The AZEK Company Inc. (NYSE: AZEK) reported Q1 EPS of $0.15, $0.04 better than the analyst estimate of $0.11. Revenue for the quarter came in at $212.3 million versus the consensus estimate of $206.37 million.

FIRST QUARTER FISCAL 2021 HIGHLIGHTS

• Consolidated net sales increased 27.8% year-over-year to $212.3 million
• Residential segment net sales increased 36.8% year-over-year to $185.6 million
• Net income of $10.2 million, driven by sales growth, margin expansion and lower interest expense; Net Margin of 4.8%
• Adjusted EBITDA increased 43.3% year-over-year to $48.5 million; Adjusted EBITDA Margin expanded 240 basis points to 22.8%

CEO COMMENTS

“Demand trends have continued their momentum, enabling us to deliver strong first quarter sales growth as well as increased confidence in our outlook for the remainder of the year,” commented Jesse Singh, AZEK’s Chief Executive Officer. “Our team continues to do an excellent job of executing against our key strategic initiatives, including new product launches as well as our capacity expansion and recycling programs, which is evident in our robust growth profile and significant margin improvement during the quarter. Our capacity expansion program remains on track as we execute against the second phase of implementation and finalize site selection for our new western U.S. facility.”

“Consistent with our mission to accelerate the use of recycled materials and further divert plastic waste from landfills, we are announcing a goal of utilizing 1 billion pounds of recycled scrap and waste annually by the end of 2026. We believe in revolutionizing outdoor living to build a more sustainable future. We are also honored to have recently been recognized as a 2021 Green Innovation of the Year award winner in recognition of our FULL-CIRCLE PVC Recycling Program by Green Builder Media and are excited about the increasing momentum around the program. Finally, our continued focus on innovation is demonstrated by the recent launch of our new high-performance TimberTech AZEK Landmark Collection which is the latest extension of our premium capped polymer decking and leverages advanced technology to create the most natural on-trend look of rustic, reclaimed wood. The combination of unique design and cascading colors creates a stunning, nature-inspired visual that’s never been seen in the industry,” concluded Mr. Singh.

OUTLOOK

“We believe that the strength and flexibility of our business model position us well to deliver long term value and outperformance in various market environments. As we look ahead to the remainder of our fiscal 2021, we have increased our outlook as steady demand continues across our Residential segment. We have improved visibility on channel inventory levels and downstream demand from our pre-season or “early buy” program, balanced by a macro-economic environment that continues to carry a level of uncertainty. Our second fiscal quarter is historically one where inventory is manufactured and positioned in the channel ahead of the building season. In fiscal 2021, we expect this staging to extend more into the third fiscal quarter given demand and production timing. We continue to see steady demand within our Residential segment across both our Deck, Rail & Accessories and Exteriors businesses supported by favorable repair and remodel, material conversion and outdoor living tailwinds, partially offset by reduced demand within our Commercial segment, which has been adversely impacted by the macro-environment,” added Mr. Singh.

AZEK is raising its outlook for the full year fiscal 2021. AZEK now expects consolidated net sales growth of 14% to 18% year-over-year and Adjusted EBITDA growth in the 19% to 23% range year-over-year. From a segment perspective, AZEK expects Residential segment net sales growth in the 17% to 21% range year-over-year, partially offset by a mid-single digit decline in Commercial segment net sales, which is consistent with prior guidance.

For the second quarter fiscal 2021 guidance, AZEK expects consolidated net sales growth in the 13% to 15% range year-over-year, driven by strong Residential segment growth in the high-teens range, partially offset by an expected high-teens decline in the Commercial segment. AZEK is expecting Adjusted EBITDA growth in the 18% to 22% range year-over-year.

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