Earnings Analysis for AZEK: Detailed Financial Overview
Revenue Analysis:
Total and Operating Revenue: Over the recent quarters, AZEK showed a fluctuating trend in total revenues, peaking at $388,812,000 in Q3 2023 and reaching a low of $240,444,000 in Q4 2023. A similar trend is noticed in the operating revenues.
Gross Profit: Gross profit margin seems to fluctuate with revenue, achieving a high of $149,701,000 in Q3 2023 and a lower figure of $91,433,000 in Q4 2023. This suggests variable efficiency in production or sales processes across quarters.
Cost Management:
Cost of Revenue: Cost of revenue has been notably high with $269,519,000 in Q1 2023 declining to a lesser yet substantial $149,011,000 by the end of 2023.
Operating Expense: Operational expenses remained significant throughout the period, starting at $74,460,000 in Q4 2023.
Total Expenses: Total expenses generally followed an increasing trend, rising from $226,257,000 in Q4 2023 to a peak of $343,979,000 by Q1 2023 indicating rising costs or possible expansions.
Profitability Analysis:
EBITDA: EBITDA showed an erratic pattern with the highest at $97,307,000 in Q3 2023. Presence of unusual items significantly impacts some quarterly results.
Operating Income: Operating income ranged from $12,002,000 in Q4 2023 to a higher $65,028,000 in Q3 2023, indicating better operational efficiency in certain quarters.
Pretax Income: Pretax income varied considerably, showing instability in earnings before tax, from $55,967,000 in Q3 2023 down to $22,939,000 in Q1 2023.
Net Income: Net income trends are unstable, highlighting the impact of non-operating incomes, expenses, and tax impacts with a high of $42,643,000 in Q3 2023.
Cash Flow Indicators:
Reconciled Depreciation: Depreciation costs have been stable ranging from around $31,636,000 to $34,005,000, suggesting consistent asset depreciation expenses across the period.
Interest Expense: A notable aspect is the fluctuating interest expense, which might reflect varying debt levels or interest rates, reaching from $10,362,000 in Q1 2023 to a lower $7,335,000 in Q3 2023.
Taxation:
Tax Rate: Tax rates varied, with a high of around 39.6% in Q4 2023, reflecting different tax effects on the financial outcomes.
Tax Provision: Tax provisions also showed variations inline with the pre-tax earnings, being highest at $16,888,000 in Q4 2023 and lowest at $6,666,000 in Q1 2023.
Tax Effect of Unusual Items: There was a notable tax effect adjustment due to unusual items in Q4 2023 amounting to $14,386,680.
Shareholder Metrics:
Diluted and Basic EPS: EPS showed a decline from Q3 with $0.28 (diluted) and $0.23 (basic to $0.17 (both diluted and basic) by Q4 2023 indicating reduced earnings per share.
Average Shares: The number of shares slightly increased from around 150 million shares at the beginning of the period to about 151 million by Q2 2023.
Net Income Available to Common Stockholders: This followed the net income trends with highest at $42,643,000 in Q3 2023.
Conclusion:
AZEK’s financial performance illustrates a pattern of volatility across few quarters with noticeable differences in revenue, cost management, and profitability. While gross profits and operational incomes show good potential, the variations in expenses and other financial obligations suggest areas for managerial focus. Additionally, the effective management of tax liabilities and interest expenses could improve net earnings significantly.
Recommendation: It may benefit AZEK to investigate the causes of cost fluctuation and to explore strategies for more stable financial planning. Operational efficiency and expense management could be key areas for improvement to enhance profitability.