The AZEK Co Inc (AZEK, Financial) released its 8-K filing on November 28, 2023, announcing its fourth quarter and full-year fiscal 2023 results. The company reported a robust financial performance for the quarter, driven by substantial growth in its Residential segment and effective margin execution. AZEK's strategic initiatives, including material conversion and channel expansion, contributed to the impressive results, alongside a record-setting net profit margin and Adjusted EBITDA Margin.
Financial Performance Overview
AZEK's fourth quarter saw a remarkable 27.6% increase in Consolidated Net Sales, amounting to $388.8 million. The Residential Segment was particularly strong, with Net Sales surging 37.6% year-over-year to $349.6 million. Net Income experienced a dramatic rise, increasing by $47.4 million to $42.6 million, with Net profit margin expanding by 1,260 basis points to 11.0%. Adjusted EBITDA grew by 63.4% to $106.4 million, and Adjusted EBITDA Margin widened by 600 basis points to 27.4%.
Annual Financial Highlights and Strategic Achievements
For the full fiscal year, AZEK reported a 1.1% increase in Net Sales to $1,370.3 million. The Residential segment's growth of 4.6% was partially offset by a decline in the Commercial segment. Net Income for the year was $68.0 million, with a slight decrease compared to the previous year, primarily due to manufacturing capacity underutilization in the first half and increased general and administrative expenses. Adjusted Net Income was $111.7 million, translating to Adjusted Diluted EPS of $0.74 per share.
Balance Sheet and Cash Flow
As of September 30, 2023, AZEK had cash and cash equivalents of $278.3 million and available future borrowings under its Revolving Credit Facility of approximately $147.2 million. The company's total gross debt, including finance leases, was $672.5 million. Net Cash Provided by Operating Activities for the quarter increased by $86.5 million year-over-year to $126.6 million, and Free Cash Flow increased by $83.5 million to $92.2 million.
Management Commentary
"The AZEK team delivered strong results this quarter including 27.6% net sales growth year-over-year, a net profit margin of 11.0% and a record fourth quarter Adjusted EBITDA Margin of 27.4%. Our Residential business grew 37.6% in the fourth quarter and 4.6% year-over-year, delivering an eighth straight year of net sales growth," said Jesse Singh, CEO of The AZEK Company. "I am very proud of how the AZEK team was able to navigate in an uncertain market and consistently deliver against our commitments."
Outlook
Looking ahead, AZEK expects continued positive Residential sell-through growth and has set a consolidated net sales target range of $1.335 to $1.395 billion for fiscal 2024, with Adjusted EBITDA projected to be between $320 to $335 million. The company remains focused on strategic growth initiatives and is confident in its long-term financial targets.
For more detailed information on AZEK's financial performance, including the full financial statements and reconciliations of non-GAAP measures, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from The AZEK Co Inc for further details.
