The AZEK Company Inc. (NYSE: AZEK) (“AZEK,” the “Company” or
“we”) has released preliminary first quarter fiscal 2021 financial
results.
Preliminary Financial Results
Set forth below are preliminary estimates of certain unaudited
financial information for the Company for the three months ended
December 31, 2020 and actual unaudited financial results for the
comparative period ended December 31, 2019. We have provided
ranges, rather than specific amounts, for the preliminary estimates
primarily because our financial closing and review procedures for
the three months ended December 31, 2020 are not yet complete. The
estimated ranges are preliminary and have not been audited or
reviewed and are inherently uncertain and subject to changes as we
complete our financial closing and review procedures for the three
months ended December 31, 2020. While we currently expect that our
final results will be consistent with the preliminary estimates set
forth below, we caution you that the estimated financial
information for the three months ended December 31, 2020 is not a
guarantee of future performance or outcomes and actual results may
differ materially from those described herein. Factors that could
cause actual results to differ from those described above are set
forth in the sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Forward-Looking Statements” in our Annual Report on Form
10-K filed with the United Stated Securities and Exchange
Commission on December 4, 2020 (the “Annual Report”). You should
read this information together with the sections titled
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and our audited historical Consolidated
Financial Statements and related notes appearing in the Annual
Report. This preliminary information should not be viewed as a
substitute for full quarterly financial statements prepared in
accordance with GAAP.
The preliminary estimates set forth below have been prepared by,
and are the responsibility of, our management.
PricewaterhouseCoopers LLP, our independent registered public
accounting firm, has not audited, reviewed, compiled or performed
any procedures with respect to the preliminary estimates.
Accordingly, PricewaterhouseCoopers LLP does not express an opinion
or any other form of assurance with respect thereto.
(U.S. dollars in thousands)
Three months ended
December 31, 2020
December 31, 2019
(Estimated) (Actual) Low High
Net sales
$
209,100
$
213,400
$
166,043
Net income (loss)
$
8,900
$
11,500
$
(9,846
)
Non-GAAP financial measures Adjusted EBITDA (1)
$
46,200
$
51,100
$
33,806
(1) We define Adjusted EBITDA as net
income (loss) before interest expense, net, income tax expense
(benefit) and depreciation and amortization and by adding to or
subtracting therefrom certain items of expense and income. See the
section titled “Selected Financial Data—Non-GAAP Financial
Measures” in the Annual Report.
For the three months ended December 31, 2020, we estimate our
net sales to be in the range of $209.1 million to $213.4 million,
as compared to $166.0 million for the three months ended December
31, 2019, representing an increase of 26% and 29%, respectively.
The increase in our consolidated net sales reflects estimated net
sales from our Residential segment of between $182.9 million and
$186.6 million for the three months ended December 31, 2020, as
compared to $135.7 million for the three months ended December 31,
2019, with such increase primarily due to higher organic net sales
related to our decking, railing, accessories and exteriors product
categories as well as favorable operational execution whereby the
first phase of our capacity expansion plan came online faster than
planned during the quarter. Demand trends remained strong across
our Residential segment channel partners during the quarter. The
increase in our net sales also reflects estimated net sales from
our Commercial segment of between $26.2 million and $26.8 million,
as compared to $30.4 million for the three months ended December
31, 2019, with such decrease primarily due to declining sales in
our Scranton Products and Vycom businesses as the effects of
COVID-19 continue to impact certain end markets.
For the three months ended December 31, 2020, we estimate our
net income to be in the range of $8.9 million to $11.5 million, as
compared to a net loss of $9.8 million for the three months ended
December 31, 2019. This increase in net income was primarily due to
higher sales in our Residential segment, improved gross margins and
lower interest expense, partially offset by higher selling, general
and administrative expenses.
For the three months ended December 31, 2020, we estimate our
Adjusted EBITDA to be in the range of $46.2 million to $51.1
million, as compared to $33.8 million for the three months ended
December 31, 2019, representing an increase of 37% to 51%. The
increase in our Adjusted EBITDA reflects the factors described
above with respect to the increases in our net sales and net income
as well as those presented in the table below.
The following table provides a preliminary reconciliation of
preliminary estimated net income, the most directly comparable
financial measure calculated in accordance with GAAP, to
preliminary estimated Adjusted EBITDA for the three months ended
December 31, 2020, and a reconciliation of actual net income to
actual Adjusted EBITDA for the three months ended December 31,
2019.
(U.S. dollars in thousands)
Three months ended
December 31, 2020
December 31, 2019
(Estimated) (Actual) Low High
Net Income (loss)
$
8,900
$
11,500
$
(9,846
)
Interest Expense
6,200
6,200
19,759
Depreciation and amortization expense
24,300
24,300
24,141
Tax (benefit) expense
3,000
4,000
(4,000
)
Share-based compensation costs
2,600
3,400
1,046
Business transformation costs (1)
-
-
163
Acquisition costs (2)
-
-
565
Initial public offering and Secondary offering costs
-
-
1,978
Other costs (3)
1,200
1,700
-
Total adjustments
37,300
39,600
43,652
Adjusted EBITDA
$
46,200
$
51,100
$
33,806
(1) Business transformation costs reflect
consulting and other costs related to repositioning of our brands,
compensation costs related to the transformation of the senior
management team and other integration-related costs. Compensation
costs related to the transformation of the senior management team
were approximately $0.2 million for the three months ended December
31, 2019.
(2) Acquisition costs reflect costs
directly related to completed acquisitions of $0.6 million for the
three months ended December 31, 2019.
(3) Other costs reflect costs for legal
defense estimated to be in the range of $0.3 million to $0.6
million for the three months ended December 31, 2020 and costs
related to an incentive plan and other ancillary expenses
associated with our initial public offering estimated to be in the
range of $0.9 million to $1.1 million for the three months ended
December 31, 2020.
The unaudited, preliminary information is presented for
informational purposes only and does not purport to represent our
financial condition or results of operations for any future period.
As a result, prospective investors should exercise caution in
relying on this information and should not draw any inferences from
this information regarding financial or operating data not
provided.
About The AZEK® Company
The AZEK Company Inc. is an industry-leading manufacturer of
beautiful, low-maintenance residential and commercial building
products, committed to innovation, sustainability and research
& development. Headquartered in Chicago, Illinois, the company
operates manufacturing facilities in Ohio, Pennsylvania and
Minnesota.
Forward Looking Statements
This press release includes “forward looking statements” within
the meaning of the federal securities laws. These forward-looking
statements represent AZEK’s expectations or beliefs concerning
future events, and it is possible that the results or events
described in this press release will not be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and assumptions. AZEK does not undertake any
obligation to update or revise any forward-looking statement made
in this press release to reflect changes since the date of this
press release, except as required by law.
Source: The AZEK Company Inc.
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version on businesswire.com: https://www.businesswire.com/news/home/20210119006137/en/
Investor Relations: Solebury Trout 312-809-1093 ir@azekco.com
Media: Lisa Wolford 917-846-0881 lwolford@soleburytrout.com
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