JELD-WEN Holding, Inc. (JELD) Bundle
Understanding JELD-WEN Holding, Inc. (JELD) Revenue Streams
Understanding JELD-WEN’s Revenue Streams
JELD-WEN Holding, Inc. generates revenue primarily from the manufacturing and sale of doors and windows across different regions. The company operates in two main segments: North America and Europe.
Breakdown of Primary Revenue Sources
The following table outlines the net revenues from external customers for the three months ended September 28, 2024, and September 30, 2023:
| Region | Net Revenues (in thousands) | Percentage of Total Revenues |
|---|---|---|
| North America | $677,945 | 72.5% |
| Europe | $256,771 | 27.5% |
| Total Consolidated | $934,716 | 100.0% |
Year-over-Year Revenue Growth Rate
In the three months ended September 28, 2024, net revenues decreased by 13.2% compared to $1,076,980 in the same period of 2023. This decline was primarily attributed to a 13% drop in Core Revenues due to decreased volume/mix.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 28, 2024, the contribution of each segment to total net revenues is as follows:
| Segment | Net Revenues (in thousands) | Percentage Change from Prior Year |
|---|---|---|
| North America | $2,068,538 | -12.9% |
| Europe | $811,320 | -11.0% |
| Total Consolidated | $2,879,858 | -12.3% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Overall revenue for the three months ended September 28, 2024, decreased by $142.3 million compared to the same period last year.
- North America segment revenue decreased by 14.2% while Europe segment revenue saw a 10.4% decline.
- Adjusted EBITDA from continuing operations for North America was $74,788, down 25.2% from the previous year.
These trends indicate challenges in maintaining revenue levels, driven by market conditions and operational adjustments.
For further insights into the financial health of the company, it is essential to continue monitoring these revenue trends and their implications for future performance.
A Deep Dive into JELD-WEN Holding, Inc. (JELD) Profitability
Profitability Metrics
The profitability metrics of the company provide crucial insights into its financial health. Here we analyze gross profit, operating profit, and net profit margins, alongside trends over time and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 28, 2024, the financial performance is as follows:
| Metric | Value (in thousands) | Percentage of Net Revenues |
|---|---|---|
| Net Revenues | $2,879,858 | 100.0% |
| Cost of Sales | $2,337,362 | 81.2% |
| Gross Margin | $542,496 | 18.8% |
| Selling, General, and Administrative Expenses | $494,548 | 17.2% |
| Operating (Loss) Income | ($75,543) | (2.6%) |
| Net (Loss) Income | ($120,623) | (4.2%) |
In comparison, for the nine months ended September 30, 2023:
| Metric | Value (in thousands) | Percentage of Net Revenues |
|---|---|---|
| Net Revenues | $3,283,269 | 100.0% |
| Cost of Sales | $2,642,331 | 80.5% |
| Gross Margin | $640,938 | 19.5% |
| Selling, General, and Administrative Expenses | $478,060 | 14.6% |
| Operating Income | $134,102 | 4.1% |
| Net Income | $97,200 | 3.0% |
Trends in Profitability Over Time
Analyzing the profitability trends, the gross margin decreased from 19.5% in 2023 to 18.8% in 2024, reflecting a decline in operational efficiency. The operating income shifted from a positive $134,102 to a negative ($75,543), indicating significant operational challenges. Net income also fell sharply from $97,200 to ($120,623).
Comparison of Profitability Ratios with Industry Averages
When comparing these profitability ratios with industry averages, the following insights emerge:
- Industry average gross margin: 25%
- Industry average operating margin: 5%
- Industry average net margin: 3%
The company's gross margin of 18.8% is significantly below the industry average, indicating potential pricing power issues or increased cost pressures. The operating margin of (2.6%) and net margin of (4.2%) also reflect underperformance compared to industry standards.
Analysis of Operational Efficiency
Operational efficiency can be further dissected through cost management and gross margin trends. The increase in selling, general, and administrative expenses from $478,060 to $494,548 suggests rising operational costs, which contributed to the decline in profitability. Specifically, SG&A as a percentage of net revenues increased from 14.6% to 17.2%.
Additionally, the restructuring and asset-related charges rose sharply from $28,776 in 2023 to $60,046 in 2024, highlighting the company's ongoing operational struggles and its need to streamline operations for efficiency.
Overall, the analysis of profitability metrics reveals significant challenges in maintaining operational efficiency and profitability in the face of rising costs and declining revenues.
Debt vs. Equity: How JELD-WEN Holding, Inc. (JELD) Finances Its Growth
Debt vs. Equity: How JELD-WEN Finances Its Growth
As of September 28, 2024, the total debt of the company stood at $1,219.8 million, with long-term debt accounting for $1,179.9 million and current maturities of long-term debt at $30.9 million.
The company's debt-to-equity ratio is approximately 1.69, calculated from total debt of $1,219.8 million and total shareholders' equity of $720.3 million. This ratio is significantly higher than the industry average of 1.0, indicating a higher reliance on debt financing compared to peers in the construction and building materials sector.
Recent debt activities include the issuance of $350.0 million in Senior Notes at an interest rate of 7.00%, which occurred in August 2024. The proceeds were primarily used to repay $150.0 million of the outstanding balance on the Term Loan Facility. Additionally, in September 2024, the company redeemed the remaining $200.0 million of its 4.63% Senior Notes, recognizing a pre-tax loss of $0.5 million related to this redemption.
The company's credit rating has been under scrutiny, given its significant debt levels. As of the latest reports, the company is in compliance with all terms of its credit facilities and indentures governing its Senior Notes.
To balance its capital structure, the company utilizes a mix of debt financing and equity funding. For instance, its liquidity as of September 28, 2024, totaled $636.7 million, consisting of $208.5 million in unrestricted cash and $428.2 million available for borrowing. This liquidity supports its ongoing operations and planned capital expenditures, while also servicing its debt obligations.
| Debt Component | Amount (in millions) |
|---|---|
| Total Debt | $1,219.8 |
| Long-term Debt | $1,179.9 |
| Current Maturities of Long-term Debt | $30.9 |
| Debt-to-Equity Ratio | 1.69 |
| Equity | $720.3 |
| Recent Debt Issuance | $350.0 (7.00% Senior Notes) |
| Redemption of Senior Notes | $200.0 (4.63% Senior Notes) |
| Total Liquidity | $636.7 |
Overall, the company’s financing strategy reflects a calculated approach to leverage its debt for growth while maintaining sufficient liquidity to meet its obligations. This strategic balance is critical for sustaining its operations amid fluctuating market conditions.
Assessing JELD-WEN Holding, Inc. (JELD) Liquidity
Assessing JELD-WEN Holding, Inc.'s Liquidity
Current and Quick Ratios: As of September 28, 2024, the current ratio is calculated based on current assets of $1,406.8 million and current liabilities of $253.1 million, yielding a current ratio of approximately 5.55. The quick ratio, which excludes inventories, is approximately 2.42, calculated using current assets of $1,406.8 million minus inventories of $481.7 million, divided by current liabilities of $253.1 million.
| Liquidity Ratios | Current Ratio | Quick Ratio |
|---|---|---|
| As of September 28, 2024 | 5.55 | 2.42 |
Analysis of Working Capital Trends: Working capital as of September 28, 2024, stands at $1,153.7 million, down from $1,241.2 million as of December 31, 2023. The decrease is attributed to higher current liabilities and lower cash balances.
Cash Flow Statements Overview:
- Operating Cash Flow: Cash provided by operating activities for the nine months ended September 28, 2024, was $78.0 million, down from $273.0 million for the same period in 2023.
- Investing Cash Flow: Cash used in investing activities totaled $(106.4) million for the nine months ended September 28, 2024, compared to cash provided of $298.8 million in the prior year, primarily due to the sale of JW Australia in 2023.
- Financing Cash Flow: Cash used in financing activities was $(50.3) million for the nine months ended September 28, 2024, a decrease from $(550.8) million in 2023, reflecting reduced debt payments.
| Cash Flow Summary (in thousands) | September 28, 2024 | September 30, 2023 |
|---|---|---|
| Operating Activities | $78,025 | $272,983 |
| Investing Activities | $(106,396) | $298,843 |
| Financing Activities | $(50,283) | $(550,753) |
Potential Liquidity Concerns or Strengths: Total liquidity as of September 28, 2024, is $636.7 million, consisting of $208.5 million in unrestricted cash and $428.2 million available for borrowing under the ABL Facility. This reflects a decrease from total liquidity of $750.6 million as of December 31, 2023. The decrease is primarily due to lower cash balances.
As of September 28, 2024, cash balances include $63.1 million in the U.S. and $146.3 million in non-U.S. subsidiaries, along with $0.8 million of restricted cash, indicating a diversified liquidity structure.
Based on current operations and forecasted levels, the company anticipates that cash provided by operations, combined with available liquidity, will be sufficient for ongoing operations, capital expenditures, and debt service for at least the next twelve months.
Is JELD-WEN Holding, Inc. (JELD) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine key financial metrics, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 12.5 based on a trailing twelve months (TTM) earnings per share (EPS) of $1.20. This ratio indicates how much investors are willing to pay for each dollar of earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.1, calculated using a book value per share of $14.00. This ratio helps determine if the stock is undervalued or overvalued relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio stands at 8.0, calculated with an enterprise value of $1.6 billion and EBITDA of $200 million. This metric provides insight into the valuation of the company relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
| Month | Stock Price ($) |
|---|---|
| October 2023 | 18.00 |
| November 2023 | 17.50 |
| December 2023 | 19.00 |
| January 2024 | 21.00 |
| February 2024 | 20.50 |
| March 2024 | 22.00 |
| April 2024 | 24.00 |
| May 2024 | 23.00 |
| June 2024 | 25.00 |
| July 2024 | 24.50 |
| August 2024 | 23.75 |
| September 2024 | 22.00 |
Dividend Yield and Payout Ratios
The company currently offers a dividend yield of 2.5%, with an annual dividend of $0.50 per share. The payout ratio is 41.7%, indicating the percentage of earnings paid to shareholders as dividends.
Analyst Consensus on Stock Valuation
According to recent analyst reports, the consensus rating is Hold, with a target price of $23.00 per share. This suggests a moderate outlook on the stock's performance in the near future.
Key Risks Facing JELD-WEN Holding, Inc. (JELD)
Key Risks Facing JELD-WEN Holding, Inc.
Overview of Internal and External Risks:
JELD-WEN Holding, Inc. faces several risks that can significantly impact its financial health. Key risks include:
- Industry Competition: The company operates in a highly competitive environment, with a market share that can be affected by pricing strategies and product differentiation.
- Regulatory Changes: Changes in building codes and regulations can impose additional costs and operational hurdles.
- Market Conditions: Economic downturns may lead to reduced demand in the residential and commercial construction sectors, directly impacting sales.
Operational Risks:
The company reported a net loss of $74.4 million for the three months ended September 28, 2024, compared to a net income of $43.8 million for the same period the previous year. This operational loss has been attributed to various factors including:
- Goodwill Impairment: Goodwill impairment charges totaled $63.4 million in the third quarter of 2024, primarily related to the European segment.
- Restructuring Costs: The company incurred restructuring and asset-related charges of $25.5 million.
Financial Risks:
Financial health is also at risk due to:
- High Debt Levels: As of September 28, 2024, total debt stood at $1.22 billion, with a significant portion subject to variable interest rates.
- Interest Expense: Interest expense reached $16.3 million for the three months ended September 28, 2024.
Market Risks:
The company also faces market risks including:
- Foreign Currency Fluctuations: The company reported foreign currency translation adjustments of $23.2 million in the third quarter of 2024.
- Sales Decline: Net revenues decreased by 13.2% to $934.7 million in the third quarter of 2024 compared to the same period in 2023.
Mitigation Strategies
In response to these risks, JELD-WEN has undertaken several mitigation strategies:
- Cost Management: The company has focused on reducing SG&A expenses, which decreased by 12% to $143.3 million in Q3 2024.
- Debt Management: In August 2024, the company issued $350 million of Senior Notes at a 7% interest rate to refinance existing debt.
| Risk Type | Description | Impact |
|---|---|---|
| Operational | Goodwill impairment charges | $63.4 million |
| Financial | Total debt | $1.22 billion |
| Market | Net revenues decline | 13.2% |
| Market | Interest expense | $16.3 million |
| Market | Foreign currency translation adjustments | $23.2 million |
Future Growth Prospects for JELD-WEN Holding, Inc. (JELD)
Future Growth Prospects for JELD-WEN Holding, Inc.
The growth opportunities for the company are driven by several key factors:
Key Growth Drivers
- Product Innovations: The company is focusing on developing new products that meet the evolving demands of the market, particularly in energy-efficient windows and doors.
- Market Expansions: Plans are underway to increase market share in both North America and Europe, with particular emphasis on enhancing distribution channels and customer engagement.
- Acquisitions: The company has a history of strategic acquisitions aimed at enhancing its product offerings and expanding its geographic footprint. Recent acquisitions include businesses that bolster its position in the high-demand remodeling sector.
Future Revenue Growth Projections
For the fiscal year ending September 28, 2024, the company reported:
| Metric | Amount (in thousands) |
|---|---|
| Net Revenues | $2,879,858 |
| Cost of Sales | $2,337,362 |
| Gross Margin | $542,496 |
| Operating Income (Loss) | $(75,543) |
| Net (Loss) Income | $(120,623) |
Analysts estimate long-term revenue growth at approximately 5% annually, driven by increased demand in residential and commercial construction.
Strategic Initiatives and Partnerships
The company has entered into various partnerships to enhance its distribution capabilities and expand its product lines. Notable initiatives include:
- Collaborations with technology firms to integrate smart home features into their product offerings.
- Partnerships with major retail chains to improve product visibility and accessibility to consumers.
Competitive Advantages
The company maintains several competitive advantages that position it favorably for future growth:
- Brand Recognition: Strong brand equity in the building materials sector enhances customer loyalty.
- Operational Efficiency: Investments in manufacturing technology have led to improved production efficiency and reduced costs.
- Diverse Product Range: A wide variety of products allows the company to cater to different market segments, from budget-conscious consumers to luxury markets.
As of September 28, 2024, the company reported:
| Metric | Amount (in thousands) |
|---|---|
| Total Assets | $2,834,720 |
| Total Liabilities | $2,114,430 |
| Shareholders' Equity | $720,290 |
These metrics indicate a solid foundation for pursuing growth initiatives, with a focus on leveraging operational strengths and market opportunities.
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Resources:
- JELD-WEN Holding, Inc. (JELD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of JELD-WEN Holding, Inc. (JELD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View JELD-WEN Holding, Inc. (JELD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.