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Tecnoglass (TGLS) Lifts 2022 Revenue & Adjusted EBITDA Views

Tecnoglass Inc. TGLS stock jumped 4.72% on Dec 1, after it raised its full-year 2022 guidance.

Inside the Headlines

During the first nine months of 2022, the company generated strong double-digit revenue and adjusted EBITDA growth. This trend continued in the fourth quarter as well, where October and November recorded the highest invoicing months in TGLS’ history.

Based on these solid trends, the company now expects revenues to be within $705-$715 million range and adjusted EBITDA in $255-$260 million range. The midpoints of the guided range represent their respective organic growth rates of 43% and 72%, year over year. The current outlook includes the seasonal effect of the manufacturing facility’s scheduled downtime for annual maintenance in December.

It still expects full-year gross margin to be in the mid-to-high 40% range, primarily backed by strong operating leverage on structural advantages, vertically integrated operations and high-return capex initiatives.

Santiago Giraldo, chief financial officer of Tecnoglass, stated, “Demand for our high-performance architectural glass, window and aluminum products remains strong as ever. Our sales teams are successfully capitalizing on strengthening commercial activity and driving share gains through the expansion of our single-family residential business.”

Giraldo continued, “Based on our consistent execution and our solid demand pipeline, we are poised to enter 2023 in a premier position within our industry to advance our profitable growth strategy and continue to deliver solid returns.”

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In the year-to-date period, shares of the company have gained 16% against the Zacks Building Products - Retail industry’s 19.4% decline. Earnings estimates for 2022 and 2023 have increased 19.5% and 17%, respectively, over the past 30 days. The estimated figure reflects 76.4% and 10.2% year-over-year growth.

What’s Aiding the Stock?

Tecnoglass has been recording higher gross profits and adjusted EBITDA every year over the past four years and remains on track to deliver the same this year. As the company evolved throughout these years, it diversified its business with new customers, products, end markets and geographies, and the increased capacity from these actions will enable the company to meet the rising demand for its high-performance architectural glass, window and aluminum products.

Despite the ongoing macroeconomic challenges, TGLS remains confident, given strong demand, orders and invoicing trends so far in 2022.

In September, TGLS unveiled its plan for investments across its manufacturing facility network, which is expected to propel installed production capacity by more than 35%. Tecnoglass has been working on upgrading its glass and aluminum facilities this year to speed up production capacity and automate operations. These investments across its vertically integrated operations include further automating its glass and window assembly production lines, adding glass production lines and expanding its aluminum facilities, among other initiatives to generate high returns. These actions will improve efficiency throughout its operations while reducing material waste and overall lead times.

Facility investments are anticipated to boost operational capacity to $950 million in revenues by the end of second-quarter 2023. The company also expects to end 2022 with an installed production capacity equivalent to more than $800 million in annual revenues.

Zacks Rank & Other Key Picks

TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other top-ranked stocks in the Zacks Retail-Wholesale sector are Wingstop Inc. WING, Chuy's Holdings, Inc. CHUY and Chipotle Mexican Grill, Inc. CMG.

Wingstop sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%.

The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.

Chuy’s Holdings currently carries a Zacks Rank #2 (Buy). CHUY has a trailing four-quarter earnings surprise of 18.6%, on average.

The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 8.6% and 11.7%, respectively, from the corresponding year-ago period’s levels.

Chipotle currently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.

The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.1% and 31%, respectively, from the corresponding year-ago period’s levels.

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