Janus International (US:JBI)2024-02-28 21:19Financial Data and Key Metrics Changes - For the full year 2023, adjusted EBITDA increased by 25.9% on a revenue increase of 4.6% [10] - The company converted over 140% of adjusted net income to free cash flow, totaling $196 million, resulting in a year-end net leverage of 1.6 times, down 1.2 times during the year [10][29] - Consolidated revenue for Q4 2023 was $263.7 million, down 5.7% compared to the prior year quarter [23] - Adjusted EBITDA for Q4 2023 was $74.3 million, up 8.9% year-over-year, with an adjusted EBITDA margin of 28.2%, an increase of 380 basis points from the prior year [25][26] - Adjusted net income for Q4 2023 was $35.9 million, a 9.8% year-over-year improvement, with adjusted diluted earnings per share of $0.24 [27] Business Line Data and Key Metrics Changes - The self-storage segment grew by 13.2% for the full year 2023, driven by new construction growth of 22.1%, while the R3 sales channel increased by 4.3% [13] - In Q4 2023, the self-storage business was up 2.5%, with new construction growing by 14.3%, while R3 was down 9.1% due to a decline in retail-to-storage conversion activity [24] - The commercial and other segment declined by 10.2% for the full year and saw a 20.8% decline in Q4, attributed to strong comps from the previous year and a shift in demand for certain product lines [14][25] Market Data and Key Metrics Changes - The company opened its first European manufacturing facility in Poland, strategically located to serve the European market [18] - The company reported a significant increase in the number of installed Nok Smart Entry system units by 66.3% to 276,000 for the year [15] Company Strategy and Development Direction - The company announced a $100 million stock repurchase program, emphasizing its commitment to value-enhancing initiatives through organic expansion and M&A while maintaining a prudently leveraged balance sheet [19][20] - The company aims to capture additional market share and create long-term value for stakeholders in 2024 and beyond [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the self-storage segment's backlog and pipeline of new opportunities entering 2024, indicating strong visibility for the next few quarters [49] - The company expects full-year 2024 revenue to be in the range of $1.092 billion to $1.125 billion, representing organic growth of 4% at the midpoint compared to 2023 [30] - Management acknowledged the impact of weather on construction activities and expects a normalization of sales in Q1 2024 [46][72] Other Important Information - The company remediated all remaining material weaknesses from the prior year as of the end of fiscal 2023 [36] - The company expects adjusted EBITDA for 2024 to be in the range of $286 million to $310 million, reflecting a 4.3% increase versus the prior year [37] Q&A Session Summary Question: What drove the decline in the commercial segment? - Management indicated that the decline was primarily due to a segment within the commercial end market, specifically the carports and shed business, which had accelerated during the pandemic [43] Question: What is the outlook for commercial growth in 2024? - Management expects growth in the commercial segment in 2024, particularly as the carport and shed segment normalizes [45] Question: What is the expected cadence for Q1 2024? - Management anticipates a slower start in Q1 due to seasonality and weather impacts, with growth expected to return in Q2 and Q3 [48] Question: Can you elaborate on the Q4 revenue shortfall? - Management noted that the commercial segment performed worse than expected, and there were delays in self-storage projects due to weather impacts [71] Question: How does the company view capital allocation between M&A and share buybacks? - Management sees M&A as the priority, with share buybacks serving as a secondary option if M&A opportunities slow down [74]