Segment
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________________

FORM 10-Q
________________________

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 2022April 1, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 001-40456
________________________
JANUS INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in its charter)

________________________

Delaware86-1476200
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
135 Janus International Blvd.
Temple, GA
30179
(Address of Principal Executive Offices)(Zip Code)
(866) 562-2580
(Registrant's telephone number, including area code)

________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:Trading Symbol(s)Name of Each Exchange
 on Which Registered:
Common Stock, par value $0.0001 per shareJBINew York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of August 12, 2022, 146,639,377May 5, 2023, 146,744,164 shares of Class A Common Stock, par value $0.0001, were issued and outstanding.

1


JANUS INTERNATIONAL GROUP, INC.
Quarterly Report on Form 10-Q
Table of Contents
SAFE HARBOR, FORWARD-LOOKING STATEMENTS
Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Item 1A. Risk Factors
Item 6. Exhibits
















2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) that reflect our current views with respect to future events and financial performance, business strategies, expectations for our business and any other statements of a future or forward-looking nature, constitute “forward-looking statements” for the purposes of federal securities laws.

These forward-looking statements include, but are not limited to, statements about our financial condition, results of operations, earnings outlook and prospects or regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those contemplated in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Form 10-Q and in our other filings with the Securities and Exchange Commission (the “SEC”). We do not assume any obligation to update any forward-looking statements after the date of this Report, except as required by law.

In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “will”, “likely”“would”, and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. We cannot assure you that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

changes adversely affecting the business in which we are engaged;

geopolitical risk and changes in applicable laws or regulations;

the possibility that Janus may be adversely affected by other economic, business, and/or competitive factors;

operational risk;

any failure to effectively manage, and receive anticipated returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions;
fluctuations in the demand for our products and services;
the impact of supply chain disruptions and inflation and our ability to recoup rising costs in the rates we charge to our customers;
the possibility that we may impair our long-lived assets and other assets, including inventory, property and equipment and investments in unconsolidated affiliates;
the possibility that the COVID-19 pandemic, or another major disease, disrupts Janus’sJanus’ business;

our ability to maintain the listing of our securities on a national securities exchange;

the possibility of significant changes in foreign exchange rates and controls;
litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Janus’sJanus’ resources; and

general economic conditions, including the capital and credit markets;
the possibility of political instability, war or acts of terrorism in any of the countries where we operate; and
other risks detailed from time to time in our filings with the SEC, press releases, and other communications, including those set forth under “Risk Factors” included in our 20212022 Annual Report on Form 10-K for the year ended January 1,December 31, 2022, and in the documents incorporated by reference herein and therein.

All subsequent written and oral forward-looking statements concerning the matters addressed in this Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Form 10-Q. WeExcept to the extent required by applicable law or regulation we undertake no obligation to update anythese forward-looking statement, whether written or oral,statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
3


PART I--FINANCIAL INFORMATION
Item 1.    Financial Statements.
Janus International Group, Inc.
Condensed Consolidated Balance Sheets
(dollar amounts in thousands, except share and per share data)data - Unaudited)
July 2,January 1,
20222022
(Unaudited)April 1,December 31,
20232022
ASSETSASSETSASSETS
Current AssetsCurrent AssetsCurrent Assets
Cash and cash equivalents$40,718 $13,192 
Accounts receivable, less allowance for credit losses; $6,607 and $5,449, at July 2, 2022 and January 1, 2022, respectively132,531 107,372 
Costs and estimated earnings in excess of billing on uncompleted contracts21,715 23,121 
CashCash$69,639 $78,373 
Accounts receivable, less allowance for credit losses; $4,652 and $4,549, at April 1, 2023 and December 31, 2022, respectivelyAccounts receivable, less allowance for credit losses; $4,652 and $4,549, at April 1, 2023 and December 31, 2022, respectively149,758 155,397 
Costs in excess of billing on uncompleted contractsCosts in excess of billing on uncompleted contracts40,992 39,251 
Inventory, netInventory, net66,769 56,596 Inventory, net64,769 67,677 
Prepaid expensesPrepaid expenses8,211 9,843 Prepaid expenses8,354 9,098 
Other current assetsOther current assets3,288 4,057 Other current assets4,450 13,381 
Total current assetsTotal current assets$273,232 $214,181 Total current assets$337,962 $363,177 
Right-of-use assets, netRight-of-use assets, net40,535 — Right-of-use assets, net43,961 44,305 
Property and equipment, netProperty and equipment, net42,557 41,607 Property and equipment, net46,005 42,083 
Customer relationships, net296,779 312,199 
Tradename and trademarks107,403 107,980 
Other intangibles, net15,118 15,861 
Intangible assets, netIntangible assets, net397,276 404,385 
GoodwillGoodwill368,085 369,286 Goodwill368,363 368,204 
Deferred tax asset, netDeferred tax asset, net60,005 58,915 Deferred tax asset, net46,601 46,601 
Other assets, net1,825 1,973 
Other assetsOther assets1,740 1,863 
Total assetsTotal assets$1,205,539 $1,122,002 Total assets$1,241,908 $1,270,618 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY
Current LiabilitiesCurrent LiabilitiesCurrent Liabilities
Accounts payableAccounts payable$56,425 $54,961 Accounts payable$58,545 $52,268 
Billing in excess of costs and estimated earnings on uncompleted contracts26,084 23,207 
Billing in excess of costs on uncompleted contractsBilling in excess of costs on uncompleted contracts18,311 21,445 
Current maturities of long-term debtCurrent maturities of long-term debt8,229 8,067 Current maturities of long-term debt8,649 8,347 
Other accrued expenses65,958 54,111 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities61,366 70,551 
Total current liabilitiesTotal current liabilities$156,696 $140,346 Total current liabilities$146,871 $152,611 
Line of credit— 6,369 
Long-term debt, netLong-term debt, net701,883 703,718 Long-term debt, net649,818 699,850 
Deferred tax liability, netDeferred tax liability, net1,827 749 Deferred tax liability, net1,909 1,927 
Other long-term liabilitiesOther long-term liabilities37,620 2,533 Other long-term liabilities39,704 40,944 
Total liabilitiesTotal liabilities$898,026 $853,715 Total liabilities$838,302 $895,332 
STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITY
Common Stock, 825,000,000 shares authorized, $.0001 par value, 146,639,377 and 146,561,717 shares issued and outstanding at July 2, 2022 and January 1, 2022, respectively15 15 
Common Stock, 825,000,000 shares authorized, $0.0001 par value, 146,744,164 and 146,703,894 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectivelyCommon Stock, 825,000,000 shares authorized, $0.0001 par value, 146,744,164 and 146,703,894 shares issued and outstanding at April 1, 2023 and December 31, 2022, respectively15 15 
Treasury stock, at cost, 18,520 and zero shares as of April 1, 2023 and December 31, 2022, respectivelyTreasury stock, at cost, 18,520 and zero shares as of April 1, 2023 and December 31, 2022, respectively(183)— 
Additional paid-in capitalAdditional paid-in capital279,309 277,799 Additional paid-in capital283,744 281,914 
Accumulated other comprehensive lossAccumulated other comprehensive loss(4,850)(949)Accumulated other comprehensive loss(4,105)(4,796)
Accumulated surplus (deficit)33,039 (8,578)
Retained earningsRetained earnings124,135 98,153 
Total stockholders’ equityTotal stockholders’ equity$307,513 $268,287 Total stockholders’ equity$403,606 $375,286 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$1,205,539 $1,122,002 Total liabilities and stockholders’ equity$1,241,908 $1,270,618 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

4


Janus International Group, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(dollar amounts in thousands, except share and per share data)data - Unaudited)
Three Months EndedSix Months EndedThree Months Ended
July 2, 2022June 26, 2021July 2, 2022June 26, 2021April 1, 2023April 2, 2022
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
REVENUE
Sales of product$213,969 $140,556 $411,274 $262,253 
Sales of services33,745 33,626 65,960 64,754 
Total revenue247,714 174,182 477,234 327,007 
Cost of Sales163,733 114,988 316,684 214,519 
REVENUESREVENUES
Product revenuesProduct revenues$209,664 $197,306 
Service revenuesService revenues42,240 32,214 
Total revenuesTotal revenues251,904 229,520 
Product cost of revenuesProduct cost of revenues120,068 128,560 
Service cost of revenuesService cost of revenues31,903 24,390 
Cost of RevenuesCost of Revenues151,971 152,950 
GROSS PROFITGROSS PROFIT83,981 59,194 160,550 112,488 GROSS PROFIT99,933 76,570 
OPERATING EXPENSEOPERATING EXPENSEOPERATING EXPENSE
Selling and marketingSelling and marketing14,389 10,381 27,739 19,840 Selling and marketing14,821 13,349 
General and administrativeGeneral and administrative29,743 36,936 57,849 56,522 General and administrative34,100 28,106 
Contingent consideration and earnout fair value adjustments— 687 — 687 
Operating ExpensesOperating Expenses44,132 48,004 85,588 77,049 Operating Expenses48,921 41,455 
INCOME FROM OPERATIONSINCOME FROM OPERATIONS39,849 11,190 74,962 35,439 INCOME FROM OPERATIONS51,012 35,115 
Interest expenseInterest expense(8,868)(7,476)(17,643)(15,602)Interest expense(15,998)(8,775)
Other expenseOther expense(342)(919)(369)(2,478)Other expense(15)(29)
Change in fair value of derivative warrant liabilities— (1,929)— (1,929)
INCOME BEFORE TAXESINCOME BEFORE TAXES30,639 866 56,950 15,430 INCOME BEFORE TAXES34,999 26,311 
Provision (benefit) for Income Taxes7,802 2,560 14,409 2,405 
NET INCOME (LOSS)$22,837 $(1,694)$42,541 $13,025 
Provision for Income TaxesProvision for Income Taxes9,017 6,607 
NET INCOMENET INCOME$25,982 $19,704 
Other Comprehensive Income (Loss)Other Comprehensive Income (Loss)(3,387)(37)(3,901)274 Other Comprehensive Income (Loss)691 (516)
COMPREHENSIVE INCOME (LOSS)19,450 (1,731)38,640 13,299 
Net income (loss) attributable to common stockholders$22,837 $(1,694)$42,541 $13,025 
Weighted-average shares outstanding, basic and diluted (Note 16)
COMPREHENSIVE INCOMECOMPREHENSIVE INCOME26,673 19,188 
Net income attributable to common stockholdersNet income attributable to common stockholders$25,982 $19,704 
Weighted-average shares outstanding, basic and diluted (Note 12)Weighted-average shares outstanding, basic and diluted (Note 12)
BasicBasic146,575,720 81,009,261 146,568,719 73,577,447 Basic146,703,894 146,561,717 
DilutedDiluted146,717,937 81,009,261 146,648,306 73,879,851 Diluted146,751,901 146,832,889 
Net income (loss) per share, basic and diluted (Note 16)
Net income per share, basic and diluted (Note 12)Net income per share, basic and diluted (Note 12)
BasicBasic$0.16 $(0.02)$0.29 $0.18 Basic$0.18 $0.13 
DilutedDiluted$0.16 $(0.02)$0.29 $0.18 Diluted$0.18 $0.13 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
5


Janus International Group, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
(dollar amounts in thousands, except share data)data - Unaudited)
Class B
Common Units
Class A
Preferred Units
Common StockAdditional paid-in capitalAccumulated Other Comprehensive Income (Loss)Accumulated
Surplus (Deficit)
Total
UnitAmountUnitAmountSharesAmount
Balance as of December 26, 20204,478 $261 189,044 $189,044  $ $ $(227)$(48,205)$140,874 
Retroactive application of the recapitalization(4,478)(261)(189,044)(189,044)66,145,633 189,299 — — — 
Balance as of December 26, 2020, as adjusted $  $ 66,145,633 $7 $189,299 $(227)$(48,205)$140,874 
Vesting of Midco LLC class B units— — — — 111,895 — 52 — — 52 
Distributions to Janus Midco LLC Class A unitholders— — — — — — — — (96)(96)
Cumulative translation adjustment— — — — — — — 311 — 311 
Net income— — — — — — — — 14,719 14,719 
Balance as of March 27, 2021 $  $ 66,257,528 $7 $189,351 $84 $(33,582)$155,860 
Vesting of Midco LLC class B units— — — — 4,012,872 — 5,210 — — 5,210 
Issuance of PIPE Shares— — — — 25,000,000 249,997 — — 250,000 
Issuance of common stock upon merger, net of transaction costs, earn out, and merger warrant liability— — — — 41,113,850 226,940 — — 226,944 
Issuance of earn out shares to common stockholders— — — — 2,000,000 — 26,480 — — 26,480 
Distributions to Janus Midco, LLC unitholders— — — — — — (541,710)— — (541,710)
Distributions to Class A preferred units— — — — — — — — (4,078)(4,078)
Deferred Tax Asset— — — — — — 78,291 — — 78,291 
Cumulative translation adjustment— — — — — — — (37)— (37)
Net income— — — — — — — — (1,694)(1,694)
Balance as of June 27, 2021 $  $ 138,384,250 $14 $234,559 $47 $(39,354)$195,266 
Class B
Common Units
Class A
Preferred Units
Common StockAdditional paid-in capitalAccumulated Other Comprehensive LossAccumulated
Surplus (Deficit)
Total
UnitAmountUnitAmountSharesAmount
Balance as of January 1, 2022 $  $ 146,561,717 $15 $277,799 $(949)$(8,578)$268,287 
Share based compensation— — — — — — 600 — — 600 
Cumulative effect of change in accounting principle(a)
—  — — — — — — (924)(924)
Cumulative translation adjustment—  — — — — — (514)— (514)
Net income— — — — — — — — 19,704 19,704 
Balance as of April 2, 2022 $  $ 146,561,717 $15 $278,399 $(1,463)$10,202 $287,153 
Share based compensation— — — — 77,660 — 910 — — 910 
Cumulative translation adjustment— — — — — — — (3,387)— (3,387)
Net income— — — — — — — — 22,837 22,837 
Balance as of July 2, 2022 $  $ 146,639,377 $15 $279,309 $(4,850)$33,039 $307,513 

Class A Preferred Units
  (1,000,000 shares authorized
par value of .0001)
Common StockAdditional paid-in capitalAccumulated Other Comprehensive LossRetained Earnings
(Accumulated Deficit)
Total
SharesAmountSharesAmount
Balance as of January 1, 2022— — 146,561,717 $15 $277,799 $(949)$(8,578)$268,287 
Share based compensation— — — — 600 — — 600 
Cumulative effect of change in accounting principle(a)
— — — — — — (924)(924)
Cumulative translation adjustment— — — — — (516)— (516)
Net income— — — — — — 19,704 19,704 
Balance as of April 2, 2022 $ 146,561,717 $15 $278,399 $(1,465)$10,202 $287,151 
(a)    EffectiveEffective January 2, 2022, the Company adopted the provisions of ASUAccounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) and ASU 2016-02, Leases (Topic 842). We have elected to adopt each of the two standards using the modified retrospective approach through a cumulative-effect adjustment to the opening balance of accumulated deficit for both. See Note 2 in the Annual Report on Form 10-K, for the year ended December 31, 2022, for further details of the impact of each standard.

Class A Preferred Units
  (1,000,000 shares authorized
par value of .0001)
Common StockTreasury StockAdditional paid-in capitalAccumulated Other Comprehensive LossRetained EarningsTotal
SharesAmountSharesAmountSharesAmount
Balance as of
December 31, 2022
— — 146,703,894 $15  $ $281,914 $(4,796)$98,153 $375,286 
Issuance of restricted units— — 58,790 — — — — — — — 
Shares withheld for taxes upon vesting of restricted units— — (18,520)— 18,520 (183)— — — (183)
Share based compensation— — — — — — 1,830 — — 1,830 
Cumulative translation adjustment— — — — — — — 691 — 691 
Net income— — — — — — — — 25,982 25,982 
Balance as of
April 1, 2023
 $ 146,744,164 $15 18,520 $(183)$283,744 $(4,105)$124,135 $403,606 



See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
6


Janus International Group, Inc.
Condensed Consolidated Statements of Cash Flows
(dollar amounts in thousands)thousands - Unaudited)
Six Months Ended
July 2, 2022June 26, 2021
(Unaudited)(Unaudited)
Cash Flows Provided By Operating Activities
Net income$42,541 $13,025 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment3,835 2,979 
Reduction in carrying amount of right-of-use assets2,615 — 
Intangible amortization14,871 13,623 
Deferred finance fee amortization1,832 1,487 
Provision for losses on accounts receivable
1,158 (666)
Share based compensation1,510 5,262 
Loss on extinguishment of debt— 2,415 
Change in fair value of contingent consideration— 687 
(Gain) Loss on sale of assets(28)43 
Loss on abandonment of PP&E571 — 
Change in fair value of derivative warrant liabilities— 1,929 
Undistributed (earnings) losses of affiliate(60)(105)
Deferred income taxes— (768)
Changes in operating assets and liabilities
Accounts receivable(26,682)(3,756)
Costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings on uncompleted contracts1,406 (5,216)
Prepaid expenses and other current assets2,481 (2,946)
Inventory(10,173)(11,008)
Accounts payable1,464 15,393 
Other accrued expenses6,971 13,783 
Other assets and long-term liabilities(1,160)(1,338)
Net Cash Provided By Operating Activities$43,152 $44,823 
Cash Flows Used In Investing Activities
Proceeds from sale of equipment$45 $79 
Purchases of property and equipment(5,268)(3,993)
Cash paid for acquisition, net of cash acquired— (1,565)
Net Cash Used In Investing Activities$(5,223)$(5,479)
Cash Flows Used In Financing Activities
Repayments on line of credit$(6,369)$— 
Distributions to Janus Midco LLC unitholders— (4,174)
Principal payments on long-term debt(4,034)(63,238)
Proceeds from merger— 334,874 
Proceeds from PIPE— 250,000 
Payments for transaction costs, net— (44,489)
Payments to Janus Midco, LLC unitholders at the business combination— (541,710)
Principal payments under capital lease obligations(66)— 
Payments for deferred financing fees— (766)
Cash Used In Financing Activities$(10,469)$(69,503)
Effect of exchange rate changes on cash and cash equivalents$66 $191 
Net (Decrease) Increase in Cash and Cash Equivalents$27,526 $(29,968)
Cash and Cash Equivalents, Beginning of Period$13,192 $45,255 
Cash and Cash Equivalents, End of Period$40,718 $15,287 
Supplemental Cash Flows Information
Interest paid$18,296 $16,848 
Income taxes paid$11,889 $774 
Cash paid for operating leases$3,832 $— 
Fair value of earnout$— $687 
Fair value of warrants$— $1,929 
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations$42,380 $— 
Right-of-use assets obtained in exchange for finance lease obligations$706 $— 
Three Months Ended
April 1, 2023April 2, 2022
(Unaudited)(Unaudited)
Cash Flows Provided By Operating Activities
Net income$25,982 $19,704 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment2,180 1,857 
Reduction in carrying amount of right-of-use assets1,485 1,319 
Change in inventory obsolescence reserve(304)— 
Amortization of intangibles7,416 7,225 
Deferred finance fee amortization1,346 912 
Provision for losses on accounts receivable102 975 
Share based compensation1,830 600 
Loss on extinguishment of debt— 103 
Loss on sale of equipment— 
Undistributed losses (earnings) of affiliate58 (22)
Changes in operating assets and liabilities
Accounts receivable5,826 (12,727)
Costs in excess of billings on uncompleted contracts(1,644)(7,165)
Prepaid expenses and other current assets9,652 (1,285)
Inventory3,310 (7,630)
Accounts payable6,168 10,375 
Billing in excess of costs on uncompleted contracts(3,294)4,847 
Accrued expenses and other current liabilities(8,471)4,647 
Other assets and long-term liabilities(1,402)1,042 
Net Cash Provided By Operating Activities$50,246 $24,777 
Cash Flows Used In Investing Activities
Proceeds from sale of equipment$17 $— 
Purchases of property and equipment(6,070)(2,880)
Cash paid for acquisitions, net of cash acquired(1,002)— 
Net Cash Used In Investing Activities$(7,055)$(2,880)
Cash Flows Used In Financing Activities
Payments on line of credit$— $(6,369)
Principal payments on long-term debt(52,017)(2,017)
Principal payments under finance lease obligations(141)(19)
Cash Used In Financing Activities$(52,158)$(8,405)
Effect of exchange rate changes on cash$233 $(58)
Net Increase (Decrease) in Cash$(8,734)$13,434 
Cash, Beginning of Period$78,373 $13,192 
Cash, End of Period$69,639 $26,626 
Supplemental Cash Flows Information
Interest paid$14,513 $6,096 
Income taxes paid$185 $370 
Cash paid for operating leases$1,987 $1,900 
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations$33 $42,202 
Right-of-use assets obtained in exchange for finance lease obligations$1,113 $633 
RSU Shares withheld related to employee taxes$183 $— 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
7

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

1.BasisNature of PresentationOperations
Janus International Group, Inc. (“Group” or “Janus” or “Company”) is a holding company.company incorporated in Delaware. References to“Janus, “Janus,” “Group,” “Company,” “we,” “our” or “us” refer to Janus International Group, Inc., and its consolidated subsidiaries. The Company is a global manufacturer, supplier, and provider of turn-key self-storage, commercial, and industrial building solutions. The Company provides facility and door automation and access control technologies, roll up and swing doors, hallway systems, and relocatable storage “MASS” (Moveable Additional Storage Structures) units, among other solutions, and works with its customers throughout every phase of a project by providing solutions spanning from facility planning and design, construction, technology, and the restoration, rebuilding, and replacement (“R3”) of damaged or end-of-life products.
The Company is headquartered in Temple, Georgia, and has domestic operations in Georgia, Texas, Arizona, Indiana, North Carolina, with international operations in United Kingdom, Australia, and Singapore. The Company provides products and services through its two operating and reportable segments which are based on the geographic region of its operations: (i) Janus North America and (ii) Janus International. The Janus International Group,segment is comprised of Janus International Europe Holdings Ltd. (UK) (“JIE”), whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus Core together with each of its operating subsidiaries, Betco, Inc. (“BETCO”), Nokē, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Access Control Technologies, LLC (“ACT”), Janus Core”)Door, LLC and Steel Door Depot.com, LLC. The Company’s common stock is a wholly-owned subsidiary of Janus Intermediate, LLC (“Intermediate”)currently traded on the New York Stock Exchange under the symbol “JBI”. Intermediate is a wholly-owned subsidiary of Janus Midco, LLC (“Midco”) and Midco is a wholly-owned subsidiary of Group.

The dollar amounts in the notes are shown in thousands of dollars, unless otherwise noted, and rounded to the nearest thousand except for share and per share amounts.
Assets held at foreign locations were approximately $65,406 and $61,144 as of April 1, 2023 and December 31, 2022, respectively. Revenues earned at foreign locations totaled approximately $21,572 and $17,914 for the three months ended April 1, 2023 and April 2, 2022, respectively.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Unaudited Condensed Consolidated Financial Statements of Janus International Group, Inc.,consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. However, they do not include allGAAP and pursuant to the applicable rules and regulations of the financial information and footnotes required by U.S. GAAP for complete financial statements.SEC. In the opinion of the Company’s management, the Unaudited Condensed Consolidated Financial Statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of July 2, 2022,April 1, 2023, and its results of operations, including its comprehensive income and stockholders’ equity for the sixthree months ended JulyApril 1, 2023 and April 2, 2022 and June 26, 2021.
. The accompanying Unaudited Condensed Consolidated Financial Statements are presentedyear-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in U.S. dollars and have been prepared in accordance with U.S. GAAP and pursuant to the accounting and disclosure rules and regulationsUnited States of the SEC for interim financial information.
America. This Quarterly Report on Form 10-Q should be read in conjunction with the Audited Consolidated Financial Statements and notes that are included in the Annual Report on Form 10-K, for the year ended January 1,December 31, 2022.
Nature of Operations
The Group is a global manufacturer and supplier of turn-key self-storage, commercial and industrial building solutions including: roll up and swing doors, hallway systems, relocatable storage units, and facility and door automation technologies with manufacturing operations in Georgia, Texas, Arizona, Indiana, North Carolina, United Kingdom, Australia, and Singapore.
The Group’s business is operated through 2 geographic regions that comprise our 2 reportable segments: Janus North America and Janus International. The Janus International segment is comprised of Janus International Europe Ltd., a company incorporated in England and Wales (“JIE”), whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus International Group, LLC (together with each of its operating subsidiaries, “Janus Core”), Betco, Inc. (“BETCO”), Noke, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Janus Door, LLC (“Janus Door”) and Steel Door Depot.com, LLC (“Steel Door Depot”).
Assets held at foreign locations were approximately $59,260 and $58,439 as of July 2, 2022 and January 1, 2022, respectively. Revenues earned at foreign locations totaled approximately $20,324 and $18,345 for the three months ended July 2, 2022 and June 26, 2021, respectively, and $38,238 and $30,905 for the six months ended July 2, 2022 and June 26, 2021, respectively.
Principles of Consolidation
The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s joint venture is accounted for under the equity method of accounting. All significant intercompany accounts and transactions have been eliminated in consolidation.
ReorganizationReclassification
On June 7, 2021, Midco transferred Janus Core, its wholly owned direct subsidiary,the Condensed Consolidated Statements of Operations and Comprehensive Income, the Company bifurcated the prior year “Cost of Sales” account between “Product cost of revenues” and “Service cost of revenues” to conform to the Group, thereby transferring the business for which historical financial information is included in these results of operations, to be indirectly held by Midco.
The Business Combination (defined and discussed below) was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Juniper Industrial Holdings, Inc. (“Juniper” or “JIH”) is treated as the acquired company and Midco is treated as the acquirer for financial statement reporting purposes (the “Combined Company”). Accordingly, for accounting purposes, the financial statements of the Combined Company represent a continuation of the financial statements of Midco with the acquisition being treated as the equivalent of Midco issuing stock for the net assets of JIH, accompanied by a recapitalization. The net assets of JIH will be stated at historical cost, with no goodwill or other intangible assets recorded.current year presentation.
Use of Estimates in the Unaudited Condensed Consolidated Financial Statements
The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant items subject to such estimates and assumptions include, but are not limited to, income taxes and the effective tax rates, reserves
for inventory obsolescence, the recognition and valuation of unit-based compensation arrangements, the useful lives of property and equipment, estimated progress toward completion for certain revenue contracts, allowances for uncollectible receivable balances, fair values and impairment of intangible assets and goodwill and assumptions used in the recognition of contract assets.
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Significant items subject to such estimates and assumptions include, but are not limited to, the derivative warrant liability, the recognition of the valuations of unit-based compensation arrangements, the useful lives of property and equipment, revenue recognition, allowances for uncollectible receivable balances, fair values and impairment of intangible assets and goodwill and assumptions used in the recognition of contract assets.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act, or JOBS Act, exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The Company qualifies as an “Emerging Growth Company” and has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows the Company to adopt the new or revised standard at the same time periods as private companies.
Fair Value Measurement
The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. A three-tiered hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires that the Company use observable market data, when available, and minimize the use of unobservable inputs when determining fair value:
Level 1, observable inputs such as quoted prices in active markets;
Level 2, inputs other than the quoted prices in active markets that are observable either directly or indirectly;
Level 3, unobservable inputs in which there is little or no market data, which requires that the Company develop its own assumptions.
The fair value of cash, accounts receivable less allowance for doubtfulcredit losses, and accounts and account payable approximate the carrying amounts due to the short-term maturities of these instruments which fall with Level 1 of the Fair Value hierarchy.instruments. The fair value of the Company’s debt approximates its carrying amount as of July 2, 2022April 1, 2023 and January 1,December 31, 2022 due to its variable interest rate that is tied to the current London Interbank Offered Rate (“LIBOR”)LIBOR rate plus an applicable margin and consistency in our credit rating. To estimate the fair value of the Company’s long term debt, the Company utilized fair value based risk measurements that are indirectly observable, such as credit risk that fall within Level 2 of the Fair Value hierarchy. The fair value of the warrants contain significant unobservable inputs including the expected term and the share exchange ratio in evaluating the fair value of underlying common stock , and exercise price, therefore, the warrant liabilities were evaluated to be a Level 3 fair value measurement. As of June 26, 2021, the fair value of the private and public warrants were valued at market price.
Significant Accounting Policies
Other than the following, the Company'sThe Company’s significant accounting policies have not changed materially from those described in its Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2022.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount and do not bear interest. On January 2, 2022, the Company adopted Accounting Standards Update (“ASU��ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“CECL”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. Refer to the Recently Adopted Accounting Pronouncements section of this noteour 2022 Annual Report on Form 10-K for the year ended December 31, 2022, for more information on the impact to the Unaudited Condensed Consolidated Financial Statements.
The Company gathered information about its current bad debt reserve and write-off practices and loss methodology, in-scope assets, historical credit losses, proposed pooling approach and expected changes to business practices under CECL. Accounts receivables are stated at estimated net realizable value from the sale of products and services to established customers. The Company determined that pooling accounts receivable by business units was the most appropriate because of the similarity of risk characteristics within each line such as customers and services offered. Historical losses and customer-specific reserve information that are used to calculate the historical loss rates are available for each business unit.

During the pooling process, the Company identified two distinct customer types: commercial and self-storage. As these customer types have different risk characteristics, the Company concludes to poolpools the financial assets at this level within each business unit.

Commercial customers typically are customers contracting with the Company on short-term projects with smaller credit limits and overall, smaller project sizes. Due to the short-term nature and smaller scale of these types of projects, the Company expects minimal write-offs of its receivables at the Commercialcommercial pool.

Self-storage projects typically involve general contractors and make up the largest portion of the Company’s accounts receivable balance. These projects are usually longer-term construction projects and billed over the course of construction. Credit limits are larger for these
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Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
projects given the overall project size and duration. Due to the longer-term nature and larger scale of these types of projects, the Company expects a potential for more write-offs of its receivable balances within the Self-Storageself-storage pool.

The Company reviewed methods provided by the guidance and determined to use the loss-rate method to be used in the CECL analysis for trade receivables and contract assets. This loss-rate method was selected as there is reliable historical information available by business unit, and this historical information was determined to be representative of the Company’s current customers, products, services, and billing practices.



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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

The summary of activity infor the allowance for credit losses forduring the six monthsperiods ended July 2,April 1, 2023 and fiscal year ended December 31, 2022, and June 26, 2021 areis as follows:

Beginning Balance
CECL Adoption1
Write-offsProvision (Reversal), netEnding Balance
2022$5,449 $366 $(1,017)$1,809 $6,607 
20214,485 — (43)(623)3,819 
April 1, 2023December 31, 2022
Balance at beginning of period$4,549 $5,449 
CECL Adoption— 366 
Write-offs— (2,949)
Provision (reversal). net103 1,683 
Balance at end of period$4,652 $4,549 

(1) On January 2, 2022, the Company adopted the provisions of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which introduced a new model known as CECL.
Product Warranties
The Company records a liability for product warranties at the time of the related sale of goods. The liability is estimated using historical warranty experience, projected claim rates and expected costs per claim. The Company adjusts its liability for specific warranty matters when they become known and the exposure can be estimated. Product failure rates as well as material usage and labor costs incurred in correcting a product failure affect the Company's warranty liabilities. If actual costs differ from estimated costs, the Company must make a revision to the warranty liability. Generally, the Company offers warranties ranging between 1-3 years for our products with the exception of roofing at one of our business units which is up to 10 years.

The activity related to product warranty liabilities recorded in Accrued expenses and other current liabilities, during the periods ended April 1, 2023 and fiscal year ended December 31, 2022, is as follows:
2.
April 1, 2023December 31, 2022
Balance at beginning of period$876 $736 
Aggregate changes in the product warranty liability325140
Balance at end of period$1,201 $876 
Concentrations of Risk
Financial instruments that are potentially subject to concentration of credit risk consist primarily of cash and accounts receivable. The Company maintains cash in bank deposit accounts that, at times, may exceed the insured limits of the local country. The Company has not experienced any losses in such accounts. The Company sells its products and services mainly in the United States and European regions. The Company performs ongoing evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary. The Company generally does not require its customers to provide collateral or other security to support accounts receivable. As of April 1, 2023 and December 31, 2022, no customer accounted for more than 10% of the accounts receivable balance.
Segments
The Company manages its operations through two operating and reportable segments: Janus North America and Janus International. These segments align the Company’s products and service offerings based on the geographic location between North America and International locations which is consistent with how the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), reviews and evaluates the Company’s operations. The CODM allocates resources and evaluates the financial performance of each operating segment. The Company’s segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. Refer to Note 14, Segments, for further detail.
Recently Adopted Accounting Pronouncements
On January 1, 2023, the Company adopted ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"), which amends ASC 805, Business Combinations (Topic 805), to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
accordance with ASC 606, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). Janus will be applying the pronouncement prospectively to business combinations occurring on or after the adoption date.
Recently Issued Accounting StandardsPronouncements
In March 2020, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is effective and may be applied beginning March 12, 2020 and will apply through December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The provisions must be applied at a Topic, Subtopic, or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. In April 2022, The Financial Accounting Standards Board (“FASB”),the FASB, proposed the deferral of the sunset date of this guidance to December 31, 2024. The Company is currently evaluatingdoes not expect that adopting the impact this adoptionReference Rate Reform accounting pronouncement will have a significant impact on Janus’sthe consolidated results of operations, financial statements.position, or cash flows of the Company.
Although there are several other new accounting pronouncements issued or proposed by the FASB, which have been adopted or will be adopted as applicable, management does not believe any of these accounting pronouncements has had or will have a material impact on the Group’sCompany’s consolidated financial position or results of operations.
Recently Adopted Accounting Pronouncements
In June 2020, the FASB issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) which deferred the effective date for ASC 842, Leases, for one year. The leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted the leasing standard effective January 2, 2022 and has elected to adopt the new standard at the adoption date using the modified retrospective method and recognized a cumulative effect adjustment to accumulated deficit in the amount of $557. Under this approach, we will continue to report comparative period financial information under ASC 840. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also made an accounting policy election to exclude leases with an initial term of 12 months or less from the consolidated balance sheet. We will recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As part of this adoption, we have implemented internal controls and key system functionality to enable the preparation of financial information.
The adoption of the standard resulted in recording right-of-use assets of $42,835 and lease liabilities of $44,776 as of January 2, 2022. The right-of-use assets are lower than the lease liabilities as existing deferred rent and lease incentive liabilities were recorded against the right-of-use assets at adoption in accordance with the standard. The standard had no impact on our debt-covenant compliance under our current agreements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years. The Company adopted this standard effective January 2, 2022 using the modified retrospective method and recognized a cumulative-effect adjustment increasing accumulated deficit and increasing the allowance for credit losses by $366.
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Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
January 2, 2022
Pre-ASC 326
Adoption
 Impact of ASC
326 Adoption
As Reported
Under ASC 326
Accounts Receivable, net$107,372 $(366)$107,006 
Cost in Excess of Billings23,121 — 23,121 
Accumulated Deficit(8,578)(366)(8,944)
3. Inventories
Inventories are stated at the lower of cost or net realizable value utilizing the first-in, first-out (FIFO) method. The major components of inventories as of July 2, 2022April 1, 2023 and January 1,December 31, 2022 are as follows:
July 2,January 1,April 1,December 31,
2022202120232022
Raw materialsRaw materials$47,980 $41,834 Raw materials$48,772 $49,788 
Work-in-processWork-in-process622 671 Work-in-process534 1,566 
Finished goodsFinished goods18,167 14,091 Finished goods15,463 16,323 
$66,769 $56,596 
Inventory, netInventory, net$64,769 $67,677 
The Company has recorded a reserve for inventory obsolescence as of July 2, 2022April 1, 2023 and January 1,December 31, 2022, of approximately $1,374$2,342 and $1,295,$2,034, respectively.
4. Property and Equipment
Property, equipment, and other fixed assets as of July 2, 2022April 1, 2023 and January 1,December 31, 2022 are as follows:
July 2,January 1,April 1,December 31,
20222021Useful Life20232022
LandLand$4,501 $4,501 LandIndefinite$4,501 $4,501 
BuildingBuilding39 years2,459 2,459 
Manufacturing machinery and equipmentManufacturing machinery and equipment36,634 35,688 Manufacturing machinery and equipment3-7 years40,498 38,814 
Leasehold improvementsLeasehold improvements4,936 4,599 Leasehold improvementsOver the shorter of the lease term or respective useful life8,446 8,327 
Computer and softwareComputer and software3 years9,762 9,580 
Furniture and fixtures, and vehiclesFurniture and fixtures, and vehicles3-7 years3,800 3,623 
Construction in progressConstruction in progress5,250 3,571 Construction in progress5,727 1,852 
Other14,328 13,287 
$65,649 $61,646 $75,193 $69,156 
Less accumulated depreciation(23,092)(20,039)
Less: accumulated depreciationLess: accumulated depreciation(29,188)(27,073)
$42,557 $41,607 $46,005 $42,083 
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
5. Acquired Intangible Assets and Goodwill
Intangible assets acquired in a business combination are recognized at fair value and amortized over their estimated useful lives. The carrying basis and accumulated amortization of recognized intangible assets at July 2, 2022April 1, 2023 and January 1,December 31, 2022, are as follows:
July 2,January 1,
20222022
Gross Carrying AmountAccumulated AmortizationAverage Remaining Life in YearsGross Carrying AmountAccumulated Amortization
Intangible Assets
Customer relationships$408,328 $111,549 11$410,094 $97,895 
Noncompete agreements395 235 5412 231 
Tradenames and trademarks107,403 — Indefinite107,980 — 
Other intangibles61,716 46,758 1161,836 46,156 
$577,842 $158,542 $580,322 $144,282 

April 1,December 31,
20232022
Gross Carrying AmountAccumulated AmortizationNet AmountGross Carrying AmountAccumulated AmortizationNet Amount
Intangible AssetsUseful Life
Customer relationships10-15 years$408,536 $132,753 $275,783 $408,246 $125,613 $282,633 
Tradenames and trademarksIndefinite107,491 — 107,491 107,378 — 107,378 
Software development10-15 years20,320 6,447 13,873 20,320 6,085 14,235 
Noncompete agreements3-8 years395 266 129 394 255 139 
Backlog< 1 year— — — 41,390 41,390 — 
$536,742 $139,466 $397,276 $577,728 $173,343 $404,385 
Changes to gross carrying amount of recognized intangible assets due to translation adjustments include an approximate $1,870 and $270 loss$307 for the period ended July 2, 2022 and JanuaryApril 1, 2022, respectively.2023. Amortization expense was approximately $7,646$7,416 and $6,791$7,225 for the three month periods ended April 1, 2023 and April 2, 2022, respectively.
The changes in the carrying amounts of goodwill for the period ended April 1, 2023 were as follows:
Balance as of December 31, 2022$368,204
Foreign Currency Translation Adjustment159 
Balance as of April 1, 2023$368,363

6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are summarized as follows:
April 1,December 31,
20232022
Customer deposits$28,505 $29,581 
Employee compensation9,709 16,520 
Current operating lease liabilities5,375 5,310 
Sales tax payable5,298 5,144 
Income taxes1,313 773 
Accrued professional fees1,935 3,594 
Product warranties1,201 876 
Accrued freight1,139 1,177 
Interest payable374 235 
Indemnity holdback liability— 1,002 
Other liabilities6,517 6,339 
Total$61,366 $70,551 
Other liabilities as of April 1, 2023 and December 31, 2022 consists of property tax, credit card and various other accruals.
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
month periods ended July 2, 2022 and June 26, 2021, and $14,871 and $13,623 for the six months periods ended July 2, 2022 and June 26, 2021, respectively.
The changes in the carrying amounts of goodwill for the period ended July 2, 2022 were as follows:
Balance as of January 1, 2022$369,286
Changes due to foreign currency fluctuations(1,253)
Goodwill adjusted during the period52 
Balance as of July 2, 2022$368,085
6. Accrued Expenses
Accrued expenses are summarized as follows:
July 2,January 1,
20222022
Sales tax payable$4,859 $3,606 
Interest payable256 2,741 
Contingent consideration payable--short term1,002 — 
Other accrued liabilities1,973 1,766 
Employee compensation15,520 13,857 
Customer deposits and allowances30,674 24,555 
Income taxes2,229 810 
Current operating lease liabilities4,944 — 
Other4,501 6,776 
Total$65,958 $54,111 
Other as of July 2, 2022 and January 1, 2022 consists primarily of property tax, freight accrual, legal, accounting and other professional fee accruals.
7. Line of Credit
On February 12, 2018, the Company, through Intermediate and Janus Core, entered into a revolving line of credit facility with a financial institution.institution pursuant to ABL Credit And Guarantee Agreement (the “LOC Agreement”). In August 2021, the Company increased the available line of credit from $50,000 to $80,000, incurred additional fees for this amendment of $425 and extended the maturity date from February 18, 2023 to August 12, 2024. The current line of credit facility is for $80,000 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a LIBOR Rate (as defined in the LOC Agreement) option is chosen by the Company. If the LIBOR Rate is elected, the interest computation is equal to the LIBOR Rate plus the LIBOR Rate Margin of 1.25%, as of July 2, 2022.April 1, 2023. If the Base Rate (as defined in the LOC Agreement) is elected, the interest computation is equal to the Base Rate of the greatest of (a) the federal funds rate plus .5%, (b) the LIBOR rate plus 1%, or (c) the financial institution’s Prime Rate (as defined in the LOC Agreement), plus the Base Rate Margin (as defined in the LOC Agreement) of .25% as of July 2, 2022.April 1, 2023. At the beginning of each quarter, the applicable margin is set and determined by the administrative agent based on the average net availability on the line of credit for the previous quarter. As of July 2, 2022April 1, 2023 and January 1,December 31, 2022, the interest rate in effect for the facility was 5.0%8.3% and 3.5%7.8%, respectively. The line of credit is collateralized by accounts receivable and inventories. The Company has incurred deferred loan costs in the amount of $1,483 which are being amortized over the term of the facility that expires on August 12, 2024, using the effective interest method, and are presented as part of other assets within our Unaudited Condensed Consolidated Balance Sheet. The amortization of the deferred loan costs is included in interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Amortization of approximately $62 and $62 was recognized for the three months ended April 1, 2023 and April 2, 2022, respectively. The unamortized portion of the fees as of July 2, 2022April 1, 2023 and January 1,December 31, 2022 was approximately $525$340 and $648,$402, respectively. There was $— and $6,369 outstanding on the line of credit as of July 2, 2022April 1, 2023 and January 1, 2022, respectively.December 31, 2022.
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Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
8. Long-Term Debt
Long-term debt consists of the following:
July 2,January 1,April 1,December 31,
2022202220232022
Note payable - Amendment No. 4 First Lien
Note payable - Amendment No. 4 First Lien
$718,346 $722,379 
Note payable - Amendment No. 4 First Lien
$662,295 $714,312 
Financing leasesFinancing leases651 — Financing leases2,044 1,043 
$718,997 $722,379 $664,339 $715,355 
Less unamortized deferred finance fees8,885 10,594 
Less current maturities8,229 8,067 
Less: unamortized deferred finance feesLess: unamortized deferred finance fees5,872 7,158 
Less: current maturitiesLess: current maturities8,649 8,347 
Total long-term debtTotal long-term debt$701,883 $703,718 Total long-term debt$649,818 $699,850 
Notes Payable - Amendment No.4 First Lien - On August 18, 2021, the Company completed a refinancing in the form of that certain First LienIncremental Amendment No. 4 to that certain First Lien Credit and Guarantee Agreement, dated as of February 12, 2018 (as restated,
amended and restated, supplemented or otherwise modified from time to time) (the “Amendment No. 4 First Lien”), in which the principal terms of the amendment were new borrowings of $155,000 which was used to fund the DBCI (hereinafter defined) acquisition. The Amendment No. 4 First Lien is comprised of a syndicate of lenders originating on August 18, 2021 in the amount of $726,413 with interest payable in arrears. The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of September 2021 with the remaining principal due on the maturity date of February 12, 2025. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of LIBOR, plus an applicable margin percent (effective rate of 4.92%8.1% as of July 2, 2022)April 1, 2023). The debt is secured by substantially all business assets. Unamortized debt issuance costs are approximately $8,885 and $10,594 at July 2, 2022 and January 1, 2022, respectively. This refinancing amendment was accounted for as a modification and as such no gain or loss was recognized for this transaction and any bank fees, original issue discount and charges capitalized are being amortized as a component of interest expense over the remaining loan term. Third party fees paid in connection with this amendment were expensed. During the three months ended April 1, 2023, we made a voluntary prepayment of $50,000 on the Amendment No.4 First Lien.
As of July 2, 2022April 1, 2023 and January 1,December 31, 2022, the Company maintained one letter of credit totaling approximately $400 on which there were no balances due.
In connection with the Company entering into the First Lien debt agreement discussed above, deferred finance fees were capitalized. These costs are being amortized over the terms of the associated debt under the effective interest rate method. Amortization of approximately $858$1,284 and $640 and $1,709 and $1,487$851 was recognized for the three and six months ended JulyApril 1, 2023 and April 2, 2022, and June 26, 2021, respectively, as a component of interest expense, including those amounts amortized in relation to the deferred finance fees associated with the outstanding line of credit. The increase during the period ended April 1, 2023, was primarily a result of the voluntary prepayment as noted above.
9. Business CombinationsLeases
Access Control Technologies, LLCAt lease commencement, a right-of-use (“ACT”ROU”) Acquisition
On August 31, 2021, Janus Core acquired 100%asset and lease liability is recorded based on the present value of the equity interestsfuture lease payments over the lease term. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of ACT12 months or less. The Company leases facilities, vehicles, and all assetsother equipment under long-term operating and certain liabilities of Phoenix Iron Worx, LLC for total consideration of approximately $10,385 which was comprised of approximately $9,383 of cash plus $1,002 of hold back
liability. The hold back liability will be trued up and settled upon the finalization of the closing statement.

The assets and liabilities of the acquisitions have been recorded based upon management's estimates of their fair market values as of each
respective date of acquisition. The following tables summarize the fair values of consideration transferred and the fair values of identified
assets acquired, and liabilities assumed at the date of acquisition:financing leases with varying terms.
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Fair Value of Consideration Transferred
Cash$9,383 
Hold Back Liability1,002 
Total Fair Value of Consideration Transferred$10,385
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash169 
Accounts receivable1,101 
Other current assets103 
Property and equipment197 
Identifiable intangible assets
Customer relationships2,470 
Backlog280 
Trademark1,450 
Recognized amounts of identifiable liabilities assumed
Accounts payable(473)
Accrued expenses(152)
Other liabilities(1,398)
Total identifiable net assets$3,747
Goodwill$6,638
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases, the practical expedient was also elected whereby lease and non-lease components have been combined. The Company uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Company will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Company will estimate the incremental borrowing rate to discount the lease payments. The Company estimates the incremental borrowing rate based on the rates of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Company does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.
The fair valuescomponents of ROU assets acquired and lease liabilities assumed, including current and noncurrent income taxes payable and deferred taxes, may bewere as follows:
subject to change as additional information is received and certain tax returns are finalized. Accordingly, the provisional measurements of fair
value of income taxes payable and deferred taxes are subject to change. The goodwill balance of $6,638 is attributable to the expansion of our product offerings and expected synergies of the combined workforce, products and technologies with ACT. All of the goodwill was assigned to the Janus North America segment of the business and is deductible for income tax purposes.
(in thousands)Balance Sheet ClassificationApril 1, 2023December 31, 2022
Assets:
Operating lease assetsRight-of-use assets, net$41,949 $43,282 
Finance lease assetsRight-of-use assets, net2,012 1,023 
Total leased assets$43,961 $44,305 
Liabilities:
Current:
OperatingOther accrued expenses$5,375 $5,310 
FinancingCurrent maturities of long-term debt581 280 
Noncurrent:
OperatingOther long-term liabilities$39,668 $40,907 
FinancingLong-term debt1,463 763 
Total lease liabilities$47,087 $47,260 
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful liveslease expense were as of the date of acquisition:follows:
Fair ValueUseful Lives
Customer Relationships$2,470 15 Years
Backlog280 3 Months
Trade Name1,450 Indefinite
Identifiable Intangible Assets$4,200
Customer relationships represent the fair values of the underlying relationships with ACT’s customers. Backlog represents the fair value of ACT’s contracts that have yet to be billed. Trade names represent ACT’s trademarks, which consumers associate
with the source and quality of the products and services they provide.
The weighted-average amortization of acquired intangibles is 8.8 years.
Three Months EndedThree Months Ended
(in thousands)April 1, 2023April 2, 2022
Operating lease cost$2,146 $1,986 
Short-term lease cost— 60 
Finance lease cost:
Amortization of right-of-use assets$124 $17 
Interest on lease liabilities30 
Total lease cost$2,300 $2,066 

During 2021, the Company incurred approximately $284 of third-party acquisition costs. These expenses are included in general and
administrative expense in the Company’s Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income for the year ended January 1, 2022.
DBCI, LLC (“DBCI”) Acquisition
On August 17, 2021, Janus Core acquired 100% of the equity interests of DBCI for total cash consideration of approximately $169,173.
The assets and liabilities of the acquisitions have been recorded based upon management's estimates of their fair market valuesOther information related to leases was as of each respective date of acquisition.follows:The following tables summarize the fair value of consideration transferred and the fair value of identified assets acquired, and liabilities assumed at the date of acquisition:

April 1, 2023December 31, 2022
Weighted Average Remaining Lease Term (in years)
Operating Leases9.559.66
Finance Leases3.263.37
Weighted Average Discount Rate
Operating Leases7.1%7.1%
Finance Leases8.0%6.6%
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Fair Value of Consideration Transferred
Cash$169,173
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash208 
Accounts receivable8,502 
Inventories9,075 
Property and equipment7,803 
Other assets29 
Identifiable intangible assets
Customer relationships26,320 
Backlog3,130 
Trademark20,850 
Recognized amounts of identifiable liabilities assumed
Accounts payable(8,012)
Accrued expenses(571)
Other liabilities(887)
Total identifiable net assets$66,446
Goodwill$102,727
As of April 1, 2023, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
(in thousands)
2023$6,254 
20247,513 
20256,649 
20266,074 
20275,304 
Thereafter31,866 
Total future lease payments$63,660 
Less: imputed interest$(18,617)
Present value of future lease payments$45,043 
As of April 1, 2023, future minimum repayments of finance leases were as follows:
(in thousands)
2023$539 
2024718 
2025718 
2026246 
202792 
Thereafter13 
Total future lease payments$2,326 
Less: imputed interest$(282)
Present value of future lease payments$2,044 
10. Income Taxes
The fair valuesCompany is taxed as a Corporation for U.S. income tax purposes and similar sections of assets acquired and liabilities assumed, including current and noncurrentthe state income taxes payable and deferred taxes, may be subject to change as additional informationtax laws. The Company’s effective tax rate is receivedbased on pre-tax earnings, enacted U.S. statutory tax rates, non-deductible expenses, and certain tax rate differences between U.S. and foreign jurisdictions. The foreign subsidiaries file income tax returns are finalized. Accordingly,in the provisional measurements of fair value ofUnited Kingdom, France, Australia, and Singapore as necessary. For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Company’s provision for income taxes payableconsists of provisions for federal, state, and deferred taxesforeign income taxes. Deferred tax liabilities and assets attributable to different tax jurisdictions are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.offset.
The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of DBCI and Janus Core. All of the goodwill was assigned to the Janus North America segment and is deductibleprovision for income taxes for the three months ended April 1, 2023 and April 2, 2022 includes amounts related to entities within the Company taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore. The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax purposes.
The following table sets forthrate on year to date ordinary income and records any changes affecting the componentsestimated annual effective tax rate in the interim period in which the change occurs. Additionally, the income tax effects of identifiable intangible assets acquired and their estimated useful lives as ofsignificant unusual or infrequently occurring items are recognized entirely within the date of acquisition:
Fair ValueUseful Lives
Customer Relationships$26,320 15 Years
Backlog3,130 4 Months
Trade Name20,850 Indefinite
Identifiable Intangible Assets$50,300
Customer relationships representinterim period in which the fair values of the underlying relationships with DBCI’s customers. Unbilled contracts (“Backlog”) represent the fair value of DBCI’s contracts that have yet to be billed. Trade names represent DBCI’s trademarks, which consumers associate with the source and quality of the products and services they provide.
The weighted-average amortization of acquired intangibles is 7.9 years.event occurs.
During 2021,the three months ended April 1, 2023 and April 2, 2022, the Company incurredrecorded a total income tax provision of approximately $2,685$9,017 and $6,607 on pre-tax income of third-party acquisition costs. These expenses are included$34,999 and $26,311 resulting in generalan effective tax rate of 25.8% and administrative expense25.1%, respectively. For the three months ended April 1, 2023, effective tax rates were primarily impacted by the change in statutory rate differentials, changes in estimated state income tax and apportionment rates, and permanent differences. For, the Company’s Unaudited Condensed Consolidated Statement of Operationsthree months ended April 2, 2022, effective rates were primarily impacted by statutory rate differentials, changes in estimated tax rates, and Comprehensive Income for the year ended January 1, 2022.



permanent differences.
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
The Business Combination
On June 7, 2021, Juniper consummated a business combination with Midco pursuant to the Business Combination Agreement (the “Business Combination”). Pursuant to ASC 805, for financial accounting and reporting purposes, Midco was deemed the accounting acquirer and Juniper was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Accordingly, the Business Combination was treated as the equivalent of Midco issuing equity for the net assets of Juniper, accompanied by a recapitalization. Under this method of accounting, the consolidated financial statements of Midco are the historical financial statements of Janus International Group, Inc. The net assets of Juniper were stated at historical costs, with no goodwill or other intangible assets recorded in accordance with U.S. GAAP, and are consolidated with Midco’s financial statements on the closing date. The shares and net income (loss) per share available to holders of the Company’s common stock, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination Agreement.
As a result of the Business Combination, Midco’s unitholders received aggregate consideration of approximately $1,200,000, which consisted of (i) $541,700 in cash at the closing of the Business Combination and (ii) 70,270,400 shares of common stock valued at $10.00 per share, totaling $702,700.
In connection with the closing of the Business Combination, Juniper Industrial Sponsor, LLC (the “Sponsor”) received 2,000,000 shares of Janus’s Common Stock (pro rata among the Sponsor shares and shares held by certain affiliates) (the “Earnout Shares”) contingent upon achieving certain market share price milestone as outlined in the Business Combination Agreement. The vesting of the Earnout Shares occurred automatically as of the close of the trading on June 21, 2021 in accordance with the terms of the Earnout Agreement, entered into by and between the Company and the Sponsor at the closing of the transaction.
Concurrently with the execution and delivery of the Business Combination Agreement, certain institutional accredited investors (the “PIPE Investors”), entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors purchased an aggregate of 25,000,000 shares of Janus’s common stock (the “PIPE Shares”) at a purchase price per share of $10.00 (the “PIPE Investment”). One of the Company’s directors also purchased an aggregate of 1,000,000 of the PIPE Shares as part of the PIPE Investment. The PIPE Investment was closed on June 7, 2021 and the issuance of an aggregate of 25,000,000 shares of common stock occurred concurrently with the consummation of the Business Combination.
In connection with the Business Combination, the Group incurred direct and incremental costs of approximately $44,500 related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees. In addition, the Company incurred $4,468 in transaction bonuses paid to key employees and $5,210 in non-cash share-based compensation expense due to the accelerated vesting of Midco’s legacy share-based compensation plan. See Note 10 - “Equity Compensation” for additional information.
G&M Stor-More Pty Ltd Acquisition
On January 19, 2021, the Company, through its wholly owned subsidiary Steel Storage Australia Pty Ltd. (“Steel Storage”) acquired 100% of the net assets of G&M Stor-More Pty Ltd. for total cash consideration of approximately $1,739. In aggregate, approximately $814 was attributed to intangible assets, approximately $929 was attributable to goodwill, and approximately $(4) was attributable to net liabilities assumed. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and Steel Storage. All of the goodwill was assigned to the Janus International segment of the business and is not deductible for income tax purposes.
The weighted-average amortization of acquired intangibles is 11.6 years.
During 2021, the Company incurred approximately $105 of third-party acquisition costs. These expenses are included in general and administrative expense of the Company’s consolidated statement of operations and comprehensive income for the six months ended June 26, 2021.
10.11. Equity Compensation
2021 Omnibus Incentive Plan
The Company maintains its 2021 Omnibus Incentive Plan (the “Plan”) under which it grants stock-based awards to eligible directors, officers and employees in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Group’sCompany’s stockholders. The Plan allows the Company to issue and grant 15,125,000 shares.
The Company measures compensation expense for stock-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). During the sixthree months ended July 2, 2022,April 1, 2023, the Company granted stock-based awards including restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and stock options under the Plan. The grant date fair value of RSUs and PSUs are equal to the closing price of the Company’s common stock on either: (i) the date of grant; or (ii) the previous trading day, depending on the level of administration required. Forfeitures are recognized as they occur, any unvested RSUs PSUs, or stock options are forfeited upon a
16

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
“Termination “Termination of Service”, as defined in the Plan, or as otherwise provided in the applicable award agreement or determined by the Company’s Compensation Committee of the Board of Directors.
Restricted Stock Unit Grants
RSUs are subject to a vesting period between one orand four years’ service vesting period. RSUsyears. RSU activity for the sixthree months ended July 2, 2022April 1, 2023 is as follows:
(dollar amounts in thousands, except share and per share data)

Six Months Ended July 2, 2022Three Months Ended April 1, 2023
RSUsWeighted-Average Grant Date Fair ValueRSUsWeighted-Average Grant Date Fair Value
Outstanding at January 1, 2022275,370 $11.9 
Unvested, outstanding at December 31, 2022Unvested, outstanding at December 31, 2022465,064 $10.5 
GrantedGranted330,462 9.9 Granted495,631 10.6 
VestedVested(69,687)11.9 Vested(58,790)9.5 
ForfeitedForfeited(8,410)11.3 Forfeited(9,288)10.0 
Outstanding at July 2, 2022527,735 $10.6 
Unvested at July 2, 2022527,735 $10.6 
Unvested, outstanding at April 1, 2023Unvested, outstanding at April 1, 2023892,617 $10.6 

Stock-based compensation expense for RSUs is recognized straight line over the respective vestingservice period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the above awards was approximately $679$637 and $1,278$600 for the three and six months ended JulyApril 1, 2023 and April 2, 2022, respectively. As of July 2, 2022,April 1, 2023, there was an aggregate of $5,101$8,538 of unrecognized expense related to the restricted stock unitsRSUs granted, which the Company expects to amortize over a weighted-average period of 3.13.01 years.
Performance-based Restricted Stock Unit GrantsGrants
The performance criteria applicable to PSUs isPSU awards are based on the satisfaction of performance conditions based on the achievement of the Company’s performance metrics. The number of PSUs that become earned can range between 0% and 200% of the original target number of PSUs awarded for the 2022 awards. As of July 2, 2022, the Company deemed it probable that the performance condition will be met and therefore concluded to value the PSUs based on a 100% payout. PSUs are subject to a three-year performance vestingcliff-vesting period.
As of July 2, 2022,April 1, 2023, PSUs activity for the sixthree months ended July 2, 2022April 1, 2023 is as follows:
Six Months Ended July 2, 2022
PSUsWeighted-Average Grant Date Fair Value
Outstanding at January 1, 2022— $— 
Granted269,863 9.4 
Vested— — 
Forfeited— — 
Outstanding at July 2, 2022269,863 $9.4 
Unvested at July 2, 2022269,863 $9.4 
(dollar amounts in thousands, except share and per share data)
Three Months Ended April 1, 2023
PSUsWeighted-Average Grant Date Fair Value
Unvested, outstanding at December 31, 2022252,923 $9.5 
Granted229,091 10.6 
Vested— — 
Forfeited— — 
Unvested, outstanding at April 1, 2023 (1)
482,014 10.0 

1) This number excludes 252,923 performance stock units, which represents the incremental number of units that would be issued based on performance results from previously-granted PSU awards. The PSUs granted in 2022 are currently estimated at 200% of target.
Stock-based compensation expense for PSUs is recognized straight line over the respective vestingrequisite service period, reduced for actual forfeitures, and included in general and administrative in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the performance-based awardsPSUs was approximately $138$994 for the three months and six months ended July 2, 2022.April 1, 2023. As of July 2, 2022,April 1, 2023, there
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Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
was an aggregate of $2,399$4,802 of unrecognized expense related to the performance-based stock unitsPSUs granted, which the Company expects to amortize over a weighted-average period of 2.52.21 years.
The above table represents PSUs assuming 100% of target payout at the time of the grant. Actual payouts can range between 0% and 200%, depending on performance results for the three-year performance period. As of April 1, 2023, the Company deemed the estimate of the PSUs granted in fiscal year ended December 31, 2022 to be issued at 200% of target, and have reflected such estimates within the share-based compensation expense. The Company estimates the PSU’s granted during the period ending April 1, 2023 to be issued at 100% of target.
The Actual payout of the 2022 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 2, 2022, through December 28, 2024. The Actual payout of the 2023 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 1, 2023, through December 27, 2025.

Stock Options
Stock options are granted by applying a valuation method to determine the grant date fair value for each stock option award. Stock options are subject to a vesting period of either three or four years. Stock option awards typically vest in 33% or 25% annual installments on each of the first four anniversariesannual anniversary of the vesting commencement date for the duration of the vesting period, and expire ten
17

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
years from the grant date. The fair value of each option is estimated using a Black-Scholes option valuation model using the independent valuations of the Company’s stock.
The principal assumptions utilized in valuing stock options include, the expected option life, the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon with a maturity equal to the expected life of the option), the expected stock price volatility using the historical and implied price volatility;volatility, and the expected dividend yield.
A summary of the assumptions used in determining the fair value of stock options is as followsfollows:
(dollar amounts in thousands, except share and per share data)

SixThree Months Ended July 2, 2022April 1, 2023
Expected life of option (years)6.00 - 6.25
Risk-free interest rate2.9% - 3.01%3.7%
Expected volatility of the Company’s stock45 %45% - 48%
Expected dividend yield on the Company’s stock— %
Stock optionsoption activity for the sixthree months ended July 2, 2022April 1, 2023 is as follows:
Six Months Ended July 2, 2022
Stock OptionsWeighted-Average Grant Date Fair ValueWeighted Average Remaining Contractual Life (in years)Intrinsic value
Outstanding at January 1, 2022— $— $— 
Granted736,105 4.5 10.0— 
Vested— — — 
Forfeited— — — 
Outstanding at July 2, 2022736,105 $4.5 9.8$— 
Unvested at July 2, 2022736,105 $4.5 9.8$— 

Three Months Ended April 1, 2023
Stock OptionsWeighted-Average Grant Date Fair ValueWeighted Average Remaining Contractual Life (in years)Intrinsic value
Unvested, outstanding at December 31, 2022700,729 $4.5 9.8$0.2 
Granted18,796 5.3 10.0— 
Exercised— — — — 
Vested(113,252)4.5 9.0— 
Forfeited— — — — 
Unvested, outstanding at April 1, 2023606,273 $4.5 9.1$— 
Vested not exercised at April 1, 2023113,252 $4.5 9.0$— 
Stock-based compensation expense for stock options is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. At July 2, 2022, totalTotal compensation expense related to stock options was approximately $94$199 and $— for the three and six months ended JulyApril 1, 2023 and April 2, 2022.2022, respectively. Total unamortized stock-based compensation expense related to the unvested stock options was approximately $3,193,$2,544, which the Company expects to amortize over a weighted-average period of 3.83.09 years.
Midco - Class B Unit Incentive Plan
Prior to the Business Combination, commencing on March 15, 2018, the Board of Directors of Midco approved the Class B Unit Incentive Plan (the “Class B Plan”), which was a form of long-term compensation that provided for the issuance of ownership units to employees for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of Midco.
As a result of the Business Combination, the Board of Directors approved an accelerated vesting for 16,079 units (equivalent to 4,012,873 shares of Group common stock) granted in connection with the Class B Plan, to allow accelerated vesting of the units upon consummation of the Business Combination. Effective June 7, 2021, as a result of the Business Combination, the Class B Plan was terminated.

17
11. Stockholders’ Equity
On June 7, 2021, the Group’s common stock began trading on the NYSE under the symbol “JBI”. Pursuant to the terms of the Amended and Restated Certificate of Incorporation, the Company is authorized and has available 825,000,000 shares of common stock with a par value of $0.0001 per share. Immediately following the Business Combination, there were 138,384,250 shares of common stock with a par value of $0.0001 outstanding. As discussed in Note 9 Business Combination, the Company has retroactively adjusted the shares issued and outstanding prior to June 7, 2021 to give effect to the exchange ratio established in the Business Combination Agreement to determine the number of shares of common stock into which they were converted.
Preferred Stock
Our certificate of incorporation authorizes the issuance of 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of July 2, 2022, zero shares of preferred stock were issued and outstanding, and no designation of rights and preferences of preferred stock had been adopted. Our preferred stock is not quoted on any market or system, and there is not currently a market for our preferred stock.
Rollover Equity
At the closing date of the business combination, each outstanding unit of Midco’s Class A Preferred and Class B Common converted into our common stock at the then-effective conversion rate. Each unit of Midco Class A Preferred was converted into approximately 343.983 shares
18

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
of our common stock, and each unit of Midco Class B Common was converted into approximately 249.585 shares of our common stock12. Net Income Per Share
Basic net income per share is computed based on the determined exchange ratio.
PIPE Investment
Concurrently with the execution and delivery of the Business Combination Agreement, the PIPE Investors entered into the PIPE Subscription Agreements pursuant to which the PIPE Investors purchased an aggregate of 25,000,000 PIPE Shares at a purchase price per share of $10.00. One of the Company’s directors purchased an aggregate of 1,000,000 of the PIPE Shares as part of the PIPE Investment.
The PIPE Investment closed on June 7, 2021 and the issuance of an aggregate of 25,000,000 shares of common stock occurred concurrently with the consummation of the Business Combination. The sale and issuance was made to accredited investors in reliance on Rule 506 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).
Founder Shares
In August 2019, the Sponsor purchased 8,625,000 shares of Class B common stock (the “founder shares”) of JIH for an aggregate purchase price of $25,000 in cash, or approximately $0.003 per founder share. By virtue of the consummation of the Business Combination, the Sponsor’s Class A common stock was converted into the right to receive an equivalentweighted average number of shares of common stock 2,000,000 of which (pro rata amongoutstanding during the Sponsor shares and shares held by certain affiliates) was subject toperiod. Diluted net income per share is computed based on the terms of the Earnout Agreement. The vesting of the Earnout Shares occurred automatically as of the close of the trading on June 21, 2021 in accordance with the terms of the Earnout Agreement. The table below represents the approximate common stock holdings of the Group immediately following the Business Combination.

Shares%
Janus Midco, LLC unitholders70,270,400 50.8 %
Public stockholders43,113,850 31.2 %
PIPE Investors25,000,000 18.0 %
Total138,384,250 100.0 %
Warrants
The Sponsor purchased 10,150,000 warrants to purchase Class A common stock of JIH (the “private placement warrants”) for a purchase price of $1.00 per whole private placement warrant, or $10,150 in the aggregate, in private placement transactions that occurred simultaneously with the closing of the Juniper IPO and the closing of the over-allotment option for the Juniper IPO (the “private placement”). Each private placement warrant entitled the holder to purchase 1 share of Class A common stock of JIH at $11.50 per share. The private placement warrants were only exercisable for a wholeweighted average number of common shares outstanding plus the effect of Class Adilutive potential common shares outstanding during the period using the treasury stock of JIH. The Sponsor transferred 5,075,000 of its private placement warrants to Midco’s equity holders as part of the consideration for the Business Combination. The private placement warrants are liability classified. Immediately after giving effect to the Business Combination, there were 17,249,995 issued and outstanding public warrants. The public warrants were equity classified. The private placement warrants and public warrants were all exercised or redeemed on November 18, 2021.
Dividend Policy
We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on our common or preferred stock in the foreseeable future. It is presently intended that we will retain our earnings for use in business operations and, accordingly, it is not anticipated that the Board of Directors will declare dividends in the foreseeable future. In addition, the terms of our credit facilities include restrictions on our ability to issue and pay dividends.
12. Related Party Transactions
Prior to the Business Combination, Jupiter Intermediate Holdco, LLC, on behalf of the Janus Core, entered into a Management and Monitoring Services Agreement (“MMSA”) with the Class A Preferred Unit holders group. As a result of the Business Combination the MMSA was terminated effective June 7, 2021. Janus Core paid management fees of $1,124 and $1,763 to the Class A Preferred Unit holders group formethod. For the three and six months ended June 26, 2021, respectively. There were no Class A Preferred Unit holders group management fees accruedApril 1, 2023 and unpaid as of JulyApril 2, 2022, dilutive potential common shares include stock options and January 1, 2022.unvested restricted stock units. Dilutive EPS excludes all common shares if their effect is anti-dilutive.
Janus Core leases a manufacturing facility in Butler, Indiana, from Janus Butler, LLC, an entity wholly owned by a former memberThe following table sets forth the computation of the Board of Directors of the Company. Effective October 20, 2021 the member resigned from the Board of Directors of the Company. Rent payments paidbasic and diluted EPS attributable to Janus Butler, LLCcommon stockholders for the three months ended JulyApril 1, 2023 and April 2, 2022 (in thousands, except share and June 26, 2021 were approximately $37 and $37, respectively. Rent payments paid to Janus Butler, LLC for the six months ended July 2, 2022 and June 26, 2021 were approximately $75 and $86, respectively The original lease extended through October 31, 2021 and on November 1, 2021 the lease was extended to October 31, 2026, with monthly payments of approximately $13 with an annual escalation of 1.5%.
19

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
Janus Core was previously a party to a lease agreement with 134 Janus International, LLC, which is an entity majority owned by a former member of the Board of Directors of the Company. In December 2021, the leased premises in Temple, Georgia were sold by the former director to a third party buyer, resulting in an assignment of the lease to said third-party buyer and an extension of the lease to November 30, 2031. Rent payments paid to 134 Janus International, LLC in the three months ended July 2, 2022 and June 26, 2021 were approximately $— and $114, respectively. Rent payments paid to 134 Janus International, LLC in the six months ended July 2, 2022 and June 26, 2021 were approximately $— and $229, respectively.
The Group is a party to a lease agreement with ASTA Investment, LLC, for a manufacturing facility in Cartersville, Georgia an entity partially owned by a stockholder of the Company. The original lease term began on April 1, 2018 and extended through March 31, 2028 and was amended in March 2021 to extend the term until March 1, 2030, with monthly lease payments of $68 per month with an annual escalation of 2.0%. Rent payments to ASTA Investment, LLC for the three months ended July 2, 2022 and June 26, 2021 were approximately $136 and $199, respectively. Rent payments to ASTA Investment, LLC for the six months ended July 2, 2022 and June 26, 2021 were approximately $340 and $397, respectively.share data):
Three Months Ended
April 1, 2023April 2, 2022
Numerator:
Net income attributable to common stockholders$25,982 $19,704 
Denominator:
Weighted average number of shares:
Basic146,703,894 146,561,717 
Adjustment for dilutive securities48,007 271,172 
Diluted146,751,901 146,832,889 
Basic net income per share attributable to common stockholders$0.18 $0.13 
Diluted net income per share attributable to common stockholders$0.18 $0.13 
13. Revenue Recognition
The Company accounts for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights and payment terms can be identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised good or service to a customer.
Contract Balances
Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract assets primarily result from contracts that include installation which are billed via payment requests that are submitted in the month following the period during which revenue was recognized. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. Contract assets are disclosed as costs and estimated earnings in excess of billings on uncompleted contracts, and contract liabilities are disclosed as billings in excess of costs and estimated earnings on uncompleted contracts in the Unaudited Condensed Consolidated Balance Sheet. Contract balances for the six months ended July 2, 2022 and Januaryas of April 1, 20222023 were as follows:
July 2, 2022January 1, 2022
Contract assets, beginning of the period$23,121 $11,399 
Contract assets, end of the period21,715 23,121 
Contract liabilities, beginning of the period23,207 21,525 
Contract liabilities, end of the period$26,084 $23,207 
April 1, 2023
Contract assets, beginning of the period$39,251 
Contract assets, end of the period40,992 
Contract liabilities, beginning of the period21,445 
Contract liabilities, end of the period$18,311 
During the three and six months ended July 2, 2022,April 1, 2023, the Company recognized revenue of approximately $2,738 and $15,193, respectively,$11,948 related to contract liabilities at January 1,December 31, 2022. This reduction was offset by new billings of approximately $5,616 and $18,071$8,814 for product and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized for the three month period ended April 1, 2023.
The Company derives subscription revenue from continued software support and six month periodsthrough the Nokē Smart Entry System, a product which provides mobile access for tenants and remote monitoring and tracking for operators. We determine standalone selling price for recurring software revenue by using the adjusted market assessment approach. The recurring revenue recognized from the Nokē Smart Entry System for the three months ended JulyApril 1, 2023 and April 2, 2022 was $439 and $268 , respectively.
18

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Disaggregation of Revenue
The principal categories we use to disaggregate revenues are by timing and sales channel of revenue recognition. The following disaggregation of revenues depict the Company’s reportable segment revenues by timing and sales channel of revenue recognition for the three and six months ended JulyApril 1, 2023 and April 2, 2022 and June 26, 2021:2022:
Revenue by Timing of Revenue Recognition
Three Months Ended
Reportable Segments by Timing of Revenue RecognitionApril 1, 2023April 2, 2022
Janus North America
Goods transferred at a point in time$204,439 $200,157 
Services transferred over time33,775 25,099 

$238,214 $225,256 
Janus International
Goods transferred at a point in time$13,106 $10,798 
Services transferred over time8,466 7,116 
$21,572 $17,914 
Eliminations$(7,882)$(13,650)
Total Revenue$251,904 $229,520 
Revenue by Sales Channel
Three Months Ended
Reportable Segments by Sales Channel Revenue RecognitionApril 1, 2023April 2, 2022
Janus North America
Self Storage-New Construction$68,243 $75,709 
Self Storage-R382,253 61,572 
Commercial and Others87,718 87,975 

$238,214 $225,256 
Janus International
Self Storage-New Construction$18,538 $11,897 
Self Storage-R33,034 6,017 
$21,572 $17,914 
Eliminations$(7,882)$(13,650)
Total Revenue$251,904 $229,520 
2019

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Revenue by Timing of Revenue Recognition
Three Months EndedSix Months Ended
Reportable Segments by Timing of Revenue RecognitionJuly 2, 2022June 26, 2021July 2, 2022June 26, 2021
Janus North America
Goods transferred at a point in time$215,865 $139,189 $416,023 $260,082 
Services transferred over time25,597 25,056 50,696 50,698 

$241,462 $164,245 $466,719 $310,780 
Janus International
Goods transferred at a point in time$12,176 $9,775 $22,975 $16,848 
Services transferred over time8,148 8,570 15,263 14,057 
$20,324 $18,345 $38,238 $30,905 
Eliminations$(14,072)$(8,408)$(27,723)$(14,678)
Total Revenue$247,714 $174,182 $477,234 $327,007 
Revenue by Sales Channel Revenue Recognition
Three Months EndedSix Months Ended
Reportable Segments by Sales Channel Revenue RecognitionJuly 2, 2022June 26, 2021July 2, 2022June 26, 2021
Janus North America
Self Storage-New Construction$70,650 $55,601 $146,359 $104,301 
Self Storage-R369,431 52,182 131,003 91,514 
Commercial and Others101,381 56,462 189,357 114,965 

$241,462 $164,245 $466,719 $310,780 
Janus International
Self Storage-New Construction$14,884 $14,878 $26,782 $23,779 
Self Storage-R35,440 3,467 11,456 7,126 
$20,324 $18,345 $38,238 $30,905 
Eliminations$(14,072)$(8,408)$(27,723)$(14,678)
Total Revenue$247,714 $174,182 $477,234 $327,007 
14. Leases
On January 2, 2022, the Group adopted ASU 2016-02, Leases, using the optional transition method. Under this method, the Group has recognized the cumulative effect adjustment to the opening balance of retained earnings. The Group has elected to adopt the package of practical expedients which apply to leases that commenced before the adoption date. By electing the package of practical expedients, the Group did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, and the initial direct costs for any existing leases. At lease commencement, a right-of-use (“ROU”) asset and lease liability is recorded based on the present value of the future lease payments over the lease term. The Group has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. The Group leases facilities, vehicles, and other equipment under long-term operating and financing leases with varying terms.
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases the practical expedient was also elected whereby lease and non-lease components have been combined. The Group uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Group will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Group will estimate the incremental borrowing rate to discount the lease payments. The Group estimates the incremental borrowing rate based on the rates of interest that the Group would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Group does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.
The components of ROU assets and lease liabilities were as follows:
21

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
(in thousands)Balance Sheet ClassificationJuly 2, 2022
Assets:
Operating lease assetsRight-of-use assets, net$39,891 
Finance lease assetsRight-of-use assets, net644 
Total leased assets$40,535 
Liabilities:
Current:
OperatingOther accrued expenses$4,944 
FinancingCurrent maturities of long-term debt161 
Noncurrent:
OperatingOther long-term liabilities$37,579 
FinancingLong-term debt490 
Total lease liabilities$43,174 
The components of lease expense were as follows:
Three Months EndedSix Months Ended
(in thousands)July 2, 2022July 2, 2022
Operating lease cost$2,018 $4,005 
Short-term lease cost— 60 
Financial lease cost:
Amortization of right-of-use assets$45 $62 
Interest on lease liabilities12 
Total lease cost$2,072 $4,139 
Other information related to leases was as follows:
July 2, 2022
Weighted Average Remaining Lease Term
Operating Leases9.8 years
Finance Leases3.7 years
Weighted Average Discount Rate
Operating Leases6.6%
Finance Leases5.0%
As of July 2, 2022, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
(in thousands)
2022$3,801 
20237,354 
20246,457 
20255,759 
20265,215 
Thereafter30,801 
Total future lease payments$59,387 
Less imputed interest$(16,864)
Present value of future lease payments$42,523 
As of July 2, 2022, minimum repayments of long-term debt under financing leases were as follows:
22

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
(in thousands)
2022$95 
2023189 
2024189 
2025189 
202640 
Thereafter11 
Total future lease payments$713 
Less imputed interest$(62)
Present value of future lease payments$651 
15. Income Taxes
Prior to June 7, 2021, the Company was a limited liability company taxed as a partnership for U.S. federal income tax purposes. The Company was generally not directly subject to income taxes under the provisions of the Internal Revenue Code and most applicable state laws. Therefore, taxable income or loss was reported to the members for inclusion in their respective tax returns.
After June 7, 2021, the Group is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws. The Group’s effective tax rate is based on pre-tax earnings, enacted U.S. statutory tax rates, non-deductible expenses, and certain tax rate differences between U.S. and foreign jurisdictions. The foreign subsidiaries file income tax returns in the United Kingdom, France, Australia, and Singapore as necessary. For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Group’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.
The provision for income taxes for the three and six months ended July 2, 2022 and June 26, 2021 includes amounts related to entities within the group taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore. The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate on year to date ordinary income and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs. Additionally, the income tax effects of significant unusual or infrequently occurring items are recognized entirely within the interim period in which the event occurs.
During the three months ended July 2, 2022 and June 26, 2021, the Company recorded a total income tax provision of approximately $7,802 and $2,560 on pre-tax income of approximately $30,639 and $866 resulting in an effective tax rate of 25.5% and 295.6%, respectively. During the six months ended July 2, 2022 and June 26, 2021, the Company recorded a total income tax provision of approximately $14,409 and $2,405 on pre-tax income of approximately $56,950 and $15,430 resulting in an effective tax rate of 25.3% and 15.6%, respectively. The three and six months ended July 2, 2022 effective tax rates were primarily impacted by the change in statutory rate differentials, changes in estimated tax rates, and permanent differences. The three and six months ended June 26, 2021 effective rates were primarily impacted by the change in tax status of the Group, statutory rate differentials, changes in estimated tax rates, and permanent differences.
16. Net Income (Loss) Per Share
Prior to the Business Combination, and prior to effecting the reverse recapitalization, the Company’s pre-merger LLC membership structure included two classes of units: Class A preferred units and Class B common units. The Class A preferred units were entitled to receive distributions prior and in preference on Class A preferred unit unpaid cumulative dividends (“Unpaid Preferred Yield”) followed by Class A preferred unit capital contributions that have not been paid back to the holders (the “Unreturned Capital”). Vested Class B common units participate in the remaining distribution on a pro-rata basis with Class A preferred units if they have met the respective Participation Threshold and, if applicable, the Target Value defined in the respective Unit Grant Agreement. The Class A preferred and Class B common units fully vested at the Business Combination date.
Pursuant to the Restated and Amended Certificate of Incorporation and as a result of the reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to June 7, 2021 to give effect to the exchange ratio used to determine the number of shares of common stock into which they were converted. Basic net income per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.
The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the three and six months ended July 2, 2022 and June 26, 2021 (in thousands, except share and per share data):
23

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
Three Months EndedSix Months Ended
July 2, 2022June 26, 2021July 2, 2022June 26, 2021
Numerator:
Net income (loss) attributable to common stockholders$22,837 $(1,694)$42,541 $13,025 
Denominator:
Weighted average number of shares:
Basic146,575,720 81,009,261 146,568,719 73,577,447 
Adjustment for dilutive securities142,217 — 79,587 302,404 
Diluted146,717,937 81,009,261 146,648,306 73,879,851
Basic net income (loss) per share attributable to common stockholders$0.16 $(0.02)$0.29 $0.18 
Diluted net income (loss) per share attributable to common stockholders$0.16 $(0.02)$0.29 $0.18 
17. Segments Information
The Company operates its business and reports its results through 2two reportable segments: Janus North America and Janus International, in accordance with ASC Topic 280, Segment Reporting. The Janus International segment is comprised of JIE with its production and sales located largely in Europe. The Janus North America segment is comprised of all the other entities including Janus Core, BETCO, NOKE, ASTA, DBCI, ACT, Janus Door, U.S. Door, and Steel Door Depot.

Summarized financial information for the Company’s segments is shown in the following tables:
Three Months Ended
April 1,April 2,
20232022
Revenue
Janus North America$238,214 $225,256 
Janus International21,572 17,914 
Eliminations(7,882)(13,650)
Consolidated Revenue$251,904 $229,520 
Income From Operations
Janus North America$48,878 $34,855 
Janus International2,279 249 
Eliminations(145)11 
Total Segment Operating Income$51,012 $35,115 
Depreciation Expense
Janus North America$1,954 $1,673 
Janus International226 184 
Consolidated Depreciation Expense$2,180 $1,857 
Amortization of Intangible Assets
Janus North America$7,105 $6,886 
Janus International311 339 
Consolidated Amortization Expense$7,416 $7,225 
Capital Expenditures
Janus North America$5,144 $2,553 
Janus International926 327 
Consolidated Capital Expenditures$6,070 $2,880 
April 1,December 31
20232022
Identifiable Assets
Janus North America$1,176,877 $1,209,905 
Janus International65,031 60,713 
Consolidated Assets$1,241,908 $1,270,618 
24
20

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Three Months EndedSix Months Ended
July 2,June 26,July 2,June 26,
2022202120222021
Revenue
Janus North America$241,462 $164,245 $466,719 $310,780 
Janus International20,324 18,345 38,238 30,905 
Intersegment(14,072)(8,408)(27,723)(14,678)
Consolidated Revenue$247,714 $174,182 $477,234 $327,007 
Income From Operations
Janus North America$38,173 $16,581 $73,028 $40,497 
Janus International1,702 (5,389)1,949 (5,082)
Eliminations(26)(2)(15)24 
Total Segment Operating Income$39,849 $11,190 $74,962 $35,439 
Depreciation Expense
Janus North America$1,791 $1,400 $3,464 $2,767 
Janus International187 106 371 212 
Consolidated Depreciation Expense$1,978 $1,506 $3,835 $2,979 
Amortization of Intangible Assets
Janus North America$7,324 $6,402 $14,210 $12,816 
Janus International322 389 661 807 
Consolidated Amortization Expense$7,646 $6,791 $14,871 $13,623 
Capital Expenditures
Janus North America$2,121 $1,234 $4,673 $2,654 
Janus International267 395 595 1,339 
Consolidated Capital Expenditures$2,388 $1,629 $5,268 $3,993 
15. Restructuring
July 2,January 1
20222022
Identifiable Assets
Janus North America$1,146,618 $1,063,563 
Janus International58,921 58,439 
Consolidated Assets$1,205,539 $1,122,002 
During fiscal year 2022 and 2023, the Company initiated a restructuring plan to relocate one of its international facilities and align its ongoing corporate strategy. The Company incurs costs associated with restructuring initiatives intended to improve operating performance, profitability and efficiency of business processes. Restructuring charges can include severance costs, relocations costs, recruiting fees affiliated with hiring new personnel, legal costs, and contract cancellation costs.

The Company records restructuring charges when they are probable and estimable. Restructuring costs are accrued when the Company announces the closure or restructuring event, and the amounts can be reasonably estimated. Restructuring costs are included in general and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income.

The Company’s restructuring expenses are comprised of the following:
(in thousands)April 1,April 2,
20232022
Severance and termination benefits$93 $— 
Facility related charges— 103 
Legal, consulting, and other professional fees497 — 
Total Restructuring Charges$590 $103 

The following table summarizes the changes in the Company’s accrued restructuring balance, which are included in Accrued Expenses and Other Current Liabilities in the accompanying Condensed Consolidated Balance Sheets.
Balance at December 31, 2022$— 
Restructuring charges590 
Payments(497)
Balance at April 1, 2023$93 
18. Significant Estimates16. Commitments and ConcentrationsContingencies
Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following:
General Litigation
The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.
Self-Insurance
Under the Company’s workers’ compensation insurance program, coverage is obtained for catastrophic exposures under which the Company retains a portion of certain expected losses. The Company has stop loss workers’ compensation insurance for claims in excess of $200 as of July 2, 2022April 1, 2023 and January 1,December 31, 2022, respectively. Provision for losses expected under this program is recorded based upon the Company’s estimates of the aggregate liability for claims incurred and totaled approximately $571$409 and $383$409 as of July 2, 2022,April 1, 2023, and January 1,December 31, 2022, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these Unaudited Condensed Consolidated Financial Statements.
Under the Company’s health insurance program, coverage is obtained for catastrophic exposures under which the Company retains a portion of certain expected losses. The Company has stop loss insurance for claims in excess of $275 and $275 as of July 2, 2022April 1, 2023 and January 1,
25

Janus International Group, Inc.
Notes to Unaudited Consolidated Financial Statements
December 31, 2022, respectively. Provision for losses expected under this program is recorded based upon the Company’s estimates of the aggregate liability for claims incurred and totaled approximately $1,479$2,146 and $1,539$2,099 as of July 2, 2022April 1, 2023 and January 1,December 31, 2022, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these Unaudited Condensed Consolidated Financial Statements.
19.17. Related Party Transactions
For the three months ended April 1, 2023 and April 2, 2022, there were no related party transactions.
21

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
18. Subsequent Events
For the interim Unaudited Condensed Consolidated Financial Statements as of July 2, 2022,April 1, 2023, the Company has evaluated subsequent events through the issuance date of the financial statements issuance date.

statements.
On July 7, 2022, uponApril 10, 2023, Janus Core, entered into Amendment Number Three to the recommendationABL Credit and Guarantee Agreement to that certain ABL Credit and Guarantee Agreement, dated as of February 12, 2018, by and among Janus Core, as parent borrower, Wells Fargo Bank, National Association, as administrative agent and collateral agent, and the other parties thereto. The Amendment, among other things, (i) replaces the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the ABL Credit and Guarantee Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updates certain other provisions of the NominatingABL Credit and Corporate Governance Committee ofGuarantee Agreement to reflect the Board of Directors oftransition from LIBOR to SOFR.
Subsequent to the period end, the Company initiated a restructuring plan to relocate one of its domestic manufacturing facilities, which will result in centralization of our Western United States manufacturing production. This consolidation is not expected to have a material impact on our business, nor do we expect the Board of Directors appointed Heather Harding as a director on the Board and as a member of the Audit Committee of the Board, effective as of July 7, 2022. Ms. Harding will serve as a Class I director until the Company’s 2025 annual meeting of shareholders and until her successor is duly elected and qualified. Ms. Harding is deemedCompany to be independent in accordanceincur material costs associated with the rules of the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange. Ms. Harding is also deemed to be an “audit committee financial expert” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. There are no other arrangements or understandings between Ms. Harding and any other person pursuant to which Ms. Harding was selected as a director of the Company. There are no related person transactions (within the meaning of Item 404(a) of Regulation S-K promulgated by the SEC) between Ms. Harding and the Company.


consolidation.


2622


Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

JANUS’SJANUS’ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which Janus’s managementJanus’management believes is relevant to an assessment and understanding of consolidated results of operations and financial condition. You should read the following discussion and analysis of Janus’sJanus’ financial condition and results of operations in conjunction with the Unaudited Condensed Consolidated financial statements and notes thereto contained in this Form 10-Q (the “Form 10-Q”).
Certain information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to plans and strategy for Janus’sJanus’ business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors,” Janus’sJanus’ actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Form 10-Q. We assume no obligation to update any of these forward- looking statements.
Unless otherwise indicated or the context otherwise requires, references in this Janus’sJanus’ Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Midco,” “Janus,” “we,” “us,” “our,” and other similar terms refer to Midco and its subsidiaries prior to the Business Combination and to Janus International Group Inc. (Parent) and its consolidated subsidiaries after giving effect to the Business Combination.subsidiaries.
Percentage amounts included in this Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Form 10-Q may vary from those obtained by performing the same calculations using the figures in our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q. Certain other amounts that appear in this Form 10-Q may not sum due to rounding.
Significant Developments
On July 1, 2022, Anselm Wong became Executive Vice President and Chief Financial Officer of the Company. Mr. Wong brings 25 years of experience in finance leadership and strategy roles to oversee Janus’s finance organization, including financial planning and analysis, accounting and reporting, internal audit, corporate development, and investor relations.
Introduction
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying Unaudited Condensed Consolidated Financial Statements, and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. MD&A is organized as follows:
Business Overview: This section provides a general description of our business, and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as recent developments we believe are important to understanding our results of operations and financial condition or in understanding anticipated future trends.
Basis of Presentation: This section provides a discussion of the basis on which our unaudited condensed consolidated financial statements were prepared.
Results of Operations: This section provides an analysis of our unaudited results of operations for the three month period ended April 1, 2023 and six months periods ended JulyApril 2, 2022 and June 26, 2021.2022.
Liquidity and Capital Resources: This section provides a discussion of our financial condition and an analysis of our unaudited cash flows for the three month period ended April 1, 2023 and six months periods ended JulyApril 2, 2022 and June 26, 2021.2022. This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at July 2, 2022,April 1, 2023, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital.
Critical Accounting Policies and Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.
Business Overview
Janus is a leading global manufacturer and supplier of turn-key self-storage, commercial and industrial building solutions including: roll up and swing doors, hallway systems, relocatable storage units, and facility and door automation technologies with manufacturing operations in
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Georgia, Texas, Arizona, Indiana, North Carolina, United Kingdom, Australia, and Singapore.Australia. The self-storage industry is comprised of institutional and non-institutional facilities. Institutional facilities typically include multi-story, climate controlled facilities located in prime locations owned and/or managed by large Real Estate Investment Trusts (“REITs”) or returns-driven operators of scale and are primarily located in the top 50 U.S. metropolitan statistical areas (“MSAs”), whereas the vast majority of non-institutional facilities are single-story, non-climate controlled facilities located outside of city centers owned and/or managed by smaller private operators that are mostly located outside of the top 50 U.S. MSAs. Janus is highly integrated with customers at every phase of a project, including facility planning/design, construction, access control and restore, rebuild, replace (R3) of damaged or end-of-life products.
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Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International. The Janus International segment is comprised of JIEH, whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus International Group, LLC (together with each of its operating subsidiaries, “Janus Core”), Betco, Inc. (“BETCO”), Noke, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Access Control Technologies, LLC (“ACT”), U.S. Door & Building Components, LLC (“U.S. Door”), Janus Door, LLC (“Janus Door”), and Steel Door Depot.com, LLC (“Steel Door Depot”).
Furthermore, our business is comprised of three primary sales channels: New Construction-Self-storage, R3-Self-storage (R3), and Commercial and Other. The Commercial and Other category is primarily comprised of roll-up sheet and rolling steel door sales into the commercial marketplace.
New construction consists of engineering and project management work pertaining to the design, building, and logistics of a greenfield new self- storage facility tailored to customer specifications while being compliant with ADA regulations. Any Nokē Smart Entry System revenue associated with a new construction project also rolls up into this sales channel.
The concept of Janus R3 is to replace storage unit doors, optimizing unit mix and idle land, and adding a more robust security solution to enable customers to (1) charge higher rental rates and (2) compete with modern self-storage facilities and large operators. In addition, the R3 sales channel also includes new self-storage capacity being brought online through conversions and expansions. R3 transforms facilities through door replacement, facility upgrades, Nokē Smart Entry Systems, and relocatable storage MASS (Moveable Additional Storage Structure).
Commercial light duty steel roll-up doors are designed for applications that require less frequent and less demanding operations. Janus offers heavy duty commercial grade steel doors (minimized dead-load, or constant weight of the curtain itself) perfect for warehouses, commercial buildings, and terminals, designed with a higher gauge and deeper guides, which combats the heavy scale of use with superior strength and durability. Janus also offers rolling steel doors known for minimal maintenance and easy installation with, but not limited to, the following options, commercial slat doors, heavy duty service doors, fire doors, fire rated counter shutters, insulated service doors, counter shutters and grilles.
Executive Overview
Janus’sJanus’ financials reflect the result of the execution of our operational and corporate strategy to penetrate the fast-growing self-storage, commercial and industrial storage markets, as well as capitalizing on the aging self-storage facilities, while continuing to diversify our products and solutions. We believe Janus is a bespoke provider of not only products, but solutions that generate a favorable financial outcome for our clients.

During 2021, we acquired G&M, DBCI, and ACT to expand market share. Our M&A activity has collectively enhanced our growth trajectory, technology and global footprint, while providing us access to highly attractive adjacent categories.
Total revenue was $247.7 million and $477.2 million for the three and six months periods ended July 2, 2022, representing an increase of 42.2% and 45.9% from $174.2 million and $327.0 million for the three and six months periods ended June 26, 2021.
Revenues increased in the three and six months periodsmonth period ended July 2, 2022April 1, 2023 as compared to the three and six months periodsmonth period ended June 26, 2021,April 2, 2022, representing a 9.8% increase in revenue. This increase is largely due to continued strong performance within all threethe R3 sales channels and $25.8 million and $47.8 million of inorganic growth as a result of the DBCI and ACT acquisitionschannel, coupled with the impact from the commercial actions taken in 2021.2022. The same trends were generally present in both the Janus North America segment as well as the Janus International segment, with the exception of the fact that the Internationalinternational segment does not sell into the Commercial sales channel.
Adjusted EBITDANet income was $50.7 million and $95.3$26.0 million for the three and six months periodsmonth period ended July 2, 2022,April 1, 2023, representing a 41.1% and 39.1%31.9% increase from $35.9 million and $68.5$19.7 million for the three and six months periodsmonth period ended June 26, 2021.April 2, 2022. Net income as a percentage of revenue was 10.3% representing an increase of 1.7% from 8.6% for the three month period ended April 2, 2022.
Adjusted EBITDA was $61.2 million for the three month period ended April 1, 2023, representing a 37.0% increase from $44.7 million for the three month period ended April 2, 2022.

Adjusted EBITDA as a %percentage of revenue was 20.5% and 20.0%24.3% for the three and six months periodsmonth period ended July 2, 2022,April 1, 2023, representing a decreasean increase of 0.1% and 1.0%4.8% from 20.6% and 21.0%19.5% for the three and six months periodsmonth period ended June 26, 2021.April 2, 2022. The reductionincrease in Adjusted EBITDA margins is a direct result of increased revenue primarily due to commercial actions taking full effect in third quarter of 2022 as well as the impact of cost synergies from our acquisitions of DBCI and ACT in 2021, which was partially offset by the inflationary increases in raw material, labor and logistics costs impacting the business in advance of commercial actions taking full effect. In addition to the inflationary cost pressures, Janus also experienced incremental costs as a public company and incremental headcount costs associated with continued strategic investments in our Nokē Smart entry ground game and customer service department.
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Information regarding use of Adjusted EBITDA, a non-GAAP measure, and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measure, is included in “Non-GAAP Financial Measures.”

The Business Combination
On June 7, 2021, Juniper Industrial Holdings, Inc. (“Juniper” or “JIH”) consummated a business combination with Midco pursuant to the Business Combination Agreement. Pursuant to ASC 805, for financial accounting and reporting purposes, Midco was deemed the accounting acquirer and Juniper was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. At the closing date of the business combination, each outstanding unit of Midco’s Class A Preferred and Class B Common converted into our common stock at the then-effective conversion rate. Immediately upon the completion of the Business Combination, Juniper and Midco became wholly-owned subsidiaries of Janus International Group, Inc. The Company is currently traded on the NYSE under the symbols “JBI” and “JBI WS”, respectively.
As a result of the Business Combination, equityholders of Midco received aggregate consideration with a value equal to $1.2 billion which consisted of (i) $541.7 million in cash and (ii) $702.7 million in shares of our common stock, or 70,270,400 shares based on an assumed stock price of $10.00 per share. In connection with the closing of the Business Combination, the Sponsor received 2,000,000 shares of our Common Stock (pro rata among the Sponsor shares and shares held by certain affiliates) (the “Earnout Shares”) contingent upon achieving certain market share price milestone as outlined in the Business Combination Agreement. The vesting of the Earnout Shares occurred as of the close of the trading on June 21, 2021.
Part of the proceeds from the merger were used to pay a non-liquidating cash distribution to Janus Midco unitholders’ in the amount of $541.7 million and partial payment on the note payable in the amount of $61.6 million. (See “Liquidity and Capital Resources” section).
Business Segment Information
Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International.
Janus North America is comprised of eight operating segments including Janus Core, Janus Door, Steel Door Depot, ASTA, NOKE, BETCO, DBCI, and ACT. Janus North America produces and provides various fabricated components such as commercial and self-storage doors, walls, hallway systems and building components used primarily by owners or builders of self-storage facilities and also offers installation
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services along with the products. Janus North America represented 91.8% and 92.0%91.4% of the Company’s revenue for the three months and six monthsmonth period ended July 2, 2022April 1, 2023, and 89.5% and 90.5%92.2% of the Company’s revenue for the three months and six monthsmonth period ended June 26, 2021, respectively.April 2, 2022.
Janus International is comprised solely of one operating segment, Janus International Europe Holdings Ltd (UK). The Janus International segment produces and provides similar products and services as Janus North America, butwith the exception of the fact that the international segment does not sell into the Commercial sales channel, and they’re largely in Europe as well as Australia. Janus International represented 8.2% and 8.0%8.6% of Janus’sJanus’ revenue for the three and six monthsmonth period ended July 2, 2022April 1, 2023, and 10.5% and 9.5%7.8% of the Company’s revenue for the three and six monthsmonth period ended June 26, 2021, respectively.
Acquisitions
Our highly accretive M&A strategy focuses on (i) portfolio diversification into attractive and logical adjacencies, (ii) geographic expansion, and (iii) technological innovation.
Inorganic growth, through acquisitions, serves to increase Janus’s strategic growth. Since 2021, Janus has completed three acquisitions which attributed a combined $84.5 million inorganic revenue increase from December 26, 2020 through JulyApril 2, 2022. Refer to the “Risk Factors” section for further information on the risks associated with integration of these acquisitions. Janus acquired the following three companies to fuel the inorganic growth of its manufacturing capabilities, product offerings, and technology solutions provided to customers.
On January 18, 2021, the Company, through its wholly owned subsidiary Steel Storage Australia Pty Ltd. acquired 100% of the net assets of G&M Stor-More Pty Ltd. for approximately $1.74 million. G&M Stor-More Pty Ltd. has over 23 years’ experience in self-storage building, design, construction and consultation. As a result of the acquisition, the Company will have an opportunity to increase its customer base of the self-storage industry and expand its product offerings in the Australian market.
On August 18, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity interests of DBCI, a company incorporated in Delaware, for approximately $169.2 million. DBCI is a manufacturer of exterior building products in North America, with over 25 years’ servicing commercial, residential and repair markets. As a result of the acquisition, the Company will have an opportunity to increase its customer base of both the commercial and self-storage industries and expand its product offerings in the North American market.
On August 31, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity of ACT, a company incorporated in North Carolina, for $10.3 million. Through this acquisition, the Group also acquired all assets and certain liabilities of Phoenix Iron Worx, LLC, a company incorporated in North Carolina. ACT has specialized in protecting critical assets in the self-storage and industrial building industries for over 7 years. The ACT team is comprised of security industry experts who continually train to be at the
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forefront of emerging industry trends, technological advancements, and new security vulnerabilities or hazards that threaten their clients. As a result of the acquisition, the Company will have an opportunity to expand its Nokē Smart Entry ground game.
Impact of COVID-19
The COVID-19 pandemic may continue to have negative impacts on our operations, supply chain, transportation networks, and customers, which may compress our margins as a result of preventative and precautionary measures that Janus, other businesses, and governments are taking. The extent to which the COVID-19 pandemic may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the pandemic and the effectiveness of actions globally to contain or mitigate its effects.
Our unaudited condensed consolidated financial statements and discussion and analysis of financial condition and results of operations reflect estimates and assumptions made by management for the three and six months ended July 2, 2022. Events and changes in circumstances arising after July 2, 2022, including those resulting from the impacts of the COVID-19 pandemic, will be reflected in management’s estimates for future periods.
Management continues to monitor the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.
Key Performance Measures
Management evaluates the performance of its reportable segments based on the revenue of services and products, gross profit, operating margins, and cash from business operations. We use Adjusted EBITDA, which is a non-GAAP financial metric, as a supplemental measure of our performance in order to provide investors with an improved understanding of underlying performance trends. Please see the section “Non-GAAP Financial Measure” below for further discussion of this financial measure, including the reasons why we use such financial measures and reconciliations of such financial measures to the nearest GAAP financial measures.
Human capital is also one of the main cost drivers of the manufacturing, selling, and administrative processes of Janus. As a result, headcount is reflective of the health of Janus indicative of an expansion or contraction of the overall business. We expect to continue to increase headcount in the future as we grow our business. Moreover, we expect that we will need to hire additional accounting, finance, and other personnel in connection with our becoming, and our efforts to comply with the requirement of being, a public company.
The following table sets forth key performance measures for the periods ended JulyApril 1, 2023 and April 2, 2022 and June 26, 2021 (dollar amounts in thousands):

Three Months EndedVarianceThree Months EndedVariance
July 2, 2022June 26, 2021$%April 1, 2023April 2, 2022$%
Total RevenueTotal Revenue$247,714 $174,182 $73,532 42.2 %Total Revenue$251,904 $229,520 $22,384 9.8 %
Adjusted EBITDAAdjusted EBITDA$50,683 $35,919 $14,764 41.1 %Adjusted EBITDA$61,183 $44,667 $16,516 37.0 %
Adjusted EBITDA (% of revenue)Adjusted EBITDA (% of revenue)20.5 %20.6 %(0.1)%Adjusted EBITDA (% of revenue)24.3 %19.5 %4.8 %

Six Months EndedVariance
July 2, 2022June 26, 2021$%
Total Revenue$477,234 $327,007 $150,227 45.9 %
Adjusted EBITDA$95,349 $68,549 $26,800 39.1 %
Adjusted EBITDA (% of revenue)20.0 %21.0 %(1.0)%

As of JulyApril 1, 2023, and April 2, 2022, and June 26, 2021, the headcount was 2,2052,301 (including 575518 temporary employees) and 1,7582,125 (including 420519 temporary employees), respectively.

Total revenue increased by $73.5 million and $150.2$22.4 million or 42.2% and 45.9%9.8% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021, respectively,April 2, 2022, primarily due to improved market conditions and commercial actions instituted in 2021 and increased volumes partially related to pull through of the 2021 new construction pent up demand coupled with a $25.8 million and $47.8 million increase in inorganic revenue growth, for the three and six month periods ended July 2, 2022, as a result of the DBCI and ACT acquisitions. The Company expects that these trends will continue to impact the Company's results for the remainder of fiscal 2022
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actions.
Adjusted EBITDA increased by $14.8 million and $26.8$16.5 million or 41.1% and 39.1%37.0% from the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six months periodsmonth period ended June 26, 2021April 2, 2022, primarily due to increased revenue which was partially offset by increased cost of salesrevenues and general and administrative expenses.

Adjusted EBITDA as a percentage of revenue decreased 0.1% and 1.0%, respectively,increased 4.8% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 primarily due to increased revenue due to commercial actions taking full effect in third quarter 2022 which was partially offset by inflationary increases in raw material, labor and logistics costs in advance of commercial and cost containment actions taking full effect. In addition to the inflationary cost pressures, Janus also experienced incremental costs as a public company and incremental headcount costs associated with strategic investmentsthe robust pace of activity for the balance of the year and investing in the continued build out of our Nokē Smart entry ground game and customer service department.service. (See Non-GAAP Financial Measures” section).
Basis of Presentation
The Unaudited Condensed Consolidated Financial Statements have been derived from the accounts of Janus and its wholly owned subsidiaries. Janus’sJanus’ fiscal year follows a 4-4-5 calendar which divides a year into four quarters of 13 weeks, grouped into two 4-week “months” and one 5-week “month.” As a result, some monthly comparisons are not comparable as one month is longer than the other two. The major advantage of a 4-4-5 calendar is that the end date of the period is always the same day of the week, making manufacturing planning easier as every period is the same length. Every fifth or sixth year will require a 53rd week.
We have presented results of operations, including the related discussion and analysis for:
the three and six monthsThe thirteen weeks period ended July 2, 2022April 1, 2023 compared to the three and six monthsthirteen weeks period ended June 26, 2021.April 2, 2022.
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Components of Results of Operations
Sales of products.Product Revenues. Sale of products representsProduct revenues represent the revenue from the sale of products, including steel roll-up and swing doors, rolling steel doors, steel structures, as well as hallway systems and facility and door automation technologies for commercial and self-storage customers. Product revenue is recognized upon transfer of control to the customer, which generally takes place at the point of destination (Janus Core) and at the point of shipping (all other operating segments). We expect our product revenue may vary from period to period on, among other things, the timing and size of orders and delivery of products and the impact of significant transactions. Revenues are monitored and analyzed as a function of sales reporting within the following sales channels, Self-Storage New Construction, Self-Storage R3, and Commercial and Other.
Sales of services.Service revenues. Service revenue reflectsrevenues reflect installation services to customers for steel facilities, steel roll-up and swing doors, hallway systems, and relocatable storage units which is recognized over time based on the satisfaction of our performance obligation. Janus is highly integrated with customers at every phase of a project, including facility planning/design, construction, access control and R3 of damaged, or end-of-life products or rebranding of facilities due to market consolidation. Service obligations are primarily short term and completed within a one-year time period. We expect our service revenue to increase as we add new customers and our existing customers continue to add more and more content per square foot.
Cost of sales. OurProduct cost of sales consists of the cost of products and cost of services. revenues. Cost of products includes the manufacturing cost of our steel roll-up and swing doors, rolling steel doors, steel structures, and hallway systems which primarily consists of amounts paid to our third-party contract suppliers and personnel-related costs directly associated with manufacturing operations as well as overhead and indirect costs. We expect cost of revenues to increase in absolute dollars in future periods as we expect our revenues to continue to grow.
Service cost of revenues. Cost of services includes third-party installation subcontractor costs directly associated with the installation of our products. Our cost of salesrevenues include purchase price variance, cost of spare or replacement parts, warranty costs, excess and obsolete inventory charges, shipping costs, and an allocated portion of overhead costs, including depreciation. We expect cost of salesrevenues to increase in absolute dollars in future periods as we expect our revenues to continue to grow.
Selling and marketing expense. Selling expenses consist primarily of compensation and benefits of employees engaged in selling activities as well as related travel, advertising, trade shows/conventions, meals and entertainment expenses. We expect selling expenses to increase in absolute dollars in future periods as we expect our revenues to continue to grow.
General and administrative expense. General and administrative (“G&A”) expenses are comprised primarily of expenses relating to employee compensation and benefits, travel, meals and entertainment expenses as well as depreciation, amortization, and non-recurring costs. We expect general and administrative expenses to increase in absolute dollars in future periods as we expect our revenues to continue to grow.
Interest expense. Consists of interest expense on short-term and long-term debt and amortization on deferred financing fees (see Long TermLong-Term Debt” section).
Factors Affecting the Results of Operations
Key Factors Affecting the Business and Financial Statements
Janus’sJanus’ management believes our performance and future growth depends on a number of factors that present significant opportunities but also pose risks and challenges.
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Factors Affecting Revenues
Janus’sJanus’ revenues from products sold are driven by economic conditions, which impacts new construction of self-storage facilities, R3 of self-storage facilities, and commercial revenue.
Janus periodically modifies sales prices of their products due to changes in costs for raw materials and energy, market conditions, labor and logistics costs and the competitive environment. In certain cases, realized price increases are less than the announced price increases due to project pricing, competitive reactions and changing market conditions. Janus also offers a wide assortment of products that are differentiated by style, design and performance attributes. Pricing and margins for products within the assortment vary. In addition, changes in the relative quantity of products purchased at different price points can impact year-to-year comparisons of net sales and operating income.
Service revenue is driven by the product revenue and the increase in value-added services, such as pre-work planning, site drawings, installation and general contracting, project management, and third-party security. Janus differentiates itself through on-time delivery, efficient installation, best in-classcustomer service satisfaction, and a reputation for high quality products.
Factors Affecting Growth Through Acquisitions
Janus’sJanus’ business strategy involves growth through, among other things, the acquisition of other companies. Janus tries to evaluate companies that it believes will strategically fit into its business and growth objectives. If Janus is unable to successfully integrate and develop acquired
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businesses, it could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on its financial results.
Janus may not be able to identify suitable acquisition or strategic investment opportunities or may be unable to obtain the required consent of its lenders and, therefore, may not be able to complete such acquisitions or strategic investments. Janus may incur expenses associated with sourcing, evaluating and negotiating acquisitions (including those that do not get completed), and it may also pay fees and expenses associated with financing acquisitions to investment banks and other advisors. Any of these amounts may be substantial, and together with the size, timing and number of acquisitions Janus pursues, may negatively affect and cause significant volatility in its financial results.
In addition, Janus has assumed, and may in the future assume, liabilities of the company it is acquiring. While Janus retains third-party advisors to consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to it. If there are unknown liabilities or other obligations, Janus’sJanus’ business could be materially affected.
Seasonality
Generally, Janus’sJanus’ sales tend to be the slowest in January due to more unfavorable weather conditions, customer business cycles and the timing of renovation and new construction project launches.
Factors Affecting Operating Costs
Janus’sJanus’ operating expenses are comprised of direct production costs (principally raw materials, labor and energy), manufacturing overhead costs, freight, costs to purchase sourced products and selling, general and administrative (“SGG&A”) expenses.
Janus’sJanus’ largest individual raw material expenditure is steel coils. Fluctuations in the prices of steel coil are generally beyond Janus’sJanus’ control and have a direct impact on the financial results. In 2021 and 2022, Janus entered into agreements with two of its largest suppliers in order to lock in steel coil prices for part of Janus’sJanus’ production needsneeds. These agreements are renewed annually and partially mitigate the potential impacts of short-term steel coil price fluctuations. These arrangements allow Janus to purchase quantities of product within specified ranges as outlined in the contracts.
Freight costs are driven by Janus’sJanus’ volume of sales of products and are subject to the freight market pricing environment.
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Results of Operations - Consolidated
The period to period comparisons of our results of operations have been prepared using the historical periods included in our unaudited condensed consolidated financial statements. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this document. We have derived this data from our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.
The following tables set forth our results of operations for the periods presented in dollars and as a percentage of total revenue.







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Results of Operations

For the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the period ended June 26, 2021April 2, 2022 (dollar amounts in thousands):
Three Months EndedVariance
July 2, 2022June 26, 2021$%
REVENUE
Sales of products$213,969 $140,556 $73,413 52.2 %
Sales of services33,745 33,626 119 0.4 %
Total revenue$247,714 $174,182 $73,532 42.2 %
Cost of Sales163,733 114,988 48,745 42.4 %
GROSS PROFIT$83,981 $59,194 $24,787 41.9 %
OPERATING EXPENSE
Selling and marketing14,389 10,381 4,008 38.6 %
General and administrative29,743 36,936 (7,193)(19.5)%
Contingent consideration and earnout fair value adjustments— 687 (687)100.0 %
Operating Expenses$44,132 $48,004 $(3,872)(8.1)%
INCOME FROM OPERATIONS$39,849 11,190 $28,659 256.1 %
Interest expense(8,868)(7,476)(1,392)18.6 %
Other income (expense)(342)(919)577 (62.8)%
Change in fair value of derivative warrant liabilities— (1,929)1,929 (100.0)%
INCOME BEFORE TAXES$30,639 $866 $29,773 3438.0 %
Provision for Income Taxes7,802 2,560 5,242 204.8 %
NET INCOME (LOSS)$22,837 $(1,694)$24,531 (1448.1)%
Six Months EndedVariance
July 2, 2022June 26, 2021$%
REVENUE
Sales of products$411,274 $262,253 $149,021 56.8 %
Sales of services65,960 64,754 1,206 1.9 %
Total revenue477,234 327,007 $150,227 45.9 %
Cost of Sales316,684 214,519 102,165 47.6 %
GROSS PROFIT$160,550 $112,488 $48,062 42.7 %
OPERATING EXPENSE
Selling and marketing27,739 19,840 7,899 39.8 %
General and administrative57,849 56,522 1,327 2.3 %
Contingent consideration and earnout fair value adjustments— 687 (687)100.0 %
Operating Expenses$85,588 $77,049 $8,539 11.1 %
INCOME FROM OPERATIONS$74,962 $35,439 $39,523 111.5 %
Interest expense(17,643)(15,602)(2,041)13.1 %
Other income (expense)(369)(2,478)2,109 (85.1)%
Change in fair value of derivative warrant liabilities— (1,929)1,929 (100.0)%
INCOME BEFORE TAXES$56,950 $15,430 $41,520 269.1 %
Provision for Income Taxes14,409 2,405 12,004 499.1 %
NET INCOME$42,541 $13,025 $29,516 226.6 %
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Three Months EndedVariance
April 1, 2023April 2, 2022$%
REVENUES
Product revenues$209,664 $197,306 $12,358 6.3 %
Service revenues42,240 32,214 10,026 31.1 %
Total revenues$251,904 $229,520 $22,384 9.8 %
Product cost of revenues120,068 128,560 (8,492)(6.6)%
Service cost of revenues31,903 24,390 7,513 30.8 %
Cost of Revenues151,971 152,950 (979)(0.6)%
GROSS PROFIT$99,933 $76,570 $23,363 30.5 %
OPERATING EXPENSE
Selling and marketing14,821 13,349 1,472 11.0 %
General and administrative34,100 28,106 5,994 21.3 %
Operating Expenses$48,921 $41,455 $7,466 18.0 %
INCOME FROM OPERATIONS$51,012 35,115 $15,897 45.3 %
Interest expense(15,998)(8,775)(7,223)82.3 %
Other income (expense)(15)(29)14 (48.3)%
INCOME BEFORE TAXES$34,999 $26,311 $8,688 33.0 %
Provision for Income Taxes9,017 6,607 2,410 36.5 %
NET INCOME$25,982 $19,704 $6,278 31.9 %
Revenue
Three Months Ended
Revenue Variance
Breakdown
Variance
%
Domestic Acquisitions
        Organic
Growth
Organic
Growth
%
July 2, 2022June 26, 2021Variances
Sales of products$213,969 $140,556 $73,413 52.2 %$23,495 $49,918 35.5 %
Sales of services33,745 33,626 119 0.4 %2,270 (2,151)(6.4)%
Total$247,714 $174,182 $73,532 42.2 %$25,765 $47,767 27.4 %
Six Months Ended
Revenue Variance
Breakdown
Variance
%
Domestic Acquisitions
        Organic
Growth
Organic
Growth
%
July 2, 2022June 26, 2021Variances
Sales of products$411,274 $262,253 $149,021 56.8 %$43,873 $105,148 40.1 %
Sales of services65,960 64,754 $1,206 1.9 %3,968 (2,762)(4.3)%
Total$477,234 $327,007 $150,227 45.9 %$47,841 $102,386 31.3 %
Revenue (dollar amounts in tables in thousands)
Three Months Ended
April 1, 2023April 2, 2022Organic Growth

%
Sales of products$209,664 $197,306 $12,358 6.3 %
Sales of services42,240 32,214 10,026 31.1 %
Total$251,904 $229,520 $22,384 9.8 %
The $73.5 million and $150.2$22.4 million revenue increase for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022 is primarily attributable to increased volumes as a result of favorable industry dynamics in all three sales channels,the positive impact from commercial actions taken in 2022, coupled with inorganic growth of $25.8 million and $47.8 million as a result of the DBCI and ACT acquisitions. The Company expects that these trends will continue to impact the Company's results for the remainder of fiscal 2022.

28


The following table and discussion compares Janus’sJanus’ sales by sales channel (dollar amounts in tables in thousands).

Three Months EndedVariance
ConsolidatedJuly 2, 2022% of salesJune 26, 2021% of sales$%
New Construction - Self Storage$77,094 31.1 %$65,747 37.7 %$11,347 17.3 %
R3 - Self Storage74,647 30.1 %55,578 31.9 %19,069 34.3 %
Commercial and Other95,973 38.8 %52,857 30.3 %43,116 81.6 %
Total$247,714 100.0 %$174,182 100.0 %$73,532 42.2 %
Six Months EndedVarianceThree Months EndedVariance
ConsolidatedConsolidatedJuly 2, 2022% of salesJune 26, 2021% of sales$%ConsolidatedApril 1, 2023% of salesApril 2, 2022% of sales$%
New Construction - Self StorageNew Construction - Self Storage$158,094 33.1 %$121,864 37.3 %$36,230 29.7 %New Construction - Self Storage$83,144 33.0 %$81,001 35.3 %$2,143 2.6 %
R3 - Self StorageR3 - Self Storage141,974 29.8 %98,568 30.1 %43,406 44.0 %R3 - Self Storage85,437 33.9 %67,328 29.3 %18,109 26.9 %
Commercial and OtherCommercial and Other177,166 37.1 %106,575 32.6 %70,591 66.2 %Commercial and Other83,323 33.1 %81,191 35.4 %2,132 2.6 %
TotalTotal$477,234 100.0 %$327,007 100.0 %$150,227 45.9 %Total$251,904 100.0 %$229,520 100.0 %$22,384 9.8 %
New construction sales increased by $11.3$2.1 million or 17.3% and by $36.2 million or 29.7%2.6% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021, respectively.April 2, 2022. The increase in the three and six monthsmonth period ended July 2, 2022April 1, 2023 is primarily due to commercial initiatives and strong growth related to the 2021 pent up demand in greenfield projects caused by permitting delays associated with the COVID-19 global pandemic continuing to ship in the first and second quarters of 2022. The Company expects that these trends will continue to impact the Company's results for the remainder of fiscal 2022.initiatives.
R3 sales increased by $19.1 million and $43.4$18.1 million or 34.3% and 44.0%26.9% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, due to the increase of conversions and expansions as self-storage capacity continues to be brought online through R3 as opposed to greenfield sites coupled with the positive impacts from commercial actions. The Company expects that these trends will continue to impact the Company's results for the remainder of fiscal 2022.
Commercial and other sales increased by $43.1 million and $70.6$2.1 million or 81.6% and 66.2%2.6% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, due to Janus Core and ASTA experiencingASTA’s continued sales across the various end-markets that the segment serves and favorable market gains due to the continued e-commerce movement coupled with share gains in both the commercial steel roll up door market and ASTA’s rolling steel product line. In addition, the commercial and other sales channel continued to benefit from the commercial actions instituted in 2021. The Company expects that these trends will continue to impact the Company's results for the remainder of fiscal 2022.
34


actions.
Cost of Sales and Gross Margin
Gross margin decreasedincreased by 0.1% and 0.8%6.3% to 33.9% and 33.6%39.7% for the three and six monthsmonth period ended July 2, 2022April 1, 2023, from 34.0% and 34.4%33.4% for the three and six monthsmonth period ended June 26, 2021.April 2, 2022. This increase is primarily due to the commercial and cost containment initiatives taking effect in third quarter 2022 which was offset by continued increased raw material, labor and logistics costs.

Three Months EndedCost of Sales Variance
Breakdown
July 2, 2022June 26, 2021Variance
Variance
%
Domestic AcquisitionsOrganic Growth
Organic Growth
%
Cost of Sales$163,733$114,988 $48,74542.4 %$18,600$30,14526.2%
(Dollar amounts in tables in thousands)
Six Months EndedCost of Sales Variance
Breakdown
July 2, 2022June 26, 2021Variance
Variance
%
Domestic AcquisitionsOrganic Growth
Organic Growth
%
Cost of Sales$316,684$214,519 $102,16547.6 %$36,277$65,88830.7%
Three Months EndedVariance
April 1, 2023April 2, 2022$%
Product cost of revenues$120,068$128,560 $(8,492)(6.6)%
Service cost of revenues$31,903$24,390 $7,51330.8 %
Cost of Revenues$151,971 $152,950 $(979)(0.6)%
The cost of sales increaserevenues decrease of $48.7 million and $102.2$1.0 million or 42.4% and 47.6%0.6% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and sixmonth period ended April 2, 2022. The decrease in product cost of revenues of $8,492 for the three months periods ended June 26, 2021April 1, 2023, is primarily attributable to anthe decline in steel coil pricing due to supplier agreements Janus entered into in 2022, while the increase in material and direct labor costsservice cost of $28.6 million and $61.9 millionrevenue for the three and six month periodsmonths ended July 2, 2022 coupled withApril 1, 2023, was due to the inorganicincrease in service costs to support the service revenue growth of $18.6 million and $36.3 million as a result of the DBCI and ACT acquisitions.31.1%
Operating Expenses - Selling and marketing
Selling and marketing expense increased $4.0 million and $7.9$1.5 million or 38.6% and 39.8% from11.0% for the three and six months periodsmonth period ended JulyApril 2, 2022 compared to the three and six months periodsmonth period ended June 26, 2021April 1, 2023. This is primarily due to increased marketing, trade showtravel and payroll related costs for additional headcount to support revenue growth coupled with limited travel, marketing and trade show costs in the prior year due to the pandemic. In addition, there was an increase in selling and marketing expenses of $1.1 million and $2.1 million as a result of the DBCI and ACT acquisitions.growth.
Operating Expenses - General and administrative
General and administrative expenses decreased $7.2increased $6.0 million or 19.5% and increased $1.3 million or 2.3% from21.3% for the three and six monthsmonth period ended June 26, 2021April 2, 2022 compared to the three and six monthsmonth period ended July 2, 2022.April 1, 2023. The decreaseincrease for the three monthsmonth period is primarily due to an increase in general liability and health insurance costs, professional fees and payroll related costs for additional headcount to support the continued top line revenue growth coupled with the transition to a public company which was offset by transaction related costs incurred in conjunction with the June 2021 Business Combination of approximately $10.4 million which is not present in the current quarter. The increase for the six months period is primarily due to an increase in general liability and health insurance costs, professional fees and payroll related costs for additional headcount to support the continued top line revenue growth coupled with the transition to a public company. In addition, there was an increase of $2.9 million and $5.8 million as a result of the DBCI and ACT acquisitions. These increases were partially offset by the approximately $10.4 million of transaction related costs incurred in conjunction with the June 2021 Business Combination.

Operating Expenses - Contingent consideration and earnout fair value adjustments
Contingent consideration and earnout fair value adjustments decreased $0.7 million or 100.0% from the three and six months period ended June 26, 2021 compared to the three and six months period ended July 2, 2022 related to the change in fair value of the earnout of the 2,000,000 common stock shares that were issued and released on June 21, 2021.growth.
Interest Expense
Interest expense increased $1.4 million and $2.0$7.2 million or 18.6% and 13.1% from82.3% for the three and six monthsmonth period ended June 26, 2021April 2, 2022 compared to the three and six monthsmonth period ended July 2, 2022April 1, 2023, primarily due to the new borrowings of $155.0 million in August 2021 and an increase in interest rates in 2022.2023. (See “Liquidity and Capital Resources” section).
Other Income (Expense)
Other income (expense) decreased by $0.6 million and $2.1 million or 62.8% and 85.1% from $0.9 million and $2.5 million of other income for the three and six months period ended June 26, 2021 to $0.3 million and $0.4 million of other (expense) for the period ended July 2, 2022 primarily due to a $1.0 million and $2.4 million loss on extinguishment of debt included in the three and six months period ended June 26, 2021 but not present in the three and six months period ended July 2, 2022.
Income Taxes
Income tax expense increased by $5.2 million and $12.0$2.4 million or 204.8% and 499.1%36.5% from $2.6 million and $2.4$6.6 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022, to $7.8 million and $14.4$9.0 million expense for the three and six monthsmonth period ended July 2, 2022April 1, 2023, due to statutory rate differentials, changes in estimated state income tax and apportionment rates, and permanent differences.
3529


to a tax structure change from a limited liability company to a Corporation as a result of the Business Combination that occurred on June 7, 2021.
Net Income

The $24.5 million and $29.5$6.3 million or 1448.1% and 226.6%31.9% increase in net income for the three and six monthsmonth period ended July 2, 2022April 1, 2023 as compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, respectively, is largely due to an increase in revenue offset by a decreasean increase in general and administrative expenses and interest expense for the three month period ended July 2, 2022. The revenue increase for the six months ended July 2, 2022 was partially offset by an increase in raw material, labor and logistics costs.April 1, 2023.
Segment Results of Operations
We operate in and report financial results for two segments: Janus North America and Janus International with the following sales channels, New Construction, Self-Storage R3, and Commercial and Other.

Segment operating income is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. For these reasons, we believe that Segmentsegment operating income represents the most relevant measure of Segment profit and loss. Our chief operating decision maker may exclude certain charges or gains, such as corporate charges and other special charges, to arrive at a Segment operating income that is a more meaningful measure of profit and loss upon which to base our operating decisions. We define Segment operating margin as Segment operating income as a percentage of the segment’s Net revenues.
The segment discussion that follows describes the significant factors contributing to the changes in results for each segment included in Net earnings.Results of Operations.

Results of Operations - Janus North America
For the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three month period ended June 26, 2021April 2, 2022 (dollar amounts in thousands):

Three Months Ended
July 2, 2022June 26, 2021Variance
$%
REVENUE
Sales of products$215,865 $139,189 $76,676 55.1%
Sales of services25,597 25,056 541 2.2%
Total revenue$241,462 $164,245 $77,217 47.0%
Cost of Sales163,238 110,341 52,897 47.9%
GROSS PROFIT$78,224 $53,904 $24,320 45.1%
OPERATING EXPENSE
Selling and marketing13,643 9,472 4,171 44.0%
General and administrative26,408 27,164 (756)(2.8)%
Contingent consideration and earnout fair value adjustments— 687 (687)100.0%
Operating Expenses$40,051 $37,323 $2,728 7.3%
INCOME FROM OPERATIONS$38,173 $16,581 $21,592 130.2%
36


Six Months EndedThree Months EndedVariance
July 2, 2022June 26, 2021VarianceApril 1, 2023April 2, 2022
$%$%
REVENUE
Sales of products$416,023 $260,082 $155,941 60.0%
Sales of services50,696 50,698 (2)—%
Total revenue$466,719 $310,780 $155,939 50.2%
Cost of Sales316,209 207,113 109,096 52.7%
REVENUESREVENUES
Product revenuesProduct revenues$204,439 $200,157 $4,282 2.1%
Service revenuesService revenues33,775 25,099 8,676 34.6%
Total revenuesTotal revenues$238,214 $225,256 $12,958 5.8%
Product cost of revenuesProduct cost of revenues119,347 134,134 (14,787)(11.0)%
Service cost of revenuesService cost of revenues25,379 18,836 6,543 34.7%
Cost of RevenuesCost of Revenues144,726 152,970 (8,244)(5.4)%
GROSS PROFITGROSS PROFIT$150,510 $103,667 $46,843 45.2%GROSS PROFIT$93,488 $72,286 $21,202 29.3%
OPERATING EXPENSEOPERATING EXPENSEOPERATING EXPENSE
Selling and marketingSelling and marketing26,261 18,167 8,094 44.6%Selling and marketing13,900 12,617 1,283 10.2%
General and administrativeGeneral and administrative51,221 44,316 6,905 15.6%General and administrative30,710 24,814 5,896 23.8%
Contingent consideration and earnout fair value adjustments— 687 (687)100.0%
Operating ExpensesOperating Expenses$77,482 $63,170 $14,312 22.7%Operating Expenses$44,610 $37,431 $7,179 19.2%
INCOME FROM OPERATIONSINCOME FROM OPERATIONS$73,028 $40,497 $32,531 80.3%INCOME FROM OPERATIONS$48,878 $34,855 $14,023 40.2%
Revenue (dollar amounts in tables in thousands)
Three Months EndedVariances
Variance
%
Revenue Variance
Breakdown
July 2, 2022June 26, 2021Domestic AcquisitionsOrganic
Growth
Organic
Growth
%
Sales of products$215,865 $139,189 $76,676 55.1 %$23,495 $53,181 38.2 %
Sales of services$25,597 $25,056 $541 2.2 %$2,270 $(1,729)(6.9)%
Total$241,462 $164,245 $77,217 47.0 %$25,765 $51,452 31.3 %
Six Months EndedVariances
Variance
%
Revenue Variance
Breakdown
July 2, 2022June 26, 2021Domestic AcquisitionsOrganic
Growth
Organic
Growth
%
Sales of products$416,023 $260,082 $155,940 60.0 %$43,873 $112,067 43.1 %
Sales of services$50,696 $50,698 $(1)— %$3,968 $(3,970)(7.8)%
Total$466,719 $310,780 $155,939 50.2 %$47,841 $108,097 34.8 %
Three Months EndedOrganic Growth
April 1, 2023April 2, 2022$%
Product revenues$204,439 $200,157 $4,282 2.1 %
Service revenues$33,775 $25,099 $8,676 34.6 %
Total$238,214 $225,256 $12,958 5.8 %
The $77.2$13.0 million and $155.9 million or 47.0% and 50.2%5.8% revenue growth increase is primarily attributable to increased volumes as a result of favorable industry dynamics in all threeR3 sales channels,channel growth due to new capacity additions and the positive impact from commercial actions taken in 2021, coupled with inorganic growth of $25.8 million and $47.8 million as a result of the DBCI and ACT acquisitions.actions.

30


The following table and discussion compares Janus North America sales by sales channel (dollar amounts in thousands).
Three Months Ended
July 2, 2022
% of Total
Sales
June 26, 2021
% of Total
Sales
Variance
$%
New Construction - Self Storage$70,650 29.2 %$55,601 33.9 %$15,049 27.1 %
R3 - Self Storage$69,431 28.8 %$52,182 31.8 %$17,249 33.1 %
Commercial and Other$101,381 42.0 %$56,462 34.4 %$44,919 79.6 %
Total$241,462 100.0 %$164,245 100.0 %$77,217 47.0 %
37


Six Months EndedThree Months EndedVariance
July 2, 2022
% of Total
Sales
June 26, 2021
% of Total
Sales
VarianceApril 1, 2023
% of Total
Sales
April 2, 2022
% of Total
Sales
$%$%
New Construction - Self StorageNew Construction - Self Storage$146,359 31.3 %$104,301 33.6 %$42,058 40.3 %New Construction - Self Storage$68,243 28.6 %$75,709 33.6 %$(7,466)(9.9)%
R3 - Self StorageR3 - Self Storage$131,003 28.1 %$91,514 29.4 %$39,489 43.2 %R3 - Self Storage$82,253 34.5 %$61,572 27.3 %$20,681 33.6 %
Commercial and OtherCommercial and Other$189,357 40.6 %$114,965 37.0 %$74,392 64.7 %Commercial and Other$87,718 36.9 %$87,975 39.1 %$(257)(0.3)%
TotalTotal$466,719 100.0 %$310,780 100.0 %$155,939 50.2 %Total$238,214 100.0 %$225,256 100.0 %$12,958 5.8 %
New Construction sales increaseddecreased by $15.0 million and $42.1$7.5 million or 27.1% and 40.3%9.9% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, primarily due to commercial initiatives and strong growth related to shipments on the first quarter of 2022 benefiting from pent up demand in greenfield projects caused by permitting delays associated with the COVID-19 global pandemic that negatively impactedin the first and second quarters of 2021.three month period ended April 2, 2022, offset by commercial initiatives.
R3 sales increased by $17.2 million and $39.5$20.7 million or 33.1% and 43.2%33.6% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, respectively, primarily due to the continued trend of new self-storage capacity being brought online through conversions and expansions coupled with the positive impacts from commercial actions.
Commercial and Other sales increaseddecreased by $44.9 million and $74.4$0.3 million or 79.6% and 64.7%0.3% for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, due to increasesprimarily due to the first quarter of 2022 benefiting from strong market competitions in both Janus Core and ASTA commercial steel roll up door market, from continued strong momentum of the ASTAand rolling steel product line andmarket, due to pent up demand in the three month period ended April 2, 2022, offset by commercial initiatives implemented due to offset the inflationary increases of raw materials, labor, and logistics costs.
Cost of SalesRevenues and Gross Margin
Gross Margin decreasedincreased by 0.4% and 1.2%7.1% to 32.4% and 32.2%39.2% for the three and six monthsmonth period ended July 2, 2022,April 1, 2023, from 32.8% and 33.4%32.1% for the three and six monthsmonth period ended June 26, 2021April 2, 2022 is primarily attributable to the decline in steel coil pricing due to supplier agreements Janus entered into in 2022, and an increase in service revenues for the three months ended April 1, 2023, primarily due to continued increased raw material, laborproject mix and logistics costs in advance of commercial and cost containment initiatives taking full effect.timing.

Three Months EndedVariance
Variance
%
Cost of Sales Variance Breakdown
July 2, 2022June 26, 2021Domestic AcquisitionsOrganic Growth
(Reduction)
Organic
Growth
%
Cost of Sales$163,238$110,341 $52,89747.9 %$18,600$34,29731.1%
(Dollar amounts in tables in thousands)
Six Months EndedVariance
Variance
%
Cost of Sales Variance Breakdown
July 2, 2022June 26, 2021Domestic AcquisitionsOrganic Growth
(Reduction)
Organic
Growth
%
Cost of Sales$316,209$207,113 $109,09652.7 %$36,277$72,81935.2%
Three Months EndedVariance
April 1, 2023April 2, 2022$%
Product cost of revenues$119,347$134,134 $(14,787)(11.0)%
Service cost of revenues$25,379$18,836 $6,54334.7 %
Cost of Revenues$144,726$152,970 $(8,244)(5.4)%
The $52.9 million and $109.1$8.2 million or 47.9% and 52.7% increase5.4% decrease in cost of salesrevenues for the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three and six monthsmonth period ended June 26, 2021April 2, 2022, is primarily due to increased revenue coupled with an increasea decrease in raw material, labor,cost of revenues due to the commercial and logistics costs. In addition, there was an inorganic increase of $18.6 million and $36.3 million for the three and six months period ended July 2, 2022, as a result of the DBCI and ACT acquisitions.cost containment initiatives taken in 2022.
Operating Expenses - Selling and marketing
Selling and marketing expenses increased $4.2 million and $8.1$1.3 million or 44.0% and 44.6%10.2% from $9.5 million and $18.2$12.6 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022 to $13.6 million and $26.3$13.9 million for the three and six monthsmonth period ended July 2, 2022April 1, 2023 primarily due to increased marketing and trade showtravel and payroll related costs for additional headcount to support revenue growth coupled with lower spend on travel, marketing and trade shows in the prior year due to the pandemic. In addition, there was an increase in selling and marketing expenses of $1.1 million and $2.1 million as a result of the DBCI and ACT acquisitions.growth.
Operating Expenses - General and administrative
General and administrative expenses decreased $0.8 million and increased $6.9$5.9 million or 2.8% and 15.6%23.8% from $27.2 million and $44.3$24.8 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022 to $26.4 million and $51.2$30.7 million for the three and six monthsmonth period ended July 2, 2022April 1, 2023. The increase for the three month period is primarily due to an increase in general liability and health insurance costs, professional fees and payroll related costs for additional headcount to support the continued top line revenue growth coupled with the transition to a public company which was offset by transaction related costs incurred in conjunction with the June 2021 Business Combination of approximately $10.4 million which is not present in the current quarter.The increase for the six months period is primarily due to an increase in general liability and health insurance costs, professional fees and payroll related costs for additional headcount to support the continued top line revenue growth coupled with the transition to a public company. In addition, there was an increase of $2.9 million and $5.8 million as a result of the DBCI and ACT
38


acquisitions. These increases were partially offset by the approximately $10.4 million of transaction related costs incurred in conjunction with the June 2021 Business Combination.

Operating Expenses - contingent consideration and earnout fair value adjustments
Contingent consideration and earnout fair value adjustments decreased $0.7 million or 100.0% from the three and six months period ended June 26, 2021 compared to the three and six months period ended July 2, 2022 related to the change in fair value of the earnout of the 2,000,000 common stock shares that were issued and released on June 21, 2021.growth.
Income from Operations
Income from operations increased by $21.6 million and $32.5$14.0 million or 130.2% and 80.3%40.2% from $16.6 million and $40.5$34.9 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022 to $38.2 million and $73.0$48.9 million for the three and six monthsmonth period ended July 2, 2022April 1, 2023, primarily due to an increase in revenue and a reduction in cost of revenues, partially offset by an increase in cost of sales, selling and general and administrative expenses.
31


INTERNATIONAL
Results of Operations - Janus International- For the three and six monthsmonth period ended July 2, 2022April 1, 2023 compared to the three month period ended June 26, 2021April 2, 2022 (dollar amounts in thousands):

Three Months Ended
July 2, 2022June 26, 2021Variance
$%
REVENUE
                 Sales of products$12,176 $9,775 $2,401 24.6 %
Sales of services8,148 8,570 (422)(4.9)%
Total revenue$20,324 $18,345 $1,979 10.8 %
Cost of Sales14,541 13,053 1,488 11.4 %
GROSS PROFIT$5,783 $5,292 $491 9.3 %
OPERATING EXPENSE
Selling and marketing746 910 (164)(18.0)%
General and administrative3,335 9,771 (6,436)(65.9)%
Operating Expenses$4,081 $10,681 $(6,600)(61.8)%
LOSS FROM OPERATIONS$1,702 $(5,389)$7,091 131.6 %
Six Months Ended
July 2, 2022June 26, 2021Variance
$%
REVENUE
                 Sales of products$22,975 $16,848 $6,127 36.4 %
Sales of services15,263 14,057 1,206 8.6 %
Total revenue$38,238 $30,905 $7,333 23.7 %
Cost of Sales28,183 22,108 6,075 27.5 %
GROSS PROFIT$10,055 $8,797 $1,258 14.3 %
OPERATING EXPENSE
Selling and marketing1,478 1,673 (195)(11.7)%
General and administrative6,628 12,206 (5,578)(45.7)%
Operating Expenses$8,106 $13,879 $(5,773)(41.6)%
INCOME (LOSS) FROM OPERATIONS$1,949 $(5,082)$7,031 (138.4)%
39


Three Months EndedVariance
April 1, 2023April 2, 2022
$%
REVENUE
Product revenues$13,106 $10,798 $2,308 21.4 %
Service revenues8,466 7,116 1,350 19.0 %
Total revenues$21,572 $17,914 $3,658 20.4 %
Product cost of revenues8,458 8,088 370 4.6 %
Service cost of revenues6,523 5,553 $970 17.5 %
Cost of Revenues14,981 13,641 1,340 9.8 %
GROSS PROFIT$6,591 $4,273 $2,318 54.2 %
OPERATING EXPENSE
Selling and marketing923 732 191 26.1 %
General and administrative3,389 3,292 97 2.9 %
Operating Expenses$4,312 $4,024 $288 7.2 %
INCOME FROM OPERATIONS$2,279 $249 $2,030 815.3 %
Revenue (dollar amounts in tables in thousands)

Three Months EndedVariances
Variance
%
Revenue Variance
Breakdown
July 2, 2022June 26, 2021Organic
Growth
Organic
Growth
Sales of products$12,176 $9,775 $2,401 24.6 %$2,401 24.6 %
Sales of services$8,148 $8,570 $(422)(4.9)%$(422)(4.9)%
Total$20,324 $18,345 $1,979 10.8 %$1,979 10.8 %
Six Months EndedVariances
Variance
%
Revenue Variance
Breakdown
July 2, 2022June 26, 2021Organic
Growth
Organic
Growth
Sales of products$22,975 $16,848 $6,127 36.4 %$6,127 36.4 %
Sales of services$15,263 $14,057 $1,206 8.6 %$1,206 8.6 %
Total$38,238 $30,905 $7,333 23.7 %$7,333 23.7 %
Three Months EndedOrganic Growth
April 1, 2023April 2, 2022$%
Product revenues$13,106 $10,798 $2,308 21.4 %
Service revenues$8,466 $7,116 $1,350 19.0 %
Total$21,572 $17,914 $3,658 20.4 %
The $2.0$3.7 million and $7.3 millionor 20.4% increase in revenue increase includes a 10.8% and 23.7% increase inis due to organic growth driven by increased sales volumes, due to improved market conditions and commercial actions instituted in 2021.instituted.
The following table illustrates the sales by channel for the three and six monthsmonth period ended JulyApril 1, 2023 and April 2, 2022 and June 26, 2021.2022.

Three Months Ended

% of Total
Sales
Variance
July 2, 2022

% of Total
Sales
June 26, 2021$%
New Construction - Self Storage$14,884 73.2 %$14,87881.1 %$6—%
R3 - Self Storage5,440 26.8 %$3,46718.9 %$1,97356.9 %
Total$20,324 100.0 %$18,345100.0 %$1,97910.8 %
(Dollar amounts in tables in thousands)
Six Months Ended

% of Total
Sales
VarianceThree Months Ended

% of Total
Sales
Variance
July 2, 2022

% of Total
Sales
June 26, 2021$%April 1, 2023

% of Total
Sales
April 2, 2022$%
New Construction - Self StorageNew Construction - Self Storage$26,782 70.0 %$23,77976.9 %$3,00312.6 %New Construction - Self Storage$18,538 85.9 %$11,89766.4 %$6,64155.8%
R3 - Self StorageR3 - Self Storage$11,456 30.0 %$7,12623.1 %$4,33060.8 %R3 - Self Storage3,034 14.1 %$6,01733.6 %$(2,983)(49.6)%
TotalTotal$38,238 100.0 %$30,905100.0 %$7,33323.7 %Total$21,572 100.0 %$17,914100.0 %$3,65820.4 %

New Construction sales were consistentincreased by $6.6 million or 55.8% to $18.5 million for the three monthsmonth period ended July 2, 2022 and June 26, 2021 and increased by $3.0April 1, 2023 compared to $11.9 million or 12.6% to $26.8 million from $23.8 for the six monthsthree month period ended JulyApril 2, 20222022. The increase was due to increased volumes, commercial actions, and improved market conditions as the international market continues to open up after the COVID-19 pandemic.higher occupancy rates at existing facilities.
R3 sales increaseddecreased by $2.0 million and $4.3$3.0 million or 56.9% and 60.8%49.6% to $5.4 million and $11.5$3.0 million for the three and six monthsmonth period ended July 2, 2022April 1, 2023 from $3.5 million and $7.1$6.0 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022 primarily due to increased volumes, commercial actions,project timing and improved market conditions asmix factors affecting the international market continues to open up after the COVID-19 pandemic.first quarter of 2023.
Cost of SalesRevenues and Gross Margin
Gross Margin increased by 0.3% and decreased by 2.2%6.7% to 28.5% and 26.3%30.6% for the three and six monthsmonth period ended July 2, 2022,April 1, 2023, from 28.8% and 28.5%23.9% for the three and six month period ended June 26, 2021.April 2, 2022. The increase in the Gross Margin for three monthsmonth period ended July 2, 2022April 1, 2023 is due primarily to increased revenue resulting in improved absorption. The decline for the six months period ended July 2, 2022 is the result of higher raw material, labor and logistics costs and an increase in mezzanine product sales which have a lower margin profile than typical
4032


product offerings as these products are buy-resale, coupled with increased overhead costs as the business continues to add infrastructure to support the strategic growth plan.

Three Months EndedVariance
Variance
%
Cost of Sales Variance Breakdown
July 2, 2022June 26, 2021Organic
Growth
Organic
Growth
%
Cost of Sales$14,541 $13,053 $1,488 11.4 %$1,488 11.4 %
(Dollar amounts in tables in thousands)
Six Months EndedVariance
Variance
%
Cost of Sales Variance Breakdown
July 2, 2022June 26, 2021Organic
Growth
Organic
Growth
%
Cost of Sales$28,183 $22,108 $6,075 27.5 %$6,075 27.5 %
Three Months EndedVariance
April 1, 2023April 2, 2022$%
Product cost of revenues$8,458 $8,088 $370 4.6 %
Service cost of revenues$6,523 $5,553 $970 17.5 %
Cost of Sales$14,981 $13,641 $1,340 9.8 %
Cost of salesrevenues increased by $1.5 million and $6.1$1.3 million or 11.4% and 27.5%9.8% from $13.1 million and $22.1$13.6 million for the three and six monthsmonth period ended June 26, 2021,April 2, 2022, to $14.5 million and $28.2$15.0 million for the three and six monthsmonth period ended July 2, 2022 with a 23.7%April 1, 2023, due to an increase in revenues coupled with an increase in raw material costs related to an increase in mezzanine product sales.
Operating Expenses - Selling and marketing
Selling and marketing expense decreasedincreased by $0.2 million and $0.2 million or 18.0% and 11.7%26.1% from $0.9 million and $1.7$0.7 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022 to $0.7 million and $1.5$0.9 million for the three and six monthsmonth period ended July 2, 2022 due to increased marketing and trade show and payroll related costs for additional headcount to support revenue growth.April 1, 2023.
Operating Expenses - General and administrative
General and administrative expenses decreased $6.4 million and $5.6increased by $0.1 million or 65.9% and 45.7%2.9% from $9.8 million and $12.2$3.3 million for the three and six monthsmonth period ended June 26, 2021April 2, 2022 to $3.3 million and $6.6$3.4 million for the period ended July 2, 2022 primarily due to transaction costs related to the Business Combination that are not present in the current periods.April 1, 2023.
Income from Operations
Income from operations increased by $7.1from $0.2 million and $7.0 million or 131.6% and 138.4% from $5.4 and $5.1 million in net losses for the three and six monthsmonth period ended June 26, 2021April 2, 2022 to $1.7$2.3 million and $1.9 million in net income for the three and six monthsmonth period ended July 2, 2022April 1, 2023. The increase for the period is primarily due to an increase in revenue and a decrease in general and administrative expenses for both the three month and six month periods.revenue.
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Non-GAAP Financial Measure
Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.
Janus presents Adjusted EBITDA which is a non-GAAP financial performance measure, which excludes from reported GAAP results, the impact of certain items consisting of acquisition events and other non-recurring charges. Janus believes such expenses, charges, and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure used by Janus to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, Janus believes these measures provide useful information to investors and others in understanding and evaluating Janus’sJanus’ operating results in the same manner as its management and board of directors. In addition, they provide useful measures for period-to-period comparisons of Janus’sJanus’ business, as they remove the effect of certain non-cash items and certain variable charges. Adjusted EBITDA is defined as net income excluding interest expense, income taxes, depreciation expense, amortization, and other non-operational, non-recurring items.
41


Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the nearest GAAP equivalent of Adjusted EBITDA. These limitations include that the non-GAAP financial measures:
exclude depreciation and amortization, and although these are non-cash expenses, the assets being depreciated may be replaced in the future;
do not reflect interest expense, or the cash requirements necessary to service interest on debt, which reduces cash available;
do not reflect the provision for or benefit from income tax that may result in payments that reduce cash available;
exclude non-recurring items which are unlikely to occur again and have not occurred before (e.g., the extinguishment of debt); and
may not be comparable to similar non-GAAP financial measures used by other companies, because the expenses and other items that Janus excludes in the calculation of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from these non-GAAP financial measures when they report their operating results.
Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with GAAP.
The following table present a reconciliation of net income to Adjusted EBITDA for the periods indicated:indicated (dollar amounts in tables in thousands):
Three Months Ended
July 2, 2022June 26, 2021Variance
$%
Net Income (Loss)$22,837 $(1,694)$24,531 1448.1%
Interest Expense8,868 7,476 1,392 18.6%
Income Taxes7,802 2,560 5,242 204.8%
Depreciation1,978 1,506 472 31.3%
Amortization7,646 6,791 855 12.6%
EBITDA$49,131 $16,639 $32,492 195.3%
Loss (gain) on extinguishment of debt(1)
— 994 (994)(100.0)%
COVID-19 related expenses(2)
— 13 (13)(100.0)%
Transaction related expenses(3)
— 10,398 (10,398)(100.0)%
Facility relocation(4)
517 49 468 955.1%
Share-based compensation(5)
— 5,210 (5,210)(100.0)%
Acquisition expense(6)
535 — 535 100.0%
 Severance and transition costs (7)
500 500 100.0%
Change in fair value of contingent consideration(8)
— 687 (687)(100.0)%
Change in fair value of derivative warrant liabilities(9)
— 1,929 (1,929)(100.0)%
Adjusted EBITDA$50,683 $35,919 $14,764 41.1%
42


Six Months Ended
July 2, 2022June 26, 2021Variance
$%
Net Income$42,541 $13,025 $29,516 226.6%
Interest Expense17,643 15,602 2,041 13.1%
Income Taxes14,409 2,405 12,004 499.1%
Depreciation3,835 2,979 856 28.7%
Amortization14,871 13,623 1,248 9.2%
EBITDA$93,299 $47,634 $45,665 95.9%
Loss (gain) on extinguishment of debt(1)
— 2,415 (2,415)(100.0)%
COVID-19 related expenses(2)
109 209 (100)(47.8)%
Transaction related expenses(3)
— 10,398(10,398)(100.0)%
Facility relocation(4)
620 67553 825.4%
Share-based compensation(5)
— 5,210 (5,210)(100.0)%
Acquisition expense(6)
821 — 821 100.0%
 Severance and transition costs (7)
500 — 500 100.0%
Change in fair value of contingent consideration(8)
— 687 (687)(100.0)%
Change in fair value of derivative warrant liabilities(9)
— 1,929 (1,929)(100.0)%
Adjusted EBITDA$95,349 $68,549 $26,800 39.1%
Three Months EndedVariance
April 1, 2023April 2, 2022
$%
Net Income$25,982 $19,704 $6,278 31.9%
Interest Expense15,998 8,775 7,223 82.3%
Income Taxes9,017 6,607 2,410 36.5%
Depreciation2,180 1,857 323 17.4%
Amortization7,416 7,225 191 2.6%
EBITDA$60,593 $44,168 $16,425 37.2%
COVID-19 related expenses(1)
— 109 (109)(100.0)%
Restructuring charges(2)
590 103 487 472.8%
Acquisition Expense(3)
— 287 (287)(100.0)%
Adjusted EBITDA$61,183 $44,667 $16,516 37.0%
(1)Adjustment for loss (gain) on extinguishment of debt regarding the write off of unamortized fees and third-party fees as a result of the debt modification completed in February 2021 and the prepayment of debt in the amount of $61.6 million that occurred on June 7, 2021 in conjunction with the Business Combination. See “Liquidity and Capital Resources” section.
(2)Adjustment consists of signage, cleaning and supplies to maintain work environments necessary to adhere to CDC guidelines during the COVID-19 pandemic. See “Impact of COVID-19” section.section.
(3)(2)Transaction related expenses incurred as a resultAdjustments consist of the Business Combination on June 7, 2021 which consist of employee bonusesfollowing: 1) facility relocations, 2) severance and the transaction cost allocation.
(4)Expenses related to the facility relocation for ASTA and Janus Core.
(5)Share-based compensation expense associated with Midco, LLC Class B Common units that fully vested at the date of the Business Combination.
(6)Expenses related to the transition services agreement for the DBCI acquisition which closed August 18, 2021.
(7)Reflects one-timehiring costs associated with our strategic transformation, including executive leadership team changes, strategic business assessment and transformation projects.
(8)(3)AdjustmentExpenses related to the change in fair value of contingent consideration related totransition services agreement for the earnout of the 2,000,000 common stock shares that were issued and released on June 21,DBCI acquisition which closed August 18, 2021.
34

(9)Adjustment related to the change in fair value of derivative warrant liabilities for the private placement warrants.
Liquidity and Capital Resources
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, days sales outstanding, inventory turns, days payable outstanding, capital expenditure forecasts, interest and principal payments on debt and income tax payments.
Our primary sources of liquidity include cash balances on hand, cash flows from operations, proceeds from equity, debt offerings and borrowing availability under our existing credit facility. We believe our operating cash flows, along with funds available under the line of credit, provide sufficient liquidity to support Janus’sJanus’ short and long-term liquidity and financing needs, which are working capital requirements, capital expenditures, service of indebtedness, as well as to finance acquisitions.
Financial Policy
Our financial policy seeks to: (i) selectively invest in organic and inorganic growth to enhance our portfolio, including certain strategic capital investments and (ii) maintain appropriate leverage by using free cash flows to repay outstanding borrowings.
Liquidity Policy
We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our obligations under both normal and stressed conditions. At Janus, we manage our liquidity to provide access to sufficient funding to meet our business needs and financial obligations, as well as capital allocation and growth objectives, throughout business cycles.
Cash Management
Janus manages its operating cash management activities through banking relationships for the domestic entities and international entities. Domestic subsidiaries monitor cash balances on a monthly basis and excess cash is transferred to Janus to pay down intercompany debt,
43


interest on the intercompany debt and intercompany sales of products and materials and other services. International subsidiaries monitor excess cash balances on a periodic basis and transfer excess cash flow to Janus in the form of a dividend. Janus compiles a monthly standalone business unit and consolidated 13-week cash flow forecast to monitor various cash activities and forecast cash balances to fund operational activities.
Holding Company Status
The Company was formed to consummate the business combination and act as a holding company of Janus Core, as such it owns no material assets and does not conduct any business operations of its own. As a result, the Company is largely dependent upon cash dividends and distributions and other transfers from its subsidiaries to meet obligations. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or make other distributions to us.
Foreign Exchange
We have operations in various foreign countries, principally the United States, the United Kingdom, France, Australia, and Singapore. Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars.
LIBOR Reform
In connection with the potential transition away from the use of the LIBORLondon Interbank Offered Rate (“LIBOR”) as an interest rate benchmark, we are currently in the process of identifying and managing the potential impact to Janus. The majority of Janus’sJanus’ exposure to LIBOR relates to the Amendment No. 4 1stFirst Lien note payable which is discussed further below.
Debt Profile (dollar amounts in table in thousands)
Principal AmountIssuance DateMaturity DateInterest RateNet Carrying ValuePrincipal AmountIssuance DateMaturity DateInterest RateNet Carrying Value
July 2, 2022January 1, 2022April 1, 2023December 31, 2022
Notes Payable - Amendment No. 4 1st Lien726,413 February 12, 2021February 12,
2025
4.92%1
$718,346 $722,379 
Notes Payable - Amendment No. 4 First LienNotes Payable - Amendment No. 4 First Lien$726,413 February 12, 2018February 12,
2025
8.09%1
$662,295 $714,312 
Financing leasesFinancing leases651 — Financing leases2,044 1,043 
Total principal debtTotal principal debt718,997 722,379 Total principal debt664,339 715,355 
Less unamortized deferred finance fees8,885 10,594 
Less current portion of long-term debt8,229 8,067 
Less: unamortized deferred finance feesLess: unamortized deferred finance fees5,872 7,158 
Less: current portion of long-term debtLess: current portion of long-term debt8,649 8,347 
Long-term debt, net of current portionLong-term debt, net of current portion$701,883 $703,718 Long-term debt, net of current portion$649,818 $699,850 
(1)The interest rate on the Amendment No. 4 1stFirst Lien term loan as of July 2, 2022,April 1, 2023, was 4.92%8.09%, which is a variable rate based on LIBOR, subject to a 1.00% floor, plus an applicable margin percent of 3.25%.
As of July 2, 2022April 1, 2023 and January 1,December 31, 2022, the Company maintained one letter of credit totaling approximately $0.4 million and $0.4 million, respectively, on which there were no balances due.

On August 18, 2021, the Company completed a refinancing in the form of that certain First Lienthe Amendment No. 4 First Lien, in which the principal terms of the amendment were a reduction in the overall interest rate based upon the loan type chosen, new borrowings of $155.0 million and a consolidation of the prior outstanding tranches into a single tranche of debt with the syndicate. The Amendment No.4 First Lien is comprised of a syndicate of lenders originating on August 18, 2021 in the amount of $726.4 million with interest payable in arrears. The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of September 30, 2021 with the remaining principal due on the maturity date of February 12, 2025. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of LIBOR, plus an applicable margin percent (total(effective rate of 4.92%8.09% as of July 2, 2022)April 1, 2023). UnamortizedThe debt issuance costs are approximately $8.9 million at July 2, 2022. This refinancing amendment was accounted for as modification of existing terms and as such no gain or loss was recognized for this transaction and any third party fees were expensed with bank fees, original issue discount and charges capitalized and are being amortized as a component of interest expense over the remaining loan term.     
On February 5, 2021, Janus completed a repricing of its First Lien and First Lien B2 Term Loans in order to take advantage of available lower interest rates. The repricing allowed the Company to combine the two First Lien Term Loans into one Term Loan.is secured by substantially all business assets.
The revolving line of credit facility and Amendment No. 4 1stFirst Lien note payable contain affirmative and negative covenants, including limitations on, subject to certain exceptions, the incurrence of indebtedness, the incurrence of liens, fundamental changes, dispositions, restricted payments, investments, transactions with affiliates as well as other covenants customary for financings of these types.
4435


The line of credit facility also includes a financial covenant, applicable only when the excess availability is less than the greater of (i) 10% of the lesser of the aggregate commitments under the line of credit facility and the borrowing base, and (ii) $5.0 million. In such circumstances, we would be required to maintain a minimum fixed charge coverage ratio for the trailing four quarters equal to at least 1.0 to 1.0; subject to our ability to make an equity cure (no more than twice in any four quarter period and up to five times over the life of the facility). As of July 2, 2022,April 1, 2023, we were compliant with our covenants under the agreements governing our outstanding indebtedness.

On August 18, 2021, the Company increased the existing available line of credit facility with a domestic bank, from $50.0 million to $80.0 million, incurred additional fees for this amendment of $0.4 million and extended the maturity date from February 12, 2023 to August 12, 2024. There was $— and $6.4 million outstanding balance on the line of credit as of July 2, 2022April 1, 2023 and January 1, 2022, respectively.December 31, 2022. The interest rate on the facility is based on a Base Rate, unless a LIBOR Rate option is chosen by Janus. If the LIBOR Rate is elected, the interest computation is equal to the LIBOR Rate, subject to a 1.00% floor, plus the LIBOR Rate Margin. If the Base Rate is elected, the interest computation is equal to the Base Rate plus the Base Rate Margin. At the beginning of each quarter the applicable margin is set and determined by the administrative agent based on the average net availability on the line of credit for the previous quarter. As of July 2, 2022April 1, 2023 and January 1,December 31, 2022 the interest rate in effect for the facility was 5.0%8.3% and 3.5%7.8%, respectively. The line of credit is secured by accounts receivable and inventories.
On February 12, 2018, Janus entered into a revolving line of credit facility with a domestic bank replacing the predecessor revolving line of credit. The line of credit facility was originally for $50.0 million with interest payments due in arrears that matures on February 12, 2023. The available line of credit and maturity date was amended on August 18, 2021.
Statement of cash flows
(dollar amounts in thousands)
The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods. For additional detail, please see the Condensed Consolidated Statements of Cash Flows in the Unaudited Condensed Consolidated Financial Statements.
SixThree month period ended July 2, 2022April 1, 2023 compared to the sixthree month period ended June 26, 2021:April 2, 2022:
July 2, 2022June 26, 2021Variance
$%
Net cash provided by (used in) operating activities$43,152 $44,823 $(1,671)(3.7)%
Net cash provided by (used in) investing activities(5,223)(5,479)256 (4.7)%
Net cash provided by (used in) financing activities(10,469)(69,503)59,034 (84.9)%
Effect of foreign currency rate changes on cash66 191 (125)(65.4)%
Net increase (decrease) in cash and cash equivalents$27,526 $(29,968)$57,494 (191.9)%
(dollar amounts in thousands)
April 1, 2023April 2, 2022Variance
$%
Net cash provided by (used in) operating activities$50,246 $24,777 $25,469 102.8 %
Net cash provided by (used in) investing activities(7,055)(2,880)(4,175)145.0 %
Net cash provided by (used in) financing activities(52,158)(8,405)(43,753)520.6 %
Effect of foreign currency rate changes on cash233 (58)291 (501.7)%
Net increase (decrease) in cash$(8,734)$13,434 $(22,168)(165.0)%
Net cash provided by operating activities

Net cash provided by operating activities decreasedincreased by $1.7$25.5 million to $43.2$50.2 million for the three month period ended July 2, 2022April 1, 2023 compared to $44.8$24.8 million for the three month period ended June 26, 2021.April 2, 2022. This was primarily due to an increase of $29.3$7.5 million to net income adjusted for non-cash items and noncash adjustments, as well as gaining efficiencies within our net working capital balances as the three month period ended April 2, 2022 had an investmentincrease in net working capital balances of $31.1$7.9 million, to continue to support revenue growth, which was driven bywhile the three month period ending April 1, 2023 had a $16.3 million increase in accounts receivable and deferred revenue offset by a $5.4 million improvement in prepaid and other current assets, $0.8 million improvement in inventory, $13.9 million decrease in accounts payable and a $7.1 million decrease in other accrued expenses. Additionally, there was a $0.2 million decrease in other assets and long-term liabilities.of net working capital balances of $10.1 million.
Net cash used in investing activities

Net cash used in investing activities decreasedincreased by $0.3$4.2 million for the three month period ended July 2, 2022April 1, 2023 as compared to the three month period ended June 26, 2021.April 2, 2022. This decreaseincrease was driven primarily by the acquisition of G&M Stor-More Pty Ltd. made in January 2021 with a net payment of $1.6 million which was partially offset by a $1.3$3.2 million increase in capital expenditures and a $1.0 million increase in cash paid for the Indemnity holdback liability related to the ACT acquisition for the period ended July 2, 2022April 1, 2023 as compared with the period ended June 26, 2021April 2, 2022 to continue to support our strategic growth initiatives.
Net cash used in financing activities
Net cash used in financing activities decreasedincreased by $59.0$43.8 million for the period ended July 2, 2022April 1, 2023 as compared to the period ended June 26, 2021.April 2, 2022. This decreaseincrease was driven primarily by a decrease of $59.2 millionan increase in principal payments ofon long-term debt anddue to a $4.2$50.0 million decreasevoluntary principal payment in net distributions paid to members whichthe period ended April 1, 2023, this was partially offset by a $6.4 million pay downpayment on the line of credit. The decreasecredit in the principal payments of long-term debt was primarily attributed to the prepayment of approximately $61.6 million of existing 1st Lien Term Loan Debt upon the closing of the Business Combination in June 2021. As a result of the business combination, the Company received $334.9 million related to proceeds from the merger and $250.0 million in proceeds from the PIPE Investment. In addition, the Company paid $541.7 million to Midco, LLC unitholders and $44.5 million in transaction costs.
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period ended April 2, 2022.
Capital allocation strategy
We continually assess our capital allocation strategy, including decisions relating to M&A, dividends, stock repurchases, capital expenditures, and debt pay-downs. The timing, declaration and payment of future dividends, falls within the discretion of the Janus’s Board of Directors and will depend upon many factors, including, but not limited to, Janus’s financial condition and earnings, the capital requirements of the business, restrictions imposed by applicable law, and any other factors the Board of Directors deems relevant from time to time.
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Contractual Obligations
Summarized below are our contractual obligations as of July 2, 2022April 1, 2023 and their expected impact on our liquidity and cash flows in future periods:periods (dollar amounts in thousands):
TotalLess than 1 year1-3 years3-5 yearsThereafter
Long Term Debt Obligations$718,997 $4,120 $14,464 $700,404 $
Long Term Supply Contracts (1)
38,343 38,343 — — — 
Other Long Term Liabilities (2)
42,524 2,722 9,889 7,858 22,055 
Total$799,864 $45,185 $24,353 $708,262 $22,064 
Total20232024-20252026-2027Thereafter
Debt Obligations$664,339 $6,524 $657,507 $297 $11 
Supply Contracts (1)
20,756 7,576 13,180 — — 
ASC 842 Liabilities
45,043 4,425 10,021 8,050 22,547 
Total$730,138 $18,525 $680,708 $8,347 $22,558 
(1)Long Term Supply Contracts relate to the multiple fixed price agreements.
(2)Other Long-Term Liabilities relate to operating lease liabilities.
Long-Term Debt Obligations is comprised of an Amendment No 4 First Lien Term Loan (see Note 8 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion) that expires on February 12, 2025. The Company’s intention is to amend and extend or refinance this loan well in advance of the current maturity date. In addition, the Company has finance lease liabilities included in long-term debt.

Other Long Term LiabilitiesASC 842 liabilities consist of operating lease liabilities for real and personal property leases with various lease expiration dates (see Note 149 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion). The amount listed in the thereafter category is primarily comprised of five real property leases with expiration dates ranging from 2026 – 2036.
The table above does not include warranty liabilities because it is not certain when this liability will be funded and because this liability is considered immaterial.
In addition to the contractual obligations and commitments listed and described above, Janusthe Company also had another commitment for which it is contingently liable as of July 2, 2022April 1, 2023 and January 1,December 31, 2022 consisting of an outstanding letter of credit of $0.4 million.
Critical Accounting Policies and Estimates
For the critical Accounting Policies and Estimates used in preparing Janus’sJanus’ Unaudited Condensed Consolidated Financial Statements, Janus makes assumptions, judgments and estimates that can have a significant impact on its revenue, results from operations, and net income, as well as on the value of certain assets and liabilities on its consolidated balance sheets. Janus bases its assumptions, judgments and estimates on historical experience and various other factors that Janus believes to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. The Company’s critical accounting estimates requiring significant judgement that could materially impact the Company's results of operations’operations, financial position and cash flows are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended January 1,December 31, 2022. Since the date of the Company’s most recent Annual Report, there have been no material changes in the Company’s critical accounting estimates or assumptions. Other than the following, the Company's significant accounting policies have not changed materially from those described in its Annual Report on Form 10-K as of January 1, 2022.
Emerging Growth Company Status
Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by the FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. Janus qualifies as an emerging growth company. Janus intends to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. Accordingly, the information contained herein may be different than the information you receive from other public companies.
Allowance for credit losses
On January 2, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“CECL”), which changes the impairment model for most financial
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assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. The Company selected the loss-rate method to be used in the CECL analysis for trade receivables and contract assets.

The Company determined that pooling accounts receivable by business units was the most appropriate because of the similarity of risk characteristics within each line such as customers and services offered. Historical losses and customer-specific reserve information that are used to calculate the historical loss rates are available for each business unit. During the pooling process, the Company identified two distinct customer types: commercial and self-storage. As these customer types have different risk characteristics, the Company concludes to pool the financial assets at this level within each business unit.

Commercial customers typically are customers contracting with the Company on short-term projects with smaller credit limits and overall, smaller project sizes. Due to the short-term nature and smaller scale of these types of projects, the Company expects minimal write-offs of its receivables at the Commercial pool.

Self-storage projects typically involve general contractors and make up the largest portion of the Company’s accounts receivable balance. These projects are usually longer-term construction projects and billed over the course of construction. Credit limits are larger for these projects given the overall project size and duration. Due to the longer-term nature and larger scale of these types of projects, the Company expects a potential for more write-offs of its receivable balances within the Self-Storage pool.
See Note 2 to our Unaudited Condensed Consolidated Financial Statements for further discussion of allowance for credit losses.
Recently Issued Accounting Standards
See Note 2 to our Condensed Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a discussion of recently issued and adopted accounting pronouncements.
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in exposures to market risk since January 1,December 31, 2022. For information regarding our exposure to certain market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2022.


Item 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, with the participation of certain members of management (collectively “the management team”) evaluated the effectiveness of our disclosure controls and procedures as of April 1, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, or SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’sCompany’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls
As discussed in Item 9A “Controls and procedures as of the end of the period covered by this Form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were ineffective due to the existence of the material weaknesses discussed further below.
Changes in Internal Control Over Financial Reporting
Other than the remediation activities described below, there were no changesProcedures” in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly2021 Annual Report on Form 10-Q, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Remediation Efforts to Address Material Weaknesses in Internal Control Over Financial Reporting
As discussed most recently in the Company’s quarterly report filed on Form 10-Q on May 17, 2022 for the quarterly period ended April 2, 2022,10-K, the Company identified an unremediated material weaknessweaknesses related to the Control Environment and Control Activities elements established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”) as of December 26, 2020.31, 2022.
The material weakness relatesBased on the evaluation of our disclosure controls and procedures as of the end of the period covered by this form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded, as of such date, our disclosure controls and procedures were ineffective due to the Company’s failure to implement and maintain appropriate information technology controls, including appropriate logical security application and segregationexistence of duties. The lack of these information technology controls (when combined with procedure and control deficiencies) prevent the Company from achieving complete, accurate, and timely financial accounting, reporting, and disclosures. As a result, monitoring was not at a sufficient level of precision to provide for the appropriate level of oversight of activities related tomaterial weaknesses discussed further below.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control in connection with itsover financial reporting. Specifically,reporting during the Company does not maintain an adequate review and approval process for certain journal entries and account reconciliations. In addition, users had excessive rights which caused segregation of duties conflicts and users possessed excessive administrationquarter ended April 1, 2023, that have materially affected, or security access across several of the IT applications that supportare reasonably likely to materially affect, the Company’s internal control over financial reporting.
Remediation of Material Weaknesses
Remediation of the identified material weaknesses and strengthening our internal control environment is a priority for us in 2022. In responseus. Management continues to make progress towards remediating the material weaknesses, the Company has hired a Director of Internal Audit and has engaged third party consultants to assess the design and implementation of controls over financial reporting. The Company has undertaken an initial assessment of the design and implementation of controls over financial reporting. The initial assessment, which is still underway, has identified additional control gaps within business process level and information technology controls.
The Company has increased our personnel resources and technical accounting expertise within the accounting function with the hiring of a new Chief Financial Officer as of July 1, 2022, as disclosed on Form 8-K filed with the Securities and Exchange Commission. Further, we’ve hired additional personnel for the accounting and information technology function in order to address inadequate segregation of duties and provide proper oversight in connection with financial reporting. Specific corrective actions are also underway to address the deficiencies relatedcontributing to the material weaknesses. We have also entered into an agreementThe remedial actions include, but are not limited to, the following:

General Information Technology Controls – Management will design and are currently workingimplement controls to monitor user access and segregation of duties in a timely manner to key information systems used in the financial reporting process. Additionally, management will create a transaction log of administrative users’ activity and review for unauthorized activity.
Revenue - As part of the financial statement close process, management will: 1) provide additional oversight to project managers around the review of the job completion progress on open installation projects; 2) design management review controls over the stand-alone selling price on contracts with a third-party consultant to assist withmultiple performance obligations; and 3) design and implement controls over cutoff for certain point-in-time revenue and maintain adequate documentation of controls which ensure the efforts to effectively remediate the identified material weaknesses.proper cutoff for point in time revenue.

The material weaknesses cannot be considered remediated until the applicable controls have been identifieddesigned and implemented and have operated for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.
Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions, and cannot provide absolute assurance that its objectives will be met. Management continues to refine and assess its overall control environment.


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PART II—OTHER INFORMATION


Item 1.    Legal Proceedings

See Note 1816 to the Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A.    Risk Factors

For information regarding factors that could affect the Company'sCompany’s results of operations, financial condition, and liquidity, see the risk factors discussed in Part I, Item 1A “Risk Factors” in our 20212022 Annual Report on Form 10-K. Except10-K for the risk factor below, there have been no material changes to the risk factors disclosed in Part I, Item 1A of our 2021 Annual Report on Form 10-K.

The ongoing conflict between Russia and Ukraine may adversely affect our business and results of operations
Due to the international scope of our operations, political, economic, and other conditions in foreign countries and regions, including geopolitical risks such as the current conflict between Russia and Ukraine, may adversely affect our business and results of operations. As a result of the Russia-Ukraine conflict and related sanctions, energy and commodity prices have spiked upwards, and foreign trade transactions and supply chains have been severely affected. Some of our logistics suppliers and suppliers of component parts have increased their prices as well, and prices charged by any alternative suppliers may not be as favorable as those we had obtained in the past. At this time, we cannot reasonably estimate the full impact of the conflict between Russia and Ukraine on the global economy and our business. However, ensuing economic conditions may negatively affect potential and existing customers in certain of our end markets, which could potentially result in declines in demand for our products. If the Russia-Ukraine conflict and related political tensions escalate, our business, financial position, results of operations and cash flows may further be adversely affected.fiscal year ended December 31, 2022.


Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.    Defaults upon Senior Securities.

None.

Item 4.    Mine Safety Disclosures.

Not applicable.

Item 5.    Other Information.

None.

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Item 6.    Exhibits.
Exhibit NumberDescription
2.1
2.2
3.1
3.2
4.1
10.1
10.2
10.3
10.4
10.5
10.610.1+
10.2+
10.710.3+
10.810.4+
10.9
31.1*
31.2*
32.1**
32.2**
101.INS101.INS^Inline XBRL Instance Document
101.SCH101.SCH^Inline XBRL Taxonomy Extension Schema Document
101.CAL101.CAL^Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF101.DEF^Inline XBRL Taxonomy Extension Definition Linkbase Document
50


101.LAB101.LAB^Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE101.PRE^Inline XBRL Taxonomy Extension Presentation Linkbase Document
104104^Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*    TheseFiled herewith.
** The certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002in Exhibit 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not filedbe deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporatedexcept to the extent that the registrant specifically incorporates it by referencereference.
+ Management contract or compensatory plan or arrangement.
^ Submitted electronically with this Report in any filing underaccordance with the Securities Actprovisions of 1933, except as shall be expressly set forth by specific reference in such filing.Regulation S-T.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:August 16, 2022May 11, 2023By:/s/ Anselm Wong
Name:Anselm Wong
Title:Chief Financial Officer
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