JELD-WEN Holding, Inc. Q2 FY2025 earnings call

• Safety performance continues to improve in both regions.
• Second quarter was about disciplined execution, delivering results at the high end of internal expectations with cost discipline.
• Took further footprint actions: transitioned Coppell, Texas facility to raw materials warehouse, closed and prepped Grinnell, Iowa Windows facility for repurposing, and announced closure of Chiloquin, Oregon facility.
• Reinstated full-year guidance due to increased visibility, reflecting transformation progress, tariff reality, and cost focus.
• Focus on improving service levels across the network, reinstating full-year guidance, and ongoing transformation and cost actions.

North America segment reported revenue of $556 million for the second quarter, a 22% decline compared to the prior year. Core revenues decreased by 15% primarily due to lower volumes, and adjusted EBITDA declined to $35 million from $76 million in the same quarter last year. Europe segment had revenue of $268 million, down only 2.7% year-over-year. Volumes were weak in the region, but the weak dollar and selected price increases mostly offset volume declines. Adjusted EBITDA was $17 million, a decline of $3 million from the prior year, with an adjusted EBITDA margin of 6.4%.

• Full year revenue expected between $3.2 billion to $3.4 billion with core revenue decline 4%-9%.
• Adjusted EBITDA expected between $170 million to $200 million, driven by negative price/cost relationship and productivity pressure from lower volumes.
• Expect $100 million of in-year transformation benefits, about half carryover from last year, half new initiatives in 2025.
• Project free cash flow to be a use of approximately $150 million.
• Evaluating options to improve capital structure, including assessing noncore assets like North American distribution business and European operations.

• Tariff uncertainty with annualized impact of ~$40 million, though pricing actions aim to recover most costs.
• Inflationary pressure in materials, freight, and labor, with selective price gives in certain markets.
• Competitive pricing in select regions impacting ability to realize pricing.
• High net debt leverage ratio of 5.7x, exceeding targeted range, and need to address leverage through various options.

Q: Focusing on efforts to optimize the network, where are we in the process and implications for near-term margins?

A: We're over the 50-yard line but still have work to do. Slowing network consolidation in back half to preserve capital and limit service disruptions. Actions like repurposing Grinnell window site remove carrying costs and will land in back half.

Q: Context on pricing realization and offsetting inflationary pressure?

A: Outlook is to be price cost neutral but guiding to slight negative on price cost with inflation above price. Tariff surcharges progressing, but competitors have aggressive pricing in select regions.

Q: Sense of urgency on addressing leverage, status of exploring options for North American distribution and Europe?

A: Leverage ratio at 5.7x is a priority. We're in early innings of reviewing multiple options, with ample liquidity, and will provide clarity on capital structure by end of year.

Q: Volumes in North America and Europe, color on volume vs mix?

A: Europe has full year low single-digit decline, rate of decline slowing. North America mid-single-digit volume decline, with 50% share loss including Midwest retailer and Towanda divestiture. Volume decline driving most of the revenue pressure with slight mix impact.

Q: EBITDA bridge, productivity in negative volume environment?

A: Base productivity negative due to volume leverage. Transformation and cost actions help, with fixed overhead productivity from footprint actions. Total productivity likely higher for full year, with phasing of transformation and cost mitigation actions more in back half.

Q: Windows vs doors performance, tariffs impact?

A: Tariffs impact consistent between windows and doors. Mix down experienced in 2024, minimal in 2025.

Q: Volume mix dynamics in back half, end market perspective?

A: Lapping share loss on Midwest retailer and targeted growth initiatives. New resi end market in North America down low to mid-single digits. Transformation and cost actions evenly split, with more cost mitigation in back half.