Q2 2023 Janus International Group Inc Earnings Call
Hello, and welcome to the Janus International second quarter 2023 earnings Conference call. Currently all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference you May Press star.
And then zero on your telephone keypad as a reminder, this conference is being recorded I would now like to turn the call over to your host Mr. John Rolling.
<unk> President of Investor Relations and F. E. N E. Thank you you may begin Mr. Rowley.
Thank you operator, and thank you all for joining our second quarter 2023 earnings Conference call.
Hope that you have seen our earnings release issued this morning. Please note that we have also posted a presentation in support of this call, which can be found in the investors section of our website at Janice Hi, NGL Dot com.
As a reminder, today's conference call May include forward looking statements regarding the companys future plans and prospects.
These statements are based on our current expectations and we undertake no duty to update them.
It's important to note that the company's actual results may differ materially from those anticipated.
Actors that could cause actual results to differ from anticipated results are contained in the company's latest earnings release and periodic filings with Securities and Exchange Commission.
We encourage you to review those factors carefully.
In addition, well be discussing.
Or providing certain non-GAAP financial measures today, including adjusted EBITDA adjusted EBITDA margin adjusted net income and adjusted EPS.
Please see our earnings release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure.
I'm joined today by our Chief Executive Officer, Ray Ritchey accident, who will provide an overview of our business and give an operations update and our chief Financial Officer and Tomorrow, We'll continue with a discussion of our financial results and outlook before we open up the call for your questions.
At this point I'll turn the call over to Randy.
Thank you John and good morning, everyone.
The momentum we established to start the year accelerated in the second quarter.
Resulting in record financial results that position us to deliver another year of outstanding performance across the platform.
Customer demand for our products and solutions continue to be robust.
The long term bullish fundamentals, we see across our end markets show resilience against an uncertain economic backdrop.
Specifically.
The demand from facility owners, driven by high occupancy rate and fundamental shifts in their customers' behavior.
Continues on both the new construction in our three side of the business.
Our backlog and visibility into our end markets gives us the confidence to once again raised our outlook for the year and positions us to achieve our longer term goals.
For revenue growth and margin I would like to thank all of our employees without whom our continued strong performance.
S wouldn't be possible.
Now turning to some specific thoughts around the quarter Genesis record second quarter operational and financial results included solid year over year gains in revenues dramatic margin improvement further deleveraging and solid cash generation.
Fundamentals inherent throughout the industry that fuel investment decisions by our customers to add much needed capacity are happening both through new construction and conversions and expansions.
Our gnocchi smart entry system had another strong quarter as we continue to ramp our capabilities and expand our market penetration.
We ended second quarter with approximately 230000 total installed units, representing nearly 39% growth year to date.
Our smart access solution headlined by gnocchi represent the best our industry has to offer and we are excited by both the accelerating adoption of its use in the future. It has in store.
Now shifting to the financial highlights for the quarter we.
We delivered consolidated revenue of $270 6 million, an increase of approximately nine 2% as compared to the same period last year.
This growth included particular strength in new construction up 33, 9%, while our three was up seven 6% and commercial and other was nine 3% lower.
Our adjusted EBITDA of 74 million came in approximately 46% higher than Q2, 2022, which represents an adjusted EBITDA margin of 27, 3%.
An improvement of 680 basis points year over year.
During the quarter favorable mix productivity initiatives and commercial actions more than offset higher costs. We continue to experience in many parts of our business, particularly labor and logistics.
Our company continues to generate strong cash flows with Janssen will discuss in further detail shortly.
Over the past 12 months through the end of the second quarter, our free cash flow conversion of adjusted net income was 100%. We expect cash conversion to remain solid over time, putting us in a strong position to focus on maintaining a robust balance sheet.
Also maintaining the firepower to respond to value enhancing M&A opportunities as we identify them.
Speaking of the balance sheet.
Our net leverage remains a key focus of our board and our management team.
I'm extremely proud that we were able to reduce our net leverage this quarter by another 30 basis points, putting us at two one times net debt to trailing 12 month adjusted EBITDA at quarter end and comfortably within our target range of two to three times.
Before I hand, it over to Anna something I'd like to talk about our progress towards our long longer term objectives laid out in our Q4 2022 earnings call.
We are on pace to achieve all these targets by expanding our industry, leading position in our end markets growing Nokia adoption with our self storage customers driving efficiencies across the platform and when appropriate executing value accretive M&A.
With respect to our stated longer term goals, our topline growth for the first half of this year puts us on track to achieve our full year target range of 4% to 6% organic revenue growth or.
Our EBITDA margins for the quarter and the first half of 2023 positions us well towards achieving our longer term target range of 25% to 27%.
Our strong conversion of adjusted net income to free cash flow in the first half of 2023 sets us up to achieve our target conversion range of 75% to 100% for the full year.
Our end markets remains strong and resilient, we continue to look at ways to leverage our leadership position to capture additional share and create long term value for all of our stakeholders.
With that I'll turn the call over to out some for an overview of the financials and our updated outlook for the full year.
Thanks, Randy and good morning, everyone.
In the second quarter revenue of 276 million was up nine 2% compared to the prior year quarter.
New construction led the way and is up 33, 9%, while our through lease up seven 6% and commercial and other it was 19, 3% lower versus the prior year quarter.
We continue to show a good mix that diversity and stability of our offerings as evidenced by our revenue mix for the quarter, which continues to be well balanced across our three sales channels.
Diving deeper into the sales channel our overall strength in the quarter came primarily from new construction, which was up 33, 8% year over year.
This improvement was the result of the combined impact of commercial actions taken in 2020, one and it really 2022 to offset inflationary pressures on many of our key inputs as well as volume growth.
This quarter, we saw catch up spending by our customers who experience permitting delays.
Our our three segment grew seven 6% in the quarter bolstered by continued new capacity additions in the form of conversion and expansion and the positive impact of commercial actions.
The ability of idle brick and mortar retail is helping our customers focus on rapidly, adding new capacity to meet persistent demand, which continues to drive growth and there are three offerings.
Additionally, our customer continue to retrofit and upgrade their facilities for their customers and to stay competitive in the marketplace.
In commercial another we came up against difficult comparisons to a particularly strong 2022 quarter, which resulted in a year over year decline of nine 3% as we've discussed before during the pandemic, we stocked up on steel, which allowed us to take advantage of quicker lead times and increase their market share at a faster pace than anticipated.
We anticipate it.
As markets have begun to normalize we have seen a shift in demand for certain product lines, which were at an all time high during the pandemic.
Our products are used in a broad range of end markets, including hotels warehouses pharmacy schools and many others. We see continued potential for increased share gains in commercial as.
As well as margin improvement overtime.
Adjusted EBITDA of 74.0 million was up 46% compared to the year ago quarter. The combination of solid demand commercial actions and cost savings initiatives continues to help offset increases in labor as we work to scale the business for continued growth, including additional investments in our Milky Smart entry system.
Adjusted EBITDA margin for the quarter was 27, 3% an increase of roughly 680 basis points from a year ago quarter.
As a reminder, our margin profile for new construction in the archery is roughly similar in these two sales tend to produce higher margins than our commercial and other sales channels.
The relative outperformance in new construction versus the decline in commercial in the quarter helped drive overall higher margins. In addition, the quarter, we saw a particularly strong contribution from some of our highest margin work in new construction and arts, reducing the nature and timing of certain projects along with favorable product mix, we expect our ready mixed revert to more normal.
Ice levels over time, consistent with their longer term margin outlook.
For the second quarter 2023.
Adjusted net income of $37 2 million, which is up 50 490 per cent from second quarter 2022.
Adjusted diluted earnings per share of 25 cents compares to 16 cents in the year ago quarter.
We had another solid quarter of cash flow generation.
Second quarter cash from operating activities was approximately $46 4 million and free cash flow was approximately $42 8 billion driven by volume growth productivity and working capital.
It adds to our multi year trend of strong conversion of adjusted net income to free cash flow, representing a trailing 12 month free cash flow conversion of 100% of adjusted net income.
In the coming months, we have incremental growth capex and you're in on the west coast to expand production capacity to better serve our customers elite touch into self for Brexit issues, providing additional cost savings and growth opportunities for the west coast and in Europe .
Our strong first half results and outlook for the remainder of the year positioning us to deliver on our target of 75% to 100% free cash flow conversion for our long term guidance.
We also continue to focus on initiatives to improve working capital and strengthen our matrix.
From a balance sheet perspective, we ended the quarter with $658 1 million of total debt $110 7 million of cash and equivalents and a net leverage of two one times net debt to adjusted trailing 12 months EBITDA down from two eight times at the end of 2022 four times at the end of the first quarter.
Sure.
Subsequent to quarter end, we paid down an additional $35 million of debt, bringing our year to date pay down to $85 million. We refinanced their first lien terminal facility is $625 million and a seven year term.
Refinancing was strongly supported by diverse syndicate of leading national banks and the Germans include a floating rate of sofa, plus 325 basis points below with the step down to 25 basis point contingent on the ratings upgrade.
We also entered into a new 125 million asset backed lending revolving credit facility, which was upsized from existing 80 million ABL revolving credit facility.
This is reflective of the strength of the business and that spread has not changed from the previous facility. Despite tightening of credit markets. Our performance demonstrates our ability to delever quickly and we remain focused on maintaining our leverage within our long term target range of 2.0 to 3.0 type.
Now turning to our 'twenty to 'twenty three outlook based on our solid second quarter and year to date results.
T a strong backlog and current visibility and market. We are pleased to once again raise our full year 2023 outlook for revenue and adjusted EBITDA. We now expect revenue to be in the range of 1.07 to 1.09 billion, a 5.9% increase at the midpoint compared to our full year 2022 results driven primarily by a combination of.
Commercial access and volume related organic growth.
We expect growth in 2020 three through a breath the strong underlying fundamentals, we see across all three sales channels.
We are raising our expectation for adjusted EBITDA to be in the range of $269 five to $289 5 million.
Representing a 23, 2% increase at the midpoint versus our full year 2020 to result in a 25.8% EBIT margin for the year.
Overall, we expect our full year results reflect a solid year of margin improvement in our business as we pursue our long term objective to deliver healthy adjusted EBITDA margin in the range of 25% to 27% over the next several years.
Thank you.
I'll now turn the call back to Wayne for closing remarks.
Thank you again asked them.
The focused effort of our entire team and the strength in our end markets helped us deliver financial results for the quarter that once again exceeded our expectations, our backlog and pipeline remain solid.
Continued testament to the resiliency of our business model. We believe we are in the early innings of a strong multi year demand environment.
And that should continue to drive solid revenues robust EBITDA margins and strong cash flow generation.
While all maintaining a fortress balance sheet that affords us a broad range of strategic options I'd like to once again, thank the entire Janice team for their unwavering focus and relentless execution as we continue to build long term value for all of our stakeholders.
Thank you again for joining US operator, we can now open up the lines for Q&A. Please.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Yeah.
Thank you. Our first question comes from Jeff Hammond with Keybanc capital markets. Please proceed with your question.
Hey, good morning, guys.
Yeah, Hey, Jeff Good morning.
Maybe just to start can you just speak to qualitatively to how backlog is trending.
What you're seeing from an order activity standpoint, just given some of the more mixed results from some of the big self storage customers and it it it sounds like you had some catch up you know in new construction. So I'm just wondering how that impacted backlog. Thanks.
Yeah, Great question look I think you know as you know.
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Go ahead.
Sorry, Yeah look you know our top 10 accounts represent less than 15% of our total revenue.
I think there was some some decent front with our customers they had a good quarter.
You know as it relates to our you know dashboard everything looks great.
Withstanding.
I mentioned in the in the opening.
The economic backdrop, we're certainly conscientious of that and so we're optimistic around kind of what we're seeing with our internal data. So.
You are correct. There was some kind of pent up demand from a from a permitting perspective.
And timing on new construction and the same applies for our three.
Okay and then.
Maybe just unpack that the product mix comment I don't know if that's just simply that our three end and new construction were stronger versus commercial or if there was something else.
Within that that drove the better margins and maybe just speak to you know the normalization dynamic into the second half along that line.
Yeah I'll start.
Yeah, So when we talk about our product mix.
Yes, less less revenue in commercial as you know the margins are slightly dilutive.
And then just kind of our internal components on on some of the new construction with the hallway systems and things of that nature tend to be higher margin. So that's really the product mix, we speak a handsome you want yeah, that's exactly right Remy So let's say, it's two mixes it's that commercial mix is the total and then the the product piece, we just had a really tremendous.
Quarter of you know products are high margin in the self storage side that should normalize a bit and the second a lot as you can see what we were forecasting, but just a little because of that.
Okay, just last one.
Average great great job Delevering quickly here, you're kind of at the low end just wondering.
You know at what point, you kind of turn the attention back to M&A or consider you know of buyback to say take out some of the clear Lake shares just given our given the strong free cash flow and where the lever just thanks.
I appreciate it and we Werent really hard I think we've done a great job deleveraging.
Not really comment on the clear Lake because it certainly is not up to us it's their shares but I think you saw some movement last quarter.
And as it relates to M&A, Jeff you know the situation here and it's part of who we are and will continue to.
You know find.
Asset.
Add value to the shareholder base.
So again you know when you look at the balance sheet. It gives us a lot of optionality into what triggers you know what levers we want to pull so to speak yeah I agree with Randy I think the Big thing is we are definitely actively looking for targets that are accretive to the business and so we're proud of where we ended on the net leverage but.
Again. This company was built on a lot of M&A. So we want to be sure that we continue to find parties that are accretive for us.
Okay. Thanks, guys.
Thanks.
Thank you. Our next question comes from Brad Hewitt with Wolfe Research. Please proceed with your question.
Alright, Thank you and good morning.
Good morning, Brad.
So obviously from a topline perspective very strong results in new construction in Q2.
Honestly, some some catch up from customers, who had experience permitting delays on prior quarters. How do you think about where we are in the cycle for new construction and the outlook for industry square footage ads.
Yeah.
When you look at you know our metrics internally it shows a tremendous amount of strength of added capacity.
But you know, we we really don't dictate that right. It can it can come in kind of our three with conversions and expansions or new construction. So I wouldn't say nothing has changed from our.
Backlog and pipeline perspective, we're still very optimistic there I think when you look at the growth rates quarter to quarter, it's really around timing.
Okay. That's helpful. And then maybe switching over to mix. Obviously, you mentioned that mix was favorable in Q2 and is expected to normalize in the coming quarters would you be able to quantify the mixed benefit that you saw in Q2.
Then how should we think about the puts and takes driving kind of the implied deceleration of margins.
In the second half given the deflation we've seen steel quarter to date.
Yeah, the window and again I wouldn't put a number we haven't disclosed anything like that but I, just think about that high level mix between self storage and commercial that'll be kind of your easier way to kind of do a calculus when that normalize a bit more you'll see kind of that piece and that's why we said if you look at what we printed in Q.
Q2 is not really drastic change into the second half in terms of margin rate point of view I think in terms of I'm looking at kind of how it will play out for the rest of your for the the mix I think it will normalize a little and again, it's timely green. He said, we we we performing we deliver to what our customers need from us.
Time point of view so it.
It wouldn't surprise me, if we had some time, where the mix changed and stayed where it is here, but again, it's timing and we can't always predict exactly how they wanted us to liberate the solution for them.
Okay. Thank you.
Oh thanks.
Thank you. Our next question comes from Daniel Moore with CGS Securities. Please proceed with your question.
Thank you good morning Ah Congrats on obviously, great progress, maybe just a little bit of color at the the customer's new construction I think you mentioned a little bit in our three to that are you know are experiencing some catch up do you expect that to spill into Q3 or is that largely.
At this customer has largely been caught up from those prior permitting delays.
No I think the permitting issue.
Something that we will have to deal with you know.
The rest of this year.
I think you hear some of our plastics customers speak to that issue. So I really don't.
Yeah going away anytime soon.
But as it relates to new construction, you've heard us say in previous quarters that you know.
Still strong.
As it relates to you know the trends that we have coming in what we call our pipeline and our backlog as well.
Yeah, I think again just a reminder, if you look at what you know our obviously, our REIT customers printed they all still had occupancy rates in that low ninety's, which is again seasonally higher than what the study say 85% of it. So again, we still have to build out to actually get that back down, but again I know they had some.
Comments about a slowdown but again the data is needed and he provided these shield all pretty much in that low ninety's range for Washington, REIT This quarter, Yeah, and one more comment.
There is.
Most of the of our listed customers deal and the top Msas and as you know we're everywhere.
Secondary markets tertiary markets. So when you here.
Formation from them quarter to quarter. It is really is stands those markets that are outside the top MSA.
Helpful.
And.
And so many any color as or is there any discernible cadence that you expect in terms of operating margin you know Q3 versus Q4 embedded in our in the adjusted our full year guide and as we think about kind of that full year twenty-three margin is that a good jumping off point.
For fiscal 'twenty four.
Yeah, I think I think that's kind of how it would lay it out of the way you just said that theory.
Decent jumping off point to full year kind of looking and what is implied for the second half.
I think again, what we'll see is that you know, we'll see some normalization on what the mix of products they buy as well as the commercial teams sell stores. So I think what you see what we're implying in the forecast is pretty good for us.
And nothing no discernible difference between the quarters and just kind of thinking.
Thinking about seasonality if there is any.
Yeah, we don't disclose it but I would say you know your assumption there is probably about one in terms of out there I think it is.
As we said before in our business the only quarters that hasn't been our seasonality is Q1, because it's January and all the other ones are a bit more consistent.
Very good and obviously could see penetration continued to increase adding gnocchi any color as to.
What types of customers are are.
You know increasing adoption and any color as to you know conversations that you may be having with maybe your top 10, 15 20 customers. Thanks again.
Yeah look we're very proud of the growth.
Estimate investments that we've made.
It really shouldn't have to back in.
So we're investing a lot there.
We continue to make it robust.
In terms of the customer profile, what I'll say, there is you'll see you're seeing customers expand their existing portfolio, you're seeing new customers come in.
I think it's really you know you've heard us talk about in the past.
The pandemic put an incentive is center stage. This type of access control smart access control, but what we're seeing right now is the shortage of labor and the nuance around labor productivity is really forcing our customers to get smart on.
Tried to minimize that.
And so you've seen acceleration on interest in not only interest but.
Sales because of that issue.
Very helpful.
The color again.
Thanks, Dan.
Thank you. Our next question comes from Reuben Garner with Benchmark Company. Please proceed with your question.
Thank you and good morning, everybody.
I don't have it.
So I hate to beat on the phone from others, but a couple of clarification clarifying questions here, but the Nic.
Next impact.
Impacting specifically the commercial versus the self storage space is that is that specifically a gross margin.
Comment, meaning the gross margins are higher in self storage and commercial and they kind of net out to the same place from a EBITDA or operating standpoint or are the margins in storage now higher altogether.
It's it's the so first of all he said the gross margin for commercial has always been slightly lower than sell storage leading to the EBITDA margin to be slightly lower I think it's always been there I think it's improved but it's always been a lower yeah. It's.
Just a follow up there it is.
Certainly has been improving.
And we will continue to improve but it's more of a product sale on that commercial segment Reuben.
On the self storage you have the value added proposition.
Proposition that we have with detailing design and installation.
As you enhance margins.
On the self storage side.
Okay, and then the <unk>.
Three.
The celebration on guest room growth.
That kind of a one off well.
Deceleration on the you know another conversions, which is technically new square footage is within that our three base was it just the mix between conversions and new construction.
Different this quarter end and the growth rates will kind of revert to more normalize as the year goes along.
Yeah, I think they will I think you'll see normalization there.
And then anything this quarter, it's timing right. We don't like Angela mentioned, we don't really dictate in terms of wind sites are ready.
But we have no concern with that.
Yeah.
The growth in our three I think you know we talked about our listing customers, they're all talking about.
Speaking at the spin, regardless, if it's remix or.
Capex into redevelopment and things of that nature. So we're still very bullish on the on the north receptor.
Okay, I'm going to sneak one more in if I can hum.
Going beyond this year.
G&A.
Is that where the most opportunity for kind of leverage and margin expansion would come from now that gross margins have kind of recovered and reach.
Reached the levels they are today.
I wouldn't say that.
The biggest opportunity been answered if you Wanna Yeah, No I think like we said volume leverage obviously as opportunity there, but I think there's this business has a nice productivity management in terms of constantly looking at our product lines and how to improve and get more productivity out there. So I wouldn't say, it's only one major lever I think we look at everything and so I think there's opportunity everywhere.
Okay, great. Congrats on the strong results again, guys and good luck going forward.
That's dangerous.
Thank you. Our next question comes from Stanley Elliott with Stifel. Please proceed with your question.
Okay.
Hey, good morning, everyone. Thank you for the question.
Turning back to Nokia are.
Are you seeing just more right now existing customers retrofitting. It are your existing customers, adding it to new unit.
Any color there would be helpful. And then and then also you guys have done a lot of work on the backend or do you feel like you're in a place now where you can continue I mean, I think you said, 39% growth, which is great but continue to scale it at that and maybe even higher levels on a go forward basis.
Yeah. So.
Yeah. The first part is the best way to describe it it's a good mix of new construction and renovation obviously.
When we get a new construction project and that that customer has an existing portfolio. When they have success with that new construction. What we're seeing is just kind of adoption you know among the existing portfolio.
But in terms of the breakout it's it's it's around 50 50.
And then on the on the backend look it's you.
You know, it's that's ever evolving we will continue to.
Fine.
And enhance the back end.
But as you know you've heard US talk about we are still in the very very early innings of this opportunity.
Yes, we're happy with the growth rates, but we're certainly not satisfied in terms of what the total opportunity is and where we think the market is ultimately going long term yeah. I think the only digital ads. The idea is just I think the back is we had talked in prior discussions.
Discussions is really to make sure we have the system that can scale for the future value for it what he don't want is not to be able to deliver a mission critical solution to our customers without the proper back in so that's why we've kind of just focus our investment to make sure that.
We know that you'll be sort of back let me hear payload that we know that the growth is going to be there. So we wanted to make sure that our customers get the robust solution that you have it should be.
Oh, Great and then you know the industry has seen some larger M&A deals here recently with some of your larger.
Institutional customers.
Has that improved your Ford visibility all else being equal.
Yeah, I think it does.
Yeah, It does but I you know not.
Yes.
Typically on the <unk> side, obviously, theres rebranding opportunities that exist.
Not going to comment or quantify.
Excuse me what that looks like.
Based off of you know.
The acquisitions, but it certainly look there are customers they rely on us for our solutions.
We really just stand ready to help them whichever direction. They go with either running dual brands.
We're consolidating into one we certainly don't have that information, but we stand ready to help them.
With.
With Euro III side of the business.
Okay, Great and then lastly, you know utilizations coming down at the industry.
Does that allow you to accelerate your are three.
Position kind of given the age the fleet and how conversations gone with with some of your existing customers around that.
That's a great way to think about it look I think when when new construction.
Look I think the peak of new construction with 2019.
To frame our great growth.
In spite of that I think when.
And folks they have a tendency when they're less busy with new construction to focus on existing portfolio.
With with a lot of the new capacity coming online there is a lot of competition.
So.
They're smart and they're gonna renovated theyre going to stay relevant stay safe.
And invest money into that into their existing portfolio. So that's a good assessment.
Great guys. Thanks, so much and best of luck.
Thanks, Dan.
Thank you. Our next question comes from John Lovallo with UBS. Please proceed with your question.
Hey, guys. Good morning. This is actually Spencer Kaufman on for John Thank you for the questions Yeah, maybe.
Maybe this first one you guys had a pretty broad exposure to different end markets and the commercial side of the business can you just provide a little bit of color as to what you're seeing from your various end markets. There you know, which ones are getting better and which ones are a little bit more challenge.
Yeah, what we we don't have great visibility in.
In terms of where the where the products going other than the feedback we're getting from our customers is the lion's share of the revenue was in the R&R space. So that's that's a that's a good data point for us there.
There are some segments within the commercial sector that have pulled back or should I say normalize that were kind of pandemic Darling. So when you think about outdoor sheds and outdoor carports that segment of the business is starting to starting to normalize. So we do have some visibility on to that but but you know just this year in fact that the R&R.
Or is most of their revenue is very comforting to us.
And from here, it's a market share play for us.
Okay got it.
And you could see you guys refinanced the term loan, which now matures in 2030, I think should we expect you guys to continue utilizing excess cash to voluntarily prepay some of that debt early or how should we think about the capital allocation side of that.
Yeah, I think that's one of the options that but if they put a privately bring me said earlier, we wanted to make sure that we're still proactively looking which we are in terms of you know.
Meaningful acquisitions that are accretive to the business. So I think thinking about it is yes, we have a lot of optionality here, but if I would prioritize I think we've got ourselves in a good position from the debt side and the leverage side priority would be to get an acquisition. If we could that's out there that's accretive for the business.
Makes sense good luck guys.
Thanks.
Thank you there are no further questions at this time I would like to turn the floor back over to rainy for closing comments.
Great. Thank you everyone for joining us today, we appreciate your support of Janus International and look forward to updating you on our progress have a great day.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Okay.
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