Janus International Group, Inc. Q1 FY2026 earnings call

Overall Performance and Liquidity

• Despite continued challenging macroeconomic conditions and subdued overall demand, Q1 2026 results exceeded management expectations.
• Adjusted EBITDA for the quarter was $33 million, with an adjusted EBITDA margin of 14.8%, down 340 basis points year-over-year primarily due to geographic and channel mix shifts.
• Liquidity position remains strong at $183.8 million total (including $112 million in cash and equivalents), with net leverage of 2.7x, within the target 2-3x range post-Kiwi2 acquisition.
• The company repurchased 2.9 million common shares for $15.7 million in the quarter, with $65 million remaining under the repurchase authorization. The first lien term loan was repriced in February 2026, reducing the interest rate by 50 basis points and lowering overall cost of capital.

Strategic Priorities (GROW Framework)

• Greater penetration of self-storage: The recent Kiwi2 Construction acquisition expands exterior solution and design-build capabilities, particularly for institutional customers on the U.S. West Coast and in Florida. Integration is progressing as planned, with early cross-collaboration opportunities across Kiwi2, Vedco, and Janus Core. The new Rapid Replace mobile app was launched to streamline self-storage door replacement quoting and ordering for owner-operators. International self-storage expansion continues to deliver strong results, supported by Nokia smart solution adoption and targeted project wins.
• Ramping adoption of smart security solutions (Nokia platform): Total installed Nokia units reached 477,000 at quarter end, up 24.2% year-over-year. The new Nokia Infinity on-door dual-technology smart lock was launched, combining Bluetooth with NFC power harvesting that maintains functionality even after the 5-year battery expires, reducing operational risk and maintenance costs. Nokia Infinity is complementary to the hardwired Nokia Ion solution, expanding use cases to both wireless retrofits and factory installations, and will be available for commercial release in Q3 2026. Management continues to focus on scaling the business to drive margin improvements and long-term recurring revenue growth.
• Outperforming in the commercial market: Expanded distribution and architectural specification efforts have driven strong performance in the rolling steel door business, with particular early success in high-growth segments like data centers.
• Winning through disciplined accretive acquisitions: The company maintains an active M&A pipeline, focusing on selective opportunities that expand capabilities, enhance the solution portfolio, and deliver long-term shareholder value, aligned with the Kiwi2 acquisition completed earlier this year.

Operational Efficiency Initiatives

• Cost optimization efforts are ongoing, with early benefits already realized from the consolidation of two Houston facilities completed earlier in 2026. Additional cost savings are expected to ramp through the second half of the year.

Consolidated total revenue for Q1 2026 was $222.7 million, representing a 5.8% year-over-year increase. Inorganic revenue contributed $18.1 million from the Kiwi2 Construction acquisition.

• Self-storage overall: Revenue increased 8.7% year-over-year. Within this channel:
  • New construction: Revenue rose 10.9% year-over-year (organic revenue decreased 9.9% year-over-year), with Kiwi2 acquisition gains and international growth offsetting soft North American new construction demand.
  • R3 (redevelopment, renovation, conversion): Revenue increased 5.3% year-over-year, driven by higher activity and normalization of conversion/expansion work.
• International segment: Total revenue increased to $27.3 million, a 28.8% ($6.1 million) year-over-year increase, driven by new construction growth and market share gains. International had a lower margin than core business in the quarter, acting as a drag on consolidated margins.
• Commercial and other segment: Revenue decreased 0.5% year-over-year. Soft demand for commercial sheet doors (tied to weakness in the pre-engineered metal building market) offset strength in rolling steel doors and freight terminal project activity.

Management reaffirmed its full-year 2026 guidance, with no upward or downward revisions from prior projections:

• Full-year total revenue is guided to a range of $940 million to $980 million, which includes $90 million to $100 million in inorganic revenue from the Kiwi2 Construction acquisition. No assumption of improving market conditions is embedded in the guidance.
• North American organic self-storage revenue is expected to decline mid-single digits year-over-year, driven by continued softness in new construction activity.
• Commercial segment revenue is expected to return to growth in 2026, driven by the rolling steel door business.
• International segment revenue is expected to grow at a high-single-digit rate year-over-year.
• Full-year adjusted EBITDA is guided to a range of $165 million to $185 million, representing an 18.2% adjusted EBITDA margin at the midpoint. Kiwi2's lower margin is expected to drag on full-year consolidated margins, with continued mix impacts from geographic and channel shifts.
• Full-year free cash flow conversion of adjusted income is expected to land near the higher end of the 75% to 100% target range.
• Management expects sequential margin improvement quarter-over-quarter, with Q1 2026 as the full-year margin low point. EBITDA will be weighted to the second half of the year, with cost savings from facility consolidation ramping through Q2 and hitting full run-rate in Q3 and Q4. Full-year effective tax rate is expected to land between 29% and 31%, with Q1's elevated rate driven by one-time acquisition and refinancing costs that will not recur through the rest of the year.

• Persistently high interest rates and tight liquidity continue to suppress North American self-storage new construction demand, which is not expected to improve until there is a meaningful reduction in interest rates.
• Rising steel prices create upward pressure on input costs, requiring price adjustments that will impact margins through the first half of 2026 before offsetting actions flow through in the back half.
• Lower-margin business segments (including the recently acquired Kiwi2 Construction and higher-growth international operations) create ongoing mix headwinds that suppress consolidated EBITDA margins relative to prior years.
• Weakness in the pre-engineered commercial metal building market continues to pressure demand for commercial sheet doors, offsetting strength in other commercial product lines.
• Forward-looking performance projections are subject to macroeconomic factors that could cause actual results to differ materially from guidance, per standard forward-looking statement disclosures.

Q: How have demand pipelines evolved relative to guidance assumptions, and what is the current breakdown of performance across business lines? / A: Management states that overall demand trends have not changed quarter-over-quarter. North American new construction demand remains suppressed by high interest rates, housing market mobility, and liquidity constraints, with no improvement expected until rates decline. R3 continues to be a bright spot, driven by ongoing self-storage industry consolidation that increases renovation and standardization activity. On the commercial side, softness is isolated to sheet doors (tied to weak metal building demand), while rolling steel doors are performing well on the back of architectural specification initiatives, serving as a positive growth indicator.

Q: Full-year 2026 guidance implies midpoint EBITDA margins of ~18.2%, well above Q1's 14.8%. What is the expected cadence of margin improvement through the year, and when will cost savings from facility consolidation flow through? / A: Management confirms margins will rise sequentially every quarter, with Q1 as the full-year low. Q2 margins will be higher than Q1 but still below the full-year average, while the second half of the year will have margins above the full-year average to hit the guided midpoint. Cost savings from the Houston facility consolidation will begin to blend into results in Q2, and will reach full run-rate in Q3 and Q4, driving the sequential improvement.

Q: How does the new Nokia Infinity smart lock complement the existing Nokia Ion product, and how does it impact adoption growth for the smart security line? / A: Nokia Infinity is a wireless battery-powered product designed for quick installation, particularly for retrofits, while Ion is a wired, battery-free solution for new installations. Infinity adds NFC technology that maintains operation even after its 5-year battery expires, reducing maintenance risk for operators. The two products complement each other by covering all use cases across new build and retrofit projects, allowing customers to standardize on the Nokia platform across all their facilities. The product is customer-developed, based on direct industry feedback, and is expected to accelerate sequential adoption growth for the smart security segment.

Q: With net leverage at 2.7x (the upper end of the target range), how attractive are share repurchases at current depressed stock prices, and is the company comfortable continuing repurchases? / A: Management states the company views its stock as undervalued at current prices, making repurchases particularly attractive. The consistent strong cash generation the company delivers provides sufficient flexibility to continue repurchasing shares even while maintaining leverage within the target range, so the company will continue disciplined repurchases going forward.