Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to JELD-WEN's Second Quarter 2025 Results. [Operator Instructions] Thank you. I would now like to turn the call over to James, VP of Investor Relations, please go ahead.

Thank you, and good morning. We issued our second quarter 2025 earnings release last night and posted a slide presentation to the Investor Relations portion of our website, which can be found at investors.jeld-wen.com. We will be referencing this presentation during our call. Today, I'm joined by Bill Christensen, Chief Executive Officer; and Samantha Stoddard, 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 SEC. JELD-WEN does not undertake any duty to update forward-looking statements, including the guidance we are providing with respect to certain expectations for future results. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. 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 to our earnings presentation. With that, I would like to now turn the call over to Bill.

Thank you, James, and good morning, everyone. Before we begin, I want to start by thanking our entire team for their continued commitment and focus. We know the environment remains difficult. However, the dedication across the organization continues to impress me. I'm especially proud to report that our safety performance continues to improve in both regions, and that is something every employee played a key role in driving. The second quarter was about disciplined execution and staying focused on what we can control. We delivered results at the high end of our internal expectations. That reflects cost discipline and the ability of our teams to effectively adapt to a complex and shifting landscape. While volumes remain soft, they came in largely as expected, and we acted with urgency to better balance our cost base. Operationally, we made important progress on several fronts. We continue to see tangible benefits from our transformation and cost actions, particularly in fixed cost reductions. At the same time, we continue to make foundational progress across our North America operating network. We have replaced a number of key roles, combined with clear actions, problem-solving and accountability at the site level. Our key priority remains improving service levels across our network. We are also reinstating full year guidance. This is not because the environment has become more predictable, but due to the fact that we are now far enough into the year to have a higher degree of visibility. Our guidance reflects expectations based on what we know today, including the continued transformation progress, the August 1 tariff reality and our sustained cost focus. While we do not know when the macro environment will get better, we do know that it will. Housing remains a fundamental need and homeowners continue to invest in improving the spaces where…

Thank you, Bill. Turning to Slide 6. Market conditions continue to be challenging, but our results were in line with the high end of our internal expectations. Revenue for the second quarter was $824 million, representing a 16% decline year-over-year. Of this decline, approximately 13% was due to lower core revenues, reflecting anticipated volume reductions across both our North America and Europe segments with the remainder from the court-ordered divestiture of our Towanda operation, which also negatively impacted our year-over-year comparisons. Adjusted EBITDA for the quarter came in at $39 million, a decrease of $46 million compared to the prior year. This was mainly driven by significantly lower volumes and slightly unfavorable mix, resulting in an adjusted EBITDA margin of 4.7%. Turning to cash flow. We generated negligible free cash flow in the quarter. This compares to $12 million of free cash flow in the second quarter of 2024. The year-over-year decline was primarily driven by lower EBITDA. Working capital generated approximately $16 million of cash this quarter compared to a contribution of $4 million in the second quarter of 2024. Given the pressure from lower EBITDA and continued investment in our transformation initiatives, our net debt leverage ratio increased to 5.7x. This level of leverage far exceeds our targeted range and reducing leverage remains one of my highest priorities. To accomplish this, we remain intensely focused on driving EBITDA improvement, exercising disciplined capital allocation and carefully managing working capital. In addition, we continue to look at other strategic options to address our high leverage ratio. Note that we have not increased our debt levels. The increasing net leverage is driven by the lower sales volume and corresponding lower EBITDA. As shown on Slide 7, the second quarter revenue decline was primarily driven by a 14% decrease in volume and…

Thanks, Samantha. Turning to Slide 12. I will walk through our updated full year guidance. While the broader macro environment remains soft, we now have greater visibility regarding our expected performance for the remainder of the year. With 2 quarters behind us, most of the third quarter largely in view and detailed execution plans in place for the months ahead, we are reinstating our full year guidance. We expect full year revenue to be between $3.2 billion to $3.4 billion with core revenue expected to decline between 4% and 9%. Additionally, we are guiding our EBITDA expectations to reflect 2 factors: first, a negative price/cost relationship; and second, continued productivity pressure from lower volumes. On pricing, we are seeing increased competition at the edges and growing customer hesitation to raise prices in a market where affordability remains a concern. On the cost side, input inflation continues, particularly in materials, freight and labor. While we continue to pass through most of the tariff impact, these additional cost pressures are weighing more heavily on our outlook. At the same time, lower volumes create operational inefficiencies that are impacting core productivity. These 2 effects, price/cost and productivity are contributing about equally to our EBITDA guidance. As a result, we expect our full year adjusted EBITDA to be between $170 million to $200 million. Unlike in a typical year, where the third quarter is meaningfully stronger than the fourth, we now expect EBITDA to be similar in both quarters. This is largely due to the timing and impact of the actions we are taking, including transformation initiatives and targeted commercial efforts to regain share. We continue to expect $100 million of in-year transformation benefits. About half of that is carryover from last year's actions, while the remainder reflects new initiatives underway in 2025. Most…

Thanks, Bill. Operator, we're now ready to begin Q&A.

[Operator Instructions] Your first question comes from the line of Susan Maklari with Goldman Sachs.

My first question is focusing on the efforts that you have to optimize the network. You walk through, Bill, some of the steps that you've realized in the last quarter or so. Can you just give us a bit more detail on where you are within that process? How we should think about the efforts that will come through in the back half of this year and the implications that could have to the near-term margins?

Yes, sure. Thanks for the question, Susan. I'd say when we're looking at a high level on our operating network, we're definitely -- we're over the 50-yard line, but we still have a lot of work to do. We're being cautious in the back half of the year and slowing pace slightly on network consolidation, but there's a couple of reasons for that. Number one, we want to make sure we're preserving capital because there still is a high level of uncertainty in the market. And we also want to limit service disruptions. As we've been consolidating sites, we have had some service disruptions for our customers. And our main priority is to make sure we are delivering what our customers need when they need it. So we are slowing the consolidation efforts in the back half of the year. We're still on track to hit our targets by the end of '26 or '27. But all of the actions that we've taken are baked into the $100 million of transformation benefits that we have flagged on the call today, $50 million from last year and $50 million of this year that we would expect to drop throughout the year and create that $100 million. So on track, but I'd say slightly slowing the rate of progression based on what I just said.

And Susan, just to add on that, when you look at the phasing of our EBITDA and the back half being more heavily weighted, some of that ties to around some of the actions we've already taken in our network. When you think about taking the Grinnell window site off- line and repurposing it to a door site that did remove carrying costs, and you'll see that land in the back half of this year.

Okay. That's helpful color. And then maybe turning to some of the factors around the operating environment. One of the things you mentioned is that it does seem to be getting a bit tougher to realize pricing. Can you just give us more context on what you're seeing there? And how you're thinking about the ability to offset that inflationary pressure that you talk to as we think about the next couple of quarters?

Yes, sure. So I think our outlook, we've always said we want to be price cost neutral right now. We're guiding to a slight negative on price cost with inflation above price. There has been selective gives that we've had to make on price the whole volumes in certain markets. Tariff surcharges are in and that's progressing, I'd say, more or less according to plan. But we have seen around the edges some aggressive pricing in select regions by competitors. So it's more of a targeted approach that I think people are taking based on still a buyer's market. As we look to the back half of the year, I think what I signal the market is still negative in our view, but the rate of decline is slowing, which is for us, I think, one of the first signals that we need to see, to get towards the bottom. So our expectation is price cost negative for the back half of the year. But we've been able to put tariff surcharges in, which is encouraging. And I think I'd say that just in the general market, it seems to be maintaining a balance even though volumes are so tight.

Your next question comes from the line of John Lovallo with UBS.

The first one is just on some of the potential actions to address the leverage that you talked about, the financial leverage in the North American distribution and one was Europe. Curious the sense of urgency here. How far along are you in the process of exploring potential options for both of these? And if your view is that the market does improve as we move into next year, is there a rush to do this? And just kind of where you guys stand on these 2 potential options?

Yes. Thanks for the question, John. Let me just try and recap what Samantha and I stated in the prepared remarks. So obviously, with a leverage ratio at 5.7x coming out of Q2, it's definitely above our target range. So that is a priority for us to address it. Our lending base, again, does not have restrictive covenants. So there's no issues from a lender standpoint that would create short- term challenges. And we have ample liquidity for the foreseeable future. And this includes a significant line of credit, $500 million, which we have not drawn nor do we plan to draw in the back half of this year. So I think that's setting the stage to really reiterate, this is something that we need to do very thoughtfully. To your point, we don't have time pressure because we have ample liquidity. Obviously, we don't like the elevated leverage and now we need to adjust it into a range that's reasonable. But we're going to take our time. So I'd say we're in the first innings, of really reviewing multiple options, and we do have multiple options and we want to make sure we strike a good balance between execution, cost of implementation and kind of overall capital structure as we're looking out towards a market that will rebound. And we need to be ready for that. So there's a lot of factors going into this. That's why we feel confident that we can come back to the capital market before the end of the year with specific details. We have some maturities, but that's not until the end of next year. So we really feel that the back half of the year will be 2 things: running the business, delivering the results, but also making sure we have a very crisp and clear plan on the capital structure.

Okay. That's helpful, Bill. And then just some quick math. It seems like the second half implied incremental EBITDA margins over 60%, and we're looking at an EBITDA margin of 7.3% versus call it, under 4% in the first half. Just curious some of the primary levers here to drive that improvement in profitability.

Sure, John. This is Samantha. The incremental on the volume itself is still going to be around 30%. So when you think about the volume lift, we'll have 30% flow through to EBITDA. Then you have discrete actions that are being driven that essentially create additional lift into the EBITDA margin. So I talked earlier about some of the footprint actions that we've taken that have already been executed, and we see those benefits flowing through in the back half. The second are more short-term cost actions through different reductions in force, again, that have already been executed, and we are seeing that play out in the back half. So when you think about the $100 million of transformation, that's approximately $50 million of that is going to be in the back half. And then you also have the $50 million of short-term actions of which are back half loaded. So you're driving, I would say, a much more significant of action specific initiatives in the back half. You also have to look at Q1 of this year was unusually low. I'd also say Q4 of 2024 was unusually low. And so kind of coming out of that back to more normalized EBITDA actions is what you're seeing in the back half of the year.

Your next question comes from the line of Phil Ng with Jefferies.

This is Fiona on for Phil today. Congrats on the solid quarter. We saw the volumes in North America were much better than expected. Can you talk more on what you saw during the quarter for both geographic locations? And maybe also some color on how much it has been, was driven by volume versus mix?

Yes. So I'd say in the 2 regions, let me start with Europe. It was as expected. We're looking at a full year low single-digit decline, and that's coming off of a low double-digit decline last year. So again, decline still a reality in Europe, but the rate of decline slowing significantly. Just to remind you, about 60% of our business is residential, and we're calling that down mid-single digits and commercial, which is down slightly. That's about 40% of our business. Those are projects. So we have good visibility on the project pipeline and very mixed performance across the geographic areas, I'd say Northern Europe may be a little weaker and Central and Western Europe stronger. So that's Europe. North America, mid-single-digit volume decline is the expectations that we're sharing today. There's 2 things you need to be thinking through. As you're looking at our rate of decline in 2Q, I think a good rule of thumb is 50%, we believe is market and 50% is share. In the 50% of share loss. There's 2 big buckets in there, Fiona. One would be the Midwest retailer that we will be lapping coming into Q4. That was on the Windows side. And then, of course, we have the court-ordered Towanda divestiture, which was closed in January of this year. So we're also -- we're going to have a full year base effect in 2025. And we're calling new construction and retail. Both are about 45% of our business in North America, down low to mid-single digits. And then the light commercial and Canadian market, which are very project heavy and project driven, they're down 10% plus. So I'd say mid-double digits, and that's only about 10% of our business, but obviously, it has an overweight effect based on the magnitude. So I'd say no surprises. What we like to see is the rate of decline is decreasing. And there's a couple of things that I think the market needs to settle in on. One is affordability and second is interest rates to get things kind of stabilized and back to a growth scenario. So that's our view for the back half of the year.

Fiona, just to touch very quickly on the volume mix. That was a big story in 2024 with mix being, I would say, a significant decline. We are not seeing that impact of mix in 2025. So in the quarter, you're looking at more than 95% of it being volume with a very small portion being mix. We believe we're at the lower end of the mix trough, and it's much more of a volume story this quarter.

Your next question comes from the line of Keith Hughes with Truist.

What is the first debt maturity next year that you discussed earlier in the call? I don't think it's a senior note?

Yes. So we can talk about it. It doesn't -- there's no debt maturity next year. It becomes current in December of 2027 so -- or excuse me, 2026.

That's the $400 million senior note you're referring to, correct?

Correct. Correct. That's the 2027 notes, $400 million.

Okay. So I guess you talked about some potential strategic actions. I want to focus on things in Europe. After you sold Australia, there was talk of maybe something particularly with Europe and it kind of went off the table. Now it's back on the table for a potential change. I guess the question is, is it the balance sheet that's driving this? Or is there something more strategic in Europe that may have changed over the last couple of years that could lead to something different than the structure we see today?

Yes. Thanks for the question, Keith. So we said all along, one of the things that we need to be doing is really asking the question, are we the best owner of a European asset, similar to what we did with Australasia. And there's a couple of reflections as we're thinking through that. Number one, we're making progress in the region, and we have a great local leadership team, which is really digging into the operational improvements that were necessary, but we're starting to see traction. And number two, it's been a pretty challenging market for the last couple of years, but as interest rates have come down, and hopefully, there will be a resolution to the war in Ukraine at some point. I do think that there's more blue skies ahead than currently visible. And clearly, it would be one of the ways that we could significantly reduce debt using proceeds like we did with Australasia. And finally, we need to understand as the market recovers and growth capital will need to be injected into the region, what are the costs and benefits of that and making sure that we're going to be able to fully fund that growth. And if not, then we need to consider different alternatives that may be better for the European platform and their long-term growth view. So there's no decisions. It's early innings of us really evaluating all options. And we've always said we need to fix things before we can assess it, and we're making pretty good progress on the fixed fees. So we do think we're getting into the pocket of where we need to be asking questions like, are we best long-term owner.

Okay. Final question. In the guide, you talked about core revenue being down 4% to 9%. What would that translate with Towanda? What would that translate into total company revenue decline?

So from an overall standpoint, Keith, the revenue decline that we're expecting from Towanda, and you remember, we guided right around the time of the announcement of the divestiture in December of 2024. We would expect that to be closer to the high end of the range. So I think about $170 million again to around $200 million. That's the high end that we would expect from the loss of Towanda. So when you think about kind of putting it in the pocket, it's around 5% or 6% of North America.

Your next question comes from the line of Matthew Bouley with Barclays.

You have Anika Dholakia on for Matt today. So looking at the EBITDA bridge for the quarter, we saw positive productivity turning from negative last quarter. So it seems like we're starting to see some of those transformation costs flow through. But when I look at the fiscal year bridge, it still shows the negative productivity, which is suggesting that it's driving negative volume. So I'm just thinking about how you're thinking about this bucket moving into 2026 and your ability to achieve productivity in a negative volume environment?

Sure. So talking about when you think of overall productivity, you're factoring in some of the short-term cost actions and some of the transformation. So when we think about transformation, we talked earlier about the footprint action and that's driving a lot of fixed overhead productivity year-over-year. When I think of in the guidance bridge and showing kind of that negative base productivity, that's truly the volume leverage on lower volumes that we have across our network. Think of it from a lower utilization of our capacity. However, we do want to have capacity that is ready for when the market does rebound so that we can grow. And we are already targeting growth initiatives that we expect to start realizing in Q4 when you see kind of the phasing of our revenue in the back half of the year. So from a productivity standpoint, again, total productivity will likely still be higher for the full year. But again, that base productivity, I would say, negative offset some of the transformation and cost actions is really just again around some of the volume leverage.

Great. That's helpful. And then my second question, just shifting gears a little bit. I'm wondering if you can parse out any details on how windows are performing relative to doors. Are you seeing maybe a greater mix down on one versus the other? And then in terms of tariffs? Is one more domestically sourced or how we should think about that? Any details on those categories would be helpful.

Yes. So I'll address the tariff question first. We're not seeing any significant change between windows and doors as affected by tariffs. I would say pretty consistent between both businesses. The -- from a window standpoint, you asked also about the mix. The mix down that we experienced really happened in 2024. So we're still seeing folks being more challenged by affordability concerns, staying at that lower end of the product base, but we are not seeing a further mix down in 2025. It's very minimal. As I said, let's call it, 3% to 5% of the total volume mix headwinds that we see. I would say, in general, it's been pretty consistent between both businesses. I wouldn't have anything specific to call out. We haven't seen that mix up, if that makes sense.

[Operator Instructions] Your next question comes from the line of Mike Dahl with RBC Capital Markets.

This is Chris on for Mike. Just going back to the full year guidance and what's implied for the back half. Could you maybe give us some more color on the volume mix dynamics you're expecting in the back half of the year? How that compares between kind of the nonres versus the new res end market in North America and Europe.

Sure. So on the back half of the year, I think there's 2 different factors that you have to think about, Chris. The first one is that from a year-on-year comp standpoint, we are lapping some of the share loss on that Midwest retailer. And so it's an easier comp going into the back half of the year. The other is that we are targeting the area that we are targeting for growth is around sort of our traditional channel, and we are already seeing some of the gains picking up through some of our, again, very specific targeted actions to grow our windows base with builders because we have additional share that we could gain there as well as some initiatives that we're driving through the transformation office around kind of a stock build program. So you have the combination of lapping some of the year-on-year comps as well as targeted growth. And so you do see a stronger volume in Q4 than traditionally that we have felt, I would say, from a phasing perspective year-on-year.

And just to clarify, from an end market perspective, understanding the moving parts around share loss and potential share gain, but just from an end market perspective for new resin. How are you guys thinking about market declines building in the back half of the year?

Yes. So we're calling -- Chris, as we said, we're calling it down low to mid-single digits in North America, and it's fairly balanced newer resi in our portfolio. So we expect that run rate to continue through the back half of the year. But again, if you comp it year- over-year, the rate of decline is slowing. And also, as Samantha called out, don't forget that there's a share aspect that you have to consider with our court order divestiture of Towanda and the loss of the Midwest retailer versus kind of the underlying market decline.

Got it. Okay. And if I could just sneak 1 last one in. Just going back to the second half implied ramp of transformation and headwind litigation that I know you said some of that's already been playing out in the first half of the year. But is there any way you could give maybe some bucketing around that, kind of what specific actions are driving the step up in the back half of the year either on the headwind, mitigation side or the transformation side, that would be helpful.

Sure. So transformation, you can think about it being very evenly split on 50-50 when you think it's the $100 million bucket. So I think that's a pretty fair assessment. On the cost mitigation side of the $50 million actions in the full year, you're going to have, I would say, slightly more than 2/3 of that in the back half of the year that you don't have in the first half. In addition, in Q1, you had significant negative productivity because the volumes dropped off more significantly in Q4 '24 and Q1 '25 that we were not able to adapt our operating structure as quickly as possible. So that's also having an impact in, I would say, the first half from a base productivity decline that you see improving throughout the year. In terms of the big buckets of what that would be, I would say the 2 largest buckets would be around plant closures, most of which that we have -- of which we have already announced, plus reductions in force, a significant portion, which we have announced in March, and we're seeing that play out in the back half. Those are, I would say, the 2 largest predominant buckets. And then the other last piece being some of the transformation initiatives on growth and then the incremental EBITDA flowing through on those picking up as well.

I will turn the call back over to James Armstrong for closing remarks.

Thank you for joining our call today. If you have any follow-ups, please reach out, and I would be happy to help with any questions. This ends our call today, and please have a great day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.