Jeld-Wen reported an $11.3 million drop in net income in the second quarter of 2018 that the company’s new CEO says was driven by “a difficult inflationary environment.”

“In the second quarter, Jeld-Wen grew revenues by 23.6 percent through contributions from recent acquisitions and core growth, while our operating results were challenged by a difficult inflationary environment,” said Gary S. Michel, president and CEO, who assumed those leadership roles on June 3.

However, he’s optimistic that the company can reverse that trend.

“As we move into the second half of 2018, we will gain momentum as we execute on our near-term priorities such as improving service levels for our customers, driving cost out of our business, and remaining disciplined with both pricing and share,” Michel said. “Based on my initial assessment of Jeld-Wen since assuming the CEO role in June, I am confident that we have the right strategy, operating model, and talent already in place. I see substantial opportunities in all three segments for core growth, margin improvement, and bolt-on M&A as we create shareholder value and continue to make progress towards achieving our long-term financial and strategic targets.”

Net revenues for the three months that ended June 30, 2018 increased $223.7 million to $1.172 billion, compared to $948.8 million for the same period last year. The increase in net revenues was driven by a 19-percent contribution from recent acquisitions, 3 percent from core revenue growth and 2 percent from the favorable impact of foreign exchange. Core revenue growth, which excludes the impact of foreign exchange and acquisitions completed in the past 12 months, increased 2 percent from favorable pricing and 1 percent from improvements in volume/mix.

Net income was $35.5 million, compared to net income of $46.8 million in the same quarter last year. According to the company, the decrease was primarily due to an increase in expenses as well as a higher tax rate compared to the same quarter last year.

Earnings per share for the second quarter was $0.33 compared to $0.43 for the same quarter last year, a decrease of $0.10. Adjusted earnings per share was $0.45 compared to $0.51 for the same quarter last year, a decrease of $0.06.

Jeld-Wen’s holdings in North America saw net revenues increase $121.5 million, or 22.0 percent, to $673.2 million. The company says the mid-single-digit core revenue growth in the doors business was offset by lower volumes in windows and Canada. In Europe, Jeld-Wen’s net revenues increased $59.8 million, or 23.1 percent, to $318.7 million, due to a 15-percent contribution from recent acquisitions, 6 percent from the favorable impact of foreign exchange, and core growth of 2 percent. Core margins declined primarily due to inflation in materials and freight costs. Net revenues in Australasia increased $42.4 million, or 30.7 percent, to $180.6 million, primarily due to the contribution from recent acquisitions of 27 percent, core growth of 3 percent, and 1 percent from the favorable impact of foreign exchange.

For full year 2018 compared to full year 2017, the company now expects net revenue growth of 16 percent to 18 percent, compared to the previous outlook of 17 percent to 19 percent. The assumption for core revenue growth remains unchanged at approximately 3 percent.

The company’s outlook for full year 2018 adjusted EBITDA is now $500 million to $520 million, compared to the previous outlook of $505 million to $535 million and 2017 adjusted EBITDA of $437.6 million. The decrease in the outlook for adjusted EBITDA is due to the unfavorable impact of updated assumptions for foreign exchange rates as well as the expected unfavorable impact of recently announced tariffs. The midpoint of the updated outlook assumes core adjusted EBITDA margin improvement of approximately 70 basis points. This improvement in core adjusted EBITDA margins is expected to be offset by the impact of recent acquisitions and the impact of foreign exchange.