Tecnoglass Holdings Inc. (TGLS)

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 Holdings 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.

19

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 Sustainable Development Goals 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

Comparison
of quarterly periods ended June 30, 2026 and 2025

Revenues

Operating
revenues increased $39.7 million, or 15.6%, from $255.5 during the quarter ended June 30, 2025, to $295.3 million, during the quarter
ended June 30, 2026. Strong revenues during the second quarter of 2026 were driven by market share gains and stronger activity in our
core U.S markets, where revenues increased $43.9 million, or 18.1% year over year, to $286.2 million. In terms of end markets, the increase
was driven by strong growth in both US commercial and residential market. Revenues from the commercial market rose 15.7% or $22.8 million
year over year, as we continue to execute on our growing project backlog. In addition, residential market sales increased 15.4% or $16.9
million yar over year, reflecting market share gains in new geographies and a modest pull-forward effect when we announced a mid-single
digit price increase for quotes issued after May. Revenues from Latin America and the Caribbean decreased $4.1 million, or 31.4% year
over year.

Gross
profit

Gross
profit during the second quarter of 2026 was $110.0 million, a decrease of $4.3 million, or 3.8%, from $114.3 million during the second
quarter of 2025. The gross profit margin during the three months ended June 30, 2026, was 37.3%, compared to 44.7% during the second
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 2026. Additionally, 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 and by operating leverage on higher revenues.

Expenses

Operating
expenses increased $20.3 million, or 38.3%, from $53.1 million to $73.4 million for the quarters ended June 30, 2025 and 2026, respectively.
The increase resulted primarily from Tariffs on imports into the U.S. which generated a total expense of $18.7 million during the second
qu

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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

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]