The AZEK Company(AZEK)2025-02-05 03:31Financial Data and Key Metrics Changes - The company reported consolidated net sales of 11 million or 20% year-over-year to 7 million year-over-year to 272 million, up 22% year-over-year, with adjusted EBITDA for the segment increasing by 24% to 13 million, down 23% year-over-year, primarily due to the Vycom divestiture and weaker demand in the Scranton Products business [35] Market Data and Key Metrics Changes - The company ended the quarter with channel inventory levels conservatively below historical averages, down roughly 15% from historical average days on hand [25][17] - Positive demand signals were observed from digital metrics and contractor surveys, indicating project backlogs in the six to seven weeks range [16][25] Company Strategy and Development Direction - The company is focused on wood conversion, product innovation, and channel expansion, with new product launches expected to address a wider range of price points and consumer needs [10][18] - Investments in recycling capabilities were highlighted, including the acquisition of a regional PVC and polyethylene recycling operation in Indiana [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market dynamics and delivering strong financial performance, despite uncertainties in the broader housing and repair markets [46] - The fiscal 2025 outlook was raised modestly, with expectations for residential segment net sales growth in the range of 6% to 8% year-over-year [18][39] Other Important Information - The company plans to continue investing in its business, both organically and inorganically, with a capital expenditure range of 95 million for fiscal 2025 [42] - The company expects a GAAP tax rate for the full year between 25% to 26% [43] Q&A Session Summary Question: Can you discuss the demand and sell-through growth? - Management indicated that while sell-through was up double-digits in Q1, the annual outlook still implies mid-single-digit sell-through for the year due to conservative market growth assumptions [49][51] Question: What is the impact of new product investments? - New product investments are expected to create some inefficiencies initially, but revenue is anticipated to ramp up as products are launched and inventory is staged [53][55] Question: How does the acquisition impact recycling capacity? - The recent acquisition adds new technology and additional recycling sourcing streams, enhancing the company's ability to convert recycled materials internally [61][63] Question: What is the outlook for share repurchases? - The company plans to be opportunistic with share repurchases, with expectations that cash generation will improve in the back half of the year [131][133] Question: How is the company addressing market share gains? - Management noted that the company is expanding its position in the pro channel and launching new products to capture a larger share of the market [67][68]