jbi-20230930

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 September 30, 2023


☐			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	JBI	New 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 1, 2023, 146,828,418 shares of Class A Common Stock, par value $0.0001, were issued and outstanding.

JANUS INTERNATIONAL GROUP, INC.

Quarterly Report on Form 10-Q

Table of Contents



			Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			3
PART I--FINANCIAL INFORMATION			4
Item 1. Condensed Consolidated Financial Statements			4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			46
Item 4. Controls and Procedures			46
PART II--OTHER INFORMATION			47
Item 1. Legal Proceedings			47
Item 1A. Risk Factors			47
Item 2. Unregistered Sales of Equity and Use of Proceeds			47
Item 3. Defaults upon Senior Securities			47
Item 4. Mine Safety Disclosures			47
Item 5. Other Information			47
Item 6. Exhibits			48
SIGNATURES			49

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 our or our 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,” “would”, 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;

•any failure to effectively manage, and receive anticipated returns from, acquisitions, divestitures, investments, joint ventures and other portfolio actions;

•fluctuations in the demand for our products and services;

•the impact of supply chain disruptions and inflation and our ability to recoup rising costs in the rates we charge to our customers;

•the possibility that we may impair our long-lived assets and other assets, including inventory, property, plant and equipment and investments in unconsolidated affiliates;

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

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

•the possibility of significant changes in foreign exchange rates and controls;

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

•general economic conditions, including the capital and credit markets;

•the possibility of political instability, war or acts of terrorism in any of the countries where we operate; 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 2022 Annual Report on Form 10-K for the year ended December 31, 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. Except to the extent required by applicable law or regulation we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

PART I--FINANCIAL INFORMATION

Item 1. Financial Statements.


Janus International Group, Inc.

Condensed Consolidated Balance Sheets
(dollar amounts in millions, except share and per share data - Unaudited)


	September 30, 2023		December 31, 2022
ASSETS
Current Assets
Cash	$	109.7	$	78.4
Accounts receivable, less allowance for credit losses; $3.8 and $4.5, at September 30, 2023 and December 31, 2022, respectively	171.3		155.4
Contract assets	51.3		39.3
Inventories	54.3		67.7
Prepaid expenses	7.9		9.1
Other current assets	4.1		13.3
Total current assets	$	398.6	$	363.2
Right-of-use assets, net	49.7		44.3
Property, plant and equipment, net	48.6		42.1
Intangible assets, net	382.2		404.4
Goodwill	368.1		368.2
Deferred tax asset, net	46.6		46.6
Other assets	3.1		1.8
Total assets	$	1,296.9	$	1,270.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	56.0	$	52.3
Billing in excess of costs	17.9		21.4
Current maturities of long-term debt	7.1		8.3
Accrued expenses and other current liabilities	80.2		70.6
Total current liabilities	$	161.2	$	152.6
Long-term debt, net	608.5		699.9
Deferred tax liability, net	1.7		1.9
Other long-term liabilities	45.4		40.9
Total liabilities	$	816.8	$	895.3
STOCKHOLDERS’ EQUITY
Common Stock, 825,000,000 shares authorized, $0.0001 par value, 146,828,032 and 146,703,894 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	$	—	$	—
Treasury stock, at cost, 19,833 and zero shares as of September 30, 2023 and December 31, 2022, respectively	(0.2)		—
Additional paid-in capital	287.3		281.9
Accumulated other comprehensive loss	(5.2)		(4.8)
Retained earnings	198.2		98.2
Total stockholders’ equity	$	480.1	$	375.3
Total liabilities and stockholders’ equity	$	1,296.9	$	1,270.6

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements


Janus International Group, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income
(dollar amounts in millions, except share and per share data - Unaudited)


	Three Months Ended				Nine months ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022

REVENUES
Product revenues	$	237.8	$	233.7	$	686.0	$	654.5
Service revenues	42.3		28.8		116.6		85.3
Total Revenues	$	280.1	$	262.5	$	802.6	$	739.8
Product cost of revenues	129.7		144.7		380.4		418.8
Service cost of revenues	31.3		21.1		86.9		63.6
Cost of Revenues	$	161.0	$	165.8	$	467.3	$	482.4
GROSS PROFIT	119.1		96.7		335.3		257.4
OPERATING EXPENSE
Selling and marketing	17.7		14.5		49.2		42.2
General and administrative	34.9		28.4		104.3		86.3
Operating Expenses	$	52.6	$	42.9	$	153.5	$	128.5
INCOME FROM OPERATIONS	66.5		53.8		181.8		128.9
Interest expense	(14.5)		(11.0)		(45.3)		(28.6)
Loss on extinguishment and modification of debt	(3.9)		—		(3.9)		—
Other income (expense)	1.3		0.2		1.1		(0.3)
INCOME BEFORE TAXES	$	49.4	$	43.0	$	133.7	$	100.0
Provision for Income Taxes	12.4		10.6		33.7		25.0
NET INCOME	$	37.0	$	32.4	$	100.0	$	75.0
Other Comprehensive Loss	(1.7)		(3.0)		(0.4)		(6.9)
COMPREHENSIVE INCOME	35.3		29.4		99.6		68.1
Net income attributable to common stockholders	$	37.0	$	32.4	$	100.0	$	75.0
Weighted-average shares outstanding, basic and diluted (Note 12)
Basic	146,827,175		146,639,452		146,765,567		146,592,296
Diluted	146,993,865		146,717,917		146,839,308		146,671,509
Net income per share, basic and diluted (Note 12)
Basic	$	0.25	$	0.22	$	0.68	$	0.51
Diluted	$	0.25	$	0.22	$	0.68	$	0.51

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements


Janus International Group, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity
(dollar amounts in millions, except share data - Unaudited)


	Class A Preferred Units (1,000,000 shares authorized par value of .0001)			Common Stock			Additional paid-in capital		Accumulated Other Comprehensive Loss		Retained Earnings (Accumulated Deficit)		Total
	Shares	Amount		Shares	Amount
Balance as of January 1, 2022	—	$	—	146,561,717	$	—	$	277.8	$	(0.9)	$	(8.6)	$	268.3
Share-based compensation	—	—		—	—		0.6		—		—		0.6
Cumulative effect of change in accounting principle(a)	—	—		—	—		—		—		(0.9)		(0.9)
Foreign currency translation adjustment	—	—		—	—		—		(0.5)		—		(0.5)
Net income	—	—		—	—		—		—		19.7		19.7
Balance as of April 2, 2022	—	$	—	146,561,717	$	—	$	278.4	$	(1.4)	$	10.2	$	287.2
Issuance of restricted units	—	—		77,660	—		—		—		—		—
Share-based compensation	—	—		—	—		0.9		—		—		0.9
Foreign currency translation adjustment	—	—		—	—		—		(3.4)		—		(3.4)
Net income	—	—		—	—		—		—		22.8		22.8
Balance as of July 2, 2022	—	$	—	146,639,377	$	—	$	279.3	$	(4.8)	$	33.0	$	307.5
Issuance of restricted units	—	—		7,898	—		—		—		—		—
Share-based compensation	—	—		—	—		0.6		—		—		0.6
Foreign currency translation adjustment	—	—		—	—		—		(3.0)		—		(3.0)
Net income	—	—		—	—		—		—		32.4		32.4
Balance as of October 1, 2022	—	$	—	146,647,275	$	—	$	279.9	$	(7.8)	$	65.4	$	337.5

(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 in the Annual Report on Form 10-K, for the year ended December 31, 2022, for further details of the impact of each standard.


	Class A Preferred Units (1,000,000 shares authorized par value of .0001)			Common Stock			Treasury Stock			Additional paid-in capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2022	—	$	—	146,703,894	$	—	—	$	—	$	281.9	$	(4.8)	$	98.2	$	375.3
Issuance of restricted units	—	—		58,790	—		—	—		—		—		—		—
Shares withheld for taxes upon vesting of restricted units	—	—		(18,520)	—		18,520	(0.2)		—		—		—		(0.2)
Share-based compensation	—	—		—	—		—	—		1.8		—		—		1.8
Foreign currency translation adjustment	—	—		—	—		—	—		—		0.7		—		0.7
Net income	—	—		—	—		—	—		—		—		26.0		26.0
Balance as of April 1, 2023	—	$	—	146,744,164	$	—	18,520	$	(0.2)	$	283.7	$	(4.1)	$	124.2	$	403.6
Issuance of restricted units	—	—		81,448	—		—	—		—		—		—		—
Shares withheld for taxes upon vesting of restricted units	—	—		(118)	—		118	—		—		—		—		—
Share-based compensation	—	—		—	—		—	—		1.8		—		—		1.8
Foreign currency translation adjustment	—	—		—	—		—	—		—		0.6		—		0.6
Net income	—	—		—	—		—	—		—		—		37.0		37.0
Balance as of July 1, 2023	—	$	—	146,825,494	$	—	18,638	$	(0.2)	$	285.5	$	(3.5)	$	161.2	$	443.0
Issuance of restricted units	—	—		3,733	—		—	—		—		—		—		—
Shares withheld for taxes upon vesting of restricted units	—	—		(1,195)	—		1,195	—		—		—		—		—
Share-based compensation	—	—		—	—		—	—		1.8		—		—		1.8
Foreign currency translation adjustment	—	—		—	—		—	—		—		(1.7)		—		(1.7)
Net income	—	—		—	—		—	—		—		—		37.0		37.0
Balance as of September 30, 2023	—	$	—	146,828,032	$	—	19,833	$	(0.2)	$	287.3	$	(5.2)	$	198.2	$	480.1

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements


Janus International Group, Inc.
Condensed Consolidated Statements of Cash Flows
(dollar amounts in millions - Unaudited)


	Nine Months Ended
	September 30, 2023		October 1, 2022

Cash Flows Provided By Operating Activities
Net income	$	100.0	$	75.0
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property, plant and equipment	6.6		5.8
Noncash lease expense	4.7		4.0
Provision (reversal) for inventory obsolescence	1.4		(0.7)
Amortization of intangibles	22.3		22.3
Deferred finance fee amortization	3.1		2.8
Provision (reversal) for losses on accounts receivable	(0.7)		1.2
Share-based compensation	5.4		2.1
Loss on extinguishment of debt	1.6		—
Loss on sale of equipment	0.1		—
Loss on abandonment of lease	—		0.6
Loss (gain) on equity method investment	0.1		(0.1)
Changes in operating assets and liabilities
Accounts receivable	(14.9)		(45.9)
Contract assets	(12.1)		(7.7)
Prepaid expenses and other current assets	9.8		(0.5)
Inventory	12.0		(11.8)
Other assets	0.1		—
Accounts payable	3.6		0.8
Billings in excess of costs	(3.6)		4.0
Accrued expenses and other current liabilities	11.0		13.6
Other long-term liabilities	(4.0)		(2.8)
Net Cash Provided By Operating Activities	$	146.5	$	62.7
Cash Flows Used In Investing Activities
Proceeds from sale of equipment	$	0.1	$	0.1
Purchases of property and equipment	(13.5)		(7.9)
Cash paid for acquisitions, net of cash acquired	(1.0)		—
Net Cash Used In Investing Activities	$	(14.4)	$	(7.8)
Cash Flows Used In Financing Activities
Payments on line of credit	$	—	$	(6.4)
Proceeds from long-term debt	337.6		—
Principal payments on long-term debt	(426.9)		(6.1)
Principal payments under finance lease obligations	(0.5)		(0.1)
Payments for deferred financing fees	(11.2)		—
Cash Used In Financing Activities	$	(101.0)	$	(12.6)
Effect of exchange rate changes on cash	$	0.2	$	(0.1)
Net Increase in Cash	$	31.3	$	42.2
Cash, Beginning of Period	$	78.4	$	13.2
Cash, End of Period	$	109.7	$	55.4
Supplemental Cash Flows Information
Interest paid	$	38.9	$	28.4
Income taxes paid	$	22.5	$	21.7
Cash paid for operating leases included in operating activities	$	6.2	$	5.8
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations	$	4.5	$	48.0
Right-of-use assets obtained in exchange for finance lease obligations	$	2.4	$	1.4
RSU Shares withheld related to employee taxes	$	0.2	$	—

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1.Nature of Operations

Janus International Group, Inc. is a holding company incorporated in Delaware. References to “Janus,” “Group,” “Company,” “we,” “our” or “us” refer to Janus International Group, Inc. and its consolidated subsidiaries. The Company is a global manufacturer, supplier, and provider of turn-key self-storage, commercial, and industrial building solutions. The Company provides facility and door automation and access control technologies, roll up and swing doors, hallway systems, and relocatable storage “MASS” (Moveable Additional Storage Structures) units, among other solutions, and works with its customers throughout every phase of a project by providing solutions spanning from facility planning and design, construction, technology, and the restoration, rebuilding, and replacement (“R3”) of damaged or end-of-life products.

The Company is headquartered in Temple, GA with operations in the United States of America (“United States”) (“U.S.”), United Kingdom (“U.K.”), Australia, Singapore, France, and Poland. The Company provides products and services through its two operating and reportable segments which are based on the geographic region of its operations: (i) Janus North America and (ii) Janus International. The Janus International segment is comprised of Janus International Europe Holdings Ltd. (U.K.) (“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, Inc. (“BETCO”), Nokē, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Access Control Technologies, LLC (“ACT”), Janus Door, LLC and Steel Door Depot.com, LLC. The Company’s common stock is currently traded on the New York Stock Exchange under the symbol “JBI”.

The dollar amounts in the notes are shown in millions of dollars, unless otherwise noted, and rounded to the nearest million except for share and per share amounts.

Assets held at foreign locations were approximately $65.0 and $61.1 as of September 30, 2023 and December 31, 2022, respectively. Revenues earned at foreign locations totaled approximately $20.4 and $17.0 for the three month periods ended September 30, 2023 and October 1, 2022, respectively, and $63.2 and $55.2 for the nine month periods ended September 30, 2023 and October 1, 2022, respectively.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to the applicable rules and regulations of the SEC. 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 September 30, 2023, and its results of operations, including its comprehensive income and stockholders’ equity for the three and nine month periods ended September 30, 2023 and October 1, 2022. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. 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 December 31, 2022.

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.

Reclassification

Certain items have been reclassified in the prior year financial statements to conform to the presentation and classifications used in the current year. These reclassifications had no effect on our previously reported results of operations or retained earnings.

Prior Period Financial Statement Correction of Immaterial Error

Subsequent to the issuance of the fiscal year 2022 Form 10-K consolidated financial statements, an immaterial error was identified relating to certain contracts that were recognized as revenue based on two performance obligations, but it was subsequently determined that the performance obligations were not distinct within the context of the contract with the customer. The correction of this immaterial error led to a presentation change on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income and in Footnote 13 to the Unaudited Condensed Consolidated Financial Statements for the three and nine month periods ended October 1, 2022, as illustrated in the table below. These presentation changes had no effect on our previously reported results of operations or retained earnings.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The effect of correcting the immaterial error in the Unaudited Condensed Consolidated Financial Statements for the three and nine month periods ended September 30, 2023 is shown in the following table:


	As previously reported		Correction		As adjusted
Condensed Consolidated Statements of Operations and Comprehensive Income
Three Months Ended October 1, 2022
Product Revenues	$	230.8	$	2.9	$	233.7
Service Revenues	31.7		(2.9)		28.8
	$	262.5	$	—	$	262.5
Nine Months Ended October 1, 2022
Product Revenues	$	642.1	$	12.4	$	654.5
Service Revenues	97.7		(12.4)		85.3
	$	739.8	$	—	$	739.8
Footnote 13. Revenue Recognition
Reportable Segments by Timing of Revenue Recognition
Three Months Ended October 1, 2022
Janus North America
Product revenues transferred at a point in time	$	232.2	$	(17.7)	$	214.5
Product revenues transferred over time	—		20.5		20.5
Services revenues transferred over time	24.5		(2.8)		21.7
	$	256.7	$	—	$	256.7
Nine Months Ended October 1, 2022
Janus North America
Product revenues transferred at a point in time	$	648.2	$	(60.8)	$	587.4
Product revenues transferred over time	—		73.2		73.2
Services revenues transferred over time	75.3		(12.4)		62.9
	$	723.5	$	—	$	723.5

Use of Estimates

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.

Significant items subject to such estimates and assumptions include, but are not limited to, income taxes and the effective tax rates, reserves

for inventory obsolescence, the recognition and valuation of unit-based compensation arrangements, the useful lives of property, plant and equipment, estimated progress toward completion for certain revenue contracts, 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.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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 credit losses, and accounts 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 September 30, 2023 and December 31, 2022 due to its variable interest rate that is tied to the current SOFR rate plus an applicable margin and consistency in our credit rating. To estimate the fair value of the Company’s debt, which consists of the First Lien Term Loan and the Revolving Credit Facility, 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 (see Notes 7 and 8 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion of the Company’s debt).

Significant Accounting Policies

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 December 31, 2022.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are stated at estimated net realizable value from the sale of products and services to established customers. All trade receivables are due in one year or less. The Company pools accounts receivable by customer type, commercial and self-storage, and by business units due to the similarity of risk characteristics within each group.

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.

At inception, we evaluate credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, we monitor credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of loss. In determining past-due status, we consider the receivable past due when any installment is over 30 days past due. Receivable balances are written off to the allowance for credit losses when, in the judgment of management, they are considered uncollectible. Revolving charge accounts are generally deemed to be uncollectible and written off to the allowance for credit losses when delinquency reaches 120 days, taking into consideration the financial condition of the customer.

The Company uses the loss-rate method in the CECL analysis for trade receivables and contract assets. The allowance for credit losses reflects the estimate of the amount of receivables that the Company will be unable to collect based on historical collection experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectability. The Company's estimate reflects changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowance.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The activity for the allowance for credit losses during the nine month period ended September 30, 2023 and the fiscal year ended December 31, 2022, is as follows:


	September 30, 2023		December 31, 2022
Balance at beginning of period	$	4.5	$	5.4
CECL Adoption (1)	—		0.4
Write-offs	—		(3.0)
Provision (reversal), net	(0.7)		1.7
Balance at end of period	$	3.8	$	4.5

(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.

Product Warranties

The Company records a liability for product warranties at the time of the related sale of goods. The liability is estimated using historical warranty experience, projected claim rates and expected costs per claim. The Company adjusts its liability for specific warranty matters when they become known and the exposure can be estimated. Product failure rates as well as material usage and labor costs incurred in correcting a product failure affect the Company's warranty liabilities. If actual costs differ from estimated costs, the Company must make a revision to the warranty liability. Generally, the Company offers warranties ranging between 1-3 years for our products with the exception of roofing at one of our business units which is up to 10 years.

The activity related to product warranty liabilities recorded in Accrued expenses and other current liabilities, during the nine month period ended September 30, 2023 and the fiscal year ended December 31, 2022, is as follows:


	September 30, 2023		December 31, 2022
Balance at beginning of period	$	0.9	$	0.7
Aggregate changes in the product warranty liability	1.0		0.2
Balance at end of period	$	1.9	$	0.9

Treasury Stock

We account for treasury stock under the cost method pursuant to the provisions of ASC 505-30, Treasury Stock. Under the cost method, the gross cost of the shares reacquired is charged to a contra equity account, treasury stock. The equity accounts that were originally credited for the original share issuance, Common Stock and additional paid-in capital, remain intact.

If the treasury shares are ever reissued in the future at a price higher than its cost, the difference will be recorded as a component of additional paid-in-capital in our Unaudited Condensed Consolidated Balance Sheets. When treasury stock is re-issued at a price lower than its cost, the difference will be recorded as a component of additional paid-in-capital to the extent that there are previously recorded gains to offset the losses. If there are no treasury stock gains in additional paid-in-capital, the losses upon re-issuance of treasury stock are recorded as a reduction of retained earnings in our Unaudited Condensed Consolidated Balance Sheets. If treasury stock is reissued in the future, a cost flow assumption will be adopted to compute excesses and deficiencies upon subsequent share re-issuance.

Concentrations of Risk

Financial instruments that are potentially subject to concentration of credit risk consist primarily of cash and accounts receivable. The Company maintains cash in bank deposit accounts that, at times, may exceed the insured limits of the local country. The Company has not experienced any losses in such accounts. The Company sells its products and services mainly in the United States and European regions. The Company performs ongoing evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary. The Company generally does not require its customers to provide collateral or other security to support accounts receivable. As of September 30, 2023 and December 31, 2022, no customer accounted for more than 10% of the accounts receivable balance.

Segments

The Company manages its operations through two operating and reportable segments: Janus North America and Janus International. These segments align the Company’s products and service offerings based on the geographic location between North America and International locations which is consistent with how the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), reviews and evaluates the Company’s operations. The CODM allocates resources and evaluates the financial performance of each operating segment. The Company’s segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. Refer to Note 14, Segments, for further detail.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Recently Adopted Accounting Pronouncements

On January 1, 2023, the Company adopted ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"), which amends ASC 805, Business Combinations (Topic 805), to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). Janus will be applying the pronouncement prospectively to business combinations occurring on or after the adoption date.

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 and subsequent amendment to the initial guidance: ASU 2021-01, Reference Rate Reform (Topic 848): Scope (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. Effective April 2, 2023, the Company transitioned its credit agreements from LIBOR to the Secured Overnight Financing Rate ("SOFR"). The Company adopted this guidance prospectively on April 2, 2023, and the adoption did not have a material impact on the Consolidated Condensed Financial Statements.

Recently Issued Accounting Pronouncements

In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718), which amends or supersedes various SEC paragraphs within the Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance, so there is no transition or effective date associated with it. The Company does not believe this will have a material impact on the Company’s consolidated financial position or results of operations.

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

3. Inventories

Inventories are stated at the lower of cost or net realizable value utilizing the first-in, first-out (FIFO) and average cost method. The major components of inventories as of September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
Raw materials	$	36.4	$	49.8
Work-in-process	0.7		1.6
Finished goods	17.2		16.3
Inventories	$	54.3	$	67.7

The Company has recorded a reserve for inventory obsolescence as of September 30, 2023 and December 31, 2022, of approximately $3.4 and $2.0, respectively.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

4. Property, Plant and Equipment

Property, plant, and equipment as of September 30, 2023 and December 31, 2022 are as follows:


	Useful Life	September 30, 2023		December 31, 2022
Land	Indefinite	$	4.5	$	4.5
Building	39 years	2.5		2.5
Manufacturing machinery and equipment	3-7 years	41.5		38.8
Leasehold improvements	Over the shorter of the lease term or respective useful life	10.3		8.3
Computer and software	3 years	9.7		9.6
Furniture and fixtures, and vehicles	3-7 years	4.1		3.6
Construction in progress	—	8.5		1.9
		$	81.1	$	69.2
Less: accumulated depreciation		(32.5)		(27.1)
		$	48.6	$	42.1

Depreciation expense was approximately $2.2 and $2.0 for the three month periods ended September 30, 2023 and October 1, 2022, respectively, and $6.6 and $5.8 for the nine month periods ended September 30, 2023 and October 1, 2022, respectively.

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 September 30, 2023 and December 31, 2022, are as follows:


	Useful Life	September 30, 2023						December 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	10-15 years	$	408.2	$	146.7	$	261.5	$	408.2	$	125.6	$	282.6
Tradenames and trademarks	Indefinite	107.4		—		107.4		107.4		—		107.4
Software development	10-15 years	20.3		7.1		13.2		20.3		6.1		14.2
Noncompete agreements	3-8 years	0.3		0.2		0.1		0.4		0.2		0.2
Backlog	< 1 year	—		—		—		41.4		41.4		—
		$	536.2	$	154.0	$	382.2	$	577.7	$	173.3	$	404.4

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include an immaterial gain and $2.0 loss for the periods ended September 30, 2023 and December 31, 2022, respectively. The amortization of intangible assets is included in the general and administrative expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.

Amortization expense was approximately $7.4 for the three month periods ended September 30, 2023 and October 1, 2022, and $22.3 for the nine month periods ended September 30, 2023 and October 1, 2022.

The changes in the carrying amounts of goodwill for the period ended September 30, 2023 were as follows:


Balance as of December 31, 2022	$	368.2
Foreign Currency Translation Adjustment	(0.1)
Balance as of September 30, 2023	$	368.1


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities are summarized as follows:


	September 30, 2023		December 31, 2022
Customer deposits	$	33.9	$	29.6
Employee compensation	17.6		16.5
Current operating lease liabilities	5.3		5.3
Sales tax payable	4.9		5.1
Current income taxes	2.3		0.8
Accrued professional fees	1.1		3.6
Product warranties	1.9		0.9
Accrued freight	0.9		1.2
Interest payable	3.6		0.2
Indemnity holdback liability	—		1.0
Other liabilities	8.7		6.4
Total	$	80.2	$	70.6

Other liabilities as of September 30, 2023 and December 31, 2022 consists of property tax, credit card and various other accruals.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

7. Line of Credit

Amendment No. 3 to the ABL Credit and Guarantee Agreement - On April 10, 2023, the Company entered into Amendment Number Three to ABL Credit and Guarantee Agreement (the “LOC Amendment No. 3”) to that certain ABL Credit and Guarantee Agreement, dated as of February 12, 2018 (the “LOC Agreement”). The LOC Amendment No. 3, among other things, (i) replaced the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the LOC Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updated certain other provisions of the LOC Agreement to reflect the transition from LIBOR to SOFR. The LOC Amendment provided for a revolving line of credit of $80.0 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a SOFR Rate (as defined in the LOC Agreement) option is chosen by the Company. If the SOFR Rate is elected, the interest computation is equal to the SOFR Rate plus the SOFR Margin (as defined in the LOC Agreement) of either 1.25% or 1.50%. 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 0.5%, (b) the SOFR rate for a one month tenor plus 1%, (c) the floor (i.e., zero), or (d) the financial institution’s Prime Rate (as defined in the LOC Agreement), plus the Base Rate Margin (as defined in the LOC Agreement) of either 0.25% or 0.50%. At the beginning of each quarter, the applicable margin is set and determined based on the average net availability on the line of credit for the previous quarter.

2023 ABL Credit and Guarantee Agreement - On August 3, 2023, the Company refinanced the revolving credit facility, pursuant to a new ABL Credit and Guarantee Agreement (the “2023 LOC Agreement”). The 2023 LOC Agreement, among other things, (i) increased the previous aggregate commitments from $80.0 to $125.0, (ii) updated the manner in which the previous borrowing base under the 2023 LOC Agreement was determined, and (iii) replaced the administrative agent with a new administrative agent. Interest payments with respect to the 2023 LOC Agreement are due in arrears. The maturity date is August 3, 2028.

The interest rate on the facility is based on a base rate, unless an Adjusted Term SOFR Rate (as defined in the 2023 LOC Agreement) option is chosen by the Company. If the Adjusted Term SOFR Rate is elected, the interest computation is equal to the Adjusted Term SOFR Rate, which is subject to a 10bps flat credit spread adjustment (“CSA”) plus the SOFR Margin (as defined in the 2023 LOC Agreement) of either 1.25%, 1.50%, or 1.75%, based on excess availability (as of September 30, 2023, the SOFR Margin Rate was 1.25%). If the Alternate Base Rate (as defined in the 2023 LOC Agreement) is elected, the interest computation is equal to the Alternate Base Rate of the greatest of (a) the federal funds rate plus 0.50%, (b) the Adjusted Term SOFR Rate for a one month tenor plus 1.00%, or (c) the financial institution’s Prime Rate (as defined in the 2023 LOC Agreement), plus the Base Rate Margin (as defined in the 2023 LOC Agreement) of either 0.25%, 0.50%, or 0.75% (as of September 30, 2023, the Base Rate Margin was 0.25%). At the beginning of each quarter, the applicable margin is set and determined based on the average net availability on the line of credit for the previous quarter. As of September 30, 2023 and December 31, 2022, the interest rate in effect for the facility was 7.3% and 7.8%, respectively. The line of credit is collateralized by accounts receivable and inventories. The Company accrues an unused commitment fee to the administrative agent at the varying rate of .25% to .38%, based on the unused portion of the maximum commitment, as defined in the 2023 LOC agreement.

This refinancing amendment was accounted for as a debt extinguishment and a $0.2 loss on debt extinguishment was recognized for this transaction within “Loss on extinguishment and modification of debt” on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. The Company incurred $1.7 of debt issuance costs, which were capitalized and are being amortized over the term of the facility that expires on August 3, 2028, using the straight-line 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. Amortization of approximately $0.1 was recognized for both the three month periods ended September 30, 2023 and October 1, 2022, and $0.2 was recognized for both the nine month periods ended September 30, 2023 and October 1, 2022. The unamortized portion of the fees as of September 30, 2023 and December 31, 2022 was approximately $1.6 and $0.4, respectively. There were no borrowings outstanding on the line of credit as of September 30, 2023 and December 31, 2022.

8. Long-Term Debt

Long-term debt consists of the following:


	September 30, 2023		December 31, 2022
Note payable - Amendment No.6 First Lien	$	625.0	$	714.3
Financing leases	3.0		1.1
	$	628.0	$	715.4
Less: unamortized deferred finance fees	12.4		7.2
Less: current maturities	7.1		8.3
Total long-term debt	$	608.5	$	699.9

Notes Payable - Amendment No. 5 First Lien - On June 20, 2023, the Company entered into Amendment No. 5 (the “Amendment No. 5 First Lien”) to the First Lien Credit and Guarantee Agreement, dated as of February 12, 2018 (the “First Lien Agreement”) (“First Lien Term Loan”). The Amendment No. 5 First Lien, among other things, (i) replaced the interest rate based on LIBOR and related LIBOR-based mechanics applicable to borrowings under the First Lien Agreement with an interest rate based on SOFR and related SOFR-based mechanics and (ii) updated certain other provisions of the First Lien Agreement to reflect the transition from LIBOR to SOFR. The Amendment No. 5


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

First Lien had an aggregate principal balance of $726.4 with interest payable in arrears. The outstanding loan balance was to be repaid on a quarterly basis of 0.28% of the original principal amount of the loans outstanding on the Fourth Amendment Effective Date (i.e., August 17, 2021) with the remaining principal due on the maturity date of February 12, 2025.

On July 19, 2023, the Company made a voluntary prepayment of $35.0 toward the principal balance of the First Lien Term Loan. The Company used cash on hand to make the voluntary prepayment. Prior to the Amendment No 6, the Company paid off an additional $0.3 on August 3, 2023 to get the balance $625.0 for the refinancing discussed below. For the nine month period ended September 30, 2023, the Company has made payments of $85.3 toward the First Lien Term Loan.

Notes Payable - Amendment No. 6 First Lien - On August 3, 2023, the Company refinanced its existing First Lien Term Loan pursuant to Amendment No. 6 (the “Amendment No. 6 First Lien”) to the First Lien Agreement. The loan was made by a syndicate of lenders, with the aggregate amount of $625.0. The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance of the amended loan beginning the last business day of December 2023 with the remaining principal due on the maturity date of August 3, 2030. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of Adjusted Term SOFR plus an applicable margin percent (effective rate of 8.7% as of September 30, 2023).

The amendment was accounted for in accordance with ASC 470-50, “Debt - Modification and Extinguishment.” As discussed above, the amended First Lien Term Loan consists of a syndicate of lenders which were evaluated, for accounting purposes, as individual lenders. Certain lenders exited the Term Loan credit facility, which resulted in extinguishment accounting. There were $287.4 of borrowings held by lenders in the new agreement, that were also held by lenders in the previous agreement. As a result, the Company wrote off a portion of unamortized debt financing costs associated with the prior First Lien Agreement, that was deemed extinguished and recognized a loss on debt extinguishment of $1.4 for the three month and nine month periods ended September 30, 2023, recognized within “Loss on extinguishment and modification of debt” on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income.

In conjunction with the Amendment No 6, the Company incurred $2.3 of costs from 3rd parties that did not qualify for capitalization of deferred finance costs, and were expensed within “Loss on extinguishment and modification of debt” on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. The Company also incurred $9.5 of additional deferred finance costs, which will be amortized over the remaining term of the modified loan. Deferred finance costs are being amortized using the effective interest method. Amortization of approximately $0.8 and $0.9 was recognized for the three month period ended September 30, 2023 and October 1, 2022, respectively, and $2.9 and $2.6 was recognized for the nine month periods ended September 30, 2023 and October 1, 2022, respectively, as a component of interest expense.

As of September 30, 2023 and December 31, 2022, the Company maintained one letter of credit totaling approximately $0.4 on which there were no balances due.

9. Leases

At lease commencement, a right-of-use (“ROU”) asset and lease liability is recorded based on the present value of the future lease payments over the lease term. The Company has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. The Company leases facilities, vehicles, and other equipment under long-term operating and financing leases with varying terms.

In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases, the practical expedient was also elected whereby lease and non-lease components have been combined.

The Company uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Company will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Company will estimate the incremental borrowing rate to discount the lease payments. The Company estimates the incremental borrowing rate based on the rates of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Company does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The components of ROU assets and lease liabilities were as follows:


(in millions)	Balance Sheet Classification	September 30, 2023		December 31, 2022
Assets:
Operating lease assets	Right-of-use assets, net	$	46.8	$	43.3
Finance lease assets	Right-of-use assets, net	2.9		1.0
Total leased assets		$	49.7	$	44.3
Liabilities:
Current:
Operating	Other accrued expenses	$	5.3	$	5.3
Financing	Current maturities of long-term debt	0.9		0.3
Noncurrent:
Operating	Other long-term liabilities	$	45.4	$	40.9
Financing	Long-term debt	2.1		0.8
Total lease liabilities		$	53.7	$	47.3

The components of lease expense were as follows:


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
(in millions)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Operating lease cost	$	2.2	$	2.1	$	6.5	$	6.1
Variable lease cost	0.2		0.1		0.5		0.3
Short-term lease cost	—		—		—		0.1
Finance lease cost:
Amortization of right-of-use assets	$	0.2	$	0.1	$	0.5	$	0.1
Interest on lease liabilities	0.1		—		0.1		—
Total lease cost	$	2.7	$	2.3	$	7.6	$	6.6

Other information related to leases was as follows:


	September 30, 2023	December 31, 2022
Weighted Average Remaining Lease Term (in years)
Operating Leases	9.07	9.66
Finance Leases	3.34	3.37
Weighted Average Discount Rate
Operating Leases	7.5%	7.1%
Finance Leases	8.4%	6.6%

As of September 30, 2023, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:


(in millions)
2023	$	2.2
2024	8.7
2025	8.2
2026	7.7
2027	7.0
Thereafter	37.8
Total future lease payments	$	71.6
Less: imputed interest	$	(20.9)
Present value of future lease payments	$	50.7


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2023, future minimum repayments of finance leases were as follows:


(in millions)
2023	$	0.3
2024	1.1
2025	1.1
2026	0.5
2027	0.3
Thereafter	0.1
Total future lease payments	$	3.4
Less: imputed interest	$	(0.4)
Present value of future lease payments	$	3.0


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

10. Income Taxes

The Company is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws. The Company’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 Company includes the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico. The Company’s provision for income taxes consists of provisions for federal, state, and foreign income taxes. Deferred tax liabilities and assets attributable to different tax jurisdictions are not offset.

The provision for income taxes for the three and nine month periods ended September 30, 2023 and October 1, 2022 includes amounts related to entities within the Company taxed as corporations in the United States of America, 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 month period ended September 30, 2023 and October 1, 2022, the Company recorded a total income tax provision of approximately $12.4 and $10.6 on pre-tax income of $49.4 and $43.0 resulting in an effective tax rate of 25.1% and 24.6%, respectively. During the nine month periods ended September 30, 2023 and October 1, 2022, the Company recorded a total income tax provision of approximately $33.7 and $25.0 on pre-tax income of $133.7 and $100.0 resulting in an effective tax rate of 25.2% and 25.0%, respectively.

For the three and nine month periods ended September 30, 2023, effective tax rates were primarily impacted by the change in statutory rate differentials, changes in estimated state income tax and apportionment rates, and permanent differences. For the three and nine month periods ended October 1, 2022, effective rates were primarily impacted by statutory rate differentials, changes in estimated tax rates, and permanent differences.

11. Equity Compensation

2021 Omnibus Incentive Plan

The Company maintains its 2021 Omnibus Incentive Plan (the “Plan”) under which it grants stock-based awards to eligible directors, officers and employees in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Company’s stockholders. The Plan allows the Company to issue and grant 15,125,000 shares.

The Company measures compensation expense for stock-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). During the nine month period ended September 30, 2023, the Company granted stock-based awards including restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and stock options under the Plan. The grant date fair value of RSUs is equal to the closing price of the Company’s common stock on either: (i) the date of grant; or (ii) the previous trading day, depending on the level of administration required. Forfeitures are recognized as they occur, any unvested RSUs or stock options are forfeited upon a “Termination of Service”, as defined in the Plan, or as otherwise provided in the applicable award agreement or determined by the Company’s Compensation Committee of the Board of Directors.

Restricted Stock Unit Grants

RSUs are subject to a vesting period between one and four years. RSU activity for the nine month period ended September 30, 2023 is as follows:


(dollar amounts in millions, except share and per share data)	Nine Months Ended September 30, 2023
	RSUs	Weighted-Average Grant Date Fair Value
Unvested, outstanding at December 31, 2022	465,064	$	10.5
Granted	748,198	10.6
Vested	(143,971)	10.5
Forfeited	(34,901)	10.3
Unvested, outstanding at September 30, 2023	1,034,390	$	10.6

Stock-based compensation expense for RSUs is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the above awards was approximately $1.0 and $0.6 for the three month period ended September 30, 2023 and October 1, 2022, respectively. Total compensation expense related to the above awards was approximately $2.6 and $1.9 for the nine month periods ended September 30, 2023 and October 1, 2022, respectively. As of September 30, 2023, there was


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

an aggregate of $9.0 of unrecognized expense related to the RSUs granted, which the Company expects to amortize over a weighted-average period of 2.5 years.

Performance-based Restricted Stock Unit Grants

PSU awards are based on the satisfaction of the Company’s performance metrics. The number of PSUs that become earned can range between 0% and 200% of the original target number of PSUs awarded for the 2022 and 2023 awards. PSUs are subject to a three-year performance cliff-vesting period.

PSUs activity for the nine month period ended September 30, 2023 is as follows:

(dollar amounts in millions, except share and per share data)


	Nine months ended September 30, 2023
	PSUs	Weighted-Average Grant Date Fair Value
Unvested, outstanding at December 31, 2022	252,923	$	9.5
Granted	229,091	10.6
Vested	—	—
Forfeited	—	—
Unvested, outstanding at September 30, 2023 (1)	482,014	$	10.0

1) This number excludes 252,923 performance stock units, which represents the incremental number of units that would be issued based on performance results from previously-granted PSU awards.

Stock-based compensation expense for PSUs is recognized straight line over the requisite vesting period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to the PSUs was approximately $0.6 and $— for the three month periods ended September 30, 2023 and October 1, 2022, respectively.

Total compensation expense related to the performance-based awards was approximately $2.2 and $— for the nine month periods ended September 30, 2023 and October 1, 2022, respectively. As of September 30, 2023, there was an aggregate of $3.8 of unrecognized expense related to the PSUs granted, which the Company expects to amortize over a weighted-average period of 1.7.

The above table represents PSUs assuming 100% of target payout at the time of the grant. The Actual payout of the 2022 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 2, 2022, through December 28, 2024. As of September 30, 2023, the Company deemed the estimate of the PSUs granted in fiscal year ended December 31, 2022 to be issued at 200% of target, and have reflected such estimates within the share-based compensation expense.

The Actual payout of the 2023 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 1, 2023, through December 27, 2025. As of September 30, 2023, the Company deemed the estimate of the PSUs granted in the nine month periods ended September 30, 2023 to be issued at 100% of target, and have reflected such estimates within the share-based compensation expense.

Stock Options

Stock options are granted by applying a Black-Scholes valuation model to determine the fair value on the grant date. Stock options are subject to a vesting period of either three or four years. Stock option awards typically vest in 33% or 25% annual installments on each annual anniversary of the vesting commencement date for the duration of the vesting period, and expire ten years from the grant date.

The principal assumptions utilized in valuing stock options include, the expected option life, the risk-free interest rate (an estimate based on the yield of United States Treasury zero coupon with a maturity equal to the expected life of the option), the expected stock price volatility using the historical and implied price volatility, and the expected dividend yield.

A summary of the assumptions used in determining the fair value of stock options is as follows:

(dollar amounts in millions, except share and per share data)


	Nine Months Ended September 30, 2023
Expected life of option (years)	6.00 - 6.25
Risk-free interest rate	2.9% - 3.7%
Expected volatility of the Company’s stock	45% - 48%
Expected dividend yield on the Company’s stock	—	%


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Stock option activity for the nine month period ended September 30, 2023 is as follows:


	Nine Months Ended September 30, 2023
	Stock Options	Weighted-Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (in years)	Intrinsic value
Unvested, outstanding at December 31, 2022	700,729	$	4.5	9.8	$	0.2
Granted	18,796	5.3		9.5	0.2
Exercised	—	—		—	—
Vested	(175,175)	4.5		8.5	1.2
Forfeited	—	—		—	—
Unvested, outstanding at September 30, 2023	544,350	$	4.5	8.6	$	—
Vested not exercised at September 30, 2023	175,175	$	4.5	8.5	$	1.2

Stock-based compensation expense for stock options is recognized straight line over the respective vesting period, reduced for actual forfeitures, and included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. Total compensation expense related to stock options was approximately $0.2 and $0.2 for the three month periods ended September 30, 2023 and October 1, 2022, respectively. Total compensation expense related to stock options was approximately $0.6 and $0.3 for the nine month periods ended September 30, 2023 and October 1, 2022, respectively. Total unamortized stock-based compensation expense related to the unvested stock options was approximately $2.1, which the Company expects to amortize over a weighted-average period of 2.6 years.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

12. Net Income Per Share

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. For the three and nine month periods ended September 30, 2023 and October 1, 2022, dilutive potential common shares include stock options and unvested restricted stock units. Dilutive EPS excludes all common shares if their effect is anti-dilutive.

The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the three and nine month periods ended September 30, 2023 and October 1, 2022 (in millions, except share and per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Numerator:
Net income attributable to common stockholders	$	37.0	$	32.4	$	100.0	$	75.0
Denominator:
Weighted average number of shares:
Basic	146,827,175		146,639,452		146,765,567		146,592,296
Adjustment for dilutive securities	166,690		78,465		73,741		79,213
Diluted	146,993,865		146,717,917		146,839,308		146,671,509
Basic net income per share attributable to common stockholders	$	0.25	$	0.22	$	0.68	$	0.51
Diluted net income per share attributable to common stockholders	$	0.25	$	0.22	$	0.68	$	0.51

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 and services that the Company has transferred to a customer. Unbilled receivables result from revenues recognized at a point-in-time and represent an unconditional right to payment subject primarily to the passage of time. Unbilled receivables are recognized as accounts receivable when they are billed. Costs in excess of billings result from revenues recognized over time and represent the net balance of billings that already occurred. Contract liabilities (billings in excess of costs) represent billings to a customer in excess of revenue that has been recognized over time.

Contract balances as of September 30, 2023 were as follows:


Costs in excess of billings at December 31, 2022	$	17.0
Unbilled receivables at December 31, 2022	22.2
Contract assets at December 31, 2022	$	39.3

Costs in excess of billings at September 30, 2023	$	31.9
Unbilled receivables at September 30, 2023	19.4
Contract assets at September 30, 2023	$	51.3

Billings in excess of cost at December 31, 2022	$	21.4
Billings in excess of cost at September 30, 2023	$	17.9

During the three and nine month periods ended September 30, 2023, the Company recognized revenue of approximately $1.4 and $18.6 related to contract liabilities at December 31, 2022.

The Company derives subscription revenue from continued software support and through the Nokē Smart Entry System, a product which provides mobile access for tenants and remote monitoring and tracking for operators. We determine standalone selling price for recurring software revenue by using the adjusted market assessment approach. The recurring revenue recognized from the Nokē Smart Entry System,


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

included in service revenues, for the three month periods ended September 30, 2023 and October 1, 2022 was $1.2 and $0.4, respectively. The recurring revenue recognized from the Nokē Smart Entry System, included in service revenues, for the nine month periods ended September 30, 2023 and October 1, 2022 was $2.4 and $1.0, respectively.

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 month periods ended September 30, 2023 and October 1, 2022:

Revenue by Timing of Revenue Recognition


	Three Months Ended				Nine Months Ended
Reportable Segments by Timing of Revenue Recognition	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Janus North America
Product revenues transferred at a point in time(1)	$	210.4	$	214.5	$	592.3	$	587.4
Product revenues transferred over time(1)	28.9		20.5		89.5		73.2
Service revenues transferred over time(1)	32.8		21.7		89.9		62.9
	$	272.1	$	256.7	$	771.7	$	723.5
Janus International
Product revenues transferred at a point in time	$	10.5	$	9.8	$	35.7	$	32.8
Service revenues transferred over time	9.9		7.2		27.5		22.4
	$	20.4	$	17.0	$	63.2	$	55.2
Eliminations	$	(12.4)	$	(11.2)	$	(32.3)	$	(38.9)
Total Revenue	$	280.1	$	262.5	$	802.6	$	739.8

(1) These numbers have been revised for the three and nine month periods ended October 1, 2022. See Note 2 to our Unaudited Condensed Consolidated Financial Statements for additional information.

Revenue by Sales Channel


	Three Months Ended				Nine Months Ended
Reportable Segments by Sales Channel Revenue Recognition	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Janus North America
Self Storage-New Construction	$	90.7	$	65.8	$	247.5	$	212.2
Self Storage-R3	85.4		84.9		245.7		215.9
Commercial and Others	96.0		106.0		278.5		295.4
	$	272.1	$	256.7	$	771.7	$	723.5
Janus International
Self Storage-New Construction	$	18.8	$	13.2	$	55.9	$	40.0
Self Storage-R3	1.6		3.8		7.3		15.2
	$	20.4	$	17.0	$	63.2	$	55.2
Eliminations	$	(12.4)	$	(11.2)	$	(32.3)	$	(38.9)
Total Revenue	$	280.1	$	262.5	$	802.6	$	739.8


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

14. 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, U.S. 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 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Revenue
Janus North America	$	272.1	$	256.7	$	771.7	$	723.5
Janus International	20.4		17.0		63.2		55.2
Eliminations	(12.4)		(11.2)		(32.3)		(38.9)
Consolidated Revenue	$	280.1	$	262.5	$	802.6	$	739.8
Income From Operations
Janus North America	$	64.5	$	53.1	$	175.0	$	126.1
Janus International	1.9		0.7		7.0		2.8
Eliminations	0.1		—		(0.2)		—
Total Segment Operating Income	$	66.5	$	53.8	$	181.8	$	128.9
Depreciation Expense
Janus North America	$	2.0	$	1.8	$	5.9	$	5.3
Janus International	0.2		0.2		0.7		0.5
Consolidated Depreciation Expense	$	2.2	$	2.0	$	6.6	$	5.8
Amortization of Intangible Assets
Janus North America	$	7.1	$	7.1	$	21.3	$	21.3
Janus International	0.3		0.3		1.0		1.0
Consolidated Amortization Expense	$	7.4	$	7.4	$	22.3	$	22.3
Capital Expenditures
Janus North America	$	3.8	$	2.1	$	12.1	$	6.8
Janus International	0.1		0.5		1.4		1.1
Consolidated Capital Expenditures	$	3.9	$	2.6	$	13.5	$	7.9


	September 30, 2023		December 31, 2022
Identifiable Assets
Janus North America	$	1,232.2	$	1,209.9
Janus International	64.7		60.7
Consolidated Assets	$	1,296.9	$	1,270.6


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

15. Restructuring

During fiscal year 2022 and 2023, the Company initiated a restructuring plan to relocate one of its international facilities and align its ongoing corporate strategy. The Company incurs costs associated with restructuring initiatives intended to improve operating performance, profitability and efficiency of business processes. Restructuring charges can include severance costs, relocations costs, recruiting fees affiliated with hiring new personnel, legal costs, and contract cancellation costs.

The Company records restructuring charges when they are probable and estimable. Restructuring costs are accrued when the Company announces the closure or restructuring event, and the amounts can be reasonably estimated. Restructuring costs are included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.

The Company’s restructuring expenses are comprised of the following:


(in millions)	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Severance and termination benefits	$	0.1	$	—	$	0.2	$	0.3
Facility related charges	—		—		0.1		0.6
Legal, consulting, and other costs	0.1		—		0.7		0.3
Total Restructuring Charges	$	0.2	$	—	$	1.0	$	1.2

The following table summarizes the changes in the Company’s accrued restructuring balance, which are included in accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets.



Balance at December 31, 2022	$	—
Restructuring charges	1.0
Payments	(1.0)
Balance at September 30, 2023	$	—

16. Commitments and Contingencies

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 $0.2 as of both September 30, 2023 and December 31, 2022. 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 $0.4 as of September 30, 2023, and December 31, 2022. The amount of actual losses incurred could differ materially from the estimates reflected in these Unaudited Condensed 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 $0.3 as of both September 30, 2023 and December 31, 2022. 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 $2.4 and $2.1 as of September 30, 2023 and December 31, 2022, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these Unaudited Condensed Consolidated Financial Statements.


Janus International Group, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

17. Related Party Transactions

Certain relatives of John Morgan Hodges (an Executive Vice President of the Company) and Elliot Kahler (General Counsel of the Company), each of whom is an executive officer, are related parties. Mr. Hodges has been an executive officer of the Company since it went public in June 2021 and all of his compensation was approved by the Compensation Committee. Mr. Kahler became an executive officer in February 2023.

Seth Powell is a Project Manager in the Company’s Estimating Department and the son-in-law of Mr. Hodges. Mr. Powell is expected to earn approximately $0.2 in total compensation for the 2023 fiscal year, consisting of base salary, commission, and share-based compensation that is subject to a three year vesting. Mr. Powell was paid compensation of $0.17, $0.12, and $0.12 in fiscal years 2022, 2021 and 2020, respectively, consisting of base salary, bonus, and commissions. Mr. Powell also participates in the Company’s benefit programs available to all other employees in similar positions.

Mr. Kahler is expected to earn approximately $0.7 in total compensation for the 2023 fiscal year, consisting of a base salary, target bonus, and share-based compensation that is subject to a three year vesting period. Mr. Kahler also participates in the Company’s benefit programs available to all other employees in similar positions.

Megan Kahler is the Chief Financial Officer of Janus International Group, LLC (“Janus Core”), our wholly owned subsidiary, and the spouse of Mr. Kahler. Ms. Kahler is expected to earn $0.4 in total compensation for the 2023 fiscal year, consisting of a base salary, target bonus, and share-based compensation that is subject to a three year vesting period. Ms. Kahler also participates in the Company’s benefit programs available to all other employees in similar positions.

The Audit Committee of the Company’s board of directors approved the above related party transactions.

18. Subsequent Events

For the interim Unaudited Condensed Consolidated Financial Statements as of September 30, 2023, the Company has evaluated subsequent events through the issuance date of the financial statements.

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 Unaudited Condensed Consolidated financial statements and notes thereto contained in this Form 10-Q (the “Form 10-Q”).

Certain information contained in this discussion and analysis or set forth elsewhere in this 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 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 “Janus,” “we,” “us,” “our,” and other similar terms refer to Janus International Group Inc. (Parent) and its consolidated subsidiaries.

Percentage amounts included in this 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 Form 10-Q may vary from those obtained by performing the same calculations using the figures in our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q. Certain other amounts that appear in this 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 Condensed 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 Condensed Consolidated Financial Statements were prepared.

•Results of Operations: This section provides an analysis of our unaudited results of operations for the three and nine month periods ended September 30, 2023 and October 1, 2022.

•Liquidity and Capital Resources: This section provides a discussion of our financial condition and an analysis of our unaudited cash flows for the nine month periods ended September 30, 2023 and October 1, 2022. This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at September 30, 2023, 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 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, and Australia. The self-storage industry is comprised of institutional and 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 JIEH, whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus International Group, LLC (together with each of its operating subsidiaries, “Janus Core”), Betco, Inc. (“BETCO”), Noke, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Access Control Technologies, LLC (“ACT”), U.S. Door & Building Components, LLC (“U.S. Door”), Janus Door, LLC (“Janus Door”), and Steel Door Depot.com, LLC (“Steel Door Depot”).

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 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) for warehouses, commercial buildings, and terminals, designed with a higher gauge and deeper guides, which combat the heavy scale of use with superior strength and durability. Janus also offers rolling steel doors known for minimal maintenance and easy installation with options for: 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 self-storage, commercial and industrial storage 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 products and solutions for our clients.

Revenues increased in the three and nine month periods ended September 30, 2023 as compared to the three and nine month periods ended October 1, 2022, representing a 6.7% and 8.5% increase in revenue, respectively. This increase is largely due to continued strong performance within the New Construction sales channel, coupled with the impact from the commercial actions taken in 2022. The same trends were generally present in both the Janus North America segment as well as the Janus International segment, with the exception that the international segment does not sell into the Commercial sales channel.

Net income was $37.0 and $100.0 for the three and nine month periods ended September 30, 2023, representing a 14.2% and 33.3% increase from $32.4 and $75.0 for the three and nine month periods ended October 1, 2022. Net income as a percentage of revenue was 13.2% and 12.5% representing an increase of 0.9% and 2.3% from 12.3% and 10.1% for the three and nine month periods ended October 1, 2022.

Adjusted EBITDA was $76.2 and $211.4 for the three and nine month periods ended September 30, 2023, representing a 20.4% and 33.2% increase from $63.3 and $158.7 for the three and nine month periods ended October 1, 2022.

Adjusted EBITDA as a percentage of revenue was 27.2% for the three month period ended September 30, 2023, and 26.3% for the nine month period ended September 30, 2023, representing an increase of 3.1% from 24.1% for the three month period ended October 1, 2022 and an increase of 4.8% from 21.5% for the nine months October 1, 2022 . The increase in Adjusted EBITDA margins is a result of increased revenue primarily due to commercial actions taken in 2022, product mix and the benefit of decreases in raw material costs, which was partially offset by increases in labor costs as the business scales for continued growth. 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.”

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 produces and provides various fabricated components such as commercial and self-storage doors, walls, hallway systems, metal roof panels, metal wall panels and building components used primarily by owners or builders of self-storage facilities. Installation services are also provided along with the products. Janus also provides industrial building solutions. Janus North America represented 92.7% and 92.1% of the Company’s revenue for the three and nine month periods ended September 30, 2023. Janus North America represented 93.5% and 92.5% of the Company’s revenue for the three and nine month periods ended October 1, 2022.

The Janus International segment produces and provides similar products and services as Janus North America, with the exception of the fact that the international segment does not sell into the Commercial sales channel, and they’re largely in Europe as well as Australia. Janus International represented 7.3% and 7.9% of Janus’s revenue for the three and nine month periods ended September 30, 2023. Janus International represented 6.5% and 7.5% of the Company’s revenue for the three and nine month periods ended October 1, 2022.

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. As of September 30, 2023, and October 1, 2022, the headcount was 2,374 employees (including 503 temporary employees) and 2,321 employees (including 695 temporary employees), respectively.

The following table sets forth key performance measures for the periods ended September 30, 2023 and October 1, 2022 (dollar amounts in millions):


	Three Months Ended						Variance
	September 30, 2023			October 1, 2022			$		%
Total Revenue	$	280.1		$	262.5		$	17.6	6.7	%
Adjusted EBITDA	$	76.2		$	63.3		$	12.9	20.4	%
Adjusted EBITDA (% of revenue)	27.2		%	24.1		%			3.1	%


	Nine Months Ended						Variance
	September 30, 2023			October 1, 2022			$		%
Total Revenue	$	802.6		$	739.8		$	62.8	8.5	%
Adjusted EBITDA	$	211.4		$	158.7		$	52.7	33.2	%
Adjusted EBITDA (% of revenue)	26.3		%	21.5		%			4.8	%

Total revenue increased by $17.6 and $62.8 or 6.7% and 8.5% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, primarily due to improved market conditions, product mix, and commercial actions.

Adjusted EBITDA increased by $12.9 and $52.7 or 20.4% and 33.2% from the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, primarily due to increased revenue which was partially offset by increased cost of revenues and general and administrative expenses.

Adjusted EBITDA as a percentage of revenue increased 3.1% and 4.8% for the three and nine month periods ended September 30, 2023 primarily due to increased revenue due to commercial actions taking full effect, which was partially offset by inflationary increases in raw material, labor and logistics costs in advance of commercial and cost containment actions taking full effect. In addition to the inflationary cost pressures, Janus also experienced incremental costs associated with additional operational investments in our Noke smart entry systems (See “Non-GAAP Financial Measures” section).

Basis of Presentation

The Unaudited Condensed 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 thirteen week period ended September 30, 2023 compared to the thirteen week period ended October 1, 2022.

Components of Results of Operations

Product Revenues. Product revenues represent 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. Product revenues also include all revenues affiliated with erecting a self storage facility for our customers, which is recognized over-time, over the life of the contract. 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, New Construction, R3, and Commercial and Other.

Service revenues. Service revenues reflect 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.

Product cost of revenues. Product costs of revenues 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. Product costs of revenues also include all costs affiliated with erecting a self storage facility for our customers. We expect cost of revenues to increase in absolute dollars in future periods as we expect our revenues to continue to grow.

Service cost of revenues. Cost of services includes third-party installation subcontractor costs directly associated with the installation of our products. Our cost of revenues 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 revenues to increase in absolute dollars in future periods as we expect our revenues to continue to grow.

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.

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 our 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 of self-storage facilities, 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 and logistics costs and the competitive environment. In certain cases, realized price increases are less than the announced price increases due to 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 installation and general contracting, project management, and third-party security. Janus differentiates itself through on-time delivery, efficient installation, customer service satisfaction, 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.

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 general and administrative (“G&A”) 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. Janus entered into agreements with two of its largest suppliers in order to lock in steel coil prices for part of Janus’s production needs. These agreements are renewed annually and partially mitigate the potential impacts of short-term steel coil price fluctuations. These arrangements allow 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 Condensed Consolidated Financial Statements. The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this document. 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 month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022 (dollar amounts in millions):


	Three Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
REVENUES
Product revenues(1)	$	237.8	$	233.7	$	4.1	1.8	%
Service revenues(1)	42.3		28.8		13.5		46.9	%
Total Revenues	$	280.1	$	262.5	$	17.6	6.7	%
Product cost of revenues	129.7		144.7		(15.0)		(10.4)	%
Service cost of revenues	31.3		21.1		10.2		48.3	%
Cost of Revenues	$	161.0	$	165.8	$	(4.8)	(2.9)	%
GROSS PROFIT	$	119.1	$	96.7	$	22.4	23.2	%
OPERATING EXPENSE
Selling and marketing	17.7		14.5		3.2		22.1	%
General and administrative	34.9		28.4		6.5		22.9	%
Operating Expenses	$	52.6	$	42.9	$	9.7	22.6	%
INCOME FROM OPERATIONS	$	66.5	$	53.8	$	12.7	23.6	%
Interest expense	(14.5)		(11.0)		(3.5)		31.8	%
Loss on extinguishment and modification of debt	(3.9)		—		(3.9)		100.0	%
Other income	1.3		0.2		1.1		550.0	%
INCOME BEFORE TAXES	$	49.4	$	43.0	$	6.4	14.9	%
Provision for Income Taxes	12.4		10.6		1.8		17.0	%
NET INCOME	$	37.0	$	32.4	$	4.6	14.2	%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
REVENUES
Product revenues(1)	$	686.0	$	654.5	$	31.5	4.8	%
Service revenues(1)	116.6		85.3		31.3		36.7	%
Total Revenues	$	802.6	$	739.8	$	62.8	8.5	%
Product cost of revenues	380.4		418.8		(38.4)		(9.2)	%
Service cost of revenues	86.9		63.6		23.3		36.6	%
Cost of Revenues	$	467.3	$	482.4	$	(15.1)	(3.1)	%
GROSS PROFIT	$	335.3	$	257.4	$	77.9	30.3	%
OPERATING EXPENSE
Selling and marketing	49.2		42.2		7.0		16.6	%
General and administrative	104.3		86.3		18.0		20.9	%
Operating Expenses	$	153.5	$	128.5	$	25.0	19.5	%
INCOME FROM OPERATIONS	$	181.8	$	128.9	$	52.9	41.0	%
Interest expense	(45.3)		(28.6)		(16.7)		58.4	%
Loss on extinguishment and modification of debt	(3.9)		—		(3.9)		100.0	%
Other income (expense)	1.1		(0.3)		1.4		(466.7)	%
INCOME BEFORE TAXES	$	133.7	$	100.0	$	33.7	33.7	%
Provision for Income Taxes	33.7		25.0		8.7		34.8	%
NET INCOME	$	100.0	$	75.0	$	25.0	33.3	%

(1) These numbers have been revised for the three and nine month periods ended October 1, 2022. See Note 2 to our Unaudited Condensed Consolidated Financial Statements for additional information.

Revenue (dollar amounts in tables in millions)


	Three Months Ended
	September 30, 2023		October 1, 2022		Organic Growth		%
Product revenues (1)	$	237.8	$	233.7	$	4.1	1.8	%
Service revenues	42.3		28.8		13.5		46.9	%
Total	$	280.1	$	262.5	$	17.6	6.7	%


	Nine Months Ended
	September 30, 2023		October 1, 2022		Organic Growth		%
Product revenues (1)	$	686.0	$	654.5	$	31.5	4.8	%
Service revenues	116.6		85.3		31.3		36.7	%
Total	$	802.6	$	739.8	$	62.8	8.5	%

(1) Product revenues include product revenues transferred at a point in time and product revenues transferred over time.

The $17.6 and $62.8 revenue increase for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022 is primarily attributable to the positive impact from commercial actions taken in 2022 as well as the growth in the New Construction sales channel.

The following table and discussion compares Janus’s sales by sales channel (dollar amounts in tables in millions).


	Three Months Ended								Variance
Consolidated	September 30, 2023		% of sales		October 1, 2022		% of sales		$		%
New Construction - Self Storage	$	105.4	37.6	%	$	75.1	28.6	%	$	30.3	40.3	%
R3 - Self Storage	86.7		31.0	%	88.4		33.7	%	(1.7)		(1.9)	%
Commercial and Other	88.0		31.4	%	99.0		37.7	%	(11.0)		(11.1)	%
Total	$	280.1	100.0	%	$	262.5	100.0	%	$	17.6	6.7	%


	Nine Months Ended								Variance
Consolidated	September 30, 2023		% of sales		October 1, 2022		% of sales		$		%
New Construction - Self Storage	$	291.8	36.4	%	$	233.2	31.5	%	$	58.6	25.1	%
R3 - Self Storage	252.5		31.5	%	230.3		31.2	%	22.2		9.6	%
Commercial and Other	258.3		32.1	%	276.3		37.3	%	(18.0)		(6.5)	%
Total	$	802.6	100.0	%	$	739.8	100.0	%	$	62.8	8.5	%

New construction sales increased by $30.3 and $58.6 or 40.3% and 25.1% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022. The increase in the three and nine month periods ended September 30, 2023 is primarily due to commercial initiatives.

R3 sales decreased by $1.7 and increased by $22.2 or 1.9% and 9.6% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022. The R3 sales decrease for the three month period ended September 30, 2023 is due to the three month period ended October 1, 2022 benefiting from favorable 2022 market gains due to pent up demand. The increase in the nine month period ended September 30, 2023 is due to the increase of conversions and expansions as self-storage capacity continues to be brought online through R3, coupled with the positive impacts from commercial actions.

Commercial and other sales decreased by $11.0 and $18.0 or 11.1% and 6.5% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, due to the three and nine month periods ended October 1, 2022, benefiting from favorable 2022 market gains due to share gains in both the commercial steel roll up door market and ASTA’s rolling steel product line, partially offset by commercial actions.

Cost of Revenues and Gross Margin

Gross margin increased by 5.6% and 7.0% to 42.5% and 41.8% for the three and nine month periods ended September 30, 2023, from 36.9% and 34.8% for the three and nine month periods ended October 1, 2022. This increase is primarily due to the commercial and cost containment initiatives.


(Dollar amounts in tables in millions)	Three Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
Product cost of revenues	$	129.7	$	144.7	$	(15.0)	(10.4)	%
Service cost of revenues	31.3		21.1		10.2		48.4	%
Cost of Revenues	$	161.0	$	165.8	$	(4.8)	(2.9)	%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
Product cost of revenues	$	380.4	$	418.8	$	(38.4)	(9.2)	%
Service cost of revenues	86.9		63.6		23.3		36.6	%
Cost of Revenues	$	467.3	$	482.4	$	(15.1)	(3.1)	%

The cost of revenues decreased by $4.8 and $15.1 or 2.9% and 3.1% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022. The decrease in product cost of revenues of $15.0 and $38.4 for the three and nine month periods ended September 30, 2023, is primarily attributable to the decline in steel coil pricing due to supplier agreements Janus entered into in 2022, while the increase in service cost of revenue of $10.2 and $23.3 for the three and nine month periods ended September 30, 2023, is due to the higher costs necessary to support the service revenue growth of 46.9% and 36.7%, respectively.

Operating Expenses - Selling and marketing

Selling and marketing expense increased $3.2 and $7.0 or 22.1% and 16.6% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022. This is primarily due to increases in payroll related costs for additional headcount in sales and advertising activities.

Operating Expenses - General and administrative

General and administrative expenses increased $6.5 and $18.0 or 22.9% and 20.9% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022. The increase for the three and nine month periods is primarily due to higher health insurance costs, stock-based compensation, and additional headcount to support the various corporate functions.

Interest Expense

Interest expense increased $3.5 and $16.7 or 31.8% and 58.4% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, primarily due to higher interest rates on floating rate debt in 2023, partially offset by the principal repayments of $85.3 on notes payable for the nine month period ended September 30, 2023. (See “Liquidity and Capital Resources” section).

Loss on Extinguishment and Modification of Debt

Loss on extinguishment and modification of debt increased by $3.9 for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, due to the debt refinancing transaction on August 3, 2023. (See Notes 7 and 8 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion of the Company’s debt).

Other Income (Expense)

Other income increased by $1.1 and $1.4, from $0.2 of other income and $0.3 of other expense for the three and nine month periods ended October 1, 2022 compared to the three and nine month periods ended September 30, 2023 , primarily due to a gain from a $1.5 legal settlement included in the three and nine month periods ended September 30, 2023. Other expense also includes gains or losses on foreign currency driven by our international operations.

Income Taxes

Income tax expense increased by $1.8 and $8.7 or 17.0% and 34.8% from $10.6 and $25.0 for the three and nine month periods ended October 1, 2022, to $12.4 and $33.7 expense for the three and nine month periods ended September 30, 2023, due to statutory rate differentials, changes in estimated state income tax and apportionment rates, and permanent differences.

Net Income

The $4.6 and $25.0 or 14.2% and 33.3% increase in net income for the three and nine month periods ended September 30, 2023 as compared to the three and nine month periods ended October 1, 2022, respectively, is largely due to an increase in revenues and a decrease in cost of revenues, partially offset by an increase in selling and marketing expenses, general and administrative expenses and interest expense for the three and nine month periods ended September 30, 2023.

Segment Results of Operations

We operate in and report financial results for two segments: Janus North America and Janus International with the following sales channels, 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. The segment discussion that follows describes the significant factors contributing to the changes in results for each segment included in Results of Operations.

Results of Operations - Janus North America

For the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022 (dollar amounts in tables in millions):


	Three Months Ended				Variance
	September 30, 2023		October 1, 2022
					$		%
REVENUES
Product revenues(1)	$	239.3	$	235.0	$	4.3	1.8%
Service revenues(1)	32.8		21.7		11.1		51.2%
Total revenues	$	272.1	$	256.7	$	15.4	6.0%
Product cost of revenues	134.9		149.2		(14.3)		(9.6)%
Service cost of revenues	24.4		15.5		8.9		57.4%
Cost of Revenues	$	159.3	$	164.7	$	(5.4)	(3.3)%
GROSS PROFIT	$	112.8	$	92.0	$	20.8	22.6%
OPERATING EXPENSE
Selling and marketing	16.9		13.8		3.1		22.5%
General and administrative	31.4		25.1		6.3		25.1%
Operating Expenses	$	48.3	$	38.9	$	9.4	24.2%
INCOME FROM OPERATIONS	$	64.5	$	53.1	$	11.4	21.5%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022
					$		%
REVENUES
Product revenues(1)	$	681.8	$	660.6	$	21.2	3.2%
Service revenues(1)	89.9		62.9		27.0		42.9%
Total revenues	$	771.7	$	723.5	$	48.2	6.7%
Product cost of revenues	388.5		435.4		(46.9)		(10.8)%
Service cost of revenues	67.3		45.5		21.8		47.9%
Cost of Revenues	$	455.8	$	480.9	$	(25.1)	(5.2)%
GROSS PROFIT	$	315.9	$	242.6	$	73.3	30.2%
OPERATING EXPENSE
Selling and marketing	46.8		40.1		6.7		16.7%
General and administrative	94.1		76.4		17.7		23.2%
Operating Expenses	$	140.9	$	116.5	$	24.4	20.9%
INCOME FROM OPERATIONS	$	175.0	$	126.1	$	48.9	38.8%

(1) These numbers have been revised for the three and nine month periods ended October 1, 2022. See Note 2 to our Unaudited Condensed Consolidated Financial Statements for additional information.

Revenue (dollar amounts in tables in millions)


	Three Months Ended				Organic Growth
	September 30, 2023		October 1, 2022		$		%
Product revenues (1)	$	239.3	$	235.0	$	4.3	1.8	%
Service revenues	32.8		21.7		11.1		51.2	%
Total	$	272.1	$	256.7	$	15.4	6.0	%


	Nine Months Ended				Organic Growth
	September 30, 2023		October 1, 2022		$		%
Product revenues (1)	$	681.8	$	660.6	$	21.2	3.2	%
Service revenues	89.9		62.9		27.0		42.9	%
Total	$	771.7	$	723.5	$	48.2	6.7	%

(1) Product revenues include product revenues transferred at a point in time and product revenues transferred over time.

The $15.4 and $48.2 or 6.0% and 6.7% revenue growth increase is primarily attributable to New Construction sales channel growth due to new capacity additions and the positive impact from commercial actions.

The following table and discussion compares Janus North America sales by sales channel (dollar amounts in millions).


	Three Months Ended								Variance
	September 30, 2023		% of Total Sales		October 1, 2022		% of Total Sales
									$		%
New Construction - Self Storage	$	90.7	33.3	%	$	65.8	25.6	%	$	24.9	37.8	%
R3 - Self Storage	85.4		31.4	%	84.9		33.1	%	0.5		0.6	%
Commercial and Other	96.0		35.3	%	106.0		41.3	%	(10.0)		(9.4)	%
Total	$	272.1	100.0	%	$	256.7	100.0	%	$	15.4	6.0	%


	Nine Months Ended								Variance
	September 30, 2023		% of Total Sales		October 1, 2022		% of Total Sales
									$		%
New Construction - Self Storage	$	247.5	32.1	%	$	212.2	29.3	%	$	35.3	16.6	%
R3 - Self Storage	245.7		31.8	%	215.9		29.8	%	29.8		13.8	%
Commercial and Other	278.5		36.1	%	295.4		40.9	%	(16.9)		(5.7)	%
Total	$	771.7	100.0	%	$	723.5	100.0	%	$	48.2	6.7	%

New Construction sales increased by $24.9 and $35.3 or 37.8% and 16.6% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, primarily due to commercial initiatives put in place in 2022 and continued high occupancy rates at existing facilities.

R3 sales increased by $0.5 and $29.8 or 0.6% and 13.8% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, respectively, primarily due 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 decreased by $10.0 and $16.9 or 9.4% and 5.7% for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, primarily due to the third quarter of 2022 benefiting from strong market competitions in Janus Core and ASTA commercial steel roll up door and rolling steel product line market, due to pent up demand in the nine month period ended October 1, 2022, offset by commercial initiatives implemented due to the inflationary increases of raw materials, labor, and logistics costs.

Cost of Revenues and Gross Margin

Gross Margin increased by 5.7% and 7.4% to 41.5% and 40.9% for the three and nine month periods ended September 30, 2023, from 35.8% and 33.5% for the three and nine month periods ended October 1, 2022 is primarily attributable to the decline in steel coil pricing due to supplier agreements Janus entered into in 2022, and an increase in service revenues for the three month period ended September 30, 2023, primarily due to project mix and timing.

(Dollar amounts in tables in millions)


	Three Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
Product cost of revenues	$	134.9	$	149.2	$	(14.3)	(9.6)	%
Service cost of revenues	24.4		15.5		8.9		57.4	%
Cost of Revenues	$	159.3	$	164.7	$	(5.4)	(3.3)	%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
Product cost of revenues	$	388.5	$	435.4	$	(46.9)	(10.8)	%
Service cost of revenues	67.3		45.5		21.8		47.9	%
Cost of Revenues	$	455.8	$	480.9	$	(25.1)	(5.2)	%

The $5.4 and $25.1 or 3.3% and 5.2% decrease in cost of revenues for the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022, is primarily due to increased revenue coupled with a decrease in cost of revenues due to the commercial and cost containment initiatives taken in 2022.

Operating Expenses - Selling and marketing

Selling and marketing expenses increased $3.1 and $6.7 or 22.5% and 16.7% from $13.8 and $40.1 for the three and nine month periods ended October 1, 2022 to $16.9 and $46.8 for the three and nine month periods ended September 30, 2023 primarily due to increased travel and payroll related costs for additional headcount to support revenue growth.

Operating Expenses - General and administrative

General and administrative expenses increased $6.3 and $17.7 or 25.1% and 23.2% from $25.1 and $76.4 for the three and nine month periods ended October 1, 2022 to $31.4 and $94.1 for the three and nine month periods ended September 30, 2023. The increase for the three and nine month periods is primarily due to an increase in health insurance costs, professional fees and additional operational investments in our Noke smart entry system to support the continued top line revenue growth.

Income from Operations

Income from operations increased by $11.4 and $48.9 or 21.5% and 38.8% from $53.1 and $126.1 for the three and nine month periods ended October 1, 2022 to $64.5 and $175.0 for the three and nine month periods ended September 30, 2023, primarily due to an increase in revenue and a reduction in cost of revenues, partially offset by an increase in selling and general and administrative expenses.

INTERNATIONAL

Results of Operations - Janus International- For the three and nine month periods ended September 30, 2023 compared to the three and nine month periods ended October 1, 2022 (dollar amounts in millions):


	Three Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
REVENUE
Product revenues	$	10.5	$	9.8	$	0.7	7.1	%
Service revenues	9.9		7.2		2.7		37.5	%
Total revenues	$	20.4	$	17.0	$	3.4	20.0	%
Product cost of revenues	6.9		6.7		0.2		3.0	%
Service cost of revenues	7.3		5.6		1.7		30.4	%
Cost of Revenues	$	14.2	$	12.3	$	1.9	15.4	%
GROSS PROFIT	$	6.2	$	4.7	$	1.5	31.9	%
OPERATING EXPENSE
Selling and marketing	0.8		0.7		0.1		14.3	%
General and administrative	3.5		3.3		0.2		6.1	%
Operating Expenses	$	4.3	$	4.0	$	0.3	7.5	%
INCOME FROM OPERATIONS	$	1.9	$	0.7	$	1.2	171.4	%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
REVENUE
Product revenues	$	35.7	$	32.8	$	2.9	8.8	%
Service revenues	27.5		22.4		5.1		22.8	%
Total revenues	$	63.2	$	55.2	$	8.0	14.5	%
Product cost of revenues	23.2		22.3		0.9		4.0	%
Service cost of revenues	20.4		18.1		2.3		12.7	%
Cost of Revenues	$	43.6	$	40.4	$	3.2	7.9	%
GROSS PROFIT	$	19.6	$	14.8	$	4.8	32.4	%
OPERATING EXPENSE
Selling and marketing	2.5		2.1		0.4		19.0	%
General and administrative	10.1		9.9		0.2		2.0	%
Operating Expenses	$	12.6	$	12.0	$	0.6	5.0	%
INCOME FROM OPERATIONS	$	7.0	$	2.8	$	4.2	150.0	%

Revenue (dollar amounts in tables in millions)


	Three Months Ended				Organic Growth
	September 30, 2023		October 1, 2022		$		%
Product revenues	$	10.5	$	9.8	$	0.7	7.1	%
Service revenues	9.9		7.2		2.7		37.5	%
Total	$	20.4	$	17.0	$	3.4	20.0	%


	Nine Months Ended				Organic Growth
	September 30, 2023		October 1, 2022		$		%
Product revenues	$	35.7	$	32.8	$	2.9	8.8	%
Service revenues	27.5		22.4		5.1		22.8	%
Total	$	63.2	$	55.2	$	8.0	14.5	%

The $3.4 and $8.0 or 20.0% and 14.5% increase in revenue is due to organic growth driven by increased sales volumes, improved market conditions and commercial actions instituted.

The following table illustrates the sales by channel for the three and nine month periods ended September 30, 2023 and October 1, 2022.

(Dollar amounts in tables in millions)


	Three Months Ended						% of Total Sales		Variance
	September 30, 2023		% of Total Sales		October 1, 2022				$		%
New Construction - Self Storage	$	18.8	92.2	%	$	13.2	77.6	%	$	5.6	42.4%
R3 - Self Storage	1.6		7.8	%	3.8		22.4	%	(2.2)		(57.9)	%
Total	$	20.4	100.0	%	$	17.0	100.0	%	$	3.4	20.0	%


	Nine Months Ended						% of Total Sales		Variance
	September 30, 2023		% of Total Sales		October 1, 2022				$		%
New Construction - Self Storage	$	55.9	88.4	%	$	40.0	72.5	%	$	15.9	39.8%
R3 - Self Storage	7.3		11.6	%	15.2		27.5	%	(7.9)		(52.0)	%
Total	$	63.2	100.0	%	$	55.2	100.0	%	$	8.0	14.5	%

New Construction sales increased by $5.6 and $15.9 or 42.4% and 39.8% to $18.8 and $55.9 for the three and nine month periods ended September 30, 2023 compared to $13.2 and $40.0 for the three and nine month periods ended October 1, 2022. The increase was due to increased volumes, commercial actions, and higher occupancy rates at existing facilities, leading to a necessity for an expansion in capacity by operators.

R3 sales decreased by $2.2 and $7.9 or 57.9% and 52.0% to $1.6 and $7.3 for the three and nine month periods ended September 30, 2023 from $3.8 and $15.2 for the three and nine month periods ended October 1, 2022 primarily due to project timing and mix of factors affecting the nine month period ended September 30, 2023.

Cost of Revenues and Gross Margin

Gross Margin increased by 2.8% and 4.2% to 30.4% and 31.0% for the three and nine month periods ended September 30, 2023, from 27.6% and 26.8% for the three and nine month periods ended October 1, 2022. The increase in the Gross Margin for the three and nine month periods ended September 30, 2023 is due primarily to increased revenue resulting in improved absorption.

(Dollar amounts in tables in millions)


	Three Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
Product cost of revenues	$	6.9	$	6.7	$	0.2	3.0	%
Service cost of revenues	7.3		5.6		1.7		30.4	%
Cost of Revenues	$	14.2	$	12.3	$	1.9	15.4	%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022		$		%
Product cost of revenues	$	23.2	$	22.3	$	0.9	4.0	%
Service cost of revenues	20.4		18.1		2.3		12.7	%
Cost of Revenues	$	43.6	$	40.4	$	3.2	7.9	%

Cost of revenues increased by $1.9 and $3.2 or 15.4% and 7.9% for the three and nine month periods ended September 30, 2023. Cost of revenues were $14.2 and $43.6 for the three and nine month periods ended September 30, 2023 and $12.3 and $40.4 for the three and nine month periods ended October 1, 2022. The increase in cost of revenues for the three and nine month periods ended September 30, 2023, is primarily to support the 37.5% and 22.8% increase in service revenues for the three and nine month periods ended September 30, 2023, respectively,

Income from Operations

Income from operations increased from $0.7 and $2.8 for the three and nine month periods ended October 1, 2022 to $1.9 and $7.0 for the three and nine month periods ended September 30, 2023. The increase for the period is primarily due to an increase in revenue.

Non-GAAP Financial Measure

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.

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 (dollar amounts in tables in millions):


	Three Months Ended				Variance
	September 30, 2023		October 1, 2022
					$		%
Net Income	$	37.0	$	32.4	$	4.6	14.2%
Interest expense	14.5		11.0		3.5		31.8%
Income taxes	12.4		10.6		1.8		17.0%
Depreciation	2.2		2.0		0.2		10.0%
Amortization	7.4		7.4		—		—%
EBITDA	$	73.5	$	63.4	$	10.1	15.9%
Restructuring charges(1)	0.2		—		0.2		100.0%
Acquisition income(2)	(1.4)		(0.1)		(1.3)		1300.0%
Loss on extinguishment and modification of debt (3)	3.9		—		3.9		100.0%
Adjusted EBITDA	$	76.2	$	63.3	$	12.9	20.4%


	Nine Months Ended				Variance
	September 30, 2023		October 1, 2022
					$		%
Net Income	$	100.0	$	75.0	$	25.0	33.3%
Interest expense	45.3		28.6		16.7		58.4%
Income taxes	33.7		25.0		8.7		34.8%
Depreciation	6.6		5.8		0.8		13.8%
Amortization	22.3		22.3		—		—%
EBITDA	$	207.9	$	156.7	$	51.2	32.7%
Restructuring charges(1)	1.0		1.2		(0.2)		(16.7)%
Acquisition (income) expense(2)	(1.4)		0.7		(2.1)		(300.0)%
Loss on extinguishment and modification of debt (3)	3.9		—		3.9		100.0%
COVID-19 related expenses(4)	—		0.1		(0.1)		(100.0)%
Adjusted EBITDA	$	211.4	$	158.7	$	52.7	33.2%

(1)Adjustments consist of the following: 1) facility relocations, and 2) severance and hiring costs associated with our strategic transformation, including executive leadership team changes, strategic business assessment and transformation projects.

(2)Income or expenses related to the transition services agreement and legal settlement for an acquisition.

(3)Adjustment for loss on extinguishment and modification of debt regarding the write off of unamortized fees and third-party fees as a result of the debt modification completed in August 2023.

(4)Adjustment consists of signage, cleaning and supplies to maintain work environments necessary to adhere to CDC guidelines during the COVID-19 pandemic.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, days sales outstanding, inventory turns, days payable outstanding, capital expenditure forecasts, interest and principal payments on debt and income tax payments.

Our primary sources of liquidity include cash balances on hand, cash flows from operations, proceeds from equity, debt offerings and borrowing availability under our existing credit facility. We believe our operating cash flows, along with funds available under the line of credit, provide sufficient liquidity to support Janus’s short and long-term liquidity and financing needs, which are working capital requirements, capital expenditures, service of indebtedness, as well as to finance acquisitions.

Financial Policy

Our financial policy seeks to: (i) selectively invest in organic and inorganic growth to enhance our portfolio, including certain strategic capital investments and (ii) maintain appropriate leverage by using free cash flows to repay outstanding borrowings.

Liquidity Policy

We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our obligations under both normal and stressed conditions. At Janus, we manage our liquidity to provide access to sufficient funding to meet our business needs and financial obligations, as well as capital allocation and growth objectives, throughout business cycles.

We have operations in various foreign countries, principally the United States, the United Kingdom, France, Australia, and Singapore. Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars.

Debt Profile (dollar amounts in table in millions)


	Principal Amount		Issuance Date	Maturity Date	Interest Rate	Net Carrying Value
						September 30, 2023		December 31, 2022
Notes payable - First Lien	$	625.0	August 3, 2023	August 3, 2030	8.70%1	$	625.0	$	714.3
Financing leases						3.0		1.1
Total principal debt						$	628.0	$	715.4
Less: unamortized deferred finance fees						12.4		7.2
Less: current portion of long-term debt						7.1		8.3
Long-term debt, net of current portion						$	608.5	$	699.9

(1)The interest rate on the Amendment No. 6 First Lien Term Loan as of September 30, 2023, was 8.70%, which is a variable rate based on Adjusted Term SOFR, subject to a 1.00% floor and 10 bps flat CSA, plus an applicable margin percent of 3.25%.

As of September 30, 2023 and December 31, 2022, the Company maintained one letter of credit totaling approximately $0.4, on which there were no balances due.

First Lien Term Loan - On June 20, 2023, the Company entered into Amendment No. 5 (the “Amendment No. 5 First Lien”) to the First Lien Term Loan. The Amendment No. 5 First Lien, among other things, (i) replaces the interest rate based on the London Interbank Offered Rate (“LIBOR”) and related LIBOR-based mechanics applicable to borrowings under the Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updates certain other provisions of the Agreement to reflect the transition from LIBOR to SOFR. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of Adjusted Term SOFR, plus an applicable margin percent. The debt is secured by substantially all business assets. On July 19, 2023, the Company made a voluntary prepayment of $35.0 toward the principal balance of the First Lien Term Loan. The Company used cash on hand to make the voluntary prepayment. For the nine month period ended September 30, 2023, the Company has made payments of $85.3 toward the First Lien Term Loan.

On August 3, 2023, the Company refinanced its existing First Lien Term Loan pursuant to the Amendment No. 6 First Lien. The loan was made by a syndicate of lenders, with the aggregate amount of $625.0. The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance of the amended loan beginning the last business day of December 2023 with the remaining principal due on the maturity date of August 3, 2030. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of Adjusted Term SOFR plus an applicable margin percent (effective rate of 8.7% as of September 30, 2023). (see Note 8 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion)

Revolving Credit Facility - On August 18, 2021, the Company increased the existing available LOC Agreement with a domestic bank, from $50.0 to $80.0, incurred additional fees for this amendment of $0.4 and extended the maturity date from February 12, 2023 to August 12, 2024. On August 3, 2023, the Company refinanced the revolving credit facility, pursuant to a new ABL Credit and Guarantee Agreement (the “2023 LOC Agreement”). The 2023 LOC Agreement, among other things, (i) increased the previous aggregate commitments from $80.0 to $125.0, (ii) updated the manner in which the previous borrowing base under the 2023 LOC Agreement was determined, and (iii) replaced the administrative agent with a new administrative agent. Interest payments with respect to the 2023 LOC Agreement are due in arrears. The maturity date is August 3, 2028.

As chosen by the Company, the amended revolving credit facility bears interest at a floating rate per annum consisting of SOFR plus an applicable margin percent that is based on excess availability. There was no outstanding balance on the line of credit as of September 30, 2023. As of September 30, 2023, the interest rate in effect for the facility was 7.3%. The line of credit is secured by accounts receivable and inventories. (see Note 7 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion)

The LOC Agreement and Amendment No. 6 First Lien contain affirmative and negative covenants, including limitations on, subject to certain exceptions, the incurrence of indebtedness, the incurrence of liens, fundamental changes, dispositions, restricted payments, investments, transactions with affiliates as well as other covenants customary for financings of these types.

The LOC Agreement also includes a financial covenant, applicable only when the excess availability is less than the greater of (i) 10% of the lesser of the aggregate commitments under the line of credit facility and the borrowing base, and (ii) $10.0. In such circumstances, we would be required to maintain a minimum fixed charge coverage ratio for the trailing four quarters equal to at least 1.00 to 1.00; subject to our ability to make an equity cure (no more than twice in any four quarter period and up to five times over the life of the facility). As of September 30, 2023, we were compliant with our covenants under the agreements governing our outstanding indebtedness.

Statement of cash flows

The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods. For additional detail, please see the Unaudited Condensed Consolidated Statements of Cash Flows in the Unaudited Condensed Consolidated Financial Statements.

Nine month period ended September 30, 2023 compared to the nine month period ended October 1, 2022:

(dollar amounts in millions)


	September 30, 2023		October 1, 2022		Variance
					$		%
Net cash provided by operating activities	$	146.5	$	62.7	$	83.8	133.7	%
Net cash (used in) investing activities	(14.4)		(7.8)		(6.6)		84.6	%
Net cash (used in) financing activities	(101.0)		(12.6)		(88.4)		701.6	%
Effect of foreign currency rate changes on cash	0.2		(0.1)		0.3		(300.0)	%
Net increase (decrease) in cash	$	31.3	$	42.2	$	(10.9)	(25.8)	%

Net cash provided by operating activities

Net cash provided by operating activities increased by $83.8 for the nine month period ended September 30, 2023 as compared to the nine month period ended October 1, 2022. This was due to an increase of $31.6 to net income adjusted for non-cash items. The change in the net working capital balances for the nine month period ended September 30, 2023 had a net decrease in accounts receivables of $31.0, a net decrease in the net change of inventory of $23.8, and a net increase in other net working capital accounts by $2.6 compared to the nine month period ended October 1, 2022.

Net cash used in investing activities

Net cash used in investing activities increased by $6.6 for the nine month period ended September 30, 2023 as compared to the nine month period ended October 1, 2022. This increase was driven by $5.6 increase in capital expenditures to continue to support our strategic growth initiatives. and a $1.0 increase in cash paid for the Indemnity holdback liability for the period ended September 30, 2023 as compared with the period ended October 1, 2022.

Net cash used in financing activities

Net cash used in financing activities increased by $88.4 for the period ended September 30, 2023 as compared to the period ended October 1, 2022. This increase was primarily due to principal repayments of $426.9 and a payment of deferred financing costs of $11.2 that was partially offset by proceeds from borrowings of $337.6 during the nine month period ended September 30, 2023.

Capital allocation strategy

We continually assess our capital allocation strategy, including decisions relating to M&A, dividends, stock repurchases, capital expenditures, and debt pay-downs. The timing, declaration and payment of future dividends, falls within the discretion of Janus’s Board of Directors and will depend upon many factors, including, but not limited to, Janus’s financial condition and earnings, the capital requirements of the business, restrictions imposed by applicable law, and any other factors the Board of Directors deems relevant from time to time.

Contractual Obligations

Summarized below are our contractual obligations as of September 30, 2023 and their expected impact on our liquidity and cash flows in future periods (dollar amounts in millions):


	Total		2023		2024-2025		2026-2027		Thereafter
Debt obligations	$	628.0	$	1.8	$	14.4	$	13.3	$	598.5
Supply contracts (1)	10.3		5.3		5.0		—		—
ASC 842 liabilities	50.7		1.5		11.9		10.4		26.9
Total	$	689.0	$	8.6	$	31.3	$	23.7	$	625.4

(1)Supply contracts relate to the multiple fixed price agreements.

Debt obligations are comprised of an Amendment No 6 First Lien Term Loan that expires on August 3, 2030. In addition, the Company has finance lease liabilities included in debt obligations (see Note 8 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion).

ASC 842 liabilities consist of operating lease liabilities for real and personal property leases with various lease expiration dates (see Note 9 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion). The amount listed in the thereafter category is primarily comprised of twelve real property leases with expiration dates ranging from 2026 – 2036.

The table above does not include warranty liabilities because it is not certain when this liability will be funded and because this liability is considered immaterial.

In addition to the contractual obligations and commitments listed and described above, the Company also had another commitment for which it is contingently liable as of September 30, 2023 and December 31, 2022 consisting of an outstanding letter of credit of $0.4.

Critical Accounting Policies and Estimates

For the critical Accounting Policies and Estimates used in preparing Janus’s Unaudited Condensed Consolidated Financial Statements, Janus makes assumptions, judgments and estimates that can have a significant impact on its revenue, results from operations, and net income, as well as on the value of certain assets and liabilities on its consolidated balance sheets. Janus bases its assumptions, judgments and estimates on historical experience and various other factors that Janus believes to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. The Company’s critical accounting estimates requiring significant judgment that could materially impact the Company's results of operations, financial position and cash flows are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Since the date of the Company’s most recent Annual Report, there have been no material changes in the Company’s critical accounting estimates or assumptions.

Recently Issued Accounting Standards

See Note 2 to our Condensed Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a discussion of recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in exposures to market risk since December 31, 2022. For information regarding our exposure to certain market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, with the participation of certain members of management (collectively “the management team”) evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, or SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As discussed in Item 9A “Controls and Procedures” in our 2022 Annual Report on Form 10-K, the Company identified unremediated material weaknesses related to the Control Environment and Control Activities elements established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”) as of December 31, 2022.

Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded, as of such date, our disclosure controls and procedures were ineffective due to the existence of the material weaknesses discussed further below.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation of Material Weaknesses

Remediation of the identified material weaknesses and strengthening our internal control environment is a priority for us. Management continues to make progress towards remediating the control deficiencies contributing to the material weaknesses. The remedial actions include, but are not limited to, the following:

•General Information Technology Controls – Management has designed and implemented several new controls during the course of the year to monitor user access and segregation of duties in a timely manner to key information systems used in the financial reporting process. Additionally, management has created a transaction log of administrative users’ activity and review for unauthorized activity. While we have designed and implemented the appropriate controls, we are waiting to complete the operating effectiveness of these controls.

•Revenue - As part of the financial statement close process, management has: 1) provided additional oversight to project managers around the review of the job completion progress on open installation projects; 2) designed and implemented management review controls over the stand-alone selling price on contracts with multiple performance obligations; and 3) designed and implemented controls over cutoff for certain point-in-time revenue and maintain adequate documentation of controls which ensure the proper cutoff for point in time revenue. While we have designed and implemented the appropriate controls, we are waiting to complete the operating effectiveness of these controls.

The material weaknesses cannot be considered remediated until the applicable controls have been designed and implemented and have operated for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.

Limitations on Effectiveness of Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, as specified above. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions, and cannot provide absolute assurance that its objectives will be met. Management continues to refine and assess its overall control environment.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 16 to the Condensed Consolidated Financial Statements, in this Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

For information regarding factors that could affect the Company’s results of operations, financial condition, and liquidity, see the risk factors discussed in Part I, Item 1A “Risk Factors” in our 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

As of the date of this report, there have been no material changes to the risk factors disclosed in our 2022 Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Equity Trading Plan Elections

(c) Certain executive officers and directors of the Company may execute purchases and sales of the Company’s common stock through 10b5-1 and non-Rule 10b5-1 equity trading plans.

On September 11, 2023, Ray Pierce Jackson, Jr., CEO and Director, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 725,000 shares of the Company’s common stock until June 14, 2024. On September 11, 2023, John Morgan Hodges, EVP, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 450,000 shares of the Company’s common stock until June 14, 2024. On September 11, 2023, Norman Nettie, VP - Manufacturing, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 270,000 shares of the Company’s common stock until June 14, 2024.

During the three month period ended September 30, 2023, none of our executive officers or directors (as defined in Section 16 of the Securities Exchange Act of 1934, as amended), adopted, terminated, or modified a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits.

Exhibit Number

Description

3.1

Amended and Restated Certificate of Incorporation of Janus International Group, Inc., filed with the Secretary of State of Delaware on June 7, 2021 (incorporated by reference to Exhibit 3.1 to Janus International Group, Inc.’s Form 8-K filed on June 11, 2021).

3.2

Amended and Restated Bylaws of Janus International Group, Inc., filed with the Secretary of State of Delaware on June 7, 2021 (incorporated by reference to Exhibit 3.2 to Janus International Group, Inc.’s Form 8-K filed on June 11, 2021).

10.1

Amendment Number Three to ABL Credit and Guarantee Agreement, dated April 10, 2023 (incorporated by reference to Exhibit 10.1 to Janus International Group, Inc.’s Form 8-K filed on April 12, 2023).

10.2

Open Market Sale Agreement, dated as of May 15, 2023, by and among Janus International Group, Inc., Clearlake Capital Partners IV (AIV-Jupiter), L.P., Clearlake Capital Partners IV (Offshore), L.P., Clearlake Capital Partners IV (AIV-Jupiter) USTE, L.P., Clearlake Capital Partners V, L.P., Clearlake Capital Partners V (Offshore), L.P., Clearlake Capital Partners V (USTE), L.P. and Jefferies LLC (incorporated by reference to Exhibit 10.1 to Janus International Group, Inc.’s Form 8-K filed on May 15, 2023).

10.3

Amendment No. 5 to First Lien Credit and Guarantee Agreement, dated June 20, 2023 (incorporated by reference to Exhibit 10.1 to Janus International Group, Inc.’s Form 8-K filed on June 23. 2023).

10.4

Amendment No. 6 to First Lien Credit and Guarantee Agreement, dated August 3, 2023 (incorporated by reference to Exhibit 10.1 to Janus International Group, Inc.’s Form 8-K filed on August 4, 2023).

10.5

ABL Credit and Guarantee Agreement, dated August 3, 2023 (incorporated by reference to Exhibit 10.2 to Janus International Group, Inc.’s Form 8-K filed on August 4, 2023).

10.6

Janus International Group, Inc. Executive Severance and Change in Control Plan (effective September 1, 2023) (incorporated by reference to Exhibit 10.1 to Janus International Group, Inc.’s Form 8-K filed on September 5, 2023).

31.1*

Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS^

Inline XBRL Instance Document

101.SCH^

Inline XBRL Taxonomy Extension Schema Document

101.CAL^

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF^

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB^

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE^

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104^

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

** The certifications furnished in Exhibit 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

^ Submitted electronically with this Report in accordance with the provisions of Regulation S-T.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:

November 6, 2023

By:

/s/ Anselm Wong

Name:

Anselm Wong

Title:

Chief Financial Officer