Highlights:
- Net revenues for the third quarter increased 6.3%, bringing the year-to-date total increase in net revenues to 3.5%
-
Net income for the third quarter amounted to
$51.3 million and adjusted EBITDA amounted to$128.2 million - Adjusted EBITDA for the third quarter increased 8.7%, and adjusted EBITDA margins expanded 20 basis points
-
Diluted earnings per share ("EPS") for the third quarter amounted to
$0.47 and adjusted EPS amounted to$0.55 -
Cash flow from operations improved
$63.9 million in the first nine months of 2017 and free cash flow improved$94.0 million -
Full year outlook for net revenue growth increased to 2.0% to 4.0% and
adjusted EBITDA outlook range narrowed to
$440 million to$450 million
“We are pleased to deliver core revenue growth in all three reporting segments and we are encouraged with the overall demand environment in our markets. Additionally, we delivered another consecutive quarter of earnings growth and margin expansion, while overcoming the impact of operational headwinds in specific product lines,” said Mark Beck, president and chief executive officer. “We are enthusiastic about our recent acquisitions, which align to our strategy and are financially accretive.”
Third Quarter 2017 Results
Net revenues for the three months ended September 30, 2017 increased
EPS for the third quarter was
On a segment basis for the third quarter of 2017, compared to the same period last year:
North America - Net revenues increased$19.7 million , or 3.6%, to$572.0 million , due to an increase in core revenues of 2% and a 2% contribution from recent acquisitions. The core revenue growth was primarily due to favorable pricing. Excluding the volume impact of the previously announced business rationalization inFlorida , the company estimates thatNorth America core revenues would have increased approximately 4%. Adjusted EBITDA increased$3.8 million , or 4.8%, to$82.5 million . Adjusted EBITDA margin expanded by 10 basis points to 14.4%. Margin improvement from profitable core growth was partially offset by operating inefficiencies in the North American windows business.Europe - Net revenues increased$18.2 million , or 7.4%, to$265.1 million , primarily due to a 4% favorable impact from foreign exchange, 2% from the contribution of recent acquisitions, and 1% from core growth. Adjusted EBITDA increased$1.9 million , or 6.2%, to$33.4 million . Adjusted EBITDA margin decreased by 10 basis points to 12.6%. The decrease in adjusted EBITDA margins was primarily due to a timing difference in theU.K. of pricing initiatives lagging material cost inflation.Australasia - Net revenues increased$21.0 million , or 15.7%, to$154.3 million , primarily due to the contribution from recent acquisitions of 8%, core growth of 4%, and 4% from the favorable impact of foreign exchange. Adjusted EBITDA increased$5.1 million , or 28.4%, to$22.9 million . Adjusted EBITDA margin expanded by 140 basis points to 14.8%.
Year-to-Date 2017 Results
Net revenues for the nine months ended September 30, 2017 increased
Balance Sheet and Cash Flow
Cash and cash equivalents as of September 30, 2017 were
Cash flow from operations improved
Updated Annual Outlook for 2017
For full year 2017 compared to full year 2016, the company now expects net revenue growth of 2.0% to 4.0%, compared to the previous range of 1.5% to 3.5%. The revised outlook for net revenue growth reflects recently closed acquisitions and is based on an assumption of continued favorable demand drivers in the company's key geographic end markets.
The company's outlook for 2017 adjusted EBITDA is now
Capital expenditures are now expected to be in the range of
“Looking forward into 2018, we expect that our revenue growth will be supported by constructive end market demand and our recent acquisitions," stated Beck. "We are confident that our JEM initiatives will continue to drive annual margin improvement of 100 to 150 basis points from both cost savings initiatives and core growth. We will also remain disciplined as we continue to pursue our healthy pipeline of M&A opportunities."
Conference Call Information
JELD-WEN management will host a conference call today, November 7, 2017, at 8 a.m. EST, to discuss the company’s financial results. The conference call can be accessed by dialing (877) 407-9208 (domestic) or (201) 493-6784 (international). A telephonic replay will be available approximately two hours after the call by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the replay is 13672179. The replay will be available until 11:59 p.m. EST on November 21, 2017.
Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the company’s website at http://investors.jeld-wen.com. The online replay will be available for 30 days on the same website immediately following the call. A slide presentation highlighting the company’s results will also be available on the Investor Relations section of the company’s website.
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 over 120 manufacturing facilities in 19
countries located primarily in
Forward-Looking Statements
This press release contains certain “forward-looking statements” regarding business strategies, market potential, future financial performance, the potential of our categories and brands, our outlook for 2017, 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.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2016, and our Quarterly Reports on Form 10-Q, both filed with the Securities and Exchange Commission.
The assumptions underlying the guidance provided for 2017 include the achievement of anticipated improvements in end markets, competitive position, and product portfolio; stable macroeconomic factors; no changes in foreign currency exchange and tax rates; favorable interest expense due to the recent debt reduction; and our future business plans. 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.
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
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 as calculated herein 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, eliminating the impact of the following items: loss from discontinued operations, net of tax; gain (loss) on sale of discontinued operations, net of tax; equity (earnings) loss of non-consolidated entities; income tax; depreciation and amortization; interest expense, net; impairment and restructuring charges; gain 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, debt refinancing, and the Onex investment. 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 the after-tax impact of i) non-cash foreign currency (gains) losses, ii) impairment and restructuring charges, and iii) other non-recurring expenses associated with certain matters such as our initial public offering, secondary offering, mergers, 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. All such items are tax-effected at our estimated annual effective tax rate of approximately 26.9%.
Other companies may compute these measures differently. No non-GAAP metric should be considered as an alternative to any other measure derived in accordance with GAAP.
Due to rounding, numbers presented throughout this document may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Adjustments to Previously Reported Financial Information
During the third quarter ended September 30, 2017, we identified and
corrected errors related to the allocation of certain expenses between
cost of sales and selling, general and administrative expenses that
occurred in previous periods. The amounts are not material to the
periods impacted, and we have elected to revise our previously issued
consolidated financial statements in our upcoming filings to correct the
prior periods. The cumulative impact of the corrections for the three
and nine months ended September 24, 2016 was an increase in cost of
sales and a decrease in selling, general and administrative expenses
of $5.1 million and
| JELD-WEN Holding, Inc. | ||||||||
| Consolidated Statements of Operations (Unaudited) | ||||||||
| (In millions) | ||||||||
| Three Months Ended | ||||||||
September 30, | September 24, | % Variance | ||||||
| Net revenues | $ | 991.4 | $ | 932.5 | 6.3% | |||
| Cost of sales | 763.2 | 726.8 | 5.0% | |||||
| Gross margin | 228.2 | 205.7 | 11.0% | |||||
| Selling, general and administrative | 142.6 | 129.8 | 9.9% | |||||
| Impairment and restructuring charges | 2.3 | 3.9 | (42.7)% | |||||
| Operating income | 83.3 | 71.9 | 15.9% | |||||
| Interest expense, net | 17.2 | 18.5 | (7.3)% | |||||
| Other expense (income) | 2.9 | (7.7) | NM | |||||
| Income before taxes, equity earnings and discontinued operations | 63.2 | 61.1 | 3.5% | |||||
| Income tax expense | 13.0 | 13.5 | (3.2)% | |||||
| Income from continuing operations, net of tax | 50.2 | 47.6 | 5.4% | |||||
| Equity earnings of non-consolidated entities | 1.1 | 1.2 | (10.3)% | |||||
| Loss from discontinued operations, net of tax | — | (2.7) | NM | |||||
| Net income | $ | 51.3 | $ | 46.1 | 11.3% | |||
| Other financial data: | ||||||||
| Adjusted EBITDA(1) | $ | 128.2 | $ | 118.0 | 8.7% | |||
| Adjusted EBITDA Margin | 12.9% | 12.7% | ||||||
(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”. | |
| JELD-WEN Holding, Inc. | ||||||||
| Consolidated Statements of Operations (Unaudited) | ||||||||
| (In millions) | ||||||||
| Nine Months Ended | ||||||||
September 30, | September 24, | % Variance | ||||||
| Net revenues | $ | 2,787.9 | $ | 2,693.6 | 3.5% | |||
| Cost of sales | 2,145.4 | 2,124.7 | 1.0% | |||||
| Gross margin | 642.5 | 568.9 | 12.9% | |||||
| Selling, general and administrative | 433.7 | 395.9 | 9.6% | |||||
| Impairment and restructuring charges | 4.0 | 9.0 | (55.6)% | |||||
| Operating income | 204.7 | 164.0 | 24.8% | |||||
| Interest expense, net | 61.6 | 53.7 | 14.7% | |||||
| Other expense (income) | 8.3 | (9.0) | NM | |||||
| Income before taxes, equity earnings and discontinued operations | 134.8 | 119.3 | 13.1% | |||||
| Income tax expense (benefit) | 33.0 | (0.1) | NM | |||||
| Income from continuing operations, net of tax | 101.9 | 119.4 | (14.7)% | |||||
| Equity earnings of non-consolidated entities | 2.6 | 2.5 | 7.3% | |||||
| Loss from discontinued operations, net of tax | — | (2.8) | NM | |||||
| Net income | $ | 104.5 | $ | 119.0 | (12.2)% | |||
| Other financial data: | ||||||||
| Adjusted EBITDA(1) | $ | 334.5 | $ | 291.9 | 14.6% | |||
| Adjusted EBITDA Margin | 12.0% | 10.8% | ||||||
| JELD-WEN Holding, Inc. | ||||||
| Selected Financial Data (Unaudited) | ||||||
| (In millions) | ||||||
September 30, | December 31, | |||||
| Consolidated balance sheet data: | ||||||
| Cash, cash equivalents | $ | 219.5 | $ | 102.7 | ||
| Accounts receivable, net | 529.4 | 407.2 | ||||
| Inventories | 398.5 | 334.6 | ||||
| Total current assets | 1,180.1 | 875.4 | ||||
| Total assets | 2,965.3 | 2,530.1 | ||||
| Accounts payable | 264.1 | 188.9 | ||||
| Total current liabilities | 610.6 | 512.8 | ||||
| Total debt | 1,251.2 | 1,620.0 | ||||
| Redeemable convertible preferred stock | — | 151.0 | ||||
| Total shareholders’ equity | 884.7 | 56.0 | ||||
| Nine Months Ended | ||||||
| Statement of cash flows data: | September 30, | September 24, | ||||
| Net cash flow (used in) provided by: | ||||||
| Operating activities | $ | 174.1 | $ | 110.2 | ||
| Investing activities | (153.5) | (141.6) | ||||
| Financing activities | 85.8 | (17.4) | ||||
| JELD-WEN Holding, Inc. | ||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures (Unaudited) | ||||||||||||||||
| (In millions) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
September | September | September | September | |||||||||||||
| Net income | $ | 51.3 | $ | 46.1 | $ | 104.5 | $ | 119.0 | ||||||||
| Income from discontinued operations, net of tax | — | 2.7 | — | 2.8 | ||||||||||||
| Equity earnings of non-consolidated entities | (1.1 | ) | (1.2 | ) | (2.6 | ) | (2.5 | ) | ||||||||
| Income tax expense (benefit) | 13.0 | 13.5 | 33.0 | (0.1 | ) | |||||||||||
| Depreciation and intangible amortization | 27.6 | 25.5 | 80.6 | 77.5 | ||||||||||||
| Interest expense, net(1) | 17.2 | 18.5 | 61.6 | 53.7 | ||||||||||||
| Impairment and restructuring charges | 2.3 | 3.9 | 4.0 | 12.1 | ||||||||||||
| (Gain) loss on sale of property and equipment | (0.1 | ) | 0.1 | (0.2 | ) | (3.3 | ) | |||||||||
| Stock-based compensation expense | 5.1 | 5.1 | 15.8 | 15.8 | ||||||||||||
| Non-cash foreign exchange transaction/translation loss | (1.8 | ) | 0.4 | 5.3 | 7.2 | |||||||||||
| Other non-cash items(2) | 0.5 | 0.1 | 0.5 | 3.1 | ||||||||||||
| Other items(3) | 14.3 | 3.3 | 31.6 | 6.5 | ||||||||||||
| Costs relating to debt restructuring and refinancing | — | — | 0.3 | — | ||||||||||||
| Adjusted EBITDA(4) | $ | 128.2 | $ | 118.0 | $ | 334.5 | $ | 291.9 | ||||||||
(1) |
For the nine months ended September 30, 2017, interest expense
includes the write-off of | |
(2) |
Other non-cash items include: (i) in the three and nine months ended
September 30, 2017, charges of | |
(3) |
Other items not core to business activity include: (i) in the three
months ended September 30, 2017, (1) | |
(4) | 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”. | |
Three Months | |||
(amounts in millions, except share and per share data) | September 30, | ||
| Net income | $ | 51.3 | |
| Legal and professional fees | 7.9 | ||
| Non-cash foreign exchange transactions/translation loss | (1.3) | ||
| Impairment and restructuring charges | 1.7 | ||
| Adjusted net income | $ | 59.6 | |
| Diluted net income per share | $ | 0.47 | |
| Legal and professional fees | 0.07 | ||
| Non-cash foreign exchange transactions/translation loss | (0.01) | ||
| Impairment and restructuring charges | 0.02 | ||
| Adjusted net income per share | $ | 0.55 | |
| Diluted shares | 108,962,240 | ||
NOTE:All adjustments to net income and net income per share are tax-effected at our estimated annual effective tax rate of approximately 26.9%
| Nine Months Ended | ||||||
September 30, | September 24, | |||||
| Net cash provided by operating activities | $ | 174.1 | $ | 110.2 | ||
| Less capital expenditures | 32.4 | 62.5 | ||||
| Free cash flow | $ | 141.7 | $ | 47.7 | ||
| JELD-WEN Holding, Inc. | ||||||||
| Segment Results (Unaudited) | ||||||||
| (In millions) | ||||||||
| Three Months Ended | ||||||||
September 30, | September 24, | |||||||
| Net revenues from external customers | % Variance | |||||||
| $ | 572.0 | $ | 552.2 | 3.6% | ||||
| 265.1 | 246.9 | 7.4% | ||||||
| 154.3 | 133.4 | 15.7% | ||||||
| Total Consolidated | $ | 991.4 | $ | 932.5 | 6.3% | |||
| Adjusted EBITDA(1) | ||||||||
| $ | 82.5 | $ | 78.7 | 4.8% | ||||
| 33.4 | 31.4 | 6.2% | ||||||
| 22.9 | 17.8 | 28.4% | ||||||
| Corporate and unallocated costs | (10.6) | (10.0) | 5.9% | |||||
| Total Consolidated | $ | 128.2 | $ | 118.0 | 8.7% | |||
(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”. | |
| JELD-WEN Holding, Inc. | ||||||||
| Segment Results (Unaudited) | ||||||||
| (In millions) | ||||||||
| Nine Months Ended | ||||||||
September 30, | September 24, | |||||||
| Net revenues from external customers | % Variance | |||||||
| $ | 1,607.7 | $ | 1,579.9 | 1.8% | ||||
| 766.3 | 752.2 | 1.9% | ||||||
| 413.9 | 361.5 | 14.5% | ||||||
| Total Consolidated | $ | 2,787.9 | $ | 2,693.6 | 3.5% | |||
| Adjusted EBITDA(1) | ||||||||
| $ | 212.5 | $ | 186.2 | 14.1% | ||||
| 97.6 | 90.4 | 8.0% | ||||||
| 53.5 | 41.0 | 30.5% | ||||||
| Corporate and unallocated costs | (29.1) | (25.7) | 13.4% | |||||
| Total Consolidated | $ | 334.5 | $ | 291.9 | 14.6% | |||
(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”. | |
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Source: JELD-WEN Holding, Inc.