Janus International (JBI) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated revenues of $247.7 million, an increase of approximately 42% compared to the same period last year, or approximately 27% on an organic basis [14][20] - Adjusted EBITDA was $50.7 million, up approximately 41% from Q2 of 2021, with adjusted EBITDA margins stable year-over-year but increased sequentially by 100 basis points over Q1 2022 [15][23] - Adjusted net income for Q2 2022 was $24.8 million, a 22.8% increase from Q2 2021, with adjusted diluted earnings per share of $0.17 compared to $0.25 in the prior year [28] Business Line Data and Key Metrics Changes - The Commercial and Other segment saw an impressive growth of 81.6%, driven by e-commerce logistics demand and market share gains [20] - The Restore, Rebuild & Replace (R3) segment grew by 34.3%, supported by new capacity additions [20][21] - New Construction revenue increased by 17.3% compared to the prior year quarter, reflecting pent-up demand from previous construction delays [22] Market Data and Key Metrics Changes - The self-storage industry remains strong with high demand and occupancy rates, leading to increased capacity additions [10][18] - The company has maintained favorable lead times despite ongoing supply constraints, allowing for superior execution with customers [20] Company Strategy and Development Direction - The company is focused on key growth strategies, including expanding the rolling steel product line and leveraging acquisitions to accelerate growth [12] - The company aims to reduce leverage towards a target of 2.5 to 3.5 times adjusted EBITDA while remaining opportunistic for M&A opportunities [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum for the second half of the year, citing all-time high backlog and strong early indicators [45] - The company raised its full-year 2022 revenue outlook to a range of $940 million to $960 million, reflecting strong first-half results and continued demand [31][34] Other Important Information - The company closed the quarter with $710.1 million in total debt and a net leverage of 3.9 times net debt to adjusted trailing 12-month EBITDA, down from 4.3 times at the end of Q1 [30] - Free cash flow conversion was 84% year-to-date, indicating strong cash generation capabilities [29] Q&A Session Summary Question: Inventory risk in the building products space - Management confirmed that inventory risk is mitigated as they are a build-to-order solutions provider and have chosen to invest in inventory to meet customer demand [44] Question: Visibility into the second half - Management indicated that all early indicators are at all-time highs, providing confidence in continued momentum [45] Question: Gross margin expectations - Management expects a step function increase in gross margins as commercial actions take effect, with benefits from lower steel costs anticipated towards the end of Q4 2022 and into 2023 [47] Question: Business mix and segment strength - Management sees consistent growth across all sales channels, with expectations for new construction to pull through more strongly in the second half of the year [63] Question: Steel flow through into P&L - Management noted that the timing for steel price benefits has been slightly longer than normal due to supply chain issues [65]