Tecnoglass Posts Record $310.6M Revenue, But Tariffs and Peso Bite Margins

Tecnoglass (NYSE:TGLS) grew third-quarter revenue 19.2% year over year to a record $310.6 million, yet adjusted EBITDA fell to $47.7 million from $79.1 million. The gap between those two figures tells the story of the quarter: tariffs, aluminum costs and a Colombian peso that appreciated roughly 20% consumed most of the revenue gain. Management raised its outlook anyway, and CFO Santiago Giraldo explained why each claim deserves scrutiny.

What happened to margins?

Gross margin fell to 34.1% from 42.7% a year earlier. Giraldo attributed approximately 580 basis points of that decline to the peso's appreciation, including an $8.4 million non-cash inventory revaluation booked in the quarter. Excluding the revaluation, adjusted EBITDA would have been roughly $8.4 million higher, he said. The caveat: the peso remains a live variable, and the revaluation effect, while smaller, has not disappeared.

Three further pressures compounded the currency hit:

• The average all-in U.S. aluminum price rose approximately 52% year over year, with higher costs reaching Tecnoglass on a lag as earlier purchases moved through inventory.
• Colombian labor costs climbed after a 23% minimum wage increase took effect at the start of the year.
• A greater share of lower-margin installation revenue weighed on the sales mix.

Section 232 tariffs on finished aluminum windows accounted for approximately $15.5 million of the increase in operating costs during the first full quarter with the 10% tariff in place, according to Giraldo. Selling, general and administrative expenses rose to 23.8% of revenue from 18.2%.

In plain terms: revenue grew, but almost every input cost rose faster.

Can the fourth quarter recover?

Management expects gross margin to improve sequentially as pricing actions, lower aluminum costs and a smaller inventory revaluation effect more than offset the strong peso. When an analyst proposed a 38% to 39% fourth-quarter gross margin, Giraldo said that was how the company was modeling it. That is an implicit forecast, not formal guidance — a distinction the company kept throughout the call.

Tecnoglass raised its 2026 revenue outlook to $1.1 billion to $1.14 billion and revised its adjusted EBITDA forecast to $210 million to $220 million. Giraldo said the EBITDA revision mainly reflected the inventory revaluation, while higher-than-expected revenue offset elevated raw material costs and the stronger currency. The company has secured aluminum at lower prices through the rest of 2026 and into the first quarter of 2027, and Giraldo expects further margin improvement next year from pricing and automation — though he conceded that exchange rates and aluminum prices remain variables. Tecnoglass has not provided formal 2027 guidance.

What does the record backlog signal?

Multifamily and commercial revenue rose 31% to $192.4 million as projects progressed into later stages. Backlog ended the quarter at a record $1.43 billion, up 13.2% from a year earlier, with a book-to-bill ratio of 1.2 times, Chief Operating Officer Christian Daes said. Florida represented roughly three-quarters of that backlog, down from more than 85% a year earlier — geographic diversification in progress, but concentration risk still substantial. CEO José Manuel Daes described Florida demand as strong and said the company is pursuing projects in other markets.

The company signed its largest project to date in October. Giraldo noted the Florida project was already included in the reported backlog because an affirmed letter of intent had been in place at quarter-end. The record backlog, in other words, already contains the headline win.

Where does residential and vinyl go from here?

Single-family residential revenue rose 4% to $118.1 million. Excluding orders pulled into the second quarter ahead of May pricing actions, revenue in the business increased 17%, Christian Daes said. José Manuel Daes said Tecnoglass plans another residential price increase, ranging from 3% to as much as 15% by product, with larger increases on aluminum-intensive items.

Giraldo reiterated expectations of approximately $15 million in vinyl revenue this year and projected $3 million to $5 million per month next year, depending on market conditions. He said the vinyl line is now fully developed, permitting a broader rollout across geographies — a promise tied, as ever, to conditions the company does not control.

Capital expenditures totaled $66.1 million in the quarter, including a land purchase for a potential U.S. facility and payments for capacity and automation investments. Tecnoglass expects to hold off on a facility decision for roughly nine months while it evaluates market conditions, equipment efficiency, staffing needs and potential returns.

The company ended the quarter with approximately $380 million in liquidity and net leverage of 0.9 times, with no significant debt maturities before the end of 2030, Giraldo said. The balance sheet, at least, carries no asterisk.