JELD-WEN Delivers Third Quarter 2020 Revenue Growth
JELD-WEN Holding, Inc. (“JELD-WEN”) announced results for the three and nine months ended September 26, 2020, including third quarter net revenue of $1,112.9 million, net income of $25.5 million, adjusted EBITDA of $130.7 million, earnings per share (“EPS”) of $0.25, adjusted EPS of $0.52, and year-to-date cash flow from operations of $210.6 million. Comparability is to the same period in the prior year, unless otherwise noted.
Third Quarter 2020 Highlights
– Net revenue increased by 1.9% to $1,112.9 million, driven by favorable pricing and foreign exchange
– Adjusted EBITDA increased by 20.0% to $130.7 million, through pricing and productivity including benefits from JELD-WEN Excellence Model (“JEM”) deployment as well as footprint rationalization and modernization
– Core adjusted EBITDA margins increased 200 basis points, a sequential improvement from the second quarter
– Pricing remained strong, demonstrated by 6% price realization in North America
– Free cash flow of $143.7 million improved $83.4 million during the first nine months of 2020
– Strong balance sheet provides flexibility with record liquidity of $952.8 million
“I am proud of our associates, whose commitment to operational execution, safety, and delivering for our customers produced revenue growth and margin expansion that exceeded expectations,” said Gary S. Michel, president and chief executive officer. “The rigorous deployment of our business operating system, the JELD-WEN Excellence Model, and disciplined adherence to our playbook, produced positive price realization, profitable share gain, and favorable productivity that led to a substantial acceleration in third quarter margin expansion.”
“Consumers’ focus on their homes, coupled with our strategy to deliver profitable market share with key customers, is driving increased demand for products in both residential new construction and repair and remodel channels,” said Mr. Michel. “Globally, JELD-WEN associates are focused on safely meeting this demand with the level of product quality and service that customers know and expect from us. We expect that our productivity initiatives and structural cost reductions through footprint rationalization and modernization will accelerate the bottom-line benefits of this growth.”
Third Quarter 2020 Results
– Core revenue growth in North America and Europe segments, as the demand environment improved
– Favorable price/cost for the eighth consecutive quarter
– North America core margins expanded 380 basis points, a sequential improvement from the second quarter
– Europe core margins expanded 230 basis points, the fifth consecutive quarter of core margin expansion in Europe segment
– Ongoing market demand headwinds in Australasia segment, combined with COVID-19 restrictions, resulted in an 8% decrease in core revenue, a sequential improvement from the second quarter
Net revenue for the three months ended September 26, 2020 increased $20.9 million, or 1.9%, to $1,112.9 million, compared to $1,092.0 million for the same period last year. The increase in net revenue was primarily driven by a 2% positive impact from foreign exchange. Core revenue, which excludes the impact of foreign exchange and acquisitions completed in the last twelve months, was unchanged as a 3% pricing benefit was offset by a 3% headwind from volume/mix.
Net income was $25.5 million during the third quarter, compared to net income of $17.0 million in the same quarter last year, an increase of $8.4 million. The increase in net income was primarily due to higher gross profit from improved price realization and operational improvements and a lower effective book income tax rate, partially offset by higher SG&A primarily due to legal expenses. Adjusted net income for the third quarter increased $26.0 million, or 97.7%, to $52.6 million, compared to $26.6 million in the same quarter last year.
The effective book income tax rate in the quarter was 38.5%. Excluding the impact of the GILTI provision of U.S. tax reform legislation and discrete tax items, the effective book income tax rate adjusted for these items during the third quarter was 30.6%.
EPS for the third quarter was $0.25, compared to $0.17 for the same quarter last year. Adjusted EPS was $0.52, compared to $0.26 a year ago.
Adjusted EBITDA increased $21.8 million, or 20.0%, to $130.7 million, compared to the same quarter last year. Adjusted EBITDA margin of 11.7% increased by 170 basis points compared to the prior year. Third quarter 2020 core adjusted EBITDA margin increased by 200 basis points compared to the prior year due to improved price realization, profitable market share gain in target markets, and favorable productivity.
On a segment basis for the third quarter of 2020, compared to the same period last year:
Net revenue increased $4.3 million, or 0.6%, to $662.7 million, due to a 1% increase in core revenue. Core revenue increased due to a 6% pricing benefit, partially offset by a 5% volume/mix headwind. Adjusted EBITDA margin expanded by 380 basis points to 13.9%.
Net revenue increased $23.3 million, or 8.1%, to $311.0 million, due to a 5% positive impact from foreign exchange and a 3% increase in core revenue. Core revenue increased due to an 2% increase in volume/mix and a 1% pricing benefit. Adjusted EBITDA margin expanded 240 basis points to 12.9%.
Net revenue decreased $6.6 million, or 4.5%, to $139.2 million, due to an 8% decrease in core revenue, partially offset by a 3% favorable impact from foreign exchange. Core revenue declined primarily due to a 7% decrease in volume/mix from continued softness in residential new construction and government mandated restrictions related to the COVID-19 pandemic. Adjusted EBITDA decreased $1.8 million, primarily due to the deleverage impact of volume/mix.
Cash Flow and Balance Sheet
– Cash flow from operations of $210.6 million during the first nine months of 2020, increased by $45.7 million year-over-year
-Free cash flow improved by $83.4 million year-over-year during the first nine months of 2020
Cash flow from operations totaled $210.6 million during the first nine months of 2020, compared to cash flow from operations of $164.9 million during the same period a year ago. The increase in cash flow from operations was primarily due to the impact of changes in accrued expenses and lower cash taxes. Free cash flow generated during the first nine months of 2020 improved $83.4 million year-over-year to $143.7 million, from $60.3 million a year ago, due to an increase in cash flow from operations and a reduction in capital expenditures.
Cash and cash equivalents as of September 26, 2020 were $605.8 million, compared to $226.0 million as of December 31, 2019. Total debt as of September 26, 2020 was $1.767 billion, compared to $1.517 billion as of December 31, 2019.
Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was a record $952.8 million as of September 26, 2020, compared to total liquidity of $554.5 million as of December 31, 2019.
While uncertainty remains elevated around COVID-19 and global macroeconomic conditions, based on continued strong operational performance and improved visibility the Company expects full year 2020 adjusted EBITDA between $435 million and $450 million. This outlook assumes, among other things, no significant changes in COVID-19 related operating restrictions or lockdowns during the fourth quarter.
For the full third quarter results, click here.
JELD-WEN, founded in 1960, is one of the world’s largest door and window manufacturers, operating manufacturing facilities in 20 countries located primarily in North America, Europe and Australia. Headquartered in Charlotte, N.C., JELD-WEN designs, produces and distributes an extensive range of interior and exterior doors, wood, vinyl and aluminum windows and related products for use in the new construction and repair and remodeling of residential homes and non-residential buildings. JELD-WEN is a recognized leader in manufacturing energy-efficient products and has been an ENERGY STAR® Partner since 1998. Our products are marketed globally under the JELD-WEN® brand, along with several market-leading regional brands such as Swedoor® and DANA® in Europe and Corinthian®, Stegbar®, and Trend® in Australia.
Chris Teachout – Investor Relations Manager – firstname.lastname@example.org – (704) 378-7007
Source: JELD-WEN Holding, Inc.