The AZEK Company Announces Third Quarter Fiscal 2022 Financial Results
The AZEK Company reported strong third-quarter results for fiscal 2022, with consolidated net sales increasing 20.6% year-over-year to $395.0 million. Net income rose 26.2% to $27.5 million, and adjusted EBITDA grew 19.0% to $86.5 million. Notably, the company announced the acquisition of INTEX Millwork Solutions, enhancing its product portfolio. AZEK plans to return $58 million to shareholders via share repurchases. For fiscal 2022, AZEK expects net sales between $1.327 billion and $1.353 billion, and adjusted EBITDA between $295 million and $307 million, reflecting ongoing growth initiatives.
- Consolidated net sales increased 20.6% to $395.0 million.
- Net income rose 26.2% to $27.5 million.
- Adjusted EBITDA increased by 19.0% to $86.5 million.
- Announced acquisition of INTEX Millwork Solutions.
- Returned $58 million to shareholders through share repurchases.
- Signs of demand moderation observed going into fiscal Q4.
- Adjusted EBITDA margin declined 30 basis points to 21.9%.
Strong Third Quarter Results; Announcing Acquisition of INTEX Millwork™; Returned
THIRD QUARTER FISCAL 2022 HIGHLIGHTS
-
Consolidated net sales increased
20.6% year over year to$395.0 million -
Net income increased
26.2% year over year to$27.5 million -
Adjusted Net Income increased
11.3% year over year to$45.2 million -
EPS increased
28.6% year over year to$0.18 -
Adjusted Diluted EPS increased
11.5% year over year to$0.29 -
Adjusted EBITDA increased
19.0% year over year to$86.5 million
OUTLOOK HIGHLIGHTS
-
Fiscal 2022 Net Sales Outlook – Expecting consolidated net sales between
$1.32 7$1.35 3 billion -
Fiscal 2022 Adjusted EBITDA Outlook – Expecting Adjusted EBITDA of
$295 $307 million
CEO COMMENTS
“We delivered another strong quarter of net sales growth, led by solid in-season demand, and Adjusted EBITDA growth, including outperformance in our margins driven by our operational execution and recycling initiatives, combined with pricing actions offsetting material inflation,” said
“As we move into fiscal Q4, we have seen some signs of demand moderation versus the prior year and our service levels have returned to historical norms, as we have benefited from increased capacity and improved operational execution. We saw the channel begin to recalibrate late in the third quarter and we are working with our dealer and distributor partners to reduce their inventory levels primarily in fiscal Q4 2022 and into fiscal Q1 2023. We believe this will better position
“We made notable progress against our strategic initiatives during the quarter, including investments in our brand and consumer journey as evidenced by strong customer engagement and double-digit growth in our digital leads and sample orders activity. Our sales efforts continue to convert more contractors and channel partners to the
“We continue to deploy capital in a disciplined manner and supplement our existing core markets with strategic acquisitions. We are proud to announce the acquisition of
“We play in incredibly attractive categories that are driven by repair and remodel and material conversion. We are in the early stages of a multiyear expansion and conversion within our markets and are as excited as ever about the compelling long-term growth and margin expansion opportunity in front of us,” said
THIRD QUARTER FISCAL 2022 CONSOLIDATED RESULTS
Net sales for the three months ended
Net income increased by
Net margin expanded to
Adjusted EBITDA increased by
Adjusted Net Income increased
BALANCE SHEET, CASH FLOW and LIQUIDITY
As of
OUTLOOK
“As we look forward, we continue to make progress on our recycling and AIMS continuous improvement initiatives, and experience strong price realization. We expect these actions to meaningfully contribute to our fourth quarter results. We are as excited as ever about the compelling long-term growth and margin expansion opportunity in front of us. We have an attractive, resilient business model, with multiple levers to drive growth and margin expansion that we believe can outperform in any economic environment,” concluded
For full year fiscal 2022,
For the fourth quarter fiscal 2022,
CONFERENCE CALL INFORMATION
The conference call can be accessed live over the phone by dialing 888-999-6096 or +1-848-280-6470 for international callers. Participants should inform the operator you want to be joined to
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. 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 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 Net Income, Adjusted Diluted EPS and Adjusted EBITDA exclude the expense of depreciation, in the case of Adjusted Gross Profit and Adjusted EBITDA, and amortization, in each case, of our assets, and, although these are non-cash expenses, the assets being depreciated 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 I, Item 2 of our Quarterly Report on Form 10-Q for the third quarter of fiscal 2022 and our Consolidated Financial Statements and related notes included therein.
Condensed Consolidated Balance Sheets
(In thousands of (Unaudited) |
||||||||
|
|
|
|
|
||||
in thousands |
|
2022 |
|
2021 |
||||
ASSETS: |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
159,621 |
|
|
$ |
250,536 |
|
Trade receivables, net of allowances |
|
|
101,513 |
|
|
|
77,316 |
|
Inventories |
|
|
322,117 |
|
|
|
188,888 |
|
Prepaid expenses |
|
|
20,522 |
|
|
|
14,212 |
|
Other current assets |
|
|
2,727 |
|
|
|
1,446 |
|
Total current assets |
|
|
606,500 |
|
|
|
532,398 |
|
Property, plant and equipment - net |
|
|
495,961 |
|
|
|
391,012 |
|
|
|
|
987,440 |
|
|
|
951,390 |
|
Intangible assets - net |
|
|
247,606 |
|
|
|
242,572 |
|
Other assets |
|
|
83,041 |
|
|
|
70,462 |
|
Total assets |
|
$ |
2,420,548 |
|
|
$ |
2,187,834 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY: |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
83,034 |
|
|
$ |
69,474 |
|
Accrued rebates |
|
|
44,491 |
|
|
|
44,339 |
|
Accrued interest |
|
|
4,367 |
|
|
|
72 |
|
Current portion of long-term debt obligations |
|
|
4,500 |
|
|
|
— |
|
Accrued expenses and other liabilities |
|
|
68,660 |
|
|
|
56,522 |
|
Total current liabilities |
|
|
205,052 |
|
|
|
170,407 |
|
Deferred income taxes |
|
|
67,892 |
|
|
|
46,371 |
|
Long-term debt—less current portion |
|
|
586,033 |
|
|
|
464,715 |
|
Other non-current liabilities |
|
|
93,601 |
|
|
|
79,177 |
|
Total liabilities |
|
|
952,578 |
|
|
|
760,670 |
|
Commitments and contingencies |
|
|
|
|
||||
Stockholders' equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Class A common stock, |
|
|
155 |
|
|
|
155 |
|
Class B common stock, |
|
|
— |
|
|
|
— |
|
Additional paid‑in capital |
|
|
1,626,115 |
|
|
|
1,615,236 |
|
Accumulated deficit |
|
|
(108,227 |
) |
|
|
(188,227 |
) |
|
|
|
(50,073 |
) |
|
|
— |
|
Total stockholders' equity |
|
|
1,467,970 |
|
|
|
1,427,164 |
|
Total liabilities and stockholders' equity |
|
$ |
2,420,548 |
|
|
$ |
2,187,834 |
|
Condensed Consolidated Statements of Comprehensive Income
(In thousands of (Unaudited) |
||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
in thousands |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Net sales |
|
$ |
394,991 |
|
$ |
327,454 |
|
$ |
1,050,954 |
|
$ |
832,854 |
Cost of sales |
|
|
268,604 |
|
|
220,617 |
|
|
713,498 |
|
|
555,190 |
Gross profit |
|
|
126,387 |
|
|
106,837 |
|
|
337,456 |
|
|
277,664 |
Selling, general and administrative expenses |
|
|
78,737 |
|
|
70,760 |
|
|
212,728 |
|
|
184,362 |
Other general expenses |
|
|
— |
|
|
1,443 |
|
|
— |
|
|
2,592 |
Operating income |
|
|
47,650 |
|
|
34,634 |
|
|
124,728 |
|
|
90,710 |
|
|
|
|
|
|
|
|
|
||||
Other expenses: |
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
10,618 |
|
|
4,054 |
|
|
18,776 |
|
|
16,428 |
Total other expenses |
|
|
10,618 |
|
|
4,054 |
|
|
18,776 |
|
|
16,428 |
|
|
|
|
|
|
|
|
|
||||
Income before income taxes |
|
|
37,032 |
|
|
30,580 |
|
|
105,952 |
|
|
74,282 |
Income tax expense (benefit) |
|
|
9,556 |
|
|
8,811 |
|
|
25,951 |
|
|
19,725 |
Net income |
|
$ |
27,476 |
|
$ |
21,769 |
|
$ |
80,001 |
|
$ |
54,557 |
|
|
|
|
|
|
|
|
|
||||
Net income per common share - basic |
|
$ |
0.18 |
|
$ |
0.14 |
|
$ |
0.52 |
|
$ |
0.36 |
Net income per common share - diluted |
|
|
0.18 |
|
|
0.14 |
|
|
0.51 |
|
|
0.35 |
|
|
|
|
|
|
|
|
|
||||
Comprehensive income |
|
$ |
27,476 |
|
$ |
21,769 |
|
$ |
80,001 |
|
$ |
54,557 |
Weighted-average common shares outstanding - basic and diluted |
|
|
|
|
|
|
|
|
||||
Basic |
|
|
153,493,355 |
|
|
153,854,313 |
|
|
154,199,158 |
|
|
153,623,579 |
Diluted |
|
|
153,891,090 |
|
|
157,022,043 |
|
|
155,631,884 |
|
|
156,658,640 |
Condensed Consolidated Statements of Cash Flows
(In thousands of (Unaudited) |
||||||||
|
|
Nine Months Ended |
||||||
|
|
2022 |
|
2021 |
||||
Operating activities: |
|
|
|
|
||||
Net income |
|
$ |
80,001 |
|
|
$ |
54,557 |
|
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities: |
|
|
|
|
||||
Depreciation |
|
|
48,764 |
|
|
|
37,654 |
|
Amortization of intangibles |
|
|
37,966 |
|
|
|
37,666 |
|
Non-cash interest expense |
|
|
4,194 |
|
|
|
2,550 |
|
Non-cash lease expense |
|
|
(218 |
) |
|
|
(17 |
) |
Deferred income tax (benefit) provision |
|
|
21,520 |
|
|
|
17,385 |
|
Non-cash compensation expense |
|
|
19,550 |
|
|
|
19,272 |
|
Loss (gain) on disposition of property |
|
|
317 |
|
|
|
624 |
|
Changes in certain assets and liabilities: |
|
|
|
|
||||
Trade receivables |
|
|
(20,399 |
) |
|
|
(19,287 |
) |
Inventories |
|
|
(121,574 |
) |
|
|
(42,721 |
) |
Prepaid expenses and other currents assets |
|
|
(7,732 |
) |
|
|
(1,324 |
) |
Accounts payable |
|
|
4,512 |
|
|
|
6,911 |
|
Accrued expenses and interest |
|
|
(3,733 |
) |
|
|
4,877 |
|
Other assets and liabilities |
|
|
2,532 |
|
|
|
1,901 |
|
Net cash provided by (used in) operating activities |
|
|
65,700 |
|
|
|
120,048 |
|
Investing activities: |
|
|
|
|
||||
Purchases of property, plant and equipment |
|
|
(139,491 |
) |
|
|
(116,715 |
) |
Proceeds from disposition of fixed assets |
|
|
617 |
|
|
|
38 |
|
Acquisitions, net of cash acquired |
|
|
(86,935 |
) |
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
(225,809 |
) |
|
|
(116,677 |
) |
Financing activities: |
|
|
|
|
||||
Proceeds under revolving credit facility |
|
|
40,000 |
|
|
|
— |
|
Payments under revolving credit facility |
|
|
(40,000 |
) |
|
|
||
Proceeds from 2022 Term Loan Agreement |
|
|
595,500 |
|
|
|
— |
|
Payment of debt issuance costs |
|
|
(3,442 |
) |
|
|
(938 |
) |
Repayments of Term Loan Agreement |
|
|
(467,654 |
) |
|
|
— |
|
Repayments of finance lease obligations |
|
|
(2,308 |
) |
|
|
(1,385 |
) |
Exercise of vested stock options |
|
|
5,995 |
|
|
|
4,614 |
|
Payments of initial public offering related costs |
|
|
— |
|
|
|
(210 |
) |
Cash paid for shares withheld for taxes |
|
|
(429 |
) |
|
|
— |
|
Purchases of treasury stock |
|
|
(58,468 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
69,194 |
|
|
|
2,081 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
(90,915 |
) |
|
|
5,452 |
|
Cash and cash equivalents – Beginning of period |
|
|
250,536 |
|
|
|
215,012 |
|
Cash and cash equivalents – End of period |
|
$ |
159,621 |
|
|
$ |
220,464 |
|
Supplemental cash flow disclosure: |
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized |
|
$ |
10,269 |
|
|
$ |
14,871 |
|
Cash paid for income taxes, net |
|
|
5,608 |
|
|
|
2,458 |
|
Supplemental non-cash investing and financing disclosure: |
|
|
|
|
||||
Capital expenditures in accounts payable at end of period |
|
$ |
24,321 |
|
|
$ |
3,780 |
|
Right-of-use operating and finance lease assets obtained in exchange for lease liabilities |
|
|
18,705 |
|
|
|
11,861 |
|
Segment Results from Operations
Residential
The following table summarizes certain financial information relating to the Residential segment results that have been derived from our unaudited Condensed Consolidated Financial Statements for the three and nine months ended
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||
( |
|
2022 |
|
2021 |
|
$ Variance |
|
% Variance |
|
2022 |
|
2021 |
|
$ Variance |
|
% Variance |
||||||||||||
Net sales |
|
$ |
343,064 |
|
|
$ |
291,209 |
|
|
$ |
51,855 |
|
17.8 |
% |
|
$ |
914,555 |
|
|
$ |
739,048 |
|
|
$ |
175,507 |
|
23.7 |
% |
Segment Adjusted EBITDA |
|
|
91,093 |
|
|
|
82,525 |
|
|
|
8,568 |
|
10.4 |
% |
|
|
258,874 |
|
|
|
222,999 |
|
|
|
35,875 |
|
16.1 |
% |
Segment Adjusted EBITDA Margin |
|
|
26.6 |
% |
|
|
28.3 |
% |
|
|
N/A |
|
N/A |
|
|
|
28.3 |
% |
|
|
30.2 |
% |
|
|
N/A |
|
N/A |
|
Commercial
The following table summarizes certain financial information relating to the Commercial segment results that have been derived from our unaudited Condensed Consolidated Financial Statements for the three and nine months ended
|
|
Three Months Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||||||
( |
|
2022 |
|
2021 |
|
$ Variance |
|
% Variance |
|
2022 |
|
2021 |
|
$ Variance |
|
% Variance |
||||||||||||
Net sales |
|
$ |
51,927 |
|
|
$ |
36,245 |
|
|
$ |
15,682 |
|
43.3 |
% |
|
$ |
136,399 |
|
|
$ |
93,806 |
|
|
$ |
42,593 |
|
45.4 |
% |
Segment Adjusted EBITDA |
|
|
12,271 |
|
|
|
6,273 |
|
|
|
5,998 |
|
95.6 |
% |
|
|
25,693 |
|
|
|
13,304 |
|
|
|
12,389 |
|
93.1 |
% |
Segment Adjusted EBITDA Margin |
|
|
23.6 |
% |
|
|
17.3 |
% |
|
|
N/A |
|
N/A |
|
|
|
18.8 |
% |
|
|
14.2 |
% |
|
|
N/A |
|
N/A |
|
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation |
||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
( |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Net income |
|
$ |
27,476 |
|
$ |
21,769 |
|
$ |
80,001 |
|
$ |
54,557 |
Interest expense |
|
|
10,618 |
|
|
4,054 |
|
|
18,776 |
|
|
16,428 |
Depreciation and amortization |
|
|
29,606 |
|
|
25,771 |
|
|
86,730 |
|
|
75,321 |
Income tax expense (benefit) |
|
|
9,556 |
|
|
8,811 |
|
|
25,951 |
|
|
19,725 |
Stock-based compensation |
|
|
4,903 |
|
|
9,510 |
|
|
13,846 |
|
|
19,646 |
Acquisition costs (1) |
|
|
3,227 |
|
|
— |
|
|
8,861 |
|
|
— |
Initial public offering and secondary offering costs |
|
|
— |
|
|
1,443 |
|
|
— |
|
|
2,592 |
Other costs (2) |
|
|
1,138 |
|
|
1,358 |
|
|
1,799 |
|
|
4,411 |
Total adjustments |
|
|
59,048 |
|
|
50,947 |
|
|
155,963 |
|
|
138,123 |
Adjusted EBITDA |
|
$ |
86,524 |
|
$ |
72,716 |
|
$ |
235,964 |
|
$ |
192,680 |
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Net income |
|
7.0 |
% |
|
6.6 |
% |
|
7.6 |
% |
|
6.6 |
% |
Interest expense |
|
2.7 |
% |
|
1.3 |
% |
|
1.8 |
% |
|
2.0 |
% |
Depreciation and amortization |
|
7.5 |
% |
|
7.9 |
% |
|
8.3 |
% |
|
9.0 |
% |
Income tax expense (benefit) |
|
2.4 |
% |
|
2.7 |
% |
|
2.5 |
% |
|
2.4 |
% |
Stock-based compensation |
|
1.2 |
% |
|
2.9 |
% |
|
1.3 |
% |
|
2.4 |
% |
Acquisition costs |
|
0.8 |
% |
|
0.0 |
% |
|
0.8 |
% |
|
0.0 |
% |
Initial public offering costs |
|
0.0 |
% |
|
0.4 |
% |
|
0.0 |
% |
|
0.3 |
% |
Other costs |
|
0.3 |
% |
|
0.4 |
% |
|
0.2 |
% |
|
0.4 |
% |
Total adjustments |
|
14.9 |
% |
|
15.6 |
% |
|
14.9 |
% |
|
16.5 |
% |
Adjusted EBITDA Margin |
|
21.9 |
% |
|
22.2 |
% |
|
22.5 |
% |
|
23.1 |
% |
| _______________________ | ||
(1) |
Acquisition costs reflect costs directly related to completed acquisitions of |
|
(2) |
Other costs include costs for legal expense of |
|
Adjusted Gross Profit and Adjusted Gross Profit Margin Reconciliation |
||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
( |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Gross Profit |
|
$ |
126,387 |
|
$ |
106,837 |
|
$ |
337,456 |
|
$ |
277,664 |
Depreciation and amortization (1) |
|
|
20,843 |
|
|
17,280 |
|
|
59,410 |
|
|
49,891 |
Acquisitions costs (2) |
|
|
— |
|
|
— |
|
|
1,208 |
|
|
— |
Other costs (3) |
|
|
324 |
|
|
— |
|
|
324 |
|
|
— |
Adjusted Gross Profit |
|
$ |
147,554 |
|
$ |
124,117 |
|
$ |
398,398 |
|
$ |
327,555 |
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Gross Margin |
|
32.0 |
% |
|
32.6 |
% |
|
32.1 |
% |
|
33.3 |
% |
Depreciation and amortization |
|
5.3 |
% |
|
5.3 |
% |
|
5.7 |
% |
|
6.0 |
% |
Acquisitions costs |
|
0.0 |
% |
|
0.0 |
% |
|
0.1 |
% |
|
0.0 |
% |
Other costs |
|
0.1 |
% |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
Adjusted Gross Profit Margin |
|
37.4 |
% |
|
37.9 |
% |
|
37.9 |
% |
|
39.3 |
% |
| _______________________ | ||
(1) |
Depreciation and amortization for the three months ended |
|
(2) |
Acquisition costs reflect inventory step-up adjustments related to recording the inventory of acquired businesses at fair value on the date of acquisition. |
|
(3) |
Other costs include costs related to a reduction in workforce of |
|
Adjusted Net Income and Adjusted Diluted EPS Reconciliation |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
( |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income |
|
$ |
27,476 |
|
|
$ |
21,769 |
|
|
$ |
80,001 |
|
|
$ |
54,557 |
|
Amortization |
|
|
12,522 |
|
|
|
12,483 |
|
|
|
37,966 |
|
|
|
37,666 |
|
Stock-based compensation (1) |
|
|
1,460 |
|
|
|
8,167 |
|
|
|
5,224 |
|
|
|
16,940 |
|
Acquisition costs (2) |
|
|
3,227 |
|
|
|
— |
|
|
|
8,861 |
|
|
|
— |
|
Capital structure transaction costs (3) |
|
|
5,112 |
|
|
|
— |
|
|
|
5,112 |
|
|
|
— |
|
Initial public offering and secondary offering costs |
|
|
— |
|
|
|
1,443 |
|
|
|
— |
|
|
|
2,592 |
|
Other costs (4) |
|
|
1,138 |
|
|
|
1,358 |
|
|
|
1,799 |
|
|
|
4,411 |
|
Tax impact of adjustments (5) |
|
|
(5,694 |
) |
|
|
(4,589 |
) |
|
|
(14,182 |
) |
|
|
(13,026 |
) |
Adjusted Net Income |
|
$ |
45,241 |
|
|
$ |
40,631 |
|
|
$ |
124,781 |
|
|
$ |
103,140 |
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income |
|
$ |
0.18 |
|
|
$ |
0.14 |
|
|
$ |
0.51 |
|
|
$ |
0.35 |
|
Amortization |
|
|
0.08 |
|
|
|
0.08 |
|
|
|
0.24 |
|
|
|
0.24 |
|
Stock-based compensation |
|
|
0.01 |
|
|
|
0.05 |
|
|
|
0.04 |
|
|
|
0.11 |
|
Acquisition costs |
|
|
0.02 |
|
|
|
— |
|
|
|
0.06 |
|
|
|
— |
|
Capital structure transaction costs |
|
|
0.03 |
|
|
|
— |
|
|
|
0.03 |
|
|
|
— |
|
Initial public offering and secondary offering costs |
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.02 |
|
Other costs |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.03 |
|
Tax impact of adjustments |
|
|
(0.04 |
) |
|
|
(0.03 |
) |
|
|
(0.09 |
) |
|
|
(0.09 |
) |
Adjusted Diluted EPS (6) |
|
$ |
0.29 |
|
|
$ |
0.26 |
|
|
$ |
0.80 |
|
|
$ |
0.66 |
|
| _______________________ | ||
(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) |
Capital structure transaction costs include third party costs related to the 2022 Term Loan Agreement. |
|
(4) |
Other costs include costs for legal expense of |
|
(5) |
Tax impact of adjustments are based on applying a combined |
|
(6) |
Weighted average common shares outstanding used in computing diluted net income per common share of 153,891,090 and 157,022,043 for the three months ended |
|
Net Leverage Reconciliation
Twelve Months Ended
|
||||
(In thousands) |
2022 |
|||
Net income |
$ |
118,594 |
|
|
Interest expense |
|
22,659 |
|
|
Depreciation and amortization |
|
113,013 |
|
|
Tax expense (benefit) |
|
34,894 |
|
|
Stock-based compensation costs |
|
16,870 |
|
|
Acquisition costs |
|
8,861 |
|
|
Initial public offering and secondary offering costs |
|
— |
|
|
Other costs |
|
2,580 |
|
|
Total adjustments |
|
198,877 |
|
|
Adjusted EBITDA |
$ |
317,471 |
|
|
Long-term debt — less current portion |
$ |
586,033 |
|
|
Unamortized deferred financing fees |
|
4,891 |
|
|
Unamortized original issue discount |
|
4,576 |
|
|
Current portion |
|
4,500 |
|
|
Finance leases |
|
64,299 |
|
|
Gross debt |
$ |
664,299 |
|
|
Cash and cash equivalents |
|
(159,621 |
) |
|
Net debt |
$ |
504,678 |
|
|
Net Leverage |
1.6x |
|||
Outlook
We have not reconciled either Adjusted EBITDA or Adjusted Diluted EPS guidance to its most comparable GAAP measure as a result of the uncertainty regarding, and the potential variability of, reconciling items such as the variability in the provision for income taxes, the estimates for warranty and rebate accruals and timing of the gain or loss on disposal of property, plant and equipment. Such reconciling items that impact Adjusted EBITDA and Adjusted Diluted EPS have not occurred, are outside of our control or cannot be reasonably predicted. Accordingly, a reconciliation of each of Adjusted EBITDA and Adjusted Diluted EPS 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 Diluted EPS guidance and future GAAP results.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005204/en/
Investor Relations Contact:
312-809-1093
ir@azekco.com
Media Contact:
402-980-9603
AZEKquestions@zenogroup.com
Source:
FAQ
What were AZEK's net sales for the third quarter of fiscal 2022?
What is AZEK's adjusted EBITDA for the third quarter of fiscal 2022?
What is the expected consolidated net sales outlook for fiscal 2022 for AZEK?
What is the significance of the INTEX Millwork acquisition for AZEK?
How much did AZEK return to shareholders in the third quarter?
