Q2 2026 Janus International Group Inc Earnings Call

August 11, 2026

Speaker #2: Hello, and welcome to the Janus International Group second quarter 2026 earnings conference call. All participants are in listen-only mode, and a question-and-answer session will follow the formal presentation.

Operator 3: Hello and welcome to the Janus International Group Q2 2026 earnings conference call. All participants are in a listen-only mode, and a question and answer session will follow the formal presentation. If you should require operator assistance during the conference, you may press star zero on your telephone keypad. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Please go ahead.

Operator: Hello and welcome to the Janus International Group Q2 2026 Earnings Conference Call. All participants are in a listen-only mode, and a question and answer session will follow the formal presentation. If you should require operator assistance during the conference, you may press star zero on your telephone keypad. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Please go ahead.

Speaker #2: If you should require operator assistance during the conference, you may press star zero on your telephone keypad. As a reminder, this call is being recorded.

Speaker #2: I would now like to turn the call over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Please go ahead.

Speaker #3: Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramey Jackson, and our Chief Financial Officer, Anselm Wong.

Sara Macioch: Thank you operator, and thank you all for joining our earnings conference call. 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. Our remarks in the press release presentation and on this call contain forward-looking statements regarding the company's business, strategy, operations and financial performance. Please review the forward-looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Speaker #3: 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.

Speaker #3: Our remarks in the press release, presentation, and on this call contain forward-looking statements regarding the company's business strategy, operations, and financial performance. Please review the forward-looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections.

Speaker #3: The company expressly disclaims any obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events, or otherwise.

Speaker #3: Additionally, non-GAAP financial measures will be referenced in this call. A reconciliation of these measures to the most directly comparable GAAP financial measure can be found in our earnings press release and presentation.

Sara Macioch: Additionally, non-GAAP financial measures will be referenced in this call. A reconciliation of these measures to the most directly comparable GAAP financial measure can be found in our earnings press release and presentation. On today's call, Ramey will provide an overview of our business. Anselm will continue with a discussion of our financial results and 2026 guidance before Ramey shares some closing thoughts, and we open up the call for your questions. At this point, I will turn the call over to Ramey.

Speaker #3: On today's call, Ramey will provide an overview of our business, Anselm will continue with a discussion of our financial results, and 2026 guidance before Ramey shares some closing thoughts, and we open up the call for your questions.

Speaker #3: At this point, I will turn the call over to Ramey.

Speaker #4: Thanks, Sara, and good morning, everyone. Thank you all for joining our call today. Second quarter results reflected a continuation of the macroeconomic trends we have discussed throughout the year.

Ramey Jackson: Thanks, Sara, and good morning, everyone. Thank you all for joining our call today. Q2 results reflected a continuation of the macroeconomic trends we have discussed throughout the year, as the operating environment remained challenging across many of the markets we serve. While we remain focused on execution and serving our customers, these factors had a greater impact on demand than we anticipated. As a result, total revenue totaled $233.5 million and adjusted EBITDA was $40.2 million. Based on our year-to-date performance and current visibility, we are revising our full year guidance. Demand levels across our core business have not trended as we expected, and we believe it's appropriate to reflect that reality in our outlook. While we have updated our expectations to reflect current market conditions, our conviction and strategy remains unchanged.

Ramey Jackson: Thanks, Sara, and good morning, everyone. Thank you all for joining our call today. Q2 results reflected a continuation of the macroeconomic trends we have discussed throughout the year, as the operating environment remained challenging across many of the markets we serve. While we remain focused on execution and serving our customers, these factors had a greater impact on demand than we anticipated. As a result, total revenue totaled $233.5 million and Adjusted EBITDA was $40.2 million. Based on our year-to-date performance and current visibility, we are revising our full year guidance. Demand levels across our core business have not trended as we expected, and we believe it's appropriate to reflect that reality in our outlook. While we have updated our expectations to reflect current market conditions, our conviction and strategy remains unchanged.

Speaker #4: As the operating environment remained challenging across many of the markets we serve, while we remain focused on execution and serving our customers, these factors had a greater impact on demand than we anticipated.

Speaker #4: As a result, total revenue totaled $233.5 million, and adjusted EBITDA was $40.2 million. Based on our year-to-date performance and current visibility, we are revising our full-year guidance.

Speaker #4: Demand levels across our core business have not trended as we expected. And we believe it's appropriate to reflect that reality in our outlook. While we have updated our expectations to reflect current market conditions, our conviction in strategy remains unchanged.

Speaker #4: We remain focused on executing against the priorities that we believe will strengthen the business and create long-term value. Let me take a few minutes to discuss our progress on those initiatives.

Ramey Jackson: We remain focused on executing against the priorities that we believe will strengthen the business and create long-term value. Let me take a few minutes to discuss our progress on those initiatives. As a reminder, we refer to our strategic framework as GROW: greater penetration of self-storage, ramping adoption of smart security solutions, outperforming in the commercial market, and winning through strategic accretive acquisitions. Beginning with greater penetration of self-storage, market conditions remained challenging during the quarter, predominantly in North America new construction, where project activity and customer investment levels continue to be constrained, particularly among our smaller customers. We continue to expand and refine our product offering in order to adapt to our customers' changing needs, including our R3 business, international presence, and design build capabilities, allowing us to deliver more comprehensive solutions. Integration of our Kiwi II Construction acquisition remains on track.

Speaker #4: As a reminder, we refer to our strategic framework as GROW, greater penetration of self-storage, ramping adoption of smart security solutions, outperforming in the commercial market, and winning through strategic agreed acquisitions.

Speaker #4: Beginning with greater penetration of self-storage, market conditions remained challenging during the quarter, predominantly in North America and new construction, where project activity and customer investment levels continue to be constrained, particularly among our smaller customers.

Speaker #4: We continue to expand and refine our product offering in order to adapt to our customers' changing needs, including our R3 business, international presence, and design-build capabilities, allowing us to deliver more comprehensive solutions.

Speaker #4: Integration of our Kiwi-2 construction acquisition remains on track. Anselm will speak further to our expectations for the business this year shortly. Next, ramping our smart security solutions through our Noki Smart Entry platform.

Ramey Jackson: Anselm will speak further to our expectations for the business this year shortly. Next, ramping our smart security solutions through our Nokē smart entry platform. During the quarter, we reached a significant milestone of surpassing 500,000 installed Nokē units. This achievement reflects years of investment and execution and marks an important inflection point for the platform. As we have discussed in prior periods, scale has always been a critical component of the Nokē strategy. Reaching this stage marks an important step in that journey and supports our ongoing efforts to improve profitability and drive greater recurring revenue over time. Adoption of Nokē continues to increase, reinforcing the meaningful value in the solutions that help our customers improve operational efficiencies, enhance security, and streamline facility management.

Speaker #4: During the quarter, we reached a significant milestone of surpassing $500,000 installed Noki units. This achievement reflects years of investment in execution and marks an important inflection point for the platform.

Speaker #4: As we have discussed in prior periods, scale has always been a critical component of the Noki strategy. Reaching this stage marks an important step in that journey and supports our ongoing efforts to improve profitability and drive greater recurring revenue over time.

Speaker #4: Adoption of Noki continues to increase. Reinforcing the meaningful value in the solutions that help our customers improve operational efficiencies and enhance security and streamline facility management.

Speaker #4: As we continue to advance our product roadmap, we have been encouraged by the initial interest in Noki Infinity, our on-door dual-technology smart-locking system we announced earlier this year.

Ramey Jackson: As we continue to advance our product roadmap, we have been encouraged by the initial interest in Nokē Infinite, our on-door dual technology smart locking system we announced earlier this year. We expect Nokē Infinite will be available for factory install on both roll-up and swing doors beginning in Q4. The third priority of our growth strategy is increasing our share in the market for commercial doors. While commercial sheet door demand remains soft, we are seeing benefits from our expanded distribution footprint and architectural specification initiatives. Our efforts in the data center space also continues to progress. We are exploring new product capabilities and continuing to position ourselves as a strategic manufacturing partner for OEMs. Our final priority is winning through disciplined M&A.

Speaker #4: We expect Noki Infinity will be available for factory install on both roll-up and swing doors beginning in the fourth quarter. The third priority of our growth strategy is increasing our share in the market for commercial doors.

Speaker #4: While commercial sheet door demand remains soft, we are seeing benefits from our expanded distribution footprint and architectural specification initiatives. Our efforts in the data center space also continue to progress.

Speaker #4: We are exploring new product capabilities and continue to position ourselves as a strategic manufacturing partner for OEMs. Our final priority is winning through discipline M&A.

Speaker #4: Strategic acquisitions remain an important component of our strategy, and we continue to evaluate opportunities that enhance our capabilities. Expand our solutions offering and support long-term value creation.

Ramey Jackson: Strategic acquisitions remain an important component of our strategy, and we continue to evaluate opportunities that enhance our capabilities, expand our solutions offering, and support long-term value creation. Combined with our scalable operating platform, this disciplined approach enables us to pursue growth while maintaining a relatively low capital intensity business model and strong cash flow generation. As we look ahead, we will continue to focus on what we can control. Executing with discipline, supporting our customers while adapting to their changing needs, optimizing our operations, and advancing our strategic priorities. While market conditions remain challenging, our revised guidance reflects our best assessment of the current demand levels and positions us to execute against expectations that we believe are achievable. With that, I'll now turn the call over to Anselm for a more detailed review of our financial results and to discuss our revised 2026 guidance. Anselm?

Speaker #4: Combined with our scalable operating platform, this discipline approach enables us to pursue growth while maintaining a relatively low capital intensity business model and strong cash flow generation.

Speaker #4: As we look ahead, we will continue to focus on what we can control: executing with discipline, supporting our customers while adapting to their changing needs, optimizing our operations and advancing our strategic priorities.

Speaker #4: While market conditions remain challenging, our revised guidance reflects our best assessment of current demand levels and positions us to execute against expectations that we believe are achievable.

Speaker #4: With that, I'll now turn the call over to Anselm for a more detailed review of our financial results and to discuss our revised 2026 guidance.

Speaker #4: Anselm?

Speaker #5: Thank you, Ramey, and good morning, everyone. Ramey spoke to our strategy and results at a high level, and I will focus my remarks on financial performance in the second quarter and our updated 2026 guidance.

Anselm Wong: Thank you, Ramey, and good morning, everyone. Ramey spoke to our strategy and results at a high level, and I will focus my remarks on financial performance in Q2 and our updated 2026 guidance. For Q2, consolidated revenue of $233.5 million increased 2.4% as compared to the prior year. Inorganic revenues for the quarter were $19.2 million, reflecting contributions from Kiwi II Construction. At the sales channel level, our self-storage business was up 15.4%, new construction increased 20.3%, while R3 is up 6.6% for the quarter. The increase in revenues for new construction was driven by contributions from Kiwi II Construction and strength in our international business, which offset continued softness in North America. On an inorganic basis, new construction revenues were flat compared to the prior year.

Speaker #5: For the second quarter, consolidated revenue of $233.5 million increased 2.4% compared to the prior year. Integrated revenues for the quarter were $19.2 million, reflecting contributions from Kiwi-2 construction.

Speaker #5: At the sales channel level, our self-storage business was up 15.4%, new construction increased 20.3%, while R3 was up 6.6% for the quarter. The increase in revenues for new construction was driven by contributions from Kiwi-2 construction and strength in our international business, which offset continued softness in North America.

Speaker #5: On an organic basis, new construction revenues were flat compared to the prior year. The increase in R3 revenue was driven by increases in door replacements and redevelopment activity, as well as increased conversion and expansion activity.

Anselm Wong: The increase in R3 revenue was driven by increases in door replacements and redevelopment activity, as well as increased conversion and expansion activity. In Q2, total revenues in our international segment increased to $31.1 million, up 9.5% compared to the prior year period, driven by growth in new construction and market share gains. For the quarter, revenue in our commercial and other segment decreased by 21.2%. The decline was primarily driven by continued softness in demand for commercial sheet doors. Q2 adjusted EBITDA of $40.2 million was down 18% compared to Q2 of 2025. This resulted in an adjusted EBITDA margin of 17.2%, a decrease of approximately 430 basis points from the prior year period. The decrease in margins year over year is primarily attributable to the impacts of geographic segment and product mix.

Speaker #5: In the second quarter, total revenues in our International segment increased to $31.1 million, up 9.5% compared to the prior year period, driven by growth in new construction and market share gains.

Speaker #5: For the quarter, revenue in our commercial and other segment decreased by $21.2%. The decline was primarily driven by continued softness in demand for commercial sheet doors.

Speaker #5: Second quarter adjusted EBITDA of $40.2 million was down 18% compared to the second quarter of 2025. This resulted in an adjusted EBITDA margin of 17.2%, a decrease of approximately $430 basis points from the prior year period.

Speaker #5: The decrease in margins year over year is primarily attributable to the impacts of geographic segment and product mix. For the second quarter, we produced adjusted net income of $23.9 million, compared to adjusted net income of $28.2 million in the prior-year period.

Anselm Wong: For Q2, we produced adjusted net income of $23.9 million, compared to adjusted net income of $28.2 million in the prior year period. Adjusted EPS for the quarter was $0.17. We generated cash from operating activities of $24.4 million and free cash flow of $21.6 million in the quarter. On a trailing 12-month basis, this represents a free cash flow conversion of adjusted net income of 129%. Capital expenditures in the quarter were $2.8 million. We ended the quarter with $205.3 million in total liquidity, including $127 million of cash and equivalents on the balance sheet. Our total outstanding long-term debt at quarter end was $550 million, and net leverage was 2.7 times within our target range of 2 to 3 times. Our liquidity levels allow us flexibility in our capital deployment.

Speaker #5: Adjusted EPS for the quarter was $17. January cash from operating activities of $24.4 million and free cash flow of $21.6 million in the quarter.

Speaker #5: On a trailing 12-month basis, this represents a free cash flow conversion of adjusted net income of $129%, capital expenditures in the quarter were $2.8 million.

Speaker #5: We ended the quarter with $205.3 million in total liquidity, including $127 million of cash and equivalents on the balance sheet. Our total outstanding long-term debt at quarter end was $550 million, and net leverage was $2.7 times within our target range of 2 to 3 times.

Speaker #5: Our liquidity levels allow us flexibility in our capital deployment. During the quarter, we repurchased approximately $367,000 shares of our common stock for a total of $1.9 million.

Anselm Wong: During the quarter, we repurchased approximately 367,000 shares of our common stock for a total of $1.9 million. Year to date, we have repurchased approximately 3.2 million shares of our common stock for a total of $17.6 million. We had $63 million remaining on our share repurchase authorization at quarter end. Now moving to our 2026 guidance. As Ramey noted, we continue to face a challenging operating environment, with demand trends remaining more muted than expected. In light of current market realities, we have adjusted our expectations for the year to reflect the environment we are seeing today and to align with what we believe is a prudent and achievable set of expectations.

Speaker #5: Year to date, we have repurchased approximately $3.2 million shares of our common stock for a total of $17.6 million. We had 63 million remaining on our share repurchase authorization at quarter end.

Speaker #5: Now, moving to our 2026 guidance. As Ramey noted, we continue to face a challenging operating environment. With demand trends remaining more muted than expected, in light of current market realities we have adjusted our expectations for the year to reflect the environment we are seeing today and to align with what we believe is a prudent and achievable set of expectations.

Speaker #5: We have yet to see the macro-environment stabilize as we anticipate entering the year, which has contributed to slower activity across portions of our core business, reflecting ongoing inflationary pressures and stagnant housing demand across North America.

Anselm Wong: We have yet to see the macro environment stabilize as we anticipate entering the year, which has contributed to slower activity across portions of our core business, reflecting ongoing inflationary pressures and stagnant housing demand across North America. As a result, we now expect full year revenue in the range of $925 million to $945 million. Additionally, due to delays and extended project timelines on certain projects originally anticipated to be completed this year, we are adjusting our expectations for inorganic revenue from Kiwi II Construction to be approximately $80 million to $90 million. We now expect North America organic self-storage revenues to be down high single digits compared to 2025, driven mostly by continued softness in new construction. In our commercial sales channel, we now anticipate revenues to be roughly flat. On the international side, we expect high single-digit revenue growth.

Speaker #5: As a result, we now expect full-year revenue in the range of $925 million to $945 million. Additionally, due to delays and extended project timelines on certain projects originally anticipated to be completed this year, we are adjusting our expectations for inorganic revenue from Kiwi-2 construction to be approximately $80 to $90 million.

Speaker #5: We now expect North America organic self-storage revenues to be down high single digits compared to 2025, driven mostly by continued softness in new construction.

Speaker #5: In our commercial sales channel, we now anticipate revenues to be roughly flat. On the international side, we expect high single-digit revenue growth. From a profitability standpoint, we continue to manage costs and remain focused on operational efficiency, while optimizing our footprint to better align with current demand.

Anselm Wong: From a profitability standpoint, we continue to manage costs and remain focused on operational efficiency while optimizing our footprint to better align with current demand. While lower forecasted volumes, negative mix, and inflationary pressures across the supply chain have put pressure on margins year to date, we anticipate the benefits from these actions will result in a sequentially stronger back half. As a result, 2026 adjusted EBITDA is now expected to be in the range of $150 million to $170 million. This reflects an adjusted EBITDA at the midpoint. We continue to anticipate being around the higher end of the free cash flow conversion of adjusted net income target range of 75% to 100%. Our updated guidance reflects current market conditions and our best assessment of demand trends for the remainder of the year.

Speaker #5: While lower forecasted volumes, negative mix, and inflationary pressures across the supply chain have put pressure on margins year to date, we anticipate the benefits from these actions will result in a sequentially stronger back half.

Speaker #5: As a result, 2026 adjusted EBITDA is now expected to be in the range of $150 million to $170 million. This reflects an adjusted EBITDA at the midpoint.

Speaker #5: We continue to anticipate being around the higher end of the free cash flow conversion of adjusted net income target range of 75% to 100%.

Speaker #5: Our updated guidance reflects current market conditions and our best assessment of demand trends for the remainder of the year. Importantly, we continue to generate strong cash flow, maintain a healthy balance sheet, and invest in a strategic initiative that we believe will drive long-term growth and shareholder value.

Anselm Wong: Importantly, we continue to generate strong cash flow, maintain a healthy balance sheet, and invest in the strategic initiatives that we believe will drive long-term growth and shareholder value. Please refer to the presentation we have posted for additional details on the key planning assumptions for 2026. Thank you all for your time. I will now turn the call over to Ramey for his closing remarks. Ramey?

Speaker #5: Please refer to the presentation we have posted for additional details on the key planning and subscriptions for 2026. Thank you all for your time.

Speaker #5: I will now turn the call over to Ramey for his closing remarks. Ramey?

Speaker #3: Thank you, Anselm. Janus continues to hold a strong position in an attractive industry. But it's clear that current market conditions remain challenging. Importantly, we continue to make meaningful progress against our strategic priorities.

Ramey Jackson: Thank you, Anselm. Janus continues to hold a strong position in an attractive industry, but it's clear that current market conditions remain challenging. Importantly, we continue to make meaningful progress against our strategic priorities. Surpassing 500,000 installed Nokē units marks an important milestone for the platform and demonstrates continued adoption of the technology-enabled solutions across the self-storage industry. While new construction activity, particularly in North America, remains constrained and we expect market conditions to remain challenging in the near term, we are encouraged to see improving sentiment from some of our larger customers. The long-term fundamentals of self-storage remain favorable. Industry occupancy levels remain healthy, household utilization continues to grow, and ongoing consolidation among operators continues to support investment in facility upgrades, modernization, and operational efficiency. Although we cannot control the macroeconomic environment, we can control how we respond.

Speaker #3: Surpassing $500,000 installed Nokia ia units marks an important milestone for the platform and demonstrates continued adoption of the technology-enabled solutions across the self-storage industry.

Speaker #3: While new construction activity, particularly in North America, remains constrained, and we expect market conditions to remain challenging in the near term, we are encouraged to see improving sentiment from some of our larger customers.

Speaker #3: The long-term fundamentals of self-storage remain favorable. Industry occupancy levels remain healthy, household utilization continues to grow, and ongoing consolidation among operators continues to support investment in facility upgrades, modernization, and operational efficiency.

Speaker #3: Although we cannot control the macroeconomic environment, we can control how we respond. We remain focused on serving our customers, optimizing our operations, managing our costs with discipline, and allocating capital responsibly.

Ramey Jackson: We remain focused on serving our customers, optimizing our operations, managing our costs with discipline, and allocating capital responsibly. Supported by a strong balance sheet and healthy cash generation, we believe we are well-positioned to emerge even stronger when market conditions improve. In closing, I want to thank our team, customers, and shareholders for your support. We appreciate your participation on today's call. Operator, we would now like to open up the lines for Q&A, please.

Speaker #3: Supported by a strong balance sheet and healthy cash generation, we believe we are well-positioned to emerge even stronger when market conditions improve. In closing, I want to thank our team, customers, and shareholders for your support.

Speaker #3: We appreciate your participation on today's call. Operator, we would now like to open up the lines for Q&A, please.

Speaker #1: Thank you. If you would like to ask a question, please press star 1 on your keypad now. To leave the queue at any time, please press star 2.

Operator 3: Thank you. If you would like to ask a question, please press star one on your keypad now. To leave the queue at any time, please press star two. Once again, that is star one to ask a question. We'll pause for just a moment to allow everyone the chance to join the queue. Thank you. Our first question today comes from Phil Ng with Jefferies. Your line is open.

Operator: Thank you. If you would like to ask a question, please press star one on your keypad now. To leave the queue at any time, please press star two. Once again, that is star one to ask a question. We'll pause for just a moment to allow everyone the chance to join the queue. Thank you. Our first question today comes from Phil Ng with Jefferies. Your line is open.

Speaker #1: Once again, that is star 1 to ask a question. We'll pause for just a moment to allow everyone the chance to join the queue.

Speaker #1: Thank you. Our first question today comes from Phil Ing with Jefferies. Your line is open.

Speaker #5: Hey, guys. Appreciate all the color. If I look at your new construction business in QQ, frankly, if you strip out Kiwi organic sales are kind of flatish.

Phil Ng: Hey, guys. Appreciate all the color. If I look at your new construction business in Q2, frankly, if you strip out Kiwi, organic sales are kind of flattish. I guess, to kind of kick things off, Anselm, in the revised outlook, the guidance, we are forecasting a weaker demand environment. It feels like it is more new construction, maybe some of the products getting pushed out in Kiwi, but can you expand a little bit, what you are seeing and how trends kind of progress each quarter going into July and August?

Speaker #5: I guess—can I kick things off? Anselm, I think to revise outlook, the guidance we're forecasting a weak demand environment. It feels like it's more new construction, maybe some of the projects getting pushed out in Q3.

Speaker #5: But can you expand a little bit? What you're seeing and how trends kind of progress at your quarter going into July and August?

Speaker #2: Yeah. The markets, like we said, it's just similar to the first half we're expecting to the second half. And what we saw is just, unfortunately, in our buildings versus Kiwi, we saw some project push-outs.

Anselm Wong: Yeah, the markets, like we said, it is just similar. The H1 we are expecting into the H2. What we saw, just unfortunately, in our buildings business, Kiwi, we saw some project push outs, and that is why we kind of revised that piece of it. That seems to be the similar trend that we have seen across the board in terms of just that push out delays that we are seeing on those projects. The good thing is that what we have reviewed is that there has not been cancellations, it has just been a timing push out.

Speaker #2: And that's why we kind of revised that piece of it. But that seems to be the similar trend that we've seen across the board in terms of just that push-out delays that we're seeing on those projects.

Speaker #2: The good thing is that what we've reviewed is that there's not been cancellations. It's just been a timing push-out.

Speaker #5: Okay. But the weakness in new construction, did it progressively get worse at your quarter? I mean, Kiwi aside, it sounds like it's more timing-related.

Phil Ng: Okay. But the weakness in new construction, did it progressively get worse each quarter? Kiwi aside, it sounds like it is more timing related, but what about

Speaker #5: But what about new construction on your end? What do you say?

Anselm Wong: Yeah

Phil Ng: new construction on your

Anselm Wong: No, it is about the same.

Phil Ng: What are you saying?

Speaker #2: Yeah, new construction is relatively the same, like we said. I think the biggest thing you saw was commercial just not getting the upturn that we were expecting that we would get.

Anselm Wong: Yeah, new construction is relatively the same, like we said. I think the biggest thing you saw was commercial just, not getting the upturn that we were expecting that we would get.

Speaker #5: Okay. Which was my next question, right? Commercial has generally been pretty benign, and this was a big drawdown, down 20%. Is this timing-related? Is this what's driving the big shortfall on the commercial side of things?

Phil Ng: Okay. Which was my next question. Commercial has generally been pretty benign, and this was a big drawdown, down 20%. Is this timing related? What is driving the big shortfall on the commercial side of things?

Speaker #2: Yeah, I'll take that one. Morning, Phil. It's Ramey. Look, I think the biggest—yeah, the biggest drag on our commercial revenue is specifically the commercial sheet doors.

Ramey Jackson: Yeah, I will take that one. Morning, Phil. It is Ramey.

Phil Ng: Good morning.

Ramey Jackson: Look, I think the biggest drag on our commercial revenue is specifically the commercial sheet doors, which predominantly are installed in pre-engineered metal buildings. That end market obviously has headwinds. That was really the biggest drag on the miss there. When you think about the category, our rolling steel product is continuing to grow, continuing to perform well. We mentioned our strategic strategies around architectural specifications. That was super important and has been ongoing for over a year, and that is starting to pay off. We are kind of obviously in the data center space, which is in growth mode, so we are excited about that. To answer your question on the miss, it is the commercial sheet door product specifically.

Speaker #2: Which are predominantly installed in pre-engineered metal buildings. And that end market obviously has headwinds, so that was really the biggest drag on the mess there.

Speaker #2: But when you think about the category, our rolling steel product is continuing to grow—continuing to perform well. We mentioned our strategic strategies around architectural specifications.

Speaker #2: That was super important and has been ongoing for over a year. And that's starting to pay off. We're kind of obviously in the data center space, which is in growth mode.

Speaker #2: So we're excited about that. But to answer your question on the mess, it's really it's the commercial sheet door product specifically.

Speaker #5: Okay, and sorry to speak one more in. R3 has actually been a bright spot, and it’s been a bright spot for a few quarters.

Phil Ng: Okay. Sorry, just to get one more in. R3 has actually been a bright spot and it has been a bright spot for a few quarters. Ramey, perhaps on that front, I suspect all the M&A activity from some of your larger re-customers has contributed to that. I am just curious, how is the outlook looking for R3 in the back half? Is there going to be a smooth handoff from one large deal to another? Just give us a little more context on what you are seeing on the R3 side as we look out to the back half this year.

Speaker #5: Ramey, perhaps on that front, I suspect all the M&A activity from some of your larger lead customers has contributed to that. I'm just curious, how's the Outlook looking for R3 in the back half?

Speaker #5: Is there going to be a smooth handoff from one large deal to another? Just give us a little more context of what you're seeing on the R3 side as we look at the back half this year.

Speaker #2: Yeah. There's a lot there. I think to your point around consolidation, look, that certainly plays an important role in the investment. But that's not 100% where we're seeing the uptick in R3.

Ramey Jackson: Yeah, there's a lot there. I think, to your point around consolidation, that certainly plays an important role in the investment, but that's not 100% where we're seeing the uptick in R3. Think about mostly institutional customers, and they're just right sizing and shoring up their facilities during this downtime. We mentioned that conversions and expansions, it's a growing piece of the business, and that's what we're seeing. So, pretty happy with the progress there and the way that that's trending on the backlog and pipeline as it relates to R3. We just have to continue to refine our products to make sure that we're in the right spot for obviously this ever-changing market. But we're pretty pleased with the R3 initiative.

Speaker #2: Think about mostly institutional customers, and they're just right-sizing and shoring up their facilities during this downtime. So we mentioned that conversions and expansions are it's a growing piece of the business, and that's what we're seeing.

Speaker #2: So pretty happy with the progress there and the way that that's trending on the backlog and pipeline as it relates to R3. We just have to continue to refine our products to make sure that we're in the right spot for obviously this ever-changing market.

Speaker #2: But we're pretty pleased with the R3 initiative.

Speaker #5: Okay. Appreciate the color, guys.

Phil Ng: Okay. Appreciate the color, guys.

Speaker #1: Thank you. Our next question will come from Jeff Heyman with KeyBank Capital Markets. Your line is open.

Operator 3: Thank you. Our next question will come from Jeff Hammond with KeyBanc Capital Markets. Your line is open.

Operator: Thank you. Our next question will come from Jeff Hammond with KeyBanc Capital Markets. Your line is open.

Speaker #6: Hey. Good morning, everyone. This is David Tarantino on for Jeff. Maybe just starting on the margins, could you just give us a little bit more color on the lower margin outlook?

David Tarantino: Hey, good morning, everyone. This is David Tarantino on for Jeff. Maybe just starting on the margins, could you just give us a little bit more color on the lower margin outlook? Is this just simply on the lower volumes? Then maybe give us some color on kind of the key buckets that support the H2 improvement versus the H1.

Speaker #6: Is this just simply due to the lower volumes? And then maybe give us some color on the key buckets that support the second-half improvement versus the first half.

Speaker #2: Sure. Thanks, David. If you think about the margin, just the volume did sales volume drop is really the big change that impacted the rate there.

Anselm Wong: Sure. Thanks, David. If you think about the margin, just the sales volume drop is really the big change that impacted the rate there. The H1 to H2 improvement, and you obviously saw it in Q2, is a lot of the optimization that we've been talking about. If you look at the factory consolidations and optimizations, we've been just looking at the volume and aligning the resources to fit with the volumes that we're seeing there. We're also looking at the back office, looking at just in general what we should be doing all the time, which we are doing all the time, and now we're finally starting to see some of that benefit come through. The other last big bucket is, as you saw, steel prices been going up.

Speaker #2: The first half to second half improvement, and you obviously saw it in Q2, is a lot of the optimization that we've been talking about.

Speaker #2: If you look at the factory consolidations and optimizations, we've just been looking at the volume and aligning the resources to fit with the volumes that we're seeing there.

Speaker #2: We're also looking at the back office, looking at, just in general, what we should be doing all the time, which we are doing all the time.

Speaker #2: And now we're finally starting to see some of that benefit come through. The other last big bucket is, as you saw, steel prices have been going up.

Speaker #2: And we've been monitoring that and managing it well, making sure that we maintain our commercial actions to offset that piece of it. So that's why all those big buckets together walked you to the second-half improvement.

Anselm Wong: We've been monitoring that, managing that well, and making sure that we maintain our commercial actions to offset that piece of it. That's why all those big buckets together walk you to the H2 improvement.

Speaker #6: Okay. Great. And then maybe following up on new construction market, it looks like Kiwi's tracking a bit lower. So maybe could you confirm whether kind of the core business is also maybe tracking a bit lower and kind of maybe give us some details of what you're seeing in the pipeline of construction activity here that's maybe informing kind of the color on NA tracking maybe a bit weaker than you expected?

David Tarantino: Okay, great. Then maybe following up on new construction market, it looks like Kiwi II Construction is tracking a bit lower. So maybe could you confirm whether kind of the core business is also maybe tracking a bit lower? And kind of maybe give us some details of what you're seeing in the pipeline of construction activity here that's maybe informing kind of the color on NA tracking maybe a bit weaker than you expected.

Speaker #2: Yeah. The core business is tracking but similar. So I don't think there's been really a big change for the core. Self-storage piece. Yeah. I think Kiwi is the more the bigger piece where we saw the timing on some of the timing of projects push out.

Anselm Wong: Yeah. The core business is tracking about similar. So I don't think there's been really a big change for the core self-storage piece. Yeah, I think Kiwi II Construction is the more, the bigger piece where we saw the timing on some of the timing of projects push out, and that's what the kind of bigger thing. And just a reminder, the big piece of the adjustment forecast was more related to the commercial sheet door piece that we talked about earlier.

Speaker #2: And that's what the kind of bigger thing is. And just as a reminder, the big piece of the adjustment forecast was more related to the commercial sheet door piece that we talked about earlier.

Speaker #6: Okay, great. That's helpful. Thanks, guys.

David Tarantino: Okay, great. That's helpful. Thanks, guys.

Speaker #3: Thanks.

Anselm Wong: Thanks.

Speaker #1: Thank you. Our next question will come from John Lavallo with UBS. Your line is open.

Operator 3: Thank you. Our next question will come from John Lovallo with UBS. Your line is open.

Operator: Thank you. Our next question will come from John Lovallo with UBS. Your line is open.

Speaker #7: Hey. Good morning, guys. This is Matt Johnson for John. Appreciate the time here. If we could just talk about yeah. Hi. If we could talk about gross margin in the quarter, I think it was down, I don't know, somewhere around 650 basis points year over year, which was down a bit more relative to the first quarter.

Matt Johnson: Hey, good morning, guys. This is Matt Johnson for John. Appreciate the time here.

Anselm Wong: Matt.

Matt Johnson: If we could just talk about, yeah, hi. If we could talk about gross margin in the quarter, I think it was down, I don't know, somewhere around 650 basis points year over year, which was down a bit more relative to the first quarter. I know you guys called out, I think it was some product and some geographic mix impacting that. I guess could you guys just maybe talk a little bit about how we should think about the drivers in terms of mix versus Kiwi versus price cost versus just anything else in there?

Speaker #7: product and some geographic mix impacting that. But I guess, could you guys just maybe talk a little bit about how we should think about the drivers in terms of mix versus Kiwi versus price cost versus just anything else in there?

Speaker #2: Yeah. Price, as you saw in the quarter, was minimal. For this quarter, as we had said earlier in the last call, I think if you look at it, the biggest issue was just the mix.

Anselm Wong: Yeah. Price, as you saw in the quarter, was minimal for this quarter, as we had said earlier in the last call. I think if you look at it, the biggest issue was just the mix. Our smaller businesses that have a smaller, lower gross margin profile than, say, our big business Janus Core. As you saw, Janus Core stayed steady. You saw the growth in the other ones, and that is what accounts for that margin decline year-over-year as some of the smaller businesses are growing.

Speaker #2: So obviously, our smaller businesses have a lower gross margin profile than, say, our big business, Janus Core. As you saw, Janus Core is 680; you saw the growth in the other ones.

Speaker #2: And that's what accounts for that margin decline. Year over year, some of the smaller businesses are growing.

Speaker #7: Appreciate that. And then I guess my second question, if we could just put a finer point on the outlook for Kiwi here, I think you guys lowered the sales outlook by about 10 million.

Matt Johnson: Appreciate that. Now I guess for my second question, if we could just put a finer point on the outlook for Kiwi here. I think you guys lowered the sales outlook by about 10 million. I think it is about 11%. I think last quarter you guys had said that Kiwi had a pretty strong backlog coming into the year, which gave them pretty good visibility for 2026. Now it sounds like there were some delays, but I guess could you just talk a little bit about what you saw with those delays? What is driving the expected ramp in Kiwi sales in the back half, and maybe any color you can give on how the backlog for Kiwi looks now?

Speaker #7: I think it's about 11%. I think last quarter you guys had said that Kiwi had a pretty strong backlog coming into the year, which gave them pretty good visibility for 2026.

Speaker #7: Now, it sounds like there were some delays, but I guess, could you just talk a little bit about what kind of what you saw with those delays?

Speaker #7: What's driving the expected ramp in Kiwi sales in the back half and maybe any color you can give on how the backlog for Kiwi looks now?

Speaker #2: Yeah, I think the backlog is still pretty strong, like we said. There's been no change to the total backlog that we're seeing. I think the biggest thing we just saw is just some of our customers are just timing getting their facilities that we brought online to get those up to speed first before they start on some of those other projects that are in the pipeline.

Anselm Wong: Yeah, I think the backlog is still pretty strong like we said. There has been no change to the total backlog that we are seeing. I think the biggest thing we just saw is just some of our customers are just time getting their facilities that we brought online to get those up to speed first before they start on some of these other projects that are in the pipeline. I think you will see a little more step up there. But again, I think it is just more balancing of these are large projects, and we always say that it is hard to predict when they do start. But the good thing is we review them all and the projects are still intact.

Speaker #2: So I think you'll see a little more step-up there. But again, I think it's just more balancing of these. These are large projects, and we always say that it's hard to predict when they do start.

Speaker #2: But the good thing is we review them all, and the projects are still intact.

Speaker #7: Appreciate it. Thanks, guys.

Matt Johnson: Appreciate it. Thanks, guys.

Speaker #2: Thank you.

Speaker #1: Thank you. Our next question will come from Dan Moore with CJS Securities. Your line is open.

Anselm Wong: Thank you.

Operator 3: Thank you. Our next question will come from Dan Moore with CJS Securities. Your line is open.

Operator: Thank you. Our next question will come from Dan Moore with CJS Securities. Your line is open.

Speaker #8: Hey. This is Willum Verdan. A lot of my questions have been answered, so I'll keep it short. Just can you talk about your expectations for working capital and free cash flow for the remainder of the year?

[Analyst] (CJS Securities): Hey, this is Will in for Dan. A lot of my questions have been answered, so I will keep it short. Can you talk about your expectations for working capital and free cash flow for the remainder of the year, and then what are your near term priorities for capital allocation? How are you thinking about the desire to deleverage versus further M&A and share repurchases?

Will Gildea: Hey, this is Will in for Dan. A lot of my questions have been answered, so I will keep it short. Can you talk about your expectations for working capital and free cash flow for the remainder of the year, and then what are your near term priorities for capital allocation? How are you thinking about the desire to deleverage versus further M&A and share repurchases?

Speaker #8: And then what are your near-term priorities for capital allocation? How are you thinking about the desire to deleverage versus further M&A and share repurchases?

Speaker #2: Sure. Thanks for the question. I think working capital has been fairly steady. I think we've continued to look at optimizing it. And I think if you think about cash flow, our guide is saying we'll be in the higher end of the conversion percentage, as we've shown in the first half.

Anselm Wong: Sure. Thanks for the question. I think, look, working capital has been fairly steady. I think we have continued to look at optimizing it, and I think if you think about cash flow, our guide is saying we will be in the higher end of the conversion percentages we have shown in H1. So pretty good cash flow that we are expecting for H2 as well. I think in terms of capital allocation, honestly, CapEx is small for our business in general, so it will stay relatively small. There is not any major investments that are coming up from that point of view from the operations that are needed. And obviously the other two choices, if you think of our debt, our debt has got another couple of years and we will probably refinance next year. So there is not a big push on that piece of it.

Speaker #2: So pretty good cash flow that we're expecting for the second half as well. I think in terms of capital allocation, obviously, CapEx is a small for our business in general.

Speaker #2: So it’ll stay relatively small. There aren’t any major investments coming up from that point of view, from the operations that are needed.

Speaker #2: And obviously, the other two choices, if you think about our debt—our debt has got another couple of years and we’ll probably refi in ’26 or so.

Speaker #2: There's not a big push on that piece of it. I think the last lever in terms of share buyback, obviously, at current prices, are very attractive for us.

Anselm Wong: I think the last lever in terms of share buyback, obviously, at current prices are very attractive for us, and you will see us continue that action that we have seen in the H1.

Speaker #2: And you'll see us continue that action that we've seen in the first half.

Speaker #8: Thank you.

[Analyst] (CJS Securities): Thank you.

Will Gildea: Thank you.

Speaker #3: Thanks.

Anselm Wong: Thanks.

Speaker #1: Thank you. Our next question comes from Ruben Gardner with the Benchmark Company. Your line is open.

Operator 3: Thank you. Our next question comes from Reuben Gardner with The Benchmark Company. Your line is open.

Operator: Thank you. Our next question comes from Reuben Gardner with The Benchmark Company. Your line is open.

Speaker #9: Thank you. Good morning, guys. I'm just wondering if you could most of my questions have been answered. I just have one. Can you elaborate on the cost actions you're taking?

Reuben Gardner: Thank you. Good morning, guys. Most of my questions have been answered. I just have one. Can you elaborate on the cost actions you are taking? Looked like there was some kind of lower SG&A maybe than we expected in this past quarter, but was that a start, or from the start in some of the cost actions you have taken to address the lower demand? Is that where we would see it as the year winds down? Thanks, guys.

Reuben Garner: Thank you. Good morning, guys. Most of my questions have been answered. I just have one. Can you elaborate on the cost actions you are taking? Looked like there was some kind of lower SG&A maybe than we expected in this past quarter, but was that a start, or from the start in some of the cost actions you have taken to address the lower demand? Is that where we would see it as the year winds down? Thanks, guys.

Speaker #9: Look like there were some kind of lower SG&A. Maybe than we expected in this past quarter, but was that a start or from the start in some of the cost actions you've taken to address the lower demand?

Speaker #9: Is that where we would see it as the year winds down? Thanks, guys.

Speaker #2: Yeah. So Ruben, I think it's along the lines what we've always said. We're always optimizing the entire business, not just the operation, but everything.

Anselm Wong: Yeah. Reuben, I think it is along the lines of what we have always said. We are always optimizing the entire business, not just the operations, but everything. What you are seeing is just us continuing to look at, hey, where is the volume going to be, where the revenue is, and let us take the right prudent action to manage costs for the company. So it is not just one area, it is across the board.

Speaker #2: So what you're seeing is just us continuing to look at, "Hey, where's the volume going to be? Where the revenue is?" And let's take the right prudent action to manage costs for the company.

Speaker #2: So it is not just one area. It's across the board.

Speaker #1: Thank you. This concludes our question and answer session. I'll now turn the meeting back over to Ramey Jackson for closing remarks.

Operator 3: Thank you. This concludes our question and answer session. I will now turn the meeting back over to Ramey Jackson for closing remarks.

Operator: Thank you. This concludes our question and answer session. I will now turn the meeting back over to Ramey Jackson for closing remarks.

Speaker #2: Okay. Thank you all for joining us today. We appreciate your support of Janus, and we look forward to updating you on our progress. Have a great day.

Ramey Jackson: Okay. Thank you all for joining us today. We appreciate your support of Janus and look forward to updating you on our progress. Have a great day.

Operator 3: Thank you. That brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Operator: Thank you. That brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Q2 2026 Janus International Group Inc Earnings Call

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