JELD-WEN Holding, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing is an annual report, not a standalone Q4 filing; unaudited quarterly results are also summarized below. JELD-WEN designs, manufactures, and distributes doors, windows, and related products. Continuing operations comprise North America and Europe. Australasia was sold on July 2, 2023 and is reported as discontinued operations.
Key financial results
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Revenue | $4.304 billion | $4.544 billion |
| Gross profit / margin | $832.6 million / 19.3% | $785.9 million / 17.3% |
| Operating income / margin | $141.6 million / 3.3% | $59.3 million / 1.3% |
| Continuing-operations net income | $25.2 million | $12.2 million |
| Net income, including discontinued operations and sale gain | $62.4 million | $45.7 million |
| Adjusted EBITDA from continuing operations (non-GAAP) | $380.4 million; 8.8% of revenue | $348.8 million; 7.7% of revenue |
| Cash provided by operating activities | $345.2 million | $30.3 million |
| Capital expenditures | $98.3 million for property and equipment; $12.6 million for intangible assets | $83.2 million for property and equipment; $9.0 million for intangible assets |
- Revenue and segments: Revenue fell 5.3%; core revenue declined 5%, reflecting a 10% unfavorable volume/mix partly offset by 5% price realization. North America revenue decreased 4.2% to $3.123 billion; Europe decreased 8.0% to $1.181 billion.
- Margins and segment performance: Gross margin improved mainly on favorable price/cost. Adjusted EBITDA rose 8.3% in North America to $382.2 million and 9.6% in Europe to $81.5 million. Corporate and unallocated costs increased 6.2% to $83.2 million.
- Cash flow: Operating cash flow improved by $314.9 million, primarily from a $342.5 million favorable change in working capital. Investing activities provided $279.2 million, including proceeds related to the Australasia sale; financing activities used $563.2 million, largely reflecting debt repayments.
- Liquidity and debt: At year-end, unrestricted cash was $288.3 million and available ABL borrowing capacity was $462.3 million, for reported total liquidity of $750.6 million. Total debt was $1.233 billion, down from $1.758 billion. The company had no ABL borrowings outstanding and reported compliance with debt agreements.
- Q4 2023: Revenue was $1.021 billion and gross profit was $191.7 million. Continuing-operations net loss was $22.6 million; net loss including discontinued operations and the sale-related item was $34.8 million.
Material changes and unusual items
- On August 3, 2023, the company redeemed $250 million of 6.25% Senior Secured Notes and $200 million of 4.63% Senior Notes, recording a $6.5 million debt-extinguishment loss. Year-end Senior Notes principal was $600 million; Term Loan Facility principal was approximately $536 million.
- The Australasia disposal generated a reported $15.7 million after-tax gain. The segment contributed $301.9 million of revenue and $21.5 million of after-tax income through the sale date in 2023. Cash flows include discontinued operations through July 2.
- FY 2023 income tax expense was $63.3 million, an effective tax rate of 71.5%. A $32.7 million increase in valuation allowances was a major driver. The Q4 sale-related result included a $10.4 million after-tax loss associated with estimated sale taxes and related tax true-ups.
- Restructuring and asset-related charges increased to $35.7 million from $17.6 million. Actions included North American facility closures and planned closures of two European manufacturing facilities; management estimated approximately $20.8 million of pre-tax costs and cash outlays for the European actions by end-2024.
- Other income included a $6.1 million Employee Retention Credit, a $7.0 million refund of China antidumping-duty deposits, and a $4.3 million pension settlement charge, among other items. Adjusted EBITDA is non-GAAP and excludes specified special items; it should not be viewed as a substitute for GAAP results.
Outlook, risks, and contingencies
- No quantified company-wide 2024 revenue or earnings guidance is provided in the supplied filing text. Management expects North American market headwinds from elevated interest rates and labor inflation, and European headwinds from economic weakness and persistently high interest rates. Pricing, productivity, and cost initiatives are intended to help offset pressure.
- Principal risks include construction and remodeling demand, interest rates and consumer financing, raw-material and labor costs, supply-chain disruption, customer concentration, competition, currency movements, and execution of footprint and productivity initiatives. The top ten customers generated approximately 43% of 2023 revenue; Home Depot accounted for 15% and Lowe’s for 11%.
- Europe goodwill is particularly sensitive: at year-end, management estimated that a decline of approximately 3% in its fair value could trigger impairment. The company recorded a $54.9 million Europe goodwill impairment in 2022, but none in 2023.
- Environmental exposure includes the Everett, Washington remediation, for which the company estimated a possible range of $11.8 million to $33.4 million and has recorded a provision within that range; final costs and allocation among potentially liable parties could differ. At Towanda, Pennsylvania, the company must remove a wood-fiber waste pile by August 31, 2025 or risk forfeiting bonds and potential penalties.
- The Towanda divestiture remains tied to the Steves litigation and court-supervised process. Other litigation and tax examinations may also affect results; management states outcomes can differ materially from recorded estimates.
- The company reported effective disclosure controls and internal control over financial reporting as of December 31, 2023; the independent auditor gave an unqualified opinion on the financial statements and internal control.
Investor verification priorities
- Check the continuing-operations figures against the discontinued-operations presentation, particularly Australasia’s sale proceeds, gain, and tax adjustments.
- Assess the sustainability of improved gross margin and Adjusted EBITDA amid declining volumes, lower market demand, and restructuring-related costs; review the non-GAAP reconciliation.
- Verify the working-capital contribution to operating cash flow and whether cash generation remains strong after the sale proceeds and seasonal effects.
- Review debt maturities, interest-rate exposure, ABL borrowing-base availability, and the January 2024 Term Loan margin reduction disclosed after year-end.
- Monitor Europe goodwill assumptions, valuation allowances and tax-credit realizability, the Towanda disposal, and environmental and litigation exposures.