Q4 2023 JELD-WEN Holding Inc Earnings Call

Operator: Thanks for standing by, and welcome to the Jeld-Wen fourth quarter and full year 2023 results call. I would now like to welcome James Armstrong, Vice President, Investor Relations, to begin the call. James, over to you. Thank you and good morning.

Thank you for standing by and welcome to the Delta when fourth quarter and full year 2023 results call.

I would now like to welcome James Armstrong, Vice President Investor Relations to begin the call James over to you.

James Armstrong: Thank you and good morning, we issued our fourth quarter and full year 2023 earnings release last night and posted a slide presentation to the Investor relations portion of our website, which can be found at investor <unk> Dot com.

James Armstrong: We issued our fourth quarter and full year 2023 earnings release last night and posted a slide presentation to the investor relations portion of our website, which can be found at investor.jeldwen.com. We will be referencing this presentation during our call. Today, I'm joined by Bill Christensen, Chief Executive Officer, and Julie Albrecht, Chief Financial Officer. Before I turn it over to Bill, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our Forms 10-K and 10-Q filed with the SVC. Jeld-Wen does not undertake any duty to update forward-looking statements, including the guidance that we are providing with respect to certain expectations for future results.

James Armstrong: We will be referencing this presentation during our call.

James Armstrong: I'm joined by Bill Christiansen, Chief Executive Officer, and Julie Albrecht Chief Financial Officer.

James Armstrong: Before I turn it over to Bill I would like to remind everyone that during this call. We will make certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

James Armstrong: These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our forms 10-K, and 10-Q filed with the SEC.

Speaker Change: <unk> does not undertake any duty to update forward looking statements, including the guidance that we are providing with respect to certain expectations for future results.

James Armstrong: Additionally, during today's call, we will discuss non-GAAP measures which we believe can be useful in evaluating our performance. However, the presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP can be found in our earnings release and in the appendix of our earnings presentation. With that, I'd like to now turn the call over to Bill. Thank you, James, and thank you everyone for joining our call today. I'm pleased to report that our fourth-quarter earnings were better than we expected, and we are making great progress on strengthening the foundation of Jeld-Wen. I want to thank all of our employees for their continued dedication as we work together to plan and execute our performance improvement activities. Today, I'll start by giving a brief overview of our fourth-quarter results and discuss some of the actions we've taken to improve our financial performance. I'll then introduce several of our new leaders before handing over to Julie to discuss the financial results in more detail.

Speaker Change: Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance the.

Speaker Change: The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

Speaker Change: A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP can be found in our earnings release and in the appendix of our earnings presentation.

Speaker Change: With that I'd like to now turn the call over to Bill. Thank you James and thank you everyone for joining our call today.

Bill Christiansen: I am pleased to report that our fourth quarter earnings were better than we expected and we are making great progress on strengthening the foundation of gel Gwen.

Bill Christiansen: I want to thank all of our employees for their continued dedication as we work together to plan and execute our performance improvement activities.

Bill Christiansen: Today, I'll start by giving a brief overview of fourth quarter results.

Bill Christiansen: Discuss some of the actions we've taken to improve our financial performance.

Bill Christiansen: I will then introduce several of our new leaders before handing over to Julie to discuss the financial results in more detail.

Bill Christensen: I'll then return to discuss our transformation journey before providing 2024 financial guidance and taking your questions. I'll begin with our fourth quarter highlights on slide four. While sales were in line with our expectations, earnings were above the top end of our guidance, primarily due to solid execution of our ongoing productivity actions.

Julie C. Albrecht: I will then return to discuss our transformation journey.

Julie C. Albrecht: Before providing 2024 financial guidance and taking your questions.

Julie C. Albrecht: I'll begin with our fourth quarter highlights on slide four.

Julie C. Albrecht: While sales were in line with our expectations.

Julie C. Albrecht: Earnings were above the top end of our guidance, primarily due to solid execution of our ongoing productivity actions.

Bill Christensen: As a result, margins significantly improved year over year. We continue to generate strong cash flows, driven by improved earnings and a reduced working capital balance. Lastly, I'm pleased to report that we achieved our 2023 cost savings goals as we continue to remove fixed costs, including site closures, and implement additional performance improvements across the business. At the beginning of 2023, we committed to improving our business. And as I look back at what our team accomplished last year, I'm proud of what we achieved.

Julie C. Albrecht: As a result margins significantly improved year over year.

Julie C. Albrecht: We continued to generate strong cash flows driven by improved earnings and reduced working capital balances.

Julie C. Albrecht: Lastly, I am pleased to report that we achieved our 2023 cost savings goals as we continue to remove fixed costs, including site closures and implement additional performance improvements across the business.

Julie C. Albrecht: At the beginning of 2023, we committed to improving our business and as I look back at what our team accomplished last year I'm proud of what we achieved.

Bill Christensen: On slide five, you see some of the important actions that are driving our improved results. We are focused on streamlining our business and took important steps in 2023, such as initiating our transformation journey, as well as selling the Australasia business. Next, we prioritize strengthening our balance sheet, and using the Australasia divestiture proceeds, we repaid 450 million of long-term debt. We also made significant working capital reductions that were an important part of our strong cash flow generation. All of this delivered a net leverage of 2.5 times, down from 3.6 times at the prior year end.

Julie C. Albrecht: On slide five Youll see some of the important actions that are driving our improved results.

Julie C. Albrecht: We are focused on streamlining our business and took important steps in 2023, such as initiating our transformation journey as well as selling the Australasia business.

Julie C. Albrecht: Next we prioritize strengthening our balance sheet.

Julie C. Albrecht: And using the Australia Asia divestiture proceeds, we repaid $450 million of long term debt.

Julie C. Albrecht: We also made significant working capital reductions that were an important part of our strong cash flow generation.

Julie C. Albrecht: All of this delivered a net leverage of two five times.

Julie C. Albrecht: <unk> from three six times at the prior year end.

Bill Christensen: Finally, we have taken significant steps to reduce our cost base, including closing or announcing the closure of five sites. And, as I mentioned earlier, we delivered our targeted $100 million of cost savings. As you can see, we take our commitment seriously, and we are delivering on what we said we would do in the fourth quarter.

Julie C. Albrecht: Finally, we have taken significant steps to reduce our cost base, including closing or announcing the closure of five sites and as I mentioned earlier, we delivered our targeted $100 million of cost savings.

Julie C. Albrecht: As you can see we take our commitments seriously.

Julie C. Albrecht: And we are delivering on what we said we would do.

In the fourth quarter, we continued to strengthen our foundation our key initial phase of our transformation journey.

Bill Christensen: We continue to strengthen our foundation, a key initial phase of our transformation journey. On slide six, we outline some of the major actions in our key focus areas of people and performance, as part of our Culture and Capabilities Workstream. We finalized the key leadership behaviors that we believe will support achieving our goals. We're starting a broad training program about these behaviors in the coming weeks, targeting 1,600 global leaders. Another important action was launching our Change Agent Network. This network consists of approximately 300 associates within the organization who are both trusted and recognized by their peers as leaders at all levels.

Julie C. Albrecht: On slide six we outline some of the major actions in our key focus areas of people and performance.

Julie C. Albrecht: As part of our culture and capabilities work stream.

Julie C. Albrecht: We finalize the key leadership behaviors that we believe will support achieving our goals.

Julie C. Albrecht: We're starting a broad training program about these behaviors in the coming weeks targeting 16 100 global leaders.

Julie C. Albrecht: Another important action.

Julie C. Albrecht: What's launching our change agent network.

Julie C. Albrecht: This network consists of approximately 300 associates within the organization, who are both trusted and recognized by their peers as leaders at all levels.

Bill Christensen: The Change Agent Network will allow us to more effectively share information, gather insights, and provide support for the many projects we have underway. Switching to performance. We completed an extensive bottom-up planning process that engaged thousands of our associates to generate ideas, followed by a business case and a project plan for each initiative. We have now sequenced these initiatives and are using a disciplined approach to track our implementation progress. Our expectation is that these projects will lead to significant long-term profitability improvement. Finally, we announced or completed the closure of four facilities in North America and Europe.

Julie C. Albrecht: The change agent network will allow us to more effectively share information gather insights and provide support for the many projects we have underway.

Julie C. Albrecht: Switching to performance, we completed an extensive bottom up planning process that engage thousands of our associates to generate ideas followed by a business case and a project plan for each initiative.

Julie C. Albrecht: We have now sequenced these initiatives and are using a disciplined approach to track our implementation progress.

Julie C. Albrecht: Our expectation is that these projects will lead to significant long term profitability improvements.

Julie C. Albrecht: Finally, we announced or completed the closure of four facilities in North America and Europe.

Bill Christensen: Combined, these closures are expected to drive more than $13 million of annual EBITDA improvement that will phase in over the next 12 months. As part of our transformation journey, it is important that we have the right people to execute the significant changes we are planning. As you see on slide 7, and as announced on February 7th, we recently added several new executives to our senior leadership team. First, Gustavo Viana was appointed as EVP and President of Europe.

Julie C. Albrecht: Combined these closures are expected to drive more than $13 million of annual EBITDA improvement that will phase in over the next 12 months.

Julie C. Albrecht: As part of our transformation journey.

Julie C. Albrecht: It is important that we have the right people to execute the significant changes we are planning.

Julie C. Albrecht: As you see on slide seven and as announced on February seven we recently added several new executives to our senior leadership team.

Julie C. Albrecht: First Gustaf of Yana was appointed as EVP and President of Europe.

Bill Christensen: He brings over three decades of experience from various multinational companies. His experience includes operational and commercial transformation, as well as promoting cultural change. Second, Dan Valenti was appointed as EVP, North America Doors and Distribution. He joined us from Whirlpool Corporation, where he spent nearly 13 years in leadership roles, most recently as SVP and General Manager, Kitchen Aid, Small of Pine.

Julie C. Albrecht: He brings over three decades of experience from various multinational companies.

Julie C. Albrecht: His experience includes operational and commercial transformations.

Julie C. Albrecht: As well as promoting cultural change.

Julie C. Albrecht: Second Danville lengthy was appointed as EVP, North America doors and distribution.

Julie C. Albrecht: <unk> joined US from Whirlpool Corporation, where he spent nearly 13 years in leadership roles. Most recently as SVP and general manager Kitchenaid small appliances.

Bill Christensen: Dan possesses significant commercial, product development, and supply chain experience. His expertise in understanding market dynamics, identifying growth opportunities, and making informed strategic decisions will be extremely valuable to our country. Finally, Matt Meyer has joined us as EVP, Chief Digital and Information Officer.

Julie C. Albrecht: Dan possesses significant commercial product development and supply chain experience.

Julie C. Albrecht: His expertise in understanding market dynamics identifying growth opportunities and making informed strategic decisions will be extremely valuable to our team.

Julie C. Albrecht: Finally, Matt Meyer has joined us as EVP, Chief digital and information officer.

Bill Christensen: Matt has helped multiple companies advance their digital transformation. His most recent position was EVP, Chief Digital and Data Officer at Driven Brand Holding, where he was responsible for data technology outcomes for the largest automotive aftermarket services provider in North America. We are confident that these new leaders will be important catalysts in helping us achieve our goals, and I look forward to their insights and expertise. I'll now turn it over to Julie to discuss the financial results. Thanks, Bill.

Matthew Bouley: Matt has helped multiple companies advance their digital transformations.

Matthew Bouley: Most recent position was EVP, chief digital and data officer at driven brand holdings.

Matthew Bouley: Where he was responsible for data technology outcomes for the largest automotive aftermarket services provider in North America.

Matthew Bouley: We are confident that these new leaders will be important catalyst in helping us achieve our goals and I look forward to their insights and expertise.

Matthew Bouley: I'll now turn it over to Julie to discuss the financial results.

Julie C. Albrecht: Thanks Bill.

Julie C. Albrecht: Looking at slide nine, our fourth-quarter revenues were approximately $1 billion, down 13% from the prior year. This decrease was driven by a reduction in our core revenues due to market-driven volume declines in both North America and Europe. Despite the lower sales, our adjusted EBITDA was $87 million in the fourth quarter, up 11% year-over-year, leading to an adjusted EBITDA margin of 8.5%. This strong year-over-year margin improvement of 190 basis points reflects solid execution of our productivity actions in areas such as site closures, headcount reductions, freight management, and sourcing optimization. On slide 10, you see that our full year 2023 results tell a similar story as the fourth quarter. Our full year revenue was $4.3 billion, down 5% year over year.

Julie C. Albrecht: Looking at slide nine our fourth quarter revenues were approximately $1 billion down 13% from the prior year.

Julie C. Albrecht: This decrease was driven by a reduction in our core revenues due to market driven volume declines in both North America and Europe.

Julie C. Albrecht: Despite the lower sales our adjusted EBITDA was $87 million in the fourth quarter up 11% year over year, leading to an adjusted EBITDA margin of eight 5%.

Julie C. Albrecht: This strong year over year margin improvement of 190 basis points reflects solid execution of our productivity actions in areas such as site closures head count reductions freight management and sourcing optimization.

Julie C. Albrecht: On slide 10, you'll see that our full year 2020 results tell a similar story as the fourth quarter.

Julie C. Albrecht: Our full year revenue was $4 $3 billion down 5% year over year.

Julie C. Albrecht: This decrease was driven by our core revenues as volume mix was lower by 10% with a partial offset from 5% of higher price realization. Our full year 2023 adjusted EBITDA increased by 9% to $380 million, and margins expanded by 110 basis points to 8.8%. Our full-year EBITDA growth was driven by operating cost reductions and positive price-cost results that were partially offset by the impact of lower volume. As Bill mentioned earlier, in 2023, we significantly increased our cash flow and reduced our leverage. Turning to slide 11, you see that we generated $345 million of operating cash flow, a $315 million improvement year over year as we had strong operational performance and significantly reduced our working capital balance. We also substantially improved our cash position. Using proceeds from the sale of the Australasia business and our strong cash flow, we reduced our net leverage ratio by more than a full turn to 2.5 times at the end of 2023.

Julie C. Albrecht: This decrease was driven by our core revenues as volume mix was lower by 10% with a partial offset from 5% of higher price realization.

Julie C. Albrecht: Our full year 2023, adjusted EBITDA increased by 9% to $380 million and margins expanded by 110 basis points to eight 8%.

Julie C. Albrecht: Our full year EBITDA growth was driven by operating cost reductions and positive price cost results that were partially offset by the impact from lower volumes.

Julie C. Albrecht: As Bill mentioned earlier in 2023, we significantly increased our cash flow and reduced our leverage.

Julie C. Albrecht: Turning to slide 11, you see that we generated $345 million of operating cash flow of $315 million improvement year over year, as we had strong operational performance and significantly reduced our working capital balances.

Julie C. Albrecht: We also substantially improved our balance sheet using.

Julie C. Albrecht: Using proceeds from the sale of the Australasia business and our strong cash flow, we reduced our net leverage ratio by more than a full turn to two five times at the end of 2023.

Julie C. Albrecht: Our leverage is now within our midterm target range of 2.0 to 2.5 times. As you can see on slide 12, our fourth quarter revenue decline was driven by a lower volume mix of 16 percent, which was slightly offset by 1 percent of price realization and a 1 percent positive foreign exchange translation impact. I'll provide additional comments about our North America and Europe volume trends shortly. Additionally, you'll find a revenue walk, including segment details for the fourth quarter and the full year, in the appendix of our earnings presentation. On slide 13, you see that our adjusted EBITDA increased by $9 million year over year.

Leverage is now within our mid term target range of 2.0 to 2.5 times.

Julie C. Albrecht: As you can see on slide 12, our fourth quarter revenue decline was driven by lower volume mix of 16%, which was slightly offset by 1% of price realization and a 1% positive foreign exchange translation impact.

Speaker Change: I'll provide additional comments about our North America, and Europe volume trends. Shortly Additionally, youll find our revenue walk including segment details for the fourth quarter and the full year in the appendix of our earnings presentation.

Speaker Change: On slide 13, you see that our adjusted EBITDA increased by $9 million year over year.

Julie C. Albrecht: Despite significant volume-mix headwinds, we generated solid profit contributions from improved productivity, lower SG&A expenses, and favorable price costs. Regarding price costs, we remain focused on pricing discipline as we do continue to see inflation in costs such as labor and insurance. Moving to our segment results on slide 14, in the fourth quarter, our North America segment generated $748 million in sales, which was a decline of 13% from year-ago levels. This was driven by a core revenue decline of 13% due to a lower volume mix of 14%.

Speaker Change: Despite significant volume mix headwinds, we generated solid profit contributions from improved productivity.

Speaker Change: Our SG&A expenses and favorable price cost.

Speaker Change: Regarding price cost, we remain focused on pricing discipline as we do continue to see inflation in costs, such as labor and insurance.

Speaker Change: Okay.

Speaker Change: Moving to our segment results on slide 14 in the fourth quarter, Our North America segment generated $748 million in sales, which was a decline of 13% from year ago levels.

Speaker Change: This was driven by our core revenue decline of 13% due to lower volume mix of 14%, However, north Americas, adjusted EBITDA improved to $94 million, which was up 8% year over year, while margins improved by 250 basis.

Julie C. Albrecht: However, North America's adjusted EBITDA improved to $94 million, which was up 8% year-over-year, while margins improved by 250 basis points to 12.6%. This was due to higher prices relative to inflation and strong productivity, which more than offset the negative impact of lower volume mix. In Europe, we generated $273 million in revenue and $16 million in adjusted EBITDA. However, core revenues decreased by 18% in the fourth quarter, driven by a lower volume mix of 20%.

Speaker Change: <unk> to 12, 6%.

Speaker Change: This was due to positive price relative to inflation and strong productivity, which more than offset the negative impact of lower volume mix.

Speaker Change: In Europe, we generated $273 million in revenue and $16 million and adjusted EBITDA.

Speaker Change: Core revenues decreased by 18% in the fourth quarter, driven by lower volume mix of 20%.

Julie C. Albrecht: Adjusted EBITDA declined by $6 million from last year, leading to 110 basis points of lower margin. This decline was due to continued weak demand that was partially offset by improved productivity. Now turning to the market outlook on slide 15, starting with North America, we expect North American volumes to be down by low single digits in 2024. We anticipate that new single-family home construction will be flat to slightly up during the year.

Speaker Change: Adjusted EBITDA declined by $6 million from last year, leading to 110 basis points of lower margin.

Speaker Change: This decline was due to continued weak demand that was partially offset by improved productivity.

Speaker Change: Now turning to the market outlook on slide 15, and starting with North America.

Speaker Change: We expect North America volumes to be down by low single digits in 2024.

Speaker Change: We anticipate that new single family home construction will be flat to up slightly during the year. However, the outlook for repair and remodel activity remains uncertain and we currently expect R&R activity to be down by low to mid single digits.

Julie C. Albrecht: However, the outlook for repair and remodel activity remains uncertain, and we currently expect R&R activity to be down by low to mid-single-digit percent. In the U.S., high interest rates continue to weigh on consumer confidence and create an affordability challenge. Existing home sales remain at relatively low levels as people with low interest rate mortgages are reluctant to move.

Speaker Change: In the U S high interest rates continue to weigh on consumer confidence and create an affordability challenge.

Speaker Change: Existing home sales remain at relatively low levels as people with low interest rate mortgages are reluctant to move. However, this dynamic creates an opportunity for increased new housing starts.

Julie C. Albrecht: However, this dynamic creates an opportunity for increased new housing starts. However, the European market is expected to continue experiencing demand weakness due to ongoing macroeconomic and geopolitical challenges. Overall, we anticipate volumes in the region to be down by high single digits. Residential construction markets remain soft across Europe, and we anticipate that these volumes will be down by high single digits. Additionally, commercial project volumes are slowing in Europe, and this demand is expected to decline by mid-single digits.

Speaker Change: The European market is expected to continue experiencing demand weakness due to the ongoing macroeconomic and geopolitical challenges overall, we anticipate volumes in the region to be down by high single digits.

Speaker Change: Residential construction markets remained soft across Europe, and we anticipate that these volumes will be down by high single digits.

Speaker Change: Additionally, commercial project volumes are slowing in Europe, and this demand is expected to decline by mid single digits.

Bill Christensen: I'll now turn it back to Bill to talk about our transformation journey. Thanks, Julie. As I've shared in previous earnings calls... We are taking a two-pronged approach to improve our business. As we show on slide 17, in the short term, we are focusing on strengthening the foundation of our business. Our solid 2023 results underscore the significant progress we are making on reducing our operating costs and improving our operational performance. However, our margins are still not where they should be, and we have a lot more work to do. We remain committed to building a strong foundation that supports our future growth. In addition to the short-term focus, we continue to assess opportunities to grow our business, and we commit to only investing where we have the right to win. While this process is ongoing,

Speaker Change: I'll now turn it back to bill to talk about our transformation journey.

Bill Christiansen: Thanks Julie.

Bill Christiansen: As I've shared on previous earnings calls we.

Bill Christiansen: We are taking a two pronged approach to improve our business.

Bill Christiansen: As we show on slide 17 in the short term, we are focusing on strengthening the foundation of our business.

Bill Christiansen: Our solid 2023 results underscore the significant progress we are making on reducing our operating costs and improving our operational performance.

However, our margins are still not where they should be and we have a lot more work to do.

Bill Christiansen: We remain committed to building a strong foundation that supports our future growth.

Bill Christiansen: In addition to the short term focus we continue to assess opportunities to grow our business.

Bill Christiansen: And we commit to only invest where we have the right to win.

Bill Christiansen: While this process is ongoing.

Bill Christensen: We see a lot of opportunity for profitable growth in the years to come. Turning to slide 18, as I've shared before, my three focus areas are people, performance, and strategy, and our transformation journey is currently focused on people and performance. We are engaging thousands of associates around the world in activities to positively impact both culture and financial results. Our teams have identified, validated, and now sequenced more than 800 initiatives.

Bill Christiansen: We see a lot of opportunity for profitable growth in the years to come.

Bill Christiansen: Turning to slide 18, as I've shared before my three focus areas, our people performance and strategy and our transformation journey is currently focused on people and performance.

Bill Christiansen: We are engaging thousands of associates around the world and activities to positively impact both culture and financial results.

Bill Christiansen: Our teams have identified validated and now sequenced more than 800 initiatives related to our culture. We are working to more clearly connect our values to our everyday work.

Bill Christensen: Related to our culture, we are working to more clearly connect our values to our everyday work. This includes investing more in training about important behaviors, including safety, continuous improvement, and accountability. We're then measuring our progress and getting feedback from our team. I'll talk more about our organizational health activities on the next slide. Shifting to performance, our numerous initiatives include a balanced focus on both growth and cost reduction actions. We are working to improve our team strength, processes, and tools within our various commercial activities. In addition, we continue to right-size our manufacturing network, as well as invest in automation and utilize our scale to streamline sourcing, among many other smaller initiatives across the organization. We are investing more in ourselves as we execute on our solid pipeline of high ROIC projects to deliver improved profitability this year and in the future. To give you a better understanding of the type of work we're doing, I want to walk through a few examples of specific projects.

Bill Christiansen: This includes investing more in training about important behaviors, including safety continuous improvement and accountability.

Bill Christiansen: We are then measuring our progress and getting feedback from our teams.

Speaker Change: I'll talk more about our organizational health activities on the next slide.

Speaker Change: Yes.

Speaker Change: Shifting to performance our numerous initiatives include a balanced focus on both growth and cost reduction actions.

Speaker Change: We are working to improve our team strength processes and tools within our various commercial activities.

Speaker Change: In addition, we continue to rightsize, our manufacturing network as well as invest in automation and utilize our scale to streamline sourcing among many other smaller initiatives across the organization.

Speaker Change: We are investing more in ourselves as we execute on our solid pipeline of high R. O IC projects to deliver improved profitability this year and in the future.

Speaker Change: To give you a better understanding of the type of work we're doing.

Speaker Change: Want to walk through a few examples of specific projects.

Bill Christensen: Slide 19 outlines our focus areas aimed at fostering a more agile culture. After assessing our organizational health index in the first half of 2023, we have holdings on three key areas: Communication, Training, and Incentives. In our global organization, ensuring that important information reaches the right individuals in a timely manner presents a significant challenge.

Speaker Change: Slide 19 outlines our focus areas aimed at fostering a more agile culture.

Speaker Change: After assessing our organizational health index in the first half of 2023, we.

Speaker Change: We have honed in on three key areas communication training and incentives.

Speaker Change: And our global organization.

Speaker Change: During that important information reaches the right individuals in a timely manner presents a significant challenge.

Bill Christensen: Nevertheless... We are committed to fostering transparent communication at all levels, employing both formal and informal channels. One method we are employing to improve communication is utilizing our recently launched Change Agent Network. This network comprises approximately 300 individuals within the organization who are empowered to accelerate communication in support of our cultural transformation. We are also investing in employee development through a variety of training initiatives. These programs cover leadership, change management, and technical skills.

Speaker Change: Nevertheless, we are committed to fostering transparent communication at all levels employing both formal and informal channels.

Speaker Change: One method, we are employing to improve communication is utilizing our recently launched change agent network.

Speaker Change: This network comprises approximately 300 individuals within the organization, who are empowered to accelerate communication in support of our cultural transformation.

Speaker Change: We are also investing in employee development through a variety of training initiatives.

Speaker Change: These programs cover a leadership change management and technical skills.

Bill Christensen: While some of these trainings take place in formal classroom settings, we're also leveraging on-the-job mentorship for more effective learning experiences. Finally, we're realigning rewards and recognition across the organization to improve connectivity with both financial performance and targeted behavior. Simultaneously, we are decentralizing responsibility while improving accountability within the organization. Now, shifting to performance, on slide 20, we show one of the growth-oriented projects we have underway in Europe. An opportunity that we have identified is improving efficiency in our quoting process. Our European team is developing a next-generation CPQ, or configure price and quote, system that will allow customers to configure their own orders and identify the right Jeld-Wen products that fit their needs. The system will then accurately price items and provide detailed quotes to customers.

Speaker Change: Well some of these trainings take place in formal classroom settings. We're also leveraging on the job mentorship for more effective learning experiences.

Speaker Change: Finally, we are realigning rewards and recognition across the organization to improve connectivity with both financial performance and targeted behaviors simultaneously, we're decentralizing responsibility, while improving accountability within the organization.

Speaker Change: Now shifting to performance on slide 20, we show one of the growth oriented projects, we have underway in Europe.

Speaker Change: An opportunity that we have identified is improving efficiency in our quoting process.

Speaker Change: Our European team is developing a next generation C PQ or configure price and quote system.

Speaker Change: That will allow customers to configure their own orders and identify the right <unk> products that fit their needs.

Speaker Change: The system will then accurately price and provide detailed quotes to customers.

Bill Christensen: When this project is complete, we will improve our customer service, refine our profit feasibility, and integrate quotes with our manufacturing system. To execute this project, we expect to spend approximately $2.5 million in both expense and capital but anticipate a cumulative EBITDA impact of more than $15 million over the next five years and an IRR of more than 50%. Moving to slide 21.

Speaker Change: When this project is complete we will improve our customer service refine our profit visibility and integrate quotes with our manufacturing systems.

Speaker Change: To execute this project, we expect to spend approximately two $5 million and both expense and capital, but anticipate a cumulative EBITDA impact of more than $15 million over the next five years and an IRR of more than 50%.

Speaker Change: Moving to slide 21.

Bill Christensen: I want to highlight an initiative that is the first in a series of investments to increase automation in our North America door facility. By leveraging proven technology, this project will drive operational efficiencies on our production line and elevate our product quality. Furthermore, the project will address bottlenecks in our facility, resulting in a substantial reduction in the build cycle duration.

Speaker Change: I want to highlight an initiative that is a first in a series of investments to increase automation in our North America door facilities.

Speaker Change: By leveraging proven technology. This project will drive operational efficiencies on a production line and elevate our product quality.

Speaker Change: Furthermore, the project will address bottlenecks in our facility.

Speaker Change: <unk> in a substantial reduction in the build cycle duration.

Bill Christensen: This initiative is expected to generate more than $6 million in EBITDA a year once fully ramped up, with an IRR of more than 45%. Once this work is complete, it will also lead to further opportunities to reduce our network complexity and improve cost to serve. These two performance-related projects are just examples of the over 800 large and small projects that came from our bottoms-up planning process.

Speaker Change: This initiative is expected to generate more than $6 million in EBITDA, a year once fully ramped up with an IRR of more than 45%.

Once this work is complete it will also lead to further opportunities to reduce our network complexity and improve cost to serve.

Speaker Change: These two performance related projects are just examples of the over 800 large and small projects that came from a bottoms up planning process. We.

Bill Christensen: We expect these projects will lead to a much stronger Jeld-Wen with a solid foundation and significantly improved profitability. I now want to discuss our 2024 guidance. On slide 23, you see our initial guidance for revenue and adjusted EBITDA. We expect our 2024 revenue to be between $4.0 and $4.3 billion, as our core revenues are expected to be flat to down 7% compared to 2023. This is driven by the continuing market uncertainty in both North America and Europe, as Julie mentioned earlier in her comment. We anticipate that our adjusted EBITDA will fall within the range of $370 to $420 million, driven potentially by lower volume, which we expect to be more than offset by ongoing productivity improvements. We expect cost savings of approximately $100 million, which is a combination of approximately $50 million of carry-forward benefits from last year's actions and new initiatives that will be delivered this year.

Speaker Change: We expect these projects will lead to a much stronger gelled, one with a solid foundation and significantly improved profitability.

Speaker Change: Yes.

Speaker Change: I now want to discuss our 2024 guidance on slide 23.

Speaker Change: See our initial guidance for revenue and adjusted EBITDA.

We expect our 2020 for revenue to be between 4.0, and $4 3 billion as our core revenues are expected to be flat to down 7% compared to 2023.

Speaker Change: This is driven by the continuing market uncertainty in both North America, and Europe as Julie mentioned earlier in her comments.

Speaker Change: We anticipate that our adjusted EBITDA will fall within the range of $370 million to $420 million.

Speaker Change: Driven potentially buy lower volumes, which we expect to be more than offset by ongoing productivity improvements.

We expect cost savings of approximately $100 million, which is a combination of approximately $50 million of carryforward benefits from last year's actions and new initiatives that will be delivered this year at.

Bill Christensen: At the midpoint of our guidance, our margins are improving from 8.8% last year to 9.5%, a solid 70 basis points. As we look at the phasing of earnings this year, we expect our first quarter EBITDA to be slightly lower than the same period in 2023 due to anticipated volume headwinds and lower backlogs than we had when we entered last year. However... We expect benefits from our internal investments to ramp up throughout the year and therefore expect approximately 40% of EBITDA in the first half of the year and the remainder in the second half. I'd now like to provide some information about our cash flow outlook for 2024, which is outlined on slide 24. We expect that this year's operating cash flow will be similar to 2023 before we invest approximately $100 million in non-repeating cash expenses to fund portions of our transformation journey.

Speaker Change: At the midpoint of our guidance our margins are improving from eight 8% last year to nine 5%, a solid 70 basis points.

Speaker Change: As we look at the phasing of earnings this year.

Speaker Change: We expect our first quarter EBIT to be slightly lower than the same period in 2023 due to anticipated volume headwinds and lower backlogs than we had when we entered last year.

Speaker Change: We expect benefits from our internal investments to ramp up throughout the year and therefore expect approximately 40% of EBITDA in the first half of the year and the remainder in the second half.

Speaker Change: I would now like to provide some information about our cash flow outlook for 2024, which is outlined on slide 24.

Speaker Change: We expect that this year's operating cash flow will be similar to 2023 before we invest approximately $100 million of non repeating cash expenses to fund portions of our transformation journey.

Bill Christensen: In addition to these investments in Jeld-Wen's future, we plan to increase our capital expenditures to approximately 4% of sales to drive costs out of the business and set ourselves up for future growth. As you can see from the examples of projects that I discussed earlier, we are keenly focused on delivering returns significantly above our cost of capital. All in, we expect our free cash flow to be approximately $50 to $100 million this year, which reflects both our strong commitment to investing in Jeld-Wen's future and our ability to self-fund these investments with planned operating cash flows. As I wrap up, let's turn to slide 25.

Speaker Change: In addition to these investments in <unk> future, we plan to increase our capital expenditures to approximately 4% of sales to drive costs out of the business and set ourselves up for future growth.

Speaker Change: As you can see from the examples of projects that I discussed earlier, we are keenly focused on delivering returns significantly above our cost of capital.

Speaker Change: All in we expect our free cash flow to be approximately $50 million to $100 million. This year, which reflects both our strong commitment to investing in <unk> future.

Speaker Change: And our ability to self fund these investments with planned operating cash flows.

Speaker Change: As I wrap up lets turn to slide 25.

Bill Christensen: I'm excited to continue updating you on our transformation journey as this year progresses. As I mentioned earlier, we take our commitment seriously, and we are executing on what we have said we would do. We know that by fixing our foundation, we are preparing for profitable growth when the market improves. I'm confident that over the next few years, Jeld-Wen will deliver significantly improved profitability and return on invested capital. We appreciate your continued interest, and I'll now turn it over to James to move to Q&A. Thanks, Bill. Operator, we're now ready to begin Q&A. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.

Speaker Change: Im excited to continue updating you on our transformation journey as this year progresses as I mentioned earlier, we take our commitments seriously.

Speaker Change: And we are executing on what we have said we will do.

Speaker Change: We know that by fixing our foundation, we are preparing for profitable growth when the market improves.

Speaker Change: Im confident that over the next few years gelled, one will deliver significantly improved profitability and return on invested capital.

Speaker Change: We appreciate your continued interest and I'll now turn it over to James to move to Q&A.

James Armstrong: Thanks, Bill operator, we're now ready to begin Q&A.

James Armstrong: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

James Armstrong: We ask that you please limit yourself to one question and one follow-up question. We'll now take a moment to compile our raw. Our first question comes from the line of Phil Ng with Jeffries. Please go ahead.

James Armstrong: We ask that you please limit yourself to one question and one follow up question.

James Armstrong: We'll now take a moment to compile a roster.

Philip Ng: Our first question comes from the line of Phil Inc. With Jefferies. Please go ahead.

Philip Ng: Hey guys, congrats on a really strong quarter, and Bill, I really appreciate the details you shared with us today in terms of the transformation journey. It sounds really exciting. Thanks, Phil. Good morning.

Philip Ng: Hey, guys. Congrats on a really strong quarter and bill really appreciate the color you shared with US today in terms of the transformation journey it sounds really exciting.

Philip Ng: Thanks, Bill good morning.

Bill Christensen: Is there a way to help us kind of think about the productivity savings in the next few years? You know, I appreciate some of these investments you're making, and just these training efforts and decentralizing the process are going to take some time to take flight, but help us think through how that perhaps progresses, whether it's productivity in the next few years, the growth profile, or maybe even aspirationally, what's a target you aspire to deliver from an EBITDA margin standpoint in a more normalized growth environment. Yes, so, Phil, thank you for the question. As we look at our transformation, as I shared in my prepared remarks, we have a significant pipeline of projects, so over 800 that we're currently working through, and we've sequenced these, obviously, over the next number of years. And there are projects that are dropping in 24.

Speaker Change: Is there a way to help us kind of think about.

Bill Christiansen: The productivity savings that extra years I appreciate some of these investments you're making and just these training effort to decentralize and the process.

Speaker Change: Is that it takes some time to take flight, but help us think through how that perhaps for grass, whether it's productivity next few years.

Speaker Change: The growth profile or maybe even aspirational what's a.

Target you aspire to deliver from an EBITDA margin standpoint, and a more normalized growth environment.

Speaker Change: Yeah. So Phil Thank you for the question as we look at our transformation as I shared in my prepared remarks, we have a significant pipeline of projects. So over 800 that we're currently working through them we sequence fees, obviously over the next number of years.

And there is projects that are dropping in 'twenty four we expect that's going to deliver probably $50 million to the bottom line theres other projects, one, which we've talked about automation in some of our door facilities, where we are in the pipeline and ordering the equipment, but that will be installed late in the year. So that will clearly have been an impact in 'twenty five.

Bill Christensen: We expect that's going to deliver probably 50 million to the bottom line. There are other projects, one, which we talked about, automation in some of our door facilities where we're in the pipeline and ordering the equipment, but that will be installed late in the year.

Bill Christensen: So that will clearly have an impact in 25 and beyond. So it's too early for us to commit to what we see that we're going to deliver in 25. But we'll clearly have a strong line of sight as we get into the back half of this year.

Speaker Change: Our ears.

Speaker Change: It's too early for us to commit to what we see that we're going to deliver in 'twenty five we'll clearly have.

Speaker Change: Strong line of sight as we get into the back half of this year, but our expectation is that the project pipeline based on what we see today will be ramping up in the out years.

Bill Christensen: But our expectations are that the project pipeline, based on what we see today, will be ramping up in the coming years, but it's too early to calibrate. Our message this year, Phil, is that we want to overcompensate for the market headwinds with our internal actions, as we did last year, and I think we did well. So we're expecting to, you know, deliver more benefit than what we're going to lose in sales headwinds, but we are expecting a significant pipeline ramp-up as we roll into the back end of the year. And we'll be sharing that as we get into, let's say, Q3, Q4 results. Okay, that's helpful.

Speaker Change: But too early to calibrate our message. This year, Phil is we want to overcompensate the market headwinds with our internal actions as we did last year and I think we did well so we're expecting to deliver more benefit than what we're going to lose in sales headwind.

Speaker Change: But we are expecting a significant pipeline ramp up as we roll into the back end of the year and we will be sharing that.

Speaker Change: As we get into let's say Q3 Q4 results.

Speaker Change: Okay. That's helpful.

Bill Christensen: And then when you think about 2024, perhaps maybe a question for Julie, great to hear that you're expecting price costs to be largely neutral. Can you give us some color on what you're seeing out there from a pricing standpoint? There's been a lot of chatter about the retail channel pressuring their suppliers a little more aggressively on pricing concessions. So help us, give us a little context in terms of where you are in terms of negotiations with the retail channel, if there's any line of reviews that we should be mindful of, and then the price cost component: what's the price, what's the cost, what's your outlook for this year? Yeah, so maybe I can start at a high level, Phil, and then Julie can add some details.

Speaker Change: And then when you think about 2024 are perhaps maybe a question for Julie great to hear that youre expecting price cost to be largely neutral.

Julie C. Albrecht: Can you give us some color on what Youre seeing.

Julie C. Albrecht: Out there from a pricing standpoint, there's been a lot of chatter about the retail retail channel pressuring their suppliers Lamar.

Julie C. Albrecht: Lastly on pricing concession so help us.

Julie C. Albrecht: Give us a little context in terms of where you are in terms of negotiations with the retail channel. If there's any line of reviews that we should be mindful of and then the price cost component.

Julie C. Albrecht: What's the price what's cost what's baked into your outlook for this year.

Speaker Change: Yes, so maybe I can start at a high level fill and then Julie maybe can augment with some details. So our aspiration. This year is definitely to be neutral from a price cost standpoint, I would say at the end of last year. We finally had caught up as you well know we were lagging for a while on price and so we do feel that.

Bill Christensen: So our aspiration this year is definitely to be neutral from a price cost standpoint. I would say at the end of last year, we finally caught up. As you well know, we were lagging for a while on price. And so we do feel that we've caught up. But we still see cost inflation coming at us, even with the down volume. There's labor inflation, there's benefit inflation, there's glass inflation.

Julie C. Albrecht: We've caught up we still see cost inflation coming out of this even with the down volume there is labor inflation theres benefit inflation Theres glass inflation. So there are some.

Bill Christensen: So there are some key input costs that are increasing. We're doing our best to offset that. And clearly, the aspiration is neutral this year in a pretty demanding, potentially down volume market. Negotiations are ongoing. Some are already complete.

Julie C. Albrecht: Key input costs that are increasing we're doing our best to offset that.

Julie C. Albrecht: And clearly the aspiration is neutral this year in a pretty demanding potentially down volume market negotiations are ongoing some are already complete so I'd say too early to draw a final conclusions about where things land.

Bill Christensen: So I'd say it's too early to draw final conclusions about where things land, but our teams are doing their work, and we feel comfortable currently giving the guidance that we want to be price cost. Yeah, maybe I'll just add a little bit to that. I think, you know, the top line impact from prices, you know, again, we'd say very neutral, maybe a very low, single-digit type of price increase, just to focus on the inflation that Bill just mentioned, you know, specific to labor, you know, we really are looking at similar inflationary impacts this year in 24 that we saw last year. So call it, you know, kind of four to 5% labor increases between North America and Europe as You know, otherwise, inflation is moderating, but, as we all know, there is still inflation in certain aspects of our materials. And again, as we've already mentioned today, definitely labor and related benefits, and insurance, there is definitely no slowdown there in what we're experiencing. I appreciate all the great color guys; continue the great work. Thanks, Phil. Have a good day. Our next question comes from the line of Susan Maklari with Goldman Sachs. Please go ahead.

Julie C. Albrecht: Our teams are doing their work and we feel comfortable.

Julie C. Albrecht: Currently giving.

Julie C. Albrecht: Giving the guidance that we want to be price cost neutral.

Speaker Change: Yes, maybe I'll, just add a little bit to that I think top line impact from prices.

Speaker Change: Again, we stay very neutral maybe very low single digit type of price increase just to focus on the inflation that bill just mentioned specific to labor. We really are looking at similar inflationary impacts this year and 24 that we saw last year, so call it kind of 4% to 5%.

Speaker Change: Labor increases between North America, and in Europe as well.

Speaker Change: Otherwise.

Speaker Change: Inflation is moderating, but as we all know there is still inflation in certain aspects of our materials.

Speaker Change: And again as we've already mentioned today definitely labor and related benefits.

Speaker Change: Insurance is definitely really no slowdown there and what we're experiencing.

Speaker Change: Okay I appreciate all the great color guys continue the great work.

Speaker Change: Good day.

Speaker Change: Our next question comes from the line of Susan Mcelderry with Goldman Sachs. Please go ahead.

Susan Marie Maklari: Thank you. Good morning, everyone. Thank you for taking the questions. Good morning.

Susan Marie Maklari: Thank you good morning, everyone.

Susan Marie Maklari: Good morning questions good morning.

Bill Christensen: The first question I want to focus a bit on your expectation for North American volumes to potentially be down somewhere in that low single-digit range. As we think about that coming through, how do you think of the cadence through the year, perhaps? And then any thoughts on, you know, the upside from there as we do start to see some of that single family starts or activity coming through? Yeah, so thanks for the question, Susan.

Susan Marie Maklari: First question I wanted to focus a bit on is your expectation for North America volumes will potentially be down somewhere in that low single digit range.

Susan Marie Maklari: About that coming through how do you think of the cadence through the year, perhaps and then.

Susan Marie Maklari: That's on the upside from there as we do start to see some of that single family starts are activity coming through.

Speaker Change: Yes, so thanks for the question Susan Here's.

Bill Christensen: Here's from a high level how we're looking at the year currently. And then I'll talk maybe at the end about how we're looking at one age versus two age potentially. So if we break down North America, we have three buckets that are relevant and very relevant.

A high level, how we're looking at the year currently and then I'll talk maybe at the end about how we're looking at <unk> versus <unk> potentially.

Speaker Change: If we breakdown North America, we got three buckets that are relevant to our very relevant so new construction single family. That's about 50% of the sales in North America, we're seeing it's flat to slightly up in 'twenty four.

Bill Christensen: So new construction, single family, that's about 50% of the sales in North America, and we're seeing it's flat to slightly up in 24. R&R, which is, close to 50% of our sales is down low to mid-single. And we do have a small bucket of non-residential or commercial, which is our multi-family business VPI.

Speaker Change: R&R, which is close to 50% of our sales.

Speaker Change: Is down low to mid single.

Speaker Change: And we do have a small bucket of nonresidential or commercial which is our multifamily business VPI, that's a very small share.

Bill Christensen: That's a very small share, and we're growing well. We expect that the market is going to be down double digits. We see ourselves only down the high single because we are gaining share. But again, that's not a material mover for us. We're talking about less than 5% of total sales. So really, new Resi down or new Resi up flat to slightly up, and then on the repair and remodel, download a mid-single.

Speaker Change: And we're growing well, we expect that markets can be down double digits, we see ourselves only down high.

Speaker Change: High single, because we are gaining share, but again, that's not a material mover for us we're talking about.

Speaker Change: Less than 5% of total sales, so really new resi down.

Speaker Change: Our new raise the up flat to slightly up and then on the repair and remodel download a mid single I would say that there's definitely a view in the market talking to our customers retail partners that is.

Bill Christensen: I'd say that there's definitely a view in the market, talking to our customers, and retail partners, that if someone had to pick a half, it would definitely be H2, with a little bit of potential upside as we look at macro headwinds potentially easing as we move into the back half of the year with interest rates easing and mortgages becoming a little more attractive, that could do a couple things. Number one, get some more people into the resale market, and that could trigger some potential R&R upside. But still, the current view today is we're not planning on that upside. You can see the high end of our guidance top line is to be flat year over year.

Speaker Change: If someone had to pick a half that would definitely be H, two with a little bit of potential upside as we look at macro headwinds potentially residing as we move into the back half of the year with interest rates easing and mortgages, becoming a little more attractive that could do a couple of things number one.

Speaker Change: Get some more people into the resale market and that could trigger some potential R&R upside.

Speaker Change: But still current view today is we're not planning on that upside you can see the high end of our guidance top line is to be flat year over year.

Julie C. Albrecht: And that would actually imply slight growth in the U.S., and Europe definitely being down. And that would be, I think, what we're thinking is an optimistic case, given the current view. So that's kind of where we are. Julie can give a little more balance on what the sales are gonna look like H1, H2. Yeah, sure, Bill. Hey, Susan.

Speaker Change: And that would actually imply a slight growth in the U S and Europe definitely being down.

Speaker Change: And that would be saying, what we're thinking is an optimistic case.

Speaker Change: Given current view, so that's kind of where we are Julie can give a little more balance on what the sales is going to look like H one H two.

Julie C. Albrecht: Yes, sure balance sheet Susan.

Julie C. Albrecht: I guess when we look at the phasing of sales through the year, we do see, at the midpoint of our guidance, one-half a little bit weaker than the other two-halves, so maybe slightly off-center of 50-50 there, with one-half being a little bit lower. That means that really, looking at first half of this year versus first half of 2023, that's about a 10% decline in our sales, which is split pretty balanced between North America and Europe, so we do see, when you look at the comps of, again, first half this year versus first half second year, first half last year, a little bit of weakness there. As Bill's already mentioned, our first quarter of 2023 was a little bit stronger than we'd expected and was stronger than normal seasonality for a Q1 because of that backlog we were bringing into last year, so that does create a more difficult comp specific to Q1.

Julie C. Albrecht: I guess, when we look at the phasing of sales through the year, we do see it.

Julie C. Albrecht: The midpoint of our guidance.

Julie C. Albrecht: One has a little bit weaker in <unk>, So maybe slightly off center, a 50 50 there.

Julie C. Albrecht: What has been a little bit lower.

Julie C. Albrecht: That means that really looking at first half of this year versus first half of 'twenty three.

Julie C. Albrecht: 10%.

Julie C. Albrecht: Client in our in our sales which is.

Julie C. Albrecht: Split pretty balanced between North America, and Europe. So we do see when you look at the comp.

Julie C. Albrecht: Again first half this year versus first half second year, So first half last year, a little bit of weakness there there.

Julie C. Albrecht: As Bill has already mentioned our first quarter.

Julie C. Albrecht: 23 look a little bit stronger than we'd expected and was stronger than kind of normal seasonality for Q1 because of that backlog, we are bringing into last year. So that does create a more difficult comp specific to Q1.

Julie C. Albrecht: You know, the other thing I'll go ahead and just mention about the first half of this year versus last year and then look at the second half is really margins in the first half of this year being relatively flat year over year, so despite the lower sales, again, of maybe 10% or so, we do expect to maintain margins at around what was around 8.5% or so in the first half. That means that a lot of the benefit from the productivity and a little bit of a ramp up in sales really does help our margins expand in the second half of the year. Okay, that's very helpful, Collar.

Julie C. Albrecht: The other thing I'll go ahead, and just mentioned about first half of this year versus.

Julie C. Albrecht: Last year and then looking at second half is really margin in the first half of this year, we see being relatively flat year over year. So despite the lower sales again of maybe 10% or so we do expect to maintain margins at around what was around eight 5% or so in the first half.

Julie C. Albrecht: That means that.

Julie C. Albrecht: A lot of the benefit from the productivity and a little bit of ramp up in sales really does.

Julie C. Albrecht: <unk> helped our margins expand second half of the year.

Speaker Change: Okay. That's very helpful color and maybe building on that a bit.

Bill Christensen: And maybe building on that a bit, you know, from the commentary, it does sound like those productivity initiatives really have gained some momentum in the last quarters or so. As you think about coming into the year with those tailwinds there and the potential for that second half lift, any thoughts on what an improvement in volumes could mean in terms of some of these initiatives and the way that they could be realized, and, just broadly speaking, what they could mean for the business and results? Yeah, so I mean, if we think about what we're trying to do now, Susan, with getting our foundation in order, clearly, it's to create pretty significant operating leverage as the volume bounces back, and the volume will bounce back. Clearly, the U.S. is underbuilt.

Speaker Change: From the commentary it does sound like those productivity initiatives really have gained some momentum in the last quarters or so.

Speaker Change: You think about coming into the year with those tailwind there and the potential for that second half lift.

Speaker Change: Any thoughts on what a improvement in the volumes could mean in terms of some of these initiatives and the way that they could be realized in and just broadly speaking what they could mean for the business and results.

Speaker Change: Yes, so I mean.

Speaker Change: If we think about what we're trying to do now Susan with getting our foundation in order clearly it's to create pretty significant operating leverage as the volume.

Speaker Change: Bounces back.

And the volume will bounce back clearly the U S is under Bill there is a pent up demand.

Bill Christensen: There is pent-up demand. We know what the macro upside is, but this is actually a great opportunity for us to be doing a lot of the homework that we need to get done. And again, the over 800 work streams that we currently have running are balanced over the next three years, and we're going to see a pretty significant exit run rate ramp up as we move into the end of this year, and so we are expecting that a volume uptick will be clearly good news for us, but that's not controlling what we see in 24. We're doing our homework, and we're planning on delivering those results to outpace If things change and surprise everyone in a positive manner, clearly, our upside will be more significant.

Speaker Change: We know kind of we know what the macro upside is but this is actually a great opportunity for us to be doing a lot of the homework that we need to get done and again the over 800 work streams that we currently have running are balanced over the next three years and we're going to see a pretty significant exit run rate ramp up as.

Speaker Change: We move into the end of this year and so we are expecting that a volume uptick will be clearly.

Speaker Change: Good news for us, but thats not controlling what we see in 'twenty four we're doing our homework and we're planning on delivering those results to outpace the market headwind, if things change and surprise everyone in a positive manner clearly our upside will be more significant.

Bill Christensen: I think we've told you in the past that we see 25 to 30 operating leverage on the uptake, and we've done a good job in the last, I'd say, 12 months of really dialing in our capacity and making sure that our supply chains and our cost to serve are well balanced for the future, so we feel that we're in pretty good shape and still doing a lot of the homework that we need to do because our margins, as Okay, that's great, Collar. Thank you both and good luck with everything.

Speaker Change: We've told you in the past, we see 25% to 30% operating leverage on the uptake and we've done a good job in the last I'd say 12 months of really dialing in.

Speaker Change: Our capacity and making sure that our supply chains and our cost to serve our well balanced for the future. So we feel that we're in pretty good shape.

Speaker Change: And still doing a lot of the homework that we need to do because our margins as I said in my prepared remarks are still a long way away from where we need to be.

Speaker Change: Okay. That's great color. Thank you both and good luck with everything.

Susan Marie Maklari: Thank you, Susan. Our next question comes from the line of John Lovallo with UBS. Please go ahead.

Speaker Change: Our next question comes from the line of John Lovallo with UBS. Please go ahead.

John Lovallo: Good morning, guys. Thank you for taking my questions as well. The first one is about that 15% decline in core revenue on a consolidated basis in the fourth quarter.

John Lovallo: Good morning, guys. Thank you for taking my questions as well.

John Lovallo: First one is hey, good morning.

John Lovallo: First one is within that 15%.

John Lovallo: Decline in core revenue on a consolidated basis in the fourth quarter is there any way to parse out the impact of the lower volume versus the negative mix, perhaps on a consolidated basis, and maybe even north America versus Europe as possible.

Julie C. Albrecht: Is there any way to parse out the impact of the lower volume versus the negative mix, perhaps on a consolidated basis, and maybe even North America versus Europe, if possible? Yes, so I would say, so a couple maybe high-level comments, John, and then maybe Julie can jump in with some detail. So clearly, the run rate, if you look at Q4, 14% volume mixed down in North America, 20% in Europe, which, I mean, those are pretty significant numbers, and it's mainly volume. There was, you know, not a lot of price in Q4, so really volume was the key driver, and especially in North America, if you think about a lot of the large retail partners that are balancing their inventories going into their fiscal year-end, which is early this year, some of the tight inventories in the market and weren't being reloaded, and by the way, we're starting to see some rebalancing of inventories as people start to better position themselves for potential growth in the back half of this year.

Speaker Change: Yes, so I would say so a couple of maybe high level comments, Jonathan maybe Julie can jump in with some detail. So clearly the run rate if you look at Q4.

Speaker Change: 14% volume mix down in North America, 20% in Europe, which I mean, those are pretty significant numbers.

Speaker Change: And it's mainly volume.

Speaker Change: There was not a lot of price in Q4, so really volume was the key driver.

Speaker Change: And especially in North America, if you think about a lot of the large retail partners that are balancing their inventories going into their fiscal year end, which is early this year.

Speaker Change: Some of the tight inventories in the market.

Speaker Change: And work being reloaded and by the way, we're starting to see some rebalancing of inventories as people start to better position themselves for potential growth.

Speaker Change: Growth in the in the back half of this year. So some of the signals that we're seeing are I'd say.

Bill Christensen: So some of the signals that we're seeing are, I'd say, better balancing of channel inventories, and that's why we feel that the run rates that we saw in Q4 are not going to pull through to Q1. We're expecting a bit better traction in Q1. Julie can share some numbers and some detail that may help underscore that. Yeah, just a little more color on the mix there.

Speaker Change: Better balancing of channel inventories and that's why we feel that the run rates that we saw in Q4.

Speaker Change: Are not going to pull through to Q1, we're expecting a bit better traction in Q1, Julie can share some numbers in some detail that may help underscore that just a little more color on the mix there really in Europe that was almost entirely volume. So there was really very little negative mix.

Julie C. Albrecht: Really, in Europe, that was almost entirely volume, so there was really very little negative mix in that negative 20% of volume mix. North America, you know, gosh, I'd say that volume impact was probably more like 10-11% within that incremental, you know, 2-3% being negative mix. So again, still in North America, heavily weighted to lower volumes, but we did have a little bit of a negative mix in that region in the fourth quarter. Okay, that's really helpful.

Speaker Change: In that.

Speaker Change: Negative 20.

20% of volume mix North America gosh.

Julie C. Albrecht: Josh I would say that volume impact was probably more like 10, 11% within that incremental 3% being negative mix. So again still in North America heavily weighted to lower volumes, but did have a little bit of negative mix.

Julie C. Albrecht: In that region in the fourth quarter.

Speaker Change: Okay. That's really helpful. And then just maybe moving forward you gave us the expectation for low single digit volume declines in North America and high single digits, followed volume declines in Europe are you expecting any meaningful mix impacting either region in 2024.

Bill Christensen: And then just maybe moving forward, you gave us the expectation for low single digit volume declines in North America and high single digits volume declines in Europe. Are you expecting any meaningful mixed impact in either region in 2024? Yeah, I would say no, I think it's going to track on kind of what we saw the back half of last year, if you just think, where's the market in general, I'd say we're mixing down, because the new construction market is tilted towards starter homes, and lower price point homes, what we see, especially in January and February, a lot of the projects in Canada that we have, a lot of the projects on our VPI commercial side, also in Europe, which are typically, you know, better margin profile businesses are being pushed out based on financing constraints that the projects have.

Speaker Change: Yes, I would say no I think it's going to track on kind of what we saw at the back half of last year. If you just think whereas the market in general I would say we're mixing down.

Speaker Change: Because the the.

Speaker Change: The new construction market is tilted towards starter homes.

Speaker Change: And lower price point homes, what we see especially in January and February a lot of the projects in Canada. We have a lot of the projects on our VPI commercial side also in Europe, which are typically better margin profile businesses are being pushed out based on financing constraints that the projects have so.

Bill Christensen: So people are still going to run the projects; they're just waiting. So we do think that, in general, we are mixing down, which is consistent with what we saw at the end of last year. Great. Thank you guys. You're welcome. Our next question comes from the line of Joe Oslesmeier with Deutsche Bank. Please go ahead. Hey, good morning, everybody.

Speaker Change: People are still going to run the projects Theyre just waiting so we do think that in general we are mixing down which is consistent with what we saw at the end of last year.

Speaker Change: Great. Thank you guys Youre welcome.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Joe <unk> with Meyer with Deutsche Bank. Please go ahead.

Joe: Hey, good morning, everybody congrats on the strong finish to the year here, Thanks, Jeff and good morning.

Joe Oslesmeier: Congratulations on the strong finish to the year here. Thanks, Jeff. Good morning.

Joe: Yeah, maybe moving beyond 24, just thinking about.

Bill Christensen: Yeah, maybe moving beyond 24, just thinking about the two parts of your North America business, the R&D business and the new construction side of things. Could you talk about, I guess, your views today, multi-year, on which of these end markets provide more upside off of, you know, what you deliver in 24? And then if you could just also speak to how you feel your manufacturing base, your infrastructure for distribution is agile enough, I guess, to handle one outperforming the other. Yeah, so starting with the second question first, Joe, I would say that we're definitely cleaning up our distribution model. And we're looking at that as we do assess our footprint and our cost to serve our key customers across all markets in North America. So we're making sure that we're balanced not just to our current state but to what we expect our future state to be. And clearly, based on the light volume, there's been overcapacity on some of our sites in the market as well. So we have taken sites offline, as we all know, last year.

Joe: The two parts of your North America business, the R&R business in the new construction side of things could you talk about.

Joe: I guess your views today multi year on which of these end markets provide more upside off of what you deliver in 'twenty four.

Joe: And then if you could just also speak to how you feel your manufacturing base your infrastructure on distribution is.

Joe: Agile enough I guess to to handle one outperforming the other.

Speaker Change: Yeah, So starting with the second question first Joe So I would say that we're definitely cleaning up our distribution model.

And we're looking at that as we do assess our footprint and our cost to serve our key customers across all markets in North America. So we're making sure that we're balance not to current state, but to what we expect future state to be and clearly based on the light volume there's been overcapacity in some of our sites in the <unk>.

Speaker Change: Market as well so we have taken sites offline as well know last year.

Bill Christensen: And we're continuing to critically look at the cost to serve model. And that is, I think, well-balanced to an upswing in the market because we've been doing a lot of great homework there. On the other side, as we kind of roll forward and just look at a very high-level view, you asked North America.

Speaker Change: And we're.

Speaker Change: Continuing to critically look at cost to serve model.

Speaker Change: And.

Speaker Change: That is I think well balanced to an upswing in the market because we've been doing a lot of great homework there.

Speaker Change: On the other side as we kind of roll forward and just look at a very high level view, you asked North America I'm going to just go up a level and say that we clearly expect macro headwinds in Europe to continue.

Bill Christensen: I'm going to just go up a level and say that we clearly expect macro headwinds in Europe to continue into next year. So clearly, the outlook in Europe is definitely weaker in the next couple of years than we would expect for North America. North America, as I said before, is clearly underbuilt.

Speaker Change: Into next year, so clearly the outlook in Europe is definitely weaker in the next couple of years and we would expect for North America in North America, clearly as I've said before we're under built we need the units, but theres also going to be a snapback of R&R activity as re sales kick in.

Bill Christensen: We need the units, but there's also going to be a snapback of R&R activity as resales kick in when interest rates come down. So we do expect both levers to be moving in the right direction. And clearly, we're getting ourselves ready to be able to serve both of those models and make sure that our cost to serve is well balanced. And if we see an increase in volume in 2025, as many people expect currently in North America, we should have some nice operating leverage that drops to the bottom line. We're focused on both pillars, traditional and retail, because they're both very important to us. And we're making sure that our cost to serve, our on-time delivery, and our quality is meeting customer expectations in both of those. That's really helpful. Thanks for that!

Speaker Change: When interest rates come down so we do expect both levers to be moving in the right direction.

Speaker Change: And clearly, we're getting ourselves ready to be able to serve both of those models and make sure that our cost to serve is well balanced and if we see an increase in volume and 25 as many people expect currently in North America, we should have some nice operating leverage that drops to the bottom line, we're focused on both pillars traditional Andrew.

Speaker Change: Retail because they're both very important to us and we're making sure that our cost to serve and our on time delivery and our quality is meeting customer expectations in both of those segments.

Speaker Change: That's really helpful. Thanks for that.

Julie C. Albrecht: And then, Julie, on the CapEx guide for this year, I understand the need to invest here. Could you help us maybe think about how long we might be running at this type of level, if this is sort of the new stable state, or if maybe next year we see some productivity coming out of the CapEx? Yeah, I'd say, you know, I think clearly we would have said in the past Jeld-Wen under-invested in its capital for both growth and efficiency, which again has shown in the results we've delivered historically.

Speaker Change: And then Julie on the Capex guide for this year understand the need to invest here could you help us maybe think about how long we might be running at this type of level. If it's sort of the new stable state or if maybe next year, we see some productivity coming out of the Capex budget.

Julie C. Albrecht: Yes, I'd say.

Julie C. Albrecht: No I think clearly we'd say in the past javelin underinvested in it and it's capital surplus.

Julie C. Albrecht: Growth and efficiency, which again as shown in the results we deliver.

Julie C. Albrecht: So, you know, this year, we've obviously evaluated our pipeline, and we're pretty bullish on the opportunities. We'll continue to reevaluate that, obviously on an annual basis, but I would expect it to be higher than the past, call it that 2 to 2.5 percent. And again, if it continues at 4 percent, I think TBD, but absolutely I'd expect it to be elevated over our historical levels for capital.

Julie C. Albrecht: Historically so.

Julie C. Albrecht: This year.

Julie C. Albrecht: Obviously evaluated our pipeline, we're pretty bullish on the opportunities we will continue to reevaluate that obviously on an annual basis, but.

Julie C. Albrecht: But I would expect.

Julie C. Albrecht: To be higher than in the past to call. It that two to two 5% and again if it continues at 4%.

Speaker Change: I think TBD, but absolutely I would expect it to be elevated over our historical levels for capital the other thing on that.

Bill Christensen: You know, the other thing I'll note is that we mentioned in our materials and our outlook for this year that we've got around $100 million of non-recurring cash expenses this year that I would say we do feel like are unique to this year and that we'd expect that type of, you know, activity to go back to more normal levels beyond this year. And so I also wanted to highlight that from a cash flow perspective and investing in ourselves. Yeah, and Joe, I would just add that, you know, these 800 plus projects, we have high visibility in our system, we're sequencing, you know, as long as we see opportunity to deliver IRRs of, you know, 20% and above, we're investing in ourselves, because I believe that is an outstanding return for our shareholders and the right way to deploy capital.

Speaker Change: As we mentioned in our materials and our outlook for this year that we've got around $100 million of nonrecurring cash expenses this year.

Speaker Change: I would say, we do feel like our unique to this year and that we would expect that type of.

Speaker Change: Activity to go back to more normal levels beyond this year and so also wanted to highlight that from a cash flow perspective and investing in ourselves.

Speaker Change: Yes, and Joe I would just add that these 800 plus projects. We have we have high visibility in our system we're sequencing.

Speaker Change: As long as we see opportunity to deliver IRR, 20% and above we're investing in ourselves because I believe that is an outstanding return for our shareholders in the right way to deploy capital and so I would expect that also next year capex would be elevated from a.

Bill Christensen: And so I would expect that also next year, CapEx would be elevated from a historical run rate. If it's, you know, the same as this year, we'll have a discussion as we see the portfolio, the maturity, and what kind of investments we need to make, but we will be investing. And that will continue into next year on the capital side. Julie mentioned that once we'll be out, but we'll still be funding projects that are very attractive. And candidly, we just don't have the resources currently to push all of these through the pipeline at the same time. So we're making sure that we're not biting off more than we can chew. Yeah, that makes a lot of sense.

Speaker Change: Oracle run rate if it's the same as this year, we'll have a discussion as we see the portfolio that maturity and what kind of investments we need to make but we will be investing and that will continue into next year on the capital side, Julie mentioned, the onetime we'll be out, but we will still be funding projects that are very.

Speaker Change: Active and candidly, we just don't have the resource currently to push all of these through the pipeline at the same time, so we're making sure that we're not biting off more than we can chew.

Speaker Change: Yes, it makes a lot of sense agree with the philosophy, there and thanks for the call. It on the onetime expenses I'll pass it on thanks, a lot alright, thanks, Joe and good day.

Joe Oslesmeier: I agree with the philosophy there. And thanks for the call out on the one-time expenses. I'll pass it on. Thanks a lot.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line up Michael Rehaut with JP Morgan. Please go ahead.

Michael Rehaut: All right. Thanks, John. Good day. Our next question comes from the line of Michael Rehaut with J.P. Morgan. Please go ahead. Hi guys, this is Andrew Lazio, and for Mike, I appreciate you taking my questions. Hey Andrew, good morning.

Michael Rehaut: Hi, guys, Andrew <unk> on for Mike I appreciate you taking my questions.

Michael Rehaut: Hey, good morning.

Good morning.

Michael Rehaut: I just wanted to ask maybe on the new single family construction side in North America at least flat to up slightly.

Michael Rehaut: It looks potentially a little bit conservative as compared to maybe some of the larger homebuilders in terms of a.

Michael Rehaut: A year over year percentage increase and I'm, just hoping maybe you could help me bridge that gap and maybe if there is some some upside or conservatism baked in there.

Andrew Lazio: I just wanted to ask maybe on the new single family construction side in North America, at least, you know, flat to up slightly, it looks potentially a little bit conservative as compared to maybe some of the larger home builders in terms of a year over year percentage increase. And I'm just hoping maybe you can help me bridge that gap. And maybe if there's some upside or conservatism baked in there.

Speaker Change: Yes, well, so theres still a high level of uncertainty I would argue in the market in general clearly theres. Some key macro levers that are going to potentially.

Speaker Change: Soften the back half of this year, which could potentially improve the reality, but don't forget were three to six months behind us start until our products are built in.

Bill Christensen: Yeah, well, so there's still a high level of uncertainty, I would argue, in the market in general. Clearly, there are some key macro levers that are going to potentially soften the back half of this year, which could potentially improve the reality. But don't forget, we're three to six months behind the start until our products are built in. You know, first windows to button up the envelope, and then doors later in the process.

Speaker Change: First windows to button up the envelope and then doors later in the process. So it takes a while for this to trickle down second point is we potentially see these starts out there, but its a lower end.

Speaker Change: And so we would actually like to see the higher end come back so the custom and that's a pull through for our wood windows and our premium products and <unk>.

Bill Christensen: So it takes a while for this to trickle down. The second point is, you know, we potentially see these starts out there, but it's a lower end. And so we would actually like to see the higher end come back, so the custom, and you know that's a pull through for our wood windows and our premium products. And so clearly, there's some pretty good value appreciation when that market comes back, but it's way softer than the low end of the market. So we're I would say I wouldn't call us overly cautious.

Speaker Change: So clearly there is some pretty good value appreciation when that market comes back, but clearly it's way softer.

Speaker Change: Then the low end of the market. So we are I would say.

Speaker Change: I wouldn't call us overly cautious I would just say that we're careful because there's just so many things that are influencing this market in the current state.

Speaker Change: And.

Speaker Change: This is our view if things are better than I think we will all be <unk>.

Proud and happy to report that.

Speaker Change: John.

Andrew Lazio: I would just say that, you know, we're careful because there's just so many things that are affecting us. This is our view. If things are better, then I think we'll all be happy, proud, and happy to report that as the year goes on. Yeah, I think that definitely sounds appropriate. I guess I'm just curious about the price cost neutral.

Speaker Change: Understood, Yes, I think that's definitely sounds appropriate.

John Lovallo: I guess I'm just curious on the price cost neutral is that on a dollar basis or a margin basis.

Speaker Change: Yes, it's really a dollar basis.

Speaker Change: I guess drop through is really not having much impact on margins and so yes.

Speaker Change: But when we say that we're definitely talking about it.

Speaker Change: Targeting dollar neutral close to zero impact on year over year changes in EBITDA.

Julie C. Albrecht: Is that on a dollar basis or a margin basis? Yeah, it's really a dollar basis, which I guess drops through as really not having much impact on margins. And so, yeah, it's, but when we say that we're definitely talking about a, you know, targeting a dollar neutral, close to zero impact on year over year changes in EBITDA, and I would say, Andrew, on prior calls. There are a couple of things. I mean, we still have a lot of work to do on cleaning up kind of the pricing foundation and making sure that we are doing a better job of being consistent. And that's still ongoing.

I would say we've talked Andrew on prior calls there is a couple of things I mean, we still have a lot of work to do on cleaning up kind of the pricing Foundation and making sure that we are we are doing a better job.

Speaker Change: Being consistent and that's still ongoing but I'd say on a broader level the input costs, we want to make sure that we can offset that with with price, but nothing more than that.

Speaker Change: Okay. That's all for me, Thank you Bill and Julien Good luck.

Speaker Change: Congrats on the quarter alright, thanks rich.

Speaker Change: Sure.

Speaker Change: Our next question comes from the line of Steven Ramsey with Thompson Research Group. Please go ahead.

Bill Christensen: But I'd say on a broader level, the input costs. We want to make sure that we can offset that with price, but nothing more than that. Okay, that's all for me. Thank you, Bill and Julie, and good luck. Congratulations on the quarter. Our next question comes from the line of Stephen Ramsey with Thompson Research Group. Please go ahead. Good morning.

Steven Ramsey: Good morning, maybe to.

Steven Ramsey: Hone in on North America repair and remodel.

Steven Ramsey: Activity can you talk to how much of your volume depends on existing home sales coming back or what other drivers on the North America R&R side are you looking for to get more confidence and clarity on where volumes could go.

Stephen East: Maybe to hone in on North America repair and remodel activity, can you talk about how much of your volume depends on existing home sales coming back or what other drivers on the North American R&R side are you looking for to get more confidence and clarity on where volumes could go? I think that's Stephen, I think that's the big lever, you know, it's roughly 50% of our North American sales. And, you know, as we look at retail, there are a couple of things that are important in retail. I've said this before, you need to have the product there, especially if it's cash and carry.

Steven Ramsey: I think that Steve and I think thats, the big lever, it's roughly 50% of our North American sales.

Steven Ramsey: As we look as we look at retail there is a couple of things that are important in retail I've said this before.

Steven Ramsey: You need to have the product there, especially if it's cash and carry there is a couple of different <unk>.

Steven Ramsey: Elements that the retail partners are working on so it's making sure you have the product there if the traffic is in the store.

Steven Ramsey: The second is theyre trying to do a better job of rebalancing inventories as we're coming out of a very tight inventory reality in the last couple of months and I do see that some of our partners are doing a better job of making sure that there's availability in stores.

Bill Christensen: There are a couple of different elements that the retail partners are working on. So it's making sure you have the product there if there is traffic in the store. And they're trying to do a better job of rebalancing inventories as we're coming out of a very tight inventory reality in the last couple of months. And I do see that some of our partners are doing a better job of making sure that there's availability in stores. And the second key lever for growth, and that's linked, a lot of that's linked to resale. And with every resale, there's some R&R activity, and then there's another resale behind that. So there's a number of things that are linked together when the resale market really starts to kick in, and I would argue that that's driven by interest rate relief and people being able to get into mortgages that are closer to where they currently are.

Steven Ramsey: And the second key lever for growth and that's linked a lot of that is linked to resale and with every resale. There's some R&R activity and then there is another <unk> <unk>.

Steven Ramsey: Resale behind that so theres a number of things that are linked together when the resale market really starts to kick in and I would argue that thats driven by interest rate relief and people being able to get into mortgages that are closer to where they currently are.

Steven Ramsey: And I'd say the second pillar that we're really driving on R&R is a professional growth and professional growth as one of those areas, where if there's a big cash and carry market and a lot of the customers are already there there are some products as well that our retail partners believe that that would be a good opportunity for them to take some share on what.

Bill Christensen: And I'd say the second pillar that we're really driving in R&R is professional growth. And professional growth is one of those areas where if there's a big cash and carry market and a lot of customers are already there, there are some products as well that our retail partners believe that would be a good opportunity for them to take some share in what they call the pro segment. So those are the two things, and pro is not distinctly linked to the new construction or the resale market. Okay, that's a great color. And then a follow-up on the CAPEX range of 150 to 200 million. In a somewhat wide range, I'm curious what you're looking for that would swing that to the low or the high end.

Steven Ramsey: They call. The pro segment. So those are those are the two things in pro is not distinctly linked to the new construction or the resale market.

Steven Ramsey: Okay. That's great color and then a follow up on the Capex range of $150 million to $200 million.

Steven Ramsey: Somewhat wide range I'm curious what you are looking for that would swing that to the low or the high end. How much you made is demand versus transformation progress timing versus equipment deliveries are there other factors to move capex up or down.

Steven Ramsey: So it's number one it's the ability of our organization to execute on those projects that is the bottleneck currently.

Bill Christensen: How much of it is demand versus transformation progress, timing versus equipment delivered, other factors to move CapEx up or down? Yeah, so it's number one, it's the ability of our organization to execute on those projects. That is the bottleneck currently.

Steven Ramsey: We feel we feel great about the strength of the balance sheet and our ability to self fund this transformation, which was one of the key things that we wanted to deliver.

Steven Ramsey: There are longer lead times for certain things and obviously that's going to also.

Bill Christensen: We feel great about the strength of the balance sheet and our ability to self-fund this transformation, which was one of the key things that we wanted to deliver. There are longer lead times for certain things, and obviously that's going to also define timelines and our ability to spend and also to deliver and install certain lines and equipment. So I would say we're the bottleneck. I would be pleased if we could spend the upper end of the range, but I think that's going to be a challenge for our organization because we're coming from a very different reality. That's helpful. Thank you. You're welcome, Stephen. Have a good day. Our next question comes from the line of Alex Rygiel with B. Riley. Please go ahead. Thank you, and good morning, everyone.

Steven Ramsey: Defined timelines and our ability to spend and also to deliver and install certain lines and equipment. So I would say where the bottleneck I would be pleased if we could spend the upper end of the range, but I think thats going to be a challenge for our organization because we're coming from a very different reality.

Steven Ramsey: Okay.

Speaker Change: That's helpful. Thank you.

Speaker Change: Youre welcome, Steve and have a good day.

Speaker Change: Our next question comes from the line of Alex Rygiel with B Riley. Please go ahead.

Alex Rygiel: Thank you and good morning, everyone could you talk a little bit about the industry could you talk a little bit about industry consolidation and any opportunities or negative impacts that you could see from a more competitive environment.

Alex Rygiel: So in general we don't want to make comments about competitors clearly we can talk about the competitive landscape.

Alex Rygiel: Our main focus is to.

Alex Rygiel: Could you talk a little bit about industry consolidation and any opportunities or negative impacts that you could see from a more competitive environment? Yeah, so, in general, you know, we don't want to make comments about competitors. Clearly, we can talk about the competitive landscape, and our main focus is to execute on what we have in front of us to really improve our operating performance. So we are totally focused on doing that and delivering the appropriate returns. And that means cleaning up our supply chain, optimizing our footprint, and driving growth initiatives. And if we execute on that, which I'm very confident that we will, that puts us in a great position in the market. But I think maybe it's more challenging for the equity analyst environment.

Alex Rygiel: Execute on what we have in front of us to really improve our operating performance. So we are totally focused on.

Doing that and delivering the appropriate returns and that means cleaning up our supply chain that means optimizing our footprint that means driving growth initiatives.

Alex Rygiel: And if we execute on that which I am very confident that we will that puts us in a great position in the market I think maybe it's more challenging for the equity analysts environment. There was one less direct comp for us in the market, but we're focused on really ourselves and really delivering what we see we need to do.

Alex Rygiel: And have a pretty clear view on how we're going to do it and.

Bill Christensen: There's one less direct competitor for us in the market, but we're focused on really being ourselves and really delivering what we see we need to do and have a pretty clear view of how we're gonna do it, and what we're investing in to get there. So I think that'd be my comment in general. We're very bullish on the market. It's gone through a tough time, and it will continue to be tough in Europe, but it's a great opportunity, and we're taking advantage of that to do our homework, clean ourselves up, and really get ready for the rebound so we can come out pretty strong. So we feel well positioned, but we still have a lot of work to do. And then can you rank the gross margin on new construction versus R&R versus multifamily and maybe talk a little bit about the headwind of weaker volume anticipated in multifamily as it relates to gross margin impact? Yeah, so Alex, we typically wouldn't share that kind of detail on profit pools across different channels. That's not the kind of detail that we'd provide.

Alex Rygiel: What we're investing to get there. So I think that'd be my comment in general we're very bullish on the market.

Alex Rygiel: It's gone through a tough time and it will continue to be tough in Europe, but it's a great opportunity and we're taking advantage of that to do our homework clean ourselves up and really get ready for the rebound. So we can come out pretty strong.

Alex Rygiel: So we feel well positioned but still we have a lot of work to do.

Alex Rygiel: [laughter].

Alex Rygiel: And then can you rank the gross margin on new construction versus R&R versus multifamily and maybe talk a little bit about that headwind.

Alex Rygiel: Weaker volume anticipated in multifamily as it relates to gross margin impact yes.

Speaker Change: Yes, so Alex we typically wouldn't share that kind of detail on profit pools across different channels.

Speaker Change: That's not the kind of detail that we provide.

Speaker Change: Fair enough. Thank you alright, you're welcome have a good day.

Speaker Change: Yeah.

Speaker Change: Our final question comes from the line of key pews with tourists. Please go ahead.

Alexander John Rygiel: Thank you. The question is on Europe, you've talked about.

Alexander John Rygiel: Identifying Europe.

Alex Rygiel: Fair enough. Thank you. All right. You're welcome. Our final question comes from the line of Keith Hughes with Truist. Please go ahead.

Alexander John Rygiel: Potentially some strategic actions and we've got the.

Alexander John Rygiel: We've got the announcement this morning around that plan.

Is Europe in the structure you want it to be with the improvements youre going towards or could there be other potential changes that could come out on the continent.

Keith Hughes: Thank you. The question's on Europe. You've talked about identifying Europe, potentially some strategic actions, and we've got the announcement this morning around that plan. Is Europe in the structure you want it to be, you know, with the improvements you're going towards? Or could there be other potential changes that could come down on the country?

Alexander John Rygiel: Yes, so Keith thanks for the question.

Alexander John Rygiel: We have stepped up the leadership quality in the European market with the higher ups Gustavo and we're really looking forward to actually <unk>.

Alexander John Rygiel: Accelerating the transformation plans that we have for Europe.

Bill Christensen: Yes, so I would, Keith, thanks for the question. We have stepped up the leadership quality in the European market with the hire of Gustavo, and we're really looking forward to accelerating the transformation plans that we have for Europe. We've said all along, we have strong brands in strong markets, but we have yet to deliver commensurate margins to really validate that case. So the ball is in our court to do that, and that's a challenge that we've accepted and we want to deliver on. We have a broad portfolio of projects to improve profit levels in underperforming markets. And we have, you know, also high expectations of margin appreciation even in 24 with continued market headwinds. And I'd say they're a little behind the U.S. from a volume development standpoint.

Alexander John Rygiel: We've said all along we have strong brands and strong markets, but we have yet to deliver commensurate margins to really validate that case. So the ball is in our court to do that and Thats. The challenge that we have accepted and we want to deliver on so we have <unk>.

Alexander John Rygiel: Broad portfolio of projects to improve.

Alexander John Rygiel: The profit levels in underperforming markets.

Alexander John Rygiel: And we have.

Alexander John Rygiel: So high expectations of margin appreciation, even in 'twenty four with continued market headwinds and I'd say, they're a little behind the U S from a volume development standpoint. So it will be also a challenging 25 at least to start at 25, So we need to make sure that we're well prepared for that so.

Alexander John Rygiel: No other strategic.

Bill Christensen: So it will also be a challenging 25, at least the start of 25, so we need to make sure that we're well prepared for that. So no other strategic implications for Europe outside of, hey, we've got to fix the foundation in Europe and get ourselves ready for the profitable growth, which will clearly arrive. It's just going to take a bit longer than in North America.

Alexander John Rygiel: Implications for Europe outside of Hey, we've got to fix the foundation in Europe, and get ourselves ready for the profitable growth, which will clearly.

Arrive, it's just going to take a bit longer than in North America.

Speaker Change: Okay. Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: I would now like to turn the call over to James Armstrong for closing remarks.

James Armstrong: Thank you for joining our call today, if you have any follow up questions. Please reach out and I would be happy to answer.

James Armstrong: This ends our call today and have a great day.

Keith Hughes: Okay, thank you. All right, Keith. Thank you. I would now like to turn the call over to James Armstrong for closing remarks. Thank you for joining our call today. If you have any follow-up questions, please reach out, and I would be happy to answer.

James Armstrong: This concludes today's call you may now disconnect.

James Armstrong: Okay.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: [music].

James Armstrong: This ends our call today, and have a great day. This concludes today's call. You may now disconnect.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Operator: Please wait; the conference will begin shortly. Please stand by for the conference to begin. Please stand by for the conference to begin.

Speaker Change: Yes.

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Yes.

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Speaker Change: [music].

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Speaker Change: Yes.

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