JELD-WEN Holding, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Although the request references 2022 Q4, this filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary. Amounts below are in U.S. dollars.
Business context and financial performance
JELD-WEN manufactures and distributes residential and non-residential doors, windows, and related building products. It operates in North America, Europe, and Australasia; doors represented 63% of 2022 revenue, windows 22%, and other products and services 15%.
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $5.129 billion | $4.772 billion |
| Gross profit / margin | $945.4 million / 18.4% | $975.3 million / 20.4% |
| Operating income / margin | $106.2 million / 2.1% | $267.4 million / 5.6% |
| Net income | $45.7 million | $168.8 million |
| Diluted EPS | $0.53 | $1.72 |
| Adjusted EBITDA (non-GAAP) | $422.2 million | $465.1 million |
| Cash from operating activities | $30.3 million | $175.7 million |
Revenue rose 7.5%, driven by 12% core revenue growth, including 13% pricing benefit, partly offset by 1% lower volume/mix and a 5% adverse foreign-exchange impact. Gross margin contracted 2.0 percentage points, primarily because input-cost inflation outpaced pricing actions. Operating income also reflected a $54.9 million Europe goodwill impairment and higher restructuring charges. The effective tax rate was 42.1%, versus 17.4% in 2021, largely due to the goodwill impairment.
Segments and material changes
- North America: Revenue increased 15.2% to $3.259 billion; Adjusted EBITDA was essentially flat at $352.9 million. Segment margin declined to 10.8% from 12.5%.
- Europe: Revenue decreased 5.0% to $1.284 billion, including a 12% adverse FX effect. Adjusted EBITDA fell 41.6% to $74.3 million; segment margin declined to 5.8% from 9.4%. The segment recorded the $54.9 million goodwill impairment.
- Australasia: Revenue decreased 0.8% to $585.4 million, including an 8% adverse FX effect. Adjusted EBITDA declined 8.2% to $65.6 million; segment margin was 11.2% versus 12.1%.
Consolidated Adjusted EBITDA margin declined to 8.2% from 9.7%. Other income of $54.9 million included, among other items, $14.0 million recovery of interest on impaired notes, $10.5 million legal settlement income, $8.1 million gain on asset disposals, and $8.0 million in insurance and government assistance. These items are not all necessarily recurring.
Cash flow, debt, and liquidity
- Operating cash flow fell to $30.3 million, primarily due to lower earnings and higher working capital. Capital expenditures were $83.2 million; operating cash flow less capital expenditures was approximately negative $52.9 million (calculated from reported figures).
- Investing cash outflow was $67.0 million. Financing cash outflow was $120.0 million, including $132.0 million of share repurchases.
- Year-end cash and cash equivalents were $219.4 million. Reported total liquidity was $645.5 million, including $410.7 million available under the ABL and $15.4 million under the Australian facility; this is a company-defined non-GAAP measure.
- Total debt was $1.759 billion, including $55.0 million drawn on the ABL; long-term debt, net of discounts and issuance costs, was $1.713 billion. Debt maturities include $674.2 million in 2025 and $415.9 million in 2027. The company reported compliance with its debt agreements at year-end.
- The company repurchased $132.0 million of stock in 2022 and had a new $200 million authorization, with no repurchases under that authorization as of year-end. It does not expect to pay cash dividends in the foreseeable future.
Outlook, risks, and contingencies
Management expected weaker North American demand in 2023 due to higher interest rates, inflation, and softer markets. It expected European new construction and repair-and-remodel activity to soften, citing inflation, rising rates, and the Russia-Ukraine conflict. In Australasia, backlog was expected to support strong demand through the first half of 2023, while full-year activity could soften. Management was evaluating options for the Australasia business. The filing provides no numerical earnings or revenue guidance.
- Key exposures include housing-market cyclicality, higher borrowing costs, raw-material, freight, energy and labor inflation, supply-chain disruption, customer concentration, foreign-exchange movements, and execution risks from restructuring and footprint rationalization. The Home Depot accounted for approximately 14% of revenue; the top ten customers accounted for 39%.
- Steves & Sons litigation requires divestiture of the Towanda, Pennsylvania operations and certain related assets. Towanda remained classified as held for sale at year-end, with $125.7 million of assets and $6.0 million of liabilities; timing and completion remain subject to the process and court-related conditions.
- For the Everett, Washington environmental matter, the company estimated possible outcomes of $11.8 million to $33.4 million and recorded provisions within that range. Final remediation costs and allocation among potentially liable parties may differ materially. A separate Pennsylvania waste-removal order requires completion by August 31, 2025; $2.3 million of bonds are posted.
- Management reported effective disclosure controls and internal control over financial reporting; the independent auditor also issued an unqualified opinion on the financial statements and internal controls.
Important facts for investors to verify
- Whether price increases and productivity improvements can offset input-cost inflation and declining volumes, particularly in Europe.
- Working-capital trends, operating cash conversion, capital spending, and borrowing availability as end-market demand changes.
- Debt repayment and refinancing capacity, especially the 2025 maturities, and the effect of variable interest rates.
- Progress, sale terms, timing, and financial impact of the Towanda divestiture, as well as the final Everett cleanup plan and cost allocation.
- Any outcome of the Australasia strategic review and changes to management’s qualitative 2023 market outlook.