JELD-WEN Reports Third Quarter 2022 Results
JELD-WEN Holding, Inc. today announced results for the three and nine months ended September 24, 2022. 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.
Third Quarter Highlights
- Net revenue of $1,295.8 million increased 13.0% for the third quarter driven by 18% core revenue growth. Core revenue growth included 15% price realization and 3% positive volume/mix.
- GAAP net loss was $33.2 million or $0.39 per share, compared to net income of $40.5 million or $0.41 per share during the same quarter a year ago. GAAP net loss includes net after-tax charges of $93.9 million or $1.10 per share, due mostly to a $54.9 million or $0.64 per share pre-tax, non-cash goodwill impairment charge in the Europe segment. Additional net charges are included for: impairment and restructuring, legal and professional fees and facility closure, consolidation, and other related costs. This compares to net after-tax charges of $3.5 million or $0.04 per share during the same quarter a year ago. A further reconciliation of these charges can be found in the tables at the end of this release.
- Adjusted EPS was $0.71, compared to adjusted EPS of $0.45 in the same quarter a year ago.
- Adjusted EBITDA increased 17.9% in the third quarter to $116.5 million; adjusted EBITDA margins expanded 40 basis points to 9.0%.
- Net cash flow used in operations was $73.4 million during the first nine months of 2022, compared to net cash flow from operations of $135.3 million in the same period a year ago. Free cash flow used was $130.9 million, compared to free cash flow of $61.6 million in the same period a year ago.
2022 Full-Year Guidance
- Core revenue growth remains at approximately 10%, with net revenues still expected to increase by 4% to 6%.
- Adjusted EBITDA is updated to a range of $400 million to $420 million from the previous outlook of $430 million to $450 million.
- Full year 2022 capital expenditures are expected to be within a range of $85 million to $95 million, compared to the previous outlook of $90 million to $110 million.
“JELD-WEN has tremendous potential and, with increased focus and discipline, we believe that we can meet our financial targets and drive more value for customers, associates and shareholders for the long-term,” said Kevin Lilly, interim chief executive officer. “I’m proud of our associates globally who performed well this quarter despite significant change within the company and in the face of a challenging operating environment.”
“Although we have more work to deliver our full potential, we made meaningful progress this quarter on initiatives to improve execution and performance,” continued Lilly. “We announced a strategic review of our Australasia segment, took additional cost actions and strengthened customers relationships, while laying the groundwork for further strategic action. The board of directors and the company’s leadership are closely aligned on these actions and believe they will improve execution, generate more consistent financial performance and enhance shareholder value.”
Third Quarter 2022 Results
Net revenue for the three months ended September 24, 2022 increased $149.2 million, or 13.0%, to $1,295.8 million, compared to $1,146.6 million for the same period last year. The increase in net revenue was driven by 18% core revenue growth, partially offset by a 5% adverse foreign exchange impact. Core revenue growth was driven by price realization (+15%) and positive volume/mix (+3%).
Net loss was $33.2 million in the third quarter, compared to net income of $40.5 million in the same period last year, a decrease of $73.7 million. The decrease in net income was largely due to a $54.9 million pre-tax, non-cash goodwill impairment charge taken within our Europe segment resulting from deteriorated macroeconomic conditions including significant cost inflation and increased interest rates. In addition, net income was negatively impacted by higher SG&A and income tax expense, partially offset by higher gross profit. Adjusted net income for the third quarter increased $16.7 million, or 38.0%, to $60.7 million, compared to $44.0 million in the same period last year.
Net loss per share for the third quarter was $0.39, compared to EPS of $0.41 for the same quarter last year. Adjusted EPS was $0.71, compared to adjusted EPS of $0.45 in the same quarter a year ago.
Adjusted EBITDA increased $17.7 million, or 17.9%, to $116.5 million, compared to the same quarter last year. Adjusted EBITDA margin increased 40 basis points to 9.0% primarily due to favorable price realization and the positive impact of higher volume/mix, partially offset by higher inflation and SG&A expense.
On a segment basis for the third quarter of 2022, compared to the same period last year:
- North America – Net revenue increased $158.3 million, or 23.4%, to $835.1 million, due to a 23% increase in core revenue. Core revenue increased due to price (+17%) and positive volume/mix (+6%). Adjusted EBITDA increased $28.4 million or 36.9% to $105.3 million, while adjusted EBITDA margin expanded 120 basis points to 12.6%.
- Europe – Net revenue decreased $17.7 million, or 5.5%, to $304.9 million, due to a 15% adverse impact from foreign exchange, partially offset by a 10% increase in core revenue. Core revenue increased due to price (+13%), partially offset by lower volume/mix (3%). Adjusted EBITDA decreased $5.7 million or 23.9% to $18.1 million, while adjusted EBITDA margin contracted 150 basis points to 5.9%.
- Australasia – Net revenue increased $8.5 million, or 5.8%, to $155.8 million, due to a 14% increase in core revenue, partially offset by an 8% adverse impact from foreign exchange. Core revenue increased due to price (+10%) and positive volume/mix (+4%). Adjusted EBITDA increased $2.4 million or 13.5% to $19.9 million, while adjusted EBITDA margin expanded 90 basis points to 12.8%.
Cash Flow and Balance Sheet
Net cash flow used in operations was $73.4 million during the first nine months of 2022, compared to net cash flow from operations of $135.3 million during the same period a year ago. The decrease in net cash flow from operations was due to higher investment in working capital and lower net income. Free cash flow used was $130.9 million in the first nine months of 2022, compared to free cash flow of $61.6 million during the same period a year ago. The decrease in free cash flow was due to higher net cash flow used in operations, partially offset by lower capital expenditures.
Total liquidity, including cash and cash equivalents and undrawn committed credit facilities, was $562.4 million as of September 24, 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 lower net income.
While net revenue guidance is unchanged, the company has updated its outlook for full year 2022 adjusted EBITDA to be between $400 million and $420 million, a reduction from the previous outlook of $430 million to $450 million. The primary drivers to lower earnings compared to the previous outlook include persistent inflation and reduced savings from productivity.
In addition, the company now expects its full-year 2022 capital expenditures to be in a range of $85 million to $95 million.
Although the company believes the assumptions reflected in the range of guidance are reasonable, given the uncertainty regarding the future performance of the global economy, the continuing conflict in Ukraine, ongoing disruptions in global supply chains, and potential changes in raw material prices and other costs as well as other risk and uncertainties, including those described below, actual results could vary substantially.
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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.