Segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 2, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-40456

________________________

JANUS INTERNATIONAL GROUP, INC.

(Exact name of registrant as specified in its charter)

________________________

Delaware	86-1476200
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
135 Janus International Blvd. Temple, GA	30179
(Address of Principal Executive Offices)	(Zip Code)

(866) 562-2580

(Registrant's telephone number, including area code)

________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Trading Symbol(s)	Name of Each Exchange  on Which Registered:
Common Stock, par value $0.0001 per share	JBI	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 12, 2022, 146,639,377 shares of Class A Common Stock, par value $0.0001, were issued and outstanding.

1

JANUS INTERNATIONAL GROUP, INC.

Quarterly Report on Form 10-Q

Table of Contents

SAFE HARBOR, FORWARD-LOOKING STATEMENTS
	Page
PART I--FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	48
Item 4. Controls and Procedures	48
PART II--OTHER INFORMATION	49
Item 1. Legal Proceedings	49
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity and Use of Proceeds	49
Item 3. Defaults upon Senior Securities	49
Item 4. Mine Safety Disclosures	49
Item 5. Other Information	49
Item 6. Exhibits	50
SIGNATURES	52

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) that reflect our current views with respect to future events and financial performance, business strategies, expectations for our business and any other statements of a future or forward-looking nature, constitute “forward-looking statements” for the purposes of federal securities laws.

These forward-looking statements include, but are not limited to, statements about our financial condition, results of operations, earnings outlook and prospects or regarding management’s expectations, hopes, beliefs, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those contemplated in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Form 10-Q and in our other filings with the Securities and Exchange Commission (the “SEC”). We do not assume any obligation to update any forward-looking statements after the date of this Report, except as required by law.

In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “will”, “likely”, and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. We cannot assure you that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

•changes adversely affecting the business in which we are engaged;

•geopolitical risk and changes in applicable laws or regulations;

•the possibility that Janus may be adversely affected by other economic, business, and/or competitive factors;

•operational risk;

•the possibility that the COVID-19 pandemic, or another major disease, disrupts Janus’s business;

•our ability to maintain the listing of our securities on a national securities exchange;

•litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Janus’s resources; and

•other risks detailed from time to time in our filings with the SEC, press releases, and other communications, including those set forth under “Risk Factors” included in our 2021 Annual Report on Form 10-K for the year ended January 1, 2022, and in the documents incorporated by reference herein and therein.

All subsequent written and oral forward-looking statements concerning the matters addressed in this Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Form 10-Q. We undertake no obligation to update any forward-looking statement, whether written or oral, to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

3

PART I--FINANCIAL INFORMATION

Item 1.    Financial Statements.

Janus International Group, Inc.

Condensed Consolidated Balance Sheets

(dollar amounts in thousands, except share and per share data)

	July 2,		January 1,
	2022		2022
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	40,718	$	13,192
Accounts receivable, less allowance for credit losses; $6,607 and $5,449, at July 2, 2022 and January 1, 2022, respectively	132,531		107,372
Costs and estimated earnings in excess of billing on uncompleted contracts	21,715		23,121
Inventory, net	66,769		56,596
Prepaid expenses	8,211		9,843
Other current assets	3,288		4,057
Total current assets	$	273,232	$	214,181
Right-of-use assets, net	40,535		—
Property and equipment, net	42,557		41,607
Customer relationships, net	296,779		312,199
Tradename and trademarks	107,403		107,980
Other intangibles, net	15,118		15,861
Goodwill	368,085		369,286
Deferred tax asset, net	60,005		58,915
Other assets, net	1,825		1,973
Total assets	$	1,205,539	$	1,122,002
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	56,425	$	54,961
Billing in excess of costs and estimated earnings on uncompleted contracts	26,084		23,207
Current maturities of long-term debt	8,229		8,067
Other accrued expenses	65,958		54,111
Total current liabilities	$	156,696	$	140,346
Line of credit	—		6,369
Long-term debt, net	701,883		703,718
Deferred tax liability, net	1,827		749
Other long-term liabilities	37,620		2,533
Total liabilities	$	898,026	$	853,715
STOCKHOLDERS’ EQUITY
Common Stock, 825,000,000 shares authorized, $.0001 par value, 146,639,377 and 146,561,717 shares issued and outstanding at July 2, 2022 and January 1, 2022, respectively	15		15
Additional paid-in capital	279,309		277,799
Accumulated other comprehensive loss	(4,850)		(949)
Accumulated surplus (deficit)	33,039		(8,578)
Total stockholders’ equity	$	307,513	$	268,287
Total liabilities and stockholders’ equity	$	1,205,539	$	1,122,002

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

4

Janus International Group, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(dollar amounts in thousands, except share and per share data)

	Three Months Ended				Six Months Ended
	July 2, 2022		June 26, 2021		July 2, 2022		June 26, 2021
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
REVENUE
Sales of product	$	213,969	$	140,556	$	411,274	$	262,253
Sales of services	33,745		33,626		65,960		64,754
Total revenue	247,714		174,182		477,234		327,007
Cost of Sales	163,733		114,988		316,684		214,519
GROSS PROFIT	83,981		59,194		160,550		112,488
OPERATING EXPENSE
Selling and marketing	14,389		10,381		27,739		19,840
General and administrative	29,743		36,936		57,849		56,522
Contingent consideration and earnout fair value adjustments	—		687		—		687
Operating Expenses	44,132		48,004		85,588		77,049
INCOME FROM OPERATIONS	39,849		11,190		74,962		35,439
Interest expense	(8,868)		(7,476)		(17,643)		(15,602)
Other expense	(342)		(919)		(369)		(2,478)
Change in fair value of derivative warrant liabilities	—		(1,929)		—		(1,929)
INCOME BEFORE TAXES	30,639		866		56,950		15,430
Provision (benefit) for Income Taxes	7,802		2,560		14,409		2,405
NET INCOME (LOSS)	$	22,837	$	(1,694)	$	42,541	$	13,025
Other Comprehensive Income (Loss)	(3,387)		(37)		(3,901)		274
COMPREHENSIVE INCOME (LOSS)	19,450		(1,731)		38,640		13,299
Net income (loss) attributable to common stockholders	$	22,837	$	(1,694)	$	42,541	$	13,025
Weighted-average shares outstanding, basic and diluted (Note 16)
Basic	146,575,720		81,009,261		146,568,719		73,577,447
Diluted	146,717,937		81,009,261		146,648,306		73,879,851
Net income (loss) per share, basic and diluted (Note 16)
Basic	$	0.16	$	(0.02)	$	0.29	$	0.18
Diluted	$	0.16	$	(0.02)	$	0.29	$	0.18

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

5

Janus International Group, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)

(dollar amounts in thousands, except share data)

	Class B Common Units			Class A Preferred Units			Common Stock			Additional paid-in capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Surplus (Deficit)		Total
	Unit	Amount		Unit	Amount		Shares	Amount
Balance as of December 26, 2020	4,478	$	261	189,044	$	189,044	—	$	—	$	—	$	(227)	$	(48,205)	$	140,874
Retroactive application of the recapitalization	(4,478)	(261)		(189,044)	(189,044)		66,145,633	7		189,299		—		—		—
Balance as of December 26, 2020, as adjusted	—	$	—	—	$	—	66,145,633	$	7	$	189,299	$	(227)	$	(48,205)	$	140,874
Vesting of Midco LLC class B units	—	—		—	—		111,895	—		52		—		—		52
Distributions to Janus Midco LLC Class A unitholders	—	—		—	—		—	—		—		—		(96)		(96)
Cumulative translation adjustment	—	—		—	—		—	—		—		311		—		311
Net income	—	—		—	—		—	—		—		—		14,719		14,719
Balance as of March 27, 2021	—	$	—	—	$	—	66,257,528	$	7	$	189,351	$	84	$	(33,582)	$	155,860
Vesting of Midco LLC class B units	—	—		—	—		4,012,872	—		5,210		—		—		5,210
Issuance of PIPE Shares	—	—		—	—		25,000,000	3		249,997		—		—		250,000
Issuance of common stock upon merger, net of transaction costs, earn out, and merger warrant liability	—	—		—	—		41,113,850	4		226,940		—		—		226,944
Issuance of earn out shares to common stockholders	—	—		—	—		2,000,000	—		26,480		—		—		26,480
Distributions to Janus Midco, LLC unitholders	—	—		—	—		—	—		(541,710)		—		—		(541,710)
Distributions to Class A preferred units	—	—		—	—		—	—		—		—		(4,078)		(4,078)
Deferred Tax Asset	—	—		—	—		—	—		78,291		—		—		78,291
Cumulative translation adjustment	—	—		—	—		—	—		—		(37)		—		(37)
Net income	—	—		—	—		—	—		—		—		(1,694)		(1,694)
Balance as of June 27, 2021	—	$	—	—	$	—	138,384,250	$	14	$	234,559	$	47	$	(39,354)	$	195,266

	Class B Common Units			Class A Preferred Units			Common Stock			Additional paid-in capital		Accumulated Other Comprehensive Loss		Accumulated Surplus (Deficit)		Total
	Unit	Amount		Unit	Amount		Shares	Amount
Balance as of January 1, 2022	—	$	—	—	$	—	146,561,717	$	15	$	277,799	$	(949)	$	(8,578)	$	268,287
Share based compensation	—	—		—	—		—	—		600		—		—		600
Cumulative effect of change in accounting principle(a)	—	—		—	—		—	—		—		—		(924)		(924)
Cumulative translation adjustment	—	—		—	—		—	—		—		(514)		—		(514)
Net income	—	—		—	—		—	—		—		—		19,704		19,704
Balance as of April 2, 2022	—	$	—	—	$	—	146,561,717	$	15	$	278,399	$	(1,463)	$	10,202	$	287,153
Share based compensation	—	—		—	—		77,660	—		910		—		—		910
Cumulative translation adjustment	—	—		—	—		—	—		—		(3,387)		—		(3,387)
Net income	—	—		—	—		—	—		—		—		22,837		22,837
Balance as of July 2, 2022	—	$	—	—	$	—	146,639,377	$	15	$	279,309	$	(4,850)	$	33,039	$	307,513

(a)     Effective January 2, 2022, the Company adopted the provisions of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) and ASU 2016-02, Leases (Topic 842). We have elected to adopt each of the two standards using the modified retrospective approach through a cumulative-effect adjustment to the opening balance of accumulated deficit for both. See Note 2 for further details of the impact of each standard.

See accompanying Notes to the Unaudited Consolidated Financial Statements

6

Janus International Group, Inc.

Condensed Consolidated Statements of Cash Flows

(dollar amounts in thousands)

	Six Months Ended
	July 2, 2022		June 26, 2021
	(Unaudited)		(Unaudited)
Cash Flows Provided By Operating Activities
Net income	$	42,541	$	13,025
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property and equipment	3,835		2,979
Reduction in carrying amount of right-of-use assets	2,615		—
Intangible amortization	14,871		13,623
Deferred finance fee amortization	1,832		1,487
Provision for losses on accounts receivable	1,158		(666)
Share based compensation	1,510		5,262
Loss on extinguishment of debt	—		2,415
Change in fair value of contingent consideration	—		687
(Gain) Loss on sale of assets	(28)		43
Loss on abandonment of PP&E	571		—
Change in fair value of derivative warrant liabilities	—		1,929
Undistributed (earnings) losses of affiliate	(60)		(105)
Deferred income taxes	—		(768)
Changes in operating assets and liabilities
Accounts receivable	(26,682)		(3,756)
Costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings on uncompleted contracts	1,406		(5,216)
Prepaid expenses and other current assets	2,481		(2,946)
Inventory	(10,173)		(11,008)
Accounts payable	1,464		15,393
Other accrued expenses	6,971		13,783
Other assets and long-term liabilities	(1,160)		(1,338)
Net Cash Provided By Operating Activities	$	43,152	$	44,823
Cash Flows Used In Investing Activities
Proceeds from sale of equipment	$	45	$	79
Purchases of property and equipment	(5,268)		(3,993)
Cash paid for acquisition, net of cash acquired	—		(1,565)
Net Cash Used In Investing Activities	$	(5,223)	$	(5,479)
Cash Flows Used In Financing Activities
Repayments on line of credit	$	(6,369)	$	—
Distributions to Janus Midco LLC unitholders	—		(4,174)
Principal payments on long-term debt	(4,034)		(63,238)
Proceeds from merger	—		334,874
Proceeds from PIPE	—		250,000
Payments for transaction costs, net	—		(44,489)
Payments to Janus Midco, LLC unitholders at the business combination	—		(541,710)
Principal payments under capital lease obligations	(66)		—
Payments for deferred financing fees	—		(766)
Cash Used In Financing Activities	$	(10,469)	$	(69,503)
Effect of exchange rate changes on cash and cash equivalents	$	66	$	191
Net (Decrease) Increase in Cash and Cash Equivalents	$	27,526	$	(29,968)
Cash and Cash Equivalents, Beginning of Period	$	13,192	$	45,255
Cash and Cash Equivalents, End of Period	$	40,718	$	15,287
Supplemental Cash Flows Information
Interest paid	$	18,296	$	16,848
Income taxes paid	$	11,889	$	774
Cash paid for operating leases	$	3,832	$	—
Fair value of earnout	$	—	$	687
Fair value of warrants	$	—	$	1,929
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations	$	42,380	$	—
Right-of-use assets obtained in exchange for finance lease obligations	$	706	$	—

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements

7

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

1.Basis of Presentation

Janus International Group, Inc. (“Group” or “Janus” or “Company”) is a holding company. References to “Janus,” “Group,” “Company,” “we,” “our” or “us” refer to Janus International Group, Inc., and its consolidated subsidiaries. Janus International Group, LLC (“Janus Core”) is a wholly-owned subsidiary of Janus Intermediate, LLC (“Intermediate”). Intermediate is a wholly-owned subsidiary of Janus Midco, LLC (“Midco”) and Midco is a wholly-owned subsidiary of Group.

The dollar amounts in the notes are shown in thousands of dollars, unless otherwise noted, and rounded to the nearest thousand except for share and per share amounts.

The accompanying Unaudited Condensed Consolidated Financial Statements of Janus International Group, Inc., have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. However, they do not include all of the financial information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the Unaudited Condensed Consolidated Financial Statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of July 2, 2022, and its results of operations, including its comprehensive income and stockholders’ equity for the six months ended July 2, 2022 and June 26, 2021.

The accompanying Unaudited Condensed Consolidated Financial Statements are presented in U.S. dollars and have been prepared in accordance with U.S. GAAP and pursuant to the accounting and disclosure rules and regulations of the SEC for interim financial information.

This Quarterly Report on Form 10-Q should be read in conjunction with the Audited Consolidated Financial Statements and notes that are included in the Annual Report on Form 10-K, for the year ended January 1, 2022.

Nature of Operations

The Group is a 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, United Kingdom, Australia, and Singapore.

The Group’s 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 Ltd., a company incorporated in England and Wales (“JIE”), whose production and sales are largely in Europe and Australia. The Janus North America segment is comprised of all the other entities including Janus International Group, LLC (together with each of its operating subsidiaries, “Janus Core”), Betco, Inc. (“BETCO”), Noke, Inc. (“NOKE”), Asta Industries, Inc. (“ASTA”), Janus Door, LLC (“Janus Door”) and Steel Door Depot.com, LLC (“Steel Door Depot”).

Assets held at foreign locations were approximately $59,260 and $58,439 as of July 2, 2022 and January 1, 2022, respectively. Revenues earned at foreign locations totaled approximately $20,324 and $18,345 for the three months ended July 2, 2022 and June 26, 2021, respectively, and $38,238 and $30,905 for the six months ended July 2, 2022 and June 26, 2021, respectively.

Principles of Consolidation

The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s joint venture is accounted for under the equity method of accounting. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reorganization

On June 7, 2021, Midco transferred Janus Core, its wholly owned direct subsidiary, to the Group, thereby transferring the business for which historical financial information is included in these results of operations, to be indirectly held by Midco.

The Business Combination (defined and discussed below) was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Juniper Industrial Holdings, Inc. (“Juniper” or “JIH”) is treated as the acquired company and Midco is treated as the acquirer for financial statement reporting purposes (the “Combined Company”). Accordingly, for accounting purposes, the financial statements of the Combined Company represent a continuation of the financial statements of Midco with the acquisition being treated as the equivalent of Midco issuing stock for the net assets of JIH, accompanied by a recapitalization. The net assets of JIH will be stated at historical cost, with no goodwill or other intangible assets recorded.

Use of Estimates in the Unaudited Condensed Consolidated Financial Statements

The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with U.S GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

8

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

Significant items subject to such estimates and assumptions include, but are not limited to, the derivative warrant liability, the recognition of the valuations of unit-based compensation arrangements, the useful lives of property and equipment, revenue recognition, allowances for uncollectible receivable balances, fair values and impairment of intangible assets and goodwill and assumptions used in the recognition of contract assets.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act, or JOBS Act, exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The Company qualifies as an “Emerging Growth Company” and has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows the Company to adopt the new or revised standard at the same time periods as private companies.

Fair Value Measurement

The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. A three-tiered hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires that the Company use observable market data, when available, and minimize the use of unobservable inputs when determining fair value:

•Level 1, observable inputs such as quoted prices in active markets;

•Level 2, inputs other than the quoted prices in active markets that are observable either directly or indirectly;

•Level 3, unobservable inputs in which there is little or no market data, which requires that the Company develop its own assumptions.

The fair value of cash, accounts receivable, less allowance for doubtful accounts and account payable approximate the carrying amounts due to the short-term maturities of these instruments which fall with Level 1 of the Fair Value hierarchy. The fair value of the Company’s debt approximates its carrying amount as of July 2, 2022 and January 1, 2022 due to its variable interest rate that is tied to the current London Interbank Offered Rate (“LIBOR”) rate plus an applicable margin and consistency in our credit rating. To estimate the fair value of the Company’s long term debt, the Company utilized fair value based risk measurements that are indirectly observable, such as credit risk that fall within Level 2 of the Fair Value hierarchy. The fair value of the warrants contain significant unobservable inputs including the expected term and the share exchange ratio in evaluating the fair value of underlying common stock , and exercise price, therefore, the warrant liabilities were evaluated to be a Level 3 fair value measurement. As of June 26, 2021, the fair value of the private and public warrants were valued at market price.

Significant Accounting Policies

Other than the following, the Company's significant accounting policies have not changed materially from those described in its Annual Report on Form 10-K for the fiscal year ended January 1, 2022.

Allowance for Credit Losses

On January 2, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) (“CECL”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. Refer to Recently Adopted Accounting Pronouncements section of this note for more information on the impact to the Unaudited Condensed Consolidated Financial Statements.

The Company gathered information about its current bad debt reserve and write-off practices and loss methodology, in-scope assets, historical credit losses, proposed pooling approach and expected changes to business practices under CECL. Accounts receivables are stated at estimated net realizable value from the sale of products and services to established customers. The Company determined that pooling accounts receivable by business units was the most appropriate because of the similarity of risk characteristics within each line such as customers and services offered. Historical losses and customer-specific reserve information that are used to calculate the historical loss rates are available for each business unit.

During the pooling process, the Company identified two distinct customer types: commercial and self-storage. As these customer types have different risk characteristics, the Company concludes to pool the financial assets at this level within each business unit.

Commercial customers typically are customers contracting with the Company on short-term projects with smaller credit limits and overall, smaller project sizes. Due to the short-term nature and smaller scale of these types of projects, the Company expects minimal write-offs of its receivables at the Commercial pool.

Self-storage projects typically involve general contractors and make up the largest portion of the Company’s accounts receivable balance. These projects are usually longer-term construction projects and billed over the course of construction. Credit limits are larger for these

9

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

projects given the overall project size and duration. Due to the longer-term nature and larger scale of these types of projects, the Company expects a potential for more write-offs of its receivable balances within the Self-Storage pool.

The Company reviewed methods provided by the guidance and determined the loss-rate method to be used in the CECL analysis for trade receivables and contract assets. This loss-rate method was selected as there is reliable historical information available by business unit, and this historical information was determined to be representative of the Company’s current customers, products, services, and billing practices.

The summary of activity in the allowance for credit losses for the six months ended July 2, 2022 and June 26, 2021 are as follows:

	Beginning Balance		CECL Adoption1		Write-offs		Provision (Reversal), net		Ending Balance
2022	$	5,449	$	366	$	(1,017)	$	1,809	$	6,607
2021	4,485		—		(43)		(623)		3,819

(1) On January 2, 2022, the Company adopted the provisions of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which introduced a new model known as CECL.

2. Recently Issued Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is effective and may be applied beginning March 12, 2020, and will apply through December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”). The amendments in ASU 2021-01 provide optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the LIBOR or another reference rate expected to be discontinued because of the reference rate reform. The provisions must be applied at a Topic, Subtopic, or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. In April 2022, The Financial Accounting Standards Board (“FASB”), proposed the deferral of the sunset date of this guidance to December 31, 2024. The Company is currently evaluating the impact this adoption will have on Janus’s consolidated financial statements.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which have been adopted or will be adopted as applicable, management does not believe any of these accounting pronouncements has had or will have a material impact on the Group’s consolidated financial position or results of operations.

Recently Adopted Accounting Pronouncements

In June 2020, the FASB issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) which deferred the effective date for ASC 842, Leases, for one year. The leasing standard will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted the leasing standard effective January 2, 2022 and has elected to adopt the new standard at the adoption date using the modified retrospective method and recognized a cumulative effect adjustment to accumulated deficit in the amount of $557. Under this approach, we will continue to report comparative period financial information under ASC 840. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also made an accounting policy election to exclude leases with an initial term of 12 months or less from the consolidated balance sheet. We will recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As part of this adoption, we have implemented internal controls and key system functionality to enable the preparation of financial information.

The adoption of the standard resulted in recording right-of-use assets of $42,835 and lease liabilities of $44,776 as of January 2, 2022. The right-of-use assets are lower than the lease liabilities as existing deferred rent and lease incentive liabilities were recorded against the right-of-use assets at adoption in accordance with the standard. The standard had no impact on our debt-covenant compliance under our current agreements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13, as subsequently amended for various technical issues, is effective for emerging growth companies following private company adoption dates for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years. The Company adopted this standard effective January 2, 2022 using the modified retrospective method and recognized a cumulative-effect adjustment increasing accumulated deficit and increasing the allowance for credit losses by $366.

10

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

	January 2, 2022
	Pre-ASC 326 Adoption		Impact of ASC 326 Adoption		As Reported Under ASC 326
Accounts Receivable, net	$	107,372	$	(366)	$	107,006
Cost in Excess of Billings	23,121		—		23,121
Accumulated Deficit	(8,578)		(366)		(8,944)

3. Inventories

Inventories are stated at the lower of cost or net realizable value utilizing the first-in, first-out (FIFO) method. The major components of inventories as of July 2, 2022 and January 1, 2022 are as follows:

	July 2,		January 1,
	2022		2021
Raw materials	$	47,980	$	41,834
Work-in-process	622		671
Finished goods	18,167		14,091
	$	66,769	$	56,596

The Company has recorded a reserve for inventory obsolescence as of July 2, 2022 and January 1, 2022, of approximately $1,374 and $1,295, respectively.

4. Property and Equipment

Property, equipment, and other fixed assets as of July 2, 2022 and January 1, 2022 are as follows:

	July 2,		January 1,
	2022		2021
Land	$	4,501	$	4,501
Manufacturing machinery and equipment	36,634		35,688
Leasehold improvements	4,936		4,599
Construction in progress	5,250		3,571
Other	14,328		13,287
	$	65,649	$	61,646
Less accumulated depreciation	(23,092)		(20,039)
	$	42,557	$	41,607

5. Acquired Intangible Assets and Goodwill

Intangible assets acquired in a business combination are recognized at fair value and amortized over their estimated useful lives. The carrying basis and accumulated amortization of recognized intangible assets at July 2, 2022 and January 1, 2022, are as follows:

	July 2,					January 1,
	2022					2022
	Gross Carrying Amount		Accumulated Amortization		Average Remaining Life in Years	Gross Carrying Amount		Accumulated Amortization
Intangible Assets
Customer relationships	$	408,328	$	111,549	11	$	410,094	$	97,895
Noncompete agreements	395		235		5	412		231
Tradenames and trademarks	107,403		—		Indefinite	107,980		—
Other intangibles	61,716		46,758		11	61,836		46,156
	$	577,842	$	158,542		$	580,322	$	144,282

Changes to gross carrying amount of recognized intangible assets due to translation adjustments include an approximate $1,870 and $270 loss for the period ended July 2, 2022 and January 1, 2022, respectively. Amortization expense was approximately $7,646 and $6,791 for the three

11

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

month periods ended July 2, 2022 and June 26, 2021, and $14,871 and $13,623 for the six months periods ended July 2, 2022 and June 26, 2021, respectively.

The changes in the carrying amounts of goodwill for the period ended July 2, 2022 were as follows:

Balance as of January 1, 2022	$	369,286
Changes due to foreign currency fluctuations	(1,253)
Goodwill adjusted during the period	52
Balance as of July 2, 2022	$	368,085

6. Accrued Expenses

Accrued expenses are summarized as follows:

	July 2,		January 1,
	2022		2022
Sales tax payable	$	4,859	$	3,606
Interest payable	256		2,741
Contingent consideration payable--short term	1,002		—
Other accrued liabilities	1,973		1,766
Employee compensation	15,520		13,857
Customer deposits and allowances	30,674		24,555
Income taxes	2,229		810
Current operating lease liabilities	4,944		—
Other	4,501		6,776
Total	$	65,958	$	54,111

Other as of July 2, 2022 and January 1, 2022 consists primarily of property tax, freight accrual, legal, accounting and other professional fee accruals.

7. Line of Credit

On February 12, 2018, the Company, through Intermediate and Janus Core, entered into a revolving line of credit facility with a financial institution. In August 2021, the Company increased the available line of credit from $50,000 to $80,000, incurred additional fees for this amendment of $425 and extended the maturity date from February 18, 2023 to August 12, 2024. The current line of credit facility is for $80,000 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a LIBOR Rate option is chosen by the Company. If the LIBOR Rate is elected, the interest computation is equal to the LIBOR Rate plus the LIBOR Rate Margin of 1.25% as of July 2, 2022. If the Base Rate is elected, the interest computation is equal to the Base Rate of the greatest of (a) the federal funds rate plus .5%, (b) the LIBOR rate plus 1%, or (c) the financial institution’s Prime Rate, plus the Base Rate Margin of .25% as of July 2, 2022. 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 July 2, 2022 and January 1, 2022, the interest rate in effect for the facility was 5.0% and 3.5%, respectively. The line of credit is collateralized by accounts receivable and inventories. The Company has incurred deferred loan costs in the amount of $1,483 which are being amortized over the term of the facility that expires on August 12, 2024, using the effective interest method, and are presented as part of other assets within our Unaudited Condensed Consolidated Balance Sheet. The amortization of the deferred loan costs is included in interest expense on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The unamortized portion of the fees as of July 2, 2022 and January 1, 2022 was approximately $525 and $648, respectively. There was $— and $6,369 outstanding on the line of credit as of July 2, 2022 and January 1, 2022, respectively.

12

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

8. Long-Term Debt

Long-term debt consists of the following:

	July 2,		January 1,
	2022		2022
Note payable - Amendment No. 4 First Lien	$	718,346	$	722,379
Financing leases	651		—
	$	718,997	$	722,379
Less unamortized deferred finance fees	8,885		10,594
Less current maturities	8,229		8,067
Total long-term debt	$	701,883	$	703,718

Notes Payable - Amendment No.4 First Lien - On August 18, 2021, the Company completed a refinancing in the form of that certain First Lien Amendment No. 4, in which the principal terms of the amendment were new borrowings of $155,000 which was used to fund the DBCI (hereinafter defined) acquisition. The Amendment No. 4 First Lien is comprised of a syndicate of lenders originating on August 18, 2021 in the amount of $726,413 with interest payable in arrears. 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. 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 rate of 4.92% as of July 2, 2022). The debt is secured by substantially all business assets. Unamortized debt issuance costs are approximately $8,885 and $10,594 at July 2, 2022 and January 1, 2022, respectively. This refinancing amendment was accounted for as a modification and as such no gain or loss was recognized for this transaction and any bank fees, original issue discount and charges capitalized are being amortized as a component of interest expense over the remaining loan term. Third party fees paid in connection with this amendment were expensed.

As of July 2, 2022 and January 1, 2022, the Company maintained one letter of credit totaling approximately $400 on which there were no balances due.

In connection with the Company entering into the debt agreement discussed above, deferred finance fees were capitalized. These costs are being amortized over the terms of the associated debt under the effective interest rate method. Amortization of approximately $858 and $640 and $1,709 and $1,487 was recognized for the three and six months ended July 2, 2022 and June 26, 2021, respectively, as a component of interest expense, including those amounts amortized in relation to the deferred finance fees associated with the outstanding line of credit.

9. Business Combinations

Access Control Technologies, LLC (“ACT”) Acquisition

On August 31, 2021, Janus Core acquired 100% of the equity interests of ACT and all assets and certain liabilities of Phoenix Iron Worx, LLC for total consideration of approximately $10,385 which was comprised of approximately $9,383 of cash plus $1,002 of hold back

liability. The hold back liability will be trued up and settled upon the finalization of the closing statement.

The assets and liabilities of the acquisitions have been recorded based upon management's estimates of their fair market values as of each

respective date of acquisition. The following tables summarize the fair values of consideration transferred and the fair values of identified

assets acquired, and liabilities assumed at the date of acquisition:

13

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

Fair Value of Consideration Transferred
Cash	$	9,383
Hold Back Liability	1,002
Total Fair Value of Consideration Transferred	$	10,385
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash	169
Accounts receivable	1,101
Other current assets	103
Property and equipment	197
Identifiable intangible assets
Customer relationships	2,470
Backlog	280
Trademark	1,450
Recognized amounts of identifiable liabilities assumed
Accounts payable	(473)
Accrued expenses	(152)
Other liabilities	(1,398)
Total identifiable net assets	$	3,747
Goodwill	$	6,638

The fair values of assets acquired and liabilities assumed, including current and noncurrent income taxes payable and deferred taxes, may be

subject to change as additional information is received and certain tax returns are finalized. Accordingly, the provisional measurements of fair

value of income taxes payable and deferred taxes are subject to change. The goodwill balance of $6,638 is attributable to the expansion of our product offerings and expected synergies of the combined workforce, products and technologies with ACT. All of the goodwill was assigned to the Janus North America segment of the business and is deductible for income tax purposes.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

	Fair Value		Useful Lives
Customer Relationships	$	2,470	15 Years
Backlog	280		3 Months
Trade Name	1,450		Indefinite
Identifiable Intangible Assets	$	4,200

Customer relationships represent the fair values of the underlying relationships with ACT’s customers. Backlog represents the fair value of ACT’s contracts that have yet to be billed. Trade names represent ACT’s trademarks, which consumers associate

with the source and quality of the products and services they provide.

The weighted-average amortization of acquired intangibles is 8.8 years.

During 2021, the Company incurred approximately $284 of third-party acquisition costs. These expenses are included in general and

administrative expense in the Company’s Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income for the year ended January 1, 2022.

DBCI, LLC (“DBCI”) Acquisition

On August 17, 2021, Janus Core acquired 100% of the equity interests of DBCI for total cash consideration of approximately $169,173.

The assets and liabilities of the acquisitions have been recorded based upon management's estimates of their fair market values as of each respective date of acquisition. The following tables summarize the fair value of consideration transferred and the fair value of identified assets acquired, and liabilities assumed at the date of acquisition:

14

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

Fair Value of Consideration Transferred
Cash	$	169,173
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed
Cash	208
Accounts receivable	8,502
Inventories	9,075
Property and equipment	7,803
Other assets	29
Identifiable intangible assets
Customer relationships	26,320
Backlog	3,130
Trademark	20,850
Recognized amounts of identifiable liabilities assumed
Accounts payable	(8,012)
Accrued expenses	(571)
Other liabilities	(887)
Total identifiable net assets	$	66,446
Goodwill	$	102,727

The fair values of assets acquired and liabilities assumed, including current and noncurrent income taxes payable and deferred taxes, may be subject to change as additional information is received and certain tax returns are finalized. Accordingly, the provisional measurements of fair value of income taxes payable and deferred taxes are subject to change. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of DBCI and Janus Core. All of the goodwill was assigned to the Janus North America segment and is deductible for income tax purposes.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

	Fair Value		Useful Lives
Customer Relationships	$	26,320	15 Years
Backlog	3,130		4 Months
Trade Name	20,850		Indefinite
Identifiable Intangible Assets	$	50,300

Customer relationships represent the fair values of the underlying relationships with DBCI’s customers. Unbilled contracts (“Backlog”) represent the fair value of DBCI’s contracts that have yet to be billed. Trade names represent DBCI’s trademarks, which consumers associate with the source and quality of the products and services they provide.

The weighted-average amortization of acquired intangibles is 7.9 years.

During 2021, the Company incurred approximately $2,685 of third-party acquisition costs. These expenses are included in general and administrative expense in the Company’s Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income for the year ended January 1, 2022.

15

Janus International Group, Inc.

Notes to Unaudited Consolidated Financial Statements

The Business Combination

On June 7, 2021, Juniper consummated a business combination with Midco pursuant to the Business Combination Agreement (the “Business Combination”). Pursuant to ASC 805, for financial accounting and reporting purposes, Midco was deemed the accounting acquirer and Juniper was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Accordingly, the Business Combination was treated as the equivalent of Midco issuing equity for the net assets of Juniper, accompanied by a recapitalization. Under this method of accounting, the consolidated financial statements of Midco are the historical financial statements of Janus International Group, Inc. The net assets of Juniper were stated at historical costs, with no goodwill or other intangible assets recorded in accordance with U.S. GAAP, and are consolidated with Midco’s financial statements on the closing date. The shares and net income (loss) per share available to holders of the Company’s common stock, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination Agreement.

As a result of the Business Combination, Midco’s unitholders received aggregate consideration of approximately $1,200,000, which consisted of (i) $541,700 in cash at the closing of the Business Combination and (ii) 70,270,400 shares of common stock valued at $10.00 per share, totaling $702,700.

In connection with the closing of the Business Combination, Juniper Industrial Sponsor, LLC (the “Sponsor”) received 2,000,000 shares of Janus’s Common Stock (pro rata among the Sponsor shares and shares held by certain affiliates) (the “Earnout Shares”) contingent upon achieving certain market share price milestone as outlined in the Business Combination Agreement. The vesting of the Earnout Shares occurred automatically as of the close of the trading on June 21, 2021 in accordance with the terms of the Earnout Agreement, entered into by and between the Company and the Sponsor at the closing of the transaction.

Concurrently with the execution and delivery of the Business Combination Agreement, certain institutional accredited investors (the “PIPE Investors”), entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors purchased an aggregate of 25,000,000 shares of Janus’s common stock (the “PIPE Shares”) at a purchase price per share of $10.00 (the “PIPE Investment”). One of the Company’s directors also purchased an aggregate of 1,000,000 of the PIPE Shares as part of the PIPE Investment. The PIPE Investment was closed on June 7, 2021 and the issuance of an aggregate of 25,000,000 shares of common stock occurred concurrently with the consummation of the Business Combination.

In connection with the Business Combination, the Group incurred direct and incremental costs of approximately $44,500 related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees. In addition, the Company incurred $