Good morning. Thanks for joining us today on day two of our 16th annual JPMorgan Home Building and Building Products Conference. My name is Michael Rehaut. I'm the senior analyst covering the home building and building product names for JPMorgan in the equity research group. We're excited to kick off another full day of presentations and fireside chats. We have with us to start off the day JELD-WEN, CEO, William Christensen, and CFO, Julie Albrecht. As part of a fireside chat, I'll be moderating a set of questions, but we also have the capacity to forward questions from the audience. If you'd like to do so, you can hit the Ask a Question button on your conference website, digital dashboard, and I'll be happy to pass those questions along. First off, Bill and Julie, welcome. Thanks for joining us today. Thanks, Mike. Pleasure to be here. Thanks, Mike. Morning. Good morning. We'll kick it off just with, you know, I, I think it's a, it's a unique question I have for you because I think you're in a unique position, with, you know, a brand-new management team, executive suite in the last year. You know, Bill, you joined in December, you joined in April, to head up Europe and then, took on the CEO role in December of this past year. Julie, you joined in July of 2022. You know, each of you have had, you know, several months, almost a year now for you, Julie, to sit in your seat. love to get your perspective on, you know, the ongoing opportunities, as well as the challenges, at JELD-WEN in terms of, you know, where are the areas of necessary change that perhaps, are you see kind of a longer timeline or more challenging areas to implement versus, you know, some of the quick wins, I think that you've already been able to put in motion. Mike, it was a great opportunity for me to kind of step into the role as CEO, having, you know, almost a year under my belt running the European operations. I was able to get a pretty good feel for culture, strategy, how do we feel we can win, and what are kind of some of the key things we need to do. A couple of the observations there which kind of roll into what we're seeing is that the aspirations that we had were mismatched with the foundation that we've seen. There's a lot of work that Julie and I are doing to really set up a transformation program around three levers: people, performance, and strategy. Obviously, we need the right people to deliver the strong performance, and that will build the right foundation for the strategy. There's a lot of low-hanging fruit, and we're in the process of sequencing, and focusing the organization on delivering on some of those projects that are already in flight. We've communicated. We see about $100 million of cost save that we're working through. In the medium term, we're really looking to do a lot more around operating efficiencies, commercial excellence work, and some network footprint optimization, which we really see as an opportunity. On the people side, which is obviously a key factor, we're really focusing on trust and transparency and pushing accountability down into the organization, creating more visibility, but holding people accountable for creating plans and delivering those plans. Happy to talk through some of that today as we discuss, but we're seeing a lot more granularity and a lot more ownership at lower levels, and that's starting to unlock some of the value, and creating a foundation that can deliver on the aspirations. We're starting in the short term as opposed to talking about very big strategy moves. I'd say that's where we are. Julie, maybe you have some additional observations. Yeah. I'll just add a few here. You know, first of all, I'll just echo what Bill said and add. I mean, this is a really excellent business. JELD-WEN has been around for many, many years. We have a great portfolio of products, and the teams are very, very motivated. To Bill's point, you know, engaging, increasing engagement and accountability and empowerment, we think is really foundational to unlocking more value, really, literally top to bottom all through, all around the globe, for our footprint. I'm really excited, quite frankly. I think Bill is off to a great start in his role. Our leadership team is gelling extremely well. I'd say we've got a lot of work to do, but we're really excited. We think that, again, the products are excellent. The team wants to win. I think for Bill and myself, the leadership team, and obviously with the support of the board, you know, we just need to set this group up for success and really, you know, lead accordingly. Great. Great. Maybe just jumping into, you know, some of the nearer term, you know, areas in terms of your outlook for the upcoming year. You know, on the sales outlook for 2023, you slightly raised your sales outlook ex Australasia by about $50 million due to the first quarter's volume upside. You effectively kept the rest of the year intact. Of note, however, you did lower your North American repair and remodel outlook to down mid to high single digits from previously down mid single digits. Just wanted to revisit that, kind of what drove that reduction? How do you see the second half playing out given current retail POS trends? Obviously April is complete, so we have visibility, and it's progressed as expected. That gives us some confidence that our expectations, at least going into Q2, are still in line with what we're seeing in the market. We would typically expect in April a channel reload on the retail side to get ready for kind of the summer build in RNR, and we didn't see that. We planned low, and we hit the expectation. There was actually, in our view, a slight destocking in the retail channel as the big retailers kind of get ready for pretty uncertain buying season in the summer. We see some hesitation, and that supports our hypothesis that it's gonna be down, you know, high single digit as the year rolls forward. We remain pretty cautious because obviously retail is a large component of our business. I would say, I know The Home Depot reported recently their expectations are right in line with where we see things developing. We're remaining prudent as the year progresses, but as we said, April was in line with our expectations. Okay, great. No, that's helpful. Also, we'll hit on Europe a little bit. The European sales outlook for 2023, you also reiterated down high single digits with new res declining anywhere from 15%-30% by country, commercial being flat. Can you remind us of the mix between, in terms of your end market exposure in Europe, how it breaks down between, you know, those end markets? Also, what are the key drivers you think at this point in the year in terms of upside versus downside, drivers relative to your outlook? We have a great portfolio of strong brands and strong markets across Europe. As we know, Europe has some pretty significant macro headwinds. There's a war going on. There's high inflation that's really sticky. There's interest rates that are still increasing. Our business in Europe is split roughly 60% on the residential side and 40% commercial. Commercial for us still remains strong because we're building out projects that were landed, you know, 18 months ago. We are seeing weakness on the commercial side going forward as the number of projects coming to market are fewer. Obviously, as that happens, there's more people bidding on fewer projects, still building out the current commercial pipeline is as expected, that's clearly supporting us as we look forward in the year. Residential is different. There's some real challenges on the residential side. We're seeing markets down, you know, low single digit, kind of in Central Europe and some of the pockets I'd say that are more stable up to the Nordic regions, which some of the markets are down 50%. It's dramatic. Starts are really weak. There's a high level of consumer uncertainty. Interest rates are increasing. There's a few things that could change that in Europe. Obviously, we need a resolution to the war. I think that's the first issue. Once that is sorted out, there's more planning certainty. That'll create two things. That'll, I would argue, give some relief on the energy side because people can start planning again without shock scenarios in the model. Second would be there's gonna be a massive sucking in effect for the rebuild that's required in Ukraine. That will be a massive rebuilding effort. Everyone in Europe is gonna be participating in getting that country back up to speed, which is gonna take years and a lot of building products. There's gonna be some pretty significant demand impact items once things get settled out. Right now, we're still in a very uncertain environment, and it's very volatile. Hence our expectations that we're staying also very cautious for the year, without a clear view on when some of these larger things get resolved. Right. No, no, makes sense. Obviously, we all pray for a resolution to the war over there. Yeah. You know, why don't we switch a moment to, you know, some of the big initiatives that you're taking on and specifically the cost takeout programs. You know, I was hoping to get kind of just the overall overview, you know, of the actions, you know, beginning in the back half of last year through this year. You know, what are the components of the savings? Where are we in the process? What's still ahead for the company? We've called out roughly $100 million, and we said it's 50/50. There's a 50%, you know, 50% roll forward for initiatives that were started last year, and obviously then there's additional things that we're doing this year to improve our competitive position in the markets that we serve. In general, before I go into the details, we're setting up transformation teams. We have set up transformation offices in both Europe and North America, and we're doing a much better job of screening, prioritizing, and creating an exception-based reporting model to really understand, in a very granular way, where the value streams are and how we're progressing according to plan, but also really to understand bottom up how solid is the package of items that we have when we look towards forecasting for future periods. We've done a lot of work in a number of different areas. Some are very short term in nature, like SG&A. Others are midterm in nature, like footprint and plant closures. We've taken action on a number of sites in Europe last year and in North America. This year, we've announced the closure of our Atlanta facility, which is going to be completed at the end of Q2, early Q3. That's an $11 million full year run rate. There's some other areas that we're really just managing the business more effectively. Managed transportation is one area where we're helping our organization look at cost of logistics and supply chain in a holistic fashion, as opposed to many individual sites doing their best to buy. We're doing that in a more centralized fashion, and as a result, there's scale effects. There's better visibility on how we balance loads and transportation costs in general. We expect that should deliver $15 million on a full year run rate as we go forward. We're filling the buckets constantly. The transformation teams that we have in place in both North America and Europe are doing a great job of identifying obviously additional cost saves and things that we can really add into the bucket and then build a bigger bank for this year, but also have some of that then roll forward into 2024. Good. Let me just drill down a little bit and make sure I'm fully appreciating all the details because, you know, I would actually even argue it's unusual that you're rolling out a number, and at the same time, you're kind of, if I understand it right, still in the process of identifying, I don't wanna say parts of the $100 million because I presume that all of those parts are identified, but maybe additional parts as well. Correct. -that further push you into 2024. When you talk about the $100 million, $50 million is carryover from actions taken in the back half of 2022, and then another $50 million are from actions taken in 2023 as well. I would assume if you're talking about $50 million of actions that you're realizing benefits from in 2023, what would then be the roll forward or the carry-over from the 2023 actions into 2024? You know, aside from just out of the $100 million from not additional, you know, actions taken. If we just talk about the roll forward, you're probably looking at $20 million-$25 million that's gonna roll forward. Mm-hmm. We are continuing to fill our portfolio, obviously. I think our signals have been and continue to be, there's additional opportunity, just depending on how markets develop and the segments that we wanna serve. We're looking at a number of different areas to improve the cost position that we have. That $25 million obviously will get bigger as we look forward into 2024 based on the exit run rate that we have from 2023 with the additional project streams that we load in to our transformation offices. Right. Right. How would we break out? You know, you kinda mentioned three big areas, I don't know if there are other areas as well. You kind of highlighted when we think about the $100 million SG&A, footprint, and plant closures or consolidations and logistics. I don't know if those are the three buckets or if there are others. How should we think about how that $100 million breaks down between those three areas? Yeah, Bill. So... Go ahead. Yeah, go ahead, Julie, if you wanna. Then I can chip in at the end 'cause there's additional areas, Mike, that I think we just need to highlight as well. We'll talk through the splits, then we can come back on some of the other areas where we think there's also additional opportunity. Yeah, definitely. I guess, you know, Mike, if I had to say the three buckets, call it SG&A, which obviously are things like headcount reductions, but other cost efficiencies, where we've optimized through various actions, kinda lower SG&A expenses. That's one bucket. Obviously, you mentioned plant closures, which really mostly impacts, let's say, cost of goods sold, but also some, you know, over SG&A type things as well. Then I'll call it just broadly with the managed transportation, indirect spend, call that just other cost of goods sold improvements, right? Let's just call those the three buckets. You know, roughly a third, a third, a third. I mean, that's not precise, but that gives you an idea- Right. that the initiatives are spread among those three buckets. You know, I'd say we view probably over time, the biggest opportunity to be in cost of goods sold. While we'll always focus on how can we make our overhead structure from an admin SG&A perspective more efficient, that is absolutely ongoing. We do feel like probably the larger opportunities continue to be out of that cost of goods sold category. Bill, whatever you wanna add more. Right. Absolutely. What we have probably not been diligent enough in the past on is commercial excellence, which is really understanding how effective is our sales force, and what's the cost of that sales force, and how does that benchmark against other players in the market. Second, how we look at pricing and the details around pricing in the various markets that we serve, the various segments that we serve. We're doing more work to better understand those levers to really work not only in the COGS side, but also deliver, I'd say, a cleaner top line and a higher quality of sales. I would probably summarize it as we're more focused on the bottom line than the top line. I think this is a pretty significant swing to prior leadership teams because there's so much opportunity. We just need to make sure that the quality of sales is appropriate, but also the cost structure to serve meets our expectations and will deliver the right return on the capital that we're deploying with the assets. Right. Right. No, that makes sense. Well, maybe, you know, I'm gonna switch up the question. My next question was on North American margins, but then after that, I had North American windows versus doors. I think I'm gonna ask that second question first 'cause it probably plays more into the answer of the margin broader, bigger picture margin question. You know, I was hoping to get kind of an update on, you know, your North American segment, you know, in terms of the exposure to doors versus windows. I mean, what. You know, in prior companies that I've followed and, you know, across the industry, you know, I've seen, you know, window companies, typically, they're much more difficult companies in terms of lower margins, much higher degree of industry fragmentation, level of competition. You know, I'm curious to understand, you know, JELD-WEN's business a little bit through this lens, and try and get an understanding of within North America, what's the split between doors and windows, and what are the competitive landscapes between those two segments, in terms of top line growth and margin profiles for each of those product categories? Just from a high level, Mike, we're probably 2/3 doors and 1/3 windows, just to kind of size. We don't share profit margin details on specific segments. What we are doing, coming back to what I had said earlier, is we're pushing down the responsibility to really shine the spotlight in on different segments. John Krause and his team in North America are working now on the windows area or the doors area or the distribution area to really understand, you know, where are we, where do we wanna play, and how are we gonna win. As we get into some of these different areas, the drivers are very similar. It's, you know, residential new construction, traditional build channel, RNR on both sides. I would agree that just in general, I would say windows is more fragmented than doors, also in Europe. Clearly there's an opportunity that we've seen rolling up some door assets around the world and have done it quite well with a very strong portfolio of brands. Windows is a little further behind. We don't serve the windows segment in Europe, however, we do in North America. For us, it's all about quality of growth and investing in the assets that we feel have a long-term sustainable competitive advantage in the market. Clearly, we have a lot of those, but we also have other areas we're starting to identify and say, "How can we make this more competitive, and what are some of the things that we need to do?" Coming back to kind of the cost measures that we're taking. We're still in the process of evaluating the quality of growth. As I said, our view clearly is on bottom line, not top line, and because we need to improve the margin profile in general, within our organization. Right. Right. No, no, that's helpful. I'm actually pulling up most recent note here to make sure I'm gonna get all the numbers right for my next question. Should have had this in front of me. Okay. You know, in terms of North American margins, you know, over the last several years, your EBITDA margins for North America have ranged between 10%-13%. And comparing it to your closest public peer, Masonite, their North American EBITDA margins, as you probably know, have been between 19%-21% since 2020. You know, and obviously, you know, this is your front and center kind of area and goals with the cost takeout program, and as you just mentioned, a focus on bottom line versus top line. I would love to try and get an understanding of how that difference breaks down. You know, in other words, to the extent that I'm on the right path or, you know, kinda thinking about windows versus doors correctly, how much of the difference is structural in terms of windows historically being a lower margin business? You know, to the extent that you're identifying these different areas, not just the $100 million cost takeout, but, you know, other areas as you've started to mention as well, you know, where can we see or what's your aspiration of getting JELD's North American EBITDA margins over the next three or four years? Kind of a combination question, what might be structural in terms of that gap? Again, perhaps it's windows, perhaps it's other things. Where might you be able to close that gap? Let me start at the 40,000 ft level. One of the things that we need to do as an organization is focus. We believe that we are playing in too many areas and not doing it as effectively as we should. As a result, we've underinvested in many assets over the last number of years. Our view is very clear. We need to do more with less. One of the first steps in that process was divesting our Australasia business, which we've signed an agreement with Platinum Equity, and we expect close in Q3, early Q3, which will give us, number one, additional flexibility on the balance sheet. Because we'll be reducing our debt. Number two, give a clear focus for leadership in the organization on the core regions, North America and Europe. That's the first step, is focusing the organization more on the core of the business. As we drill down into the core, your specific question was North American margin profile. Clearly, we're not happy with the margin profile that we're delivering today. I think that's message number one. Message number two is it's probably pretty hard to find a comp for us today. Clearly, there's area comps, there's no company comp because we are pretty diversified. You know, diversification can be a strength, it can also be a weakness. We're going into that context and better understanding how can we win in the segments that we choose to play. Winning for us means an appropriate return on capital, appropriate investments, the right team, the right innovation, and the right products. Clearly, it's going to take us some time to dig through the different areas that we participate in to really understand what's the aspiration that we have. It's too early to share where we think we need to be in three, four years. My message is that there's significant opportunity when I'm looking at the portfolio to really improve the bottom line. That will be some of the content that we wanna share with the capital market in the back half of this year when we're talking about where do we feel we need to focus and where do we think we can get our margin profile by making some smart decisions and focusing on fewer things, but doing those more effectively. Okay, great. No, thank you for that. Maybe just moving on to, you know, I have a couple more questions here. We have about 10 more minutes left for the session. Again, for those that are dialed in, if you'd like to ask a question of your own, please, you know, hit the button. Operator, I actually The website kind of is now not allowing me to get in. Operator, if you have those questions, you can forward them to me in the chat, and I'll pass them along. Next question would just focus on, you know, price mix. You know, it's a big area of focus, obviously, in general. You mentioned pricing, Bill, earlier in terms of perhaps areas of margin opportunity going forward. How should we think about price mix annually on a go-forward basis? Specifically, if you have thoughts around pricing each year, and also on the mix side, obviously, you have some higher growth product categories like VPI and Auraline. You know, love to get your sense of both of those components. Clearly, our goal is positive price cost, but we need to do it in an appropriate fashion. The expectation was for ourselves but also for many people in the industry that the inflation headwinds are still very relevant, so pricing is a key factor and has been for the last, let's say, 12 + months, just based on the disruption on the economic side. I'd maybe hand it over to Julie to go through some details specifically on price cost, if there's more, you know, content that we can give you. We're happy with the work that we're doing and we need to keep that level of diligence up. I'd say we were late to the game, last year, and we've caught up, and now we're getting much better at assessing, and seeing the signals early enough where we can take appropriate actions. On a high level, Julie can give some more details. I'll just add a few more comments. I think, you know, clearly, price cost is one of our most important factors this year. Obviously, we're talking about the weakening demand. Obviously, cost reductions, we've been talking about that. That's a big theme. As well, as Bill said, really making sure that we're doing the right thing for JELD-WEN as well as our customers right around pricing. It was pretty resilient in the first quarter, which was one of our, you know, drivers to stronger than expected earnings in Q1. As we move through this year, as Bill mentioned, in 2022, right, we were catching up to inflation and really feel like we caught up in the second half of the year, which means for 2023, when you think about comps, right, and especially top line, we see this, you know, +10% that we recognized in Q1 on price really declining and really flattening out year-over-year. A lot of that is comp driven, as well as, you know, caution around in this environment. You know, where are we able to maybe limited get new price increases versus a real focus on holding price. As Bill mentioned, we've really made some nice improvements, especially in North America, around visibility, you know, inflation that remains in inventory, right? That we can't lose sight of as that runs through the P&L. Again, I think just a lot more diligence and better information around, managing price, protecting price appropriately. Again, as Bill said, one of our priorities is staying price cost positive. Just on the mix side, Julie or Bill, any way to think about, you know, mix over the next, you know, couple of years? I mean, again, you've had some higher growth, product areas, product categories. Obviously, positive mix is something that, you know, most companies try and focus on, but, you know, there are trends within your industry that would also suggest supporting positive mix over the next, you know, couple of years. Any thoughts around expectations of what a positive mix might contribute to the top line or even the margin side on a go-forward basis? I think it's premature to really give any numbers there. If you think about, you know, if you heard what Bill was just talking about, generally, you know, as we push down more accountability into the regional leadership teams and really shine the light from Bill, myself, and down through the regions, again, sales mix and where we're focusing our investments and how are we simplifying our business, you know, these themes that Bill's been talking about, I think all of that leads to we would expect to be improving our mix. You know, there are pockets of that right now. Like, we had positive sales mix in Q1. I mean, that's nice, but I mean, we're thinking in the coming years, we would hope to see, and as a part of our strategy, we'll be focusing more, call it big, on mix of our products with a more of an eye on profitability. Right. We have a couple minutes left. I don't see any questions in the queue, but I have a couple more of my own. I think, you know, probably time for one more important bigger picture, which is on the balance sheet, and capital allocation. You know, Bill, you referred to the sale of Australasia to Platinum. You know, I think following that sale, you expect to fall below 3x net debt to EBITDA by year-end. How should we think about your leverage goals for 2024 and beyond? You know, as that leverage comes down, you know, how would you know, ostensibly balance, you know, further deleveraging, you know, over a 2024/2025 timeframe, versus M&A and share repurchase or other uses of capital? Yeah. Where we are today clearly does not meet our expectations, so we need to be below 3x. We feel with the proceeds of the Australasia divestment, which will have very limited tax leakage and some strong cash flows as we've communicated, we should get below 3x by the end of the year. Clearly, that's not the goal. Rather, the goal is to continue delevering. You know, is it 2.5x? Is it below 2x? I don't know. Julie and I are working through that. Clearly, we need to strengthen the balance sheet because we need to do a couple different things on the capital side. We need to invest in ourselves, which is, which we're seeing great opportunities. With all of the internal projects, the paybacks on these streams are very compelling. We need to continue that. We need to over-invest in some of the assets that we really haven't taken care of as we should have in the past. Clearly, continue thinking through delevering, to give us some more optionality on tuck-in acquisitions. Because clearly, once we strengthen our foundation, we are already thinking about, you know, profitable growth levers, how are we going to build our portfolio going forward. I suggest kind of the near to mid term, share buybacks for us are a pretty low priority. Not out of the picture, but we feel that there's ample opportunities for capital allocation in other areas which would deliver a pretty solid return, based on the current setup. That's what we're looking. The first goal is to focus, sell Australasia, delever, and get below 3 by the end of the year. That would be our first kind of, target that we're communicating. Great. Great. Well, that actually, I think, does it. We're just about at the ending point, ten of the hour, so we'll cut it off here. Bill, Julie, thanks so much for your time. Great to, you know, like I said, meet you at least virtually for the first time, so appreciate your participation. For those on, you know, that are still on, we'll be continuing at 9:00 A.M. with LGI Homes followed by MDC. Later today, we'll have Fortune Brands, KB Home. The afternoon session will contain Taylor Morrison, PGT, and Forestar. Thanks again, Bill and Julie, appreciate it, and we'll see you soon. Thank you, Mike. Have a good day. Thanks, Mike. Appreciate. Thank you. Bye. Talk this morning.