AZEK Company Reports 18.7% Increase in Net Sales, Net Income Declines by 27.9%

The AZEK Company Inc. reported its financial results for the three months ended December 31, 2024, revealing a net sales increase of 18.7% to $285.4 million, compared to $240.4 million in the same period last year. The growth was primarily driven by a 22.0% increase in the Residential segment, attributed to strong consumer demand and the addition of new stocking locations. However, the Commercial segment experienced a decline of 23.0% in net sales, largely due to the divestiture of the Vycom business and weaker market demand.

Despite the increase in sales, the company's net income fell by 27.9% to $18.1 million, down from $25.1 million in the prior year. This decline was influenced by the absence of a significant gain on the sale of the Vycom business, which had contributed $38.5 million to last year's results. Operating income, however, saw a substantial increase of 142.9%, rising to $27.3 million from $11.2 million, reflecting improved operational efficiency and reduced selling, general, and administrative expenses.

In terms of strategic developments, AZEK completed the sale of its Vycom business on November 1, 2023, for net proceeds of approximately $131.8 million. This divestiture allowed the company to concentrate on its core operations and provided additional cash for capital allocation priorities. The company also made an acquisition during the quarter, spending $12.0 million on a business in the Residential segment, which was deemed immaterial.

Operationally, AZEK's total assets increased to $1.4 billion as of December 31, 2024, with cash and cash equivalents reported at $148.1 million. The company maintained a strong liquidity position, with approximately $372.7 million available under its revolving credit facility. The employee headcount remained stable, and the company reported a slight increase in its treasury stock holdings, reflecting ongoing share repurchase activities.

Looking ahead, AZEK's management expressed confidence in its ability to navigate market challenges and capitalize on growth opportunities. The company anticipates continued demand for its engineered products, driven by consumer preferences for low-maintenance and sustainable building materials. However, management acknowledged potential risks related to inflation, supply chain disruptions, and market conditions that could impact future performance.