JELD-WEN Holding, Inc. 2026 Q2 Earnings Call

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.jeldwen.com. We will be referencing this presentation during our call. Today, I am 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 10-K and 10-Q filed with the SEC.

Jeld-Wen 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-GAAP 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 GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP 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. Good morning, everyone. Before turning to our results, I want to begin by recognizing our associates at Jeld-Wen. 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 Michel, who joined Jeld-Wen 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 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 due to temporary disruptions.

Those issues have largely subsided. 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 was 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 had previously lost. 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 EBITDA 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. 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 EBITDA 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 a combined net benefit 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 volumes.

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 volumes. 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 volumes. 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 three percentage 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. While 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 U.S. 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.