The AZEK Company (AZEK) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 FY2024 results with 12.1% year-over-year net sales growth to $434.4M, led by 18% growth in the residential segment and double-digit Deck, Rail & Accessories sell-through increases, driven by productivity and new product initiatives.

• Adjusted EBITDA grew 24% year-over-year to $119.4M, with margin expanding 260 basis points to a record 27.5%.

• Net income increased 45% year-over-year to $50.1M; adjusted net income up 38% to $62.0M; adjusted diluted EPS rose 40% to $0.42.

• Announced $600M share repurchase program, completed $50M accelerated repurchase, and expanded distribution partnerships, including entry into the Canadian market.

• Launched new products and continued progress on a new exteriors manufacturing facility near Pittsburgh, expected operational in 2025.

Financial highlights

• Q3 2024 consolidated net sales reached $434.4M, up 12.1% year-over-year; residential segment net sales were $416.0M, up 18%.

• Adjusted gross profit increased 23% year-over-year to $168M, with adjusted gross margin up 350 basis points to 38.7%.

• Net income for Q3 2024 was $50.1M ($0.34 per share); adjusted net income was $62M ($0.42 per share).

• Free cash flow for the quarter was $177.5M, up $12.5M year-over-year; net leverage at 0.8x.

• Gross profit margin expanded to 37.8% for the quarter, up from 34.0% year-over-year.

Outlook and guidance

• FY2024 consolidated net sales guidance raised to $1.422–$1.438B, with adjusted EBITDA outlook increased to $370–$380M.

• Residential segment expected to deliver 10–12% net sales growth and 42–45% segment-adjusted EBITDA growth for the year.

• Q4 2024 net sales expected at $329–$345M; adjusted EBITDA at $82–$92M; margin 24.9–26.7%.

• Capital expenditures for FY2024 expected at $90–$95M (5–7% of revenue).

• Company expects to continue above-market growth and long-term margin expansion despite a soft R&R market.