FOURTH QUARTER FISCAL 2021 HIGHLIGHTS:
• Consolidated net sales increased 31.1% year over year to a record $346.1 million
• Residential segment net sales increased 31.1% year over year to $305.1 million
• Net income increased by $103.0 million year over year to $38.6 million
• Adjusted EBITDA increased $15.4 million year over year to $81.5 million
OUTLOOK HIGHLIGHTS:
• Fiscal 2022 Net Sales Outlook – Expecting consolidated net sales growth of mid-teens year over year
• Fiscal 2022 Adjusted EBITDA Outlook – Expecting Adjusted EBITDA growth of high-teens year over year
• First Quarter Fiscal 2022 Outlook – Expecting consolidated net sales growth between 18% and 21% year over year, and Adjusted EBITDA growth of between 14% and 17% year over year
The AZEK Company Inc. (the “Company” or “AZEK”) (NYSE: AZEK), the industry-leading manufacturer of beautiful, low-maintenance and environmentally sustainable outdoor living products, including TimberTech® decking and Versatex® and AZEK Trim®, today announced financial results for its fourth quarter and fiscal year ended September 30, 2021.
CEO COMMENTS:
“The AZEK Company delivered another impressive quarter and year – our first full year as a public company – with record growth in net sales, net income and Adjusted EBITDA. Our team continues to execute against our strategy of delivering long-term, sustainable growth and value creation for our customers, partners, employees, and shareholders,” Jesse Singh, AZEK’s Chief Executive Officer said. “We delivered these results while strengthening our team, increasing capacity and broadening our differentiated product portfolio to increase market share and wood conversion.”
“During the fiscal fourth quarter, we meaningfully improved service to our customers, made progress against our decking capacity expansions, and made additional investments to drive long-term, sustainable growth. End-market demand remains strong, driven by repair & remodel market strength, sustained interest in outdoor living, and an accelerated trend in material conversion to our types of beautiful, long-lasting, high-performance products. Given our confidence in the long-term opportunity, we are adding a fourth phase to our decking capacity expansion program. Cumulatively, our multi-phase expansion program is expected to increase decking capacity by more than 100%, versus a 2019 baseline, by the end of calendar year 2022. We believe this increased capacity will give us industry-leading capability as well as the flexibility to pursue new opportunities and continue our best-in-class service levels in 2022 and beyond.”
“We continue to progress against our key initiatives, including growth through innovation, margin expansion through recycle and continuous improvement programs, and positively impacting the world through our commitments to ESG stewardship. In alignment with our FULL-CIRCLE ESG goals, in fiscal 2021 we diverted approximately 500 million pounds of scrap and waste from landfills through our recycling programs, a 25% increase from approximately 400 million pounds in fiscal 2020. Recycled materials now make up approximately 56% of our extruded product portfolio by weight, and we continue to make progress towards our goal of using one billion pounds of recycled material annually by the end of 2026,” Singh continued.
“We remain excited about the future and believe we are well positioned to capitalize on industry tailwinds and our own value-driven execution. I am thankful to our entire team for their unwavering commitment to supporting our customers and partners and look forward to continued success together in 2022,” Singh concluded.
FOURTH QUARTER FISCAL 2021 CONSOLIDATED RESULTS
Net sales for the three months ended September 30, 2021 increased by $82.2 million, or 31.1%, to $346.1 million, compared to $263.9 million for the three months ended September 30, 2020. The increase was attributable to higher sales growth in both our Residential and Commercial segments. Net sales for the three months ended September 30, 2021 increased for our Residential segment by 31.1% and increased for our Commercial segment by 31.3%, in each case as compared to the prior year period.
Gross profit for the three months ended September 30, 2021 increased by $22.0 million, or 24.4%, to $112.3 million, compared to $90.3 million for the three months ended September 30, 2020. The increase in gross profit was primarily driven by the strong sales results in the Residential and Commercial segments as well as pricing and manufacturing productivity, partially offset by higher costs. Gross margin decreased to 32.4% for the three months ended September 30, 2021, compared to 34.2% for the three months ended September 30, 2020. This was partially due to the continued rise in input costs ahead of price realization. Adjusted Gross Profit Margin decreased 250 basis points to 37.7%, compared to 40.2% for the prior year period.
Selling, general and administrative expenses decreased by $89.5 million, to $60.5 million, or 17.5% of net sales, for the three months ended September 30, 2021, compared to $150.0 million, or 56.8% of net sales, for the three months ended September 30, 2020. The decrease was primarily attributable to lower stock-based compensation expense, partially offset by higher personnel costs, public company costs, professional fees and marketing expenses in the period. This occurred as the Company made investments in selling, marketing and R&D capabilities during the quarter.
Net income increased by $103.0 million to $38.6 million, or $0.25 per share, for the three months ended September 30, 2021, compared to a net loss of $64.4 million, or ($0.43) per share, for the three months ended September 30, 2020. This was primarily due to higher sales growth in both our Residential and Commercial segments, higher gross profit and a decrease in interest expense resulting from the reduced principal amount outstanding under our Term Loan Agreement.