Quarterly Report (10-q)
10 Mai 2022 - 10:05PM
Edgar (US Regulatory)
false Q2 2022 --09-30 AZEK Co Inc.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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, 2022
OR
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the transition period from
to
Commission File Number: 001-39322
The AZEK Company Inc.
(Exact name of registrant as specified in its charter)
|
Delaware
|
90-1017663
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
1330 W Fulton Street, Suite 350, Chicago, Illinois
|
60607
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code: (877)
275-2935
Securities registered pursuant to Section 12(b) of the
Act:
|
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
|
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
|
|
|
|
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
As of April 29, 2022, the registrant had 155,155,235 shares of
Class A Common Stock, $0.001 par value per share, and 100
shares of Class B Common Stock, $0.001 par value per share,
outstanding.
2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
The AZEK Company Inc.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except for share and per share
amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
in thousands
|
|
March 31,
2022
|
|
|
September 30,
2021
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
25,812
|
|
|
$
|
250,536
|
|
|
Trade receivables, net of allowances
|
|
|
171,685
|
|
|
|
77,316
|
|
|
Inventories
|
|
|
299,160
|
|
|
|
188,888
|
|
|
Prepaid expenses
|
|
|
18,203
|
|
|
|
14,212
|
|
|
Other current assets
|
|
|
5,991
|
|
|
|
1,446
|
|
|
Total current assets
|
|
|
520,851
|
|
|
|
532,398
|
|
|
Property, plant and equipment - net
|
|
|
474,340
|
|
|
|
391,012
|
|
|
Goodwill
|
|
|
987,440
|
|
|
|
951,390
|
|
|
Intangible assets - net
|
|
|
260,128
|
|
|
|
242,572
|
|
|
Other assets
|
|
|
76,721
|
|
|
|
70,462
|
|
|
Total assets
|
|
$
|
2,319,480
|
|
|
$
|
2,187,834
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
76,228
|
|
|
$
|
69,474
|
|
|
Accrued rebates
|
|
|
31,723
|
|
|
|
44,339
|
|
|
Accrued interest
|
|
|
46
|
|
|
|
72
|
|
|
Current portion of long-term debt obligations
|
|
|
—
|
|
|
|
—
|
|
|
Accrued expenses and other liabilities
|
|
|
65,586
|
|
|
|
56,522
|
|
|
Total current liabilities
|
|
|
173,583
|
|
|
|
170,407
|
|
|
Deferred income taxes
|
|
|
61,505
|
|
|
|
46,371
|
|
|
Long-term debt—less current portion
|
|
|
505,284
|
|
|
|
464,715
|
|
|
Other non-current liabilities
|
|
|
86,074
|
|
|
|
79,177
|
|
|
Total liabilities
|
|
|
826,446
|
|
|
|
760,670
|
|
|
Commitments and contingencies (See Note 17)
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 1,000,000 shares authorized and
no shares issued
or outstanding at March 31, 2022 and September 30,
2021, respectively
|
|
—
|
|
|
—
|
|
|
Class A common stock, $0.001 par value; 1,100,000,000 shares
authorized,
155,108,627 shares issued and outstanding at March 31,
2022 and
154,866,313 shares issued and outstanding at September
30, 2021
|
|
|
155
|
|
|
|
155
|
|
|
Class B common stock, $0.001 par value; 100,000,000 shares
authorized,
100 shares issued and outstanding at March 31, 2022
and at September 30, 2021,
respectively
|
|
|
—
|
|
|
|
—
|
|
|
Additional paid‑in capital
|
|
|
1,628,581
|
|
|
|
1,615,236
|
|
|
Accumulated deficit
|
|
|
(135,702
|
)
|
|
|
(188,227
|
)
|
|
Total stockholders' equity
|
|
|
1,493,034
|
|
|
|
1,427,164
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
2,319,480
|
|
|
$
|
2,187,834
|
|
See Notes to Condensed Consolidated Financial Statements
(Unaudited).
3
The AZEK Company Inc.
Condensed Consolidated Statements of Comprehensive Income
(Loss)
(In thousands of U.S. dollars, except for share and per share
amounts)
(Unaudited)
|
|
|
Three Months Ended March 31,
|
|
|
Six Months Ended March 31,
|
|
|
in thousands
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
Net sales
|
|
$
|
396,255
|
|
|
$
|
293,121
|
|
|
$
|
655,963
|
|
|
$
|
505,399
|
|
|
Cost of sales
|
|
|
273,795
|
|
|
|
195,272
|
|
|
|
444,894
|
|
|
|
334,572
|
|
|
Gross profit
|
|
|
122,460
|
|
|
|
97,849
|
|
|
|
211,069
|
|
|
|
170,827
|
|
|
Selling, general and administrative expenses
|
|
|
70,822
|
|
|
|
60,155
|
|
|
|
133,991
|
|
|
|
113,602
|
|
|
Other general expenses
|
|
|
—
|
|
|
|
1,149
|
|
|
|
—
|
|
|
|
1,149
|
|
|
Operating income (loss)
|
|
|
51,638
|
|
|
|
36,545
|
|
|
|
77,078
|
|
|
|
56,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
4,010
|
|
|
|
6,348
|
|
|
|
8,158
|
|
|
|
12,374
|
|
|
Total other expenses
|
|
|
4,010
|
|
|
|
6,348
|
|
|
|
8,158
|
|
|
|
12,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
47,628
|
|
|
|
30,197
|
|
|
|
68,920
|
|
|
|
43,702
|
|
|
Income tax expense (benefit)
|
|
|
11,810
|
|
|
|
7,557
|
|
|
|
16,395
|
|
|
|
10,914
|
|
|
Net income (loss)
|
|
$
|
35,818
|
|
|
$
|
22,640
|
|
|
$
|
52,525
|
|
|
$
|
32,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic
|
|
$
|
0.23
|
|
|
$
|
0.15
|
|
|
$
|
0.34
|
|
|
$
|
0.21
|
|
|
Net income (loss) per common share - diluted
|
|
|
0.23
|
|
|
|
0.14
|
|
|
|
0.34
|
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
35,818
|
|
|
$
|
22,640
|
|
|
$
|
52,525
|
|
|
$
|
32,788
|
|
|
Weighted-average common shares outstanding - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
154,661,277
|
|
|
|
153,509,612
|
|
|
|
154,551,589
|
|
|
|
153,366,516
|
|
|
Diluted
|
|
|
156,121,476
|
|
|
|
156,747,514
|
|
|
|
156,560,502
|
|
|
|
156,377,902
|
|
See Notes to Condensed Consolidated Financial Statements
(Unaudited).
4
The AZEK Company Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands of U.S. dollars, except for share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
|
Paid-In
|
|
|
|
Accumulated
|
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
Deficit
|
|
|
|
Equity
|
|
|
Balance – December 31, 2021
|
|
|
155,032,377
|
|
|
$
|
155
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,622,516
|
|
|
$
|
|
(171,520
|
)
|
|
$
|
|
1,451,151
|
|
|
Net income (loss)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
35,818
|
|
|
|
|
35,818
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4,881
|
|
|
|
|
—
|
|
|
|
|
4,881
|
|
|
Exercise of stock options
|
|
|
70,149
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,613
|
|
|
|
|
—
|
|
|
|
|
1,613
|
|
|
Cancellation of restricted stock awards
|
|
|
(6,174
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Issuance of common stock under employee stock plan, net of shares
withheld for taxes
|
|
|
12,275
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(429
|
)
|
|
|
|
—
|
|
|
|
|
(429
|
)
|
|
Balance – March 31, 2022
|
|
|
155,108,627
|
|
|
$
|
|
155
|
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,628,581
|
|
|
$
|
|
(135,702
|
)
|
|
$
|
|
1,493,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – September 30, 2021
|
|
|
154,866,313
|
|
|
$
|
155
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,615,236
|
|
|
$
|
|
(188,227
|
)
|
|
$
|
|
1,427,164
|
|
|
Net income (loss)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
52,525
|
|
|
|
|
52,525
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
8,851
|
|
|
|
|
—
|
|
|
|
|
8,851
|
|
|
Exercise of vested stock options
|
|
|
214,041
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4,923
|
|
|
|
|
—
|
|
|
|
|
4,923
|
|
|
Cancellation of restricted stock awards
|
|
|
(10,573
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Issuance of common stock under employee stock plan, net of shares
withheld for taxes
|
|
|
38,846
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(429
|
)
|
|
|
|
—
|
|
|
|
|
(429
|
)
|
|
Balance – March 31, 2022
|
|
|
155,108,627
|
|
|
$
|
|
155
|
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,628,581
|
|
|
$
|
|
(135,702
|
)
|
|
$
|
|
1,493,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
|
Paid-In
|
|
|
|
Accumulated
|
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
Deficit
|
|
|
|
Equity
|
|
|
Balance – December 31, 2020
|
|
|
154,735,617
|
|
|
$
|
155
|
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,592,240
|
|
|
$
|
|
(271,229
|
)
|
|
$
|
|
1,321,166
|
|
|
Net income (loss)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
22,640
|
|
|
|
|
22,640
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
7,052
|
|
|
|
|
—
|
|
|
|
|
7,052
|
|
|
Exercise of stock options
|
|
|
25,616
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
590
|
|
|
|
|
—
|
|
|
|
|
590
|
|
|
Cancellation of restricted stock awards
|
|
|
(21,995
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Balance – March 31, 2021
|
|
|
154,739,238
|
|
|
$
|
|
155
|
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,599,882
|
|
|
$
|
|
(248,589
|
)
|
|
$
|
|
1,351,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – September 30, 2020
|
|
|
154,637,240
|
|
|
$
|
155
|
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,587,208
|
|
|
$
|
|
(283,475
|
)
|
|
$
|
|
1,303,888
|
|
|
Net income (loss)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
32,788
|
|
|
|
|
32,788
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
9,931
|
|
|
|
|
—
|
|
|
|
|
9,931
|
|
|
Exercise of vested stock options
|
|
|
123,993
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,953
|
|
|
|
|
—
|
|
|
|
|
2,953
|
|
|
Cancellation of restricted stock awards
|
|
|
(21,995
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
IPO costs
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(210
|
)
|
|
|
|
—
|
|
|
|
|
(210
|
)
|
|
Adoption of ASU 2016-02
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2,098
|
|
|
|
|
2,098
|
|
|
Balance – March 31, 2021
|
|
|
154,739,238
|
|
|
$
|
|
155
|
|
|
|
100
|
|
|
$
|
|
—
|
|
|
$
|
|
1,599,882
|
|
|
$
|
|
(248,589
|
)
|
|
$
|
|
1,351,448
|
|
See Notes to Condensed Consolidated Financial Statements
(Unaudited).
5
The AZEK Company Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)
(Unaudited)
|
|
|
Six Months Ended March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
52,525
|
|
|
$
|
32,788
|
|
|
Adjustments to reconcile net income (loss) to net cash flows
provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
31,680
|
|
|
|
24,366
|
|
|
Amortization of intangibles
|
|
|
25,444
|
|
|
|
25,183
|
|
|
Non-cash interest expense
|
|
|
2,373
|
|
|
|
1,996
|
|
|
Non-cash lease expense
|
|
|
(68
|
)
|
|
|
39
|
|
|
Deferred income tax (benefit) provision
|
|
|
15,132
|
|
|
|
8,710
|
|
|
Non-cash compensation expense
|
|
|
11,773
|
|
|
|
9,931
|
|
|
Loss (gain) on disposition of property
|
|
|
425
|
|
|
|
298
|
|
|
Changes in certain assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(90,571
|
)
|
|
|
(57,578
|
)
|
|
Inventories
|
|
|
(98,616
|
)
|
|
|
(36,429
|
)
|
|
Prepaid expenses and other currents assets
|
|
|
(8,677
|
)
|
|
|
(2,111
|
)
|
|
Accounts payable
|
|
|
12,213
|
|
|
|
8,239
|
|
|
Accrued expenses and interest
|
|
|
(22,294
|
)
|
|
|
(8,461
|
)
|
|
Other assets and liabilities
|
|
|
1,118
|
|
|
|
1,115
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(67,543
|
)
|
|
|
8,086
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(113,995
|
)
|
|
|
(72,735
|
)
|
|
Proceeds from disposition of fixed assets
|
|
|
497
|
|
|
|
32
|
|
|
Acquisitions, net of cash acquired
|
|
|
(86,935
|
)
|
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(200,433
|
)
|
|
|
(72,703
|
)
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds under revolving credit facility
|
|
|
40,000
|
|
|
|
—
|
|
|
Payment of debt issuance costs
|
|
|
—
|
|
|
|
(938
|
)
|
|
Repayments of finance lease obligations
|
|
|
(1,242
|
)
|
|
|
(883
|
)
|
|
Exercise of vested stock options
|
|
|
4,923
|
|
|
|
2,953
|
|
|
Payments of initial public offering related costs
|
|
|
—
|
|
|
|
(210
|
)
|
|
Cash paid for shares withheld for taxes
|
|
|
(429
|
)
|
|
|
—
|
|
|
Net cash provided by (used in) financing activities
|
|
|
43,252
|
|
|
|
922
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(224,724
|
)
|
|
|
(63,695
|
)
|
|
Cash and cash equivalents – Beginning of period
|
|
|
250,536
|
|
|
|
215,012
|
|
|
Cash and cash equivalents – End of period
|
|
$
|
25,812
|
|
|
$
|