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What changed in Tecnoglass Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Tecnoglass Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+214 added−222 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-07)

Top changes in Tecnoglass Inc.'s 2023 10-K

214 paragraphs added · 222 removed · 171 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

64 edited+13 added−12 removed62 unchanged
Biggest changeRecent examples of our high return investments within the last two years include: ● Automation of six window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction of on-site damage by 30%; ● Additional aluminum expansion project to increase capacity by approximately 400 tons/month; ● Further automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage by approximately 40%; ● Upgrade vacuum magnetron sputter coating machinery which will allow to coat glass before tempering; ● Construction of 500,000 square feet warehouse with two numerical punching machines, two metal benders and a complete painting line; ● Automation of two centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials.
Biggest changeRecent examples of our high return investments within the last two years include: ● Automation of six window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction of on-site damage by 30%; ● Additional aluminum expansion project to increase capacity by approximately 400 tons/month; ● Further automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage by approximately 40%; ● Upgrading vacuum magnetron sputter coating machinery which will allow us to coat glass before tempering; ● Automation of two centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials; ● Acquiring 1.5 million square feet of land adjacent to our existing facilities for future expansion and for our sport facility complex available to factory employees; and ● Establishing new vinyl window assembly lines with annualized capacity of approximately $300 million.
These programs increase the skills of our employees and are designed to allow our employees to keep pace with the new technologies being installed at our manufacturing facilities. We are committed to developing our employees and remaining at the forefront of technology in our industry.
These programs increase the skills of our employees and are designed to allow our employees to keep pace with the new technologies being installed at our manufacturing facilities. We are committed to developing our employees and remaining at the forefront of technology in our industry.
We believe our ability to accompany our clients throughout every phase of their projects’ engineering, consulting, manufacturing and installation along with our ability to coordinate these efforts as a one-stop-shop is a key differentiator from our competition. 9 High Barriers to Entry The ability of new competitors to enter the markets that we serve is limited due to the technical certifications required on high specification building projects, such as IGCC, IqNet Icontec 14001 and ISO9001.
We believe our ability to accompany our clients throughout every phase of their projects’ design, engineering, consulting, manufacturing and installation along with our ability to coordinate these efforts as a one-stop-shop is a key differentiator from our competition. 9 High Barriers to Entry The ability of new competitors to enter the markets that we serve is limited due to the technical certifications required on high specification building projects, such as IGCC, IqNet Icontec 14001 and ISO9001.
Demand for high-specification architectural glass is typically highest in large coastal cities, which we are able to ship to directly, while most of our competitors must utilize relatively expensive land transportation services to deliver finished goods to these sites. 8 Commitment to Quality and Innovation Our commitment to quality is evidenced by our significant recent investments in land, warehousing space, machinery and equipment.
Demand for high-specification architectural glass is typically highest in large coastal cities, which we are able to ship to directly, while most of our competitors must utilize relatively expensive land transportation services to deliver finished goods to these sites. 8 Commitment to Quality and Innovation Our commitment to quality is evidenced by our significant investments in land, warehousing space, machinery and equipment.
The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cash flows from the Bogota plant, debt incurred at the joint venture level that will not be consolidated into the Company and an additional contribution by us of up to approximately $12.5 million if needed (based on debt availability or other sources).
The new plant will be funded with proceeds from the original cash contribution made by us, operating cash flows from the Bogota plant, debt incurred at the joint venture level that will not be consolidated into our company and an additional contribution by us of up to approximately $12.5 million if needed (based on debt availability or other sources).
From an ethnicity perspective, our labor force is diverse but predominantly Latino based on our location. Company History We are an exempted company incorporated under the laws of the Cayman Islands. We were incorporated in 2013 in connection with a business combination between Tecnoglass subsidiaries TG and ES, and Andina Acquisition Corporation.
From an ethnicity perspective, our labor force is diverse but predominantly Latino based on our geographic location. Company History We are an exempted company incorporated under the laws of the Cayman Islands. We were incorporated in 2013 in connection with a business combination between Tecnoglass subsidiaries TG and ES, and Andina Acquisition Corporation.
As we explore growth opportunities in new U.S. markets, we intend to leverage the strong reputation we have developed with national commercial construction contractors, architects and designers for providing high quality products at the most competitive prices. Penetrate the U.S.
As we explore growth opportunities in new U.S. markets, we intend to leverage the strong reputation we have developed with national commercial construction contractors, architects, and designers for providing high quality products at the most competitive prices.
We operate state-of-the-art glass making equipment, glass laminating lines, aluminum presses and high-volume insulating equipment which facilitate more precise manufacturing, enabling us to offer a broader selection of and higher quality products and remain agile in responding to customer demands, while generating less raw material waste.
We operate state-of-the-art glass making equipment, glass laminating lines, aluminum presses, vinyl assembling lines, and high-volume insulating equipment which facilitate more precise manufacturing, enabling us to offer a broader selection of and higher quality products and remain agile in responding to customer demands, while generating less raw material waste.
Since 2012, we have invested more than $400 million in the latest technologies to enhance the efficiency and accuracy of our production lines, and ultimately to improve the quality of the products that we deliver to our customers. We believe these significant investments position us to meet our growth objectives over the next several years.
Since 2012, we have invested more than $500 million in the latest technologies to enhance the efficiency and accuracy of our production lines, and ultimately to improve the quality of the products that we deliver to our customers. We believe these significant investments position us to meet our growth objectives over the next several years.
We attribute our success, in large part, to our ability to produce a broad range of sophisticated products, as well as our reputation for delivering high quality, made-to-order architectural glass on time. Our employees have extensive training, knowledge and experience at manufacturing high specification products.
We attribute our success, in large part, to our ability to produce a broad range of sophisticated products, as well as our reputation for delivering high quality, made-to-order architectural glass and building enclosures on time. Our employees have extensive training, knowledge and experience at manufacturing high specification products.
In recent years, we have successfully grown our geographic presence in the United States outside of Florida, particularly into markets along the east coast, and as a result, nearly 24% of our U.S. backlog is for projects outside of Florida.
In recent years, we have successfully grown our geographic presence in the United States outside of Florida, particularly into markets along the east coast, and as a result, nearly 23% of our U.S. backlog is for projects outside of Florida.
Between 5% and 10% of our production is randomly selected to verify compliance with a variety of quality standards, such as water leaks, functionality, manufacturing and accessories, according to ASTM International (“ASTM”) and American Architectural Manufacturers Association (“AAMA”) rules. These measures allow us to effectively detect issues and take specific actions to mitigate their reoccurrence.
Approximately 5% of our production is randomly selected to verify compliance with a variety of quality standards, such as water leaks, functionality, manufacturing, and accessories, according to ASTM International (“ASTM”) and American Architectural Manufacturers Association (“AAMA”) rules. These measures allow us to effectively detect issues and take specific actions to mitigate their reoccurrence.
We believe our investments in technology within recent years have positioned us well for continued growth given the flexibility afforded by our current installed capacity, improved profitability and enhanced cash generation in the years ahead.
We believe our investments in technology have positioned us well for continued growth in the years ahead given the flexibility afforded by our current installed capacity, improved profitability, and enhanced cash generation.
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 third largest glass fabricator in 2022 by Glass Magazine.
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 third largest glass fabricator serving the United States in 2023 by Glass Magazine.
Additionally, they are available in numerous structures, including fixed body, sliding windows, casement windows, hung windows, sliding doors and swinging doors. ● Interior dividers and Commercial display windows - commercial and interior display windows with a broad range of profiles, colors and crystal finishes, as well as bathroom stall dividers, office cubicle separators and closets.
Additionally, they are available in numerous structures made of aluminum and vinyl, including fixed body, sliding windows, casement windows, hung windows, sliding doors and swinging doors. ● Interior dividers and Commercial display windows - commercial and interior display windows with a broad range of profiles, colors and crystal finishes, as well as bathroom stall dividers, office cubicle separators and closets.
Through the coordinated efforts of our sales teams, product specialists and field service teams, we deliver high quality service to our customers, from the initial order to the delivery and installation of our products.
Through the coordinated efforts of our sales teams, product specialists and field service teams, we deliver high quality service to our customers, from the initial order to the delivery and installation of our products, when applicable.
TG and ES are corporations formed under the laws of Colombia and founded in 1994 and 1984, respectively, by José M. Daes, our Chief Executive Officer, and Christian T.
TG and ES are corporations formed under the laws of Colombia and founded in 1994 and 1983, respectively, by José M. Daes, our Chief Executive Officer, and Christian T.
The cost associated with product warranties was $2.4 million and $1.3 million during the years ended December 31, 2022, and 2021, respectively. Certifications Among our many designations and certifications, Tecnoglass has earned the Miami-Dade County Notice of Acceptance (“NOA”), one of the most demanding certificates in the industry and a requirement to market hurricane-resistant glass in Florida.
The cost associated with product warranties was $1.9 million and $2.4 million during the years ended December 31, 2023 and 2022, respectively. Certifications Among our many designations and certifications, Tecnoglass has earned the Miami-Dade County Notice of Acceptance (“NOA”), one of the most demanding certificates in the industry and a requirement to market hurricane-resistant glass in Florida.
The Company incurs costs related to the development of new products and pays for external tests that need to be performed on our products in order to comply with strict building codes. Human Capital As of December 31, 2022, we had a total of 8,770 employees, none of whom is represented by a union.
The Company incurs costs related to the development of new products and pays for external tests that need to be performed on our products in order to comply with strict building codes. Human Capital As of December 31, 2023, we had a total of 8,531 employees, none of whom is represented by a union.
While enhancing production cost efficiencies, along with ESG initiatives, the Company entered into a long-term power purchase agreement in a new project that will cogenerate 9MW through two gas engines with a heat recovery system.
While enhancing production cost efficiencies, along with ESG initiatives, we entered into a long-term power purchase agreement in a new project that will cogenerate 9MW through two gas engines with a heat recovery system.
Although our business and facilities are subject to federal, state and local environmental regulation, environmental regulation does not have a material impact on our operations. 15 Research and Development During the years ended December 31, 2022, 2021, and 2020, we spent approximately $0.6 million, $0.7 million, and $1.0 million, respectively, in research and development.
Although our business and facilities are subject to federal, state and local environmental regulation, environmental regulation does not have a material impact on our operations. 15 Research and Development During the years ended December 31, 2023, 2022 and 2021, we spent approximately $0.9 million, $0.6 million, and $0.7 million, respectively, in research and development.
In line with the geographic penetration strategy, the Company has started expanding its presence to other markets by opening product showrooms in other states. As of the date of this Annual Report, new showrooms in New York City and Charleston, SC have been opened to service its respective regions.
In line with the geographic penetration strategy, we have started expanding our presence to other markets by opening product showrooms in other states. As of the date of this Annual Report, showrooms in New York City and Charleston, SC have been opened to service its respective regions.
Of our 100 largest customers, which represent over 78% of our sales during the twelve months ended December 31, 2022, approximately 98% are located in North America and 2% in Latin America ,. No single customer accounted for more than 10% of our revenues during the years ended December 31, 2022, and 2021.
Of our 100 largest customers, which represent over 80% of our sales during the twelve months ended December 31, 2023, approximately 98% are located in North America and 2% in Latin America. No single customer accounted for more than 10% of our revenues during the years ended December 31, 2023 and 2022.
Occupational Health and Safety management System ● Exporter and Importer Authorized Economic Operator (AEO) ● CAP (Certified applicator program) PPG Industries certifies the highest level of coating application. ● Complies with NFRC (National Fenestration Rating Council) Energy Efficient Products ● Complies with NOA (Notice of Acceptance) Fenestration products for all areas of Florida,including hurricane zones. ● Complies with FBC (Florida Building Code) Hurricane protection products ● Complies with Miami-Dade County’s stringent safety code regulations for hurricane-proof Windows ● Member of the American Architectural Manufacturers Association (AAMA) ESW certifications include: Complies with minimum security criteria for U.S.
Occupational Health and Safety management System ● Exporter and Importer Authorized Economic Operator (AEO) ● CAP (Certified applicator program) PPG Industries certifies the highest level of coating application. ● Complies with NFRC (National Fenestration Rating Council) Energy Efficient Products ● Complies with NOA (Notice of Acceptance) Fenestration products for all areas of Florida, including hurricane zones. ● Complies with FBC (Florida Building Code) Hurricane protection products ● CAP (Certified applicator program) PPG Industries certifies the highest level of coating application ● Member of the American Architectural Manufacturers Association (AAMA) ESW certifications include: Complies with minimum security criteria for U.S.
These investments have also helped us manage workplace injuries, with a Lost Time Injury Frequency Rate of 3.5%, which is considerably lower than the average rate of 9.5% for glass and metal manufacturing companies in Colombia. We have remained union-free since ES’s incorporation in 1983.
These investments have also helped us manage workplace injuries, with a Lost Time Injury Frequency Rate of 3.1%, which is considerably lower than the average rate of approximately 7.9% for glass and metal manufacturing companies in Colombia for 2023. We have remained union-free since ES’s incorporation in 1983.
Our products have become widely regarded in Florida for their quality and are certified in compliance with all U.S. regulations. Sales in Florida comprised 91% of United States revenue in the year ended December 31, 2022.
Our products have become widely regarded in Florida for their quality and are certified in compliance with all U.S. regulations. Sales in Florida comprised 90% of United States revenue in the year ended December 31, 2023.
As of December 31, 2021, we had a total of 6,908 employees. Most of our employees are hired through seven temporary staffing companies and are employed under one-year fixed-term employment contracts. We actively encourage and facilitate the development of our employees through rolling training programs, with multiple training sessions held on a weekly basis.
As of December 31, 2022, we had a total of 8,770 employees. Most of our employees are hired through seven temporary staffing companies and are employed under one-year fixed-term employment contracts. We actively encourage and facilitate the development of our employees through rolling training programs, with multiple training sessions held on a weekly basis.
Competitive Strengths Our success has been grounded in our ability to offer high quality products at competitive prices. We are able to competitively price our products, while still achieving strong margins, due to a number of unique cost advantages.
Competitive Strengths Our success has been grounded in our ability to offer high quality products at competitive prices and with efficient lead times. We are able to competitively price our products, while still achieving strong margins, due to a number of unique cost advantages.
The Company considers itself an equal opportunity employer and has constantly sought to seek the best talent irrespective of gender or ethnicity. While the jobs associated to the core manufacturing operations are predominantly filled by males, the company´s sales and administrative staff is comprised of approximately 40% females and 60% males.
The Company considers itself an equal opportunity employer and has constantly sought to seek the best talent irrespective of gender or ethnicity. While the jobs associated to the core manufacturing operations are predominantly filled by males, our sales and administrative staff is comprised of approximately 33% females and 67% males.
We believe that the quality of our products, coupled with our ability to price competitively given our structural advantages on cost and our efficient lead times given our vertical integration, will allow us to generate further growth in the future.
We believe that the quality of our products, coupled with our ability to price competitively given our structural advantages on cost, and our efficient lead times given our vertically integrated model, will allow us to generate further growth in the future.
On October 28, 2020, we acquired said land from a related party and paid for it through the issuance of an aggregate of 1,557,142 ordinary shares of the Company, valued at $7.00 per share, which represented an approximate 33% premium based on the closing stock price as of October 27, 2020.
On October 28, 2020, we acquired said land from a related party in exchange for an aggregate of 1,557,142 ordinary shares of the Company, valued at $7.00 per share, which represented an approximate 33% premium based on the closing stock price as of October 27, 2020.
Since 2017, we have been expanding our presence in U.S. residential markets which went from less than 5% of our sales to nearly 43% of our sales for the full year 2022.
Since 2017, we have been expanding our presence in U.S. residential markets which went from less than 5% of our sales to nearly 40.3% of our sales for the full year 2023.
Daes, our Chief Operating Officer. 16 Additional Information About the Company We maintain websites for our subsidiaries, TG, ES, GM&P and ES Metals, which can be found at www.tecnoglass.com , www.energiasolarsa.com , www.gmpglazing.com , and www.es-metals.com, respectively.
Daes, our Chief Operating Officer. 16 Additional Information About the Company We maintain websites for our subsidiaries, TG, ES Windows, GM&P and ES Metals, which can be found at https://www.tecnoglass.com/es/, https://eswindows.com , https://wwwgmpglazing.com , https://es-metals.com, respectively.
We had a significant demand in the U.S. residential market, representing 43% of our total sales for the year ended December 31, 2022, compared to less than 5% for the year ended December 31, 2017, and 36% for the year ended December 31, 2021.
We had a significant demand in the U.S. residential market, representing 40.3% of our total sales for the year ended December 31, 2023, compared to less than 5% for the year ended December 31, 2017, and 42.8% for the year ended December 31, 2022.
The U.S. private residential construction market exceeded $950 billion in spending during the twelve months ended December 31, 2022, according to the United States Census Bureau. Residential housing starts in the U.S. increased by 8.4% during December 2022 compared to December 2021, according to the U.S. Census Bureau.
The U.S. private residential construction market exceeded $900 billion in spending during the twelve months ended December 31, 2023, according to the United States Census Bureau. Residential housing starts in the U.S. increased by 7.6% during December 2023 compared to December 2022, according to the U.S. Census Bureau.
The Company improved efficiency in its glass production during 2021 and 2022 by further automating certain key manufacturing processes to increase capacity, while reducing material waste and overall lead times.
We improved efficiency in our glass production during 2022 and 2023 by further automating certain key manufacturing processes to increase capacity, while reducing material waste and overall lead times.
All of our internal processes are continually and independently supervised by Tecnoglass’s Quality Assurance department. The Quality Assurance department maintains rigorous oversight of optimization indicators covering energy, water, recyclable waste and other facets of the production process. Constant monitoring of these indicators is integral to ensuring that we consistently produce high quality products.
The Quality Assurance department maintains rigorous oversight of optimization indicators covering energy, water, recyclable waste and other facets of the production process. Constant monitoring of these indicators is integral to ensuring that we consistently produce high quality products.
Products combine functionality, aesthetics and elegance and are available in a broad range of structures and materials. ● Hurricane-proof windows - combine heavy-duty aluminum or vinyl frames with special laminated glass to provide protection from hurricane-force winds up to 180 mph and wind-borne debris by maintaining their structural integrity and preventing penetration by impacting objects. ● Other – awnings, structures, automatic doors and other components of architectural systems.
Products combine functionality, aesthetics and elegance and are available in a broad range of structures and materials. ● Hurricane-proof windows - combine heavy-duty aluminum or vinyl frames with special laminated glass to provide protection from hurricane-force winds up to 180 mph and wind-borne debris by maintaining their structural integrity and preventing penetration by impacting objects. ● StormArmour – attachments for sliding doors that minimize water intrusion during severe weather events such as hurricanes, torrential rains, and winds. ● Other – awnings, structures, automatic doors and other components of architectural systems.
We carry out a series of initiatives based on our global sustainability strategy, which is supported on three fundamental pillars: promoting an ethical and responsible continuous growth, leading eco-efficiency and innovation and empowering our environment. As part of this strategy, the Company has voluntarily adhered to UN Global Compact Principles since 2017.
We purposefully implement initiatives aligned with our global sustainability strategy, which rests on three fundamental pillars: promoting an ethical and responsible continuous growth, leading eco-efficiency and innovation, and empowering our environment. As part of this strategy, the Company has voluntarily adhered to UN Global Compact Principles since 2017.
Our customer relationships are established and maintained through the coordinated efforts of our sales and production teams. We employ a highly responsive and efficient team of professionals devoted to addressing customer support with the goal of resolving any issue in a timely manner.
Customer Service We believe that our ability to provide customers outstanding service is a strong competitive differentiator. Our customer relationships are established and maintained through the coordinated efforts of our sales and production teams. We employ a highly responsive and efficient team of professionals devoted to addressing customer support with the goal of resolving any issue in a timely manner.
In 2021, in pursuit of our cooperation with the attainment of the Sustainable Development Goals (“SDGs”), we joined a program to dynamize, strengthen and make visible the management of greenhouse gas emissions as a carbon neutral strategy set out by the Colombian government by 2050.
In 2021, in pursuit of our cooperation with the attainment of the Sustainable Development Goals (“SDGs”) created by the United Nations, we joined a program to dynamize, strengthen and make visible the reduction of greenhouse gas emissions set out by the Colombian government by 51% in 2030 and to reach carbon neutrality by 2050.
Currently, residential sales represent a considerable portion of our total sales, and we believe we will continue growing into this end market in the U.S through share gains, new products and a commitment to execution.
We have received significant interest for the new products within these categories to date and positive reactions from our customers. Currently, residential sales represent a considerable portion of our total sales, and we believe we will continue growing into this end market in the U.S through share gains, new products and a commitment to execution.
In Colombia, we believe we are the leading producer of high-end windows, with almost 40 years of experience in the glass and aluminum structure assembly market. The industry has a few well-known players and is mostly atomized and comprised of small competitors.
In Colombia, we believe we are the leading producer of high-end windows, with over 40 years of experience in the glass and aluminum structure assembly market. The industry has a few well-known players and is mostly fragmented and comprised of small competitors. We currently compete with companies such as Viracon (a subsidiary within the Apogee Enterprises Inc.
Item 1. Business. Overview Tecnoglass is a leading vertically-integrated manufacturer, supplier and installer of architectural glass, windows, and associated aluminum products for the global commercial and residential construction industries. Tecnoglass was rated the third largest glass fabricator in 2022 by Glass Magazine.
Item 1. Business. Overview Tecnoglass is a leading vertically integrated manufacturer, supplier and installer of architectural glass, windows, and associated aluminum and vinyl products for the global commercial and residential construction markets.
Typically, all of our materials are readily available from a number of sources, and no supplier delays or shortages are anticipated. We source raw materials and glass necessary to manufacture our products from a variety of domestic and foreign suppliers. During the year ended December 31, 2022, one supplier accounted for more than 10% of total raw material purchases.
Typically, all of our materials are readily available from a number of sources, and no supplier delays or shortages are anticipated. We source raw materials and glass necessary to manufacture our products from a variety of domestic and foreign suppliers.
We have established and maintain credibility primarily through the strength of our products, our customer service and quality assurance, the speed at which we deliver finished products and the attractiveness of our pricing. Our advertising expenditures consist primarily of maintaining our subsidiaries’ websites. Customer Service We believe that our ability to provide customers outstanding service is a strong competitive differentiator.
We have established and maintain credibility primarily through the strength of our products, our customer service and quality assurance, the speed at which we deliver finished products and the attractiveness of our pricing. Our advertising expenditures consist primarily of new showrooms opening, provisions for events, and maintaining our subsidiaries’ websites.
Our products can be found on some of the most distinctive buildings in these regions, including One Thousand Museum (Miami), Paramount Miami Worldcenter (Miami), Hub50House (Boston), Via 57 West (New York), Ae’o Tower (Honolulu), Salesforce Tower (San Francisco), Trump Plaza (Panama), and Departmental Legislative Assembly (Bolivia).
Our products can be found on some of the most distinctive buildings in these regions, including 100 Hood Park Drive (Boston), 601 West 29 th St (New York). Norwegian Cruise Line Terminal B (Miami), Paramount Miami Worldcenter (Miami), Via 57 West (New York), One65 Main (Cambridge), AE’O Tower (Honolulu), Salesforce Tower (San Francisco), and One Thousand Museum (Miami).
Our registered trademarks include El Poder de la Calidad, Energia Solar, Tecnoglass, Alutions, Eswindows, Tecnobend, Tecnoair, Tecnosmart, ECOMAX by ESWINDOWS, ESWINDOWS Interiors, ESW Windows and Walls, Solartec by Tecnoglass, Prestige by ESWINDOWS, Eli by ESWINDOWS, Alessia by ESWINDOWS, Elite Line by ESWindows, ULTRAVIEW by Tecnoglass, and MULTIMAX by ESWIDOWS. 12 Sales, Marketing and Customer Service Sales and Marketing Our sales strategy primarily focuses on attracting and retaining customers by consistently providing exceptional customer service, leading product quality, and competitive pricing.
Brands and Trademarks Our main brands are Tecnoglass, ESWindows and Alutions. Our registered trademarks include El Poder de la Calidad, Energia Solar, Tecnoglass, Alutions, Eswindows, Tecnobend, Tecnoair, Tecnosmart, ECOMAX by ESWINDOWS, ESWINDOWS Interiors, ESW Windows and Walls, Solartec by Tecnoglass, Prestige by ESWINDOWS, Eli by ESWINDOWS, Alessia by ESWINDOWS, Elite Line by ESWindows, ULTRAVIEW by Tecnoglass, and MULTIMAX by ESWIDOWS.
Our products are manufactured in a 4.1 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.
In addition to glass, we manufacture aluminum and vinyl products such as profiles, rods, bars, plates, and other hardware specifically designed for window manufacturing. Our products are manufactured in a 5.6 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.
In 2022, we invested in additional automation and capacity expansion which will be fully operational by mid-2023. The Company expects to continue funding these capital investments mainly with cash on hand. Rigorous Adherence to Quality Standards Maintaining the high-quality standards for which we have become known is essential to the execution of our strategy.
We expect to continue funding these capital investments mainly with cash on hand. Rigorous Adherence to Quality Standards Maintaining the high-quality standards for which we have become known is essential to the execution of our strategy. All of our internal processes are continually and independently supervised by Tecnoglass’s Quality Assurance department.
We expect that our focus on innovation, which is founded upon our investments in technology, will position us well to take advantage of new opportunities. The Company has carried out enhancements at its glass and aluminum facilities to increase production capacity and automate operations. The Company anticipates that these high return investments will continue generating efficiencies in the production processes.
We have carried out enhancements at our glass and aluminum facilities to increase production capacity and automate operations. We anticipate that these high return investments will continue generating efficiencies in the production processes.
Additionally, on September 30, 2022 we voluntarily prepaid $10.0 million of the term loan and $6.7 million under the revolving line of credit which is fully unused as of December 31, 2022. 13 Customers Our customers include architects, building owners, general contractors and glazing subcontractors in the commercial construction market. We currently have more than 1,000 customers.
The committed line of credit of $150 million was fully unused as of December 31, 2023. 13 Customers Our customers include architects, building owners, general contractors and glazing contractors in the commercial construction market. We currently have approximately 1,000 customers.
Continued Investment in Technology to Meet Evolving Demands We have a track record of developing innovative new products, and we intend to continue our focus on new product opportunities in the future. We are constantly identifying shifts in global trends and customer needs and designing new products to meet those changes in demand.
Additionally, showrooms in Houston, TX, and Bonita Springs, FL have been completed and are expected to be fully operational in early 2024. Continued Investment in Technology to Meet Evolving Demands We have a track record of developing innovative new products, and we intend to continue our focus on new product opportunities in the future.
The key factors on which we and our competitors compete for business include quality, price, reputation, breadth of products and service offerings, and production speed leading to shorter lead times. We face intense competition from both smaller and larger market players who compete against us in our various markets including glass, window and aluminum manufacturing.
We face intense competition from both smaller and larger market players who compete against us in our various markets including glass, window and aluminum manufacturing.
Residential Market In April 2017 we launched “ES Windows: Elite Collection” and “ES Windows: Prestige Collection” to target the U.S. residential new and replacement sectors. We have received significant interest for the new products within these categories to date and positive reactions from our customers.
Residential Market In addition to increasing our penetration in the U.S., we continue to seek to further expand our offerings in the U.S. To this end, in April 2017, we launched “ES Windows: Elite Collection” and “ES Windows: Prestige Collection” to target the U.S. residential new and replacement sectors.
Working Capital Requirements and Debt Facilities During the year ended December 31, 2022, we generated $141.9 million of cash from operating activities. The positive cashflow from operations during 2022 is related to record high operating profit margins, enhanced working capital management efforts and lower interest expenses.
Working Capital Requirements and Debt Facilities During the year ended December 31, 2023, we generated $138.8 million of cash from operating activities.
We continuously strive to make a difference for our people, contributing to building a better future for the region and our country.
During 2023, we delivered more than 110 housing improvements. These and other initiatives have allowed us to maintain a strong relationship with the communities and our employees. We continuously strive to make a difference for our people, contributing to building a better future for the region and our country.
Headquartered in Barranquilla, Colombia, the Company operates out of a 4.1 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to the Americas, the Caribbean, and the Pacific. Tecnoglass supplies over 1,000 customers in North, Central and South America, with the United States accounting for 96% of revenues.
Tecnoglass earned the #1 spot on Forbe’s list of America’s 100 most successful small-cap companies for 2024, and was rated the third largest glass fabricator in 2023 by Glass Magazine. Headquartered in Barranquilla, Colombia, the Company operates out of a 5.6 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to the Americas, the Caribbean, and the Pacific.
In order to continue this success, it is critical that we invest in the latest technologies available in our industry. For example, with the installation of our soft-coating facility, we became able to manufacture low emissivity glass that is energy efficient allowing us to meet growing demand for “green” products.
For example, with the installation of our soft-coating facility, we became able to manufacture low emissivity glass that is energy efficient allowing us to meet growing demand for “green” products. We operate state-of-the-art architectural glass transformation equipment, glass laminating lines, aluminum presses, vinyl assembling lines, and high-volume insulating equipment, which facilitate more precise manufacturing and generate less raw material waste.
During the year ended December 31, 2021, two suppliers individually accounted for more than 10% of total raw material purchases, which in the aggregate represented 26.6% of raw material purchases, including Vidrio Andino (St. Gobain), from whom we purchased 10%, and with whom we created a joint venture in May 2019.
During the year ended December 31, 2023, two suppliers accounted for more than 10% of total raw material purchases, and in aggregate both account for 22.1% of total raw material purchases. During the year ended December 31, 2022, one supplier accounted for more than 10% of total raw material purchases.
These investments have also helped us manage workplace injuries, with our rate of one accident per 28 workers per year, which is substantially lower than the average of one accident per 11 workers per year for manufacturing companies in Colombia. We value our employees and invest in them and in our local communities.
These investments have also contributed to workplace safety, with our Lost Time Injury Frequency Rate (LTIFR), which measures the number of lost-time injuries per million hours worked during the financial year, of 3.1% which is substantially lower than the average for manufacturing companies in Colombia which stood at approximately 7.9% for 2023.
We operate state-of-the-art architectural glass making equipment, glass laminating lines, aluminum presses and high-volume insulating equipment, which facilitate more precise manufacturing and generate less raw material waste. We will seek to leverage this platform of cutting-edge equipment to adapt our products to evolving demands in both current and new markets.
We seek to leverage this platform of cutting-edge equipment to adapt our products to evolving demands in both current and new markets. We expect that our focus on innovation, which is founded upon our investments in technology, will position us well to take advantage of new opportunities.
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, and 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.
With over 40 years of experience in architectural glass and aluminum assembly, we specialize in transforming various glass products. Our offerings include tempered safety glass, double thermo-acoustic glass, and laminated glass. Our wide range of finished glass products are utilized in diverse buildings for floating facades, curtain walls, windows, doors, handrails, as well as interior and bathroom spatial dividers.
For several decades, our Tecnoglass ES Windows Foundation has committed resources to create projects to assist and contribute to the region’s development. Through the foundation´s scholarship program, over 300 students benefited in 2022, with grants to access higher education in different universities in Colombia. Our foundation funds local schools and institutions looking to improve social transformation and community development.
We value our employees and invest in them and our local communities. For several decades, our Tecnoglass ES Windows Foundation has committed resources to create projects to assist and contribute to the region’s development. For many years, we have allocated resources from the foundation to initiate and support various regional development projects.
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Tecnoglass’s tailored, high-end products are found on some of the world’s most distinctive properties, including One Thousand Museum (Miami), Paramount Miami Worldcenter (Miami), Hub50House (Boston), Via 57 West (New York), AE’O Tower (Honolulu), Salesforce Tower (San Francisco), Trump Plaza (Panama), and Departmental Legislative Assembly (Bolivia). 5 Our Business General 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.
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Tecnoglass supplies over 1,000 customers in North, Central and South America, with the United States accounting for 95% of revenues. Tecnoglass’s tailored, high-end products are found on some of the world’s most distinctive properties, including 100 Hood Park Drive (Boston), 601 West 29 th St (New York).
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We have 40 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.
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Norwegian Cruise Line Terminal B (Miami), Paramount Miami Worldcenter (Miami), Via 57 West (New York), One65 Main (Cambridge), AE’O Tower (Honolulu), Salesforce Tower (San Francisco), and One Thousand Museum (Miami). 5 Our Business General We are experienced and highly skilled in the vertical integration of architectural glass manufacturing, distribution, and professional fitting.
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Additionally, across our various programs, we engage with partners in numerous ways, supporting sports and healthy habits in younger generations. At the Tecnoglass ES Windows Foundation, we strive to make a difference for our people and local communities. This and other initiatives have allowed us to maintain a strong relationship with the communities and our employees.
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Our expertise extends to the production of top-quality windows, as well as the supply of aluminum, vinyl, and other components. Our dedicated and knowledgeable team serves a diverse range of commercial and residential construction projects worldwide, guaranteeing outstanding products and seamless installation services.
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Brands and Trademarks Our main brands are Tecnoglass, ESWindows and Alutions.
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In 2023, our scholarship program allowed over 551 students to pursue higher education at Colombian universities. We support local educational entities and organizations pursuing societal change and community enhancement. Our multiple programs also include collaboration with partners to promote sports and encourage healthy lifestyles among the youth.
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In October 2020, the Company entered into a $300 million five-year term Senior Secured Credit Facility consisting of a $250 million delayed draw term loan and a $50 million committed revolving credit facility which bears interest at a rate of LIBOR, with a 0.75% floor, plus a spread of between 2.50% and 3.50%, based on the Company’s net leverage ratio.
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Our goal at the Tecnoglass ES Windows Foundation is to create positive and lasting impacts on our employees and the communities we serve. Through our home improvement program, we acknowledge the commitment and dedication of the Tecnoglass group employees by supporting them to enhance their homes or purchase their own, ensuring the well-being of their families.
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In December 2020, we used $23.1 million proceeds of the long-term debt facility to repay several credit facilities.
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In late 2023, we entered into the vinyl window market, expanding our product portfolio to more than double our addressable market, and offering customers a wider selection of solutions to meet their project needs.
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Subsequently, in January 2021 we redeemed the Company’s existing $210 million unsecured senior notes, which had an interest rate of 8.2% and mature in 2022 using proceeds from this new facility and incurred in an extinguishment cost of $10.9 million including $8.6 of call premium to exercise the call option.
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We intend to capitalize on our existing distribution base for our aluminum products to obtain significant synergies given the significant number of dealers and distributors that already sell both aluminum and vinyl windows. Additionally, we expect to benefit from a wider product offering in markets where vinyl made frames and windows are more prevalent than aluminum ones. Penetrate the U.S.
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In November 2021, the Company amended its Senior Secured Credit Facility to (i) increase the borrowing capacity under its committed Line of credit from $50 million to $150 million, (ii) reduce its borrowing costs by an approximate 130 basis points, and (iii) extend the initial maturity date by one year to the end of 2026.
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We are constantly identifying shifts in global trends and customer needs and designing new products to meet those changes in demand. In order to continue this success, it is critical that we invest in the latest technologies available in our industry.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn recent years we have made significant capital expenditures which include: ● Automation of six window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction of on-site damage by 30%; ● Additional aluminum expansion project to increase capacity by approximately 400 tons/month; ● Further automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage by approximately 40%; ● Upgrade vacuum magnetron sputter coating machinery which will allow to coat glass before tempering; ● Construction of 500,000 square feet warehouse with two numerical punching machines, two metal benders and a complete painting line. ● Automation of two centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials There can be no assurance that the anticipated cost saving initiatives will be achieved, or that they will not be significantly and materially less than anticipated, or that the completion of such cost savings initiatives will be effectively accomplished.
Biggest changeIn recent years we have made significant capital expenditures which include: ● Automation of six window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction of on-site damage by 30%; ● Additional aluminum expansion project to increase capacity by approximately 400 tons/month; ● Further automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage by approximately 40%; ● Upgrading vacuum magnetron sputter coating machinery which will allow us to coat glass before tempering; ● Automation of two centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials; ● Acquiring 1.5 million square feet of land adjacent to our existing facilities for future expansion and for our sport facility complex available to factory employees; and ● Establishing new vinyl window assembly lines with annualized capacity of approximately $300 million There can be no assurance that the anticipated cost saving initiatives will be achieved, or that they will not be significantly and materially less than anticipated, or that the completion of such cost savings initiatives will be effectively accomplished.
The success of our business depends, in part, on our ability to execute on our acquisition strategy, to successfully integrate acquisitions and to retain key employees of our acquired businesses and to retain key employees of our acquired businesses . A portion of our historical growth has occurred through acquisitions and we may enter into additional acquisitions in the future.
The success of our business depends, in part, on our ability to execute on our acquisition strategy, to successfully integrate acquisitions and to retain key employees of our acquired businesses. A portion of our historical growth has occurred through acquisitions, and we may enter into additional acquisitions in the future.
We may not be able to integrate successfully any business we may acquire or have acquired into our existing business, and any acquired businesses may not be profitable or as profitable as we had expected. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs and lower profits.
We may not be able to successfully integrate any business we may acquire or have acquired into our existing business, and any acquired businesses may not be profitable or as profitable as we had expected. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs and lower profits.
Further, we may not have adequate insurance to compensate for all losses that result from any of these events. Our reliance on a single facility subjects us to concentrated risks. We currently operate the vast majority of our business from a single production facility in Barranquilla, Colombia.
Further, we may not have adequate insurance to compensate for all losses that result from any of these events. Our reliance for a majority of our business on a single facility subjects us to concentrated risks. We currently operate the vast majority of our business from a single production facility in Barranquilla, Colombia.
Although the customary terms of our arrangements with customers in Latin America and the Caribbean typically require a significant upfront payment ranging between 30% and 50% of the cost of an order, if a large customer were to experience financial difficulty, or file for bankruptcy or similar protection, or if we were unable to collect amounts due from customers that are currently under bankruptcy or similar protection, it could adversely impact our results of operations, cash flows and asset valuations.
Although the customary terms of our arrangements with customers in Latin America and the Caribbean typically require a significant upfront payment ranging from between 30% and 50% of the cost of an order, if a large customer were to experience financial difficulty, or file for bankruptcy or similar protection, or if we were unable to collect amounts due from customers that are currently under bankruptcy or similar protection, it could adversely impact our results of operations, cash flows and asset valuations.
To successfully finance such acquisitions, we may need to raise additional equity capital and indebtedness, which could increase our leverage level above our leverage level. We cannot assure you that we will enter into definitive agreements with respect to any contemplated transactions or that transactions contemplated by any definitive agreements will be completed on time or at all.
To successfully finance such acquisitions, we may need to raise additional equity capital and indebtedness, which could increase our leverage level. We cannot assure you that we will enter into definitive agreements with respect to any contemplated transactions or that transactions contemplated by any definitive agreements will be completed on time or at all.
Furthermore, the Colombian government and the Colombian Central Bank intervene in the country’s economy and occasionally make significant changes in monetary, fiscal and regulatory policy, which may include the following measures: ● controls on capital flows; ● international investments and exchange regime.
Furthermore, the Colombian government and the Colombian Central Bank intervene in the country’s economy and occasionally make significant changes in monetary, fiscal and regulatory policy, which may include the following measures: ● controls on capital flows; or ● international investments and exchange regime.
We may not realize the anticipated benefit through our joint venture with Saint-Gobain and the planned construction of a new plant as part of the joint venture may not be completed as planned.
We may not realize the anticipated benefit through our joint venture with Saint-Gobain as the construction of a new plant as part of the joint venture may not be completed as planned.
Political tensions in Venezuela rose in January 2019 as several countries, including Colombia, did not recognize the legitimacy of Nicolás Maduro as Venezuelan head of state. However, as of December 31, 2022, Colombia’s new government is aiming to reestablish political and commercial relations with Venezuela.
Political tensions in Venezuela rose in January 2019 as several countries, including Colombia, did not recognize the legitimacy of Nicolás Maduro as Venezuelan head of state. However, as of December 31, 2023, Colombia’s new government is aiming to reestablish political and commercial relations with Venezuela.
We are a “controlled company,” controlled by Energy Holding Corp., whose interest in our business may be different from ours or yours. We are a “controlled company” within the meaning of the New York Stock Exchange listing standards.
We are a “controlled company,” controlled by Energy Holding Corporation, whose interest in our business may be different from ours or yours. We are a “controlled company” within the meaning of the New York Stock Exchange listing standards.
As a result, any downturn in economic activity could have a negative impact on our business in the United States, which as of December 31, 2022, accounted for 96% of our net operating revenues. The termination or re-negotiation of free trade agreements or other related events could also indirectly have an adverse effect on the Colombian economy.
As a result, any downturn in economic activity could have a negative impact on our business in the United States, which as of December 31, 2023, accounted for 95% of our net operating revenues. The termination or re-negotiation of free trade agreements or other related events could also indirectly have an adverse effect on the Colombian economy.
Unemployment continues to be high in Colombia compared to other economies in Latin America. Furthermore, recent political and economic actions in the Latin American region, including actions taken by the Argentine and Venezuelan governments, may negatively affect international investor perception of the region.
Unemployment continues to be high in Colombia compared to other economies in Latin America. Furthermore, recent political and economic actions in the Latin American region, including actions taken by the Venezuelan government, may negatively affect international investor perception of the region.
Customer concentration and related credit, commercial and legal risk may adversely impact our future earnings and cash flows. Our ten largest third-party customers worldwide collectively accounted for 32% of our total sales revenue for the year ended December 31, 2022, though no single customer accounted for more than 10% of annual revenues.
Customer concentration and related credit, commercial and legal risk may adversely impact our future earnings and cash flows. Our ten largest third-party customers worldwide collectively accounted for 34% of our total sales revenue for the year ended December 31, 2023, though no single customer accounted for more than 10% of annual revenues.
We have been advised by our Cayman Islands legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature.
We have been advised that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature.
In the year ended December 31, 2022, 98% of our sales were to customers outside Colombia, including to the United States and Panama, and we expect sales into the United States and other foreign markets to continue to represent a significant portion of our net sales.
In the year ended December 31, 2023, 97% of our sales were to customers outside Colombia, including to the United States and Panama, and we expect sales into the United States and other foreign markets to continue to represent a significant portion of our net sales.
We also do not have any long-term requirements contracts pursuant to which we would be required to fulfill customers on an as-needed basis.
We also do not have any long-term requirements contracts pursuant to which we would be required to fulfill customer orders on an as-needed basis.
As of December 31, 2022, we and our subsidiaries on a consolidated basis had $173.2 million principal amount of debt outstanding. Our indebtedness could have negative consequences to our financial health.
As of December 31, 2023, we and our subsidiaries on a consolidated basis had $173.4 million principal amount of debt outstanding. Our indebtedness could have negative consequences to our financial health.
During the year ended December 31, 2022, approximately 2% of our revenues and 37% of our expenses were in Colombian pesos. The remainder of our expenses and revenues were denominated, priced and realized in U.S. Dollars. In the future, and especially as we further expand our sales in other markets, our customers may increasingly make payments in non-U.S. currencies.
During the year ended December 31, 2023, approximately 3% of our revenues and 24% of our expenses were in Colombian pesos. The remainder of our expenses and revenues were denominated, priced and realized in U.S. Dollars. In the future, and especially as we further expand our sales in other markets, our customers may increasingly make payments in non-U.S. currencies.
As of the date of publication of this annual report, we have transitioned all our employee population back to physical presence at the workplace, in compliance with Colombian government recommendations for prevention and control of COVID-19.
As of the date of this Form 10-K, we have transitioned all our employee population back to physical presence at the workplace, in compliance with Colombian government recommendations for prevention and control of COVID-19.
La Niña is a recurring weather phenomenon, and it may contribute to flooding, mudslides or other natural disasters on an equal or greater scale in the future. In the event of a natural disaster, our disaster recovery plans may prove to be ineffective, which could have a material adverse effect on its ability to conduct our businesses.
El Niño is a recurring weather phenomenon, and it may contribute to higher temperatures, droughts, wildfires, or other natural disasters on an equal or greater scale in the future. In the event of a natural disaster, our disaster recovery plans may prove to be ineffective, which could have a material adverse effect on its ability to conduct our businesses.
Colombia’s fiscal deficit and growing public debt could adversely affect the Colombian economy. Since the start of the Covid-19 pandemic, increased government expenses and lower tax collection raised the fiscal deficit up to 7.8% of GDP in 2020. In 2021, economic recovery along with higher tax collection stabilized the fiscal deficit to 7.5% of GDP.
Colombia’s fiscal deficit and growing public debt could adversely affect the Colombian economy. Since the start of the Covid-19 pandemic, increased government expenses and lower tax collection raised the fiscal deficit up to 7.8% of GDP in 2020.
The interests of our controlling shareholders could differ from the interests of our other shareholders. Energy Holding Corporation exercises significant influence over us as a result of its majority shareholder position and voting rights. As of December 31, 2022, Energy Holding Corporation beneficially owned approximately 55.4% of our outstanding ordinary shares.
The interests of our controlling shareholders could differ from the interests of our other shareholders. Energy Holding Corporation exercises significant influence over us as a result of its majority shareholder position and voting rights. As of the date of this Form 10-K, Energy Holding Corporation beneficially owned approximately 52.4% of our outstanding ordinary shares.
The armed conflict between Russia and Ukraine, including sanctions and tensions between the United States along with several other countries and Russia, may adversely affect the results of our operations. The Russian invasion of Ukraine starting in February 2022 has escalated global tensions between the United States and NATO countries against Russia. Colombia has also condemned Russia’s invasion of Ukraine.
Recent armed conflicts around the globe, including sanctions and tensions between United States, NATO allies and several eastern countries, may adversely affect the results of our operations. The Russian invasion of Ukraine starting in February 2022 has escalated global tensions between the United States and NATO countries against Russia. Colombia has also condemned Russia’s invasion of Ukraine.
Although our glass supply has run smoothly through 2022, we may be unable to realize the planned synergies and fail to integrate some aspects of the facility’s production capacity into our manufacturing process, which may have a negative impact on our financial condition.
Although our glass supply ran smoothly during 2023, we may be unable to fully realize the planned synergies and fail to integrate some aspects of the facility’s production capacity into our manufacturing process, which may have a negative impact on our financial condition in the future.
We source raw materials and glass necessary to manufacture our products from a variety of domestic and foreign suppliers. During the year ended December 31, 2022, one supplier accounted for more than 10% of total raw material purchases, at 14% of total raw material purchases.
We source raw materials and glass necessary to manufacture our products from a variety of domestic and foreign suppliers. During the year ended December 31, 2023, two suppliers accounted for more than 10% of total raw material purchases, and in aggregate both account for 22.1% of total raw material purchases.
Natural disasters in Colombia could disrupt our business and affect our results of operations and financial condition in the future. Our operations are exposed to natural disasters in Colombia, such as earthquakes, volcanic eruptions, tornadoes, tropical storms and hurricanes. Heavy rains in Colombia, attributable in part to the La Niña weather pattern, have resulted in severe flooding and mudslides.
Natural disasters in Colombia could disrupt our business and affect our results of operations and financial condition in the future. Our operations are exposed to natural disasters in Colombia, such as earthquakes, volcanic eruptions, tornadoes, tropical storms and hurricanes.
The 2020 global economic crisis, resulting from the outbreak of the COVID-19 pandemic which negatively affected many economic sectors and countries around the world, had negative effects on the Colombian economy. In addition, several supply chain shocks originated during the pandemic that might further strain and adversely affect the global economy.
The 2020 global economic crisis, resulting from the outbreak of the COVID-19 pandemic which negatively affected many economic sectors and countries around the world, had negative effects on the Colombian economy.
We are both a “smaller reporting company” and an “accelerated filer” as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and no longer qualify as an “emerging growth company.” If we are not able to adequately implement the requirements of Section 404, we may not be able to assess whether internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence, the market price of our ordinary shares and our ability to raise additional capital.
If we are not able to adequately implement the requirements of Section 404, we may not be able to assess whether internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence, the market price of our ordinary shares and our ability to raise additional capital.
During 2022, global inflationary pressures and lower interest rates, led Colombia to reach an annual inflation rate of 13.1% in 2022. As a result, Colombian Central Bank (“Banco de la República”) raised its monetary policy rate from 3% in December 2021, to 12% as of December 31, 2022. In addition, minimum wage for 2023 was agreed to increase 16%.
As a result, Colombian Central Bank (“Banco de la República”) raised its monetary policy rate from 12% as of December 31, 2022, to 13% as of December 31, 2023, leading annual inflation rate to close at 9.28% as of December 2023. In addition, minimum wage for 2024 was agreed to increase 12%.
Multiple economic sanctions against Russia are being imposed by many countries worldwide which has impacted the global economy as many commercial, industrial and financial businesses are closing operations in Russia.
Multiple economic sanctions against Russia are being imposed by many countries worldwide which has impacted the global economy as many commercial, industrial and financial businesses are closing operations in Russia. Trade restrictions imposed on Russia have led to increasing prices of oil, fluctuation in commodities markets and destabilizing many foreign currencies exchange rates.
As of December 31, 2022, Tecnoglass’s U.S and Latin American customers and suppliers are fully operational, and virtually all of the Company’s employees have been vaccinated against COVID-19 and are working on site. 28 Even though exports from Colombia, principally petroleum and petroleum products, and gold, have grown in recent years, fluctuations in commodity prices pose a significant challenge to their contribution to the country’s balance of payments and fiscal revenues.
Although the Covid-19 effects have been contained as of December 2023, new variants may emerge and have a negative effect on the Colombian economy in the future. 28 Even though exports from Colombia, principally petroleum and petroleum products, and gold, have grown in recent years, fluctuations in commodity prices pose a significant challenge to their contribution to the country’s balance of payments and fiscal revenues.
However, the payment of any future dividends will be solely at the discretion of our Board of Directors and there can be no assurance that we will continue to pay dividends in the future. 34 If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
However, the payment of dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements and our general financial condition and limitations imposed by our outstanding indebtedness. 34 If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
We may not be able to predict how changing market conditions in Colombia will affect our financial results. During 2021, Colombia’s long-term foreign currency sovereign credit ratings were lowered to “Baa2” by Moody’s, and “BB+” by S&P and Fitch, three of the main rating agencies worldwide, as Colombia’s fiscal adjustments seemed to be more protracted and gradual than previously expected.
We may not be able to predict how changing market conditions in Colombia will affect our financial results. During 2023, Moody’s, S&P and Fitch, three of the main rating agencies worldwide, ratings for Colombia stood at “Baa2”, “BB+”, and “BB+” respectively, where Moody’s and Fitch had a Stable outlook and S&P reported a negative outlook.
During 2022, the same risk rating agencies ratified Colombia’s ratings to “Baa2” “and BB+”, reflecting their expectation of fiscal deficit recovery and stable net debt over total GDP, driven by economic growth. Colombia’s real GDP increased approximately 7.5% in 2022.
The ratings reflect their expectation of fiscal deficit recovery and stable net debt over total GDP, driven by moderate economic growth. Colombia’s real GDP increased 0.6% in 2023. Global inflationary pressures and lower interest rates during 2022, led Colombia to reach an annual inflation rate of 13.28% in May 2023.
Trade restrictions imposed on Russia have led to increasing prices of oil, fluctuation in commodities markets and destabilizing many foreign currency exchange rates. 29 Further escalation of conflict can lead to severe constraints on global supply chains such as logistics obstructions, raw material price increases and shortages, and higher energy costs.
In addition, recent military tensions between the United States alongside certain allies, and Yemen’s Houthi group, has negatively impacted global commercial trade, as many ships are not being able to navigate through the Suez Canal. 29 Further escalation of conflict can lead to severe constraints on global supply chains such as logistics obstructions, raw material price increases and shortages, and higher energy costs.
According to the Finance Ministry of Colombia, fiscal deficit as a percentage of GDP during 2022 is expected to close at 5.5%, based on data as of November 2022, as a result of the consolidation of economic recovery, higher tax collection, and lower expenses associated to COVID-19 pandemic.
In 2021 and 2022, economic recovery along with higher tax collection, and lower expenses associated to COVID-19, decreased fiscal deficit to 7.5%, and 5.5% of GDP, respectively.
A United States investor should consult its advisors regarding the potential application of these rules to an investment in the ordinary shares. Risks Related to the COVID-19 Global Pandemic 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.
A United States investor should consult its advisors regarding the potential application of these rules to an investment in the ordinary shares. 35 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.
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In recent years, the Colombian currency had shown some short-term volatility vis-à-vis the U.S. Dollar. The Colombian Peso depreciated 21% and 16% against U.S. Dollar in 2022 and 2021, respectively.
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Recently, a coalition of U.S. producers of aluminum extrusions filed a petition with U.S. trade authorities requesting the imposition of anti-dumping duties against imports of aluminum extrusions from Colombia. As we are the main extruder of aluminum in Colombia, we volunteered as a mandatory respondent in the investigation and provided certain requested information.
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In 2021, Colombia began to recover from the Covid-19 pandemic. Colombian real GDP increased approximately 9.5% in 2021 as economic activity returned to pre-pandemic levels due to the commercial reactivation of every sector and the advance of the vaccine plan, where 78% of Colombian population is vaccinated with at least 1 dose.
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The investigation is not expected to be completed until late in the second half of 2024. As a result of this investigation, imports of our goods which are considered subject merchandise might be subject to anti-dumping duties. If that were the case, it might adversely impact our results of operations.
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We face various risks related to health epidemics, pandemics and similar outbreaks, including the global outbreak of COVID-19. The outbreak of COVID-19 led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital.
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Based on data as of October 2023, fiscal deficit is expected to close at 4.3% of GDP, due to higher tax collection, COP revaluation against USD, and lower costs of debt resulting from inflation indexed bonds, during the year. In recent years, the Colombian currency had shown some short-term volatility vis-à-vis the U.S. Dollar.
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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 COVID-19 in December 2019, we strictly adhered to mandates and other guidance from local governments and global health authorities.
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The Colombian Peso appreciated 20.5% in 2023, after a 20.7% depreciation during 2022, as a result of political instability since 2022 presidential elections.
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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.
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The results of the upcoming 2024 presidential elections in the United States could have a major impact on bilateral relations, economic cooperation, and regional security between Colombia and U.S. Increased U.S pressure on Colombia to align with its geopolitical interests may result in a reduction of U.S commercial trade and direct investment in Colombia.
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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. Virtually all of the Company’s employees have been vaccinated against COVID-19 and are working on site.
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The territorial dispute between Venezuela and Guyana, starting on November 1, 2023 when Venezuela unilaterally declared the Esequibo region of Guyana as a part of Venezuela, may affect Colombia’s political and commercial relations with Venezuela, as many commercial allies including United States, Brazil, and the United Kingdom, support Guyana.
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As of December 31, 2022, Tecnoglass’s U.S. and Latin American customers are fully operational with many construction projects typically considered by jurisdictions to be essential business activities since the early stages of the pandemic. However, given the increasing number of new COVID-19 variants, demand in all served markets may slow down impacting all aspects of business in every U.S.
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The potential escalation of the conflict could have significant impact on Colombia, which could in turn disrupt trade and investment in the region. This could have an adverse impact on our results of operations.
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State and Latin American country. As of December 31, 2022, Tecnoglass had ample liquidity, including cashflow generated from operating activities and available lines of credit, ensuring sufficient access to capital.
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High temperatures and decrease in rainfall in Colombia, attributable in part to the El Niño weather pattern, have resulted in severe droughts, affecting especially prices in Colombia, as hydropower accounts for 70% of total country’s energy.
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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. 35 We may be adversely affected by any disruption in our information technology systems.
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Our operations are dependent upon our information technology systems, which encompass all of our major business functions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We own and operate a total of 4.1 million square feet of manufacturing facilities. Our main 3.9 million square foot manufacturing complex, located in Barranquilla, Colombia, houses a glass production plant, aluminum plant and window and facade assembly plant.
Biggest changeItem 2. Properties. We own and operate a total of 5.6 million square feet of manufacturing facilities. Our main 5.4 million square foot manufacturing complex, located in Barranquilla, Colombia, houses a glass production plant, aluminum plant and window and facade assembly plant.
The Alutions plant has an effective installed capacity of 3,100 tons per month and can create a variety of shapes and forms for windows, doors, and related products.
The Alutions plant has an effective installed capacity of 4,100 tons per month and can create a variety of shapes and forms for windows, doors, and related products.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, 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. Item 4. Mine Safety Disclosures. Not Applicable. PART II
Biggest changeHowever, with the information at our disposition as this time, there are no indications that such claims will result in a material adverse effect on our business, financial condition or results of operations. Item 4. Mine Safety Disclosures. Not Applicable. PART II
Item 3. Legal Proceedings. 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.
Item 3. Legal Proceedings. From time to time, we are 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeWindows; ● references to “ESW” are to ES Windows LLC, our indirect wholly-owned subsidiary, based in Florida; ● References to “VS” are to Ventanas Solar S.A.; ● references to “Tecno LLC” are to Tecnoglass LLC; ● references to “Tecno RE” are to Tecno RE LLC; ● references to “ES Metals” are to ES Metals S.A.S.; and ● references to “GM&P” are to GM&P Consulting and Glazing Contractors Inc. 4 Our registered trademarks include El Poder de la Calidad, Energia Solar, Tecnoglass, Alutions, Eswindows, Tecnobend, Tecnoair, Tecnosmart, ECOMAX by ESWINDOWS, ESWINDOWS Interiors, ESW Windows and Walls, Solartec by Tecnoglass, Prestige by ESWINDOWS, Eli by ESWINDOWS, Alessia by ESWINDOWS, Elite Line by ESWindows, ULTRAVIEW by Tecnoglass, and MULTIMAX by ESWIDOWS.
Biggest changeOur registered trademarks include El Poder de la Calidad, Energia Solar, Tecnoglass, Alutions, Eswindows, Tecnobend, Tecnoair, Tecnosmart, ECOMAX by ESWINDOWS, ESWINDOWS Interiors, ESW Windows and Walls, Solartec by Tecnoglass, Prestige by ESWINDOWS, Eli by ESWINDOWS, Alessia by ESWINDOWS, Elite Line by ESWindows, ULTRAVIEW by Tecnoglass, and MULTIMAX by ESWIDOWS.
As more fully set forth under “Item 1A, Risk Factors” in this Form 10-K, principal risks and uncertainties that may affect our business, financial condition or results of operations include the following risks: Risks Related to Our Business Operations ● We operate in competitive markets, and our business could suffer if we are unable to adequately address potential downward pricing pressures and other factors that may reduce operating margins. ● Failure to maintain the performance, reliability and quality standards required by our customers could have a materially negative impact on our financial condition and results of operation. ● The volatility of the cost of raw materials used to produce our products could materially adversely affect our results of operations in the future. ● We rely on third-party suppliers for raw materials and third-party transportation, each of which subjects us to risks and costs that we cannot control, and which risks and costs may materially adversely affect our operations. ● We may not realize the anticipated benefit through our joint venture with Saint-Gobain and the planned construction of a new plant as part of the joint venture may not be completed as planned. ● Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance existing products and services through product development initiatives and technological advances; any failure to make such improvements could harm our future business and prospects. ● The home building industry and the home repair and remodeling sector are regulated and any increased regulatory restrictions or changes in building codes could negatively affect our sales and results of operations. ● Changes in building codes could lower the demand for our impact-resistant windows and doors. ● Equipment failures, delays in deliveries and catastrophic loss at our manufacturing facility could lead to production curtailments or shutdowns that prevent us from producing our products. ● Our reliance on a single facility subjects us to concentrated risks. ● Customer concentration and related credit, commercial and legal risk may adversely impact our future earnings and cash flows. ● If new construction levels and repair and remodeling markets decline, such market pressures could negatively affect our results of operations. ● Our business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities, possible losses, and other disruptions of our operations in the future, which may not be covered by insurance. ● The nature of our business exposes each of our subsidiaries to product liability and warranty claims that, if adversely determined, could negatively affect our financial condition and results of operations and the confidence of customers in our products. ● We are subject to potential exposure to environmental liabilities and are subject to environmental regulation and any such liabilities or regulation may negatively affect our costs and results of operations in the future. ● Weather can materially affect our business and we are subject to seasonality. ● Our results of operations could be significantly affected by foreign currency fluctuations and currency regulations. ● We are dependent on certain key personnel, the loss of whom could materially affect our financial performance and prospects in the future. ● Certain of our officers and directors have been involved in litigation, investigations or other proceedings and may be so again in the future, the defense or prosecution of such matters could be time-consuming and could divert our management’s attention, and may have an adverse effect on us. 3 ● We have entered into significant transactions with affiliates or other related parties, which may result in conflicts of interest. ● The interests of our controlling shareholders could differ from the interests of our other shareholders. ● We conduct all of our operations through our subsidiaries and will rely on payments from our subsidiaries to meet all of our obligations and may fail to meet our obligations if our subsidiaries are unable to make payments to us. ● Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations.
As more fully set forth below under the section titled “Item 1A, Risk Factors” in this Form 10-K, principal risks and uncertainties that may affect our business, financial condition or results of operations include the following risks: Risks Related to Our Business Operations ● We operate in competitive markets, and our business could suffer if we are unable to adequately address potential downward pricing pressures and other factors that may reduce operating margins. ● Failure to maintain the performance, reliability and quality standards required by our customers could have a materially negative impact on our financial condition and results of operation. ● The volatility of the cost of raw materials used to produce our products could materially adversely affect our results of operations in the future. ● We rely on third-party suppliers for raw materials and third-party transportation, each of which subjects us to risks and costs that we cannot control, and which risks and costs may materially adversely affect our operations. ● We may not realize the anticipated benefit through our joint venture with Saint-Gobain and the planned construction of a new plant as part of the joint venture may not be completed as planned. ● Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance existing products and services through product development initiatives and technological advances; any failure to make such improvements could harm our future business and prospects. ● The home building industry and the home repair and remodeling sector are regulated and any increased regulatory restrictions or changes in building codes could negatively affect our sales and results of operations. ● Changes in building codes could lower the demand for our impact-resistant windows and doors. ● Equipment failures, delays in deliveries and catastrophic loss at our manufacturing facility could lead to production curtailments or shutdowns that prevent us from producing our products. ● Our reliance on a single facility subjects us to concentrated risks. ● Customer concentration and related credit, commercial and legal risk may adversely impact our future earnings and cash flows. ● If new construction levels and repair and remodeling markets decline, such market pressures could negatively affect our results of operations. ● Our business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities, possible losses, and other disruptions of our operations in the future, which may not be covered by insurance. ● The nature of our business exposes each of our subsidiaries to product liability and warranty claims that, if adversely determined, could negatively affect our financial condition and results of operations and the confidence of customers in our products. ● We are subject to potential exposure to environmental liabilities and are subject to environmental regulation and any such liabilities or regulation may negatively affect our costs and results of operations in the future. ● Weather can materially affect our business and we are subject to seasonality. ● Our results of operations could be significantly affected by foreign currency fluctuations and currency regulations. ● We are dependent on certain key personnel, the loss of whom could materially affect our financial performance and prospects in the future. ● Certain of our officers and directors have been involved in litigation, investigations or other proceedings and may be so again in the future, the defense or prosecution of such matters could be time-consuming and could divert our management’s attention and may have an adverse effect on us. 3 ● We have entered into significant transactions with affiliates or other related parties, which may result in conflicts of interest. ● The interests of our controlling shareholders could differ from the interests of our other shareholders. ● We conduct all of our operations through our subsidiaries and will rely on payments from our subsidiaries to meet all of our obligations and may fail to meet our obligations if our subsidiaries are unable to make payments to us. ● Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations.
Form 10-K Summary. 60 2 FORWARD LOOKING STATEMENTS AND INTRODUCTION All statements other than statements of historical fact included in this Annual Report on Form 10-K (this “Form 10-K”) including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements.
Form 10-K Summary. 62 2 FORWARD LOOKING STATEMENTS AND INTRODUCTION All statements other than statements of historical fact included in this Annual Report on Form 10-K (this “Form 10-K”) including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements.
Risk Factors Summary Investors should consider the risks and uncertainties described below that may affect our business and future financial performance. These and other risks and uncertainties are more fully described in “Item 1A, Risk Factors” in this Form 10-K. Additional risks not presently known to us or that we currently deem immaterial may also affect us.
Risk Factors Summary Investors should consider the risks and uncertainties described below that may affect our business and future financial performance. These and other risks and uncertainties are more fully described below in section titled “Item 1A, Risk Factors” in this Form 10-K. Additional risks not presently known to us or that we currently deem immaterial may also affect us.
Unless the context otherwise requires: ● references to the “Company”, “Tecnoglass”, the “group” and to “we”, “us” or “our” are to Tecnoglass Inc., a Cayman Islands exempted company, and its subsidiaries; ● references to “TG” are to Tecnoglass S.A.S; ● references to “ES” are to C.I. Energía Solar S.A.S E.S.
Certain Frequently Used Terms Unless the context otherwise requires: ● references to the “Company”, “Tecnoglass”, the “group” and to “we”, “us” or “our” are to Tecnoglass Inc., a Cayman Islands exempted company, and its subsidiaries; ● references to “TG” are to Tecnoglass S.A.S; ● references to “ES” are to C.I. Energía Solar S.A.S E.S.
It also may be difficult or impossible to enforce judgments of courts of the United States and other jurisdictions against our Colombian subsidiaries or any of their directors, officers and controlling persons. ● Economic and political conditions in Colombia may have an adverse effect on our financial condition and results of operations. ● The Colombian Government and the Central Bank exercise significant influence on the Colombian economy. ● Factors such as Colombia’s growing public debt and fluctuating exchange rates could adversely affect the Colombian economy. ● Economic instability in Colombia could negatively affect our ability to sell our products. ● Government policies and actions and judicial decisions in Colombia could significantly affect our results of operations and financial condition in the future. ● We are dependent on sales to customers outside Colombia and any failure to make these sales may adversely affect our operating results in the future.
It also may be difficult or impossible to enforce judgments of courts of the United States and other jurisdictions against our Colombian subsidiaries or any of their directors, officers and controlling persons. ● Economic and political conditions in Colombia may have an adverse effect on our financial condition and results of operations. ● The Colombian Government and the Central Bank exercise significant influence on the Colombian economy. ● Factors such as Colombia’s growing public debt and fluctuating exchange rates could adversely affect the Colombian economy. ● Economic instability in Colombia could negatively affect our ability to sell our products. ● Government policies and actions and judicial decisions in Colombia could significantly affect our results of operations and financial condition in the future. ● We are dependent on sales to customers outside Colombia and any failure to make these sales may adversely affect our operating results in the future. ● We are subject to trade investigations conducted by U.S. authorities over Colombian products that may result in additional duties for our products.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 55 Item 13. Certain Relationships and Related Transactions, and Director Independence. 57 Item 14. Principal Accounting Fees and Services. 59 PART IV Item 15. Exhibits and Financial Statement Schedules. 60 Item 16.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 57 Item 13. Certain Relationships and Related Transactions, and Director Independence. 59 Item 14. Principal Accountant Fees and Services. 61 PART IV Item 15. Exhibits and Financial Statement Schedules. 62 Item 16.
Added
Windows; ● references to “ESW” are to ES Windows LLC, our indirect wholly-owned subsidiary, based in Florida; ● References to “VS” are to Ventanas Solar S.A.; ● references to “Tecno LLC” are to Tecnoglass LLC; ● references to “Tecno RE” are to Tecno RE LLC; ● references to “ES Metals” are to ES Metals S.A.S.; and ● references to “GM&P” are to GM&P Consulting and Glazing Contractors Inc. 4 TRADEMARKS We have proprietary rights to certain of the trademarks, service marks, and trade names used in this Form 10-K.
Added
Solely for convenience, our trademarks, service marks, and trade names referred to in this Form 10-K may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHowever, the payment of any future dividends will be solely at the discretion of our Board of Directors and there can be no assurance that we will continue to pay dividends in the future. Our bond indenture currently restricts the type of dividend we can make while the bonds are outstanding. See “Description of Indebtedness” below for further information.
Biggest changeHowever, the payment of any future dividends will be solely at the discretion of our Board of Directors and there can be no assurance that we will continue to pay dividends in the future.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our ordinary shares are listed on the New York Stock Exchange under the symbol “TGLS”. Holders As of December 31, 2022, there were 310 holders of record of our ordinary shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our ordinary shares are listed on the New York Stock Exchange under the symbol “TGLS”. Holders As of December 31, 2023, there were 284 holders of record of our ordinary shares.
Recent Sales of Unregistered Securities In connection with our Saint-Gobain joint venture, on October 28, 2020 we paid $10.9 million for a lot of land through the issuance of an aggregate of 1,557,142 ordinary shares of the Company to affiliates of the CEO and COO’s family, valued at $7.00 per share, which represented an approximate 33% premium based on the closing stock price on October 27, 2020.
Recent Sales of Unregistered Securities In connection with our Saint-Gobain joint venture, on October 28, 2020, we paid $10.9 million for a lot of land through the issuance of an aggregate of 1,557,142 ordinary shares of the Company to affiliates of the Chief Executive Officer and Chief Operating Officer’s family, valued at $7.00 per share, which represented an approximate 33% premium based on the closing stock price on October 27, 2020.
The payment of dividends in the future, if any, will therefore also be contingent upon limitations imposed by our outstanding indebtedness. 37 Because we are a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdictions of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur.
The payment of dividends in the future, if any, will also be contingent upon our revenues and earnings, if any, capital requirements and our general financial condition and limitations imposed by our outstanding indebtedness. 37 Because we are a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdictions of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur.
Removed
The graph assumes an investment at the close of trading on December 30, 2023, and assumes the shareholder opted for share dividends during all periods. 38 Repurchases No repurchases of shares or any class of our equity securities registered under Section 12 of the Exchange Act were made in the fourth quarter of the fiscal year covered by this Form 10-K by or on behalf of the Company or any affiliated purchaser (this term is defined in Rule 10b-18(a)(3) under the Exchange Act).
Added
The graph assumes an investment at the close of trading on December 29, 2023, and assumes the shareholder opted for share dividends during all periods. 38 Repurchases Share repurchase activity during the months within the fourth quarter of the fiscal year ended December 31, 2023 was as follows: Periods Total Number of Shares Purchased Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) October 2, 2023 Open market and privately negotiated purchases 67,850 $ 32.9 67,850 October 3, 2023 Open market and privately negotiated purchases 87,287 $ 32.4 87,287 October 4, 2023 Open market and privately negotiated purchases 34,411 $ 32.3 34,411 October 24, 2023 Open market and privately negotiated purchases 80,000 $ 32.3 80,000 October 25, 2023 Open market and privately negotiated purchases 15,666 $ 32.4 15,666 October 26, 2023 Open market and privately negotiated purchases 17,896 $ 32.5 17,896 October 27, 2023 Open market and privately negotiated purchases 43,748 $ 32.5 43,748 November 9, 2023 Open market and privately negotiated purchases 60,373 $ 32.3 60,373 November 10, 2023 Open market and privately negotiated purchases 1,898 $ 32.5 1,898 November 13, 2023 Open market and privately negotiated purchases 2,838 $ 33.0 2,838 November 16, 2023 Open market and privately negotiated purchases 37,216 $ 34.4 37,216 December 15, 2023 Open market and privately negotiated purchases 100 $ 35.8 - Total 678,065 $ 34.7 676,515 $ 26,527,637 (1) On November 3, 2022, the Board of Directors authorized the purchase of up to $50 million of the Company’s common shares.
Added
The program does not obligate the Company to acquire a minimum amount of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRecent examples of our high return investments within the last two years include: ● Automation of six window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction of on-site damage by 30%; ● Additional aluminum expansion project to increase capacity by approximately 400 tons/month; ● Automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage by approximately 40%; ● Upgrade vacuum magnetron sputter coating machinery which will allow to coat glass before tempering; ● Construction of 500,000 square feet warehouse with two numerical punching machines, two metal benders and a complete painting line. ● Automation of two centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials 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.
Biggest changeRecent examples of our high return investments within the last two years include: ● Automation of six window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction of on-site damage by 30%; ● Additional aluminum expansion project to increase capacity by approximately 400 tons/month; ● Further automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage by approximately 40%; ● Upgrading vacuum magnetron sputter coating machinery which will allow to coat glass before tempering; ● Automation of two centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials; ● Acquiring 1.5 million square feet of land adjacent to our existing facilities for future expansion and for our sport facility complex available to factory employees; and ● Establishing new vinyl window assembly lines with annualized capacity of approximately $300 million.
Our glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, and digital print glass as well as mill finished, anodized, painted aluminum profiles, and produces rods, tubes, bars and plates. Window production lines are defined depending on the different types of windows: normal, impact resistant, hurricane-proof, safety, soundproof and thermal.
Our glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, and digital print glass as well as mill finished, anodized, painted aluminum and vinyl profiles, and produces rods, tubes, bars and plates. Window production lines are defined depending on the different types of windows: normal, impact resistant, hurricane-proof, safety, soundproof and thermal.
Inventories Inventories of raw materials, which consist primarily of purchased and processed glass, aluminum, parts and supplies held for use in the ordinary course of business, are valued at the lower of cost or net realizable value. Cost is determined using a weighted-average method.
Inventories Inventories of raw materials, which consist primarily of purchased and processed glass, aluminum, vinyl, parts and supplies held for use in the ordinary course of business, are valued at the lower of cost or net realizable value. Cost is determined using a weighted-average method.
Our company has focused on working with The Power of Quality , always making sure that our vision of sustainability is immersed into every aspect of our business, including social, environmental, economic and governance variables, that help us make decisions and create value for our stakeholders.
We have focused on working with The Power of Quality , always making sure that our vision of sustainability is immersed into every aspect of our business, including social, environmental, economic and governance variables, that help us make decisions and create value for our stakeholders.
Headquartered in Barranquilla, Colombia, we operate out of a 4.1 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to North, Central and South America, the Caribbean, and the Pacific.
Headquartered in Barranquilla, Colombia, we operate out of a 5.6 million square foot vertically integrated, state-of-the-art manufacturing complex that provides easy access to North, Central and South America, the Caribbean, and the Pacific.
During the year ended December 31, 2022, and 2021, the Company recorded an income tax provision of $74.8 million and $28.5 million, respectively, reflecting an effective income tax rate of 32.3% and 29.4%, respectively. The effective income tax rates for both years approximate the statutory rate of 33.8% and 29.6% for the fiscal years 2022 and 2021, respectively.
During the years ended December 31, 2022 and 2021, the Company recorded an income tax provision of $74.8 million and $28.5 million, respectively, reflecting an effective income tax rate of 33.3% and 30.7%, respectively. The effective income tax rates for both years approximate the statutory rate of 33.8% and 29.6% for the fiscal years 2022 and 2021, respectively.
On October 28, 2020 we acquired said land from a related party and paid for it with the issuance of an aggregate of 1,557,142 ordinary shares of the Company, valued at $7.00 per share, which represented an approximate 33% premium based on the closing stock price as of October 27, 2020.
On October 28, 2020, we acquired said land from a related party in exchange for an aggregate of 1,557,142 ordinary shares of the Company, valued at $7.00 per share, which represented an approximate 33% premium based on the closing stock price as of October 27, 2020.
As a result of the foregoing, the Company recorded a net income for the year ended December 31, 2021, of $68.4 million compared to $23.8 million in the year ended December 31, 2020. Cash Flow from Operations, Investing and Financing Activities During the year ended December 31, 2022, and 2021, operating activities generated approximately $141.9 million and $117.3 million, respectively.
As a result of the foregoing, the Company recorded a net income for the year ended December 31, 2022 of $156.4 million compared to $68.4 million in the year ended December 31, 2021. Cash Flow from Operations, Investing and Financing Activities During the year ended December 31, 2023 and 2022, operating activities generated approximately $138.8 million and $141.9 million, respectively.
As part of this strategy the Company has voluntarily adhered to UN Global Compact Principles since 2017 and in pursuit of our cooperation with the attainment of the Sustainable Development Goals (“SDGs”) joined in 2021 a program to dynamize, strengthen and make visible the management of greenhouse gas emissions as a carbon neutral strategy set out by the Colombian government for 2050.
As part of this strategy we have voluntarily adhered to UN Global Compact Principles since 2017 and in pursuit of our cooperation with the attainment of the SDGs joined in 2021 a program to dynamize, strengthen and make visible the management of greenhouse gas emissions as a carbon neutral strategy set out by the Colombian government for 2050.
As a result of the foregoing, the Company recorded a net income for the year ended December 31, 2022, of $156.4 million compared to $68.4 million in the year ended December 31, 2021.
As a result of the foregoing, the Company recorded net income for the year ended December 31, 2023 of $183.5 million compared to $156.4 million in the year ended December 31, 2022.
Critical Accounting Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the assets, liabilities, revenues and expenses, and other related amounts during the periods covered by the financial statements. Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain.
GAAP requires management to make significant estimates and assumptions that affect the assets, liabilities, revenues and expenses, and other related amounts during the periods covered by the financial statements. Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain.
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.
Non-operating income was comprised primarily of income from rental properties and gains on sale of scrap materials and charges to customers on credit card payments, as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.
In addition, we believe we are the leading glass transformation company in Colombia. 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.
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.
The increase was driven by $16.2 million, or 70.4%, increase in shipping expense resulting from sales increasing 44.2% along with some increases in shipping rates and a higher mix of sales going into the more atomized US residential market, a $3.4 million in non-recurring professional fees, and by a $4.6 million one-time settlement payment associated with a dispute related to a project.
The increase was driven by $16.2 million, or 70.4%, increase in shipping expense resulting from sales increasing 44.2% along with some increases in shipping rates and a higher mix of sales going into the more atomized US residential market, a $3.4 million in non-recurring professional fees, and by a $4.6 million one-time settlement payment associated with a dispute related to a project. 44 During the years ended December 31, 2022 and 2021, the Company recorded net non-operating income of $4.2 million and $0.6 million, respectively.
Contract assets and liabilities which generated $16.2 million, resulting from a combination of a decrease in retainage as several jobs in the US were finalized, a reduction of unbilled receivables tied to our advance on projects currently in execution, and increased advances received from customers. Comparatively, contract assets and liabilities generated $28.6 million during the year ended December 31, 2021.
The main source of operating cash during the year ended December 31, 2023, were contract assets and liabilities, which generated $13.9 million, resulting from a combination of a decrease in retainage as several jobs in the US were finalized, a reduction of unbilled receivables tied to our advance on projects currently in execution, and increased advances received from customers.
The United States accounted for 96%, and 92% of our combined revenues in 2022 and 2021, respectively, while Colombia accounted for approximately 2% and 5%, and other Latin-American destinations accounted for approximately 2% and 3% in those years, respectively.
The United States accounted for 95%, and 96% of our combined revenues in 2023 and 2022, respectively, while Colombia accounted for approximately 3% and 2%, and other Latin-American destinations accounted for approximately 2% during both years.
During the year ended December 31, 2022, we paid $71.3 million to acquire property, plant and equipment, which in combination with $11.8 million acquired under credit, amount to total capital expenditures of $83.2 million. During 2021, we used $51.5 million for the acquisition or property and equipment.
During the year ended December 31, 2023, we paid $78.0 million to acquire property, plant and equipment, which in combination with $9.3 million acquired under credit, amount to total capital expenditures of $87.3 million. During 2022, we used $71.3 million for the acquisition or property and equipment.
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.
In particular, we are actively seeking to expand our presence in United States outside of Florida. We also launched a residential window offering which, we believe, will help us expand our presence in the United States and generate additional organic growth.
The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cash flows 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 if needed (based on debt availability). 42 Results of Operations (Amounts in thousands) Twelve months ended December 31, 2022 2021 2020 Operating revenues $ 716,570 $ 496,785 $ 376,607 Cost of sales 367,071 294,201 237,166 Gross profit 349,499 202,584 139,441 Operating expenses (123,084 ) (85,599 ) (73,734 ) Operating income 226,415 116,985 65,707 Non-operating income and expenses, net 4,218 608 89 Foreign currency transactions gains / (losses) 2,013 (4,308 ) (8,638 ) Equity method income 6,680 4,177 1,387 Interest expense and deferred cost of financing (8,156 ) (9,850 ) (21,671 ) Debt extinguishment - (10,699 ) - Income tax provision (74,758 ) (28,485 ) (13,033 ) Net income 156,412 68,428 23,841 (Income) loss attributable to non-controlling interest (669 ) (277 ) 34 Income attributable to parent $ 155,743 $ 68,151 $ 23,875 Comparison of years ended December 31, 2022, and December 31, 2021 Our operating revenue increased $219.8 million, or 44.2%, from $496.8 million in the year ended December 31, 2021, to $716.6 million in the year ended December 31, 2022.
The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cash flows 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 if needed (based on debt availability). 42 Results of Operations (Amounts in thousands) Twelve months ended December 31, 2023 2022 2021 Operating revenues $ 833,265 $ 716,570 $ 496,785 Cost of sales 442,331 367,071 294,201 Gross profit 390,934 349,499 202,584 Operating expenses (131,172 ) (123,084 ) (85,599 ) Operating income 259,762 226,415 116,985 Non-operating income and expenses, net 5,131 4,218 608 Foreign currency transactions gains / (losses) 686 2,013 (4,308 ) Interest expense and deferred cost of financing (9,178 ) (8,156 ) (9,850 ) Debt extinguishment - - (10,699 ) Income tax provision (77,904 ) (74,758 ) (28,485 ) Equity method income 5,013 6,680 4,177 Net income 183,510 156,412 68,428 Income attributable to non-controlling interest (628 ) (669 ) (277 ) Income attributable to parent $ 182,882 $ 155,743 $ 68,151 Comparison of years ended December 31, 2023 and December 31, 2022 Our operating revenue increased $116.7 million, or 16.3%, from $716.6 million in the year ended December 31, 2022 to $833.3 million in the year ended December 31, 2023.
Non-operating income is comprised primarily of income from rental properties and gains on sale of scrap materials and charges to customers on credit card payments, as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence. 43 Interest expense and deferred cost of financing decreased $1.7 million, or 17.2%, to $8.2 million during the year ended December 31, 2022, from $9.9 million during the year ended December 31, 2021, despite increases in floating interest rates as a result of a reduction of our debt balance.
Non-operating income is comprised primarily of interest income from short term investments and deposits, rental properties and gains on sale of scrap materials and charges to customers on credit card payments, as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence. 43 Interest expense and deferred cost of financing increased $1.0 million, or 12.5%, to $9.2 million during the year ended December 31, 2023, from $8.2 million during the year ended December 31, 2022, reflecting an increase in floating interest rates while our debt balance remained stable.
The main use of cash in investing activities during 2022, was related to the automation of our architectural system assembly processes and incremental land purchases as further described above in the Capital Resources section.
We used $76.0 million and $72.6 million in investing activities during the year ended December 31, 2023 and 2022, respectively. The main use of cash in investing activities during 2023, was related to the automation of our architectural system assembly processes and incremental land purchases as further described above in the Capital Resources section.
Operating expenses as a percentage of sales improved from 19.6% in 2020 to 17.2% in 2021, as a result of operating leverage from higher sales and our continued effort to enhance our lean administrative structure and tight cost controls. 44 During the year ended December 31, 2021, and 2020, the Company recorded a net non-operating income of $0.6 million and non-operating income of $0.1 million, respectively.
However, as a result of our continued effort to enhance our lean administrative structure and tight cost controls, our operating expenses as a percentage of sales improved from 17.2% in 2022 to 15.7% in 2023. During the years ended December 31, 2023 and 2022, the Company recorded a net non-operating income of $5.1 million and $4.2 million, respectively.
Single family residential market sales increased $129.1 million, or 72.8%, from $177.4 million in 2021 to $306.4 million in 2022 and accounted for 42.8% of total sales in the year ended December 31, 2022. U.S. Commercial market sales increased $102.9 million, or 36.9%, from $279.0 million to $382.0 million as we continue to execute on our growing backlog.
U.S. sales increased $232.0 million, or 50.8%, from $456.3 million in 2021 to $688.4 million in 2022. U.S. single family residential market sales increased $129.1 million, or 72.8%, from $177.4 million in 2021 to $306.4 million in 2022 and accounted for 42.8% of total sales in the year ended December 31, 2022.
We anticipate that working capital will continue to be a net benefit to cash flow in the near future, which in addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months.
We anticipate that working capital will continue to be a net benefit to cash flow in the near future, which in addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months. 41 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.
Standard form sales reflect lower-value orders that are of short duration. 40 We expect to benefit from growth in our largest markets in the United States by gaining market share, broadening our geographic footprint within the U.S. and demographic factors favoring demand in the geographies served by us.
We have two types of sales operations: contract sales, which are the high-dollar, customer tailored projects, and standard form sales, which reflect lower-value orders that are of short duration. 40 We expect to benefit from growth in our largest markets in the United States by gaining market share, broadening our geographic footprint.
We also have sales forces located in Colombia and Panama with long-standing business relationships in the region to serve Latin American markets. We have two types of sales operations: Contract sales, which are the high-dollar, customer tailored projects, and standard form sales.
We also have sales forces located in Colombia and Panama with long-standing business relationships in the region to serve Latin American markets.
This resulted in gross profit margin reaching 48.8% during the year ended December 31, 2022, up from 40.8% during the year ended December 31, 2021.
Gross profit increased $146.9 million, or 72.5%, to $349.5 million during the year ended December 31, 2022, compared with $202.6 million during the year ended December 31, 2021. This resulted in gross profit margin reaching 48.8% during the year ended December 31, 2022, up from 40.8% during the year ended December 31, 2021.
The 800-basis point improvement in gross margin can be mainly attributable to operating leverage on higher sales, favorable product pricing dynamics, ongoing efficiency efforts, and favorable foreign exchange rates resulting from a depreciation of the Colombian peso. Operating expenses increased $37.5 million, or 43.8%, from $85.6 million to $123.1 million for the year ended December 31, 2021, and 2022, respectively.
The 800-basis point improvement in gross margin was mainly attributable to operating leverage on higher sales, favorable product pricing dynamics, ongoing efficiency efforts, and favorable foreign exchange rates resulting from a depreciation of the Colombian peso.
Our products can be found on some of the most distinctive buildings in these regions, including One Thousand Museum (Miami), Paramount Miami Worldcenter (Miami), Hub50House (Boston), Via 57 West (New York), AE’O Tower (Honolulu), Salesforce Tower (San Francisco), Trump Plaza (Panama), and Departmental Legislative Assembly (Bolivia).
Our products can be found on some of the most distinctive buildings in these regions, including 100 Hood Park Drive (Boston), 601 West 29 th St (New York). Norwegian Cruise Line Terminal B (Miami), Paramount Miami Worldcenter (Miami), Via 57 West (New York), One65 Main (Cambridge), AE’O Tower (Honolulu), Salesforce Tower (San Francisco), and One Thousand Museum (Miami).
Our products are manufactured in a 4.1 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.
In addition to glass, we manufacture aluminum and vinyl products such as profiles, rods, bars, plates, and other hardware specifically designed for window manufacturing. Our products are manufactured in a 5.6 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.
We produce fixed body, sliding windows, projecting windows, guillotine windows, sliding doors and swinging doors. ES produces facade products which include: floating facades, automatic doors, bathroom dividers and commercial display windows. We sell to over 1,000 customers using several sales teams based out of Colombia and the United States to specifically target regional markets in South, Central and North America.
We sell to over 1,000 customers using several sales teams based out of Colombia and the United States to specifically target regional markets in South, Central and North America.
Including assets acquired with debt or supplier credit, total capital expenditures during the period were $53.4 million. Financing activities used $44.8 million and $43.8 million during the year ended December 31, 2022, and 2021, respectively.
Including assets acquired with debt or supplier credit, total capital expenditures during the period were $83.2 million. We also received dividends from our investment in Vidrio Andino for $2.3 million during 2023. Financing activities used $42.8 million and $44.8 million during the years ended December 31, 2023 and 2022, respectively.
Operating expenses increased $11.9 million, or 16.1%, from $73.7 million to $85.6 million for the year ended December 31, 2020, and 2021, respectively.
Operating expenses increased $37.5 million, or 43.8%, from $85.6 million for the year ended December 31, 2021 to $123.1 million for the year ended December 31, 2022.
Interest expense and deferred cost of financing decreased $11.8 million, or 54.5%, to $9.9 million during the year ended December 31, 2021 from $21.7 million during the year ended December 31, 2020 as a result of our new financing arrangement further described above in the liquidity section.
Interest expense and deferred cost of financing decreased $1.7 million, or 17.2%, to $8.2 million during the year ended December 31, 2022, from $9.9 million during the year ended December 31, 2021, despite increases in floating interest rates as a result of a reduction of our debt balance.
Additionally, in April 2019, the Company acquired 70% equity interest in ESMetals, which has been consolidated in our financial statements since. ESMetals is a Colombian entity that 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.
ESMetals is a Colombian entity that serves as a metalwork contractor to supply us 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.
U.S. sales increased $115.9 million, or 34.0%, from $340.4 million in 2020 to $456.3 million in 2021. Single family residential market sales increased $106.7 million, or 151.1%, from $70.6 million in 2020 to $177.3 million in 2021, and accounted for 35.7% of total sales in the year ended December 31, 2021.
U.S. single family residential market sales increased $29.0 million, or 9.5%, from $306.4 million in 2022 to $335.4 million in 2023 and accounted for 40.3% of total sales in the year ended December 31, 2023. Sales to Latin-American markets increased $10.0 million, or 35.6%, from $28.2 million in 2022 to $38.2 million in 2023.
Strong sales during 2022 were driven by U.S. single family residential and commercial market activity. U.S. sales increased $232.0 million, or 50.8%, from $456.3 million in 2021 to $688.4 million in 2022. U.S.
Strong sales during 2023 were driven by U.S. commercial and single-family residential market activity. U.S. sales increased $106.7 million, or 15.5%, from $688.4 million in 2022 to $795.1 million in 2023. U.S. Commercial market sales increased $77.7 million, or 20.3%, from $382.0 million in 2022 to $459.7 million in 2023 as we continue to execute on our growing backlog.
We thereby reduced our financing cost, despite global increases in interest rates. 41 As of December 31, 2022, we had a strong liquidity position, comprised of $170 million available under committed lines of credit, in addition to a cash balance of $103.7 million.
As of December 31, 2023, our liquidity position was comprised of $170 million available under committed lines of credit, in addition to a cash balance of $129.5 million.
Comparison of years ended December 31, 2021, and December 31, 2020 Our operating revenue increased $120.2 million, or 31.9%, from $376.6 million in the year ended December 31, 2020, to $496.8 million in the year ended December 31, 2021.
Comparison of years ended December 31, 2022 and December 31, 2021 Our operating revenue increased $219.8 million, or 44.2%, from $496.8 million in the year ended December 31, 2021 to $716.6 million in the year ended December 31, 2022. Strong sales during 2022 were driven by U.S. single family residential and commercial market activity.
During the year ended December 31, 2022, the main source of cash was operating activities, which generated $141.9 million.
Liquidity As of December 31, 2023 and 2022, we had cash and cash equivalents of approximately $129.5 million and $103.7 million, respectively. During the year ended December 31, 2023, the main source of cash was operating activities, which generated $138.8 million.
Comparatively, the Company recorded a net loss of $8.6 million during the year ended December 31, 2020, within the statement of operations as the Colombian peso depreciated 16.0% during the period.
During the year ended December 31, 2023, the Company recorded a non-operating gain of $0.7 million associated with foreign currency transactions. Comparatively, the Company recorded a net gain of $2.0 million during the year ended December 31, 2022, within the statement of operations as the Colombian peso appreciated 20.5% during the period.
During the year ended December 31, 2021, and 2020, the Company recorded an income tax provision of $28.5 million and $13.0 million, respectively, reflecting an effective income tax rate of 29.4% and 35.3%, respectively. The effective income tax rate of 29.4%, during the year ended December 31, 2021, approximates the statutory rate.
During the years ended December 31, 2023 and 2022, the Company recorded an income tax provision of $77.9 million and $74.8 million, respectively, reflecting an effective income tax rate of 30.4% and 33.3%, respectively.
Sales to Latin-American markets decreased $12.2 million, or 30.3%, from $40.5 million to $28.2 million in 2022 as we focus our efforts on more attractive U.S. markets. Gross profit increased $146.9 million, or 72.5%, to $349.5 million during the year ended December 31, 2022, compared with $202.6 million during the same period of 2021.
U.S. commercial market sales increased $102.9 million, or 36.9%, from $279.0 million in 2021 to $382.0 million in 2022 as we continued to execute on our growing backlog. Sales to Latin-American markets decreased $12.2 million, or 30.3%, from $40.5 million in 2021 to $28.2 million in 2022 as we focused our efforts on more attractive U.S. 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 third largest glass fabricator in 2022 by Glass Magazine.
With a focus on innovation, combined with providing highly specified products with the highest quality standards at competitive prices, we have earned #1 spot in the Forbe’s list of America’s 100 most successful small-cap companies for 2024, and developed a leadership position in each of our core markets.
These stable to positive macro trends combined with a lean cost structure, leave us well positioned maintain industry leading margins and further diversify our presence into the U.S. Liquidity As of December 31, 2022, and 2021, we had cash and cash equivalents of approximately $103.7 million and $85.0 million, respectively.
In late October 2023, 30 year-fixed mortgage rates reached a 23 year high of 7.8% and decreased to 6.7% as of February 2024. These stable to positive macro trends in our core markets and geographies combined with a lean cost structure, leave us well positioned maintain industry leading margins and further diversify our presence into the U.S.
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 years ended December 31, 2022, and 2021, we made investments primarily in building and construction, and machinery and equipment in the amounts of $83.2 million, and $53.4 million, respectively.
During the years ended December 31, 2023, and 2022, we made investments primarily in building and construction, and machinery and equipment in the amounts of $87.3 million, and $83.1 million, respectively.
The positive cashflow from operations during the year ended December 31, 2022 has been related to a much higher profitability year over year, enhanced working capital efforts, reduced interest expense and a higher share of our revenue mix coming from the single-family residential space, which has a shorter cash cycle.
The positive cashflow from operations during the year ended December 31, 2023, has been related to our industry leading profitability, and enhanced working capital efforts.
In late 2022, we launched two new showrooms, one in New York City and one in Charleston, SC, to serve primarily single family residential markets in their regions, and have plan to open additional showrooms in new geographies across the southern United States as part of our geographic expansion strategy.
In late 2022, we launched two new showrooms, one in New York City and one in Charleston, SC, to serve primarily single-family residential markets in their regions. New showrooms have been completed in Houston, TX, and Bonita Springs, FL, and are expected to be fully operational early in 2024.
According to FMI´s 2023 Engineering and Construction Industry overview, construction put in place in the multifamily residential construction sector, which accounted for 64% of our backlog in 2022, is expected to increase 8.5% year over year in 2023, and U.S. nonresidential building construction put in place is expected to continue expanding through 2023, at an annualized rate of 7.9% to $637 billion in and projected to remain at similar levels through 2026.
Additionally, according to Key Media Research (“KMR”) data, U.S. nonresidential building construction put in place is expected to continue expanding through 2024, at an annualized rate of 4.6% to $800 billion, and projected to remain at similar levels through 2026.
This resulted in gross profit margin reaching 40.8% during the year ended December 31, 2021, up from 37.0% during the year ended December 31, 2020.
Gross profit increased $41.5 million, or 11.9%, to $391.0 million during the year ended December 31, 2023, compared with $349.5 million during the year ended December 31, 2022. This resulted in gross profit margin reaching 46.9% during the year ended December 31, 2023, down from 48.8% during the year ended December 31, 2022.
Please see the section entitled “Forward-Looking Statements and Introduction” in this Form 10-K. 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.
Please see the section entitled “Forward-Looking Statements and Introduction” in this Form 10-K. Overview We are experienced and highly skilled in the vertical integration of architectural glass manufacturing, distribution, and professional fitting. Our expertise extends to the production of top-quality windows, as well as the supply of aluminum, vinyl, and other components.
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, and 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.
With over 40 years of experience in architectural glass and aluminum assembly, we specialize in transforming various glass products. Our offerings include tempered safety glass, double thermo-acoustic glass, and laminated glass. Our wide range of finished glass products are utilized in diverse buildings for floating facades, curtain walls, windows, doors, handrails, as well as interior and bathroom spatial dividers.
Removed
We have almost 40 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.
Added
Our dedicated and knowledgeable team serves a diverse range of commercial and residential construction projects worldwide, guaranteeing outstanding products and seamless installation services.
Removed
According to Key Media & Research (“KMR”) data, the volume of architectural glass used in nonresidential construction will expand for a second-straight year, albeit at a slower pace, by 4.7% in 2023 to 178.1 million square feet, following a 6.7% uptick the year before.
Added
In the United States, which is our largest market, we were ranked as the third largest glass fabricator serving the United States in 2023 by Glass Magazine. In addition, we believe we are the leading glass transformation company in Colombia.
Removed
In October 2020, the Company entered a $300 million five-year term Senior Secured Credit Facility consisting of a $250 million delayed draw term loan and a $50 million committed revolving credit facility which bore interest at a rate of LIBOR, with a 0.75% floor, plus a spread of between 2.50% and 3.50%, based on the Company’s net leverage ratio.
Added
Additionally, in April 2019, we acquired a 70% equity interest in ESMetals, which has been consolidated in our financial statements since. In November 2023, we acquired the remaining 30% equity interest in ESMetals.
Removed
In December 2020, we used $23.1 million proceeds of the long-term debt facility to repay several credit facilities.
Added
We produce fixed body, sliding windows, projecting windows, guillotine windows, sliding doors and swinging doors. ES produces facade products which include: floating facades, automatic doors, bathroom dividers and commercial display windows.
Removed
Subsequently, in January 2021 we redeemed the Company’s existing $210 million unsecured senior notes, which had an interest rate of 8.2% and matured in January 2022 using proceeds from this new facility and incurred an extinguishment cost of $10.9 million including $8.6 of call premium to exercise the call option.
Added
In late 2023, we entered into the vinyl window market, expanding our product portfolio to more than double our addressable market, and offering customers a wider selection of solutions to meet their project needs.
Removed
In November 2021, the Company amended its Senior Secured Credit Facility to (i) increase the borrowing capacity under its committed Line of credit from $50 million to $150 million, (ii) reduce its borrowing costs by an approximate 130 basis points, and (iii) extend the initial maturity date by one year to the end of 2026.
Added
We intend to capitalize on our existing distribution base for our aluminum products to obtain significant synergies given the number of dealers and distributors that already sell both aluminum and vinyl windows.
Removed
The modification also included a re-sizing of the term loan to $200 million for a total facility size of up to $350 million including the revolving credit facility.
Added
Favorable demographics in states such as South Carolina, Florida, Texas, and North Carolina, where we have a strong presence, contribute to continued growth. Despite the overall decline of housing permits in U.S. south region, down 9% year over year, from a very strong 2022; permits in key cities in Florida, where we maintain a strong presence, increased by 3%.
Removed
Borrowings under the credit facility will now bear interest at a rate of LIBOR with no floor plus a spread of 1.75%, based on the Company’s net leverage ratio, compared to a prior rate of LIBOR with a floor of 0.75% plus a spread of 2.50%.
Added
Residential construction put in place in the U.S. is expected to increase 1.3% during 2024, after a 5.6% decrease presented in 2023. Borrowing costs are expected to decrease during 2024, as interest rates start to stabilize and probably decline.
Removed
The facility was led by PNC Bank N.A as Administrative Agent; with Citizens Bank N.A, BBVA USA, CIT Bank and Wells Fargo Bank N.A serving as Joint Lead Arrangers. The effective interest rate for this credit facility including deferred issuance costs is 2.81%.
Added
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.
Removed
We recorded total costs and fees of $1.5 million related to this transaction, of which $1.4 million of fees paid to banks were capitalized as deferred cost of financing, and $0.2 million paid to third parties recorded as an operating expense on the consolidated statements of operations for the year 2021. This transaction was accounted for as a debt modification.
Added
The 190-basis point decrease in gross margin can be mainly attributable to our revenue mix which included more installation and stand-alone product sales during the current period. Installation and stand-alone product revenues were up 21.4% and 9.5% respectively year over year, weighting down overall gross margin.
Removed
In March 2022, we voluntarily prepaid $15 million of capital to this credit facility which has decreased our net leverage ratio and triggered a step down in the applicable interest rate spread to 1.5%.
Added
Additionally, unfavorable currency exchange dynamics impacted our costs denominated in the Colombian Peso against our predominantly US Dollar revenue stream. Operating expenses increased $8.1 million, or 6.6%, from $123.1 million for the year ended December 31, 2022, to $131.2 million for the year ended December 31, 2023.
Removed
Additionally, on September 30, 2022, we voluntarily prepaid $10.0 million of the term loan and $6.7 million under the revolving line of credit, which is fully unused as of December 31, 2022.
Added
Administrative and selling Personnel expense increased 27%, from $28.1 million in 2022 to $35.7 in 2023, related to a larger operation and ongoing geographical expansion. Additionally, provision for accounts receivable increased $2.2 million, from $0.6 million in 2022 to $2.8 million in 2023.
Removed
During the year ended December 31, 2022, and 2021, the Company recorded a net non-operating income of $4.2 million and non-operating income of $0.6 million, respectively.
Added
Comparatively, contract assets and liabilities generated $16.2 million during the year ended December 31, 2022.
Removed
In early 2020, initial COVID-19 lockdowns and other preventive measures slowed down our business, especially in Latin America as several customers halted activities and we shut down our manufacturing facilities in Colombia between March 24, 2020, and April 13, 2020 during the nationwide shelter-in-place order. Strong sales during 2021 were driven by U.S. single family residential and commercial market activity.
Added
The largest use of cash in operating activities were other assets, comprised primarily of prepaid taxes, which used $27.5 million during the year ended December 31, 2023, related to the aggregate of $107.2 million related to income taxes paid during the period, most of which was paid by the Colombian subsidiaries during the second quarter of 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed11 unchanged
Biggest changeDollar denominated monetary assets exceed their monetary liabilities by $28.4 million, such that a 1% devaluation of the Colombian peso will result in a loss of $0.3 million recorded in the Company’s Consolidated Statement of Operations as of December 31, 2022. Additionally, the results of the foreign subsidiaries must be translated into U.S.
Biggest changeDollar denominated monetary liabilities exceed their monetary assets by $37.3 million, such that a 1% devaluation of the Colombian peso will result in a loss of $0.4 million recorded in the Company’s Consolidated Statement of Operations as of December 31, 2023. Additionally, the results of the foreign subsidiaries must be translated into U.S.
Dollar would result in our annual revenues increasing by $0.8 million and our costs and expenses increasing by approximately $10.8 million, resulting in a $10.0 million decrease to net earnings based on results for the twelve months ended December 31, 2022. Similarly, a significant portion of the monetary assets and liabilities of these subsidiaries are generally denominated in U.S.
Dollar would result in our annual revenues increasing by $1.3 million and our costs and expenses increasing by approximately $8.1 million, resulting in a $6.8 million decrease to net earnings based on results for the twelve months ended December 31, 2023. Similarly, a significant portion of the monetary assets and liabilities of these subsidiaries are generally denominated in U.S.
Some of our subsidiaries’ operations are based in Colombia, and primarily transact business in local currency. Approximately 2% of our consolidated revenues and 37% of our costs and expenses are denominated in Colombian pesos, thereby mitigating some of the risk associated with changes in foreign exchange rates.
Some of our subsidiaries’ operations are based in Colombia, and primarily transact business in local currency. Approximately 3% of our consolidated revenues and 24% of our costs and expenses are effectively incurred in Colombian pesos, thereby mitigating some of the risk associated with changes in foreign exchange rates.

Other TGLS 10-K year-over-year comparisons