JELD-WEN Holding Inc

Previous wording

This MD&A contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” in Item 1 -Business and Item 1A -Risk Factors in 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 Factors and included elsewhere in this Form 10-K.

Current wording

This MD&A contains forward-looking statements that involve risks and uncertainties. Refer to “Forward-Looking Statements” in Item 1 -Business and Item 1A -Risk Factors in 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 Factors included in this Form 10-K.

Previous wording

We operate manufacturing and distribution facilities in 15 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.

Current wording

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.

Previous wording

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. Financial information related to our business segments can be found in Note 14 -Segment Informationof our financial statements included elsewhere in this Form 10-K.

Current wording

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.

Previous wording

During 2021, the Company ceased the appeal process for its litigation with Steves & Sons, Inc. (“Steves”). As a result, we are required to divest the Company’s Towanda, PA operations (“Towanda”). Assuming customary closing conditions are met and subject to court approval, we believe the divestiture will occur within the next twelve months and qualifies for held for sale accounting. We have reclassified certain assets and liabilities to assets held for sale in the accompanying financial statements. We plan to continue reporting Towanda within our North America operations until the divestiture is finalized. For additional information on the Steves litigation and divestiture, see Note 25 -Commitments and Contingenciesof our financial statements included elsewhere in this Form 10-K.

Current wording

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. As of December 31, 2024, and prior to the court-ordered divestiture closing, we believed the court-ordered divestiture would occur within the next twelve months and qualifies for held for sale accounting. We have reclassified certain assets and liabilities to assets held for sale in the accompanying financial statements. We have reported Towanda within our North America operations through 2024. Refer to Note 25 -Commitments and Contingencies included in this Form 10-K for more information on the Steves litigation and court-ordered divestiture.

Previous wording

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. See Note 2 - Discontinued Operations of our financial statements included elsewhere in this Form 10-K.

Current wording

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 included in this Form 10-K for more information.

Previous wording

•interest rate fluctuations (including mortgage and credit card interest rates) and the availability of financing for our customers and consumers;

Current wording

•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;

Previous wording

We incur substantial freight and duty costs to 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 have risen significantly due to a number of 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 attempt to mitigate some of these cost increases through various internal initiatives and to pass a substantial portion of these increases to our customers; however, we may not realize the intended results within the intended timeframe.

Current wording

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.

Previous wording

Working capital fluctuates throughout the year and is affected by 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 usually 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 a number of 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.

Current wording

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 a number of 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.

Previous wording

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. See 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.

Current wording

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.

Previous wording

•other sales, including sales of trim board, glass, hardware and locks, door skins, window screens, and miscellaneous installation and other services. We also sell molded door skins to certain 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.

Current wording

•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.

Previous wording

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. See Item 7A -Quantitative and Qualitative Disclosures About Market Risk-Raw Materials Risk.

Current wording

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.

Previous wording

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. The majority of our products are shipped by third-party carriers.

Current wording

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 the majority of our products.

Previous wording

SG&A expenses consist primarily of research and development, sales and marketing, and general and administrative expenses.

Current wording

SG&A expenses primarily consist of research and development, sales and marketing, and general and administrative expenses.

Previous wording

Research and Development. Research and development expenses consist primarily of personnel expenses related to research and development, consulting and contractor expenses, tooling and prototype materials, and overhead costs allocated to such expenses. Substantially all of our research and development expenses are related to developing new products and services and improving our existing products and services. To date, research and development 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.

Current wording

Research and Development. Research and development expenses consist primarily of personnel expenses related to research and development, consulting and contractor expenses, tooling and prototype materials, and overhead costs allocated to such expenses. Substantially all our research and development expenses are related to developing new products and services and improving our existing products and services. To date, research and development 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.

Previous wording

Goodwill impairment consists of goodwill impairment charges associated with our Europe reporting unit in the year ended December 31, 2022. For more information, refer to Note 6 -Goodwillof our consolidated financial statements included in this Form 10-K.

Current wording

Goodwill impairment consists of goodwill impairment charges associated with our Europe reporting unit during the years ended December 31, 2022 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 -Goodwill included in this Form 10-K for more information.

Previous wording

Restructuring charges, net consist primarily of all salary-related severance 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 consist of accelerated depreciation and amortization of assets due to changes in asset useful lives.

Current wording

Restructuring 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 consist of accelerated depreciation and amortization of assets due to changes in asset useful lives. Refer to Note 19. Restructuring and Asset-Related Charges to our consolidated financial statements included in this Form 10-K for more information.

Previous wording

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. For additional details, see Note 12 -Long-Term Debtof our financial statements for the year ended December 31, 2023 included elsewhere in this Form 10-K.

Current wording

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, Net and Note 12 -Long-Term Debt to our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Other income, net, includes income and losses related to various miscellaneous non-operating expenses. For more information, refer to Note 22 - Other Income, Netof our consolidated financial statements included in this Form 10-K.

Current wording

Other income, net, includes income and losses related to various miscellaneous non-operating expenses. Refer to Note 22 - Other Income, Net to our consolidated financial statements included in this Form 10-K for more information.

Previous wording

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 of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. For more information, refer to Note 15 -Income Taxesto our consolidated financial statements included in this Form 10-K.

Current wording

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 Taxes to our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Gross Margin– Gross margin decreased $37.0 million, or 4.5%, to $785.9 million in the year ended December 31, 2022 from $822.9 million in the year ended December 31, 2021. Gross margin as a percentage of net revenues was 17.3% in the year ended December 31, 2022 and 19.7% in the year ended December 31, 2021. The decrease in gross margin percentage was due primarily to the timing differences between increased input costs and our pricing actions in our end markets.

Current wording

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.

Previous wording

SG&A Expense– SG&A expense increased $49.6 million, or 8.2%, to $654.1 million in the year ended December 31, 2022 from $604.5 million in the year ended December 31, 2021. SG&A expense as a percentage of net revenues decreased to 14.4% in the year ended December 31, 2022 from 14.5% in the year ended December 31, 2021. The increase in SG&A expense was primarily due to increased variable compensation expenses, self-insurance costs, and sales and marketing expenses, partially offset by decreased legal and professional fees.

Current wording

SG&A Expense– SG&A expense 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 expense 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 expense was primarily due to decreased performance-based variable compensation expense partially offset by increased professional fees, including non-recurring transformation journey expenses.

Previous wording

Goodwill Impairment– Goodwill impairment charges of $54.9 million in the year ended December 31, 2022 relate to goodwill impairment charges for our Europe reporting unit. For further information, refer to Note 5 -Goodwill of our consolidated financial statements included in this Form 10-K.

Current wording

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 –Goodwill to our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Goodwill Impairment– Goodwill impairment charges of $54.9 million in the year ended December 31, 2022 relate to goodwill impairment charges in our Europe reporting unit. For further information, refer to Note 6 -Goodwill of our consolidated financial statements included in this Form 10-K.

Current wording

Goodwill Impairment– Goodwill impairment charges of $54.9 million in the year ended December 31, 2022, relate to goodwill impairment charges in our Europe reporting unit. Refer to Note 6 –Goodwill of our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Restructuring and Asset Related Charges– Restructuring and asset related charges of $35.7 million in the year ended December 31, 2023 increased 102.8% from $17.6 million in the year ended December 31, 2022. The increase in restructuring charges was primarily due to an increase in charges incurred to close certain manufacturing facilities in our North America segment. For more information, refer to Note 19 - Restructuring and Asset Related Chargesof our consolidated financial statements included in this Form 10-K.

Current wording

Restructuring and Asset Related Charges– Restructuring and asset related charges of $35.7 million in the year ended December 31, 2023, increased 102.8% from $17.6 million in the year ended December 31, 2022. The increase in restructuring charges was primarily due to an increase in charges incurred to close certain manufacturing facilities in our North America segment. Refer to Note 19 - Restructuring and Asset-Related Charges to our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Interest Expense, Net– Interest expense, net, decreased $10.2 million, or 12.4%, to $72.3 million in the year ended December 31, 2023 from $82.5 million in the year ended December 31, 2022. The decrease was primarily due to higher interest income from interest rate derivatives, the redemption of our Senior Secured Notes and partial redemption of our Senior Notes, and decreased borrowings on our Revolving Credit Facilities during the year ended December 31, 2023, partially offset by an increase to the cost of borrowing on our variable rate Term Loan Facility.

Current wording

Interest Expense, Net– Interest expense, net, decreased $10.2 million, or 12.4%, to $72.3 million in the year ended December 31, 2023, from $82.5 million in the year ended December 31, 2022. The decrease was primarily due to higher interest income from interest rate derivatives, the redemption of our Senior Secured Notes and partial redemption of our Senior Notes, and decreased borrowings on our Revolving Credit Facilities during the year ended December 31, 2023, partially offset by an increase to the cost of borrowing on our variable rate Term Loan Facility. Refer to Note 21 -Interest Expense, Net of our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Loss on Extinguishment of Debt– The $6.5 million loss on extinguishment of debt is related to the redemption of our Senior Secured Notes and partial redemption of our Senior Notes during the year ended December 31, 2023. Refer to Note 12 - Long-Term Debtof our consolidated financial statements included in this Form 10-K.

Current wording

Loss on Extinguishment of Debt– The $6.5 million loss on extinguishment of debt is related to the redemption of our Senior Secured Notes and partial redemption of our Senior Notes during the year ended December 31, 2023. Refer to Note 12 -Long-Term Debt of our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Other Income, Net– Other income, net decreased $27.7 million, or 51.9%, to $25.7 million in the year ended December 31, 2023 from $53.4 million in the year ended December 31, 2022. Other income, net in the year ended December 31, 2023 primarily consisted of recovery of the JW Australia transition services costs incurred of $8.3 million, income from the refund of deposits from antidumping duties of $7.0 million, an ERC from the U.S. government of $6.1 million, recovery of cost from interest received on impaired notes of $3.5 million, and income from short-term investments and forward contracts related to the JW Australia divestiture of $3.1 million, partially offset by pension expense of $6.5 million and a $4.3 million settlement loss associated with our U.S. defined benefit pension plan. Other income, net in the year ended December 31, 2022 primarily consisted of the recovery of cost from interest received on impaired notes of $14.0 million, legal settlement income of $10.5 million, reimbursements from governmental assistance and insurance of $8.0 million, pension income of $4.9 million, credit for overpayments of utility expenses of $2.0 million, and foreign currency gains of $1.0 million.

Current wording

Other Income, Net– Other income, net decreased $27.7 million, or 51.9%, to $25.7 million in the year ended December 31, 2023, from $53.4 million in the year ended December 31, 2022. Other income, net in the year ended December 31, 2023, primarily consisted of recovery of the JW Australia transition services costs incurred of $8.3 million, income from the refund of deposits from antidumping duties of $7.0 million, an ERC from the U.S. government of $6.1 million, recovery of cost from interest received on impaired notes of $3.5 million, and income from short-term investments and forward contracts related to the JW Australia divestiture of $3.1 million, partially offset by pension expense of $6.5 million and a $4.3 million settlement loss associated with our U.S. defined benefit pension plan. Other income, net in the year ended December 31, 2022, primarily consisted of the recovery of cost from interest received on impaired notes of $14.0 million, legal settlement income of $10.5 million, reimbursements from governmental assistance and insurance of $8.0 million, pension income of $4.9 million, credit for overpayments of utility expenses of $2.0 million, and foreign currency gains of $1.0 million. Refer to Note 22 - Other Income, Net of our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Income Taxes– Income tax expense was $63.3 million and $18.0 million in the years ended December 31, 2023 and December 31, 2022, respectively. The effective tax rate in the year ended December 31, 2023 was 71.5% compared to 59.6% in the year ended December 31, 2022. The effective tax rate increased primarily due to the impacts of the $32.7 million net valuation allowance recorded in the year ended December 31, 2023, partially offset by the $54.9 million non-deductible goodwill impairment charge recorded for the year ended December 31, 2022 not recorded in the year ended December 31, 2023. For more information, refer to Note 15 -Income Taxesof our consolidated financial statements included in this Form 10-K.

Current wording

Income Taxes– Income tax expense was $63.3 million and $18.0 million in the years ended December 31, 2023, and December 31, 2022, respectively. The effective tax rate in the year ended December 31, 2023, was 71.5% compared to 59.6% in the year ended December 31, 2022. The effective tax rate increased primarily due to the impacts of the $32.7 million net valuation allowance recorded in the year ended December 31, 2023, partially offset by the $54.9 million non-deductible goodwill impairment charge recorded for the year ended December 31, 2022, not recorded in the year ended December 31, 2023. Refer to Note 15 -Income Taxesof our consolidated financial statements included in this Form 10-K for more information.

Previous wording

Gain on Sale of Discontinued Operations, net of tax– The $15.7 million gain on sale of discontinued operations, net of tax is related to the July 2, 2023 sale of JW Australia. Refer to Note 2 - Discontinued Operationsof our consolidated financial statements included in this Form 10-K.

Current wording

Gain on Sale of Discontinued Operations, net of tax– The $15.7 million gain on sale of discontinued operations, net of tax is related to the July 2, 2023, sale of JW Australia. Refer to Note 2 - Discontinued Operationsof our consolidated financial statements included in this Form 10-K for more information.

Previous wording

We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding 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, net; and certain special items consisting of non-recurring net legal and professional expenses and settlements; goodwill impairment; restructuring and asset related charges; other facility closure, consolidation, and related costs and adjustments; M&A related costs; net (gain) loss on sale of property and equipment; loss on extinguishment of debt; share-based compensation expense; pension settlement charges; non-cash foreign exchange transaction/translation (income) loss; and other special items. 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.

Current wording

We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding 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; M&A related costs; 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.

Previous wording

We have two reportable segments in our continuing operations, organized and managed principally by geographic region: North America and Europe. We report all other business activities in Corporate and unallocated costs.

Current wording

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.

Previous wording

(1)Income tax expense in our Europe segment includes an increase in valuation allowance against net operating loss carryforwards of $30.0 million. Refer to Note 15 - Income Taxesof our consolidated financial statements for further information.

Current wording

(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.

Previous wording

(2)North America depreciation and amortization expense includes accelerated depreciation of $9.1 million from reviews of equipment capacity optimization. Corporate and unallocated depreciation and amortization expense includes software accelerated amortization of $14.1 million for an ERP system that we intend to not utilize upon completion of the JW Australia Transition Services Agreement period.

Current wording

(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.

Previous wording

(1)Income tax expense in Corporate and unallocated costs includes the tax impact of U.S. Operations.

Current wording

(1)Income tax expense in Corporate and unallocated costs in the year ended December 31, 2022, includes the tax impact of U.S. Operations.

Previous wording

(1)Adjusted EBITDA from continuing operations is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA from continuing operations, see Note 14 -Segment Information to our financial statements included in this Form 10-K.

Current wording

(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.

Previous wording

(1)Adjusted EBITDA from continuing operations is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted EBITDA from continuing operations, see Note 14 -Segment Informationof our financial statements included in this Form 10-K.

Current wording

(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.

Previous wording

As of December 31, 2023, we had total liquidity (a non-GAAP measure) of $750.6 million, consisting of $288.3 million in unrestricted cash, $462.3 million available for borrowing under the ABL Facility, compared to total liquidity of $575.2 million as of December 31, 2022 (on a continuing operations basis and excluding JW Australia). The increase in total liquidity was primarily due to both higher cash balances and lower borrowings on our ABL Facility at December 31, 2023 compared to December 31, 2022.

Current wording

As of December 31, 2024, we had total liquidity (a non-GAAP measure) of $566.7 million, consisting of $150.3 million in unrestricted cash, $416.4 million available for borrowing under the ABL Facility, compared to total liquidity of $750.6 million as of December 31, 2023. The decrease in total liquidity was primarily due to lower cash balances at December 31, 2024, compared to December 31, 2023.

Previous wording

As of December 31, 2023, our cash balances, including $0.8 million of restricted cash, consisted of $72.9 million in the U.S. and $216.3 million in non-U.S. subsidiaries. The company repatriated $21.8 million and $132.8 million from non-U.S. subsidiaries during the year ended December 31, 2023 and December 31, 2022, respectively. The Company utilized cash repatriated from non-U.S. subsidiaries to repay a portion of the outstanding ABL Facility during the year ended December 31, 2022. 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.

Current wording

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.

Previous wording

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 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.

Current wording

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.

Previous wording

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 $10.8 million in the year ended December 31, 2023. A 100 basis point increase in interest rates would have increased our interest expense by $10.8 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.

Current wording

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 $8.3 million in the year ended December 31, 2024. A 100-basis point increase in interest rates would have increased our interest expense by $8.4 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.