,722) (2,513)
Total $ 1,418 1,627
Contract Backlog [Member]    
Income Tax [Line Items]    
Intangible assets, Gross   3,090
Accumulated Amortization   (3,090)
Total  
v3.20.1
Revised Presentation of Statement of Cash Flows (Tables)
3 Months Ended
Mar. 31, 2020
Accounting Changes and Error Corrections [Abstract]  
Summary of Difference Between the Prior and Current Presentation of Consolidated Statement of Cash Flows

The revisions to the Consolidated Statement of Cashflows as of March 31, 2019, which had no effect on the net change in cash and cash equivalents, are summarized in the following table:

 

    Three months ended March 31, 2019  
    As previously reported     Revision adjustment     As revised  
                   
                                     
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   $ (4,900 )   $ (729 )   $ (5,629 )
CASH USED IN INVESTING ACTIVITIES     (3,661 )     (52 )     (3,713 )
CASH PROVIDED BY FINANCING ACTIVITIES     36,853       781       37,634  
Effect of exchange rate changes on cash and cash equivalents   $ 380     $ -     $ 380  
                         
NET INCREASE (DECREASE) IN CASH     28,672       -       28,672  
CASH - Beginning of period     33,040       -       33,040  
CASH - End of period   $ 61,712     $ -     $ 61,712  

v3.20.1
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares
Mar. 31, 2020
Dec. 31, 2019
Statement of Stockholders' Equity [Abstract]    
Ordinary shares, par value $ 0.0001 $ 0.0001
v3.20.1
Debt (Tables)
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Schedule of Long Term Debt

The Company’s debt is comprised of the following:

 

    March 31, 2020     December 31, 2019  
Revolving lines of credit   $ 21,351     $ 17,455  
Finance lease     430       493  
Unsecured senior note     210,000       210,000  
Other loans     14,779       15,578  
Syndicated loan     14,999       19,999  
Less: Deferred cost of financing     (2,619 )     (3,714 )
Total obligations under borrowing arrangements     258,940       259,811  
Less: Current portion of long-term debt and other current borrowings     15,245       16,084  
Long-term debt   $ 243,695     $ 243,727  

Schedule of Maturities of Long Term Debt

Maturities of long-term debt and other current borrowings are as follows as of March 31, 2020:

 

2021   $ 15,278  
2022     216,506  
2023     9,337  
2024     12,493  
2025     5,332  
Thereafter     2,613  
Total   $ 261,559  

v3.20.1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Mar. 31, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Preferred shares, par value $ 0.0001 $ 0.0001
Preferred shares, shares authorized 1,000,000 1,000,000
Preferred shares, shares issued 0 0
Preferred shares, shares outstanding 0 0
Ordinary shares, par value $ 0.0001 $ 0.0001
Ordinary shares, shares authorized 100,000,000 100,000,000
Ordinary shares, shares issued 46,117,631 46,117,631
Ordinary shares, shares outstanding 46,117,631 46,117,631
v3.20.1
Hedging Activity and Fair Value Measurements (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Accumulated other comprehensive income net of tax $ (62,617) $ (39,264)
Loss on foreign currency fair value hedge derivative loss 5,228  
Derivatives used in net investment hedge, tax (benefit) 1,672  
Accumulated Other Comprehensive Loss [Member] | With in Next Twelve Months [Member]    
Reclassified earnings, expected 5,228  
Non-Delivery Forward and Collar Contracts [Member]    
Foreign currency fair value hedge asset at fair value $ 5,228  
Foreign currency fair value hedge activities, description We had 34 outstanding forward and collar contracts to exchange 48 million U.S. Dollars to Colombian Pesos through February 2021.  
Accumulated other comprehensive income net of tax $ 3,556  
v3.20.1
Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]    
2020 $ 1,361  
2021 2,013  
2022 1,148  
2023 826  
2024 565  
Thereafter 185  
Total $ 6,098 $ 6,703
v3.20.1
Basis of Presentation and Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Use of Estimates

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, 2019. The year-end condensed balance sheet data was derived from audited financial statements 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 inherent 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 product sold to the construction industry.

Principles of Consolidation

Principles of Consolidation

 

These unaudited condensed consolidated financial statements consolidate TGI, 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 (“Componenti”) and ES Metals SAS (“ES Metals”), 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, otherwise 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.

Derivative Financial Instruments

Derivative Financial Instruments

 

The Company recognizes all derivative financial instruments as either assets or liabilities at fair value on the 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 consolidated statement of comprehensive income. Amounts in accumulated other comprehensive loss on the consolidated balance sheet are reclassified into the consolidated statement of income in the same period or periods during which the hedged transactions are settled.

Impairment

Impairment

 

We review goodwill and long-lived assets for impairment each year on December 31st or more frequently when events or significant changes in circumstances indicate that the carrying value may not be recoverable. The novel coronavirus global outbreak and its associated economic impact, including a significant decrease in the market price of our ordinary shares, is considered a triggering event requiring us to reassess our goodwill and long-lived asset valuations, as well as assumptions of future income from underlying assets. To the extent the impact of the pandemic depends on future developments which are highly uncertain we will continue to evaluate in future periods whether these assumptions are reasonable and will update the forecasts and impairment analysis as appropriate. Based on our analysis as of March 31, 2020 we concluded that no impairment needs to be recorded  to our goodwill using the market approach as the market capitalization of our company, which has a single reporting unit, exceeds the book value of shareholders equity. Based on our analysis as of March 31, 2020 we concluded that no impairment needs to be recorded to our long-lived assets as their carrying value are below their realizable values based on projected future cashflows estimated with assumptions deemed reasonable by management based on information currently available. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company’s market capitalization, and general industry, market and macro-economic conditions.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU represents a significant change in the allowance for credit losses accounting model by requiring immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The new model is applicable to all financial instruments that are not accounted for at fair value through net income, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, (with early application permitted). The FASB issued ASU 2019-10 and ASU 2019-11 during the fourth quarter of 2019 that will postpone the effective date to the year beginning after December 15, 2022. In February 2020, the FASB issued ASU 2020-02 “Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842), which amends SEC Staff Accounting Bulletin No. 119 (SAB119) which contains interpretative guidance from the SEC aligned to the FASB’s ASC 326. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

 

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 8485): 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 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 amendments in this Update is effective for the Company on December 31, 2022 with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

v3.20.1
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)
$ in Thousands
Ordinary Shares [Member]
Additional Paid in Capital [Member]
Legal Reserve [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Total Shareholders' Equity [Member]
Non-Controlling Interest [Member]
Total
Balance beginning at Dec. 31, 2018 $ 4 $ 157,604 $ 1,367 $ 10,439 $ (37,058) $ 132,356 $ 872 $ 133,228
Balance beginning, shares at Dec. 31, 2018 38,092,996              
Issuance of common stock 33,050 33,050 33,050
Issuance of common stock, shares 5,000,000              
Stock dividend   5,162 (6,109) (947) (947)
Stock dividend, shares 538,657              
Foreign currency translation 1,770 1,770 1,770
Net income 7,338 7,338 (7) 7,331
Balance ending at Mar. 31, 2019 $ 4 195,816 1,367 11,668 (35,288) 173,567 865 174,432
Balance ending, shares at Mar. 31, 2019 43,631,653              
Balance beginning at Dec. 31, 2019 $ 5 208,283 1,367 16,213 (39,264) 186,604 606 187,210
Balance beginning, shares at Dec. 31, 2019 46,117,631              
Cash 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 ending at Mar. 31, 2020 $ 5 $ 208,390 $ 1,367 $ (3,897) $ (62,617) $ 143,248 $ 704 $ 143,952
Balance ending, shares at Mar. 31, 2020 46,117,631              
v3.20.1
Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Finite-Lived 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. Also, it includes the intangibles acquired from the acquisition of GM&P.

 

    March 31, 2020  
    Gross     Acc. Amort.     Net  
Trade Names   $ 980     $ (604 )   $ 376  
Notice of Acceptances (NOAs), product designs and other intellectual property     8,760       (4,519 )     4,241  
Non-compete Agreement     165       (102 )     63  
Customer Relationships     4,140       (2,722 )     1,418  
Total   $ 14,045     $ (7,947 )   $ 6,098  

 

    December 31, 2019  
    Gross     Acc. Amort.     Net  
Trade Names   $ 980     $ (555 )   $ 425  
Notice of Acceptances (NOAs), product designs and other intellectual property     8,903       (4,323 )     4,580  
Non-compete Agreement     165       (94 )     71  
Contract Backlog     3,090       (3,090 )     -  
Customer Relationships     4,140       (2,513 )     1,627  
Total   $ 17,278     $ (10,575 )   $ 6,703  

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2020 is as follows:

 

Year ending   (in thousands)  
2020   $ 1,361  
2021     2,013  
2022     1,148  
2023     826  
2024     565  
Thereafter     185  
    $ 6,098  

v3.20.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 36,824 $ 47,862
Investments 1,604 2,304
Trade accounts receivable, net 104,416 110,558
Due from related parties 8,463 8,057
Inventories 68,341 82,714
Contract assets - current portion 36,689 42,014
Other current assets 27,734 29,340
Total current assets 284,071 322,849
Long-term assets:    
Property, plant and equipment, net 128,426 154,609
Deferred income taxes 14,573 4,595
Contract assets - non-current 10,743 7,059
Due from related parties - long term 1,423 1,786
Intangible assets 6,098 6,703
Goodwill 23,561 23,561
Long-term investments 45,856 45,596
Other long-term assets 2,611 2,910
Total long-term assets 233,291 246,819
Total assets 517,362 569,668
Current liabilities:    
Short-term debt and current portion of long-term debt 15,245 16,084
Trade accounts payable and accrued expenses 56,962 61,878
Accrued interest expense 3,039 7,645
Due to related parties 3,896 4,415
Dividends payable 1,305 67
Contract liability - current portion 13,957 12,459
Due to equity partners 10,900 10,900
Other current liabilities 14,278 15,563
Total current liabilities 119,582 129,011
Long-term liabilities:    
Deferred income taxes 857 411
Long-term payable associated to GM&P acquisition 8,500 8,500
Long-term liabilities from related parties 628 622
Contract liability - non-current 148 187
Long-term debt 243,695 243,727
Total long-term liabilities 253,828 253,447
Total liabilities 373,410 382,458
SHAREHOLDERS' EQUITY    
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2020 and December 31, 2019 respectively
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 46,117,631 and 46,117,631 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively 5 5
Legal Reserves 1,367 1,367
Additional paid-in capital 208,390 208,283
Retained earnings (3,897) 16,213
Accumulated other comprehensive (loss) (62,617) (39,264)
Shareholders' equity attributable to controlling interest 143,248 186,604
Shareholders' equity attributable to non-controlling interest 704 606
Total shareholders' equity 143,952 187,210
Total liabilities and shareholders' equity $ 517,362 $ 569,668
v3.20.1
Related Parties
3 Months Ended
Mar. 31, 2020
Related Party Transactions [Abstract]  
Related Parties

Note 11. Related Parties

 

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

 

    Three months ended March 31,  
    2020     2019  
Sales to related parties   $ 1,192     $ 2,360  
                 
Fees paid to directors and officers   $ 961     $ 809  
Payments to other related parties   $ 814     $ 926  

 

    March 31, 2020     December 31, 2019  
Current Assets:                
Due from VS   $ 5,102     $ 4,203  
Due from other related parties     3,361       3,854  
    $ 8,463     $ 8,057  
                 
Long Term due from VS     1,423       1,786  
                 
Liabilities:                
Due to related parties - current   $ 3,896     $ 4,415  
Due to related parties - Non current   $ 628     $ 622  

 

The Company also has a note payable which matures in 2022 related to the acquisition GM&P for $8,500 due to the former owner who holds shares of the Company and a management position within the Company.

 

Ventana Solar S.A. (“VS”), a Panama Sociedad anónima, is an importer and installer of the Company’s products in Panama. Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to VS for the three months ended March 31, 2020 and 2019 were $643 and $670, respectively.

 

Payments to other related parties during the three months ended March 31, 2020 and 2019 include the following:

 

    Three months ended March 31,  
    2020     2019  
Charitable contributions   $ 349     $ 427  
Sales commissions   $ 259     $ 476  

 

Charitable contributions are donations made to the Company’s foundation, Fundación Tecnoglass-ESW.

v3.20.1
Revised Presentation of Statement of Cash Flows
3 Months Ended
Mar. 31, 2020
Accounting Changes and Error Corrections [Abstract]  
Revised Presentation of Statement of Cash Flows

The revisions to the Consolidated Statement of Cashflows as of March 31, 2019, which had no effect on the net change in cash and cash equivalents, are summarized in the following table:

 

    Three months ended March 31, 2019  
    As previously reported     Revision adjustment     As revised  
                   
                                     
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   $ (4,900 )   $ (729 )   $ (5,629 )
CASH USED IN INVESTING ACTIVITIES     (3,661 )     (52 )     (3,713 )
CASH PROVIDED BY FINANCING ACTIVITIES     36,853       781       37,634  
Effect of exchange rate changes on cash and cash equivalents   $ 380     $ -     $ 380  
                         
NET INCREASE (DECREASE) IN CASH     28,672       -       28,672  
CASH - Beginning of period     33,040       -       33,040  
CASH - End of period   $ 61,712     $ -     $ 61,712  

v3.20.1
Intangible Assets
3 Months Ended
Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note 7. 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. Also, it includes the intangibles acquired from the acquisition of GM&P.

 

    March 31, 2020  
    Gross     Acc. Amort.     Net  
Trade Names   $ 980     $ (604 )   $ 376  
Notice of Acceptances (NOAs), product designs and other intellectual property     8,760       (4,519 )     4,241  
Non-compete Agreement     165       (102 )     63  
Customer Relationships     4,140       (2,722 )     1,418  
Total   $ 14,045     $ (7,947 )   $ 6,098  

 

    December 31, 2019  
    Gross     Acc. Amort.     Net  
Trade Names   $ 980     $ (555 )   $ 425  
Notice of Acceptances (NOAs), product designs and other intellectual property     8,903       (4,323 )     4,580  
Non-compete Agreement     165       (94 )     71  
Contract Backlog     3,090       (3,090 )     -  
Customer Relationships     4,140       (2,513 )     1,627  
Total   $ 17,278     $ (10,575 )   $ 6,703  

 

The weighted average amortization period is 5.4 years.

 

During the three months ended March 31, 2020 and 2019, the amortization expense amounted to $550 and $1,211, respectively, and was included within the general and administration expenses in our Condensed Consolidated Statement of Operations.

 

The estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2020 is as follows:

 

Year ending   (in thousands)  
2020   $ 1,361  
2021     2,013  
2022     1,148  
2023     826  
2024     565  
Thereafter     185  
    $ 6,098  

v3.20.1
Revised Presentation of Statement of Cash Flows - Schedule of Geographical Information of Revenue from External Customer (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Total Revenues $ 87,298 $ 107,168
Colombia [Member]    
Total Revenues 6,472 12,959
United States [Member]    
Total Revenues 78,798 92,062
Panama [Member]    
Total Revenues 680 763
Other [Member]    
Total Revenues $ 1,348 $ 1,384
v3.20.1
Long Term Investments (Details Narrative) - USD ($)
$ in Thousands
May 03, 2019
Jan. 11, 2019
Apr. 30, 2019
ESMetals [Member]      
Equity method investment, ownership percentage     70.00%
Saint-Gobain Joint Venture Agreement [Member] | Vidrio Andino Holdings S.A.S [Member]      
Minority ownership interest 25.80% 25.80%  
Purchase price for acquiring minority interest $ 45,000 $ 45,000  
Cash consideration paid for acquisition of minority interest 34,100 34,100  
Recorded current liabilities in relation to acquisition 10,900    
Recorded investments in relation to acquisition $ 45,000    
Saint-Gobain Joint Venture Agreement [Member] | Vidrio Andino Holdings S.A.S [Member] | Land [Member]      
Recorded current liabilities in relation to acquisition   $ 10,900  
v3.20.1
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Income Tax Disclosure [Abstract]    
Current income tax, United States $ (151) $ (512)
Current income tax, Colombia (2,747) (3,420)
Total current income tax (2,898) (3,932)
Deferred income Tax, United States (319) 169
Deferred income Tax, Colombia 9,350 (1,116)
Total deferred income tax 9,031 (947)
Total income tax benefit (provision) $ 6,133 $ (4,879)
Effective tax rate 25.00% 40.00%
v3.20.1
Shareholders' Equity (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Apr. 03, 2019
Mar. 25, 2019
Mar. 31, 2020
Mar. 02, 2020
Effect of dilutive securities     551,423  
Follow-on Equity Offering [Member]        
Sale of stock, number of shares Issued in Transaction   5,000,000    
Sale of stock, price per share   $ 7.00    
Proceeds from offering   $ 33,050    
Follow-on Equity Offering [Member] | Underwriters [Member]        
Number of options to purchase additional ordinary shares   750,000    
Number of options exercises in period 551,423      
Quarterly Rate [Member]        
Dividend rate per share     $ 0.14 $ 0.0275
Annual Basis [Member]        
Dividend rate per share       $ 0.11