Deck Maker Azek Jumps in Debut With Summer Pandemic in Focus

(Bloomberg) -- Azek Co., a decking and outdoor furniture maker poised to benefit from homeowners upgrading as the coronavirus pandemic drags into summer, rose in its trading debut after raising $765 million.

The Chicago-based company’s shares rose as much as 27% Friday after it priced its upsized initial public offering above the marketed range. Azek sold 33.25 million shares for $23 after offering 31.25 million for $19 to $21.

The shares closed up 18% to $27.15 in New York trading, giving the company a market value of $3.85 billion.

Private equity-backed Azek, which is changing its name from CPG Newco LLC, is one of the few “winners” of the pandemic, with the lockdown that began in March. The fear of a second wave of Covid-19 hitting the U.S. is causing most states and companies to adopt a slow return to normalcy, creating a further incentive summer staycation improvements.

“We believe that the current Covid-19 crisis, which has caused people to spend an extended amount of time at home, could be an additional catalyst that may cause an increasing number of homeowners to further recognize the benefits that our portfolio of outdoor living products can offer,” Azek said in its filings.

While Azek’s sales channels are mostly offline retailers, customers are moving online, Chief Executive Officer Jesse Singh said in an interview. He added that constructions can be done in a socially distanced manner, although some states including New York have deemed such work non-essential.

“People are using going online to get educated about the market, looking at different options, figuring out what to do and actually getting a contractor online,” Singh said.

Facilities, Products

Azek, which operates seven manufacturing and recycling facilities in the U.S., produces decking and railing material for residential and commercial use. It also sells outdoor furniture under its TimberTech brand.

Ares Management and Ontario Teachers’ Pension Plan Board, existing backers, will each retain a 37.6% stake in Azek after the share sale, the filings show.

Before the pandemic, Azek’s has been unprofitable for the past three years even as its net sales steadily climbed. For the six months ended March 31, the company had a net loss of $5.8 million on revenue of $412 million, according to its filings. It estimates that it lost as much as 2.5 million on sales of up to $133 million in April and May.

Barclays Plc, Bank of America Corp., Goldman Sachs Group Inc. and Jefferies Financial Group Inc. led the offering. The shares are trading on the New York Stock Exchange under the symbol AZEK.

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