# Tecnoglass Inc. (TGLS)

Informational only - not investment advice.

CIK: 0001534675
SIC: 3211 Flat Glass
SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 32](/major-group/32/) > [SIC 3211 Flat Glass](/industry/3211/)
Latest 10-K filed: 2026-03-02
SEC page: https://www.sec.gov/edgar/browse/?CIK=1534675
Filing source: https://www.sec.gov/Archives/edgar/data/1534675/000149315226008465/form10-k.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 983610000 | USD | 2025 | 2026-03-02 |
| Net income | 159566000 | USD | 2025 | 2026-03-02 |
| Assets | 1260392000 | USD | 2025 | 2026-03-02 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-02. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001534675.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 305,016,000 | 314,456,000 | 370,984,000 | 430,912,000 | 376,607,000 | 496,785,000 | 716,570,000 | 833,265,000 | 890,181,000 | 983,610,000 |
| Net income | 23,180,000 | 5,449,000 | 9,031,000 | 24,535,000 | 23,875,000 | 68,151,000 | 155,743,000 | 182,882,000 | 161,309,000 | 159,566,000 |
| Operating income | 47,848,000 | 34,364,000 | 47,195,000 | 58,815,000 | 65,707,000 | 116,985,000 | 226,415,000 | 259,762,000 | 227,001,000 | 230,741,000 |
| Gross profit | 112,647,000 | 99,182,000 | 120,217,000 | 135,809,000 | 139,441,000 | 202,584,000 | 349,499,000 | 390,934,000 | 379,972,000 | 421,410,000 |
| Diluted EPS | 0.69 | 0.15 | 0.21 | 0.55 | 0.51 | 1.43 | 3.27 | 3.85 | 3.43 | 3.42 |
| Operating cash flow | -3,085,000 | 14,209,000 | -5,031,000 | 25,664,000 | 71,711,000 | 117,253,000 | 141,920,000 | 138,827,000 | 170,532,000 | 135,755,000 |
| Capital expenditures | 22,906,000 | 7,027,000 | 13,117,000 | 24,952,000 | 18,323,000 | 51,513,000 | 71,327,000 | 77,960,000 | 79,563,000 | 101,262,000 |
| Dividends paid | 741,000 | 2,471,000 | 2,714,000 | 5,227,000 | 3,801,000 | 5,243,000 | 12,869,000 | 16,427,000 | 19,743,000 | 28,127,000 |
| Assets | 394,730,000 | 468,000,000 | 489,774,000 | 569,668,000 | 530,112,000 | 591,563,000 | 734,308,000 | 962,717,000 | 1,016,648,000 | 1,260,392,000 |
| Liabilities | 281,165,000 | 346,335,000 | 356,546,000 | 382,458,000 | 321,570,000 | 346,865,000 | 383,983,000 | 414,697,000 | 385,465,000 | 547,340,000 |
| Stockholders' equity | 113,565,000 | 121,665,000 | 133,228,000 | 183,133,000 | 208,541,000 | 244,698,000 | 350,325,000 | 548,020,000 | 631,183,000 | 713,052,000 |
| Cash and cash equivalents | 26,918,000 | 40,923,000 | 33,040,000 | 47,862,000 | 67,668,000 | 85,011,000 | 103,671,000 | 129,508,000 | 134,882,000 | 100,901,000 |
| Free cash flow | -25,991,000 | 7,182,000 | -18,148,000 | 712,000 | 53,388,000 | 65,740,000 | 70,593,000 | 60,867,000 | 90,969,000 | 34,493,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin | 7.60% | 1.73% | 2.43% | 5.69% | 6.34% | 13.72% | 21.73% | 21.95% | 18.12% | 16.22% |
| Operating margin | 15.69% | 10.93% | 12.72% | 13.65% | 17.45% | 23.55% | 31.60% | 31.17% | 25.50% | 23.46% |
| Return on equity | 20.41% | 4.48% | 6.78% | 13.40% | 11.45% | 27.85% | 44.46% | 33.37% | 25.56% | 22.38% |
| Return on assets | 5.87% | 1.16% | 1.84% | 4.31% | 4.50% | 11.52% | 21.21% | 19.00% | 15.87% | 12.66% |
| Liabilities / equity | 2.48 | 2.85 | 2.68 | 2.09 | 1.54 | 1.42 | 1.10 | 0.76 | 0.61 | 0.77 |
| Current ratio | 2.69 | 2.16 | 2.39 | 2.50 | 3.03 | 2.10 | 2.06 | 2.27 | 2.11 | 1.86 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001534675.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q2 | 2022-06-30 |  |  | 0.70 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.98 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 1.01 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 225,280,000 | 52,445,000 | 1.10 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 210,743,000 | 45,863,000 | 0.97 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 194,603,000 | 36,339,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 192,627,000 | 29,730,000 | 0.63 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 219,654,000 | 35,028,000 | 0.75 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 238,327,000 | 49,535,000 | 1.05 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 239,573,000 | 47,016,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 222,288,000 | 42,189,000 | 0.90 | reported discrete quarter |
| 2025-Q2 | 2025-03-31 |  | 42,189,000 |  | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 255,546,000 |  | 0.94 | reported discrete quarter |
| 2025-Q3 | 2025-06-30 |  | 44,083,000 |  | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 260,479,000 |  | 1.01 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 245,297,000 | 26,106,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 249,012,000 | 31,891,000 | 0.71 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1534675/000149315226021974/form10-q.htm

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization.
Confidence: high
Filing date: 2026-05-08
Report date: 2026-03-31

Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking
Statements

This
Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking
statements on our current expectations and projections about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking
statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,”
“could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause
or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission
(“SEC”) filings. References to “we”, “us” or “our” are to Tecnoglass Inc., except where
the context requires otherwise. The following discussion should be read in conjunction with our unaudited condensed consolidated financial
statements and related notes thereto included elsewhere in this report.

Overview

We
are experienced and highly skilled in the vertical integration of window and architectural glass manufacturing, distribution, and professional
fitting. Our expertise extends to the production of top-quality windows, as well as the supply of aluminum, vinyl, and other components.
Our dedicated and knowledgeable team serves a diverse range of commercial and residential construction projects worldwide, guaranteeing
outstanding products and seamless installation services. With a focus on innovation, combined with providing highly specified products
with the highest quality standards at competitive prices, we have earned #1 spot in the Forbe’s list of America’s 100 most
successful small-cap companies for 2024, and developed a leadership position in each of our core markets. In the United States, which
is our largest market, we were ranked among the four largest glass fabricators serving the United States in 2025 by Glass Magazine. In
addition, we believe we are the leading glass transformation company in Colombia. Our customers, which include developers, general contractors
or installers for hotels, office buildings, shopping centers, airports, universities, hospitals and multi-family and residential buildings,
look to us as a value-added partner based on our product development capabilities, our high-quality products and our unwavering commitment
to exceptional service.

With
over 40 years of experience in architectural glass and aluminum assembly, we specialize in transforming various glass products. Our offerings
include tempered safety glass, double thermo-acoustic glass, and laminated glass. Our wide range of finished glass products are utilized
in diverse buildings for floating facades, curtain walls, windows, doors, handrails, as well as interior and bathroom spatial dividers.
In addition to glass, we manufacture aluminum and vinyl products such as profiles, rods, bars, plates, and other hardware specifically
designed for window manufacturing.

The
majority of our products are manufactured in a 6.1 million square foot, state-of-the-art manufacturing complex in Barranquilla, Colombia
that provides easy access to North, Central and South America, the Caribbean and the Pacific. Our products can be found on some of the
most distinctive buildings in these regions, including 100 Hood Park Drive (Boston), 601 West 29th St (New York). Norwegian
Cruise Line Terminal B (Miami), Paramount Miami Worldcenter (Miami), Via 57 West (New York), One65 Main (Cambridge), AE’O Tower
(Honolulu), Salesforce Tower (San Francisco), and One Thousand Museum (Miami). Our track record of successfully delivering high profile
projects has earned us an increasing number of opportunities across the United States, evidenced by our expanding backlog and overall
revenue growth.

Our
structural competitive advantage is underpinned by our low-cost manufacturing footprint, vertically integrated business model and geographic
location. Our integrated facilities in Colombia and distribution and services operations in Florida provide us with a significant cost
advantage in both manufacturing and distribution, and we continue to invest in these operations to expand our operational capabilities.
We also leverage automation and process digitalization across our operations to improve throughput, consistency and scalability, supporting
cost efficiency and service reliability. Our lower cost manufacturing footprint allows us to offer competitive prices for our customers,
while also providing innovative, high quality and high value-added products, together with consistent and reliable service. We have historically
generated high margin organic growth based on our position as a value-added solutions provider for our customers.

20

We
have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in
Florida has primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated
areas of the United States. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic
growth with some acquisitions that have allowed us added control over our supply chain allowed for further vertical integration of our
business and will act as a platform for our future expansion in the United States. Earlier acquisitions in 2016 and 2017, of ESW and
GM&P respectively, helped establish our U.S. distribution and installation capabilities, while more recent transactions—including
our minority interest in Vidrio Andino, our full ownership of ESMetals, and the 2025 acquisition of certain assets of Continental Glass
Systems, LLC—have enhanced our vertical integration, capacity, customer reach, and backlog.

On
April 3, 2025, we completed the acquisition of certain assets and assume certain liabilities of Continental Glass Systems, LLC, a leading
provider of architectural glass and glazing solutions in the Southeast U.S., that included manufacturing equipment, intangibles, and
a strong project backlog, enhancing our U.S. presence, customer reach, and supply chain efficiency.

The
continued diversification of the group’s presence and product portfolio is a core component of our strategy. In particular, we
are actively seeking to expand our presence in United States outside of Florida. We also launched a residential window offering which,
we believe, will help us expand our presence in the United States and generate additional organic growth. We believe that the quality
of our products, coupled with our ability to price competitively given our structural advantages on cost, will allow us to generate further
growth in the future.

We
have focused on working with The Power of Quality, always making sure that our vision of sustainability is immersed into every
aspect of our business, including social, environmental, economic and governance variables, that help us make decisions and create value
for our stakeholders. We carry out a series of initiatives based on our global sustainability strategy, which is supported on three fundamental
pillars: promoting an ethical and responsible continuous growth, leading eco-efficiency and innovation, and empowering our environment.
As part of this strategy, we have voluntarily adhered to UN Global Compact Principles since 2017 and in pursuit of our cooperation with
the attainment of the SDGs joined in 2021 a program to dynamize, strengthen and make visible the management of greenhouse gas emissions
as a carbon neutral strategy set out by the Colombian government for 2050. Additionally, we are advancing initiatives in circular economy
and implementing comprehensive water management and treatment strategies aimed at improving efficiency, reuse and replenishment, in order
to maintain our water-positive operations.

RESULTS
OF OPERATIONS

Three months ended

March 31,

2026

2025

Operating Revenues

$

249,012

$

222,288

Cost of sales

(153,178

)

(124,763

)

Gross profit

95,834

97,525

Operating expenses

(50,893

)

(42,472

)

Other operating income

-

4,276

Operating income

44,941

59,329

Non-operating income and expenses, net

856

1,016

Equity method income

102

1,344

Foreign currency transactions losses, net

917

(509

)

Interest Expense and deferred cost of financing

(3,023

)

(1,331

)

Income tax provision

(11,902

)

(17,660

)

Net income

$

31,891

$

42,189

Comparison
of quarterly periods ended March 31, 2026, and 2025

Revenues

Operating
revenues increased $26.7 million, or 12.0%, from $222.3 during the quarter ended March 31, 2025, to $249.0 million, during the quarter
ended March 31, 2026. Strong revenues during the first quarter of 2026 were driven by market share gains and stronger activity in our
core U.S markets, where revenues increased $24.7 million, or 11.6% year over year, to $237.1 million. In terms of end markets, the increase
was driven by strong growth in the US commercial market, up 20.4% or $25.1 million year over year as we continue to execute on our growing
project backlog and market share gains, while US residential market sales was relatively flat year over year. Revenues from Latin America
and the Caribbean increased $2.0 million, or 20.7% year over year.

Gross
profit

Gross
profit during the first quarter of 2026 was $95.8 million, a decrease of $1.7 million, or 1.7%, from $97.5 million during the first quarter
of 2025. The gross profit margin during the three months ended March 31, 2026, was 38.5%, compared to 43.9% during the first quarter
of 2025, primarily driven by higher input costs associated with increasing aluminum prices, as well as higher salaries given the one-time
double digit minimum wage increase put in place in Colombia at the beginning of the year. Additionally, we had an unfavorable revenue
mix as commercial revenues with installation services rose year over year as we execute on our growing backlog of projects with installation.
Finally, we had a stronger local currency year over year, impacting our local currency costs on a comparable basis.. The aforementioned
factors were partially offset by positive pricing adjustments implemented in the second quarter of last year.

Expenses

Operating
expenses increased $8.4 million, or 19.8%, from $42.5 million to $50.9 million for the quarters ended March 31, 2025, and 2026, respectively.
The increase resulted primarily from increased personnel cost, on higher salaries and a stronger Colombian Peso. Additionally the Government
of Colombia imposed a one-time, non-recurring $2.9 million wealth tax on larger Colombian companies in order to subsidy certain unexpected
climate related emergencies. This measure is currently being challenged under the Supreme Court. These increases were partially offset
by a $1.9 million recovery of previously paid import tariffs recorded as a reduction to selling expense during the three months ended
March 31, 2026 on certain products imported to the United States under the International Emergency Economic Powers Act after the U.S.
Supreme Court ruled that certain tariffs imposed under the IEEPA were not valid in February 2026.

Non
operating income and expenses, net

During
the three months ended March 31, 2026 and 2025, the Company recorded net non-operating income of $0.9 million and $1.0 million, respectively.
Non-operating income is comprised of interest income from short term investment

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Item
7.

Management’s
Discussion and Analysis of Financial Condition and Results of Operations.

The
following discussion of the Company’s financial condition and results of operations should be read in conjunction with the Company’s
consolidated financial statements and notes to those statements included in this Form 10-K. This discussion contains forward-looking
statements that involve risks and uncertainties. Please see the section entitled “Forward-Looking Statements and Introduction”
in this Form 10-K.

Overview

We
are experienced and highly skilled in the vertical integration of windows and architectural glass manufacturing, distribution, and professional
fitting. Our expertise extends to the production of top-quality windows, as well as the supply of aluminum, vinyl, and other components.
Our dedicated and knowledgeable team serves a diverse range of commercial and residential construction projects worldwide, guaranteeing
outstanding products and seamless installation services. With a focus on innovation, combined with providing highly specified products
with the highest quality standards at competitive prices, we have earned #1 spot in the Forbe’s list of America’s 100 most
successful small-cap companies for 2024, and developed a leadership position in each of our core markets. In the United States, which
is our largest market, we were ranked among the four largest glass fabricators serving the United States in 2023 by Glass Magazine. In
addition, we believe we are the leading glass transformation company in Colombia. Our customers, which include developers, general contractors
or installers for hotels, office buildings, shopping centers, airports, universities, hospitals and multi-family and residential buildings,
look to us as a value-added partner based on our product development capabilities, our high-quality products and our unwavering commitment
to exceptional service.

With
over 40 years of experience in architectural glass and aluminum assembly, we specialize in transforming various glass products. Our offerings
include tempered safety glass, double thermo-acoustic glass, and laminated glass. Our wide range of finished glass products are utilized
in diverse buildings for floating facades, curtain walls, windows, doors, handrails, as well as interior and bathroom spatial dividers.
In addition to glass, we manufacture aluminum and vinyl products such as profiles, rods, bars, plates, and other hardware specifically
designed for window manufacturing.

38

The
majority of our products are manufactured in a 6.1 million square foot, state-of-the-art manufacturing complex in Barranquilla, Colombia
that provides easy access to North, Central and South America, the Caribbean and the Pacific. Our products can be found on some of the
most distinctive buildings in these regions, including the Aston Martin Residences (Miami), Miami World Tower (Miami), 3ELEVEN (New York),
Raffles Hotel (Boston), Norwegian Cruise Line Terminal B (Miami), One Thousand Museum (Miami), Paramount Miami Worldcenter (Miami), Salesforce
Tower (San Francisco) and AE’O Tower (Honolulu).. Our track record of successfully delivering high profile projects has earned
us an increasing number of opportunities across the United States, evidenced by our expanding backlog and overall revenue growth.

Our
structural competitive advantage is underpinned by our low-cost manufacturing footprint, vertically integrated business model and geographic
location. Our integrated facilities in Colombia and distribution and services operations in Florida provide us with a significant cost
advantage in both manufacturing and distribution, and we continue to invest in these operations to expand our operational capabilities.
Our lower cost manufacturing footprint allows us to offer competitive prices for our customers, while also providing innovative, high
quality and high value-added products, together with consistent and reliable service. We have historically generated high margin organic
growth based on our position as a value-added solutions provider for our customers.

We
have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in
Florida has primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated
areas of the United States. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic
growth with some acquisitions that have allowed us added control over our supply chain allowed for further vertical integration of our
business and will act as a platform for our future expansion in the United States. In 2016, we completed the acquisition of ESW, which
gave us control over the distribution of products into the United States from our manufacturing facilities in Colombia. In March 2017,
we completed the acquisition of GM&P, a consulting and glazing installation business that was previously our largest installation
customer. Most recently, on April 3, 2025, we completed the acquisition of certain assets and assume certain liabilities of Continental
Glass Systems, LLC, a leading provider of architectural glass and glazing solutions in the Southeast U.S., that included manufacturing
equipment, intangibles, and a strong project backlog, enhancing our U.S. presence, customer reach, and supply chain efficiency.

In
2019 we consummated the joint venture agreement with Saint-Gobain, acquiring a 25.8% minority ownership interest in Vidrio Andino, a
Colombia-based subsidiary of Saint-Gobain, solidifying our vertical integration strategy by acquiring an interest in the first stage
of our production chain, while securing ample glass supply for our expected production needs. Additionally, in April 2019, we acquired
a 70% equity interest in ESMetals, which has been consolidated in our financial statements since. In November 2023, we acquired the remaining
30% equity interest in ESMetals. ESMetals is a Colombian entity that serves as a metalwork contractor to supply us with steel accessories
used in the assembly of certain architectural systems as part of our vertical integration strategy.

The
continued diversification of the group’s presence and product portfolio is a core component of our strategy. In particular, we
are actively seeking to expand our presence in United States outside of Florida. We also launched a residential window offering which,
we believe, will help us expand our presence in the United States and generate additional organic growth. We believe that the quality
of our products, coupled with our ability to price competitively given our structural advantages on cost, will allow us to generate further
growth in the future.

We
have focused on working with The Power of Quality, always making sure that our vision of sustainability is immersed into every
aspect of our business, including social, environmental, economic and governance variables, that help us make decisions and create value
for our stakeholders. We carry out a series of initiatives based on our global sustainability strategy, which is supported on three fundamental
pillars: promoting an ethical and responsible continuous growth, leading eco-efficiency and innovation, and empowering our environment.
As part of this strategy we have voluntarily adhered to UN Global Compact Principles since 2017 and in pursuit of our cooperation with
the attainment of the SDGs joined in 2021 a program to dynamize, strengthen and make visible the management of greenhouse gas emissions
as a carbon neutral strategy set out by the Colombian government for 2050.

How
We Generate Revenue

We
are a leading manufacturer of hi-spec architectural glass and windows for the western hemisphere residential and commercial construction
industries, operating through our direct and indirect subsidiaries. Headquartered in Miami, Florida,, the Company maintains its principal
manufacturing operations in Colombia and operates out of approximately 6.5 million square foot vertically-integrated, state-of-the-art
manufacturing and operational footprint across Colombia and the United States that provides easy access to North, Central and South America,
the Caribbean, and the Pacific.

39

Our
glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, and digital print glass
as well as mill finished, anodized, painted aluminum and vinyl profiles, and produces rods, tubes, bars and plates. Window production
lines are defined depending on the different types of windows: normal, impact resistant, hurricane-proof, safety, soundproof and thermal.
We produce fixed body, sliding windows, projecting windows, guillotine windows, sliding doors and swinging doors. ES produces facade
products which include: floating facades, automatic doors, bathroom dividers and commercial display windows. In late 2023, we entered
into the vinyl window market, expanding our product portfolio to more than double our addressable market, and offering customers a wider
selection of solutions to meet their project needs. We intend to capitalize on our existing distribution base for our aluminum products
to obtain significant synergies given the number of dealers and distributors that already sell both aluminum and vinyl windows.

We
sell to approximately 1,000 customers using several sales teams based out of Colombia and the United States to specifically target regional
markets in South, Central and North America. The United States accounted for 94.8%, and 95.5% of our combined revenues in 2025 and 2024,
respectively, while Colombia accounted for approximately 3.2% and 2.8%, and other Latin-American destinations accounted for approximately
2.0% and 1.7%, respectively.

We
sell our products through our main offices/sales teams based out of Florida and different regions in the US, which is our largest sales
group and has strong relationships with glazing contractors, general contractors, real estate developers and specialty window dealers
in the region. In late 2022, we launched two showrooms, one in New York City and one in Charleston, SC, to serve primarily single-family
residential markets in their regions. New showrooms have been completed in Houston, TX, and Bonita Springs, FL. Additionally, showrooms
in Phoenix, AZ and Los Angeles, CA are in the lease negotiating stages and are expected to open in 2025. We also have sales forces located
in Colombia and Panama with long-standing business relationships in the region to serve Latin American markets. We have two types of
sales operations: contract sales, which are the high-dollar, customer tailored projects, and standard form sales, which reflect lower-value
orders that are of short duration.

We
expect to benefit from growth in our largest markets in the United States by gaining market share, broadening our geographic footprint.
Favorable demographics in states such as South Carolina, Florida, Texas, and North Carolina, where we have a strong presence, contribute
to continued growth. According to FMI’s 2025 Building Products Market Overview, annual spending for the residential window and
door market is expected to grow at a Compound Annual Growth rate of 6.2%, totaling $340 billion from 2025 to 2029, despite of current
macroeconomic challenges of affordability, interest rates, and tariff uncertainties, negatively impacting the U.S. residential market
as of 2025. This growth is anticipated to accelerate in 2027 and remain strong through 2029, mainly driven by high demand for energy
efficient products such as vinyl. On the other hand, Nonresidential building product spending is expected to experience a total growth
of 22% from 2025 to 2029, or a total projected spending of around $260 billion. Additionally, the latest Nonresidential Construction
Index (NRCI) increased from 47.9 in Q4’2025, to 54.5 in Q1’2026, reflecting improved expectations of economic conditions
and expanding industry opportunities from the commercial construction market for 2026. These stable to positive macro trends in our core
markets and geographies combined with a lean cost structure, leave us well positioned to maintain industry leading margins and further
diversify our presence into the U.S.

Liquidity

As
of December 31, 2025, and December 31, 2024, we had cash and cash equivalents of approximately $100.9 million and $134.9 million, respectively.
During the year ended December 31, 2025, the main source of cash was operating activities, which generated $135.8 million.

40

As
of December 31, 2025, our liquidity position was comprised of $365 million available under committed lines of credit, in addition to
a cash balance of $100.9 million. We anticipate that working capital will continue to be a net benefit to cash flow in the near future,
which in addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months.

Capital
Resources

We
transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significant
investments in state-of-the-art technology. During the years ended December 31, 2025, and 2024, we made investments primarily in building
and construction, and machinery and equipment in the amounts of $75.3 million, and $79.6 million, respectively. We believe our investments
in technology within recent years have positioned us well for continued growth given the flexibility afforded by our current installed
capacity, improved profitability and enhanced cash generation in the years ahead. Recent examples of our high return investments within
the last three years include:

●

Further
automation of window assembly production lines, increasing efficiencies, labor and material waste costs with an estimated reduction
of on-site damage by 30%;

●

Additional
aluminum expansion project to increase capacity by approximately 400 tons/month;

●

Further
automation of additional glass lines, increasing efficiencies on an end-to-end basis reducing lead times, headcount and on-site damage
by approximately 40%;

●

Automation
of three centralized aluminum warehouses for storing, sorting and delivering extrusion matrices and aluminum profiles to our internal
production processes that reduce lead times for the assembly of architectural systems and reduce on-site damage to materials; one
additional warehouse under construction in 2026

●

Acquiring
2.1 million square feet of land adjacent to our existing facilities for future expansion and for our sport facility complex available
to factory employees;

●

Completed
expansion of our architectural metal facade plant, which specializes in engineering, designing, and manufacturing tailor-made facades.

In
April 2025, Tecnoglass acquired certain assets and assumed certain liabilities of Florida-based Continental Glass Systems, LLC. (“Continental”),
a premier provider of innovative architectural glass and glazing solutions in the Southeast U.S. This acquisition included a manufacturing
plant, various intangibles, and a substantial project backlog in both execution and pipeline phases. With annualized revenues of approximately
$30 million, Continental’s production capabilities, high-quality product portfolio, and reputation for excellence strengthens Tecnoglass’
U.S. market presence, broadens its client reach, and creates synergies that reinforce Tecnoglass’ leadership position in the architectural
glass industry. Additionally, the Company anticipates operational benefits as it integrates Continental’s supply chains into its
existing manufacturing operations. The purchase price for the acquisition was $10,429, of which $6,841 of the purchase price was paid
in cash by the Company on April 3, 2025, with the remaining amount to be payable by the Company in cash within 365 days after closing
date. The total amount of acquisition-related costs was $588, which are included in the Statement of operations for the period ending
December 31, 2025.

Additionally,
we acquired $9.0 million and $6.4 million of property plant and equipment under credit during the twelve months ended December 31, 2025,
and 2024, respectively. These investments across our vertically-integrated operations include further automating our glass and window
assembly production lines, adding glass production lines, expanding our aluminum facilities, putting new vinyl windows lines to penetrate
this new product segment and purchasing land to grow beyond current installed capacity.

The
Company estimates that current manufacturing operating capacity has reached approximately $1.3 billion which does not account for incremental
installation revenue capacity. Additionally, the Company expects the resulting increase in output to improve efficiency throughout its
operations while reducing material waste and overall lead times.

41

Results
of Operations (Amounts in thousands)

Twelve months ended December 31,

2025

2024

2023

Operating revenues

$

983,610

$

890,181

$

833,265

Cost of sales

562,200

510,209

442,331

Gross profit

421,410

379,972

390,934

Operating expenses

(196,310

)

(152,971

)

(131,172

)

Other operating income

5,641

-

-

Operating income

230,741

227,001

259,762

Non-operating income and expenses, net

3,127

5,858

5,131

Foreign currency transactions (loss)/gains

3,756

(5,665

)

686

Loss on debt extinguishment

(1,380

)

-

-

Interest income (expense), net and deferred cost of financing

(3,445

)

(7,433

)

(9 ,178)

Income tax provision

(75,726

)

(63,849

)

(77,904

)

Equity method income

2,493

5,397

5,013

Net income

159,566

161,309

183,510

Income attributable to non-controlling interest

-

-

(628

)

Income attributable to parent

$

159,566

$

161,309

$

182,882

Comparison
of years ended December 31, 2025 and December 31, 2024

Our
operating revenue increased $93.4 million, or 10.5%, from $890.2 million in the year ended December 31, 2024, to $983.6 million in the
year ended December 31, 2025. Strong sales during 2025 were driven by U.S. commercial and single-family residential market activity.
U.S. sales increased $83.0 million, or 9.8%, from $849.9 million in 2024 to $932.9 million in 2025. U.S. Commercial market sales increased
$51.7 million, or 10.8%, from $477.8 million in 2024 to $529.5 million in 2025 as we continue to execute on our growing backlog. U.S.
single family residential market sales increased $31.3 million, or 8.4%, from $372.1 million in 2024 to $403.4 million in 2025 and accounted
for 41.0% of total sales in the year ended December 31, 2025. Sales to Latin-American markets increased $10.4 million, or 25.8%, from
$40.3 million in 2024 to $50.8 million in 2025.

Gross
profit during the twelve months ended December 31, 2025, was $421.4 million, an increase of $41.4 million, or 10.9%, from $380.0 million
during the twelve months ended December 31, 2024. The gross profit margin during the twelve months ended December 31, 2025, remained
stable at 42.8% from 42.7% during the twelve months of 2024. During 2025, pricing action and improved operating leverage, balanced out
inflationary pressures on input costs, mostly salary increases set at the beginning of the year, and rising cost of aluminum in part
due to our tariff mitigation strategy. Average FX rates remained relatively stable year over year despite some short term volatility.

Operating
expenses increased $43.3 million, or 28.3%, from $153.0 million to $196.3 million for the twelve months ended December 31, 2024, and
2025, respectively. The increase was mainly driven by tariffs on imports into the U.S. which generated $19.9 million expense. Additionally,
the nominal increase was driven by administrative salary adjustments and higher transportation and commission expenses related to higher
revenues.

During
the twelve months ended December 31, 2025, the Company recorded other operating income of $5.6 million mainly related to a gain on the
sale of an aircraft and the recognition of a refund related to Employee Retention Credits under government relief programs. There was
no comparable income recorded during the previous year period.

During
the twelve months ended December 31, 2025, and 2024, the Company recorded non-operating income of $3.1 and $5.9 million, respectively.
Non-operating income for the period is comprised primarily of income from rental properties and gains on sale of scrap materials as well
as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.

42

During
the twelve months ended December 31, 2025, the Company recorded a non-operating net gain of $3.8 million associated with foreign currency
transactions, compared to a net loss of $5.7 million during the twelve months ended December 31, 2024.

In
September 2025, the Company entered into a new Senior Secured Credit Facility to replace its prior credit agreement dated November 2021.
The new facility transitions the Company from a term-loan-plus-revolver structure to a fully committed revolving facility and (i) increases
total committed borrowing capacity from $150 million to $500 million, (ii) reduces borrowing costs by approximately 25 basis points,
and (iii) extends the initial maturity date by five years to December 2030. Borrowings under the new facility bear interest at the Secured
Overnight Financing Rate (SOFR) with no floor, plus a spread of 1.25%, based on the Company’s net leverage ratio. The effective
interest rate for this facility, including deferred issuance costs, is 6.98% as of December 31, 2025. In connection with the establishment
of the new facility, the Company incurred total costs and fees of $2,783 which were capitalized as deferred financing costs.

The
transaction was accounted for as a debt extinguishment in accordance with ASC 470-50. As a result, the Company recognized a loss on extinguishment
of debt of $1,380, representing the write-off of the remaining unamortized deferred financing costs related to the prior credit facilities
and termination costs associated with closing the previous facility.

Interest
expense and deferred cost of financing decreased by $0.5 million, or 7.2%, to $6.9 million for the twelve months ended December 31, 2025,
primarily reflecting the discontinuation of hedge accounting for the Company’s interest rate swap contracts upon the extinguishment
of the prior credit facility and issuance of the new revolving facility. Following this discontinuation, the periodic settlements and
fair value changes of these swaps are now recognized within Interest income (expense), net and deferred cost of financing on the Consolidated
Statement of Operations and Comprehensive Income. During the twelve months ended December 31, 2025, the Company recorded a gain of $3.3
million related to derivative financial instruments. 

The
effective income tax rate of 32.2% and 28.4% for the years ended December 31, 2025 and 2024. Our effective rate generally reflects a
blended statutory rate, primarily driven by the 35% corporate tax rate in Colombia, where most of our manufacturing operations are located,
and the 21% U.S. federal statutory rate.

As
a result of the foregoing, the Company recorded a net income for the year ended December 31, 2025 of $159.6 million, compared to $161.3
million for the year ended December 31, 2024.

Comparison
of years ended December 31, 2024 and December 31, 2023

Our
operating revenue increased $56.9 million, or 6.8%, from $833.3 million in the year ended December 31, 2023, to $890.2 million in the
year ended December 31, 2024. Strong sales during 2024 were driven by U.S. commercial and single-family residential market activity.
U.S. sales increased $54.8 million, or 6.9%, from $795.1 million in 2023 to $849.9 million in 2024. U.S. Commercial market sales increased
$18.1 million, or 3.9%, from $459.7 million in 2023 to $477.8 million in 2024 as we continue to execute on our growing backlog. U.S.
single family residential market sales increased $36.7 million, or 10.9%, from $335.4 million in 2023 to $372.1 million in 2024 and accounted
for 41.8% of total sales in the year ended December 31, 2024. Sales to Latin-American markets increased $2.1 million, or 5.4%, from $38.2
million in 2023 to $40.3 million in 2024.

Gross
profit during the year ended December 31, 2024, was $380.0 million, a decrease of $10.9 million, or 2.8%, from $390.9 million during
the year ended December 31, 2023. The gross profit margin during the year ended December 31, 2024, decreased to 42.7% from 46.9% during
the year ended December 31, 2023, primarily related to a 5.9% appreciation of the Colombian Peso impacting our costs denominated in Colombian
Pesos against our predominantly US Dollar revenue stream. Additionally, the year over year comparison was also impacted by our mix of
revenue, with sales from installation projects, wich bears lower margins, now accounting for 18.2% of our total revenues for the year
ended December 31, 2024, compared to 15.4% for the year ended December 31, 2023, as well as higher salaries which were adjusted by the
government at the beginning of the year and higher headcount to adjust for ongoing growth, which accounted for 210 basis points of our
gross margin deterioration. Despite the year over year reduction of gross profit margin, gross margin sequentially increased during the
year ended December 31, 2024.

Operating
expenses increased $21.8 million, or 16.6%, from $131.2 million to $153.0 million for the year ended December 31, 2023 and 2024, respectively.
The increase was mainly driven by personnel expense, up $9.4 million from $35.7 million during the year ended December 31, 2023, to $45.1
million during the year ended December 31, 2024, due to administrative salary adjustments, and operating headcount increase to support
our growing operation, resulting in 74 basis points deterioration of our operating margin; and by a negative effect in COP denominated
amounts related to a 5.9% appreciation of the Colombian Peso against US Dollar over the period.

During
the year ended December 31, 2024 and 2023, the Company recorded non-operating income of $5.9 and $5.1 million, respectively. Non-operating
income for the period is comprised primarily of interest income from short-term investments, income from rental properties and gains
on sale of scrap materials as well as non-operating expenses related to certain charitable contributions outside of the Company’s
direct sphere of influence.

43

Interest
expense and deferred cost of financing decreased $1.7 million, or 19.0%, to $7.4 million during the year ended December 31, 2024, from
$9.2 million during the year ended December 31, 2023, as the Company voluntarily prepaid $62.0 million to reduce its debt balance and
benefited from having a favorable interest rate hedge in place for 100% of its outstanding debt.

During
the year ended December 31, 2024, the Company recorded a non-operating net loss of $5.7 million associated with foreign currency transactions,
compared to a net gain of $0.7 million during the year ended December 31, 2023.

The
effective income tax rate of 28.4% and 29.8% for the years ended December 31, 2024 and 2023, respectively, are below the average statutory
rates of 31.3% and 30.4% during each of those periods, respectively, as the proportion of our taxable income shifted jurisdictions resulting
from new developments of our product designs, trademarks and other intellectual property rights as well as from growing profit in US
subsidiaries.

As
a result of the foregoing, the Company recorded a net income for the year ended December 31, 2024 of $161.3 million compared to $183.5
million for the year ended December 31, 2023.

Cash
Flow from Operations, Investing and Financing Activities

During
the years ended December 31, 2025 and 2024, operating activities generated approximately $135.8 million and $170.5 million, respectively.
The strong cashflow from operations during the year ended December 31, 2025, was mainly associated with our industry leading profitability
and effective working capital management, partially offset by incremental input costs and tariff expenses in 2025.

The
main sources of operating cash during the year ended December 31, 2025, were contract assets and liabilities, and trade accounts payable
and accrued expenses. Contract assets and liabilities generated $31.4 million during the fiscal year ended December 31, 2025, mostly
due to an increase in billings in excess of costs, as large commercial jobs are being executed, and large projects from our backlog are
starting operations; compared to $14.3 million generated during the twelve months ended December 31, 2024. In addition, trade accounts
payable and accrued expenses generated $8.1 million during the fiscal year ended December 31, 2025, related to higher payables due to
our higher raw material purchases as we procure a stock of U.S. sourced aluminum as part of our tariff mitigation strategy, compared
with $14.7 million during the fiscal ended December 31, 2024. In direct relation to that, the largest use of cash in operating activities
was the purchase of inventories, which used $45.1 million during the twelve months ended December 31, 2025, in contrast to $2.9 million
used during the prior year period.

We
used $87.5 million and $77.3 million in investing activities during the twelve months ended December 31, 2025, and 2024, respectively.
During the year ended December 31, 2025, we paid $101.3 million to acquire property plant and equipment, which is partially offset by
$12.3 million sale of property, plant and equipment. This included scheduled payments on previous investments to increase capacity and
efficiency, as well as $15.0 million of real estate in south Florida. Additionally, we spent $6.8 million to acquire certain assets and
assume certain liabilities of Continental Glass Systems, LLC, a leading provider of architectural glass and glazing solutions in the
Southeast U.S., that included manufacturing equipment, intangibles, and a strong project backlog, enhancing our U.S. presence, customer
reach, and supply chain efficiency. The price of this purchase was $10.4 million, of which $3.6 million remains to be paid in the short
term. During the twelve months ended December 31, 2024, we used $79.6 million for the acquisition of property and equipment.

Financing
activities reflected gross debt proceeds of $176.0 million and repayments of $114.4 million, primarily related to the replacement of
the Company’s prior credit facility with a new $500 million revolving facility in September 2025. The transaction was accounted
for as a debt extinguishment under ASC 470-50, resulting in the recognition of $1.0 million in deferred financing costs associated with
the new facility, which extends the maturity to December 2030 and provides increased borrowing capacity and enhanced financial flexibility.

44

Off-Balance
Sheet Arrangements

We
did not have any material off-balance sheet arrangements as of December 31, 2025 or 2024.

Critical
Accounting Estimates

The
preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that
affect the assets, liabilities, revenues and expenses, and other related amounts during the periods covered by the financial statements.
Management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables
and assumptions affecting the future resolution of the uncertainties increases, these judgments become more subjective and complex. We
have identified the following accounting policies as the most important to the presentation and disclosure of our financial condition
and results of operations.

Revenue
Recognition

For
supply and installation contracts, the performance obligations are satisfied over time and control is deemed to be transferred when the
contract is accepted by our customers. Revenues from supply and installation contracts are recognized using the cost-to-cost method,
measured by the percentage of costs incurred to date to total estimated costs for each contract. Contract modifications routinely occur
to account for changes in contract specifications or requirements. In most cases, contract modifications are for goods or services that
are not distinct and, therefore, are accounted for as part of the existing contract. Transaction price estimates include additional consideration
for submitted contract modifications or claims when the Company believes it has an enforceable right to the modification or claim, the
amount can be reliably estimated, and its realization is reasonably assured. Amounts representing modifications accounted for as part
of the existing contract are included in the transaction price and recognized as an adjustment to sales on a cumulative catch-up basis.