JELD-WEN Reports Second Quarter 2022 Results
JELD-WEN Holding, Inc. (“JELD-WEN” or the “Company”) announced results for the three and six months ended June 25, 2022, including second quarter net revenue of $1,331.0 million, net income of $45.8 million, adjusted EBITDA of $125.8 million, cash flow used in operations of $165.7 million, earnings per share (“EPS”) of $0.52, and adjusted EPS of $0.57.
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 6.8% for the second quarter driven by 11% core revenue growth
- Eighth consecutive quarter of core revenue growth; core revenue grew in each segment, led by North America segment
- Realized 12% pricing to mitigate significant cost inflation
- Adjusted EBITDA decreased 15.1% in the second quarter to $125.8 million
- Repurchased 5.2 million shares in the first six months or approximately 6% of total shares outstanding at year-end 2021
- The board of directors approved new $200 million share repurchase authorization
“Significant cost inflation and softening retail demand in North America and Europe impacted our profitability more than we anticipated in the second quarter,” said Gary S. Michel, chair and chief executive officer. “These results are not indicative of the performance-driven culture and expectations at JELD-WEN. We know we have the right strategy, our long-term macroeconomic fundamentals remain strong, and our productivity initiatives are yielding benefits. But, we must execute better and consistently deliver on our promises to customers and shareholders. We have already taken aggressive actions to reduce costs and are actively working on additional opportunities to accelerate margin expansion.”
“Even with the impact of these aggressive cost savings decisions, we have adjusted our full year expectations for revenue growth and adjusted EBITDA, as market headwinds are likely to persist through year-end,” continued Michel. “We are confident in our strategy to deliver profitable growth and we remain focused on operational excellence, world-class innovation and exceptional customer service that will create long-term value for our shareholders.”
Second Quarter 2022 Results
Net revenue for the three months ended June 25, 2022 increased $85.2 million, or 6.8%, to $1,331.0 million, compared to $1,245.8 million for the same period last year. The increase in net revenue was driven by 11% core revenue growth, partially offset by a 4% adverse foreign exchange impact. Core revenue growth was driven by price realization (+12%), partially offset by lower volume/mix (1%).
Net income was $45.8 million in the second quarter, compared to net income of $60.7 million in the same period last year, a decrease of $14.9 million. The decrease in net income was largely due to lower gross profit from cost inflation, partially offset by higher other income and lower SG&A expense. Adjusted net income for the second quarter decreased $10.1 million, or 16.7%, to $50.2 million, compared to $60.3 million in the same period last year.
EPS for the second quarter was $0.52, compared to EPS of $0.60 for the same quarter last year. Adjusted EPS was $0.57, compared to adjusted EPS of $0.59 in the same quarter a year ago.
Adjusted EBITDA decreased $22.4 million, or 15.1%, to $125.8 million, compared to the same quarter last year. Adjusted EBITDA margin declined 240 basis points to 9.5% primarily due to higher cost inflation, partially offset by price realization and lower SG&A expense.
On a segment basis for the second quarter of 2022, compared to the same period last year:
- North America – Net revenue increased $99.0 million, or 13.4%, to $839.1 million, due to a 14% increase in core revenue. Core revenue increased due to price (+14%). Adjusted EBITDA margin was 11.1%.
- Europe – Net revenue decreased $9.7 million, or 2.8%, to $340.0 million, due to a 12% adverse impact from foreign exchange, partially offset by a 9% increase in core revenue. Core revenue increased due to price (+11%), partially offset by lower volume/mix (2%). Adjusted EBITDA margin was 5.9%.
- Australasia – Net revenue decreased $4.1 million, or 2.6%, to $151.8 million, due to a 7% adverse impact from foreign exchange, partially offset by a 4% increase in core revenue. Core revenue increased due to price (+8%), partially offset by lower volume/mix (4%). Adjusted EBITDA margin was 10.5%.
Cash Flow and Balance Sheet
Net cash flow used in operations was $165.7 million during the first six months of 2022, compared to net cash flow from operations of $40.7 million during the same period a year ago. The increase in net cash flow used in operations was due to higher investment in working capital and lower net income. Free cash flow used was $200.5 million in the first six months of 2022, compared to free cash flow used of $4.0 million during the same period a year ago. The increase in free cash flow used was due to higher net cash flow used in operations, partially offset by lower capital expenditures.
The company repurchased 3,430,006 shares in the second quarter for $64.3 million.
Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was $550.8 million as of June 25, 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 share repurchases, higher working capital investments, and decreased earnings in the current period.
Revised 2022 Outlook
- Core revenue growth remains at approximately 10%, but due to foreign exchange translation headwinds, revenue growth is revised to a range of 4% to 6% from a previous range of 7% to 10%.
- Adjusted EBITDA is lowered to a range of $430 million to $450 million from previous outlook of $520 million to $565 million.
- Full year 2022 capital expenditures are expected to be within a range of $90 million to $110 million, compared to the previous outlook of $130 million to $150 million.
Share Repurchase Authorization
On July 28, 2022, the board of directors approved a new share repurchase authorization to purchase up to $200 million of the company’s common stock. The new share repurchase program, which replaces the company’s existing program, is designed to return value to shareholders by offsetting dilution from stock issuances and reducing share count over time. The company expects to fund repurchases through cash on hand and cash generated from operations. The timing and total amount of stock 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. This program has no termination date, may be suspended or discontinued at any time and does not obligate the company to acquire any amount of common stock.
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.