Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JELD-WEN Holding Inc (JELD, Financial) is actively enhancing production capabilities to improve quality and lead times, with significant improvements noted at their Kissimmee, Florida facility.
- The company is collaborating with new homebuilders to reduce total costs and enhance service experience, securing meaningful new business ahead of internal plans.
- JELD-WEN Holding Inc (JELD) is focused on transformation initiatives expected to achieve approximately $100 million in ongoing benefits and $50 million from short-term actions in 2025.
- The company is investing in automation and process improvements to enhance productivity and reduce costs, positioning itself for long-term success.
- JELD-WEN Holding Inc (JELD) has ample liquidity, including an undrawn $500 million revolving credit line, providing financial flexibility despite current challenges.
Negative Points
- JELD-WEN Holding Inc (JELD) experienced a 19% year-over-year revenue decline in Q1 2025, primarily due to lower core revenues and the divestiture of Towanda operations.
- Adjusted EBITDA decreased by $47 million year-over-year, with a margin of only 2.8%, driven by significantly lower volumes and unfavorable mix.
- The company is facing ongoing productivity headwinds as costs have not decreased at the pace required to offset lower demand levels.
- JELD-WEN Holding Inc (JELD) has withdrawn its full-year guidance due to significant short-term market volatility and uncertainty introduced by tariffs.
- The net debt leverage ratio increased to 4.6 times, exceeding the targeted range of 2 to 2.5 times, raising concerns about financial stability.
Q & A Highlights
Q: How confident are you in your ability to pass along the $30 million in 2025 tariff impact to your customers?
A: William Christensen, CEO: We are in constant negotiation with our key customers regarding the tariff impact. We have a strong internal team working on this, and we are confident in passing the surcharges to the market. We are also optimizing our cost structure to balance the impact. The uncertainty lies in the long-term implications of tariffs on demand.
Q: How should we think about the phrasing of your outlook that 2Q EBITDA will be slightly better seasonally compared to the first quarter?
A: William Christensen, CEO: Typically, we see a seasonal uptick in 2Q versus 1Q, but this year, the rebound is muted. We expect a quarter-over-quarter uptick, but off a lower base. Samantha Stoddard, CFO, added that the tariff-related impact on demand has been minimal so far, and April's activity was more muted than expected.
Q: How should we think about the flow-through of the $150 million in mitigation actions from transformation and cost out in the back half of the year?
A: William Christensen, CEO: We expect a 40-60 split, with 40% in H1 and 60% in H2. Some cost measures were actioned at the end of 1Q, impacting 2Q and beyond. The big variable is volume development, as some productivity assumptions are based on volumes.
Q: How are you managing liquidity risk given your leverage was 4.5 times in 1Q?
A: Samantha Stoddard, CFO: Our lending base does not have restrictive covenants, and we have ample liquidity, including an undrawn revolver. We are closely managing working capital and reviewing every CapEx request. We are also evaluating options like sale-leaseback or asset sales to strengthen our balance sheet.
Q: Are you seeing or thinking about the potential to regain market share as a largely US-based producer for your North America operations?
A: William Christensen, CEO: Yes, there is opportunity, especially with products like fiberglass doors where tariffs make imports prohibitive. We are investing in domestic manufacturing and discussing opportunities with key customers, but it will take time to settle.
Q: Can you provide more color on the new business wins with builder customers and the impact on production builder sales?
A: William Christensen, CEO: We are ahead of expectations for gaining new business, but it will take 6-9 months to materialize in sales. We are focusing on selling systems to builder partners, but current builder volume is at the lower end.
Q: How should we think about the timing of the $30 million tariff impact flowing through 2Q versus the second half?
A: Samantha Stoddard, CFO: We intend to fully pass through the $30 million in tariffs to customers. The timing difference in Q2 is immaterial, and we expect to see the impact of surcharges throughout the rest of the year.
Q: Can you talk about your confidence in offsetting the $50 million of non-tariff inflation with pricing?
A: Samantha Stoddard, CFO: We expect to be slightly price cost negative this year due to the challenging demand outlook. The $50 million is still a good number for non-tariff-related input cost increases, and we are focusing on competing on service and quality.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
