Janus International (JBI) - 2023 Q4 - Annual Results

Financial Performance Highlights Fourth Quarter 2023 Performance Q4 2023 revenue declined 5.7% to $263.7 million, yet Net Income and Adjusted EBITDA grew, expanding the margin to 28.2% Q4 2023 Key Financial Metrics (vs. Q4 2022) | Metric | Q4 2023 ($M) | Q4 2022 ($M) | Change | | :--- | :--- | :--- | :--- | | Revenue | $263.7 | $279.7 | -5.7% | | Self-Storage Revenue | - | - | +2.5% | | Commercial & Other Revenue | - | - | -20.2% | | Net Income | $35.8 | $32.7 | +9.5% | | Diluted EPS | $0.24 | $0.22 | +9.1% | | Adjusted EBITDA | $74.3 | $68.2 | +8.9% | | Adjusted EBITDA Margin | 28.2% | 24.4% | +3.8 p.p. | | Adjusted Net Income | $35.9 | $32.7 | +9.8% | | Adjusted Diluted EPS | $0.24 | $0.22 | +9.1% | Full Year 2023 Performance Janus achieved record FY23 results with 4.6% organic revenue growth to $1,066.4 million, Net Income and Adjusted EBITDA up 25.9%, and net leverage reduced to 1.6x Full Year 2023 Key Financial Metrics (vs. FY 2022) | Metric | FY 2023 ($M) | FY 2022 ($M) | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,066.4 | $1,019.5 | +4.6% | | Self-Storage Revenue | - | - | +13.2% | | Commercial & Other Revenue | - | - | -10.2% | | Net Income | $135.7 | $107.7 | +25.9% | | Diluted EPS | $0.92 | $0.73 | +26.0% | | Adjusted EBITDA | $285.6 | $226.9 | +25.9% | | Adjusted EBITDA Margin | 26.8% | 22.3% | +4.5 p.p. | | Adjusted Net Income | $138.4 | $109.2 | +26.6% | | Adjusted Diluted EPS | $0.94 | $0.74 | +27.0% | - The company achieved strong cash flow, with operating cash flow reaching $215.0 million, compared to $88.5 million in 2022[6] - Net leverage was significantly reduced, ending the year at 1.6x, a decrease of 1.2x from the end of 2022[6] Management Commentary and Outlook Management Commentary CEO Ramey Jackson attributed record 2023 results to strong execution and demand, highlighting debt refinancing, new facilities, cloud migration, and reduced net leverage - CEO Ramey Jackson highlighted key 2023 accomplishments: - Paid down and refinanced the term loan - Opened an Atlanta software center and a manufacturing facility in Poland - Migrated the Nokē cloud provider to Amazon Web Services[4] 2024 Financial Outlook Janus initiated FY24 guidance, projecting revenues of $1.092 billion to $1.125 billion and Adjusted EBITDA of $286 million to $310 million, with ~4% YoY growth at midpoint Full Year 2024 Guidance | Metric | Guidance Range | Midpoint YoY Growth | | :--- | :--- | :--- | | Revenue | $1.092B - $1.125B | +4.0% | | Adjusted EBITDA | $286M - $310M | +4.3% | Long-Term Financial Targets The company reaffirmed long-term financial targets: 4-6% organic revenue growth, 25-27% Adjusted EBITDA margins, 75-100% free cash flow conversion, and 2.0x-3.0x net leverage - The company's long-term financial goals are: - Annual Organic Revenue Growth: 4% to 6% - Adjusted EBITDA Margin: 25% to 27% - Free Cash Flow Conversion: 75% - 100% of adjusted net income - Net Leverage: 2.0x to 3.0x[8][13] Capital Allocation Share Repurchase Program Janus announced an inaugural share repurchase program, authorized for up to $100 million of common stock, with no expiration and funded by cash and future free cash flow - The Board of Directors has authorized a new share repurchase program for up to $100 million of its common stock[9] - The program has no expiration date and will be funded by cash on hand and expected future free cash flow[9][10] Financial Statements and Reconciliations Consolidated Statements of Operations FY23 total revenues increased to $1,066.4 million, gross profit to $449.7 million, income from operations to $245.7 million, and net income rose 26% to $135.7 million Full Year 2023 vs. 2022 Statement of Operations (in millions) | Line Item | FY 2023 ($M) | FY 2022 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1,066.4 | $1,019.5 | +4.6% | | Gross Profit | $449.7 | $364.9 | +23.2% | | Income from Operations | $245.7 | $187.5 | +31.0% | | Net Income | $135.7 | $107.7 | +26.0% | | Diluted EPS | $0.92 | $0.73 | +26.0% | Consolidated Balance Sheets As of December 30, 2023, total assets reached $1,350.0 million, cash doubled to $171.7 million, total liabilities decreased, and stockholders' equity grew to $519.6 million Balance Sheet Highlights (in millions) | Account | Dec 30, 2023 ($M) | Dec 31, 2022 ($M) | | :--- | :--- | :--- | | Cash | $171.7 | $78.4 | | Total Current Assets | $463.1 | $363.2 | | Total Assets | $1,350.0 | $1,270.6 | | Long-term Debt, net | $607.7 | $699.9 | | Total Liabilities | $830.4 | $895.3 | | Total Stockholders' Equity | $519.6 | $375.3 | Consolidated Statements of Cash Flows FY23 net cash from operating activities surged to $215.0 million, investing activities used $19.9 million, financing activities used $102.4 million, increasing the cash balance to $171.7 million Full Year 2023 vs. 2022 Cash Flows (in millions) | Cash Flow Activity | FY 2023 ($M) | FY 2022 ($M) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $215.0 | $88.5 | | Net Cash Used in Investing Activities | $(19.9) | $(8.7) | | Net Cash Used in Financing Activities | $(102.4) | $(14.7) | | Net Increase in Cash | $93.3 | $65.2 | | Cash, End of Year | $171.7 | $78.4 | Revenue by Sales Channel In 2023, total Self-Storage revenue grew 13.2% to $729.8 million, driven by New Construction, while Commercial and Other declined 10.2% to $336.6 million Full Year 2023 Revenue by Sales Channel (in millions) | Sales Channel | FY 2023 Revenue ($M) | FY 2022 Revenue ($M) | YoY Growth | | :--- | :--- | :--- | :--- | | New Construction - Self Storage | $394.9 | $323.4 | +22.1% | | R3 - Self Storage | $334.9 | $321.1 | +4.3% | | Total Self Storage | $729.8 | $644.5 | +13.2% | | Commercial and Other | $336.6 | $375.0 | -10.2% | | Total Revenue | $1,066.4 | $1,019.5 | +4.6% | Non-GAAP Reconciliations The company provides reconciliations for non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Free Cash Flow Conversion to their GAAP equivalents Reconciliation to Adjusted EBITDA FY23 Net Income of $135.7 million was reconciled to Adjusted EBITDA of $285.6 million, with major adjustments for interest, taxes, depreciation, amortization, and debt extinguishment loss FY 2023 Reconciliation of Net Income to Adjusted EBITDA (in millions) | Line Item | FY 2023 ($M) | | :--- | :--- | | Net Income | $135.7 | | Interest expense | $60.0 | | Income taxes | $47.1 | | Depreciation | $9.3 | | Amortization | $29.8 | | Loss on extinguishment of debt | $3.9 | | Other adjustments | $(0.2) | | Adjusted EBITDA | $285.6 | Reconciliation to Non-GAAP Adjusted Net Income FY23 GAAP Net Income of $135.7 million was adjusted to Non-GAAP Adjusted Net Income of $138.4 million by adding pre-tax non-GAAP items and subtracting their tax effect FY 2023 Reconciliation to Non-GAAP Adjusted Net Income (in millions) | Line Item | FY 2023 ($M) | | :--- | :--- | | Net Income | $135.7 | | Net Income Adjustments (pre-tax) | $3.7 | | Tax Effect on Adjustments | $(1.0) | | Non-GAAP Adjusted Net Income | $138.4 | Non-GAAP Adjusted EPS FY23 GAAP Diluted EPS was $0.92, adjusted to Non-GAAP Diluted EPS of $0.94, calculated using Non-GAAP Adjusted Net Income of $138.4 million and 146.9 million shares FY 2023 GAAP vs. Non-GAAP EPS | Metric | FY 2023 (USD) | FY 2022 (USD) | | :--- | :--- | :--- | | GAAP Diluted EPS | $0.92 | $0.73 | | Non-GAAP Adjusted Diluted EPS | $0.94 | $0.74 | Non-GAAP Free Cash Flow Conversion FY23 free cash flow was $196.0 million (operating cash flow $215.0 million less $19.0 million capex), resulting in 142% free cash flow conversion of Non-GAAP Adjusted Net Income, a significant improvement from 73% in 2022 FY 2023 Free Cash Flow Conversion (in millions) | Metric | FY 2023 ($M) | FY 2022 ($M) | | :--- | :--- | :--- | | Cash flow from operating activities | $215.0 | $88.5 | | Less: capital expenditure | $(19.0) | $(8.8) | | Free cash flow | $196.0 | $79.7 | | Non-GAAP Adjusted Net Income | $138.4 | $109.2 | | Free cash flow conversion | 142% | 73% |