JELD-WEN Q4 2024 Earnings Results & Report

JELD-WEN EPS Results

• Actual EPS: -$0.13
• Consensus EPS: $0.07
• Beat/Miss: Missed by -$0.20
• One Year Ago EPS: N/A
• EPS Beat Rate: 3 of last 8 quarters

JELD-WEN Revenue Results

• Actual Revenue: $895.70 million
• Expected Revenue: $860.82 million
• Beat/Miss: Beat by +$34.88 million
• YoY Revenue Growth: N/A

JELD-WEN, Inc. is a manufacturer of windows and doors for residential and nonresidential buildings. Its product portfolio includes vinyl, wood, and aluminum windows; patio and entry doors; interior doors; and related building products. The company serves new construction, remodeling, and replacement markets through distribution channels, retail outlets, and building professionals.

Headquartered in Charlotte, North Carolina, JELD-WEN serves customers in North America, Europe, and Australia. Its products are marketed under the JELD-WEN brand and other regional and specialty brands, with offerings tailored to local construction standards, climate conditions, and design preferences.

The company traces its origins to a wood-products business established in Oregon in 1960 and has expanded through organic growth and acquisitions into an international building-products manufacturer. JELD-WEN (NYSE:JELD) is publicly traded on the New York Stock Exchange under the symbol JELD.

JELD-WEN Q4 2024 Earnings Call Transcript

Key Takeaways

• Fourth quarter revenue fell 12% year-over-year to $896 million, and adjusted EBITDA declined $47 million to $40 million (4.5% margin) as lower volume and mix pressured performance.
• Transformation initiatives delivered approximately $115 million in benefits in 2024, and the company expects to achieve an additional $100 million in annualized EBITDA improvements plus $50 million in near-term cost savings in 2025.
• 2025 guidance assumes net revenues of $3.2–3.4 billion (a 4–9% core decline), adjusted EBITDA of $215–265 million, free cash flow use of ~$135 million, and year-end leverage above 4×.
• Management is executing a North America network optimization program—rightsizing factories (including idling the Grinnell, Iowa plant), accelerating automation and consolidating facilities—to improve efficiency and service levels.

Presentation

[Operator]

Hello, and welcome to the JELD-WEN Holding, Inc. fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session, and if you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to James Armstrong, Vice President, Investor Relations. You may begin.

[James Armstrong, VP of Investor Relations at JELD-WEN Holding Inc.]

Thank you, and good morning. We issued our fourth quarter and full year 2024 earnings release last night and posted a slide presentation to the Investor Relations portion of our website, which can be found at investors.jeldwen.com. We will be referencing this presentation during our call. Today, I'm joined by Bill Christensen, Chief Executive Officer, and Samantha Stoddard, Chief Financial Officer. Before I turn it over to Bill, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our Forms 10-K and 10-Q filed with the SEC.

[James Armstrong, VP of Investor Relations at JELD-WEN Holding Inc.]

JELD-WEN does not undertake any duty to update forward-looking statements, including the guidance we are providing with respect to certain expectations for future results. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP can be found in our earnings release and in the appendix of our earnings presentation. With that, I would like to now turn the call over to Bill.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Thank you, James, and good morning, everyone. I'd like to start by recognizing the hard work and commitment of our team throughout what was a very challenging year. We have continued making meaningful progress in our transformation, strengthening our ability to navigate current conditions while positioning ourselves for long-term success. I also want to extend my appreciation to our customers listening today. We value your partnership and remain committed to being a stronger, more reliable partner in the years ahead. Today, I'll begin by providing an overview of the quarter, after which Samantha will walk through our quarterly and full year financial performance. I'll then return to discuss our outlook for both the market and our business. Looking at our fourth quarter highlights on slide four, the softer demand environment we anticipated last quarter materialized largely as expected, and our Adjusted EBITDA results came in within our guidance range.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

As promised, we delivered approximately $115 million of transformation benefits in 2024, and we continue to take the necessary actions to align our costs with current market conditions while ensuring we are all well-positioned for future growth. In the fourth quarter, we faced continued pressure from weaker volume and mix across both North America and Europe. While our transformation initiatives provided some offset, they were not enough to fully counteract these headwinds. That said, we remain encouraged by the progress of our various initiatives, which are in our control. These initiatives are helping us navigate the environment while strengthening our company for future performance. Although we're pleased with the progress of our transformation, market conditions remain challenging. We continue to see consumers trading down and delaying larger-scale remodeling projects, which has impacted both our volume and mix.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Additionally, while housing starts have remained stable, the sharp decline in multifamily and higher-end home construction has significantly affected our VPI and LaCantina businesses. On a positive note, while the overall market is soft, our interior door business has remained relatively stable as we picked up share. In response to the continued soft market conditions, we are implementing cost reduction initiatives to further improve efficiency and adapt to our ongoing market dynamics. For example, in January, we announced the idling of our windows plant in Grinnell, Iowa, following the loss of a major Midwest customer stocking business. With that, I'll turn it over to Samantha to walk through our financial results in more detail.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Thanks, Bill. Turning to slide six, fourth quarter revenue was $896 million, down 12% year-over-year. This decline was driven by lower core revenues reflecting the expected market-driven volume declines across North America and Europe, as well as a continued mix shift in North America from higher price to more affordable options as customers prioritize cost savings. Adjusted EBITDA for the quarter was $40 million, a $47 million decline from the prior year driven primarily by lower volume mix, resulting in an Adjusted EBITDA margin of 4.5%. Free cash flow in the fourth quarter was a use of $28 million, including $56 million in capital investments. Given the impact of lower EBITDA and our continued investment in transformation initiatives, our net debt leverage ratio increased to 3.8x, above our target range of 2x-2.5x.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

As we look ahead to 2025 and beyond, one of my top priorities will be to return to our targeted leverage range through EBITDA improvements and appropriate capital allocation. As shown on slide seven, our fourth quarter revenue decline was primarily driven by a 12% decrease in volume and mix, with approximately half of the decline attributed to a shift from higher average selling price products to more affordable options. I'll provide additional insights into North America and Europe market trends shortly. As shown on slide eight, Adjusted EBITDA declined by $47 million year-over-year, largely due to the sharp drop in volume and mix. As expected, cost pressures remained a headwind in the quarter, driven primarily by labor and material inflation in glass and other commodities, key factors contributing to negative price-cost dynamics.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Additionally, lower volumes led to operational inefficiencies, limiting our ability to generate meaningful productivity gains. Moving to our segment results on slide nine, our North America segment generated $640 million in revenue for the fourth quarter, a 14% decline year-over-year. This was driven by a 14% reduction in core revenues, primarily due to lower volume and mix. The decline was more heavily weighted towards mix as consumers continued to shift toward more affordable products. Additionally, earlier in the year, we exited certain higher price products with dilutive margins. North America's Adjusted EBITDA declined to $42 million from $94 million in the prior year, reflecting the impact of lower volume and mix, as well as negative price-cost dynamics and productivity headwinds stemming from significantly lower volumes. In Europe, revenue for the fourth quarter was $256 million, with Adjusted EBITDA of $17 million.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Core revenues declined 6% year-over-year, driven by a 7% decrease in volume and mix, almost entirely attributable to volume. However, Adjusted EBITDA improved by $1 million, resulting in a margin of 6.5%. The impact of lower volumes and slightly negative price-cost was more than offset by strong productivity improvements. Turning to slide 10, full-year revenue declined 12% year-over-year, reflecting the ongoing impact of lower volumes and mix throughout the year. In addition, late in the year, our sales were affected by the loss of a major Midwest retail customer's window stocking business, as well as the strategic pruning of unprofitable business. Adjusted EBITDA and margins were pressured by lower sales, with these impacts only partially offset by productivity gains from our transformation initiatives.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

For the year, we faced approximately $160 million in headwinds from lower volume and mix, along with an additional $40 million decline from negative price-cost and productivity challenges stemming from sharp volume declines. However, our transformation efforts delivered meaningful results, allowing us to offset nearly half of these pressures in 2024. As a result, Adjusted EBITDA declined 28% year-over-year, with margins contracting by 150 basis points. I'll now hand it over to Bill to talk about the outlook into 2025.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Thanks. With the financial results covered, I would now like to shift focus to the broad market environment and our expectations for 2025. Turning to slide 12, when we provided our initial market outlook last year, we were outside the consensus in anticipating a market decline. While we were directionally correct, the downturn was steeper than we had expected. This year, we see the potential for continued volatility in North America, with significant uncertainty around how conditions will unfold. Potential tariffs, persistently high interest rates, and the possibility of renewed inflation all contribute to this uncertainty. Additionally, affordability remains an issue as both unit costs and interest rates remain elevated. Finally, reports indicate that new home inventory is at a decade-high level, and discretionary spending on home improvements remains subdued, especially on big-ticket discretionary items. Therefore, we believe there is a meaningful risk of further market declines in North America.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Specifically, we expect both new construction and repair and remodel demand for windows and doors to decline by low to mid-single digits. We also anticipate continued double-digit declines in both multifamily and Canadian markets, consistent with last year's trends. In Europe, we believe the market will continue to decline this year, albeit at a lower rate than North America. Given this backdrop, we expect European residential construction activity to decline moderately, while commercial projects are likely to be slightly down. Given the challenging market outlook and as part of our ongoing transformation, we are taking further actions to strengthen our network. As shown on slide 13, we are launching a comprehensive program to optimize our North America network, ensuring it is aligned to both support and deliver on our long-term commercial strategy.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Specifically, we will be realigning our footprint to support future growth at both the regional and product levels, ensuring we have the capability to manufacture the right product with the right capacity in the right locations. At the same time, we are accelerating automation investments to drive further efficiency and enable additional facility consolidation. Finally, to improve customer service levels, we are enhancing the planning and execution of all projects in this area to minimize service disruptions and maintain strong customer support levels. While much of this optimization work is already underway, we do not expect a significant financial impact from the program in 2025. However, as the consolidation progresses, we anticipate it could generate an additional $60 million or more in benefits on top of our ongoing transformation efforts once fully implemented.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

In addition to the midterm optimization of our network, we are also implementing shorter-term actions to reduce costs and align with current market conditions. As shown on slide fourteen, we have identified several near-term initiatives. First, we are right-sizing our factories. That includes adjusting our salaried workforce. In several regions, demand has further declined while we continue to run multiple shifts. As we progress with our long-term network optimization, we are making near-term adjustments by reducing shifts and scaling back support staff to better align short-term costs with current and expected market realities. Additionally, with the evolving tariff landscape, we are proactively preparing for a higher tariff environment, particularly in North America. We are modeling options to optimize our supply chain to reduce costs, prioritize regional sourcing, and in-market production wherever possible. These short-term initiatives are expected to have a meaningful impact on 2025 earnings.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

When combined with our broader productivity efforts, they are projected to generate approximately $50 million in annual savings. These near-term adjustments will help stabilize our cost structure as we recognize that 2025 will likely bring additional volume challenges. Let's now turn to our guidance for the year. Turning to our guidance on slide 16, we anticipate continued softness in North America, compounded by the impact of share loss and the strategic business pruning last year. As a result, we expect net revenues to range between $3.2 billion-$3.4 billion, reflecting a projected 4%-9% decline in core revenues.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Up to 4%-9% reduction in core revenues, which excludes the impact of Towanda, about half is a result of the roll forward of changes that happened last year, including the loss of the large Midwest retail business, while the other half is related to the anticipated additional market weakness. Lower volumes are expected to flow through to EBITDA at an approximate 30% decremental rate, partially offset by ongoing transformation initiatives. Based on these factors, we now forecast an Adjusted EBITDA range of $215 million-$265 million. Given our EBITDA expectations, we anticipate operating cash flow of approximately $15 million in 2025. In response to the low levels of operating cash flow, we are adjusting our capital expenditures to approximately $150 million, considering our expected elevated leverage levels by year-end. This results in a projected use of free cash flow of approximately $135 million.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

While this CapEx guidance is lower than previously outlined, it remains well above historical levels, representing approximately 4.5% of sales. We remain committed to funding our transformation to position the business for long-term success. The cash impact will not be as severe as our free cash flow guidance might suggest. This year, we received approximately $110 million in cash from the required divestiture of Towanda, which we will use to support our transformation efforts. However, with lower EBITDA, we still expect to end the year with leverage above 4x, exceeding our target range, and we will be taking steps to address this. As you know, we typically do not provide quarterly guidance and do not expect to do so moving forward.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

However, the first quarter of this year is shaping up to be particularly challenging as the market remains weak and we begin to experience the full impact of last year's share loss and required divestiture. To maintain transparency and support your modeling, we currently expect a Q1 sales range between $750 million and $775 million, with Adjusted EBITDA of approximately $20 million. That said, we anticipate an improvement in Q2 and throughout the remainder of the year, driven by normal seasonality and the ongoing benefits of our transformation and cost management efforts. As a result, we do not expect these exceptionally low levels to persist. On slide seventeen, we provide a detailed breakdown of the key factors driving our EBITDA guidance midpoint to support your modeling.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

As shown, the impact of the Towanda divestiture, combined with volume declines and the reversal of one-time benefits, is only partially offset by the significant improvements we are achieving through targeted near-term actions and our broader transformation initiatives. As we enter the third year of our transformation, we remain focused on driving meaningful progress based on the things we can control. As shown on slide 18, we expect to deliver another $100 million in annualized Adjusted EBITDA improvements this year. While there is still significant work and opportunity ahead to strengthen the foundation of our business, the results so far demonstrate that our efforts are making a tangible impact in a challenging market environment. Turning to slide 19, we expect the majority of the year-over-year variance to come from our North American segment, while we anticipate some early signs of stabilization in Europe.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

In North America, lower volumes are expected to have the greatest impact, driven by a weaker market, the required Towanda divestiture, strategic business pruning, and share losses from 2024. While we anticipate strong productivity gains in the region, they are unlikely to fully offset the impact of declining volumes. Price-cost is expected to be flat in the year. Conversely, while European sales volumes may present a headwind, we expect these pressures to be more than offset by the productivity improvements generated through our transformation initiatives. Although we do not anticipate a significant year-over-year increase in EBITDA, we do expect both absolute EBITDA levels and margins to improve modestly in 2025 compared to 2024. As in North America, we anticipate price-cost will be roughly neutral in 2025.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Finally, corporate expenses are expected to be higher this year as certain one-time benefits do not repeat, and we reinstate variable incentives across the company. While the exact impact remains difficult to predict, we currently expect corporate expenses to land between 2023 and 2024 levels. As we look to the next phase of our strategy, one that positions JELD-WEN for long-term success despite continued near-term headwinds. 2025 will be a pivotal year for JELD-WEN. Over the past two years, we have successfully reduced annual run rate costs by more than $200 million, yet persistent market weakness has offset these improvements. As a result, we are now shifting to the next phase of our transformation. Turning to slide 20, our focus in 2025 centers on three key priorities. First, reestablishing strong partnerships with our customers.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Our service levels have not consistently met our customers' expectations, and we are taking steps to improve both service and quality across the company. By focusing our organization on safety, quality, and delivery metrics, and linking variable compensation to these metrics, we aim to deliver what customers expect: the right product at the right quality, on time and in full. As we continue to execute on these improvements, we fully expect to regain market share that has been lost in recent years. Second, optimizing our network. As we discussed earlier, we still have too many facilities operating below optimal levels. We are taking a disciplined approach to realign our long-term footprint, ensuring we maintain the right capacity while minimizing customer disruptions and enhancing service levels. Finally, continuing to invest in cost and efficiency gains. Underinvestment over the past decade has left us with a fragmented network and many manual processes.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

We will accelerate automation in select manufacturing operations as we still have significant opportunities to improve efficiency and reduce costs across our network. We expect 2025 to remain challenging, with continued market-related headwinds. However, we are taking the necessary actions on items that we control to navigate near-term pressures while positioning JELD-WEN for long-term success. I am incredibly proud of our team's hard work to deliver long-term value. We continue to invest in the right systems, processes, and people to deliver the long-term value. Thank you for your continued interest, and with that, I'll now turn it over to James for the Q&A.

[James Armstrong, VP of Investor Relations at JELD-WEN Holding Inc.]

Thanks, Bill. Operator, we're now ready to begin the Q&A.

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We ask that you please limit yourself to one question and one follow-up. Please ensure you are not on speakerphone and that your phone is not on mute when called upon. Thank you. Your first question comes from Philip Ng of Jefferies. Your line is open.

[Philip Ng, Managing Director at Jefferies]

Hey, guys. Appreciate all the great color in terms of how you're tackling some of these dynamics. But I guess my first question was really around the step-up in your earnings progression, even from 1Q to 2Q, implicitly goes from $20 million-$64 million. And certainly, first half versus back half, pretty noticeable pickup there. So I think, number one, it'd be helpful to kind of give us a little more color on how that progresses, whether it's the $100 million transformation or the $50 million headwind mitigation. How does that get layered in?

[Philip Ng, Managing Director at Jefferies]

And I guess in a more normal demand environment, do some of these savings in the short term kind of reverse as well? Help us think through progression would be really helpful.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Thanks, Bill. This is Samantha. So to think about the progression, as we talked about, we're going to be taking both some near-term actions, about $50 million this year, as well as the transformation. Many of those actions will begin to take effect in Q2. So we have to adapt to the ongoing market dynamics by optimizing our factories, our support staff, and our SG&A. And most of that takes effect in the beginning of Q2. Are you assuming any ramp-up in demand in terms of first half versus back half? We're pretty steady-state throughout the year. So there's going to be the normal seasonality that we expect beginning in Q2.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

So combined with the actions we're taking, that's kind of the lift-up that you see. So we do expect more of a normal seasonality beginning in Q2 and Q3.

[Philip Ng, Managing Director at Jefferies]

Okay. And then from a price-cost standpoint, you're calling for a pretty neutral price-cost this year. So I guess first, on the price part, have you taken any pricing actions and how your competitors are reacting? And then certainly, the unknown out there is around tariffs. The China tariffs feel pretty firm. There's metal and aluminum tariffs. And then there's talks of potentially China and Canada. I'm particularly interested on the Canadian front, just given the amount of lumber this country imports. How are you thinking about all those things and what's baked into your full-year guide as well?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Hey, it's Bill. Morning, Phil. So yes, it is a complicated picture currently if you're trying to run a global supply chain. Let me try and work through these one at a time based on the questions you asked. So yes, we are taking price. We expect currently, given our visibility to the supply chain, around $50 million in headwind on the cost side. Secondly, if we look at metals coming in from China, very little exposure. Yes, there is some lumber. I would say global exposure to lumber. And right now, we're running through different scenarios and modeling implications. We feel fairly well set up given our current production network, which is fully domestic, both Canada and U.S. But we're waiting to see if there's some cross-border tariffs, and it would be Canada-U.S. that could potentially have an impact.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

But we are running scenarios, haven't baked anything in addition into the guidance that you currently have in front of you.

[Philip Ng, Managing Director at Jefferies]

Okay. So the $50 million does not account for the $50 million cost headwind you called out, Bill, does not account for any tariffs, whether it's China or Canada at this point, correct?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

No. No. That would be over and above. But there are obviously factor cost headwinds, and that's why we have selectively taken price in the market.

[Philip Ng, Managing Director at Jefferies]

Okay. Thank you. Appreciate the call.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah, you're welcome.

[Operator]

The next question comes from John Lovallo of UBS. Your line is open.

[Spencer Kaufman, Director and Equity Research Analyst at UBS]

Hey, good morning, guys. This is actually Spencer Kaufman on for John for the question.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Hey, Spencer.

[Spencer Kaufman, Director and Equity Research Analyst at UBS]

Hey, good morning. Maybe just the first one. Can you just talk a little bit about your line of sight into really just how confident you are in achieving the $50 million of the mitigation savings and the $100 million transformation savings in this year, just given your market view here? And I guess on top of that, is the right way to think about it that the transformation you'll be doing anyways and the $50 million is just how you would approach a more challenging market environment?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah. So I think your last statement is fairly clear and spot on. On our transformation, this is our ongoing business to really improve the foundation and strengthen the future for JELD-WEN. So I'd say we have active projects that are already in flight. 80%-85% of the $100 million, they're already running. So we have pretty good conviction on being able to deliver that.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

I think our historical track record would suggest we're able to do what we say in this regard. The additional $50, that is reacting to what we think will be another demand-challenged environment. So we have to adapt our cost structure accordingly and make sure we're ready. Yes, we'd love the market to be turning up, but right now, we don't see any signals from any of our competitors, customers, or market research that would suggest a turn. So we're getting ready for a challenging year and making sure we're doing what we can control and doing that effectively.

[Spencer Kaufman, Director and Equity Research Analyst at UBS]

Okay. Yep, that makes sense. In your slides, you mentioned that mix is expected to remain at the entry-level price point. How should we think about that in the context of your 2025 revenue build?

[Spencer Kaufman, Director and Equity Research Analyst at UBS]

Is mix expected to continue to be a year-over-year headwind, or are we sort of lapping all that now and should be somewhat neutralized?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah, I think it's probably baked in, and it's kind of a run rate that's rolling forward. If you just think about that dynamic of the market, we still expect a soft market, as we've said, down low- to mid-single digits, both on new and retail R&R. With that situation, the large builders obviously are going to continue to sell out. Inventories are building there, but it's lower-end volume and product, which has a detrimental mix to our business, but we feel that's fairly baked in now and probably continue for the near term.

[Spencer Kaufman, Director and Equity Research Analyst at UBS]

Okay. Thanks, guys.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah. Thanks, Spencer.

[Operator]

The next question comes from Susan Maklari with Goldman Sachs. Your line is open.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Thank you. Good morning, everyone.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Hey, Susan.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Morning, Susan.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Good morning. My first question is, can you talk a bit about organic efforts to regain share, especially given the environment that we're in? Any progress that you're seeing there or projects that we should be looking for as we move through this year?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah. So there's a couple of things that we're doing on the growth side, Susan. Clearly, this is a challenging demand environment, but there are always growth opportunities for us, both on doors and in windows. So there's two buckets that we're focused on. Number one is being more effective on the sales side. So we've set up pretty strenuous pipeline review processes in both our doors and windows organizations, have weekly stand-ups. We're building project pipeline, and we're creating conversion models that will allow us to better predict where we think we're going to end the year.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

We're not ready to disclose detail around that, but I'm very pleased with the pipeline progression. So that would be the organic piece. Second would be really driving service improvements. Clearly, there are certain areas where we have to improve from a service level. I'm talking about quality and delivery because there are some pockets in this market that are still going and demand is strong, such as interior doors in the Southeast market. Unfortunately, there were many hurricanes last year, and that's really pushed demand from some of our key partners in the region. So we need to make sure we can fulfill that effectively.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

So quality, delivery, and organic pipeline growth in the sales organization are the three levers that we're working on and feel pretty confident that we're going to be able to gain back some of the share that we elected to step away from last year just based on profit pool weakness or the Midwest retailer that elected to go offshore.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Okay. That's helpful color. And then maybe just turning back to the full-year guide and thinking about the first half versus the second half. Any thoughts, Bill or Samantha, how we should be thinking about the exit rate on that EBITDA margin for this year as some of these initiatives do start to come through and gain momentum?

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Yeah. Towards the end of the year, as they're gaining momentum, you are going to have kind of the tail end in Q4 when you think about the drop-off from a seasonality impact. But I would say it's a good practice to think about our margin rate exit around 9%, 8%-9% at the end of the year.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Okay. All right. That's very helpful color. Thank you both. Good luck with everything.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

You're welcome.

[Operator]

Your next question comes from the line of Matthew Boulay with Barclays. Your line is open.

[Anika Dholakia, Assistant VP of Equity Research at Barclays]

Good morning. You have Anika Dholakia. I'm from Matt today. Thanks for taking my questions. First off, hi, good morning. Within your $150 million CapEx guide for the full year, I'm wondering if you can give more detail on what this is being allocated to. Is it more on the productivity side, or is it growth, or is it maintenance? Any details on that would be helpful. Thanks.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Sure. So I would say it's balanced right now between network optimization and improving automation in our facilities, with some portion also being towards our growth. So you think about our special order project that we announced on a previous earnings call. There's a lot of work going into that around the updating of displays, making sure that we have the right systems in place to facilitate better special order process in our retail partners' stores. When you think about the overall $150, you got to think a little less than $100 is tied to maintaining the asset base for our overall network. So the $50 million of, let's call it incremental to that, is really the transformational CapEx around network optimization, automation, and then some growth initiatives.

[Anika Dholakia, Assistant VP of Equity Research at Barclays]

Awesome. That's super helpful. Then I guess secondly, on Europe, the volume and mix remains under pressure. Have you guys seen any pockets of strength in this region, specifically in commercial? I know it's guided down slightly. And then can we assume any recovery as we move through 2025, or how do you expect the volume cadence to trend there? Thanks.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah, you're welcome. So Europe is definitely looking better, but still challenged. So there's definitely pockets in different countries of recovery. Again, just to remind you, the build cycle for a European unit is probably nine to 12 months before our product goes in versus six to nine in the U.S. So as the starts pick up, we won't expect a major take until nine to 12 months later. So our expectation now, and we've communicated this before, is we expect recovery in 2026, not before.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Interest rates are coming down, which will definitely help. And we're also seeing some competitors in specific markets that are in financial distress, so we're able to pick up some additional volumes. And this has been a story that's been going on probably for a couple of years now. And then on the commercial side, to answer your question on projects, we do see project pipeline starting to pick back up, but obviously, that also has a pretty long gestation period based on the size and the scope of the project. So that's like 12 months out. So it's a 2026 story, and we are controlling what we can control in 2025.

[Anika Dholakia, Assistant VP of Equity Research at Barclays]

Awesome. Thank you. And good luck.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Thank you very much.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Thank you.

[Operator]

Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. Your next question comes from Mike Dahl of RBC Capital Markets. Your line is open.

[Mike Dahl, Managing Director and Equity Research Analyst of Homebuilders and Building Products at RBC Capital Markets]

Hey, thanks for taking my questions. First one, just to go back to Phil's questions on tariffs. If $50 million is not an insignificant amount, if that's not inclusive of Canada, so can you just help us understand if that's the incremental cost, what specifically is it related to in terms of the spend that you're bringing in?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah. So the $50 million, hey, Mike, good morning. So the $50 million, that's not tariff-related. That's just inflation costs on our sourcing stack. So I mean, there's freight, there's labor inflation, there's material inflation. Those are the big buckets that fill the $50 million. So it's separate and distinct to potential tariff headwinds, which are currently not baked into that number. And our expectation is that we're going to be price-cost neutral on that in the market for 2025.

[Mike Dahl, Managing Director and Equity Research Analyst of Homebuilders and Building Products at RBC Capital Markets]

Okay. That's a very helpful clarification. Thanks for that. My second question is kind of related. I mean, if we look at kind of the bridges, and it's always helpful how you draw the waterfalls. In 2024, you had, call it, $200 million of EBITDA headwinds. You offset $95 million of that, give or take $90 million-$95 million. In this bridge, you kind of inclusive of Towanda, you have another $200 million, I guess, exclusive of Towanda, like $150 million exclusive of Towanda. And you're effectively assuming all of that is offset, and then you still have kind of these price-cost issues, which I appreciate you're assuming neutral, but that's still stuff that you need to do to get it there. So just I guess the question is going back to level of conviction. It seems like a lot to offset to get to kind of a flattish EBITDA number.

[Mike Dahl, Managing Director and Equity Research Analyst of Homebuilders and Building Products at RBC Capital Markets]

So, help us with that walk a little. And maybe as part of that, also the corporate side, that's a very wide range on corporate costs. So maybe a little more detail on what's happening there.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Okay. Let me try and hit it at a high level, and then maybe Samantha can give some additional color if some buckets are unclear. So I think you've kind of framed it correctly. The Towanda divestment, again, just so it's clear, that was court-ordered, and we did divest based on an order from the court, and that has cost us expected $175 million of revenue and $35 million in EBITDA. So that is one bucket clearly of headwind. The second bucket of headwind, as we've shown on the waterfall, is market, and the market is bucketed into a couple of areas.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Number one, volume mix headwind, and number two, pruning and share loss, things that are kind of rolling forward, the Midwest retail loss, some of the pruning that we've done in our portfolio, what we didn't like from a profit pool standpoint last year, and that's a pretty big number, so based on our expectation on where we see the headwinds this year, we feel that the $100 million in transformation that we're driving to and we've committed to is not going to be enough to counteract this, so we need to do more, so we're going to take some tough actions on the structural cost to make sure we're ready for the rebound, and we still feel that this is a great story when the volume comes back, and we've cleaned up our cost structure and our manufacturing footprint, so that's still what we're working on this year.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Maybe there's some additional details that Samantha can give to help you maybe better understand the buckets and how we're looking at balancing this.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

So from a corporate cost to market conditions, that'll continue into 2025. There is going to be about $15 million-$20 million of headwind simply because of a variable comp issue year-over-year that will be reinstated in 2025. So when you factor it all in, think about modeling this year being $15 million-$20 million higher than 2024 net of all the puts and takes.

[Mike Dahl, Managing Director and Equity Research Analyst of Homebuilders and Building Products at RBC Capital Markets]

Got it. Okay. Thank you.

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

You're welcome.

[Operator]

The next question comes from Keith Hughes of Truist. Your line is open.

[Keith Hughes, Managing Director and Sell Side Equity Research Analyst at Truist]

Thank you. You're talking about price-cost flat with $50 million of traditional inflation headwind. There's so much mixed pressure in your industry. What areas do you think you can get price? It just seems like this would just get mixed down, whatever you raise prices on. Where are you going to get that?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah. Well, good morning, Keith. I do believe that, as we said before, the mix down that was occurring last year, we feel we're kind of at a run rate that's predictable on the mix. So we don't think there's going to be a significant amount of changes on the mix when we look at kind of our stack for expectations on volume around the builder side, on the new construction, and then on the retail and R&R side. So this is just us working extremely hard with our partners to make sure that we're doing what we can to control our costs. But if there is inflation, and there still is inflation in the system, then we need to pass it through.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

Keith, the other thing to think about is some of this has already the price has already been in the market. This is in there from last year. Some of this is carryover impact that you're feeling in 2025, but this is already in the market.

[Keith Hughes, Managing Director and Sell Side Equity Research Analyst at Truist]

Okay. The big customer loss in the Midwest, when will you anniversary that? Can you give us an idea of what kind of revenue loss over 12 months that is?

[Bill Christensen, CEO at JELD-WEN Holding Inc.]

Yeah. It's going to be kind of Q3-ish, around September, end of Q3.

[Keith Hughes, Managing Director and Sell Side Equity Research Analyst at Truist]

One final question. The previous comment on the corporate cost of $15 million-$20 million headwind, is this just normal compensation expense coming back, or is there something unusual about it?

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

That's exactly it. Yeah. It's essentially normal, essentially variable compensation coming back in 2025. It's nothing out of the ordinary other than that.

[Keith Hughes, Managing Director and Sell Side Equity Research Analyst at Truist]

Okay. Thank you.

[Samantha Stoddard, CFO at JELD-WEN Holding Inc.]

You're welcome.

[Operator]

This concludes the question and answer session. I'll turn the call to James Armstrong for closing remarks.

[James Armstrong, VP of Investor Relations at JELD-WEN Holding Inc.]

Thank you for joining our call today. If you have any follow-up questions, please reach out. I'll be happy to answer them. This ends our call, and please have a great day.

[Operator]

This concludes today's conference call. Thank you for joining. You may now disconnect.

Participants

Executives

• Bill Christensen, CEO
• Samantha Stoddard, CFO
• James Armstrong, VP of Investor Relations

Analysts

• Anika Dholakia, Assistant VP of Equity Research at Barclays
• Philip Ng, Managing Director at Jefferies
• Susan Maklari, Senior Equity Research Analyst at Goldman Sachs
• Spencer Kaufman, Director and Equity Research Analyst at UBS
• Keith Hughes, Managing Director and Sell Side Equity Research Analyst at Truist
• Mike Dahl, Managing Director and Equity Research Analyst of Homebuilders and Building Products at RBC Capital Markets