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PGT Innovations, Inc. (NYSE:PGTI)
Q3 2020 Earnings Call
Nov 5, 2020, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to PGT Innovation's Third Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to PGT Innovation's Chief Financial Officer, Sherri Baker. Please go ahead.

Sherri Baker -- Senior Vice President and Chief Financial Officer

Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. On the Investors section of the company's website, you will find the earnings press release with our third quarter 2020 results 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 two of the presentation as well as the disclaimers included in the press release related to forward-looking statements.

Today's remarks contain forward-looking statements, including statements about our fourth quarter 2020 outlook and the impact of the COVID-19 pandemic that may involve risks, uncertainties and other factors that could cause actual results to differ materially. This disclaimer is a brief summary of the company's statutory forward-looking statements disclaimer, which is included in the company's filings with the SEC.

Additionally, on Slide three, you should also note that we report results using non-GAAP measures, which we believe provide additional information for investors to help facilitate comparison of 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 today by PGT Innovations CEO and President, Jeff Jackson. After our prepared remarks, we will be available to take your questions.

I will now hand the call over to Jeff for opening remarks.

Jeffrey T. Jackson -- Chief Executive Officer and President

Thank you, Sherri, and good morning, everyone, and thank you for joining us on today's call. Before getting to the discussion of the business results, I'd like to note that I'm very proud of the team for their efforts in what continues to be operating in a challenging, complex and unpredictable environment. Our primary focus will always be on protecting the health and personal safety of our employees and their families and communities. The dedication and spirit shown by our employees has been exemplary, and I want to thank them for stepping up and taking care of our customers and taking care of each other.

Order flow is increasing, as is our backlog, we are working steadily to increase production output while adhering to important safety protocols to try to prevent COVID-19 transmission at our facilities. We believe these enhanced safety protocols have been effective at allowing us to responsibly increase capacity to accommodate consumer demand without jeopardizing safety. Each quarter, I think it's important to begin our discussion of the results by reviewing our strategic pillars shown on Slide four. This framework guides our execution as we seek to create long-term value for our shareholders while serving our customers.

Our first pillar is customer-centric innovation, maintaining our focus on our customers who are at the center of our business, which in turn drives brand recognition and loyalty and ultimately leads to sales growth. Our innovative market strategy has enabled us to further enhance customer expectancy and provide the insights into future demand that is now driving our sales into the R&R market in light of the increased time people are spending in their homes. Our second pillar highlights our need to continually attract and retain dedicated employees with the right skill set in order for our company to succeed over the long term. As we look to increase capacity to support increasing demand, we are actively recruiting talent in a tight labor market. We strive to maintain our long-standing culture where employees come to work every day knowing they are appreciated and that they work for a company that cares about them and their family.

Our third pillar is making investments in the business to grow our manufacturing capabilities and continually improving operations so we can shift the best possible products to meet our customers' demand. As we discussed over the past few earnings calls, we have put substantial effort behind identifying and implementing operational improvements across the manufacturing process at our Western business unit. While we made steady progress and improvement along the way, this really came to fruition during the third quarter as we achieved substantial better production rates, which drove significant EBITDA margin improvements versus prior year. Our long-term strategy includes continuing to invest in our business to drive product innovation and increased operational efficiency.

Our fourth pillar is to allocate capital across competing priorities, which may include reinvesting in the business, making acquisitions or paying down debt with the ultimate goal to drive shareholder value. Next, I'll review some key messages for the quarter on Slide five before Sherri provides further details on the financials. We reported strong sales in the third quarter, up 20% over prior year. Organic growth was 7%, primarily reflecting strength in the Florida market, while sales were down slightly in the western region as key markets in California and Arizona have been slower to recovery from the downturn caused by the pandemic. Based on our strong order entry patterns and increased backlog, we're expecting continued growth in organic sales in our southeastern markets in the fourth quarter.

This belief anticipates our channels and markets are not negatively impacted by any new government restrictions related to the pandemic or material changes in the economy in our core markets, either of which we expect at this time. Sales contribution from NewSouth, which was acquired on February one of this year was $27 million. The ongoing strength of that business emphasizes our view that NewSouth was a great acquisition that is complementary to our existing business model, and we believe will be an important part of our future growth. We are excited to announce that NewSouth has opened its newest showroom in Houston, Texas. Gross profit grew by 24% to $87 million, driven by our strong sales growth and the operational efficiencies we realized at Western.

Adjusted EBITDA margin increased 50 basis points, with the improvement mostly driven by operational efficiencies we have achieved through our manufacturing processes. Looking ahead into the fourth quarter, we expect margins to again exceed prior year comparisons as we believe our organic growth will continue, and we will be able to exit some less profitable lines of business at NewSouth. Turning to Slide six. Let's look at our order entries and backlog. We have continued to see strong recovery in order entry momentum since the low point in April. For the third quarter, the dollar value of order entry for our legacy business, excluding NewSouth, was up 26% over prior year.

Drilling down further, our legacy Southeastern business unit's third quarter order entry was up 33% versus prior year. In our Western business unit, order entry for the third quarter was down 2% versus the prior year quarter, primarily reflecting slower recoveries in Arizona and California. While down year-over-year, this represents a sequential improvement from 20% decline in the second quarter. Excluding NewSouth, our total backlog more than doubled versus the prior year. The growth in backlog in our Southeast business unit was driven primarily by increasing orders and somewhat by delays in receiving materials from certain suppliers due to COVID-19 pandemic and related government measures.

For the third quarter, retail orders at NewSouth Window Solutions increased roughly 48% year-over-year. On Slide seven, I would like to highlight key areas of the strategic marketing work we've done that we believe have enabled us to improve lead time generation supporting our sales growth during 2020. I have mentioned the importance of having the right talent. So one of the most important steps we have taken is putting in place the team and supporting infrastructure to drive commercial sales. As a result, we have been able to build relationships to win new jobs in the commercial space. Additionally, our sales team have developed exclusive agreements with production builders to capture growth in new construction. We have expanded our presence in growing channels.

These include share growth with big box retailers, targeted growth in coastal states other than Florida and develop the direct-to-consumer channel through our NewSouth acquisition. Our company is based on the principle of innovation by collaborating with customers and investing in R&D. This has enabled us to stay in front of changing builder preferences such as the need to accommodate demand for our low price point options. One example is the introduction of a value aluminum product branded CGI Sparta, and another is the 3700 series vinyl products that Western Window systems began selling to spec builders last year.

To keep on the leading edge of consumer preferences, last year, we launched our iLab, which serves as an incubator to distribute new and innovative products through select dealers to judge market reaction and demand before we begin production on the larger scale. Additionally, we are driving growth by using our brand strategy and digital outreach. One example of this is the significant growth in the Florida market achieved through our increased implementation of this data-driven strategy, which yields significant lead generations for our dealer base.

In summary, I believe our targeted selling and marketing approaches have been a primary factor in our overall success in capturing sales during this challenging time. We will continue to refine and expand upon these strategies as we make progress toward our goal of establishing PGT Innovations as a national leader of the premium window and door markets.

I now will turn the call over to Sherri to review the results in greater detail. Sherri?

Sherri Baker -- Senior Vice President and Chief Financial Officer

Thank you, Jeff. Turning to Slide eight. For the quarter, we reported net sales of $238 million, a 20% increase versus the prior year quarter. And as Jeff mentioned, this included $27 million of sales contribution from NewSouth. Organic sales, excluding NewSouth, were up 7%. And to break this down further in our legacy Southeast business unit, primarily consisting of Florida, sales were up 9% versus the prior year quarter, while in our Western business unit, sales were down 5%. Although sales were down in the Western region versus the prior year, sequentially, the market decline is improving versus Q2. Looking at third quarter sales by channel. In Repair & Remodel, we saw organic growth of 13% year-over-year. We are expecting continued sales growth in the R&R channel in the fourth quarter.

In the New Construction channel, organic sales for the third quarter were flat versus prior year. This was largely driven by legacy Florida sales, where new construction has proven more resilient with Q3 sales up 8% versus the prior year period. The Western region saw new construction sales decline 5% versus the prior year quarter, primarily as a result of decreases by California production builders. Selling, general and administrative expenses increased by $12 million compared to the prior year quarter, primarily driven by the addition of the SG&A for NewSouth following its acquisition in early February.

Excluding NewSouth, direct labor costs as a percent of sales decreased approximately 30 basis points compared to the prior year period as investments in operational enhancements and efficiencies at Western continue to have a positive impact on labor costs. We are also realizing savings from our enhanced reporting and dashboarding, which we believe will drive improved efficiencies of labor resources and workflow on the production line. And finally, we are on track to achieve cost savings at an annualized run rate of approximately $3.5 million as a result of the consolidation of our Orlando plant into our Venice and Tampa manufacturing facilities.

Gross profit for the quarter was $87 million, an increase of nearly $17 million, reflecting the $40 million increase in sales and reduced manufacturing costs. Adjusted EBITDA for the quarter increased 24% to $43 million compared to adjusted EBITDA for the prior year quarter of $35 million. Our effective tax rate for the quarter came in at 25%. We reported adjusted net income for the quarter of $18.1 million or $0.31 per diluted share in the third quarter of 2020 compared to $15.1 million or $0.26 per diluted share in the third quarter of 2019. We expect Q4 2020 consolidated sales to be in the range of $200 million to $210 million, growing by 14% to 20% compared to the fourth quarter of 2019.

This fourth quarter outlook assumes we do not experience any significant new pandemic related government restrictions or other macroeconomic disruptions that would adversely impact our business or the economies of our core markets. It also assumes we will not experience any significant disruptions to our supply chain for materials or availability of labor due to the pandemic for government responses to the pandemic. We continually strive to manage costs while also aligning cost structure to our sales forecast in order to provide a high level of customer service, including reasonable delivery lead times. Our backlog provides a degree of visibility, and we are constantly monitoring order entries and evaluating sales trends. While we are currently working toward expanding production, we maintain flexibility to manage our cost structure in the event our outlook changes.

Turning now to our balance sheet. We ended the quarter with net debt of $320 million, an $11 million decrease for the second quarter. Our only significant debt maturity in the near-term is our term loan of $54 million due late 2022. We voluntarily paid down $10 million of the term loan during the third quarter of 2020. As of quarter end, we had total liquidity of $175 million, including a cash balance of $99 million, plus $76 million of unused capacity on our revolver. We improved our net debt to trailing 12-month adjusted EBITDA ratio to approximately 2.2 times, inclusive of the NewSouth acquisition. Next, we show the chart on Slide 10 each quarter to highlight our track record of paying down leverage following the completion of significant acquisitions.

On Slide 11, I would like to review PGT Innovation's capital allocation priorities. Our first priority remains internal investment in projects that we expect to drive margin growth by growing revenues and/or reducing expenses. In the third quarter, we realized significant benefits at Western, where our internal investments in a number of projects has further improved our operational efficiency. Another priority is our commitment to maintaining a strong balance sheet and conservative capital structure. We strive to maintain a conservative leverage profile with a range of 2.0 to 3.0 times net debt-to-EBITDA and continue to have a preference for staying at the low end of that range.

We have maintained healthy cash flow and a strong liquidity position, which enabled us to make a total of $10 million in debt prepayments of our term loan in the third quarter. We also have prioritized using capital for strategic acquisitions that are expected to be accretive, generate strong returns or allow us to expand into new regions, channels or products as we did with our acquisition of NewSouth in February of this year. We expect to continue to look for and evaluate potential acquisitions that satisfy these characteristics and parameters.

And now I would like to turn the call back over to Jeff for some closing thoughts. Jeff?

Jeffrey T. Jackson -- Chief Executive Officer and President

Thanks, Sherri. In closing, I would like to acknowledge our team members and our local distributor, Doug Ashy Building Materials in Lake Charles, Louisiana, for their efforts to distribute much needed relief supplies following the devastation of Hurricane Laura and subsequently Hurricane Delta. With our company headquartered in Florida, we have seen the devastation that these incredibly powerful weather events can leave behind. Our goal is that the support and supplies we provide will help residents rebuild their homes, their communities and their lives. This relief effort is yet another reason PGT Innovations is a great place to work and demonstrates our spirit of helping others, which has always been one of our core missions.

At this time, I would like to turn the call over to the conference operator to begin Q&A. Operator?

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And the first question will come from Phil Ng with Jefferies. Please go ahead.

Maggie -- Jefferies -- Analyst

Hey, Jeff and Sherri. This is Maggie [Phonetic] on for Phil. I guess just to start, assuming similar trends in NewSouth and 4Q, the midpoint of the guide implies a deceleration in organic growth. Is that the right takeaway? And can you talk about what would be driving that deceleration?

Jeffrey T. Jackson -- Chief Executive Officer and President

Yeah, no. Specifically, the NewSouth, no, I mean, NewSouth in the quarter alone grew 48%. So -- and our backlog is close to $45 million alone in NewSouth. So as we look into the fourth quarter, I mean, we still think NewSouth is gonna continue to grow. But obviously, it's exceeding our model expectations when we bought it. It's been an incredible acquisition for us. If you look at our range that we're putting out there, a lot of that depends on where we fall in terms of a supply standpoint. As long as there's not any major disruptions in supplies, I think what we've been able to do is increase our capacity, specifically at NewSouth. When we first bought them, our capacity was less than 1,000 units a week, around upper 800s. And now it's 1,500 heading to 1,700. So we've almost doubled the capacity there at NewSouth. So we do expect to start eating into that huge backlog. And we do expect them to continue to grow as we wind out the year and even go into next year. You wanna --?

Sherri Baker -- Senior Vice President and Chief Financial Officer

One additional consideration is also, this year in the fourth quarter, we have three less production days than we did last year. So on a growth rate basis from a legacy perspective, it's actually gonna be very similar to what we saw in Q3.

Maggie -- Jefferies -- Analyst

Okay. Okay, that makes sense. And then order trends were really strong in the quarter and definitely good to see Western orders in slight positive. But backlogs have also been up significantly. Can you talk about where lead times are trending and how you're thinking about the timing of converting those strong order trends into sales?

Jeffrey T. Jackson -- Chief Executive Officer and President

Sure. I mean, in October, for instance, we've already started eating into that backlog. It really -- from a capacity standpoint, like I said, really across every business unit, we've been able to ramp capacity. Obviously, at Western, you've seen the results with significant improvement in leverage and EBITDA there and margin there. But if you look at even NewSouth, I've already commented on, we've already done that also here at PGT. So again, we're starting to increase into almost a $200 million backlog. And like I've said earlier, it's obviously, a tight labor market, everyone is experiencing that. And from a supply chain standpoint, they're filling it as well.

I don't think it's anything long-term in nature. But I do think both from glass and aluminum standpoint, they've struggled just like the industry has, and they're getting back on their feet, which has allowed us to obviously bring down that lead time, or the backlog as well. If you look at our lead times, in general, we have several buckets of lead times, but -- and it;ll depend on which business you're talking about. But I think the major bucket of lead time is our major business unit, which is legacy PGT. Those lead times will get back under control by the beginning of, I would say, 2021. I would say over half of them are already within that four-week lead time. It's the other kinda piece of the business that have extended lead times that we'll continue to work on.

Maggie -- Jefferies -- Analyst

Okay. Great, thank you.

Operator

And the next question will come from Michael Rehaut with JP Morgan. Please go ahead.

Maggie -- JP Morgan -- Analyst

Hi, good morning. This is Maggie [Phonetic] on for Mike. First question, just on order trends that you saw maybe in October. In September, in the Western business, you saw a big improvement in that year-on-year growth, but there was a bit of a slowdown in terms of growth on the Southeastern legacy business side. So could you talk about what you saw in October relative to how you exited the third quarter?

Sherri Baker -- Senior Vice President and Chief Financial Officer

Yeah. I'd say from a legacy Florida business, the growth rates are similar in October. Western, actually in October, has a pretty tough comp just in that month because we had several large commercial projects in 2019. But the last couple of weeks that we've been looking at, I'd say that they're getting back to a healthy order growth rate. So, improving as we expect it to improve as we go through the quarter. And if you look at the macro perspective, just from what you're seeing from a start's perspective, just with the normal kind of lead time around from start to order about 12 weeks, we expect to start to see some of that benefit coming in as we exit Q4 and going into Q1 of next year.

Maggie -- JP Morgan -- Analyst

Got it. Thanks. And second, on margins, you've talked about a lot of moving pieces in there in terms of the structural changes at Western and then NewSouth, I think, exiting portions of the commercial business. So can you talk about where you are in terms of the timing of those? Is there anything left to come at Western? Or is most of that already -- are we seeing most of that benefit already? And then on NewSouth, the timing, I believe, you said of the -- exiting the commercial business would be 4Q, but is that gonna be seen mostly in 4Q and into 1Q? Or just some more color there.

Jeffrey T. Jackson -- Chief Executive Officer and President

Yeah. We will see some benefit of both those things in the fourth quarter. From a Western standpoint, those guys have done an incredible job. Their direct labor has improved north of 200 bps, distributions, almost 200 bps. So when you really look at that unit, it's running I would say better than even when we bought it from an operational standpoint, and results. So that will continue, quite frankly, as we start to ramp back up. And like Sherri said, we are facing some tough comps there from last year for some commercial jobs that they had. But Texas is good. Texas is a solid market for us. Both Arizona and California have been slow to come out, but we are starting to see some signs that there's some life there, and then we're starting to get back into those markets.

So from operationally, Western iss poised just to have an incredible 2021. So I think you'll still continue to see that benefit into the fourth quarter. NewSouth, we are exiting some of the lines, and we should be out of most of those lines in the fourth quarter. But you will see some benefit because that exiting started actually in the third quarter. So it will wind down and won't be as -- the negativeness won't be as big of an impact in our fourth quarter as it was in the third. So you'll see benefit coming out in the fourth. But by the time you reach first quarter, again, of 2021, that those lines will be totally out, and we will be focused on the more profitable ones.

Maggie -- JP Morgan -- Analyst

Great. Thank you.

Operator

And the next question will be from Ken Zener with KeyBanc. Please go ahead.

Ken Zener -- KeyBanc -- Analyst

Good morning, everybody.

Sherri Baker -- Senior Vice President and Chief Financial Officer

Good morning.

Jeffrey T. Jackson -- Chief Executive Officer and President

Good morning.

Ken Zener -- KeyBanc -- Analyst

Jeff, Sherri, very good results considering. And your whole team, obviously, considering how many different markets you're in right now, the headwinds. And I just -- I don't recall you guys executing this well. So if we could start with like your comment, Jeff, I believe, on NewSouth, you say -- you talked about 800 units a week when you got them, and you're ramping up to, I believe, you said 1,500, which, I recall the history of your company ramping up, it was a big issue for the window industry, in general, when you have to teach that many people how to make windows. What is the difference right now? I mean, how can you be ramping up so quickly with such good execution there. Just in terms of whether it's four or eight people per team? Or how are you doing it so well versus what would happen in the past?

Jeffrey T. Jackson -- Chief Executive Officer and President

Right. Really, the key to NewSouth has been technology. We've been able to come in there and modify the plant, reengineer the lines, clean out the facility, quite frankly, streamlined the inventory flow all the way through to finished goods. And that's just helped improvement tremendously. We added a couple of new machinery, a couple of CNC-type machines to speed along the process and be less labor focused. And we've been able to add people in Tampa to a certain degree. So, I think, overall, we're very pleased. And yeah, Ken, we're at 1,500 now. I said it would be 1,700 by the time we finish the first -- fourth quarter here. So our plans are to go north of 2,000 eventually.

And again, as we open up more stores, which we plan on doing. As I've mentioned on the call, we opened up our Houston location, and we're incredibly already pleased with that. We're already starting getting orders. So as we open up more stores, we're going to have to ramp up that capacity, and I know we have much more to go. We're not running two full shifts, for instance, there. So right now, I would say we put in the technology, we've reengineered the plant, and now it's a matter of leveraging the shifts and employee talent.

Ken Zener -- KeyBanc -- Analyst

Right. So you basically were able to get much more output because of the process and technology as opposed to doubling or even increasing labor 50%, for example?

Jeffrey T. Jackson -- Chief Executive Officer and President

That's exactly right.

Ken Zener -- KeyBanc -- Analyst

Wow. You made -- obviously, I appreciate the order rates that you're putting in the different units. I think that's very interesting, especially when you look back how you've been doing that since October last year. But can you talk -- what I found interesting is that New versus R&R mix, I think New was flat. R&R was up 13%, if I -- if my memory is correct. Is that really just -- 'cause you're in so many different regions and product categories right now. Was that really just -- was the R&R up reflecting success in your Western initiative to extend beyond New Construction? Is that really what that R&R growth is reflecting?

Sherri Baker -- Senior Vice President and Chief Financial Officer

No. Actually, the R&R growth is almost 100% in legacy Florida business. So -- and the addition of NewSouth. So it's really -- it's a combination of both of those. We just opened one of our stores at West earlier this year. They crossed the $1 million order threshold in Q3, which was really exciting, and we're gonna be opening up a second location sometime soon. The New Construction piece, the flat is really growth in Florida offset by still that 5% decline in Western. So it's more of a Seaboard-Western mix on the New Construction side.

Ken Zener -- KeyBanc -- Analyst

And then if you could comment, not only are builders getting a lot of orders, we just had an installation company report this morning that says, look, the orders are there, the builders just can't get stuff built. And windows generally go in before installation. So how are you thinking about the lags you're seeing in the industry? A homebuilder talked about it, basically a 10% delay in their construction cycle time. So on the NewSouth, are you seeing that a lot because it's obviously -- I don't know, your growth seems to be pretty good. And then the second question, which is separate, would be, how are you seeing demand -- people getting comfortable with the windows, i.e., contractors coming in? It seems like with R&R up, you're doing quite fine. Thank you very much.

Jeffrey T. Jackson -- Chief Executive Officer and President

Yeah, I'll comment just in general. You're right. New Construction, it really starts with lots. So available lots in -- for the New Construction guys are becoming premium and scarce. So, and it goes all the way through. So the various calls I've listened to and the executives I've talked to, there is a general delay right now in just getting stuff done. That's also tied to labor markets, are very, very tight as well. From our end, we've been able to ramp up that capacity as -- again, as we increase from an automation standpoint, and we're starting to feed into that New Construction boom. But in Florida, it is a robust market. We have north of 900 people a day moving into the state. And we see that, if anything, increasing.

So I think that's gonna bode well into 2021. From an R&R standpoint, quite frankly, we're benefiting just like all the other R&R businesses are. You had a lot of people staying at home for the last three, four months, some quarantined, some lock -- sheltered in place, and they wanna fix up their place, whether it's our sliding glass doors, indoor/outdoor living field, to patios or decking or whatever it may be. So all those markets are, I think, experiencing a tremendous growth because of pandemic-related stay-at-home measures. And I think we benefited from that as well, both from NewSouth, PGT, really across all brands. Do you have anything you want to add?

Sherri Baker -- Senior Vice President and Chief Financial Officer

No, that's perfect.

Ken Zener -- KeyBanc -- Analyst

Thank you.

Jeffrey T. Jackson -- Chief Executive Officer and President

Thank you.

Operator

And the next question will come from Keith Hughes with Truist. Please go ahead.

Keith Hughes -- Truist -- Analyst

Thank you. Your order growth in the Southeast has just been outstanding here the last four or five months. Is it going to be possible for you to have double-digit organic growth next year from those orders? Or are you simply just not gonna have enough capacity to ship at that rate?

Sherri Baker -- Senior Vice President and Chief Financial Officer

You'll certainly see the benefit of that backlog at least probably through the first half of next year. The real question will be, does that significant order growth continue as we get into the early part of the year? Probably a little bit too soon to tell, but just the overall strength of what we've been seeing in the marketplace is, I'd say, very attractive for us at this point in time.

Keith Hughes -- Truist -- Analyst

But are you gonna be able to ship? I mean, you're putting up high single digits in the third and probably something like that in the fourth in the Southeast. Is that gonna be the maximum rate you can do? Or can that rate increase if the orders are there?

Jeffrey T. Jackson -- Chief Executive Officer and President

No, it can definitely increase. And again, we will be able to shift between brands. For instance, I'll tell you NewSouth, we're gonna -- we will more than double that capacity as we continue to add production lines there. And that's literally just an extra shift. That's people. So there's not really a restraint other than just getting the proper people in and trained. In Miami, at our CGI facility, we still have plenty of capacity there. If you look at our overall blended capacity for all our facilities, you're probably in that 65% or 70% capacity range. So I still think next year, we're gonna be able to meet the increasing demand. And again, we had another active hurricane season. This is like the fourth in a row. And I think that's gonna also drive spirited awareness of the benefit of our impact products.

Keith Hughes -- Truist -- Analyst

Well, if you got that low-level of capacity, I guess I'm kinda confused on why the fourth quarter revenue growth is not stronger. It seems like you'd be able to fulfill this more quickly than I thought. Is there something else going on there?

Jeffrey T. Jackson -- Chief Executive Officer and President

Well, in addition to the days -- share days, our fourth quarter has almost, every year since I've been here, been challenged from a share production day standpoint. You have both Thanksgiving and Christmas falling in the fourth quarter. In addition to that, Keith, for instance, I'll get back on the NewSouth side, you also have to have the installation capacity as well. So those crews have to be hired and put in place as well. So it's just more complex than saying meet quarter-over-quarter. There's various things that'll fall into that bucket. A lot of R&R does not happen in the fourth quarter. People do not want you in their homes over Thanksgiving and Christmas. So there's just an inherent nature of the business, is our fourth quarter will always be challenged from different aspects that we encounter.

Sherri Baker -- Senior Vice President and Chief Financial Officer

This is typical seasonality.

Keith Hughes -- Truist -- Analyst

Okay. And the NewSouth business has just been fantastic, as you've kind of highlighted, really for this entire year. As you go into next year, is there gonna be just a natural slowing as that business just goes up against tough comps? It's gonna be coming in your organic growth numbers next year, too. Is that something we should think about? Or is there something else going on here that this robust growth should continue?

Jeffrey T. Jackson -- Chief Executive Officer and President

Well, obviously, we're at 30 -- 46%.

Sherri Baker -- Senior Vice President and Chief Financial Officer

48% for orders, yeah.

Jeffrey T. Jackson -- Chief Executive Officer and President

Yeah, we're not gonna continue, percentage-wise, that kind of stuff. But the key to NewSouth, and I'll let Sherri comment in a second. The key to NewSouth is gonna be opening up new stores, OK? We opened up Houston, we've got New Orleans slated. We're eventually gonna open up another store in Houston, by the way, and we're gonna go into the South Atlanta market. So -- and Virginia. We got different slated store openings, and that will be the key to that continued double-digit, maybe in the 20%-plus type growth rates we're gonna hopefully drive at NewSouth.

Sherri Baker -- Senior Vice President and Chief Financial Officer

Yeah. And I would also add that importantly, even the existing stores that have been opened for several years have still been seeing double-digit growth. So you have some really nice, healthy organic growth, and then you have the added benefit of the new store openings. So it's really a combination of both of those.

Jeffrey T. Jackson -- Chief Executive Officer and President

And then you're sitting on a $45 million worth of backlog. So NewSouth will have a -- definitely have a robust 2021.

Keith Hughes -- Truist -- Analyst

Okay. Thanks very much.

Jeffrey T. Jackson -- Chief Executive Officer and President

You bet.

Operator

[Operator Instructions]. Next question will come from Truman Patterson with Wells Fargo. Please go ahead.

Truman Patterson -- Wells Fargo -- Analyst

Hi. Good morning, everyone. Thanks for taking my questions. First off, just following up on a few questions previously. I don't think I heard you quantify how much lead times have been extended by. Can you just quantify it for us on maybe a days basis?

Jeffrey T. Jackson -- Chief Executive Officer and President

Yeah. That's gonna be hard to do because it's going to literally vary by product. A casement versus single hung versus a sliding glassdoor, they all have different lead times. In general, we like to keep our lead times anywhere from three to four weeks. And I can tell you, for several of those lines, that's just not the case. Those lead times have been from six to as much as ten weeks at times. So that fluctuates by the customer and also by the brand. So I can't put, in general, a statement on it for the whole company.

Truman Patterson -- Wells Fargo -- Analyst

Okay, OK. And then I wanted to follow-up on the capacity in 2021, just on the homebuilder side. Clearly, new res demand has been very strong in Florida, and I'm sure you're discussing 2021 plans with your distributor and builder partners. I guess, do you all have the capacity to meet that demand if it remains pretty elevated and they are able to get the homes constructed and closed in 2021?

Jeffrey T. Jackson -- Chief Executive Officer and President

The answer is quite simply, is yes, we do have the capacity. Like I said earlier, we're running probably about 70% capacity, 65% to 70% capacity now. And we have plans to obviously add capacity as we continue to grow the business organically. And there's always acquisition-added capacity, this is always on the table as well.

Truman Patterson -- Wells Fargo -- Analyst

Okay, OK. And then my follow-up is a two-parter. Aluminum, it's up modestly over the past couple of months and pretty materially versus earlier this year. How are you all hedged for '21? And do you need any price hikes to offset it? And then on the flip side, on SG&A, a lot of firms have actually pulled back on costs from -- due to the pandemic, lack of travel, advertising, etc. Should we actually see some costs normalize going forward in SG&A?

Sherri Baker -- Senior Vice President and Chief Financial Officer

Well, I'll take them in order. So from an aluminum perspective, we've been very actively putting on coverage. Right now, we're 60% covered for next year, and we're actually gonna see a tailwind versus what we're seeing currently just due to the fact that we had a higher hedge than spot prices at times this year. So we've been very active on that front. So it should be similar, if not better, next year with a 60% hedge. On the SG&A perspective, the one thing to consider is that NewSouth just from a SG&A as a percent of sales has a higher SG&A structure just because of their go-to-market strategy with direct-to-consumer, they definitely have a higher advertising expense and marketing than what you would see in the legacy business. So that's probably the biggest factor. But as we continue to get higher sales, we should continue to see some leverage on that.

Truman Patterson -- Wells Fargo -- Analyst

Okay, thank you.

Sherri Baker -- Senior Vice President and Chief Financial Officer

You bet.

Jeffrey T. Jackson -- Chief Executive Officer and President

Thank you.

Operator

Ladies and gentlemen, this concludes your question-and-answer session. I would like to turn the conference back over to Sherri Baker for any closing remarks.

Sherri Baker -- Senior Vice President and Chief Financial Officer

Thank you. And thank you, everyone, for joining us today and your continued interest in PGT Innovations. We hope you and your families continue to remain safe and healthy. Thanks so much.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Sherri Baker -- Senior Vice President and Chief Financial Officer

Jeffrey T. Jackson -- Chief Executive Officer and President

Maggie -- Jefferies -- Analyst

Maggie -- JP Morgan -- Analyst

Ken Zener -- KeyBanc -- Analyst

Keith Hughes -- Truist -- Analyst

Truman Patterson -- Wells Fargo -- Analyst

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