Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share data)
1. Nature of Operations
Janus International Group, Inc. (“Group” or “Janus” or “Company”) is a holding company. 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. These entities are all incorporated in the state of Delaware. 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 wholly owned subsidiary, Janus International Europe Holdings Ltd. (UK) (“JIE”), owns 100% of the equity of Janus International Europe Ltd. (UK), a company incorporated in England and Wales, and its subsidiary Steel Storage France (s.a.r.l), a company incorporated in France. JIE owns 100% of the equity for Active Supply & Design (CDM) Ltd. (UK) (“AS&D”), a company incorporated in England and Wales and 100% of the equity for Steel Storage Australia & Steel Storage Asia (“Steel Storage”), companies incorporated in Australia and Singapore. AS&D merged with JIE in 2021.
The Group’s wholly owned subsidiary, Janus Cobb Holdings, LLC (“Cobb”), owns 100% of the equity of Asta Industries, Inc. (“ASTA”), a company incorporated in Georgia, and its subsidiary Atlanta Door Corporation, a company incorporated in Georgia. Cobb also owns 100% of the equity of Nokē, Inc. (“NOKE”), a company incorporated in Delaware, and Betco, Inc. (“BETCO”), a company also incorporated in Delaware.
On January 2, 2020, JIE purchased 100% of the outstanding shares of Steel Storage.
On January 18, 2021, the Group, through its wholly owned subsidiary Steel Storage acquired 100% of the net assets of G & M Stor-More Pty Ltd (“G&M”) as more fully described in Note 10 Business Combinations.
On August 18, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity interests of DBCI, LLC f/k/a Dingo NewCo, LLC (“DBCI”), a company incorporated in Delaware as more fully described in Note 10 Business Combinations.
On August 31, 2021, the Group, through its wholly owned subsidiary Janus Core acquired 100% of the equity of Access Control Technologies, LLC (“ACT”), a company incorporated in North Carolina. Through this acquisition, the Group also acquired all assets and certain liabilities of Phoenix Iron Worx, LLC (“Phoenix”), a company incorporated in North Carolina as more fully described in Note 10 Business Combinations.
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 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 Core together with each of its operating subsidiaries, BETCO, NOKE, ASTA, DBCI, ACT, Janus Door, LLC and Steel Door Depot.com, LLC.
As of June 7, 2021, Janus Parent, Inc. (“Company”) consummated the business combination (the “Business Combination”) contemplated by the Business Combination Agreement, dated as of December 21, 2020 (as amended from time to time, the “Business Combination Agreement”), by and among Janus International Group, Inc. (f/k/a Janus Parent, Inc.), Juniper Industrial Holdings, Inc. (“Juniper” or “JIH”), a blank check company, JIH Merger Sub, Inc., a wholly-owned subsidiary of the Company (“JIH Merger Sub”), Jade Blocker Merger Sub 1, Inc., Jade Blocker Merger Sub 2, Inc., Jade Blocker Merger Sub 3, Inc., Jade Blocker Merger Sub 4, Inc., Jade Blocker Merger Sub 5, Inc. (collectively referred to as the “Blocker Merger Subs”), Clearlake Capital Partners IV (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners IV (Offshore) (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners V (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners V (USTE) (AIV-Jupiter) Blocker, Inc., Clearlake Capital Partners V (Offshore) (AIV-Jupiter) Blocker, Inc. (collectively referred to as the “Blockers”), Janus Midco, LLC (“Midco”), Jupiter Management Holdings, LLC, Jupiter Intermediate Holdco, LLC, J.B.I., LLC and Cascade GP, LLC, solely in its capacity as equityholder representative. Pursuant to the Business Combination Agreement, (i) JIH Merger Sub merged with and into Juniper with Juniper being the surviving corporation in the merger and a wholly-owned subsidiary of the Company, (ii) each of the Blocker Merger Subs merged with and into the corresponding Blockers with such Blocker being the surviving corporation in each such merger and a wholly-owned subsidiary of the Company, (iii) each other equityholder of Midco contributed or sold, as applicable, all of its equity interests in Midco to the Company or Juniper, as applicable, in exchange for cash, preferred units and/or shares of the Common Stock, as applicable, and (iv) the Company contributed all of the equity interests in Midco acquired pursuant to the foregoing transactions to Juniper, such that, as a result of the consummation of the Business Combination, Midco became an indirect wholly-owned subsidiary of Juniper. Refer to Note 10 for further discussion on the Business Combination.
Immediately upon the completion of the Business Combination, Juniper and Midco became wholly-owned subsidiaries of Janus International Group, Inc. The Group’s common stock is currently traded on the New York Stock Exchange under the symbol “JBI”.
Assets held at foreign locations were approximately $58,439 and $53,424 as of January 1, 2022 and December 26, 2020, respectively. Revenues earned at foreign locations totaled approximately $68,579 and $45,490 for the years ended January 1, 2022 and December 26, 2020, respectively.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with U.S. GAAP and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”).
The Business Combination, completed as of June 7, 2021, was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, JIH is treated as the acquired company and Midco is treated as the acquirer for financial statement reporting purposes (the “Combined Company”). Midco has been determined to be the accounting acquirer based on an evaluation of the following facts and circumstances:
•Janus Midco equityholders have the majority ownership and voting rights in the Combined Company. The relative voting rights is equivalent to equity ownership (each share of common stock is one vote). JIH shareholders (IPO investors, founders, PIPE investors) hold 49.2% voting interest compared to Janus Midco’s 50.8% voting interest.
•The board of directors of the Combined Company is composed of nine directors, with Janus Midco equity holders having the ability to elect or appoint a majority of the board of directors in the Combined Company.
•Janus Midco’s senior management are the senior management of the Combined Company.
•The Combined Company has assumed the Janus name.
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 were stated at historical cost, with no goodwill or other intangible assets recorded. Midco is deemed to be the predecessor of the Company, and the consolidated assets and liabilities and results of operations prior to the Closing Date, for the year ended December 26, 2020 are those of Midco. The shares and corresponding capital amounts and net income per share available to common stockholders, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination Agreement.
One-time direct and incremental transaction costs incurred by the Company were recorded based on the activities to which the costs relate and the structure of the transaction. The costs relating to the issuance of equity is recorded as a reduction of the amount of equity raised, presented in additional paid in capital, while all costs related to the warrants and contingent consideration were estimated and charged to expense.
Principles of Consolidation
The consolidated financial statements include the accounts of the Group 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
As of June 7, 2021, Midco transferred its wholly owned direct subsidiary Janus International Group, LLC 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.
Use of Estimates in the Consolidated Financial Statements
The preparation of 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.
Significant items subject to such estimates and assumptions include, but are not limited to, income taxes and the effective tax rates, reserves for inventory obsolescence, the fair value of contingent consideration and earnout, the fair value of assets and liabilities related to acquisitions, the derivative warrant liability, the recognition and valuation 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.
Coronavirus Outbreak
The COVID-19 outbreak will continue to have a negative impact on our operations, supply chain, transportation networks and customers. The impact on our business and the results of operations included temporary closure of our operating locations, or those of our customers or suppliers, among others. In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, which may significantly hamper our production throughout the supply chain and constrict sales channels. The extent of these factors are uncertain and cannot be predicted. Our consolidated financial statements reflect estimates and assumptions made by management as of January 1, 2022. Events and changes in circumstances arising after January 1, 2022, including those resulting from the impacts of COVID-19 pandemic, will be reflected in management’s estimates for future periods.
Emerging Growth Company
Section 102(b)(1) of the 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.
Shipping and Handling (Revenue & Cost of Sales)
The Company records all amounts billed to customers in sales transactions related to shipping and handling as revenue earned for the goods provided. Shipping and handling costs are included in cost of sales. Shipping and handling costs were approximately $35,241 and $24,061 for the years ended January 1, 2022 and December 26, 2020, respectively.
Advertising costs
The Company records all advertising related costs to the consolidated statements of operations and comprehensive income during the year incurred and they are included in the selling and marketing line. During the year ended January 1, 2022 and December 26, 2020 the Company incurred and expensed $2,004 and $1,326, respectively.
Cash and Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At January 1, 2022 and December 26, 2020, cash equivalents consisted primarily of money market accounts.
At January 1, 2022 and December 26, 2020, the Company’s domestic cash accounts exceeded federally insured limits by approximately $10,226 and $28,102 respectively. At January 1, 2022 and December 26, 2020, cash balances of approximately $4,832 and $8,366, respectively, were held outside of the United States of America. At January 1, 2022 and December 26, 2020, the Company’s foreign accounts exceeded foreign insured limits by approximately $2,272 and $6,329, respectively.
Inventories
Inventories are measured using the first-in, first-out (FIFO) method. Labor and overhead costs associated with inventory produced by the Company are capitalized. Inventories are stated at the lower of cost or net realizable value as of January 1, 2022 and December 26, 2020. The Company has recorded a reserve for inventory obsolescence as of January 1, 2022 and December 26, 2020, of approximately $1,295 and $1,964, respectively.
Property and Equipment
Property and equipment acquired in business combinations are recorded at fair value as of the acquisition date and are subsequently stated less accumulated depreciation. Property and equipment otherwise acquired are stated at cost less accumulated depreciation. Depreciation is charged to expense on the straight-line basis over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the lease term or their respective useful lives. Maintenance and repairs are charged to expense as incurred.
The estimated useful lives for each major depreciable classification of property and equipment are as follows
| | | | | |
| Manufacturing machinery and equipment | 3-7 years |
| Office furniture and equipment | 3-7 years |
| Vehicles | 3-10 years |
| Leasehold improvements | 3-20 years |
Other Current Assets
Other current assets as of January 1, 2022 consists primarily of other receivables and net VAT taxes of $3,906. As of December 26, 2020, other current assets consists primarily of other receivables, net VAT taxes and deferred transaction costs associated with the Business Combination with Juniper of $3,444.
Deferred Finance Fees
Deferred financing fees consist of loan costs, which are being amortized on the effective interest method over the life of the related debt. During the year ended January 1, 2022, the Company incurred approximately $4,321 in deferred finance fees in connection with the June, 2021 debt transaction. There were no additional deferred finance fees capitalized for the year ended December 26, 2020. Debt issuances are more fully described in Note 8 Line of Credit and Note 9 Long-Term Debt.
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; and
•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 the Company’s debt approximates its carrying amount as of January 1, 2022 and December 26, 2020 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 falls within Level 2 of the Fair Value hierarchy. For the year ended January 1, 2022, the public warrants were valued at market price. The fair value of the private warrants contains significant unobservable inputs including the expected term and volatility. Therefore, the private warrant liabilities were evaluated to be a Level 3 fair value measurement. The fair value of private warrants is estimated using a Binomial Lattice in a risk-neutral framework. Specifically, the future stock price of the Company is modeled assuming a Geometric Brownian Motion (GBM) in a risk-neutral framework. For each modeled future price, the warrant payoff is calculated based on the contractual terms, and then discounted at the term-matched risk-free rate. Finally, the fair value of the private warrants was calculated as the probability-weighted present value over all future modeled payoffs. The following assumptions were used for the valuation of the private warrants:
| | | | | |
| Warrant term (yrs.) | 4.7 | |
Volatility | 30.4 | % |
Risk-free rate | 0.91 | % |
Dividend yield | — | % |
The change in the fair value of warrant liabilities is as follows:
| | | | | |
| Balance assumed in the Business Combination at June 7, 2021 | $ | 37,149 | |
| Conversion of Private warrants to Public warrants | (11,091) | |
| Redeemed/exercised warrants | (31,976) | |
Change in fair value of warrants | 5,918 | |
Balance at January 1, 2022 | $ | — | |
Warrant Liability
The Company classifies Private Placement Warrants (defined and discussed in Note 13 - Stockholders’ Equity) as liabilities. At the end of each reporting period, changes in fair value during the period are recognized as a component of other income (expense), net within the consolidated statements of operations and comprehensive income. The Company continued adjusting the warrant liability for changes in fair value until the earlier of a) the exercise or expiration of the warrants or b) the redemption of the warrants, at which time the warrants will be reclassified to additional paid-in capital.
On October 13, 2021, Janus announced that it would redeem all of its outstanding Private and Public warrants to purchase shares of Janus’s common stock that were issued pursuant to the Warrant Agreement, dated as of June 7, 2021 by and between Janus and Continental Stock Transfer & Trust Company (the “Warrant Agent”) and the Warrant Agreement, dated as of July 15, 2021, by and between Janus and the Warrant Agent, for a redemption price of $0.10 per Warrant (the “Redemption Price”), that remain outstanding at 5:00 p.m. New York City time on November 12, 2021 (the “Redemption Date”). Since all of the Private Placement Warrants were exercised or redeemed by January 1, 2022, the associated warrant liabilities were reclassified to additional paid-in capital.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the Financial Accounting Standards Board (“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 is currently evaluating the impact of this standard to the consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update removes Step 2 of the goodwill impairment test under current guidance, which requires a hypothetical purchase price allocation. The new guidance requires an impairment charge to be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. Upon adoption, the guidance is to be applied prospectively. ASU 2017-04 is effective for Emerging Growth Companies in fiscal years beginning after December 15, 2021, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the adoption of ASU 2017-04 on the consolidated financial statements and does not expect a significant impact of the standard on the consolidated financial statements.
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. Janus is currently evaluating the impact this adoption will have on Janus’s consolidated financial statements. 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 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 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. Early adoption would continue to be allowed. The Company is evaluating the impact the standard will have on the consolidated financial statements; however, the standard is expected to have a material impact on the consolidated financial statements due to the recognition of additional assets and liabilities for operating leases. The Company expects the impact for Topic 842 to be additional right of use assets between $41.0 million and $43.0 million with a corresponding lease liability for similar amounts. The Company does not expect any material impact to our consolidate statements of operations and comprehensive income and cash flows.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity’s own equity, and modifies the guidance on diluted earnings per share (EPS) calculations as a result of these changes. The amendments in this Update are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. Janus is currently evaluating the impact of this standard on Janus’s consolidated financial statements.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, with early adoption permitted. The Group does not expect adoption of the new guidance to have a significant impact on the 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.
3. Inventories
The major components of inventories are detailed below at:
| | | | | | | | | | | |
| January 1, | | December 26, |
| 2022 | | 2020 |
Raw materials | $ | 41,834 | | | $ | 17,432 | |
| Work-in-process | 671 | | | 637 | |
Finished goods | 14,091 | | | 7,213 | |
| $ | 56,596 | | | $ | 25,282 | |
4. Property and Equipment
Property, equipment, and other fixed assets as of January 1, 2022 and December 26, 2020 are as follows:
| | | | | | | | | | | |
| January 1, | | December 26, |
| 2022 | | 2020 |
| Land | $ | 4,501 | | | $ | 3,361 | |
Manufacturing machinery and equipment | 35,688 | | | 26,447 | |
Leasehold improvements | 4,599 | | | 5,127 | |
Construction in progress | 3,571 | | | 2,170 | |
| Other | 13,287 | | | 8,084 | |
| $ | 61,646 | | | $ | 45,190 | |
Less accumulated depreciation | (20,039) | | | (14,219) | |
| $ | 41,607 | | | $ | 30,971 | |
For the years ended January 1, 2022 and December 26, 2020 the Company incurred depreciation of expense of $6,450 and $5,985, respectively.
5. Acquired Intangible Assets and Goodwill
Intangible assets acquired in a business combination (See Note 10 Business Combinations) are recognized at fair value and amortized over their estimated useful lives. The carrying basis and accumulated amortization of recognized intangible assets at January 1, 2022 and December 26, 2020, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1, | | December 26, |
| 2022 | | 2020 |
| Gross Carrying Amount | | Accumulated Amortization | | Average Remaining Life in Years | | Gross Carrying Amount | | Accumulated Amortization |
Intangible Assets | | | | | | | | | |
Customer relationships | $ | 410,094 | | | $ | 97,895 | | | 11 | | $ | 380,863 | | | $ | 71,390 | |
Noncompete agreements | 412 | | | 231 | | | 5 | | 413 | | | 151 | |
Tradenames and trademarks | 107,980 | | | — | | | Indefinite | | 85,598 | | | — | |
Other intangibles | 61,836 | | | 46,156 | | | 6 | | 58,405 | | | 41,279 | |
| $ | 580,322 | | | $ | 144,282 | | | | | $ | 525,278 | | | $ | 112,820 | |
Changes to gross carrying amount of recognized intangible assets due to translation adjustments include an approximate $270 and $997 loss for the years ended January 1, 2022 and December 26, 2020, respectively. Amortization expense was approximately $31,588 and $27,046 for the years ended January 1, 2022 and December 26, 2020, respectively.
The changes in the carrying amounts of goodwill for the period ended January 1, 2022 were as follows:
| | | | | |
| Balance as of December 26, 2020 | $ | 259,423 | |
| Goodwill acquired during the period | 110,240 | |
| Changes due to foreign currency fluctuations | (376) | |
| Balance as of January 1, 2022 | $ | 369,286 | |
6. Investment in Joint Venture
The Company holds a 45% interest in a joint venture with a foreign corporation. The joint venture, located in Mexico, manufactures and distributes steel rolling doors in Mexico and South America. The Company originally contributed $637 of machinery and equipment. The Company accounts for its investment in the joint venture by using the equity method of accounting under which the Company’s share of the net income of the joint venture is recognized as income in the Company’s consolidated statements of operations and comprehensive income and added to the investment account. Distributions received from the joint venture are treated as a reduction of the investment account.
As of January 1, 2022 and December 26, 2020, the Company’s investment in the joint venture was approximately $851 and $1,002, respectively. The investment in joint venture is included within other assets on the consolidated balance sheets. For the year period ended January 1, 2022 and December 26, 2020, approximately $151 and $61 of undistributed loss and earnings, respectively are included in other income (expense), respectively.
7. Accrued Expenses
Accrued expenses are summarized as follows:
| | | | | | | | | | | |
| January 1, | | December 26, |
| 2022 | | 2020 |
Sales tax payable | $ | 3,606 | | | $ | 1,325 | |
Interest payable | 2,741 | | | 4,833 | |
Contingent consideration payable - short term | — | | | 4,000 | |
Other accrued liabilities | 1,766 | | | 5,511 | |
Employee compensation | 13,857 | | | 6,703 | |
Customer deposits and allowances | 24,555 | | | 10,781 | |
Income taxes | 810 | | | 949 | |
| Other | 6,777 | | | 3,064 | |
| Total | $ | 54,111 | | | $ | 37,165 | |
Other accrued liabilities consist primarily of deferred transaction costs of $3,337 as of December 26, 2020. Other as of January 1, 2022 and December 26, 2020 consists primarily of property tax, freight accrual, legal, accounting and other professional fee accruals.
8. 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. If the Base Rate is elected, the interest computation is equal to the Base Rate plus the Base Rate Margin. 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 January 1, 2022 and December 26, 2020, the interest rate in effect for the facility was 3.5%. 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 straight line method. The amortization of the deferred loan costs is included in interest expense on the consolidated statements of operations and comprehensive income. The unamortized portion of the fees included in other assets as of January 1, 2022 and December 26, 2020 was approximately $648 and $448, respectively. There was $6,369 and no outstanding balance on the line of credit as of January 1, 2022 and December 26, 2020, respectively.
9. Long-Term Debt
Long-term debt consists of the following:
| | | | | | | | | | | |
| January 1, | | December 26, |
| 2022 | | 2020 |
Note payable - First Lien | $ | — | | | $ | 562,363 | |
Note payable - First Lien B2 | — | | | 73,875 | |
Note payable - Amendment No. 4 First Lien | 722,379 | | | — | |
| $ | 722,379 | | | $ | 636,238 | |
Less unamortized deferred finance fees | 10,594 | | | 12,110 | |
Less current maturities | 8,067 | | | 6,523 | |
Total long-term debt | $ | 703,718 | | | $ | 617,604 | |
Notes Payable – First Lien and First Lien B2 – The First Lien notes payable was comprised of a syndicate of lenders that originated on February 12, 2018, in the amount of $470,000 with interest payable in arrears. The Company subsequently entered into the first amendment of the First Lien notes payable on March 1, 2019, to issue an additional tranche of the notes payable in the amount of $75,000 (First Lien B2), and the second amendment of the First Lien notes payable on August 9, 2019, to increase the first tranche of the notes payable by $106,000. Both tranches bore interest, as chosen by the Company, at a floating rate per annum consisting of LIBOR plus an applicable margin percent, and were secured by substantially all business assets. On July 21, 2020, the Company repurchased $1,989 principal amount of the First Lien (the “Open Market Purchase”) at an approximate $258 discount, resulting in a gain on the extinguishment of debt of approximately $258. Following the repurchase of the First Lien in the Open Market Purchase, approximately $573,000 principal amount of the 1st Lien remained outstanding. The total interest rate for the First Lien was 4.75% as of December 26, 2020. Unamortized debt issuance costs were approximately $10,304 at December 26, 2020.
The First Lien B2 was comprised of a syndicate of lenders that originated on March 1, 2019, in the amount of $75,000 with interest payable in arrears. The outstanding loan balance was to be repaid on a quarterly basis of 0.25% of the original balance beginning the last day of June 2019 with the remaining principal due on the maturity date of February 12, 2025. As chosen by the Company, the First Lien B2 notes payable bore interest at a floating rate per annum consisting of LIBOR plus an applicable margin percent (total rate of 5.50% as of December 26, 2020.) The debt was secured by substantially all business assets. Unamortized debt issuance costs were approximately $1,806 as of December 26, 2020.
Notes Payable - Amendment No. 3 First Lien - As of February 5, 2021, the Company completed a repricing of its First Lien and First Lien B2 Term Loans, in which the principal terms of the amendment were a reduction in the overall interest rate based upon the loan type chosen and a consolidation of the prior two outstanding tranches into a single tranche of debt with the syndicate. The Amendment No.3 First Lien was comprised of a syndicate of lenders originating on February 5, 2021 in the amount of $634,607 with interest payable in arrears. The outstanding loan balance was 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 (total rate of 4.25% as of January 1, 2022). The debt was secured by substantially all business assets.
As a result of the repricing transaction, the Company recognized a loss on extinguishment of approximately $1,421. The loss is included in Other income (expense) on the Consolidated Statements of Operations and Comprehensive Income.
As of June 7, 2021 and as a result of the Business Combination, the Company repaid approximately $61,600 of debt and recognized a loss on extinguishment of approximately $994. The loss is included in Other income (expense) on the Consolidated Statements of Operations and Comprehensive Income.
Notes Payable - Amendment No.4 First Lien - On August 18, 2021, the Company completed a refinancing of its First Lien Amendment No. 3, in which the principal terms of the amendment were new borrowings of $155,000 which was used to fund the DBCI 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 (total rate of 4.25% as of January 1, 2022). The debt is secured by substantially all business assets. Unamortized debt issuance costs are approximately $10,594 at January 1, 2022. This refinancing amendment was accounted for as a modification and as such no gain or loss was recognized for this transaction and any third party fees paid in connection with this amendment were expensed and any bank fees, original issue discount and charges associated with this amendment were capitalized and are being amortized as a component of interest expense over the remaining loan term.
As of January 1, 2022, and December 26, 2020, the Company maintained one letter of credit totaling approximately $400 and $295, on which there were no balances due.
In connection with the Company entering into the debt agreements 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 $2,951 and $2,419 was recognized for the years ended January 1, 2022 and December 26, 2020, 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.
Aggregate annual maturities of long-term debt at January 1, 2022, are:
| | | | | |
| 2022 | $ | 8,067 | |
| 2023 | 8,067 | |
| 2024 | 6,051 | |
| 2025 | 700,194 | |
| 2026 | — | |
| Total | $ | 722,379 | |
10. Business Combinations
Access Control Technologies, LLC Acquisition
On August 31, 2021, Janus Core acquired 100% of the equity interests of ACT and all assets and certain liabilities of Phoenix for total consideration of approximately $10,333 which was comprised of approximately $9,383 cash plus $950 of hold back liability. The closing statement was finalized in the fourth quarter of 2021.
The assets and liabilities of this acquisition have been recorded based upon management's estimates of their fair market values as of the 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:
| | | | | |
| Fair Value of Consideration Transferred | |
| Cash | $ | 9,383 | |
| Hold Back Liability | 950 | |
| Total Fair Value of Consideration Transferred | $ | 10,333 | |
| 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 | (1,396) | |
| Total identifiable net assets | $ | 3,749 | |
| |
| Goodwill | $ | 6,584 | |
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 balance of approximately $6,584 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. Unbilled contracts (“Backlog”) represent 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 8.84
During the year ended January 1, 2022, the Company incurred approximately $284 of third-party acquisition costs. These expenses are included in general and administrative expense in the Company’s Consolidated Statement of Operations and Comprehensive Income for the year ended January 1, 2022.
The amounts of revenue and net income of ACT included in the results from the transaction date of August 31, 2021 through January 1, 2022 are as follows:
| | | | | |
| Periods from September 1, 2021 through January 1, 2022 |
|
| Revenue | $ | 3,572 | |
Net Income | (869) | |
DBCI, LLC Acquisition
On August 17, 2021, Janus Core acquired 100% of the equity interests of DBCI for total cash consideration of approximately $169,173. The Company is working with the seller to finalize the net working capital adjustment which is expected to be finalized as soon as practicable.
The assets and liabilities of this acquisition have been recorded based upon management's estimates of their fair market values as of the 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:
| | | | | |
| 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 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 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 | | 10 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 5.25.
During the year ended January 1, 2022, the Company incurred approximately $2,685 of third-party acquisition costs. These expenses are included in general and administrative expense in the Company’s Consolidated Statement of Operations and Comprehensive Income for year ended January 1, 2022.
The amounts of revenue and net income of DBCI included in the Consolidated Statements of Operations and Comprehensive Income from the transaction date of August 17, 2021 through January 1, 2022 are as follows:
| | | | | |
| Periods from August 18, 2021 through January 1, 2022 |
|
| Revenue | $ | 33,037 | |
Net Income | 2,820 | |
Pro Forma Financial Information
The following unaudited pro forma information is based on estimates and assumptions that the Company believes to be reasonable. However, this information is not necessarily indicative of the Company’s consolidated results of income in future periods or the results that actually would have been realized had the Company and DBCI and ACT been combined companies during the periods presented. These pro forma results exclude any savings or synergies that would have resulted from these business combinations had they occurred on December 27, 2019. This unaudited pro forma supplemental information includes incremental asset amortization, accounting policy alignment, nonrecurring transaction costs, and other charges as a result of the acquisitions, net of the related tax effects.
The following unaudited pro forma information has been prepared as if the DBCI and ACT acquisitions had taken place on December 29, 2019. The Company prepared the table based on certain estimates and assumptions. These estimates and assumptions were made solely for the purposes of developing such unaudited pro forma information and have not been adjusted to provide period over period comparability.
| | | | | | | | | | | |
| Year Ended |
| January 1, | | December 26, |
| 2022 | | 2020 |
| Revenue | $ | 809,647 | | | $ | 637,239 | |
Net Income | 44,574 | | | 59,232 | |
Business Combination with Juniper Industrial Holdings, Inc.
On June 7, 2021, Juniper consummated a business combination with Midco pursuant to the Business Combination Agreement. 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, 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. All Earnout Shares were issued or released during the year ended January 1, 2022.
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 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 $50,600 related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees.. In addition, the Company incurred $4,468 in transaction bonuses paid to key employees and $2,059 in non-cash share-based compensation expense due to the accelerated vesting of Midco’s legacy share-based compensation plan. The transaction bonuses and share-based compensation are included in general and
administrative expense on the Company’s consolidated statement of operations and comprehensive income for year ended January 1, 2022. See Note 12 - “Equity Incentive Plan and Unit Option Plan” for additional information.
G & M Stor-More Pty Ltd Acquisition
On January 19, 2021, the Company, through its wholly owned subsidiary Steel Storage Australia Pty Ltd. acquired 100% of the net assets of G & M Stor-More Pty Ltd. for total cash consideration of approximately $1,739. In aggregate, approximately $814 was attributed to intangible assets, approximately $929 was attributable to goodwill, and approximately $(4) was attributable to net liabilities assumed. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and Steel Storage. All of the goodwill was assigned to the Janus International segment of the business and is not deductible for income tax purposes.
The weighted-average amortization of acquired intangibles is 11.6 years.
During the year ended January 1, 2022, the Company incurred approximately $105 of third-party acquisition costs. These expenses are included in general and administrative expense of the Company’s Consolidated Statement of Operations and Comprehensive Income for the year ended January 1, 2022.
Pro forma results of operations for this acquisition have not been presented as the historical results of operations for G & M Stor-More Pty Ltd. are not material to the consolidated results of operations in the prior years.
11. Profit Sharing Plan
The Company has one 401(k) plan for the years ended January 1, 2022 and December 26, 2020 covering substantially all U.S. employees for Janus International Group, LLC, BETCO, NOKE, ASTA and DBCI. Eligible employees may contribute up to the limits established by applicable income tax regulations. The Company made employer matching contributions of approximately $1,092 and $901 for the years ended January 1, 2022 and December 26, 2020, respectively.
The Company may also make discretionary matching contributions to the plans. The Company did not make a discretionary contribution for the years ended January 1, 2022 and December 26, 2020.
12. Equity Incentive Plan and Unit Option Plan
2021 Equity Incentive Plan
Effective June 7, 2021, Group implemented an equity incentive program designed to enhance the profitability and value of its investment for the benefit of its shareholders by enabling Group to offer eligible directors, officers and employees equity-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interest between such individuals and the Group’s shareholders.
The Company measures compensation expense for restricted stock units (“RSUs”) issued under the 2021 Omnibus Incentive Plan (the “Plan”) in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Stock-based compensation is measured at fair value on the grant date and recognized as compensation expense over the requisite service period. The Company records compensation cost for these awards using the straight-line method. Forfeitures are recognized as they occur.
During the year ended January 1, 2022, Group granted to certain employees and board members RSUs. As of January 1, 2022, RSUs granted to individuals under the Plan totaled 275,370. RSUs granted to employees are subject to continued employment and vest ratably over four years while RSUs granted to board members are subject to continued service and vest on the first anniversary of the grant date.
Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at the grant date.
The following table summarizes all restricted stock unit activity:
| | | | | | | | | | | |
| Year Ended January 1, 2022 |
| RSUs | | Weighted-Average Grant Date Fair Value |
| Outstanding at December 26, 2020 | — | | | $ | — | |
| Granted | 275,370 | | | 11.91 |
| Vested | — | | | — | |
| Forfeited | — | | | — | |
| Outstanding at January 1, 2022 | 275,370 | | | $ | 11.91 | |
| | | | | | | | | | | |
| Unvested at January 1, 2022 | 275,370 | | | $ | 11.91 | |
| Vested and payable at January 1, 2022 | — | | | — | |
Total compensation expense related to the above awards was approximately $66 for the year ended January 1, 2022.
At January 1, 2022, total unrecognized compensation expense for nonvested equity awards granted was approximately $3.2 million. This expense is expected to be recorded over a weighted-average period of 3.24 years.
Midco - Common B Unit Incentive Plan
Prior to the Business Combination, commencing on March 15, 2018, the Board of Directors of Midco approved the Class B Unit Incentive Plan (the “Class B Plan”), which was a form of long-term compensation that provided for the issuance of ownership units to employees for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of Midco. As a result of the Business Combination, the Board of Directors approved an acceleration of the awards granted in connection with the Class B Plan, to allow accelerated vesting of the units upon consummation of the Business Combination. On the date of the Closing, the accelerated vesting for 16,079 units (equivalent to 4,012,873 shares of Group common stock) resulted in $2,100 of non-cash share-based compensation expense recorded to general and administrative expense in the Company’s consolidated statement of operations and comprehensive income for the year ended January 1, 2022.
13. Stockholders’ Equity
On June 7, 2021, the Group’s common stock began trading on the NYSE under the symbol “JBI”. Pursuant to the terms of the Amended and Restated Certificate of Incorporation, the Company is authorized and has available 825,000,000 shares of common stock with a par value of $0.0001 per share. Immediately following the Business Combination on June 7, 2021, there were 138,384,250 shares of common stock with a par value of $0.0001 outstanding. As discussed in Note 10 Business Combinations, the Company has retroactively adjusted the shares issued and outstanding prior to June 7, 2021 to give effect to the exchange ratio established in the Business Combination Agreement to determine the number of shares of common stock into which they were converted. As of January 1, 2022, the number of outstanding shares is 146,561,717. The increase in outstanding shares is a result of warrant exercise and redemptions during the year ended January 1, 2022.
Preferred Stock
Our certificate of incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock with a par value of $0.0001 per share. As of January 1, 2022, zero shares of Preferred Stock were issued and outstanding, and no designation of rights and preferences of preferred stock had been adopted. Our preferred stock is not quoted on any market or system, and there is not currently a market for our preferred stock.
Rollover Equity
At the Closing Date of the business combination, each outstanding unit of Midco’s Class A Preferred and Class B Common converted into the Company’s common stock at the then-effective conversion rate. Each unit of Midco Class A Preferred was converted into approximately 343.983 shares of our common stock, and each unit of Midco Class B Common was converted into approximately 249.585 shares of our common stock. As of June 7, 2021 there are 70,270,400 shares held by Midco equityholders.
PIPE Investment
Concurrently with the execution and delivery of the Business Combination Agreement, the PIPE Investors entered into the PIPE Subscription Agreements pursuant to which the PIPE Investors purchased an aggregate of 25,000,000 PIPE Shares at a purchase price per share of $10.00. One of the Company’s directors 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. The sale and issuance was made to accredited investors in reliance on Rule 506 of Regulation D under the Securities Act of 1933, as amended.
Founder Shares
In August 2019, the Sponsor purchased 8,625,000 shares of Class B common stock (the “founder shares”) of Juniper Industrial Holdings, Inc. (“JIH”) for an aggregate purchase price of $25,000 in cash, or approximately $0.003 per founder share. By virtue of the consummation of the Business Combination, the Sponsor’s Class B common stock was converted into the right to receive an equivalent number of shares of Common Stock, 2,000,000 of which (pro rata among the Sponsor shares and shares held by certain affiliates) was subject to the terms of the Earnout 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. The table below represents the approximate common stock holdings of Group immediately following the Business Combination.
| | | | | | | | |
| Shares | % |
| Janus Midco, LLC unitholders | 70,270,400 | | 50.8 | % |
| Public stockholders | 43,113,850 | | 31.2 | % |
| PIPE Investors | 25,000,000 | | 18.0 | % |
| Total | 138,384,250 | | 100.0 | % |
Warrants
The Sponsor purchased 10,150,000 warrants to purchase Class A common stock of JIH (the “private placement warrants”) for a purchase price of $1.00 per whole private placement warrant, or $10,150,000 in the aggregate, in private placement transactions that occurred simultaneously with the closing of the Juniper IPO and the closing of the over-allotment option for the Juniper IPO (the “private placement”). Each private placement warrant entitled the holder to purchase one share of Class A common stock of JIH at $11.50 per share. The private placement warrants were only exercisable for a whole number of shares of Class A common stock of JIH. The Sponsor transferred 5,075,000 of its private placement warrants to Midco’s equityholders as part of the consideration for the Business Combination. Immediately after giving effect to the Business Combination, there were 10,150,000 issued and outstanding private placement warrants. The private placement warrants were liability classified.
Immediately after giving effect to the Business Combination, there were 17,249,995 issued and outstanding public warrants. The public warrants are equity classified. All of the private and public warrants were exercised or redeemed on November 18, 2021 and therefore there are no warrants issued and outstanding as of January 1, 2022.
Dividend Policy
We have never declared or paid, and do not anticipate declaring or paying, any cash dividends on our Common or Preferred Stock in the foreseeable future. It is presently intended that we will retain our earnings for use in business operations and, accordingly, it is not anticipated that the Board of Directors will declare dividends in the foreseeable future. In addition, the terms of our credit facilities include restrictions on our ability to issue and pay dividends.
14. Related Party Transactions
Prior to the Business Combination, Jupiter Intermediate Holdco, LLC, on behalf of Janus Core, entered into a Management and Monitoring Services Agreement (MMSA) with the Class A Preferred Unit holders group. Janus Core paid management fees to the Class A Preferred Unit holders group for the years ended January 1, 2022 and December 26, 2020 of approximately $1,124 and $7,101, respectively. Approximately $896 of the Class A Preferred Unit holders group management fees were accrued and unpaid as of December 26, 2020 and no fees were accrued and unpaid as of January 1, 2022. As a result of the Business Combination the MMSA was terminated effective June 7, 2021.
Janus Core leases a manufacturing facility in Butler, Indiana, from Janus Butler, LLC, an entity wholly owned by a former member of the board of directors of Group. Effective October 20, 2021 the member resigned from the board of Janus Core. Rent payments paid to Janus Butler, LLC for the years ended January 1, 2022 and December 26, 2020 were approximately $135 and $134, respectively. The original lease extends through October 31, 2021 and on November 1, 2021 the lease was extended to October 31, 2026, with monthly payments of approximately $13 with an annual escalation of 1.5%.
Janus Core was previously a party to a lease agreement with 134 Janus International, LLC, which is an entity majority owned by a former member of the board of directors of the Company. In December, 2021 the leased premises in Temple, Georgia were sold by the former director to a third party buyer, resulting in an assignment of the lease to said third-party buyer and an extension of the lease to November 30, 2031. Rent payments paid to 134 Janus International, LLC in the years ended January 1, 2022 and December 26, 2020 were approximately $343 and $446, respectively.
The Group is a party to a lease agreement with ASTA Investment, LLC, for a manufacturing facility in Cartersville, Georgia an entity partially owned by a shareholder of the Company. The original lease term began on April 1, 2018 and extended through March 31, 2028 and was amended in December 2020 to extend the term until March 1, 2030, with monthly lease payments of $66 per month with an annual escalation of 2.0%. Rent payments to ASTA Investment, LLC for the years ended January 1, 2022 and December 26, 2020 were approximately $801 and $837, respectively.
15. Revenue Recognition
The Company accounts for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights and payment terms can be identified, the contract has commercial substance, and it is probable that the Company will collect substantially all of the consideration to which it is entitled. The Company’s customer terms of sale are generally on an open account basis with standard commercial terms of net 30 days. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised good or service to a customer. The Company recognizes material revenue when the goods are shipped and received by the customer, installation revenue is recognized over time as the services are performed and the benefit is transferred to the customer and services related revenue is recognized when the services are performed or over time if needed based upon the approved contract terms.
Contract Balances
Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract assets primarily result from contracts that include installation which are billed via payment requests that are submitted in the month following the period during which revenue was recognized. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. Contract assets are disclosed as costs and estimated earnings in excess of billings on uncompleted contracts, and contract liabilities are disclosed as billings in excess of costs and estimated earnings on uncompleted contracts in the consolidated balance sheet. Contract balances as of January 1, 2022 were as follows:
| | | | | |
| January 1, 2022 |
Contract assets, beginning of the period | $ | 11,399 | |
Contract assets, end of the period | $ | 23,121 | |
Contract liabilities, beginning of the period | $ | 21,525 | |
Contract liabilities, end of the period | $ | 23,207 | |
During the year ended January 1, 2022, the Company recognized revenue of approximately $19,338 related to contract liabilities at December 26, 2020. There were new billings of approximately $21,020 for product and services for which there were unsatisfied performance obligations to customers and revenue had yet been recognized as of January 1, 2022.
Disaggregation of Revenue
The principal categories we use to disaggregate revenues are by timing and sales channel of revenue recognition. The following disaggregation of revenues depict the Company’s reportable segment revenues by timing and sales channel of revenue recognition for the years ended January 1, 2022 and December 26, 2020:
Revenue by Timing of Revenue Recognition
| | | | | | | | | | | |
| Year Ended |
Reportable Segments by Sales Channel Revenue Recognition | January 1, 2022 | | December 26, 2020 |
Janus North America | | | |
| Goods transferred at a point in time | $ | 615,020 | | | $ | 430,585 | |
| Services transferred over time | 99,924 | | | 89,534 | |
| $ | 714,944 | | | $ | 520,119 | |
Janus International | | | |
| Goods transferred at a point in time | 38,490 | | | 25,509 | |
| Services transferred over time | 30,089 | | | 19,981 | |
| $ | 68,579 | | | $ | 45,490 | |
| Eliminations | (33,373) | | | (16,636) | |
Total Revenue | $ | 750,150 | | | $ | 548,973 | |
Revenue by Sale Channel Revenue Recognition
| | | | | | | | | | | | |
| Year Ended | |
Reportable Segments by Sales Channel Revenue Recognition | January 1, 2022 | | December 26, 2020 | |
Janus North America | | | | |
| Self Storage-New Construction | $ | 235,361 | | | $ | 246,547 | | |
| Self Storage-R3 | 220,949 | | | 132,283 | | |
| Commercial and Others | 258,634 | | | 141,289 | | |
| $ | 714,944 | | | $ | 520,119 | | |
Janus International | | | | |
| Self Storage-New Construction | $ | 51,723 | | | $ | 25,509 | | |
| Self Storage-R3 | 16,856 | | | 19,981 | | |
| Commercial and Others | — | | | — | | |
| $ | 68,579 | | | $ | 45,490 | | |
| Eliminations | (33,373) | | | (16,636) | | |
Total Revenue | $ | 750,150 | | | $ | 548,973 | | |
16. Operating Leases
The Company is party to various leases all of which are illustrated in the table below:
| | | | | | | | | | | |
| Leasing Entity | Property Address | Term End Date | Monthly Rate |
| Janus International Group, LLC | Surprise, AZ | 4/30/2034 | $ | 42 | |
| Janus International Group, LLC | Temple, GA | 12/31/2036 | 74 | |
| Janus International Group, LLC | Houston, TX | 12/31/2036 | 72 | |
| Janus International Group, LLC | Anaheim, CA | 6/30/2024 | 21 | |
| Janus International Group, LLC | Butler, IN | 10/31/2026 | 12 | |
| Janus International Group, LLC | Orlando, FL | 10/31/2023 | 17 | |
| Janus International Group, LLC | Temple, GA | 11/30/2031 | 41 | |
| Janus International Group, LLC | Houston, TX | 1/31/2023 | 10 | |
| Janus International Group, LLC | Sumner, WA | 6/30/2026 | 24 | |
| Janus International Group, LLC | Douglasville, GA | 4/30/2024 | 24 | |
| Janus International Group, LLC | Douglasville, GA | 4/1/2027 | 29 | |
| Asta Industries, Inc. | Cartersville, GA | 3/1/2030 | 67 | |
| Asta Industries, Inc. | Fayetteville, GA | 7/31/2022 | 9 | |
| Asta Industries, Inc. | Houston, TX | 1/31/2023 | 8 | |
| Janus International Europe Ltd. (UK) | Peterlee, UK | 6/30/2026 | 22 | |
| Janus International Europe Ltd. (UK) | Twickenham, UK | 4/29/2028 | 17 | |
| Active Supply and Design (UK) | Cheshire, UK | 12/31/2025 | 3 | |
| Steel Storage Australia Pty Ltd. | Hendra, Queensland | 2/28/2026 | 25 | |
| Steel Storage Australia Pte Ltd. | Singapore | 6/30/2023 | 15 | |
Noke, Inc. | Lehi, UT | 10/31/2022 | 16 | |
| Betco, Inc. | Statesville, NC | 3/31/2024 | 34 | |
| Betco, Inc. | Charlotte, NC | 1/31/2023 | 7 | |
| DBCI, LLC | Chandler, AZ | 11/23/2022 | 15 | |
| DBCI, LLC | Houston, TX | 2/18/2022 | 30 | |
| ACT, LLC | Salisbury, NC | 8/31/2026 | 20 | |
| ACT, LLC | Las Vegas, NV | 6/30/2024 | 2 | |
| ACT, LLC | Cary, NC | 8/31/2022 | 1 | |
| ACT, LLC | Greer, SC | 9/30/2024 | 1 | |
The Company also leases certain equipment under various noncancellable operating lease agreements expiring through 2024.
Total rent expense under operating leases was approximately $6,771 and $5,533 for the years ended January 1, 2022 and December 26, 2020, respectively. Rent expense of approximately $122 and $211 was recognized for the years ended January 1, 2022 and December 26, 2020, respectively, in excess of cash paid for straight-line rent considerations. This amount is included in deferred rent as a part of other long-term liabilities at year-end.
Future minimum lease payments under these noncancellable operating leases are as follows:
| | | | | |
| 2021 |
| 2022 | $ | 6,972 | |
| 2023 | 6,225 | |
| 2024 | 5,285 | |
| 2025 | 4,882 | |
| 2026 | 4,128 | |
| Thereafter | 19,901 | |
| Total | $ | 47,393 | |
17. Leases - Sale-Leasebacks
For the year ended January 1, 2022, the Company entered into a Sale Leaseback transaction, accounted for under ASC 840, related to a production, warehousing and distribution facility in Houston, Texas. The Company purchased the facility in September of 2021 for approximately $9.2 million and incurred initial improvements of approximately $0.4 million that were made prior to the facility being sold and immediately leased back to a third party for approximately $9.6 million in December 2021. Due to the nature and timing of this transaction there was no gain or loss recognized by the Company for the year ended January 1, 2022.
The resulting lease entered into by the Company is for an initial term of 15 years with an option to renew for 2 additional 10 year periods. The monthly rental payments escalate each year by a market based index or a flat percentage, whichever is higher. The seller has no continuing involvement related to this transaction for the property in question.
The future minimum lease payments related to the sale-lease are summarized in the following table:
| | | | | |
| 2021 |
| 2022 | $ | 779 | |
| 2023 | 795 | |
| 2024 | 810 | |
| 2025 | 827 | |
| 2026 | 843 | |
| Thereafter | 9,419 | |
| Total | $ | 13,473 | |
18. Income Taxes
Prior to June 7, 2021, the Company was a limited liability company taxed as a partnership for U.S. federal income tax purposes. The Company was generally not directly subject to income taxes under the provisions of the Internal Revenue Code and most applicable state laws. Therefore, taxable income or loss was reported to the members for inclusion in their respective income tax returns.
After June 7, 2021, the Group is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws. The Group’s effective tax rate is based on pre-tax earnings, enacted U.S. statutory tax rates, non-deductible expenses, and certain tax rate differences between U.S. and foreign jurisdictions. The foreign subsidiaries file income tax returns in the United Kingdom, France, Australia, and Singapore as necessary. For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Group’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.
The provision for income taxes for the years ended January 1, 2022 and December 26, 2020 includes amounts related to entities within the group taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore. The Company determines its provision for income taxes for interim periods and annual periods using an estimate of its annual effective tax rate on year to date ordinary income and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs. Additionally, the income tax effects of significant unusual or infrequently occurring items are recognized entirely within the period in which the event occurs.
During the years ended January 1, 2022 and December 26, 2020, the Company recorded a total income tax provision of approximately $6,481 and $2,114 on pre-tax income of approximately $50,283 and $58,951 resulting in an effective tax rate of 12.9% and 3.6%, respectively. The effective tax rates for the year ended January 1, 2022 were primarily impacted by the change in tax status of the Group from partnership to corporation, statutory rate differentials, changes in estimated tax rates, valuation allowances and permanent differences and for the year ended December 26, 2020, were primarily impacted by the tax status of the Group being a partnership and permanent differences.
For the years ended January 1, 2022 and December 26, 2020, income (loss) from continuing operations before taxes consist of the following:
| | | | | | | | | | | |
| Year Ended |
| January 01, 2022 | | December 26, 2020 |
| US operations | $ | 54,067 | | | $ | 56,019 | |
| Foreign operations | (3,784) | | | 2,932 | |
| Total | $ | 50,283 | | | $ | 58,951 | |
Income tax expense (benefit) attributable to income from continuing operations consists of:
| | | | | | | | | | | | | | | | | |
| Current | | Deferred | | Total |
| Year ended January 1, 2022: | | | | | |
| U.S. federal | $ | 629 | | | $ | 4,376 | | | $ | 5,005 | |
| State and local | 1,529 | | | 10 | | | 1,539 | |
| Foreign jurisdiction | (526) | | | 463 | | | (63) | |
| Total | $ | 1,632 | | | $ | 4,849 | | | $ | 6,481 | |
| | | | | | | | | | | | | | | | | |
| Current | | Deferred | | Total |
| Year ended December 26, 2020: | | | | | |
| U.S. federal | $ | (2) | | | $ | 823 | | | $ | 821 | |
| State and local | 612 | | | (473) | | | 139 | |
| Foreign jurisdiction | 1,155 | | | (1) | | | 1,154 | |
| Total | $ | 1,765 | | | $ | 349 | | | $ | 2,114 | |
Income tax expense (benefit) attributable to income from continuing operations was approximately $6,481 and $2,114 for the years ended January 1, 2022 and December 26, 2020, respectively, and differed from the amounts computed by applying the partnership’s U.S. federal income tax rate of zero for the year ended December 26, 2020 and for the partial period up to the Business Combination date of June 7, 2021, presented to pretax income from continuing operations as a result of the following:
| | | | | | | | | | | |
| Year Ended |
| January 1, 2022 | | December 26, 2020 |
| Income before taxes | $ | 50,283 | | | $ | 58,951 | |
| Computed “expected” tax expense | 10,559 | | | — | |
| Increase (reduction) in income taxes resulting from: | | | |
| Statutory rate differential | (5,606) | | | 1,281 | |
| Permanent difference | 1,776 | | | 697 | |
| State income taxes, net of federal benefit | 1,284 | | | 519 | |
| Change in tax rates | (1,342) | | | (421) | |
| Change in estimate | 175 | | | (146) | |
| | | |
| Change in valuation allowance | (938) | | | — | |
| Other, net | 573 | | | 184 | |
| Total | $ | 6,481 | | | $ | 2,114 | |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 1, 2022 and December 26, 2020 are presented below:
| | | | | | | | | | | |
| January 1, | | December 26, |
| 2022 | | 2020 |
| Deferred tax assets | | | |
| Allowance for doubtful accounts | $ | 101 | | | $ | 15 | |
| Other accrued expenses | 863 | | | 222 | |
| Inventories | 210 | | | 66 | |
| Leases | 3 | | | 9 | |
| Tax incentives | 113 | | | — | |
| Intangibles | 61,465 | | | — | |
| Net operating loss carryforward | 1,095 | | | 1,670 | |
| Other | 17 | | | 83 | |
| Total gross deferred tax assets | 63,867 | | | 2,065 | |
| Less: valuation allowance | (256) | | | — | |
| Net deferred tax assets | 63,611 | | | 2,065 | |
| | | |
| Deferred tax liabilities | | | |
| Intangibles | — | | | (15,200) | |
| Property and equipment | (4,360) | | | (2,134) | |
| Prepaids | (816) | | | — | |
| Other | (269) | | | — | |
| Total gross deferred liabilities | (5,445) | | | (17,334) | |
| Net deferred tax asset (liability) | $ | 58,166 | | | $ | (15,269) | |
The difference between income tax expense recorded in our consolidated statements of operations and comprehensive income and income taxes computed by applying the corporate statutory federal income tax rate (21% for the year ended January 1, 2022 and December 26, 2020) to income before income tax expense is due to the fact that the majority of our income was not subject to federal income tax due to our status as a limited liability company prior to June 7, 2021. In general, only the corporate entities in our structure are subject to federal tax at 21%. The Company realized a current tax benefit of $6,901 from the utilization of net operating loss carryforwards. We record a tax provision related to the amount of undistributed earnings of our foreign subsidiaries expected to be repatriated.
At January 1, 2022 and December 26, 2020, the Company has net operating loss carryforwards for Federal income tax purposes of $0 and $6,901, respectively, which are available to offset future federal taxable income, if any, and are not subject to expiration. At January 1, 2022 and December 26, 2020, the Company has net operating loss carryforwards for state income tax purposes of $5,382 and $4,961 which are available to offset future state taxable income, of which $2,018 and $1,950 are subject to expiration beginning in 2024 and 2036, respectively.
In evaluating its ability to realize its net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of January 1, 2022, the Company has set up a valuation allowance against state net operating loss in the amount of $256 due to losses incurred in a subsidiary which does not generate operating income, thus the Company does not believe a tax benefit is more likely than not to be realized for that subsidiary’s state net operating losses.
The Company recognizes accrued interest associated with unrecognized tax benefits as part of interest expense and penalties associated with unrecognized tax benefits as part of other expenses. As of January 1, 2022 and December 26, 2020 there were no accrued interest and penalties associated with unrecognized tax benefits. Management believes there are no material amounts of tax positions for which there is uncertainty as of January 1, 2022 and December 26, 2020. There are no changes expected in the next 12 months.
Management of Janus is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. For the years before 2017, the Company is no longer subject to U.S. federal or state income tax examinations. For the years before 2017, the Company is no longer subject to examination by the United Kingdom, French, Australia, and Singapore taxing authorities in those jurisdictions.
19. Net Income Per Share
Prior to the Business Combination, and prior to effecting the reverse recapitalization, the Company’s pre-merger LLC membership structure included two classes of units: Class A preferred units and Class B common units. The Class A preferred units were entitled to receive distributions prior and in preference on Class A preferred unit unpaid cumulative dividends (“Unpaid Preferred Yield”) followed by Class A preferred unit capital contributions that have not been paid back to the holders (the “Unreturned Capital”). Vested Class B common units participate in the remaining distribution on a pro-rata basis with Class A preferred units if they have met the respective Participation Threshold and, if applicable, the Target Value defined in the respective Unit Grant Agreement. The Class A preferred and Class B common units fully vested at the Business Combination date.
Pursuant to the Restated and Amended Certificate of Incorporation and as a result of the reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to June 7, 2021 to give effect to the exchange ratio used to determine the number of shares of common stock into which they were converted. Basic net income per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed based on the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include stock purchase warrants and contingently issuable shares attributable to the earn-out consideration. Dilutive EPS excludes private placement warrants as the impact is antidilutive.
The following table sets forth the computation of basic and diluted EPS attributable to common stockholders for the years ended January 1, 2022 and December 26, 2020:
| | | | | | | | | | | |
| |
| Year Ended |
| January 1, 2022 | | December 26, 2020 |
| Numerator: | | | |
| Net income attributable to common stockholders | $ | 43,801 | | | $ | 56,837 | |
| | | |
| | | |
| Denominator: | | | |
| Weighted average number of shares: | | | |
| Basic | 107,875,018 | | | 65,843,575 | |
| Adjustment for Public Warrants - Treasury stock method | 1,102,793 | | | — | |
| Diluted | $ | 108,977,811 | | | $ | 65,843,575 |
| Basic net income per share attributable to common stockholders | $ | 0.41 | | | $ | 0.86 | |
| Diluted net income per share attributable to common stockholders | $ | 0.40 | | | $ | 0.86 | |
20. Segments Information
The Company operates its business and reports its results through two reportable segments: Janus North America and Janus International, in accordance with ASC Topic 280, Segment Reporting. The Janus International segment is comprised of JIE with its production and sales located largely in Europe. The Janus North America segment is comprised of all the other entities including Janus Core, BETCO, NOKE, ASTA, DBCI, ACT, Janus Door and Steel Door Depot.
Summarized financial information for the Company’s segments is shown in the following tables:
| | | | | | | | | | | |
| Year Ended |
| January 1, | | December 26, |
| 2022 | | 2020 |
| Revenue | | | |
| Janus North America | $ | 714,944 | | | $ | 520,119 | |
| Janus International | 68,579 | | | 45,490 | |
| Intersegment | (33,373) | | | (16,636) | |
| Consolidated Revenue | $ | 750,150 | | | $ | 548,973 | |
| Income From Operations | | | |
| Janus North America | $ | 70,697 | | | $ | 91,665 | |
| Janus International | 21,663 | | | 2,811 | |
| Eliminations | 40 | | | 45 | |
| Total Segment Operating Income | $ | 92,400 | | | $ | 94,521 | |
| Depreciation Expense | | | |
| Janus North America | $ | 5,977 | | | $ | 5,390 | |
| Janus International | 472 | | | 594 | |
| Consolidated Depreciation Expense | $ | 6,450 | | | $ | 5,985 | |
| Amortization of Intangible Assets | | | |
| Janus North America | $ | 30,081 | | | $ | 25,661 | |
| Janus International | 1,507 | | | 1,385 | |
| Consolidated Amortization Expense | $ | 31,588 | | | $ | 27,046 | |
| Capital Expenditures | | | |
| Janus North America | $ | 16,170 | | | $ | 6,002 | |
| Janus International | 3,696 | | | 336 | |
| Consolidated Capital Expenditures | $ | 19,866 | | | $ | 6,338 | |
| | | | | | | | | | | |
| January 1, | | December 26 |
| 2022 | | 2020 |
| Identifiable Assets | | | |
| Janus North America | $ | 1,063,563 | | | $ | 820,261 | |
| Janus International | 58,439 | | | 53,219 | |
| Consolidated Assets | $ | 1,122,002 | | | $ | 873,480 | |
21. Significant Estimates and Concentrations
Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following:
General Litigation
The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.
Self-Insurance
Under the Company’s workers’ compensation insurance program, coverage is obtained for catastrophic exposures under which the Company retains a portion of certain expected losses. The Company has stop loss workers’ compensation insurance for claims in excess of $200 as of January 1, 2022 and December 26, 2020, respectively. Provision for losses expected under this program is recorded based upon the Company’s estimates of the aggregate liability for claims incurred and totaled approximately $383 and $391 as of January 1, 2022, and December 26, 2020, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these consolidated financial statements.
Under the Company’s health insurance program, coverage is obtained for catastrophic exposures under which the Company retains a portion of certain expected losses. The Company has stop loss insurance for claims in excess of $250 and $250 as of January 1, 2022 and December 26, 2020, respectively. Provision for losses expected under this program is recorded based upon the Company’s estimates of the aggregate liability for claims incurred and totaled approximately $1,539 and $916 as of January 1, 2022 and December 26, 2020, respectively. The amount of actual losses incurred could differ materially from the estimates reflected in these consolidated financial statements.
22. Subsequent Events
For the consolidated financial statements as of January 1, 2022, the Company has evaluated subsequent events through the issuance date of the financial statements.