Jeld-Wen Holding (JELD) Q2 2026 earnings call transcript

Thank you and good morning. We issued our second quarter, 2026 earnings release last night and posted a slide presentation to the Investor Relations portion of our website, which can be found at investors. gelgwin. com. We will be referencing this presentation during our call. Today, I'm joined by Bill Christensen, Chief Executive Officer and Samantha Stoddard, Chief Financial Officer.

Before I turn it over to Bill, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our forms 10K and 10Q, filed with the SEC.

Gelgwin does not undertake any duty to update forward-looking statements, including the guidance we are providing with respect to certain expectations for future results. Additionally, during today's call, we will discuss non-GAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAP. A reconciliation of these non-GAP measures to their most directly comparable financial measures calculated under GAP can be found in our earnings release and in the appendix to our earnings presentation.

With that, I would like to now turn the call over to Bill.

Thank you, James, and good morning, everyone. Before turning to our results, I want to begin by recognizing our associates at Gelgwin. The second quarter progress would not have been possible without their commitment, focus, and hard work. Our teams have continued to execute in a challenging environment, improve how we operate, and provide our customers with a more dependable and consistent service experience.

I want to thank everyone across the organization for the role they played in delivering these results. I would also like to welcome Christian Mikkel, who joined Gelgwin in June as Executive Vice President and President of Europe. Christian brings more than 25 years of international leadership experience across manufacturing and industrial businesses. His experience in operational improvement and business transformation will be valuable as we continue to strengthen and further optimize our European business.

Turning to the business, the macro environment in the second quarter was in line with our expectations. We experienced that the anticipated seasonal increase in activity as we moved out of the first quarter. Overall, market volumes remain soft, but the pace of the year over year decline is beginning to moderate. Against that backdrop, we delivered results that were consistent with our expectations and continued to make progress on the priorities we outlined at the beginning of the year.

As shown on slide four, second quarter sales were $818 million. We continue to balance our labor and cost structure with current demand levels while maintaining the resources necessary to provide customers with the service they expect.

Our on time, in full performance declined modestly in June and remained in the high 80% range in July through the temporary disruptions.

Those issues have largely subsided and we are already seeing OTIF recover toward 90% and above. Importantly, our customers remain satisfied with our service and sustaining consistent performance remains a key priority across the organization.

Adjusted EBITDA was $42 million for the quarter, up from the prior year. Importantly, this was the first quarter in 10 quarters in which adjusted EBITDA increased year over year. Adjusted EBITDA margin improved to 5.2% compared to 4.7% last year, an increase of 50 basis points despite the continued pressure from lower market volumes.

These results demonstrate the progress we are making through improved execution, productivity, and disciplined cost management. Free cash flow with a $28 million use of cash during the quarter. We continue to tightly manage capital expenditures and remain disciplined in how we deploy cash across the business.

As we move into the second half of this year, we expect the seasonal working capital cycle and improved earnings performance to support improved cash generation.

Looking ahead, expect continued focus on what we can control as we remain concentrated on managing costs. At the same time, we continue to prioritize service and execution for our customers. Our improved performance is helping us compete for and win back business that we have previously lost and we are beginning to see those efforts translate into improved commercial results.

As a result, we still expect sales performance to be modestly better than the midpoint of our previous guidance. We also continue to face significant price cost headwinds driven primarily by freight, including the impact of freight on material costs.

We are managing through these pressures and expect to continue working constructively with our customers as these cost pressures persist.

Despite these headwinds, our cost actions and improved operating performance support an increase of our EBITDAW guidance midpoint. Before I turn it over to Samantha, I want to briefly address both our balance sheet and portfolio priorities.

We continue to actively evaluate options to address our near term debt maturities, working closely with our advisors, including potential refinancing alternatives.

Our objective is to preserve liquidity, maintain financial flexibility, and provide the company with sufficient time to continue improving performance as market conditions stabilize.

We also continue to make progress on the strategic review of our European business. The process remains ongoing, and we are carefully evaluating the available alternatives with a focus on long-term shareholder value. We have nothing further to announce at this time.

With that, I will hand it over to Samantha to review our financial results in greater detail.

Thank you, Bill. Turning to the financial results on slide six, second quarter net revenue was $818 million, compared to $824 million in the second quarter of 2025, a decline of 1% year over year. The decrease was driven by lower volume mix, partially offset by higher pricing and favorable foreign exchange.

Adjusted EBITDAW for the quarter was $42 million, compared to $39 million in the prior year period, an increase of 8%. The improvement was driven primarily by continued productivity gains, which more than offset a portion of the ongoing price cost headwinds and lower volume mix.

Turning to cash flow, free cash flow was a $28 million use of cash in the second quarter due to higher working capital, specifically the timing of accounts receivable due to higher sales at the end of the current period. We continue to manage cash closely and remain focused on working capital discipline as we move through the second half of the year.

Despite the use of cash during the quarter, higher adjusted EBITDA helped keep net debt leverage flat sequentially at 11.3 times at the end of the second quarter. To support the seasonal working capital investment, we have $80 million drawn on our revolving credit facility. We remain focused on improving earnings, generating cash and maintaining balance sheet flexibility as we continue to manage through the current market environment.

Turning to slide seven, the year-over-year change in revenue was driven by lower volume mix, partially offset by higher pricing and favorable foreign exchange. Core revenue declined 2%, while foreign exchange contributed a $9 million benefit. Taken together, these items resulted in a 1% decline in reported revenue for the quarter.

Turning to slide eight, adjusted EBITDA for the second quarter was $42 million compared to $39 million in the prior year quarter. The year-over-year improvement was led by strong productivity across the business, which contributed a $36 million benefit. We also delivered meaningful SG&A savings. Those savings were partially offset by the non-recurrence of certain one-time benefits recognized in the prior year, resulting in the combined net benefits of $1 million from SG&A and other items.

These improvements more than offset continued external and market-related pressures. Price cost was a $29 million headwind, reflecting ongoing inflation that exceeded the benefit from pricing. Lower volume mix represented an additional $5 million headwind. Overall, the bridge demonstrates the progress we are making on the areas within our control. Productivity and cost discipline enabled us to grow adjusted EBITDA year-over-year despite continued price-cost pressure and soft market volume.

Turning to slide nine and our segment results, North America revenue was $529 million, compared to $556 million in the prior year quarter. The year-over-year decline was driven by lower volume mix with the majority of the impact coming from lower volume. Adjusted EBITDA for North America was $41 million, compared to $35 million last year. Adjusted EBITDA margin improved to 7.7% from 6.3%.

The increase reflects continued productivity gains and meaningful SG&A improvements, which more than offset a portion of the pressure from ongoing price-cost headwinds and lower volume. In Europe, revenue was $289 million, compared to $268 million in the prior year quarter, an increase of 8%. The improvement was driven by better volume mix, favorable foreign exchange and higher pricing. Foreign exchange contributed approximately 3% points to the year-over-year revenue increase.

Adjusted EBITDA for Europe was $13 million, compared to $17 million last year. The decline was driven primarily by price-cost pressure. While we realized higher pricing year-over-year, it was not sufficient to offset additional material cost inflation during the quarter. These headwinds were partially offset by improved productivity and more favorable volume mix. I will now hand it back to Bill to discuss our market outlook.

Thanks, Samantha. Turning to slide 11, I want to review our current market outlook and the assumptions supporting our expectations for the remainder of 2026.

We continue to operate in a soft and uncertain demand environment. Well, the pace of year-over-year declines is beginning to moderate in certain areas. Our outlook remains cautious and does not assume a meaningful near-term recovery. In North America, we continue to expect the overall windows and doors market to decline in the low to mid-single digits. Within that outlook, we anticipate new single-family construction will be down low-single digits while repair and remodel activity will decline in the mid-single digit range.

We expect US multifamily to increase significantly year-over-year. In Canada, conditions remain more challenging and we continue to expect high-single-digit declines due to broader economic softness and weak housing activity. In Europe, market conditions appear to be stabilizing and we continue to expect volumes to be approximately flat year-over-year while demand remains subdued. We are not expecting a further material deterioration from current levels.

At the company level, our volume assumptions remain broadly aligned with the underlying markets. We continue to see benefits from improved service and customer engagement which are supporting opportunities to regain share. At the same time, we remain disciplined in how we approach pricing and commercial activity given the continuing price cost pressures across the business.

Overall, our outlook is based on current demand levels and continued execution against the areas within our control. We are not relying on a market recovery to deliver our expectations.

Instead, our focus remains on consistent service, disciplined cost management, and improved operating performance. Turning to slide 12, I'll walk through our updated full year, 2026 guidance.

We are raising the low end of our revenue outlook as improved service levels begin to translate into share recovery and new incremental business.

We now expect net revenue in the range of $3.1 billion to $3.2 billion compared to our previous range of $3.05 billion to $3.2 billion.

As a result, we now expect core revenue to decline between two and 5% year over year compared to our previous expectation of a three to 6% revenue decline.

We are also increasing the low end of our adjusted EBITDAW guidance. We focus on SG&A and broader cost management. These improvements are expected to be partially offset by continued inflation cost pressure.

Turning to cash flow, we are lowering our full year expectations primarily due to additional restructuring costs associated with right sizing our SG&A structure and other one time costs incurred during the year. We are partially offsetting these impacts through continued discipline on capital spending and now expect full year capital expenditures of approximately $85 million.

As a result, we now expect operating cash flow of approximately $10 million and free cash flow to be a use of approximately $75 million for the year.

Finally, our guidance continues to assume no significant portfolio changes. Turning to slide 13, this chart bridges our 2025 adjusted EBITDA of $118 million to the updated midpoint of our 2026 adjusted EBITDAW guidance of $135 million.

Starting with the market, we continue to expect volume mix to represent an approximately $25 million headwind. This reflects the ongoing softness across our end markets and remained unchanged from our previous expectations.

The next two items reflect improving execution across the business. We now expect net share loss to be a $20 million headwind compared to $30 million previously.

This improvement reflects the progress we are making on service and the resulting opportunities to regain business with our customers.

We also now expect a total of approximately $120 million of productivity benefit compared to $110 million previously. This includes both the carryover benefit from our transformation initiatives and the impact of continued business right sizing. The increase reflects stronger productivity, additional SG&A actions, and our continued focus on aligning the cost structure with current demands. These improvements are partially offset by greater price cost pressure.

We now expect price cost to be an approximately $50 million headwind compared to $40 million previously. The increase primarily reflects continued freight and material cost inflation that is still exceeding the benefit from pricing.

We are managing these pressures closely, but as we have discussed, addressing persistent price cost headwinds will require us to continue to work constructively with our customers.

The remaining items represent a net headwind of approximately $8 million. This includes approximately $10 million of headwind from variable compensation and other timing related factors partially offset by favorable foreign exchange and other items. Taken together, these elements bridge to the midpoint of our updated adjusted EBITDA guidance.

The improvement reflects stronger productivity and less share loss, which more than offset the additional price cost pressure we now expect.

I wanna spend a few minutes on the progress we continue to make with service across our North America business. Turning to slide 14, on time, in full delivery or OTIF remains one of the most important measures of how well we are serving our customers. Over the past year, we have made significant progress in improving service performance and creating greater consistency across the network.

As shown on the slide, OTIF declined modestly in June and remained below 90% in July. July performance was affected by temporary production disruptions related to Canadian wildfire smoke, which required us to shut down certain sites for a period of time.

We also experienced challenges with several freight providers that did not deliver the level of service we require. The impact from the wildfire smoke has now largely subsided and our effective facilities have returned to normal operations. We are also actively addressing the freight challenges, working directly with our providers and taking the necessary actions to improve reliability.

Based on the progress, we would expect OTIF to return above 90% going forward. Importantly, our customers are recognizing the quality and consistency of our service levels. Customer feedback continues to be positive. Confidence in our ability to deliver has improved and we are seeing additional opportunities to compete for and win back business that we had previously lost.

The progress we have made reflects the work of our teams to improve execution, respond quickly when issues arise and build greater consistency across our operations. That stronger execution is also beginning to reshape our revenue trajectory. With service back to levels that meet customer expectations, we believe the business is better positioned to perform more in line with the market and benefit from normal market growth over time.

We are encouraged by the progress we have made, but need to improve consistency. Sustaining Europe's OTIF above 95% while returning North America to above 90% and maintaining that performance will help us further strengthen customer relationships, support our share position and deliver improved performance over time.

Finally, turning to slide 15, I'll close by stepping back and highlighting the priorities that will continue to guide us through the remainder of the year.

First, customer service remains at the center of our focus. We have made meaningful progress in improving consistency, responsiveness and delivery performance and our customers are recognizing that improvement.

Better service is helping us rebuild trust, strengthen relationships and create opportunities to regain business that we had previously lost. We need to maintain that momentum and continue delivering at the level our customers expect.

Cash and cost management also remain critical priorities. We are laser focused on addressing the upcoming maturities in order to strengthen our balance sheet and provide additional time to improve our business performance in choppy market conditions.

We remain diligent on working capital, capital spending, cost control, as well as the broader actions needed to preserve liquidity and improve free cash flow.

Finally, I want to again thank our associates across Gelslin. We continue to operate in a difficult environment and the progress we are seeing would not be possible without their hard work, commitment and resilience.

Our results are improving, our customers are seeing the difference and that progress is a direct reflection of the effort our teams are making every day.

There is still more work to do, but we are moving in the right direction and are focused on building from here.

With that, I'll turn the call over to James for questions.

Thanks, Bill. Operator, we're now ready to begin Q&A.

Hey, Charles. Good morning. Good morning.

Yes, thanks for the question. So we continue to make progress on our OTIF, which is on time and full delivery. That's the most important metric that we track, both in Europe and in North America. And that basically represents our ability to meet customer expectations. As we shared in prepared remarks, there was a little bit of degradation, slightly below 90% in North America.

In June and July, there was a few wildfire related shutdowns, obviously unplanned, but things that we had to react to. We're already seeing August tracking based on expectations back up to above 90% marks. So we're feeling very comfortable. Second reflection is no significant negative customer feedback through the last three, four months on service levels. So we feel that we're continuing to regain some of the delivery challenges that we had coming out of last year and into the beginning of this year.

And that's starting to materialize into sales gains based on where we initially budgeted the year. So we picked up probably 25 million in our latest update of top line guidance of additional sales based, we think mainly on our ability to really perform against customer expectations. So we continue to make progress.

And the wildfires continue, unfortunately, to be a real challenge. You may be seeing some of the news northwest of the US. There are some pretty significant wildfires burning again. So this is something that we're monitoring closely. Obviously, you want to make sure all our associates and their families are safe, but trying to manage through some potential disruptions that we still expect over the next couple of months.

Yep, thanks. That probably a two part question and answer. Let me start just with some higher level comments on price costs. So there is continued select price pressure, but the larger change as we have signaled in our prepared remarks versus prior expectations is cost inflation. And that's mainly inbound and outbound freight as well as European energy price impact.

So obviously our productivity and SG&A, as you can see on the waterfall, savings are helping to offset the near term gap, but we are continuing to work with our customers to address the longer term price cost dynamics. And I think Samantha can share a little bit more detail on the levers of that price cost dynamic.

Sure, I do want to reiterate, we are seeing positive price. So we have been putting price into the market. Unfortunately, it's been offset by the increased inflation. And as Bill mentioned, I would say, it's about a two third, one third right now on material inflation and then freight inflation across the company. Energy prices, we're seeing that in Europe, but it's mostly as they'll talk to tied to fuel prices. So it's both the inbound on our material costs, as well as the input commodities that are going into our business coming from the fuel.

Yeah, thank you.

I would say, hey, Stephen, good morning, Bill. It's fairly balanced. Definitely on the interior door side in North America, we are seeing some small pickups.

It's the North American business. It's obviously a regional business model based on where we have assets in place and how we're servicing our customers. So I'd say in general, it's a very balanced rebound of volume that we're regaining.

And there are, I'd say, hotspots. I said one of them was on the interior door side. And we continue to make progress also on regaining some of the vinyl window business, which has been important. And think about this as balanced between both our traditional sales channel but also the R&R. Obviously, the market remains fairly soft as we know, but this is some share loss that we probably never should have lost that we're starting to pick back up, connected with our OTIF improvements and the consistency that we're showing for our customers.

Right, so how we think about and how we actually comp that business, it's Canada and multifamily is kind of how we look at it, Canada is significantly down, multifamily is significantly up. As we've been signaling for a while, this is our VPI business. Our teams are doing a phenomenal job of gaining new business and projects across North America but also delivering on that, this will clearly roll in to next year. I mean, we're already looking right now at Q4 pipelines that continue to be very robust. So we feel comfortable and confident about the trajectory.

However, it's a small relative share of our overall portfolio. So not sure if there's a market share gain in this segment but for us, the year over year comps are significant on the growth side.

One other thing, Steven, on VPI in particular, our multifamily business, we did, we made an investment to grow some of our sales base in the East Coast a few years ago and we're really starting to see that pay off as we continue to grow business on the Eastern part of the US. This was primarily a Northwestern business located out in Washington.

And so that's been really positive to see and we would expect that to continue into next year.

Yes, thanks for your question. So we feel pretty good. I'd say the bucket is probably 100% action and we're going to take off obviously every month as we roll forward through the rest of the year. So we're feeling confident about that progress. Obviously understanding that productivity is connected to volume and as volume moves, there could be positive or negative impacts based on how the second half materializes.

We're also thinking based on what we've shown in the waterfall, the total cost that we think we can deliver or cost out we think we can deliver this year. Think about roughly 30 million rolling into 2027.

Yes, so as you can see in the slide, we are seeing, I would say overall tariff, tempering slightly from when we kicked off the beginning of the year. But to your question on the tariff refund, we did receive an immaterial amount in 2Q. It was approximately $1 million. And we also did receive additional tariff refund in Q3. We expect the net benefit in Q3 will be in the mid-single-digit millions.

So we'll be reporting that when we release our Q3 as well.

Thanks everyone for joining us today. If you have any follow-up questions, please feel free to reach out. We appreciate your time and interest in Gelslin. Have a great day.