The AZEK Company Announces Third Quarter and Year-To-Date Fiscal 2024 Results; Reaffirms Second Half of Fiscal 2024 Outlook and Raises Bottom End of Full-Year Fiscal 2024 Outlook
The AZEK Company announced its third-quarter and year-to-date fiscal 2024 results, highlighting substantial growth and profitability. Consolidated net sales increased by 12% to $434.4 million, with the Residential segment seeing an 18% rise to $416.0 million. The company's net income surged 45% to $50.1 million, while adjusted net income grew 38% to $62.0 million. The gross profit margin expanded by 380 basis points to 37.8%, and the adjusted EBITDA margin improved by 260 basis points to 27.5%. The company generated $195 million in cash from operating activities and announced a new $600 million share repurchase program. AZEK reaffirmed its second-half fiscal 2024 outlook and raised the lower end of its full-year guidance, expecting net sales between $1.422 and $1.438 billion and adjusted EBITDA between $370 and $380 million.
La AZEK Company ha annunciato i risultati finanziari del terzo trimestre e dell'anno fino ad oggi per il 2024, evidenziando una crescita e una redditività sostanziali. Le vendite nette consolidate sono aumentate del 12%, raggiungendo i 434,4 milioni di dollari, con il settore residenziale che ha mostrato un incremento del 18% a 416,0 milioni di dollari. L'utile netto dell'azienda è salito del 45% a 50,1 milioni di dollari, mentre l'utile netto rettificato è cresciuto del 38% a 62,0 milioni di dollari. Il margine di profitto lordo è aumentato di 380 punti base, raggiungendo il 37,8%, e il margine EBITDA rettificato è migliorato di 260 punti base, arrivando al 27,5%. L'azienda ha generato 195 milioni di dollari in contante dalle attività operative e ha annunciato un nuovo programma di riacquisto di azioni da 600 milioni di dollari. AZEK ha riconfermato le previsioni per la seconda metà dell'anno fiscale 2024 e ha alzato il limite inferiore delle sue previsioni annuali, aspettandosi vendite nette tra 1,422 e 1,438 miliardi di dollari e un EBITDA rettificato tra 370 e 380 milioni di dollari.
La empresa AZEK ha anunciado los resultados financieros del tercer trimestre y del año hasta la fecha de 2024, destacando un crecimiento y una rentabilidad sustanciales. Las ventas netas consolidadas aumentaron un 12% a 434,4 millones de dólares, con el segmento residencial mostrando un incremento del 18% hasta 416,0 millones de dólares. El ingreso neto de la empresa se disparó un 45% a 50,1 millones de dólares, mientras que el ingreso neto ajustado creció un 38% hasta 62,0 millones de dólares. El margen de utilidad bruta se amplió en 380 puntos básicos, alcanzando el 37,8%, y el margen EBITDA ajustado mejoró en 260 puntos básicos hasta el 27,5%. La empresa generó 195 millones de dólares en efectivo de actividades operativas y anunció un nuevo programa de recompra de acciones de 600 millones de dólares. AZEK reafirmó su perspectiva para la segunda mitad del año fiscal 2024 y elevó el límite inferior de su orientación anual, esperando ventas netas entre 1.422 y 1.438 millones de dólares y un EBITDA ajustado entre 370 y 380 millones de dólares.
AZEK Company는 2024 회계연도 제3분기 및 현재까지의 결과를 발표하며 상당한 성장과 수익성을 강조했습니다. 총매출은 12% 증가하여 4억 4천 340만 달러에 달하고, 주거 부문은 18% 증가하여 4억 1천 600만 달러에 도달했습니다. 회사의 순이익은 45% 급증하여 5천 1백 만 달러에 이르렀고, 조정된 순이익은 38% 증가하여 6천 2백만 달러가 되었습니다. 총 이익률은 380베이시스 포인트 증가하여 37.8%에 도달했으며, 조정된 EBITDA 마진은 260베이시스 포인트 개선되어 27.5%에 이르렀습니다. 회사는 운영 활동에서 1억 9천 5백만 달러의 현금을 생성하고 6억 달러 규모의 자사주 매입 프로그램을 발표했습니다. AZEK는 2024 회계연도 하반기 전망을 재확인하고 연간 가이던스의 하한선을 높여, 순매출 1,422억 달러에서 1,438억 달러, 조정된 EBITDA는 3억 7천만 달러에서 3억 8천만 달러로 예상하고 있습니다.
La société AZEK a annoncé ses résultats pour le troisième trimestre et l'année en cours de l'exercice 2024, mettant en évidence une croissance et une rentabilité substantielles. Les ventes nettes consolidées ont augmenté de 12% pour atteindre 434,4 millions de dollars, le secteur résidentiel enregistrant une hausse de 18% à 416,0 millions de dollars. Le résultat net de l'entreprise a bondi de 45% pour atteindre 50,1 millions de dollars, tandis que le résultat net ajusté a crû de 38% pour s'établir à 62,0 millions de dollars. La marge brute s'est élargie de 380 points de base à 37,8%, et la marge EBITDA ajustée s'est améliorée de 260 points de base à 27,5%. L'entreprise a généré 195 millions de dollars de liquidités provenant de ses activités opérationnelles et a annoncé un nouveau programme de rachat d'actions de 600 millions de dollars. AZEK a réaffirmé ses prévisions pour la seconde moitié de l'exercice 2024 et a relevé le plafond inférieur de ses prévisions annuelles, s'attendant à des ventes nettes entre 1,422 et 1,438 milliard de dollars et un EBITDA ajusté entre 370 et 380 millions de dollars.
Die AZEK Company hat ihre Ergebnisse für das dritte Quartal und das bis dato laufende Geschäftsjahr 2024 angekündigt und dabei ein erhebliches Wachstum und Rentabilität hervorgehoben. Die konsolidierten Nettoumsätze stiegen um 12% auf 434,4 Millionen Dollar, wobei der Wohnbereich einen Anstieg von 18% auf 416,0 Millionen Dollar verzeichnete. Der Nettogewinn des Unternehmens erhöhte sich um 45% auf 50,1 Millionen Dollar, während das adjustrierte Nettogewinn um 38% auf 62,0 Millionen Dollar wuchs. Die Bruttogewinnmarge erweiterte sich um 380 Basispunkte auf 37,8%, und die adjustrierte EBITDA-Marge verbesserte sich um 260 Basispunkte auf 27,5%. Das Unternehmen erzielte 195 Millionen Dollar Bargeld aus operativen Tätigkeiten und kündigte ein neues Aktienrückkaufprogramm über 600 Millionen Dollar an. AZEK bestätigte seine Prognose für die zweite Hälfte des Geschäftsjahres 2024 und hob die untere Grenze der Jahresprognose an, mit Erwartungen für Nettoumsätze zwischen 1,422 und 1,438 Milliarden Dollar und adjusted EBITDA zwischen 370 und 380 Millionen Dollar.
- Consolidated net sales increased 12% YoY to $434.4 million.
- Residential segment net sales rose 18% YoY to $416.0 million.
- Net income surged 45% YoY to $50.1 million.
- Adjusted net income grew 38% YoY to $62.0 million.
- Gross profit margin expanded by 380 basis points to 37.8%.
- Adjusted EBITDA margin improved by 260 basis points to 27.5%.
- Generated $195 million in cash from operating activities.
- Announced new $600 million share repurchase program.
- Raised the bottom end of full-year fiscal 2024 guidance.
- Commercial segment net sales decreased by 49% YoY due to the sale of the Vycom business.
Insights
The AZEK Company's Q3 FY2024 results are highly positive, showcasing strong financial performance and market outperformance. Key highlights include:
- Net sales increased
12% YoY to$434.4 million - Residential segment sales grew
18% YoY - Gross profit margin expanded 380 bps to
37.8% - Net income rose
45% YoY to$50.1 million - Adjusted EBITDA increased
24% YoY to$119.4 million
The company's ability to drive above-market growth, expand margins and generate strong cash flow (
AZEK's performance is noteworthy given the challenging market conditions. The company's success in driving mid-single-digit Residential sell-through growth and double-digit Deck, Rail & Accessories sell-through growth amidst a down repair & remodel market demonstrates the effectiveness of their growth initiatives. Key factors contributing to this outperformance include:
- Material conversion strategies
- Channel expansion (e.g., Doman Building Materials partnership in Canada)
- New product innovations (TimberTech Composite Terrain+™ decking, TimberTech Aluminum Framing)
- Strong brand momentum (recognized by U.S. News and World Report, Good Housekeeping)
The company's ability to sustain double-digit growth over the long-term, despite market headwinds, positions it well for future market share gains in the outdoor living products sector.
AZEK's margin expansion is particularly impressive, driven by several key factors:
- Manufacturing productivity improvements
- Cost reduction initiatives
- Increased use of recycled content in products
- Operating leverage
These efforts resulted in a 260 bps expansion in net profit margin to
Residential Segment Execution Delivered Above-Market Growth, Strong Net Profit Margin and Record Adjusted EBITDA Margin
Initiatives Drove Mid-Single-Digit Residential Sell-Through Growth and Double-Digit Deck, Rail & Accessories Sell-Through Growth
THIRD QUARTER FISCAL 2024 FINANCIAL HIGHLIGHTS
-
Consolidated Net Sales increased
12% year-over-year to$434.4 million 18% year-over-year -
Residential Segment Net Sales increased
18% year-over-year to$416.0 million -
Gross profit margin expanded 380 basis points year-over-year to
37.8% ; Adjusted Gross Profit Margin expanded 350 basis points year-over to38.7% -
Net Income increased
45% year-over-year to$50.1 million 38% year-over-year to$62.0 million -
Net profit margin expanded 260 basis points year-over-year to
11.5% -
Adjusted EBITDA increased
24% year-over-year to$119.4 million 33% year-over-year to$117.0 million -
Adjusted EBITDA Margin expanded 260 basis points year-over-year to
27.5% -
EPS increased
$0.11 $0.34 $0.12 $0.42
RECENT COMPANY HIGHLIGHTS
- Delivered record fiscal third quarter financial results across Net Sales, Gross Profit, Adjusted Gross Profit, Net Income and Adjusted EBITDA
- Strong margin expansion driven by operating leverage, productivity initiatives and materials savings
-
Generated
$195 million $178 million -
Announced new
$600 million $50 million -
Recognized as one of the best composite decking brands by
U.S. News and World Report, Good Housekeeping Home Improvement & Outdoor Lab evidencing strong brand momentum
CEO COMMENTS
"The AZEK team delivered record financial results this quarter, as we continued to execute our strategy to drive material conversion, above-market growth and margin expansion,” said Jesse Singh, CEO of The AZEK Company. “Our focus on manufacturing productivity, cost reduction initiatives, including increasing the amount of recycled content in our products, and operating leverage enabled us to deliver net profit margin expansion of 260 basis points year-over-year to
“During the fiscal third quarter, Residential segment net sales increased approximately
“The benefit of our shelf space gains in recent years, combined with AZEK-specific initiatives driving conversion, strong brand momentum and new product innovations have enabled us to sustain our growth. We are seeing great momentum in our 2024 new product launches, including TimberTech Composite Terrain+™ decking and TimberTech Aluminum Framing substructure. Most recently, we initiated a regional launch of our first galvanized steel railing solution, TimberTech Fulton Rail, which further expands our multi-option railing portfolio across price points. We expect to see the impact of new channel expansion in fiscal year 2025, including our recently announced Doman Building Materials decking distribution partnership, which we believe will enable us to more aggressively expand in and convert the Canadian market,” stated Mr. Singh.
“Once again, our TimberTech brand was recognized for its beauty, innovation and performance by industry experts. TimberTech was recognized by
THIRD QUARTER FISCAL 2024 CONSOLIDATED RESULTS
Net sales for the three months ended June 30, 2024 increased by
Gross profit increased by
Effective as of December 31, 2023, AZEK has revised the definition of Adjusted Gross Profit to no longer exclude depreciation expense and the prior period has been recast to reflect the change. Adjusted Gross Profit increased by
Net income increased by
Adjusted EBITDA increased by
Adjusted Net Income increased by
BALANCE SHEET, CASH FLOW and LIQUIDITY
As of June 30, 2024, AZEK had cash and cash equivalents of
Net Cash Provided by Operating Activities for the three months ended June 30, 2024, increased by
During the quarter, AZEK repurchased approximately 0.9 million initial shares of its Class A common stock under a
OUTLOOK
“As we look at the remainder of the year, we are reaffirming our outlook for the second half of fiscal 2024 and raising the bottom end of our full-year fiscal 2024 guidance. We continue to assume Residential sell-through growth to be in the mid-single-digits in the fiscal fourth quarter, as we see our initiatives driving continued outperformance relative to anticipated softer trends in the broader repair & remodel markets. Over the last few months, we have seen some choppiness in the broader construction economy and are assuming a down market for the remainder of fiscal year 2024. We expect our channel to end the fiscal year at or below historical inventory days on hand. We continue to see strong growth in our internal digital and engagement metrics and believe that there is pent-up demand that will be realized as the broader market improves. We remain confident in our ability to drive double-digit growth over the long-term, as we continue to prove the resiliency and growth potential that is an outcome of the AZEK business model,” continued Mr. Singh.
AZEK provides certain of its outlook on a non-GAAP basis, as the Company cannot predict some elements that are included in reported GAAP results, including the impact of acquisition costs and other costs. Refer to the Outlook section in the discussion of non-GAAP financial measures below for more details.
For the full-year fiscal 2024, AZEK now expects consolidated net sales in the range of
AZEK expects Residential segment net sales in the range of
For the fourth quarter of fiscal 2024, AZEK expects consolidated net sales between
“We believe we are well positioned to win across any market scenario and continue to see substantial opportunities for material conversion to our types of low-maintenance, long-lasting materials. From 2019 to 2023, our Deck, Rail & Accessories business has experienced a
CONFERENCE CALL AND WEBSITE INFORMATION
AZEK will hold a conference call to discuss the results today, Wednesday, August 7, 2024, at 4:00 p.m. (CT). To access the live conference call, please register for the call in advance by visiting https://registrations.events/direct/Q4I108409. 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 AZEK’s website at investors.azekco.com/events-and-presentations/. AZEK uses its investor relations website at investors.azekco.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
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 AZEK website or by dialing (800) 770-2030 or (609) 800-9909. The conference ID for the replay is 10840. The replay will be available until 10:59 p.m. (CT) on August 20, 2024. In addition, an earnings presentation will be posted and available on the AZEK investor relations website prior to the conference call.
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
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical facts, 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. 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. 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 our communities; statements about our future expansion plans, capital investments, capacity targets and other future strategic initiatives; statements about any stock repurchase plans, including the expected settlement date of the ASR; statements about potential new products and product innovation; statements regarding the potential impact of global events; statements about future pricing for our products or our raw materials and our ability to offset increases to our raw material costs and other inflationary pressures; statements about the markets in which we operate and the economy more generally, including inflation and interest rates, supply and demand balance, growth of our various markets and growth in the use of engineered products as well as our ability to share in such growth; statements about our production levels; and all other statements with respect to our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance contained in this earnings release are forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in our Annual Reports on Form 10-K and Form 10-K/A, Quarterly Reports on Form 10-Q and in our other filings with the
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, except as required by law.
NON-GAAP FINANCIAL MEASURES
To supplement our earnings release and consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in
- Adjusted Gross Profit: Beginning for the three months ended December 31, 2023, we define Adjusted Gross Profit as gross profit before amortization, business transformation costs, acquisition costs and certain other costs. Adjusted Gross Profit Margin is equal to Adjusted Gross Profit divided by net sales. Prior to the three months ended December 31, 2023, depreciation was also excluded from Adjusted Gross Profit. We believe that including depreciation expense in our Adjusted Gross Profit definition will result in easier comparability to our peers. Presentations of Adjusted Gross Profit and Adjusted Gross Profit Margin for prior periods have been recast to conform to the current period presentation for comparability.
- Adjusted Net Income: Defined 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.
- Adjusted Diluted EPS: Defined 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.
- Adjusted EBITDA: Defined 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: Equal to gross debt less cash and cash equivalents, divided by trailing twelve month Adjusted EBITDA.
- Free Cash Flow: Defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment.
In addition, we provide Adjusted Net Sales excluding Vycom, which is a non-GAAP measure that we define as Consolidated Net Sales excluding the impact from the divested Vycom business. We believe Adjusted Net Sales excluding Vycom is useful to investors because it reflects the ongoing trends in our business following the divestiture of Vycom.
These non-GAAP financial measures 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. Non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. See the accompanying earnings tables for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures.
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/A for fiscal 2023 and our Consolidated Financial Statements and related notes included therein.
The AZEK Company Inc. Consolidated Balance Sheets
(In thousands of |
|||||||
|
|||||||
in thousands |
June 30,
|
|
September 30,
|
||||
|
|
|
(As Restated) |
||||
ASSETS: |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
346,948 |
|
|
$ |
278,314 |
|
Trade receivables, net of allowances |
|
67,619 |
|
|
|
57,660 |
|
Inventories |
|
204,871 |
|
|
|
195,600 |
|
Prepaid expenses |
|
9,736 |
|
|
|
13,595 |
|
Other current assets |
|
27,519 |
|
|
|
16,123 |
|
Total current assets |
|
656,693 |
|
|
|
561,292 |
|
Property, plant and equipment - net |
|
459,369 |
|
|
|
501,023 |
|
Goodwill |
|
967,816 |
|
|
|
994,271 |
|
Intangible assets - net |
|
164,083 |
|
|
|
199,497 |
|
Other assets |
|
92,767 |
|
|
|
87,793 |
|
Total assets |
$ |
2,340,728 |
|
|
$ |
2,343,876 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
64,131 |
|
|
$ |
56,015 |
|
Accrued rebates |
|
59,203 |
|
|
|
60,974 |
|
Current portion of long-term debt obligations |
|
6,000 |
|
|
|
6,000 |
|
Accrued expenses and other liabilities |
|
84,713 |
|
|
|
66,727 |
|
Total current liabilities |
|
214,047 |
|
|
|
189,716 |
|
Deferred income taxes |
|
46,919 |
|
|
|
59,509 |
|
Long-term debt—less current portion |
|
576,804 |
|
|
|
580,265 |
|
Other non-current liabilities |
|
109,946 |
|
|
|
104,073 |
|
Total liabilities |
|
947,716 |
|
|
|
933,563 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Class A common stock, |
|
157 |
|
|
|
156 |
|
Class B common stock, |
|
— |
|
|
|
— |
|
Additional paid‑in capital |
|
1,684,739 |
|
|
|
1,662,322 |
|
Retained earnings (accumulated deficit) |
|
60,639 |
|
|
|
(64,377 |
) |
Accumulated other comprehensive income (loss) |
|
927 |
|
|
|
1,878 |
|
Treasury stock, at cost, 12,377,929 and 8,268,423 shares at June 30, 2024 and September 30, 2023, respectively |
|
(353,450 |
) |
|
|
(189,666 |
) |
Total stockholders' equity |
|
1,393,012 |
|
|
|
1,410,313 |
|
Total liabilities and stockholders' equity |
$ |
2,340,728 |
|
|
$ |
2,343,876 |
|
The AZEK Company Inc. Consolidated Statements of Comprehensive Income
(In thousands of |
|||||||||||||
|
|||||||||||||
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||
in thousands |
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
|
|
2023 |
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||
Net sales |
$ |
434,369 |
|
|
$ |
387,553 |
|
$ |
1,093,221 |
|
|
$ |
981,504 |
Cost of sales |
|
270,045 |
|
|
|
255,639 |
|
|
681,174 |
|
|
|
696,529 |
Gross profit |
|
164,324 |
|
|
|
131,914 |
|
|
412,047 |
|
|
|
284,975 |
Selling, general and administrative expenses |
|
88,598 |
|
|
|
72,490 |
|
|
249,042 |
|
|
|
220,211 |
Other general expenses |
|
— |
|
|
|
1,065 |
|
|
— |
|
|
|
1,065 |
Loss (gain) on disposal of property, plant and equipment |
|
(49 |
) |
|
|
95 |
|
|
2,049 |
|
|
|
278 |
Operating income |
|
75,775 |
|
|
|
58,264 |
|
|
160,956 |
|
|
|
63,421 |
Other income and expenses: |
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
7,863 |
|
|
|
10,408 |
|
|
24,453 |
|
|
|
30,481 |
Gain on sale of business |
|
(90 |
) |
|
|
— |
|
|
(38,390 |
) |
|
|
— |
Total other (income) and expenses |
|
7,773 |
|
|
|
10,408 |
|
|
(13,937 |
) |
|
|
30,481 |
Income before income taxes |
|
68,002 |
|
|
|
47,856 |
|
|
174,893 |
|
|
|
32,940 |
Income tax expense |
|
17,892 |
|
|
|
13,216 |
|
|
49,877 |
|
|
|
9,810 |
Net income |
$ |
50,110 |
|
|
$ |
34,640 |
|
$ |
125,016 |
|
|
$ |
23,130 |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) due to change in fair value of derivatives, net of tax |
$ |
236 |
|
|
$ |
3,953 |
|
$ |
(951 |
) |
|
$ |
691 |
Total other comprehensive income (loss) |
|
236 |
|
|
|
3,953 |
|
|
(951 |
) |
|
|
691 |
Comprehensive income |
$ |
50,346 |
|
|
$ |
38,593 |
|
$ |
124,065 |
|
|
$ |
23,821 |
|
|
|
|
|
|
|
|
||||||
Net income per common share: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.34 |
|
|
$ |
0.23 |
|
$ |
0.86 |
|
|
$ |
0.15 |
Diluted |
|
0.34 |
|
|
|
0.23 |
|
|
0.84 |
|
|
|
0.15 |
|
|
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
||||||
Basic |
|
145,439,955 |
|
|
|
150,140,392 |
|
|
146,159,550 |
|
|
|
150,610,890 |
Diluted |
|
147,495,902 |
|
|
|
151,069,954 |
|
|
148,011,393 |
|
|
|
151,056,199 |
The AZEK Company Inc. Consolidated Statements of Cash Flows
(In thousands of |
|||||||
|
|||||||
|
Nine Months Ended June 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
||||
Operating activities: |
|
|
|
||||
Net income |
$ |
125,016 |
|
|
$ |
23,130 |
|
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities: |
|
|
|
||||
Depreciation |
|
66,135 |
|
|
|
63,504 |
|
Amortization of intangibles |
|
29,876 |
|
|
|
35,035 |
|
Non-cash interest expense |
|
1,236 |
|
|
|
1,236 |
|
Non-cash lease expense |
|
(102 |
) |
|
|
(188 |
) |
Deferred income tax (benefit) provision |
|
(12,284 |
) |
|
|
1,599 |
|
Non-cash compensation expense |
|
20,684 |
|
|
|
13,608 |
|
Fair value adjustment for contingent consideration |
|
— |
|
|
|
250 |
|
Loss on disposition of property, plant and equipment |
|
2,049 |
|
|
|
1,919 |
|
Gain on sale of business |
|
(38,390 |
) |
|
|
— |
|
Changes in certain assets and liabilities: |
|
|
|
||||
Trade receivables |
|
(12,256 |
) |
|
|
15,441 |
|
Inventories |
|
(28,029 |
) |
|
|
83,401 |
|
Prepaid expenses and other currents assets |
|
(10,012 |
) |
|
|
(9,590 |
) |
Accounts payable |
|
5,696 |
|
|
|
11,308 |
|
Accrued expenses and interest |
|
14,448 |
|
|
|
(5,803 |
) |
Other assets and liabilities |
|
(86 |
) |
|
|
1,043 |
|
Net cash provided by operating activities |
|
163,981 |
|
|
|
235,893 |
|
Investing activities: |
|
|
|
||||
Purchases of property, plant and equipment |
|
(54,433 |
) |
|
|
(54,059 |
) |
Proceeds from disposition of fixed assets |
|
326 |
|
|
|
173 |
|
Divestiture, net of cash disposed |
|
131,783 |
|
|
|
— |
|
Acquisitions, net of cash acquired |
|
(5,962 |
) |
|
|
(161 |
) |
Net cash provided by (used in) investing activities |
|
71,714 |
|
|
|
(54,047 |
) |
Financing activities: |
|
|
|
||||
Payments on Term Loan Agreement |
|
(4,500 |
) |
|
|
(4,500 |
) |
Proceeds under revolving credit facility |
|
— |
|
|
|
25,000 |
|
Payments under revolving credit facility |
|
— |
|
|
|
(25,000 |
) |
Principal payments of finance lease obligations |
|
(2,132 |
) |
|
|
(1,958 |
) |
Payments of INTEX contingent consideration |
|
— |
|
|
|
(5,850 |
) |
Exercise of vested stock options |
|
19,418 |
|
|
|
11,111 |
|
Cash paid for shares withheld for taxes |
|
(4,853 |
) |
|
|
(1,381 |
) |
Purchases of treasury stock |
|
(174,994 |
) |
|
|
(55,488 |
) |
Net cash used in financing activities |
|
(167,061 |
) |
|
|
(58,066 |
) |
Net increase in cash and cash equivalents |
|
68,634 |
|
|
|
123,780 |
|
Cash and cash equivalents – Beginning of period |
|
278,314 |
|
|
|
120,817 |
|
Cash and cash equivalents – End of period |
$ |
346,948 |
|
|
$ |
244,597 |
|
Supplemental cash flow disclosure: |
|
|
|
||||
Cash paid for interest, net of amounts capitalized |
$ |
34,843 |
|
|
$ |
34,581 |
|
Cash paid for income taxes, net |
|
70,338 |
|
|
|
21,003 |
|
Supplemental non-cash investing and financing disclosure: |
|
|
|
||||
Capital expenditures in accounts payable at end of period |
$ |
7,648 |
|
|
$ |
14,299 |
|
Right-of-use operating and finance lease assets obtained in exchange for lease liabilities |
11,639 |
|
|
2,828 |
|||
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 unaudited Consolidated Financial Statements for the three and nine months ended June 30, 2024 and 2023.
|
Three Months Ended June 30, |
|
|
|
|
|
Nine Months Ended June 30, |
|
|
|
|
||||||||||||||||
( |
|
2024 |
|
|
|
2023 |
|
|
$ Variance |
|
% Variance |
|
|
2024 |
|
|
|
2023 |
|
|
$ Variance |
|
% Variance |
||||
|
|
|
(As Restated) |
|
|
|
|
|
|
|
(As Restated) |
|
|
|
|
||||||||||||
Net sales |
$ |
416,009 |
|
|
$ |
351,608 |
|
|
$ |
64,401 |
|
18.3 |
% |
|
$ |
1,041,550 |
|
|
$ |
873,208 |
|
|
$ |
168,342 |
|
19.3 |
% |
Segment Adjusted EBITDA(1) |
|
116,965 |
|
|
|
87,887 |
|
|
|
29,078 |
|
33.1 |
% |
|
|
279,330 |
|
|
|
160,124 |
|
|
|
119,206 |
|
74.4 |
% |
Segment Adjusted EBITDA Margin |
|
28.1 |
% |
|
|
25.0 |
% |
|
|
N/A |
|
N/A |
|
|
|
26.8 |
% |
|
|
18.3 |
% |
|
|
N/A |
|
N/A |
|
(1) |
|
Effective as of December 31, 2023, Residential segment Adjusted EBITDA includes all corporate expenses, such as selling, general and administrative costs related to our corporate offices, including payroll and other professional fees. The prior periods have been recast to reflect the change. |
Commercial Segment
The following table summarizes certain financial information relating to the Commercial segment results that have been derived from our unaudited Consolidated Financial Statements for the three and nine months ended June 30, 2024 and 2023.
|
Three Months Ended June 30, |
|
|
|
|
|
Nine Months Ended June 30, |
|
|
|
|
||||||||||||||||||
( |
|
2024 |
|
|
|
2023 |
|
|
|
|
% Variance |
|
|
2024 |
|
|
|
2023 |
|
|
|
|
% Variance |
||||||
Net sales |
$ |
18,360 |
|
|
$ |
35,945 |
|
|
$ |
(17,585 |
) |
|
(48.9 |
)% |
|
$ |
51,671 |
|
|
$ |
108,296 |
|
|
$ |
(56,625 |
) |
|
(52.3 |
)% |
Segment Adjusted EBITDA |
|
2,455 |
|
|
|
8,780 |
|
|
|
(6,325 |
) |
|
(72.0 |
)% |
|
|
8,257 |
|
|
|
21,763 |
|
|
|
(13,506 |
) |
|
(62.1 |
)% |
Segment Adjusted EBITDA Margin |
|
13.4 |
% |
|
|
24.4 |
% |
|
|
N/A |
|
|
N/A |
|
|
|
16.0 |
% |
|
|
20.1 |
% |
|
|
N/A |
|
|
N/A |
|
Adjusted Net Sales Excluding Vycom Reconciliation
Three Months Ended June 30, |
Nine Months Ended June 30, |
||||||||||
( |
2024 |
2023 |
2024 |
|
2023 |
||||||
Net sales |
$ |
434,369 |
$ |
387,553 |
$ |
1,093,221 |
$ |
981,504 |
|||
Impact from sale of Vycom business |
- |
(18,591) |
(3,319) |
(59,572) |
|||||||
Adjusted net sales excluding Vycom |
$ |
434,369 |
$ |
368,962 |
$ |
1,089,902 |
$ |
921,932 |
|||
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
( |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Net Income |
$ |
50,110 |
|
|
$ |
34,640 |
|
|
$ |
125,016 |
|
|
$ |
23,130 |
|
Interest expense, net |
|
7,863 |
|
|
|
10,408 |
|
|
|
24,453 |
|
|
|
30,481 |
|
Depreciation and amortization |
|
31,871 |
|
|
|
33,063 |
|
|
|
96,012 |
|
|
|
98,539 |
|
Income tax expense |
|
17,892 |
|
|
|
13,216 |
|
|
|
49,877 |
|
|
|
9,810 |
|
Stock-based compensation costs |
|
5,828 |
|
|
|
4,164 |
|
|
|
20,595 |
|
|
|
13,747 |
|
Acquisition and divestiture costs(1) |
|
364 |
|
|
|
— |
|
|
|
1,012 |
|
|
|
4,535 |
|
Gain on sale of business(2) |
|
(90 |
) |
|
|
— |
|
|
|
(38,390 |
) |
|
|
— |
|
Secondary offering costs |
|
— |
|
|
|
1,065 |
|
|
|
— |
|
|
|
1,065 |
|
Other costs(3) |
|
5,582 |
|
|
|
111 |
|
|
|
9,012 |
|
|
|
580 |
|
Total adjustments |
|
69,310 |
|
|
|
62,027 |
|
|
|
162,571 |
|
|
|
158,757 |
|
Adjusted EBITDA |
$ |
119,420 |
|
|
$ |
96,667 |
|
|
$ |
287,587 |
|
|
$ |
181,887 |
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Net Profit Margin |
|
11.5 |
% |
|
|
8.9 |
% |
|
|
11.4 |
% |
|
|
2.4 |
% |
Interest expense, net |
|
1.8 |
% |
|
|
2.7 |
% |
|
|
2.2 |
% |
|
|
3.1 |
% |
Depreciation and amortization |
|
7.4 |
% |
|
|
8.5 |
% |
|
|
8.8 |
% |
|
|
9.9 |
% |
Income tax expense |
|
4.1 |
% |
|
|
3.4 |
% |
|
|
4.6 |
% |
|
|
1.0 |
% |
Stock-based compensation costs |
|
1.3 |
% |
|
|
1.1 |
% |
|
|
1.9 |
% |
|
|
1.4 |
% |
Acquisition and divestiture costs |
|
0.1 |
% |
|
|
— |
% |
|
|
0.1 |
% |
|
|
0.5 |
% |
Gain on sale of business |
|
— |
% |
|
|
— |
% |
|
|
(3.5 |
)% |
|
|
— |
% |
Secondary offering costs |
|
— |
% |
|
|
0.3 |
% |
|
|
— |
% |
|
|
0.1 |
% |
Other costs |
|
1.3 |
% |
|
|
— |
% |
|
|
0.8 |
% |
|
|
0.1 |
% |
Total adjustments |
|
16.0 |
% |
|
|
16.0 |
% |
|
|
14.9 |
% |
|
|
16.1 |
% |
Adjusted EBITDA Margin |
|
27.5 |
% |
|
|
24.9 |
% |
|
|
26.3 |
% |
|
|
18.5 |
% |
______________________ |
||
(1) |
|
Acquisition and divestiture costs reflect costs related to acquisitions of |
(2) |
|
Gain on sale of business relates to the sale of the Vycom business. |
(3) |
|
Other costs include costs related to the restatement of the AZEK’s consolidated financial statements and condensed consolidated interim financial information for each of the quarters within fiscal years ended September 30, 2023 and 2022, and for the fiscal quarter ended December 31, 2023 (the “Restatement”) of |
Adjusted Gross Profit Reconciliation
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
( |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Gross Profit |
$ |
164,324 |
|
|
$ |
131,914 |
|
|
$ |
412,047 |
|
|
$ |
284,975 |
|
Amortization(1) |
|
3,778 |
|
|
|
4,515 |
|
|
|
11,439 |
|
|
|
13,737 |
|
Other costs(2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
116 |
|
Adjusted Gross Profit |
$ |
168,102 |
|
|
$ |
136,429 |
|
|
$ |
423,486 |
|
|
$ |
298,828 |
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Gross Margin |
|
37.8 |
% |
|
|
34.0 |
% |
|
|
37.7 |
% |
|
|
29.0 |
% |
Amortization |
|
0.9 |
% |
|
|
1.2 |
% |
|
|
1.0 |
% |
|
|
1.4 |
% |
Other costs |
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Adjusted Gross Profit Margin |
|
38.7 |
% |
|
|
35.2 |
% |
|
|
38.7 |
% |
|
|
30.4 |
% |
______________________ |
||
(1) |
|
Effective as of December 31, 2023, AZEK revised the definition of Adjusted Gross Profit to no longer exclude depreciation expense. The prior periods have been recast to reflect the change. |
(2) |
|
Other costs include costs related to a reduction in workforce of |
Adjusted Net Income and Adjusted Diluted EPS Reconciliation
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
( |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Net Income |
$ |
50,110 |
|
|
$ |
34,640 |
|
|
$ |
125,016 |
|
|
$ |
23,130 |
|
Amortization |
|
9,840 |
|
|
|
11,578 |
|
|
|
29,876 |
|
|
|
35,035 |
|
Stock-based compensation costs(1) |
|
475 |
|
|
|
1,062 |
|
|
|
4,188 |
|
|
|
3,422 |
|
Acquisition and divestiture costs(2) |
|
364 |
|
|
|
— |
|
|
|
1,012 |
|
|
|
4,535 |
|
Gain on sale of business(3) |
|
(90 |
) |
|
|
— |
|
|
|
(38,390 |
) |
|
|
— |
|
Secondary offering costs |
|
— |
|
|
|
1,065 |
|
|
|
— |
|
|
|
1,065 |
|
Other costs(4) |
|
5,582 |
|
|
|
111 |
|
|
|
9,012 |
|
|
|
580 |
|
Tax impact of adjustments(5) |
|
(4,269 |
) |
|
|
(3,646 |
) |
|
|
4,650 |
|
|
|
(11,764 |
) |
Adjusted Net Income |
$ |
62,012 |
|
|
$ |
44,810 |
|
|
$ |
135,364 |
|
|
$ |
56,003 |
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Net Income |
$ |
0.34 |
|
|
$ |
0.23 |
|
|
$ |
0.84 |
|
|
$ |
0.15 |
|
Amortization |
|
0.07 |
|
|
|
0.07 |
|
|
|
0.20 |
|
|
|
0.23 |
|
Stock-based compensation costs |
|
— |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.02 |
|
Acquisition and divestiture costs |
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
0.03 |
|
Gain on sale of business |
|
— |
|
|
|
— |
|
|
|
(0.26 |
) |
|
|
— |
|
Secondary offering costs |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Other costs |
|
0.04 |
|
|
|
— |
|
|
|
0.06 |
|
|
|
0.01 |
|
Tax impact of adjustments |
|
(0.03 |
) |
|
|
(0.02 |
) |
|
|
0.03 |
|
|
|
(0.08 |
) |
Adjusted Diluted EPS(6) |
$ |
0.42 |
|
|
$ |
0.30 |
|
|
$ |
0.91 |
|
|
$ |
0.37 |
|
______________________ |
||
(1) |
|
Stock-based compensation costs reflect expenses related to AZEK’s initial public offering. Expenses related to AZEK’s recurring awards granted each fiscal year are excluded from the Adjusted Net Income reconciliation. |
(2) |
|
Acquisition and divestiture costs reflect costs related to acquisitions of |
(3) |
|
Gain on sale of business relates to the sale of the Vycom business.
|
(4) |
|
Other costs include costs related to the Restatement of |
(5) |
|
Tax impact of adjustments, except for gain on sale of business, are based on applying a combined |
(6) |
|
Weighted average common shares outstanding used in computing diluted net income per common share of 147,495,902 and 151,069,954 for the three months ended June 30, 2024 and 2023, respectively, and 148,011,393 and 151,056,199 for the nine months ended June 30, 2024 and 2023, respectively. |
Free Cash Flow Reconciliation
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
||||||||||||
( |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(As Restated) |
|
|
|
(As Restated) |
||||||||
Net cash provided by operating activities |
$ |
195,075 |
|
|
$ |
171,751 |
|
|
$ |
163,981 |
|
|
$ |
235,893 |
|
Less: Purchases of property, plant and equipment |
|
(17,554 |
) |
|
|
(6,775 |
) |
|
|
(54,433 |
) |
|
|
(54,059 |
) |
Free Cash Flow |
$ |
177,521 |
|
|
$ |
164,976 |
|
|
$ |
109,548 |
|
|
$ |
181,834 |
|
Net cash provided by (used in) investing activities |
$ |
(23,453 |
) |
|
$ |
(6,701 |
) |
|
$ |
71,714 |
|
|
$ |
(54,047 |
) |
Net cash used in financing activities |
$ |
(52,073 |
) |
|
$ |
(46,712 |
) |
|
$ |
(167,061 |
) |
|
$ |
(58,066 |
) |
Net Leverage Reconciliation
Twelve Months Ended June 30, |
||||
(In thousands) |
|
2024 |
|
|
Net income |
$ |
164,247 |
|
|
Interest expense, net |
|
33,265 |
|
|
Depreciation and amortization |
|
130,017 |
|
|
Income tax expense |
|
62,205 |
|
|
Stock-based compensation costs |
|
25,552 |
|
|
Acquisition and divestiture costs |
|
3,367 |
|
|
Secondary offering costs |
|
— |
|
|
Gain on sale of business |
|
(38,390 |
) |
|
Other costs |
|
9,275 |
|
|
Total adjustments |
|
225,291 |
|
|
Adjusted EBITDA |
$ |
389,538 |
|
|
Long-term debt — less current portion |
$ |
576,804 |
|
|
Current portion |
|
6,000 |
|
|
Unamortized deferred financing fees |
|
3,460 |
|
|
Unamortized original issue discount |
|
3,236 |
|
|
Finance leases |
|
77,111 |
|
|
Gross debt |
$ |
666,611 |
|
|
Cash and cash equivalents |
|
(346,948 |
) |
|
Net debt |
$ |
319,663 |
|
|
Net leverage |
|
0.8x |
|
|
OUTLOOK
We have not reconciled either of Adjusted EBITDA or Adjusted EBITDA Margin 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 and Adjusted EBITDA Margin have not occurred, are outside of our control or cannot be reasonably predicted. Accordingly, a reconciliation of each of Adjusted EBITDA and Adjusted EBITDA Margin 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 and Adjusted EBITDA Margin guidance and future GAAP results.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807977254/en/
Investor Relations Contact:
Eric
312-809-1093
ir@azekco.com
Media Contact:
Amanda Cimaglia
312-809-1093
media@azekco.com
Source: The AZEK Company Inc.
FAQ
What were AZEK's third-quarter fiscal 2024 net sales?
How much did AZEK's Residential segment net sales grow in Q3 fiscal 2024?
What was AZEK's net income for Q3 fiscal 2024?
How did AZEK's adjusted EBITDA margin change in Q3 fiscal 2024?
What is AZEK's outlook for full-year fiscal 2024 net sales?
