The AZEK Company Announces Fourth Quarter and Full-Year Fiscal 2024 Results

Delivered Record Fiscal Year Residential Net Sales, Net Income and Adjusted EBITDA

High-Single-Digit Residential Sell-Through Growth Year Over Year in the Fiscal Fourth Quarter

The AZEK Company Inc. (“AZEK” or the “Company”), the industry-leading manufacturer of beautiful, low-maintenance and environmentally sustainable outdoor living products, including TimberTech ^® Decking and Railing, Versatex ^® and AZEK ^® Trim and StruXure ^® pergolas, announced financial results for its fourth quarter and fiscal year ended September 30, 2024.

Fourth Quarter Fiscal 2024 Financial Highlights

• Consolidated Net Sales of $348.2 million
• Residential Segment Net Sales of $327.3 million
• Gross profit margin of 37.3%; Adjusted Gross Profit Margin of 38.4%
• Net Income of $28.4 million; Net profit margin of 8.1%
• Adjusted EBITDA of $91.8 million; Residential Segment Adjusted EBITDA of $85.9 million
• Adjusted EBITDA Margin of 26.3%
• EPS of $0.19 per share; Adjusted Diluted EPS of $0.29 per share

Fiscal Year 2024 Company Highlights

• Consolidated Net Sales increased 5% year-over-year to $1.44 billion; Adjusted Net Sales excluding results for Vycom increased 11% year-over-year
• Residential Segment Net Sales increased 12% year-over-year to $1.37 billion, with Deck, Rail & Accessories products growing 18%
• Net income increased 146% to $153 million, inclusive of the $37.7 million Vycom gain on sale, and net profit margin expanded by 600 basis points year-over-year to 10.6%
• Adjusted EBITDA increased 34% to $379 million and Adjusted EBITDA Margin expanded by 560 basis points year over year to 26.3%
• Generated $224 million of cash from operating activities and $147 million of Free Cash Flow
• Returned $243 million to shareholders through our share repurchase program

Fiscal Year 2025 Planning Assumptions

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.

• Expecting consolidated net sales between $1.51 to $1.54 billion, representing approximately 5% to 7% year-over-year growth and assuming a flat repair & remodel market
• Adjusted EBITDA is expected to be in the range of $400 to $415 million, representing an increase of 5% to 9% year over year

CEO Comments

“The AZEK team delivered strong financial results that reflect our team’s focus on consistently delivering growth and margin expansion,” said Jesse Singh, CEO of The AZEK Company. “The successful execution of our strategic growth initiatives in fiscal 2024 enabled us to deliver high-single-digit year-over-year Residential sell-through growth and 12% year-over-year net sales growth in a challenging market. Our Deck, Rail & Accessories business, which makes up the majority of the company, grew 18% year-over-year in fiscal year 2024 and is well positioned for 2025. Our focus on manufacturing productivity, sourcing savings, recycling and operating leverage delivered net profit margin expansion of 600 basis points year over year to a record 10.6% and Adjusted EBITDA Margin expansion of 560 basis points year over year to a record 26.3%. We generated strong cash flow, refinanced our debt with more favorable terms, invested in future manufacturing and recycling capacity, and returned $243 million to shareholders through our share repurchase program. Our differentiated top line and bottom line results speak to the effectiveness and resilience of our strategy, the strength of AZEK’s innovative products, and the dedication of our team members and business partners who share our vision. Our multi-year track record of outperformance across various market conditions gives us confidence in our growth and margin expansion through AZEK-specific initiatives in fiscal year 2025 and beyond,” continued Mr. Singh.

“During the fiscal fourth quarter, Deck, Rail & Accessories sell-through grew high single digits and Exteriors grew low single digits year over year, improving modestly relative to the prior two quarters. Overall Residential segment sell-through grew approximately high single digits, while net sales declined approximately 6% year over year driven by the previously discussed $35 million shift in earlier product purchases by our channel partners in June to ensure strong service levels,” said Mr. Singh.

“We see incremental sales momentum from our recent new product launches and are excited about our recently announced slate of new product platforms and innovations for 2025, including TimberTech Reliance Rail, TimberTech Fulton Rail, and TrimLogic, expanding our access to nearly $2 billion of market opportunity. Reliance Rail, crafted from premium vinyl, and Fulton Rail, made from galvanized steel, further elevate and diversify our railing offerings. TrimLogic, a paintable PVC exterior trim targeting wood conversion, is made with up to 95% recycled PVC material – a breakthrough in sustainable building materials. The launch of these new products highlights our ability to offer a balanced collection of products across decking, railing, and exteriors categories at multiple price points and features. With the unmatched breadth and depth of our best-in-class portfolio, further elevated by our new product launches, we’re accelerating our market expansion into fiscal year 2025,” stated Mr. Singh.

“Our investments in marketing and sales are driving significant momentum in our brand awareness among homeowners, dealers and professional contractors alike. TimberTech Decking and Railing and AZEK Trim were recently recognized by both Builder and Remodeler Magazine’s Brand Use Studies as #1 or #2 in the “brand awareness” and “brand most used in the last two years” categories. TimberTech was recognized by Good Housekeeping’s 2025 Home Renovation Awards for its innovative Vintage Collection leveraging its Advanced PVC fire-resistant technology. Our accelerating brand relevance and innovative products differentiate us as the leader in sustainable outdoor living building materials,” continued Mr. Singh.

Fourth Quarter Fiscal 2024 Consolidated Results

Net sales for the three months ended September 30, 2024 decreased by $40.6 million, or 10%, to $348.2 million from $388.8 million for the three months ended September 30, 2023. The decrease was primarily due to the previously discussed $35 million shift in earlier product purchases by our channel partners in June to ensure strong service levels in addition to the effect of the Vycom business sale in our Commercial segment. Net sales for the three months ended September 30, 2024 decreased for our Residential segment by $22.4 million, or 6%, and decreased for our Commercial segment by $18.2 million, or 47%, respectively, as compared to the prior year period. The decrease in our Commercial segment was primarily due to the sale of the Vycom business. Vycom net sales were $17.5 million for the three months ended September 30, 2023.

Gross profit decreased by $15.5 million to $129.7 million for the three months ended September 30, 2024, compared to $145.3 million for the three months ended September 30, 2023. Gross profit margin declined by 10 basis points to 37.3% for the three months ended September 30, 2024 compared to 37.4% for the three months ended September 30, 2023.

Adjusted Gross Profit decreased by $16.0 million to $133.7 million for the three months ended September 30, 2024, compared to $149.7 million for the three months ended September 30, 2023. Adjusted Gross Profit Margin declined by 10 basis points to 38.4% for the three months ended September 30, 2024 compared to 38.5% for the three months ended September 30, 2023.

Net income decreased by $10.9 million to $28.4 million, or $0.19 per share, for the three months ended September 30, 2024, compared to $39.2 million, or $0.26 per share, for the three months ended September 30, 2023. Net profit margin declined 200 basis points to 8.1% for the three months ended September 30, 2024, as compared to net profit margin of 10.1% for the three months ended September 30, 2023.

Adjusted EBITDA decreased by $10.2 million to $91.8 million for the three months ended September 30, 2024, compared to Adjusted EBITDA of $102.0 million for the three months ended September 30, 2023. Adjusted EBITDA Margin expanded 10 basis points to 26.3% from 26.2% for the prior year period.

Adjusted Net Income decreased by $8.5 million to $41.6 million, or Adjusted Diluted EPS of $0.29 per share, for the three months ended September 30, 2024, compared to Adjusted Net Income of $50.1 million, or Adjusted Diluted EPS of $0.33 per share, for the three months ended September 30, 2023.

Year Ended September 30, 2024 Consolidated Results

Net sales for the year ended September 30, 2024 increased by $71.1 million, or 5%, to $1,441.4 million from $1,370.3 million for the year ended September 30, 2023. The increase was primarily due to higher sales volume in our Residential segment attributable to key growth initiatives, including channel expansion, new products and downstream sales and marketing investments, partially offset by the effect of the sale of the Vycom business in our Commercial segment. Net sales for the year ended September 30, 2024 increased for our Residential segment by $145.9 million, or 12%, and decreased for our Commercial segment by $74.8 million, or 51%, respectively, as compared to the prior year period. The decrease in our Commercial segment was primarily due to the sale of the Vycom business. Vycom net sales were $3.3 million and $77.1 million for the years ended September 30, 2024 and 2023, respectively.

Gross profit increased by $111.5 million to $541.8 million for the year ended September 30, 2024, compared to $430.3 million for the year ended September 30, 2023. Gross profit margin expanded by 620 basis points to 37.6% for the year ended September 30, 2024 compared to 31.4% for the year ended September 30, 2023.

Adjusted Gross Profit increased by $108.6 million to $557.2 million for the year ended September 30, 2024, compared to $448.6 million for the year ended September 30, 2023. Adjusted Gross Profit Margin expanded by 600 basis points to 38.7% or the year ended September 30, 2024 compared to 32.7% for the year ended September 30, 2023.

Net income increased by $91.0 million to $153.4 million, or $1.04 per share, for the year ended September 30, 2024, compared to $62.4 million, or $0.41 per share, for the year ended September 30, 2023. Net profit margin expanded 600 basis points to 10.6% for the year ended September 30, 2024, as compared to net profit margin of 4.6% for the year ended September 30, 2023.

Adjusted EBITDA increased by $95.5 million to $379.3 million for the year ended September 30, 2024, compared to Adjusted EBITDA of $283.8 million for the year ended September 30, 2023. Adjusted EBITDA Margin expanded 560 basis points to 26.3% from 20.7% for the prior year period.

Adjusted Net Income increased by $70.8 million to $177.0 million, or Adjusted Diluted EPS of $1.20 per share, for the year ended September 30, 2024, compared to Adjusted Net Income of $106.1 million, or Adjusted Diluted EPS of $0.70 per share, for the year ended September 30, 2023.

Balance Sheet, Cash Flow and Liquidity

As of September 30, 2024, AZEK had cash and cash equivalents of $164.0 million and approximately $372.8 million available for future borrowings under its Revolving Credit Facility. Total gross debt, including finance leases, as of September 30, 2024, was $529.1 million. During the quarter, AZEK strengthened its financial position by refinancing its ABL and Term Loans, retiring approximately $150 million in funded debt from its balance sheet and reducing its interest rate.

Net Cash Provided by Operating Activities for the three months ended September 30, 2024, decreased by $66.2 million year-over-year to $60.5 million. Free Cash Flow for the three months ended September 30, 2024, decreased by $54.4 million year-over-year to $37.8 million.

During the quarter, AZEK repurchased approximately 1 million initial shares of its Class A common stock under a $50 million accelerated share repurchase agreement (“ASR”). The final settlement of the ASR is based on the volume-weighted average price of our Class A common stock over the repurchase period, subject to certain adjustments. AZEK expects to settle the ASR in the first quarter of fiscal year 2025. AZEK also repurchased approximately 0.4 million shares of its Class A common stock on the open market for an aggregate purchase price of approximately $17.5 million. As of September 30, 2024, AZEK had approximately $557.1 million available for repurchases under its existing share repurchase program.

Outlook

“We continue to see positive Residential sell-through growth, and demand indicators from our customer surveys are positive heading into fiscal year 2025. Channel inventories are below historical averages through our fiscal year-end. We also see positive trends in our internal digital and engagement metrics and believe that there is underlying demand that will be realized as the broader market improves. We remain optimistic about the U.S. repair & remodel market. Our fiscal year 2025 planning assumptions assume an approximately flat repair & remodel market, and, consistent with our historical track-record, we would expect to outperform the market driven by AZEK-specific initiatives including material conversion, channel expansion, new product innovations and consumer journey initiatives,” continued Mr. Singh.

For the full-year fiscal 2025, AZEK expects Residential segment net sales in the range of $1.439 to $1.466 billion, representing approximately 5% to 7% year-over-year growth, and Segment Adjusted EBITDA in the range of $388 to $401 million, representing approximately 6% to 10% year-over-year growth. Residential segment Adjusted EBITDA Margin is expected to be in the range of 27.0% to 27.4%. AZEK expects the Commercial segment’s Scranton Products business to deliver net sales in the range of $71 to $74 million and Segment Adjusted EBITDA in the range of $12 to $14 million.

AZEK expects consolidated net sales in the range of $1.51 to $1.54 billion, representing an increase of approximately 5% to 7% year over year. Adjusted EBITDA is expected to be in the range of $400 to $415 million, representing an increase of 5% to 9% year over year. Adjusted EBITDA Margin is expected to be in the range of 26.5% to 27.0%. Capital expenditures for fiscal year 2025 are expected to be in the range of $85 to $95 million.

For the first quarter of fiscal 2025, AZEK expects Residential segment net sales in the range of $247 to $252 million, representing approximately 11% to 13% year-over-year growth, and Segment Adjusted EBITDA in the range of $57 to $59 million, representing approximately 9% to 13% year-over-year growth. AZEK expects consolidated net sales between $260 to $266 million, representing approximately 8% to 11% year-over-year growth, and Adjusted EBITDA between $58 to $60 million.

“We believe we are well positioned to drive above-market growth in fiscal year 2025 and double-digit growth over the long-term by continuing to execute our growth strategy. We expect to build upon the multi-year margin initiatives we have executed to achieve our annual Adjusted EBITDA Margin target of 27.5%,” concluded Mr. Singh.

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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 85% 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 hundreds of millions of pounds of waste and scrap out of landfills each year, and revolutionizing the industry to create a more sustainable future. The AZEK Company has recently been named one of America’s Climate Leaders by USA Today, a Top Workplace by the Chicago Tribune and U.S. News and World Report, and a winner of the 2024 Real Leaders ^® Impact Awards. Headquartered in Chicago, Illinois, the company operates manufacturing and recycling facilities in Ohio, Pennsylvania, Idaho, Georgia, Nevada, New Jersey, Michigan, Minnesota and Texas. For additional information, please visit azekco.com .

Contact:

Eric Robinson – Investor Relations – ir@azekco.com – (312) 809-1093

Source: The AZEK Company, Inc.