JELD-WEN Holding, Inc.
Lead Plaintiff Deadline: 04/20/2020
SUMMARY OF CASE:
A securities class action has been filed against JELD-WEN Holding, Inc. (JELD) on behalf of all persons or entities who purchased or otherwise acquired the publicly traded common stock of JELD-WEN between January 26, 2017 through October 15, 2018. This case has been filed in the USDC – Virginia (Eastern).
Jeld-Wen and its primary competitor, Masonite Corporation (“Masonite”), are the two largest manufacturers of interior molded doors in the United States. In October 2012, JeldWen acquired another manufacturer of interior molded doors and door skins, CraftMaster Manufacturing, Inc. (“CMI”). As a result of that acquisition, Jeld-Wen gained ownership of CMI’s flagship door skin manufacturing plant in Towanda, Pennsylvania, and removed CMI as the third source of door skin supply in the interior molded doors market. In early 2014, Jeld-Wen announced that it had implemented a new pricing strategy, shifting from its old strategy to grow volumes and increase market share that “often led to competing on price” to a new strategy that emphasized “pricing optimization” to increase product profitability on a per unit basis.
Just several months later, in June 2014, Masonite abruptly and inexplicably stopped selling door skins to other door manufacturers, making Jeld-Wen the market’s sole supplier of door skins. Around the same time, Jeld-Wen began taking adverse actions against independent door manufacturers with which the Company had long-term agreements to supply door skins by, among other things, raising prices. In response to Jeld-Wen’s price increases, in June 2016, one of those independent door manufacturers, Steves and Sons, Inc., filed a lawsuit against Jeld-Wen, Inc., a wholly owned subsidiary of Jeld-Wen, in the Eastern District of Virginia, alleging that the Company’s acquisition of CMI and Jeld-Wen’s subsequent price increases for its interior molded doors and door skins violated federal antitrust laws (the “Steves Litigation”).
On or around January 27, 2017, Jeld-Wen conducted an initial public offering of the Company’s common stock (the “IPO”). Four months after the IPO, on or around May 24, 2017, Jeld Wen conducted a secondary public offering of the Company’s common stock (the “First SPO”). Then, six months after the First SPO, on or around November 15, 2017, Jeld-Wen conducted another secondary public offering of the Company’s common stock (the “Second SPO”).
The Complaint alleges that throughout the Class Period, defendants engaged in a scheme to defraud and made materially false and misleading statements, as well as failed to disclose material adverse facts, regarding the Company’s business, operations, growth prospects, and competitive positioning. Specifically, defendants stated that Jeld-Wen products, including doors, compete against other manufacturers on price, and described the market in which the Company sells its doors as “highly competitive.” Defendants also attributed Jeld-Wen’s strong margins and anticipated margin growth to legitimate business factors, such as “making strategic pricing decisions based on an analysis of customer and product level profitability” and increasing its emphasis on “pricing optimization.” These and similar statements made by defendants during the Class Period were false and misleading because defendants knew that Jeld-Wen was engaged in a price-fixing conspiracy with another door manufacturer to artificially increase or maintain prices of interior molded doors. As a result of defendants’ misrepresentations, shares of Jeld-Wen’s common stock traded at artificially inflated prices throughout the Class Period.
On February 15, 2018, the Company announced that a jury returned a verdict gainst Jeld-Wen in the Steves Litigation, finding that Jeld-Wen’s conduct violated the U.S. antitrust laws. However, the true breadth of Jeld-Wen’s misconduct and the financial impact it had on the Company’s business continued to be concealed from investors. Moreover, Jeld-Wen continued to assure investors that it participated in a highly competitive market.
On October 5, 2018, the Judge presiding over the Steves Litigation ruled that JeldWen would be required to divest the door skin facility the Company had obtained in connection with its acquisition of CMI. This disclosure, which spurred several analyst downgrades, caused the price of Jeld-Wen shares to decline by nearly 5%.
Then, on October 15, 2018, after the market closed, Jeld-Wen announced that the Company expected its third quarter 2018 financial results to include a $76.5 million charge related to the ongoing Steves Litigation. The Company also announced the resignation of its CFO, Brooks Mallard. In response to these disclosures, Jeld-Wen’s stock price declined from $21.31 per share to $17.28 per share, on high trading volume, a decline of 19%.