Q1 2025 Janus International Group Inc Earnings Call
Operator: Please stand by, we're about to begin. Hello and welcome to the Janus International Group first quarter 2025 earnings conference call.
Please standby we're about to begin.
Speaker Change: Hello, and welcome to the Janus International Group first quarter, 'twenty 25 earnings Conference call.
Operator: Currently, all participants are in a listen-only mode.
Currently all participants are in a listen only mode.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator's assistance during the conference, you may press star, then zero on your telephone keypad.
Speaker Change: A question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference you May Press Star then zero on your telephone keypad.
Operator: As a reminder, this conference is being recorded.
Speaker Change: As a reminder, this conference is being recorded.
Sara Macioch: I would now like to turn the call over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Thank you. You may begin, Ms. Macioch. Thank you, Operator, and thank you all for joining our earnings conference call.
Speaker Change: I would now like to turn the call over to your host Ms. Sara Misiak Senior director of Investor Relations of Janice.
Speaker Change: Thank you you may begin Ms Macy's.
Amy Jackson: Thank you operator, and thank you all for joining our earnings conference call I'm joined today by our Chief Executive Officer, Amy Jackson, and our Chief Financial Officer, and some wrong. We hope that you have seen our earnings release issued this morning.
Sara Macioch: I am joined today by our Chief Executive Officer, Ramey Jackson, and our Chief Financial Officer, Anselm 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 investor section of our website at Janusintl.com.
Amy Jackson: We have also posted a presentation in support of this call, which can be found in the investors section of our website at Janice I N T L Dot com.
Sara Macioch: Before we begin, I would like to remind you that today's call may include forward looking statements. 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.
Amy Jackson: Before we begin I would like to remind you that today's call may include forward looking statements any statements made describing our belief plans strategies expectations projections and assumptions our forward looking statements.
Amy Jackson: 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.
Sara Macioch: 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.
Amy Jackson: 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.
Amy Jackson: 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.
Sara Macioch: 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. Please see our release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure.
Amy Jackson: Adjusted EBITDA margin adjusted net income and adjusted EPS.
Rainy: 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 rainy will provide an overview of our business and some will continue with a discussion of our financial results.
Ramey Jackson: On today's call, Ramey will provide an overview of our business.
Sara Macioch: Anselm will continue with the discussion of our financial results. and 2025 Guidance before Ramey shares some closing thoughts and we open up the call for your questions.
Rainy: 2025 guidance before raimi share some closing thoughts and we open up the call for your questions at.
Ramey Jackson: At this point, I will turn the call over to Ramey. Thank you, Sara. 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.
Amy Jackson: At this point I will turn the call over to Amy.
Amy Jackson: Thank you Sarah and good morning, everyone. Thank you all for joining us today.
Amy Jackson: I am pleased with our start to 2025 with results mostly in line with our expectations despite ongoing macroeconomic volatility.
Amy Jackson: 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.
Amy Jackson: The strength of our business model has enabled us to navigate these headwinds effectively while continuing to invest in the future.
Ramey Jackson: With that, let me start by highlighting a few key themes related to our first quarter results. First, despite ongoing market uncertainty, we're seeing growth in our backlog and continued stability in our pipeline. Second, we're 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.
Amy Jackson: With that let me start by highlighting a few key themes related to our first quarter results.
Amy Jackson: First despite ongoing market uncertainty, we're seeing growth in our backlog and continued stability in our pipeline.
Amy Jackson: Second, we're making progress on our cost reduction plan, which is yielding tangible benefits.
Amy Jackson: Third we continue to demonstrate financial strength with robust cash generation and disciplined capital allocation.
Amy Jackson: And finally, we believe we are well positioned to navigate the current tariff environment.
Ramey Jackson: For the first quarter of 2025, we delivered revenue of $210.5 million, down 17.3% compared to first quarter of 2024. 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 channels saw a decrease of 1% driven by a softness and rolling sheet door market, partially offset by a contribution from our TMC acquisition completed last May. Our Nokia 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.
Amy Jackson: For the first quarter of 2025, we delivered revenue of $210 5 million down 17, 3% compared to first quarter of 2024.
Amy Jackson: 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.
Amy Jackson: Our commercial another sales channel saw a decrease of 1% driven by softness in rolling sheet door market, partially offset by contribution from our TMC acquisition completed last may.
Amy Jackson: Our gnocchi Smart entry system continues to gain traction in the market with 384000 installed units at quarter end, representing sequential growth of five 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: 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.
Amy Jackson: Yeah.
Amy Jackson: 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.
Ramey Jackson: The restructuring initiatives we implemented in 2024 are progressing well, with our structural cost reduction plan on track to deliver approximately $10 million to $12 million in annual pre-tax cost savings by the end of 2025. These actions are designed to improve margins, simplify our organizational structure, and enhance our operational efficiency.
Amy Jackson: The restructuring initiatives, we implemented in 2024 are progressing well with our structural cost reduction plan on track to deliver approximately 10 million to $12 million in annual pre tax cost savings by the end of 2025.
Amy Jackson: These actions are designed to improve margins and simplify our organizational structure and enhance our operational efficiencies.
Ramey Jackson: 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 million on our first lien term loan and repurchase 0.6 million shares for a $5.1 million under our share repurchase program during the quarter. At quarter end, we had $16.3 million remaining on our share repurchase authorization.
Amy Jackson: 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 million on our first lien term loan and repurchased 6 million shares or a five.
Amy Jackson: $1 million under our share repurchase program during the quarter.
Amy Jackson: At quarter end, we had $16 3 million remaining on our share repurchase authorization.
Ramey Jackson: 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 tariff. 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. At the current expected tariff rates beyond 2025, we estimate the potential ongoing annual impacts to be in the range of 10 to 12 million.
Amy Jackson: I'd like to take a moment to address tariffs and the potential expense impacts to Janice, 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.
Amy Jackson: 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.
Amy Jackson: At this time, we estimate the total potential expense impact related to tariffs for 2025 to be in the low single digit millions at the current expected tariff rates beyond 2025, we estimate the potential ongoing annual impacts to be in the range of $10 million to $12 million.
Ramey Jackson: We anticipate that our productivity and commercial actions will provide a mitigating effect against these impacts.
Amy Jackson: We anticipate that our productivity and commercial actions will provide a mitigating effect against these impacts.
Ramey Jackson: 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 20 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.
Amy Jackson: As we look ahead, we remain confident in the long term fundamentals of our business we.
Amy Jackson: We expect the self storage industry to continue to benefit from strong underlying demand drivers and believe there is significant opportunity for our three business as consolidation across the self storage industry, coupled with the average facility age exceeding 20 years will lead customers focusing their capital allocation on existing properties.
Amy Jackson: 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.
Anselm Wong: Now I'll turn the call over to Anselm for a detailed review of our financial results and updates to our 2025 guidance. Anselm. Thanks, Ramey, and good morning, everyone. As Ramey 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 $210.5 million 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 off 19.3% for the quarter.
Amy Jackson: Now I'll turn the call over to Anthony for a detailed review of our financial results and updates to our 2025 guidance anthem.
Anthony: Thanks, Amy 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 5 million was 17, 3% lower as compared to the prior year quarter with Dick's.
Anthony: Claims and all three sales channels together, our self storage business was down 23, 1% new construction was down 25, 5%, while our <unk> 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 sustain high interest.
Anselm Wong: 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. The R3 decline was driven by a 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 revenue increase by $6.5 million, or 44.2% compared to prior year.
Anthony: Rates impacting liquidity, causing some customers to just project timing.
Anthony: <unk> 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.
Anthony: The quarter the impact to organic revenues was driven roughly 10% by price and 90% by volume.
Anthony: In the first quarter. The international segment saw total revenues increased by $6 5 million or 44, 2% compared to prior year.
Anselm Wong: The change is attributable to increased volume as a result of normalizing local market conditions compared to prior year, which was negatively affected by the UK recessionary period starting late fiscal 2023 and impacting most of fiscal 2024. Due to the international business's lower margin profile, this had a negative impact on the company's overall adjusted EBITDA margin. Our commercial and other segments saw a 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 $38.4 million was down 42.1% compared to the first quarter of 2024.
Anthony: The change is attributable to increased volume as a result of normalizing local market conditions compared to prior year, which was negatively affected by the UK recessionary periods, starting late fiscal 2023 and impacting most of fiscal 2024 due to the international business is lower margin profile. This had a negative impact on the companys.
Anthony: Overall adjusted EBITDA margin.
Anthony: Our commercial and other segments saw 1% decline in the first quarter driven by market softness, we're rolling sheet doors, largely offset by contribution from the PMC acquisition.
Anthony: First quarter adjusted EBITDA of $38 4 million was down 42, 1% compared to the first quarter of 2024.
Anselm Wong: This resulted in an adjusted EBITDA margin of 18.2%, a decrease of approximately 790 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 the geographic segment and sales channel mix. In the quarter, we realized approximately $1.5 million in savings associated with the previous announced cost reduction program. And we expect to realize approximately $10 to $12 million in annual pre-tax cost savings by end of 2025. For the first quarter, we produced adjusted net income of $17.7 million, a decrease of 51.6% from the prior year, and adjusted EPS of $0.13.
Anthony: This resulted in an adjusted EBITDA margin of 18, 2% a decrease of approximately 790 basis points from the prior year period. The decrease in profitability was due to lower volumes impacting our ability to leverage fixed cost as well as the impacts of geographic segment and sales channel mix.
Anthony: In the quarter, we realized approximately $1 5 million in savings associated with the previously announced cost reduction program and we expect to realize approximately $10 million to $12 million in annual pre tax cost savings by the end of 2025.
Anthony: For the first quarter, we produced adjusted net income of $17 7 million a decrease of 51, 6% for the prior year and adjusted EPS of 13, we generated cash from operating activities of $48 3 million and free cash flow of $41 9 million in the quarter on a trailing 12 month basis. This represents a free cash flow.
Anselm Wong: We generated cash from operating activities of $48.3 million and free cash flow of $41.9 million in the quarter. On a trailing 12-month basis, this represents a free cash flow conversion of adjusted net income of 170%. Capital expenditures in the quarter were $6.4 million. We finished the quarter with $217.1 million in total liquidity, including $140.8 million of cash and included on a balance sheet. Our total outstanding long-term debt at quarter end was $557 million, and net leverage was 2.3 times, well within our target range of 2 to 3 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 0.6 million shares for $5.1 million as part of our $100 million share repurchase program.
Anthony: Conversion of adjusted net income of 170% capital expenditures in the quarter were $6 4 million.
Anthony: We finished the quarter with $217 1 million in total liquidity, including $140 8 million of cash and equivalents on our balance sheet.
Anthony: Our total outstanding long term debt at quarter end was $557 million and net leverage was two three times well within our target range of two to three times.
Anthony: Aided by our strong balance sheet and cash position to start the year.
Anthony: And with our capital allocation priorities during the quarter, we repurchased 6 million shares for $5 $1 million as part of our $100 million.
Share repurchase program.
Anselm Wong: At quarter end, the company had $16.3 million remaining on its share repurchase authorization. We also made a voluntary prepayment of $40 million on our first lien term loan, which will lower our overall interest expense for the year by an estimated $2.2 million. The annualized impact is expected to be $2.7 million.
Anthony: At quarter end the company had $16 3 million remaining on its share repurchase authorization. We also made a voluntary prepayment of $40 million on our first lien term loan, which will lower our overall interest expense for the year by estimated $2 2 million. The annualized impact is expected to be $2 7 million now moving to our 2020.
Anselm Wong: 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 million to $890 million and adjust the EBITDA to be in the range of $175 million to $195 million, 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 the back half of 2025.
Anthony: <unk> guidance based on our first quarter results current visibility into our end markets and current expectation of the direct impacts from tariffs we are reaffirming our full year guidance for revenue and adjusted EBITDA.
Anthony: We continue to expect revenues to be in the range of $860 million to $890 million and adjusted EBIT to be in the range of $175 million to $195 million, reflecting an adjusted EBITDA margin of 21, 1% at the midpoint.
Anthony: 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.
Anselm Wong: Additionally, as the year progresses, we expect our customers to begin shifting their focus towards R3 initiatives as facility owners focus more on optimizing and upgrading existing properties over new construction. 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 rain soft in the first half of the year as we work through customers' extended project time. 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.
Anthony: Additionally, as the year progresses, we expect our customers to begin shifting their focus towards our three initiatives and facility owners focused more on optimizing and upgrading existing properties or new construction.
Anthony: As a reminder, the margin progress for new construction in our three are similar so we are gnostic about moves machine the two sales channels.
Anthony: New construction is expected to remain soft in the first half of the year as we worked through customers extended project timelines.
Anthony: 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 I will now turn the call over to Randy for his closing remarks Remy.
Anselm Wong: Please refer to the presentation we have posted for additional details on our key planning assumptions for 2025. Thank you.
Ramey Jackson: I will now turn the call over to Ramey for his closing remarks. Ramey. Thank you again, Anselm. Despite the challenges we face 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.
Anthony: Thank you again and some 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.
Anthony: 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.
Anthony: The strategic alignment Brazilians of our business model are reflected in our reaffirmed 2025 guidance. We believe we are well positioned to deliver long term value for all stakeholders a big thank you to our employees customers and shareholders for your continued support.
Ramey Jackson: We believe we're well positioned to deliver long-term value for all stakeholders.
Ramey Jackson: A big thank you to our employees, customers, and shareholders for your continued support. Again, thank you for joining us.
Anthony: Thank you for joining US operator, we can now open up the lines for Q&A.
Operator: Operator, we can now open up the lines for Q&A. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question.
Speaker Change: At this time, if you would like to ask a question. Please press star one on your telephone keypad.
Anthony: You may remove yourself from the queue at any time by pressing star two.
Speaker Change: Once again that is star one to ask a question.
Jeff Hammond: We'll take our first question from Jeff Hammond with KeyBank. Please go ahead. Hey, uh, good morning, guys. Morning, Jeff.
Speaker Change: We'll take our first question from Jeff Hammond with Keybanc. Please go ahead.
Jeff Hammond: Hey, good morning, guys.
Speaker Change: Good morning, Jeff.
Jeff Hammond: So, you know, just listening to the public self-storage rates, 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?
Speaker Change: So just listening to the public self storage rates. It seems like fundamentals are stabilizing or maybe moving a little off the bottom I know 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.
Speaker Change: Break free and move through the backlog and two just how would you characterize.
Ramey Jackson: And two, just how would you characterize, you know, order activity in the pipeline behind 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 both of those categories as well. So I think pretty good indication that stuff is moving.
Speaker Change: Order activity in the pipeline behind it.
Jeff Hammond: Yes, great question Jeff.
Seeing the move like we saw in Q4 that projects are moving in the pipeline.
Jeff Hammond: Unfortunately, it's still some of the stubborn rates that you mentioned.
Jeff Hammond: In terms of the pipeline.
Jeff Hammond: And backlog we're seeing.
Jeff Hammond: Steady small growth in that in both of those categories as well, so I think pretty good.
Jeff Hammond: Indication that stuff is moving.
Ramey Jackson: Yeah, just to add to that, Jeff, there's no question we were looking at kind of the churn rates, kind of pre pandemic, around 300 days. They're currently sitting around 500 days. So there's no question that it's, it's maintained. You know, it's been pushed out and seems to be fairly consistent moving forward. and just pipeline. Yeah, both both orders and pipeline have, you know, been on an uptick since the beginning of the year. Super, you know, happy with where we are there and it continues to grow.
Speaker Change: Ill just add to that Jeff. There is no question, we're looking at kind of the churn rates.
Jeff Hammond: Pre pandemic around 300 days.
Jeff Hammond: There are currently sitting around 500 days. So there is no question that it's it's maintained.
Jeff Hammond: Sure.
Jeff Hammond: It's been pushed out and seems to be fairly consistent moving forward.
Jeff Hammond: Yeah.
Jeff Hammond: And just pipeline.
Jeff Hammond: Yes, both both orders and pipeline.
Jeff Hammond: And then on an uptick since the beginning of the year.
Jeff Hammond: Super.
Jeff Hammond: Happy with where we are there and it continues to grow.
Jeff Hammond: 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 one queue. And then, you know, I'm assuming you're probably seeing some steel inflation, some of the tariff inflation.
Jeff Hammond: Okay and then.
Jeff Hammond: Just on I appreciate the color on tariffs just on price I think.
Jeff Hammond: In your guide you originally saying I think price down high single digits.
Jeff Hammond: It was only 2% down in <unk> and then <unk>.
Jeff Hammond: Assuming you're probably seeing some steel inflation some of the tariff inflation. So I'm just wondering.
Ramey Jackson: So I'm just wondering, how you're thinking about, you know, 90 days ago, and then you know, just, just is the offset, you know, lower volumes or, or maybe that's an upside situation. Yeah, no, exactly. You think about the pricing when we had any use 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 the newer ones. So that's why Q1 wasn't as impacted as much from a pricing point of view.
Jeff Hammond: How are you thinking about.
Jeff Hammond: This downs relative to 90 days ago and then.
Jeff Hammond: Just.
Jeff Hammond: Is the offset.
Jeff Hammond: Lower volumes or where maybe thats an upside.
Jeff Hammond: Situation, yes.
Jeff Hammond: So you think about the pricing when we hit any use 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 the newer ones. So thats why Q1 wasn't as impacted as much from a pricing point of view.
Ramey Jackson: Okay, and then just real quick on the tariff number, just help me understand the low single-digit million this year versus, you know, the 10 to 12 million, you know, kind of on a full-year run, right? Yeah, if you think about it, like, we have, 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, 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.
Speaker Change: Okay, and then just real quick on that.
Speaker Change: The tariff number just help me understand the low single digit million dollars this year versus the <unk>.
Speaker Change: 10 to 12 million kind of on a full year run rate, yes, if you're thinking about it like we have as you know how we buy our inventory we have a decent amount of inventory already for the year. So it's not as getting a full year impact for that so when we actually looked at kind of our inventory positions as well as some are mitigating I assume thats kind of how.
Speaker Change: We got down to a much smaller impact for 2025.
Speaker Change: Looking to next year on an annualized basis that 12 million. There is if there is 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.
Speaker Change: In addition to just general productivity to mitigate that for 2026.
Speaker Change: Yes.
Jeff Hammond: Okay, thanks.
Speaker Change: Okay. Thanks.
Speaker Change: Okay.
Speaker Change: Thanks, Jeff.
Philip Ng: We'll go next to Phil Ng with Jeffreys, please go ahead. Hey guys, I guess follow up on that question on pricing, you know, 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.
Speaker Change: We will go next to fill in with Jefferies. Please go ahead.
Speaker Change: You guys.
Speaker Change: Just follow up on that question on pricing.
Speaker Change: Certainly better than expected, maybe that's timing and thats just going to kick in a little more fully in the coming quarters, but help us kind of think through what youre seeing on the pricing front certainly as steel prices have moved up you have some level of hedging maybe thats 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.
Ramey Jackson: 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. Yeah, so it's a great question, Phyllis. I think if you look at it from a price point of view, 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, and I think ultimately it's going to be dictated by real demand, and the demand hasn't been there.
Speaker Change: Some share just given your competitors are smaller competitors are probably little less equipped to kind of navigate through some of the supply challenges and certainly tariffs as well.
Speaker Change: Yes, so great question for US I think if you look at it from a price 40, theres a bit of timing like you said.
Speaker Change: Why the impact is not as much I think if you look at steel.
Speaker Change: I think the provide the suppliers have tried to kind of raise the price and I think ultimately it's going to indicative by real demand and the demand hasnt been there and that's why you see fallback.
Ramey Jackson: And that's why you see it fall back to a lower level than what the initial indication was. So it'll be, like we've always said about with our steel, we've got a good process how we buy it, and we're managing it, and 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. Okay. That's a great color.
Speaker Change: A lower level than what the initial indication.
Speaker Change: The indication with so Italy look like we've always said about with their steel.
Speaker Change: Got a good process, how we buy it.
Speaker Change: And we're managing and if it does step up at the end of the year, we have the ability to putting commercial actions to mitigate if we need to.
Speaker Change: Okay. That's good.
Philip Ng: And then on the R3 side of things, a few things, right? I mean, the retail conversions has been a drag.
Speaker Change: The color and then on the <unk> side of things a few things right I mean the <unk>.
Speaker Change: Retail conversions.
Philip Ng: When does that comp out? And then, you know, I think Ramey, 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 and how does that kind of ripple through?
Speaker Change: Has been a drag when when does that comp out and I.
Speaker Change: I think rod Raymond your comments suggested that perhaps some of your customers are pivoting from new construction to <unk> III.
Speaker Change: Any like real tangible signs that kind of come through in the back half related this year, just based on orders and bidding and 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.
Ramey Jackson: And any color on some of the rebranding efforts that's out there from some of your larger institutional customers? Yeah, you're right. I think it's getting really low, the retail conversion piece of it. We've always said that there'll always be some amount of it, but you're right. That's kind of why you saw the negative in terms of R3 slow up much better this quarter. And what I would expect going forward is that it'll be at a steady state there in terms of retail conversion.
Speaker Change: Yes.
Speaker Change: Youre right I think it's getting really low the retail conversion piece of it we've always said that there'll always be some amount of it but you are right. That's kind of why you saw this slow.
Speaker Change: The negative in terms of our three slow up.
Speaker Change: Much better this quarter.
Speaker Change: What I would expect going forward is that there'll be at a steady state there because.
Ramey Jackson: I think Ramey probably can address the other question in terms of kind of what we're seeing. But I can right now, we're starting to see incremental increases in that R3 piece where our customers are starting to put more projects of R3. And obviously, they come in various size, but we're starting to see that starting to increase.
Speaker Change: Because the retail conversion I think.
Speaker Change: Probably just couldn't get addressed the other question in terms of kind 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 our three piece, where our customers are starting to put more projects of our three and hopefully they come in various size, but we're starting to see that starting to increase.
Ramey Jackson: Yeah, just to follow up, the specifically on the rebranding that that opportunity is well underway. We are obviously partnered with with with our customers to accommodate that. And 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 Anselm's 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.
Speaker Change: Yes, just a follow up.
Speaker Change: Specifically on the rebranding.
Speaker Change: The opportunity is well underway.
Speaker Change: We are obviously partner with with.
Speaker Change: With our customers to accommodate that and so thats you have heard me talk about that that's a multi year opportunity specifically on the large win that we.
Speaker Change: And to <unk> point, we're seeing others more institutional operators accelerate that way.
Speaker Change: A way of remix full renovations.
Speaker Change: A little bit of expansion and then office upgrades. So that's that's been a pleasant surprise in terms of the way that they're allocating capital.
Ramey Jackson: 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.
Speaker Change: But I will say on the non institutional side of the business. They are pretty much on the sidelines from any capex expenditure at this time.
Ramey Jackson: And Ramey, any color on how this kind of progresses and ramps up? You know, backlogs getting better on R3 is great, but how does that kind of ripple through? Does that dial up in the back half or this is more of a 26 event? Oh, it does. It certainly dials up in the back half. As you know, 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, you know, all throughout the process. 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.
And any color on how this progresses and ramps up you know backlog is getting better our rfps, Greg, but how does that kind of ripple through the debt dial up in the back half or this is more of a 2016.
Speaker Change: Does it certainly DAU is up in the back half.
Speaker Change: As you know these are projects that we've been working on for a while.
Speaker Change: I have great visibility the way the <unk> III program works, I mean, theres touch points throughout the process.
Speaker Change: And so we're super comfortable with the timing because we play a big part in that in terms of tenant notification in and just the project management side of it so our expectations. It will certainly accelerate in the second half.
Philip Ng: So our expectations, it will certainly accelerate in the second half. Okay, appreciate it, caller.
Speaker Change: Okay I appreciate the color.
Speaker Change: Hmm.
Daniel Moore: We'll go next to Dan Moore with CJS Securities.
Dan Moore: We will go next to Dan Moore with CJS Securities.
Will: Hi this is Will on for Dan. Last quarter you started to see signs of stabilization in commercial. Has that continued or has tariff and economic uncertainty impacted that momentum? Yeah, it certainly has stabilized. We're seeing some growth in certain product lines, some opportunity in the carport and shed. As we previously announced, 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.
Will: Hi, This is will on for Dan last quarter, you started to see signs of stabilization in commercial has that continued or has tariff economic uncertainty impacted that momentum.
Speaker Change: Yes. It certainly has stabilized we're seeing some growth in certain product lines.
Speaker Change: Some opportunity in the carport and shared as we previously announced we are positioned to Adore center kind of in the hub of where that product line is manufacturer.
Speaker Change: So we're taking aggressive steps to gain share there I would say the only thing that is relatively flat and it kind of <unk>.
Speaker Change: Through on our numbers this quarter would be the commercial sheet door, which is typically.
Speaker Change: Its application is in metal buildings, so as you probably know that debt.
Ramey Jackson: So as you probably know, that sector is depressed, I would say probably at a bottom right now. So any movement upward, we'll certainly get the benefit of that moving forward.
Speaker Change: That sector is depressed I would say probably at a at a bottom right now so any movement upward we will certainly get there.
Speaker Change: The benefit of that moving forward.
Ramey Jackson: Thank you.
Ramey Jackson: And then in self storage, a lot of small and mid sized customers started delaying projects as long as a year ago. Those projects that have been on the shelf For 6-9 months or longer, are you starting to see more cancellations or conversely, are you starting to see more starts to move forward? Yeah, we're starting to see more starts move forward. That's the best way to think about it. In terms of cancellations, we haven't seen anything out of the ordinary from cancellations of the backlog. Thank you.
Speaker Change: Thank you and then in self storage a lot of small and mid size customers started Duane projects, so as long as a year ago.
Speaker Change: Projects that have been on the shelf for.
Speaker Change: Six to nine months or longer are you starting to see more cancellations or Conversely are you starting to see more start to move forward.
Speaker Change: We're starting to see more starts move forward Thats the best way to.
Speaker Change: To think about it in terms of cancellations, we haven't seen anything out of the ordinary.
Speaker Change: From cancellations of the backlog.
Speaker Change: Thank you.
Speaker Change: Thank you.
John Lovallo: We'll go next to John Lovallo with UBS. Good morning, guys. Thanks for taking my questions as well. You know, the $10 to $12 million of pre-tax cost savings from structural cost reduction still remains in place. You guys realized about $1.5 million in the first quarter. How should we sort of think of the cadence of those savings through the year? And what are some of the projects that are going to allow you to kind of drive those savings?
Speaker Change: We'll go next to John Lovallo with UBS.
John Lovallo: Good morning, guys. Thanks for taking my questions as well.
Speaker Change: The tenant is $10 million to $12 million of pre tax cost savings.
Speaker Change: From structural cost reductions still remains in place you guys realized about $1 five in the first quarter, how should we sort of think of the cadence of those savings through the year and what are some of the projects that are going to allow you to kind of drive those savings.
Anselm Wong: Thanks for your 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 you know, obviously in our cuts get sold in terms of resetting our labor force for the volume that we're delivering, and then also in our G&A lines that we're doing some leases that we no longer needed. So it's on pace there, and there's opportunity for incremental that we're seeing as we work through them as well. Got it. And then, you know, on the Nokia installed units, 384,000, I think that's up about 5% sequentially, which which is good.
Speaker Change: Sure. Thanks for your question, John maybe you think about the cadence we should probably be at a full run rate at the end of Q2 for those savings there.
Speaker Change: <unk> items.
Speaker Change: <unk> in our cost of goods sold and just re.
Speaker Change: Steady our.
Speaker Change: Labor force for the volume that we're delivering and then also in our G&A lines that renewing some leases leases that we no longer need it. So it's on pace there and there is opportunity for incremental that we're seeing as we worked through them as well.
Speaker Change: Got it and then on the Nokia installed units.
Speaker Change: 384000, I think those are about 5% sequentially.
Anselm Wong: But it seems like the growth has kind of, you know, moderated a bit over the past few quarters. How are you kind of thinking about it through the remainder of the year and sort of the longer term adoption? Yeah, I think it's still going pretty strong for the new product, Nokia ION. I think, as we always talked about, is as the install base gets bigger, then obviously the sequential growth is going to get a bit smaller because you've got 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 with the customers we're looking for.
Speaker Change: Which is good but it seems like the growth is kind of more.
Speaker Change: Moderated a bit over the past few quarters, how you're kind of thinking about it through the remainder of the year and sort of the longer term adoption.
Speaker Change: Yes, I think it's still going pretty strong for the new product Nokia and I think as we always talked about is as the installed base gets bigger then obviously the <unk>.
Speaker Change: <unk> growth is going to get a bit small because you've got 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.
Speaker Change: Expectation with the customers were looking for.
Anselm Wong: Yeah, fantastic.
Speaker Change: Okay Fantastic. Thank you guys.
Operator: Thank you guys. This does conclude today's question and answer session.
Ed: Thanks, Ed.
Speaker Change: 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: I will now turn the program back over to Ramey for any additional or closing remarks. Thank you everyone for joining us today. We appreciate your support of Janus International and look forward to updating you on our progress.
Rami: 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.
Operator: Have a great day.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
Rami: This does conclude today's program. Thank you for your participation you may disconnect at any time.
Rami: Okay.
Rami: Yes.
Rami: Hum.