- Earnings call transcript Q3 2022

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Operator

Hello, and welcome to the Janus International Third Quarter 2022 Earnings Conference Call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. of and President Vice Rohlwing, Investor FP&A. Relations John you, Mr. Thank Rohlwing.

You begin. may

John Rohlwing

have all and the call. our our you have release also operator, support that you, in presentation this Please for this We our at morning. issued website thank that posted conference Thank found we earnings call, of you joining which Investors note be earnings section XXXX third hope janusintl.com. in a seen of quarter can

to latest regarding call our to conference update those future may we anticipated the Commission differ contained today's the in may reminder, results and release the you statements, statements earnings on company's is note and are to from forward-looking review based undertake a factors actual company's that current materially These prospects. differ important As those the results anticipated. them. results It company's from to plans periodic we encourage include Exchange Factors and Securities that carefully. no are filings duty and and with actual could cause expectations

reconciliation the your our to overview Chief provide questions. to and I will earnings measures measures I'm of filings will will comparable Ramey. joined an adjusted open before In financial results our Chief up certain update; Officer, discussion EPS. of non-GAAP Anselm over turn our Financial with income, point, adjusted Executive including see measures. this Officer, adjusted the adjusted outlook or business an Wong, Ramey to EBITDA, Please their and financial who our will providing most we be EBITDA our Jackson, a give a and At non-GAAP discussing for margin, call addition, of continue GAAP today, these and operations call net we release directly today by who

Ramey Jackson

employees It We which uncertainty, that particularly to is on Good of John. self-storage continue or sustained our yet greenfield these everyone. our drive possible the we especially economic be and the within These fundamentals momentum to an you, should significant want continue fact of of wouldn't and to build fundamentals combined a results in our of personally the backdrop new a hard them of illustrates and and the period morning industry business the add moment take our need demand effort capacity, for to company. outstanding encouraging as their of that investment up to customers of all is achieved results, high without a thank against expansions enjoy another results and also conversions we our how quarter XXXX, professionalism testament to delivered industry it. by in work. I execution Thank

with conversions and improvement, produced turning expect solid benefiting again included to come. specific the and addition through the business power our business. were and that side replace continue meaningful greenfield tailwinds how margin the proud much integration end strong each for to expansions of exposure customers, effort our The I industry thoughts synergies just results generation. are by strong our is There we that offerings with our there. our acquisitions those to to The results of as excited installation and pace. a enjoy activity expectations results. needed drive construction rebuild and choice expectations integration additional and also I'm today for us as a continues expands consistent and robust DBCI to and add two low-voltage restore, our addition in new above respect realize our capabilities ACT. value to team's capacity to years in at look its markets. key quarter faster activities the around becomes cash on Now, adding some a from of enhance outstanding high-quality, driven revenues, I'm quarter. to to in quarter, integration leverage, strong from our meaningful performance, a is coming strong once helping decisions operational initial more both, our we the and by providing that it additional another portion and for record ACT's our forward fueling our fundamentals investment to in decrease The had financial Janus throughout Noke Noke color of described Growth inherent

other an basis. highlights XX%, period a to The compared approximately for to delivered as the the our sales or of revenues all which in the continue we million, the acquisitions, DBCI and ACT financial year from contributed growth $X.X and approximately on quarter. benefit leading reflected the an the shifting Now, in channels commercial We the again organic contributions increase consolidated with $XXX of same once quarter. million strength of to way XX% and from

improvement higher of year-over-year. in Our points of XXX XX% basis adjusted of which approximately adjusted an EBITDA QX million than EBITDA margin $XX came of an represents XX.X%, XXXX,

business. initiatives impact, continue actions, a quarter, parts to During we cost-saving experience helping costs of volume commercial many higher in our and offset had the significant growth to

strong Our detail free conversion was flow our will net flows, to cash of income. XX% generate Anselm Year-to-date, company cash which shortly. also continues adjusted further discuss in

about target position our leverage conversion while times X.X solid us value-enhancing I'm a than less becoming want expect to point of expand to XX months over proud on leverage. We target the within been being opportunities. to for to focus flexible cash time, range public our company. in remain achieve to on range strong after able that EBITDA, I our extremely X.X putting adjusted a maintaining we've

growth the can put the balance sheet we a with analyze healthy prudent and where inorganic business strong run to while uses being able both opportunities. organic enviable and execution, cash Solid underlying in of us today position fundamentals

and Our end markets all position stakeholders. long-term resilient. remain our value strong to leverage We look create to market share and capture additional leading for

overview outlook full Anselm, the All revenue I'll and the EBITDA increased of an for that, and over the in has for updated resulted in an call of year. With this outlook XXXX. financials turn to for

Anselm Wong

once in continued in In RX up Commercial at XX.X%, in revenue from versus from markets line this need quarter sales million channel up rolling door XX.X% our gains quarter, new solid growth good share both XX.X% commercial sheet basis, roll-up segment's again on RX Other by product benefit The compared ASTA services. synergy three year were and XX.X% was growing growth segment, demonstrates end of gains realization sales was of quarter. driven steel market $XXX.X from by and and continued all and the driven also our construction quarter and the our was additions It door in of to form construction third the impressive the strong up of driven capacity new focus expansions. as greenfield was XX.X% retail in capacity customers. many an continues of Ramey, sites, to XX.X% bolstered Other, be XX.X% prior offerings of the conversions additions Commercial by execution remains and driven available that weighted by new and to channels. the The our at RX by is prior opposed the the and to market year morning, capacity towards among new brick-and-mortar the organic DBCI. another Thanks quarter everyone. our

to increase we match costs closely business all of is initiatives how caused times and and have and to positive lower see to We from pent-up growth year, construction making the business. markets, that realizations EBITDA and continued our us more expectations. other revenue forward ahead the margin new pace costs through EBITDA keep steps flow in raw material the as RX, all consolidated quarter those we continued seeding our our ago synergies, offset continues million in eliminating primary quarter compared for the input for margin delays acquisitions to a by logistics. sales. and from points despite and inflationary high by to basis Higher of pressures to cost pandemic continues all ago ACT solid XX.X% are year labor prolonged labor profile of results. basis logistics margins grow offset acquisition demand, strategy raw of quarter. the our progress synergies end and The closer impact commercial inflationary to our Higher our view demand by Adjusted was $XX.X to acquisitions continue along actions construction, are working. combination XXX the EBITDA occurring address permitting the and recovery representative more of a our at taken costs in through to and ACT legacy legs revenue help expected reflect steel year moves XQ of year our quarter is labor the much and material to inflationary an with impacts mix contributions improved up of price DBCI demand last of of growth, from fourth signs worked XX.X%, the across and contracts synergy year-over-year These compared commercial from impacts. logistics. and cost price partially actions, was of are expectations Since Adjusted of for and of On as improve in contracts our driver of occurred high was higher cost last DBCI going than to designed volume savings albeit and we growth XXXX in as the commercial design

up adjusted year SG&A quarter reduced XXX.X% of during $XX.X by $X.XX solid third somewhat of quarter in the net quarter was compared XXXX. expense. had Adjusted which share third ago the net to the cash flow income increase per from earnings in quarter. We by For favorably million, generation. was $X.XX we've offset of another quarter, Adjusted of income higher an revenue impacted XXXX, diluted

approximately Third trend flow $XX.X approximately to cash adjusted our strong operating XX% million of the of free cash. cash quarter net net conversion year-to-date, income and income free was represented adding $XX.X multiyear This from for flow activities cash to million. quarter a XX% conversion and of was

the working investment than income in of conversion lower rate was flow. cash capital net free primary of typical driver to Continued the

a debt, equivalents second the down net cash net of months end to and X.X we quarter of at from with quarters. closed million return expect total conversion of We leverage in the levels times sheet the million flow of more perspective, debt typical income trailing $XX.X to XX $XXX.X cash X.X EBITDA, coming the of free From of a balance and quarter. net to adjusted times

our Our performance to quickly. delever ability demonstrate to continues

our are of within We maintaining on our times. X.X now X.X range targeted leverage focused to

increase continued pleased X% compared full ACT. our $XXX billion, results, At outlook. million up I'm and current full a results, the $XXX to end $X.XX by markets, the announce we our this EBITDA. of Revenue our of and on our solid DBCI now to XXXX be commercial raising year a revenue based volume-related in year from Turning that outlook XXXX to for to previously. primarily year-to-date of strong is backlog adjusted additions expected are and range range to of of the growth full million combination $XXX actions midpoint the XX. and driven and to organic represents year million visibility

see to XXXX XX.X% range we in We sales growth At be reflect expect million. strong EBITDA across the this $XXX the We results. expect up increase the to fundamentals $XXX all previous million underlying adjusted to the to three represents the year million in the range of full fourth $XXX versus quarter a $XXX now million, midpoint, of from channels.

improvement quarter, line margin in in higher the closing you. the third We I for in business. slightly resulting Ramey now back sequentially, to Thank EBITDA a call to margins turn quarter, fourth to adjusted our remarks. be year solid in from of the will expect

Ramey Jackson

you Thank again, Great. Anselm.

ahead results These We strong innings well of synergies early a EBITDA the multiyear what as schedule power execute significant us. earnings we of margins, for is the acquisition environment. realized deliver a by recovery build please. of schedule. the margin delivered ahead the leverage up Janus attained our we term. results targets we we platform, continue reflect and record are to achieved revenues in Our strength now and demand the in the we our expect look Operator, team markets. execution believe in of testament on Q&A Thank over you growth the lines performance joining to strong our open for can will to I again long this end and as momentum

Operator

line you. from question Markets. we now proceed. Ladies Please conducting gentlemen, with first the Capital a Hammond and Jeffrey [Operator Our session. be will Thank comes KeyBanc Instructions] of question-and-answer

David Tarantino

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

Ramey Jackson

David. Hey,

Anselm Wong

Hey, David.

David Tarantino

there's integration margins the to on a maybe implied you price more the guidance? quarter and us Could also between just third realization give the little color like of bit ACT? from both benefits moving of and kind sounds pieces some Maybe DBCI volume, splitting what's it in out and

Anselm Wong

step-up if margins previously it's at question. expected growth the out we and about XX% increase we XX% look the organic a to look discussed, of it happened ballpark, what if inorganic our breaks balance with have quarter was Sure you price QX. from to you due this And great about of And from at about margin. as XX% the was

David Tarantino

then your both the And impressive. just sustainable share thoughts performance to has of give been maybe Great. be? Okay. the late of commercial really can you kind gains Maybe growth could how as and on flipping

Ramey Jackson

great question. that Look, This is I business Yeah, to continue in segment. we Ramey. think outperform

that not our our but products, products new our our I sticky. think services only it's are to proven customers

and different right? interesting of geared are those and a those But of that more kind sales they're multi-end accounts. So, servicing geared usage, So, we're lot retaining R&R. what's kind we're is what out markets to finding of

of new of or construction type a a it's replacement. less sale, more specification of So, more

question of everything So, retain or good can didn't type going expect we're growth, to this certainly to, on it's we We to but sustainability. these forecast a do customers.

David Tarantino

guys. Thanks, Great.

Ramey Jackson

Thank you.

Operator

Our from next question Company. the line with The Reuben Please Benchmark Garner of proceed. comes

Reuben Garner

you. morning, Thank Good everybody.

Ramey Jackson

Reuben. morning, Good

Reuben Garner

margin margin in the gross EBITDA we're right what's gave of to base the year quarter? would think next there Just talk year? for in for guidance QX seasonality margin? in talk that any declines an the QX, you the margin progression. kind about is fourth a from the way or is standpoint? So – or increases year, you that's to growth from volume the where those exit the Are or progression implied to And decreases And to that just next drive the about and about going can for

Anselm Wong

No, it's a great way to put it.

question. for thanks the So

what or what's next implied point saw QX into about a going expectation you QX. into way step-off think you'll good see it's again our year. is So is that And in is to in the – what

lower there's same we they're how actually we'll an as the start think of still the Year, about said steel costs QX. New uncertain I just market prices into that's think, at still the time, want to kind hopefully, start in But seeing of probably managing. And that you roll and it. I some it's seeing that remind us other should we'd that we

Reuben Garner

Okay.

had? the So come be other to upside as that initiatives in if the there costs able pricing words, steel hold down, you've could you're

Anselm Wong

the need Exactly. in we we'll said prior be. But calls, I think competitive as we be market to where

But just a how I that balance should kind it's looking it. think that's think of at. So, we're about

Reuben Garner

changes you're last and on thoughts Okay. the the Great. conversations And that thing, business? then self-storage in year market on in Obviously, customers thinking with mortgage any months any trajectory a standpoint rates of an investment housing end? on they're their as having next lot the eyes sort from few general, how of that to in your about and

Ramey Jackson

some the is then to think pandemic usage. created and warehouse to with and tenant work-from-home, also drivers additional perspective. and Look we're When kind more I the still But back kind seasonality drivers a were from of things commercial think you decluttering are are more robust. space tremendously expensive a commercial starting see getting lot about normalization actual of that

certainly -- be will the long-term and right? So housing that's everything of of that's So are sustainability. to kind and guess those meaningful robust. drivers the impact how at seems the question additional backdrop But is they I how market,

services visibility. as our very those kind forward and very, design a and advance still of conscientious of overall of We're things perspective well. we the very our moving of of certainly from or of robust And kind optimistic. kind two remain economy. But in we're year strong, kind that notwithstanding terms global and in Reuben, of indicators know you As have robust leading great all seem

Reuben Garner

on luck Great. and the results Thanks. Congrats going forward. good

Ramey Jackson

you. Thank

Anselm Wong

you. Thank

Operator

next Moore Our from of the comes question Daniel proceed. CJS line with Securities. Please

Daniel Moore

and Congrats strong results. Good Ramey for really on morning. Thanks the question, taking Anselm.

Just the about as what demand looking of question by demand change think piggybacking region, in differences at across the getting US. then and any are seeing or to kind the on well? construction regions you And meaningful we as internationally different RX

Ramey Jackson

Yeah. question. Great

you of more I at this kind around is look think pandemic-driven. when demand the

the brought MSAs facilities just being being think work being seeing RX tertiary upgraded through a in capacity when in old more lot our we're online tremendous amount of and But kind a suburban and about kind you new markets. top M&A of then That's deployed competitive. seeing conversions. construction of to remain You're the also

now optimistic international, around early And a of so there. capacity, I'm that's kind to right And obviously a demand telling around or mess demand there's still pickup as are still tremendous that our as the of what we're we're relates -- end Again, our seeing kind is of it with to it market, and us very new relates sorry pipelines it the moves country. then indicators self-storage. amount as Europe

So in very drive what we we're terms the business. to see of indicators early by encouraged our

Daniel Moore

Very couple then things. a just helpful. And -- of housekeeping

of your kind quarter leverage continues capacity borrowing Just to where lower? sit as exiting today we blended interest in rate take the at

Anselm Wong

Dan. Thanks, Yeah.

X.X leverage, look X.X I XX range. think improved at think to again well range. And our as you balance saw we again delevered down cash you million I to if as the

terms was of X% the a range and industry, we the you in believe we rate rate blending kind I the got. In know that as that floating approximately of end have

affordability and I or to we're with that generating. a view, cognizant a options thing in think in time, of that cash looking of manage. increase that position we're terms the flow point good I good current in we're of all rates us the management at still interest that we do continuous makes range from And we're think what is strong sense the an the I'm at for

Daniel Moore

being your you would to in little high-end internal bit down in a with comfortably that bit start to did more of environment? you below of or a investment, rising faster lean to just you paying kind range, a in addition of continuously question, terms on maybe M&A target little debt indicate now No look rate seem the

Anselm Wong

the out definitely decision. for Yeah, the on Sure. look always what's we're capital allocation right

all options there. on table mentioned are think you that including look at ones I the the we

kind Ramey of further, us the think I I think as it but we more at. that can is bit a look on everything give table

Ramey Jackson

Yeah.

you a where are important us today. who and are us. we part to is of know, It's to puts M&A As very we

forward. relates it as we're looking at opportunities some and good So valuations to being moving certainly there there it will like opportunistic be and feels opportunities

So -- that. but like Anselm enjoying said, about and really optionality it's

Daniel Moore

and right. you this at this few out. just nice level, little missing, closer least a is last notwithstanding high days. story, differentiated it brush? of some I'll customers for But the about and little to some lows, customers XX-week All talk see not Last shares that the Thanks. self-storage of from jump Maybe but bit your for be bit of to are maybe get REITs. your may Janus of what how with of me same of the We're publicly traded but -- the as kind necessarily a morning your story paid investors but those some recovery,

Ramey Jackson

a it. I appreciate Yeah. very That's question, Dan. good

the is think diversity way can you our that to answer best I So platform. look of at the

XXX% not we're So construction. to new tied

when that tremendous Noke construction have drivers self-storage, growth new than smart right? investment portfolios. And existing typically, entry seen are commercial we've of our into a we've slowdown, We RX, -- kind seen around

RX, redevelopment. music that's One billion is, our kind one our it's top of listed towards customers announced for opportunity us. allocation $X And the accounts capital to that of while a XXX% of is ears

I think platform to as commercial the well. testament notwithstanding, a and it's the the aspect diversity then So of

the a we've revenue it's very achieve our And gains part make that market the been We're that but terms big opportunity continue it's of again, Smart of becoming growing. meaningful and a a meaningful it's also again today – share to to segment. in see our Nokē greater not happy able it of We revenue. more with progress then, Entry in part

the industry kind of to of the speak. opposed service so end between, provider So market into think that's kind to I the difference as the

Daniel Moore

Thanks again for it. color. I appreciate

Ramey Jackson

Thanks, Dan. Yeah.

Anselm Wong

Thank you.

Operator

line Stanley comes of proceed. Our Please next the from with Elliott question Stifel.

Stanley Elliott

Hi. you, taking question. everybody. Thank Good morning, for the guys

what mean you of tests out I things are the mentioned of still being small. there Noke the in are some you marketplace start I other to position doing? some the And maybe grow. of from Or up mean this what hearing are get that the You some you're you're traction? to us let's do ramp how think? can things quickly more doing to

Ramey Jackson

of from scaling get of of its really we're terms it's What in our is terms the installation right. that the look, us ACT growth an future out to the we're at and low the moment. They're we're in perspective expectations doing par professionals expecting. question, Great voltage is on that acquisition with Yeah. it for the customer process growth in experience allowing

it's of outsized see of their going largest integrates that terms with working We're the into certainly in growth to the know In to we happen. operators platforms. kind business how

once around And the opportunity our as And Entry with really in can a so of so way. opportunity accelerate for Stanley meaningful other in expand sensors, keep from there's we're it's perspective in get really just that mind, a it's to optimistic baseline just baseline we lot opportunity that Smart So well. a right? Noke the and

Stanley Elliott

Ramey, Just remind have what backlog does visibility. here? Could a sort And us curious, backlog visibility of good mentioned you bit how of your you kind good little extend? far this you

Ramey Jackson

Yeah.

of right? we're work design go. of the we're So a starts from or on lot a that in even even advance, looks and doing two work lot may pipeline a doing year design not projects Our construction design before

construction So a around there. our burn of we And new great on and have kind our it's visibility rate relates backlog it to year as backlog.

good into XX the from in our perspective again, months. visibility So next very coming what's

Stanley Elliott

Perfect time luck. best guys. your congratulations of Thanks and for and

Ramey Jackson

you. Thank

Anselm Wong

Thank you.

Operator

comes from next Instructions] line Our the proceed. of Please Lovallo [Operator with John question UBS.

John Lovallo

Thanks morning my questions. for Good guys. taking

maybe correctly, organic pull is? that construction. for quantify remember fourth And the hoping adjusting in expect could you you in quarter the new was would I growth of one XXXX I quarter? fourth forward some had that first The revenue is if what

Ramey Jackson

that relates things That kind of of guess to pandemic I related permitting really I was nature. QX as year. can it on last hit and of

relates and in through expect we new rates I of backlog growth construction forward. it to that's kind more as new moving normalized our think flowing construction normalized

John Lovallo

you. Got

industry Okay. but macro a we touched those about next this currents of And of but deteriorating then, Ramey, you organic an cross before self-storage as in How from kind into spot. kind revenue dynamics year do move this you on good with perspective? the think

Ramey Jackson

Again, normalization assume construction RX meaningful there's and facilities momentum with the drive there of competitive. the a is is And to asset just well. in let's towards Yeah, look meaningful today's up new upgrade to older and the also opportunity standards age opportunity self-storage be question. great bringing class at the technology as

from you our it's perspective when a look at I So very growth drivers see outlook. the -- platform my on robust

John Lovallo

it. Got Thanks guys.

Ramey Jackson

John. Thanks

Anselm Wong

Thanks.

Operator

for you. remarks. session. call turn Thank like to I This to the Jackson concludes the would Ramey back question-and-answer closing

Ramey Jackson

Thank day. you updating today. us Have you support progress. forward joining to our International We of appreciate on Janus your look and great a everyone for

Operator

This you. concludes today's Thank conference.

You your you now participation. Thank may for disconnect.

Janus International (JBI) 11 Nov 222022 Q3 Earnings call transcript