The AZEK Company Announces $50 Million Accelerated Share Repurchase Program

Rhea-AI Summary

The AZEK Company (NYSE: AZEK) has announced a $50 million accelerated share repurchase (ASR) program in collaboration with Goldman Sachs. This initiative aims to buy back Class A common stock using company cash reserves. Initially, AZEK will receive around 0.9 million shares, with the final settlement due by August 2024. The final share count will depend on the average daily volume-weighted price during the repurchase period. Post-ASR, AZEK will have $625 million remaining in its repurchase program. The agreement includes standard terms for adjustments, acceleration, extension, or termination.

Positive

• AZEK will repurchase $50 million in shares, which can increase shareholder value.
• The company is using existing cash reserves for the repurchase, indicating strong liquidity.
• An initial delivery of 0.9 million shares will be received, enhancing shareholder equity.
• The agreement leaves $625 million available for future repurchases, showing long-term commitment to shareholder returns.

Negative

• The final number of shares repurchased will depend on the share price, introducing uncertainty.
• Potential need for AZEK to deliver additional shares or cash to Goldman Sachs could arise, posing financial risk.
• Share repurchase focuses on stock manipulation rather than operational improvements, which may not address underlying business issues.

Insights

Financial Analyst

AZEK's $50 million accelerated share repurchase (ASR) program indicates the company's confidence in its financial health and future prospects. Repurchasing shares can boost earnings per share (EPS) by reducing the number of outstanding shares, which may attract investors looking for improved financial metrics. Allocating $50 million from cash on hand for the buyback reflects a solid liquidity position. The fact that the final share count will be based on AZEK’s average daily volume-weighted average price (VWAP) suggests a strategy to minimize market impact and acquisition costs.

While share repurchase programs often signal positive corporate health, they don't necessarily guarantee stock price appreciation in the short term. The long-term impact hinges on how effectively AZEK can leverage the buyback to enhance shareholder value, as well as the company's ongoing performance within its industry. Investors should also consider the remaining $625 million available under the share repurchase program, indicating potential future buybacks, which could further support stock prices.

Market Research Analyst

AZEK operates in the outdoor living products market, which has seen increased demand due to trends toward home improvement and outdoor renovations. By executing an ASR, AZEK appears committed to maintaining shareholder value amidst competitive pressures. The relationship with Goldman Sachs underscores the company's reliance on established financial institutions to navigate market complexities. The ASR’s timing, with settlement by August 2024, could align with projected seasonal upticks in home improvement activities, potentially maximizing the repurchase's impact on stock price during high-demand periods.

However, the stock market is subject to broader economic conditions and investor sentiment, which can overshadow company-specific actions. Therefore, while the ASR is a positive signal, it is essential for investors to monitor broader market trends and AZEK’s performance against its competitors in the outdoor living space.

CHICAGO--(BUSINESS WIRE)-- The AZEK Company Inc. (NYSE: AZEK) (“AZEK” or the “Company”), the industry-leading manufacturer of beautiful, low-maintenance and environmentally sustainable outdoor living products, including TimberTech^® decking and railing, Versatex^® and AZEK^® Trim and StruXure^® pergolas, today announced it has entered into an accelerated share repurchase agreement (“ASR”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to repurchase $50 million of the Company’s Class A common stock.

The Company is funding the share repurchases under the ASR with cash on hand. Under the terms of the ASR, the Company will receive an initial delivery of approximately 0.9 million shares of Class A common stock from Goldman Sachs, with the final settlement scheduled to occur no later than August, 2024. The final number of shares to be repurchased under the ASR will be based generally on the average of AZEK’s daily volume-weighted average price per share of Class A common stock during a repurchase period, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR. After the ASR is completed, the Company will have approximately $625 million remaining on its share repurchase program.

At settlement, Goldman Sachs may be required to deliver additional shares of Class A Common Stock to the Company, or the Company may be required either to make cash payments or deliver shares of Class A Common Stock to Goldman Sachs, at the Company’s election. The ASR Agreement contains customary provisions for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances under which the ASR Agreement may be accelerated, extended or terminated, and various representations and warranties made by the parties to one another.

About The AZEK® Company

The AZEK Company Inc. (NYSE: AZEK) is the industry-leading designer and manufacturer of beautiful, low maintenance and environmentally sustainable outdoor living products, including TimberTech® decking and railing, Versatex® and AZEK® Trim, and StruXure® pergolas. Consistently awarded and recognized as the market leader in innovation, quality, aesthetics and sustainability, our products are made from up to 85% recycled material and primarily replace wood on the outside of homes, providing a long-lasting, eco-friendly, and stylish solution to consumers. Leveraging the talents of its approximately 2,000 employees and the strength of relationships across its value chain, The AZEK Company is committed to accelerating the use of recycled material in the manufacturing of its innovative products, keeping hundreds of millions of pounds of waste and scrap out of landfills each year, and revolutionizing the industry to create a more sustainable future. The AZEK Company has recently been named one of America’s Climate Leaders by USA Today, a Top Workplace by the Chicago Tribune and U.S. News and World Report, and a winner of the 2024 Real Leaders® Impact Awards. Headquartered in Chicago, Illinois, the company operates manufacturing and recycling facilities in Ohio, Pennsylvania, Idaho, Georgia, Nevada, New Jersey, Michigan and Minnesota.

Cautionary Note Regarding Forward-Looking Statements

This release contains or refers to certain forward-looking statements within the meaning of the federal securities laws and subject to the "safe harbor" protections thereunder. Forward-looking statements are statements about future events and are based on our current expectations. These forward-looking statements may be identified by the words “believe,” “hope,” "expect," "intend," "will," "target," “anticipate,” "goal" and similar expressions. Projected financial information and performance are forward-looking statements. Other forward-looking statements may include, without limitation, statements with respect to the Company’s liquidity outlook, share repurchase plans and the expected completion date of the ASR. The Company bases its forward-looking statements on information available to it on the date of this release and undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events, or otherwise, except as may otherwise be required by law. Actual future events could also differ materially due to numerous factors that involve substantial known and unknown risks and uncertainties including, among other things, the risks and uncertainties set forth under "Risk Factors" and elsewhere in the Company's reports on Form 10-K and Form 10-Q and the other risks and uncertainties discussed in any subsequent reports that the Company files with the Securities and Exchange Commission from time to time. Although we have attempted to identify those material factors that could cause actual results or events to differ from those described in such forward-looking statements, there may be other factors that could cause actual results or events to differ from those anticipated, estimated or intended. Given these uncertainties, investors are cautioned not to place undue reliance on our forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240618623430/en/

Investor Contact:

Eric Robinson

312-809-1093

ir@azekco.com

Source: The AZEK Company Inc.

FAQ

What is the value of AZEK's accelerated share repurchase program?

AZEK's accelerated share repurchase program is valued at $50 million.

Who is AZEK partnering with for the share repurchase program?

AZEK is partnering with Goldman Sachs for the $50 million accelerated share repurchase program.

When is the final settlement for AZEK's share repurchase scheduled?

The final settlement for AZEK's share repurchase is scheduled to occur no later than August 2024.

How many shares will AZEK initially receive under the ASR?

AZEK will initially receive approximately 0.9 million shares of Class A common stock.

How much will remain in AZEK's share repurchase program after the ASR?

Approximately $625 million will remain in AZEK's share repurchase program after the ASR.