The AZEK Company Announces First Quarter Fiscal 2022 Financial Results

First Quarter Fiscal 2022 Highlights

• Consolidated net sales increased 22.3% year over year to $259.7 million
• Residential segment net sales increased 19.1% year over year to $221.1 million
• Net income increased by $6.6 million year over year to $16.7 million
• Adjusted EBITDA increased $10.1 million year over year to $58.5 million

Outlook Highlights

• Increasing Fiscal 2022 Net Sales and Adjusted EBITDA Outlook, inclusive of recent acquisitions; reaffirming Fiscal 2022 pre-acquisition guidance
• Fiscal 2022 Net Sales Outlook – Expecting consolidated net sales growth of 17% to 21% year over year, inclusive of recent acquisitions
• Fiscal 2022 Adjusted EBITDA Outlook – Expecting Adjusted EBITDA growth of 18% to 22% year over year, inclusive of recent acquisitions
• Second Quarter Fiscal 2022 Outlook – Expecting consolidated net sales growth between 24% and 27% year over year, inclusive of recent acquisitions, and Adjusted EBITDA growth between 17% and 20% year over year, inclusive of startup costs and the impact from recent acquisitions

The AZEK Company Inc. (the “Company” or “AZEK”) (NYSE: AZEK), the industry-leading manufacturer of beautiful, low-maintenance and environmentally sustainable outdoor living products, including TimberTech® decking, Versatex® and AZEK Trim® and StruXure™ pergolas, today announced financial results for the first quarter ended December 31, 2021 of its fiscal year 2022.

CEO Comments

“We begin fiscal 2022 in a position of strength with incremental capacity coming online leading to meaningfully improved service levels for our customers,” Jesse Singh, AZEK’s Chief Executive Officer, said. “In combination with an innovative and differentiated product portfolio, we are pursuing opportunities that expand our channel, geographic footprint, and customer relationships. Our successful Early Buy performance coupled with our strategic initiatives give us confidence for the full year.”

“We continue to see strong momentum in our business and our leading indicators point to ongoing market expansion. During the quarter, we continued to invest in our strategic initiatives and completed two acquisitions. In December, we acquired StruXure Outdoor, a designer and manufacturer of high quality and innovative aluminum pergolas and cabanas. StruXure’s products are a natural complement to our TimberTech portfolio, drive wood conversion, and are already being installed together by contractors across North America. We are excited to add a business like StruXure, which we believe can grow at or above our Residential segment growth rates. In November, we acquired a regional recycler with strengths in material sourcing, processing, logistics and scrap management. This acquisition complements our existing recycling efforts and will help to advance our goal of recycling one billion pounds of waste and scrap annually by the end of 2026. We are excited to welcome these two teams to the AZEK family,” continued Mr. Singh.

“AZEK’s momentum is driven by a clear and focused strategy to revolutionize outdoor living and to create a more sustainable future. We continue to see strong underlying market demand driven by positive demographic trends, an increasing focus on outdoor living, and the ongoing desire to convert from wood to our types of low-maintenance, high-performance alternative materials. We are on track to meet and exceed our long-term goals and we remain confident in our ability to deliver above market sales growth and core margin expansion during fiscal 2022,” Singh said.

First Quarter Fiscal 2022 Consolidated Results

Net sales for the three months ended December 31, 2021 increased by $47.4 million, or 22.3%, to $259.7 million, compared to $212.3 million for the three months ended December 31, 2020. The increase was attributable to higher sales growth in both our Residential and Commercial segments. Net sales for the three months ended December 31, 2021 increased for our Residential segment by 19.1% and increased for our Commercial segment by 44.8%, in each case as compared to the prior year period.

Net income for the three months ended December 31, 2021 increased by $6.6 million to $16.7 million, or $0.11 per share, compared to $10.1 million, or $0.07 per share, for the three months ended December 31, 2020. This was primarily due to higher sales and gross profit in both our Residential and Commercial segments.

Net margin expanded to 6.4% for the three months ended December 31, 2021, as compared to net margin of 4.8% for the three months ended December 31, 2020.

Adjusted EBITDA increased by $10.1 million to $58.5 million for the three months ended December 31, 2021, as compared to Adjusted EBITDA of $48.5 million for the three months ended December 31, 2020. The increase was primarily driven by higher sales growth in our Residential and Commercial segments as well as higher gross profit. Adjusted EBITDA Margin declined 30 basis points to 22.5% from 22.8% for the prior year period.

Adjusted Net Income increased $5.6 million to $28.8 million, or Adjusted Diluted EPS of $0.18 per share, for the three months ended December 31, 2021, as compared to Adjusted Net Income of $23.1 million, or Adjusted Diluted EPS of $0.15 per share, for the three months ended December 31, 2020.

First Quarter Fiscal 2022 Segment Results

Residential Segment

Net sales for the three months ended December 31, 2021 increased by $35.5 million, or 19.1%, to $221.1 million from $185.6 million for the three months ended December 31, 2020. The increase was primarily attributable to higher net sales in our Deck, Rail & Accessories and Exteriors businesses.

Segment Adjusted EBITDA for the three months ended December 31, 2021 increased by $10.7 million, or 18.1%, to $69.4 million from $58.8 million for the three months ended December 31, 2020. The increase was mainly driven by higher sales, partially offset by higher raw material costs, manufacturing costs and selling and marketing expenses. Segment Adjusted EBITDA Margin declined 30 basis points to 31.4% from 31.7% for the prior year period.

Commercial Segment

Net sales for the three months ended December 31, 2021 increased by $11.9 million, or 44.8%, to $38.6 million from $26.6 million for the three months ended December 31, 2020. The increase was primarily attributable to higher net sales in our Vycom and Scranton Products businesses.

Segment Adjusted EBITDA was $4.7 million for the three months ended December 31, 2021, compared to $3.3 million for the three months ended December 31, 2020. The increase was primarily driven by higher sales in the Vycom business as well as net manufacturing productivity. Segment Adjusted EBITDA Margin declined 10 basis points to 12.3% from 12.4% for the prior year period.

Balance Sheet, Cash Flow and Liquidity

As of December 31, 2021, the Company had cash and cash equivalents of $66.1 million and approximately $146.7 million available for future borrowings under our Revolving Credit Facility. Total debt as of December 31, 2021 was $465.0 million.

Outlook

“We have started the year strong, with a successful “Early Buy” period, the launch of several new products and increased capacity that has led to improved service levels across our business. We continue to see a strong market and material conversion momentum within both Decking and Exteriors. Our TimberTech line of decking has the most natural looking, highest-performance products on the market, and we expect to sustain our broad-based growth. Our Exteriors business is realizing the benefit of our focused sales efforts and new products that have accelerated wood conversion. Combined with ongoing strategic capital, recycling and people investments, we are on track to deliver strong net sales and Adjusted EBITDA growth through the balance of fiscal 2022,” Singh said.

For full-year fiscal 2022, AZEK expects consolidated net sales growth to increase 17% to 21% year over year, inclusive of the StruXure acquisition. From an Adjusted EBITDA perspective, AZEK expects to deliver 18% to 22% Adjusted EBITDA growth year over year, inclusive of the startup costs associated with our capacity investment programs.

For the second quarter fiscal 2022, AZEK expects consolidated net sales to grow in the range of 24% to 27% year over year, inclusive of the StruXure acquisition. From an Adjusted EBITDA perspective, AZEK expects to deliver growth in the range of 17% to 20% year over year, inclusive of startup costs and the impact from acquisitions.

For the full first quarter results, click here.

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 Versatex® and AZEK Trim® and StruXure™ pergolas. Consistently recognized as a market leader in innovation, quality and aesthetics, products across AZEK’s portfolio are made from up to 100% recycled material and primarily replace wood on the outside of homes, providing a long-lasting, eco-friendly and stylish solution to consumers. Leveraging the talents of its approximately 2,000 employees and the strength of relationships across its value chain, The AZEK Company is committed to accelerating the use of recycled material in the manufacturing of its innovative products, keeping millions of pounds of waste out of landfills each year, and revolutionizing the industry to create a more sustainable future. Headquartered in Chicago, Illinois, the company operates manufacturing facilities in Ohio, Pennsylvania and Minnesota, and recently announced a new facility will open in Boise, Idaho.

Contact:

Amanada Cimaglia – Investor Relations Contact – ir@azekco.com – (312) 809-1093

Source: The AZEK Company, Inc.