Executive Summary / Key Takeaways

• Janus International, a leader in self-storage and commercial building solutions, is demonstrating resilience and strategic adaptability in a challenging macroeconomic environment marked by high interest rates and project delays.
• Despite a significant revenue decline in Q1 2025 driven by volume softness in North America, particularly in new construction and R3 conversions/expansions, the company reaffirmed its full-year 2025 guidance, anticipating a strengthening in the back half of the year.
• Strategic initiatives, including the accretive T.M.C. acquisition, the rollout of the next-generation Nokē Ion smart entry system, and a structural cost reduction plan targeting $10-$12 million in annual savings, are positioning Janus for future growth and margin improvement.
• Janus maintains a strong balance sheet and robust cash flow generation, enabling disciplined capital allocation through debt reduction (including a recent $40 million voluntary prepayment) and share repurchases, providing flexibility to navigate uncertainty and pursue opportunistic growth.
• The long-term investment thesis remains underpinned by the resilient demand drivers for self-storage, the significant opportunity in upgrading aging facilities (R3), and Janus's differentiated technology and market leadership, despite near-term risks from continued project delays, potential tariff impacts, and competitive pricing pressures.

Building Solutions for a Dynamic Market

Janus International Group, Inc. stands as a global provider of turn-key building solutions for the self-storage, commercial, and industrial sectors. With operations spanning North America, the UK, Australia, France, and Poland, the company has built a business centered on manufacturing and supplying essential components like roll-up and swing doors, hallway systems, and relocatable storage units. Beyond products, Janus offers integrated services covering facility planning, design, construction, and the critical restoration, rebuilding, and replacement (R3) of aging facilities. This comprehensive approach positions Janus as a deeply integrated partner throughout a project's lifecycle.

The company operates through two primary geographic segments: Janus North America, representing the vast majority of its revenue, and Janus International, focused on European and Australian markets. Within these segments, business is driven by three main sales channels: self-storage new construction, self-storage R3, and commercial and other. This structure reflects how management evaluates performance and allocates resources, emphasizing distinct market dynamics and customer needs within each area.

The period spanning 2024 and early 2025 has tested the resilience of this model. Macroeconomic headwinds, notably sustained high interest rates and associated customer liquidity constraints, have led to significant project timing adjustments and temporary deferrals across the industry. This environment has particularly impacted the North American segment and the new construction and R3 sales channels, causing a notable decline in recent performance. However, Janus has actively responded with strategic initiatives aimed at enhancing operational efficiency, diversifying its offerings, and strengthening its financial position to weather the downturn and capitalize on future recovery.

Competitive Landscape and Differentiated Technology

In the competitive landscape, Janus positions itself as an industry leader in self-storage solutions, differentiating through its turn-key approach, product quality, on-time delivery, and customer service. While direct comparisons with all competitors are complex, particularly against private entities, publicly traded peers like Allegion (ALLE), Assa Abloy (ASAZY), Masonite (DOOR), and Fortune Brands Innovations (FBHS) offer insight into the broader building products and security markets.

Compared to these larger, more diversified players, Janus holds a specialized niche, particularly in the self-storage segment. While peers like Allegion and Assa Abloy boast larger global footprints and often higher profitability margins (Allegion's TTM Gross Margin ~44%, Assa Abloy's ~42% vs. JBI's ~39%), Janus's focus allows for deeper expertise and tailored solutions. Janus's TTM Operating Margin (~13%) and Net Margin (~5%) trail these larger competitors, reflecting differences in scale, product mix, and operational structure. However, Janus's TTM Debt/Equity ratio (~1.06) appears healthier than Masonite's (~1.57), indicating a more conservative balance sheet approach. Janus's TTM Revenue growth rate, while impacted by recent declines, has historically shown periods of outperformance compared to some peers.

A key differentiator for Janus, particularly in the self-storage market, is its investment in technology, most notably the Nokē Smart Entry system. This innovative suite of remote access solutions provides enhanced security and operational efficiency for facility owners and tenants. The system offers remote access control and monitoring, moving beyond traditional lock-and-key systems.

The company continues to invest in this area, launching the Nokē Ion in late 2024. This next-generation inside-the-door magnetic hardwired smart locking system was met with customer enthusiasm during beta testing. Management highlights its unique and flexible customization capabilities and an updated pricing structure designed to drive broader adoption. While specific quantitative performance metrics for Nokē Ion compared to alternatives were not detailed, the strategic intent is clear: to offer a more accessible and adaptable smart entry solution that caters to a wider range of customer needs and budgets. The company also introduced the NS Door series in 2024, featuring enhanced security features like anchored guides and a robust lower bar, specifically engineered to combat theft, a growing concern in select markets.

These technological advancements are critical to Janus's competitive moat. The Nokē system, with 384,000 units installed by the end of Q1 2025 (representing 5.2% sequential growth), contributes to Janus's positioning as a technology-forward provider. While larger competitors like Allegion and Assa Abloy also invest heavily in smart security, Janus's integrated approach within its self-storage solutions provides a distinct value proposition. The success of Nokē Ion and continued innovation in products like the NS Series are expected to be growth engines, helping Janus gain market share and potentially command premium pricing, contributing to margin improvement over time, despite facing competitive pricing pressures, particularly in the current softer market.

Navigating Headwinds: Recent Performance and Strategic Responses

The impact of the challenging macroeconomic environment was evident in Janus's recent financial results. For the three months ended March 29, 2025, total revenue decreased by $44.0 million, or 17.3%, to $210.5 million compared to $254.5 million in the prior-year period. This decline was primarily driven by a decrease in organic volume, stemming from the macroeconomic uncertainty and customer liquidity challenges that began causing project timing adjustments in mid-2024. The North America segment saw a significant revenue decrease of 20.7%, while the International segment demonstrated resilience with a 44.2% increase, benefiting from improving local market conditions following a recessionary period in the UK.

Looking at sales channels, self-storage new construction revenue fell by 25.5%, and R3 sales decreased by 19.3%. Management attributed the R3 decline primarily to a nearly 50% decrease in facility expansion and retail big-box conversion activity, although door replacement and renovation activity provided a partial offset. Commercial and other sales saw a modest 1.0% decrease, with softness in rolling sheet doors largely offset by the inorganic contribution of $3.5 million from the T.M.C. acquisition.

The lower revenue volume impacted profitability. Gross profit decreased by $28.5 million to $81.9 million, and Adjusted EBITDA fell by $27.9 million, or 42.1%, to $38.4 million. This resulted in a lower Adjusted EBITDA margin of 18.2% in Q1 2025, down from 26.1% in Q1 2024, primarily due to reduced leverage on fixed costs. Net income also decreased significantly, falling by $19.9 million to $10.8 million.

In response to these headwinds, Janus has implemented several strategic initiatives. The acquisition of T.M.C. in May 2024 for $59.4 million was a key move to diversify into the adjacent trucking terminal maintenance market, which management sees as a platform for potential future roll-up acquisitions and a way to leverage capabilities for the self-storage Facilitate division. The company also initiated a structural cost reduction plan in 2024, targeting $10 million to $12 million in annual pretax savings by the end of 2025 through streamlining labor, rationalizing real estate, and reducing SG&A expenses. Approximately $1.5 million in savings from this plan were realized in Q1 2025, helping to partially offset increases in general and administrative expenses driven by higher amortization from the T.M.C. acquisition and increased share-based compensation.

Financially, Janus maintains a strong position. As of March 29, 2025, the company had $140.8 million in cash and cash equivalents and a total liquidity of $217.1 million, including borrowing capacity. The net leverage ratio stood at 2.3 times, well within the company's target range of two to three times. Janus continues to generate robust cash flow from operations, reporting $48.3 million in Q1 2025, a significant increase from $28.6 million in the prior year, partly due to favorable working capital movements. Free cash flow was $41.9 million in the quarter, representing a strong conversion rate of 237% of Adjusted Net Income.

Demonstrating confidence and disciplined capital allocation, Janus made a voluntary prepayment of $40.0 million on its First Lien Term Loan in Q1 2025, following a $21.9 million prepayment in April 2024 and a repricing of the loan that lowered interest margins.

The company also continued executing its share repurchase program, buying back 621,643 shares for $5.1 million in Q1 2025, with $16.3 million remaining under the authorization.

Outlook and Risks

Looking ahead, Janus reaffirmed its full-year 2025 guidance, projecting revenues between $800 million and $890 million and Adjusted EBITDA between $175 million and $195 million. At the midpoint, this implies an Adjusted EBITDA margin of 21.1%. Management expects results to strengthen in the back half of the year, anticipating that delayed projects will eventually move forward. They also foresee a shift in customer capital allocation towards R3 initiatives as the year progresses, driven by the need to upgrade aging facilities (over 60% are estimated to be over 20 years old) and compete with new supply. While new construction is expected to remain soft in the first half, the R3 segment, particularly door replacement and renovation, is showing signs of incremental increase in the backlog, and management expects it to accelerate in the second half. The commercial segment, specifically the commercial sheet door market, is believed to be near a bottom, with opportunities for growth in rolling steel doors and contributions from T.M.C.

The outlook is supported by the expected realization of the full $10 million to $12 million in annual cost savings from the restructuring plan by year-end 2025 and continued adoption of the Nokē Ion system. Janus anticipates being near the higher end of its 75% to 100% free cash flow conversion target for 2025.

However, the path forward is not without risks. The primary challenge remains the persistent macroeconomic uncertainty and the duration of project delays. While cancellations have not been material, prolonged deferrals could impact revenue and profitability. Sustained high interest rates and potential changes in lending standards continue to pose risks to customer liquidity and investment decisions, particularly for non-institutional operators who remain largely on the sidelines. The dynamic tariff environment also presents a potential headwind, with estimated impacts of low single-digit millions in 2025 and potentially $10 million to $12 million annually beyond that if not fully mitigated by productivity and commercial actions. Increased competition, including opportunistic pricing from smaller players, could pressure margins.

Conclusion

Janus International is navigating a complex market environment by leveraging its established position as a self-storage industry leader, its differentiated technological offerings like the Nokē system, and a proactive strategic playbook. Despite facing significant near-term headwinds from macroeconomic uncertainty and project delays that impacted recent results, particularly in North America's new construction and R3 conversion segments, the company's reaffirmation of its 2025 guidance signals confidence in a strengthening performance in the latter half of the year.

The investment thesis for Janus rests on its ability to capitalize on the long-term resilience of the self-storage market, driven by consistent life-event demand and the substantial opportunity presented by an aging facility base ripe for R3 upgrades. Strategic acquisitions like T.M.C., ongoing product innovation such as Nokē Ion and the NS Series, and disciplined cost management through the restructuring plan are critical levers for future growth and margin expansion. Supported by a strong balance sheet and robust cash flow generation that allows for strategic debt reduction and shareholder returns, Janus appears well-positioned to weather the current volatility. While risks related to prolonged project delays, tariff impacts, and competitive pressures persist, the company's focus on operational excellence, technological leadership, and strategic flexibility provides a compelling narrative for investors looking for exposure to a resilient sector poised for recovery.