Jeld-Wen (JELD) Q1 2025 Earnings Call May 06, 2025 08:00 AM ET Speaker0 Thank you for standing by. My name is Kaila, and I will be your conference operator today. At this time, I'd like to welcome everyone to the GelDwyn Holding, Inc. First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the call over to James Armstrong, Investor Relation ...

JELD-WEN (JELD) came out with a quarterly loss of $0.17 per share versus the Zacks Consensus Estimate of a loss of $0.19. This compares to earnings of $0.21 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10.53%. A quarter ago, it was expected that this company would post a loss of $0.07 per share when it actually produced a loss of $0.10, delivering a surprise of -42.86%.Over the last four quarters, the company has surpassed ...

First Quarter 2025 Results May 6, 2025 Speakers Disclosures Bill Christensen CEO Samantha Stoddard CFO Certain statements in this presentation, including our guidance and business strategies, are forward- looking statements that involve risk, uncertainty and assumptions, and are based on information as of May 6, 2025. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review our Annual Report on Form 10-K, Form 10-Qs fi ...

Financial Performance - Net revenues for Q1 2025 were $776.0 million, a decrease of $183.1 million, or 19.1%, compared to $959.1 million in Q1 2024, primarily due to the divestiture of the Towanda facility and a 15% decline in Core Revenue[5][10] - The net loss for Q1 2025 was $179.8 million, compared to a net loss of $27.7 million in the same period last year, an increase of $152.1 million, largely due to a $125 million non-cash goodwill impairment charge[6][10] - Adjusted EBITDA for Q1 2025 was $21.9 million, a decline of $46.8 million from $68.7 million in Q1 2024, with an Adjusted EBITDA Margin of 2.8%, down 440 basis points year-over-year[8][10] - Adjusted EPS for Q1 2025 was ($0.17), compared to $0.21 in Q1 2024, reflecting the impact of the non-cash goodwill impairment charge[7][10] - The operating loss margin for Q1 2025 was (22.1%), compared to (2.9%) for the same quarter last year[10] - Gross margin declined by 35.1% to $112.1 million, down from $172.6 million year-over-year[31] - Operating loss increased significantly to $171.8 million, compared to a loss of $28.3 million in the prior year, representing a 507.5% increase[31] - Net loss for the quarter was $179.8 million, a 548.4% increase from a loss of $27.7 million in the same quarter last year[31] - Adjusted net loss income was $(14.2) million for Q1 2025, a significant decline from adjusted net income of $18.4 million in Q1 2024[39] - The company reported a diluted net loss per share of $2.12, compared to $0.32 in the same quarter last year[31] Cash Flow and Working Capital - Net cash used in operating activities increased to $83.5 million in Q1 2025, up from $11.0 million in Q1 2024, primarily due to unfavorable earnings changes and a decrease in working capital[11] - Free cash flow for Q1 2025 was $(125.4) million, compared to $(45.7) million in Q1 2024[44] - Accounts receivable increased to $453.6 million from $388.4 million, indicating a rise in outstanding customer payments[33] Segment Performance - North America segment net revenue was $530.6 million, a decline of $149.4 million, or 22.0%, driven by a 17% decrease in Core Revenue due to weaker market demand[17] - Europe segment net revenue was $245.4 million, a decline of $33.7 million, or 12.1%, primarily due to a 9% decrease in Core Revenue from market softness[17] - North America revenues fell by 22.0% to $530.6 million, while Europe revenues decreased by 12.1% to $245.4 million[46] Asset and Liability Changes - Total assets decreased to $2,429.3 million from $2,620.2 million at the end of the previous year[33] - Cash and cash equivalents decreased to $132.5 million from $150.3 million at the end of the previous year[33] - Net debt increased to $1,049.7 million as of March 29, 2025, compared to $1,033.1 million at the end of 2024[44] - The net debt leverage ratio rose to 4.6x, up from 3.8x in the previous quarter[44] Impairment and Charges - Goodwill impairment charge of $124.6 million was recorded, reflecting significant asset valuation adjustments[31] - The company incurred a goodwill impairment of $124.6 million in Q1 2025, which was not present in Q1 2024[39] - The company recorded $11.9 million in net legal and professional expenses and settlements during Q1 2025[41] Strategic Focus - The company remains committed to its transformation strategy, focusing on cost reduction and improving quality and service levels despite challenging market conditions[4]

Core Insights - JELD-WEN Holding, Inc. reported a net revenue of $776.0 million for Q1 2025, a decrease of 19.1% compared to $959.1 million in the same period last year, primarily due to the divestiture of the Towanda facility and a 15% decline in Core Revenue driven by weak macroeconomic conditions [4][9]. - The company experienced a net loss of $179.8 million in Q1 2025, significantly higher than the net loss of $27.7 million in Q1 2024, largely due to a $125 million non-cash goodwill impairment charge and lower volume/mix [5][9]. - Adjusted EBITDA for the quarter was $21.9 million, down 68.1% from $68.7 million in the same quarter last year, with an Adjusted EBITDA Margin of 2.8%, a decrease of 440 basis points year-over-year [7][9]. Financial Performance - The net loss per share for Q1 2025 was $2.12, compared to a loss of $0.32 per share in Q1 2024, reflecting the significant increase in net loss [6][9]. - Adjusted Net Loss for the first quarter was $14.2 million, a decrease of $32.6 million compared to Adjusted Net Income of $18.4 million in the same period last year [5][38]. - The company reported a cash flow from operating activities of $(83.5) million, an increase in cash used compared to $(11.0) million in the same period last year [11][45]. Segment Performance - In North America, net revenue was $530.6 million, a decline of 22.0%, with a net loss of $150.9 million, reflecting a significant year-over-year decrease [8][9]. - European operations reported net revenue of $245.4 million, down 12.1%, with a net loss of $3.5 million, primarily due to unfavorable volume/mix driven by market softness [10][9]. Cash Flow and Capital Expenditures - Capital expenditures in Q1 2025 increased to $42.0 million from $34.7 million in Q1 2024, while Free Cash Flow used was $(125.4) million, compared to $(45.7) million in the prior year [12][45]. - The company’s total debt stood at $1,182.2 million as of March 29, 2025, with a Net Debt of $1,049.7 million, resulting in a Net Debt Leverage of 4.6x [46].

Core Insights - JELD-WEN has been recognized for its commitment to sustainability and climate action, aiming for net zero direct and indirect greenhouse gas emissions by 2050 [1][2] - The company is implementing energy efficiency projects and renewable energy solutions as part of its strategy to achieve its sustainability goals [1] - JELD-WEN earned a place on USA TODAY's list of America's Climate Leaders through a rigorous evaluation of its emissions data and environmental performance [2] Company Overview - JELD-WEN Holding, Inc. is a leading global designer, manufacturer, and distributor of high-performance doors, windows, and related building products, serving both new construction and remodeling sectors [4] - The company is headquartered in Charlotte, North Carolina, operates in 14 countries across North America and Europe, and employs approximately 16,000 associates [4] - JELD-WEN's brand portfolio includes JELD-WEN®, LaCantina®, VPI™, Swedoor®, and DANA® [4]

Company Overview - JELD-WEN Holding, Inc. is a leading global designer, manufacturer, and distributor of high-performance interior and exterior doors, windows, and related building products [3] - The company serves both the new construction and repair and remodeling sectors [3] - JELD-WEN operates facilities in 14 countries across North America and Europe, employing approximately 16,000 associates [3] Upcoming Financial Results - JELD-WEN will release its first quarter 2025 results after the market close on May 5, 2025 [1] - A conference call to discuss the results will take place at 8 a.m. EST on May 6, 2025 [1] Accessing the Conference Call - Interested parties can access the call via webcast on the company's Investor Relations website or by dialing specific numbers for the U.S. and international participants [2] - A replay of the call will be available on the company's website approximately two hours after the live event [2]

Financial Performance - The company reported net revenues of $3,776 million for the year ended December 31, 2024[27]. - Net revenues decreased by $528.7 million, or 12.3%, to $3,775.6 million for the year ended December 31, 2024, compared to $4,304.3 million in 2023[228]. - Net revenues decreased by $239.5 million, or 5.3%, to $4,304.3 million in the year ended December 31, 2023, compared to $4,543.8 million in 2022, driven by a 5% decrease in Core Revenues[239]. - The company reported a net loss from continuing operations of $(187,580) for the year ended December 31, 2024[257]. - The effective tax rate for the year ended December 31, 2023, was 71.5%, significantly higher than 59.6% in 2022, primarily due to a $32.7 million net valuation allowance[247]. - The company reported a net income of $62.4 million in 2023, compared to $45.7 million in 2022, reflecting an increase of 36.6%[238]. Revenue Sources - Door sales accounted for 63% of net revenues, while window sales contributed 20% and other products accounted for 17%[33]. - Approximately 46% of the company's net revenues in 2024 came from its top ten customers, with The Home Depot and Lowe's representing 16% and 12% of consolidated net revenues, respectively[52]. - The percentage of total consolidated net revenues from North America was 71.7% in 2024, down from 72.6% in 2023[261]. Cost and Expenses - Gross margin decreased by $143.6 million, or 17.3%, to $689.0 million, with a gross margin percentage of 18.2% in 2024, down from 19.3% in 2023[229]. - SG&A expenses decreased by $2.8 million, or 0.4%, to $652.5 million, with SG&A as a percentage of net revenues increasing to 17.3% in 2024 from 15.2% in 2023[230]. - Restructuring and asset-related charges increased by $32.4 million, or 90.5%, to $68.1 million in 2024, primarily due to facility closures in North America and Europe[232]. Market Conditions - The North America segment is expected to face headwinds in 2025 due to high interest rates and inflation in labor, freight, and raw materials[40]. - The European market is anticipated to experience softness in residential and non-residential markets in 2025 due to economic weakness and high interest rates[41]. Operational Insights - The company operates 79 manufacturing and distribution facilities across 14 countries, focusing on optimizing its global footprint to enhance performance and profit margins[29]. - The company has a diversified business model serving both new construction and repair and remodel sectors[25]. - The company’s manufacturing processes are vertically integrated, which enhances capabilities and quality control while providing supply chain savings[31]. - The company has made significant investments in innovation and product development to meet customer needs and market trends[34]. - The company is focused on disciplined capital allocation and working capital management to maximize shareholder returns[35]. Environmental and Regulatory Matters - The company is subject to extensive environmental, health, and safety laws and regulations across its global operations, which may impact financial position[65]. - The company’s operations involve handling hazardous wastes, exposing it to potential liabilities and claims associated with contamination[66]. - The company has been involved in environmental regulatory actions, but does not expect these to materially affect its financial position[67]. - The company continues to evaluate and modify its manufacturing processes to further reduce environmental impact[64]. Employee Engagement and Development - The company is committed to employee engagement and development, with various programs aimed at attracting and retaining talent[61]. - The company’s organizational health is measured annually through a global employee survey, focusing on employee experiences and engagement levels[63]. Cash Flow and Liquidity - Total liquidity as of December 31, 2024, was $566.7 million, a decrease from $750.6 million as of December 31, 2023, primarily due to lower cash balances[274]. - Net cash provided by operating activities decreased by $239.0 million to $106.2 million in the year ended December 31, 2024, compared to $345.2 million in 2023[287]. - Net cash used in investing activities was $153.3 million in the year ended December 31, 2024, compared to cash provided by investing activities of $279.2 million in 2023, primarily due to $365.6 million proceeds related to the sale of JW Australia in 2023[289]. Debt and Financing - Outstanding debt balance as of December 31, 2024, was $1,192.0 million, with estimated interest payments of $72.9 million due in 2025 and $280.4 million due in 2026 and thereafter[285]. - In August 2024, the company issued $350.0 million of Senior Notes at 7.00% interest, proceeds used to repay $150.0 million of the Term Loan Facility and redeem $200.0 million of 4.63% Senior Notes[283]. Goodwill and Impairment - Goodwill impairment charges totaled $94.8 million in 2024, including $63.4 million related to the Europe reporting unit and $31.4 million for North America[231]. - The carrying amount of the Europe reporting unit exceeded its fair value, resulting in a goodwill impairment charge of $63.4 million in the third quarter of 2024[305]. - The company recorded a goodwill impairment charge of $54.9 million for the Europe reporting unit during the year ended December 31, 2022[303]. Currency and Hedging - The company held foreign currency derivative contracts with a total notional amount of $148.4 million as of December 31, 2024, to manage exchange fluctuations[326]. - The average exchange rate for the U.S. dollar strengthened against the Canadian dollar and the Euro by 9% and 6%, respectively, impacting Adjusted EBITDA by (1%)[324]. - The company has implemented a hedging program to manage potential changes in value associated with raw material purchases denominated in foreign currencies[327].

Financial Data and Key Metrics Changes - Fourth quarter revenue was $896 million, down 12% year-over-year, primarily due to lower core revenues and a shift towards more affordable options [15][22] - Adjusted EBITDA for the quarter was $40 million, a decline of $47 million from the prior year, resulting in an adjusted EBITDA margin of 4.5% [16][18] - Free cash flow in the fourth quarter was a use of $28 million, with net debt leverage ratio increasing to 3.8 times, above the target range of 2 to 2.5 times [16][17] Business Line Data and Key Metrics Changes - North America segment generated $640 million in revenue for the fourth quarter, a 14% decline year-over-year, with adjusted EBITDA declining to $42 million from $94 million [19][20] - Europe segment revenue for the fourth quarter was $256 million, with adjusted EBITDA of $17 million, reflecting a 6% decline in core revenues but improved adjusted EBITDA by $1 million [20][21] Market Data and Key Metrics Changes - The overall market remains soft, with consumers trading down and delaying larger remodeling projects, impacting volume and mix [12][13] - Housing starts have remained stable, but there has been a significant decline in multi-family and higher-end home construction, affecting specific business lines [12][13] Company Strategy and Development Direction - The company is focusing on transformation initiatives, delivering approximately $115 million in benefits in 2024, while implementing cost reduction initiatives to improve efficiency [10][13] - A comprehensive program to optimize the North American network is being launched to align with long-term commercial strategy, including facility consolidation and automation investments [29][30] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued volatility in North America due to potential tariffs, high interest rates, and new home inventory at a decade high [26][27] - For 2025, the company expects net revenues to range between $3.2 billion and $3.4 billion, reflecting a projected 4% to 9% decline in core revenues [35][36] Other Important Information - The company plans to adjust capital expenditures to approximately $150 million, considering expected elevated leverage levels by year-end [36][37] - The first quarter of 2025 is expected to be particularly challenging, with anticipated sales between $750 million and $775 million and adjusted EBITDA of approximately $20 million [39][40] Q&A Session Summary Question: Earnings progression from Q1 to Q2 - Management indicated that near-term actions and transformation initiatives will begin to take effect in Q2, leading to expected normal seasonality [55][56] Question: Price cost standpoint and tariffs - Management confirmed that the $50 million cost headwind does not account for any potential tariffs, and they are modeling scenarios for the evolving tariff landscape [60][63] Question: Confidence in achieving savings - Management expressed confidence in achieving the $100 million transformation savings, with 80%-85% of the initiatives already in progress [71][72] Question: Organic efforts to regain market share - Management is focusing on improving sales effectiveness and service levels to regain market share lost in previous years [85][88] Question: Corporate costs and headwinds - Management noted a $15 million to $20 million headwind in corporate costs due to reinstated variable compensation in 2025 [115][116] Question: Mix pressure and pricing - Management believes the mix pressure is predictable and that they will work hard to control costs while passing through necessary price increases [122][123]

Financial Performance - Net revenues from continuing operations for Q4 2024 were $895.7 million, a decrease of $125.3 million or 12.3% compared to $1,021.1 million in Q4 2023[6]. - Net loss from continuing operations in Q4 2024 was $68.4 million, compared to a net loss of $22.6 million in the same period last year, reflecting a decrease of $45.8 million[7]. - Adjusted EBITDA from continuing operations for Q4 2024 was $40.1 million, a decline of $46.5 million compared to $86.5 million in Q4 2023, with an adjusted EBITDA margin of 4.5%[10]. - Full year 2024 net revenues from continuing operations were $3,775.6 million, a decrease of 12.3% compared to the previous year[8]. - Full year 2024 net loss from continuing operations was $187.6 million or $2.21 per share, compared to net income of $25.2 million or $0.29 per share in 2023[8]. - Adjusted EBITDA for the full year 2024 was $275.2 million, a decrease of 27.7% from $380.4 million in 2023[34]. - The company reported a net loss from continuing operations of $(187.6) million for the year ended December 31, 2024, compared to a net income of $25.2 million in 2023[43]. - Adjusted EBITDA from continuing operations for the year ended December 31, 2024, was $275.2 million, down from $380.4 million in 2023, reflecting a decrease of about 28%[40]. Cash Flow and Capital Expenditures - Net cash provided by operating activities decreased by $239.0 million to $106.2 million for the year ended December 31, 2024[11]. - The net cash provided by operating activities decreased to $106.2 million in 2024 from $345.2 million in 2023, representing a decline of approximately 69%[38]. - The company reported a net cash used in investing activities of $153.3 million in 2024, compared to net cash provided of $279.2 million in 2023[38]. - Capital expenditures for 2024 increased by $62.8 million to $173.7 million, up from $110.9 million in 2023[12]. Debt and Liabilities - The company’s total liabilities were $2,000.1 million as of December 31, 2024, compared to $2,129.5 million as of December 31, 2023[36]. - The company’s long-term debt and payments of debt extinguishment costs amounted to $55.2 million in 2024, a significant reduction from $561.3 million in 2023[38]. - Total debt decreased from $1,226.3 million in 2023 to $1,183.4 million in 2024, resulting in a net debt increase from $938.0 million to $1,033.1 million[58]. - Net Debt Leverage increased from 2.5x in 2023 to 3.8x in 2024, indicating a higher leverage ratio[58]. Segment Performance - North America segment net revenue was $639.8 million, a decline of $107.8 million or 14.4%, driven by a 14% decrease in core revenue[17]. - North America net revenues for the year ended December 31, 2024, were $2,708.4 million, down 13.3% from $3,123.1 million in 2023[60]. - Adjusted EBITDA from continuing operations for North America decreased by 33.5% from $382.2 million in 2023 to $254.1 million in 2024[60]. Impairments and Special Items - The company incurred a goodwill impairment of $94.8 million for the full year 2024, compared to no impairment in 2023[34]. - The company incurred goodwill impairment charges of $31.4 million in Q4 2024, with total goodwill impairment for the year amounting to $94.8 million[43]. - The company reported total special items of $62.7 million for the year ended December 31, 2024, which included legal expenses, restructuring charges, and goodwill impairment[50]. - The company incurred special items totaling $35.7 million related to restructuring and asset-related charges during the year[53]. Future Outlook - The company expects 2025 revenue guidance to range from $3.2 billion to $3.4 billion, reflecting a core revenue decline of 4% to 9% compared to 2024[13]. - Adjusted EBITDA for 2025 is projected to be between $215 million and $265 million[14]. - The company plans to continue focusing on restructuring and cost management strategies to improve future performance[44].