Attached files
| file | filename |
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| 8-K - 8-K - JELD-WEN Holding, Inc. | jeld-wenq220178xk.htm |
| EX-99.1 - EXHIBIT 99.1 - JELD-WEN Holding, Inc. | jeld-wenq22017ex991.htm |
1 P R I V I L E G E D A N D C O N F I D E N T I A L
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Q2 2017 Results Presentation | August 8, 2017
2
Disclosures
Forward-Looking Statements
This presentation contains certain "forward-looking statements" regarding business strategies, market potential, future financial performance, the potential of our categories and brands, our outlook for 2017, and
our expectations, beliefs, plans, objectives, prospects, assumptions, or other future events. Forward-looking statements are generally identified by our use of forward-looking terminology such as “anticipate”,
“believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “potential”, “predict”, “seek”, or “should”, or the negative thereof or other variations thereon or comparable terminology. Where,
in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans, expectations, assumptions, estimates, and
projections of our management. Although we believe that these statements are based on reasonable expectations, assumptions, estimates and projections, they are only predictions and involve known and
unknown risks, many of which are beyond our control that could cause actual outcomes and results to be materially different from those indicated in such statements.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including the factors discussed in our Annual Report on Form 10-K for the
year ended December 31, 2016, and our Quarterly Report on Form 10-Q for the quarter ended April 1, 2017, both filed with the Securities and Exchange Commission.
The assumptions underlying the guidance provided for 2017 include the achievement of anticipated improvements in end markets, competitive position, and product portfolio; stable macroeconomic factors; no
changes in foreign currency exchange and tax rates; and favorable interest expense due to the recent debt reduction. The forward-looking statements included in this presentation are made as of the date
hereof, and except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this
presentation.
Non-GAAP Financial Measures
This presentation presents certain “non-GAAP” financial measures. The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). A reconciliation of non-GAAP financial measures used in this presentation to their nearest comparable GAAP financial measures is included at the
end of this presentation. The Company provides certain guidance on a non-GAAP basis because the Company cannot predict certain elements that are included in certain reported GAAP results, including the
variables and individual adjustments necessary for a reconciliation to GAAP.
We use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, and Adjusted EPS because we believe they assist investors and analysts in comparing our operating performance across reporting
periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA and Adjusted EBITDA margin are helpful in
highlighting trends because they exclude the results of decisions that are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding
capital structure, the tax jurisdictions in which we operate, and capital investments. We use Adjusted EBITDA and Adjusted EBITDA margin to measure our financial performance and also to report our results to
our board of directors. Further, our executive incentive compensation is based in part on Adjusted EBITDA. In addition, we use Adjusted EBITDA as calculated herein for purposes of calculating compliance with
our debt covenants in certain of our debt facilities. Adjusted EBITDA should not be considered as an alternative to net income as a measure of financial performance or to cash flows from operations as a liquidity
measure.
We define Adjusted EBITDA as net income, eliminating the impact of the following items: loss from discontinued operations, net of tax; gain (loss) on sale of discontinued operations, net of tax; equity (earnings)
loss of non-consolidated entities; income tax; depreciation and amortization; interest expense, net; impairment and restructuring charges; gain on sale of property and equipment; share-based compensation
expense; non-cash foreign exchange transaction/translation income (loss); other non-cash items; other items; and costs related to debt restructuring, debt refinancing, and the Onex investment. Adjusted
EBITDA margin is defined as Adjusted EBITDA divided by net revenues.
We present free cash flow because we believe it assists investors and analysts in determining the quality of our earnings. We also use free cash flow to measure our financial performance and to report to our
board of directors. In addition, our executive incentive compensation is based in part on free cash flow. We define free cash flow as cash flow from operations less capital expenditures (including purchases of
intangible assets). Free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure.
Adjusted net income represents net income adjusted for the after-tax impact of i) non-cash foreign currency (gains) losses, ii) impairment and restructuring charges, and iii) other non-recurring expenses
associated with certain matters such as our initial public offering, secondary offering, mergers, and litigation. Adjusted EPS represents net income per diluted share adjusted to exclude the estimated per share
impact of the same specifically identified items used to calculate adjusted net income as described above. All such items are tax-effected at our estimated annual effective tax rate of approximately 29.8%.
Other companies may compute these measures differently. No non-GAAP metric should be considered as an alternative to any other measure derived in accordance with GAAP.
Due to rounding, numbers presented throughout this document may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures.
3
Introduction
Mark Beck, President and CEO
4
JELD-WEN at a Glance
Global market leader in windows and doors
Q2 2017 LTM Net Revenues of $3.7 billion and
Adj. EBITDA of $426 million (~11.5% margin)
Scaled platform creating competitive advantage
• 117 manufacturing facilities in 19 countries
• 20,000+ employees
• 13,000+ customers
Long-standing customer relationships with
home centers, builders and independent dealers
Seven strategic acquisitions in the past two
years – all on track to deliver strong ROI
Business Highlights
Key Brands
Net Revenues Mix(1)
ApplicationProduct Geography
(1) Based on FY2016 results.
GLOBAL MARKET LEADER WITH UNMATCHED SCALE
A us t ra l as i a
14%
E urope
27%
N .A .
59%
N on-R es i .
10%
R es i .
R epa i r &
R em ode l
45%
R es i . N ew
C ons t ruc t i o n
45%
Othe r
9%
W i ndows
24%
D oors
67%
5
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
FY 2013 LTM Q2 2017 Target*
An Extraordinary Transformation Underway
PROVEN TEAM DRIVING EARNINGS GROWTH AND FREE CASH FLOW
Adjusted EBITDA Margin %
Where We Are Today
Our Proven Operating Model
Early stages of a multi-year turnaround
A global platform with scale, iconic brands and
leading market positions
A team of accomplished leaders assembled
from the best Industrials (Danaher, Cooper,
UTC, etc.) executing a proven operating model
• Self-help: quality, productivity, sourcing
• Steady profitable growth: price, innovation,
share-gain
• Strategic M&A: as an industry consolidator
Where We Are Going
1
2
3
4.4%
11.5%
15-20%
*Note: This presentation includes long-term targets, which are for illustrative purposes only. These long-term targets should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the times at, or by which, if at all, such performance or results will be achieved.
6
Proven Operating Model
Target Identification
Target Cultivation
Stage Gate Process
Integration Playbook
Performance Tracking
Strategic M&AOperational Excellence
Talent Management, JELD-WEN Excellence Model (JEM), and Enabling Technology
WORLD-CLASS PERFORMANCE AND RETURNS
New Products and Innovation
Brand Strategy
Channel Management
Sales Force Effectiveness
Pricing Optimization
Profitable Organic Growth
Safety and Compliance
Quality System
Customer Experience
Productivity
Sourcing
7
Profitable Organic Growth
Recent New Product Launches
INVESTING IN INNOVATION TO DRIVE PROFITABLE GROWTH
North America Europe
Australasia
Premium Vinyl Windows Fiberglass Doors DesignGlide Hardware Carisma – 3D Printing Concealed Frame
Alumiere Windows Blonde Oak Doors Flomotion & Duomode Sashless
Fire Rated Steel
8
NEW PRODUCTS DIFFERENTIATED BY DESIGN AND PERFORMANCE
Profitable Organic Growth
Recent New Product Launches
Architectural Fiberglass Doors Alumiere Windows
9
Strategic M&A
Mattiovi Acquisition
HIGHLY STRATEGIC BOLT-ON; SYNERGIES IN BOTH REVENUES AND COST
Leading interior door manufacturer in Finland with a
strong business in both the residential and commercial
markets
Rationale: Strong brand name and product offering
improves our Nordic market position and provides
additional capacity for door frames
Closed June 30, 2017
Primary products include:
• Stile and rail interior doors
• Molded interior doors
• Wet area doors (sauna and bathroom)
• Fire-rated and sound proof doors
Three Finnish manufacturing sites:
• Laitila – Stile and rail solid wood doors
• Alavus – Project doors
• Posio – Door frames and components
10
Second Quarter Highlights
BUSINESS TRANSFORMATION DRIVING EARNINGS AND FCF IMPROVEMENT
Adjusted EBITDA growth of 11.2%
- Adjusted EBITDA margin of 13.2%, a 150 bps increase over prior year
- Favorable pricing, operational cost savings initiatives, and improved mix
Net revenues decreased 1.6%
- Unfavorable foreign exchange impact and small decrease in core revenues, partially
offset by contribution from Breezway acquisition
Free cash flow for the year to date increased $77 million
JEM initiatives driving improvements in margin and cash flow
Investing in profitable growth and strategic M&A
11
Financial Review
Brooks Mallard, EVP and Chief Financial Officer
12
SOLID MARGIN IMPROVEMENT IN THE QUARTER; YTD RESULTS ON TRACK
2017 YoY Change 2017 YoY Change
Net Revenues $948.7 (1.6%) $1,796.5 2.0%
Gross Margin $235.7 11.1% $421.7 13.9%
Gross Margin Percent 24.8% 280 bps 23.5% 250 bps
Net Income $46.8 (30.1%) $53.2 (27.1%)
EPS – Diluted (1) $0.43 N/A N/A N/A
Adjusted EPS – Diluted (1) $0.51 N/A N/A N/A
Adjusted EBITDA $125.3 11.2% $206.3 18.6%
Adjusted EBITDA Margin 13.2% 150 bps 11.5% 160 bps
Q2 and YTD 2017 Financial Summary
USD in millions (except for per share items)
Q2 YTD
( 1 ) Y T D f i g u r e s a n d p r i o r p e r i o d c o mp a r i s o n s a r e n o t me a n i n g f u l , a s Q 2 2 0 1 7 wa s t h e f i r s t f u l l q u a r t e r r e f l e c t i n g t h e p o s t - I P O c a p i t a l s t r u c t u r e a n d d i l u t i o n o f t h e I P O t r a n s a c t i o n .
13
Q2 2017
Pricing 1% 2% 0% 1%
Volume/Mix (2%) (4%) 1% 0%
Core Growth (1%) (2%) 1% 1%
Acquisitions 1% 0% 0% 5%
FX (2%) (1%) (4%) 0%
Total (1.6%) (2.8%) (3.0%) 6.0%
PRICING CONTINUES TO BE POSITIVE; CORE REVENUES DECLINED IN Q2
Q2 and YTD 2017 Net Revenues Walk
JELD-WEN North America Europe Australasia
YTD 2017
Pricing 2% 2% 1% 1%
Volume/Mix 0% (1%) 3% 2%
Core Growth 2% 1% 4% 3%
Acquisitions 1% 0% 0% 8%
FX (1%) 0% (5%) 3%
Total 2.0% 0.8% (0.8%) 13.7%
14
SOLID MARGIN EXPANSION DESPITE SOFT REVENUE
2017 YoY Change 2017 YoY Change
Net Revenues $551.7 (2.8%) $1,035.8 0.8%
Adjusted EBITDA $79.8 5.3% $130.0 21.0%
Adjusted EBITDA Margin 14.5% 110 bps 12.6% 210 bps
North America Segment Performance
USD in millions
Q2 YTD
Wood Windows Vinyl Windows Interior Doors Exterior Doors Wall Systems
15
FX IMPACTING REVENUES; SIGNIFICANT MARGIN IMPROVEMENT
2017 YoY Change 2017 YoY Change
Net Revenues $258.9 (3.0%) $501.2 (0.8%)
Adjusted EBITDA $37.1 8.1% $64.3 9.0%
Adjusted EBITDA Margin 14.3% 140 bps 12.8% 110 bps
Europe Segment Performance
USD in millions
Q2 YTD
Residential Doors Commercial Doors Fire Resistant Sound Dampening Security Doors
16
RECENT ACQUISITIONS DRIVING GROWTH; MARGIN PROGRESSION CONTINUES
2017 YoY Change 2017 YoY Change
Net Revenues $138.2 6.0% $259.5 13.7%
Adjusted EBITDA $17.3 21.7% $30.6 32.1%
Adjusted EBITDA Margin 12.5% 160 bps 11.8% 170 bps
Australasia Segment Performance
USD in millions
Q2 YTD
Windows Doors Shower Enclosures Closet Systems Specialty Windows
17
Balance Sheet and Cash Flow
USD in millions
NET LEVERAGE REDUCED TO 2.4x; SIGNIFICANT LIQUIDITY
Balance Sheet and Liquidity July 1, 2017 December 31, 2016(1)
Total Debt $1,245.8 $1,620.0
Cash $227.7 $102.7
Total Net Debt $1,018.1 $1,517.3
Net Debt / Adjusted EBITDA 2.4x 3.9x
Liquidity (2) $527.9 $381.9
Cash Flow YTD Q2 2017 YTD Q2 2016
Cash Flow From Operations $66.2 $12.6
Capital Expenditures (3) ($19.8) ($43.3)
Free Cash Flow $46.3 ($30.7)
( 1 ) D o e s n o t r e f l e c t t h e i mp a c t o f p r o c e e d s r e c e i v e d f r o m i n i t i a l p u b l i c o f f e r i n g s u b s e q u e n t t o y e a r e n d .
( 2 ) L i q u i d i t y i n c l u d e s c a s h a n d a v a i l a b i l i t y f r o m u n d r a wn r e v o l v i n g c r e d i t f a c i l i t i e s .
( 3 ) I n c l u d e s p u r c h a s e s o f p r o p e r t y , e q u i p me n t , a n d i n t a n g i b l e a s s e t s .
18
Summary and 2017 Outlook
Mark Beck, President and Chief Executive Officer
19
OUTLOOK AFFIRMED FOR 2017 REVENUE AND ADJUSTED EBITDA
Net Revenue Growth 1.5% – 3.5%
Adjusted EBITDA $440 – $460
Capital Expenditures $80 – $90
2017 Outlook
USD in millions
20
Appendix
21
Non-GAAP Reconciliation
Adjusted EBITDA (USD in millions)
1. For the six-months ended July 1, 2017, interest expense includes the write-off of $7.0 million of original issue discount and deferred financing fees related to the
repayment of debt.
2. Other non-cash items include; (i) in the three months ended June 25, 2016, (1) $2.6 million out-of-period charge for European warranty liability adjustment; and (ii) in
the six months ended June 25, 2016, (1) $2.6 million out-of-period charge for European warranty liability adjustment, and (2) charges of $0.4 million for Trend PPA
inventory valuation adjustment.
3. Other items not core to business activity include: (i) in the three-months ended July 1, 2017, (1) $7.8 million in legal costs, (2) $1.0 million in secondary offering
costs, and (3) $0.7 million in legal entity consolidation costs; (ii) in the three months ended June 25, 2016, (1) $0.4 million professional fees related to the IPO
process, (2) $0.3 million related to a legal settlement accrual for CMI, (3) $0.2 million of non-recurring audit fees, and (4) $0.2 million in acquisition costs; (iii) in the
six months ended July 1, 2017, (1) $15.8 million in legal costs, (2) $(2.2) million gain on settlement of contract escrow, (3) $1.0 million secondary offering costs, (4)
$0.8 million in legal entity consolidation costs, (5) $0.6 million in facility shut down costs, and (6) $0.3 million in IPO costs; and (iv) in the six months ended June 25,
2016, (1) $1.0 million in acquisition costs, (2) $0.4 million of professional fees related to IPO process, (3) $0.3 million in Dooria plant closure costs, (4) $0.3 million
related to a legal settlement accrual for CMI, (5) $0.2 million of tax consulting costs in Europe, and (6) $0.2 million of non-recurring audit fees.
4. Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP.
Three Months
Six Months Ended
July 1,
2017
June 25,
2016
July 1,
2017
June 25,
2016
Net income $ 46.8 $ 66.9 $ 53.2 $ 72.9
Income from discontinued operations, net of tax — 0.6 — 0.1
Equity earnings of non-consolidated entities (1.1 ) (0.5 ) (1.6 ) (1.3
Income tax expense (benefit) 17.7 (15.7 ) 20.0 (13.6
Depreciation and intangible amortization 26.0 26.4 53.1 52.0
Interest expense, net(1) 17.5 18.2 44.4 35.2
Impairment and restructuring charges 0.6 5.3 1.8 8.2
(Gain) loss on sale of property and equipment — 0.3 (0.1 ) (3.3
Stock-based compensation expense 5.3 5.5 10.8 10.6
Non-cash foreign exchange transaction/translation loss 2.8 1.8 7.1 6.8
Other non-cash items(2) — 2.6 — 3.0
Other items(3) 9.8 1.4 17.3 3.2
Costs relating to debt restructuring and refinancing — — 0.3 —
Adjusted EBITDA(4) $ 125.3 $ 112.7 $ 206.3 $ 173.9
22
Non-GAAP Reconciliation
Adjusted EPS & Free Cash Flow (USD in millions)
NOTE: All adjustments to net income and net income per share are adjusted at our estimated annual
effective tax rate of approximately 29.8%
Six Months Ended
July 1, 2017 June 25, 2016
Net cash used in operating activities $ 66.2 $ 12.6
Less capital expenditures 19.8 43.3
Free cash flow $ 46.3 $ (30.7 )
Three Months
Ended
July 1, 2017
Net income $ 46.8
Legal and professional fees 6.2
Non-cash foreign exchange transactions/translation loss 1.9
Impairment and restructuring charges 0.4
Adjusted net income $ 55.3
Diluted net income per share $ 0.43
Legal and professional fees 0.06
Non-cash foreign exchange transactions/translation loss 0.02
Impairment and restructuring charges —
Adjusted net income per share $ 0.51
Diluted shares 109,086,129