Tecnoglass Inc., a manufacturer of architectural glass, windows and associated aluminum products, saw an improvement in its fourth quarter and full year 2019 revenues compared to last year. That’s according to the company’s financial results for the fourth quarter and full year ended December 31, 2019.
Total revenues for the fourth quarter of 2019 improved 3.6% to $101.4 million compared to $97.9 million in the prior year quarter. Excluding the impact of unfavorable foreign currency exchange, total revenues increased 4.7% compared to the prior year quarter, with growth in the U.S. and Colombia. U.S. revenues increased 2.9% to $83.8 million compared to $81.5 million in the prior year quarter, primarily driven by stronger residential invoicing partly offset by delayed starts on key commercial projects, representing an estimated $5 million of deferred invoicing. The delays were mainly attributable to labor constraints experienced by customers amid overall robust commercial construction activity. Colombia revenues of $14.1 million increased 9.2% as reported and 17.4% excluding foreign currency compared to the prior year quarter, primarily attributable to stronger project activity.
Gross profit for the fourth quarter of 2019 was $29.3 million, representing a 28.9% gross margin compared to gross profit of $34.1 million, representing a 34.9% gross margin in the prior year quarter. The lower gross margin was mainly attributable to higher U.S. labor costs, particularly on installation revenues and subcontracting costs, as well as modestly higher aluminum costs per unit. Gross margin in fourth quarter 2019 also included approximately $1.5 million of non-recurring costs to finalize the implementation, testing and start-up of the company’s automation projects at its production facilities.
Adjusted EBITDA was $21.5 million, or 21.2% of sales compared to $21.5 million, or 22% of sales, in the prior year quarter. Adjusted EBITDA in the fourth quarter 2019 included $1.1 million in contribution from the company’s joint venture with Saint-Gobain.
“2019 was another transformative year for Tecnoglass, in which we achieved record total revenues, gross profit, adjusted EBITDA and backlog. Additionally, we effectively managed our inventory and working capital, contributing to further balance sheet improvement and robust cash flow generation into year end. We were especially pleased to deliver positive free cash flow during a year where we invested a considerable amount of capital towards completing several high return projects that will further enhance the strength of our vertically-integrated operations over the long-term,” says José Manuel Daes, Tecnoglass CEO. “We believe these collective actions, combined with the simplification of our dividend to a cash-only policy, have significantly improved our alignment with shareholders, underpinning our commitment to meaningful value creation as we outpace market growth and gain share. Into 2020, we remain optimistic about our project pipeline and the strength of our industry-leading margin business.”
“Backlog grew each quarter on a sequential basis through 2019, primarily in the U.S, leaving us on firm footing at year end. Our focused efforts to add new customers, enter new markets and provide best-in-class service drove a 24% full year sales increase in the U.S., representing 85% of our total revenues compared to 80% in 2018. Full year single-family residential sales increased by 78%, surpassing our expectations. At the same time, during the fourth quarter higher costs for aluminum and U.S. labor adversely impacted gross profit. In addition, some customers experienced their own labor constraints, resulting in an estimated $5 million of delayed commercial projects into 2020. We anticipate the efficiency savings from our timely completion of automation initiatives, among other actions, will help mitigate higher labor costs and allow us to accomplish our objectives in the year ahead,” adds COO Christian Daes.
Full Year 2019 Results
Total revenues for the full year 2019 increased 16.2% to $430.9 million compared to $371 million in the prior year. Excluding the impact of unfavorable foreign currency exchange, total revenues increased 17.7% compared to the prior year.
Gross profit increased 13% year-over-year to a full year record of $135.8 million, representing a 31.5% gross margin, compared to $120.2 million, representing a 32.4% gross margin in the prior year. Operating income was $58.8 million compared to $47.2 million in the prior year.
Full Year 2020 Outlook
For the full year 2020, Tecnoglass expects to see growth in construction end markets and additional market share gains in the U.S. In 2020, the company anticipates revenues to grow to a range of $445 to $455 million. The company anticipates adjusted EBITDA in 2020 to be in the range of $97 million to $102 million, representing growth of 7.7% at the midpoint year-over-year, driven by higher revenues and the flow through of high return investments, partly offset by higher labor costs.