The AZEK Company Inc. AZEK is scheduled to report fourth-quarter fiscal 2024 results on Nov. 19, after the closing bell.
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In the last reported quarter, the company’s adjusted earnings and net sales topped the Zacks Consensus Estimate by 16.7% and 9.3%, respectively.
The company’s earnings surpassed expectations in three of the trailing four quarters and met on one occasion, with an average surprise of 34.2%.
AZEK’s Trend in Estimate Revision
The Zacks Consensus Estimate for AZEK’s fiscal fourth-quarter adjusted earnings per share has moved down to 26 cents from 27 cents in the past 30 days. The estimated figure implies a fall of 27.8% from the year-ago quarter’s adjusted earnings of 36 cents per share.
The AZEK Company Inc. Price and EPS Surprise
The AZEK Company Inc. Price and EPS Surprise
The AZEK Company Inc. price-eps-surprise | The AZEK Company Inc. Quote
The consensus estimate for net sales is pegged at $336.6 million, indicating a 13.4% decrease from the prior-year period’s reported figure of $388.8 million.
Factors to Note for AZEK’s Q4 Performance
Revenues
AZEK’s top line in the fourth quarter of fiscal 2024 is expected to have decreased year over year due to softer trends in the broader repair and remodel market and uneven conditions in the construction sector. Also, regional softness in exterior sales observed in the third quarter is likely to have impacted the company's fiscal fourth-quarter performance.
For the quarter to be reported, AZEK expects total net sales to be between $329 million and $345 million. The company anticipates a $35 million impact on net sales due to advanced purchases made in the previous quarter to ensure strong in-season service
The Zacks Consensus Estimate for the Residential segment’s net sales is pegged at $319 million, indicating a year-over-year decline of 8.9%. The consensus mark for the Commercial segment’s net sales is pegged at $19.4 million, down from $39.2 million reported a year ago. Soft contributions from the Commercial segment due to the divestiture of AZEK’s Vycom business are likely to have hindered growth.
However, the company’s Residential segment’s performance is likely to be aided by material conversion, execution of recent shelf space gains and new product innovations across its product portfolio.
The company expects residential sell-through growth to remain in the mid-single digits in the fiscal fourth quarter. The demand uptrend in product categories, especially Deck, Rail and Accessories, is expected to have aided the growth.
The company remains optimistic about its strategic growth initiatives, supported by strong performance in internal digital and engagement metrics. It believes that pent-up demand will materialize as conditions in the broader market improve. The company is confident in its ability to achieve double-digit growth in the long term, driven by the resilience and potential of its business model.
Margins
The fiscal fourth quarter bottom line of AZEK is likely to have been impacted by higher selling, general, and administrative expenses. Increased investments in sales and marketing initiatives to support organic growth are expected to have contributed to these higher costs.
For the fourth quarter of fiscal 2024, the company expects adjusted EBITDA and adjusted EBITDA margin to be in the ranges of $82 to $92 million and 24.9% to 26.7%, respectively. In the year-ago quarter, the company reported an adjusted EBITDA of $106.4 million and an adjusted EBITDA margin of 27.4%.
However, the company expects the fiscal fourth-quarter margins to be benefited from normalized production levels, increased utilization at its Boise facility, cost absorption and stable material input costs. Increased focus on sourcing and recycling initiatives to lower input costs is likely to have aided the company’s performance in the to-be-reported quarter.
What the Zacks Model Unveils for AZEK
Our proven model does not conclusively predict an earnings beat for AZEK this time around. The company does not have the right combination of two key ingredients—a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold)—to increase the odds of an earnings beat.
Earnings ESP: AZEK has an Earnings ESP of -12.02%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
AZEK’s Zacks Rank: The company currently has a Zacks Rank of 3. You can see the complete list of today’s Zacks Rank #1 stocks here.
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