Q3 2024 Tecnoglass Inc Earnings Call
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Speaker Change: I would now like to turn the conference over to Brad Cray Investor Relations. Please go ahead. Thank you for joining us for technical loss in third quarter 2024 conference call.
Speaker Change: The slide presentation to accompany this call may be obtained on the investors section of the <unk> website.
Speaker Change: Speakers for today's call are Chief Executive Officer, Jose Manuel <unk>, Chief Operating Officer, Chris <unk>, and Chief Financial Officer Santiago Giraldo.
Speaker Change: I'd 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 995, including statements regarding future financial performance future growth and future acquisitions. These statements are based on <unk> current expectations or beliefs and are sub.
Speaker Change: Jack 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 other risks and uncertainties affecting the operation of technical asset business. These risks uncertainties and contingencies.
Speaker Change: Are indicated from time to time in technical <unk> filings with the SEC the.
Speaker Change: The information discussed during the call is presented in light of such risks further investors should keep in mind that techno glasses financial results in any particular period may not be indicative of future results.
Speaker Change: <unk> 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.
Speaker Change: I will now turn the call over to Jose Manuel beginning on slide number four.
Jose Manuel: Thank you Brett Burford, you every one for brokers.
Jose Manuel: On today's call.
Jose Manuel: We are proud to report another quarter over Churchill oversold.
Jose Manuel: Brokers are being reviewed to confuse people.
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Jose Manuel: For renewables.
Jose Manuel: Third quarter before Google Roku.
Jose Manuel: Local revenues of 238 3 billion.
Speaker Change: Oh God.
Speaker Change: Earlier through organic growth.
Speaker Change: The breadth of performance labels through.
Speaker Change: I could give you should go through Mercury sure.
Speaker Change: So those are the rules that are doing better.
Speaker Change: <unk> you are smarter.
Speaker Change: Oh very quickly figure out of your business model.
Speaker Change: For sure.
Good morning, and welcome to the techno glass third quarter 'twenty 'twenty four earnings conference call all participants will be in listen only mode.
Speaker Change: So it was terrific for the strong cost controls.
Speaker Change: And quickly adapt to evolving multiple numbers.
Speaker Change: So those should go probably into the rest of the virtual business.
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Speaker Change: Revenues reached a new quarterly record over 109 point something billion.
Speaker Change: Represent the lowest growth for further preferred.
After today's presentation there'll be an opportunity to ask questions.
Speaker Change: Over the year.
To ask a question you May press Star then one on your telephone keypad.
Speaker Change: This strong performance reflects both.
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Speaker Change: He knows the bulker conversions.
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Speaker Change: Bob.
Speaker Change: Our product.
Speaker Change: Bravo portfolio.
I would now like to turn the conference over to Brad Cray Investor Relations. Please go ahead. Thank you for joining us protecting the western <unk> third quarter 2024 conference call.
Speaker Change: Oh, well confirming their commercial business delivered revenue growth well for boys six preferred.
Speaker Change: Year over year to 100.
A copy of the slide presentation to accompany this call may be obtained on the investors section of the techno last website.
Speaker Change: 46 million.
Speaker Change: Bergendorff Hurricane Harvey, there's one or two quarter for district.
For today's call are Chief Executive Officer, Jose Manuel Dias, Chief Operating Officer, Chris <unk>, and Chief Financial Officer Santiago Giraldo.
Speaker Change: This momentum has carried into the fourth quarter.
Speaker Change: He worked over a regular monthly invoicing for the company as a whole.
Speaker Change: We maintain a positive outlook for our multifamily and commercial business supported by our record backlog.
I'd 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, including statements regarding future financial performance future growth and future acquisitions. These statements are based on <unk> current expectations or beliefs.
Speaker Change: Global scope.
Speaker Change: Got it.
Speaker Change: Oh yeah.
Speaker Change: Investments in the automation of the runs by restructuring continue to generate substantial returns.
Speaker Change: We had a strong year over your grocery both gross profit.
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 other risks and uncertainties affecting the operation of <unk> business.
Speaker Change: Adjusted EBITDA.
Speaker Change: These results show our ability to mine.
Speaker Change: And just moving my views well growing the business.
Speaker Change: We remain confident in our ability to sustain levy perfect a really big through enhance operational efficiency.
These risks uncertainties and contingencies are indicated from time to time and techno Watson filings with the SEC.
Speaker Change: Well, we're not purely a favorable exchange rate over the past year.
The information discussed during the call is presented in light of such risks further investors should keep in mind that <unk> financial results in any particular period may not be indicative of future results.
Speaker Change: Our strong financial position provides significant flexibility to pursue growth initiatives well reported totals up.
<unk> 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.
Speaker Change: Shareholder.
Speaker Change: We generated strong operating cash flow was $41 million this quarter.
Speaker Change: This was driven by growth in our shorter cycle, where she visual business.
I will now turn the call over to Jose Manuel beginning on slide number four.
Speaker Change: Visibly working capital management.
Thank you Brad and thank you everyone for brokers.
Speaker Change: This story because it arose from fortified our board's decision.
On today's call.
We are proud to report another quarter of exceptional result.
Speaker Change: Those 236% in Jersey.
Speaker Change: 215 cents per share.
Sure.
We refer you to consistently outperformed the doorbell.
Speaker Change: In conclusion, we are strategically positioned to capitalize on this.
Oh third quarter before buzzard, Glu Roku revenues of 233 billion.
Our third quarter performance included record revenues of $238.3 million.
Speaker Change: That's real growth opportunities.
Speaker Change: Like Rose bowls are really those are the commercial market.
Oh, it earlier through organic growth.
Speaker Change: Our record backlog.
Speaker Change: The extends well into 'twenty pretty sick.
Brazil performed both verbal stripe.
Speaker Change: Post foods, the strong demand for our products.
I could give you so chose to.
Go through bulk for sure.
Speaker Change: Ready for market leadership.
Those are the rules that are doing better than the broader you are smarter.
Speaker Change: This visibility combined with our operational excellence I mean, no IP portfolio.
Sure.
Cigarette business Bogo free bags or do you prefer.
Speaker Change: It shows the goldfields.
Sure Hello, It goes to every flavor straw goes cold rolls.
Speaker Change: Really difficult diesel delivering above market growth.
We are about to evolve your multiple.
Speaker Change: Just to leave it.
Speaker Change: The strong momentum in our project pipeline continue into October.
She knows she can go probably into the rest of the virtual business.
Speaker Change: So really good evolution.
I believe you've reached a new quarterly record well well drill down a point.
Speaker Change: This supports our strengthening outlook for 'twenty to 'twenty four it reinforces our long term growth trajectory.
Sure.
Representing robust growth of 12%.
Over a year.
Speaker Change: With our vertically integrated model.
This strong performance reflects both there's probably loves about conversions of drawing the Bob Paulo, Nobody's Bravo portfolio.
Speaker Change: Almost bullish.
Speaker Change: Improving our ability to execute we believe taking a little longer.
Speaker Change: He is uniquely positioned to create lasting value for our shareholders.
Oh boy to forbid our commercial business delivered revenue growth well for boys, 6% year over year to $128 6 million.
Speaker Change: I will now turn the call over for Greif to provide that Israel operating highlights.
Speaker Change: Thank you all for somebody who isn't moving to slide number five our performance during the third quarter reflects the resilience of our business to outperform brother microeconomic strengths.
But again those are good how are you.
One or two quarter for blue shirt.
Speaker Change: Please momentum has carried into the fourth quarter, we booked over our regular monthly invoicing for the company as a whole.
Speaker Change: Our single family residential business did you find another record quarter with revenues, increasing 25% year over year to 100, a 9.7 million.
Speaker Change: We maintain a positive outlook for our multifamily and commercial business supported by our record backlog a robust quoting activity.
Speaker Change: This exceptional growth reflects strong demand for our innovative high performance products, which allow us to capture market share.
Speaker Change: Oh, that's good.
Speaker Change: Investments no nobody was one of the rooms by restructuring CT.
Speaker Change: We also benefited from deliveries on products are there prior to the expiration of Fleury us window cells tax assumption at the end of June.
Speaker Change: There's no real substantial resorts.
We had a strong year over your grocery both gross profit.
The adjusted EBITDA.
Speaker Change: Turning to our multifamily and commercial business our reputation for excellence continues to earn us new opportunities across our key geographies.
This was all show or are really due to my brain.
Speaker Change: Moving my.
Speaker Change: Well growing the business.
Speaker Change: We remain confident in our ability.
Speaker Change: Due to sustained living Brooklyn, but really be.
Speaker Change: These result in revenues growing to our homeland $28 6 million and we achieved another record multiyear backlog of approximately 1.14 billion at quarter end the pipeline of projects that we expect to sign into backlog provides clear because you're really dealing projects well.
Speaker Change: Through enhance operational efficiency.
Speaker Change: The Burger group will not be really a stable exchange rate over the past year.
Speaker Change: Our strong financial position provides significant flexibility to pursue growth initiatives well reported.
Speaker Change: 2025 are nearly 2026.
Speaker Change: Shareholder.
Speaker Change: We generated strong operating cash flow was $41 million. This.
Speaker Change: Moving to slide number six.
Speaker Change: Our backlog has demonstrated consistent sequential growth in each quarter since 2021.
Speaker Change: This quarter.
Speaker Change: This was driven by growth in our shorter cycle business.
Speaker Change: Momentum in our project pipeline and a strong bidding activity has helped us maintain a book to bill ratio of 1.1 times as of quarter three 2020 for.
Speaker Change: Visibly working capital management.
Speaker Change: It's probably closer to the original Fulton, our board's decision for those two.
Speaker Change: These sustained our track record of maintaining the ratio above one one times for the 15th consecutive quarter.
Speaker Change: Preserving the dividend.
Speaker Change: <unk> 15 cents per share.
Speaker Change: In conclusion, we are strategically positioned to capitalize on the substantial.
Speaker Change: Historically, approximately two thirds of our reported backlog is in boys over the following 12 months.
Speaker Change: Going forward, we see our growth both of those are like Rachel Barnes group.
Speaker Change: It is worth nothing two things first we historically have virtually no project cancellations given that our windows are typically installed in largely completed buildings.
Speaker Change: Well record backlog, which extends well into their.
Speaker Change: That moves towards the strong demand for our products everybody ready for murder leadership.
Speaker Change: But if you really.
Speaker Change: Second the majority of our backlog consists of projects that we believe have reviews and C. D V D to interest rate fluctuations.
Speaker Change: Combined with our operational electrical is portable.
Speaker Change: Portfolio.
Speaker Change: This shows the goldfields.
Speaker Change: Really difficult diesel delivering above market growth.
Speaker Change: While external factors can cause temporary delays in deliveries, we believe book to Bill ratio provides us strong visibility on future in Boise.
Speaker Change: To live in Belgium.
Speaker Change: The strong momentum in our project pipeline continue into October.
Speaker Change: I'll now turn the call over to Santiago to discuss our financial results and outlook for 2024.
Speaker Change: So record in Boise.
Speaker Change: Suppose or strengthen.
Speaker Change: For 2020.
Santiago Giraldo: Thank you Christian.
Speaker Change: For reinforces our long term growth trajectory.
Santiago Giraldo: Turning to single family residential on slide number seven.
Speaker Change: We're going to basically degradable robust balance sheet.
Speaker Change: Our single family residential revenues for the third quarter increased 25% year over year to a record $109 7 million.
Speaker Change: I really just do execute we believe is.
Speaker Change: He is uniquely positioned to create lasting value for our shareholders.
Speaker Change: Compared to 87 8 million in the prior year quarter.
Greif: I will now turn the call over for Greif to provide operating.
Speaker Change: This strong year over year growth, primarily reflects improving market trends and the invoicing of orders placed ahead of the June 30th exploration of the Florida sales tax waiver.
Greif: Operating highlights.
Speaker Change: Thank you, Mr Monaco and moving to slide number five our performance during the third quarter reflects the resilience of our business to outperform broader macroeconomic trends.
Speaker Change: Looking ahead our.
Speaker Change: Organic growth opportunities in the single family residential are driven by our expanding dealer network geographic growth in the southeast.
Speaker Change: Our single family residential business achieved another record quarter with revenues, increasing 25% year over year to 100, a 9.7 million.
Speaker Change: And our strategic entry into the vinyl market, which has significantly expanded our addressable market.
Greif: This exceptional growth reflects strong demand for our innovative high performance products, which allow us to capture market share.
Speaker Change: We continue to expand dealer relationships innovate and generate awareness for our new vinyl products.
Greif: We also benefited from deliveries on products order prior to the expiration of Florida, Yes window sales tax assumption at the end of June.
Speaker Change: We continue to quote an incremental number of projects in many of our new high growth targets.
Speaker Change: We expect deliveries to continue ramping up through year end and expect substantial growth in the coming years as we leverage our existing network to meet growing demand for these products.
Greif: Turning to our multifamily and commercial business our reputation for excellence continues to earn us new opportunities across our key geographies.
Speaker Change: We were also pleased to see our Es windows pivot Dorwin several high profile glass industry awards during the quarter, which we expect will help drive additional sales growth in these businesses.
Greif: These result in revenues growing to our homeland $28 6 million and we achieved another record multiyear backlog of approximately 1.14 billion at quarter end the pipeline of projects that we expect to sign into backlog provides clear because you really do them projects well into two.
Speaker Change: Additionally, we were very pleased to be recognized by Fortune 100, as one of the top 30 fastest growing public companies in the U S.
Greif: 20 to 25.
Greif: Italy 2026.
Speaker Change: The only company recognized in the materials segment.
Greif: Moving to slide number six our.
Greif: Our backlog has demonstrated consistent sequential growth in each quarter since 2021.
Speaker Change: This is a testament to our sound strategy and our ability to leverage our competitive advantages.
Greif: Momentum in our project pipeline and a strong bidding activity has helped us maintain a book to bill ratio of 1.1 times as of quarter three 2020 for these.
Speaker Change: Turning to drivers of revenue on slide number nine.
Speaker Change: Total revenues for the third quarter increased 13, 1% year over year to $238 3 million, our highest revenue quarter in the company's history.
Greif: These extend our track record of maintaining the ratio above one one times for the 15th consecutive quarter.
Speaker Change: The increase was driven by growth in both our single family residential and multifamily slashed commercial businesses.
Greif: Historically, approximately two thirds of our reported backlog is in boys over the following 12 months.
Speaker Change: Looking at the profit drivers on slide number 10.
Greif: It is worth nothing two things first we historically have been really no project cancellations given that our windows are typically installed in largely completed buildings.
Speaker Change: Adjusted EBITDA for the third quarter was 81 4 million, representing an adjusted EBITDA margin of 34, 2%.
Greif: Second the majority of our backlog consists of lawyers that we believe have reduced sensitivity to interest rate fluctuations.
Speaker Change: Third quarter gross profit reached $109 2 million, representing a 45, 8% gross margin compared to gross profit of $95 million and a 43% gross margin in the prior year quarter.
Greif: While external factors can cause temporary nature deliveries, we believe book to Bill ratio provides us strong visibility on future in Boise I will now turn the call over to Santiago to discuss our financial results and outlook for 2024.
Speaker Change: The year over year margin improvement, primarily reflects benefits from stronger pricing stable raw material cost favorable.
Santiago: Thank you Christian.
Speaker Change: Favorable product mix and steady foreign exchange rates.
Santiago: Turning to single family residential on slide number seven.
Speaker Change: We incurred incremental expenses related to aluminum tariffs on a small number of our products, which have been largely pass through the customers and which works.
Speaker Change: Our single family residential revenues for the third quarter increased 25% year over year to a record $109 7 million.
Santiago: Impaired to 87 8 million in the prior year quarter.
Speaker Change: Subsequently eliminated based on the negative determination by the International Trade Commission on October 31, as it was determined that these aluminum imports do not present, a risk for the U S industry.
Santiago: This strong year over year growth, primarily reflects improving market trends and the invoicing of orders placed ahead of the June 30th exploration of the Florida sales tax waiver.
Speaker Change: As highlighted last quarter, the unfavorable FX comparisons seen in recent quarters have dissipated.
Santiago: Looking ahead.
Santiago: Our organic growth opportunities in the single family residential are driven by our expanding dealer network geographic growth in the southeast.
Speaker Change: Given the relative stability in currencies during the last 15 to 18 months and we expect this stability to continue through year end.
Santiago: And our strategic entry into the vinyl market, which has significantly expanded <unk>.
Speaker Change: Okay.
Speaker Change: SG&A expenses were $41 5 million compared to $29 5 million in the prior year quarter.
Santiago: Addressable market.
Santiago: We continue to expand dealer relationships in a way and generate awareness for our new vinyl products.
Speaker Change: This increase primarily reflects higher transportation and commission expenses associated with our revenue growth.
Santiago: We continue to quote an incremental number of projects in many of our new high growth targets.
Speaker Change: Increased personnel expenses from annual salary adjustments implemented at the beginning of the year as well as increased head count to support a larger operation.
Santiago: We expect deliveries to continue ramping up through year end and expect substantial growth in the coming years as we leverage our existing network to meet growing demand for these products.
Speaker Change: And certain nonrecurring expenses related to our previously announced strategic with you.
Santiago: We were also pleased to see our Es windows people adore win several high profile glass industry awards during the quarter.
Speaker Change: Now looking at our strong cash flow.
Speaker Change: And improved leverage on slide number 11.
Speaker Change: We generated strong third quarter operating cash flow of $41 5 million.
Santiago: Which we expect will help drive additional sales growth in this space.
Speaker Change: Driven by increased profitability on higher revenues and efficient working capital management.
Santiago: Additionally, we were very pleased to be recognized by fortune 100 as well.
Santiago: One of the top 30 fastest growing public companies in the U S.
Speaker Change: Our capital expenditures of $23 7 million included approximately $5 million of opportunistic payments for previously purchased land for future potential capacity expansion and equipment sold on their sellers finance.
Santiago: The only company recognized in the materials segment.
Santiago: This is a testament to our sound strategy and our ability to leverage our competitive advantages.
Santiago: Turning to drivers of revenue on slide number nine.
Speaker Change: As well as a discretionary payments for our new Miami headquarters, which will include a new flagship showroom to help us drive incremental business activity.
Santiago: Total revenues for the third quarter increased 13, 1% year over year to $238 3 million, our highest revenue quarter in the company's history.
Speaker Change: Excluding these proactive payments capital expenditures decreased quarter over quarter in line with our expectations for capital expenditures to decrease sequentially in the back half of the year.
Santiago: The increase was driven by growth in both our single family residential and multifamily slash commercial businesses.
Speaker Change: During the quarter, we voluntarily prepaid $17 5 million when our syndicated term loan facility.
Santiago: Looking at the profit drivers on slide number 10.
Santiago: Adjusted EBITDA for the third quarter was 81 4 million, representing an adjusted EBITDA margin of 34, 2%.
Speaker Change: Net leverage ratio dropped to a record low of 0.01 times compared to 0.2 times in the prior year quarter.
Speaker Change: In addition, we returned capital to shareholders through $5 2 million of cash dividends during the period.
Santiago: Third quarter gross profit reached $109 2 million, representing a 45, 8% gross margin compared to gross profit of $95 million and a 43% gross margin in the prior year quarter.
Speaker Change: Yeah.
Speaker Change: As of September 32024, we had total liquidity of approximately 290 million <unk>.
Speaker Change: Including $122 million in cash and $170 million available under our revolving credit facilities.
Santiago: The year over year margin improvement, primarily reflects benefits from stronger pricing stable raw material cost.
Speaker Change: This strong liquidity position combined with our robust cash flow generation provides us with ample financial flexibility to pursue our growth initiatives and other value enhancing initiatives.
Santiago: Favorable product mix and steady foreign exchange rates.
Santiago: We incurred incremental expenses related to aluminum tariffs on a small number of our products, which have been largely pass through the customers and we've worked through.
Speaker Change: On slide number 12, we showcase our success in generating best in class returns for our shareholders outperforming the broader industry over the last three years.
Santiago: Subsequently eliminated based on the negative determination by the International Trade Commission on October 31.
Speaker Change: Our focus on enhancing our business through strategic investments continues to be validated through consistently higher returns than our peers.
Santiago: It was determined that these aluminum imports do not present, a risk for the U S industry.
Santiago: As highlighted last quarter, the unfavorable FX comparisons seen in recent quarters have dissipated.
Speaker Change: This outperformance is enhanced by our robust profitability and solid track record of cash flow generation.
Santiago: Given the relative stability in currencies.
Speaker Change: As mentioned in our earnings release today. After careful evaluation. The board has concluded its review of strategic alternatives and has decided that the best path forward is to continue executing on our ongoing business strategy.
Santiago: In the last 15 to 18 months and we expect this stability to continue through year end.
Santiago: Yeah.
Santiago: SG&A expenses were $41 5 million compared to $29 5 million in the prior year quarter.
Speaker Change: Based on our strong business visibility high return organic growth investments and projected cash flow generation. We believe the best path forward to maximize shareholder value is to continue to expand across the U S. Leveraging our sustainable competitive advantages to gain market share.
Santiago: This increase primarily reflects higher transportation and commission expenses associated with our revenue growth.
Santiago: Increased personnel expenses from annual salary adjustments implemented at the beginning of the year as well as increased head count to support a larger operation.
Speaker Change: <unk> through our broader product offering.
Santiago: And certain nonrecurring expenses related to our previously announced strategic review.
Speaker Change: Concurrently the board has determined that based on the strength of the business and the company's financial flexibility you will return more cash to shareholders, increasing the dividend by 36% and expanding the buyback program to 100 million to execute on share repurchases opportunistically.
Santiago: Now looking at our strong cash flow.
Santiago: And improved leverage on slide number 11.
Santiago: We generated strong third quarter operating cash flow of $41 5 million.
Santiago: Driven by increased profitability on higher revenues and efficient working capital management.
Speaker Change: <unk>.
Speaker Change: Now moving to our outlook on slide number 14.
Santiago: Our capital expenditures of $23 7 million included approximately 5 million of opportunistic payments for previously purchased land for future potential capacity expansion and equipment sold on their salary finance.
Speaker Change: Based on our strong execution through the first nine months of 2024 and our momentum into year end. We are updating our full year 2024 outlook. We now expect full year revenues to be in the range of 880 million to 900 million representing.
Santiago: As well as a discretionary payments for our new Miami headquarters, which will include a new flagship showroom to help us drive incremental business activity.
Speaker Change: Representing entirely organic growth of approximately 7% at the midpoint of the range.
Santiago: Excluding these proactive payments capital expenditures decreased quarter over quarter in line with our expectations for capital expenditures to decrease sequentially in the back half of the year.
Speaker Change: Additionally, we're updating our adjusted EBITDA target to a range of 270 million to $280 million.
Speaker Change: Our outlook is predicated.
Speaker Change: On a few key assumptions.
Santiago: During the quarter, we voluntarily prepaid $17 5 million on our syndicated term loan facility.
Speaker Change: First it takes into account our delivery timetable for commercial orders through year end and incorporates our strong performance in October alongside ongoing residential orders scheduled for execution in November.
Santiago: Net leverage ratio dropped to a record low of 0.01 times compared to 0.2 times in the prior year quarter.
Santiago: In addition, we returned capital to shareholders through $5 2 million of cash dividends during the period.
Speaker Change: We expect continued momentum in our vinyl related revenues and stable activity in short term and small commercial projects.
Santiago: Yeah.
Santiago: As of September 32024, we had total liquidity of approximately 290 million <unk>.
Speaker Change: Supported by our strong order activity during the third quarter.
Santiago: Including $122 million in cash and $170 million available under our revolving credit facilities.
Speaker Change: This outlook assumes Columbian peso exchange rates remain stable within the current range and gross margins maintained in the low to mid 40 range for the year.
Santiago: This strong liquidity position combined with our robust cash flow generation provides us with ample financial flexibility to pursue our growth initiatives and other value enhancing initiatives.
Speaker Change: Additionally, we anticipate healthy cash flow generation through the remainder of the year, particularly given that the majority of our capital expenditure investments are now complete with capital expenditures expected to decrease sequentially in the fourth quarter.
Santiago: On slide number 12, we showcase our success in generating best in class returns for our shareholders outperforming the broader industry over the last three years.
Speaker Change: In conclusion, our third quarter performance demonstrates our ability to outperform even in challenging market conditions, while maintaining industry, leading margins and profitability.
Santiago: Our focus on enhancing our business through strategic investments continues to be validated through consistently higher returns than our peers.
Speaker Change: As we look to the remainder of the year and beyond are considerable growth in single family residential combined with our record backlog provides us with multiple avenues for continued expansion.
Santiago: This outperformance is enhanced by our robust profitability and solid track record of cash flow generation.
Santiago: As mentioned in our earnings release today. After careful evaluation. The board has concluded its review of strategic alternatives and has decided that the best path forward is to continue executing on our ongoing business strategy.
Speaker Change: With our focused cost management strong balance sheet and robust cash flow generation, we remain well positioned to drive sustainable growth and create additional value for our shareholders into 2025 and beyond.
Santiago: Based on our strong business visibility high return organic growth investments and projected cash flow generation. We believe the best path forward to maximize shareholder value is to continue to expand across the U S. Leveraging our sustainable competitive advantages to gain market share.
Speaker Change: With that we will be happy to answer your questions. Operator, Please open the line for questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad if.
Santiago: <unk> through our broader product offering.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys.
Santiago: Concurrently the board has determined that based on the strength of the business and the company's financial flexibility you will return more cash to shareholders, increasing the dividend by 36% and expanding the buyback program to a 100 million to execute on share repurchases opportunistically.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question today is from Sam <unk> with Raymond James. Please go ahead.
Santiago: Municipally.
Santiago: Now moving to our outlook on slide number 14.
Speaker Change: Good morning, Jose Manuel Chris Santiago, how are you.
Santiago: Based on our strong execution through the first nine months of 2024 and our momentum into year end, we are updating our full year 2024.
Speaker Change: Thank you.
Speaker Change: A few questions if I could.
Speaker Change: Start with the obvious one at the conclusion of the strategic review I mean, presumably.
Santiago: We now expect full year revenues to be in the range of 880 million to 900 million representing.
Speaker Change: You were looking into potentially.
Speaker Change: Transaction that would involve selling the company.
Santiago: Representing entirely organic growth of approximately 7% at the midpoint of the range.
Speaker Change: What what do you see as the company being generally valued at.
Santiago: Additionally, we're updating our adjusted EBITDA target to a range of 270 million to $280 million.
Speaker Change: The.
Speaker Change: Private market transaction versus the public markets right now.
Santiago: Our outlook is predicated.
Speaker Change: And associated with that question with the.
Santiago: On a few key assumptions.
Speaker Change: Our share repurchase.
Santiago: First it takes into account our delivery timetable for commercial orders through year end and incorporates our strong performance in October alongside ongoing residential orders scheduled for execution in November we expect continued momentum in our vinyl related revenues and <unk>.
Speaker Change: Purchase authorization, having been raised do you.
Speaker Change: Paid using repo at current stock prices.
Speaker Change: So on the first one Tim you know when we revealed this out to the market. We said that many different options were on the table not necessarily just a sale of the company. So continuing the path and growing organically was determined by the board to be the best option.
Santiago: Stable activity in short term and small commercial projects.
Santiago: Supported by our strong order activity during the third quarter.
Santiago: This outlook assumes Columbian peso exchange rates to remain stable within the current range and gross margins maintained in the low to mid 40 range for the year.
Speaker Change: Returns for shareholders and.
Speaker Change: And clearly with that you know you can play that we have a positive view for the organic growth of the company going forward be avenues for growth and such so at.
Santiago: Additionally, we anticipate healthy cash flow generation through the remainder of the year, particularly given that the majority of our capital expenditure investments are now complete with capital expenditures expected to decrease sequentially in the fourth quarter.
Speaker Change: At the end of the day. He was he was a determination based on the prospects for the company.
Speaker Change: Why do we think the multiple for the companies weren't it again that depends on the view on growth.
Speaker Change: And what we see going forward right now I think you so easily trading at a premium and we think that's probably warranted based on better margin profile and based on better growth outlook. So that's obviously four four for the market to determine and understand.
Santiago: In conclusion, our third quarter performance demonstrates our ability to outperform even in challenging market conditions, while maintaining industry, leading margins and profitability.
Santiago: As we look to the remainder of the year and beyond are considerable growth in single family residential combined with our record backlog provides us with multiple avenues for continued expansion.
Speaker Change: While the company's value going forward based on those prospects.
Speaker Change: And the REIT the repo questions Santiago I'm sorry.
Speaker Change: Oh, the repo questions as we said it would be Opportunistically and that's one of the Pan on cash flow, mainly where you obviously have opportunities to continue growing organically and as we've discussed before to the extent that we find ways to reinvest in the business to return on invested capital is obviously the highest.
Santiago: With our focused cost management strong balance sheet.
Santiago: Our robust cash flow generation, we remain well positioned to drive sustainable growth and create additional value for our shareholders into 2025 and beyond.
Santiago: With that we will be happy to answer your questions. Operator, Please open the line for questions.
Speaker Change: But if we see that you know there is opportunities to buy when we feel that you know the stock needs to be supported will definitely be there for that.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: Okay.
Santiago: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Thank you for that question for that question and answer the next obvious question, obviously is Europe.
Santiago: To withdraw your question. Please press Star then two.
Speaker Change: First look at.
Speaker Change: At 25.
Santiago: At this time, we will pause momentarily to assemble our roster.
Speaker Change: What's your first.
Speaker Change: Guess as to our initial guess as to sales gross margin and EBITDA margins as we look into 'twenty five.
Speaker Change: The first question today is from Sam Dark ACH with Raymond James. Please go ahead.
Speaker Change: So we say gross margins, where I was going to be for 2024 in the low to mid forties, you. So Q3 actually achieving mid forties and you can probably trend up based on what we're seeing for growth in 2025 too early to tell.
Speaker Change: Good morning, Jose Manuel Chris Santiago, how are you.
Speaker Change: Thank you.
Speaker Change: A few questions if I could.
Speaker Change: Start with the obvious one at the conclusion of the strategic review I mean, presumably.
Speaker Change: You know what we see exactly for 2025, we're going through the budgeting process and we'll give you guys more color on our next call. Obviously, when we provide 2025 guidance, but generally with that growth, we expect margins to continue trending up.
Speaker Change: You were looking into potentially.
Speaker Change: Transaction that would involve selling the company.
Speaker Change: What what do you see as the company being generally valued at.
Speaker Change: As a private market transaction versus the public markets right now.
Speaker Change: Also.
Speaker Change: We have.
Speaker Change: Very good backlog.
Speaker Change: And associated with that question with the.
Speaker Change: Closing.
Speaker Change: More jobs the web we invoice every board so the board keeps growing.
Speaker Change: Share repurchase authorization, having been raised do you anticipate using repo at current stock prices.
Tom: Sure Tom.
Speaker Change: Modular head.
Speaker Change: And you all referenced to.
Speaker Change: So on the first one Sam you know when we revealed this out to the market. We said that many different options were on the table not necessarily just a sale of the company. So continuing the path and growing organically was determined by the board to be the best option.
Tom: And my final question.
Tom:
Tom: There was obviously good news that the.
Tom: East Coast and southeast ports.
Tom: The strike was was minimal.
Speaker Change: If however, the ports eventually strike in January if if talks breakdown what sorts of options are available to you to satisfy demand in Florida, and the southeast and are you anticipating.
Speaker Change: And returns for shareholders.
Speaker Change: And clearly with that you know you can play that we have a positive view for the organic growth of the company going forward be avenues for growth and such so.
Speaker Change: At the end of the day. He was he was a determination based on the prospects for the company.
Speaker Change: Shipping product ahead of the mid January.
Speaker Change: Potential port situation. Thanks.
Speaker Change: Why do we think the multiple for the for the companies weren't it again that depends on the view on growth.
Speaker Change: Well the fortunate we're using.
Tom: They are all private and they will not compromise with the port strike.
Speaker Change: And what we see going forward right now I think you.
Tom:
Tom: But there are several important so we can go through.
Speaker Change: So easily trading at a premium and we think that's probably warranted based on better margin profile and based on better growth outlook. So that's obviously four four for the market to determine and understand what the company's value going forward based on on those prospects.
Tom: The causes are the same.
Tom: The difference between ship into Miami or.
Tom: Or <unk>.
Tom: Cheaper to sell any of them to Miami, So we could still find a way to come in.
Speaker Change: <unk>.
Tom: But we always keep a good.
Santiago: And the REIT the repo questions Santiago I'm sorry.
Tom: Inventory of the products that we have because we are always ahead of our customers. So at any point in time for example, today, we have two weeks deliveries already a store at the point in Miami.
Speaker Change: Oh the real question is as we said it would be Opportunistically and that's gonna depend on cash flow, mainly where you obviously have opportunities to continue growing organically and as we've discussed before to the extent that we find ways to reinvest in the business to return on invested capital. These he's obviously the highest.
Tom: Okay.
Speaker Change: Very helpful. Thank you gentlemen.
Speaker Change: The next question is from Julio Romero with Sidoti <unk> Company. Please go ahead.
Speaker Change: But if we see that you know there is opportunities to buy when we feel that you know the stock needs to be supported will definitely be there for that.
Speaker Change: Good morning. This is Alex on for Julio Thank you for taking questions.
Speaker Change: Just a follow up.
Speaker Change: Okay.
Speaker Change: Post strategic review is there any change expected to what avenues, you are considering to pursue growth.
Speaker Change: Okay.
Speaker Change: You for that question for that question and answer the next obvious question, obviously is Europe.
Speaker Change: First look.
Speaker Change: Great.
Speaker Change: At 25.
Speaker Change: Yeah, I mean, obviously, continuing taking market share and in leveraging our advantages each number one but we're also contemplating opportunistic tuck in acquisitions to be able to enter some of these new markets more efficiently. So everything's on the table, obviously has to make sense from a valuation perspective, but you know our.
Speaker Change: What's your first a guess as to our initial guess as to sales gross margin and EBITDA margins as we look into 'twenty five.
Speaker Change: So we say gross margins, where I was going to be for 2024 and the load to meet forties, you. So Q3 actually achieving mid forties and he can probably trend up based on what we're seeing for growth in 2025 to too early to tell.
Speaker Change: <unk> has been has been strong and gaining market share organically.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: And one follow up.
Speaker Change: In terms of the SG&A increase year over year.
Speaker Change: You know what we see exactly for 2025, we're going through the budgeting process and we'll give you guys more color on our next call. Obviously, when we provide 2025 guidance, but generally with that growth, we expect margins to continue trending up.
Speaker Change: Do you see that continuing to rise at the same pace and if so would you attribute the raise to the same drivers mentioned in the press release and on the call.
Speaker Change: We do not.
Speaker Change: You look sequentially from Q2, the changes not so drastic and the reason for that.
Speaker Change: And Oh, sorry.
Speaker Change: We have a very good backlog.
Speaker Change: Higher SG&A year over year is that at the beginning of the year as we disclosed in our previous call. We have salary increases that took effect at the beginning of this year. So if you look at it sequentially that the change is not that high.
Speaker Change: We keep closing.
Speaker Change: More jobs the web we even voice every blue so.
Speaker Change: <unk> keeps growing.
Speaker Change: Sure.
Speaker Change: Now to the hub.
Speaker Change: Different geographies too.
Speaker Change: That number one number two there were some nonrecurring expenses associated with the strategic review that a win.
Speaker Change: And my final question.
Speaker Change:
Speaker Change: There was obviously good news that the.
Speaker Change: East Coast and southeast ports are the strike was was minimal.
Speaker Change: <unk> expense in Q3 and number three.
Speaker Change: We incurred some aluminum tariffs that were put in place earlier in the in the year that were not there last year and those terrorists were subsequently reversed by early termination of the International Trade Commission. So we don't expect that going forward.
Speaker Change: If however, the ports eventually strike in January if if talks breakdown what sorts of options are available to you to satisfy demand in Florida, and the southeast and are you anticipating.
Speaker Change: As we move through the year.
Speaker Change: Shipping product ahead of the mid January.
Speaker Change: Thank you very much.
Speaker Change: Potential port situation. Thanks.
Speaker Change: Thank you.
Speaker Change: The next question is from Tim Weiss with Baird. Please go ahead.
Speaker Change: Well the porch that we're using.
Speaker Change: Hey, guys good morning, nice job.
Speaker Change: They are all private and they will not compromise with the port strike.
Speaker Change: Maybe just first question on the tariffs Santiago I guess first do you do you get that back in terms of any tariffs that you've incurred I mean does that kind of come back in the fourth quarter I guess, that's the first question and then.
Speaker Change:
Speaker Change: But there are several important so we can go through.
Speaker Change: The courses are the same.
Speaker Change: The difference between shipping to Miami or.
Speaker Change: Obviously, we're a couple of days from the election, but.
Speaker Change: Or a sham on ice.
Speaker Change: Cheaper to sell other than to Miami, So we could still find a way to come in.
Speaker Change: The precedent that it's going to it's going to be president has run on a on a on a tariff ticket and so you know I know China has been focus but it can also kind of expand to just any sort of imports. So what type of flexibility do you guys have around any prospective tariffs that kind of happened just on <unk>.
Speaker Change: But we always keep a good inventory of the products.
Speaker Change: Because we are always ahead of our customers. So at any point in time for example, today, we have two weeks deliveries already a store at the point in Miami.
Speaker Change: <unk> in general.
Speaker Change: Yes, and on the first question. The answer is yes, we get that fully returned to us and that would be reflected in Q4.
Speaker Change: Very helpful. Thank you gentlemen.
Speaker Change: The next question is from Julio Romero with Sidoti <unk> Company. Please go ahead.
Speaker Change: And I think that was a good test because what happened there is that a lot of those were passed on to clients and they pay for them without any significant issues and we saw you know other competitors doing the same so at the end of the day, what you would potentially see with tariffs given the fact that the U S is not self sufficient needs that import.
Speaker Change: Good morning. This is Alex on for Julio Thank you for taking questions.
Speaker Change: Just a follow up.
Speaker Change: Post strategic review is there any change expected to what avenues, you are considering to pursue growth.
Speaker Change: <unk> continued to be required and those are going to be passed onto inclines via pricing right. So our expectation is that everybody is probably going to be on the same boat and that's going to create inflation and I think you're seeing that reflected on the markets today.
Bobby: Hey, Bobby.
Bobby: Yeah, I mean, obviously, continuing taking market share and in leveraging our advantages each number one but we're also contemplating opportunistic tuck in acquisitions to be able to enter some of these new markets more efficiently. So everything's on the table, obviously has to make sense from a valuation perspective, but you know.
Speaker Change: And also I may add that.
Bobby: Our strategy has been has been strong and gaining market share organically.
Speaker Change: Columbia is one of the few countries.
Speaker Change: Even in a pattern or a deficit with the U S and trade.
Bobby: Yeah.
Speaker Change: Thank you.
Speaker Change: And one follow up.
Speaker Change: Awards.
Speaker Change: In terms of the SG&A increase year over year.
Speaker Change: Out of the 16 billion trade that we deal with the U S 9 billion easing commodity that we shipped like oil.
Speaker Change: Do you see that continuing to rise at the same pace and if so would you attribute the raise to the same drivers mentioned in the press release and on the call.
Speaker Change: Coffee bananas flowers.
Speaker Change: Call us.
Speaker Change:
Speaker Change: We do not if you look sequentially from Q2 the change he is not.
Speaker Change: Certainly we wouldn't expect that in country answer definitely with the U S would guess.
Speaker Change: So drastic and the reason for that.
Speaker Change: <unk> body, they will do we will pass onto the customers on.
Speaker Change: Higher SG&A year over year is that at the beginning of the year as we discussed in our previous call. We have salary increases that took effect at the beginning of this year. So if you look at it sequentially. The change he is not that high.
Speaker Change: And with aluminum like San Diego said, where when they.
Speaker Change: Actually we are paying to the 10% tariff on aluminum and we're getting it all back from customers.
Speaker Change: That number one number two there were some nonrecurring expenses associated with the strategic review that a win that nowhere expense in Q3 and number three.
Speaker Change: Okay. Okay. That's helpful. And then just as you think about backlog conversion.
Speaker Change: Your backlog now is up.
Speaker Change: We incurred some aluminum tariffs that were put in place earlier in the in the year that were not there last year and those terrorists were subsequently reversed by early termination of the International Trade Commission. So we don't expect that going for as we've moved through the year.
Speaker Change: North of 20% I think year to date.
Speaker Change: <unk> commercial U S revenue I think is is actually down slightly and so.
Speaker Change: Should we see a pretty big inflection and the implied U S commercial business in 2025 is that.
Speaker Change: Thank you very much.
Speaker Change: Backlog starts to convert.
Speaker Change: Thank you.
Speaker Change: Yes, and I think we discussed this last in the last call that some of these projects that are getting booked or some of the larger towers that take longer to get put in place. So it's not necessarily an 18 month conversion, but a longer data conversion. So we're essentially building into 2000.
Speaker Change: The next question is from Tim Weiss with Baird. Please go ahead.
Tim Weiss: Hey, guys good morning nice quarter.
Tim Weiss: Maybe just first question on the tariffs Santiago I guess first do you do you get that back in terms of any tariffs that you've incurred I mean does that kind of come back in the fourth quarter I guess, that's the first question and then.
Speaker Change: 26 already but the expectation generally is that the vascular will continue going as Jose just mentioned the other thing is that to the extent that residential continues to grow and is taking more and more of the overall revenue stream that doesn't get captured in the backlog right. So it doesn't necessarily mean that sequential growth.
Tim Weiss: Obviously, we're a couple of days from the election, but.
Tim Weiss: The precedent that it's going to it's going to be president has run on a on it on a tariff ticket and so you know I know China has been focused but it could also kind of expand to just any sort of imports. So what type of flexibility do you guys have around any prospective tariffs that kind of happened just on <unk>.
Speaker Change: <unk>.
Speaker Change: He is going to reflect as he did what future revenues will be because a lot of that revenue stream is coming from single family rescue, but but to answer your question. The expectation is for the bank to continue growing.
Speaker Change: Ports in general Yeah.
Speaker Change: Yes, and on the first question. The answer is yes, we get that fully returned to us and that would be reflected in Q4.
Speaker Change: Through year end, and obviously with the backlog composition. The conversion is probably extending more based on the complexity and magnitude of those projects.
Speaker Change: And I think that was a good test because what happened there is that a lot of those were passed on to clients and they pay for them without any significant issues and we saw you know other competitors doing the same so at the end of the day, what you would potentially see with tariffs given the fact that the U S is not self sufficient and he's not import.
Speaker Change: Okay. Okay. Good and then just just last one can you just remind us kind of where you are on the final ramp within residential.
Speaker Change: Yeah, So a lot of quotes steel.
Tim Weiss: <unk> continued to be required in those are going to be passed on to win clients via pricing right. So our expectation is that everybody is probably going to be on the same boat and that's going to create inflation and I think you're seeing that reflected on the markets today.
Speaker Change: So much slower than expected, but it is encouraging that we can very good feedback as we discussed last quarter. The main issue was not having the full line. So the vinyl doors for instance, that's been taken care of so we continue to expect that to be a meaningful contributor next year.
Speaker Change: And also I may add.
Tim Weiss: Columbia is one of the few countries that.
Speaker Change: Okay very good I'll hop back in queue. Thanks, everybody. Thanks.
Tim Weiss: In a pattern or a deficit with the U S and trade.
Speaker Change: Thanks.
Speaker Change: The next question is from Alex Rygiel with B Riley FBR. Please go ahead.
Tim Weiss: <unk>.
Tim Weiss: [noise] out of the 16 billion trade that we deal with the U S 9 billion easing commodity that we shipped like oil.
Speaker Change: Thank you and good morning, gentlemen, a couple of quick questions first.
Speaker Change: Santiago can you quantify the pull forward effect related to the exploration of the Florida sales tax labor.
Speaker Change: Golfie bananas flowers.
Speaker Change: Yeah. So if you look at the run rate that we were going with we were talking about maybe 85 million 90 million per quarter. In Q2, you will reach 109, and that's about right. I mean, if you think about the level of orders on that side.
Speaker Change: Okay cool so.
Speaker Change: I certainly wouldn't expect that in country definitely with the U S would guess.
Speaker Change: <unk> body, they will do we will pass onto the customers on.
Speaker Change: As of June it was up 60%, but not all of it was executed in Q3 as we discussed the expectation is that some of that is gonna be executing in Q4. So I would say Alex that generally maybe a good $50 million of what we did in Q3 was related to.
Speaker Change: And with aluminum like San Diego said, where when they.
Speaker Change: Actually we are paying to the 10% tariff on aluminum and we're getting it all back from customers.
Speaker Change: Okay. Okay. That's helpful. And then just as you think about backlog conversion.
Speaker Change: That pull forward.
Speaker Change: Your backlog now is up.
Speaker Change: The encouraging thing is that orders have leveled off right. So we're just going to have more invoicing in Q3, and Q4, but expect with a with interest rates coming down hopefully we expect.
Speaker Change: North of 20% I think year to date.
Speaker Change: Our commercial U S revenue I think is is actually down slightly and so.
Speaker Change: More business is going for as well as with this geographic diversification, but yeah, I would say $10 million to $15 million was what's embedded in Q3.
Speaker Change: Should we see a pretty big inflection and the implied U S. Commercial business in 2025 is that backlog starts to convert.
Speaker Change: And is there any chance the waiver is reauthorized.
Speaker Change: Yes, and then I think we discussed this last in the last call that some of these projects that are getting booked or some of the larger towers that take longer to get put in place right. So it's not necessarily an 18 month conversion, but a longer dated conversion. So we're essentially building into 2000.
Speaker Change: No. We do not know hopefully that is the case, but you know it's gonna be kind of more on the legislative side to determine that I think that based on the recent activity of Hurricanes is certainly a possibility I think is is definitely something that should be.
Speaker Change: 26 already but the expectation generally is that the battery that will continue going as Jose just mentioned the other thing is that to the extent that residential continues to grow and he's taking more and more of the overall revenue stream that doesn't get capturing in the backlog right. So it doesn't necessarily mean that sequential growth.
Speaker Change: And hopefully.
Speaker Change: If it is extended we will see some some tail winds behind that.
Speaker Change: And on that topic of Hurricanes can you sort of remind us how the.
Speaker Change: Demand pull through sort of plays out over the next couple of quarters for repairs and fewer new vinyl window product can sort of play into that opportunity at all.
Speaker Change: Good.
Speaker Change: He is going to reflect as indeed, what future revenues will be because a lot of that revenue stream is coming from single family rescue, but but to answer your question. The expectation is core for the bank to continue growing.
Speaker Change: Well.
Speaker Change: You know the truth is take a little time.
Speaker Change: Through year end, and obviously with the backlog composition. The conversion is probably extending more based on the complexity and magnitude of those projects.
Speaker Change: How about you.
Speaker Change: The claims.
Speaker Change: There is a lot of move with the bad debt.
Speaker Change: Okay. Okay. Good and then just just last one can you just remind us kind of where you are on the vinyl ramped within residential.
Speaker Change: We have seen a slowdown in orders on the west coast of Florida.
Speaker Change: Because of the Hurricane there were two.
Speaker Change: Two or three weeks.
Speaker Change: Nobody was doing anything though started to pick up again that we expect.
Speaker Change: Yeah. So a lot of quotes steel so much slower than expected, but it's encouraging that we're getting very good feedback as we discussed last quarter. The main issue was not having the full line. So the vinyl doors for instance, that's been taken care of so.
Speaker Change: A lot of work to get done next year.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: We continue to expect that to be a meaningful contributor next year.
Speaker Change: The next question is from John Ramirez with D. A Davidson. Please go ahead.
Speaker Change: Okay very good I'll hop back in queue. Thanks, everybody. Thanks.
Speaker Change: Thanks.
John Ramirez: Hi, Thank you for the time that it is John for Brent Thielman.
Speaker Change: The next question is from Alex Rygiel with B Riley FBR. Please go ahead.
Speaker Change:
Speaker Change: Thinking about the backlog and in context of the pipeline visibility.
Speaker Change: Thank you and good morning, gentlemen, a couple of quick questions first.
Speaker Change: Santiago can you quantify the pull forward effect related to the exploration of the Florida sales tax labor.
Speaker Change: And into 2026.
Speaker Change: Can you give a little more color as to what the burn rate looks like.
Speaker Change: Yeah. So if you look at the run rate that we were going with we were talking about maybe 85 million 90 million per quarter. In Q2, you will reach 109 and and that's about right. I mean, if you think about the the level of orders on that side.
Speaker Change: Is it more second half weighted.
Speaker Change: Given that you have projects.
Speaker Change: Take a little longer too.
Speaker Change: So revenue.
Speaker Change: Yes, let's start with that.
Speaker Change: Well I guess the back of the envelope calculation is that too.
Speaker Change: As of June it was up 60%, but not all of it was executed in Q3 as we discussed the expectation is that some of that is going to be executed in Q4. So.
Speaker Change: Two thirds of the backlog get executed within the first 12 months.
Speaker Change: I think perhaps based on the composition of projects that could change slightly maybe call. It you know.
Speaker Change: So I would say Alex that generally maybe you know a good $50 million of what we did in Q3 was related to the pull forward the.
Speaker Change: 60.
Speaker Change: 60% getting there in the first 12 months, but that's also going to be determined by how many light commercial projects were able to book from here on out.
Speaker Change: The encouraging thing is that orders have leveled off right. So we're just going to have more invoicing in Q3, and Q4, but expect with with interest rates coming down hopefully we expect.
Speaker Change: Because you know the.
Speaker Change: The backlog composition will have these kind of large projects that are multiyear, but you also get projects that you book on a spot basis that get deliver within you know six 912 months.
Speaker Change: More businesses going for as well as with this geographic diversification, but yeah, I would say $10 million to $15 million was what's embedded in Q3.
Speaker Change: And is there any chance the waiver is reauthorized.
Speaker Change: So that's yet to be determined.
Speaker Change: Based on what we have today, maybe it gets extended and is not you know 65% that gets executed over the following 12 months, maybe it's more like 60%.
Speaker Change: Yeah.
Speaker Change: No we do not know hope hopefully that's the case, but you know he's he's just going to be kind of more on the legislative side to determine that I think that based on the recent activity of Hurricanes is certainly a possibility I think is is definitely something that should be needed and hopefully.
Speaker Change: Then to the extent that the light commercial projects continued to pick up.
Speaker Change: Then that's going to change right. So.
Speaker Change: Visibility is more so on the longer dated projects, but we still have like commercial projects that cannot get booked.
Speaker Change: If it is extended we would see some some tail winds behind that.
Speaker Change: Day to day basis.
Speaker Change: And on that topic of Hurricanes can you sort of remind us how the.
Speaker Change: Okay.
Speaker Change: Thank you Annie.
Speaker Change: Regarding vinyl.
Speaker Change: Do you guys still think it will be five to 10 million contribution per month.
Speaker Change: Demand pull through sort of plays out over the next couple of quarters for repairs and fewer new vinyl window product can sort of play into that opportunity at all.
Speaker Change: In 2025 or.
Speaker Change: Is there a more of a target that you guys have thought of.
Speaker Change: Yeah, we're starting to pick up.
Speaker Change: Well.
Speaker Change: Joining me for <unk>.
Speaker Change: As you know the truth is take a lot of time.
Speaker Change: We have though the complete life, we are developing a couple of Gopro awards.
Speaker Change: Sure.
Speaker Change: The claims.
Speaker Change: Sure.
Speaker Change: We are better prepared.
Speaker Change: There is a lot of moves with the bad yet.
Speaker Change: We believe maybe the first two months with Tobin slowest months of the year.
Speaker Change: We have seen a slowdown in orders or the west coast to Florida.
Speaker Change: No.
Speaker Change: Yes.
Speaker Change: Because of the Hurricane there was like two or three weeks.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Nobody was doing anything though started to pick up again, we would expect.
Speaker Change: And.
Speaker Change: Just thinking about your relationship with single beam and the possible.
Speaker Change: All of that work to get done next year.
Speaker Change: This gallant and contribution margins.
Speaker Change: Okay.
Speaker Change: Can you provide a little more color into how that my.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: Show up in the P&L.
Speaker Change: Omission preliminary expectations.
Speaker Change: The next question is from genre mirrors with D. A Davidson. Please go ahead.
Speaker Change: Meaning our relationship with them and how we're able to supply the glass Gen.
Speaker Change: Hi, Thank you for the time that it is John for Brent Thielman.
Speaker Change: Generally cheaper market or.
Speaker Change: Right.
Speaker Change:
Speaker Change: The sort of discount that you guys expect it to get some then misled.
Speaker Change: Thinking about the backlog and in context of the pipeline visibility going into 2026.
Speaker Change: Just wanted to know are you guys thinking about that in terms of margin contribution.
Speaker Change: Can you give a little more color as to what the burn rate looks like.
Speaker Change: If you earlier, we were asked about the gross margin.
Speaker Change: Is it more second half weighted.
Speaker Change: Percentages for next year in <unk>.
Speaker Change: Given that you have projects.
Speaker Change: Thing that going forward, we should be able to hover around.
Speaker Change: Take a little longer too.
Speaker Change: So revenue.
Speaker Change: Yes, let's start with that.
Speaker Change: The kind of $45, 46%.
Speaker Change: Well I guess the back of the envelope calculation is that too.
Speaker Change: Next year with operating leverage and.
Speaker Change: Two thirds of the bag, a little get get executed within the first 12 months.
Speaker Change: Being able to purchase.
Speaker Change: Yes.
Speaker Change: At a discount from market.
Speaker Change: I think perhaps you know based on the composition of projects that could change slightly maybe call. It you know.
Speaker Change: It could potentially be higher I mean, we'll give you guys more color next quarter, when we provide full guidance, but at this point we haven't.
Speaker Change: 60.
Speaker Change: Quantify that because we are going through the budgeting process.
Speaker Change: P.
Speaker Change: 60% getting there in the first 12 months, but that's also going to be determined by how many light commercial projects were able to book from here on out.
Speaker Change: Thank you I appreciate the time.
Speaker Change: Okay. Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Jose Manuel <unk> for any closing remarks.
Speaker Change: Because you know the backlog composition will will have these kind of large projects that are multiyear, but you also get projects that you book on a spot basis that get deliver within you know six 912 months.
Jose Manuel: Thanks, everyone for participating able do those coal.
Jose Manuel: Please expect further news every quarter, we're doing really good.
Speaker Change: So that that's yet to be determined I mean based on what we have today, maybe it gets extended and he's not you know 65% that gets executed over the following 12 months, maybe it's more like 60%.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: But then to the extent that the light commercial projects continued to pick up then doesn't that change right. So.
Speaker Change: The visibility is more so on the longer dated projects, but we still have like commercial projects that can get booked on a day to day basis.
Speaker Change: Okay.
Speaker Change: Thank you and regarding vinyl.
Speaker Change: Are you do you guys still think it will be five to 10 million contribution per month.
Speaker Change: 20 to 25 or.
Speaker Change: Is there a more of a target that you guys have thought of.
Speaker Change: Yeah, we're starting to pick up.
Speaker Change: 25.
Speaker Change: We have though the complete life, we're developing a couple of new probes.
Speaker Change: Yeah.
Speaker Change: Be better prepared.
Speaker Change: We believe maybe the first two months.
Speaker Change: Slowest of the year.
Speaker Change: No.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: And.
Speaker Change: Just thinking about your relationship with single beam and the possible.
Speaker Change: Discount and contribution margins.
Speaker Change: Can you provide a little more color into how that my.
Speaker Change: Show up in the P&L.
Speaker Change: Listen preliminary expectations.
Speaker Change: Meaning our relationship with them and how we're able to supply the glass.
Speaker Change: Generally cheaper market or.