JELD - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. And welcome to JELD-WEN Holding, Inc. Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Instructions]. [Operator that being advised conference today’s be recorded. is Please hand over Director to would Investor now speaker conference to like Teachout, I your the today, Relations. of Chris Please go ahead.

Chris Teachout

this issued Good by the to Gary joined and referencing portion which CEO; earnings everyone. during you. website, Relations posted John We Michel, our CFO. will Thank press slide our morning, Investor release Linker, today we morning of presentation this and a I'm our our be call.

remind release everyone we forms forward-looking update Before in during respect I providing with meaning set pending undertake we and statements XX-Q filed does like our outcome expected guidance to to variety SEC. certain Reform to constitute begin, we are to litigation. call, any that statements of Litigation a expectations duty those make future forth provided These of of statements that will of the Securities and are in would the this the including results XX-K XXXX. JELD-WEN or risks Act subject not for including regarding with the and the certain statements statements, our Private within forward-looking earnings uncertainties,

will results be turn financial to most I in comparable presentation. the the A like to our in prepared we to over and Gary. information in measure accordance performance. for call, under measures, today's now GAAP. believe be reconciliation release appendix non-GAAP GAAP considered can not should would during call Additionally, presentation of we of as non-GAAP these or useful substitute a which our be to earnings evaluating directly calculated additional can found in discuss The this in isolation with measures the this

Gary Michel

today. thank you morning, Good everyone. us Chris. Thanks, joining for And

JELD-WEN’s the performance. past premier propel strategic have to few the Over deployed foundation we years,

these each flow, making executing the effectively shareholder progress JELD-WEN is Excellence improve that business deployment JEM, the in problem-solving And are work in growth, for continuous holistic within our Model. is of capital we're returns. and the margin The essence accelerate to and good lean elimination plan improvement, underpinning to areas. allocating a practice organic strategy to disciplined approach identification of a cash our expand our while systematic system a We optimize way operating development globally. JEM of people and deliver our This of is culture, anchored the strategy people and waste. very company of the respect

are savings. drivers. in the our While commercial still work and has channels. been In focused across on in growth customer seeing innovation strategies of and stages, where and combination products services JELD-WEN are Execution of and program opportunities rationalization is and and we've unleashing realization in of calls, the areas we expand distribution represented strategic we've projects vast on previous progress consecutive footprint seeing savings. This delivering now million the commercial and inflation channel offset of disciplined expansion. JEM has disciplined Likewise, phase share significant our now annual X price/cost. is X/X $XXX market using The that to to of modernization gains favorable margin first and the quarters in our completed price approach targeted underway associated progress led outperformance price segmentation, the to early highlighted having made next the geographies deployed, consistent of the we initiatives, and

was throughout on challenges capacity labor the serve also these with while material the more impact reduce deliver sites, to lockdowns. unforeseen supply productivity a always JEM including efficient the events the to of growth chain levers points basis programs including You'll quarter Nonetheless, and last These natural The weather in great was XXX grew and helping growth recall and revenue XXXX. Total severe and quarter and for absenteeism, by margin adding fourth year. fourth including ability prior segments year, customers. savings. costs in through way first Europe This unanticipated of and disasters. the other associates of X% increased led you of of core significant versus and these since government year, I that and and strategic XXXX, through sequential found the versus rooftops adjusted rationalization felt our manufacturing is savings quarter the disruptions In improvements to safety year, X.X% Across revenue increased the utilization, made the our all uncertain of revenue core versus Core for our the associates a grew pandemic growth rest core expansion. unprecedented the customers, navigating to of enhancing and our we and effects and results best quarter, sourcing want at our In consumption these second delivered the communities driving quarter. while effects North to the and XXXX, of included modernization both our events such progress volume forefront, extend shareholders. sincere times. thank margin achieve growth margin expansion. contributing the prior Australasia revenue year, EBITDA XX.X%. delivered for we us X All since year-over-year core expansion America

while of mix. favorable a We improving price, in continue still signs headwind from product to and benefit channel QX, and

net positive improvement. revenue delivered segment further these productivity, impacts adjusted on to positive margin, our each expanding addition EBITDA In

are saw of America, in point Specifically, margin Europe execution point in North the of a basis showing our point XXX in margin Australasia. strategies expansion through. we margin expansion expansion The commercial basis basis XXX benefits and JEM XXX and

being full were from deliberate of expectations our with coupled XXX entered basis to the we of clearly the teams, deliver That as our said, core footprint margin year, productivity expansion. the actions year. points impact pandemic the the For the and offset benefits by able below deployment taken to of declined actions X.X%, revenue JEM,

increased operations, thoughts of the demonstrating for the the overcame years $X.X safe liquidity our lowest approximately the to our X.X strength absenteeism X capital, sheet, record quality environments leverage times, cash prudent Further earnings balance the closures with of net to and IPO channel JELD-WEN. of also and reduced a we In to debt ago. delivered And billion, since a mandated cash This will further product and we few capital governmental ensure commentary allocation, flexibility financial increase on associates, earnings addition changes certain implementing of temporary shareholder as value. and cost and minutes. some we working savings, John evaluate preserving for XXXX in in to performance, our strong capital effects million, provide of cost strategic focus in have a mix. alternatives working managing provide free flow enhance XX% on continued of I on will additional our we and record performance, $XXX.X improvements and working all

some on key segment. for will thoughts drivers I each our First, and markets share

North housing fundamentals supportive. For America, remain

quarters accelerate builder We and home starts supply availability. previous expect increase the strong orders building other to starts recent labor from perhaps as and to Completion robust new due these activity continue in constraints, of starts. including product turn housing to lag may

inflation and realization demand first during expect the in actions to R&R single-digits, We we more offset to year. over increasing expect favoring solid The of expected half are for XXXX projects overall activity implemented and larger holding, we DIY. the grow late low pro-driven than pricing headwinds tariff by

markets expect somewhat we be the flat Europe, For to year. for full

across end in construction, new XXXX, our Europe the healthy For open R&R. and half markets are project and of first

later to year. improvements potential the price for mix and However, demand we performance will segment. in Market see momentum, continued the moderate in including gains and in share extend sequential

new recover. yet construction to For fourth to be We challenging permits. saw construction and new Australasia, particularly accelerating have continue stabilization single-family the during with markets Australia, signs of residential quarter

We programs construction remodel both the ongoing from directed expect activity. benefit of government and improvement some new stimulus at home

also been immigration, due has comes to date new yet COVID-XX. The resume. housing to expected challenged. Repair be set for However, and has this of a halted significant which portion to demand Australia's remodel to a demand from government is

some this and expect I'm we North housing in dynamics our each for through XXXX, stabilization the America, optimistic market about European weakness particularly and offset markets fundamentals some in additional improvements Australia. share in of gains. However, market outlook of to

of deployment been performance deliver be margin for segmentation will of detailed price. the and the review rationalization based financial for and now continuing a John modernization our the disciplined programs of innovation, fourth performance quarter and benefits foundation on excellence, XXXX. and including JEM, execution the and expansion However, our of and will significant growth through our has provide to commercial the year full

John Linker

start Thanks, Page Gary, and XX. morning, on everyone. good I'll

as challenging revenue, earnings, Our fourth consistently is multiple environment running result strong flow a quarter we the billion. Adjusted $X.X quarters, XXX all impact core XX.X%, and any margin, impact our and strong balance meaningful sheet. quarter volume on acquisitions, detail XXX margins, an expanded basis business financial EBITDA The our to tailwinds third Notably, execution demonstrate in structural core primarily X.X% third This increase the disciplined basis as improvements as exchange over while our X margin initiatives foreign delivered our cash of Fourth exchange. playbook margin improved our XX of quarter. the the from quarter. Page to driven of focusing The on foreign in adjusted EBITDA increased all for price continued our continued delivered JEM, as sequentially from net in a the revenue reduction operating well performance the increase productivity combination quarter favorable expansion. of programs results of revenue in JEM realization, a and fourth direct provides quarter recent expanded revenue segments operating strategy of by points, revenue the growth which of system. and was deployment points to mix consecutive margin drivers cost execution core contributed excludes from performance.

X% consolidated North pricing, XX, contribution of Net pricing quarter revenue for increased partially volume in X% fourth the a I'll in to by Page from offset core increased take where more X.X%, benefit you a from comprised mix. detail. a X% in volume revenue through and X%, mix. Our driven from segment X% headwind by increase Please move the performance America a

indicator volume the fully healthy a story of a tell sequential improvement the a X% quarter, the headwind does While mix America. backdrop not is third is in demand this from in North lagging that

and quarter throughput Unfortunately, So quite manufacturing our and order Unit healthy demand strong plants. in well, capacity leading stepped quarter, volumes sequentially spend the moment most the backlogs. and a product remained staffing product on book-to-bill levels I'd COVID-related in as strong. to like was activity dynamics North in impacted channel. operations the our generally in by absenteeism in areas up increased which to significantly key healthy and America

remained As volume well SKUs below North in both revenue we America, also headwinds in partners though of products well prior and remained as stock of healthy. year. absenteeism, levels the headwind because were plants, target primarily underlying faced on as below our even as their Mix a orders the revenue result certain retail a at channel inventories

As retail activity worked we SKUs saw levels, we to our restore was at and and special SKUs, towards with the stock quarter weighted order their therefore, partners order orders. activity lower-priced higher-priced and custom reduced targeted inventories in

and U.S. our the our mid-single-digits of in ability revenue U.S. was U.S. other remodel meaningfully of to how however, have declined America, due several VPI new faced and in to we meet our compared due network. we prior North terms channel to headwinds including higher prior compared retail Demand the with these growth revenue where absenteeism In this windows. was absenteeism with Canada, channels December. traditional quarter, in generally demand In across mid-single-digits. growth our approximately revenue restrictions. in other accelerated In and of in constrained distribution the both our XX%. declined locations repair the results. Even absenteeism North XX% and COVID to to large door products COVID to wholesale the and channel, business, America revenue our channel strong, doors netted Windows of month distribution restrictions year, growth dynamics impacted increased In mix in All channel, and year approximately impact revenue California,

strong better America. full the revenue continued In than the quarter. So our in January, rate exit North performance was

expansion revenue margin XXXX, impacted America by by strong for noting days accounting Given North by driven America demonstrated we growth quarter, will believe net X-X-X just exchange. to market local in discussed. mid-teens overall about XX.X%, across and be The volume Canada. margin adjusted due Scandinavia, these margin revenue setup XX.X% improvement exceeded distributed across fewer that last nicely and good growth product with lines feel performance calendar. first expanded by healthy Central of excluding windows Europe high Similar was comps productivity, our partially that and in we full pricing. the doors, X% North shipping basis recent to X% quarter volume Europe. I Core and currency growth our impact trends, the mix was offset year EBITDA of XXX for and growth, mix increased revenue pricing comprised growth revenue revenue impact X% single-digit the points foreign to

We're an said, for It's quarter still revenue local restrictions continue early meaningful and the see overall versus from volume For remains the X.X% limited consecutive improvement year. full from in pleased a revenue since Victoria given growth second and as margin the COVID which X% core prior visibility core XXXX currency quarter the the to result XXX The first market quite and reduction place, in population benefited improvements strong reopening demand. of revenue in lockdown, 'XX are stimulus year that government the of leverage productivity, increase performance in sixth cost the That and government and profitable performance is of the year-over-year Australia, a quarter, growth programs. of driver growth. in Australasia ongoing XXX-day demand with the basis of Europe due on of in points headwinds. actions near-term housing increased quarter from share of fourth immigration gain. to impact the revenue stimulus with XXXX Australia quarter delivered housing

global of input delivered and revenue results, comment of margin on to our basis productivity costs. to On this solid back the like leverage. I'd Australasia from points Coming improved back XXX our expansion volume segment performance, consolidated

the anticipated, quarter fourth inflation accelerate material quarter. sequentially we and rates from did year-over-year freight cost third and As

However, price offset more increases. than these

impact was there no significant So on margin.

Looking ensure and our in for our to accruals, labor quarter. environmental needed goals an partially use by in import is COVID-related other litigation note we prior cost compared offset the But inflation inflation concern. XXXX, labor increasing on still despite deliver matters Also, expect particularly taken offset variable and headwinds, inflation area duties we America expansion taxes in XXXX. to to cost charges certain to and potential first of in the price tight into that item in continued ongoing year, fixed legacy on market to due a the reductions primarily margin we increased as for early SG&A and continue to year. structure. continue result and half One compensation to the reductions as these increase, North absenteeism, of of will to

you assets favorable restore GILTI. been related Late We As by we recall, will certain $XXX net impact on Exclusion Treasury reduction has may tax P&L of to taxes approximately a newly operating to rate deferred in to impacted we Operating Please future. from U.S. the carryforwards, GILTI. the sheet of After offset consideration a point reflect GILTI the net prior in benefit XXXX, our Tax to free loss to planning the last year, tax performance carryforwards X for see quarter, measures, result be option quarter under the XX, NOLs, additional Retroactive GILTI in recorded increased credit had longer book Tax XXXX have the approximately will the net to a these to cash certain to benefit. fourth of able we been allowed for negatively and $XX.X XX% XX%. loss provisions fourth cash you restore the operating of which of times, our strong elected tax the which us cash finalized the restoration balance X.X led the flow and flow details High carryforwards XXXX, for in were reform. million tax leverage IPO. Page years which to previously our our cash of as for due in that increased High compared which XXXX, tax of Exclusion of since regulations able a net the foreign no a one-time reduction utilized issued lowest to in turn U.S. where to can million flow

benefit improvement certain overall, by assistance was such high-quality XX on capital the net highlights earnings stronger efficient data be flow cash both While did trend from and flow will COVID-related our payroll in utilization. of working more driven repaid programs, and deferrals, as temporary XXXX XXXX, which most longer-term XXXX tax operating Page the cash leverage.

opportunities. us the benefited shareholder you the allocation As the I'll on see, And have gives lastly, our comments. current and to improvements capital liquidity create $X.X cash it we generated to can free who'll of back and With years, is over which billion. uncertain Gary, of sheet in has This turn sustained highlight value for few our Page these highest flexibility that, liquidity closing last Gary? XX, I'll flow ever level company for during times. provide balance

Gary Michel

the the balance segmentation our X% Australia. deliver continued total the optimistic John. year, and other delivered the for expansion in XXXX. rationalization commercial we offset based in of said, EBITDA year and price being been our revenue the nicely conditions, strong effects of markets, sheet, serve pipeline near-term growth and our Despite improvement us America; to financial increases residential including including XXXX The price. through strong and the disciplined already accelerating deliver growth particularly in expect capabilities of and range in we strong All-in, be the construction of coupled healthy to favorable of tariffs. set in to of disciplined and to This million expect we some signs our JEM, housing consolidated strength expand in to modernization North savings and unique fundamentals of with X% and each result up of growth innovation, Thanks, volume and We we $XXX strategies our out our margin and million. operating between growth and modernization benefits cost European performance inflation expansion $XXX demand of expansion excellence, on sets of markets; will full deployed in through the That and continuing customers. our system, the order adjusted outlook benefits remain projects, has for of QX our books about and and a market pandemic margin in deployment to of programs the margin is headwinds our momentum last and execution and to rationalization performance productivity JEM, and deployment deliver

highlight conclude, we to reported tenacity strong result people direct we of of work, the at persistence I'd we're like As of are the that talented today the and representative JELD-WEN and culture building. results unique the a strategic

has in our customers we transform morning. be about building shareholders. premier and JELD-WEN premier company. our management been JELD-WEN sustainable performance continued year take to strong, into joining for us in your Our products continue you Momentum your as John deliver a and deliberate is happy to questions. we interest I building and effective will to now foundation for are Thank and and team excited ahead the for this the

Operator

[Operator Instructions].

Your first from Barclays. from question comes Bouley Matthew

Matthew Bouley

start -- row a quarters for Gary, commercial a price/cost on several the here. you efforts side. price/cost done of I job nice want question a in keeping to the out with highlighted favorable

trend price you year to guess, segments increasingly to more should first enough of positive? extent suggest, inflation? taken we Or I think you this in recent of is half So, maintain across year this the given this as greater price/cost of kind headwind the inflation the neutral it's an have the

Gary Michel

to in markets but there. been increases, we’ve across in. in kind of the -- America, the good we've outside pricing Matt. America able here in doors that and all windows. the some action And to see price think see last been Yes, the disciplined North year, benefits that, primarily for price Thanks we've we of really in that take followed able particularly been gone had in in markets, mid North late then the some going late we've question, world kind all fortunate been with I in We've

watching half, offset as we it some we seeing the do -- very, still closely, We to during have believe we inflation to more strategy the That's support do are I in out mean, pull very first more has price mentioned. we We there. and opportunities are order that that to price lever can than actually always inflation. that our been maintain. continue we

quite product the and as X a out, kind watch The last we talked of years, years has where benefit margin that our customer bit. base of played over really of seeing the we're the outside really about of that lot something it's a and work base we So that's price. our around expansion X.X segmentation of

feel So that good we about pretty pull ability again. our to lever

John Linker

and coming, mean I'll based of in with we're just and say inflation it's And off will John. seeing the of sort now, and and pricing just extraordinarily we be negotiated based know have in what big tailwind XXXX. dynamic today, we inflation a based it that weeks just was what place our right I'd we've of for off than by. full is terms noting tailwind what off add sits in go price/cost as But inflation today have a year, on. of less Matt, of the where fluctuations we that already place yes, in that customer base, implemented is I

Matthew Bouley

it. Got

helpful. That's Okay.

I production distribution product ability short North of associated thought America. costs backlog your these you on of rates, here? building? in obviously, And It what the on one I of production knock might assume Can that's to ramp to sort type of be had of you with production days. through challenges focusing business. guidance you're talk guess, kind it’s here? some this revenue mean, ramping able Does supply also just down as sounds Second the like sort a door windows, in

Gary Michel

Yes.

on flip-flop. kind affecting are a we changed there. more of position we lot know business. the little and earlier -- And businesses. right absenteeism there's I'd look that now. We're windows bit deliver of on, just in we're effect, than has saw able pieces we a of a unpack So seeing kind production, you kind more actually That production good in commitments position to the demand of X windows that and windows I year, in for we're feel at side our last kind pickup say really COVID of side. share as on that other windows to if the steadily of really that of business actually a

So that seeing of has rearview story kind there. windows good improving the that’s the production for mirror and in actually of really us, we're some -- performance

about So pretty excited windows.

and saw ensure the of doors, distribution to On the folks more doing door operate have we some in general, the side kind plants we all down. we that to in build -- we industry We're that to absenteeism quarter. and need obviously our hit that actually that fourth in can

make the We do Obviously, continue well on. kind for as hit We'll are across is area. some sure our areas region door focused issues that produce in that we'll single do was seeing able to in we're of are something where But to We that work tenacity of of day to working customers our very, we that of that people we're to one share. that that some and believe the continue every country. California got that. kind really distribution places gaining most actions the we're very of be right now weather deliberate we down. But there those and

So we'll watch that. continue to

Operator

John question of Bank your come And Lovallo next America. from will from

John Lovallo

you tied above Can of points increase? year-over-year. help the sales other what looking XXX I basis just for, about higher percentage factors? to was us, Maybe little just XX% some SG&A, a the were we starting were of And Or that what drivers that of absenteeism? there off were think as with and a over

John Linker

that fourth in that were there were quarter non-operating We -- that of been bit true-ups in additional adjusted things legacy excluded some a and compensation year deferred that claims, and some employees, to that from are also had earlier sort have a have There of couple of there. impact accruals did quarter fourth say things us doctor seeing health I'd litigation Yes. for EBITDA. one-offs. a the and to the the going did expense make back related additional we and like to variable some catch-up in things some were

in was it say of of of wouldn't just John, the fourth exited the quarter, the I of of as change, things the we kind sort So year. the terms when anything spend hit it’s structural, in timing sort us

John Lovallo

Okay. moderate year. demand that general and Understood. might can just why there Got structural And comment in was about Was a might you in you. if half moderate? comps? that, the Was think the the us than might help related understand more second that comment so, that I made that the And be? possibility of then demand European to

John Linker

of that well Europe. right both look the commercial nice saw think fourth some quarter, projects, had in residential. quarter, areas first business I nature certain Gary as here the out, pretty of is, that comment now, as you The there order as we in growth, good called on books the pretty in

the dollars we stabilize sort that, moderation from home think on potentially to about is when you, demand. when and have of what if and concern consumer spending I near-term and start or think of consumers could of R&R and a the euros, their that and or for other -- travel that does lack be have shifts the avenues visibility some away their COVID

an mean, So low seeing it's lack kind unemployment, of not you overly what's of if anything clarity standpoint. in weakening. I of lot of a European not economic on step There's there's sort exactly from a happen. are high to a take we're GDP. healthy structural of back, going that in these we're It's markets terms markets just the

sort a a there's pretty bit think like. back you're good, bit year, visibility hearing half cautiousness from mark but on of I look of that's of just So do could a that us of what near-term as have we the question

Operator

next your Ng from come from will And Phil Jefferies. question

Philip Ng

Congrats solid on a quarter.

with America How anticipate North in you're were And just about what on dealing absenteeism. are view your in tracking? some fourth given organic do orders this X% volume America volumes North you quarter, Your year? your down growth of the resi, appreciating type

Gary Michel

North growth based R&R. retail really in Canada, We've mix that in that When that. Really for we about seeing a the that talked start decline on our other strong other demand quarter. purely product think commercial America. and really quarter we're was in distribution actually actual channel traditional growth absenteeism of or strong fourth door and and VPI, there. bit in and what demand The about even I'll including absenteeism in door the seen to strong products, strong for U.S. pretty we're little the some of seeing, on So is businesses, the -- some effect the our business was we related some

have So still our growth in good feel we strong still and forward there. about America pretty backlog, rates going pretty pretty strong demand coming-in North still

John Linker

Yes.

just exit the the mentioned month of XX% of rate in tough in year. up of prior issue. shipping I'd January December a -- bit America North Revenue the I a about is growth over say, So on comp days the in remarks. was prepared because

exactly year-over-year, it's fairly the So business. backlog, North And sitting not short-cycle here a first the we're but similar. say trajectory America was comparable, I'd in quarter,

more about time as So versus last up year. true of backlog, significantly fairly but we to opposed as orders open open are think it orders same kind the

stable North and of have I we're in we platform think of sort progresses. year year sure and growth absenteeism an issues manufacturing the up nicely can we acceleration volume worked for quite if get So teed sort the out, this America as make

Philip Ng

good better operations all spot sounds you'll certainly get when and It to kind Gary on think a John, sense this of in have guys on do encouraging. very growth? capitalize you you a the And

Gary Michel

know, we've able been is watch we've -- all it We some to kind day, -- that to Yes. last, Absenteeism the obviously, the been make bit of every are for and the we're related or a our story we've doing little on in shutdown taking don't plants. sure to where X action operate, more where quarter line feel obviously. I pandemic just shifts got of obviously we But operations. California

make that been our plants around there. we've taking ability or action over have schedule So either we hiring people to our to sure

fairly feel well. like keeping we it we're So up with

that benefits of there the been I here for really on know it we have We people of JEM, sure that way capabilities. know are, of we what we one affect that have last cycle try the we customers. operate, -- how playbooks had system And for performance like the the make years averages the but need primarily and work we the did have, we on, to operating we we that doing different many benefits said, few doesn't work our to our that times business for

to, So our product the we may demand, with quality that consistently playbook the labor we'd that get know any lower out of operating have that to we like be at plants. we type it's vision we a can of in but one than

Philip Ng

challenges really kind of the Gary. the back. of you That's great expect share? the great. some a few in? given to one some North tightness years, Just America, of in more progress, can given And windows profitability recapture step squeeze you're the in just you've I That's And seen do in seeing market the did last take

years year little maybe back there versus any of shake kind a is higher? margins where out profitability few this way a to So set where level could were help us

Gary Michel

Yes.

So in on we've windows operations the great progress some side. the made business

and which we're to based ability operational to have very, that XX fact, we in recapture we in As out, stepped might very little throughput actually issues bit consistently margins our while where the close kind little back of XX, share, demand on There our on market moving now. And commercially tightness of the share kind on our you turning then. windows. months back have competitive, very is might lead still is fairly times -- been on a but lead consistently. we've know, traditional industry we lost into There's ago high our accounts for a recapture we're bit improved times have seeing and windows, stepped

been is JEM we've kind work has that window very, doing on and nicely. of up caught performing So the very

So meeting it's well opportunity as margin as for expansion share. the

John Linker

improvement Yes. in And business. the in points, months some in The mean, that I side, North fourth margin area window quarters had ago, basis headwinds the We've margin X we something some row quarter margin up windows. basis XXX North pretty had American business. points, just a think in strong was now America on XXX obviously, that XX in

in where margin the margin are So and heading business of not a certainly right improvements trajectory of still operational back the think standpoint, capable the we improvements direction. is from but to

Operator

from Baird. your And Tim come Wojs from will next question

Timothy Wojs

kind margins I I question you little little a the first first just had, half. walk a but get maybe inflation and in the in think margins, comps we bit through half, we On year? second the the should for think how are of expansion as about some tougher margin maybe have the easier also then comps

overall? we think about how for the year So to margin understand just trying phasing should better

John Linker

Yes.

comments the half is The the towards of think of -- phasing think negotiated, put in And inflation of we're of the correct. price we've is offsetting place about in level first so get increases quarter of I not your in quarter weighted that the if that you of necessarily full sort this the inflation. year. going when of the price we into up going stepped terms some channel to are a first

tailwind a and plans be in do on year. price QX. got from improvement volume productivity Overall, this then price/cost will here quarter well. So feel the we the visibility place say like I'd in side both and the less expect of in we've there, certainly and to every as margin get We

throughout price/cost margin and So should while hit an improvement is it inflation be it getting I will given probably lowest easy we but just that full the year, the versus that when year. year, with of first quarter, prior that see and the think we're the the comp accelerate tariffs,

Gary Michel

deployment really on with it. expand the price operational capability that single engine effect John from get having that's consistent of cycle use every built. seeing ability We're But a what very that period-over-period, clearly, area the of disciplined company our inflation, have demand Absolutely, working consistent ability pointed our we've the accelerated on price as to we to in of and we've been beauty we in to as well. products So out, margin very, And the very for. JEM an the other productivity the we're of meet is, working is time, part Tim, standpoint. the

those continues So entire as our the get as the inflation the seeing take company. demand deployment productivity than markets offset to benefit price through are more strong, really across and of JEM we've that to able the we're been

Timothy Wojs

on follow-up, guess I deployment. then And capital my just

X, is the probably think lowest Your to IPO. I close the leverage been it's which is since now

mean, to bit does M&A change more leverage start going little going how think any So a Just thinking capital. to feasible become help a little you're forward? here about I forward. about there you as

Gary Michel

been and lowest the our IPO. it to Yes. That's targets the get obviously debt number you're is correct, the since one of down,

position about our I is as We which we are. we where well, a also record good feel like So company. believe liquidity the pretty for

to in rationalization, So we'll flexibility. think to we we're in pretty projects and And company, program internally through there's focus good our It's those. sense. we've M&A when we'll assuming you're opportunities, and at We continue generate for of continue place. a good returns to something that correct look to make continue the modernization done on around lot we have But great some choices look as makes we'll in the that it some at there. past,

can as to that, measure as well. repurchase we addition of that In as one share levers appropriate pull also we'll the

Operator

Susan come Maklari from next question your from And will Sachs. Goldman

Susan Maklari

get you across those completed we the below be mix us levels. U.S. should year? in you when up you're remarks working in targets, to especially be normalized coming the shift. expect that thinking that? their and that first mix I made is question give how the sense of comments My shift, around Can about And back the some know with through to the you retail to your inventory is

Gary Michel

really year units starting product did customers orders. through and And side, Yes. somewhat, we're last the stock of at -- to quarter, instantaneously starting year. still frankly, what towards a kind what special what our saw, see happens, lot they partners while throughout it to want than factories and drove -- fourth to are the stock. that from diminish special order is probably put get The back a where the can retail as those what we'll more happen more that and stock, retail sequentially as the was able we contractors, we're getting see expect persisted through increase, rather to special We liking, looking in which see of mix, that a headwind, be in kind We're happened place to would year. our that that to inventories of well. orders the then where we them promote And and through for

half in a see this So turn the would quarter we to quarter, for us we into probably be end year. that and as second the tailwind of go of second maybe to to start the expect start

John Linker

Yes.

off we'll definitely in the up, year. an QX. -- of will throughout that special and start think mix order the of going have to a we order restored, in opportunity beyond I still improvement inventories based we the half on be that, margin about headwind will headwind phasing be prior back know think the we clear, mean, tailwind of in is And back year, the has in mix to but to I and be a a and just open it see pick be what just to book QX the backlog, question

Susan Maklari

sense you've think initiatives implementation, it made Can maybe all in issues XXXX. that cost even you came terms your up projects the obviously, And and of lot kind with of go how where as or helpful. That's we specific Okay. a that there? highlight would JEM any and in give with of XXXX, of some you and improvements headway about of in us are things you through to that

Gary Michel

Yes. That's great really question. a

of the say really think On stages JEM in deployment. side, the always I I we're early that

we seeing our But We're We work a operate continue on to we manage and a culture see -- JEM $XXX and deployed how shift that even the we and you system The our as operations. about. in we and project how annual operating modernization functions starting kind have we're there. of basis gain, if or factories we about our tools solving, talked that being program, standard in million look will, put deployed savings well. tools is approach day-to-day to we out our how in used have committed problem which real rationalization business and we probably at of the talked X/X really about,

of and flight projects in in throughput modernizing got plant We've operations. to that we've another of X/X those next and consolidation, X/X really learned the we've built run kind will XXXX. the now of look on JEM. what first principles that You'll start But are X/X improvements, up to and our on That of builds continuing of rate fully see show projects, kind in gotten at that. our

that in of programs what other about nice modernization would would we are do, I in about about downturn invest types continue and talked or me. XXXX that, last the we to things excuse did programs, these our was the before -- different rationalization, do of various a year One XXXX, we

all right world. much So or some projects good delay, really maybe extend so kept we around time, quarter we got in And forward. in segments the going they We our lose didn't a through. but really

still our we we debt pretty So million annual that feel rate achieve project run good and to we said of about the the ability $XXX would.

Operator

from next Michael your Rehaut question from will JPMorgan. And come

Elad Hillman

This Elad is on for Mike. Hillman

what also price XXXX offset can us material well give of please of inflation you of you try expect raw putting in First, increases as impact a and as you're rough quantification inflation? amounts the into P&L tariffs? what to And to effect types

John Linker

Sure.

be want headwind the from is the overall inflation clear again, still be a P&L based to off on price/cost but on for -- yes, full I know tailwind of inflation, that, we to the a starting what year there'll side, So the today.

order X.X% And of But of tariffs to XXXX. of of in that of in is something a materials actually magnitude. would what less tailwind a say and inflation was sort that saw in and impact, freight an in range, inflation just of that's we I So close than XXXX. it terms magnitude sort sales of double

progresses as as margin year pricing this pricing And have we pricing would as today sure guide see similar an certainly a than and year had I I significantly So And make environment on inflationary XXXX place with be want in and it say, we But no additional what standpoint. standpoint, from can't actions the improvement. pricing what of a to will order magnitude in we've consider magnitude, forward reason too from negotiated, certainly, much meaningful. then drive the of XXXX evolves, needed don't that we of is to order standpoint. we

of vinyl-orient steel biggest and Metals, and specifics inflation, the and then In is terms biggest categories feeling would the us those coil sort spend range plastic or X% the increases X which X% components. for sort and to be those in of categories. aluminum impact lumber we're the millwork in then a for both up be biggest in categories, and would where year year-over-year of terms in are on of prior logs us of

Elad Hillman

in you're a the new were on construction to or second January And in the do trends see well? side demand production? rate exit could my question the main if deeper flow-through or saw stronger also, production And and drivers America. side and maybe some is, starting in from the then December more through residential into and as in flow curious just that improvements delving on you when think strengths little if there you bit I North was the

John Linker

Yes.

our I results, and being that December absenteeism, of December to that had we example, able month it were the hits of in both. drive plants mentioned. So were I growth some to terms that still said, for revenue XX% we production. to yet the in of some normalize XX% XX% still But that started we mean,

mentioned, there will, backlog, or America sort availability activity. of I as where then lot the have labor the year-over-year, months, production up are sequentially demand plants we as North is And order stabilized, really orders seen more this of yes, open they're for of well. few in the and healthy, the stable. certain a And been So last we've in you if got sort but

drivers sides. the both of coming the demand I So from are think

Gary Michel

the side, demand there. there's housing good on Yes,

items ability as that of shortages much think other availability to so will one well impact build the but or homes those testing to materials building labor our as the not the starts I of delays. be for deliver, and

closely. very very, that watching we're So

a But we the we We expect And side. it's difficult we up with that tailwind little do demand that I we question just from us. on single see to answer and believe for that a keep than the that housing more -- us. think we be know a

I decide building depending materials. us. how what think housing actually those we'll the labor be for able staging with other to meet will and starts that, on but it materialize will That be

Operator

Markets. your come will from Dahl RBC from Capital And question next Mike

Michael Dahl

range to just that the Gary, But in revenue and for looking we're X% Australian rates wanted think of breakdown of get or a kind the then from you to I kind plus something guide flat of it's positive FX the like embeds I If like X% about would would a costs X%, of the John, more on ask to euro kind impact at note detailed the to small tailwinds of dollar, I'm the be looking at it FX. spot for whether when guidance X%. balance bridge year. of of we more

embedding? And just any we more wrong embedded that? a some of detail we where the and So the aggregate then aggregate A, are you I when think of is just that lot was price or around breakdown hoping, ex-FX, just FX your of about your mix what questions on volume, quantification mixed in what's volume, what already kind are but of

John Linker

Sure. Yes.

FX pretty has as well. been market volatile So the

meaningful. you was to if December pretty our to think I FX rates key were the November just and just some from of change extrapolate

that tailwind sort And that more the just of FX rest year were meaningful. point you time agree so the the and that, if to you for persists assume revenue could pick I of with be in a that

is quarter this those is averaging a Our normalized. of probably something of rates more viewpoint fourth year kind that sort more

more X% ballpark. X% to is revenue in So maybe FX the tailwind,

improve. we're on just average, and we're with the of average And then And above volume to below what organic there. certainly Australia, in Certainly, this from be North a view side. expect Europe the so conservative -- that on point -- would America terms the then both company above leaves strongest, guide or taking that the pretty probably at the the in we company And average the guidance. is rest pricing of company seeing more

guidance seeing some how could what slightly or headwind to But tailwind negative we're and from early the wrong, to slightly in guidance. Australia upside prove revenue. negative think could off that be the be assumes Australia I Based It peter-out that benefit the sustainable year, sort some visibility of we're in very could terms back don't of stimulus. this near-term seeing just of half the in that well from the the have of we government in year. yet

side. us that's certainly we’ve given baked point at the opportunity But the guidance in perform kind end the visibility range an for revenue the at high this of So of the year, on what there's to in.

Michael Dahl

second there's like pieces. cash seems question a of moving free is number on flow. My It

free You've some working maybe cash and changes got we NOL and you've of the got step-up the be this about some in changes, cap thinking some deferred flow How then year. payments a got of sizable should you've conversion? CapEx fairly

John Linker

The that that CARES good U.S. advantage during to XXXX. Yes. through XXXX countries then of type to deferral we the defer to we small Act COVID world in tax is that situation. and other tax the legislation of around and in of took of this mentioned, sort item payroll repaid A similar portion portion required be payroll flows a

it's a and 'XX, tailwind to anticipated Just 'XX. in the be that, in it year-over-year impact was headwind of a

the so is the of And reversing of kind year-over-year that million. about impact $XX

mentioned cash And you to be the you also the stepping -- so free particularly that for going full if with to headwind at a it's flow CapEx year, up. the look

of be But core to flow sort So in expect -- of those conversion will earnings down in any year-over-year, earnings because terms -- we free quality expect of we be or our don't to flow. change drivers. the 'XX cash of of cash the in

to XXXX So from the midpoint cash the straight will flow. are were cash there I But look distinct of to versus you guide, be earnings that down to increase XXX% headwinds couple in free of if free to certainly would drop-through sort to of 'XX. at that cause the a at in 'XX expect through

Operator

Truist. next Keith will come from question Hughes your And from

Keith Hughes

profit back improvement the referring to Just plan.

million. you've said $XXX of gotten You'd X/X the

I of the actually from think that's run XXXX rate have dollars a plan? you're any estimate how you to. Do many referring impacted

John Linker

completed the All is a XXXX. of yes, forward. the But given everything should terms some projects that that that I'd of moving the in the run actually the we were certainly, hoping implied, COVID, the in fraction what we that the timing -- rate a in in and going that was facility shutdowns sort X/X get the happened to of XXXX sort year, with it had is $XX only of hit pieces in be say P&L of earlier million that is base of

XXXX, the And certainly, would year-over-year of so tailwind be to into earnings. get that the as benefit we of incremental drivers one

Keith Hughes

Okay. And of will be your the end 'XX? on do you for have what 'XX, plans run an estimate by rate the based

John Linker

going and live should earnings of some say $XX XXXX I a of we're program, be this base the forward. off I'm to by the would come base, that million of of in and Yes. put footprint we going was the rolled are a got going end -- sort XXXX of so years -- $XX saying of be about then end 'XX. I million off into program we're we in there'll in earnings additional of of P&L, the for -- of full and XXXX when by first And the as we've we're so in out the that future from sort base guess again, this measuring projects year more that end the

Operator

will come Baumgarten from Credit from Adam question Suisse. next your And

Adam Baumgarten

completion Can lagging more than maybe Just a today or from give weeks kind us maybe basis, that looks like versus you usual. of you either think, mentioned pre-COVID? what starts, months sense I

Gary Michel

We opportunity think growth is We up is, demand. lag answer. is us Yes, Maybe difficult for the a windows much us. us lever. the windows expect a with I us we their is high more that a -- that this to for for is little at question for for It construction demand ascertain. there tailwind know it's to How doors. and bit know But to is both residential that there a keep point. is difficult for

just other a think that complete of they tailwind material much know, something need on building following something the the could the know a the makes that starts, know number think we that on can earlier, real building if got I I of of delay. don't when year. guess, that's it's don't labor probably if kind a but -- to they And days to I just of through load going particularly materials start is the we'll it I we've issue based weeks we I word. be It’s see order get put products question how do that's a that that. a tailwind. or to and we're

Adam Baumgarten

Got it.

was year. Okay. amount some pretty And should about like -- guidance, last 'XX embedded for it up on How a sounds decent corporate expenses we in think John, been one-time there your event. might then, just it have

So how should it 'XX? we think about for

John Linker

say in be discretionary had the spending to I'd XXXX, marketing of as will some that we certainly, some sales Yes. COVID-related and with we back other some get deferrals that, the some deferrals. and there step-up of

in of was as 'XX, some expenses back $XX COVID-related see think -- we would step-up was full think, number modest million, $XX I I have the to for million, in I those it 'XX. that in me, in the year, believe. it expense I bring I the So was corporate the but of don't exact in range front a of

Operator

And from B. your Rygiel Alex next from question come will Riley.

Alexander Rygiel

to quantify impact revenue EBITDA? Is it absenteeism possible COVID either or on the

John Linker

-- It's year, to in the early based off North not -- average, America, sort COVID its as looking think it were earlier in sort would at absenteeism in of certainly way stages. of high just I not the about averaging but scientific, we single-digit is on XX% was of

absenteeism As quarter. in quarter, the came had XX% quarter. in were mentioned fourth up some the plants we stepped average the XX%, fourth the that meaningfully the wave that I pretty in second up fourth

of range very table North $XX the quarter terms be in the of would points rough hard America in that left volume absenteeism the million was the trying could a exactly estimate that's I'm what I data that. would extrapolate So revenue. of But again, sort on on it's fourth what say in -- to just say have into use sort to been. to from really of that

Alexander Rygiel

of And have then absenteeism on sort about in have kind that I impact of also the improving. that talk believe obviously, that? times of lead Any been that -- or you light way that had said may to quantify

Gary Michel

Yes.

base about and been we and improving our and we've more lead years our be that our the X.X choosy. talk and are of standard on rates the throughput the we capability. picky published consistently the lead operations we're of for segmenting for what have where it pre-COVID on windows in was able commercial the times our kind So to of side, But customer place run for that we pretty time figure Part last have significantly, improved windows. meet of much rate over kind

meeting So we're that. definitely

absenteeism there. On the door the side, deterrent is probably on the only depend

affect keeping customer operating deliveries point-of-sales even up trying And sure. I Our to factories with that well. are said earlier, very, We're very volumes absenteeism. with not for as

the probably putting we times a commercially a the we're orders. lot well. leads lead door -- So to yes of as little space into But in state how commercially again, effort up more

in that feel share. good pretty up to to we So we're place a competitively continue pick

Operator

And Garner your Benchmark. question from comes next Reuben from

Reuben Garner

Most of my questions have been answered. I just quick have follow-up. one

guess, and beyond the I DIY about opportunity the recover low Am America, can there right like and way? rate more part impetus pro the So is I outlook down question, what's overall low assume demand part the that looks the of kind in is down? thinking the dragging you challenged. of that, pro between the single-digit what was the I XXXX of an market North this for to single-digit year maybe And that channel growth for DIY. break is type R&R the

Gary Michel

Yes.

XXXX. talk when about geared to In in products to the XXXX think a that issues be quickly. up of DIY getting was some of would towards lot we more type I start the pick stock And mix business even more business. then pro R&R complete,

more frankly starting but that back. -- contractor starting as well. we longer a to to margin is special more of get business see better lead where a product little So what or we of time pro products are That's come type

coming mix So and that's what see do through. will contribute that actually to that shift, we

Gary Michel

sharing We continuing our forward JELD-WEN business. a call in and appreciate you. quarter from really look of and our Thank you support this taking interest to our now. obviously, to We all quarter, results

and answering forward the you look have with to days. also We any coming in might time questions that you spending

again our with with the that that great benefits And building. programs at and and importantly, of been JEM, you modernization. interest. your JELD-WEN and folks productivity the of positioned culture engagement benefits tenacity business of we the So that have operating feel here dedication, we're the our We rationalization our thank for system most the we've well around

in forward so up and based on Thank showing results, our you that. success our what's that's to much. look we So continuing

Operator

everyone. This you, will call. conclude Thank conference today's

now disconnect. You may

JELD-WEN Holding (JELD) 16 Feb 212020 Q4 Earnings call transcript