JELD-WEN Holding, Inc. [JELD] Filings

10-Q 1 jeld-20230930.htm 10-Q jeld-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-38000

____________________________

JELD-WEN Holding, Inc.

(Exact name of registrant as specified in its charter)

____________________________


Delaware						93-1273278
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2645 Silver Crescent Drive

Charlotte, North Carolina 28273

(Address of principal executive offices, zip code)

(704) 378-5700

(Registrant’s telephone number, including area code)

____________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock (par value $0.01 per share)

JELD

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 85,215,086 shares of Common Stock, par value $0.01 per share, outstanding as of November 3, 2023.

JELD-WEN HOLDING, Inc.

- Table of Contents –


		Page No.
Part I - Financial Information

Item 1.	Unaudited Financial Statements
	Consolidated Statements of Operations	8
	Consolidated Statements of Comprehensive Income (Loss)	9
	Consolidated Balance Sheets	10
	Consolidated Statements of Equity	12
	Consolidated Statements of Cash Flows	13
	Notes to Unaudited Consolidated Financial Statements	14
	Note 1. Description of Company and Summary of Significant Accounting Policies	14
	Note 2. Discontinued Operations	15
	Note 3. Accounts Receivable	17
	Note 4. Inventories	17
	Note 5. Property and Equipment, Net	18
	Note 6. Goodwill	18
	Note 7. Intangible Assets, Net	18
	Note 8. Accrued Expenses and Other Current Liabilities	19
	Note 9. Warranty Liability	19
	Note 10. Long-Term Debt	20
	Note 11. Income Taxes	22
	Note 12. Segment Information	22
	Note 13. Capital Stock	27
	Note 14. Earnings Per Share	27
	Note 15. Stock Compensation	28
	Note 16. Restructuring and Asset Related Charges	28
	Note 17. Held for Sale	30
	Note 18. Other (Income), Net	31
	Note 19. Derivative Financial Instruments	31
	Note 20. Fair Value of Financial Instruments	32
	Note 21. Commitments and Contingencies	33
	Note 22. Supplemental Cash Flow Information	39

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52

Part II - Other Information

Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52

Item 5.	Other Information	52
Item 6.	Exhibits	53

	Signature	54

Glossary of Terms

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:





Form 10-K			Annual Report on Form 10-K for the fiscal year ended December 31, 2022

ABL Facility			Our $500 million asset-based loan revolving credit facility, dated as of October 15, 2014 and as amended from time to time, with JWI (as hereinafter defined) and JELD-WEN of Canada, Ltd., as borrowers, the guarantors party thereto, a syndicate of lenders, and Wells Fargo Bank, N.A., as administrative agent

Adjusted EBITDA from continuing operations			A supplemental non-GAAP financial measure of operating performance not based on any standardized methodology prescribed by GAAP that we define as income (loss) from continuing operations, net of tax adjusted for the following items: income tax expense (benefit); depreciation and amortization; interest expense, net; and certain special items consisting of non-recurring legal and professional expenses and settlements; goodwill impairment, restructuring and asset related charges; other facility closure, consolidation, and other related costs and adjustments; M&A related costs; loss on extinguishment of debt; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; and other special items.


ASC			Accounting Standards Codification
ASU			Accounting Standards Update
AUD			Australian Dollar


BBSY			Bank Bill Swap Bid Rate


CAP			Cleanup Action Plan
CARES Act			Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020

CEO			Chief Executive Officer
CFO			Chief Financial Officer
Charter			Amended and Restated Certificate of Incorporation of JELD-WEN Holding, Inc.



CME			Chicago Mercantile Exchange
CMI			JWI d/b/a CraftMaster Manufacturing, Inc.
COA			Consent Order and Agreement
CODM			Chief Operating Decision Maker, which is our Chief Executive Officer

Common Stock			The 900,000,000 shares of common stock, par value $0.01 per share, authorized under our Charter
Core Revenues			Revenue excluding the impact of foreign exchange, divestitures, and acquisitions completed in the last twelve months
Corporate Credit Facilities			Collectively, our ABL Facility and our Term Loan Facility
COVID-19			A novel strain of the 2019-nCov coronavirus
Credit Facilities			Collectively, our Corporate Credit Facilities and other acquired term loans and revolving credit facilities


DKK			Danish Krone



ERP			Enterprise Resource Planning




Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board


GAAP			Generally Accepted Accounting Principles in the United States

GHGs			Greenhouse Gases
GILTI			Global Intangible Low-Taxed Income




JELD-WEN			JELD-WEN Holding, Inc., together with its consolidated subsidiaries where the context requires



JWI			JELD-WEN, Inc., a Delaware corporation



LIBOR			London Interbank Offered Rate
M&A			Mergers and acquisitions


MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations





Onex			Onex Partners III LP and certain affiliates


PaDEP			Pennsylvania Department of Environmental Protection
PLP			Potential Liability Party
Preferred Stock			90,000,000 shares of Preferred Stock, par value $0.01 per share, authorized under our Charter
PSU			Performance Stock Unit
R&R			Repair and Remodel


RSU			Restricted Stock Unit

SEC			U.S. Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
Senior Notes			$800.0 million of unsecured notes issued in December 2017 in a private placement in two tranches: $400.0 million bearing interest at 4.625% and maturing in December 2025 ($200.0 of which were redeemed on August 3, 2023) and $400.0 million bearing interest at 4.875% and maturing in December 2027.
Senior Secured Notes			$250.0 million of senior secured notes issued in May 2020 in a private placement bearing interest at 6.25% and redeemed in August 2023.

SOFR			Secured Overnight Financing Rate
SG&A			Selling, general, and administrative expenses


Tax Act			Tax Cuts and Jobs Act
Term Loan Facility			Our term loan facility, dated as of October 15, 2014, and as amended from time to time with JWI, as borrower, the guarantors party thereto, a syndicate of lenders, and Bank of America, N.A., as administrative agent


U.S.			United States of America
VPI			JWI d/b/a VPI Quality Windows, Inc.

Working Capital			Accounts receivable plus inventory less accounts payable

CERTAIN TRADEMARKS, TRADE NAMES, AND SERVICE MARKS

This report includes trademarks, trade names, and service marks owned by us. Our U.S. window and door trademarks include JELD-WEN®, AuraLast®, MiraTEC®, Extira®, LaCANTINA®, MMI Door®, KaronaTM, ImpactGard®, JW®, Aurora®, IWP®, True BLU®, ABSTM, Siteline®, National Door®, Low-Friction Glider®, Hydrolock®, VPITM, AURALINE®, FINISHIELD®, MILLENNIUM®, TRUFIT®, EPICVUE®, and EVELIN®. Our trademarks are either registered or have been used as common law trademarks by us. The trademarks we use outside the U.S. include the Swedoor®, Dooria®, DANA®, MattioviTM, Zargag® , Alupan®, and Domoferm® marks in Europe. ENERGY STAR® is a registered trademark of the U.S. Environmental Protection Agency. This report contains additional trademarks, trade names, and service marks of others, which are, to our knowledge, the property of their respective owners. Solely for convenience, trademarks, trade names, and service marks referred to in this report appear without the ®, ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names, and service marks. We do not intend our use of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

PART I - FINANCIAL INFORMATION

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the federal Securities Act and Section 21E of the Exchange Act, which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this Form 10-Q are forward-looking statements. Forward-looking statements are generally identified by our use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” or “should,” and, in each case, their negative or other various or comparable terminology. In particular, statements about the markets in which we operate, including growth of our various markets, and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance under Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 1- Business are forward-looking statements. In addition, statements regarding the potential outcome and impact of pending litigation are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the headings Item 1A- Risk Factors in our Form 10-K and Item 1A – Risk Factors and Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

•negative trends in overall business, financial market and economic conditions, and/or activity levels in our end markets;

•our highly competitive business environment;

•failure to timely identify or effectively respond to consumer needs, expectations, or trends;

•failure to maintain the performance, reliability, quality, and service standards required by our customers;

•failure to successfully implement our strategic initiatives, including our transformation, productivity and global footprint rationalization initiatives;

•the ongoing conflict between Russia and Ukraine;

•acquisitions, divestitures, or investments in other businesses that may not be successful;

•adverse outcome of pending or future litigation;

•declines in our relationships with and/or consolidation of our key customers;

•increases in interest rates and reduced availability of financing for the purchase of new homes and home construction and improvements;

•fluctuations in the prices of raw materials used to manufacture our products;

•delays or interruptions in the delivery of raw materials or finished goods;

•failure to retain and recruit executives, managers, and employees;

•seasonal business with varying revenue and profit;

•changes in weather patterns and related extreme weather conditions;

•political, regulatory, economic, and other risks, including the impact of political conflict on the global economy and the impact pandemics, including the COVID-19 pandemic, that arise from operating a multinational business;

•exchange rate fluctuations;

•disruptions in our operations due to natural disasters or acts of war;

•manufacturing realignments and cost savings programs;

•security breaches and other cybersecurity incidents;

•increases in labor costs, potential labor disputes, and work stoppages at our facilities;

•changes in building codes that could increase the cost of our products or lower the demand for our windows and doors;

•compliance costs and liabilities under environmental, health, and safety laws and regulations;

•compliance costs with respect to legislative and regulatory proposals to restrict emission of GHGs;

•lack of transparency, threat of fraud, public sector corruption, and other forms of criminal activity involving government officials;

•product liability claims, product recalls, or warranty claims;

•inability to protect our intellectual property;

•pension plan obligations;

•availability and cost of credit;

•our current level of indebtedness and the effect of restrictive covenants under our existing or future indebtedness including our Credit Facilities and Senior Notes; and

•other risks and uncertainties, including those listed under Item 1A- Risk Factors in our Form 10-K and Item 1A- Risk Factors in this Form 10-Q.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. Any forward-looking statement in this Form 10-Q speaks only as of the date of this Form 10-Q. We do not undertake any obligation to update any of the forward-looking statements, except as required by law. We do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The forward-looking statements contained in this Form 10-Q are not guarantees of future performance and our actual results of operations, financial condition, and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained herein. In addition, even if our results of operations, financial condition, and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this Form 10-Q, they may not be predictive of results or developments in future periods.

Unless the context requires otherwise, references in this Form 10-Q to “we,” “us,” “our,” “the Company,” or “JELD-WEN” mean JELD-WEN Holding, Inc., together with our consolidated subsidiaries where the context requires, including our wholly owned subsidiary JWI.

Item 1 - Unaudited Financial Statements

JELD-WEN HOLDING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended				Nine Months Ended

(amounts in thousands, except share and per share data)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022
Net revenues	$	1,076,980	$	1,140,025	$	3,283,269	$	3,364,794
Cost of sales	853,384		933,636		2,642,331		2,780,125
Gross margin	223,596		206,389		640,938		584,669


Selling, general and administrative	162,820		162,208		478,060		482,249
Goodwill impairment	—		54,885		—		54,885
Restructuring and asset related charges (Note 16)	12,698		6,552		28,776		11,796
Operating income (loss)	48,078		(17,256)		134,102		35,739


Interest expense, net	16,737		21,273		59,083		59,794
Loss on extinguishment of debt	6,487		—		6,487		—


Other income, net (Note 18)	(9,453)		(5,180)		(10,981)		(31,334)
Income (loss) from continuing operations before taxes	34,307		(33,349)		79,513		7,279
Income tax expense (Note 11)	17,399		11,715		31,638		20,960
Income (loss) from continuing operations, net of tax	16,908		(45,064)		47,875		(13,681)
Gain on sale of discontinued operations, net of tax (Note 2)	26,076		—		26,076		—
Income from discontinued operations, net of tax (Note 2)	801		11,872		23,249		25,787
Net income (loss)	$	43,785	$	(33,192)	$	97,200	$	12,106



Weighted average common shares outstanding (Note 14):
Basic	85,182,678		84,519,095		84,915,519		87,121,448
Diluted	86,349,840		84,519,095		85,729,136		88,016,849
Net income (loss) per share from continuing operations
Basic	$	0.20	$	(0.53)	$	0.56	$	(0.16)
Diluted	$	0.20	$	(0.53)	$	0.56	$	(0.16)
Net income per share from discontinued operations
Basic	$	0.32	$	0.14	$	0.58	$	0.30
Diluted	$	0.31	$	0.14	$	0.58	$	0.29
Net income (loss) per share
Basic	$	0.51	$	(0.39)	$	1.14	$	0.14
Diluted	$	0.51	$	(0.39)	$	1.13	$	0.14

Net income per share may not sum due to rounding.

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

JELD-WEN HOLDING, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)



	Three Months Ended				Nine Months Ended
(amounts in thousands)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022
Net income (loss)	$	43,785	$	(33,192)	$	97,200	$	12,106

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax expense of $1,200, $95, $2,353, and $197, respectively	12,418		(55,196)		12,097		(121,457)
Net investment hedge adjustments, net of tax (benefit) of $(854), $0, $0, and $0, respectively	(2,511)		—		—		—
Interest rate hedge adjustments, net of tax (benefit) expense of $(1,115), $803, $(2,939), and $3,900, respectively	(3,365)		2,341		(8,726)		11,464
Defined benefit pension plans, net of tax expense of $451, $384, $487, and $926, respectively	1,169		583		1,265		1,494
Total other comprehensive income (loss), net of tax	7,711		(52,272)		4,636		(108,499)
Comprehensive income (loss)	$	51,496	$	(85,464)	$	101,836	$	(96,393)

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

JELD-WEN HOLDING, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)


(amounts in thousands, except share and per share data)	September 30, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	239,219	$	164,475
Restricted cash	687		1,463
Accounts receivable, net (Note 3)	567,672		531,232
Inventories (Note 4)	518,443		594,471
Other current assets	69,770		73,485
Assets held for sale (Note 17)	134,207		125,748
Current assets of discontinued operations (Note 2)	—		204,732
Total current assets	1,529,998		1,695,606
Property and equipment, net (Note 5)	628,033		642,004
Deferred tax assets	185,167		182,161
Goodwill (Note 6)	378,899		381,953
Intangible assets, net (Note 7)	136,252		148,106
Operating lease assets, net	121,877		128,993
Other assets	28,091		25,778
Non-current assets of discontinued operations (Note 2)	—		296,760
Total assets	$	3,008,317	$	3,501,361
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	313,160	$	286,978
Accrued payroll and benefits	119,141		107,002
Accrued expenses and other current liabilities (Note 8)	255,291		247,901
Current maturities of long-term debt (Note 10)	40,501		34,093
Liabilities held for sale (Note 17)	8,216		6,040
Current liabilities of discontinued operations (Note 2)	—		104,612
Total current liabilities	736,309		786,626
Long-term debt (Note 10)	1,193,252		1,712,790
Unfunded pension liability	35,114		31,109
Operating lease liability	97,886		105,068
Deferred credits and other liabilities	101,034		95,936
Deferred tax liabilities	7,564		7,862
Non-current liabilities of discontinued operations (Note 2)	—		38,422
Total liabilities	2,171,159		2,777,813
Commitments and contingencies (Note 21)

Shareholders’ equity
Preferred Stock, par value $0.01 per share, 90,000,000 shares authorized; no shares issued and outstanding	—		—
Common Stock: 900,000,000 shares authorized, par value $0.01 per share, 85,214,451 and 84,347,712 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.	852		843
Additional paid-in capital	746,618		734,853
Retained earnings	227,686		130,486
Accumulated other comprehensive loss	(137,998)		(142,634)
Total shareholders’ equity	837,158		723,548
Total liabilities and shareholders’ equity	$	3,008,317	$	3,501,361

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

JELD-WEN HOLDING, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)


	Three Months Ended
	September 30, 2023			September 24, 2022
(amounts in thousands, except share and per share amounts)	Shares	Amount		Shares	Amount
Preferred stock, $0.01 par value per share	—	$	—	—	$	—
Common stock, $0.01 par value per share

Balance at beginning of period	85,048,937	$	850	85,857,994	$	859

Shares issued for exercise/vesting of share-based compensation awards	182,966	2		134,218	1
Shares repurchased	—	—		(1,641,084)	(17)


Shares surrendered for tax obligations for employee share-based transactions	(17,452)	—		(19,592)	—

Balance at period end	85,214,451	$	852	84,331,536	$	843






Additional paid-in capital
Balance at beginning of period		$	744,015		$	730,963

Shares issued for exercise/vesting of share-based compensation awards		86			—

Shares surrendered for tax obligations for employee share-based transactions		(306)			(341)




Amortization of share-based compensation		3,496			(316)
Balance at period end		747,291			730,306




Employee stock notes
Balance at beginning of period		(673)			(673)
Net issuances, payments and accrued interest on notes		—			—
Balance at period end		(673)			(673)
Balance at period end		$	746,618		$	729,633
Retained earnings
Balance at beginning of period		$	183,901		$	155,331
Shares repurchased		—			(25,274)


Net income		43,785			(33,192)
Balance at period end		$	227,686		$	96,865
Accumulated other comprehensive income (loss)
Balance at beginning of period		$	(145,709)		$	(149,973)
Foreign currency adjustments		12,418			(55,196)
Realized gain net investment hedges		(2,511)			—
Unrealized (loss) gain on interest rate hedges		(3,365)			2,341
Net actuarial pension gain		1,169			583
Balance at period end		$	(137,998)		$	(202,245)

Total shareholders’ equity at period end		$	837,158		$	625,096

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

JELD-WEN HOLDING, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)


	Nine Months Ended
	September 30, 2023			September 24, 2022
(amounts in thousands, except share and per share amounts)	Shares	Amount		Shares	Amount
Preferred stock, $0.01 par value per share	—	$	—	—	$	—
Common stock, $0.01 par value per share
Balance at beginning of period	84,347,712	$	843	90,193,550	$	902

Shares issued for exercise/vesting of share-based compensation awards	975,200	10		1,112,005	11
Shares repurchased	—	—		(6,848,356)	(69)


Shares surrendered for tax obligations for employee share-based transactions	(108,461)	(1)		(125,663)	(1)

Balance at period end	85,214,451	$	852	84,331,536	$	843






Additional paid-in capital
Balance at beginning of period		$	735,526		$	720,124

Shares issued for exercise/vesting of share-based compensation awards		221			2,000

Shares surrendered for tax obligations for employee share-based transactions		(1,637)			(2,764)




Amortization of share-based compensation		13,181			10,946
Balance at period end		747,291			730,306




Employee stock notes
Balance at beginning of period		(673)			(673)
Net issuances, payments and accrued interest on notes		—			—
Balance at period end		(673)			(673)
Balance at period end		$	746,618		$	729,633
Retained earnings
Balance at beginning of period		$	130,486		$	215,611
Shares repurchased		—			(130,852)


Net income		97,200			12,106
Balance at period end		$	227,686		$	96,865
Accumulated other comprehensive income (loss)
Balance at beginning of period		$	(142,634)		$	(93,746)
Foreign currency adjustments		12,097			(121,457)

Unrealized (loss) gain on interest rate hedges		(8,726)			11,464
Net actuarial pension gain		1,265			1,494
Balance at period end		$	(137,998)		$	(202,245)

Total shareholders’ equity at period end		$	837,158		$	625,096

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements

JELD-WEN HOLDING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



	Nine Months Ended
(amounts in thousands)	September 30, 2023		September 24, 2022
OPERATING ACTIVITIES
Net income	$	97,200	$	12,106
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization	102,704		97,624
Deferred income taxes	8,817		9,623
Net (gain) loss on disposition of assets	(3,906)		353
Goodwill impairment	—		54,885
Adjustment to carrying value of assets	4,759		534

Amortization of deferred financing costs	2,148		2,298
Loss on extinguishment of debt	6,487		—
Gain on sale of discontinued operations, net of tax	(26,076)		—
Stock-based compensation	13,181		10,946

Amortization of U.S. pension expense	375		1,083

Recovery of cost from interest received on impaired notes	(3,000)		(13,953)
Other items, net	(10,684)		41,859
Net change in operating assets and liabilities:
Accounts receivable	(50,234)		(166,610)
Inventories	74,772		(146,992)
Other assets	22,105		(31,143)
Accounts payable and accrued expenses	45,548		67,134
Change in short-term and long-term tax liabilities	(11,213)		(13,173)
Net cash provided by (used in) operating activities	272,983		(73,426)

INVESTING ACTIVITIES

Purchases of property and equipment	(69,627)		(53,070)

Proceeds from sale of property and equipment	6,259		1,190
Purchase of intangible assets	(10,734)		(4,392)
Proceeds (payments) related to the sale of JW Australia(1)	367,525		—
Recovery of cost from interest received on impaired notes	3,000		13,953
Cash received for notes receivable	148		79
Cash received from insurance proceeds	3,165		—
Change in securities for deferred compensation plan	(893)		(486)

Net cash provided by (used in) investing activities	298,843		(42,726)

FINANCING ACTIVITIES

Change in long-term debt and payments of debt extinguishment costs	(549,346)		84,775



Common stock issued for exercise of options	231		2,011
Common stock repurchased	—		(131,987)
Payments to tax authorities for employee share-based compensation	(1,638)		(2,657)


Net cash used in financing activities	(550,753)		(47,858)
Effect of foreign currency exchange rates on cash	(2,035)		(31,732)
Net increase (decrease) in cash and cash equivalents	19,038		(195,742)
Cash, cash equivalents and restricted cash, beginning	220,868		396,890
Cash, cash equivalents and restricted cash, ending	$	239,906	$	201,148
Balances included in the Consolidated Balance Sheets:
Cash, cash equivalents, and restricted cash	$	239,906	$	156,358
Cash and cash equivalents included in current assets of discontinued operations	—		44,790
Cash and cash equivalents at end of period	$	239,906	$	201,148
For further information see Note 22 - Supplemental Cash Flow.
Cash flows from discontinued operations through the divestiture date of July 2, 2023 are included in the above amounts and explained in Note 1 — Basis of Presentation and Note 2 — Discontinued Operations.
(1) Includes proceeds from the sale of JW Australia, net of the $73.9 million of cash divested.

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

JELD-WEN HOLDING, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Description of Company and Summary of Significant Accounting Policies

Nature of Business – JELD-WEN Holding, Inc., along with its subsidiaries, is a vertically integrated global manufacturer and distributor of windows, doors, and other building products that derives substantially all its revenues from the sale of its door and window products. Unless otherwise specified or the context otherwise requires, all references in these notes to “JELD-WEN,” “we,” “us,” “our,” or the “Company” are to JELD-WEN Holding, Inc. and its subsidiaries.

Our continuing operations include facilities located in the U.S., Canada, Europe, and Mexico. Our products are marketed primarily under the JELD-WEN brand name in the U.S. and Canada and under JELD-WEN and a variety of acquired brand names in Europe.

Our revenues are affected by the level of new housing starts and remodeling activity in each of our markets. Our sales typically follow seasonal new construction and repair and remodeling industry patterns. The peak season for home construction and remodeling in many of our markets generally corresponds with the second and third calendar quarters, and therefore, sales volume is typically higher during those quarters. Our first and fourth quarter sales volumes are generally lower due to reduced repair and remodeling activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in certain areas of our geographic end markets.

Basis of Presentation – The accompanying unaudited consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and September 24, 2022, respectively, have been prepared in accordance with GAAP for interim financial information and pursuant to the rules and regulations of the SEC. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company’s financial position for the periods presented. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or any other period. The accompanying consolidated balance sheet as of December 31, 2022 was derived from audited financial statements included in our Annual Report on Form 10-K. The accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. Accordingly, they should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

On April 17, 2023, we entered into a Share Sale Agreement with Aristotle Holding III Pty Limited, a subsidiary of Platinum Equity Advisors, LLC, to sell our Australasia business (“JW Australia”). On July 2, 2023, we completed the sale. The net assets and operations of the disposal group met the criteria to be classified as “discontinued operations” and are reported as such in all periods presented unless otherwise noted. The consolidated statements of cash flows include cash flows from discontinued operations through the divestiture date of July 2, 2023. See Note 2 - Discontinued Operations for further information.

All U.S. dollar and other currency amounts, except per share amounts, are presented in thousands unless otherwise noted.

Fiscal Year – We operate on a fiscal calendar year, and each interim quarter is comprised of two 4-week periods and one 5-week period, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on December 31. As a result, our first and fourth quarters may have more or fewer days included than a traditional 91-day fiscal quarter.

Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and allocations that affect amounts reported in the consolidated financial statements and related notes. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets including goodwill and other intangible assets, employee benefit obligations, income tax uncertainties, contingent assets and liabilities, provisions for bad debt, inventory, warranty liabilities, legal claims, valuation of derivatives, environmental remediation, and claims relating to self-insurance. Actual results could differ due to the uncertainty inherent in the nature of these estimates.

COVID-19 – The CARES Act in the U.S. and similar legislation in other jurisdictions includes measures that assisted companies in responding to the COVID-19 pandemic. These measures consisted primarily of cash assistance to support employment levels and deferment of remittance of certain non-income tax expense payments. The most significant impact was from the CARES Act in the U.S., which included a provision that allowed employers to defer the remittance of the employer portion of the social security tax relating to 2020. The deferred employment payment must be paid over two years. Original payment due dates were in 2021 and 2022, however updated guidance provided by the Internal Revenue Service in December 2021 allowed for these payments to be made during 2022 and 2023. The Company deferred $20.9

million of the employer portion of social security tax in 2020, of which $9.9 million was paid in the first quarter of 2022 and the remaining $11.0 million was paid in the fourth quarter of 2022.

Recent Accounting Standards – In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of LIBOR or by another reference rate expected to be discontinued. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, to clarify the scope of ASU No. 2020-04. In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Topic 848, which extended the relief provisions under Topic 848 through December 31, 2024. In May 2020, we elected the expedient within ASC 848 which allows us to assume that our hedged interest payments are probable of occurring regardless of any expected modifications in their terms related to reference rate reform. In addition, ASC 848 allows for the option to change the method of assessing effectiveness upon a change in critical terms of the derivative or the hedged transactions and upon the end of relief under ASC 848. At this time, we have elected to continue the method of assessing effectiveness as documented in the original hedge documentation and apply the practical expedients related to probability to assume that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. In June 2023, we executed amendments to our Term Loan Facility, ABL Facility and interest rate derivative agreements to replace LIBOR with a Term SOFR based rate. These contract amendments did not have a material impact on the Company’s consolidated financial statements. Refer to Note 10. - Long-Term Debt and Note 19 - Derivative Financial Instruments for further information.

We have considered the applicability and impact of all ASUs. We have assessed ASUs not listed above and have determined that they were either not applicable or were not expected to have a material impact on our financial statements.

Note 2. Discontinued Operations

On April 17, 2023, we entered into a Share Sale Agreement with Aristotle Holding III Pty Limited, a subsidiary of Platinum Equity Advisors, LLC, to sell our Australasia business (“JW Australia”), for a purchase price of approximately AUD $688 million. On July 2, 2023, we completed the sale, receiving net cash proceeds of approximately $446 million, including $3.3 million of cash received from the settlement of certain forward contracts (refer to Note 19. Derivative Financial Instruments for further information). We recorded a net gain on the sale of JW Australia of $26.1 million, net of taxes. The net gain on sale includes $30.3 million of cumulative translation adjustments losses and $1.0 million of accumulated net actuarial pension losses reclassified from other comprehensive income.

This divestiture qualified as a discontinued operation as of April 17, 2023 since it represents a strategic shift for us and has a major effect on our consolidated results of operations. Accordingly, the results of operations for the JW Australia reportable segment, together with certain costs related to the sale, have been classified as discontinued operations within the consolidated statements of operations for all periods presented.

Subsequent to the completion of the sale, we entered into an agreement to provide certain transition services to JW Australia, including providing information technology post-closing services, purchases under a supply agreement, and reimbursement for certain costs to upgrade specific IT systems up to a capped amount. The Company had reserved approximately $8.6 million relating to these matters as of September 30, 2023. The Company has determined the impact of the continuing involvement is insignificant to our consolidated financial statements.

The following is a summary of the major categories of assets and liabilities of JW Australia that had been reflected as held for sale in the periods preceding the divestiture at:


(amounts in thousands)	December 31, 2022
ASSETS
Cash and cash equivalents	$	54,931

Accounts receivable, net	72,516
Inventories	71,984
Other current assets	5,301
Current assets of discontinued operations	$	204,732

Property and equipment, net	$	120,482
Deferred tax assets	13,019
Goodwill	78,552
Intangible assets, net	43,998
Operating lease assets, net	38,887
Other assets	1,822
Non-current assets of discontinued operations	$	296,760

LIABILITIES
Accounts payable	$	33,704
Accrued payroll and benefits	26,635
Accrued expenses and other current liabilities	43,975
Current maturities of long-term debt	298
Current liabilities of discontinued operations	$	104,612

Long-term debt	$	448
Unfunded pension liability	4,396
Operating lease liability	30,753
Deferred credits and other liabilities	1,962
Deferred tax liabilities	863
Non-current liabilities of discontinued operations	$	38,422

The balances of the assets and liabilities of JW Australia as of the divestiture date of July 2, 2023 did not materially change from the balances as of July 1, 2023 disclosed in our Form 10-Q for the second quarter of 2023.

Components of amounts reflected in the consolidated statements of operations related to discontinued operations are presented in the table, as follows:


	Three Months Ended				Nine Months Ended

(amounts in thousands)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022
Net revenues	$	—	$	165,214	$	301,876	$	452,598
Cost of sales	—		120,824		211,575		337,025
Gross margin	—		44,390		90,301		115,573
Selling, general and administrative	606		30,186		62,083		83,628

Restructuring and asset related charges	—		27		—		80
Operating income (loss)	(606)		14,177		28,218		31,865
Interest income, net	—		(135)		(685)		(80)
Other income, net	(17)		(2,510)		(2,274)		(4,580)
Income (loss) from discontinued operations before taxes	(589)		16,822		31,177		36,525
Income tax expense (benefit)	(1,390)		4,950		7,928		10,738
Income from discontinued operations, net of tax	$	801	$	11,872	$	23,249	$	25,787

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows through the divestiture date of July 2, 2023. The following table presents cash flow and non-cash information related to discontinued operations:


	Nine Months Ended

(amounts in thousands)	September 30, 2023		September 24, 2022

Depreciation and amortization	$	5,196	$	14,360
Capital expenditures	6,229		4,359
Share-based incentive compensation	926		1,196
Provision for bad debt	5,062		368

Unless otherwise noted, discussion within the notes to the consolidated financial statements relates to continuing operations only and excludes the historical JW Australia reportable operating segment.

Note 3. Accounts Receivable

We sell our manufactured products to a large number of customers, primarily in the residential housing construction and remodel sectors, broadly dispersed across many domestic and foreign geographic regions. We assess the credit risk relating to our accounts receivable based on quantitative and qualitative factors, including historical credit collections within each region where we have operations. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not usually require collateral for accounts receivable, but do require advance payment, guarantees, a security interest in the products sold to a customer, and/or letters of credit in certain situations.

At September 30, 2023 and December 31, 2022, we had an allowance for credit losses of $12.0 million and $15.4 million, respectively. The decrease in the allowance for credit losses in the nine months ended September 30, 2023 is due to improved collections experience in our North America segment and decreased consolidated net revenues.

Note 4. Inventories

Inventories are stated at the lower of cost or net realizable value. Finished goods and work-in-process inventories include material, labor, and manufacturing overhead costs.


(amounts in thousands)	September 30, 2023		December 31, 2022
Raw materials	$	403,114	$	458,768
Work in process	23,058		28,295
Finished goods	92,271		107,408
Total inventories	$	518,443	$	594,471

Note 5. Property and Equipment, Net


(amounts in thousands)	September 30, 2023		December 31, 2022
Property and equipment	$	1,916,457	$	1,897,751
Accumulated depreciation	(1,288,424)		(1,255,747)
Total property and equipment, net	$	628,033	$	642,004

We recorded accelerated depreciation of our plant and equipment of $1.1 million and $4.3 million during the three and nine months ended September 30, 2023 within restructuring and asset related charges in the accompanying consolidated statements of operations. We recorded accelerated depreciation of $0.5 million in the nine months ended September 24, 2022, all of which was incurred in the second quarter. For more information, refer to Note 16 - Restructuring and Asset Related Charges.

During the nine months ended September 30, 2023, we recorded $9.1 million of accelerated depreciation resulting from reviews of our North America equipment capacity optimization, all of which were incurred in the second quarter. These charges were recorded within cost of sales in the accompanying consolidated statements of operations.

The effect on our carrying value of property and equipment due to currency translations for foreign property and equipment, net, was a decrease of $1.0 million as of September 30, 2023 compared to December 31, 2022.

Depreciation expense was recorded as follows:


	Three Months Ended				Nine Months Ended
(amounts in thousands)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022
Cost of sales	$	19,315	$	20,131	$	69,843	$	59,620
Selling, general and administrative	1,379		1,311		4,267		4,062
Total depreciation expense	$	20,694	$	21,442	$	74,110	$	63,682

Note 6. Goodwill

The following table summarizes the changes in goodwill by reportable segment:


(amounts in thousands)	North America		Europe		Total Reportable Segments






Balance as of December 31, 2022	$	182,269	$	199,684	$	381,953






Currency translation	31		(3,085)		(3,054)
Balance as of September 30, 2023	$	182,300	$	196,599	$	378,899

Note 7. Intangible Assets, Net

The cost and accumulated amortization values of our intangible assets were as follows:


	September 30, 2023
(amounts in thousands)	Cost		Accumulated Amortization		Net Book Value
Customer relationships and agreements	$	120,707	$	(79,497)	$	41,210
Software	111,091		(45,872)		65,219
Trademarks and trade names	31,617		(10,176)		21,441
Patents, licenses and rights	12,630		(4,248)		8,382
Total amortizable intangibles	$	276,045	$	(139,793)	$	136,252


	December 31, 2022
(amounts in thousands)	Cost		Accumulated Amortization		Net Book Value
Customer relationships and agreements	$	121,461	$	(73,182)	$	48,279
Software	108,611		(36,231)		72,380
Trademarks and trade names	31,789		(9,000)		22,789
Patents, licenses and rights	9,942		(5,284)		4,658
Total amortizable intangibles	$	271,803	$	(123,697)	$	148,106

The effect on our carrying value of intangible assets due to currency translations for foreign intangible assets as of September 30, 2023 compared to December 31, 2022 was a decrease of $0.5 million.

Amortization expense was recorded as follows:


	Three Months Ended				Nine Months Ended

(amounts in thousands)	September 30, 2023		September 24, 2022		September 30, 2023		September 24, 2022
Amortization expense	$	9,166	$	6,169	$	21,166	$	18,805

We recorded accelerated amortization of $3.5 million during the three and nine months ended September 30, 2023 related to an ERP system that we intend to not utilize upon completion of the JW Australia Transition Services Agreement period. We expect to record an additional $24.8 million of accelerated amortization related to this ERP through the second quarter of 2024.

Note 8. Accrued Expenses and Other Current Liabilities


(amounts in thousands)	September 30, 2023		December 31, 2022
Accrued sales and advertising rebates	$	77,453	$	90,461
Current portion of operating lease liability	31,171		31,152
Non-income related taxes	27,691		22,615
Accrued freight	24,874		17,377
Current portion of warranty liability (Note 9)	22,034		21,215
Accrued expenses	20,364		13,505
Current portion of accrued claim costs relating to self-insurance programs	14,036		16,231
Accrued income taxes payable	11,885		9,368
Accrued interest payable	8,792		4,036
Deferred revenue and customer deposits	7,272		10,084
Current portion of restructuring accrual (Note 16)	7,122		5,021
Legal claims provision	1,372		3,490
Current portion of derivative liability (Note 19)	1,225		3,346
Total accrued expenses and other current liabilities	$	255,291	$	247,901

The legal claims provision relates primarily to contingencies associated with the ongoing legal matters disclosed in Note 21 - Commitments and Contingencies.

The accrued sales and advertising rebates, accrued interest payable, accrued freight, and non-income related taxes can fluctuate significantly period-over-period due to timing of payments.

Note 9. Warranty Liability

Warranty terms vary from one year to lifetime on certain window and door components. Warranties are normally limited to servicing or replacing defective components for the original customer. Product defects arising within six months of sale are classified as manufacturing defects and are not included in the current period expense below. Some warranties are transferable to subsequent owners and are either limited to 10 years from the date of manufacture or require pro-rata

payments from the customer. A provision for estimated warranty costs is recorded at the time of sale based on historical experience and is periodically adjusted to reflect actual experience.

An analysis of our warranty liability is as follows:


(amounts in thousands)	September 30, 2023		September 24, 2022
Balance as of January 1	$	52,389	$	53,367
Current period charges	23,930		20,744

Experience adjustments	(992)		384
Payments	(22,925)		(21,041)

Currency translation	(101)		(1,307)
Balance at period end	52,301		52,147
Current portion	(22,034)		(20,773)
Long-term portion	$	30,267	$	31,374

The most significant component of our warranty liability as of September 30, 2023 and September 24, 2022 was in the North America segment. As of September 30, 2023, the warranty liability in the North America segment totaled $45.4 million after discounting future estimated cash flows at rates between 0.53% and 3.80%. Without discounting, the liability would have increased by approximately $3.8 million.

Note 10. Long-Term Debt

Our long-term debt, net of original issue discount and unamortized debt issuance costs, consisted of the following:


	September 30, 2023	September 30, 2023		December 31, 2022
(amounts in thousands)	Interest Rate
Senior Notes	4.63% - 4.88%	$	600,000	$	800,000
Senior Secured Notes		—		250,000
Term loans	1.30% - 7.68%	537,835		541,970
Revolving credit facilities		—		55,000
Finance leases and other financing arrangements	2.00% - 8.28%	81,520		89,038
Mortgage notes	5.67% - 6.17%	21,360		22,472
Total Debt		1,240,715		1,758,480
Unamortized debt issuance costs and original issue discounts		(6,962)		(11,597)
Current maturities of long-term debt		(40,501)		(34,093)
Long-term debt		$	1,193,252	$	1,712,790

Summaries of our significant changes to outstanding debt agreements as of September 30, 2023 are as follows:

Senior Secured Notes and Senior Notes

In December 2017, we issued $800.0 million of unsecured Senior Notes in two tranches: $400.0 million bearing interest at 4.63% and maturing in December 2025 (“4.63% Senior Notes”), and $400.0 million bearing interest at 4.88% and maturing in December 2027 in a private placement for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

In May 2020, we issued $250.0 million of Senior Secured Notes bearing interest at 6.25% and maturing in May 2025 (“6.25% Senior Secured Notes”) in a private placement for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The proceeds were net of fees and expenses associated with debt issuance, including an underwriting fee of 1.25%. Interest is payable semiannually, in arrears, each May and November.

On August 3, 2023, we redeemed all $250.0 million of our 6.25% Senior Secured Notes and $200.0 million of our 4.63% Senior Notes. The Company recognized a pre-tax loss of $6.5 million on the redemption in the three and nine months ended September 30, 2023, consisting of $3.9 million in call premium and $2.6 million in accelerated amortization of debt issuance costs.

Term Loans

U.S. Facility - Initially executed in October 2014, we amended the Term Loan Facility in July 2021 to, among other things, extend the maturity date from December 2024 to July 2028 and provide additional covenant flexibility. Pursuant to the amendment, certain existing and new lenders advanced $550.0 million of replacement term loans, the proceeds of which were used to prepay in full the amount outstanding under the previously existing term loans. The replacement term loans originally bore interest at LIBOR (subject to a floor of 0.00%) plus a margin of 2.00% to 2.25% depending on JWI’s corporate credit ratings. In addition, the amendment also modifies certain other terms and provisions of the Term Loan Facility, and adds language to address the replacement of LIBOR with a SOFR basis upon the June 30, 2023 cessation of the publication of LIBOR. Voluntary prepayments of the replacement term loans are permitted at any time, in certain minimum principal amounts, but were subject to a 1.00% premium during the first six months. The amendment requires 0.25% of the initial principal to be repaid quarterly until maturity. As a result of this amendment, we recognized debt extinguishment costs of $1.3 million, which included $1.0 million of unamortized debt issuance costs and original discount fees. As of the date of the amendment, the outstanding principal balance, net of original issue discount, was $548.6 million.

In June 2023, we amended the Term Loan Facility to replace LIBOR with a Term SOFR based rate as the successor benchmark rate and made certain other technical amendments and related conforming changes. All other material terms and conditions were unchanged.

As of September 30, 2023, the outstanding principal balance, net of original issue discount, was $536.7 million.

In May 2020, we entered into interest rate swap agreements with a weighted average fixed rate of 0.395% paid against one-month LIBOR floored at 0.00% with outstanding notional amounts aggregating to $370.0 million corresponding to that amount of the debt outstanding under our Term Loan Facility. In June 2023, the interest rate swap agreements were amended to convert to a SOFR basis on June 30, 2023, resulting in a weighted average fixed rate of 0.317% paid against one-month USD-SOFR CME Term floored at (0.10)%. The interest rate swap agreements are designated as cash flow hedges of a portion of the interest obligations on our Term Loan Facility borrowings and mature in December 2023. See Note 19 - Derivative Financial Instruments for additional information on our derivative assets and liabilities.

Revolving Credit Facility

ABL Facility - In July 2021, we amended the ABL Facility to, among other things, extend the maturity date from December 2022 to July 2026, increase the aggregate commitment to $500.0 million, provide additional covenant flexibility, conform certain terms and provisions to the Term Loan Facility, and amend the interest rate grid applicable to the loans thereunder by adding language to address the replacement of LIBOR with a SOFR basis upon the June 30, 2023 cessation of the publication of LIBOR. Pursuant to the amendment, the amount allocated to U.S. borrowers was increased to $465.0 million. The amount allocated to Canadian borrowers was maintained at $35.0 million. Borrowings under the ABL Facility bore, at the borrower’s option, interest at either a base rate plus a margin of 0.25% to 0.50% depending on excess availability or LIBOR (subject to a floor of 0.00%) plus a margin of 1.25% to 1.50% depending on excess availability. All other material terms and conditions were unchanged.

In June 2023, we amended the ABL Facility to replace LIBOR with a Term SOFR based rate as the successor benchmark rate and made certain other technical amendments and related conforming changes. All other material terms and conditions were unchanged.

As of September 30, 2023, we had no outstanding borrowings, $39.0 million in letters of credit and $453.4 million available under the ABL Facility.

Mortgage Notes – In December 2007, we entered into thirty-year mortgage notes secured by land and buildings in Denmark with principal payments which began in 2018. As of September 30, 2023, we had DKK 150.6 million ($21.4 million) outstanding under these notes.

Finance leases and other financing arrangements – In addition to finance leases, we include insurance premium financing arrangements and loans secured by equipment in this category. As of September 30, 2023, we had $81.5 million outstanding in this category, with maturities ranging from 2023 to 2031.

As of September 30, 2023, we were in compliance with the terms of all of our Credit Facilities and the indentures governing the Senior Notes.

Note 11. Income Taxes

The effective income tax rate for continuing operations was 50.7% and 39.8% for the three and nine months ended September 30, 2023, respectively, and (35.1)% and 288.0% for the three and nine months ended September 24, 2022, respectively. In accordance with ASC 740-270, we recorded an income tax expense of $17.4 million and $31.6 million from continuing operations in the three and nine months ended September 30, 2023, respectively, and $11.7 million and $21.0 million from continuing operations in the three and nine months ended September 24, 2022, respectively. We applied our estimated annual effective tax rate to year-to-date income for includable entities during the respective periods. Our estimated annual effective tax rate for both years includes the impact of the tax on GILTI. Entities that are currently generating losses and for which there is a full valuation allowance are excluded from the worldwide effective tax rate calculation and are calculated separately.

The impact of significant discrete items is separately recognized in the quarter in which they occur. The tax expense for discrete items included in the tax provision for continuing operations for the three months ended September 30, 2023 was $7.0 million, compared to a tax expense of $1.9 million for the three months ended September 24, 2022. The discrete tax expense amounts for the three months ended September 30, 2023 comprised primarily of $5.7 million of tax expense attributable to an increase in the valuation allowance on U.S. foreign tax credit carryforwards and a net $2.3 million of tax expense due to changes in uncertain tax positions (“UTPs”), partially offset by a $0.9 million net tax benefit attributable to the decrease in the valuation allowance on U.S. state net operating losses. The discrete tax expense amounts for the three months ended September 24, 2022 comprised primarily of $2.8 million of tax expense attributable to share-based compensation, partially offset by $1.1 million of tax benefit attributed to return-to-provision adjustments.

The tax expense related to discrete items included in the tax provision for continuing operations for the nine months ended September 30, 2023 was $9.6 million, compared to a tax benefit of $4.5 million for the nine months ended September 24, 2022. The discrete tax expense for the nine months ended September 30, 2023 were comprised primarily of $5.7 million of tax expense attributable to an increase in the valuation allowance on U.S. foreign tax credit carryforwards, a net $2.0 million of tax expense due to changes in UTPs, $1.6 million of tax expense attributable to share-based compensation and a $0.6 million increase in the valuation allowance in U.S. state net operating losses. The discrete tax benefits for the nine months ended September 24, 2022 were comprised primarily of $9.5 million of tax benefit related to movement in the valuation allowance due to changes in estimated forecasted earnings and $1.2 million of tax benefit attributable to return-to-provision adjustments, partially offset by $3.4 million of tax expense attributable to share-based compensation, $2.6 million of tax expense attributable to interest expense on UTPs.

Under ASC 740-10, we provide for uncertain tax positions and the related interest expense by adjusting unrecognized tax benefits and accrued interest accordingly. We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During the nine months ended September 30, 2023, we settled our income tax audit in the amount of $8.4 million principal excluding interest with the Denmark tax authority. We previously provided a reserve for the Denmark income tax audit and have reduced our uncertain tax position reserve as a result of the settlement. We increased our reserve by $11.6 million during the three months ended September 30, 2023 due to ongoing audits in Europe, partially offset by a $9.3 million recognition of a deferred tax asset under our capacity management agreement structure. We had unrecognized tax benefits without regard to accrued interest of $35.2 million and $29.3 million as of September 30, 2023 and December 31, 2022, respectively.

The Company continually evaluates its global cash needs. As of September 30, 2023, the Company continues to make an indefinite reinvestment assertion on the future earnings of its foreign subsidiaries.

Note 12. Segment Information

We report our segment information in the same way management internally organizes the business to assess performance and make decisions regarding allocation of resources in accordance with ASC 280-10- Segment Reporting. Management reviews net revenues and Adjusted EBITDA from continuing operations to evaluate segment performance and allocate resources. We define Adjusted EBITDA from continuing operations as income (loss) from continuing operations, net of tax, adjusted for the following items: income tax expense (benefit); depreciation and amortization; interest expense, net; and certain special items consisting of non-recurring legal and professional expenses and settlements; goodwill impairment; restructuring and asset related charges; other facility closure, consolidation, and other related costs and adjustments; M&A related costs; loss on extinguishment of debt; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; and other special items. We use Adjusted EBITDA from continuing operations because we believe this measure assists 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. This non-GAAP financial measure should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

We have two reportable segments in our continuing operations, organized and managed principally in geographic regions: North America and Europe. We report all other business activities in Corporate and unallocated costs. Factors considered in determining the two reportable segments include the nature of business activities, the management structure accountable directly to the CODM, the discrete financial information available and the information regularly reviewed by the CODM. .

The following tables set forth certain information relating to our segments’ operations:

(amounts in thousands)

North
America

Europe

Total Operating
Segments

Corporate
and
Unallocated
Costs

Total
Consolidated

Three Months Ended September 30, 2023

Total net revenues

790,327

289,692

JELD-WEN Holding, Inc. [JELD] Filings
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-09]
10-K	[2023-02-21]
10-Q	[2022-11-01]
10-Q	[2022-08-01]
10-Q	[2022-05-02]
10-K	[2022-02-22]
10-Q	[2021-11-01]
10-Q	[2021-08-02]
10-Q	[2021-04-30]
10-K	[2021-02-23]
10-Q	[2020-11-03]
10-Q	[2020-08-05]
10-Q	[2020-05-06]
10-K	[2020-02-24]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-08]
10-K	[2019-03-01]
10-Q	[2018-11-07]
10-Q	[2018-08-07]
10-Q	[2018-05-09]
10-K	[2018-03-06]
S-1	[2017-11-13]
10-Q	[2017-11-08]
10-Q	[2017-08-08]
S-1	[2017-05-15]
10-Q	[2017-05-12]
10-K	[2017-03-03]
S-1	[2016-06-01]