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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 June 29, 2024
OR
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission file number 001-40456
________________________
JANUS INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in its charter)
________________________
| | | | | |
Delaware | 86-1476200 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
135 Janus International Blvd. Temple, GA | 30179 |
(Address of Principal Executive Offices) | (Zip Code) |
(866) 562-2580
(Registrant's telephone number, including area code)
________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: |
Common Stock, par value $0.0001 per share | JBI | New York Stock Exchange |
________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 August 2, 2024, 145,322,228 shares of the Registrant’s common stock were outstanding.
JANUS INTERNATIONAL GROUP, INC.
Quarterly Report on Form 10-Q
Table of Contents
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” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
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, beliefs, intentions or strategies regarding the future, including our expectations regarding our revenues, cost of revenues, operating expenses, other operating results, and other key metrics, and our ability to meet previously announced earnings guidance with respect to the Company and/or its individual segments. 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 risks 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 our long-lived assets and other assets, including inventory, property, plant, and equipment, intangibles, and investments in unconsolidated affiliates may become impaired;
•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, and adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth, and regional or global liquidity constraints;
•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 2023 Annual Report on Form 10-K for the year ended December 30, 2023, 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) |
| | | | | | | | | | | |
| June 29, 2024 | | December 30, 2023 |
ASSETS | | | |
Current Assets | | | |
Cash and cash equivalents | $ | 110.1 | | | $ | 171.7 | |
Accounts receivable, less allowance for credit losses of $4.0 and $3.6, at June 29, 2024 and December 30, 2023, respectively | 178.8 | | | 174.1 | |
Contract assets | 32.7 | | | 49.7 | |
Inventories | 50.8 | | | 48.4 | |
Prepaid expenses | 8.8 | | | 8.4 | |
Other current assets | 24.9 | | | 10.8 | |
Total current assets | $ | 406.1 | | | $ | 463.1 | |
Property, plant and equipment, net | 57.6 | | | 52.4 | |
Right-of-use assets, net | 52.5 | | | 50.9 | |
Intangible assets, net | 401.2 | | | 375.3 | |
Goodwill | 384.3 | | | 368.6 | |
Deferred tax asset, net | 31.1 | | | 36.8 | |
Other assets | 2.6 | | | 2.9 | |
Total assets | $ | 1,335.4 | | | $ | 1,350.0 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current Liabilities | | | |
Accounts payable | $ | 57.8 | | | $ | 59.8 | |
Contract liabilities | 25.5 | | | 26.7 | |
Current maturities of long-term debt | 7.3 | | | 7.3 | |
Accrued expenses and other current liabilities | 53.5 | | | 80.3 | |
Total current liabilities | $ | 144.1 | | | $ | 174.1 | |
Long-term debt, net | 585.8 | | | 607.7 | |
Deferred tax liability, net | 1.7 | | | 1.7 | |
Other long-term liabilities | 47.5 | | | 46.9 | |
Total liabilities | $ | 779.1 | | | $ | 830.4 | |
STOCKHOLDERS’ EQUITY | | | |
Common stock, 825,000,000 shares authorized, $0.0001 par value, 147,194,938 and 146,861,489 shares issued at June 29, 2024 and December 30, 2023, respectively | $ | — | | | $ | — | |
Treasury stock, at cost, 1,886,228 and 34,297 shares as of June 29, 2024 and December 30, 2023, respectively | (26.9) | | | (0.4) | |
Additional paid-in capital | 294.3 | | | 289.0 | |
Accumulated other comprehensive loss | (3.3) | | | (2.9) | |
Retained earnings | 292.2 | | | 233.9 | |
Total stockholders’ equity | $ | 556.3 | | | $ | 519.6 | |
Total liabilities and stockholders’ equity | $ | 1,335.4 | | | $ | 1,350.0 | |
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 | | Six Months Ended |
| June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
REVENUES | | | | | | | |
Product revenues | $ | 205.8 | | | $ | 232.8 | | | $ | 420.9 | | | $ | 448.2 | |
Service revenues | 42.6 | | | 37.8 | | | 82.0 | | | 74.3 | |
Total Revenues | $ | 248.4 | | | $ | 270.6 | | | $ | 502.9 | | | $ | 522.5 | |
Product cost of revenues | 115.1 | | | 126.3 | | | 229.8 | | | 250.7 | |
Service cost of revenues | 24.3 | | | 28.0 | | | 53.7 | | | 55.6 | |
Cost of Revenues | $ | 139.4 | | | $ | 154.3 | | | $ | 283.5 | | | $ | 306.3 | |
GROSS PROFIT | $ | 109.0 | | | $ | 116.3 | | | $ | 219.4 | | | $ | 216.2 | |
OPERATING EXPENSES | | | | | | | |
Selling and marketing | 17.1 | | | 16.7 | | | 34.7 | | | 31.5 | |
General and administrative | 40.3 | | | 35.3 | | | 77.6 | | | 69.4 | |
Operating Expenses | $ | 57.4 | | | $ | 52.0 | | | $ | 112.3 | | | $ | 100.9 | |
INCOME FROM OPERATIONS | $ | 51.6 | | | $ | 64.3 | | | $ | 107.1 | | | $ | 115.3 | |
Interest expense, net | (13.0) | | | (14.8) | | | (27.3) | | | (30.8) | |
Loss on extinguishment and modification of debt | (1.7) | | | — | | | (1.7) | | | — | |
Other income (expense) | 0.2 | | | (0.1) | | | 0.2 | | | (0.1) | |
INCOME BEFORE TAXES | $ | 37.1 | | | $ | 49.4 | | | $ | 78.3 | | | $ | 84.4 | |
Provision for Income Taxes | 9.5 | | | 12.4 | | | 20.0 | | | 21.4 | |
NET INCOME | $ | 27.6 | | | $ | 37.0 | | | $ | 58.3 | | | $ | 63.0 | |
Other Comprehensive Income (Loss) | $ | 0.2 | | | $ | 0.6 | | | $ | (0.4) | | | $ | 1.3 | |
COMPREHENSIVE INCOME | $ | 27.8 | | | $ | 37.6 | | | $ | 57.9 | | | $ | 64.3 | |
| | | | | | | |
Weighted-average shares outstanding, basic and diluted (Note 14) | | | | | | | |
Basic | 145,857,673 | | | 146,765,631 | | | 146,230,907 | | | 146,734,762 | |
Diluted | 146,435,123 | | | 146,772,157 | | | 146,740,667 | | | 146,762,029 | |
Net income per share, basic and diluted (Note 14) | | | | | | | |
Basic | $ | 0.19 | | | $ | 0.25 | | | $ | 0.40 | | | $ | 0.43 | |
Diluted | $ | 0.19 | | | $ | 0.25 | | | $ | 0.40 | | | $ | 0.43 | |
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 | | 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 | |
| | |
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 | | Treasury Stock | | Additional paid-in capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total |
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | | | | | |
Balance as of December 30, 2023 | — | | | $ | — | | | 146,861,489 | | | $ | — | | | 34,297 | | | $ | (0.4) | | | $ | 289.0 | | | $ | (2.9) | | | $ | 233.9 | | | $ | 519.6 | |
Repurchase of common shares | — | | | — | | | (1,019,889) | | | — | | | 1,019,889 | | | (15.3) | | | — | | | — | | | — | | | (15.3) | |
Issuance of restricted units | — | | | — | | | 163,309 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Shares withheld for taxes upon vesting of restricted units | — | | | — | | | (57,696) | | | — | | | 57,696 | | | (0.9) | | | — | | | — | | | — | | | (0.9) | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | — | | | 1.9 | | | — | | | — | | | 1.9 | |
Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (0.6) | | | — | | | (0.6) | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 30.7 | | | 30.7 | |
Balance as of March 30, 2024 | — | | | $ | — | | | 145,947,213 | | | $ | — | | | 1,111,882 | | | $ | (16.6) | | | $ | 290.9 | | | $ | (3.5) | | | $ | 264.6 | | | $ | 535.4 | |
Repurchase of common shares | — | | | — | | | (753,667) | | | — | | | 753,667 | | | (10.1) | | | — | | | — | | | — | | | (10.1) | |
Issuance of restricted units | — | | | — | | | 133,774 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Issuance of common stock on exercise of stock options | | | | | 2,069 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Shares withheld for taxes upon vesting of restricted units | — | | | — | | | (20,679) | | | — | | | 20,679 | | | (0.2) | | | — | | | — | | | — | | | (0.2) | |
Share-based compensation | — | | | — | | | — | | | — | | | — | | | — | | | 3.4 | | | — | | | — | | | 3.4 | |
Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 0.2 | | | — | | | 0.2 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 27.6 | | | 27.6 | |
Balance as of June 29, 2024 | — | | | $ | — | | | 145,308,710 | | | $ | — | | | 1,886,228 | | | $ | (26.9) | | | $ | 294.3 | | | $ | (3.3) | | | $ | 292.2 | | | $ | 556.3 | |
Total shares issued are the aggregate of Common Stock outstanding and Treasury Shares.
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) |
| | | | | | | | | | | |
| Six Months Ended |
| June 29, 2024 | | July 1, 2023 |
| | | |
Cash Flows Provided By Operating Activities | | | |
Net Income | $ | 58.3 | | | $ | 63.0 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | |
Depreciation of property, plant and equipment | 5.9 | | | 4.4 | |
Noncash lease expense | 3.6 | | | 3.0 | |
Provision for inventory obsolescence | — | | | (0.8) | |
Amortization of intangibles | 15.5 | | | 14.8 | |
Deferred income taxes | 5.7 | | | — | |
Deferred finance fee amortization | 1.4 | | | 2.2 | |
Provision for losses on accounts receivable | 0.5 | | | 0.8 | |
Share-based compensation | 5.3 | | | 3.6 | |
Loss on equity investment | — | | | 0.1 | |
Changes in operating assets and liabilities, excluding effects of acquisition | | | |
Accounts receivable | (2.7) | | | (0.9) | |
Contract assets | 16.9 | | | (10.8) | |
Prepaid expenses and other current assets | (13.7) | | | 8.4 | |
Inventories | (2.2) | | | 9.1 | |
Other assets | 0.1 | | | 2.0 | |
Accounts payable | (2.8) | | | 3.2 | |
Contract liabilities | (1.6) | | | (2.9) | |
Accrued expenses and other current liabilities | (27.4) | | | 2.0 | |
Other long-term liabilities | (3.2) | | | (4.6) | |
Net Cash Provided By Operating Activities | $ | 59.6 | | | $ | 96.6 | |
Cash Flows Used In Investing Activities | | | |
Purchases of property, plant, and equipment | $ | (10.3) | | | $ | (9.6) | |
Cash paid for acquisitions, net of cash acquired | (60.1) | | | (1.0) | |
Net Cash Used In Investing Activities | $ | (70.4) | | | $ | (10.6) | |
Cash Flows Used In Financing Activities | | | |
Principal payments on long-term debt | $ | (23.4) | | | $ | (54.0) | |
Principal payments under finance lease obligations | (1.0) | | | (0.3) | |
Payments for deferred financing fees | (0.2) | | | — | |
Cash paid for common shares withheld for taxes | (0.9) | | | — | |
Repurchase of common shares | (25.2) | | | — | |
Net Cash Used In Financing Activities | $ | (50.7) | | | $ | (54.3) | |
Effect of exchange rate changes on cash | $ | (0.1) | | | $ | 0.6 | |
Net (Decrease) Increase in Cash | $ | (61.6) | | | $ | 32.3 | |
Cash, Beginning of Period | $ | 171.7 | | | $ | 78.4 | |
Cash, End of Period | $ | 110.1 | | | $ | 110.7 | |
Supplemental Cash Flows Information | | | |
Interest paid | $ | 39.0 | | | $ | 28.4 | |
Income taxes paid | $ | 24.3 | | | $ | 11.2 | |
Cash paid for operating leases included in operating activities | $ | 4.3 | | | $ | 4.1 | |
Non-cash Investing and Financing Activities: | | | |
Right-of-use assets obtained in exchange for operating lease obligations | $ | 4.2 | | | $ | — | |
Right-of-use assets obtained in exchange for finance lease obligations | $ | 1.4 | | | $ | 2.1 | |
RSU shares withheld included in accrued employee taxes | $ | 0.2 | | | $ | 0.2 | |
Excise taxes from common share repurchase included in accrued expenses | $ | 0.3 | | | $ | — | |
Capital expenditures in accounts payable | $ | 0.6 | | | $ | — | |
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 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 including facility planning and design, construction, technology, and the restoration, rebuilding, and replacement (“R3”) of self-storage facilities. Additionally, the Company provides facility and door automation and access control technologies.
The Company is headquartered in Temple, GA with operations in the United States of America (“United States”) (“U.S.”), United Kingdom (“U.K.”), Australia, France, Canada, 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”), U.S. Door & Building Components, LLC (“U.S. Door”), Janus Door, LLC (“Janus Door”) Steel Door Depot.com, LLC (“Steel Door Depot”), Janus International Canada, Ltd. (“Janus Canada”), and Terminal Door, LLC (“Terminal Door”). 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 and rounded to the nearest million, unless otherwise noted, except for share and per share amounts.
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 June 29, 2024, and its results of operations, including its comprehensive income and stockholders’ equity for the three and six month periods ended June 29, 2024 and July 1, 2023. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but may 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 30, 2023.
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.
Reclassifications and Adjustments
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.
In addition, the Company recorded a $2.5 out of period adjustment as a reduction in service cost of revenues with an offset to accounts payable, to adjust estimated contract costs to actual costs incurred on installation projects which were completed during the years 2017 to 2023.
Use of Estimates in the Consolidated Financial Statements
The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Items subject to such estimates and assumptions include, but are not limited to, income taxes and the effective tax rates, inventory basis adjustments, the fair value of assets and liabilities related to acquisitions, the recognition and valuation of unit-based compensation arrangements, the useful lives of property and equipment, the commencement date of leases, the incremental borrowing rate used to calculate lease liabilities, estimated progress toward completion for certain revenue contracts, allowance for credit losses, fair values and impairment of intangible assets and goodwill, and assumptions used in the accounting for business combinations.
| | |
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 and cash equivalents, 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 is estimated using fair value based risk measurements that are indirectly observable, such as credit risk that fall within Level 2 of the Fair Value hierarchy. The Company’s debt approximates its carrying amount as of June 29, 2024 and December 30, 2023 due to its variable interest rate that is tied to the current Secured Overnight Financing Rate (“SOFR”) rate plus an applicable margin (see Notes 8 and 9 to our Unaudited Condensed Consolidated Financial Statements in this Form 10-Q for a further discussion of the Company’s debt). The Company also has investments in U.S. Treasury bills, which are classified as Level 1, short term investments due to the short-term nature of these instruments.
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 30, 2023.
Cash and Cash Equivalents
Cash and Cash Equivalents include short-term highly liquid investments that are readily convertible to known amounts of cash and have maturities of three months or less from the date of purchase. The Company has short-term, highly liquid investments classified as cash equivalents, which are invested in U.S. Treasury bills. Interest income on U.S. Treasury bills are offset against Interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Interest income was $0.4 for the three and six month periods ended June 29, 2024.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable primarily arise from the sale of products and services to established customers. Accounts receivable are recorded at the invoiced amount and do not bear interest. Additionally, accounts receivable are stated at estimated net realizable value, net of allowance for credit losses which is based on the Company’s assessment of the collectability of customer accounts.
The Company estimates the allowance for credit losses using the loss-rate method. As the Company determined that its customers at various business units and sales channels share similar risk characteristics, the same loss rate is applied to all accounts receivable. The Company estimates the allowance for credit losses by considering various factors such as historical write-offs, changes in customers’ credit ratings, delinquency, payment history, the age of the accounts receivable balances, and current and expected economic conditions that may affect a customer’s ability to pay. Account balances are charged off against the allowance when it is determined that internal collection efforts should no longer be pursued.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
The activity for the allowance for credit losses during the six month periods ended June 29, 2024 and July 1, 2023, is as follows:
| | | | | |
| |
Balance at December 30, 2023 | $ | 3.6 | |
Write-offs | (0.1) | |
Provision for expected credit losses, net | 0.5 | |
Balance at June 29, 2024 | $ | 4.0 | |
| | | | | |
| |
Balance at December 31, 2022 | $ | 4.6 | |
Write-offs | — | |
Provision for expected credit losses, net | 0.8 | |
Balance at July 1, 2023 | $ | 5.4 | |
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 one and three years for our products with the exception of warranties for roofing at one of our business units, where we offer warranties of up to 10 years.
The activity related to product warranty liabilities recorded in Accrued expenses and other current liabilities during the six month periods ended June 29, 2024 and July 1, 2023, is as follows:
| | | | | |
Balance at December 30, 2023 | $ | 2.3 | |
Aggregate changes in the product warranty liability | 0.1 | |
Balance at June 29, 2024 | $ | 2.4 | |
| | | | | |
Balance at December 31, 2022 | $ | 0.9 | |
Aggregate changes in the product warranty liability | 0.6 |
Balance at July 1, 2023 | $ | 1.5 | |
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 June 29, 2024, no customer accounted for more than 10% of the accounts receivable balance or more than 10% of revenues. For the three month period ended June 29, 2024, the Company had one vendor that accounted for 15% of all raw material and finished goods purchases. This vendor provides raw-materials to the Company which can be replaced by alternative vendors should the need arise.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
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 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 16, Segments Information, for further detail.
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 the London Interbank Offered Rate (“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 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
On August 23, 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, under which an entity that qualifies as either a joint venture or a corporate joint venture as defined in the FASB ASC master glossary is required to apply a new basis of accounting upon the formation of the joint venture. Specifically, the ASU provides that a joint venture or a corporate joint venture (collectively, “joint ventures”) must initially measure its assets and liabilities at fair value on the formation date. The amendments are effective for all joint venture formations with a formation date on or after January 1, 2025. Early adoption and retrospective application of the amendments are permitted. The Company does not believe this will have a material impact on the Company’s consolidated financial position or results of operations.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The update will be effective for annual periods beginning after December 15, 2023. We are assessing the effect of this update on our Consolidated Condensed Financial Statements and believe the adoption of this standard could add material additional segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in a public entity’s income tax rate reconciliation table and other disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. We are assessing the effect of this update on our Consolidated Consolidated Financial Statements and related disclosures.
Although there are several other new accounting pronouncements issued or proposed by the FASB, which have been adopted or will be adopted as applicable, management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial position or results of operations.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
3. Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using actual costs or standard costs (that approximate
actual cost) determined on a first-in, first-out basis or average cost. Labor and overhead costs associated with inventory produced by the
Company are capitalized into inventories. The major components of inventories as of June 29, 2024 and December 30, 2023 are as follows:
| | | | | | | | | | | |
| June 29, 2024 | | December 30, 2023 |
Raw materials | $ | 37.0 | | | $ | 31.0 | |
Work-in-process | 0.4 | | | 1.4 | |
Finished goods | 13.4 | | | 16.0 | |
Inventories | $ | 50.8 | | | $ | 48.4 | |
4. Property, Plant, and Equipment
Property, plant, and equipment as of June 29, 2024 and December 30, 2023 are as follows:
| | | | | | | | | | | | | | | | | |
| Useful Life | | June 29, 2024 | | December 30, 2023 |
Land | Indefinite | | $ | 4.5 | | | $ | 4.5 | |
Building | 39 years | | 2.4 | | | 2.5 | |
Manufacturing machinery and equipment | 3-7 years | | 48.3 | | | 43.5 | |
Leasehold improvements | Over the shorter of the lease term or respective useful life | | 12.3 | | | 11.4 | |
Computer and software | 3 years | | 16.2 | | | 14.5 | |
Furniture and fixtures, and vehicles | 3-7 years | | 6.0 | | | 4.9 | |
Construction in progress | — | | 8.5 | | | 6.2 | |
| | | $ | 98.2 | | | $ | 87.5 | |
Less: accumulated depreciation | | | (40.6) | | | (35.1) | |
| | | $ | 57.6 | | | $ | 52.4 | |
Depreciation expense included in cost of revenues, was approximately $1.9 and $1.7 for the three month periods ended June 29, 2024 and July 1, 2023, respectively, and $3.8 and $3.3 for the six month periods ended June 29, 2024 and July 1, 2023, respectively. Depreciation expense included in operating expenses was $1.1 and $0.5 for the three month periods ended June 29, 2024 and July 1, 2023, respectively and $2.1 and $1.1 for the six month periods ended June 29, 2024 and July 1, 2023, respectively.
5. Business Combination
Terminal Door Asset Acquisition
On May 17, 2024, the Company, through its wholly owned subsidiary Terminal Door, LLC, acquired 100% of the business operations (the “T.M.C. Acquisition”) of Smith T.M.C., Inc., a Georgia corporation, Jerry O. Smith Company, LLC, a Georgia limited liability company, and J.O.S. Realty, Inc., a Georgia corporation (collectively, the “T.M.C. Sellers”). Pursuant to the asset purchase agreement for such acquisition, Terminal Door acquired substantially all assets of the T.M.C. Sellers related to the business of trucking terminal renovation, construction, remodeling, and maintenance. The Company accounted for this acquisition as a business combination.
For the three months ended June 29, 2024, the Company incurred approximately $0.8 of third-party acquisition costs in connection with the T.M.C. Acquisition. These expenses are included in general and administrative expense in the accompanying Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income.
The Company is continuing its review of the fair value estimates for certain assets acquired in connection with the T.M.C. Acquisition, including intangible assets, and liabilities assumed. The final determination of the purchase price is pending calculations of working capital and other adjustments, and as such, the Company has not yet finalized its allocation of the purchase price.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
The following tables summarize the fair value of consideration transferred and the recognized amount of identified assets acquired, and liabilities assumed at the date of acquisition:
| | | | | |
Segment | North America |
Consideration transferred | |
Cash paid | $ | 60.1 | |
Less: estimated net working capital receivable | (0.7) | |
Total purchase consideration | $ | 59.4 | |
Recognized amounts of identifiable assets acquired and liabilities assumed | |
Accounts receivable | 2.5 | |
Inventory | 0.2 | |
Property and equipment | 0.4 | |
Identifiable intangible assets | 41.5 | |
Recognized amounts of identifiable liabilities assumed | |
Accounts payable | (0.4) | |
Contract liabilities | (0.5) | |
Total identifiable net assets | $ | 43.7 | |
Goodwill | 15.7 | |
Total net assets acquired | $ | 59.4 | |
The Company recognized goodwill related to the T.M.C. Acquisition of $15.7. The goodwill recognized in this acquisition was attributable to the acquired assembled workforce, expected synergies and economies of scale, none of which qualify for recognition as a separate intangible asset. The goodwill is expected to be deductible for tax purposes.
The following table sets forth the components of identifiable intangible assets acquired as of the date of the T.M.C. Acquisition, and the related weighted average amortization period:
| | | | | | | | |
| Fair Value | Weighted-Average Amortization Period (years) |
Customer Relationships | $ | 37.2 | | 15 |
Tradename | 1.6 | | 5 |
Non-compete Agreement | 2.7 | | 5 |
Identifiable Intangible Assets | $ | 41.5 | | |
Results of acquired operations
The results of the acquired operations of Terminal Door have been included in the Unaudited Condensed Consolidated Financial Statements of the Company since the acquisition date of May 17, 2024. For the period from May 17, 2024 through June 29, 2024, Terminal Door had contributed revenues of $4.0 and net income of $0.7.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
6. 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 amount and accumulated amortization of recognized intangible assets at June 29, 2024 and December 30, 2023, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | June 29, 2024 | | December 30, 2023 |
| Original Useful Life (years) | Weighted-Average Amortization period (years) | | Gross Carrying Amount | | Accumulated Amortization | | Net Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Amount |
Customer relationships | 10-15 | 9.8 | | $ | 445.7 | | | $ | 168.3 | | | $ | 277.4 | | | $ | 409.0 | | | $ | 154.1 | | | $ | 254.9 | |
Tradenames and trademarks | Indefinite | Indefinite | | 107.5 | | | — | | | 107.5 | | | 107.5 | | | — | | | 107.5 | |
Tradename | 5 | 4.9 | | 1.6 | | | — | | | 1.6 | | | — | | | — | | | — | |
Software development | 10-15 | 6.1 | | 20.3 | | | 8.3 | | | 12.0 | | | 20.3 | | | 7.5 | | | 12.8 | |
Noncompete agreements | 3-8 | 5.1 | | 3.0 | | | 0.3 | | | 2.7 | | | 0.3 | | | 0.2 | | | 0.1 | |
| | 9.6 | | $ | 578.1 | | | $ | 176.9 | | | $ | 401.2 | | | $ | 537.1 | | | $ | 161.8 | | | $ | 375.3 | |
Changes to gross carrying amount of recognized intangible assets due to translation adjustments include a loss of $0.1 and gain of $0.8 for the periods ended June 29, 2024 and December 30, 2023, 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 $8.0 and 7.4 for the three month periods ended June 29, 2024 and July 1, 2023, and $15.5 and $14.8 for the six month periods ended June 29, 2024 and July 1, 2023.
The changes in the carrying amounts of goodwill for the period ended June 29, 2024 were as follows:
| | | | | | | | | | | | | | | | | |
| Janus North America | | Janus International | | Consolidated |
Balance as of December 30, 2023 | $ | 357.0 | | | $ | 11.6 | | | $ | 368.6 | |
Terminal Door Asset Acquisition | 15.7 | | | — | | | 15.7 | |
Balance as of June 29, 2024 | $ | 372.7 | | | $ | 11.6 | | | $ | 384.3 | |
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities, as of June 29, 2024 and December 30, 2023 are summarized as follows:
| | | | | | | | | | | |
| June 29, 2024 | | December 30, 2023 |
Customer deposits | $ | 20.7 | | | $ | 29.6 | |
Employee compensation | 14.0 | | | 20.2 | |
Interest payable | 0.4 | | | 13.2 | |
Current operating lease liabilities | 6.0 | | | 5.4 | |
Sales tax payable | 3.5 | | | 3.4 | |
Accrued professional fees | 0.6 | | | 0.7 | |
Product warranties | 2.4 | | | 2.3 | |
Accrued freight | 0.1 | | | 0.8 | |
Other liabilities(1) | 5.8 | | | 4.7 | |
Total | $ | 53.5 | | | $ | 80.3 | |
(1) Other liabilities as of June 29, 2024 and December 30, 2023 consists of property tax, credit card and various other accruals.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
8. 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 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.
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 10 basis points 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 June 29, 2024, the SOFR Margin Rate was 1.25%). As of June 29, 2024 and December 30, 2023, the interest rate in effect for the facility was 6.69% and 6.76%, 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.
The Company incurred $1.3 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 June 29, 2024 and July 1, 2023, and $0.1 was recognized for both the six month periods ended June 29, 2024 and July 1, 2023. The unamortized portion of the fees as of both June 29, 2024 and December 30, 2023, was approximately $1.0 and $1.1, respectively. There were no borrowings outstanding on the line of credit as of June 29, 2024 and December 30, 2023.
As of June 29, 2024 and December 30, 2023, the Company maintained one letter of credit totaling approximately $0.4 on which there were no balances due. The amount available on the line of credit as of both June 29, 2024 and December 30, 2023 was approximately $124.6.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
9. Long-Term Debt
Long-term debt consists of the following: | | | | | | | | | | | |
| June 29, 2024 | | December 30, 2023 |
Note payable - First Lien | $ | 600.0 | | | $ | 623.4 | |
Financing leases | 3.8 | | | 3.4 | |
| $ | 603.8 | | | $ | 626.8 | |
Less: unamortized deferred finance fees | 10.7 | | | 11.8 | |
Less: current maturities | 7.3 | | | 7.3 | |
Total long-term debt | $ | 585.8 | | | $ | 607.7 | |
Notes Payable - First Lien - As a result of a credit rating upgrade in March 2024, the term agreement allowed the previous applicable margin rate to decrease from 3.25% to 3.00%. On April 18, 2024, the Company made a voluntary prepayment of $21.9 toward the certain First Lien Credit and Guarantee Agreement, dated as of February 12, 2018 (as amended to date, the “First Lien Term Loan”). As a result of the prepayment, the Company expensed an additional $0.4 for pro-ration of the unamortized debt issuance costs that was amortizing over the expected life of the borrowing. The Company used cash on hand to make the voluntary prepayment.
On April 30, 2024, the Company completed a repricing pursuant to Amendment No. 7 (the “Repricing Amendment”) to the First Lien Term Loan. The Repricing Amendment reduced the applicable interest rate margins on the $600.0 First Lien Term Loan from 2.00% to 1.50% for the term loans bearing interest at rates based on the base rate, and from 3.00% to 2.50% for the term loans bearing interest at rates based on the secured overnight financing rate. In addition to the change in the applicable margin rate, the Company is no longer subject to a CSA rate of 0.1%. Interest is payable in arrears (with respect to Base Rate loans) or at the end of an interest period selected by the Company (with respect to SOFR loans). The outstanding loan balance is to be repaid on a quarterly basis in an amount equal to 0.25% of the original balance of the amended loan, with the remaining principal due on the maturity date of August 3, 2030. The debt was secured by substantially all of the Company’s business assets. There are no prepayment penalties if the Company makes voluntary prepayments on the outstanding principal balance. The interest rate on the First Lien Term Loan as of June 29, 2024, was 7.84%, which is a variable rate based on Adjusted Term SOFR and includes an applicable margin percentage of 2.50%.
The Repricing Amendment was accounted for in accordance with ASC 470-50, “Debt - Modification and Extinguishment.” The 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 $599.0 of borrowings held by lenders in the new agreement, that were also held by lenders in the First Lien Term Loan prior to the Repricing Amendment.
As a result, the Company wrote off an immaterial portion of unamortized debt financing costs associated with the First Lien Term Loan prior to the Repricing Agreement, that was deemed extinguished and recognized within “Loss on extinguishment and modification of debt” on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income. In conjunction with the Repricing Amendment, the Company incurred $1.7 of costs from third 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.
In conjunction with the Repricing Amendment, the Company incurred $0.2 of additional deferred finance costs, which will be amortized over the remaining term of the modified loan. Amortization of deferred loan costs is included in interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. Amortization of approximately $0.9 and $0.8 was recognized for the three month periods ended June 29, 2024 and July 1, 2023, respectively, and $1.3 and $2.1 was recognized for the six month periods ended June 29, 2024 and July 1, 2023, respectively, as a component of interest expense.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
10. Leases
The Company primarily leases certain office and manufacturing facilities, as well as vehicles, copiers, and other equipment. These operating leases generally have an original lease term between 1 year and 20 years, and some include options to extend (generally 5 to 10 years). Lease agreements generally do not include material variable lease payments, residual value guarantees, or restrictive covenants.
The components of right-of-use (“ROU”) assets and lease liabilities were as follows:
| | | | | | | | | | | | | | |
(in millions) | Balance Sheet Classification | June 29, 2024 | | December 30, 2023 |
Assets: | | | | |
Operating lease assets | Right-of-use assets, net | $ | 48.5 | | | $ | 47.6 | |
Finance lease assets | Right-of-use assets, net | 4.0 | | | 3.3 | |
Total leased assets | | $ | 52.5 | | | $ | 50.9 | |
Liabilities: | | | | |
Current: | | | | |
Operating | Other accrued expenses | $ | 6.0 | | | $ | 5.4 | |
Financing | Current maturities of long-term debt | 1.3 | | | 1.0 | |
Noncurrent: | | | | |
Operating | Other long-term liabilities | 47.4 | | | 46.9 | |
Financing | Long-term debt | 2.5 | | | 2.4 | |
Total lease liabilities | | $ | 57.2 | | | $ | 55.7 | |
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
(in millions) | | June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
Operating lease cost | | $ | 2.5 | | | $ | 2.1 | | | $ | 4.9 | | | $ | 4.3 | |
Variable lease cost | | 0.1 | | | 0.2 | | | 0.3 | | | 0.3 | |
Short-term lease cost | | 0.4 | | | — | | | 0.6 | | | — | |
Finance lease cost: | | | | | | | | |
Amortization of right-of-use assets | | 0.4 | | | 0.2 | | | 0.6 | | | 0.3 | |
Interest on lease liabilities | | — | | | 0.1 | | | 0.1 | | | 0.1 | |
Total lease cost | | $ | 3.4 | | | $ | 2.6 | | | $ | 6.5 | | | $ | 5.0 | |
Other information related to leases was as follows: | | | | | | | | | | | |
| June 29, 2024 | | December 30, 2023 |
Weighted Average Remaining Lease Term (in years) | | | |
Operating Leases | 8.36 | | 8.85 |
Finance Leases | 3.20 | | 3.39 |
Weighted Average Discount Rate | | | |
Operating Leases | 7.6% | | 7.6% |
Finance Leases | 8.0% | | 8.4% |
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
As of June 29, 2024, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
| | | | | |
(in millions) | |
2024 | $ | 4.8 | |
2025 | 9.7 | |
2026 | 9.4 | |
2027 | 8.3 | |
2028 | 8.2 | |
Thereafter | 32.9 | |
Total future lease payments | $ | 73.3 | |
Less: imputed interest | $ | (19.9) | |
Present value of future lease payments | $ | 53.4 | |
As of June 29, 2024, future minimum repayments of finance leases were as follows:
| | | | | |
(in millions) | |
2024 | $ | 0.8 | |
2025 | 1.5 | |
2026 | 1.0 | |
2027 | 0.8 | |
2028 | 0.2 | |
Thereafter | — | |
Total future lease payments | $ | 4.3 | |
Less: imputed interest | $ | (0.5) | |
Present value of future lease payments | $ | 3.8 | |
11. Income Taxes
The Company is taxed as a Corporation under Subchapter C, 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, Poland, Canada and Australia, as necessary, and are included on the U.S. tax returns as pass-through entities, with the exception of Poland and Canada, which is shown on the U.S. tax return as a corporation and is not taxed in the U.S., The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes” (“ASC 740”). 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. 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.
During the three month periods ended June 29, 2024 and July 1, 2023, the Company recorded a total income tax provision of approximately $9.5 and $12.4 on pre-tax income of $37.1 and $49.4 resulting in an effective tax rate of 25.6% and 25.1%, respectively. During the six month periods ended June 29, 2024 and July 1, 2023, the Company recorded a total income tax provision of approximately $20.0 and $21.4 on pre-tax income of $78.3 and $84.4 resulting in an effective tax rate of 25.5% and 25.4%, respectively. For the three and six month periods ended June 29, 2024, 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 six month periods ended July 1, 2023, effective rates were primarily impacted by statutory rate differentials, changes in estimated tax rates, and permanent differences.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
12. 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. The performance obligations typically have an original expected duration of one year or less.
Contract Balances
Contract assets are the rights to consideration in exchange for goods and services that the Company has transferred to a customer. Revenues in excess of billings result from revenues recognized over time. Unbilled receivables result from revenues recognized point in time and represent an unconditional right to payment for earned revenues and result from timing differences between when revenues are earned and billed for. Unbilled receivables are recognized as accounts receivable when they are billed. Contract liabilities result from revenues recognized over time and represent cash received in excess of revenue earned on active projects. Where the Company receives a down-payment from the customer, it is recorded in customer deposits within accrued expenses and other current liabilities until the project becomes active.
Contract balances as of June 29, 2024 were as follows:
| | | | | |
Revenues in excess of billings at December 30, 2023 | $ | 17.8 | |
Unbilled receivables at December 30, 2023 | 31.9 | |
Contract assets at December 30, 2023 | $ | 49.7 | |
| |
Revenues in excess of billings at June 29, 2024 | $ | 22.5 | |
Unbilled receivables at June 29, 2024 | 10.2 | |
Contract assets at June 29, 2024 | $ | 32.7 | |
| |
Contract liabilities at December 30, 2023 | $ | 26.7 | |
Contract liabilities at June 29, 2024 | $ | 25.5 | |
During the three and six month periods ended June 29, 2024, the Company recognized revenue of approximately $2.2 and $22.4, respectively, related to contract liabilities at December 30, 2023.
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, included in service revenues, for the three month periods ended June 29, 2024 and July 1, 2023 was $1.1 and $0.8, respectively and $1.7 and $1.2 for the six month periods ended June 29, 2024 and July 1, 2023, respectively.
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
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 six month periods ended June 29, 2024 and July 1, 2023:
Revenue by Timing of Revenue Recognition | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
Reportable Segments by Timing of Revenue Recognition | | June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
Janus North America | | | | | | | | |
Product revenues transferred at a point in time | | $ | 168.8 | | | $ | 193.4 | | | $ | 343.0 | | | $ | 363.0 | |
Product revenues transferred over time | | 26.6 | | | 27.7 | | | 59.3 | | | 60.6 | |
Service revenues transferred over time | | 35.4 | | | 28.6 | | | 69.0 | | | 56.6 | |
| | $ | 230.8 | | | $ | 249.7 | | | $ | 471.3 | | | $ | 480.2 | |
Janus International | | | | | | | | |
Product revenues transferred at a point in time | | $ | 10.8 | | | $ | 12.0 | | | $ | 19.8 | | | $ | 25.1 | |
Service revenues transferred over time | | 7.2 | | | 9.2 | | | 12.9 | | | 17.7 | |
| | $ | 18.0 | | | $ | 21.2 | | | $ | 32.7 | | | $ | 42.8 | |
Eliminations | | $ | (0.4) | | | $ | (0.3) | | | $ | (1.1) | | | $ | (0.5) | |
Total Revenue | | $ | 248.4 | | | $ | 270.6 | | | $ | 502.9 | | | $ | 522.5 | |
Revenue by Sales Channel | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
Reportable Segments by Sales Channel Revenue Recognition | June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
Janus North America | | | | | | | |
Self Storage-New Construction | $ | 95.5 | | | $ | 84.7 | | | $ | 199.7 | | | $ | 149.3 | |
Self Storage-R3 | 58.7 | | | 77.7 | | | 127.0 | | | 160.1 | |
Commercial and Others | 76.6 | | | 87.3 | | | 144.6 | | | 170.8 | |
| $ | 230.8 | | | $ | 249.7 | | | $ | 471.3 | | | $ | 480.2 | |
Janus International | | | | | | | |
Self Storage-New Construction | $ | 15.2 | | | $ | 18.5 | | | $ | 27.6 | | | $ | 37.1 | |
Self Storage-R3 | 2.8 | | | 2.7 | | | 5.1 | | | 5.7 | |
| $ | 18.0 | | | $ | 21.2 | | | $ | 32.7 | | | $ | 42.8 | |
Eliminations | $ | (0.4) | | | $ | (0.3) | | | $ | (1.1) | | | $ | (0.5) | |
Total Revenue | $ | 248.4 | | | $ | 270.6 | | | $ | 502.9 | | | $ | 522.5 | |
| | |
Janus International Group, Inc. |
|
Notes to Unaudited Condensed Consolidated Financial Statements |
13. Equity Compensation
2021 Omnibus Incentive Plan
The Company maintains its 2021 Omnibus Incentive Plan (the “Plan”) under which it grants share-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 share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). During the six month period ended June 29, 2024, the Company granted share-based awards including restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) under the Plan. The grant date fair value of RSUs and PSUs 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, PSUs 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. In connection with the equity awards, the share-based compensation expense was $3.4 and $1.8 for the three month periods ended June 29, 2024 and July 1, 2023, respectively, and $5.3 and $3.6 for the six month periods ended June 29, 2024 and July 1, 2023, respectively. The income tax benefit from share-based compensation was $0.5 and $0.3 for the three month periods ended June 29, 2024 and July 1, 2023, respectively and $0.9 and $0.7 for the six month periods ended June 29, 2024 and July 1, 2023, respectively.
Restricted Stock Unit Grants
RSUs are subject to a vesting period between one and four years. RSU activity for the six month period ended June 29, 2024 is as follows:
| | | | | | | | | | | |
(dollar amounts in millions, except share and per share data) | |
| RSUs | | Weighted-Average Grant Date Fair Value |
Unvested, outstanding at December 30, 2023 | 944,810 | | | $ | 10.6 | |
Granted | 1,373,124 | | | 14.4 | |
Vested | (297,083) | | | 10.2 | |
Forfeited | (36,198) | | | 12.0 | |
Unvested, outstanding at June 29, 2024 | 1,984,653 | | | $ | 13.3 | |
Share-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 $2.5 and $0.9 for the three month periods ended June 29, 2024 and July 1, 2023, respectively, and $3.6 and $1.6 for the six month periods ended June 29, 2024 and July 1, 2023, respectively. As of June 29, 2024, there was an aggregate of $23.6 of unrecognized expense related to the RSUs granted, which the Company expects to amortize over a weighted-average period of 2.2 years.
Performance-based Restricted Stock Unit Grants
PSU awards are based on the satisfaction of the Company’s three-year cumulative adjusted EBITDA. The number of PSUs that become earned can range between 0% and 200% of the original target number of PSUs. PSUs are subject to a three-year performance cliff-vesting period.
PSUs activity for the six month period ended June 29, 2024 is as follows:
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(dollar amounts in millions, except share and per share data) | |
| PSUs | | Weighted-Average Grant Date Fair Value |
Unvested, outstanding at December 30, 2023 | 482,014 | | | $ | 10.0 | |
Granted | 232,702 | | | 14.8 | |
Vested | — | | | — | |
Forfeited | (41,008) | | | 10.4 | |
Unvested, outstanding at June 29, 2024 (1) | 673,708 | | | $ | 11.6 | |
(1) This number excludes 242,353 performance stock units, which represents the incremental number of units that would be issued based on performance results from previously-granted PSU awards. Share-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 $0.7 for both the three month periods ended June 29, 2024 and July 1, 2023, and $1.3 and $1.6 for the six month periods ended June 29, 2024 and July 1, 2023, respectively. As of
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Janus International Group, Inc. |
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Notes to Unaudited Condensed Consolidated Financial Statements |
June 29, 2024, there was an aggregate of $4.4 of unrecognized expense related to the PSUs granted, which the Company expects to amortize over a weighted-average period of 2.1 years.
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 June 29, 2024, 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 June 29, 2024, the Company deemed the estimate of the PSUs granted in the six month periods ended June 29, 2024 to be issued at 95% of target, and have reflected such estimates within the share-based compensation expense.
The actual payout of the 2024 grants will be in a range of 0% to 200%, depending on performance results for the three-year performance period from January 1, 2024, through December 26, 2026. As of June 29, 2024, the Company deemed the estimate of the PSUs granted in the six month period ended June 29, 2024 to be issued at 90% 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.
Stock option activity for the six month period ended June 29, 2024 is as follows:
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(dollar amounts in millions, except share and per share data) | | Stock Options | | Weighted-Average Grant Date Fair Value | | Weighted-Average Exercise Price, per share | | Weighted Average Remaining Contractual Life (in years) | | Aggregate Intrinsic Value |
Vested not exercised at December 30, 2023 | | 175,175 | | | $ | 4.5 | | | $ | 9.4 | | | 8.3 | | $ | 0.6 | |
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Unvested, outstanding at December 30, 2023 | | 544,350 | | | $ | 4.5 | | | $ | 9.4 | | | 8.4 | | $ | 2.0 | |
Granted | | — | | | — | | | — | | | — | | | — | |
Exercised | | (2,069) | | | — | | | 9.5 | | | — | | | — | |
Vested | | (113,252) | | | 4.5 | | | — | | | 7.8 | | 0.4 | |
Forfeited | | (29,835) | | | 5.1 | | | 10.2 | | | 8.4 | | 0.1 | |
Unvested, outstanding at June 29, 2024 | | 399,194 | | | $ | 4.4 | | | $ | 9.3 | | | 7.9 | | $ | 1.4 | |
Vested not exercised at June 29, 2024 | | 286,358 | | | $ | 4.5 | | | $ | 9.4 | | | 7.9 | | $ | 0.9 | |
Share-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 for both of the three month periods ended June 29, 2024 and July 1, 2023, and $0.4 for both of the six month periods ended June 29, 2024 and July 1, 2023. Total unamortized share-based compensation expense related to the unvested stock options as of June 29, 2024, was approximately $1.4, which the Company expects to amortize over a weighted-average period of 1.8 years.
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Janus International Group, Inc. |
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Notes to Unaudited Condensed Consolidated Financial Statements |
14. 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 six month periods ended June 29, 2024 and July 1, 2023, dilutive potential common shares include stock options and unvested restricted stock units. Dilutive earnings per share (“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 six month periods ended June 29, 2024 and July 1, 2023:
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| Three Months Ended | | Six Months Ended |
(in millions, except share and per share data) | June 29, 2024 | | July 1, 2023 | | June 29, 2024 | | July 1, 2023 |
Numerator: | | | | | | | |
Net income attributable to common stockholders | $ | 27.6 | | | $ | 37.0 | | | $ | 58.3 | | | $ | |