Hello and welcome to the Janus International's Second Quarter 2021 Earnings Conference Call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, the conference is being recorded. I would now like to turn the call over to your host Mr. Scott Sannes, Chief Financial Officer of Janus. Thank you. You may begin, Mr. Sannes.

Thank you, operator. And thank you all for joining our second quarter 2021 earnings conference call. We hope that you have seen our earnings release issued this morning. Please note that we have also posted a presentation in support of this call, which can be found in the investors section of our website at janusintl.com. Before we begin, I would like to remind you that today's call may include forward-looking statements. Any statements describing our beliefs, goals, plans, strategies, expectations, projections, forecasts and assumptions are forward-looking statements. Please note that the company's actual results may differ from those anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business, prospects and future results. We assume no obligation to update publicly any forward-looking statements. In addition, we'll be discussing or providing certain non-gap financial measures today, including adjusted EBITDA, adjusted EBITDA margins, adjusted net income and adjusted EPS. Please see our release and filings for reconciliation of these non-GAAP measures with their most directly comparable GAAP measure. I'm joined today by our Chief Executive Officer, Ramey Jackson, who will provide an overview of our business and give an operations update. I will continue with the discussion of our financial results and outlook before we open up the call for your questions. At this point, I will turn the call over to Ramey.

Thank you, Scott. Before I begin, I think it would be a good idea to remind you all of who we're and what we do at Janus given this is our first public earnings call. Janus provides industry leading products and access control technologies to the self-storage and commercial space. We offer a wide range of critical products and solutions with over 50% share of the fast growing self-storage market and our three division which is our Replacement, Remix and Renovation business, we sell products and services to help customers upgrade their assets within an aging storage industry. As approximately 60% of self-storage facilities are over 20 years old, the sales channel provides Janus with a significant growth opportunity. We're a first mover in providing Smart Lock technology through our proprietary Nokē wireless solution. In addition, we provide a full-line of complete self-storage building systems with our BETCO division, as well as a complete offering of rolling steel doors for the commercial, industrial and warehousing space with our ASTA division. Over the past five years, we've doubled our business and expect to replicate that growth rate in the future. We have a very strong position in self-storage and a leading position with our customers in all of our business segments. The second quarter of 2021 was a transformative one for Janus. We completed our business combination with Juniper Industrial Holdings, and became a public company in June. We backed up our strong start to the year by delivering solid financial results for the quarter, even in the face of unprecedented inflationary pressures from raw material, labor and logistics, while continuing to invest in strategic growth initiatives. High occupancy rates continue to drive new capacity additions in self-storage industry. This is a significant tailwind for the business and our outlook. Janus…

Thanks, Ramey and good morning everyone. In the second quarter, revenues of $174.2 million were up 42.5% compared to the prior-year quarter, driven primarily by solid execution and performance in each of our sales channels. Commercial was up 69%, R3 was up 62% and new construction was up 16% over the prior-year quarter. This strong growth was also partially bolstered by the COVID related recovery across all end-markets. Adjusted EBITDA of $35.9 million was up 26% compared to the year-ago quarter. Higher revenue was the primary driver of EBITDA growth, partially offset by higher raw material, labor and logistics costs and investments in strategic growth initiatives. Janus has taken actions to offset the inflationary effects through commercial and cost containment initiatives. The cost pressures coupled with the investments resulted in adjusted EBITDA margins of 20.6%, down from 23.3% in the prior-year quarter. In addition to inflationary cost pressures, we also experienced incremental costs related to being a public company, keeping our employees safe as a result of COVID-19, higher headcounts associated with strategic investments in our Facilitate Initiative, and the continued build-out of our Nokē Smart Entry ground game and customer service department. For the second quarter 2021, we produced adjusted net income of $17.3 million and adjusted earnings per share of $0.22. We also generated $44.8 million in cash from operating activities. Free cash flow for the quarter was $71.8 million representing a free cash flow conversion of 94.7% which is defined as management adjusted EBITDA less CapEx, which is computed consistently to both the adjusted EBITDA and free cash flow computations presented in the original investor presentation. At quarter-end, our outstanding share balance was 138,384,250. We report results in two business segments, Janus North America and Janus International. Janus North America contributed 90.5% of revenue for the quarter.…

Great. Thank you again, Scott. We are proud of how Janus performed during the quarter and since becoming a public company. Our business delivered another quarter of solid results even as we completed our merger and becoming a public company. I firmly believe in the power of this organization and our ability to deliver strong margin performance and continued earnings growth. I look forward to continuing our positive momentum for the full-year of 2021 and beyond. Thank you again for joining us. Operator, we can now open up the lines for Q&A please.

Thank you. At this time, we will be conducting a question-and-answer session. . Our first question is from Jeff Hammond of KeyBanc Capital Markets. Please state your question.

Hey, good morning guys.

Good morning, Jeff.

Good morning, Jeff.

So just on the guidance. So one, just to be clear, it does not include anything from DBCI on either top-line or EBITDA?

That's correct.

Okay. And then it looks like versus your December presentation sales much higher kind of EBITDA in line. And I was just wondering if you could walk through some of the moving pieces on the EBITDA line, whether it be mix inflationary pressures. And I think he talked about new public company costs and how much those are?

Yes, sure. So I think like you said, the top item attributing to the kind of call it a lack of conversion on the top-line. Revenue increase is the inflationary pressures from raw material, logistics, and labor as we previously discussed. I think in addition to that you've got the higher than anticipated public company costs. I think one thing that was not originally anticipated is, as a private company I think we were paying circa about $100,000 a year for D&O insurance. And the cost as a public company is about 30 times that for us. So in some of those costs, we're obviously not, we were not able to anticipate that when we put together the original investor presentation circa a year-ago. In addition to that, you've got also some strategic investments, as we kind of touched upon in our facilitate initiative, as well as our kind of Nokē Smart Entry, building out the ground game and bolstering the customer service departments.

Okay. Helpful. And then just maybe speaking to the material inflation and labor, et cetera. Just talk about what you're doing with respect to pricing?

Yes, I'll take that, Scott. Look, Jeff in terms of inflationary pressures, look we have been through times like this. We have a playbook as it relates to kind of commercial decision and our commercial actions and also kind of cost containment. Albeit this is unprecedented as it relates to the inflationary times. But we're certainly comfortable as it relates to those two items that that we'll see the pickup in full momentum of those commercial decisions through the back half of the year, second half of the year.

Okay. And then just last one, the commercial growth is pretty eye popping in the first half of the year. I understand kind of the e-commerce dynamic. Can you just talk about sustainability of that growth rate? What you think the market is growing grows in the second half and kind of what's driving your share gains there?

Yes, great question. Look, I think it's, it relates to like you mentioned, kind of e-commerce warehousing. In addition to that, when you look at ASTA. The investment we made in ASTA back in 2017, we focused on expanding the product, bringing the product up to industry standards or higher. When you look at our distribution base or dealers, we now have another product to sell them, and that's really starting to take off. And so I think it has a lot to do with market penetration as it relates to ASTA. Yes, I certainly think given that we're in the early stages of that. I think there's tremendous runway.

Okay. Great. Thanks.

Thanks, Jeff.

Our next question is from Adam Friedman of Jefferies. Please state your question.

Hey guys, thanks for taking the time today. So I just wanted to ask about Nokē. You've made a bunch of announcements recently that you're rolling it out with specific customers. Just wanted to ask like how those roll outs are going. There's sort of any change in your estimates with regards to your Nokē revenue projections over the next few years? Thanks.

Hey, good morning, Adam. Yes, so as it relates to kind of any changes. No, we're comfortable with where we are. We're very pleased with the roll out. Some of the management changes that we made are more geared towards kind of the ground game if you will that Scott spoke of. Building out the customer experience, aspect of the solution. And then as it relates to kind of consumer behavior and data, we're starting to get a lot of positive results from the experience, and we're just going to continue to focus on the educational aspect of the deployment and the solution. And as it relates to the ROI and of our customer. So no change in figures. And we're very pleased with where we are with the Nokē solution today.

Great. Thanks. And then just on the revenue guide. Can you sort of parse out what percentage of the increase in top-line is related to pricing versus volume? I mean, there's clearly been a step up in pricing that you're obviously sort of taking with your customers. And to Jeff's point, obviously, there wasn't as much incremental EBITDA flow through. But can you - is there any way you can parse out, what sort of pricing contribution is coming through?

Scott?

Yes. So I would say that in the first half of the year there's not a lot of impact from the pricing initiatives. But in the back half of the year as Ramey mentioned, we expect to see more of a much larger impact from pricing on the forecast. And I think we're anticipating that it's probably the back half of the year, it's probably about a 75%, 25% split between price and volume. So 75% being kind of commercial initiatives and 25% being volume related.

Great. Thanks. And then just lastly, is it fair to assume that these price increases that you're implementing will be kept next year? And just how should we think about incremental margins next year assuming that the price increases that you're implementing flow through fully next year?

Yes. Great question, Adam. So I think the way that we would respond to that is it's going to depend. Historically we've got a track record of generally speaking not giving price increases back. But as far as what that looks like going forward to be determined based on what raw material pricing does in second half '21 as well as first half of '22.

Great. Thanks for the responses, guys.

Thanks Adam.

Thank you.

We have reached the end of the question-and-answer session. I will now turn the call back over to Ramey Jackson for closing remarks.

Thank you everyone for joining us today. We appreciate your support of Janus International and look forward to updating you on our progress. Have a good day.

This concludes today's conference. Thank you for your participation. Have a great day.