Q2 2023 Tecnoglass Inc Earnings Call
Ladies and welcome to take no Glass, Inc. Second quarter 2023 earnings conference call at this time all participants are.
Only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Brad Cray Investor Relations. Please go ahead Sir.
Thank you for joining us for technical partners second quarter 2023 conference call a copy of the slide presentation to accompany this call may be obtained on the investors section of detecting glass website.
Our speakers for today's call are Chief Executive Officer, Jose Manuel Dias, Chief Operating Officer, Chris Diet, and Chief Financial Officer, Santiago, but I'll.
I'd like to remind everyone that matters discussed in this call except for historical information are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements regarding future financial performance future growth and future acquisitions.
These statements are based on technical asked as current expectations or beliefs and are subject to uncertainty and changes in circumstances.
Actual results may vary in a material nature from those expressed or implied by the statements herein due to changes in economic business competitive <unk> regulatory factors.
Other risks and uncertainties affecting the operation of technical asset business.
These risks uncertainties and contingencies are indicated from time to time in technical asked as filings with the SEC.
The information discussed during the call is presented in light of such risks are.
Further investors should keep in mind that technical asked its financial results in any particular period may not be indicative of future results.
Technical asked is under no obligation to and expressly disclaims any obligation to update or alter its forward looking statements, whether as a result of new information future events changes in assumptions or otherwise.
I will now turn the call over to Jose Manuel beginning on slide number four.
Thank you Bob and thank you, everyone, who participated on today's call.
We ended the first half of the year on solid footing.
We're in the store was sold during the second quarter.
Local revenues a bug globe, despite the complex operating environment.
Our total revenues in the second quarter.
33% year over year to 225 point.
3 million.
These are dangerous.
<unk> straight quarter of double digit organic revenue growth.
Nobody has changed to whose names you know a key end markets.
Did you choose when to reflect their shoes.
They quickly integrated the business model.
Okay.
Most of the focus like confusion or dedicated team members for their.
Ability to gain share and adoption.
I cannot be prouder of the hard.
Org and does occasion Oh.
Our colleagues are great movies alone.
Multifamily and commercial demand for our products and services again drove our top line growth.
This increased by 48% year over year.
The $148 3 million.
As we continue to execute well and are growing.
Any bucket.
Oh sure. She is a believer in new high profile projects.
To drive the momentum we've seen in large project demand.
Mhm Denny's JV.
But our backlog growing to a road show in the Haynesville.
Every menu.
Right.
Oh change to a single family residential market.
The 15% to a record $86 9 million.
We are winning.
Relation a dealership groups.
Geographic expansion into attractive Mike.
We are also benefiting from secular tailwind, but particularly the southeast U S mi to other girlfriends oriented towards homebuilding.
Do you still see room.
Room for mutual growth.
Building on the stimulus change performance.
We will see but we'd be year over year expulsion or industry really muggy.
The strong adjusted EBITDA below 85 D.
Our disciplined cost.
Control efforts combined with the chunky and sustainable improvements.
Made to all those quickly integrated platform.
January new solely recurrence.
Oh, a multiyear efficiency and automation efforts contributed to adjusted EBITDA margin expansion to 37, 7%.
Year over year gross margin rose to 48, 7%.
We believe basal bolus bedrooms, and well ahead of the industry All ages.
Excluding the 10 to 22, I mean, you did touch screen.
During the quarter.
We are going to catch the name <unk>.
And free cash flow.
And then she played a painful going above and beyond to expand capacity and improve your pieces.
We are very pleased with their own to make these investments realize even more capacity than we had previously planned.
Well effectively gimenez told to eventual base.
Over 40%.
The $1 billion of Haynesville shale.
They need to meet the ever growing demand for hard to handle these pools.
Thanks to a very strict and integrated platform shaking his head pinch it really really to deliver high quality service.
Until it's too close to where we even shorter lead times.
We continue to be highly reliable shoulder to shoulder with relatively integrated platform.
Voltages naval dynamics.
But we shouldn't lose a show called the advantages.
We feel Tam preventive services to serve a broader market, while delivering industry, leading margins and returns.
We are not so good.
Uh huh.
I really do go merger should even though there's structural advantages.
Sure and operational structure.
The significant investments we have made in our business.
We are increasing our full year revenue and adjusted EBITDA growth.
For flood.
The patients for.
Amid solid demand trends for the rest of doing it to a degree.
I'll now turn the call over to Chris to provide additional operating highlights.
Thank you have someone on moving to our backlog on slide five.
Ended the quarter with a record backlog of 797 million up 19% year over year. This reflects solid bidding activity and project wins throughout the quarter, which continued into the third quarter as well that sounds right the momentum in my multifamily and commercial.
Our customers value that they can depend on taking over loss to deliver quality products on their high profile projects, while maintaining consistently low lead times, while the high interest rates remain elevated favorable secular and demographic trends in our key geographies continued to fuel.
Our Bachelor at.
Well in our backlog represented one six times, our trailing 12 months revenue.
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This indicates a strong pipeline of projects into 'twenty 'twenty four as projects formally put them on when the pandemic continued to resume activity.
Our positive outlook is further supported by far while looking indicators such as the June Abi index reading of 50.1.
Secondly, consulting on second reading, an expansionary territory.
The South region, where we have our largest presence so on expansionary Abi reading of 50.5, Fortyish supporting the healthy levels of activity and demand tailwind, but we are seeing in that region.
As a reminder, approximately two thirds of our backlog is mainly composed of medium.
High rise residential buildings, which are currently outperforming most all other commercial sectors.
The last one is related to a wide variety of commercial projects where demand remains firm.
Our single family residential growth trajectory is not fully captured in our backlog even the shorter term is part our duration projects.
Our performance in the single family residential business remains positive.
Quarterly record revenue as we continue expanding our footprint and they get my I'm taking market share.
Given our investment in capacity, our lead times on how even shorter and approaching five weeks in several product lines.
Well ahead of many of our peers, we are launching new programs in areas, where we are with lots and lots of opportunity and where new showrooms are already operational.
Additionally, using our degrees of operational capacity, we are now very well positioned.
These are.
Large homebuilders cost tomorrow.
Demand for the stand alone aluminum and glass products.
Looking ahead, we are encouraged by the strong trajectory in single family residential demand. In addition to our growing backlog of multifamily and commercial projects, which.
Which give us confidence in our res food.
So anybody three outlook.
We look for to continue on.
Leveraging our innovative.
Paul you have strong industry relationships and our structural competitive advantages to strengthen our position as a leader and I get that.
Sure Ross.
I will now turn the call over to Santiago to discuss our results and improved outlook for 2020 three.
Thank you Christian turning to slide six.
Our second quarter results extended our exceptional record of strong financial performance, we navigated through a complex microenvironment to produce another quarter of solid results.
This reflects the resilience of our unique very clean integrated business model and focused execution of our strategic priorities across all aspects of our business.
As we've highlighted in recent quarters, we remain better position than ever to take advantage of that tailwind is unique to our business given our ability to deliver superior quality architectural glass products with much shorter lead times and an attractive value.
These dynamics is evident in our single family residential revenues, which grew organically, 15% year over year in the second quarter.
As we look to the remainder of 2023, we expect solid trends through our market share gains positive demographic trends in our main markets and the marketing of our innovative products.
On slide seven.
I have discussed our structural advantages many times, but it is important for us to continue to emphasize these key points.
Our competitive advantages are unique to take no glass and allow us to thrive even during these challenging macroeconomic times.
The differentiating factors benefiting our business are.
Number one.
High return investments in plant automation and capacity upgrades.
Number two.
What else do you really stable cost the hedging on the aluminum input and dependable supplier of raw glass through our JV with tangled on.
Number three.
Focused culture to retain quality talent and achieve low turnover as an employer of choice.
Number four keeping transportation costs under 5% of revenues.
And five a sustainable energy model.
Including solar power and cogeneration of power through onsite and natural gas.
Turning to the drivers of revenue on slide nine.
Total revenues increased 33, 2% year over year to a record $225 3 million for the second quarter.
This increase was led by significant growth in our multifamily and commercial activity as well as double digit growth in single family residential revenue.
Largely reflecting additional market share gains in our key geographies.
Both our single family residential and multifamily commercial revenues are benefiting from the positive demographic trends in our main markets.
Looking at the drivers of adjusted EBITDA on Slide 10.
Adjusted EBITDA for the second quarter 2023 increased 55, 8% to a second quarter record of 85 million.
Compared to $54 6 million in the prior year quarter.
Adjusted EBITDA margin of 37.7% increased 540 basis points compared to the second quarter of 2022.
Second quarter gross profit increased 49% to $109 7 million.
Representing a 48, 7% and gross margin.
These compared to gross profit of $73 6 million, representing a 43, 5% gross margin in the prior year quarter.
Improvement in gross margin, mainly reflected operating leverage on higher sales favorable pricing dynamics and greater operating efficiencies related to our prior automation initiatives.
SG&A was $35 2 million compared to $28 1 million in the prior year quarter with the majority of the increase attributable to higher shipping and commission expenses as a result of higher sales.
As well as increased corporate cost to support a larger operation.
As a percentage of total revenues SG&A for the second quarter improved 100 basis points to 15, 6%.
Turning to our structurally improve margin and cash generation on slide 11.
On a trailing 12 month basis gross margin continued on an upward trajectory in the second quarter, increasing to an average of 51, 5% compared to a margin of 31, 5% at the end of 2019.
The significant improvement in our gross margin over that time is mainly attributable to the themes that we have shared on past calls, namely the structural and sustainable operational improvements related to automation initiatives and our shift into business strategy to diversify.
To the more profitable single family residential end market, where we do not perform lower margin installation work.
While our normalized gross margin has been structurally enhanced by over 1500 basis points. Since 2019, we still do expect to see some variability from quarter to quarter.
As we discussed on our prior earnings call. The record gross margin of 53% achieving the first quarter was set to retreat based on our gross margin guidance for the year well.
On a sequential basis comparison to the first quarter the more normalized gross margin in the second quarter was the result of several factors.
Number one.
Over half of the sequential decline was attributable to a strong appreciation of the Colombian peso, which affect a large portion of our costs such as labor professional fees maintenance cost utilities as well as inventories.
Given improved sentiment both from a country specific and general macroeconomic perspective, we expect the peso to remain around current levels for the rest of the year.
Number two.
The next factor impacting sequential gross margin, what's the mix of product revenues I will expand on that point.
The extra capacity that has recently come online.
Ford at us the ability to sell customers more standalone product, namely architectural glass and aluminum framing.
Which carry lower margins than our fully untenable windows given prior capacity constraints are finished glass and aluminum products were previously getting allocated to our very clean integrated production of windows, which generate our highest margin revenues the absorption of new capacity and ability to offer a.
Wider range of solutions to customers.
This positive overall for our business.
The final factor affecting sequential gross margin was a more competitive marketplace. Although this impact was much less than the other two factors were.
We did experience a modestly more competitive pricing environment, particularly in single family residential.
As we look to the balance of the year, we expect that the current level of the peso a more diversified product mix and competitive dynamics will produce gross margins around normalized levels through the remainder of the year. Therefore, we now expect gross margin will be in the 48% to 50% range for the full year two.
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As mentioned on our May earnings call, we expect a limited cash for operations in the second quarter, which was entirely due to the timing of the 2022 income tax payments for the Columbia and entities, which have now been fully pay.
Excluding the annual tax payments that reminder of cash flow from operations was very strong.
Proximately $57 million and up year over year.
Looking to the back half of the year, we expect cash flow generation to be stronger even the absence of these income tax payments and the step down in capex.
Now looking at our improved balance sheet and leverage on slide 12.
We have taken many actions over the past several years to fortify our balance sheet.
We have improved our weighted average interest rate by over 180 basis points. Since 2020 and are currently at the lowest interest rate tier under our debt agreement.
Has left us with significant financial flexibility to return cash to shareholders and execute growth in other initiatives.
Which are the 40% addition to our installed capacity.
At quarter end, our leverage ratio stayed near record lows, a 0.2 times net debt to LTM adjusted EBITDA down from 0.5 times in the second quarter of last year.
As of June 30th we had a cash balance of approximately $105 million and availability under our committed revolving credit facilities of $170 million, resulting in total liquidity of approximately 275 million.
On slide 13, we are committed to delivering strong returns to shareholders on average over the past three years, our stronger profitability and meaningful step up in cash flow generation has driven significant returns.
When comparing our Aro and ROIC metrics to those U S building product peers there.
Their returns on reinvestment into our business plus dividends have driven substantially higher value to our shareholders further validating our strategic approach to driving returns.
As you can see on slide 15, the upward trajectory of our revenue and adjusted EBITDA remains positive.
And there's a lot of runway for growth with the recent capacity additions to that to get up to $1 billion of annual revenue.
We are as confident as ever in our ability to achieve many years of exceptional growth.
Now moving to our outlook on slide 16.
Based on our strong results, so far and visibility through year end, we have an improved outlook for 2023.
We are increasing the low end of our outlook for both revenue and adjusted EBITDA growth.
We now expect full year 2023 of revenue to be in the range of 830 million to $855 million.
This outlook represents entirely organic growth of 18% at the midpoint.
Based on these sales outlook, our anticipated mix of revenues and our expectations for cost and expenses, we expect full year adjusted EBITDA to be in the range of 320 million to 335 million, representing a 23% growth at the midpoint of the range.
As I discussed earlier, we expect gross margins to be in the 48% to 50% range for full year 2023.
In regards to the cabinets of results. The second half of 2023 has significantly more challenging comps.
And we experienced in the first half.
This is reflected in the implied revenue and adjusted EBITDA growth that we expect to achieve in the second half relative to the full year growth for both metrics.
Additionally, based on the schedule and timing of projects, we expect third quarter revenues to step down sequentially from the second quarter before picking up in the fourth quarter.
As previously discussed cash flow from operations and free cash flow are expected to be strong for the rest of the year, even the seasonal effect of the annual tax payment in the second quarter and the majority of our budgeted capex, having been completed through June <unk>.
We're all we are confident that our very clean integrated operating platform will allow us to continue generating industry, leading results and best in class service for our customers with our differentiated product offerings.
D G geographic position in attractive markets highly efficient cost structure and our latest round of high return investments, we remain well positioned to capture the demand we see across our end markets with that we will be happy to answer your questions. Operator. Please open the line for quest.
Since.
Thank you we will now be conducting a question and answer session.
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One moment, please while lethal.
Sure.
Yeah.
Our first question comes from Keith Weiss.
Please go ahead.
Yes.
Hey, guys good.
Good morning, and good morning, everyone for the time maybe.
Maybe just first question just if you can maybe talk a little bit about the overall, you know kind of environment that you're seeing.
Well, it's still pretty strong you know maybe you just talk a little bit about bidding quoting and I guess with the incremental capacity that you've brought on I mean.
Have you been able to kind of expand the types or you know the geographical area or projects that you're bidding on now.
Yeah.
Well, what we're seeing a bit more papers.
A lot of Coty.
Depending on the.
The reason.
For example, with him Phil.
From Florida.
Florida.
In New York.
Maryland.
Boston.
And the crux of the scrubber, you get a little relief.
Uh huh.
From.
Some areas are going though.
Before Joe.
We're not driving maybe quotes the bump for the rest of the country seems to be doing good.
And I guess from a I mean have you seen I guess from a financing perspective or funding perspective, I mean have you seen any kind of underlying weakness or kind of delays in kind of quotes to its actual bids.
Yes.
Yes, we are for example in South Florida.
It was the husband.
Suddenly very well.
But.
The road, though.
Or b b.
Because.
For the cost of a building.
Plus the interest rates are so high that.
It doesn't make sense for them to do it.
I have seen in the last couple of weeks.
The prices of our cost structure that could be down.
I mean Congress.
T O.
Colby Brown.
People are strict to the builder.
Because.
Then it would make sense for them to build.
No rentals.
Okay. Okay.
Then I guess you know Santiago just on on the on the gross margin line.
As you kind of think about you know the three the three buckets that you kind of outlined I mean is that kind of phases into the back half of the year. How would you expect you know that.
The Colombian peso appreciation and I'm, just kind of the product mix and things like that to kind of face I don't know either.
Our year over year basis, just to kind of stabilize from where we're at today or is there are there some pieces that kind of move around.
Yeah. So if you recall team when we guided after Q1, we basically implies that gross margins were going to stabilize for full year coming up from 53% to what we said, 50%, which we still think he's possible and that accounted for the normal.
The station of the FX rate.
And in the mix of business.
If you look at what's happened with the FX rate the Colombian peso was the most revalued its currency in the world.
That has to deal with macro trends, but also country specific brands that are more positive than it's been than they were previously.
And now we're seeing that the peso has stabilized for.
For the rest of the year and that's how we're projecting going forward. So at the end of the day, if you kind of back into the new range of 48% to 50% that already implies.
The peso is where is that today.
And we have a little bit more installation and standalone product sales the rest of the year. So.
If you look at you know.
All of the moving pieces here I mean, this is really related to the revaluation of the peso week, we're being cautious.
Cautious with.
And in in the mix of business going forward. So yes, we expect at least what we were able to achieve in Q2.
The rest of the way and he's gonna depend on mainly those two factors, but we expect from a revenue perspective to the continue the healthy trends.
Okay, Okay, very good I'll hop back in queue. Thanks, guys nice job.
Alright. Thank you. Thank you.
Yeah.
Next question comes from Stanley Elliott with Stifel. Please go ahead.
Hey, good morning, everyone. Thank you all for the question.
And can you talk a little bit about what you're seeing on the residential side. You know I was a bit surprised I mean, it's flattish on a sequential basis you guys have put a lot of resources a lot of capacity there.
There, maybe help us with with what's going on within the residential markets.
Well the Rouge eventual merger.
We are there.
It probably should be.
Well for outside of Florida.
Where davie market.
We grow very slow at the beginning.
Because you have no market with no problem.
Well designed.
We'd like to be stretched truthful.
We do.
And.
So.
We learned about them.
But where are you shipping there.
So.
I see.
Insurers are reporting at a lower pressure on people.
And especially condominiums.
Ooh Ooh.
Trace the windows.
I believe Rachel.
Outside the scrubber keep beam level not very strong level.
Especially because new construction.
There is a slow down a little bit.
Because of the interest rate.
Well, we should stabilize here in Florida.
There's really no time, nobody knew we don't see that's pro growth.
We're going to grow.
And it looks like the back half of the the guidance kind of implied would indicate kind of flattish sort of revenues for both segments and in the second half the year am I getting that correctly, maybe there's some FX involved but just want to make sure I was thinking about that holistically.
No S FX one really.
Make a make a significant difference here just because 95% of our revenues are in U S dollars. That's as you know.
But if you look at what we had guided for residential is very much in line. I mean, we had guided Q1, I, saying theres going to be a step up sequentially, which which you saw a Q1 with the 83 and a half.
This quarter, we do 87, so there was a step up sequentially.
And the way that we're modeling these out based on the orders that we have today is that it should be kind of flattish the rest of the way sequentially from Q2 in line with what Jose was saying.
And also we have much tougher comps year over year for the second half of the year.
<unk> 22 versus 23, so on them on the resi side, you will see some some kind of a flattish nose.
On the commercial side, we are seeing growth year over year, the second the second half.
I believe with the 115 and 126, respectively.
The last two quarters of last year, and we're modeling you know to grow the second half of the year twenty-three versus those numbers on that side and that's mainly where they increased growth is going to come from.
On the topline basis.
Right, but on the on the multifamily commercial side, you're probably looking at kind of like mid single digits growth on growth on a year over year basis is that kind of get to the midpoint of the guide I guess that was kind of the Genesis of the question, Yes, yes.
If youre just looking for the second half of the year comps, yes, and obviously if you back into our original guidance that makes sense that that would you know just just temporary little bit because the first half of the year growth was much much more stronger so to get to the original guidance. You would you would expect that to be the case.
Perfect guys. Thanks, so much and best of luck. Thank.
Thank you. Thank you Sam.
Yeah.
Okay.
Comes from.
L E G.
Got it.
Hey, good morning.
Can you maybe talk about the facility expansion the delta between the 1 billion installed base versus the $950 million expectation just if you could expand at all on you know maybe what part of the expansion is above expectation either.
Specific product lines or window components that make up the incremental $50 million.
Well it might be beyond that.
We are expecting at least.
Billions of capacity.
The way.
After taking into consideration everything that will be finish on installed by September I really believe that we're going to have so it makes talking about hidden and I you will depend on how the products made in those lines I use.
We sell them yours is glass.
Or aluminum.
You win.
Two 1 billion, if we can put them into windows, we can even go higher so.
We are.
What was he shouldn't we.
I really believe that we needed to do this because we were working seven days a week 24 hours a day and they're you know he's very uncomfortable.
Not good maintenance on equipment and you have to use them everyday. So now we're doing better in maintenance, we have the extra capacity and we are ready for the many projects that we have coming up.
Very helpful. And then Christian you talked about the lead times are five weeks on several product lines, but what are those lead times before and what's your sense of where competitive competitors lead times would be at.
Well they used to eat 12 weeks and weeks 11 weeks.
Now down to five Oh, we still have capacity, we can even bring it.
A little bit more.
And our competition is around the same times.
Which makes US you know.
We have better quality.
How 'bout better broke them, we can deliver at the same time. So we have I think we're gonna be gaining market.
Margo shared I know that this is not a good time to talk about that because you know there are so many variables going on in the inflation and the interest rate and all that but we.
I really am optimistic 'twenty 'twenty, four will be our best year ever.
Really helpful I'll pass it on thanks very much.
Yeah.
Next question comes from Josh Wilson with Ray.
Maam please.
Please go ahead.
Good morning, and thanks for taking my questions.
Good morning, Josh.
Could you give us your latest thoughts on what your total capex budget will be for 'twenty, three and any early thoughts on what it would look like in 'twenty four.
Yeah. If you look at the year to date Capex you know a lot of what we have planned to do has been executed. So the idea is for it stepped down quite a bit of.
The second half of the year.
I would imagine that we ended up with less than 45 million and $40 million to $45 million in total capex for FY 'twenty, three and then 24 stepping down I.
I would say by half option.
At least absent any new projects or expansion that is required for future growth, but that would be the base case based on the installed capacity that Christian discussed he's gonna depend on how the backlog and the pipeline continues to grow but everything held equal he's gonna them is going to step down to less than half of next year.
Okay.
Got it.
And could you talk about what the productivity of spin of the single family showrooms, thus far versus your expectations.
Well the switching mineral do you want to yeah.
No. The showrooms are working very well we have over people call me ma'am the floor before.
We don't want to over Russia fell.
Total project for them.
Don.
Uh huh.
We would all hope for sure, but we have.
Because there are no problem.
Murray.
Every market has a new program.
Sure.
So we're working there.
Certainly.
We have shipped to all food go zones.
The reception of that would be great.
No we're not.
Oprah.
Sure Luke.
I'd go with my brother have Herb.
We're very bullish.
Figure about private equity before.
We have a law firm for what we're doing.
We have showed you know.
We don't play games, where we know where we're going.
And we're doing it right.
We are open or Bosch or was were all pretty a couple more breakthrough.
We plan to open doors.
What's the stage version.
Cool.
If I could sneak in one more on the FX impact whichever is easier what would you say your guidance would have been.
Today, if the peso had not changed just to give us a sense of sensitivity to any future changes.
Well you can back into it I think based on the peak of the year to where it is today. The peso has strengthened about 18% or so being again being the most revalued currency in the world.
The impact this quarter was about 3% to operating margins.
So if you were just to model it out with a 3%.
<unk> impact the rest of the way positive impact the rest of the day. The way you can kind of back up into that into that number.
Thanks.
Yeah.
Sure.
Next question comes from Alex.
B, Brian D Securities. Please go ahead.
Thank you good morning, gentlemen, nice quarter.
You talked about a little bit of a favorable pricing in the corner in the quarter. How should we think about that going forward in light of your comments about the competitive environment.
Oh, well, we shoes some of our competitors.
The biggest one.
Hum cruiser brushes because.
They were not doing very well with low margins.
So we have less pressure on pricing.
There's trouble or somehow.
The aluminum.
So we don't have any pressure on pricing.
There's oh.
The market I think.
That would be favorable for everybody.
Soon after.
Interest rates are storey luxury.
We're sure a lot of a lot of people buy them.
Hi, Robert.
There are houses.
Uh huh.
For most of us personally and Florida insurance.
Our ability to lower brochure of.
And then secondly can you talk about the new products the success, they're having in the importance of those.
Driving our growth in 2024.
Those of course are.
Every market, but for sure.
The for the products for example in the North East.
Looking forward to.
Temperature control and a favorable.
Hmm.
Because physicians are really low so we've assigned program for another area.
Since we're new in the market, but we tried to design better.
And there's a learning curve.
<unk> shipped a few product for a few projects very few well see how it works how about how difficult or easy they used to lose or these are big.
And then we prove the pro a little we'd leave it alone.
We have.
Great.
A lot of feedback.
The banks have removed, though we're going to gain a little while ago.
And those are real show were very intrusive.
Thank you.
Okay.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from <unk>.
<unk> suites D. A Davidson. Please go ahead.
Hi, This is John for Brent and then how are you.
Good morning.
Okay I'll start with the two part question could.
Could you provide an update on the residential business expansion in Texas, and just provide some color on that type of progress Youre seeing.
And so the second part accounting you know for.
The strength in the South East.
Which of your other markets in the U S is picking up in residential.
Well, there's always doing well that's true.
Not with those reserve timing.
We're opening a showroom in Houston.
Sean.
And we have sold.
A couple of small jobs.
And like I said before we're doing the flu bug.
It was good.
So we're going full speed bump right.
Yeah.
Austin or Houston.
Love.
A building like Crazy and we're one of the bigger ones.
Some of that.
We are exploring.
So the California.
There was a little slower to de book.
There's a lot of market to explore for Oh no.
No.
And on the North Sea.
I mean from a South Carolina, Oh, we have gone a few jobs like I said before.
The reception has been great. So we're very hopeful.
Thank you and recur.
Regarding.
Construction labor shortages and Florida.
Have you seen any impact on your business and if so thinking of revenue I'll have you or or any of US who you work with all have been able to navigate the short a labor shortage.
Well actually we have no approved.
No.
Oh.
All the jobs that we have or will.
Hum.
People I mean, we have no shortage of them over time.
Sure the building's going offline.
We have noticed spirit of Uh huh.
Great. Thank you I appreciate that I'll hop back in.
Okay.
There are no further questions at this time I would like to tender.
Manuel dies.
Yes.
Very welcome.
We are very enthusiastic about.
But as a company.
Sure.
I believe.
We are poised.
To keep growing them.
And Oh sure hold of what.
What they deserve.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you.
Your participation and have a great.
Hey.
Okay.
Okay.
Okay.
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Okay.
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Okay.
Okay.
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Yes.
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