# Janus International Group, Inc. (JBI) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Janus International Group, Inc.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1839839/000183983924000066/jbi-20231230.htm
Accession: 0001839839-24-000066
Filing date: 2024-02-28
Report date: 2023-12-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/JBI/
All MD&A years: /company/JBI/mda/
Previous year: /company/JBI/mda/fy2022/ (FY 2022)
Next year: /company/JBI/mda/fy2024/ (FY 2024)

Item 7.    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 the consolidated results of operations and financial condition. You should read the following discussion and analysis of Janus’s financial condition and results of operations in conjunction with the consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K (this “Annual Report”).

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed on March 29, 2023 for discussion and analysis of results of operations for the year ended December 31, 2022.

Certain information contained in this discussion and analysis or set forth elsewhere in this Annual Report, 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 Annual Report. We assume no obligation to update any of these forward-looking statements.

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

Percentage amounts included in this Annual Report 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 Annual Report may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Annual Report. Certain other amounts that appear in this Annual Report may not sum due to rounding.

Dollar amounts are shown in millions of dollars, unless otherwise noted, and rounded to the nearest million except for share

and per share amounts.

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying 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 that 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 consolidated financial statements were prepared.

•Results of Operations: This section provides an analysis of our results of operations for the years ended December 30, 2023 and December 31, 2022.

•Liquidity and Capital Resources: This section provides a discussion of our financial condition and an analysis of our cash flows for the years ended December 30, 2023 and December 31, 2022. This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at December 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 Estimates: This section identifies and summarizes those accounting estimates that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.

Business Overview

Janus is a leading global manufacturer and supplier of turn-key self-storage, commercial and industrial building solutions including: roll-up and swing doors, hallway systems, relocatable storage units, and facility and door automation technologies with manufacturing operations in Georgia, Texas, Arizona, Indiana, North Carolina, United Kingdom, Australia, and Poland. The Company focuses on providing building solutions to two primary markets, providing building solutions to the self-storage industry and the broader commercial industrial market. 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 REITs or returns-driven operators of scale and are primarily

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located in the top 50 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 of damaged or end-of-life products.

Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International. The Janus International segment is comprised of Janus International Europe Holdings Ltd. (UK), whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus International Group, LLC (“Janus Core”), Betco, Inc. (“BETCO”), Nokē, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), DBCI, LLC (“DBCI”), Access Control Technologies, LLC (“ACT”), 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 remodel self-storage facilities including storage unit doors, hallways, ceilings, offices, optimizing unit mix, utilizing vacant land for movable storage units (JBI MASS relocatable storage units), and adding a more robust security solutions to enable customers to (1) charge higher rental rates and (2) compete with modern self-storage facilities and large operators. In addition, the R3 sales channel also includes new self-storage capacity being brought online through conversions and expansions. R3 transforms facilities through door replacement, facility upgrades, Nokē Smart Entry Systems, and relocatable storage MASS.

Commercial light duty steel roll-up doors are designed for applications that require less frequent and less demanding operations. Janus offers heavy duty commercial grade steel doors (minimized dead-load, or constant weight of the curtain itself) perfect for warehouses, commercial buildings, and terminals, designed with a higher gauge and deeper guides, which 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, but not limited to, the following 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 growth within the commercial storage market, expanding its self-storage market share, as well as capitalizing on the aging self-storage facilities, while continuing to diversify our products and solutions. Janus is a bespoke provider of not only products, but solutions that generate a favorable financial outcome for our clients.

Total revenues was $1,066.4 for the year ended December 30, 2023, representing an increase of 4.6% from $1,019.5 for the year ended December 31, 2022.

Net income was $135.7 for the year ended December 30, 2023, representing an increase of $28.0 from $107.7 for the year ended December 31, 2022. Adjusted EBITDA was $285.6 for the year ended December 30, 2023, representing a 25.9% increase from $226.9 for the year ended December 31, 2022. Adjusted EBITDA as a percentage of revenue was 26.8% for the year ended December 30, 2023, representing an increase of 4.5% from 22.3% for the year ended December 31, 2022. The increase in Adjusted EBITDA margins is a direct result of increased revenue primarily due to commercial actions taking full effect in third quarter of 2022 which was partially offset by the investments we made in our software center and inflationary costs.

Cash flows from operations was $215.0 for the year ended December 30, 2023, representing an increase of $126.5 from $88.5 for the year ended December 31, 2022. During the year ended December 30, 2023, Free Cash Flow to Non-GAAP Adjusted Net Income was 142%, compared to 73% during the year ended December 31, 2022. Free Cash Flow conversion is higher in 2023 due to higher net income adjusted for non cash items of $29.0 and changes in net working capital of $97.5.

During fiscal 2023, we did a voluntary paydown of our debt of $85.3 and refinanced our Term loan to a new $625.0 First Lien Note payable. In addition, we opened a new manufacturing facility in Poland as well as opened our new software center in Atlanta.

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

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Business Segment Information

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

Janus North America is comprised of eight entities including Janus Core, Janus Door, Steel Door Depot, ASTA, NOKE, BETCO, DBCI, and ACT. Janus North America produces and provides various fabricated components such as commercial and self-storage doors, walls, hallway systems and building components used primarily by owners or builders of self-storage facilities and also offers installation services along with the products. Janus North America represented 92.3% and 92.6% of Janus’s revenue for the years ended December 30, 2023 and December 31, 2022, respectively.

Janus International is comprised solely of one entity, Janus International Europe Holdings Ltd (UK). The Janus International segment produces and provides similar products and services as Janus North America but largely in Europe and Australia. Janus International represented 7.7% and 7.4% of Janus’s revenue for the years ended December 30, 2023 and December 31, 2022, respectively.

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 reflect Janus’s operational status, indicating whether the business is expanding or contracting. We expect a continued rise in our workforce as we expand our operations. Additionally, we foresee the need to hire additional software personnel as we continue to expand the software accessibility component of our business. As of December 30, 2023, and December 31, 2022, the headcount was 2,305 (including 441 temporary employees) and 2,247 (including 551 temporary employees), respectively.

The following table sets forth key performance measures for the years ended December 30, 2023 and December 31, 2022

(dollar amounts in millions)

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Total Revenue","$","1,066.4","","$","1,019.5","","$","46.9","","","4.6","%"],["Adjusted EBITDA","$","285.6","","$","226.9","","$","58.7","","","25.9","%"],["Adjusted EBITDA (% of revenue)","26.8","%","","22.3","%","","","","4.5","%"]]
[[/GREPCENT_TABLE]]

Total revenues increased by $46.9 or 4.6% for the year ended December 30, 2023 compared to the year ended December 31, 2022, primarily due to commercial actions.

Adjusted EBITDA increased by $58.7 or 25.9% from the year ended December 30, 2023 compared to the year ended December 31, 2022, and Adjusted EBITDA as a percentage of revenue increased 4.5% for the year ended December 30, 2023 primarily due to increased revenue due to commercial actions taking full effect in third quarter 2022 which was partially offset by inflationary increases in labor and logistics costs. (See “Non-GAAP Financial Measures” section).

Basis of Presentation

The 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 and the year ended January 1, 2022 was a year in which we added a 53rd week.

We have presented results of operations, including the related discussion and analysis for the year ended December 30, 2023 compared to the year ended December 31, 2022.

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Components of Results of Operations

Product revenues. Product revenues represent 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 revenues are recognized upon transfer of control to the customer, which generally takes place at the point of destination. In certain instances, product revenues include all revenues affiliated with erecting an entire structure for our customers, which is recognized over-time. We expect our product revenue may vary from period to period on, among other things, the timing and size of orders and delivery of products and the impact of significant transactions. Revenues are monitored and analyzed as a function of sales reporting within the following sales channels, Self-Storage New Construction, Self-Storage R3, and Commercial and Other.

Service revenues. Service revenue reflects installation services to customers for steel structures, 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 public company costs. We expect general and administrative expenses to increase in absolute dollars in future periods as we expect our revenues to continue to grow. We also expect G&A expenses to increase in the near term as a result of operating as a public company, including expenses associated with compliance with the rules and regulations of the Commission, and an increase in legal, audit, insurance, investor relations, professional services and other administrative expenses.

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

Factors Affecting the Results of Operations

Key Factors Affecting the Business and Financial Statements

Management understands Janus’s 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 because of project pricing, competitive reactions and changing market conditions. Janus also offers a wide assortment of products that are differentiated by style, design and performance attributes. Pricing and margins for products within the assortment vary. In addition, changes in the relative quantity of products purchased at different price points can impact year-to-year comparisons of net sales and operating income.

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

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Factors Affecting Growth Through Acquisitions

Janus’s business strategy involves growth through, among other things, the acquisition of other companies. Janus evaluates companies that it believes will strategically fit into its business and growth objectives, including those that will support its overall strategy of portfolio diversification, geographic expansion, and technological innovation, among other areas of focus. While Janus seeks acquisition opportunities that it believes will augment its business and growth objectives, certain factors could prevent acquisition opportunities from materializing, including target-company availability, relative valuation expectations, and certain due diligence considerations, among other factors.

Seasonality

Generally, Janus’s sales tend to be the slowest in the first and fourth quarters 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 selling and marketing, and general and administrative expenses.

Janus’s largest individual raw material expenditure is steel coils. Fluctuations in the prices of steel coil are generally beyond Janus’s control and have a direct impact on the financial results. From time to time, Janus enters into agreements with large suppliers in order to lock in steel coil prices for part of Janus’s production needs and partially mitigate the potential impacts of short-term steel coil price fluctuations. This arrangement allows Janus to purchase quantities of product within specified ranges as outlined in the contracts. Outbound freight costs are driven by Janus’s volume of product revenues and are subject to the freight market pricing environment.

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Results of Operations - Consolidated

The period to period comparisons of our results of operations have been prepared using the historical periods included in our consolidated financial statements. The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this document. We have derived this data from our consolidated financial statements included elsewhere in this Annual Report. The following tables set forth our results of operations for the periods presented are in dollars.

A detailed discussion of the prior year 2022 to 2021 year-over-year changes is not included herein and can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in the 2022 Annual Report on Form 10-K filed March 29, 2023.

Results of Operations

(dollar amounts in millions)

Unaudited Quarterly Consolidated Results for the quarter ended December 30, 2023 compared to the quarter ended December 31, 2022

[[GREPCENT_TABLE]]
[["","Three Months Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["REVENUE"],["Product revenues(1)","$","223.7","","","$","236.4","","","$","(12.7)","","","(5.4)","%"],["Service revenues(1)","40.0","","","43.3","","","(3.3)","","","(7.6)","%"],["Total revenue","$","263.7","","","$","279.7","","","$","(16.0)","","","(5.7)","%"],["Product cost of revenues","120.3","","","138.2","","","(17.9)","","","(13.0)","%"],["Service cost of revenues","29.1","","","33.9","","","(4.8)","","","(14.2)","%"],["Cost of revenues","$","149.4","","","$","172.1","","","$","(22.7)","","","(13.2)","%"],["GROSS PROFIT","$","114.3","","","$","107.6","","","$","6.7","","","6.2","%"],["OPERATING EXPENSE"],["Selling and marketing","16.2","","","16.1","","","0.1","","","0.6","%"],["General and administrative","34.2","","","32.9","","","1.3","","","4.0","%"],["Operating Expenses","$","50.4","","","$","49.0","","","$","1.4","","","2.9","%"],["INCOME FROM OPERATIONS","$","63.9","","","$","58.6","","","$","5.3","","","9.0","%"],["Interest expense","(14.7)","","","(13.4)","","","(1.3)","","","9.7","%"],["Other income (expense)","\u2014","","","0.1","","","(0.1)","","","(100.0)","%"],["Other Expense, Net","$","(14.7)","","","$","(13.3)","","","$","(1.4)","","","10.5","%"],["INCOME BEFORE TAXES","$","49.2","","","$","45.3","","","$","3.9","","","8.6","%"],["Provision for Income Taxes","13.4","","","12.6","","","0.8","","","6.3","%"],["NET INCOME","$","35.8","","","$","32.7","","","$","3.1","","","9.5","%"]]
[[/GREPCENT_TABLE]]

(1) These numbers have been revised for the year ended December 31, 2022. See Note 2 to our consolidated financial statements for additional information.

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For the year ended December 30, 2023 compared to the year ended December 31, 2022

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["REVENUE"],["Product revenues(1)","$","909.8","","","$","890.9","","","$","18.9","","","2.1","%"],["Service revenues(1)","156.6","","","128.6","","","28.0","","","21.8","%"],["Total revenue","$","1,066.4","","","$","1,019.5","","","$","46.9","","","4.6","%"],["Product cost of revenues","500.8","","","557.1","","","(56.3)","","","(10.1)","%"],["Service cost of revenues","115.9","","","97.5","","","18.4","","","18.9","%"],["Cost of revenues","$","616.7","","","$","654.6","","","$","(37.9)","","","(5.8)","%"],["GROSS PROFIT","$","449.7","","","$","364.9","","","$","84.8","","","23.2","%"],["OPERATING EXPENSE"],["Selling and marketing","65.5","","","58.3","","","7.2","","","12.3","%"],["General and administrative","138.5","","","119.1","","","19.4","","","16.3","%"],["Operating Expenses","$","204.0","","","$","177.4","","","$","26.6","","","15.0","%"],["INCOME FROM OPERATIONS","$","245.7","","","$","187.5","","","$","58.2","","","31.0","%"],["Interest expense","(60.0)","","","(42.0)","","","(18.0)","","","42.9","%"],["Loss on extinguishment and modification of debt","(3.9)","","","\u2014","","","(3.9)","","","100.0","%"],["Other (expense)","1.0","","","(0.2)","","","1.2","","","(600.0)","%"],["Other Expense, Net","$","(62.9)","","","$","(42.2)","","","$","(20.7)","","","49.1","%"],["INCOME BEFORE TAXES","$","182.8","","","$","145.3","","","$","37.5","","","25.8","%"],["Provision for Income Taxes","47.1","","","37.6","","","9.5","","","25.3","%"],["NET INCOME","$","135.7","","","$","107.7","","","$","28.0","","","26.0","%"]]
[[/GREPCENT_TABLE]]

(1) These numbers have been revised for the period ended December 31, 2022. See Note 2 to our consolidated financial statements for additional information.

Revenue

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Product revenues(1)","$","909.8","","","$","890.9","","","$","18.9","","","2.1","%"],["Service revenues","156.6","","","128.6","","","28.0","","","21.8","%"],["Total","$","1,066.4","","","$","1,019.5","","","$","46.9","","","4.6","%"]]
[[/GREPCENT_TABLE]]

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

The $46.9 revenue increase for the year ended December 30, 2023 compared to the year ended December 31, 2022 was due to growth in the New Construction and R3 self storage segments, and is 80% attributable to commercial actions. The 21.8% increase in service revenues is primarily attributable to an 11.1% increase in the New Construction and R3 self storage product revenues for the year ended December 30, 2023.

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

[[GREPCENT_TABLE]]
[["","Year Ended","","","","Year Ended","","","","Variance"],["","December 30, 2023","","% of revenues","","December 31, 2022","","% of revenues","","$","","%"],["New Construction - Self Storage","$","394.9","","","37.0","%","","$","323.4","","","31.7","%","","$","71.5","","","22.1","%"],["R3 - Self Storage","334.9","","","31.4","%","","321.1","","","31.5","%","","13.8","","","4.3","%"],["Commercial and Other","336.6","","","31.6","%","","375.0","","","36.8","%","","(38.4)","","","(10.2)","%"],["Total","$","1,066.4","","","100.0","%","","$","1,019.5","","","100.0","%","","$","46.9","","","4.6","%"]]
[[/GREPCENT_TABLE]]

New construction revenues increased by $71.5 or 22.1% for the year ended December 30, 2023 compared to the year ended December 31, 2022. The increase in the year ended December 30, 2023 is primarily due to commercial actions and increased demand for capacity additions through greenfield sites.

R3 revenues increased by $13.8 or 4.3% for the year ended December 30, 2023 compared to the year ended December 31, 2022. The growth was primarily driven by the expansion of storage facilities and strategic adjustments in unit configurations, alongside favorable outcomes from commercial actions.

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Commercial and other revenues decreased by $38.4 or 10.2% for the year ended December 30, 2023 compared to the year ended December 31, 2022 due to shifts in demand for certain product lines, affecting both the commercial steel roll up door market and the rolling steel product line.

Cost of Revenues and Gross Margin

(dollar amounts in millions)

Gross margin increased by 6.4% to 42.2% for the year ended December 30, 2023 from 35.8% for the year ended December 31, 2022 primarily due to the commercial actions and cost containment initiatives taking effect in the second half of 2022, offset by increased labor and logistics costs.

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Product cost of revenues","$","500.8","","","$","557.1","","","$","(56.3)","","(10.1)","%"],["Service cost of revenues","115.9","","","97.5","","","18.4","","18.9","%"],["Cost of revenues","$","616.7","","","$","654.6","","","$","(37.9)","","(5.8)","%"]]
[[/GREPCENT_TABLE]]

The $37.9 or 5.8% decrease in cost of revenues for the year ended December 30, 2023 compared to the year ended December 31, 2022, is attributable to a $73.4 decrease in material, due to cost containment initiatives, as well as the decrease in the demand for certain products within the commercial sales channel, partially offset by an increase of $17.1 in labor, freight and other costs of revenues. The $18.4 increase in installation cost of revenue supports the service revenue growth of $28.0 for the year ended December 30, 2023 compared to the year ended December 31, 2022.

Operating Expenses - Selling and marketing

Selling and marketing expense increased $7.2 or 12.3% for the year ended December 31, 2022 compared to the year ended December 30, 2023. The increase is primarily the result of a $4.1 rise in payroll related expenditures attributable to additional headcount in sales, along with a $1.2 increase in marketing and advertising expenses, and a $0.5 increase in travel-related costs.

Operating Expenses - General and administrative

General and administrative expenses rose by $19.4 or 16.3% for the year ended December 31, 2022 compared to the year ended December 30, 2023. This upward trend was primarily driven by a $13.2 increase in employee wages and benefits for additional headcount to support the continued top line revenue growth and additional expenses associated with the opening of the Atlanta software center. Additionally, there was a $2.9 uptick in stock-based compensation, and a $1.4 increase in sales and use taxes.

Interest Expense

Interest expense increased $18.0 or 42.9% for the year ended December 30, 2023 compared to the year ended December 31, 2022 due to an increase in the LIBOR / SOFR rate in 2023 and the term loan refinancing in August. (See “Liquidity and Capital Resources” section).

Income Taxes

Income tax expense increased by $9.5 or 25.3% to $47.1 for the year ended December 30, 2023 from $37.6 for the year ended December 31, 2022, due to the year over year increase of income before taxes.

Net Income

The $28.0 or 26.0% increase in net income for the year ended December 31, 2022 compared to the year ended December 30, 2023 is largely due to an increase in revenues and decrease in cost of revenues, offset by the increase in selling and general and administrative expenses, interest expense and income taxes.

Segment Results of Operations

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

Segment operating income is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. For these reasons 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 net earnings.

32

Results of Operations - Janus North America

(dollar amounts in millions)

For the year ended December 30, 2023 compared to the year ended December 31, 2022

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022"],["","","","$","","%"],["REVENUE"],["Product revenues(1)","$","906.4","","","$","897.8","","","$","8.6","","","1.0%"],["Services revenues(1)","122.0","","","96.5","","","25.5","","","26.4%"],["Total revenue","$","1,028.4","","","$","994.3","","","$","34.1","","","3.4%"],["Product cost of revenues","511.7","","","577.6","","","(65.9)","","","(11.4)%"],["Service cost of revenues","90.9","","","71.4","","","19.5","","","27.3%"],["Cost of revenues","$","602.6","","","$","649.0","","","$","(46.4)","","","(7.1)%"],["GROSS PROFIT","$","425.8","","","$","345.3","","","$","80.5","","","23.3%"],["OPERATING EXPENSE"],["Selling and marketing","62.2","","","55.1","","","7.1","","","12.9%"],["General and administrative","125.4","","","107.1","","","18.3","","","17.1%"],["Operating Expenses","$","187.6","","","$","162.2","","","$","25.4","","","15.7%"],["INCOME FROM OPERATIONS","$","238.2","","","$","183.1","","","$","55.1","","","30.1%"]]
[[/GREPCENT_TABLE]]

(1) These numbers have been revised for the year ended December 31, 2022. See Note 2 to our consolidated financial statements for additional information.

Revenue

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Product revenues(1)","$","906.4","","","$","897.8","","","$","8.6","","","1.0","%"],["Service revenues","122.0","","","96.5","","","25.5","","","26.4","%"],["Total revenue","$","1,028.4","","","$","994.3","","","$","34.1","","","3.4","%"]]
[[/GREPCENT_TABLE]]

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

The $34.1 or 3.4% revenue increase was due to growth in the New Construction and R3 self storage segments and is 86% attributable to impact from our commercial actions for the year ended December 30, 2023. The service revenues increased by $25.5 or 26.4% due to the increase in the self storage product revenues, as illustrated in the below table, which have a larger service component to those contracts.

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

[[GREPCENT_TABLE]]
[["(in millions)","Year Ended","","Variance"],["","December 30, 2023","","% of total revenues","","December 31, 2022","","% of total revenues"],["","","","","","$","","%"],["New Construction - Self Storage","$","336.5","","","32.7","%","","$","289.4","","","29.1","%","","$","47.1","","","16.3","%"],["R3 - Self Storage","326.9","","","31.8","%","","304.1","","","30.6","%","","22.8","","","7.5","%"],["Commercial and Other","365.0","","","35.5","%","","400.8","","","40.3","%","","(35.8)","","","(8.9)","%"],["Total","$","1,028.4","","","100.0","%","","$","994.3","","","100.0","%","","$","34.1","","","3.4","%"]]
[[/GREPCENT_TABLE]]

New Construction revenues increased by $47.1 or 16.3% for the year ended December 30, 2023 compared to the year ended December 31, 2022 primarily due to commercial actions and increased demand for capacity additions through greenfield sites.

R3 revenues increased by $22.8 or 7.5% for the year ended December 30, 2023 compared to the year ended December 31, 2022. The growth was primarily driven by the expansion of storage facilities and strategic adjustments in unit configurations, alongside favorable outcomes from commercial actions.

Commercial and Other revenues decreased by $35.8 or 8.9% for the year ended December 30, 2023 compared to the year ended December 31, 2022 due to shifts in demand for certain product lines, affecting both the commercial steel roll up door market and the rolling steel product line.

33

Cost of Revenues and Gross Margin

(dollar amounts in millions)

Gross Margin increased by 6.7% to 41.4% for the year ended December 30, 2023 from 34.7% for the year ended December 31, 2022 primarily due to the commercial actions and material cost containment initiatives taking effect in the second half of 2022, offset by the continued increased labor and logistics costs.

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Product cost of revenues","$","511.7","","$","577.6","","","$","(65.9)","","(11.4)","%"],["Service cost of revenues","90.9","","71.4","","","19.5","","27.3","%"],["Cost of revenues","$","602.6","","$","649.0","","","$","(46.4)","","(7.1)","%"]]
[[/GREPCENT_TABLE]]

The $46.4 or 7.1% decrease in cost of revenues for the year ended December 30, 2023 compared to the year ended December 31, 2022 is primarily due to a decrease in material due to cost containment initiatives, as well as the decrease in the demand for certain products within the commercial sales channel, partially offset by an increase in labor, and logistics costs.

Operating Expenses - Selling and marketing

Selling and marketing expenses increased $7.1 or 12.9% from $55.1 for the year ended December 31, 2022 to $62.2 for the year ended December 30, 2023 primarily due to increased marketing and trade show and payroll related costs for additional headcount to support revenue growth.

Operating Expenses - General and administrative

General and administrative expenses increased $18.3 or 17.1% from $107.1 for the year ended December 31, 2022 to $125.4 for the year ended December 30, 2023 primarily due to an increase in employee wages and benefits for additional headcount to support the continued top line revenue growth and additional expenses associated with the opening of the Atlanta software center.

Income from Operations

Income from operations increased by $55.1 or 30.1% from $183.1 for the year ended December 31, 2022 to $238.2 for the year ended December 30, 2023 due to an increase in gross margins offset by an increase in selling and marketing and general and administrative expenses.

Results of Operations - Janus International

(dollar amounts in millions)

For the year ended December 30, 2023 compared to the year ended December 31, 2022

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022"],["","","","$","","%"],["REVENUE"],["Product revenues","$","46.3","","","$","43.4","","","$","2.9","","","6.7","%"],["Services revenues","36.0","","","32.1","","","3.9","","","12.1","%"],["Total revenue","$","82.3","","","$","75.5","","","$","6.8","","","9.0","%"],["Product cost of revenues","31.7","","","29.7","","","2.0","","","6.7","%"],["Service cost of revenues","26.4","","","26.2","","","0.2","","","0.8","%"],["Cost of revenues","$","58.1","","","$","55.9","","","$","2.2","","","3.9","%"],["GROSS PROFIT","$","24.2","","","$","19.6","","","$","4.6","","","23.5","%"],["OPERATING EXPENSE"],["Selling and marketing","3.3","","","3.2","","","0.1","","","3.1","%"],["General and administrative","13.1","","","12.0","","","1.1","","","9.2","%"],["Operating Expenses","$","16.4","","","$","15.2","","","$","1.2","","","7.9","%"],["INCOME FROM OPERATIONS","$","7.8","","","$","4.4","","","$","3.4","","","77.3","%"]]
[[/GREPCENT_TABLE]]

34

Revenue

(dollar amounts in millions)

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Product revenues","$","46.3","","","$","43.4","","","$","2.9","","","6.7","%"],["Services revenues","36.0","","","32.1","","","3.9","","","12.1","%"],["Total revenues","$","82.3","","","$","75.5","","","$","6.8","","","9.0","%"]]
[[/GREPCENT_TABLE]]

The $6.8 or 9.0% increase in revenues is 48% due to commercial actions instituted.

The following table illustrates the revenues by sales channel for the years ended December 30, 2023 and December 31, 2022 (dollar amounts in millions).

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","% of totalrevenues","","December 31, 2022","","% of totalrevenues","","$","","%"],["New Construction - Self Storage","$","73.2","","","88.9","%","","$","57.2","","","75.8","%","","$","16.0","","28.0%"],["R3 - Self Storage","9.1","","","11.1","%","","18.3","","","24.2","%","","(9.2)","","(50.3)","%"],["Total","$","82.3","","","100.0","%","","$","75.5","","","100.0","%","","$","6.8","","9.0","%"]]
[[/GREPCENT_TABLE]]

New Construction revenues increased by $16.0 or 28.0% to $73.2 for the year ended December 30, 2023 from $57.2 for the year ended December 31, 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 revenues decreased by $9.2 or 50.3% to $9.1 for the year ended December 30, 2023 from $18.3 for the year ended December 31, 2022 primarily due to customers focusing more on New Construction versus expanding their portfolio through expansions and retrofits or utilizing our portable MASS units.

Cost of revenues and Gross Margin

(dollar amounts in millions)

Gross Margin increased by 3.4% to 29.4% for the year ended December 30, 2023 from 26.0% for the year ended December 31, 2022.

The increase is primarily due to increased revenue resulting in improved absorption.

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022","","$","","%"],["Product cost of revenues","$","31.7","","","$","29.7","","","$","2.0","","","6.7","%"],["Service cost of revenues","26.4","","","26.2","","","0.2","","","0.8","%"],["Cost of revenues","$","58.1","","","$","55.9","","","$","2.2","","","3.9","%"]]
[[/GREPCENT_TABLE]]

Cost of revenues increased by $2.2 or 3.9% to $58.1 for the year ended December 30, 2023 from $55.9 for the year ended December 31, 2022.

Operating Expenses - General and administrative

General and administrative expenses increased $1.1 or 9.2% to 13.1 for the year ended December 30, 2023 from $12.0 for the year ended December 31, 2022. The increase for the year ended December 30, 2023 is primarily due to the setup costs associated with the Poland plant opening in the fourth quarter of 2023.

Income from Operations

Income from operations increased by $3.4 to $7.8 for the year ended December 30, 2023 from $4.4 for the year ended December 31, 2022. The increase was primarily due to an increase in revenues offset by the increase in general and administrative expenses.

35

Results of Operations - Eliminations

(dollar amounts in millions)

Eliminations include transactions to account for intercompany activity. The eliminations necessary to arrive at consolidated financial information activity for the years December 30, 2023 and December 31, 2022 are as follows:

[[GREPCENT_TABLE]]
[["Revenues","Year Ended"],["","December 30, 2023","","December 31, 2022"],["North America Segment revenues before eliminations","$","1,028.4","","","$","994.3"],["International Segment revenues before eliminations","82.3","","","75.5"],["Eliminations","(44.3)","","","(50.3)"],["Consolidated total revenues","$","1,066.4","","","$","1,019.5"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Cost of Revenues","Year Ended"],["","December 30, 2023","","December 31, 2022"],["North America Segment cost of revenues before eliminations","$","602.6","","","$","649.0"],["International Segment cost of revenues before eliminations","58.1","","","55.9"],["Eliminations(1)","(44.0)","","","(50.3)"],["Consolidated total cost of revenues","$","616.7","","","$","654.6"]]
[[/GREPCENT_TABLE]]

1) Cost of revenues eliminations for the year ended December 30, 2023 includes intercompany profit in inventory eliminations.

[[GREPCENT_TABLE]]
[["Revenues by Sales Channel"],["","North America Revenues","","International Revenues","","Eliminations","","Consolidated Revenues"],["December 30, 2023"],["New Construction - Self Storage","$","336.5","","","$","73.2","","","$","(14.8)","","","$","394.9"],["R3 - Self Storage","326.9","","","9.1","","","(1.1)","","","334.9"],["Commercial and Other","365.0","","","\u2014","","","(28.4)","","","336.6"],["","$","1,028.4","","","$","82.3","","","$","(44.3)","","","$","1,066.4"],["December 31, 2022"],["New Construction - Self Storage","$","289.4","","","$","57.2","","","$","(23.2)","","","$","323.4"],["R3 - Self Storage","304.1","","","18.3","","","(1.3)","","","321.1"],["Commercial and Other","400.8","","","\u2014","","","(25.8)","","","375.0"],["","$","994.3","","","$","75.5","","","$","(50.3)","","","$","1,019.5"]]
[[/GREPCENT_TABLE]]

36

Non-GAAP Financial Measures

(dollar amounts in millions)

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.

Adjusted EBITDA

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. Such expenses, charges, and gains are not indicative of Janus’s normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

Adjusted EBITDA is 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, 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, 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., corporate restructuring); 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:

[[GREPCENT_TABLE]]
[["","Three Months Ended","","Variance"],["","December 30, 2023","","December 31, 2022"],["(dollar amounts in millions)","","","$","","%"],["Net Income","$","35.8","","","$","32.7","","","$","3.1","","","9.5","%"],["Interest expense","14.7","","","13.4","","","1.3","","","9.7","%"],["Income taxes","13.4","","","12.6","","","0.8","","","6.3","%"],["Depreciation","2.7","","","2.1","","","0.6","","","28.6","%"],["Amortization","7.5","","","7.4","","","0.1","","","1.4","%"],["EBITDA","$","74.1","","","$","68.2","","","$","5.9","","","8.7","%"],["Restructuring charges(3)","0.2","","","\u2014","","","0.2","","","100.0","%"],["Adjusted EBITDA","$","74.3","","","$","68.2","","","$","6.1","","","8.9","%"]]
[[/GREPCENT_TABLE]]

37

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 30, 2023","","December 31, 2022"],["(dollar amounts in millions)","","","$","","%"],["Net Income","$","135.7","","","$","107.7","","","$","28.0","","","26.0","%"],["Interest expense","60.0","","","42.0","","","18.0","","","42.9","%"],["Income taxes","47.1","","","37.6","","","9.5","","","25.3","%"],["Depreciation","9.3","","","7.9","","","1.4","","","17.7","%"],["Amortization","29.8","","","29.7","","","0.1","","","0.3","%"],["EBITDA","$","281.9","","","$","224.9","","","$","57.0","","","25.3","%"],["Loss on extinguishment and modification of debt(1)","3.9","","","\u2014","","","3.9","","","100.0","%"],["COVID-19 related expenses(2)","\u2014","","","0.1","","","(0.1)","","","(100.0)","%"],["Restructuring charges(3)","1.2","","","1.1","","","0.1","","","9.1","%"],["Acquisition expense(4)","(1.4)","","","0.8","","","(2.2)","","","(275.0)","%"],["Adjusted EBITDA","$","285.6","","","$","226.9","","","$","58.7","","","25.9","%"]]
[[/GREPCENT_TABLE]]

(1)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.

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

(3)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.

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

Adjusted Net Income

Adjusted Net Income is defined as net income attributable to shareholders, which excludes from reported GAAP results, the impact of certain items consisting of acquisition events and other non-recurring charges. Similar to Adjusted EBITDA, such expenses, charges, and gains are excluded since they are not indicative of Janus’s normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

We use Adjusted Net Income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. Adjusted net income should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.

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

[[GREPCENT_TABLE]]
[["","Three Months Ended"],["","December 30, 2023","","December 31, 2022"],["Net Income","$","35.8","","","$","32.7"],["Net Income Adjustments(1)","0.2","","","\u2014"],["Tax Effect Non-GAAP on Net Income Adjustments(2)","(0.1)","","","\u2014"],["Non-GAAP Adjusted Net Income","$","35.9","","","$","32.7"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 30, 2023","","December 31, 2022"],["Net Income","$","135.7","","","$","107.7"],["Net Income Adjustments(1)","3.7","","","2.0"],["Tax Effect Non-GAAP on Net Income Adjustments(2)","(1.0)","","","(0.5)"],["Non-GAAP Adjusted Net Income","$","138.4","","","$","109.2"]]
[[/GREPCENT_TABLE]]

(1)Refer to the Adjusted EBITDA table above for detailed breakout of adjustment items.

(2)Tax effected for the net income adjustments. Used effective tax rates 27.2% and 27.8% for the three months ended December 30, 2023 and December 31, 2022, respectively, and 25.8% and 25.9% for the years ended December 30, 2023 and December 31, 2022, respectively.

38

Free Cash Flow

The Company uses a measure of free cash flow to facilitate an understanding of its ability to generate cash for reinvestment into its businesses. We define "Free Cash Flow" as cash flow from operating of continuing operations, less cash used in purchases of property and equipment. Free Cash Flow is not intended as an alternative measure of cash flow from operations, as determined in accordance with GAAP in the United States. We use this financial measure both in presenting results to shareholders and the investment community and in our internal evaluation and management of our businesses. We believe that this financial measure and the information it provides are useful to investors because it permits investors to view our performance using the same tool that we use to gauge progress in achieving our goals. We believe that the non-GAAP financial measure "Free cash flow" is also useful to investors because it is an indication of cash flow that may be available to fund investments in future growth initiatives. Free cash flow should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.

The following table present a reconciliation of cash flows provided by operating activities to free cash flow for the periods indicated:

[[GREPCENT_TABLE]]
[["","Three Months Ended"],["","December 30, 2023","","December 31, 2022"],["Cash flow from operating activities","$","68.5","","","$","25.9"],["Less: capital expenditure","(5.5)","","","(1.0)"],["Free Cash Flow","$","63.0","","$","24.9"],["GAAP Net Income","$","35.8","","$","32.7"],["Non-GAAP Adjusted Net Income","$","35.9","","$","32.7"],["Operating Cash Flow to GAAP Net Income","191","%","","79","%"],["Free Cash Flow to Non-GAAP Adjusted Net Income (\u201cconversion\u201d)","175","%","","76","%"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 30, 2023","","December 31, 2022"],["Cash flow from operating activities","$","215.0","","$","88.5"],["Less: capital expenditure","(19.0)","","(8.8)"],["Free Cash Flow","$","196.0","","$","79.7"],["GAAP Net Income","$","135.7","","$","107.7"],["Non-GAAP Adjusted Net Income","$","138.4","","$","109.2"],["Operating Cash Flow to GAAP Net Income","158","%","","82","%"],["Free Cash Flow to Non-GAAP Adjusted Net Income (\u201cconversion\u201d)","142","%","","73","%"]]
[[/GREPCENT_TABLE]]

39

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. Based on the information available as of the date of this Annual Report on Form 10-K, our operating cash flow, along with funds available under the line of credit, adequately support Janus’s liquidity and financing needs, including working capital requirements, capital expenditures, debt servicing, and potential acquisitions. The Company believes it will have sufficient working capital to fund operations for at least the next twelve months from the date of issuance of these financial statements.

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.

Cash Management

Janus manages its operating cash management activities through banking relationships for the domestic entities and international entities. Domestic subsidiaries monitor cash balances on a monthly basis and excess cash is transferred to Janus to pay down intercompany debt, interest on the intercompany debt, and intercompany sales of products and materials and other services. International subsidiaries monitor excess cash balances on a periodic basis and transfer excess cash flow to Janus in the form of a dividend. Janus compiles a monthly standalone business unit and consolidated 13-week cash flow forecast to monitor various cash activities and forecast cash balances to fund operational activities.

Holding Company Status

Janus International Group, Inc. owns no material assets, other than its ownership of Janus Core, and does not conduct any business operations of its own. As a result, Janus International Group, Inc. is largely dependent upon cash dividends and distributions and other transfers from its subsidiaries, such as Janus Core, to meet obligations. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or make other distributions to us.

Foreign Exchange

We have operations in various foreign countries, principally the United Kingdom, France, Australia, Poland, 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 millions)

[[GREPCENT_TABLE]]
[["","Principal Amount","","Issuance Date","","Maturity Date","","Interest Rate","","Net Carrying Value"],["","","","","","December 30, 2023","","December 31, 2022"],["First Lien notes payable","$","625,000","","","August 3, 2023","","August 3, 2030","","8.76% 1","","$","623.4","","","$","714.3"],["Financing leases","","","","","","","","","3.4","","","1.1"],["Total principal debt","","","","","","","","","$","626.8","","","$","715.4"],["Less: unamortized deferred finance fees","","","","","","","","","11.8","","","7.2"],["Less: current portion of long-term debt","","","","","","","","","7.3","","","8.3"],["Long-term debt, net of current portion","","","","","","","","","$","607.7","","","$","699.9"]]
[[/GREPCENT_TABLE]]

(1)The interest rate on the Amendment No. 6 First Lien term loan as of December 30, 2023, was 8.76%, which is a variable rate based on Adjusted Term SOFR, subject to a 1.00% floor, plus .10% credit spread adjustment (“CSA”) and an applicable margin percent of 3.25%

40

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 .10% CSA and an applicable margin percent. The debt is secured by substantially all business assets. For the year ended December 30, 2023, the Company made voluntary payments of $85.3 toward the First Lien Term Loan using cash on hand.

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 .10% CSA and an applicable margin percent (effective rate of 8.76% as of December 30, 2023). (see Note 9, Long-Term Debt, to our consolidated financial statements in this Form 10-K 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 .10% CSA and an applicable margin percent that is based on excess availability. There was no outstanding balance on the line of credit as of December 30, 2023, and December 31, 2022. As of December 30, 2023, the Adjusted Term SOFR interest rate for the facility was 6.8%. The line of credit is secured by accounts receivable and inventories. (see Note 8, Line of Credit, to our consolidated financial statements in this Form 10-K for a further discussion)

The 2023 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 2023 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 December 30, 2023, we were compliant with our covenants under the agreements governing our outstanding indebtedness.

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

Statement of cash flows

(dollar amounts in millions)

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 Consolidated Statements of Cash Flows in the consolidated financial statements.

Year ended December 30, 2023 compared to the year ended December 31, 2022:

[[GREPCENT_TABLE]]
[["","December 30, 2023","","December 31, 2022","","Variance"],["","","","$","","%"],["Net cash provided by operating activities","$","215.0","","","$","88.5","","","$","126.5","","","142.9","%"],["Net cash used in investing activities","(19.9)","","","(8.7)","","","(11.2)","","","128.7","%"],["Net cash used in financing activities","(102.4)","","","(14.7)","","","(87.7)","","","596.6","%"],["Effect of foreign currency rate changes on cash","0.6","","","0.1","","","0.5","","","500.0","%"],["Net increase in cash","$","93.3","","","$","65.2","","","$","28.1","","","43.1","%"]]
[[/GREPCENT_TABLE]]

Net cash provided by operating activities

Net cash provided by operating activities increased by $126.5 to $215.0, or 142.9%, for the year ended December 30, 2023, compared to $88.5 for the year ended December 31, 2022. This was primarily due to a favorable change in the net working capital, resulting in a $97.5 increase in net cash flows from operating activities, as in the year ended December 31, 2022, changes in net working capital resulted in a cash usage of $84.8, while there was a $12.7 cash inflow due to changes in net working capital for the year ended December 30, 2023. Additionally, the increase in net cash provided by operating activities for the year ended December 30, 2023, was attributable to a $29.0 increase in net income, adjusted for non-cash items.

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Net cash used in investing activities

Net cash used in investing activities increased by $11.2 for the year ended December 30, 2023 as compared to the year ended December 31, 2022. This increase was driven primarily by a $10.2 increase in capital expenditures to continue to support our strategic growth initiatives.

Net cash used in financing activities

Net cash used in financing activities increased by $87.7 for the year ended December 30, 2023 as compared to the year ended December 31, 2022. This decrease was primarily due to principal repayments of $428.5 and a payment of deferred financing costs of $10.8, partially offset by proceeds from borrowings of $337.6 during the year ended December 30, 2023 in connection with the 2023 debt refinancing. See Note 9, Long-term Debt, to our consolidated financial statements for additional discussion of the transaction.

Capital allocation strategy

We continually assess our capital allocation strategy, including decisions relating to mergers and acquisitions, share repurchases, capital expenditures, debt pay-downs, etc.

Contractual Obligations

(dollar amounts in millions)

Excluding debt obligations disclosed above, the table below summarizes our approximate contractual obligations as of December 30, 2023 and their expected impact on our liquidity and cash flows in future periods:

[[GREPCENT_TABLE]]
[["","Total","","Less than 1 year","","1-3 years","","3-5 years","","Thereafter"],["Supply Contracts (1)","$","5.7","","","$","5.7","","","$","\u2014","","","$","\u2014","","","$","\u2014"],["Operating lease obligations","73.5","","","8.8","","","17.0","","","14.9","","","32.8"],["Total","$","79.2","","","$","14.5","","","$","17.0","","","$","14.9","","","$","32.8"]]
[[/GREPCENT_TABLE]]

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

Operating lease obligations consist of operating lease liabilities for real and personal property leases with various lease expiration dates. The amount listed in the thereafter category is primarily comprised of eleven real property leases with expiration dates ranging from 2029 – 2036. See Note 5, Leases, to our consolidated financial statements for a further discussion.

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.

Off-Balance Sheet Arrangements

As of December 30, 2023, we did not have any off-balance sheet arrangements that are material or reasonably likely to be material to our financial condition or results of operations.

Related Party Transactions

See Note 14, Related Party Transactions, to our consolidated financial statements for a discussion of related party transactions.

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Critical Accounting Estimates

For the critical Accounting Estimates used in preparing Janus’s 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 are reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.

The consolidated financial statements have been prepared in accordance with GAAP. To prepare these financial statements, Janus makes estimates, assumptions, and judgments that affect what Janus reports as its assets and liabilities, what Janus discloses as contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the periods presented.

In accordance with Janus’s policies, Janus regularly evaluates its estimates, assumptions, and judgments, including, but not limited to, those concerning revenue recognition, lease accounting, income taxes and acquisitions of businesses. The Company bases its estimates, assumptions, and judgments on its historical experience and on factors that are reasonable under the circumstances. The results involve judgments about the carrying values of assets and liabilities not readily apparent from other sources. If Janus’s assumptions or conditions change, the actual results Janus reports may differ from these estimates. The following critical accounting estimates affect the more significant estimates, assumptions, and judgments Janus uses to prepare these consolidated financial statements.

Revenue Recognition

The Company enters into certain contracts with customers that may include multiple performance obligations. Determining whether the performance obligations in these contracts are considered to be distinct within the context of the contract with the customer may require significant judgment. Additionally, it is determined whether the performance obligation(s) will be recognized point in time or over time.

For performance obligations recognized over time, we employ the cost-to-cost input method as we consider it the most accurate measure of when goods and services are transferred to the customer. Under this method, we estimate the costs to complete individual contracts and recognize as revenue the portion of the total contract price deemed complete, based on the relationship of costs incurred to date to total anticipated costs.

It is important to note that, under the cost-to-cost method, the use of estimated costs to complete each contract is a crucial variable in determining recognized revenue. This estimate can change over the course of a contract's duration due to factors such as contract modifications and other elements affecting job completion. Our cost estimation process relies on the expertise, significant experience, and judgment of project management, finance professionals, and operational management. These teams assess various factors, including historical performance, costs of materials and labor, change orders, and the nature of the work to be performed.

To ensure accuracy, we regularly review and reassess our estimates for each uncompleted contract at least quarterly, incorporating the latest reliable information available. It's important to recognize that changes in these estimates could have both favorable and unfavorable impacts on revenues and their related profits.

Lease Accounting

Judgments made by management for our lease obligations include the determination of our incremental borrowing rate, and the length of the lease term, which includes the determination of renewal options that are reasonably assured. The lease term can affect the classification of a lease as finance or operating for accounting purposes, the amount of the lease liability and corresponding right-of-use lease asset recognized, the term over which related leasehold improvements for each restaurant are amortized and any rent holidays and/or changes in rental amounts for recognizing rent expense over the term of the lease. These judgments may produce materially different amounts of depreciation, amortization and rent expense than would be reported if different assumed lease terms were used.

We use our estimated incremental borrowing rate in determining the present value of lease payments for purposes of determining lease classification and recording lease liabilities and lease assets on our consolidated balance sheet. Our incremental borrowing rate is determined based on a synthetic credit rating, determined using a valuation model, adjusted to reflect a secured credit rating and a developed spread curve, if applicable, applied to a risk-free rate yield curve. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially. Changes in the determination of our incremental borrowing rate could also have an impact on the depreciation and interest expense recognized for finance leases. See Note 5, Leases, to our consolidated financial statements.

Business Combinations

Under the acquisition method of accounting, Janus recognizes tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. Janus records the excess of the fair value of the consideration transferred, plus fair value of noncontrolling interest, plus fair value of preexisting interest in the acquiree over the value of the net assets acquired as goodwill. The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. Janus uses a variety of information sources to determine the value of acquired assets and liabilities including: third-party appraisers for the values and lives of property, identifiable intangibles and inventories; and legal counsel or other advisors to assess the obligations associated with legal, environmental or other claims. Critical estimates in valuing customer relationships, noncompete agreements, trademarks and tradenames, and other intangible assets (e.g., backlog, software, and technology) acquired, include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated

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projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges which could be material.

We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We generally determine the fair value of the contingent consideration using the Monte Carlo simulation, and Probability-Weighted Payment method. Each reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to operating expenses within the Consolidated Statements of Operations and Comprehensive Income. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the amount of contingent consideration expense we record in any given period.

Recently Issued Accounting Standards

See Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements for a discussion of recently issued and adopted accounting pronouncements.

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