What happened

Higher costs and softening demand caused building products company Jeld-Wen Holdings (JELD -1.91%) to miss analysts' Q2 earnings expectations. Investors aren't optimistic there will be a quick rebound, sending Jeld-Wen shares down 14% as of 1:12 p.m. ET.

So what

Jeld-Wen is a manufacturer of interior and exterior building products, including windows, doors, and wall systems. We knew going into the quarter that housing and construction stocks have been under pressure due to rising interest rates, but analysts were still not ready for the numbers that Jeld-Wen reported.

The company earned $0.57 per share in Q2, falling short of the $0.64-per-share consensus estimate, on revenue that came in as expected at $1.33 billion. Net income was $45.8 million, down substantially from $60.7 million in the year-ago period.

"Significant cost inflation and softening retail demand in North America and Europe impacted our profitability more than we anticipated in the second quarter," CEO Gary S. Michel said in a statement.

Jeld-Wen was able to boost pricing in some areas to help mitigate cost inflation. Even so, despite reporting its eighth consecutive quarter of core revenue growth, it was unable to hit its profitability targets.

Now what

The pressures driving the earnings miss didn't go away the moment the quarter ended. Jeld-Wen cut its full-year 2022 revenue growth forecast to 4% to 6%, down from 7% to 10%, and lowered its expected adjusted EBITDA to a range of $430 million to $450 million, down from $520 million to $565 million.

Jeld-Wen is looking to cut costs, lowering its capital expenditures guidance for the year to $90 million to $110 million from $130 million to $150 million. But there is only so much the company can do given the macroeconomic environment.

"Even with the impact of these aggressive cost savings decisions, we have adjusted our full year expectations for revenue growth and adjusted EBITDA, as market headwinds are likely to persist through year-end," Michel said.

This is a well-run company with a stable cash cushion, reporting more than $550 million in total liquidity at the end of the quarter. But in a rising rate environment that is sending homebuyers to the sidelines and causing renovations to be put on hold, it's tough to get excited about Jeld-Wen shares right now.