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What changed in Janus International Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Janus International Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+282 added−387 removedSource: 10-K (2023-03-29) vs 10-K (2022-03-15)

Top changes in Janus International Group, Inc.'s 2023 10-K

282 paragraphs added · 387 removed · 221 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe metal commercial door market has experienced strong growth driven by: (1) an increase in construction spending, (2) aging infrastructure, and (3) efforts to improve security, appearance, and the energy efficiency of buildings. 3 Within the commercial industrial sector, we are a smaller participant within a larger addressable market, which provides the Company with significant opportunity for market share growth within a sector that is well positioned for future growth driven by the rising growth of eCommerce.
Biggest changeWithin the commercial industrial sector, we are a smaller participant within a larger addressable market, which provides the Company with significant opportunity for market share growth within a sector that is well positioned for future growth driven by the rising growth of eCommerce. Competitive Conditions We are subject to competition in substantially all product and service areas.
Commercial doors are composed of either primarily metal, plastic, and wood and used in industrial facilities, office, retail, & lodging establishments, institutional buildings, and other non-residential infrastructure. We compete within the metal commercial doors sub-sector with a focus on commercial roll-up sheet doors and rolling steel doors.
Commercial doors are composed of either primarily metal, plastic, and wood and used in industrial facilities, office, retail, and lodging establishments, institutional buildings, and other non-residential infrastructure. We compete within the metal commercial doors sub-sector with a focus on commercial roll-up sheet doors and rolling steel doors.
Our proprietary hardware and smart locking systems have helped businesses effortlessly manage physical security and have laid the ground work for Janus to integrate an enhanced wireless network within a self-storage facility, thereby creating a segment of our business with limited competition and high barriers to entry. Proven and Experienced Management Team.
Our proprietary hardware and smart locking systems have helped businesses manage physical security and have laid the ground work for Janus to integrate an enhanced wireless network within a self-storage facility, thereby creating a segment of our business with limited competition and high barriers to entry. Proven and Experienced Management Team.
We are actively selling security-as-a-service and have been able to disrupt the conventional security market by developing a platform with multiple attractive adjacencies including hardware (i.e. purpose-built locks), software (i.e. applications and a web portal) and back-end integration (i.e. APIs and a cloud platform) to support a compelling ROI opportunity for our client’s new facilities and R3 retrofits.
We are actively selling security-as-a-service and have been able to disrupt the conventional security market by developing a platform with multiple adjacencies including hardware (i.e. purpose-built locks), software (i.e. applications and a web portal) and back-end integration (i.e. APIs and a cloud platform) to support ROI opportunity for our client’s new facilities and R3 retrofits.
Janus is the market leader in building solutions for the self-storage market, offering institutional and non-institutional operators the broadest product offering and unique end-to-end solutions. Commercial Door Approximately 32% of our total sales are attributable to the commercial industrial door market.
Janus is the market leader in building solutions for the self-storage market, offering institutional and non-institutional operators the broadest product offering and unique end-to-end solutions. Commercial Door Approximately 37% of our total sales are attributable to the commercial industrial door market.
We provide a full suite of products, services and maintenance, fabrication and installation offerings that meet a wide-range of client demands including management of third-party installation, architect drawings, R3 solutions, self-storage doors, hallway systems, relocatable systems, electronic locks, commercial doors, self-storage maintenance and servicing and custom facility gate fabrication and installation all of which is realized through a large network of best-in-class, trusted third-party installers, as well as our eleven strategically placed manufacturing and service 1 facilities in the United States.
We provide a full suite of products, services and maintenance, fabrication and installation offerings that meet a wide-range of client demands including management of third-party installation, architect drawings, R3 solutions, self-storage doors, hallway systems, relocatable systems, electronic locks, commercial doors, self-storage maintenance and servicing and custom facility gate fabrication and installation all of which is realized through a large network of third-party installers, as well as our eleven strategically placed manufacturing and service facilities in the United States.
Item 1. BUSINESS Overview Janus International Group, Inc. (f/k/a Janus Parent, Inc.) (“we,” “us,” “Group,” “Janus” or the “Company”), headquartered in Temple, Georgia with eleven domestic and three international manufacturing facilities is a leading global manufacturer, supplier and provider of turn-key self-storage, commercial, and industrial building solutions.
Item 1. BUSINESS Overview Janus International Group, Inc. (“we,” “us,” “Group,” “Janus” or the “Company”), headquartered in Temple, Georgia with eleven domestic and three international manufacturing facilities is a leading global manufacturer, supplier, and provider of turn-key self-storage, commercial, and industrial building solutions.
These institutional facilities are typically located in a top 50 U.S. MSA. Non-institutional facilities are comprised of single-story, non-climate-controlled facilities located outside of city centers owned and/or managed by smaller private operators that are mostly located outside of the top 50 U.S. MSAs.
Non-institutional facilities are comprised of single-story, non-climate-controlled facilities located outside of city centers owned and/or managed by smaller private operators that are mostly located outside of the top 50 U.S. MSAs.
Our management team has a proven track record of identifying, executing, and integrating acquisitions to support our strategic growth initiatives. In order to achieve this growth, we utilize a disciplined, highly accretive acquisition strategy that prioritizes portfolio diversification into logical adjacencies, geographic expansion, and technological innovation. We continue to actively review a number of acquisition opportunities that fit this framework.
Our management team has a proven track record of identifying, executing, and integrating acquisitions to support our strategic growth initiatives. In order to achieve this growth, we utilize a disciplined, highly accretive acquisition strategy that prioritizes portfolio diversification into logical adjacencies, geographic expansion, and technological innovation.
For additional information on environmental matters and regulation, see “Risk Factors — Risks Related to Our Business — Extensive environmental regulation to which we are subject creates uncertainty regarding future environmental expenditures and liabilities.” Human Capital Workforce Demographics As of January 1, 2022, we had 1,577 full-time and part-time employees worldwide (excluding 440 contract workers).
For additional information on environmental matters and regulation, see “Risk Factors — Risks Related to Our Business — Extensive environmental regulation to which we are subject creates uncertainty regarding future environmental expenditures and liabilities.” Human Capital Workforce Composition and Demographics As of December 31, 2022, we had 1,696 full-time and part-time employees worldwide (excluding 551 contract workers).
Approximately 67% of our workforce is composed of hourly production associates, and the remaining population is composed of associates in a professional role. Our current worldwide workforce is made up of approximately 91% domestic employees and approximately 9% international employees. 4 We recognize that our employees are our greatest asset.
Approximately 64% of our workforce is composed of hourly production associates, and the remaining population is composed of associates in a professional role. Our current worldwide workforce is made up of approximately 90% domestic employees and approximately 10% international employees. We recognize that our employees are our greatest asset.
Available supply of self-storage is well below long-term levels, as exhibited by the key self-storage REITs operating at 96% occupancy rates based upon publicly available information as of third quarter 2021.
Available supply of self-storage is well below long-term levels, as exhibited by the key self-storage REITs operating at over 90% occupancy rates based upon publicly available information as of the end of 2022.
The steel industry is highly cyclical and prices for the Company’s raw materials are influenced by numerous factors beyond the Company’s control. The steel market continues to be dynamic, with a degree of uncertainty about future pricing trends.
The Company’s practice is to seek cost savings and enhanced quality by purchasing from a limited number of suppliers. The steel industry is highly cyclical and prices for the Company’s raw materials are influenced by numerous factors beyond the Company’s control. The steel market continues to be dynamic, with a degree of uncertainty about future pricing trends.
The Company is fundamental to its customer’s success throughout every phase of a project by providing solutions spanning from facility planning and design, construction, technology, and the restoration, rebuilding, and replacement (“R3”) of damaged or end-of-life products. Company History The Company was founded in 2002, originally to provide the best-in-industry door systems for the self-storage industry.
The Company is fundamental to its customer’s success throughout every phase of a project by providing solutions spanning from facility planning and design, construction, technology, and the restoration, rebuilding, and replacement (“R3”) of damaged or end-of-life products.
Industry Overview Self-Storage Approximately 68% of our total sales are attributable to the self-storage market. The self-storage industry refers to properties that offer do-it-yourself, month-to-month storage space rental for personal or business use. Self-storage provides a convenient way for individuals and businesses to store their belongings, whether due to a life event or the need for extra storage.
The self-storage industry refers to properties that offer do-it-yourself, month-to-month storage space rental for personal or business use. Self-storage provides a convenient way for individuals and businesses to store their belongings, whether due to a life event or the need for extra storage. According to management estimates there are approximately 55,000 self-storage facilities located in the United States.
ACT is a low-voltage/security systems integrator, who specializes in the self storage and multi-family industries. With dedicated installation and service divisions, ACT has one of the largest addressable footprints in technology in the self-storage industry and has specialized in protecting critical assets in the self-storage and industrial building industries for over 7 years.
With dedicated installation and service divisions, ACT has one of the largest addressable footprints in technology in the self-storage industry and has specialized in protecting critical assets in the self-storage and industrial building industries for over 7 years. Phoenix specializes in the custom fabrication of gating and fencing solutions for the self-storage industry.
According to management estimates there are approximately 55,000 self-storage facilities located in the United States. Self-storage facilities can be classified into two general categories: institutional and non-institutional. Institutionally owned facilities typically include multi-story, climate-controlled facilities located in prime locations owned and/or managed by a REIT or other returns-driven operator of scale.
Self-storage facilities can be classified into two general categories: institutional and non-institutional. Institutionally owned facilities typically include multi-story, climate-controlled facilities located in prime locations owned and/or managed by a REIT or other returns-driven operator of scale. These institutional facilities are typically located in a top 50 U.S. Metropolitan Statistical Area (“MSA”).
Rolling steel doors are constructed of heavier gauge steel, are more durable, are more expensive than roll-up sheet and sectional doors, and are primarily used in facilities such as warehouses, particularly in heavy industrial applications (carrying with them the ability to better trap hot/cool air inside the facility).
Rolling steel doors are constructed of heavier gauge steel, are more durable, are more expensive than roll-up sheet and sectional doors, and are primarily used in facilities such as warehouses, particularly in heavy industrial applications (carrying with them the ability to better trap hot/cool air inside the facility). 5 The metal commercial door market has experienced strong growth driven by: (1) an increase in construction spending, (2) aging infrastructure, and (3) efforts to improve security, appearance, and the energy efficiency of buildings.
In September 2021, Janus completed the acquisition of Access Control Technologies, LLC, (“ACT”) a Company incorporated in North Carolina and certain assets and liabilities of Phoenix IronWorx, LLC (“Phoenix”). ACT is a low-voltage/security systems integrator that specializes in the self-storage and multi-family industries.
Through this acquisition, the Company also acquired all assets and certain liabilities of Phoenix, a company incorporated in North Carolina. ACT is a low-voltage/security systems integrator, who specializes in the self storage and multi-family industries.
Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto.
Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto. 6 Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), and comparable state laws, we may be required to investigate and remediate regulated hazardous materials at one or more of our properties.
Acquisitions ACT Acquisition In August 2021, the Company, through its wholly owned subsidiary Janus International Group, LLC (“Janus Core”) acquired 100% of the equity of ACT. Through this acquisition, the Company also acquired all assets and certain liabilities of Phoenix, a company incorporated in North Carolina.
We continue to actively review a number of acquisition opportunities that fit this framework. 4 Acquisitions ACT Acquisition In August 2021, the Company, through its wholly owned subsidiary Janus International Group, LLC (“Janus Core”) acquired 100% of the equity of ACT.
DBCI is a manufacturer of exterior building products in North America, with over 25 years’ servicing self-storage, commercial, residential, and repair markets. As a result of the acquisition, the Company will have an opportunity to increase its customer base of both the commercial and self-storage industries and expand its product offerings in the North American market.
As a result of the acquisition, the Company will have an opportunity to increase its customer base of both the commercial and self-storage industries and expand its product offerings in the North American market. G & M Stor-More Pty Ltd. Acquisition In January 2021, the Company acquired the assets of G & M Stor-More Pty Ltd (“G&M”).
Phoenix specializes in the custom fabrication of gating and fencing solutions for the self-storage industry. The ACT team is comprised of security industry experts who continually train to be at the forefront of emerging industry trends, technological advancements, and new security vulnerabilities or hazards that threaten their clients.
The ACT team is comprised of security industry experts who continually train to be at the forefront of emerging industry trends, technological advancements, and new security vulnerabilities or hazards that threaten their clients. As a result of the acquisition, the Company will have an opportunity to expand its NOKE Smart Entry ground game and installation network.
As a result of the acquisition, Janus will have an opportunity to increase its customer base of the self-storage industry and expand our geographical reach in the Australian market. PTI Australasia Pty Ltd. Acquisition In March 2020, we completed the acquisition of PTI Australasia Pty Ltd, an Australian distributor of self-storage access control security and integrative technologies.
G&M has over 23 years’ experience across the world in self-storage building, design, construction and consultation. As a result of the acquisition, Janus will have an opportunity to increase its customer base of the self-storage industry and expand our geographical reach in the Australian market. Industry Overview Self-Storage Approximately 63% of our total sales are attributable to the self-storage market.
Raw Materials The principal raw material used by the Company is steel (steel coil). The Company purchases raw materials from a variety of commercial sources on a fixed and variable basis. The Company’s practice is to seek cost savings and enhanced quality by purchasing from a limited number of suppliers.
We typically compete with one or more local providers in all of our markets, as well as a number of national and regional companies. Raw Materials The principal raw material used by the Company is steel (steel coil). The Company purchases raw materials from commercial sources on a fixed and variable basis.
The Company has not filed for bankruptcy, receivership or any similar proceedings nor is in the process of filing for bankruptcy, receivership, or any similar proceedings. Information About Our Executive Officers See “Item 10 — Directors, Executive Officers, and Corporate Governance”.
The Company has not filed for bankruptcy, receivership or any similar proceedings nor is in the process of filing for bankruptcy, receivership, or any similar proceedings. We are required to file annual, quarterly, and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”).
With dedicated installation and service divisions, ACT has one of the largest addressable footprints in technology in the self-storage industry. Phoenix is a custom gate and fence fabricator primarily serving the self-storage industry. Competitive Strengths We believe the following competitive strengths have been instrumental in our growth and position the Company for continued success: Strong Share in Growing, Well-Structured Markets.
Our common stock is listed and traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “JBI.” Competitive Strengths We believe the following competitive strengths have been instrumental in our growth and position the Company for continued success: Strong Share in Growing, Well-Structured Markets.
As a result of the acquisition, the Company will have an opportunity to expand its Nokē Smart Entry ground game and installation network. DBCI Acquisition In August 2021, the Company, through Janus Core, acquired 100% of the equity interests of DBCI, a company incorporated in Delaware.
DBCI Acquisition In August 2021, the Company, through Janus Core, acquired 100% of the equity interests of DBCI, a company incorporated in Delaware. DBCI is a manufacturer of exterior building products in North America, with over 25 years’ servicing self-storage, commercial, residential, and repair markets.
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Over the last 20 years, the Company has consistently expanded its product offerings to the self-storage industry while also diversifying its product and solution offerings into commercial industrial end markets. The Company started operations in Temple, Georgia providing value-added door systems to self-storage clients, and in 2003 expanded to Surprise, Arizona to better serve clients in the Western U.S.
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Company History Founded in 2002, Janus is a leading global manufacturer and supplier of turn-key self-storage, commercial, and industrial building solutions, including roll-up and swing doors, hallway systems, relocatable storage units, and facility and door automation technologies. Over the past 20 years, Janus has expanded its operations to serve several U.S. and international locations.
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In 2004, we opened a facility in Houston, Texas to address demand in the Southwest and moved internationally in 2006 by establishing a joint venture in Peterlee, United Kingdom to provide solutions to the European market. Additionally, in 2009, we acquired Epic Doors, Inc. to strengthen the Company’s domestic presence in the sector and in 2011 acquired U.S.
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Although our competition can vary by local market, both the industries and markets we compete in are highly competitive and fragmented as a whole.
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Door & Building Components, LLC to significantly increase our market share. In 2014, we opened a facility in Butler, Indiana to further penetrate the Midwestern and Canadian markets, and also acquired Steel Storage Europe to expand our offerings internationally. In 2017, the Company accelerated its plans in the commercial industrial door market through the acquisition of Asta Industries, Inc.
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Our industries and markets include global, national, regional, and local providers for our products, services, and solutions, including manufacturers, distributors, service providers, online commerce providers, as well as newer entrants to the market with non-traditional business and customer service models or disruptive technologies and products.
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(“ASTA”), and in 2018 we acquired Nokē , Inc. (“NOKE”) a Utah based software and technology company, which brought new access control products and s olutions to our suite of product offerings to both the self-storage and commercial industrial markets through the development of the Nokē Smart Entry Platform.
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We believe that participants in our industry compete on the basis of customer relationships, product quality and availability, reliability, delivery speed, value added products and services, and service capabilities, product innovation, pricing and overall ease of doing business.
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In December 2018, Janus completed the acquisition of Active Supply & Design (CDM) Ltd. (UK) (“AS&D”), a company based in the United Kingdom. AS&D is a self-storage design, construction and installation company whose operations were merged into Janus International Europe during 2021. In March 2019, we completed the acquisition of BETCO, Inc.
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Unless otherwise stated herein, these filings are not deemed to be incorporated by reference in this report.
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(“BETCO”), a company based in North Carolina that is in the business of manufacturing and installing steel building structures for self-storage customers. In January 2020, Janus completed the acquisition of Steel Storage Australia and Asia (collectively, “Steel Storage”), a provider of self-storage design and construction services in Australia, New Zealand, Singapore, and surrounding regions.
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All of our filings, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Form DEF 14A and any amendments to these reports, will be available free of charge on our website as soon as reasonably practicable after the reports are filed or furnished electronically with the SEC.
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In March 2020, Janus completed the acquisition of PTI Australasia Pty Ltd, an Australian distributor of self-storage access control security and integrative technologies. In January 2021, the Company acquired G & M Stor-More Pty Ltd., which has over 23 years’ experience in self-storage building, design, construction and consultation.
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Reports filed with the SEC are also made available on its website at www.sec.gov. In addition, our Corporate Governance Guidelines, Code of Ethics, and other policies, and the Board of Directors’, Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee charters are available, free of charge, on our website or in print for stockholders.
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In August of 2021, Janus completed the acquisition of DBCI, LLC, (f/k/a Dingo Newco, LLC) (“DBCI”), an entity engaged in the business of manufacturing and installing door systems for the self-storage industr y and the commercial industrial market .
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Unless expressly noted, the 7 information on our website or any other website is not incorporated by reference in this Annual Report on Form 10-K and should not be considered part of this Annual Report on Form 10-K or any other information we file with or furnish to the SEC.
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G & M Stor-More Pty Ltd. Acquisition In January 2021, the Company acquired the assets of G & M Stor-More Pty Ltd (“G&M”). G&M has over 23 years’ experience across the world in self-storage building, design, construction and consultation.
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Information About Our Executive Officers See “Item 10 — Directors, Executive Officers, and Corporate Governance”. 8
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We believe that the acquisition of PTI Australasia Pty Ltd adds to the breadth of its expertise in order to help accelerate the global adoption of the Nokē Smart Entry System.
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Steel Storage Australia and Asia Acquisitions In January 2020, we completed the acquisition of Steel Storage Australia and Asia, a provider of self-storage design and construction services in Australia, New Zealand, Singapore, and surrounding regions. The acquisition of Steel Storage expands our global automated product offerings and allows us to reach customers in a broader range of geographic locations.
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BETCO Acquisition In March 2019, we completed the acquisition of BETCO, a Delaware corporation in the business of manufacturing and installing steel building structures for self-storage customers.
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As a result of the acquisition, we have been able to grow our geographic presence and leverage our institutional customer relationships to expand our product offerings into a “one stop shopping” model that includes improved multi-story self-storage offerings. AS&D Acquisition 2 In December 2018, we completed the acquisition of AS&D a company incorporated in England and Wales.
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AS&D is a self-storage design, construction and installation company. As a result of the AS&D acquisition, we increased our geographic presence and market share of the self-storage industry, specifically in the European market, and expanded its product offerings.
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NOKE Acquisition In December 2018, we completed the acquisition of NOKE, a Delaware corporation in the business of designing, manufacturing, supporting, and selling commercial security hardware and software solutions.
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As a result of the acquisition, we have effectively accelerated our smart entry solutions and product offerings, including our development of the Nokē Smart Entry System, a product which provides mobile access for tenants and remote monitoring and tracking for operators.
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This product has provided a substantial revenue opportunity for us through potential large-scale adoption among operators seeking to implement the Nokē Smart Entry System into their portfolio in order to remain competitive. The Nokē Smart Entry System also presents attractive recurring revenue opportunities that results from continued software support and maintenance.
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ASTA Acquisition In July 2017, we completed the acquisition of ASTA, a U.S. supplier of rolling-door products. This acquisition has allowed us to expand our product offerings in the commercial door segment of the self-storage market, which we have served since 2002 through our roll-up sheet doors for commercial application and pre-engineered buildings.
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ASTA, which offers more durable, heavy-duty rolling steel doors (18, 20, or 22 gauge) and provides additional commercial and heavy industrial solutions not offered by our roll-up sheet doors, has allowed us to increase our market-share in the commercial door market and reduce ASTA’s manufacturing costs through economies of scale.
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Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), and comparable state laws, we may be required to investigate and remediate regulated hazardous materials at one or more of our properties.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe extent of Janus’s competition varies by industry, geographic area, and project type. Janus’s projects are frequently awarded through a competitive bidding process, which is standard in its industry. Janus is constantly competing for project awards based on pricing, schedule, and the breadth and technical sophistication of its services.
Biggest changeJanus faces intense competition to provide technical, professional, and construction services to clients. The markets Janus serves are highly competitive, and it competes against many local, regional, and national companies. The extent of Janus’s competition varies by industry, geographic area, and project type. Janus’s projects are frequently awarded through a competitive bidding process, which is standard in its industry.
For as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (its predecessor), (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior second fiscal quarter ending in June, and (2) the date on which it has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
For as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (its predecessor), (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior second fiscal quarter ending in June, or (2) the date on which it has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
The growth in revenue we have experienced in recent years may not be indicative of our future growth, if any, and we will not be able to grow as expected, or at all, if we do not accomplish the following: 9 • increase the number of customers; • further improve the quality of our products and service offerings, and introduce high-quality new products; • timely adjust expenditures in relation to changes in demand for the underlying products and services offered; • maintain brand recognition and effectively leverage our brand; and • attract and retain management and other skilled personnel for our business.
The growth in revenue we have experienced in recent years may not be indicative of our future growth, if any, and we will not be able to grow as expected, or at all, if we do not accomplish the following: • increase the number of customers; • further improve the quality of our products and service offerings, and introduce high-quality new products; • timely adjust expenditures in relation to changes in demand for the underlying products and services offered; • maintain brand recognition and effectively leverage our brand; and • attract and retain management and other skilled personnel for our business.
In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or express an adverse opinion, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our stock price may be adversely affected.
In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or express an adverse opinion, investors may lose confidence in 17 the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our stock price may be adversely affected.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, which the Company has elected to do. 13 The Company cannot predict if investors will find its common stock less attractive because it will rely on these exemptions.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, which the Company has elected to do. The Company cannot predict if investors will find its common stock less attractive because it will rely on these exemptions.
Our inability to protect our proprietary technology against unauthorized copying or use, as 10 well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platform or solutions, impair the functionality of our platform or solutions, delay introductions of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our platform or solutions, or injure our reputation.
Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platform or solutions, impair the functionality of our platform or solutions, delay introductions of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our platform or solutions, or injure our reputation.
If our cash flows are insufficient to fund our obligations and any debt we incur in the future and we are unable to refinance or restructure these obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures or to sell material assets or operations to meet our then-existing debt and other obligations.
If our cash flows are insufficient to fund our obligations and any debt we incur in the future and we are unable to refinance or restructure these obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital 13 expenditures or to sell material assets or operations to meet our then-existing debt and other obligations.
However, existing safeguards and any future improvements may prove to be ineffective and employees or agents may engage in conduct for which we might be held responsible. If employees violate our policies or we fail to maintain adequate record-keeping and internal accounting practices to accurately record our transactions, we may be subject to regulatory sanctions.
However, existing safeguards and any future improvements may prove to be ineffective and employees or agents may engage in conduct for which we might be held responsible. 19 If employees violate our policies or we fail to maintain adequate record-keeping and internal accounting practices to accurately record our transactions, we may be subject to regulatory sanctions.
Janus’s actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. Risks Relating to Janus’s Business 5 Janus’s continued success is dependent upon its ability to hire, retain, and utilize qualified personnel.
Janus’s actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below. Risks Relating to Janus’s Business Janus’s continued success is dependent upon its ability to hire, retain, and utilize qualified personnel.
Matters over which CCG may, directly or indirectly, substantially influence include: • the election of the Board and the appointment and removal of our officers; • mergers and other business combination transactions requiring stockholder approval, including proposed transactions that would result in our stockholders receiving a premium price for their shares; • certain customary negative consent rights in connection with a change in control; and • amendments to our certificate of incorporation or increases or decreases in the size of the Board The Company’s amended and restated certificate of incorporation renounced any interest or expectancy that the Company has in corporate opportunities that may be presented to the Company’s officers, directors, or shareholders or their respective affiliates, other than those officers, directors, shareholders, or affiliates who are the Company’s or the Company’s subsidiaries’ employees.
Matters over which CCG may, directly or indirectly, significantly influence include: • the election of the Board and the appointment and removal of our officers; • mergers and other business combination transactions requiring stockholder approval, including proposed transactions that would result in our stockholders receiving a premium price for their shares; • certain customary negative consent rights in connection with a change in control; and • amendments to our certificate of incorporation or increases or decreases in the size of the Board The Company’s amended and restated certificate of incorporation renounced any interest or expectancy that the Company has in corporate opportunities that may be presented to the Company’s officers, directors, or shareholders or their respective affiliates, other than those officers, directors, shareholders, or affiliates who are the Company’s or the Company’s subsidiaries’ employees.
Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, financial condition and results of operations could be harmed. We have experienced and may continue to experience rapid expansion of our employee ranks. We believe our corporate culture has been a key element of our success.
Our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business, financial condition and results of operations could be harmed. We have experienced and may continue to experience rapid expansion of our employee ranks. Our corporate culture has been a key element of our success.
The regulatory framework for privacy issues is rapidly evolving and future enactment of 11 more restrictive laws, rules, or regulations and/or future enforcement actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our business or our customers businesses.
The regulatory framework for privacy issues is rapidly evolving and future enactment of more restrictive laws, rules, or regulations and/or future enforcement actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our business or our customers businesses.
Factors affecting the trading price of our Common Stock may include: • actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to it; • changes in the market’s expectations about its operating results; • success of competitors; • our operating results failing to meet market expectations in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us or the self-storage and commercial industry and market in general; • operating and stock price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Common Stock available for public sale; • any significant change in the Board or management; 14 • sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Factors affecting the trading price of our Common Stock may include: • actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to us; • changes in the market’s expectations about our operating results; • success of competitors; • our operating results failing to meet market expectations in a particular period; • changes in financial estimates and recommendations by securities analysts concerning us or the self-storage and commercial industry and market in general; • operating and stock price performance of other companies that investors deem comparable to us; • our ability to market new and enhanced products on a timely basis; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Common Stock available for public sale; • any significant change in the Board or management; • sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.
In such case, we may be unable to maintain compliance with securities 20 law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.
Any of the factors listed below could have a material adverse effect on your investment in our Common Stock and its common stock may trade at prices significantly below the price you paid for them.
Any of the factors listed below could have a material adverse effect on your investment in our Common Stock and our common stock may trade at prices significantly below the price you paid for them.
Brand promotion and marketing activities may not be successful or yield increased revenue, and to the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur and our results of operations could be harmed.
Brand promotion and marketing activities may not be successful or yield increased revenue, and to the extent that these activities yield increased revenue, the increased revenue may not offset the expenses we incur and our results of 11 operations could be harmed.
If our customers’ operating expenses increase without a corresponding increase in revenues, they may decrease discretionary spending, which could diminish our profitability and limit our ability to make distributions to our shareholders.
If our customers’ operating expenses increase without a corresponding 14 increase in revenues, they may decrease discretionary spending, which could diminish our profitability and limit our ability to make distributions to our shareholders.
In an active market, the trading price of our Common Stock may be volatile and subject to wide fluctuations in response to various factors, some of which are beyond its control.
In an active market, the trading price of our Common Stock may be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control.
As a result, 15 these persons are not required to offer certain business opportunities to the Company and may engage in business activities that compete with the Company.
As a result, these persons are not required to offer certain business opportunities to the Company and may engage in business activities that compete with the Company.
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In particular, on December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly revised the Internal Revenue Code of 1986, as amended (the “Code”).
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “Tax Act”), which significantly revised the Internal Revenue Code of 1986, as amended (the “Code”).
To the extent the Company chooses not to use exemptions from various reporting requirements under the JOBS Act, or if we no longer can be classified as an “emerging growth company,” we expect that we will incur additional compliance costs, which will reduce its ability to operate profitably.
To the extent the Company chooses not to use exemptions from various reporting requirements under the JOBS Act, or if we no longer can be classified as an “emerging growth company,” we expect that we will incur additional compliance costs, which will reduce our ability to operate profitably.
Future sales of Common Stock issued to the Selling Stockholders may reduce the market price of the Common Stock that you might otherwise obtain. In connection with the consummation of the Business Combination (hereinafter defined) and the PIPE Investment, the Selling Stockholders received approximately 70,270,400 shares of Common Stock and 10,150,000 Warrants.
Future sales of Common Stock issued to the Selling Stockholders may reduce the market price of the Common Stock that you might otherwise obtain. In connection with the consummation of the Business Combination (defined below) and the PIPE Investment, the Selling Stockholders received approximately 70,270,400 shares of Common Stock and 10,150,000 Warrants.
Any of these amounts may be substantial, and together with the size, timing and number of acquisitions Janus pursues, may negatively affect and cause significant volatility in its financial results. In addition, Janus has assumed, and may in the future assume, liabilities of the company it is acquiring.
Any of these amounts may be substantial, and together with the size, timing and number of acquisitions Janus pursues, may negatively affect and cause significant volatility in our financial results. In addition, Janus has assumed, and may in the future assume, liabilities of the company it is acquiring.
Our amended and restated certificate of incorporation and bylaws contain provisions to limit the ability of others to acquire control of the Company or cause us to engage in change-of-control transactions, including, among other things: • provisions that authorize the board of directors of the Company (the “Board”), without action by our stockholders, to authorize by resolution the issuance of shares of preferred stock and to establish the number of shares to be included in such series, along with the preferential rights determined by the Board; provided that, the Board may also, subject to the rights of the holders of preferred stock, authorize shares of preferred stock to be increased or decreased by the approval of the Board and the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the corporation; • provisions that impose advance notice requirements and other requirements and limitations on the ability of stockholders to propose matters for consideration at stockholder meetings; and • a staggered board whereby our directors are divided by three classes, with each class subject to retirement and reelection once every three years on a rotating basis. 12 With our staggered Board, at least two annual meetings of stockholders will generally be required in order to effect a change in a majority of our directors.
Our amended and restated certificate of incorporation and bylaws contain provisions to limit the ability of others to acquire control of the Company or cause us to engage in change-of-control transactions, including, among other things: • provisions that authorize the board of directors of the Company (the “Board”), without action by our stockholders, to authorize by resolution the issuance of shares of preferred stock and to establish the number of shares to be included in such series, along with the preferential rights determined by the Board; provided that, the Board may also, subject to the rights of the holders of preferred stock, authorize shares of preferred stock to be increased or decreased by the approval of the Board and the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the corporation; • provisions that impose advance notice requirements and other requirements and limitations on the ability of stockholders to propose matters for consideration at stockholder meetings; and • a staggered board whereby our directors are divided by three classes, with each class subject to retirement and reelection once every three years on a rotating basis.
While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
While we understand our tax positions to be consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
Legal and contractual restrictions in agreements governing our indebtedness, as well as our financial condition and operating requirements, may limit our ability to receive distributions from Group and the Janus business.
Legal and contractual restrictions in agreements governing our indebtedness, as well as our financial condition and operating requirements, may limit our ability to receive distributions from Group.
If Janus is unable to compete effectively, it may experience a loss of market share or reduced profitability or both, which, if significant, could have a material adverse impact on Janus’s business, financial condition and results of operations. Janus’s business strategy relies in part on acquisitions to sustain its growth.
If Janus is unable to compete effectively, it may experience a loss of market share or reduced profitability or both, which, if significant, could have a material adverse impact on Janus’s business, financial condition and results of operations. Janus’s business strategy relies in part on acquisitions to sustain its growth. Acquisitions of other companies present certain risks and uncertainties.
In addition, the Company may use shares of its Common Stock as consideration for future acquisitions, which could further dilute its current stockholders. We may be substantially influenced by CCG, whose interests may conflict with yours. The concentrated ownership of our Common Stock could prevent you and other shareholders from influencing significant decisions.
In addition, the Company may use shares of its Common Stock as consideration for future acquisitions, which could further dilute its current stockholders. We may be significantly influenced by CCG, whose interests may be different than yours. The concentrated ownership of our Common Stock could prevent you and other shareholders from influencing significant decisions.
Acquisitions of other companies present certain risks and uncertainties. 6 Janus’s business strategy involves growth through, among other things, the acquisition of other companies. Janus tries to evaluate companies that it believes will strategically fit into its business and growth objectives, including, for example, Janus’s acquisition of NOKE in December 2018.
Janus’s business strategy involves growth through, among other things, the acquisition of other companies. Janus tries to evaluate companies that it believes will strategically fit into its business and growth objectives, including, for example, Janus’s acquisition of NOKE in December 2018.
Many countries in 7 the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business.
Governmental tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business.
The Tax Act was recently amended by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Certain provisions of the Tax Act may adversely affect us. The Tax Act requires complex computations that were not previously provided for under U.S. tax law.
On March 27, 2020, The Tax Act was amended by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Certain provisions of the Tax Act, as amended by the CARES Act, may adversely affect us. The Tax Act requires complex computations that were not previously provided for under U.S. tax law.
We must comply with increasingly complex and rigorous regulatory standards enacted to protect businesses and personal data, including the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”).
We must comply with increasingly complex and rigorous regulatory standards enacted to protect businesses and personal data, including the GDPR and the California Consumer Privacy Act (“CCPA”).
Other changes that may be enacted in the future, including changes to tax laws enacted by state or local governments in jurisdictions in which we operate, could result in further changes to state and local taxation and materially adversely affect our financial position and results of operations.
Furthermore, other changes that may be enacted in the future, including changes to tax laws enacted by state or local governments in jurisdictions in which we operate, could materially increase the amount of taxes, including state and local taxes, we would be required to pay and could materially adversely affect our financial position and results of operations.
While Janus retains third-party advisors to consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to it. If there are unknown liabilities or other obligations, Janus’s business could be materially affected.
While Janus retains third-party advisors to consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to it.
The Company’s ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for its common stock.
The Company’s ability to meet expectations and projections in any research or reports published by securities or industry analysts, or a lack of coverage by securities or industry analysts, could result in a depressed market price and limited liquidity for our common stock. 18 The trading market for our Common Stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors.
In addition, these new vertical markets may have specific risks associated with them. Our management team has limited experience managing a public company. Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules, and regulations that govern public companies.
Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules, and regulations that govern public companies.
If any action the subject matter of which is within the scope of the forum provisions is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”); and (y) having service of process made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder.
If any action the subject matter of which is within the scope of the forum provisions is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”); and (y) having service of process made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder. 16 This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or any of its directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.
It is difficult to determine the breadth and duration of economic and financial market disruptions and the many ways in which they may affect our customers and our business in general. Nonetheless, financial and macroeconomic disruptions could have a significant adverse effect on our sales, profitability, and results of operations.
We also cannot predict the many ways in which they may affect our customers and our business in general. Nonetheless, financial and macroeconomic disruptions could have a significant adverse effect on our sales, profitability, and results of operations.
As of January 1, 2022, CCG controlled the voting of approximately 36.8% of our outstanding Common Stock. As a result, CCG has substantial influence over most matters requiring stockholder consent.
As of December 31, 2022, CCG controlled the voting of approximately 35.5% of our outstanding Common Stock. As a result, CCG has significant influence over most matters requiring stockholder consent.
We cannot predict the timing, strength, or duration of any economic slowdown or any subsequent recovery generally, or any industry in particular. If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be materially adversely affected.
If the conditions in the general economy and the markets in which we operate worsen from present levels, our business, financial condition, and results of operations could be materially adversely affected.
Privacy concerns could result in regulatory changes that may harm our business. Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate, including California, Canada, and certain European Union member states, have imposed restrictions and requirements on the use of personal information by those collecting such information.
Many jurisdictions in which we operate, including California, Canada, and certain European Union member states, have imposed restrictions and requirements on the use of personal information by those collecting such information.
Enactment of stricter laws or regulations, stricter interpretations of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at sites we own or third-party sites may require us to make additional expenditures, some of which could be material.
Enactment of stricter laws or regulations, stricter interpretations of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at sites we own or third-party sites may require us to make additional expenditures, some of which could be material. 15 Risks Relating to Ownership of our Common Stock We may issue additional common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Common Stock.
Our dependence on, and the price and availability of, raw materials (such as steel coil) as well as purchased components may adversely affect our business, results of operations and financial condition. We are subject to fluctuations in market prices for raw materials, including steel and energy, which could have an adverse effect on our results of operations.
We are subject to fluctuations in market prices for raw materials, including steel and energy, which could have an adverse effect on our results of operations.
The Company also granted certain registration rights to the Selling Stockholders pursuant to the Amendment to the Registration and Stockholder Rights Agreement, by and among Juniper, Juniper Industrial Sponsor, LLC (the “Sponsor”) and Midco (the “Amendment to the Stockholder and Registration Rights Agreement”), the Investor Rights Agreement, by and among Clearlake Capital Group, L.P.
The Company also granted certain registration rights to the Selling Stockholders pursuant to the Amendment to the Registration and Stockholder Rights Agreement (as defined herein), by and among Juniper, Juniper Industrial Sponsor, LLC (the “Sponsor”) and Midco, the Investor Rights Agreement, by and among CCG, the Sponsor, certain stockholders of Juniper and equityholders of Midco (the “Investor Rights Agreement”) and the PIPE Subscription Agreements.
Department of the Treasury or another governing body that may significantly differ from the Company’s interpretation of the Tax Act, which may result in a material adverse effect on our business, cash flow, results of operations or financial condition. In addition, governmental tax authorities are increasingly scrutinizing the tax positions of companies.
Department of the Treasury or another governing body that may significantly differ from the Company’s interpretation of the Tax Act, which may result in a material adverse effect on our business, cash flow, results of operations or financial condition. On August 16, 2022, legislation commonly known as the Inflation Reduction Act (the “IRA”) was signed into law.
If Janus’s business is not profitably operated, Group may be unable to pay us dividends or make distributions or loans to enable us to pay any dividends on our Common Stock or satisfy our other financial obligations. We have no direct operations and no significant assets other than our ownership of Group, which operates Janus’s business.
Our only significant asset is ownership of Janus’s business through our ownership interest in Janus Core (defined below) and its respective subsidiaries. If Janus Core’s business is not profitably operated, Group may be unable to pay us dividends or make distributions or loans to enable us to pay any dividends on our Common Stock or satisfy our other financial obligations.
If U.S. or non-U.S. tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.
If U.S. federal, state or local or non-U.S. tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted 10 Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.
If we fail to effectively maintain, promote, and enhance our brand in a cost-effective manner, our business and competitive advantage may be harmed. 8 We believe that maintaining and enhancing our reputation and brand recognition is critical to our relationships with existing customers, providers and strategic partners, and to our ability to attract new customers, providers, and strategic partners.
Our brand is integral to our success. If we fail to effectively maintain, promote, and enhance our brand in a cost-effective manner, our business and competitive advantage may be harmed.
Prolonged unfavorable economic conditions or uncertainty may have an adverse effect on our sales and profitability and may result in customers making long-lasting changes to their discretionary spending behavior on a more permanent basis. 16 We have identified material weaknesses in our internal control over financial reporting as of January 1, 2022.
Decreases in demand for our products without a corresponding decrease in costs would put downward pressure on margins and would negatively impact our financial results. Prolonged unfavorable economic conditions or uncertainty may have an adverse effect on our sales and profitability and may result in customers making long-lasting changes to their discretionary spending behavior on a more permanent basis.
If Janus cannot attract and retain qualified personnel or effectively implement appropriate succession plans, it could have a material adverse impact on its business, financial condition, and results of operations. The coronavirus (COVID-19) pandemic and the global attempt to contain it may harm our industry, business, results of operations, and ability to raise additional capital.
If Janus cannot attract and retain qualified personnel or effectively implement appropriate succession plans, it could have a material adverse impact on its business, financial condition, and results of operations. Janus engages in a highly competitive business. If Janus is unable to compete effectively, it could lose market share and its business and results of operations could be negatively impacted.
In addition, third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition. Adverse macroeconomic and business conditions may significantly and negatively affect the self-storage and commercial market, which could have a negative effect on our business and therefore our results of operations.
In addition, third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to our acquisition. Rising operating expenses for our customers could indirectly reduce our cash flow and funds available for future distributions.
To the extent purchases of our offerings are perceived by customers and potential customers as discretionary, our revenue may be disproportionately affected by delays or reductions in general spending. Also, competitors may respond to challenging market conditions by lowering prices and attempting to lure away our customers.
Also, competitors may respond to challenging market conditions by lowering prices and attempting to lure away our customers. We cannot predict the timing, strength, or duration of any economic slowdown, financial market disruptions or any subsequent recovery, generally or any industry in particular.
Removed
The global spread of the coronavirus (COVID-19) and the various attempts to contain it have created significant volatility, uncertainty and economic disruption. In response to government mandates, health care advisories and otherwise responding to employee and vendor concerns, we have altered certain aspects of our operations.
Added
Janus is constantly competing for project awards based on pricing, schedule, and the breadth and technical sophistication of its services.
Removed
A large portion of our professional workforce has had to spend a significant amount of time working from home, which impacts their productivity. International and domestic travel has been severely curtailed, which required the cancellation of dozens of partner and potential partner meetings and the rescheduling to virtual and telephonic forums for other such meetings.
Added
If there are unknown liabilities or other obligations, Janus’s business could be materially affected. 9 Our dependence on, and the price and availability of, raw materials (such as steel coil) as well as purchased components may adversely affect our business, results of operations and financial condition.
Removed
Many productions are paused, including productions of third parties who supply us with necessary product. Additionally, trade shows have been cancelled globally, which is where we have significant interactions with customers and suppliers.
Added
Among other things, the IRA includes a 1% excise tax on corporate stock repurchases, applicable to repurchases after December 31, 2022, and also a new minimum tax based on book income. Our analysis of the effect of the IRA on us is ongoing and incomplete.
Removed
Other partners have similarly had their operations altered or temporarily suspended by government mandated shutdowns, both domestically and globally, including distribution partners and those partners that we use for our operations as well as development, production and post-production services.
Added
It is possible that the IRA (or implementing regulations or other guidance) could adversely impact our current and deferred federal tax liability.
Removed
To the extent the resulting economic disruption is severe, we could see some partners and vendors go out of business, resulting in reduced demand from distributors and, consequently, may result in a reduction in forecasted revenue and potential increased write-downs of accounts receivable, as well as supply constraints and increased costs or delays to our production.
Added
We are subject to taxes by U.S. federal, state, and local and non-U.S. tax authorities.
Removed
Such production pauses may cause us temporarily to have less products available to provide our services in subsequent quarters, which could negatively impact demand for our products and services. Temporary production pauses or permanent shutdowns in production could result in asset impairments or other charges and will change the timing and amount of cash outflows associated with production activity.
Added
Our future effective tax rates could be adversely affected by a number of factors, including changes in the valuation of our deferred tax assets and liabilities, expected timing and amount of the release of any tax valuation allowances, or changes in tax laws, regulations, or interpretations thereof.
Removed
Notwithstanding our continued operations and performance, the COVID-19 pandemic may continue to have negative impacts on our operations, supply chain, transportation networks and customers, which may compress our margins as a result of preventative and precautionary measures that Janus, other businesses, and governments are taking.
Added
In addition, we may be subject to audits of our income, sales, and other transaction taxes by U.S. federal, state, and local and non-U.S. taxing authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations.
Removed
Any resulting economic downturn could adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials.
Added
Maintaining and enhancing our reputation and brand recognition is critical to our relationships with existing customers, providers and strategic partners, and to our ability to attract new customers, providers, and strategic partners.
Removed
The progression of this matter could also negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers, among others.
Added
In addition, these new vertical markets may have specific risks associated with them. The coronavirus (COVID-19) pandemic and the global attempt to contain it may harm our industry, business, results of operations, and ability to raise additional capital.
Removed
In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above, which may significantly hamper our production throughout the supply chain and constrict sales channels.
Added
The ongoing COVID-19 pandemic has resulted in periodic disruptions in demand for oil and gas commodities as various jurisdictions have attempted to implement or have implemented measures designed to contain the spread of the virus.
Removed
The extent to which the COVID-19 pandemic may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the pandemic, new variants of the virus, and the effectiveness of actions globally to contain or mitigate its effects.
Added
The ongoing pandemic has related economic repercussions that could adversely impact our business, results of operations, financial condition and cash flows and include, but are not limited to: • disruptions to our supply chain resulting from our limited access to our vendors, our vendors’ limited access to their facilities or our ability to transport raw materials from our vendors, adversely affecting the price of, or our ability to obtain, materials essential to our products and our business which could result in a loss of customers and revenue; • reduction in revenues as a result of lower demand for our products as our customers across the industry reduce their budget for capital expenditures and institute additional capital discipline measures; and • liquidity challenges, including impacts related to delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies, and, if a significant number of our customers experience a prolonged business decline or disruption, we may incur increased exposure to credit risk and bad debts 12 Our management team has limited experience managing a public company.
Removed
In addition to the potential direct impacts to our business, the global economy is likely to be significantly weakened as a result of the actions taken in response to COVID-19.
Added
Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy and data protection. The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change.
Removed
To the extent that such a weakened global economy impacts consumers’ ability or willingness to pay for our service or vendors’ ability to provide services to us, we could see our business and results of operation negatively impacted.
Added
Laws and regulations governing data privacy and the unauthorized disclosure of confidential information, including the European Union General Data Protection Regulation (the “GDPR”), pose increasingly complex compliance challenges and potentially elevate our costs. The U.K. may enact data privacy laws similar to the GDPR following Brexit, in order to maintain harmony with GDPR requirements, but this is not yet settled.
Removed
Additionally, if we need to access the capital markets, there can be no assurance that financing may be available on attractive terms, if at all.
Added
Any failure, or perceived failure, by us to comply with applicable data protection laws could result in proceedings or actions against us by governmental entities or others, Privacy concerns could result in regulatory changes that may harm our business. Personal privacy has become a significant issue in the jurisdictions in which we operate.

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Item 2. Properties

Properties — owned and leased real estate

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Removed
In December 2021, we sold our real estate interest in Houston, Texas located at 8018 Breen Road and received approximately $9.6 million, after closing costs. Contemporaneously with closing, we entered into a lease with the buyer for the same premises that were subject to the sale with the goal of consolidating our Texas manufacturing and distribution operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of the date of this Annual Report on Form 10-K, there were no material pending legal proceedings in which we or any of our subsidiaries are a party or to which any of our property is subject. Item 4. MINE SAFETY DISCLOSURES Not applicable. 17 PART II
Biggest changeAs of the date of this Annual Report on Form 10-K, there were no material pending legal proceedings in which we or any of our subsidiaries are a party or to which any of our property is subject. Item 4. MINE SAFETY DISCLOSURES Not applicable. 21 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed4 unchanged
Biggest changeHolders As of January 1, 2022, there were 45 holders of record of our Common Stock, no holders of record of our Preferred Stock and no holders of record of our Warrants.
Biggest changeHolders As of December 31, 2022, there were 19 holders of record of our Common Stock, and no holders of record of our Preferred Stock.
Repurchases We may repurchase, in the future, our shares in open market transactions from time to time or through privately negotiated transactions in accordance with federal securities laws, at our discretion. Currently we have no repurchase program in place or approved by the Board of Directors.
Repurchases We may repurchase, in the future, our shares in open market transactions from time to time or through privately negotiated transactions in accordance with federal securities laws, at our discretion. Currently we have no repurchase program in place or approved by the Board of Directors. Item 6. RESERVED
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “JBI.” Our certificate of incorporation authorizes the issuance of 825,000,000 shares of Common Stock with a par value of $0.0001 per share.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our Common Stock is listed on the NYSE under the symbol “JBI.” Our certificate of incorporation authorizes the issuance of 825,000,000 shares of Common Stock with a par value of $0.0001 per share.
As of January 1, 2022, no shares of Preferred Stock were issued and outstanding, and no designation of rights and preferences of preferred stock had been adopted. Our preferred stock is not quoted on any market or system, and there is not currently a market for our preferred stock.
As of December 31, 2022, no shares of Preferred Stock were issued and outstanding, and no designation of rights and preferences of preferred stock had been adopted. Our preferred stock is not quoted on any market or system, and there is not currently a market for our preferred stock.
The Company had 146,561,717 shares of Common Stock issued and outstanding as of January 1, 2022. The outstanding shares of the Company's Common Stock are duly authorized, validly issued, fully paid and non-assessable. Preferred Stock Our certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $0.0001 per share.
The Company had 146,703,894 shares of Common Stock issued and outstanding as of December 31, 2022. The outstanding shares of the Company's Common Stock are duly authorized, validly issued, fully paid and non-assessable. Preferred Stock Our certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $0.0001 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

124 edited+29 added−113 removed86 unchanged
Biggest changeResults of Operations (dollar amounts in thousands) For the year ended January 1, 2022 compared to the year ended December 26, 2020 Year Ended Variance January 1, 2022 December 26, 2020 $ % REVENUE Sales of products $ 619,967 $ 439,458 $ 180,509 41.1 % Sales of services 130,182 109,516 20,666 18.9 % Total revenue $ 750,150 $ 548,973 $ 201,177 36.6 % Cost of Sales 498,787 345,150 153,637 44.5 % GROSS PROFIT $ 251,363 $ 203,823 $ 47,540 23.3 % OPERATING EXPENSE Selling and marketing 46,295 34,532 11,763 34.1 % General and administrative 111,981 76,946 35,035 45.5 % Contingent consideration and earnout fair value adjustments 687 (2,175) 2,862 (131.6) % Operating Expenses $ 158,963 $ 109,303 $ 49,660 45.4 % INCOME FROM OPERATIONS $ 92,400 $ 94,521 $ (2,121) (2.2) % Interest expense (32,876) (36,011) 3,135 (8.7) % Other income (expense) (3,324) 441 (3,765) (853.7) % Change in fair value of derivative warrant liabilities (5,918) — (5,918) 100.0 % Other Expense, Net $ (42,118) $ (35,570) $ (6,548) 18.4 % INCOME BEFORE TAXES $ 50,283 $ 58,951 $ (8,668) (14.7) % Provision for Income Taxes 6,481 2,114 4,367 206.6 % NET INCOME $ 43,801 $ 56,837 $ (13,036) (22.9) % Revenue (dollar amounts in thousands) Year Ended Variance % Revenue Variance Breakdown January 1, 2022 December 26, 2020 Variance Domestic Acquisitions Organic Growth Organic Growth % Sales of products $ 619,967 $ 439,458 $ 180,510 41.1 % $ 33,115 $ 147,395 33.5 % Sales of services 130,182 109,516 20,667 18.9 % 3,495 17,172 15.7 % Total $ 750,150 $ 548,973 $ 201,176 36.6 % $ 36,610 $ 164,567 30.0 % The $201.2 million revenue increase for the year ended January 1, 2022 compared to the year ended December 26, 2020 is primarily attributable to increased volumes as a result of favorable industry dynamics in both the commercial and R3 sales channels coupled with inorganic growth of $36.6 million as a result of the DBCI and ACT acquisitions.
Biggest changeResults of Operations (dollar amounts in thousands) Unaudited Quarterly Consolidated Results for the quarter ended December 31, 2022 compared to the quarter ended January 1, 2022 Three Months Ended Variance December 31, 2022 January 1, 2022 $ % REVENUE Sales of products $ 230,965 $ 201,876 $ 29,089 14.4 % Sales of services 48,763 33,477 15,286 45.7 % Total revenue $ 279,728 $ 235,353 $ 44,375 18.9 % Cost of Sales 172,137 158,717 13,420 8.5 % GROSS PROFIT $ 107,591 $ 76,636 $ 30,955 40.4 % OPERATING EXPENSE Selling and marketing 16,059 14,388 1,671 11.6 % General and administrative 32,913 33,662 (749) (2.2) % Operating Expenses $ 48,972 $ 48,050 $ 922 1.9 % INCOME FROM OPERATIONS $ 58,619 $ 28,586 $ 30,033 105.1 % Interest expense (13,416) (9,611) (3,805) 39.6 % Other income (expense) 85 (935) 1,020 (109.1) % Change in fair value of derivative warrant liabilities — (7,542) 7,542 100.0 % Other Expense, Net $ (13,331) $ (18,088) $ 4,757 (26.3) % INCOME BEFORE TAXES $ 45,288 $ 10,498 $ 34,790 331.4 % Provision for Income Taxes 12,574 216 12,358 5721.3 % NET INCOME $ 32,714 $ 10,282 $ 22,432 218.2 % 27 For the year ended December 31, 2022 compared to the year ended January 1, 2022 Year Ended Variance December 31, 2022 January 1, 2022 $ % REVENUE Sales of products $ 873,087 $ 619,967 $ 253,120 40.8 % Sales of services 146,422 130,183 16,239 12.5 % Total revenue $ 1,019,509 $ 750,150 $ 269,359 35.9 % Cost of Sales 654,577 498,787 155,790 31.2 % GROSS PROFIT $ 364,932 $ 251,363 $ 113,569 45.2 % OPERATING EXPENSE Selling and marketing 58,275 46,295 11,980 25.9 % General and administrative 119,180 111,981 7,199 6.4 % Contingent consideration and earnout fair value adjustments — 687 (687) (100.0) % Operating Expenses $ 177,455 $ 158,963 $ 18,492 11.6 % INCOME FROM OPERATIONS $ 187,477 $ 92,400 $ 95,077 102.9 % Interest expense (42,039) (32,876) (9,163) 27.9 % Other (expense) (227) (3,324) 3,097 (93.2) % Change in fair value of derivative warrant liabilities — (5,918) 5,918 100.0 % Other Expense, Net $ (42,266) $ (42,118) $ (148) 0.4 % INCOME BEFORE TAXES $ 145,211 $ 50,282 $ 94,929 188.8 % Provision for Income Taxes 37,558 6,481 31,077 479.5 % NET INCOME $ 107,653 $ 43,801 $ 63,852 145.8 % Revenue (dollar amounts in thousands) Year Ended Variance % Revenue Variance Breakdown December 31, 2022 January 1, 2022 Variance Domestic Acquisitions Organic Growth Organic Growth % Sales of products $ 873,087 $ 619,967 $ 253,120 40.8 % $ 51,665 $ 201,455 32.5 % Sales of services 146,422 130,183 16,239 12.5 % 4,923 11,316 8.7 % Total $ 1,019,509 $ 750,150 $ 269,359 35.9 % $ 56,588 $ 212,771 28.4 % The $269.4 million revenue increase for the year ended December 31, 2022 compared to the year ended January 1, 2022 is primarily attributable to increased volumes as a result of favorable industry dynamics in all three sales channels, positive impact from commercial actions taken in 2022, coupled with inorganic growth of $56.6 million as a result of the DBCI and ACT acquisitions.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information which Janus’s management believes is relevant to an assessment and understanding of consolidated results of operations and financial condition.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information which Janus’s management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition.
In addition, the R3 sales channel also includes new self-storage capacity being brought online through conversions and expansions. R3 transforms facilities through door replacement, facility upgrades, Nokē Smart Entry Systems, and relocatable storage MASS. 19 Commercial light duty steel roll-up doors are designed for applications that require less frequent and less demanding operations.
In addition, the R3 sales channel also includes new self-storage capacity being brought online through conversions and expansions. R3 transforms facilities through door replacement, facility upgrades, Nokē Smart Entry Systems, and relocatable storage MASS. Commercial light duty steel roll-up doors are designed for applications that require less frequent and less demanding operations.
Janus recognizes accrued interest associated with uncertain tax positions as part of interest expense and penalties associated with uncertain tax positions as part of other expenses. Business combinations Under the acquisition method of accounting, Janus recognizes tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.
Janus recognizes accrued interest associated with uncertain tax positions as part of interest expense and penalties associated with uncertain tax positions as part of other expenses. 41 Business combinations Under the acquisition method of accounting, Janus recognizes tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.
Adjusted EBITDA is defined as net income excluding interest expense, income taxes, depreciation expense, amortization, and other non-operational, non-recurring items. 31 Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.
Adjusted EBITDA is defined as net income excluding interest expense, income taxes, depreciation expense, amortization, and other non-operational, non-recurring items. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.
Freight costs are driven by Janus’s volume of sales of products and are subject to the freight market pricing environment. 24 Results of Operations - Consolidated The period to period comparisons of our results of operations have been prepared using the historical periods included in our consolidated financial statements.
Freight costs are driven by Janus’s volume of sales of products and are subject to the freight market pricing environment. Results of Operations - Consolidated The period to period comparisons of our results of operations have been prepared using the historical periods included in our consolidated financial statements.
Janus also offers rolling steel doors known for minimal maintenance and easy installation with, but not limited to, the following options, commercial slat doors, heavy duty service doors, fire doors, fire rated counter shutters, insulated service doors, counter shutters and grilles.
Janus also offers rolling steel doors known for minimal maintenance and easy installation with, but not limited to, the 23 following options, commercial slat doors, heavy duty service doors, fire doors, fire rated counter shutters, insulated service doors, counter shutters and grilles.
Critical estimates in valuing customer relationships, noncompete agreements, trademarks and tradenames, and other intangible assets (e.g., backlog, software, and technology) 40 acquired, include future cash flows that we expect to generate from the acquired assets.
Critical estimates in valuing customer relationships, noncompete agreements, trademarks and tradenames, and other intangible assets (e.g., backlog, software, and technology) acquired, include future cash flows that we expect to generate from the acquired assets.
Janus may incur expenses associated with sourcing, evaluating and negotiating acquisitions (including those that do not get completed), and it may also pay fees and expenses associated with financing acquisitions to investment banks and other advisors.
Janus may incur expenses 26 associated with sourcing, evaluating and negotiating acquisitions (including those that do not get completed), and it may also pay fees and expenses associated with financing acquisitions to investment banks and other advisors.
On August 18, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity interests of DBCI, a company incorporated in Delaware, for approximately $169.2 million. DBCI is a manufacturer of exterior building products in North America, with over 25 years’ servicing commercial, residential and repair markets.
On August 18, 2021, the Company, through its wholly owned subsidiary Janus Core acquired 100% of the equity interests of DBCI, a company incorporated in Delaware, for approximately $169.2 million. DBCI is a manufacturer of exterior building products in North 24 America, with over 25 years’ servicing commercial, residential and repair markets.
Accordingly, Janus believes these measures provide useful information to investors and others in understanding and evaluating Janus’s operating results in the same manner as its management and board of directors. In addition, they provide useful measures for period-to-period comparisons of Janus’s business, as they remove the effect of certain non-cash items and certain variable charges.
Accordingly, these measures provide useful information to investors and others in understanding and evaluating Janus’s operating results in the same manner as its management and board of directors. In addition, they provide useful measures for period-to-period comparisons of Janus’s business, as they remove the effect of certain non-cash items and certain variable charges.
As a result, Janus International Group, Inc. is largely dependent upon cash dividends and distributions and other transfers from its subsidiaries to meet obligations. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or make other distributions to us.
As a result, Janus International Group, Inc. is largely dependent upon cash dividends and distributions and other transfers from its subsidiaries, such as Janus Core, to meet obligations. The agreements governing the indebtedness of our subsidiaries impose restrictions on our subsidiaries’ ability to pay dividends or make other distributions to us.
We expect general and administrative expenses to increase in absolute dollars in future periods as we expect our revenues to continue to 23 grow.
We expect general and administrative expenses to increase in absolute dollars in future periods as we expect our revenues to continue to grow.
Segment operating income is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. For these reasons, we believe that Segment operating income represents the most relevant measure of Segment profit and loss.
Segment operating income is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation. For these reasons segment operating income represents the most relevant measure of segment profit and loss.
This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at January 1, 2022, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital. • Critical Accounting Policies and Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.
This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at December 31, 2022, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital. • Critical Accounting Policies and Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.
Consists of interest expense on short-term and long-term debt and amortization on deferred financing fees (see “Long Term Debt” section). Factors Affecting the Results of Operations Key Factors Affecting the Business and Financial Statements Janus’s management believes their performance and future growth depends on a number of factors that present significant opportunities but also pose risks and challenges.
Consists of interest expense on short-term and long-term debt and amortization of deferred financing fees (see “Long Term Debt” section). Factors Affecting the Results of Operations Key Factors Affecting the Business and Financial Statements Management understands Janus’s performance and future growth depends on a number of factors that present significant opportunities but also pose risks and challenges.
The decline in the year ended January 1, 2022 is the result of higher raw material, labor and logistics costs and an increase in mezzanine product sales which have a lower margin profile than typical product offerings as these products are buy-resale, coupled with increased overhead costs as the business continues to add infrastructure to support the strategic growth plan.
The decline in the year ended December 31, 2022 is the result of higher raw material, labor and logistics costs and an increase in mezzanine product sales which have a lower margin profile than typical product offerings as these products are buy-resale, coupled with increased overhead costs as the business continues to add infrastructure to support the strategic growth plan.
On August 31, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity of ACT, a company incorporated in North Carolina, for approximately $10.3 million. Through this acquisition, the Group also acquired all assets and certain liabilities of Phoenix, a company incorporated in North Carolina.
On August 31, 2021, the Company, through its wholly owned subsidiary Janus Core acquired 100% of the equity of ACT, a company incorporated in North Carolina, for approximately $10.4 million. Through this acquisition, the Company also acquired all assets and certain liabilities of Phoenix, a company incorporated in North Carolina.
Product revenue is recognized upon transfer of control to the customer, which generally takes place at the point of destination (Janus Core) and at the point of shipping (all other segments).
Product revenue is recognized upon transfer of control to the customer, which generally takes place at the point of destination (Janus Core) and at the point of shipping (all other subsidiaries).
The decrease for the year ended is due to a $5.9 million fair value of warrant liabilities adjustment included in the year ended January 1, 2022 but not present in the year ended December 26, 2020. All warrants were redeemed in the fourth quarter of 2021.
The decrease for the year ended December 31, 2022 is due to a $5.9 million fair value of warrant liabilities adjustment included in the year ended January 1, 2022, but not present in the year ended December 31, 2022. All warrants were redeemed in the fourth quarter of 2021.
MD&A is organized as follows: • Business Overview: This section provides a general description of our business, and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as recent developments we believe are important to understanding our results of operations and financial condition or in understanding anticipated future trends. • Basis of Presentation: This section provides a discussion of the basis on which our consolidated financial statements were prepared. • Results of Operations: This section provides an analysis of our results of operations for the years ended January 1, 2022 and December 26, 2020, respectively. • Liquidity and Capital Resources: This section provides a discussion of our financial condition and an analysis of our cash flows for the years ended January 1, 2022 and December 26, 2020, respectively.
MD&A is organized as follows: • Business Overview: This section provides a general description of our business, and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as recent developments that are important to understanding our results of operations and financial condition or in understanding anticipated future trends. • Basis of Presentation: This section provides a discussion of the basis on which our consolidated financial statements were prepared. • Results of Operations: This section provides an analysis of our results of operations for the years ended December 31, 2022 and January 1, 2022, respectively. • Liquidity and Capital Resources: This section provides a discussion of our financial condition and an analysis of our cash flows for the years ended December 31, 2022 and January 1, 2022.
Janus differentiates itself through on-time delivery, efficient installation, best in-class service, and a reputation for high quality products. Factors Affecting Growth Through Acquisitions Janus’s business strategy involves growth through, among other things, the acquisition of other companies. Janus tries to evaluate companies that it believes will strategically fit into its business and growth objectives.
Janus differentiates itself through on-time delivery, efficient installation, best in-class service, and a reputation for high quality products. Factors Affecting Growth Through Acquisitions Janus’s business strategy involves growth through, among other things, the acquisition of other companies. Janus evaluates companies that it believes will strategically fit into its business and growth objectives.
Long-Lived Asset Impairment Janus evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable.
Long-Lived and Indefinite-Lived Asset Impairment Janus evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable.
Janus bases its assumptions, judgments and estimates on historical experience and various other factors that Janus believes to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. The consolidated financial statements have been prepared in accordance with GAAP.
Janus bases its assumptions, judgments and estimates on historical experience and various other factors that are reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. The consolidated financial statements have been prepared in accordance with GAAP.
Janus believes such expenses, charges, and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.
Such expenses, charges, and gains are not indicative of Janus’s normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.
The Company measures compensation expense for restricted stock units (“RSUs”) issued under the 2021 Omnibus Incentive Plan (the “Plan”) in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Stock-based compensation is measured at fair value on the grant date and recognized as compensation expense over the requisite service period.
The Company measures compensation expense for stock-based awards under the 2021 Omnibus Incentive Plan (the “Plan”) in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Stock-based compensation is measured at fair value on the grant date and recognized as compensation expense over the requisite service period.
Components of Results of Operations Sales of products. Sale of products represents the revenue from the sale of products, including steel roll-up and swing doors, rolling steel doors, steel structures, as well as hallway systems and facility and door automation technologies for commercial and self-storage customers.
Sale of products represents the revenue from the sale of products, including steel roll-up and swing doors, rolling steel doors, steel structures, as well as hallway systems and facility and door automation technologies for commercial and self-storage customers.
As of January 1, 2022, we were compliant with our covenants under the agreements governing our outstanding indebtedness. 35 Statement of cash flows (dollar amounts in thousands) The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods.
As of December 31, 2022, we were compliant with our covenants under the agreements governing our outstanding indebtedness. Statement of cash flows (dollar amounts in thousands) The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods.
Janus International represented 9.1% and 8.3% of Janus’s revenue for the years ended January 1, 2022 and December 26, 2020, respectively. Acquisitions Our highly accretive M&A strategy focuses on (i) portfolio diversification into attractive and logical adjacencies, (ii) geographic expansion, and (iii) technological innovation. Inorganic growth, through acquisitions, serves to increase Janus’s strategic growth.
Janus International represented 7.4% and 9.1% of Janus’s revenue for the years ended December 31, 2022 and January 1, 2022, respectively. Acquisitions Our highly accretive M&A strategy focuses on (i) portfolio diversification into attractive and logical adjacencies, (ii) geographic expansion, and (iii) technological innovation. Inorganic growth, through acquisitions, serves to increase Janus’s strategic growth.
Equity Incentive Plan and Unit Option Plan 2021 Equity Incentive Plan Effective June 7, 2021, Group implemented an equity incentive program designed to enhance the profitability and value of its investment for the benefit of its shareholders by enabling Group to offer eligible directors, officers and employees equity-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Group’s shareholders.
Equity Incentive Plan and Unit Option Plan 2021 Omnibus Incentive Plan Effective June 7, 2021, the Company implemented an equity incentive program designed to enhance the profitability and value of its investment for the benefit of its stockholders by enabling the Company to offer eligible directors, officers and employees equity-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Company’s stockholders.
The inorganic growth as a result of the G&M Stor-More Pty Ltd. is not separately stated above as the amount is not significant. The following table illustrates the sales by channel for the year ended January 1, 2022 and December 26, 2020 (dollar amounts in thousands).
The inorganic growth as a result of the G&M Stor-More Pty Ltd. is not separately stated above as the amount is not significant. 32 The following table illustrates the sales by channel for the years ended December 31, 2022 and January 1, 2022 (dollar amounts in thousands).
Intangible Assets Fair values assigned to the definite life intangible assets, consisting of customer relationships, noncompete agreements, backlog and other intangibles (i.e., software) are amortized on the straight-line basis over estimated useful lives less than 15 years. Such assets are periodically evaluated as to the recoverability of their carrying values.
No such charges were recognized during the periods presented. Fair values assigned to the definite life intangible assets, consisting of customer relationships, noncompete agreements, backlog and other intangibles (i.e., software) are amortized on the straight-line basis over estimated useful lives less than 15 years. Such assets are periodically evaluated as to the recoverability of their carrying values.
Janus North America represented 90.9% and 91.7% of Janus’s revenue for the years ended January 1, 2022 and December 26, 2020, respectively. Janus International is comprised solely of one operating segment, Janus International Europe Holdings Ltd (UK). The Janus International segment produces and provides similar products and services as Janus North America but largely in Europe as well as Australia.
Janus North America represented 92.6% and 90.9% of Janus’s revenue for the years ended December 31, 2022 and January 1, 2022, respectively. Janus International is comprised solely of one operating segment, Janus International Europe Holdings Ltd (UK). The Janus International segment produces and provides similar products and services as Janus North America but largely in Europe as well as Australia.
Income Taxes Income tax expense increased by $4.4 million or 206.6% from $2.1 million for the year ended December 26, 2020 to $6.5 million for the year ended January 1, 2022 due to a tax structure change from a limited liability company that was considered a disregarded entity for tax purposes to a Corporation as a result of the Business Combination that occurred on June 7, 2021.
Income Taxes Income tax expense increased by $31.1 million or 479.5% from $6.5 million for the year ended January 1, 2022 to $37.6 million for the year ended December 31, 2022 due to a tax structure change from a limited liability company that was considered a disregarded entity for tax purposes to a Corporation as a result of the Business Combination that occurred on June 7, 2021.
There was $6.4 million and no outstanding balance on the line of credit as of January 1, 2022 and December 26, 2020, respectively. As of January 1, 2022 and December 26, 2020 the interest rate in effect for the facility was 3.5%% and 3.5%, respectively. The line of credit is secured by accounts receivable and inventories.
There was $— million and $6.4 million outstanding balance on the line of credit as of December 31, 2022 and January 1, 2022, respectively. As of December 31, 2022 and January 1, 2022 the interest rate in effect for the facility was 7.8% and 3.5%, respectively. The line of credit is secured by accounts receivable and inventories.
In addition, there was an increase in selling and marketing expenses of $1.4 million as a result of the DBCI and ACT acquisitions.
In addition, there was an increase in selling and marketing expenses of $2.3 million as a result of the DBCI and ACT acquisitions.
In addition, the commercial and other sales channel continued to benefit from the commercial actions instituted earlier in the year.
In addition, the commercial and other sales channel continued to benefit from the commercial actions instituted in 2021.
Critical Accounting Policies and Estimates For the critical Accounting Policies and Estimates used in preparing Janus’s consolidated financial statements, Janus makes assumptions, judgments and estimates that can have a significant impact on its revenue, results from operations and net income, as well as on the value of certain assets and liabilities on its consolidated balance sheets.
Subsequent Events See Note 22 to our Consolidated Financial Statements for a discussion of subsequent events. 39 Critical Accounting Policies and Estimates For the critical Accounting Policies and Estimates used in preparing Janus’s consolidated financial statements, Janus makes assumptions, judgments and estimates that can have a significant impact on its revenue, results from operations and net income, as well as on the value of certain assets and liabilities on its consolidated balance sheets.
In addition, there was an inorganic increase of $26.3 million as a result of the DBCI and ACT acquisitions.
In addition, there was an inorganic increase of $43.7 million as a result of the DBCI and ACT acquisitions.
(8) Adjustment related to the change in fair value of derivative warrant liabilities for the private placement warrants prior to the redemption of the warrants in Q4 2021. 32 Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
(9) Adjustment related to the change in fair value of derivative warrant liabilities for the private placement warrants. 35 Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
The decrease was primarily due to an increase in revenue which was offset by increased raw material, labor, logistics, selling and general and administrative expenses. Non-GAAP Financial Measures (dollar amounts in thousands) Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States.
The increase was primarily due to an increase in revenue and a decrease in general and administrative expenses that was offset by an increase in cost of sales. Non-GAAP Financial Measures (dollar amounts in thousands) Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States.
This was primarily due to an increase of $14.1 million to net income adjusted for non-cash items and an investment in net working capital of $35.1 million to continue to support revenue growth, which was driven by a $3.4 million increase in prepaid and other current assets, $25.1 million increase in inventory to ensure supply to our plants in the current raw material constrained environment coupled with raw material inflation, $31.7 million increase in accounts receivable and deferred revenue as a result of increased sales volume and commercial initiatives, $16.2 million increase in accounts payable, and a $8.9 million increase in other accrued expenses.
This was primarily due to an increase of $67.3 million to net income adjusted for non-cash items and an investment in net working capital of $53.6 million to continue to support revenue growth, which was driven by a $2.5 million increase in prepaid and other current assets, $11.2 million increase in inventory to ensure supply to our plants in the current raw material constrained environment coupled with raw material inflation, $30.6 million increase in accounts receivable and deferred revenue as a result of increased sales volume and commercial initiatives, $19.2 million increase in accounts payable, and a $12.4 million increase in other accrued expenses.
Operating Expenses - Selling and marketing Selling and marketing expenses increased $10.7 million or 33.4% from $31.9 million for the year ended December 26, 2020 to $42.6 million for the year ended January 1, 2022 primarily due to increased marketing and trade show and payroll related costs for additional headcount to support revenue growth coupled with lower spend on travel, marketing and trade shows in the prior year due to the pandemic.
Operating Expenses - Selling and marketing Selling and marketing expenses increased $12.5 million or 29.3% from $42.6 million for the year ended January 1, 2022 to $55.1 million for the year ended December 31, 2022 primarily due to increased marketing and trade show and payroll related costs for additional headcount to support revenue growth coupled with lower spend on travel, marketing and trade shows in the prior year due to the pandemic.
Year Ended Variance Variance % Cost of Sales Variance Breakdown January 1, 2022 December 26, 2020 Organic Growth Organic Growth % Cost of Sales $ 50,486 $ 31,647 $ 18,839 59.5 % $ 18,839 59.5 % Cost of sales increased by $18.8 million or 59.5% from $31.6 million for the year ended December 26, 2020 to $50.5 million for the year ended January 1, 2022 generally in line with a 50.8% increase in revenues coupled with an increase in raw material, labor and logistics costs and mezzanine product sales.
Year Ended Variance Variance % Cost of Sales Variance Breakdown December 31, 2022 January 1, 2022 Organic Growth Organic Growth % Cost of Sales $ 55,811 $ 50,486 $ 5,325 10.5 % $ 5,325 10.5 % Cost of sales increased by $5.3 million or 10.5% from $50.5 million for the year ended January 1, 2022 to $55.8 million for the year ended December 31, 2022 generally in line with a 10.1% increase in revenues coupled with an increase in raw material, labor and logistics costs and mezzanine product sales.
Commercial and other sales increased by $108.9 million or 81.4% for the year ended January 1, 2022 compared to the year ended December 26, 2020 due to Janus Core and ASTA experiencing favorable market gains due to the continued e-commerce movement coupled with share gains in the commercial steel roll up door market from ASTA’s launch of the rolling steel product line in the fourth quarter of 2020.
Commercial and other sales increased by $132.3 million or 54.5% for the year ended December 31, 2022 compared to the year ended January 1, 2022 due to Janus Core and ASTA experiencing favorable market gains due to the continued e-commerce movement coupled with share gains in the commercial steel roll up door market from ASTA’s launch of the rolling steel product line.
Operating Expenses - Selling and marketing Selling and marketing expense increased $11.8 million or 34.1% from the year ended December 26, 2020 compared to the year ended January 1, 2022 primarily due to increased marketing, trade show and payroll related costs for additional headcount to support revenue growth coupled with limited travel, marketing and trade show costs in the prior year due to the pandemic.
Operating Expenses - Selling and marketing Selling and marketing expense increased $12.0 million or 25.9% for the year ended January 1, 2022 compared to the year ended December 31, 2022 primarily due to increased marketing, trade show and payroll related costs for additional headcount to support revenue growth coupled with limited travel, marketing and trade show costs in the prior year due to the pandemic.
Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Annual report filing and 10-K.
Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this Annual report filing and 10-K. We assume no obligation to update any of these forward-looking statements.
We assume no obligation to update any of these forward-looking statements. 18 Unless otherwise indicated or the context otherwise requires, references in this Janus’s Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Midco” “Janus,” “we,” “us,” “our,” and other similar terms refer to Midco and its subsidiaries prior to the Business Combination and to Janus International Group Inc.
Unless otherwise indicated or the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Midco” “Janus,” “we,” “us,” “our,” and other similar terms refer to Midco and its 22 subsidiaries prior to the Business Combination and to Janus International Group Inc.
As chosen by the Company, the Amended loan bears interest at a floating rate per annum consisting of LIBOR plus an applicable margin percent (total rate of 4.25% as of January 1, 2022). The debt is secured by substantially all business assets.
As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of LIBOR, plus an applicable margin percent (effective interest rate of 7.98% as of December 31, 2022). The debt is secured by substantially all business assets.
Since 2020, Janus has completed five acquisitions which contributed a combined $46.1 million inorganic revenue increase from December 29, 2019 through January 1, 2022. Refer to Item 1A. Risk Factors within this Form 10-K section further information on the risks associated with integration of these acquisitions.
Since 2021, Janus has completed three acquisitions which contributed a combined $93.2 million inorganic revenue increase from December 27, 2020 through December 31, 2022. Refer to Item 1A. Risk Factors within this Form 10-K section for further information on the risks associated with integration of these acquisitions.
Adjusted EBITDA increased by $21.8 million or 17.2% from the year ended January 1, 2022 compared to the year ended December 26, 2020 primarily due to increased revenue which was partially offset by increased cost of sales and general and administrative expenses.
Adjusted EBITDA increased by $78.7 million or 53.1% from the year ended December 31, 2022 compared to the year ended January 1, 2022 primarily due to increased revenue which was partially offset by increased cost of sales and general and administrative expenses.
( See “ Non-GAAP Financial Measures” section) Basis of Presentation The consolidated financial statements have been derived from the accounts of Janus and its wholly owned subsidiaries.
Basis of Presentation The consolidated financial statements have been derived from the accounts of Janus and its wholly owned subsidiaries.
The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this document. We have derived this data from our consolidated financial statements included elsewhere in this Annual filing and 10-K.
The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this document. We have derived this data from our consolidated financial statements included elsewhere in this Annual filing and 10-K. The following tables set forth our results of operations for the periods presented are in dollars.
If such circumstances or conditions exist, management applies the two step process under ASC 350-20; first, the Company compares the fair value of the reporting unit with its carrying amount, and second, if the fair value of the reporting is less than its carrying amount, the Company compares the implied fair value of the reporting unit’s goodwill with its carrying amount and records an impairment charge to the extent the carrying amount of the goodwill exceeds its implied fair value.
If such circumstances or conditions exist, management applies the quantitative goodwill impairment test process under ASC 350-20. The Company compares the fair value of the reporting unit with its carrying amount, to identify any potential goodwill impairment. The Company records an impairment charge to the extent the carrying amount exceeds the reporting unit's fair value.
The majority of Janus’s exposure to LIBOR relates to the Amendment No. 4 1st Lien note payable which is discussed further below. 33 Debt Profile (dollar amounts in thousands) Principal Amount Issuance Date Maturity Date Interest Rate Net Carrying Value January 1, 2022 December 26, 2020 Notes Payable - 1st Lien $ 470,000 February 2018/ August 2019 February 1, 2025 4.75% 1 $ — $ 562,363 Notes Payable - 1st Lien B2 75,000 March 1, 2019 February 1, 2025 5.50% 2 — 73,875 Notes Payable - Amendment No. 4 1st Lien 726,413 February 1, 2021 February 1, 2025 4.25% 3 722,379 — Total principal debt $ 722,379 $ 636,238 Less unamortized deferred finance fees 10,594 12,110 Less: current portion of long-term debt 8,067 6,523 Long-term debt, net of current portion $ 703,718 $ 617,604 (1) The interest rate on the 1st Lien term loan as of December 26, 2020, was 4.75%, which is a variable rate based on LIBOR, subject to a 1.00% floor, plus an applicable margin percent of 3.75% (2) The interest rate on the 1st Lien B2 term loan as of December 26, 2020, was 5.50%, which is a variable rate based on LIBOR, subject to a 1.00% floor, plus an applicable margin percent of 4.50% (3) The interest rate on the Amendment No. 4 1st Lien term loan as of January 1, 2022, was 4.25%, which is a variable rate based on LIBOR, subject to a 1.00% floor, plus an applicable margin percent of 3.25% As of January 1, 2022, and December 26, 2020, the Company maintained one letter of credit totaling approximately $0.4 million and $0.3 million, respectively, on which there were no balances due.
The majority of Janus’s exposure to LIBOR relates to the Amendment No. 4 1st Lien note payable which is discussed further below. 36 Debt Profile (dollar amounts in thousands) Principal Amount Issuance Date Maturity Date Interest Rate Net Carrying Value December 31, 2022 January 1, 2022 Notes Payable - Amendment No. 4 1st Lien $ 726,413 February 12, 2018 February 12, 2025 7.98% 1 $ 714,312 $ 722,379 Financing leases 1,043 — Total principal debt $ 715,355 $ 722,379 Less unamortized deferred finance fees 7,158 10,594 Less: current portion of long-term debt 8,347 8,067 Long-term debt, net of current portion $ 699,850 $ 703,718 (1) The interest rate on the Amendment No. 4 1st Lien term loan as of December 31, 2022, was 7.98%, which is a variable rate based on LIBOR, subject to a 1.00% floor, plus an applicable margin percent of 3.25% As of December 31, 2022, and January 1, 2022, the Company maintained one letter of credit totaling approximately $0.4 million and $0.4 million, respectively, on which there were no balances due.
Additionally, there was a $5.1 million improvement in other assets and long-term liabilities. Net cash used in investing activities Net cash used in investing activities increased by $179.1 million for the year ended January 1, 2022 as compared to the year ended December 26, 2020.
Additionally, there was a $0.1 million increase in other assets and long-term liabilities. Net cash used in investing activities Net cash used in investing activities decreased by $181.2 million for the year ended December 31, 2022 as compared to the year ended January 1, 2022.
Cost of Sales and Gross Margin (dollar amounts in thousands) Gross Margin decreased by 3.8% to 32.6% for the year ended January 1, 2022 from 36.5% for the year ended December 26, 2020 due primarily to continued increased raw material, labor and logistics costs in advance of commercial and cost containment initiatives taking effect.
Cost of Sales and Gross Margin (dollar amounts in thousands) Gross margin increased by 2.3% to 35.8% for the year ended December 31, 2022 from 33.5% for the year ended January 1, 2022 primarily due to continued increased raw material, labor and logistics costs which was offset by the commercial and cost containment initiatives taking effect in the second half of 2022.
We believe our operating cash flows, along with funds available under the line of credit, provide sufficient liquidity to support Janus’s liquidity and financing needs, which are working capital requirements, capital expenditures, service of indebtedness, as well as to finance acquisitions.
Based on the information available as of the date of this Annual Report on Form 10-K, our operating cash flow, along with funds available under the line of credit, provide sufficient liquidity to support Janus’s liquidity and financing needs, which are working capital requirements, capital expenditures, service of indebtedness, as well as to finance acquisitions.
The provision for income taxes for the years ended January 1, 2022 and December 26, 2020 includes amounts related to entities within the group taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore.
The Company’s provision for income taxes consists of provisions for federal, state, and foreign income taxes. The provision for income taxes for the years ended December 31, 2022 and January 1, 2022 includes amounts related to entities within the Company taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore.
Year Ended % of total sales Variance January 1, 2022 % of total sales December 26, 2020 $ % New Construction - Self Storage $ 51,723 75.4% $ 26,701 58.7 % $ 25,022 93.7% R3 - Self Storage 16,856 24.6 % 18,735 41.2 % (1,879) (10.0) % Commercial and Other — — % 54 0.1 % (54) (100.0) % Total $ 68,579 100.0 % $ 45,490 100.0 % $ 23,089 50.8 % New Construction sales increased by $25.0 million or 93.7% to $51.7 million for the year ended January 1, 2022 from $26.7 million for the year ended December 26, 2020 due to increased volumes and improved market conditions as the international market continues to open up after the COVID-19 pandemic.
Year Ended % of total sales Variance December 31, 2022 % of total sales January 1, 2022 $ % New Construction - Self Storage $ 57,242 75.8 % $ 51,723 75.4 % $ 5,519 10.7% R3 - Self Storage 18,269 24.2 % 16,856 24.6 % 1,413 8.4 % Commercial and Other — — % — — % — (100.0) % Total $ 75,511 100.0 % $ 68,579 100.0 % $ 6,932 10.1 % New Construction sales increased by $5.5 million or 10.7% to $57.2 million for the year ended December 31, 2022 from $51.7 million for the year ended January 1, 2022 due to increased volumes and improved market conditions as the international market continues to open up after the COVID-19 pandemic.
The inorganic growth as a result of the G&M Stor-More Pty Ltd. acquisition is not separately stated above as the amount is not significant. 25 The following table and discussion compares Janus’s sales by sales channel (dollar amounts in thousands).
In addition, we began to see a more meaningful impact from our commercial actions in the second half of the year. The inorganic growth as a result of the G&M Stor-More Pty Ltd. acquisition is not separately stated above as the amount is not significant. The following table and discussion compares Janus’s sales by sales channel (dollar amounts in thousands).
Other Income (Expense) Other income (expense) decreased by $3.8 million or 853.7% from $0.4 million of other income for the year ended December 26, 2020 to $3.3 million of other (expense) for the year ended January 1, 2022.
Other Income (Expense) Other expense decreased by $3.1 million or 93.2% from $3.3 million of other expense for the year ended January 1, 2022 to $0.2 million of other expense for the year ended December 31, 2022.
Net cash provided by (used in) financing activities Net cash provided by financing activities increased by $146.9 million for the year ended January 1, 2022 as compared to the year ended December 26, 2020.
Net cash provided by (used in) financing activities Net cash provided by financing activities decreased by $97.4 million for the year ended December 31, 2022 as compared to the year ended January 1, 2022.
The Company records compensation cost for these awards using the straight-line method.
The Company records compensation cost for these awards using the straight-line method. Forfeitures are recognized as they occur.
Cost of Sales and Gross Margin (dollar amounts in thousands) Gross margin decreased by 3.6% to 33.5% for the year ended January 1, 2022 from 37.1% for the year ended December 26, 2020 due primarily to increased raw material, labor and logistics costs in advance of commercial and cost containment initiatives taking effect.
Cost of Sales and Gross Margin (dollar amounts in thousands) Gross Margin increased by 2.1% to 34.7% for the year ended December 31, 2022 from 32.6% for the year ended January 1, 2022 primarily due to continued increased raw material, labor and logistics costs which was offset by the commercial and cost containment initiatives taking effect in the second half of 2022.
Adjusted EBITDA as a percentage of revenue decreased 3.3% for the year ended January 1, 2022 primarily due to inflationary increases to raw material, labor and logistics costs in advance of commercial and cost containment actions taking effect.
Adjusted EBITDA as a percentage of revenue increased 2.5% for the year ended December 31, 2022 primarily due to increased revenue due to commercial actions taking full effect in third quarter 2022 which was partially offset by inflationary increases in raw material, labor and logistics costs in advance of commercial and cost containment actions taking full effect.
Holding Company Status Janus International Group, Inc. was formed to consummate the business combination and act as a holding company of the Group, as such owns no material assets and does not conduct any business operations of its own.
Janus compiles a monthly standalone business unit and consolidated 13-week cash flow forecast to monitor various cash activities and forecast cash balances to fund operational activities. Holding Company Status Janus International Group, Inc. was formed to consummate the business combination and as such owns no material assets and does not conduct any business operations of its own.
For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Group’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.
The foreign subsidiaries file income tax returns in the United Kingdom, France, Australia, and Singapore as necessary. For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction.
This increase was driven primarily by the acquisitions of G&M Stor-More Pty Ltd., DBCI and ACT with the net payments of $1.6 million, $169.0 million and $9.2 million, respectively, offset by $4.5 million paid in the prior year for the Steel Storage and PTI Australasia Pty Ltd acquisitions.
This decrease was driven primarily by the prior year acquisitions of G&M Stor-More Pty Ltd., DBCI and ACT with the net payments of $1.6 million, $169.0 million and $9.2 million, respectively, and decrease in capital expenditures of $1.5 million for the period for the year ended December 31, 2022 as compared with the year ended January 1, 2022.
The increase in other (expense) for the year ended is primarily due to a $2.4 million loss on extinguishment of debt and a $0.8 million loss on abandonment included in the year ended January 1, 2022 but not present in the year ended December 26, 2020.
The decrease in other expense for the year ended is primarily due to a $2.4 million loss on extinguishment of debt and a $0.8 million loss on abandonment included in the year ended January 1, 2022, but not present in the year ended December 31, 2022. 29 Change in fair value of derivative warrant liabilities Change in fair value of derivative warrant liabilities decreased by $5.9 million or 100.0% from $5.9 million for the year ended January 1, 2022 to $— million for the year ended December 31, 2022.
Subsequent Events See Note 22 to our Consolidated Financial Statements for a discussion of subsequent events.
Related Party Transactions See Note 14 to our Consolidated Financial Statements for a discussion of related party transactions.
R3 sales increased by $77.9 million or 58.9% for the year ended January 1, 2022 compared to the year ended December 26, 2020 due primarily to the continued trend of new self-storage capacity being brought online through conversions and expansions coupled with the positive impacts from commercial actions. 28 Commercial and Other sales increased by $116.8 million or 82.7% for the year ended January 1, 2022 compared to the year ended December 26, 2020 due to increases in both Janus Core and ASTA commercial steel roll up door market, from strong momentum with the launch of the ASTA rolling steel product line in the fourth quarter of 2020 and commercial initiatives implemented to offset the inflationary increases of raw materials, labor, and logistics costs.
Commercial and Other sales increased by $142.8 million or 55.3% for the year ended December 31, 2022 compared to the year ended January 1, 2022 due to increases in both Janus Core and ASTA commercial steel roll up door market, from strong momentum with the launch of the ASTA rolling steel product line and commercial initiatives implemented to offset the inflationary increases of raw materials, labor, and logistics costs.
The increase for the year ended is due to a $0.7 million adjustment related to the change in fair value of the earnout of the 2,000,000 common stock shares that were issued and released on June 21, 26 2021 and a $(2.2) million contingent consideration fair value adjustment related to the acquisition of NOKE and BETCO for the year ended December 26, 2020.
Operating Expenses - Contingent consideration and earnout fair value adjustments Contingent consideration and earnout fair value adjustments decreased by $0.7 million or 100.0% for the year ended January 1, 2022 compared to the year ended December 31, 2022, and were related to the change in fair value of the earnout of the 2,000,000 common stock shares that were issued and released on June 21, 2021.
Income from Operations Income from operations increased by $4.3 million or 4.7% from $91.7 million for the year ended December 26, 2020 to $95.9 million for the year ended January 1, 2022 due to an increase in revenue offset by an increase in cost of sales, selling and general and administrative expenses. 29 INTERNATIONAL (dollar amounts in thousands) Results of Operations - Janus International- For the year ended January 1, 2022 compared to the year ended December 26, 2020 Year Ended Variance January 1, 2022 December 26, 2020 $ % REVENUE Sales of products $ 38,490 $ 25,509 $ 12,981 50.9 % Sales of services 30,089 19,981 10,108 50.6 % Total revenue $ 68,579 $ 45,490 $ 23,089 50.8 % Cost of Sales 50,486 31,647 18,838 59.5 % GROSS PROFIT $ 18,093 13,843 $ 4,251 30.7 % OPERATING EXPENSE Selling and marketing 3,706 2,600 1,106 42.5 % General and administrative 17,957 8,432 9,525 113.0 % Operating Expenses $ 21,663 $ 11,032 $ 10,631 96.4 % INCOME FROM OPERATIONS $ (3,570) $ 2,811 $ (6,380) (227.0) % Revenue (dollar amounts in thousands) Year Ended Variances Variance % Revenue Variance Breakdown January 1, 2022 December 26, 2020 Organic Growth Organic Growth Sales of products $ 38,490 $ 25,509 $ 12,981 50.9 % $ 12,981 50.9 % Sales of services 30,089 19,981 10,108 50.6 % 10,108 50.6 % Total $ 68,579 $ 45,490 $ 23,089 50.8 % $ 23,089 50.8 % The $23.1 million revenue increase includes a 50.8% increase in organic growth driven by increased sales volumes due to improved market conditions in 2021 as compared to the pandemic impacted 2020 results.
INTERNATIONAL (dollar amounts in thousands) Results of Operations - Janus International- For the year ended December 31, 2022 compared to the year ended January 1, 2022 Year Ended Variance December 31, 2022 January 1, 2022 $ % REVENUE Sales of products $ 43,378 $ 38,490 $ 4,888 12.7 % Sales of services 32,133 30,089 2,044 6.8 % Total revenue $ 75,511 $ 68,579 $ 6,932 10.1 % Cost of Sales 55,811 50,486 5,325 10.5 % GROSS PROFIT $ 19,700 18,093 $ 1,607 8.9 % OPERATING EXPENSE Selling and marketing 3,224 3,706 (482) (13.0) % General and administrative 12,039 17,957 (5,918) (33.0) % Operating Expenses $ 15,264 $ 21,663 $ (6,400) (29.5) % INCOME FROM OPERATIONS $ 4,436 $ (3,570) $ 8,006 Revenue (dollar amounts in thousands) Year Ended Variances Variance % Revenue Variance Breakdown December 31, 2022 January 1, 2022 Organic Growth Organic Growth Sales of products $ 43,378 $ 38,490 $ 4,888 12.7 % $ 4,888 12.7 % Sales of services 32,133 30,089 2,044 6.8 % 2,044 6.8 % Total $ 75,511 $ 68,579 $ 6,931 10.1 % $ 6,931 10.1 % The $6.9 million revenue increase includes a 10.1% increase in organic growth driven by increased sales volumes due to improved market conditions and commercial actions instituted in 2021.
Year Ended Variance Variance % Cost of Sales Variance Breakdown January 1, 2022 December 26, 2020 Domestic Acquisitions Organic Growth Organic Growth % Cost of Sales $ 481,714 $ 330,184 $ 151,530 45.9 % $ 24,279 $ 127,251 38.5% The $151.5 million or 45.9% increase in cost of sales for the year ended January 1, 2022 compared to the year ended December 26, 2020 is primarily due to increased revenue coupled with an increase in raw material, labor, and logistics costs.
Year Ended Variance Variance % Cost of Sales Variance Breakdown December 31, 2022 January 1, 2022 Domestic Acquisitions Organic Growth Organic Growth % Cost of Sales $ 648,983 $ 481,714 $ 167,269 34.7 % $ 43,682 $ 123,587 25.7% The $167.3 million or 34.7% increase in cost of sales for the year ended December 31, 2022 compared to the year ended January 1, 2022 is primarily due to increased revenue coupled with an increase in raw material, labor, and logistics costs.
R3 sales increased by $70.4 million or 46.6% for the year ended January 1, 2022 compared to the year ended December 26, 2020 due to the increase of conversions and expansions as more self-storage capacity continues to be brought online through R3 as opposed to greenfield sites coupled with the positive impacts from commercial actions.
R3 sales increased by $93.9 million or 44.7% for the year ended December 31, 2022 compared to the year ended January 1, 2022 due primarily to the continued trend of new self-storage capacity being brought online through conversions and expansions coupled with the positive impacts from commercial actions.
Every fifth or sixth year will require a 53rd week and the year ended January 1, 2022 was a year in which we added a 53rd week. We have presented results of operations, including the related discussion and analysis for the year ended January 1, 2022 compared to the year ended December 26, 2020.
Every fifth or sixth year will require a 53rd week and the year ended January 1, 2022 was a year in which we added a 53rd week.
The increase for the year ended is due to a $0.7 million adjustment related to the change in fair value of the earnout of the 2,000,000 common stock shares that were issued and released on June 21, 2021 and a $(2.2) million contingent consideration fair value adjustment related to the acquisition of NOKE and BETCO for the year ended December 26, 2020.
Operating Expenses - Contingent consideration and earnout fair value adjustments Contingent consideration and earnout fair value adjustments decreased by $0.7 million or 100.0% from $0.7 million for the year ended January 1, 2022 to $— million for the year ended December 31, 2022. respectively, and were related to the change in fair value of the earnout of the 2,000,000 common stock shares that were issued and released on June 21, 2021.
In accordance with Janus’s policies, Janus regularly evaluates its estimates, assumptions, and judgments, including, but not limited to, those concerning revenue recognition, inventory, accounts receivable, depreciation and amortization, contingencies, goodwill and other long lived asset impairment, unit-based compensation, derivative warrant liability, contingent consideration, and income taxes, and bases its 37 estimates, assumptions, and judgments on its historical experience and on factors Janus believes reasonable under the circumstances.
In accordance with Janus’s policies, Janus regularly evaluates its estimates, assumptions, and judgments, including, but not limited to, those concerning revenue recognition, accounts receivables, inventory valuation, contingencies, valuation of long-lived assets, goodwill and other long-lived intangible asset impairment, unit-based compensation, income taxes and acquisitions of businesses.
Revenues increased in 2021 as compared to 2020 largely due to continued strong performance within both the R3 and Commercial and Other sales channels and $36.6 million of inorganic growth as a result of the DBCI and ACT acquisitions coupled with the COVID-19 pandemic impacting prior year revenue in 2020.
Revenues and net income increased in 2022 as compared to 2021 largely due to continued strong performance within all three sales channels and $56.6 million of inorganic growth as a result of the DBCI and ACT acquisitions coupled with the impact from the commercial actions taken in 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeJanus also has a $80 million credit facility with a financial institution, for the year ended January 1, 2022 and $50 million for the year ended December 26, 2020. As of January 1, 2022 and December 26, 2020 there was $6.4 million and no outstanding amounts under this facility, respectively.
Biggest changeAs of December 31, 2022 and January 1, 2022, there was no outstanding amounts and $6.4 million outstanding amounts under this facility, respectively. The interest rate on the facility is based on a base rate, unless a LIBOR Rate option is chosen by the Company.
To mitigate credit risk, ongoing credit evaluations of customers’ financial condition are performed, deposits are required for select customers, and lien rights on any jobs in which Janus provides subcontracted installation services are available. As of January 1, 2022 and December 26, 2020, Janus’ top 10 customers represented less than 25% and 30% of our gross trade accounts receivable, respectively.
To mitigate credit risk, ongoing credit evaluations of customers’ financial condition are performed, deposits are required for select customers, and lien rights on any jobs in which Janus provides subcontracted installation services are available. As of December 31, 2022 and January 1, 2022, Janus’ top 10 customers represented less than 25% and 25% of our gross trade accounts receivable, respectively.
Credit risk As of January 1, 2022 and December 26, 2020, our cash and cash equivalents were maintained at major financial institutions in the United States, Europe, Singapore, and Australia, and our current deposits are likely in excess of insured limits.
Credit risk As of December 31, 2022 and January 1, 2022, our cash and cash equivalents were maintained at major financial institutions in the United States, Europe, Singapore, and Australia, and our current deposits are likely in excess of insured limits.
These fixed price agreements expect to cover approximately 52.0% of estimated steel purchases for fiscal year end. We have not entered into hedges with respect to our raw material costs at this time, but we may choose to enter into such hedges in the future.
These fixed price agreements expect to cover approximately 40.7% of estimated steel purchases for fiscal year end. We have not entered into hedges with respect to our raw material costs at this time, but we may choose to enter into such hedges in the future.
Impact of Inflation Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results if we are unsuccessful in passing such inflationary increases on to our customers in the form of higher prices. Inflationary pressures have significantly impacted our 2021 results of operations. 43
Impact of Inflation Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our operating results if we are unsuccessful in passing such inflationary increases on to our customers in the form of higher prices. Inflationary pressures have significantly impacted our 2022 results of operations. 44
Commodity/raw material price exposures and concentration of supplier risk Janus’s biggest commodity group spend is steel coils, which is subject to price volatility due to external factors, and comprises approximately, 61.3% and 61.8% of commodity spend on a consolidated level for the fiscal year ended December 26, 2020 and the fiscal year ended January 1, 2022, respectively.
Commodity/raw material price exposures and concentration of supplier risk Janus’s biggest commodity Company spend is steel coils, which is subject to price volatility due to external factors, and comprises approximately, 62.2% and 61.8% of commodity spend on a consolidated level for the fiscal year ended December 31, 2022 and January 1, 2022, respectively.
On January 1, 2022 the Amendment No. 4 debt carried a total interest of 4.25% Taking into account the LIBOR floor of 1.0%, a hypothetical increase or decrease in 100 basis points of the LIBOR rate on the amounts outstanding under the Amendment No. 4 to 1st Lien term loan as of January 1, 2022, would have led to an approximate $0.9 million increase and no decrease in the interest expense of the Amendment No. 4 to 1st Lien term loan on an annual basis.
Taking into account the LIBOR floor of 1.0%, a hypothetical increase or decrease in 100 basis points of the LIBOR rate on the amounts outstanding under the Amendment No. 4 to 1st Lien term loan as of December 31, 2022, would have led to an approximate $7.1 million increase and $7.1 million decrease in the interest expense of the Amendment No. 4 to 1st Lien term loan on an annual basis.
We believe these institutions have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us. Our accounts receivable primarily relate to revenue from the sale of products and services to established customers.
Based on the information available as of the date of this Annual Report on Form 10-K, these institutions have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us. 43 Our accounts receivable primarily relate to revenue from the sale of products and services to established customers.
Historically, our management 42 entered into interest rate hedges, but has not done so within the periods presented. Management would consider using such mitigating strategy in the future to combat potential exposure.
Historically, our management entered into interest rate hedges, but has not done so within the periods presented. Management would consider using such mitigating strategy in the future to combat potential exposure. Refer to Item 1A. Risk Factors for further information on the risks associated with our interest rate exposure.
Interest rate exposure As indicated in Note 9 of Janus’ consolidated financial statements, for the year ended December 26, 2020 Janus’ outstanding borrowings under its credit facilities include a 1st Lien term loan for $562.4 million and borrowings under its amended credit facilities include a second tranche of the 1st Lien term loan (“1st Lien B2 term loan”) for $73.9 million.
Interest rate exposure As indicated in Note 9 of Janus’ consolidated financial statements, for the year ended December 31, 2022, outstanding borrowings under its credit facilities include a First Lien Amendment No. 4 term loan.
The facility accrues interest at our option of (i) a LIBOR rate plus the applicable margin or (ii) a base rate plus the applicable margin. At January 1, 2022 and December 26, 2020 the interest rate was 3.5%. Janus experiences risk related to fluctuations in the LIBOR rate and base rate at any given time.
Janus experiences risk related to fluctuations in the LIBOR rate and base rate at any given time.
Removed
For the year ended January 1, 2022 the credit facility was amended and now includes a single tranche of debt, Amendment No. 4, with a total term loan amount of $722.4 million.
Added
On August 18, 2021, the Company completed a refinancing of its First Lien Amendment No. 3, in which the principal terms of the amendment were new borrowings of $155 million which was used to fund the DBCI acquisition.
Removed
These borrowings accrue interest at our option of (i) a LIBOR rate, subject to a 1.00% floor, plus the applicable margin or (ii) a base rate (i.e., prime rate or federal funds rate) plus the applicable margin.
Added
The Amendment No. 4 First Lien is comprised of a syndicate of lenders originating on August 18, 2021 in the amount of $726 million with interest payable in arrears.
Removed
The interest rate on the 1st Lien term loan and 1st Lien B2 term loan was the LIBOR rate plus 3.75% and 4.50%, or a total interest rate of 4.75% and 5.5% respectively on December 26, 2020.
Added
The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of September 2021 with the remaining principal due on the maturity date of February 12, 2025.
Added
As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of LIBOR, plus an applicable margin percent (effective interest rate of 7.98% as of December 31, 2022). Janus also has a $80.0 million credit facility with a financial institution, for the year ended December 31, 2022 and January 1, 2022, respectively.
Added
If the LIBOR Rate is elected, the interest computation is equal to the LIBOR Rate plus the LIBOR Rate Margin. If the Base Rate is elected, the interest computation is equal to the Base Rate plus the Base Rate Margin.
Added
At the beginning of each quarter the applicable margin is set and determined by the administrative agent based on the average net availability on the line of credit for the previous quarter. As of December 31, 2022 and January 1, 2022, the interest rate in effect for the facility was 7.8% and 3.5%, respectively.

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