Janus International Group, Inc. 2026 Q2 Earnings Call

Please go ahead. 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 investors 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.

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. Ansel 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.

Thanks, Sarah, 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, 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.

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.

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.

As we continue to advance our product roadmap, we have been encouraged by the initial interest in Nokē Infinitē, our on-door dual technology smart locking system we announced earlier this year. We expect Nokē Infinitē 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. 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.

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 CapEx 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? 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. For the second quarter, 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 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. 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. 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. 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. 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. 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 2-3 times. 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. 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.