Earnings call transcript Q1 2023

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Operator

Hello, and welcome to the Janus International First Quarter 2023 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 like to now turn the call over to your host, Mr. of and President Vice Rohlwing, Investor FP&A. Relations John you. Thank

You may Rohlwing. Mr. begin,

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 first hope janusintl.com. in a seen of quarter can

regarding call our to conference update future may we today’s the reminder, results statements statements on company’s is note and forward-looking based undertake a actual anticipated. company’s current may These prospects. important As the them. It to plans materially include differ those and that no are duty expectations, from

results results Securities the to encourage cause from latest review differ carefully. company’s the those could we are in Exchange release that and filings anticipated earnings factors you Commission, and Factors actual periodic contained and with to

In adjusted comparable certain addition, and Please we will release directly measures see non-GAAP net a of measures our most adjusted and adjusted these margins, EBITDA, today, their to income EPS. reconciliation earnings measure. providing adjusted financial non-GAAP for EBITDA filings GAAP be discussing or including

continue we Chief outlook our questions. a joined and today your will Jackson, the and provide who discussion will overview results Officer, I’m by of up financial before of operations and with Executive Anselm call our who Officer, Wong, Ramey update; an our given business our open for Chief Financial

over At this Ramey. to call the turn point, I’ll

Ramey Jackson

insulated be the the the start in broader XXXX, uncertainty. of another our our the and morning, largely continues demand bullish we robust on macroeconomic momentum record remain outstanding end softest fundamentals XXXX. typically achieved John. first considering quarter Customer year. Good quarter you, Thank delivered across Notable our see financial everyone. results is from as to Building markets we operational long-term of to

that are to success fundamentals again, performance like enjoying sustained employees strong of high our should their our solutions Once self-storage, achieve possible. investment wouldn’t to period business them demand and Our in and all be well-positioned and strong particular, are help in continued whom would thank without and facilities our of drive customers, I in goals. a products best-in-class

that some to improvement, quarter. operational solid included and produced add regardless the and by turning path needed and throughout specific conversions fundamentals strong industry We’ve customers thoughts Now once to construction capacity further or decisions expansions our revenues, solid our again deleveraging margin inherent and the told results Janus investment are gains profile much around financial they margin in is cash either outstanding repeatedly new year-over-year fueling how take. you similar the through of generation. that

expand the we our quarter to total market on units. installed quarter, at and from quarter another expansions. conversions quarter to RX we this had strength our up continue ramp total installed first XXX,XXX coming trend XXX,XXX as discussed new Noke were continues grew we call, of capacity and via there the during units capabilities particular penetration approximately fourth The recent our strong as and year-end,

and Our has it technologies, the about control store. to remote has industry the in both represent our Noke adoption in future its offer, we’re access particularly use of best the accelerating excited

well last We to as channels all compared as delivered of an digit highlights across comes the year-over-year sales This XX% as Now both the construction strength in to particular RX in that our the was for shifting million, up year. increase nearly low-single and quarter. increases with financial period of new consolidated $XXX.X XX.X% growth commercial. segment revenues same

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

of parts we cost commercial quarter, initiatives in productivity labor our logistics. business, and actions continue particularly more than higher the offset to and many During experience

Our detail further shortly. company strong continues which generate in flows, discuss cash will Anselm to

the XX flow end conversion free of the was of quarter, cash the adjusted our first months XX%. through past Over net income

We a position while maintaining balance respond on opportunities remain also focus in putting being flexible strong conversion over a as identify robust expect them. us to value-enhancing time, to cash to we to M&A sheet solid

Speaking were net XX-month of leverage quarter a team. target range putting and half the us well our turn, to for end within our focus able debt X adjusted nearly X.X remains trailing of to by at net net balance at that proud times our sheet, times. quarter a to this our and EBITDA our I’m leverage management key Board extremely reduce we X

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

Before our out to laid our objectives towards I hand I’d over Anselm, it on to earnings talk like long-term our about call. progress last

the X% top as were XXXX positions in ACT organic achieve which our in positions goals, target Nokē We full markets, executing our acquired customers, year well efficiencies are our us start all achieving of growing the X% these organic to driving self-storage by our with and to M&A. year, is DBCI our growth expanding line across platform revenue range targets and towards long-term adoption to stated value-accretive our driving to point at respect growth. end industry-leading With all this

XX.X%, XX% up our of towards are year-over-year, which dramatically XX%. well margins to EBITDA trending range Our target long-term were of

mentioned is free sets target net target flow our start our strong us conversion our net range. XX% to up cash inside leverage adjusted the earlier, I income to achieve XXX% year. to full comfortably for range to of as year conversion Our of And

additional to remain of resilient, markets all look and create value our long-term and for leadership capture leverage share and stakeholders. strong we position our end to Our

over an our updated With that, full to the outlook of year. I’ll call turn financials the and for overview for the Anselm

Anselm Wong

solid evident Ramey, demand up was construction up led sales by quarter, way driven in of of while diversity revenue XX.X%, and X.X% the In commercial X% split is our perfectly X% first compared RX almost which our million quarter. offering the across prior to look quarter, for year was three stability both into channels. other were sales our new versus morning, around our good when everyone. mix prior particularly at third and the the of all and higher you revenue and and Thanks, quarter, $XXX.X three to year the channels. was The

The the continues additions impressive expansions. growth quarter segment conversions new by and from form in the be capacity our RX to in bolstered of

construction, adding new XXXX. the retail remains idle site, capacity year during in Our greenfield was previous than slower by towards our brick-and-mortar as RX availability pandemic occurred opposed positively new first customers’ customers. our XXXX as was demand construction weighted on of focus by impacted to the new to offerings capacity quarter pent-up driven impacted growth In that

first first share to to we has XXXX, see included gains. a quarter, In other strong normalize construction continue which elongate Commercial [indiscernible] times very from and started as delays persist. and compared the quarter to other, growth and benefits In of market actions commercial

of XX% year of are pharmacy, and Our ago EBITDA was in markets, quarter. continued products range Adjusted many growth compared and warehouses, hotels, a others. in schools including end commercial to other. million used broad the see up $XX.X potential We for

cost-saving quarter driving we to The our initiatives points combination Adjusted business. profile quarter. including of as to the work XX.X%, continues the scale for to increases of in in commercial EBITDA view business margin and the growth, additional labor demand, actions Nokē help offset an of more XXX continued the year solid as representative closer was for ago we from margin us increase basis investments

in in accommodate are and going with forward contracts lag moves of times impacts. prolonged eliminating design, to cost inflationary designed Our recovery our the flexibility high costs by today input in

produced of XXXX. diluted $X.XX For the quarter XX.X% the compared of per share net first which adjusted up $XX.X to quarter. year-ago XXXX, $X.XX income was first earnings from we quarter Adjusted in million,

We had another flow of quarter solid generation. cash

approximately million flow cash activities adjusted quarter of free net our approximately $XX.X trailing trend $XX.X was of cash operating free cash flow, million. conversion adds conversion multiyear cash First XX% strong adjusted income. and to XX-month income to net representing a was This from free of of flow

strengthen improve our to metrics. capital focus We to on continue initiatives and working

perspective, times sheet from debt adjusted of of end XXXX. debt, a the trailing the a times and X.X down From $XXX.X EBITDA, XX-month closed with million $XX.X quarter and net balance equivalents at net to we X.X of of cash total million leverage

delever X.X to Our of and target we our the X.X expense focused quickly, performance remain ability to first on range times. $XX in within our million. demonstrates Interest was leverage maintaining our quarter

the quarter, help upgraded us we were we paid hand, at ago, loan pleased reflective the $XX During rating adverse have made. offset in lien rising our Moody’s credit impacts partially the We to of rates facility should first efforts see of of cash our using that weeks was term strong XXXX. which down two on million

revenue are end adjusted range our We outlook $X.XX our on solid to a current Based at results, of our commercial combination year continued our be raising to a backlog compared of year in $X.XX billion and XXXX primarily to actions organic full of EBITDA. expect the X% quarter turning full XXXX we and driven billion, by midpoint the increase and revenue XXXX visibility strong volume-related Now outlook. first to growth. results, markets, now for

in we XXXX to growth all see three the strong fundamentals underlying reflect sales We channels. expect across

versus for million, XXXX million our EBITDA our XX% increase in representing expectations $XXX to range the We a are year adjusted midpoint to the $XXX results. of raising be at full

March half in be the we quarter, with to half margins the our in strength margin. balanced the the second first first expect Given

range expect year several to in as adjusted years the our over year We results in the margin full EBITDA long-term our improvement business next we deliver a to healthy solid pursue to of XX% objective margin XX% of reflect

Thank remarks. call you. the I to will for now Ramey turn closing back

Ramey Jackson

quarter, advancing well to our Thank increased plans executed on longer-term you year in to We full objectives. again, our outlook Anselm. the setting while deliver first table achieve the our Great.

record and while EBITDA in and flow strong cash in are our on strength believe the innings towards outstanding conservative team another continued as in we more drive a improved is our balance across early fundamentals environment, to The strong we the build a I what by drive maintaining expect is generation, will the year. execution should all market. XXXX we multiyear momentum revenues, end our one sheet. directly record of We results that demand margins this attributable

Thank lines please. for open we up Operator, you, for Q&A, now us. the again, can joining

Operator

you. Thank

now [Operator question-and-answer will Instructions] Thank a conducting you. We be session.

question. your Please with Daniel Moore Our first comes question Securities. CJS with proceed from

Daniel Moore

the you, Thanks taking John, Ramey, for Anselm, good Thank question. morning.

Ramey Jackson

Good morning, Dan.

Anselm Wong

Good morning, Dan.

Daniel Moore

visibility Start said even quarter, being dashboard the you with – described I a positive. very advance. And in your was significantly last or year as think you more

and as as or three talk six new remains pipeline least construction, And RX visibility across order XXXX Just the ago. through to how the extent of fiscal XXXX. describe into maybe well would versus about you months what remainder that commercial intact, at

Ramey Jackson

Dan. question, Good Yes.

So nothing’s changed from quarter-to-quarter.

Our robust. pipeline backlog remains

RX. also but indicators momentum, of strong only of All indicate construction our in not kind new

So that from nothing’s capacity. changed

Daniel Moore

in Helpful. Really growth healthy sequential Nokē placements.

update concern a product. And entered sign testing Just on among and a Nokē the larger Is for particularly the traction from good Carrier or market that a recently the us think competing REITs. perspective? your I with

Ramey Jackson

Yes.

I doing volidifies what for of the I think too good an others of we’ve opportunity always Nokē. said think market. not And enter kind to it it’s we’re at

As you a know, this while. for at been Dan, we’ve

a from lot and growing have it and kind building the pains ages of We first mover of out.

kind the doors in manufacturing to hallways and that our As process. leader you know, integrate also, able we’re product we’re into and of

bullish a moat heavy there but segment, more we be there’s certainly moving around forward. couldn’t So that

of in customer Our accelerate to orders terms continue adoption.

it seeing to standard a from of phase to a certain kind adoption. test We’re customers going full of more portfolio becoming

last as And that call, progress. strength that we mentioned with happy we’ve the added bench on to kind very segment. we’re of So

And are from we a really scalability perspective pleased care. also and where customer we’re so

happy with we’re there. are So where we

Daniel Moore

the in last one. speak I’ll

opportunity of of Storage, near-term XXXX and about disruptions that you terms beyond You’re us cetera? Space rebranding, et Life And just signage, of Extra importantly, any – do thinking terms could foresee the probably out about potential to combination more their tell you CapEx in looking Thanks. plans? and the in

Ramey Jackson

how how time. Yes. with very been to add Look, very they good and They market in have terms have a are REITs capacity for they models of go refurbishment. both customers both and long different

together. of kind integrate really in two to businesses good a those spot them We’re help

is they’re think of are you to a really from that dollars integration. rebranding in allocation accelerate good record I I we’re help of to the know where that. tell perspective. a on certainly what with But them don’t I kind stock they speaking can

Daniel Moore

any follow-up. you. I’ll get in back Thank

Ramey Jackson

Dan. Thanks,

Anselm Wong

Dan. Thanks,

Operator

Thank you.

with next Our proceed is Please your Stifel. with from question. question Elliott Stanley

Stanley Elliott

everyone. Hey, for the question. you good Thank morning,

Ramey Jackson

Stanley. Thanks,

Stanley Elliott

first progression know Starting said think off, half? you half said, repeat what margin you but could second I you the what to just about make versus I sure.

Anselm Wong

Yes.

first first would the than the coming quarter and half, the how went at in. look had you margin If you guided saw we statement, much originally our second that be stronger half stronger

for closer looking and news but faster commercial it driven is be good it’s second will again, to which view first So down actions what stronger, thought, costs It’s we at be good a will we’re news of from our and still the the that coming our for half, margin us half by is, us. point than

Stanley Elliott

have to guys we costs commercial a again cetera? of most recently. see kind working done the up a you started really job about think And the year here nice start months How the organization et thinking things of six side on of kind to of steel of in some move should volatility given about steel those ability we offset out, when the

Anselm Wong

Yes.

that move give Stanley, we the as contracts think previously adjust win all like in price steel the to flexibility know, us to had I you actually direction. revised costs

do it there. I to think is definite – ability So the

be the there. at think And we in to that flexibility what the are the competitive about of all that time, think smart to to the I do want contract being just allowed need I out we deals redoing same do.

Stanley Elliott

have out Great. potential What be learning past, something place then you’ve Does are the maybe products, seem more on just sure other I services about kind for to more industry of making to for you Nokē, road. that Or add-ons the In a a them? pickup. it sequential and interest standard? we is your that there? other that of guess, rolling me, in from system kind lock of is customers the And down nice lastly talked on

Ramey Jackson

think still have, of education I data, can more to upside we pricing it’s in on of opportunity of results really this I of is of the what tremendous amount understand the yet opportunity, exists. there’s And a lot say rollout. product We’ve take then operational customers on And focused the integrate technology a data the advantage perspective. of But line helping on uber That side that that from a and right? an from data system. we’re the there, Yes. benefits amount

with certainly kind of forward we are we’re opportunities deployment, kind So but content. staying expand of to move where tight as we there’s

Stanley Elliott

chain from guess any supply And accelerate anything on one. last or the you side quick seeing you orders? problems would to I Are the having continuing that one Nokē keep

Ramey Jackson

Yes. equipment manufacturing. Kudos done team, all that we really job need for of to the a procurement good the we’ve in securing

So well. there good spot we’re in as a

Stanley Elliott

Perfect. Thanks, guys. Best of luck.

Ramey Jackson

Stanley. Thanks,

Anselm Wong

Stanley. Thanks,

Operator

you. Thank

Please is from question next Our KeyBanc. your with question. Jeff Hammond with proceed

Jeff Hammond

Hey, good morning, everyone.

Ramey Jackson

Good morning, Jeff.

Jeff Hammond

very between around I and – So organizations. just public want back anywhere of maybe Clearly, like go and customer that of versus – speak lending segmentation just a institutional pipeline it concerns one, sounds you’re and on the any smaller backlog to just standards. REITs your visibility good. tightening seeing maybe wondering, I’m is lot to maybe the still if larger

Ramey Jackson

seeing we’re backlog, we on backlog. interest that There’s in frankly, kind question. But up verify Great certainly capital, know, you our and as of non-institutional. of Look, we institutional We feel not quite in funding of cost Jeff, like those nature. our dashboard. that question rates, break into around things no our

So comfortable moving projects forward. those we’re with

there’s then And of think amount on And a just pipeline the a in. market. I new to testament it’s side, opportunity end the tremendous coming

I resilient. has proven think self-storage be to

think lenders class asset the I understand better.

to in today So it nature. the we notwithstanding and I advance, we’re interest a around very that rates But the what’s of can yes, relates optimistic. going mean, on lending see things optimistic, and as noise with what year cautiously we’re

Jeff Hammond

good Okay. to Great. That’s hear.

to you how there the rate you’re commercial see kind share thinking maybe that just comps? us warehouse I of the Is was pickup that share starting market kind gain. of – to maybe about some stability simply know And for just set of and business, Just on start normalize? decelerating. level that Are growth

Ramey Jackson

a it’s get amount Yes. in product and questions, availability where had to tremendous and that right? difficult Look, from spend – segment out were There comps, perspective, our able to we had good weren’t quarter, we manufacture there’s a time. no able others of is

a So picked up customers. new lot we of

those kind give to lose we’ll try that product business ability that’s top to service the maintain opportunity our opportunity. There’s And much service model previously said we’ll possible. just that time, question possible – It’s maintain of as for the to out and get same at of our our accounts. as share some as is quickly customers. no I’ve as our the But as and to

the our delivery, we’re on-time do to So really an work because, that’s kind with of that’s and architectural really sweet a specifications it. lot that’s don’t more of We the market focus you we where has end where with know, about found to less service on of as and and focusing. That’s that R&R. replacement more spot do

Jeff Hammond

And item, on maybe just expense you’re interest thinking level housekeeping year. then for the a set Great. just how GAAP Okay. us about

Anselm Wong

Yes.

If QX, looked approximately that expense. the you you about $XX was amount saw million interest in had what at of we

You million. saw the pay $XX down about

if slight a quarters. the see you’d So you do the for adjustment other math, down

is again, is should and expectation math you that future everyone But rate predict than I you whole there maybe saw Our there. thing same another increase there, in But little can’t of lower be the a QX quarter there. of like do else if it around and number the that. a that kind

Jeff Hammond

Thanks, guys. Okay.

Ramey Jackson

Thank you.

Anselm Wong

Thanks.

Operator

Thank you.

Lovallo John from comes with question question. next with Please your UBS. proceed Our

Spencer Kaufman

This on Kaufman the for for you actually good Spencer is John. Thank questions. guys, Hey morning.

at quarter Are second first takes should the and through fourth you beat the mid-March? expectations? how better one, worse if Has or gotten taking XQ your EBITDA we guidance updated just for leaving the the The we essentially revenue your assumptions and puts about your look anything take unchanged? think just versus a for since year, and prior prior

Ramey Jackson

Yes.

yes, And helps backlog in beat our year we rest QX of we of got the said, visibility balance pretty we’re the as the that. good. like – we us I saw there. confirm think the the still think seeing I essentially, you And

So for of we’ve in beat what was. kind QX the raised

Spencer Kaufman

we Okay. you home through in That for that to sales rates How benefit existing the as the would makes the potentially should from that? extent that? sense. interest lower just expect year self-storage about And mean I think to settle move we reaccelerate, demand

Ramey Jackson

things that’s hard interest off to thrives if new nature. Look, in Yes. keep regardless business. it’s say. that it’s events mind, It or of housing the But event-based an of

to answer hard of but point So kind to specifically, drivers self-storage. question you of we’ll that the

Spencer Kaufman

one, last And this could Okay. sneak if I in.

imply just follow-up would that, a And you low about EBITDA full For you of on Thanks. Can the you year? the XX.X%. expect the get will for to margins expect how path XQ the outlook to there? be that year the for margin about do gross we that to the think should piece? discuss How XX.X%

Anselm Wong

I way is the that like should going the would see cost about through think half second drivers that, I in of think already improvement it that still benefit. – some discussed we’ve the will into we terms

that would The by we’ll a And rate seeing we’re driven that the to is QX we something volume with the is margin of view, in around improvement point first into rate half. But benefits back pricing some lot there. and half it due in said think probably going a cost our I [indiscernible] is be expectation of then still second that get from for half. the

Spencer Kaufman

luck. you, Thank guys. it. Got Okay. Good

Ramey Jackson

Thanks.

Operator

Thank Instructions] you. you. Thank [Operator

Please comes proceed from Stoic Cullen Our next question Point. with your with Rose question.

Cullen Rose

morning. good guys, Hey

Ramey Jackson

morning. Good

Cullen Rose

expectations. start Congrats guess and was on you beat year. have question continued I to strong raise to past a the the

market target is your the – at demand the end you call It at below this XX about be And it’s your strong questions of stable. year end either end by of get like industry. state this or you target leverage looks the guys per low think you can leverage I of pace. say will about

probably at buildings this. cash doesn’t a really probably companies like to serious the discount care. and the discount stock healthy with a company product returns the pretty product react. seems yet Nobody a margins trades to yield to quality buildings pretty average free serious And It higher and

discount has So trade-off how I that and think of the M&A buying and material you which stability the guys what guys you this versus been put strategy, be of I’m think stock to the a the these back that and pretty the at allocation, curious own consistent on in quality factor your numbers continue capital for out. levels of you’ve about successful given seems business to been about

Ramey Jackson

comps. lot of deleveraging it cash. the we for there, leave sentiments certainly way. a capital around question. to a relates and lot price are Yes. agree There’s to that unpack your Thanks kind a This yes, I’ll as of in And share deployment, with there. just meaningful business and generates And

certainly And of to working That’s anything on buybacks do paying really in not only a terms Board options, from something that that part debt in our also puts we’re Directors with of super and good add? of allocation, down spot, that’s at. M&A, certainly our something looking focused but you DNA. we’re or our have Anselm, us or that that’s always

Anselm Wong

Yes. right. No, I is think Ramey

We’re at constantly looking it.

right. think you’re I

better of us kind where at quarter. this we’re leverage forward-looking a the forecasts the in than puts in You do place even for ratio much currently even

in I same had a investments factories production some just a reminder in in we improve just actually our for us point time, Coast think capacity of well West key view, at within cash from as as to there. Europe our the flow have I

to Ramey for it’s is said, we’re a just us still right – use out cash there is like and M&A not deals So it is know, but of market there we’ll for continue it’s that the doesn’t the that at tough as mean to grow right look now, thing there some business, you the looking.

Cullen Rose

you one for Appreciate could that sale that. supply. company there’s Yes. every day Well,

to would to But start range a Thanks. So the I of encourage again that year. in on the congrats you consider options. great

Ramey Jackson

Thank you.

Anselm Wong

Thanks.

Operator

are back comments. There to would the at turn further time. like over questions for I Jackson floor no to Ramey closing this

Ramey Jackson

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

Operator

teleconference. today’s concludes This

your Thank participation. You time. may disconnect you your lines at this for

Janus International (JBI) 11 May 232023 Q1 Earnings call transcript