Hello, and welcome to Janus International Group First Quarter 2024 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the call over to Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Thank you. Ms. Macioch you may begin.

Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramey Jackson; and our Chief Financial Officer, Anselm Wong. We hope that you have seen our earnings release issued this morning. Please note that we have also posted a presentation in support of this call, which can be found in the Investors section of our website at janusintl.com. Before we begin, I would like to remind you that today's call may include forward-looking statements. Any statements made describing our beliefs, goals, plans, strategies, expectations, projections, forecasts, and assumptions are forward-looking statements. Please note that the company's actual results may differ from those anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission which identify the principal risks and uncertainties that could affect our business, prospects, and future results. We assume no obligation to update publicly any forward-looking statements and any forward-looking statement made by us during this call is based only on information currently available to us and speaks only as of the date when it is made. In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margins, adjusted net income, and adjusted EPS. Please see our release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure. On today's call, Ramey will provide an overview of our business. Anselm will continue with a discussion of our financial results and 2024 guidance before Ramey shares some closing thoughts, and we open up the call for your questions. At this point, I will turn the call over to Ramey.

Thank you, Sara. The first quarter was a busy one at Janus as we built upon the momentum established in 2023 to deliver a solid start to the year, one that was in line with our expectations. As always, everything we do at Janus is a team effort, and I'd like to thank our employees for their continued hard work, dedication, and professionalism as they show every day. We delivered financial results consistent with our expectations in the first quarter, including adjusted EBITDA that was up 8.3% on a 1% increase in revenue. Our record of strong cash generation continued as we delivered free cash flow in the quarter of $24 million, with a trailing 12-month free cash conversion of adjusted net income rate over 120%. This drove net leverage at the end of the first quarter to another record low since going public of 1.5x, down 1.1x year-over-year and below our stated long-term target range of 2x to 3x. Our sustained strong cash flow generation put us in a position to be very active in our capital allocation activities and we have been. During the first quarter, we repurchased over 1 million shares. And subsequent to the quarter end, we made both a voluntary paydown of $21.9 million and repriced our first lien term loan. We continue to explore M&A opportunities, focusing on key areas of self-storage, commercial, technology, and services. Our largest business is providing comprehensive solutions in self-storage, which consists of 2 sales channels, New Construction and Restore, Rebuild, Replace or R3. Combined, self-storage makes up roughly 2/3 of our revenue and an even higher percentage of our EBITDA, with a similar margin profile across these 2 sales channels. While we report specifics for each channel, along with our commercial and other segments, the discussion of total self-storage helps to smooth out the quarterly noise across the 2 segments given the lumpiness of project timing. For the first quarter of 2024, on a combined basis, total self-storage was up 11%, driven by new construction. Industry fundamentals continue to favor investment in self-storage capacity, which over the last several quarters has focused on greenfield sites. Our Commercial and Other sales channel was down 19.2% in the first quarter compared to the year-ago period. The results reflected a continued decline in demand for certain product lines. We continue to innovate and broaden our reach to various end markets in order to access untapped potential on the commercial side. Despite the year-over-year top line decline, we are very excited about our opportunities there as well as the potential we see to improve margins. Noke, our innovative suite of remote access solutions, had another strong quarter, during which we increased the number of installed units to 300,000 from 276,000 at year-end 2023, representing a sequential growth of 8.7%. In early April, we announced the newest addition to our Noke Smart Entry product lineup, the Noke Ion, an inside-the-door Magnetic, Hardwired Smart Locking system. The sleek, yet powerful hardwired smart lock has a number of benefits. It uses low voltage power that's inside the door and is compatible with a cloud-native software portal and pairs with our customer-friendly mobile app for ease of access. Ion represents the next step in the expansion of capabilities of Noke to drive accelerated adoption across our customers' portfolios. In summary, we are excited about our start of 2024 as we look to build on our momentum. We look forward to working to expand our strong market position to capture additional share and create long-term value for all of our stakeholders in 2024 and beyond. With that, I'll turn the call over to Anselm for further overview of our results, along with updates to our 2024 guidance. Anselm?

Thanks, Ramey, and good morning, everyone. As Ramey stated, we are off to a good start to the year as our first quarter results included top line growth, margin expansion, and strong cash generation, allowing us to make substantial progress on our balanced capital allocation program. Now let me dive deeper into the numbers. In the first quarter, consolidated revenue of $254.5 million was 1% higher as compared to the prior year quarter as strength in total self-storage more than offset a decline in our commercial and other sales channel. Together, our self-storage business was up 11% for the quarter. Within self-storage, new construction continued its momentum with growth in the quarter of 40.2% as customers continued to add new greenfield capacity. R3 was up 17.3% for the quarter as a result of a decline in retail-to-storage conversion activity compared to the prior year. Total self-storage growth was entirely driven by North America, partly offset by a decline in international. Our Commercial and Other segment saw a 19.2% decline in the first quarter, driven by continued shift in demand for certain product lines. First quarter adjusted EBITDA of $66.3 million was up 8.3% compared to the year-ago quarter. This solid performance produced an adjusted EBITDA margin of 26.1%, up 180 basis points from the prior year period. This improvement in profitability is a result of a positive impact of geographic segment and sales channel mix and declines in material costs, partially offset by increased operating costs as the business scales for continued growth. With regard to the margin benefit from geographic segment mix, over 90% of our revenues are sourced from North America, which has a higher margin profile than our international business. During the first quarter, international saw revenues down 31.9%. The primary driver of this steep decline was our largest international market entering a recession and the corresponding impact on project launch decisions. We are encouraged that projects are not being canceled but rather put on hold as the underlying fundamentals that make self-storage attractive in that market persist. Due to the international business's lower margin profile, this contributed to the favorable mix and the company's overall adjusted EBITDA margin improvement. For the first quarter, we produced adjusted net income of $31.1 million, a 17.8% year-over-year improvement and adjusted diluted earnings per share of $0.21. Adjusted net income was impacted in the quarter by drivers already covered, including the higher revenue and favorable geographic segment and sales channel mix. We generated cash from operating activities of $28.6 million, continuing to demonstrate the robust cash generation profile of the business. Capital expenditures for the quarter were $4.6 million, down from $6.1 million in the first quarter of 2023. Our free cash flow profile reflects the strength of our financial results and the resilience of our business. For the first quarter, we generated free cash flow of $24 million. On a trailing 12-month basis, this represented a free cash flow conversion of adjusted net income of 123%. We finished the quarter with $303 million of total liquidity, including $178.4 million of cash on the balance sheet. Our total outstanding long-term debt at quarter end was $606.4 million, and our net leverage was 1.5x. This is an improvement of 1.1x versus the year-ago period and 0.1x sequentially. On the strength of our balance sheet business model, improved governance, and resolution of all material weaknesses, in March, we received a credit rating upgrade from S&P to B+ from B with a positive outlook; and in April, Moody's upgraded our credit rating to Ba3 from B1 and revised their outlook to positive. The combination of strong liquidity, continued cash generation, and balance sheet strength puts us in a position to pursue M&A targets, execute against our $100 million repurchase program and address our long-term debt. During the first quarter, we repurchased 1.02 million shares for $15.3 million, including commissions and excise taxes and subsequent to the quarter, we made both a voluntary prepayment of $21.9 million and repriced our first lien term loan, which reduced our interest rate by 50 basis points from SOFR+300+CSA to SOFR+250. Now moving to our 2024 guidance. Based on first quarter results and the visibility we have into our end markets, we are reiterating our guidance for revenues and adjusted EBITDA. Specifically, we continue to expect revenue to be in the range of $1.092 billion to $1.125 billion, representing organic growth of 4% at the midpoint versus 2023. We expect adjusted EBITDA to be in the range of $286 million to $310 million. At the midpoint, this represents a 4.3% increase versus prior year and reflects an adjusted EBITDA margin at the midpoint of 26.9%. We expect total self-storage to continue to grow throughout the year. In Commercial and Other, we expect a return to growth in the back half of the year. In our International segment, we expect the second half of the year to be stronger than the front half as market conditions normalize and we ramp up our operations at our new Poland facility. We mentioned on our last call that we expect to return to normal seasonality in 2024 where the second and third quarters comprise a larger portion of revenues compared to the first and fourth quarters and that remains the case.

Thank you again, Anselm. The hard work we have done and the momentum we have built are paying off as we had a solid start to the year while also executing capital allocation on multiple fronts. Our long-term objectives remain intact based on the reiterated guidance Anselm just laid out. We expect 2024 to feature another year of strong performance. We are the industry leader in self-storage solutions with differentiated offerings, ever-improving capabilities to help our customers address the undersupply of self-storage capacity prevalent today. Those best-in-class offerings have allowed us to deliver strong organic and acquired top-line growth, improved EBITDA margins, and outstanding cash generation. We continue to have the expertise and the flexibility on our balance sheet to pursue and execute accretive shareholder value-enhancing opportunities. I look forward to continuing our positive momentum in 2024 and beyond as we intend to drive long-term value creation for all of our stakeholders. Thank you again for joining us. Operator, we can now open up the lines for Q&A, please.

Our first question is from Jeff Hammond with KeyBanc Capital Markets.

I just want to hit on kind of how you're seeing the backlog and pipeline. Clearly, new construction was really strong. Wondering if that drew down backlog or if there was any pull forward there?

Yes, great question. Nothing's changed there. When you talk about new construction, self-storage backlog pipeline remains strong. Backlog remains strong, and we're very optimistic.

Okay. Great. And then commercial, I'm just wondering, is this kind of lingering that the shed and carport piece of the business comping tough comps, or is there something more meaningful going on? And just maybe how to think about within the 4% midpoint revenue growth guide, what you're thinking for commercial on a full year basis?

Yes, I'll let Anselm talk about the guide. But look, I think it's a continuation of the segment around carports and sheds. As you know, we do not have the visibility into the commercial kind of channel because of our go-to-market strategy. But we do feel like there's a softness in general in that sector in addition to those segment lines. But if Anselm, do you want to talk about it?

Yes, I think the visibility is still not there, Jeff. And I think the way I look at it from the guide point of view is that you've seen the strength of the self-storage instability there. If we still see some softness there, I think there will be enough storage strength to kind of offset that piece as you see in Q1. But right now, it's still uncertain because our visibility is low there. But I would see, if I break down the details below like Ramey said, the carports and sheds still seem a bit softer, but the rolling steel and the other parts seem to be holding there. So it's just a matter of getting through that piece.

Yes. And just the last thing for me. We're still bullish in that segment. We're going to continue to execute our plan. We've got a great plan to continue to grow and be in the right spot when there is an uptick in that macro. We talked about some of the initiatives about geographic expansion and then also product enhancement. So I feel like we're in a good spot, and we'll continue to build that line up.

Could you discuss the dynamics of R3? I understand that conversions have slowed down somewhat, but there is definitely a consolidation trend happening. What are your observations regarding that?

Yes. I think if you look at R3, Jeff, I think we're still seeing that there are not many opportunities for the conversions, but no different than the prior quarters that we've been talking. And that's why you see the strength in the new constructions, as we still have to meet the demand there. I think in terms of the consolidations, we're starting to see slowly some of the orders coming from that. Again, we had mentioned that there is a little slowness in terms of that starting because of some of the integration issues that some of our customers are just working through that we're helping them with. So it's more just timing that we're seeing still there. But I think we're starting to see some of those orders trickle in now.

Our next question is from Daniel Moore with CJS Securities.

Obviously, as you tend to think about new construction and R3 work interchangeably within self-storage. That said, 40% growth jumps off the table in terms of new construction. Just talk about where that growth is coming from? Are there specific geographies that are expanding faster? And do we expect new construction to continue to outpace R3 for the remainder of the year?

Yes. Great question, and I'm glad you brought that up. I mean, as you know, we're agnostic in terms of how our customers add supply. But it's a continuation of some of those secondary and tertiary markets that remain robust. Obviously, the new construction topic over 1.5 years has been, in terms of third-party data, it's totally different than what we've been printing. So I understand the concern, but from our visibility and listening to our customers, there's a lot of markets that are still under supplied. And that's where you're seeing our growth, notwithstanding elevated construction costs and, obviously, the cost of capital; self-storage is a long-term business. So what's happening today is the end market is still strong in certain areas, and they're investing in the long-term future of the asset. So again, just a continuation of the markets that are under supplied that kind of go under the radar.

And on the margin front, obviously, remain impressive in light of kind of a mixed macro environment, and I appreciate all the color on the geographic and product mix and how that plays in. Just how should we think about the cadence of margins as we look to Q2 versus Q1? I know Q2, Q3 seasonally a little bit stronger and as well as kind of the cadence for the remainder of the year within the confines of that 27-ish percent guide at the midpoint.

No, Dan, that's how to think about it like you said, we usually have the step-up in Q2 because our volume is larger in Q2, Q3, so we get the benefit there. I think one of the things we always talk about is that we're always looking at opportunities for productivity as well. So our factories are always looking for opportunities. Our Poland factory in Europe is just finally getting up to speed with the last piece of equipment that's installed there. So I think we're still bullish in terms of looking at margin improvement for the business.

Got it. And then just in terms of capital allocation, obviously, well below your leverage targets and buying back stock with a lot of capacity left. Just can you talk about the pipeline and maybe kind of level of dialogues around M&A, how that's the bid-ask spreads and whether you're seeing more opportunity that could come to fruition in the next 12, 18 months?

Yes, still a lot of opportunities out there. I think we're excited about all the different areas that we're looking for from an M&A point of view. I don't think much has changed in terms of what the opportunities are out there. There are opportunities, and I think there's just a balance of ones that are priced reasonably for an acquisition versus some that are still asking for a higher multiple. But I think there's still a lot of opportunities that we're seeing in all the different areas that we've been looking for there. And then I think just in general, from a capital allocation, you're right, we're doing great in terms of generating the cash, and it just gives us the flexibility to be opportunistic when we would need to be.

Our next question is from John Lovallo with UBS.

This is actually Matt Johnson on for John. I know you guys kind of touched on this already. Just put a finer point on it. I think at the midpoint of your full-year outlook, you have sales of 4%. How are you guys thinking about new construction versus R3 versus commercial on a full-year basis within that?

Yes. I think that's why we kind of started showing the storage together. I think, again, we're agnostic between how it goes in either one. At least that from a high level right now, what we see, the immediate thing is new construction is going to stay fairly strong from what we can tell from the backlog, and I think from an R3 point of view, it's really still that leveling off of the conversion opportunities out there. And we're still hopeful that that will come back in terms of opportunity there. But again, overall, we just feel that there's still that strength and stability in that storage piece.

Yes. And just on the conversion piece, and I think we're on record saying this, it's more about normalization than it is anything else because of the pandemic created permitting issues and occupancy rates in the high 90s, mid- to high 90s; I mean, capacity needed to come online as quickly as possible, and that was just the quickest way operators could bring capacity online. But in terms of what we're seeing, it's really just coming back to normalization. And so we feel good about it, just not at those kind of pandemic levels.

Got it. And then just if I could touch on input cost a little bit. I think steel prices are down pretty meaningfully year-to-date. So just how are you guys thinking about the dynamics between price/cost through the rest of this year?

Yes. Steel, actually, we've been following. It's down from the beginning, but it's more stabilized in terms of kind of looking at how it's been year-over-year. So the good thing about it is that it's always going to be volatile, but it's actually a bit more stable. So I think that just creates a better environment where there's not a lot of price that we have to do because any time you have to do price, it's not that we won't do it; we just have the ability to do it, but it's always a tougher one to bring through there. So I think if it holds in kind of the area where it is right now, I think it will be a bit more stable market for us from that point of view.

Our next question is from Brad Hewitt with Wolfe Research.

So curious to hear what you guys are seeing from a backlog perspective, maybe how has that trended recently? And how far does your visibility extend this year, particularly on new construction? I think some of the public REITs have kind of talked down on the new development side of things. But just curious what you're seeing from a backlog and pipeline perspective.

Sure. The backlog remains strong, as Ramey mentioned earlier. We are observing that much of the growth is happening in the tertiary market, particularly among smaller operators who are actively building in those areas. There are still opportunities there, reflecting a long-term business cycle rather than a short-term outlook. Recent new orders in the pipeline highlight this trend, as we’ve reviewed some of these orders and found that operators are focused on the long game, recognizing it as a good long-term return despite current rates being a bit high. They don't just consider the peak conditions, which is why the backlog and pipeline continue to hold steady.

Yes. To remind you, the REITs and the institutional customer base we consider as institutional make up about 30% of the market. Our visibility, given our market share, truly reflects the entire market in the Americas. We believe this may be where the disconnect lies as well.

Okay. Great. That's helpful. And then maybe in terms of Noke, just curious what you guys are expecting this year from a revenue perspective. And how do you think about the timing of a potential acceleration there on the top line?

Yes. Look, I couldn't be more proud of that team. We got 300,000 connected devices, and we continue to innovate. We're listening to our customers. The latest release around Ion, super proud, very optimistic. It gives us more flexibility on pricing. It gives us more flexibility on the offering in terms of what our customers actually need. So yes, we're very optimistic. We've got great feedback. We continue to refine. We continue to get better on stability. We continue just honestly to innovate there. So super bullish in terms of an inflection point. I can't really predict that, but we're doing all the right things in terms of customer engagement and just refining the offering to set it up to really accelerate adoption. Anselm, you got anything else?

We don't disclose the Noke piece, but I believe Ramey indicated that we are optimistic about the opportunity with the new product. We are currently in the middle of beta testing that product and hope to launch it later this year, as it provides more options for our customers and offers greater stability due to its hardwired nature rather than being battery-operated.

We have reached the end of our Q&A session. I would like to turn the conference back over to Ramey for closing remarks.

Yes. Thank you, everyone, for joining us today. We'd like to remind you of our Annual Meeting of Shareholders coming up on June 24. We encourage you to vote your shares and look forward to your feedback. We appreciate your support of Janus International and look forward to updating you on our progress again in the future. Have a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.