Benzinga | Aug 12, 2021 11:12AM EDT

Azek Stock Gains On Strong Q3, Raised FY21 Sales Outlook

* Azek Company Inc (NYSE:AZEK) reported third-quarter sales growth of 46.4% year-over-year to $327.45 million, beating the consensus of $291.53 million.

* Sales by segments: Residential $291.2 million (+51.2% Y/Y) and Commercial $36.2 million (+16.5% Y/Y).

* Adjusted EPS improved to $0.26 from $0.05 in 3Q20, beating consensus estimates of $0.23.

* The gross margin contracted by 100 bps to 32.6%, and on an adjusted basis contracted by 290 bps to 37.9%

* The operating income increased to $34.8 million from $7.97 million a year ago, and the margin expanded by 706 bps to 10.6%.

* Azek generated cash from operating activities year-to-date of $118.73 million, compared to $11.29 million a year ago.

* Adjusted EBITDA increased by 25.8% Y/Y to $72.72 million, and margin contracted by 360 bps to 22.2%.

* The company had cash and cash equivalents of $220.5 million and ~$145.6 million available for future borrowings under Revolving Credit Facility. Total debt was $467.7 million as of June 30, 2021.

* Q4 Outlook: Azek expects consolidated net sales growth of 22% - 27% and Adjusted EBITDA growth of 19% - 25% Y/Y.

* FY21 Outlook: Azek expects consolidated net sales growth of 28% - 30% (prior 23% - 26%), Adjusted EBITDA growth of 27% - 29% (prior 25% - 29%).

* Price Action: AZEK shares are trading higher by 9.25% at $40.97 on the last check Thursday.