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Dec 31, 2022
AZEK Q1 2023 Earnings Report
AZEK's Q1 2023 financial results were delivered modestly ahead of expectations, driven by favorable sales and solid execution.
Key Takeaways
AZEK Company Inc. reported a decrease in net sales for the first quarter of 2023, with a consolidated net sales of $216.3 million compared to $259.7 million in the same period last year. Net loss was ($25.8) million, or ($0.17) per share, compared to a net income of $16.7 million, or $0.11 per share, in the prior year. The company reaffirmed its fiscal year 2023 planning assumptions, expecting an approximately 10% year-over-year decline in volume and Adjusted EBITDA in the range of $250 to $265 million.
Delivered fiscal first quarter 2023 results modestly ahead of expectations, driven by favorable sales and operational execution.
Completed residential channel inventory normalization.
Continued progress on strategic initiatives, including 2023 new product launches, channel expansion, and lower cost recycle programs.
Launched brand refresh for TimberTech, AZEK Exteriors and StruXure, connecting these brands together under consistent messaging to better serve our customers.
AZEK
AZEK
AZEK Revenue by Segment
Revenue by Segment
Residential Segment Revenue
CapyFin.comCommercial Segment Revenue
CapyFin.com Forward Guidance
AZEK continues to assume an approximately 10% year-over-year decline in volume and expects Adjusted EBITDA for fiscal 2023 to be in the range between $250 to $265 million. For the fiscal second quarter of 2023, AZEK expects consolidated net sales in the range of $340 to $365 million, and Adjusted EBITDA in the range of $57 to $63 million.
Positive Outlook
- Sell-through demand trends for our Residential business have been modestly better than the planning assumptions outlined in our last update.
- We remain cautiously optimistic as we move into our traditional selling season.
- Our execution during the fiscal first quarter against our strategic initiatives gives us increased confidence in our plan for the year.
- AZEK continues to expect Adjusted Gross Profit Margin and Adjusted EBITDA Margin improvement through the balance of fiscal 2023.
- AZEK was able to secure additional shelf space and product placement as an outcome of our winter negotiations.
Challenges Ahead
- AZEK continues to assume an approximately 10% year-over-year decline in volume.
- Channel inventory build is expected to be meaningfully lower than fiscal Q2 2022.
- Net sales for the three months ended December 31, 2022 decreased for the Residential segment by 18.8% and our Commercial segment by 4.7%, in each case as compared to the prior year period.
- Adjusted EBITDA decreased by $43.4 million to $15.1 million for the three months ended December 31, 2022, as compared to Adjusted EBITDA of $58.5 million for the three months ended December 31, 2021.
- Net income (loss) decreased by $42.5 million to ($25.8) million, or ($0.17) per share, for the three months ended December 31, 2022 compared to $16.7 million, or $0.11 per share, for the three months ended December 31, 2021.
Revenue & Expenses
Visualization of income flow from segment revenue to net income