Jeld-Wen Posts Modest Growth in North America as Demands for Housing Increase

February 20th, 2020 by Tara Taffera

“Our 65% improvement in 2019 free cash flow demonstrates that the Jeld-Wen Excellence Model (JEM) has enhanced our working capital efficiency and improved our quality of earnings.” This was a statement from Gary S. Michel, president and CEO, after Jeld-Wen announced its results for the three months and full year ending December 31, 2019. This included fourth-quarter core revenue growth in North America of 1%, demonstrating improvements to demands for new residential construction in North America, according to the door and window maker.

Cash flow from operations for the 12 months ending December 31, 2019, improved by $83.0 million year-over-year to $302.7 million. The outlook for 2020 includes net revenue growth of 1% to 4% and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $450 million to $495 million.

“2019 was a pivotal year as we advanced deployment of the Jeld-Wen Excellence Model (JEM) across the enterprise and delivered positive productivity, even as we faced significant market headwinds in residential new construction demand in our North America and Australasia segments,” said Michel. “During the year, we made significant progress with our footprint rationalization and modernization program and launched innovative new products to drive future growth.”

Still there were challenges, which Michel acknowledged.

“Our fourth quarter results were challenged by continued market demand headwinds in Australasia and operational inefficiencies in our North America segment. While I am pleased that we sequentially improved our North America performance from the third quarter, I’m disappointed that we did not return to margin expansion. Looking to 2020, we have visibility to several catalysts that will drive core revenue growth and margin improvement. Demand drivers in residential new construction are supportive of growth in 2020, with improving housing fundamentals in North America and early signs of recovering demand in Australia later in the year. Improved pricing, particularly in North America, will expand margins and allow us to accelerate product and service innovation for our customers. We also have good visibility to cost savings and operational improvements from our healthy global pipeline of productivity and footprint rationalization and modernization projects.”

Margins in North America impacted window operations primarily, which sequentially improved from the third quarter, according to the results.

Net income was $7.8 million, compared to net income of $38.1 million in the same quarter last year, a decrease of $30.3 million. The decrease in net income was primarily due to a higher effective tax rate and lower gross profit from reduced volumes in each geographic segment and cost inefficiencies in North America, the company reported.

The full results may be found here.

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