JELD-WEN Announces Second Quarter 2020 Margin Expansion From Strong Price Realization and Improved Operational Performance

JELD-WEN Holding, Inc. (“JELD-WEN”) announced results for the three and six months ended June 27, 2020, including second quarter net revenue of $992.3 million, net income of $23.1 million, adjusted EBITDA of $125.7 million, earnings per share (“EPS”) of $0.23, and adjusted EPS of $0.47.

Second Quarter 2020 Highlights

– Adjusted EBITDA margin increased 130 basis points to 12.7%, despite impact from COVID-19 pandemic
– Price realization improved sequentially and year-over-year
– Structurally reduced costs through JEM deployment and ongoing footprint initiatives
– Free cash flow improved $12.4 million year-over-year
– Balance sheet strengthened, with record liquidity of $809 million, an increase of $254 million compared to December 31, 2019

“We delivered performance above expectations in an uncertain demand environment and in challenging operating conditions, demonstrating that underlying business fundamentals are strong and our strategy is delivering results,” said Gary S. Michel, president and chief executive officer. “We remained disciplined and followed our playbook to profitably grow our market share in key products and channels, deliver improved price realization, and structurally reduce costs through the rigorous deployment of the JELD-WEN Excellence Model (“JEM”) and our footprint rationalization and modernization initiatives.”

“I am proud of how our associates have risen to the unprecedented challenges brought on by COVID-19, maintaining safe working environments for each other and our channel partners, and continuing to deliver world-class products to our customers. While the persistence of the virus in many countries globally contributes to near-term demand uncertainty, we believe that the pandemic will result in long-term trends that will drive improved demand for our products in both new construction and repair and remodel activity.”

Second Quarter 2020 Results

– Revenue improved sequentially throughout the quarter, declining only 11.3% year-over-year, ahead of original expectations
– Favorable price/cost for the seventh consecutive quarter
– Fourth consecutive quarter of core margin improvement in Europe segment
– SG&A cost control measures delivered year-over-year savings

Net revenue for the three months ended June 27, 2020 decreased $126.6 million, or 11.3%, to $992.3 million, compared to $1,119.0 million for the same period last year. The decrease in net revenue was driven by a 10% decline in core revenue and a 1% adverse impact from foreign exchange. Core revenue, which excludes the impact of foreign exchange and acquisitions completed in the last twelve months, was unfavorably impacted by a 13% headwind from volume/mix, primarily related to COVID-19, partially offset by a 3% pricing benefit.

Net income was $23.1 million during the second quarter, compared to net income of $22.4 million in the same quarter last year, an increase of $0.7 million. The increase in net income was primarily due to lower SG&A and impairment and restructuring expense, and greater other income, partially offset by lower gross profit from reduced volumes in each geographic segment. Adjusted net income for the second quarter increased $2.2 million, or 4.9%, to $47.7 million, compared to $45.5 million in the same quarter last year.

The effective book income tax rate in the quarter was 31.1%. Excluding the impact of the GILTI provision of U.S. tax reform legislation and discrete tax items, which were largely offsetting, the effective book income tax rate adjusted for these items during the second quarter was also 31.1%.

EPS for the second quarter was $0.23, compared to $0.22 for the same quarter last year. Adjusted EPS was $0.47, compared to $0.45 a year ago.

Adjusted EBITDA decreased $1.9 million, or 1.5%, to $125.7 million, compared to the same quarter last year. Adjusted EBITDA margin of 12.7% increased by 130 basis points compared to the prior year. Second quarter 2020 core adjusted EBITDA margin increased by 140 basis points compared to the prior year due to improved price realization, favorable productivity, and SG&A cost controls.

On a segment basis for the second quarter of 2020, compared to the same period last year:

North America

Net revenue decreased $60.3 million, or 9.0%, to $608.1 million, due to a 9% decrease in core revenue. Core revenue decreased due to a 14% volume/mix headwind, primarily a result of the COVID-19 pandemic, partially offset by a 5% pricing benefit. Adjusted EBITDA margin expanded by 190 basis points to 15.0%.

Europe

Net revenue decreased $38.9 million, or 12.9%, to $261.5 million, due to an 11% decrease in core revenue and a 2% adverse impact from foreign exchange. Core revenue decreased due to an 11% decrease in volume/mix, primarily related to the COVID-19 pandemic on served markets. Adjusted EBITDA margin expanded 120 basis points to 10.8%.

Australasia

Net revenue decreased $27.5 million, or 18.3%, to $122.7 million, due to a 12% decrease in core revenue and a 6% unfavorable impact from foreign exchange. Core revenue declined, primarily due to an 11% decrease in volume/mix from continued softness in residential new construction and the impact of the COVID-19 pandemic. Adjusted EBITDA decreased $6.0 million, primarily due to the deleverage impact of volume/mix.

Cash Flow and Balance Sheet

– Cash flow from operations of $38.3 million during the first six months of 2020 decreased by $4.3 million year-over-year
– Free cash flow improved by $12.4 million year-over-year during the first six months of 2020

Cash flow from operations totaled $38.3 million during the first six months of 2020, compared to cash flow from operations of $42.6 million during the same period a year ago. The decrease in cash flow from operations was primarily due to a decrease in operating income. Free cash flow used during the first six months of 2020 improved $12.4 million year-over-year to $8.2 million, from $20.6 million a year ago, primarily due to a reduction in capital expenditures.

Cash and cash equivalents as of June 27, 2020 were $457.7 million, compared to $226.0 million as of December 31, 2019. Total debt as of June 27, 2020 was $1.762 billion, compared to $1.517 billion as of December 31, 2019.

Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was a record $808.6 million as of June 27, 2020, compared to total liquidity of $554.5 million as of December 31, 2019.

For the full second quarter results, click here.

About JELD-WEN

JELD-WEN, founded in 1960, is one of the world’s largest door and window manufacturers, operating manufacturing facilities in 20 countries located primarily in North America, Europe and Australia. Headquartered in Charlotte, N.C., JELD-WEN designs, produces and distributes an extensive range of interior and exterior doors, wood, vinyl and aluminum windows and related products for use in the new construction and repair and remodeling of residential homes and non-residential buildings. JELD-WEN is a recognized leader in manufacturing energy-efficient products and has been an ENERGY STAR® Partner since 1998. Our products are marketed globally under the JELD-WEN® brand, along with several market-leading regional brands such as Swedoor® and DANA® in Europe and Corinthian®, Stegbar®, and Trend® in Australia.

Contact:

Chris Teachout – Investor Relations Manager – investors@jeldwen.com – (704) 378-7007

Source: JELD-WEN Holding, Inc.