The AZEK Company Inc.'s Q2 2025: Navigating Contradictions in Sales Growth, Macroeconomic Challenges, and Cost Structures

Earnings DecryptWednesday, May 7, 2025 7:26 pm ET
2min read
Decking and Railing sales growth expectations, macroeconomic uncertainty and sell-through assumptions, product portfolio and market segments, tariff impact on cost , and retail and Pro growth are the key contradictions discussed in The Company Inc.'s latest 2025Q2 earnings call.



Residential Segment Growth:
- AZEK delivered 9% year-over-year growth in its residential segment for Q2, driven by positive mid-single-digit residential sell-through growth and the expansion of its channel presence and new product launches.
- This growth is attributed to the company's focus on material conversion, product innovation, and improving the customer journey.

Product Category Performance:
- Deck, Rail & Accessories net sales grew 11% year-over-year with each product line growing high single digits to double digits.
- Exterior's net sales grew 2% year-over-year, reflecting relative stability amidst a slower repair and remodel and new construction market.

Adjusted EBITDA and Financial Performance:
- The company expanded its adjusted EBITDA margin by 40 basis points year-over-year to 27.5%, while continuing to invest in long-term growth initiatives.
- This performance was supported by strong residential segment adjusted EBITDA growth of 11% year-over-year.

Strategic Initiatives and Recycling Efforts:
- AZEK's 2024 and 2025 new product launches, such as TimberTech Harvest+ decking and TrimLogic exterior trim, are ramping up well, supported by strong contractor and dealer feedback.
- The acquisition of Northwest Polymers is expected to expand AZEK's in-house capacity and contribute to its goal of increasing recycled content in its products.