JELD-WEN navigates tough terrain: mixed Q4 earnings and cautious outlook
JELD-WEN Holdings, Inc. (JELD), a prominent global manufacturer of doors and windows, unveiled its Q4 (December) financials, revealing net revenue of $1.02 billion, a 23.3% dip compared to the previous year, yet surpassing EPS forecasts with $0.37 against an expected $0.27. Despite this, the company's revenue did not meet analyst expectations of $1.04 billion.
For FY24, JELD-WEN projects net revenue to fall between $4.0-4.3 billion, aligning closely with the analysts' projection of $4.27 billion. The anticipated adjusted EBITDA is set to range from $370 to $420 million, highlighting the company's commitment to offsetting anticipated volume declines with ongoing efficiency gains.
The outlook underscores formidable challenges ahead, particularly in the U.S. and European markets, where diverse volume mix headwinds loom large. In North America, representing 73% of Q4's revenue, a 16% drop in volume mix contributed to a 13% reduction in net revenue to $747.6 million. The company foresees these conditions extending into 2024, with repair and remodel (R&R) activities expected to shrink by low-to-mid single digits in FY24.
Europe's scenario appears similarly strained, with a notable 18% fall in core revenue to $273.4 million amid sluggish residential construction. The anticipated slowdown in commercial project volumes in Europe is predicted to persist into the year.
Nevertheless, JELD-WEN reported a year-over-year increase in adjusted EBITDA margin by 190 basis points to 8.5%, thanks to cost reduction efforts, including the shuttering of five locations. In FY23, the company met its $100 million cost-saving target and streamlined operations by divesting its Australian segment, using the proceeds to reduce $450 million in long-term debt, thereby easing interest expense pressures.
Despite these strategic moves, the company acknowledges the need for further margin improvement. For FY24, JELD aims for an adjusted EBITDA of $370-$420 million, indicating a potential 10.5% growth at the upper range, despite expected volume contractions.