Tecnoglass Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Samuel Darkatsh - Raymond James - Analyst : Good morning, Jose Manuel, Chris Santiago. How are you? Thank you. A couple of questions. First off, Santiago, could you help us directionally think about third quarter sales, gross margin and EBITDA expectations and then the caveat to that or the addendum to that would be, what are you seeing in single-family orders in July now that the incentives have expired?

Question: Samuel Darkatsh - Raymond James - Analyst : And then my follow-up question, prevailing aluminum prices look like they're down, I don't know, call it, 15%, 20% or so over the past month or two. Are you expecting a favorable impact on gross margins? And what are you expecting for industry pricing as a result? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, TGLS.N - Q2 2024 Tecnoglass Inc Earnings Call

Question: Samuel Darkatsh - Raymond James - Analyst : I guess the spirit of my question was your market intelligence in terms of how others that you compete against in the state or that use aluminum, how much they've hedged and whether the lower aluminum prices of late, at least may have influenced pricing, especially in July and August after the incentives expired.

Question: Samuel Darkatsh - Raymond James - Analyst : Thank you.

Question: Alex Rygiel - B. Riley Securities - Analyst : Jose, can you provide us a little bit more color on the new orders and the strength in backlog in the quarter, like geographically, where are you seeing the strength come from?

Question: Alex Rygiel - B. Riley Securities - Analyst : Excellent. And then how should we think about the mix in backlog today between installation and product sales and how that might affect margins over the coming 12, 18 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, TGLS.N - Q2 2024 Tecnoglass Inc Earnings Call

Question: Alex Rygiel - B. Riley Securities - Analyst : And lastly, as it relates to vinyl windows, have you started shipping yet? And how might we think about the cadence over the next two quarters and maybe even an early look into a revenue target for 2025?

Question: Alex Rygiel - B. Riley Securities - Analyst : Yes. Thank you.

Question: Alex Hantman - Sidoti & Company - Analyst : Good morning. This is Alex on for Julio. First question on CapEx. Could you give us a quantified CapEx guide for 2024? And does that include any further capacity expansion?

Question: Alex Hantman - Sidoti & Company - Analyst : Thank you. Appreciate the context. And then one more for me. We touched on this a little bit earlier in the Q&A. But on the promotional activity from last quarter within single-family residential, did that have an impact at all in the second quarter? And do you think that there's some residual impact for the remainder of the year?

Question: Alex Hantman - Sidoti & Company - Analyst : Great. Thank you.

Question: Tim Wojs - Robert W. Baird & Co., Inc. - Analyst : Hey, guys. Good morning. I guess, on the first one, just on the backlog piece. Obviously, really strong performance this quarter. Just given the June uptick in single-family, I mean, did that get captured a little bit in the backlog? I'm just kind of curious if you can quantify that. And -- just also

Question: Tim Wojs - Robert W. Baird & Co., Inc. - Analyst : Okay. That's helpful. And then maybe just on the backlog conversion. So I think historically, you talked about in the slides, you've converted about two-thirds of your backlog over the next 12 months. And so I know the mix of the backlog has changed a little bit. But if I would apply that same conversion percentage to your trailing 12-month backlog, I have a non-res business that's probably going to be closer to $550 million to $600 million over the next 12 to 18 months versus the $450 million that you're reporting on a run rate basis today. So I just want to verify that the math I'm doing is okay and if there's any change in that conversion timeline.

Question: Tim Wojs - Robert W. Baird & Co., Inc. - Analyst : Okay, great. And then just the last one for me. On the salary increases that you mentioned in the quarter, I guess, were those kind of standard in nature? Or were those any sort of special increases? And I guess as you think about the back half of the year, will you get some leverage on that as you just get better volumes?

Question: Tim Wojs - Robert W. Baird & Co., Inc. - Analyst : Got you. Okay. So it's just the normal kind of salary increases, I see.

Question: Tim Wojs - Robert W. Baird & Co., Inc. - Analyst : Okay, great. Thanks for the time. Good luck in the back half and Thank you.

Question: Jean Ramirez - D.A. Davidson & Company - Analyst : Good morning. Thank you for the time. Could you help me understand what the bridge looks like between your 3Q guidance and the year-end? I mean, at the midpoint, it looks like there's some sort of inflection point that needs to happen to reach your gross margins and that revenue guidance. But your gross margins this quarter with that 40% quarter-over-quarter revenue growth was sort of kept down at 40.8%. Could you help me understand like what needs to happen for that gross margin growth? And given the FX, it's now starting to taper down or starting to sort of materialize itself out (inaudible).

Question: Jean Ramirez - D.A. Davidson & Company - Analyst : Thank you. And for vinyl, can you provide some color on the shipment trends and invoice trends post 2Q? And do you still expect around $20 million in the second half in vinyl?

Question: Jean Ramirez - D.A. Davidson & Company - Analyst : Thank you. And last one for me. If you could provide some update on that strategic review that was announced earlier in the quarter. Is there anything you can say regarding that?

Question: Jean Ramirez - D.A. Davidson & Company - Analyst : Perfect. Appreciate the time. Thank you.