TRG | The Bottom Line – 7/19

Despite the stagnant R&R environment, we believe there are opportunities for investors. JELD-WEN is one of those. After years of uninspiring operating and margin performance (and therefore, stock price underperformance), we believe the time is now. We believe the stock is valued at a low multiple on the low point of earnings (~6x EV/EBITDA). The management team, which started in late 2022, is making operational improvements that should have been done years ago and there is an extensive pipeline of projects still being worked through. JELD is not reducing capacity, but is improving its cost structure so that every dollar of future sales is more profitable. We believe improvement is already happening, but lower volumes are suppressing total sales, EBITDA and margin. We would encourage investors to look beneath the surface to see the improvements. JELD has reduced the number of manufacturing sites to 55 in North America. Sales and EBITDA on a per unit basis are trending much better than reported and expected segment results. When volumes return, we expect meaningful margin expansion in the North America segment, leading to higher EBITDA and a higher multiple.