Azek Company Q1 Fiscal 2025 Results; Raises Full-Year Sales and EBITDA Outlook

AZEK Company Reports Strong Q1 FY2025 Results, Raises Full-Year Outlook for Sales and EBITDA Growth

AZEK, a leading manufacturer of high-quality, sustainable outdoor living products, including TimberTech® Decking and Railing, Versatex® Trim, AZEK® Trim, and StruXure® pergolas, has announced strong financial results for the fiscal first quarter ending December 31, 2024. The company’s performance continues to reflect the success of its strategic initiatives and disciplined operational execution.

CEO Insights

Jesse Singh, CEO of AZEK, shared his thoughts on the company’s continued growth and achievements. “The AZEK team delivered another strong quarter of growth, driven by our strategic initiatives and operational excellence,” said Singh. “Our Residential segment saw net sales increase by 22% year-over-year, supported by double-digit growth in sell-through and expanded market presence across our Deck, Rail & Accessories, and Exteriors product categories.”

Singh emphasized that the company’s focus on wood conversion, product innovation, consumer journey improvements, and expanding brand presence continues to fuel its success. “Our market outperformance is a direct result of the dedication and collaboration of our team members and business partners,” he continued.

Looking ahead, Singh also highlighted the excitement around several new product launches scheduled for 2025, including the TimberTech Fulton Rail®, TimberTech Reliance Rail™, Versatex XCEED™ siding, and TrimLogic™, an exterior trim product made with up to 95% recycled PVC. “We have invested in and begun ramping up production of these products, which impacted our margins in the quarter. However, we expect these investments to drive future growth as we scale and position these products for success,” said Singh.

Singh also celebrated TimberTech decking’s ongoing success, noting that the brand was named one of Fast Company’s 2024 “Brands That Matter” in the Benchmark Brands category. Additionally, the company is marking the 25th anniversary of AZEK Trim, which revolutionized the PVC trim category with its durability, low maintenance, and design flexibility. “We continue to innovate with sustainable solutions across our entire portfolio, striving to lead the industry while remaining disciplined in our financial priorities,” Singh added.

Q1 FY2025 Financial Results

For the three months ended December 31, 2024, AZEK reported net sales of $285.4 million, a 19% increase compared to $240.4 million in the same period the previous year. The growth was primarily driven by higher sales volumes in the Residential segment, thanks to strong consumer demand and new stocking locations. This was partially offset by the sale of the Vycom business and weaker demand in the Commercial segment.

  • Residential Segment: Sales increased by $49.0 million, or 22%, compared to the previous year.
  • Commercial Segment: Sales decreased by $4.0 million, or 23%, primarily due to the Vycom divestiture.

Despite a solid increase in sales, gross profit grew by $12.9 million to $103.6 million, although gross profit margin slightly declined by 140 basis points to 36.3% for the quarter. Adjusted gross profit, which excludes certain items, increased by $12.2 million to $106.7 million, but adjusted gross profit margin fell by 190 basis points to 37.4%.

Net income for the first quarter was $18.1 million, or $0.12 per share, down from $25.1 million, or $0.17 per share, for the same period in 2023. The decline was due to the divestiture gain from Vycom in the prior year. Adjusted net income, excluding the Vycom impact, rose by $10.1 million to $25.1 million, or $0.17 per share.

Adjusted EBITDA for the quarter increased by $11.0 million to $65.9 million, with an adjusted EBITDA margin of 23.1%, up from 22.8% a year ago.

Balance Sheet, Cash Flow, and Liquidity

As of December 31, 2024, AZEK had cash and cash equivalents of $148.1 million, with an additional $372.7 million available under its revolving credit facility. Total gross debt, including finance leases, stood at $534.2 million.

Net cash provided by operating activities was $13.6 million, an increase of $29.9 million compared to the same period last year. Capital expenditures for the quarter totaled $21.6 million, which included the acquisition of a regional recycling facility to expand the company’s recycling capabilities. Free cash flow for the quarter improved by $25.9 million, although it remained negative at $(8.0) million.

Outlook for FY2025

Given the strong start to fiscal year 2025, AZEK has raised its full-year guidance. The company now expects consolidated net sales to be in the range of $1.52 to $1.55 billion, reflecting a 5% to 8% increase year-over-year. Adjusted EBITDA is forecasted to be between $403 million and $418 million, a 6% to 10% increase from last year. Adjusted EBITDA margin is expected to range between 26.5% and 27.0%. Capital expenditures are projected to be between $85 million and $95 million for the year.

In terms of segment performance, the Residential segment is expected to achieve net sales between $1.452 billion and $1.479 billion, representing 6% to 8% growth year-over-year. Segment adjusted EBITDA for Residential is forecasted to range between $392 million and $405 million, reflecting 7% to 11% year-over-year growth. Meanwhile, the Commercial segment is expected to see a slight decline, with net sales of $68 million to $71 million and adjusted EBITDA between $11 million and $13 million.

For Q2 FY2025, AZEK expects Residential segment net sales to range between $422 million and $432 million, an increase of 5% to 7% year-over-year. Consolidated net sales for the quarter are projected to be between $437 million and $448 million, reflecting 4% to 7% growth. Adjusted EBITDA for Q2 is expected to range from $115 million to $120 million, a 2% to 6% increase year-over-year.

Long-Term Vision and Strategy

Singh concluded by outlining the company’s strategy for continued growth: “Our strategy combines disciplined short-term execution with long-term investments in innovation, capabilities, and talent. By building on our proven track record, we are positioning AZEK to lead in any environment. We remain excited about the opportunities ahead and are committed to investing in innovation and strengthening our market leadership while achieving double-digit net sales growth and maintaining our long-term EBITDA margin target of 27.5%.”

Conference Call and Investor Information

AZEK will host a conference call to discuss these results today, February 5, 2025, at 4:00 p.m. (CT). Investors can listen to the live call by registering in advance via the AZEK website. For those unable to attend, a replay of the call will be available shortly after the event on AZEK’s investor relations site.

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