Janus International Group, Inc. (JBI) September 2026 Conference Transcript

All right. Good morning, everyone. My name is Maggie Miller. I'm one of Phil Ng's associates here at Jefferies, and we're thrilled to have JBI here today. We have Anselm Wong, the CFO, and I'm going to fire away with some questions, but we will open it up at the end if there are any questions from the audience. So just raise your hand. And I don't know if you want to give a quick intro.

Just the Janus International. We're the largest provider of self-storage materials for the self-storage industry. We also have a commercial business, and we also have technology in our access control business, which is the largest access control provider in the self-storage industry. And I'm very proud in terms of how that business has progressed into being the market leader in up to half a million connected devices.

All right. So I guess to start off, you know, it's been kind of a choppy backdrop this year, but can you provide some color on what your customers have been telling you and how your orders and backlogs have progressed, you know, July and August? And maybe if you could talk about if you've seen any uptick and cancellations or project delays. Sure.

Not much has really changed. I can't comment to July and August, but if you look at the first half of this year and into current what we're seeing, it's pretty much the similar market. Very choppy. I think everyone knows interest rates haven't really moved in the right way. People are not moving in terms of mobility around housing. So what we're seeing where the customer is, the people that, you know, have money, which is the large institutions, the REITs, certain large mom-and-pop guys, they're still business as usual, running their playbook, waiting for the market return, but also still building or as well as refurbishing sites. And then the smaller customers are really just been sitting on the sidelines for a while now, and they haven't really come back in. I think, you know, everyone's waiting for that sign. if you look at some of our bigger customers that are public a lot of feedback they've given is they're seeing a little stability in the rates rental rates and what they're seeing so everyone's just hoping hey when is the next big move in terms of seeing people moving again which is one of the biggest drivers for self-storage and then in terms of project cancellations or delays no real shift yeah no real shift i think the what we're seeing is just more you know just delays in terms of how long it takes to do a project i think you know one of our newer businesses kiwi that we have that does the full building what we're seeing is just you know consistently just people taking longer to develop properties i think one of the things we're seeing is just lease up taking a bit longer than normal in terms of how when a brand new facility comes being brought on it takes a bit longer to get leased up so really not change and really not cancellations i think generally in self-storage especially for our business where we are in this cycle is once they determine it's a good site it's generally a good site so people usually you know will hold on to that site and eventually develop it and that's one of the good things about us having a visibility of the backlog seeing some of these sites where they are it's that they won't get canceled eventually someone will develop it because they picked the site they've done a lot of background work to determine if it's going to be a good site or not okay makes sense and then under the current liquidity backdrop can you talk more about your visibility between the non-institutional client side versus institutional clients sure um i think the institutional ones have not had a big issue in terms of liquidity and getting funds to develop properties i think the bigger issue more in general is hey is is you You know, with steel prices going up recently, if you've tracked steel, is the cost to build the facility going to hunt in terms of their model? I think the larger guys who have access to capital at better rates than the smaller guys, they're still in the money in terms of a lot of their property developments that they work I think for the smaller guys, they're not an issue, don't have access to capital at, you know, favorable rates. They find it harder to make their projects hunt in terms of returns. And I think one of the things we're trying to do to improve that, you know, despite the market, look, the market's the market, is offer solutions to help them. So, NOKE, which is one of our technology solutions, is helping a lot. If you go to our website, you'll see one of our large customers has a use case in terms of how NOKE has helped them reduce their theft, reduce their labor costs, to make a lot more projects hunt because you're reducing your ongoing costs. So, one of the things we want to do is just continue, look, the market is going to be where it is. How can we actually help our customers actually improve their returns by reducing the running costs?

Okay, great. And then R3 has been pretty solid the last few quarters. Can you talk about what is driving that growth and how you're thinking about the outlook for the back half of this year?

Sure. R3 has been a great improvement year over year. One of the big things we're seeing in a market that we're in is the large guys getting bigger. And what you see in the public, you'll see the big REITs acquire some of the smaller guys who are very large guys. But there's always acquisitions going on. I think in this market, if you're not going to be able to build as much due to the market we're in, one of the things you use is acquire a lot of your competitors. So you're seeing a lot of the competition being acquired. It could be large ones where you saw, like, you know, public storage acquire NSA, as well as, you know, their Canada location. But what you also see is smaller guys are buying up onesie, twosie guys as well. And every time there's an acquisition, that's an opportunity for R3. One of the things that you always do when you acquire is rebranding. You want to rebrand it to your brand so that you keep that theme in terms of what, you know, your company is, as well as just reducing your SEO costs. You don't want to do two, three different brands. You want to do one brand. And I think the other thing is they take a look at the occupancy rates. One of the quick wins for acquisitions when they do it, generally, if you look at the public REITs, you'll see their occupancy rates are low 90s in terms of how well they manage their facilities. If you were to do that same metric to a smaller operator, you'd see it be meaningfully lower. So one of the big levers they do in terms of their model when they acquire it is that they look at, hey, what can I do to improve the occupancy rates of the target that we just acquired? And one of the few levers is the R3 bucket that we help them with is, hey, do you have the right number of units? Do you have the unit mix, which is one of the critical things that determines occupancy? So if they don't have, if there's big demand for 10 by 10s versus a 5 by 5, then we'll come in and help them re, you know, configure the facility to offer larger units. And that's kind of what we're seeing a lot is that with these acquisitions, they're coming in to say, hey, look, I'm going to buy these targets now while the market's not great. I'm going to go in and actually improve the occupancy of it by either reconfiguring, rebranding, you know, adding more units of Silly if they're at capacity. So that's what's helped the R3 bucket in terms of growth because we're seeing a lot of acquisitions underneath the covers in our industry. And on that acquisition work, are you seeing that level of activity sustained? is is there still a good runway for um for that type of acquisition activity yeah definitely i think you know if the market stays where it is you're going to continue to see more acquisitions i think that's one of the levers um for the well-capitalized um storage operators that they're doing they're pulling right now makes total sense for them because if you look at you know typical them at low 90s they're acquiring targets that are like 80 or 70 or 60 percent even accuracy rates you move that metric to like even like 10 or 20 percent that's a huge improvement in terms of ROI in those sites and they have their each of them has their different playbook that they run but I think you're going to continue to see more and more and I think most of the large customers that are public have said that is that they are still going to be really active in terms of acquisition to continue to take targets off at you know well managed well returned prices that they can see in terms of adding their playbook to improve the numbers that they're acquiring.

And Janice has recently made a pretty sizable acquisition in Kiwi, and that's a new adjacency for you. Could you walk us through the strategic rationale and value creation opportunity with Kiwi?

Yeah, one of the big things our CEO, Ramey, has always stressed is how do I add more content? And one of the things that we had traditionally done is we're known for our door hallway, obviously access control. We had a small business called VECO that does the building, so not just the door hallway, but does the building. But they were very specific in terms of geography. They only did the southeast, and they only did generally single-story to maybe two-story. Kiwi brings the portfolio to us to do multi-story. So what they, their strategic, you know, competitive advantage is that they're the experts in, call it complex, multi-story buildings. So there's not many builders that can build for California. So if you are in the California, you know, one of the big issues, seismic, you know, earthquakes, they have actually developed their building model so that it can sustain in those regions. And that's why anyone generally builds theirs, uses them for those type of buildings. They've also built a lot recently in Florida. So one of the key things it did for us is that we could add more content to structures that we couldn't build. We didn't have the expertise to build those complex structures. We also did not have geography in terms of the West Coast or Florida. So this, with our Betco business, just allowed us to actually expand geography, but also expand the type of building we could sell. And if you think of larger REIT or institutional customers, it's always easier to go to one supplier to say, do everything for me. And that was one of the things that initiated it for us is that a lot of our customers say, hey, look, this market is consolidating. I want to deal with one supplier that I can trust, especially if it's going to be around. One of the things you always worry about this market is that if you go to a smaller supplier, are they going to be around with the liquidity issues out there? And obviously Janice has done well in terms of cash flow running our business and managing our P&L and our balance sheet. So one of the things that strategically made sense is, hey, let's acquire the expertise so that we can offer more to our existing customers so that we can actually build for them. And just so you guys know, because we only had the smaller single-story, two-story, we really didn't build a lot for the large institution. And if you look at what's being built today, more of them are multi-story because of real estate and complex buildings. And this gives us that capability.

Okay, great. It sounds really exciting, but results have been a little softer out of the gates. Could you talk about, you know, what's driving that and the visibility you have on that side of the business with backlogs or big activity?

Yeah, the good thing is that when we looked at, when we acquired that company, we did a thorough look at their backlog. So everything's, you know, been consistent. We haven't seen any cancellations. what we have seen is, you know, our end customers that we're building for taking a longer time to rent up. So once you launch facilities, there's usually, you know, a three to six month rental period where you rent up and then you, you know, continue with your plan to expand and build other buildings. We're seeing a bit slower rent up timing. And that's what's delayed a lot of the projects that are in the pipeline that we need to build. Our customer, you know, direct feedback, we ask them say hey what's happening there so look those sites we have we already picked but we need to get these other rented up before we actually give you the you know go sign to continue with the other projects we do that we have in the pipeline so that's caused a little softness in what we originally forecasted for i think it's still you know good that sign that they're still not canceling the projects and they're still moving forward them it's just delaying a bit to get the rental up i think the other piece that we're we're seeing just it is much larger than a regular business So if you think a door hallway job, even a larger size facility, you rarely get to about a million dollars, maybe a million, too. These are buildings, so you've got a full building plus a door hallway. So the size of projects are anywhere $3 to $6 million, so much larger projects. So if we just get one project push out, that's a meaningful dollar amount that gets moved out. So you get a couple. You've got the size, you know, much larger size. And unfortunately, you know, for us, we've never had those sides of businesses, and that's really caused a bit of tougher kind of predicting if there's some delays in some of them that's helped that unfortunately moves out some of the projects.

Okay, makes sense. And then your international business has been performing pretty well, seeing decent growth there. What's driving the strength, and what initiatives do you have in place there to keep driving growth?

Sure. Yeah, the market there is a little better than the U.S., not much better, but I would tell you the biggest things that we've done there to take share is really listen to our customers is one of the things that, you know, it sounds so basic, but one of the things our new leader there that he's been in place now probably about almost two years is he really just took a look at what we were building and providing to our customers and said, look, is there something that I can do differently to encourage you guys to buy from us? And one of the things was change the door design. So one of the big things is our business in international is mainly in the UK originally and in Australia, which, you know, has a specific door, specific paint system, which is a very high quality, very expensive, very environmentally friendly door. Whereas you go in other parts of Europe that don't have that requirement, makes it less, you know, favorable for a purchase price. And we weren't selling to those other regions. we adjusted the door to say, hey, look, we can build the type of door you want if you wanted different paint system, different steel to support what you need in your market that's affordable. So that's what he did. He really adjusted the portfolio product line to suit those other markets. And the other thing that he did really well is, if you look at Noki, part of the Noki story has been international. He's done a great job of having Noki go on with every door sale. And I think Europe's been a bit more you know open to technology versus the u.s so he's been able to attach no key to almost every sale that he does and that's i think what's helped him really outgrow some of our competitors it's not that there's not competitors there but i think again if you sit back as a customer you want a customer company that's going to be around especially if you're running the access control system for them you can't have a small guy that just goes out of business and then you're you know you're stuck this system doesn't work anymore so i think he's been able to really upsell the technology the quality the fact that we're a well-run company that will be around to support you you know in in the immediate future in the long term as well great and i guess while

we're on the subject of nokie um you recently hit the 500k threshold on nokie um remind us kind of the financial impact that Noki has on your business and when you see it being a more meaningful needle mover for EBITDA growth in the future?

Thank you. No, it's exciting, you know, milestone. One of the things when I first joined this company, I joined it because the access, I love technology. And one of the things that we were not doing well was we were not at scale, number one but also we had a lot of i would call it quality issues with the early instances of nokia it's taken a long time to you know fix some of those quality issues get better product but also fix what's in the field at the same time growing the the connected devices as you know with any type of subscription software business you have to hit to scale before you start making money we were having meaningful drag on ebitda from our nokia business even though it's a small business, but I've been through this twice in my career, and I think this finally got us to a point where the overall Nokia business, I mean, hardware plus software, gets to about a break-even level, and now what we're hoping for is, as we continue adding scale to the Nokia business, it starts generating positive EBITDA for the business, so one of the things that, it's not an exact science, I don't want everyone to say, hey, every dollar after $500,000 is positive, in general, it'll be that way, I think there will always be some fluctuations but i think we're happy about it because we finally reached that scale and what it allows us for is spread the cost of the overhead for the software engineers for the communication costs aws costs etc across you know all the portfolios to allow us to be more profitable and the exciting thing about it is what you know we have a there's a trade show this week um that's on some of our newer products are coming out that one of the things we want to do is with gnocchi was that beyond just the basic access control was add more accessories and and sensors to the solution one of the big things that we're seeing in demand once you get to this scale level you get more customers asking for other accessories meaning hey you know you guys provide access for which is great and motion sensor but i want to know the temperature of the stuff that i'm sitting in my unit i want to know the humidity i want to visually see it and part of the products we're going to launch will have the capabilities to add more accessories and sensors to the solution to make it almost like a mini security system within each self-storage unit. That's where the demand is going. And that's where, again, we're not sitting back. Even in this market, as more commercial customers use self-storage, you're getting more commercial demand for a more robust security system. And that's what we're excited about, is that now, after getting through all the issues we had in the past and getting to break even getting to scale now we can start offering more accessories more use cases to help our customers you know improve what they're offering because when we offer these things the self-storage operate can sell it at a markup to their customers as well there's that's where the demand is coming and you think about it if you are a commercial customer just think of the use cases that if you're holding sensitive inventory you want to have visibility on it either from a temperature point of view or humidity point of view even from a visual point of view and that's kind of what we're launching a lot of more accessories to go with it to help the customers and then one of the things that you know we're working on is data analytics we've always talked about hey once you get to a scale point you have a lot of data metrics that you're capturing one of the most key metrics that our customers want is when if you could give early indication to when someone's gonna move out that would be huge in terms of data point, and if you think about metrics and with AI now, you can take all the data sets that we have, look at your portfolio and see who's moving out, and then go backwards and look at the data set to see, hey, why did this guy move out? What were the key metrics that we're measuring that showed that, hey, why did they move out So there's a lot of work with the data set now that we've got really large-scale data that we can use to help our customers, and that's one of the demands that we're hearing that customers would want is that that would be a good indication because then you can send in your sales team, hey, we can offer you a discount to stay longer or whatever other levers that they have there. So it's exciting to finally get the scale where you can finally use the data set that we've been generating.

Sounds really interesting. And where are you seeing adoption pick up most for Nokia? And are there any areas, different customer groups, where you're seeing more pushback? and how are you, you know, getting past that?

Yeah, with anything, I think there's always cost or price is always going to be an issue. What we're seeing is that the well, you know, funded, call it middle to large mom and pop guys, they're taking advantage of it. And I think we're excited about it. Like, again, we have a number of customers that are sizable in that mom and pop area that have been taking advantage of it, that see the savings. They're the proof points for us that this system works is that they're showing basically one of our customers showing zero theft after Noki's installed and then also saving on the labor. And if you think about it, you know, we don't talk about it a lot, but theft does happen there. And if you can actually reduce that to practically nothing, you're saving not just on the theft, but you're saving on the damage that was caused so you don't have to replace a door or what other gate was damaged there. So it's been a huge impact there. And I think that set of customers is really taking advantage. when they do make decision they do an all decision it's like it's not like let me do one site here it's all my sites that I have in all my future sites that we're doing so that's what we're so excited about seeing the expansion of no key in terms of some of these customer set I think eventually I think everyone knows look it's gonna be you know I think it's just a matter of time when the standard you know like trunk lock will be the standard for self storage I just don't see in this situation if you ask anyone in the industry they'll say the same thing is that I don't see a long term where it's still going to be locking key, which is the majority of it out there right now. I think your demographics are changing where no one carries a physical key anymore. If you think about it, you don't carry a key for your car. You don't carry a key for this. Why should you carry a key for self-storage? So now you can use your phone or your watch to open your lock. That's where the future is going there. And I think one of the things exciting for us about it is that as this expands, not just the use cases I talked about, there's other industries that the no-key technology can be applied to that we're working on as well i think the main thing is we want to focus on self storage first but it's exciting that you can apply that technology to other industries as well cool um you've seen some kind of divergent trends between your rolling steel door business and commercial sheet doors maybe if you could talk about what's driving each of those and what your outlook is on the commercial side? Sure. Yeah, commercial if you look at our commercial business the majority of our commercial is our commercial sheet door and a commercial sheet door is very similar to a self-storage door the only difference is it may have wind clips for wind rating or it might have felt to make the roll up a bit smoother so it's a bit more robust store and unfortunately that market really sold, we sold through distribution so we don't have insight in terms of the end customer but But our feedback in terms of understanding what happened in the past couple of quarters in terms of that demand, we're seeing that metal building structure. So think about pre-engineered metal buildings that people buy that use for a mini warehouse or a small factory. That part of the market is really shrunken in terms of demand in the current market right now. And that commercial sheet door went into a lot of those prefabricated metal buildings. So unfortunately, we saw a lot of downturn on that piece. We're still seeing the same thing, you know, recently there. So I think that piece is what's impacted commercial sheet doors. Now, on the other side, rolling steel doors, which is way more robust, heavier gauge steel. Some have motor operators. That part of our business, which we're a small share of, is actually growing still. I think what's happened is we've actually taken a more offensive approach where we're getting more specifying architects, But we're also actually putting technology. So we've got a performance series store that runs at the peak, meaning it runs faster than most similar performance series stores. So a lot of customers are coming to us and say, hey, we're offering a more competitive door that performs a lot better than a lot of our competitors, even though we're a small supplier in rolling steel. That's really helped drive a lot of the growth in the rolling steel piece, and it'll still be a growth driver. I think, you know, one of the things that we would like long-term is to, just like we add technology from a no-can self-storage, it would be great to continue to look at technology adding to the rolling steel side of the commercial business.

All right. And you touched on this earlier, but we've seen a lot of inflation in steel. Could you remind us how you approach your steel purchases and how far hedged you are?

Yeah, sure. So the way we buy our steel is we have a strong relationship with the steel mills as well as the service centers in between. So the whole process usually is when we put an order in, it's usually about six to seven months by the time we put an order in when we get the steel. So that gives us the leeway to see how steel cost is going before it hits our P&L. So we can manage commercial actions if we need to, if the steel has been going up as obviously it has been. So it gives a little insight there. I think the other thing that it does for us is also help, you know, some of our customers in terms of telling them, giving the heads up, hey, we're starting to see this coming here. This is eventually going to hit. Please be aware, obviously, we're going to be adjusting, you know, prices if we need to based on where the steel is going. But I think that visibility and that buying program allows us to give us that extra, you know, head start to see what's happening there. I think the other thing that I think people, you know, where I think if you remember the last time still went crazy like this was during just around the pandemic. And obviously at that time supply demand was crazy back then. So I think there was easier to pass through price at that point in time. I think for us now in a tougher market right now, we're trying to do the best where we're trying to manage. You know, we have to pass through what we need to pass through to make sure we maintain our margins. but I think the other thing we're trying to do is look at how do we adjust the product line to better support the customers and what I mean by that is that we have a large product line so we're trying to say hey look just like we did in Europe where we just a product line we've got to take a look at you know North America what do we do the same thing to help our customers saying hey look maybe we're over spec here let's look at different doors that we can sell you and different other wall panels etc that meet the same needs for what you need um being aware of where steel price is going okay and on that point you're forecasting an uptick in margins in the back half of this year in a weaker demand backdrop what are some of the self-help levers you have to drive margins um in addition to sure yeah one of the things that we we always want to do is that look i can't control the market but we can control um a lot of variables internally for our business so one of the things we pride ourselves is really constantly looking at our footprint where the demand is where the volume is and what we can do to actually improve it so some of the things we've done you know publicly is we've really right-sized and consolidate some of our operational footprint to match the demand so that means on that necessary closer factor but looking at adjusting hey if we were had three shifts maybe it's one shift now if there's you know two factories in similar locations let's go down to one which is what we did in Houston so we've really taken a look at operationally what we can do to say hey look if the demands gonna be here for a while let's really adjust our footprint so that we get the optimize the cost we have we're also at the same time looking at the opportunities to expand else elsewhere as well where there is demand but one of the things we pride ourselves is really constantly looking at our footprint you know optimizing it doesn't just apply for the factory applies to the back office as well so I think obviously if you have less demand you start looking at every role you look at hey how many SPS you need how many procurement people need etc as you go through the entire organization and it's always an ongoing thing for us in terms of what we're looking at so if you look at the second half what you're seeing is a lot of the actions that we were planning in the last year rolling into this year finally getting implemented and then seeing the results of that you know in addition to pricing but it's really maintaining optimizations of our footprint to match the demand that's out there okay great and then could you walk us through capital allocation priorities currently and talk about the pipeline for M&A sure yeah one of the things like we've always probably look M&A I wish I could always predict time we can ever do that so I think we always have a pipeline we were looking at I would say obviously we just did kiwi i think right now it's tough to see anything that's you know sizable that um would be meaningful but i think one of the two levers we have is we're mindful of our leverage ratio we're mindful of where the stock price is we feel honestly we feel it's way undervalued right now and obviously you would expect us to pull the levers on both those two things in terms of you know stock buyback as well as you know debt reduction um as well so i think we've been smart about it the great thing about our business is we generate strong cash flow it's been consistent throughout the you know when we were growing um really fast as well as now in this market

we just manage our cash very well so we fortunately are able to leverage and use that cash for those two key levers right now okay great and then i guess kind of wrapping up my questions If you could give us an update on what you're seeing from a competitive landscape standpoint, you know, with tariffs and the choppy demand backdrop, I'm guessing some of your smaller competitors are struggling more than you. And so has there been share gain opportunities or are you seeing an increase in M&A opportunities for some of your smaller competitors?

No, it's a great question. I think in an environment where we have the scale advantage, you know, better processing, better pricing, a lot of our supply chain, we've been able to use that as an advantage. And what we're seeing out there is you're starting to see what we kind of thought probably started probably about a year to 18 months ago is that our smaller competitors are starting to, you know, struggle even more than we are. I think that the – unfortunately, obviously, when you're a smaller competitor to us, you don't have the buying programs we have. You don't have the efficiency in terms of how we've operated our business model. So you're starting to see a lot of them shrink, cut back even more than we are cutting back, as well as to the point where some of them are, you know, I would say tougher to make their business from a cash flow point of view. So we're starting to see it happen now. That does drive opportunity for us to go back to their customers and similar customers as well to say, hey, we're going to be around. Janice has been a company that's been around a long time. We're well capitalized. We're here to help finish projects that maybe your other suppliers not going to be able to finish for you in this environment, as well as being able to look at them as a target. I think at this point, it'd be tough to say whether or not they'd be a key acquisition target. I think for us, we look at all our acquisitions through a fine lens where there's certain metrics, hurdle rates they have to pass, strategic for us as well. So I would say we're always looking at those ones as well. But we don't just obviously buy unless it's going to meet some of our internal metrics.

Okay, great. We have a couple of minutes left if there's anything from the audience right here.

Thank you. Can you just speak to your commercial business? How integrated is it to your other business lines? And how do you think about that in terms of market share, high versus low, et cetera?

Yeah, so our commercial sheet door, like I said earlier, is very similar to our self-storage. business so from a operational point it's fully integrated so we build them in the same plants we have a coe model where we have certain regions that build all our products so each factory can build all our products so that's why we can take advantage if demand goes up or down between both business and optimize their rolling steel is a bit different where we do build in two of the three factories um so it's getting there our model is to eventually build rolling still in all of them as well um so that we can optimize there from a commercial point they are separate because you're hitting different customer sets not self-storage you're hitting you know it could be warehousing or you could be hitting like a hotel that you're selling the the product to but i think from operationally what that's one of the advantages that we have is that we can actually consolidate because they're in the same factories all right anything else okay well thank you so much for being here and thank you all for being here yes thank you everyone