Tecnoglass' strong Q1 performance driven by expansion in market share

Published: 2025-07-09 00:53:36 ET TGLS

Published on 07/09/2025 at 00:53, updated on 07/09/2025 at 05:22

By Maya Patel

Tecnoglass Inc. has posted robust Q1 2025 numbers, achieving record net sales and operating income. The impressive results have been driven by market share gains in single-family and multi-family/commercial sectors, alongside strong execution on high-profile projects. In addition, the company has bolstered growth through strategic acquisitions, which continue to be a key component of its expansion strategy.

Founded in 1983 and based in the US, Tecnoglass Inc. is a holding company specializing in the manufacturing of architectural glass and windows for residential and commercial construction across the Western Hemisphere. Tecnoglass produces a diverse array of glass products, including tempered safety glass, double thermo-acoustic glass, and laminated glass, primarily installed in commercial and residential buildings. These products are used in various applications such as floating facades, windows, doors, handrails, and interior and bathroom spatial dividers, and can be found in hotels, residential buildings, commercial and corporate centers, universities, airports, and hospitals.

In addition to glass products, Tecnoglass manufactures aluminum items like profiles, rods, bars, plates, and other hardware essential for window production. The company designs, manufactures, markets, and installs architectural systems for high, medium, and low-rise construction, including glass and aluminum windows and doors, office dividers and interiors, floating facades, and commercial display windows. Tecnoglass has around 9,800 employees.

Tecnoglass posted record net sales of $222m in Q1 25, up 15% y/y, driven by market share gains in single family and multi-family / commercial revenues. EBIT, therefore, rose to a record $55m in the quarter, reflecting a 34.2% increase, with margins improving by 353bp to 24.8%. Net income rose 41.9% y/y to $42m. The company's backlog grew by 24.9% y/y to a record $1.14bn, bolstered by a strong execution track record on high-profile projects and continued market share expansion, which is driving new opportunities across the US.

Tecnoglass Inc. has outlined its outlook for FY 25, presenting scenarios for both higher and lower ends of performance. On the higher end, the company anticipates minimal impact on the construction industry from aluminum or reciprocal tariffs, largely offset by favorable pricing. A continued downtrend in interest rates is expected to drive mortgage rates lower, while favorable foreign exchange rates, with the Colombian Peso at $4,200 or weaker, are hedged for the remainder of the year. Legacy residential revenues are projected to grow at a high single-digit rate, with vinyl revenues around $25m. The outlook incorporates pricing adjustments for H2 2025, with gross margins in the mid-to-high 40% range, and contributions from the acquisition of Continental assets.

Conversely, the lower-end scenario assumes widespread tariffs driving inflation and constraining construction spending. Pricing increases may be partially offset by a decrease in single-family volume, with inflation keeping interest and mortgage rates at current levels or higher, deteriorating builder confidence. The unhedged portion of the Colombian Peso is expected at $3,900-$4,000, with flat to low single-digit growth for legacy residential revenues, vinyl revenues of $10m-$15m, slower activity in short-term/small commercial projects, and gross margins in the low 40% range, alongside contributions from Continental assets.

Tecnoglass reported a solid top line performance over FY 21-24, posting a revenue CAGR of 21.5% to reach $890m. EBIT rose at a CAGR of 24.7% to $227m in FY 24, with margins expanding by 195bp to 25.5%. Net income increased at 33.3% CAGR over the same period, reaching $161m in FY 24.

Cash from operations rose from $117m at end-FY 21 to $171m at end-FY 24. Positive earnings trajectory and steady cash inflow from operations led to an increase in cash and cash equivalent rose from $85m to $135m. In addition, the group’s total debt decreased considerably from $199m at end-FY 21 to $111m at end-FY 24. The gearing calculated as total debt-to-equity, improved from 81.4% to 17.6%.

In comparison, Masco Corporation, a local peer, reported a revenue CAGR of minus 2.2% over the past three years to $7.8bn in FY 24. However, EBIT rose at a CAGR of 9.9% to $1.4bn in FY 24, with margins expanding from 12.2% to 17.5%. Net income rose at a CAGR of 26.1% to $822m.

Over the past 12 months, the company's stock has delivered solid returns of approximately 46.1%, reflecting a positive fundamental trajectory. In comparison, Masco Corporation’s stock delivered almost flat returns of about minus 0.8%.

Tecnoglass is currently trading at a P/E of 18.5x, based on the FY 25 estimated EPS of $4.1, which is higher than its 3-year historical average of 14.8x and that of Masco Corporation (18.4x). In terms of EV/EBIT multiple of 12.7x, based on the FY 25 estimated EBIT of $276.9m, which is higher than its 3-year historical average of 10.5x but lower than Masco Corporation’s valuation of 22.5x.

Tecnoglass is pretty much liked by five analysts, with three having ‘Buy’ ratings and two having ‘Hold’ ratings for an average target price of $92.3, implying an 18.2% upside from current level. Analysts’ views are further supported by an anticipated EBIT CAGR of 14.8% over FY 24-27, reaching $343m, with margins expanding from 25.3% to 30.2% in FY 27. In addition, analysts estimate a net profit CAGR of 14.5%, reaching $242m with margins expanding from 18.1% to 21.2% in FY 27, with EPS expected to increase to $5.3 in FY 27 from $3.4 in FY 24. Likewise, analysts estimate EBIT CAGR of 1.6% and net profit CAGR of 6% for Masco Corporation.

Overall, the company has demonstrated strong performance and growth potential, driven by strategic market share expansion and acquisitions. The company's robust financial health, positive analyst outlook, and competitive positioning against peers like Masco Corporation highlight its promising future. However, it is prone to some risks, including regulatory risks, trade & tariff risks, operational risks and cybersecurity risks.

Maya Patel