JELD-WEN Announces Changes in North America Window Operations

Rhea-AI Summary

JELD-WEN Holding, Inc. announces the closure of two manufacturing facilities in Vista, California, and Hawkins, Wisconsin, to streamline window product offerings and enhance long-term profitability. The company expects one-time costs of $45 million but anticipates annual pre-tax income improvements of at least $11 million.

Insights

Market Research Analyst

The decision by JELD-WEN to shut down two manufacturing facilities and streamline its window product offerings is a strategic move aimed at enhancing operational efficiency and cost management. This step is indicative of a broader trend in the manufacturing sector where companies are continually seeking ways to optimize their supply chain and production processes in response to market demands and competitive pressures.

From a market perspective, the closure of these facilities and the discontinuation of the Auraline product line suggest a shift in consumer preferences or a strategic realignment to focus on more profitable or in-demand products. The projected annual pre-tax income improvements of at least $11 million reflect a significant cost-saving initiative that could improve the company's financial health over the long term. However, the one-time costs of $45 million could have a short-term negative impact on the company's financials, potentially affecting investor sentiment.

The consolidation of wood window manufacturing in Illinois also points to a rationalization of assets to reduce overheads and streamline operations. However, investors should monitor how these changes might impact market share, customer relationships and brand reputation, as well as the potential risks associated with the consolidation of operations, such as production bottlenecks or quality control issues.

Financial Analyst

With JELD-WEN's announcement, there is a clear financial implication for both short-term and long-term horizons. The immediate one-time costs of $45 million will likely be a hit to the company's earnings in the fiscal year of 2024. This expenditure includes severance, asset write-offs and other closure-related expenses. Investors should consider the implications of these costs on the company's net income and earnings per share for the year.

On the flip side, the anticipated annual pre-tax income improvements of $11 million suggest a positive long-term outlook. These savings could potentially lead to margin expansion and increased profitability. It is important for investors to weigh the short-term costs against the long-term benefits and consider how these actions fit into the company's overall financial strategy.

Another aspect to consider is the impact of these closures on the company's balance sheet. The reduction in assets and potential liabilities associated with the facilities could alter the company's financial ratios, which are critical for creditors and investors alike. The market will also be looking at how these changes affect the company's cash flows, as the initial cash outlay for the closures will need to be managed alongside ongoing operational expenses.

Human Resources Consultant

The human element of JELD-WEN's operational changes cannot be overlooked. The closure of the two facilities affects approximately 450 associates, which raises concerns about workforce management and corporate reputation. From an HR standpoint, the company will need to manage the layoffs sensitively to minimize the impact on employee morale and the associated risks of knowledge loss.

The transition of employees, if any are to be retained and relocated, requires careful planning to ensure a smooth integration into the Rantoul facility. Additionally, the company's employer brand may be affected, which could influence future talent acquisition and retention. Investors should consider the potential costs associated with retraining, relocation and increased turnover.

Moreover, the company's approach to managing these changes will be scrutinized by both current and prospective employees. The manner in which JELD-WEN handles the closures and communicates with its workforce could have long-term implications for its corporate culture and operational effectiveness.

Company will close two manufacturing facilities and streamline window product offerings as part of transformation journey

CHARLOTTE, N.C., April 11, 2024 /PRNewswire/ -- JELD-WEN Holding, Inc. (NYSE: JELD) today announced actions to simplify its North America windows operations by closing its Vista, California, and Hawkins, Wisconsin, manufacturing facilities.

Today's announcement is a further step in JELD-WEN's transformation journey to strengthen the foundation of the company and position itself for long term, profitable growth. In connection with these site closures, the company expects to incur one-time costs of approximately $45 million and generate annual pre-tax income improvements of at least $11 million.

The Vista, California, site manufactures composite windows (marketed and sold under the brand name Auraline) and has approximately 110 associates. Multiple market factors have made it prohibitive to competitively sustain the composite windows product line and it will be discontinued. As a result, JELD-WEN plans to close the Vista composite windows facility. Orders placed within 90 days of April 11, 2024, will be accepted and fulfilled under currently stated lead times.

JELD-WEN expects to incur one-time costs in 2024 of approximately $21 million related to the Vista closure and after project completion, recognize an annual pre-tax income improvement of at least $4 million.

The Hawkins, Wisconsin, site manufactures wood windows and employs approximately 340 associates. JELD-WEN will consolidate production from Hawkins into its wood windows manufacturing facility in Rantoul, Illinois. One-time costs related to this site consolidation are estimated at approximately $24 million, most of which should be incurred in 2024. Annual pre-tax income improvement, after completion of these activities, is expected to be at least $7 million.

JELD-WEN will address any updates about the closures during its quarterly earnings call scheduled for May 7, 2024.

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About JELD-WEN, Inc.
JELD-WEN Holding, Inc. (NYSE: JELD) is a leading global designer, manufacturer and distributor of high-performance interior and exterior doors, windows, and related building products serving the new construction and repair and remodeling sectors. Based in Charlotte, North Carolina, the company operates facilities in 15 countries in North America and Europe and employs approximately 18,000 associates dedicated to bringing beauty and security to the spaces that touch our lives. The JELD-WEN family of brands includes JELD-WEN^® worldwide, LaCantina^® and VPI™ in North America, and Swedoor^® and DANA^® in Europe. For more information, visit corporate.JELD-WEN.com or follow LinkedIn.

Forward Looking Statements
This press release includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including, but not limited to, statements related to the expected savings and other benefits of the site closures, the timing of completion of the site closures, and the expected costs, cash expenditures and charges of the site closures. These forward-looking statements are based upon the company's current plans, assumptions, beliefs, and expectations. Forward-looking statements are subject to the occurrence of many events outside of the company's control. Actual results and the timing of events may differ materially from those contemplated by such forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2023, and our other filings with the U.S. Securities and Exchange Commission.

Media Contact:
JELD-WEN Holding, Inc.
Caryn Klebba
Head of global public relations
704-807-1275
mediana@jeldwen.com

Investor Relations Contact:
James Armstrong
Vice President, Investor Relations
704-378-5731
jarmstrong@jeldwen.com

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SOURCE JELD-WEN Holding, Inc.

FAQ

What facilities is JELD-WEN closing?

JELD-WEN is closing its manufacturing facilities in Vista, California, and Hawkins, Wisconsin.

What products are manufactured at the Vista, California facility?

The Vista, California facility produces composite windows marketed under the brand name Auraline.

How many associates are employed at the Hawkins, Wisconsin facility?

The Hawkins, Wisconsin facility employs approximately 340 associates.

Where will production be consolidated from the Hawkins facility?

Production from the Hawkins, Wisconsin facility will be consolidated into the wood windows manufacturing facility in Rantoul, Illinois.

What are the estimated one-time costs related to the Hawkins facility consolidation?

The estimated one-time costs related to the Hawkins facility consolidation are approximately $24 million.