Tecnoglass Stock

Good day, and welcome to the Tecnoglass, Inc. Second Quarter 2026 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference call over to Mr. Brad Cray, Investor Relations. Mr. Cray, the floor is yours, sir.

Thank you for joining us for Tecnoglass' Second Quarter 2026 Conference Call. A copy of the slide presentation to accompany this call may be obtained on 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. 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 Tecnoglass' 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/or regulatory factors and other risks and uncertainties affecting the operation of Tecnoglass' business.

These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass' filings with the Securities and Exchange Commission. The information discussed during the call is presented in light of such risks. Further, investors should keep in mind that Tecnoglass' 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 #4.

Thank you, Brad, and thank you, everyone, for participating on today's call. We are pleased to report another period of record revenue that demonstrates the strength and resilience of our business with robust double-digit growth in both our single-family residential and multifamily and commercial businesses.

Our backlog is at another record level, and we continue to gain market share. The strength of our platform continues to differentiate us in the market. That includes the quality of our products, our vertically integrated low-cost model and our deep customer relationships.

As we discussed last quarter, we expected the cost pressure from tariffs to hit ahead of the offsetting benefit from our pricing actions and other efficiency measures. That played out as anticipated. We have spent years building the flexibility to operate through shifting cost and trade conditions. That model lets us respond faster than most companies in our industry facing those same cost pressures.

Demand remains strong even with our own pricing actions now flowing into orders. Our industry-leading advantages are truly hard to replicate. Our geographic expansion is gaining traction with strong reception of our recently launched legacy line in the West Coast showroom on track to open in late September to support growing demand, marking our seventh U.S. showroom opened in the past few years.

Our vinyl line continues to build momentum and our automation program is advancing on schedule. Subsequent to quarter end, we completed our redomiciliation from the Cayman Islands to the United States in July. This further aligns our corporate structure with our U.S. listing, enhances index eligibility and broadens our potential investor base.

We also expect to complete the purchase of the land for the potential new U.S. facility in the coming weeks. As we discussed last quarter, we continue to advance discussions with state and local authorities on incentives that will support the economics of the potential project, and we are working to finalize the remaining terms.

Tecnoglass has been built over many years with a focus on high-quality products, customer service and operational excellence. That discipline continues to underpin the business today.

Over the long term, we expect this model to keep generating durable cash flow, which supports our ability to return capital to shareholders. It also lets us keep investing in the growth initiatives that will drive long-term value. We remain as confident as ever in our ability to continue building long-term value for our shareholders.

I will now turn the call over to Chris to provide additional operating highlights.

Thank you, Jose Manuel. Moving to Slide #5 and 6. Our backlog grew 15.6% year-over-year to another record of $1.4 billion. Our backlog has shown consistent sequential growth every quarter since 2021, and our book-to-bill ratio of 1.1 extends our track record to 23 consecutive quarters above 1.0x.

Multifamily and commercial revenues grew 15.7% year-over-year to a record $168.8 million, reflecting consistent execution on an expanding project pipeline and continued market share gains, including growing contributions from projects beyond Florida.

The strength of our backlog is supported by several key factors. First, we experienced virtually no project cancellations as we typically install windows in buildings that are already well advanced into the construction process. Second, our mix has shifted toward larger high-end projects such as luxury condominiums and upscale lodging, which have been less sensitive to interest rate fluctuations. And third, the continued geographic diversification of our project portfolio is driving our expansion in untapped markets.

Florida represented approximately 3/4 of backlog in the second quarter versus approximately 80% in the first quarter and nearly 90% in the year-ago quarter, reinforcing our geographic expansion. Importantly, while this reflects strong growth in new markets, our Florida pipeline remains healthy, and we continue to expect strong demand trends in the Florida market through the balance of the year.

Moving to Slide #7. Single-family residential revenues grew 15.4% year-over-year to a record $126.5 million. This performance was driven by continued market share gains through geographic expansion, growing contributions from our vinyl product line and healthy order activity, including strong orders placed ahead of our May pricing actions.

As a reminder, approximately 65% to 70% of our single-family revenues are tied to repair and remodel demand, which is more resilient and less correlated with mortgage rate. We see multiple avenues to continue gaining share.

Our dealer network has expanded over 20% in the last 12 months, supported by our high-quality products and efficient 5- to 6-week lead times. We have generated approximately $15 million of single-family residential revenues outside of Florida year-to-date, on pace with our original target of roughly $30 million for the full year.

Our Los Angeles showroom is on track to open in late September, which will be our fifth showroom outside of Florida and seventh overall, bringing our legacy light aluminum window line to the West Coast market.

Our vinyl line continues to gain traction, contributing to this quarter's record results as we continue scaling across our footprint with this product that has more than doubled our addressable market.

Turning to Slide #8. Despite a muted residential market, Tecnoglass has consistently outperformed industry benchmarks with our single-family revenues growing at a roughly 40% organic CAGR since entering the market in 2018, while total U.S. residential improvement spending is expected to grow 5.1% this year.

From a regional perspective, the South Atlantic, Mid-Atlantic and West South Central Census divisions where our business is more concentrated are projected to be among the strongest performing regions for residential construction spending in 2026. This geographic alignment between our platform and strong markets, combined with our expanding dealer base and the ongoing vinyl ramp underpins our confidence in achieving our double-digit revenue growth guidance, which is well above expected end market growth.

I will now turn the call over to Santiago to discuss our financial results and full year outlook.

Thank you, Christian. Turning to the drivers of revenue on Slide #10. Total revenues for the second quarter increased 15.6% year-over-year to a record $295.3 million. Growth was broad-based with continued execution on our record backlog in multifamily and commercial and ongoing market share gains in single-family residential, aided by orders placed ahead of our May pricing actions. An estimated $15 million to $20 million of residential orders were pulled into the second quarter ahead of the May price increase. Order levels have since returned to a more normalized growth trend.

Looking at the profit drivers on Slide #11. Adjusted EBITDA for the second quarter of 2026 was $51.7 million, representing an adjusted EBITDA margin of 17.5% compared to $79.8 million or 31.2% in the prior year quarter. Second quarter gross margin was 37.3% compared to 44.7% in the prior year quarter. The year-over-year change in gross margin was primarily driven by several factors. This includes elevated U.S. aluminum costs with the average all-in U.S. aluminum price up approximately 77% year-over-year, higher labor costs related to the 23% minimum wage increase in Colombia at the beginning of the year and the Colombian peso that appreciated approximately 14% year-over-year.

The quarter also included approximately $0.7 million in severance costs related to headcount reductions under our efficiency and automation initiatives. These collective pressures were partially offset by operating leverage on record volume.

The May pricing actions began flowing into orders late in the quarter with the revenue benefit beginning in the third quarter. SG&A expenses were $73.5 million or 24.9% of total revenues compared to $53.1 million or 20.8% of total revenues in the prior year quarter. The increase primarily reflected approximately $17 million of expenses associated with the Section 232 tariffs on finished aluminum windows, along with higher transportation and commission expenses associated with our revenue growth and higher personnel expenses from annual salary increases, coupled with a stronger peso. This was nearly a full quarter carrying the new 10% tariff.

We provide a closer look at the margin dynamics on Slide #12. Aluminum was at a record high for the quarter. The average all-in U.S. aluminum price, which combines the LME benchmark and the Midwest premium was up approximately 77% year-over-year. Costs have come down from this year's peak in May. The peso has continued to strengthen and at approximately 3,200 to the dollar is currently at its strongest level since June 2019, running stronger than the assumptions in our prior outlook scenarios.

On average, a 5% movement in the Colombian peso impacts our gross margins by approximately 120 basis points. We will continue to be opportunistic in adding foreign exchange hedges where possible in addition to reducing our peso expenses in line with our ongoing automation-related headcount reduction.

I will walk through how our pricing flows into results. On the residential side, our May actions included a 7% adjustment. Those orders started getting invoiced right at the end of the second quarter. So the benefit begins in the third quarter and builds through September as more of what we ship reflects those actions.

In commercial and multifamily, pricing flows through over a longer time horizon. What we are invoicing today out of backlog was priced well before May, so the benefit reaches revenue as we book and execute additional projects. That starts in late 2026 on smaller quick turnaround jobs and in late 2027 on larger projects.

Putting that together, we expect third quarter gross margin to be roughly flat or slightly higher when compared to the second quarter, with improved pricing helping offset a stronger peso and continued high aluminum costs.

Now examining our cash flow and balance sheet on Slide #13 and 14. Cash provided by operating activities of approximately $4.4 million in the second quarter reflected the seasonal timing of annual income tax payments for our Colombian subsidiaries, which totaled approximately $26 million during the quarter, along with tariff-related payments and continued strategic purchases of U.S.-sourced aluminum as part of our supply chain resilience and tariff mitigation strategy.

Capital expenditures of $35.4 million in the quarter included scheduled payments related to previously announced capacity and automation investment. Our balance sheet remains solid. We ended the quarter with total liquidity of approximately $360 million and no significant debt maturities until the end of 2030. With a net leverage ratio of 0.6x, we maintain a conservative leverage profile that provides significant financial flexibility to continue investing in growth and returning capital to shareholders.

Our disciplined investments in operational excellence and our vertically integrated platform have consistently delivered superior returns relative to the broader industry, supported by our leading profitability and working capital management. We expect these trends to continue generating cash flows to support our history of balanced high-return capital deployment.

Now moving to our outlook on Slide 16. Based on our first half performance and the visibility provided by our order book, we are narrowing our full year 2026 revenue outlook to a range of $1.08 billion to $1.12 billion, with adjusted EBITDA in the range of $220 million to $230 million. This factors in our expectation for third quarter revenues to step down sequentially from the record second quarter, primarily reflecting some revenue pull forward ahead of the implemented price increases. That said, we expect year-over-year growth in each of the remaining quarters of 2026 and reiterate our expectation for double-digit revenue growth for the year, supported by a solid production schedule and a growing benefit from pricing.

Our automation and efficiency program reduced headcount by 10% as of the end of June with additional automation expected to be operational by year-end, providing incremental headcount efficiency. We are executing this program while preserving our capacity to serve a strong order book. We believe these actions are strengthening our cost structure and competitive position for years to come.

Our revised guidance accounts for prevailing high aluminum costs and a stronger-than-expected Colombian peso that has provided a higher-than-anticipated headwind to margins versus our prior assumptions. That being said, we continue to be highly encouraged with demand trends and our ability to grow well above industry rates. Within our guidance range, the primary factors remain the timing of project invoicing from our commercial backlog, the pace of residential end market activity, expansion into new geographies and vinyl and the trajectory of aluminum costs and foreign exchange.

As pricing initiatives and incremental automation savings are realized, we remain committed to fully offsetting the tariff impact in 2027. We expect capital expenditures in the range of $80 million to $95 million. This now includes the previously disclosed $20 million to $25 million for the purchase of the land related to the potential new U.S. facility, which we expect to complete in the coming weeks. Executing the land purchase preserves our optionality as the feasibility study continues.

If we decide to move forward with construction, the project would proceed in phases, with each stage evaluated based on demand trends, return profiles and overall market conditions. In conclusion, our results demonstrate the durability of our business model and the strength of our competitive position.

We are executing on a record backlog and gaining share in new and existing geographies. With a growing national presence in single-family residential and a solid balance sheet, we remain confident in our ability to deliver on our objectives and outperform the market for years to come.

With that, we will be happy to answer your questions. Operator, please open the lines for questions.

[Operator Instructions] The first question we have will come from Julio Romero of Sidoti & Company.

Maybe to start on the guidance adjustment. How much of the EBITDA guide reduction is on the stronger Colombian peso versus the aluminum side versus other costs?

Most of it, Julio. If you look at what we told you guys a quarter ago, the peso was at about COP 3,600, COP 3,700, and we were estimating that it could stay flattish from there. It has strengthened down to an all-time high since 7 years ago. So it went down to COP 3,200, while on the aluminum front, it's been stable since then. So nothing really surprising on the aluminum front. It's more on the FX side.

Got it. So just to clarify, FX by far the biggest lever here?

Yes.

Okay. That's helpful. And then on the gross margin that you mentioned, Santiago, that should be flat or slightly higher than 2Q. What kind of revenue step-up relative to the second quarter does that imply?

No. If you look at what we said, there is actually $15 million to $20 million of orders that came in ahead of the price increase in May, right? So what we're actually seeing is Q3 revenues in the range of $280 million or so, still quite a bit of growth year-on-year, but a step down from Q2 based on that pull forward.

Got it. And then last one for me is just on the commercial. I like how you described it into 2 buckets. Can you just kind of help us think about the rough split between the quick turnaround that hits in late '26 and the larger projects in late '27?

Yes. So the light orders really account for about $12 million to $15 million per month in terms of revenues. By year-end, that will still have some of the older pricing in Q3. But in Q4, you'll start seeing some of that getting invoiced with the newer pricing. So you get the benefit at year-end and obviously all of '27.

And then on the larger commercial stuff, we estimate that you start seeing the new pricing Q2, Q3. And that's obviously the rest of the commercial segment revenues. So you can kind of back into it with the range that I gave you of $12 million to $15 million on the light commercial side.

Next, we have Sam Darkatsh of Raymond James.

So a few questions, and thank you for the granularity around the third quarter expectations based on, obviously, a bunch of moving parts. Back of the envelope math, Santiago, I'm coming up with somewhere in the $45 million to $50 million range for EBITDA in the third quarter. Is that roughly accurate? Or am I missing some things on the OpEx line?

I would say slightly higher. At the higher end of that, I would expect somewhere close to Q2. And again, you have better pricing that is flowing through, but obviously, worse effects based on current conditions versus Q2, right? So at the end of the day, we're not expecting a step down sequentially Q3 versus Q2. The expectation is that we can get to somewhat of a flattish EBITDA result for Q3.

Are 3Q single-family sales expected to be down because of the pull forward and then it rebounds in the fourth quarter? Or what's contemplated in the single-family in the third quarter?

Yes. That's correct. And on single-family, you now have some of the better pricing flowing through, not all. But as we move into the quarter, you'll start invoicing all of it with the better pricing. So you do have the step down based on the orders that were pulled ahead of the price increase for Q2. So you do have some reduction, but then it steps up based on the better pricing toward the end of Q3 and all of Q4.

Got it. And my final question, if I could. Noticed no share repurchase of a material basis in the second quarter, unlike the 3 quarters prior. I think you still have $100 million authorized available for authorization. What are your thoughts in terms of second half repo and why the pause temporarily?

Working capital. I mean if you look at Q2, you have the seasonal effect of tax payments. We also have been doing prepurchasing of aluminum -- of U.S. aluminum to secure supply. And from an AR perspective, obviously, we're growing 15% year-on-year. So there's working capital demands. And that is not unusual that Q2 would be the one that uses the most working capital because of the factors that I just mentioned.

And then on top of that, having to prepurchase U.S. aluminum doesn't help. We expect cash flow from operations to improve in the second half of the year. So obviously, depending on what we continue to see from a working capital perspective, obviously, we still have some CapEx to invest. But yes, we do still have $100 million remaining on that authorization. So depending on what the Board wants to do, I would assume that the cash flow is better in the second half of the year to do some of that as well.

[Operator Instructions] The next question we have comes from Tim Wojs of Baird.

I guess I know there's a lot of moving pieces with pricing and tariffs and just kind of the macro. I mean, if you look at kind of the underlying demand environment today versus maybe where we were 3, 6 months ago, I mean, how would you describe it, both in Florida and kind of outside of Florida?

The demand is really high. I mean, it is surprisingly high everywhere across the U.S. We have -- how do we assess the demand because the quoting progress that we have is unbelievable. We have to even hire new people for quoting because the demand for new jobs is crazy, in Florida and outside of Florida, surprisingly, New York is coming back really strong also. So demand is there.

Okay. Okay. And then I guess when you think about kind of the peso and the aluminum costs, I mean, I think you kind of opportunistically hedged the peso in the past, and I don't think you've done anything on aluminum. Any kind of changes, Santiago, to those philosophies?

Yes. On the aluminum front, we shouldn't have really much of volatility for the second half of the year. We have already kind of pre-bought the rest of the year kind of at flattish levels. What's going to move the needle here is what happens with the peso. It appreciated quite rapidly ahead of the presidential elections that turned out as a pro-business result. So I think that increased a lot of confidence into the country and strengthened the peso. That happened really fast. So at this point, we are not hedged. We don't want to enter into hedges right now at a level that is the lowest we've had in the last 7 years, right? So to the extent that we see some normalization, then we'll try to be opportunistic. But as of now, we don't have any hedges, the rest of the year. So I think that the main variable from here on out is what happens on that front rather than what happens with the raw material cost.

Okay. Okay. And then just to kind of circle back on the tariff offsets. It sounds like everything is pacing to plan in terms of pricing and automation offsetting the tariffs. Is that still okay?

Yes. This is Christian Daes. I mean we have done so many moves and automation in the plant that within the next 6 months, we're going to be able to really become more profitable and be more efficient. And we are starting to see the results. The new machinery started to come in. And I really believe that we -- this exercise is going to be really good for the company because at the end of it, we're going to be a much stronger and efficient company.

I'm showing no further questions at this time. We will go ahead and conclude our question-and-answer session. I would now like to turn the conference call back over to Mr. Jose Manuel for any closing remarks. Sir?

Well, thanks, everyone, for participating on today's call, and we're going to have much better news for the rest of the year and especially for the years ahead. Thank you.

And we thank you, sir, for your time today and the rest of the management team. The conference call has now concluded. At this time, you may disconnect your lines. Thank you. Take care, and have a great day, everyone.

Hello, everybody. Welcome to the latest episode of BBI LatAm. This is a video series from Bradesco where we explore investment trains across Latin America and emerging markets. So I'm Ben Laidler, the Head of Equity Strategy here at Bradesco in London. And I'm joined by my colleague Murilo Riccini from Sao Paulo, who leads equity strategy across the Andean region.

So today, we have the pleasure of being joined from Barranquilla, Colombia by Santiago Giraldo, the Chief Financial Officer of Tecnoglass. Tecnoglass is a leading architectural windows and glass company that's vertically integrated from manufacturing in Colombia to selling in the United States.

Despite these Colombian routes, the stock's headquartered in Miami. It's been listed on the New York Stock Exchange since 2013 under the ticker TGLS. Putting it historically a little bit more under the radar screen for Latin American investors, hopefully, something we can solve a little bit with this interview.

I'm just going to start with a few numbers as usual to set the scene. $1.9 billion, that's the current market capitalization of Tecnoglass in U.S. dollars. 18 million, that's the average daily traded value of the stock over the last 3 months. I think if you're actually listed in Colombia, that would make you 1 of the top 3 most liquid stocks there, interestingly.

And finally, 15%, that's the compound annual sales growth of the company since the IPO in 2013, so a pretty impressive number.

So that's enough for me. Santiago, thank you very much for coming on. Maybe before we dive into the business, you could just tell us a little bit about your background and how you came to be the CFO of Tecnoglass?

Absolutely. Ben and Murilo, thanks for having us. Happy to present Tecnoglass to all the audience. By the way, background, I was actually on your side, much longer than I was on the CFO role. I was a banker for JPMorgan and Citibank. In my previous life, I lived in the U.S. for 10 years after graduating from my MBA and then moved to Colombia to work for Citibank in the investment bank, mainly focused on oil and gas at the time in the corporate and investment bank. And then after that, I decided to move into the other end. One, being the CFO for 1 of the companies that you probably cover, [ Ecopetrol ] and 1 of their subsidiaries, the time needs a CFO. So I decided to make the move and then about 10 years ago, I moved to Barranquilla to take on this new challenge for Tecnoglass, which at the time was a very [ niche ] in company into [ financial ] markets. And I'm being public and they needed somebody with experience, kind of help guide the process. And it's been quite a ride, indeed. I mean, I'm sure we'll go into some more detail of that.

But since then, I've been here as a CFO and Head of Investor Relations. And they're really happy not only for the current situation and how we have evolved, but for the future of the company.

So Santiago, starting with the basics. What does Tecnoglass do with what makes you different in this industry?

Yes. This company started about 45 years ago in Colombia. It was a company that essentially ensemble windows. And along the way, the owners and our principles right now found that the more very clean that we can be and the more value that we can put into the process, the better and more profitable we could be. So they started investing into equipment to actually not only ensemble windows, but transform glass, transform aluminum and started slowly but surely verily integrating the process. At first, it was a play mainly focused on Colombia, then expanded a little bit into the Andean region. And about 25 years ago, it was pretty evident that if we were going to grow, it had to be mainly into the U.S., which is a per market for a Colombian company that is based off the coast in 3 to 5 days from Florida. So starting to develop relationships, mainly in South Florida and Miami, the company started doing a little bit of business in the U.S. At the time, it was only, I would say, 5% of our total revenues and a few years later, a couple of decades later, now it's 97% of our total revenue base.

So essentially, what we do is we provide end-to-end solutions for the architectural glass and windows space, mainly high-end properties, think about high-end condos, Class A office space, luxury lodging. And then 2018, when we were essentially all commercial construction, including multifamily, we decided to make a move to the single-family residential space. So now today, the company supplies windows and glass for both the commercial and single-family residential space, mainly in the U.S., we still do the Caribbean Central America, South America, but 97% of our business in the U.S. And now much more diversified, 45% of our business is single-family residential, 55% of our business is commercial construction.

So we compete in the high-end side of things. I mean we essentially provide a product that is high value added, whether that is impact resistance, energy efficiency, sound [ protetized ] products. So everything is built to suit and really, we're now just becoming national. Our main core markets were the Southeast of the U.S., but I'm sure we'll probably go into more detail as to the strategy of the company. But now the company is fully penetrating the rest of the U.S., that's what we're excited about.

Thank you. Yes, yes. That's great. I just -- maybe just following on from that. So big picture, how do you think about the sort of big structural tailwinds of this business? Should we think about it as a play on the U.S. construction cycle? Should we think about it as a play on the sort of growth of South Florida or the broader sort of U.S. Sun Belt states? Something else, how should we sort of conceptualize the longer-term trend?

Well, there's definitely different trends not only industry related, obviously, construction is cyclical. By being in different segments, we play on different cycles, right, because commercial construction and single-family residential construction do not hit at the same time. But what can keep though, we tend to kind of smooth that over now with how differentiated we are.

But there's definitely trends. For instance, you see much more glass than you see some cement in the new structures that are getting built out, right? I mean everything is aesthetically pleasing. People like views and you see trends related to sustainability, [ ESG ]. So for instance, impact resistance. Obviously, with everything that's going on with climate change has become more important. And there are drivers that make it, so there's more investment in to impact resistance. There's insurance waves. There are tax incentives.

So there are things that are serving as a tailwind to our business, and that has been the case for a few years.

Migration, right, South Florida, as everybody knows, has become very popular. Been booming for the last 5 years, 7 years, generally taxed by states in the Southeast and the Sun Belt states are doing better than others. And that happens to be our core markets historically as. As we go into our conversation, we want to expand geographically and become a nationwide company altogether.

Yes, immigration is also serving as a tailwind not only within the U.S. from people relocating from high tax paying states to this tax-friendly states, but also foreigners. Foreign buyers who want to invest in their second homes, mainly in Florida and the Southeast.

So yes, there are definitely trends that serve for. As I tell to our business technology, there's new technology that is being developed where Windows now will serve as a power to build, right? In other words, you have windows that absorb energy all day, and now it's going waste. Now there's technology that will allow those windows to power building, right?

So there's a lot of stuff that is coming that will help our business continue to grow.

Fascinating. Okay, so on that, let's delve into the business. Murilo?

So my next question is, what is your current outlook for the U.S. commercial and multifamily segment, including the backlog growth and key profit drivers?

Yes. It's interesting, obviously, because when you look at the headlines, there's challenges, right? And a lot of our peers are not growing or they're decreasing volumes. And obviously, the cost pressures on the other side of the equation are not making it easier, right? But we're growing double digits and a [ monopole ] on digits. I mean we've been growing our 15%, 17% since becoming public [indiscernible]. We're expecting to grow double digits, that's embedded into the guidance that we provided to the market. And the reason we're able to do that is because we're winning markets here, right? Not only in our core markets but also expanding geographically. We [ were ] entered a new vinyl market a couple of years ago, and we're leveraging our competitive advantages. As you would see in our margin profile, we obviously have a much leaner and much better cost structure that allows us to price competitively if we need to be. But that's not the strategy. We want to be profitable. We want to get paid based on the type of quality of the product that we provide. But having a more efficient cost structure, obviously has a ton of benefits. But we want to win with quality. We want to win with efficient lead times. We want to win with superior service. And that has allowed us to gain a lot of market share over the last 10 years or so.

Our backlog, as you mentioned, is at a record level of $1.4 billion right now. So we have a lot of visibility not only the 20 -- to 2026 and 2027, but now building into '28.

So despite the challenges that you're seeing in the market generally, we're very optimistic in the sense that we can continue to gain market share for the foreseeable future.

If I can just pick up from that. I mean that was, I guess the commercial multifamily, right, that's sort of core business. But as you mentioned earlier, the expansion into single-family, it's now, I -- 40% of your business, you've been doing it less than 10 years, it seems to be a home run, but it also strikes me that it's a very different business, maybe with a different cycle. Could you maybe just sort of talk about maybe how it's different and the trends that you're seeing there?

Yes. And in general, if I were to break it down, we're expecting both segments to grow double digits this year. But [ again ], it's coming from different directions. On the commercial side, we're expecting double-digit growth because of the backlog that we've been able to build up until this point. So we know it's coming, right? These are projects that are getting executed. No big surprises. We kind of know how that's going to play out. And again, that is more favorable conditions in our core markets in our ability to gain market share as we expand wider into the U.S.

On the single-family residential side, just by way of context for the audience, we started in 2018 and did less than $10 million in revenues. Last year, we made $400 million. [indiscernible], so we're getting market share with a differentiated product, obviously competitive as far as pricing goes, but that segment is a bit more challenging [ and a little bit more challenging ]. And to give further context, we are not heavy on single-family residential new home construction, 70% of what we do is repair and remodeling, so cycles hit differently, right?

When you have a lot of R&R, the drivers are different. So for instance, when you have this level of inflation and very high mortgage rates, well, the people that are locked into a 3% mortgage rates are not going anywhere. So as opposed to buying new homes, they're going to reinvest in their current ones. That's where we are right now, right? So I think 1 of them is consumption is for people to tie our business to new single-family residential construction, right? We sell very little to homebuilders. So that's not the driver for us. By being more exposed to RN, you can mitigate the cycles and the volatility of the business.

That being said, where that segment growth is coming from is mainly from the geographical expansion that we were undertaking. It used to be that single-family residential was strictly Florida. We have opened up 6 showrooms throughout the U.S., [ Manhattan ], Charleston, Houston, Phoenix and Los Angeles. So we're now much more diversified. We're selling into different states. We have a new window that is made out of vinyl, which is 60% of the total addressable market as opposed to 30%, which is aluminum. So that gives us a lot of options, right? That gives us a lot of options to go out and take market share and grow in the different segments.

So while we're projecting our core aluminum window market for the single-family residential space in Florida to be kind of flattened, maybe growing low single digits. We're expecting the entire single-family residential segments to grow double digits all in because of the opportunities that we have outside of Florida.

That's great. Let's talk about that. Murilo?

Yes. Santiago, going a bit deeper on this. So what are the main pillars of your growth strategy in terms of geography and product category. Is it capacity expansion plans in the U.S.?

Yes. So in terms of product diversification, if you think about the way this works, we have been very focused on [ impact resistance ] windows, right? So that means South Florida, that means coastal area, so it could be the Gulf of Mexico, it could be the Carolinas. But then as you start expanding throughout the U.S., you don't need that type of window, right, right? So we went back to the drawing board and developed windows for the broader U.S. market. That means a lighter aluminum window. That means getting into vinyl for the audience just to differentiate both products. A heavy frame, aluminum window is required for impact resistance. But if you step outside into the Midwest or the West Coast, you don't need that. So nobody is going to pay what that costs, right? But then on the other hand, a vinyl window, which is cheaper, is better for energy efficiency. So when you think about places that have huge energy fluctuation like huge temperature fluctuations, you require more of a vinyl product, right? So coincident -- not coincidentally, as we were stepping outside of the U.S., we had to develop new products because it's not like you can just sell the same product that you sell in Miami, in Phoenix. We are now at a point where we have the products, right? So we're now just starting to ramp up 1 of those products for outside of Florida. You have to first kind of have the product. We opened up showrooms to establish more relationships. We hire salespeople away from the competition, and we're ready to go.

I mean, this year, we're going to sell probably around [ 60 ] million between vinyl windows and aluminum windows outside of Florida. So it's starting to contribute that why even when we project at the core market, it's going to be flattish or grows low single digits, we're still projecting the overall segment to grow double digits because of the opportunities to step outside of [ core ] markets.

I wanted to go back to something you talked about earlier, which was, I guess, the capacity in Colombia, the sort of DNA, the business and the building of the sort of virtual integration strategy. I look at your profit margins, much higher than your competitors. How much of that is because of the vertical integration? How much of it is something else? And maybe if you could just sort of talk to us through the degree of vertical integration and what you see as the benefits there?

So we'll start with the footprint of the business. We're fully very clean-graded in the sense, that we buy raw materials even -- the main 2 raw materials that we have are rock glass which is a glass that is just sand turn into glass and raw aluminum billets, that's 85% of our raw material cost. The aluminum we buy from traders, that's a commodity. The glass we buy from a joint venture that we have with [ Saint-Gobain ] on which we announced a few years back, so that gives us efficiencies. And then from then on forward, we do everything end to end. We take those raw materials and we transform that glass to make it impact resistance, energy efficient, sound proof. We take the raw aluminum billets and we make the frames. We ensemble our own windows. We export to the U.S. We have our own distributor to get it to the end client. We have our own installation arm to do the installation on commercial products. So what that does is to leave us a higher margin profile, right? When you're not like having to leave margin outside of your house, so to speak, because you're able to do everything in-house, so your margins are going to be better.

On top of that, if you look at our business model, it's kind of like taking the best of both worlds, we're able to manufacture in Colombia where the minimum wage is probably the equivalent of about $1 an hour versus our U.S. counterpiece. What are they paying, I don't know, $30 an hour, if not more, right? But we're also having the benefit of transporting from Colombia to the U.S. And if you think about this Colombia's 1 of the few countries in the world that has a trade deficit with the U.S.

So we're benefiting in a big way from having a much more efficient labor cost structure and also having -- the benefit of having efficient transportation into the U.S. There's a lot of U.S. containers [indiscernible] are back empty because our main [ exit ] country commodities and the travel. They travel by bulk, they don't travel in containership. So we're able to use that dead weight again back into the U.S. very efficiently, right?

So all in all, to answer your questions, if you take our margin [ 4.25% ], and then we end up at 28%, 29%, which is significantly higher than the industry average, which could be in the low teens, maybe a well-run company is hitting 15%, 16%. So there's a good 15 points of difference between what we're able to achieve and want a player in the U.S. is able to achieve. I would say maybe 60% of that is attributable to the [ arbitrage ]. And then the rest is being able to have a fully very integrated model as well as cheaper SG&A, not only labor but everything else that comes with -- and being able to manufacture in Colombia, but selling into the high-end market that we sell into the U.S.

So it's a good business model. One, we take advantage of having labor availability in Colombia, very qualified. We've been doing this forever. A lot of these employees have been here for 5, 10, 15 years. So when the question comes about how someone can replicate this is very difficult. This is something that has been in the works for 40 years, right? From the ground up, growing organically and developing talent inwards, not necessarily be able to go out and getting new employees to do this would be very challenging.

Right. Murilo?

Yes. Santiago, I'm discussing a little bit more of these challenges. So how are you managing the cost pressures, particularly related to [ tariff wars ], which are highly discussed, and also aluminum prices and the Colombian peso, which is something very important for the company, right?

Yes. So let's start with the input cost. And obviously, they go together because tariffs and aluminum costs are quite correlated. If you look at what's happening right now with the things that the administration put in place in terms of tariffs, aluminum was hit pretty hardly, right? And the way that, that is kind of laid out is, okay, if you are able to supply U.S. aluminum, you can bypass most of the tariff you still have to pay, 10% on the way back out. But what has happened is that the U.S. is not self-scientific as far as what it is -- what it needs for aluminum internally, it is only able to supply roughly 40% of its internal needs. So obviously, if you look at what has happened with not only LME because of the war and some other disruptions, aluminum has gone up quite a bit. But also the U.S. premium. The U.S. aluminum premium has gone up over 350% [ year-on-year ] as a result of these tariffs, right? Because everybody is looking to purchase your aluminum to bypass the tariff.

What's happening right now is that almost indifferent, right? I mean it's almost indifferent if you pay the tariff or if you buy your aluminum. So what was intended to be something favorable for U.S. manufacturer is not the case, because as a U.S. manufacturer, you're having to either pay for the U.S. aluminum at a much higher price or import the aluminum from a different place since the U.S. is not self-scientific. So it's a watch, right? This is impacting everybody altogether.

That said, because this is impact -- all together, everybody is raising pricing, right? So as expected, not only with our business with many, other businesses, if you look at what's taking place with inflation, everybody is having to take pricing actions, right? It is 1 of the few ways to counter and offset the impacts of what's happening.

So we were able to adjust price on the lowest of the industry because we feel that we're in a position to take market share. One, the industry as a whole raises prices between 6% and 12%. So by doing kind of like the lower end, we feel we can further go out and penetrate the market and take advantage of the disruption that is taking place right now. Obviously, there's probably short-term pressures on margins, but we don't feel that this is structural at some point is going to kind of reverse and alleviate some of this. We don't know what's going to happen with tariffs.

But [indiscernible]. We're fully prepared to fully offset the tariff impact in '27 by doing [ animation ], by logistical improvements and by the price increases that took place in May. So obviously, we're still going to have the impact of higher aluminum and we'll see where that goes. But we're going to be able to fully offset the impacts of the tariffs that were put in place this year.

On the other end, you have FX, which -- for those of you that follow Colombia, right now, the peso is abnormally strong in our view and our exposure is mainly to the local cost that we have to pay mainly for labor costs, right? We're doing anomaly throughout this year. So we think there's going to be a head count reduction that we can put in place, [ age lowering EXP ]. To those experienced denominated in the [ Colombian ]. So I think -- does it [ picked up of ] going down grade.

But in terms of having able to mitigate that exposure we do opportunistic hedging, one we try to be able to hedge above our budget rate, therefore, just kind of taking that variable out of the equation and trying to reduce that exposure as much as we can, right? I able to dollarize some of these costs and expenses. We can do that. And be able to be opportunistic in terms of right now is abnormally strong, but our feeling is that based on the overall country's finances and the rate differential that, that is abnormally high right now. We think that's going to normalize longer term.

Interesting. Okay. So it's time for the quick fire round. This is shorter questions and shorter answers. I want to talk strategic focus, right? You talked about growth, you've talked about efficiency. You've talked about innovation, automation, what's the focus? Where are you spending on those 3? Where are you spending most of your time right now?

I would say growth. I mean product development, market share taking, pushing our products throughout the U.S., getting to be a true nationwide company. Obviously, innovation matters, new products are important. New technologies are important. But I think what we want to do is expand, grow, take market share and become twice the company that we are in the next decade.

Yes. So capital returns. What is your current priority for your capital returns? So dividends, share buybacks and other alternatives?

To the extent that we can continue reinvesting in growth, working capital and CapEx, the return on invested capital is much higher than the alternative. But if you look at the cash flow generation over the last couple of years, we've been able to invest significantly in growth CapEx because maintenance CapEx is less than 1% of revenues here. So we have a lot of discretionary CapEx to support the ongoing growth to the extent that we can find ways to continue growing the highest return that we can achieve. However, because of the cash flow generation, we have invested over 150,000 in buybacks, we obviously see an opportunity there based on current valuations. And the company pays a quarterly dividend at about 1% yield or so.

So we want to make sure that is a balanced approach. We invest in the business and return cash to shareholders, right?

You've talked about some of the inevitable pressures and cost pressures of the business. But if you look across the risk and some of the headwinds combination, interest rates, the Colombian [indiscernible]. What's the 1 that I don't know either worry you or you spend most of your time trying to mitigate?

I think we're controlling what we can control, right? I mean, in terms of looking for efficiencies, in terms of like doing pricing actions when there's price elasticity, we're doing that. What we can't control is how the rules change. And what I mean by that is it's hard to kind of run a business when you wake up and there's new tariffs in place, right? And we don't have clarity as to what this looks like long term, right? As a result of that, seeing raw material inflation, right, that is impacting everyone. So we control what we can control. And from a macro perspective and geopolitical perspective, the hope is that a lot of these headwinds can move out of the way, and we'd be in a better position, meaning we would have grown 10% to 15%, a much larger company with some of these pressures that we're currently seeing, right?

Interesting. So last question, Santiago, and very important one. What is the biggest misconception investors currently have about your business in your view? And what is the key point you believe they are missing?

Well, I think your viewers will probably have a lesser misconception that some of the U.S.-type investors that we come across, right? Because when you're exposing the Colombian angle, obviously, that comes with huge benefits, right, in terms of how profitable we can be and how efficient we can be. But it's also hard to not get bucketed into other EMs, meaning getting Colombia bucketed with Venezuela, for instance. [indiscernible] situation, some geopolitical turmoil in the region that us having kind of left this government for the first time in a century in the country. We're not experiencing it, right? I mean we have experienced kind of stable democracy, not any [ hyperinflation ], right?

So I think it is important to understand what it means to manufacture in Colombia. We're trying to portray that this company is centric in the way that so long as the economy goes, so long as the building industry goes in the U.S. will go right, the fact that we manufacture in Colombia should not be perceived as an incremental risk, right? I mean, it's not like the company is at risk because of the geopolitical tensions around the region. One, the main drivers are related to how the U.S. behaves. That, number one.

And number two, I would say that when you see the general headlines and the leading indicators that tell you, okay, new home construction is down 20% year-on-year, we get bucketed into that. So I think it's important to understand 2 things. Our main markets are outperforming the broader U.S. and we're not necessarily tied to new home construction, right? We have a more resilient business model. I say generally that would be the main 3.

Great. I think that's a good place to end. Santiago, thank you very much for joining Murilo and I in discussing [ TGLS ].

Appreciate you guys having us.

Thank you, Santiago. All right. So that was another episode of BBI LatAm, the Bradesco video series exploring investment trains across Latin America and emerging markets. If we've wetted your appetite and you want to learn more about Tecnoglass, please head over to their Investor Relations website, that's investors.tecnoglass.com. Thank you. Goodbye.

Good morning, and welcome to the Tecnoglass, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brad Cray, Investor Relations. Please go ahead.

Thank you for joining us for Tecnoglass' First Quarter 2026 Conference Call. A copy of the slide presentation to accompany this call may be obtained on 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. 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 Tecnoglass' 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/or regulatory factors and other risks and uncertainties affecting the operation of Tecnoglass' business.

These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass' filings with the SEC. The information discussed during the call is presented in light of such risks.

Further, investors should keep in mind that Tecnoglass' 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 #4.

Thank you, Brad, and thank you, everyone, for participating on today's call. We are pleased with how our business performed to start 2026 and more importantly, with our positioning heading into the rest of the year. The demand environment for our products is favorable. Our backlog is at a record level and order activity across both our commercial and single-family residential businesses continues to build momentum.

The fundamentals of what we do, the quality of our products, our vertically integrated model and our customer relationships are as strong as they have ever been. That underlying momentum is important context for how we view the recent trade policy changes affecting aluminum-containing imports. The trade policy changes do not change our competitive position in the market, and they do not reflect any softening in demand for our products.

We have been preparing for and navigating a dynamic cost and trade environment for a handful of years now. We have invested in our supply chain to structure our sourcing and built a platform with the flexibility to adapt. Our industry-leading cost structure and vertically integrated model allows us to respond to these changes with more agility than most competitors. We have implemented pricing actions and remain confident in our ability to execute these increases while preserving our competitive position.

We are confident in our trajectory because we are not just reacting to macro conditions. We are investing in the long-term growth of the business. Our vinyl expansion and geographic expansion are gaining traction. We are opening new showrooms and entering new geographies. Projects outside of Florida accounted for almost 1/4 of the total backlog as of the end of the first quarter.

We are advancing the U.S. re-domiciliation, which will further align our corporate structure with where we operate and invest. And we continue to evaluate the potential construction of a new U.S. facility based on the potential returns and market conditions meeting our thresholds. If we decide to move forward, this automated facility will expand capacity, improve lead times and position us for expansion opportunities we do not fully serve today while expecting to preserve a strong margin profile.

We have built Tecnoglass over many years by focusing on product quality, customer service and operational excellence. Our business generates strong cash flow, and we remain committed to returning capital to shareholders while investing in growth initiatives that will drive long-term value. We are confident in our ability to deliver on our full year objectives and continue building long-term value for our shareholders.

I will now turn the call over to Chris to provide additional operating highlights.

Thank you, Jose Manuel. Moving to Slide #5 and 6. Our backlog grew 19.1% year-over-year to a record $1.36 billion. Multifamily and commercial revenues up 20.4% year-over-year to a record $160.5 million, reflecting consistent execution on an expanding project pipeline and market share gains. Our backlog has grown sequentially every quarter since 2021, and our book-to-bill ratio of 1.3x extends our track record to 21 consecutive quarters above 1.1x.

We have virtually no project cancellations as we install windows in buildings already well advanced in construction. In recent years, our mix has shifted toward larger high-end projects such as luxury condominiums and upscale lodging, which are less sensitive to interest rate fluctuations. Our growing geographic diversification also reduces regional concentration risk.

Moving to Slide #7. Single-family residential revenues were essentially flat year-over-year in the first quarter, mainly reflecting the timing of invoicing. Demand was better represented by orders, which grew 3.4% year-over-year and 14.1% sequentially with additional momentum into April. Approximately 65% of our single-family revenues are tied to repair and remodel demand, which is more resilient and less correlated with mortgage rates.

This provides a more stable demand base regardless of new construction activity. We see multiple avenues to continue gaining share. Our dealer network has expanded over 20% in the last 12 months. Our vinyl line continues to gain traction with robust quoting activity as evidenced by the highest monthly order level to date in April. Our Los Angeles showroom is on track to open in the coming weeks, bringing our legacy light aluminum window line to the Southwest market and marking our fifth showroom outside of Florida and seventh overall.

Turning to Slide #8. Despite a muted residential market, Tecnoglass has consistently outperformed industry benchmarks with our single-family revenues growing at a roughly 40% organic CAGR since entering the market in 2018. This outperformance comes even as the national residential construction spending and remodeling activity have remained muted during the last couple of years. We are well positioned to continue performing.

Our business and geographic penetration strategy is concentrated in regions which are projected to lead residential construction and spending growth in 2026. Combined with our expanding dealer base, new showroom openings and the ongoing vinyl ramp, this underpins our confidence in achieving double-digit revenue growth guidance, which is well above expected end market growth expectations.

I will now turn the call over to Santiago to discuss our financial results and full year outlook.

Thank you, Christian. Turning to the drivers of revenue on Slide #10. Total revenues for the first quarter increased 12% year-over-year to a first quarter record of $249 million.

The growth was driven by positive momentum in our multifamily and commercial business, which grew 20.4% year-over-year, reflecting strong execution on our record backlog and market share gains. This was partially offset by roughly flat single-family residential revenues, mainly reflecting the timing of order conversion into revenue with modest invoicing in January and February, giving away to a strong pickup in March and continued positive momentum into April.

Looking at the profit drivers on Slide #11. Adjusted EBITDA for the first quarter of 2026 was $61.5 million, representing an adjusted EBITDA margin of 24.7% compared to $70.2 million or 31.6% in the prior year quarter. First quarter gross margin was 38.5% compared to 43.9% in the prior year quarter.

The year-over-year decline reflected the continuation of several dynamics that persisted into 2026, an unfavorable revenue mix from a higher proportion of installation revenues in commercial and multifamily, elevated U.S. aluminum costs with aluminum LME plus U.S. premium spot rates increasing approximately 48% year-over-year and a 12% year-over-year appreciation of the Colombian peso further pressured margin.

We also realized higher salary expenses related to the annual salary adjustments at the beginning of the year. These headwinds were partially offset by stronger pricing and operating leverage on higher volume. SG&A for the first quarter was 20.4% of revenue compared to 19.1% of revenue in the prior year quarter. The increase primarily reflected aluminum and reciprocal tariff expenses, higher personnel expense from annual salary adjustments at the beginning of the year and a stronger peso during the period, higher transportation and commission expenses associated with revenue growth. We also had a onetime $2.9 million expense related to a government-imposed wealth tax on large companies in Colombia to address a government declared climate-related emergency.

We provide a closer look at the margin dynamics on Slide #12, namely aluminum and FX. With respect to aluminum, it is important to distinguish between 2 separate dynamics. The first is the escalation in underlying aluminum cost, which was the primary driver of margin pressure in the first quarter. Global aluminum LME rates and U.S. Midwest premiums reached record highs during the quarter, increasing approximately 48% year-over-year and creating industry-wide cost pressure.

The second dynamic is the 10% Section 232 tariff on finished aluminum window imports, which was enacted April 2026 after the close of the first quarter. We are proactively addressing this new tariff through pricing actions effective on early May orders and are advancing additional operational efficiencies, including logistics optimization, increased automation and headcount rationalization to further mitigate the impact as we move through the year and expect to fully neutralize it in 2027.

Looking at the foreign exchange dynamics, the Colombian peso appreciated approximately 12% year-over-year. Given that approximately 25% of our costs are peso-denominated, primarily representing labor cost, this appreciation pressured margins, compounded by annual salary adjustments in Colombia at the beginning of the year.

On average, a 5% movement in the Colombian peso impacts our gross margins by approximately 110 basis points. To partially mitigate the exposure, we executed additional hedges during the quarter on a portion of our Colombian peso exposure and will continue to be opportunistic in adding incremental coverage throughout 2026.

Now examining our cash flow and balance sheet on Slide #13 and 14. First quarter operating cash flow of $6.7 million reflected a strategic decision to secure approximately $34 million of U.S. sourced aluminum as part of our tariff mitigation and supply chain resilience strategy, which is expected to provide cost benefits in the middle of the year. Capital expenditures of $17.3 million in the quarter included scheduled payments on previous investments and early investments on additional automation.

Our balance sheet remains solid. Total liquidity of approximately $425 million at quarter end, including over $330 million of availability under our revolving credit facility. We have no significant debt maturities until the end of 2030. With net debt to LTM adjusted EBITDA approximately 0.4x, we maintain a conservative leverage profile that provides significant financial flexibility to continue investing in growth and returning capital to shareholders.

Our disciplined investments in operational excellence and our vertically integrated platform have consistently delivered superior returns relative to the broader industry, supported by our leading profitability and working capital management. These strengths continue to generate sustainable cash flow and shareholder value while preserving financial flexibility to pursue additional growth opportunity.

Consistent with that approach, we are pleased to have returned substantial capital to shareholders during the first quarter. We repurchased approximately $16.5 million in shares under our $250 million program with approximately $92.5 million of remaining repurchase capacity as of May 7, 2026, and paid $6.7 million in dividends, returning a combined $23.2 million to shareholders during the quarter.

Now moving to our outlook on Slide 16. Our first quarter 2026 performance came in line with our expectations, supported by record revenues, all-time high backlog of $1.36 billion and positive momentum across both our residential and commercial platforms. Based on the strength of our top line results and the visibility provided by our backlog order trends, we are reaffirming our full year 2026 guidance.

We expect revenue in the range of $1.06 billion to $1.13 billion and adjusted EBITDA in the range of $225 million to $245 million. This is unchanged from our guidance communicated in April, which incorporated the incremental impact of the recently enacted 10% tariff on finished aluminum window imports into the U.S.

With our guidance range, the primary factors remain the timing of project invoicing from our commercial backlog, the pace of residential market recovery, execution in new geographies and vinyls and the trajectory of aluminum cost and foreign exchange. The high end of the range assumes a more constructive demand and cost backdrop, while the low end contemplates a more measured recovery and continued pressure from the current aluminum and FX conditions.

Importantly, both scenarios assume continued market share gains, strong backlog execution and disciplined cost management across the business. Our May price increase is expected to begin contributing to results by early July, providing a meaningful mitigation to the tariff headwinds already discussed. As we execute on our pricing and efficiency initiatives throughout the year, we see potential for additional margin expansion as we move through the year and see a clear path to full neutralization of the tariff impact 2027 when full year pricing across both businesses and incremental automation savings are expected to fully offset the tariff-related headwinds.

We expect another year of strong cash generation, albeit with more use of working capital given upcoming tariff payments, strategically securing U.S. aluminum ahead of production times and longer cash conversion cycles given the increase in installation work, which has less upfront payments and more retainage. As in years past, the second quarter of the year is expected to have the seasonal impact related to income tax payments for our Colombian-based subsidiary.

Capital expenditures are projected to be in the range of $60 million to $70 million, which includes maintenance CapEx at approximately 1% of revenues, plus planned investments in efficiency initiatives and amortization payments of previous investments. Separately, we expect to invest approximately $20 million to $25 million for the purchase of the land related to the potential new U.S. facility, which we would plan to finance with our available credit facilities.

Executing the land purchase now preserves our optionality as the feasibility study continues, and we have already secured substantial state and local tax credits that would significantly enhance project economics. If we decide to move forward with construction, the project would proceed in phases, with each stage evaluated based on demand trends, return profiles and overall market conditions. We would only move forward if the project meets our high return thresholds.

In conclusion, our results demonstrate the durability of our business model and the strength of our competitive position, even as we navigate a dynamic operating environment. We are executing on a record backlog, gaining share in new and existing geographies, building momentum in vinyl and taking targeted pricing and operational actions to mitigate tariff headwinds.

With a record backlog, a growing national presence in single-family residential and a solid balance sheet, we remain confident in our ability to deliver on our full year objectives and outperform the market for years to come.

With that, we will be happy to answer your questions. Operator, please open the line for questions.

[Operator Instructions] The first question comes from Rohit Seth with B. Riley.

Just on the price increase, are you seeing your competitors also raising prices? And what gives you confidence that it's going to be the take rate from competitors?

Yes. Everybody has raised prices because of the increases in aluminum and the increases in glass. All the products that we buy to make the windows are subject to increases due to the oil and gas increases. So everybody has raised prices, some more than us and a couple a little less than us.

Okay. And then on the aluminum, it looks like you built some inventory. I imagine that's the aluminum. How are you positioned now going into the second half on aluminum?

Right now, Seth, we're buying it on the spot. And if you kind of listen to what we said a couple of weeks ago when we reguided, we also baked in the impact of higher than the beginning of the year pricing, right? So at this point in time, we're buying it at spot, even though it has gone up roughly 12% since the beginning of the year. That's already baked into projections.

Your next question comes from Julio Romero with Sidoti & Co.

Can you guys expand on how April has trended since you guys have announced price increases, as competitors have announced price increases and specifically with regards to customer receptivity and how they're managing through rising input costs on their end? Are they changing anything from order size or project scope, both on the residential and the commercial side?

Well, April was extremely strong. And as you saw in the press release, obviously, you see some orders of clients anticipating the price increase that took place in May 4. I think what we'll be telling is how orders continue to trend in May. So far, so good.

Nothing really to speak of in terms of drop in demand, but April was abnormally high. I mean, we're talking about 40% more of a normal month. But obviously, some of that is pulled forward of orders that probably would have taken place in May and June.

Helpful. And where are you guys on the U.S. re-domiciling? Is that -- I guess, that's expected to close in the second quarter?

Yes. The expectation is that, that will be done by mid-June. Proxy cards should be going out for voting likely around mid- to end of May. And effectively, we should be re-domiciled if the vote goes through by the middle of June.

[Operator Instructions] Your next question comes from Tim Wojs with Baird.

Maybe just to start, just kind of just big picture question. Obviously, the tariffs, I think, obviously surprised you, surprised the market. You guys obviously still have a pretty meaningful cost advantage even with the tariffs in the marketplace.

And I'm just kind of curious, as you've talked to your customers and these have obviously kind of come into the market, have you noticed any change from your perspective in terms of share gains or just kind of incrementally working with customers? I'm just kind of curious if the tariff dynamic has really changed your position in the market at all or not?

No, not at all. I mean everybody has raised their prices and the raising of the prices came from a local competitor or local competitors before we did it. We follow the trend. We were going to absorb the tariff if nobody else increases the prices to keep competitive and not lose market share. But on the contrary, we -- everybody raised the prices, and we have gained market share, and we're going to keep gaining market share.

Now as we said on the press release, around 20% to 25% of all our sales are outside Florida. That's going to keep gaining momentum, and we hope in a year or 1.5 years from now, 50% of the growth is going to be outside of Florida. And we're doing really good. I mean, our product mix is great. Our service is great. The customers love the performance. So we plan to keep gaining market share for sure.

And this is Christian. And we also plan to make up for the tariffs with more volume and also with cost -- cutting costs. We have implemented a program to cut our costs significantly in the next few months. And we'll be -- by the end of the year, we'll be back to the levels of profitability that we have before.

Okay. That's really helpful. And then Santiago, just I was hoping maybe you could kind of dial in Q2 for us maybe a little bit, just given, obviously, the tariffs are kind of coming into the P&L. And I think typically, you do see kind of a step-up in revenue just from a seasonality perspective. So any kind of broad kind of comments on how we should think about the model for the second quarter, please?

Yes. As we have discussed previously, you're going to have a quarter in which you have the impact of the newly established tariffs, but yet you don't have the impact of the pricing actions that took place in May, right? So you're going to have a step down Q2 just based on the fact that you have the incremental costs associated with tariffs, but the offsetting on pricing starts taking place in late June, early July, right?

So from that perspective, you will see a step down, albeit at a higher revenue base. And essentially, as you saw in the press release, we saw acceleration in terms of revenues and orders in March, and we're seeing that in April as well. So we're seeing a step-up in revenues. On the backlog side, obviously, we know where we are, and you saw what happened with the commercial construction segment growing 20%. We expect that trend somewhat to continue.

And on the resi side, we did see acceleration at the end of Q1 and beginning of Q2. So from a top line perspective, we're expecting Q2 to be higher than Q1. You will have the impact, however, of the tariffs not being fully offset by pricing on this quarter, but that will be partially offset in Q3 once orders placed in May start hitting P&L.

Okay. And then mechanically, the tariffs fall, I believe, for you in SG&A. So do you -- would you actually see gross profit pick up a little bit sequentially and then kind of offset by the higher SG&A, so EBITDA actually goes down?

I think it's going to be more or less in line. You will have some impact of higher aluminum cost that wasn't prebought. Remember that we were expecting aluminum to cover us through May. So you're going to have aluminum flowing through the P&L at newly spot prices, not at the levels that we bought it earlier in the year.

So I think that probably balances out, and we end up with somewhat similar gross profit margins. If we're able to get more operating leverage on higher sales, maybe a little bit higher. But I would say base case, we end up around the 39% gross margin profile.

This concludes our question-and-answer session. I would like to turn the conference over to Jose Manuel Daes for closing remarks.

Well, thanks, everybody, for participating on today's call. We are doing our best to keep growing and having the best margins in the industry and wait for the better news. Thank you.

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

Good day, and welcome to the Tecnoglass, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Mr. Blake Warren of Investor Relations. Please go ahead, sir. .

Thank you for joining us for Tecnoglass Fourth Quarter and Full Year 2025 Conference Call. A copy of the slide presentation to accompany this call may be obtained on the Investors section of 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. 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 Tecnoglass 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/or regulatory factors and other risks and uncertainties affecting the operation of Tecnoglass' business.

These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass' filings with the Securities and Exchange Commission. The information discussed during the call is presented in light of such risks. Further, investors should keep in mind that Tecnoglass' 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 #4.

Thank you, Blake, and thank you, everyone, for participating on today's call. We are pleased to report another year of strong performance for 2025, our record revenues of $984 million reflect the strength across our businesses and our consistent ability to gain market share and capitalize on demand for our differentiated offerings. These results are a testament to the dedication of our team and the durability of the competitive advantages we have built over many years.

Our single family residential business delivered yet another record year with revenues growing to an all-time high of $403 million. Growth was driven by our expanding dealer network, geographic diversification into new markets, a strong pricing execution, and the momentum in our wider product line.

Our multifamily and commercial businesses was similarly strong with revenues growing to $580 million on robust demand for our high-performance products in high-end resignation and luxury launching projects. From an operational standpoint, I am particularly proud of our team's ability to maintain our industry-leading margin profile through a unique challenging year. This reflects or consistent pricing discipline and significant cost control measures. These actions more than offset the impact of tariffs and increased raw material costs supporting a stable gross margin for the year.

We also continue to ramp up our mining windows product portfolio and diversified our manufacturing footprint through the Continental Glass System acquisition, both of which help us expand our presence into different markets and diversify our operational platform. This robust operational performance, along with our disciplined working capital management directly into a strong cash generation. Cash flow from operations of $136 million for the full year allowed us to return substantial value to our shareholders through dividends and our share repurchase program.

To that end, we repurchased $180 million in shares during the year, including $88 million in the fourth quarter alone. We announced today the Board has expanded our share repurchase authorization by $100 million, reflecting their confidence in our continued cash flow generation capabilities, the strength of our balance sheet and our commitment to delivering superior returns to shareholders.

In summary, 2025 was a year that demonstrated the durability and adaptability of our business bubble. We grew revenue to nearly $1 billion, maintained our gross margin profile in the face of significant external headwinds, diversified our manufacturing and product platform and returned substantial capital to shareholders. Our performance, along with our record backlog positions us well for another year of record revenue and value creation in 2026.

I will now turn the call over to Chris to provide additional operating highlights.

Thank you, Jose Manuel. Moving to Slide #5 and 6. We maintained a sharp focus on operational execution throughout 2025, Our overall performance through a dynamic macroeconomic environment reflects the durability of our differentiated platform and the dedication of our team to delivering best-in-class products and service to our customers. In 2025, we delivered double-digit revenue growth in our multifamily and commercial business driven by continued strong performance in our key markets and incremental contribution from our Continental Glass system asset acquisition completed at the beginning of the year.

Continental continues to integrate smoothly into our operation, enhancing our capabilities in high-end architectural glass and glazing while providing us with a diversified manufacturing presence in Florida. Activity remains healthy across our commercial markets given our expansion into new markets and ability to gain market share, which is reflected in our double-digit revenue growth expectations for 2026.

The trend of our activity is also reflected directly in yet another backlog record number, which closed the year up 16% to a record $1.3 billion. Our book-to-bill ratio of 1.1x in the fourth quarter extended our track record to 20 consecutive quarters above 1.1x. Our project cancellation rate is near 0 given our late stage installation profile and our backlog has demonstrated consistent sequential growth every quarter since 2021. I will also reiterate a key point that the composition of our backlog has shifted more towards high-end large-sized projects recently, which tend to be less sensitive to higher interest rates and overall affordability constraints.

Moving to Slide #7. Our single family residential business achieved record full year revenues of $403 million compared to $372 million in 2024. The year-over-year improvement reflects dealership growth, geographic expansion and ongoing contributions from our vinyl products. Despite challenging macro conditions, we were encouraged to see order received during the fourth quarter growth by double digits year-over-year with additional momentum into the new year as January orders outperformed the prior 2 months, giving us confidence heading into 2026.

Over the course of 2025, our dealer base expanded considerably, driven largely by expansion into new geographies beyond our traditional core markets. Our Los Angeles showroom is expected to open in the first quarter of this year, adding to our existing showrooms in Florida, South Carolina, New York, Texas and Arizona and serving as a hope for our legacy light aluminum line in the Southwest.

Our vinyl expansion continues to progress well with robust quoting activity validating the significant market opportunity ahead. Across all product lines, our quality, efficient lead times and superior service and competitive pricing continues to be key difference makers in attracting and retaining dealers.

Turning to Slide #8. The broader market backdrop as we enter 2020 gives us additional confidence in our long-term trajectory. Total U.S. construction spending is expected to grow approximately 1% this year with residential spending projected to increase approximately 2% as affordability conditions improve. Contractor sentiment has moved back into expansion territory with the national remodeling conditions index at 54.5. and the backlog component strengthened meaningfully to 70.4 in the first quarter of 2026 from 54.6 in the fourth quarter of 2025, a leading indicator that aligns well with what we are seeing in our own order activity.

From a regional perspective, the South Atlantic, Mid-Atlantic and West South Central Sensors divisions where our business is more concentrated are projected to be among the strongest performing regions from residential construction spending in 2026. This geographic alignment between our platform and the market expected to outperform underpins our growth outlook for 2026. Additionally, we continue to expect that market share gains in the new geographies and product segments will allow us to outperform market growth in years to come.

I will now turn the call over to Santiago to discuss our financial results and full year outlook.

Thank you, Christian. Turning to the drivers of revenue on Slide #10. Total revenues for the fourth quarter increased 2.4% year-over-year to $245.3 million. The growth was driven by positive momentum in our multifamily and commercial business. This was partially offset by a modest decline in single-family residential, which saw pricing and share gains that we had a very challenging prior year comparison. Full year revenues increased 10.5% to a record 983.6 million. The full year growth came from both our multifamily and commercial and single-family residential businesses, reflecting strong execution on a record backlog, healthy conditions in our core Southeast high-end commercial portfolio, geographic expansion and continued traction in our vinyl product line. .

Looking at the profit drivers on Slide #11. Full year adjusted EBITDA reached $291.3 million, representing a margin of 29.6% compared to 31% in the prior year. On a full year basis, gross margin increased slightly to 42.8% compared to 42.7% in the prior year. The essentially stable full year gross margin despite challenging macroeconomic factors during the second half reflects stronger pricing and operating leverage that more than offset the impact of tariffs and higher raw material costs, a strengthening Colombian peso and higher salary expenses throughout the year.

Full year SG&A as a percentage of revenue was approximately 20% and compared to 17.2% in the prior year, mainly due to the tariffs paid during 2025, which increased our selling expenses year-over-year. Full year performance was stronger in the first half given different macro headwinds that started toward the middle of the year. Accordingly, adjusted EBITDA for the fourth quarter 2025 was $62.2 million, representing an adjusted EBITDA margin of 25.4% compared to $79.2 million or 33.1% in the prior year quarter. Consistent with the dynamics we highlighted on our last earnings call, the fourth quarter carry the full weight of the cost headwinds and stronger local currency that intensified through the second half of the year. Fourth quarter gross margin was 40% compared to 44.5% gross margin in the prior year quarter. The year-over-year change in gross margin was driven by 3 key factors: first, an unfavorable revenue mix with a higher proportion of installation revenues, which reached a record high during the fourth quarter; second, near all-time high U.S. aluminum costs which continued their steep climb throughout the fourth quarter and significantly impacted our raw material cost; and third, a significant revaluation of the Colombian peso which strengthened approximately 9.5% year-over-year in the quarter, creating an unfavorable effect on our margins.

These headwinds were partially offset by stronger pricing flowing through from the adjustments we implemented earlier in the year. SG&A for the fourth quarter was 21.8% of revenue compared to 16.4% of revenue in the prior year quarter. The increase primarily reflected aluminum and reciprocal tariff expenses on stand-alone component sales, higher personnel expense from annual salary adjustments and stronger Colombian peso during the period and higher transportation and commission expenses associated with revenue growth.

We provide a closer look at the primary headwinds that impacted our margins in the second half of 2025 on Slide #12, namely aluminum and FX which continued to move sharply following our last earnings call. With respect to aluminum, it is important to distinguish between the 2 separate dynamics. The $25 million tariff impact we communicated earlier in the year was fully offset through our pricing actions. The more significant headwind was the sharp escalation in underlying aluminum cost independent of tariffs. Global aluminum spot rates spiked higher. And on top of that, U.S. Midwest aluminum premiums more than doubled during the year, creating industry-wide margin pressure that accelerated materially in the second half of the year.

Separately, we faced aluminum and reciprocal tariffs on stand-alone component sales, which we have proactively addressed through targeted mitigation actions, including pass-through pricing on stand-alone glass and aluminum products and securing U.S. aluminum supply to mitigate tariff headwinds. As cost mitigation offsets, our pricing adjustments implemented earlier in the year partially offset a portion of the higher aluminum cost in the fourth quarter.

Looking ahead, our continued expansion into vinyl windows and eventual normalization of input costs or potential future pricing adjustments to reduce the impact of aluminum cost as a percentage of sales over time. We continue to evaluate incremental pricing actions as warranted by market conditions, but have not embedded this assumption within our guidance scenarios and could represent potential upside to our outlook. Looking at foreign exchange dynamics, the Colombian peso appreciated approximately 12% during full year 2025, moving from 43.08 to 37.91 per dollar. Given the approximately 20% to 25% of our costs are peso denominated, this appreciation made our Colombian cost base more expensive and pressure margins, compounded by salary adjustments in Colombia during the year.

To partially mitigate this exposure, we hedged a portion of our Colombian peso exposure during 2025 and will continue to be opportunistic in executing hedges in 2026 above our current guidance assumptions, creating potential upside to guidance.

Now examining our strong cash flow and balance sheet on Slide #13. We generated $135.8 million in operating cash flow for the full year 2025, driven by effective working capital management and solid underlying profitability. Capital expenditures of $89 million included scheduled payments on previous investments as well as expenditures related to the Continental Glass Systems acquisition. Our balance sheet remains solid with liquidity of approximately $465 million at year-end, including a cash position of approximately $100.9 million and $365 million of availability under our revolving credit facility and bilateral lines of credit.

In September, we refinanced our senior secured credit facility, expanding capacity to $500 million, reducing spreads by 25 basis points and extending the maturity to 2030. We have no significant debt maturities until year-end 2030. With net debt to LTM adjusted EBITDA of 0.24x, we maintain a conservative leverage profile that provides significant financial flexibility to continue investing in growth initiatives and returning capital to shareholders.

On Slide #14, our strong track record of generating returns above the broader industry continues to validate our disciplined capital allocation approach. Over the past 3 years, our strategic investments in operational excellence and capacity expansion have consistently delivered superior returns for our shareholders, driven by our industry-leading profitability, very clean integrated platform and significant improvements to working capital. These strengths continue to generate sustainable cash flow and shareholder value while preserving financial flexibility to pursue additional growth opportunities. We're also pleased to have returned substantial capital to shareholders through share repurchases and dividends during the year. During 2025, we repurchased $118 million in shares, including $87.6 million in the fourth quarter alone, partially funding that activity through a draw on our revolving credit facility, reflecting our conviction in the intrinsic value of the business. In total, we returned approximately $146 million to shareholders through repurchases and dividends.

Given the Board's confidence in our continued cash flow generation capabilities, prudent balance sheet management and commitment to delivering superior returns to shareholders they approved an expansion on our share repurchase authorization to $250 million in total, resulting in approximately $110 million of remaining repurchasing power. In addition to the expansion of the buyback program, our Board also approved the redomiciliation of the company from the Cayman Islands into the U.S. Subject to shareholder approval, which will be sought within the next couple of months, the company would now be both headquarter and domicile in the U.S., continuing our long-term strategy to become even more U.S.-centric as we become a larger company with a complete nationwide footprint.

The redomicile into the U.S. will help us achieve turn tax efficiencies from a corporate level perspective as well as to facilitate dividend distributions to shareholders.

Now moving to our outlook on Slide 16. Our full year 2025 performance demonstrated the strength of our business in a toughening macro environment into year-end that has continued into early 2026. Based on the visibility provided by our residential order book in multiyear backlog, we are introducing our full year 2026 outlook for revenues to be in the range of $1.06 billion to $1.13 billion, representing growth of approximately 11% at the midpoint of the range.

Additionally, we're introducing our adjusted EBITDA outlook in the range of $265 million to $305 million. Our high-end outlook assumes continued downward trends in interest rates benefiting mortgage rates and improved affordability, a more favorable interest rate environment supporting a broader acceleration in project invoicing. The high-end outlook assumes continued market share gains and strong execution in new geographies in vinyl as well as full backlog execution without significant project delays. At the top end, we expect aluminum input costs to soften approximately 10% by the middle of the year versus year-end 2025 levels and the Colombian peso to trend 4,000 pesos per dollar, which is essentially stable year-over-year.

The top of the range also assumes annual salary adjustments in Colombia that are offset by favorable operating leverage and efficiency gains. The low end of our range contemplates a more challenging environment in which the Fed does not cut rates during the year, constraining residential invoicing momentum with high single-digit revenue growth, driven primarily by backlog execution, market share gains and flattish single-family revenues. Under this scenario, we also assume a more gradual expansion in new geographies in vinyl and potential timing shift in certain commercial projects into 2027. The low scenario further assumes stable aluminum input cost versus year-end 2025 and the Colombian peso remaining below 3,800 pesos per dollar with annual salary adjustments in Colombia, not being fully offset by operating leverage.

As mentioned earlier, our guidance range establishes a baseline that excludes several potential upside levers. Specifically, our outlook does not factor in additional pricing actions or opportunistic hedging strategies that we are actively evaluating to further protect margins. From a seasonal perspective, we expect the first quarter of the year to be softer as some of the aforementioned headwinds remain in place currently, and the level of orders started picking up earlier this year with actual invoicing expected to take place within the second quarter and beyond; both assumptions also bake in an incremental amount of installation revenue in line with our previous discussions around the shift in backlog composition geared to larger projects in which we do both supply the windows and perform installation.

Under both scenarios, we expect another year of strong free cash flow generation. Working capital should continue to be a source of cash as we further penetrate residential markets, so this will be partially offset by longer cash conversion cycles in our growing installation business. Capital expenditures are projected to be in the range of $60 million to $75 million, which includes maintenance CapEx at approximately 1% of revenues and the remainder for planned investments in efficiency initial years. As previously disclosed, in 2025, we initiated a feasibility study for a new state-of-the-art largely automated facility in the U.S. If we decide to move forward with the project and the diligence process is completely favorably, our 2026 investment related to this would be limited to an estimated of $20 million to $25 million for the land acquisition only.

This potential land purchase is not included in our current 2026 capital expenditure guidance and remains subject to a final investment decision and the ongoing assessment of demand trends and overall market conditions. Beyond the land purchase, we do not expect significant additional capital deployment on this initiative in 2026 as we complete equipment testing and continue to monitor demand trends.

In conclusion, our fourth quarter and full year 2025 results demonstrate our ability to deliver strong results in a dynamic environment. We are leveraging our competitive advantages, including our very clean integrated manufacturing platform, our expanding geographic footprint and our diversified and growing product portfolio to gain share and drive long-term value for our shareholders.

With a record backlog, a growing national presence in single-family residential, a strengthened balance sheet and multiple growth initiatives advancing, we entered 2026 with a strong momentum. These advantages are structural and durable. Our share gains and geographic expansion are on track and we remain confident in our ability to continue outperforming the market for years to come.

With that, we will be happy to answer your questions. Operator, please open the line for questions.

[Operator Instructions]

And first question today will come from Sam Darkatsh with Raymond James.

Good morning, Jose Manuel, Chris, Santiago, how are you? .

Good morning. Doing well. Thank you.

So I'm just going to ask some clarification or quantification question, Santiago, apologies for this. You mentioned that the first quarter was softer. Can you give us a sense, generally speaking, of sales, gross margin, EBITDA type of thing that we should be expecting for the first quarter, knowing that 2/3 of it is done at this point?

More or less in line with Q4. That's what we would expect. Remember that in Q1, you also have a couple of weeks of scheduled maintenance shutdown. So you have a shorter quarter, in line with Q4 when we shut down at the end of the year. So it would be more or less in line with that. .

Got you. And then within the '26 framework at the low end and the high end, what are your expectations for gross margins, general and administrative and then also tariffs?

On tariffs, just the ongoing tariffs on stand-alone product, we continue to supply aluminum from the U.S., but being able to mitigate that impact. On the gross margin from the low to the high end, you have about 200 basis points of difference from high 30s to low 40s, depending on where we are. And obviously, the main impact would be the input cost as it relates to raw materials, the FX, as you saw in the presentation, we are providing different scenarios that outline what the assumptions would be on either case.

SG&A, we expected to go down in terms of percentage of our sales based on the fact that we will not incur aluminum tariffs as we did in 2025. But obviously, on a nominal basis, when we're growing 11% at the midpoint, you have some variable expenses related to transportation and commissions and salary adjustments that increased the nominal base.

But as a percentage of sales, the idea is that we should be slightly lower.

Your next question will come from Rohit Seth with B. Riley.

Hi Santiago. Can you talk a little bit about the pricing actions that you have not yet implemented, what products are on? And when do you expect to put those prices out.

Well, this is Jose Manuel. We have to wait and see the reaction of the total market in order to raise our prices. We would like to raise the prices. Obviously, we have started in all the new jobs but in residential, our competition is strongly, so they have not raised their prices in order to gain market share. We have not raised, not to let them take the market that we do have. So we'll have to wait and see.

Okay. And just a follow-up on the vinyl and your new product lines. Can you just quantify how much of the new product lines you achieved in 2025 and what you're expecting to see in 2026?

Our base case shows that we ended up with vinyl roughly around $10 million for the year. We expect that to increase at least 2.5 to 3x in 2026. We feel that there is upside to that base case and the cadence of sales will dictate how much we're able to ramp that up at the end of the year. As we have discussed in previous calls, the main issue was not having the full availability of the products, which we feel good about at this point in time, the dealer base has increased over 20% year-over-year. A lot of that is vinyl dealers. So in essence, the seed has been planned to execute and grow that a few times over year-over-year. .

Understood. And so the certification of those products is done, you have the full product line set up and ready to go?

Yes, that is the case. It's just a matter of executing on sales.

Okay. All right. I'll pass it along.

The next question will come from Tim Wojs with Baird.

Maybe just kind of first question. I guess, would you expect to see the U.S. commercial revenue accelerate in '26. I think it grew 11% in '25, but your backlog has clearly been up more than that over the past few years. So should we start to see those growth rates merge as that backlog starts to convert in a bigger way in '26?

Yes, sure. Commercial is going to grow in '26 and '27 because not only we have a big backlog in Florida, mostly, but we are expanding our reach into other markets by our installer GMP. So we expect to the commercial side to keep growing at a very big pace, double digits or more.

Okay. And I guess when you're if you're thinking about kind of the backlog in the pipeline, I mean, has anything -- I know the market is choppy. But has anything changed there? I mean do you guys still expect to see some pretty good backlog growth in '26 as well?

Yes. Yes, for sure. We see a lot of commercial activity in the Northeast that was seen before. And now we are landing jobs in Texas, Utah, Colorado, we expect with our new brand in California to gain a lot of traction there, too. .

Okay. Okay. Great. And then San, what is the residential assumption for revenue at the midpoint of the guide? I think they did, what, $403 million this year?

We ended up $403 million. What we're expecting is on the kind of legacy Florida business to be up low single digits. And then the rest of the growth coming from vinyl in non-Florida opportunities. And we expect that obviously, altogether to equate to a double-digit growth year-over-year as well. So both segments, we are projecting to grow double digits. And on the resi side, coming more from geographical expansion in vinyl. .

Okay. Okay. Great. Good luck on your guys.

All right. Thanks, Tim. .

Next question will come from Julio Romero with Sidoti & Company.

Thanks for the vinyl breakout earlier of about $10 million in '25. I think you said about 2.5 to 3x is expected in '26. Kind of same question, but for the showrooms, your 5 showrooms going soon to be 6 in the first quarter. Just help us level set the contribution there? And is that separate from the Vinyl contribution expected? How would you have us think about that?

Yes, because the showrooms not only have the new vinyl lines, but they have the new legacy line many new products that we are -- we developed last year, like, for example, the garage door, we have a garage door now, but it was only for impact hurricane impact in Florida. Now we developed the garage door nation wide, and we expect that to ramp up a lot and also, we have a new few doors and windows that have had tremendous success with our clients. They love it. I think we're going to grow double digits, but we hope it's going to be a lot in the high double digits.

And I guess just to rephrase that a little bit. I guess I'm just asking how much incremental aside from the $10 million in vinyl came from the showrooms in '25 and how much kind of separate from that is '26 that doesn't overlap?

On the showrooms, remember that, that's both commercial and residential, right? So if we wanted to kind of break that out on the resi side for the showroom revenues, we ended up at about $10 million, and we're expecting to do $30 million to $35 million this year. So again, that segment of the business in line with the answer to Tim's question earlier, is what is going to drive the single family residential growth. Both vinyl and non-Florida resi are expected to grow 2.5, 3x this year.

Very helpful. And I guess -- you also mentioned that on the new plant that you're evaluating, you're also looking at new opportunities such as Buy America projects and quick turnaround. I was just hoping you could dive into that a little bit for us.

Well, we are in the state. This is Christian. We are going to be testing the new technology in Colombia first and make sure that we can reach a level of automation in off. So we require the least amount of people to work. I mean, we don't want to have another place with 9,000 employees. We want to have 1,500 or the most 2000 and be able to first deliver faster, also make about the same amount of money because there will be some savings on transportation and the tariffs and all that.

And it will be to have also a good thing to have in the states. But obviously, it's not going to take care -- take place this year because we're going to be testing at the end of the year, all the technology. So it will be a decision that we make by February or March of next year of what to build in the U.S. and how to build it. We are close to buying the land, but it's also important for us to -- I mean, to our products to be by American. And another thing is that regardless of the product being manufactured in Colombia, almost all raw materials come from the U.S. So we are American company anyways.

Yes, absolutely. And I think maybe just to look at that -- thank you, Christian, for another angle is just when I hear by America projects, I think about like federally funded infrastructure projects or something of that nature. So could your window products potentially participate in projects such as those?

Well, they used to be able to participate with the free trade agreement that we had in place because all the materials were manufacturing in the U.S. and not anymore. So with the new plant, if we build it next year, that will be an advantage that we will have to be able to do further buildings, too. So we're trying to keep growing and our idea is to double ourselves in the next 3 to 5 years. And we don't -- we're not doing this only for the money, but because it's our life and we love what we do. And we've been doing it for over 40 years. So this is the way to go.

Absolutely. -- and best of luck in 2026. .

Your next question will come from Deane Vilas with D.A. Davidson.

Yes. I apologize if perhaps repeating some of the things you mentioned, but could you just kind of like walk me through with some of the cadence of the nonresidential -- the commercial and single-family kind of work that you'll be doing through first half in the second half compared I guess what I'm getting to is I'm wondering, is there -- as you're expanding into Northern Florida and some of perhaps dynamic changes that's occurring in your commercial side. Is that influencing how you move through the backlog?

So let me rephrase and make sure I'm getting your question right. In terms of cadence of revenues. The way that we're projecting this is that each sequential quarter is going to be incremental revenues as we move through the year. As we said earlier, the first quarter is expected to be kind of more or less in line with Q4 and then sequentially, both because of the backlog visibility that we have and the geographical penetration and the vinyl ramp-up, we're expecting revenues both in the single family residential and the commercial segments to go higher as we're moving through the year. So it's going to be back loaded based on those assumptions. .

Okay. Appreciate that. And then just thinking about the impact of aluminum, is that under your assumption, does that alleviate then in the second half? Or is there a sequential taper coming off your 1Q guidance?

No. I mean if you look at the presentation that we put together and what we discussed here is that there's 2 scenarios. On the downside, we're assuming stable pricing in line with what you saw at the end of last year. which is kind of more like what we're seeing today. If you're looking at the upside, we're assuming that aluminum prices taper up and we get a benefit in the second half of the year, because as of now, we're almost 2 months into this and aluminum prices remain elevated.

Makes sense. And just on the vinyl -- is there a space for a bigger upside as you have more and more products available. And you mentioned that there is better bundles that you -- better opportunities when you sell these different products that have vinyl in them. Do we look -- is the 3x is -- yes, is it 3x just the top? Or is there more of an upside that you could grow from there on that vinyl tap?

3x is the minimum we expect. We are very conservative on that side. If everything falls into place, we expect to go, let's assume that this year, we were selling around $1 million a month. We expect from the second half of the year to do $5 million a month. And we believe that we're going to do -- that's going to ramp up next year to do at least $10 million of, that is what we expect, we'll have to see. But $20 million is a conservative estimate. .

Thank You so much. I appreciate your time.

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

Well, thank you, everyone, for participating on today's call. And in spite of all that is happening in the market, in spite of the tariffs, in spite of the aluminum going up, in spite of the devaluation of the dollar, we have done very well. The company is going to keep striving. We have a lot of plans of growth for '26, '27 and '28 and we're going to make our clients happy and our investors more than happy. Thank you. .

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

I call the 2025 Annual General Meeting of Tecnoglass Inc. to order. I am Santiago Giraldo, Chief Financial Officer of the company. Also present is Andrea Zambrano, our General Counsel.

I appoint Andreas Zambrano to add the inspector of this meeting and to execute the oath of office.

I present the affidavit of Continental Stock Transfer & this company, showing that notice of the annual meeting and proxy statement was mailed on December 1, 2025, and to all shareholders of record at the close of business on November 24, 2025.

I ordered the affidavit to be filed in the minute book immediately following the minutes of this meeting.

I present the list of shareholders of record as of the close of business on November 24, 2025, as certified by Continental Stock Transfer & Trust Company.

Will the inspector please report on the number of shares eligible to both the number present and the presence of a quorum.

46,569,446 ordinary shares outstanding and eligible to vote. At least 50% of such shares are represented at this meeting by proxy or in person.

Legal notice of the meeting has been given. A quorum is present, the meeting is regularly and lawfully convened and ready to transact business.

The first item of business is to elect two Class C directors to the company's Board of Directors, Jose Manuel Daes and John Paul Pérez have been nominated for election to serve as Class C directors to hold office until such term expires in 2028, and their successors are elected and qualified.

I move for their election.

I second the motion.

Are there any persons present who wish to cast a ballot or change their proxy cards?

Management casts proxies are directed by the shareholder instruction set forth on such proxies.

The shares voting were sufficient to elected two Class C directors.

The second item of business is to approve on an advisory basis, the executive compensation of the company's named executive officers.

I move for his approval.

I second the motion.

Are there any persons present who wish to cast a ballot or change their proxy cards?

Management casts proxies are directed by the shareholder instructions set forth on such proxies.

And the majority of the outstanding shares present and entitled to voted in favor of the proposal.

The third item of business is to select, on an advisory basis 1 every 3 years as the frequency with which the company will hold an advisory shareholder vote to approve executive compensation.

I move for his approval.

I second motion.

Are there any persons present who wish to cast a ballot or change their proxy cards?

Management casts proxies as directed by the shareholder instructions set forth on such proxies.

A sufficient number of shares were voted in favor of the proposal.

Representatives of PricewaterhouseCoopers, the company's auditors will respond to any appropriate questions you may have after the meeting. At this time, all of the business to come before this meeting is now completed.

I will entertain a motion to adjourn the meeting.

I so moved.

I second the motion, meeting adjourned.

Good morning, and welcome to the Tecnoglass Third Quarter 2025 Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Brad Cray, Investor Relations. Please go ahead.

Thank you for joining us for Tecnoglass' Third Quarter 2025 Conference Call. A copy of the slide presentation to accompany this call may be obtained on 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. 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. And including statements regarding future financial performance, future growth and future acquisitions.

These statements are based on Tecnoglass' 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/or regulatory factors and other risks and uncertainties and affecting the operation of Tecnoglass' business.

These risks, uncertainties and contingencies are indicated from time to time in Tecnoglass' filings with the SEC. The information discussed during the call is presented in light of such risks. Further, investors should keep in mind that Tecnoglass' 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 #4.

Thank you, Brad, and thank you, everyone, for participating on today's call. We are pleased to report another exceptional quarter that demonstrate the strength and resilience of our business model even under challenging macroeconomic conditions. Our third quarter total revenues reached a record $260.5 million, up 9.3% year-over-year driven by strong organic growth from both our single-family residential and multifamily commercial businesses.

Our robust results in the face of market uncertainty and ongoing inflationary pressure showcases our team's dedication to excellence and our ability to consistently outperform market trends.

In our single-family residential business, we grew revenue of 3.4% year-over-year to a record $113.5 million. This performance reflects the early benefits from our pricing initiatives implemented earlier this year. Continued market share gains through geographic and leadership expansion and contribution from our growing final portfolio.

Our multifamily and commercial business delivered impressive growth of 14.3% year-over-year to a record $147 million. The improvement reflects both bank share gains in key markets and solid execution on our expanding project pipeline. The industry outperformance we're seeing in our commercial activity has resulted in a record backlog of $1.3 billion, up over 20% year-over-year.

We maintained a strong profitability with a gross margin of 42.7% and an adjusted EBITDA margin of 30.4%. Our vertically integrated platform a previously implemented strategic pricing actions are helping to mitigate various cost pressures positioning us well as we move into 2026. This margin resilience, combined with our disciplined working capital management, drove robust cash flow from operations.

This cash generation enabled us to return significant capital to shareholders while maintaining strategic flexibility. To that end, we were pleased to report a $30 million in shares and pay $7 million in dividends during the quarter.

Our both to expand our share repurchase program to $150 million reinforces the confidence in the business and our commitment to balance capital allocation. Our third quarter results demonstrate the power of our vertically integrated business model and our ability to execute in a dynamic environment.

With our strong balance sheet, record backlog providing multiyear visibility and multiple growth initiatives and advancing, we remain confident that ever in our ability to continue delivering exceptional shareholder value for years to come. I will now turn the call over to Christian.

Thank you, Jose Manuel. Moving to Slide #5 and 6. Our third quarter performance reflects the successful execution of our growth strategy across both businesses with a stable order activity and continued market share gains across our key regions. Our multifamily and commercial business delivered record revenue driven by robust activity within the key markets.

We ended the quarter with another record backlog of $1.3 billion up substantially over 20% year-over-year. This expanding pipeline provides a strong visibility through 2026 and 2027, with additional market share gain opportunities across our core geographies, and project execution on track. Our backlog has seen consistent sequential growth since 2021, reflecting sustainability of our structural competitive advantages even under challenging macroeconomic conditions.

Our book-to-bill ratio remained healthy at 1.3x for the third quarter, continuing our track record of maintaining a ratio above 1.1x for the past 19 consecutive quarters. As previously stated, the composition of our backlog has changed during the last year, shifting more towards high-end large-sized projects which tend to be less sensitive to higher interest rates and overall affordability. Moving to Slide #7. Our single-family residential business achieved record revenues on entirely organic growth.

This performance was driven by previously enacted pricing initiatives that are now flowing through the P&L and helping to offset higher input costs. We were encouraged by double-digit year-over-year increase in residential orders during this quarter.

This is very notable because we had $5 million to $7 million in orders that pull forward into the second quarter ahead of our price increase. This positive performance demonstrates successful geographic expansion. Strong reception of our expanded product offering, more than 20% year-over-year growth in our dealer network and growing contributions from our vinyl product line.

We are excited about several growth initiatives that we expect will further strengthen our market position. Our dealer network expansion continues to drive market penetration support by short lead times and initiative products offering. Better than nationwide demographic trends across our key Southeast markets, combined with our geographic diversification efforts are creating multiple avenues for continued market share gains.

The California showroom opening in the fourth quarter and the introduction of the light aluminum legacy line designed for new geographies represent an important milestone in our geographical expansion, where we are already seeing encouraging growth in orders with our expand product line portfolio expanding aluminum and vinyl solutions, we are well positioned to continue to grow into 2026.

Additionally, we continue to advance our feasibility study for a new fully automated facility in Florida which would diversify our manufacturing footprint and provide logistics and lead time advantages in many of our target markets, further strengthening our vertically integrated platform.

I will now turn the call over to Santiago to discuss our financial results and full year outlook.

Thank you, Christian. Turning to the drivers of revenue on Slide #9. Total revenues for the third quarter increased 9.3% year-over-year to a record $260.5 million, with growth in both our single-family residential and multifamily commercial businesses. This performance reflects pricing gains as well as a robust demand for our best-in-class product offerings, driving strong organic momentum. Our Continental glass asset acquisition contributed approximately $4 million to revenue during the quarter.

Looking at the profit drivers on Slide #10. Adjusted EBITDA for the third quarter of 2025 was $79.1 million, representing an adjusted EBITDA margin of 30.4% compared to $81.4 million or a 34.2% margin in the prior year quarter. This quarter, gross profit was $111.3 million, representing a 42.7% gross margin compared to gross profit of $109.2 million, representing a 45.8% gross margin in the prior year quarter.

The year-over-year change in gross margin reflected several factors. First, we had an unfavorable revenue mix with a higher proportion of installation revenue. Second, raw material costs were impacted by U.S. aluminum premiums reaching all-time highs during the quarter. Third, the Colombian peso strengthened significantly during the quarter. affecting our nonhedged portion of local costs.

SG&A expenses were $47.3 million or 18.2% of total revenues compared to $41.5 million or 17.4% of total revenues in the prior year quarter. The increase included approximately $3.1 million in aluminum tariffs on stand-alone component sales, which we are mitigating through our pricing actions.

Additionally, we had higher transportation and commission expenses associated with our revenue growth as well as increased personnel expenses related to annual salary adjustments implemented at the beginning of the year. Our strategic pricing initiatives and cost control measures are gaining traction.

We implemented mid-single-digit pricing adjustments on residential products and shifted to U.S. sourced aluminum. And we're beginning to see the benefit of those actions as higher-priced orders are invoiced. We expect our pricing actions and supply chain optimization efforts to offset an estimated $25 million full year impact of tariffs and increased premiums on U.S. aluminum.

Now examining our strong cash flow and balance sheet on Slide #11. We generated operating cash flow of $40 million in the third quarter, driven by strong profitability and efficient working capital management, which more than offset incremental inventory purchases of U.S. aluminum and increased receivables on higher installation revenues, which carry longer cash cycles. Capital expenditures of $18.8 million in the quarter included scheduled payments on previous investments and continued progress on our growth initiatives.

We continue to expect capital expenditures to moderate through year-end, driving strong free cash flow generation in the fourth quarter. Our balance sheet remains exceptionally strong with total liquidity of approximately $550 million at quarter end, including a cash position of $124 million and $425 million of availability under our recently refinanced and expanded senior secured credit facility and other bilateral bank facilities.

In September, we expanded our syndicate facility to $500 million from $150 million, reducing spreads by 25 basis points and extending the maturity to 2030, providing significant financial flexibility for growth and other strategic capital allocation initiatives.

With total debt of $111.9 million we maintain a net debt to LTM adjusted EBITDA ratio of negative 0.04x, providing us with tremendous financial flexibility to execute on growth initiatives while returning capital to shareholders. On Slide #12, our strong track record of generating returns above the broader industry continues to validate our disciplined capital allocation approach.

Over the past 3 years, our strategic investments in operational excellence and capacity expansion have consistently delivered superior returns for our shareholders. This outperformance reflects our focus on high return investments in a very clean integrated platform as well as our industry-leading profitability and significant improvements to working capital, which are driving sustainable cash generation and shareholder value while maintaining our financial flexibility to pursue additional growth opportunities.

We're also pleased to continue returning a portion of capital to shareholders through share repurchases and dividends. During the quarter, we repurchased $30 million in shares and paid $7 million in dividends. Given the Board's confidence in our continued cash flow generation capabilities, prudent balance sheet management and commitment to delivering superior returns to shareholders they have authorized an expansion of Tecnoglass share repurchase authorization to $150 million.

Following the expansion, the company had approximately $96.5 million remaining under its existing share repurchase program. Now moving to our outlook on Slide 14. Based on our strong performance through the first 9 months of 2025, and the expectations for the fourth quarter of the year based on current market conditions, we're updating our full year 2025 financial guidance.

We now expect revenues to be in the range of $970 million to $990 million, reflecting growth of approximately 10% at the midpoint. This updated range reflects lower project starts in light commercial due to current macroeconomic uncertainty while maintaining our confidence in double-digit top line growth for the full year 2025 as well as for the full year 2026.

Additionally, we're updating our adjusted EBITDA outlook to a range of $294 million to $304 million, representing approximately 8% growth at the midpoint. This guidance assumes that pricing initiatives and other mitigation efforts will help compensate for the projected $25 million full year impact from elevated input costs and tariffs on select products, but now accounts for higher-than-expected aluminum cost, U.S. aluminum premiums and a stronger local currency.

Key assumptions supporting our outlook include stable volumes on residential orders for the rest of the year. Lower volumes in light construction activity continued downtrend in interest rates, driving mortgage rates lower. FX headwinds from a stronger Colombian peso year-over-year and a healthy cash flow generation during the rest of the year.

We expect low single-digit growth for legacy single-family residential revenue with a higher mix of commercial jobs with installation. We now anticipate gross margins in the low to mid-40% range.

In conclusion, our third quarter 2025 results demonstrate our ability to execute effectively in all environments by leveraging our competitive advantages to gain market share while maintaining industry-leading margins and generating exceptional cash flow with our record backlog providing multiyear visibility, expanding markets presence through geographic and product diversification and strong balance sheet supporting strategic flexibility, we are well positioned to continue our track record of outperformance.

We remain confident in our ability to deliver another year of strong growth in revenues and adjusted EBITDA while creating lasting value for our shareholders and also anticipate to be able to once again grow our top line by double digits in 2026. With that, we will be happy to answer your questions. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Tim Wojs with Baird.

Hey, everybody. Good morning. Maybe just first on 2026 and kind of calling out double-digit growth. I'm just curious if you could add a little bit of context around the visibility to that, what kind of you're assuming in that number for some of your larger project work, residential and then also just kind of acknowledging some of the kind of weaker kind of smaller commercial projects right now.

Tim, I'll take this first. Obviously, we have a record backlog in place that gives us visibility, especially on the larger projects that are either in execution or already breaking ground that has financial closings in place already. So that gives us a lot of visibility.

And I think the single-family residential component, a lot of the growth is coming from what we're seeing as far as the geographical expansion into other places and the vinyl product ramp-up. We'll obviously come back to you guys with more granular detail. This is kind of like what we're seeing based on making some general assumptions and have a lot of confidence in that. But as far as the breakdown goes and where we think specifically each bucket is going to contribute I think we'll give you more detail in the next call.

Okay. Okay. And then as I think about the cost side of things, is there a way just give us some -- I think aluminum was a $5 million headwind and you had a couple of million dollars from FX. But I guess how do those -- how does the aluminum piece kind of trend in the fourth quarter and early '26? And then -- if you could just maybe talk about kind of when you would expect some of the peso headwinds to kind of normalize out? Is that kind of the mid-2026 time line at this point .

Yes. On the aluminum, if you look at what's happened here in the last 3 months, LME has gone up 15% from about 2,500 to 2,900. So that's been a pretty fast ramp-up. -- and the U.S. aluminum premiums have gone up even faster, about 67% from about $1,000 to $1,800, right? So that's happened fast as of late. I think the thought process here is that as volumes and demand subside, those are going to correct. .

But as of now, is anybody's guess as to what's going to happen there. Hopefully, that won't stay at record high levels for a prolonged period of time. And if you look at what's happened with the FX since our last call, we were at $41.70, and now we're at $38.50. That's an 8% revaluation in 90 days. So again is a headwind of a very rapid ramp-up over the last 90 days.

What's happening there as well is that the government of Colombia data liability management deal where they have monetized a lot of dollars as of late. The expectation is for the peso probably to come back up about 4,000 by year-end. Locally, we're covered on about 60% of our cost and expenses, and we'll be looking to be opportunistic and find an attractive entry point to mitigate that risk going forward. But the expectation based on the economist, is that we should be closer to the 4,000 level by year-end.

Okay. Okay. And then I guess just last one for me. On the vinyl business, could you just give us an update maybe on kind of where that business is tracking in 2025 and maybe your kind of initial expectations for next year there? .

Tim, this is Jose. This year, we duplicated what we did last year, but it still minimum compared to what is going to be next year. We expect next year to be from 7 to 10x more than we have done this year, because we're going to have a complete line, and we have already like 15 new dealers lined up just waiting for the line to be complete. .

Our next question comes from Sam Darkatsh with Raymond James. .

So I wanted to piggyback a little bit on Tim's questions around 26 million -- can you remind us what the price and tariff cost rollovers are from 25 into '26. And when I'm -- I guess what I'm getting at Santiago is what do you figure generally speaking, '26 gross margins might shake out? And can you lever EBITDA margins next year? .

Yes. So obviously, there's a few moving pieces here. As far as pricing goes, as you know, we increased single-family residential pricing 5% to 7% in May. So obviously, all of that now has the new pricing. And on the commercial side, you see a lot more of the backlog that was signed earlier in the year coming in with new prices.

And obviously, we're executing still some of the older backlog where we did adjust pricing. As far as gross margin goes, I mean, it's early to tell, but I think the idea depending on what happens with the inputs that we just discussed is that we can be able to maintain the low to mid-40s type profile, but as you see, there's FX, there is aluminum cost, there's mix. We're doing more installation based on the high-end projects that GM&P is executing and you got operating leverage, right?

I mean we're saying that we can grow top line double digits again next year, we would obviously expect to get operating leverage in there. But again, we'll get you guys more detail as the time approaches, and we report Q4 and full 2026 guidance in the next call.

Got you. And then as it relates to pricing, as it stands right now, do you anticipate further pricing actions to mitigate some of your costs? And what are you seeing out in the field in terms of a competitive response to all the aluminum pressures?

Generally, you're seeing tight pricing, as you would expect. Everybody is trying to maintain their market share. So for as much as we would like to take further pricing actions, the market details really what you can do. So the expectation for our growth next year is more on the volume side, as Jose was mentioning, not only we're expecting the full ramp-up on vinyl, but all of the other geographies contributing much more meaningful. So when we're talking about double-digit growth, it's more coming from volume rather than the assumption that we're going to be able to raise prices again based on what the competition is doing and the dynamics for the industry. .

And then my last question, the perspective U.S. facility that you are contemplating? I know it's still in the semi early stages, but can you give us a sense of how much capacity you're looking at, what the CapEx cost might be and the timing of those sorts of expenditures?

Well, we're still designing starting, doing engineering, but we do believe that the building and land will be around $225 million and the machines will be around 150, and it will be the -- we will have the capacity of 40% of most lines. It's still too early to tell. We do have a line already a piece of land that we like is in a very special place. We're making -- we're going to bid on it. And when we have all the numbers together because it's going to be a fully automatic robotic factory that will employ like 1/8 of the people that we normally employ to make the same window. When we have all that will give you more color on what is it that we have to do. But we are really looking into it because it's a good thing to do, especially that we want to do it in the East Coast and also in the West Coast.

Samuel, just to add to Christian's comments. Obviously, that CapEx is multiyear, right? So this is something where if the factory is going to take 2, 3 years to get built out, this is something that gets spent over a multiyear horizon. And also, it can be built gradually, right, depending on demand. So you don't have to make a full investment without having the demand for the excess capacity as well. .

So roughly $350 million to $400 million in total costs and maybe $500 million in capacity. Is that the broad brush way of looking at it? .

Yes. That roughly sounds good. So if you extrapolate to decent margins, the payback is attractive, obviously.

Our next question comes from the line of Rohit Seth with B. Riley. .

Just on the guidance, you cited slower-than-anticipated invoicing light commercial construction is the driver of the guidance cut -- can you quantify how much revenue maybe slip from Q4 into 2026. Is this like 1 or 2 projects or this more a broader issue in the commercial side? .

Well, we're talking about a $20 million reduction at the midpoint of the guidance more or less. We would estimate that at least half of that is 2026 business, which obviously further supports the idea of double-digit growth next year. And I would say some of that is coming from more stable resi invoicing than previously anticipated. .

But these are projects that are obviously in the backlog and not expected to obviously drop off is more a timing issue.

Okay. And then on the 2026 double-digit growth guide on revenues, could you maybe narrow that down to a specific range? Is it 10 to 12 or 13 to 15.

I mean, at this point, I would assume low double-digit growth. But again, more details to come we're basically working with back of the envelope calculations and assumptions. But when we report Q4 and give you full guidance, we'll provide more granular detail on that. .

Okay. And your gross margins come down to the mid-40s. As you think about 2026, I mean, and you're driving your margin assumptions. What are the key swing factors? Is there a path back to the mid-40s and you think this low 4 lesions or of the new run rate? .

Low to mid-40s is what -- what we had talked about on the earlier question. And if you kind of back into the math, that's more or less where we can end up this year? Next year, again, there's different variables related to input cost. Hopefully, some of the recent spikes in aluminum costs and premiums will come down to normalized levels. FX is also in question, so it's an important input and installation mix virtues manufacturing mix also comes to play. .

And finally, how much operating leverage can we get on those incremental sales. So again, there's different variables. We'll provide more color when we report next quarter.

Okay. And just on the higher mix of revenues with installation, it's been a headwind. Just can you quantify what percentage of your commercial revenue is the installation versus product building? .

What percentage of the commercial revenues, one, I'm sorry? .

What percentage was the installation mix in the third quarter versus product only .

If you look at the overall revenue for the year, we're doing about $990 million take -- about $200 million of that is going to be installation for the year, and that is up 50% versus last year. This quarter, the impact on mix alone for the fourth quarter is roughly about $2 million of EBITDA versus where we were in the prior midpoint.

Our next question comes from the line of Brent Thielman with DA Davidson. .

Great. Just coming back to the sort of the short cycle commercial work that maybe pushed some revenue out or delayed revenue, however you want to frame it. What I mean what is sort of in your view kind of changed in the last few months that's influenced that? And I guess, as a follow-up question, the backlog continues to grow here. maybe what you see across the country in terms of high-end space? Is the market getting better? Is the backlog growth purely an influence of you taking share? Can you comment on those 2 things, that would be great. .

Well, I think that the input costs that we're mentioning here is playing a part in many other segments in the construction industry, right? So when you have light commercial construction depending on those input costs is probably prudent to kind of push up some of those projects until things normalize. So I think in what you have seen, we talked about LME going up 15% in 90 days and U.S. aluminum premiums up 65% in the same time period. .

That's translated into other things, right? So for somebody that is putting in place a smaller project where they don't have necessarily financial closings of people that have already bought condos, for instance, that's a different story, is a different proposition. So it's a matter of timing and having things normalized. At some point, there's going to be some type of correction. So I think that's what playing a part there. And on your second question, can you repeat, I think Jose is going to address that? .

Maybe just the back -- I mean, look, the backlog is growing at the same time here. So is this is the market for high-end space getting better in the U.S.? Is this that you're capturing more share in new regions, just discussion there.

Well, we are expanding geographically. For example, before, we didn't have any work in the top Semirara. And now we have a lot of work there. We have worked in Jackson bill. We have 3 buildings where we never had any and we keep quoting. We have a lot of work in the area, and that's only in Florida. And now we see resurgence in the Boston, New York area. And also, we are quoting directly with the GMP brand, which is the installation brand in Texas, California and even in Hawaii. So we're not just relying on Florida anymore. We are expanding Florida. So Florida to all over the state, we are expanding outside the state with really good results. .

Okay. And then maybe just 1 more follow-up on the single-family product line, when you look outside of Florida, where do you -- are these different geographies you're targeting? Where are you getting the most traction? Like where are you getting a lot of momentum building the Texas East Coast West Coast? .

All over the East Coast is growing with the new line, but we see most of the growth is West Texas, Arizona, Utah, even Hawaii. I mean we sold last year in Hawaii around I don't know exactly, but -- we're going to end up invoicing this year like $6 million to $10 million, and we hope to do 20 or 30 next year.

Our next question comes from the line of Julio Romero with Sidoti.

Christian, Santiago. I appreciate the preliminary revenue expectation for '26 and I understand we'll get more color to come on the puts and takes there. Any preliminary thoughts on how we should think about capital allocation? I know you have the automated plant in Florida that you're currently weighing. Just trying to think about how you're thinking about capital expenditures and your recently up share repurchase? And how would you have us think about that?

On CapEx, as we had mentioned before, it's trending down, and we're talking about core growth CapEx not talking about the potential to do the U.S. plant, which is still early in the process. So the CapEx is going to trend down, utilize capacity, still allows us to grow well into double digits for the next couple of years.

You saw what we did in terms of buybacks last quarter and in terms of the Board action to increase that program. So I think that's definitely a good use of capital going forward as we continue to generate free cash flow. The dividend continues to be to be there.

So that's another way to return capital to shareholders, obviously. And we have very little debt. We continue to expect to be in a net cash position for the foreseeable future. So I think it will be finding opportunities to continue reinvesting in the business. If the backlog continues growing or as Jose mentioned, the opportunities for single-family residential materialize, and we grow significantly over the next year, then at some point, we'll have to just reinvest in growth.

But immediately, I think doing something on the buyback front makes sense as you saw from the Board's actions and waiting to see what happens with the general conditions of the market.

Very helpful there. And then on single-family, I know we talked about vinyl and we talked about showrooms, but wanted to get a progress update on Multimax how that's doing at the moment. And a lot of the homebuilders have been rather pessimistic expressive in the near term, rebound isn't likely in the near term. We'll be curious to how you're thinking about that product line and the outlook at the moment. .

Well,Multimax is doing much better this year, even though the housings have dropped a little bit for every builder, because we gained a couple of very nice accounts. We now are selling to 3 more home builders, and we expect to take 1 or 2 more within the next 6 months. So that line is doing well, but most of the growth next year, particularly are going to come from the new lines that we are launching complete by the end of the year to the other markets to Texas, California, Arizona. I mean, those lines even though not complete, we are already selling in those states with -- and people are really, really happy and enthusiastic. They can wait to buy a lot more. So -- we're really excited about those lines.

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

Thanks, everyone, for participating on today's call. We hope to keep growing double digits. Please keep time for better. .

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