The AZEK Company (AZEK) The 44th Annual William Blair Growth Stock Conference summary

Business overview and strategy

• Manufactures sustainable, low-maintenance outdoor living products from recycled plastics, targeting wood replacement in decking, railing, exteriors, and accessories.

• Holds leading market positions: #2 in decking overall, #1 in pro composite/PVC decking, and #1 in PVC exterior trim, with top brand positions in the U.S. and Canada.

• Focuses on wood conversion, product innovation, multi-channel expansion, and tuck-in M&A to drive above-market growth and margin expansion.

• Vertically integrated manufacturing and a large direct sales force drive demand through professional dealers and big box retailers.

• Emphasizes disciplined capital allocation, prioritizing investments in capacity, product development, recycling, and share repurchases.

Market opportunity and growth drivers

• Total addressable market estimated at $25 billion, with outdoor living as the primary focus.

• Composite decking market share projected to reach ~50% in 10-15 years and up to 75% over time, compared to the current ~23%.

• Each 1% increase in composite conversion equates to 3-4% revenue growth.

• Exteriors business is complementary, not margin dilutive, and offers further wood conversion opportunities.

• Double-digit organic growth targeted, consistently outperforming the 4-5% R&R market growth.

Financial performance and objectives

• Reported $1,435M in LTM FY 2Q24 net sales, with a 10-year net sales CAGR of ~12% and a target for double-digit annual net sales growth.

• Residential segment sales CAGR: 16% (7 years), 12% (10 years); EBITDA more than doubled over the period.

• EBITDA margin target of 27.5% by 2027 already achieved, with plans to expand adjusted EBITDA margin by 500bps versus FY19 baseline.

• Margin expansion driven by recycling, product configuration, continuous improvement, and SG&A leverage.

• Free cash flow expected in low double digits as a percentage of sales, supporting organic growth, CapEx, bolt-on M&A, and share repurchases.