The AZEK Company(AZEK) - 2023 Q4 - Annual Report

Credit Facilities and Debt Management - The company has $150.0 million available under the Revolving Credit Facility as of September 30, 2023, with an option to increase commitments by up to$100.0 million[172] - A 100 basis point change in interest rates would result in a $2.9 million change in annual interest expense on the Senior Secured Credit Facilities as of September 30, 2023[174] - The company has entered into$300 million of interest rate swaps to hedge against interest rate volatility associated with the 2022 Term Loan Agreement[174] - The company had $594.0 million outstanding under the 2022 Term Loan Agreement as of September 30, 2023[310] - The company's variable rate indebtedness exposes it to interest rate risk, with potential increases in debt service obligations if interest rates rise[173] - The company's ability to grow and compete effectively may be limited due to restrictive covenants under the Senior Secured Credit Facilities[169] Share Repurchase Program - The company's share repurchase program authorizes the repurchase of up to$400 million of Class A common stock[182] Accounts Receivable and Cash Management - As of September 30, 2023, receivables from one customer represented 17.2% of gross trade receivables[313] - The company's cash and cash equivalents are maintained at major financial institutions in the United States, with deposits likely exceeding insured limits[313] Raw Material Costs and Supply Chain Management - The company's cost of sales is subject to inflationary pressures, including raw material prices, freight, and labor costs[315] - The company relies on various raw materials including petrochemical resins, reclaimed polyethylene, PVC material, waste wood fiber, and aluminum for production[316] - The company does not typically enter into fixed-price contracts with suppliers and currently has no fixed-price contracts with major vendors[316] - Raw material costs are managed through sales terms and maintaining relationships with multiple vendors, with spot market prices negotiated continuously[316] - Petrochemical resin costs are subject to significant price volatility, historically affected by supply-demand changes and crude oil prices[317] - Resin supply contracts average 1-2 years, with pricing variable based on an industry benchmark price index[317] - The company is obligated to purchase a minimum amount of resins from each supplier under annual contracts[317] - Prices for reclaimed polyethylene, waste wood fiber, aluminum, and additives fluctuate based on market supply-demand and business conditions[318] - The company has not entered into hedges for raw material costs but may consider doing so in the future[316] - Short-term supply contracts for resins include indexed-based pricing, with occasional strategic purchases of larger quantities[316] - Raw materials are generally purchased on an as-needed basis, except for indexed-based resin contracts and strategic purchases[316]