Executive Summary / Key Takeaways

• Resilient Business Model Amidst Headwinds: Janus International Group (JBI) demonstrates robust operational execution and cash flow generation despite a challenging macroeconomic environment characterized by high interest rates and customer liquidity constraints. The company's diversified offerings and strategic focus on more capitalized customer segments provide a strong foundation.
• Technological Edge with Nokē Smart Entry: JBI's proprietary Nokē Smart Entry system, particularly the Nokē ION, is a significant differentiator, driving adoption among institutional customers due to its proven security benefits (up to 90% theft reduction reported by a client) and cost-management capabilities, positioning it for accelerated growth.
• Strategic Pivot to R3 and International Growth: While North American new construction faces softness, JBI is strategically positioned to capitalize on the aging self-storage installed base through its R3 (Restoration, Rebuilding, and Replacement) initiatives and is experiencing strong volume-driven growth in its International segment.
• Disciplined Capital Allocation and Strong Financial Health: With a net leverage of 2.3x (within its 2-3x target range), substantial liquidity, and ongoing share repurchases, JBI maintains financial flexibility. A recent credit rating upgrade from S&P underscores its balanced capital approach and consistent profitability.
• Outlook for H2 2025 and Beyond: JBI anticipates a stronger second half of 2025, driven by R3 project acceleration, continued international recovery, and benefits from its cost reduction program, despite a revised EBITDA margin outlook due to geographic and product mix.

The Foundation of Flexibility: Janus International's Strategic Blueprint

Janus International Group, Inc. (NYSE:JBI), founded in 2002, has carved out a specialized niche as a global manufacturer and supplier of turn-key building solutions for the self-storage, commercial, and industrial sectors. Headquartered in Temple, Georgia, JBI's comprehensive offerings span roll-up and swing doors, hallway systems, relocatable storage units (MASS), and advanced facility and door automation and access control technologies. This end-to-end approach, from planning and design to construction and restoration, underpins its strategic resilience in a dynamic market.

The company's operational footprint extends across North America, Europe, the U.K., Australia, and Poland, allowing it to leverage diverse market opportunities. JBI's go-to-market strategy prioritizes more capitalized customer segments, a critical factor in navigating the current macroeconomic climate. This focus, coupled with a proactive approach to product innovation and strategic acquisitions, has shaped its competitive positioning.

The self-storage industry, a core market for JBI, continues to benefit from strong underlying demand drivers, including recurring life events. A significant tailwind for JBI is the aging infrastructure of existing facilities, with over 60% of U.S. self-storage properties exceeding 20 years in age. This creates a substantial opportunity for JBI's Restoration, Rebuilding, and Replacement (R3) business, as facility owners are increasingly incentivized to upgrade and optimize their existing assets.

Technological Edge: The Power of Nokē Smart Entry

At the heart of Janus International's differentiation lies its innovative suite of remote access solutions, most notably the Nokē Smart Entry system. This proprietary technology offers smart locking solutions, including the recently introduced Nokē ION, designed for seamless integration with both new construction and retrofit projects across self-storage and commercial doors. The Nokē ION, a hardwired system, has been particularly well-received for its enhanced stability, design, and performance.

The tangible benefits of Nokē are compelling for operators. It enables more effective cost management through virtual facility management, significantly reduces the need for on-site labor, and enhances tenant satisfaction. Crucially, the system addresses a pervasive industry challenge: security. One of JBI's larger clients has reported a remarkable 90% reduction in theft after implementing the Nokē product line. This quantifiable security improvement provides a strong competitive advantage and drives accelerated interest from large institutional customers.

JBI's commitment to innovation extends beyond Nokē. The company has expanded its BETCO metal decking product line, offering custom structural solutions for self-storage development, and launched a redesigned Nokē web portal to enhance enterprise-level experiences for owner-operators. These technological advancements not only strengthen JBI's competitive moat but also contribute directly to its financial performance by enabling higher-value offerings and potentially better margins.

Strategic Execution in a Challenging Environment

JBI operates through two primary geographic segments: Janus North America and Janus International, with revenues further disaggregated into Self-storage - New Construction, Self-storage - R3, and Commercial and Other sales channels. This structure allows for targeted strategies and resource allocation.

In the third quarter of 2025, JBI reported total revenue of $219.3 million, a 4.7% decrease compared to the prior year. This decline was primarily attributed to decreases in both price and volume, stemming from macroeconomic uncertainty and high interest rates impacting customer liquidity, particularly in North America. For the nine months ended September 27, 2025, total revenues decreased by 10.2% to $657.9 million, largely due to volume declines.

Despite these headwinds, the International segment demonstrated significant strength, with revenues increasing by 32.9% to $28.3 million in Q3 2025 and 44.0% to $77.9 million for the nine-month period. This growth was driven by increased volumes as demand normalized following a recessionary period in the U.K. and strategic shifts in go-to-market approaches in certain high-growth international pockets. While this segment typically carries a lower margin profile than North America, its robust growth provides diversification.

The Self-storage - New Construction channel experienced a 5.5% revenue increase in Q3 2025 to $97.3 million, primarily due to international strength offsetting North American softness. However, for the nine-month period, new construction revenues decreased by 14.0% to $274.9 million, reflecting the broader impact of economic uncertainty on project timelines. The R3 sales channel, a key strategic focus, saw a modest 0.7% increase in Q3 2025 revenue to $57.3 million, driven by door replacement and renovation activity. The nine-month R3 revenue, however, decreased by 10.2% to $169.9 million, impacted by a significant 40% decline in facility expansion and retail big-box conversion activity. Management anticipates an acceleration in R3 projects in the latter half of 2025 as facility owners pivot capital allocation towards existing properties.

The Commercial and Other segment faced a 20.1% revenue decline in Q3 2025 to $64.7 million, with approximately 70% of this attributed to the lumpiness of the TMC business (trucking terminal renovation, construction, remodeling, and maintenance services) and broader weakness in the LTL trucking industry. Despite this, JBI is seeing growth in rolling steel and its carport and sheds business, benefiting from multi-year efforts to secure architectural specifications and new distribution centers.

Financial Strength and Capital Discipline

Janus International's financial performance reflects its ability to manage costs and generate strong cash flows even in a challenging environment. For Q3 2025, Adjusted EBITDA increased by 1.2% to $43.6 million, yielding an Adjusted EBITDA margin of 19.9%. This margin improvement was primarily due to the prior year's negative impact from credit loss adjustments, partially offset by current volume declines and unfavorable segment mix. For the nine-month period, Adjusted EBITDA decreased by 24.7% to $131.0 million, mainly due to lower revenue margins and the execution of a strategic transformation plan.

The company's balance sheet remains robust. As of September 27, 2025, JBI commanded $256.2 million in total liquidity, including $178.9 million in cash and equivalents. Total outstanding long-term debt stood at $554.0 million, resulting in a net leverage ratio of 2.3x, comfortably within its target range of 2x to 3x. This strong liquidity and manageable debt profile provide ample financial flexibility.

JBI actively manages its capital allocation. During the nine months ended September 27, 2025, the company made a voluntary prepayment of $40 million on its First Lien Term Loan, which is expected to reduce annual interest expense by an estimated $2.2 million. Additionally, JBI repurchased 1.93 million shares for $16.0 million under its share repurchase program, with $80.5 million remaining on the authorization as of Q3 2025. This commitment to returning capital to shareholders, alongside opportunistic M&A, underscores management's confidence in the business. Subsequent to the third quarter, on October 17, 2025, S&P upgraded JBI's credit rating from B+ to BB- with a stable outlook, a testament to its resilient business model and consistent cash flow generation.

Competitive Landscape and Strategic Positioning

Janus International operates in a competitive landscape that includes global players like Assa Abloy AB (ASSAY), Allegion plc (ALLE), Stanley Black & Decker, Inc. (SWK), and dormakaba Group (DKBGY), all offering various building solutions, security, and access control systems. JBI's competitive advantage lies in its specialized focus on turn-key solutions for the self-storage and industrial sectors, particularly in North America.

Compared to a broader security leader like Assa Abloy, JBI's Nokē system offers simpler, more cost-effective automation tailored for self-storage, potentially providing greater efficiency in deployment for smaller-scale projects. While Assa Abloy benefits from a wider global reach and extensive R&D in high-security applications, JBI's targeted approach fosters stronger customer loyalty in its niche. Against Allegion, which excels in electronic security systems, JBI's comprehensive building packages and relocatable storage units offer differentiators in project bundling and adaptability. Similarly, while Stanley Black & Decker boasts a vast product range and manufacturing scale, JBI's specialized solutions and North American focus allow it to gain market share in self-storage applications. JBI's operational focus and tailored automation also allow it to compete effectively with dormakaba's advanced access control systems, particularly in user-friendly integration for self-storage.

JBI's primary competitive advantages, or "moats," are its proprietary automation technologies like Nokē and its expertise in delivering integrated, turn-key solutions. These offerings provide tangible benefits such as enhanced user integration and superior security, which can translate into recurring revenue streams from maintenance services and improved pricing power in its core segments. However, JBI faces vulnerabilities in its supply chain dependencies and a comparatively smaller global presence, which could expose it to cost pressures or limit market penetration compared to its larger, more diversified rivals. Barriers to entry, such as established distribution networks and regulatory requirements for security products, help protect JBI's market position by deterring new entrants.

Outlook and Risks

Janus International has updated its full-year 2025 guidance, reflecting a nuanced view of the market. The company now expects revenues to be in the range of $870 million to $880 million and Adjusted EBITDA to be between $164 million and $170 million. This revised Adjusted EBITDA guidance, reflecting a midpoint margin of 19.1%, is primarily due to an unfavorable geographic and product mix, specifically the higher contribution from lower-margin international sales. Management anticipates Q4 2025 revenues to be largely in line with Q3 2025.

The company reiterates its expectation for results to strengthen in the back half of 2025. This improvement is projected to be driven by an acceleration in R3 initiatives as facility owners prioritize upgrades to existing properties, alongside a continued recovery in the commercial sales channel and International segment. New construction, particularly in North America, is expected to remain soft for the balance of the year due to extended customer project timelines. JBI's cost reduction program remains on track to deliver $10 million to $12 million in annual pretax savings by the end of 2025, with approximately 70% of these savings already realized. Furthermore, JBI expects its free cash flow conversion of adjusted net income to be above the target range of 75% to 100% for 2025.

Key risks to this outlook include persistent macroeconomic uncertainty and sustained high interest rates, which continue to impact customer liquidity and project timing. The "lumpy" nature of the TMC business can also lead to quarter-to-quarter fluctuations in commercial revenue. Tariffs on steel imports and other components pose an ongoing risk, with an estimated low single-digit million expense impact for 2025 and potential unmitigated annual impacts of $6 million to $8 million beyond 2025. However, JBI is actively mitigating these risks through alternative sourcing and productivity initiatives.

Conclusion

Janus International Group stands as a compelling investment opportunity, rooted in its specialized market leadership and strategic adaptability. Despite a challenging macroeconomic backdrop, JBI's core investment thesis remains robust, driven by its innovative Nokē Smart Entry system, a strategic pivot towards high-potential R3 projects, and strong international growth. The company's disciplined financial management, evidenced by healthy cash flow generation, a manageable debt profile, and a commitment to shareholder returns, provides a solid foundation for long-term value creation. While near-term headwinds from economic uncertainty and project delays persist, JBI's focus on technological differentiation and its ability to capture market share in an aging industry position it favorably for an eventual market inflection. Investors should recognize JBI's capacity to unlock significant value through its smart solutions and resilient operational strategy.