JELD-WEN Holding, Inc. (NYSE:JELD) Q4 2024 Earnings Call Transcript
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Overview
The earnings call indicates a challenging financial landscape with declining revenues and EBITDA, increased debt leverage, and downward-revised guidance for 2024. Despite cost-saving initiatives and transformation projects, the weak financial performance and cautious outlook, especially in key markets like North America, suggest a negative sentiment. The Q&A highlights management's uncertainty in addressing cost challenges and inflation, further supporting a negative outlook. Given the small-cap status, the stock is likely to react more strongly to these negative factors, resulting in a predicted stock price movement of -2% to -8% over the next two weeks.
Key Financial Performance
Fourth Quarter Revenue $896 million, down 12% year-over-year due to lower core revenues reflecting expected market-driven volume declines across North America and Europe, and a shift from higher price to more affordable options.
Adjusted EBITDA $40 million, a decline of $47 million year-over-year, primarily driven by lower volume and mix, resulting in an adjusted EBITDA margin of 4.5%.
Free Cash Flow A use of $28 million, including $56 million in capital investments, impacted by lower EBITDA and continued investment in transformation initiatives.
Net Debt Leverage Ratio Increased to 3.8 times, above the target range of 2 to 2.5 times, due to lower EBITDA and capital investments.
North America Revenue $640 million, a 14% decline year-over-year, driven by a 14% reduction in core revenues primarily due to lower volume and mix.
North America Adjusted EBITDA Declined to $42 million from $94 million in the prior year, reflecting the impact of lower volume and mix, as well as negative price cost dynamics.
Europe Revenue $256 million, with adjusted EBITDA of $17 million; core revenues declined 6% year-over-year, driven by a 7% decrease in volume and mix.
Full-Year Revenue Declined 12% year-over-year, reflecting ongoing impacts of lower volumes and mix throughout the year.
Full-Year Adjusted EBITDA Declined 28% year-over-year, with margins contracting by 150 basis points, pressured by lower sales and partially offset by productivity gains.
Projected 2025 Adjusted EBITDA Expected range of $215 million to $265 million, reflecting anticipated continued softness in North America and the impact of share loss.
Projected Operating Cash Flow for 2025 Approximately $15 million, reflecting low levels of operating cash flow.
Projected Capital Expenditures for 2025 Approximately $150 million, lower than previously outlined but above historical levels, representing about 4.5% of sales.
Projected Free Cash Flow for 2025 Approximately $135 million, reflecting the expected elevated leverage levels by year-end.
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Operating Highlights
Market Positioning: The company anticipates continued volatility in North America with significant uncertainty around market conditions, including potential tariffs and high interest rates.
Market Expansion: Despite a soft overall market, JELD-WEN's interior door business has remained stable, indicating a potential area for market share growth.
Operational Efficiencies: JELD-WEN delivered approximately $115 million of transformation benefits in 2024 and is implementing cost reduction initiatives to improve efficiency.
Cost Reduction Initiatives: The company announced the idling of its Windows plant in Grinnell, Iowa, following the loss of a major customer.
Network Optimization: A comprehensive program is being launched to optimize the North American network, including facility consolidation and automation investments.
Strategic Shifts: The company is shifting focus to reestablish strong partnerships with customers and improve service levels, quality, and delivery metrics.
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Risk or Challenges
Market Conditions: The company faces significant uncertainty in North America due to potential tariffs, high interest rates, and renewed inflation, which may lead to further market declines.
Consumer Behavior: Consumers are trading down and delaying larger remodeling projects, impacting volume and mix.
Construction Trends: A sharp decline in multi-family and higher-end home construction has negatively affected specific business segments.
Operational Efficiency: Lower volumes have led to operational inefficiencies, limiting productivity gains.
Supply Chain Challenges: The evolving tariff landscape requires proactive measures to optimize the supply chain and reduce costs.
Financial Performance: The company anticipates a decline in revenues and EBITDA due to lower volumes and strategic business pruning.
Debt Levels: The net debt leverage ratio increased to 3.8 times, exceeding the target range of 2 to 2.5 times.
Capital Expenditures: Projected use of free cash flow is approximately $135 million, with capital expenditures adjusted to $150 million.
Customer Service: Service levels have not consistently met customer expectations, necessitating improvements to regain market share.
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Guidance & Outlook
Transformation Benefits: Delivered approximately $115 million of transformation benefits in 2024.
Cost Reduction Initiatives: Implementing cost reduction initiatives to improve efficiency and adapt to market dynamics.
Network Optimization Program: Launching a comprehensive program to optimize the North American network to support long-term commercial strategy.
Automation Investments: Accelerating automation investments to drive efficiency and enable facility consolidation.
Customer Service Improvements: Enhancing planning and execution of projects to minimize service disruptions and maintain strong customer support.
Near-term Cost Adjustments: Rightsizing factories and adjusting salaried workforce to align with current market conditions.
Supply Chain Optimization: Modeling options to optimize supply chain and prioritize regional sourcing.
2025 Revenue Guidance: Expect net revenues to range between $3.2 billion and $3.4 billion, reflecting a projected 4% to 9% decline in core revenues.
2025 Adjusted EBITDA Guidance: Forecast an adjusted EBITDA range of $215 million to $265 million.
2025 Operating Cash Flow: Anticipate operating cash flow of approximately $15 million.
2025 Capital Expenditures: Adjusting capital expenditures to approximately $150 million.
2025 Free Cash Flow: Projected use of free cash flow of approximately $135 million.
Q1 2025 Sales Guidance: Expect Q1 sales range between $750 million and $775 million, with adjusted EBITDA of approximately $20 million.
2025 EBITDA Improvements: Expect to deliver another $100 million in annualized adjusted EBITDA improvements.
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Shareholder Return Plan
Shareholder Return Plan: The company is focused on returning to its targeted leverage range through EBITDA improvements and appropriate capital allocation. They anticipate a projected use of free cash flow of approximately $135 million in 2025, which indicates a cautious approach to shareholder returns given the current financial challenges.
Capital Expenditures: The company is adjusting its capital expenditures to approximately $150 million, which is lower than previously outlined but still above historical levels, representing about 4.5% of sales.
Transformation Benefits: The company delivered approximately $115 million of transformation benefits in 2024 and expects to generate an additional $60 million or more in benefits from network optimization once fully implemented.
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Key Q&A
Q:Can you give us more color on how earnings progression goes from $20 million to $64 million from 1Q to 2Q?
A:We’re taking near-term actions of about $15 million this year, and many of those actions will begin to take effect in Q2. We have to adapt to ongoing market dynamics by optimizing our factories, support staff, and SG&A.
Q:Are you assuming any ramp-up in demand in terms of first half versus back half?
A:There’s going to be normal seasonality beginning in Q2, combined with the actions we’re taking.
Q:Have you taken any pricing actions and how are your competitors reacting?
A:Yes, we are taking price. We expect around $50 million in headwind on the cost side.
Q:Does the $50 million cost headwind account for any tariffs?
A:No, that will be over and above the $50 million.
Q:How confident are you in achieving the $50 million of mitigation savings and the $100 million transformation savings this year?
A:We have active projects that are already in flight, 80%-85% of the $100 million is already running.
Q:What is the expected exit rate on EBITDA margin for this year?
A:Think about our margin rate exit around 8% to 9% at the end of the year.
Q:Can you give more detail on the $150 million CAPEX guide for the full year?
A:It’s balanced between network optimization, improving automation, and some growth initiatives.
Q:Have you seen any pockets of strength in Europe?
A:Europe is looking better but still challenged. We expect recovery in 2026.
Q:Can you clarify the $50 million inflation cost?
A:The $50 million is related to inflation on sourcing, including freight, labor, and material inflation.
Q:What areas do you think you can get price given the mix pressure?
A:We believe the mix down is at a predictable run rate, and we need to pass through inflation.
Q:When will you anniversary the big customer loss in the Midwest?
A:It will be around September, end of Q3.
Q:Is the $15 million to $20 million headwind in corporate costs just normal compensation expense?
A:Yes, it’s essentially normal variable compensation coming back in 2025.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific impacts of tariffs on their cost structure, as well as the exact details on how they plan to offset the significant EBITDA headwinds.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America price
America volume
Europe market
Samantha
Towanda divestiture
WEN term
action market
consolidation
cost dynamic
cost productivity
customer
decade
decrease volume
disruption
leverage
loss Midwest
market condition
market share
market weakness
mix margin
modeling
optimization
option
pressure
priority
productivity gain
pruning
quality
response
service level
share loss
shift
support
tariff
term action
term adjustment
term footprint
term success
term value
time
transformation effort
use
JELD Transcript
JELD-WEN Holding, Inc. (JELD) Q3 2025 Earnings Call Transcript
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The earnings call reveals significant challenges: declining volumes, aggressive competitor pricing, and reduced EBITDA expectations. Although there are transformation initiatives and cost-saving measures, the market conditions remain weak, and guidance indicates ongoing struggles. The potential business sale is uncertain, and management's vague responses further amplify concerns. Given the market cap of $1.12 billion, the stock is likely to experience a negative reaction, falling between -2% to -8% over the next two weeks.
JELD-WEN Holding, Inc. (JELD) Q2 2025 Earnings Call Transcript
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The earnings call reveals a challenging financial situation with declining revenues, high leverage, and negligible free cash flow. Despite plans for improvement, the immediate outlook remains weak. The Q&A section highlights concerns about financial leverage and lack of clarity on strategic actions. The company's market cap suggests moderate stock price sensitivity, but the overall sentiment is negative due to financial underperformance and uncertainties.
JELD-WEN Holding, Inc. (JELD) Q1 2025 Earnings Call Transcript
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The earnings call reveals significant financial challenges, including a 19% revenue decline, increased net debt leverage, and negative cash flow. Despite cost reduction efforts, the guidance indicates further revenue declines and weak EBITDA improvements. The Q&A highlighted management's uncertainty in passing tariff costs to customers and muted seasonal growth expectations. The absence of a share repurchase program and unclear responses to key risks further dampen sentiment. Considering the small-cap market cap, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.
JELD-WEN Holding, Inc. (NYSE:JELD) Q4 2024 Earnings Call Transcript
Unknown2-19
The earnings call indicates a challenging financial landscape with declining revenues and EBITDA, increased debt leverage, and downward-revised guidance for 2024. Despite cost-saving initiatives and transformation projects, the weak financial performance and cautious outlook, especially in key markets like North America, suggest a negative sentiment. The Q&A highlights management's uncertainty in addressing cost challenges and inflation, further supporting a negative outlook. Given the small-cap status, the stock is likely to react more strongly to these negative factors, resulting in a predicted stock price movement of -2% to -8% over the next two weeks.
JELD Report
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