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. If anyone should require the operator's assistance during the conference, you may press star then 0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Ms. Sara 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 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. 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. I'd 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 and 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 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 Rapid Replace, a mobile app designed to streamline self-storage, door replacement quotes, and orders. The Janus Rapid Replace app was built for self-storage owner-operators who need 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 477,000 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 Infinitē, an on-door dual technology smart locking system, which represents an important milestone in the Nokē product roadmap we are delivering this year. Nokē Infinitē combines Bluetooth technology with near-field communication, or NFC, power harvesting, allowing the lock to be securely accessed even after its 5-year battery life is exceeded. The dual technology meaningfully reduces operational risk and maintenance costs for owner-operators. Designed with a slim on-door profile, we expect Nokē Infinitē to be available for factory install on both roll-up and swing doors beginning in the third quarter. Importantly, we see Nokē Infinitē as highly complementary to the hardware 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 owner-operators by reducing labor requirements and enhancing security through advanced access control and theft deterrence. 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. 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 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'll 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 Kiwi II Construction. At the sales channel level, our self-storage business was up 8.7%. 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 the first quarter of 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 2 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, free cash flow of $33.4 million in the quarter.
On a trailing 12-month basis, this represents a free cash flow conversion of adjusted net 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 2.7 times within our target range of 2-3 times 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 are pleased to announce a repricing of our first lien term loan, reducing our interest rate by 50 basis points from SOFR plus 250 to SOFR plus 200, significantly lowering our cost of capital, enhancing our financial flexibility. Moving to our 2026 guidance. We continue to expect full year revenue in the range of $940 million-$980 million. This includes approximately $90 million-$100 million in organic revenue from 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 ASTA business.
On the international side, we expect high single-digit revenue growth. 2026 adjusted EBITDA is expected to be in the range of $165 million-$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%-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, Anson. 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.
Certainly. We'll take our first question from Jeff Hammond with KeyBanc Capital Markets. Your line is open.
Hey, morning, guys. This is David Tarantino on for Jeff.
Hey, David.
David.
Morning. Maybe starting with the demand trends, it sounds like both self-storage and commercial are tracking in line with the initial outlook. Correct me if I'm wrong, could you give some color around how the pipeline of opportunities has evolved to date and how the underlying demand trends that you're seeing today compares to what you have implied in the guide?
Yeah. Look, I don't, Yeah, thanks for the question. I don't think there's been a lot of change quarter-over-quarter. Obviously, new construction demand in North America is impacted by interest rates, liquidity, all the things we've been talking about, mobility around housing. I don't see that changing until we get some reprieve on interest rates, quite frankly. You know, R3 is a bright spot for us. You know, we continue to perform well, obviously with M&A and consolidation that's happening in the marketplace that's driving revenue for us. On the commercial side, you know, it's the commercial sheet door product line that's really been impacted, and that has everything to do with the metal building end market, pre-engineered metal building end market.
The bright spot on the commercial side is our rolling steel door business again, which is ASTA. You know, we've been talking about our initiatives around Architectural Specification Initiatives, in addition to growing market share, and that's certainly paying off and is a green shoot for us on the commercial piece.
Great. That is helpful. Maybe on the margins, could you just give us some color on price costs with around rising inputs? I know if I recall, it typically shows through on a lag. Does this give you the opportunity to push more price? How should we think about kind of the buckets of the margins going forward?
Yeah. You think about what happened in Q margin. We had always talked about the lag in terms of the backlog of price adjustments that we had done prior just bleeding through into the quarter now. If you look at the steel trend, it's on its way up, as we had said last quarter. You would expect, you know, commercial actions the other way, you know, going into the rest of the year. I think I would say you probably have a little more commercial action adjustments in the back half, a little more price negative blending into this quarter, and then it goes back up the other way. As a reminder, our contracts allow us to adjust where we need to based on, you know, input cost changes.
Great. Maybe if I could sneak one more in. Could you just give some color on the tax rate why was it so much higher in the first quarter and tracking higher in 2026? Maybe what is the cash tax rate look like?
Sure. There, there is a lot of obviously one-timer adjustments in there due to the acquisition, as well as the refinancing that occurred. If you look at the reconciliation that's included in the earnings materials, you'll see that there is a, you know, approximately $2 million related to the debt refinancing. Obviously, a way better rate going forward, so it's a benefit for us. We have to take the charge for the prior cost. Then the other piece is the cost related to the acquisition. As you go through, obviously great actions, we're happy with Kiwi II. Obviously related to that, there's acquisition costs as well as compensation, as we paid. As you know, we disclosed that we paid some of the purchase price in equity compensation.
That drives some tax differentials for what is not as disallowed compensation. I think those are the main items, if you walk through, that impacted the tax rate, and obviously a few of them are one-timers.
Okay, great. Thanks. I'll 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. Just maybe in terms of the cadence, we just talked about price cost and how, you know, that may flow through. The guidance for the full year implies a little over 18% adjusted EBITDA margin midpoint, Q1 just below 15. Just how do we think about the cadence, you know, in terms of either sequential improvement into H2 or split of EBITDA dollars between H1 and H2? You know, how we kinda think about that walk was with, you know, starting with Q2, I guess.
Yeah, sure. Thanks for the question, Dan. If you think about it, we always talked about it as last quarter, is that a step, you know, up every quarter. Q2 will be better than Q1, a little better, probably a little less than the overall average for the year. Back half, obviously a higher than the average for the year to blend it to the year. The reason for that is that we've always constantly looking at optimizing our footprint in terms of costs. You saw the announcement in Houston. If you look at the timing of some of those cost savings, those actually blend up a bit in Q2, and then obviously full savings in Q3 and Q4. That's why you see a blend of it stepping up every quarter.
Got it. I know it's early days, but can you talk a little bit more about the, you know, whether it's cross-selling or best practices between Kiwi, Betco, you know, how does the, how's the integration going and maybe some early learnings from that acquisition?
Look, we're really happy with the progress. You know, I guess the collaboration between Janus Core and BETCO and Kiwi, you know, the focus, like you said, is cross-selling. We've had some early wins on that front in terms of combining the door and hallway through the total building envelope. Then, you know, in addition to that, Daniel Moore, the customer segment, the additional customers that we now have visibility to and that are now on the Janus platform, we're super excited about where it's going and happy with the integration efforts thus far.
Got it. If I might sneak one more in.
Yeah.
Just talk a little bit about, you know, obviously the, I guess, the second of your GROW, you know, ramp smart security solutions. Just talk a little bit more about how Nokē Infinitē, you know, helps in that. How is it complementary to Nokē Ion? You know, are you seeing more traction? You know, what kind of expectations for sequential growth, maybe not for the next quarter, but over the next year or two relative to what we've seen in terms of adoption. Thanks again.
Sure. Thanks, Dan. Great question. We're very excited about the new product launches we have for our Nokē business. If you look at the new product that we launched, it's an upgrade to the Nokē ONE. There is use cases where customers wanna install that is quicker for with a battery product as well as wireless. That's what it does. The beauty of that product is that even if the battery, which we're seeing now will last about five years, even when that battery dies, it will still work with the NFC technology that we put in it. You've got backup there. It's a beautiful product in terms of fitting that use case where you want that quicker install, especially on retrofits. Nokē Ion, further, you know, updates that product.
Everyone's been happy with that product in terms of performance, as well as battery free when you can actually install it with a wire. What it allows for is further use case, further sensors that we can add to the portfolio that we're getting a lot of requests for from customers. Very excited about the new platform and obviously helping drive, you know, sequential growth in that Nokē business.
Yeah. I think Anselm covered it well. I just wanna kinda point out, you know, this roadmap that we'll continue to launch throughout the year and next year, it's 100% innovated around voice of the customer. We're not guessing. We're not, you know, in terms of what the industry needs. We're actually listening to our customers and investing in those innovations to bring the market.
Perfect. Then last, housekeeping, just following up on the first question, tax rate, what should we expect for kind of the balance of the year? Thanks.
Yeah. I think if you look at the guidance, we put in 29%-31% for the full year. Again, obviously, it is an increase from last time, but it's a, you know, function of those items that I just mentioned in terms of the impact of the rate in Q1. I think you get a bit more normalized rate in the other quarters that blend to the average for the year.
Got it. I missed that in the guidance table. Thank you again.
Yeah.
Our next question will come from Philip Ng with Jefferies. Your line is open.
Hi, good morning. This is Fiona on for Phil. Just curious on the cost side, I know you guys are probably more insulated with the tariff, how do you think about the changes to Section 232 tariff, how is that gonna impact your business relative to your competitors?
Sure. I think as you know, obviously, most of the steel we purchase is domestic steel, so obviously, doesn't have an impact, a direct impact to the domestic steel. I think obviously, if you go down deeper into the details of the regulation, it'll impact the certain types of products made of steel. I would expect that there'll be some obviously negative impact on some of our competitors, but I think you have to go into detail in terms of the specific item that's impacted.
Okay, that's helpful. Inflation starts ticking up again. We're curious about, are you looking to pass through some of the higher costs through your surcharges or any mitigation actions you're thinking about for the rest of the year?
Yes. Definitely, absolutely, fuel is one of the top ones. We've already, just like a lot of other industries, fuel surcharges to cover that piece. In terms of steel, obviously we track that on a daily basis, and we've always said that we have the ability to adjust and there will be some commercial actions related to that trend of steel that's happening that you're seeing out there, and we're closely watching it whether or not, you know, we do more.
Okay. Maybe if I can just sneak into one last one. Can you also talk about your mix dynamics? I think in the quarter it was a little bit of a headwind.
Yes. If you look at the breakout, when the Q comes out, obviously international had a very strong quarter again. They did have a bit lower margin compared to their ending trailing margin just because of customer mix and product mix. I think that was kind of one of the big drivers that you saw in the quarter, where a lot of our smaller BUs, which have lower margins compared to the Janus core, blended into the quarter that drove a lot of the mix negative mix impact in the quarter.
Okay. Thank you. Very helpful.
Our next question will come from Reuben Gildea with The Benchmark Company. Your line is open.
Hey, good morning, everyone. This is John McGlade on for Reuben. I appreciate you taking my questions.
Morning, John.
I just wanted to start out, maybe we could follow up on Nokē. It looks like you guys added about 20,000 new units this quarter. I know the previous break-even target was 500. Just I guess with the launch of the new Nokē Infinitē platform, does it change your break-even? Then, you know, is at this point getting closer, is there any estimates you're willing to share on really how much of a contribution hitting that break-even milestone could be for the bottom line?
Yeah, we haven't disclosed that yet, but what I can tell you is, we've got a couple things that are happening. Obviously, the unit volume getting to that break-even point, but also AI is coming in and really helping us manage developing software costs. It's, it's really impacting the team where we don't need as many engineers to do the equivalent work. That is helping move that break-even point lower. I think we're excited about it, and we've all talked about getting to scale for that Nokē business. These new products are gonna help drive the incremental growth to get there quicker.
Okay, that sounds great. I guess the one other question I have, obviously international is doing well, and I know that there were some changes in the go-to-market strategies that you've implemented there over the past year or so. Could you maybe dive into how those have helped you gain share and maybe what markets specifically internationally you're seeing, kinda outsized growth in?
Good question. Look, we've been pretty consistent there and laser-focused on our strategy. What we're actually driving to is the Nokē Smart Entry offering is driving a lot of door and hallway opportunities. We've been super happy with that on the execution piece. Also looking in countries that have more of a robust development pipeline, which would be Germany and Spain, to answer a couple of them. Just really proud of the team, the management, the execution across the board and see a lot of, you know, continued tailwinds on the international side of it.
You know, like I said, I just kinda wanna highlight Nokē Smart Entry is really driving adoption in a meaningful way and is influencing owners and operators in terms of their door and hallway selection.
All right. Thank you. That was helpful. I appreciate you taking my questions, and good luck in the quarter ahead.
Thank you.
Thank you.
Our next question will come from John Lovallo with UBS. Your line is open.
Hey, good morning, guys. You've Matt Johnson on for John. Appreciate the time here. First off, if we could just put a finer point on it. I think there's obviously a few moving pieces, but at the midpoint of the full-year outlook, you guys are talking about 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 then if you guys expect 1Q to be kind of the low point of the year on gross margin specifically?
1 Q is the low point. Like we said, every quarter it'll sequentially move up, until obviously our big quarter in Q3 and then usually we have a little seasonality that adjusts for Q4. I think if you look at it, we don't disclose kind of the split, but if you think about it, a lot of the restructuring actions, at least that we've announced, will have a blend of hitting into the cost of goods sold as well as G&A.
That's great. Appreciate it. Then just on capital allocation, I think you guys bought back about $16 million of stock in the quarter, which was encouraging. Stock's been under a bit of pressure here recently. I guess, how attractive do you think repurchases are at these levels? I guess with net leverage, I think it's at 2.7x, which is kind of approaching the higher end of your target range. I guess, how comfortable are you repurchasing more stock moving forward at the risk of, you know, your net leverage potentially moving a bit higher from here?
I think the first of all, I think you're right. I think it's, you know, we bought a lot back in Q1. We think it's, you know, it was undervalued then. We think it's undervalued now. I think with the cash generation that we show that we consistently deliver provides us the flexibility to continue kind of purchasing more shares and obviously at the current price, even more attractive.
Thanks, guys.
Thank you.
We do have a follow-up question from Jeffrey Hammond with KeyBanc Capital Markets. Your line is open.
Hey, guys. David following up. Could you just give us some more color on what's embedded in the guide from a cadence perspective? How do we expect 2Q to shape up and any general framework for the back half on kind of both the top and margin lines?
Yeah. We don't provide specific guides, I think the way to think about it is just sequentially moving up for revenue is sequentially for EBITDA, That's what you would expect to do to hit the full year guide. Like I said earlier, obviously second half larger than the first half in terms of EBITDA, to get to the overall rate that we have in our guide.
Okay, great. Maybe following up on R3, could you just expand on the pipeline opportunities here a little bit more, just particularly following some large M&A deals from the operators? Are you seeing any of that yet or is How much of it's embedded in the guide today? Any color there would be helpful.
I'm not gonna comment on the specific one. They're a public company. What I can tell you is we're pleased with the R3 pipeline and backlog and also the performance. You know, we've been very clear in terms of the market dynamics around consolidation. It's happening. It continues to accelerate, and we're in a really good spot to take advantage of that market trend. Super excited about the opportunity.
Okay, great. Thanks, guys.
Thank you.
It appears we have no further questions at this time. I'll turn the program back to the speakers for any additional or closing remarks.
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.
This concludes today's program. Thank you for your participation, and you may disconnect at any time.