Good afternoon, everyone. I am Matthew Bouley, Barclays U.S. Home building and Building Products. Really pleased to continue the day here with the team from The AZEK Company, CEO Jesse Singh, CFO Pete Clifford. So, everyone's been in these meetings all day so far, so you know how this goes. We're gonna start with our, with our audience response questions. So if you could, utilize the keypad in front of you, we'll run through these quickly and then jump right into the good stuff, into the Q&A. So first question for the audience: Do you currently own AZEK? Overweight, market weight, underweight, or no? And for this audience... All right, new investors. Next question, please. General bias towards AZEK right now: positive, negative, or neutral? I wonder what that-- we'll, we'll see what that said last year at this time. Okay, leaning positive, but not as much as I would've thought. Next question, please. Through cycle, EPS growth for AZEK will be, versus peers: above, in line with, or below? Okay, audience leans towards above peers. Next question, please. What should AZEK do with excess cash? Bolt-on, larger M&A, share repo, dividends, debt paydown, or internal investment? Wide variety, leaning towards internal investment. Next question: What multiple of 2024 earnings should AZEK trade? Less than 10 to above 21. So you wanna have builders on stage, we one side of that, I think with AZEK, we have to have a different set of ranges. It's a big range. Let's see. All right. This is on EPS, not on EBITDA. Okay, final question, please. Most significant share price headwind facing AZEK today: growth, margins, capital deployment, or execution strategy? Okay, a little bit towards growth, but not a consensus, I guess. So, Jesse, Pete, thank you guys for being here. Absolutely. I think we'll start with something just very high level. We just talked about it outside, Jesse. The idea that composite decking is sort of operating in a different world than what we're seeing in other building products categories. So we'll get into all the specifics around AZEK, but just the primary category you focus on of composite decking, to your view, what has really caused the decoupling and the strength of that category relative to everything else we're seeing in building products? Yeah, let me first, good to be here. We've been public since 2020, and when we went public, we had a lot of dialogue on the strength of the market and the resilience of the markets in which we play. And as part of that, we said we're a double-digit grower. We had a 10-year track record of double digits. You know, our 5-year track record right now is 16%, our ten-year is 12%. And underlying that was the link back to this resiliency. And if you take a look at the last downturn in 2009, which we referenced, the R&R was more resilient than new construction, and decking was meaningfully more resilient than R&R. In fact, we mixed up during the last downturn in 2009. And so then, if you take that as backdrop and you take a look at our growth thesis, in general, we are repair and remodel as an industry. We are repair and remodel, but we are in the segment of repair and remodel, which tends to have the number one focus. So for the last decade, AIA has listed outdoor living as the number one area for remodel, above bathrooms, above kitchens. And so within R&R, we're a real strong focus. And then within that, we have this conversion of the vast majority of the market being wood, and ourselves, as an industry, taking a higher and higher share. So, in 2020, we were saying that the market is 20% composite. We're now saying it's 25% composite and growing. I think clearly, as you look at the performance of the industry, the underlying growth rate, not the volatility of changes in channel inventory, it's been resilient, and we believe a key part of that is that continuing wood conversion and the continued focus on outdoor living, which was there well before the pandemic, was there through the pandemic, and continues to be a main area of focus right now in the house. Got it. And so just to set the stage for, you know, not everyone may be familiar, but since you sold part of the commercial business, deck rail and accessories, is that roughly 80% of revenues or a little less than? It's about two-thirds, give or take, of revenues. Two-thirds, and then exteriors. Exteriors is about a third. It's a little. Yeah. Y ou know, a ballpark. Okay, so the deck rail and accessories is the part we're highlighting here first. So we've got this industry that has been growing mid-single digits, you know, far outpacing, for all the reasons you just mentioned, the rest of repair and remodel. And then you've got AZEK itself outgrowing the industry, right? Yeah. So you didn't give a hard number, but you said, you know, kind of strong double digits for your own sell-through growth. So maybe kind of get into, what are some of the building blocks that drive that difference from mid-single digits in the industry? Yeah. T o your own growth being well above that? Yeah, I think in general, if you start to do the math between ourselves and some of the other players in the market over a couple-year stack, you'll arrive at something, you know, 400 or 500 basis points. Some quarters higher, some quarters lower. But in general, over that two-year stack, that would not be far from the number. So if you dissect that, we do have multiple product lines, and so one of the key aspects of how we operate is we always launch new products. And those new products are either in the core or close in adjacencies. And so if you think about our value proposition, it's using recycled products to repair or to replace wood on the outside of homes. Deck rail and accessories is a key part of that. Exteriors, which is trim, primarily on the outside of homes, but column wraps and those kind of things that involve the white accent pieces. So new products are engaged in both those markets. That adds additional growth and has added additional growth for us. On top of that, we have the benefit of channel expansion. We are underrepresented in retail. That's given us some accretive growth. And I think in the pro channel, because of our breadth of portfolio, taking those new products, we've been able to consistently expand our position in the market in both of our product lines, right? Within our deck rail and accessories, and also in our exteriors products, where we have continued to expand position. And so the question might be: How have you been able to do that? You know, we were capacity constrained for a period of time. We now have additional capacity, and we have new products that are differentiated, and so both of those have been very helpful. In addition, we've got a 200-person sales force that is focused downstream on contractors, and we have incrementally larger investments at the consumer level. So those things are beneficial as you're increasing your position, within, in our case, both the pro and retail market. So on the retail market, as you just mentioned, you've now got more capacity, the ability to serve the retail channel. Just category you've probably been, or a channel you've been, I guess, historically underpenetrated. Just how do you kind of think about where, where that retail penetration is today, and, you know, how, how much do you, do you want to get that to? Yeah, I mean, first and foremost, our strength has and will continue to be in the pro and with the pro. Mm-hmm. Right? So, 88% of what we sell goes through a more professional channel. And we are, as you mentioned, underrepresented on the retail side. And I think the opportunity we have is, as our products continue to penetrate consumers and continue to penetrate professionals, that becomes more and more relevant, as the retail channel wants to continue to grow there. So I would say we continue to see accretive to our core growth opportunity in retail, so think that will be additive to our growth equation, and that usually comes with a lot of base hits, right? It's, you know, we're not swinging for the fences here. We see opportunity to continue to drive the special order part of the business and other parts of that business, both in both of our product lines. So I would just say, I don't know that we have a long-term objective, except to see that as an additive growth element. So we've gone from 5% of our portfolio in retail to 12. You know, you could certainly see that continuing the trajectory over the next handful of years. Got it. So maybe a couple on kind of the guide and then sort of near-term shape of everything, and then we'll get back to the bigger picture. You know, I think the implication from the guide, this was, of course, your fiscal Q1, that you're gonna grow residential kind of 6%-ish for the next three quarters, and even if you take the Q2 guide out, it sort of implies your second half is, might even be flattish or up slightly. So just kind of what's the implication of that? Because there's a lot of companies that have sort of the opposite cadence of implied improvement versus you guys is more of a downslope. So kind of, you know, what's the potential for the second half to, you know, relative to, you know, what's currently implied in the guide? Where's the conservatism? Yeah, as we had articulated at the end of the first quarter, you know, much of 2023, we managed to channel down about 10%, versus sort of pre-pandemic kind of historical days on hand. We ended the first quarter down about 20, which implies we're probably putting about $20 million back into the channel in the second quarter. What's implied in that guide over the nine months is really that that $20 million comes back out in the third and fourth quarter. Now, that may be a conservative assumption, as we think about it here today. But sell-through, equal sell-through in the last nine months of the year. And you're right, it's just under 6% is kind of the assumption on the residential basis. Okay. No, that's helpful. I guess kind of begs the question of just channel inventory and, you know, you went through the cycle of, you know, channel effectively overstocked and then destocked. Now is below normal, yet demand is still okay. I mean, is this kind of the way you're thinking about the business for the next, you know, multiple years at this point? You're just not gonna see the type of stocking you used to see. This industry is gonna operate more on kind of a just-in-time basis? Yeah, I was gonna say. Yeah, go ahead. I think lead times have kind of structurally changed, Matt. Yeah. Mm-hmm. Yeah. Mm-hmm. And that's really kind of the key. Pre-pandemic, a lot of the industry was sort of at eight weeks. During the pandemic, a lot of folks went to allocation at 14 weeks. We maintained about four weeks for the last four quarters. That's our commitment to our channel. That is why, if we were later in the year, maybe we wouldn't be talking about putting $20 million more inventory in, but it's such a critical time, right into the lead into the season. You know, we think it's the right thing to do. As we communicated on our last call, maybe one nuance that's different in the past is, we will probably hold a little bit more of our own finished goods on our own balance sheet, a little bit deeper into the season, to ensure that we can kind of hit and maintain four-week lead times, as we think that's critical to drive the right kind of efficiency, capital efficiency, throughout the channel. Yeah, I would just add that—and this may be the higher-level question you have in there. We would prefer to have the least amount of inventory in the system to deliver the highest level of service, right? So that's—there's a fundamental lean principle on inventory is waste. In our case, given the logistics and the physicality of what we sell, we sell things that are 20 feet long and weigh a bit and are difficult to deliver overnight. So you need to have it staged in the right place. You need—you need some element of that in market. But we would prefer to continue to find ways to manage the inventory at a appropriately low level while we sustain incredibly high service. We view service as a differentiator, and so hopefully, as we navigate through, we'll be in more of a just-in-time mindset. And I think the capacity that we have added allows us to service demand in season, rather than having to stage inventory to service demand. And so I think that gives us opportunities to be more efficient. Got it. Okay, well said. So another couple just on the guide and, and all that. I mean, you know, the, the increase to the earnings, the EBITDA was, you know, relatively commensurate with the increase in sales. And so, I mean, we know- we knew some of the things you had, right? You had deflation carrying over, you had kind of, you know, improving production economics, but just any kind of color on that bridge and, and sort of what really drove that, you know, unusually high, incremental EBITDA relative to the incremental sales you spoke to? Yeah, I think first and foremost, you know, on the first quarter, it was always gonna be the quarter that delivered the largest kind of variance or comp to the prior year. Mm-hmm. The first quarter came in only modestly better than our internal budgets or our plan, so there wasn't any real big surprises internally. We just felt prudent that in our original guidance, that, because the first quarter was so critical, we wanted to see that land. Second thing being, you know, getting an opportunity to see the entire order book and backlog from the early buying negotiations. Most of that wraps up, you know, by the mid-December timeframe. So we had really good visibility to what the second quarter and how the season was starting to shape up. And then the third thing is, you know, just the opportunity to see four more months before our call around sort of what was happening with commodities. With our lag time, that just gave us more confidence that we could see that much further into the season around sort of the some of the margin drivers. Got it. Yeah, and I think if you just step up at a high level, you know, when we went public, we said we thought there was 500 basis points of opportunity. In our 2022, after some noise in supply chain, we said there was 500 basis points of opportunity. We've been working on margin expansion opportunity, I should say. We've been working against that. There was a lot of noise in the system. As that noise comes out, you can see the progress against the initiatives that we had laid out. And so, you know, from our vantage point, as we look at it, it is a step up in guide. It's totally what we expected and what we think we should deliver, and we think there's an opportunity, and we believe that there's an opportunity to continue a pace into 25 and 26 that you know, hopefully will make our 500 basis point discussion a lot more conservative feeling as we progress. Yep, got it. Right, I mean, I guess depending on where you end this year, you'll be a lot closer to your investor day guidance of $27.5. I think the other comment you made on the call was, or you have made, is that you're kind of 100 basis points of annual margin expansion. So I, you know, presumably, me not putting words into your mouth, but I guess $27.5 is not necessarily a cap. Correct. No pun intended. So when you think of 100 basis points per year, how does that kind of split between gross margin, you know, Yeah AIMS, productivity, recycling, and kind of just ongoing operations? Yeah, generically, if you went back to what we laid out on the opportunity set in the 2022 Investor Day, generically, you could think about we probably have executed against about half of that 600-basis points kind of margin opportunities and, and projects. If you said, what's maybe different next year as you look forward, we really haven't gotten a lot of SG&A leverage in the last two years. We've constantly reinvested in the business. I think you'd see us in 2025 kind of get back closer to that cadence of delivering 25 basis points, potentially from SG&A, and 75 basis points from gross margin. So maybe the optics are a little different, but, you know, we, we still are really, really confident in terms of the ability to kind of execute in the near term here, you know, 100 basis points a year. Got it. So if you think about kind of 75 basis points of gross margin a year, I think, I think at the Investor Day, and correct me if I'm wrong, but the specifically, the recycling mix was meant over multiple years to drive something like 300 or 300. Yeah. 50 basis points. So I guess the question is: where are we now on that journey, you know, of that 300-350 basis points? And sort of, you know, where do you see that getting over the next couple of years? Yeah. The quick generic answer, as mentioned, I think we're probably about a third of the way in terms of kind of executing that opportunity. Just a little bit of color by kind of the core pieces. You know, we're approximately 60% kind of recycled content on our PVC deck target, and at the Investor Day was 70%. So there's still a lot of headroom there. On trim, we're approaching 40%. Target in the Investor Day was 50+, so we've got some headroom there as well. On the HDPE play, we were targeting 90% in the Investor Day. Most of our fleet is gonna go to 75% this year. So again, there's still some incremental headway on top of that. And look, we know that by the back half of this year, Boise becomes kind of a productivity tool for us, and we really haven't had as much volume to run through that plant as we would like. So it's a, it's a known tailwind for at least the next two years beyond in terms of just conversion costs and plant productivity for us. Got it. Okay. That's helpful. So actually I'll ask one more on the recycling side. So, you know, you've made a lot of effort around PVC recycling, sort of a market that really did not exist, I would argue, a few years ago. So, you know, kind of, I guess this is a two-parter. Just where, where are we on that kind of journey of, of specifically PVC recycling sourcing? And then just kind of what, what type of advantage does it give you when you're, you're not really seeing other competitors in that type of. Yeah, just. Or are you seeing competitors? Yeah, just high level. If you know of, and I've asked this question, if you know of other players that are using recycled PVC as a core part of their product or strategy, please let us know. But, you know, we have a foundational belief that recycled PVC is a fantastic resource that should not be landfilled. And, so we use it in our decking, and that will continue to increase, and it's both a cost and environmental benefit. Decking has a wrap around it. We use it in our trim, which is all white trim, has a right now 35%-40% recycled content. We believe we can get that higher. But there's also an opportunity for us to continue to use recycled PVC as a raw material to move into other segments. We have a paintable, recycled PVC product right now called PaintPro. And that allows us to move into wood look, wood feel applications, where the product drills, cuts, nails like wood, made out of recycled PVC, but you know, can access more market. So we think that's a really important competitive position to be in that makes us competitive right now, but it also gives us an opportunity to continue to expand. Ultimately, all of this is not about winning now. It's nice that, you know, we've got a good quarter to talk about, but really our focus is to make sure that we set ourselves up for 2025 and 2026 to have the right new products, the right expansion, the right adjacencies, and the right margin structure. This expansion of recycle and PVC really sets us up really well for the future. The other thing I'll just highlight is PVC has some pretty significant advantages in the decking space. It has a Class A flame spread, which basically means it's really good for fire zones. The flame doesn't propagate, and it looks better, and it's cooler. So it's a meaningfully differentiated product in the market that also happens to use a proprietary recycle stream for us. Great. Okay, shift gears to the pricing side. You're very clear around this year. There was a price increase, but there's rebates, so, you know, it's not really a contributor to 2024. My question is more around kind of the pricing philosophy in the industry. I guess maybe sticking on the decking side. I mean, do you think this is an industry that can kind of get to annual price increases, or is it still gonna be the type of thing where, you know, year on, year off? How do you expect that to play out? First, I think we price to value, right? Mm-hmm. We, we have different segmentation in our pricing: good, better, best, premium. Within those ranges, we wanna make sure that we are giving a customer a terrific value. Against that, we think that there's in that value equation, there's an opportunity for you know, inflationary-type pricing in basically all of our segments, you know, in the future. We've done it in the past, and we fully expect that we'll be able to pass on any inflation in the future. Got it. So the audience polling question, I think, on the capital deployment, gave a rather wide range. Didn't seem like there was a consensus. So, you're the only answer that matters. So, when we think about, you know, you've made efforts around adjacent products and M&A, right? But then now you've been more aggressive on the share repurchase and all that. So kind of, you know, just update us on kind of the capital deployment priorities, and then maybe we can get into the M&A side, too. So, just giving time, very high level, we generate an awful lot of cash. We've deployed that cash against a buyback. We will continue, you know, we've got another $100 million before we reauthorize additional share repurchases. You know, we believe that there's value to be had by continuing to buy our stock, especially given the long-term value that we expect to create. So we would expect to continue to be in the market. We have some floating and expensive debt, even though our leverage is nearing one. We'll evaluate debt retirement as it makes sense. And then as you look at the M&A and organic opportunities, 5%-7% of revenue on capital gives us both maintenance and growth. We're actually adding a new facility and within that 5%-7%, so that gives us plenty of capital. We may go a little higher once in a while, but we've done a lot of the heavy lifting. And then we will selectively deploy capital against acquisitions that fit our investor deck. We're not gonna try to move far afield and buy something that we have to come out and explain why we bought it, right? We really like our business model. We like the opportunity to drive double-digit growth and, you know, close to thirty percent EBITDA margin over the long term. And we wanna make sure that whatever we do enables that. Having said all that, that does leave a fair amount of cash left over, and we're, you know, we're exploring the options, too. Depending on the day, maybe we would have put one in each bucket also. But I'm joking a little bit, but I do think that ultimately, we're a growth company, and we see an opportunity to continue to deliver that cash back to shareholders. We'll figure out exactly how we do that. Got it. Question on the competitive environment. There obviously is your largest competitors is investing in a huge facility. So you know, when you think about just, you know, and even you tertiary players or, you know, wanna be bigger in this category for obvious reasons. So, you know, what are you doing and maybe focusing on that big competitor capacity ad, what are you doing to kind of, you know, entrench yourselves? And, you know, how do you think about what could arise when a large competitor brings a big new plant online? How do you think that could disrupt market dynamics or any of that? Yeah, the simplest way to put it is, over the long term, we have gone through phases of having excess capacity and not excess capacity, but the vast majority of time between us and our competitor, we've had excess capacity. So we're sitting on excess capacity as we speak. We have the ability. We've already done our large new site. We have the ability to scale it. Throughout all of that, excess capacity doesn't tend to change market dynamics. It, you know, we're used to it. It's a key part of how we run. We need that surge capacity. We tend to grow into it. So, you know, the fact that our largest competitor might be adding capacity is probably a good sign for the industry. We don't expect it to change any competitive dynamics, except that they probably need it in the future, right? Likewise, our excess capacity puts us in a position where since it's done, we can get scale and leverage on the investment we already have. So we've got some capital efficiency ahead of us, given or improving capital efficiency ahead of us, given that we've already done the multi-hundred-million-dollar investment that we can scale for years to come. Got it. And maybe we'll do one more just on the, on the M&A point you made. I mean, you made- there was an acquisition in the pergola space recently. You kind of envision a, a broader set of outdoor products that could fit into the portfolio, or is it still gonna be really kind of closer adjacencies? I would say closer adjacencies. We'll be really selective. It has to fit the thesis of double-digit growth, high margin, margin expansion, and it has to be an enabler. And in most cases, what we will acquire will fit nicely into the pictures and presentations that we have that allow us to expand our share of wallet. Got it. All right. Jesse Singh, Pete Clifford. Appreciate it. Thank you, guys. Thank you so much.