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Jun 30, 2020
AZEK Q3 2020 Earnings Report
AZEK announced its Q3 2020 financial results, marking its first report as a public company, driven by increasing demand and a strong Q4 outlook, accelerating and increasing capacity investments.
Key Takeaways
AZEK reported a 1.1% increase in net sales to $223.7 million, driven by a 5.5% increase in the Residential segment, offset by a 19.7% decrease in the Commercial segment. The company's net loss was ($52.1) million, impacted by IPO-related and debt extinguishment expenses. Adjusted EBITDA increased by 9.6% to $57.8 million, with Adjusted EBITDA Margin expanding to 25.8%.
Residential segment net sales increased 5.5% year-over-year to $192.6 million, with June net sales increasing over 15% year-over-year.
Deck, Rail & Accessories net sales increased over 9% year-over-year.
Net loss of ($52.1) million, driven by $59.7 million of IPO-related and debt extinguishment expenses; Net Margin of (23.3%).
Adjusted EBITDA increased 9.6% year-over-year to $57.8 million; Adjusted EBITDA Margin expanded 200 basis points to 25.8%.
AZEK
AZEK
AZEK Revenue by Segment
Revenue by Segment
Residential Segment Revenue
CapyFin.comCommercial Segment Revenue
CapyFin.com Forward Guidance
AZEK anticipates net sales growth of 12% to 17% year-over-year and Adjusted EBITDA growth of 14% to 19% year-over-year for the fourth quarter of fiscal year 2020.
Positive Outlook
- Strong demand within Residential segment end markets.
- Continued robust demand within the Residential segment across Deck, Rail & Accessories and Exteriors businesses.
- Accelerated deployment of expansion plans.
- Expect additional capacity to come online during the fourth quarter as well as the second and third quarters of fiscal year 2021.
- Completion of the expansion program expected in the first half of fiscal year 2022.
Challenges Ahead
- Economic uncertainty caused by the pandemic, including high unemployment.
- Continued weakness in the Commercial segment.
- Temporary shortages in decking and railing product lines due to strong demand.
- Uncertainty regarding reconciling items such as the variability in the provision for income taxes.
- Estimates for warranty and rebate accruals and timing of the gain or loss on disposal of property, plant and equipment.
Revenue & Expenses
Visualization of income flow from segment revenue to net income