Janus International Group, Inc. Q1 FY2025 earnings call

• Growth in backlog and continued stability in pipeline despite macroeconomic volatility.
• Progress on cost reduction plan with structural cost reduction expected to deliver $10 million to $12 million in annual pretax cost savings by end of 2025.
• Noke Smart Entry system has 384,000 installed units at quarter-end with sequential growth of 5.2%, showing traction.
• Strong cash flow generation and balance sheet allowed voluntary prepayment of $40 million on first lien term loan and share repurchase of 600,000 shares for $5.1 million.
• Mitigation of tariff exposure through dual sourcing and inventory on hand, with estimated low single-digit million impact in 2025 and $10 million to $12 million ongoing annual impact beyond 2025.
• Confidence in underlying demand for self-storage solutions despite customer caution on liquidity and capital deployment.

In the first quarter of 2025, Janus International Group delivered revenue of $210.5 million, down 17.3% compared to Q1 2024. Total self-storage saw a decrease of 23.1% due to volume decline from economic and interest rate uncertainty. Commercial and other sales channels decreased driven by softness in the rolling sheet door market, partially offset by the TMC acquisition. The international segment saw total revenues increase by $500,000 or 44.2% compared to the prior year, attributable to normalized local market conditions. First quarter adjusted EBITDA was $38.4 million, down 42.1%, resulting in an adjusted EBITDA margin of 18.2%, a decrease of approximately 790 basis points from the prior year period. The international segment's lower margin profile negatively impacted overall adjusted EBITDA margin, while commercial and other segments saw a 1% decline driven by rolling sheet door market softness but offset by the TMC acquisition.

• Reaffirmed 2025 revenue guidance in the range of $800 million to $890 million and adjusted EBITDA guidance in the range of $175 million to $195 million.
• Expect results to strengthen in the back half of 2025.
• Anticipate being near the higher end of free cash flow conversion of adjusted net income target range of 75% to 100% in 2025.
• Customers expected to shift focus towards R3 initiatives as facility owners optimize existing properties over new construction, with margin profiles of new construction and R3 similar.

• Macroeconomic volatility impacting business results.
• Tariff exposure with potential expense impacts, including low single-digit million impact in 2025 and $10 million to $12 million ongoing annual impact beyond 2025 if no mitigation actions taken.
• Market uncertainty affecting customer liquidity and capital deployment.

Q: Just listening to public self-storage REITs, what is the latest on the pacing of project delays starting to break free and order activity in the pipeline?

A: Ramey Jackson said they are seeing projects moving in the pipeline, with pipeline and backlog showing steady small growth. Anselm Wong added churn rates are around 500 days currently compared to pre-pandemic 300 days.

Q: On price, how are you thinking about price downs relative to ninety days ago and tariff number impact?

A: Anselm Wong said pricing blends into the year as they bleed off older and newer projects, so Q1 was not as impacted. For tariffs, current inventory and mitigating actions lead to low single-digit million impact in 2025, with $10 million to $12 million annualized impact beyond 2025 if no mitigation.

Q: On R3 side, when does retail conversion comp out and signs of R3 pivoting from new construction?

A: Anselm Wong said retail conversion piece is getting low and expected to be steady state. Ramey Jackson said they are seeing incremental increases in R3 backlog with customers allocating capital to full renovations, expansions, and office upgrades, expecting acceleration in the back half.

Q: On commercial stabilization, has momentum continued and self-storage projects, are there more starts moving forward?

A: Ramey Jackson said commercial has stabilized with growth in certain product lines, carport and shed, but commercial sheet door is depressed. On self-storage, they are seeing more starts move forward with no unusual cancellations from backlog.