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JELD-WEN(JELD) - 2025 Q1 - Earnings Call Transcript
JELDJELD-WEN(JELD)2025-05-06 12:00

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was 776million,representinga19776 million, representing a 19% decline year over year, with approximately 15% attributed to lower core revenues and 4% due to the divestiture of the Towanda operations [11][12] - Adjusted EBITDA for the quarter was 22 million, a decrease of 47millioncomparedtotheprioryear,resultinginanadjustedEBITDAmarginof2.847 million compared to the prior year, resulting in an adjusted EBITDA margin of 2.8% [12][15] - Free cash flow was a use of 125 million in Q1 2025, compared to a 46millionuseinQ12024,primarilydrivenbylowerEBITDAandunfavorableworkingcapitaldynamics[13][14]−Thenetdebtleverageratioincreasedto4.6times,exceedingthetargetedrangeof2to2.5times,withreducingleveragebeingahighpriorityforthecompany[14]BusinessLineDataandKeyMetricsChanges−NorthAmericasegmentreportedrevenueof46 million use in Q1 2024, primarily driven by lower EBITDA and unfavorable working capital dynamics [13][14] - The net debt leverage ratio increased to 4.6 times, exceeding the targeted range of 2 to 2.5 times, with reducing leverage being a high priority for the company [14] Business Line Data and Key Metrics Changes - North America segment reported revenue of 531 million for Q1 2025, a 22% decline year over year, with core revenues decreasing by 17% primarily due to lower volume [16] - Adjusted EBITDA for North America declined to 16millioncomparedto16 million compared to 61 million in the same quarter last year, reflecting negative impacts from lower volume and productivity challenges [16] - Europe segment revenue for Q1 was 245million,down12245 million, down 12% year over year, driven almost entirely by lower volume, with adjusted EBITDA of 11 million, a decline of 4millionfromtheprioryear[17]MarketDataandKeyMetricsChanges−Thecompanyexperienceddouble−digitvolumedeclinesinbothNorthAmericaandEuropesegmentsduringthequarter,withongoingmarketdeclinesimpactingrevenue[7][11]−Tariffsintroducedadditionalplanninguncertainty,leadingtothewithdrawaloffull−yearguidance[8]−Theanticipatedannualizedimpactoftariffsisapproximately4 million from the prior year [17] Market Data and Key Metrics Changes - The company experienced double-digit volume declines in both North America and Europe segments during the quarter, with ongoing market declines impacting revenue [7][11] - Tariffs introduced additional planning uncertainty, leading to the withdrawal of full-year guidance [8] - The anticipated annualized impact of tariffs is approximately 55 million, with about 30millionexpectedtoaffect2025results[18][19]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonenhancingproductioncapabilities,optimizingmanufacturinganddistributionnetworks,andinvestinginautomationtodriveefficiencyandreducecosts[28][29]−Thestrategicprioritiesincludereestablishingstrongpartnershipswithcustomers,optimizingoperationalfootprint,andinvestinginautomationtoenhanceproductivity[28][29]−Thecompanyremainscommittedtoitstransformationinitiatives,expectingtoachieveapproximately30 million expected to affect 2025 results [18][19] Company Strategy and Development Direction - The company is focused on enhancing production capabilities, optimizing manufacturing and distribution networks, and investing in automation to drive efficiency and reduce costs [28][29] - The strategic priorities include reestablishing strong partnerships with customers, optimizing operational footprint, and investing in automation to enhance productivity [28][29] - The company remains committed to its transformation initiatives, expecting to achieve approximately 100 million in ongoing transformation benefits this year [27] Management's Comments on Operating Environment and Future Outlook - The management highlighted the challenging macroeconomic environment, with elevated interest rates and declining consumer confidence impacting new home construction and repair activities [22] - Despite significant headwinds, the company anticipates that Q2 adjusted EBITDA will be slightly above Q1 levels, driven by cost reduction initiatives [26] - The management expressed confidence in navigating current challenges and believes the company will be well-positioned once markets stabilize [30] Other Important Information - The company has made difficult decisions to reduce headcount and consolidate workflows to adapt to the current business environment [25] - The company is actively managing working capital and reviewing capital expenditure requests to strengthen its balance sheet [52] Q&A Session Summary Question: Confidence in passing along tariff impact to customers - Management is in constant negotiation with key customers regarding tariff impacts and believes they can pass through surcharges while optimizing cost structures [34][35] Question: Expectations for Q2 EBITDA improvement - Management expects a seasonal uptick in Q2, but it will be muted compared to historical trends due to ongoing uncertainty [38][39] Question: Confidence in offsetting non-tariff inflation - Management maintains that $50 million is still a good estimate for non-tariff related input cost increases, with a focus on service and quality to remain competitive [79] Question: Update on Towanda divestiture impact - Management expects to see results towards the higher end of the EBITDA impact range from the Towanda divestiture [82] Question: Progress on standardizing build specifications - Management reports progress in optimizing cost to serve and reducing product complexity, which will aid in future footprint consolidation [90] Question: CapEx outlook and flexibility - Management has flexibility with CapEx and is focused on balancing short-term and long-term investments, with potential reductions if market conditions worsen [100]