Tecnoglass Holdings Inc.: Form 10-Q for the period ended Jun 30, 2026

Forward-Looking Statements

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

Overview

We are experienced and highly skilled in the vertical integration of window and 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 dedicated and knowledgeable team serves a diverse range of commercial and residential construction projects worldwide, guaranteeing outstanding products and seamless installation services. 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. In the United States, which is our largest market, we were ranked among the four largest glass fabricators serving the United States in 2025 by Glass Magazine. 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.

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. In addition to glass, we manufacture aluminum and vinyl products such as profiles, rods, bars, plates, and other hardware specifically designed for window manufacturing.

The majority of our products are manufactured in a 6.1 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. Our products can be found on some of the most distinctive buildings in these regions, including 100 Hood Park Drive (Boston), 601 West 29th 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 track record of successfully delivering high profile projects has earned us an increasing number of opportunities across the United States, evidenced by our expanding backlog and overall revenue growth.

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

We have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in Florida has primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated areas of the United States. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic growth with some acquisitions that have allowed us added control over our supply chain allowed for further vertical integration of our business and will act as a platform for our future expansion in the United States. Earlier acquisitions in 2016 and 2017, of ESW and GM&P respectively, helped establish our U.S. distribution and installation capabilities, while more recent transactions—including our minority interest in Vidrio Andino, our full ownership of ESMetals, and the 2025 acquisition of certain assets of Continental Glass Systems, LLC—have enhanced our vertical integration, capacity, customer reach, and backlog.

On April 3, 2025, we completed the acquisition of certain assets and assume certain liabilities of Continental Glass Systems, LLC, a leading provider of architectural glass and glazing solutions in the Southeast U.S., that included manufacturing equipment, intangibles, and a strong project backlog, enhancing our U.S. presence, customer reach, and supply chain efficiency.

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 window offering which, we believe, will help us expand our presence in the United States and generate additional organic growth. We believe that the quality of our products, coupled with our ability to price competitively given our structural advantages on cost, will allow us to generate further growth in the future.

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. 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, we have voluntarily adhered to UN Global Compact Principles since 2017 and in pursuit of our cooperation with the attainment of the Sustainable Development Goals 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. Additionally, we are advancing initiatives in circular economy and implementing comprehensive water management and treatment strategies aimed at improving efficiency, reuse and replenishment, in order to maintain our water-positive operations.

RESULTS OF OPERATIONS

Comparison of quarterly periods ended June 30, 2026 and 2025

Revenues

Operating revenues increased $39.7 million, or 15.6%, from $255.5 during the quarter ended June 30, 2025, to $295.3 million, during the quarter ended June 30, 2026. Strong revenues during the second quarter of 2026 were driven by market share gains and stronger activity in our core U.S markets, where revenues increased $43.9 million, or 18.1% year over year, to $286.2 million. In terms of end markets, the increase was driven by strong growth in both US commercial and residential market. Revenues from the commercial market rose 15.7% or $22.8 million year over year, as we continue to execute on our growing project backlog. In addition, residential market sales increased 15.4% or $16.9 million yar over year, reflecting market share gains in new geographies and a modest pull-forward effect when we announced a mid-single digit price increase for quotes issued after May. Revenues from Latin America and the Caribbean decreased $4.1 million, or 31.4% year over year.

Gross profit

Gross profit during the second quarter of 2026 was $110.0 million, a decrease of $4.3 million, or 3.8%, from $114.3 million during the second quarter of 2025. The gross profit margin during the three months ended June 30, 2026, was 37.3%, compared to 44.7% during the second quarter of 2025, primarily driven by higher input costs associated with increasing aluminum prices, as well as higher salaries given the one-time double digit minimum wage increase put in place in Colombia at the beginning of 2026. Additionally, we had a stronger local currency year over year, impacting our local currency costs on a comparable basis. The aforementioned factors were partially offset by positive pricing adjustments implemented in the second quarter of last year and by operating leverage on higher revenues.

Expenses

Operating expenses increased $20.3 million, or 38.3%, from $53.1 million to $73.4 million for the quarters ended June 30, 2025 and 2026, respectively. The increase resulted primarily from Tariffs on imports into the U.S. which generated a total expense of $18.7 million during the second quarter of 2026, an increase of $10.6 million or 129.2% year over year, from a total Tariff expense of $8.1 million during the second quarter of 2025. Additionally, increased personnel cost, on higher salaries and a stronger Colombian Peso.

Non operating income and expenses, net

During the three months ended June 30, 2026 and 2025, the Company recorded net non-operating income of $0.6 million in both periods. Non-operating income is comprised of interest income from short-term investments, as well as non-operating expenses related to certain charitable contributions. Equity method income, mainly from our joint venture with Saint Gobain decreased $1.2 million, or 124.5%, after recording a loss of $0.2 million during the quarter ended June 30, 2026, compared to an income of $0.9 million recorded during the quarter ended June 30, 2025.

Foreign currency transaction gains and losses

During the three months ended June 30, 2026, the Company recorded a non-operating income of $5.2 million associated with foreign currency transactions compared to a net non-operating income of $0.8 million during the three months ended June 30, 2025.

Interest income (expense), net and deferred cost of financing

Interest expense and deferred cost of financing increased by $2.2 million, or 160.8%, to $3.5 million for the quarter ended June 30, 2026, as a result of higher amount of debt from our Senior secured credit facility further explained under capital resources.

Income Taxes

We recorded income tax expense of $14.1 million and $18.1 million during the three months ended June 30, 2026, and 2025, respectively. The effective income tax rate of 36.5% for the three months ended June 30, 2026, primarily reflects the impact of certain foreign expenses incurred by the Company’s Colombian subsidiaries that are not deductible for income tax purposes.

As a result of the foregoing, the Company recorded net income for the three months ended June 30, 2026, of $24.6 million compared to net income of $44.1 million for the three months ended June 30, 2025.

Comparison of six-month periods ended June 30, 2026 and 2025

Revenues

Operating revenues during the six months ended June 30, 2026 was $544.3 million, compared to $477.8 million during the six months ended June 30, 2025, an increase of $66.5 million or 13.9%, year over year. Strong revenues during the first half of 2026 were driven by strong activity in the U.S market, where revenues increased $68.6 million, or 15.1% year over year, to $523.4 million. The increase was driven by higher U.S. commercial market revenues, up $50.0 million, or 17.9% year over year, as we continue to execute on our growing backlog of projects. Residential revenues increased $16.4 million, or 8.3% year over year, resulting from strong demand momentum in core markets and our ongoing geographical expansion, and a modest pull-forward effect when we announced a mid-single digit price increase for quotes issued after May. Revenues from Latin America and the Caribbean decreased $2.1 million, or 9.2% year over year.

Gross profit

Gross profit during the first half of 2026 was $205.9 million, a decrease of $6.0 million, or 2.8%, from $211.9 million during the first half of 2025. The gross profit margin during the six months ended June 30, 2026, was 37.8%, compared to 44.3% during the same period of 2025, primarily driven by higher input costs associated with increasing aluminum prices, as well as higher salaries given the one-time double digit minimum wage increase put in place in Colombia at the beginning of 2026. Additionally, we had a stronger local currency year over year, impacting our local currency costs on a comparable basis. The aforementioned factors were partially offset by positive pricing adjustments implemented in the second quarter of last year.

Expenses

Operating expenses increased $28.8 million, or 30.1%, from $95.7 million to $124.4 million for the six months ended June 30, 2025, and 2026, respectively. The increase resulted primarily from tariffs on imports into the U.S. which generated a net expense of $20.0 million during the first half of 2026. including a $1.9 million recovery of previously paid import tariffs following the invalidation of certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), an increase of $7.0 million or 53.8% year over year, from a total Tariff expense of $13.0 million during the first half of 2025. Additionally, operating expenses increased due to higher personnel costs resulting from higher salaries and a stronger Colombian Peso.

Non operating income and expenses, net

During the six months ended June 30, 2026 and 2025, the Company recorded net non-operating income of $1.5 million and $1.6 million, respectively. Non-operating income is comprised of interest income from short-term investments, as well as non-operating expenses related to certain charitable contributions. Equity method income, mainly from our joint venture with Saint Gobain, decreased $2.4 million, or 105.6%, after recording a net loss of $0.1 million during the six months ended June 30, 2026, compared to an income of $2.3 million recorded during the six months ended June 30, 2025.

Foreign currency transaction gains and losses

During the six months ended June 30, 2026, the Company recorded a non-operating income of $6.1 million associated with foreign currency transactions compared to a net non-operating income of $0.3 million during the six months months ended June 30, 2025.

Interest income (expense), net and deferred cost of financing

Interest expense and deferred cost of financing increased by $3.9 million, or 144.1%, to $6.5 million for the six months ended June 30, 2026, as a result of higher amount of debt from our Senior secured credit facility further explained under capital resources

Income Taxes

We recorded income tax expense of $26.0 million and $35.8 million during the six months ended June 30, 2026, and 2025, respectively. The effective income tax rate of 31.5% for the six months ended June 30, 2026, primarily reflects the impact of certain foreign expenses incurred by the Company's Colombian subsidiaries that are not deductible for income tax purposes.

As a result of the foregoing, the Company recorded net income for the six months ended June 30, 2026, of $56.4 million compared to net income of $86.3 million for the six months ended June 30, 2025.

Liquidity

As of June 30, 2026 and December 31, 2025, we had a cash and cash equivalents balance of approximately $80.8 million and $100.9 million, respectively. Additionally, we currently have approximately $280 million available under several lines of credit.

We anticipate that the Company will continue to generate positive cashflow from operating activities throughout the remainder of the year, which we believe, in addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months.

Capital Resources

We transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significant investments in state-of-the-art technology. During the three months ended June 30, 2026 and 2025, we made investments primarily in building, machinery and equipment in the amounts of $52.7 million and $62.9 million, respectively. Additionally, we acquired $9.8 million and $7.7 million of property plant and equipment under credit during the six months ended June 30, 2026, and 2025, respectively. Investments made during the first six months of 2026 were mainly related an ongoing broad automation project to increase efficiency, improve headcount and increase capacity given the Company´s current growth which has reduced excess capacity. Additionally, we continue to amortize scheduled payments on previous investments to increase capacity and efficiency.

While the Company estimates that current manufacturing operating capacity has reached approximately $1.3 billion (which does not account for incremental installation revenue capacity) it expects to finish the year at a higher level, once current investments become operational. Additionally, the Company expects the resulting increase in output to improve efficiency throughout its operations while reducing material waste, reducing headcount and improving overall lead times.

Cash Flow from Operations, Investing and Financing Activities

During the six months ended June 30, 2026 and 2025, operating activities generated approximately $11.1 million and $64.8 million, respectively. The main source of operating cash during the six months ended June 30, 2026, were driven by trade accounts payable. Trade accounts payable and accrued expenses generated $31.3 million during the six months ended June 30, 2026, related to higher unpaid balance of higher than usual raw material purchases as we procure a stock of U.S. sourced aluminum as part of our tariff mitigation strategy, compared with $21.8 million during the six months ended June 30, 2025. In connection, purchase of inventories used $35.8 million during the six months ended June 30, 2026, as we continue procure in advance, a higher stock of U.S. sourced aluminum as part of our supply chain resilience and tariff mitigation strategy, in contrast to $24.0 million generated during the prior year period. The larges use of cash in operating activities during the six months ended June 30, 2026 were taxes payable, which used $39.2 million and $18.5 million during the six months ended June 30, 2026 and 2025, respectively, following seasonal tax payment schedules. Additionally, trade accounts receivables, used $32.3 million in the six months ended June 30, 2026, compared with $20.4 million during the prior year period, driven by a continued elevated pace of large commercial installation jobs during the first six months of 2026, which entail longer cash cycles.

We used $51.0 million and $48.6 million in investing activities during the six months ended June 30, 2026, and 2025, respectively. During the six months ended June 30, 2026, we paid $52.7 million to acquire property plant and equipment, mainly related to scheduled payments on previous investments to increase capacity and efficiency. During the six months ended June 30, 2025, we used $62.9 million for the acquisition of property and equipment.

Financing activities also reflected gross debt proceeds of $63.8 million and repayments of $15.7 million, mainly used to repurchase $16.5 million of our stock during the six months ended June 30, 2025, leaving $92.4 million remaining under our $250 million Share Repurchase Program.

Off-Balance Sheet Arrangements

None

We are exposed to ongoing market risk related to changes in foreign currency exchange rates and commodity market prices.

Previously, a rise in interest rates could negatively affect the cost of financing for a significant portion of our debt with variable interest rates. However, following recent repayments in 2024 only an immaterial portion of our debt is exposed to market risk, net of the effect from interest rate hedging derivative financial instruments further described in the footnotes to the financial statements, and fluctuations in interest rates would not have a significant impact on our cost of financing.

We are subject to market risk due to changes in the value of foreign currencies in relation to our reporting currency, the U.S. dollar. Some of our subsidiaries’ operations are based in Colombia and primarily transact business in local currency. Approximately 2.5% of our consolidated revenues and 25% of our costs and expenses are effectively incurred in Colombian pesos, thereby mitigating some of the risk associated with changes in foreign exchange rates. This portion of costs and expenses denominated in Colombian Peso excludes certain items which are transacted in Colombia using Colombian Peso but are priced in U.S. Dollars or are otherwise indexed to U.S. Dollar rates. Thus a 5% appreciation of the Colombian Peso relative to the US Dollar would result in our revenues for the three months ended June 30, 2026, increasing by $0.7 million and our costs and expenses increasing by approximately $6.8 million, resulting in a $6.1 million decrease to net earnings based on results for the three months ended June 30, 2026.

Similarly, a significant portion of the monetary assets and liabilities of these subsidiaries are generally denominated in US Dollars, while their functional currency is the Colombian peso, thereby resulting in gains or losses from remeasurement of assets and liabilities using the end of period spot exchange rate. These subsidiaries have both monetary assets and monetary liabilities denominated in US Dollars, thereby mitigating some of the risk associated with changes in foreign exchange rate. Furthermore, we record a portion of the non-cash foreign currency transaction gains and losses from remeasurement of certain intercompany loans as other comprehensive income. Net of this, the Colombian subsidiaries’ US Dollar denominated monetary liabilities exceed their monetary assets by $107,131 million, such that a 1% devaluation of the Colombian peso will result in a loss of $1.1 million recorded in the Company’s Consolidated Statement of Operations as of June 30, 2026.

Additionally, the results of the foreign subsidiaries must be translated into US Dollars, our reporting currency, in the Company’s consolidated financial statements. The currency translation of the financial statements using different exchange rates, as appropriate, for different parts of the financial statements generates a translation adjustment, which is recorded within other comprehensive income on the Company’s Consolidated Statement of Comprehensive Income and Consolidated Balance Sheet.

We are also subject to market risk exposure related to volatility in the prices of aluminum, one of the principal raw materials used for our manufacturing. The commodities markets, which include the aluminum industry, are highly cyclical in nature, and as a result, prices can be volatile. Commodity costs are influenced by numerous factors beyond our control, including general economic conditions, the availability of raw materials, competition, labor costs, freight and transportation costs, production costs, import duties and other trade restrictions. Our selling prices are also impacted by changes in commodity costs base our pricing of aluminum products based on the quoted price on the London Metals Exchange plus a manufacturing premium with the intention of aligning cost of our raw materials with selling prices to attempt to pass commodity price changes through to our customers.

We cannot accurately estimate the impact a one percent change in the commodity costs of would have on our results of operation, as the change in commodity costs would both impact the cost to purchase materials and our selling prices. The impact to our results of operations depends on the conditions of the market for our products, which could impact our ability to pass commodities costs to our customers.

Evaluation of Disclosure Controls and Procedures

We performed an evaluation required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of our design and operating effectiveness of the internal controls over financial reporting as of the end of the period covered by this Quarterly Report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, were effective as of June 30, 2026 in order to provide reasonable assurance that the information disclosed in our reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

For the quarter ended June 30, 2026, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, except as follows:

Risks Related to Colombia and Other Countries Where We Operate

Our business could be negatively impacted by political or economic tensions between Colombia and the United States.

Our business operations and financial performance could be adversely affected by political or economic tensions between the governments of Colombia and its neighbor country Venezuela, and the United States, mostly influenced by differences in political orientation and policy priorities between such country’s administrations. Given that our manufacturing facilities are based in Colombia and 96% of our sales for the fiscal year ended December 31, 2025, occurred in the United States, any deterioration in diplomatic or economic relations between the countries, including the imposition of trade restrictions, tariffs, sanctions, limitations on cross-border payments, or other measures resulting from political disagreements between the President of Colombia Gustavo Petro, and the President of the United States Donald Trump, could negatively affect our ability to conduct business in the U.S., increase our costs, or restrict access to financial and commercial channels.

On April 2, 2026, the United States announced modifications to tariffs imposed under Section 232 of the Trade Expansion Act of 1962 on imports of aluminum, steel, and certain derivative products, which became effective on April 6, 2026. These changes include, among other things, applying tariffs to the full customs value of certain imported products and introducing a range of tariff rates depending on the composition of such products, including a reduced tariff rate of approximately 10% for certain products manufactured abroad using U.S.-origin aluminum, which were previously exempt.

Although no “reciprocal” tariff initiative against Colombia is active as of the date of this report, there can be no assurance that such measures will not be introduced in the future. Any such developments could have a material adverse effect on our revenues, profitability, and overall business prospects.