JELD-WEN Extends Track Record of Revenue and Earnings Growth with Second Quarter 2021 Results
JELD-WEN Holding, Inc. (“JELD-WEN”) announced results for the three and six months ended June 26, 2021, including second quarter net revenue of $1,245.8 million, net income of $60.7 million, adjusted EBITDA of $148.2 million, earnings per share (“EPS”) of $0.60, and adjusted EPS of $0.59. Comparability is to the same period in the prior year, unless otherwise noted. References to “core” financial results exclude the impact of foreign exchange and acquisitions completed in the last twelve months.
– Net revenue increased by 25.5% to $1,245.8 million, including a 19% increase in core revenue
– Core revenue increased in all three reporting segments, driven by an acceleration in volume and price realization
– Gross profit increased 33.5% to $291.9 million and gross profit margin expanded 140 basis points to 23.4%
– Adjusted EBITDA increased by 17.9% to $148.2 million
– Repurchased 1,177,757 shares in the quarter for $33.7 million
– Increased share repurchase authorization to $400 million
– Completed successful debt refinancing, extending maturities at attractive interest rates
– Raised full year outlook for revenue and adjusted EBITDA
– Announced divestiture process for Towanda, PA operations, a leading provider of wood fiber composite building products
“JELD-WEN’s multi-faceted growth platform and rigorous deployment of our business operating system, the JELD-WEN Excellence Model (“JEM”), are driving consistent growth and profitability improvement across the enterprise,” said Gary S. Michel, president and chief executive officer. “Our associates delivered broad based core revenue growth through profitable share gain and disciplined pricing, driving gross margin expansion in a challenging inflationary environment. Supportive residential new construction and repair and remodel activity, and continued execution of our playbook will drive sustained improvements in revenue, earnings and free cash flow.”
Second Quarter 2021 Results
– Accelerated core revenue growth in each segment, including 21% in North America
– Eleventh consecutive quarter of price realization ahead of inflation
– North America core margin expanded for the fifth consecutive quarter, with an increase of 60 basis points
– Europe core margin expanded for the eighth consecutive quarter, with an increase of 130 basis points
Net revenue for the three months ended June 26, 2021 increased $253.5 million, or 25.5%, to $1,245.8 million, compared to $992.3 million for the same period last year. The increase in net revenue was primarily driven by 19% core revenue growth and a 6% positive impact from foreign exchange. Core revenue growth was driven by a 13% positive contribution from volume/mix and a 6% pricing benefit.
Net income for the second quarter increased $37.6 million to $60.7 million, compared to net income of $23.1 million in the same period last year. The increase in net income was primarily due to higher gross profit from increased volume/mix, positive price/cost realization and operational improvements, partially offset by higher SG&A. Higher SG&A expense was driven by the non-recurrence of significant cost reduction actions related to COVID-19 implemented in the second quarter last year, partially offset by lower legal and professional fees. The effective book income tax rate during the quarter was 26.9%. Adjusted net income for the second quarter increased $12.6 million, or 26.4%, to $60.3 million, compared to $47.7 million in the same quarter last year.
EPS for the second quarter was $0.60, compared to $0.23 for the same quarter last year. Adjusted EPS was $0.59, compared to $0.47 a year ago.
Adjusted EBITDA increased $22.5 million, or 17.9%, to $148.2 million, compared to the same quarter last year. Adjusted EBITDA margin of 11.9% decreased by 80 basis points compared to the prior year. Adjusted EBITDA margin declined as gross margin improvement was offset by higher SG&A expense related to the non-recurrence of prior year COVID-19 cost savings actions.
On a segment basis for the second quarter of 2021, compared to the same period last year:
– North America – Net revenue increased $132.0 million, or 21.7%, to $740.1 million, due to a 21% increase in core revenue. Core revenue increased due to a 13% increase in volume/mix and an 8% pricing benefit. Adjusted EBITDA margin expanded by 60 basis points to 15.6%.
– Europe – Net revenue increased $88.2 million, or 33.7%, to $349.7 million, due to a 21% increase in core revenue and a 13% positive impact from foreign exchange. Core revenue increased primarily due to an 18% increase in volume/mix and a 3% pricing benefit. Adjusted EBITDA margin expanded 60 basis points to 11.4%.
– Australasia – Net revenue increased $33.2 million, or 27.1%, to $155.9 million, due to an 18% favorable foreign exchange impact and a 9% increase in core revenue. Core revenue increased primarily due to an 8% increase in volume/mix and a 1% pricing benefit. Adjusted EBITDA increased $2.8 million, while adjusted EBITDA margin decreased 90 basis points to 11.5%.
Cash Flow and Balance Sheet
– Cash flow from operations of $40.7 million during the first six months of 2021, increased by $2.4 million
– Free cash flow use of $4.0 million in the first six months of 2021, improved by $4.2 million
Cash flow from operations totaled $40.7 million in the first six months of 2021, compared to cash flow from operations of $38.3 million during the same period a year ago. The increase in cash flow from operations was primarily due to higher earnings, partially offset by higher cash interest, cash taxes, and legal settlement payments. Free cash flow use improved $4.2 million to $4.0 million in the first six months of 2021, from $8.2 million a year ago, due to higher earnings and a reduction in capital expenditures.
Cash and cash equivalents as of June 26, 2021 were $618.3 million, compared to $735.8 million as of December 31, 2020. Total debt as of June 26, 2021 was $1.720 billion, compared to $1.768 billion as of December 31, 2020. The company repurchased 1,177,757 shares in the quarter for $33.7 million.
Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was $1,022.0 million as of June 26, 2021, compared to total liquidity of $1,121.5 million as of December 31, 2020.
On July 28, 2021, JELD-WEN completed a successful debt refinancing, locking in attractive interest rates, bolstering liquidity, and optimizing future debt maturity schedules. The company upsized its existing $400 million Asset Based Revolving Credit Facility to $500 million and extended the maturity date from 2022 to 2026. Additionally, the company issued a $550 million Term B Loan, to refinance its existing Term B Loan of the same amount, and extended the maturity date from 2024 to 2028.
Share Repurchase Authorization
On July 27, 2021, the board of directors authorized an increase to the company’s existing share repurchase program to purchase up to a total of $400 million of the company’s common stock. This authorization does not have an expiration date and does not commit the company to repurchase shares of its common stock. The company intends to fund the program with a combination of cash on hand and cash generated from operations. The amount and timing of future repurchases will be determined by management at its discretion and will vary depending on certain factors, including but not limited to market conditions, available funds and alternative uses of capital.
“The upsize of our share repurchase program demonstrates confidence by the board and management in JELD-WEN’s multi-faceted growth strategy,” said Mr. Michel. “We believe our shares are undervalued and represent an attractive investment opportunity for us. This program provides us with another lever in our disciplined, returns-focused approach to capital deployment.”
Divestiture of Towanda, PA Operations
The company also today announced that it will commence a process for the divestiture of its Towanda, PA operations, a leading provider of wood fiber composite building products that includes the MiraTEC exterior trim and Extira product lines. The company will work with the court-appointed special master to complete a sale and intends to maximize the value of the divestiture assets. JELD-WEN has decided not to appeal the decision by the U.S. Court of Appeals for the Fourth Circuit (the “Fourth Circuit”), which upheld the district court’s divestiture ruling in the litigation between the company and Steves and Sons, Inc.
JELD-WEN continues to believe that the litigation lacks merit and denies that the company engaged in any wrongdoing. However, following a thorough review, JELD-WEN has concluded at this time that it is in the best interest of the company and its stakeholders to commence a process for the divestiture of its Towanda, PA operations and certain related assets. The special master has retained an investment bank to evaluate divestiture options for the Towanda facility and oversee an orderly sale process. Although the company will not be seeking Supreme Court review of the Fourth Circuit’s decision, the company retains the legal right to challenge the divestiture process and the final divestiture order.
Mr. Michel said, “The Towanda facility is a leader in wood fiber composite technology with talented associates, a high-performance product portfolio and attractive financial characteristics. It has a long track record of revenue growth, industry leading profit margins, and high cash flow conversion. In addition to these factors, we believe that the business will attract significant interest from buyers, due to the housing and renovation boom and current strong M&A market conditions. JELD-WEN is well-prepared to support the continued growth of our customers post-divestiture. We are excited to continue to provide industry-leading products and services to our customers, and to drive value for shareholders.”
For the year ended December 31, 2020, the Towanda operations generated approximately $205 million of total gross sales, of which approximately $150 million was generated from third party customers.
Updated 2021 Outlook
– Net revenue growth expected to be within a range of 12% to 14%, compared to 8.0% to 11.0% previously
– Adjusted EBITDA anticipated to be within a range of $510 million to $535 million, compared to the previous range of $505 million to $535 million
– Projected capital expenditures are expected to be within a range of $130 million to $140 million, unchanged from the previous outlook
For the full second quarter results, click here.
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.