Table of Contents

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-257731

PROSPECTUS SUPPLEMENT NO. 5

(to Prospectus dated August 6, 2021)

 

LOGO

JANUS INTERNATIONAL GROUP, INC.

Up to 114,045,400 Shares of Common Stock

Up to 10,150,000 Warrants

Up to 10,150,000 Shares of Common Stock Underlying Warrants

 

 

This prospectus supplement supplements the prospectus dated August 6, 2021 (the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-257731). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on November 9, 2021 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

The Prospectus and this prospectus supplement relate to resale from time to time of up to 114,045,400 shares of our common stock, par value $0.0001 per share (the “Common Stock”), 10,150,000 warrants to purchase Common Stock of the Company (the “Warrants”) and 10,150,000 shares of Common Stock issuable upon exercise of the Warrants by the selling securityholders named in the Prospectus (each a “Selling Securityholder and collectively, the “Selling Securityholders”). The Common Stock may be offered from time to time up to specified limits by one or more of the Selling Securityholders identified in the Prospectus or in any supplement to the Prospectus. See the sections of the Prospectus entitled “Selling Securityholders” and “Plan of Distribution.”

Our Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “JBI.” On November 12, 2021, the closing sale price of our Common Stock was $13.25. Our Warrants were listed on NYSE under the symbol “JBI WS” until November 11, 2021. On November 11, 2021, the closing sale price of our Warrants was $3.80. As of 5:00 p.m., Eastern Time, on November 12, 2021, all of our outstanding Warrants have been redeemed.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

 

 

Investing in our Common Stock and Warrants involves risks that are described in the “Risk Factors” section beginning on page 58 of the Prospectus and under similar headings in any further amendments or supplements to the Prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus supplement is November 15, 2021.


Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 25, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                    

Commission file number: 001-40456

 

 

JANUS INTERNATIONAL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

(State or other jurisdiction of

incorporation or organization)

  

86-1476200

(I.R.S. Employer

Identification No.)

135 Janus International Blvd.

Temple, GA

(Address of principal executive offices)

  

30179

(Zip Code)

(866) 562-2580

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

  

Trading

Symbol(s)

  

Name of Each Exchange

on Which Registered

Common Stock, par value $0.0001 per share

Warrants, each to purchase one share of Common Stock

  

JBI

JBI WS

  

New York Stock Exchange

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes :  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes :  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes :  ☐    No  ☒

As of November 5, 2021, 142,936,580 shares of Class A Common Stock, par value $0.0001, were issued and outstanding.

 

 

 


Table of Contents

JANUS INTERNATIONAL GROUP, INC.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

 

         Page  

PART I—FINANCIAL INFORMATION

     3  

Item 1.

  Financial Statements      3  

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      26  

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      55  

Item 4.

  Controls and Procedures      56  

PART II—OTHER INFORMATION

     58  

Item 1.

  Legal Proceedings      58  

Item 1A.

  Risk Factors      58  

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      58  

Item 3.

  Defaults upon Senior Securities      58  

Item 4.

  Mine Safety Disclosures      58  

Item 5.

  Other Information      58  

Item 6.

  Exhibits      58  

SIGNATURES

     61  


Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Janus International Group, Inc.

Consolidated Balance Sheets

 

 

     September 25,     December 26,  
     2021     2020  
     (Unaudited)        

ASSETS

    

Current Assets

    

Cash and cash equivalents

   $ 9,221,607   $ 45,254,655

Accounts receivable, less allowance for doubtful accounts; $4,366,000 and $4,485,000, at September 25, 2021 and December 26, 2020, respectively

     101,680,287     75,135,295

Costs and estimated earnings in excess of billing on uncompleted contracts

     23,602,670     11,398,934

Inventory, net

     52,830,737     25,281,521

Prepaid expenses

     8,851,831     5,949,711

Other current assets

     3,505,602     5,192,386
  

 

 

   

 

 

 

Total current assets

   $ 199,692,734   $ 168,212,502

Property and equipment, net

     49,786,563     30,970,507

Customer relationships, net

     319,339,643     309,472,398

Tradename and trademarks

     107,958,402     85,597,528

Other intangibles, net

     18,380,776     17,387,745

Goodwill

     369,607,198     259,422,822

Deferred tax asset, net

     63,616,900       —    

Other assets

     1,992,783     2,415,243
  

 

 

   

 

 

 

Total assets

   $ 1,130,374,999     $ 873,478,745
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current Liabilities

    

Accounts payable

   $ 56,817,373   $ 29,889,057

Billing in excess of costs and estimated earnings on uncompleted contracts

     25,759,923     21,525,319

Current maturities of long-term debt

     8,111,212     6,523,417

Other accrued expenses

     62,209,935     37,164,627
  

 

 

   

 

 

 

Total current liabilities

   $ 152,898,443   $ 95,102,420  

Line of credit

     19,350,803      

Long-term debt, net

     706,927,275     617,604,254

Deferred tax liability, net

     —         15,268,131

Derivative warrant liability

     35,525,000     —    

Other long-term liabilities

     4,234,276     4,631,115
  

 

 

   

 

 

 

Total liabilities

   $ 918,935,797     $ 732,605,920
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Common Stock, 825,000,000 shares authorized, $.0001 par value, 138,384,360 and 66,145,633 shares issued and outstanding at September 25, 2021 and December 26, 2020, respectively

     13,838     6,615

Additional paid in capital

     231,407,780     189,298,544

Accumulated other comprehensive loss

     (1,123,039     (227,160

Accumulated deficit

     (18,859,377     (48,205,174
  

 

 

   

 

 

 

Total stockholders’ equity

   $ 211,439,202   $ 140,872,825
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,130,374,999     $ 873,478,745
  

 

 

   

 

 

 

See accompanying Notes to the Unaudited Consolidated Financial Statements

 

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Janus International Group, Inc.

Consolidated Statements of Operations and Comprehensive Income

 

 

     Three Months Ended     Nine Months Ended  
     September 25,
2021
    September 26,
2020
    September 25,
2021
    September 26,
2020
 
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

REVENUE

        

Sales of product

   $ 155,669,772   $ 113,511,689   $ 417,922,304   $ 317,048,413

Sales of services

     32,120,153     26,827,369     96,874,278     83,334,062
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     187,789,925     140,339,058     514,796,582     400,382,475

Cost of Sales

     125,551,395     87,574,908     340,070,342     254,755,038
  

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT

     62,238,530     52,764,150     174,726,240     145,627,437

OPERATING EXPENSE

        

Selling and marketing

     12,065,859     7,823,145     31,906,155     25,800,711

General and administrative

     24,947,491     18,309,277     78,318,621       52,875,943

Contingent consideration and earnout fair value adjustments

     —         (2,875,248     686,700       (2,875,248
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Expenses

     37,013,350     23,257,174     110,911,476     75,801,406
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM OPERATIONS

     25,225,180     29,506,976     63,814,764     69,826,031

Interest expense

     (7,663,536     (8,768,791     (23,265,333     (27,447,267

Other income (expense)

     90,873       319,091     (2,387,997     418,302

Change in fair value of derivative warrant liabilities

     3,552,500     —         1,624,000     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Expense, Net

     (4,020,163     (8,449,700     (24,029,330     (27,028,965
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME BEFORE TAXES

     21,205,017     21,057,276     39,785,434     42,797,066

Provision for Income Taxes

     3,527,275     284,282     6,265,664     1,054,574
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 17,677,742     $ 20,772,994   $ 33,519,770   $ 41,742,492
  

 

 

   

 

 

   

 

 

   

 

 

 

Other Comprehensive Income (Loss)

     (1,169,565     3,339,777     (895,879     (418,283
  

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME

   $ 16,508,177   $ 24,112,771   $ 32,623,891   $ 41,324,209
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stockholders

   $ 17,677,742     $ 20,772,994   $ 33,519,770   $ 41,742,492
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding, basic and diluted (Note 15)

        

Basic

     138,384,284     65,875,152     95,179,726     65,773,907

Diluted

     142,840,792     65,875,152     97,828,380     65,773,907

Net income per share, basic and diluted (Note 15)

        

Basic

   $ 0.13   $ 0.32   $ 0.35   $ 0.63

Diluted

   $ 0.10   $ 0.32   $ 0.33   $ 0.63

See accompanying Notes to the Unaudited Consolidated Financial Statements.

 

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Janus International Group, Inc.

Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)

 

 

    Class B
Common Units
    Class A
Preferred Units
    Common Stock     Additional
paid-in
capital
    Accumulated
Other
Comprehensive
Income (Loss)
    Accumulated
Equity
(Deficit)
    Total  
    Unit     Amount     Unit     Amount     Shares     Amount                          

Balance as of December 28, 2019

    2,599   $ 91,278   $ 189,044     189,043,734   $ —       $ —       $ —     $ (2,152,685   $ (56,088,082   $ 130,894,245
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Retroactive application of the recapitalization

    (2,599   $ (91,278   $ (189,044     (189,043,734   $ 65,676,757   $ 6,568   $ 189,128,444   $ —       $ —       $ —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 28, 2019, as adjusted

    —         —         —         —         65,676,757     6,568     189,128,444     (2,152,685     (56,088,082   $ 130,894,245
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Vesting of Midco LLC class B units

    —         —         —         —         93,054     9     27,683     —         —         27,692

Distributions to Janus Midco LLC Class A unitholders

    —         —         —         —         —         —         —         —         (54,484     (54,484

Cumulative translation adjustment

    —         —         —         —         —         —         —         (3,531,485     —         (3,531,485

Net income

    —         —         —         —         —         —         —           9,952,030     9,952,030
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 28, 2020, as adjusted

    —         —         —         —         65,769,811     6,577     189,156,127     (5,684,170     (46,190,536     137,287,998
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Vesting of Midco LLC class B units

    —         —         —         —         105,341     11     29,956     —         —         29,967

Distributions to Janus Midco LLC Class A unitholders

    —         —         —         —         —         —         —         —         (285,498     (285,498

Cumulative translation adjustment

    —         —         —         —         —         —         —         (226,575     —         (226,575

Net income

    —         —         —         —         —         —         —         —         11,017,468     11,017,468
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 27, 2020, as adjusted

    —         —         —         —         65,875,152     6,588     189,186,083     (5,910,745     (35,458,566     147,823,360
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Vesting of Midco LLC class B units

    —         —         —         —         177,426     18     60,593     —         —         60,611

Distributions to Janus Midco LLC Class A unitholders

    —         —         —         —         —         —         —         —         (35,797,005     (35,797,005

Cumulative translation adjustment

    —         —         —         —         —         —         —         3,339,777     —         3,339,777

Net income

    —         —         —         —         —         —         —         —         20,772,994     20,772,994
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of September 26, 2020, as adjusted

    —         —         —         —         66,052,578     6,606     189,246,676     (2,570,968     (50,482,577     136,199,737
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

5


Table of Contents

Janus International Group, Inc.

Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)

 

 

    Class B
Common Units
    Class A
Preferred Units
    Common Stock     Additional
paid-in
capital
    Accumulated
Other
Comprehensive
Income (Loss)
    Accumulated
Equity
(deficit)
    Total  
    Unit     Amount     Unit     Amount     Shares     Amount                          

Balance as of December 26, 2020

    4,478   $ 261,425   $ 189,044     189,043,734   $ —       $ —       $ —       $ (227,160   $ (48,205,174   $ 140,872,825
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Retroactive application of the recapitalization

    (4,478     (261,425     (189,044     (189,043,734     66,145,633     6,615     189,298,544     —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 26, 2020, as adjusted

    —         —         —         —         66,145,633     6,615     189,298,544     (227,160     (48,205,174     140,872,825
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Vesting of Midco LLC class B units

    —         —         —         —         111,895     11     51,865     —         —         51,876

Distributions to Class A preferred units

    —         —         —         —         —         —         —         —         (95,883     (95,883

Cumulative translation adjustment

    —         —         —         —         —         —         —         310,768     —         310,768

Net income

    —         —         —         —         —         —         —         —         14,718,821     14,718,821
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 27, 2021, as adjusted

    —         —         —         —         66,257,528     6,626     189,350,409     83,608     (33,582,236     155,858,407
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Vesting of Midco LLC class B units

    —         —         —         —         4,012,872     401     2,058,822     —         —         2,059,223

Issuance of PIPE Shares

    —         —         —         —         25,000,000     2,500     249,997,500     —         —         250,000,000

Issuance of common stock upon merger, net of transaction costs, earn out, and merger warrant liability

    —         —         —         —         41,113,850     4,111     226,939,423     —         —         226,943,534

Issuance of earn out shares to common stockholders

    —         —         —         —         2,000,000     200     26,479,800     —         —         26,480,000

Distributions to Janus Midco, LLC unitholders

    —         —         —         —         —         —         (541,710,278     —         —         (541,710,278

Distributions to Class A preferred units

    —         —         —         —         —         —         —         —         (4,078,090     (4,078,090

Deferred Tax Asset

    —         —         —         —         —         —         78,290,839     —         —         78,290,839

Cumulative translation adjustment

    —         —         —         —         —         —         —         (37,082     —         (37,082

Net income

    —         —         —         —         —         —         —         —         1,123,207     1,123,207
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of June 26, 2021

    —         —         —         —         138,384,250     13,838     231,406,515     46,526     (36,537,119     194,929,760
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Warrant Redemption

    —         —         —         —         110     —         1,265     —         —         1,265

Cumulative translation adjustment

    —         —         —         —         —         —         —         (1,169,565     —         (1,169,565

Net income

    —         —         —         —         —         —         —         —         17,677,742     17,677,742
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of September 25, 2021

    —         —         —         —         138,384,360     13,838     231,407,780     (1,123,039     (18,859,377     211,439,202
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying Notes to the Unaudited Consolidated Financial Statements

 

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Table of Contents

Janus International Group, Inc.

Consolidated Statements of Cash Flows

 

     Nine Months Ended  
     September 25,
2021
    September 26,
2020
 
     (Unaudited)     (Unaudited)  
Cash Flows Provided By Operating Activities     
Net income    $ 33,519,770   $ 41,742,492
Adjustments to reconcile net income to net cash provided by operating activities     

Depreciation

     4,677,954     4,270,649

Intangible amortization

     21,851,717     20,287,353

Deferred finance fee amortization

     2,286,480     2,419,061

Share based compensation

     2,111,099     118,270

Loss on extinguishment of debt

     2,414,854     (257,545

Change in fair value of contingent consideration and earnout

     686,700     (2,875,248

Loss on sale of assets

     43,091     22,595

Change in fair value of derivative warrant liabilities

     (1,624,000     —    

Undistributed (earnings) losses of affiliate

     75,565     (12,685

Deferred income taxes

     (767,658     237,359

Changes in operating assets and liabilities

    

Accounts receivable

     (16,942,650     571,872

Costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings on uncompleted contracts

     (12,101,214     1,392,227

Prepaid expenses and other current assets

     (4,488,285     (2,846,461

Inventory

     (18,474,167     1,033,221

Accounts payable

     18,409,091     1,011,609

Other accrued expenses

     29,127,435     7,728,116

Other assets and long-term liabilities

     (1,122,518     2,068,168
  

 

 

   

 

 

 

Net Cash Provided By Operating Activities

     59,683,264     76,911,053
  

 

 

   

 

 

 
Cash Flows Used In Investing Activities     

Proceeds from sale of equipment

     79,409     7,348

Purchases of property and equipment

     (15,930,575     (4,936,347

Cash paid for acquisitions, net of cash acquired

     (179,713,814     (4,472,105
  

 

 

   

 

 

 

Net Cash Used In Investing Activities

     (195,564,980     (9,401,104
  

 

 

   

 

 

 
Cash Flows Provided by (Used In) Financing Activities     

Net borrowings on line of credit

     19,350,803     —    

Distributions to Janus Midco LLC unitholders

     (4,173,973     (36,136,986

Principal payments on long-term debt

     (64,824,518     (6,623,601

Proceeds from issuance of long term debt

     155,000,000     —    

Proceeds from merger

     334,873,727     —    

Proceeds from PIPE

     250,000,000     —    

Payments for transaction costs

     (44,489,256     —    

Payments to Janus Midco, LLC unitholders at the business combination

     (541,710,278     —    

Proceeds from warrant redemption

     1,265     —    

Payment of contingent consideration

     —         (3,923,271

Payments for deferred financing fees

     (4,320,821     —    
  

 

 

   

 

 

 

Cash Provided By (Used In) Financing Activities

   $ 99,706,948   $ (46,683,858
  

 

 

   

 

 

 
Effect of exchange rate changes on cash and cash equivalents      141,720     (1,003,090
  

 

 

   

 

 

 
Net (Decrease) Increase in Cash and Cash Equivalents    $ (36,033,048   $ 19,823,001
  

 

 

   

 

 

 
Cash and Cash Equivalents, Beginning of Fiscal Year    $ 45,254,655   $ 19,905,598
  

 

 

   

 

 

 
Cash and Cash Equivalents as of September 25, 2021 and September 26, 2020    $ 9,221,607   $ 39,728,599
  

 

 

   

 

 

 
Supplemental Cash Flows Information     

Interest paid

   $ 19,226,554   $ 20,231,744

Income taxes paid

   $ 1,509,592   $ 848,831

See accompanying Notes to the Unaudited Consolidated Financial Statements

 

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Table of Contents

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

1. Nature of Operations

Janus International Group, Inc. (“Group” or “Janus”) is a holding company. Janus International Group, LLC (“Janus Core”) is a wholly-owned subsidiary of Janus Intermediate, LLC (“Intermediate”). Intermediate is a wholly-owned subsidiary of Janus Midco, LLC (“Midco”) and Midco is a wholly-owned subsidiary of Group. These entities are all incorporated in the state of Delaware. The Group is a global manufacturer and supplier of turn-key self-storage, commercial and industrial building solutions including: roll up and swing doors, hallway systems, relocatable storage units, and facility and door automation technologies with manufacturing operations in Georgia, Texas, Arizona, Indiana, North Carolina, United Kingdom, Australia, and Singapore.

The Group’s wholly owned subsidiary, Janus International Europe Holdings Ltd. (UK) (“JIE”), owns 100% of the equity of Janus International Europe Ltd. (UK), a company incorporated in England and Wales, and its subsidiary Steel Storage France (s.a.r.l), a company incorporated in France. JIE owns 100% of the equity for Active Supply & Design (CDM) Ltd. (UK) (“AS&D”), a company incorporated in England and Wales and 100% of the equity for Steel Storage Australia & Steel Storage Asia (“Steel Storage”), companies incorporated in Australia and Singapore.

The Group’s wholly owned subsidiary, Janus Cobb Holdings, LLC (“Cobb”), owns 100% of the equity of Asta Industries, Inc. (“ASTA”), a company incorporated in Georgia, and its subsidiary Atlanta Door Corporation, a company incorporated in Georgia. Cobb also owns 100% of the equity of Nokē, Inc. (“NOKE”), a company incorporated in Delaware, and Betco, Inc. (“BETCO”), a company also incorporated in Delaware.

On January 2, 2020, JIE purchased 100% of the outstanding shares of Steel Storage.

On January 18, 2021, the Group, through its wholly owned subsidiary Steel Storage acquired 100% of the net assets of G & M Stor-More Pty Ltd (“G&M”) as more fully described in Note 9 – “Business Combinations.”

On August 18, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity interests of DBCI, LLC f/k/a Dingo NewCo, LLC (“DBCI”), a company incorporated in Delaware as more fully described in Note 9 – “Business Combinations.”

On August 31, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity of Access Control Technologies, LLC (“ACT”), a company incorporated in North Carolina. Through this acquisition, the Group also acquired all assets and certain liabilities of Phoenix Iron Worx, LLC (“Phoenix”), a company incorporated in North Carolina as more fully described in Note 9 – “Business Combinations.”

The Group’s business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International. The Janus International segment is comprised of JIE, whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus Core together with each of its operating subsidiaries BETCO, NOKE, ASTA, DBCI, ACT, Janus Door, LLC (“Janus Door”) and Steel Door Depot.com, LLC.

As of June 7, 2021, Janus Parent, Inc. (“Company”) consummated the business combination (the “Business Combination”) contemplated by the Business Combination Agreement, dated as of December 21, 2020 (as amended from time to time, the “Business Combination Agreement”), by and among Janus International Group, Inc. (f/k/a Janus Parent, Inc.), Juniper Industrial Holdings, Inc. (“Juniper” or “JIH”), a blank check company, JIH Merger Sub, Inc., a wholly-owned subsidiary of the Company (“JIH Merger Sub”), Jade Blocker Merger Sub 1, Inc., Jade Blocker Merger Sub 2, Inc., Jade Blocker Merger Sub 3, Inc., Jade Blocker Merger Sub 4, Inc., Jade Blocker Merger Sub 5, Inc. (collectively referred to as the “Blocker Merger Subs”), Clearlake Capital Partners IV (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners IV (Offshore) (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners V (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners V (USTE) (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners V (Offshore) (AIV-Jupiter) Blocker, Inc. (collectively referred to as the “Blockers”), Janus Midco, LLC (“Midco”), Jupiter Management Holdings, LLC, Jupiter Intermediate Holdco, LLC, J.B.I., LLC and Cascade GP, LLC, solely in its capacity as equityholder representative. Pursuant to the Business Combination Agreement, (i) JIH Merger Sub merged with and into Juniper with Juniper being the surviving corporation in the merger and a wholly-owned subsidiary of the Company, (ii) each of the Blocker Merger Subs merged with and into the corresponding Blockers with such Blocker being the surviving corporation in each such merger and a wholly-owned subsidiary of the Company, (iii) each other equityholder of Midco contributed or sold, as applicable, all of its equity interests in Midco to the Company or Juniper, as applicable, in exchange for cash, preferred units and/or shares of the Common Stock, as applicable, and (iv) the Company contributed all of the equity interests in Midco acquired pursuant to the foregoing transactions to Juniper, such that, as a result of the consummation of the Business Combination, Midco became an indirect wholly-owned subsidiary of Juniper. Refer to Note 9 – “Business Combinations” for further discussion on the Business Combination.

 

 

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Table of Contents

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

Immediately upon the completion of the Business Combination, Juniper and Midco became wholly-owned subsidiaries of Janus International Group, Inc. The Group’s common stock and warrants issued to the public shareholders are currently traded on the New York Stock Exchange under the symbols “JBI” and “JBI WS”, respectively.

Assets held at foreign locations were approximately $56,439,000 and $53,424,000 as of September 25, 2021 and December 26, 2020, respectively. Revenues earned at foreign locations totaled approximately $17,824,000 and $12,621,000 for the three months ended September 25, 2021 and September 26, 2020 and $48,729,000 and $32,165,000 for the nine months ended September 25, 2021 and September 26, 2020, respectively.

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Statements

The accompanying consolidated balance sheet as of September 25, 2021, consolidated statements of operations and comprehensive income and consolidated statements of stockholders’ equity for the three and nine months ended September 25, 2021 and September 26, 2020, respectively and consolidated statements of cash flows for the nine months ended September 25, 2021 and September 26, 2020, are unaudited.

These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. However, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the unaudited consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of September 25, 2021, and its results of operations, including its comprehensive income and stockholders’ equity for the three and nine months ended September 25, 2021 and September 26, 2020, and its cash flows for the nine months ended September 25, 2021 and September 26, 2020. The results for the three and nine months ended September 25, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 1, 2022. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Form S-1 (as amended), initially filed with the Securities and Exchange Commission (the “SEC”) on July 7, 2021 and declared effective by the staff of the SEC on August 6, 2021, including the final prospectus dated August 6, 2021 (including supplements to the prospectus filed from time to time).

Basis of Presentation

The accompanying consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with U.S. GAAP and pursuant to the accounting and disclosure rules and regulations of the SEC for interim financial information.

The Business Combination, completed as of June 7, 2021, was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, JIH is treated as the acquired company and Midco is treated as the acquirer for financial statement reporting purposes (the “Combined Company”). Midco has been determined to be the accounting acquirer based on an evaluation of the following facts and circumstances:

 

   

Janus Midco equityholders have the majority ownership and voting rights in the Combined Company. The relative voting rights is equivalent to equity ownership (each share of common stock is one vote). JIH shareholders (IPO investors, founders, PIPE investors) hold 49.2% voting interest compared to Janus Midco’s 50.8% voting interest.

 

   

The board of directors of the Combined Company is composed of nine directors, with Janus Midco equity holders having the ability to elect or appoint a majority of the board of directors in the Combined Company.

 

   

Janus Midco’s senior management are the senior management of the Combined Company.

 

   

The Combined Company has assumed the Janus name.

Accordingly, for accounting purposes, the financial statements of the Combined Company represent a continuation of the financial statements of Midco with the acquisition being treated as the equivalent of Midco issuing stock for the net assets of JIH, accompanied by a recapitalization. The net assets of JIH will be stated at historical cost, with no goodwill or other intangible assets recorded. Midco is deemed to be the predecessor of the Company, and the consolidated assets and liabilities and results of operations prior to the Closing Date (for the year ended December 26, 2020 and the three and nine months ended September 26, 2020) are those of Midco. The shares and corresponding capital amounts and net income (loss) per share available to common stockholders, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination Agreement.

One-time direct and incremental transaction costs incurred by the Company were recorded based on the activities to which the costs relate and the structure of the transaction. The costs relating to the issuance of equity is recorded as a reduction of the amount of equity raised, presented in additional paid in capital, while all costs related to the warrants and contingent consideration were estimated and charged to expense.

 

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Table of Contents

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

Principles of Consolidation

The consolidated financial statements include the accounts of the Group and its wholly owned subsidiaries. The Company’s joint venture is accounted for under the equity method of accounting. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

In the third quarter of 2021, the Group reclassified the change in fair value of earnout recorded in June 2021 from general and administrative expense to contingent consideration and earnout fair value adjustments within operating expenses in the Consolidated Statements of Operations and Comprehensive Income.

Reorganization

As of June 7, 2021, Midco transferred its wholly owned direct subsidiary Janus Core, to the Group, thereby transferring the business for which historical financial information is included in these results of operations, to be indirectly held by Midco.

Use of Estimates in the Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant items subject to such estimates and assumptions include, but are not limited to, the fair value of contingent consideration, the fair value of assets and liabilities related to acquisitions, the derivative warrant liability, the recognition of the valuations and unit-based compensation arrangements, the useful lives of property and equipment, revenue recognition, allowances for uncollectible receivable balances, fair values and impairment of intangible assets and goodwill and assumptions used in the recognition of contract assets.

Coronavirus Outbreak

The COVID-19 outbreak will continue to have a negative impact on our operations, supply chain, transportation networks and customers. The impact on our business and the results of operations included temporary closure of our operating locations, or those of our customers or suppliers, among others. In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, which may significantly hamper our production throughout the supply chain and constrict sales channels. The extent of these factors are uncertain and cannot be predicted. Our consolidated financial statements reflect estimates and assumptions made by management as of September 25, 2021. Events and changes in circumstances arising after September 25, 2021, including those resulting from the impacts of COVID-19 pandemic, will be reflected in management’s estimates for future periods.

Emerging Growth Company

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The Company qualifies as an “Emerging Growth Company” and has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows the Company to adopt the new or revised standard at the same time periods as private companies.

Shipping and Handling (Revenue & Cost of Sales)

The Company records all amounts billed to customers in sales transactions related to shipping and handling as revenue earned for the goods provided. Shipping and handling costs are included in cost of sales. Shipping and handling costs were approximately $8,562,000 and $5,993,000 and $24,136,000 and $17,729,000 for the three and nine months ended September 25, 2021 and September 26, 2020, respectively.

 

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Table of Contents

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

Inventories

Inventories are measured using the first-in, first-out (FIFO) method. Labor and overhead costs associated with inventory produced by the Company are capitalized. Inventories are stated at the lower of cost or net realizable value as of September 25, 2021 and December 26, 2020. The Company has recorded a reserve for inventory obsolescence as of September 25, 2021 and December 26, 2020, of approximately $1,672,000 and $1,964,000, respectively.

Property and Equipment

Property and equipment acquired in business combinations are recorded at fair value as of the acquisition date and are subsequently stated less accumulated depreciation. Property and equipment otherwise acquired are stated at cost less accumulated depreciation. Depreciation is charged to expense on the straight-line basis over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the lease term or their respective useful lives. Maintenance and repairs are charged to expense as incurred.

The estimated useful lives for each major depreciable classification of property and equipment are as follows

 

Manufacturing machinery and equipment

     3-7 years  

Office furniture and equipment

     3-7 years  

Vehicles

     3-10 years  

Leasehold improvements

     3-20 years  

Other Current Assets

Other current assets as of September 25, 2021 consists primarily of other receivables and net VAT taxes of approximately $3,506,000. As of December 26, 2020, other current assets consists primarily of other receivables, net VAT taxes and deferred transaction costs associated with the Business Combination with Juniper of approximately $3,444,000.

Fair Value Measurement

The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. A three-tiered hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires that the Company use observable market data, when available, and minimize the use of unobservable inputs when determining fair value:

 

   

Level 1, observable inputs such as quoted prices in active markets;

 

   

Level 2, inputs other than the quoted prices in active markets that are observable either directly or indirectly; and

 

   

Level 3, unobservable inputs in which there is little or no market data, which requires that the Company develop its own assumptions.

The fair value of cash, accounts receivable, less allowance for doubtful accounts and account payable approximate the carrying amounts due to the short-term maturities of these instruments which fall within Level 1 of the Fair Value hierarchy. The fair value of the Company’s debt approximates its carrying amount as of September 25, 2021 and December 26, 2020 due to its variable interest rate that is tied to the current London Interbank Offered Rate (“LIBOR”) rate plus an applicable margin and consistency in our credit rating. To estimate the fair value of the Company’s long term debt, the Company utilized fair value based risk measurements that are indirectly observable, such as credit risk that falls within Level 2 of the Fair Value hierarchy. As of September 25, 2021, the public warrants were valued at market price. The fair value of the private warrants contains significant unobservable inputs including the expected term and volatility. Therefore, the private warrant liabilities were evaluated to be a Level 3 fair value measurement. The fair value of private warrants is estimated using a Binomial Lattice in a risk-neutral framework. Specifically, the future stock price of the Company is modeled assuming a Geometric Brownian Motion (GBM) in a risk-neutral framework. For each modeled future price, the warrant payoff is calculated based on the contractual terms, and then discounted at the term-matched risk-free rate. Finally, the value of the private warrants was calculated as the probability-weighted present value over all future modeled payoffs. The following assumptions were used for the valuation of the private warrants:

 

Warrant term (yrs.)

     4.7  

Volatility

     30.4

Risk-free rate

     0.91

Dividend yield

    

The change in the fair value of warrant liabilities is as follows:

 

Balance at June 26, 2021

   $ 39,077,500  

Change in fair value of warrants

     (3,552,500
  

 

 

 

Balance at September 25, 2021

   $ 35,525,000  
  

 

 

 

 

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Table of Contents

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

Warrant Liability

The Company classifies Private Placement Warrants (defined and discussed in Note 11 – “Stockholders’ Equity”) as liabilities. At the end of each reporting period, changes in fair value during the period are recognized as a component of other income (expense), net within the consolidated statements of operations and comprehensive income. The Company will continue to adjust the warrant liability for changes in fair value until the earlier of a) the exercise or expiration of the warrants or b) the redemption of the warrants, at which time the warrants will be reclassified to additional paid-in capital. On October 13, 2021, the Group announced that the Company will redeem all of its outstanding warrants which is further discussed in Note 18 – “Subsequent Events.”

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years. The Company is currently evaluating the impact of this standard to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update removes Step 2 of the goodwill impairment test under current guidance, which requires a hypothetical purchase price allocation. The new guidance requires an impairment charge to be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. Upon adoption, the guidance is to be applied prospectively. ASU 2017-04 is effective for Emerging Growth Companies in fiscal years beginning after December 15, 2021, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the adoption of ASU 2017-04 on the consolidated financial statements and does not expect a significant impact of the standard on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is effective and may be applied beginning March 12, 2020, and will apply through December 31, 2022. Janus is currently evaluating the impact this adoption will have on Janus’s consolidated financial statements. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The provisions must be applied at a Topic, Subtopic, or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level.

In June 2020, the FASB issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) which deferred the effective date for ASC 842, Leases, for one year. The leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption would continue to be allowed. The Company is evaluating the impact the standard will have on the consolidated financial statements; however, the standard is expected to have a material impact on the consolidated financial statements due to the recognition of additional assets and liabilities for operating leases.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted earnings per share (EPS) calculations as a result of these changes. The standard will be effective for Janus beginning February 7, 2022 and can be applied on either a fully retrospective or modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2020. Janus is currently evaluating the impact of this standard on Janus’s consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, with early adoption permitted. The Group does not expect adoption of the new guidance to have a significant impact on the consolidated financial statements.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

Although there are several other new accounting pronouncements issued or proposed by the FASB, which have been adopted or will be adopted as applicable, management does not believe any of these accounting pronouncements has had or will have a material impact on the Group’s consolidated financial position or results of operations.

3. Inventories

The major components of inventories at :

 

     September 25,      December 26,  
     2021      2020  

Raw materials

   $ 38,852,320    $ 17,431,731

Work-in-process

     838,389      637,109

Finished goods

     13,140,028      7,212,681
  

 

 

    

 

 

 
   $ 52,830,737    $ 25,281,521
  

 

 

    

 

 

 

4. Property and Equipment

Property, equipment, and other fixed assets as of September 25, 2021 and December 26, 2020 are as follows:

 

     September 25,      December 26,  
     2021      2020  

Land

   $ 4,501,295    $ 3,361,295

Manufacturing machinery and equipment

     34,913,905      26,446,933

Leasehold improvements

     5,204,632      5,127,065

Construction in progress

     11,127,210      2,170,193

Other

     12,725,431      8,084,391
  

 

 

    

 

 

 
   $ 68,472,473    $ 45,189,877

Less accumulated depreciation

     (18,685,910      (14,219,370
  

 

 

    

 

 

 
   $ 49,786,563    $ 30,970,507
  

 

 

    

 

 

 

5. Acquired Intangible Assets and Goodwill

Intangible assets acquired in a business combination (see Note 9 – “Business Combinations”) are recognized at fair value and amortized over their estimated useful lives. The carrying basis and accumulated amortization of recognized intangible assets at September 25, 2021 and December 26, 2020, are as follows:

 

     September 25,      December 26,  
     2021      2020  
     Gross Carrying
Amount
     Accumulated
Amortization
     Average
Remaining
Life in
Years
     Gross Carrying
Amount
     Accumulated
Amortization
 

Intangible Assets

              

Customer relationships

   $ 410,021,868    $ 90,682,225      12      $ 380,862,639    $ 71,390,241

Noncompete agreements

     411,010      238,732      6        412,949      151,028

Tradenames and trademarks

     107,958,402      —          Indefinite        85,597,528      —    

Other intangibles

     61,831,402      43,622,904      6        58,404,905      41,279,081
  

 

 

    

 

 

       

 

 

    

 

 

 
   $ 580,222,682    $ 134,543,861       $ 525,278,021    $ 112,820,350
  

 

 

    

 

 

       

 

 

    

 

 

 

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include an approximate $369,000 and $997,000 loss for the period ended September 25, 2021 and December 26, 2020, respectively. Amortization expense was approximately $8,229,000 and $6,892,000 and $21,852,000 and $20,287,000 for the three and nine months ended September 25, 2021 and September 26, 2020, respectively.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

The changes in the carrying amounts of goodwill for the period ended September 25, 2021 were as follows:

 

Balance as of December 26, 2020

   $ 259,422,822
  

 

 

 

Goodwill acquired during the period

     110,641,756  

Changes due to foreign currency fluctuations

     (457,380
  

 

 

 

Balance as of September 25, 2021

   $ 369,607,198
  

 

 

 

6. Accrued Expenses

Accrued expenses are summarized as follows:

 

     September 25,      December 26,  
     2021      2020  

Sales tax payable

   $ 2,132,147    $ 1,324,696

Interest payable

     6,576,691      4,832,590

Contingent consideration payable - short term

     4,000,000      4,000,000

Other accrued liabilities

     1,998,182      5,294,414

Employee compensation

     10,088,860      6,090,304

Customer deposits and allowances

     25,179,906      10,780,783

Other

     12,234,149      4,841,840
  

 

 

    

 

 

 

Total

   $ 62,209,935    $ 37,164,627
  

 

 

    

 

 

 

Other accrued liabilities consist primarily of deferred transaction costs of $0 and $3,337,000 as of September 25, 2021 and December 26, 2020, respectively. Other consists primarily of property tax, freight accrual, Federal and State income taxes, legal, accounting and other professional fees.

7. Line of Credit

On February 12, 2018, the Company, through Intermediate and Janus Core, entered into a revolving line of credit facility with a financial institution. In August 2021, the Company increased the available line of credit from $50,000,000 to $80,000,000, incurred additional fees for this amendment of $425,000 and extended the maturity date from February 18, 2023 to August 12, 2024. The current line of credit facility is for $80,000,000 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a LIBOR Rate option is chosen by the Company. If the LIBOR Rate is elected, the interest computation is equal to the LIBOR Rate plus the LIBOR Rate Margin. If the Base Rate is elected, the interest computation is equal to the Base Rate plus the Base Rate Margin. At the beginning of each quarter the applicable margin is set and determined by the administrative agent based on the average net availability on the line of credit for the previous quarter. As of September 25, 2021 and December 26, 2020, the interest rate in effect for the facility was 3.5%. The line of credit is collateralized by accounts receivable and inventories. The Company has incurred deferred loan costs in the amount of $1,483,000 which are being amortized over the term of the facility that expires on August 12, 2024, using the effective interest method. The amortization of the deferred loan costs is included in interest expense on the consolidated statements of operations and comprehensive income. The unamortized portion of the fees as of September 25, 2021 and December 26, 2020 was approximately $740,000 and $448,000, respectively. There was $19,350,803 and $0 outstanding balance on the line of credit as of September 25, 2021 and December 26, 2020, respectively.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

8. Long-Term Debt

Long-term debt consists of the following:

 

     September 25,      December 26,  
     2021      2020  

Note payable—First Lien

   $ —      $ 562,363,000

Note payable—First Lien B2

     —          73,875,000

Note payable—Amendment No. 4 First Lien

     726,413,482      —    

Notes payable—Auto Loans

     92,684      —    
  

 

 

    

 

 

 
     726,506,166      636,238,000

Less unamortized deferred finance fees

     11,467,679      12,110,329

Less current maturities

     8,111,212      6,523,417
  

 

 

    

 

 

 

Total long-term debt

   $ 706,927,275    $ 617,604,254
  

 

 

    

 

 

 

Notes Payable – First Lien and First Lien B2

The First Lien notes payable was comprised of a syndicate of lenders that originated on February 12, 2018, in the amount of $470,000,000 with interest payable in arrears. The Company subsequently entered into the first amendment of the First Lien notes payable on March 1, 2019, to issue an additional tranche of the notes payable in the amount of $75,000,000 (First Lien B2), and the second amendment of the First Lien notes payable on August 9, 2019, to increase the first tranche of the notes payable by $106,000,000. Both tranches bore interest, as chosen by the Company, at a floating rate per annum consisting of LIBOR plus an applicable margin percent, and were secured by substantially all business assets. On July 21, 2020, the Company repurchased $1,989,000 principal amount of the First Lien (the “Open Market Purchase”) at an approximate $258,000 discount, resulting in a gain on the extinguishment of debt of approximately $258,000. Following the repurchase of the First Lien in the Open Market Purchase, approximately $573,000,000 principal amount of the 1st Lien remained outstanding. The total interest rate for the First Lien was 4.75% as of December 26, 2020. Unamortized debt issuance costs were approximately $10,304,000 at December 26, 2020.

The First Lien B2 was comprised of a syndicate of lenders that originated on March 1, 2019, in the amount of $75,000,000 with interest payable in arrears. The outstanding loan balance was to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of June 2019 with the remaining principal due on the maturity date of February 12, 2025. As chosen by the Company, the First Lien B2 notes payable bore interest at a floating rate per annum consisting of LIBOR plus an applicable margin percent (total rate of 5.50% as of December 26, 2020.) The debt was secured by substantially all business assets. Unamortized debt issuance costs were approximately $1,806,000 as of December 26, 2020.

Notes Payable – Amendment No. 3 First Lien

As of February 5, 2021, the Company completed a repricing of its First Lien and First Lien B2 Term Loans, in which the principal terms of the amendment were a reduction in the overall interest rate based upon the loan type chosen and a consolidation of the prior two outstanding tranches into a single tranche of debt with the syndicate. The Amendment No. 3 First Lien was comprised of a syndicate of lenders originating on February 5, 2021 in the amount of $634,607,000 with interest payable in arrears. The outstanding loan balance was to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of September 2021 with the remaining principal due on the maturity date of February 12, 2025. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of LIBOR, plus an applicable margin percent (total rate of 4.25% as of September 25, 2021). The debt was secured by substantially all business assets.

As a result of the repricing transaction, the Company recognized a loss on extinguishment of approximately $1,421,000. The loss is included in Other income (expense) on the Consolidated Statements of Operations and Comprehensive Income.

As of June 7, 2021 and as a result of the Business Combination, the Company repaid approximately $61,600,000 of debt and recognized a loss on extinguishment of approximately $994,000. The loss is included in Other income (expense) on the Consolidated Statements of Operations and Comprehensive Income.

Notes Payable – Amendment No. 4 First Lien

On August 18, 2021, the Company completed a refinancing of its First Lien Amendment No. 3, in which the principal terms of the amendment were new borrowings of $155,000,000 which was used to fund the DBCI acquisition. The Amendment No. 4 First Lien is comprised of a syndicate of lenders originating on August 18, 2021 in the amount of $726,413,000 with interest payable in arrears. The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of September 2021 with the remaining principal due on the maturity date of February 12, 2025. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of LIBOR, plus an applicable margin percent (total rate of 4.25% as of September 25, 2021). The debt is secured by substantially all business assets. Unamortized debt issuance costs are approximately $11,468,000 at September 25, 2021. This refinancing amendment was accounted for as modification and as such no gain or loss was recognized for this transaction and any third party fees were expensed with bank fees, original issue discount and charges capitalized and are being amortized as a component of interest expense over the remaining loan term.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

Notes Payable – Auto Loans

With the acquisition of ACT (see Note 9 – “Business Combinations”), the Group acquired various loans secured by automobiles used by ACT to service customers. The loans outstanding balances at September 25, 2021 are approximately $93,000 and have interest rates ranging from 4.29% to 8.35%, are secured by the individual vehicles and have remaining terms of 1 to 4 years. The loans have approximate monthly payments ranging from $400 to $1,200.

As of September 25, 2021, and December 26, 2020, the Company maintained one letter of credit totaling approximately $400,000 and $295,000, on which there were no balances due.

In connection with the Company entering into the debt agreements discussed above, deferred finance fees were capitalized. These costs are being amortized over the terms of the associated debt under the effective interest rate method. Amortization of approximately $800,000 and $810,000 and $2,286,000 and $2,419,000 was recognized for the three and nine months ended September 25, 2021 and September 26, 2020, respectively, as a component of interest expense, including those amounts amortized in relation to the deferred finance fees associated with the outstanding line of credit.

Aggregate annual maturities of long-term debt at September 25, 2021, are:

 

2021

   $ 2,029,869

2022

     8,106,224

2023

     8,090,601

2024

     6,063,807

2025

     702,215,665
  

 

 

 

Total

   $ 726,506,166
  

 

 

 

9. Business Combinations

Access Control Technologies, LLC Acquisition

On August 31, 2021, Janus Core acquired 100% of the equity interests of ACT and all assets and certain liabilities of Phoenix for total consideration of approximately $10,733,000 which was comprised of approximately $9,383,000 of cash plus $1,350,000 of hold back liability. The hold back liability will be trued up and settled upon the finalization of the closing statement.

The assets and liabilities of the acquisitions have been recorded based upon management’s estimates of their fair market values as of each respective date of acquisition. The following tables summarize the fair values of consideration transferred and the fair values of identified assets acquired, and liabilities assumed at the date of acquisition:

 

Fair Value of Consideration Transferred

  

Cash

     9,383,460

Hold Back Liability

     1,350,000
  

 

 

 

Total Fair Value of Consideration Transferred

   $
10,733,460
 
  

 

 

 

Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed

  

Cash

     169,485

Accounts receivable

     1,100,533

Other current assets

     102,521

Property and equipment

     196,561

Identifiable intangible assets

  

Customer relationships

     2,470,000

Backlog

     280,000

Trademark

     1,450,000

Recognized amounts of identifiable liabilities assumed

  

Accounts payable

     (473,353

Accrued expenses

     (152,191

Other liabilities

     (1,395,911
  

 

 

 

Total identifiable net assets

     3,747,645  
  

 

 

 

Goodwill

     6,985,815  
  

 

 

 

The fair values of assets acquired and liabilities assumed, including current and noncurrent income taxes payable and deferred taxes, may be subject to change as additional information is received and certain tax returns are finalized. Accordingly, the provisional measurements of fair value of income taxes payable and deferred taxes are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The goodwill balance of $6,986,000 is attributable to the expansion of our product offerings and expected synergies of the combined workforce, products and technologies with ACT. All of the goodwill was assigned to the Janus North America segment of the business and is deductible for income tax purposes.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

 

     Fair Value      Useful Lives  

Customer Relationships

   $ 2,470,000      15 Years  

Backlog

     280,000      3 Months  

Trade Name

     1,450,000      Indefinite  
  

 

 

    

Identifiable Intangible Assets

   $ 4,200,000     
  

 

 

    

Customer relationships represent the fair values of the underlying relationships with ACT’s customers. Unbilled contracts (“Backlog”) represent the fair value of ACT’s contracts that have yet to be billed. Trade names represent ACT’s trademarks, which consumers associate with the source and quality of the products and services they provide.

The weighted-average amortization of acquired intangibles is 8.8 years

During 2021, the Company incurred approximately $284,000 of third-party acquisition costs. These expenses are included in general and administrative expense in the Company’s Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 25, 2021.

The amounts of revenue and net income of ACT included in the results from the transaction date of August 31, 2021 through September 25, 2021 are as follows:

 

     Periods from
September 1, 2021
through September 25,

2021
 

Revenue

   $ 981,976

Net Income

     26,038

DBCI, LLC Acquisition

On August 17, 2021, Janus Core acquired 100% of the equity interests of DBCI for total cash consideration of approximately $169,173,000.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

The assets and liabilities of the acquisitions have been recorded based upon management’s estimates of their fair market values as of each respective date of acquisition. The following tables summarize the fair value of consideration transferred and the fair values of identified assets acquired, and liabilities assumed at the date of acquisition:

 

Fair Value of Consideration Transferred

  
  

 

 

 

Cash

   $ 169,172,537  
  

 

 

 

Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed

  

Cash

     207,655  

Accounts receivable

     8,501,810  

Inventories

     9,075,049  

Property and equipment

     7,802,720  

Other assets

     29,280  

Identifiable intangible assets

  

Customer relationships

     26,320,000  

Backlog

     3,130,000  

Trademark

     20,850,000  

Recognized amounts of identifiable liabilities assumed

  

Accounts payable

     (8,011,998

Accrued expenses

     (571,375

Other liabilities

     (887,271
  

 

 

 

Total identifiable net assets

     66,445,870   
  

 

 

 

Goodwill

     102,726,667
  

 

 

 

The fair values of assets acquired and liabilities assumed, including current and noncurrent income taxes payable and deferred taxes, may be subject to change as additional information is received and certain tax returns are finalized. Accordingly, the provisional measurements of fair value of income taxes payable and deferred taxes are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of DBCI and Janus Core. All of the goodwill was assigned to the Janus North America segment and is deductible for income tax purposes.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

 

     Fair Value             Useful Lives  

Customer Relationships

   $ 26,320,000         15 Years  

Backlog

     3,130,000           4 Months  

Trade Name

     20,850,000           Indefinite  
  

 

 

       

 

 

 

Identifiable Intangible Assets

   $ 50,300,000      
  

 

 

       

Customer relationships represent the fair values of the underlying relationships with DBCI’s customers. Unbilled contracts (“Backlog”) represent the fair value of DBCI’s contracts that have yet to be billed. Trade names represent DBCI’s trademarks, which consumers associate with the source and quality of the products and services they provide.

The weighted-average amortization of acquired intangibles is 7.9 years.

During 2021, the Company incurred approximately $2,685,000 of third-party acquisition costs. These expenses are included in general and administrative expense in the Company’s Consolidated Statement of Operations and Comprehensive Income for the three and nine months ended September 25, 2021.

The amounts of revenue and net income of DBCI included in the Consolidated Statements of Operations and Comprehensive Income from the transaction date of August 17, 2021 through September 25, 2021 are as follows:

 

     Period from August 18,
2021 through
September 25, 2021
 

Revenue

   $ 8,456,455  

Net Income

     565,265  

Pro Forma Financial Information

The following unaudited pro forma information is based on estimates and assumptions that the Company believes to be reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had the Company and DBCI and ACT been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business combinations had they occurred on December 29, 2019. This unaudited pro forma supplemental information includes incremental asset amortization, accounting policy alignment, nonrecurring transaction costs, and other charges as a result of the acquisitions, net of the related tax effects.

The following unaudited pro forma information has been prepared as if the DBCI and ACT acquisitions had taken place on December 29, 2019. The Company prepared the table based on certain estimates and assumptions. These estimates and assumptions were made solely for the purposes of developing such unaudited pro forma information and have not been adjusted to provided period over period comparability.

 

     Three Months Period Ended      Nine Months Period Ended  
     September 25,
     September 26,
     September 25,
     September 26,
 
     2021      2020      2021      2020  

Revenue

   $ 199,314,429      $ 160,977,239      $ 574,135,446      $ 468,372,347  

Net Income

     17,097,308        19,848,627        35,272,653        43,221,338  

Business Combination with Juniper Industrial Holdings, Inc.

On June 7, 2021, Juniper consummated a business combination with Midco pursuant to the Business Combination Agreement. Pursuant to ASC 805, for financial accounting and reporting purposes, Midco was deemed the accounting acquirer and Juniper was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Accordingly, the Business Combination was treated as the equivalent of Midco issuing equity for the net assets of Juniper, accompanied by a recapitalization. Under this method of accounting, the consolidated financial statements of Midco are the historical financial statements of Janus International Group, Inc. The net assets of Juniper were stated at historical costs, with no goodwill or other intangible assets recorded in accordance with U.S. GAAP, and are consolidated with Midco’s financial statements on the Closing Date. The shares and net income (loss) per share available to holders of the Company’s common stock, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination Agreement.

As a result of the Business Combination, Midco’s unitholders received aggregate consideration of approximately $1.2 billion, which consisted of (i) $541.7 million in cash at the closing of the Business Combination and (ii) 70,270,400 shares of common stock valued at $10.00 per share, totaling $702.7 million.

In connection with the closing of the Business Combination, Juniper Industrial Sponsor, LLC (the “Sponsor”) received 2,000,000 shares of Janus’s Common Stock (pro rata among the Sponsor shares and shares held by certain affiliates) (the “Earnout Shares”) contingent upon achieving certain market share price milestone as outlined in the Business Combination Agreement. The vesting of the Earnout Shares occurred automatically as of the close of the trading on June 21, 2021 in accordance with the terms of the Earnout Agreement, entered into by

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

and between the Company and the Sponsor at the closing of the Transaction. All contingent consideration shares were issued or released during the six months ended June 26, 2021.

Concurrently with the execution and delivery of the Business Combination Agreement, certain institutional accredited investors (the “PIPE Investors”), entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors purchased an aggregate of 25,000,000 shares of Common Stock (the “PIPE Shares”) at a purchase price per share of $10.00 (the “PIPE Investment”). One of the Company’s directors also purchased an aggregate of 1,000,000 of the PIPE Shares as part of the PIPE Investment. The PIPE Investment was closed on June 7, 2021 and the issuance of an aggregate of 25,000,000 shares of Common Stock occurred concurrently with the consummation of the Business Combination.

In connection with the Business Combination, the Group incurred direct and incremental costs of approximately $44.5 million related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds. In addition, the Company incurred $4,468,000 in transaction bonuses paid to key employees and $2,059,000 in non-cash share-based compensation expense due to the accelerated vesting of Midco’s legacy share-based compensation plan. The transaction bonuses and share-based compensation are included in general and administrative expense on our consolidated statement of operations and comprehensive income for nine months ended September 25, 2021. See Note 10 – “Equity Incentive Plan and Unit Option Plan” for additional information.

G & M Stor-More Pty Ltd Acquisition

On January 19, 2021, the Company, through its wholly owned subsidiary Steel Storage Australia Pty Ltd. acquired 100% of the net assets of G&M for total cash consideration of approximately $1,739,000. In aggregate, approximately $814,000 was attributed to intangible assets, approximately $929,000 was attributable to goodwill, and approximately $(4,000) was attributable to net liabilities assumed. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and Steel Storage. All of the goodwill was assigned to the Janus International segment of the business and is not deductible for income tax purposes.

The weighted-average amortization of acquired intangibles is 11.6 years.

During 2021, the Company incurred approximately $105,000 of third-party acquisition costs. These expenses are included in general and administrative expense of the Company’s Consolidated Statement of Operations and Comprehensive Income for the nine months ended September 25, 2021.

Pro forma results of operations for this acquisition have not been presented because the historic results of operations for G&M Stor-More Pty Ltd. are not material to the consolidated results of operations in the prior year.

10. Equity Incentive Plan and Unit Option Plan

2021 Equity Incentive Plan

Effective June 7, 2021, Group implemented an equity incentive program designed to enhance the profitability and value of its investment for the benefit of its shareholders by enabling Group to offer eligible directors, officers and employees equity-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Group’s shareholders. As of September 25, 2021, no awards were granted to any individuals under the Plan.

Midco – Common B Unit Incentive Plan

Prior to the Business Combination, commencing in March 15, 2018, the Board of Directors of Midco approved the Class B Unit Incentive Plan (the “Class B Plan”), which was a form of long-term compensation that provided for the issuance of ownership units to employees for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of Midco. As a result of the Business Combination, the Board of Directors approved an acceleration of the awards granted in connection with the Class B Plan, to allow accelerated vesting of the units upon consummation of the Business Combination. On the date of the Closing, the accelerated vesting for 16,079 units (equivalent to 4,012,873 shares of Group common stock) resulted in $2.1 million of non-cash share-based compensation expense recorded to general and administrative expense in consolidated statement of operations and comprehensive income for the three and nine months ended September 25, 2021.

 

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Table of Contents

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

11. Stockholders’ Equity

On June 7, 2021, the Group’s common stock began trading on the NYSE under the symbol “JBI”. Pursuant to the terms of the Amended and Restated Certificate of Incorporation, the Company is authorized and has available 825,000,000 shares of common stock with a par value of $0.0001 per share. Immediately following the Business Combination, there were 138,384,250 shares of common stock with a par value of $0.0001 outstanding. As discussed in Note 9 – “Business Combinations,” the Company has retroactively adjusted the shares issued and outstanding prior to June 7, 2021 to give effect to the exchange ratio established in the Business Combination Agreement to determine the number of shares of common stock into which they were converted. As of September 25, 2021 the number of outstanding shares is 138,384,360. The increase in shares is a result of warrant redemptions during the nine months ended September 25, 2021.

Rollover Equity

At the closing date of the business combination, each outstanding unit of Midco’s Class A Preferred and Class B Common converted into our common stock at the then-effective conversion rate. Each unit of Midco Class A Preferred was converted into approximately 343.983 shares of our common stock, and each unit of Midco Class B Common was converted into approximately 249.585 shares of our common stock. There are 70,270,400 shares held by Midco equityholders.

PIPE Investment

Concurrently with the execution and delivery of the Business Combination Agreement, the PIPE Investors entered into the PIPE Subscription Agreements pursuant to which the PIPE Investors purchased an aggregate of 25,000,000 PIPE Shares at a purchase price per share of $10.00. One of the Company’s directors purchased an aggregate of 1,000,000 of the PIPE Shares as part of the PIPE Investment.

The PIPE Investment was closed on June 7, 2021 and the issuance of an aggregate of 25,000,000 shares of Common Stock occurred concurrently with the consummation of the Business Combination. The sale and issuance was made to accredited investors in reliance on Rule 506 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

Founder Shares

In August 2019, the Sponsor purchased 8,625,000 shares of Class B common stock (the “founder shares”) of Juniper Industrial Holdings, Inc. (“JIH”) for an aggregate purchase price of $25,000 in cash, or approximately $0.003 per founder share. By virtue of the consummation of the Business Combination, the Sponsor’s Class B common stock was converted into the right to receive an equivalent number of shares of Common Stock, 2,000,000 of which (pro rata among the Sponsor shares and shares held by certain affiliates) was subject to the terms of the Earnout Agreement. The vesting of the Earnout Shares occurred automatically as of the close of the trading on June 21, 2021 in accordance with the terms of the Earnout Agreement. The table below represents the approximate common stock holdings of Group immediately following the Business Combination.

 

     Shares      %  

Janus Midco, LLC unitholders

     70,270,400      50.8

Public stockholders

     43,113,850      31.2

PIPE Investors

     25,000,000      18.0
  

 

 

    

 

 

 

Total

     138,384,250      100.0
  

 

 

    

 

 

 

Warrants

The Sponsor purchased 10,150,000 warrants to purchase Class A common stock of JIH (the “private placement warrants”) for a purchase price of $1.00 per whole private placement warrant, or $10,150,000 in the aggregate, in private placement transactions that occurred simultaneously with the closing of the Juniper IPO and the closing of the over-allotment option for the Juniper IPO (the “private placement”). Each private placement warrant entitled the holder to purchase one share of Class A common stock of JIH at $11.50 per share. The private placement warrants were only exercisable for a whole number of shares of Class A common stock of JIH. The Sponsor transferred 5,075,000 of its private placement warrants to Midco’s equityholders as part of the consideration for the Business Combination. Immediately after giving effect to the Business Combination, there were 10,150,000 issued and outstanding private placement warrants. As of September 25, 2021, there were 10,150,000 issued and outstanding private placement warrants. The private placement warrants are liability classified.

Immediately after giving effect to the Business Combination, there were 17,249,995 issued and outstanding public warrants. As of September 25, 2021, there are 17,249,885 issued and outstanding public warrants. The public warrants are equity classified.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

12. Related Party Transactions

Prior to the Business Combination, Jupiter Intermediate Holdco, LLC, on behalf of the Janus Core, has entered into a Management and Monitoring Services Agreement (MMSA) with the Class A Preferred Unit holders group. Janus Core paid management fees to the Class A Preferred Unit holders group for the three and nine months ended September 25, 2021 and September 26, 2020 of approximately $0 and $1,632,000 and $1,124,000 and $5,241,000, respectively. Approximately $869,000 of the Class A Preferred Unit holders group management fees were accrued and unpaid as of December 26, 2020 and no fees were accrued and unpaid as of September 25, 2021. As a result of the Business Combination the MMSA was terminated effective June 7, 2021.

For the three and nine months ended September 25, 2021 and September 26, 2020, there were no related party sales from the Group to its Mexican Joint Venture. For the three and nine months ended September 25, 2021 and September 26, 2020, there were no related party sales from the Mexican Joint Venture.

Janus Core leases a manufacturing facility in Butler, Indiana, from Janus Butler, LLC, an entity wholly owned by a former member of the board of directors of Group. Rent payments paid to Janus Butler, LLC for the three and nine months ended September 25, 2021 and September 26, 2020, were approximately $37,000 and $37,000 and $123,000 and $109,000, respectively. The lease extends through October 31, 2021 and on November 1, 2021 the lease was extended to October 31, 2026, with monthly payments of approximately $13,000 with an annual escalation of 1.5%.

Janus Core is a party to a lease agreement with 134 Janus International, LLC, an entity majority owned by a former member of the board of directors of Group. Rent payments paid to 134 Janus International, LLC in the three and nine months ended September 25, 2021 and September 26, 2020, were approximately $114,000 and $112,000 and $343,000 and $335,000, respectively. On September 27, 2021, the lease was extended from September 30, 2021 to December 30, 2021, with monthly payments of approximately $38,000 per month with an annual escalation of 2.5%.

The Group leases a distribution center in Fayetteville, Georgia from French Real Estate Investments, LLC, an entity partially owned by a shareholder of the Group. Rent payments paid to French Real Estate Investments, LLC for the three and nine months ended September 25, 2021 and September 26, 2020, were approximately $26,000 and $26,000 and $79,000 and $79,000, respectively. The lease extends through July 31, 2022, with monthly payments of approximately $9,000 per month. The Group additionally acquired a lease agreement with ASTA Investment, LLC, for a manufacturing facility in Cartersville, Georgia an entity partially owned by a shareholder of the Company. The original lease term began on April 1, 2018 and extended through March 31, 2028 and was amended in June 2020 to extend the term until March 1, 2030, with monthly lease payments of $66,000 per month with an annual escalation of 2.0%. Rent payments to ASTA Investment, LLC for the three and nine months ended September 25, 2021 and September 26, 2020, were approximately $201,000 and $197,000 and $599,000 and $425,000, respectively.

The Group leases office space for ACT from an entity owned and controlled by the president of ACT. Rent payments paid to BSU Management, Ltd for the three and nine months ended September 25, 2021 were $20,000. In addition to the lease payment, ACT also paid a security deposit of $20,000 for the three and nine months periods ended September 25, 2021. The lease extends through August 31, 2026 with an option to renew for an additional 5 years and monthly payments are approximately $20,000 per month with an annual escalation of approximately 1.5%.

13. Revenue Recognition

The Company accounts for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights and payment terms can be identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised good or service to a customer.

Contract Balances

Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract assets primarily result from contracts that include installation which are billed via payment requests that are submitted in the month following the period during which revenue was recognized. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. Contract assets are disclosed as costs and estimated earnings in excess of billings on uncompleted contracts, and contract liabilities are disclosed as billings in excess of costs and estimated earnings on uncompleted contracts in the consolidated balance sheet. Contract balances as of September 25, 2021 were as follows:

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

     September 25, 2021  

Contract assets, beginning of the period

   $ 11,398,934
  

 

 

 

Contract assets, end of the period

   $ 23,602,670
  

 

 

 

Contract liabilities, beginning of the period

   $ 21,525,319
  

 

 

 

Contract liabilities, end of the period

   $ 25,759,923
  

 

 

 

During the three and nine months ended September 25, 2021, the Company recognized revenue of approximately $848,000 and $17,780,000, respectively, related to contract liabilities at December 26, 2020. There were new billings of approximately $22,015,000 for product and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of September 25, 2021.

Disaggregation of Revenue

The principal categories we use to disaggregate revenues are by timing and sales channel of revenue recognition. The following disaggregation of revenues depict the Company’s reportable segment revenues by timing and sales channel of revenue recognition for the three and nine months ended September 25, 2021 and September 26, 2020:

Revenue by Timing of Revenue Recognition

 

     Three Months Ended      Nine Months Ended  

Reportable Segments by Sales Channel Revenue
Recognition

   September 25, 2021      September 26, 2020      September 25, 2021      September 26, 2020  

Janus North America

           

Goods transferred at a point in time

   $ 154,631,784    $ 110,370,452    $ 414,713,892    $ 310,647,036

Services transferred over time

     24,487,323      22,127,171      75,184,879      69,200,338
  

 

 

    

 

 

    

 

 

    

 

 

 
     179,119,107      132,497,623      489,898,771      379,847,374
  

 

 

    

 

 

    

 

 

    

 

 

 

Janus International

           

Goods transferred at a point in time

     10,191,505      7,920,469      27,039,893      18,031,237

Services transferred over time

     7,632,830      4,700,198      21,689,399      14,133,724
  

 

 

    

 

 

    

 

 

    

 

 

 
     17,824,335      12,620,667      48,729,292      32,164,961
  

 

 

    

 

 

    

 

 

    

 

 

 

Eliminations

     (9,153,517      (4,779,232      (23,831,481      (11,629,860
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenue

   $ 187,789,925    $ 140,339,058    $ 514,796,582    $ 400,382,475
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue by Sale Channel Revenue Recognition

 

     Three Months Ended      Nine Months Ended  

Reportable Segments by Sales Channel Revenue
Recognition

   September 25, 2021      September 26, 2020      September 25, 2021      September 26, 2020  

Janus North America

           

Self Storage-New Construction

   $ 54,506,607    $ 67,675,747    $ 157,120,551    $ 184,898,993

Self Storage-R3

     57,141,059      30,663,566      151,563,398      98,645,228

Commercial and Others

     67,471,441      34,158,310      181,214,822      96,303,153
  

 

 

    

 

 

    

 

 

    

 

 

 
     179,119,107      132,497,623      489,898,771      379,847,374
  

 

 

    

 

 

    

 

 

    

 

 

 

Janus International

           

Self Storage-New Construction

   $ 12,435,987    $ 7,874,084    $ 34,186,904    $ 19,903,835

Self Storage-R3

     5,388,348      4,692,451      14,542,388      12,206,994

Commercial and Others

            54,132             54,132
  

 

 

    

 

 

    

 

 

    

 

 

 
     17,824,335      12,620,667      48,729,292      32,164,961
  

 

 

    

 

 

    

 

 

    

 

 

 

Eliminations

     (9,153,517      (4,779,232      (23,831,481      (11,629,860
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenue

   $ 187,789,925    $ 140,339,058    $ 514,796,582    $ 400,382,475
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

14. Income Taxes

Prior to June 7, 2021, the Company was a limited liability company taxed as a partnership for U.S. federal income tax purposes. The Company was generally not directly subject to income taxes under the provisions of the Internal Revenue Code and most applicable state laws. Therefore, taxable income or loss was reported to the members for inclusion in their respective tax returns.

After June 7, 2021, the Group is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws . The Group’s effective tax rate is based on pre-tax earnings, enacted U.S. statutory tax rates, non-deductible expenses, and certain tax rate differences between U.S. and foreign jurisdictions. The foreign subsidiaries file income tax returns in the United Kingdom, France, Australia, and Singapore as necessary. For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Group’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.

The provision for income taxes for the three and nine months ended September 25, 2021 and September 26, 2020 includes amounts related to entities within the group taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore. The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate on year to date ordinary income and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs. Additionally, the income tax effects of significant unusual or infrequently occurring items are recognized entirely within the interim period in which the event occurs.

During the three months ended September 25, 2021 and September 26, 2020, the Company recorded a total income tax provision of approximately $3,527,000 and $284,000 on pre-tax income of approximately $21,205,000 and $21,057,000 resulting in an effective tax rate of 16.6% and 1.3%, respectively. During the nine months ended September 25, 2021 and September 26, 2020, the Company recorded a total income tax provision of approximately $6,266,000 and $1,055,000 on pre-tax income of approximately $39,785,000 and $42,797,000 resulting in an effective tax rate of 15.7% and 2.5%, respectively The effective tax rates for these periods were primarily impacted by the change in tax status of the Group, statutory rate differentials, changes in estimated tax rates, and permanent differences.

15. Net Income Per Share

Prior to the Business Combination, and prior to effecting the reverse recapitalization, the Company’s pre-merger LLC membership structure included two classes of units: Class A preferred units and Class B common units. The Class A preferred units were entitled to receive distributions prior and in preference on Class A preferred unit unpaid cumulative dividends (“Unpaid Preferred Yield”) followed by Class A preferred unit capital contributions that have not been paid back to the holders (the “Unreturned Capital”). Vested Class B common units participate in the remaining distribution on a pro-rata basis with Class A preferred units if they have met the respective Participation Threshold and, if applicable, the Target Value defined in the respective Unit Grant Agreement. The Class A preferred and Class B common units fully vested at the Business Combination date.

Pursuant to the Restated and Amended Certificate of Incorporation and as a result of the reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to June 7, 2021 to give effect to the exchange ratio used to determine the number of shares of common stock into which they were converted. Basic net income per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include stock purchase warrants and contingently issuable shares attributable to the earn-out consideration.

The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the three and nine months ended September 25, 2021 and September 26, 2020:

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

     Three Months Ended      Nine Months Ended  
     September 25, 2021      September 26, 2020      September 25, 2021      September 26, 2020  

Numerator:

           

Net income attributable to common stockholders

     17,677,742      20,772,994      33,519,770      41,742,492

Adjustment for Warrants—gain on value of private warrants

     (3,552,500      —          (1,624,000      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Income as adjusted

     14,125,242      20,772,994      31,895,770      41,742,492
  

 

 

    

 

 

    

 

 

    

 

 

 

Denominator:

           

Weighted average number of shares:

           

Basic

     138,384,284      65,875,152      95,179,726      65,773,907

Adjustment for Warrants—Treasury stock method

     4,456,508      —          2,648,654      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     142,840,792      65,875,152        97,828,380      65,773,907  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic net income per share attributable to common stockholders

   $ 0.13    $ 0.32    $ 0.35    $ 0.63

Diluted net income per share attributable to common stockholders

   $ 0.10    $ 0.32    $ 0.33    $ 0.63
  

 

 

    

 

 

    

 

 

    

 

 

 

16. Segments Information

The Company operates its business and reports its results through two reportable segments: Janus North America and Janus International, in accordance with ASC Topic 280, Segment Reporting. The Janus International segment is comprised of JIE with its production and sales located largely in Europe. The Janus North America segment is comprised of all the other entities including Janus Core, BETCO, NOKE, ASTA, DBCI, ACT, Janus Door and Steel Door Depot.

Summarized financial information for the Company’s segments is shown in the following tables:

 

     Three Months Ended      Nine Months Ended  
     September 25,      September 26,      September 25,      September 26,  
     2021      2020      2021      2020  

Revenue

           

Janus North America

   $ 179,119,107    $ 132,497,623    $ 489,898,771    $ 379,847,374

Janus International

     17,824,334      12,620,668      48,729,292      32,164,961

Intersegment

     (9,153,516      (4,779,233      (23,831,481      (11,629,860
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated Revenue

   $ 187,789,925    $ 140,339,058    $ 514,796,582    $ 400,382,475
  

 

 

    

 

 

    

 

 

    

 

 

 

Income From Operations

           

Janus North America

   $ 24,381,785    $ 28,108,223    $ 60,884,392    $ 67,754,629

Janus International

     819,333      1,362,916      2,881,576      1,980,836

Eliminations

     24,062      35,837      48,796      90,566
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Segment Operating Income

   $ 25,225,180    $ 29,506,976    $ 63,814,764    $ 69,826,031
  

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation Expense

           

Janus North America

   $ 1,590,238    $ 1,329,258    $ 4,357,148    $ 3,960,580

Janus International

     108,380      108,690      320,806      310,069
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated Depreciation Expense

   $ 1,698,618    $ 1,437,948    $ 4,677,954    $ 4,270,649
  

 

 

    

 

 

    

 

 

    

 

 

 

Amortization of Intangible Assets

           

Janus North America

   $ 7,876,571    $ 6,415,681    $ 20,692,679    $ 19,244,828

Janus International

     352,189      475,904      1,159,038      1,042,525
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated Amortization Expense

   $ 8,228,760    $ 6,891,585    $ 21,851,717    $ 20,287,353
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

     September 25,      December 26  
     2021      2020  

Identifiable Assets

     

Janus North America

   $ 1,074,290,055      $ 820,259,539  

Janus International

     56,084,944        53,219,206
  

 

 

    

 

 

 

Consolidated Assets

   $ 1,130,374,999      $ 873,478,745
  

 

 

    

 

 

 

17. Significant Estimates and Concentrations

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following:

General Litigation

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

Self-Insurance

Under the Company’s workers’ compensation insurance program, coverage is obtained for catastrophic exposures under which the Company retains a portion of certain expected losses. The Company has stop loss workers’ compensation insurance for claims in excess of $200,000 as of September 25, 2021 and December 26, 2020, respectively. Provision for losses expected under this program is recorded based upon the Company’s estimates of the aggregate liability for claims incurred and totaled approximately $246,000 and $391,000 as of September 25, 2021, and December 26, 2020, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these consolidated financial statements.

Under the Company’s health insurance program, coverage is obtained for catastrophic exposures under which the Company retains a portion of certain expected losses. The Company has stop loss insurance for claims in excess of $250,000 and $250,000 as of September 25, 2021 and December 26, 2020, respectively. Provision for losses expected under this program is recorded based upon the Company’s estimates of the aggregate liability for claims incurred and totaled approximately $793,000 and $916,000 as of September 25, 2021 and December 26, 2020, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these consolidated financial statements.

 

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Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

 

 

18. Subsequent Events

For the interim consolidated financial statements as of September 25, 2021, the Company has evaluated subsequent events through the issuance of the financial statements.

On October 13, 2021, Janus announced that it will redeem all of its outstanding warrants to purchase shares of Janus’s common stock that were issued pursuant to the Warrant Agreement, dated as of June 7, 2021 by and between Janus and Continental Stock Transfer & Trust Company (the “Warrant Agent”) and the Warrant Agreement, dated as of July 15, 2021, by and between Janus and the Warrant Agent, for a redemption price of $0.10 per Warrant (the “Redemption Price”), that remain outstanding at 5:00 p.m. New York City time on November 12, 2021 (the “Redemption Date”).

On October 22, 2021, the Company announced that David Curtis has resigned from the Board of Directors (the “Board”) due to health reasons, effective October 20, 2021. Mr. Curtis did not serve on any committees of the Board. A replacement director has not been identified at this time.

 

 

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

JANUS’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which Janus’s management believes is relevant to an assessment and understanding of consolidated results of operations and financial condition. You should read the following discussion and analysis of Janus’s financial condition and results of operations in conjunction with the consolidated financial statements and notes thereto contained in this Quarterly report on Form 10-Q.

Certain information contained in this discussion and analysis or set forth elsewhere in this Quarterly report on Form 10-Q, including information with respect to plans and strategy for Janus’s business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors,” Janus’s actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Quarterly report on Form 10-Q. We assume no obligation to update any of these forward-looking statements.

Unless otherwise indicated or the context otherwise requires, references in this Janus’s Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Midco” “Janus,” “we,” “us,” “our,” and other similar terms refer to Midco and its subsidiaries prior to the Business Combination and to Janus International Group Inc. (Parent) and its consolidated subsidiaries after giving effect to the Business Combination.

Percentage amounts included in this Quarterly report on Form 10-Q have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Quarterly report on Form 10-Q may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Quarterly report on Form 10-Q.

Certain other amounts that appear in this Quarterly report on Form 10-Q may not sum due to rounding.

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying unaudited consolidated financial statements and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. MD&A is organized as follows:

 

   

Business Overview: This section provides a general description of our business, and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as recent developments we believe are important to understanding our results of operations and financial condition or in understanding anticipated future trends.

 

   

Basis of Presentation: This section provides a discussion of the basis on which our unaudited consolidated financial statements were prepared.

 

   

Results of Operations: This section provides an analysis of our unaudited results of operations for the three and nine months periods ended September 25, 2021 and September 26, 2020, respectively.

 

   

Liquidity and Capital Resources: This section provides a discussion of our financial condition and an analysis of our unaudited cash flows for the three and nine months periods ended September 25, 2021 and September 26, 2020, respectively. This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at September 25, 2021, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital.

 

   

Critical Accounting Policies and Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.

Business Overview

Janus is a leading global manufacturer and supplier of turn-key self-storage, commercial and industrial building solutions including: roll up and swing doors, hallway systems, relocatable storage units, and facility and door automation technologies with manufacturing operations in Georgia, Texas, Arizona, Indiana, North Carolina, United Kingdom, Australia, and Singapore. The self-storage industry is comprised of institutional and

 

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non-institutional facilities. Institutional facilities typically include multi-story, climate controlled facilities located in prime locations owned and/or managed by large Real Estate Investment Trusts (“REITs”) or returns-driven operators of scale and are primarily located in the top 50 U.S. metropolitan statistical areas (“MSAs”), whereas the vast majority of non-institutional facilities are single-story, non-climate controlled facilities located outside of city centers owned and/or managed by smaller private operators that are mostly located outside of the top 50 U.S. MSAs. Janus is highly integrated with customers at every phase of a project, including facility planning/design, construction, access control and restore, rebuild, replace (R3) of damaged or end-of-life products.

Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International. The Janus International segment is comprised of Janus International Europe Holdings Ltd. (UK), whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus Core, BETCO, NOKE, ASTA, DBCI, ACT, Janus Door, and Steel Door Depot.com.

Furthermore, our business is comprised of three primary sales channels: New Construction-Self-storage, R3-Self-storage (R3), and Commercial and Other. The Commercial and Other category is primarily comprised of roll-up sheet and rolling steel door sales into the commercial marketplace.

New construction consists of engineering and project management work pertaining to the design, building, and logistics of a greenfield new self-storage facility tailored to customer specifications while being compliant with ADA regulations. Any Nokē Smart Entry System revenue associated with a new construction project also rolls up into this sales channel.

The concept of Janus R3 is to replace storage unit doors, optimizing unit mix and idle land, and adding a more robust security solution to enable customers to (1) charge higher rental rates and (2) compete with modern self-storage facilities and large operators. In addition, the R3 sales channel also includes new self-storage capacity being brought online through conversions and expansions. R3 transforms facilities through door replacement, facility upgrades, Nokē Smart Entry Systems, and relocatable storage MASS (Moveable Additional Storage Structure).

Commercial light duty steel roll-up doors are designed for applications that require less frequent and less demanding operations. Janus offers heavy duty commercial grade steel doors (minimized dead-load, or constant weight of the curtain itself) perfect for warehouses, commercial buildings, and terminals, designed with a higher gauge and deeper guides, which combats the heavy scale of use with superior strength and durability. Janus also offers rolling steel doors known for minimal maintenance and easy installation with, but not limited to, the following options, commercial slat doors, heavy duty service doors, fire doors, fire rated counter shutters, insulated service doors, counter shutters and grilles.

Executive Overview

Janus’s financials reflect the result of the execution of our operational and corporate strategy to penetrate the fast-growing self-storage, commercial and industrial markets, as well as capitalizing on the aging self-storage facilities, while continuing to diversify our products and solutions. We believe Janus is a bespoke provider of not only products, but solutions that generate a favorable financial outcome for our clients.

During the last two years, we have acquired Steel Storage Asia, PTI Australasia Pty Ltd., G&M, DBCI, and ACT to expand geographically. Our M&A activity has collectively enhanced our growth trajectory, technology and global footprint, while providing us access to highly attractive adjacent categories.

Total revenue was $187.8 million and $514.8 million for the three and nine months period ended September 25, 2021, representing an increase of 33.8% and 28.6% from $140.3 million and $400.4 million for the three and nine months period ended September 26, 2020.

Revenues increased in the third quarter of 2021 as compared to the third quarter of 2020, largely due to continued strong performance within both the R3 and Commercial and Other sales channels and $9.4 million of the inorganic growth as a result of the DBCI and ACT acquisitions coupled with the COVID-19 pandemic impacting prior year revenue in the third quarter of 2020. The same trends were generally present in both the Janus North America segment as well as the Janus International segment, indicative of a worldwide continued recovery from the COVID-19 pandemic.

Adjusted EBITDA was $36.3 million and $104.9 million for the three and nine months period ended September 25, 2021, representing a 2.9% and 13.7% increase from $35.3 million and $92.2 million for the three and nine months period ended September 26, 2020.

 

 

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Adjusted EBITDA as a percentage of revenue was 19.3% and 20.4% for the three and nine months period ended September 25, 2021, representing a decrease of 5.8% and 2.7% from 25.1% and 23.0% for the three and nine months period ended September 26, 2020. The reduction in Adjusted EBITDA margins is a direct result of the inflationary increases in raw material, labor and logistics costs impacting the business in advance of price increases taking effect. In addition to the inflationary cost pressures, Janus also experienced incremental costs as a public company and incremental headcount costs associated with strategic investments in both our Facilitate division coupled with our continued build out of our Noke Smart entry ground game and customer service department.

Information regarding use of Adjusted EBITDA, a non-GAAP measure, and a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measure, is included in “Non-GAAP Financial Measures.”

On August 18, 2021, the Company completed a refinancing of its First Lien Amendment No. 3, in which the principal terms of the amendment were new borrowings of $155.0 million which were used to fund the DBCI acquisition. In addition, the Company increased the available line of credit from $50.0 million to $80.0 million and extended the maturity date. There was a $19.4 million increase on the line of credit during the three months period ended September 25, 2021. (See Liquidity and Capital Resources” section.)

The Business Combination

On June 7, 2021, Juniper Industrial Holdings, Inc. (“Juniper”) consummated a business combination with Midco pursuant to the Business Combination Agreement. Pursuant to ASC 805, for financial accounting and reporting purposes, Midco was deemed the accounting acquirer and Juniper was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. At the closing date of the business combination, each outstanding unit of Midco’s Class A Preferred and Class B Common converted into our common stock at the then-effective conversion rate. Immediately upon the completion of the Business Combination, Juniper and Midco became wholly-owned subsidiaries of Janus International Group, Inc. The shares of common stock and warrants of the Company are currently traded on the NYSE under the symbols “JBI” and “JBI WS”, respectively.

As a result of the Business Combination, equityholders of Midco received aggregate consideration with a value equal to $1.2 billion which consisted of (i) $541.7 million in cash and (ii) $702.7 million in shares of our Common Stock, or 70,270,400 shares based on an assumed stock price of $10.00 per share. In connection with the closing of the Business Combination, the Sponsor received 2,000,000 shares of our Common Stock (pro rata among the Sponsor shares and shares held by certain affiliates) (the “Earnout Shares”) contingent upon achieving certain market share price milestone as outlined in the Business Combination Agreement. The vesting of the Earnout Shares occurred as of the close of the trading on June 21, 2021.

Part of the proceeds from the merger were used to pay a non-liquidating cash distribution to Janus Midco unitholders’ in the amount of $541.7 million and partial payment to Note Payable in the amount of $61.6 million. (See “Liquidity and Capital Resources” section.)

Business Segment Information

Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International.

Janus North America is comprised of eight operating segments including Janus Core, Janus Door, Steel Door Depot, ASTA, NOKE, BETCO, DBCI, and ACT. Janus North America produces and provides various fabricated components such as commercial and self-storage doors, walls, hallway systems and building components used primarily by owners or builders of self-storage facilities and also offers installation services along with the products. Janus North America represented 90.5%, 90.5%, 91.0% and 92.0% of Janus’s revenue for the three and nine months period ended September 25, 2021 and September 26, 2020, respectively.

Janus International is comprised solely of one operating segment, Janus International Europe Holdings Ltd (UK). The Janus International segment produces and provides similar products and services as Janus North America but largely in Europe as well as Australia. Janus International represented 9.5%, 9.5%, 9.0%, and 8.0% of Janus’s revenue for the three and nine months period ended September 25, 2021 and September 26, 2020, respectively.

 

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Acquisitions

Our highly accretive M&A strategy focuses on (i) portfolio diversification into attractive and logical adjacencies, (ii) geographic expansion, and (iii) technological innovation.

Inorganic growth, through acquisitions, serves to increase Janus’s strategic growth. Since 2020, Janus has completed five acquisitions which contributed a combined $18.9 million inorganic revenue increase from December 29, 2019 through September 25, 2021. Refer to the “Risk Factors” section of our registration statement filed on Form S-1 (as amended) on July 7, 2021 for further information on the risks associated with integration of these acquisitions. Janus acquired the following six companies to fuel the inorganic growth of its manufacturing capabilities, product offerings, and technology solutions provided to customers.

On January 2, 2020, Janus’s wholly-owned subsidiary, JIE purchased 100% of the outstanding shares of Steel Storage Asia Pte Ltd. and Steel Storage Australia Pty Ltd. (collectively “Steel Storage” or “SSA”) for $6.5 million. The rationale for the Steel Storage acquisition was geographic expansion. The Steel Storage acquisition specifically expanded Janus’s global presence.

On March 31, 2020, Janus’s wholly-owned subsidiary, Steel Storage Australia Pty Ltd. purchased 100% of the assets of PTI Australasia Pty Ltd., a provider of access control security in the self-storage design and commercial industries in Australia, New Zealand and surrounding regions, for $0.032 million. The PTI Australasia Pty Ltd. acquisition specifically bolstered the adoption of Nokē Smart Entry Systems in Australia and New Zealand.

On January 18, 2021, the Company, through its wholly owned subsidiary Steel Storage Australia Pty Ltd. acquired 100% of the net assets of G & M Stor-More Pty Ltd. for approximately $1.74 million. G & M Stor-More Pty Ltd. has over 23 years’ experience in self-storage building, design, construction and consultation. As a result of the acquisition, the Company will have an opportunity to increase its customer base of the self-storage industry and expand its product offerings in the Australian market.

On August 18, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity interests of DBCI, a company incorporated in Delaware, for $169.2 million. DBCI is a manufacturer of exterior building products in North America, with over 25 years’ servicing commercial, residential and repair markets. As a result of the acquisition, the Company will have an opportunity to increase its customer base of both the commercial and self-storage industries and expand its product offerings in the North American market.

On August 31, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity of ACT, a company incorporated in North Carolina, for $10.7 million. Through this acquisition, the Group also acquired all assets and certain liabilities of Phoenix, a company incorporated in North Carolina. ACT has specialized in protecting critical assets in the self-storage and industrial building industries for over 7 years’. The ACT team is comprised of security industry experts who continually train to be at the forefront of emerging industry trends, technological advancements, and new security vulnerabilities or hazards that threaten their clients. As a result of the acquisition, the Company will have an opportunity to expand its Nokē Smart Entry ground game.

Impact of Brexit

The U.K. exit from the European Union on January 31, 2020, commonly referred to as Brexit, has caused, and may continue to cause, uncertainty in the global markets. Political and regulatory responses to the withdrawal are still developing, and we are in the process of assessing the impact that the withdrawal may have on our business as more information becomes available. Any impact from Brexit on our business and operations over the long term will depend, in part, on the outcome of tariff, tax treaties, trade, regulatory, and other negotiations the U.K. conducts.

Impact of COVID-19 and the CARES Act

In early 2020, the Coronavirus (COVID-19) swiftly began to spread globally, and the World Health Organization (WHO) subsequently declared COVID-19 to be a public health emergency of international concern on March 11, 2020. The COVID-19 outbreak has resulted in travel restrictions and in some cases, prohibitions of non-essential activities, disruption and shutdown of certain businesses and greater uncertainty in global financial markets. The full extent to which COVID-19 impacts Janus’s business, results of operations and financial condition are dependent on the further duration and spread of the outbreak mainly within the United States, Europe, and Australia.

To aid in combating the negative business impacts of COVID-19, the federal government enacted the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” on March 27, 2020. Under the CARES Act, Janus deferred $2.6 million in payroll taxes of which half of the balance is due December 31, 2021 and the remaining balance is due December 31, 2022.

 

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As a result of COVID-19 and in support of continuing its manufacturing efforts, Janus has undertaken a number of steps to protect its employees, suppliers and customers, as their safety and well-being is one of our top priorities. Janus has taken several safety measures including implementing social distancing practices and requiring employees to wear masks. There was $1.0 million and $1.2 million in COVID-19 related expenses in the three and nine months period ended September 25, 2021 primarily related to COVID-19 PPE supplies and COVID tests.

Notwithstanding our continued operations and performance, the COVID-19 pandemic may continue to have negative impacts on our operations, supply chain, transportation networks and customers, which may compress our margins as a result of preventative and precautionary measures that Janus, other businesses, and governments are taking. Any resulting economic downturn could adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials. The progression of this matter could also negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers, among others. In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above, which may significantly hamper our production throughout the supply chain and constrict sales channels. The extent to which the COVID-19 pandemic may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the pandemic and the effectiveness of actions globally to contain or mitigate its effects.

Our unaudited consolidated financial statements and discussion and analysis of financial condition and results of operations reflect estimates and assumptions made by management as of September 25, 2021. Events and changes in circumstances arising after September 25, 2021, including those resulting from the impacts of the COVID-19 pandemic, will be reflected in management’s estimates for future periods.

Management continues to monitor the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.

Key Performance Measures

Management evaluates the performance of its reportable segments based on the revenue of services and products, gross profit, operating margins, and cash from business operations. We use Adjusted EBITDA, which is a non-GAAP financial metric, as a supplemental measure of our performance in order to provide investors with an improved understanding of underlying performance trends. Please see the section “Non-GAAP Financial Measure” below for further discussion of this financial measure, including the reasons why we use such financial measures and reconciliations of such financial measures to the nearest GAAP financial measures.

Human capital is also one of the main cost drivers of the manufacturing, selling, and administrative processes of Janus. As a result, headcount is reflective of the health of Janus indicative of an expansion or contraction of the overall business. We expect to continue to increase headcount in the future as we grow our business. Moreover, we expect that we will continue to hire additional accounting, finance, and other personnel in connection with our becoming, and our efforts to comply with the requirement of being, a public company.

The following table sets forth key performance measures for the periods ended September 25, 2021 and September 26, 2020

 

     Three Months     Variance  
     Period ended
September 25,
2021
    Period ended
September 26,
2020
    $      %  

Total Revenue

   $ 187,789,925   $ 140,339,058   $ 47,450,867      33.8

Adjusted EBITDA

   $ 36,308,668   $ 35,283,414   $ 1,025,254      2.9

Adjusted EBITDA (% of revenue)

     19.3     25.1        (5.8 )% 

 

     Nine Months     Variance  
     Period ended
September 25,
2021
    Period ended
September 26,
2020
    $      %  

Total Revenue

   $ 514,796,582   $ 400,382,475   $ 114,414,107      28.6

Adjusted EBITDA

   $ 104,857,783   $ 92,210,886   $ 12,646,897      13.7

Adjusted EBITDA (% of revenue)

     20.4     23.0        (2.7 )% 

 

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As of September 25, 2021, and September 26, 2020, the headcount was 1,601 (including 486 temporary employees) and 1,231 (including 300 temporary employees), respectively.

Total revenue increased by $47.5 million and $114.4 million or 33.8% and 28.6% for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 primarily due to increased volumes and improved market conditions in 2021 as the COVID-19 pandemic significantly impacted revenue in the third quarter of 2020 coupled with a $9.4 million increase in inorganic revenue growth as a result of the DBCI and ACT acquisitions. In addition, we began to see a more meaningful impact from our commercial actions in the later part of the third quarter of 2021. (See “Results of Operations” section.)

Adjusted EBITDA increased by $1.0 million and $12.6 million or 2.9% and 13.7% from the three and nine months period ended September 25, 2021 compared to the three and nine months periods ended September 26, 2020 primarily due to increased revenue which was partially offset by increased cost of sales and general and administrative expenses.

Adjusted EBITDA as a percentage of revenue decreased 5.8% and 2.7% for the three and nine months period ended September 25, 2021 primarily due to inflationary increases to raw material, labor and logistics costs in advance of commercial and cost containment actions taking effect. In addition to the inflationary cost pressures, Janus also experienced incremental costs as a public company and incremental headcount costs associated with strategic investments in both our Facilitate division coupled with our continued build out of our Nokē Smart entry ground game and customer service department. (See Non-GAAP Financial Measures” section.)

Basis of Presentation

The unaudited consolidated financial statements have been derived from the accounts of Janus and its wholly owned subsidiaries. Janus’s fiscal year follows a 4-4-5 calendar which divides a year into four quarters of 13 weeks, grouped into two 4-week “months” and one 5-week “month.” As a result, some monthly comparisons are not comparable as one month is longer than the other two. The major advantage of a 4-4-5 calendar is that the end date of the period is always the same day of the week, making manufacturing planning easier as every period is the same length. Every fifth or sixth year will require a 53rd week.

We have presented results of operations, including the related discussion and analysis for the following periods:

 

   

the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020.

Components of Results of Operations

Sales of products. Sale of products represents the revenue from the sale of products, including steel roll-up and swing doors, rolling steel doors, steel structures, as well as hallway systems and facility and door automation technologies for commercial and self-storage customers. Product revenue is recognized upon transfer of control to the customer, which generally takes place at the point of destination (Janus Core) and at the point of shipping (all other segments). We expect our product revenue may vary from period to period on, among other things, the timing and size of orders and delivery of products and the impact of significant transactions. Revenues are monitored and analyzed as a function of sales reporting within the following sales channels, Self-Storage New Construction, Self-Storage R3, and Commercial and Other.

Sales of services. Service revenue reflects installation services to customers for steel facilities, steel roll-up and swing doors, hallway systems, and relocatable storage units which is recognized over time based on the satisfaction of our performance obligation. Janus is highly integrated with customers at every phase of a project, including facility planning/design, construction, access control and R3 of damaged, or end-of-life products or rebranding of facilities due to market consolidation. Service obligations are primarily short term and completed within a one-year time period. We expect our service revenue to increase as we add new customers and our existing customers continue to add more and more content per square foot.

Cost of sales. Our cost of sales consists of the cost of products and cost of services. Cost of products includes the manufacturing cost of our steel roll-up and swing doors, rolling steel doors, steel structures, and hallway systems which primarily consists of amounts paid to our third-party contract suppliers and personnel-related costs directly associated with manufacturing operations as well as overhead and indirect costs. Cost of services includes third-party installation subcontractor costs directly associated with the installation of our products. Our cost of sales include purchase price variance, cost of spare or replacement parts, warranty costs, excess and obsolete inventory charges, shipping costs, and an allocated portion of overhead costs, including depreciation. We expect cost of sales to increase in absolute dollars in future periods as we expect our revenues to continue to grow.

 

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Selling and marketing expense. Selling expenses consist primarily of compensation and benefits of employees engaged in selling activities as well as related travel, advertising, trade shows/conventions, meals and entertainment expenses. We expect selling expenses to increase in absolute dollars in future periods as we expect our revenues to continue to grow.

General and administrative expense. General and administrative (“G&A”) expenses are comprised primarily of expenses relating to employee compensation and benefits, travel, meals and entertainment expenses as well as depreciation, amortization, and non-recurring costs. We expect general and administrative expenses to increase in absolute dollars in future periods as we expect our revenues to continue to grow. We also expect G&A expenses to increase in the near term as a result of operating as a public company, including expenses associated with compliance with the rules and regulations of the Commission, and an increase in legal, audit, insurance, investor relations, professional services and other administrative expenses.

Interest expense. Interest expense consists of interest expense on short-term and long-term debt and amortization on deferred financing fees. (See “Long Term Debt” section.)

Factors Affecting the Results of Operations

Key Factors Affecting the Business and Financial Statements

Janus’s management believes their performance and future growth depends on a number of factors that present significant opportunities but also pose risks and challenges.

Factors Affecting Revenues

Janus’s revenues from products sold are driven by economic conditions, which impacts new construction, R3 of self-storage facilities, and commercial revenue.

Janus periodically modifies sales prices of their products due to changes in costs for raw materials and energy, market conditions, labor costs and the competitive environment. In certain cases, realized price increases are less than the announced price increases because of project pricing, competitive reactions and changing market conditions. Janus also offers a wide assortment of products that are differentiated by style, design and performance attributes. Pricing and margins for products within the assortment vary. In addition, changes in the relative quantity of products purchased at different price points can impact year-to-year comparisons of net sales and operating income.

Service revenue is driven by the product revenue and the increase in value-added services, such as pre-work planning, site drawings, installation and general contracting, project management, and third-party security. Janus differentiates itself through on-time delivery, efficient installation, best in-class service, and a reputation for high quality products.

Factors Affecting Growth Through Acquisitions

Janus’s business strategy involves growth through, among other things, the acquisition of other companies. Janus tries to evaluate companies that it believes will strategically fit into its business and growth objectives. If Janus is unable to successfully integrate and develop acquired businesses, it could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on its financial results.

Janus may not be able to identify suitable acquisition or strategic investment opportunities or may be unable to obtain the required consent of its lenders and, therefore, may not be able to complete such acquisitions or strategic investments. Janus may incur expenses associated with sourcing, evaluating and negotiating acquisitions (including those that do not get completed), and it may also pay fees and expenses associated with financing acquisitions to investment banks and other advisors. Any of these amounts may be substantial, and together with the size, timing and number of acquisitions Janus pursues, may negatively affect and cause significant volatility in its financial results.

In addition, Janus has assumed, and may in the future assume, liabilities of the company it is acquiring. While Janus retains third-party advisors to consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to it. If there are unknown liabilities or other obligations, Janus’s business could be materially affected.

Seasonality

Generally, Janus’s sales tend to be the slowest in January due to more unfavorable weather conditions, customer business cycles and the timing of renovation and new construction project launches.

 

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Factors Affecting Operating Costs

Janus’s operating expenses are comprised of direct production costs (principally raw materials, labor and energy), manufacturing overhead costs, freight, costs to purchase sourced products and selling, general, and administrative expenses.

Janus’s largest individual raw material expenditure is steel coils. Fluctuations in the prices of steel coil are generally beyond Janus’s control and have a direct impact on the financial results. In 2020 and 2021, Janus entered into agreements with three of its largest suppliers in order to lock in steel coil prices for part of Janus’s production needs and partially mitigate the potential impacts of short-term steel coil price fluctuations. This arrangement allows Janus to purchase quantities of product within specified ranges as outlined in the contracts.

Freight costs are driven by Janus’s volume of sales of products and are subject to the freight market pricing environment.

Results of Operations – Consolidated

The period to period comparisons of our results of operations have been prepared using the historical periods included in our unaudited consolidated financial statements. The following discussion should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this document. We have derived this data from our unaudited consolidated financial statements included elsewhere in this Quarterly report on Form 10-Q. The following tables set forth our results of operations for the periods presented in dollars and as a percentage of total revenue.

Results of Operations

For the three and nine months period ended September 25, 2021 compared to the period ended September 26, 2020

 

     Three Months      Variance  
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     $      %  

REVENUE

           

Sales of products

   $ 155,669,772    $ 113,511,689    $ 42,158,083      37.1

Sales of services

     32,120,153      26,827,369      5,292,784      19.7
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     187,789,925      140,339,058      47,450,867      33.8

Cost of Sales

     125,551,395      87,574,908      37,976,487      43.4
  

 

 

    

 

 

    

 

 

    

 

 

 

GROSS PROFIT

     62,238,530      52,764,150      9,474,380      18.0

OPERATING EXPENSE

           

Selling and marketing

     12,065,859      7,823,145      4,242,714      54.2

General and administrative

     24,947,491      18,309,277      6,638,214      36.3

Contingent consideration and earnout fair value adjustments

     —          (2,875,248      2,875,248      (100.0 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Expenses

     37,013,350      23,257,174      13,756,176      59.1
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME FROM OPERATIONS

     25,225,180      29,506,976      (4,281,796      (14.5 )% 

Interest expense

     (7,663,536      (8,768,791      1,105,255      (12.6 )% 

Other income (expense)

     90,873      319,091      (228,218      (71.5 )% 

Change in fair value of derivative warrant liabilities

     3,552,500      —          3,552,500     
  

 

 

    

 

 

    

 

 

    

 

 

 

Other Expense, Net

     (4,020,163      (8,449,700      4,429,537      (52.4 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME BEFORE TAXES

     21,205,016      21,057,276      147,740      0.7

Provision for Income Taxes

     3,527,275      284,282      3,242,993      1140.8
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INCOME

   $ 17,677,742    $ 20,772,994    $ (3,095,252      (14.9 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents
     Nine Months      Variance  
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     $      %  

REVENUE

           

Sales of products

   $ 417,922,304    $ 317,048,413    $ 100,873,891      31.8

Sales of services

     96,874,278      83,334,062      13,540,216      16.2
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     514,796,582      400,382,475      114,414,107      28.6

Cost of Sales

     340,070,342      254,755,038      85,315,304      33.5
  

 

 

    

 

 

    

 

 

    

 

 

 

GROSS PROFIT

     174,726,240      145,627,437      29,098,803      20.0

OPERATING EXPENSE

           

Selling and marketing

     31,906,155      25,800,711      6,105,444      23.7

General and administrative

     78,318,621      52,875,943      25,442,678      48.1

Contingent consideration and earnout fair value adjustments

     686,700        (2,875,248      3,561,948      (123.9 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Expenses

     110,911,476      75,801,406      35,110,070      46.3
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME FROM OPERATIONS

     63,814,764      69,826,031      (6,011,267      (8.6 )% 

Interest expense

     (23,265,333      (27,447,267      4,181,934      (15.2 )% 

Other income (expense)

     (2,387,997      418,302      (2,806,299      (670.9 )% 

Change in fair value of derivative warrant liabilities

     1,624,000      —          1,624,000     
  

 

 

    

 

 

    

 

 

    

 

 

 

Other Expense, Net

     (24,029,330      (27,028,965      2,999,635      (11.1 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME BEFORE TAXES

     39,785,434      42,797,066      (3,011,632      (7.0 )% 

Provision for Income Taxes

     6,265,664      1,054,574      5,211,090      494.1
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INCOME

   $ 33,519,770    $ 41,742,492    $ (8,222,722      (19.7 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue

 

     Three Months                   Revenue Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variances      Variance
%
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 

Sales of products

   $ 155,669,772    $ 113,511,689    $ 42,158,083      37.1   $ 8,220,713    $ 33,937,370      29.9

Sales of services

     32,120,153      26,827,369      5,292,784      19.7     1,217,718      4,075,066      15.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 187,789,925    $ 140,339,058    $ 47,450,867      33.8   $ 9,438,431    $ 38,012,436      27.1
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

     Nine Months                   Revenue Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variances      Variance
%
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 

Sales of products

   $ 417,922,304    $ 317,048,413    $ 100,873,891      31.8   $ 8,220,713    $ 92,653,178      29.2

Sales of services

     96,874,278      83,334,062      13,540,216      16.2     1,217,718      12,322,498      14.8
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 514,796,582    $ 400,382,475    $ 114,414,107      28.6   $ 9,438,431    $ 104,975,676      26.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

The $47.5 million and $114.4 million revenue increase for the three and nine month period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 is primarily attributable to increased volumes as a result of favorable industry dynamics in both the commercial and R3 sales channels coupled with inorganic growth of $9.4 million as a result of the DBCI and ACT acquisitions. In addition, we began to see a more meaningful impact from our commercial actions in the third quarter of 2021. The inorganic growth as a result of the PTI Australasia Pty Ltd. and G&M Stor-More Pty Ltd. acquisitions are not separately stated above as these amounts were not significant.

 

34


Table of Contents

The following table and discussion compares Janus’s sales by sales channel.

 

     Three Months            Three Months            Variance  
Consolidated    Period ended
September 25,
2021
     % of sales     Period ended
September 26,
2020
     % of sales     $     %  

New Construction - Self Storage

   $ 65,934,280      35.1   $ 74,520,022      53.1   $ (8,585,742     (11.5 )% 

R3 - Self Storage

     59,247,787      31.6     35,136,858      25.0   $ 24,110,929     68.6

Commercial and Other

     62,607,858      33.3     30,682,178      21.9     31,925,680     104.1
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 187,789,925      100.0   $ 140,339,058      100.0   $ 47,450,867     33.8
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

     Nine Months            Nine Months            Variance  
Consolidated    Period ended
September 25,
2021
     % of sales     Period ended
September 26,
2020
     % of sales     $     %  

New Construction - Self Storage

   $ 187,874,566      36.5   $ 200,455,652      50.1   $ (12,581,086     (6.3 )% 

R3 - Self Storage

     157,766,343      30.6     110,852,222      27.7     46,914,121     42.3

Commercial and Other

     169,155,673      32.9     89,074,601      22.2     80,081,072     89.9
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 514,796,582      100.0   $ 400,382,475      100.0   $ 114,414,107     28.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

New construction sales decreased by $8.6 million or 11.5% and decreased by $12.6 million or 6.3% for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020, respectively. The decrease in the three and nine months period ended September 25, 2021 is primarily due to the continued delays in greenfield projects caused by permitting delays associated with the COVID-19 global pandemic, coupled with the continued trend of new self-storage capacity being brought online through conversions and expansions, which roll up under R3.

R3 sales increased by $24.1 million and $46.9 million or 68.6% and 42.3% for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 due to the increase of conversions and expansions as more self-storage capacity continues to be brought online through R3 as opposed to greenfield sites coupled with the positive impacts from commercial actions.

Commercial and other sales increased by $31.9 and $80.1 million or 104.1% and 89.9% for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 due to Janus Core and ASTA experiencing favorable market gains due to the continued e-commerce movement coupled with share gains in the commercial steel roll up door market from ASTA’s launch of the rolling steel product line in the fourth quarter of 2020. In addition, we began to see a more meaningful impact from our commercial actions in the quarter.

Cost of Sales and Gross Margin

Gross margin decreased by 4.5% and 2.5% to 33.1% and 33.9% for the three and nine months period ended September 25, 2021 from 37.6% and 36.4% for the three and nine months period ended September 26, 2020 due primarily to continued increased raw material, labor and logistics costs in advance of commercial and cost containment initiatives taking effect.

 

     Three Months                   Cost of Sales Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance      Variance
%
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 

Cost of Sales

   $ 125,551,395        87,574,908    $ 37,976,487        43.4   $ 6,601,554      $ 31,374,933        35.8

 

     Nine Months                   Cost of Sales Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance      Variance
%
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 

Cost of Sales

   $ 340,070,342        254,755,038    $ 85,315,304        33.5   $ 6,601,554      $ 85,315,304        33.5

The $38.0 million and $85.3 million or 43.4% and 33.5% increase in cost of sales for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 is primarily attributable to increased raw material, labor and logistics costs on a global basis, revenue increases and inorganic growth of $6.6 million as a result of the DBCI and ACT acquisitions.

 

35


Table of Contents

Operating Expenses – Selling and marketing

Selling and marketing expense increased $4.2 million and $6.1 million or 54.2% and 23.7% from the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 primarily due to increased marketing, trade show and payroll related costs for additional headcount to support revenue growth coupled with limited travel, marketing and trade show costs in the prior year due to the pandemic. In addition, there was an increase in selling and marketing expenses of $0.4 million as a result of the DBCI and ACT acquisitions.

Operating Expenses – General and administrative

General and administrative expenses increased $6.6 million and $25.4 million or 36.3% and 48.1% from the three and nine months period ended September 26, 2020 compared to the three and nine months period ended September 25, 2021 primarily due to an increase in general liability and health insurance, professional fees and payroll related costs for additional headcount to support the continued top line revenue growth coupled with the transition to a public company and $1.9 million as a result of the DBCI and ACT acquisitions. In addition, the Company incurred transaction related costs in conjunction with the June 2021 business combination of approximately $10.4 million which is further discussed in Non-GAAP Financial Measures section.

Interest Expense

Interest expense decreased $1.1 million and $4.2 million or 12.6% and 15.2% from the three and nine months period ended September 26, 2020 compared to the three and nine months period ended September 25, 2021 due to a lower interest rate environment coupled with a $2.0 million debt prepayment in July 2020. In addition, the Company entered into a Debt Modification agreement in February 2021 which consolidated the prior two outstanding tranches into a single tranche and resulted in a reduction in the overall interest rate. In conjunction with the business combination on June 7, 2021, the Company made a $61.6 million prepayment on debt. On August 18, 2021, the Company completed a refinancing of its First Lien Amendment No. 3, in which the principal terms of the amendment were new borrowings of $155.0 million which partially offset this decrease in the interest expense for the three months period ended September 25, 2021. (See Liquidity and Capital Resourcessection.)

Other Income (Expense)

Other income (expense) decreased by $0.2 million and increased by $2.8 million or 71.5% and 670.9% from $0.3 and $0.4 million of other income for the three and nine months period ended September 26, 2020 to $0.1 million of other income and $2.4 million of other (expense) for the period ended September 25, 2021. The decrease for the three months period ended is primarily due to a $0.3 million gain on extinguishment of debt included in the three months period ended September 26, 2020, but not present in the three months period ended September 25, 2021. The increase in other (expense) for the nine months period ended is primarily due to a $2.4 million loss on extinguishment of debt included in the nine months period ended September 25, 2021 but not present in the nine months period ended September 26, 2020.

Income Taxes

Income tax expense increased by $3.2 million and $5.2 million or 1140.8% and 494.1% from $0.3 million and $1.1 million for the three and nine months period ended September 26, 2020 to $3.5 million and $6.3 million expense for the three and nine months period ended September 25, 2021 due to a tax structure change from a limited liability company that was considered a disregarded entity for tax purposes to a Corporation as a result of the Business Combination that occurred on June 7, 2021.

Net Income

The $3.1 million and $8.2 million or 14.9% and 19.7% decrease in net income for the three and nine month periods ended September 25, 2021 as compared to the three and nine months period ended September 26, 2020 is largely due to an increase in raw material, labor and logistics costs coupled with increased selling, general and administrative expenses.

Segment Results of Operations

We operate in and report financial results for two segments: North America and International with the following sales channels, Self-Storage New Construction, Self-Storage R3, and Commercial and Other.

Segment operating income is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. For these reasons, we believe that Segment operating income represents the most relevant measure of Segment profit and loss. Our chief operating decision maker may exclude certain charges or gains, such as corporate charges and other special charges, to arrive at a Segment operating income that is a more meaningful measure of profit and loss upon which to base our operating decisions. We define Segment operating margin as Segment operating income as a percentage of the segment’s Net revenues.

 

36


Table of Contents

The segment discussion that follows describes the significant factors contributing to the changes in results for each segment included in Net earnings.

Results of Operations – Janus North America

For the three and nine months period ended September 25, 2021 compared to the period ended September 26, 2020

 

                                                           
     Three Months                
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance  
     $      %  
                             

REVENUE

           

Sales of products

   $ 154,631,783    $ 110,370,452    $ 44,261,331      40.1

Sales of services

     24,487,324      22,127,171      2,360,153      10.7
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     179,119,107      132,497,623      46,621,484      35.2

Cost of Sales

     121,480,502      83,687,988      37,792,514      45.2
  

 

 

    

 

 

    

 

 

    

 

 

 

GROSS PROFIT

     57,638,605      48,809,635      8,828,970      18.1

OPERATING EXPENSE

           

Selling and marketing

     10,956,479      7,746,220      3,210,259      41.4

General and administrative

     22,300,340      15,830,440      6,469,900      40.9

Contingent consideration and earnout fair value adjustments

     —          (2,875,248      2,875,248      (100.0 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Expenses

     33,256,819      20,701,412      12,555,407      60.7
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME FROM OPERATIONS

   $ 24,381,786    $ 28,108,223    $ (3,726,437      (13.3 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Nine Months                
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance  
     $      %  
                             

REVENUE

           

Sales of products

   $ 414,713,892    $ 310,647,036    $ 104,066,856      33.5

Sales of services

     75,184,879      69,200,338      5,984,541      8.6
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     489,898,771      379,847,374      110,051,397      29.0

Cost of Sales

     328,593,737      243,878,508      84,715,229      34.7
  

 

 

    

 

 

    

 

 

    

 

 

 

GROSS PROFIT

     161,305,034      135,968,866      25,336,168      18.6

OPERATING EXPENSE

           

Selling and marketing

     29,123,707      23,569,694      5,554,013      23.6

General and administrative

     70,610,235      47,519,790      23,090,445      48.6

Contingent consideration and earnout fair value adjustments

     686,700        (2,875,248      3,561,948      (123.9 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Expenses

     100,420,642      68,214,236      32,206,406      47.2
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME FROM OPERATIONS

   $ 60,884,392    $ 67,754,630    $ (6,870,238      (10.1 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue

 

     Three Months      Variances      Variance
%
    Revenue Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 
                                                 

Sales of products

   $ 154,631,783    $ 110,370,452    $ 44,261,331      40.1   $ 8,220,713    $ 36,040,618      32.7

Sales of services

     24,487,324      22,127,171      2,360,153      10.7     1,217,718      1,142,435      10.7
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 179,119,107    $ 132,497,623    $ 46,621,484      35.2   $ 9,438,431    $ 37,183,053      28.1
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

37


Table of Contents
     Nine Months      Variances      Variance
%
    Revenue Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 
                                                 

Sales of products

   $ 414,713,892    $ 310,647,036    $ 104,066,856      33.5   $ 8,220,713    $ 95,846,143      30.9

Sales of services

     75,184,879      69,200,338      5,984,541      8.6     1,217,718      4,766,823      8.6
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 489,898,771    $ 379,847,374    $ 110,051,397      29.0   $ 9,438,431    $ 100,612,966      26.5
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

The $46.6 million and $110.1 million or 35.2% and 29.0% revenue increase is primarily attributable to increased volumes as a result of favorable industry dynamics in both the commercial and R3 sales channels coupled with inorganic growth of $9.4 million as a result of the DBCI and ACT acquisitions. In addition, we began to see a more meaningful impact from our commercial actions in the quarter.

The following table and discussion compares Janus North America sales by sales channel.

 

     Three Months              
     Period ended
September 25,
2021
     % of total
sales
    Period ended
September 26,
2020
     % of total
sales
    Variance  
    $     %  
                                        

New Construction - Self Storage

   $ 54,506,607      30.4   $ 67,675,747      51.1   $ (13,169,140     (19.5 )% 

R3 - Self Storage

     57,141,059      31.9     30,663,566      23.1     26,477,493     86.3

Commercial and Other

     67,471,441      37.7     34,158,310      25.8     33,313,131     97.5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 179,119,107      100.0   $ 132,497,623      100.0   $ 46,621,484     35.2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

     Nine Months              
     Period ended
September 25,
2021
     % of total
sales
    Period ended
September 26,
2020
     % of total
sales
    Variance  
    $     %  
                                        

New Construction - Self Storage

   $ 157,120,551      32.1   $ 184,898,993      48.7   $ (27,778,442     (15.0 )% 

R3 - Self Storage

     151,563,398      30.9     98,645,228      26.0     52,918,170     53.6

Commercial and Other

     181,214,822      37.0     96,303,153      25.4     84,911,669     88.2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 489,898,771      100.0   $ 379,847,374      100.0   $ 110,051,397     29.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

New Construction sales decreased by $13.2 million and $27.8 million or 19.5% and 15.0% for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 due to continued delays in projects associated with the COVID-19 global pandemic, coupled with the continued trend of new self-storage capacity being brought online through conversions and expansions, which are included in R3 sales.

R3 sales increased by $26.5 million and $52.9 million or 86.3% and 53.6% for the three and nine months period ended September 25, 2021 compared to the three and nine months periods ended September 26, 2020 due primarily to the continued trend of new self-storage capacity being brought online through conversions and expansions coupled with the positive impacts from commercial actions.

Commercial and Other sales increased by $33.3 million and $84.9 million or 97.5% and 88.2% for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 due to increases in both Janus Core and ASTA commercial steel roll up door market, from strong momentum with the launch of the ASTA rolling steel product line in the fourth quarter of 2020 and commercial initiatives implemented to offset the inflationary increases of raw materials, labor, and logistics costs.

Cost of Sales and Gross Margin

Gross Margin decreased by 4.7% and 2.9% to 32.2% and 32.9% for the three and nine months period ended September 25, 2021, from 36.0% and 35.2% for the three and nine months period ended September 26, 2020 due primarily to continued increased raw material, labor and logistics costs in advance of commercial and cost containment initiatives taking effect.

 

38


Table of Contents
     Three Months      Variance      Variance
%
    Cost of Sales Variance Breakdown  
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 

Cost of Sales

   $ 121,480,502      $ 83,687,988      $ 37,792,514        45.2   $ 6,601,554      $ 31,190,960        37.3

 

     Nine Months      Variance      Variance
%
    Cost of Sales Variance Breakdown  
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Domestic
Acquisitions
     Organic
Growth
     Organic
Growth
%
 

Cost of Sales

   $ 328,593,737      $ 243,878,508      $ 84,715,229        34.7   $ 6,601,554      $ 78,113,675        32.0

The $37.8 million and $84.7 million or 45.2% and 34.7% increase in cost of sales for the three and nine months period ended September 25, 2021 compared to the three and nine months period ended September 26, 2020 is primarily due to increased revenue coupled with an increase in raw material, labor, and logistics costs. In addition, there was an inorganic increase of $6.6 million as a result of the DBCI and ACT acquisitions.

Operating Expenses – Selling and marketing

Selling and marketing expenses increased $3.2 million and $5.6 million or 41.4% and 23.6% from $7.7 million and $23.6 million for the three and nine months period ended September 26, 2020 to $11.0 million and $29.1 million for the three and nine months period ended September 25, 2021 primarily due to increased marketing and trade show and payroll related costs for additional headcount to support revenue growth coupled with lower spend on travel, marketing and trade shows in the prior year due to the pandemic. In addition, there was an increase in selling and marketing expenses of $0.4 million as a result of the DBCI and ACT acquisitions.

Operating Expenses – General and administrative

General and administrative expenses increased $6.5 million and $23.1 million or 40.9% and 48.6% from $15.8 million and $47.5 million for the three and nine months period ended September 26, 2020 to $22.3 million and $70.6 million for the three and nine months period ended September 25, 2021 primarily due to an increase in general liability and health insurance, professional fees and payroll related costs for additional headcount to support the incremental revenue coupled with the transition to a public company and $1.9 million as a result of the DBCI and ACT acquisitions. In addition, the Company incurred transaction related costs in conjunction with the June 2021 business combination of approximately $10.4 million which is further discussed in Non-GAAP Financial Measures section.

Income from Operations

Income from operations decreased by $3.7 million and $6.9 million or 13.3% and 10.1% from $28.1 million and $67.8 million for the three and nine months period ended September 26, 2020 to $24.4 million and $60.9 million for the three and nine months period ended September 25, 2021 primarily due to an increase in cost of sales, selling and general and administrative expenses, partially offset by an increase in revenue.

 

39


Table of Contents

INTERNATIONAL

Results of Operations – Janus International

For the three and nine months period ended September 25, 2021 compared to the period ended September 26, 2020

 

     Three Months               
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance  
     $     %  
                            

REVENUE

          

Sales of products

   $ 10,191,505    $ 7,920,469    $ 2,271,036     28.7

Sales of services

     7,632,830      4,700,198      2,932,632     62.4
  

 

 

    

 

 

    

 

 

   

 

 

 

Total revenue

     17,824,335      12,620,667      5,203,668     41.2

Cost of Sales

     13,248,470      8,701,990      4,546,480     52.2
  

 

 

    

 

 

    

 

 

   

 

 

 

GROSS PROFIT

     4,575,865      3,918,677      657,188     16.8

OPERATING EXPENSE

          

Selling and marketing

     1,109,381      76,925      1,032,456     1342.2

General and administrative

     2,647,151      2,478,837      168,314     6.8
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating Expenses

     3,756,532      2,555,762      1,200,770     47.0
  

 

 

    

 

 

    

 

 

   

 

 

 

INCOME FROM OPERATIONS

   $ 819,333    $ 1,362,915    $ (543,582     (39.9 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

 

                                                                       
     Nine Months                
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance  
     $      %  
                             

REVENUE

           

Sales of products

   $ 27,039,893    $ 18,031,237    $ 9,008,656      50.0

Sales of services

     21,689,399      14,133,724      7,555,675      53.5
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     48,729,292      32,164,961      16,564,331      51.5

Cost of Sales

     35,356,883      22,596,956      12,759,927      56.5
  

 

 

    

 

 

    

 

 

    

 

 

 

GROSS PROFIT

     13,372,409      9,568,005      3,804,404      39.8

OPERATING EXPENSE

           

Selling and marketing

     2,782,448      2,231,017      551,431      24.7

General and administrative

     7,708,386      5,356,153      2,352,233      43.9
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Expenses

     10,490,834      7,587,170      2,903,664      38.3
  

 

 

    

 

 

    

 

 

    

 

 

 

INCOME FROM OPERATIONS

   $ 2,881,575    $ 1,980,835    $ 900,740      45.5
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue

 

                                                                                               
     Three Months      Variances      Variance
%
    Revenue Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Organic
Growth
     Organic
Growth
 
                                          

Sales of products

   $ 10,191,505    $ 7,920,469    $ 2,271,036      28.7   $ 2,271,036      28.7

Sales of services

     7,632,830      4,700,198      2,932,632      62.4     2,932,631      62.4
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 17,824,335    $ 12,620,667    $ 5,203,668      41.2   $ 5,203,668      41.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

                                                                                               
     Nine Months      Variances      Variance
%
    Revenue Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Organic
Growth
     Organic
Growth
 
                                          

Sales of products

   $ 27,039,893    $ 18,031,237    $ 9,008,656      50.0   $ 9,008,656      50.0

Sales of services

     21,689,399      14,133,724      7,555,675      53.5     7,555,674      53.5
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total

   $ 48,729,292    $ 32,164,961    $ 16,564,331      51.5   $ 16,564,330      51.5
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

The $5.2 million and $16.6 million revenue increase includes a 41.2% and 51.5% increase in organic growth driven by increased sales volumes due to improved market conditions, primarily in the second and third quarter of 2021. The inorganic growth as a result of the PTI Australasia Pty Ltd. and G&M Stor-More Pty Ltd. are not separately stated above as these amounts were not significant.

 

40


Table of Contents

The following table illustrates the sales by channel for the three and nine months period ended September 25, 2021 and September 26, 2020.

 

     Three Months      % of total
sales
    Variance  
     Period ended
September 25,
2021
     % of total
sales
    Period ended
September 26,
2020
    $     %  
                                        

New Construction - Self Storage

   $ 12,435,987      69.8   $ 7,874,084      62.4   $ 4,561,903       57.9

R3 - Self Storage

     5,388,348      30.2     4,692,451      37.2     695,897       14.8

Commercial and Other

     —          —       54,132      0.4     (54,132     (100.0 )% 
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 17,824,335      100.0   $ 12,620,667      100.0   $ 5,203,668       41.2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

     Nine Months      % of total
sales
    Variance  
     Period ended
September 25,
2021
     % of total
sales
    Period ended
September 26,
2020
    $     %  
                                        

New Construction - Self Storage

   $ 34,186,904      70.2   $ 19,903,835      61.9   $ 14,283,069       71.8

R3 - Self Storage

     14,542,388      29.8     12,206,994      38.0     2,335,394       19.1

Commercial and Other

     —          —       54,132      0.2     (54,132     (100.0 )% 
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 48,729,292      100.0   $ 32,164,961      100.0   $ 16,564,331       51.5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

New Construction sales increased by $4.6 million and $14.3 million or 57.9% and 71.8% to $12.4 million and $34.2 million for the three and nine months period ended September 25, 2021 from $7.9 million and $19.9 million for the three and nine months period ended September 26, 2020 due to increased volumes and improved market conditions as the international market continues to open up after the COVID-19 pandemic.

R3 sales increased by $0.7 million and $2.3 million or 14.8% and 19.1% to $5.4 million and $14.5 million for the three and nine months period ended September 25, 2021 from $4.7 million and $12.2 million for the three and nine months period ended September 26, 2020 due primarily to project mix fluctuations.

Cost of Sales and Gross Margin

Gross Margin decreased by 5.4% and 2.3% to 25.7% and 27.4% for the three and nine months period ended September 25, 2021, from 31.0% and 29.7% for the period ended September 26, 2020. The decline in the three and nine months period ended September 25, 2021 is the result of higher raw material, labor and logistics costs and an increase in mezzanine product sales which have a lower margin profile than typical product offerings as these products are buy-resale, coupled with increased overhead costs as the business continues to add infrastructure to support the strategic growth plan.

 

                                                                                                                                               
     Three Months      Variance      Variance
%
    Cost of Sales
Variance Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Organic
Growth
     Organic
Growth
%
 
                                          

Cost of Sales

   $ 13,248,470    $ 8,701,990    $ 4,546,480      52.2   $ 4,546,480      52.2

 

     Nine Months      Variance      Variance
%
    Cost of Sales Variance
Breakdown
 
     Period ended
September 25,
2021
     Period ended
September 26,
2020
    Organic
Growth
     Organic
Growth
%
 
                                          

Cost of Sales

   $ 35,356,883    $ 22,596,956    $ 12,759,927      56.5   $ 12,759,927      56.5

Cost of sales increased by $4.5 million and $12.8 million or 52.2% and 56.5% from $8.7 million and $22.6 million, for the three and nine months period ended September 26, 2020, to $13.2 million and $35.4 million for the three and nine months period ended September 25, 2021 in line with a 41.2% and 51.5% increase in revenues coupled with an increase in raw material, labor and logistics costs and mezzanine product sales.

 

41


Table of Contents

Operating Expenses — Selling and marketing

Selling and marketing expense increased by $1.0 million and $0.6 million or 1342.2% and 24.7% from $0.1 million and $2.2 million for the three and nine months period ended September 26, 2020 to $1.1 million and $2.8 million for the three and nine months period ended September 25, 2021 primarily due to an increase in commission expense as a result of higher sales coupled with an increase in travel and marketing costs in 2021 compared to prior year as these expenses were significantly cut back due to the COVID-19 global pandemic.

Operating Expenses — General and administrative

General and administrative expenses increased $0.2 million and $2.4 million or 6.8% and 43.9% from $2.5 million and $5.4 million for the three and nine months period ended September 26, 2020 to $2.6 million and $7.7 million for the period ended September 25, 2021 primarily due to the continued investment in personnel and infrastructure to support the strategic growth objectives of the international business operations coupled with lower costs in 2020 associated with the pandemic.

Income from Operations

Income from operations decreased by $0.5 million and increased by $0.9 million or 39.9% and 45.5% from $1.4 and $2.0 million for the three and nine months period ended September 26, 2020 to $0.8 million and $2.9 million for the three and nine months period ended September 25, 2021. The decline in the three months period ended September 25, 2021 was primarily due to an increase in raw material, labor, logistics and selling expenses. The increase in the nine months period ended September 25, 2021 was primarily due to an increase in revenue, partially offset by increased raw material, labor, logistics, selling and general and administrative expenses.

Non-GAAP Financial Measures

Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Janus presents Adjusted EBITDA which is a non-GAAP financial performance measure, which excludes from reported GAAP results, the impact of certain items consisting of acquisition events and other non-recurring charges. Janus believes such expenses, charges, and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure used by Janus to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, Janus believes these measures provide useful information to investors and others in understanding and evaluating Janus’s operating results in the same manner as its management and board of directors. In addition, they provide useful measures for period-to-period comparisons of Janus’s business, as they remove the effect of certain non-cash items and certain variable charges. Adjusted EBITDA is defined as net income excluding interest expense, income taxes, depreciation expense, amortization, and other non-operational, non-recurring items.

Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is the nearest GAAP equivalent of Adjusted EBITDA. These limitations include that the non-GAAP financial measures:

 

   

exclude depreciation and amortization, and although these are non-cash expenses, the assets being depreciated may be replaced in the future;

 

   

do not reflect interest expense, or the cash requirements necessary to service interest on debt, which reduces cash available;

 

   

do not reflect the provision for or benefit from income tax that may result in payments that reduce cash available;

 

   

exclude non-recurring items which are unlikely to occur again and have not occurred before (e.g., the extinguishment of debt); and

 

   

may not be comparable to similar non-GAAP financial measures used by other companies, because the expenses and other items that Janus excludes in the calculation of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from these non-GAAP financial measures when they report their operating results.

 

42


Table of Contents

Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with GAAP.

The following table present a reconciliation of net income to Adjusted EBITDA for the periods indicated:

 

     Three Months                
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance  
     $      %  
                             

Net Income

   $ 17,677,742    $ 20,772,994    $ (3,095,252      (14.9 )% 

Interest Expense

     7,663,536      8,768,791      (1,105,255      (12.6 )% 

Income Taxes

     3,527,275        284,282      3,242,993      1140.8

Depreciation

     1,698,618      1,437,948      260,670      18.1

Amortization

     8,228,760      6,891,586      1,337,174      19.4
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 38,395,931    $ 38,155,601    $ 640,330      1.7

Loss (gain) on extinguishment of debt(2)

     —          (257,545      257,545      —  

COVID-19 related expenses(3)

     1,030,415        260,606      769,809      295.4

Transaction related expenses(4)

     —          —          —          —  

Facility relocation(5)

     34,823        —          34,823      —  

Share-based compensation(6)

     —          —          —          —  

Change in fair value of contingent consideration and earnout(7)

     —          (2,875,248      2,875,248      —  

Change in fair value of derivative warrant liabilities(8)

     (3,552,500      —          (3,552,500      —  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 36,308,669    $ 35,283,414    $ 1,025,255      2.9
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Nine Months                
     Period ended
September 25,
2021
     Period ended
September 26,
2020
     Variance  
     $      %  
                             

Net Income

   $ 33,519,770    $ 41,742,492    $ (8,222,722      (19.7 )% 

Interest Expense

     23,265,333      27,447,267      (4,181,934      (15.2 )% 

Income Taxes

     6,265,664        1,054,574        5,211,090      494.1

Depreciation

     4,677,954      4,270,649      407,305      9.5

Amortization

     21,851,717      20,287,353      1,564,364      7.7
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 89,580,438    $ 94,802,335    $ (5,221,897      (5.5 )% 

BETCO transition fee(1)

     —          15,000        (15,000      (100.0 )% 

Loss (gain) on extinguishment of debt(2)

     2,414,854      (257,545      2,672,399      —  

COVID-19 related expenses(3)

     1,239,678        526,344        713,334      135.5

Transaction related expenses(4)

     10,398,423        —          10,398,423      —  

Facility relocation(5)

     102,467        —          102,467      —  

Share-based compensation(6)

     2,059,223      —          2,059,223      —