Tecnoglass Holdings Inc. (TGLS) FY 2023 MD&A

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 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 as the third largest glass fabricator 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.

Our
products are manufactured in a 5.6 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.

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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.

On
May 3, 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 Barranquilla, Colombia, we operate out of a 5.6
million square foot vertically integrated, state-of-the-art manufacturing complex that provides easy access to North, Central and South
America, the Caribbean, and the Pacific.

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 over 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 95%, and 96% of our combined revenues in 2023 and 2022, respectively,
while Colombia accounted for approximately 3% and 2%, and other Latin-American destinations accounted for approximately 2% during both
years.

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 new 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, and are expected to be
fully operational early in 2024. 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.

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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. Despite the overall decline of housing permits in U.S. south region, down 9% year over
year, from a very strong 2022; permits in key cities in Florida, where we maintain a strong presence, increased by 3%. Additionally,
according to Key Media Research (“KMR”) data, U.S. nonresidential building construction put in place is expected to
continue expanding through 2024, at an annualized rate of 4.6% to $800 billion, and projected to remain at similar levels through
2026. Residential construction put in place in the U.S. is expected to increase 1.3% during 2024, after a 5.6% decrease presented in 2023. Borrowing costs are expected to decrease during 2024,
as interest rates start to stabilize and probably decline. In late October 2023, 30
year-fixed mortgage rates reached a 23 year high of 7.8% and decreased to 6.7% as of February 2024. These stable to positive macro trends in our core
markets and geographies combined with a lean cost structure, leave us well positioned maintain industry leading margins and further
diversify our presence into the U.S.

Liquidity

As
of December 31, 2023 and 2022, we had cash and cash equivalents of approximately $129.5 million and $103.7 million, respectively. During
the year ended December 31, 2023, the main source of cash was operating activities, which generated $138.8 million.

As
of December 31, 2023, our liquidity position was comprised of $170 million available under committed lines of credit, in addition to
a cash balance of $129.5 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.

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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, 2023, and 2022, we made investments primarily in building
and construction, and machinery and equipment in the amounts of $87.3 million, and $83.1 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 two years include:

On
May 3, 2019, we consummated a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component
of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino, a Colombia-based subsidiary of
Saint-Gobain. The purchase price for our interest in Vidrio Andino was $45 million, of which $34.1 million was paid in cash and $10.9
million paid through the contribution of land on December 9, 2020. On October 28, 2020, we acquired said land from a related party in
exchange for an aggregate of 1,557,142 ordinary shares of the Company, valued at $7.00 per share, which represented an approximate 33%
premium based on the closing stock price as of October 27, 2020.

The
land will serve the purpose of developing a second float glass plant nearby our existing manufacturing facilities which we expect will
carry significant efficiencies for us once it becomes operative, in which we will also have a 25.8% interest. The new plant will be funded
with proceeds from the original cash contribution made by the Company, operating cash flows from the Bogota plant, debt incurred at the
joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million if
needed (based on debt availability).

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Results
of Operations (Amounts in thousands)

Comparison
of years ended December 31, 2023 and December 31, 2022

Our
operating revenue increased $116.7 million, or 16.3%, from $716.6 million in the year ended December 31, 2022 to $833.3 million in the
year ended December 31, 2023. Strong sales during 2023 were driven by U.S. commercial and single-family residential market activity.
U.S. sales increased $106.7 million, or 15.5%, from $688.4 million in 2022 to $795.1 million in 2023. U.S. Commercial market sales increased
$77.7 million, or 20.3%, from $382.0 million in 2022 to $459.7 million in 2023 as we continue to execute on our growing backlog. U.S.
single family residential market sales increased $29.0 million, or 9.5%, from $306.4 million in 2022 to $335.4 million in 2023 and accounted
for 40.3% of total sales in the year ended December 31, 2023. Sales to Latin-American markets increased $10.0 million, or 35.6%, from
$28.2 million in 2022 to $38.2 million in 2023.

Gross
profit increased $41.5 million, or 11.9%, to $391.0 million during the year ended December 31, 2023, compared with $349.5 million during
the year ended December 31, 2022. This resulted in gross profit margin reaching 46.9% during the year ended December 31, 2023, down from
48.8% during the year ended December 31, 2022. The 190-basis point decrease in gross margin can be mainly attributable to our revenue
mix which included more installation and stand-alone product sales during the current period. Installation and stand-alone product revenues
were up 21.4% and 9.5% respectively year over year, weighting down overall gross margin. Additionally, unfavorable currency exchange
dynamics impacted our costs denominated in the Colombian Peso against our predominantly US Dollar revenue stream.

Operating
expenses increased $8.1 million, or 6.6%, from $123.1 million for the year ended December 31, 2022, to $131.2 million for the year ended
December 31, 2023. Administrative and selling Personnel expense increased 27%, from $28.1 million in 2022 to $35.7 in 2023, related to
a larger operation and ongoing geographical expansion. Additionally, provision for accounts receivable increased $2.2 million, from $0.6
million in 2022 to $2.8 million in 2023. However, as a result of our continued effort to enhance our lean administrative structure and
tight cost controls, our operating expenses as a percentage of sales improved from 17.2% in 2022 to 15.7% in 2023.

During
the years ended December 31, 2023 and 2022, the Company recorded a net non-operating income of $5.1 million and $4.2 million, respectively.
Non-operating income is comprised primarily of interest income from short term investments and deposits, rental properties and gains
on sale of scrap materials and charges to customers on credit card payments, as well as non-operating expenses related to certain charitable
contributions outside of the Company’s direct sphere of influence.

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Interest
expense and deferred cost of financing increased $1.0 million, or 12.5%, to $9.2 million during the year ended December 31, 2023, from
$8.2 million during the year ended December 31, 2022, reflecting an increase in floating interest rates while our debt balance remained
stable.

During
the year ended December 31, 2023, the Company recorded a non-operating gain of $0.7 million associated with foreign currency transactions.
Comparatively, the Company recorded a net gain of $2.0 million during the year ended December 31, 2022, within the statement of operations
as the Colombian peso appreciated 20.5% during the period.

During
the years ended December 31, 2023 and 2022, the Company recorded an income tax provision of $77.9 million and $74.8 million, respectively,
reflecting an effective income tax rate of 30.4% and 33.3%, respectively.

As
a result of the foregoing, the Company recorded net income for the year ended December 31, 2023 of $183.5 million compared to $156.4
million in the year ended December 31, 2022.

Comparison
of years ended December 31, 2022 and December 31, 2021

Our
operating revenue increased $219.8 million, or 44.2%, from $496.8 million in the year ended December 31, 2021 to $716.6 million in the
year ended December 31, 2022.

Strong
sales during 2022 were driven by U.S. single family residential and commercial market activity. U.S. sales increased $232.0 million,
or 50.8%, from $456.3 million in 2021 to $688.4 million in 2022. U.S. single family residential market sales increased $129.1 million,
or 72.8%, from $177.4 million in 2021 to $306.4 million in 2022 and accounted for 42.8% of total sales in the year ended December 31,
2022. U.S. commercial market sales increased $102.9 million, or 36.9%, from $279.0 million in 2021 to $382.0 million in 2022 as we continued
to execute on our growing backlog. Sales to Latin-American markets decreased $12.2 million, or 30.3%, from $40.5 million in 2021 to $28.2
million in 2022 as we focused our efforts on more attractive U.S. markets.

Gross
profit increased $146.9 million, or 72.5%, to $349.5 million during the year ended December 31, 2022, compared with $202.6 million during
the year ended December 31, 2021. This resulted in gross profit margin reaching 48.8% during the year ended December 31, 2022, up from
40.8% during the year ended December 31, 2021. The 800-basis point improvement in gross margin was mainly attributable to operating leverage
on higher sales, favorable product pricing dynamics, ongoing efficiency efforts, and favorable foreign exchange rates resulting from
a depreciation of the Colombian peso.

Operating
expenses increased $37.5 million, or 43.8%, from $85.6 million for the year ended December 31, 2021 to $123.1 million for the year ended
December 31, 2022. The increase was driven by $16.2 million, or 70.4%, increase in shipping expense resulting from sales increasing 44.2%
along with some increases in shipping rates and a higher mix of sales going into the more atomized US residential market, a $3.4 million
in non-recurring professional fees, and by a $4.6 million one-time settlement payment associated with a dispute related to a project.

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During
the years ended December 31, 2022 and 2021, the Company recorded net non-operating income of $4.2 million and $0.6 million, respectively.
Non-operating income was comprised primarily of income from rental properties and gains on sale of scrap materials and charges to customers
on credit card payments, as well as non-operating expenses related to certain charitable contributions outside of the Company’s
direct sphere of influence.

Interest
expense and deferred cost of financing decreased $1.7 million, or 17.2%, to $8.2 million during the year ended December 31, 2022, from
$9.9 million during the year ended December 31, 2021, despite increases in floating interest rates as a result of a reduction of our
debt balance.

During
the year ended December 31, 2022, the Company recorded a non-operating gain of $2.0 million associated with foreign currency transactions.
Comparatively, the Company recorded a net loss of $4.3 million during the year ended December 31, 2021, within the statement of operations
as the Colombian peso depreciated 20.8% during the period.

During
the years ended December 31, 2022 and 2021, the Company recorded an income tax provision of $74.8 million and $28.5 million, respectively,
reflecting an effective income tax rate of 33.3% and 30.7%, respectively. The effective income tax rates for both years approximate the
statutory rate of 33.8% and 29.6% for the fiscal years 2022 and 2021, respectively.

As
a result of the foregoing, the Company recorded a net income for the year ended December 31, 2022 of $156.4 million compared to $68.4
million in the year ended December 31, 2021.

Cash
Flow from Operations, Investing and Financing Activities

During
the year ended December 31, 2023 and 2022, operating activities generated approximately $138.8 million and $141.9 million, respectively.
The positive cashflow from operations during the year ended December 31, 2023, has been related to our industry leading profitability,
and enhanced working capital efforts.

The
main source of operating cash during the year ended December 31, 2023, were contract assets and liabilities, which generated $13.9 million,
resulting from a combination of a decrease in retainage as several jobs in the US were finalized, a reduction of unbilled receivables
tied to our advance on projects currently in execution, and increased advances received from customers. Comparatively, contract assets
and liabilities generated $16.2 million during the year ended December 31, 2022. The largest use of cash in operating activities were
other assets, comprised primarily of prepaid taxes, which used $27.5 million during the year ended December 31, 2023, related to the
aggregate of $107.2 million related to income taxes paid during the period, most of which was paid by the Colombian subsidiaries during
the second quarter of 2023. Comparatively, other assets used $0.5 million during the year ended December 31, 2022, related to the return
of prepaid value added taxes of Colombian subsidiaries offsetting income tax payments during 2022. Cash provided by operating activities
during the year ended December 31, 2023, was negatively impacted by $25.8 million non-cash unrealized foreign currency transaction losses
compared to a net gain of $15.4 million, during the year ended December 2022, as a result of a 20.5% appreciation of the Colombian Peso
against the US Dollar, during 2023.

We
used $76.0 million and $72.6 million in investing activities during the year ended December 31, 2023 and 2022, respectively. The main
use of cash in investing activities during 2023, was related to the automation of our architectural system assembly processes and incremental
land purchases as further described above in the Capital Resources section. During the year ended December 31, 2023, we paid $78.0 million
to acquire property, plant and equipment, which in combination with $9.3 million acquired under credit, amount to total capital expenditures
of $87.3 million. During 2022, we used $71.3 million for the acquisition or property and equipment. Including assets acquired with debt
or supplier credit, total capital expenditures during the period were $83.2 million. We also received dividends from our investment in
Vidrio Andino for $2.3 million during 2023.

Financing
activities used $42.8 million and $44.8 million during the years ended December 31, 2023 and 2022, respectively. We paid $16.4 million
and $12.9 million of dividends to holders of our ordinary shares during the years ended December 2023 and 2022, respectively. During
the year ended December 31, 2023, we used $23.5 million to repurchase shares under the $50 million buyback program authorized by our
Board of Directors. Additionally, the Company paid $3.0 million to buy out the non-controlling interest in ESMetals.

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Off-Balance
Sheet Arrangements

We
did not have any material off-balance sheet arrangements as of December 31, 2023 or 2022.

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.

Trade
Accounts Receivable

Trade
accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts and sales returns. The Company’s
policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts
receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary
based on an analysis of past due accounts and other factors that may indicate that the collectability of an account may be in doubt.
Other factors that the Company considers include its existing contractual obligations, historical payment patterns of its customers and
individual customer circumstances, and a review of the local economic environment and its potential impact on the collectability of accounts
receivable. Account balances are deemed to be uncollectible and are charged off within 90 days of having recorded an allowance and all
means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

Inventories
of raw materials, which consist primarily of purchased and processed glass, aluminum, vinyl, parts and supplies held for use in the ordinary
course of business, are valued at the lower of cost or net realizable value. Cost is determined using a weighted-average method. Inventory
consisting of certain job specific materials not yet installed (work in process) are valued using the specific identification method.
Cost for finished product inventory are recorded and maintained at the lower of cost or market. Cost includes raw materials and direct
and applicable indirect manufacturing overheads. Also, inventories related to contracts in progress are included within work in process
and finished goods and are stated at using the specific identification method and lower of cost or market, respectively, and are expected
to turn over in less than one year.

Reserves
for excess or slow-moving raw materials inventories are updated based on historical experience of a variety of factors including sales
volume and levels of inventories at the end of the period. The Company does not maintain allowances for the lower of cost or market for
inventories of finished products as its products are manufactured based on firm orders rather than built-to-stock.

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Income
taxes

The
Company is subject to income taxes in some jurisdictions. Significant judgment is required when determining the worldwide provision for
income taxes. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under
this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities
are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in
deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of the Company’s assets
and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. For each tax jurisdiction in which the
Company operates, deferred tax assets and liabilities are offset and are presented as a single noncurrent amount within the consolidated
balance sheets.

There
are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters
is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and
liabilities in the period in which such determination is made.

The
Company recognizes the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technical
merits, that the position will be sustained upon examination. The Company accrues for other tax contingencies when it is probable that
a liability to a taxing authority has been incurred and the amount of the contingency can be reasonably estimated. Interest accrued related
to unrecognized tax and income tax related penalties are included in the provision for income taxes. The uncertain income taxes positions
are recorded in “Taxes payable” in the consolidated balance sheets.

Long
Lived Assets

The
Company periodically reviews the carrying values of its long-lived assets when events or changes in circumstances would indicate that
it is more likely than not that their carrying values may exceed their realizable values, and record impairment charges when considered
necessary.

When
circumstances indicate that an impairment may have occurred, the Company tests such assets for recoverability by comparing the estimated
undiscounted future cash flows expected to result from the use of such assets and their eventual disposition to their carrying amounts.
If the undiscounted future cash flows are less than the carrying amount of the asset, an impairment loss, measured as the excess of the
carrying value of the asset over its estimated fair value, is recognized. Fair value is determined through various valuation techniques,
including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

Property,
plant and equipment are recorded at cost less accumulated depreciation. Significant improvements and renewals that extend the useful
life of the asset are capitalized. Interest incurred while acquired property is under construction and installation are capitalized.
When property is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any
related gains or losses are included in income as a reduction to or increase in selling, general and administrative expenses. Depreciation
is computed on a straight-line basis, based on the following estimated useful lives: