AZEK
The stock closed at $27.15 on its first day of trading. Major owners of the stock are the private equity firm, Ares Capital, and the Ontario Teachers' Pension Plan Fund, both of which own 37.6%. The lead underwriter was Barclays
There was strong demand for the stock despite concerns about consumer confidence given the high unemployment rate. However, AZEK's products are recognized for being environmentally friendly, and ESG stocks have been in favor. AZEK's primary competitor, Trex
On the downside, AZEK has a heavy debt load of $1.2 billion which is 64% of its total assets. In the first six months of 2020, it posted a net loss of $5.8 million on $411 million in revenue, largely due to negative effects from the coronavirus which hampered demand and production. However, this was an improvement from the first six months of 2019, when the company lost $21 million. In contrast, Trex posted net income of nearly $80 million in the first six months of the year.
Company Profile
AZEK is at the intersection of a couple of interesting trends. The housing market is strong with prices rising, primarily due to sustained demand and low supply. Outdoor living spaces are also increasingly popular, especially with Millennials. Finally, AZEK's products are recognized for being sustainable and environmentally friendly which also appeals to the younger generation.
One of the beneficiaries of people spending more time at home has been a surge in home improvement which is also evident from the earnings reports of Home Depot
AZEK was started in 1990, and it's gone through several changes in terms of name and ownership. The company is split into two divisions - AZEK exterior and TimberTech. TimberTech makes its well-known decking material in addition to porches, railing, and lights. AZEK exterior makes trim and molding. It sells its products to a network of 4,000 dealers, including home-improvement stores, and has 35 distributors across North America.