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
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 ; AdjustedNet Sales excluding results for Vycom increased 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 to 38.7%
-
Net Income increased 45% year-over-year to
$50.1 million ; Adjusted Net Income increased 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 ; Residential Segment Adjusted EBITDA increased 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 year-over-year to$0.34 per share; Adjusted Diluted EPS increased$0.12 year-over-year to$0.42 per share
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 of cash provided by operating activities and$178 million of Free Cash Flow -
Announced new
$600 million share repurchase program and entered into$50 million accelerated share repurchase program -
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
“During the fiscal third quarter, Residential segment net sales increased approximately 18% year-over-year driven by strength in Deck, Rail and Accessories which saw double-digit sell-through growth to our professional dealer and retailer partners. Overall, Residential segment sell-through grew mid-single-digits year-over-year as our initiatives offset a down repair & remodel market. Exteriors experienced some market-driven softness in the quarter after delivering solid growth over the last five years. We also saw our channel partners purchase approximately
“The benefit of our shelf space gains in recent years, combined with
“Once again, our TimberTech brand was recognized for its beauty, innovation and performance by industry experts.
THIRD QUARTER FISCAL 2024 CONSOLIDATED RESULTS
Net sales for the three months ended
Gross profit increased by
Effective as of
Net income increased by
Adjusted EBITDA increased by
Adjusted Net Income increased by
BALANCE SHEET, CASH FLOW and LIQUIDITY
As of
Net Cash Provided by Operating Activities for the three months ended
During the quarter,
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
For the full-year fiscal 2024,
For the fourth quarter of fiscal 2024,
“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 17% compounded annual growth rate (CAGR) and our Exteriors business has grown at a 16% CAGR, demonstrating the strength and resiliency of our business. Our fiscal year 2024 Residential segment guidance implies 10% to 12% year-over-year net sales growth and 42% to 45% year-over-year Segment Adjusted EBITDA growth. Consistent with our multi-year track record, we are well positioned to drive above-market growth in fiscal year 2024, fiscal year 2025 and over the long-term by continuing to execute our growth strategy. We continue to see significant opportunity for cost reduction, recycling and productivity, and we expect to build upon the multi-year margin initiatives we have executed upon to achieve our annual Adjusted EBITDA Margin target of 27.5%,” concluded
CONFERENCE CALL AND WEBSITE INFORMATION
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/.
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 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 endedDecember 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
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.
Consolidated Balance Sheets
(In thousands of |
|||||||
|
|||||||
in thousands |
|
|
|
||||
|
|
|
(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 |
|
|
|
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 |
|
|
|
(353,450 |
) |
|
|
(189,666 |
) |
Total stockholders' equity |
|
1,393,012 |
|
|
|
1,410,313 |
|
Total liabilities and stockholders' equity |
$ |
2,340,728 |
|
|
$ |
2,343,876 |
|
Consolidated Statements of Comprehensive Income
(In thousands of |
|||||||||||||
|
|||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||
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 |
Consolidated Statements of Cash Flows
(In thousands of |
|||||||
|
|||||||
|
Nine Months Ended |
||||||
|
|
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
|
Three Months Ended |
|
|
|
|
|
Nine Months Ended |
|
|
|
|
||||||||||||||||
( |
|
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 |
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
|
Three Months Ended |
|
|
|
|
|
Nine Months Ended |
|
|
|
|
||||||||||||||||||
( |
|
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 |
Nine Months Ended |
||||||||||
( |
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 |
|
Nine Months Ended |
||||||||||||
( |
|
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 |
|
Nine Months Ended |
||||||||||||
|
|
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 |
Adjusted Gross Profit Reconciliation
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
( |
|
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 |
|
Nine Months Ended |
||||||||||||
|
|
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 |
(2) |
|
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 |
||||||||||||
( |
|
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 |
|
Nine Months Ended |
||||||||||||
|
|
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 |
Free Cash Flow Reconciliation
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
( |
|
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
|
||||
(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:
312-809-1093
ir@azekco.com
Media Contact:
312-809-1093
media@azekco.com
Source: