JELD-WEN Holding, Inc. (NYSE:JELD) today announced results for
the three months ended March 28, 2020, including net revenues of
$979.2 million, net loss of $0.2 million, adjusted EBITDA of $74.5
million, earnings per share ("EPS") of $0.00, and adjusted EPS of
$0.13.
Highlights:
- Net revenues for the first quarter decreased 3.1%
year-over-year to $979.2 million, unfavorably impacted by
volume/mix in each segment
- Adjusted EBITDA margins of 7.6%, slightly ahead of previous
outlook
- Implemented comprehensive COVID-19 response plan with cost
savings measures globally, while also prioritizing associate safety
and flexibility to meet customer demand
- Withdrew 2020 financial guidance due to global demand
uncertainty related to COVID-19 pandemic
- Pro forma first quarter liquidity of approximately $700 million
reflecting recently completed transactions
"The health and security of our associates, channel partners,
suppliers, and other business partners remains our number one
priority as we work to safely maintain production, satisfy customer
orders, and prepare for an eventual recovery in end market demand,"
said Gary S. Michel, president and chief executive officer. "In
many locations, JELD-WEN has been identified as an `essential
business' or `life sustaining' enterprise, allowing us to maintain
operations and meet customer demand. In these locations, we are
following World Health Organization and Centers for Disease Control
and Prevention recommendations and adhering to local and regional
guidelines, while adopting global best practices and utilizing
JELD-WEN Excellence Model tools to ensure that we are minimizing
exposure risk and protecting our associates."
"In light of the uncertain impact of COVID-19, we moved
decisively in the first quarter to reduce operating costs and defer
non-essential capital investment, maintain the integrity of our
supply chain, and manage our cash and liquidity. We continue to
service customers and respond quickly to changing market
conditions," said Mr. Michel. "Our cost reduction measures include
compensation reductions for our executive leadership team and board
of directors, as well as other programs to temporarily reduce our
salary costs globally. We have also suspended all discretionary
spending and we continue to seek ways to increase overall
liquidity."
"I am proud of how our associates have risen to this
unprecedented challenge, as our COVID-19 response is expected to
have an immediate, positive impact on our cost structure during the
second quarter, while helping to further improve safety and
maintain business continuity. We will emerge from this crisis a
stronger, more unified JELD-WEN."
First Quarter 2020 Results
- Favorable price/cost for the sixth consecutive quarter
- Third consecutive quarter of core margin improvement in Europe
segment
- Volume/mix headwinds due to sequentially worse Australasia
market demand, government mandated plant closures in Europe, and
unfavorable volume/mix in North America
- Core adjusted EBITDA margins declined 120 basis points
Net revenues for the three months ended March 28, 2020 decreased
$31.1 million, or 3.1%, to $979.2 million, compared to $1.010
billion for the same period last year. The decrease in net revenues
was driven by a 3% decline in core revenues and a 2% adverse impact
from foreign exchange, partially offset by a 2% positive impact
from the VPI acquisition. Core revenues, which exclude the impact
of foreign exchange and acquisitions completed in the last twelve
months, were impacted by a 5% headwind from unfavorable volume/mix,
partially offset by a 2% pricing benefit.
Net loss was $0.2 million during the first quarter, compared to
net income of $15.8 million in the same quarter last year, a
decrease of $16.0 million. The decrease in net income was primarily
due to lower gross profit from reduced volumes in each geographic
segment and higher SG&A expense and impairment costs. Adjusted
net income for the first quarter was $13.1 million, compared to
$22.2 million in the same quarter last year, a decrease of $9.1
million.
The effective book income tax rate in the quarter increased to
123.8%, primarily due to a greater proportion of foreign income
subject to the GILTI provisions of U.S. tax reform legislation and
certain discrete tax items. Excluding the impact of the GILTI tax
and discrete tax items specific to the period, the first quarter
effective book tax rate would have been approximately 31.0%.
EPS for the first quarter was $0.00, compared to $0.16 for the
same quarter last year, a decrease of $0.16. Adjusted EPS was
$0.13, compared to $0.22 a year ago.
Adjusted EBITDA decreased $14.8 million, or 16.5%, to $74.5
million, compared to the same quarter last year. Adjusted EBITDA
margins of 7.6% decreased by 120 basis points compared to the prior
year. First quarter 2020 core adjusted EBITDA margins decreased by
120 basis points compared to the prior year, as improvement in
Europe was offset by core margin reduction in North America and
Australasia.
On a segment basis for the first quarter of 2020, compared to
the same period last year:
- North America - Net revenues increased $21.6 million, or
3.8%, to $586.7 million, due to a 1% increase in core revenues and
a 3% contribution from the VPI acquisition. Core revenues increased
due to a 3% pricing benefit, partially offset by a 2% volume/mix
headwind. Adjusted EBITDA decreased $3.8 million to $49.0 million,
due to unfavorable volume/mix as well as operational
inefficiencies, partially offset by positive pricing.
- Europe - Net revenues decreased $18.5 million, or 6.2%,
to $281.5 million, due to a 3% adverse impact from foreign exchange
and a 3% decrease in core revenues. Core revenues decreased
primarily due to a 4% decrease in volume/mix, partially offset by a
1% pricing benefit. Adjusted EBITDA decreased $4.3 million to $23.3
million, due to unfavorable volume/mix and foreign exchange,
partially offset by positive price and productivity.
- Australasia - Net revenues decreased $34.2 million, or
23.6%, to $111.0 million, due to a 18% decrease in core revenues
and a 6% unfavorable impact from foreign exchange. Core revenue
growth decreased, primarily due to a 16% decrease in volume/mix.
Adjusted EBITDA decreased $7.7 million to $8.7 million, primarily
due to the deleverage impact of volume/mix.
Cash Flow and Balance Sheet
- Cash flows used in operations of $76.5 million during the first
quarter of 2020 increased by $48.5 million year-over-year,
primarily due to the decrease in net income and an increase in
working capital
- Free cash flow use of $106.7 million during the first quarter
increased by $46.8 million year-over-year, primarily due to the
increase in cash flows used in operations
Cash flows used in operations totaled $76.5 million in the first
quarter of 2020, compared to cash flows used in operations of $28.0
million during the same period a year ago. The increase in cash
flows used in operations was primarily due to an increase in
working capital. Free cash flow used during the first quarter
increased $46.8 million year-over-year to $106.7 million, from
$59.9 million a year ago, primarily due to the increase in cash
flows used in operations.
Cash and cash equivalents as of March 28, 2020 were $214.3
million, compared to $226.0 million as of December 31, 2019. Total
debt as of March 28, 2020 was $1.612 billion, compared to $1.517
billion as of December 31, 2019.
Total liquidity, including cash and cash equivalents and undrawn
committed credit facilities, was $431.2 million as of March 28,
2020, compared to total liquidity of $554.5 million as of December
31, 2019, reflecting the company's normal seasonal working capital
cycle. Following the company's $250 million senior secured notes
offering, which closed on May 4, 2020 and AU $30 million of
additional borrowing availability recently added to the company's
Australian credit facilities, pro forma liquidity as of March 28,
2020 was approximately $696 million.
The company repurchased $5.0 million of common stock in the
first quarter of 2020, prior to the COVID-19 disruption.
"I have the utmost confidence in each member of our global team
to rise to the unprecedented challenges brought on by the COVID-19
pandemic," said Gary S. Michel, president and chief executive
officer. "We will continue to provide our customers with the
highest quality products and services, and prudently and safely
manage every aspect of our business during this crisis. We have an
amazing team, a sound strategy, and great assets, and will emerge
from this a stronger JELD-WEN."
Conference Call Information
JELD-WEN management will host a conference call on May 5, 2020,
at 8 a.m. EDT, to discuss the company’s financial results.
Interested investors and other parties can access the call either
via webcast by visiting the Investor Relations section of the
company's website at http://investors.jeld-wen.com, or by dialing (877)
396-4218 (domestic) or (647) 689-5631 (international). A slide
presentation highlighting the company’s results will also be
available on the Investor Relations section of the company’s
website.
For those unable to listen to the live event, a webcast replay
will be available approximately two hours following completion of
the call.
To learn more about JELD-WEN, please visit the company’s website
at http://investors.jeld-wen.com.
About JELD-WEN
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.
Forward-Looking Statements
Certain statements in this press release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements by our CEO and statements
regarding our business strategies and ability to execute on our
plans, market potential, future financial performance, customer
demand, the potential of our categories, brands and innovations,
the impact of our footprint rationalization and modernization
program, our pipeline of productivity projects, the estimated
impact of tax reform on our results, litigation outcomes, and our
expectations, beliefs, plans, objectives, prospects, assumptions,
or other future events. Forward-looking statements are generally
identified by our use of forward-looking terminology such as
“anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”,
“intend”, “may”, “might”, “plan”, “potential”, “predict”, “seek”,
or “should”, or the negative thereof or other variations thereon or
comparable terminology. Where, in any forward-looking statement, we
express an expectation or belief as to future results or events,
such expectation or belief is based on the current plans,
expectations, assumptions, estimates, and projections of our
management. Although we believe that these statements are based on
reasonable expectations, assumptions, estimates and projections,
they are only predictions and involve known and unknown risks, many
of which are beyond our control that could cause actual outcomes
and results to be materially different from those indicated in such
statements.
Risks and uncertainties that could cause actual results to
differ materially from such statements include risks associated
with the impact of the COVID-19 pandemic on the company and our
employees, customers, and suppliers, and other factors, including
the factors discussed in our Annual Reports on Form 10-K and our
other filings with the Securities and Exchange Commission.
The forward-looking statements included in this release are made
as of the date hereof, and except as required by law, we undertake
no obligation to update, amend or clarify any forward-looking
statements to reflect events, new information or circumstances
occurring after the date of this release.
Adjustments to Previously Reported Financial
Information
As previously reported, the statement of operations for the
three months ended March 30, 2019 include the correction of certain
errors and other accumulated misstatements as described in Note 32
- Revision of Prior Period Financial Statements in our Annual
Report of our Form 10-K and Note 27 - Revision of Prior Period
Financial Statements of our Form 10-Q for the quarterly period
ended June 29, 2019. Based upon our evaluation of both quantitative
and qualitative factors, we believe that the effects of these
errors and other accumulated misstatements were not material
individually or in the aggregate to any previously reported
quarterly or annual period.
Non-GAAP Financial Information
This press release presents certain “non-GAAP” financial
measures. The components of these non-GAAP measures are computed by
using amounts that are determined in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”). A reconciliation of non-GAAP financial measures used in
this press release to their nearest comparable GAAP financial
measures is included in the tables at the end of this press
release. The company provides certain guidance solely on a non-GAAP
basis because the company cannot predict certain elements that are
included in certain reported GAAP results, including the variables
and individual adjustments necessary for a reconciliation to GAAP.
While management is not able to specifically quantify the
reconciliation items for forward-looking non-GAAP measures without
unreasonable effort, management bases the estimated ranges of
non-GAAP measures for future periods on its reasonable estimates of
such factors as assumed effective tax rate, assumed interest
expense, and other assumptions about capital requirements for
future periods. The variability of these items may have a
significant impact on our future GAAP results.
We use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net
income, and Adjusted EPS because we believe they assist investors
and analysts in comparing our operating performance across
reporting periods on a consistent basis by excluding items that we
do not believe are indicative of our core operating performance.
Management believes Adjusted EBITDA and Adjusted EBITDA margin are
helpful in highlighting trends because they exclude the results of
decisions that are outside the control of management, while other
measures can differ significantly depending on long-term strategic
decisions regarding capital structure, the tax jurisdictions in
which we operate, and capital investments. We use Adjusted EBITDA
and Adjusted EBITDA margin to measure our financial performance and
also to report our results to our board of directors. Further, our
executive incentive compensation is based in part on Adjusted
EBITDA. In addition, we use Adjusted EBITDA for purposes of
calculating compliance with our debt covenants in certain of our
debt facilities. Adjusted EBITDA should not be considered as an
alternative to net income as a measure of financial performance or
to cash flows from operations as a liquidity measure.
We define Adjusted EBITDA as net income (loss), adjusted for the
following items: loss from discontinued operations, net of tax;
equity earnings of non-consolidated entities; income tax (benefit)
expense; depreciation and amortization; interest expense, net;
impairment and restructuring charges; gain on previously held
shares of equity investment; (gain) loss on sale of property and
equipment; share-based compensation expense; non-cash foreign
exchange transaction/translation (income) loss; other non-cash
items; other items; and costs related to debt restructuring and
debt refinancing. Adjusted EBITDA margin is defined as Adjusted
EBITDA divided by net revenues.
We present free cash flow because we believe it assists
investors and analysts in determining the quality of our earnings.
We also use free cash flow to measure our financial performance and
to report to our board of directors. In addition, our executive
incentive compensation is based in part on free cash flow. We
define free cash flow as cash flow from operations less capital
expenditures (including purchases of intangible assets). Free cash
flow should not be considered as an alternative to cash flows from
operations as a liquidity measure.
Adjusted net income represents net income adjusted for certain
items as presented in our reconciliation of non-GAAP, including the
after-tax impact of i) non-cash foreign currency (gains) losses,
ii) impairment and restructuring charges, iii) one-time non-cash
gains, and iv) other non-recurring expenses associated with mergers
and acquisitions and litigation. Adjusted EPS represents net income
per diluted share adjusted to exclude the estimated per share
impact of the same specifically identified items used to calculate
adjusted net income as described above. Where applicable, such
items are tax-effected at our estimated annual adjusted effective
tax rate.
Other companies may compute these measures differently. Non-GAAP
metrics should not be considered as alternatives to any other
measures derived in accordance with GAAP.
Due to rounding, numbers presented throughout this release may
not sum precisely to the totals provided and percentages may not
precisely reflect the absolute figures.
JELD-WEN Holding, Inc.
Consolidated Statements of
Operations (Unaudited)
(In millions)
Three Months Ended
March 28, 2020
March 30, 2019
% Variance
Net revenues
$
979.2
$
1,010.3
(3.1
)%
Cost of sales
784.8
802.1
(2.2
)%
Gross margin
194.4
208.1
(6.6
)%
Selling, general and administrative
172.6
164.1
5.2
%
Impairment and restructuring charges
6.5
3.7
76.0
%
Operating income
15.2
40.3
(62.2
)%
Interest expense, net
16.6
17.7
(6.0
)%
Other (income) expense
(2.3
)
(3.5
)
(32.9
)%
Income (loss) before taxes and equity
earnings
1.0
26.1
(96.3
)%
Income tax expense (benefit)
1.2
10.3
(88.4
)%
Net income (loss)
$
(0.2
)
$
15.8
(101.5
)%
Other financial data:
Adjusted EBITDA(1)
$
74.5
$
89.3
(16.5
)%
Adjusted EBITDA Margin(1)
7.6
%
8.8
%
(1)
Adjusted EBITDA is a financial measure that is not calculated in
accordance with GAAP. For a discussion of our presentation of
Adjusted EBITDA and Adjusted EBITDA Margin, see above under the
heading “Non-GAAP Financial Information”.
JELD-WEN Holding, Inc.
Selected Financial Data
(Unaudited)
(In millions)
March 28, 2020
December 31, 2019
Consolidated balance sheet
data:
Cash and cash equivalents
$
214.3
$
226.0
Accounts receivable, net
539.3
469.8
Inventories
524.0
505.1
Total current assets
1,337.3
1,243.3
Total assets
3,406.6
3,381.3
Accounts payable
281.9
295.0
Total current liabilities
758.5
768.8
Total debt
1,611.9
1,517.4
Total shareholders’ equity
753.8
812.1
Three Months Ended
Statement of cash flows data:
March 28, 2020
March 30, 2019
Net cash flow provided by (used in):
Operating activities
$
(76.5
)
$
(28.0
)
Investing activities
(22.4
)
(88.9
)
Financing activities
89.3
93.5
JELD-WEN Holding, Inc.
Reconciliation of Non-GAAP
Financial Measures (Unaudited)
(In millions)
Three Months Ended
March 28, 2020
March 30, 2019
Net income (loss)
$
(0.2
)
$
15.8
Income tax expense
1.2
10.3
Depreciation and amortization
33.5
30.9
Interest expense, net
16.6
17.7
Impairment and restructuring charges
(1)
6.7
4.1
Loss (gain) on sale of property and
equipment
(2.1
)
0.5
Share-based compensation expense
3.7
2.6
Non-cash foreign exchange
transaction/translation (income) loss
(1.2
)
(3.7
)
Other items (2)
16.3
10.4
Other non-cash items
—
0.7
Adjusted EBITDA
$
74.5
$
89.3
(1)
Impairment and restructuring charges consist of (i) impairment
and restructuring charges that are included in our unaudited
consolidated statements of operations plus (ii) additional charges
relating to inventory and/or manufacturing of our products that are
included in cost of sales in the accompanying unaudited
consolidated statements of operations in the amount of $0.2 and
$0.4 for the three months ended March 28, 2020 and March 30, 2019,
respectively.
(2)
Other non-recurring items not core to ongoing business activity
include: (i) in the three months ended March 28, 2020 (1) $11.7 in
legal costs and professional expenses relating primarily to
litigation, (2) $3.1 in facility closure and consolidation costs
related to our facility footprint rationalization program, (3) $1.2
for one-time lease termination charges; (ii) in the three months
ended March 30, 2019 (1) $4.8 in facility closure and consolidation
costs related to our facility footprint rationalization program,
(2) $2.9 in acquisition and integration costs, (3) $1.6 in legal
costs and professional expenses relating primarily to
litigation.
Three Months Ended
(amounts in millions, except share and
per share data)
March 28, 2020
March 30, 2019
Net income (loss)
$
(0.2
)
$
15.8
Legal costs and professional expenses
11.7
1.6
Non-cash foreign exchange
transactions/translation (income) loss
(1.2
)
(3.7
)
Impairment and restructuring charges
6.7
4.1
Facility closure and consolidation
charges
3.1
4.8
Acquisition and integration charges
—
2.9
Adjusted tax impact
(7.0
)
$
(3.3
)
Adjusted net income (1)
$
13.1
$
22.2
Diluted net income per share
$
—
0.16
Legal and professional fees
0.12
0.02
Non-cash foreign exchange
transactions/translation (income) loss
(0.01
)
(0.04
)
Impairment and restructuring charges
0.07
0.04
Facility closure and consolidation
charges
0.02
0.04
Acquisition and integration charges
—
0.03
Adjusted tax impact
(0.07
)
$
(0.03
)
Adjusted net income per share (1)
$
0.13
$
0.22
Diluted shares used in adjusted EPS
calculation represent the fully dilutive shares for the three
months ended March 28, 2020 and March 30, 2019,
respectively.(2)
101,626,191
101,461,293
(1)
As a result of the 2019 revision, three months ended March 30,
2019 adjusted net income as presented herein was reduced by $0.9
million, and adjusted EPS was reduced by $0.01.
Note: Except as otherwise noted,
adjustments to net income and net income per share are tax-effected
at an adjusted tax rate of 25.7% and 34.6% for the three months
ended March 28, 2020 and March 30, 2019, respectively. Excluding
the impact of the GILTI provision, the first quarter adjusted
effective book tax rate would have been approximately 26% and 30%
for the three months ended March 28, 2020 and March 30, 2019,
respectively.
(2)
Dilutive shares for March 28, 2020 includes basic weighted
average shares outstanding of 100,646,850 and the dilutive impact
of restricted stock units, performance share units, and options to
purchase common stock of 979,341.
Three Months Ended
March 28, 2020
March 30, 2019
Net cash provided by operating
activities
$
(76.5
)
$
(28.0
)
Less capital expenditures
30.2
31.9
Free cash flow
$
(106.7
)
$
(59.9
)
JELD-WEN Holding, Inc.
Segment Results
(Unaudited)
(In millions)
Three Months Ended
March 28, 2020
March 30, 2019
% Variance
Net revenues from external customers
North America
$
586.7
$
565.1
3.8
%
Europe
$
281.5
$
300.0
(6.2
)%
Australasia
$
111.0
$
145.2
(23.6
)%
Total Consolidated
$
979.2
$
1,010.3
(3.1
)%
Adjusted EBITDA(1)
North America
$
49.0
$
52.8
(7.2
)%
Europe
$
23.3
$
27.6
(15.6
)%
Australasia
$
8.7
$
16.4
(46.7
)%
Corporate and unallocated costs
$
(6.5
)
$
(7.5
)
(13.3
)%
Total Consolidated
$
74.5
$
89.3
(16.5
)%
(1)
Adjusted EBITDA is a financial measure that is not calculated in
accordance with GAAP. For a discussion of our presentation of
Adjusted EBITDA, see above under the heading “Non-GAAP Financial
Information”.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005297/en/
Investor Relations Contact: JELD-WEN Holding, Inc. Chris
Teachout Investor Relations Manager 704-378-7007
investors@jeldwen.com Media Contact: JELD-WEN Holding, Inc.
Noreen Pratscher Vice President, Corporate Communications
704-526-4146 corporate@jeldwen.com
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