Q3 2025 Janus International Group Inc Earnings Call

Please stand by your program will be getting momentarily.

A question and answer session will follow the formal presentation.

If anyone should require the operator's assistance during the conference, you may press star 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, Miss Sarah masio, senior director, investor relations of Janice

Thank you. You may begin, Miss Massac.

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 law.

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 statement made describing our beliefs, plans, strategies, expectations, projections, and assumptions are forward-looking statements.

The company is actual results May differ from those anticipated, by such forward-looking statements for a variety of reasons, including but not limited to tariffs interest rates, and other macroeconomic factors many of which are beyond our control.

Please see our recent filings with the Securities and Exchange Commission, which identified 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 seeks 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 to 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 a 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 Raimi.

Thank you, Sarah. And good morning, everyone. We appreciate you all joining our call today.

I'd like to highlight a few key themes as I begin my prepared remarks. First, our team continues to execute in a operating environment, that remains challenging

Second, we have confidence in the long-term. Fundamentals of our end markets. We serve reinforced by the stability of our backlog and pipeline.

And finally, we believe our flexible Financial profile and solid cash generation underpin. The resiliency of our business model and allow us to adapt to changing market conditions.

For the third quarter of 2025 Janice delivered. Total revenue of 219.3 million down 4.7% from the third quarter of 2024.

Adjusted Eva doll was 43.6 Million up 1.2% compared to the prior year.

Ansom will expand further upon drivers of these results shortly.

Moving along to a discussion of our sales channels.

Total Self Storage saw a revenue increase of 3.7% on the new construction site. This was driven by strength in our International segment which more than offset continued softness in the North American Market.

The R3 sales Channel benefited from strength in the door replacement and renovation activity.

Our commercial and other sales Channel decreased 20.1%, primarily driven by declines in rtmc business. Due the project timing as well as weakness in the LTL Trucking industry stemming from broader economic impacts

TMC accounted for approximately 70% of the decline in Revenue in the quarter.

As we have noted before, the TMC business can be somewhat lumpy and will EB and flow throughout the year.

Additionally, we continue to experience, overall Market softness for commercial sheet doors.

Despite the revenue decline, we are still seeing growth in other areas of our Commercial Business.

Including rolling steel and our multi-year effort to get specified for certain architectural requirements.

We believe the more comprehensive Suite of offerings. We have worked to develop is helping to build upon our position in the commercial Market.

Adoption of our Noki smart entry system continues to progress.

With 439,000 installed units at quarter end.

Representing an increase of 35.9% year-over-year.

The smart locking solution is low voltage. Powered can be customized and enhanced features, like LED lights and motion sensors, and is designed and optimized for all Janis, self storage and Commercial Door products for both new construction and retrofits.

We're pleased with the performance of this business, and in particular, the acceleration of interest from the large institutional customers.

we continue to see opportunities for further expansion as operators. Explore Avenues to effectively manage their costs prevent theft and enhance tenant satisfaction.

In the third quarter, Janice continued to invest in innovation and expand our offerings to drive long-term growth across our portfolio.

Through our Betco brand, we announced a comprehensive expansion of our metal decking product line.

This new range of custom metal decking system provides design. Flexibility to meet the unique structural and Architectural demands of Self Storage development and Redevelopment

We also launched a redesigned web portal for our Noki smart entry platform, marking another milestone in our ongoing commitment to delivering seamless Enterprise level experiences for Self Storage owner, operators to run their facilities, in a more effective and efficient manner.

From a financial standpoint, our strong business model and cash flow generation. Should allow us to be opportunistic with regard to our Capital allocation priorities.

During the quarter. We continued our share repurchase program and are consistently. Evaluating m&a opportunities, which remain our top Capital, allocation priority.

despite sustained High interest rates, we are encouraged by the fundamentals of our business, and their capacity to drive long-term growth, the Self Storage industry, remains resilient and continued consolidation presents growth opportunities for our 3 business,

With an aging install base. And in the face of liquidity, constraints, We Believe Facility Owners will be encouraged to focus their Capital, allocation on existing properties.

With positive industry Tailwinds coupled with our significant scale. In financial discipline, we believe we are well positioned to deliver long-term shareholder value.

With that, I'll turn the call over to an for a further review of our financial results and updates to our 2025 guidance handsome.

Thank you, Remy, and good morning. Everyone as Remy shared, our team has continued to focus on execution in a tempered operating environment.

For the third quarter Consolidated, railing of 219.3 million declined 4.7% as compared to the prior year quarter in total. Our self- storage business was up 3.7% new construction, increased 5.5% and R3 was up. 0.7% for the quarter, the growth in revenues for new construction was driven by strength and our International segment which more than offset continued weakness in North America.

The increase in R3 Revenue was driven by increases in door replacement and renovation activity.

In the third quarter, our International segments of total revenues increase to 28.3 million up, 7 million, or 32.9% compared to the prior year, driven primarily by growth in new construction.

For the quarter Revenue in our commercial and other statement declined by 20.1% approximately. 70% of the decline in Revenue was attributable. To our TMC business due to project timing, as well, as overall weakness in the LTL Trucking industry resulting from tariff and economic impacts.

As Remy noted, the TMC business can fluctuate throughout the year depending on the timing of jobs that are completed.

While we continue to see softness in the commercial sheet or Market, we encouraged by the strength. We are seeing in both rolling steel and the carport and sheds business.

On a Consolidated basis. The impact of rims, for the quarter was roughly, 60% price and 40% volume.

Third quarter adjusted, ebida of 43.6 million was up 1.2% compared to the third quarter of 2024.

This resulted in an adjusted, even a margin of 19.9%, an increase of approximately 120 basis points from the prior year period.

The increase in margins year over year is primarily attributable to the prior year being negatively impacted by adjustments or provision for credit losses. Which was partially offset by volume declines, and impacts of geographic Savings in sales Channel mix.

We continue to see the benefits from our previously announced Cost Reduction Program. As a reminder, we expect to realize approximately $10 to $12 million in annual pre-tax cost savings by the end of 2025.

For the third quarter, we produce adjusted the income of 22.6 million up 1.3% compared to the prior year period and just the EPS of 16 cents.

We generated cash from operating activities of 15 million in free cash flow of 8.3 million. In the quarter on a trailing 12-month basis. This represents a free cash flow conversion of adjusted, net income of 171%.

We ended the quarter with 256.2 million in total liquidity, including 178.9 million of cash and equivalents on the balance sheet.

Our total outstanding long-term debt at quarter end, was 554 million, and that leverage was 2.3 times within our target range of 2 to 3 times,

These liquidity levels provide us ample Financial flexibility and allow us to execute on our Capital allocation priorities.

During the quarter we repurchase approximately 82,000 shares for 800,000,000 as part of our share repurchase program.

With the additional 75 million share repurchase authorization approved by our board of directors early this year. The coming head 80.5 million remaining on our share repurchase authorization at the end of the third quarter.

Subsequent to quarter in. We are also pleased that S&P upgraded. Our credit rating from B+ to BB minus with a stable Outlook. This recognition reflects our resilient business model balanced approach to Capital allocation, and consistent cash will generation profitability.

Now, going to our 2025 guidance based on our year-to-date results, current visibility into our backlog and end markets and business, Trends and conditions. As of today, we are updating our full year 2025 guidance programs and adjusted ebit up.

we expect Revenue to be in the range of 870 million to 880 million and adjusted ibida to be in the range of about 164,270, million reflecting, an adjustable margin of 19.1% at the midpoint,

While we anticipate reings in the first quarter to be largely aligned with the third quarter. And the midpoint of the guide remains intact. We now anticipate either margins to come down from our original guidance. Primarily driven by Geographic and product mix

We continue to anticipate 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 exceptions for 2025.

Thank you all for your time. I will now turn the call over to Raymond for his closing remarks for Amy.

Thank you handsome. Our team has continued to focus on factors. We can control in a dynamic environment.

Supported by our balance sheet and cash flow Foundation. We will continue to develop our Innovative Suite of solutions, to further build Upon Our industry leadership position and invest for future growth. We believe We will be well positioned in our industry when an inflection point and the operating environment does occur.

Looking ahead, we will continue to execute on our strategic plan as we look to drive long-term value creation for all of our stakeholders. In closing, I'd like to express my appreciation to our team customers, and our shareholders for your support.

Thank you again, for participating on today's call Operator, we would now like to open up the lines for Q&A please.

Absolutely. At this time. If you'd like to ask a question, please press the star and 1 keys, on your telephone keypad.

To keep in mind, you can remove yourself from the question Queue at any time by pressing star and 2.

We'll take our first question today. From Dan Moore with CJs securities.

Please go ahead. Your line is open.

Hi. This is willan for Dan

Um just looking at the guidance, good morning. Let's looking at the guidance for revenues and change but even as lower by 10% at the midpoint. So

We're looking for something in the 19% margin range versus you know, 21%. Can you add some more color and help us rank order or buck at the Delta between mix higher input costs? You know, including tariffs and other factors? Thank you.

Sure. Um the biggest thing was really product mix and then the kind of segment mix where the sales came from. If you actually notice um when we print the queue, you'll see the international sales are up meaningfully. So there's a lower margin versus kind of in our North America business. So the majority is there Terrace is really not Material, um and neither is was input costs.

Thank you very helpful and then looking at your backlogs and quoting activity, particularly from your core recovery customers. Uh, what does it tell you regarding their plans and budgets for growth for both new construction and R3 related? Spend as we look into 2026,

um, at least, for seeing, right now, at least for the current time, uh, the backlog in the paper, looked pretty stable. Um, I wouldn't say there's anything that's changed from last quarter. Um, where we saw was fairly stable.

Thank you.

We'll take our next question from Jeff Hammond with KeyBank, please go ahead. Your line is open.

Hey, good morning everyone. This is uh David Tarantino on for Jeff.

Um, maybe.

Weakness in. Uh TMC, how much is timing versus the softness and then markets? And then, maybe around the unchanged midpoint of the overall sales guide? How should we think about the assumptions between the end markets and what gives you the confidence that this was more down to timing and should improve moving forward? Yeah, as we said about TMC, it's really, there's 2 things there, is that a lot of their products are pretty large projects that, um, get impacted by whether you impact the decision by the customer. So, um, it's really hard to predict kind of what quarters certain projects land, and because of those decision points. So, a lot of it, I would say, was a push out of of, at least, from a visibility point of a project that we were aware of, um, second. I think if, you know, that the LTL Market, um, and the customers there, um, it has been soft softer due to the reduced, uh, volume of transactions, due to the tariffs. So, we are seeing a little of, um, that push back in terms of opportunities there because of that. But in general, you know,

Most of our TMC business is on our so um at some point you're going to have to do some of the repairs. So I think there's just some timing um that we expect for some of the projects that are being pushed out. Yeah, just just to close. I mean, it's it's uh we remain excited about um the TMC business. It's uh, it's a really good business and a good industry. So we're very optimistic about the the growth profile of that business.

And is it fair to think, within the unchanged midpoint of the sales guide that maybe commercials a little bit lower and Self Storage higher? Is that? Am I thinking about that correctly?

Um, if you look, if you do the implied you'll see it's a little lower for both of them just to get to the implied Q4. Um, but I don't think commercial will be um as bad as this Q3 in terms of the client

Okay great. And then maybe in Self Storage. Can you dig into what's driving the strength in international and maybe how we should expect that moving forward? And then maybe can you just give us some color on what you're seeing on the ground and um, North America? And how that's played out relative to your guys' expectations.

Yeah, I can start. Um, look, I mean, there are certain park at certain Pockets at internationally that are undergoing extreme growth mode. Um, we kind of revise our go to market strategy, uh, moving forward. And, and it, it matters in terms of being in the countries that, uh, that you serve. And so that's playing out. Uh, and we're excited about that. And in addition to that around the international business, our Noki adoption is becoming more standard. So we're seeing a lot of acceleration as as, um, as with door hall, hallway, sales being standard with our, with our Noki offering, and then on the Self Storage piece of it and in North America, no change from the past few quarters, the institutional um, operators are are accelerating

Uh, development. You know, they're using this opportunity to to gain market share and then the non-institutional pretty much on the sidelines. But 1 positive thing that we are seeing with non-institutional is they have a lot of construction, ready, sites. So they're at a good point to win. The macro turns, they'll be be able to accelerate development as well.

Um, and then on the R3 side, you know, same thing, uh consolidation matters, m&a matters to us in terms of R3 Revenue. Uh, from a rebranding perspective. Um, and then unit mix optimization being able to right-size the the sites, uh, continue to drive our 3.

I agree. Thanks guys.

We'll take our next question, from John lovello with UBS. Please go ahead. Your line is open.

Hey guys, good morning, this is Spencer Coffman on for John, thank you for the questions. Um, the first 1, I think if we were kind of back out or back into the impact from TMC, I think it would be like an 11 million impact in the quarter. Um, I guess 1 is at roughly what it was and then 2 um are you expecting to sort of recover that in the fourth quarter or does this kind of get pushed into 2026?

Um, yeah, that's about the approximate value if you imply it. Um, and all right, it's going to be a push. Um, as you expect because there's you know, certain jobs, we can only do in certain amounts in the quarter so there's definitely a push into Q4 and then subsequently into 2026.

Okay. Got it. Um and you know, I think typically you know, sales in the first quarter are a little bit softer than, you know, the rest of the quarters which usually leads to, you know, lower margin sequentially. Um, you know, is that how you guys are sort of thinking about 1 Q at this point or are there? You know, any unusual items kind of similar to what happened and and for Q2 24 to to 1 q25.

I'd say at this point, it's just we, we we will probably refer to our next quarter, earnings call to really discuss that

Fair enough. Um, if I could just squeeze 1 more in uh, just on, on the Tariff side. Recognizing it's it's pretty small for you guys. Um, you know, I I think that you you haven't really changed the outlook for sort of that the annualized impact of, you know, 6 to 8 million on an unmitigated basis. But, you know, if I look in the slide deck, I think you guys may have admitted, uh, you know, in the footnote this part about, you know, securing the alternative sourcing for components and that, you know, you anticipate the productivity and Commercial actions will offset a lot of that exposure, um, I guess is, is there anything to read into it? So why that's not in the slide deck anymore?

Uh, know we're still um, we're still uh, doing the same thing. Like we said, we're mitigating and looking at alternative sources, we've already done. Some of the actions to do that. So I don't think it's implying anything. We're still on track for that.

Great. Thanks guys.

We'll take our next question from Phil. In with Jeffrey's, please go ahead. Your line is open.

Hey guys. Uh, appreciate all the color. Um, I guess first on your um Self Storage business in the US. Um appreciating to MC's lumpy in nature.

But it sounds like a lot of the growth is coming from the international business.

So when you guys have to unpack the North American Self Storage business, is it kind of unfolding like what you expected? Um, particularly in the back half this year?

Yeah, it's been probably. The only thing I would say is that the R3 as we talked about acceleration is not happening as fast as we would have liked. Obviously, we don't predict that timing. It's, uh, it was our best guess in terms of that piece, but I think the balance of it is kind of coming what we expected a new construction, but it's just the R3 piece is a bit slower in terms of growing where we would have thought it would be.

And that's mostly in the institutional side of things, or non institutional side, where it's been a little more. Uh, yeah, institutional in in large rates.

Okay. Uh, all right, that's helpful. Um, and in terms of um, the colors that you shared earlier about how uh Raymond you shared about how a lot of your um non institutional customers have construction ready sites? Um, how quickly can they react? I mean, I guess what should we be? Monitoring that from the outside looking? That would be indicative of perhaps things picking up, is it? Uh, rates coming down, liquidity and improving, uh, consumer confidence. Just kind of help us. Think through what are the Nuggets that we should be looking for the outside and if those things unfold, um, how quickly could that, uh, translate to your volumes,

Yeah, that that's hard to predict. Great question by the way. Um but all the above, I mean, in terms of the macro, uh, liquidity matters, uh, interest rates, I mean, the 10 year treasury keeps bouncing around, um, but I think more than anything is the confidence, um, is what we're hearing, um, you know, for a stronger tomorrow in in the macro. Um, but what we've seen, we've mentioned several times on on these calls, that the activity in the pipeline remains very strong. And so that gives us optimism that

You know, our customers will be ready to to to dive in as quickly as possible. Um, that's something that hasn't happened in, in previous downturns. Usually, you know, when things slow down, everything slows down, but that has not been the case in terms of the amount of work that we're doing, uh, on the design side of it, and the quoting, uh, in the pipeline. So we're we're really optimistic that once things do turn that it'll accelerate and on the, on the timing, it's hard to tell what I do. You know what I do know is, you know, I would classify a lot of these sites as shovel ready. So they have the property, it's just a matter of you know getting getting you know, construction started.

So, let's say, if they decided to move today, um, just in terms of the construction cycle, when your products come in is, is that 6 months after or are you pretty early in that construction cycle in terms of the process? Yeah, it it really depends on the mix. I mean, a large, uh, you know, part of our go to market strategy has been the end to end Building Solutions, so it's not only the door and hallways

And so with that being said, the projects that we're actually doing the buildings on, we'll start a lot quicker. Uh, but you know, 3 to 6 months is probably a good, a good number for that.

Okay. And I'll stick in one more question for Remy, uh, from a raw material standpoint. How are you guys set up? Because I believe you purchase all of your steel domestically, so you don't really have that steel tariff piece. But steel prices are certainly still higher. You had a lot of cost hedged out for good parts of this year. Um, when you look at 2026, I suspect your costs are going to go up. Um, have you started bidding work at these elevated prices, and are you able to pass it through?

Look at the steel prices. I think there was that Trend to go up, but then because there has not been the demand for it, it's actually held pretty low. So, if you look at it right now and obviously you know how we buy steel is that um we've already bought steel going into next year. Um, it's been fairly stable surprisingly in terms of where the steel price has been. So I wouldn't expect a large change at this point for the early parts of next year.

Okay. All right. Thank you so much.

Thanks Bill.

We'll take our next question, from Ruben Gardner with Benchmark. Please go ahead. Your line is open

Thanks, good morning, everybody.

um, so you you've got the 10 to 12 million dollars in costs uh initiatives that you've had in place this year, how much of that has been

realized so far how much will carry into next year, and I guess

If if we don't start to see some significant changes in demand or are there more things that you can do to reduce the cost structure, um, or is this the kind of situation where you'd likely?

Ride ride it out. And, and because you're

You know, optimistic about the long-term Dynamics in the industry.

No, I think if you look at the casting, we are on track you already. You saw what we posted. We're about 70% of the savings already, so we should be, um, in that range. We, we talked about the 10 to 12 for the year. Um, in terms of further costs, I think we're always looking so very many and I are always pushing the business to look at Opportunity. So I would say there's definitely more opportunity there. Um, we're already working on a few, um, just in preparation, uh, if it does, the demand still saves low. So, there's definitely more opportunity.

Okay, and then, um, it it looked like, uh, your inventory picked up as a percentage of Revenue. Um, I don't know if it's just a 1-off was or anything, uh, unique there. We'll, we'll, we'll be expect that to kind of go back down in the fourth quarter. Yeah, just yeah, it's definitely. It's, you know, if we buy the steel, our volumes been a bit lower than we would expected. So you would expect the inventory to go up slightly, um, due to the compared to the original forecasted volume. You were there. So, I think it's just a slight blip there, where we had to have, the inventory was not at the volume that we expected, but our expectation will, you know, will burn it off as we go through the rest of the year.

Okay. And then last 1 for me, um, you mentioned. Noki success is internationally. Well, how do things stand domestically? Um, I I assume utilization rates have come in somewhat, um, maybe a better time to, um, to to, to make those kind of changes that would be necessary to to, to move to the Noki system. At least now versus, you know, a couple years ago any signs that an acceleration or on the way. Um, you know, I know you've been waiting or looking for a larger institutional player to to kind of

Make them move on that. What are the chances that that's around the corner?

Yeah that's that's a good question. We mentioned in our comments that the institutional activity has certainly picked up and I think it's really a testament to ion you know it it's really proven itself in terms of design performance stability and and a price point that the Market's looking for

Um, and then, you know, you've heard us talk about security. Uh, it's, it's really a problem for the industry and

Um and and and and it's really, you know, resolved a lot of the security issues 1 of our larger clients is reported 90% reduction in in uh, in Theft, you know, with, with that product line. So we continue to be optimistic um, and looking forward to driving additional use cases, you know, throughout the sector, but couldn't be happier for them.

So just a, a quick follow-up. I mean, is it, is it likely at some point that there's like a step function higher like, where there's a large adoption or or do you think of more of a? Okay. All right. So we're still so that's still in the cards. Okay. All right, thank you guys. Good luck going forward.

Thank you.

And we'll take our next question as a follow-up from Jeff. Hammond with KeyBank. Please go ahead. Your line is open.

Hey, guys, it's David again. Um, just a quick follow-up on the price. It was largely stable sequentially. So, could you, you could just give us a more color and how we should expect this to evolve moving forward and maybe into next year just based on the actions you've already implemented today.

Yeah, I think the, for rounds of this year, we expect something similar, but again, we haven't looked into to make sure what the impact will be.

Okay, great. Thanks, guys.

And there are no further questions on the line at this time, I'll turn the program back to Ramey Jackson for any additional or closing remarks.

All right, 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.

This does conclude today's program. Thank you all for your participation, and you may now disconnect.