Yahoo Finance JELD-WEN Holding Inc (JELD) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...
First Quarter Revenue: $959 million, down 11% year-over-year.
Adjusted EBITDA: $69 million, down $10 million from the previous year.
Adjusted EBITDA Margin: 7.2%, slightly down by 10 basis points from the previous year.
North America Sales: $680 million, a decline of 11% from the previous year.
North America Adjusted EBITDA: $61 million, down from $79 million the previous year.
Europe Sales: $279 million.
Europe Adjusted EBITDA: $15 million.
Annual EBITDA Savings from Facility Closures: Expected to be at least $11 million.
CapEx Increase: Approximately $10 million year-over-year, funding transformation projects.
2024 Revenue Guidance: Lowered to between $3.9 billion and $4.1 billion.
2024 Adjusted EBITDA Guidance: Lowered to between $340 million and $380 million.
2024 Operating Cash Flow: Expected to be approximately $325 million.
2024 Free Cash Flow: Projected to be between $50 million and $75 million.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
JELD-WEN Holding Inc (NYSE:JELD) is actively progressing on its transformation journey, focusing on operational improvements and cost efficiency.
The company has completed the closure of two North American facilities, which is expected to deliver at least $11 million of annual EBITDA savings.
JELD-WEN Holding Inc (NYSE:JELD) is increasing its CapEx spending to support operational improvements, with a focus on material efficiency and production automation.
Despite market challenges, the company's first quarter sales and EBITDA were in line with expectations, supported by productivity actions.
JELD-WEN Holding Inc (NYSE:JELD) continues to invest in its culture and leadership, enhancing skills and behaviors across the organization to strengthen its foundation.
Negative Points
First quarter revenues for JELD-WEN Holding Inc (NYSE:JELD) were down 11% year over year, primarily due to volume declines in both North America and Europe.
Adjusted EBITDA for the first quarter decreased by $10 million year over year, with a marginal EBITDA margin reduction.
The company has lowered its revenue and adjusted EBITDA guidance for 2024, reflecting weaker than expected macroeconomic conditions and market challenges.
JELD-WEN Holding Inc (NYSE:JELD) is experiencing significant volume mix headwinds, with a notable impact from lower volume in its core markets.
The repair and remodel market, a significant segment for JELD-WEN Holding Inc (NYSE:JELD), continues to be weak, impacting the company's performance.
Q & A Highlights
Q: Can you unpack the reduction in top line guidance and EBITDA, especially considering the uncertain macro backdrop and the less seasonal uplift in the retail channel? A: (William Christensen - CEO) The weaker R&R ramp-up in Q2 is a significant headwind, primarily focused on our US business. Inventory levels are staying neutral, without big swings, but there's a lower uptake across the market. This is mainly due to our large share in R&R, which is clearly a headwind influenced by guarded consumer sentiment and interest rate uncertainty. Regarding pruning, we are actively assessing our portfolio mix and profit levels, leading to decisions to stop certain lines of business in our Windows segment that aren't meeting profit expectations.
Q: How do you size the pruning dynamic for this year? A: (William Christensen - CEO) The pruning could account for about $50 million to $100 million in top line headwind. From an EBITDA standpoint, while it's marginally dilutive, it's generally positive as long as we can effectively manage and remove fixed costs associated with these pruned lines.
Q: Could you provide more insight into the margin performance expected for this year, especially with the incremental momentum from cost initiatives in the second half? A: (Julie Albrecht - CFO) We expect first half margins to be down slightly by about 100 basis points year-over-year, mainly due to lower volumes and one-time costs related to windows site closures. However, for the second half, we anticipate an improvement of about 100 to 150 basis points in margins, driven by better volume mix comparisons and the ramp-up of productivity and cost savings.
Q: Can you discuss the opportunities to gain more exposure with builders, particularly the big builders? A: (William Christensen - CEO) The market is moving towards lower-end new construction, which has less interest rate sensitivity. We're underrepresented in Windows in this segment and are focusing on solving this by aligning our offerings, like our vinyl windows, to meet the demands of these builders for shorter lead times and higher service levels.
Q: Could you break out the impact from volume versus mix in the 12% core revenue decline? A: (Julie Albrecht - CFO) The 12% volume mix decline was roughly split as 60% volume and 40% mix, with the mix headwind primarily in North America due to average selling price dynamics, particularly as we see strong unit volume growth in interior doors but at lower prices compared to premium windows.
Q: What specific factors led to the decision to shut down the airline composite window business? A: (William Christensen - CEO) The decision was driven by delays in the project, lower than expected market traction, and significant input cost increases. These factors led to a business case that did not meet our expectations, prompting the tough decision to redirect resources to more value-creating projects within our portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
