Q3 2024 The AZEK Co Inc Earnings Call

August 7, 2024

Ladies and gentlemen, welcome to the ASAC Company's third quarter fiscal 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Operator: 3rd Quarter Fiscal 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Eric Robinson. Please go ahead, Eric.

Operator: 3rd Quarter Fiscal 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to Eric Robinson. Please go ahead, Eric.

Please be advised that today's conference is being recorded. And I would now like to hand the conference over to Eric Robinson. Please go ahead, Eric.

Eric Robinson: Thank you and good afternoon. We issued our earnings press release and a supplemental earnings presentation this afternoon on the investor relations portion of our website at investors.azekco.com. The earnings press release was also furnished by 8k on the SEC's website. I'm joined today by Jesse Singh, our Chief Executive Officer, and Peter Clifford, our Chief Operations Officer and Chief Financial Officer.

Eric Robinson: Thank you and good afternoon. We issued our earnings press release and a supplemental earnings presentation this afternoon on the investor relations portion of our website at investors.azekco.com. The earnings press release was also furnished by 8K on the SEC's website. I'm joined today by Jesse Singh, our Chief Executive Officer, and Peter Clifford, our Chief Operations Officer and Chief Financial Officer.

Eric Robinson: Thank you and good afternoon. We issued our earnings press release and a supplemental earnings presentation this afternoon to the investor relations portion of our website at investors.azekco.com.

Speaker Change: The earnings press release was also furnished via 8K on the SEC's website. I'm joined today by Jesse Singh, our Chief Executive Officer, and Peter Clifford, our Chief Operations Officer and Chief Financial Officer.

Eric Robinson: I would like to remind everyone that during this call, we may make certain statements that constitute forward-looking statements within the meaning of the federal securities laws, including remarks about future expectations, beliefs, estimates, forecasts, plans, and prospects. Such statements are subject to a variety of risks and uncertainties, as described in our periodic reports filed with the Securities and Exchange Commission, that could cause actual results to differ materially. We do not undertake any duty to update such forward-looking statements.

Speaker Change: I would like to remind everyone that during this call, we may make certain statements that constitute forward-looking statements within the meaning of the federal securities laws, including remarks about future expectations, beliefs, estimates, forecasts, plans, and prospects.

Such statements are subject to a variety of risks and uncertainties, as described in our periodic reports filed with the Securities and Exchange Commission, that could cause actual results to differ materially.

Eric Robinson: We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance.

Eric Robinson: Additionally, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. However, these non-GAAP measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of such non-GAAP measures can be found in our earnings press release and a supplemental earnings presentation, which are posted on our website. Now, I will turn the call over to AZIC's CEO, Jesse Singh.

Eric Robinson: These non- GAAP measures should not be considered in isolation or as a substitute for results prepared in accordance with GAP.

Jesse Singh: Reconciliations of such non-GAAP measures can be found in our earnings press release and a supplemental earnings presentation, which are posted on our website. Now, let me turn the call over to AZIC's CEO , Jesse Singh.

Jesse Singh: Good afternoon, and thank you for joining us. The AZAC team once again delivered strong results in our fiscal third quarter of 2024, including a 12% net sales increase year-over-year, excluding the recently divested BICOM business. Net sales increased 18% year over year, driven by excellent performance in our residential segment, which also grew 18% year over year, driven by strength in deck, rail, and accessories. Our growth playbook and ASEC-specific initiatives continue to demonstrate our ability to outgrow the underlying market, reinforcing our position as the industry leaders.

Jesse Singh: Good afternoon and thank you for joining us. The AZAC team once again delivered strong results in our fiscal third quarter of 2024, including a 12% net sales increase year-over-year.

Jesse Singh: excluding the recently divested BICOM business.

Jesse Singh: excluding the recently divested BICOM business. Net sales increased 18% year-over-year driven by excellent performance in our residential segment, which also grew 18% year-over-year driven by strength in deck, rails, and accessories. Our growth playbook and ASEC-specific initiatives continue to demonstrate our ability to outgrow the underlying market, reinforcing our position as industry leaders as our initiatives drive incremental growth. These actions are driving our sales and converting the market to our products.

Speaker Change: Net sales increased 18% year-over-year, driven by excellent performance in our residential segment, which also grew 18% year-over-year, driven by strength in deck, rails, and accessories.

Speaker Change: Our growth playbook and ASEC-specific initiatives continue to demonstrate our ability to outgrow the underlying market.

Speaker Change: reinforcing our position as the industry leader. As we continue to expand and engage the market in a broader way, we are even more optimistic about the long-term opportunity for growth and material conversion.

Jesse Singh: As we continue to expand and engage the market in a broader way, we are even more optimistic about the long-term opportunity for growth and material conversion. Adjusted EBITDA grew substantially year over year. The adjusted EBITDA margin expanded 260 basis points to a record 27.5%, driven by strong gross margin performance that was partially offset by increased growth investment.

Speaker Change: Adjusted EBITDA grew substantially year-over-year. An adjusted EBITDA margin expanded 260 basis points to a record 27.5% driven by strong gross margin performance that was partially offset by increased growth investments.

Jesse Singh: Our residential segment, which includes our corporate costs, delivered an even stronger growth of 33% year-over-year and achieved a segment-adjusted EBITDA margin of 28.1%. Our margin performance reflects the multi-year execution of our strategy of driving productivity, favorable price cost, Recycle Material Inclusion, and Continuous Improvement Program.

Speaker Change: Our residential segment, which includes our corporate costs, delivered an even stronger growth of 33% year-over-year and achieved a segment-adjusted EBITDA margin of 28.1%.

Speaker Change: Our margin performance reflects the multi-year execution of our strategy of driving productivity, favorable price costs, recycled material inclusion, and continuous improvement programs.

Jesse Singh: The strength in our margins has enabled us to reinvest in the business while being well on our way to achieving our annual adjusted EBITDA target of 27.5%. We also delivered strong cash generation this quarter, and our board of directors recently authorized a $600 million expansion of our share repurchase program. Our results this quarter are a testament to the dedication and passion of AZEX team members and partners to deliver the best products and the best experience for our customers, and I want to thank all of them for their contributions.

Speaker Change: The strength in our margins has enabled us to reinvest in the business while being well on our way towards achieving our annual adjusted EBITDA target of 27.5%.

Speaker Change: We also delivered strong cash generation this quarter, and our Board of Directors recently authorized a $600 million expansion of our share repurchase program.

Speaker Change: Our results this quarter are a testament to the dedication and passion of AZEX team members and partners to deliver the best products and the best experience for our customers. And I want to thank all of them for their contributions.

Jesse Singh: During the quarter, we saw double-digit year-over-year sell-through growth in deck, rail, and accessories and mid-single-digit sell-through growth overall in our residential segment, as our initiatives drove incremental growth. As a reminder, our definition of sell-through includes a blend of what our dealers are buying from our distributors to service existing demand, combined with point of sale data of what contractors and consumers are buying from retail channel partners.

Speaker Change: During the quarter, we saw double-digit year-over-year sell-through growth in deck, rail, and accessories, and mid-single-digit sell-through growth overall in our residential segment as our initiatives drove incremental growth.

Speaker Change: As a reminder, our definition of sell-through includes a blend of what our dealers are buying from our distributors to service existing demand, combined with point-of-sale data of what contractors and consumers are buying from retail channel partners.

Jesse Singh: We saw growth within each of our deck rail and accessories product lines as we continue to see the benefits of channel expansion initiatives, new products, and downstream sales engagement and brand investment. These actions are driving our sales and converting the market to our products. We are especially proud of this performance and the execution of our teams, given the uncertain macro environment.

Speaker Change: We saw growth within each of our deck rail and accessories product lines as we continue to see the benefits from channel expansion initiatives, new products, and downstream sales engagement and brand investments.

Speaker Change: These actions are driving our sales and converting the market to our products.

Speaker Change: We are especially proud of this performance and the execution of our teams, given the uncertain macro environment.

Jesse Singh: Our exteriors product line has grown at a strong 16% tagger from 2019 to 2023. This business, which partially participates in the residential new construction market, experienced some market-driven softness in the quarter after delivering strong growth in the last few years. We continue to see great long-term opportunities for this business as we target material conversion with innovative trim and siding products and capitalize on the significant pent up demand for housing.

Speaker Change: Our exteriors product line has grown at a strong 16% tagger from 2019 to 2023.

Speaker Change: This business, which partially participates in the residential new construction market, experienced some market-driven softness in the quarter after delivering strong growth in the last few years.

Speaker Change: We continue to see great long-term opportunities for this business as we target material conversion with innovative trim and siding products and capitalize on the significant pent-up demand for housing.

Jesse Singh: Overall, we remain confident about the key long-term opportunities in our markets, as we continue to see underinvestment and pent-up demand in repair and remodel and new housing. We continue to invest across our core strengths in research and development, innovation, brand awareness, customer relationships, and our world-class manufacturing operations. Dohman has been a strong partner for us in California, and we're excited about the expansion, which will help drive incremental growth.

Speaker Change: Overall, we remain confident about the key long-term opportunities in our markets as we continue to see under-investment and pent-up demand in repair and remodel and new housing.

Jesse Singh: Overall, we remain confident about the key long-term opportunities in our markets as we continue to see underinvestment and pent-up demand for repair and remodel and new housing. Market trends, including an aging housing stock, the expansion of millennials as homeowners, a shift to more sustainable materials, and an increased focus on outdoor living, should provide a growth environment for years to come.

Speaker Change: Market trends including an aging housing stock, the expansion of Millennials as homeowners, a shift to more sustainable materials, and an increased focus on outdoor living should provide a growth environment for years to come.

Jesse Singh: We continue to invest across our core strengths in research and development, innovation, brand awareness, customer relationships, and our world-class manufacturing operations. We are seeing great momentum in our 2024 new product launches, including TimberTech Composite, TerrainPlus, DEC, and Timber Tech Aluminum Framing Substructure. Most recently, we began a regional launch of our first galvanized steel railing solution, TimberTech FultonRail, which further expands our multi-option railing portfolio across price points.

Speaker Change: We continue to invest across our core strengths in research and development, innovation, brand awareness, customer relationships, and our world-class manufacturing operations.

Speaker Change: we are seeing grate momentum in our two thousand and twenty-four new product launches including timbertech composite to rain plus decking and timbertech aluminum framing substructure

Speaker Change: Most recently, we began a regional launch of our first galvanized steel railing solution, TimberTech FultonRail, which further expands our multi-option railing portfolio across price points.

Jesse Singh: We are on track to launch more new product innovations across both our deck rail and accessories and exteriors portfolio for the 2025 building season, which you'll hear more about later. Our brand awareness and momentum are accelerating as a result of our continued marketing investments and recent channel expansion gains, further reinforcing our position as the leader in sustainable outdoor living building materials. Once again, our timbertech brand was recognized by industry experts, including by US News and World Report as the composite decking brand with the best natural wood look and by Good Housekeeping's Home Improvement and Outdoor Lab as the best overall engineered decking pick. We recently launched our new deck building resource center on timbertech.com with expanded content and resources to serve both our experienced contractor and DIY customers with helpful guides, how-to's, and tips developed by our installation experts.

Speaker Change: We are on track to launch more new product innovations across both our deck, rail, and accessories and exteriors portfolio for the 2025 building season, which you'll hear more about later.

Speaker Change: Our brand awareness and momentum are accelerating as a result of our continued marketing investments and recent channel expansion gains.

Speaker Change: further reinforcing our position as the leader in sustainable outdoor living building materials.

Speaker Change: Once again, our Timber Tech brand was recognized by industry experts, including by U.S. News and World Report as the composite decking brand with the best natural wood look, and by Good Housekeeping's Home Improvement and Outdoor Lab as the best overall engineered decking pick.

Speaker Change: We recently launched our new Deck Building Resource Center on TimberTech.com with expanded content and resources to serve both our experienced contractor and DIY customers with helpful guides, how-tos, and tips developed by our installation experts.

Jesse Singh: These investments in the consumer journey and branding are part of our strategy to educate consumers, drive material conversion, and fuel channel expansion. We have also announced an expansion of our distribution partnership with Dolman Building Materials, which will enable us to more aggressively expand the availability of timber tech decking in and convert the Canadian market. Dohman has been a strong partner for us in California, and we're excited about the expansion, which will help drive incremental growth in fiscal year 2025 and beyond. Progress continues at our new exteriors manufacturing facility outside of Pittsburgh.

Speaker Change: These investments in the consumer journey and branding are part of our strategy to educate consumers, drive material conversion, and fuel channel expansion.

Speaker Change: We have also announced an expansion of our distribution partnership with Dolman Building Materials, which will enable us to more aggressively expand the availability of timber tech decking in and convert the Canadian market.

Speaker Change: Dillman has been a strong partner for us in California and we're excited about the expansion which will help drive incremental growth in fiscal year 2025 and beyond.

Speaker Change: progress continues at our new exteriors manufacturing facility outside of pittsburgh

Jesse Singh: We expect this building to be operational in 2025 and provide additional trim and new siding production capacity at our existing Versatec Exteriors Manufacturing Campus. Across our manufacturing and recycling footprint, we continue to make investments in each of our facilities that allow us to accommodate new products on our roadmap that will support future growth and expand the use of recycled materials. Our recycling introduction rates are getting closer to the 40% level for our AZEK Exteriors brand and in the low to mid-60s range for our TimberTech advanced PVC decking products.

Speaker Change: we expect this building to the operational in two thousand and twenty-five and provide additional timd and new sitinging production capacity at our existing verstechack exteriors manufacturing campus

Speaker Change: Across our manufacturing and recycle footprint, we continue to make investments in each of our facilities that allow us to accommodate new products on our roadmap that will support future growth and expand the use of recycled materials.

Speaker Change: Our recycle introduction rates are getting closer to the 40% level for our AZEK Exteriors brand and in the low to mid-60s range for our TimberTech Advanced PVC decking products.

Jesse Singh: We believe there is more opportunity to drive the recycling content higher, and we will continue to invest in our R&D capabilities to lead through innovation. Turning to our internal demand indicators, we continue to experience strong growth in digital activity, digital engagement, Sample Orders, and Contractor Leads. However, contractor backlogs from our customer surveys have remained consistent with the prior quarter. Both contractor and dealer sentiment remains positive while also being more cautious on the near-term outlook.

Speaker Change: We believe there is more opportunity to drive the recycle content higher and we will continue to invest in our R&D capabilities to lead through innovation.

Jesse Singh: Turning to our internal demand indicators, we continue to experience strong growth in digital activity, digital engagement, Sample Orders, and Contractor Leads. As we look to the remainder of the fiscal year, we are reaffirming our outlook for the second half of fiscal 2024 and raising the midpoint of our full year fiscal 2024 guidance. Our fiscal 2024 residential segment guidance implies a 10 to 12% year over year net sales growth and a 42 to 45% year over year segment adjusted EBITDA growth.

Speaker Change: Turning to our internal demand indicators, we continue to experience strong growth in digital activity, digital engagement, sample orders, and contractor leads.

Speaker Change: Contractor backlogs from our customer surveys have remained consistent with the prior quarter. Both contractor and dealer sentiment remains positive while also being more cautious on the near-term outlook.

Jesse Singh: As we look to the remainder of the fiscal year, we are reaffirming our outlook for the second half of fiscal 2024 and raising the midpoint of our full year fiscal 2024 guidance. Our fiscal 2024 residential segment guidance implies a 10 to 12% year over year net sales growth and a 42 to 45% year over year segment adjusted EBITDA growth. For the fiscal fourth quarter, we continue to assume residential sell-through growth to be in the mid-single digits, as we expect our ASAC-specific growth initiatives to drive continued outperformance relative to the anticipated softer trends in the broader repair and remodel market.

Speaker Change: as we look to the remainder of the fiscal year we are reaffirming our outlook for the second half of fiscal two thousand and twenty four and raising the midpoint of our full year fiscal two thousand and twenty four guidance

Speaker Change: Our Fiscal 2024 Residential Segment Guidance implies a 10-12% year-over-year net sales growth and a 42-45% year-over-year segment-adjusted EBITDA growth.

Jesse Singh: For the fiscal fourth quarter, we continue to assume residential sell-through growth to be in the mid-single digits, as we expect our ASAC-specific growth initiatives to drive continued outperformance relative to the anticipated softer trends in the broader repair and remodel market. Over the last few months, we have seen some choppiness in the overall construction economy and are assuming a down repair and remodel market for the remainder of fiscal year 2024. We expect our channel partners to end the fiscal year at or below historical inventory days on hand.

Speaker Change: For the fiscal fourth quarter, we continue to assume residential sell-through growth.

Speaker Change: to be in the mid-single digits as we expect our aac specific growth initiatives to drive continued outperformance relative to the anticipated softer trends in the broader repairment remodel markets

Jesse Singh: Over the last few months, we have seen some choppiness in the overall construction economy and are assuming a down repair and remodel market for the remainder of fiscal year 2024. We expect our channel partners to end the fiscal year at or below historical inventory days on hand. The strong growth in our internal digital and engagement metrics leads us to believe that there is pent-up demand. We remain confident in our ability to drive double-digit growth over the long term as we continue to prove the resiliency and growth potential that is an outcome of the ASAC business model and having the best team in the industry. I'll now turn the call over to Pete to provide some additional context on our financial results and outlook.

Speaker Change: Over the last few months, we have seen some choppiness in the overall construction economy and are assuming a down repair and remodel market for the remainder of fiscal year 2024.

Speaker Change: We expect our channel partners to end the fiscal year at or below historical inventory days on hand.

Jesse Singh: The strong growth in our internal digital and engagement metrics leads us to believe that there is pent-up demand. We remain confident in our ability to drive double-digit growth over the long term as we continue to prove the resiliency and growth potential that is an outcome of the ASAC business model and having the best team in the industry.

Speaker Change: The strong growth in our internal digital and engagement metrics lead us to believe that there is pent-up demand.

Speaker Change: We remain confident in our ability to drive double-digit growth.

Speaker Change: over the long term.

Speaker Change: as we continue to prove the resiliency and growth potential.

Speaker Change: That is an outcome of the ASAC business model and having the best team in the industry. I'll now turn the call over to Pete to provide some additional context on our financial results and outlook.

Peter Clifford: Thanks, Jesse, and good afternoon, everyone. As Eric highlighted at the beginning of the call, we have uploaded a Supplemental Earnings presentation to the Investor Relations portion of our website. Before we get into the results, I wanted to provide some context on the third quarter operating environment. Our overall residential sell-through, including our exteriors business, was in line with our previously guided expectations for mid-sink. Consistent with past quarters, we surveyed a broad base of our professional contractors and dealers to understand the environment on the ground.

Pete: Thanks, Jesse, and good afternoon, everyone. As Eric highlighted at the beginning of the call, we have uploaded a Supplemental Earnings presentation to the Investor Relations portion of our website. Before we get into the results, I wanted to provide some context on the third quarter operating environment. From a demand perspective, we continue to experience approximately double-digit sell-through growth in fiscal 3Q24 across our deck, rail, and accessories portfolio, including our structure business. Our overall residential sell-through, including our exteriors business, was in line with our previously guided expectations for mid-sink.

Pete: Thanks, Jesse, and good afternoon, everyone. As Eric highlighted at the beginning of the call, we have uploaded a Supplemental Earnings presentation on the Investor Relations portion of our website. Before we get into the results, I wanted to provide some context on the third quarter operating environment.

Pete: In June, our channel partners purchased approximately $35 million of product earlier than in the prior year to ensure strong service levels throughout the build season, which resulted in channel inventories ending the quarter in line with historical average days on hand. The timing of these purchases by the channel added approximately 9% to our 3Q24 sales growth. Consistent with past quarters, we surveyed a broad base of our professional contractors and dealers to understand the environment on the ground.

Pete: From a demand perspective, we continue to experience approximately double-digit sell-through growth in fiscal 3Q24 in our deck, rail, and accessories portfolio, including our structure business.

Pete: Our overall residential sell-through, including our exteriors business, was in line with our previously guided expectations for mid-single digits.

Pete: in june our channelpartners purchased approximately thirty-five million of product earlier than in prior year t ure strong service levels throughout the build season which resulted in channel inventories ending the quarter in line with historical average days on hand

Pete: The timing of these purchases by the channel added approximately 9% to our 3Q24 sales growth.

Pete: Consistent with past quarters, we surveyed a broad base of our pro-contractors and dealers to understand the environment on the ground.

Peter Clifford: Our contractors reported stable project backlogs of seven plus weeks just above pre-pandemic levels. From a sediment perspective, our contractors and dealers communicated relatively consistent views of both current market sediment and expectations for growth compared to the prior quarter survey. Investments that we've been making in sales and marketing are continuing to drive momentum across our digital metrics, even in a down market. From an operating perspective, our production levels were up double digits year over year after lapping the inventory drawdown experienced last year. Production levels in the quarter drove strong utilization and cost absorption in the quarter. We continue to execute our recycling and product configuration. Sourcing and material savings continue to provide a benefit, and commodities remain relatively stable.

Pete: Our contractors reported stable project backlogs of seven plus weeks just above pre-pandemic levels. From a sediment perspective, our contractors and dealers communicated relatively consistent views of both current market sediment and expectations for growth compared to the prior quarter. On the digital side, we continue to see robust growth in both samples and contractor leads, as well as brand awareness. Investments that we've been making in sales and marketing are continuing to drive momentum across our digital metrics, even in a down market.

Pete: Our contractors reported stable project backlogs of 7 plus weeks just above pre-pandemic levels.

Pete: From a sediment perspective, our contractors and dealers communicated relatively consistent views of both current market sediment and expectations for growth compared to the prior quarter's survey.

Pete: On the digital side, we continue to see robust growth in both samples and contractor leads, as well as brand awareness. The investments that we've been making in sales and marketing are continuing to drive momentum across our digital metrics, even in a down market.

Pete: U.S. pro and retail channel expansion, combined with our new pro-channel Canadian distribution partner, Domain Building Materials, will provide important incremental growth in fiscal 2025. These are yet more examples of the accretive growth opportunities that we have in front of us.

Speaker Change: for a u s pro and retail channel expansion combined with our new proach channel canadian distribution partner doomman building materials will provide important incremental growth in fiscal two thousand and twenty-five these are yet more examples of the accretive growth opportunities that would have infront of us

Pete: From an operating perspective, our production levels were up double digits year over year after lapping the inventory drawdown experienced last year. Production levels in the quarter drove strong utilization and cost absorption. We continue to execute our recycling and product configuration. Sourcing and material savings continue to provide a benefit, and commodities remain relatively stable.

Speaker Change: From an operating perspective, our production levels were up double digits year-over-year after lapping the inventory drawdown experienced last year. Production levels in the quarter drove strong utilization and cost absorption in the quarter. We continue to execute our recycling and product configuration initiatives.

Pete: Sourcing and material savings continue to provide a benefit, and commodities remain relatively stable. Ultimately, these combined leverages have allowed us to deliver strong gross margins.

Peter Clifford: Ultimately, these combined levers have allowed us to deliver strong gross margin. This quarter also marks another milestone in our Boise facility, where we have commissioned the last decking production line from our original phase one capacity expansion project, which began in 2021. As utilization continues to increase, we expect to drive meaningful conversion cost per pound improvements out of this strategically important facility. In terms of SG&A, we continue to invest in the front of the business to build our brand and expand our capabilities to drive above market growth.

Pete: Ultimately, these combined levers have allowed us to deliver strong gross margin. This quarter also marks another milestone in our Boise facility, where we have commissioned the last decking production line from our original phase one capacity expansion project, which began in 2021. As utilization continues to increase, we expect to drive meaningful conversion cost per pound improvements out of this strategically important facility. In terms of SG&A, we continue to invest in the front of the business to build our brand and expand our capabilities to drive above market growth.

Speaker Change: This quarter also marks another milestone in our Boise facility, where we have commissioned the last decking production line from our original Phase I capacity expansion project, which began in 2021.

Pete: As utilization continues to increase, we expect to drive meaningful conversion costs per pound improvements out of this strategically important facility.

Pete: In terms of SG&A, we continue to invest in the front of the business to build our brand and expand our capabilities to drive above market growth.

Peter Clifford: In fiscal three, Q24, we grew consolidated net sales by 12% year over year to $434 million, which was partially impacted by the timing of the channel partner purchases as described earlier. Excluding the impact of the Viacom divestiture, our net sales were up 18% year-over-year. The 3Q24 growth was driven by a residential segment increasing 18% year-over-year, partially offset by the $19 million net impact from the divestiture of our Viacom business and our commercial segment.

Pete: In fiscal 3Q24, we grew consolidated net sales by 12% year over year to $434 million, which was partially impacted by the timing of the channel partner purchases as described earlier. Excluding the impact of the Viacom divestiture, our net sales were up 18% year-over-year.

Speaker Change: in fiscal three twenty-four we grew consolidated net sales by twelve percent year-over-year to four hundred and thirty four million which was partially impacted by the timing of the channel part our purchases as desscribed earlier

Speaker Change: Excluding the impact of the Viacom divestiture, our net sales were up 18% year-over-year.

Pete: The 3Q24 growth was driven by a residential segment increasing 18% year-over-year, partially offset by the $19 million net impact from the divestiture of our Viacom business and our commercial segment. 3Q24 gross profit increased by $32 million, or approximately 25% year-over-year, to $164 million. 3Q24 adjusted gross profit increased by $32 million, or 23% year over year, to $168 million. Our adjusted gross profit margin percentage increased 350 base points year over year to finish at 38.7%.

Speaker Change: The 3Q24 growth was driven by a residential segment increasing 18% year-over-year, partially offset by the $19 million net impact from the divestiture of our Viacom business and our commercial segment.

Peter Clifford: 3Q24 gross profit increased by $32 million, or approximately 25% year-over-year, to $164 million. 3Q24 adjusted gross profit increased by $32 million, or 23% year-over-year, to $168 million. Our adjusted gross profit margin percentage increased 350 base points year over year to finish at 38.7%. The adjusted gross profit increase was driven primarily by higher sales, stronger utilization in our plants, continued execution of recycling and product configuration initiatives, and benefited from both sourcing savings and material savings. Gap SG&A expenses increased by 16 million year over year to 89 million.

Pete: 3Q24 gross profit increased by $32 million, or approximately 25% year-over-year to $164 million.

Pete: 3Q24 adjusted gross profit increased by $32 million, or 23% year-over-year, to $168 million.

Pete: Our adjusted gross profit margin percentage increased 350 base points year-over-year to finish at 38.7%.

Pete: The adjusted gross profit increase was driven primarily by higher sales, stronger utilization in our plants, continued execution of recycling and product configuration initiatives, and benefited from both sourcing savings and material savings. Gap SG&A expenses increased by 16 million year over year to 89 million.

Pete: The adjusted gross profit increase was driven primarily by higher sales, stronger utilization in our plants, continued execution of recycling and product configuration initiatives.

Pete: and benefited from both sourcing savings and material savings.

Pete: GAAP SG&A expenses increased by $16 million year-over-year to $89 million. The increase is primarily driven by residential segment SG&A investments in marketing and brand awareness initiatives and approximately $5 million of one-time costs.

Peter Clifford: The increase is primarily driven by residential segment SG&A investments in marketing and brand awareness initiatives and approximately 5 million of one-time costs. Adjusted EBITDA for 3Q24 increased by $23 million, or 23% year-over-year to $119 million. The adjusted even a margin rate for the quarter increased 260 basis points year over year to 27.5%, driven by gross margin expansion, partially offset by SG&A investment. Net income for 3Q24 increased by $15 million to $50 million, or $0.34 per share. Adjusted net income for 3Q24 increased by $17 million to $62 million, or adjusted diluted EPS of $0.42 per share. Now, we turn to our segment results.

Pete: The increase is primarily driven by residential segment SG&A investments in marketing and brand awareness initiatives and approximately 5 million of one-time costs. Adjusted EBITDA for 3Q24 increased by $23 million, or 23% year-over-year to $119 million. The adjusted even a margin rate for the quarter increased 260 basis points year over year to 27.5%, driven by gross margin expansion, partially offset by SG&A investment. Net income for 3Q24 increased by $15 million to $50 million, or $0.34 per share. Adjusted net income for 3Q24 increased by $17 million to $62 million, or adjusted diluted EPS of $0.42 per share. Now, we turn to our segment results.

Pete: Adjusted EBITDA for 3Q24 increased by $23 million or up 23% year-over-year to $119 million.

Pete: The adjusted EBITDA margin rate for the quarter increased 260 basis points year-over-year to 27.5%, driven by gross margin expansion partially offset by SG&A investments.

Pete: Net income for 3Q24 increased by $15,000,000 to $50,000,000, or $0.34 per share. Adjusted net income for 3Q24 increased by $17,000,000 to $62,000,000, or adjusted diluted EPS of $0.42 per share.

Peter Clifford: Residential segment net sales for 3Q24 were $416 million, up 18% year-over-year. Residential segment adjusted EBITDA for 3Q24 came in at $117 million, up approximately 33% year-over-year; adjusted it even on margins were up 310 basis points year over year to 28.1%. Commercial segment net sales for the quarter were $18 million, down 49% year-over-year, primarily due to the sale of the Viacom business. Commercial segment adjusted EBITDA for the quarter came in at $2.5 million, a decrease of $6.3 million year-over-year. The decrease was primarily driven by the disposition of the Viacom business.

Pete: Residential segment net sales for 3Q24 were $416 million, up 18% year-over-year. Residential segment adjusted EBITDA for 3Q24 came in at $117 million, up approximately 33% year-over-year; adjusted it even on margins were up 310 basis points year over year to 28.1%. Commercial segment net sales for the quarter were $18 million, down 49% year-over-year, primarily due to the sale of the Viacom business. Commercial segment adjusted EBITDA for the quarter came in at $2.5 million, a decrease of $6.3 million year-over-year. The decrease was primarily driven by the disposition of the Viacom business.

Pete: Now turning to our segment results.

Pete: residential segment that sales for three q twenty four or four hundred and sixteen million up eighteen percent year-year residential segment adjusted ebita for three q twenty four came in at one hundred and seventeen million up approximately thirty three percent year -year

Pete: Residential segment adjusted at EBITDA margins were up 310 basis points year-over-year to 28.1%.

Pete: Commercial segment net sales for the quarter were $18 million, down 49% year-over-year, primarily due to sales of the Viacom business.

Pete: Commercial segment adjusted EBITDA for the quarter came in at $2.5 million, a decrease of $6.3 million year-over-year. The decrease was primarily driven by the disposition of the Viacom business.

Peter Clifford: From the balance sheet and cash flow perspective, we ended the quarter with cash and cash equivalents of $347 million and approximately $148 million available for future borrowings under our revolving credit facility. Working capital, defined as inventory plus accounts receivable minus accounts payable, was $208 million, down $12 million year over year. We ended the quarter with gross debt of $667 million, which included $77 million in finance. Net debt was $320 million, and our net leverage ratio stood at 0.8 times at the end of 3Q24.

Pete: From the balance sheet and cash flow perspective, we ended the quarter with cash and cash equivalents of $347 million and approximately $148 million available for future borrowings under our revolving credit facility. Working capital, defined as inventory plus accounts receivable minus accounts payable, was $208 million, down $12 million year over year. We ended the quarter with gross debt of $667 million, which included $77 million in financing.

Pete: From a balance sheet and cash flow perspective, we ended the quarter with cash and cash equivalents of $347 million and approximately $148 million available for future borrowings under our revolving credit facility.

Pete: Working capital defined as inventory plus accounts receivable minus accounts payable was $208 million, down $12 million year-over-year. We ended the quarter with gross debt of $667 million, which included $77 million of finance leases.

Pete: Net debt was $320 million, and our net leverage ratio stood at 0.8 times at the end of 3Q24. Net cash from operating activities was $195 million during the third quarter, an increase of $23 million year-over-year. Capital expenditures for the quarter were approximately $18 million. For the third quarter, free cash flow was $178 million, an increase of $13 million year-over-year. As we previously announced, we completed a $50 million accelerated share repurchase program in June.

Pete: Net debt was $320 million, and our net leverage ratio stood at .8 times at the end of 3Q24.

Peter Clifford: Net cash from operating activities was $195 million during the third quarter, an increase of $23 million year-over-year. Capital expenditures for the quarter were approximately $18 million. For the third quarter, free cash flow was $178 million, an increase of $13 million year-over-year. As we previously announced, we completed a $50 million accelerated share repurchase program in June. Under the terms of the agreement, the company retired approximately 1.2 million shares, with the balance settled on August 5, 2024. The remaining authorization under our share repurchase program is approximately $625 million. As a reminder, our capital allocation priorities remain the same as we previously communicated.

Pete: Net cash from operating activities was $195 million during the third quarter, an increase of $23 million year-over-year. Capital expenditures for the quarter were approximately $18 million.

Pete: For the third quarter, free cash flow is $178 million, an increase of $13 million year-over-year.

Pete: As we previously announced, we completed a $50 million accelerated share repurchase program in June .

Pete: Under the terms of the agreement, the company retired approximately 1.2 million shares, with the balance settled on August 5, 2024. The remaining authorization under our share repurchase program is approximately $625 million. As a reminder, our capital allocation priorities remain the same as we previously communicated.

Pete: As a reminder, our capital allocation priorities remain the same as we previously communicated. We will continue to invest in our business both organically and inorganically, and to the extent we have excess cash flow, we will look to repurchase shares opportunistically.

Peter Clifford: We will continue to invest in our business both organically and inorganically, and to the extent we have excess cash flow, we will look to repurchase shares opportunistically. Shifting towards our outlook, I wanted to share some perspective on the assumptions heading into the fourth quarter. We expect to see a negative R&R market in 4Q24. We see residential sell through in the mid single digits. In Q3, we've seen some regional softness and exterior weakness and expect this to continue through the fourth quarter. We see benefits from our focus on sourcing and recycling initiatives to drive lower input costs for gross margin.

Pete: We will continue to invest in our business both organically and inorganically, and to the extent we have excess cash flow, we will look to repurchase shares opportunistically. Shifting towards our outlook, I wanted to share some perspective on the assumptions heading into the fourth quarter. We expect to see a negative R&R market in 4Q24. We see residential sell through in the mid single digits. In Q3, we've seen some regional softness and exterior weakness and expect this to continue through the fourth quarter.

Pete: shifting towards our outlook i wanted to share some perspective on the assumptions heading into the fourth quarter

Pete: We expect to see a negative R&R market in 4Q24. We see residential sell-through in the mid-single digits.

Pete: In Q3, we've seen some regional softness in exteriors and expect this to continue through the fourth quarter.

Pete: We continue to focus on driving above-market growth through our conversion and share gain initiatives. We expect to manage channel inventories conservatively through our fiscal year-end to be at or below historical averages. On the margin side, our fourth quarter will be positively impacted by normalized production levels, increased utilization of our Boise facility, cost absorption, and stable material input costs. We see benefits from our focus on sourcing and recycling initiatives to drive lower input costs for gross margin.

Pete: On the margin side, our fourth quarter will be positively impacted by normalized production levels, increased utilization with our Boise facility, cost absorption, and stable material input costs.

Pete: We see benefits from our focus on sourcing and recycling initiatives to drive lower input costs to our gross margins.

Pete: In SG&A, we will continue to support organic growth through sales and marketing initiatives. With that in mind, let me move to our updated guidance for fiscal 2024. Given our outperformance in the first nine months, we are raising the bottom of our guidance for full year consolidated net sales to a range between $1,422,000,000 to $1,438,000,000 and increasing our full year adjusted even our range to between $370,000,000 to $380,000,000. Our net sales guidance range would imply 10 to 11% growth year over year, adjusting for the Viacom sale, and 30 to 34% year over year growth in adjusted EBITDA.

Pete: In SG&A, we will continue to support organic growth through sales and marketing initiatives.

Pete: With that context,

Pete: Let me move to our updated guidance for fiscal 2024.

Pete: Given our outperformance in the first nine months, we are raising the bottom of our guidance for full-year consolidated net sales to a range between $1,422,000,000 to $1,438,000,000.

Pete: and increasing our full-year adjusted EBITDA range to between $370 million to $380 million.

Jesse Singh: Our net sales guidance range would imply 10 to 11% growth year-over-year, adjusting for the Viacom sale, and 30 to 34% year-over-year growth in adjusted EBITDA. For additional guidance assumptions to assist with modeling fiscal 2024, please refer to the Supplemental Earnings presentation we have posted on our Investor Relations website. Taking these factors into consideration, our guidance for the quarter is $329 million to $345 million in revenue and $82 million to $92 million in adjusted EBITDA. We are expecting an effective tax rate of approximately 26% for the quarter. With that, I will now turn the call back to Jesse for his closing remarks. Thanks.

Pete: Our net sales guidance range would imply 10-11% growth year-over-year, adjusting for the Viacom sale, and 30-34% year-over-year growth in adjusted EBITDA. Our residential segment planning assumption for the year is

Pete: A residential segment planning assumption for the year is $1,351,000,000 to $1,365,000,000 in net sales and $358,000,000 to $367,000,000 in segment adjusted EBITDA, representing 10% to 12% sales growth year over year and 42% to 45% segment adjusted EBITDA growth when combining corporate expenses with our residential reporting segment, as mentioned earlier this fiscal year. A few assumptions to share include the following.

Pete: one billion three hundred and fifty one million to one billion three hundred and sixty five million and net sales and three hundred fifty eight million to three hundred and sixty seven million and segment adjusted ebitda representing ten to twelve percent sales growth the over-year

Pete: and 42 to 45 percent segment adjusted EBITDA growth when combining corporate expenses with our residential reporting segment as mentioned earlier this fiscal year.

Pete: As a reminder, we expect to see two to four million of one-time greater gross than net sales discounts in the quarter to support the channel expansion communicated last quarter. We are expecting a capital expenditure range of between $90 million and $95 million, consistent with our publicly stated target of CapEx of approximately 5% to 7% of revenue. Additionally, we are expecting depreciation of approximately $90 to $92 million.

Pete: A few assumptions to share include the following. As a reminder, we expect to see $2 to $4 million of one-time greater gross than net sales discounts in the quarter to support the channel expansion communicated last quarter.

Pete: We are expecting a capital expenditure range of between $90 million to $95 million, consistent with our publicly stated target of CapEx of approximately 5% to 7% of revenue.

Pete: We are expecting depreciation approximately $90 to $92 million. We are expecting a gap tax rate for the full year of approximately 29 percent.

Pete: We are expecting a gap tax rate for the full year of approximately 29%. And finally, for the full year, fiscal 2024, we expect to deliver another strong year of free cash flow generation. For additional guidance assumptions to assist with modeling fiscal 2024, please refer to the Supplemental Earnings presentation we have posted on our Investor Relations website. For the fourth quarter, we are expecting sell-through growth in the mid-single digits. It is important to highlight that we are reaffirming our second half of fiscal 2024 sales outlook and raising the bottom end of the guidance, which now assumes 3 to 5% year over year growth.

Pete: And finally, for the full year, fiscal 2024, we expect to deliver another strong year of free cash flow generation.

Pete: For additional guidance assumptions to assist with modeling fiscal 2024, please refer to the Supplemental Earnings presentation we have posted on our Investor Relations website. For the fourth quarter, we are expecting sell-through growth in the mid-single-digit range.

Pete: It is important to highlight that we are reaffirming our second half of fiscal 2024 sales outlook and raising the bottom end of the guidance, which now assumes 3 to 5% year-over-year growth.

Pete: We expect channel partners' behavior to follow traditional seasonal patterns of modest inventory drawdowns. As we approach the winter months, we saw approximately 35 million dollars of sales impact from the timing of channel purchases into the third quarter from the fourth quarter, impacting fourth quarter sales by 9%. Taking these factors into consideration, our guidance for the quarter is $329 million to $345 million in revenue and $82 million to $92 million in adjusted EBITDA. We are expecting an effective tax rate of approximately 26% for the quarter. With that, I will now turn the call back to Jesse for his closing remarks. Thanks.

Pete: We expect channel partners' behavior to follow traditional seasonal patterns of modest inventory drawdowns as we approach the winter months.

Pete: We saw approximately $35 million of sales impact from the timing of channel purchases into the third quarter from the fourth quarter, impacting fourth quarter sales by 9%.

Pete: Taking these factors into consideration, our guidance for the quarter is $329 million to $345 million in revenue and $82 million to $92 million in adjusted EBITDA.

Pete: We are expecting an effective tax rate of approximately 26% for the quarter. With that, I will now turn the call back to Jesse for closing remarks.

Jesse Singh: I would like to thank our dedicated team members, channel and supplier partners, and contractors for your continued dedication to the Azek Company. We believe we are well positioned to win across any market scenario and continue to see substantial opportunities for material conversion to our types of low-maintenance, long-lasting materials. Our residential segment five-year CAGR from 2018 to 2023 is 18%, and our 10-year CAGR from 2013 to 2023 is 12%. Consistent with our multi-year track record, we expect to deliver 10 to 12% growth in our residential segment in 2024.

Jesse Singh: thanks pe i would again like to thank our dedicated team members channel and supplier partners and contractors for your continued dedication for the aac company

Jesse Singh: to the Azek Company. We believe we are well positioned to win across any market scenario and continue to see substantial opportunities for material conversion to our types of low-maintenance, long-lasting materials. Our residential segment five-year CAGR from 2018 to 2023 is 18%, and our 10-year CAGR from 2013 to 2023 is 12%. Consistent with our multi-year track record, we expect to deliver 10 to 12% growth in our residential segment in 2024. And we are well positioned to drive above market growth in fiscal year 2025.

Jesse Singh: We believe we are well-positioned to win across any market scenario and continue to see substantial opportunities for material conversion to our types of low-maintenance, long-lasting materials.

Jesse Singh: our residential segment five year tger from twenty and eighteen to two thousand and twenty three is eighteen percent in our ten year cagger from two thousand and thirteen to two thousand and twenty three is twelve percent

Jesse Singh: consistent with our multi-year track records.

Jesse Singh: we expect to deliver ten to twelve percent growth in our residential segment in two thousand and twenty four

Jesse Singh: And we are well positioned to drive above market growth in fiscal year 2025 and over the long term by continuing to execute our growth strategy. We continue to see significant opportunities on the cost reduction, recycling, and productivity fronts and expect to build upon the multi-year margin initiatives we have executed to achieve our annual adjusted EBITDA margin target of 27.5%.

Jesse Singh: and we are well positioned to drive above market growth in fiscal year 2025 and over the long term by continuing to execute our growth strategy.

Jesse Singh: And over the long term, by continuing to execute our growth strategy. We continue to see significant opportunities on the cost reduction, recycling, and productivity fronts and expect to build upon the multi-year margin initiatives we have executed to achieve our annual adjusted EBITDA margin target of 27.5%.

Pete: we continue to see significant opportunity on the cost reduction

Pete: Recycling and Productivity Fronts.

Pete: and expect to build upon.

Pete: The Multi-Year Margin Initiative.

Pete: we have executed upon to achieve our annual adjusted EBITDA margin target of 27.5%.

Operator: With that operator, please open the line for questions. Thank you, and we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question,

Speaker Change: With that, Operator, please open the line for questions.

Operator: Thank you, and we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Thank you, and we will now begin the question and answer session.

Operator: To be able to take as many questions as possible, we do ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. And your first question comes from the line of Philip Ng with Jeffreys. Your line is open. Hey guys, congrats on a really strong quarter.

Operator: If you would like to withdraw your question, simply press star 1 a second time. To be able to take as many questions as possible, we do ask that you please limit yourself to one question. Again, it is star 1 if you would like to join the queue. And your first question comes from the line of Philip Ng with Jeffreys. Your line is open.

Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time.

Pete: If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Pete: To be able to take as many questions as possible, we do ask that you please limit yourself to one question.

Pete: Again, it is star 1 if you would like to join the queue.

Speaker Change: And your first question comes from the line of Philip Ng with Jeffreys. Your line is open.

Philip Ng: Hey guys, congrats on a really strong quarter and the outlook's really impressive just given how choppy the consumer and the macro backdrop is. So, great job from a team perspective.

Pete: Jesse, I guess historically you've been skewed more towards the higher end of the consumer. Can you just give us some color on how orders and backlogs have progressed through the quarter and into July and how perhaps the high-end, low-end, or mid-end of your customer portfolio is kind of broken down and how they're kind of performing?

Jesse Singh: Yeah, so thanks, Phil, for the question. Let me just give you a couple of high-level data points that will put things in perspective. As we talked about, we are a predominantly professional business where, you know, give or take, only about 5% of our decking is actually in stock at retail. The rest is either special order at retail or in the pro shop.

Jesse Singh: Yeah, so thanks, Phil, for the question. Let me just give you a couple of high-level data points that will put things in perspective. As we talked about, we are a predominantly pro-

Speaker Change: business where you know give or take only about 5% of our decking is actually in stock at retail.

Jesse Singh: So we are relatively limited in our exposure to stock decking, and it's been an expanding program for us. And then I think the other general data point, which you're highlighting, is that a meaningful part of our business sits in what we would define as best or premium. You know, upwards of 60% of our business sits more in that category. And so as you look at the makeup of our company, we are disproportionately compared to, you know, others in the industry, disproportionately focused on professional athletes and those types of products that fit the professional.

Speaker Change: The rest is either special order, at retail, or in the pros. So we are relatively...

Pete: limited in our exposure on stock-decking, and it's been an expanding program for us. I think the other general data point which you're highlighting,

Pete: is a meaningful part of our business sits in what we would define as best or premium, you know, you know, upwards of 60% of our business sits

Pete: more in that category. And so as you look at the makeup of our we are disproportionately compared to, you know, others in the industry, disproportionately focused on pro

Jesse Singh: So relative to trends, as we talked about on the last call, we had seen, you know, overall, roughly double-digit trends in April. That moderated modestly across the portfolio, where we did see some modest slowdown in particular in our exteriors business. But as we highlighted in the deck rail and accessories business, you know, we ended the quarter at double-digit growth. Now that's actually down a little bit from earlier in the year, where we defined it as strong double-digit growth, which would have been, you know, closer to kind of teens growth.

Pete: and those types of products that fit the pro.

Pete: So, relative to trends, as we talked about at the last call,

Philip Ng: We had seen, you know, overall, roughly double-digit trends in April . That moderated modestly across the portfolio.

Philip Ng: where we did see some modest slowdown in in particular our exteriors business but as we highlighted on the deck rail and accessories business

Pete: You know, we ended the quarter at double-digit growth. Now, that's actually down a little bit from earlier in the year where we defined it as strong double-digit growth, which would have been, you know, closer to

Jesse Singh: So it was down modestly. And as we highlighted in the call, the backlog from our contractors continues to be relatively steady across, in particular, the deck rail and accessories area. And then once again, as we called out on the call, we've seen some, you know, geographic weakness in our exteriors business. So, and so in effect, that's how you get the, you know, the mid-single-digit sell-through growth that we expect to see in Q4.

Pete: kind of teams grow. So it was down modestly and as we highlighted in the call, the backlog from our contractors continues to be

Jesse Singh: relatively steady.

Jesse Singh: across, in particular, the deck rail and accessories area. And then once again, as we called out...

Jesse Singh: On the call, we've seen some

Jesse Singh: Geographic weakness in our exteriors business. So in effect, that's how you get.

Philip Ng: The mid-single-digit sell-through growth that we expect to see in Q4.

Pete: Thanks for the great color, Jesse.

Operator: And your next question comes from the line of Michael Rehaut with J.P. Morgan. Your line is open.

Jesse Singh: Appreciate it. Thank you.

Speaker Change: and your next question comes from the line of michael reht with jp morgan your line is open

Unknown Attendee: Hi, thanks. Good afternoon.

michael reht: Hi. Thanks. Good afternoon. Thanks for taking my question. I wanted to just get a sense of the, you know, your expected sell-through trend for the fourth quarter up mid-single digits.

Jesse Singh: Thanks for taking my question. I wanted to just get a sense of the, you know, your expected sell-through trend for the fourth quarter in the mid-single digits. Um, I assume that's kind of an all-in sell through trend for residential versus, You know, I'd love to kind of get the comp of that versus the third quarter because it kind of broke out in the third quarter, you know, sell through double digits on Zachary Allen Accessories, Offset by Softer Trends.

Philip Ng: Um, deck rail and accessories, offset by softer trends. What I'm trying to get at is if the 4Q sell-through trend is kind of similar to the all-in residential sell-through in the third quarter, or if there's a little bit of Analysis and Evaluation with Carol Monaghan on Exterior's softness relative to deck and rail.

Speaker Change: I assume that kind of looks like an all-in sell-through trend for residential versus

Speaker Change: You know, I'd love to kind of get the comp of that versus the third quarter because it kind of broke out in the third quarter, you know, sell through double digits on

Jesse Singh: What I'm trying to get at is if the 4Q sell-through trend is kind of similar to the all-in residential sell-through in the third quarter, or if there's a little bit of, www.youtube.com.uk Exterior's softness relative to deck and rail.

Speaker Change: Decker Rail and Accessories, Offset by Softer Trends. What I'm trying to get at is if the 4Q sell-through trend is kind of similar to the all-in residential sell-through in the third quarter or if there's a little bit of

Speaker Change: Acceleration embedded in that and if so why?

Speaker Change: And just secondly, any more color on, you know, why exteriors is a little softer than decking and rail in the third quarter. Usually I believe it's largely within, you know, spitting distance of each other. And so just kind of curious if there's any specific drivers to the,

Speaker Change: exteriors softnessthis relative to deckand rail

Jesse Singh: Yeah, I, you know, high level, and then I'll ask Pete to chime in, you know, the way to think of the fourth quarter, from what we can see on sell through trends, you know, how do we get to the mid single digits? It looks generally like the third quarter, meaning deck rail and accessories are above the mid single digits, and exteriors would be below the mid single digits. As a reminder, exteriors, you know, give or take, are 25% of the business.

Speaker Change: Yeah, I, you know, high level and then I'll ask Pete to chime in. You know, the way to think of the fourth quarter from what we can see on sell through trends, you know, how do we get to the mid single digit?

Pete: It looks generally like the third quarter, meaning deck rail and accessories is above mid-single digits and exteriors.

Jesse Singh: So it has a smaller impact relative to that. So you should think of it there. And once again, remember, as we look at our growth profile, we have a number of initiatives that I called out new products, shelf gain, downstream contractor wins, All of those kinds of things from our 200-person sales force that lead to those kinds of sell-through growth. So then, relative to your question on exteriors, Pete, I don't know if you want to take that just at a high level, and then I can add color if needed Yeah, the macro, you know, how I would describe it is, look, you know, the industry.

Pete: would be below Midsommar. Just as a reminder, exteriors, you know, give or take is 25.

Pete: percent of the business. So it has a smaller impact relative to that. So you should think of it there. And once again, remember, as we look at

Speaker Change: Our growth profile, we have a number of initiatives that I called out, new products, shelf gain, downstream contractor wins.

Speaker Change: All of those kinds of things from our 200-person sales force that lead to those kinds of sell-through growth. So then relative to your question on exteriors,

Jesse Singh: All of those kinds of things from our 200-person sales force that lead to that kind of sell-through growth. So then, relative to your question on exteriors, Pete, I don't know if you want to take that just at a high level, and then I can add color, if needed, how I would describe it as, look, the industry.

Speaker Change: Pete, I don't know if you want to take that just at a high level and then I can add color if needed.

Peter Clifford: Yeah, the macro, you know, how I would describe it is, look, the industry has a large concentration in the Northeast, so it parallels the housing market dynamics of the Northeast pretty closely. We are hearing and seeing from many of our customers that there has been an elongation, if you want to call it that, of the lag between sort of starts and completions, especially in the Northeast. And that's kind of what we see, generally speaking, from an exterior perspective.

Pete: Yeah, the macro, you know, how I would describe it is, look, the industry has a large concentration in the Northeast, so it parallels the housing market dynamics of the Northeast pretty closely. We are hearing and seeing from many of our customers that there has been an elongation, if you want to call it that, of the lag between sort of starts and completions, especially in the Northeast, and that's kind of what we see, generally speaking, from an exterior perspective. And then maybe just a double click again on some sort of sell through.

Peter Clifford: Yeah, the macro, you know, how I would describe is, look, you know, the industry has a large concentration in the Northeast, so it parallels housing market dynamics of the Northeast pretty closely. We are hearing and seeing from many of our customers that there has been a...

Pete: and elongation, if you want to call it that, of the lag between sort of starts and completions, especially in the Northeast.

Mike: And that's kind of what we see, generally speaking, from an exteriors perspective. And then maybe just to double-click again on sort of sell-through, how I would think about it, Mike, is in the first half of the year, you should think of deck rail and accessories, as Jesse said, being sort of low teens.

Peter Clifford: And then maybe just to double-click again on sort of sell-through, how I would think about it, Mike, is that in the first half of the year, you should think of deck rail and accessories, as Jesse said, being sort of low teens. And in the first half of the year, the exterior is kind of being flapped up, maybe low single digits. In the back half of the year, that looks like high single digits approaching double digits for deck rail and accessories, and where exteriors are probably flat to modestly down in low single digits. That's kind of the high-level kind of math.

Mike: And in the first half of the year, the exterior is kind of being flapped up, maybe low single digits.

Mike: In the back half of the year, that looks like high single digits approaching double digit for deck, ground, accessories, and or exteriors is probably flat to modestly down low single digits. That's kind of the high level kind of math.

Speaker Change: Great, thank you.

Operator: And your next question comes from the line of Tim Weiss with Baird. Your line is open.

Tim Weiss: And your next question comes from the line of Tim Weiss with Baird. Your line is open.

Mike: Appreciate it. Thanks, Mike.

Mike: it

Speaker Change: And your next question comes from the line of Tim Weiss with Baird. Your line is open.

Jesse Singh: Hey guys, good afternoon. And yeah, nice job in a dynamic environment. Maybe just on channel expansion. I don't know if you kind of fully quantified this for 2024, but just kind of thinking about how channel expansion, I don't know if you want to call that shelf space or other parts of the market, has kind of contributed to growth this year. And I think you do probably have some decent visibility into what that looks like at this point for next year. So just trying to think about how we should kind of think about channel expansion or shelf expansion, you know, kind of share gain, you know, this year and then kind of going into next.

Jesse Singh: Hey guys, good afternoon. And yeah, nice job in a dynamic environment. Maybe just on channel expansion. I don't know if you kind of fully quantified this for 2024, but just kind of thinking about how channel expansion, I don't know if you want to call that shelf space or other parts of the market, has kind of contributed to growth this year. And I think you do probably have some decent visibility into what that looks like at this point for next year. So just trying to think about how we should kind of think about the channel expansion, the shelf expansion, you know, kind of share gain, you know, this year and then kind of going into next.

Tim Weiss: Hey guys, good afternoon, and yeah, nice job in a dynamic environment.

Tim Weiss: Maybe just on channel expansion, I don't know if you kind of fully quantified this for 2024, but just kind of thinking about what the channel expansion, I don't know if you want to call that shelf space or other parts of the market, has kind of contributed to growth this year.

Mike: And I think you do probably have some decent visibility to what that looks like at this point for next year. So just trying to think about, you know, how we should, you know, kind of think about the channel expansion, the shelf expansion, you know, kind of share gains, you know, this year and then kind of going into next.

Jesse Singh: Yeah, I, as we talked about, our intent is to, you know, outgrow the market, give or take by five to 7%. Now, we think, as we look back, we may have done a bit better than that over the last 18 months.

Jesse Singh: Yeah, as we talked about, our intent is to, you know, outgrow the market, give or take by five to 7%. Now, we think, as we look back, we may have done a bit better than that over the last 18 months. But as you know, we built the growth plan, think of it as in that five to 7%. That is really built on some conversion.

Speaker Change: Yeah, as we've talked about, our intent is to, you know, outgrow the market, you know, give or take by five to seven percent. Now, we think, as we look back, we may have done a bit better than that.

Jesse Singh: But as, as, you know, we built the growth plan, think of it as in that five to 7%, that is really built on some conversion. But then a few points of, of, you know, what we call initiative, you know, call it two to three, I think, you know, we've talked about last year, or 2024, that being closer to, you know, 5%, in terms of just self-help initiatives, and then you should think of channel expansion, both in the retail and the pro, as contributing, you know, a meaningful part of that 5%. And, and as you mentioned, with what we announced yesterday, and what we announced on the last call, as we look at 2025, you know, we're going to have a similar target of, you know,

Mike: Over the last 18 months, but as as you know, we built the growth plan. Think of it as in that five to seven percent that is really built on some conversion.

Mike: But then a few points of, you know, what we call initiative.

Jesse Singh: But then a few points of, you know, what we call initiative, you know, call it two to three, I think, you know, we've talked about last year, or 2024, that being closer to, you know, 5%, in terms of just self help initiatives. And then you should think of channel expansion, both in the retail and the pro, as contributing, you know, a meaningful part of that 5%. And as you mentioned, with what we announced yesterday, and what we announced on the last call, as we look at 2025, you know, we're going to have a similar target of self-help between new products and channel expansion, of, you know, in that, you know, call it, you know, I think on our growth stack, we say two to three, we're obviously targeting something like 5% growth, you know, with the channel discussion that we've had to date, and we disclosed, that gives us, I'd say, a little bit better start to 2025 than we had last year relative to visibility.

Mike: You know, call it two to three. I think, you know, we've talked about last year or 2024, that being closer to, you know, 5% in terms of just self-help initiatives. And then you should think of channel expansion, both in the retail and the pro.

Jesse Singh: as contributing, you know, a meaningful...

Mike: part of that 5%. And as you mentioned, with what we announced yesterday, and what we announced on the last call, as we look at 2025, you know, we're going to have a similar target of

Jesse Singh: selfll-help between new products and channel expansion

Jesse Singh: of, you know, in that, you know, call it, you know, I think on our growth stack, we say two to three, we're obviously targeting something like five.

Mike: percent growth with the channel discussion that we've had to date and we've disclosed

Mike: That gives us, I'd say, a little bit better start to 2025 than we had last year relative to visibility.

Peter Clifford: Okay, okay, that's helpful. And then maybe just on the margins, you know, let's say the market gets a little weaker or even more weaker from here. I guess, how would you kind of manage the margins or what type of levers would you pull? You know, could you accelerate some of your internal margin initiatives? How would you kind of treat, you know, marketing and branding, those types of things?

Speaker Change: Okay, okay, that's helpful. And then maybe just on the margins.

Speaker Change: You know, let's say the market gets a little weaker or more weaker from here. I guess, how would you kind of manage the margins or what type of levers would you pull? You know, could you accelerate some of your internal margin initiatives? How would you kind of treat, you know, marketing and branding, those types of things?

Peter Clifford: Yeah, Tim, this is Peter, and I think as we've talked about all the way back to investor day in 2022, we've kind of laid out the pathway to meaningful margin expansion, and I think on the last call or two, we've kind of ended that. We've probably executed about half of that opportunity, and half still remains. So, you know, we still see plenty of opportunities to execute against, whether it be increasing recycling content, continuing to move the cheaper, lower grades of recycling, and challenging our conversion costs within recycling, as well as within our plants.

Peter Clifford: Yeah, Tim, this is Peter. You know, I think as we've talked about all the way back to the investor day in 2022, we've kind of laid out the pathway to, you know, meaningful margin expansion, I think on the last call or two.

Peter Clifford: We've kind of ended that. We've probably executed about half of that opportunity, and half still remains. So, you know, we still see plenty of opportunities to execute against, whether it be increasing recycling content, continuing to move the cheaper, lower grades of recycling, challenging our conversion costs within recycling as well as within our plants. We've got an opportunity now with Boise, a position to be fully utilized here going forward. And we expect a lot of productivity out of that plant, you know, lean and sourcing initiatives from our AIMS categories.

Peter Clifford: We've kind of hit it at, we've probably executed about half of that opportunity and half still remains, so we still see plenty of opportunities to execute against, whether it be...

Speaker Change: You know, increasing recycling content.

Speaker Change: We're continuing to move to cheaper, lower grades of recycle, challenging our conversion costs within recycling as well as within our plants.

Peter Clifford: We've got an opportunity now with Boise, a position to be fully utilized here going forward, and we expect a lot of productivity out of that plant. You know, lean and sourcing initiatives from our aims categories. So we still feel like we've got a lot of levers in front of us. And candidly, we've had the opportunity in the last four to five quarters to be aggressive and invest ahead of the business a bit, as we saw kind of performance and growth beyond the market and beyond expectations.

Peter Clifford: So we still feel like we've got a lot of levers in front of us. And candidly, we've had the opportunity in the last four to five quarters to be aggressive and invest ahead of the business a bit, as we saw kind of performance and growth beyond the market and beyond expectations. So, you know, we've consistently said consistently that at some point, we really do believe we can get modest SG&A leverage from this business in the future. And so that's really been something that we haven't really been tapping into here in the last kind of four to six quarters.

Jesse Singh: Yeah.

Jesse Singh: And candidly, we've had the opportunity the last four to five quarters to be aggressive and invest ahead of the business a bit, as we saw kind of performance and growth beyond sort of the market.

Peter Clifford: So, you know, we've said consistently at some point, we really do believe we can get modest SG&A leverage from this business in the future. And so that's really been something that we haven't really been tapping into here in the last kind of four to six quarters.

Speaker Change: and Beyond Expectations. So, you know, we've said consistently at some point, we really do believe we can get modest SG&A leverage from this business in the future. And so that's really been something that we've really haven't been tapping into here the last kind of four to six quarters.

Jesse Singh: Yeah, and just to add to what Pete said, our SG&A investment...uh modestly brought down our EBITDA margins this year, so you know, instead of being part of the productivity equation, we use our productivity performance and gross margin performance to give us an opportunity to incrementally spend more as a percent of sales. Okay.

Speaker Change: Yeah, and just to add to what Pete said, our, our SG&A investment, um,

Jesse Singh: modestly brought down our EBITDA margins this year. So, you know, instead of being part of the productivity equation, we used.

Jesse Singh: our productivity performance and gross margin performance to give us an opportunity to incrementally spend additional as a percentage sales.

Operator: Great. Thanks for the time, guys.

Speaker Change: Okay.

Speaker Change: Great. Thanks for the time, guys.

Operator: And your next question comes from the line of Matthew Bouley with Barclays. Your line is open.

Jesse Singh: And your next question comes from the line of Matthew Bouley with Barclays. Your line is open.

Jesse Singh: Good evening, everyone. Thank you for taking the time to answer the question. So you mentioned the $35 million moving to June from July. I mean, that seems very plainly explainable. But just in the context that there's probably going to be some sensitivity to these things here, maybe if you could just sort of be clear around channel inventories and, you know, to the extent, is there a scenario where your channel could be de-stocking, you know, to a greater degree than seasonal? And if there's any reason to think that that might persist into your fiscal Q1, thank you. Yeah,

Speaker Change: good evening everyone thank you for geting the question

Speaker Change: So just you mentioned that the 35 million moving to June from July I mean, I mean that seems very plainly explainable But but just in the context that there's probably going to be some sensitivity

Speaker Change: to these things here. Maybe if you could just sort of be clear around channel inventories and

Speaker Change: To the extent, is there a scenario where your channel could be destocking to a greater degree than seasonal, and if there's any reason to think that that might persist into your fiscal Q1.

Peter Clifford: Yeah, I mean, I'll start, Jesse. Go ahead, Pete, sorry.

Jesse Singh: Yeah, I mean, I'll start, Jesse. Go ahead, Pete, sorry.

Pete: Yeah, I mean I'll start Jesse. Go ahead, Pete, sorry. But you know ultimately on the 35 million, just to give it double click, I do think, you know, two things kind of drove that. One, as we talked about through the first half of the year, certainly through May, sell-through was kind of low teens on deck rail and accessories.

Peter Clifford: But, you know, ultimately, on the $35 million, just to give it a double-click, I do think, you know, two things kind of drove that. One, as we talked about through the first half of the year, certainly through May, sell-through was kind of low teens on deck, rail, and accessories. So that's the backdrop of people making decisions in June on when they buy or when they place their orders. The second thing is, really, the falling of the 4th of July weekend was kind of critical, with our customer shutdowns, as well as ours, you're sort of confronted with a decision of, do I want my product by Friday, June 28th, or do I want to wait until Monday, July 8th?

Pete: But, you know, ultimately, on the $35 million, just to give it a double-click, I do think, you know, two things kind of drove that. One, as we talked about through the first half of the year, certainly through May, sell-through was kind of low teens on deck, rail, and accessories. So that's the backdrop of people making decisions in June on when they buy or when they place their orders. The second thing is really the falling of the 4th of July weekend was kind of critical, that with our customer shutdowns, as well as ours, you're sort of confronted with a decision of, do I want my product by Friday, June 28th, or do I want to wait until Monday, July 8th?

Peter Clifford: So that's the backdrop of people making decisions in June on when they buy or when they place their order.

Peter Clifford: The second thing is really the...

Peter Clifford: Falling of the Fourth of July weekend was kind of critical.

Peter Clifford: that with our customers shutdowns as well as arsyou're sort of confronted with a decision of doi want product by friday

Peter Clifford: June 28th or do I want to wait until Monday July 8th and I think a lot of customers given the strength of the demand that they were seeing certainly wanted to have that product in place to be positioned well for the start of the busy season.

Peter Clifford: And I think a lot of customers, given the strength of the demand that they were seeing, certainly wanted to have that product in place to be positioned well for the start of the busy season. And then, secondarily, as we had in our prepared remarks, we ended the quarter kind of in line with historical inventory levels, even with that $35 million being put into the channel. We fully expect that some of that's going to come out in the fourth quarter, and we would expect the end of the fiscal year inventory within the channel to be at or below, as it has been for most of the last six quarters, those historical pre-pandemic levels.

Pete: And I think a lot of customers, given the strength of the demand that they were seeing, certainly wanted to have that product in place to be positioned well for the start of the busy season. And then, secondarily, as we had in our prepared remarks, we ended the quarter kind of in line with historical inventory levels, even with that $35 million being put into the channel. We fully expect that some of that's going to come out in the fourth quarter, and we would expect the end of the fiscal year inventory within the channel to be at or below, as it has been for most of the last six quarters, those historical pre-pandemic levels.

Peter Clifford: and then secondarily as we've had our prepared remarks we ended the quarter kind of in line with historical inventory levels even with that thirty five million being put into the channel

Peter Clifford: We fully expect that some of that's going to come out in the fourth quarter, and that we would expect the end of the fiscal year inventory within the channel to be at or below, as it has been most of the last six quarters, those historical pre-pandemic levels.

Pete: All right. Thanks, Pete. Good luck, guys. Yeah.

Peter Clifford: All right. Thanks, Pete. Good luck, guys.

Operator: And your next question comes from the line of Mike Dahl with RBC Capital Markets. Your line is open.

Mike Dahl: And your next question comes from the line of Mike Dahl with RBC Capital Markets. Your line is open.

Mike Dahl: Thanks.

Speaker Change: And your next question comes from the line of Mike Dahl with RBC Capital Markets. Your line is open.

Unknown Attendee: Thanks for taking my question. Just to follow up on that timing dynamic, it sounds like if it was an Unknown Attendee.

Mike Dahl: Hi, thanks for taking my question. Just to follow up on that timing dynamic, it sounds like if it was...

Mike Dahl: A matter of a couple of days, this may not be an issue, but did you have to adjust your...

Mike Dahl: production levels at all, so is production swinging from one quarter to another, just trying to think about if there's some additional margin impact in 3Q versus

Peter Clifford: Yeah, my guess is, Peter, really the only cost incurred that's unusual is we probably worked a little bit more overtime on the logistics side to get the product out the door before the 4th of July weekend, but from a production perspective, it had, you know, almost no kind of absorption or production efficiency impact.

Mike Dahl: Yeah, my guess is, Peter, really the only, you know, cost incurred that's unusual is we probably worked a little bit more overtime on the logistics side to get the product out the door before the 4th of July weekend. But from a production perspective, it had, you know, almost no kind of absorption or production.

Susan Maklari: And just given this year was kind of unique in terms of the comps on production and now the market dynamics you're talking about, any early glimpse into how you're thinking about planning your production into 25?

Peter Clifford: And just given this year was kind of unique in terms of the comps on production and now the market dynamics you're talking about, any early glimpse into how you're thinking about planning your production into 25?

Speaker Change: efficiency impact

Susan Maklari: And Pete, just given this year was kind of unique in terms of the comps on production and now the market dynamics you're talking about, any early glimpse into how you're thinking about planning your production into 25?

Jesse Singh: It's a little early, but what I can say is, at least for the third quarter, our production volumes were up about close to 20% on the core. We'll be up modestly in the fourth quarter. And again, I think as we look at the macro for next year, the one thing for certain that we can see is we're going to utilize our Boise facility almost certainly in a very different way than we have over the last two years, which should be a nice tailwind for us.

Speaker Change: It's a little early, what I can say is at least for the third quarter again, our production volumes were up about close to 20% on the poor.

Speaker Change: We'll be up modestly in the fourth quarter and again I think as we look at the macro for next year the one thing for certain that we can see is we're going to utilize our Boise facility almost certainly in a very different way than we have over the last two years which should be a nice tailwind for us.

Jesse Singh: Yeah, I think the other thing just relative to running the factories is the shelf gains we have highlighted will necessitate some inventory, you know, modest amounts of it's in whatever we've called out through q4 into q1 just to be able to handle Unknown Attendee, The Fill Associated, you know, during the first half of, you know, in particular, the first quarter, but during the first half of next year. So, you know, we don't see much volatility in our factories as we look out till the end of the calendar year. Once again, we're not talking about 25. But you have to consider, you know, the volume perspective we do have where, you know, we're going to need that capacity to be able to service customer demand.

Speaker Change: Yeah, I think the other thing just relative to running of the factories is, you know, the shelf gains we have highlighted.

Speaker Change: will necessitate some inventory, you know, modest, it's in whatever we've called out, through Q4 into Q1, just to be able to handle

Speaker Change: you know, the fill associated, you know, during the first half of, you know, in particular, the first quarter, but during the first half of next year. So, you know, we don't see much volatility in our factories as we look out till the end of the calendar year.

Speaker Change: once thing we're not talking about twenty-five but you have to consider the the volume perspective we do have where we're going to need that capacity to to be able to serservice customer demand

Operator: Okay, that's helpful. Thanks, Jesse. Thanks, Pete.

Mike Dahl: Okay, that's helpful. Thanks, Jesse. Thanks, Pete.

Jesse Singh: And your next question comes from the line of Susan Maklari with Goldman Sachs. Your line is open.

Operator: And your next question comes from the line of Susan Maklari with Goldman Sachs. Your line is open.

Speaker Change: And your next question comes from the line of Susan Maklari with Goldman Sachs. Your line is open.

Jesse Singh: Thank you. Good afternoon, everyone. My first question is, can you talk a bit about how you're seeing the new product coming through and the success that it is enjoying and how that positions you for growth in 2025, even if the macro stays a little choppier?

Susan Maklari: Thank you. Good afternoon, everyone.

Susan Maklari: My first question is, can you talk a bit about how you're seeing the new products coming through, the success that is realizing, and how that positions you for growth in 2025, even if the macro stays a little choppier?

Jesse Singh: Yeah, the staging in general of new products, it really depends, right. So on a, let's call it, new to the market type product, like our aluminum substructures and our siding products, you typically go through a phase where, you know, year one and even year two are building the market, and you start to harvest the building of that market in year two and year three. And I think in particular, as you take a look at some of our exterior products, our siding products, Unknown Speaker, that are once again niche, high-end, specialty siting, and then some of the other products that we have, those will do better in year two than in year one. And then you look at the core product launches that you have. Unknown Speaker Our terrain product, our terrain plus product, which was upgrading our oldest product line.

Speaker Change: Yeah, the staging in general of new products, it really depends, right? So on a, let's call it new to the market type product, like our

Speaker Change: Our aluminum substructure, you typically go, and our siding products, you typically go through a phase where, you know, year one and even year two is building the market.

Speaker Change: And you start to harvest the building of that market in year two and year three. And I think in particular, as you take a look at some of our exteriors products, our siding products,

Speaker Change: that once again are niche, high-end.

Speaker Change: Specialty Siding, and then some of the other products that we have, those will, you know, do better in year two than in year one. And then you look at the core product launches that you have. In our case,

Speaker Change: Our Terrain product, our Terrain Plus product, which was upgrading our oldest product line. That brings some unique aesthetic benefits.

Jesse Singh: That brings some unique aesthetic benefits that are not really seen in the market at a very specific price point. On that particular one, we have seen really nice growth this year in terms of adoption, and we would expect that growth to continue into next year. And then the third component, I would say, is as we look ahead to next year. We talked about Fulton Rail, TimberTech Fulton Rail, which is a steel rail system that we just launched into the market.

Speaker Change: that are not really seen in the market at a very specific price point. On that particular one, we have seen really nice growth this year in terms of adoption.

Speaker Change: And we would expect that growth to continue into next year. And then the third component, I would say, is as we look at next year, we talked about Fulton Rail.

Speaker Change: Timber Tech Fold and Rail, which is a steel rail system.

Jesse Singh: That type of product, because it's a known product in the market, will see really good adoption through the first year and into the second year. I would say, without being specific, we have other products that are more in our core that address certain segments where we're not playing that we would expect to see a more immediate benefit next year, both in our exteriors business and, and our deck rail and accessories.

Speaker Change: That we just launched into the market. That type of product because it's a known product in the market.

Speaker Change: Will see really, you know good adoption Through the first year into the second year. I would say without being specific We have other products that are more in our core that address certain

Speaker Change: segments where we're not playing that we would expect to see a more immediate benefit next year, both in our exteriors business and in our deck rail and accessories business.

Susan Maklari: and our deck rail and accessories.

Jesse Singh: Okay, that's great, Culler, thank you. And then you also mentioned in your prepared remarks about the recycling content across the different offerings that you have. As you think about the Texas facility coming online, any thoughts on how that recycling content will change over the coming quarters?

Speaker Change: Okay, that's great, Culler. Thank you. And then you also mentioned in your prepared remarks about the recycling content across the different offerings that you have. As you think about the Texas facility coming online, any thoughts on how that recycling content will change over the coming quarters?

Jesse Singh: Yeah, I would just answer it simply as the facility we have, as you highlighted in Texas, allows us to get more product, and that allows us to expand recycling in our exteriors, which is typically more white recycling. So it really sets us up to be able to continue to expand recycling in our more premium exterior products. And then the investments we are making and have made in the other areas allow us to do that, but they also give us capacity for on deck and other painted exterior products. So, you know, it's not only increasing content, but it's also giving us an opportunity to continue to launch new products. Okay, thanks.

Speaker Change: Yeah, I would just answer it simply as the facility we have, as you highlighted, in Texas allows us to get more product that allows us to expand, recycle in our exteriors business.

Jesse Singh: that allows us to expand recycling in our exteriors. And then the investments we are making, and I have made in the other areas, allow us to do that, but also give us capacity for on deck and other painted exterior products. So, you know, it's not only increasing content, but it's also giving us an opportunity to continue to launch new products. Okay, thanks.

Jesse Singh: which is typically more white recycle. So it really sets us up to be able to continue to expand recycle in our more premium exteriors products.

Jesse Singh: And then the investments we are making and have made in the other areas allow us to do that, but also give us capacity on on deck and other painted exteriors products. So, you know, it's not only increasing content.

Jesse Singh: But it's also giving us an opportunity to continue to launch new products.

Operator: Okay, thanks for the color and good luck with everything.

Speaker Change: Okay, thanks for the color and good luck with everything.

Operator: And your next question comes from the line of Ryan Merkel with William Blair. Your line is open.

Speaker Change: Appreciate it. Thanks.

Speaker Change: And your next question comes from the line of Ryan Merkel with William Blair. Your line is open.

Unknown Attendee: Hey, everyone, just a couple of cleanups for me. First off, are you seeing any pressure on entry or mid-price point products, whether that's at retail or in the pro? And then my second question is, you lowered the outlook for R&D, but you didn't change your guidance for 4Q. Is that because you're tied to the higher-end consumer? Or is it just as much about your growth initiatives?

Unknown Attendee: Hey everyone, just a couple cleanups for me. First off, are you seeing any pressure at the entry or mid price point products, whether that's at the retail or in the pro?

Unknown Attendee: And then my second question is, you lowered the outlook for R&R, but you didn't change, you know, your guidance for 4Q. Is that because you're tied to the higher-end consumer, or is it just as much your growth initiatives?

Jesse Singh: Um, I, uh, uh, either one of us can answer, but I'll take it. Let Pete chime in.

Unknown Attendee: I, either one of us can answer, but I'll take it and let Pete chime in. You know, just in terms of the entry-level products that we have, as I mentioned, it's really low as a percentage of our business.

Jesse Singh: Um, you know, just, uh, in terms of the entry-level products that we have, as I mentioned, it's really low as a percentage of our business. And it's also an area where we have seen expansion, and why there, while there might be some softness in the market, our growth in that segment is more than offsetting any market growth. So if you're not playing in a segment, you're entering a segment, and that segment's a little softer for us.

Speaker Change: And it's also an area where we have seen expansion. And while there might be some softness there in the market, our growth in that segment is more than offsetting any market growth. So if you're not playing in a segment...

Speaker Change: You're entering a segment, and that segment's a little softer. For us, it's...

Jesse Singh: You know, it's growth either way. And I just forgot your second question. I apologize.

Speaker Change: You know, it's it's growth either way. Um, and I, I, uh, uh, I just forgot your second question. I apologize. I, you know, I'd pile in here just, you know, what I could say is, is on a POS perspective, certainly special order is much stronger than sort of the stock position.

Peter Clifford: I'd pile in here. What I can say is, from a POS perspective, certainly special order is much stronger than sort of the stock position. And, as Jesse said, look, when you think about our good category, we're under indexed there. And when you think of what's pure OPP, it is a very, very small part of our business.

Jesse Singh: I'd pile in here. What I can say is, from a POS perspective, certainly special order is much stronger than sort of the stock position. And, as Jesse said, look, when you think about our good category, we're under indexed there. And when you think of what's pure OPP, it is a very, very small part of our business.

Peter Clifford: And as Jesse said, look, I, you know, when you think about our good category, we're under index there. And when you think of what's pure OPP, it is a very, very small part of our business.

Jesse Singh: Okay, no, that is helpful. Yeah, the second question was just, you lowered the outlook for R&R, but you didn't change your mid-single-digit sell-through expectation, so what's trying to zero in, is that because you're tied to the higher-end consumer that's holding up better, or is it just as much share gains and new products and other things you're doing? I think it probably has.

Speaker Change: Okay, no, that is helpful. Yeah, the second question was just, you lowered the outlook for R&R, but you didn't change your mid-single-digit sell-through expectation, so I was trying to zero in, is that because you're tied to the higher-end consumer that's holding up better, or is it just as much share gains and new products and other things you're doing?

Jesse Singh: I think it probably has more to do with our philosophy on guidance, so we were coming in at high, you know, high single-digit, double-digit sell-through growth. And after the last call, if anything, we had a lot of questions about where you were at, you know, double-digit sell-through growth, why are you assuming, Mid-Single-Digit Sell-Through Growth.

Speaker Change: I think it probably has more to do with our philosophy on guidance. So we were coming in

Jesse Singh: At high, you know, high single-digit, double-digit sell-through growth. And after the last call, if anything, you know, we had a lot of questions about where you're at, you know, double-digit sell-through growth, why are you assuming, Mid-Single-Digit Sell-Through Growth. And I think for us, you know, we tried to build guidance that accounted for variations in the underlying economy. And that's why we have a range, and that's why, even though we were tracking better than that, for two quarters in a row, we basically said, we believe that the underlying market could be at mid-single digits. And so even though we saw a slowdown, we had accounted for that. We weren't assuming that would happen. We just thought it was appropriate to plan for that. So that's really it.

Jesse Singh: at high, you know, high single-digit, double-digit sell-through growth. And after the last call, if anything, you know, we had a lot of questions of you're at, you know, double-digit sell-through growth. Why are you assuming?

Jesse Singh: And I think for us, you know, we tried to build guidance that accounted for variations in the underlying economy, and that's why we have a range, and that's why, even though we were tracking better than that, for two quarters in a row, we basically said that we believed that the underlying market could be at mid-single digits. And so even though we saw a slowdown, we had accounted for that We weren't assuming that it would happen.

Jesse Singh: mid single digit cell through growth. And I think for us, you know, we tried to build a guidance that accounted for variations in the underlying economy. And that's why we have a range. And that's why

Jesse Singh: Even though we were tracking better than that, you know, for two quarters in a row, we basically said,

Jesse Singh: We believe that the underlying market could be at mid-single digits. And so even though we saw a slowdown, we had accounted for that.

Jesse Singh: We just thought it was appropriate to plan for that. So that's really it. You know, we did see a slowdown. Had we not seen a slowdown, we may have been raising our guidance, but we did see, as we talked about, a modest slowdown, and as such, that was incorporated in our assumption. Got it. Thanks. And your next question comes from the line of Keith.

Jesse Singh: We weren't assuming that would happen. We just thought it was appropriate to plan for that. So that's really it. You know, we did see a slowdown. Had we not seen a slowdown, you know, we may be raising our guidance, but we did see, you know, as we talked about a modest slowdown, and as such, that's...

Jesse Singh: You know, we did see a slowdown. Had we not seen a slowdown, you know, we may have been raising our guidance. But we did see, as we talked about, a modest slowdown, and as such, that's Got it. Thanks.

Jesse Singh: That was incorporated in our assumptions.

Keith Hughes: And your next question comes from the line of Keith Hughes with Truist. Your line is open. Yeah, thank you. Um, as you survey your contractors and customers, and they always think about the year and a calendar year, do they have enough backlog to care?

Operator: And your next question comes from the line of Keith Hughes with Truist. Your line is open. Yeah, thank you. Um, as you survey your contractors and customers, and they always think about the year in a calendar year, do they have enough backlog to

Speaker Change: Got it. Thanks.

Speaker Change: And your next question comes from the line of Keith Hughes with Truist. Your line is open.

Keith Hughes: Yeah, thank you. As you survey your contractors and customers and they always think about the year in a calendar year, do they have enough backlog to carry through at this the sellout rate you've been discussing for the rest of the year?

Peter Clifford: Yeah, Keith, this is Peter. As mentioned early in the call here, from what we've seen in terms of sell through in July, I can tell you it supports our guidance here that we've communicated today. Obviously, you know, on the decking side, and that's where our surveys are certainly a bit deck rail and accessories eccentric or centric. So that seven plus weeks backlog, there's enough visibility, generally speaking, when we get that survey filled out in the middle of July that it's a pretty good proxy for at least what they think they're going to need through the season. You know, the exteriors business is a little bit shorter cycle, in terms of probably more like two, two weekly times. So we've got a little bit less visibility there.

Peter Clifford: yes keep this as peter as mentioned early in the call here from what we've seen in terms of sell through in july i can tell you it supports our guidancehere that we've communicated today

Peter Clifford: Obviously, you know, on the decking side, and that's where our surveys are certainly a bit deck rail and accessories eccentric or centric. So that seven plus weeks backlog, there's enough visibility, generally speaking, when we get that survey filled out in the middle of July .

Peter Clifford: That it's a pretty good proxy for at least what they think they're going to need through the season firmly. You know, the exteriors business is a little bit shorter cycle, you know, in terms of probably more like two weekly times. So we've got a little bit less visibility there.

Peter Clifford: Okay. And second question on, you sort of answered this, but on your production scheduling and decking and railing, if we look at sequential production rates, will they remain consistent with what we saw in the June quarter and September and December? Yeah, sequentially, I would expect the production levels to be pretty flat, 3Q to 4Q.

Peter Clifford: Okay, and second question on, you sort of answered this, but on your production scheduling and decking and railing, if we look at sequential production rates, will they remain consistent to what we saw in the June quarter in September and December ?

Operator: And as Jesse said, you know, we'll be busy a bit now for the load in on retail when it really starts to ramp up in the first quarter of next year. Okay, great. Thank you. And your next question comes from the line of John Lovallo with UBS. Your line is open. Hey guys, thank you for taking my question.

Speaker Change: Yeah, sequentially, I would expect the production levels to be pretty flat, 3Q to 4Q. And as Jesse said, you know, we'll be – we're busy a bit now for the load-in on the retail wind that really starts to ramp in the first quarter of next year.

John Lovallo: And as Jesse said, you know, we'll be, we're busy a bit now for the load in on the retail wind that really starts to ramp up in the first quarter of next year. Okay, great. Thank you. And your next question comes from the line of John Lovallo with UBS. Your line is open. Hey guys, thank you for taking my question.

Speaker Change: Okay, great. Thank you.

John Lovallo: And your next question comes from the line of John Lovallo with UBS. Your line is open. Hey guys.

Operator: And your next question comes from the line of John Lovallo with UBS. Your line is open. Hey guys.

John Lovallo: And your next question comes from the line of John Lovallo with UBS. Your line is open.

Peter Clifford: Yeah, as far as pricing is concerned, I don't think that macroeconomics is going to have a meaningful impact on what we do with pricing. We've kind of said, look, for a lot of years, maybe not every year, you know, we would hope to get modest price increases to offset, you know, customary inflation. And as far as, you know, being fixated on macro right now, I think, as Jesse said earlier in the call, I think what's very different about us is, you know, we wake up every morning with the mission of how to grow five to 7% above whatever R&R is. And if we do that successfully, then we know we're going to be rewarded.

John Lovallo: Hey guys, thank you for taking my question.

John Lovallo: I guess, you know, you're talking about R&R being down in the fiscal fourth quarter. Curious by how much and maybe how you're thinking about R&R as we progress into fiscal year 25, which is right around the corner for you guys, you know, and in a market where demand may be a little bit softer, how does that translate into pricing as we move forward here?

Peter Clifford: Yeah, as far as pricing, I don't think that the macro is going to have a meaningful impact as to what we do with pricing. We've kind of said, look, in a lot of years, maybe not every year, you know, we would hope to get modest price increases to offset, you know, customary inflation.

Peter Clifford: And as far as, you know,

Peter Clifford: Being fixated on macro right now, I think, as Jesse said earlier in the call, you know, I think what's very different about us is, you know, we wake up every morning with the mission how do we figure out how to grow five to seven percent above whatever R&R is. And if we do that successfully, then we know we're going to be rewarded.

Jesse Singh: Yeah, and, John, you know, we're not going to try to predict the R&R market. To Pete's point, you know, what I would say is, you know, we use the two main players that are out there.

Jesse Singh: Yeah.

Jesse Singh: Yeah, and John , you know, we're not going to try to predict the R&R market.

Jesse Singh: And I think, you know, in general, they have forecast, they downgraded their forecast. And in general, I think the prevailing view is, you know, modestly negative in our fiscal fourth quarter, with the potential to go positive. And what I want to highlight is that it will have been seven straight quarters of negative in the R&R markets. And I would just say that's highly unusual.

Jesse Singh: You know, to Pete's point, you know, what I would say is, you know, we use the two main

Jesse Singh: players that are out there. And I think, you know, in general,

Jesse Singh: They have downgraded their forecast and in general, I think the prevailing view is, you know, modestly

Jesse Singh: Negative in our fiscal fourth quarter with the potential to go positive. And what I want to highlight is

Jesse Singh: You know, it will have been seven straight quarters of negative in the R&R markets.

Jesse Singh: And I think as we look at 25, you know, we're going to focus, as Pete said, on the initiatives we can control and the initiatives. And in our case, when I say control what you can control, I'm talking about growth programs in this context. Obviously, cost is an option if it's ever needed. But, you know, we continue to be focused on growth initiatives. And we feel pretty good about that. I would say it would be highly unusual, almost unprecedented, to have three years in a row of a negative R&R model.

Jesse Singh: And I think as we look at 25, you know, we're going to focus, as Pete said, on the initiatives we can control and the initiatives. And in our case, when I say control what you can control, I'm talking about growth programs in this context. Obviously, cost is an option if it's ever needed. But, you know, we continue to be focused on growth initiatives. Um, and we feel pretty good about that. I would say it would be highly unusual, almost unprecedented, to have three years in a row of negative R&R.

Jesse Singh: And I would just say that's highly unusual, and I think as we look at 25, you know, we're going to focus, as Pete said, on

Jesse Singh: The initiatives we can control and the initiatives, and in our case, when I say control what you can control, I'm talking about growth programs.

Jesse Singh: In this context, obviously, cost is an option if it's ever needed, but, you know, we continue to be focused on growth initiatives.

Jesse Singh: And we feel pretty good about that. I would say it would be highly unusual, almost unprecedented, to have three years in a row of a negative R&R market.

Rafe Jadrosich: And your next question comes from the line of Rafe Jadrosich with Bank of America. Your line is open.

Operator: And your next question comes from the line of Rafe Jadrosich with Bank of America. Your line is open.

Rafe Jadrosich: Thanks guys.

Speaker Change: And your next question comes from the line of Rafe Jadrosich with Bank of America. Your line is open.

Jesse Singh: Hi, good afternoon. Thanks for taking my question. I know retail is relatively small for you today, but you are expanding in that channel, and you've announced distribution wins there. I think at this point, you're in both big box players going into next year. How do we think about the penetration opportunity in that channel longer term versus where your penetration is today? And do you see additional shelf space opportunities in that channel, or do you think you're more underpenetrated in other places? Well, first, we, as...

Jesse Singh: Hi, good afternoon. Thanks for taking my question.

Jesse Singh: I know retail is relatively small for you today, but you are expanding in that channel and you've announced kind of distribution.

Jesse Singh: When's there? I think at this point you're in both big box players going into next year.

Jesse Singh: How do we think about the penetration opportunity in that channel longer term versus where your penetration is today and do you see additional shelf space opportunity in that channel or do you think you're more under penetrated in other places?

Jesse Singh: Well, first, as you pointed out, or implied, I mean, we see penetration opportunity in the pro channel, we see penetration opportunity in the retail channel, we see wood conversion in both channels, and we see tremendous opportunity if we develop the right products and have the right downstream efforts to grow the market. I think what we would say and have said over the last five years is that, given our products, given the impact we can make on the professional, that there should be accretive opportunities, accretive to our core growth rate opportunities in the retail channels where we can support them as they look to expand their growth strategy.

Jesse Singh: I will first, as you pointed out, or implied, I mean, we see penetration opportunity in the pro channel, we see penetration opportunity in the retail channel, we see wood conversion in both channels, and we see tremendous opportunity if we develop the right products and have the right downstream efforts to grow the market. I think what we would say and have said over the last five years is that, given our products, given the impact we can make on the professional, that there should be accretive opportunities, accretive to our core growth rate opportunities in the retail channels where we can support them as they look to expand their growth strategy.

Jesse Singh: Well, first, we, as you pointed out or implied, I mean, we see penetration opportunity in the pro channel. We see penetration opportunity in the retail channel. We see wood conversion.

Jesse Singh: in both channels, and we see tremendous opportunity if we develop the right products.

Jesse Singh: and have the right downstream efforts to grow the market. I think what we would say and have said over the last five years is, we do believe that, you know, given our products, given the impact we can make on the pro,

Jesse Singh: that there should be accretive opportunities, accretive to our core growth rate opportunities in the retail channels, where we can support them as they look to expand their growth strategies.

Jesse Singh: You know, more specific than that, we'll see how things unfold, but we continue to believe in growth in both channels, and we continue to believe that there's an opportunity for us to add value to both sets of those customers.

Jesse Singh: Unknown Speaker More specifically than that, we'll see how things unfold, but we continue to believe in growth in both channels, and we continue to believe that there's an opportunity for us to add value to both sets of those customers.

Jesse Singh: You know, more specific than that, you know, we'll see how things unfold, but we continue to believe in growth in both channels and we continue to believe that there's opportunity for us to add value to both sets of those customers.

Operator: And your next question comes from the line of Trey Grooms with Stevens. Your line is open.

Trey Grooms: And your next question comes from the line of Trey Grooms with Stevens. Your line is open.

Trey Grooms: Great, thank you.

Speaker Change: and next question comes from the line of trade grooms with stevens your lineine is open

Jesse Singh: Hey, good afternoon, everyone. I just wanted to touch on the Domen partnership expansion there and, you know, the Canadian market. Maybe you could touch on the magnitude of the opportunity there. And, you know, is that a market where you could see, you know, more expansion opportunities or shelf space opportunities? And then, you know, just on the bigger picture for the Canadian market, Jesse mentioned the conversion opportunity. Is that opportunity similar in that market to what it is here, you know, that we're more familiar with them? Sorry, I'm just not as familiar with the Canadian market. Thanks.

Jesse Singh: Hey, good afternoon, everyone. I just wanted to touch on the Domain Partnership expansion there and, you know, the Canadian market. Maybe if you could touch on the magnitude of the opportunity there and, you know, is that a market where you could see, you know, more

Speaker Change: Expansion Opportunity or Shelf Space Opportunities, and then...

Jesse Singh: You know, just on the bigger picture for the Canadian market is, you know, Jesse, you mentioned conversion opportunity. Is that opportunity similar in that market to what it is here, you know, that we're more familiar with? Sorry, I'm just not as familiar with that Canadian market. Thanks.

Jesse Singh: Sure. First, we have a really nice Canadian business, and our existing channel partner there has done a really nice job of helping us grow in the market. And effectively, what we're doing is expanding our presence in the West, in particular, in the West part of the country, and it gives us an opportunity to continue to drive conversion, either competitive conversion in a more aggressive way, or wood conversion.

Jesse Singh: Sure, first, you know, we have a really nice Canadian business, and our existing channel partner there has done a really nice job of helping us grow in the market. And effectively, what we're doing is expanding our presence in the West, in particular in the western part of the country, and it gives us an opportunity to continue to drive conversion, either competitive conversion in a more aggressive way or or wood conversion. So to your point, you know, we have a good existing business in Canada.

Jesse Singh: Sure, first, you know, we have a really nice Canadian business and our existing channel partner there.

Jesse Singh: has done a really nice job of helping us grow in the market and effectively what we're doing is expanding our presence in the Western, in particular in the Western part of the country.

Jesse Singh: and it gives us an opportunity to continue to drive conversion, either competitive conversion in a more aggressive way.

Jesse Singh: So to your point, you know, we have a good existing business in Canada. Now, the combination of two of the strongest channel partners and distributors there puts us in a position where we can gain incrementally. And as part of this expansion, we had clearly defined gains that could be had for both of us as we made this transition. So normally, we don't talk about distribution as a shelf gain. In this particular case, it facilitates shelf gains in Canada as we move into 2025.

Jesse Singh: or and or wood conversion. So to your point, you know, we, we have a good existing business in Canada.

Jesse Singh: Now the combination of two of the strongest channel partners and distributors there puts us in a position where we can gain incrementally. And as part of this expansion, we have clearly defined gains that can be had for both of us as we make this transition. So normally, we don't talk about distribution as a shelf gain. In this particular case, it facilitates shelf gains in Canada as we move into 2025. Okay, thanks for the detail on that.

Jesse Singh: Now the combination of two of the strongest channel partners and distributors there puts us in a position where we can gain incrementally. And as part of this expansion,

Jesse Singh: We were, we had clearly defined gains that could be had.

Jesse Singh: for both of us as we make this transition. So normally we don't talk about distribution as a shelf gain. In this particular case, it facilitates shelf gains in.

Jesse Singh: in Canada as we move into 2025.

Jesse Singh: Okay, thanks for the detail on that. Thank you. I appreciate it.

Operator: Okay, thanks for the detail on that. Thank you. I appreciate it. Thanks for the question.

Jesse Singh: I appreciate it. Thanks for the question. And your final question comes from...

Jesse Singh: Okay, thanks for the detail on that. Thank you. Appreciate it. Thanks for the question.

Adam Baumgarten: And your final question comes from the line of Adam Baumgarten with Zellman & Associates. Your line is open. Hey guys, just a quick one.

Operator: And your final question comes from the line of Adam Baumgarten with Zellman & Associates. Your line is open. Hey guys, just a quick one.

Adam Baumgarten: And your final question comes from the line of Adam Baumgarten with Zellman & Associates. Your line is open.

Adam Baumgarten: Hey guys, just a quick one for me just on the balance sheet. Leverage is really quite low here. I guess maybe any update on your appetite for additional acquisitions or really more so probably additional share repurchases.

Peter Clifford: Yeah, I think, look, with the new program that we just had approved, I think our philosophy has been we're always going to be modestly programmatic and, and, and repurchases but allowing ourselves enough flexibility to be opportunistic, obviously, with the market or the sector being dislocated. Right now, I think you should feel comfortable that we'll be opportunistic here this quarter.

Peter Clifford: Yeah, I think, look, with the new program that we just had approved, I think our philosophy has been we're always going to be modestly programmatic with the repurchases but allowing ourselves enough flexibility to be opportunistic. Obviously, with the market or the sector being dislocated right now, I think you should feel comfortable that we'll be opportunistic here this quarter.

Peter Clifford: Yeah, I think, look, with the new program that we just had approved, I think our philosophy has been we're always going to be modestly programmatic in the repurchases, but allowing ourselves enough flexibility to be opportunistic.

Peter Clifford: Obviously, with the market or the sector being dislocated, right now I think you should feel comfortable that we'll be opportunistic here this quarter.

Speaker Change: Got it. Thanks guys. Best of luck.

Peter Clifford: I appreciate it. Thanks, Adam. With that...

Adam Baumgarten: Appreciate it. Thanks, Adam.

Peter Clifford: Sorry, I'll go ahead and wrap up since I'm talking anyway. Thank you all so much for your attendance this evening, and we look forward to conversations in the next few days or during the next call. Thanks again, and have a great evening.

Peter Clifford: Sorry, I'll go ahead and wrap up, since I'm talking anyways. Thank you all so much for your attendance this evening, and we look forward to conversations in the next few days or during the next call. Thanks again and have a great evening.

Operator: And ladies and gentlemen, that concludes today's call, and we thank you for your participation. You may now disconnect.

Operator: Operator, and ladies and gentlemen, that concludes today's call, and we thank you for your participation. You may now disconnect.

Operator: And ladies and gentlemen, that concludes today's call and we thank you for your participation. You may now disconnect.

Operator: Please wait; the conference will begin shortly.

Pete: How I would think about it, Mike, is in the first half of the year, you should think of Declare on accessories, as Jesse said, being sort of low teams. And then in the first half of the year, the exterior is kind of flat, maybe low single digits. In the back half of the year, that looks like high single digits approaching double digits for Declare on accessories. And where exterior is probably flat to modestly down in low single digits, that's kind of the high level kind of math.

Q3 2024 The AZEK Co Inc Earnings Call

Request a DemoDemo

AZEK

The AZEK Co

Earnings