JELD-WEN Reports Fourth Quarter Results and Establishes 2023 Guidance

JELD-WEN Holding, Inc. (NYSE: JELD) (“JELD-WEN” or the “Company”) today announced results for the quarter and year ended December 31, 2022. Comparability is to the same period in the prior year, unless otherwise noted.

 Fourth Quarter Highlights

• Net revenue of $1,331.4 million increased 3.5% in the fourth quarter driven by 9% Core Revenue growth. Core Revenue growth included (+12%) price realization driven by continuing cost inflation and (-3%) lower volume/mix.
• Net income was $33.6 million or $0.40 per share, compared to net income of $42.1 million or $0.45 per share during the same quarter a year ago. Net income includes net after-tax charges of $5.9 million or $0.07 per share, compared to net after-tax charges of $7.0 million or $0.08 per share during the same quarter a year ago. A further reconciliation of these charges for both periods can be found in the tables at the end of this release.
• Adjusted EPS was $0.47, compared to Adjusted EPS of $0.53 in the same quarter a year ago. Adjusted Net Income and Adjusted EPS for the quarter ended December 31, 2021 have been revised to conform to current period presentation and revise the adjusted tax impact. 
• Adjusted EBITDA was $99.6 million, compared to $120.1 million during the same quarter a year ago. Adjusted EBITDA margins contracted by 180 basis points year-over-year to 7.5%.

Full Year Highlights

• Net revenue of $5,129.2 million increased 7.5% driven by 12% Core Revenue growth. Core Revenue growth included (+13%) price realization mostly related to significant cost inflation, slightly offset by a decrease in volume/mix (-1%).
• Net income was $45.7 million or $0.53 per share, compared to net income of $168.8 million or $1.72 per share a year ago. Net income includes net after-tax charges of $100.8 million or $1.15 per share, due to a goodwill impairment and various other items. This compares to net after-tax charges of $28.9 million or $0.29 per share during the prior year. A further reconciliation of these charges for both periods can be found in the tables at the end of this release. 
• Adjusted EPS was $1.68, compared to Adjusted EPS of $2.01 in the prior year. Adjusted Net Income and Adjusted EPS for the first three quarters of 2022 and the full year ended December 31, 2021 have been revised to conform to current period presentation and revise the adjusted tax impact.
• Full year results exceeded the high end of the Company’s most recent 2022 guidance range as Adjusted EBITDA was $422.2 million, compared to $465.1 million in the prior year. Full year Adjusted EBITDA margins contracted 150 basis points to 8.2%.

2023 Full-Year Guidance

• Net revenue of $4.5 billion to $4.9 billion 
• Adjusted EBITDA in a range of $360 million to $400 million

“Our team continued to take decisive actions in the fourth quarter to improve execution and address our cost structure, while staying focused on safety and quality in all that we do,” said Chief Executive Officer, William J. Christensen. “I want to thank our global associates for their commitment to serving customers in 2022 amidst significant change and a challenging macroeconomic backdrop.”

Christensen continued, “As we look ahead in 2023, we expect softening demand in most of our end markets.  We are taking a two-pronged approach to streamline and strengthen JELD-WEN to improve short-term financial performance while positioning the company for longer-term success. We are focused on expanding our margins and increasing our cash flow generation by reducing our cost structure through operational efficiencies and rationalizing our global footprint. At the same time, we have formalized workstreams to deliver long-term profitable growth by optimizing our production network and investing in products and services to better serve customers.”

Fourth Quarter 2022 Results 

Net revenue for the three months ended December 31, 2022 increased $44.4 million, or 3.5%, to $1,331.4 million, compared to $1,286.9 million for the same period last year. The increase in net revenue was driven by 9% Core Revenue growth, partially offset by a 5% adverse foreign exchange impact. Core Revenue growth was driven by price realization (+12%) mostly related to continuing cost inflation partially offset by lower volume/mix (-3%).

Net income was $33.6 million in the fourth quarter, compared to net income of $42.1 million in the same period last year, a decrease of $8.5 million. Despite positive price/cost results, the decrease in net income was largely due to higher SG&A expense and lower volume/mix. Adjusted Net Income for the fourth quarter decreased $9.5 million, to $39.5 million, compared to $49.0 million in the same period last year. 

Earnings per share (“EPS”) for the fourth quarter was $0.40, compared to EPS of $0.45 for the same quarter last year. Adjusted EPS for the fourth quarter was $0.47 compared to Adjusted EPS of $0.53 in the same quarter last year. 

Adjusted EBITDA decreased $20.5 million, to $99.6 million, compared to the same quarter last year. Adjusted EBITDA margin contracted 180 basis points to 7.5%, as positive price/cost was more than offset by higher SG&A expense. 

On a segment basis for the fourth quarter of 2022, compared to the same period last year:

• North America – Net revenue increased $90.1 million, or 11.7%, to $862.8 million, driven by a 13% increase in Core Revenue which was higher due to price realization (+13%). Net income increased $15.9 million to $71.7 million. Adjusted EBITDA increased $6.2 million to $87.0 million, while Adjusted EBITDA margin contracted 40 basis points to 10.1%.
• Europe – Net revenue decreased $43.4 million, or (12.1%), to $316.2 million, due to a 13% adverse impact from foreign exchange, slightly offset by a 1% increase in Core Revenue. Core Revenue increased due to price realization (+11%), mostly offset by lower volume/mix (-10%). Net income decreased $15.0 million to $0.4 million. Adjusted EBITDA decreased $13.4 million to $21.5 million, while Adjusted EBITDA margin contracted 290 basis points to 6.8%.
• Australasia – Net revenue decreased $2.2 million, or (1.4)%, to $152.4 million, due to a 10% increase in Core Revenue, more than offset by an 11% negative impact from foreign exchange. Core Revenue increased due to price realization (+10%). Net income decreased $5.8 million to $7.4 million. Adjusted EBITDA decreased $3.3 million to $19.4 million, while Adjusted EBITDA margin contracted 200 basis points to 12.7%.  

Full Year 2022 Results

Net revenue for the full year ended December 31, 2022 increased $357.5 million, or 7.5%, to $5,129.2 million, compared to $4,771.7 million for prior year. The increase in net revenue was driven by 12% Core Revenue growth, partially offset by a 5% adverse foreign exchange impact. Core Revenue growth was driven by price realization (+13%) mostly related to significant cost inflation slightly offset by reductions in volume/mix (-1%).

Net income was $45.7 million in the full year compared to net income of $168.8 million in the same period last year, a decrease of $123.1 million. Despite improved productivity and higher Other Income, net income was lower mostly due to higher SG&A expenses and a third quarter goodwill impairment charge in the Europe segment. 

Net income per share for the full year was $0.53 compared to EPS of $1.72 for the same period last year. Adjusted EPS was $1.68 compared to Adjusted EPS of $2.01 in the same period a year ago. 

Adjusted EBITDA decreased $42.9 million, to $422.2 million compared to the same period last year. Adjusted EBITDA margin decreased 150 basis points to 8.2% primarily as improved productivity was more than offset by higher SG&A expenses and lower volume/mix.

On a segment basis for the full year 2022, compared to the prior year:

• North America – Net revenue increased $430.1 million, or 15.2%, to $3,259.4 million, due to a 15% increase in Core Revenue. Core Revenue increased due to price realization (+14%) and positive volume/mix (+1%). Net income increased $4.6 million to $260.6 million. Adjusted EBITDA remained stable at $352.9 million, while Adjusted EBITDA margin contracted 170 basis points to 10.8%.
• Europe – Net revenue decreased $68.0 million, or (5.0%), to $1,284.5 million, due to a 12% adverse impact from foreign exchange, partially offset by a 7% increase in Core Revenue. Core Revenue increased due to price realization (+11%), partially offset by lower volume/mix (-4%). Net income decreased $117.4 million to a net loss of $50.8 million. Adjusted EBITDA decreased $53.0 million to $74.3 million, while Adjusted EBITDA margin contracted 360 basis points to 5.8%.
• Australasia – Net revenue decreased $4.7 million, or 0.8%, to $585.4 million, due to a 7% increase in Core Revenue,  offset by an 8% negative impact from foreign exchange. Core Revenue increased due to price realization (+8%) slightly offset by reduced volume/mix (-1%). Net income decreased $6.8 million to $25.4 million. Adjusted EBITDA decreased $5.9 million to $65.6 million, while Adjusted EBITDA margin contracted 90 basis points to 11.2%.  

Cash Flow and Balance Sheet 

Net cash flow from operations was $30.3 million during the full year 2022, a $145.3 million decline compared to net cash flow from operations of $175.7 million during the same period a year ago. Full year net income declined $123.1 million year-over-year including a $54.9 million non-cash goodwill impairment charge in the Company’s Europe segment. Net working capital consumed $234.5 million in 2022, $165.6 million increased cash use compared to the prior year, mostly driven by timing and amounts of year-end accounts payable balances. Partially offsetting these negative impacts to 2022 cash flow was an approximately $110 million improvement in changes in accrued expenses due to prior year payment of legal settlements.

Capital expenditures in 2022 declined by $7.5 million to $92.2 million from $99.7 million in 2021.

Free Cash Flow used in 2022 was $61.9 million, compared to Free Cash Flow generated of $76.0 million in 2021. This $137.9 million decline reflects the decrease in net cash flow from operations and slightly lower capital expenditures.

Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was $645.5 million as of December 31, 2022, compared to total liquidity of $837.8 million as of December 31, 2021. The decrease in total liquidity was primarily due to cash utilized for increased working capital investments, share repurchases and lower net income. 

Full Year 2023 Guidance

The Company expects 2023 net revenue of $4.5 to $4.9 billion which reflects a low double digit decline in volume/mix across its portfolio of products and geographies. Core Revenues are forecasted to be down 4-8% as carry-forward price realization partially offsets lower market demand. 

Further, the Company expects 2023 Adjusted EBITDA to be within the range of $360 to $400 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.

Capital expenditures are forecasted to be slightly higher year-over-year with approximately half focused on productivity activities and the other half spent on maintenance.

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 and assume no new COVID-19 lockdowns or restrictions, which could unfavorably impact our operations, labor availability, and supply chain continuity.

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About JELD-WEN

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 driven by innovation and 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.

Source: JELD-WEN Holding, Inc.