Tecnoglass, Inc. :TGLS-US: Earnings Analysis: Q2, 2016 By the Numbers : August 11, 2016

Tecnoglass, Inc. reports financial results for the quarter ended June 30, 2016.

We analyze the earnings along side the following peers of Tecnoglass, Inc. – Ply Gem Holdings, Inc., PGT, Inc. and PPG Industries, Inc. (PGEM-US, PGTI-US and PPG-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 77.51 million, Net Earnings of USD 14.37 million.
  • Gross margins widened from 32.73% to 34.14% compared to the same period last year, operating (EBITDA) margins now 20.81% from 20.76%.
  • Year-on-year change in operating cash flow of 44.81% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-06-30 2015-09-30 2015-12-31 2016-03-31 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 58.05 62.89 66.4 60.9 77.51
Revenue Growth (%YOY) 0 0 50.16 17.02 33.52
Earnings (mil) -11.35 7.58 -0.55 13.66 14.37
Earnings Growth (%YOY) -2014.46 319.68 -104.1 38.29 226.67
Net Margin (%) -19.55 12.06 -0.82 22.44 18.54
EPS -0.45 0.25 -0.02 0.47 0.47
Return on Equity (%) -61.26 46.7 -4.61 133.46 90.47
Return on Assets (%) -15.76 10.13 -0.72 15.61 14.28

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Market Share Versus Profits

Revenues History
Earnings History

TGLS-US‘s change in revenue this period compared to the same period last year of 33.52% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TGLS-US is holding onto its market share. Also, for comparison purposes, revenues changed by 27.27% and earnings by 5.19% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 32.73% to 34.14% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 20.76% to 20.81% compared to the same period last year. For comparison, gross margins were 38.11% and EBITDA margins were 24.22% in the last reporting period.

Gross Margin Versus EBITDA Margin

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

TGLS-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 57.84, compared to last year’s level of 41.13 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Cash Versus Earnings – Sustainable Performance?

TGLS-US‘s change in operating cash flow of 44.81% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 16.03% to 16.09% and (2) one-time items. The company’s pretax margins are now 23.46% compared to -13.29% for the same period last year.

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

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Company Profile

Tecnoglass, Inc. operates as a holding company, which engages in the design, manufacture, and trade of architectural glass. Its products include the following types of glass: laminated, thermo-laminated, tempered, silk-screened, curved, and digital print. It also distributes floating facades, bathroom dividers, automatic doors, and hurricane-proof and commercial display windows. It operates under the Alutions by TG and Alutions trademarks. The company was founded on September 21, 2011 and is headquartered in Barranquilla, Colombia.

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