Q2 2025 Janus International Group Inc Earnings Call
Hello and welcome to the Janus. International Group, second quarter 2025 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, Miss Sandra, missio, senior, director, investor relations of Janice. Thank you. You may begin. Miss meac.
Thank you, operator. And thank you all for joining our earnings conference call. I am joined today by our chief executive officer, Ray Jackson and our Chief Financial Officer and some 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 Janice intel.com.
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.
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 Eva adjusted Eva margin, adjusted, net income, adjusted EPs, and net Leverage.
Please see our release in filings for a Reconciliation of these non-gaap measures to their most directly comparable, gaap measure.
On today's call, Remy will provide an overview of our business.
Anthem will continue with the discussion of our financial results and 2025 guidance. Before Remy shares, some closing thoughts and we open up the call for your questions.
At this point, I will turn the call over to Ray.
Thank you, Sarah. Good morning, everyone.
Thank you all for joining us today.
Janice delivered results for the quarter that were expectations and I'm pleased with our teams continued, strong execution in a dynamic operating environment.
The resiliency of our business model and our Diversified product offerings have enabled us to whether these challenging macroeconomic conditions, as we work to position the business for long-term success.
With that as a backdrop, I'd like to highlight a few key themes related to the quarter.
First we saw Market recovery in both our commercial sales Channel and our International segment.
Second, our backlog and pipeline remain stable.
Third, we continue to strengthen our leadership team and unveil new offerings to better support our customers and meet their evolving needs.
and finally, we continue to demonstrate Financial strength with robust cash, generation and discipline Capital allocation,
Positioning us. Well to capitalize on the attractive long-term fundamentals of the market. We serve
beginning with our results, for the second quarter of 2025, we delivered revenue of 228.1 million
Down 8.2% compared to the second quarter of 2024.
Total Self Storage. Saw a decrease of 148%.
On the new construction side, this was driven by volume declines resulting from uncertainty in the economic and interest rate environment.
And our R3 sales channel. The decrease was primarily due to continued declines in Big Box, retail convergence and expansion activity.
While customers remain cautious with regard to their liquidity and capital deployment, we are confident in the underlying long-term fundamentals of Self Storage Market.
The softness in our North American Self Storage business was partially offset by a recovery. In the international markets, we serve as macro conditions in these areas improved.
Our commercial and other sales Channel increased 6.7%.
Driven by contributions from our. TMC acquisition completed in May of 2024 coupled with the growth in Rolling steel doors and recovery and demand for carports and sheds.
We are also beginning to realize the benefits of our multi-year efforts to get specified for certain architectural requirements in the commercial space. And we believe this more comprehensive Suite of offering.
We have worked to develop is also allowing us to gain share in the market.
Our Noki smart entry system continues to gain traction.
With 409,000 installed units at quarter in representing growth of 6.5% sequentially and 26.6% year-over-year.
We're pleased with the momentum. We're building in this business and we continue to see opportunities for further growth as customer, adoption of Noki, ion continues in 2025 and Beyond.
You're in the quarter. We welcome Jason Williams as the president of Janus or Janice core.
In his new role, Jason is responsible for the Janus core strategy. Overseeing sells marketing financial performance and product development for the self storage and Commercial Door in hallway, business.
Jason joins us with extensive experience in senior leadership roles at technologically advanced industrial companies. We look forward to his contributions.
In the second quarter, Janice continued to invest in digital Innovation brand expansion. And structural manufacturing to drop long-term growth across our portfolio.
Reflecting this continued momentum. Janice was named a 2025 inside Self Storage. Best of business winner in 3 categories.
Best self storage door.
Best Technology, Innovation.
This marks the 15th consecutive year, we have received recognition for best self storage door by inside Self Storage.
That Co was also recognized by inside Self Storage as a 2025 best of business winner in the category of best development Consulting.
Switching gears, I'd like to take a brief moment to share our updated expectations with regard to tariffs and their potential expense impact, Janice.
As a reminder, while the bulk of our steel and material inputs are sourced domestically. We do have some exposure to components Source from countries that we anticipate will be impacted by the tariffs.
For 2025, we continue to estimate the total potential. Expense impact related to tariffs will be in the low single digit Millions.
Beyond 2025, we now estimate the potential ongoing unmitigated annual impacts to be in the range of 6 to 8 million at the current expected tariff rates.
Compared to 10 to 12 million previously.
We are working to secure alternative sourcing for components.
We historically Source from impacted regions and anticipate that our productivity and Commercial actions will offset much of our exposure.
From a financial standpoint, our resilient business model, strong liquidity, and robust cash generation allow us to execute on our Capital allocation priorities.
To that end during the quarter. We repurchased 1.2 million shares for 10.1 million. Under our share, repurchase program.
I'm also pleased to share that our board of directors expanded, our existing share repurchase, repurchase program during the second quarter authorizing, the repurchase of up to an additional 75 million of common stock.
This additional authorization reflects the board's confidence in our business and extends our ability to return Capital to shareholders.
As we look ahead, we are competent in the long term, fundamentals of our business.
We believe the Self Storage industry will continue to benefit from strong underlying demand driven by our recurring life events.
Our R3 business also has significant opportunity. As consolidation increases across Self Storage industry, more than 60% of the self storage facilities. In the US are over 20 years old, which we believe will encourage customers to focus their Capital allocation on existing properties.
Taken together. We believe that we are well positioned.
To deliver long-term shareholder value, given our strong balance sheet, consistent cash flow generation. And position as the market leader, in self storage, and Commercial Solutions.
With that, I'll turn the call over to anomer a further review of our financial results and updates to our 2025 guide UNAM.
Thanks, Remy and good morning everyone. As Remy highlighted, we continue to execute against the challenging macroeconomic backdrop, inner pleased to deliver results ahead of our expectations.
In the second quarter, consolidate revenue of 228.1 million was 8.2%, lower as compared to the prior year quarter.
Together, our self storage business was down 14.8%. New construction was down 15.2%, while R3 decreased 14% for the quarter.
The decline in revenues for a new construction was primarily driven by declines in volume associated, with Continuum, macroeconomic uncertainty and sustained High, interest rates, impacting our smaller customers liquidity,
The decrease in R3 Revenue, was driven by continued declines in retail, big box conversion and facility expansion activity, partially offset by increases in door replacement and renovation activity.
In the second quarter, our International Sigma saw total revenues increased to 28.4 million up 10.458% compared to Prior year. The increase was driven by higher volumes as demand continues to normalize following the UK recessionary. Period. That impacted performance beginning in late fiscal 2023. Through the bulk of fiscal 2024. We are pleased margins in our international business have been increasing as volumes return.
In the second quarter, our commercial and other statement increased by 6.7% in total, including 1.7% of organic growth.
in organic growing total, 3.8 million reflecting a partial quarter of contribution from TMC, which was acquired in May to 2024
The organic growth was driven by strength and rolling steel doors as well as recovering and demand for carports and sheds.
as Remy noted, we are seeing green shoots from our efforts to secure specifications on select architectural projects, as well as benefits from our distribution facility in Mountain Area, North Carolina that opened last year
Second quarter adjusted. Ebit of 49 million was down 24% compared to the second quarter of 2024,
This resulted in an adjusted ebit on margin of 21.5%. A decrease of approximately 450 base points from the prior year, period.
The decrease in property was due to lower volumes impacting. Our ability to leverage fixed costs as well as impacts of geographic segments and sales Channel mix.
In the quarter, we realized approximately 2.7 million in savings associated with the previously announced cost Reduction Program, reaching the full run rate at the end of Q2 as it anticipated.
As a reminder, we expect to realize approximately 10 to 12 million in annual pre-tax, cost savings by the end of 2025.
Or the second quarter, we've reduced adjusted income of 28.2 million. A decrease of 21.9% for the prior year and adjust the EPS of 20 cents.
We generate a cash from operating activities of 51.4 million and free cash flow. 44.6 million in the quarter.
On a trailing 12-month basis, this represents the free cash flow conversion of the Justin and income of 211 Cent.
Capital expenses in quarter were 6.8 million.
We ended the quarter with 244.3 million, total liquidity, including 173.6 million of cash, included on the balance sheet. Our total outstanding long-term debt at quarter in was 556 million and that leverage was 2.3 times within our target range of 2 to 3 times.
This liquidity level, particularly given current market conditions, gives us a great deal of flexibility across our capital allocation priorities.
As we said in the past m&a is part of our DNA and we will remain at Focus going forward.
Additionally, we continue to return Capital to our shares as demonstrated by a repurchase of 1.2 million shares for 10.1 million. As part of our share repurchase program.
With the additional 75 million share repurchase authorization approved by the board of directors. In the second quarter. The company had 81.3 million remaining on our share of purchase authorization at quarter end.
Now moving to our 2025 guidance based in our year-to-date results, current visibility into our backlog in in markets and business Trends and conditions. As of today, we are reaffirming our full year 2025 guidance for revenue and adjusted evida. We continue to expect revenues to be in the range of 860 million to 890 million, in adjusted ebida to be in the range of 175 million, to 195, million reflecting, and adjusted, even on margin of 21.1% at the midpoint.
From a Cadence perspective, we expect the backup of 2025 to be relatively flat to the first half of revenues and expect even on margins to improve, as we move through, the final 2 quarters of the year.
Results are expected to follow the typical season out of our business. With third quarter being larger than fourth quarter. We intimate the commercial sales Channel and international saying will continue to recover in the back of 2025.
New construction inspected remains soft to the balance of the year as customer project timelines remain extended. As a reminder, the margin provides for a new construction Arthur similar. So we are agnostic about moves between the two sales channels.
We now anticipate that the free cash flow conversion of adjusted net income will be above the target range of 75% to 100% for 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 Ray for his closing remarks Ray.
Thank you, UNAM.
I'm proud of our team's execution.
Our strong balance sheet and cash flow Foundation. Provide us ample flexibility, to expand our suite of offerings and capabilities to drive growth and invest in our future.
Our reaffirmed 2025 guidance is underpinned by our resilient business model and Industry leadership position. Despite near-term challenges and Market fluctuations, I'm encouraged by the Improvement. We delivered in commercial, and international and remain confident in our ability to deliver long-term value for our shareholders.
To close. I'd like to thank our team customers and shareholders for all of your support.
Thank you again for being with us today. Operator, we would now like to open up the lines for Q&A please.
Thank you at this time. If you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the Queue at any time by pressing star 2 once again, that is star and 1. If you would like to ask a question, we'll take our first question from Jeff Hammond with keeping your line is now open.
Hey, good morning, guys.
Hey, Jeff.
um,
So you know, just within the mix of Self Storage, I was a little surprised knew was, you know, more resilient and and our 3 a little bit lighter, just given that you've been talking about, you know, our 3 kind of carrying the day. Um, so just wanted to know, you know,
that and and what should we expect, you know, in in terms of the mix into the second half,
Yeah, no. Jeff the great question, I think we've always talked about, we do what our customers kind of want to lead us to and you know right now what we're seeing is that they still want a bit of the new construction to complete those projects. So we're not seeing as fast of a conversion to R3, even though we're seeing the pipeline in the backlog, build for R3, we're just seeing the choice of of completing a lot of the new construction projects right now as a preference
okay, and then I think you had said, you know,
That the the projects were kind of loading more to 3Q, you know, obviously you have a nice beat, no change to the guide. Just wondering if you know, you feel better within the range kind of after the first half or if there was some stuff that maybe got pulled forward from from 3 Q to 2 q. And you know it within that you know how do we think about you know, Trends in the 3 Q?
Yeah, I think, you know, the way we're looking at, it's still an uncertain Market out there. I think, you know, you would expect it interest rates to adjust and they, we haven't seen anything there yet. So, it's just more being realistic about what we can see, you know, we've, we've refined our tool to look at timing of projects, so, um, we're just reflecting what we're seeing in the pipeline in the backlog data that we have.
So there's 3 Q still feel.
You know, like the best best quarter of the year.
Um the the way we're looking at at least from the the new construction side in the the project we have good visibility to it, looks like it could be uh you know a flash to slightly above for Q3 but you know it'll depend on timing and some of those projects.
Okay. Thanks a lot guys.
Thank you.
Thank you. We'll take our next question. From Dan Moore with CJs Securities. Your line is now open.
Hi, this is Will on for Dan?
Up commercial Revenue. Rebounded, nicely in the quarter. Can you add some more color to the drivers there and where you seen the biggest participation gains? And then you know also talked about uh your confidence in the sustainability of that growth for the remainder of the year.
No, that that's a good question. I'll put it in 3, buckets.
Number 1 asked a rolling steel. As we've mentioned, in the past, we've invested heavily in product diversification. We're adding some more products, um, you know, just just kind of rounding out the suite of products that our customers have uh, to sell. Um, number 2, the architectural efforts in terms of getting, you know, the product specified. Um, and we've always said look, we're a small part of that commercial piece and regardless of the End Market, you know, we we still have share gains that that are available to us and we're
Executing on that.
Uh, second would be the uh, carport shed business. Um, as you know, we've invested in uh kind of brick and mortar Distribution Center in the hub of where of where that product is uh, distributed in Mount Airy. And so those efforts are paying off that Market's rebounding. We're we're adding content to the solution, you know, we're more than just doors in that space. And then secondly our our TMC acquisition is is uh performing uh as expected. And um and so we're we're happy with the growth. We're seeing there.
Thank you. And then uh can you provide an update on the progress you're making with noi across channels? Um,
looks like adoption among smaller. Self Storage players continues to the steady pace.
Are we closer today than we were 6 to 12 months ago to any of the larger rates adopting it in a meaningful way.
Yeah, we won't really specify on, on the REITs. In particular won't won't call them out. But what I can tell you is, is the, uh, the models that were running in the tests that were running, uh, continue to, to progress, um, and outside of the reach. You know, a lot of the larger institutional customers are, are showing a great interest in it. I think it's really a couple of things. Number 1, the, the ion product that we that we released the stability, the inherent stability, to it being a wired solution. Um, you know, is is Meaningful. And then also the pro.
Price point as well.
Thank you.
Thank you.
Thank you, we'll take our next question from Phil. Nick with Jeffrey's please go ahead. Your line is open.
For the upcoming quarters, still a good guidance.
Yeah pricing. It's just really the timing. I think like we talked about it is is as we deliver the projects, the older ones would have the higher price and then the newer ones would be the lower price so it's still coming in, you know, came a bit, you know, slower than we we expect in terms of the timing of it. Um, but I think it'll be a slightly better. Um, from a pricing point of view as we go in, um, just as a update. Um, when we looked at it, there's that Blended number you're seeing is is storage and Commercial. And we had already said that commercial was holding up a bit better than the Self Storage side of the house. And that's what you're seeing. Uh, especially with the mix of store, uh, commercial being a bit stronger than the Self Storage. That you'll see a bit better blend. So then the pricing that will be a bit better.
Got it. Um, and
assuming pricing is going to be better than I expected in the second half. How should we be thinking about margins? Um, in the third quarter?
And maybe also in the fourth quarter.
More margins is, is improving, as we talked about. And as we plan, right is you, you look at a couple of things pricing, it will be a little over there. But the the bigger thing is that we talked about is that hey, our steel cost, um, uh, is blending in at the lower cost as it Blends into the back of the year, but also our cost actions. Um, at the end of Q2 got to what we said when we get to. And there actually is more that it's coming that we're working on. So a lot of
Levers are coming into play that we talked about, which would help get the margin back in the range we discussed to achieve the full year margin rate.
Okay, thank you.
Thank you.
Thank you. We'll take our next question from Ruben Gardener. Will you please go ahead? Your line is now open.
Hi, this is John Glenn on for Reuben. Um congrats on the quarter, guys. I just wanted to ask if you could maybe provide some color on the uh replacement in renovation activity increases you saw in our 3 doing the quarter.
Is that a sign of new business wins or maybe you have some customers? Who, put projects off? Who just can't afford to wait any longer.
Uh, great question. Um, I would answer that it's a blend. I mean, obviously the some of the larger consolidation activity that's happening in previous. Quarters is is uh, driving. Um that Revenue um,
You know in in yeah, I mean as a momentum I think I think again. Um we talked about it is that people are starting to look at their assets and saying, hey, we got to reinvest to really improve it. Um, I'm sure you can get on some of the public C public. Uh, earnings causes some of our customers to see what they're doing, but I think it's going down, like Remy said, Acquisitions are um, Forefront for them, as well as improving the asset base that they have.
Okay. Uh and then additionally just with Noki. Uh do you have any additional color you might be able to provide on the runway there? Uh maybe there's an element of the macro slowdown that helps accelerate adoption at some point.
Yeah, no, no, we definitely feel that. It's 1 of the key levers, for all our customers to improve their cost position. We've already said that is that um, Noki allows you to to go into that that virtual management. Um, you no longer have to use, you know, you know as much labor to actually support your storage facility. So we're seeing a lot of our customers, take advantage of that solution to improve their cost position.
All right, thank you. I'll pass it along.
Thank you.
Thank you.
And we will take a follow-up from Jeff Hammond with keeping please go ahead. Your line is open.
Yeah, um, thanks for the follow-up, guys. Um, so I think you said you characterize backlog and pipeline as stable. I think some of the industry data out there kind of points to lower development as we move into next year. I know we're pretty far away from that, but I'm just wondering, you know, what the disconnect is? Is that share gain? Is that, you know, a better R3 pipeline mix? Just, you know, any color as you think a little further.
Further out? No. I think you hit the nail on the head, Jeff. It's it's uh we are taking share.
um, and have been for the past, call it 3 quarters, um,
So that that certainly 1 of them and then mix has a lot to do with it as well.
In the mix being.
R3 kind of filling the
Uh, a lot of our customers are starting to look at, you know, upgrades to their facility, to improve occupancy rates, as well as, as the market gets a bit more competitive to to have that more up-to-date facility.
Okay, sounds good. Thanks guys.
Thank you.
Thank you. And we currently have no further questions in the queue. I will turn the program back over to you. Remy Jackson for any additional or closing remarks. Okay. Thank you all for joining us today. We appreciate your support of Janice and look forward to updating you on our progress. Have a great day.
Meeting, thank you for your participation. You may disconnect at any time and have a wonderful day.