Azek Company Inc (AZEK) 2023 Q3 法說會逐字稿

Welcome to The AZEK Company's Third Quarter Fiscal 2023 Earnings Call. (Operator Instructions). Please be advised that today's conference is being recorded.

歡迎參加 AZEK 公司 2023 年第三季財報電話會議。 （操作員說明）。請注意，今天的會議正在錄製中。

I'd like to hand the conference over to Eric Robinson. Please go ahead, Eric.

我想把會議交給埃里克·羅賓遜。請繼續，埃里克。

Thank you, and good afternoon, everyone. 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. The earnings press release was also furnished via 8-K on the SEC's website. I'm joined today by Jesse Singh, our Chief Executive Officer; and Peter Clifford, our Chief Financial Officer.

謝謝大家，大家下午好。今天下午，我們在 Investors.azekco.com 網站的投資者關係部分發布了收益新聞稿和補充收益介紹。收益新聞稿也透過 SEC 網站上的 8-K 提供。今天我們的執行長傑西辛格 (Jesse Singh) 也加入了我的行列。以及我們的財務長 Peter Clifford。

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.

我想提醒大家，在這次電話會議中，我們可能會做出某些構成聯邦證券法含義內的前瞻性陳述的陳述，包括有關未來預期、信念、估計、預測、計劃和前景的言論。此類陳述受到我們向美國證券交易委員會提交的定期報告中所述的各種風險和不確定性的影響，可能導致實際結果有重大差異。我們不承擔更新此類前瞻性陳述的任何責任。

Additionally, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. 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, which is posted on our website.

此外，在今天的電話會議中，我們將討論非公認會計原則財務指標，我們相信這些指標有助於評估我們的表現。這些非公認會計原則措施不應被孤立考慮，也不應取代根據公認會計原則準備的結果。此類非公認會計原則措施的調節可以在我們網站上發布的收益新聞稿中找到。

Now let me turn the call over to AZEK's CEO, Jesse Singh.

現在讓我將電話轉給 AZEK 執行長 Jesse Singh。

Good afternoon, and thank you for joining us. The AZEK team delivered strong financial results driven by continued execution of our growth and productivity initiatives, operational performance and double-digit Residential sell-through. I am very proud of the team as we delivered these results through our continued focus on growth through new products, material conversion and customer expansion. We also drove significant margin expansion through operational excellence, sourcing savings and recycling initiatives.

下午好，感謝您加入我們。在持續執行我們的成長和生產力計劃、營運績效和兩位數住宅銷售的推動下，AZEK 團隊取得了強勁的財務業績。我為我們的團隊感到非常自豪，因為我們透過持續專注於新產品、材料轉換和客戶拓展來實現成長，從而取得了這些成果。我們也透過卓越營運、採購節約和回收計劃推動了利潤率的大幅成長。

Our results this quarter demonstrate the strength and resiliency of our business and our team's focus on execution to drive above-market growth and margin expansion across varying market conditions. Our leading Deck, Rail & Accessories and Exteriors categories delivered strong sell-through growth in an uncertain repair and remodel market driven in part by wood conversion and new business wins. As we have highlighted in the past, we believe that we have a resilient business model and can outgrow the underlying R&R market through the combination of material conversion and our portfolio of growth initiatives. Overall, we remain confident in our long term strategy to outgrow the market through innovation, new product development and channel expansion supported by secular trends around wood conversion, outdoor living and demographic shifts, increasing the need for housing.

我們本季的業績證明了我們業務的實力和彈性，以及我們團隊對執行力的專注，以在不同的市場條件下推動高於市場的成長和利潤擴張。我們領先的甲板、軌道和配件以及外部類別在不確定的維修和改造市場中實現了強勁的銷售成長，部分原因是木材轉換和新業務的勝利。正如我們過去所強調的那樣，我們相信我們擁有彈性的商業模式，並且可以透過材料轉換和我們的成長計劃組合的結合來超越基礎的 R&R 市場。總體而言，我們對我們的長期策略充滿信心，透過創新、新產品開發和管道擴張，在木材轉換、戶外生活和人口變化的長期趨勢的支持下，超越市場，增加住房需求。

In the third quarter of fiscal 2023, we generated $387.6 million of net sales and delivered double-digit net income and adjusted EBITDA growth. As expected, our fiscal Q3 margins improved significantly, and we delivered 310 basis points of adjusted EBITDA margin expansion to 25%, as we realize the benefits of ongoing cost savings initiatives. We continued to see the impact from our increased focus on cash conversion and disciplined capital expenditures and in the third quarter, generated free cash flow of $160.1 million, growing $52.4 million year-over-year. Our cash flow generation during the quarter supported approximately $48 million worth of share repurchases.

2023 財年第三季度，我們實現了 3.876 億美元的淨銷售額，並實現了兩位數的淨利潤和調整後 EBITDA 成長。正如預期的那樣，我們第三季度的利潤率顯著提高，調整後的 EBITDA 利潤率增長了 310 個基點，達到 25%，因為我們意識到持續的成本節約舉措的好處。我們繼續看到我們更加關注現金轉換和嚴格資本支出所產生的影響，第三季產生了 1.601 億美元的自由現金流，年增 5,240 萬美元。本季我們產生的現金流支持了價值約 4,800 萬美元的股票回購。

During the quarter, we saw double-digit year-over-year Residential segment sell-through growth, including strong growth across our Exteriors category and our Deck, Rail & Accessories category. We also saw strong growth in both our Residential pro and our retail channels. These categories saw a sequential improvement versus the prior quarter and highlight stronger in-season demand versus our flattish sell-through growth during the first half of the fiscal year. We believe that our performance is a combination of category resilience relative to other parts of the repair and remodel industry, combined with AZEK-specific growth programs, including our shelf gains and expansion of new products.

在本季度，我們看到住宅細分市場的銷量同比實現兩位數增長，包括我們的外部類別以及我們的甲板、導軌和配件類別的強勁增長。我們也看到住宅專業和零售通路的強勁成長。與上一季相比，這些類別出現了環比改善，並突顯了旺季需求的強勁，而我們在本財年上半年的銷量增長持平。我們相信，我們的業績是相對於維修和改造行業其他部分的品類彈性與 AZEK 特定增長計劃（包括我們的貨架增長和新產品擴張）的結合。

Demand signals, including our digital marketing metrics and feedback from our contractor and dealer surveys also provide a positive backdrop for the remainder of the building season and our fiscal year. We meaningfully expanded our margins within the quarter as we realize the benefits of cost and sourcing actions and more normalized production levels versus the first half of the fiscal year when we aggressively reduced our production to draw down inventory in our channel and within our own walls.

需求訊號，包括我們的數位行銷指標以及承包商和經銷商調查的回饋，也為建築季剩餘時間和我們的財年提供了積極的背景。我們在本季度有意義地擴大了利潤，因為我們意識到成本和採購行動以及更正常化的生產水平的好處，而本財年上半年我們大幅減少了產量，以減少我們通路和自己內部的庫存。

In addition, we were challenged with having to work through higher cost inventory on the balance sheet that mask the cost reductions that we had already implemented. We expanded our adjusted EBITDA margin sequentially by 570 basis points and year-over-year by 310 basis points. Results within the quarter reflect strong execution by our operations team and our current cost structure. Supply chains have normalized, and we continue to work with our channel partners to maintain appropriate residential channel inventory while continuing to focus on delivering industry-leading service.

此外，我們還面臨著必須處理資產負債表上成本較高的庫存的挑戰，這掩蓋了我們已經實施的成本削減。我們將調整後的 EBITDA 利潤率環比擴大了 570 個基點，比去年同期擴大了 310 個基點。本季的業績反映了我們營運團隊的強勁執行力和當前的成本結構。供應鏈已經正常化，我們將繼續與通路合作夥伴合作，維持適當的住宅通路庫存，同時繼續專注於提供業界領先的服務。

During the quarter, we saw a sequential drop in channel inventory, and consistent with our last 2 quarters, ended the quarter below our average 2017 to 2019 days on hand in the channel. On the Commercial segment side, as we've indicated over the last couple of quarters, we've seen a more challenging environment resulting from a combination of channel destocking and softer demand in certain nonresidential and industrial end markets. The inventory recalibration in our Commercial business is proceeding as expected, and we continue to expect the impact from channel destocking to be substantially complete by year-end.

在本季度，我們看到通路庫存連續下降，與過去兩個季度一致，本季結束時通路庫存天數低於 2017 年至 2019 年的平均庫存天數。在商業領域方面，正如我們在過去幾季所指出的那樣，由於通路去庫存和某些非住宅和工業終端市場的需求疲軟，我們看到了更具挑戰性的環境。我們商業業務的庫存調整正在按預期進行，我們仍然預期渠道去庫存的影響將在年底前基本完成。

During the quarter, we continued to make progress against our strategic initiatives and saw the benefits of our new products and our expanded shelf gains. The new products we have launched in 2023 on top of our previous years of launches add to our industry-leading premium portfolio of products that utilize our proprietary recycled PVC and colored technology capabilities. These product innovations position us to drive incremental growth in our core markets and access outdoor living adjacencies. Within our railing business, new colors in our classic composite series rail and vertical cable rail solutions are seeing strong adoption and feedback from our customers.

在本季度，我們繼續在策略性舉措方面取得進展，並看到了新產品的好處和擴大的貨架收益。在前幾年推出的基礎上，我們於 2023 年推出的新產品進一步豐富了我們行業領先的優質產品組合，這些產品利用了我們專有的再生 PVC 和彩色技術能力。這些產品創新使我們能夠推動核心市場的增量成長並進入戶外生活領域。在我們的欄桿業務中，我們的經典複合系列導軌和垂直電纜導軌解決方案中的新顏色得到了客戶的廣泛採用和回饋。

In Exteriors, we continue to see strong performance across our core AZEK and Versatex brands and value-added product innovations like PaintPro Trim and Captivate siding that expand our market opportunity. Our Exteriors team has done a great job of capitalizing on new business wins this year and outperforming the market by delivering best-in-class service to our customers.

在外飾方面，我們持續看到核心 AZEK 和 Versatex 品牌的強勁表現，以及 PaintPro Trim 和 Captivate 壁板等加值產品創新，擴大了我們的市場機會。我們的外飾團隊在利用今年的新業務勝利方面做得非常出色，並透過為客戶提供一流的服務超越了市場。

We also saw strong momentum for both our TimberTech brand and our AZEK brands. In the most recent JLC 2023 Brand Use Study results recently published by Zonda, TimberTech decking, TimberTech railing and AZEK exterior trim were ranked as the #1 most used brand in the last 2 years in each of their respective categories. TimberTech composite PVC decking also ranked #1 in quality, making it both #1 in quality and #1 most used. We believe that our ongoing focus on new products, branding and customer focus is enabling us to win and gain mind share with our customers.

我們也看到 TimberTech 品牌和 AZEK 品牌的強勁勢頭。在 Zonda 最近發布的 JLC 2023 品牌使用研究結果中，TimberTech 裝飾、TimberTech 欄桿和 AZEK 外飾在各自類別中被評為過去 2 年中使用最多的品牌第一名。 TimberTech 複合 PVC 地板在品質方面也排名第一，使其在品質方面排名第一，在最常用方面排名第一。我們相信，我們對新產品、品牌和客戶關注的持續關注使我們能夠贏得客戶並贏得客戶的關注。

During the quarter, we also expanded our PVC recycling capacity, increased the amount of recycle we consume in our exteriors products and expanded our full-circle recycling sourcing network. Our full-circle PVC recycling program collects scrap generated from construction sites, and we are adding larger-format collection bins to address larger scrap like vinyl siding collected through construction and demolition streets. These investments are key enablers to support the recycling of millions of pounds of waste and scrap PVC annually and increasing recycled content of our products, consistent with our long-term recycling and margin objectives.

本季度，我們也擴大了 PVC 回收能力，增加了外飾產品的回收量，並擴大了全循環回收採購網絡。我們的全循環 PVC 回收計劃收集建築工地產生的廢料，並且我們正在添加更大規格的收集箱，以處理透過建築和拆除街道收集的較大廢料，例如乙烯基壁板。這些投資是支持每年回收數百萬磅廢棄物和廢 PVC 並增加我們產品的回收含量的關鍵推動因素，這符合我們的長期回收和利潤目標。

AZEK was once again proud to be recognized with new awards this quarter. First, AZEK was named in USA Today's first-ever list of America's Climate Leaders. The list highlights leading companies that have shown meaningful reductions in their greenhouse gas emission intensity, as measured by greenhouse gases relative to revenue. AZEK has reduced its Scope 1 and Scope 2 carbon intensity by approximately 15% between 2019 and 2021. Additionally, TimberTech Advanced PVC decking was named a 2023 winner in the prestigious Environment + Energy Leader Product of the Year Award in recognition of its sustainability attributes, including having a lower life cycle carbon footprint versus traditional wood decking. These recognitions combined with our recently published 2022 FULL-CIRCLE ESG Report illustrate AZEK's positive momentum and reflect our commitment to positively impacting our products, our people and the planet.

AZEK 再次自豪地在本季度獲得新獎項。首先，AZEK 入選《今日美國》有史以來第一份美國氣候領袖名單。該名單重點介紹了溫室氣體排放強度（以溫室氣體相對於收入的衡量標準）顯著降低的領先公司。 AZEK 在2019 年至2021 年間將其範圍1 和範圍2 碳強度降低了約15%。此外，TimberTech Advanced PVC 地板因其可持續發展屬性而被評為2023 年著名的環境+ 能源領袖產品獎獲獎者，包括與傳統木質地板相比，生命週期碳足跡更低。這些認可與我們最近發布的 2022 年全方位 ESG 報告相結合，說明了 AZEK 的積極勢頭，並反映了我們對對我們的產品、我們的員工和地球產生積極影響的承諾。

Turning to outlook. We continue to be confident in our business strategy and our ability to deliver within the current fiscal year and for years to come. Our improved Residential segment visibility and cost savings initiatives give us confidence to raise our outlook for fiscal year 2023. We exited the quarter with a stronger margin profile, and we are in a great position to build upon these gains while continuing to drive incremental cost savings against our long-term goals. Key digital metrics highlight increased interest in our TimberTech brand, and we continue to see growing customer engagement with website traffic and sample orders showing healthy year-over-year growth during the quarter.

轉向展望。我們仍然對我們的業務策略以及我們在本財年和未來幾年內實現目標的能力充滿信心。我們改善的住宅細分市場可見度和成本節約措施讓我們有信心提高2023 財年的前景。我們以更強勁的利潤率結束本季度，我們處於有利地位，可以在繼續推動增量成本節約的同時，在這些收益的基礎上再接再厲。違背我們的長期目標。關鍵數字指標突顯了人們對我們的 TimberTech 品牌的興趣增加，我們繼續看到客戶對網站流量和樣品訂單的參與度不斷增加，顯示本季度同比健康增長。

Our quarterly pro contractor and dealer surveys showed sustained contractor backlogs of approximately 8 weeks and expectations for continued demand for the remainder of the building season. These results are consistent with prior surveys with contractors expecting modest revenue growth in 2023 and also citing labor shortages as their biggest pain point. Our dealer survey saw similar positive sentiment with our dealers incrementally more confident in the outlook for 2023 and expecting modest revenue growth. In addition to the stability of our existing contractors and dealers, we continue to expand our network, allowing us to access more of the market and drive incremental share and wood conversion. We have added over 800 contractors into our system year-to-date and are seeing incremental growth from our expanded dealer and retail network.

我們的季度專業承包商和經銷商調查顯示，承包商積壓的時間約為 8 週，並且預計建築季剩餘時間需求將持續存在。這些結果與先前的調查一致，承包商預計 2023 年收入將適度成長，並認為勞動力短缺是他們最大的痛點。我們的經銷商調查也發現了類似的正面情緒，我們的經銷商對 2023 年的前景越來越有信心，並預期收入將適度成長。除了現有承包商和經銷商的穩定性之外，我們還繼續擴大我們的網絡，使我們能夠進入更多市場並推動增量份額和木材轉換。今年迄今為止，我們已將 800 多家承包商添加到我們的系統中，並看到我們擴大的經銷商和零售網路帶來的增量成長。

In summary, our growth and cost savings initiatives are on track, we're experiencing positive results in our Residential segment, and we have increased visibility for the 2023 season. We now expect to deliver adjusted EBITDA in a range between $275 million to $280 million, an increase from our planning assumption range of $250 million to $265 million. We expect year-over-year adjusted EBITDA margin expansion in the fourth quarter that is accretive versus the prior quarter and year-over-year. As we progress through the balance of the year and into fiscal 2024, we will continue to focus on growth opportunities, margin expansion and cash flow generation against our previously discussed 2027 financial objectives.

總而言之，我們的成長和成本節約計畫正在步入正軌，我們在住宅領域取得了積極的成果，並且我們對 2023 年季節的可視性有所提高。我們現在預計調整後的 EBITDA 在 2.75 億美元至 2.8 億美元之間，高於我們 2.5 億美元至 2.65 億美元的規劃假設範圍。我們預計第四季度調整後的 EBITDA 利潤率將比上一季和去年同期有所增長。隨著今年剩餘時間和 2024 財年的進展，我們將根據先前討論的 2027 年財務目標，繼續專注於成長機會、利潤擴張和現金流生成。

Our team and external partners have done a great job, and we really appreciate their efforts. We continue to see the opportunity to drive above-market growth and margin expansion. This quarter was an important step in the journey, and we are focused on delivering improved results in the future. I will now turn the call over to Pete to provide some additional context on our financial results and outlook.

我們的團隊和外部合作夥伴做得非常出色，我們非常感謝他們的努力。我們繼續看到推動高於市場成長和利潤擴張的機會。本季是這一歷程中的重要一步，我們致力於在未來提供更好的結果。我現在將把電話轉給皮特，以提供有關我們財務業績和前景的更多背景資訊。

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.

謝謝傑西，大家下午好。正如艾瑞克在電話會議開始時所強調的那樣，我們已在網站的投資者關係部分上傳了補充收益簡報。

Before we get into the third quarter results, I want to provide some color on the operating environment during the quarter. From a high-level perspective, we are continuing to see a positive demand environment in the Residential business year-to-date while our Commercial business is effectively managing its way through the channel destocking impacts, which we expect to be substantially completed by the end of the fiscal year.

在我們討論第三季業績之前，我想提供一些有關本季營運環境的資訊。從高層角度來看，今年迄今為止，我們繼續看到住宅業務的積極需求環境，而我們的商業業務正在有效地應對渠道去庫存的影響，我們預計到年底將基本完成財政年度的。

From an operating perspective, we started to see our production volume levels normalize in the quarter, giving us opportunities to drive leverage and conversion costs. As expected, production volume levels were down approximately 10% year-over-year in the quarter, driven primarily by our continued inventory reduction efforts on our own balance sheet.

從營運角度來看，我們開始看到本季的產量水準正常化，這為我們提供了提高槓桿率和轉換成本的機會。正如預期的那樣，本季產量水準年減約 10%，這主要是由於我們在自身資產負債表上持續減少庫存的努力所致。

On the commodities front, key raw materials have stabilized around our original planning assumptions, and those lower input costs are being realized in our financial results. We continue to drive disciplined cost management of our discretionary spending and supporting key investments in the future. These factors drove the anticipated margin acceleration that we saw in the quarter, exceeding our previously communicated expectations.

在大宗商品方面，關鍵原料已穩定在我們最初的計畫假設附近，而這些較低的投入成本正在我們的財務表現中實現。我們將繼續推動可自由支配支出的嚴格成本管理，並支持未來的關鍵投資。這些因素推動了我們在本季看到的預期利潤率加速成長，超出了我們先前傳達的預期。

Lastly, our teams continue to outperform expectations against our working capital initiatives. For the third quarter of 2023, we saw net sales of $387.6 million, which was modestly above our guidance expectations. Net sales declined 1.9% year-over-year. The third quarter included a volume decline of approximately $20 million, which was primarily driven by our Commercial segment, partially offset by positive contributions from very modest carryover pricing and M&A.

最後，我們的團隊在營運資本計畫方面的表現持續超越預期。 2023 年第三季度，我們的淨銷售額為 3.876 億美元，略高於我們的指導預期。淨銷售額較去年同期下降 1.9%。第三季的銷售量下降了約 2000 萬美元，這主要是由我們的商業部門推動的，但部分被非常溫和的結轉定價和併購的積極貢獻所抵消。

3Q '23 gross profit increased by $5.8 million or 4.6% year-over-year to $132.2 million. Third quarter '23 adjusted gross profit increased by $8.6 million or 5.8% year-over-year to $156.2 million. Our adjusted gross profit margin percent increased 290 basis points year-over-year to finish at 40.3%. The adjusted gross profit increase was driven primarily by material deflation, more normalized production levels and execution against cost saving initiatives.

23 年第三季毛利年增 580 萬美元，成長 4.6%，達到 1.322 億美元。 2023 年第三季調整後毛利年增 860 萬美元，成長 5.8%，達到 1.562 億美元。我們的調整後毛利率年增 290 個基點，達到 40.3%。調整後的毛利成長主要是由於材料通貨緊縮、生產水準更加正常化以及成本節約措施的執行所推動的。

Selling, general and administrative expenses decreased by $5.1 million to $73.7 million. The bulk of the year-over-year decrease was driven by lower acquisition costs as well as disciplined cost management within the quarter. Adjusted EBITDA for the quarter increased by $10.4 million or up 12.1% to $97 million. The adjusted EBITDA margin rate for the quarter increased 310 basis points to 25% from 21.9% in the prior year. The primary driver of the year-over-year change in adjusted EBITDA was the impact of material deflation, a more normalized production environment and execution against cost savings initiatives. Net income for the quarter was $34.9 million or $0.23 per share. Adjusted net income for the quarter was $45 million or adjusted diluted EPS of $0.30 per share.

銷售、一般和管理費用減少 510 萬美元，達到 7,370 萬美元。年比下降的主要原因是採購成本降低以及本季嚴格的成本管理。本季調整後 EBITDA 增加 1,040 萬美元，成長 12.1%，達到 9,700 萬美元。本季調整後 EBITDA 利潤率從去年同期的 21.9% 上升 310 個基點至 25%。調整後 EBITDA 同比變化的主要驅動因素是材料通貨緊縮、更標準化的生產環境以及針對成本節約計畫的執行的影響。該季度淨利潤為 3,490 萬美元，即每股 0.23 美元。該季度調整後淨利潤為 4,500 萬美元，調整後攤薄每股收益為 0.30 美元。

Now turning to our segment results. Residential segment net sales for the quarter was $352 million, up 2.5% year-over-year. We saw growth in both Exteriors as well as Deck, Rail & Accessories. Residential segment adjusted EBITDA for the quarter came in at $105.5 million, up approximately 16% year-over-year. Residential adjusted EBITDA margins were up 350 basis points to 30%. Commercial segment net sales for the quarter were $35.9 million, down approximately 31% year-over-year. These results were in line with our previous quarter's commentary and expectations. Commercial segment adjusted EBITDA for the quarter came in at $8.8 million, a decrease of $3.5 million year-over-year. It is important to note that despite this channel destocking backdrop, we were able to hold our EBITDA margins above 24% in the quarter.

現在轉向我們的部門業績。本季住宅部門淨銷售額為 3.52 億美元，年增 2.5%。我們看到了外部以及甲板、導軌和配件的成長。本季住宅部門調整後 EBITDA 為 1.055 億美元，年增約 16%。住宅調整後 EBITDA 利潤率成長 350 個基點，達到 30%。該季度商業部門淨銷售額為 3,590 萬美元，年減約 31%。這些結果符合我們上一季的評論和預期。本季商業部門調整後 EBITDA 為 880 萬美元，年減 350 萬美元。值得注意的是，儘管存在通路去庫存的背景，我們本季的 EBITDA 利潤率仍保持在 24% 以上。

From a balance sheet and cash flow perspective, we ended the quarter with cash and cash equivalents of $244.6 million and approximately $147.2 million available for future borrowings under our revolving credit facility. Working capital, defined as inventory plus AR minus AP was $241.2 million. We ended the quarter with gross debt of $673.9 million, which included approximately $78.4 million of finance leases.

從資產負債表和現金流的角度來看，本季結束時，我們的現金和現金等價物為 2.446 億美元，約 1.472 億美元可用於循環信貸安排下的未來借款。營運資金（定義為庫存加 AR 減去 AP）為 2.412 億美元。截至本季末，我們的總債務為 6.739 億美元，其中包括約 7,840 萬美元的融資租賃。

Net debt was $429.3 million, and our net leverage ratio stood at 1.7x at the end of the third quarter. Net cash from operating activities was $166.9 million during the quarter versus net cash from operating activities of $133.2 million in the prior year period. Capital expenditures for the quarter were approximately $7 million, down $19 million versus the prior year period. Overall, free cash flow in the first 9 months of the fiscal year was up $250 million year-over-year.

截至第三季末，淨負債為 4.293 億美元，淨槓桿率為 1.7 倍。本季經營活動產生的現金淨額為 1.669 億美元，而去年同期經營活動產生的現金淨額為 1.332 億美元。該季度的資本支出約為 700 萬美元，比去年同期減少 1,900 萬美元。總體而言，本財年前 9 個月的自由現金流年增 2.5 億美元。

As expected, we were active during the quarter with our share purchase program. We're purchasing approximately $48 million worth of shares at a weighted average of $24.90 per share. Given the strength of our cash position, we expect to be active again in the fourth quarter with our share repurchases activity. As a reminder, the remaining authorization under our share repurchase program is approximately $263 million. 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.

正如預期的那樣，我們在本季積極實施了股票購買計劃。我們將以每股 24.90 美元的加權平均價格購買價值約 4,800 萬美元的股票。鑑於我們的現金狀況強勁，我們預計第四季將再次積極開展股票回購活動。提醒一下，我們的股票回購計畫的剩餘授權約為 2.63 億美元。我們的資本配置優先事項與我們先前溝通的相同。我們將繼續對我們的業務進行有機和無機投資，如果我們有多餘的現金流，我們將尋求機會回購股票。

As we turn to the outlook, let me provide some context and color on what we are seeing and assuming for the balance of the fiscal year. We have now seen enough of the season in Residential to confidently call the year. The Commercial segment second half is coming in as expected, we communicated on our last call. We are confident that the Commercial channel destocking will be substantially completed by the end of 4Q '23. To remind folks of the full year Commercial segment impact that we are expecting in our outlook, is to have sales and EBITDA down approximately 20% year-over-year, with the bulk of that pressure in the second half of the year. We expect full year Commercial EBITDA margins above 20%.

當我們談到前景時，讓我為我們對本財年餘額的觀察和假設提供一些背景和色彩。我們現在已經看到了住宅領域的足夠多的內容，可以自信地宣布這一年的到來。我們在上次電話會議中表示，下半年的商業業務將如預期進行。我們有信心商業通路去庫存將在 23 年第四季末基本完成。提醒大家注意我們在展望中預期的全年商業部門影響，即銷售額和 EBITDA 年比下降約 20%，其中大部分壓力出現在下半年。我們預計全年商業 EBITDA 利潤率將超過 20%。

With improved Residential segment visibility, coupled with a stable Commercial segment, we are raising our full year '23 adjusted EBITDA range to $275 million to $280 million. As we have previously communicated, we expect to see healthy margin expansion in the second half of the year with the fourth quarter margins accretive to 3Q '23 and the prior year. Our margin drivers remain lower raw material costs, improved production volumes and execution against our cost savings initiatives.

隨著住宅細分市場知名度的提高，加上商業細分市場的穩定，我們將 23 年全年調整後 EBITDA 範圍提高至 2.75 億美元至 2.8 億美元。正如我們之前所傳達的，我們預計今年下半年的利潤率將實現健康成長，第四季的利潤率將比 23 年第三季和去年同期有所增加。我們的利潤驅動因素仍然是原材料成本降低、產量提高以及成本節約計劃的執行。

Before discussing fourth quarter guidance, I want to reflect on the fiscal year-to-date. When offering our planning assumptions, in November 2022, we were operating in an uncertain environment with the unknown impact of the Fed's cumulative interest rates on both the repair and remodel spend and consumer sentiment. Against this backdrop, the key focus areas for our business were around our ability to navigate the channel destocking, sustained pricing in our core markets, deliver on sourcing savings and manage our conversion costs while protecting capacity and lead times to service our market. Through three quarters, I'm proud of the way the team has executed while at the same time providing strong service to the market, expanding our position across channels and reducing working capital. At present, channel inventory levels at the end of June were lower than fiscal 2017 to 2019 average days on hand.

在討論第四季度指導之前，我想回顧一下本財年迄今的情況。在 2022 年 11 月提供我們的計畫假設時，我們是在一個不確定的環境中運作的，而聯準會累積利率對維修和改造支出以及消費者信心的影響未知。在此背景下，我們業務的關鍵重點領域是我們的能力：引導通路去庫存、核心市場的持續定價、實現採購節約和管理我們的轉換成本，同時保護服務我們市場的產能和交貨時間。在過去的三個季度裡，我對團隊的執行方式感到自豪，同時為市場提供強大的服務，擴大我們的跨通路地位並減少營運資本。目前，6月底通路庫存水準低於2017年至2019財年平均庫存天數。

We are confident that our current lead times will allow us to service demand. As Jesse mentioned upfront, contractor backlogs remained consistent with the prior quarter at roughly 8 weeks, and both contractor and dealer sentiment remain above average and were consistent with prior quarter survey. Additional context around our 4Q '23 guidance includes we expect both sales volume as well as production volume levels to be up meaningfully year-over-year as we lap the prior year channel destocking. Key raw materials and commodity projections continue to be in line with our planning assumptions. As expected, we will continue to see lower cost inventory roll off the balance sheet in 4Q '23. Capital expenditures are expected to end the full year at around $85 million, representing a very modest increase in our earlier CapEx expectations. As stated before, we will continue to invest incremental capital as we see growth and margin opportunity across our Residential business.

我們相信，目前的交貨時間將使我們能夠滿足需求。正如 Jesse 之前提到的，承包商積壓訂單與上一季保持一致，約為 8 週，承包商和經銷商的信心仍然高於平均水平，與上一季的調查結果一致。圍繞我們 23 年第四季度指導的其他背景包括，隨著我們完成上一年的渠道去庫存，我們預計銷量和產量水平將同比大幅增長。主要原料和商品預測繼續符合我們的規劃假設。正如預期的那樣，我們將在 2023 年第四季繼續看到成本較低的庫存從資產負債表中消失。預計全年資本支出約為 8500 萬美元，較我們先前的資本支出預期略有增加。如前所述，隨著我們看到住宅業務的成長和利潤機會，我們將繼續投資增量資本。

Cash conversion and working capital initiatives remain a priority for us. With all that in mind, for 4Q '23, we expect consolidated net sales between $356 million to $376 million, and we expect adjusted EBITDA between $90 million and $95 million.

現金轉換和營運資金計劃仍然是我們的首要任務。考慮到所有這些，我們預計 23 年第四季的綜合淨銷售額將在 3.56 億美元至 3.76 億美元之間，調整後的 EBITDA 將在 9,000 萬美元至 9,500 萬美元之間。

With that, I'll now turn the call back to Jesse for closing remarks.

現在，我將把電話轉回給傑西，讓他作結束語。

Thanks, Pete. I would again like to thank our dedicated team members, channel and supplier partners and contractors that support The AZEK Company. Thank you for your commitment and contribution. We are in an excellent position to outperform the market in any environment and realize the margin benefits of our sourcing and recycling initiatives. Our focused working capital improvements and meaningful free cash flow generation put us in a great position from a capital allocation perspective to opportunistically participate in share repurchases. The fundamentals of our business are strong as is our confidence in the long-term growth, material conversion and margin expansion opportunity. We have a clear strategy in AZEK-specific initiatives to drive above-market growth.

謝謝，皮特。我要再次感謝我們敬業的團隊成員、通路和供應商合作夥伴以及支持 The AZEK 公司的承包商。感謝您的承諾和貢獻。我們處於有利地位，可以在任何環境下跑贏市場，並實現我們的採購和回收計劃的利潤效益。我們專注於改善營運資本和產生有意義的自由現金流，從資本配置的角度來看，我們處於有利位置，可以機會主義地參與股票回購。我們業務的基本面十分強勁，我們對長期成長、材料轉換和利潤擴張機會充滿信心。我們在 AZEK 特定措施中製定了明確的策略，以推動高於市場的成長。

With that, operator, please open the line for questions.

那麼，接線員，請開通提問線路。

(Operator Instructions) The first question comes from Phil Ng from Jefferies.

（操作員說明）第一個問題來自 Jefferies 的 Phil Ng。

Congrats on a really strong quarter, especially on the margin performance. So my question really centers around that. If I look at your guidance, you're assuming roughly 25% EBITDA margin in the back half. I appreciate there's some seasonality in the business, but is that not a bad way to think about how margins could look in 2024 if you get some leverage? And kind of how do you see that cadence progressing to your longer-term 27.5% EBITDA margin target by 2027? It seems like there could be some upside here.

恭喜這個季度的強勁表現，尤其是利潤率表現。所以我的問題確實圍繞於此。如果我看一下你的指導，你會假設後半部的 EBITDA 利潤率約為 25%。我知道該業務存在一定的季節性，但如果你獲得一些槓桿作用，那麼考慮 2024 年的利潤率會是什麼樣子，這不是一個壞方法嗎？您如何看待 2027 年 27.5% EBITDA 長期目標的節奏？看起來這裡可能有一些好處。

Phil, this is Peter. So obviously, the results here in the third quarter and what we expect in the fourth quarter gives us a tremendous amount of confidence that we're not only on track, but exactly where we'd like to be in pacing to hit the 27.5% in 2027. As far as sort of a, let's call it, a baseline, I think what I would share that we've communicated previously that might be helpful as you're thinking about next year, is what we do know about margin impacts is between the accounting change and estimate and the underutilization in the first half of the year, it was about a $20 million impact that won't reoccur.

菲爾，這是彼得。顯然，第三季度的結果以及我們對第四季度的預期給了我們極大的信心，我們不僅走上了正軌，而且完全達到了我們希望達到 27.5% 的速度。2027 年。就某種（我們稱之為基準）而言，我想我要分享的內容是我們之前溝通過的，這可能會對您考慮明年有所幫助，那就是我們對利潤率影響的了解。就上半年的會計變更和估計以及利用率不足而言，大約有2000 萬美元的影響不會再次發生。

The second thing that we've articulated is that we expect to leave about $20 million of deflation on the balance sheet here at fiscal year-end 2023 that would roll off in 2024. So it's approximately $40 million. Keep in mind, we would expect to make some investments against that $40 million, but that's probably a good way of framing up or thinking about exits.

我們闡明的第二件事是，我們預計 2023 財年末的資產負債表上將留下約 2000 萬美元的通貨緊縮，該通貨緊縮將在 2024 年結束。所以大約是 4000 萬美元。請記住，我們預計會針對這 4000 萬美元進行一些投資，但這可能是構建或考慮退出的好方法。

Next question comes from Michael Rehaut from JPMorgan.

下一個問題來自摩根大通的 Michael Rehaut。

I wanted to maybe kind of shift you're talking about, and I apologize if this might have been hit on in the last question, but kind of thinking into next year, trying to think about the takes, the pluses and minuses, the tailwinds and headwinds, different drivers that might influence the margin as you sit here today. And again, kind of looking at your back half performance, in particular, I'm thinking about any incremental carryover on the price/cost side, productivity, raw material, those types of things. And sorry for just sneaking in a second small one. Just curious on how you said that sell-through was up double digits in 3Q. What does your fourth quarter guidance reflect in that area?

我想要也許你正在談論的某種轉變，如果這可能在最後一個問題中被提及，我很抱歉，但有點思考明年，嘗試考慮採取的措施，優點和缺點，順風車以及逆風，不同的驅動因素可能會影響您今天坐在這裡的利潤。再說一遍，特別是看看你的後半部分錶現，我正在考慮價格/成本方面、生產力、原材料等方面的任何增量結轉。抱歉，我偷偷放進了第二個小東西。只是好奇你是如何說第三季的銷量成長了兩位數的。您的第四季度指導在該領域反映了什麼？

Yes. Mike, you may not have heard it. Pete just answered that first one. I'll summarize as what Pete just highlighted as a reminder, underutilization plus some of the onetime accounting impacts were $20 million plus an additional $20 million on the balance sheet coming into '24. And I think as we've talked about throughout the entirety of the year, we're really focused on obviously delivering the year but making sure we're really well set up for '24.

是的。麥克，你可能沒聽過。皮特剛剛回答了第一個問題。我總結一下皮特剛剛強調的提醒，利用不足加上一些一次性的會計影響是 2000 萬美元，加上 24 年資產負債表上的額外 2000 萬美元。我認為，正如我們在全年中所討論的那樣，我們確實專注於交付這一年的成果，但確保我們為 24 小時做好了充分準備。

And then on your second question, relative to what we're assuming on sell-through, I think in the materials that are posted online, we stated positive sell-through. And really, the way to think of it is we're not going to give a specific range on assumption except that anything that's positive is really what we're expecting and will give us an opportunity to deliver the range that we've highlighted.

然後，關於你的第二個問題，相對於我們對銷售率的假設，我認為在網路上發布的資料中，我們表示積極的銷售率。事實上，我們不會給出一個具體的假設範圍，除非任何積極的事情都是我們所期望的，並且會給我們一個機會來實現我們所強調的範圍。

Maybe just to squeeze in one last one, and I apologize that I was repetitive on the prior question. Thinking about growth initiatives for next year, you talked about adding distributors and various other growth initiatives in your portfolio, product portfolio. Any way to think about how that might add to growth in addition to underlying market growth for the segment -- for the sector, sorry.

也許只是為了擠進最後一個，我很抱歉我重複了上一個問題。考慮明年的成長計劃，您談到了在您的投資組合、產品組合中添加經銷商和各種其他成長計劃。除了該細分市場的潛在市場成長之外，任何方式都可以考慮如何增加成長——對於該行業來說，抱歉。

Yes. So let's start with where we are now. I appreciate the question. So if you take a look at our trailing 12, I think one of the things that both Pete and I tried to comment on during the scripted portion of the call is that our inventory correction is behind us. We've taken the appropriate steps. And so as you look back and you look at our '22 growth rate in our Residential business, it was 12%. If you look at the guide we have for our Residential business, the midpoint of the guide or the range of the guide, it really stacks up to our Residential business being at 2% to 3% despite some of the inventory corrections for the fiscal year.

是的。那麼就讓我們從現在的情況開始吧。我很欣賞這個問題。因此，如果你看一下我們的尾隨 12 項數據，我認為 Pete 和我在電話會議腳本部分試圖評論的一件事是，我們的庫存修正已經過去了。我們已經採取了適當的步驟。所以，當你回顧過去，看看我們 22 年住宅業務的成長率是 12%。如果您查看我們的住宅業務指南、指南的中點或指南的範圍，您會發現，儘管本財年進行了一些庫存修正，但我們的住宅業務確實處於 2% 至 3% 的水平。

Now against that, we've also said that we're seeing double-digit growth. And I think if you think about the underlying R&R market, in many cases, many people talked about that as being negative. There's some other discussion about our particular sector being flat. And then against that, I think when you start to look at our trailing 12, our trailing 12 on our guide and you extrapolate what would be logical as you incorporate a more normalized fourth quarter, what you start to see is a trailing 12 across each of those areas that really reflects our execution within our market expansion. And so I think it's key to recognize within the industry that we are showing right now the benefit of that share and new product growth and new growth initiative conversation on our year-to-date, and we will continue to expect that as we move forward.

與此相反，我們也表示我們正在看到兩位數的成長。我認為，如果你考慮潛在的 R&R 市場，在很多情況下，很多人都認為這是負面的。還有一些關於我們特定部門持平的其他討論。然後，我認為，當你開始查看我們的尾隨12 分、我們指南上的尾隨12 分，並推斷當你納入更標準化的第四季度時，什麼是合乎邏輯的，你開始看到的是每個季度的尾隨12 分這些領域真正反映了我們在市場擴張中的執行力。因此，我認為關鍵是要在行業內認識到，我們現在正在展示今年迄今為止的份額、新產品增長和新增長計劃對話的好處，並且隨著我們的前進，我們將繼續期望這一點。

Next question from Ryan Merkel from William Blair.

威廉·布萊爾的下一個問題是瑞安·默克爾提出的。

I had a question on early thoughts on the early buy. Can you just comment on what you're hearing and thinking for distributors and pro dealers? And one of the reasons I ask is one of your competitors mentioned that pro dealers might push some of the stocking into calendar first quarter '24. Just curious if you've heard something similar.

我對早期購買的早期想法有疑問。您能否簡單評論一下您對經銷商和專業經銷商的所聞和所想？我問的原因之一是你的一個競爭對手提到專業經銷商可能會將部分庫存推到 24 年第一季。只是好奇你是否聽過類似的事情。

Yes. What -- I'm sorry, Pete, I'll take it and then just as you step back and consider what we said at the end of calendar '22, at the end of our first quarter of this year, we said that we were operating under a very conservative environment and that we were working with our dealer partners and our distributors to make sure that we had the right inventory levels in the right staging. And so as we move into the season, we are now in a position where we are lapping conservatism. And as we look at the market, we don't expect any additional conservatism barring any meaningful change in the market.

是的。什麼 - 對不起，皮特，我會接受它，然後就在你退後一步考慮我們在 22 日曆年末、今年第一季末所說的話時，我們說我們我們在非常保守的環境下運營，我們正在與我們的經銷商合作夥伴和經銷商合作，以確保我們在正確的階段擁有正確的庫存水準。因此，當我們進入這個季節時，我們現在處於一個拋棄保守主義的境地。當我們審視市場時，我們預期除非市場發生任何有意義的變化，否則不會出現任何額外的保守主義。

And I think the other key element to highlight is we operated under a more normalized, call it, appropriately conservative early buy last year. And so we are now moving into a lapping of that early buy and we do very, very little on our early buy in the calendar first quarter.

我認為另一個需要強調的關鍵因素是我們去年在更規範化的、適當保守的早期購買下進行了操作。因此，我們現在正在進入早期購買階段，我們在第一季的早期購買方面做得非常非常少。

Next question comes from Keith Hughes from Truist.

下一個問題來自 Truist 的 Keith Hughes。

Just building on that last question, it seems as though the run rate here is very strong, as you've said in several questions. It seems though the channel would really start to build a lot of inventory or at least get ready for the season next year. I don't know if you hear mixed things on that. What are you hearing from the channel about next year? What do they think it's going to look like? And what kind of position are you going to take?

僅以最後一個問題為基礎，正如您在幾個問題中所說，這裡的運行率似乎非常高。看來該頻道確實會開始建立大量庫存，或至少為明年的季節做好準備。我不知道你是否聽過一些混雜的說法。您從頻道中了解到明年的情況如何？他們認為它會是什麼樣子？你打算採取什麼樣的立場？

Yes. It's extremely difficult to start to talk about next -- it's extremely difficult to talk about next year. I think as you look at what we have gone through this year, I would say it is -- it has been a relatively normal pacing, a relatively normal year with, as Pete pointed out, a very conservative set point relative to what is the inventory that people took on and how we worked with our channel to make sure that it was appropriately conservative. I think as we look at next year, we're focused on continuing to build on this year. And aside from that, we're excited about what we can continue to do from a momentum standpoint.

是的。開始談論明年是極其困難的——談論明年是極其困難的。我認為，當你看看我們今年所經歷的事情時，我會說，這是一個相對正常的節奏，一個相對正常的一年，正如皮特指出的那樣，相對於當前的情況來說，這是一個非常保守的設定點。人們接受的庫存以及我們如何與我們的管道合作以確保其適當保守。我認為，當我們展望明年時，我們的重點是在今年的基礎上繼續發展。除此之外，從勢頭的角度來看，我們對我們可以繼續做的事情感到興奮。

Okay. And one other question, and Pete, you highlighted some nice numbers for us of some headwinds that are going away. Are those mostly going to be exhausted after the first half of the year?

好的。還有一個問題，皮特，你向我們強調了一些不錯的數字，說明一些正在消失的不利因素。上半年過後大部分人都累了嗎？

Yes, Keith, that's actually accurate. We'll carry over about half a year's deflation. So most of our carryovers are going to be in 1 and 2Q from a comp perspective. And obviously, the bulk of the underutilization was on first half of the year.

是的，基思，這確實是準確的。我們將承受大約半年的通貨緊縮。因此，從比較的角度來看，我們的大部分結轉將發生在第一季和第二季。顯然，大部分未充分利用發生在今年上半年。

And will it slant -- will be even between the quarters or a lot of slant towards the first? Or...

它會傾斜嗎——在兩個季度之間會均勻還是會向第一個季度傾斜很多？或者...

It will be a little heavier, Keith, the 1Q just because the accounting change in estimate was about $6 million, and that was all in 1Q.

Keith，第一季的情況會稍微重一些，因為估計的會計變化約為 600 萬美元，而這全部發生在第一季。

Next question comes from Tim Wojs from Baird.

下一個問題來自貝爾德 (Baird) 的蒂姆沃伊斯 (Tim Wojs)。

Maybe just my question, I guess, Jesse, could you just kind of maybe as you look at double-digit sellout, I know this is not a scientific thing, it's more of an art. But is there a way to kind of think about what a like-for-like sellout number is versus maybe what you're adding from new products or new shelf space?

也許只是我的問題，我想，傑西，當你看到兩位數的銷售量時，我知道這不是一個科學的東西，它更像是一門藝術。但是，有沒有一種方法可以考慮類似的銷售數字與您從新產品或新貨架空間中添加的數字之間的關係？

Yes. I think it's a good question. What I would say is what we've said in the past is that our initiatives incrementally would drive, give or take 3% to 5%, and depending on the year, depending on the timing, et cetera. I think from what we can see in the general underlying data, between all of our initiatives, I think it's probably at least 3% to 5% from where we stand right now. And once again, that is a broad brush that's part of that revenue stack that we provided over the years.

是的。我認為這是一個好問題。我想說的是，我們過去說過的是，我們的措施將逐步推動、給予或採取 3% 到 5%，具體取決於年份、時間等。我認為，從我們在一般基礎數據中看到的情況來看，在我們所有的舉措之間，我認為與我們目前的情況相比，可能至少有 3% 到 5% 的差距。再說一次，這是我們多年來提供的收入堆疊的一部分。

Next question from Susan Maklari, Goldman Sachs.

下一個問題來自高盛的 Susan Maklari。

Pete, in your commentary, you mentioned that deflation and productivity cost savings were some of the key elements in the margin performance that we saw this quarter. Can you give any more color on the role of each of those? And then any thoughts on the utilization rate that you expect to have coming out of this year? And the potential for further upside in '24 and what that perhaps could mean from a margin perspective.

皮特，在您的評論中，您提到通貨緊縮和生產力成本節約是我們本季看到的利潤表現的一些關鍵因素。您能否對其中每個角色的作用進行更多說明？那麼您對今年預計的利用率有何想法？ 24 年進一步上漲的潛力以及從利潤角度來看這可能意味著什麼。

Yes, Susan, this is Peter. Look, I think the easiest way to answer the question is from a sequential step-up perspective, we've kind of highlighted, look, from a first half or the back half, about 60% of the lift is the $30 million in deflation and about 40% is sort of the underutilization and change in accounting.

是的，蘇珊，這是彼得。看，我認為回答這個問題最簡單的方法是從連續上升的角度來看，我們有點強調，看，從上半年或後半段來看，大約 60% 的提升是 3000 萬美元的通貨緊縮大約40 % 是由於會計方面的未充分利用和變化。

As far as expectations for next year, certainly, we don't know what the volume equation is going to look like, but we would almost certainly want to be or need to be positive from a production volume perspective, which would obviously be a nice backdrop for our production plants to run beyond.

當然，就明年的預期而言，我們不知道產量方程式會是什麼樣子，但從產量的角度來看，我們幾乎肯定希望或需要是積極的，這顯然是一個很好的結果我們的生產工廠超越的背景。

Next question comes from Trey Grooms from Stephens.

下一個問題來自史蒂芬斯的特雷·格魯姆斯。

So just quick on the Commercial update. You mentioned that the destocking was substantially behind us by year-end. But is there any way to kind of parse out -- and sorry if I missed it, but kind of parse out how much of the decline in the quarter was driven by softer demand versus destocking? And then I think you mentioned, Pete, stable commercial environment. Maybe I misheard that. But is that to say that it's kind of stabilized here at lower levels in the back half? And maybe any early thoughts from talking to end customers and maybe their backlogs. Any thoughts on maybe when you might start to see some demand improvement there in that segment?

因此，請快速進行商業更新。您提到，到年底，去庫存已經基本結束。但有沒有什麼方法可以解析——如果我錯過了，抱歉，但可以解析出本季的下降有多少是由需求疲軟與去庫存推動的？然後我想你提到了，皮特，穩定的商業環境。也許我聽錯了。但這是否意味著它在後半段的較低水準上趨於穩定？也許還有與最終客戶交談的任何早期想法以及他們的積壓訂單。您對何時開始看到該細分市場的需求有所改善有什麼想法嗎？

Yes, Trey, this is Peter. I think we said on our last call, and it still holds here is a little over half of the impact on the Commercial business in the back half of the year is channel destock. The other piece is demand. As far as just color on the bulk of the industrial markets are already through channel destocking as we exited 3Q here. The loan market that we're wrestling with in the fourth quarter that we feel comfortable that will materially complete the destocking in semicon. So I don't know if that helps in terms of color.

是的，特雷，這是彼得。我想我們在上次電話會議上說過，今年下半年對商業業務的影響有一半多一點是渠道去庫存，這一點仍然成立。另一塊是需求。就顏色而言，隨著我們退出第三季度，大部分工業市場已經透過通路去庫存。我們在第四季度努力應對的貸款市場，我們認為這將實質地完成半導體產業的去庫存。所以我不知道這對顏色是否有幫助。

And as far as stabilization, I think the comment was just really around the fact that we see the business still kind of exactly as we called it last quarter. We mentioned for the full year, we thought top and bottom line would be down about 20% year-over-year. That's still our guide right now, and we feel comfortable with it. And we also feel comfortable in holding EBITDA margins above 20%.

就穩定而言，我認為這一評論實際上是圍繞著這樣一個事實，即我們認為該業務仍然與我們上季度所稱的完全一樣。我們提到全年的收入和利潤將年減約 20%。目前這仍然是我們的指南，我們對此感到滿意。我們也樂意將 EBITDA 利潤率維持在 20% 以上。

Next question comes from John Lovallo, UBS.

下一個問題來自瑞銀集團的約翰·洛瓦洛。

As you look beyond this year in terms of industry pricing, I think you've talked in the past that you think that this industry could sort of garner 2% to 3% pricing on an annual basis just given the distributor model. Do you still believe that, that's true? And if so, I mean, is that contemplated in that 27.5% 2027 EBITDA margin? Or would that actually be upside from there?

當您展望今年的行業定價時，我認為您過去曾說過，僅考慮到分銷商模式，該行業每年可能會獲得 2% 至 3% 的定價。你還相信那是真的嗎？如果是這樣，我的意思是，2027 年 27.5% 的 EBITDA 利潤率是否考慮了這一點？或者說這實際上會有好處嗎？

Yes. Look, I think as our conversations in the past with our product portfolio with the aesthetics, branding just differentiated products in general as long -- as well as the strength of our channel presence, I think this should be a business where we can offset, let's just say, normal inflation in the marketplace, whether that's a point or 2. That's certainly something we're aspiring to.

是的。聽著，我認為，正如我們過去與我們的產品組合的對話一樣，我們的產品組合具有美學、品牌化，只要總體上差異化產品，以及我們渠道的實力，我認為這應該是一項我們可以抵銷的業務，這麼說吧，市場上的正常通貨膨脹，無論是 1 點還是 2 點。這當然是我們所渴望的。

As far as our growth stack, we've kind of said, look, our gross stock is x M&A and it's x price. So conceptually, anything that we can get there is, let's say, hedged against any of the other levers, right, would drive a portfolio of actions getting to 27.5%. So you could think of it as it's defense against ensuring that we can deliver on the 27.5%.

就我們的成長堆疊而言，我們已經說過，看，我們的總庫存是 x 併購，它是 x 價格。因此，從概念上講，我們可以做到的任何事情，比方說，對沖任何其他槓桿，對吧，將推動行動組合達到 27.5%。因此，您可以將其視為確保我們能夠實現 27.5% 目標的防禦。

I think the only other thing I would add, John, is as we look at the value add we have from the string of new products that we have launched and will continue to launch, that really adds differentiated value in the market. And we believe that's a really important factor in being able to sustain the value and therefore, the price that we get for our products. And it really ends up over the long term being a value proposition for the consumer. And we feel really, really good with all of the efforts over the last few years of launching multiple new product lines that we're adding a lot of really differentiated value at the consumer level.

約翰，我想我要補充的唯一一件事是，當我們審視我們已經推出並將繼續推出的一系列新產品所帶來的附加價值時，這確實增加了市場的差異化價值。我們相信，這是能夠維持價值以及我們的產品價格的一個非常重要的因素。從長遠來看，它確實最終成為消費者的價值主張。我們對過去幾年推出多個新產品線所做的所有努力感到非常非常滿意，我們在消費者層面增加了許多真正差異化的價值。

Next question, Adam Baumgarten from Zelman & Associates.

下一個問題是來自 Zelman & Associates 的 Adam Baumgarten。

It looks like your Residential sell-through was above your biggest competitor, at least in the quarter, and you mentioned some of those initiatives contributing to the outgrowth. Can you also touch on maybe how sell-through will look the next year? Was it actually above Deck, Rail & Accessories?

看來您的住宅銷售量高於您最大的競爭對手，至少在本季是這樣，您提到了其中一些有助於成長的舉措。能否談談明年的銷售情況？它實際上是在甲板、導軌和配件之上嗎？

I think if you take a look at our guide for the year, there's some noise in terms of inventory movement on Deck, Rail & Accessories. But if you look at our guide I mentioned, in aggregate, we're going to end up at 2% to 3% positive for Residential given our guide. And you consider the sell-through numbers we just told you, it's been pretty balanced across both areas. So you should think as we move through the quarter we just ended and as we move into the next quarter, that our sell-through is really balanced on a relative basis between both those businesses.

我認為，如果您看一下我們今年的指南，您會發現甲板、導軌和配件的庫存變動存在一些噪音。但如果你看一下我提到的我們的指南，總的來說，根據我們的指南，我們最終會得出 2% 到 3% 的住宅收益。你考慮一下我們剛剛告訴你的銷售數字，這兩個領域都相當平衡。因此，您應該認為，當我們剛結束的季度和進入下一個季度時，我們的銷售量在這兩個業務之間的相對基礎上確實是平衡的。

The next question comes from Rafe Jadrosich from Bank of America.

下一個問題來自美國銀行的 Rafe Jadrosich。

Great. So just on following up on the sellout trends. Can you just -- Jesse, like the improvement from flattish in the first half of the fiscal year to up double digit, it's pretty sharp acceleration. And when we look across like R&R in general, I don't think we've seen an acceleration like that in other categories. So what do you think is driving that big improvement on a sequential basis? Is it like the conversion rate going higher? Is that just getting more shelf space? Were there any specific customer wins there? And then just within the sellout, is there any difference between -- [majors] between wholesale and retail?

偉大的。因此，只需跟進銷售趨勢即可。你能不能－傑西，就像本財年上半年從持平到兩位數的成長一樣，這是相當急劇的加速。當我們從總體上看 R&R 時，我認為我們沒有看到像其他類別那樣的加速。那麼，您認為是什麼推動了環比的巨大改進呢？是不是轉換率變高了？這只是為了獲得更多的貨架空間嗎？那裡有任何特定的客戶勝利嗎？然後就在銷售中，批發和零售之間[專業]有什麼區別嗎？

Yes. I think part of it, when you start to talk about timing first half and second half, the main distinction is our second half of the year is actually in the bulk of the season in -- and so I think as we've talked about earlier, it's difficult to parse out sell-through in the fourth calendar quarter or in the first calendar quarter because there's -- it's a bit offseason in certain geographies, and there's a lot of movement there.

是的。我認為部分原因是，當你開始談論上半場和下半場的時間安排時，主要區別是我們下半年實際上是在賽季的大部分時間裡——所以我認為正如我們所討論的早些時候，很難分析第四季度或第一季的銷售情況，因為在某些地區正處於淡季，而且那裡有很多變動。

I think certainly, we feel really good about the season and our aggregate sell-through as we end the year. And so I'll give you just a couple of perspectives. Relative to other parts of R&R, as we've talked about in the past, we do believe the sectors that we play in are more resilient. And I think as you look back to 2019 and what we're guiding to now, our Residential business is materially bigger, 80-plus percent larger. And that's really a reflection of the resiliency of the market segment we play in, so I'll start there, combined with company-specific initiatives.

我想當然，我們對這個季節和年底的總銷量感覺非常好。因此，我將向您提供幾個觀點。正如我們過去所討論的，相對於 R&R 的其他部分，我們確實相信我們所從事的行業更具彈性。我認為，當你回顧 2019 年以及我們現在的指導方針時，我們的住宅業務大幅擴大，規模擴大了 80% 以上。這確實反映了我們所處的細分市場的彈性，因此我將從這裡開始，並結合公司的具體舉措。

And I think we talked about in earlier calls that we had picked up some additional shelf space in both our pro channel and also within retail. And you have the backdrop of a resilient business, some incremental shelf positions, which allow you to access wood conversion. It allows you to engage broader customers. And then layer on top of that, there is additional wood conversion that we believe is happening, and we get incremental benefit from our new products, in particular, in our Exteriors area where that part of the R&R market as you can hear from some of the other folks that have reported, is a bit weaker and yet we still delivered strong performance. And so I think it's -- as Pete said, it's a portfolio of actions on top of a very resilient sector that we've talked about for years within the market.

我想我們在之前的電話中談到，我們在專業通路和零售領域都獲得了一些額外的貨架空間。而且您擁有彈性業務的背景，一些增量的貨架位置，使您可以進行木材轉換。它可以讓您吸引更廣泛的客戶。除此之外，我們相信正在發生額外的木材轉換，我們從我們的新產品中獲得了增量收益，特別是在我們的外部區域，您可以從一些 R&R 市場中聽到這一點其他人報告的情況有點弱，但我們仍然表現強勁。因此，我認為，正如皮特所說，這是我們多年來在市場上討論的一個非常有彈性的行業之上的一系列行動。

Next question comes from Joe Ahlersmeyer, Deutsche Bank.

下一個問題來自德意志銀行的 Joe Ahlersmeyer。

I just want to ask about mix. Within the sell-through up double digits, could you talk about any current benefit you're getting from mix, people choosing higher-value products, higher price point products? And then just any opportunity for that to be a continued part of the algorithm for growth going forward?

我只是想問一下混音的事在銷售額成長兩位數的情況下，您能談談您目前從組合中獲得的任何好處嗎？人們選擇更高價值的產品、更高價位的產品？那麼是否有機會讓它成為未來成長演算法的持續組成部分呢？

Yes. Joe, this is Peter. What I would say is, look, with added capacity here in 2023, we've done a kind of modest relaunch of our Prime and Prime+. We were under-indexed that kind of good category over the last 2 years just due to lack of capacity. As we have pushed those products this year, we've obviously picked up some share along the way and have felt the impact of the modest mix impact of picking up more at the good category level.

是的。喬，這是彼得。我想說的是，看，隨著 2023 年容量的增加，我們對 Prime 和 Prime+ 進行了某種程度的重新推出。在過去的兩年裡，由於缺乏容量，我們對這個好的類別的索引不足。當我們今年推出這些產品時，我們顯然已經獲得了一些份額，並且感受到了在優質品類層面獲得更多份額所產生的適度混合影響的影響。

Meaning you actually had a mix headwind, if it was -- if you're talking good, better, best, right?

這意味著你實際上遇到了混合逆風，如果是 - 如果你說好，更好，最好，對吧？

Yes. You've got the [nearest] modest trade-down as we've picked up share with the new capacity.

是的。隨著我們透過新產能獲得份額，您已經獲得了[最近的]適度的折扣。

Yes. I'll add though that the way to think of it is we've seen nice growth in our premium segment also. But what Pete's talking about is the opportunity we had to access business that we hadn't already had, in aggregate, if anything, leads to a very, very modest, almost indistinguishable on the P&L mix impact from growth of the more entry-level products.

是的。但我要補充一點，我們的高端市場也看到了好的成長。但皮特所說的是我們必須獲得我們尚未擁有的業務的機會，總的來說，如果有的話，會導致對損益組合的影響非常非常小，幾乎無法區分入門級增長的增長產品。

That makes sense. Thanks for the context there. And then just on the Commercial margins, you're facing weaker demand in destock, but yet you've held margins basically flat year-over-year kind of guiding to that flat year-over-year-ish for the year. Just can you talk us through how you're able to do that? Because obviously, the result was a little different in the Residential destock.

這就說得通了。感謝那裡的背景。然後就商業利潤率而言，您面臨著去庫存需求疲軟的情況，但您的利潤率基本上與去年同期持平，這指導了今年的同比持平。您能告訴我們您是如何做到這一點的嗎？因為顯然，住宅去庫存的結果有點不同。

Yes. I think that as we talked about, that team has done an absolutely terrific job of developing value-added segments of being able to scale the factory appropriately without -- it's a more -- it's a narrower factory and a narrower footprint. And so it has an ability to scale up and down relative to volume changes incredibly efficiently. And I think they've just done a really nice job of that -- of both of those things, managing through volume, some volume volatility and decline while they continue to drive value-added products. And so it's been a really nice business performance, as you highlighted, for that team as they've managed through a destock that's occurring in many parts of the rest of the economy.

是的。我認為，正如我們所討論的，該團隊在開發增值部分方面做得非常出色，能夠適當地擴大工廠規模，而不需要更窄的工廠和更窄的佔地面積。因此，它能夠非常有效地根據體積變化進行縮放。我認為他們在這兩方面都做得非常好，在繼續推動增值產品的同時，透過數量、一些數量波動和下降進行管理。因此，正如您所強調的那樣，對於該團隊來說，這是一個非常好的業務表現，因為他們成功地解決了經濟其他許多領域正在發生的去庫存問題。

(Operator Instructions) The next question comes from Kurt Yinger, D.A. Davidson.

（操作員說明）下一個問題來自地方檢察官 Kurt Yiner。戴維森。

Just a two-parter on recycling. First, could you just remind us what the next mile marker is in terms of the low for high density kind of recycled polyethylene substitution? And then secondly, you touched on the full circle kind of PVC program and accessing some new materials there. Is that something that's driving down kind of per pound cost of recycled PVC materials at this stage? Or any color there?

只是回收方面的兩方。首先，您能否提醒我們，低密度再生聚乙烯取代高密度再生聚乙烯的下一英里標記是什麼？其次，您談到了 PVC 程序的完整循環並在那裡獲取了一些新材料。現階段這是否會降低再生 PVC 材料的每磅成本？或是有什麼顏色嗎？

Yes. Let me start with the latter. I think we've highlighted over the last year, over the last couple of years, the strength we really have is the largest vertically integrated PVC recycler in the country. And what that's allowed us to do is to really push and source a lot of alternative materials. And our ability to use those materials within our products, both in exteriors and our Deck, Rail & Accessories business, we believe, is pretty unique. And as such, you should think of that journey within PVC recycling as being a combination of a few things.

是的。讓我從後者開始。我認為我們在過去的一年、過去的幾年裡一直強調，我們真正擁有的實力是國內最大的垂直整合 PVC 回收商。這讓我們能夠真正推動和採購大量替代材料。我們相信，我們在產品中使用這些材料的能力，無論是在外觀還是我們的甲板、導軌和配件業務中，都是非常獨特的。因此，您應該將 PVC 回收過程視為幾件事的組合。

One is increasing the percentage of recycle. I think the second is, of course, optimizing the way we process recycle. And I think the third element is using lower and lower cost recycle. When we put these bins out there and we work with our channel partners and other construction and demolition companies, we are the alternative to landfill and it's a value add to our channel partners, but it's also obviously a very cost-effective recycle stream because it's just really the transport of the product back. And so it is certainly part of our ongoing effort to use lower and lower-value recycle within PVC.

一是提高回收率。我認為第二個當然是優化我們處理回收的方式。我認為第三個要素是使用越來越低成本的回收。當我們把這些垃圾箱放在那裡並與我們的通路合作夥伴和其他建築和拆除公司合作時，我們是垃圾掩埋場的替代方案，這對我們的通路合作夥伴來說是一個增值，但它顯然也是一個非常具有成本效益的回收流，因為它只是真正將產品運回。因此，在 PVC 中使用越來越低價值的回收材料無疑是我們持續努力的一部分。

I'll make a quick comment on the cap composite side and on some of the other initiatives we have. I think in general, you should think of us continuing to incrementally make progress on the PVC side. And we currently have lower-cost formulations running in our factory and shipping out to customers using a higher percentage of low-density products. I think the staging of that is something that we'll continue to see through 2024. So that's an ongoing process, an ongoing conversion. And it's really important that we not disrupt our customers as we do that conversion.

我將對上限複合材料方面以及我們擁有的其他一些舉措進行快速評論。我認為總的來說，你應該認為我們在聚氯乙烯方面繼續逐步取得進展。目前，我們的工廠正在運行成本較低的配方，並使用較高比例的低密度產品運送給客戶。我認為我們將在 2024 年繼續看到這一點。所以這是一個持續的過程，持續的轉變。在進行轉換時，不要打擾我們的客戶，這一點非常重要。

As I mentioned, we've done some of that. There's more to go. And as we see windows to do that conversion on our lines, we'll continue to see that. And as we said in the call, on our Exteriors business, we've been able to incrementally increase our recycled content also, which has had a nice positive environmental impact in that business.

正如我所提到的，我們已經做了一些工作。還有更多的事情要做。當我們看到窗口在我們的生產線上進行這種轉換時，我們將繼續看到這一點。正如我們在電話中所說，在我們的外飾業務中，我們也能夠逐步增加我們的回收材料，這對該業務產生了良好的正面環境影響。

Next question comes from Steven Ramsey with Thompson Research Group.

下一個問題來自湯普森研究小組的史蒂文拉姆齊。

Thinking about the context of your consumer indicators are positive, contractor sentiment seems positive and more positive than distributor sentiment and your sentiment aligns more with consumers and contractors. What do you think catalyzes the distribution part of the chain to adopt a more positive sentiment at this point?

考慮到您的消費者指標是積極的，承包商的情緒似乎是積極的，並且比經銷商的情緒更積極，並且您的情緒與消費者和承包商更加一致。您認為目前是什麼促使鏈條的分銷部分採取更積極的情緒？

You mean -- I think if I interpret your question, what is causing our channel partners to be more conservative? Is that how I should interpret the question?

你的意思是──我想如果我解釋一下你的問題，是什麼導致我們的通路夥伴變得更加保守？我應該這樣解釋這個問題嗎？

Right. What's the catalyst at this point to get them over the line to your side?

正確的。此時此刻，促使他們越過界線站在你這邊的催化劑又是什麼？

Yes. No, look, we are very aligned with our channel partners. It's really important to acknowledge that we've been able to recognize, in aggregate, growth in the market. That doesn't mean every channel partner has equal growth. But as you expand channel partners, as you work with channel partners, we've been able to realize growth together. I think what's key here is we continue to think it's appropriate to be conservative on how we manage inventory together so that we can continue to drive higher and higher turns together while servicing our customers. It also derisks the future in case there's some additional volatility. So I think you can live with the combination of short-term demand, short-term optimism in certain pockets. And in this case, I would say, short-term continuity of demand, while also being concerned and acknowledging that it's appropriate to have the right amount of inventory on the ground to not get ahead of ourselves.

是的。不，你看，我們與我們的通路合作夥伴非常一致。重要的是要承認我們已經能夠總體上認識到市場的成長。這並不意味著每個通路夥伴都有平等的成長。但是，當您擴大通路合作夥伴時，當您與通路夥伴合作時，我們就能夠共同成長。我認為這裡的關鍵是我們仍然認為在如何共同管理庫存方面保持保守是適當的，這樣我們就可以在為客戶提供服務的同時繼續共同推動更高的周轉率。如果出現額外的波動，它還會降低未來的風險。所以我認為你可以接受短期需求和某些人的短期樂觀情緒的結合。在這種情況下，我想說的是，需求的短期連續性，同時也擔心並承認，適當數量的庫存是適當的，以免超出我們的預期。

And so I think the team, our channel partners, we feel really good that we're working together to make sure that we've got that appropriate balance. And I think that will set us up well as we move into 2024 and beyond as we're constantly going to be dealing with some appropriate defensive, conservative position as we work through that really sets us up and to continue to just focus on downstream growth.

因此，我認為團隊，我們的通路合作夥伴，我們感覺非常好，我們正在共同努力，以確保我們獲得適當的平衡。我認為，當我們進入2024 年及以後時，這將為我們做好準備，因為我們將繼續處理一些適當的防禦性、保守的立場，因為我們正在努力解決這個問題，這確實讓我們做好了準備，並繼續專注於下游成長。

I would now like to turn the line over to Jesse Singh.

我現在想把電話轉給傑西辛格。

Really appreciate all of your time this evening, and we look forward to chatting with many of you, and have a great evening. Thank you.

非常感謝你們今晚抽出寶貴的時間，我們期待與你們中的許多人聊天，祝你們度過一個愉快的夜晚。謝謝。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連線。