Janus International Group Q1 2025 Earnings Call Transcript

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May 8, 2025
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Operator

Hello, and welcome to the Janus International Group First Quarter twenty twenty five Earnings Conference Call. Currently, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Ms.

Operator

Sarah Masiach, Senior Director, Investor Relations of Janus. Thank you. You may begin, Ms. Macioc.

Sara Macioch
Sara Macioch
Senior Director of Investor Relations at Janus International Group

Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramy Jackson and our Chief Financial Officer, Ansem Wong. We hope that you have seen our earnings release issued this morning. We have also posted a presentation in support of this call, which can be found in the Investors section of our website at janisintl.com. Before we begin, I would like to remind you that today's call may include forward looking statements.

Sara Macioch
Sara Macioch
Senior Director of Investor Relations at Janus International Group

Any statements made describing our beliefs, plans, strategies, expectations, projections and assumptions are forward looking statements. The company's actual results may differ from those anticipated by such forward looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business, prospects and future results. We assume no obligation to update publicly any forward looking statements, and any forward looking statement made by us during this call is based only on information currently available to us and speaks only as of the date when it is made. In addition, we will be discussing or providing certain non GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted EPS.

Sara Macioch
Sara Macioch
Senior Director of Investor Relations at Janus International Group

Please see our release and filings for a reconciliation of these non GAAP measures to their most directly comparable GAAP measure. On today's call, Ramy will provide an overview of our business. Ansem will continue with a discussion of our financial results and 2025 guidance before Ramy shares some closing thoughts and we open up the call for your questions. At this point, I will turn the call over to Ramy.

Ramey Jackson
Chief Executive Officer at Janus International Group

Thank you, Sarah, and good morning, everyone. Thank you all for joining us today. I'm pleased with our start to 2025 with results mostly in line with our expectations despite ongoing macroeconomic volatility. Our team continues to execute well in this challenging environment, maintaining our focus on operational excellence and disciplined capital allocation while positioning the business for long term success. The strength of our business model has enabled us to navigate these headwinds effectively while continuing to invest in the future.

Ramey Jackson
Chief Executive Officer at Janus International Group

With that, let me start by highlighting a few key themes related to our first quarter results. First, despite ongoing market uncertainty, we are seeing growth in our backlog and continued stability in our pipeline. Second, we are making progress on our cost reduction plan, which is yielding tangible benefits. Third, we continue to demonstrate financial strength with robust cash generation and disciplined capital allocation. And finally, we believe we are well positioned to navigate the current tariff environment.

Ramey Jackson
Chief Executive Officer at Janus International Group

For the first quarter of twenty twenty five, we delivered revenue of $210,500,000 down 17.3% compared to first quarter of twenty twenty four. Total self storage saw a decrease of 23.1%, given a decline in volume associated with the uncertainty in the economic and interest rate environment. Our commercial and other sales channel saw a decrease of 1%, driven by a softness in rolling sheet door market, partially offset by a contribution from our TMC acquisition completed last May. Our Noki Smart Entry system continues to gain traction in the market. With 384,000 installed units at quarter end, representing sequential growth of 5.2%, we're excited about the momentum we're building in this business and see opportunities for further growth as customer adoption of Nokia Ion continues in 2025.

Ramey Jackson
Chief Executive Officer at Janus International Group

While customers remain cautious about their liquidity and capital deployment in the current environment, we are confident in the underlying demand for self storage solutions. The restructuring initiatives we implemented in 2024 are progressing well, with our structural cost reduction plan on track to deliver approximately $10,000,000 to $12,000,000 in annual pre tax cost savings by the end of twenty twenty five. These actions are designed to improve margins, simplify our organizational structure, and enhance our operational efficiencies. From a financial standpoint, we continue to demonstrate the resilience of our business model. Our excellent cash flow generation and balance sheet have provided us the financial flexibility to make a voluntary prepayment of $40,000,000 on our first lien term loan and repurchase 600,000.0 shares for a $5,100,000 under our share repurchase program during the quarter.

Ramey Jackson
Chief Executive Officer at Janus International Group

At quarter end, we had $16,300,000 remaining on our share repurchase authorization. I'd like to take a moment to address tariffs and the potential expense impacts to Janus. While the bulk of our steel and material inputs are sourced domestically, we do have some exposure to components sourced from areas that we expect will be impacted by tariffs. We have dual sources for many of our components, which coupled with our inventory on hand allows us to mitigate much of our exposure to tariffs in 2025. At this time, we estimate the total potential expense impact related to tariffs for 2025 to be in the low single digit millions.

Ramey Jackson
Chief Executive Officer at Janus International Group

At the current expected tariff rates beyond 2025, we estimate the potential ongoing annual impacts to be in the range of 10,000,000 to 12,000,000 We anticipate that our productivity and commercial actions will provide a mitigating effect against these impacts. As we look ahead, we remain confident in the long term fundamentals of our business. We expect the self storage industry to continue to benefit from strong underlying demand drivers and believe there is significant opportunity for our R3 business as consolidation across the self storage industry, coupled with the average facility age exceeding twenty years, will lead customers focusing their capital allocation on existing properties. As an industry leader in self storage solutions, our strong balance sheet, exceptional cash flow generation and suite of innovative offerings positions us well to deliver attractive long term shareholder value. Now, I'll turn the call over to Ansem for a detailed review of our financial results and updates to our 2025 guidance.

Ramey Jackson
Chief Executive Officer at Janus International Group

Ansem?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Thanks, Remy, and good morning, everyone. As Remy highlighted, we continue to navigate a challenging macroeconomic environment and are pleased to deliver results that were largely in line with our expectations. In the first quarter, consolidated revenue of $210,500,000 was 17.3% lower as compared to the prior year quarter with declines in all three sales channels. Together, our self storage business was down 23.1%, New construction was down 25.5, while R3 was up 19.3% for the quarter. The decline in revenues for new construction was almost entirely due to a decline in volume associated with macroeconomic uncertainty and sustained high interest rates impacting liquidity, causing some customers to adjust project timing.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

The R3 decline was driven by nearly 50% decrease in retail big box conversions and facility expansion activity partially offset by increases in door replacement and renovation activity. For the quarter, the impact to organic revenues was driven roughly 10% by price and 90% by volume. In the first quarter, the International segment saw total revenues increased by $6,500,000 or 44.2% compared to prior year. The change is attributable to increased volumes as a result of normalizing local market conditions compared to prior year, which was negatively affected by The UK recessionary period starting late fiscal twenty twenty three and impacting most of fiscal twenty twenty four. Due to the international businesses lower margin profile, this had a negative impact on the company's overall adjusted EBITDA margin.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Our Commercial and Other segment saw 1% decline in the first quarter driven by market softness for rolling sheet doors, largely offset by contribution from the TMC acquisition. First quarter adjusted EBITDA of $38,400,000 was down 42.1% compared to the first quarter of twenty twenty four. This resulted in an adjusted EBITDA margin of 18.2, a decrease of approximately seven ninety basis points from the prior year period. The decrease in profitability was due to lower volumes impacting our ability to leverage fixed costs as well as impacts of geographic segment and sales channel mix. In the quarter, we realized approximately 1,500,000 in savings associated with the previously announced cost reduction program and we expect to realize approximately 10,000,000 to $12,000,000 in annual pre tax cost savings by end of twenty twenty five.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

For the first quarter, we produced adjusted net income of $17,700,000 a decrease of 51.6% from the prior year and adjusted EPS of $0.13 We generated cash from operating activities of $48,300,000 and free cash flow of $41,900,000 in the quarter. On a trailing twelve month basis, this represents a free cash flow conversion of adjusted net income of 170%. Capital expenditures in the quarter were 6,400,000.0 We finished the quarter with $217,100,000 in total liquidity, including $140,800,000 of cash and equivalents on the balance sheet. Our total outstanding long term debt at quarter end was $557,000,000 and net leverage was 2.3 times, well within our target range of two to three times. Aided by our strong balance sheet and cash position to start the year and consistent with our capital allocation priorities during the quarter, we repurchased 600,000.0 shares for $5,100,000 as part of our $100,000,000 share repurchase program.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

At quarter end, the company had $16,300,000 remaining on its share repurchase authorization. We also made a voluntary prepayment of $40,000,000 on our first lien term loan, which will lower our overall interest expense for the year by an estimated $2,200,000 The annualized impact is expected to be 2,700,000.0 Now moving to our 2025 guidance, based on our first quarter results, current visibility into our end markets and current expectations of the direct impacts from tariffs, we are reaffirming our full year guidance for revenues and adjusted EBITDA. We continue to expect revenues to be in the range of $860,000,000 to $890,000,000 and adjusted EBITDA to be in the range of $175,000,000 to $195,000,000 reflecting an adjusted EBITDA margin of 21.1 at the midpoint. As we look at the cadence of results for the year, we reiterate our expectation for results to strengthen in the back half of 2025. Additionally, as the year progresses, we expect our customers to begin shifting their focus towards our three initiatives as facility focus more on optimizing and upgrading existing properties over new construction.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

As a reminder, the margin profiles for new construction in R3 are similar, so we are agnostic about moves between the two sales channels. New construction is expected to remain soft in the first half of the year as we work through customers' extended project timelines. We continue to anticipate being near the higher end of the free cash flow conversion of adjusted net income target range of 75% to 100% in 2025. Please refer to the presentation we have posted for additional details on our key planning assumptions for 2025. Thank you.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

I will now turn the call over to Raimi for his closing remarks. Raimi?

Ramey Jackson
Chief Executive Officer at Janus International Group

Thank you again, Anson. Despite the challenges we faced in the first quarter, I'm encouraged by the positive signals we're seeing in our business, including growth in our backlog and the continued stability of our pipeline. While the broader market environment remains in flux, our strong balance sheet and cash flow generation gives us significant flexibility and optionality to continue investing in our business while seeking out and delivering accretive shareholder value enhancing opportunities. The strategic alignment and resilience of our business model are reflected in our reaffirmed 2025 guidance. We believe we're well positioned to deliver long term value for all stakeholders.

Ramey Jackson
Chief Executive Officer at Janus International Group

A big thank you to our employees, customers and shareholders for your continued support. Again, thank you for joining us. Operator, we can now open up the lines for Q and A.

Operator

We'll take our first question from Jeff Hammond with KeyBanc. Please go ahead.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

Hey, good morning guys.

Ramey Jackson
Chief Executive Officer at Janus International Group

Good morning, Jeff.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

Just listening to the public self storage REIT, it seems like fundamentals are stabilizing or maybe moving a little off the bottom. I know rates are still stubborn. But just wondering, one, what's the latest that you're seeing on kind of the pacing of some of these projects delays starting to break free and move through the backlog? And two, just how would you characterize order activity in the pipeline behind it?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Yeah, great question, Jeff. We're seeing the move like we saw in Q4 that projects are moving in the pipeline. Unfortunately, still some of the stubborn rates that you mentioned. In terms of pipeline and backlog, we're seeing just a steady small growth in that in both of those categories as well. So I think pretty good indication that stuff is moving.

Ramey Jackson
Chief Executive Officer at Janus International Group

Yes, just to add to that, Jeff, there's no question we were looking at kind of the churn rates kind of pre pandemic around three hundred days. They're currently sitting around five hundred days, there's no question that it's maintained, it's been pushed out and seems to be fairly consistent moving forward.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

And just pipeline?

Ramey Jackson
Chief Executive Officer at Janus International Group

Yes, both orders and pipeline have been on an uptick since the beginning of the year. Super happy with where we are there and it continues to grow.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

Okay. And then just on appreciate the color on tariffs. Just on price, I think in your guide, you're originally saying, I think, price down high single digits. It was only 2% down in 1Q. And then I'm assuming you're probably seeing some steel inflation, some of the tariff inflation.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

So I'm just wondering how you're thinking about price downs relative to ninety days ago. And just is the offset lower volumes or maybe that's an upside situation?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Yes. Jeff, you think about the pricing where we get any uses for the full year, and we said it would blend into the year as we bleed off some of the older projects and some of newer ones. So that's why q one wasn't as impacted as much from a pricing point of view.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

Okay. Then

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

just real quick on the tariff number. Just help me understand the low single digit million this year versus the 10 to 12,000,000 kind of on

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

a full year run rate?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Yeah. If you think about it, have a as you know, how we buy our inventory, we have a decent amount of inventory already for the year. So it's not as you're not getting a full year impact for that. So when we actually looked at kind of our inventory positions as well as some of our mitigating actions, that's kind of how we got down to a much smaller impact for 2025.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

And if you look into next year on an annualized basis, that 12 ish million there is if there's no mitigation actions at all and obviously with our normal process in terms of sourcing things, we're currently looking at renegotiating some of those items as well as looking at other sources in addition to just general productivity to mitigate that for 2026.

Jeff Hammond
Jeff Hammond
Analyst at KeyBanc Capital Markets

Okay. Thanks.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Thanks, Jeff.

Operator

We'll go next to Phil Ng with Jefferies. Please go ahead.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Hey, guys. I guess follow-up on that question on pricing. Certainly better than expected, maybe that's timing and that's just going to kick in a little more fully in the coming quarters. But help us kind of think through what you're seeing on the pricing front. Certainly steel prices have moved up.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

You have some level of hedging, maybe that's helpful. But is that an opportunity for pricing to get better perhaps in the back half or maybe an opportunity to kind of pick up some share just given your competitors or smaller competitors are probably a little less equipped to kind of navigate through some of the supply challenges and certainly tariffs as well?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Yes. So it's a great question, Phyllis. I think if you look at it from a price point, there's a bit of timing like you said. That's why the impact is not as much. I think if you look at steel, I think the suppliers have tried to kind of raise the price.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

And I think ultimately, it's going be dictated by real demand, and the demand hasn't been there. And that's why you see it fall back to a lower level than what the initial indication was. It'll be look, like we've always said about with our steel, we've got a good process how we buy it, and we're managing it. If it does step up at the end of the year, we have the ability to put in commercial actions to mitigate if we need to.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Okay. That's great color. And then on the R3 side of things, a few things, right? I mean, the retail conversions has been a drag. When does that comp out?

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

And then I think, Raimi, your comments suggested that perhaps some of your customers are pivoting from new construction to R3. Any like real tangible signs that kind of come through in the back half or later this year just based on orders and bidding? How does that kind of ripple through? And any color on some of the rebranding efforts that's out there from some of your larger institutional customers?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Yes. So we're you're right. I think it's getting really low, retail conversion piece of it. We've always said that there will always be some amount of it, but you're right. It's that's kind of why you saw the slow the negative in terms of R3 slow up much better this quarter.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

And what I would expect going forward is that it'll be at a steady state there in terms of retail conversion. I think, Ramy probably just can address the other question in terms of what we're seeing. But I can tell you, when we're looking at our backlog right now, we're starting to see incremental increases in that r three piece where our customers are starting to put more projects of r three. And honestly, they come in various size, but we're starting to see that starting to increase.

Ramey Jackson
Chief Executive Officer at Janus International Group

Yeah, just to follow-up, specifically on the rebranding, opportunity is well underway. We are obviously partnering with our customers to accommodate that. So that's, you've heard me talk about that, that's a multi year opportunity specifically on the large one that you know of. And to answer point, we're seeing others more institutional operators accelerate that by way of remix, full renovations, a little bit of expansion and then office upgrades. So, that's been a pleasant surprise in terms of the way that they're allocating capital.

Ramey Jackson
Chief Executive Officer at Janus International Group

But I will say on the non institutional side of the business, they're pretty much on the sidelines from any CapEx expenditure at this time.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

And Ramy, any color on how this kind of progresses and ramps up? Backlog is getting better on R3's break, but how does that kind of ripple through? Does that dial up in the back half or this is more of a 26 event?

Ramey Jackson
Chief Executive Officer at Janus International Group

It does. It certainly dials up in the back half. As you know, these are projects that we've been working on for a while. Have great visibility the way the R3 program works. I mean, there's touch points all throughout the process.

Ramey Jackson
Chief Executive Officer at Janus International Group

And so we're super comfortable with the timing because we play a big part in that in terms of tenant notification and just the project management side of it. So our expectation is that it will certainly accelerate in the second half.

Philip Ng
Philip Ng
Managing Director at Jefferies Financial Group

Okay. Appreciate the color.

Operator

We'll go next to Dan Moore with CJS Securities.

Will Gildea
Equity Research Associate at CJS Securities

Hi, this is Will on for Dan. Last quarter you started to see signs of stabilization in commercial. Has that continued or is tariff and economic uncertainty impacted that momentum?

Ramey Jackson
Chief Executive Officer at Janus International Group

Yes, it certainly has stabilized. We're seeing some growth in certain product lines, some opportunity in the carport and shed as we've previously announced where we positioned a door center kind of in the hub of where that product line is manufactured. So we're taking aggressive steps to gain share there. I would say the only thing that is relatively flat and it kind of came through on our numbers this quarter would be the commercial sheet door, which is typically its application is in metal buildings. So as you probably know that sector is depressed, I would say probably at a bottom right now.

Ramey Jackson
Chief Executive Officer at Janus International Group

So any movement upward will certainly get the benefit of that moving forward.

Will Gildea
Equity Research Associate at CJS Securities

Thank you. And then in self storage, a lot of small and mid sized customers started delaying projects for as long as a year ago. Of those projects that have been on the shelf for six, nine months or longer, are you starting to see more cancellations? Or conversely, are you starting to see more starts move forward?

Ramey Jackson
Chief Executive Officer at Janus International Group

Yeah. We're starting to see more starts move forward. That's the best way to, you know, to think about it. In terms of cancellations, we haven't seen anything out of the the ordinary, you know, from cancellations of the backlog.

Will Gildea
Equity Research Associate at CJS Securities

Thank you.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Thank you.

Operator

We'll go next to John Lovallo with UBS.

John Lovallo
John Lovallo
Senior US Homebuilding & Building Products Equity Research Analyst at UBS Group

Good morning, guys. Thanks for taking my questions as well. The 10,000,000 to $12,000,000 of pretax cost savings from structural cost reductions still remains in place. You guys realized about $1,000,000 in the first quarter. How should we sort of think of the cadence of those savings through the year?

John Lovallo
John Lovallo
Senior US Homebuilding & Building Products Equity Research Analyst at UBS Group

And what are some of the projects that are going to they'll value to kind of drive those savings?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Sure. Thanks for the question, John. If you think about the cadence, we should probably be at a full run rate at the end of Q2 for those savings. There are various items and obviously in our cost of goods sold in terms of resetting our labor force for the volume that we're delivering. And then also in our G and A lines that we do in some leases that we no longer need it.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

It's on pace there and there's opportunity for incremental that we're seeing as we work through them as well.

John Lovallo
John Lovallo
Senior US Homebuilding & Building Products Equity Research Analyst at UBS Group

Got it. And then on the Nokia installed units, 84,000, I think that's up about 5% sequentially, which is good, but it seems like the growth has kind of moderated a bit over the past few quarters. How are kind of thinking about it through the remainder of the year and sort of the longer term adoption?

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Yes, I think it's still going pretty strong for the new product Nokia Ion. I think as we always talked about is, as the installed base gets bigger, then obviously the sequential growth is going to get a bit small because you've a much larger base. But I think we're still bullish on the opportunity for the rest of the year and going into next year because the new product is really hitting a lot of the expectation what the customers were looking for.

John Lovallo
John Lovallo
Senior US Homebuilding & Building Products Equity Research Analyst at UBS Group

Okay. Fantastic. Thank you, guys.

Anselm Wong
Anselm Wong
Executive VP & CFO at Janus International Group

Thanks, Jeff.

Operator

This does conclude today's question and answer session. I will now turn the program back over to Rami for any additional or closing remarks.

Ramey Jackson
Chief Executive Officer at Janus International Group

Thank you, everyone, for joining us today. We appreciate your support of Janus International and look forward to updating you on progress. Have a great day.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Executives
    • Sara Macioch
      Sara Macioch
      Senior Director of Investor Relations
    • Anselm Wong
      Anselm Wong
      Executive VP & CFO
Analysts
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Key Takeaways

  • Janus reported Q1 revenue of $210.5 million (down 17.3% YoY) and adjusted EBITDA of $38.4 million (down 42.1%) with an 18.2% margin.
  • The self-storage channel declined 23%, commercial sales were down 1%, international revenue grew 44%, and Noki Smart Entry installations rose 5.2% to 384,000 units.
  • Management’s $10–12 million structural cost-reduction plan is on track for full realization by year-end, delivering $1.5 million in savings in Q1.
  • Robust cash generation—$48.3 million of operating cash flow and $41.9 million of free cash flow—funded a $40 million term-loan prepayment and the repurchase of 600,000 shares for $5.1 million.
  • Backlog and project pipeline showed modest growth, supporting reaffirmed 2025 guidance of $860–890 million in revenue and $175–195 million in adjusted EBITDA despite anticipated tariff headwinds.
AI Generated. May Contain Errors.
Earnings Conference Call
Janus International Group Q1 2025
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