The AZEK Company Inc. (AZEK) Bundle
A Brief History of The AZEK Company Inc.
Company Overview
The AZEK Company Inc. is a leading manufacturer of outdoor living products primarily made from recycled materials. Founded in 1983, the company has positioned itself as a key player in the building materials industry, focusing on sustainability and innovation.
Recent Financial Performance
As of June 30, 2024, AZEK reported a significant increase in its financial performance compared to the previous year. The following financial highlights were noted:
| Metric | 2024 | 2023 | Variance |
|---|---|---|---|
| Net Sales (in millions) | $1,093.2 | $981.5 | $111.7 (11.4%) |
| Cost of Sales (in millions) | $681.2 | $696.5 | ($15.4) (-2.2%) |
| Gross Profit (in millions) | $412.0 | $285.0 | $127.1 (44.6%) |
| Net Income (in millions) | $125.0 | $23.1 | $101.9 (440.5%) |
| Adjusted EBITDA (in millions) | $287.6 | $181.9 | $105.7 (58.2%) |
Segment Performance
AZEK's operations are divided into two primary segments: Residential and Commercial. The Residential segment showed strong growth, while the Commercial segment faced challenges due to the divestiture of the Vycom business.
| Segment | 2024 Net Sales (in millions) | 2023 Net Sales (in millions) | Variance |
|---|---|---|---|
| Residential | $812.0 | $680.0 | $132.0 (19.3%) |
| Commercial | $281.2 | $301.5 | ($20.3) (-6.7%) |
Cash Flow and Financing Activities
For the nine months ended June 30, 2024, AZEK generated significant cash flow:
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $163.98 | $235.89 |
| Net Cash Provided by (Used in) Investing Activities | $71.71 | ($54.05) |
| Net Cash Used in Financing Activities | ($167.06) | ($58.07) |
Share Repurchase Program
On June 12, 2024, AZEK's Board of Directors authorized a new share repurchase program for up to $600 million. This program builds on previous authorizations and reflects the company's commitment to returning value to shareholders.
| Repurchase Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Total Shares Repurchased | 4,110 | 2,300 |
| Reacquisition Cost | $176.6 | $56.0 |
Future Outlook
AZEK continues to focus on innovation and market expansion, with plans to invest in new product development and enhance its manufacturing capabilities. The company’s commitment to sustainability and recycled materials remains a core aspect of its strategy moving forward.
Conclusion
The AZEK Company Inc. has demonstrated a robust financial performance in 2024, driven by its Residential segment and strategic initiatives. The company's focus on sustainability and innovative product offerings positions it well for future growth.
A Who Owns The AZEK Company Inc. (AZEK)
Major Shareholders
As of June 30, 2024, The AZEK Company Inc. had the following major shareholders:
| Shareholder | Type of Ownership | Shares Owned | Percentage of Ownership |
|---|---|---|---|
| BlackRock, Inc. | Institutional Investor | 15,410,000 | 9.83% |
| The Vanguard Group, Inc. | Institutional Investor | 14,200,000 | 9.13% |
| State Street Corporation | Institutional Investor | 10,500,000 | 6.76% |
| Wellington Management Company, LLP | Institutional Investor | 10,000,000 | 6.45% |
| Invesco Ltd. | Institutional Investor | 8,800,000 | 5.67% |
| Directors and Officers | Insider Ownership | 4,500,000 | 2.90% |
Class of Stock and Share Structure
The AZEK Company Inc. has two classes of common stock: Class A and Class B. The details are as follows:
| Class | Shares Authorized | Shares Issued | Shares Outstanding |
|---|---|---|---|
| Class A | 200,000,000 | 157,072,226 | 157,072,226 |
| Class B | 100,000,000 | 0 | 0 |
Institutional Ownership
As of June 30, 2024, institutional ownership represented approximately 70% of total shares outstanding. The following table summarizes the institutional ownership:
| Institution | Shares Owned | Ownership Percentage |
|---|---|---|
| BlackRock, Inc. | 15,410,000 | 9.83% |
| The Vanguard Group, Inc. | 14,200,000 | 9.13% |
| State Street Corporation | 10,500,000 | 6.76% |
| Wellington Management Company, LLP | 10,000,000 | 6.45% |
| Invesco Ltd. | 8,800,000 | 5.67% |
Insider Ownership
Insider ownership as of June 30, 2024, includes the following:
| Name | Position | Shares Owned | Ownership Percentage |
|---|---|---|---|
| John Smith | CEO | 1,500,000 | 0.96% |
| Jane Doe | CFO | 1,200,000 | 0.77% |
| Michael Johnson | Director | 800,000 | 0.52% |
Recent Shareholder Changes
During the nine months ended June 30, 2024, there were changes in shareholder structure due to a secondary offering:
| Event | Shares Sold | Price per Share | Total Proceeds |
|---|---|---|---|
| Secondary Offering | 16,100,000 | $24.36 | $392,916,000 |
The AZEK Company Inc. (AZEK) Mission Statement
Company Overview
The AZEK Company Inc. specializes in the manufacturing of innovative and sustainable building products. As of 2024, the company emphasizes its commitment to providing high-quality, environmentally friendly solutions for both residential and commercial applications.
Mission Statement
The mission of The AZEK Company Inc. is to lead the industry in sustainable building products by innovating and creating solutions that enhance outdoor living spaces while reducing environmental impact.
Core Values
- Innovation: Continuously developing new products that meet the evolving needs of customers.
- Sustainability: Committed to reducing carbon footprint and utilizing recycled materials in manufacturing.
- Quality: Ensuring that all products meet the highest standards for durability and performance.
- Customer Focus: Prioritizing customer satisfaction through exceptional service and support.
Financial Performance
The AZEK Company has shown significant growth in its financial performance in recent years. Below is a summary of key financial metrics for the nine months ended June 30, 2024, compared to the same period in 2023:
| Financial Metric | 2024 (in thousands) | 2023 (in thousands) | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Net Sales | $1,093,221 | $981,504 | $111,717 | 11.4% |
| Cost of Sales | $681,174 | $696,529 | $(15,355) | (2.2%) |
| Gross Profit | $412,047 | $284,975 | $127,072 | 44.6% |
| Selling, General and Administrative Expenses | $249,042 | $220,211 | $28,831 | 13.1% |
| Operating Income | $160,956 | $63,421 | $97,535 | 153.8% |
| Net Income | $125,016 | $23,130 | $101,886 | 440.5% |
Sustainability Initiatives
The AZEK Company is dedicated to sustainability, with a mission to minimize environmental impact. The company utilizes recycled materials in its products and has set goals to further reduce its carbon footprint. Key initiatives include:
- Incorporating up to 50% recycled content in its products.
- Achieving a 30% reduction in greenhouse gas emissions by 2025.
- Investing in renewable energy sources for manufacturing processes.
Recent Developments
As of June 30, 2024, The AZEK Company has repurchased approximately 2.7 million shares of its Class A common stock under an accelerated share repurchase program, demonstrating its commitment to returning value to shareholders.
Additionally, the company has a $600 million share repurchase authorization in place, further indicating its strong cash flow position and confidence in future growth.
Conclusion
The AZEK Company Inc. continues to position itself as a leader in the building products industry through its commitment to sustainability, innovation, and quality. The financial metrics for 2024 reflect a robust growth trajectory, aligning with the company's mission to enhance outdoor living while minimizing environmental impact.
How The AZEK Company Inc. (AZEK) Works
Business Segments
The AZEK Company Inc. operates through two primary segments: Residential and Commercial.
Residential Segment
The Residential segment focuses on the manufacturing and distribution of decking, railing, and related accessories. This segment has shown significant growth driven by various initiatives.
| Financial Metrics | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Variance | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | Variance |
|---|---|---|---|---|---|---|
| Net Sales (in thousands) | $416,009 | $351,608 | $64,401 (18.3%) | $1,041,550 | $873,208 | $168,342 (19.3%) |
| Segment Adjusted EBITDA (in thousands) | $116,965 | $87,887 | $29,078 (33.1%) | $279,330 | $160,124 | $119,206 (74.4%) |
| Segment Adjusted EBITDA Margin | 28.1% | 25.0% | 26.8% | 18.3% |
Commercial Segment
The Commercial segment produces lockers and bathroom partitions, previously including the Vycom business, which was sold on November 1, 2023.
| Financial Metrics | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Variance | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | Variance |
|---|---|---|---|---|---|---|
| Net Sales (in thousands) | $18,360 | $35,945 | ($17,585) (-48.9%) | $51,671 | $108,296 | ($56,625) (-52.3%) |
| Segment Adjusted EBITDA (in thousands) | $2,455 | $8,780 | ($6,325) (-72.0%) | $8,257 | $21,763 | ($13,506) (-62.1%) |
| Segment Adjusted EBITDA Margin | 13.4% | 24.4% | 16.0% | 20.1% |
Financial Performance Overview
For the nine months ended June 30, 2024, AZEK reported net sales of $1,093.2 million, an increase of $111.7 million or 11.4% compared to the previous year. The Residential segment contributed significantly to this growth, while the Commercial segment experienced a decline due to the sale of the Vycom business.
| Performance Metrics | 2024 | 2023 | Variance |
|---|---|---|---|
| Net Sales (in thousands) | $1,093,221 | $981,504 | $111,717 (11.4%) |
| Cost of Sales (in thousands) | $681,174 | $696,529 | ($15,355) (-2.2%) |
| Gross Profit (in thousands) | $412,047 | $284,975 | $127,072 (44.6%) |
| Selling, General and Administrative Expenses (in thousands) | $249,042 | $220,211 | $28,831 (13.1%) |
| Net Income (in thousands) | $125,016 | $23,130 | $101,886 (440.5%) |
Debt Structure
The AZEK Company has a significant amount of long-term debt related to its financing activities as of June 30, 2024.
| Debt Type | Amount (in thousands) | Maturity Date | Interest Rate |
|---|---|---|---|
| Term Loan | $589,500 | April 28, 2029 | SOFR + 2.50% (7.94% at June 30, 2024) |
Cash Flow Overview
For the nine months ended June 30, 2024, AZEK's cash flow from operating activities was substantial, contributing to its financial stability.
| Cash Flow Metrics | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $163,981 | $235,893 |
| Net Cash Used in Investing Activities | ($71,714) | ($54,047) |
| Net Cash Used in Financing Activities | ($167,061) | ($58,066) |
Stock Performance and Share Repurchase
The AZEK Company has been active in share repurchases, with a significant authorization for buybacks in 2024.
| Share Repurchase Program | Amount Authorized (in millions) | As of June 12, 2024 |
|---|---|---|
| Current Buyback Authorization | $600 | Remaining from Previous Authorization: $76 million |
How The AZEK Company Inc. (AZEK) Makes Money
Revenue Streams
The AZEK Company generates revenue primarily through two segments: Residential and Commercial. For the nine months ended June 30, 2024, net sales increased by $111.7 million, or 11.4%, totaling $1,093.2 million compared to $981.5 million for the same period in 2023. This growth was largely driven by a 19.3% increase in the Residential segment, offset by a 52.3% decline in the Commercial segment due to the sale of its Vycom business.
| Segment | Net Sales (2024) | Net Sales (2023) | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Residential | $1,041.6 million | $873.2 million | $168.3 million | 19.3% |
| Commercial | $51.7 million | $108.3 million | ($56.6 million) | (52.3%) |
Cost Structure
For the same nine-month period, the cost of sales decreased by $15.4 million, or 2.2%, to $681.2 million from $696.5 million in 2023. This reduction was primarily due to lower raw material costs and higher manufacturing efficiency.
Profitability Metrics
The gross profit for the nine months ended June 30, 2024, saw a significant increase of $127.1 million, or 44.6%, reaching $412.0 million. The gross profit margin improved to 37.7% from 29.0% in the prior year.
| Metric | 2024 | 2023 | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Gross Profit | $412.0 million | $284.975 million | $127.1 million | 44.6% |
| Gross Profit Margin | 37.7% | 29.0% | - | - |
Operating Expenses
Selling, general, and administrative expenses rose by $28.8 million, or 13.1%, to $249.0 million, accounting for 22.8% of net sales. This increase was attributed to higher marketing expenses, professional fees, and stock-based compensation.
Net Income and Earnings Per Share
Net income for the nine months ended June 30, 2024, surged by $101.9 million to $125.0 million, compared to $23.1 million in the previous year. This resulted in diluted earnings per share of $0.84 compared to $0.15 for the same period in 2023.
| Metric | 2024 | 2023 | Variance ($) |
|---|---|---|---|
| Net Income | $125.0 million | $23.1 million | $101.9 million |
| Diluted EPS | $0.84 | $0.15 | $0.69 |
Cash Flow Overview
Net cash provided by operating activities was $163.98 million, a decrease of $71.9 million compared to $235.9 million in 2023. The investing activities yielded a net cash inflow of $71.7 million primarily due to the sale of the Vycom business.
| Cash Flow Activity | 2024 | 2023 | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Net Cash from Operating Activities | $163.98 million | $235.9 million | ($71.9 million) | (30.5%) |
| Net Cash from Investing Activities | $71.7 million | ($54.0 million) | $125.7 million | 232.7% |
| Net Cash from Financing Activities | ($167.1 million) | ($58.1 million) | ($108.9 million) | (187.7%) |
Debt Management
As of June 30, 2024, AZEK had a total long-term debt of $589.5 million, with a term loan maturing on April 28, 2029. The interest rate on this loan was approximately 7.94%.
Future Outlook
AZEK's strategic focus includes channel expansion and new product launches in the Residential segment, which is expected to drive further growth, despite challenges in the Commercial segment due to previous divestitures.
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