We've come a long way from where we began. And with growth comes change. New faces, new products, new processes, new horizons. Yet through all the changes, these JELD WEN values have stayed constant. Innovation, integrity, continuous improvement.
These values fuel our growth. Today, we're more committed than ever to providing superior products that our customers can trust every time to running a business with sustainability at our core, to forming teams where every voice is valued. And to creating the kind of excellence that investors can get excited about too. Here at JELD WEN,
Good morning, everyone. Thank you for joining us and welcome to JELD WEN's inaugural Investor Day. My name is Chris Teachout and I'm JELD WEN's Director of Investor Relations. In a moment, I'll provide a brief overview of the agenda for this morning. But before we begin, I'd like to draw your attention to our standard disclosures and safe harbor language on this slide, which covers the contents of today's webcast.
Today's event includes forward looking statements. Each forward looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those discussed in such statements. We undertake no obligation to update or revise any of these forward looking statements. You'll be hearing shortly from key members of our executive leadership team and we have several short videos throughout today's presentation that will provide a glimpse into how Our teams globally are utilizing our business operating system, the JELD WEN Excellence Model or JEM to transform the business and deliver improvements for our customers and shareholders. You will learn about our multifaceted growth platform and the excitement our associates share for delivering value for our customers and shareholders.
First up, Gary Michel, our CEO, will provide an introduction and outline of our strategic vision and lay out what we believe is a compelling Investment opportunity. Next, Greg Miner, SVP of JEM and Daniel Castillo, President of North America We'll describe our business operating system, the JELD WEN Excellence Model and through real life examples show the benefits it is driving in our business. Then we will have the first of 2 Q and A sessions. Next, Sean Laskoski, SVP of Corporate Strategy and Business Development and David Guernsey, President of Europe will discuss JELD WEN's multifaceted growth strategy along with several examples how our associates are using JEM strategy and commercial tools to drive differentiated customer experiences, innovation and profitable growth. Roya Benja, General Counsel, We'll then provide an overview of our recently published inaugural environmental, social and governance report and JELD WEN's framework for approaching each of these areas.
Next, John Linker, Chief Financial Officer, will provide an overview of recent financial performance and introduce 2025 revenue, margin and free cash flow targets and capital allocation priorities. We will then host another Q and A session before wrapping up with closing remarks from Gary. You may submit a question at any point during the prepared remarks or Q and A session by entering it in the Ask A Question section on the webcast console. And with that, I'd like to turn things over to Gary.
Thanks, Chris. Good morning, everyone, and thank you for joining us today. Welcome to our inaugural Investor Day as we share with you what we believe is a compelling investment story. We've come a long way in the past 3 years and have made significant progress in establishing our vision for JELD WEN, which I'll expand on over the next few minutes. At a minimum, there are 3 messages I would like you to take away today regarding this exciting time for JELD WEN.
1st, We have a multifaceted growth platform with a successful track record of earnings growth, compounding cash flow and capital deployment. 2nd, we have a well defined strategy and business operating system that are driving transformation and delivering profitable organic growth. And third, the breadth and scale of the JELD WEN franchise, including leading market positions, powerhouse brands and unparalleled global footprint is unmatched. Our disciplined execution is delivering customer focused innovation, profitable growth and consistent results, And our strong balance sheet positions us to continue this growth and financial performance. We have made Remarkable progress and dynamic changes to shape our company since I became CEO in June of 2018.
We've shared our strategic growth drivers including organic growth, operational excellence, disciplined capital deployment and a premier performance culture as a competitive advantage. This culture has been amplified by the team we've assembled Who are thought leaders in a variety of disciplines from lean operations to customer focused innovation and are thrilled that you will have the chance to meet some of them today. These drivers are an outgrowth of our vision to be a great company, which I'll detail for you in a few minutes. Our drive To be a great company has deep roots extending back to our founding. When Dick Wendt and his partners established JELD WEN in 1960, It was founded as a family owned and family run business.
That meant that if we put our name on the product, the quality must be there to meet our standards. It meant taking care of our customers, associates and communities. It meant as a company, we always strive to do the right thing. These foundational values are what drives us today. They are embodied in our values driven culture and how we strive to do what's right for our people, our customers and the communities where we live and work.
And there are countless examples of how our people impact their coworkers and our company every day. This is part of who we are and it was especially evident last year during the pandemic. Our focus was first and foremost on the health and safety of our associates and partners And due to this focus, we avoided major outbreaks of the pandemic. Associates across the globe volunteered and contributed in the communities where we live and work to ensure food security, support for emergency response and shelter. These commitments also flow into the strength of our brands.
In each of our geographic markets, we maintain brands that are well known for their quality and features and are well respected by our customers. Our global scale and customer focus serve to fortify our brand strength as a tangible symbol of the values we live each day. The breadth of our product offering is unmatched with a range of doors, windows and other products that meet the needs of our customers and builder partners around the world. From these humble beginnings, we have grown to be one of the largest windows and door companies in the world with total revenues In 2020 of just over $4,200,000,000 60% of our revenue is generated in North America and the remainder from operations in Europe And Australasia. We have a strong track record of multi year revenue growth represented by the performance metrics highlighted in this graphic.
More recently, as we worked toward the 4 pillars of our growth strategy, you can see the result in improving adjusted EBITDA margins last year, Which increased 80 basis points on a consolidated basis driven by outsized performance in North America and Europe. Our performance starts with our aspiration to be a great company. We define a great company as a company that people want to buy from, A company where people want to work and a company shareholders want to invest in. Customers want to buy from a great company because it provides the products and solutions customers need and want when they need them. They find value in the offerings and the relationships and enjoy a differentiated and superior customer experience.
Customers want to partner with companies that understand their needs and develop innovative solutions to meet them. Associates want to work at a great company for the freedom and resources to develop their talents, the ability to make a contribution and to realize their personal and professional aspirations. When we think about this attribute of being a great company, It's our role as leaders to attract, develop and retain the best people and provide the resources they need to perform at their highest potential. We've assembled an incredible team of people to lead our organization who I'll introduce to you in a few minutes. Shareholders want to invest in a great company because it consistently outperforms commercially, operationally and financially, delivering superior financial returns in its industry.
We've worked hard over the past few years to make the changes needed to establish and grow that premier performing culture and is beginning to bear results. Customers and channel partners are recognizing real differences in innovation and operational performance leading to share gains and growth. We will continue to develop and perform to deliver differentiated performance as well. And finally, and maybe most importantly, great companies always do the right thing for people, communities and the world. Let's dive a little deeper into the values behind our efforts towards success.
We aim to bring value to our customers With our global footprint, which drives the breadth and scope of the products and services we can provide to our diverse customer base wherever they are. When we think about global advantages, they extend beyond supply chain and sourcing to innovation and application of best practices to meet customer needs, while making a positive impact on our world. We assembled a very talented team that brings the skills and experience to deliver our results. You can see from this slide the breadth of their backgrounds. These are professionals with innovation deeply ingrained in their expertise and experiences And they come from emerging and established companies.
These leaders with diverse backgrounds are thought leaders in each of their respective disciplines with experience leading lean operations, customer focused innovation, customer service and sustainability, and they attract and develop the best talent too. These leaders are what I call talent multipliers in reference to the adage that success begets success. When you have proven leaders leading your organization, Attracting winners to the team becomes much easier. With the right pieces in place, we have never been more excited about the future of JELD WEN That we are right now and the actions we have taken to drive our long term results have just begun to generate returns. Another of our founding principles that Dick Wendt established decades ago was a focus on being resourceful and using every bit of raw material that entered our doors for a high value purpose.
This mindset is at the root of our business operating system, the JELD WEN Excellence Model or GEM as we call it. And if you've been following our company, you've heard us talk about JEM in many settings as it is the systematic way That our people work within the company to deliver our strategy globally. It is a holistic approach that at its core is a lean problem solving culture Rooted in continuous improvement, development and respect for people and the identification and elimination of waste. JEM is the foundational underpinning of all we do at JELD WEN. Many companies adopt a lean program And you may think of JEM as our own version of a lean program.
In some respects, it is. However, so many of these companies never move Beyond doing lean, applying isolated lean tools and lean events primarily in manufacturing. They never expand to living lean or leading lean and this is the key differentiator of JEB. It is and how we continuously improve our operations and functions. It defines how we approach our work to enable growth, strategy development and deployment.
This morning, our leaders will be sharing details of how JEM permeates everything we do while sharing real life examples that show the benefits of our journey. Many investors seem to view JEM as simply a model for incorporating lean initiatives to our business that deliver cost savings and margin expansion, And it certainly is, but it's also a lot more. JEM is an all encompassing approach to how we do business from the top line to the bottom, not just the costs in between. Many companies that adopt lean initiatives are stuck on simply holding lean events, Driving programs and limiting the scope of lean. For us, the essence of living and leading lean focus on growth and differentiated customer experience.
When you start with the doing of lean, you might have discrete events surrounding specific initiatives to improve operational efficiency or eliminate waste. As you grow beyond the doing into living, people begin to see processes and actions that can be improved, extending the lean principles to product innovation and customer segmentation to drive commercial excellence. Think about improved quality, lead times And reliable delivery, enabling growth and faster product introduction, more effective selling and fulfillment and freeing up resources for growth. Each day brings new focus on driving enhanced efficiency and reducing waste across our operations, enabling us to do more with less. This enhances working capital leverage and drives improved cash flow.
As an example of GEM principles in action, Let's talk about the issues we had in North America Windows several years ago, which I know has been an area of interest for a number of you. We learned a lot from this episode as we were fundamentally dealing with a mismatch on production and demand. By applying JEM to the problem, we were able to highlight the need for better information and forecasting to match capacity with demand and optimize production to improve delivery time through the channel. While there were certainly production aspects to addressing this challenge, we were also Able to focus on the growth initiatives within our solution. The really exciting characteristics of JEM that will ultimately help us drive growth.
And now as a result of these efforts, as you heard on our earnings call a few weeks ago, our North America business is performing nicely, Gaining profitable share and expanding margins. Identifying a problem, focusing on it and turning the result into a competitive advantage. We can talk a bit about how JEM can foster growth on multiple levels. First, when we enhance quality and improve delivery times, We drive demand for our products. When customers know the quality will be there when they need it, they will increase their business with us.
This brings us to our focus on creating a differentiated customer experience in every segment. We strive to sell through the channel, not just to the channel. We want to create the best customer experience at every touch point with the customer and make it easy for them to do business with JELD WEN. Our leadership in lean will deliver innovation and sustainability in our products, further driving demand. Our lean efforts will also grow capacity, allowing us to meet the increased demand quickly and efficiently with limited incremental investment.
And these efforts layer into our strategy, which we have laid out in an easily understandable and a pliable model, which you can see here. Internally, we call this the strategy U, which stands for universal framework, universal to customer segments, brands, product offerings and geographies, But it also looks like a you, so it works. It really speaks to how we approach our business and investing in efforts that provide competitive advantages and more effectively serve our channels. At the foundation of the U are innovation and sustainability, which drive our approach to product development and how we serve customers. It's important to note that we focus on customer driven innovation As we believe that we can gain the most from working collaboratively with our customers to solve their challenges.
From an innovation perspective, we look at materials and how they translate to improve quality and performance and product system integration and construction and installation methods that enhance the ease of using and installing our products. From a sustainability perspective, We look at using sustainable materials and how we design sustainability and energy efficiency into every one of our products. Product innovation and sustainability underscore the differentiated customer experience. This means establishing builder and consumer brands that create demand pool. It means engaging with architects, designers and specifiers to ensure we have the products that meet their exact needs and expectations.
We will expand the application of digital methods and technologies to reinvent the end to end experience for builders, channel partners and homeowners. On the other side of the U, we work to enhance productivity with the construction industry to address the consistent challenges in worksite efficiency, productivity and availability of labor. This may mean adopting new product designs, enhancing ease of installation or turnkey solutions with integrated wall systems incorporating our doors and windows. Again, the bottom line with these efforts is to differentiate the JELD WEN experience from our competition And for customers, builders and channel partners to want to do more business with us. As we've mentioned before, we're still early in this overall transformative process, But we're starting to see the results.
As Greg will share with you shortly, our efforts have prompted an evolution from results driven behavior to behavior driven results. Here you can see a phrase that many of you have heard me say before, reliably boring, relentlessly repeatable. But what do we mean by this? In our view, the reliably boring part is the what of our business, while the relentlessly repeatable captures the how of our business. The what represents our drive for results, delivering on our customers' expectations, meeting our objectives and delivering results.
All of these areas should be reliably boring. We deliver what we promise and our customers should never have concerns about that. And how do we get to this point where the results we deliver are so consistent as to be boring? That's the relentlessly repeatable part. How we achieve these goals?
This starts with saying what we intend to do and then doing it, delivering on our promises. It involves JEM, our business operating system that drives how we work. It is fundamentally rooted in the values we live by each day and the leadership model we employ. Ultimately, all of these actions will extend to the broader communities where we operate and the world more broadly. Given this background, you can see that JELD WEN is a multifaceted growth story.
Just as we think about how to approach our work each day Within our JEM system, we have developed the JELD WEN Accelerated Growth Model or JAG, where we focus on top line growth driven by innovation and commercial excellence. Think of this as our standard work or cadence for strategy deployment. Here, we focus on process, price and products as means to accelerate future growth. With gem based enhancements to productivity and footprint rationalization, we are able to meet increased demand driven by our customer experience. This morning, We are sharing with you our conviction to grow greater than market through our continued deployment of JEM and our accelerated growth strategies, Significantly adding to JELD WEN size and scale by 2025.
And our strategy and platform can support sufficiently more inorganically as we execute further. You can see the magnitude of the growth driven by our strategy and through continued deployment of JEM and disciplined execution will deliver EBITDA margins in the 15% to 17% range. We will continue to deploy capital in a disciplined fashion, investing in ourselves through high returning projects and through inorganic opportunities to grow the company. As I wrap up my introduction, I will share our recently published inaugural corporate social responsibility report. This is an effort that has been supported by our Board and the entire senior leadership team as we are committed to being a great company and great companies do the right thing.
As part of this effort, we've identified key areas of focus for how we approach our environmental, social and governance or ESG efforts and they all broadly surround our 4 growth pillars. Our efforts are based on the growth and support of our employees, Creating a circular economy and producing sustainable products, which together support our long term growth. Ultimately, our efforts produce a model that we call the JELD WEN home. The windows illustrating Transparency of our operations and leadership, opening doors to opportunities for our people and communities and ultimately using materials that matter to the health of the planet. In the end, we want to be a company that delivers value for all of our stakeholders, Which means consistently delivering a differentiated customer experience, being a great operator and always striving to do the right thing.
Our leaders are excited to share more about this compelling investment opportunity called JELD WEN. They will share how our multifaceted growth strategy will deliver for our customers, our associates, our investors and the world. Greg Miner will share with you how our operating system
JEM is an acronym for the JELD WEN Excellence Model, and it is our business It touches all parts of the business, whether it be finance or freight, definitely operations, but HR as well. Jim really is foundational throughout our company now regardless of where you go, whether it be in Australasia Or Europe or North America, you will see that everyone is engaged around GEM and the understanding that it is all about Continuous improvement. The way it's really matured over the years is now we're at the point where we're looking at breakthrough initiatives. So it's not just problem solving the day to day problems, but it's looking at a vision of where we want to be, where are we going to move in the next 12 months and And how to do that. We're focused on reducing our time to get product to market, to get our product to the customers.
We are focused on a Very safe workforce where people are engaged, 1st pass quality. And then I think the most important thing is meeting the customer Demand at the rate they want to meet it. And it's looking at how we can do that by linking all of the steps together versus just improving one process in isolation. So when we go into an improvement event, we always say, let's set our targets to double the good And half the bad. What we have seen is by focusing on our strategic initiatives that we're able to drive true bottom line results.
Think about a stream of water and it's flowing. But what happens when there's rocks in the water? Big rocks or little rocks. That stream slows down. So engaging all of our people and our workforce in removing those rocks.
And if at first you can't remove them, you can at least make them smaller, the flow See a team come together and they collaborate and they learn, it makes their work better and it makes our customer Here, that's very, very rewarding. The value of Jim and the reason I believe in it so much is that it is the culture The system that's going to allow us to be the company that everyone wants to buy from, that people want to work And that investors want to invest in.
Good morning, all. It's great to be with you today. My colleague Bonnie Davis just provided a great segue into this segment. I'm Greg Miner, Senior Vice President and global GEM leader for JELD WEN. I'm going to walk you through our lean program, which you know as GEM, the JELD WEN Excellence Model, Provide you with details on how we're accelerating transformation and give you several real world examples of JEM in action within the enterprise.
As I go through the slides, there are 3 key things I want you to take away. First, as Gary mentioned in his opening remarks, We have a well defined strategy and JEM is the way we operationalize that strategy. The second takeaway is the depth and breadth of GEM across our enterprise. We have teams in manufacturing as well as all functional areas identifying waste and working diligently to eliminate it. Finally, I want you to know how JEM is accelerating growth.
We are laser focused on delivering value to our customers and earning their business through operational performance. Here you will see a depiction of the house of GEM, which is our toolkit for executing a lean transformation. Our lean journey began with the fundamentals of doing lean as shown on the bottom of the house of GEM, including basic problem solving, voice of customer analysis and environmental safety and health work. In my experience, many companies stop here and believe they are lean. Our house of gem was created with the understanding that in order to become a great lean company, We would have to move past doing lean to living and leading lean and I'll provide some details as to exactly what I mean by this in a few minutes.
This understanding brought processes including integrated business planning, strategic planning, commercial excellence and talent acquisition into the fold of JEM. Later today, my colleague, Sean Laskoski will discuss How JEM is being used in our strategic planning process to accelerate growth beyond the manufacturing plant floor. For the GEM team, we also apply continuous improvement to our own processes and in 2021 Introduced the transformation model as shown on the right side of the slide. This model pulls elements of the house of GEM into a structured methodology. The center is the basis of any good lean program, rigorous problem solving using the PDCA model, which stands for plan, do, check and act and which we operationalize through A3 problem solving templates.
The model then defines multiple levels of problem solving from annual strategy deployment to hourly Schedule attainment through the deployment of a daily management system, helping to ensure that we minimize waste today and maximizing the elimination of waste in the future. The model also applies rigor to the lean journey including a prescribed pace of change, sustainment and employee engagement metrics. We will set aggressive proactive goals that will unlock new levels of productivity and growth through waste elimination. Moving to the next slide, as with any change management initiative, repetition is the key to sustainment and embedding the desired behavior in the DNA of the company. Our associates and culture are our greatest competitive advantage and the transformation model is designed to empower them to improve processes every day.
The prescribed change pace of change, as I mentioned previously, serves a dual purpose. 1st, in accelerating the progression of turning a series of actions, the doing into a belief system, the living and leading. Most of what JELD WEN has achieved thus far in terms of demonstrated productivity savings, I would describe as doing lean. Using a lean framework, our approximately 80 GEM associates have worked alongside other JELD WEN associates to execute hundreds of discrete projects to eliminate waste and increase efficiency. As Gary mentioned, We are on a journey to create a premier performance culture.
The model aligns our teams from the executive suite to the floor and empowers everyone to solve problems at the best point of impact in real time. Those doing the work are often the best to Solve problems associated with the work. Just think about the power of 23,000 problem solvers on our team. The next leg of our evolution, which I will expand upon shortly, includes creating 14 model facilities or value streams where our teams will map out and optimize every step in the process. And this process will then be rolled out to our entire manufacturing footprint as we continue executing hundreds of lean activities monthly on a global basis.
The second benefit of the defined pace of change is the acceleration of revenue growth and margin expansion. The pace of change requirement means teams must proactively look for waste and opportunities to improve, focused on velocity. The famous Taiichi Ohno, who is considered the father of the Toyota production system once said, and I quote, all we are doing is looking at the time line from the moment a customer gives us an order to the point when we collect the cash and we are reducing the timeline by reducing the non value adding wastes. Simply put, We are focused on accelerating the cash to cash cycle to deliver accelerated growth, margin expansion and cash conversion. As you may know, I'm still relatively new to JELD WEN having spent 25 years practicing lean in roles from lean consultant To Business Unit President, I've been fortunate to see many examples of both good and not so good.
2 things attracted me to JELD WEN, The commitment to lean from our CEO and the fact that I'm not starting at ground 0, as I mentioned a moment ago, We already have 80 dedicated gem resources across the globe who are working diligently every day to improve performance. There are numerous problem solving teams working cross functionally every week. We are now accelerating our journey with the addition of 4 Highly seasoned sensei, who collectively have over 100 years experience in both running lean companies and coaching and training lean. Their experience comes from powerhouse lean companies including Danaher, Toyota, Hillenbrand, Ingersoll Rand and Herman Miller. This team will act as force multipliers to increase the velocity of talent development for existing GEM team and to advance our overall lean skill base.
These investments will accelerate our path to leading GEM, resulting in a systematic approach that will deliver a sustainable differentiated level of performance improvement for our customers and investors. On the next slide, you will see how we are deploying this next chapter of JEM. We call it the 3 Versus value, value stream and velocity. In the spirit of simplicity, I want our associates to focus their collective effort on just three things: understanding customer value as defined by our customers, optimizing the value stream and increasing the velocity with which we Execute change and deliver for our customers. Short agile lead times win customers and by focusing on value optimizing our processes and working with speed, we are able to reduce cycle times, deliver product to our customers more quickly, in turn providing them with additional flexibility as they work to exceed the expectations of their customers.
By focusing on reducing cycle time, We can eliminate waste, increasing productivity savings and increase effective capacity to support growth. We are currently realizing the benefit of reduced lead times in North America windows, which my colleague Daniel Castillo will expand on shortly and where we've achieved lead times to stay substantially below our peers. We are also working across our footprint to expand the scope of our value streams moving from reducing cycle times from order to ship to a more encompassing quote to cash. This expanded focus has benefits for customers by further compressing the timeline to get product to customers more quickly and further benefits JELD WEN by increasing cash conversion. Moving to the next slide, We are confident that as we increase velocity, we will add value to customers and earn a larger share of wallet from the market.
To enable this growth, we are currently in the midst of launching 14 model sites or value streams across the globe by deploying the transformation model that I spoke to previously. I won't go through each of these actions, but as you can see, the process includes a Full value stream analysis, team and culture development workshops and other projects, which we expect will generate meaningful improvement in key metrics including a 50% lead time reduction, doubled productivity and a 20% improvement in quality. It's critical to understand as well that as we execute projects, improvement is realized almost immediately and many of the actions we're taking have little to no capital costs. These 14 sites include 6 in North America, 4 in Europe and 4 in Australasia. They span the full spectrum of our products and represent strategic growth opportunities for us.
Teams at each site will target what will unlock growth through building a competitive advantage by operational performance, including end to end cycle time reduction and a meaningful step up in quality. These model value streams will then be deployed across our entire global manufacturing footprint to drive additional value for customers and benefit to JELD WEN and our shareholders. Moving to the next slide, I'd now like to provide several examples of initial success we're having across the enterprise. This slide illustrates how we're transforming our North America door production, specifically how we dramatically improved our capacity for specially configured door orders for retail channel customers, a high margin value stream that was struggling to keep pace with demand. Our team performed a full value stream analysis and implemented a flow cell that removed material travel, associate motion and work in progress.
This resulted in a 96% reduction in lead time, while increasing throughput by more than 3 times, an excellent example of what's achievable with this process. As we demonstrate repeatability of this improvement, We expect further volume growth in this product. As Gary mentioned in his opening remarks, lean goes well beyond the shop floor at JELD WEN. The next slide presents just a few examples of JEM at work accelerating our front office administrative processes. On the slide, you can see 3 different examples of JEM Kaizens or change for the better in finance, human resources and IT.
Our North American finance team was tasked with reducing the amount of time required to close the books each month. They were successful at reducing the overall touch time by 20% and as a result eliminated 90% of weekend work. This is another proof point of how JEM supports the lean principle of respect for people in supporting a healthy work life balance. Another example of GEM's success in our functional areas is in human resources. 1 of our teams was challenged with improving the time it takes to fill an open role.
Using the A3 problem solving technique, the team studied the current process and removed unnecessary steps to eliminate waste. Since the beginning of 2021, we have seen an 18% reduction in time to fill despite an increasingly challenging labor market. The third example of JEM beyond the factory floor was in Information Technology Department,
where it
was a challenge to provide new remote employees with all of their equipment in time to be ready for work on day 1, exacerbated by COVID-nineteen related work from home rules for non factory workers. The team used the JEM problem solving methodology and reduced management approvals by 50%, ultimately reducing cycle time and enabling the company to provide the necessary equipment to new employees prior to their scheduled start date. Leading with JEM beyond the shop floor helps deepen and broaden adoption of JEM as the way we work across all of JELD WEN. Moving to the next slide is a brief update on our footprint rationalization and modernization efforts, another important success story that is driving productivity savings, increased manufacturing flexibility and value to the customer. This slide illustrates our continued progress towards realizing our goal of $100,000,000 in savings related to rationalization and modernization.
We are midway through the point of meeting that goal with projects that are complete or currently in progress. In 2020, we realized a net reduction of 781,000 square feet. As a result of the substantial progress made over the last 2 years, the company has realized a 7% increase in revenue generated per square foot. Along with improving our asset utilization, this further supports our ESG program by optimizing electricity, water and natural gas consumption across a smaller footprint. In closing, our commitment to lean through our JEM program Stands throughout the enterprise, continues to mature and accelerate and importantly is driving positive results.
To say we have only scratched the surface would not do justice to the improvement achieved by our associates over the last 5 years. However, as we expand our knowledge, deploy new processes and further empower our associates, we still Have a significant opportunity to continue to drive waste out of our operations. And our rallying cry of double the good, half the bad and commitment to the 3 Versus will accelerate value for our customers and our shareholders. Now I'd like to turn it over to Daniel Castillo to walk you through how we are applying JEM principles to our North American business.
Thanks, Greg. As both Gary and Greg previously mentioned, JEM, our business operating system permeates throughout the enterprise, including North America and it's simply how we run the company. Before we discuss some specifics, let me provide an overview of the North America business. Chelwyn North America is roughly $2,500,000,000 in revenue and we are positioned as a leading door and window manufacturer in North America, which creates cost synergies and a deeper relationship with customers. We service the residential new construction and repair and remodel markets and have a growing presence in the non residential space as well.
We have strong relationships with customers in the retail and traditional distribution channels along with the homebuilder customers they serve. Furthermore, we have industry leading products and brands in every market we play in. For example, our fiberglass door offering has the closest look and feel to natural wood and the widest style and color assortment in the industry. We offer the full spectrum of price points from entry level fiberglass all the way to high end custom doors. In addition, our broad windows offering includes VPI, an acquisition from approximately 2 years ago, which leads in the mid rise multifamily Institutional, hospitality and commercial project applications.
I'll speak more to our fiberglass and VPI businesses shortly. Our revenue is split fairly evenly between residential new construction and R and R, and we have a small commercial business in North America as well. We view demand within the traditional distribution channel as a close proxy for residential new construction demand, similarly for retail demand being a good proxy for R and R demand. Our door manufacturing revenue comprises roughly half of our North America revenue. Our windows revenue accounts for roughly onefour of our revenue and the remaining quarter of our revenue comes primarily from our doors value added distribution business and from ancillary products and services to a smaller extent.
We have leveraged JEM tools to transform our business to not only deliver operational improvements, But to translate those improvements into profitable share gain and a sustainable competitive advantage by increasing effective capacity and improving quality and customer service. I'm very proud of our best in class team we have in North America from our production associates in our manufacturing facilities to our sales representatives Bringing value to our customers every day. The adoption of JEM as our standard operating system used across our entire ecosystem has resulted in a winning culture That is the driving force behind our long term growth opportunity. As this slide highlights, our focus on reducing end to end cycle time is increasing velocity, resulting in reduced lead times, effective capacity expansion and growth. With respect to windows, specifically our vinyl window operations, We utilize our JEM toolbox to align capacity with the customers we want to grow with and this exercise has resulted in profitable share gain.
Our team worked feverishly to improve performance by implementing standard work to reduce complexity and variability and developed an integrated supply and demand plan that aligns capacity to key customers and markets. Our efforts to reduce cycle time, segment our customers and more closely align supply and demand Has reduced vinyl window lead times by almost 3 times from 14 weeks to 5 weeks, aligned our growth with key partners and translated into 150% increase in orders year to date through April. We have applied a similar set of JEM tools within our door operations to standardize our fiberglass door offering and make it easier for customers to transact with us. By reducing cycle times, investing in capacity and aligning with key builders and channel partners, we have grown our fiberglass door business by over 30% over the last 2 years. We continue to invest in capacity expansion projects to enable additional growth in our fiberglass business.
Through the disciplined deployment of JEM across our North America business, we will deliver a superior customer experience and sustainable profitable growth for our investors. As Greg discussed previously, we are focused on increasing velocity by reducing cycle times throughout the business, including in interior doors, which I like to highlight here. The increase in velocity and improved cycle time has delivered improved lead times and significant share gain opportunities. After implementing our daily management system, our operations team identified variations in interior door press cycle times. Armed with hourly production data, the team problem solved and to identify and eliminate the root cause of the variation.
The result was a 5 second efficiency improvement and consistent cycle time. This 5 second improvement may seem small, but depending on the final product, it can increase capacity to yield as much as 5% revenue growth. While John will touch on our broader capital allocation priorities later, investing in internal high return projects is our number one use of cash and we have a great opportunity to support growth in our Windows business, specifically within VPI Windows and Vinyl. We acquired VPI 2 years ago and remain very bullish on that business as they continue to expand their presence in the multifamily segment. By implementing GEM initiatives, VPI has grown effective capacity within its existing footprint through improvement in material flow and is expanding capacity to new regions.
On the top left hand corner of the slide, you see the Brown Building. That is a perfect example of our ability to cross sell our products in multifamily projects to help increase Our share of wallet. The first two floors on that building feature our custom wood windows and floors 3 to 7 include our VPI solutions for mid rise multifamily units. Through the GEM deployment and capacity expansion into new geographic markets, VPI is poised to double its business in the very attractive multifamily segment over the next 3 years. You may have seen our press release earlier this month regarding the announcement of our market expansion of VPI To the East Coast, this is a prime example of our ability to grow share in new markets by bringing our industry leading products into regions where we have historically had limited presence and we couldn't be more excited.
On the Vinyl Window side, as I stated previously, We continue to make improvements and are realizing those benefits by offering market leading lead times, launching new innovative products and segmenting the business to strategic markets and customers. By implementing these improvements, we have increased our capacity by over 15% and are positioned to continue to grow our share in the marketplace. I want to emphasize again, JEM is the foundation that creates differentiation and a competitive advantage for growth. And JEM deployment is pervasive throughout the enterprise. We have improved the end to end value stream, reducing cycle time and eliminating waste from the supply chain to the customer.
Together with strong customer and builder relationships Across channels, we are delivering a superior customer experience. Another example of JEM in action, we dramatically simplified the ordering and fulfillment process Indoor's working with our builder and channel partners to standardize our product offering from hundreds of SKUs to approximately 20 SKUs. By streamlining our product offering, we reduce complexity within our manufacturing process, gain production throughput, align capacity with demand and alleviate pressure on the supply chain, while further enhancing the customer experience. We continuously work with our supply chain and channel partners to reduce cycle time and eliminate waste across all our processes. This alignment also allows us to better analyze market trends and utilize advanced analytics to improve our manufacturing processes, customer service and product portfolio.
Lastly, as we continue to We're closely developing end to end solutions for all our customers. We will extend our capabilities into providing further sustainable solutions and create lasting shareholder value. As we've been discussing, JEM supports growth through process improvements and operational excellence. JEM is also embedded in our innovation efforts as we continue to drive value through process innovation and automation in our facilities through the use of robotics. Product innovation and new materials for our windows and doors applications that will enable new solutions for new customers and markets.
Customer experience investments in digital innovation will drive further improvements and best in class capabilities to simplify the end to end customer JELD WEN experience. You'll hear from Sean and David later, while they'll go into further detail around some of our innovation efforts. Thank you for your interest in JELD WEN and I look forward to taking your questions in our upcoming Q and A. However, before we get to Q and A, please watch this video that provides a look at our PUR 1 piece flow door manufacturing lines at work.
The 1 piece flow really allows you to focus everything on the customer. When you're thinking batch flow, you're thinking days. When you're thinking 1 piece flow, you're thinking day. The first time I saw it, I couldn't believe that we could get there. The process was 6.5 hours.
If the customer asked for a rush order, it was harder For us to meet that demand. And as we all know, speed wins. The cutting, the painting, the stacking on the end, it's all automated. A huge benefit compared to batch flow where you have to touch every single process along the way. You have to feed it into the machine to cut.
You have to Pull it out of the machine. Okay. You have to send it to a paint line to get painted. This machine does all that in one flow. The system is faster, allows us to get to our customer quicker, but we don't sacrifice safety and quality for that speed.
If we had a scenario where we see poor quality, we know it right away and we're able to stop, get that problem addressed and then keep building good doors again. It takes about half the amount of resources to process an order on 1 piece flow than it does through batch processing. It takes about 80, 82% less space to do 1 piece flow than it does for batching. And when you think of the lead time from customer order to ship, it takes about 75 Percent less time to make it through the process when you're looking at 1 piece flow versus the batch process. The batch process is About a 4 and 4 and a half hours to dry.
The glue that we use on our 1 piece flow process is a polyurethane Sein reactive, glue. It really just takes 15 seconds or 10 seconds to dry. It's very quick. So And we pivot the door, we trim both sides of the length of the door, and then we apply ultraviolet paint and then dry it with ultraviolet light. We do the same process again along the top and bottom of the door.
And then we'll put in a label and then it's ready to go. That whole process start to finish is about One minute. What we see here in in our Atlanta facility is that now we have the ability to truly plan to a customer's order. We know when the truck's gonna leave. We know when we have to have material in the bay to load that truck.
It's a one day process for basically an entire We still realize there's so much more we can do. The continuous improvement program called JEM really allows The platform to do that. It was in a out of the box model. We had to build it ourselves. And so we've really taken a lot of Time building that model together.
We've learned a lot along the way and we'll continue to improve that process for the next generation.
Good morning, and welcome to the first of 2 Q and A sessions this morning. We're going to start with a question for Gary. You are now 3 years into your role as CEO. Where in the business or strategy implementation are you most pleased with the progress? And where do you still see the most opportunity or potential?
That's a great question.
We made
a lot of progress in the last 3 years, particularly in our operational and our cultural areas of the company. The deployment of JEM across the entire the entire business, the building of a premier performing culture, one that It does what we say we're going to do, delivers for our customers, delivers on our commitments is really something that I'm proud of and I think that our Associates have really attracted to on this culture, our operational performance and our ability To really stabilize the performance of the business operationally and move towards growth in our commercial excellence capabilities as well. I think we've got some room to grow. As you've heard already, JEM is really our business operating system. And you're going to hear a little bit more here on how we're deploying that across our strategy And toward accelerated growth as well.
Thank you, Gary. Please describe synergies between the windows and door businesses in North America. Is one business structurally better than the other? Danny, would you mind handling that one?
Great question, Chris. I would say the synergies are around Commercial opportunities and operational opportunities. On the commercial side, we offer end to end solutions From entry level products all the way to custom made products. And what that allows us to do is offer a full house package With our innovative solutions, which increases our share of wallet. On the operational side, as Greg mentioned, JEM is our foundation and we use it on a daily basis to align our capacity to reduce our cycle times, increase our throughput.
And what that allows us to do is aligns our capacity to our growth opportunities. As far as the two businesses, They're the same. They both are positioned to meet the company's objectives on revenue growth and margin growth. And more importantly, they play a vital role in achieving our strategic initiatives around innovation, energy savings and sustainability. Daniel, thank you for that.
Can you talk a little bit more about the differences between doing, living and leading gem? As you think about the evolution from one to the next, what can we expect to see from an operational standpoint? Gary, would you mind taking that? So I'll
start off and maybe toss it over to Greg a little bit as well. When we think about lean deployments in companies, a lot of companies Deploy lean. Frankly, they use the tools to improve a process, improve a plant, very focused on using the tools in an operational setting To solve problems. I think the difference between what a lot of companies do in terms of deploying a lean program And what we've done with JEM is really building an operating system and changing the culture from one that looks at every aspect of our company from end to end in our value streams, Looking at how we improve flow, improve our ability to grow and build a foundation around problem solving, around continuous improvement and the like. And I think that's the big difference between just doing lean and really living and leading in lean as
part of our culture.
Yes, sure, Gary. It's exactly right. A little more specifically, again, you've heard before the doing piece is really about the tools, taking out a tool, finding a problem, Solving it, it tends to also be very discrete. We kind of take out that tool, put it back in the box. When you get to the living piece, you're really looking at a systematic approach.
So a great example is the video we just saw in 1 piece flow. There's no 1 piece flow tool in the lean toolbox. In order to be able to do 1 piece flow, you have To have total productive maintenance, you have to have setup production, you have to have sequencing materials to the people and to the production lines. So in order to get that concept of 1 piece flow, it takes a systematic level of approach. And then when you get to the leading lean, the way I like to say it is, it's in there, right?
Everything we do, it becomes unconscious. It just baked into everything we do Across the entire organization. Thank you for that guys.
In your recent earnings call and in this presentation, improved lead times We're mentioned across a number of businesses, specifically in Windows. How did you accomplish these operational improvements? And how sustainable are they Given the accelerating demand in North America. Daniel?
Yes. Thanks, Chris. I would say if we step back for a minute, in the past, Our issue has been about a mismatch, as Gary stated, a mismatch on supply and demand. What the team has been able to do, and we're really proud of their efforts, Spend a lot of time around customer segmentation, and we've also implemented an effective supply and demand plan around our integrated business process. In addition to that, we've utilized JEM to increase our equipment uptime and therefore increase our throughput.
And with that, I think the Windows business is positioned to grow and it has a sustainable process going forward. Thank you, Daniel.
Your organic growth target for 2021 to 2025 represents an acceleration And revenue growth rate for JELD WEN from recent years. What gives you confidence in the company's ability to deliver these improvements? Gary, would you mind taking that? No, it'd
be great. It's a great question. We've been very focused on fixing our operational Improving our operational capabilities, the deployment of JEM and creating a culture around growth and sustainability. The example that Danny just gave around the Windows business really applies across all of our product lines and our value We've been able to improve throughput, improve our reliability and improve our operational support there. Likewise, as you're going to hear in a little bit, we've been able to apply our JEM tools around strategy and growth so that we have added a commercial excellence capability within the company that I feel really confident about customer segmentation, our ability to look at where markets are moving And to build quality reliable products, get them to customers when they need them and where they need them in a reliable fashion.
So I feel very confident About our ability to accelerate our organic growth and to drive continue to drive that profitable growth and margin expansion. Thank you, Gary.
Greg, you are relatively new to JELD WEN. Please talk about your early observations of JEM and the lean culture. What sort of sorry, what sort of potential do you see at JELD WEN versus other industries that you've worked in?
Great question. And I can't tell you how excited I am when I get to go to the GIMA and go to our plants. The commitment and passion around GEM and continuous improvement is truly palpable. Our plant managers across the globe are going to the Gemba every single day using their SQDCI, safety, quality, delivery, cost Inventory boards to identify problems, look at trends and get to the root cause and solve problems. This is happening literally every day at an organic level.
Back in December, because of COVID travel challenges, we actually implemented virtual gimbal walks. So even today And this week, I get to go on 3 to 5 gimbal walks every single week to work with those teams and see how they're working And help them improve their processes. As far as industries, Chris, I spent 8 years in a with a lean consulting firm And worked in industries from healthcare to making frozen pizza. And I really don't think I saw one industry where lean is just ubiquitous Across the industry, with maybe the exception of automotive because everybody's trying to catch up to Toyota, the leader in lean. What I can tell you is in every industry, there's a company that is using and leading and living lean And they're winning.
And I can tell you from my perspective, in our industry, that's Joe Wind. We're going to win and we're going to with Lean and with Gem.
Thank you, Greg. Given the strong macro demand outlook in North America, how do you think about growth potential and capacity utilization in your business? Daniel, I'll turn that one over to you.
Yes. I think, obviously, when we look at the demand side, builder sentiment is robust And order rates are strong. As we look at that, we're going to continue to see that. And I think both businesses, the windows and door business are positioned To execute and grow around those opportunities.
Dan, I think I've got a follow-up to that. Sure. Where might you choose to invest capital and capacity Expansion versus seeking improved throughput through GEM initiatives.
On the investment side, we're going to concentrate our investment around high performance, high value products. And we've recently announced as far as examples, we've recently announced that we're going to expand our multifamily window business on which is VPI Out to the East Coast and we've also subsequently announced an expansion into our entry doors around our fiberglass solutions. As far as the GEM investments, as Bonnie said in the video earlier, I would say that's a daily occurrence in our business And we're looking to drive those daily improvements from a reduced cycle time and increased throughput to align our capacity to our growth initiatives.
Great. Thank you, Daniel. Greg, can you please provide more detail about what you're implementing at these 14 model plans?
Sure. Great question. First, we're not slowing. We're not waiting. We've already started 6 Of the 14 sites, so we're almost halfway through getting them up and running on the new model.
The COVID challenges have caused us To be a little bit slower than I'd like in Australasia and Europe, but we are up and running and we do have a very good plan to have all 14 up and running before the end of this year. As far as the model itself, it's a 3 phase approach. Each one of the teams at the model sites will go through an exercise with 1 of the coaches To help them understand what it's like to lead in a lean environment, in a transformational environment that's in that leading and living lean versus The doing lean, so they go through that process, then leads then to a full detailed value stream analysis of the product line or product family That we're going to use as the model transformation in those sites. That's a really data intense process digging into every part of the process from order to ship, As Taiichi Ohno said, we're just looking at how we can reduce that cycle time. The output of that value stream analysis is a body of work It's going to create a new future state with significantly less waste in it.
That leads to the execution phase, the 3rd phase, which is through rapid improvement events. These rapid and prune events are week long activities, very traditional, what you might call Kaizen, where a team will study a piece of the value stream And then go really deep into it and come up with solutions that are literally executed the following week. And sometimes they may take a little bit longer if we got to move a major piece of equipment or something, but they typically end up with the improvements starting the very next week. You can imagine at the end of the year when we have all 14 sites up and running, Each one of them is going to be running 1 to 2 rapid improvement events every single month. So you think about 14 to 20 improvement events happening on a regular basis.
The improvements are going to come pretty quick. They'll be small and incremental until we get the whole value stream through that first cycle of improvement, But it's going to happen pretty quickly.
Great.
Thank you, Greg. There's been quite a bit of consolidation in North America Windows over the last few years. How is your business currently positioned or impacted by this consolidation? Daniel, would you mind taking that?
Great question, Chris. We're bullish on our Windows business. The business is set up to meet or exceed the company's stated objectives of both on top line and on margin growth. And we'll continue to invest, like I said, in high performance, high value products like our VPI multifamily windows and our even our folding Wall Door Systems. Sean Laskowski will go into more detail a little later on as to how we're investing in that high performance, high value Products and solutions.
Thank you, Daniel. Please provide some examples of future planned savings From the footprint rationalization and modernization program. Is this weighted more to one of the 3 segments? Greg?
Great question.
Yes. Of course, as you can imagine, it is weighted pretty heavily towards North America based just on our business model and our business footprint With over 50% of our plants in North America. So yes, it is weighted towards North America, but it is pretty broad across all of our segments and business units. As far as the execution piece, we're right at the 50 yard line where we've got 50% that's either in progress or complete With the other 50% in planning, and I can tell you we have really good line of sight to that remaining 50% that's in planning. Those first projects were relatively small.
We were able to get through them quick. So we did a relatively large number of smaller projects. It might actually look like we've slowed down now as we get to these bigger projects that are more strategic. We sure as heck don't want to Interrupt our customers as we execute on these projects. So what you're going to see going forward is maybe it looks Slower again, but you're going to see a larger movement each time we move and get one of these projects from that planning phase because we're really going through a detailed plan So that we don't miss any execution to our customers.
And then as they move, you'll see bigger chunks moving into the in progress and then complete as we go forward.
Great. Thanks, Greg. Please provide an update on the composite window launch in North America, including a reminder on the value proposition of that product. Danny, would you mind taking that? Sure, Chris.
Our composite window is key to meeting our growth objectives in the window business. The team has been developing a full house package that will offer various sizes, styles and colors. The product will exceed our customers' expectations around performance and quality, and it's going to leverage The durability of a vinyl window with the beauty of the wood design. As far as our revenue expectations, we feel that we're going to Hit our full stride in 2022 and early indications are that there's a lot of interest in the product And our financial estimates are at or slightly ahead of our original estimates that we provided.
Great. Thank you, Daniel. Well, that concludes our first Q and A session. We're going to take a short break and we'll see everyone back here in about 5 minutes. Thanks.
Hello. My name is Sean Lonskoski. I'm the Senior Vice President for Strategy and Corporate Development here at JELD WEN. The key element of my role is defining and overseeing our JELD WEN accelerated growth effort also known as JAG. While our JELD WEN Excellence model, JEM, is readily associated with operational capabilities, as you'll learn about today, JAG is derived from the commercial tools and processes embodied within JEM.
JAG is a 3 pillar growth strategy comprised of core organic growth, breakthrough innovation and inorganic growth. The primary objective of JAG is to consistently deliver Above market organic growth rates. An important secondary objective is complementing that above market organic growth With disciplined inorganic growth that solidifies our existing market positions or extends our portfolio into natural adjacencies. Next slide please. Our growth plans are underpinned by our universal or you strategy.
This universal strategy is a common approach instead of common capabilities that links all of our market segments and geographies we participate in, All of the customer types we serve and all of the products we offer. Our universal strategy begins with the customer experience, Providing our trade partners and end users best in class service and support across the entire purchase journey. And it culminates with a focus on construction productivity, leveraging our ability to help builders and contractors complete their projects both more effectively and more efficiently. Our customer experience and construction productivity focus Supplies when providing windows to homebuilders in North America, delivering a quality commercial interior door to an installation contractor in Europe Or assisting a home buyer in their entry door selection at a showroom in Australia. Next slide please.
Let me now go a bit deeper on achieving accelerated growth via a differentiated customer experience. We've observed that the areas of our business that exhibit the highest growth rates and have the highest returns are typically areas where our customer satisfaction is highest. Providing the best customer experience means doing so at all touch points in the purchase journey, beginning with the initial learning and research phase, Moving through to getting a quotation, making the final product selection, taking delivery and finally enjoying the completed project and if necessary extending to any care that might be required after installation. And it also means incorporating digital elements to We improve these interactions, removing friction and complexity wherever possible. It's not about doing digital for the sake of digital.
It's about using digital to improve the customer experience. A few examples would include relevant, yet easy to understand information to make design choices for consumers, online configuration and order placement for trade partners or remote troubleshooting and appointment scheduling for aftermarket service technicians. The result of our customer experience focus is The portfolio of brands well known with builders and consumers alike, an actively engaged group of architects, designers and specifiers and the continued reinvention of the end to end experience for our trade partners, for homebuilders And for homeowners, which in turn results in above market organic growth rates. Next slide please. Next, I'll discuss achieving accelerated growth by increasing construction productivity.
The construction industry is wrestling with labor shortages, supply chain constraints and construction dynamics like material inflation and evolving building code requirements. All of these make it challenging to complete projects on time and at the best cost. We are taking an ever more active role in how our offerings impact construction productivity now And well into the future, looking for ways to provide turnkey solutions or facilitate high quality prefabrication. An example of that more active role is having frequent discussions with trade partners and builders on their business challenges, Not just articulating the features and benefits of the products we offer. Another example is having employees spend time at Construction job sites, observing the entire build process, including the delivery, handling and installation of our own products.
Each of these activities results in ideas that directly feed into our break through innovation funnel. We're already pleased with the resulting ideas and look forward to bringing several to fruition and to market In the coming months years. Next slide please. Providing a differentiated customer experience and increasing construction productivity will unlock above market organic growth in our core offerings. The universal strategy supports our existing global portfolio of top market brands, VPI and La Cantina in North America, Donna and Swedor in Europe and Corinthian and Stegbar in Australia, just to name a few.
And of course, the JELD WEN brand across the globe. Additionally, our universal approach provides the strategic framework to apply those capabilities to new brands within our core and to new offerings beyond our core. And as you will hear from John, our financial framework will support significant inorganic growth going forward. To identify opportunities and build a robust M and A pipeline, we have already begun looking at what and how our customers purchase. For example, when looking at the downstream markets, nearly 90% of builders purchase patio doors from their window supplier, Nearly 80% purchase entry doors and nearly 60% purchase interior doors.
There really is synergy in the offerings we provide today. Additionally, there are several other offerings homebuilders commonly purchase from their window and door supplier. And again, we're also keeping a pulse on what stands in the way of homebuilders and contractors from delivering their projects on time and on budget. We are confident that JELD WEN of the future will continue to be a leader in windows and doors, Delivering core growth at above market rates. By complementing with disciplined inorganic growth, We also believe the GELD win of tomorrow will become a broader leader in premium materials for high performance Steer and interior building products.
Next slide please. As mentioned earlier, our universal strategy rests On a foundation of innovation and sustainability. We have substantially increased our innovation resources in the past year. By adding a global innovation leader, standing up a global innovation team, forming regional innovation teams and making multiple innovation focused hires within those regions. The result is a robust funnel of innovation ideas With additional activity underway to fill that funnel with even more high impact opportunities.
You'll hear several great examples around leading with innovation from our business leaders. And finally, we strive to produce And deliver all of our offerings in a sustainable way, which you'll also hear more about today from Roya. To summarize, Our JELD WEN accelerated growth effort JAG will create profitable organic growth at above market rates, while also creating compounding cash flow via the disciplined allocation of capital to fund additional growth through inorganic activity. I'll now hand off to David Guernsey, the leader of our Europe region who will share more about his business And some of the great work occurring there.
David? Good morning. I'm David Guernsey, EVP and President of JELD WEN Europe. It's my pleasure to talk with you today about our growth aspirations. Our market leadership position is built on over 25 years of strong customer relationships.
We serve over 17 countries and 300,000,000 people from our 32 production facilities. Juglin Europe's product and service offerings are represented by 12 highly recognized brands. Our products range from doors you might find in your home like The simplest molded door in your closet or a custom timber front entrance to commercial applications you might encounter in a hotel. You can also see our highly technical applications like radiation resistant doors in hospitals and laboratories. Overall, about 60% of our over €1,000,000,000 in revenue is generated in residential and 40% in commercial markets.
And in the markets where we play, we win. There is, however, so much more opportunity. First, we have tremendous segment potential where because of our current offerings and geographic scope, we can grow by leveraging products and brands Existing in one part of our footprint to address segments underserved in other parts of our footprint. Our biggest opportunities here being exterior, Steel and high performance products. Additionally, we're continuing to expand geographically using both Organic and inorganic approaches to access new markets and further optimize our manufacturing capabilities.
By winning in new segments and new markets the way we do in current markets, JELD WEN Europe has the potential to triple its turnover in Europe. Of course, we will continue to leverage our service advantage and our product leadership for share acquisition in the markets we serve today. For all of these initiatives, we're fortunate to have a strong platform on which to build. Consistent with JELD WEN's universal Strategy of enabling construction industry productivity, eOffer and 5 plus are two great examples Helping to drive significantly above market growth in Germany, our largest market. EOffer is a digital commerce platform That allows our channel partners to self manage quotations, allowing them to better serve the customers And upon quote acceptance reduce the order processing time by 20% to 40%.
Overall order cycle time for our customers is reduced to hours versus days for some of our competitors. Amplifying the impact of the offer is 5 plus This is a model unmatched by our competitors and enabled by our manufacturing excellence program, JEM, Where team JELD WEN offers a guaranteed lead time of only 5 days for most of our build to order products. And our more Flex and technical offerings can be manufactured in as little as 10 days. With 2 thirds of our German build to order product delivered in 5 days, eOffer and 5 plus give our customers the ultimate in flexibility, improving their productivity and driving growth for JELD WEN. With the success of our German service model and our universal focus on customer experience, we're rapidly scaling certain elements in other countries.
Europe leaves JELD WEN in the rapid deployment of our global e commerce platform. Here you see a page for our France offering, a part of our recent To be released in the U. K. And France that our team brought to market in fewer than 90 days, leveraging modern development techniques. This platform allows our customers better visibility to product availability and significantly shortens Their order cycle time from up to 24 hours to nearly instantaneous.
Additionally, we have observed that order values for the platform Are 40% larger than traditional entry methods. Customers tell us that they see huge potential in this platform and that we're a step ahead of similar tools in the market. As e commerce momentum grows, further enhancement continues as does our expansion across Europe. While we work to differentiate through our service model, product vitality is critical for the long term. And new and enhanced products are about a third of our growth plan.
I'd like to share with you 2 of our more recent innovations. First is the EcoDoor, an offering consistent with our strategy to leverage premium materials to better address the Ever increasing sustainability requirements of architects, developers, governments and end users. Offered as an option to our advanced line of exterior doors, the FSC certified materials used in its construction Create a recyclable door with improved energy efficiency and sound abatement that continues to meet the requirements for fire resistance and security. 2nd are smart doors, innovative new products for both commercial and residential applications that are currently launching. The doors developed in conjunction with our hardware partners Offer more seamless hardware door integration, better addressing the aesthetic and technology needs of our customers.
Many thanks for your interest in JELD WEN Europe. I hope you are as enthusiastic as I am about the strength of our business, Our opportunity in Europe and the many assets that we have to drive growth.
Hello. My name is Roy O'Bania and I'm the General Counsel of JELD WEN. I'm happy to be here with you today to describe our ESG history, Our journey over the past year and our ambitions for the future. For over 60 years, JELD WEN has invested in initiatives that benefit our planet and communities. It's part of our DNA.
We've made sustainable product design and manufacturing integral to our business as far back as the 1970s And we developed a process to use wood byproducts to make the door skins used in interior molded doors. To this day, We use recycled and sustainable materials across our product lines. Our processes are intended to reduce waste and greenhouse gas emissions. So we've always understood our responsibility to the communities in which we work and live to our associates and those of our supply chain all over the world. We also understand our responsibility to our planet and our role in preserving our environment.
You've already heard from Greg, David, Sean and Danny about ESG initiatives that are embedded in company strategy. Now we are ready to take the next step in our ESG journey And I want to talk about the work we have done to position the company as a leading ESG focused enterprise. As Gary mentioned, we just published our first ESG report and I encourage you to take a close look at how we define our ESG ambition, approach and governance. A cross functional global team was heavily invested in defining our ESG ambition and approach with the full Support of our Board and the entire senior leadership team. I along with John Linker, Sean Laskoski, Tim Craven, Our finance strategy and HR leaders are the executive sponsors of the ESG initiatives at the company and are charged with driving ESG through all aspects of Our ESG ambition is the result of a systematic approach to addressing the material topics of greatest relevance to our stakeholders And to long term business success.
Our initial focus is on those topics where JELD WEN can make the most difference. The report is just the beginning. We have committed to take meaningful steps to attain leading ESG performance that will drive business advantage and value creation over the long term. We call our ESG framework, the JELD WEN home. We are focused on 4 key areas, Producing sustainable and energy efficient products, supporting a circular economy and sustainable supply chain, Ensuring the growth and safety of our diverse associates and driving innovation and research, all supporting our long term growth.
To hold ourselves accountable, we will be transparent on our progress. The 3 pillars of this framework are broadly defined as materials that matter, Doors that open and windows that brighten. For materials that matter, we will give new life to our materials and how we use them. This means designing for reuse and recycling and ensuring energy efficiency for our end users. For doors that open, we will be open to Broad and diverse perspectives and deep innovation.
We will flex our research capabilities and bring in different voices. And for windows that brighten, we will give a clear line of sight through a window into our work. We hold ourselves accountable and are responsible in our reporting. We are accountable to our people and uncompromising about implementing and auditing measures that put health and safety first. We will do the right thing.
What have we done already with regards to energy efficiency? We build energy efficiency into our operations and product We have been an ENERGY STAR partner for over 20 years and are targeting ENERGY STAR certification For all new products developed in North America. 2 of our product lines have already been certified by the Passive House Institute For Energy Efficiency. We manufacture doors that are made of sustainable materials and increase energy efficiency substantially. Our Canadian colleagues Have developed the northern tri pane windows that by using 3 panes of glass can result in better thermal performance and internal air filtration.
The exterior pane insulates the interior 2 panes and can reduce heating and cooling costs as a result. The extra air space between each pane of glass Also serves to reduce radiant heat and condensation, allowing for more cold weather humidity and helps mitigate exterior noise. That's just one example. We're also committed to investing in systems that support cradle to cradle product life cycles. We source wood products from sustainable forestry and a good portion of our source timber is FSC or PEFC certified or the equivalent.
Beyond sourcing, we're designing products for circular end of use disposal and creating cost effective circular logistics and business models Downstream and upstream, we are excited by the potential innovations in products and processes these goals promote. We are particularly proud of our new Surabhan, Indonesia facility featured on the next slide. Building on our JEM processes, Cerrobon represents a visionary commitment to sustainable manufacturing practices. Sustainability is built into every inch of the facility's design. For example, the facility uses technology that enables managers to monitor energy and water use in real time And make necessary adjustments if it exceeds the established benchmarks, a dedicated electricity room that allows the facility to store electricity And adjust how it's applied during peak and non peak times.
A fully sustained potable and non potable water system That uses recycled rainwater. No groundwater or municipal water has been needed since the operation opened. Next, we have opened the door to broad perspectives and deep innovation. Our global lead for innovation is revamping Folio management process to increase the focus on transformational and disruptive ideas and to expand our capabilities and investment in material science That supports sustainable solutions, including towards greater energy efficiency and new product development and process innovation Across categories and regions with a particular push to increase patentable new materials. To fuel ideation, We established global and regional innovation teams to facilitate the exchange of new concepts and ideas.
These teams are supported by a new idea management system that captures and sources innovative suggestions from our entire associate base. Our current tally includes over 250 ongoing modification and and new product development projects. Sustainable innovation is highly dependent on a foundation of diversity, equity and inclusion Or DE and I. While we are still on our DE and I journey, we recently have made significant strides. We now have 3 women on our Board of Directors, including the first woman of color.
Our commitment to diversity, equity and inclusion emanates from the Board and senior management and into the organization. We are very focused on ensuring diverse slates for selection and succession for leadership positions. We are invested in recruiting minority candidates and we continue to expand our associate affinity network groups. To date 20% of our global management is female and we are committed to improving this representation. We can do better and we will.
To help our associates understand their own unconscious biases, we conduct proactive training on discriminatory practices based on race, Gender, religion, ethnicity, sexual orientation and other factors. We will be closely tracking the impact of these initiatives Reporting on diversity statistics and detailing our roadmap to attain targets. We like many other industrial companies have more progress to make, But the commitment has never been stronger. An important part of our ESG ambition is transparency and accountability. We will give a clear line of sight into the steps we are taking with regards to ESG and good governance overall.
We also are implementing best in class safety management Plans, standards and training requirements to prevent workplace injuries, fatalities and illness. We have 74 full time employees focused on health and safety and 50 full time employees focused on environmental matters. We also launched a global health and safety campaign with a single set of 12 critical safety rules adopted by each facility. The LIFE initiative, which stands for Living Injury Free Everyone, focuses on eliminating serious injuries or death And we're tracking serious incidents to measure the campaign's effectiveness. To increase accountability for health and safety, we implemented a user Friendly software platform with robust and sophisticated incident tracking capability.
Our long term consistent approach to health and safety Has tangibly changed our working environments. We emphasize safety from the start and encourage a community of safety through team competitions and rewards Among other things. Our plant management team thinks beyond the walls of the facility too. In some regions, the families of our associates Are invited to learn more about the factory and about safety. Our inaugural ESG report is an important step towards increasing visibility and transparency.
Looking ahead, we will build integrated sustainability reporting systems And develop standardized processes to enable consistent measurement of all ESG topics across sites and regions. In addition, our executive compensation is linked to ESG metrics relating to safety, employee engagement and diversity. And our annual associate engagement survey ensures that every associate has a voice. In 2020, We sent it to more than 21,000 associates, translated it into 19 languages and achieved an 85% response rate. We take the feedback seriously and management is held accountable to be responsive.
What is next? Our path forward is focused on setting targets and implementing operational structures that will support our portfolio of ongoing and new initiatives. We are building on a foundation of 60 years and we look forward to making fast and meaningful shifts. You will hear more over the coming months years. I would now like to turn it over to John Linker, our CFO to discuss the financial benefits of our plans.
Thank you.
Good morning, everyone. I'm John Linker, JELD WEN's CFO, and it's good to be with you all today. As Gary described in the beginning, one of the aspects that defines a great company The company that shareholders want to invest in. When I think about a company that shareholders want to invest in, I think of a company that has a strong track record of performance, A company that meets its commitments, a company that has a strong vision for creating shareholder value based on the foundation of ESG, A company with a robust governance and compliance infrastructure and a company that has fantastic growth prospects. And that's exactly what you've heard today so far, and you're going to hear from me about JELD WEN over the next few minutes.
JELD WEN is a multifaceted growth platform with a clearly defined framework for delivering growth, margin expansion and compounding cash through disciplined capital allocation. Before we get into details and I'm sure you're all anxiously awaiting the discussion of our 2025 framework, I want to add my own perspective regarding JIM or the JELD WEN Excellence Model. Historically, I believe the investment community has primarily thought of JEM as an enabler for productivity, for manufacturing cost savings and margin improvement. Hopefully, from the earlier presentations today, you now understand that JEM extends beyond just cost and margin improvement. JEM is an enabler for lean transformation throughout our enterprise, accelerating revenue growth through cycle time improvement and elimination of waste.
The culture of JEM is clearly embedded in our office environments and our functional teams as well as our operations. Our functional leaders use JIM tools in just the same way we use JIM on the manufacturing plant floor, such as value stream mapping, a3 problem solving and rapid improvement events, just to name a few. We've achieved significant results by using these tools across our functions like our legal department, IT, marketing, HR as well as our finance team. Through these gym tools, we've eliminated waste, improved cycle time and improved communication, which together gives us more time and resources to focus on executing our strategy to deliver sustainable shareholder value. Let's get in the details.
We'll start by reviewing JELD WEN's Extraordinary track record of financial performance from 2015 to 2020. Starting with revenue. Over the 5 year period, we grew revenue at a compound annual growth rate of 4.6%, driven by both organic and inorganic initiatives. That revenue growth, combined with our cost reduction programs, enabled a growth rate in earnings of 7.5% during the same period. This demonstrates our ability to expand margins through productivity, cost savings, pricing and fixed cost reduction.
While the revenue and earnings growth are solid, one of the standout attributes, which I think the market undervalues, is the power of our cash flow conversion and our ability to compound that cash flow over time. As you can see here from 2015 to 2020, We've grown free cash flow at a compound annual growth rate of 22.3%. We've used that free cash flow to compound the benefits and drive shareholder value through our disciplined capital allocation process, focusing on investments that have the highest risk adjusted returns. Additionally, the strong earnings and cash performance has enabled us to significantly improve our balance sheet and credit metrics. Over the last few years, we've reduced our net debt to EBITDA from nearly 4 times at IPO to now under 2.5 times.
We also built a significant liquidity position, including cash and undrawn credit facilities, which gives us flexibility and provides funding for future growth investments. Together, this track record demonstrates that we have a repeatable playbook to deliver future growth. Next, I'll describe the framework that enabled our recent track record of financial performance and provides clear visibility to how we will achieve future growth, margin expansion and cash flow. As you may recall, Gary assumed the CEO role in mid-twenty 18 and I assume the CFO role later in 2018. At that time, we implemented the framework shown on this page to drive predictable and sustained business performance across the enterprise.
There are 5 aspects to this framework. 1st, volume growth. Our expectation is to grow organic revenue volume at a faster rate than our underlying markets. As you heard today from my colleagues, We have made significant investments in both operational and commercial excellence programs that will drive our revenue growth above market. In recent quarters, our organic volume performance has accelerated, demonstrating that these strategies are delivering profitable share gain in key products and channels.
We feel confident about our ability to continue to accelerate this organic volume growth into the future. Next on pricing. Our framework is to always implement sufficient price to more than offset material and freight inflation, targeting a net spread of at least 100 basis points as a percent of sales. We have a strong track record in this area with 10 consecutive quarters of price realization and excessive inflation. While inflation has certainly accelerated across our global supply chain, we are well positioned to continue this favorable price cost performance in 2021.
Next, focusing on productivity. In this context, we define productivity as the year over year reduction in our cost of goods sold, Excluding the impact of price, volume, mix, material inflation and freight inflation, each of our businesses build multi year pipelines of Project ideas that will drive productivity savings, everything from sourcing savings to automation investments to simple rapid improvement events that eliminate downtime and waste on the factory floor. These pipelines or projects have consistently driven net productivity savings over the last few years, Over $50,000,000 since 2018, and we have good visibility to driving more productivity savings in the future. Now on fixed costs, we believe it is critical to not only be lean in our variable manufacturing costs, but also it is important to Constantly take out our fixed costs. We require each business and functional support area to identify projects that will deliver fixed cost reductions with an expectation of a 1% annual reduction.
These sorts of actions ensure that we will stay nimble to continue performing even in a down cycle. Our global footprint rationalization and modernization program is part of how we deliver these fixed cost savings. And as you heard from Greg, we're making excellent progress in this program with a pipeline of projects to drive future savings. Finally, on working capital, we annually develop projects and initiatives to eliminate waste and improve velocity with our working capital. This allows us to maintain high cash conversion and then compound that cash over time in strategic investments.
We also have a strong track record in this area as we've reduced working capital by 160 basis points as a percent of sales from 2018 to 2020. There's more to come here as well. By focusing on these five value drivers, we have a consistent, relentlessly repeatable formulation for delivering superior financial performance. Now I'll highlight a few other aspects of our business that make JELD WEN a compelling investment opportunity. On this slide, I'll focus on our highly variable cost structure, which is enabled by JEM.
This variable cost structure provides a platform for growth through operating leverage and enables us to manage costs to match demand. On the page, you can see a breakdown of our cost of goods sold. The largest piece of our cost of goods sold comes from direct material and then direct labor as well. The majority of our cost structure is variable. I'd estimate that our cost of goods sold is approximately 80% variable, and we've demonstrated our ability to leverage this variable cost base as shown with the 24% improvement in earnings per employees.
An accelerator to this variable cost structure is Jim. As we lean our operation, eliminating waste and improving cycle time, Our cost structure will become even more variable, and we will see additional financial benefits. For example, over the last few years, the benefits of JEM have reduced our direct labor as a percent of cost of goods sold by 260 basis points. So as you can see, The variable nature of our cost structure positions us well to deliver profitable growth well into the future. Now I'll return to the topic of cash and that 22% growth rate that I mentioned earlier.
There are several aspects that allow us to achieve high cash conversion and growth faster than earnings. 1st in working capital. By implementing JEM across our operations, we have eliminated waste in inventory, accounts receivable and accounts payable. We have reduced working capital as a percent of sales by 160 basis points, which has been an enabler to higher cash conversion percentage. We think there's more room to run here.
And as we implement JEM and invest in our global ERP platform, which will eliminate waste. Additionally, our recent capital expenditures have been at or below our depreciation and amortization, providing a cash flow shield. Finally, We also have some significant tax attributes, which have allowed us to maintain a cash tax rate less than our book tax rate. We expect these benefits to continue. These are just a few of the examples of how we expect to be able to drive high cash flow conversion and then compound that cash Over time, through disciplined capital deployment, which is my next topic, we prioritize capital allocation opportunities through the lens of risk adjusted returns.
This means that we take each opportunity to deploy cash and analyze the IRR or payback profile against the risks associated with achieving the results. We do this for all types of investments such as investing in ourselves through capital projects for productivity or automation, R and D projects or growth investments as well as acquisitions or even purchasing our own shares. Projects that carry more risk such as an acquisition or a new greenfield facility must have an unadjusted return that is significantly higher than a lower risk project such as a productivity oriented automation investment. And as you can see, over the last few years, the majority of capital deployment has gone to investing in ourselves through these high returning projects. Additionally, We have an excellent platform for mergers and acquisitions with a proven playbook.
From 2015 to 2020, we completed 14 acquisitions. These acquisitions were done at attractive purchase price multiples, delivered synergies and are generating returns well in excess of our weighted average cost of capital. We believe we can leverage this platform for M and A and the playbooks we've developed as we're building a pipeline of M and A candidates to support the growth strategy that Sean discussed. We've also returned capital to shareholders through our share repurchases and we'll continue to do so opportunistically. The right side of this slide very clearly demonstrates the strong results of our capital allocation process, represented by return on invested capital as defined in the footnote.
This shows results over the last few years and projects ROIC for this year using the midpoint of our current outlook. As you can see, we've made substantial improvements in our ROIC, tracking to over 11% for 2021. These results demonstrate that our disciplined approach to capital allocation is driving results by delivering accelerated returns on our investment base. Now let's shift to the future and review our financial plan through 2025. There are 4 key aspects to our long term plan to achieve superior financial performance.
Starting with revenue growth. From 2021 through 2025, We expect to be able to deliver annual revenue growth consistently in excess of market volume growth. Based on the current market outlooks and our global mix of markets and JELD WEN specific growth initiatives, we expect annualized organic growth of 6% to 8% through 2025. The assumptions that drive the above market portion of our revenue growth are as follows. First, we expect pricing to average at least low single digits annually over the period, which is consistent with our long term average track record price realization over the last 7 years.
2nd, we expect above market volume and mix growth contributions from our organic growth initiatives such as innovation, new products and services, customer experience investments and capacity expansion. You already heard a lot of good examples today from the earlier presenters of how driving gym, commercial excellence and product innovation will enable this above market volume growth and improved mix. I'll highlight a few specific examples of our accelerated growth initiatives that will drive volume and mix. In North America, we expect above market growth from our composite window product line, capacity expansion of our exterior door and vinyl window product lines, geographic growth of our multifamily VPI, Windows platform and the continued efforts of JEM, which will increase cycle time and growth across all product lines. In Europe, we see clear potential to expand our addressable market using our existing product capabilities to grow our business, as David described, in underserved segments and new geographies.
And in Australasia, we expect above market growth from an innovative new series of energy efficient windows and a new line of commercial windows, both scheduled to launch in 2022. In addition to these specific projects that are already funded and in process, We have a healthy funnel of ideas for breakthrough innovation projects that we believe will add revenue in future years. So in summary, we have high confidence in our ability to outgrow the market given our visibility to the JELD WEN specific growth initiatives that will drive organic revenue growth through 2025. Next, we have visibility to adjusted EBITDA margins in the range of 15% to 17% by 2025, which I'll describe more on the next slide. Also during this 2025 framework, we expect free cash flow conversion of 90% to 100%.
And finally, we believe there's a significant opportunity to create value in our 2025 framework through capital deployment and specifically through inorganic growth, our capital deployment priorities are as follows. First, we prioritize investing in ourselves and high returning capital projects, but that spend, of course, is already embedded and the free cash flow conversion target that I just provided. Next, we believe we have an excellent platform for M and A and a proven playbook, which we can use to drive inorganic growth by deploying capital into accretive acquisitions. We are very disciplined acquirers focusing on reasonable valuations, maximizing risk adjusted returns, clear synergy potential and ROIC improvements. We also expect potential acquisitions to be 1st year accretive to earnings and profit margins.
Assuming we maintain an average of 2.5x net leverage or less during this time frame, We have acquisition purchase price capacity of approximately $4,000,000,000 over the 2021 to 2025 period, which will allow us to drive additional profitable revenue growth significantly in excess of the organic rate goals. If M and A targets are not available at attractive valuations, we will deploy this investment capacity in other ways that create value for shareholders such as opportunistic share repurchases. By delivering on these 2025 financial targets, we expect to drive significant Shareholder value creation. Next, I'd like to provide details of how we expect to deliver the 15% to 17% EBITDA margin target, starting with the midpoint of our 2021 full year outlook of 11.2%. First, We expect to realize pricing in excess of inflation as we've done over the last 10 quarters.
Next, we expect margin contribution from operating leverage on improved volume and mix from the growth initiatives described earlier as well as constructive end market demand. In addition, we will continue to drive profitability improvement through our productivity initiatives and structural cost reduction programs As we have done over the last few years, from those 3 categories, price cost, volume leverage and productivity savings, We can more than achieve our margin target. We also plan to make investments in the business to support this growth, improve customer experience, enhance quality and accelerate innovation. So shown here is reinvestment and SG and A to support these growth investments. Combined, these initiatives provide good visibility to our 15% to 17% adjusted EBITDA margin target by 2025.
And create growth opportunities. Thank you for your interest in JELD WEN and we look forward to taking your questions in the upcoming Q and A session.
The team has really empowered the team here at the operation to do something completely different than what's been done in the industry before.
They have empowered and challenged the teams To look and see how can we create breakthrough improvement in how we manufacture these products That have basically been manufactured the same way for 50 years.
No change is off the table. You guys discuss it, you vet it, make sure it's going to improve the And we're seeing benefits of that already.
We were looking for not 5% to 10% improvements in how we did things. We were looking 40%, 50%, 70%, 90% improvements over the ways that things were done before. And that requires a different level of thinking.
We didn't want to be stuck in our old ways and just create another window factory. We wanted something that was going to be different and really a model for the rest of GELDAND.
We went out on the manufacturing floor every day. And if we had an idea How something should work, we did that job ourselves. And we said, would I want to do this for 8 hours a day for years? And if the answer was no, we'd go back and we'd design a job that we would want to do.
Our first event, we looked at Raw materials to our sawing operation. By the time the event was over, we have reduced the square footage requirements by 75%.
Inventory turns reduction of almost 50% compared to the old design. Based upon just the inventory storage area, about 60% reduction Based upon what our new layout is going to be.
So we started with a ton of cantilever racking and vertical storage that while it was Better than what we do in many of our vinyl facilities today, we pushed ourselves to think further. And what we did is we removed most of That can't levered racking and instead we turned our inventory faster by challenging our suppliers to On a world class timeline to us. The second thing we did is we took our saws and we pushed them closer together so that 1 operator could run 2 saws at once. 3rd, we took several discrete pieces of machining equipment and combine them into 1 robotic cell that required fewer changeovers and fewer material touches for every part. Fourthly, we took our assembly lines and we turned them 90 degrees so that material would flow right out Fabrication cells straight into assembly.
This not only unlocks improvement that we can make now, but also enables our associates on the Or to identify further opportunities for improvement later.
The future is really all about deploying our gym tools and getting to the ideal We want this to be a model factory for JELD WEN.
What affects me most is the engagement that we have from all aspects of the business right now. We're all aligned Find on what we need to accomplish moving forward.
I feel like I'm the luckiest guy in the factory. You know, I have this great tool bag at my disposal. I have the resources, empowerment that I need to deploy it across the organization. And every day I come to work, even though we're got
Thanks again for joining us this morning. I hope we've given you more insight into why we believe JELD WEN is Compelling investment opportunity and shared our excitement for growth and the future of our business. Before we invite more questions from you, Please allow me to reiterate the 3 messages I started out with as key takeaways for today. First, JELD WEN is a multifaceted growth platform With a successful track record of earnings growth, compounding cash flow and capital deployment. 2nd, we have developed and deployed A well defined strategy and business operating system that are driving transformation and delivering profitable growth.
And third, The JELD WEN franchise is unmatched and provides competitive advantage, innovation and superior returns. This includes leading market positions, Powerhouse brands and an unparalleled global footprint. Our disciplined execution is delivering customer focused innovation and solid organic growth, while our strong balance sheet positions us for continued operational and financial performance. Thank you for joining us today and for your continued interest in JELD WEN. We hope you share in our excitement for the future.
We now welcome any remaining questions you have for our team.
Good morning, everyone, and welcome to session 2. Let's get underway. You mentioned digital as an enabler to the differentiated customer experience. Please provide some more detail around this work and how it will contribute to growth. Sean, would you mind taking that?
Thanks, Chris. So the way the question was framed is, it starts with the customer experience. And then digital itself is a means of providing that great experience, whether it's at the beginning of the purchase or through the use. One of the things that really excites me about the digital is the opportunity to deliver that experience by mobilizing both our internal resources And our external partnerships. You've already heard from the e offer in Europe and as well as the connected doors, which have a lot of buzz right now.
So those are some examples. But to bring it home, it really is about starting with the customer experience and applying digital to that experience.
Thank you, Sean. Please discuss value added door features and integrated door systems. Is that part of your current offering and strategy for growth? Gary, would you mind taking that?
Thanks, Chris. Great question. I mean all of our products really are about value added. They do so much in the home and in the building. When we think about doors, we think about the door system.
We think about technical doors that we sell today that include fire doors, security doors, Doors for acoustic attenuation. We think about our window products as part of the security and safety features In high wind areas and hurricane zones, we sell a full package, a home package and commercial building Suites that provide energy efficiency solutions and sustainability solutions as well. We have Connected doors that we sell today that provide security and safety features as well. So we think about our complete systems, we think about our technical doors. They really do so much more and add so much value to our customers.
And that's what differentiates our product line and our system approach to selling from others.
Great. Thank you, Gary. Please describe the Construction Industry Productivity Initiatives in a bit more detail. Can you give some examples of products and services that are driving growth in this area? Sean, would you mind handling that?
Yes. So I've been in the construction industry for a little over a decade now. And the one thing I've learned is that the product that is the Easiest to install, service and maintain often wins out among a product that may have a richer feature set. But really here, it's about going deeper into understanding those industry challenges and how we can help. So I really feel good about that.
We've got some opportunities coming for the future, but it's to help our partners get Their jobs done more profitably and more efficiently.
Great. Thank you, Sean. Please talk about the components of the 6 to 8% organic revenue target, market assumptions, pricing, company specific growth initiatives. John, would you mind tackling that?
Sure. So as we think about the 6% to 8% growth rate on the organic side, there's really 3 components. There's the market piece that was just There's a pricing piece and then there's a company specific piece. On the market side, we feel like we've got good demand tailwinds in all 3 of our markets that we operate in are all 3 of our segments, North America, Europe and Australasia. Housing fundamentals are strong in each one of those regions.
Over the 2021 to 2025 period, what we are assuming today is that market growth rate blends to sort of a low single digit type of a level, and that's the market piece of our algorithm. On the pricing side, as I mentioned In my prepared remarks, we've got a good track record of delivering low single digit pricing realization for the last 7 years, and we see The good ability for us to continue to realize at that same level over this 2021 to 2025 framework as well. And And then the exciting piece, I think, is the company specific initiatives that we've got visibility to. As we talked about throughout the presentation today, there's new products that we have Funded, they're in process of being developed, there's capacity expansion that's funded, that's in process of being brought online, that's tied to a profitable share gain. And that's The last piece of that 6% to 8% is really the company specific initiatives where we've got that revenue visibility from projects that are in flight.
Additionally, there's the breakthrough innovation that Sean referred to of ideas that are in a funnel. Those will hopefully Manifest into revenue opportunities a little bit further out in the framework. So I'd say sitting here today, we've got pretty good visibility into all three aspects of what will deliver that 6% to 8% Our organic growth target.
Great. Thanks, John. Regarding Europe, currently the business is weighted towards interior doors. How are you thinking about Europe growth opportunities in exterior doors or windows versus increasing penetration with existing product offerings?
Gary, would you mind tackling that? No, sure Chris. It's a great question. When we look at our Europe business, we're really excited about the growth prospects that we see there and we're actually Experiencing there is, 1st of all, just taking our broad product portfolio and going with a pan European approach to marketing and selling and supporting our products. Traditionally, we had sold products specific to each region.
Today, we're taking products, both interior and exterior across the regions, Which allows us to sell products we already make in markets that we already sell in and expand our share, which is a great growth opportunity for us. Additionally, we're looking at other expansion opportunities within Europe, markets that use the same type of products that we sell today And we're selling those into new markets, another opportunity, another lever for growth for us across Europe. And then Looking at ancillary products, additional, as I mentioned earlier, technical doors, connected doors and the like that we're able to sell into those markets that we serve as well. So really excited about the opportunities in Europe, both expanding products that we sell into the markets we sell in, expanding in geographies and expanding with innovative new products. Great.
Thank you, Gary. Regarding ESG, what is different now regarding JELD WEN's commitment to ESG Compared to other points in the company's history. Roya, would you mind taking that?
We've always been a values based company. I think what's Different now is that we are living our values in a systematic and intentional way. And in fact, over the last year, we've spent a significant amount Time and resources on developing an ESG strategy that is part and parcel of our company strategy and embedding ESG into all our decision making. What else is different is that we have committed leadership. We have a committed board that has expectations of us To live up to what we say we will do.
And we also have developed a baseline with the CSG report. You will see what our baseline is That will then enable us to develop ambitious targets that we'll talk more about in the coming days, months years. I think that's the key thing. We're going to hold ourselves accountable now.
Great. Thank you, Roya. The long term targets are impressive and would represent an Acceleration relative to history. How can we think about your margin targets based on today's volume? John, would you mind taking that?
Sure. If you think back a few years, when Gary and I both took our roles, we sort of refreshed the framework For achieving margin targets. And at the time, it was largely a self help margin improvement story. It was assuming sort of flat volume And at least enough pricing to achieve or offset inflation that just from cost initiatives alone, we saw the path to mid teens EBITDA Margin target. I think what's changed today and hopefully you've heard throughout the presentation is, the volume piece and accelerating revenue growth for JELD WEN is now a really key piece of the framework, which is going to allow us to drive both above market top line As well as the volume mix leverage on EBITDA margins, which will be an accelerator to the margin expansion.
So certainly, The volume piece of our value creation framework is much more significant than it was several years ago.
Great. Thank you, John. Regarding your inorganic goals, you referenced looking at adjacent building product categories outside of doors and windows. What other products would you consider and why? Sean, would you mind that?
Yes. So we talked a lot about the customer driven innovation. We actually view the M and A opportunities the same way, meaning we start with our customers and look at what they're buying or How can we apply our capabilities to what they're buying? So if you reflect back on the slide I shared at the end, it showed really what are those other Products, what are those other offerings that folks are buying that also buy windows and also buy doors. So we screen that list and we're continuing to focus Proactively, what are the opportunities on that list.
So that's a great starting point.
Great. Thank you, Sean. Please discuss how you will achieve the free cash flow conversion goals. Is there an opportunity in working capital? John, would you mind taking that?
Sure. If you think back to the prepared remarks, we talked about some of the historical successes in working capital. A lot of that early success was achieved on accounts payable, accounts receivable. The untapped potential of working capital for JELD WEN today is really on the inventory side. As we get more mature with JEM and we roll out these Transformation sites and continue to mature across the enterprise to leading with Jim.
Think about the cycle time improvements. Think about the Improvements on the demand side of our our demand planning side of our business to be able to be smarter about how much inventory we carry. So those benefits from Jim will Be a natural enabler to more efficient inventory usage. And then thinking additionally about the footprint rationalization and modernization program, Fewer rooftops. The rooftops that we do have will be closer to optimal freight lanes, will allow us to really optimize the inventory levels that we're carrying there as well.
So Certainly, one of the drivers of that free cash flow conversion is getting lean on inventory, and we expect to achieve that over the framework. Additionally, we do have some nice tax attributes, which will allow us to have a cash tax rate less than our book rate, at least for the next year or 2, which will also be an enabler to the cash Slow conversion.
Great. Thanks, John. Please describe any financial criteria for future M and A. Sean, would you mind tackling that?
Yes. So we look at our M and A on 2 screens. The first one is strategic fit. Does it fit within The portfolio that we have today and does it align with our capabilities, assuming that it does pass that And we also want to make sure that there's a financial fit. You heard about the discipline that we've exercised in prior acquisitions.
We want to continue to maintain that. What that ultimately means is with rare exception being accretive on both margin and accretive on earnings in year 1. That's The goal. Great. Thanks, Sean.
At the end of Greg Miner's presentation, he said that we have only scratched the surface And GEM and footprint rationalization. Can you please expand on this comment? John, I'm going to start with you and then maybe we'll kick it over to Greg for any additional comments.
I think that's the exciting piece of the gentleman story is we have just scratched the surface. And certainly, the financial targets that we've put out today Our step up of where we've been performing in recent years, and Jim is going to be the enabler to allow us to achieve that. As you think about Scratching the surface and improvement in the future, we're deploying a continuous improvement culture. Our continuous improvement does not stop in 2025, when we achieve this framework, we plan to continue to improve the business beyond that. And good lean businesses are able to take out productivity year in, year out Regardless of market conditions, and that's our plan.
So in the near term, we're focused on 2020 1 to 2025. But long term, Yes, the cost side of our business has much more potential, and I think scratching the surface is correct. And we've got the proof points In our portfolio today, we've got a number of businesses and product lines that are already at 20% plus EBITDA margins. And so we know it's possible, and we can deliver that. But in the short term, we're going to stick to the targets we've given today.
But maybe, Greg, you can talk to some of the more near term activities.
Yes. Sure, John. Yes. Look, and we're also not waiting for these 14 model sites to do other activities. As I said earlier in my comments, we're doing still these discrete activities.
A great example is one of our teams in another one of our door plants over the last 2 weeks generated a 54% productivity improvement all through throughput increase. Same number of people producing 54% more product for our customers. That's on one production line. And we're not in that case, Again, we're not looking at the entire value stream that order to ship. This was just the production, one of the production lines in one facility and there's 4 others to go that probably have Similar levels of opportunity in them.
And then as we said in the examples, JEM is throughout our entire business. We'll look at that whole order entry process, How we schedule products, how we deliver products to our customers will be the scope expansion as we go through it, not just looking at the production line. And there's another whole level of productivity that's available in those areas too. Excellent.
Thank you, guys. For each of the ESG pillars that you described in your prepared remarks, where are you farthest along and where do you see the most opportunity? Roya?
I think we're farthest along, obviously, in energy efficiency. We've been an ENERGY STAR partner for over 20 years and Partner of the Year multiple times. I talked a lot about the new product introductions in my prepared remarks, and we're now doubling down on that. I think the other area in which we're Far along would be in the sustainable supply chain, especially in terms of sourcing wood products from sustainable forestry. And you did see and hear about our Sarabande facility in terms of our ability to sort of create the circular economy sustainable Input type models.
So I think we're doing pretty well there, a lot more opportunity to end of use disposal for our products that we're looking at. And I think the area in which there is probably greatest opportunity based on where we are today is on diversity, equity and inclusion, Which is not a surprise, and we're very honest about the strides we need to make, and that is no different from the rest of our industry. But we have Focus now on becoming a leader in diversity, equity and inclusion within our own company, in our own industry, But also help the industry along as well. So I think that is an area in which I'm particularly excited about.
Great. Thanks, Ryan. In the past, you've discussed a net leverage target of 2 to 2.5 times, which is where leverage sits today. What is the leverage target During the 2021 'twenty five time frame. John, would you mind handling that?
Well, first of all, we're committed to handling the balance sheet in a prudent manner. We're very disciplined in that regard. We've reduced leverage from nearly 4 times at the time of the IPO in 2017 to where we are today in the low 2s, which Proves that we can demonstrate that delevering. During the 2021 to 2025 framework, I'd say that the 2% to 2.5% range is an area that we feel comfortable operating in and executing on M and A. Certainly, if we would continue and aspire to have leverage work down from there, but as long as we have good visibility to End market demand and good opportunities on the M and A front.
We are comfortable operating that 2 to 2.5 times range, but we'll continue to be disciplined there. For the right opportunity on the M and A front, we may pop above 2.5x for the right strategic M and A opportunity, But that would only occur if we had clear visibility to delevering very quickly. And as I said a minute ago, we've proven our ability to do that.
Great. Thank you, John. Please provide more detail on capital allocation and the trade offs of looking at M and A versus share repurchases. How will you balance the operational readiness to execute both M and A as well as your organic growth and margin improvement plans? Gary, would you mind touching on that please?
Well, yes, I think you've heard both John and Sean talk about our disciplined approach to M and A. 1st and foremost, it's got to match our strategy. Anything that we would do to add to the families Got to either accelerate our growth, accelerate our strategy, provide us with capabilities that we would otherwise try to do, but this helps accelerate that. So that's 1st and foremost. It has to be accretive to the business And we have to be able to take it on.
We've demonstrated in the past that we've been able to be disciplined about Not only the selection and the integration of these businesses, but we've been able to put the right talent onto that as well. Part of what we do as well is we're looking for talent when we're making these kind of decisions. So if we can bring new capabilities, New experiences and new technologies to the business as well. We're equally excited about that.
Thank you, Gary. In the past, you've highlighted ongoing CapEx of 2% to 2.5% of revenue on a normalized basis. Given where we are in JEM deployment, Footprint initiatives and SAP, when do you expect reverting back to this level? And is this still a good target? John, would you mind tackling that?
Sure. Over the long term, I do think 2% to 2.5% of sales is a good modeling expectation for our CapEx needs for our business, Broken down roughly half between maintenance and sustaining needs and then half between productivity, growth, Efficiency type investments. A couple of years ago, we did when we launched the footprint rationalization and modernization program, We indicated that we may have to tick up CapEx a little bit, 3% to 3.5% of sales for a couple of years to fund The footprint initiatives and also fund our ERP investments. That did happen in 2019. And then in 2020, of course, we sort of scaled back CapEx a little bit due to some of the COVID uncertainties and now we're resuming a more normalized level of spend.
So I think we've probably got another year or 2 to go of that Elevated level of CapEx of 3% to 3.5% of sales, so we can fund some of these major projects. And then, over the rest of the framework, normalizing to that sort of 2% to 2.5% of sales range.
Great. Thank you, John. On capital allocation, dollars 4,000,000,000 is a meaningful amount of capital to deploy. Can you talk a bit about your ability to deploy that level of capital? Gary, would you mind tackling that please?
Sure, Chris. That is a great question. Thank you so much for that. Dollars 4,000,000,000 is a lot of money. But I think what it does is it underscores The benefit of our GEM deployment and the discipline that we put around operational excellence and the leverage that we expect to get from on top of that with organic growth.
So I think you're seeing the fall of that is being what sounds like a large Amount of money that we can redeploy into growing the business and into expanding the reach and the capabilities and the size of JELD WEN. But don't be fooled. We're going to be disciplined as we always have been around making choices that again accelerate our strategy, allow us To grow that are accretive to the business. Barring those opportunities, we have as we will be able to deploy Capital towards repurchasing our own shares, investing in ourselves, plus we continue to have projects as well in this plan that are high returning internally focused. So again, it's a lot of money.
It shows you the amount of A benefit that we're getting from the work that we're doing, but it gives us a lot of flexibility in our ability to grow this company over the next several years. Great.
Thank you, Gary, and thank you, everyone. That concludes our second Q and A session as well as our inaugural Investor Day. A replay will be available on our website shortly. As always, if you have any further questions, please don't hesitate to reach out. Thanks, everyone, and have a great day.