John Linker - SVP, Corporate Development & IR Mark Beck - CEO Brooks Mallard - CFO.

Mike Dahl - Barclays Nishu Sood - Deutsche Bank Bob Wetenhall - RBC Capital Markets Susan Maklari - Credit Suisse Jason Marcus - JPMorgan John Lovallo - Bank of America.

[Call Starts Abruptly] These JEM proof points were achieved with minimal capital investment, so the paybacks and returns are quite attractive. As JEM continues to be embedded in our culture across all of our plans, we expect the impact of these opportunities to increase.

Now shifting to the pillar of strategic M&A, I'm pleased to introduce you to our most recent bolt-on acquisitions. First on Page 7 I'll highlight the acquisition of MMI Door which closed on August 25.

MMI is an innovator and leader in providing full door systems with customizable options and features that go well beyond the door side itself, things including the frame, sill, molding, glass, finishing options, and hardware.

As homebuilders and contractors struggle with labor cost and labor availability, they expect suppliers such as MMI to provide more of the value add and historically was done on the job site. Our strategy here is to improve the service offerings of our North American door business and improve lead times to customers.

In doing so, we can create and capture more value. MMI adds approximately $90 million in annual revenue and will be immediately accretive to our adjusted EBITDA margins. Next on Page 8, I'll highlight the acquisition of the Kolder Group which closed on August 31.

While the majority of our global revenue comes from doors and windows in Australia we also have a very nice existing business in the supply and installation of glass, shower enclosures, and closet systems.

You may recall that in Australia we are vertically integrated in glass processing which enhances our competitive position in the glass intensive area of shower enclosures. Kolder significantly expands our leadership position in shower enclosures and closet systems in the major population centers of Eastern Australia.

We expect revenue synergies from cross-selling job into other door and window product lines to the Kolder customer base and we expect cost synergies by leveraging our combined glass processing assets between the two companies. Kolder adds approximately AUD30 million of annual revenue at immediately accretive EBITDA margins.

And finally on Page 9 our most recent deal Domoferm which we announced on October 11 and we expect to close in mid to late first quarter 2018, subject to customary closing conditions. Domoferm is headquartered in Vienna, Austria, with additional manufacturing operations in Germany and in the Czech Republic.

Domoferm is a European leader in steel frames, steel doors, and fire doors, which has a significant expansion of our product range. In Europe, doors are typically certified and sold as a system with a frame and other components. So this acquisition will allow us to better serve the needs of our customers.

We expect Domoferm to add approximately €110 million in annualized revenues. At EBITDA margin that will initially be dilutive for the first 12 to 24 months until we capture expected cost synergies.

On Page 10 to wrap up my comments on M&A, I want to emphasize that our M&A program is delivering excellent results and creating significant shareholder value.

For the six transactions from 2015 and 2016, which have now last a full-year of performance we paid $173 million in cash and delivered over $300 million of revenue at an EBITDA margin of approximately 16%. Our 2017 year-to-date transactions are off to a good start and we expect to create significant value with those deals as well.

On a cumulative basis, our M&A investments are on track to deliver returns that are significantly higher than our cost of capital. With this type of financial profile, you can understand why we are so enthusiastic about M&A as our first choice for deployment of free cash flow.

Now turning to Slide 11, I'll discuss some highlights of our third quarter results. Our net revenues increased 6.3% with core revenue growth in all three reporting segments.

In North America our core revenues increased 2% on a reported basis, but the underlying core growth was approximately 4% excluding the impact of the previously announced business rationalization in Florida. Overall in the North American window and door market, we see a positive demand environment and favorable pricing dynamics.

Our North American window business is continuing to recover from the lead time issues discussed last quarter. Our North American door business grew very nicely in the quarter with mid-single-digit volume growth in both interior and exterior doors. This is excluding the Florida business line rationalization impact.

From a profitability standpoint, we delivered another consecutive quarter of growth in adjusted EBITDA and margins. We continue to be on track to deliver on our annual margin improvement goal of 100 to 150 basis points.

Our margin expansion this quarter was limited as we absorb the impact of operating headwinds in our North American windows business and in the UK.

With respect to windows, in the third quarter we made progress in reducing the extended lead times discussed in our second quarter earnings call and we expect to exit the year with a normalized backlog of orders. In the third quarter as we corrected these lead time issues, we incurred excess labor costs.

Additionally, we experienced increases in freight and logistics as a result of expediting late orders and constraints on freight availability due to the Hurricanes. Also in the UK, the timing of our pricing optimization initiatives lagged inflationary cost pressures on materials resulting in margin compression.

In both cases, we see these margin headwinds as temporary and isolated and we do not see ongoing pressure in these areas in 2018.

Our cash flow conversion performance continues to be excellent as we have now delivered a year-over-year improvement of $94 million through the third quarter and as we've already discussed our capital deployment through M&A has a lot of momentum and we're very enthusiastic about the quality of our pipeline.

In the area of profitable core growth, we're seeing good traction from our investments in service, quality, innovation, and merchandising and we've just been notified that we were awarded some new business from a major North American retail line review for doors.

While the details are still being finalized, we do expect to start transitioning the business in the second quarter of 2018. Moving forward, we don't plan to publicly comment on every line review decision however we know that this one was of interest. Finally on Page 12, I'll reiterate our consistent track record of margin improvement.

We continue to deliver year-over-year margin performance improvement both on a quarterly and a year-to-date basis. Brooks will now walk you through the third quarter performance in more detail..

Thanks Mark. Starting on Slide 14, for the third quarter net revenues increased $58.9 million or 6.3% to $991.4 million. The increase was driven by core growth in all three segments, the favorable impact of foreign exchange, and the contribution of recent acquisitions. I will address the revenue drivers in more detail in a moment.

Year-to-date, net revenues increased $94.3 million or 3.5% to $2.8 billion. For the third quarter, gross margin increased $22.5 million or 11% to $228.2 million. Gross margin as a percentage of net revenue expanded 90 basis points from 22.1% in 2016 to 23% in 2017.

Year-to-date gross margin as a percentage of net revenue expanded 190 basis points from 21.1% in 2016 to 23% in 2017. The increases in gross margin and gross margin percentage were due to favorable pricing and operational cost savings and the absence of $7 million charge to material cost in the same period last year.

Improvements in gross margin were partially offset by the previously mentioned operational headwinds in North American windows and the UK. For the third quarter, SG&A expense increased $12.8 million or 9.9% to $142.6 million. SG&A expense as a percentage of net revenues was 14.4% compared to 13.9% for the same period a year ago.

The increases in SG&A expense and SG&A expense percentage were primarily due to legal costs of approximately $9.1 million. Year-to-date, SG&A expense as a percentage of net revenues was 15.6% compared to 14.7% for the same period a year ago.

The increases in SG&A and SG&A expense percentage were primarily due to legal costs of approximately $24.9 million. Both for the quarter and the full-year, absent these temporary discrete expenses our SG&A as a percentage of net revenue would have been unchanged. For the third quarter, net interest expense decreased $1.3 million to $17.2 million.

The decrease was primarily due to improved terms related to the amendment to our long-term loan agreement earlier this year. For the third quarter, other income decreased $10.6 million resulting in other expense of $2.9 million, primarily due to non-recurring legal settlement income in the same period last year.

For the third quarter, net income increased $5.2 million to $51.3 million. Net income in the third quarter of 2017 was unfavorably impacted by the previously mentioned discrete items of legal costs and was favorably impacted by a lower effective tax rate compared to the prior year. Year-to-date net income decreased $14.5 million to $104.5 million.

Net income in the first nine months of 2017 was unfavorably impacted by the previously mentioned discrete items of financing fee write-offs and legal costs and the first nine months of 2016 were favorably impacted by the release of certain valuation allowances.

For the quarter, diluted earnings per share was $0.47 and adjusted diluted earnings per share was $0.55. We don't include a prior period EPS comparison as of second quarter of 2017 was the first full quarter reflecting the share capitalization impact of our IPO earlier in 2017.

For the third quarter, adjusted EBITDA increased $10.2 million or 8.7% to $128.2 million. Adjusted EBITDA margin expanded 20 basis points in the quarter to 12.9% compared to 12.7% a year ago.

The increase in adjusted EBITDA and margin was primarily due to favorable pricing and operational cost savings, offset by operational headwinds in North American windows and the unfavorable impact of freight costs in the U.S. driven largely by higher rates and scheduling inefficiencies arising from the major hurricane events.

Year-to-date adjusted EBITDA margin expanded 120 basis points to 12% compared to 10.8% a year ago. Impairment and restructuring expense is tracking lower than prior year with $2.3 million incurred in the quarter compared to $3.9 million in the third quarter of 2016.

On a year-to-date basis, impairment and restructuring expense was $4 million compared to $9 million in the prior year. Entering Q4, we expect some restructuring activity in North America as we work to improve the pace and consistency of the operational improvements in that business segment.

In doing so, we expect to lean out the organizational structure, reduce overhead, and top rated talent in certain key positions. The financial impact of these changes will be a Q4 restructuring charge of approximately $6 million to $7 million with a payback of less than one year. Slide 15 provides a buildup of our revenue drivers.

For the third quarter, the 6.3% increase in our revenues was driven by 2% increase in core revenues, 3% contribution from recent acquisitions, and favorable foreign exchange impact of 2%. The core growth of 2% was comprised of a 1% benefit from pricing and a 1% increase from volume mix.

For the first nine months, the 3.5% improvement in our revenues was driven by 2% core growth and 2% contribution from recent acquisitions. Core growth was comprised of a 1% benefit from pricing and a 1% increase from volume mix. Next I'll move to the segment detail beginning with North America on Slide 16.

Net revenues in North America for the third quarter increased $19.7 million or 3.6% to $572 million. The increase in net revenues was mainly due to core growth of 2% primarily due to the benefit of pricing and a 2% contribution from the acquisition of MMI Door.

Volume mix was flat due to the previously announced business line exit in Florida which is estimated to have a $50 million annualized revenue impact. We also saw continued revenue headwinds in our North American window business due to the previously discussed delivery issues and extended lead times.

Third quarter adjusted EBITDA in North America increased $3.8 million or 4.8% to $82.5 million, EBITDA margins expanded by 10 basis points to 14.4%.

The increase in adjusted EBITDA was primarily due to favorable pricing and operational cost savings offset by unfavorable operational performance in North American windows and the previously mentioned higher freight cost. On Slide 17, net revenues in Europe for the third quarter increased $18.2 million or 7.4% to $265.1 million.

The increase in net revenues was primarily due to the favorable impact of foreign exchange of 4%, contribution from the Mattiovi acquisition of 2%, and core growth of 1%. Europe volume growth was limited due to the rationalization of certain products and customers in the UK.

For the third quarter, adjusted EBITDA in Europe increased $1.9 million or 6.2% to $33.4 million. Margins decreased by 10 basis points to 12.6% largely due to material inflation and pricing in the UK. On Slide 18, net revenues in Australasia for the third quarter increased $21 million or 15.7% to $154.3 million.

The large increase in net revenues was primarily due to an 8% increase from the recent acquisitions of Breezway and Kolder as well as 4% core growth and 4% from favorable foreign exchange impact. For the third quarter adjusted EBITDA in Australasia increased $5.1 million or 28.4% to $22.9 million.

Margins expanded by 140 basis points to 14.8% as a result of the accretive benefit of the acquisitions and profitable core growth. Now I'd like to provide a brief update on our balance sheet and cash flow on Slide 19. Cash and cash equivalents as of September 30, 2017, were $219.5 million compared to $102.7 million as of December 31, 2016.

Total debt as of September 30, 2017, was $1.3 billion compared to $1.6 billion as of December 31, 2016. The reduction in debt was primarily due to the net proceeds of our IPO earlier this year. As of September 30, 2017, our net leverage ratio was 2.4 times compared to 3.9 times as of December 31, 2016.

Our net leverage ratio is now within our medium-term target range. Cash flow from operations in the first nine months of 2017 improved to $174.1 million from $110.2 million in the same period a year ago.

Free cash flow improved $94 million to $141.7 million from $47.7 million in the same period a year ago due to improved operating cash flows and reduced capital expenditures. Our balance sheet remained strong and our capital structure liquidity and free cash flow generation continue to provide us with a flexibility to fund our strategic initiatives.

I will now turn the call back over to Mark for closing remarks..

Thanks Brooks. I'll wrap up on page 21 with our updated annual outlook for 2017. Our outlook is based on underlying market assumptions, specifically that new construction and the repair and remodel growth in North America and Europe will continue and that the housing market in Australia will be a headwind.

Our assumptions also include continued margin expansion by executing on the initiatives of our operating model. Our updated outlook also takes into account our recent acquisition activity. So for the full-year, our net revenue growth expectation is now 2% to 4% compared to our previous outlook of 1.5% to 3.5%.

The increase in the revenue growth outlook is primarily due to the recent acquisitions on MMI Door and Kolder. We are refining our outlook for 2017 adjusted EBITDA to be $440 million to $450 million. This is from our previous outlook of $440 million to $460 million.

Our new outlook takes into account the partial year contributions of our recent acquisitions, offset by operational headwinds, I discussed, as well as expected investments in the fourth quarter related to the line review win that I mentioned earlier in the call.

Lastly, we have reduced our outlook on capital expenditures to be $60 million to $70 million from our previous view of $80 million to $90 million. The reduction in capital expenditures is due to the phasing of certain major projects.

It is important to remember that we are still in the early stages of a multi-year turnaround and that there will be quarter-to-quarter fluctuations in the cadence of our margin improvement. Our experienced leadership team and our operating model have us well-positioned to continue delivering operational and financial improvement in 2017 and beyond.

Looking into next year, while we won't issue our formal guidance for 2018 until our next call in February, our growth outlook for 2018 is consistent with the framework we have discussed previously.

In 2018, we expect top-line growth to accelerate from 2017 with net revenue growth of mid-single-digits including the impact of the recently closed acquisitions. We will add Domoferm's revenue contribution and any other new M&A to our outlook after closing occurs.

From a margin improvement standpoint, we continue to expect EBITDA margin improvement in the range of 100 to 150 basis points. I want to thank all of JELD-WEN's employees for their hard work. We would not be able to achieve any of these results if it wasn't for their commitment and passion.

To wrap up, before we open the line for questions, I would like to leave you with these thoughts. We are delivering core revenue growth with positive pricing. We continue to deliver year-over-year margin improvement.

Our cash flow conversion is excellent with free cash flow in excess of net income and we continue to create shareholder value through M&A by delivering on synergies from the deals we have closed as well as maintaining a healthy pipeline of future opportunities. We are very well positioned to take this positive momentum into 2018 and beyond.

With that, I'll ask the operator to please open the line for your questions..

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Mike Dahl with Barclays. Please proceed with your question..

I wanted to start by hopefully just getting a little bit more detail on the adjustments to guidance. And so, I think some of the operational headwinds were contemplated in the prior guide.

So could you just help us bridge how much were some of the then incremental headwinds you experienced such as the freight and delivery versus how much of the reduction is coming from these investments ahead of the new business win?.

Yes, Mike, this is Brooks. So the way that we see it in total, we're seeing about $10 million of headwinds, if you go from mid-point to mid-point, $10 million of headwinds offset by about $5 million of favorable impact from the acquisitions.

And of that $10 million the majority of it which I would say is about $8 million is going to be a combination of freight going to continue freight headwinds as well as the operational and volume headwinds associated with the windows issues above and beyond what we were thinking before.

And then there's $1 million to $2 million of additional expense as we get ready for this retail business. So that's a pretty -- that's a broad breakout of how it rolls up..

Got it, that's helpful.

And then as it relates to the new business wins understand that you don't want to give a tremendous amount of detail, but is there anything you can frame for us relative to some of the major business wins that you walked -- the major business that you walked away from this year, is it comparable in size and is this something that you're going to be able to service out of your existing assets or should we expect anything else on the capacity side associated with this?.

Right. Mike, this is Mark. You're absolutely right. We worked very hard to be quite disciplined and rationalize some business that was not attractive.

And so as we pursue new business, it's imperative that we have that same level of discipline and we seek to pursue business where we think it can be a win-win where the customer is going to get some great new products, great service, quality, some innovative merchandising and that is the basis upon which we think we've won this business.

But it also has to be a win for us and certainly this new business that we've won does meet those criteria.

We will be serving this business across multiple regions of these stores in more than just one region and we do believe that the existing -- the existing capacity we have near the stores that need to be served will be adequate, in some cases, we will need to add an additional shift that means hiring and training more folks to come in and run the factory, but we do not need to necessarily put any new facilities in place and any investments in equipment would be fairly minimal.

So again we're not going to say a whole lot more, you did ask about the size of it, I would say it is roughly comparable to what we walked away from earlier this year in Florida..

Okay, that's really helpful. And then last one from me, I think Domoferm seems like a nice strategic fit in Europe. I know you mentioned that the margins are currently dilutive and there is a 12 to 24 month plan to bring them up to line average in Europe.

Can you just give us little more detail on kind of how that business was run or structured and what are the major things that you need to do and kind of timeline for how meaningful some of the improvement could be over the next -- over the next 12 months?.

Hey Mike, it's John. So Domoferm from a manufacturing standpoint, it's a private equity owned business for the last four or five years. They've done a lot of nice things to improve certain aspects of the business made some investments.

But in some respects I think the operations of the business looks not too dissimilar than maybe JELD-WEN did a few years ago, has run in a very siloed mentality.

So each of those four manufacturing facilities that Mark talked about were run sort of independently and there's really not a lot of -- not a lot of coordination around productivity and some of the sourcing efforts and so it's really the same playbook we're running with JEM on our core business is the same playbook we plan to run with Domoferm in terms of implementing best practices, productivity, sourcing, just sort of leaning out the operations.

So there's nothing in terms of facility closures or anything like that that we have contemplated it's really just the blocking and tackling of productivity and it does take a bit of time, the cadence we're on with our core businesses is 100, 150 bps a year.

So if you think about something that's in a single-digit margin profile to get it up to where JELD-WEN is, it's just going to take us a bit of time.

But we feel very confident about our plans to get there and as you said from a strategic fit standpoint, this acquisition builds a really critical gap in our portfolio in Europe and we're excited about the prospects for revenue synergies as well..

Hey, Mike, I would just add. I think John covered the manufacturing side very well but there is also an opportunity again not unlike where we were a few years back an opportunity around better pricing discipline that we can also bring to bear to help that business..

Okay, great. Thanks for that..

Our next question is from the line of Nishu Sood with Deutsche Bank. Please proceed with your question..

Thank you. I wanted to ask about 2018, great to see the confidence the mid-single-digits revenue growth expectation for 2018. This new business win and the acquisitions kind of get you half of the way to that mid-single-digits. So core growth implies some modest acceleration.

Just wanted to get your thoughts there on the core business obviously new business win is core, I'm talking about kind of the base business.

What are your thoughts there you mentioned a positive outlook obviously in North America, just wanted to get your thoughts on the core business and how you see that trending into 2018?.

Sure. Thank you for the question. I think your math is correct. We do see a modest acceleration of core growth. And as we think about it, there's a few drivers that I think are notable.

I mean first of all, we will not have the headwinds associated with the loss of a large chunk of retail business that we had this year, it will continue through the first quarter, but then for three quarters of the year that will be behind us because that business transitioned last year in April and May.

The second thing I would point out is this year; our door business has been already performing kind of in the range that we're talking about. And so it's not necessarily we're needing a big change there. We need to continue doing what we're doing.

We do have some nice new products such as the statement pre-finished door line which is doing very well in fact our entire fiberglass door line is growing well above the mid-single-digit range and we see that continuing.

What has kind of held us back a bit this year has been wood windows where we had these struggles with lead time that that kind of hurts you two ways, it hurts you as you don't get the sales as quickly because you're delayed in getting the product out but it also hurts you a second time as some customers choose to place orders with alternative sources for a short period of time and so it gets your lead times back down.

So we think as we get to with window problems behind us by the end of this year that becomes not, not a drag, and it's actually contributing to the growth. So if you add those three things together and I think we do feel confident that we can accelerate core growth modestly in 2018..

Got it, great.

And keeping on the topic of 2018 also very encouraging to see you discussing the potential margin improvement in 2018, another year of 100 to 150 basis points definitely appreciate the examples you gave of that in the slide deck but maybe if you could kind of give us a kind of state of the operational margin improvement since IPO, how is it progressed against your expectations obviously there's been some challenges here and also similar reign of question what are you kind of seeing into 2018 that gives you the confidence for that statement as well, please?.

Certainly. So since the IPO, we have continued to drive productivity. Our sourcing program I would say has actually exceeded our expectations. That program has great legs in that.

As we realize savings, we continue to add new projects to the pipeline and so our pipeline seems to continue to be just as robust even though we complete certain projects and take them out of the pipeline. And so I would say that one has over-delivered a little bit.

I think on pure productivity we would say that it's under-delivered a bit and that's primarily due to the challenges that we've seen in wood windows. And obviously that's been a disappointment for us and it's something that we own and that we're very aggressively addressing and getting it -- get that fixed by the end of the year.

But outside of wood windows we're seeing productivity in our plants.

The examples that I gave were actually drawn from windows because that's where we're having some of these challenges, but the same types of activities are happening in our door plans, the same types of activities are happening in Australia, and in Europe, where we use these fundamental JEM tools, these are all based on the lean principles that were first created by Toyota and then brought to the U.S.

by companies like Danaher and used by others such as Cooper. And as we apply these fundamental tools, we do see the productivity kick in. This is I like the Toronto example we used because this is what we're looking for across the network of over 100 plants.

We want to embed this, so it becomes a part of the culture, so that everyone in the plant is thinking about productivity and bringing ideas forward of the over 200 mini kaizens, about 90% of those in Toronto actually came from operators on the floor who know the process best, who identified in some cases small and in some cases larger ways that they can improve the manufacturing process.

And so we're deploying that across the network and we are seeing gains. Unfortunately the headwinds in wood windows have matched some of that..

This is Brooks. I would just add that the 60:40 split between operational improvements which includes productivity and sourcing and all the work we're doing there versus 40% of core growth which is volume accretion and pricing that still holds.

We know we believe that’s for 2018 is right within the range of what we're looking at in terms of the overall 100 to 150 bps of improvement where the split is coming from. So even though we've had these headwinds here in the back half of the year, we still feel confident that that's the right number as we move forward..

Okay, thank you..

Thank you for those questions..

Our next question comes from the line of Bob Wetenhall with RBC Capital Markets. Please proceed with your question..

Hey good morning..

Hey, good morning Bob..

Thanks for taking the question.

How are you doing?.

Good..

Hey wanted to check in with you guys lot of hurricane activity and you've got a couple moving pieces on the North American side in the portfolio between hurricanes business loss and now business win where it seems like you've recouped that.

Can you give me a feel a little bit Mark for what you're thinking on is are we kind of like in a mid-single-digit volume growth area pretty consistently for the industry, you're well positioned to leverage that volume growth? Is this kind of an aberration just timing wise and what's the upside from rebuild activity in North America.

I'm really trying to understand the discrete drivers that some other people were asking about as you go into 2018?.

Yes. So we in terms of the market itself, we do believe that the North America market does continue to grow maybe at a slightly reduced rate. The hurricane activity we have seen a little bit of demand spike on some products related to the hurricanes, but in many cases windows and doors are kind of later in the process of rebuilding.

We went back and did some analytics around what happened with Hurricane Sandy. And that would indicate that a tailwind that we would experience would actually not begin until 2018, if the same pattern follows this time around. We think it's a modest tailwind and obviously it's already baked into this guidance that we've just given.

I think that it also had a negative impact to the hurricane and we can talk a whole lot about it on the discussion, but we certainly did feel pressure around freight, freight availability in some regions of the country became incredibly challenging, just to get access in many cases getting that access did cost additional fees or surcharges to get the freight that we needed, that's starting to break up a little bit and we're seeing less pressure.

It's not completely back to normal but we see it heading in that direction here in the fourth quarter and we think by early next year the freight situation it will probably be settled out perhaps it's slightly higher freight rates than before the hurricanes but we think sort of the acute pressure that we saw in quarter three, will be behind us..

Got it.

And then just on North American profitability if you manage through the freight issues and I'm betting that you guys can get the window operations resolved quickly, does that provide you with a pretty healthy North American tailwind assuming your volume outlook comes through and pricing stays the same, it just sounds like there's a lot of short-term or recent disruption in the quarter that's transitory in nature I'm just trying to get confirmation of that to understand how margin can you know if there's just a naturally embedded tailwind going into next year?.

Yes, I think there's a couple things that are going to -- that are going to drive a tailwind in the next year. I think certainly in the back half we're going to have a little bit easier comps, when you think about -- when you think about some of the headwinds that we had this year operationally.

I think also when you look at some of the learnings that we've had over the course of the past couple of quarters and some of the things we're doing from a automation perspective balancing the plants in terms of capacity and production and labor and things like that.

So that's all going to start to come to bear in the first half of the year and that should show us some additional tailwinds as well.

So I think what you'll see is we'll start to get better in the first half of the year and then we will start to pick up steam and in the back half of the year, we should really have some nice comps as all the hard work we've put into the margin repair on that business goes up against some pretty easy comps in Q3 and Q4 of 2018..

Got it. And final question from me Brooks, maybe you could just talk about price versus input cost inflation and how JELD-WEN is managing that. Nice work and thanks for good luck gentlemen, appreciate the time..

Thanks Bob. From a price inflation perspective, we are continuing to see some pressure, resin continues to be a pressure item and then resin will leap over into things like packaging material with particle board and things like that. Steel in North America continues to be an issue.

And then in Europe we continue to have lumber price inflation and in Australia we continue to have aluminum price inflation. I think overall, we feel comfortable and confident that we know we're going to be able to be accretive on price.

We still have some areas of the business from a strategic pricing perspective where we're not where we want to be, so we're going to attack those areas. We continue to attack those areas with larger price increases to get to profitability, where we needed to be.

On the other parts of the business we're going to continue to at least maintain at level at par with inflation. And so net-net, we think we're going to be accretive on the pricing front and then we will also have -- we will also have the sourcing initiatives which should help us out a little bit.

Lastly, some of the big headwinds we've seen from a material inflation perspective have been in the UK as we talked about relative to not only inflationary pressures within the country, but then also transactional FX with the imports. And we had some fixed pricing on some contracts that are all coming due at the end of this year.

And as we renegotiate those contracts with better terms and better pricing that should provide us some nice tailwinds from a pricing versus material inflation as we head into 2018..

Our next question is from the line of Susan Maklari with Credit Suisse. Please proceed with your question..

It seems like your Australia business has held up pretty well even despite some of the macro factors that are going on down there.

Can you just talk a little bit to what you're seeing and perhaps maybe some of the benefit of the sort of small nature of your offerings in that market?.

I'll be happy to. So you're absolutely right. The Australian market entered a downturn late last year and has continued. It began in Western Australia and it has kind of moved its way across the country.

This downturn has been more profound in the multi-family segment of the market where we're less exposed, we're about 85% exposed on single-family, so that has helped. But even on the single-family side of the market it's been down mid-single-digits year-over-year and yet we've managed to continue to show growth both through price and volume.

And I think there's a number of reasons for that, we've got a fantastic team down there that's executing very well. We've made some great acquisitions that have allowed us to cross-sell into new customers that we didn't have access to prior to those acquisitions.

In fact of the top 20 builders in Australia, we now have 18 of them, who are buying products from us. And I would say the last thing that we did I think was a good strategic move was as we saw this downturn coming, we repositioned parts of our business to get more exposure to R&R where we were relatively light in Australia.

And the fundamental economy in Australia is still doing well which is reflected in R&R holding up reasonably well and so that we've increased our exposure to R&R that has also helped to offset some of the softness in new construction. And so end of the day we think we're gaining share, we know we're gaining price and our team is executing great..

Okay, that's very helpful. And then your cash flows this quarter were really impressive.

And as you -- so you guys have talked to some of these points around your sourcing initiatives and some of the work that you've done from a lean perspective, can you help us better understand maybe what some of the drivers of that cash flow were and how we should be thinking about that coming together as we look to 2018?.

This is Brooks. I'll take that one. So a couple of things. Our long-term goal was to always be accretive when it comes to free cash flow versus net income, so that's always our long-term goal which will align nicely with our strategic capital deployment and what we want to do from an acquisition perspective.

One of the things that's helped us out this year compared to last year is last year we had some terms changes with some of our larger customers where we were trying to align our discounts and things of that nature. So last year from a working capital perspective we were a little bit sideways compared to what we normally want to do.

And so that's one reason we look better year-over-year. The other thing is from a capital perspective, as Mark said; we've got some pretty big projects in the hopper from an automation perspective and from a wood components capacity perspective and different things like that.

And those just aren't going to hit until the beginning of next year and into next year and so we're a little depressed in our capital spending this year compared to what we would normally be.

Our depreciation and amortization runs in the $100 million to $105 million kind of range and we would like to be spending more in the $90 million range probably not full -- that full depreciation but certainly pretty close. And so we're down a little bit this year and that will be a little chunky maybe next year we will be a little bit up.

I will tell you the upside that we have is as we put all these lean initiatives in place, the one place we really haven't attacked quite yet is working capital; we've been very focused on margin repair, very focused on driving gross margins through pricing and through operational improvements.

So I think the upside there over the next two to three years is as we start to deploy JEM across our working capital, we've really got an opportunity to drive some cash flow there as well.

And so as we think -- as we move forward you think about our capital spend, you think about our working capital initiatives, we really feel confident that we're going to be able to drive cash flow in excess of net income.

And then also our tax attributes where our cash tax rate is going to be significantly lower than our GAAP tax rate, you add all those up and from a cash generation perspective, we feel very confident over the next two to three years..

All right, great. Thank you very much..

Thank you, Susan..

Our next question comes from the line of Jason Marcus with JPMorgan. Please proceed with your question..

First question is on Europe, just want to understand if you can give us a little bit more color on what you're seeing there from both geographic and product standpoint.

And then if any geographies that really stand out from a demand standpoint? And I guess lastly in terms of pricing in Europe, if you could just kind of walk us through your footprint and let us know what you're seeing?.

Sure. So we've organized the parts of Europe that we serve into four regions. We actually don't serve the most southern parts of Europe. And so the four regions are Northern Europe which is primarily Scandinavia, Central Europe which is Austria, Germany, Switzerland, and we have the France and the UK so that make up the four regions.

I would tell you that Central Europe and Northern Europe are great markets. We have very strong positions. We are the leader in those markets by quite a bit. We are the only Pan-European player. So in each of those regions we are basically competing with locals and the growth there has been steady, kind of low-single-digits roughly equal to GDP.

Northern Europe has been a little bit more robust this year than the rest of Europe and that it's been a good strong market. France was down for about three years in a row each year roughly 5% or 6%.

And so after three years of contraction, we're very, very happy to say that we saw earlier in 2017 the contraction stop, and actually, through the back half of the year, we're seeing the beginnings of some expansion in the French market. While that market was contracting, we took advantage of that time to restructure. We reduced our footprint.

We went from three factories down to two and that's allowed us to drive some significant margin expansion now as things have stabilized and began to grow.

The UK is now our most challenged region and I think Brooks already spoke to that in terms of there were some contracts that actually predate this team that did not give us much flexibility around price.

And many of those contracts are ending here at the end of the year and we're in the process of renegotiating those in ways that will give us more flexibility going forward but also an immediate reset at the start of the year.

And so we think that will certainly help us better offset the inflationary pressures we've seen in the UK that we think are basically tied back to Brexit..

Yes, I would add to that I think on the pricing front the UK was the main area and Europe where we needed to do some rationalization.

And so we did some skew rationalization and some pricing rationalization around making sure that the margins were where they needed to be for all of our products and so that's been a big part of what they've been working through.

And I think that also just from an internal perspective our pricing execution wasn't as crisp as it should have been, through the second quarter. So we've rolled out where we can some price increases in Q3 to help offset some of those material inflation that we've seen.

So between the price increases we rolled out for Q3 and between the skew and pricing rationalization we've done and between the new contractors that are going to kick in next year we feel good about the UK business coming back strong in 2018..

And we have time for just one more question..

Yes. That question is coming from the line of John Lovallo with Bank of America. Please proceed with your question..

Hey, guys. Thanks for putting me in here. May be just a couple points of clarification here.

First on the North American restructuring the $6 million to $7 million that is not included in EBITDA; is that correct, you're backing that out? That's not the reason why --?.

That's correct..

Okay.

So that's not the reason why the EBITDA look came down?.

Correct..

Okay.

And then as we look to the fourth quarter I think we had the shipping day reversal to keep in mind and then also was there any loading -- any significant loading that we should be aware of in any other regions?.

No, I don't think so. I don't recall anything, so..

All right. Thanks guys..

All right. Thank you everyone for attending our call today and we appreciate your questions and your interest in JELD-WEN. Have a great day..

This concludes today's conference. Thank you for your participation. You may now disconnect your lines at this time..