{"url_path":"/sec/tgls/10-q/2026/item-3","section_key":"item-3","section_title":"Item 3 Quantitative and Qualitative Disclosures about Market Risk**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1534675/0001493152-26-021974-index.html","accession_number":"0001493152-26-021974","cik":"0001534675","ticker":"TGLS","issuer_name":"Tecnoglass Holdings Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1534675/0001493152-26-021974-index.html","primary_entity_key":"0001534675","primary_entity_name":"Tecnoglass Inc."},"word_count":689,"has_tables":true,"body_markdown":"**Item\n3. Quantitative and Qualitative Disclosures about Market Risk**\n\n \n\nWe\nare exposed to ongoing market risk related to changes in foreign currency exchange rates and commodity market prices.\n\n \n\nPreviously,\na rise in interest rates could negatively affect the cost of financing for a significant portion of our debt with variable interest rates.\nHowever, following recent repayments in 2024 only an immaterial portion of our debt is exposed to market risk, net of the effect from\ninterest rate hedging derivative financial instruments further described in the footnotes to the financial statements, and fluctuations\nin interest rates would not have a significant impact on our cost of financing.\n\n \n\nWe\nare subject to market risk due to changes in the value of foreign currencies in relation to our reporting currency, the U.S. dollar.\nSome of our subsidiaries’ operations are based in Colombia and primarily transact business in local currency. Approximately 3%\nof our consolidated revenues and 25% of our costs and expenses are effectively incurred in Colombian pesos, thereby mitigating some of\nthe risk associated with changes in foreign exchange rates. This portion of costs and expenses denominated in Colombian Peso excludes\ncertain items which are transacted in Colombia using Colombian Peso but are priced in U.S. Dollars or are otherwise indexed to U.S. Dollar\nrates. Thus a 5% appreciation of the Colombian Peso relative to the US Dollar would result in our revenues for the three months ended\nMarch 31, 2026, increasing by $0.4 million and our costs and expenses increasing by approximately $3.0 million, resulting in a $2.6 million\ndecrease to net earnings based on results for the three months ended March 31, 2026.\n\n \n\n23\n\n \n\n \n\nSimilarly,\na significant portion of the monetary assets and liabilities of these subsidiaries are generally denominated in US Dollars, while their\nfunctional currency is the Colombian peso, thereby resulting in gains or losses from remeasurement of assets and liabilities using the\nend of period spot exchange rate. These subsidiaries have both monetary assets and monetary liabilities denominated in US Dollars, thereby\nmitigating some of the risk associated with changes in foreign exchange rate. Furthermore, we record a portion of the non-cash foreign\ncurrency transaction gains and losses from remeasurement of certain intercompany loans as other comprehensive income. Net of this, the\nColombian subsidiaries’ US Dollar denominated monetary liabilities exceed their monetary assets by $87.5 million, such that a 1%\ndevaluation of the Colombian peso will result in a loss of $0.9 million recorded in the Company’s Consolidated Statement of Operations\nas of March 31, 2026.\n\n \n\nAdditionally,\nthe results of the foreign subsidiaries must be translated into US Dollars, our reporting currency, in the Company’s consolidated\nfinancial statements. The currency translation of the financial statements using different exchange rates, as appropriate, for different\nparts of the financial statements generates a translation adjustment, which is recorded within other comprehensive income on the Company’s\nConsolidated Statement of Comprehensive Income and Consolidated Balance Sheet.\n\n \n\nWe\nare also subject to market risk exposure related to volatility in the prices of aluminum, one of the principal raw materials used for\nour manufacturing. The commodities markets, which include the aluminum industry, are highly cyclical in nature, and as a result, prices\ncan be volatile. Commodity costs are influenced by numerous factors beyond our control, including general economic conditions, the availability\nof raw materials, competition, labor costs, freight and transportation costs, production costs, import duties and other trade restrictions.\nOur selling prices are also impacted by changes in commodity costs base our pricing of aluminum products based on the quoted price on\nthe London Metals Exchange plus a manufacturing premium with the intention of aligning cost of our raw materials with selling prices\nto attempt to pass commodity price changes through to our customers.\n\n \n\nWe\ncannot accurately estimate the impact a one percent change in the commodity costs of would have on our results of operation, as the change\nin commodity costs would both impact the cost to purchase materials and our selling prices. The impact to our results of operations depends\non the conditions of the market for our products, which could impact our ability to pass commodities costs to our customers."}