Prepared remarks
Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Hello, and welcome to the Janus International Group First Quarter 2026 Earnings Conference Call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Ms. Sara E. Macioch, Senior Director, Investor Relations of Janus. Thank you. You may begin, Ms. Macioch.
Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramey Pierce Jackson, and our Chief Financial Officer, Anselm Wong. We hope that you have seen our earnings release issued this morning. We have also posted a presentation in support of the release, which can be found in the Investors section of our website at janusintl.com. Our remarks in the press release, presentation and on this call contain forward-looking statements regarding the company's business, strategy, operations and financial performance. Please review the forward-looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ materially from our forward-looking statements and projections. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise. Additionally, non-GAAP financial measures will be referenced in this call. A reconciliation of these measures to the most directly comparable GAAP financial measure can be found in our earnings press release and presentation. On today's call, Ramey will provide an overview of our business, Anselm will continue with a discussion of our financial results and 2026 guidance before Ramey shares some closing thoughts and we open up the call for your questions. At this point, I will turn the call over to Ramey.
Thanks, Sara, and good morning, everyone. Thank you all for joining our call today. The first quarter reflected many of the same challenging macroeconomic dynamics we have discussed in recent quarters. Against this backdrop, our team remained focused on execution, safety, and customer service. While overall demand remained subdued, our results for the quarter were ahead of our expectations. We delivered total revenue of $222.7 million and adjusted EBITDA of $33 million for the quarter. From a financial standpoint, our liquidity position remains strong, providing flexibility to manage through near-term volatility while maintaining our strategic focus. Cash generation in the quarter supported continued balance sheet strength and disciplined capital allocation. During the first quarter, we repurchased approximately 2.9 million shares of common stock for a total of $15.7 million. As of quarter end, we had $65 million remaining under our share repurchase authorization. Now I would like to spend some time discussing our strategic priorities and recent progress towards these initiatives. While our strategy remains consistent, we are introducing the acronym GROW to refer to these priorities: Greater penetration of self storage; Ramping adoption of smart security solutions; Outperforming in the commercial market; and Winning through strategic accretive acquisitions. Beginning with greater penetration of self storage, our recent acquisition of Kiwi II Construction announced earlier this year advances this priority by expanding our content for self storage facilities. Kiwi enhances our exterior solutions and design-build capabilities, particularly with institutional customers on the West Coast and in Florida. Early integration efforts are progressing as planned. We are encouraged by the initial collaboration opportunities between Kiwi, Betco and our Janus Core business. Leveraging our unique R3 capabilities is another important lever in increasing our penetration of self storage. Ongoing consolidation within the self storage industry is creating meaningful opportunities for our R3 business. As larger operators acquire and integrate assets, they are increasingly focused on standardization, upgrades, and operational efficiency — areas where we believe Janus is uniquely positioned to serve as a long-term strategic partner. We continue to invest in and expand our R3 offerings to meet these needs. To this end, during the quarter, we announced the release of Door-to-Door Replace, a mobile app designed to streamline self storage door replacement quotes and orders. The Janus Door-to-Door Replace app was built for self storage owners and operators who need a fast, reliable way to request quotes and submit orders to replace damaged doors at their facilities. We also continue to be pleased with the performance of our international business as we expand our presence in the self storage industry on a global scale. Our focus on refining our product offering and go-to-market approach over the past several quarters continues to produce results. In the first quarter, international performance was supported by Nokē adoption and targeted project wins. We remain focused on selectively expanding into additional geographies with favorable market conditions. Next, ramping smart security solutions through our Nokē Smart Entry platform remains a central pillar of our long-term growth strategy. At the end of the first quarter, we had 477 thousand total installed units, representing an increase of 24.2% year over year. Janus is the first mover in smart security and access control within self storage, and we continue to solidify our competitive advantage through customer-led innovation. A recent example of this progress is the launch of Nokē Infinity, an on-door dual-technology smart locking system, which represents an important milestone in the Nokē product roadmap we are delivering this year. Nokē Infinity combines Bluetooth technology with near field communication, or NFC, power harvesting, allowing the lock to be securely accessed even after its five-year battery life has been exceeded. The dual-technology meaningfully reduces operational risk and maintenance costs for owners and operators. Designed with a slim on-door profile, we expect Nokē Infinity to be available for factory install on both roll-up and swing doors beginning in the third quarter. Importantly, we see Nokē Infinity as highly complementary to the hardwired Nokē Ion solution, and a meaningful step forward in driving adoption of smart entry solutions, enabling customers to standardize on the Nokē platform across environments suited for both hardwired and wireless solutions. As we advance the Nokē platform, we remain focused not just on unit growth and new product launches, but also on driving efficiencies and margin improvement as the business reaches scale. Nokē addresses real operational challenges faced by self storage owners and operators by reducing labor requirements and enhancing security through advanced access control and theft deterrents. As a result, we continue to be optimistic about the long-term opportunity in this business and its potential to drive increased recurring revenue over time. The third priority of our growth strategy is increasing our share in the market for commercial doors. Our expanded distribution footprint and architectural specification efforts are gaining traction, resulting in strong performance in our rolling steel business this quarter, and we are encouraged by the early success in segments such as data centers, where growth opportunities remain robust. Our final priority is disciplined M&A. Strategic acquisitions continue to be a core part of our strategy, as evidenced by our acquisition of Kiwi II Construction I spoke to earlier. While our M&A approach remains selective, our pipeline continues to be active. We are maintaining our focus on opportunities that expand our capabilities, enhance our solutions offering, and create long-term shareholder value. As we look ahead, we will focus on what we can control: execute with discipline, support our customers, and manage the business for the long term. While we expect many of the challenges in the operating environment we are facing will persist in the near term, we are confident Janus is well-positioned for the future as the industry leader in self storage solutions, with strong operational capabilities and attractive adjacencies for expansion. With that, I will now turn the call over to Anselm to walk through a more detailed review of our financial results and discuss our reaffirmed 2026 guidance. Anselm?
Thank you, Ramey, and good morning, everyone. Ramey spoke to our strategy and results at a high level, and I will focus my remarks on our financial performance in the first quarter and our 2026 guidance. For the first quarter, consolidated revenue of $222.7 million increased 5.8% as compared to the prior year. Inorganic revenues for the quarter were $18.1 million, reflecting contributions from acquisitions. New construction increased 10.9%, while R3 was up 5.3% for the quarter. The increase in revenues for new construction was driven by solid performance from our Kiwi acquisition and continued strength in our international business, which offset continued softness in North America. On an organic basis, new construction revenues were down 9.9% year over year. The increase in R3 revenue was driven by increases in redevelopment and renovation activity and a normalization in conversion and expansion activity. In the first quarter, total revenues in our international segment increased to $27.3 million, up $6.1 million or 28.8% compared to the prior year, driven by growth in new construction activity and market share gains. For the quarter, revenue in our commercial and other segment decreased by 0.5%. The decline was primarily driven by continued softness in demand for commercial sheet doors, partially offset by increases in rolling steel and freight terminal project activity. First quarter adjusted EBITDA of $33 million was down 14.1% compared to 2025. This resulted in an adjusted EBITDA margin of 14.8%, a decrease of approximately 340 basis points from the prior year period. The decrease in margins year over year is primarily attributed to the impacts of geographic segment and sales channel mix. We remain focused on controlling our costs and continue to regularly evaluate opportunities to optimize operations and improve our efficiencies. We are seeing benefits from the consolidation of our two facilities in Houston earlier this year. For the first quarter, we produced adjusted net income of $1.7 million compared to adjusted net income of $17.7 million in the prior year period. Adjusted EPS for the quarter was $0.01. We generated cash from operating activities of $36.2 million, and free cash flow of $33.4 million in the quarter. On a trailing twelve-month basis, this represents a free cash flow conversion of adjusted income of 155%. Capital expenditures in the quarter were $2.8 million. We ended the quarter with $183.8 million in total liquidity, including $112 million of cash and equivalents on the balance sheet. Our total outstanding long-term debt at quarter end was $551 million and net leverage was 2.7x, within our target range of 2x to 3x following our acquisition of Kiwi II Construction as expected. Our liquidity levels provided us flexibility as we deploy our capital. As Ramey mentioned, during the quarter we repurchased approximately 2.9 million shares for a total of $15.7 million. We had $65 million remaining on our share repurchase authorization at quarter end. In February, we were pleased to announce a repricing of our first-lien term loan, reducing our interest rate by 50 basis points from SOFR+250 to SOFR+200, significantly lowering our cost of capital and enhancing our financial flexibility. Now moving to our 2026 guidance. We continue to expect full-year revenue in the range of $940 million to $980 million. This includes approximately $90 million to $100 million of inorganic growth from the Kiwi II Construction acquisition. As a reminder, our guidance does not include any embedded assumptions of an improvement in market conditions. We continue to expect North America organic self storage revenues to be down mid-single digits compared to 2025, driven mostly by continued softness in new construction. In our commercial sales channel, we anticipate a return to growth in 2026 driven by our asset business. On the international side, we expect high single-digit revenue growth. 2026 adjusted EBITDA is expected to be in the range of $105 million to $185 million. This reflects an adjusted EBITDA margin of 18.2% at the midpoint. Consolidated EBITDA margin will continue to be impacted by both geographic segment and sales channel mix. We expect that Kiwi II's EBITDA will be a drag on overall margins for 2026. Cash flow remains robust, and for 2026, we continue to anticipate being around the higher end of the free cash flow conversion of adjusted net income target range of 75% to 100%. Please refer to the presentation we have posted for details on the key planning assumptions for 2026. Thank you all for your time. I will now turn the call over to Ramey for his closing remarks. Ramey?
Thank you, Anselm. Janus continues to hold a strong position in an attractive, resilient industry. We serve our customers across the full life cycle of their facilities, from design and build-out to ongoing maintenance, modernization, and technology upgrades. That end-to-end value proposition continues to differentiate us, particularly in periods of economic uncertainty. Though new construction activity, particularly in North America, is likely to remain constrained this year, self storage fundamentals continue to be supported by high occupancy rates and rising household utilization trends. As housing market activity normalizes over time, we believe these trends will support increased demand for both new development and investment in existing facilities. While operating conditions remain dynamic, we are focusing firmly on what we can control and are committed to achieving our reaffirmed 2026 guidance. We are executing with discipline, supporting our customers, optimizing our operations, and investing in areas of the business with the most durable demand and long-term opportunity. Supported by our strong balance sheet and consistent cash generation, I remain confident Janus is well equipped to build upon our industry leadership position, expand into adjacent markets with attractive fundamentals, and deliver long-term value for our shareholders. In closing, I want to express my appreciation to our team, customers, and shareholders for your support. We thank you for your participation on today's call. Operator, we would now like to open up the lines for Q&A, please.
Questions and answers
Certainly. Please press 1 on your keypad. To leave the queue at any time, please press 2. We will take our first question from Jeffrey David Hammond with KeyBanc Capital Markets. Your line is open.
Hey, morning guys. This is David Tarantino on for Jeffrey. Maybe starting with the demand trends, it sounds like both self storage and commercial are tracking in line with initial outlook. Correct me if I am wrong, but could you give some color around how the pipeline of opportunities has evolved to date? And how the underlying demand trends that you are seeing today compare to what you implied in the guide?
Yes. Thanks for the question. I do not think there has been a lot of change quarter over quarter. Obviously, new construction demand in North America is impacted by interest rates, liquidity, mobility around housing, and I do not see that changing until we get some reprieve on interest rates. R3 is a bright spot for us; we continue to perform well with M&A and consolidation that is happening in the market driving revenue for us. On the commercial side, it is the commercial sheet door product line that has really been impacted, and that has everything to do with the pre-engineered metal building end market. The bright spot on the commercial side is our rolling steel door business, which is Asta. We have been talking about our architectural specification initiatives in addition to growing market share, and that is certainly paying off and is a green shoot for us on the commercial piece.
Great. That is helpful. And then maybe on the margins, could you just give us some color on price and cost with rising inputs? I recall these effects typically show through on a lag. Does this give you the opportunity to push more price, or how should we think about the buckets of the margins going forward?
Yeah. If you think about what happened in Q1 margin, we had always talked about the lag in terms of the backlog of price adjustments that we had done prior to those adjustments bleeding through into the quarter now. If you look at the steel trend, it is on its way up, as we said last quarter. You would expect commercial actions the other way going into the rest of the year. So I think you probably have a little more commercial adjustments in the back half, a little more price negative blending into this quarter, and then it goes back up the other end. As a reminder, our contracts allow us to adjust where we need to based on input cost changes.
Great. And maybe if I could sneak one more in: could you just give some color on the tax rate and why it was so much higher in the first quarter and tracking higher for 2026, and maybe what the cash tax rate looks like?
Sure. There were a number of one-time adjustments in Q1 due to the acquisition as well as the refinancing that occurred. If you look at the reconciliation included in the earnings materials, you will see approximately $2 million related to the debt refinancing. While the repricing gives us a better rate going forward, we have to take the charge for the prior cost. The other piece is costs related to the acquisition: acquisition costs as well as compensation. As we disclosed, we paid some of the purchase price with equity compensation, which drives some tax differentials because certain compensation deductions are disallowed. Those are the main items that impacted the tax rate, and a few of them are one-time items.
Great. Thanks. I will pass it along.
Thanks. Next question will come from Daniel Moore with CJS Securities. Your line is open.
Yes. Good morning, Ramey. Good morning, Anselm. Thanks for taking the questions. In terms of cadence, we just talked about price and cost and how that may flow through. Guidance for the full year implies a little over 18% adjusted EBITDA margin at the midpoint, with Q1 just below 15%. How should we think about the cadence in terms of sequential improvement into the second half or the split of EBITDA dollars between H1 and H2? In other words, how should we expect Q2 to shape up?
Thanks for the question, Dan. If you think about it, as we talked about last quarter, we expect a step up every quarter. So Q2 will be better than Q1 but probably a little less than the overall average for the year, and then the back half will be higher than the average for the year to blend to the full year. The timing of some of our cost savings, such as the Houston consolidation, means those savings blend up a bit in Q2 with full savings in Q3 and Q4. That is why you see a step-up each quarter.
Got it. And I know it is early days, but can you talk a little more about cross-selling or best practices between Kiwi, Betco, and Janus Core? How is the integration going and any early learnings from that acquisition?
We are really happy with the progress. The collaboration between Janus Core, Betco and Kiwi is focused on cross-selling. We have had some early wins on combining the door and hallway through the total building envelope. In addition, the customer segment expansion — the additional customers that we now have visibility to and that are now on the Janus platform — is very promising. We are excited about where it is going and pleased with the integration efforts thus far.
Got it. If I might sneak one more in: could you talk about how Infinity helps ramp smart security solutions, how it is complementary to Ion, and what kind of expectations you have for sequential growth over the next year or two relative to adoption?
Sure. We are very excited about the new product launch for Nokē. The new product is an upgrade to the Nokē 1 and targets use cases where customers want a quicker, battery-powered install and wireless operation, which is especially useful in retrofits. The beauty of Nokē Infinity is that even if the battery, which will last about five years, dies, it will still work with the NFC technology we put in it, so you have backup. Nokē Ion is the hardwired, battery-free solution that allows for additional sensors and capabilities customers are requesting. Both products are performing well, and the new platform will help drive sequential growth in the Nokē business.
I would add that this roadmap and the products we will continue to launch throughout this year and next are directly informed by the voice of the customer. We are listening to our customers and investing in innovations they need.
Perfect. And then housekeeping: tax rate, what should we expect for the balance of the year?
If you look at the guide, we put in a 29% to 31% range for the full year. It is an increase from last time, largely a function of the items I mentioned impacting Q1. You should see a more normalized rate in the other quarters that blends to the full-year average.
Our next question will come from Phil Ng with Jeff. Your line is open.
This is Fiona on for Phil. Just curious on the tariff side. I know you are probably more insulated from tariffs, but how do you think about changes to Section 301 tariff and how is that going to impact your business relative to competitors?
Most of the steel we purchase is domestic, so there is not a direct impact to the domestic steel that we buy. If you go deeper into the details of the regulation, it will impact certain types of products made of steel, so I would expect some negative impact on some competitors depending on the specific items affected, but it is specific to product types.
That is helpful. Inflation is picking up again. Are you looking to pass through some of the higher costs through surcharges or any mitigation actions you are considering for the rest of the year?
Yes. Fuel is one of the top items; like many industries, we have fuel surcharges to cover that. For steel, we track prices closely on a daily basis and have the ability to adjust via our contracts. There will likely be some commercial actions related to the steel trend, and we are closely watching it to determine if we need to do more.
Okay. And maybe one last question: can you also talk about your mixed dynamics? I think in the quarter it was a headwind.
Yes. In the quarterly breakout, a number of our smaller business units reported strong revenue but have lower margins compared to Janus Core. That product and customer mix led to a negative mix impact in the quarter, which was one of the drivers of the margin decline.
Our next question will come from Reuben Garner with The Benchmark Company. Your line is open.
Hey, good morning, everyone. This is Joseph Gerard McGlade on for Reuben. I wanted to start on Nokē. It looks like you added about 20 thousand new units this quarter. I know the previous breakeven target was 500 thousand. With the launch of Nokē Infinity, does that change your breakeven? Also, any estimates you are willing to share on how much contribution hitting breakeven could be for the bottom line?
We have not disclosed a new breakeven point, but there are a couple of factors moving in our favor. Obviously, unit volume getting to that breakeven point matters, but AI is also helping us manage and reduce software development costs, meaning we need fewer engineers to do equivalent work. That is helping move the breakeven point lower. We are excited about this and believe the new products will help drive incremental growth to get to scale faster.
Okay. That sounds great. One other question: international is doing well, and I know you implemented changes in go-to-market strategy over the past year. How have those changes helped you gain share, and which international markets are showing outsized growth?
We have been consistent and laser-focused on our strategy internationally. Nokē Smart Entry is driving a lot of door and hallway opportunities, and it is influencing owners and operators in their door and hallway selection. We are targeting countries with robust development pipelines, such as Germany and Spain, and have been pleased with execution. Overall, we see continued tailwinds on the international side and are proud of the team's performance.
Alright. Thank you. That was helpful. I appreciate you taking my questions, and good luck in the quarter ahead.
Our next question will come from John Lovallo with UBS. Your line is open.
Hey. Good morning, guys. You have Matt Johnson on for John. Appreciate the time. First, at the midpoint of the full-year outlook you are talking about an EBITDA margin of about 18.2%, which would be down about 80 basis points year over year. Any thoughts you could give on how much of that you see coming from gross margin versus SG&A? And do you expect Q1 to be the low point of the year on gross margin specifically?
Q1 is the low point; we expect sequential improvement each quarter with a big improvement in Q3 and some seasonality in Q4. We do not disclose the exact split between gross margin and SG&A, but the restructuring actions we've announced will have impact across both cost of goods sold and SG&A.
That is great. On capital allocation: you bought back about $16 million of stock in the quarter. How attractive do you think repurchases are at these levels? With net leverage around 2.7x, approaching the higher end of your target range, how comfortable are you repurchasing more stock versus allowing net leverage to move higher?
First, we believe the shares were and remain attractive at current prices. Our consistent cash generation gives us flexibility to continue repurchases, and at current prices repurchases are even more attractive.
Thanks, guys. Thank you.
And we do have a follow-up question from Jeffrey David Hammond with KeyBanc Capital Markets. Your line is open.
Hey, guys. It is David following up. Could you give more color on what is embedded in the guide from a cadence perspective? How do you expect Q2 to shape up? Any general framework for the back half on both the top and margin lines?
We do not provide quarter-by-quarter guidance, but think about it as sequentially moving up for revenues and EBITDA to hit the full-year guide. The second half will be larger than the first half in EBITDA to arrive at the overall full-year rate in our guide.
Okay. Great. And maybe following up on R3, could you expand on the pipeline opportunities, particularly following some large M&A deals from operators? Are you seeing any of that yet, or how much of it is embedded in the guide today?
I won't comment on any specific company, but we are pleased with the R3 pipeline and backlog and with its performance. Consolidation is happening and continues to accelerate, and we are in a good position to take advantage of that market trend. We are super excited about the opportunity.
Okay. Great. Thanks, guys.
It appears we have no further questions at this time. I will turn the program back to the speakers for any additional or closing remarks.
Okay. Thank you all for joining us today. We appreciate your support of Janus, and we look forward to updating you on our progress. Have a great day.
This concludes today's program. Thank you for your participation, and you may disconnect at any time.