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Segment
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 October 1, 2022

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
86-1476200
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
135 Janus International Blvd.
Temple, GA
30179
(Address of Principal Executive Offices)(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 JBINew York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
________________________

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 and post 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 8, 2022, 146,647,275 shares of Class A Common Stock, par value $0.0001, were issued and outstanding.

1


JANUS INTERNATIONAL GROUP, INC.
Quarterly Report on Form 10-Q
Table of Contents
SAFE HARBOR, FORWARD-LOOKING STATEMENTS
Page
Item 1A. Risk Factors
Item 6. Exhibits
















2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) that reflect our current views with respect to future events and financial performance, business strategies, expectations for our business and any other statements of a future or forward-looking nature, constitute “forward-looking statements” for the purposes of federal securities laws.

These forward-looking statements include, but are not limited to, statements about our financial condition, results of operations, earnings outlook and prospects or regarding management’s expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those contemplated in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Form 10-Q and in our other filings with the Securities and Exchange Commission (the “SEC”). We do not assume any obligation to update any forward-looking statements after the date of this Report, except as required by law.

In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “will”, “likely”, and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. We cannot assure you that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

changes adversely affecting the business in which we are engaged;

geopolitical risk and changes in applicable laws or regulations;

the possibility that Janus may be adversely affected by other economic, business, and/or competitive factors;

operational risk;

the possibility that the COVID-19 pandemic, or another major disease, disrupts Janus’ business;

our ability to maintain the listing of our securities on a national securities exchange;

litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Janus’ resources; and

other risks detailed from time to time in our filings with the SEC, press releases, and other communications, including those set forth under “Risk Factors” included in our 2021 Annual Report on Form 10-K for the year ended January 1, 2022, and in the documents incorporated by reference herein and therein.

All subsequent written and oral forward-looking statements concerning the matters addressed in this Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Form 10-Q. We undertake no obligation to update any forward-looking statement, whether written or oral, to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
3


PART I--FINANCIAL INFORMATION
Item 1.    Financial Statements.
Janus International Group, Inc.
Condensed Consolidated Balance Sheets
(dollar amounts in thousands, except share and per share data)
October 1,January 1,
20222022
(Unaudited)
ASSETS
Current Assets
Cash $55,335 $13,192 
Accounts receivable, less allowance for credit losses; $4,553 and $5,449, at October 1, 2022 and January 1, 2022, respectively
151,694 107,372 
Costs and estimated earnings in excess of billing on uncompleted contracts30,831 23,121 
Inventory, net69,050 56,596 
Prepaid expenses12,282 9,843 
Other current assets2,227 4,057 
Total current assets$321,419 $214,181 
Right-of-use assets, net45,529  
Property and equipment, net42,855 41,607 
Customer relationships, net288,770 312,199 
Tradename and trademarks106,971 107,980 
Other intangibles, net14,743 15,861 
Goodwill367,262 369,286 
Deferred tax asset, net59,979 58,915 
Other assets1,874 1,973 
Total assets$1,249,402 $1,122,002 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable$55,728 $54,961 
Billing in excess of costs and estimated earnings on uncompleted contracts27,235 23,207 
Current maturities of long-term debt8,379 8,067 
Other accrued expenses75,919 54,111 
Total current liabilities$167,261 $140,346 
Line of credit 6,369 
Long-term debt, net701,189 703,718 
Deferred tax liability, net1,678 749 
Other long-term liabilities41,764 2,533 
Total liabilities$911,892 $853,715 
STOCKHOLDERS’ EQUITY
Common Stock, 825,000,000 shares authorized, $0.0001 par value, 146,647,275 and 146,561,717 shares issued and outstanding at October 1, 2022 and January 1, 2022, respectively
15 15 
Additional paid-in capital279,944 277,799 
Accumulated other comprehensive loss(7,887)(949)
Retained earnings (accumulated deficit)65,438 (8,578)
Total stockholders’ equity$337,510 $268,287 
Total liabilities and stockholders’ equity$1,249,402 $1,122,002 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
4


Janus International Group, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(dollar amounts in thousands, except share and per share data)
Three Months EndedNine Months Ended
October 1, 2022September 25, 2021October 1, 2022September 25, 2021
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
REVENUE
Sales of product$230,847 $155,670 $642,122 $417,922 
Sales of services31,700 32,120 97,659 96,874 
Total revenue262,547 187,790 739,781 514,796 
Cost of Sales165,755 125,551 482,439 340,070 
GROSS PROFIT96,792 62,239 257,342 174,726 
OPERATING EXPENSE
Selling and marketing14,477 12,066 42,216 31,906 
General and administrative28,418 24,947 86,267 81,469 
Contingent consideration and earnout fair value adjustments   687 
Operating Expenses42,895 37,013 128,483 114,062 
INCOME FROM OPERATIONS53,897 25,226 128,859 60,664 
Interest expense(10,979)(7,664)(28,622)(23,265)
Other expense56 91 (313)(2,388)
Change in fair value of derivative warrant liabilities 1,271  (658)
INCOME BEFORE TAXES42,974 18,924 99,924 34,353 
Provision for Income Taxes 10,575 3,382 24,984 5,787 
NET INCOME $32,399 $15,542 $74,940 $28,566 
Other Comprehensive Income (Loss)(3,037)(1,170)(6,938)(896)
COMPREHENSIVE INCOME29,362 14,372 68,002 27,670 
Net income attributable to common stockholders$32,399 $15,542 $74,940 $28,566 
Weighted-average shares outstanding, basic and diluted (Note 16)
Basic146,639,452 138,384,284 146,592,296 95,179,726 
Diluted146,717,917 142,840,792 146,671,509 97,828,380 
Net income per share, basic and diluted (Note 16)
Basic$0.22 $0.11 $0.51 $0.30 
Diluted$0.22 $0.10 $0.51 $0.30 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
5


Janus International Group, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
(dollar amounts in thousands, except share data)
Class B
Common Units
Class A
Preferred Units
Common StockAdditional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained Earnings
(AccumulatedDeficit)
Total
UnitAmountUnitAmountSharesAmount
Balance as of December 26, 20204,478 $261 189,044 $189,044  $ $ $(227)$(48,205)$140,874 
Retroactive application of the recapitalization(4,478)(261)(189,044)(189,044)66,145,633 7 189,299 — — — 
Balance as of December 26, 2020, as adjusted $  $ 66,145,633 $7 $189,299 $(227)$(48,205)$140,874 
Vesting of Midco LLC class B units— — — — 111,895 — 52 — — 52 
Distributions to Janus Midco LLC Class A unitholders— — — — — — — — (96)(96)
Cumulative translation adjustment— — — — — — — 311 — 311 
Net income— — — — — — — — 14,719 14,719 
Balance as of March 27, 2021 $  $ 66,257,528 $7 $189,351 $84 $(33,582)$155,860 
Vesting of Midco LLC class B units— — — — 4,012,872 — 5,210 — — 5,210 
Issuance of PIPE Shares— — — — 25,000,000 3 249,997 — — 250,000 
Issuance of common stock upon merger, net of transaction costs, earn out, and merger warrant liability— — — — 41,113,850 4 226,940 — — 226,944 
Issuance of earn out shares to common stockholders— — — — 2,000,000 — 26,480 — — 26,480 
Distributions to Janus Midco, LLC unitholders— — — — — — (541,710)— — (541,710)
Distributions to Class A preferred units— — — — — — — — (4,078)(4,078)
Deferred Tax Asset— — — — — — 78,291 — — 78,291 
Cumulative translation adjustment— — — — — — — (37)— (37)
Net income— — — — — — — — (1,694)(1,694)
Balance as of June 27, 2021 $  $ 138,384,250 $14 $234,559 $47 $(39,354)$195,266 
Warrant redemption— — — — 110 — 1 — — 1 
Cumulative translation adjustment— — — — — — — (1,170)— (1,170)
Warrant movements from private to public— — 10,111 10,111 
Net Income— — — — — — — — 15,542 15,542 
Balance as of September 25, 2021 $  $ 138,384,360 $14 $244,671 $(1,123)$(23,812)$219,750 







6


Janus International Group, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
(dollar amounts in thousands, except share data)
Class B
Common Units
Class A
Preferred Units
Common StockAdditional paid-in capitalAccumulated Other Comprehensive LossRetained Earnings
(AccumulatedDeficit)
Total
UnitAmountUnitAmountSharesAmount
Balance as of January 1, 2022 $  $ 146,561,717 $15 $277,799 $(949)$(8,578)$268,287 
Share based compensation— — — — — — 600 — — 600 
Cumulative effect of change in accounting principle(a)
—  — — — — — — (924)(924)
Cumulative translation adjustment—  — — — — — (514)— (514)
Net income— — — — — — — — 19,704 19,704 
Balance as of April 2, 2022 $  $ 146,561,717 $15 $278,399 $(1,463)$10,202 $287,153 
Issuance of restricted units— — — — 77,660 — — — — — 
Share based compensation— — — — — — 910 — — 910 
Cumulative translation adjustment— — — — — — — (3,387)— (3,387)
Net income— — — — — — — — 22,837 22,837 
Balance as of July 2, 2022 $  $ 146,639,377 $15 $279,309 $(4,850)$33,039 $307,513 
Issuance of restricted units— — — — 7,898 — — — — — 
Share based compensation— — — — — — 635 — — 635 
Cumulative translation adjustment— — — — — — — (3,037)— (3,037)
Net income— — — — — — — — 32,399 32,399 
Balance as of October 1, 2022 $  $ 146,647,275 $15 $279,944 $(7,887)$65,438 $337,510 

(a)    Effective January 2, 2022, the Company adopted the provisions of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) and ASU 2016-02, Leases (Topic 842). We have elected to adopt each of the two standards using the modified retrospective approach through a cumulative-effect adjustment to the opening balance of accumulated deficit for both. See Note 2 for further details of the impact of each standard.

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
7


Janus International Group, Inc.
Condensed Consolidated Statements of Cash Flows
(dollar amounts in thousands)
Nine Months Ended
October 1, 2022September 25, 2021
(Unaudited)(Unaudited)
Cash Flows Provided By Operating Activities
Net income$74,940 $28,566 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment5,817 4,678 
Reduction in carrying amount of right-of-use assets3,997  
Amortization of intangibles22,278 21,852 
Deferred finance fee amortization2,758 2,286 
Provision (reversal) for losses on accounts receivable1,206 (59)
Share based compensation2,145 5,262 
Loss on extinguishment of debt 2,415 
Change in fair value of contingent consideration 687 
(Gain) loss on sale of assets(45)43 
Loss on abandonment of lease571  
Change in fair value of derivative warrant liabilities 658 
Undistributed (earnings) losses of affiliate(102)76 
Deferred income taxes, net (768)
Changes in operating assets and liabilities
Accounts receivable(45,893)(16,884)
Costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings on uncompleted contracts(7,710)(12,101)
Prepaid expenses and other current assets(531)(4,488)
Inventory, net(12,454)(18,474)
Accounts payable766 18,409 
Other accrued expenses17,658 28,649 
Other assets and long-term liabilities(2,810)(1,124)
Net Cash Provided By Operating Activities$62,591 $59,683 
Cash Flows Used In Investing Activities
Proceeds from sale of equipment$67 $79 
Purchases of property and equipment(7,856)(15,930)
Cash paid for acquisition, net of cash acquired (179,714)
Net Cash Used In Investing Activities$(7,789)$(195,565)
Cash Flows Used In Financing Activities
(Repayments) proceeds from line of credit$(6,369)$19,351 
Distributions to Janus Midco LLC unitholders (4,174)
Principal payments on long-term debt(6,051)(64,825)
Proceeds from long-term debt 155,000 
Proceeds from merger 334,874 
Proceeds from PIPE 250,000 
Payments for transaction costs, net (44,489)
Payments to Janus Midco, LLC unitholders at the Business Combination (541,710)
Proceeds from warrant exercise 1 
Principal payments under finance lease obligations(137) 
Payments for deferred financing fees (4,321)
Cash (Used In) Provided by Financing Activities$(12,557)$99,707 
Effect of exchange rate changes on cash and cash equivalents$(102)$142 
Net Increase (Decrease) in Cash and Cash Equivalents$42,143 $(36,033)
Cash and Cash Equivalents, Beginning of Period$13,192 $45,255 
Cash and Cash Equivalents, End of Period$55,335 $9,222 
Supplemental Cash Flows Information
Interest paid$28,351 $19,227 
Income taxes paid$21,655 $1,510 
Cash paid for operating leases$5,763 $ 
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations$47,999 $ 
Right-of-use assets obtained in exchange for finance lease obligations$1,373 $ 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements
8

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

1.Basis of Presentation
Janus International Group, Inc. is a holding company. References to “Janus,” “Group,” “Company,” “we,” “our” or “us” refer to Janus International Group, Inc., and its consolidated subsidiaries. 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”). Midco is a wholly-owned subsidiary of Janus Intermediate Holdco, Inc. (“Intermediate Holdco”). Intermediate Holdco is a wholly-owned subsidiary of Juniper Industrial Holdings, Inc. (“Juniper” or “JIH”), and Juniper is a wholly-owned subsidiary of Group.

The dollar amounts in the notes are shown in thousands of dollars, unless otherwise noted, and rounded to the nearest thousand except for share and per share amounts.
The accompanying Unaudited Condensed Consolidated Financial Statements are presented in U.S. dollars and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC 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 Condensed Consolidated Financial Statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of October 1, 2022, and its results of operations, including its comprehensive income and stockholders’ equity for the three and nine months ended October 1, 2022 and September 25, 2021.
This Quarterly Report on Form 10-Q should be read in conjunction with the Audited Consolidated Financial Statements and notes that are included in the Annual Report on Form 10-K, for the year ended January 1, 2022.
Nature of Operations
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, the United Kingdom, Australia, and Singapore.
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 Janus International Europe Ltd., a company incorporated in England and Wales (“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, Betco, Inc. (“BETCO”), Noke, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Janus Door, LLC (“Janus Door”), Access Control Technologies, LLC (“ACT”), U.S Door & Building Components, LLC (“U.S. Door”), and Steel Door Depot.com, LLC (“Steel Door Depot”).
Assets held at foreign locations were approximately $55,749 and $58,439 as of October 1, 2022 and January 1, 2022, respectively. Revenues earned at foreign locations totaled approximately $16,959 and $17,824 for the three months ended October 1, 2022 and September 25, 2021, respectively, and $55,197 and $48,729 for the nine months ended October 1, 2022 and September 25, 2021, respectively.
Principles of Consolidation
The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company 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.
Reorganization
On June 7, 2021, Midco transferred Janus Core, its wholly owned direct subsidiary, 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.
The Business Combination (defined and discussed below) was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Juniper is treated as the acquired company and Midco is treated as the acquirer for financial statement reporting purposes (the “Combined Company”). 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.
Use of Estimates in the Unaudited Condensed Consolidated Financial Statements
The preparation of Unaudited Condensed 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.
9

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Significant items subject to such estimates and assumptions include, but are not limited to, the derivative warrant liability, the recognition of the valuations of share-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.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act, or 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.
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;
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. The fair value of the Company’s debt approximates its carrying amount as of October 1, 2022 and January 1, 2022 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 debt, the Company utilized fair value based risk measurements that are indirectly observable, such as credit risk that fall within Level 2 of the Fair Value hierarchy. The fair value of the warrants contains significant unobservable inputs including the expected term and the share exchange ratio in evaluating the fair value of underlying common stock, and exercise price, therefore, the warrant liabilities were evaluated to be a Level 3 fair value measurement.
Significant Accounting Policies
Other than the following, the Company’s significant accounting policies have not changed materially from those described in its Annual Report on Form 10-K for the fiscal year ended January 1, 2022.
Allowance for Credit Losses
On January 2, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“CECL”), 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. Refer to Recently Adopted Accounting Pronouncements section of this note for more information on the impact to the Unaudited Condensed Consolidated Financial Statements.
The Company gathered information about its current bad debt reserve and write-off practices and loss methodology, in-scope assets, historical credit losses, proposed pooling approach and expected changes to business practices under CECL. Accounts receivables are stated at estimated net realizable value from the sale of products and services to established customers. The Company determined that pooling accounts receivable by business units was the most appropriate because of the similarity of risk characteristics within each line such as customers and services offered. Historical losses and customer-specific reserve information that are used to calculate the historical loss rates are available for each business unit.

During the pooling process, the Company identified two distinct customer types: commercial and self-storage. As these customer types have different risk characteristics, the Company concluded to pool the financial assets at this level within each business unit.

Commercial customers typically are customers contracting with the Company on short-term projects with smaller credit limits and overall, smaller project sizes. Due to the short-term nature and smaller scale of these types of projects, the Company expects minimal write-offs of its receivables at the commercial pool.

Self-storage projects typically involve general contractors and make up the largest portion of the Company’s accounts receivable balance. These projects are usually longer-term construction projects and billed over the course of construction. Credit limits are larger for these projects given the overall project size and duration. Due to the longer-term nature and larger scale of these types of projects, the Company expects a potential for more write-offs of its receivable balances within the self-storage pool.
10

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements

The Company reviewed methods provided by the guidance and determined to use the loss-rate method in the CECL analysis for trade receivables and contract assets. This loss-rate method was selected as there is reliable historical information available by business unit, and this historical information was determined to be representative of the Company’s current customers, products, services, and billing practices.

The summary of activity in the allowance for credit losses for the nine months ended October 1, 2022 and the allowance for doubtful accounts for the nine months ended September 25, 2021 are as follows:

Beginning Balance
CECL Adoption1
Write-offs
Provision (Reversal), net
Ending Balance
2022
$5,449 $366 $(2,468)$1,206 $4,553 
20214,485 — (59)(59)4,367 

(1) On January 2, 2022, the Company adopted the provisions of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which introduced a new model known as CECL.
2. Recently Issued Accounting Standards
In March 2020, the Financial Accounting Standards Board (“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. 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 U.S. 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 April 2022, the FASB, proposed the deferral of the sunset date of this guidance to December 31, 2024. The Company is currently evaluating the impact this adoption will have on the Company’s 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.
Recently Adopted Accounting Pronouncements
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. The Company adopted the leasing standard effective January 2, 2022 and has elected to adopt the new standard at the adoption date using the modified retrospective method and recognized a cumulative effect adjustment to accumulated deficit in the amount of $558. Under this approach, we will continue to report comparative period financial information under ASC 840. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also made an accounting policy election to exclude leases with an initial term of 12 months or less from the consolidated balance sheet. We will recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As part of this adoption, we have implemented internal controls and key system functionality to enable the preparation of financial information.
The adoption of the standard resulted in recording right-of-use assets of $42,835 and lease liabilities of $44,776 as of January 2, 2022. The right-of-use assets are lower than the lease liabilities as existing deferred rent and lease incentive liabilities were recorded against the right-of-use assets at adoption in accordance with the standard. The standard had no impact on our debt-covenant compliance under our current agreements.
In June 2016, the 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 adopted this standard effective January 2, 2022 using the modified retrospective method and recognized a cumulative-effect adjustment increasing accumulated deficit and increasing the allowance for credit losses by $366.
11

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
January 2, 2022
Pre-ASC 326
Adoption
 Impact of ASC
326 Adoption
As Reported
Under ASC 326
Accounts Receivable, net$107,372 $(366)$107,006 
Cost in Excess of Billings23,121 — 23,121 
Accumulated Deficit(8,578)(366)(8,944)
3. Inventories
Inventories are stated at the lower of cost or net realizable value utilizing the first-in, first-out (FIFO) method. The major components of inventories as of October 1, 2022 and January 1, 2022 are as follows:
October 1,January 1,
20222022
Raw materials
$48,043 $41,834 
Work-in-process650 671 
Finished goods
20,357 14,091 
$69,050 $56,596 
The Company has recorded a reserve for inventory obsolescence as of October 1, 2022 and January 1, 2022, of approximately $1,996 and $1,295, respectively.
4. Property and Equipment
Property, equipment, and other fixed assets as of October 1, 2022 and January 1, 2022 are as follows:
October 1,January 1,
20222022
Land$4,501 $4,501 
Manufacturing machinery and equipment
37,286 35,688 
Leasehold improvements
5,615 4,599 
Construction in progress
6,063 3,571 
Other14,274 13,287 
$67,739 $61,646 
Less accumulated depreciation
(24,884)(20,039)
$42,855 $41,607 
5. Acquired Intangible Assets and Goodwill
Intangible assets acquired in a business combination are recognized at fair value and amortized over their estimated useful lives. The carrying basis and accumulated amortization of recognized intangible assets at October 1, 2022 and January 1, 2022, are as follows:
October 1,January 1,
20222022
Gross Carrying AmountAccumulated AmortizationAverage Remaining Life in YearsGross Carrying AmountAccumulated Amortization
Intangible Assets
Customer relationships
$406,970 $(118,200)10$410,094 $(97,895)
Noncompete agreements
380 (233)5412 (231)
Tradenames and trademarks
106,971 — Indefinite107,980 — 
Other intangibles
61,626 (47,030)1061,836 (46,156)
$575,947 $(165,463)$580,322 $(144,282)
Changes to gross carrying amount of recognized intangible assets due to translation adjustments include an approximate $3,278 and $270 loss for the period ended October 1, 2022 and January 1, 2022, respectively. Amortization expense was approximately $7,408 and $8,229 for the
12

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
three month periods ended October 1, 2022 and September 25, 2021, and $22,278 and $21,852 for the nine months periods ended October 1, 2022 and September 25, 2021, respectively.
The changes in the carrying amounts of goodwill for the period ended October 1, 2022 were as follows:
Balance as of January 1, 2022$369,286 
Changes due to foreign currency fluctuations(2,076)
Goodwill adjusted during the period52 
Balance as of October 1, 2022$367,262 
6. Accrued Expenses
Accrued expenses are summarized as follows:
October 1,January 1,
20222022
Sales tax payable
$5,236 $3,606 
Interest payable
254 2,741 
Indemnity Holdback Liability
1,002  
Other accrued liabilities
6,222 1,766 
Employee compensation
14,016 13,857 
Customer deposits and allowances
36,297 24,555 
Income taxes
2,121 810 
Current operating lease liabilities
5,293  
Other5,478 6,776 
Total$75,919 $54,111 
Other as of October 1, 2022 and January 1, 2022 consists of property tax, freight accrual, legal, accounting and other professional fee accruals.
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 pursuant to ABL Credit And Guarantee Agreement (the “LOC Agreement”). In August 2021, the Company increased the available line of credit from $50,000 to $80,000, incurred additional fees for this amendment of $425 and extended the maturity date from February 18, 2023 to August 12, 2024. The current line of credit facility is for $80,000 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a LIBOR Rate (as defined in the LOC Agreement) 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 of 1.25%, as of October 1, 2022. If the Base Rate (as defined in the LOC Agreement) is elected, the interest computation is equal to the Base Rate of the greatest of (a) the federal funds rate plus .5%, (b) the LIBOR rate plus 1%, or (c) the financial institution’s Prime Rate (as defined in the LOC Agreement), plus the Base Rate Margin (as defined in the LOC Agreement) of .25% as of October 1, 2022. 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 October 1, 2022 and January 1, 2022, the interest rate in effect for the facility was 6.5% and 3.5%, respectively. The line of credit is collateralized by accounts receivable and inventories. The Company has incurred deferred loan costs in the amount of $1,483 which are being amortized over the term of the facility that expires on August 12, 2024, using the effective interest method, and are presented as part of other assets within our Unaudited Condensed Consolidated Balance Sheet. The amortization of the deferred loan costs is included in interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The unamortized portion of the fees as of October 1, 2022 and January 1, 2022 was approximately $463 and $648, respectively. There was $ and $6,369 outstanding on the line of credit as of October 1, 2022 and January 1, 2022, respectively.
13

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
8. Long-Term Debt
Long-term debt consists of the following:
October 1,January 1,
20222022
Note payable - Amendment No. 4 First Lien
$716,329 $722,379 
Financing leases
1,260  
$717,589 $722,379 
Less unamortized deferred finance fees
8,021 10,594 
Less current maturities
8,379 8,067 
Total long-term debt
$701,189 $703,718 
Notes Payable - Amendment No.4 First Lien - On August 18, 2021, the Company completed a refinancing in the form of that certain First Lien Amendment No. 4, in which the principal terms of the amendment were new borrowings of $155,000 which was used to fund the DBCI (hereinafter defined) 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 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 (effective rate of 6.4% as of October 1, 2022). The debt is secured by substantially all business assets. This refinancing amendment was accounted for as a modification and as such no gain or loss was recognized for this transaction and any bank fees, original issue discount and charges capitalized are being amortized as a component of interest expense over the remaining loan term. Third party fees paid in connection with this amendment were expensed.
As of October 1, 2022 and January 1, 2022, the Company maintained one letter of credit totaling approximately $400 on which there were no balances due.
In connection with the Company entering into the First Lien debt agreement discussed above, deferred finance fees were capitalized. Amortization of approximately $865 and $800 and $2,573 and $2,286 was recognized for the three and nine months ended October 1, 2022 and September 25, 2021, 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.
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 Iron Worx, LLC for total consideration of approximately $10,385 which was comprised of approximately $9,383 of cash plus $1,002 of hold back
liability.

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:
14

Janus International Group, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Fair Value of Consideration Transferred
Cash$9,383 
Hold Back Liability1,002 
Total Fair Value of Consideration Transferred$10,385 
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash169 
Accounts receivable1,101 
Other current assets