Jeld-Wen Holding Inc.
02/23/2026 | Press release | Distributed by Public on 02/23/2026 06:58
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This MD&A contains forward-looking statements that involve risks and uncertainties. Refer to "Forward-Looking Statements" in Item 1 - Businessand Item 1A - Risk Factorsin this Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under Item 1A - Risk Factorsincluded in this Form 10-K.
This MD&A is a supplement to our financial statements and notes thereto included elsewhere in this Form 10-K and is provided to enhance your understanding of our results of operations and financial condition. Our discussion of results of operations is presented in millions throughout the MD&A and due to rounding may not sum or calculate precisely to the totals and percentages provided in the tables. Our MD&A is organized as follows:
•Company Overview.This section provides a general description of our Company and reportable segments, business and industry trends, our key business strategies, and background information on other matters discussed in this MD&A.
•Results of Operations. This section provides our analysis and outlook for the significant line items on our consolidated statements of operations, as well as highlights key events or changes since the reporting period that may affect our financial condition, results, or future outlook.
•Segment Results and Non-GAAP Reconciliations. This section provides other information that we deem meaningful to an understanding of our results on both a consolidated basis and a reportable segment basis. It also includes non-GAAP financial measures used by management to assess performance and make decisions regarding the allocation of resources, along with reconciliations to the most directly comparable GAAP measures.
•Liquidity and Capital Resources. This section contains an overview of our financing arrangements and provides an analysis of trends and uncertainties affecting liquidity, cash requirements for our business, and sources and uses of our cash.
•Critical Accounting Policies and Estimates.This section discusses the accounting policies that we consider important to the evaluation and reporting of our financial condition and results of operations, and whose application requires significant judgments or a complex estimation process.
Company Overview
We are a leading global designer, manufacturer, and distributor of high-performance interior and exterior doors, windows, and related building products, serving the new construction and R&R sectors.
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We operate manufacturing and distribution facilities in 14 countries, located primarily in North America and Europe. For many product lines, our manufacturing processes are vertically integrated, enhancing our range of capabilities, our ability to innovate, and our quality control as well as providing supply chain, transportation, and working capital savings.
Reportable Segments
Our business is organized in geographic regions to ensure integration across operations serving common end markets and customers. We have two reportable segments: North America and Europe. Refer to Note 14 - Segment Information included in this Form 10-K for more information about our segments.
Divestitures
During 2021, the Company ceased the appeal process for its litigation with Steves. As a result, we were required to divest our Towanda facility and related assets, which occurred on January 17, 2025. We have reported Towanda within our North America operations through the date of sale. Refer to Note 2 -Discontinued Operations and Divestitureincluded in this Form 10-K for more information.
On April 17, 2023, we entered into a Share Sale Agreement with Aristotle Holding III Pty Limited, a subsidiary of Platinum Equity Advisors, LLC, to sell our Australasia business. On July 2, 2023, we completed the sale. The net assets and operations of the disposal group met the criteria to be classified as "discontinued operations" and are reported as such in all periods presented unless otherwise noted. The consolidated statements of cash flows include cash flows from discontinued operations through the divestiture date of July 2, 2023. Refer to Note 2 -Discontinued Operations and Divestitureincluded in this Form 10-K for more information.
Factors and Trends Affecting Our Business
Components of Net Revenues
The key components of our net revenues include Core Revenues (which we define to include the impact of pricing and volume/mix, as discussed further under the heading, "Product Pricing and Volume/Mix" below), contribution from acquisitions and divestitures made within the prior twelve months, and the impact of foreign exchange. Net revenues reported in our financial statements are impacted by the fluctuating currency values in the geographies in which we operate, which we refer to as the impact from foreign exchange. Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, percentage changes in pricing are based on management schedules and are not derived directly from our accounting records.
Product Demand
General business, financial market, and economic conditions globally and in the regions where we operate influence overall demand in our end markets and for our products. In particular, the following factors may have a direct impact on demand for our products in the countries and regions where our products are marketed and sold:
•the strength of the economy;
•employment rates, consumer confidence, and spending rates;
•the availability and cost of credit;
•interest rate fluctuations (including mortgage and credit card interest rates), sustained periods of elevated interest rates, and the availability of financing for our customers and consumers;
•the amount and type of residential and non-residential construction;
•housing sales and home values;
•the age of existing home stock, home vacancy rates, and foreclosures;
•volatility in both debt and equity capital markets;
•increases in the cost of raw materials or any shortage in supplies or labor, including as a result of tariffs or other trade restrictions;
•disruptions or delays to the global supply chain;
•the effects of governmental regulation and initiatives to manage economic conditions;
•armed conflicts, acts of terrorism or civil unrest;
•geographical shifts in population and other changes in demographics; and
•changes in weather patterns and extreme weather events.
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In addition, we seek to drive demand for our products through the implementation of various strategies and initiatives. We believe we can enhance demand for our new and existing products by:
•innovating and developing new products and technologies;
•investing in branding and marketing strategies, including marketing campaigns in both print and social media, as well as our investments in training curriculum, in-field training and technologies to facilitate remote learning; and
•implementing channel initiatives to enhance our relationships with key channel partners and customers, including optimizing growth through rebate programs in North America.
Product Pricing and Volume/Mix
The price and mix of products that we sell are important drivers of our net revenues and net income. Under the heading "Results of Operations," references to (i) "pricing" refer to the impact of price increases or decreases, as applicable, for particular products between periods and (ii) "volume/mix" refer to the combined impact of both the number of products we sell in a particular period and the types of products sold, in each case, on net revenues. While we operate in competitive markets, the demand for our innovative products allows us to exercise pricing discipline, which is an important element of our strategy to achieve profitable growth through improved margins. Our strategy also includes incentivizing our channel partners to sell our higher margin products, and we believe a renewed focus on innovation and the development of new technologies will increase our sales volumes and the overall profitability of our product mix.
Cost Reduction and Productivity Initiatives
Our senior management team has a proven history of implementing operational excellence programs at various large, global manufacturing businesses, and we believe the same successes can be realized at JELD-WEN. Key areas of focus of our operational excellence, productivity, and footprint rationalization programs include:
•reducing labor, overtime, and waste costs by optimizing manufacturing capacity and improving planning and manufacturing processes;
•increasing rigor and alignment around capital expenditures with a clear linkage to our strategy and optimizing returns;
•reducing or minimizing increases in material usage and costs through value-added engineering;
•investing in logistics optimization programs to reduce freight costs and increase throughput;
•redesigning our supply chain network to reduce lead times and optimize inventory levels to increase cash flow; and
•reducing warranty costs and scrap by improving quality.
We continue to implement our strategic cost-reduction and productivity initiatives to develop the culture and processes of operational excellence and continuous improvement. These cost reduction initiatives, which may include plant closures and consolidations, headcount reductions, and other various initiatives aimed at lowering production and overhead costs, may not produce the intended results within the intended timeframe.
Raw Material Costs
Commodities such as wood, steel, glass, fiberglass, aluminum, and vinyl are major components in the production of our products. Changes in the underlying prices of these commodities have a direct impact on the cost of goods sold. While we attempt to pass on a substantial portion of such cost increases to our customers, we may not be successful in doing so. In addition, our results of operations for individual quarters may be negatively impacted by a delay between the time of raw material cost increases and a corresponding price increase. Conversely, our results of operations for individual quarters may be positively impacted by a delay between the time of a raw material price decrease and a corresponding competitive pricing decrease.
Freight Costs
We incur freight and duty costs from third party logistics providers and port authorities to transport raw materials and work-in-process inventory to our manufacturing facilities and to deliver finished goods to our customers. Changes in freight and duty rates as well as the availability of freight services can have a significant impact on our cost of goods sold. Freight and duty costs are variable due to several factors that have affected the supply and demand of trucking and port services, including increased regulation, such as logging of miles, increases in general economic activity, labor shortages, and an aging workforce. We continue to monitor these key market drivers and proactively mitigate these costs through various internal initiatives and carrier contracts.
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Working Capital and Seasonality
Working capital fluctuates throughout the year and is affected by the seasonality of sales of our products and of customer payment patterns. The peak season for home construction and remodeling in our North America and Europe segments generally corresponds with the second and third calendar quarters, and therefore our sales volume is generally higher during those quarters. Typically, working capital increases at the end of the first quarter and beginning of the second quarter in conjunction with, and in preparation for, our peak season, and working capital decreases starting in the third quarter as inventory levels and accounts receivable decline. Global supply markets and supply chains have been impacted by certain events, resulting in shortages and extended lead times impacting our operations and profitability. We continue to apply several different strategies to mitigate the impact of these challenges on our operations, including extending our demand planning, seeking alternative sources, utilizing substitute products and leveraging our supplier relationships.
Foreign Currency Exchange Rates
We report our consolidated financial results in U.S. dollars. Due to our international operations, the weakening or strengthening of foreign currencies against the U.S. dollar can affect our reported operating results and our cash flows as we translate our foreign subsidiaries' financial statements from their reporting currencies into U.S. dollars. Refer to Item 1A - Risk Factors - Risks Relating to Our Business and Industry, Item 1A - Risk Factors- Exchange rate fluctuations may impact our business, financial condition, and results of operations, and Item 7A - Quantitative and Qualitative Disclosures About Market Risk - Exchange Rate Risk included in this Form 10-K for more information.
Components of our Operating Results
Net Revenues
Our net revenues are a function of sales volumes and selling prices, each of which is a function of product mix, and consist primarily of:
•sales of a wide variety of interior and exterior doors, including patio doors, for use in residential and non-residential applications, with and without frames, to a broad group of wholesale and retail customers in both of our geographic markets;
•sales of a wide variety of windows for both residential and certain non-residential uses, to a broad group of wholesale and retail customers in North America; and
•other sales, including sales of glass, hardware and locks, and window screens. We also sell molded door skins to certain direct and indirect customers pursuant to long-term contracts, and these customers in turn use the molded door skins to manufacture interior doors and compete directly against us in the marketplace.
Net revenues do not include internal transfers of products between our component manufacturing, product manufacturing and assembly, and distribution facilities.
Cost of Sales
Cost of sales consists primarily of material costs, direct labor and benefit costs, repair and maintenance, depreciation, utility, rent and warranty expenses, outbound freight, insurance and benefits, supervision, and tax expenses.
Material Costs. The single largest component of cost of sales is material costs, which include raw materials, components, and finished goods purchased for use in manufacturing our products or for resale. Our most significant material costs include wood, wood composites, wood components, steel, glass, internally produced door skins, fiberglass compound, hardware, petroleum-based products such as resin and binders, as well as aluminum and vinyl extrusions. The cost of each of these items is impacted by global supply and demand trends, both within and outside our industry, as well as commodity price fluctuations, conversion costs, energy costs, and transportation costs. Material costs also include purchased finished goods. We have and may continue to experience inflation in our material costs, including increased costs for inbound freight, due to supply chain challenges from economic and geopolitical uncertainties, including the ongoing conflict between Russia and Ukraine. The imposition of new tariffs on imports, new trade restrictions, or changes in tariff rates or trade restrictions may further impact material costs. Refer to Item 7A - Quantitative and Qualitative Disclosures About Market Risk - Raw Materials Risk included in this Form 10-K.
Direct Labor and Benefit Costs. Direct labor and benefit costs reflect a combination of production hours, average headcount, general wage levels, payroll taxes, and benefits provided to employees. Direct labor and benefit costs include wages, overtime, payroll taxes, and benefits paid to hourly employees at our facilities that are involved in the production and/or distribution of our products. These costs are generally managed by each facility and headcount is adjusted according to overall and seasonal production demand. We run multi-shift operations in many of our facilities to maximize return on assets and utilization. Direct labor and benefit costs fluctuate with headcount but generally tend to increase with inflation due to increases in wages and health benefit costs.
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Repair and Maintenance, Depreciation, Utility, Rent, and Warranty Expenses.
•Repairs and maintenance costs consist of equipment and facility maintenance expenses, purchases of maintenance supplies, and the labor costs involved in performing maintenance on our equipment and facilities.
•Depreciation includes depreciation expense associated with our production assets and plants.
•Rent is predominantly comprised of lease costs for facilities we do not own as well as vehicle fleet and equipment lease costs. Facility leases are typically multi-year and may include increases tied to certain measures of inflation.
•Warranty expenses represent all costs related to servicing warranty claims and product issues and are mostly related to our window and door products sold in the U.S. and Canada.
Outbound Freight. Outbound freight includes payments to third-party carriers for shipments of orders to our customers, as well as driver, vehicle, and fuel expenses when we deliver orders to customers. Third-party carriers ship most of our products.
Insurance and Benefits, Supervision, and Tax Expenses.
•Insurance and benefit costs are the expenses relating to our insurance programs, health benefits, retirement benefit programs (including the pension plan), and other benefits for employees that are not included in direct labor and benefits costs.
•Supervision costs are the wages and bonus expenses related to plant managers. Both insurance and benefits and supervision expenses tend to be influenced by headcount and wage levels.
•Tax costs are mostly payroll taxes for employees not included in direct labor and benefit costs, and property taxes. Tax expenses are impacted by changes in tax rates, headcount and wage levels, and the number and value of properties owned.
In addition, an appropriate portion of each of the insurance and benefits, supervision and tax expenses are allocated to SG&A.
Selling, General, and Administrative Expenses
SG&A primarily consists of R&D, sales and marketing, and general and administrative expenses.
Research and Development. R&D expenses consist primarily of personnel expenses related to R&D, consulting and contractor expenses, tooling and prototype materials, and overhead costs allocated to such expenses. Substantially all our R&D expenses are related to developing new products and services and improving our existing products and services. To date, R&D expenses have been expensed as incurred, because the period between achieving technological feasibility and the release of products and services for sale has been short and development costs qualifying for capitalization have been insignificant.
Sales and Marketing.Sales and marketing expenses consist primarily of advertising and marketing promotions of our products and services and related personnel expenses, as well as sales incentives, trade show and event costs, sponsorship costs, consulting and contractor expenses, travel, display expenses, and related amortization. Sales and marketing expenses are generally variable expenses.
General and Administrative. General and administrative expenses consist of personnel expenses for our finance, legal, human resources, and administrative personnel, as well as the costs of professional services, any allocated overhead, information technology, amortization of intangible assets acquired, and other administrative expenses.
Goodwill Impairment
Goodwill impairment consists of goodwill impairment charges associated with our North America reporting unit during the year ended December 31, 2025, and our Europe reporting unit during the years ended December 31, 2025 and 2024. During the year ended December 31, 2024, goodwill impairment also consists of goodwill impairment charges related to the court-ordered divestiture of Towanda. Refer to Note 6 - Goodwillto our consolidated financial statements included in this Form 10-K for more information.
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Restructuring and Asset Related Charges, Net
Restructuring and asset-related charges, net consist primarily of all salary-related severance and employee termination benefits that are accrued and expensed when a restructuring plan has been put into place, the plan has received approval from the appropriate level of management, and the benefit is probable and reasonably estimable. In addition to salary-related costs, we incur other restructuring costs and adjustments when facilities are closed, or capacity is realigned within the organization. Upon termination of an employment or commercial contract we record liabilities and expenses pursuant to the terms of the relevant agreement. For non-contractual restructuring activities, liabilities and expenses are measured and recorded at fair value in the period in which they are incurred. Asset related charges, net consist of accelerated depreciation and amortization of assets due to changes in asset useful lives. Refer to Note 19 -Restructuring and Asset-Related Charges, Net to our consolidated financial statements included in this Form 10-K for more information.
Interest Expense, Net
Interest expense, net relates primarily to interest payments on our credit facilities and debt securities, as well as commitment fees and amortization of any original issue discount or debt issuance costs. Debt issuance costs are included as an offset to long-term debt in the accompanying consolidated balance sheets and are amortized to interest expense over the life of the related facility using the effective interest method. Refer to Note 21 - Interest Expense, Netand Note 12 - Long-Term Debtto our consolidated financial statements included in this Form 10-K for more information.
Other Income, Net
Other income, net, includes income and losses related to various miscellaneous non-operating expenses. Refer to Note 22- Other Income, Netto our consolidated financial statements included in this Form 10-K for more information.
Income Taxes
Income taxes are recorded using the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the date of enactment. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Refer to Note 15 - Income Taxesto our consolidated financial statements included in this Form 10-K for more information.
Results of Operations
The tables in this section summarize key components of our results of operations for the periods indicated, both in U.S. dollars and as a percentage of our net revenues. Certain percentages presented in this section have been rounded to the nearest whole number. Accordingly, totals may not equal the sum of the line items in the tables below.
We present several financial metrics in "Core" terms, such as Core Revenues, which excludes the impact of foreign exchange, acquisitions, and divestitures completed in the last twelve months. We believe Core Revenues assists management, investors, and analysts in understanding the organic performance of our operations.
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Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (amounts in thousands) |
% of Net Revenues |
% of Net Revenues |
|||||||||||||||||||||
| Net revenues | $ | 3,211,181 | 100.0 | % | $ | 3,775,592 | 100.0 | % | |||||||||||||||
| Cost of sales | 2,696,986 | 84.0 | % | 3,086,618 | 81.8 | % | |||||||||||||||||
| Gross margin | 514,195 | 16.0 | % | 688,974 | 18.2 | % | |||||||||||||||||
| Selling, general and administrative | 551,111 | 17.2 | % | 652,527 | 17.3 | % | |||||||||||||||||
| Goodwill impairment | 334,617 | 10.4 | % | 94,801 | 2.5 | % | |||||||||||||||||
| Restructuring and asset-related charges, net | 44,511 | 1.4 | % | 68,092 | 1.8 | % | |||||||||||||||||
| Operating loss | (416,044) | (13.0) | % | (126,446) | (3.3) | % | |||||||||||||||||
| Interest expense, net | 67,182 | 2.1 | % | 67,237 | 1.8 | % | |||||||||||||||||
| Loss on extinguishment and refinancing of debt | 237 | - | % | 1,908 | 0.1 | % | |||||||||||||||||
| Other income, net | (9,144) | (0.3) | % | (24,773) | (0.7) | % | |||||||||||||||||
| Loss from continuing operations before taxes | (474,319) | (14.8) | % | (170,818) | (4.5) | % | |||||||||||||||||
| Income tax expense | 147,930 | 4.6 | % | 16,762 | 0.4 | % | |||||||||||||||||
| Loss from continuing operations, net of tax | (622,249) | (19.4) | % | (187,580) | (5.0) | % | |||||||||||||||||
| Gain (loss) on sale of discontinued operations, net of tax | 1,040 | - | % | (1,440) | - | % | |||||||||||||||||
| Net loss | $ | (621,209) | (19.3) | % | $ | (189,020) | (5.0) | % | |||||||||||||||
Consolidated Results
Net Revenues - Net revenues decreased $564.4 million, or 14.9%, to $3.21 billion in the year ended December 31, 2025, from $3.78 billion in the year ended December 31, 2024. The decrease in net revenues was primarily driven by a decrease in Core Revenues of 12% and a decrease in net revenues from the court-ordered divestiture of Towanda of 4%. These were partially offset by a favorable foreign exchange impact of 1%. The decline in Core Revenues was driven by a 13% decrease in volume/mix, partially offset by a 1% benefit from price realization.
Gross Margin - Gross margin decreased $174.8 million, or 25.4%, to $514.2 million in the year ended December 31, 2025, from $689.0 million in the year ended December 31, 2024. Gross margin as a percentage of net revenues was 16.0% in the year ended December 31, 2025, compared to 18.2% in the year ended December 31, 2024. The decrease in gross margin percentage was primarily due to the decremental impact of volume/mix and negative price/cost, partially offset by favorable productivity.
SG&A - SG&A decreased $101.4 million, or 15.5%, to $551.1 million in the year ended December 31, 2025, from $652.5 million in the year ended December 31, 2024. SG&A as a percentage of net revenues remained flat at 17.2% for the years ended December 31, 2025 and 2024. The decrease in SG&A was primarily due to a decrease in professional fees, including non-recurring transformation journey expenses, gains on sale of property and equipment, including the sale-leaseback transaction in 2025 for our industrial warehouse located in Coral Springs, Florida, lower salaries and benefits driven by a reduction in headcount, and lower amortization expense resulting from accelerated amortization in the prior year for an ERP that we are no longer utilizing after we completed our related obligations under the JW Australia Transition Services Agreement.
Goodwill Impairment - Goodwill impairment charges of $334.6 million in the year ended December 31, 2025, related to the full impairment of goodwill in our North America and Europe reporting units. Goodwill impairment charges of $94.8 million in the year ended December 31, 2024, consisted of goodwill impairment charges of $63.4 million related to our Europe reporting unit and $31.4 million related to our North America reporting unit in connection with the court-ordered divestiture of Towanda. Refer to Note 6 - Goodwillto our consolidated financial statements included in this Form 10-K for more information.
Restructuring and Asset-Related Charges, Net - Restructuring and asset-related charges, net decreased $23.6 million, or 34.6% to $44.5 million in the year ended December 31, 2025, from $68.1 million in the year ended December 31, 2024. The decrease in restructuring and asset-related charges, net was primarily due to a decrease in charges incurred to close certain manufacturing facilities in our North America and Europe segments and to transform the operating structure of our Europe segment. Refer to Note 19 -Restructuring and Asset-Related Charges, Netto our consolidated financial statements included in this Form 10-K for more information.
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Interest Expense, Net - Interest expense, net, was $67.2 million for both the years ended December 31, 2025 and 2024. Higher interest on our Senior Notes due September 2032, issued in the third quarter of 2024, driven by a higher principal balance and interest rate, was offset by lower interest on the Term Loan Facility due to a partial principal repayment in the third quarter of 2024 and a lower interest rate in 2025. Refer to Note 21 - Interest Expense, Netto our consolidated financial statements included in this Form 10-K for more information.
Loss on Extinguishment and Refinancing of Debt - Loss on extinguishment and refinancing of debt decreased $1.7 million, or 87.6%, to $0.2 million in the year ended December 31, 2025, from $1.9 million in the year ended December 31, 2024. Refer to Note 12 - Long-Term Debtto our consolidated financial statements included in this Form 10-K for more information.
Other Income, Net - Other income, net decreased $15.6 million, or 63.1%, to $9.1 million in the year ended December 31, 2025, from $24.8 million in the year ended December 31, 2024. Refer to Note 22- Other Income, Netto our consolidated financial statements included in this Form 10-K for more information.
Income Tax Expense - Income tax expense was $147.9 million in the year ended December 31, 2025, compared to $16.8 million in the year ended December 31, 2024. The effective tax rate in the year ended December 31, 2025, was (31.2)%. The effective tax rate for the year ended December 31, 2025, was driven primarily by the $174.8 million increase to valuation allowances on foreign and U.S. tax attributes and $55.4 million of tax expense attributable to nondeductible goodwill impairment. The effective tax rate in the year ended December 31, 2024, was (9.8)%.The effective tax rate for the year endedDecember 31, 2024, was driven primarily by the $24.6 million increase to valuation allowances on foreign and state NOL and credit carryforwards, $20.2 million of tax expense attributable to nondeductible goodwill impairment, $7.1 million of tax expense attributed to nondeductible expenses, and $4.5 million of tax expense attributed to the expiration of U.S. attributes, partially offset by $2.7 million of tax benefit attributable to R&Dcredits. Refer to Note 15 - Income Taxesto our consolidated financial statements included in this Form 10-K for more information.
Gain (Loss) On Sale Of Discontinued Operations, Net Of Tax - The $1.0 million gain and $1.4 million loss on sale of discontinued operations, net of tax in the years ended December 31, 2025 and 2024, respectively, is related to the July 2, 2023, sale of JW Australia. The $1.0 million incurred in the year ended December 31, 2025, is due to a release of reserve associated with purchases under a supply agreement in the second quarter of 2025. The $1.4 million incurred in the year ended December 31, 2024, is related to settlement of an outstanding tax liability related to JW Australia. Refer to Note 2 -Discontinued Operations and Divestiture to our consolidated financial statements included in this Form 10-K for more information.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023
| Year Ended December 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (amounts in thousands) |
% of Net Revenues |
% of Net Revenues |
|||||||||||||||||||||
| Net revenues | $ | 3,775,592 | 100.0 | % | $ | 4,304,334 | 100.0 | % | |||||||||||||||
| Cost of sales | 3,086,618 | 81.8 | % | 3,471,713 | 80.7 | % | |||||||||||||||||
| Gross margin | 688,974 | 18.2 | % | 832,621 | 19.3 | % | |||||||||||||||||
| Selling, general and administrative | 652,527 | 17.3 | % | 655,280 | 15.2 | % | |||||||||||||||||
| Goodwill impairment | 94,801 | 2.5 | % | - | - | % | |||||||||||||||||
| Restructuring and asset-related charges, net | 68,092 | 1.8 | % | 35,741 | 0.8 | % | |||||||||||||||||
| Operating (loss) income | (126,446) | (3.3) | % | 141,600 | 3.3 | % | |||||||||||||||||
| Interest expense, net | 67,237 | 1.8 | % | 72,258 | 1.7 | % | |||||||||||||||||
| Loss on extinguishment and refinancing of debt | 1,908 | 0.1 | % | 6,487 | 0.2 | % | |||||||||||||||||
| Other income, net | (24,773) | (0.7) | % | (25,719) | (0.6) | % | |||||||||||||||||
| (Loss) income from continuing operations before taxes | (170,818) | (4.5) | % | 88,574 | 2.1 | % | |||||||||||||||||
| Income tax expense | 16,762 | 0.4 | % | 63,339 | 1.5 | % | |||||||||||||||||
| (Loss) income from continuing operations, net of tax | (187,580) | (5.0) | % | 25,235 | 0.6 | % | |||||||||||||||||
| (Loss) gain on sale of discontinued operations, net of tax | (1,440) | - | % | 15,699 | 0.4 | % | |||||||||||||||||
| Income from discontinued operations, net of tax | - | - | % | 21,511 | 0.5 | % | |||||||||||||||||
| Net (loss) income | $ | (189,020) | (5.0) | % | $ | 62,445 | 1.5 | % | |||||||||||||||
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Consolidated Results
Net Revenues - Net revenues decreased $528.7 million, or 12.3%, to $3.78 billion in the year ended December 31, 2024, from $4.30 billion in the year ended December 31, 2023. The decrease in net revenues was primarily driven by a decrease in Core Revenues of 12%. Core Revenues decreased due to a 12% decline in volume/mix.
Gross Margin - Gross margin decreased $143.6 million, or 17.3%, to $689.0 million in the year ended December 31, 2024, from $832.6 million in the year ended December 31, 2023. Gross margin as a percentage of net revenues was 18.2% in the year ended December 31, 2024, and 19.3% in the year ended December 31, 2023. The decrease in gross margin percentage was due to a decremental impact of volume/mix, partially offset by an increase in productivity.
SG&A - SG&A decreased $2.8 million, or 0.4%, to $652.5 million in the year ended December 31, 2024, from $655.3 million in the year ended December 31, 2023. SG&A as a percentage of net revenues increased to 17.3% in the year ended December 31, 2024, from 15.2% in the year ended December 31, 2023. The decrease in SG&A was primarily due to decreased performance-based variable compensation expense partially offset by increased professional fees, including non-recurring transformation journey expenses.
Goodwill Impairment - Goodwill impairment charges of $94.8 million in the year ended December 31, 2024, consist of a $63.4 million goodwill impairment charge associated with our Europe reporting unit, and a $31.4 million goodwill impairment charge in our North America reporting unit related to the court-ordered divestiture of Towanda. Refer to Note 6 - Goodwillto our consolidated financial statements included in this Form 10-K for more information.
Restructuring and Asset-Related Charges, Net - Restructuring and asset-related charges, net increased $32.4 million, or 90.5% to $68.1 million in the year ended December 31, 2024, from $35.7 million in the year ended December 31, 2023. The increase in restructuring charges, net was primarily due to an increase in charges incurred to close certain manufacturing facilities in our North America and Europe segments and to transform the operating structure of our Europe segment Refer to Note 19 -Restructuring and Asset-Related Charges, Netto our consolidated financial statements included in this Form 10-K for more information.
Interest Expense, Net - Interest expense, net, decreased $5.0 million, or 6.9%, to $67.2 million in the year ended December 31, 2024, from $72.3 million in the year ended December 31, 2023. The decrease was primarily due to lower long-term debt balances resulting from the redemption of our Senior Secured Notes and partial redemption of our 4.63% Senior Notes in the third quarter of 2023, and an increase in interest income from invested cash balances, partially offset by a decrease in interest income from interest rate derivatives and a higher interest rate on our Senior Notes maturing in 2032 issued during the third quarter of 2024. Refer to Note 21 - Interest Expense, Netto our consolidated financial statements included in this Form 10-K for more information.
Loss on Extinguishment and Refinancing of Debt - The $1.9 million loss on extinguishment and refinancing of debt during the year ended December 31, 2024, is related to the amendment of our Term Loan Facility as well as the redemption of the remaining $200.0 million of our 4.63% Senior Notes. The loss on extinguishment and refinancing of debt of $6.5 million in the year ended December 31, 2023, is related to the redemption of our Senior Secured Notes and partial redemption of our 4.63% Senior Notes. Refer to Note 12 - Long-Term Debtto our consolidated financial statements included in this Form 10-K for more information.
Other Income, Net - Other income, net decreased $0.9 million, or 3.7%, to $24.8 million in the year ended December 31, 2024, from $25.7 million in the year ended December 31, 2023. Refer to Note 22- Other Income, Netto our consolidated financial statements included in this Form 10-K for more information.
Income Tax Expense - Income tax expense was $16.8 million in the year ended December 31, 2024, compared to $63.3 million in the year ended December 31, 2023. The effective tax rate in the year ended December 31, 2024, was (9.8)%. The effective tax rate for the year ended December 31, 2024, was driven primarily by the $24.6 million increase to valuation allowances on foreign and state NOL and credit carryforwards, $7.1 million of tax expense attributed to nondeductible expenses, $20.2 million of tax expense attributable to nondeductible goodwill impairment and $4.5 million of tax expense attributed to the expiration of U.S. attributes, partially offset by $2.7 million of tax benefit attributable to R&D credits. The effective tax rate in the year ended December 31, 2023, was 71.5%. The effective tax rate in the year ended December 31, 2023, was primarily driven by the effects of the $32.7 million net valuation allowance recorded against our foreign and state NOLs as well as $7.2 million of tax expense attributed to the expiration of our U.S. attributes. Refer to Note 15 - Income Taxes to our consolidated financial statements included in this Form 10-K for more information.
(Loss) Gain On Sale Of Discontinued Operations, Net Of Tax - The $1.4 million loss and $15.7 million gain on sale of discontinued operations in the years ended December 31, 2024 and 2023, respectively, are related to the July 2, 2023, sale of JW Australia. The $1.4 million loss incurred in the year ended December 31, 2024, is related to settlement of an outstanding tax liability for JW Australia. Refer to Note 2 -Discontinued Operations and Divestiture to our consolidated financial statements included in this Form 10-K for more information.
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Segment Results and Non-GAAP Reconciliations
We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding the allocation of resources in accordance with ASC 280-10 - Segment Reporting. We define Adjusted EBITDA from continuing operations as income (loss) from continuing operations, net of tax, adjusted for the following items: income tax expense (benefit); depreciation and amortization; interest expense (income), net; and certain special items consisting of non-recurring net legal and professional expenses and settlements; goodwill impairment; restructuring and asset-related charges, net; M&A related costs (income); net (gain) loss on sale of business, property and equipment; loss on extinguishment and refinancing of debt; share-based compensation expense; pension settlement charges; non-cash foreign exchange transaction/translation (gain) loss; and other special items. We use Adjusted EBITDA from continuing operations because we believe this measure assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. This non-GAAP financial measure should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP.
We have two reportable segments, organized and managed principally in geographic regions: North America and Europe. We report all other business activities in Corporate and unallocated costs.
Reconciliations of (loss) income from continuing operations, net of tax to Adjusted EBITDA from continuing operations by segment are as follows:
| Year Ended December 31, 2025 | |||||||||||||||||||||||
| (amounts in thousands) | North America | Europe | Corporate and Unallocated Costs | Total Consolidated | |||||||||||||||||||
| Loss from continuing operations, net of tax | $ | (267,610) | $ | (172,887) | $ | (181,752) | $ | (622,249) | |||||||||||||||
|
Income tax expense(1)
|
114,168 | 12,199 | 21,563 | 147,930 | |||||||||||||||||||
| Depreciation and amortization | 69,418 | 32,895 | 10,068 | 112,381 | |||||||||||||||||||
| Interest (income) expense, net | (803) | 2,183 | 65,802 | 67,182 | |||||||||||||||||||
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Special items:(2)
|
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| Net legal and professional expenses and settlements | 2,958 | 6,660 | 21,846 | 31,464 | |||||||||||||||||||
| Goodwill impairment | 181,248 | 153,369 | - | 334,617 | |||||||||||||||||||
| Restructuring and asset-related charges, net | 24,435 | 17,711 | 2,365 | 44,511 | |||||||||||||||||||
| M&A related costs | - | - | 9,053 | 9,053 | |||||||||||||||||||
| Net gain on sale of business, property, and equipment | (37,149) | - | - | (37,149) | |||||||||||||||||||
| Loss on extinguishment and refinancing of debt | - | - | 237 | 237 | |||||||||||||||||||
| Share-based compensation expense | 3,174 | 2,180 | 9,640 | 14,994 | |||||||||||||||||||
| Pension settlement charge | 6,644 | - | - | 6,644 | |||||||||||||||||||
|
Other special items(3)
|
2,979 | 1,000 | 4,395 | 8,374 | |||||||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 99,462 | $ | 55,310 | $ | (36,783) | $ | 117,989 | |||||||||||||||
(1)Income tax expense in our North America segment includes $129.2 million attributable to an increase in the valuation allowance recorded against our U.S. tax attributes and $5.1 million attributed to withholding tax accrued on certain foreign undistributed earnings from prior years.
(2)Refer to the calculation of Adjusted EBITDA from continuing operations for a discussion of the Special items listed below.
(3)Corporate and unallocated other special items include $3.5 million in expenses related to an environmental matter.
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| Year Ended December 31, 2024 | |||||||||||||||||||||||
| (amounts in thousands) | North America | Europe | Corporate and Unallocated Costs | Total Consolidated | |||||||||||||||||||
| Income (loss) from continuing operations, net of tax | $ | 82,836 | $ | (64,331) | $ | (206,085) | $ | (187,580) | |||||||||||||||
| Income tax expense (benefit) | 18,676 | 8,066 | (9,980) | 16,762 | |||||||||||||||||||
|
Depreciation and amortization(1)
|
73,528 | 30,702 | 21,556 | 125,786 | |||||||||||||||||||
| Interest expense, net | 2,648 | 2,114 | 62,475 | 67,237 | |||||||||||||||||||
|
Special items:(2)
|
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| Net legal and professional expenses and settlements | 2,921 | 4,740 | 55,061 | 62,722 | |||||||||||||||||||
| Goodwill impairment | 31,356 | 63,445 | - | 94,801 | |||||||||||||||||||
| Restructuring and asset-related charges, net | 42,817 | 23,729 | 1,546 | 68,092 | |||||||||||||||||||
| M&A related costs | - | - | 15,296 | 15,296 | |||||||||||||||||||
| Net gain on sale of business, property, and equipment | (13,415) | (153) | (184) | (13,752) | |||||||||||||||||||
| Loss on extinguishment and refinancing of debt | - | - | 1,908 | 1,908 | |||||||||||||||||||
| Share-based compensation expense | 3,087 | 1,261 | 11,117 | 15,465 | |||||||||||||||||||
| Non-cash foreign exchange transaction/translation loss (gain) | 315 | (3,771) | 355 | (3,101) | |||||||||||||||||||
| Other special items | 9,302 | 1,911 | 399 | 11,612 | |||||||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 254,071 | $ | 67,713 | $ | (46,536) | $ | 275,248 | |||||||||||||||
(1)Corporate and unallocated depreciation and amortization expense in the year ended December 31, 2024, includes accelerated amortization of $14.1 million for an ERP system that we are no longer utilizing after we completed our related obligations under the JW Australia Transition Services Agreement.
(2)Refer to the calculation of Adjusted EBITDA from continuing operations for a discussion of the Special items listed below.
| Year Ended December 31, 2023 | |||||||||||||||||||||||
| (amounts in thousands) | North America | Europe | Corporate and Unallocated Costs | Total Consolidated | |||||||||||||||||||
| Income (loss) from continuing operations, net of tax | $ | 175,980 | $ | (3,335) | $ | (147,410) | $ | 25,235 | |||||||||||||||
|
Income tax expense (benefit)(1)
|
79,210 | 44,095 | (59,966) | 63,339 | |||||||||||||||||||
|
Depreciation and amortization(2)
|
79,900 | 30,185 | 24,911 | 134,996 | |||||||||||||||||||
| Interest expense, net | 4,713 | 3,224 | 64,321 | 72,258 | |||||||||||||||||||
|
Special items:(3)
|
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| Net legal and professional expenses and settlements | 946 | 3,726 | 23,512 | 28,184 | |||||||||||||||||||
| Restructuring and asset-related charges, net | 29,207 | 5,738 | 796 | 35,741 | |||||||||||||||||||
| M&A related costs | 759 | - | 5,816 | 6,575 | |||||||||||||||||||
| Net loss (gain) on sale of property and equipment | 1,223 | (5,101) | (6,645) | (10,523) | |||||||||||||||||||
| Loss on extinguishment and refinancing of debt | - | - | 6,487 | 6,487 | |||||||||||||||||||
| Share-based compensation expense | 5,121 | 1,890 | 10,466 | 17,477 | |||||||||||||||||||
| Pension settlement charge | 4,349 | - | - | 4,349 | |||||||||||||||||||
| Non-cash foreign exchange transaction/translation (gain) loss | (261) | 1,628 | (772) | 595 | |||||||||||||||||||
| Other special items | 1,042 | (595) | (4,721) | (4,274) | |||||||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 382,189 | $ | 81,455 | $ | (83,205) | $ | 380,439 | |||||||||||||||
(1)Income tax expense in our Europe segment includes an increase in valuation allowance against our foreign net operating loss carryforwards of $30.0 million.
(2)Corporate and unallocated costs depreciation and amortization expense in the year ended December 31, 2023, includes accelerated amortization of $14.1 million for an ERP system that we are no longer utilizing after we completed our related obligations under the JW Australia Transition Services Agreement. North America depreciation and amortization expense in the year ended December 31, 2023, includes accelerated depreciation of $9.1 million from reviews of equipment capacity optimization.
(3)Refer to the calculation of Adjusted EBITDA from continuing operations for a discussion of the Special items listed below.
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Reconciliations of (loss) income from continuing operations, net of tax to Adjusted EBITDA from continuing operations on a consolidated basis are as follows:
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| (Loss) income from continuing operations, net of tax | (622,249) | (187,580) | $ | 25,235 | |||||||||||||
|
Income tax expense(1)
|
147,930 | 16,762 | 63,339 | ||||||||||||||
|
Depreciation and amortization(2)
|
112,381 | 125,786 | 134,996 | ||||||||||||||
| Interest expense, net | 67,182 | 67,237 | 72,258 | ||||||||||||||
| Special items: | |||||||||||||||||
|
Net legal and professional expenses and settlements(3)
|
31,464 | 62,722 | 28,184 | ||||||||||||||
|
Goodwill impairment(4)
|
334,617 | 94,801 | - | ||||||||||||||
|
Restructuring and asset-related charges, net(5)(6)
|
44,511 | 68,092 | 35,741 | ||||||||||||||
|
M&A related costs(7)
|
9,053 | 15,296 | 6,575 | ||||||||||||||
|
Net gain on sale of business, property, and equipment(8)
|
(37,149) | (13,752) | (10,523) | ||||||||||||||
|
Loss on extinguishment and refinancing of debt(9)
|
237 | 1,908 | 6,487 | ||||||||||||||
|
Share-based compensation expense(10)
|
14,994 | 15,465 | 17,477 | ||||||||||||||
|
Pension settlement charge(11)
|
6,644 | - | 4,349 | ||||||||||||||
|
Non-cash foreign exchange transaction/translation (gain) loss(12)
|
- | (3,101) | 595 | ||||||||||||||
|
Other special items(13)
|
8,374 | 11,612 | (4,274) | ||||||||||||||
| Adjusted EBITDA from continuing operations | $ | 117,989 | $ | 275,248 | $ | 380,439 | |||||||||||
(1)Income tax expense in the year ended December 31, 2025, includes $129.2 million attributable to an increase in the valuation allowance recorded against our U.S. tax attributes and $5.1 million attributed to withholding tax accrued on certain foreign undistributed earnings from prior years. Income tax expense in the year ended December 31, 2023, includes an increase in valuation allowance against foreign net operating loss carryforwards of $30.0 million. Refer to Note 15 - Income Taxesto our consolidated financial statements included in this Form 10-K for more information.
(2)Depreciation and amortization expense includes accelerated amortization of $14.1 million in the years ended December 31, 2024 and 2023, in Corporate and unallocated costs for an ERP system that we are no longer utilizing after we completed our related obligations under the JW Australia Transition Services Agreement. In addition, depreciation and amortization expense in the year ended December 31, 2023, includes accelerated depreciation of $9.1 million in North America from reviews of equipment capacity optimization.
(3)Net legal and professional expenses and settlements include non-recurring transformation journey expenses of $28.7 million, $59.2 million, and $26.1 million in the years ended December 31, 2025, 2024, and 2023, respectively. For the year ended December 31, 2025, these expenses primarily relate to project-based consulting fees that directly support the transformation journey that are not expected to recur in the foreseeable future. These projects include the centralization of human resources processes, North America supply chain network optimization strategy, and other projects related to our transformation journey. For the years ended December 31, 2024 and 2023, these expenses primarily relate to the engagement of a transformation consultant for a period spanning from the third quarter of 2023 through April 2025, for which we incurred $40.7 million and $20.0 million, respectively. Expenses for this transformation consultant's engagement, which was extended into 2025, included $2.5 million in the year ended December 31, 2025. Additionally, net legal and professional expenses and settlements include $1.6 million, $2.8 million, and $1.8 million in the years ended December 31, 2025, 2024, and 2023, respectively, relating to litigation of historic legal matters.
(4)Goodwill impairment in the year ended December 31, 2025, consists of goodwill impairment charges related to the full impairment of goodwill in our North America and Europe reporting units. Goodwill impairment in the year ended December 31, 2024, consists of a $63.4 million goodwill impairment charge associated with our Europe reporting unit, and a $31.4 million goodwill impairment charge in our North America segment related to the court-ordered divestiture of Towanda. Refer to Note 6 - Goodwillto our consolidated financial statements included in this Form 10-K for more information.
(5)Restructuring and asset-related charges, net represents severance, accelerated depreciation and amortization, equipment relocation and other expenses directly incurred as a result of restructuring events. The restructuring charges primarily relate to charges incurred to change the operating structure, eliminate certain roles, and close certain manufacturing facilities in our North America and Europe segments. Refer to Note 19 -Restructuring and Asset-Related Charges, Netto our consolidated financial statements included in this Form 10-K for more information.
(6)Product and inventory-related charges related to announced facility closures were detrimental to Adjusted EBITDA from continuing operations. Refer to Note 19 -Restructuring and Asset-Related Charges, Netto our consolidated financial statements included in this Form 10-K for more information.
(7)M&A related costs consist of legal and professional expenses related to the court-ordered divestiture of Towanda and other strategic initiatives.
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(8)Net gain on sale of business, property, and equipment in the year ended December 31, 2025, primarily relates to the court-ordered divestiture of Towanda, the sale of property in Coral Springs, Florida and the sale of property and equipment in Marion, North Carolina. Net gain on sale of business, property and equipment in the year ended December 31, 2024, primarily relates to the sale of our business in St. Kitts and properties in Chile, Mexico, and Klamath Falls, Oregon. Net gain on sale of business, property and equipment in the year ended December 31, 2023, primarily relates to the sale of properties in the United Kingdom, Australia, and Klamath Falls, Oregon.
(9)Loss on extinguishment and refinancing of debt consists of $0.2 million in the year ended December 31, 2025, associated with an amendment of our ABL Facility. Loss on extinguishment and refinancing of debt of $1.9 million in the year ended December 31, 2024, associated with an amendment of our Term Loan Facility and redemption of the remaining $200.0 million of our 4.63% Senior Notes. Loss on extinguishment and refinancing of debt of $6.5 million in the year ended December 31, 2023, is related to the redemption of $250.0 million of our 6.25% Senior Secured Notes and $200.0 million of our 4.63% Senior Notes. Refer to Note 12 - Long-Term Debtto our consolidated financial statements included in this Form 10-K for more information.
(10)Share-based compensation expense represents equity-based compensation expense related to the issuance of share-based awards.
(11)Pension settlement charge of $6.6 million in the year ended December 31, 2025, is due to the purchase of group annuity contracts and transfer of pension obligations associated with our U.S. defined benefit pension plan to an insurer. Pension settlement charge of $4.4 million in the year ended December 31, 2023, represents a settlement loss associated with our U.S. defined benefit pension plan resulting from a one-time lump sum payment offered to pension plan participants. Refer to Note 26 - Employee Retirement and Pension Benefitsto our consolidated financial statements included in this Form 10-K for more information.
(12)Non-cash foreign exchange transaction/translation (gain) loss is primarily associated with fair value adjustments of foreign currency derivatives and revaluation of balances denominated in foreign currencies.
(13)Other special items not core to ongoing business activity include: (i) in the year ended December 31, 2025 $3.5 million in expenses related to an environmental matter in Corporate and unallocated costs; (ii) in the year ended December 31, 2024, a loss of $4.8 million of cumulative foreign currency translation adjustments related to the substantial liquidation of a foreign subsidiary in Chile and Mexico in our North America segment; (iii) in the year ended December 31, 2023, ($3.1) million in income from short-term investments and forward contracts related to the JW Australia divestiture in Corporate and unallocated costs, ($2.8) million in adjustments to compensation and non-income taxes associated with exercises of legacy equity awards in our Europe segment, and $2.2 million in costs that do not meet the GAAP definition of restructuring, primarily related to the closure of a certain facility in our Europe segment.
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands) | 2025 | 2024 | Variance | ||||||||||||||
| Net revenues from external customers | |||||||||||||||||
| North America | $ | 2,154,348 | $ | 2,708,371 | (20.5) | % | |||||||||||
| Europe | 1,056,833 | 1,067,221 | (1.0) | % | |||||||||||||
| Total Consolidated | $ | 3,211,181 | $ | 3,775,592 | (14.9) | % | |||||||||||
| Percentage of total consolidated net revenues | |||||||||||||||||
| North America | 67.1 | % | 71.7 | % | |||||||||||||
| Europe | 32.9 | % | 28.3 | % | |||||||||||||
| Total Consolidated | 100.0 | % | 100.0 | % | |||||||||||||
|
Adjusted EBITDA from continuing operations(1)
|
|||||||||||||||||
| North America | $ | 99,462 | $ | 254,071 | (60.9) | % | |||||||||||
| Europe | 55,310 | 67,713 | (18.3) | % | |||||||||||||
| Corporate and unallocated costs | (36,783) | (46,536) | (21.0) | % | |||||||||||||
| Total Consolidated | $ | 117,989 | $ | 275,248 | (57.1) | % | |||||||||||
| Adjusted EBITDA from continuing operations as a percentage of segment net revenues | |||||||||||||||||
| North America | 4.6 | % | 9.4 | % | |||||||||||||
| Europe | 5.2 | % | 6.3 | % | |||||||||||||
| Total Consolidated | 3.7 | % | 7.3 | % | |||||||||||||
(1)Adjusted EBITDA from continuing operations is a financial measure that is not calculated in accordance with GAAP. Refer to the calculation of Adjusted EBITDA from continuing operations for a discussion of the Special items listed above.
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North America
Net revenues in North America decreased $554.0 million, or 20.5%, to $2.15 billion in the year ended December 31, 2025, from $2.71 billion in the year ended December 31, 2024. The decrease was primarily due to a decrease in Core Revenues of 14% and a decrease in net revenues from the court-ordered divestiture of Towanda of 6%. The decrease in Core Revenues was driven by a 14% decline in volume/mix due to weaker market demand.
Adjusted EBITDA from continuing operations in North America decreased $154.6 million, or 60.9%, to $99.5 million in the year ended December 31, 2025, from $254.1 million in the year ended December 31, 2024. The decrease was primarily due to unfavorable volume/mix, negative price/cost, and lower productivity, partially offset by lower SG&A. The decrease in SG&A was primarily driven by decreased salaries and benefits driven by a reduction in headcount, lower advertising and promotion expenses, reduction in R&D expenses, as well as lower non-transformational professional fees.
Europe
Net revenues in Europe decreased $10.4 million, or 1.0%, to $1.06 billion in the year ended December 31, 2025, from $1.07 billion in the year ended December 31, 2024. The decrease was primarily due to a decrease in Core Revenues of 5%, partially offset by a favorable foreign exchange impact of 4%. The decrease in Core Revenues was primarily driven by unfavorable volume/mix of 7%, primarily due to market softness across the region, partially offset by a 2% benefit from price realization.
Adjusted EBITDA from continuing operations in Europe decreased $12.4 million, or 18.3%, to $55.3 million in the year ended December 31, 2025, from $67.7 million in the year ended December 31, 2024. The decrease was primarily due to unfavorable volume/mix and negative price/cost, partially offset by favorable productivity.
Corporate and unallocated costs
Corporate and unallocated costs decreased by $9.8 million, or 21.0%, to $36.8 million in the year ended December 31, 2025, from $46.5 million in the year ended December 31, 2024. The decrease in cost was primarily due to an increase in cash received on a real estate investment, lower salaries and benefits driven by a reduction in headcount in the current year, lower insurance expense due to favorable claims experience, and reduction in non-transformational professional fees, partially offset by higher foreign exchange and hedging losses.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023
| Year Ended December 31, | ||||||||||||||||||||
| (amounts in thousands) | 2024 | 2023 | % Variance | |||||||||||||||||
| Net revenues from external customers | ||||||||||||||||||||
| North America | $ | 2,708,371 | $ | 3,123,056 | (13.3) | % | ||||||||||||||
| Europe | 1,067,221 | 1,181,278 | (9.7) | % | ||||||||||||||||
| Total Consolidated | $ | 3,775,592 | $ | 4,304,334 | (12.3) | % | ||||||||||||||
| Percentage of total consolidated net revenues | ||||||||||||||||||||
| North America | 71.7 | % | 72.6 | % | ||||||||||||||||
| Europe | 28.3 | % | 27.4 | % | ||||||||||||||||
| Total Consolidated | 100.0 | % | 100.0 | % | ||||||||||||||||
|
Adjusted EBITDA from continuing operations(1)
|
||||||||||||||||||||
| North America | $ | 254,071 | $ | 382,189 | (33.5) | % | ||||||||||||||
| Europe | 67,713 | 81,455 | (16.9) | % | ||||||||||||||||
| Corporate and unallocated costs | (46,536) | (83,205) | (44.1) | % | ||||||||||||||||
| Total Consolidated | $ | 275,248 | $ | 380,439 | (27.6) | % | ||||||||||||||
| Adjusted EBITDA from continuing operations as a percentage of segment net revenues | ||||||||||||||||||||
| North America | 9.4 | % | 12.2 | % | ||||||||||||||||
| Europe | 6.3 | % | 6.9 | % | ||||||||||||||||
| Total Consolidated | 7.3 | % | 8.8 | % | ||||||||||||||||
(1)Adjusted EBITDA from continuing operations is a financial measure that is not calculated in accordance with GAAP. Refer to the calculation of Adjusted EBITDA from continuing operations for a discussion of the Special items listed above.
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North America
Net revenues in North America decreased $414.7 million, or 13.3%, to $2.71 billion in the year ended December 31, 2024, from $3.12 billion in the year ended December 31, 2023. The decrease was primarily due to a decrease in Core Revenues of 13%. Core Revenues decreased due to an 13% unfavorable volume/mix driven by weaker market demand and a shift in demand to lower priced products.
Adjusted EBITDA from continuing operations in North America decreased $128.1 million, or 33.5%, to $254.1 million in the year ended December 31, 2024, from $382.2 million in the year ended December 31, 2023. The decrease was primarily due to unfavorable volume mix and price/cost, partially offset by improved productivity.
Europe
Net revenues in Europe decreased $114.1 million, or 9.7%, to $1.07 billion in the year ended December 31, 2024, from $1.18 billion in the year ended December 31, 2023. The decrease was primarily due to a decrease in Core Revenues of 10%. Core Revenues decreased due to unfavorable volume/mix of 11% primarily due to market softness across the region, partially offset by a 1% benefit from price realization.
Adjusted EBITDA from continuing operations in Europe decreased $13.7 million, or 16.9%, to $67.7 million in the year ended December 31, 2024, from $81.5 million in the year ended December 31, 2023. The decrease was primarily due to unfavorable volume/mix and price/cost, partially offset by favorable productivity.
Corporate and unallocated costs
Corporate and unallocated costs decreased by $36.7 million, or 44.1%, to $46.5 million in the year ended December 31, 2024, from $83.2 million in the year ended December 31, 2023. The decrease in cost was primarily due to a decrease in performance-based variable compensation expense, lower insurance expense due to favorable claims experience, an increase in cash received on investment in real estate, reduction in non-transformational professional fees and corporate function expense savings in 2024, partially offset by an increase in cloud and software application costs.
Liquidity and Capital Resources
Overview
We have historically funded our operations through a combination of cash from operations, draws on our revolving credit facilities, and the issuance of non-revolving debt such as our Term Loan Facility and our Senior Notes. We place a strong emphasis on cash flow generation, which includes an operating discipline focused on working capital management. Working capital fluctuates throughout the year and is impacted by inflation, the seasonality of our sales, customer payment patterns, supply availability, and the translation of the balance sheets of our foreign operations into the U.S. dollar. Typically, working capital increases at the end of the first quarter and beginning of the second quarter in conjunction with, and in preparation for, the peak season for home construction and remodeling in our North America and Europe segments, and decreases starting in the fourth quarter as inventory levels and accounts receivable decline. Inventories fluctuate for raw materials that have long delivery lead times, as we work through prior shipments and take delivery of new orders.
As of December 31, 2025, we had total liquidity (a non-GAAP measure) of $484.7 million, consisting of $136.1 million in unrestricted cash and $348.6 million available for borrowing under the ABL Facility, compared to total liquidity of $566.7 million as of December 31, 2024. The decrease in total liquidity was primarily due to lower ABL borrowing base availability as well as a lower cash balance at December 31, 2025, compared to December 31, 2024.
As of December 31, 2025, our cash balances, including $2.1 million of restricted cash, consisted of $64.3 million in cash located in the U.S. and $73.9 million in cash located outside of the U.S. held by our non-U.S. subsidiaries.
Based on our current and forecasted level of operations and seasonality of our business, we believe that cash provided by operations and other sources of liquidity, including cash, cash equivalents, and availability under our revolving credit facilities, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments, and debt service requirements for at least the next twelve months from this issuance of financial statements and maintain compliance with covenants under our debt agreements.
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Our total indebtedness as of December 31, 2025, was $1.18 billion of which $23.7 million in short-term debt obligations is due and payable within the next 12 months. Our $400.0 million Senior Notes bearing interest of 4.88% are due and payable in December 2027. To service our indebtedness, we may be required to undertake various actions including, but not limited to, refinancing all or a portion of our existing long-term debt, pursuing strategic reviews of our assets and businesses, entering into sale-leaseback transactions for selected properties, adjusting our planned level of capital and other expenditures, or other strategies. In addition, in accordance with our credit agreements, dispositions of assets or businesses may require us to use all or a portion of the proceeds of such sales to pay down certain portions of our debt.
We may, from time to time, refinance, reprice, extend, retire, or otherwise modify our outstanding debt to lower our interest payments, reduce our debt, or otherwise improve our financial position. These actions may include repricing amendments, extensions, and/or opportunistic refinancing of debt. The amount of debt that may be refinanced, repriced, extended, retired, or otherwise modified, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants, and other considerations.
We may, from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if there are any, will be on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Based on hypothetical variable rate debt that would have resulted from drawing each revolving credit facility up to the full commitment amount, a 100-basis point decrease in interest rates would have reduced our interest expense by $8.9 million in the year ended December 31, 2025. A 100-basis point increase in interest rates would have increased our interest expense by $8.8 million in the same period. In certain instances, the impact of a hypothetical decrease would have been partially mitigated by interest rate floors that apply to certain of our debt agreements.
Contractual Obligations
In addition to our discussion and analysis surrounding our liquidity and capital resources, we have significant contractual obligations and commitments as of December 31, 2025, relating to the following:
•Long-term debt and interest obligations- As of December 31, 2025, our outstanding debt balance was $1.18 billion. Refer to Note 12 - Long-Term Debtto our consolidated financial statements included in this Form 10-K for more information regarding the timing of expected future principal payments. Interest on long-term debt is calculated based on debt outstanding and interest rates in effect on December 31, 2025, considering scheduled maturities and amortization payments. As of December 31, 2025, we estimate interest payments of $70.2 million due in 2026 and $210.0 million due in 2027 and thereafter.
•Finance and operating lease obligations- As of December 31, 2025, our remaining contractual commitments for finance and operating leases was $244.4 million. Refer to Note 8 - Leasesto our consolidated financial statements included in this Form 10-K for additional details regarding the timing of expected future payments.
•Purchase obligations- As of December 31, 2025, we have purchase obligations of $42.0 million due in 2026 and $30.8 million due in 2027 and thereafter. These purchase obligations are primarily relating to software hosting services and equipment purchase agreements. Purchase obligations are defined as purchase agreements that are enforceable and legally binding and that specify all significant terms, including quantity, price, and the approximate timing of the transaction.
Borrowings and Refinancings
In June 2023, we amended the Term Loan Facility to replace LIBOR with a Term SOFR based rate as the successor benchmark rate and made certain other technical amendments and related conforming changes. All other material terms and conditions were unchanged.
In August 2023, we redeemed all $250.0 million of our 6.25% Senior Secured Notes and $200.0 million of our 4.63% Senior Notes. The Company recognized a pre-tax loss of $6.5 million on the redemption in the year ended December 31, 2023, consisting of $3.9 million in call premium and $2.6 million in accelerated amortization of debt issuance costs.
In January 2024, we amended the Term Loan Facility to lower the applicable margin for replacement term loans, remove certain provisions no longer relevant to the parties, and make certain other technical amendments and related conforming changes. Pursuant to the amendment, replacement term loans bear interest at SOFR plus a margin of 1.75% to 2.00% depending on JWI's corporate credit ratings, compared to a margin of 2.00% to 2.25% under the previous amendment. All other material terms and conditions of the Term Loan Agreement were unchanged.
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In August 2024, we issued $350.0 million of Senior Notes, bearing interest at 7.00%, the proceeds of which were utilized to repay $150.0 million of the outstanding balance of our Term Loan Facility and redeemed the remaining $200.0 million of our 4.63% Senior Notes in September 2024. The Company recognized a pre-tax loss of $0.5 million on the redemption resulting from accelerated amortization of debt issuance costs.
In March 2025, we amended the ABL Facility to extend the maturity date from July 2026 to March 2028, replace the CDOR as the applicable rate with respect to loans denominated in Canadian Dollars with the CORRA, and make certain other technical amendments and related conforming changes. All other material terms and conditions of the ABL Facility credit agreement were unchanged including the aggregate commitment, which remained at $500.0 million. As a result of this amendment, the Company recognized a pre-tax loss of $0.2 million in the first quarter of 2025, consisting of unamortized issuance costs.
If there are outstanding borrowings against the ABL Facility, which results in the Company's Global Excess Availability falling below the Level 1 Availability Trigger Amount, we would be required to comply with a minimum Fixed Charge Coverage Ratio as described in the ABL Facility credit agreement.
In December 2007, we entered into thirty-year mortgage notes secured by land and buildings in Denmark with principal payments which began in 2018. In October 2024, we repaid the entire remaining principal balance of the mortgage notes of DKK142.5 million ($20.7 million).
As of December 31, 2025, we were in compliance with the terms of all our Credit Facilities and the indentures governing the Senior Notes.
Our results have been and will continue to be impacted by substantial changes in our net interest expense throughout the periods presented and into the future. Refer to Note 12 - Long-Term Debtto our consolidated financial statements included in this Form 10-K for more information.
Cash Flows
The following table summarizes the changes to our cash flows for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| (amounts in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Cash (used in) provided by: | |||||||||||||||||
| Operating activities | $ | (4,861) | $ | 106,214 | $ | 345,188 | |||||||||||
| Investing activities | 16,281 | (153,337) | 279,174 | ||||||||||||||
| Financing activities | (33,049) | (80,633) | (563,157) | ||||||||||||||
| Effect of changes in exchange rates on cash and cash equivalents | 8,830 | (10,344) | 7,074 | ||||||||||||||
| Net change in cash and cash equivalents | $ | (12,799) | $ | (138,100) | $ | 68,279 | |||||||||||
Cash Flows from Operations
Net cash used in operating activities was $4.9 million in the year ended December 31, 2025, compared to cash provided by operating activities of $106.2 million in the year ended December 31, 2024. The change in cash flows from operating activities was primarily due to the decrease in earnings of $432.2 million, inclusive of $334.6 million in non-cash goodwill impairment charges related to our North America and Europe reporting units in the current year, $129.2 million attributable to a valuation expense recorded against our U.S. tax attributes during 2025, and a $69.5 million increase in net cash used in our working capital accounts. The impact of accounts receivable, net, was unfavorable by $55.6 million for the year ended December 31, 2025, compared to the same period in 2024, primarily driven by a slower pace of declining sales and accounts receivable relative to the prior year. Accounts payable had an unfavorable impact of $38.0 million, mainly due to reduced inventory purchases in North America and lower professional expense payables related to a transformation consultant. Inventory contributed a favorable impact of $24.1 million, primarily reflecting decreased material purchases in North America.
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Net cash provided by operating activities decreased $239.0 million to $106.2 million in the year ended December 31, 2024, compared to $345.2 million in the year ended December 31, 2023. The decreased operating cash flow was primarily due to unfavorable change in earnings of $251.5 million and an unfavorable impact from accrued expenses of $39.1 million, due primarily to higher payments of annual variable compensation for 2023 performance, partially offset by a $9.4 million improvement in net cash provided by our working capital accounts. The impact of accounts receivable, net of $91.4 million was favorable in the year ended December 31, 2024, compared to the year ended December 31, 2023, which was primarily due to decreased sales and slightly improved collections. The $28.1 million favorable impact from accounts payable is primarily due to improved payment terms with suppliers. The $110.1 million unfavorable impact of inventory is primarily due to the prior year benefit from intentional, one-time reductions not being repeated in the current year, as 2024 began with a more normalized inventory level as compared to the prior year. Further, the unfavorable impact of inventory was also driven by investments in inventory levels to aid in delivering improved service levels and lead times to our customers.
Cash Flows from Investing Activities
Net cash provided by investing activities was $16.3 million in the year ended December 31, 2025, compared to cash used in investing activities of $153.3 million in the year ended December 31, 2024. The change in cash flows from investing activities was primarily driven by $110.7 million proceeds related to the court-ordered divestiture of Towanda, proceeds of $37.6 million from sale of property in Coral Springs, Florida, during the year ended December 31, 2025, and by a decrease in capital expenditures of $37.8 million.
Net cash used in investing activities was $153.3 million in the year ended December 31, 2024, compared to cash provided by investing activities of $279.2 million in the year ended December 31, 2023, primarily driven by $365.6 million proceeds (payments) related to the sale of JW Australia during the year ended December 31, 2023, and an increase in capital expenditures of $62.8 million.
Cash Flows from Financing Activities
Net cash used in financing activities decreased $47.6 million to $33.0 million in the year ended December 31, 2025, compared to $80.6 million in the year ended December 31, 2024, primarily driven by the repurchases of common stock of $24.3 million in the year ended December 31, 2024, and a reduction in net debt payments and debt extinguishment costs of $23.7 million.
Net cash used in financing activities decreased $482.5 million to $80.6 million in the year ended December 31, 2024, compared to $563.2 million in the year ended December 31, 2023, primarily due to net debt payments and payments of debt extinguishment costs of $55.2 million in the year ended December 31, 2024, compared to net debt payments and payments of debt extinguishment costs of $561.3 million in the year ended December 31, 2023. This decrease is partially offset by the repurchases of common stock of $24.3 million during the year ended December 31, 2024.
Holding Company Status
We are a holding company that conducts all our operations through subsidiaries, and we rely on dividends or advances from our subsidiaries to fund the holding company. The majority of our operating income is derived from JWI, our main operating subsidiary. The ability of our subsidiaries to pay dividends to us is subject to applicable local law and may be limited due to the terms of other contractual arrangements, including our Credit Facilities and Senior Notes.
Critical Accounting Policies and Estimates
The following disclosure is provided to supplement the description of our accounting policies contained in Note 1 - Description of Company and Summary of Significant Accounting Policiesto our consolidated financial statements. Our MD&A is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which may differ from these estimates. The following discussion highlights the estimates we believe are critical and should be read in conjunction with the consolidated financial statements included in this Form 10-K.
Recoverability of Long-Lived and Intangible Assets
Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such asset or asset groups may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or a change in utilization of property and equipment.
We group assets to test for impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
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When a triggering event is identified, we perform an impairment test by reviewing the expected undiscounted cash flows generated from the anticipated use of the asset or asset group and the residual value from the ultimate disposal of the asset or asset group, compared to the carrying value of the asset or asset group. If the expected undiscounted cash flows are less than the carrying value of the asset or asset group, the asset or asset group is deemed not to be recoverable and possibly impaired. We then estimate the fair value of the asset or asset group to determine whether an impairment loss should be recognized. An impairment loss will be recognized if an asset or asset group's fair value is determined to be less than its carrying value. Fair value can be determined using an income approach, cost approach, or market approach. For depreciable long-lived assets and an amortizable intangible asset, the new cost basis will be amortized over the remaining useful life of the asset. Our impairment loss calculations require management to apply judgments in estimating future cash flows to determine asset fair values under the income approach, including forecasting the useful lives of the assets. Under the cost approach, we applied assumptions regarding the current replacement cost of similar assets adjusted for estimated depreciation, physical deterioration, and economic obsolescence. For the market approach, we utilized a guideline company method in which the fair value of the asset or asset group was based on a weighting of the market multiples of comparable companies.
Goodwill
Goodwill was tested for impairment on an annual basis during the fourth quarter and between annual tests if indicators of potential impairment existed. The estimated fair values of our reporting units were derived using a combination of income and market approaches, both of which yielded substantially equivalent indications of fair value. Absent an indication of fair value from a potential buyer or similar specific transactions, we believed that the use of these methods provided a reasonable estimate of a reporting unit's fair value. Fair value computed by these models was arrived at using several factors and inputs. There were inherent uncertainties related to fair value models, the inputs, factors and our judgment in applying them to this analysis. Nonetheless, we believed that the combination of these methods provided a reasonable approach to estimate the fair values of our reporting units.
Under the income approach, the fair value of a reporting unit was based on a discounted cash flow analysis of management's short-term and long-term forecast of operating performance. This analysis contained significant assumptions and estimates including revenue growth rates, expected EBITDA, discount rates, capital expenditures, incremental net working capital, income tax rates, and terminal growth rates. Under the market approach, we utilized a guideline company method in which the fair value of the reporting unit was based on a weighting of the market multiples of comparable companies.
After the divestiture of our Australasia reporting unit in the third quarter of 2023, we identified two reporting units: North America and Europe. In determining our reporting units, we considered (i) whether an operating segment or a component of an operating segment was a business, (ii) whether discrete financial information was available, and (iii) whether the financial information is regularly reviewed by management of the operating segment.
Following our 2023 annual impairment test for our Europe reporting unit, we concluded that while no impairment existed, the fair value of our reporting unit exceeded its carrying value by approximately 3%. During the third quarter of 2024, the Company updated its financial forecast for the Europe reportable segment to reflect anticipated macroeconomic conditions of prolonged elevated interest rates leading to reduced revenue growth expectations. The end of the third fiscal quarter also marks the conclusion of our generally heavier seasonal sales period and our European net sales were negatively impacted by weaker market demand. Accordingly, the Company determined that a triggering event occurred requiring an interim goodwill impairment test for its European reporting unit as of September 28, 2024. Based upon the results of our interim impairment test, we concluded the carrying value of our Europe reporting unit exceeded its fair value, and we recorded a goodwill impairment charge of $63.4 million, representing a partial impairment of goodwill assigned to the Europe reporting unit. Following this partial impairment, the reporting unit's carrying amount equaled the fair value.
The Company elected to perform a qualitative analysis as of the fourth quarter 2024 for the Europe reporting unit. Our analysis did not determine that it was more likely than not that the carrying value of the Europe reporting unit exceeded the fair value. During the fourth quarter 2024, we quantitatively determined that the fair value of our North America reporting unit exceeded its net carrying amount and no goodwill impairment existed. We determined that the fair value of our North America reporting unit would have to decline by less than 10% to be considered impaired.
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During the first quarter of 2025, the Company determined that a triggering event occurred, requiring an interim goodwill impairment test of its North America reporting unit as of March 29, 2025. This was due to factors that increased short-term volatility in sales and EBITDA volatility, reflecting anticipated economic headwinds, deterioration of market demand versus previous expectations, and uncertainty around how potential increases in inflationary pressures on imports will impact customer demand. These factors included a decrease in the US GDP growth consensus estimate for 2025 by approximately 40 basis points from the end of 2024. Further, the National Association of Homebuilders reported that single-family starts were projected to grow 70 basis points less than previously estimated, and multifamily starts were expected to decline 6.0% in 2025, down from a 3.5% decline cited in previous reports. Additionally, during the first quarter, we saw a continued decline in the market price of our common stock, resulting in a decrease in our market capitalization. The impairment test indicated a non-cash goodwill impairment charge related to the North America reporting unit of $137.7 million, which the Company recorded in the accompanying consolidated statements of operations during the first quarter of 2025. Following this impairment charge to our North America reporting unit, the fair values of both of our reporting units approximate their carrying value.
During the third quarter of 2025, the Company determined that a triggering event occurred, requiring an interim goodwill impairment test of its North America and Europe reporting units as of September 27, 2025. The end of the third fiscal quarter marks the conclusion of our generally heavier seasonal sales period, and our net sales during this period were negatively impacted by weaker than previously expected market demand in each of our reporting units. This was due to increased economic headwinds, further deterioration of market demand versus previous expectations as well as the impacts of continued elevated interest rates and inflationary pressures extending the time horizon for market demand recovery. Our European business also experienced lower than expected demand in some of our larger markets as well as inventory re-balancing that impacted purchasing from our larger customers. In addition, we were unable to realize previously expected base productivity in both of our reporting units contributing to lower than expected profitability levels. As a result of these factors, the Company updated its financial forecast for the North America and Europe reporting units to reflect current and anticipated macroeconomic conditions leading to reduced revenue growth expectations and profitability. As a result of our impairment tests, all the remaining goodwill related to both the North America and Europe reporting units was determined to be fully impaired, and a $196.9 million non-cash goodwill impairment charge was recorded in the accompanying consolidated statements of operations during the third quarter of 2025.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate both the positive and negative evidence that is relevant in assessing whether we will realize the deferred tax assets. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. This projected realization is directly related to our future projections of the performance of our business and management's planning initiatives at any point in time. As a result, valuation allowances are subject to change as proven business trends and planning initiatives develop.
The tax effects from an uncertain tax position can be recognized in the consolidated financial statements only if the position is more likely than not to be sustained, based on the technical merits of the position and the jurisdiction. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit and the tax related to the position would be due to the entity and not the owners. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. We apply this accounting standard to all tax positions for which the statute of limitations remains open. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
We file a consolidated federal income tax return in the U.S. and various states. For financial statement purposes, we calculate the provision for federal income taxes using the separate return method. Certain subsidiaries file separate tax returns in certain countries and states. Any U.S. federal, state and foreign income taxes refundable and payable are reported in other current assets and other current liabilities in the consolidated balance sheets as of December 31, 2025 and 2024. We record interest and penalties on amounts due to tax authorities as a component of income tax expense in the consolidated statements of operations. We have elected to account for the impact of GILTI in the period in which it is incurred.
The Company continues to monitor and evaluate legislative developments related to GloBE established by the OECD Pillar Two framework. Several countries in which the Company's subsidiaries operate have adopted those rules into legislation. The Company continues to evaluate impacts as further guidance is released.
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Contingent Liabilities
Contingent liabilities require significant judgment in estimating potential losses for legal and environmental claims. Each quarter, we review significant new claims and litigation for the probability of an adverse outcome. Estimates are recorded as liabilities when it is probable that a liability has been incurred, and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will materially exceed the recorded provision. Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple forecasts that often depend on judgments about potential actions by third parties such as regulators, and the estimated loss can change materially as individual claims develop.
Share-based Compensation Plan
We have share-based compensation plans that provide compensation to employees through various grants of share-based instruments. We apply the fair value method of accounting using the Black-Scholes option-pricing model to determine the compensation expense for stock options. The compensation expense for RSUs awarded is based on the fair value of the RSU at the date of grant. Compensation expense is recorded in the consolidated statements of operations and is recognized over the requisite service period. The determination of obligations and compensation expense requires the use of several mathematical and judgmental factors, including stock price, expected volatility, the anticipated life of the option, estimated risk-free rate, and the number of shares or share options expected to vest. Any difference in the number of shares or share options that vest can affect future compensation expense. Other assumptions are not revised after the original estimate.
The Black-Scholes option-pricing model requires the use of weighted average assumptions for estimated expected volatility, estimated expected term of stock options, risk-free rate, estimated expected dividend yield, and the fair value of the underlying common stock at the date of grant. We estimate the expected term of all stock options based on previous history of exercises. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock option. The expected dividend yield rate is 0% which is consistent with the expected dividends to be paid on common stock.
For PSUs issued prior to 2021, the number of PSUs that vest is determined by a payout factor consisting of equally weighted performance measures of Adjusted EBITDA and Free Cash Flow, each as reported over the applicable three-year performance period, and is adjusted based upon a market condition measured by our TSR over the applicable three-year performance period as compared to the TSR of the Russell 3000 index.
For PSUs issued from 2021 to 2024, the number of PSUs that vest is determined by a payout factor consisting of equally weighted pre-set three-year cumulative performance targets on ROIC and TSR. The fair value of the award is estimated using a Monte Carlo simulation approach in a risk-neutral framework to model future stock price movements based on historical volatility, risk-free rates of return, and correlation matrix.
For PSUs issued in 2025, the number of PSUs that vest is determined based on annual performance evaluations of Adjusted ROIC and Net Sales over three independent annual performance periods, with equally weighted performance measures of ROIC and Net Sales. Each metric is measured annually, and the cumulative earned PSUs may be modified, at the sole discretion of the Compensation Committee of the Board of Directors, at the end of the third year, by a three-year TSR-based adjustment at the end of the award period. This adjustment can range from a reduction of up to 10% to an increase of up to 10%, based on the Company's relative TSR compared to the Russell 3000 index. The fair value of the award is estimated using a Monte Carlo simulation approach in a risk-neutral framework to model future stock price movements based on historical volatility, risk-free rates of return, and correlation matrix.
We estimate forfeitures based on our historical analysis of actual stock option forfeitures. Actual forfeitures are recorded when incurred and estimated forfeitures are reviewed and adjusted at least annually.
Employee Retirement and Pension Benefits
The obligations under our defined benefit pension plans are calculated using actuarial models and methods. The most critical assumption and estimate used in the actuarial calculations is the discount rate for determining the current value of benefit obligations. Other assumptions and estimates used in determining benefit obligations and plan expenses include expected return on plan assets, inflation rates, and demographic factors such as retirement age, mortality, and turnover. These assumptions and estimates are evaluated periodically and are updated accordingly to reflect our actual experience and expectations.
The discount rate used to determine the benefit obligations was computed through a projected benefit cash flow model. This approach determines the discount rate as the rate that equates the present value of the cash flows (determined using that single rate) to the present value of the cash flows where each cash flows' present value is determined using the spot rates from the WTW RATE: Link 10:90 Yield Curve.
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The discountrate utilized to calculate the projected benefit obligation at the measurement date for our U.S. pension plan decreased to 5.41% at December 31, 2025, from 5.57% at December 31, 2024. Lowering the discount rate by 25 bps would increase the U.S. pension and post-retirement obligation at December 31, 2025, by approximately $4.0 million and would decrease estimated fiscal year 2026 pension expense by approximately $0.2 million. Increasing the discount rate by 25 bps would decrease the U.S. pension and post-retirement obligation at December 31, 2025, by approximately $3.8 million and would increase estimated fiscal year 2026 pension expense by approximately $0.1 million.
We determine the expected long-term rate of return on plan assets based on the plan assets' historical long-term investment performance, current asset allocation, and estimates of future long-term returns by asset class. Holding all other assumptions constant, a 100-bps increase or decrease in the assumed rate of return on plan assets would decrease or increase 2026 net periodic pension expense by approximately $1.5 million.
The actuarial assumptions we use in determining our pension benefits may differ materially from actual results because of changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions might materially affect our financial position or results of operations.
From time to time, we may execute transactions intended to reduce the volatility and long-term risk of our U.S. defined benefit pension plan such as one-time lump-sum election windows for eligible participants or the purchase of group annuity contracts from highly rated insurers when market conditions and plan fundamentals are favorable. These market conditions and plan fundamentals include interest rate levels, insurer pricing and capacity, plan funded status, PBGC premiums, and expected administrative costs. When a settlement occurs, GAAP requires immediate recognition in earnings of a portion of accumulated actuarial gains/losses proportional to the obligation settled. As a result, any such action may give rise to a non-cash pre-tax pension settlement charge recorded within other income, net, with a corresponding impact to accumulated other comprehensive income. Cash impacts depend on the structure of the transaction.
Capital Expenditures
We expect that our capital expenditures will be focused on supporting our cost reduction and efficiency improvement projects sustaining our current manufacturing operations. We are subject to health, safety, and environmental regulations that may require us to make capital expenditures to ensure our facilities are compliant with those various regulations.
Jeld-Wen Holding Inc. published this content on February 23, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 23, 2026 at 12:58 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]