JELD-WEN Holding, Inc. announced a leadership transition with Chairman of the Board, Kirk S. Hachigian, assuming the duties of CEO on an interim basis; announced an agreement to acquire American Building Supply, Inc. (“ABS”); announced the acquisition of A&L Windows Pty Ltd (“A&L”); and updated its outlook for first quarter and full year 2018 for the impact of the A&L acquisition.
CEO Leadership Transition
The Board of Directors of the Company announced the departure of President and CEO, Mark Beck, effective February 27, 2018, by mutual agreement. Under the terms of his employment agreement, Mr. Beck’s service as a director also ended on that date. Mr. Hachigian, Chairman of the Board and former CEO of the Company, will assume Mr. Beck’s duties while the Board conducts a search for a new CEO.
“We appreciate Mark’s contributions to the Company during his tenure,” commented Mr. Hachigian. “JELD-WEN remains committed to delivering long-term value to our shareholders through solid execution on all aspects of our operating model, including operational excellence, profitable organic growth, and strategic M&A. Our strong and experienced executive management team will work closely with me to make this leadership transition seamless for our customers, shareholders and employees.”
Agreement to Acquire American Building Supply, Inc.
JELD-WEN has signed a definitive agreement to acquire all of the outstanding shares of ABS. ABS excels in supporting distributors, dealers, and home centers with a broad product range of doors, frames, and hardware for both the residential and commercial markets.
Through its Doormerica® division, ABS manufactures a broad selection of decorative, specialty, and architectural doors, including the Millennium Door series. ABS has developed a reputation as a premier supplier of value-added services for the millwork industry, through a relentless focus on quality and service.
“The acquisition of ABS aligns perfectly with our strategy to expand our door capabilities with value-added services and customized full door systems. ABS, together with our recent acquisition of MMI Door, will expand our ability to offer these services to our customers with a broad geographic coverage area across the U.S.,” said John Linker, Senior Vice President Corporate Development and Investor Relations.
“With ABS’s capabilities in quick-ship customizable configurations, hardware options, and specialized component offerings, we will improve our service offerings and lead times for our channel partners. We look forward to welcoming the entire ABS team to the JELD-WEN family.”
JELD-WEN expects the transaction to close late in the first quarter of 2018, subject to customary closing conditions. Terms of the acquisition were not disclosed.
JELD-WEN has a long and valued partnership with ABS as a supplier of door and window products. As a result of the acquisition, JELD-WEN expects to add approximately $275 million in incremental annualized revenue.
JELD-WEN expects the acquisition to be immediately accretive to adjusted EPS in 2018. ABS’s adjusted EBITDA margins initially will be lower than JELD-WEN’s adjusted EBITDA margins, until expected synergies are achieved.
Acquisition of A&L Windows Pty Ltd
JELD-WEN today completed the acquisition of A&L, a leading Australian manufacturer of residential aluminum windows and patio doors.
Founded in 1980, A&L has a long history of supporting homebuilders and contractors with innovative products and high-quality service. With a network of manufacturing facilities and showrooms across the eastern seaboard of Australia, A&L has a well-known brand and strong reputation.
“A&L’s excellent position in the first-time home buyer market expands the reach of our current product range and customer base. The addition of A&L’s brand name expands our portfolio of leading Australian brands and supports our strategy to build leadership positions in attractive markets,” said John Linker, Senior Vice President Corporate Development and Investor Relations.
“We expect to deliver synergies through operational savings from the implementation of JEM and by leveraging the benefits of our combined supply chain. We are pleased to welcome the entire A&L team to the JELD-WEN family.”
A&L was privately held by its founders. Terms of the acquisition were not disclosed.
JELD-WEN expects the acquisition to add approximately AU$130 million in annualized revenue. Additionally, JELD-WEN expects the acquisition to be immediately accretive to EPS in 2018.
Outlook for First Quarter and Full Year 2018
Including the expected contribution of the A&L acquisition, but excluding the impact of the pending ABS acquisition, the Company now expects full year 2018 net revenue growth of 10% to 13% compared to the previous outlook of 8% to 11%.
The Company now expects full year 2018 adjusted EBITDA of $505 million to $535 million compared to the previous outlook of $500 million to $530 million. The outlook for full year 2018 capital expenditures remains unchanged at $100 million to $125 million. The Company’s adjustments to its 2018 outlook relate solely to the impact of the A&L acquisition.
Additionally, for the first quarter of 2018, the Company expects adjusted EBITDA of $80 million to $86 million. The outlook for the first quarter is consistent with the Company’s previously disclosed expectations.