The AZEK Company Announces Fourth Quarter and Full-Year Fiscal 2022 Results
The AZEK Company reported a 15% increase in net sales for fiscal 2022, totaling $1.36 billion. However, the fourth quarter faced a net loss of $4.8 million, reflecting a decrease in sales of 12% year-over-year at $304.6 million. Adjusted EBITDA was $65.1 million, down from $81.5 million for the same quarter last year. The company anticipates a 10% volume decline in fiscal 2023, projecting Adjusted EBITDA between $250 million and $265 million. AZEK has returned $81 million to shareholders through share repurchases.
- 15% increase in net sales to $1.36 billion for fiscal 2022.
- Successful launch of innovative products and three tuck-in acquisitions.
- Returned $81 million to shareholders during the fiscal year.
- Net loss of $4.8 million in Q4 2022.
- Adjusted EBITDA decreased to $65.1 million from $81.5 million year-over-year.
- Projected 10% decline in volume for fiscal 2023.
Solid Results Delivering
FOURTH QUARTER FISCAL 2022 FINANCIAL HIGHLIGHTS
-
Consolidated
Net Sales of$304.6 million -
Net Loss of
( ; Adjusted Net Income of$4.8) million $24.5 million -
EPS of (
$0.03 $0.16 -
Adjusted EBITDA of
$65.1 million
RECENT COMPANY HIGHLIGHTS
- Diverted approximately 500 million pounds of waste and scrap in fiscal 2022, halfway to the Company’s goal to recycle one billion pounds of waste and scrap annually by the end of 2026
-
Debuted the
TimberTech ® Invite Collection™, low-maintenance outdoor furniture with an emphasis on beauty, longevity, comfort and sustainability - Introduced Cabana X® by StruXure Outdoor®, a non-permanent, high-quality, high-tech cabana
-
Continued recognition for innovation and culture – HBSDealer Golden Hammer Award for AZEK Exteriors' Captivate™ Prefinished Siding and Trim; Architizer A+Product Award for
TimberTech's Landmark Collection™ of decking, the popular choice winner in the sustainable design category; CohnReznick’s Inaugural Gamechangers in ESG award
CEO COMMENTS
“Our fiscal 2022 results reflect the key strategic investments we have made to sustainably grow our business, our ability to execute with agility and our team’s steadfast focus on our customers,” said
“During the fiscal year, we launched several award-winning new product innovations and completed three tuck-in acquisitions, expanding and strengthening our already industry-leading portfolio. We also announced our first share repurchase authorization and returned
“In our fiscal fourth quarter, we experienced steady end-market demand while reducing inventory in the channel consistent with our expectations. We expect to complete the previously highlighted channel inventory recalibration by the end of the fiscal first quarter 2023,” added
FOURTH QUARTER FISCAL 2022 CONSOLIDATED RESULTS
Net sales for the three months ended
During the quarter, we updated the process by which we estimate the value of our inventory which resulted in a charge of
Net income decreased by
Adjusted EBITDA decreased by
Adjusted Net Income decreased
TWELVE MONTHS ENDED
Net sales for the year ended
Net income decreased by
Adjusted Net Income was
Adjusted EBITDA for the twelve months ended
BALANCE SHEET, CASH FLOW and LIQUIDITY
As of
OUTLOOK
“Demand for outdoor living products continued at a steady pace through the fiscal fourth quarter and into the current quarter. We are confident in our strategy, yet we recognize the potential for a slowdown in our markets in 2023. Our added capacity positions us well to pursue new market opportunities, expand our share, drive wood conversion and execute our cost reduction programs – all while providing best-in-class service to our customers. Given the successful startup of our new manufacturing facility in
For full-year fiscal 2023,
For the fiscal first quarter 2023, AZEK’s channel inventory reduction remains on track, and as previously noted,
Following the first quarter,
“As the innovation leader in the industry, we will continue to invest in new product expansions that drive material conversion and exceed customer expectations. We are excited about the opportunities ahead of us as we invest for the future and continue to position the company to achieve our long-term growth and margin expansion objectives,” concluded
CONFERENCE CALL INFORMATION
To access the live conference call, please register for the call in advance by visiting https://conferencingportals.com/event/kqzNUoaC. Registration will also be available during the call. After registering, a confirmation e-mail will be sent including dial-in details and unique conference call codes for entry. To ensure you are connected for the full call please register at least 10 minutes before the start of the call.
Interested investors and other parties can also listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://investors.azekco.com/events-and-presentations/.
For those unable to listen to the live conference call, a replay will be available approximately two hours after the call through the archived webcast on the
ABOUT THE AZEK® COMPANY
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this earnings release, including statements regarding future operations are forward-looking statements. In some cases, forward looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," or the negative of these terms and similar expressions intended to identify forward-looking statements. Projected financial information and performance, including our guidance and outlook as well as statements about our future growth and margin expansion goals and factors, assumptions and variables underlying these projections and goals, are forward-looking statements. In particular and unless specifically provided herein, no financial information for fiscal year 2023, including net sales guidance, operating results or otherwise, should be inferred or extrapolated from the guidance provided in this earnings release. Other forward-looking statements may include, without limitation, statements with respect to our ability to meet the future targets and goals we establish, including our environmental, social and governance targets, and the ultimate impact of our actions on our business as well as the expected benefits to the environment, our employees, and the communities in which we do business; statements about our future expansion plans, capital investments, capacity targets and other future strategic initiatives; statements about any stock repurchase plans; statements about potential new products and product innovation; statements regarding the potential impact of the COVID-19 pandemic or geopolitical conflicts, such as the conflict between
These statements are based on information available to us as of the date of this earnings release. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. We disclaim any intention and undertake no obligation to update or revise any of our forward-looking statements after the date of this release to reflect actual results or future events or circumstances whether as a result of new information, future events or otherwise, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
NON-GAAP FINANCIAL MEASURES
To supplement our earnings release and consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in
However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our earnings release and our consolidated financial statements prepared and presented in accordance with GAAP.
We define Adjusted Gross Profit as gross profit before depreciation and amortization, business transformation costs, acquisition costs and certain other costs as described below. Adjusted Gross Profit Margin is equal to Adjusted Gross Profit divided by net sales.
We define Adjusted Net Income as net income (loss) before amortization, share-based compensation costs, business transformation costs, acquisition costs, initial public offering and secondary offering costs and certain other costs as described below.
We define Adjusted Diluted EPS as Adjusted Net Income divided by weighted average common shares outstanding – diluted, to reflect the conversion or exercise, as applicable, of all outstanding shares of restricted stock awards, restricted stock units and options to purchase shares of our common stock.
We define Adjusted EBITDA as net income (loss) before interest expense, net, income tax (benefit) expense and depreciation and amortization and by adding to or subtracting therefrom items of expense and income as described above.
Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by net sales. Net Leverage is equal to gross debt less cash and cash equivalents, divided by trailing twelve month Adjusted EBITDA. We believe Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin and Net Leverage are useful to investors because they help identify underlying trends in our business that could otherwise be masked by certain expenses that can vary from company to company depending on, among other things, its financing, capital structure and the method by which its assets were acquired, and can also vary significantly from period to period. We also add back depreciation and amortization and share-based compensation because we do not consider them indicative of our core operating performance. We believe their exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we believe that showing gross profit and net income, as adjusted to remove the impact of these expenses, is helpful to investors in assessing our gross profit and net income performance in a way that is similar to the way management assesses our performance. Additionally, EBITDA and EBITDA margin are common measures of operating performance in our industry, and we believe they facilitate operating comparisons. Our management also uses Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with other GAAP financial measures for planning purposes, including as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. Management considers Adjusted Gross Profit and Adjusted Net Income as useful measures because our cost of sales includes the depreciation of property, plant and equipment used in the production of products and the amortization of various intangibles related to our manufacturing processes. Further, management considers Net Leverage as a useful measure to assess our borrowing capacity.
Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin and Net Leverage have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- These measures do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
- These measures do not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA and Adjusted EBITDA Margin do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
- Adjusted EBITDA and Adjusted EBITDA Margin do not reflect our income tax expense or the cash requirements to pay our taxes;
- Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Adjusted EBITDA Margin exclude the expense of amortization of our assets, and Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin also exclude the expense of depreciation of our assets, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future;
- Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA exclude the expense associated with our equity compensation plan, although equity compensation has been, and will continue to be, an important part of our compensation strategy;
- Adjusted Gross Profit, Adjusted Net Income, Adjusted Diluted EPS and Adjusted EBITDA exclude certain business transformation costs, acquisition costs and other costs, each of which can affect our current and future cash requirements; and
- Other companies in our industry may calculate Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin and Net Leverage differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, none of these metrics should be considered indicative of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
Segment Adjusted EBITDA
Depending on certain circumstances, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin may be calculated differently, from time to time, than our Adjusted EBITDA and Adjusted EBITDA Margin, which are further discussed under the heading “Non-GAAP Financial Measures.” Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin represent measures of segment profit reported to our chief operating decision maker for the purpose of making decisions about allocating resources to a segment and assessing its performance. For more information regarding how Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin are determined, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Results of Operations” set forth in Part II, Item 7 of our Annual Report on Form 10-K for fiscal 2022 and our Consolidated Financial Statements and related notes included therein.
Consolidated Balance Sheets
(In thousands of |
||||||||
|
|
|
||||||
|
|
As of |
||||||
|
|
2022 |
|
2021 |
||||
ASSETS: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
120,817 |
|
$ |
250,536 |
|
||
Trade receivables, net of allowances |
|
90,159 |
|
|
77,316 |
|
||
Inventories |
|
299,905 |
|
|
188,888 |
|
||
Prepaid expenses |
|
17,212 |
|
|
14,212 |
|
||
Other current assets |
|
2,501 |
|
|
1,446 |
|
||
Total current assets |
|
530,594 |
|
|
532,398 |
|
||
Property, plant and equipment, net |
|
517,913 |
|
|
391,012 |
|
||
|
|
993,995 |
|
|
951,390 |
|
||
Intangible assets, net |
|
245,835 |
|
|
242,572 |
|
||
Other assets |
|
94,754 |
|
|
70,462 |
|
||
Total assets |
$ |
2,383,091 |
|
$ |
2,187,834 |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
48,987 |
|
$ |
69,474 |
|
||
Accrued rebates |
|
50,479 |
|
|
44,339 |
|
||
Accrued interest |
|
4,436 |
|
|
72 |
|
||
Current portion of long-term debt obligations |
|
6,000 |
|
|
— |
|
||
Accrued expenses and other liabilities |
|
72,589 |
|
|
56,522 |
|
||
Total current liabilities |
|
182,491 |
|
|
170,407 |
|
||
Deferred income taxes |
|
65,195 |
|
|
46,371 |
|
||
Long-term debt — less current portion |
|
584,879 |
|
|
464,715 |
|
||
Other non-current liabilities |
|
106,083 |
|
|
79,177 |
|
||
Total liabilities |
$ |
938,648 |
|
$ |
760,670 |
|
||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock, |
|
— |
|
|
— |
|
||
Class A common stock, |
|
155 |
|
|
155 |
|
||
Class B common stock, |
|
— |
|
|
— |
|
||
Additional paid-in capital |
|
1,630,378 |
|
|
1,615,236 |
|
||
Accumulated deficit |
|
(113,002 |
) |
|
(188,227 |
) |
||
|
|
(73,088 |
) |
|
— |
|
||
Total stockholders’ equity |
|
1,444,443 |
|
|
1,427,164 |
|
||
Total liabilities and stockholders’ equity |
$ |
2,383,091 |
|
$ |
2,187,834 |
|
||
Consolidated Statements of Comprehensive Income (Loss)
(In thousands of |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Years Ended
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net sales |
$ |
304,632 |
|
$ |
346,120 |
$ |
1,355,586 |
$ |
1,178,974 |
|||||||
Cost of sales |
|
232,768 |
|
|
233,833 |
|
|
946,266 |
|
|
789,023 |
|
||||
Gross profit |
|
71,864 |
|
|
112,287 |
|
|
409,320 |
|
|
389,951 |
|
||||
Selling, general and administrative expenses |
|
67,478 |
|
|
60,467 |
|
|
279,889 |
|
|
244,205 |
|
||||
Other general expenses |
|
— |
|
|
— |
|
|
— |
|
|
2,592 |
|
||||
Loss on disposal of plant, property and equipment |
|
179 |
|
|
401 |
|
|
496 |
|
|
1,025 |
|
||||
Operating income |
|
4,207 |
|
|
51,419 |
|
|
128,935 |
|
|
142,129 |
|
||||
Other expenses: |
||||||||||||||||
Interest expense |
|
6,180 |
|
|
3,883 |
|
|
24,956 |
|
|
20,311 |
|
||||
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Total other expenses |
|
6,180 |
|
|
3,883 |
|
|
24,956 |
|
|
20,311 |
|
||||
Income (loss) before income taxes |
|
(1,973 |
) |
|
47,536 |
|
|
103,979 |
|
|
121,818 |
|
||||
Income tax expense |
|
2,803 |
|
|
8,943 |
|
|
28,754 |
|
|
28,668 |
|
||||
Net income (loss) |
$ |
(4,776 |
) |
$ |
38,593 |
|
$ |
75,225 |
|
$ |
93,150 |
|
||||
Net income (loss) per common share: |
||||||||||||||||
Basic |
$ |
(0.03 |
) |
$ |
0.25 |
|
$ |
0.49 |
|
$ |
0.61 |
|
||||
Diluted |
$ |
(0.03 |
) |
$ |
0.25 |
|
$ |
0.49 |
|
$ |
0.59 |
|
||||
Comprehensive income (loss) |
$ |
(4,776 |
) |
$ |
38,593 |
|
$ |
75,225 |
|
$ |
93,150 |
|
||||
Weighted average shares used in calculating net income (loss) per common share: |
||||||||||||||||
Basic |
|
151,459,182 |
|
|
154,232,718 |
|
|
153,510,110 |
|
|
153,777,859 |
|
||||
Diluted |
|
151,459,182 |
|
|
156,686,478 |
|
|
154,517,843 |
|
|
156,666,394 |
|
||||
Consolidated Statements of Cash Flows
(In thousands of |
||||||||
|
|
|
||||||
|
|
Years Ended
|
||||||
|
|
2022 |
|
2021 |
||||
Operating activities: |
||||||||
Net income |
$ |
75,225 |
|
$ |
93,150 |
|
||
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities: |
||||||||
Depreciation expense |
|
67,996 |
|
|
51,802 |
|
||
Amortization expense |
|
50,537 |
|
|
49,802 |
|
||
Non-cash interest expense |
|
5,638 |
|
|
3,110 |
|
||
Non-cash lease expense |
|
(275 |
) |
|
(88 |
) |
||
Deferred income tax expense (benefit) |
|
19,684 |
|
|
25,529 |
|
||
Non-cash compensation expense |
|
27,512 |
|
|
22,250 |
|
||
Loss on disposition of property, plant and equipment |
|
496 |
|
|
1,025 |
|
||
Bad debt provision |
|
290 |
|
|
342 |
|
||
Changes in operating assets and liabilities: |
||||||||
Trade receivables |
|
(8,545 |
) |
|
(6,772 |
) |
||
Inventories |
|
(97,459 |
) |
|
(58,819 |
) |
||
Prepaid expenses and other current assets |
|
(4,300 |
) |
|
(5,892 |
) |
||
Accounts payable |
|
(32,146 |
) |
|
16,071 |
|
||
Accrued expenses and interest |
|
(1,345 |
) |
|
14,910 |
|
||
Other assets and liabilities |
|
2,527 |
|
|
1,259 |
|
||
Net cash provided by (used in) operating activities |
|
105,835 |
|
|
207,679 |
|
||
Investing activities: |
||||||||
Purchases of property, plant and equipment |
|
(170,938 |
) |
|
(175,119 |
) |
||
Proceeds from sale of property, plant and equipment |
|
649 |
|
|
46 |
|
||
Purchases of intangible assets |
|
(1,500 |
) |
|
— |
|
||
Acquisitions, net of cash acquired |
|
(108,387 |
) |
|
— |
|
||
Net cash provided by (used in) investing activities |
|
(280,176 |
) |
|
(175,073 |
) |
||
Financing activities: |
||||||||
Proceeds under Revolving Credit Facility |
|
40,000 |
|
|
— |
|
||
Payments under Revolving Credit Facility |
|
(40,000 |
) |
|
— |
|
||
Payments of financing fees related to Term Loan Agreement |
|
— |
|
|
(939 |
) |
||
Payments of Term Loan Agreement |
|
(467,654 |
) |
|
— |
|
||
Proceeds from 2022 Term Loan Agreement |
|
595,500 |
|
|
— |
|
||
Payments of debt issuance costs related to 2022 Term Loan Agreement |
|
(3,442 |
) |
|
— |
|
||
Repayments of finance lease obligations |
|
(3,865 |
) |
|
(1,921 |
) |
||
Payments of initial public offering related costs |
|
— |
|
|
(210 |
) |
||
Exercise of vested stock options |
|
5,995 |
|
|
5,988 |
|
||
Cash paid for shares withheld for taxes |
|
(429 |
) |
|
— |
|
||
Purchases of treasury stock |
|
(81,483 |
) |
|
— |
|
||
Net cash provided by (used in) financing activities |
|
44,622 |
|
|
2,918 |
|
||
Net increase (decrease) in cash and cash equivalents |
|
(129,719 |
) |
|
35,524 |
|
||
Cash and cash equivalents at beginning of period |
|
250,536 |
|
|
215,012 |
|
||
Cash and cash equivalents at end of period |
$ |
120,817 |
|
$ |
250,536 |
|
||
Supplemental cash flow disclosure: |
||||||||
Cash paid for interest, net of amounts capitalized |
$ |
14,899 |
|
$ |
17,119 |
|
||
Cash paid for income taxes, net |
|
10,549 |
|
|
4,620 |
|
||
Supplemental non-cash investing and financing disclosure: |
||||||||
Capital expenditures in accounts payable at end of period |
$ |
29,562 |
|
$ |
16,177 |
|
||
Property, plant and equipment acquired under finance lease obligations |
|
— |
|
|
— |
|
||
Right-of-use operating and finance lease assets obtained in exchange for lease liabilities |
|
33,400 |
|
|
57,817 |
|
||
Segment Results from Operations |
||||||||||||||||||||||||||
Residential Segment |
||||||||||||||||||||||||||
The following table summarizes certain financial information relating to the Residential segment results that have been derived from our audited Consolidated Financial Statements for the three and twelve months ended |
||||||||||||||||||||||||||
Three Months Ended
|
|
|
|
|
Twelve Months Ended
|
|
|
|
||||||||||||||||||
( |
2022 |
2021 |
|
$
|
%
|
|
2022 |
2021 |
|
$
|
%
|
|||||||||||||||
Net sales |
$ |
254,196 |
|
$ |
305,078 |
|
$ |
(50,882 |
) |
(16.7 |
)% |
$ |
1,168,751 |
|
$ |
1,044,126 |
|
$ |
124,625 |
|
11.9 |
% |
||||
Segment Adjusted EBITDA |
|
64,503 |
|
|
91,564 |
|
|
(27,061 |
) |
(29.6 |
)% |
|
323,377 |
|
|
314,563 |
|
|
8,814 |
2.8 |
% |
|||||
Segment Adjusted EBITDA Margin |
|
25.4 |
% |
|
30.0 |
% |
|
N/A |
|
N/A |
|
|
27.7 |
% |
|
30.1 |
% |
|
N/A |
|
N/A |
|
||||
Commercial Segment |
||||||||||||||||||||||||||
The following table summarizes certain financial information relating to the Commercial segment results that have been derived from our audited Consolidated Financial Statements for the three and twelve months ended |
||||||||||||||||||||||||||
Three Months Ended
|
|
|
|
|
Twelve Months Ended
|
|
|
|
||||||||||||||||||
( |
2022 |
2021 |
|
$
|
%
|
|
2022 |
2021 |
|
$
|
%
|
|||||||||||||||
Net sales |
$ |
50,436 |
|
$ |
41,042 |
|
$ |
9,394 |
22.9 |
% |
$ |
186,835 |
|
$ |
134,848 |
|
$ |
51,987 |
38.6 |
% |
||||||
Segment Adjusted EBITDA |
|
14,562 |
|
|
6,019 |
|
|
8,543 |
|
141.9 |
% |
|
40,255 |
|
|
19,323 |
|
|
20,932 |
|
108.3 |
% |
||||
Segment Adjusted EBITDA Margin |
|
28.9 |
% |
|
14.7 |
% |
|
N/A |
|
N/A |
|
|
21.5 |
% |
|
14.3 |
% |
|
N/A |
|
N/A |
|
||||
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation |
||||||||||||||||
Three Months Ended
|
|
Years Ended
|
||||||||||||||
( |
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Net income (loss) |
$ |
(4,776 |
) |
$ |
38,593 |
$ |
75,225 |
$ |
93,150 |
|||||||
Interest expense |
|
6,180 |
|
|
3,883 |
|
|
24,956 |
|
|
20,311 |
|
||||
Depreciation and amortization |
|
31,803 |
|
|
26,284 |
|
|
118,533 |
|
|
101,604 |
|
||||
Tax expense (benefit) |
|
2,803 |
|
|
8,943 |
|
|
28,754 |
|
|
28,668 |
|
||||
Stock-based compensation costs |
|
4,259 |
|
|
3,024 |
|
|
18,105 |
|
|
22,670 |
|
||||
Acquisition costs (1) |
|
3,990 |
|
|
— |
|
|
12,851 |
|
|
— |
|
||||
Initial public offering and secondary offering costs |
|
— |
|
|
— |
|
|
— |
|
|
2,592 |
|
||||
Inventories (2) |
|
19,297 |
|
|
— |
|
|
19,297 |
|
|
— |
|
||||
Other costs (3) |
|
1,520 |
|
|
780 |
|
|
3,319 |
|
|
5,192 |
|
||||
Total adjustments |
|
69,852 |
|
|
42,914 |
|
|
225,815 |
|
|
181,037 |
|
||||
Adjusted EBITDA |
$ |
65,076 |
|
$ |
81,507 |
|
$ |
301,040 |
|
$ |
274,187 |
|
||||
Three Months Ended
|
|
Years Ended
|
||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
Net margin |
(1.6 |
)% |
11.2 |
% |
5.5 |
% |
7.9 |
% |
||||
Interest expense |
2.0 |
% |
1.1 |
% |
1.8 |
% |
1.7 |
% |
||||
Depreciation and amortization |
10.5 |
% |
7.6 |
% |
8.8 |
% |
8.6 |
% |
||||
Tax expense (benefit) |
1.0 |
% |
2.6 |
% |
2.2 |
% |
2.5 |
% |
||||
Stock-based compensation costs |
1.4 |
% |
0.8 |
% |
1.4 |
% |
1.9 |
% |
||||
Acquisition costs |
1.3 |
% |
0.0 |
% |
0.9 |
% |
0.0 |
% |
||||
Initial public offering and secondary offering costs |
0.0 |
% |
0.0 |
% |
0.0 |
% |
0.2 |
% |
||||
Inventories |
6.3 |
% |
0.0 |
% |
1.4 |
% |
0.0 |
% |
||||
Other costs |
0.5 |
% |
0.2 |
% |
0.2 |
% |
0.5 |
% |
||||
Total adjustments |
23.0 |
% |
12.3 |
% |
16.7 |
% |
15.4 |
% |
||||
Adjusted EBITDA Margin |
21.4 |
% |
23.5 |
% |
22.2 |
% |
23.3 |
% |
||||
| ______________________________ | ||
(1) |
Acquisition costs reflect costs directly related to completed acquisitions of |
|
(2) |
During the fourth quarter of fiscal year 2022, we updated the process by which we estimate the value of our inventory. This included updating the assumptions that are used in determining and treating certain capitalized costs, primarily by incorporating the impacts of changes in the amount of recycled content introduced into our products. |
|
(3) |
Other costs reflect costs for legal expenses of |
|
Adjusted Gross Profit Reconciliation |
||||||||||||||||
Three Months Ended
|
|
Years Ended
|
||||||||||||||
( |
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Gross profit |
$ |
71,864 |
$ |
112,287 |
$ |
409,320 |
$ |
389,951 |
||||||||
Depreciation and amortization (1) |
|
22,689 |
|
|
18,012 |
|
|
82,099 |
|
|
67,903 |
|
||||
Inventories (2) |
|
19,297 |
|
|
— |
|
|
19,297 |
|
|
— |
|
||||
Acquisition costs (3) |
|
165 |
|
|
— |
|
|
1,373 |
|
|
— |
|
||||
Other costs (4) |
|
185 |
|
|
72 |
|
|
509 |
|
|
72 |
|
||||
Adjusted Gross Profit |
$ |
114,200 |
|
$ |
130,371 |
|
$ |
512,598 |
|
$ |
457,926 |
|
||||
Three Months Ended
|
|
Years Ended
|
||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
Gross margin |
23.6 |
% |
32.4 |
% |
30.2 |
% |
33.1 |
% |
||||
Depreciation and amortization |
7.4 |
% |
5.3 |
% |
6.1 |
% |
5.7 |
% |
||||
Inventories |
6.3 |
% |
0.0 |
% |
1.4 |
% |
0.0 |
% |
||||
Acquisition costs |
0.1 |
% |
0.0 |
% |
0.1 |
% |
0.0 |
% |
||||
Other costs |
0.1 |
% |
0.0 |
% |
0.0 |
% |
0.0 |
% |
||||
Adjusted Gross Profit Margin |
37.5 |
% |
37.7 |
% |
37.8 |
% |
38.8 |
% |
||||
| ______________________________ | ||
(1) |
Depreciation and amortization for fourth quarters 2022 and 2021, and for fiscal years 2022 and 2021, consists of |
|
(2) |
During the fourth quarter of fiscal year 2022, we updated the process by which we estimate the value of our inventory. This included updating the assumptions that are used in determining and treating certain capitalized costs, primarily by incorporating the impacts of changes in the amount of recycled content introduced into our products. |
|
(3) |
Acquisition costs reflect inventory step-up adjustments related to recording the inventory of acquired businesses at fair value on the date of acquisition. |
|
(4) |
Other costs include reduction in workforce costs of |
|
| Adjusted Net Income and Adjusted Diluted EPS Reconciliation | ||||||||||||||||
Three Months Ended
|
|
Years Ended
|
||||||||||||||
( |
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||
Net income (loss) |
$ |
(4,776 |
) |
$ |
38,593 |
|
$ |
75,225 |
|
$ |
93,150 |
|
||||
Amortization |
|
12,571 |
|
|
12,136 |
|
|
50,537 |
|
|
49,802 |
|
||||
Stock-based compensation costs (1) |
|
1,330 |
|
|
1,806 |
|
|
6,554 |
|
|
18,746 |
|
||||
Acquisition costs (2) |
|
3,990 |
|
|
— |
|
|
12,851 |
|
|
— |
|
||||
Initial public offering and secondary offering costs |
|
— |
|
|
— |
|
|
— |
|
|
2,592 |
|
||||
Inventories (3) |
|
19,297 |
|
|
— |
|
|
19,297 |
|
|
— |
|
||||
Other costs (4) |
|
1,520 |
|
|
780 |
|
|
3,319 |
|
|
5,192 |
|
||||
Capital structure transaction costs (5) |
|
— |
|
|
— |
|
|
5,112 |
|
|
— |
|
||||
Tax impact of adjustments (6) |
|
(9,445 |
) |
|
(3,522 |
) |
|
(23,627 |
) |
|
(16,549 |
) |
||||
Adjusted Net Income |
$ |
24,487 |
|
$ |
49,793 |
|
$ |
149,268 |
|
$ |
152,933 |
|
||||
Three Months Ended
|
|
Years Ended
|
||||||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||||
Net income (loss) per common share — diluted |
$ |
(0.03 |
) |
$ |
0.25 |
|
$ |
0.49 |
|
$ |
0.59 |
|
||||
Amortization |
|
0.08 |
|
|
0.08 |
|
|
0.33 |
|
|
0.32 |
|
||||
Stock-based compensation costs |
|
0.01 |
|
|
0.01 |
|
|
0.05 |
|
|
0.12 |
|
||||
Acquisition costs |
|
0.02 |
|
|
— |
|
|
0.08 |
|
|
— |
|
||||
Initial public offering and secondary offering costs |
|
— |
|
|
— |
|
|
— |
|
|
0.02 |
|
||||
Inventories |
|
0.13 |
|
|
— |
|
|
0.12 |
|
|
— |
|
||||
Other costs |
|
0.01 |
|
|
0.01 |
|
|
0.02 |
|
|
0.03 |
|
||||
Capital structure transaction costs |
|
— |
|
|
— |
|
|
0.03 |
|
|
— |
|
||||
Tax impact of adjustments |
|
(0.06 |
) |
|
(0.03 |
) |
|
(0.15 |
) |
|
(0.10 |
) |
||||
Adjusted Diluted EPS (7) |
$ |
0.16 |
|
$ |
0.32 |
|
$ |
0.97 |
|
$ |
0.98 |
|
||||
| ______________________________ | ||
(1) |
Stock-based compensation costs reflect expenses related to our initial public offering. Expenses related to our recurring awards granted each fiscal year are excluded from the Adjusted Net Income reconciliation. |
|
(2) |
Acquisition costs reflect costs directly related to completed acquisitions of |
|
(3) |
During the fourth quarter of fiscal year 2022, we updated the process by which we estimate the value of our inventory. This included updating the assumptions that are used in determining and treating certain capitalized costs, primarily by incorporating the impacts of changes in the amount of recycled content introduced into our products. |
|
(4) |
Other costs reflect costs for legal expenses of |
|
(5) |
Capital structure transaction costs include third party costs related to our refinancing of our term loan agreement of |
|
(6) |
Tax impact of adjustments is based on applying a combined |
|
(7) |
Weighted average common shares outstanding used in computing diluted net income (loss) per common share is 151,759,572 shares for fourth quarter 2022, 156,686,478 shares for fourth quarter 2021, 154,517,843 shares for fiscal year 2022, and 156,666,394 shares for fiscal year 2021. |
|
Net Leverage Reconciliation
Twelve Months Ended
|
||||
(In thousands) |
2022 |
|||
Net income |
$ |
75,225 |
|
|
Interest expense |
|
24,956 |
|
|
Depreciation and amortization |
|
118,533 |
|
|
Tax expense (benefit) |
|
28,754 |
|
|
Stock-based compensation costs |
|
18,105 |
|
|
Acquisition costs |
|
12,851 |
|
|
Inventories |
|
19,297 |
|
|
Other costs |
|
3,319 |
|
|
Total adjustments |
|
225,815 |
|
|
Adjusted EBITDA |
$ |
301,040 |
|
|
Long-term debt — less current portion |
$ |
584,879 |
|
|
Current portion |
|
6,000 |
|
|
Unamortized deferred financing fees |
|
4,712 |
|
|
Unamortized original issue discount |
|
4,409 |
|
|
Finance leases |
|
78,072 |
|
|
Gross debt |
$ |
678,072 |
|
|
Cash and cash equivalents |
|
(120,817 |
) |
|
Net debt |
$ |
557,255 |
|
|
Net Leverage |
|
1.9 |
x |
|
Outlook
We have not reconciled Adjusted EBITDA guidance to its most comparable GAAP measure as a result of the uncertainty regarding, and the potential variability of, reconciling items such as the costs of acquisitions, which are a core part of our ongoing business strategy, and other costs. Such reconciling items that impact Adjusted EBITDA have not occurred, are outside of our control or cannot be reasonably predicted. Accordingly, a reconciliation of Adjusted EBITDA to its most comparable GAAP measure is not available without unreasonable effort. However, it is important to note that material changes to these reconciling items could have a significant effect on our Adjusted EBITDA guidance and future GAAP results.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221128005042/en/
Investor Relations Contact:
312-809-1093
ir@azekco.com
Media Contact:
312-809-1093
media@azekco.com
Source:
FAQ
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