Q1 2024 Tecnoglass Inc Earnings Call

Good day and welcome to the technical Glass, Inc. First quarter 'twenty 'twenty four earnings conference call all participants will be in listen only mode.

Operator: Good day, and welcome to the Tecnoglass Inc. First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Brad Cray, IR. Please go ahead.

Operator: Should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

Operator: To withdraw your question. Please press Star then two please note. This event is being recorded.

Operator: I'd now like to turn the conference over to Brad Cray I R. Please go ahead.

Brad Cray: Thank you for joining us for Tecnoglass' first quarter 2024 conference call. A copy of the slide presentation to accompany this call may be obtained in the investors section of the Tecnoglass website. Our speakers for today's call are Chief Executive Officer Jose Manuel Daes, Chief Operating Officer Chris Daes, and Chief Financial Officer Santiago Giraldo.

Brad Cray: Thank you for joining us for technical asked this first quarter 2024 conference call.

Brad Cray: A copy of the slide presentation to accompany this call may be obtained on the investors section of the techno glass website.

Brad Cray: Our speakers for today's call are Chief Executive Officer, Jose Manuel Dias, Chief Operating Officer, Chris Diet, and Chief Financial Officer Santiago ground.

Brad Cray: I'd like to remind everyone that the matters discussed in this call, except for historical information, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth, and future acquisitions. These statements are based on Tecnoglass's current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary in a material nature from those expressed or implied by the statements herein due to changes in economic, business, competitive, and regulatory factors, and other risks and uncertainties affecting the operation of Tecnoglass's business.

Brad Cray: I would like to remind everyone that matters discussed in this call except for historical information are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 <unk>.

Brad Cray: Including statements regarding future financial performance future growth and future acquisitions. These.

Brad Cray: These statements are based on technical losses current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary in a material nature from those expressed or implied by the statements herein due to changes in economic business competitive <unk> regulatory factors and.

Brad Cray: Other risks and uncertainties affecting the operation of technical losses business.

Brad Cray: These risks, uncertainties, and contingencies are indicated from time to time in Tecnoglass's filings with the SEC. The information discussed during the call is presented in light of these risks. Further, investors should keep in mind that Tecnoglass's financial results in any particular period may not be indicative of future results. Tecnoglass is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise. I will now turn the call over to Jose Manuel, beginning on slide number four.

Brad Cray: These risks uncertainties and contingencies are indicated from time to time and techno glasses filings with the SEC.

Julio Alberto Romero: The information discussed during the call is presented in light of such risks.

Julio Alberto Romero: Further investors should keep in mind, the technical as its financial results in any particular period may not be indicative of future results technical asked is under no obligation to and expressly disclaims any obligation to update or alter its forward looking statements, whether as a result of new information future events changes in assumptions or otherwise.

Brad Cray: I will now turn the call over to Jose Manuel beginning on slide number four.

Julio Alberto Romero: Thank you Bob and thank you everyone for participating on today's call.

Jos Manuel Daes: Thank you Brad and thank you everyone for participating on today's call. I am proud of our team's resilience to start off 2024. Despite the challenging macroeconomic environment, we maintain an attractive aesthetic. We executed against a record multifamily commercial backlog, while navigating market pressures in a single-family residential sales town. This resulted in revenues of $192.6 billion.

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Jos Manuel Daes: The struggle to have reported before.

Jos Manuel Daes: Despite a challenging macroeconomic environment, we maintained a steady course, we executed against our vertical wolfberry, probably commercial buckle.

Jos Manuel Daes: Delegate bugger bushels.

Jos Manuel Daes: She'd been publicly reservation sales.

Jos Manuel Daes: This was all but revenues well below.

Jos Manuel Daes: Two 6 billion.

Jos Manuel Daes: Multifamily commercial revenues.

Jos Manuel Daes: Multifamily commercial revenues met our expectations and continue to look healthy based on continued backlog and pipeline growth in our main market. Growth in this business helped to partly cushion soft and physical family residential demand, which is now trending much better based on the level of orders seen during the last couple of months. Our record backlog of 916 million reflects growing demand for our product and healthy commercial activity in our key geography, with visibility into 2025. However, single-family residential performance lags due to inflationary constraints on consumer spending.

Jos Manuel Daes: The expectations are good news to look healthy based digital bug globe.

Jos Manuel Daes: Blood draws.

Jos Manuel Daes: Pain market.

Jos Manuel Daes: Gross.

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Jos Manuel Daes: You'll probably do as usual.

Jos Manuel Daes: Bob would you know just be much better, but also the level of orders.

Jos Manuel Daes: The last couple of months.

Jos Manuel Daes: Both local vote.

Jos Manuel Daes: 2 million.

Jos Manuel Daes: Reflects growing demand for April.

Jos Manuel Daes: Commercial activity in our key geographies.

Jos Manuel Daes: With visibility towards.

Jos Manuel Daes: Well he formerly was the original performers.

Jos Manuel Daes: Due to the pleasure Noetic, Australia to consumer spending.

Jos Manuel Daes: Record order trends in March and April were up over 12% compared to the same period in 2023, indicating an upward trajectory in this business. Additionally, our strategic entry into the vinyl window market is showing promising early results as quality activity is surpassing our expectations. We anticipate that vinyl owners will accelerate and become a more significant contributor to our results in the latter half of the year. Our commitment to efficient working capital management was evident in our strong cash flow from operations of $33 million in the first quarter. This cash generation, coupled with an expected reduction in capital expenditures, yielded free cash flow of $24 million during the quarter.

Jos Manuel Daes: More older Glenn's your module in April were all up over 12% compared to the same period in 2023.

Jos Manuel Daes: No blood project.

Jos Manuel Daes: Yeah.

Jos Manuel Daes: Additionally, <unk>.

Jos Manuel Daes: The window market.

Jos Manuel Daes: Promising early results.

Jos Manuel Daes: These were buzzing.

Jos Manuel Daes: Pleasure.

Jos Manuel Daes: We anticipate the bundle orders will accelerate that'd be calling a motion to.

Jos Manuel Daes: <unk> to.

Speaker Change: So our results later this year.

Jos Manuel Daes: Our commitment to efficient working capital newsroom was really really strong.

Jos Manuel Daes: Strong cash flow from operations was 33 million.

Speaker Change: First quote.

Jos Manuel Daes: These were almost in the range of global Windows spectrum.

Jos Manuel Daes: There's no sugar in capital expenditure.

Jos Manuel Daes: Yielding fruit does slow 24 billion.

Jos Manuel Daes:

Jos Manuel Daes: This was achieved despite facing headwinds from currency fluctuations in an unfavorable revenue mix. Furthermore, our solid capital position has provided us with the financial flexibility necessary to support our growth initiatives. This included ramping up production of idle windows and further enhancing a low-net-leverage profile. I am particularly pleased to report that we improved our net debt to adjust the dividend ratio to a record low of 0.1 times, as of March 31st,

Jos Manuel Daes: This was achieved despite facing headwinds.

Jos Manuel Daes: Gurus, you've looked places, they're not real favorable revenue mix.

Jos Manuel Daes: Furthermore, our solid capital position has provided you know we've been fundamental cause you relieved as necessary to support our growth initiatives.

Jos Manuel Daes: This included ramping up promotional bundle windows.

Speaker Change: Oh, no no deleverage profile.

Jos Manuel Daes: Particularly.

Jos Manuel Daes: Pleased to report that we improve on that.

Jos Manuel Daes: Back to adjusted EBITDA ratio.

Jos Manuel Daes: Hello, two one times.

Jos Manuel Daes: But 31st 2024.

Jos Manuel Daes: Looking ahead, we were.

Jos Manuel Daes: Looking ahead, we remain optimistic about the underlying drivers of our business. The attractiveness of the minor window market, combined with its enticing customer relationships and geographic diversification, positions us well to capture additional value. Despite the broader macro challenges affecting our industry, a robust pipeline of projects continues to support healthy activity across our end market. We look forward to delivering strong results as we move through 2020. I will now turn the call over to Chris to provide additional operating highlights.

Jos Manuel Daes: We made no payments to go about building.

Chris: So her business.

Chris: Uh huh.

Chris: The one who window about group combined with a drug.

Chris: Customer relationships and geographic diversification.

Chris: Positions us well to capture additional value.

Chris: Despite the broader macro challenges are good below industry <unk>.

Chris: Our robust pipeline of projects.

Chris: To support those.

Chris: Previously our girls, though.

Chris: We look forward to delivering stronger results.

Chris: Move through 'twenty 'twenty four.

Jos Manuel Daes: I will now turn the call over to Chris to provide additional operating highlights.

Christian T. Daes: Thank you, Jose Manuel. Moving to slide number 5. Our performance in the first quarter reflects our adaptability amidst a dynamic operating landscape. We ended the quarter with another record backlog of $916 million. These represented 1.8 times our LTM multifamily and commercial revenue. Our backlog remains a key element of our growth strategy, providing us with a multi-year view of projects in our pipeline for the multi-family commercial portion of our revenue. This side of our business is historically less sensitive to higher interest rates.

Chris: Thank you Jose Manuel moving to slide number five our performance in the first quarter reflects our adaptability amaze dynamic operating landscape.

Christian T. Daes: We ended the quarter with another record backlog of $916 million.

Christian T. Daes: These represented one eight times, our LTM multifamily and commercial revenues are.

Christian T. Daes: Our backlog remains a key element of our growth strategy, providing us with a multiyear view of projects in our pipeline on the multifamily commercial portion of our revenues.

Christian T. Daes: This side of our business is historically less sensitive to higher interest rates, we continue to experience solid levels of multifamily and commercial quoting and bidding activity as well as favorable demographic trends in Florida, and the southeast U S. In the first quarter.

Christian T. Daes: We continue to experience solid levels of multifamily and commercial quoting and bidding activity, as well as favorable demographic trends in Florida and the Southeast U.S. in the first quarter. This reinforces our confidence in our overall growth trajectory. Notably, within the Miami, Fort Lauderdale, and Palm Beach areas alone, Tecnoglass has substantial market share in the approximately 750 ongoing and planned projects.

Christian T. Daes: <unk>.

Christian T. Daes: These reinforces our confidence in our overall growth trajectory, notably within the Miami and Fort.

Christian T. Daes: Fort Lauderdale Palm Beach areas alone, taking our garage are substantial market share in the approximately 750 ongoing and planned projects.

Christian T. Daes: These positions us well to capitalize on the secular demand what do you mean these key U S markets.

Christian T. Daes: These positions are well positioned to capitalize on the secular demand within these key U.S. markets. Turning our attention to our product lines, customers' response to our vinyl offering has been exceptionally positive.

Christian T. Daes: Turning our attention to our product lines customers.

Christian T. Daes: Customers response to our vinyl offering has been exceptionally positive.

Christian T. Daes: The quoting activity of these products is surpassing our expectations and we are on our schedule degrees deliveries in the later half of 'twenty 'twenty four.

Christian T. Daes: The growing activity of these products is surpassing our expectations, and we are on a schedule to increase deliveries in the latter half of 2024. Our strategic move into the vinyl market, combined with the expansion of our showroom network, is poised to drive organic growth and significantly expand our addressable market. Moving to slide number 6.

Christian T. Daes: Our strategic move into the final market combined with the expansion of our showroom network is poised to drive organic growth and significantly expand our addressable market.

Christian T. Daes: Moving to slide number six.

Christian T. Daes: Our backlog has seen consistent sequential growth in each quarter since 2021. We expect this momentum in our project pipeline and the strong bidding activity we are seeing will help us maintain a strong book-to-bill ratio, which stood at 1.2 times as of Q1 2024. This adds to our track record of maintaining a book-to-bill ratio above 1.1 times over the past 13 consecutive quarters. Historically, roughly two-thirds of our reported backlog is invoiced over the following 12 months.

Christian T. Daes: Our backlog has seen consistent sequential growth in each quarter since 2021.

Christian T. Daes: We expect this momentum in our project pipeline and the strong bidding activity. We are seeing will help us maintain a strong book to bill ratio, which stood at 1.2 times as of quarter, one 'twenty 'twenty four.

Christian T. Daes: This adds to our track record of maintaining a book to bill ratio of above one one times over the past 13 consecutive quarters.

Christian T. Daes: Historically, roughly two thirds of our report the backlog or in voice over the following 12 months.

Christian T. Daes: With Big Charlie not project cancellation historical even the late stage installation of windows into largely completed buildings. We believe that these raise your provides a strong busy really D. When in Boise and despite the fact that certain external factors can cause temporary delays in deliveries.

Christian T. Daes: With virtually no project cancellation historically, even the late stage installation of windows into largely completed buildings, we believe that this ratio provides strong visibility on invoicing despite the fact that certain external factors can cause temporary delays in delivery. Looking at the favorable demographic trends we see in our key regions on slide number seven. Despite a mixed outlook for the U.S. housing market overall, our core markets in the southern states are benefiting from positive demographic trends.

Christian T. Daes: Looking at the favorable demographic trends, we see in our key regions on the slide number seven.

Christian T. Daes: Despite a mixed outlook for the U S housing market overall, our GOR magazine, the southern states are benefiting from positive demographic trends.

Christian T. Daes: Both multifamily and single-family housing stars are on an upward trajectory driven by population growth and a pronounced housing shortage. While we mostly serve R&R channels today, these February demographics are expected to sustain robust activity in our primary markets through 2024 and 2025. I will now turn the call over to Santiago to discuss our financial results and outlook for 2024.

Christian T. Daes: Both multifamily and single family housing starts are on an upward trajectory driven by population growth and a pronounced housing shortage.

Santiago: Why do we mostly serve R&R channels today. These favorable demographics are expected to sustain robust activity in our primary markets through 'twenty 'twenty four 'twenty 'twenty five.

Christian T. Daes: I will now turn the call over to Santiago.

Santiago: Of course, our financial results and outlook for 'twenty to 'twenty four.

Santiago: Thank you Christian.

Santiago Giraldo: Christian, turning to single-family residential on slide number 8. During the first quarter, we generated single-family residential revenues of $73 million, compared to $84 million in the prior year quarter. The year-over-year change was primarily due to slower sequential and year-over-year activity resulting from much higher interest rates and mortgage rates. As mentioned by Jose Manuel, however, this trend has reversed significantly, based on the level of orders for March and April, which came at a record level, up over 12% year-over-year.

Santiago: Turning to single family residential on slide number eight.

Santiago Giraldo: During the first quarter, we generated single family residential revenues of $73 million.

Santiago Giraldo: Compared to $84 million in the prior year quarter.

Santiago Giraldo: The year over year change was primarily due to slower sequential and year over year at PV, resulting from much higher interest and mortgage rates.

Santiago Giraldo: As mentioned by Jose Manuel However, this trend has reversed significantly based on the level of orders for March and April which came at a record level up over 12% year over year.

Santiago Giraldo: While higher interest rates drove weakness during the quarter, we continue to see organic growth opportunities in our single-family residential business due to a variety of tailwinds unique to Tecnoglass, namely... A widening dealer base enabled by short lead times, innovative product development, and demand for energy-saving products. Geographic expansion in Florida and growing brand recognition throughout the U.S. through showroom openings in key markets such as New York and Charleston. In its recent entry into the vinyl market, which significantly expanded our addressable market and provides a huge runway for revenue growth and product diversification once the business ramps up to full operating capacity.

Santiago Giraldo: While higher interest rates drove weakness during the quarter, we continued to see organic growth opportunities in our single family residential business.

Santiago Giraldo: Alrighty of <unk> unique technical glass.

Santiago Giraldo: Namely a.

Santiago Giraldo: Widening dealer base enabled by short lead times innovative product development and demand for energy savings products.

Santiago Giraldo: Geographic expansion in Florida, and growing brand recognition throughout the U S through showroom openings in key markets, such as New York, Charleston, and Hughes.

Santiago Giraldo: And our recent entry into the viner market, which significantly expanded our addressable market and provides a huge runway for revenue growth and product diversification once the business ramps up to full operating capacity.

Santiago Giraldo: On slide number nine.

Santiago Giraldo: On slide number nine, I would like to reiterate a few key points from our recent strategic entry into viral marketing. The enthusiasm and interest from our customers have been overwhelmingly positive, as evidenced by the high level of coordination. The favorable response from our customers reinforces our confidence in this strategic decision and underscores our potential for long-term success in this attractive market. Our showrooms now feature both our legacy aluminum window lines and our new vinyl design.

Santiago Giraldo: I would like to reiterate a few key points from our recent strategic entry into Idaho wind.

Santiago Giraldo: Then uzi awesome and interest from our customers has been overwhelmingly positive.

Santiago Giraldo: As evidenced by the high level of quoting activity.

Santiago Giraldo: The favorable response from our customers reinforces our confidence in this strategic decision.

Santiago Giraldo: Their scores our potential for long term success in this attractive market.

Santiago Giraldo: Our showrooms now feature both our legacy aluminum window lines and our new vinyl besides.

Santiago Giraldo: Additionally, we have successfully on boarded new distributors in northern Florida, yet since our last update.

Santiago Giraldo: Additionally, we have successfully onboarded new distributors in Northern Florida since our last stop, further solidifying our market. The opportunities we see within vinyl are incredibly promising, given the vast size of the addressable market across the U.S. Turning to drivers of revenue on slide number... Total revenues for the first quarter decreased 4.9% year over year to $192.6 million, in line with our expectations, due to lower single-family residential revenues and downtime related to maintenance in January.

Santiago Giraldo: Further solidifying our market presence.

Santiago Giraldo: The opportunities we see within vinyl are incredibly promising given the vast size of the addressable market across the U S.

Santiago Giraldo: Turning to the drivers of revenue on slide number 11.

Santiago Giraldo: Total revenues for the first quarter decreased four 9% year over year to $192.6 million.

Santiago Giraldo: In line with our expectations.

Santiago Giraldo: Due to lower single family residential revenues and downtime related to maintenance in January.

Santiago Giraldo: Our multifamily and commercial business continue to perform in line with internal expectations, as we executed on our growing back. Looking at the profit drivers on slide number 12. Adjusted EBITDA for the first quarter of 2024 was $51 million, representing an adjusted EBITDA margin of 26.5%. SG&A was $33.6 million compared to $34.1 million in the prior year quarter, with a decrease attributable to lower shipping and commission expenses partially offset by higher personnel expenses given annual salary adjustments that took place at the beginning of the year.

Santiago Giraldo: Our multifamily and commercial business continued to perform in line with internal expectations as we executed on our growing backlog.

Santiago Giraldo: Looking at the profit drivers on slide number 12.

Santiago Giraldo: Adjusted EBITDA for the first quarter of 2024 was $51 million, representing an adjusted EBITDA margin of 26, 5%.

Santiago Giraldo: SG&A was $33 6 million compared to $34 1 million in the prior year quarter with the decrease attributable to lower shipping and commission expenses, partially offset by higher personnel expenses given annual salary adjustments that took place at the beginning of the year.

Santiago Giraldo: Yeah.

Santiago Giraldo: As a percentage of total revenues, SG&A for the first quarter was 17.5% of revenue compared to 16.8% of revenue in the prior year quarter. The increase in SG&A as a percentage of revenue was primarily due to lower revenues year over year. First quarter gross profit was $74.7 million, representing a 38.8% gross market. This compared to gross profit of $107.8 million, representing a 53.2% gross margin in the prior year quarter. The year-over-year change in gross margin is primarily related to four main factors. First, we had an unfavorable effects impact of nearly 800 basis points.

Santiago Giraldo: As a percentage of total revenues SG&A for the first quarter was 17, 5% of revenue compared to 16, 8% of revenue in the prior year quarter.

Santiago Giraldo: The increase in SG&A as a percentage of revenue was primarily due to lower revenues year over year.

Santiago Giraldo: Yeah.

Santiago Giraldo: First quarter gross profit was $74 7 million.

Santiago Giraldo: Presenting at 38, 8% gross margin.

Santiago Giraldo: This compares to gross profit of $107 8 million, representing a 53, 2% gross margin in the prior year quarter.

Santiago Giraldo: The year over year change in gross margin is primarily related to four main factors first we had an unfavorable FX impact of nearly 800 basis points.

Santiago Giraldo: This relates to a non-cash accounting effect on inventory with the peso as the functional currency and the effect on peso-denominated costs and expenses against a steep revaluation of approximately 18% year-over-year. Excluding the FX impact on a constant currency basis with the prior year quarter, gross margin would have been 46.3%. Second, we saw a 200 basis points impact from temporary promotional activity implemented in the fourth quarter that was subsequently invoiced in the first quarter on certain single-family residential products, which has mostly concluded.

Santiago Giraldo: This related to a noncash accounting effect on inventory with the peso functional currency and the effect on peso denominated cost and expenses against that steep revaluation of approximately 18% year over year.

Santiago Giraldo: Excluding the FX impact on a constant currency basis with the prior year quarter gross margin would have been 46, 3%.

Santiago Giraldo: Second we saw a 200 basis points impact from temporary promotional activity implemented in the fourth quarter that was subsequently invoiced in the first quarter on certain single family residential products.

Santiago Giraldo: Which has mostly concluded.

Santiago Giraldo: Third we had an unfavorable revenue mix that.

Santiago Giraldo: We had an unfavorable revenue... that included more installation and stand-alone product sales. Software revenues resulted in lower operating levels. To a lesser extent, gross margin was also impacted by a temporary increase in energy costs due to dry weather conditions in Colombia. As a reminder, we estimate that each movement of 5% in FX equates to approximately 150 basis points in operating margin. While the year-over-year effects impact was pronounced, given the relative stability of the currencies over the last several months, the sequential impact from FX was much lower, with an estimated 150 basis points impact on margin from a 4% to 5% appreciation in the peso from the fourth quarter of 2023 to the first quarter of 20

Santiago Giraldo: That included more installation and Standalone product sales.

Santiago Giraldo: Fourth.

Santiago Giraldo: Software revenues resulted in lower operating leverage.

Santiago Giraldo: To a lesser extent gross margin was also impacted by a temporary increase in energy costs due to dry weather conditions in Colombia.

Santiago Giraldo: As a reminder, we estimate that each movement of 5% in FX equates to approximately 150 basis points in operating margins.

Santiago Giraldo: While the year over year FX impact was pronounced.

Santiago Giraldo: Given the relative stability of the currencies over the last several months.

Santiago Giraldo: Sequential impact from FX was much lower.

Santiago Giraldo: With an estimated 150 basis points impact to margins from a 4% to 5% appreciation in the peso from the fourth quarter of 2023 through the first quarter of 2024.

Santiago Giraldo: Other factors impacting our sequential gross margin compared to 42, 6% last quarter included a decrease in operating leverage given lower revenues.

Santiago Giraldo: Other factors impacting our sequential growth margin compared to 42.6% last quarter included a decrease in operating leverage, given lower revenues, temporary promotional activity in residential, and higher operating costs for personnel, given higher salary costs from company-wide annual salary increases which take place at the beginning of each year, and a temporary increase in energy. Now, looking at our strong cash flow and improved leverage on slide number, The first quarter showcased another period of solid operating cash flow, amounting to $33.4 million, primarily driven by effective working capital. Our capital expenditures total $9.9 million, encompassing investments in land, our entry into the vinyl window market, and past investments in automation and increased operational capacity.

Santiago Giraldo: The temporary promotional activity in residential and higher operating costs for personnel.

Santiago Giraldo: Higher salary costs from company wide annual salary increases, which take place at the beginning of each year.

Santiago Giraldo: And a temporary increase in energy costs.

Santiago Giraldo: Now looking at our strong cash flow and improved leverage on slide number 13.

Santiago Giraldo: The first quarter showcase another period of solid operating cash flow.

Santiago Giraldo: Mounting to $33 4 million.

Santiago Giraldo: Primarily driven by effective working capital management.

Santiago Giraldo: Our capital expenditures totaled $9 9 million encompassing investments in land are entering to the vinyl window market and past investments in automation and increasing operational capacity.

Santiago Giraldo: With our increased installed capacity, we anticipate a significant reduction in capital expenditures for the remainder of 2024.

Santiago Giraldo: With our increased install capacity, we anticipate a significant reduction in capital expenditures for the remainder of 2020. We are pleased to continue our track record of driving additional value for our shareholders through Cash TV. We returned capital to shareholders through $4.2 million in dividend payments during the quarter and continue to have roughly $26 million available for share repurchases within our current authorization period. Net leverage remains at a record low 0.1 times net debt to LTM adjusted EBIT, a change from the prior year quarter. As of March 31st,

Santiago Giraldo: We were pleased to continue our track record of driving additional value for our shareholders through our cash dividend.

Santiago Giraldo: We returned capital to shareholders through $4 2 million in dividend payments during the quarter and continued to have roughly 26 million available for share repurchases within our current authorization.

Santiago Giraldo: Net leverage remained at a record low 0.1 times net debt to LTM adjusted EBITDA unchanged from the prior year quarter.

Santiago Giraldo: As of March 31.

Santiago Giraldo: We had a cash balance of $136 million and availability under our Commuter Revolver Credit Facility of $170 million, resulting in total liquidity of approximately $306 million. This gives us significant financial flexibility to drive additional value in our business. On slide 14, we highlight our success in generating superior returns for shareholders, performing better than the industry average. Our profitability and enhanced cash flow generation over the past three years have yielded significant above-average returns, further validating our strategic approach. Now, moving to our outlook on slide number six. The themes we highlighted during our last earnings call remain very consistent with what we are seeing right now, with several updates on CERN dynamics.

Santiago Giraldo: We had a cash balance of 136 million and availability under our committed revolver credit facilities of $170 million.

Santiago Giraldo: Resulting in total liquidity of approximately $306 million. This gives us significant financial flexibility to drive additional value in our business.

Santiago Giraldo: On slide 14, we highlight our success in generating superior return for our shareholders are performing the industry average.

Santiago Giraldo: Our profitability and enhance cash flow generation over the past three years have yielded significant above average returns further validating our strategic approach.

Santiago Giraldo: Now moving to our outlook on slide number 16.

Santiago Giraldo: The themes, we highlighted during our last earnings call remain very consistent with what we're seeing right now with several updates to certain dynamics.

Santiago Giraldo: We remain confident in our ability to produce another year of revenue growth based on the visibility from our growing backlog and by the organic growth drivers we highlighted earlier, including our vinyl initiative, showroom openings, and geographical expansion. That being said, given the current lack of clarity on U.S. macroeconomic factors, mainly the trajectory of interest rates going forward, we are providing three different scenarios for how we see our results playing out for the food. These scenarios are predicated on a few main factors. First.

Santiago Giraldo: We remain confident in our ability to produce another year of revenue growth based on the visibility from our growing backlog and by the organic growth drivers, we highlighted earlier, including our vinyl initiatives showroom openings and geographical expansion.

Santiago Giraldo: That being said given the current lack of clarity on U S. Macroeconomic factors, mainly the trajectory of interest rates going forward, we are providing three different scenarios for how we see our results playing out for the full year.

Santiago Giraldo: These scenarios are predicated on a few main factors.

Santiago Giraldo: A slower start to the year for single-family residential revenue and the durability of the expected pickup later in the year, given recent record order trends, coupled with the expected ramp-up in vinyl sales in the second half of the year. Second, we anticipate an increased mix of revenues from installation and standalone product sales compared to 2020. Third, a less volatile FX rate since the end of 2023 results in a Colombian peso that is roughly 8 to 12 percent stronger than the average FX rate for 2023 based on the current and projected 2024 FX levels, and fourth.

Santiago Giraldo: First.

Santiago Giraldo: A slower start to the year for single family residential revenues.

Santiago Giraldo: And the durability of the expected pickup later in the year given recent record order trends coupled with the expected ramp up in vinyl sales in the second half of the year.

Santiago Giraldo: Second we anticipate an increase mix of revenues from installation in a standalone product sales compared to 2023.

Santiago Giraldo: Third a less volatile FX rate since the end of 2023 results you know Colombian peso that is roughly 8% to 12% stronger than the average FX rate for 2023 based on the current and projected 2024 FX levels.

Santiago Giraldo: And for.

Santiago Giraldo: All scenarios assume the execution of large projects within our multifamily and commercial backlog, staying within the current scheduled timeline, and provide different levels of activity for smaller, short-term duration projects, which tend to be more rate-centered. In addition, our scenarios incorporate a range of outcomes for U.S. Fed interest rate decisions over the years. Our base case scenario assumes mid-single-digit revenue growth of 5%, resulting in full year 2024 revenues of approximately $875 million and adjusted EBITDA of $267 million.

Santiago Giraldo: All scenarios assume the execution of large projects within our multifamily and commercial backlog staying within current scheduled timeline.

Santiago Giraldo: And provide different levels of activity for smaller short term duration projects, which tend to be more rate sensitive.

Santiago Giraldo: In addition, our scenarios and incorporate a range of outcomes for U S fed interest rate decisions through year end.

Santiago Giraldo: Our base case scenario assumes mid single digit revenue growth of 5%.

Santiago Giraldo: The resulting in full year 2024 revenues of approximately $875 million and adjusted EBITDA of $267 million.

Santiago Giraldo: Based on the range of scenarios, we have laid out.

Santiago Giraldo: We have also factored in both a downside and an upside. These scenarios assume revenue growth of 2% and up to 9% year over year, delivering adjusted EBITDA of $250 and $285 million, respectively. As mentioned earlier, we have seen a more robust pace of activity in single-family residential, with orders reaching record levels in March and April.

Santiago Giraldo: We have also factoring both downside and an upside case.

Santiago Giraldo: These scenarios assume revenue growth of 2% and up two 9% year over year delay.

Santiago Giraldo: Delivering adjusted EBITDA of 250, and 285 million respectively.

Santiago Giraldo: As mentioned earlier, we have seen a more robust pace of activity in single family residential with orders reaching record levels in March and April.

Santiago Giraldo: While we are optimistic about the strength of our key geographers, the momentum within our new vinyl product, and Shared Gain Opportunities, we acknowledge that higher interest rates could continue to weigh down on consumer purchasing. Combined with our higher expected growth in installation and stand-alone product sales, this has the residual effect of a less favorable mix, which in turn pressures gross margins year over year, which we expect to partially or fully offset through operating leverage, depending on the revenue scenario.

Santiago Giraldo: While we are optimistic on the strength of our key geographies the momentum with our new vinyl products and.

Santiago Giraldo: And share gain opportunities, we acknowledged that higher interest rates could continue to weigh down on consumer purchasing decisions.

Santiago Giraldo: Combined with our higher expected growth in installation in a stand alone product sales. This has had a residual effect of a less favorable mix, which in turn pressures gross margins year over year, which we expect to partially or fully offset through operating leverage depending on their revenue scenario.

Santiago Giraldo: On a sequential basis, we expect gross margins to step up from the levels seen in first quarter.

Santiago Giraldo: On a sequential basis, we expect gross margins to step up from the levels seen in the first quarter based on a more stable FX rate and favorable operating leverage from a sequential increase in revenue. Therefore, based on our scenarios, we factor in an expectation for full-year gross margin to be in the low to mid-40s range, accounting for a softer than expected first quarter. All three scenarios assume healthy free cash flow growth year-over-year, given the majority of capital expenditures related to facility automation, expansion, and vinyl-related investments have already been completed.

Santiago Giraldo: Based on a more stable FX rate and favorable operating leverage from a sequential increase in revenues.

Santiago Giraldo: Therefore based on our scenarios, we factor in our expectation for full year gross margin to be in the low to mid Forty's range accounting for a softer than expected first quarter.

Santiago Giraldo: All three scenarios assume healthy free cash flow growth year over year, given the majority of capital expenditures related to facility automation expansion and vinyl related investments having being completed.

Santiago Giraldo: In summary, we remain optimistic in the overall strength of our business. Our growing backlog of multifamily and commercial projects and promising activity in our vinyl business should support market share expansion and value creation in the quarters and years to come. With that, we will be happy to answer your questions. Operator, please open the line for questions. Thank you. We will now begin the question and answer session.

Santiago Giraldo: In summary, we remain optimistic in the overall strength of our business are growing by the level of multifamily and commercial projects and promising activity in our vinyl business to support market share expansion and value creation in the quarters and years to come.

Santiago Giraldo: With that we will be happy to answer your questions opera.

Santiago Giraldo: Operator, please open the line for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Stanley Elliott with Stifel. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: At this time, we will pause momentarily to assemble our roster.

Operator: The first question comes from Stanley Elliott with Stifel. Please go ahead, hey, good.

Stanley Stoker Elliott: Hey, good morning everybody. Thank you for the question. Could you all help us a little bit in terms of, you know, kind of the 875, kind of the midpoint, the split between the commercial and the residential in that, and then maybe some discussions around growth implied in the new guide.

Stanley Stoker Elliott: Morning, everybody. Thank you for the question.

Stanley Stoker Elliott: Could you will help us a little bit in terms of kind of let's just talk about the 875 kind of the midpoint.

Stanley Stoker Elliott: The split between the commercial and the residential in that and then maybe some some discussions around growth implied in the new guide.

Santiago Giraldo: Yeah, I'll take that Stan. We are making in commercial being about 57% of the total revenue stream. And as you would see in the deck that we put together, that implies that we do about 20 million in vinyl in the second half of the year, and that we see some sequential growth based on the schedule of the projects that we have in line on the commercial segment right and then on the legacy business basically non-vinyl on the legacy business, We assume that we obviously are going to invoice the orders that came in at record levels for March and April, and that that's sustainable through June, stepping down to more normalized levels, if we are able to sustain the amount of orders that we're seeing.

Stanley Stoker Elliott: Yes.

Speaker Change: I'll take that Stan we are baking in commercial being about 57% of the total revenue stream.

Santiago Giraldo: We rescued being 43%.

Santiago Giraldo: And as you would see in the deck that we put together that implies that we do about $20 million in vinyl in the second half of the year.

Santiago Giraldo: And we see some sequential growth based on the schedule of the projects that we have in line on the commercial segment right and then on the legacy business basically non vinyl on the legacy business.

Santiago Giraldo: We assumed that we obviously are going to invoice.

Santiago Giraldo: The orders that came in at record levels for March and April.

Santiago Giraldo: That that's sustainable through June.

Santiago Giraldo: Stepping down to more normalized levels, if we are able to sustain yes.

Santiago Giraldo: The amount of orders that we're seeing right now obviously you get more towards the upside case.

Santiago Giraldo: And, you know, talking about the full year guide, maybe I can help you understand kind of what had changed, I guess, since February when you all were looking at double-digit... We had, it looked like, it sounds like you had softer order growth before it picked up. Maybe just kind of help frame out some of the bigger changes within the overall top line expectation.

Santiago Giraldo: And I guess kind of talking about the full year guide.

Santiago Giraldo: Maybe I guess, what help us kind of what had changed I guess since February when you all were looking at double digit.

Santiago Giraldo: We had it looked like it sounds like you had softer order growth before it picked up.

Santiago Giraldo: You may be just kind of help frame out some of the some of the bigger changes within within the overall top line expectations.

Santiago Giraldo: Well, I think that the main thing is the change in the outlook on interest rates. I mean, back then, we were really talking about definitely three cuts and better overall psychology, whereas right now, we're talking about no cuts or even a hike, right? So there's clearly been a change in overall macro conditions. That being said, as I just reiterated, April and March orders came in at record levels. So we'll see if that is definitely a trend reversal and we are able to get to the double-digit growth that we are outlining on the upside case. So, you know, we're still saying that that is a possible scenario. It just needs to be that certain things are met.

Santiago Giraldo: I think the main thing is the change on the outlook on interest rates. I mean back then we were really talking about definitely three courts and better overall psychology, whereas right now we're talking about <unk> or even a hike right. So there's clearly been a change in overall macro conditions.

Santiago Giraldo: <unk> said I'd just reiterate it April and March orders came in a regular levels. So we'll see if that is definitely a trend reversal and we are able to get to the double digit growth that we are outlining.

Santiago Giraldo: The upside case, so you know worst we're still saying that that is a possible case, he just needs to be that sort of things.

Santiago Giraldo: Our met.

Santiago Giraldo: Yes.

Jos Manuel Daes: You guys had a nice showing at IBS. Curious if that's what helped drive some of the strong orders in March and April, or was that more from some of the retail and showrooms that are out there? Just any color there would be great.

Santiago Giraldo: It had a nice showing it at I B S curious kind of if if that's what helped drive some of the strong orders in March and April or was that more from some of the retail and showrooms that are out there just any color there would be great.

Jose: Well, let me tell you this is jose.

Jos Manuel Daes: Well, let me tell you this. This is Jose.

Jos Manuel Daes: Customers are appreciating the value proposition that we have in our windows. They're better performing, better looking, more modern. And also, all our glasses encourage a lot of people to see the products that they don't normally see anywhere else, so we're very happy about what happens at those shows, and we're going to increase the amount of space that we're going to get in the next one.

Jose: Go Super helpful. Appreciate it.

Jos Manuel Daes: The value proposition that we have no windows.

Jos Manuel Daes: We'll be.

Jos Manuel Daes: Looking more modern.

Jos Manuel Daes: And also all our glass is.

Jos Manuel Daes: Hum.

Jos Manuel Daes:

Jos Manuel Daes:

Jos Manuel Daes: The shows.

Jos Manuel Daes: A lot of people to see the books.

Jos Manuel Daes: The orbit issues or anywhere else. So we're very happy about.

Jos Manuel Daes: What happens, though shows that we're going to Greece.

Jos Manuel Daes: About the space that we're going to go there.

Jos Manuel Daes: Excellent.

Stanley Stoker Elliott: Perfect, guys. That's it for me.

Speaker Change: Perfect guys. That's it for me. Thanks, so much best of luck.

Stanley Stoker Elliott: <unk>.

Speaker Change: The next question comes from Sam darker Smith with Raymond James. Please go ahead.

Stanley Stoker Elliott: Thanks so much, and best of luck!

Samuel John Darkatsh: The next question comes from Sam Darkatsh with Raymond James. Please go ahead.

Speaker Change: Jose Manuel Chris Santiago, how are you this morning.

Samuel John Darkatsh: Jose Manuel, Chris, and Santiago, how are you this morning? Good morning. How are you? I'm well, thank you. Three quick questions, if I could. I guess the obvious one would be, Santiago, can you give us a framework of what to expect for sales, gross margin, and EBITDA for the second quarter?

Samuel John Darkatsh: Good morning, Laurie Good morning, where you are and I'm well. Thank you.

Samuel John Darkatsh: Three quick questions if I could.

Samuel John Darkatsh: I guess the obvious one would be Santiago how would.

Santiago Giraldo: Yeah, so the base case assumes gross margin trending kind of in line with Q4 of last year, and we kind of highlighted the premises for that. And most of that pickup is coming from what we're expecting in terms of operating leverage, given sequential increasing revenues. And that is supported, obviously, by the orders that we discussed earlier, which on the residential side are coming at a record level in the last two months. From an SG&A perspective, we don't expect anything really out of the ordinary, so, you know, that should be flat. The pickup comes from operating leverage on higher sequential sales for Q2 over Q1.

Samuel John Darkatsh: Would you.

Speaker Change: Can you give us a framework of what to expect for sales gross margin and EBITDA for the second quarter.

Santiago Giraldo: Yeah. So the base case assumes gross margin trending kind of in line with Q4 of last year.

Santiago Giraldo: And we kind of highlighted the premises for for that.

Santiago Giraldo: And most of that pickup is coming from what we're expecting in terms of operating leverage given the sequential increase in revenues.

Santiago Giraldo: And that is supported obviously by the orders that we discussed earlier, which on the residential side are coming at a record level in the last two months.

Santiago Giraldo: From an SG&A perspective, we don't expect anything really out of the ordinary. So you know that that should be flattish the pickup comes from operating leverage.

Santiago Giraldo: On on higher sales sequentially for Q2 over Q1.

Santiago Giraldo: So what what sort of sequential bump.

Santiago Giraldo: So what sort of sequential bump might you expect in sales then in the second quarter?

Santiago Giraldo: Expect in sales than in the second quarter.

Speaker Change: I would say, we're probably modeling around.

Santiago Giraldo: I would say we're probably modeling around 210 to 225, somewhere around there. I mean, that's kind of a broader range, but at this point in time, I think that should be coming towards the higher end of that range.

Santiago Giraldo: 210 to $2 25 somewhere around there I mean, that's kind of a broader range, but at this point I'm I think that should be coming towards the higher end of that range.

Speaker Change: Got you and then the.

Samuel John Darkatsh: Gotcha. And then the other...

Samuel John Darkatsh: Yeah.

Santiago Giraldo: I know you were considering, or you continue to consider, hedging out your exposure to the Colombian peso. Obviously, there's sensitivity within the peso within the upper and lower band of your range. Can you talk about where you are right now in terms of the thinking, whether it's with you and the board in terms of hedging out the peso so we don't have these volatility issues?

Samuel John Darkatsh: I know you were considering or you continue to consider hedging out your exposure to the Colombian peso, obviously, there's sensitivity within the peso within the upper and lower band of your range can you talk about where you are right now in terms of the thinking whether it's with you folks onto the board.

Santiago Giraldo: In terms of hedging.

Santiago Giraldo: Hedging out the peso. So we we don't have these.

Santiago Giraldo: These volatility issues.

Santiago Giraldo: Yeah, if you look at the volatility, I mean, we're clearly experiencing really tough quarters. Last quarter and this quarter were completely outliers based on the all-time FX relationship of the currencies, right? I mean, we hit an all-time low in Q4 and Q1 of this year, but if you look at how it's trended. Q2 steps down from $4,700 to $4,400, and Q3 is actually averaging, since Q3 of last year, it's been averaging at the same kind of level for the last nine months. So I think it's not expected that you see this type of volatility. It's clearly an outlier.

Speaker Change: Yeah. If you look at the the volatility I mean, we're we're clearly lapsing really tough quarters last quarter and this quarter, we're completely outliers based on on the all time FX relationship of the currencies right. I mean, we hit an all time low in Q4 and Q1 of this year, but if you look at.

Santiago Giraldo: How it's trended Q.

Santiago Giraldo: Q2 steps down from 4700 4400 in Q3 is actually averaging since Q3 of last year. He's been averaging at the same kind of level for the last nine months I think is not expected that you see this type of volatility is clearly.

Speaker Change: An outlier and I think the comps definitely get much easier as we move along into into the year. We don't have any reason to expect.

Santiago Giraldo: And I think the comps definitely get much easier as we move along into the year.

Santiago Giraldo: At the peso will vary the rest of the year based on the projections from from macro economies.

Christian T. Daes: And also, excuse me, and also let me add, this is Christian Daes. We have tried in the past... 15, 20 years to hedge on aluminum, hedge on the dollar, and somehow, we have taken even the best banks that do the job. And in all of them, we ended up always losing. I mean, 70% of the time we missed the upside or the downside because we hedged it. So I told Santiago yesterday that.

Santiago Giraldo: So you're doing also.

Christian T. Daes: Excuse me and also let me add this is Jim.

Christian T. Daes: <unk>.

Christian T. Daes: We have tried in the past.

Christian T. Daes: 15, 20 years to hedge on aluminum hedge on the dollar.

Christian T. Daes: Somehow we have taken even the best banks that do these days.

Christian T. Daes: <unk>.

Christian T. Daes: And in all of them, we ended up always loosen I mean, 70% of the time, we missed the day the upsides the downsides.

Christian T. Daes: Because we hedge so I told San Diego yesterday that.

Christian T. Daes: You know, the rate is at a place where it's.., not going to move. If you look back 24 months ago, it used to be at this rate. So when he went up to 5,000 or 5,300, he was, a special case for a few months and then it went back to normal so instead of wasting time maybe playing God we want to you know let it play out because at the end we don't so so we don't you know we don't start to make moves that may and we may end up losing even more money so uh we feel very comfortable where we are obviously we keep looking at the hedging to see when it would make sense but right now it looks like it doesn't there is no way it can go down anymore i mean the country will not support that type of exchange rate

Christian T. Daes: The rate is at a place where he is now going to move if you look at if you look back 24 months ago. He used to be at this rate.

Christian T. Daes: When you went up to 5000 or 5300 <unk> it was.

Christian T. Daes: A special case for a few months and then he went back to normal so instead of wasting time maybe.

Christian T. Daes: Playing got we wanted to.

Christian T. Daes: Let it play out because at the end we don't know.

Christian T. Daes: So we don't you know we don't start to make moves that may.

Christian T. Daes: We may end up losing even more money. So we feel very comfortable where we are.

Christian T. Daes: Usually we keep looking at hedging to see when it would make sense, but right now it looks like.

Christian T. Daes: It doesn't mean, there's no way you can go down anymore, I mean, the country will not support that type of exchange rate.

Samuel John Darkatsh: Thank you for that color, Chris. My last question: there was no share repo in the quarter. I think there's a reasonable chance that you folks get included within the Russell 2000, at least, if not this quarter, certainly soon. Talk about your near-term capital allocation priorities, especially around share repurchase, knowing that that might be on the horizon, so the stock would act accordingly.

Speaker Change: And then my last question. Thank you for that color Chris.

Samuel John Darkatsh: My last question there was no share repo in the quarter I think there's a there's a reasonable chance that you folks get included within the Russell 2000, and at least if not this quarter certainly soon.

Samuel John Darkatsh: Talk about your near term capital allocation priorities, especially around share repurchase.

Samuel John Darkatsh: Knowing that that might be on the horizon. So the stock with a act accordingly.

Santiago Giraldo: Yeah, that's always on the board's mind and obviously a topic of discussion in each one of them and will definitely be opportunistic. I think there's a great chance to return value to shareholders via not only repurchases but also dividends. The balance sheet is as flexible as it's ever been.

Speaker Change: Yeah. That's that's always on the on the Board's mind, and obviously a topic of discussion in each one of them and we'll definitely be opportunistic I think there's a great chance to return value to shareholders via not only repurchases, but also dividends and the balance sheet is as flexible as it's ever been so.

Santiago Giraldo: So just to answer that, I mean, we'll be opportunistic. And obviously, we have more than half of that program still available to us to execute, so. You know, we'll see how it plays out, but definitely, there's a lot of value to be created. Very helpful

Santiago Giraldo: Just to answer that I mean, we'll we'll be opportunistic and obviously, we have more than half of that program still available to us to execute set so.

Santiago Giraldo: Well, we'll see how it plays out but definitely there's a lot of value to be created there.

Samuel John Darkatsh: Very helpful. Thank you, gentlemen. All right.

Speaker Change: Very helpful. Thank you gentlemen, alright.

Speaker Change: Alright, thank you.

Samuel John Darkatsh: The next question comes from Tim Voice with Baird. Please go ahead.

Timothy Ronald Wojs: The next question comes from Tim Wojs with Barrett. Please go ahead.

Timothy Ronald Wojs: Hey, everybody good morning.

Timothy Ronald Wojs: Hey, everybody. Good morning. Hey, good morning.

Timothy Ronald Wojs: Hey, good morning, maybe just maybe just.

Timothy Ronald Wojs: Maybe just maybe just, you know, to step back, just, you know, Jose Manuel. I mean, your backlog continues to grow both sequentially and year over year, and you mentioned a pretty good pipeline of kind of activity around quoting and bidding and things like that. So I guess you could just add a little bit of flavor in terms of kind of what you're seeing on the ground, you know, from both a quoting and maybe a pricing perspective. And would you expect the pack, the backlog, you know, to continue to grow here in the

Timothy Ronald Wojs: Setback just hurting.

Timothy Ronald Wojs: Jose Manuel you talked about I mean, your backlog continues to grow both sequentially and year over year.

Timothy Ronald Wojs: And you mentioned, a pretty good pipeline as kind of activity around quoting and bidding and things like that so I guess could you just add a little bit of flavor in terms of kind of what youre seeing on the ground from both our quoting and maybe a pricing perspective and would you expect the backlog to.

Timothy Ronald Wojs: To continue to grow here in the near term.

Timothy Ronald Wojs: The backlog will continue to grow this is called usually grow every day.

Jos Manuel Daes: The backlog will continue to grow, I mean it is continuing to grow every day because we are voicing much less than the jobs that were closing. I mean, this past month, we closed much more than what we imported.

Jos Manuel Daes: Because we believe bulge live.

Jos Manuel Daes: The jobs that were closing.

Jos Manuel Daes: I mean.

Jos Manuel Daes: This move.

Jos Manuel Daes: <unk> closed too much more than what were your voice.

Jos Manuel Daes: And we see the trend. I mean, Florida is booming everywhere. It's not only Miami, it's for Florida, Boca Raton, Pompano Beach, Western Beach is crazy. And then you go up to Jacksonville, Tampa.

Jos Manuel Daes: We see the trend I mean, Florida is boom.

Jos Manuel Daes: Everywhere.

Jos Manuel Daes: But he is fort Lauderdale, Boca Raton pulp.

Jos Manuel Daes: <unk> Beach West Palm Beach is crazy.

Jos Manuel Daes: Then you go up to Jacksonville Tampa.

Jos Manuel Daes: We're seeing a lot of activity, and we are very enthusiastic because all the jobs are fully funded. It's not like they're playing games. So we see the backlog growing, and just remember that in the backlog, there is nothing for retail. And retail is coming up, I mean, resignation. So we believe that after all the new products from July on, everything is going to turn around, but we want to be conservative on the outlook. Anyhow, we believe we're going to do good, very good, in the second semester.

Jos Manuel Daes: We're seeing a lot of activity.

Jos Manuel Daes: Were very enthusiastic that goes all the jobs are fully funded.

Jos Manuel Daes: Gabe so we see the <unk>.

Jos Manuel Daes: <unk> growing.

Jos Manuel Daes: Just remember the backlog.

Jos Manuel Daes: There is no big over retail retail is Colby <unk>.

Jos Manuel Daes: The residual.

Jos Manuel Daes: So we believe.

Jos Manuel Daes: Uh huh.

Jos Manuel Daes: After all the new products.

Jos Manuel Daes: From July one.

Jos Manuel Daes: Everything is going to toward the road.

Jos Manuel Daes: But we wanted to be conservative.

Jos Manuel Daes: Look anyhow, we believe we're going to do good very good over the cycles.

Speaker Change: Okay. Okay got you that's helpful. And then I guess, just Santiago on the residential side I mean, if you kind of plug in the residential kind of expectation for the year I think you get something like $375 million or something like that for sale for resi. So is the math really just kind of $20 million or so.

Timothy Ronald Wojs: Okay, okay, gotcha. That's helpful. And then I guess just, you know, Santiago, just on the residential side. I mean, if you kind of plug in the residential kind of expectation for the year, I think you get something like 375 million or something like that for sales. For Rezi, so is the math really just kind of 20 million or so in base case vinyl, and then you get, you know, will that be kind of 6-7% kind of legacy business? Is that kind of the math?

Timothy Ronald Wojs: Base case vinyl and then you get the kind of six 7% kind of legacy business is that kind of the math.

Santiago Giraldo: Yeah, I mean, your math is right on based on the percentages that I just gave earlier and that's a significant pick up from from Q1, obviously and you know us as we mentioned.

Santiago Giraldo: Yeah, I mean your math is right on, based on the percentages that I just gave earlier. And that's a significant pick-up from Q1, obviously, and as we mentioned, and the presentation sequential orders were up over 20%, right? So in Q2, we already have really good visibility on what's coming, right? I think that the key ingredient here is whether that continues to be sustainable, and I think that's going to be partially related to what happens with interest rates and overall psychology. That's why we wanted to lay out the different cases. But on the base case, your math is right on.

Timothy Ronald Wojs: Okay, good. And then the last one I have, you mentioned in the slides just smaller commercial projects. I guess what exactly, and if you want to just give some definitional examples of what that is, and just how big of a percentage of the commercial business that is for you guys.

Timothy Ronald Wojs: The presentation sequential orders were up over 20% right. So on Q2, we already have really good visibility on what's coming right I think the key ingredient here is whether it continues to be sustainable and I think that's gonna be partially related to what happens with.

Timothy Ronald Wojs: Interest rate and an overall psychology and.

Speaker Change: That's why we wanted to lay out the different cases, but on the base case, you're your math is right on.

Timothy Ronald Wojs: Okay. Okay, and then the last one I had just you mentioned in the slides just smaller commercial projects.

Timothy Ronald Wojs: I guess, what exactly I guess I wanted to just give some definitional examples of what that is and just how big of a percentage of the commercial business that is for you guys.

Santiago Giraldo: Yeah, think about that, Tim. I mean, you have your, like...large projects, multi-family that are multi-year projects, but you also will have maybe like a car dealership or something really small, like a street mall, something to that extent. And that comes in, you know, much more spot on in nature, right? I mean, that's something that you could get in March and be invoiced in the same year. And typically, that will range, you know, between 10, 12 million, 10, 13 million per month. So depending on where we end up, what kind of range we have for commercial, we end up on the higher end or the lower end of these three different scenarios. OK.

Speaker Change: Yeah, I think think about that team I mean, you have your like.

Santiago Giraldo: Large projects multifamily that are multi year projects, but you also will have maybe like a car dealership or something like really small like a sweet ball.

Santiago Giraldo: Something to that extent and dotcom team you know much more spot in nature right. I mean, that's something that you could get in March in and be Invoiced in the same year and typically that will range between 10 to 12 million 13 million per month.

Santiago Giraldo: So depending on where we end up at what kind of range on light commercial we ended up on the higher end or the lower end of these three different scenarios.

Timothy Ronald Wojs: Okay, okay, that's helpful. Thanks for the call, and we'll talk to you soon.

Tim: Okay. Okay. That's helpful. Thanks.

Speaker Change: Thanks for the color and we'll talk to you Sam Yep.

Speaker Change: Thank you.

Timothy Ronald Wojs: The next question comes from Alex Rygiel with B Riley FBR. Please go ahead.

Alexander John Rygiel: The next question comes from Alex Rygiel, with B. Reilly, FBR. Please go ahead.

Alexander John Rygiel: Good morning, gentlemen, and thank you for taking my question a couple of questions here first.

Alexander John Rygiel: Morning, gentlemen. Thank you for taking my question. A couple of questions here. First, could you provide a little bit greater detail as it relates to vinyl windows and the successes to date, maybe either quantifying quoting or orders or number of dealers or manufacturing lines, just a little bit more detail there. Okay. Let me explain.

Alexander John Rygiel: Could you provide a little bit greater detail as it relates to vinyl windows and the successes to date, maybe either quantify or quoting or orders or number of dealers or manufacturing lines, just a little bit more detail there.

Jos Manuel Daes: Okay, let me explain what happened. We launched the line. And since we didn't know everything about the new line, we made a few mistakes. And it wasn't a complete line. So when we went to our dealers, they said, Oh, yes, I like what you're doing, but you're missing something. And if you don't have it, I cannot go to a complete line for my costume.

Speaker Change: Okay, Let me explain what it is.

Jos Manuel Daes: We have loans.

Jos Manuel Daes: Right.

Jos Manuel Daes: She is we really know everything about the airline.

Jos Manuel Daes: We made a few mistakes.

Jos Manuel Daes:

Jos Manuel Daes: It wasn't a complete so when we went to our dealers.

Jos Manuel Daes: Oh, yes.

Jos Manuel Daes: What are you doing.

Jos Manuel Daes: This growth.

Jos Manuel Daes: Beautiful.

Jos Manuel Daes: Go into a completed.

Jos Manuel Daes: Costumers.

Jos Manuel Daes: And like that, we had a few hurdles, even with the supplier of our extrusions. And we are on the way of redeveloping everything. And, like I said in the previous question, We are going to be ready by the end of June with a complete line, and we know and expect the second semester to be much, much better. And we're being very conservative on the outlook for the second semester, but this is going to... 10-fold by next year for sure.

Jos Manuel Daes:

Jos Manuel Daes: We had a few hurdles.

Jos Manuel Daes: Even with the supplier of our extrusion.

Jos Manuel Daes: And we are the way to <unk>.

Jos Manuel Daes: We develop with everything.

Jos Manuel Daes: Sure.

Speaker Change: The full question.

Jos Manuel Daes: We are going to be ready by the end of June with a complete line.

Jos Manuel Daes: We know we expect the circles.

Jos Manuel Daes: To be much much better.

Jos Manuel Daes: Whoever we're being very conservative on the outlook.

Jos Manuel Daes: For the circles to book this is going to.

Jos Manuel Daes: Twofold.

Jos Manuel Daes: This year for sure.

Jos Manuel Daes: Yeah.

Jos Manuel Daes: It's very helpful and then.

Santiago Giraldo: And then as it relates to residential, can you kind of remind us what your mix is there between new construction and R&R? And then talk a bit about sales to homebuilders and how that has changed in the outlook.

Santiago Giraldo: As it relates to residential can you kind of remind us what your mix is there between new construction and R&R and then talk a bit about sales into homebuilders.

Santiago Giraldo: And how that is has changed in the outlook.

Santiago Giraldo: I'll talk about the breakdown is roughly two-thirds repair and remodeling and one-third new home construction, Alex. I'll let Jose talk about the..., the dynamics with homebuilders and such. Well, we're seeing the...

Speaker Change: I'll I'll talk about the breakdown is roughly two thirds repair and remodeling and one third.

Speaker Change: New home construction and Alex I'll, let Jose talk about the.

Santiago Giraldo: The the dynamics with homebuilders and such.

Jose: Well, we're seeing.

Jos Manuel Daes: Well, we're seeing, uh... New construction is stalling a little bit because of the interest rates, so R&R has taken more of the market, but... We believe it should be a mix of 50-50 as soon as the interest rates start coming down.

Jos Manuel Daes: The new construction stalling a little bit.

Jos Manuel Daes: Because of the interest rate so.

Jos Manuel Daes: Uh huh.

Jos Manuel Daes: Striking the more of the market.

Jos Manuel Daes: Book.

Jos Manuel Daes: Believe it should be a big so 50 50 soon.

Jos Manuel Daes: Soon after interest rates historical Rainbow.

Speaker Change: Thank you.

Jos Manuel Daes: The next question comes from Julio Romero with Sidoti <unk> Co. Please go ahead.

Alexander John Rygiel: The next question comes from Julio Romero with Sidoti & Co. Please go ahead.

Julio Alberto Romero: Hey, good morning wasn't Manuel Christian on San Diego.

Julio Alberto Romero: Hey, good morning, Jose Manuel, Christian, and Santiago. Good morning. Hey, just to clarify, I wanted to stay on vinyl for a little bit. The shipments of vinyl products in December were just samples, or were they actually orders that did translate into revenues in the first quarter?

Julio Alberto Romero: Julio.

Julio Alberto Romero: Hey, just to clarify.

Julio Alberto Romero: To stay on vinyl for a little bit the.

Julio Alberto Romero: The shipments of vinyl products in December there. They were just samples or were they actually the orders that did translate into revenues in the first quarter.

Julio Alberto Romero: The first quarter, we have.

Jos Manuel Daes: Don't know, the first quarter we had minimum shipments because they were real orders. I mean, we shipped, the samples don't even count. I mean, we gave them for free. They were real orders, but every day we see the orders getting stronger and stronger and coming up more and more. Just to give you an example.

Jos Manuel Daes: Maybe even shipments because.

Jos Manuel Daes: There were real orders.

Jos Manuel Daes: There are some tools.

Jos Manuel Daes: Until we get them for free.

Jos Manuel Daes: There were real orders.

Jos Manuel Daes: Every day, we see the orders.

Jos Manuel Daes: Children with Goldman.

Jos Manuel Daes: So more and more.

Jos Manuel Daes: Just to give you an example, in the month of May, we're going to invoice more than we invoiced in the months of February, March, and April together in vinyl. And in June, we're supposed to invoice more than we did in May, April, March, and February.

Jos Manuel Daes: To give you an example.

Jos Manuel Daes: In the month of May we're learning boys more then we invoiced in the month of February March and April together.

Jos Manuel Daes: In buying the land and in June we were supposed to invoice more than we did in May April March and February. So it is improving by the minute, but obviously, while wholesale tried to explain before is that.

Jos Manuel Daes: So it is improving by the minute, but obviously, what Jose tried to explain before is that once we complete the line, we're going to see this exponentially go up, and we're going to be invoicing several million dollars a month. So that's what we're working for. That's what we're shooting for, and we're getting ready for it. We have already installed some windows, some projects, and they look really good. I mean, they are comparing to the previous windows they were buying, and ours looks stronger, wider, better. So we're really happy, and we see a good future ahead of us in miners.

Jos Manuel Daes: Once we complete the line, we're going to see these exponentially go up.

Jos Manuel Daes: We're gonna be invoicing several million dollars a month. So that's what we're working for that's what we're shooting for and we're getting ready for it we have already installed some window some projects and they look really good I mean, they are comparing to the previous windows they were buying.

Jos Manuel Daes: And ours is.

Jos Manuel Daes: It looks stronger.

Jos Manuel Daes: Wider better.

Jos Manuel Daes: So we were really happy and we see a good future ahead of us.

Speaker Change: All right very helpful and you talked about the two new distributors signed in.

Julio Alberto Romero: Very helpful. And you talked about the two new distributors signed in, I think, Sarasota and Florida, and then the new distributor in northern Florida as well. Just talk a bit about what's the early feedback from those distributors. And also, how would you have us think about the ramp of additional distributors throughout the year?

Julio Alberto Romero: I think Sarasota in Florida, and then the new distributor in northern Florida as well.

Julio Alberto Romero: Just talk a bit about what's the early feedback from those distributors and also how would you help us think about the ramp of additional distributors throughout the year.

Jos Manuel Daes: And those distributors are ready to order, but like I said before... We don't have a complete line, and it's difficult for them sometimes to go into a job.

Julio Alberto Romero: Those are there's two reserves.

Jos Manuel Daes: Really to order book.

Jos Manuel Daes: Before.

Jos Manuel Daes: We don't have a globally right.

Jos Manuel Daes: It is difficult sometimes to go into.

Jos Manuel Daes: Joe.

Jos Manuel Daes: And then they have 9 different products, and we only have 7, and the other 2 are missing. They would rather wait until we have the complete line to really ramp up so they can go for only one product and not have to mix and match in one house because it doesn't look good, that's what they said. That's why... I've been telling you, and we know, and we feel it. The next two quarters are going to be great, I mean the end of the year, and 2025 is going to catapult crazy to a dividing line. People like the look, they like that it's much better than what we see in the competition, and we have a better glass composition. So it's a win-win situation; we just have to wait a little bit.

Jos Manuel Daes: They they have.

Jos Manuel Daes: Different drugs that we only have seven.

Jos Manuel Daes: The other two are busy so.

Jos Manuel Daes: The other way.

Jos Manuel Daes: The complete leg really rubble so they took over only one half.

Jos Manuel Daes: Have to Beechwood house, because it doesn't look good that's what they ship that's why.

Speaker Change: I'd be telling you in a.

Jos Manuel Daes: We know what we're feeling.

Jos Manuel Daes: <unk>.

Jos Manuel Daes: Two quarters are going to be great.

Jos Manuel Daes: The end of the year.

Jos Manuel Daes: 2025 per Boe.

Jos Manuel Daes: Crazy with the buzzer goes.

Jos Manuel Daes: People like the look people like that.

Jos Manuel Daes: Bulge.

Jos Manuel Daes: The competition.

Jos Manuel Daes: We have a burger glass composition.

Jos Manuel Daes: Hello.

Jos Manuel Daes: Situations, we'll just have to wait a little bit.

Speaker Change: Okay understood and then last one for me is just on I. Appreciate the outlook scenarios you gave for 'twenty for how to think about each one and you gave us the vinyl revenue for each scenario.

Julio Alberto Romero: Okay, understood. And then the last one for me is just on I appreciate the outlook scenarios you gave for 24. I had to think about each one. And you gave us the vinyl revenue for each scenario. I'm curious how much is embedded for showroom revenue relating to your legacy aluminum product in those scenarios.

Julio Alberto Romero: Just curious how much is embedded.

Julio Alberto Romero: For showroom revenue relating to your legacy aluminum product in those scenarios.

Julio Alberto Romero: It's it's kind of in line with what we had originally estimated will you still just kind of ramping up and you know that the they kind of hold up on the ramp up is the pull develop and all of the products for those markets.

Santiago Giraldo: It's kind of in line with what we had originally estimated, Julio, still just kind of ramping up, and, you know, the kind of holdup on the ramp-up is the full development of the products for those markets. We'll be talking maybe around 10 million for the year out of those geographies, but also remember that we're shooting to sell vinyl in some of these other places as well, so it's not exclusively aluminum windows for you to model, right? I mean, some of that is gonna be interchangeable.

Santiago Giraldo: We'd be talking maybe around 10 million for the year, although a lot of those geographies, but also remember that we're on.

Santiago Giraldo: We're shooting to sell vinyl in some of these other places as well so.

Santiago Giraldo: Not exclusively aluminum windows.

Santiago Giraldo: Or for you to model right I mean, some of that is going to be an interchangeable.

Speaker Change: Perfect and then just one more.

Julio Alberto Romero: Perfect. And just one more, if you can remind us how much the show sales were in 23. Just to think about the year over year.

Julio Alberto Romero: Could remind us how much the show sales were in 23, just to think about the year over year.

Santiago Giraldo: No, still not material. I mean, that's still completely upside year over year, more than a couple of million dollars. So, you know, if you look at it on a percentage basis, it's going to look like a huge increase, right? It's just kind of on a nominal basis, still going up.

Speaker Change: No. It's still it's still not material I mean, that's still complete up upside year over a year, what do you I mean he wasn't.

Santiago Giraldo: More than a couple of million dollars. So if you could.

Santiago Giraldo: If you look on a percentage basis, he's going to look like a huge increase right. It's just kind of on a nominal basis.

Santiago Giraldo: Still ramping up.

Speaker Change: Yeah, absolutely I appreciate all the color thanks, very much guys Yep I.

Julio Alberto Romero: Yep, absolutely. I appreciate all the color. Thanks very much, guys.

Speaker Change: Good one.

Julio Alberto Romero: The next question comes from John Ramirez with D. A Davidson. Please go ahead.

John Ramirez: The next question comes from John Ramirez with D.A. Davidson. Please go ahead.

Jean Paul Ramirez: Hi, Thank you for the time.

John Ramirez: Hi, thank you for the time. You have kept gross margin guidance low to mid-40s across all scenarios. Aside from anything or what you've mentioned during this call, what sort of drives the confidence of keeping you know around this guidance during the second half? I just want to hear some more color around that.

John Ramirez: You have kept gross margin guidance low to mid forty's across all scenarios aside from anything or what you've mentioned and during this call what sort of drives that confidence of keeping them.

John Ramirez: You know around this guidance during the second half.

John Ramirez: I just wanted to hear some more color around that.

Santiago Giraldo: Just to clarify, we're not baking in low to mid 40s in all three scenarios. If you look at the different ones, we're talking about low to mid 40s on the base case, and mid-40s on the upside. So just, I just want to clarify that.

John Ramirez: Just to clarify where we're not baking in low to mid forties in all three scenarios. If you look at the different ones, we're talking about low to mid Forty's on the base case mid forty's on the outside.

Santiago Giraldo: So just I just want to clarify that and where it's coming from essentially a lot more operating leverage as you move through the year.

Santiago Giraldo: And where it's coming from is essentially a lot more operating leverage as we move through the year. As we're ramping up. The residential orders that we're seeing in March and April, if that is sustainable, all of that is going to improve the mix as well because it's more manufacturing revenue. So you essentially have operating leverage and a better mix. But again, just to clarify, we are saying mid-40s on the upper upside case, and low to mid-40s on the base case. So in any event, based on what we know that is coming as far as revenues are concerned, we're seeing a step up from what you saw in Q1.

Santiago Giraldo: As we're ramping up you know the residential orders that we're seeing in March April if that is sustainable all of that is going to improve that mix as well because he's more manufacturing revenue.

Santiago Giraldo: So you essentially have operating leverage and an end and better mix.

Santiago Giraldo: But again just to clarify we are saying mid forty's on the upper upside case low to mid Forty's on the base case. So in any event based on what we know that is coming as far as revenues, we're seeing a step up from what we from what you saw in Q1.

Santiago Giraldo: Okay.

Speaker Change: Thank you. Thank you for that and so you said a ramp up rent residential what about commercial what does the.

John Ramirez: Thank you. Thank you for that!

John Ramirez: Outlook look like there.

John Ramirez: Growing as well I mean, and you have more visibility there based on the schedule of the projects that you're about to deliver on.

John Ramirez: So there shouldn't be you know so much more volatility as you would see on the spot nature of the business on the rest of eventual site right. So you already have.

Santiago Giraldo: And, um, so you said there would be a ramp up in residential. But, um, what about commercial? What does the, um, outlook look like there?

Santiago Giraldo: growing as well. I mean, you have more visibility there based on the schedule of the projects that you're about to deliver on. So, you know, there shouldn't be so much more volatility as you would see in the spot nature of the business on the residential side, right? So you already have a product or projects that you're supposed to be delivering throughout the rest of the year, and the way that we're modeling this out is sequential growth throughout until year end.

Speaker Change: Schedule, a product or projects that you're supposed to be delivering throughout the rest of the year.

Santiago Giraldo: And the way that we're modeling the saudis sequential growth throughout until until year end.

Speaker Change: Thank you.

John Ramirez: Thank you. And just going back to the guidance, the EBITDA bridge sort of indicates around 11 million decline related to mix and price. How much is related to mix, and how much is related to price?

Santiago Giraldo: And just going.

John Ramirez: Going back to the guidance the EBITDA bridge sort of indicates around 11 million decline related to mix and price how much is related to mix and how much is related to price.

Speaker Change: Are you talking about the Q1 or are you talking about because when you're talking about guidance, we didn't provide that need to be that bridge for that.

Santiago Giraldo: Are you talking about Q1 or are you talking about, because when you're talking about guidance, we didn't provide an EBITDA bridge for that?

John Ramirez: Just for the full year.

Santiago Giraldo: Or just the full year.

Speaker Change: On the full year. The main impact is going to be FX. We're projecting 4000 on average last year was roughly 43 58 per cent of revaluation year over year.

Santiago Giraldo: On the full year, the main impact is going to be FX. We're projecting $4,000 on average. Last year it was roughly $4,350, so it's an 8% revaluation year over year.

Santiago Giraldo: So you have an impact on negative effects. And then the other two factors are makes and operating leverage. And essentially, if you are getting to the upside case. The Operating Leverage on Incremental Revenue nets out the mixed effect, right? So on that scenario, your only variance is related to effect. On the base case, you have roughly, you know, what we're expecting is probably about 10 to 15% more mix and standalone product sales.

Speaker Change: So you have.

Santiago Giraldo: Any impact on negative effects and then the other two factors are mix and operating leverage.

Santiago Giraldo: And essentially if you are getting to the upside case, the operating leverage on incremental revenue nets out.

Santiago Giraldo: The mix effect right so on that on that scenario you're only.

Santiago Giraldo: <unk> is related to FX.

Santiago Giraldo: On.

Santiago Giraldo: On the base case, you have roughly you know what we're expecting is probably about 10% to 15% more mix and standalone product sales.

Santiago Giraldo: And other than that pricing should not be a factor from here on out because the pricing impacts were only related to our promotional effect that was done in Q4 for Q1 sales and that's essentially concluded so.

Santiago Giraldo: And other than that, pricing should not be a factor from here on out because the pricing impacts were only related to a promotional effect that was done in Q4 for Q1 sales, and that's essentially concluded. This is going to be more of a mixed effect.

Santiago Giraldo: To be more of a mix effect.

Speaker Change: Got it. Thank you I appreciate the time.

Santiago Giraldo: Got it. Thank you. I appreciate the time.

Santiago Giraldo: Sure.

Santiago Giraldo: This concludes our question and answer session I would like to turn the conference back over to Jose Manuel for any closing remarks.

Jos Manuel Daes: This concludes our question and answer session. I would like to turn the conference back over to Jose Manuel Diaz for any closing remarks.

Speaker Change: Well thanks, everyone for produce your baby with today's call.

Jos Manuel Daes: Well, thanks, everyone, for participating in today's call. As I have reiterated, our company is going to do better things, penetrate more markets, and give much better results to our shareholders and everybody. Thank you.

Jos Manuel Daes: So you have raised.

Speaker Change: Our company is.

Jos Manuel Daes: Going to do better things.

George Borba: George Borba goods.

Jos Manuel Daes: Much better results.

Jos Manuel Daes: Our shareholders.

Speaker Change: Hi, everybody.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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