# Janus International Group, Inc. (JBI) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Janus International Group, Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1839839/000183983925000032/jbi-20241228.htm
Accession: 0001839839-25-000032
Filing date: 2025-02-26
Report date: 2024-12-28
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/JBI/
All MD&A years: /company/JBI/mda/
Previous year: /company/JBI/mda/fy2023/ (FY 2023)
Next year: /company/JBI/mda/fy2026/ (FY 2026)

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. You should read the following discussion and analysis of Janus’s financial condition and results of operations in conjunction with the consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K (this “Annual Report”).

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed on February 28, 2024 for discussion and analysis of results of operations for the year ended December 30, 2023.

Certain information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to plans and strategy for Janus’s business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors,” Janus’s actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. 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. We assume no obligation to update any of these forward-looking statements.

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 “Janus,” “we,” “us,” “our,” and other similar terms refer to Janus International Group Inc. and its subsidiaries.

Percentage amounts included in this Annual Report have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Annual Report may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this Annual Report. Certain other amounts that appear in this Annual Report may not sum due to rounding.

Dollar amounts are shown in millions of dollars, unless otherwise noted, and rounded to the nearest million except for share

and per share amounts.

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. 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 28, 2024 and December 30, 2023.

•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 28, 2024 and December 30, 2023. This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at December 28, 2024, 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 Estimates: This section identifies and summarizes those accounting estimates 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.

27

Business Overview

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 with manufacturing operations in Georgia, Texas, Arizona, Indiana, North Carolina, Poland, United Kingdom (“U.K.”), and Australia. The Company focuses on providing building solutions to two primary markets, providing building solutions to the self-storage industry and the broader commercial industrial market. The self-storage industry is comprised of institutional and non-institutional facilities. Institutional facilities typically include multi-story, climate-controlled facilities located in prime locations owned and/or managed by large REITs or returns-driven operators of scale and are primarily located in the top 50 MSAs, whereas the vast majority of non-institutional facilities are 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. Janus is highly integrated with customers at every phase of a project, including facility planning/design, construction, access control and restore, rebuild, replace of damaged or end-of-life products.

Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International. The Janus International segment is comprised of Janus International Europe Holdings Ltd. (UK), whose production and sales are largely in Europe, the U.K., and Australia. The Janus North America segment is comprised of all the other entities including Janus International Group, Inc., Janus International Group, LLC (“Janus Core”), Betco, Inc. (“BETCO”), Nokē, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Access Control Technologies, LLC (“ACT”), Janus Door, LLC (“Janus Door”), Steel Door Depot.com, LLC (“Steel Door Depot”), Janus International Canada, Ltd. (“Janus Canada”), and Terminal Door, LLC (“Terminal Door”).

Furthermore, our business is comprised of three primary sales channels: New Construction-Self-storage, R3-Self-storage (R3), and Commercial and Other. The Commercial and Other category is primarily comprised of roll-up sheet and rolling steel door sales into the commercial marketplace.

New construction consists of engineering and project management work pertaining to the design, building, and logistics of a greenfield new self-storage facility tailored to customer specifications while being compliant with ADA regulations. Any Nokē Smart Entry System revenue associated with a new construction project also rolls up into this sales channel.

The concept of Janus R3 is to remodel self-storage facilities, including storage unit doors, hallways, ceilings, offices, optimizing unit mix, utilizing vacant land for movable storage units (JBI MASS relocatable storage units), and adding a more robust security solutions to enable customers to: (1) charge higher rental rates and (2) compete with modern self-storage facilities and large operators. In addition, the R3 sales channel also includes new self-storage capacity being brought online through conversions and expansions. R3 transforms self-storage and other 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 offers heavy duty commercial grade steel doors (minimized dead-load, or constant weight of the curtain itself) perfect for warehouses, commercial buildings, and freight terminals, designed with a higher gauge and deeper guides, which combat the heavy scale of use with superior strength and durability. Janus also offers rolling steel doors known for minimal maintenance and easy installation with, but not limited to, the following options for; commercial slat doors, heavy duty service doors, fire doors, fire rated counter shutters, insulated service doors, counter shutters and grilles. Following the T.M.C. Acquisition (hereinafter defined), our business expanded to provide trucking terminal renovation, construction, remodeling, and maintenance services to trucking customers in the Southeast United States.

28

Executive Overview

Janus’s financials reflect the result of the execution of our operational and corporate strategy to penetrate the commercial and industrial storage markets, as well as capitalizing on the aging self-storage facilities, while continuing to diversify our products and solutions. Janus is a bespoke provider of not only products, but solutions that generate a favorable financial outcome for our clients.

•During fiscal year 2024, we introduced our all-new internal hardwired smart lock, Nokē Ion™ and announced our NS Series of enhanced security doors.

•Opened a distribution center in Toronto, Canada to service our Canadian markets and in Mt. Airy, North Carolina to support our commercial market.

•Acquired the assets of T.M.C., a premier provider of terminal maintenance services for the trucking industry in the Southeast.

•Announced a structural cost reduction program.

•Completed a voluntary pay down of $21.9 toward our debt and successfully repriced our term loan, which reduced the interest rate margin by 50 bps.

•Repurchased 7,141,261 shares for $79.6 as part of our previously announced $100.0 share repurchase program.

•Total revenues of $963.8 for the year ended December 28, 2024 compared to $1,066.4 for the year ended December 30, 2023.

•Net income was $70.4 for the year ended December 28, 2024 compared to $135.7 for the year ended December 30, 2023.

•Adjusted EBITDA was $208.5 for the year ended December 28, 2024 compared to $285.6 for the year ended December 30, 2023.

•Adjusted EBITDA as a percentage of revenue was 21.6% for the year ended December 28, 2024 compared to 26.8% for the year ended December 30, 2023.

•Cash flows from operations of $154.0 and free cash flow of $133.8 were generated for the year ended December 28, 2024 compared to $215.0 cash flows from operations and $196.0 free cash flow for the year ended December 30, 2023.

Information regarding use of Adjusted EBITDA and Free Cash Flow non-GAAP measures, and a reconciliation to the most comparable GAAP measure, is included in “Non-GAAP Financial Measures.”

Business Segment Information

Our business is operated through two geographic regions that comprise our two reportable segments: Janus North America and Janus International.

Janus North America is comprised of nine entities including Corporate, Janus Core, Janus Door, Steel Door Depot, ASTA, NOKE, BETCO, ACT and T.M.C. Janus North America produces and provides various fabricated components such as commercial and self-storage doors, walls, hallway systems and building components used primarily by owners or builders of self-storage facilities and also offers installation services along with the products. Janus North America represented 92.4% and 92.3% of Janus’s revenue for the years ended December 28, 2024 and December 30, 2023.

Janus International is comprised of Janus International Europe Holdings Ltd (“Janus Europe Holdings”) and its subsidiaries, Janus International Australia Pty Ltd (“Janus Australia”), Janus International Europe Ltd (“Janus Europe”), Janus International France SARL (“Janus France”), and Janus International Poland sp. z.o.o (“Janus Poland”). The Janus International segment produces and provides similar products and services as Janus North America but largely in Europe, the U.K., and Australia. Janus International represented 7.6% and 7.7% of Janus’s revenue for the years ended December 28, 2024 and December 30, 2023.

Basis of Presentation

The consolidated financial statements have been derived from the accounts of Janus and its wholly owned subsidiaries. Janus’s fiscal year follows a 4-4-5 calendar which generally divides a year into four quarters of 13 weeks, grouped into two 4-week “months” and one 5-week “month.” As a result, some period comparisons are not comparable as one period is longer than the other two. The major advantage of a 4-4-5 calendar is that the end date of the period is always the same day of the week, making manufacturing planning easier as every period is the same length. Our fiscal year is composed of the 52 or 53 weeks ending on the Saturday closest to the last day of December. Fiscal year 2024, ending on December 28, 2024, and fiscal year 2023, ending on December 30, 2023, were both comprised of 52 weeks. All references to years, quarters, and months relate to fiscal periods rather than calendar periods, unless otherwise noted.

We have presented results of operations, including the related discussion and analysis for the year ended December 28, 2024 compared to the year ended December 30, 2023.

29

Components of Results of Operations

Product revenues. Product revenues represent 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. Product revenues are recognized upon transfer of control to the customer, which generally takes place at the point of destination. In certain instances, product revenues include all revenues affiliated with erecting an entire structure for our customers, which is recognized over time. We expect our product revenue may vary from period to period on, among other things, the timing and size of orders and delivery of products and the impact of significant transactions. Revenues are monitored and analyzed as a function of sales reporting within the following sales channels: Self-Storage New Construction, Self-Storage R3, and Commercial and Other.

Service revenues. Service revenue primarily reflects installation services provided to customers for steel structures, steel roll-up and swing doors, hallway systems, and relocatable storage units. Additionally, service revenue includes trucking terminal construction and remodeling, as well as repair and maintenance services tailored to trucking customers. Service revenue is recognized over time as performance obligations are satisfied. Janus maintains close integration with customers throughout all phases of a project, including facility planning and design, construction, access control, and R3 services for damaged or end-of-life products, as well as facility updates driven by market consolidation.

Product cost of revenues. Product cost of revenues includes the manufacturing cost of our steel roll-up and swing doors, rolling steel doors, steel structures, and hallway systems which primarily consists of amounts paid to our third-party contract suppliers, outbound freight, and personnel-related costs directly associated with manufacturing operations, depreciation on certain assets, as well as other as overhead and indirect costs. Product costs of revenues also include all costs affiliated with erecting a self storage facility for our customers. We expect our product cost of revenues to substantially correlate to our product revenues.

Service cost of revenues. Cost of services includes third-party installation subcontractor costs directly associated with the installation of our products. Our cost of revenues include purchase price variance, cost of spare or replacement parts, warranty costs, excess and obsolete inventory charges, shipping costs, and an allocated portion of overhead costs, including depreciation. We expect our service cost of revenues to substantially correlate to our service revenues.

Selling and marketing expense. Selling expenses consist primarily of compensation and benefits of employees engaged in selling activities as well as related travel, advertising, trade shows/conventions, meals and entertainment expenses. We expect selling expenses to substantially correlate to overall revenues, with some deviations for strategic investments.

General and administrative expense. General and administrative (“G&A”) expenses are comprised primarily of expenses relating to employee compensation and benefits, travel, meals and entertainment expenses as well as depreciation, amortization, professional services and public company costs. We expect general and administrative expenses to substantially correlate to overall revenues, with some deviations for strategic investments.

Interest expense. Consists of interest expense on short-term and long-term debt and amortization of deferred financing fees, partially offset by interest income earned on cash equivalents. (see “Long Term Debt” section).

30

Key Performance Measures

Management evaluates the performance of its reportable segments based on the revenue of products and services, gross profit, and Adjusted EBITDA, which is a non-GAAP financial metric, as a supplemental measure of our performance in order to provide investors with an improved understanding of underlying performance trends. Please see the section titled “Non-GAAP Financial Measures” below for further discussion of this financial measure, including the reasons why we use such financial measures and reconciliations of such financial measures to the nearest GAAP financial measures.

Human capital is also one of the main cost drivers of the manufacturing, selling, and administrative processes of Janus. As a result, headcount generally reflects Janus’s operational status, indicating whether the business is expanding or contracting. While we expect changes in our workforce to generally correlate to our operational performance, certain non-recurring events such as corporate restructuring, could impact general trends related to our headcount as the Company continues to develop an appropriate workforce composition to meet operational demand. As of December 28, 2024 and December 30, 2023, the Company’s headcount was 2,271 (including 388 temporary employees) and 2,305 (including 441 temporary employees), respectively.

The following table sets forth key performance measures for the years ended December 28, 2024 and December 30, 2023

(dollar amounts in millions)

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 28, 2024","","December 30, 2023","","$","","%"],["Total Revenue","$","963.8","","$","1,066.4","","$","(102.6)","","","(9.6)","%"],["Adjusted EBITDA","$","208.5","","$","285.6","","$","(77.1)","","","(27.0)","%"],["Adjusted EBITDA (% of revenue)","21.6","%","","26.8","%","","","","(5.2)","%"]]
[[/GREPCENT_TABLE]]

Total revenues decreased by $102.6 or 9.6% for the year ended December 28, 2024 compared to the year ended December 30, 2023, primarily due to the negative impacts of volume declines due to project deferrals as a result of the higher interest rate environment.

Adjusted EBITDA decreased by $77.1 or 27.0% from the year ended December 28, 2024 compared to the year ended December 30, 2023, and Adjusted EBITDA as a percentage of revenue decreased 5.2% for the year ended December 28, 2024 primarily due to the negative impacts of volume declines due to project deferrals and increases in operating expenses. (See “Non-GAAP Financial Measures” section).

31

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.

Factors Affecting Revenues

Janus’s revenues from products sold are driven by economic conditions, which impacts new construction of self-storage facilities, R3 of self-storage facilities, and commercial revenue.

Janus periodically modifies sales prices of their products due to changes in costs for raw materials, energy, market conditions, labor and logistics costs and the competitive environment. In certain cases, realized price increases are less than the announced price increases because of project pricing, competitive reactions and changing market conditions. Janus also offers a wide assortment of products that are differentiated by style, design and performance attributes. Pricing and margins for products within the assortment vary. In addition, changes in the relative quantity of products purchased at different price points can impact year-to-year comparisons of net sales and operating income.

Service revenue is driven by the product revenue and the increase in value-added services, such as pre-work planning, site drawings, installation and general contracting, project management, and third-party security. 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, including those that will support its overall strategy of portfolio diversification, geographic expansion, and technological innovation, among other areas of focus. While Janus seeks acquisition opportunities that it believes will augment its business and growth objectives, certain factors could prevent acquisition opportunities from materializing, including target-company availability, relative valuation expectations, and certain due diligence considerations, among other factors.

Factors Affecting Operating Costs

Janus’s operating expenses are comprised of direct production costs (principally raw materials, labor and energy), manufacturing overhead costs, freight, costs to purchase sourced products and selling and marketing, and general and administrative expenses.

Janus’s largest individual raw material expenditure is steel coils. Fluctuations in the prices of steel coil are generally beyond Janus’s control and have a direct impact on the financial results. From time to time, Janus enters into agreements with large suppliers in order to fix steel coil prices for part of Janus’s production needs and partially mitigate the potential impacts of short-term steel coil price fluctuations. These arrangements allow Janus to purchase steel coils for fixed prices as outlined in the contracts. Outbound freight costs are driven by Janus’s volume of product revenues and are subject to the freight market pricing environment.

32

Results of Operations - Consolidated

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 Report. The following tables set forth our results of operations for the periods presented in dollars.

A detailed discussion of the prior year ended December 30, 2023 to the year ended December 31, 2022 year-over-year changes is not included herein and can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the year ended December 30, 2023 Annual Report on Form 10-K filed on February 28, 2024.

Results of Operations

(dollar amounts in millions)

For the year ended December 28, 2024 compared to the year ended December 30, 2023

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance"],["","December 28, 2024","","December 30, 2023","","$","","%"],["REVENUE"],["Product revenues","$","779.4","","","$","909.8","","","$","(130.4)","","","(14.3)","%"],["Service revenues","184.4","","","156.6","","","27.8","","","17.8","%"],["Total revenue","$","963.8","","","$","1,066.4","","","$","(102.6)","","","(9.6)","%"],["Product cost of revenues","442.3","","","500.8","","","(58.5)","","","(11.7)","%"],["Service cost of revenues","123.7","","","115.9","","","7.8","","","6.7","%"],["Cost of revenues","$","566.0","","","$","616.7","","","$","(50.7)","","","(8.2)","%"],["GROSS PROFIT","$","397.8","","","$","449.7","","","$","(51.9)","","","(11.5)","%"],["OPERATING EXPENSE"],["Selling and marketing","68.1","","","65.5","","","2.6","","","4.0","%"],["General and administrative","171.1","","","138.5","","","32.6","","","23.5","%"],["Impairment","12.0","","","\u2014","","","12.0","","","100.0","%"],["Operating Expenses","$","251.2","","","$","204.0","","","$","47.2","","","23.1","%"],["INCOME FROM OPERATIONS","$","146.6","","","$","245.7","","","$","(99.1)","","","(40.3)","%"],["Interest expense, net","(49.6)","","","(60.0)","","","10.4","","","(17.3)","%"],["Gain on sale of manufacturing facility","5.0","","","\u2014","","","5.0","","","100.0","%"],["Loss on extinguishment and modification of debt","(1.7)","","","(3.9)","","","2.2","","","(56.4)","%"],["Other (expense)","\u2014","","","1.0","","","(1.0)","","","(100.0)","%"],["Other Expense, Net","$","(46.3)","","","$","(62.9)","","","$","16.6","","","(26.4)","%"],["INCOME BEFORE TAXES","$","100.3","","","$","182.8","","","$","(82.5)","","","(45.1)","%"],["Provision for Income Taxes","29.9","","","47.1","","","(17.2)","","","(36.5)","%"],["NET INCOME","$","70.4","","","$","135.7","","","$","(65.3)","","","(48.1)","%"],["Adjusted EBITDA*","$","208.5","","","$","285.6","","","$","(77.1)","","","(27.0)","%"]]
[[/GREPCENT_TABLE]]

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

33

Revenue

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance","","Variance Breakdown"],["","December 28, 2024","","December 30, 2023","","$","","%","","Acquisition Revenue","","Organic Growth","","Organic Growth %"],["Product revenues","$","779.4","","","$","909.8","","","$","(130.4)","","","(14.3)","%","","$","\u2014","","","$","(130.4)","","","(14.3)","%"],["Service revenues","184.4","","","156.6","","","27.8","","","17.8","%","","27.2","","","$","0.6","","","0.4","%"],["Total","$","963.8","","","$","1,066.4","","","$","(102.6)","","","(9.6)","%","","$","27.2","","","$","(129.8)","","","(12.2)","%"]]
[[/GREPCENT_TABLE]]

Total revenue declined $102.6 for the year ended December 28, 2024 compared to the year ended December 30, 2023. The organic revenue decline for the year ended December 28, 2024 is substantially attributed to a decline in volume associated with customer deferrals of projects based on macroeconomic uncertainty and the interest rate environment. The organic decline was partially offset by $27.2 in inorganic revenue from the T.M.C. Acquisition.

The following table and discussion compares Janus’s revenues by sales channel:

[[GREPCENT_TABLE]]
[["","Year Ended","","","","Year Ended","","","","Variance"],["(dollar amounts in millions)","December 28, 2024","","% of revenues","","December 30, 2023","","% of revenues","","$","","%"],["New Construction - Self Storage","$","416.3","","","43.2","%","","$","394.9","","","37.0","%","","$","21.4","","","5.4","%"],["R3 - Self Storage","245.7","","","25.5","%","","334.9","","","31.4","%","","(89.2)","","","(26.6)","%"],["Commercial and Other","301.8","","","31.3","%","","336.6","","","31.6","%","","(34.8)","","","(10.3)","%"],["Total","$","963.8","","","100.0","%","","$","1,066.4","","","100.0","%","","$","(102.6)","","","(9.6)","%"]]
[[/GREPCENT_TABLE]]

New construction revenues increased by $21.4 or 5.4% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The increase in the year ended December 28, 2024 is primarily due to elevated occupancy rates and continued demand in the first half of the year.

R3 revenues decreased by $89.2 or 26.6% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The R3 sales decrease was due to project deferrals associated with macroeconomic uncertainty as well as an approximately 33% decline in facility expansion and retail big-box conversion activity.

Commercial and other revenues decreased by $34.8 or 10.3% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease was attributable to a decline in volumes for rolling sheet doors in the carport and shed market, partially offset by $27.2 in inorganic revenue from the T.M.C. Acquisition.

Cost of Revenues

[[GREPCENT_TABLE]]
[["","Year Ended","","Variance","","Variance Breakdown"],["(dollar amounts in millions)","December 28, 2024","","December 30, 2023","","$","","%","","Acquisition Cost","","Organic Growth","","Organic Growth %"],["Product cost of revenues","$","442.3","","","$","500.8","","","$","(58.5)","","(11.7)","%","","$","\u2014","","","$","(58.5)","","","(11.7)","%"],["Service cost of revenues","123.7","","","115.9","","","7.8","","6.7","%","","17.9","","","$","(10.1)","","","(8.7)","%"],["Cost of revenues","$","566.0","","","$","616.7","","","$","(50.7)","","(8.2)","%","","$","17.9","","","$","(68.6)","","","(11.1)","%"]]
[[/GREPCENT_TABLE]]

The cost of revenues decreased $50.7 or 8.2% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease in product cost of revenues of $58.5 for the year ended December 28, 2024 is primarily attributable to the decline in volume. The $7.8 increase in service cost of revenue is primarily attributable to the operational costs of T.M.C., that was acquired in the second quarter of fiscal year 2024.

Operating Expenses - Selling and marketing

Selling and marketing expense increased $2.6 or 4.0% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The increase is primarily the result of an increase in marketing and advertising expenses for strategic purposes.

Operating Expenses - General and administrative

General and administrative expenses increased by $32.6 or 23.5% for the year ended December 28, 2024 compared to December 30, 2023. This was primarily driven by a $15.7 increase in the provision of expected credit losses based on a number of customers that have an elevated risk of not making payment. In addition, there is a higher cost structure as a result of the T.M.C. Acquisition as well as $2.6 of post acquisition expenditures related to the T.M.C. business. Stock-based compensation increased $3.6 as a result of the inclusion of expense associated with three fiscal years of grants in 2024 compared to two years of grant expense in fiscal year 2023. There was also an increase in restructuring charges of $0.9 to support strategic initiatives. Lastly, there was a net $4.9 increase in one-time acquisition charges, relating to various non-recurring professional fees.

34

Intangible Asset Impairment

For the year ended December 28, 2024, the Company recognized a non-cash impairment of $12.0 on our DBCI tradename primarily due to an overall change in brand strategy for the DBCI tradename. Therefore, we have a lowered expected future revenue, earnings, and cash flow stream associated with the tradename.

Interest Expense, net

Interest expense, net decreased $10.4 to $49.6 or 17.3% for the year ended December 28, 2024 compared to the year ended December 30, 2023 primarily due to a voluntary debt repayment of $21.9 million during the 2024 fiscal year and a voluntary repayment of $85.3 throughout the 2023 fiscal year. The decrease in interest expense is also due to the April 2024 Repricing Agreement, which lowered the overall interest rate, partially offset by the investment in cash equivalents, which resulted in interest income of $2.1 for the year ended December 28, 2024. (See “Liquidity and Capital Resources” section).

Income Taxes

Income tax expense decreased by $17.2 or 36.5% to $29.9 for the year ended December 28, 2024 from $47.1 for the year ended December 30, 2023, due to the year over year decrease of income before taxes.

Net Income

The $65.3 or 48.1% decrease in net income for the year ended December 30, 2023 compared to the year ended December 28, 2024 is largely due to a decrease in revenues and increase in operating expenses partially offset by a decrease in cost of revenues.

Adjusted EBITDA

Adjusted EBITDA decreased by $77.1 or 27.0% for the year ended December 28, 2024 compared to the year ended December 30, 2023, primarily due to a decrease in revenue yielding a decline in gross profit of $45.7 with an increase in general and administrative costs largely attributed to the provision of expected credit losses reserves of $15.7 and an increase in costs associated with the opening of the Poland facility.

Segment Results of Operations

We operate in and report financial results for two segments: North America and International. We have the following sales channels: Self-Storage New Construction, Self-Storage R3, and Commercial and Other.

Gross profit and Adjusted EBITDA are the measures of profit and loss that our Chief Operating Decision Maker (“CODM”) uses to evaluate the financial performance of the business and as the basis for resource allocation, performance reviews and compensation.

Adjusted EBITDA is defined as net income excluding interest expense, income taxes, depreciation, amortization, and other non-operational, non-recurring items. The CODM uses Adjusted EBITDA, a non-GAAP financial measure, as a primary performance metric to assess operating performance, develop future operating plans, and make strategic decisions related to operating expenses and resource allocation, among others.

The segment discussion that follows describes the significant factors contributing to the changes in results for each segment included in net earnings.

35

Results of Operations - Janus North America

For the year ended December 28, 2024 compared to the year ended December 30, 2023

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 28, 2024","","December 30, 2023","","$","","%"],["REVENUE"],["Product revenues","$","738.6","","","$","865.1","","","$","(126.5)","","","(14.6)%"],["Services revenues","154.0","","","120.6","","","33.4","","","27.7%"],["Total revenue","$","892.6","","","$","985.7","","","$","(93.1)","","","(9.4)%"],["Product cost of revenues","410.5","","","470.8","","","(60.3)","","","(12.8)%"],["Service cost of revenues","102.3","","","89.4","","","12.9","","","14.4%"],["Cost of revenues","$","512.8","","","$","560.2","","","$","(47.4)","","","(8.5)%"],["GROSS PROFIT","$","379.8","","","$","425.5","","","$","(45.7)","","","(10.7)%"],["OPERATING EXPENSE"],["Selling and marketing","63.6","","","62.2","","","1.4","","","2.3%"],["General and administrative","157.6","","","125.4","","","32.2","","","25.7%"],["Impairment","12.0","","","\u2014","","","12.0","","","100.0%"],["Operating Expenses","$","233.2","","","$","187.6","","","$","45.6","","","24.3%"],["INCOME FROM OPERATIONS","$","146.6","","","$","237.9","","","$","(91.3)","","","(38.4)%"],["Adjusted EBITDA*","$","206.3","","","$","275.8","","","$","(69.5)","","","(25.2)%"]]
[[/GREPCENT_TABLE]]

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Revenue

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance","","Variance Breakdown"],["","December 28, 2024","","December 30, 2023","","$","","%","","Acquisition Revenue","","Organic Growth","","Organic Growth %"],["Product revenues(1)","$","738.6","","","$","865.1","","","$","(126.5)","","","(14.6)","%","","$","\u2014","","","$","(126.5)","","","(14.6)","%"],["Service revenues","154.0","","","120.6","","","33.4","","","27.7","%","","27.2","","","$","6.2","","","5.1","%"],["Total revenue","$","892.6","","","$","985.7","","","$","(93.1)","","","(9.4)","%","","$","27.2","","","$","(120.3)","","","(12.2)","%"]]
[[/GREPCENT_TABLE]]

(1) Product revenues include product revenues transferred at a point in time and product revenues transferred over time.

Total revenue declined $93.1 for the year ended December 28, 2024 compared to the year ended December 30, 2023. The organic revenue decline for the year ended December 28, 2024 is substantially attributed to a decline in volume associated with customer deferrals of projects based on macroeconomic uncertainty and the interest rate environment. The organic decline was partially offset by $27.2 in inorganic revenue from the T.M.C. Acquisition.

The following table and discussion compares Janus North America revenues by sales channel.

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 28, 2024","","% of total revenues","","December 30, 2023","","% of total revenues","","$","","%"],["New Construction - Self Storage","$","354.0","","","39.7","%","","$","321.7","","","32.6","%","","$","32.3","","","10.0","%"],["R3 - Self Storage","234.3","","","26.2","%","","325.8","","","33.1","%","","(91.5)","","","(28.1)","%"],["Commercial and Other","304.3","","","34.1","%","","338.2","","","34.3","%","","(33.9)","","","(10.0)","%"],["Total","$","892.6","","","100.0","%","","$","985.7","","","100.0","%","","$","(93.1)","","","(9.4)","%"]]
[[/GREPCENT_TABLE]]

New Construction revenues increased by $32.3 or 10.0% for the year ended December 28, 2024 compared to the year ended December 30, 2023 primarily due to elevated occupancy rates and continued demand in the first half of the year.

R3 revenues decreased by $91.5 or 28.1% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The R3 sales decrease was due to project deferrals associated with macroeconomic uncertainty as well as an approximately 33% decline in facility expansion and retail big-box conversion activity.

36

Commercial and Other revenues decreased by $33.9 or 10.0% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease was attributable to a decline in volumes for rolling sheet doors in the carport and shed market, offset by $27.2 in inorganic revenue from the T.M.C. Acquisition.

Cost of Revenues

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance","","Variance Breakdown"],["","December 28, 2024","","December 30, 2023","","$","","%","","Acquisition Cost","","Organic Growth","","Organic Growth %"],["Product cost of revenues","$","410.5","","$","470.8","","$","(60.3)","","(12.8)","%","","$","\u2014","","","$","(60.3)","","","(12.8)","%"],["Service cost of revenues","102.3","","89.4","","12.9","","14.4","%","","17.9","","","$","(5.0)","","","(5.6)","%"],["Cost of revenues","$","512.8","","$","560.2","","$","(47.4)","","(8.5)","%","","$","17.9","","","$","(65.3)","","","(11.7)","%"]]
[[/GREPCENT_TABLE]]

The cost of revenues decreased $47.4 or 8.5% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease in product cost of revenues of $60.3 for the year ended December 28, 2024 is primarily attributable to the decline in volume. The $12.9 increase in service cost of revenue is primarily attributable to the T.M.C. Acquisition partially offset by the decline in organic volume for the year ended December 28, 2024 compared to the year ended December 30, 2023.

Operating Expenses - Selling and marketing

Selling and marketing expenses increased $1.4 or 2.3% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The increase is primarily the result of increases in payroll, marketing, and advertising expenses.

Operating Expenses - General and administrative

General and administrative expenses increased $32.2 or 25.7% for the year ended December 28, 2024 compared to the year ended December 30, 2023. This was primarily driven by a $15.7 increase in the provision of expected credit losses based on a number of customers that have an elevated risk of not making payment. Operating expense depreciation increased by $1.8 as a result of the increased investment in property, plant and equipment. As a result of the T.M.C. Acquisition, there are approximately $2.6 additional inorganic expenses. Stock-based compensation increased $3.6 as a result of the inclusion of expense associated with three fiscal years of grants in 2024 compared to two years of grant expense in fiscal year 2023. Restructuring charges increased by $0.9 to support strategic initiatives. Lastly, there was a net $4.9 increase in one-time acquisition charges, relating to various non-recurring professional fees.

Intangible Asset Impairment

For the year ended December 28, 2024. the Company recognized a non-cash impairment of $12.0 on our DBCI tradename primarily due to an overall change in brand strategy for the DBCI tradename. The Company implemented a strategic decision to focus the use of the DBCI tradename toward the Commercial markets on a going forward basis. The DBCI tradename will no longer be a focus within the self-storage industry. Therefore, we have lowered expected future revenue, earnings, and cash flow stream associated with the tradename.

Income from Operations

Income from operations decreased by $91.3 or 38.4% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease is primarily due to a decline in sales volume and fixed cost leverage, the intangible asset impairment charge and the increase in general and administrative expenses.

Adjusted EBITDA

Adjusted EBITDA decreased by $69.5 or 25.2% for the year ended December 28, 2024 compared to the year ended December 30, 2023, primarily due to a decrease in revenue yielding a decline in gross profit of $45.7 with an increase in general and administrative costs largely attributed to the provision of expected credit losses reserves of $15.7.

37

Results of Operations - Janus International

For the year ended December 28, 2024 compared to the year ended December 30, 2023

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 28, 2024","","December 30, 2023","","$","","%"],["REVENUE"],["Product revenues","$","43.2","","","$","46.3","","","$","(3.1)","","","(6.7)","%"],["Services revenues","30.4","","","36.0","","","(5.6)","","","(15.6)","%"],["Total revenue","$","73.6","","","$","82.3","","","$","(8.7)","","","(10.6)","%"],["Product cost of revenues","33.3","","","31.7","","","1.6","","","5.0","%"],["Service cost of revenues","22.3","","","26.4","","","(4.1)","","","(15.5)","%"],["Cost of revenues","$","55.6","","","$","58.1","","","$","(2.5)","","","(4.3)","%"],["GROSS PROFIT","$","18.0","","","$","24.2","","","$","(6.2)","","","(25.6)","%"],["OPERATING EXPENSE"],["Selling and marketing","4.5","","","3.3","","","1.2","","","36.4","%"],["General and administrative","13.5","","","13.1","","","0.4","","","3.1","%"],["Operating Expenses","$","18.0","","","$","16.4","","","$","1.6","","","9.8","%"],["INCOME FROM OPERATIONS","$","\u2014","","","$","7.8","","","$","(7.8)","","","(100.0)","%"],["Adjusted EBITDA*","$","2.2","","","$","9.8","","","$","(7.6)","","","(77.6)","%"]]
[[/GREPCENT_TABLE]]

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Revenue

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance","","Variance Breakdown"],["","December 28, 2024","","December 30, 2023","","$","","%","","Acquisition Revenue","","Organic Growth","","Organic Growth %"],["Product revenues","$","43.2","","","$","46.3","","","$","(3.1)","","","(6.7)","%","","$","\u2014","","","$","(3.1)","","","(6.7)","%"],["Services revenues","30.4","","","36.0","","","(5.6)","","","(15.6)","%","","\u2014","","","$","(5.6)","","","(15.6)","%"],["Total revenues","$","73.6","","","$","82.3","","","$","(8.7)","","","(10.6)","%","","$","\u2014","","","$","(8.7)","","","(10.6)","%"]]
[[/GREPCENT_TABLE]]

The $8.7 or 10.6% decrease in revenues is primarily due to a decline in volume as a result of the U.K. recessionary period during the first half of fiscal year 2024.

The following table illustrates the revenues by sales channel for the years ended December 28, 2024 and December 30, 2023.

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 28, 2024","","% of total revenues","","December 30, 2023","","% of total revenues","","$","","%"],["New Construction - Self Storage","$","62.2","","","84.5","%","","$","73.2","","","88.9","%","","$","(11.0)","","(15.0)%"],["R3 - Self Storage","11.4","","","15.5","%","","9.1","","","11.1","%","","2.3","","25.3","%"],["Total","$","73.6","","","100.0","%","","$","82.3","","","100.0","%","","$","(8.7)","","(10.6)","%"]]
[[/GREPCENT_TABLE]]

New Construction revenues decreased by $11.0 or 15.0% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease in New Construction revenues is primarily due to a decline in volume as a result of the U.K. recessionary period during the first half of fiscal year 2024.

R3 revenues increased by $2.3 or 25.3% for the year ended December 28, 2024 compared to the year ended December 30, 2023.

38

Cost of revenues

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance","","Variance Breakdown"],["","December 28, 2024","","December 30, 2023","","$","","%","","Acquisition Cost","","Organic Growth","","Organic Growth %"],["Product cost of revenues","$","33.3","","","$","31.7","","","$","1.6","","","5.0","%","","$","\u2014","","","$","1.6","","","5.0","%"],["Service cost of revenues","22.3","","","26.4","","","(4.1)","","","(15.5)","%","","17.9","","","$","(22.0)","","","(83.3)","%"],["Cost of revenues","$","55.6","","","$","58.1","","","$","(2.5)","","","(4.3)","%","","$","17.9","","","$","(20.4)","","","(35.1)","%"]]
[[/GREPCENT_TABLE]]

Cost of revenues decreased by $2.5 or 4.3% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The change in cost of revenues is generally aligned with the changes in revenues following volume activity, slightly offset by an increase in fixed costs related to the manufacturing plant located in Poland, which was fully operational for the year ended December 28, 2024.

Operating Expenses - General and administrative

General and administrative expenses increased $0.4 or 3.1% for the year ended December 28, 2024 compared to the year ended December 30, 2023. The increase for the year ended December 28, 2024 is primarily due to the higher cost structure with an additional manufacturing plant located in Poland, which opened in late fiscal year 2023 and was operational during the full fiscal year 2024.

Income from Operations

Income from operations decreased by $7.8 for the year ended December 28, 2024 compared to the year ended December 30, 2023. The decrease for the periods is primarily due to a decrease in sales volume and decline from fixed cost leverage.

Adjusted EBITDA

Adjusted EBITDA decreased by $7.6 or 77.6% compared to the year ended December 30, 2023, primarily due to a decline in revenues and an increase in our cost structure associated with our Poland manufacturing plant.

39

Results of Operations - Eliminations

Eliminations include transactions to account for intercompany activity. The eliminations necessary to arrive at consolidated financial information activity for the years December 28, 2024 and December 30, 2023 are as follows:

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended"],["Revenues","December 28, 2024","","December 30, 2023"],["North America Segment revenues","$","892.6","","","$","985.7"],["International Segment revenues","73.6","","","82.3"],["Intersegment Eliminations","(2.4)","","","(1.6)"],["Consolidated total revenues","$","963.8","","","$","1,066.4"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended"],["Cost of revenues","December 28, 2024","","December 30, 2023"],["North America Segment cost of revenues","$","512.8","","","$","560.2"],["International Segment cost of revenues","55.6","","","58.1"],["Intersegment Eliminations","(2.4)","","","(1.6)"],["Consolidated total cost of revenues","$","566.0","","","$","616.7"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Revenues by sales channel","North America Revenues","","International Revenues","","Eliminations","","Consolidated Revenues"],["December 28, 2024"],["New Construction - Self Storage","$","354.0","","","$","62.2","","","$","\u2014","","","$","416.2"],["R3 - Self Storage","234.3","","","11.4","","","\u2014","","","245.7"],["Commercial and Other","304.3","","","\u2014","","","(2.4)","","","301.9"],["","$","892.6","","","$","73.6","","","$","(2.4)","","","$","963.8"],["December 30, 2023"],["New Construction - Self Storage","$","321.7","","","$","73.2","","","\u2014","","","$","394.9"],["R3 - Self Storage","325.8","","","9.1","","","\u2014","","","334.9"],["Commercial and Other","338.2","","","\u2014","","","(1.6)","","","336.6"],["","$","985.7","","","$","82.3","","","$","(1.6)","","","$","1,066.4"]]
[[/GREPCENT_TABLE]]

40

Non-GAAP Financial Measures

Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Adjusted EBITDA

Janus presents Adjusted EBITDA which is a non-GAAP financial performance measure, which excludes from reported GAAP results, the impact of certain items consisting of acquisition events and other non-recurring charges. Management believes Adjusted EBITDA allows investors to evaluate the Company’s operating performance and compare our results of operations from period to period on a consistent basis by excluding items that management does not believe are indicative of our core operating performance. EBITDA is earnings before interest, taxes, depreciation, and amortization.

Adjusted EBITDA is used by Janus to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. 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. 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. There are a number of limitations related to the use of Adjusted EBITDA rather than net income, which is the nearest GAAP equivalent of Adjusted EBITDA. These limitations include that the non-GAAP financial measures:

•exclude depreciation and amortization, and although these are non-cash expenses, the assets being depreciated may be replaced in the future;

•do not reflect interest expense, or the cash requirements necessary to service interest on debt, which reduces cash available;

•do not reflect the provision for or benefit from income tax that may result in payments that reduce cash available;

•exclude non-recurring items which are unlikely to occur again and have not occurred before (e.g., corporate restructuring); and

•exclude non-cash impairments, non-cash gains or losses on the sale of property, plant and equipment (“PP&E”), other non-cash items and one-time charges;

•may not be comparable to similar non-GAAP financial measures used by other companies, because the expenses and other items that Janus excludes in the calculation of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from these non-GAAP financial measures when they report their operating results.

Because of these limitations, these non-GAAP financial measures should be considered along with other operating and financial performance measures presented in accordance with GAAP. The following table presents a reconciliation of net income to Adjusted EBITDA for the periods indicated:

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Year Ended","","Variance"],["","December 28, 2024","","December 30, 2023","","$","","%"],["Net Income","$","70.4","","","$","135.7","","","$","(65.3)","","","(48.1)","%"],["Interest expense, net","49.6","","","60.0","","","(10.4)","","","(17.3)","%"],["Income taxes","29.9","","","47.1","","","(17.2)","","","(36.5)","%"],["Depreciation","12.0","","","9.3","","","2.7","","","29.0","%"],["Amortization","32.0","","","29.8","","","2.2","","","7.4","%"],["EBITDA*","$","193.9","","","$","281.9","","","$","(88.0)","","","(31.2)","%"],["Restructuring (income) expense(1)","(2.9)","","","1.2","","","(4.1)","","","(341.7)","%"],["Impairment(2)","12.0","","","\u2014","","","12.0","","","100.0","%"],["Loss on extinguishment and modification of debt(3)","1.7","","","3.9","","","(2.2)","","","(56.4)","%"],["Acquisition expense (income)(4)","3.5","","","(1.4)","","","4.9","","","(350.0)","%"],["Other","0.3","","","\u2014","","","0.3","","","100.0","%"],["Adjusted EBITDA*","$","208.5","","","$","285.6","","","$","(77.1)","","","(27.0)","%"]]
[[/GREPCENT_TABLE]]

(1)Restructuring (income) expense consist of the following: 1) facility relocations; 2) severance and hiring costs associated with our strategic transformation, including executive leadership team changes; 3) sale of a manufacturing facility; and 4) strategic business assessment and transformation projects.

(2)Impairment consists of the write down of the DBCI tradename intangible asset.

41

(3)Adjustments for loss on extinguishment and modification of debt are related to the write off of unamortized fees and third-party fees as a result of the debt modification completed in April 2024 and the debt refinancing of its existing certain First Lien Credit and Guarantee Agreement, dated as of February 12, 2018 (as amended to date, the “First Lien Term Loan”) pursuant to Amendment No. 6 to the First Lien Term Loan, that occurred in August 2023 (the “Amendment No. 6 First Lien”).

(4)Expenses or income related to various professional fees, net working capital finalization, and legal settlements from acquisition related activities.

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Adjusted Net Income

Adjusted Net Income is defined as net income attributable to shareholders, which excludes from reported GAAP results, the impact of certain items consisting of acquisition events and other non-recurring charges. Similar to Adjusted EBITDA, such expenses, charges, and gains are excluded since they 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.

We use Adjusted Net Income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with U.S. GAAP, provides a more complete understanding of factors and trends affecting our business than does U.S. GAAP measures alone. Adjusted net income should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.

The following table presents a reconciliation of net income to adjusted net income for the periods indicated:

[[GREPCENT_TABLE]]
[["","Year Ended"],["(dollar amounts in millions)","December 28, 2024","","December 30, 2023"],["Net Income","$","70.4","","","$","135.7"],["Net Income Adjustments(1)","14.6","","","3.7"],["Tax Effect on Net Income Adjustments(2)","(4.4)","","","(1.0)"],["Out of period adjustments(3)","$","1.5","","","$","\u2014"],["Non-GAAP Adjusted Net Income*","$","82.1","","","$","138.4"]]
[[/GREPCENT_TABLE]]

(1)Refer to the Adjusted EBITDA table above for detailed breakout of adjustment items.

(2)Tax effected for the net income adjustments. Effective tax rates of 29.8% and 25.8% were used for the periods ended December 28, 2024 and December 30, 2023, respectively.

(3)Out of period adjustments includes a tax correction of $3.4 partially offset by a reduction in service cost of revenues of $1.9, net of tax.

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Free Cash Flow

The Company uses a measure of free cash flow to facilitate an understanding of its ability to generate cash for reinvestment into its businesses. We define “Free Cash Flow” as cash flow from operating activities, less cash used in purchases of property plant and equipment. Free Cash Flow is not intended as an alternative measure of cash flow from operations, as determined in accordance with GAAP in the United States. We use this financial measure both in presenting results to shareholders and the investment community and in our internal evaluation and management of our businesses. We believe that this financial measure and the information it provides are useful to investors because it permits investors to view our performance using the same tool that we use to gauge progress in achieving our goals. We believe that the non-GAAP financial measure “Free Cash Flow” is also useful to investors because it is an indication of cash flow that may be available to fund investments in future growth initiatives. Free Cash Flow should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.

The following table presents a reconciliation of cash flows provided by operating activities to Free Cash Flow for the periods indicated:

[[GREPCENT_TABLE]]
[["(dollar amounts in tables in millions)","Year Ended"],["","December 28, 2024","","December 30, 2023"],["Cash flow from operating activities","$","154.0","","$","215.0"],["Less: Purchases of property, plant and equipment","(20.1)","","(19.0)"],["Free Cash Flow*","$","133.9","","$","196.0"],["GAAP Net Income","$","70.4","","$","135.7"],["Non-GAAP Adjusted Net Income*","$","82.1","","$","138.4"],["Operating Cash Flow to GAAP Net Income","219","%","","158","%"],["Free Cash Flow to Non-GAAP Adjusted Net Income (\u201cconversion\u201d)*","163","%","","142","%"]]
[[/GREPCENT_TABLE]]

42

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Net Leverage Ratio

The Company uses the net leverage ratio as a metric to assess liquidity and the flexibility of its balance sheet. Consistent with other liquidity metrics, the Company monitors the net leverage ratio as a measure to determine the appropriate level of debt the Company believes is optimal to operate its business, and accordingly, to quantify debt capacity available for strengthening the balance sheet for strategic capital allocation and deployment through investments in the business, and for returning capital to the shareholders. The net leverage ratio is the ratio of our consolidated senior secured indebtedness reduced by cash to our trailing four-quarter consolidated EBITDA. Net leverage ratio and, net debt should not be considered in isolation of, or as alternatives to, measures prepared in accordance with GAAP.

The following table presents a reconciliation of Long-Term Debt to Net Debt and Long-Term Debt to Net Income Ratio to Net Leverage Ratio for the periods indicated:

[[GREPCENT_TABLE]]
[["(dollar amounts in tables in millions)","Year Ended"],["","December 28, 2024","","December 30, 2023"],["Note payable - First Lien","$","598.5","","","$","623.4"],["Less: Cash","149.3","","","171.7"],["Net Debt*","$","449.2","","","$","451.7"],["Net Income","$","70.4","","","$","135.7"],["Adjusted EBITDA","$","208.5","","","$","285.6"],["Long-Term Debt to Net Income","8.5","","","4.6"],["Non-GAAP Net Leverage Ratio*","$","2.2","","","$","1.6"]]
[[/GREPCENT_TABLE]]

*Janus uses measures of performance that are not required by or presented in accordance with GAAP in the United States. Non-GAAP financial performance measures are used to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation or as a substitute for the relevant GAAP measures and should be read in conjunction with information presented on a GAAP basis.

Credit Ratings

Costs of borrowing and their respective ability to access the capital markets are affected not only by market conditions but also by the short-term and long-term credit ratings assigned to our respective debt by the major credit rating agencies.

In determining our credit ratings, the rating agencies consider a number of quantitative factors, including but not limited to, debt to total capitalization, operating cash flow relative to outstanding debt, and operating cash flow coverage of interest. In addition, the rating agencies consider qualitative factors such as consistency of our earnings over time and the quality of our management and business strategy.

Our debt is rated by two rating agencies: Standard & Poor’s Corporation (S&P) and Moody’s Investors Service (Moody’s). As of December 28, 2024, our outlook and current debt ratings are as follows:

[[GREPCENT_TABLE]]
[["","S&P","","Moody\u2019s"],["Corporate","B+","","Ba3"],["Senior secured long-term debt(1)","BB-","","Ba3"],["Outlook","Positive","","Positive"]]
[[/GREPCENT_TABLE]]

(1) A credit rating is not a recommendation to buy, sell or hold securities. Our credit ratings may be revised or withdrawn at any time by the rating agencies, and each rating should be evaluated independently of any other rating. There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be lowered, or withdrawn entirely, by a rating agency if, in its judgment, circumstances so warrant.

43

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, days sales outstanding, inventory turns, days payable outstanding, capital expenditure forecasts, interest and principal payments on debt and income tax payments.

Our primary sources of liquidity include cash balances on hand, cash flows from operations, proceeds from equity, debt offerings and borrowing availability under our existing credit facility. Based on the information available as of the date of this Annual Report, our operating cash flow, along with funds available under the line of credit, adequately support Janus’s liquidity and financing needs, including working capital requirements, capital expenditures, debt servicing, and potential acquisitions. The Company believes it will have sufficient working capital to fund operations for at least the next 12 months from the date of issuance of these financial statements.

Financial Policy

Our financial policy seeks to: (i) selectively invest in organic and inorganic growth to enhance our portfolio, including certain strategic capital investments, (ii) maintain appropriate leverage by using free cash flows to repay outstanding borrowings, and (iii) allocate capital toward repurchases of our common stock.

Liquidity Policy

We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our obligations under both normal and stressed conditions. At Janus, we manage our liquidity to provide access to sufficient funding to meet our business needs and financial obligations, as well as capital allocation and growth objectives throughout business cycles.

Cash Management

Janus manages its operating cash management activities through banking relationships for the domestic entities and international entities. Domestic subsidiaries monitor cash balances on a monthly basis and excess cash is transferred to Janus to pay down intercompany debt, interest on the intercompany debt, and intercompany sales of products and materials and other services. International subsidiaries monitor excess cash balances on a periodic basis and transfer excess cash flow to Janus in the form of a dividend. 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.

Foreign Exchange

We have operations in various foreign countries, principally the United Kingdom, France, Australia, Canada and Poland. Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars.

Debt Profile

[[GREPCENT_TABLE]]
[["","Principal Amount","","Issuance Date","","Maturity Date","","Interest Rate","","Net Carrying Value"],["(dollar amounts in millions)","","","","","December 28, 2024","","December 30, 2023"],["Notes payable - First Lien","$","600.0","","","August 3, 2023(1)","","August 3, 2030","","7.07% (2)","","$","598.5","","","$","623.4"],["Financing leases","","","","","","","","","3.4","","","3.4"],["Total principal debt","","","","","","","","","$","601.9","","","$","626.8"],["Less: unamortized deferred finance fees","","","","","","","","","9.9","","","11.8"],["Less: current portion of long-term debt","","","","","","","","","8.8","","","7.3"],["Long-term debt, net of current portion","","","","","","","","","$","583.2","","","$","607.7"]]
[[/GREPCENT_TABLE]]

(1)Represents the original issuance date for the First Lien Term Loan. Subsequent to the original issuance of the First Lien Term Loan, the Company has amended the First Lien Term Loan on a number of occasions, including most recently on April 30, 2024 when the Company completed a repricing pursuant to the Repricing Amendment described below.

(2)The interest rate on the Repricing Amendment as of December 28, 2024, was 7.07%, which is a variable rate based on Adjusted Term SOFR plus an applicable margin of 2.50%.

44

First Lien Term Loan - On June 20, 2023, the Company entered into Amendment No. 5 to the First Lien Term Loan (the “Amendment No. 5 First Lien”). The Amendment No. 5 First Lien, among other things, (i) replaces the interest rate based on the London Interbank Offered Rate (“LIBOR”) and related LIBOR-based mechanics applicable to borrowings under the Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updates certain other provisions of the Agreement to reflect the transition from LIBOR to SOFR. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of Adjusted Term SOFR, plus 0.10% credit spread adjustment (“CSA”) and an applicable margin. The debt is secured by substantially all business assets. For the year ended December 30, 2023, the Company made voluntary payments of $85.3 toward the First Lien Term Loan using cash on hand.

On August 3, 2023, the Company refinanced its existing First Lien Term Loan pursuant to the Amendment No. 6 First Lien. The loan was made by a syndicate of lenders, with the aggregate amount of $625.0. The outstanding loan balance is to be repaid on a quarterly basis of 0.25% of the original balance of the amended loan beginning the last business day of December 2023 with the remaining principal due on the maturity date of August 3, 2030. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of Adjusted Term SOFR plus 0.10% CSA and an applicable margin (see Note 10, Long-Term Debt, to our consolidated financial statements in this Form 10-K for a further discussion).

In April 2024, the Company made a voluntary prepayment of $21.9 toward the First Lien Term Loan. The Company used cash on hand to make the voluntary prepayment.

On April 30, 2024, the Company completed a repricing pursuant to Amendment No. 7 (the “Repricing Amendment”) to the First Lien Term Loan. The Repricing Amendment reduced the applicable interest rate margins on the $600.0 First Lien Term Loan from 2.0% to 1.50% for the term loans bearing interest at rates based on the base rate, and from 3.00% to 2.50% for the term loans bearing interest at rates based on the SOFR rate. In addition to the change in the applicable margin rate, the Company is no longer subject to a CSA rate of 0.1%. Interest is payable in arrears (with respect to base rate loans) or at the end of an interest period selected by the Company (with respect to SOFR loans). The outstanding loan balance is to be repaid on a quarterly basis in an amount equal to 0.25% of the original balance of the amended loan, with the remaining principal due on the maturity date of August 3, 2030. The interest rate on the First Lien Term Loan as of December 28, 2024, was 7.07%, which is a variable rate based on Adjusted Term SOFR and includes an applicable margin of 2.50%. In conjunction with the Repricing Amendment, the Company incurred $1.7 of costs from third parties that did not qualify for capitalization of deferred finance costs and were expensed within “Loss on extinguishment and modification of debt” on the Consolidated Statement of Operations and Comprehensive Income. See Note 10 to our Consolidated Financial Statements in this Form 10-K for a further discussion.

Revolving Credit Facility - On August 18, 2021, the Company increased the existing available LOC Agreement with a domestic bank, from $50.0 to $80.0, incurred additional fees for this amendment of $0.4 and extended the maturity date from February 18, 2023 to August 12, 2024. On August 3, 2023, the Company refinanced the revolving credit facility, pursuant to a new ABL Credit and Guarantee Agreement (the “2023 LOC Agreement”). The 2023 LOC Agreement, among other things, (i) increased the previous aggregate commitments from $80.0 to $125.0, subject to eligible collateral, (ii) updated the manner in which the previous borrowing base under the 2023 LOC Agreement was determined, and (iii) replaced the administrative agent with a new administrative agent. Interest payments with respect to the 2023 LOC Agreement are due in arrears. The maturity date is August 3, 2028.

As chosen by the Company, the amended revolving credit facility bears interest at a floating rate per annum consisting of SOFR plus 0.10% CSA and an applicable margin that is based on excess availability. There was no outstanding balance on the line of credit as of December 28, 2024, and December 30, 2023. As of December 28, 2024, the Adjusted Term SOFR interest rate for the facility was 5.9%. The line of credit is secured by accounts receivable and inventories. (see Note 9, Line of Credit, to our consolidated financial statements in this Form 10-K for a further discussion)

The 2023 LOC Agreement and Repricing Amendment contain affirmative and negative covenants, including limitations on, subject to certain exceptions, the incurrence of indebtedness, the incurrence of liens, fundamental changes, dispositions, restricted payments, investments, transactions with affiliates as well as other covenants customary for financings of these types. The 2023 LOC Agreement also includes a financial covenant, applicable only when the excess availability is less than the greater of (i) 10% of the lesser of the aggregate commitments under the line of credit facility and the borrowing base, and (ii) $10.0. In such circumstances, we would be required to maintain a minimum fixed charge coverage ratio for the trailing four quarters equal to at least 1.00 to 1.00; subject to our ability to make an equity cure (no more than twice in any four quarter period and up to five times over the life of the facility). As of December 28, 2024, we were compliant with our covenants under the agreements governing our outstanding indebtedness.

As of December 28, 2024, and December 30, 2023, the Company’s borrowing base capacity yielded $82.4 and $125.0, respectively.

As of December 28, 2024, and December 30, 2023, the Company maintained one letter of credit totaling approximately $0.4 on which there were no balances due.

45

Statement of Cash Flows

The following table presents a summary of cash flows from operating, investing and financing activities for the following comparative periods. For additional detail, please see the Consolidated Statements of Cash Flows in the consolidated financial statements.

Year ended December 28, 2024 compared to the year ended December 30, 2023:

[[GREPCENT_TABLE]]
[["","December 28, 2024","","December 30, 2023","","Variance"],["(dollar amounts in millions)","","","$","","%"],["Net cash provided by operating activities","$","154.0","","","$","215.0","","","$","(61.0)","","","(28.4)","%"],["Net cash used in investing activities","(73.1)","","","(19.9)","","","(53.2)","","","267.3","%"],["Net cash used in financing activities","(103.0)","","","(102.4)","","","(0.6)","","","0.6","%"],["Effect of foreign currency rate changes on cash","(0.3)","","","0.6","","","(0.9)","","","(150.0)","%"],["Net (decrease) increase in cash","$","(22.4)","","","$","93.3","","","$","(115.7)","","","(124.0)","%"]]
[[/GREPCENT_TABLE]]

Net cash provided by operating activities

Net cash provided by operating activities decreased by $61.0, or 28.4%, to $154.0 for the year ended December 28, 2024, compared to $215.0 for the year ended December 30, 2023. This decline was primarily driven by a $15.9 reduction in net cash activity from net working capital requirements, reflecting higher inventory levels and timing of receivables and payables. Additionally, a $45.1 decrease in net income adjusted for non-cash items contributed to the overall decline in operating cash flows.

Net cash used in investing activities

Net cash used in investing activities increased by $53.2 or 267.3% for the year ended December 28, 2024, compared to the prior year. This increase was primarily due to the T.M.C. Acquisition, which resulted in $59.4 of cash outflows, partially offset by higher proceeds from sale of property, plant, and equipment during the year ended December 28, 2024, compared to the prior year.

Net cash used in financing activities

Net cash used in financing activities increased slightly by $0.6 or 0.6% for the year ended December 28, 2024, compared to the prior year. This was driven by debt payments, net of debt proceeds, of $24.9 during the year, compared to $90.9 in the prior year. The decrease in net borrowings was partially offset by share repurchases of $78.8. See Note 10, Long-term Debt, to our consolidated financial statements for additional discussion of the financing transactions.

Capital allocation strategy

We continually assess our capital allocation strategy, including but not limited to decisions relating to mergers and acquisitions, share repurchases, capital expenditures, and debt pay-downs.

Contractual Obligations

The table below summarizes our approximate contractual obligations as of December 28, 2024 and their expected impact on our liquidity and cash flows in future periods:

[[GREPCENT_TABLE]]
[["(dollar amounts in millions)","Total","","Less than 1 year","","1-3 years","","3-5 years","","Thereafter"],["Notes payable - First Lien","$","598.5","","","$","7.5","","","$","12.0","","","$","12.0","","","$","567.0"],["Finance lease obligations","3.4","","","$","1.4","","","$","1.6","","","$","0.4","","","$","\u2014"],["Unconditional purchase obligations (1)","6.8","","","$","2.8","","","$","3.9","","","$","0.1","","","$","\u2014"],["Operating lease obligations","61.6","","","6.8","","","12.7","","","11.0","","","31.1"],["Total","$","670.3","","","$","18.5","","","$","30.2","","","$","23.5","","","$","598.1"]]
[[/GREPCENT_TABLE]]

(1)Unconditional purchase obligations consist of supply contracts that relate to fixed price agreements as well as multi-year software contracts.

Operating lease obligations consist of operating lease liabilities for real and personal property leases with various lease expiration dates. The amount listed in the thereafter category is primarily comprised of nine real property leases with expiration dates ranging from 2030 – 2044. See Note 5, Leases, to our consolidated financial statements for a further discussion.

The table above does not include warranty liabilities because it is not certain when this liability will be funded and because this liability is considered immaterial.

Off-Balance Sheet Arrangements

As of December 28, 2024, we did not have any off-balance sheet arrangements that are material or reasonably likely to be material to our financial condition or results of operations.

46

Critical Accounting Estimates

For the critical Accounting 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. 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.

In accordance with Janus’s policies, Janus regularly evaluates its estimates, assumptions, and judgments, including, but not limited to, those concerning revenue recognition, business combinations, goodwill and indefinite-life intangible valuations and allowance for credit losses. The results involve judgments about the carrying values of assets and liabilities not readily apparent from other sources. If Janus’s assumptions or conditions change, the actual results Janus reports may differ from these estimates. The following critical accounting estimates affect the more significant estimates, assumptions, and judgments Janus uses to prepare these consolidated financial statements.

Revenue Recognition

For performance obligations recognized over time, we utilize the cost-to-cost input method as we consider it the most accurate measure of when goods and services are transferred to the customer. Under this method, we estimate the costs to complete individual contracts and recognize revenue proportionately to the total contract price deemed complete, based on the relationship of costs incurred to date to total anticipated costs.

It is important to note that, under the cost-to-cost method, the use of estimated costs to complete each contract is a crucial variable in determining recognized revenue. This estimate can change over the course of a contract’s duration due to many factors such as contract modifications and other elements affecting job completion.

To ensure accuracy, we regularly review and reassess our estimates for each uncompleted contract at least quarterly, incorporating the latest reliable information available. It is important to recognize that changes in these estimates could have both favorable and unfavorable impacts on revenues and their related profits.

Business Combinations

Under the acquisition method of accounting, the Company recognizes tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We record the excess of the fair value of the consideration transferred over the value of the net assets acquired as goodwill. The accounting for business combinations requires us to make significant estimates and assumptions, especially with respect to intangible assets and the fair value of contingent payment obligations. We use a variety of information sources to determine the value of acquired assets and liabilities including: third-party appraisers for the values and lives of property, identifiable intangibles and inventories; and legal counsel or other advisors to assess the obligations associated with legal, environmental or other claims. Critical estimates in valuing customer relationships, noncompete agreements, and tradenames, include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could experience impairment charges which could be material.

Goodwill and Indefinite-Life Intangible Valuations

The Company’s business acquisitions result in the recognition of goodwill and other intangible assets, which are a significant portion of the Company’s total assets. Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Identifiable intangible assets are recognized separately from goodwill and include customer relationships, tradenames and trademarks, software, and other specifically identifiable assets. Certain tradenames and trademarks are deemed to be indefinite-lived.

Goodwill represents the excess of the purchase price paid over the estimated fair value of the net assets acquired and liabilities assumed in the acquisition of a business. Goodwill has an indefinite useful life, and is not amortized, but instead tested for impairment annually on the first day of the fourth quarter of or more often if events or changes in circumstances indicate that the carrying amount may exceed fair value as set forth in ASC 350, “Intangibles—Goodwill and Other” (“ASC 350”). The Company tests for goodwill impairment at the reporting unit level, which is an operating segment or one level below an operating segment. The amount of goodwill acquired in a business combination that is assigned to one or more reporting units as of the acquisition date is the excess of the purchase price of the acquired businesses (or portion thereof) included in the reporting unit, over the fair value assigned to the individual assets acquired or liabilities assumed from a market participant perspective. Goodwill is assigned to the reporting unit(s) expected to benefit from the synergies of the combination even though other assets or liabilities of the acquired entity may not be assigned to that reporting unit.

ASC 350 allows an optional qualitative assessment as part of annual impairment testing, prior to a quantitative assessment test, to determine whether it is more likely than not that the fair value of a reporting unit exceeds its carrying amount. If a qualitative assessment determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test. Otherwise, no further analysis is required. Alternatively, the Company may elect to proceed directly to the quantitative impairment test.

In conducting a qualitative assessment, the Company analyzes actual and projected growth trends for net sales and margin for each reporting unit, as well as historical performance versus plan and the results of prior quantitative tests performed. Additionally, the Company assesses factors that may impact its business, including macroeconomic conditions and the related impact, market-related exposures, plans to market for sale all or a portion of the business, competitive changes, new or discontinued product lines, changes in key personnel, and any potential risks to projected financial results.

47

If performed, the quantitative test compares the fair value of a reporting unit with its carrying amount. We determine the fair value of each reporting unit by estimating the present value of expected future cash flows, discounted by the applicable discount rate, and peer company multiples. If the carrying value exceeds the fair value, the Company recognizes an impairment loss in the amount equal to the excess, not to exceed the total amount of goodwill allocated to that reporting unit.

In performing a quantitative assessment of indefinite-life intangible assets other than goodwill, primarily tradenames and trademarks, we estimate the fair value of these intangible assets using the relief-from-royalty method which requires assumptions related to projected revenues from our long-range plans; assumed royalty rates that could be payable if we did not own the trademark; and a discount rate using a market based weighted-average cost of capital. If the estimated fair value of the indefinite-life intangible asset is less than its carrying value, we would recognize an impairment loss. If actual results are not consistent with management’s estimate and assumptions, a material impairment charge of our trademarks and trade names could occur, which could have an adverse effect on the Company’s financial condition and results of operations.

Allowance for Credit Losses

We encounter credit loss risks associated with the collection of our account receivables. We analyze historical experience, customer specific and general economic conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount in estimating credit losses. The accounting estimate related to the allowance for credit losses is a critical accounting estimate because the underlying assumptions used for the allowance can change from time to time and credit losses could potentially have a material impact on our results of operations.

Recently Issued Accounting Standards

See Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements for a discussion of recently issued and adopted accounting pronouncements.

48