Janus International Group Q2 2026 Earnings Call - Guidance Cut Amid Commercial Softness, Nokē Milestone Hits 500K Units

Operator: Hello, and welcome to the Janus International Group second quarter 2026 earnings conference call. All participants are in a listen-only mode, and a question and answer session will follow the formal presentation. If you should require operator assistance during the conference, you may press star zero on your telephone keypad. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Please go ahead.

Sara Macioch, Senior Director, Investor Relations, Janus International Group: Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramey 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 this call, 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. Ansel 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.

Ramey Jackson, Chief Executive Officer, Janus International Group: Thanks, Sarah, and good morning, everyone. Thank you all for joining our call today. Second quarter results reflected a continuation of the macroeconomic trends we have discussed throughout the year, as the operating environment remained challenging across many of the markets we serve. While we remain focused on execution and serving our customers, these factors had a greater impact on demand than we anticipated. As a result, total revenue totaled $233.5 million and adjusted EBITDA was $40.2 million. Based on our year-to-date performance and current visibility, we are revising our full year guidance. Demand levels across our core business have not trended as we expected, and we believe it’s appropriate to reflect that reality in our outlook. While we have updated our expectations to reflect current market conditions, our conviction and strategy remains unchanged.

We remain focused on executing against the priorities that we believe will strengthen the business and create long-term value. Let me take a few minutes to discuss our progress on those initiatives. As a reminder, we refer to our strategic framework as GROW: 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, market conditions remained challenging during the quarter, predominantly in North America new construction, where project activity and customer investment levels continue to be constrained, particularly among our smaller customers. We continue to expand and refine our product offering in order to adapt to our customers’ changing needs, including our R3 business, international presence, and design build capabilities, allowing us to deliver more comprehensive solutions. Integration of our Kiwi II Construction acquisition remains on track.

Anselm will speak further to our expectations for the business this year shortly. Next, ramping our smart security solutions through our Nokē Smart Entry platform. During the quarter, we reached a significant milestone of surpassing 500,000 installed Nokē units. This achievement reflects years of investment and execution and marks an important inflection point for the platform. As we have discussed in prior periods, scale has always been a critical component of the Nokē strategy. Reaching this stage marks an important step in that journey and supports our ongoing efforts to improve profitability and drive greater recurring revenue over time. Adoption of Nokē continues to increase, reinforcing the meaningful value in the solutions that help our customers improve operational efficiencies, enhance security, and streamline facility management.

As we continue to advance our product roadmap, we have been encouraged by the initial interest in Nokē Infinitē, our on-door dual technology smart locking system we announced earlier this year. We expect Nokē Infinitē will be available for factory install on both roll-up and swing doors beginning in the fourth quarter. The third priority of our growth strategy is increasing our share in the market for commercial doors. While commercial sheet door demand remains soft, we are seeing benefits from our expanded distribution footprint and architectural specification initiatives. Our efforts in the data center space also continues to progress. We are exploring new product capabilities and continuing to position ourselves as a strategic manufacturing partner for OEMs. Our final priority is winning through disciplined M&A.

Strategic acquisitions remain an important component of our strategy, and we continue to evaluate opportunities that enhance our capabilities, expand our solutions offering, and support long-term value creation. Combined with our scalable operating platform, this disciplined approach enables us to pursue growth while maintaining a relatively low CapEx intensity business model and strong cash flow generation. As we look ahead, we will continue to focus on what we can control, executing with discipline, supporting our customers while adapting to their changing needs, optimizing our operations, and advancing our strategic priorities. While market conditions remain challenging, our revised guidance reflects our best assessment of the current demand levels and positions us to execute against expectations that we believe are achievable. With that, I’ll now turn the call over to Anselm for a more detailed review of our financial results and to discuss our revised 2026 guidance. Anselm?

Anselm Wong, Chief Financial Officer, Janus International Group: 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 financial performance in the second quarter and our updated 2026 guidance. For the second quarter, consolidated revenue of $233.5 million increased 2.4% as compared to the prior year. Inorganic revenues for the quarter were $19.2 million, reflecting contributions from Kiwi II Construction. At the sales channel level, our self-storage business was up 15.4%, new construction increased 20.3%, while R3 is up 6.6% for the quarter. The increase in revenues for new construction was driven by contributions from Kiwi II Construction and strength in our international business, which offset continued softness in North America. On an organic basis, new construction revenues were flat compared to the prior year.

The increase in R3 revenue was driven by increases in door replacements and redevelopment activity, as well as increased conversion and expansion activity. In the second quarter, total revenues in our international segment increased to $31.1 million, up 9.5% compared to the prior year period, driven by growth in new construction and market share gains. For the quarter, revenue in our commercial and other segment decreased by 21.2%. The decline was primarily driven by continued softness in demand for commercial sheet doors. Second quarter adjusted EBITDA of $40.2 million was down 18% compared to the second quarter of 2025. This resulted in an adjusted EBITDA margin of 17.2%, a decrease of approximately 430 basis points from the prior year period. The decrease in margins year-over-year is primarily attributable to the impacts of geographic segment and product mix.

For the second quarter, we produced adjusted net income of $23.9 million compared to adjusted net income of $28.2 million in the prior year period. Adjusted EPS for the quarter was $0.17. We generated cash from operating activities of $24.4 million and free cash flow of $21.6 million in the quarter. On a trailing 12-month basis, this represents a free cash flow conversion of adjusted net income of 129%. Capital expenditures in the quarter were $2.8 million. We ended the quarter with $205.3 million in total liquidity, including $127 million of cash and equivalents on the balance sheet. Our total outstanding long-term debt at quarter end was $550 million, and net leverage was 2.7 times within our target range of 2-3 times. Our liquidity levels allow us flexibility in our capital deployment.

During the quarter, we repurchased approximately 367,000 shares of our common stock for a total of $1.9 million. Year to date, we have repurchased approximately 3.2 million shares of our common stock for a total of $17.6 million. We had $63 million remaining on our share repurchase authorization at quarter end. Now moving to our 2026 guidance. As Ramey noted, we continue to face a challenging operating environment, with demand trends remaining more muted than expected. In light of current market realities, we have adjusted our expectations for the year to reflect the environment we are seeing today and to align with what we believe is a prudent and achievable set of expectations.

We have yet to see the macro environment stabilize as we anticipate entering the year, which has contributed to slower activity across portions of our core business, reflecting ongoing inflationary pressures and stagnant housing demand across North America. As a result, we now expect full year revenue in the range of $925 million-$945 million. Additionally, due to delays and extended project timelines on certain projects originally anticipated to be completed this year, we are adjusting our expectations for inorganic revenue from Kiwi II Construction to be approximately $80 million-$90 million. We now expect North America organic self-storage revenues to be down high single digits compared to 2025, driven mostly by continued softness in new construction. In our commercial sales channel, we now anticipate revenues to be roughly flat. On the international side, we expect high single-digit revenue growth.

From a profitability standpoint, we continue to manage costs and remain focused on operational efficiency while optimizing our footprint to better align with current demand. While lower forecasted volumes, negative mix, and inflationary pressures across the supply chain have put pressure on margins year to date, we anticipate the benefits from these actions will result in a sequentially stronger back half. As a result, 2026 adjusted EBITDA is now expected to be in the range of $150 million-$170 million. This reflects an adjusted EBITDA margin of 17.1% at the midpoint. We continue to anticipate being around the higher end of the free cash flow conversion of adjusted net income target range of 75%-100%. Our updated guidance reflects current market conditions and our best assessment of demand trends for the remainder of the year.

Importantly, we continue to generate strong cash flow, maintain a healthy balance sheet, and invest in the strategic initiatives that we believe will drive long-term growth and shareholder value. Please refer to the presentation we have posted for additional 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?

Ramey Jackson, Chief Executive Officer, Janus International Group: Thank you, Anselm. Janus continues to hold a strong position in an attractive industry, but it is clear that current market conditions remain challenging. Importantly, we continue to make meaningful progress against our strategic priorities. Surpassing 500,000 installed Nokē units marks an important milestone for the platform and demonstrates continued adoption of the technology-enabled solutions across the self-storage industry. While new construction activity, particularly in North America, remains constrained and we expect market conditions to remain challenging in the near term, we are encouraged to see improving sentiment from some of our larger customers. The long-term fundamentals of self-storage remain favorable. Industry occupancy levels remain healthy, household utilization continues to grow, and ongoing consolidation among operators continues to support investment in facility upgrades, modernization, and operational efficiency. Although we cannot control the macroeconomic environment, we can control how we respond.

We remain focused on serving our customers, optimizing our operations, managing our costs with discipline, and allocating capital responsibly. Supported by a strong balance sheet and healthy cash generation, we believe we are well-positioned to emerge even stronger when market conditions improve. In closing, I want to thank our team, customers, and shareholders for your support. We appreciate your participation on today’s call. Operator, we would now like to open up the lines for Q&A, please.

Operator: Thank you. If you would like to ask a question, please press star one on your keypad now. To leave the queue at any time, please press star two. Once again, that is star one to ask a question. We’ll pause for just a moment to allow everyone the chance to join the queue. Thank you. Our first question today comes from Phil Ng with Jefferies. Your line is open.

Phil Ng, Analyst, Jefferies: Hey, guys. Appreciate all the color. If I look at your new construction business in Q2, frankly, if you strip out Kiwi, organic sales are kind of flattish. I guess to kind of kick things off, Hanson, in the revised outlook, the guidance we’re forecasting a weaker demand environment. It feels like it’s more new construction, maybe some of the products getting pushed out in Kiwi, but can you expand a little bit, what you’re seeing and how trends kind of progress at your quarter going into July and August?

Ramey Jackson, Chief Executive Officer, Janus International Group: Yeah, the markets, like we said, it’s just similar to first half we’re expecting into the second half, and what we saw just unfortunately, in our buildings business, Kiwi, we saw some project push outs, and that’s why we kind of revised that piece of it. But that seems to be the similar trend that we’ve seen across the board in terms of just that push out delays that we’re seeing on those projects. The good thing is that what we’ve reviewed is that there’s not been cancellations, it’s just been a timing push out.

Phil Ng, Analyst, Jefferies: Okay. But the weakness in new construction, did it progressively get worse each quarter? Kiwi aside, it sounds like it is more timing related, but what about

Ramey Jackson, Chief Executive Officer, Janus International Group: Yeah

Phil Ng, Analyst, Jefferies: new construction on your

Ramey Jackson, Chief Executive Officer, Janus International Group: No, it is about the same.

Phil Ng, Analyst, Jefferies: What are you saying?

Ramey Jackson, Chief Executive Officer, Janus International Group: Yeah, new construction is relatively the same, like we said. I think the biggest thing you saw was commercial, just not getting the upturn that we were expecting that we would get.

Phil Ng, Analyst, Jefferies: Okay. Which was my next question. Commercial’s generally been pretty benign, and this was the big drawdown, down 20%. Is this timing related? What’s driving the big shortfall on the commercial side of things?

Ramey Jackson, Chief Executive Officer, Janus International Group: Yeah, I’ll take that one. Morning, Phil. It’s Ramey.

Phil Ng, Analyst, Jefferies: Good morning.

Ramey Jackson, Chief Executive Officer, Janus International Group: Yeah, the biggest drag on our commercial revenue is specifically the commercial sheet doors, which predominantly are installed in pre-engineered metal buildings, and that end market obviously has headwinds. That was really the biggest drag on the miss there. When you think about the category, our rolling steel product is continuing to grow, continuing to perform well. We mentioned our strategic strategies around architectural specifications. That was super important and has been ongoing for over a year, and that is starting to pay off. We are kind of obviously in the data center space, which is in growth mode, so we are excited about that. To answer your question on the miss, it is the commercial sheet door product specifically.

Phil Ng, Analyst, Jefferies: Okay. Sorry, just to get one more in. R3 has actually been a bright spot and it has been a bright spot for a few quarters. Ramey, perhaps on that front, I suspect all the M&A activity from some of your larger REIT customers has contributed to that. I am just curious, how is the outlook looking for R3 in the back half? Is there going to be a smooth handoff from one large deal to another? Just give us a little more context on what you are seeing on the R3 side as we look out to the back half this year.

Ramey Jackson, Chief Executive Officer, Janus International Group: Yeah, there is a lot there. I think, to your point around consolidation, look, that certainly plays an important role in the investment, but that is not 100% where we are seeing the uptick in R3. Think about mostly institutional customers, and they are just rightsizing and shoring up their facilities during this downtime. We mentioned that conversions and expansions is a growing piece of the business, and that is what we are seeing. So, pretty happy with the progress there and the way that that is trending on the backlog and pipeline as it relates to R3. We just have to continue to refine our products to make sure that we are in the right spot for obviously this ever-changing market. But we are pretty pleased with the R3 initiative.

Phil Ng, Analyst, Jefferies: Okay. Appreciate the color, guys.

Operator: Thank you. Our next question will come from Jeff Hammond with KeyBanc Capital Markets. Your line is open.

David Tarantino, Analyst, KeyBanc Capital Markets: Hey, good morning, everyone. This is David Tarantino on for Jeff. Maybe just starting on the margins, could you just give us a little bit more color on the lower margin outlook? Is this just simply on the lower volumes? Then maybe give us some color on kind of the key buckets that support the second half improvement versus the first half.

Anselm Wong, Chief Financial Officer, Janus International Group: Sure. Thanks, David. If you think about the margin, just the sales volume drop is really the big change that impacted the rate there. The first half to second half improvement, and you obviously saw it in Q2, is a lot of the optimization that we’ve been talking about. If you look at the factory consolidations and optimizations, we’ve been just looking at the volume and aligning the resources to fit with the volumes that we’re seeing there. We’re also looking at the back office, looking at just in general, what we should be doing all the time, which we are doing all the time, and now we’re finally starting to see some of that benefit come through.

The other last big bucket is, as you saw, steel prices been going up, and we’ve been monitoring that, managing that well, and making sure that we maintain our commercial actions to offset that piece of it. So that’s why all those big buckets together walk you to the second half improvement.

David Tarantino, Analyst, KeyBanc Capital Markets: Okay, great. Then maybe following up on the new construction market, it looks like Kiwi’s tracking a bit lower. Could you confirm whether the core business is also maybe tracking a bit lower? And maybe give us some details of what you’re seeing in the pipeline of construction activity here that’s maybe informing the color on NA tracking maybe a bit weaker than you expected.

Anselm Wong, Chief Financial Officer, Janus International Group: Yeah, the core business is tracking about similar, so I don’t think there’s been really a big change for the core self-storage piece. Yeah, I think Kiwi is the bigger piece where we saw the timing on some of the timing of projects push out, and that’s the bigger thing. Just a reminder, the big piece of the adjustment in the forecast was more related to the commercial sheet door piece that we talked about earlier.

David Tarantino, Analyst, KeyBanc Capital Markets: Okay, great. That’s helpful. Thanks, guys.

Anselm Wong, Chief Financial Officer, Janus International Group: Thanks.

Operator: Thank you. Our next question will come from John Lovallo with UBS. Your line is open.

Matt Johnson, Analyst, UBS: Hey, good morning, guys. This is Matt Johnson for John. Appreciate the time here.

Anselm Wong, Chief Financial Officer, Janus International Group: Matt.

Matt Johnson, Analyst, UBS: Yeah, hi. If we could talk about gross margin in the quarter. I think it was down, I don’t know, somewhere around 650 basis points year-over-year, which was down a bit more relative to the first quarter. I know you guys called out, I think it was some product and some geographic mix impacting that. I guess could you guys just maybe talk a little bit about how we should think about the drivers in terms of mix versus Kiwi versus price cost versus just anything else in there?

Anselm Wong, Chief Financial Officer, Janus International Group: Yeah. Price, as you saw in the quarter, was minimal for this quarter, as we had said earlier in the last call. I think if you look at it, the biggest issue was just the mix. So obviously our smaller businesses that have a smaller, lower gross margin profile than, say, our big business Janus Core. As you saw, Janus Core stayed steady. You saw the growth in the other ones, and that’s what accounts for that margin decline year-over-year, as some of the smaller businesses are growing.

Matt Johnson, Analyst, UBS: Appreciate that. Then I guess for my second question, if we could just put a finer point on the outlook for Kiwi here. I think you guys lowered the sales outlook by about $10 million. I think it’s about 11%. I think last quarter you guys had said that Kiwi had a pretty strong backlog coming into the year, which gave them pretty good visibility for 2026. Now it sounds like there were some delays, but I guess could you just talk a little bit about what you saw with those delays? What’s driving the expected ramp in Kiwi sales in the back half, and maybe any color you can give on how the backlog for Kiwi looks now?

Anselm Wong, Chief Financial Officer, Janus International Group: Yeah, I think the backlog is still pretty strong, like we said. There has been no change to the total backlog that we are seeing. I think the biggest thing we just saw is just some of our customers are just time getting their facilities that we have brought online to get those up to speed first before they start on some of those other projects that are in the pipeline. So I think you will see a little more step up there. But again, I think it is just more balancing of these are large projects, and we always say that it is hard to predict when they do start. But the good thing is we review them all, and the projects are still intact.

Matt Johnson, Analyst, UBS: Appreciate it. Thanks, guys.

Anselm Wong, Chief Financial Officer, Janus International Group: Thank you.

Operator: Thank you. Our next question will come from Dan Moore with CJS Securities. Your line is open.

Will, Analyst, CJS Securities: Hey, this is Will, in for Dan. A lot of my questions have been answered, so I will keep it short. Can you talk about your expectations for working capital and free cash flow for the remainder of the year, and what are your near-term priorities for capital allocation? How are you thinking about the desire to deleverage versus further M&A and share repurchases?

Anselm Wong, Chief Financial Officer, Janus International Group: Sure. Thanks for the question. I think, look, working capital has been fairly steady. I think we have continued to look at optimizing it, and I think if you think about cash flow, our guide is saying we will be in the higher end of the conversion percentage as we have shown in the first half. So pretty good cash flow that we are expecting for the second half as well. I think in terms of capital allocation, honestly, CapEx is small for our business in general, so it will stay relatively small. There is not any major investments that are coming up from that point of view from the operations that are needed. And obviously the other two choices, if you think about our debt, our debt has got another couple of years and we will probably refinance the issue. So there is not a big push on that piece of it.

I think the last lever in terms of share buyback, obviously at current prices are very attractive for us, and you will see us continue that action that we have seen in the first half.

Will, Analyst, CJS Securities: Thank you.

Anselm Wong, Chief Financial Officer, Janus International Group: Thanks.

Operator: Thank you. Our next question comes from Reuben Gardner with The Benchmark Company. Your line is open.

Reuben Gardner, Analyst, The Benchmark Company: Thank you. Good morning, guys. Most of my questions have been answered. I just have one. Can you elaborate on the cost actions you’re taking? Looked like there was some kind of lower SG&A maybe than we expected in this past quarter, but was that a start, or from the start in some of the cost actions you’ve taken to address the lower demand? Is that where we would see it as the year winds down? Thanks, guys.

Anselm Wong, Chief Financial Officer, Janus International Group: Yeah. Reuben, I think it’s along the lines of what we’ve always said. We’re always optimizing the entire business, not just the operations, but everything. What you’re seeing is just us continuing to look at, hey, where’s the volume going to be, where the revenue is, and let’s take the right prudent action to manage costs for the company. It is not just one area, it’s across the board.

Operator: Thank you. This concludes our question and answer session. I’ll now turn the meeting back over to Ramey Jackson for closing remarks.

Ramey Jackson, Chief Executive Officer, Janus International Group: Okay. Thank you all for joining us today. We appreciate your support of Janus and look forward to updating you on our progress. Have a great day.

Operator: Thank you. That brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect.