Good morning. My name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the JELD-WEN Holding, Inc. Second Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Chris Teachout, Director of Investor Relations. Please go ahead.

Thank you. Good morning, everyone. We issued our earnings press release this morning and posted a slide presentation to the Investor Relations portion of our website which we will be referencing during this call. I’m joined today by Gary Michel, Chair and CEO; and David Guernsey, Executive Vice President. Before we begin, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our Forms 10-K and 10-Q filed with the SEC. JELD-WEN does not undertake any duty to update forward-looking statements including the guidance we are providing with respect to certain expectations for future results. Additionally, during today’s call, we will discuss non-GAAP measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measure calculated under GAAP can be found in our earnings release and in the appendix to this presentation. I would now like to turn the call over to Gary.

Thanks, Chris. Good morning, everyone and thank you for joining us. At JELD-WEN, we're in the midst of a multiyear journey, transforming the business to deliver consistent, profitable growth, expand margins and further enhance shareholder value through effective capital deployment. This year has been particularly challenging to deliver on our financial targets given the macroeconomic environment. To succeed, companies must adapt how they do business to overcome ever-changing headwinds. Our execution did not meet those requirements, nor was it indicative of the performance-driven culture and expectations we have at JELD-WEN. As the earnings release dated this morning, results came in below expectations for the quarter and we've adjusted the full year outlook to reflect first half performance and a continued challenging operating environment for the remainder of 2022. We know we have the right strategy, long-term macroeconomic fundamentals remain strong and our productivity initiatives are yielding benefits. But we must execute better and consistently deliver on our promises. As I'll describe in a few minutes, we have already taken significant actions to reduce costs and to help mitigate the earnings headwinds of the current operating environment and we're reviewing additional actions that will have a positive impact on our top and bottom lines. Before I provide that color, let me provide some context on this quarter's performance. Continued significant cost inflation and softening demand in certain geographies and channels impacted second quarter results more significantly than we anticipated. Cost inflation which totaled more than $30 million net of price actions continued to be the primary driver of adjusted EBITDA and margin weakness relative to prior year and our expectations. Demand in this quarter was mixed with total volume/mix down slightly from last year. We experienced particular softness within the North America and Europe retail channels and from lower volume mix…

Thank you, Gary and good morning, everyone. I'll begin with a review of our consolidated results for the second quarter. Please turn to Page 10. In the second quarter, we generated net revenue of $1.3 billion, an increase of 6.8%, primarily driven by 11% core revenue growth. The increase in core revenue was due to a 12% positive price realization and 1% volume/mix headwind. Second quarter adjusted EBITDA decreased 15.1% to $125.8 million. Adjusted EBITDA margin decreased 240 basis points with cost inflation from raw material, freight, labor and energy negatively impacting margins by approximately 380 basis points partially offset by positive productivity. Earnings per share and adjusted EPS were $0.52 and $0.57, respectively, compared to EPS and adjusted EPS of $0.60 and $0.59 a year ago. On Slide 11, you'll see a detailed breakdown of key drivers of revenue growth in the second quarter. Once again, price realization was strongest in North America at 14%, followed by Europe at 11%, while Australasia increased 8%, an acceleration compared to the first quarter. As Gary mentioned previously, we took additional price measures in each of our segments that will be fully realized during the third quarter. Volume/mix decreased 1%. North America volume/mix was flat in 2Q, while Europe and Australasia decreased to 2% and 4%, respectively. Please turn to Page 12 which shows the substantial raw material and freight inflation we faced over the past four quarters and the price increases we've implemented to help offset the impacts. Material and freight inflation was again greater than expected, driven primarily by metals, millwork and logs and lumber. Delayed price implementation within the retail channel impacted our ability to cover all these costs in the second quarter. However, price increases are now fully implemented and will be reflected in third quarter results. As…

Thank you, David. Before I cover the market outlook, I would like to provide an update on the divestiture process for our wood fiber building products business in Towanda, Pennsylvania. Last year, we decided that pursuing a divestiture was in the best interest of JELD-WEN and our shareholders. We have and will continue to cooperate with the court and the special master and his advisers to carry out an orderly sale of Towanda. Unlike a typical divestiture, we are in a legal process that has not concluded and is dictated by the court. In the meantime, Towanda is operating business as usual. I'm very proud of our fiber products team for putting customers first and operating the business. As we shared previously, we are fully prepared to meet our own door skin needs from other facilities when the divestiture is complete. Please turn to Page 16. In North America, heightened mortgage rates and increased economic uncertainty are likely to cause a continued slowdown in both residential new construction and repair and remodel activity in the near term. However, we expect the R&R market to remain more resilient over the longer term given the level of homeowner equity accumulation, age of the existing housing stock and homeowners increased focus on their homes. We anticipate continued solid demand within multifamily to provide some offset over the near term. In Europe, high inflation and economic uncertainty stemming largely from the war in Ukraine is impacting residential new construction and R&R activity, while commercial project work remains steady. Over the near term, the high degree of uncertainty is likely to cause a further slowing of activity. But like North America, we expect an underbuilt market and aging housing stock to drive increasing activity over the intermediate and longer term. In Australasia, demand for new…

[Operator Instructions] And your first question is from the line of John Lovallo with UBS.

The first one is, JEM has been in the process now for several years. Is there anything different in the strategy that you implemented in 2Q that could help execution become more consistent? Or is it sort of just more of the same blocking and tackling?

Thanks for the question. Yes, we've been deploying JEM now for several years. We got a number of model value streams that are definitely showing outsized performance compared to places where we're not quite as far along. So one of the things with JEM is continuing to accelerate our deployment across the entire enterprise, using the tools definitely makes a difference in how we perform. Because of JEM, we've been able to increase capacity and throughput at certain sites, those model sites which has allowed us to accelerate our rationalization and modernization programs, taking older legacy plants off-line and reducing cost -- reducing our core cost by taking those factories offline. And shutting down that capacity in exchange for lower cost more productive capacity elsewhere. Without JEM, I don't think we would be able to do that as quickly. And through the second quarter and into the second half, we're actually accelerating some of that work. We previously announced a couple of closures that JEM really allowed us to do that. But the net result is better throughput, better cost structure in fewer facilities which JEM is really providing us that opportunity to do.

Okay, that's helpful. And then are you concerned at all that industry pricing discipline maybe especially on the interior doors could fade here as volume moderates?

Well, it’s been a number of years to get the – to get price to match value in that marketplace. We clearly are watching that. But a lot of what we’re seeing is – certainly, we saw softness in the retail side. Pricing still continues to hold both there and in the builder channel. Our backlogs are really strong in our traditional and builder channel. And a lot of that price is already built into that backlog. So we would expect to see that for the remainder of the year.

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

I just wanted to ask about the assumptions around the revenue guide. You said you expect volume/mix to be flat to slightly down for the year which I think that assumes trends are relatively consistent with the first half of the year. I know the comps maybe eased somewhat. But at the same time, as you mentioned, you’ve clearly got changes in the market. I’m wondering if you could provide a little more color around that outlook in the second half, sort of your confidence in continuing at sort of these relatively consistent trends, maybe any detail around June or July would be helpful there and sort of views on customer inventory. So I know there’s a lot in there but any color on the volume outlook.

Well, certainly, customer inventory particularly in the traditional channel has been adjusting a bit. But the good news for us is that we've got pretty significant backlogs which helps us gauge in a pretty accurate way where we think volumes are going to land in the next 90 days or so. So we're looking at that and feel pretty comfortable about that, along with some of the consistency that we're seeing from the builder channels. So with all of that in place, I think we're in a reasonably good spot particularly as we lap the third quarter from last year which was a fairly weak quarter for us.

Got it. Okay. Understood. That’s helpful. And then secondly, on the cost savings, presumably some of these savings might be permanent, I guess, given the closures and exit. I don’t want to put words in your mouth. But I guess I’m curious if you could, number one, maybe quantify the savings; and number two, kind of speak about what might be permanent, what could be temporary and if there’s opportunity to even push harder, be more aggressive on some of these cost savings if the market ends up weakening further here?

Yes. Sure, Matt. We've taken some obviously permanent actions and plant closures that we previously announced really in all three segments in the second quarter. We're continuing, as I said earlier, to look at accelerating those rationalization actions with additional permanent cost out where we can. A lot of that based on the fact that we've been able to increase our throughput and our capacity in other plants where we've deployed JEM and are seeing great results and expect that to continue. In addition to that, we've taken swift action on other costs. David referred to them as austerity programs. But all the normal types of costs that we would take out, including through and including some personnel but also other costs that for the short term are discretionary. We have more in line that we are deploying in the third quarter and second half and we will continue to do that as we're capable of doing that. It's a matter of just time and resource to get that done.

A lot of the initiatives that we put into place from a cost standpoint, we put into place coming out of the first quarter and began to gain some momentum through the second quarter. And particularly the permanent initiatives will start to gain a bit of steam as we head through the third and the fourth quarter.

Your next question is from the line of Michael Rehaut with JPMorgan.

First, I just wanted to get a sense – and apologies if I missed it before. You detailed several actions earlier driven by JEM around some a couple of plant closures and actions in the U.K. that I believe you said occurred in the second quarter and you’ll see the full run rate of those savings in the third quarter. I was hoping just to get a rough sense of what those dollar savings were – should we expect and – on an annualized basis? And if you expect to achieve the full run rate of that for the entirety of 3Q or by 3Q end?

So I think what we'll see with regard to that is some of the plant closures, for instance, Melton, will start to see towards the end of 3Q when we have final closure. Some of the other plant adjustments that we've made, we'll see at the beginning -- or already seeing the benefits at the beginning of 2Q. For sure, by the time we get into 4Q, we'll see full run rate against all of those initiatives.

And could you give us a sense of what the dollar savings would be from those actions? The EBITDA?

Yes. So I would say, in total, the kind of some total of the initiatives that we put into place is in the neighborhood of $75 million on an annualized basis. So we're actually in Q2 -- annualized basis, yes, sorry about that, on an annualized basis and we'll start to see full run rate against that again halfway through the third quarter and into the fourth quarter.

Great. And on price cost, also just wanted to get a sense. The slide that you posted is very helpful kind of detailing price against cost earlier in the presentation. It does show kind of a rough offset on a dollar basis but it would appear not on a margin basis. So when you think about becoming – you mentioned price/cost becoming a tailwind in 3Q and 4Q. Just wanted to clarify that you expect that tailwind to be on a margin basis. And if so, just confirming for both quarters as well as if you have any sense of the degree of magnitude, that would be helpful as well.

Yes. So with regard to the margin impact, kind of that price cost and you've got it clearly all the math there, you get all of the revenue and offset 100% by inflation. And that's had about 100-ish basis point impact on margins for us overall. We'll see that rate reasonably consistent as we get into the third quarter and the fourth quarter, except that, that price/cost dynamic is much closer in the third quarter than the fourth quarter and helps -- will help us kind of with 100-ish basis point improvement in sequential performance from the second half versus the first half.

So a little bit of both. We’ll still see the depression from the kind of from the significant impact of that pricing substantially offset by the inflation, although the relationship and that pricing and inflation will drive some benefit in the second half versus the first half.

The next question is from the line of Stanley Elliott with Stifel.

Could you talk a little bit about how you're thinking about the European exposed manufacturing with concerns over energy utilities over there. What sort of impact do you see? Also, have you all thought or have they told you all if you will be "essential manufacturing? I'm just trying to get a sense for any sort of disruptions that we potentially could see.

So as we went through COVID, we were considered essential manufacturing. I wouldn’t see any reason why under energy supply challenge, we wouldn’t be considered essential manufacturing. So from that standpoint, we feel reasonably comfortable. Our European leadership tells us that he’s reasonably comfortable with kind of what’s happening from an energy reserve standpoint within Europe. And to that end, I think we’ll be in a reasonably good position kind of buffer the cost of that energy over the foreseeable future.

We've been able to take -- take price in certain markets. We also have some strength in certain markets as well where we continue to see growth. We continue to see strong markets. France, Central Europe, for example, continue to be strong and contributing in the region. Obviously, we have to offset those utility costs and then inflation and we'll continue to monitor that. But just like we mentioned earlier, our discussion of rationalization and modernization, the deployment of JEM, etcetera, hits Europe just like it would anywhere else in the network.

And secondly, you pushed out some capital projects. I mean I understand the markets are slowing. But any sense or kind of flavor on what’s getting pushed out, maybe even regionally? Just trying to look at that versus all the implementation that you’re still working on with some of the JEM initiatives.

Yes. I think it's not that so much that things are getting pushed out. I think it's really just what our ability and capability has been on an ongoing basis. A lot of the JEM projects, particularly in more mature JEM deployed facilities don't cost us a lot. It's kind of a -- one of the benefits of doing JEM is at some point, you get this virtuous cycle of continuous improvement without as much investment in capital. Obviously, we're not skimping on anything that we've talked about in terms of growth. We continue to invest in our new products and new category growth that we've been talking about. And we talked about that, a lot of that being beneficial here in the second half as well and that continues to be true. So really, it's more just about where we are on a year-to-date run rate on projects and the projects that are before us and the ability to pull those off in the remainder of the year. But I really wouldn't point to anything in particular that's a slowdown or a pushout of any of our growth strategies that we've already talked about.

Your next question is from the line of Deepa Raghavan with Wells Fargo Securities.

Can you talk about your backlog? I'm looking specifically at any potential risk of cancellation given that price increases are ongoing. I'm assuming you have some exponential costs out there but also the demand environment is softening at the same time. Relatedly, did I hear you say backlogs are up 50% year-on-year?

Yes. We have backlogs up 50% in the traditional channels in North America.

Yes. So Deepa, what we saw is we've seen some slowdown in the retail channels. Sometimes that's a little bit of an overreaction in the beginning and then comes back later. As you know, R&R markets which tend to be served through retail tend to be more resilient even in slowdowns. So we'll be watching that one. But as far as the traditional and builder channel, we actually saw pretty steady order flows through the quarter and that's really where our backlog exists. And we see that pretty well -- that's what's going to carry us into the second half. We've got those backlogs there. We've really seen no order cancellations due to pricing. And as our lead times have really come down to back to normal, quite frankly, we're seeing those shipments happen.

Okay. You mentioned investing in new projects – products even now with a focus on increasing profitability. Can you talk about if your strategy has changed to focus on the lower end of the chain, given that we may be going into a slowdown and some of the consumers are probably trading down at this point in time. How are you thinking about your investments, your R&D, your new product innovation, etcetera, at this time?

Well, we continue to -- first of all, we've talked about the second half being the beginning of the payout of some of the innovation and new products that we've put out there. First of all, on capacity expansion in our VPI multifamily business, that continues to go very, very well. We've opened our Statesville, North Carolina plant to serve the East Coast. Customers bring that -- nationalizing that product line. We've had great reception to that and we're continuing to add capacity in Statesville to meet what is a strong backlog and continuing order demand. We expect multifamily to continue to be strong for a while. Likewise, we started commercially shipping our Auraline composite window product in the second quarter. July orders are very, very strong for that product and ramping. And we will continue. It’s a brand-new product category for us and one that’s kind of – it’s really a step-up product. So we think that that’s going to continue to be strong and we’re seeing that in the order take up that we’re seeing and very, very excited about that. Likewise, our exterior fiberglass product, while maybe a little bit more geared towards R&R. We’re seeing that capacity expansion being utilized as well with continued growth that we’ve been talking about for the last several quarters. So all of those are margin accretive to our lineup and in growth areas that we think will continue even through a slowdown. They’re not necessarily – they’re certainly not big box retail focused in their positioning. That being said, we’ve got a full breadth of products across the range and we’ll continue to monitor where the order flows are. But right now, our traditional builder channels are pretty strong.

Your next question is from the line of Susan Maklari with Goldman Sachs.

My first question is building on the commentary that you just gave in terms of mix. You've been seeing an improvement in the mix over the last couple of quarters. Is it reasonable to assume that the mix is continuing to improve and will continue to come through in the back half?

Yes. There is a continued improvement in mix kind of built into our outlook in the back half and driven by -- we've talked about softness in retail offset by some strength in the traditional channels and that would naturally mix up.

Okay. All right. My second question is, as we do think about the shift that’s happening in the underlying macro. And obviously, your efforts to continue to put pricing through to offset the inflation. Are you seeing any changes in the elasticity of demand across either retail or the wholesale traditional channels? And maybe anything geographically too, as you think about North America or the U.S. versus Europe?

So we've seen -- so in the U.S., as I mentioned earlier, we saw some retail slowing. Again, that's maybe as much around adjusting inventories and order flows in as it is, what's actually happening on the R&R side, on the outsell side. On the builder side, the traditional channel side, we saw pretty steady order demand through the quarter and we expect that to continue here in North America. In Europe, again, we talked about some strong markets as well as some markets that have some uncertainty. So again, France, Central Europe, very strong, continues strong. The retail market there slowing as well but we see some of our commercial business there fairly steady. And then in Australasia, really have been on an upswing in terms of order demand. It's as much there about a little bit of a different cycle where as much there about builders being able to have enough labor to build the orders that they have. But our backlogs are strong and our order loads are fairly strong there. And we expect as they stabilize out of their COVID absenteeism, they had some flu issues in the quarter as well. We expect that to continue to be a bright spot for us in the next several quarters.

Your next question is from the line of Mike Dahl with RBC Capital Markets.

Gary, I want to ask one question related to Towanda. I know you’re still limited in what you can say. But your comment around continuing to have sufficient door skin capacity from your other plants. I wanted to get a little more clarity on that because obviously, Towanda has been your biggest facility. I think at one point, it may have been 1/3 of your facings. So I know you’ve had some productivity initiatives at other plants. How much of the ability to service the lost skin capacity from Towanda is coming from true increases at your other plants versus as you’ve gotten further along in this process having a more solidified plan for potentially a long-term supply agreement with the future owner of Towanda?

Well, there's always the possibility of a future supply agreement with future owner. We don't know who that is or will be at this point or what the terms of that might be but that's always a possibility. But I will tell you that we've had a lot of time to prepare for this and we've been preparing ourselves with our other internal plants to be in a position to serve ourselves, our needs, both currently and for any growth that we might see. And we feel like we're in pretty good shape to do that.

Got it. Okay. And then one other – my second one is more of a housekeeping item. There was a $21 million other income line item in the quarter. It looks like that was not backed out of adjusted EBITDA or income. Can you just give us a little more detail on what that was and whether that’s something that we should think about some continued impacts in the second half from it?

Yes. It was a combination of items. We had a real estate sale for some real estate that we had in Mexico. There was -- which obviously is nonrecurring but there was actually some favorability on our FX hedging that would reasonably be expected to occur considering the strength of the dollar and the situation that we're in, coupled with a few onetime cost adjustments that we continue to -- we continue to look for opportunities, particularly in the environment that we're in to execute something similar as we would get into the back half of the year.

Your next question is from the line of Josh Chan with Baird.

I guess if you look at your new guidance range versus the old guidance range, could you just sort of bucket the various items that changed kind of by order of importance? I would expect you probably have a good visibility in the pricing but so was inflation worse? The demand environment and then internal efficiency? Could you just kind of help us see…

Yes, I think the way to look at it is -- yes, the majority of the change is really volume related. The rest is a little bit of continued inflation. And then some of the costs associated -- really timing of the costs associated with that volume coming out. So if you look at kind of first half, second half, clearly, our margin is better in the second half than the first half markedly. And that's a benefit of the price deployed and the actions that we've taken already on the cost side. So again, mostly volume, some inflation and some of the cost and inefficiencies that are related to that volume facedown.

All right. And then on sort of your macro thoughts in North America, with R&R being more resilient and new construction maybe being softer which makes sense. That’s kind of the opposite of what you’re seeing in terms of the channels, I guess, with traditional being stronger. So could you just kind of reconcile that and how you see the channel are playing out as we go forward?

Yes. I think as our -- in the short term, we've seen retail softness earlier here, certainly slowed in the second half. We tend to see a more quicker reaction in the retail. And then it kind of climbs back as the inventories and the lead times kind of settle out. So we'll probably see that kind of over the midterm and long term, where R&R will settle out as being more resilient in a downturn. Right now, we continue to have strong orders and backlog from our builder channel partners which tends to be in our traditional channels. And again, some changes there in inventory positions but most of that is to order. So those backlogs will continue to carry us certainly in the third quarter and through to the end of the year. We'll obviously be monitoring when we see that slowdown of order rates in the builder channel but we certainly have not experienced that yet.

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

This is Phil Ng. Gary, so it sounds like orders have remained pretty steady which is a little surprising, especially in Europe. Just curious how much line of sight do you have? And you talked about backlogs being pretty extended on the builder side. How extended is that? Just give us some comfort around that just because I’ve always thought your business is a little more shorter cycle in nature.

Yes. So I think just to clear up a little bit. We've seen -- we saw some softness in orders in general in Europe but we have pockets of strength still in France and in Central Europe. Our commercial orders tend to be pretty steady as well. That's our project business. Where we've seen the weakness has been in retail in Europe and in some of the Northern Europe markets where there's some uncertainty related to -- primarily to Ukraine. In North America, again, we saw pretty steady order loads in our traditional channel but softness in retail. And then orders in Australasia, fairly strong for the builder market and for R&R with a little bit of choppiness there still as they're coming out of some of the COVID absenteeism and availability of labor, primarily for builders to build the orders that they have.

Got you. That’s helpful, Gary. I mean certainly, inflation slower growth is out of control. But I think in your prepared remarks, you mentioned that some operational challenges, not meaning your intended target to turn like. Can you expand on those issues? How much of that is behind you? And if we do have a weaker backdrop, call it, in 2023, are there any obvious higher cost footprint that you have or you could take out and see a bigger cost saving coming through perhaps next year if you needed to?

Yes. I think the real thing, there's not operational issues or hiccups in our own operations. We were able to meet demand pretty well. Really, the difference was inflationary costs that were higher than we expected. And that we probably could have performed against better. We've got some pretty active supply chain actions underway which will help us both on the cost and on the availability side, quite frankly and we're exercising those. As far as rationalization goes of our footprint, we've been working on that for a number of years. In the second quarter, we took some action to take some legacy plants offline. That's a permanent cost out really in all three regions, we've got more of that to come. And again, it's really a benefit of the work that we've done by deploying JEM, improving capacity and cost structure in our model plant and being able to take additional plants offline. That's really where we're going to get the best cost savings and best structural change. I've said all along, I've said this for the last few years, in a downturn, these are the types of activities you would do anyway. And we have the benefit of actually having them teed up and being able to accelerate that program rather than come up with it from scratch.

Your next question is from the line of Truman Patterson with Wolfe Research.

Just wanted to follow up on one of John's questions. In North America, I think you all had some pretty robust pricing effective in June. I'm just trying to understand if the expected realization of that price hike, given some of the retail softness you all mentioned, are you still -- are you expecting it to be as effective as maybe last year's announcements? Or are we starting to see pricing power wane a little bit?

I think we'll see -- well, the pricing that's out and deployed is what we'll be seeing in the second -- benefit of in the second half. So that's already in -- there's no additional pricing that we're expecting in the second half guide at this point. It's all been deployed and that's what we expect. So I -- obviously, there's -- it's a matter of what your volume -- what the volume is and the amount of the price but that's built into that guide.

We've accounted for a kind of a reasonable level of competitiveness in terms of the impact on our pricing in the second half. But to Gary's point is the outlook and the guide that we've given to all of you at this particular point in time assumes the increases that we have in place, right, either way through the back half of the year.

Okay. And then free cash flow in the first half, I think, was about negative $200 million. I'm just hoping you all -- given the new updated guidance, if you all can give an update of where that might in for the full year? And I'm really thinking is there any chance to maybe work down the inventory or net working capital levels? And if I heard you correctly in the prepared remarks, it sounds like perhaps near to intermediate term, share repo might be put on hold and you will be focused on leverage going forward?

Thank you for asking and answering my question. Yes, the working capital is a significant focus. There is opportunity, the way I see it in our working capital for about half a turn, it’s about $200 million. And indeed, we’re going to – we’ll continue to be opportunistic from a share repurchase standpoint. But at the current time, we have a really significant focus on improving the overall leverage. And that’s a big focus for us to focus to get back down to kind of that targeted leverage through the back half of the year and then into 2023.

And today's final question is from the line of Steven Ramsey with Thompson Research Group.

I wanted to think about Australia R&R market push. Can you maybe share where you are on this journey? Where you are now versus one to two years ago? And as you scale up the R&R business, how does this impact margins for the segment now and in the future?

So, thanks for the question. We've had the strategy -- for those that are not familiar, our Australasian business has been primarily focused towards the new construction -- towards new construction, home new construction in Australia. And one of our strategies was to improve our penetration into the repair and remodel which is a natural extension. If we're in the new build, we should be able to do that. We’ve made some investments over the last several years in showrooms and capabilities within the R&R channel and we’ve seen significant improvement in our mix towards R&R. Just like in our other markets, it’s margin accretive and we expect as this cycle continues in our strategy to grow that our growth in R&R will expand. So we’ve definitely made some improvements there and we’ll continue to report out on the mix change as we go forward as the cycle improves.

And this does conclude the Q&A session of today's call. I will now turn the call to Gary Michel for closing remarks.

So again, thank you for joining us this morning and for all your questions. We look forward to sharing our progress on the third quarter and the second half as our cautioned commercial actions yield results. Our strategy, long-term macro fundamentals and our rationalization initiatives are yielding benefits. Our execution against this backdrop will deliver a stronger second half. Thank you again for your interest in JELD-WEN. Look forward to talking to you all soon.

Ladies and gentlemen, this does conclude the JELD-WEN Holding, Inc. second quarter 2022 earnings conference call. Thank you for participating. You may now disconnect.