The AZEK Company (AZEK) Baird 2024 Global Industrials Conference summary

Business Overview and Market Positioning

• Operates as a vertically integrated manufacturer with leading brands in decking, trim, railing, and exteriors, generating nearly $1.5 billion in net sales.

• TimberTech is #2 in composite decking usage and AZEK Exteriors is #1 in brand familiarity for exterior trim.

• Decking represents about 70% of sales, with the remainder in exteriors and a small commercial division.

• Focuses on the outdoor living space, offering products that emphasize beauty, low maintenance, and sustainability.

• Total addressable market is estimated at $25 billion, with core opportunities in decking, railing, and exteriors.

Growth Drivers and Strategy

• Accelerating wood-to-composite conversion is a key growth tailwind, with conversion rates increasing due to improved technology and consumer awareness.

• Targets 50% market conversion in the next 10-15 years, with potential to reach 75%, mirroring trends in siding and doors.

• Growth strategy includes product innovation, multichannel expansion, enhancing the consumer journey, and strategic bolt-on M&A.

• Repair and remodel (R&R) market is the core business driver, representing about 85% of sales.

• Consistent double-digit growth achieved through material conversion, execution, and additional growth initiatives.

Product Innovation and Portfolio Expansion

• Recent launches include premium vinyl and steel railings, a new PVC decking line, and TrimLogic, a sub-premium trim product.

• Developed a good-better-best portfolio in decking, now expanding similar offerings in exteriors and railing.

• Balanced growth across all price points, with new products targeting broader market segments.

• Innovation has contributed to improved gross and EBITDA margins, with a 2027 margin target of 27.5%.

• Capital allocation prioritizes business investment, followed by M&A and share repurchases.