PART I [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for The AZEK Company Inc. as of June 30, 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets slightly decreased to **$2.36 billion**, with cash doubling to **$244.6 million** and inventories significantly decreasing Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $244,597 | $120,817 | | Inventories | $221,281 | $299,905 | | Total current assets | $569,647 | $530,594 | | Total assets | $2,358,866 | $2,383,091 | | **Liabilities & Equity** | | | | Total current liabilities | $167,092 | $182,491 | | Long-term debt—less current portion | $581,418 | $584,879 | | Total liabilities | $921,051 | $938,648 | | Total stockholders' equity | $1,437,815 | $1,444,443 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Net sales decreased **1.9%** to **$387.6 million** for Q3 2023, while net income increased **26.9%** to **$34.9 million**, but nine-month net income fell **68.4%** to **$25.3 million** Statement of Comprehensive Income Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $387,553 | $394,991 | $981,504 | $1,050,954 | | Gross profit | $132,200 | $126,387 | $287,952 | $337,456 | | Operating income | $58,550 | $47,650 | $66,398 | $124,728 | | Net income | $34,875 | $27,476 | $25,312 | $80,001 | | Diluted EPS | $0.23 | $0.18 | $0.17 | $0.51 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$230.0 million** for the nine months ended June 30, 2023, driven by inventory reduction Cash Flow Summary (in thousands) | Activity | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $230,043 | $65,700 | | Net cash used in investing activities | $(54,047) | $(225,809) | | Net cash provided by (used in) financing activities | $(52,216) | $69,194 | | Net increase (decrease) in cash | $123,780 | $(90,915) | | Cash and cash equivalents – End of period | $244,597 | $159,621 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, including revenue recognition, business combinations, debt structure, segment performance, and share repurchase activities - In Q3 2023, the company completed a secondary offering where selling stockholders sold **16.1 million** shares, and the company repurchased **1.48 million** shares for approximately **$36.0 million** as part of the offering[22](index=22&type=chunk) - On August 1, 2022, the company acquired INTEX Millwork Solutions for a total purchase price of approximately **$25.9 million**, which included **$20.1 million** in cash and **$5.8 million** in contingent consideration[34](index=34&type=chunk) - As of June 30, 2023, the company had **$595.5 million** outstanding under its 2022 Term Loan Agreement and no outstanding borrowings under its **$150.0 million** Revolving Credit Facility[53](index=53&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk) - In November 2022, the company entered into two interest rate swap agreements, each with a notional amount of **$150 million**, to hedge against interest rate volatility on its term loan[69](index=69&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and nine-month fiscal 2023 financial results, highlighting sales declines due to volume, segment performance, non-GAAP measures, and liquidity [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q3 2023 net sales decreased **1.9%** to **$387.6 million** due to volume declines, while nine-month net sales fell **6.6%** to **$981.5 million** with net income down **68.4%** Q3 2023 vs Q3 2022 Performance (in thousands) | Metric | Q3 2023 | Q3 2022 | $ Variance | % Variance | | :--- | :--- | :--- | :--- | :--- | | Net sales | $387,553 | $394,991 | $(7,438) | (1.9)% | | Gross profit | $132,200 | $126,387 | $5,813 | 4.6% | | Operating income | $58,550 | $47,650 | $10,900 | 22.9% | | Net income | $34,875 | $27,476 | $7,399 | 26.9% | Nine Months 2023 vs 2022 Performance (in thousands) | Metric | 9M 2023 | 9M 2022 | $ Variance | % Variance | | :--- | :--- | :--- | :--- | :--- | | Net sales | $981,504 | $1,050,954 | $(69,450) | (6.6)% | | Gross profit | $287,952 | $337,456 | $(49,504) | (14.7)% | | Operating income | $66,398 | $124,728 | $(58,330) | (46.8)% | | Net income | $25,312 | $80,001 | $(54,689) | (68.4)% | - The decrease in nine-month net sales was primarily due to a **16%** decline in volume, resulting from channel inventory reductions in the first part of the fiscal year[125](index=125&type=chunk) [Segment Results of Operations](index=32&type=section&id=Segment%20Results%20of%20Operations) The Residential segment saw **2.5%** Q3 sales growth, while the Commercial segment experienced a significant **30.8%** Q3 sales drop due to channel inventory drawdowns Residential Segment Performance (in thousands) | Metric | Q3 2023 | Q3 2022 | % Variance | 9M 2023 | 9M 2022 | % Variance | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $351,608 | $343,064 | 2.5% | $873,208 | $914,555 | (4.5)% | | Segment Adjusted EBITDA | $105,503 | $91,093 | 15.8% | $211,885 | $258,874 | (18.2)% | Commercial Segment Performance (in thousands) | Metric | Q3 2023 | Q3 2022 | % Variance | 9M 2023 | 9M 2022 | % Variance | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $35,945 | $51,927 | (30.8)% | $108,296 | $136,399 | (20.6)% | | Segment Adjusted EBITDA | $8,780 | $12,271 | (28.4)% | $21,763 | $25,693 | (15.3)% | [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures show Q3 2023 Adjusted EBITDA at **$97.0 million** and nine-month Free Cash Flow significantly improved to **$176.0 million** Non-GAAP Performance Summary (in thousands) | Metric | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Adjusted Gross Profit | $156,183 | $147,554 | $358,784 | $398,398 | | Adjusted Net Income | $45,046 | $45,241 | $58,187 | $124,781 | | Adjusted EBITDA | $96,955 | $86,524 | $184,865 | $235,964 | | Free Cash Flow | $160,126 | $107,747 | $175,984 | $(73,791) | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company had **$244.6 million** in cash and **$147.2 million** available credit, with operating cash flow increasing to **$230.0 million** for the nine months - The company's liquidity position as of June 30, 2023, includes **$244.6 million** in cash and cash equivalents and **$147.2 million** available under its Revolving Credit Facility[155](index=155&type=chunk) - Net cash from operating activities increased by **$164.3 million** to **$230.0 million** for the nine months ended June 30, 2023, primarily due to a decrease in inventory[161](index=161&type=chunk) - Under its Share Repurchase Program, the company repurchased **1.95 million** shares for **$48.5 million** in Q3 2023, with approximately **$262.5 million** remaining available for future repurchases as of June 30, 2023[164](index=164&type=chunk)[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations, inflation, and raw material price volatility, with a **100-basis-point** interest rate change impacting annual cash interest by **$3.0 million** - A **100 basis point** increase or decrease in floating interest rates would change annual cash interest by approximately **$3.0 million** as of June 30, 2023[174](index=174&type=chunk) - The company has entered into interest rate swaps on a notional amount of **$300 million** to convert variable-rate debt to a fixed rate, hedging against interest rate volatility[174](index=174&type=chunk) - The company faces inflationary pressures and price fluctuations for key raw materials such as polyethylene, PVC resins, and wood fiber, which it attempts to offset through price increases and production efficiencies[177](index=177&type=chunk)[178](index=178&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[180](index=180&type=chunk) - No changes occurred during the quarter ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[181](index=181&type=chunk) PART II. Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions but does not expect any material adverse effects on its financial condition or operations - The company states that there are no current legal claims or proceedings that are expected to have a material adverse effect on its business, financial condition, or cash flows[183](index=183&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2022 Form 10-K - No material changes have been made to the risk factors disclosed in the company's 2022 Form 10-K since September 30, 2022[184](index=184&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2023, the company repurchased **1,946,747** shares of Class A common stock at an average price of **$24.90** per share Issuer Purchases of Equity Securities (Q3 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value of Shares Remaining for Repurchase | | :--- | :--- | :--- | :--- | | May 2023 | 1,603,307 | $25.39 (calculated) | $271,637,771 | | June 2023 | 343,440 | $26.46 (calculated) | $262,548,740 | | **Total** | **1,946,747** | **$24.90 (reported)** | **N/A** | - The repurchases in Q3 2023 included **1,477,832** shares bought from the underwriter in the secondary offering for ~**$36.0 million** and **468,915** shares bought on the open market for ~**$12.0 million**[187](index=187&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) CEO Jesse Singh established a Rule 10b5-1 trading plan for the potential sale of up to **143,000** Class A common shares - CEO Jesse Singh established a Rule 10b5-1 trading plan on May 10, 2023, for the sale of up to **143,000** shares of Class A common stock over a one-year period starting September 11, 2023[189](index=189&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including certifications and XBRL data files - The report includes standard filings such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[191](index=191&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2023, the company generated net sales of $377.7 million, a decline of 4.7% year-over-year, with adjusted EBITDA of $72.8 million, down from $90.9 million in the prior year [6][22][23] - Operating cash flow increased by approximately $94 million year-over-year to $56.7 million in Q2 2023 [6] - The company reduced inventory by nearly $50 million from the end of fiscal 2022 to Q2 2023 [6][18] Business Line Data and Key Metrics Changes - Residential net sales were $342 million, down 2.4% year-over-year, with adjusted EBITDA of $8.4 million, a decrease of approximately 18% [24] - Commercial segment net sales were $35.6 million, down 22.5% year-over-year, with adjusted EBITDA of $7.8 million, a decrease of $900,000 [24] Market Data and Key Metrics Changes - Residential channel inventory levels are approximately 15% below the historical average from 2017 to 2019 [7][20] - The commercial segment is experiencing challenges due to channel destocking and softer demand in certain markets, with an expected headwind of approximately $15 million in segment adjusted EBITDA for the fiscal year [8][17] Company Strategy and Development Direction - The company is focused on driving accelerated material conversion and growth through new product development and channel expansion, targeting a $14 billion core market [5][6] - New product launches, including TimberTech decking and outdoor furniture, are expected to drive incremental growth [9][10] - The company aims to increase the use of recycled materials in its products and is nearing completion of capacity expansion in its PVC recycling plant [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA in the range of $250 million to $265 million for fiscal 2023, despite challenges in the commercial segment [8][19] - The company is monitoring demand indicators closely and remains optimistic about the residential business, with contractor backlogs remaining consistent [15][30] - Management highlighted the importance of balancing constructive sentiment with caution due to ongoing market uncertainties [16] Other Important Information - The company received multiple awards for its sustainable products, validating its investment in R&D and innovation [12][14] - Free cash flow in the first six months of the fiscal year was up $197 million year-over-year, with expectations for continued expansion in the second half [25][26] Q&A Session Summary Question: What would give confidence for the back half of the year? - Management indicated the need to see positive momentum convert to revenue and is cautiously optimistic based on contractor and dealer feedback [35][36] Question: What pricing expectations are there for the residential segment? - Pricing realization is expected to be low single digits for the third quarter, with a flat outlook for the fourth quarter [41][42] Question: What is the expected impact of commercial segment performance? - The commercial segment is expected to see a top-line decline of about 20% for the full year, with adjusted EBITDA margins maintained at or above 20% [48][49] Question: How is sell-through demand progressing? - Sell-through demand has been steady, with some geographic variations, and the company is well-positioned to meet any incremental demand [60][61] Question: What are the expectations for share repurchase in the back half of the year? - The company aims to stay within a leverage ratio target of 2 to 2.5 times, suggesting potential for increased share repurchase activity [57][58]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Title of each class Trading Symbol Name of each exchange on which registered Class A Common Stock, par value $0.001 per share AZEK The New York Stock Exchange FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Title of each class Trading SymbolName of each exchange on which registered Class A Common Stock, par value $0.001 per share AZEK The New York Stock Exchange FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commiss ...

The AZEK Company Inc. (NYSE:AZEK) Q4 2022 Results Conference Call November 28, 2022 6:30 AM ET Company Participants Eric Robinson - IR Jesse Singh - CEO Peter Clifford - CFO Conference Call Participants Keith Hughes - Truist Securities Matthew Bouley - Barclays Michael Rehaut - JPMorgan Tim Wojs - Baird Phil Ng - Jefferies Spencer Kaufman - UBS Ryan Merkel - William Blair Susan Maklari - Goldman Sachs Ketan Mamtora - BMO Capital Markets Operator Good afternoon. My name is Emma and I will be your conference ...

The AZEK Company Inc. (NYSE:AZEK) Q3 2022 Results Conference Call August 4, 2022 10:00 AM ET Company Participants Eric Robinson - IR Jesse Singh - CEO Peter Clifford - CFO Conference Call Participants John Lovallo - UBS Keith Hughes - Truist Securities Ketan Mamtora - BMO Capital Markets Matthew Bouley - Barclays Michael Rehaut - JPMorgan Philip Ng - Jefferies Ryan Merkel - William Blair Susan Maklari - Goldman Sachs Timothy Wojs - Robert W. Baird Operator Welcome to the AZEK Company's Third Quarter 2022 Ea ...

The AZEK Company, Inc. (NYSE:AZEK) Q2 2022 Earnings Conference Call May 10, 2022 10:00 AM ET Company Participants Chris Russell - Head of Corporate Development and Investor Relation Jesse Singh - Chief Executive Officer Pete Clifford - Chief Financial Officer Conference Call Participants Keith Hughes - Truist Josh Chan - Robert W. Baird Michael Rehaut - JPMorgan Matthew Bouley - Barclays John Lovallo - UBS Ryan Merkel - William Blair Susan Maklari - Goldman Sachs Phil Ng - Jefferies Mike Dahl - RBC Capital ...