The AZEK Company, an industry leader in sustainable, low-maintenance outdoor living products such as TimberTech® decking and railing, Versatex® and AZEK® trim, and StruXure® pergolas, today shared its financial performance for the fourth quarter and fiscal year ending September 30, 2024.
CEO’s Comments
Jesse Singh, CEO of The AZEK Company, commented, “The AZEK team delivered strong results in fiscal 2024, driven by our focus on growth and margin expansion. Despite market challenges, we achieved high-single-digit growth in Residential sell-through and 12% growth in net sales. Our Deck, Rail & Accessories business, which represents the majority of our company, saw an 18% year-over-year increase, positioning us well for 2025. We focused on operational productivity, sourcing savings, recycling, and leveraging our operations, leading to a 600-basis-point expansion in net profit margin to a record 10.6% and a 560-basis-point increase in Adjusted EBITDA margin to 26.3%. We also generated strong cash flow, refinanced our debt with more favorable terms, and repurchased $243 million in shares. Our performance reflects the strength of AZEK’s products, the dedication of our team, and our resilient strategy. We remain confident in our ability to sustain growth and margin expansion through our initiatives into fiscal year 2025 and beyond.”
Fourth Quarter Fiscal 2024 Performance
For the three months ended September 30, 2024, net sales decreased by $40.6 million, or 10%, to $348.2 million, compared to $388.8 million in the same period last year. This decline was primarily due to a $35 million shift in product purchases by channel partners in June and the sale of the Vycom business in the Commercial segment. Net sales for the Residential segment fell by $22.4 million (6%), and for the Commercial segment by $18.2 million (47%).
Despite this, AZEK’s gross profit for the quarter was $129.7 million, down from $145.3 million a year ago. Gross margin remained relatively flat at 37.3%, compared to 37.4% in Q4 of fiscal 2023. Adjusted Gross Profit for the quarter was $133.7 million, compared to $149.7 million for the same period last year, with Adjusted Gross Margin at 38.4%, down slightly from 38.5% in 2023.
Net income for the quarter decreased by $10.9 million to $28.4 million, or $0.19 per share, compared to $39.2 million, or $0.26 per share, in Q4 of fiscal 2023. Adjusted EBITDA for the quarter was $91.8 million, down from $102.0 million, but the Adjusted EBITDA Margin expanded slightly to 26.3%.
Full-Year Fiscal 2024 Performance
For the full fiscal year ended September 30, 2024, AZEK achieved net sales of $1.44 billion, a 5% increase from $1.37 billion in 2023. This growth was driven by higher sales volumes in the Residential segment, driven by expansion in channels, new products, and marketing efforts, partially offset by the Vycom business sale. Residential net sales grew by 12%, while Commercial sales declined by 51%.
Gross profit for the year increased by $111.5 million to $541.8 million, and gross margin expanded by 620 basis points to 37.6%. Adjusted Gross Profit for the year rose by $108.6 million, reaching $557.2 million, with Adjusted Gross Margin expanding to 38.7%.
Net income for the year rose by $91.0 million to $153.4 million, or $1.04 per share, up from $62.4 million, or $0.41 per share, in 2023. Adjusted EBITDA increased by $95.5 million to $379.3 million, with a 560-basis-point expansion in Adjusted EBITDA Margin to 26.3%.
Balance Sheet and Cash Flow
As of September 30, 2024, AZEK had cash and cash equivalents of $164.0 million and approximately $372.8 million available for future borrowings. The company also refinanced its debt during the quarter, retiring about $150 million in debt and reducing its interest rate.
Cash provided by operating activities for the quarter decreased by $66.2 million to $60.5 million, while Free Cash Flow declined by $54.4 million to $37.8 million. AZEK repurchased 1 million shares under an accelerated share repurchase program, and $557.1 million remained available for future share repurchases.
Outlook for Fiscal 2025
Looking ahead, AZEK remains optimistic about demand growth in the Residential sector and the broader repair and remodel market. The company expects Residential segment net sales for fiscal 2025 to range between $1.44 billion and $1.47 billion, representing a 5% to 7% year-over-year increase. Segment Adjusted EBITDA is expected to range from $388 million to $401 million, reflecting a 6% to 10% increase.
For Q1 of fiscal 2025, AZEK anticipates Residential net sales between $247 million and $252 million, and consolidated net sales between $260 million and $266 million, reflecting 8% to 11% growth year-over-year.
Jesse Singh concluded, “We are well-positioned for growth in fiscal 2025 and beyond. We expect to continue executing our growth strategy, which includes new product innovations, material conversions, and channel expansion, to achieve above-market growth and long-term success.”
Conference Call and Webcast
AZEK will host a conference call today, November 19, 2024, at 4:00 p.m. (CT) to discuss these results. A live webcast will be available on AZEK’s Investor Relations website, and a replay will be accessible after the call. For more details, visit investors.azekco.com.
