JELD-WEN(US:JELD)2022-10-31 17:37Financial Data and Key Metrics Changes - The company reported revenue of $1.3 billion and adjusted EBITDA of $116.5 million, representing year-over-year increases of 13% and 18% respectively [22][41] - Adjusted EBITDA margin improved by 40 basis points to 9% due to favorable price cost, improved operating leverage, and positive productivity [41][42] - GAAP net loss for the quarter was $33.2 million, compared to net income of $40.5 million in the same period last year, primarily due to a $55 million non-cash goodwill impairment charge in the Europe segment [42] Business Line Data and Key Metrics Changes - North America led with a 23% increase in core revenue, driven by strong price realization and positive volume mix [23][46] - Europe experienced a 5.5% decrease in net revenue, impacted by foreign exchange headwinds, despite a 10% core revenue growth [48] - Australasia revenue increased almost 6%, with a 14% increase in core revenue, although negatively impacted by foreign exchange [50] Market Data and Key Metrics Changes - North America showed strong demand in windows, exterior doors, and company-owned distribution, while Europe faced deteriorating macroeconomic conditions due to the war in Ukraine and rising inflation [48][56] - The company anticipates a continued slowdown in the housing market across North America and Europe, with repair and remodel activity expected to fare better than new residential construction [56][58] Company Strategy and Development Direction - The company is focused on streamlining operations and improving financial performance, including a strategic review of its Australasia business [14][29] - Management aims to enhance execution and performance while preparing for the new CEO to lead the company effectively [18][21] - The company is committed to investing in projects that exceed internal return hurdles and reducing financial leverage [54][55] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the near term due to persistent inflation and a softening housing market, but remains optimistic about long-term demand potential [20][24] - The company is taking decisive actions to improve results and ensure that the fundamental strength of the business translates into shareholder value creation [21][65] - Management reaffirmed full-year core revenue guidance of 10% growth but revised adjusted EBITDA expectations to between $400 million and $420 million due to inflation pressures [62][64] Other Important Information - The company ended the quarter with total cash of $200 million and liquidity of $560 million, with net debt leverage decreasing to 3.6 times [53] - The company is focused on improving working capital and expects to generate positive free cash flow in the fourth quarter [52] Q&A Session Summary Question: What drove the elevated SG&A and overall corporate expense in the quarter? - Higher SG&A expenses were driven by timing and amounts related to incentive compensation and increased medical claim expenses, with expectations for normalization in Q4 [68][70] Question: Are you looking for individuals with building products or industrial experience in your CEO search? - While building products experience is advantageous, the right level of broad experience and leadership capabilities is also considered [71][72] Question: Can you break out the magnitude dollar amount based on higher inflation and reduced expectations for productivity savings? - The inflation impact in the second half is expected to be more negative, with energy prices contributing significantly to the increase [76][78] Question: What are your expectations for North America volume in Q4? - North America volumes are expected to decline in the low to mid-single-digit range, reflecting a slowdown in residential construction [90][91] Question: How do you expect raw materials inflation to impact the P&L next year? - The company is not prepared to comment on detailed outlooks for next year as they are currently working through the budgeting process [99] Question: Which categories within the distribution channel do you think have excess inventory? - Excess inventory is noted in categories such as exterior and interior doors, with efforts to balance inventory levels with customer demand [105] Question: How do you think about the mix shift between custom versus stock products? - The mix is dynamic, with a focus on the Pro custom segment, but no specific trends were identified [116] Question: What are your plans for managing productivity and optimizing your footprint? - The company is focused on driving accountability within regions and plants, with plans to provide stronger updates on productivity management in future quarters [120][121]