Start of the Day with Chris Forte – TGLS

Posted on August 8, 2022 by Scott Shuda

“A reputation is like a pane of glass, once it’s broken it can’t be fixed.”

I’ve often pondered this great saying. There’s a lot of truth in it. When I say “Bill Clinton” do you think of his overall good presidency or do you think “Monica Lewinsky”?

What’s this got to do with investing? Coincidentally a lot with Technoglass (TGLS: NYSE), a superb glass company that had a stone thrown at its reputation.

TGLS, with a state of the art manufacturing facility in Colombia is a leading manufacturer of architectural glass and windows installed primarily in commercial and residential buildings. Tecnoglass sells to customers in North, Central and South America. Its high-end products can be found on some of the world’s most distinctive properties. If you’ve been to Miami you have probably seen or seen through their glass windows.

Recently announced Q2 earnings were exceptional once again.

“Revenues increased 39% year-over-year to $169.1 million, marking our fifth straight quarter of record revenues driven by our continued expansion in the single-family residential end market and accelerating growth in our commercial business.

“Our single-family residential business, which is mainly focused on remodel and renovation based projects, was up approximately 86% year-over-year, to a record $75.9 million, or 45% of total revenues. This achievement reflects the rapid expansion of this business in key US regions.

“Momentum in our results is also supported by accelerating activity in our commercial business, which we expect to continue for the foreseeable future.

“We produced another quarter of record adjusted EBITDA, while sustaining an industry-leading adjusted EBITDA margin in excess of 30%.

“A strong cash flow has allowed us to deleverage our balance sheet to the lowest net debt to LTM, adjusted EBITDA ratio in the company’s history at 0.5 times as of June. Today we announced a 15% increase in our dividend.”

“We are confident in our ability to achieve our increased guidance to deliver another year of record results. This outlook represents growth of 27%. We expect full year adjusted EBITDA growth of 44%.

So what’s the glitch? On December 9, 2021 TGLS plummeted 41% after short seller Hindenburg Research released a short report alleging “accounting irregularities.” and a dubious past related to cartel characters. The stock which was having a banner year got destroyed, their pane of glass and reputation cracked.

But was it true? The company hired a special committee to prove otherwise. Analysts from B. Riley and Baird came to their defense, saying this was 20 year old news and after decades of spotless performance the company was all good. Yet the one day damage was done.

Meanwhile the company kept on growing and putting up good numbers. Now at $24, it never returned to $34 which it was at when the report came out.

TGLS is a good growth play. It has a FWD P/E of 9, and short interest of 8.6% that has slowly been squeezed as TGLS has gained 50% over the last 6 weeks.

Maybe reputations can be repaired.
_______
QUICKIES
*There’s a Breakout Investors Call with Management – SNIPF. Florian Buschek says, “My new pick…. you will enjoy the CEO speaking and presenting!”
*Florian also put in some hard work to give us the highlights of the “Perma-Fix Environmental (PESI) Q2 2022 Earnings Call, Aug 05, 2022” on the Feed.
*Aaron Warwick provides a link to “Enjoyed my interview with Jacob Braun of Braun Capital on QIPT.”
*Over a two day period tiny healthcare play IONM traveled from $1 to a high over $5 and closed Friday at $2.54, up 21% for the day.
*Assertio (ASRT) reports Q2 revenue of $35M (+40.5% Y/Y); raises FY2022 financial guidance

“We all know Russia doesn’t care about what Brittney Griner did. This is the same country that’s breaking every human rights law on the planet, but they’re like, ‘That woman has vape cartridge. She’s real criminal.” — TREVOR NOAH

Good luck to all – Chris

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