Hello, and welcome to the Janus International Group Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Ms. Sara Macioch, Senior Director, Investor Relations of Janus. Thank you. You may begin, Ms. Macioch.

Thank you, operator, and thank you all for joining our earnings conference call. I am joined today by our Chief Executive Officer, Ramey Jackson; and our Chief Financial Officer, Anselm Wong. We hope that you have seen our earnings release issued this morning. 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 made describing our beliefs, plans, strategies, expectations, projections and assumptions are forward-looking statements. 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, and any forward-looking statement made by us during this call is based only on information currently available to us and speaks only as of the date when it is made. In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted EPS and net leverage. Please see our release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measure. On today's call, Ramey will provide an overview of our business. Anselm will continue with a discussion of our financial results and 2025 guidance before Ramey shares some closing thoughts, and we open up the call for your questions. At this point, I will turn the call over to Ramey.

Thank you, Sara. Good morning, everyone. Thank you all for joining us today. Janus delivered results for the quarter that were above our expectations, and I'm pleased with our team's continued strong execution in a dynamic operating environment. The resiliency of our business model and our diversified product offerings have enabled us to weather these challenging macroeconomic conditions as we work to position the business for long-term success. With that as a backdrop, I'd like to highlight a few key themes related to the quarter. First, we saw market recovery in both our commercial sales channel and our International segment. Second, our backlog and pipeline remains stable. Third, we continue to strengthen our leadership team and unveil new offerings to better support our customers and meet their evolving needs. And finally, we continue to demonstrate financial strength with robust cash generation and disciplined capital allocation, positioning us well to capitalize on the attractive long-term fundamentals of the market we serve. Beginning with our results for the second quarter of 2025, we delivered revenue of $228.1 million, down 8.2% compared to the second quarter of 2024. Total self-storage saw a decrease of 14.8% on the new construction side. This was driven by volume declines resulting from uncertainty in the economic and interest rate environment. In our R3 sales channel, the decrease was primarily due to continued declines in big box retail conversions and expansion activity. While customers remain cautious with regard to their liquidity and capital deployment, we are confident in the underlying long-term fundamentals of self-storage market. The softness in our North American self-storage business was partially offset by a recovery in the international markets we serve as macro conditions in these areas improve. Our commercial and other sales channel increased 6.7%, driven by contributions from our TMC acquisition completed…

Thanks, Ramey, and good morning, everyone. As Ramey highlighted, we continue to execute against a challenging macroeconomic backdrop and are pleased to deliver results ahead of our expectations. In the second quarter, consolidated revenue of $228.1 million was 8.2% lower as compared to the prior year quarter. Together, our self-storage business was down 14.8%. New construction was down 15.2%, while R3 decreased 14% for the quarter. The decline in revenues for new construction was primarily driven by declines in volume associated with continued macroeconomic uncertainty and sustained high interest rates impacting our smaller customers' liquidity. The decrease in R3 revenue was driven by continued declines in retail big box conversion and facility expansion activity, partially offset by increases in door replacement and renovation activity. In the second quarter, our International segment saw total revenues increase to $28.4 million, up $10.4 million or 58% compared to prior year. The increase was driven by higher volumes as demand continues to normalize following the U.K. recessionary period that impacted performance beginning in late fiscal 2023 through the bulk of fiscal 2024. We are pleased margins in our International business have been increasing as volumes return. In the second quarter, our Commercial and Other segment increased by 6.7% in total, including 1.7% of organic growth. Inorganic revenue totaled $3.8 million, reflecting a partial quarter of contribution from TMC, which was acquired in May 2024. The organic growth was driven by strength in rolling steel doors as well as recovery in demand for carports and sheds. As Ramey noted, we are seeing green shoots from our efforts to secure specifications on select architectural projects as well as benefits from our distribution facility in Mt. Airy, North Carolina that opened last year. On a consolidated basis, the impact to organic revenues for the quarter was roughly…

Thank you, Anselm. I'm proud of our team's execution. Our strong balance sheet and cash flow foundation provide us ample flexibility to expand our suite of offerings and capabilities to drive growth and invest in our future. Our reaffirmed 2025 guidance is underpinned by a resilient business model and industry leadership position. Despite near-term challenges and market fluctuations, I'm encouraged by the improvement we delivered in commercial and international and remain confident in our ability to deliver long-term value for our shareholders. To close, I'd like to thank our team, customers and shareholders for all of your support. Thank you again for being with us today. Operator, we would now like to open up the lines for Q&A, please.

[Operator Instructions] We will take our first question from Jeff Hammond with KeyBanc.

So just within the mix of self-storage, I was a little surprised new was more resilient and R3 a little bit lighter, just given that you've been talking about R3 kind of carrying the day. So just wanted to know what's going on within that? And what should we expect in terms of the mix into the second half?

Yes. No, Jeff, great question. I think we've always talked about we do what our customers kind of want to lead us to. And right now, what we're seeing is that they still want a bit of a new construction to complete those projects. So we're not seeing as fast of a conversion to R3 even though we're seeing the pipeline and the backlog build for R3, we're just seeing the choice of completing a lot of the new construction projects right now as a preference.

Okay. And then I think you had said the projects were kind of loading more to 3Q. Obviously, you have a nice beat, no change to the guide. Just wondering if you feel better within the range kind of after the first half or if there were some stuff that maybe got pulled forward from 3Q to 2Q? And within that, how do we think about trends into 3Q?

Yes. I think the way we're looking at it, it's still an uncertain market out there. I think you would have expected interest rates to adjust and we haven't seen anything there yet. So it's just more being realistic about what we can see. We've refined our tool to look at timing of projects. So we're just reflecting what we're seeing in the pipeline, the backlog data that we have.

So does 3Q still feel like the best quarter of the year?

The way we're looking at it, at least from the new construction side and the project we have good visibility to, it looks like it could be flat to slightly above for Q3, but it will depend on timing on some of those projects.

We'll take our next question from Dan Moore with CJS Securities.

This is Will on for Dan. Commercial revenue rebounded nicely in the quarter. Can you add some more color to the drivers there and where you've seen the biggest participation gains? And then also talk about your confidence in the sustainability of that growth for the remainder of the year.

That's a good question. I'll put it in 3 buckets. Number one, ASTA rolling steel. As we've mentioned in the past, we've invested heavily in product diversification. We're adding some more products, just kind of rounding out the suite of products that our customers have to sell. Number two, the architectural efforts in terms of getting the product specified. And we've always said, look, we're a small part of that commercial piece. And regardless of the end market, we still have share gains that are available to us, and we're executing on that. Second would be the carport and shed business. As you know, we've invested in kind of brick-and-mortar distribution center in the hub of where that product is distributed in Mt. Airy. And so those efforts are paying off. That market is rebounding. We're adding content to the solution. We're more than just doors in that space. And then secondly, our TMC acquisition is performing as expected. And so we're happy with the growth we're seeing there.

And then can you provide an update on the progress you're making with Noke across channels? It looks like adoption among smaller self-storage players continues to stay pace. Are we closer today than we were 6 to 12 months ago to any of the larger REITs adopting it in a meaningful way?

Yes. We won't really specify on the REITs in particular. I won't call them out. But what I can tell you is the models that we're running and the tests that we're running continue to progress. And outside of the REITs, a lot of the larger institutional customers are showing great interest in it. I think it's really a couple of things. Number one, the Ion product that we released, the stability, the inherent stability to it being a wired solution is meaningful and then also the price point as well.

We'll take our next question from Phil Ng with Jefferies.

This is Fiona on for Phil. Congrats on the solid quarter.

Thank you, Fiona.

In terms of pricing, yes, pricing is holding up pretty well and better than expected. So just curious on your thoughts and how should we think about pricing on the second half? Is down mid-single digit for the upcoming quarters still a good guidance?

Yes. Pricing, it's just really the timing. I think like we talked about it is as we deliver the projects, the older ones would have the higher price and then the newer ones will be the lower price. So it's still coming in -- came a bit slower than we expect in terms of the timing of it. But I think it will be slightly better from a pricing point of view as we go in. Just as an update, when we looked at it, there's that blended number seeing is storage and commercial. And we had already said that commercial was holding up a bit better than the self-storage side of the house, and that's what you're seeing, especially with the mix of commercial being a bit stronger than self-storage that you'll see a bit better blend so then the pricing net will be a bit better.

Got it. And assuming pricing is going to be better than expected in the second half, how should we be thinking about margins in the third quarter and maybe also in the fourth quarter?

Margins is improving as we talked about and as we planned, right? As you look at a couple of things. Pricing will be a little lever there. But the bigger thing that we talked about is that, hey, our steel cost is blending in at the lower cost as it blends into the back of the year, but also our cost actions at the end of Q2 got to what we said we would get to. And there actually is more that is coming that we're working on. So a lot of these levers are coming into play that we talked about that would help get the margin back in the range we talked about to get to the full year margin rate.

Okay, good luck.

Thank you.

We'll take our next question from Reuben Garner.

This is John McGlade on for Reuben. Congrats on the quarter, guys. I just wanted to ask if you could maybe provide some color on the replacement and renovation activity increases you saw in R3 during the quarter. Is that a sign of new business wins or maybe you have some customers who put projects off who just can't afford to wait any longer?

Great question. I would answer that, it's a blend. I mean, obviously, the -- some of the larger consolidation activity that's happened in previous quarters is driving that revenue in -- yes, I mean...

Positive momentum. I think, again, we talked about it is that people are starting to look at their assets and say, "Hey, we got to reinvest to really improve it." I'm sure you can get on some of the public earnings calls from our customers to see what they're doing. But I think it's going down, like Ramey said, acquisitions are forefront for them as well as improving the asset base that they have.

Okay. And then additionally, just with Noke, do you have any additional color you might be able to provide on the runway there? Maybe there's an element of the macro slowdown that helps accelerate adoption at some point?

Yes. No, no, we definitely feel that it's one of the key levers for all our customers to improve their cost position. We've always said that is that Noke allows you to go into that virtual management. You no longer have to use as much labor to actually support your storage facility. So we're seeing a lot of our customers take advantage of that solution to improve their cost position.

And we will take a follow-up from Jeff Hammond with KeyBanc.

Yes. So I think you said -- you characterized backlog and pipeline as stable. I think some of the industry data out there kind of points to lower development as we move into next year. And I know we're pretty far away from that. But just wondering what the disconnect is? Is that share gain? Is that a better R3 pipeline mix? Just any color as you think a little further out?

No, I think you hit the nail on the head, Jeff. It's -- we are taking share and have been for the past, call it, 3 quarters. So that's certainly one of them and then mix has a lot to do with it as well.

And the mix being R3 kind of filling the holes.

Yes, like we said, we're starting to see an increase of the R3 pipeline in the backlog as a lot of our customers are starting to look at upgrades to their facilities to improve occupancy rates as well as the market gets a bit more competitive to have that more up-to-date facility.

And we currently have no further questions in the queue. I will turn the program back over to Ramey Jackson for any additional or closing remarks.

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

Thank you. This does conclude today's meeting. Thank you for your participation. You may disconnect at any time, and have a wonderful day.