JELD-WEN Holding, Inc. (JELD) Earnings

Management highlights

- Overall Financial Performance * Q2 2026 total net revenue was $818 million, a 1% year-over-year decline, driven by lower volume mix partially offset by higher pricing and a $9 million foreign exchange benefit. * Adjusted EBITDA was $42 million, an 8% increase from $39 million year-over-year, marking the first year-over-year adjusted EBITDA increase in 10 quarters. Adjusted EBITDA margin improved 50 basis points to 5.2% from 4.7% last year. * Free cash flow was a $28 million use of cash in the quarter, driven by seasonal working capital timing. Net debt leverage remained flat sequentially at 11.3x, with $80 million drawn on the revolving credit facility to support seasonal working capital needs. * $36 million in productivity gains and net SG&A savings offset $29 million in price-cost headwinds and $5 million in lower volume mix headwinds to deliver the adjusted EBITDA growth. - Service and Operational Performance * On-time in-full (OTIF) delivery performance declined modestly to the high 80% range in June-July due to temporary disruptions: Canadian wildfire smoke forced temporary facility shutdowns, and underperformance from third-party freight providers. These issues have largely resolved, and OTIF is recovering toward 90% or above. * Customer satisfaction remains positive, and improved service has enabled the company to win back business lost in prior periods, translating to better commercial results. - Strategic and Balance Sheet Priorities * Christian Michel joined in June as EVP and President of Europe, bringing 25+ years of international manufacturing and transformation experience to optimize the European business. * Management is actively evaluating options to address upcoming near-term debt maturities, including potential refinancing, with the goal of preserving liquidity and maintaining financial flexibility while the business improves performance amid market volatility. * A strategic review of the European business remains ongoing, with all options being evaluated to maximize long-term shareholder value.

Guidance

- Full-year 2026 net revenue guidance is updated to a range of $3.1 billion to $3.2 billion, up from the prior range of $3.05 billion to $3.2 billion. Core revenue is now expected to decline 2% to 5% year-over-year, an improvement from the prior expectation of a 3% to 6% decline, driven by early share recovery from improved service. - Full-year adjusted EBITDA guidance is updated to a range of $120 million to $150 million, up from the prior range of $100 million to $150 million, lifting the midpoint of guidance. The improvement comes from stronger productivity, reduced expected net share loss, partially offset by higher price-cost pressure. * Updated bridge to the new $135 million adjusted EBITDA midpoint: volume mix remains an expected $25 million headwind (unchanged), net share loss is now a $20 million headwind (down from $30 million previously), total productivity benefits are expected to hit $120 million, price-cost headwinds increase to $50 million (up from $40 million previously), and other items create a net $8 million headwind. - Full-year capital expenditures are now expected to be approximately $85 million, with continued discipline on spending. - Full-year operating cash flow is expected to be approximately $10 million, and full-year free cash flow is expected to be a $75 million use of cash, lowered from prior expectations due to additional restructuring and one-time costs. - Guidance assumes no significant portfolio changes, and no material near-term market recovery.

Segment performance

North America: Q2 2026 revenue was $529 million, representing 64.7% of total company revenue, down from $556 million year-over-year. Adjusted EBITDA for the segment was $41 million, up from $35 million year-over-year, with adjusted EBITDA margin improving to 7.7% from 6.3% last year. Europe: Q2 2026 revenue was $289 million, representing 35.3% of total company revenue, up 8% from $268 million year-over-year; 3 percentage points of this increase came from favorable foreign exchange. Adjusted EBITDA for the segment was $13 million.

Risks & headwinds

- Overall market volumes remain soft, and the company continues to operate in a soft, uncertain demand environment, with no expectation of a meaningful near-term market recovery. - Persistent price-cost headwinds, driven primarily by freight and material cost inflation that currently exceeds the benefit of implemented pricing, create ongoing margin pressure. - Temporary operational disruptions from Canadian wildfires continue to pose a near-term risk to production and delivery performance. - High leverage of 11.3x net debt and upcoming near-term debt maturities create balance sheet risk that requires active refinancing or restructuring action. - Canada's housing market is experiencing broader economic softness, leading to an expected high single-digit market decline for the region.

Analyst Q&A

• Q: What operational adjustments is GELD-WEN making to address recent freight-related service disruptions, and how will improved service impact share recovery in H2 2026 and beyond?

  A: Recent OTIF declines were driven by unplanned wildfire shutdowns and freight provider underperformance, with August OTIF already tracking back above 90%. No significant negative customer feedback has been received from the recent service dip, and improved service has already translated to $25 million in incremental top-line revenue versus initial 2026 budgets. Wildfire risk remains a continuing near-term concern that the company is actively monitoring to protect associates and manage potential future disruptions.

• Q: What has driven the deterioration in price-cost dynamics versus prior expectations, and what is the company's ability to implement additional price increases to offset inflation?

  A: The larger change versus prior guidance is higher-than-expected cost inflation, driven mostly by inbound and outbound freight costs and European energy prices. GELD-WEN has already implemented positive pricing across the market, but current inflation has outpaced these pricing increases. Approximately two-thirds of the current price-cost gap comes from material inflation, and one-third from freight inflation, with fuel prices impacting both inbound materials and outbound delivery costs. The company continues to work constructively with customers to address ongoing price-cost pressures, with productivity and SG&A savings offsetting the current near-term gap.

• Q: Where are the business wins from improved service concentrated, and how is the multifamily business tracking relative to its robust market outlook?

  A: Share gains are broadly balanced, with particular strength on the interior door side and vinyl window business in North America, as GELD-WEN regains share it lost in prior periods due to past service issues. Multifamily growth is significantly up year-over-year, with the company's VPI multifamily business seeing strong payoff from a prior multi-year investment to expand its East Coast sales footprint. Growth is expected to continue into 2027, with strong Q4 2026 order pipelines already in place, though the segment remains a small relative share of GELD-WEN's total portfolio.

• Q: What is the current status of 2026 productivity efforts, and what is the expected cadence of productivity savings into 2027? What changes have there been to tariff assumptions and what is the expected benefit from tariff refunds?

  A: 100% of the planned 2026 productivity cost reduction bucket has been actioned, with all savings expected to be realized by the end of the year. Roughly $30 million in annualized productivity savings from 2026 actions are expected to carry over into 2027. Overall tariff costs have moderated slightly from the start of 2026; the company received a $1 million immaterial tariff refund in Q2 2026, and expects a mid single-digit million net tariff refund benefit in Q3 2026.