JELD-WEN Reports First Quarter 2023 Results and Updates Full-Year Guidance

CHARLOTTE, N.C., May 8, 2023 /PRNewswire/ -- JELD-WEN Holding, Inc. (NYSE: JELD) ("JELD-WEN" or the "Company") today announced results for the three months ended April 1, 2023. Comparability is to the same period in the prior year, unless otherwise noted. After taking into account reporting the Australasia segment as discontinued operations, the Company is raising its full-year guidance on the remaining business to reflect its first quarter results and ongoing cost reduction activities.

First Quarter Highlights

• Net revenue of $1,222.6 million increased +4.4% in the first quarter driven by +7% Core Revenue growth. Core Revenue growth included +10% of price realization driven by continuing cost inflation and lower volume/mix (-3%).
• Net income was $15.1 million or $0.18 per share, compared to net loss of ($0.5) million or ($0.01) per share during the same quarter a year ago. Operating income margin was 3.1% as of April 1, 2023.
• Adjusted EPS was $0.35, compared to Adjusted EPS of $0.24 in the same quarter a year ago. Adjusted EPS includes net after-tax charges of $14.5 million or $0.17 per share, compared to net after-tax charges of $22.3 million or $0.25 per share during the same quarter a year ago. Adjusted Net Income and Adjusted EPS for the quarter ended March 26, 2022 have been revised to conform to current period presentation and revise the adjusted tax impact. A further reconciliation of these charges for both periods can be found in the tables at the end of this release.
• Adjusted EBITDA was $93.5 million, compared to $80.2 million during the same quarter a year ago. Adjusted EBITDA Margin increased by 80 basis points year-over-year to 7.7%.
• On April 17, 2023, the Company announced the sale of its Australasia segment for AU$688 million and intent to use majority of the proceeds to repay debt.

"We made progress in the first quarter to simplify and strengthen JELD-WEN which, combined with more favorable than expected market conditions, resulted in improved financial performance," said Chief Executive Officer William J. Christensen.  "During this time of weaker demand, our associates carefully controlled costs while continuing to deliver on our customers' expectations. In addition, to further simplify our global operations, we recently announced the sale of our Australasia business to Platinum Equity which will allow us to focus on our two largest regions and strengthen our balance sheet by paying down debt."

Christensen continued, "Driven by our solid first quarter results, ongoing cost reduction activities and the move of our Australasia segment to discontinued operations, we are raising our 2023 guidance on the remaining business. However, with the continued macro-economic uncertainty in North America and Europe, we are taking a pragmatic view of the market and our financial outlook for the year."

First Quarter 2023 Results 

Net revenue for the three months ended April 1, 2023 increased $51.6 million, or +4.4%, to $1,222.6 million, compared to $1,171.0 million for the same period last year. The increase in net revenue was driven by +7% Core Revenue growth, partially offset by a -3% adverse foreign exchange impact. Core Revenue growth was driven by price realization of +10% mostly related to prior year increases and continuing cost inflation partially offset by lower volume/mix (-3%).

Net income was $15.1 million in the first quarter, compared to net loss of ($0.5) million in the same period last year, an increase of $15.7 million. The growth in net income was driven by positive price/cost, partially offset by lower volume/mix. Adjusted Net Income for the first quarter increased $7.8 million, to $29.6 million, compared to $21.8 million in the same period last year. 

Earnings per share ("EPS") for the first quarter was $0.18, compared to net loss per share of ($0.01) for the same quarter last year. Adjusted EPS for the first quarter was $0.35 compared to Adjusted EPS of $0.24 in the same quarter last year. 

Adjusted EBITDA increased $13.3 million, to $93.5 million, compared to the same quarter last year. Adjusted EBITDA Margin increased 80 basis points to 7.7%, as positive price/cost was partially offset by lower volume/mix. 

On a segment basis for the first quarter of 2023, compared to the same period last year:

• North America - Net revenue increased $45.7 million, or +6.3%, to $768.0 million, driven by a +7% increase in Core Revenue which was higher due to price realization of +10% partially offset by lower volume/mix (-3%). Net income decreased $2.8 million to $35.2 million. Operating income margin was 7.0% as of April 1, 2023. Adjusted EBITDA increased $12.1 million to $79.2 million, while Adjusted EBITDA Margin increased 100 basis points to 10.3%.
• Europe - Net revenue decreased $10.8 million, or -3.3%, to $312.5 million, due to a -6% adverse impact from foreign exchange, slightly offset by a +3% increase in Core Revenue. Core Revenue increased due to price realization of +10%, partially offset by lower volume/mix (-7%). Net income increased $7.9 million to $7.3 million. Operating income margin was 1.7% as of April 1, 2023. Adjusted EBITDA increased $2.9 million to $17.6 million, while Adjusted EBITDA Margin increased by 110 basis points to 5.6%.
• Australasia - Net revenue increased $16.7 million, or +13.3%, to $142.1 million, due to a +20% increase in Core Revenue, partially offset by a -7% adverse impact from foreign exchange. Core Revenue increased due to higher volume/mix of +11% and strong price realization of +9%. Net income increased $3.3 million to $5.3 million. Operating income margin was 5.6% as of April 1, 2023. Adjusted EBITDA increased $2.2 million to $12.6 million, while Adjusted EBITDA Margin increased 60 basis points to 8.9%.

Cash Flow and Balance Sheet

Net cash flow used in operations was ($0.7) million during the first quarter of 2023, a $186.2 million improvement compared to net cash flow used in operations of ($186.9) million during the same period a year ago. Net income in the first quarter of 2023 improved $15.7 million compared to the same period a year ago. Net working capital consumed ($41.1) million in the first quarter of 2023, a $186.5 million improvement compared to the prior year.

Capital expenditures in the first quarter of 2023 increased by $7.2 million to $23.6 million, up from $16.4 million in the first quarter of 2022.

Free Cash Flow used in the first quarter of 2023 was ($24.3) million, compared to Free Cash Flow used in the first quarter of 2022 of ($203.2) million. This $179.0 million improvement is primarily due to higher net cash flow from operations.

Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was $618.9 million as of April 1, 2023, compared to total liquidity of $645.5 million as of December 31, 2022.

Updated Full Year 2023 Guidance

JELD-WEN is updating its guidance to reflect the solid first quarter performance, ongoing cost reduction actions and the impact of the Australasia segment moving to discontinued operations following the April 17, 2023 announcement of the agreement to sell the segment.

The Company now expects 2023 net revenue of $4.0 to $4.4 billion which reflects a low double digit decline in volume/mix across its portfolio of products and geographies in North America and Europe. Core Revenues are forecasted to be down 4% to 8% as carry-forward price realization partially offsets lower market demand. 

Further, the Company now expects 2023 Adjusted EBITDA to be within the range of $330 to $370 million driven by lower year-over-year volumes and the non-recurrence of certain Other Income items partially offset by improved productivity and cost reductions.

Although the Company believes the assumptions reflected in the range of guidance are reasonable, actual results could vary substantially given the uncertainty regarding the future performance of the global economy, the continuing conflict in Ukraine, ongoing disruptions in global supply chains, and potential changes in raw material prices and other costs as well as other risks and uncertainties, including those described below. In addition the guidance ranges provided for 2023 do not include the impact of potential acquisitions or divestitures, except the announced divestiture of the Australasia business, and assume no new COVID-19 lockdowns or restrictions, which could unfavorably impact our operations, labor availability, and supply chain continuity.

Conference Call Information

JELD-WEN management will host a conference call on May 9, 2023, at 8 a.m. ET, to discuss the Company's financial results. Interested investors and other parties can access the call either via webcast by visiting the Investor Relations section of the Company's website at https://investors.jeld-wen.com, or by dialing 888-330-2446 from the United States or +1-240-789-2732 internationally and using ID 1285715. A slide presentation highlighting the Company's results is available on the Investor Relations section of the Company's website.

For those unable to listen to the live event, a webcast replay will be available approximately two hours following completion of the call. To learn more about JELD-WEN, please visit the Company's website at https://investors.jeld-wen.com.

About JELD-WEN Holding, Inc.

Headquartered in Charlotte, N.C., JELD-WEN is a leading global manufacturer of high-performance interior and exterior building products, offering one of the broadest selections of windows, interior and exterior doors, and wall systems. JELD-WEN delivers a differentiated customer experience, providing construction professionals with durable, energy-efficient products and labor-saving services that help them maximize productivity and create beautiful, secure spaces for all to enjoy. The JELD-WEN team is committed to creating safe, sustainable environments for customers, associates, and local communities. The JELD-WEN family of brands includes JELD-WEN® worldwide; LaCantina™ and VPI™ in North America; Swedoor® and DANA® in Europe; and Corinthian®, Stegbar®, and Breezway® in Australia. Visit jeld-wen.com for more information.

Investor Relations Contact:
James Armstrong
Vice President, Investor Relations
704-378-5731
jarmstrong@jeldwen.com

Media Contact:
Colleen Penhall
Vice President, Corporate Communications
980-322-2681
cpenhall@jeldwen.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "plan," "possible," "potential," "predict," "project," "should," "target," "will," "would" and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts or forward-looking statements, including statements regarding our business strategies and ability to execute on our plans, market potential, future financial performance, customer demand, the potential of our categories, brands and innovations, the impact of our footprint rationalization and modernization program, the impact of acquisitions and divestitures on our business and our ability to maximize value and integrate operations, our pipeline of productivity projects, the estimated impact of tax reform on our results, litigation outcomes, and our expectations, beliefs, plans, objectives, prospects, assumptions, or other future events, all of which involve risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2022, Quarterly Reports on Form 10-Q filed in 2023 and our other filings with the U.S. Securities and Exchange Commission.

The forward-looking statements included in this release are made as of the date hereof, and we undertake no obligation to update any forward-looking statements, except as required by law.

Non-GAAP Financial Information

This press release presents certain "non-GAAP" financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted EPS, Free Cash Flow, and Net Debt Leverage. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). A reconciliation of non-GAAP financial measures used in this press release to their nearest comparable GAAP financial measures is included in the tables at the end of this press release. The Company provides certain guidance solely on a non-GAAP basis because the Company cannot predict certain elements that are included in certain reported GAAP results. While management is not able to provide a reconciliation of items for forward-looking non-GAAP measures without unreasonable effort, management bases the estimated ranges of non-GAAP measures for future periods on its reasonable estimates of certain items such as assumed effective tax rate, assumed interest expense, and other assumptions about capital requirements for future periods. The variability of these items may have a significant impact on our future GAAP results.

Other companies may compute these measures differently. The non-U.S. GAAP information has limitations as an analytical tool and should not be considered in isolation  from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is not an indicator of our performance under U.S. GAAP.

We use Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted EPS because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA and Adjusted EBITDA Margin are helpful in highlighting trends because they exclude certain items outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. We use Adjusted EBITDA and Adjusted EBITDA Margin to measure our financial performance in reporting our results to our Board of Directors. Further, our executive incentive compensation is based in part on Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income as a measure of financial performance or to cash flows from operations as a liquidity measure.

We define Adjusted EBITDA as net income (loss), adjusted for the following items: (income) loss from discontinued operations, net of tax; income tax expense (benefit); depreciation and amortization; interest expense, net; and certain special items consisting of non-recurring legal and professional expenses and settlements; restructuring and asset related charges; facility closure, consolidation, and other related costs and adjustments; M&A related costs; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; and other special items.

Adjusted Net Income represents net income adjusted for the after-tax impact of certain special items used to calculate Adjusted EBITDA as described above. Where applicable, the specifically identified items are tax effected at the applicable jurisdictional tax rate and tax expense is adjusted to remove the effect of discrete tax items.

Adjusted EPS represents net income per diluted share adjusted to exclude the estimated per share impact of the same specifically identified items used to calculate Adjusted Net Income as described above.

Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net revenues.

We present several financial metrics in "Core" terms, which exclude the impact of foreign exchange, acquisitions and divestitures completed in the last twelve months. We define Core Revenue as net revenue excluding the impact of foreign exchange, and acquisitions and divestitures completed in the last twelve months. The use of "Core" metrics assists management, investors, and analysts in understanding the organic performance of the operations.

We present Free Cash Flow because we believe this metric assists investors and analysts in determining the quality of our earnings. Free Cash Flow is defined as net cash (used in) provided by operating activities less capital expenditures (including purchases of intangible assets). Free Cash Flow should not be considered alternatives to net cash (used in) provided by operating activities as a liquidity measure. We also present Net Debt Leverage because it is a key financial metric that is used by management to assess the balance sheet risk of the Company. We define Net Debt Leverage as Net Debt (total principal debt outstanding less unrestricted cash) divided by Adjusted EBITDA for the last twelve month period.

Due to rounding, numbers presented throughout this release may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures.

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SOURCE JELD-WEN Holding, Inc.