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Good morning, and welcome to the PGT Innovations Second Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be opportunity to ask questions. Please note, that this event is being recorded.
Now, I'd like to turn the conference over to Mr. Brad West, Interim Chief Financial Officer. Please go ahead.
Thank you, and good morning, everyone, and welcome to the PGT Innovations second quarter 2021 investor conference call. On the Investors section of our company website, you will find the earnings press release issued earlier today as well as the slide presentation we have posted to accompany today's discussion. This webcast is being recorded and will be available for replay on the company's website.
Before we begin our prepared remarks, please direct your attention to the disclosure statement on Slide 2 of the presentation as well as the disclaimers included in the earnings press release and our SEC filings related to forward-looking statements. Today's remarks contain forward-looking statements, including statements about our 2021 financial performance outlook and the potential impact of the COVID-19 pandemic on our business going forward. Those statements involve risks, uncertainties and other factors that could cause actual results to differ materially. Additional information on factors that could cause actual results to differ from expected results is available in the company's most recent Form 10-K.
Additionally, on Slide 3, note that we report results using non-GAAP financial measures, which we believe provide additional information to help investors compare prior and present performance. A reconciliation to the most directly comparable GAAP measures is included in the tables attached to the earnings release and in the appendix of the slide presentation.
I am joined on this morning's call by Jeff Jackson, PGT Innovation's CEO and President. We will take your questions after delivering our prepared remarks.
I will now hand the call over to Jeff.
Thank you, Brad, and good morning, everyone, and thank you for joining us on today's call. We continue to see impressive growth in demand during the second quarter across all our geographies, but particularly in Florida and across both our new construction and repair and remodeling channels. Put that growth in perspective, for the first half of 2021, excluding Eco, annualized unit order entry has grown by approximately 40% versus 2019. We are a large custom window and door manufacturer. Therefore, we require a strong and experienced direct labor force to produce the quality products our customers need. Additionally, we require equipment to produce the materials and floor space to make and store finished goods.
During the back half of the second quarter, we made exceptional progress in all 3 of these categories to upscale our business to meet the growth in customer demand. This was accomplished during a unique period in which our industry and others have faced labor shortages and supply chain problems due to the strength of the economy, combined with the worst pandemic we've seen in our lifetime. While we faced our share of challenges, I'm very proud of our team members, our employees, dealers, distributors, everyone have consistently gone above and beyond to serve our customers. The availability of vaccines has helped us on many fronts, including enabling an increasing number of employees to work safely in person in our facilities. However, we continue to monitor and prepare to respond to the potential effects of COVID variant on our business, customers and employees.
Turning to Slide 4; second quarter sales grew 41% versus the prior year period, establishing a new quarterly record. In our Southeast Business Unit, sales were up 40%, including $24 million of sales contributed from our Eco Windows Systems acquisition, which we acquired in February of this year. Our Western Business Unit sales increased 44%, due in part to continued economic recovery in both Arizona and California, where orders have increased year-over-year, 47% and 31%, respectively, for the first 6 months. Overall, organic growth was 29%. To take advantage of growth trends in our Western region, in May, we acquired CRi SoCal, Inc., a California-based window and door design and installation contractor. This was a $10 million tuck-in acquisition that will enable us to better serve large commercial builders in the new construction and strengthen our position with key customers in that region.
Our strong revenue growth drove a meaningful increase in gross profit during the quarter. Although several factors, including the investments made in scaling up the business, contributed to higher costs, negatively impacting margins. We experienced material cost and wage inflation on products that were shipped against older backlog sold before price increases have taken effect. Additionally, product mix in our legacy Southeastern markets shifted slightly towards less profitable non-impact products, which represented 31% of our business in the quarter compared to 28% in the second quarter of 2020. Some of our recent pricing actions were done to improve the profit in our non-impact sales in the Southeastern Business Unit. Despite the challenges of the pandemic and historically tight labor market and supply chain disruptions, we have been able to add people, equipment and manufacturing and warehouse space to facilitate operations at higher run rates required to meet demand growth. These actions, while necessary for long-term growth, drove higher cost in the second quarter and into our third quarter in a number of areas.
First, the second quarter, we were very successful at recruiting new hires. For example, in a tight labor market in Florida, we significantly increased headcount by 600 people or 17%. However, in our custom manufacturing facilities, it can take up to 6 months to train a new team member to reach the level of efficiency required. Therefore, during the quarter, we incurred recruiting, training, labor and overhead expenses without the benefit of increased production capacity that we expect will flow in the back half of 2021 and into 2022 as our new associates will enable us to ship more products to customers and continue decreasing our lead times. Second, we incurred expenses of adding a new Fort Myers production facility, which began 24/7 operations in June. This past quarter, we also continued to invest in increasing capacity at our Venice, Miami and Tampa facilities. Third, earlier this year, we leased a new facility to increase warehouse capacity in Southeast Florida. This improved our fulfillment capabilities and freed up warehouse capacity to increase production. And finally, like the first quarter, we also had labor cost inflation related to increased base wage rates and retention bonuses.
In this competitive labor market, we prioritize retaining our experienced team members who have made our success possible throughout this pandemic. These initiatives were not easy and challenges remain. However, I'm very proud of the progress thus far. We are confident these steps will help us increase our output, which will allow us to decrease our lead times and put us in a better position to meet expected strong growth and demand for the remainder of this year and into 2022. Despite the short-term initial drags on margin in the second quarter, which will continue into the third quarter, these actions were necessary to meet the significant growth we see and to better serve our customers.
Our previously announced price increases are beginning to take effect, and our recently added team members are already starting to make positive impacts on our lead times. We expect to see some margin improvement in Q3, although we will experience pressures similar to Q2 as our training of new team members and expansion costs continue. We anticipate a more normalized operations and margin results in fourth quarter and heading into 2022, where we will have capabilities more in line to meet the robust demand we've seen over the past 15 months. The impact of the increase in prices and shipments in the back half of 2021 allows us to increase our annual guidance range in sales to $1.1 billion to $1.2 billion, representing a growth of 25% to 36%. Based on this substantial investment I previously discussed, the need to increase capacity to meet this demand, this is driving a reduction in our EBITDA guidance range to $160 million to $190 million. The range continues to be wide, given the uncertainties around the unique supply chain challenges, training new team members and how our workforce continues to be affected by COVID.
Turning to Slide 5; we have more detail on order entry. We, again, saw strong order entry in our Southeast Business Unit, up 33%, driven by continued strength in both the new construction, up 57% and the repair and remodeling market, up 21%. At Western, order entry was up 52% as we saw continued momentum in recoveries in states like California, Arizona and Texas. Our recent acquisitions, NewSouth and Eco, continued to see impressive demand growth. For the second quarter, retail sales at NewSouth Window Solutions totaled $40 million, an increase of 36% year-over-year. Eco achieved order entry growth of 32%. We are optimistic that we will continue to see growth into 2022 as regions within our key footprint, including Florida, Arizona and Texas continue to see net migration of residents from states with colder climates and higher taxes. We have made significant strides in the quarter, and we'll continue to invest to position PGT Innovations to be able to meet this demand.
Slide 6 summarizes the framework that guides our execution as we seek to create long-term value for our shareholders while servicing our customers and communities. Our first pillar is a customer-centric innovation to stay in front of changing builder and consumer preferences while bringing products to market that offer performance and value they demand. We are always looking ahead to drive future sales through customer preference insights. I previously addressed our second pillar, which is recruiting and retaining talent we need to continue growth. Across our entire organization, we have increased headcount by approximately 1,000 people in 2021. We have always placed an emphasis on being an employer of choice. But during the pandemic, we placed a greater emphasis on proactive communication to expand our team of dedicated employees with the right skill set. We work hard to maintain a safe workplace and a culture where employees know they're appreciated. In addition, this year, we have implemented a long-term incentive plan to help retention. As previously mentioned, we've been able to meaningfully increase our headcount in the past few months.
Our third pillar is investing in the business to scale our operations to capture anticipated increase in long-term demand. This year, we've been especially focused on increasing manufacturing capacity and capabilities. These actions will help us meet growing demand, critical equipment for vinyl and glass capacities, which have been delayed from COVID challenges are beginning to arrive and will allow us to increase capacity throughout the back half and into 2022. Our fourth pillar is allocating free cash flow to achieve profitable growth through; one, investing for growth through new product development and production capacity; two, paying down debt; and three, finding the right acquisition.
Now, I'd like to turn the call back over to Brad to review our results in greater detail. Brad?
Thank you, Jeff. Turning to Slide 7. We reported net sales of $286 million for the quarter, a 41% increase over the prior year quarter. This includes 29% organic growth from all of our legacy businesses, including substantial growth within our NewSouth business, which continues to increase orders and installations. From a channel perspective, our repair and remodel sales benefited from our last 2 acquisitions, both of which focused mainly on Florida's R&R market. In the second quarter, our sales breakdown finished at 56% R&R and 44% new construction. Our organic R&R sales grew 26% during the quarter, and organic new construction sales grew 32% from the strength of our legacy brands.
Gross profit for the quarter was $97 million, a 30% increase, reflecting increased sales partially offset by the items Jeff previously discussed. Second quarter gross margin was 34.0%, a 270-basis-point decrease from the prior year quarter. The decline was impacted by an increase in direct labor expense, mainly caused by the increased headcount and corresponding training costs and increased wage rates and overtime within our operations and as we continue to compete for labor in a tight market. In our Western markets, we continue to see labor improvement, which partially offset this impact. Inflationary pressure on materials also impacted our margin negatively during the quarter. This was mainly a result of the cost of aluminum, which from a cash perspective, was up 61% in Q2 compared to prior year. We were hedged at only a 12% increase for 64% of our needs during the quarter, which mitigated this impact. Going forward, we are hedged at similar amounts for 70% of our needs for the remainder of 2021. Through the initiatives discussed by Jeff and pricing actions already taken, we expect gross margins to improve approximately 50 basis points in Q3 and further improve in Q4 as price increases and further efficiencies take hold.
Selling, general and administrative expenses for the second quarter increased by 40% compared to the prior year quarter, primarily reflecting higher selling costs as a result of increased sales and increased amortization expense related to recent acquisitions. We did also see an increase in distribution costs as we work to expand our Southeastern operations, which will begin to normalize as efficiencies are gains. Additionally, we made some marketing-related investments in our 3 NewSouth locations that have opened over the past 12 months. Our adjusted EBITDA was $36 million, a 3% increase versus the $35 million in the prior year quarter. Our effective tax rate for the quarter came in at 20.3%, lower than our normal expected full year modeling assumption of 25% due to certain discrete tax benefits realized during the quarter. We reported adjusted net income of $10.7 million or $0.18 per diluted share in the second quarter of 2021 compared to $12.5 million or $0.21 per diluted share in the second quarter of 2020.
Turning now to our balance sheet on Slide 8. We ended the quarter with net debt of $431 million, our only significant near-term debt maturity as our term loan of $54 million due in late 2022. As of quarter end, we had total liquidity of $123 million, including the cash balance of 48 and $75 million of unused capacity on our revolver. We finished the quarter with net debt to trailing 12-month adjusted EBITDA ratio of approximately 2.7x.
Next, on Slide 9, we have updated our historical net debt and leverage ratio to highlight our progress towards deleveraging following the completion of acquisitions as well as show us our track record.
On Slide 10, I would like to discuss PGT Innovation's anticipated capital allocation priorities. Our first priority is to find internal investment opportunities and projects. We expect to increase capacity, drive margin growth by reducing expenses or by increasing revenue through product enhancements. Another important priority is our commitment to maintaining a strong balance sheet and conservative capital structure by paying down debt after acquisitions. Our goal generally is to maintain a conservative leverage profile within a target range of 2x to 3x net-debt-to-EBITDA, absent any large acquisitions. Finally, we use capital for strategic acquisitions that are expected to be accretive and generate strong returns over the long term.
We look for opportunities that would allow us to expand into new regions, channels or products such as CRi or that would give us access to technologies, enhance manufacturing or supply chain capabilities such as Eco. We will continue to carefully evaluate other possible acquisition opportunities as part of our overall strategic plan.
And now, I would like to turn the call back over to Jeff for some closing comments. Jeff?
Thanks, Brad. I'll conclude today with a summary of why I'm excited about our future and why I believe PGT Innovations creates a long-term value for our shareholders. We are a national leader with strong brands, which have been further boosted by recent acquisitions. Our products are in growing categories and in the fastest-growing regions in the U.S. We have a long history of providing our customers with innovative products to meet their changing needs and intend to maintain our industry leadership through ongoing R&D, hiring and retaining the best talent in making the right acquisitions.
Continuous improvement of our operations is how over time we can drive long-term margin expansion. Although recent challenges have surfaced as we emerge from a historical pandemic and experienced record demand growth, in the second quarter, we took many steps to make improvements necessary to gain this required capacity. Lastly, we have a comprehensive strategy that we are striving to execute to create long-term value for our shareholders and customers.
At this time, let me begin the Q&A. Operator?
[Operator Instructions] First question comes from Phil Ng of Jefferies.
This is John [ph] on for Phil. I just wanted to start by asking about some of your costs and inefficiencies. Given the price increases flowing through, offset by some of these lingering costs that you outlined. When do you think the EBITDA margins will inflect positively on a year-over-year basis? And can you also quantify the cost and inefficiencies we experienced in 2Q?
Yes. So I'm going to answer your second question first. We experienced year-over-year decline in margin of 270 bps. A large portion of that was the direct labor inefficiency that Jeff referred to, just as we hired quite a few employees to help get a substance of capacity that we need. So that was probably from a year-over-year perspective, 200 to 230 bps of difference. We will start to see that improve in the back half of the year. But like Jeff mentioned, there is there is a 6-month training window, so it will take some time. But we're starting to see some of that already, and we're starting to increase our output already. So we feel confident in the path we're taking there. On the pricing side, we kind of got the pricing that we were expecting in Q2. So kind of the miss, if you will, was the labor, getting the extra labor cost. But the pricing did come in pretty good, and we expect an additional probably 100 bps of pricing in Q3 and then even more pricing in Q4.
Year-over-year, margins in Q4 are going to be very favorable because Q4 of 2020 was one of our - was still in the COVID period for the most part. So our Q4 this year is going to be pretty strong year-over-year. But ultimately, we said what we have for the entire guidance range for EBITDA. I think that's a pretty good reflection of where we think margins are going to come in for the back half.
Excellent. And then, just one more. Have you seen any impact on demand and operations with COVID cases spiking in Florida? And similarly, you had any material availability issues related to either COVID or transportation bottlenecks?
Yes. I think this latest bout of COVID impact. I'd say, about roughly 50 people right now out related to COVID-ness. The issue is it affects certain lines. So if one person goes down a line or in a warehouse, for instance, that whole group is generally impacted and is out. That's probably the biggest operational impact, because then we have to cover for that group. In terms of the supply chain challenges, yes, we are still facing supply chain challenges. Cardinal, our major glass supplier, just this morning, we're 1,400 units on back order or short. And that impacts us. Quite frankly, we have to reschedule those 1,400 units because we were scheduled to build them. So we are still having material impacts that are hurting us. But what - I want to make sure I point out. We began the second quarter. Actually, okay, we made a strategic decision to add 600 people in basically a 2-month period. So if you look at April, our April EBITDA margins were fine. They were in the mid-teens, mid - say, call it, 15-ish percent. But when we added all those individuals and we opened up Fort Myers. And once we've got fully spunned up our warehouse on the East Coast, all those investments are there to help capacity.
We've got to drive more capacity into our system. So we can quite frankly, bring down our lead times and better serve our customers because we did see that significant increase in demand. You put that on top of COVID, it does create its share of challenges. Internally, we went back, we're going to go back to wearing mask as mandatory in our facilities here in Florida. Again, we had an abundance of precaution for our folks. We want to keep them safe as possible. And we still have all our COVID procedures in place, cleaning, sanitizing, social distancing, working from home. All of that's still on the forefront for our folks.
Thank you. The next question is from Ken Zener of KeyBanc.
You guys have expanded your footprint enormously. If we look at today's current housing demand relative to housing demand inflecting at the end of the great financial crisis or whatever you want to call it. And with the industry window industry in general, I think, had some of the same issues, right? Because windows are - they're highly variable cost in terms of you need those teams of people. So I can just kind of highlighted, obviously, if one person goes down, it takes out a team in terms of the COVID. Could you maybe give us some context to the 600 people you hire, because your footprint is a lot wider. You're in Southern Florida, you're in Arizona. Can you give us a perspective about how that 600 labor pool addition compares perhaps to the expansion last cycle when we kind of have the same - I don't want to say growing pains, but just staffing up issues, just to put it in context, because you obviously did recover as those costs and people came online?
Right. Ken, that's a very good question. And again, that's where we kind of get our 6-month estimate on training folks because that last cycle, I think it was back in '13 when the housing market kind of took off from its downturn period, yes, we did. We had to staff up again because the demand took about 6 months but folks were trained, and we were hitting back - we're hitting our margins again. If I compare the two, it's probably the size and scale now versus then. Then we were coming off a base of sales of, call it, $275 million - I'm sorry, $175 million. And now we're coming off a much bigger growth percent off of even a bigger base. So CGI, for instance, they've been a stellar facility in terms of performance. The team here has done a phenomenal job. But their orders are up 90-plus percent. So it's just hard to scale up that kind of order growth efficiently, and that's what you've seen.
We are very successful in adding those 600 people. I'm very proud of the team and the efforts that took place to do that. But like I said, it come in a cost, we made that decision, and I think it's the right one long-term because, again, they will - those team members will get efficient and will become part of the PGT family, and they will be productive.
And then it sounds, obviously, you talked about the 300 basis point margin pressure, two-thirds of that plus is labor. So with the pricing going through, it sounds - I mean, obviously, if you're on backlog from class. actually it's hard for you to meet your demand. Would you say or quantify perhaps lost sales due to lack of material coming through the supply chain to you? Is that something that or just how do you consider that?
Yes. I don't know if we can quantify it here, to be honest, we have lost sales. I answered that question. The answer is, yes. But I can tell you the sales that were lost were lower margin sales, mainly in the, say, call it, the corporate builder arena, where the lead times got extended to a point where they had to get someone else, which, quite frankly, if you're going to lose sales, that's the area we wanted to lose them. They are lower margin sales. So we have had lost sales due to performance. And we are not and have not, for the last few months, operated at a historical PGT level. And we're still not, again, we've got to get our folks up and trained. We have seen some signs of improvement, quite frankly, and I'm going to go back to lead times as an example, lead times for our vinyl lines at the end of June were 38 weeks. Now they're running anywhere from 22 to 26 weeks. So again, that's a substantial improvement.
And just to, call it, a 5-week going on 6-week period. So we're starting to see improvements. Our back orders are coming down. At the end of June, our back orders were $21 million. Now they're closer to $15 million, heading to $12 million. So we've seen already some movement in performance, although I don't want to underestimate, we got a long way to go, given the robust demand we are seeing and continue to see.
Appreciate it. If I can just ask one more since it's been raised with me. Within your core impact market, would you say that your market share has been fairly steady, just generally not giving any specific numbers, but has there been any shift in that market that you had commented on?
Yes. I would say it's been steady. The market has grown tremendously. And obviously, with our sales up and our order entry up in total for PGT, 47%, it includes our Eco acquisition. But we are growing faster than the market, if you will, in certain areas, especially, I would say, in our new construction area, but although R&R is still very robust growth there as well. It's hard to quantify. Are we losing share? I think, we're maintaining - I just think that - again, I'm centering it on Florida. The market is just growing so dramatically, all boats are floating, if you will. So other companies are growing in sales, but we are too, and we're growing our share.
Nothing that's - but 1 million people moving into the Florida over the next 2 years. So obviously, the market is growing. And I also think impact products are continuing to gaining penetration just generally. So both of those things are creating large growth in the market overall.
Thank you. And the next question comes from Josh Wilson of Raymond James.
Kind of a related question. There was a pretty big disparity between your new construction order growth and your R&R order growth. To what extent was that due to different competitive sets? And how do you think for your mix evolves in the coming quarters?
Well, we actually gained some new customers, some relatively large new customers, new construction, so some of that will share gain. But we have seen, I'd say, this year, I think we're projecting overall growth in new construction, single-family starts to be somewhere in the neighborhood of 30% based on where we're trending. So it's kind of a combination of pretty sizable growth in the new housing starts as well as the fact that we gained a couple of large customers.
Those customers, for example, I mentioned on the last call, like, for instance, the villages, they came on, and that's pretty much all new construction, but that was a significant win for our team and new construction growth.
Do you feel - so you think the difference is just share gains in new construction? Or feel like you lost some share in R&R?
I won't say we hadn't lost share in R&R because some of the smaller dealers, when lead times get extended to what they were in the second quarter, like I mentioned in vinyl, 38 weeks, although now we're down between 22 and 26 weeks, sliding glass doors, they get up to 30 weeks. Now we're down at 22 weeks. So when your lead times do get out to 38 weeks, I know we lost some R&R business. It's hard to quantify, given the significant growth we've seen.
Yes. And I think just keep in mind, though, when you look at our actual shipments, the lead times are a little bit more protected in new construction. So you could see a circumstance where order entries are relatively consistent growth, but new construction just grew a little bit faster in the shipments because of the slightly reduced lead times there.
Got it. And then as we look to '22, can you give us a sense of what your CapEx plans might be there?
It is early to tell. We typically try to stick to 3%, 3% to 3.5% say of sales in CapEx. We are going to expand our manufacturing footprint in Miami. We did acquire 75% of Eco this year, and we are looking to expand that glass producing capability by adding in some more insulating equipment down there. So there's a couple of big projects like that, that we're going to be doing. But it's really too early to put a firm number. But I think if you stick in that 3.5% would be a conservative, 3.5% of sales is what we typically run.
And Jeff, I'll add to that. Obviously, this year, we're going to end up spending more than what we planned at the beginning of the year, but a lot of that just stays within the 3.5% just because our order entry is up so much, it still ends up being about 3.5%.
Exactly, got it. Good luck with the next quarter.
Thank you. And the next question is from Michael Rehaut of J. P. Morgan.
This is Maggie [ph] on for Mike. First question on your capacity expansion. I believe you said that some pieces of it have been delayed due to equipment delays across your vinyl and glass capacity. I was wondering if you could give a bit more granular of a time line of when you think that, that capacity is going to come online and begin benefiting operations across your different product lines?
Yes, there has been some delays. That's a great question. I think even in the first quarter earnings call, we had mentioned growth in our vinyl, adding capacity there. That got delayed. Quite frankly, that is still not all the way in, a portion of that line is in. We now have another - a third UV line, but it's still not whole. We're still missing one piece of that line. And for instance, we've been adding cutting and loading capacity at Eco for that glass plant, so we will produce more glass. That got delayed, and it just came in this week. So there's various components that have been delayed. Screen making ability. We're trying to ramp up our ability to make internal screens as well, tooling associated with that. Most of that should be in place by the fourth quarter. Again, it's coming in this quarter of piecemeal. So it's a little bit hard to answer because that's just out of our control.
I definitely have discussions with the team weekly, if not daily on the timing of some of that. And their hands are tied to a certain degree, because it's either tied up in port, coming from overseas and various other reasons. And it's typically COVID related in terms of what's happening at our supplier or equipment. So I would say by the fourth quarter, we should be in good shape. Hopefully, again, knowing the equipment is literally coming in as we speak, for instance, a cutter came in. So it's coming in this quarter.
Got it. That's helpful. And second, on price costs, recognizing that you've already contracted a good amount of your aluminum needs for the rest of the year. Can you talk about your inflation outlook and any potential that you might see for the need for further price increases?
Yes. The pricing that we have put in place was kind of calculated and designed to deal with the inflation that we had seen basically through maybe, call it, the midpoint of the second quarter, which is when we kind of announced our last big price increase. And the major inflationary factors, as a reminder to everyone, again, is the cost of aluminum and then also our wage rates. For the most part, those have remained relatively steady since that point. And when we do our analysis of our pricing, we are still confident that our pricing can cover those inflationary pressures. And the demand, obviously, is such that the pricing has been accepted and not really an issue. So when you think about Q4, we're going to be in a position where we'll start getting past the backlog that we created pre-price increase and start seeing those margins. And then at that point, what will be kind of left to get us to the margins we've historically have seen will be just getting on the efficiency side, making the final steps in that regard once our 6 months and our 13 members are trained.
[Operator Instructions] Next question is from Keith Hughes of SunTrust.
Yes, just a little longer-term question. The last couple of deals you have done, been Florida, Southeast-centric. As you look forward, is that just - is that going to be the area, given how robust the growth is that we'll see more deals? Or will you still consider stuff in other parts of the country like a Western that fits your margin profile?
No, that's a good question, Keith. Yes, I think what you'll see now in Florida versus deals is going to be expansion and investment, both in technology and innovation and warehousing and distribution. Florida is an incredible market. I think we've got enough brands and exposure here, and we just need to basically service what we have and grow it, and it's growing rapidly. So the next acquisition will be out of the state. We're targeting something out less maybe to join the Western facility and that team did a phenomenal quarter, had a great quarter. And there's certain targets we're looking at, certain geographic areas we're looking at. And quite frankly, product mix. If you recall, Western's mainly aluminum with a vinyl slotting glass door. So we need to expand their product portfolio as well. So we're targeting product mix/geography in that acquisition, the next one.
This concludes the question-and-answer session. Now, I'd like to turn the call back over to Mr. Brad West for closing remarks. Please go ahead.
Thank you, everyone, for joining us on today's call. And if you have any further questions, don't hesitate to give me a call. And we'll look forward to talking to everyone next quarter. Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.