Ramey Jackson: Just let me add to that, please. Dan, M&A is very important to us. It’s a part of who we are, and I think we have a successful track record of M&A. So the pipeline remains to be strong. We focus on it. We’re continuously looking at opportunities so that regardless will never change. It’s a part of who we are.
Daniel Moore: Perfect. Appreciate the color. I look forward to having the opportunity to see some of your facilities down in Atlanta, in Georgia, I should say, next month and best of luck.
Operator: Thank you. Our next question comes from the line of John Lovallo with UBS. Please proceed with your question.
Spencer Kaufman: This is actually Spencer Kaufman on for John. Thank you for the question. Maybe the first one, just following up on some of the last question. If you just look at that 75% to 100% of free cash flow conversion, that 2x or 3x leverage target seems conservative unless there’s a substantial amount of cash going towards M&A, and it seems like there could be. But just kind of curious as to, in your internal model, how much cash you guys are allocating for acquisitions. And just kind of given the current macro uncertainty, is it fair to assume that you’d rather be at the low end of that 2 to 3x leverage target range. And I know I’m kind of going a little bit over here, but just given that all your debt is floating rate. I mean, would you consider paying down more debt more aggressively right now with your cash flow to kind of be below that target range?
Anselm Wong: Yes. We’re actually — like we said before, it’s optionality. So definitely that’s on the plate that we’re looking at right now. So we’re actually looking at the various options that being one of them. I think, obviously, we don’t comment on M&A right now in terms of the allocation or anything there. But I think the only other material item would be the CapEx that I said that we’re implementing for growth in the business that would impact the conversion to a bit on the lower end than what it would normally be. But outside of that, I think you’re right, I think one of the things we want to look is definitely the floating debt and the interest rate there and what we’re paying. Fortunately, we have a lot of options here to deal with that in terms of the cash we’re generating as well the cash we closed the year with.
Spencer Kaufman: Right. Okay. Okay. That makes sense. And just turning gears here, for your longer-term financial targets, the 4% to 6% organic growth. Can you just parse out sort of your expectations for three versus commercial versus new construction and how you’re thinking about that share gain versus the market piece.
Anselm Wong: Yes. We don’t share the split out there but as we’ve talked about our business before, and obviously, I don’t want to say anyone can forecast how the economy goes. But the way we actually run our business is that we don’t have a 3 or new construction. And as Ramey said earlier, as we see some of the new construction go down, generally, the R3 goes up. So it’s a balanced pro depending on where we are in the self-storage kind of cycle.
Spencer Kaufman: Okay. And if I can just sneak in one more and apologies if I missed this earlier on the call, but the delay of the 10-K filing, can you just provide a little bit more color as to what’s driving that?
Anselm Wong: Yes. It’s just the amount of work to get through in terms of all the audit work and stuff that we have to do. So I don’t think there’s anything other than that. There’s just a number of things where you get through and then BDOs got to do their work. We don’t believe that there’s going to be any impact to any of the numbers that we reported.
Spencer Kaufman: Okay. Got it. Thank you, guys. And good luck.
Operator: Thank you. . Our next question comes from the line of Joshua Pokrzywinski with Morgan Stanley. Please proceed with your question.
Josh Pokrzywinski: So we’ve covered a lot of ground already but one thing that continues to stand out and maybe getting a little bit more obvious as time goes on is your business performance versus maybe some of the public indicators like what . I think they’ve talked about completions down the last couple of years, clearly that’s not what you guys have seen. I think they have maybe a little bit more of a bearish outlook for ’24 and ’25. And it just seems so decoupled from the business, you guys have clearly put up the numbers so something is very different. But I guess, as you guys look at their data, if it’s something that you look at, where do you feel like they have it the most wrong.
Ramey Jackson: Yes. Good question. Look, I think from the very beginning, we’ve really put a lot of emphasis on our internal data and how that drives our decisions. And when you think about where we are in the entire space, we are designing these projects on the front-end. We don’t focus on top MSAs. Our customer set is vast in that our 10% customers, it represents less than or our top 10 customers represents less than 20% of our revenue. So we see it all. It’s not just the top MSA focus. It’s not just new construction. It’s also the capacity additions, whether it’s a conversion or whether it’s an expansion. So while I think that the third-party data is getting better, and we certainly do pay attention to it and we kind of reconcile with what we have internally.
Josh, like I said, our internal data is really where it’s at and we have over two decades of data that we could go back to and reconcile. So again, I just stand very firm that our internal data is superior as it relates to real-time self-storage activity.
Anselm Wong: Yes. I’ll just add to what Ramey said, Josh, is that you got to remember also that the industry is like 60% of the industry is 20-plus years old. So you’re still going to get a lot of work in our R3 for that as people just upgrade to be competitive. And that’s always going to continue to happen because of that reason. So I don’t think the data out there fairly represents kind of that volume growth from that.
Josh Pokrzywinski: Got it. That’s helpful perspective. And like I said, clearly, you guys are distinguishing yourselves from what’s out there. Maybe a follow-up on just the higher interest rate environment and liquidity discussions, especially what’s happened over the last couple of weeks. How do you guys think about sort of the time at which a project is initially discussed and the underwriting takes place versus when you start to see an order? I know that in a lot of cases, you guys are sort of interacting very early on with these customers, but how do you think about that lag between when you get brought in relative to a project decision and then ultimately when the delivery takes place.
Ramey Jackson: Yes, I think it depends on the channel but new construction typically stays in the backlog 9 to 12 months. And typically, once it enters the backlog, Josh, the funding is secured. So I think I know where you’re going with your question. In terms of our visibility, what type of confidence do we have that will turn into revenue and I think we have a high degree of confidence based off the funding piece of that. Now in terms of the visibility, we have with doing unit mixes and design and things of that nature, you never know if those are coming to fruition, but we have visibility in terms of the quantity of inquiries from a pipeline perspective, all of those things remain very, very high at this point in time.
Josh Pokrzywinski: Got it. That’s helpful.
Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Jackson for any final comments.
Ramey Jackson: Okay. Great. Thank you, everyone, for joining us today. We appreciate your support of Janus International and look forward to updating you on our progress. Have a good day.
Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
