Cover Page
Cover Page | 12 Months Ended |
Sep. 30, 2020 | |
Document Information [Line Items] | |
Document Type | S-1 |
Amendment Flag | false |
Entity Registrant Name | AZEK Co Inc. |
Entity Central Index Key | 0001782754 |
Entity Tax Identification Number | 90-1017663 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Incorporation, State or Country Code | DE |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Address, Address Line One | 1330 W Fulton Street, Suite 350 |
Entity Address, City or Town | Chicago |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 60607 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 215,012 | $ 105,947 |
Trade receivables, net of allowances | 70,886 | 52,623 |
Inventories | 130,070 | 115,391 |
Prepaid expenses | 8,367 | 6,037 |
Other current assets | 360 | 10,592 |
Total current assets | 424,695 | 290,590 |
Property, plant and equipment, net | 261,774 | 208,694 |
Goodwill | 951,390 | 944,298 |
Intangible assets, net | 292,374 | 342,418 |
Other assets | 1,623 | 2,263 |
Total assets | 1,931,856 | 1,788,263 |
Current liabilities: | ||
Accounts payable | 42,059 | 47,479 |
Accrued rebates | 30,362 | 22,733 |
Accrued interest | 1,103 | 13,578 |
Current portion of long-term debt obligations | 0 | 8,304 |
Accrued expenses and other liabilities | 50,516 | 47,903 |
Total current liabilities | 124,040 | 139,997 |
Deferred income taxes | 21,260 | 34,003 |
Finance lease obligations — less current portion | 10,910 | 11,181 |
Long-term debt — less current portion | 462,982 | 1,103,313 |
Other non-current liabilities | 8,776 | 9,746 |
Total liabilities | 627,968 | 1,298,240 |
Commitments and contingencies (Note 17) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 1,000,000 shares authorized and no shares issued and outstanding at September 30, 2020 and September 30, 2019, respectively | 0 | |
Additional paid-in capital | 1,587,208 | 652,493 |
Accumulated deficit | (283,475) | (162,578) |
Total stockholders' equity | 1,303,888 | 490,023 |
Total liabilities and stockholders' equity | 1,931,856 | 1,788,263 |
Common Class A [Member] | ||
Stockholders' equity: | ||
Common stock | 155 | 75 |
Total stockholders' equity | 155 | 75 |
Common Class B [Member] | ||
Stockholders' equity: | ||
Common stock | 0 | 33 |
Total stockholders' equity | $ 33 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Sep. 30, 2019 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 154,637,240 | 75,093,778 |
Common stock, shares outstanding | 154,637,240 | 75,093,778 |
Common Class B [Member] | ||
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 100 | 33,068,963 |
Common stock, shares outstanding | 100 | 33,068,963 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net sales | $ 899,259 | $ 794,203 | $ 681,805 |
Cost of sales | 603,209 | 541,006 | 479,769 |
Gross profit | 296,050 | 253,197 | 202,036 |
Selling, general and administrative expenses | 308,275 | 183,572 | 144,688 |
Other general expenses | 8,616 | 9,076 | 4,182 |
Loss on disposal of plant, property and equipment | 904 | 1,495 | 791 |
Operating income (loss) | (21,745) | 59,054 | 52,375 |
Other expenses: | |||
Interest expense | 71,179 | 83,205 | 68,742 |
Loss on extinguishment of debt | 37,587 | ||
Total other expenses | 108,766 | 83,205 | 68,742 |
Income (loss) before income taxes | (130,511) | (24,151) | (16,367) |
Income tax expense (benefit) | (8,278) | (3,955) | (23,112) |
Net income (loss) | $ (122,233) | $ (20,196) | $ 6,745 |
Net income (loss) per common share: | |||
Basic and Diluted | $ (1.01) | $ (0.19) | $ 0.06 |
Comprehensive income (loss) | $ (122,233) | $ (20,196) | $ 6,745 |
Weighted average shares used in calculating net income (loss) per common share: | |||
Basic and Diluted | 120,775,717 | 108,162,741 | 108,162,741 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Adoption of ASU [Member] | Common Class A [Member] | Common Class B [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Deficit [Member]Adoption of ASU [Member] |
Beginning balance at Sep. 30, 2017 | $ 456,373 | $ 75 | $ 33 | $ 605,586 | $ (149,321) | ||
Beginning balance (in shares) at Sep. 30, 2017 | 75,093,778 | 33,068,963 | |||||
Net income (loss) | 6,745 | 6,745 | |||||
Member contributions prior to initial public offering | 40,000 | 40,000 | |||||
Non-cash contributions prior to initial public offering | 2,475 | 2,475 | |||||
Member redemptions prior to initial public offering | (2,694) | (2,694) | |||||
Stock-based compensation | 2,654 | 2,654 | |||||
Ending balance at Sep. 30, 2018 | 505,553 | $ 75 | $ 33 | 648,021 | (142,576) | ||
Ending balance (in shares) at Sep. 30, 2018 | 75,093,778 | 33,068,963 | |||||
Adoption of Accounting Standard Update (ASU) | ASU 2014-09 [Member] | $ 194 | $ 194 | |||||
Net income (loss) | (20,196) | (20,196) | |||||
Member contributions prior to initial public offering | 1,311 | 1,311 | |||||
Member redemptions prior to initial public offering | (101) | (101) | |||||
Stock-based compensation | 3,262 | 3,262 | |||||
Ending balance at Sep. 30, 2019 | 490,023 | $ 75 | $ 33 | 652,493 | (162,578) | ||
Ending balance (in shares) at Sep. 30, 2019 | 75,093,778 | 33,068,963 | |||||
Adoption of Accounting Standard Update (ASU) | ASU 2016-16 [Member] | $ 1,336 | $ 1,336 | |||||
Net income (loss) | (122,233) | (122,233) | |||||
Member contributions prior to initial public offering | 1,500 | 1,500 | |||||
Member redemptions prior to initial public offering | (3,553) | (3,553) | |||||
Conversion of profits interests into common shares | $ 9 | (9) | |||||
Conversion of profits interests into common shares (in shares) | 8,235,299 | ||||||
Net proceeds from initial public offering | 819,690 | $ 38 | 819,652 | ||||
Net proceeds from initial public offering (in shares) | 38,237,500 | ||||||
Conversion of Class B common stock into Class A common stock | $ 33 | $ (33) | |||||
Conversion of Class B common stock into Class A common stock (in shares) | 33,068,863 | (33,068,863) | |||||
Exercise of vested stock options | $ 41 | 41 | |||||
Exercise of vested stock options (in shares) | 1,800 | 1,800 | |||||
Stock-based compensation | $ 117,084 | 117,084 | |||||
Ending balance at Sep. 30, 2020 | $ 1,303,888 | $ 155 | $ 1,587,208 | $ (283,475) | |||
Ending balance (in shares) at Sep. 30, 2020 | 154,637,240 | 100 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities: | |||
Net income (loss) | $ (122,233) | $ (20,196) | $ 6,745 |
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities: | |||
Depreciation expense | 44,637 | 33,703 | 26,293 |
Amortization expense | 55,144 | 60,226 | 51,372 |
Non-cash interest expense | 6,994 | 3,986 | 3,339 |
Deferred income tax benefit | (10,110) | (5,321) | (24,125) |
Non-cash compensation expense | 117,084 | 4,564 | 3,542 |
Fair value adjustment for contingent consideration | 53 | (1,810) | |
Loss on disposition of property, plant and equipment | 904 | 1,495 | 791 |
Bad debt provision | 512 | 383 | 176 |
Loss on extinguishment of debt | 37,587 | ||
Changes in operating assets and liabilities: | |||
Trade receivables | (17,656) | (9,015) | 2,211 |
Inventories | (12,146) | (4,492) | 953 |
Prepaid expenses and other current assets | 1,035 | (4,550) | 3,460 |
Accounts payable | (4,361) | 11,679 | 4,398 |
Accrued expenses and interest | 2,664 | 20,376 | (12,839) |
Other assets and liabilities | (1,694) | 1,981 | 2,796 |
Net cash provided by (used in) operating activities | 98,361 | 94,872 | 67,302 |
Investing activities: | |||
Purchases of property, plant and equipment | (95,594) | (63,006) | (42,758) |
Proceeds from sale of property, plant and equipment | 253 | 71 | 60 |
Acquisitions, net of cash acquired | (18,453) | (292,984) | |
Net cash provided by (used in) investing activities | (113,794) | (62,935) | (335,682) |
Financing activities: | |||
Proceeds from initial public offering, net of related costs | 820,467 | ||
Proceeds from 2025 Senior Notes | 346,500 | ||
Redemption of 2021 and 2025 Senior Notes | (665,000) | ||
Payments of debt extinguishment costs related to 2021 and 2025 Senior Notes | (24,938) | ||
Proceeds under Revolving Credit Facility | 129,000 | 40,000 | 30,000 |
Payments under Revolving Credit Facility | (129,000) | (40,000) | (30,000) |
Proceeds from long-term debt | 224,438 | ||
Payments on long-term debt obligations | (341,958) | (8,304) | (7,167) |
Payments of financing fees related to Term Loan Agreement | (5,179) | ||
Payments of debt issuance costs related to 2025 Senior Notes | (7,754) | ||
Proceeds (repayments) of finance lease obligations | (807) | 1,405 | (656) |
Payments of Ultralox contingent consideration | (2,000) | ||
Payments of initial public offering related costs | (584) | ||
Redemption of capital contributions prior to initial public offering | (3,553) | (101) | (2,694) |
Capital contributions prior to initial public offering | 1,500 | 1,311 | 40,000 |
Exercise of vested stock options | 41 | ||
Net cash provided by (used in) financing activities | 124,498 | (8,273) | 248,742 |
Net increase (decrease) in cash and cash equivalents | 109,065 | 23,664 | (19,638) |
Cash and cash equivalents at beginning of period | 105,947 | 82,283 | 101,921 |
Cash and cash equivalents at end of period | 215,012 | 105,947 | 82,283 |
Supplemental cash flow disclosure: | |||
Cash paid for interest, net of amounts capitalized | 76,670 | 78,807 | 65,050 |
Cash paid for income taxes, net | 1,376 | 1,252 | 622 |
Supplemental non-cash investing and financing disclosure: | |||
Capital expenditures in accounts payable at end of period | 2,089 | 3,674 | 4,983 |
Property, plant and equipment acquired under finance lease obligations | $ 966 | $ 1,637 | 7,045 |
Non-cash equity contribution | $ 2,475 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Organization The AZEK Company Inc. (the “Company”) is a Delaware corporation that holds all of the limited liability company interests in CPG International LLC, the entity which directly and indirectly holds all of the equity interests in the operating subsidiaries. The Company is a leading manufacturer of premium, low-maintenance building products for residential, commercial and industrial markets. The Company’s products include trim, decking, porch, moulding, railing, pavers, bathroom and locker systems, as well as extruded plastic sheet products and other non-fabricated products for special applications in industrial markets. The Company operates in various locations throughout the United States. AZEK is a brand name for residential products while the commercial products are branded under the brand names Celtec, Playboard, Seaboard, Flametec, Designboard, Cortec, Sanatec, Scranton Products, Aria Partitions, Eclipse Partitions, Hiny Hiders, Tufftec Lockers and Duralife Lockers. Initial Public Offering On June 16, 2020, the Company completed its initial public offering (the “IPO”) of its Class A common stock, in which it sold 38,237,500 shares, including 4,987,500 shares pursuant to the underwriters’ over-allotment option. The shares began trading on the New York Stock Exchange on June 12, 2020 under the symbol “AZEK”. The shares were sold at an IPO price of $23.00 per share for net proceeds to the Company of approximately $819.7 million, after deducting underwriting discounts and commissions of $50.6 million and offering expenses of approximately $9.2 million payable by the Company. In addition, the Company used its net proceeds to redeem $350.0 million in aggregate principal of its then-outstanding 2025 Senior Notes, $70.0 million of its then-outstanding principal amount under the Revolving Credit Facility and effected a $337.7 million prepayment of its then-outstanding principal amount under the Term Loan Agreement. Refer to Note 8 for additional information. In conjunction with the Company’s conversion from a limited liability company into a corporation (the “Corporate Conversion”) prior to the closing of the IPO, the Company effected a unit split of its then-outstanding limited liability company unit and then converted the units on a one-to-one Secondary Offering On September 15, 2020, the Company completed an offering of 28,750,000 shares of Class A common stock, par value $0.001 per share, including the exercise in full by the underwriters of their option to purchase up to 3,750,000 additional shares of Class A common stock, at a public offering price of $33.25 per share. The shares were sold by certain stockholders of the Company (the “Selling Stockholders”). The Company did not receive any of the proceeds from the sale of the shares by the Selling Stockholders. The estimated offering expenses of approximately $1.4 million is payable by the Company and recorded in “Other general expenses” within the Consolidated Statements of Comprehensive Income (Loss). Immediately subsequent to the closing of the secondary offering, Class B common stockholders converted 33,068,863 shares of Class B common stock into Class A common stock. In addition, the secondary offering triggered a change in performance criteria, in which certain performance-vested restricted stock awards and stock options vested as a result of the secondary offering. Refer to Note 12 and 13 for additional information. b. Summary of Significant Accounting Policies Basis of Presentation The Company operates on a fiscal year ending September 30. The accompanying Consolidated Financial Statements and notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Consolidated Financial Statements include the assets, liabilities and results of operations of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net loss, stockholders’ equity or cash flows as previously reported. The Company’s financial condition and results of operations are being, and are expected to continue to be affected by the current COVID-19 COVID-19 COVID-19 COVID-19 COVID-19 Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates include revenue recognition, reserves for excess inventory, inventory obsolescence, product warranties, customer rebates, stock-based compensation, litigation, income taxes, contingent consideration, goodwill and intangible asset valuation and accounting for long-lived assets. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Actual results may differ from estimated amounts. Estimates are revised as additional information becomes available. Seasonality Although the Company generally has demand for its products throughout the year, its sales have historically experienced some seasonality. The Company has typically experienced higher levels of sales of its residential products in the second fiscal quarter of the year as a result of its “early buy” sales, which encourages dealers to stock its residential products. The Company has generally experienced lower levels of sales of residential products in the first fiscal quarter due to adverse weather conditions in certain markets during the winter season. Although its products can be installed year-round, weather conditions can impact the timing of the sales of certain products. In addition, the Company has experienced higher levels of sales of its bathroom partition products and its locker products during the second half of its fiscal year, which includes the summer months when schools are typically closed and therefore are more likely to undergo remodel activities. Change in Accounting Principle—Revenue Recognition The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) • Identify the contract with a customer; • Identify the performance obligations in the contract; • Determine the transaction price, which is the total consideration provided by the customer; • Allocate the transaction price among the separate performance obligations within the contract; and • Recognize revenue when the performance obligations are satisfied. On October 1, 2018, the Company early adopted ASC 606, using the modified retrospective method with an adjustment to the opening balance of equity of $0.2 million, due to the cumulative impact of adopting Topic 606. The adoption of ASC 606 did not have a material impact on the Consolidated Financial Statements, and the Company did not restate comparative period amounts. Therefore, the comparative information for fiscal year 2018 continues to be reported under ASC 605, Revenue Recognition The Company sells its products to residential and commercial markets. The Company’s Residential segment principally generates revenue from the manufacture and sale of its premium, low-maintenance non-fabricated The Company recognizes revenues when control of the promised goods is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods, at a point in time, when shipping occurs. Each product the Company transfers to the customer is considered one performance obligation. The Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods. As a result of this accounting policy election, the Company does not consider shipping and handling activities as promised services to its customers. Shipping and handling costs billed to customers are recorded in net sales. The Company records all shipping and handling costs as “Cost of sales”. Customer contracts are typically fixed price and short-term in nature. The transaction price is based on the product specifications and is determined at the time of order. The Company does not engage in contracts greater than one year, and therefore does not have any incremental costs capitalized as of September 30, 2020 or September 30, 2019. The Company may offer various sales incentive programs throughout the year. It estimates the amount of sales incentive to allocate to each performance obligation, or product shipped, using the most-likely-amount method of estimation, based on sales to the direct customer or sell-through customer. The estimate is updated each reporting period and any changes are allocated to the performance obligations on the same basis as at inception. Changes in estimate allocated to a previously satisfied performance obligation are recognized as part of net revenue in the period in which the change occurs under the cumulative catch-up 3 1 The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance. Change in Accounting Principle—Measurement Date for Conducting Annual Goodwill Impairment Test During fiscal year 2019, the Company changed the annual impairment assessment date as a result of management’s improvements to the budgeting process to August 1 st th Earnings Per Share Basic net income per common share is computed based on the weighted average number of common shares outstanding. Potentially dilutive shares are included in the diluted per-share Advertising Costs Advertising costs primarily relate to trade publication advertisements, cooperative advertising, product brochures and samples. Such costs are expensed as incurred and are included in “Selling, general and administrative expenses” within the Consolidated Statements of Comprehensive Income (Loss). Total advertising expenses were approximately $33.2 million, $41.7 million and $31.7 million for the years ended September 30, 2020, 2019 and 2018, respectively. Research and Development Costs Research and development costs primarily relate to new product development, product claims support and manufacturing process improvements. Such costs are expensed as incurred and are included in “Selling, general and administrative expenses” within the Consolidated Statements of Comprehensive Income (Loss). Total research and development expenses were approximately $7.7 million, $8.0 million, and $6.5 million, for the years ended September 30, 2020, 2019 and 2018, respectively. Cash and Cash Equivalents The Company considers cash and highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates or equals fair value due to their short-term nature. Concentrations and Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. As of September 30, 2020, cash and cash equivalents were maintained at major financial institutions in the United States, and current deposits are in excess of insured limits. The Company believes these institutions have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to the Company. The Company has not experienced any losses in such accounts. Sales to certain Residential segment distributors accounted for 10% or more of the Company’s total net sales in 2020, 2019 and 2018 were as follows: Years Ended September 30, 2020 2019 2018 Distributor A 20.3 % 19.8 % 21.2 % At September 30, 2020, three customers accounted for 10% or more of gross trade receivables; Customer A was 13.1%, Customer B was 12.6% and Customer C was 11.9%. At September 30, 2019, no customers accounted for 10% or more of gross trade receivables. For each year ended September 30, 2020, 2019 and 2018, approximately 10%, 17% and 14%, respectively, of the Company’s materials purchases were purchased from its largest supplier. Allowance for Doubtful Accounts The Company routinely assesses the financial strength of its customers and believes that its trade receivables credit risk exposure is limited. An allowance for doubtful accounts is provided for known and anticipated credit losses and disputed amounts, as determined by management in the course of regularly evaluating individual customer receivables. This evaluation takes into consideration a customer’s financial condition and credit history, as well as current economic conditions. Amounts are written-off Inventories Inventories (mainly petrochemical resin in raw materials and finished goods), are valued at the lower of cost or net realizable value and are reduced for slow-moving and obsolete inventory. Management assesses the need for, and the amount of, obsolescence write-down based on customer demand of the item, the quantity of the item on hand and the length of time the item has been in inventory. Further, management also considers net realizable value in assessing inventory balances. Inventory costs include those costs directly attributable to products, including all manufacturing overhead but excluding costs to distribute. The inventories cost is recorded at standard cost, which approximates actual cost, on the first-in first-out Vendor Rebates Certain vendor rebates and incentives are earned by the Company only when specified levels of periodic purchases are achieved. These vendor rebates are recognized based on a systematic and rational allocation of the cash consideration offered in respect of each of the underlying transactions, provided the amounts are probable and reasonably estimable. The Company records the incentives as a reduction in the cost of inventory. The Company records such incentives during interim periods based on actual results achieved on a year-to-date Customer Rebates The Company offers rebates to customers based on total amounts purchased by each customer during each calendar year. The Company provides for the estimated cost of rebates at the time revenue is recognized based on rebate program rates and anticipated sales to each customer eligible for rebates and other available information. Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates. Refer to Note 2 for additional information. Product Warranties The Company provides product assurance warranties of various lengths and terms to certain customers based on standard terms and conditions. The Company provides for the estimated cost of warranties at the time revenue is recognized based on management’s judgment, considering such factors as cost per claim, historical experience, anticipated rates of claims, and other available information. Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates. Refer to Note 9 for additional information. Property, Plant and Equipment, Net Property, plant and equipment (“PP&E”) is recorded at cost, net of accumulated depreciation. Major additions and betterments are capitalized while repair and/or maintenance expenses are charged to operations when incurred. Construction in progress is also recorded at cost and includes capitalized interest, if material. Depreciation for financial reporting purposes is computed using the straight-line method over the following estimated useful lives of the assets: Land improvements 10 years Building and improvements 7-40 years Manufacturing equipment 1-15 Office furniture and equipment 3-12 Vehicles 5 years Computer equipment 3-7 Leasehold improvements are recorded at cost and depreciated over the standard life of the type of asset or the remaining life of the lease, whichever is shorter. Equipment held under capital leases is stated at the lower of the fair value of the asset or the net present value of the future minimum lease payments at the inception of the lease. For equipment held under capital leases, depreciation is computed using the straight-line method over the shorter of the estimated useful lives of the leased assets or the related lease term and is included within depreciation expense. PP&E is evaluated for impairment at the asset group level. If a triggering event suggests that a potential impairment has occurred, recoverability of these assets is assessed by evaluating whether or not future estimated undiscounted net cash flows are less than the carrying amount of the assets. If the estimated cash flows are less than the carrying amount, the assets are written down to their fair value through an impairment loss recognized as a non-cash During the year ended September 30, 2020, the Company recognized a $0.9 million loss on disposal of fixed assets in the ordinary course of business, $1.0 million loss related to assets in the Residential segment and $0.1 million gain related to assets in the Commercial segment. During the year ended September 30, 2019, the Company recognized a $1.5 million loss on disposal of fixed assets, $1.2 million related to corporate assets and $0.3 million related to assets in the Residential segment. During the year ended September 30, 2018, the Residential segment recognized a $0.8 million loss on disposal of fixed assets in the ordinary course of business. These losses are classified as “Loss on disposal of property, plant and equipment” in a separate caption within the Consolidated Statements of Comprehensive Income (Loss) within “Operating income (loss)”. Build-to-Suit The Company establishes assets and liabilities for the fair value of the building and estimated construction costs incurred under lease arrangements when it is considered the owner (for accounting purposes only), or build-to-suit build-to-suit Deferred Financing Costs, Net The Company has recorded deferred financing costs incurred in conjunction with its debt obligations. The Company amortizes debt issuance costs over the remaining life of the related debt using the straight-line method for the Revolving Credit Facility and the effective interest method for other debt. Deferred financing costs, net of accumulated amortization, are presented as “Other assets” (non-current) Goodwill The Company accounts for goodwill as the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company assigns goodwill to four reporting units based on which reporting unit is expected to benefit from the business combination as of the acquisition date. Goodwill is not subject to amortization; rather, the Company tests goodwill for impairment annually during the fourth fiscal quarter ended September 30 and whenever events occur or changes in circumstances indicate that impairment may have occurred. Impairment testing is performed for each of the reporting units by first assessing qualitative factors to see if further testing of goodwill is required. If the Company concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying amount based on the qualitative assessment, then a quantitative test is required. The Company may also choose to bypass the qualitative assessment and perform the quantitative test. If the estimated fair value of a reporting unit exceeds the carrying value, the Company considers that goodwill is not impaired. If the carrying value exceeds estimated fair value, there is an impairment of goodwill and an impairment loss is recorded. The Company calculates the impairment loss by comparing the fair value of the reporting unit less the carrying amount, including goodwill. Goodwill impairment would be limited to the carrying value of the goodwill. In performing the quantitative test, the Company measures the fair value of the reporting units to which goodwill is allocated using an income-based approach, a generally accepted valuation methodology, and relevant data available through and as of August 1, for the years ended September 30, 2020 and 2019, respectively, and through and as of September 30, for the year ended September 30, 2018. Under the income approach, fair value is determined using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows. The key estimates and factors used in this approach include, but are not limited to, revenue growth rates and profit margins based on internal Company forecasts, discount rates, perpetuity growth rates, future capital expenditures, and working capital requirements, among others, and a review of comparable market multiples for the industry segment as well as historical operating trends for the Company. The Company completed the annual goodwill impairment tests as of August 1, 2020 and 2019, and as of September 30, 2018, using a quantitative assessment approach. As a result of these respective annual assessments, the Company noted that the fair value of each reporting unit was determined to be in excess of the carrying value and as such, there were no impairment charges for the years ended September 30, 2020, 2019 or 2018. Refer to Note 6 for additional information. Intangible Assets, Net Amortizable intangible assets include proprietary knowledge, trademarks, customer relationships and other intangible assets. The Company does not have any indefinite lived intangible assets other than goodwill. The intangible assets are being amortized on an accelerated basis using the sum of the years’ digits method over their estimated useful lives, which range from 3 to 20 years, reflecting the pattern in which the economic benefits are consumed or otherwise used up. The Company evaluates whether events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets. In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful lives. The Company evaluates amortizable intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If a triggering event suggests that a potential impairment has occurred, recoverability of these assets is assessed by evaluating the probability that future estimated undiscounted net cash flows will be less than the carrying amount of the long-lived assets. If the estimated cash flows are less than the carrying amount of the long-lived assets, the assets are written down to their fair value through an impairment loss recognized as a non-cash Stock-Based Compensation The Company determines the expense for all employee stock-based compensation awards by estimating their fair value and recognizing such value as an expense, on a straight-line, ratable or cliff basis, depending on the award, in the Consolidated Financial Statements over the requisite service period in which employees earn the awards. The Company estimates the fair value of performance-based awards granted to employees using the Monte Carlo pricing model and for service-based awards granted to employees using the Black Scholes pricing model. The fair value of performance-based awards that are expected to vest is recognized as compensation expense on a straight-line basis over the requisite service period. The fair value of service-based awards that are expected to vest is recognized as compensation expense on either (1) straight-line basis, (2) a ratable vesting basis or (3) a cliff vesting basis. The Company accounts for forfeitures as they occur. To determine the fair value of a stock-based award using the Monte Carlo and Black Scholes models, the Company makes assumptions regarding the risk-free interest rate, expected future volatility, expected dividend yield and performance period. The risk-free rate is based on the U.S. treasury yield curve in effect at the time of grant. The Company estimates the expected volatility of the share price by reviewing the estimated post-IPO Refer to Note 13 for additional information. Estimated Fair Value of Financial Instruments The carrying amounts for the Company’s financial instruments classified as current assets and liabilities, including cash and cash equivalents, trade accounts receivable and accrued expenses and accounts payable, approximate fair value due to their short maturities. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level Level Level . Refer to Note 10 for additional information. Income Taxes Income taxes are provided on income reported for financial statement purposes, adjusted for permanent differences between financial statement reporting and income tax regulations. A valuation allowance is established whenever management believes that it is more likely than not that deferred tax assets may not be realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the deferred tax assets or liabilities are expected to be realized or settled. The realization of the net deferred tax assets is primarily dependent on estimated future taxable income. A change in the Company’s estimate of future taxable income may require an increase or decrease in the valuation allowance. A liability for uncertain tax positions is recorded whenever management believes it is not more-likely than-not On December 22, 2017, the President of the United States signed and enacted comprehensive tax legislation into law in the form of H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Except for certain provisions, the Tax Act is effective for tax years beginning on or after January 1, 2018. As a fiscal year U.S. taxpayer, the majority of the provisions applied to the Company’s fiscal year 2019, such as new limitations on certain business deductions, including the limitation on the Company’s interest expense deduction. For fiscal year 2018 and effective in the three months ended December 31, 2017, the most significant impact included: lowering of the U.S. federal corporate income tax rate and remeasuring the Company’s deferred tax assets and liabilities. The phase in of the lower federal income tax rate resulted in a blended rate of 24.5% for fiscal year 2018, as compared to the previous rate of 35%. The federal income tax rate was reduced to 21% in subsequent fiscal years. Because the Company has net operating loss carry-forwards and was not expected to owe federal tax in its fiscal year 2018 tax return, the remeasurement of deferred taxes recognized for the period was calculated using the future federal tax rate of 21%. During the year ended September 30, 2018, the Company recorded a $22.5 million net income tax benefit for the remeasurement of its deferred tax assets and liabilities. The Company’s effective tax rate was significantly impacted by the recognition of this remeasurement. Refer to Note 16 for further information regarding the impact of this legislation. Recently Adopted Accounting Pronouncements Under the Jumpstart Our Business Startups (“JOBS”) Act, the Company qualifies as an emerging growth company (“EGC”) and as such, has elected not to opt out of the extended transition period for complying with new or revised accounting pronouncements. During the extended transition period, the Company is not subject to new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period. On October 1, 2017, the Company adopted Accounting Standards Update (“ASU”) ASU No. 2015-11, Inventory—Simplifying the Measurement of Inventory On October 1, 2017, the Company adopted ASU No. 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments On October 1, 2018, the Company early adopted ASU No. 2014-09, Revenue from Contracts with Customers On October 1, 2019, the Company adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), No. 2017-13, No. 2018-01, 2018-10 2018-11, No. 2018-20, No. 2019-01, No. 2019-10 No. 2020-05. right-of-use In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) No. 2019-05 2019-10 2019-11. off-balance In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use 350-40): internal-use In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Revenue
Revenue | 12 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 2. REVENUE The Company sells its products to residential and commercial markets. The Company’s Residential segment principally generates revenue from the manufacture and sale of its premium, low-maintenance non-fabricated The Company recognizes revenues when control of the promised goods is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods, at a point in time, when shipping occurs. Each product the Company transfers to the customer is considered one performance obligation. The Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods. As a result of this accounting policy election, the Company does not consider shipping and handling activities as promised services to its customers. Customer contracts are typically fixed price and short-term in nature. The transaction price is based on the product specifications and is determined at the time of order. The Company may offer various sales incentive programs throughout the year. It estimates the amount of sales incentive to allocate to each performance obligation, or product shipped, using the most-likely-amount method of estimation, based on sales to the direct customer or sell-through customer. The estimate is updated each reporting period and any changes are allocated to the performance obligations on the same basis as at inception. Changes in estimate allocated to a previously satisfied performance obligation are recognized as part of net revenue in the period in which the change occurs under the cumulative catch-up The Company also engages in customer rebates, which are recorded in “Net sales” in the Consolidated Statements of Comprehensive Income (Loss) and in “Accrued rebates” and “Trade receivables” in the Consolidated Balance Sheets. The Company recorded accrued rebates of $ 30.4 As of September 30, 2020 2019 2018 Beginning balance $ 24,858 $ 21,914 $ 16,922 Rebate expense 54,083 50,847 42,400 Rebate payments (46,262) (47,903 ) (38,893 ) Acquisitions — — 1,485 Ending balance $ 32,679 $ 24,858 $ 21,914 The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance. |
Business Combinations
Business Combinations | 12 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | 3. BUSINESS COMBINATIONS On January 31, 2020, the Company acquired certain assets and assumed certain liabilities of Return Polymers, Inc. for a total purchase price of approximately $18.5 million, subject to customary post-closing working capital adjustments. Return Polymers is located in Ashland Ohio and is a provider of full-service recycled PVC material processing, sourcing, logistical support and scrap management programs. The Company financed the acquisition with cash on hand. The acquisition was accounted for as a business combination under Accounting Standards Codification (“ASC”) ASC 805 Business Combinations The following table represents the preliminary allocation of assets acquired and liabilities assumed on the acquisition date and certain measurement period adjustments attributable to customary working capital adjustments as of September 30, 2020 (in thousands): Total purchase consideration $ 18,453 Allocation of consideration to assets acquired and liabilities assumed: Cash and cash equivalents $ — Accounts receivable 1,119 Inventories 2,532 Prepaid expenses and other current assets 39 Property, plant and equipment 4,080 Intangible assets 5,100 Goodwill 7,092 Accounts payable (947 ) Accrued expenses and other liabilities (562 ) Net assets acquired $ 18,453 At the acquisition date, total intangible assets and goodwill amounted to $11.6 million, comprised of $4.6 million related to customer relationships, and $0.7 million related to trademarks, as well as $6.3 million in goodwill. During the year ended September 30, 2020, the Company recognized $0.6 million in working capital adjustments and $0.2 million reduction in customer relationships, resulting in an increase in goodwill of $0.8 million, and $7.1 million in total goodwill as of September 30, 2020. It is expected that $7.1 million of the goodwill is deductible for tax purposes. The estimated useful life for customer relationships is 15 years and trademarks is 10 years. The weighted average useful life at the date of acquisition was 14.3 years. |
Inventories
Inventories | 12 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. INVENTORIES Inventories are valued at the lower of cost or net realizable value, and are reduced for slow-moving and obsolete inventory. The inventories cost is recorded at standard cost, which approximates actual cost, on a first-in first-out As of September 30, 2020 2019 Raw materials $ 33,850 $ 36,855 Work in process 19,935 19,514 Finished goods 76,285 59,022 Total inventories $ 130,070 $ 115,391 During the year ended September 30, 2018, the Company developed additional capabilities relating to the potential utilization or sale of off specification finished goods inventory and re-assessed re-introduction |
Property, Plant and Equipment -
Property, Plant and Equipment - Net | 12 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment - Net | 5. PROPERTY, PLANT AND EQUIPMENT — NET Property, plant and equipment — net consisted of the following (in thousands): As of September 30, 2020 2019 Land and improvements $ 2,758 $ 2,758 Buildings and improvements 71,059 67,770 Capital lease – building 2,021 2,021 Capital lease – manufacturing equipment 1,026 1,026 Capital lease – vehicles 3,782 3,835 Manufacturing equipment 306,036 254,570 Computer equipment 24,927 22,733 Furnitures and fixtures 5,689 5,409 Vehicles 465 339 Total property, plant and equipment 417,763 360,461 Construction in progress 54,412 16,453 472,175 376,914 Accumulated depreciation (210,401 ) (168,220 ) Total property, plant and equipment – net $ 261,774 $ 208,694 The Company is considered the owner, for accounting purposes only, of leased office space, as it had taken on certain risks of construction build cost overages above normal tenant improvement allowances. Accordingly, the estimated fair value of the leased property was $9.2 million as of both September 30, 2020 and September 30, 2019. The corresponding lease financing obligation was $7.9 million as of both September 30, 2020 and September 30, 2019. The lease financing obligation was recorded in “Finance lease obligations—less current portion” in the Consolidated Balance Sheets. Refer to Note 17 for additional information. Depreciation expense was approximately $44.6 million, $33.7 million and $26.3 million in the years ended September 30, 2020, 2019 and 2018, respectively. During the years ended September 30, 2020 and 2019, $1.3 million and $0.9 million of interest was capitalized, respectively. Accumulated amortization for assets under capital leases was $4.0 million and $3.7 million as of September 30, 2020 and 2019, respectively. Accumulated amortization for the assets under the build-to-suit |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Net | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets - Net | 6. GOODWILL AND INTANGIBLE ASSETS — NET Goodwill Goodwill consisted of the following (in thousands): Residential Commercial Total Goodwill as of September 30, 2019 $ 903,909 $ 40,389 $ 944,298 Acquisitions (1) 7,092 — 7,092 Goodwill as of September 30, 2020 $ 911,001 $ 40,389 $ 951,390 Accumulated impairment losses as of September 30, 2019 $ — $ 32,200 $ 32,200 Accumulated impairment losses as of September 30, 2020 $ — $ 32,200 $ 32,200 (1) Acquisition of Return Polymers, Inc., refer to Note 3. Intangible assets, net The Company does not have any indefinite lived intangible assets other than goodwill as of September 30, 2020 and 2019. Finite-lived intangible assets consisted of the following (in thousands): As of September 30, 2020 Lives in Gross Accumulated Net Propriety knowledge 10 — 15 $ 289,300 $ (195,303 ) $ 93,997 Trademarks 5 — 20 223,840 (124,521 ) 99,319 Customer relationships 15 — 19 146,670 (52,119 ) 94,551 Patents 10 7,000 (3,182 ) 3,818 Other intangible assets 3 — 15 4,076 (3,387 ) 689 Total intangible assets $ 670,886 $ (378,512 ) $ 292,374 As of September 30, 2019 Lives in Gross Accumulated Net Propriety knowledge 10 — 15 $ 289,300 $ (171,686 ) $ 117,614 Trademarks 5 — 20 223,140 (108,096 ) 115,044 Customer relationships 15 — 19 142,270 (39,084 ) 103,186 Patents 10 7,000 (2,132 ) 4,868 Other intangible assets 3 — 15 4,076 (2,370 ) 1,706 Total intangible assets $ 665,786 $ (323,368 ) $ 342,418 Amortization expense was approximately $55.1 million, $60.2 million and $51.4 million for the years September 30, 2020, 2019 and 2018, respectively. As of September 30, 2020, the remaining weighted average amortization period for acquired intangible assets was 12.9 years. Amortization expense relating to these amortizable intangible assets as of September 30, 2020, is expected to be as follows (in thousands): 2021 $ 49,802 2022 44,347 2023 39,219 2024 34,227 2025 29,281 Thereafter 95,498 Total $ 292,374 |
Composition of Certain Balance
Composition of Certain Balance Sheet Accounts | 12 Months Ended |
Sep. 30, 2020 | |
Composition of Certain Balance Sheet Accounts Disclosure [Abstract] | |
Composition of Certain Balance Sheet Accounts | 7. COMPOSITION OF CERTAIN BALANCE SHEET ACCOUNTS Allowance for Doubtful Accounts Allowance for doubtful accounts consisted of the following (in thousands): As of September 30, 2020 2019 2018 Beginning balance $ 904 $ 1,230 $ 1,048 Provision 512 383 176 Bad debt write-offs (119 ) (709 ) (89 ) Acquisitions 35 — 95 Ending balance $ 1,332 $ 904 $ 1,230 Accrued Expenses and Other Liabilities Accrued expenses consisted of the following (in thousands): As of September 30, 2020 2019 Employee related liabilities $ 26,554 $ 17,202 Freight 5,530 4,158 Professional fees 4,249 14,160 Marketing 3,343 2,026 Warranty 2,921 2,543 Construction in progress 1,303 903 Capital lease 969 721 Contingent consideration — 1,303 Other 5,647 4,887 Total accrued expenses and other current liabilities $ 50,516 $ 47,903 |
Debt
Debt | 12 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 8. DEBT Debt consisted of the following (in thousands): As of September 30, 2020 2019 Term Loan Agreement due May 5, 2024 — LIBOR + 3.75% (4.75% and 5.93% at September 30, 2020 and 2019, respectively), (includes a discount of $507 and $1,105 at September 30, 2020 and 2019, respectively) $ 467,147 $ 808,507 Revolving Credit Facility through March 9, 2022 — LIBOR + 2.00% — — 2021 Senior Notes due October 1, 2021 — Fixed at 8% — 315,000 Total 467,147 1,123,507 Less unamortized deferred financing fees (4,165 ) (11,890 ) Less current portion — (8,304 ) Long-term debt — less current portion and unamortized financing fees $ 462,982 $ 1,103,313 As of September 30, 2020, the Company scheduled fiscal year debt payment on the Term Loan Agreement as $467.7 million in the year 2024. No other debt payments are due by the Company in any other fiscal year. Term Loan Agreement On September 30, 2013, CPG International LLC refinanced its then outstanding long-term debt and entered into (i) a new senior secured revolving credit facility (the “Revolving Credit Facility”) among CPG International LLC (as successor-in-interest successor-in-interest co-syndication co-documentation The proceeds from borrowings under the amended Term Loan Agreement and the 2021 Senior Notes were used to (i) fund the acquisition of CPG International LLC and (ii) repay all amounts outstanding under the Company’s prior term loan agreement, prior notes and related fees. The Term Loan Agreement matures on May 5, 2024, since the 2021 Senior Notes were redeemed June 8, 2020. The Term Loan Agreement provides for interest on outstanding principal thereunder at a fluctuating rate, at CPG International LLC’s option, for (i) alternative base rate (“ABR”) borrowings, the highest of (a) the Federal Funds Rate as of such day plus 50 basis points, (b) the prime commercial lending rate announced as of such day by the Administrative Agent as defined in the Term Loan Agreement, as the “prime rate” as in effect on such day and (c) the LIBOR as of such day for a deposit in U.S. dollars with a maturity of one month plus 100 basis points, provided that in no event shall the ABR be less than 200 basis points, plus the applicable margin of 275 basis points per annum; or (ii) for Eurocurrency borrowings, the adjusted LIBOR of (a) the LIBOR in effect for such interest period divided by one, minus the statutory reserves applicable to such Eurocurrency borrowing, if any, and (b) 100 basis points, plus the applicable margin of 375 basis points per annum. As of September 30, 2020 and 2019, unamortized deferred financing fees related to the Term Loan Agreement were $4.2 million and $9.1 million, respectively. The Term Loan Agreement may be voluntarily prepaid in whole, or in part, in each case without premium or penalty (other than the Prepayment Premium (as defined in the Term Loan Agreement), if applicable), subject to certain customary conditions. The Company used part of its net proceeds from the IPO to prepay outstanding principal of the Term Loan Agreement in the amount of $337.7 million, paid $4.3 million in accrued interest, and the Company recognized in interest expense an additional $3.2 million amortization of deferred financing fees associated with the prepayment amounts during the year ended September 30, 2020. The obligations under the Term Loan Agreement are secured by a first priority security interest in the membership interests of CPG International LLC owned by The AZEK Company Inc. and substantially all of the present and future assets of the borrowers and guarantors including equity interests of their domestic subsidiaries, subject to certain exceptions, (the “Term Loan Priority Collateral”) and a second priority lien on current assets. The obligations under the Term Loan Agreement are guaranteed by the Company and the wholly owned domestic subsidiaries of CPG International LLC other than certain immaterial subsidiaries and other excluded subsidiaries. The Term Loan Agreement requires mandatory prepayments of the term loan thereunder from certain debt issuances, certain asset dispositions (subject to certain reinvestment rights) and a percentage of excess cash flow (subject to step-downs upon CPG International LLC achieving certain leverage ratios). At September 30, 2020, no excess cash flow payment was required based on the current leverage ratio. At September 30, 2019, the estimated prepayment of excess cash flow was $6.4 million. The lenders do have the option to decline any prepayments based on excess cash flows. At the lenders’ option the excess cash flow payment made in January 2020 was $2.2 million with the remaining prepayment declined by the lenders. CPG International LLC is required to repay the outstanding principal amount under the Term Loan Agreement in quarterly installments equal to 0.25253% of the aggregate principal amount under the Term Loan Agreement outstanding on the amendment date of June 18, 2018 and such quarterly payments may be reduced as a result of prepayments. Based on the prepayment of $337.7 million made with the IPO proceeds, CPG International LLC has prepaid all of the quarterly principal payments through maturity. The Term Loan Agreement restricts payments of dividends unless certain conditions are met, as defined in the Term Loan Agreement. Revolving Credit Facility On March 9, 2017, CPG International LLC amended, restated and extended the maturity of the Revolving Credit Facility, and on June 5, 2020, CPG International LLC further amended the Revolving Credit Facility (the “Amendment”) to establish $8.5 million of commitments for FILO loans, which are available to be drawn in a single disbursement on or prior to December 31, 2020. The availability of the FILO Loans will be subject to satisfaction of certain conditions at the time of borrowing, including the value of borrowing-base eligible assets at the time of borrowing. Under the terms of the Revolving Credit Facility, as amended, FILO Loans may be borrowed against increased percentages of borrowing-base eligible assets (as compared to the percentages of borrowing-base eligible assets applicable to all other loans under the Revolving Credit Facility). The Amendment did not increase the total aggregate amount of commitments under the Revolving Credit Facility. Borrowing of FILO Loans under the Revolving Credit Facility will reduce the total aggregate commitments available for revolving loans for so long as the FILO Loans remain outstanding. If borrowed, the FILO Loans will mature on December 4, 2021. As of September 30, 2020, the Company has not drawn on the FILO loans. The Revolving Credit Facility matures on March 9, 2022. The Revolving Credit Facility provides for maximum aggregate borrowings of up to $150.0 million, subject to an asset-based borrowing base. The borrowing base is limited to a set percentage of eligible accounts receivable and inventory, less reserves that may be established by the administrative agent and the collateral agent in the exercise of their reasonable credit judgment. On March 16, 2020, the Company borrowed $89.0 million under the Revolving Credit Facility to enhance financial flexibility in light of uncertainties resulting from the COVID-19 The Revolving Credit Facility provides for an interest rate on outstanding principal thereunder at a fluctuating rate, at CPG International LLC’s option, at (i) for ABR borrowings, the highest of (a) the Federal Funds Rate plus 50 basis points, (b) the prime rate and (c) the LIBOR as of such date for a deposit in U.S. dollars with a maturity of one month plus 100 basis points, plus, in each case, a spread of 50 to 100 basis points, based on average historical availability, or (ii) for Eurocurrency borrowings, adjusted LIBOR plus a spread of 150 to 200 basis points, based on average historical availability. A “commitment fee” accrues on any unused portion of the commitments under the Revolving Credit Facility during the preceding three calendar month period. If the average daily used percentage is greater than 50%, the commitment fee equals 25 basis points, and if the average daily used percentage is less than or equal to 50%, the commitment fee equals 37.5 basis points. The commitment fees were $0.5 million, $0.5 million and $0.6 million for the years ended September 30, 2020, 2019 and 2018, respectively. The obligations under the Revolving Credit Facility are guaranteed by The AZEK Company Inc. and its wholly owned domestic subsidiaries other than certain immaterial subsidiaries and other excluded subsidiaries. The obligations under the Revolving Credit Facility are secured by a first priority security interest in substantially all of the accounts receivable, inventory, deposit accounts, securities accounts and cash assets of The AZEK Company Inc., CPG International LLC and the subsidiaries of CPG International LLC that are guarantors under the Revolving Credit Facility, and the proceeds thereof (subject to certain exceptions) (the “Revolver Priority Collateral”), plus a second priority security interest in all of the Term Loan Priority Collateral. The Revolving Credit Facility may be voluntarily prepaid in whole, or in part, in each case without premium or penalty. CPG International LLC is also required to make mandatory prepayments (i) when aggregate borrowings exceed commitments or the applicable borrowing base and (ii) during “cash dominion,” which occurs if (a) the availability under the Revolving Credit Facility is less than the greater of (i) $12.5 million and (ii) 10% of the lesser of (x) $150.0 million and (y) the borrowing base, for five consecutive business days or (b) certain events of default have occurred and are continuing. The Revolving Credit Facility contains affirmative covenants that are customary for financings of this type, including allowing the Revolver Administrative Agent to perform periodic field exams and appraisals to evaluate the borrowing base. The Revolving Credit Facility contains various negative covenants, including limitations on, subject to certain exceptions, the incurrence of indebtedness, the incurrence of liens, dispositions, investments, acquisitions, restricted payments, transactions with affiliates, as well as other negative covenants customary for financings of this type. The Revolving Credit Facility also includes a financial maintenance covenant, applicable only when the excess availability is less than the greater of (i) 10% of the lesser of the aggregate commitments under the Revolving Credit Facility and the borrowing base, and (ii) $12.5 million. In such circumstances, CPG International LLC would be required to maintain a minimum fixed charge coverage ratio (as defined in the Revolving Credit Facility) for the trailing four quarters equal to at least 1.0 to 1.0; subject to CPG International LLC’s ability to make an equity cure (no more than twice in any four quarter period and up to five times over the life of the facility). As of September 30, 2020, CPG International LLC was in compliance with the financial and nonfinancial covenants imposed by the Revolving Credit Facility. The Revolving Credit Facility also includes customary events of default, including the occurrence of a change of control. 2021 Senior Notes The 2021 Senior Notes were issued on September 30, 2013, in an aggregate principal amount of $315.0 million, and had a maturity of October 1, 2021. The 2021 Senior Notes bore interest at the rate of 8.000% per annum payable in cash semi-annually in arrears on April 1 and October 1 of each year (computed based on a 360-day 30-day 12-month 2016 106.0 % 2017 104.0 % 2018 102.0 % 2019 and thereafter 100.0 % The indenture relating to the 2021 Senior Notes contained negative covenants that are customary for financings of this type. The indenture did not contain any financial maintenance covenants. As of September 30, 2020, CPG International LLC was in compliance with the negative covenants imposed by the 2021 Senior Notes and the indenture. In connection with the 2025 Senior Notes offering, the Company issued a redemption notice on May 7, 2020 for the full $315.0 million of outstanding 2021 Senior Notes, which were redeemed on June 8, 2020. The Company also paid $4.6 million in accrued interest and recognized a $1.9 million loss on the extinguishment in the “Loss on the extinguishment of debt” within the Consolidated Statements of Comprehensive Income (Loss). As of September 30, 2019, the unamortized deferred financing fees related to the 2021 Senior Notes consisted of $2.8 million. 2025 Senior Notes On May 12, 2020, the Company issued $350.0 million of 9.500% 2025 Senior Notes with a maturity of May 15, 2025, and interest was payable on May 15 and November 15 of each year. The Company had the option to redeem all or a portion of the 2025 Senior Notes at any time on or after May 15, 2022 at certain redemption prices, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, before May 15, 2022, the Company had the option to (i) redeem up to 40% of the aggregate principal amount of the 2025 Senior Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 107.125% of the principal amount of the 2025 Senior Notes redeemed, (ii) redeem (x) up to 40% of the aggregate principal amount of the 2025 Senior Notes or (y) all of the 2025 Senior Notes with the proceeds from a Qualified IPO at a redemption price equal to 107.125% of the principal amount of the 2025 Senior Notes redeemed or (iii) redeem some or all of the 2025 Senior Notes at a price equal to 100% of the principal amount plus a “make-whole” premium, in the case of each of (i), (ii) and (iii), plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The 2025 Senior Notes were redeemable in whole or in part, at any time after May 15, 2022 at the following redemption prices, plus accrued and unpaid interest, if redeemed during the 12-month 2022 104.750 % 2023 102.375 % 2024 and thereafter 100.000 % On June 8, 2020, the Company used the proceeds of the $350.0 million 2025 Senior Notes offering to redeem the 2021 Senior Notes in full and to repay $15.0 million of the outstanding principal amount under the Revolving Credit Facility, and other general corporate purposes. On June 16, 2020, the Company used part of its net proceeds from the IPO to redeem $350.0 million in aggregate principal of the outstanding 2025 Senior Notes, paid $3.9 million in accrued interest and recognized a $35.7 million loss on the extinguishment in the “Loss on extinguishment of debt” within the Consolidated Statements of Comprehensive Income (Loss). Interest expense consisted of the following (in thousands): Years Ended September 30, 2020 2019 2018 Interest expense Term Loan Agreement $ 41,261 $ 52,504 $ 38,285 2021 Senior Notes 17,150 25,200 25,200 2025 Senior Notes 3,879 — — Revolving Credit Facility 1,654 904 682 Other 1,530 1,506 1,709 Amortization Debt issue costs Term Loan Agreement 4,910 1,980 1,397 2021 Senior Notes 880 1,407 1,407 2025 Senior Notes 180 — — Revolving Credit Facility 426 358 358 Original issue discounts 597 241 178 Less capitalized interest (1,288 ) (895 ) (474 ) Interest expense $ 71,179 $ 83,205 $ 68,742 Refer to Note 10 for information pertaining to the fair value of the Company’s debt as of September 30, 2020 and 2019. |
Product Warranties
Product Warranties | 12 Months Ended |
Sep. 30, 2020 | |
Product Warranties Disclosures [Abstract] | |
Product Warranties | 9. PRODUCT WARRANTIES The Company provides product assurance warranties of various lengths ranging from 5 years to lifetime for limited coverage for a variety of material and workmanship defects based on standard terms and conditions between the Company and its customers. Warranty coverage depends on the product involved. The warranty reserve activity was as follows (in thousands): As of September 30, 2020 2019 Beginning balance $ 11,133 $ 9,304 Adjustments to reserve 2,710 4,503 Warranty claims payment (3,159 ) (2,927 ) Accretion — purchase accounting valuation 229 253 Ending balance 10,913 11,133 Current portion of accrued warranty (2,921 ) (2,543 ) Accrued warranty — less current portion $ 7,992 $ 8,590 TimberTech Warranties and Related Indemnification In connection with the acquisition of TimberTech on September 21, 2012 and the acquisition of CPG International LLC on September 30, 2013, the Company recognized the fair value of the related warranty liabilities calculated as the net present value of the expected costs to settle all future warranty claims for products sold prior to the acquisition dates. The Company records accretion expense in “Cost of sales” in the Consolidated Statement of Comprehensive Income (Loss) in order to increase the value of the liability to reflect the future value of the warranty claims when they are actually settled. In addition, the Company records estimated warranty claims obligations related to current sales on an ongoing basis for the TimberTech product line. Pursuant to the TimberTech purchase agreement, the seller, Crane Group Companies Limited (“Crane”), also agreed to indemnify the Company for claims made up to seven years after the acquisition date for the majority of the costs to settle warranty claims for certain identified problems related to two products which have exhibited a high number of claims related to scorching and fading defects. The products were produced between 2010 and 2011 and have not been sold by the Company since 2011. Similar to its recognition of the warranty liability, the Company recorded an indemnification receivable from Crane on the acquisition date equal to the fair value of the indemnification calculated as the net present value of the expected indemnification payments to be received in the future. At September 30, 2020, $1.8 million was classified as Other Current Assets. As of September 30, 2019, $1.3 million was classified as Other Current Assets and $0.5 million was classified as Other Assets (non-current). The Company will continue to monitor the actual cost to settle warranty claims in the future and will make adjustments to the warranty liability and indemnification receivable if needed. The indemnification period expired on September 21, 2019. Crane disputes the scope of its past indemnification obligations and the Company cannot predict the outcome of the dispute. The Company may need to record additional charges to the Consolidated Statements of Comprehensive Income (Loss) and the Consolidated Balance Sheets related to the reserve and any obligations as a result of the indemnification dispute in future periods. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | 10. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820, Fair Value Measurement and Disclosures • Level 1—Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market. • Level 2—Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data. • Level 3—Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement. Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial instruments with a fair value that approximates carrying value— Financial instruments with a fair value different from carrying value— The carrying values and the estimated fair values of the debt financial instruments (Level 2 measurements) consisted of the following (in thousands): As of September 30, 2020 2019 Carrying Estimated Carrying Estimated Term Loan Agreement due May 5, 2024 $ 467,147 $ 465,185 $ 808,507 $ 804,464 2021 Senior Notes due October 1, 2021 — — 315,000 315,000 The fair values of the debt instruments were determined using trading prices between qualified institutional buyers; therefore, the 2021 Senior Notes are classified as Level 2. In connection with the acquisition of WES, LLC and Ultralox Technology, LLC (together, “Ultralox”) on December 20, 2017, the Company provided a contingent payment to the employees of Ultralox. The contingent payment was based on achievement of a minimum EBITDA amount and a multiple of EBITDA, for EBITDA exceeding a higher threshold for calendar year 2018. Based on the formula, the potential minimum of the contingent payment was zero and the potential maximum was $30.0 million. During the year ended September 30, 2019, the Company paid the former owners of Ultralox $2.0 million as partial settlement of the original contingent liability. At the acquisition date, the fair value was estimated to be $5.3 million. Of the fair value, $2.8 million is accounted for as contingent consideration in conjunction with the acquisition related to the non-employee The contingent payment made was based on achievement of a minimum EBITDA amount and a multiple of EBITDA, for EBITDA exceeding a higher threshold for calendar 2018. The Company classified the contingent liability as Level 3, due to the lack of observable inputs. Significant assumptions made by the Company included a central estimate of EBITDA and EBITDA volatility of 39%. Changes in assumptions could have an impact on the payout of the contingent consideration payout amount. During the year ended September 30, 2019, the Company amended the earnout agreement to include two additional payments totaling $3.4 million to the former owners of Ultralox that are contingent upon the employee owners continued employment through December 31, 2018 and 2019. These additional earnout payments were recognized as compensation expense over the required employment periods, because they are contingent upon future service from the date of the amendment. During the year ended September 30, 2020, the Company paid the remaining $1.7 million as settlement of the amended earnout agreement. At September 30, 2020 and 2019, the contingent payment liability was $0.0 million and $1.3 million, respectively, and is recorded in “Accrued expenses and other liabilities” in the Consolidated Balance Sheets. The following table provides a roll-forward of the aggregate fair value of the contingent consideration and compensation expense categorized as Level 3 (in thousands). Years Ended September 30, 2020 2019 2018 Beginning balance $ 1,303 $ 1,900 $ — Issuance of contingent consideration in connection with acquisition — — 2,822 Change in fair value of contingent consideration — 53 (1,810 ) Less contingent payments (1,675 ) (3,675 ) — Compensation expense recognized 372 3,025 888 Ending balance $ — $ 1,303 $ 1,900 For the years ended September 30, 2020, 2019 and 2018, the estimated contingent payment recognized as compensation expense was $0.0 million, $1.3 million and $0.9 million, respectively, and was included in Non-cash |
Segments
Segments | 12 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segments | 11. SEGMENTS Operating segments for the Company are determined based on information used by the chief operating decision maker (“CODM”) in deciding how to evaluate performance and allocate resources to each of the segments. The CODM reviews Adjusted EBITDA and Adjusted EBITDA Margin as the key segment measures of performance. Adjusted EBITDA is defined as segment operating income (loss) plus depreciation and amortization, adjusted by adding thereto or subtracting therefrom stock-based compensation costs, business transformation costs, acquisition costs, capital structure transaction costs, and certain other costs. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. The Company has two reportable segments, Residential and Commercial. The reportable segments were determined primarily based on products and end markets as follows: • Residential—The Residential segment manufactures and distributes decking, railing, trim and accessories through a national network of dealers and distributors and multiple home improvement retailers providing extensive geographic coverage and enabling the Company to effectively serve contractors. The additions of Ultralox and Versatex are complementary to the Residential segment railing and trim businesses, respectively. The recent addition of Return Polymers provides a full-service recycled PVC material processing, sourcing, logistical support, and scrap management programs. This segment is impacted by trends in and the strength of home repair and remodel activity. • Commercial—The Commercial segment manufactures, fabricates and distributes resin based extruded sheeting products for a variety of commercial and industrial applications through a widespread distribution network as well as directly to original equipment manufacturers. This segment includes Scranton Products which manufactures lockers and partitions and Vycom which manufactures resin based sheeting products. This segment is impacted by trends in and the strength of the new construction sector. The accounting policies of the operating segments are the same as those described in Note 1, “Summary of Significant Accounting Policies”. Intercompany transactions between segments are excluded as they are not included in management’s performance review of the segments. Currently foreign revenue accounts for less than 10% of consolidated revenue. The Company does not disclose assets outside of the United States as they totaled less than 10% of the consolidated assets as of September 30, 2020, 2019 and 2018 . The segment data below includes data for Residential and Commercial for the years ended and as of September 30, 2020, 2019 and 2018 (in thousands). Years Ended and As of September 30, Residential Commercial Corporate and Total 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 Net Sales $ 771,167 $ 655,445 $ 541,942 $ 128,092 $ 138,758 $ 139,863 $ — $ — $ — $ 899,259 $ 794,203 $ 681,805 Adjusted EBITDA 238,060 188,742 168,438 15,051 21,493 21,669 (39,598 ) (30,669 ) (25,693 ) 213,513 179,566 164,414 Capital Expenditures 86,473 48,206 36,121 6,472 4,592 4,308 2,649 10,208 2,329 95,594 63,006 42,758 Depreciation and Amortization 85,148 81,716 66,396 9,302 8,845 8,961 5,331 3,368 2,308 99,781 93,929 77,665 Goodwill 911,001 903,909 903,909 40,389 40,389 40,389 — — — 951,390 944,298 944,298 Total Assets 1,726,705 1,584,383 1,596,075 180,116 171,721 162,543 25,035 32,159 20,562 1,931,856 1,788,263 1,779,180 Years Ended September 30, 2020 2019 2018 Segment Adjusted EBITDA Residential $ 238,060 $ 188,742 $ 168,438 Commercial 15,051 21,493 21,669 Total Adjusted EBITDA for reporting segments $ 253,111 $ 210,235 $ 190,107 Unallocated net expenses (39,598 ) (30,669 ) (25,693 ) Adjustments to Income (loss) before income tax provision (benefit) Depreciation and amortization (99,781 ) (93,929 ) (77,665 ) Stock-based compensation costs (120,517 ) (3,682 ) (3,099 ) Asset impairment and inventory revaluation costs (1) — — (12,747 ) Business transformation costs (2) (594 ) (16,560 ) (5,822 ) Acquisition costs (3) (1,596 ) (4,110 ) (7,361 ) Initial public offering and Secondary offering costs (4) (8,616 ) (9,076 ) (789 ) Other costs (5) (4,154 ) 6,845 (4,189 ) Capital structure transaction costs (6) (37,587 ) — (367 ) Interest expense (71,179 ) (83,205 ) (68,742 ) Income (loss) before income taxes $ (130,511 ) $ (24,151 ) $ (16,367 ) (1) Asset impairment and inventory revaluation costs reflect tangible and intangible asset impairment costs of $0.0 million, $0.0 million and $0.9 million for fiscal years 2020, 2019 and 2018, respectively, and inventory revaluations of $0.0 million, $0.0 million and $11.8 million for fiscal years 2020, 2019 and 2018, respectively, in the ordinary course of business. (2) Business transformation costs reflect consulting and other costs related to repositioning of brands of $0.0 million, $4.3 million and $0.0 million for fiscal years 2020, 2019 and 2018, respectively, compensation costs related to the transformation of the senior management team of $0.6 million, $2.3 million and $0.2 million for fiscal years 2020, 2019 and 2018, respectively, costs related to the relocation of the Company’s corporate headquarters of $2.0 million for fiscal year 2019, start-up (3) Acquisition costs reflect costs directly related to completed acquisitions of $0.9 million, $4.1 million and $4.9 million for fiscal years 2020, 2019 and 2018, respectively and inventory step-up (4) Initial public offering costs includes $1.4 million in fees related to the Secondary offering of class A common stock in fiscal year 2020. (5) Other costs reflect costs for legal expenses of $0.9 million, $0.9 million and $1.5 million for fiscal years 2020, 2019 and 2018, respectively, reduction in workforce costs of $0.4 million for fiscal year 2020, costs related to a change in the estimated warranty obligation based on a change in operational policy on reimbursement of claims of $2.1 million in fiscal year 2018, other miscellaneous adjustments of $0.6 million for fiscal year 2018, income from an insurance recovery of legal loss of $7.7 million for fiscal year 2019, and costs related to an incentive plan associated with the IPO of $2.9 million for fiscal year 2020. (6) Capital structure transaction costs include loss on extinguishment of debt of $1.9 million for the 2021 Senior Notes and $35.7 million for the 2025 Senior Notes for fiscal year 2020, and debt related issuance costs of $0.4 million for fiscal year 2018. |
Capital Stock
Capital Stock | 12 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | 12. CAPITAL STOCK The Company completed its IPO on June 16, 2020, in which it sold 38,237,500 shares of its Class A common stock, including 4,987,500 shares pursuant to the underwriters’ over-allotment option. The shares were sold at an IPO price of $23.00 per share for net proceeds to the Company of approximately $819.7 million, after deducting underwriting discounts and commissions of $50.6 million and offering expenses of approximately $9.2 million payable by the Company. Immediately prior to the completion of the IPO, the Company converted to a Delaware corporation from a limited liability company. The Company’s certificate of incorporation provides for two classes of common stock: Class A common stock and Class B common stock. In addition, the certificate of incorporation authorizes shares of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by the board of directors. The Company is authorized to issue up to 1.1 billion shares of Class A common stock, up to 1 hundred million shares of Class B common stock and up to 1 million shares of preferred stock, each par value $0.001 per share, in one or more series. The Class A common stock and Class B common stock provide identical economic rights, but holders of Class B common stock have limited voting rights, specifically that such holders have no right to vote, solely with respect to their shares of Class B common stock, with respect to the election, replacement or removal of directors. Holders of Class A common stock and Class B common stock are not entitled to preemptive rights. Holders of Class B common stock may convert their shares of Class B common stock into shares of Class A common stock on a one-for-one In conjunction with the Corporate Conversion and prior to the closing of the IPO, the Company effected a unit split of its then-outstanding unit, resulting in an aggregate of 108,162,741 units, including 75,093,778 Class A units and 33,068,963 Class B units. Concurrently with the Corporate Conversion, the units were converted to an aggregate of 108,162,741 shares of common stock, including 75,093,778 shares of Class A common stock and 33,068,963 shares of Class B common stock. In addition, a class of the Company’s former indirect parent’s partnership interests referred to as “Profits Interests” were exchanged for an aggregate of 2,703,243 shares of Class A common stock and 5,532,0 5 On September 15, 2020, the Company completed an offering of 28,750,000 shares of Class A common stock, par value $0.001 per share, including the exercise in full by the underwriters of their option to purchase up to 3,750,000 additional shares of Class A common stock, at a public offering price of $33.25 per share. The shares were sold by the Selling Stockholders. The Company did not receive any of the proceeds from the sale of the shares by the Selling Stockholders. The estimated offering expenses of approximately $1.4 million is payable by the Company and recorded in “Other general expenses” within the Consolidated Statements of Comprehensive Income (Loss). Immediately subsequent to the closing of the secondary offering, Class B common stockholders converted 33,068,863 shares of Class B common stock into Class A common stock. At September 30, 2020, the following amounts were issued and outstanding: 154,637,240 shares of Class A common stock and 100 shares of Class B common stock. The Company has not issued any shares of preferred stock. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 13. STOCK-BASED COMPENSATION The Company grants stock-based awards to attract, retain and motivate key employees and directors. Prior to the completion of the IPO, Profits Interests were issued through an LP Interest Agreement. The Profits Interests were, as part of the Corporate Conversion, converted into shares of common stock, restricted stock and stock options. The 2020 Omnibus Incentive Compensation Plan (“2020 Plan”), became effective as of June 11, 2020, the day of effectiveness of the registration statement filed in connection with the IPO. The 2020 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, and performance-based or other equity-related awards to the Company’s employees and directors. The maximum aggregate number of shares that may be issued under the 2020 Plan is 15,852,319 shares with 5,040,776 shares remaining in the reserve. The total aggregate number of shares may be adjusted as determined by the Board of Directors. As part of the Corporate Conversion, the Company modified its terms and conditions of the performance-based awards by changing the vesting conditions. The change was treated as a modification under ASC 718, Stock Compensation, in which the fair value of the performance based awards was measured at the modification date and compared to the fair value of the modified award immediately prior to the modification, with the difference resulting in incremental compensation expense. As a result of the incremental fair value of the modified awards, the Company recognized $103.4 million in incremental compensation cost in “Selling, general and administrative expenses” in the Consolidated Statements of Comprehensive Income (Loss), for the year ended September 30, 2020. Subsequent to the IPO, the Company participated in a non-dilutive Stock-based compensation expense for the years ended September 30, 2020, 2019 and 2018 was $120.5 million, $3.3 million and $2.5 million, respectively, recognized in “Selling, general and administrative expenses” in the Consolidated Statements of Comprehensive Income (Loss). Total income tax benefit for the years ended September 30, 2020, 2019 and 2018 was $6.3 million, $0.0 million and $0.0 million, respectively. As of September 30, 2020, the Company had not yet recognized compensation cost on unvested stock-based awards of $25.4 million, with a weighted average remaining recognition period of 3.1 years. The Company uses the Monte Carlo pricing model to estimate the fair value of its performance-based awards as of the grant date, and uses the Black Scholes pricing model to estimate the fair value of its service-based awards as of the grant date. Under the terms of the 2020 Plan, all stock options will expire if not exercised within ten years of the grant date. The following table sets forth the significant assumptions used for the performance-based awards granted during the year ended September 30, 2020: June 12, 2020 Risk-free interest rate 0.75% Expected volatility 40.00% Expected term (in years) 0.50 Expected dividend yield 0.00% The following table sets forth the significant assumptions used for the service-based awards granted during the year ended September 30, 2020: June 12, 2020 Risk-free interest rate 0.47%-0.56% Expected volatility 35.00% Expected term (in years) 6.25 – 7.00 Expected dividend yield 0.00% Stock Options The following table summarizes the performance-based stock option activity for the year ended September 30, 2020: Number of Weighted Average Weighted Average Aggregate Intrinsic (in years) (in thousands) Outstanding at October 1, 2019 — $ — — $ — Granted 1,706,098 23.00 — — Exercised (600 ) 23.00 — — Cancelled/Forfeited — — — — Expired — — — — Outstanding at September 30, 2020 1,705,498 23.00 9.7 20,142 Vested and exercisable at September 30, 2020 1,705,498 23.00 9.7 20,142 The following table summarizes the service-based stock option activity for the year ended September 30, 2020: Number of Weighted Average Weighted Average Aggregate Intrinsic (in years) (in thousands) Outstanding at October 1, 2019 — $ — — $ — Granted 3,384,147 23.00 — — Exercised (1,200 ) 23.00 — — Cancelled/Forfeited — — — — Expired — — — — Outstanding at September 30, 2020 3,382,947 23.00 9.7 39,953 Vested and exercisable at September 30, 2020 979,583 23.00 9.7 11,569 Both the performance-based stock options and the service-based stock options were subject to a 180-day 180-day Restricted Stock Awards A summary of the performance-based restricted stock awards activity for the year ended September 30, 2020 was as follows: Number of Shares Weighted Average Outstanding and unvested at October 1, 2019 — $ — Granted 3,884,615 23.00 Vested (3,884,615 ) 23.00 Forfeited — — Outstanding and unvested at September 30, 2020 — — A summary of the service-based restricted stock awards activity for the year ended September 30, 2020 was as follows: Number of Shares Weighted Average Outstanding and unvested at October 1, 2019 — $ — Granted 1,647,442 23.00 Vested (161,831 ) 23.00 Forfeited — — Outstanding and unvested at September 30, 2020 1,485,611 23.00 Restricted Stock Units A summary of the service-based restricted stock unit awards activity for the year ended September 30, 2020 was as follows: Number of Shares Weighted Average Outstanding and unvested at October 1, 2019 — $ — Granted 191,443 23.00 Vested — — Forfeited (6,592 ) 23.00 Outstanding and unvested at September 30, 2020 184,851 23.00 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Sep. 30, 2020 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | 14. EMPLOYEE BENEFIT PLANS The Company has a 401(k) defined contribution plans (the “401(k) Plans”) for the benefit of its employees who meet certain eligibility requirements. The Company does not offer a defined benefit plan (pension plan) nor does the Company offer any other post-retirement benefits. The 401(k) Plans cover substantially all of the Company’s full-time employees. Each participant may contribute up to 85% of his or her salary, within dollar limitations set forth by the ERISA guidelines. The 401(k) Plans match employee pre-tax The Company’s contributions to the plans totaled $3.2 million, $2.7 million and $1.7 million, for the years ended September 30, 2020, 2019 and 2018, respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 15. EARNINGS PER SHARE The Company computes earnings per common share (“EPS”) under the two-class Basic EPS attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding. Diluted EPS is calculated by adjusting weighted average shares outstanding for the dilutive effect of potential common shares, determined using the treasury-stock method. For purposes of the diluted EPS calculation, restricted stock awards, restricted stock units and options to purchase shares of common stock are considered to be potential common shares. The following table sets forth the computation of the Company’s basic and diluted EPS attributable to common stockholders (in thousands, except share and per share amounts): Years Ended September 30, 2020 2019 2018 Numerator: Net income (loss) $ (122,233 ) $ (20,196 ) $ 6,745 Net income (loss) attributable to common stockholders — basic and diluted $ (122,233 ) $ (20,196 ) $ 6,745 Denominator: Weighted average shares of common stock — basic and diluted 120,775,717 108,162,741 108,162,741 Net income (loss) attributable to common stockholders: Net income (loss) per share attributable to common stockholders — basic and diluted $ (1.01 ) $ (0.19 ) $ 0.06 The following table includes the number of shares that may be dilutive common shares in the future, and were not included in the computation of diluted net income (loss) per share because the effect was anti-dilutive: Years Ended September 30, 2020 2019 2018 Restricted Stock Awards 1,064,897 — — Stock Options 268,177 — — Restricted Stock Units 19,724 — — |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 16. INCOME TAXES The Company’s operations are substantially all domestic. The components of income tax expense (benefit) consisted of the following (in thousands): Years Ended September 30, 2020 2019 2018 Current: Federal $ (55 ) $ (62 ) $ (41 ) State and local 1,887 1,428 1,054 Total current 1,832 1,366 1,013 Deferred: Federal (7,408 ) (3,128 ) (25,534 ) State and local (2,702 ) (2,193 ) 1,409 Total deferred (10,110 ) (5,321 ) (24,125 ) Income tax benefit $ (8,278 ) $ (3,955 ) $ (23,112 ) The effective income tax rate was different from the statutory U.S. federal income tax rate of 21.0%, 21.0% and 21.0% for the years ended September 30, 2020, 2019 and 2018, respectively, due to the following (in thousands): 2020 Rate 2019 Rate 2018 Rate Income tax benefit / federal statutory rate $ (27,407 ) 21.0 % $ (5,072 ) 21.0 % $ (3,437 ) 21.0 % State and local taxes — net of federal benefit (960 ) 0.6 (667 ) 2.8 275 (1.7 ) Increase in valuation allowance 280 (0.2 ) 20 (0.1 ) 140 (0.9 ) Increase in valuation allowance — impact of U.S. tax reform — — — — 902 (5.5 ) Stock-based compensation 19,344 (14.8 ) 685 (2.8 ) 558 (3.4 ) State tax law change — — — 1,453 (8.9 ) Deferred impact of U.S. tax reform rate change — — — — (23,409 ) 143.0 Non-deductible 411 (0.3 ) 407 (1.7 ) — — Executive compensation 235 (0.2 ) — — — — Federal research and development credit (465 ) 0.4 — — — — Meals and entertainment 262 (0.2 ) 350 (1.5 ) 206 (1.3 ) Other 22 — 322 (1.3 ) 200 (1.2 ) Income tax benefit / effective tax rate $ (8,278 ) 6.3 % $ (3,955 ) 16.4 % $ (23,112 ) 141.2 % The effective income tax rate was 6.3% for the year ended September 30, 2020 compared to 16.4% for the year ended September 30, 2019. The 2020 effective income tax rate was negatively impacted by non-deductible The components of the deferred tax assets and liabilities consisted of the following (in thousands): As of September 30, 2020 2019 Deferred tax asset: Federal net operating loss carryforwards $ 23,389 $ 19,706 State loss carryforwards and other benefits 9,797 8,866 Inventory reserves 5,181 7,867 Warranty reserves 3,016 2,819 Legal reserves 365 451 Accrued expenses 7,876 7,407 Disallowed interest carryforward 12,019 9,222 Stock-based compensation 6,325 — Federal research and development credit 465 — Valuation allowance (5,530 ) (5,250 ) Total deferred tax assets 62,903 51,088 Deferred tax liabilities: Intangible assets — net 45,509 51,823 Property, plant and equipment 37,617 32,747 Indemnification receivable related to warranty reserves 1,037 521 Total deferred tax liabilities 84,163 85,091 Net deferred tax liability $ 21,260 $ 34,003 At September 30, 2020, the Company has approximately $85.8 million (gross of tax) of net operating loss carryforwards for federal income tax purposes which begin to expire after 2031 and $27.9 million of net operating loss carryforwards for federal income tax purposes that have an indefinite carryforward period. Additionally, the Company has approximately $94.3 million of net operating loss carryforwards for state and local tax purposes, which expire in varying amounts beginning in 2021 and through 2038. The valuation allowance was determined in accordance with the provisions of ASC 740, Income Taxes As of September 30, 2020 2019 Beginning balance $ 5,250 $ 5,230 Expense 280 20 Ending balance $ 5,530 $ 5,250 A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits consisted of the following (in thousands): As of September 30, 2020 2019 Beginning balance $ 961 $ 924 Unrecognized tax benefits related to prior years 35 37 Ending balance $ 996 $ 961 Unrecognized tax benefits of $0.5 million and $0.5 million are recorded as an offset to certain non-current When applicable, the Company’s practice is to recognize interest and penalties related to uncertain income tax positions in income tax expense. For the years ended September 30, 2020, 2019 and 2018 the amounts recognized by the Company for interest and penalties were not material. The corresponding liability recorded in the Consolidated Balance Sheets as of September 30, 2020 and 2019 was also not material. The Company and its subsidiaries file U.S. federal income tax returns. The Company and its subsidiaries’ federal income tax returns for tax years 2016 and beyond are open tax years subject to examination by the Internal Revenue Service (“IRS”). The Company also has net operating loss carry-forwards from prior to 2016, which are subject to examination upon future utilization of such losses. The Company and its subsidiaries also file income tax returns in various state jurisdictions, as appropriate, with varying statutes of limitation. These returns are not material to the consolidated income tax provision. US Tax Reform Legislation On December 22, 2017, the President of the United States signed into law H.R. 1, comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Except for certain provisions, the Tax Act is effective for tax years beginning on or after January 1, 2018. As a fiscal year U.S. taxpayer, the majority of the provisions, such as new limitations on certain business deductions, including the limitation on the Company’s interest expense deduction, applied to the Company beginning in fiscal year 2019. For fiscal year 2018 and effective in the three months ended December 31, 2017, the most significant impact included: lowering of the U.S. federal corporate income tax rate and remeasuring certain net deferred tax assets and liabilities. The phase in of the lower corporate income tax rate resulted in a blended rate of 24.5% for fiscal year 2018, as compared to the previous rate of 35%. The tax rate was reduced to 21% in subsequent fiscal years. Because the Company has net operating loss carry-forwards and was not expected to owe federal tax in the fiscal year 2018 tax return, the remeasurement of deferred taxes and the annual effective tax rate for the period are calculated using the future federal tax rate of 21%. In the year ended September 30, 2018, the Company recorded a $22.5 million net income tax benefit for the remeasurement of certain deferred tax assets and liabilities. The Company’s effective tax rate was significantly impacted by the recognition of this remeasurement. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provided guidance on how companies should account for the tax effects related to the Tax Act. According to SAB 118, companies were to make a good faith effort to compute the impact of the Tax Act in a timely manner once the company obtained, prepared, and analyzed the information needed to complete their accounting requirements under ASC 740. The measurement period for SAB 118 ended December 22, 2018, and companies are now required to report the impact of the Tax Act using existing tax law and other sources of authority. The Company was able to record the impact of the Tax Act without using the measurement period provisions of the Tax Act. The material elements of the Tax Act are reflected in the rate reconciliation as final. Certain law changes from the Tax Act require the Company to analyze new items including, but not limited to, limitations on interest deductions and accelerated cost recovery of fixed assets. The Company has made policy decisions as to how to account for the tax effects of these items, as required by authoritative regulatory guidance, and will continue to analyze the impact as additional authoritative and technical guidance is issued and finalized at the federal and state levels. The Tax Act also revised the definition of “covered employees” who are subject to the $1.0 million limitation imposed on deductions for executive compensation paid by publicly-traded corporations. As a result, the limitation now applies to the chief executive officer, the chief financial officer, the three other highest compensated employees and any employee who was a covered employee for any taxable year beginning after 2016. The Tax Act also eliminated the exception to this rule for commission or performance-based compensation paid to these covered employees. This new provision generally does not apply to compensation paid pursuant to a written contract in effect on or before November 3, 2017 that is not materially modified or renewed. Based on this new provision, since the Company became publicly traded in June 2020, it is now required to adjust the Deferred Tax Asset related to future stock compensation deductions for amounts that it does not expect it will be able to deduct in the future. The Company will continue to analyze executive compensation in future periods and adjust the Deferred Tax Asset for limitations of estimated future compensation deductions as information becomes available. The Company adopted ASU No. 2016-16 , Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory |
Commitments And Contingencies
Commitments And Contingencies | 12 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | 17. COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases vehicles, machinery and a manufacturing facility under various capital leases. The Company also leases office equipment, vehicles and manufacturing and office facilities under various operating leases. In 2018, the Company entered into a lease agreement for its corporate headquarters in Chicago, IL. The Company was responsible for costs to build out the office space and spent approximately $3.4 million in improvements to meet the Company’s needs. Based on the lease agreement and the changes made to the office space the Company concluded that it was the “deemed owner” of the building (for accounting purposes only) during the construction period. The Company recorded the build out costs as an asset with a corresponding build-to-suit 840-40, Leases—Sale-Leaseback Transactions Future minimum annual payments under noncancelable leases with initial or remaining noncancelable lease terms in excess of one year as of September 30, 2020 were as follows (in thousands): Capital Financing Operating 2021 $ 1,635 $ 776 $ 2,646 2022 1,522 787 2,555 2023 1,118 806 2,355 2024 735 826 1,974 2025 598 846 1,569 Thereafter 2,191 3,823 3,397 Total payments $ 7,799 $ 7,864 $ 14,496 Less amount representing interest (3,843 ) Present value of minimum capital lease payments $ 3,956 Total rent expense was approximately $1.6 million, $1.3 million and $1.4 million for the years ended September 30, 2020, 2019 and 2018, respectively. The future minimum sublease income under a noncancelable sublease was $0.9 million at September 30, 2020. Raw Material and Fixed Asset Purchase Commitments The Company fulfills requirements for raw materials under both purchase orders and supply contracts. In the year ended September 30, 2020, the Company purchased substantially all of its raw materials, other than resins, under purchase orders which do not involve long-term supply commitments. Substantially all of the Company’s resins are purchased under supply contracts that may average approximately one to two years, for which pricing is variable based on certain industry-based market indices. The resin supply contracts are negotiated annually and generally provide that the Company is obligated to purchase a minimum amount of resins from each supplier. As of September 30, 2020, the Company has purchase commitments under material supply contracts of $3.1 million for the calendar year ending December 31, 2020. As of September 30, 2020, and 2019, the Company had committed to purchase $1.5 million and $0.7 million of equipment, respectively. Legal Proceedings In the normal course of the Company’s business, it is at times subject to pending and threatened legal actions, in some cases for which the relief or damages sought may be substantial. Although the Company is not able to predict the outcome of such actions, after reviewing all pending and threatened actions with counsel and based on information currently available, management believes that the outcome of such actions, individually or in the aggregate, will not have a material adverse effect on the Company’s results of operations or financial position. However, it is possible that the ultimate resolution of such matters, if unfavorable, may be material to the Company’s results of operations in a particular future period as the time and amount of any resolution of such actions and its relationship to the future results of operations are not currently known. The Company accrues for losses when they are probable of occurrence and such losses are reasonably estimable. Legal costs expected to be incurred are accounted for as they are incurred. Loss Contingencies On June 18, 2018, the Company acquired Versatex. In connection with a contingent liability assumed by the Company in the acquisition, the Company recorded a contingent liability of $5.8 million as a measurement period adjustment to the opening balance sheet related to the assumption of a contingency related to an automobile accident involving a Versatex employee prior to the acquisition. The case was fully settled during the year ended September 30, 2020 and payment of $5.8 million was made by the Company’s insurer to the claimants. During the year ended September 30, 2019, the Company was made aware of a worker’s compensation case that became reasonably possible to give rise to a liability. The case is in discovery as the nature and extent of the Company’s exposure is currently being determined. The Company expects a range of loss of $0.4 million to $0.5 million. As of September 30, 2020, there are various other worker’s compensation and personal injury claims that have been made against the Company. All such claims are being contested and the Company does not believe a loss is probable; therefore, no reserve has been recorded related to these matters. In addition, the Company carries insurance for these types of matters and is expecting to recover thereon. The Company is a party to various legal proceedings and claims, which arise in the ordinary course of business. As of September 30, 2020, the Company determined that there was not at least a reasonable possibility that it had incurred a material loss, or a material loss in excess of a recorded accrual, with respect to such proceedings. Gain Contingency During the quarter ended March 31, 2018, the Company paid a litigation settlement of $7.5 million. The Company had previously recorded a reserve in the same amount during the quarter ended March 31, 2017. The Company maintains specialty insurance policies. The Company filed claims under its insurance policies to recover the loss and legal defense costs. During the year ended September 30, 2019, the Company received $7.7 million as settlement of its claims under the specialty insurance policies. The settlement of $7.7 million is included in operating income for the year ended September 30, 2019. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Sep. 30, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | 18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (In thousands, except per share amounts): Three Months Ended September 30, 2020 June 30, March 31, 2020 December 31, 2019 September 30, 2019 June 30, March 31, 2019 December 31, 2018 September 30, 2018 June 30, March 31, 2018 December 31, 2017 Net sales (1) $ 263,920 $ 223,711 $ 245,585 $ 166,043 $ 215,534 $ 221,307 $ 219,931 $ 137,431 $ 191,137 $ 184,406 $ 200,863 $ 105,399 Gross profit 90,264 75,123 79,372 51,291 69,476 75,410 67,405 40,906 56,003 51,361 65,211 29,461 Net income (loss) $ (64,359 ) $ (52,116 ) $ 4,088 $ (9,846 ) $ (920 ) $ 1,511 $ (1,516 ) $ (19,271 ) $ (4,564 ) $ (10,228 ) $ 9,072 $ 12,465 Net income (loss) per common share: Basic and Diluted $ (0.43 ) $ (0.44 ) $ 0.04 $ (0.09 ) $ (0.01 ) $ 0.01 $ (0.01 ) $ (0.18 ) $ (0.04 ) $ (0.09 ) $ 0.08 $ 0.12 (1) Net sales are impacted by seasonality as the Company has typically experienced moderately higher levels of sales of residential products in the second fiscal quarter of the year as a result of “early buy” sales. Net sales are also generally impacted by the number of days in a quarter or a year that contractors and other professionals are able to install products. This can vary dramatically based on, among other things, weather events such as rain, snow and extreme temperatures. The Company has generally experienced lower levels of sales of residential products in the first fiscal quarter due to adverse weather conditions in certain markets, which typically reduce the construction and renovation activity during the winter season. In addition, the Company has experienced higher levels of sales of bathroom partition products and locker products during the second half of a fiscal year, which includes the summer months when schools are typically closed and therefore are more likely to undergo remodel activities. |
Condensed Financial Information
Condensed Financial Information of Registrant (Parent Company Only) | 12 Months Ended |
Sep. 30, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Financial Information of Registrant (Parent Company Only) | 19. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) The AZEK Company Inc. (parent company only) Balance Sheets (In thousands of U.S. dollars, except for share and per share amounts) As of September 30, 2020 2019 ASSETS: Non-current Investments in subsidiaries $ 1,303,888 $ 490,023 Total non-current 1,303,888 490,023 Total assets $ 1,303,888 $ 490,023 LIABILITIES AND STOCKHOLDERS’ EQUITY: Total liabilities $ — $ — Stockholders’ equity: Preferred stock, $0.001 par value; 1,000,000 shares authorized and no shares issued and outstanding at September 30, 2020 and September 30, 2019, respectively — — Class A common stock, $0.001 par value; 1,100,000,000 shares authorized, 154,637,240 shares issued and outstanding at September 30, 2020, and 75,093,778 shares issued and outstanding at September 30, 2019 155 75 Class B common stock, $0.001 par value; 100,000,000 shares authorized, 100 shares issued and outstanding at September 30, 2020, and 33,068,963 shares issued and outstanding at September 30, 2019 — 33 Additional paid-in 1,587,208 652,493 Accumulated deficit (283,475 ) (162,578 ) Total stockholders’ equity 1,303,888 490,023 Total liabilities and stockholders’ equity $ 1,303,888 $ 490,023 The AZEK Company Inc. (parent company only) Statements of Comprehensive Income (Loss) (In thousands of U.S. dollars) Years Ended September 30, 2020 2019 2018 Net income (loss) of subsidiaries $ (122,233 ) $ (20,196 ) $ 6,745 Net income (loss) of subsidiaries $ (122,233 ) $ (20,196 ) $ 6,745 Comprehensive income (loss) $ (122,233 ) $ (20,196 ) $ 6,745 The AZEK Company Inc. did not have any cash as of September 30, 2020, 2019 or 2018, accordingly a Statement of Cash Flows has not been presented. Basis of Presentation The parent company financial statements should be read in conjunction with the Company’s Consolidated Financial Statements and the accompanying notes thereto. For purposes of this condensed financial information, the Company’s wholly owned and majority owned subsidiaries are recorded based upon its proportionate share of the subsidiaries’ net assets (similar to presenting them on the equity method). Since the restricted net assets of The AZEK Company Inc. and its subsidiaries exceed 25% of the consolidated net assets of the Company and its subsidiaries, the accompanying condensed parent company financial statements have been prepared in accordance with Rule 12-04, S-X. Dividends from Subsidiaries There were no cash dividends paid to The AZEK Company Inc. from the Company’s consolidated subsidiaries during each of the years ended September 30, 2020, 2019 and 2018. Restricted Payments CPG International LLC is party to the Revolving Credit Facility and the Term Loan Agreement originally executed on September 30, 2013, both of which have been amended and extended from time to time. The obligations under the Revolving Credit Facility and Term Loan Agreement are secured by substantially all of the present and future assets of the borrowers and guarantors, including equity interests of their domestic subsidiaries, subject to certain exceptions. The obligations under the Revolving Credit Facility and Term Loan Agreement are guaranteed by the Company and its wholly owned domestic subsidiaries other than certain immaterial subsidiaries and other excluded subsidiaries. CPG International LLC is not permitted to make certain payments unless those payments are consistent with exceptions outlined in the agreements. These payments include repurchase of equity interests, fees associated with a public offering, income taxes due in other applicable payments. Further, the payments are only permitted if certain conditions are met related to availability and fixed charge coverage as defined in the Revolving Credit Facility and described in Note 8 to these Consolidated Financial Statements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 20. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date the Consolidated Financial Statements were issued. The Company has determined that there were no subsequent events. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company operates on a fiscal year ending September 30. The accompanying Consolidated Financial Statements and notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Consolidated Financial Statements include the assets, liabilities and results of operations of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. These reclassifications had no impact on net loss, stockholders’ equity or cash flows as previously reported. The Company’s financial condition and results of operations are being, and are expected to continue to be affected by the current COVID-19 COVID-19 COVID-19 COVID-19 COVID-19 |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates include revenue recognition, reserves for excess inventory, inventory obsolescence, product warranties, customer rebates, stock-based compensation, litigation, income taxes, contingent consideration, goodwill and intangible asset valuation and accounting for long-lived assets. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Actual results may differ from estimated amounts. Estimates are revised as additional information becomes available. |
Seasonality | Seasonality Although the Company generally has demand for its products throughout the year, its sales have historically experienced some seasonality. The Company has typically experienced higher levels of sales of its residential products in the second fiscal quarter of the year as a result of its “early buy” sales, which encourages dealers to stock its residential products. The Company has generally experienced lower levels of sales of residential products in the first fiscal quarter due to adverse weather conditions in certain markets during the winter season. Although its products can be installed year-round, weather conditions can impact the timing of the sales of certain products. In addition, the Company has experienced higher levels of sales of its bathroom partition products and its locker products during the second half of its fiscal year, which includes the summer months when schools are typically closed and therefore are more likely to undergo remodel activities. |
Change in Accounting Principle-Revenue Recognition | Change in Accounting Principle—Revenue Recognition The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) • Identify the contract with a customer; • Identify the performance obligations in the contract; • Determine the transaction price, which is the total consideration provided by the customer; • Allocate the transaction price among the separate performance obligations within the contract; and • Recognize revenue when the performance obligations are satisfied. On October 1, 2018, the Company early adopted ASC 606, using the modified retrospective method with an adjustment to the opening balance of equity of $0.2 million, due to the cumulative impact of adopting Topic 606. The adoption of ASC 606 did not have a material impact on the Consolidated Financial Statements, and the Company did not restate comparative period amounts. Therefore, the comparative information for fiscal year 2018 continues to be reported under ASC 605, Revenue Recognition The Company sells its products to residential and commercial markets. The Company’s Residential segment principally generates revenue from the manufacture and sale of its premium, low-maintenance non-fabricated The Company recognizes revenues when control of the promised goods is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods, at a point in time, when shipping occurs. Each product the Company transfers to the customer is considered one performance obligation. The Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods. As a result of this accounting policy election, the Company does not consider shipping and handling activities as promised services to its customers. Shipping and handling costs billed to customers are recorded in net sales. The Company records all shipping and handling costs as “Cost of sales”. Customer contracts are typically fixed price and short-term in nature. The transaction price is based on the product specifications and is determined at the time of order. The Company does not engage in contracts greater than one year, and therefore does not have any incremental costs capitalized as of September 30, 2020 or September 30, 2019. The Company may offer various sales incentive programs throughout the year. It estimates the amount of sales incentive to allocate to each performance obligation, or product shipped, using the most-likely-amount method of estimation, based on sales to the direct customer or sell-through customer. The estimate is updated each reporting period and any changes are allocated to the performance obligations on the same basis as at inception. Changes in estimate allocated to a previously satisfied performance obligation are recognized as part of net revenue in the period in which the change occurs under the cumulative catch-up 3 1 The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance. |
Change in Accounting Principle—Measurement Date for Conducting Annual Goodwill Impairment Test | Change in Accounting Principle—Measurement Date for Conducting Annual Goodwill Impairment Test During fiscal year 2019, the Company changed the annual impairment assessment date as a result of management’s improvements to the budgeting process to August 1 st th |
Earnings Per Share | Earnings Per Share Basic net income per common share is computed based on the weighted average number of common shares outstanding. Potentially dilutive shares are included in the diluted per-share |
Advertising Costs | Advertising Costs Advertising costs primarily relate to trade publication advertisements, cooperative advertising, product brochures and samples. Such costs are expensed as incurred and are included in “Selling, general and administrative expenses” within the Consolidated Statements of Comprehensive Income (Loss). Total advertising expenses were approximately $33.2 million, $41.7 million and $31.7 million for the years ended September 30, 2020, 2019 and 2018, respectively. |
Research and Development Costs | Research and Development Costs Research and development costs primarily relate to new product development, product claims support and manufacturing process improvements. Such costs are expensed as incurred and are included in “Selling, general and administrative expenses” within the Consolidated Statements of Comprehensive Income (Loss). Total research and development expenses were approximately $7.7 million, $8.0 million, and $6.5 million, for the years ended September 30, 2020, 2019 and 2018, respectively. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash and highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates or equals fair value due to their short-term nature. |
Concentrations and Credit Risk | Concentrations and Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. As of September 30, 2020, cash and cash equivalents were maintained at major financial institutions in the United States, and current deposits are in excess of insured limits. The Company believes these institutions have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to the Company. The Company has not experienced any losses in such accounts. Sales to certain Residential segment distributors accounted for 10% or more of the Company’s total net sales in 2020, 2019 and 2018 were as follows: Years Ended September 30, 2020 2019 2018 Distributor A 20.3 % 19.8 % 21.2 % At September 30, 2020, three customers accounted for 10% or more of gross trade receivables; Customer A was 13.1%, Customer B was 12.6% and Customer C was 11.9%. At September 30, 2019, no customers accounted for 10% or more of gross trade receivables. For each year ended September 30, 2020, 2019 and 2018, approximately 10%, 17% and 14%, respectively, of the Company’s materials purchases were purchased from its largest supplier. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company routinely assesses the financial strength of its customers and believes that its trade receivables credit risk exposure is limited. An allowance for doubtful accounts is provided for known and anticipated credit losses and disputed amounts, as determined by management in the course of regularly evaluating individual customer receivables. This evaluation takes into consideration a customer’s financial condition and credit history, as well as current economic conditions. Amounts are written-off |
Inventories | Inventories Inventories (mainly petrochemical resin in raw materials and finished goods), are valued at the lower of cost or net realizable value and are reduced for slow-moving and obsolete inventory. Management assesses the need for, and the amount of, obsolescence write-down based on customer demand of the item, the quantity of the item on hand and the length of time the item has been in inventory. Further, management also considers net realizable value in assessing inventory balances. Inventory costs include those costs directly attributable to products, including all manufacturing overhead but excluding costs to distribute. The inventories cost is recorded at standard cost, which approximates actual cost, on the first-in first-out |
Vendor Rebates | Vendor Rebates Certain vendor rebates and incentives are earned by the Company only when specified levels of periodic purchases are achieved. These vendor rebates are recognized based on a systematic and rational allocation of the cash consideration offered in respect of each of the underlying transactions, provided the amounts are probable and reasonably estimable. The Company records the incentives as a reduction in the cost of inventory. The Company records such incentives during interim periods based on actual results achieved on a year-to-date |
Customer Rebate | Customer Rebates The Company offers rebates to customers based on total amounts purchased by each customer during each calendar year. The Company provides for the estimated cost of rebates at the time revenue is recognized based on rebate program rates and anticipated sales to each customer eligible for rebates and other available information. Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates. Refer to Note 2 for additional information. |
Product Warranties | Product Warranties The Company provides product assurance warranties of various lengths and terms to certain customers based on standard terms and conditions. The Company provides for the estimated cost of warranties at the time revenue is recognized based on management’s judgment, considering such factors as cost per claim, historical experience, anticipated rates of claims, and other available information. Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates. Refer to Note 9 for additional information. |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment (“PP&E”) is recorded at cost, net of accumulated depreciation. Major additions and betterments are capitalized while repair and/or maintenance expenses are charged to operations when incurred. Construction in progress is also recorded at cost and includes capitalized interest, if material. Depreciation for financial reporting purposes is computed using the straight-line method over the following estimated useful lives of the assets: Land improvements 10 years Building and improvements 7-40 years Manufacturing equipment 1-15 Office furniture and equipment 3-12 Vehicles 5 years Computer equipment 3-7 Leasehold improvements are recorded at cost and depreciated over the standard life of the type of asset or the remaining life of the lease, whichever is shorter. Equipment held under capital leases is stated at the lower of the fair value of the asset or the net present value of the future minimum lease payments at the inception of the lease. For equipment held under capital leases, depreciation is computed using the straight-line method over the shorter of the estimated useful lives of the leased assets or the related lease term and is included within depreciation expense. PP&E is evaluated for impairment at the asset group level. If a triggering event suggests that a potential impairment has occurred, recoverability of these assets is assessed by evaluating whether or not future estimated undiscounted net cash flows are less than the carrying amount of the assets. If the estimated cash flows are less than the carrying amount, the assets are written down to their fair value through an impairment loss recognized as a non-cash During the year ended September 30, 2020, the Company recognized a $0.9 million loss on disposal of fixed assets in the ordinary course of business, $1.0 million loss related to assets in the Residential segment and $0.1 million gain related to assets in the Commercial segment. During the year ended September 30, 2019, the Company recognized a $1.5 million loss on disposal of fixed assets, $1.2 million related to corporate assets and $0.3 million related to assets in the Residential segment. During the year ended September 30, 2018, the Residential segment recognized a $0.8 million loss on disposal of fixed assets in the ordinary course of business. These losses are classified as “Loss on disposal of property, plant and equipment” in a separate caption within the Consolidated Statements of Comprehensive Income (Loss) within “Operating income (loss)”. |
Build-to-Suit Leases | Build-to-Suit The Company establishes assets and liabilities for the fair value of the building and estimated construction costs incurred under lease arrangements when it is considered the owner (for accounting purposes only), or build-to-suit build-to-suit |
Deferred Financing Costs, Net | Deferred Financing Costs, Net The Company has recorded deferred financing costs incurred in conjunction with its debt obligations. The Company amortizes debt issuance costs over the remaining life of the related debt using the straight-line method for the Revolving Credit Facility and the effective interest method for other debt. Deferred financing costs, net of accumulated amortization, are presented as “Other assets” (non-current) |
Goodwill | Goodwill The Company accounts for goodwill as the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company assigns goodwill to four reporting units based on which reporting unit is expected to benefit from the business combination as of the acquisition date. Goodwill is not subject to amortization; rather, the Company tests goodwill for impairment annually during the fourth fiscal quarter ended September 30 and whenever events occur or changes in circumstances indicate that impairment may have occurred. Impairment testing is performed for each of the reporting units by first assessing qualitative factors to see if further testing of goodwill is required. If the Company concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying amount based on the qualitative assessment, then a quantitative test is required. The Company may also choose to bypass the qualitative assessment and perform the quantitative test. If the estimated fair value of a reporting unit exceeds the carrying value, the Company considers that goodwill is not impaired. If the carrying value exceeds estimated fair value, there is an impairment of goodwill and an impairment loss is recorded. The Company calculates the impairment loss by comparing the fair value of the reporting unit less the carrying amount, including goodwill. Goodwill impairment would be limited to the carrying value of the goodwill. In performing the quantitative test, the Company measures the fair value of the reporting units to which goodwill is allocated using an income-based approach, a generally accepted valuation methodology, and relevant data available through and as of August 1, for the years ended September 30, 2020 and 2019, respectively, and through and as of September 30, for the year ended September 30, 2018. Under the income approach, fair value is determined using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows. The key estimates and factors used in this approach include, but are not limited to, revenue growth rates and profit margins based on internal Company forecasts, discount rates, perpetuity growth rates, future capital expenditures, and working capital requirements, among others, and a review of comparable market multiples for the industry segment as well as historical operating trends for the Company. The Company completed the annual goodwill impairment tests as of August 1, 2020 and 2019, and as of September 30, 2018, using a quantitative assessment approach. As a result of these respective annual assessments, the Company noted that the fair value of each reporting unit was determined to be in excess of the carrying value and as such, there were no impairment charges for the years ended September 30, 2020, 2019 or 2018. Refer to Note 6 for additional information. |
Intangible Assets, Net | Intangible Assets, Net Amortizable intangible assets include proprietary knowledge, trademarks, customer relationships and other intangible assets. The Company does not have any indefinite lived intangible assets other than goodwill. The intangible assets are being amortized on an accelerated basis using the sum of the years’ digits method over their estimated useful lives, which range from 3 to 20 years, reflecting the pattern in which the economic benefits are consumed or otherwise used up. The Company evaluates whether events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets. In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful lives. The Company evaluates amortizable intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If a triggering event suggests that a potential impairment has occurred, recoverability of these assets is assessed by evaluating the probability that future estimated undiscounted net cash flows will be less than the carrying amount of the long-lived assets. If the estimated cash flows are less than the carrying amount of the long-lived assets, the assets are written down to their fair value through an impairment loss recognized as a non-cash |
Stock-Based Compensation | Stock-Based Compensation The Company determines the expense for all employee stock-based compensation awards by estimating their fair value and recognizing such value as an expense, on a straight-line, ratable or cliff basis, depending on the award, in the Consolidated Financial Statements over the requisite service period in which employees earn the awards. The Company estimates the fair value of performance-based awards granted to employees using the Monte Carlo pricing model and for service-based awards granted to employees using the Black Scholes pricing model. The fair value of performance-based awards that are expected to vest is recognized as compensation expense on a straight-line basis over the requisite service period. The fair value of service-based awards that are expected to vest is recognized as compensation expense on either (1) straight-line basis, (2) a ratable vesting basis or (3) a cliff vesting basis. The Company accounts for forfeitures as they occur. To determine the fair value of a stock-based award using the Monte Carlo and Black Scholes models, the Company makes assumptions regarding the risk-free interest rate, expected future volatility, expected dividend yield and performance period. The risk-free rate is based on the U.S. treasury yield curve in effect at the time of grant. The Company estimates the expected volatility of the share price by reviewing the estimated post-IPO Refer to Note 13 for additional information. |
Estimated Fair Value of Financial Instruments | Estimated Fair Value of Financial Instruments The carrying amounts for the Company’s financial instruments classified as current assets and liabilities, including cash and cash equivalents, trade accounts receivable and accrued expenses and accounts payable, approximate fair value due to their short maturities. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level Level Level . Refer to Note 10 for additional information. |
Income Taxes | Income Taxes Income taxes are provided on income reported for financial statement purposes, adjusted for permanent differences between financial statement reporting and income tax regulations. A valuation allowance is established whenever management believes that it is more likely than not that deferred tax assets may not be realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the deferred tax assets or liabilities are expected to be realized or settled. The realization of the net deferred tax assets is primarily dependent on estimated future taxable income. A change in the Company’s estimate of future taxable income may require an increase or decrease in the valuation allowance. A liability for uncertain tax positions is recorded whenever management believes it is not more-likely than-not On December 22, 2017, the President of the United States signed and enacted comprehensive tax legislation into law in the form of H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Except for certain provisions, the Tax Act is effective for tax years beginning on or after January 1, 2018. As a fiscal year U.S. taxpayer, the majority of the provisions applied to the Company’s fiscal year 2019, such as new limitations on certain business deductions, including the limitation on the Company’s interest expense deduction. For fiscal year 2018 and effective in the three months ended December 31, 2017, the most significant impact included: lowering of the U.S. federal corporate income tax rate and remeasuring the Company’s deferred tax assets and liabilities. The phase in of the lower federal income tax rate resulted in a blended rate of 24.5% for fiscal year 2018, as compared to the previous rate of 35%. The federal income tax rate was reduced to 21% in subsequent fiscal years. Because the Company has net operating loss carry-forwards and was not expected to owe federal tax in its fiscal year 2018 tax return, the remeasurement of deferred taxes recognized for the period was calculated using the future federal tax rate of 21%. During the year ended September 30, 2018, the Company recorded a $22.5 million net income tax benefit for the remeasurement of its deferred tax assets and liabilities. The Company’s effective tax rate was significantly impacted by the recognition of this remeasurement. Refer to Note 16 for further information regarding the impact of this legislation. |
Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Under the Jumpstart Our Business Startups (“JOBS”) Act, the Company qualifies as an emerging growth company (“EGC”) and as such, has elected not to opt out of the extended transition period for complying with new or revised accounting pronouncements. During the extended transition period, the Company is not subject to new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period. On October 1, 2017, the Company adopted Accounting Standards Update (“ASU”) ASU No. 2015-11, Inventory—Simplifying the Measurement of Inventory On October 1, 2017, the Company adopted ASU No. 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments On October 1, 2018, the Company early adopted ASU No. 2014-09, Revenue from Contracts with Customers On October 1, 2019, the Company adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), No. 2017-13, No. 2018-01, 2018-10 2018-11, No. 2018-20, No. 2019-01, No. 2019-10 No. 2020-05. right-of-use In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) No. 2019-05 2019-10 2019-11. off-balance In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, Fair Value Measurement In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use 350-40): internal-use In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedules of Concentration of Risk Percentage | Years Ended September 30, 2020 2019 2018 Distributor A 20.3 % 19.8 % 21.2 % |
Schedule of Estimated Useful Lives of the Assets | Depreciation for financial reporting purposes is computed using the straight-line method over the following estimated useful lives of the assets: Land improvements 10 years Building and improvements 7-40 years Manufacturing equipment 1-15 Office furniture and equipment 3-12 Vehicles 5 years Computer equipment 3-7 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Rebate Activity | The rebate activity was as follows (in thousands). As of September 30, 2020 2019 2018 Beginning balance $ 24,858 $ 21,914 $ 16,922 Rebate expense 54,083 50,847 42,400 Rebate payments (46,262) (47,903 ) (38,893 ) Acquisitions — — 1,485 Ending balance $ 32,679 $ 24,858 $ 21,914 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Return Polymers Inc [Member] | |
Business Acquisition [Line Items] | |
Summary of Preliminary Allocation of Assets Acquired and Liabilities Assumed | The following table represents the preliminary allocation of assets acquired and liabilities assumed on the acquisition date and certain measurement period adjustments attributable to customary working capital adjustments as of September 30, 2020 (in thousands): Total purchase consideration $ 18,453 Allocation of consideration to assets acquired and liabilities assumed: Cash and cash equivalents $ — Accounts receivable 1,119 Inventories 2,532 Prepaid expenses and other current assets 39 Property, plant and equipment 4,080 Intangible assets 5,100 Goodwill 7,092 Accounts payable (947 ) Accrued expenses and other liabilities (562 ) Net assets acquired $ 18,453 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): As of September 30, 2020 2019 Raw materials $ 33,850 $ 36,855 Work in process 19,935 19,514 Finished goods 76,285 59,022 Total inventories $ 130,070 $ 115,391 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Net (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment - Net | Property, plant and equipment — net consisted of the following (in thousands): As of September 30, 2020 2019 Land and improvements $ 2,758 $ 2,758 Buildings and improvements 71,059 67,770 Capital lease – building 2,021 2,021 Capital lease – manufacturing equipment 1,026 1,026 Capital lease – vehicles 3,782 3,835 Manufacturing equipment 306,036 254,570 Computer equipment 24,927 22,733 Furnitures and fixtures 5,689 5,409 Vehicles 465 339 Total property, plant and equipment 417,763 360,461 Construction in progress 54,412 16,453 472,175 376,914 Accumulated depreciation (210,401 ) (168,220 ) Total property, plant and equipment – net $ 261,774 $ 208,694 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Net (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | Goodwill consisted of the following (in thousands): Residential Commercial Total Goodwill as of September 30, 2019 $ 903,909 $ 40,389 $ 944,298 Acquisitions (1) 7,092 — 7,092 Goodwill as of September 30, 2020 $ 911,001 $ 40,389 $ 951,390 Accumulated impairment losses as of September 30, 2019 $ — $ 32,200 $ 32,200 Accumulated impairment losses as of September 30, 2020 $ — $ 32,200 $ 32,200 (1) Acquisition of Return Polymers, Inc., refer to Note 3. |
Summary of Finite-lived Intangible Assets | Finite-lived intangible assets consisted of the following (in thousands): As of September 30, 2020 Lives in Gross Accumulated Net Propriety knowledge 10 — 15 $ 289,300 $ (195,303 ) $ 93,997 Trademarks 5 — 20 223,840 (124,521 ) 99,319 Customer relationships 15 — 19 146,670 (52,119 ) 94,551 Patents 10 7,000 (3,182 ) 3,818 Other intangible assets 3 — 15 4,076 (3,387 ) 689 Total intangible assets $ 670,886 $ (378,512 ) $ 292,374 As of September 30, 2019 Lives in Gross Accumulated Net Propriety knowledge 10 — 15 $ 289,300 $ (171,686 ) $ 117,614 Trademarks 5 — 20 223,140 (108,096 ) 115,044 Customer relationships 15 — 19 142,270 (39,084 ) 103,186 Patents 10 7,000 (2,132 ) 4,868 Other intangible assets 3 — 15 4,076 (2,370 ) 1,706 Total intangible assets $ 665,786 $ (323,368 ) $ 342,418 |
Summary of Expected Amortization Expense Relating to Intangible Assets | Amortization expense relating to these amortizable intangible assets as of September 30, 2020, is expected to be as follows (in thousands): 2021 $ 49,802 2022 44,347 2023 39,219 2024 34,227 2025 29,281 Thereafter 95,498 Total $ 292,374 |
Composition of Certain Balanc_2
Composition of Certain Balance Sheet Accounts (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Composition of Certain Balance Sheet Accounts Disclosure [Abstract] | |
Summary of Allowance for Doubtful Accounts | Allowance for doubtful accounts consisted of the following (in thousands): As of September 30, 2020 2019 2018 Beginning balance $ 904 $ 1,230 $ 1,048 Provision 512 383 176 Bad debt write-offs (119 ) (709 ) (89 ) Acquisitions 35 — 95 Ending balance $ 1,332 $ 904 $ 1,230 |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses consisted of the following (in thousands): As of September 30, 2020 2019 Employee related liabilities $ 26,554 $ 17,202 Freight 5,530 4,158 Professional fees 4,249 14,160 Marketing 3,343 2,026 Warranty 2,921 2,543 Construction in progress 1,303 903 Capital lease 969 721 Contingent consideration — 1,303 Other 5,647 4,887 Total accrued expenses and other current liabilities $ 50,516 $ 47,903 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Debt Instrument [Line Items] | |
Summary of Long-term Debt | Debt consisted of the following (in thousands): As of September 30, 2020 2019 Term Loan Agreement due May 5, 2024 — LIBOR + 3.75% (4.75% and 5.93% at September 30, 2020 and 2019, respectively), (includes a discount of $507 and $1,105 at September 30, 2020 and 2019, respectively) $ 467,147 $ 808,507 Revolving Credit Facility through March 9, 2022 — LIBOR + 2.00% — — 2021 Senior Notes due October 1, 2021 — Fixed at 8% — 315,000 Total 467,147 1,123,507 Less unamortized deferred financing fees (4,165 ) (11,890 ) Less current portion — (8,304 ) Long-term debt — less current portion and unamortized financing fees $ 462,982 $ 1,103,313 |
Summary of Interest Expense | Interest expense consisted of the following (in thousands): Years Ended September 30, 2020 2019 2018 Interest expense Term Loan Agreement $ 41,261 $ 52,504 $ 38,285 2021 Senior Notes 17,150 25,200 25,200 2025 Senior Notes 3,879 — — Revolving Credit Facility 1,654 904 682 Other 1,530 1,506 1,709 Amortization Debt issue costs Term Loan Agreement 4,910 1,980 1,397 2021 Senior Notes 880 1,407 1,407 2025 Senior Notes 180 — — Revolving Credit Facility 426 358 358 Original issue discounts 597 241 178 Less capitalized interest (1,288 ) (895 ) (474 ) Interest expense $ 71,179 $ 83,205 $ 68,742 |
2021 Senior Notes [Member] | |
Debt Instrument [Line Items] | |
Summary of Debt Instrument Redemption | The 2021 Senior Notes were redeemable in whole or in part, at any time after October 1, 2016 at the following redemption prices, if redeemed during the 12-month 2016 106.0 % 2017 104.0 % 2018 102.0 % 2019 and thereafter 100.0 % |
2025 Senior Notes [Member] | |
Debt Instrument [Line Items] | |
Summary of Debt Instrument Redemption | The 2025 Senior Notes were redeemable in whole or in part, at any time after May 15, 2022 at the following redemption prices, plus accrued and unpaid interest, if redeemed during the 12-month 2022 104.750 % 2023 102.375 % 2024 and thereafter 100.000 % |
Product Warranties (Tables)
Product Warranties (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Product Warranties Disclosures [Abstract] | |
Summary of Warranty Reserve Activity | The warranty reserve activity was as follows (in thousands): As of September 30, 2020 2019 Beginning balance $ 11,133 $ 9,304 Adjustments to reserve 2,710 4,503 Warranty claims payment (3,159 ) (2,927 ) Accretion — purchase accounting valuation 229 253 Ending balance 10,913 11,133 Current portion of accrued warranty (2,921 ) (2,543 ) Accrued warranty — less current portion $ 7,992 $ 8,590 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Carrying Values and the Estimated Fair Values of the Debt Financial Instruments | The carrying values and the estimated fair values of the debt financial instruments (Level 2 measurements) consisted of the following (in thousands): As of September 30, 2020 2019 Carrying Estimated Carrying Estimated Term Loan Agreement due May 5, 2024 $ 467,147 $ 465,185 $ 808,507 $ 804,464 2021 Senior Notes due October 1, 2021 — — 315,000 315,000 |
Summary of Aggregate Fair Value of the Contingent Consideration and Compensation Expense | The following table provides a roll-forward of the aggregate fair value of the contingent consideration and compensation expense categorized as Level 3 (in thousands). Years Ended September 30, 2020 2019 2018 Beginning balance $ 1,303 $ 1,900 $ — Issuance of contingent consideration in connection with acquisition — — 2,822 Change in fair value of contingent consideration — 53 (1,810 ) Less contingent payments (1,675 ) (3,675 ) — Compensation expense recognized 372 3,025 888 Ending balance $ — $ 1,303 $ 1,900 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Summary of Residential and Commercial Segment Reporting Information | The segment data below includes data for Residential and Commercial for the years ended and as of September 30, 2020, 2019 and 2018 (in thousands). Years Ended and As of September 30, Residential Commercial Corporate and Total 2020 2019 2018 2020 2019 2018 2020 2019 2018 2020 2019 2018 Net Sales $ 771,167 $ 655,445 $ 541,942 $ 128,092 $ 138,758 $ 139,863 $ — $ — $ — $ 899,259 $ 794,203 $ 681,805 Adjusted EBITDA 238,060 188,742 168,438 15,051 21,493 21,669 (39,598 ) (30,669 ) (25,693 ) 213,513 179,566 164,414 Capital Expenditures 86,473 48,206 36,121 6,472 4,592 4,308 2,649 10,208 2,329 95,594 63,006 42,758 Depreciation and Amortization 85,148 81,716 66,396 9,302 8,845 8,961 5,331 3,368 2,308 99,781 93,929 77,665 Goodwill 911,001 903,909 903,909 40,389 40,389 40,389 — — — 951,390 944,298 944,298 Total Assets 1,726,705 1,584,383 1,596,075 180,116 171,721 162,543 25,035 32,159 20,562 1,931,856 1,788,263 1,779,180 Years Ended September 30, 2020 2019 2018 Segment Adjusted EBITDA Residential $ 238,060 $ 188,742 $ 168,438 Commercial 15,051 21,493 21,669 Total Adjusted EBITDA for reporting segments $ 253,111 $ 210,235 $ 190,107 Unallocated net expenses (39,598 ) (30,669 ) (25,693 ) Adjustments to Income (loss) before income tax provision (benefit) Depreciation and amortization (99,781 ) (93,929 ) (77,665 ) Stock-based compensation costs (120,517 ) (3,682 ) (3,099 ) Asset impairment and inventory revaluation costs (1) — — (12,747 ) Business transformation costs (2) (594 ) (16,560 ) (5,822 ) Acquisition costs (3) (1,596 ) (4,110 ) (7,361 ) Initial public offering and Secondary offering costs (4) (8,616 ) (9,076 ) (789 ) Other costs (5) (4,154 ) 6,845 (4,189 ) Capital structure transaction costs (6) (37,587 ) — (367 ) Interest expense (71,179 ) (83,205 ) (68,742 ) Income (loss) before income taxes $ (130,511 ) $ (24,151 ) $ (16,367 ) (1) Asset impairment and inventory revaluation costs reflect tangible and intangible asset impairment costs of $0.0 million, $0.0 million and $0.9 million for fiscal years 2020, 2019 and 2018, respectively, and inventory revaluations of $0.0 million, $0.0 million and $11.8 million for fiscal years 2020, 2019 and 2018, respectively, in the ordinary course of business. (2) Business transformation costs reflect consulting and other costs related to repositioning of brands of $0.0 million, $4.3 million and $0.0 million for fiscal years 2020, 2019 and 2018, respectively, compensation costs related to the transformation of the senior management team of $0.6 million, $2.3 million and $0.2 million for fiscal years 2020, 2019 and 2018, respectively, costs related to the relocation of the Company’s corporate headquarters of $2.0 million for fiscal year 2019, start-up (3) Acquisition costs reflect costs directly related to completed acquisitions of $0.9 million, $4.1 million and $4.9 million for fiscal years 2020, 2019 and 2018, respectively and inventory step-up (4) Initial public offering costs includes $1.4 million in fees related to the Secondary offering of class A common stock in fiscal year 2020. (5) Other costs reflect costs for legal expenses of $0.9 million, $0.9 million and $1.5 million for fiscal years 2020, 2019 and 2018, respectively, reduction in workforce costs of $0.4 million for fiscal year 2020, costs related to a change in the estimated warranty obligation based on a change in operational policy on reimbursement of claims of $2.1 million in fiscal year 2018, other miscellaneous adjustments of $0.6 million for fiscal year 2018, income from an insurance recovery of legal loss of $7.7 million for fiscal year 2019, and costs related to an incentive plan associated with the IPO of $2.9 million for fiscal year 2020. (6) Capital structure transaction costs include loss on extinguishment of debt of $1.9 million for the 2021 Senior Notes and $35.7 million for the 2025 Senior Notes for fiscal year 2020, and debt related issuance costs of $0.4 million for fiscal year 2018. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Performance Shares And Restricted Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Share-Based Payment Award Valuation Assumptions | The following table sets forth the significant assumptions used for the performance-based awards granted during the year ended September 30, 2020: June 12, 2020 Risk-free interest rate 0.75% Expected volatility 40.00% Expected term (in years) 0.50 Expected dividend yield 0.00% |
Service Based Stock Options And Restricted Stock Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Share-Based Payment Award Valuation Assumptions | The following table sets forth the significant assumptions used for the service-based awards granted during the year ended September 30, 2020: June 12, 2020 Risk-free interest rate 0.47%-0.56% Expected volatility 35.00% Expected term (in years) 6.25 – 7.00 Expected dividend yield 0.00% |
Performance Shares [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Share-Based Compensation Stock Options Activity | The following table summarizes the performance-based stock option activity for the year ended September 30, 2020: Number of Weighted Average Weighted Average Aggregate Intrinsic (in years) (in thousands) Outstanding at October 1, 2019 — $ — — $ — Granted 1,706,098 23.00 — — Exercised (600 ) 23.00 — — Cancelled/Forfeited — — — — Expired — — — — Outstanding at September 30, 2020 1,705,498 23.00 9.7 20,142 Vested and exercisable at September 30, 2020 1,705,498 23.00 9.7 20,142 |
Service Based Stock Option Activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Share-Based Compensation Stock Options Activity | The following table summarizes the service-based stock option activity for the year ended September 30, 2020: Number of Weighted Average Weighted Average Aggregate Intrinsic (in years) (in thousands) Outstanding at October 1, 2019 — $ — — $ — Granted 3,384,147 23.00 — — Exercised (1,200 ) 23.00 — — Cancelled/Forfeited — — — — Expired — — — — Outstanding at September 30, 2020 3,382,947 23.00 9.7 39,953 Vested and exercisable at September 30, 2020 979,583 23.00 9.7 11,569 |
Performance Based Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Non-Vested Restricted Stock Activity | A summary of the performance-based restricted stock awards activity for the year ended September 30, 2020 was as follows: Number of Shares Weighted Average Outstanding and unvested at October 1, 2019 — $ — Granted 3,884,615 23.00 Vested (3,884,615 ) 23.00 Forfeited — — Outstanding and unvested at September 30, 2020 — — |
Service Based Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Non-Vested Restricted Stock Activity | A summary of the service-based restricted stock awards activity for the year ended September 30, 2020 was as follows: Number of Shares Weighted Average Outstanding and unvested at October 1, 2019 — $ — Granted 1,647,442 23.00 Vested (161,831 ) 23.00 Forfeited — — Outstanding and unvested at September 30, 2020 1,485,611 23.00 |
Schedule of Unvested Restricted Stock Units | A summary of the service-based restricted stock unit awards activity for the year ended September 30, 2020 was as follows: Number of Shares Weighted Average Outstanding and unvested at October 1, 2019 — $ — Granted 191,443 23.00 Vested — — Forfeited (6,592 ) 23.00 Outstanding and unvested at September 30, 2020 184,851 23.00 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Summary of Computation of Basic And Diluted Earnings Per Share | The following table sets forth the computation of the Company’s basic and diluted EPS attributable to common stockholders (in thousands, except share and per share amounts): Years Ended September 30, 2020 2019 2018 Numerator: Net income (loss) $ (122,233 ) $ (20,196 ) $ 6,745 Net income (loss) attributable to common stockholders — basic and diluted $ (122,233 ) $ (20,196 ) $ 6,745 Denominator: Weighted average shares of common stock — basic and diluted 120,775,717 108,162,741 108,162,741 Net income (loss) attributable to common stockholders: Net income (loss) per share attributable to common stockholders — basic and diluted $ (1.01 ) $ (0.19 ) $ 0.06 |
Summary of Antidilutive Securities Excluded From Computation of Earnings Per Share | The following table includes the number of shares that may be dilutive common shares in the future, and were not included in the computation of diluted net income (loss) per share because the effect was anti-dilutive: Years Ended September 30, 2020 2019 2018 Restricted Stock Awards 1,064,897 — — Stock Options 268,177 — — Restricted Stock Units 19,724 — — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The Company’s operations are substantially all domestic. The components of income tax expense (benefit) consisted of the following (in thousands): Years Ended September 30, 2020 2019 2018 Current: Federal $ (55 ) $ (62 ) $ (41 ) State and local 1,887 1,428 1,054 Total current 1,832 1,366 1,013 Deferred: Federal (7,408 ) (3,128 ) (25,534 ) State and local (2,702 ) (2,193 ) 1,409 Total deferred (10,110 ) (5,321 ) (24,125 ) Income tax benefit $ (8,278 ) $ (3,955 ) $ (23,112 ) |
Schedule of Effective Income Tax Rate Reconciliation | The effective income tax rate was different from the statutory U.S. federal income tax rate of 21.0%, 21.0% and 21.0% for the years ended September 30, 2020, 2019 and 2018, respectively, due to the following (in thousands): 2020 Rate 2019 Rate 2018 Rate Income tax benefit / federal statutory rate $ (27,407 ) 21.0 % $ (5,072 ) 21.0 % $ (3,437 ) 21.0 % State and local taxes — net of federal benefit (960 ) 0.6 (667 ) 2.8 275 (1.7 ) Increase in valuation allowance 280 (0.2 ) 20 (0.1 ) 140 (0.9 ) Increase in valuation allowance — impact of U.S. tax reform — — — — 902 (5.5 ) Stock-based compensation 19,344 (14.8 ) 685 (2.8 ) 558 (3.4 ) State tax law change — — — 1,453 (8.9 ) Deferred impact of U.S. tax reform rate change — — — — (23,409 ) 143.0 Non-deductible 411 (0.3 ) 407 (1.7 ) — — Executive compensation 235 (0.2 ) — — — — Federal research and development credit (465 ) 0.4 — — — — Meals and entertainment 262 (0.2 ) 350 (1.5 ) 206 (1.3 ) Other 22 — 322 (1.3 ) 200 (1.2 ) Income tax benefit / effective tax rate $ (8,278 ) 6.3 % $ (3,955 ) 16.4 % $ (23,112 ) 141.2 % |
Schedule of Deferred Tax Assets and Liabilities | The effective income tax rate was 6.3% for the year ended September 30, 2020 compared to 16.4% for the year ended September 30, 2019. The 2020 effective income tax rate was negatively impacted by non-deductible The components of the deferred tax assets and liabilities consisted of the following (in thousands): As of September 30, 2020 2019 Deferred tax asset: Federal net operating loss carryforwards $ 23,389 $ 19,706 State loss carryforwards and other benefits 9,797 8,866 Inventory reserves 5,181 7,867 Warranty reserves 3,016 2,819 Legal reserves 365 451 Accrued expenses 7,876 7,407 Disallowed interest carryforward 12,019 9,222 Stock-based compensation 6,325 — Federal research and development credit 465 — Valuation allowance (5,530 ) (5,250 ) Total deferred tax assets 62,903 51,088 Deferred tax liabilities: Intangible assets — net 45,509 51,823 Property, plant and equipment 37,617 32,747 Indemnification receivable related to warranty reserves 1,037 521 Total deferred tax liabilities 84,163 85,091 Net deferred tax liability $ 21,260 $ 34,003 |
Summary of Valuation Allowance | The activity in the valuation allowance consisted of the following (in thousands): As of September 30, 2020 2019 Beginning balance $ 5,250 $ 5,230 Expense 280 20 Ending balance $ 5,530 $ 5,250 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits consisted of the following (in thousands): As of September 30, 2020 2019 Beginning balance $ 961 $ 924 Unrecognized tax benefits related to prior years 35 37 Ending balance $ 996 $ 961 |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Future Minimum Annual Payments Under Noncancelable Leases | Future minimum annual payments under noncancelable leases with initial or remaining noncancelable lease terms in excess of one year as of September 30, 2020 were as follows (in thousands): Capital Financing Operating 2021 $ 1,635 $ 776 $ 2,646 2022 1,522 787 2,555 2023 1,118 806 2,355 2024 735 826 1,974 2025 598 846 1,569 Thereafter 2,191 3,823 3,397 Total payments $ 7,799 $ 7,864 $ 14,496 Less amount representing interest (3,843 ) Present value of minimum capital lease payments $ 3,956 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Sep. 30, 2020 | |
Selected Quarterly Financial Information [Abstract] | |
Summary of Quarterly Financial Information | (In thousands, except per share amounts): Three Months Ended September 30, 2020 June 30, March 31, 2020 December 31, 2019 September 30, 2019 June 30, March 31, 2019 December 31, 2018 September 30, 2018 June 30, March 31, 2018 December 31, 2017 Net sales (1) $ 263,920 $ 223,711 $ 245,585 $ 166,043 $ 215,534 $ 221,307 $ 219,931 $ 137,431 $ 191,137 $ 184,406 $ 200,863 $ 105,399 Gross profit 90,264 75,123 79,372 51,291 69,476 75,410 67,405 40,906 56,003 51,361 65,211 29,461 Net income (loss) $ (64,359 ) $ (52,116 ) $ 4,088 $ (9,846 ) $ (920 ) $ 1,511 $ (1,516 ) $ (19,271 ) $ (4,564 ) $ (10,228 ) $ 9,072 $ 12,465 Net income (loss) per common share: Basic and Diluted $ (0.43 ) $ (0.44 ) $ 0.04 $ (0.09 ) $ (0.01 ) $ 0.01 $ (0.01 ) $ (0.18 ) $ (0.04 ) $ (0.09 ) $ 0.08 $ 0.12 (1) Net sales are impacted by seasonality as the Company has typically experienced moderately higher levels of sales of residential products in the second fiscal quarter of the year as a result of “early buy” sales. Net sales are also generally impacted by the number of days in a quarter or a year that contractors and other professionals are able to install products. This can vary dramatically based on, among other things, weather events such as rain, snow and extreme temperatures. The Company has generally experienced lower levels of sales of residential products in the first fiscal quarter due to adverse weather conditions in certain markets, which typically reduce the construction and renovation activity during the winter season. In addition, the Company has experienced higher levels of sales of bathroom partition products and locker products during the second half of a fiscal year, which includes the summer months when schools are typically closed and therefore are more likely to undergo remodel activities. |
Condensed Financial Informati_2
Condensed Financial Information of Registrant (Parent Company Only) (Tables) - Parent Company [Member] | 12 Months Ended |
Sep. 30, 2020 | |
Schedule of Balance Sheets | The AZEK Company Inc. (parent company only) Balance Sheets (In thousands of U.S. dollars, except for share and per share amounts) As of September 30, 2020 2019 ASSETS: Non-current Investments in subsidiaries $ 1,303,888 $ 490,023 Total non-current 1,303,888 490,023 Total assets $ 1,303,888 $ 490,023 LIABILITIES AND STOCKHOLDERS’ EQUITY: Total liabilities $ — $ — Stockholders’ equity: Preferred stock, $0.001 par value; 1,000,000 shares authorized and no shares issued and outstanding at September 30, 2020 and September 30, 2019, respectively — — Class A common stock, $0.001 par value; 1,100,000,000 shares authorized, 154,637,240 shares issued and outstanding at September 30, 2020, and 75,093,778 shares issued and outstanding at September 30, 2019 155 75 Class B common stock, $0.001 par value; 100,000,000 shares authorized, 100 shares issued and outstanding at September 30, 2020, and 33,068,963 shares issued and outstanding at September 30, 2019 — 33 Additional paid-in 1,587,208 652,493 Accumulated deficit (283,475 ) (162,578 ) Total stockholders’ equity 1,303,888 490,023 Total liabilities and stockholders’ equity $ 1,303,888 $ 490,023 |
Schedule of Statements of Comprehensive Income (Loss) | The AZEK Company Inc. (parent company only) Statements of Comprehensive Income (Loss) (In thousands of U.S. dollars) Years Ended September 30, 2020 2019 2018 Net income (loss) of subsidiaries $ (122,233 ) $ (20,196 ) $ 6,745 Net income (loss) of subsidiaries $ (122,233 ) $ (20,196 ) $ 6,745 Comprehensive income (loss) $ (122,233 ) $ (20,196 ) $ 6,745 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Additional Information (Detail) $ / shares in Units, $ in Thousands | Sep. 15, 2020USD ($)$ / sharesshares | Jun. 16, 2020USD ($)$ / sharesshares | Mar. 16, 2020USD ($) | Sep. 30, 2020USD ($)Customer$ / sharesshares | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Oct. 01, 2019USD ($) | Oct. 01, 2018USD ($) |
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Opening balance of equity | $ 1,303,888 | $ 490,023 | $ 505,553 | $ 456,373 | |||||
Total amount of incentives | 63,100 | 50,800 | 42,400 | ||||||
Advertising Expense | $ 33,200 | $ 41,700 | $ 31,700 | ||||||
Federal statutory income tax rate | 21.00% | 21.00% | 21.00% | 35.00% | |||||
Gain (loss) on disposal of fixed assets | $ (900) | $ (1,500) | |||||||
Research and development expenses | 7,700 | 8,000 | $ 6,500 | ||||||
Income tax benefit for remeasurement of deferred tax assets and liabilities | $ 22,500 | ||||||||
Proceeds from issuance initial public offering | $ 819,700 | 820,467 | |||||||
Underwriting discounts and commissions payments | 50,600 | $ 50,600 | |||||||
Estimated offering expenses payable | $ 1,400 | 9,200 | |||||||
Prepayment of senior notes | 665,000 | ||||||||
Retained earnings | $ (283,475) | (162,578) | |||||||
Stock split conversion ratio | 173 | ||||||||
Revolving Credit Facility [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Revolving Credit Facility, outstanding amount | 70,000 | $ 0 | $ 0 | ||||||
2020 Senior Notes [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Senior notes outstanding | 350,000 | ||||||||
Prepayment of senior notes | $ 337,700 | ||||||||
IPO [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Shares issued during period | shares | 38,237,500 | ||||||||
Shares issued price | $ / shares | $ 23 | ||||||||
Over-Allotment Option [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Shares issued during period | shares | 4,987,500 | ||||||||
Maximum [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Intangible assets, useful lives | 20 years | ||||||||
Federal statutory income tax rate | 24.50% | ||||||||
Minimum [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Intangible assets, useful lives | 3 years | ||||||||
Cost of Goods and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Concentration Risk, Percentage | 10.00% | 17.00% | 14.00% | ||||||
Accounts Receivable [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Customers accounted | three customers accounted for 10% or more of gross trade receivables; Customer A was 13.1%, Customer B was 12.6% and Customer C was 11.9%. | no customers accounted for 10% or more of gross trade receivables. | |||||||
Accounts Receivable [Member] | Supplier Concentration Risk [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Number of Customer | Customer | 3 | ||||||||
Accounts Receivable [Member] | Supplier Concentration Risk [Member] | Customer A [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Concentration Risk, Percentage | 13.10% | ||||||||
Accounts Receivable [Member] | Supplier Concentration Risk [Member] | Customer B [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Concentration Risk, Percentage | 12.60% | ||||||||
Accounts Receivable [Member] | Supplier Concentration Risk [Member] | Customer C [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Concentration Risk, Percentage | 11.90% | ||||||||
Accounts Receivable [Member] | Maximum [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Concentration Risk, Percentage | 10.00% | 10.00% | |||||||
Common Class A [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Opening balance of equity | $ 155 | $ 75 | $ 75 | $ 75 | |||||
Shares issued during period | shares | 38,237,500 | ||||||||
Conversion of Class B common stock into Class A common stock (in shares) | shares | 33,068,863 | ||||||||
Common stock par or stated value per share | $ / shares | $ 0.001 | $ 0.001 | |||||||
Common Class A [Member] | IPO [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Shares issued during period | shares | 38,237,500 | ||||||||
Common Class A [Member] | Over-Allotment Option [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Shares issued during period | shares | 3,750,000 | ||||||||
Shares issued price | $ / shares | $ 33.25 | ||||||||
Common Class A [Member] | Secondary Offering [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Shares issued during period | shares | 28,750,000 | ||||||||
Common stock par or stated value per share | $ / shares | $ 0.001 | ||||||||
Common Class B [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Opening balance of equity | $ 33 | $ 33 | $ 33 | ||||||
Conversion of Class B common stock into Class A common stock (in shares) | shares | 33,068,863 | (33,068,863) | |||||||
Common stock par or stated value per share | $ / shares | $ 0.001 | $ 0.001 | |||||||
Adoption of ASU [Member] | ASU 2014-09 [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Opening balance of equity | $ 200 | ||||||||
Revision of Prior Period Adjustment [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Retained earnings | $ 1,300 | ||||||||
Corporate Assets [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Gain (loss) on disposal of fixed assets | $ (1,200) | ||||||||
Residential Segment [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Concentration Risk, Percentage | 10.00% | 10.00% | 10.00% | ||||||
Gain (loss) on disposal of fixed assets | $ (1,000) | $ (300) | $ (800) | ||||||
Commercial Segment [Member] | |||||||||
Organization And Summary Of Significant Accounting Policies [Line Items] | |||||||||
Gain (loss) on disposal of fixed assets | $ 100 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedules of Concentration of Risk Percentage (Detail) | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Distributor A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 20.30% | 19.80% | 21.20% |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property, Plant and Equipment (Detail) | 12 Months Ended |
Sep. 30, 2020 | |
Land and Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 10 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 5 years |
Minimum [Member] | Buildings and Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 7 years |
Minimum [Member] | Manufacturing Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 1 year |
Minimum [Member] | Office Furniture And Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 3 years |
Minimum [Member] | Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 3 years |
Maximum [Member] | Buildings and Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 40 years |
Maximum [Member] | Manufacturing Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 15 years |
Maximum [Member] | Office Furniture And Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 12 years |
Maximum [Member] | Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 7 years |
Revenue - Additional Informatio
Revenue - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Revenue from Contract with Customer [Abstract] | |||
Accrued rebates | $ 30,362 | $ 22,733 | $ 19,700 |
Contra trade receivable | $ 2,300 | $ 2,100 | $ 2,100 |
Revenue - Summary of Rebate Act
Revenue - Summary of Rebate Activity (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |||
Beginning balance | $ 24,858 | $ 21,914 | $ 16,922 |
Rebate expense | 54,083 | 50,847 | 42,400 |
Rebate payments | (46,262) | (47,903) | (38,893) |
Acquisitions | 1,485 | ||
Ending balance | $ 32,679 | $ 24,858 | $ 21,914 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - USD ($) $ in Thousands | Jan. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Business Combinations [Line Items] | ||||
Goodwill | $ 951,390 | $ 944,298 | $ 944,298 | |
Acquired finite lived intangible assets weighted average useful life | 12 years 10 months 24 days | |||
Working capital adjustment recognized | $ 600 | |||
Return Polymers Inc [Member] | ||||
Business Combinations [Line Items] | ||||
Business combination, total purchase price | $ 18,500 | 18,453 | ||
Business combination, date of acquisition | Jan. 31, 2020 | |||
Business combination, recognized identifiable assets acquired and liabilities assumed, intangible assets including goodwill | $ 11,600 | 18,453 | ||
Goodwill | 7,092 | |||
Goodwill, expected tax deductible amount | 7,100 | |||
Acquired finite lived intangible assets weighted average useful life | 14 years 3 months 18 days | |||
Business combination increase decrease in the value of goodwill | 800 | |||
Return Polymers Inc [Member] | Acquisition date | ||||
Business Combinations [Line Items] | ||||
Goodwill | $ 6,300 | |||
Customer relationships [Member] | Return Polymers Inc [Member] | ||||
Business Combinations [Line Items] | ||||
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 4,600 | |||
Acquired finite lived intangible assets useful life | 15 years | |||
Business combination adjustment made to the value of intangible assets | $ (200) | |||
Trademarks [Member] | Return Polymers Inc [Member] | ||||
Business Combinations [Line Items] | ||||
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 700 | |||
Acquired finite lived intangible assets useful life | 10 years |
Business Combinations - Summary
Business Combinations - Summary of Preliminary Allocation of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Jan. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Allocation of consideration to assets acquired and liabilities assumed: | ||||
Goodwill | $ 951,390 | $ 944,298 | $ 944,298 | |
Return Polymers Inc [Member] | ||||
Business combination recognized identifiable assets acquired goodwill and liabilities assumed net abstract [Line Items] | ||||
Total purchase consideration | $ 18,500 | 18,453 | ||
Allocation of consideration to assets acquired and liabilities assumed: | ||||
Cash and cash equivalents | ||||
Accounts receivable | 1,119 | |||
Inventories | 2,532 | |||
Prepaid expenses and other current assets | 39 | |||
Property, plant and equipment | 4,080 | |||
Intangible assets | 5,100 | |||
Goodwill | 7,092 | |||
Accounts payable | (947) | |||
Accrued expenses and other liabilities | (562) | |||
Net assets acquired | $ 11,600 | $ 18,453 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Inventory [Line Items] | ||
Raw materials | $ 33,850 | $ 36,855 |
Work in process | 19,935 | 19,514 |
Finished goods | 76,285 | 59,022 |
Total inventories | $ 130,070 | $ 115,391 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |||
Inventory revaluation | $ 0 | $ 0 | $ 11.8 |
Property, Plant and Equipment_3
Property, Plant and Equipment - Net - Summary of Property, Plant and Equipment - Net (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property Plant and Equipment Excluding Construction in Progress Gross | $ 417,763 | $ 360,461 |
Property, Plant and Equipment, Gross | 472,175 | 376,914 |
Accumulated depreciation | (210,401) | (168,220) |
Total property, plant and equipment – net | 261,774 | 208,694 |
Land and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 2,758 | 2,758 |
Buildings and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 71,059 | 67,770 |
Capital Lease Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 2,021 | 2,021 |
Capital Lease Manufacturing Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 1,026 | 1,026 |
Capital Lease Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 3,782 | 3,835 |
Manufacturing Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 306,036 | 254,570 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 24,927 | 22,733 |
Furnitures and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 5,689 | 5,409 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 465 | 339 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 54,412 | $ 16,453 |
Property, Plant and Equipment_4
Property, Plant and Equipment - Net - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Finance lease right of use asset | $ 9,200 | $ 9,200 | $ 9,200 |
Finance lease obligation | 7,900 | 7,900 | |
Depreciation | 44,637 | 33,703 | $ 26,293 |
Interest Capitalized | 1,300 | 900 | |
Assets Under Capital Lease [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Accumulated amortization under capital leases | 4,000 | 3,700 | |
Assets under Build to Suit lease [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Accumulated amortization leased assets | $ 500 | $ 300 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Net - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill [Line Items] | |||
Amortization expense | $ 55,144 | $ 60,226 | $ 51,372 |
Acquired finite lived intangible assets weighted average useful life | 12 years 10 months 24 days |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Net - Summary of Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill [Line Items] | ||
Goodwill, beginning balance | $ 944,298 | |
Acquisitions | 7,092 | |
Goodwill, ending balance | 951,390 | |
Accumulated impairment losses | 32,200 | $ 32,200 |
Residential [Member] | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 903,909 | |
Acquisitions | 7,092 | |
Goodwill, ending balance | 911,001 | |
Accumulated impairment losses | ||
Commercial [Member] | ||
Goodwill [Line Items] | ||
Goodwill, beginning balance | 40,389 | |
Acquisitions | ||
Goodwill, ending balance | 40,389 | |
Accumulated impairment losses | $ 32,200 | $ 32,200 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Net - Summary of Finite-Lived Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 670,886 | $ 665,786 |
Accumulated Amortization | (378,512) | (323,368) |
Total | $ 292,374 | 342,418 |
Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 3 years | |
Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 20 years | |
Propriety knowledge [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 289,300 | 289,300 |
Accumulated Amortization | (195,303) | (171,686) |
Total | $ 93,997 | $ 117,614 |
Propriety knowledge [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 10 years | 10 years |
Propriety knowledge [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 15 years | 15 years |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 223,840 | $ 223,140 |
Accumulated Amortization | (124,521) | (108,096) |
Total | $ 99,319 | $ 115,044 |
Trademarks [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 5 years | 5 years |
Trademarks [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 20 years | 20 years |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 146,670 | $ 142,270 |
Accumulated Amortization | (52,119) | (39,084) |
Total | $ 94,551 | $ 103,186 |
Customer relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 15 years | 15 years |
Customer relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 19 years | 19 years |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 10 years | 10 years |
Gross Carrying Value | $ 7,000 | $ 7,000 |
Accumulated Amortization | (3,182) | (2,132) |
Total | 3,818 | 4,868 |
Other intangible [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | 4,076 | 4,076 |
Accumulated Amortization | (3,387) | (2,370) |
Total | $ 689 | $ 1,706 |
Other intangible [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 3 years | 3 years |
Other intangible [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Lives in Years | 15 years | 15 years |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Net - Summary of Expected Amortization Expense Relating to Intangible Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2021 | $ 49,802 | |
2022 | 44,347 | |
2023 | 39,219 | |
2024 | 34,227 | |
2025 | 29,281 | |
Thereafter | 95,498 | |
Total | $ 292,374 | $ 342,418 |
Composition of Certain Balanc_3
Composition of Certain Balance Sheet Accounts - Summary of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Allowance for Credit Loss [Abstract] | |||
Beginning balance | $ 904 | $ 1,230 | $ 1,048 |
Provision | 512 | 383 | 176 |
Bad debt write-offs | (119) | (709) | (89) |
Acquisitions | 35 | 95 | |
Ending balance | $ 1,332 | $ 904 | $ 1,230 |
Composition of Certain Balanc_4
Composition of Certain Balance Sheet Accounts - Summary of Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Employee related liabilities | $ 26,554 | $ 17,202 |
Freight | 5,530 | 4,158 |
Professional fees | 4,249 | 14,160 |
Marketing | 3,343 | 2,026 |
Warranty | 2,921 | 2,543 |
Construction in progress | 1,303 | 903 |
Capital lease | 969 | 721 |
Contingent consideration | 1,303 | |
Other | 5,647 | 4,887 |
Total accrued expenses and other current liabilities | $ 50,516 | $ 47,903 |
Debt - Summary of Long-Term Deb
Debt - Summary of Long-Term Debt (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 467,147 | $ 1,123,507 |
Less: unamortized deferred financing fees | (4,165) | (11,890) |
Less: current portion | 0 | (8,304) |
Long-term debt—less current portion and unamortized deferred financing fees | 462,982 | 1,103,313 |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 467,147 | 808,507 |
2021 Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 315,000 | |
Less: unamortized deferred financing fees | (2,800) | |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | ||
Less: unamortized deferred financing fees | $ (800) | $ (900) |
Debt - Summary of Long-Term D_2
Debt - Summary of Long-Term Debt (Detail) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2013 | Sep. 30, 2020 | Sep. 30, 2019 |
Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date | May 5, 2024 | ||
Debt instrument, description of variable rate basis | LIBOR + 3.75% | ||
Debt instrument, basis spread on variable rate | 3.75% | ||
Debt instrument rate | 4.75% | 5.93% | |
Debt instrument unamortized discount | $ 507 | $ 1,105 | |
2021 Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date | Oct. 1, 2021 | Oct. 1, 2021 | |
Debt instrument fixed interest rate | 8.00% | 8.00% | |
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date | Mar. 9, 2022 | ||
Debt instrument, description of variable rate basis | LIBOR + 2.00% | ||
Debt instrument, basis spread on variable rate | 2.00% |
Debt - Additional Information (
Debt - Additional Information (Detail) | Jun. 16, 2020USD ($) | Jun. 08, 2020USD ($) | May 12, 2020USD ($) | May 07, 2020USD ($) | Mar. 16, 2020USD ($) | Jan. 31, 2020USD ($) | Sep. 30, 2013USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Mar. 09, 2017USD ($) |
Debt Instrument [Line Items] | |||||||||||
Proceeds from senior notes | $ 346,500,000 | ||||||||||
Accrued interest paid | 76,670,000 | $ 78,807,000 | $ 65,050,000 | ||||||||
Gain (loss) on extinguishment of debt | (37,587,000) | ||||||||||
Deferred financing cost | 4,165,000 | 11,890,000 | |||||||||
Prepay of outstanding principal of term loan agreement | $ 2,200,000 | ||||||||||
Amortization of deferred financing fee | 3,200,000 | ||||||||||
Long-Term Debt, Maturity, Year Five | $ 467,700,000 | ||||||||||
CPG International LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, covenant description | CPG International LLC is also required to make mandatory prepayments (i) when aggregate borrowings exceed commitments or the applicable borrowing base and (ii) during “cash dominion,” which occurs if (a) the availability under the Revolving Credit Facility is less than the greater of (i) $12.5 million and (ii) 10% of the lesser of (x) $150.0 million and (y) the borrowing base, for five consecutive business days or (b) certain events of default have occurred and are continuing. | ||||||||||
Senor Notes Due Two Thousand And Twenty One [Member] | CPG International LLC [Member] | Wilmington Trust National Association [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument maturity date | Oct. 1, 2021 | ||||||||||
Debt instrument interest rate | 8.00% | ||||||||||
Maximum [Member] | CPG International LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Minimum fixed charge coverage ratio | 100 | ||||||||||
Minimum [Member] | CPG International LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Minimum fixed charge coverage ratio | 100 | ||||||||||
Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument maturity date | Mar. 9, 2022 | ||||||||||
Deferred financing cost | $ 800,000 | 900,000 | |||||||||
Aggregate maximum borrowing capacity | $ 150,000,000 | ||||||||||
Loan borrowed | $ 89,000,000 | ||||||||||
Outstanding borrowings capacity | $ 70,000,000 | 0 | 0 | ||||||||
Outstanding letters of credit held | $ 6,800,000 | 3,000,000 | |||||||||
Debt Instrument, Basis spread on variable rate | 2.00% | ||||||||||
Line of credit facility, commitment fee description | If the average daily used percentage is greater than 50%, the commitment fee equals 25 basis points, and if the average daily used percentage is less than or equal to 50%, the commitment fee equals 37.5 basis points | ||||||||||
Debt instrument, description of variable rate basis | LIBOR + 2.00% | ||||||||||
Line of credit facility, commitment fee amount | $ 500,000 | 500,000 | 600,000 | ||||||||
Debt instrument, covenant description | (i) 10% of the lesser of the aggregate commitments under the Revolving Credit Facility and the borrowing base, and (ii) $12.5 million. | ||||||||||
Amortization of deferred financing fee | $ 426,000 | 358,000 | 358,000 | ||||||||
Revolving Credit Facility [Member] | CPG International LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Available borrowing capacity | 129,400,000 | ||||||||||
Option to increase the commitments | $ 100,000,000 | ||||||||||
Revolving Credit Facility [Member] | ABR Borrowings [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate description | (i) for ABR borrowings, the highest of (a) the Federal Funds Rate plus 50 basis points, (b) the prime rate and (c) the LIBOR as of such date for a deposit in U.S. dollars with a maturity of one month plus 100 basis points, plus, in each case, a spread of 50 to 100 basis points, based on average historical availability | ||||||||||
Revolving Credit Facility [Member] | ABR Borrowings [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 0.50% | ||||||||||
Debt instrument, description of variable rate basis | Federal Funds Rate plus 50 basis points | ||||||||||
Revolving Credit Facility [Member] | ABR Borrowings [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 1.00% | ||||||||||
Debt instrument, description of variable rate basis | LIBOR as of such date for a deposit in U.S. dollars with a maturity of one month plus 100 basis points, plus, in each case, a spread of 50 to 100 basis points | ||||||||||
Revolving Credit Facility [Member] | ABR Borrowings [Member] | Prime Rate [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, description of variable rate basis | prime rate | ||||||||||
Revolving Credit Facility [Member] | Eurocurrency Borrowings [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument interest rate description | for Eurocurrency borrowings, adjusted LIBOR plus a spread of 150 to 200 basis points, based on average historical availability | ||||||||||
Revolving Credit Facility [Member] | Eurocurrency Borrowings [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument, description of variable rate basis | LIBOR plus a spread of 150 to 200 basis points | ||||||||||
Revolving Credit Facility [Member] | FILO Loans [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate maximum borrowing capacity | $ 8,500,000 | ||||||||||
Revolving Credit Facility [Member] | Maximum [Member] | ABR Borrowings [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 1.00% | ||||||||||
Revolving Credit Facility [Member] | Maximum [Member] | Eurocurrency Borrowings [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 2.00% | ||||||||||
Revolving Credit Facility [Member] | Minimum [Member] | ABR Borrowings [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 0.50% | ||||||||||
Revolving Credit Facility [Member] | Minimum [Member] | Eurocurrency Borrowings [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 1.50% | ||||||||||
Amended Agreement For Term Loan [Member] | CPG International LLC [Member] | Wilmington Trust National Association [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument maturity date | May 5, 2024 | ||||||||||
Deferred financing cost | $ 4,200,000 | 9,100,000 | |||||||||
Prepay of outstanding principal of term loan agreement | 337,700,000 | ||||||||||
Payment of accrued interest | 4,300,000 | ||||||||||
Cumulative term loan prepayments estimated | $ 0 | 6,400,000 | |||||||||
Percentage of principal amount to be repaid by way of instalments | 0.25253% | ||||||||||
Term loan frequency of instalment payment | quarterly installments | ||||||||||
Amended Agreement For Term Loan [Member] | CPG International LLC [Member] | London Interbank Offered Rate (LIBOR) [Member] | Wilmington Trust National Association [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument base rate | 1.00% | ||||||||||
Amended Agreement For Term Loan [Member] | CPG International LLC [Member] | Federal Funds Rate [Member] | Wilmington Trust National Association [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 0.50% | ||||||||||
Amended Agreement For Term Loan [Member] | CPG International LLC [Member] | Adjusted Libor [Member] | Wilmington Trust National Association [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 0.375% | ||||||||||
Debt instrument base rate | 1.00% | ||||||||||
Amended Agreement For Term Loan [Member] | Minimum [Member] | CPG International LLC [Member] | Alternative Base Rate [Member] | Wilmington Trust National Association [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Basis spread on variable rate | 2.75% | ||||||||||
Debt instrument base rate | 2.00% | ||||||||||
2021 Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument face amount | $ 315,000,000 | ||||||||||
Debt instrument maturity date | Oct. 1, 2021 | Oct. 1, 2021 | |||||||||
Accrued interest paid | $ 4,600,000 | ||||||||||
Gain (loss) on extinguishment of debt | $ 1,900,000 | ||||||||||
Debt instrument interest rate | 8.00% | 8.00% | |||||||||
Debt instrument, repurchase amount | $ 315,000,000 | ||||||||||
Debt Instrument, Repurchase Date | Jun. 8, 2020 | ||||||||||
Deferred financing cost | 2,800,000 | ||||||||||
Amortization of deferred financing fee | $ 880,000 | $ 1,407,000 | $ 1,407,000 | ||||||||
2025 Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt instrument face amount | $ 350,000,000 | ||||||||||
Debt instrument maturity date | May 15, 2025 | ||||||||||
Proceeds from senior notes | $ 350,000,000 | ||||||||||
Repayment of debt | 350,000,000 | ||||||||||
Accrued interest paid | 3,900,000 | ||||||||||
Gain (loss) on extinguishment of debt | $ 35,700,000 | ||||||||||
Debt instrument interest rate | 9.50% | ||||||||||
Amortization of deferred financing fee | $ 180,000 | ||||||||||
2025 Senior Notes [Member] | Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Repayments of credit | $ 15,000,000 | $ 15,000,000 | |||||||||
Debt Instrument Redemption Option One [Member] | 2025 Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed | 40.00% | ||||||||||
Debt Instrument, Redemption Price, Percentage | 107.125% | ||||||||||
Debt Instrument Redemption Option Two [Member] | 2025 Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed | 40.00% | ||||||||||
Debt Instrument, Redemption Price, Percentage | 107.125% | ||||||||||
Debt Instrument Redemption Option Three [Member] | 2025 Senior Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt Instrument, Redemption Price, Percentage | 100.00% |
Debt - Disclosure of Debt Instr
Debt - Disclosure of Debt Instrument Redemption (Detail) | 12 Months Ended | |
May 14, 2023 | Sep. 30, 2017 | |
2021 Senior Notes [Member] | Debt Instrument, Redemption, Period One [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 106.00% | |
2021 Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 104.00% | |
2021 Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 102.00% | |
2021 Senior Notes [Member] | Debt Instrument, Redemption, Period Four [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 100.00% | |
2025 Senior Notes [Member] | Debt Instrument, Redemption, Period One [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 104.75% | |
2025 Senior Notes [Member] | Debt Instrument, Redemption, Period Two [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 102.375% | |
2025 Senior Notes [Member] | Debt Instrument, Redemption, Period Three [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 100.00% |
Debt - Summary of Interest Expe
Debt - Summary of Interest Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Interest expense | |||
Other | $ 1,530 | $ 1,506 | $ 1,709 |
Debt issuance costs | |||
Amortization of debt issuance costs | 3,200 | ||
Original issue discounts | 597 | 241 | 178 |
Less capitalized interest | (1,288) | (895) | (474) |
Interest expense | 71,179 | 83,205 | 68,742 |
Term Loan Agreement [Member] | |||
Interest expense | |||
Interest expense, debt | 41,261 | 52,504 | 38,285 |
Debt issuance costs | |||
Amortization of debt issuance costs | 4,910 | 1,980 | 1,397 |
2021 Senior Notes [Member] | |||
Interest expense | |||
Interest expense, debt | 17,150 | 25,200 | 25,200 |
Debt issuance costs | |||
Amortization of debt issuance costs | 880 | 1,407 | 1,407 |
2025 Senior Notes [Member] | |||
Interest expense | |||
Interest expense, debt | 3,879 | ||
Debt issuance costs | |||
Amortization of debt issuance costs | 180 | ||
Revolving Credit Facility [Member] | |||
Interest expense | |||
Interest expense, debt | 1,654 | 904 | 682 |
Debt issuance costs | |||
Amortization of debt issuance costs | $ 426 | $ 358 | $ 358 |
Product Warranties - Additional
Product Warranties - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Product Warranty Liability [Line Items] | ||
Assurance of product | The Company provides product assurance warranties of various lengths ranging from 5 years to lifetime for limited coverage for a variety of material and workmanship defects based on standard terms and conditions between the Company and its customers. | |
Product warranty classified as noncurrent | $ 0.5 | |
Other Current Assets [Member] | ||
Product Warranty Liability [Line Items] | ||
Product warranty classified as current | $ 1.8 | $ 1.3 |
Product Warranties - Summary of
Product Warranties - Summary of Warranty Reserve Activity (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Product Warranty Liability [Line Items] | ||
Beginning balance | $ 11,133 | $ 9,304 |
Adjustments to reserve | 2,710 | 4,503 |
Warranty claims payment | (3,159) | (2,927) |
Accretion – purchase accounting valuation | 229 | 253 |
Ending balance | 10,913 | 11,133 |
Current portion of accrued warranty | (2,921) | (2,543) |
Accrued warranty – less current portion | $ 7,992 | $ 8,590 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Summary of Carrying Values and the Estimated Fair Values of the Debt Financial Instruments (Detail) - Fair Value, Inputs, Level 2 [Member] - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 |
Carrying Value [Member] | ||
Schedule of carrying values and the estimated fair values of the debt financial instruments [Line Items] | ||
Term Loan Agreement due May 5, 2024 | $ 467,147 | $ 808,507 |
2021 Senior Notes due October 1, 2021 | 315,000 | |
Estimated Fair Value [Member] | ||
Schedule of carrying values and the estimated fair values of the debt financial instruments [Line Items] | ||
Term Loan Agreement due May 5, 2024 | 465,185 | 804,464 |
2021 Senior Notes due October 1, 2021 | $ 315,000 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | |
Business combination, contingent consideration, liability | $ 1,303 | ||
Non cash compensation expense contingent payment | $ 0 | 1,300 | $ 900 |
Accrued Expenses And Other Liabilities [Member] | |||
Business combination, contingent consideration, liability | 0 | 1,300 | |
Ultralox [Member] | |||
Business combination, contingent consideration arrangements, range of outcomes, value, low | 0 | ||
Business combination, contingent consideration arrangements, range of outcomes, value, high | 30,000 | ||
Contingent liability, payments | 1,700 | 2,000 | |
Business combination, recognized identifiable assets acquired and liabilities assumed, contingent liability | 5,300 | ||
Contingent consideration related to non-employee owners | 2,800 | ||
Contingent consideration related compensation expenses | 2,500 | ||
Adjustment in fair value of contingent payment | $ 900 | ||
Additional contingent liability, payments | $ 3,400 | ||
Ultralox [Member] | Measurement Input, EBITDA Multiple [Member] | |||
Business combination, contingent consideration, liability, measurement input | 39 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Summary of Aggregate Fair Value of the Contingent Consideration and Compensation Expense (Detail) - Contingent Consideration Liability [Member] - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair value, liabilities measured on recurring basis, unobservable input reconciliation [Line Items] | |||
Beginning balance | $ 1,303 | $ 1,900 | |
Issuance of contingent consideration in connection with acquisition | $ 2,822 | ||
Change in fair value of contingent consideration | 53 | (1,810) | |
Less: contingent payments | (1,675) | (3,675) | |
Compensation expense recognized | 372 | 3,025 | 888 |
Ending balance | $ 1,303 | $ 1,900 |
Segments - Summary of Residenti
Segments - Summary of Residential and Commercial Segment Reporting Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | |||||||||||||||
Net sales to customers | $ 263,920 | $ 223,711 | $ 245,585 | $ 166,043 | $ 215,534 | $ 221,307 | $ 219,931 | $ 137,431 | $ 191,137 | $ 184,406 | $ 200,863 | $ 105,399 | $ 899,259 | $ 794,203 | $ 681,805 |
Adjusted EBITDA | |||||||||||||||
Total Adjusted EBITDA for reporting segments | 213,513 | 179,566 | 164,414 | ||||||||||||
Unallocated net expenses | (39,598) | (30,669) | (25,693) | ||||||||||||
Adjustments to Income (loss) before income tax provision (benefit) | |||||||||||||||
Capital Expenditures | 95,594 | 63,006 | 42,758 | ||||||||||||
Depreciation and amortization | 99,781 | 93,929 | 77,665 | ||||||||||||
Stock-based compensation costs | (120,517) | (3,682) | (3,099) | ||||||||||||
Asset impairment and inventory revaluation costs | (12,747) | ||||||||||||||
Business transformation costs | (594) | (16,560) | (5,822) | ||||||||||||
Acquisition costs | (1,596) | (4,110) | (7,361) | ||||||||||||
Initial public offering and Secondary offering costs | (8,616) | (9,076) | (789) | ||||||||||||
Other costs | (4,154) | 6,845 | (4,189) | ||||||||||||
Capital structure transaction costs | (37,587) | (367) | |||||||||||||
Interest expense | (71,179) | (83,205) | (68,742) | ||||||||||||
Goodwill | 951,390 | 944,298 | 944,298 | 951,390 | 944,298 | 944,298 | |||||||||
Total Assets | 1,931,856 | 1,788,263 | 1,779,180 | 1,931,856 | 1,788,263 | 1,779,180 | |||||||||
Income (loss) before income taxes | (130,511) | (24,151) | (16,367) | ||||||||||||
Reportable Subsegments [Member] | |||||||||||||||
Adjusted EBITDA | |||||||||||||||
Total Adjusted EBITDA for reporting segments | 253,111 | 210,235 | 190,107 | ||||||||||||
Residential Segment [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Net sales to customers | 771,167 | 655,445 | 541,942 | ||||||||||||
Adjusted EBITDA | |||||||||||||||
Total Adjusted EBITDA for reporting segments | 238,060 | 188,742 | 168,438 | ||||||||||||
Adjustments to Income (loss) before income tax provision (benefit) | |||||||||||||||
Capital Expenditures | 86,473 | 48,206 | 36,121 | ||||||||||||
Depreciation and amortization | 85,148 | 81,716 | 66,396 | ||||||||||||
Goodwill | 911,001 | 903,909 | 903,909 | 911,001 | 903,909 | 903,909 | |||||||||
Total Assets | 1,726,705 | 1,584,383 | 1,596,075 | 1,726,705 | 1,584,383 | 1,596,075 | |||||||||
Commercial Segment [Member] | |||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||
Net sales to customers | 128,092 | 138,758 | 139,863 | ||||||||||||
Adjusted EBITDA | |||||||||||||||
Total Adjusted EBITDA for reporting segments | 15,051 | 21,493 | 21,669 | ||||||||||||
Adjustments to Income (loss) before income tax provision (benefit) | |||||||||||||||
Capital Expenditures | 6,472 | 4,592 | 4,308 | ||||||||||||
Depreciation and amortization | 9,302 | 8,845 | 8,961 | ||||||||||||
Goodwill | 40,389 | 40,389 | 40,389 | 40,389 | 40,389 | 40,389 | |||||||||
Total Assets | 180,116 | 171,721 | 162,543 | 180,116 | 171,721 | 162,543 | |||||||||
Corporate and Eliminations Segment [Member] | |||||||||||||||
Adjusted EBITDA | |||||||||||||||
Total Adjusted EBITDA for reporting segments | (39,598) | (30,669) | (25,693) | ||||||||||||
Adjustments to Income (loss) before income tax provision (benefit) | |||||||||||||||
Capital Expenditures | 2,649 | 10,208 | 2,329 | ||||||||||||
Depreciation and amortization | 5,331 | 3,368 | 2,308 | ||||||||||||
Total Assets | $ 25,035 | $ 32,159 | $ 20,562 | $ 25,035 | $ 32,159 | $ 20,562 |
Segments - Summary of Residen_2
Segments - Summary of Residential and Commercial Segment Reporting Information (Parenthetical) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Transformation Costs [Line Items] | |||
Business acquisition acquisition costs completed acquistions | $ 900 | $ 4,100 | $ 4,900 |
Inventory step up adjustments relating to business acquisitions | 700 | 0 | 2,400 |
Legal expenses | 900 | 900 | 1,500 |
Miscellaneous adjustments | 600 | ||
Capital structure transaction costs | (37,587) | (367) | |
Costs of reduction in workforce | (400) | ||
Tangible and intangible asset impairment costs | 0 | 0 | 900 |
Inventory revaluation | 0 | 0 | 11,800 |
Cost related to change in estimated warranty obligation | 2,100 | ||
Initial public offering and Secondary offering costs | (8,616) | (9,076) | (789) |
2021 Senior Notes [Member] | |||
Business Transformation Costs [Line Items] | |||
Capital structure transaction costs | 1,900 | ||
Debt related issuance costs | 400 | ||
2025 Senior Notes [Member] | |||
Business Transformation Costs [Line Items] | |||
Capital structure transaction costs | 35,700 | ||
IPO [Member] | |||
Business Transformation Costs [Line Items] | |||
Costs related to an incentive plan | 2,900 | ||
Secondary Offering [Member] | Common Class A [Member] | |||
Business Transformation Costs [Line Items] | |||
Initial public offering and Secondary offering costs | 1,400 | ||
Insurance Claims [Member] | |||
Business Transformation Costs [Line Items] | |||
Income from insurance recovery of legal loss | 7,700 | ||
Business Transformation Costs [Member] | |||
Business Transformation Costs [Line Items] | |||
Consulting and other costs | 0 | 4,300 | 0 |
Compensation costs for transformation | $ 600 | 2,300 | 200 |
Relocation costs | 2,000 | ||
Start up costs | 5,300 | ||
Operations related integration costs | $ 2,700 | $ 5,600 |
Segment - Additional Informatio
Segment - Additional Information (Detail) | 12 Months Ended |
Sep. 30, 2020Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Capital Stock - Additional Info
Capital Stock - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Sep. 15, 2020 | Jun. 16, 2020 | Mar. 16, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Class of Stock [Line Items] | |||||
Proceeds from initial public offering, net of related costs | $ 819,700 | $ 820,467 | |||
Underwriting commision and discounts | 50,600 | $ 50,600 | |||
Estimated offering expenses payable | $ 1,400 | $ 9,200 | |||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |||
Common stock description of voting rights | The Class A common stock and Class B common stock provide identical economic rights, but holders of Class B common stock have limited voting rights, specifically that such holders have no right to vote, solely with respect to their shares of Class B common stock, with respect to the election, replacement or removal of directors. | ||||
Common stock description of conversion rights | Class A Common Stock and Class B Common Stock are not entitled to preemptive rights. Holders of Class B Common Stock may convert their shares of Class B Common Stock into shares of Class A Common Stock on a one-for-one basis, in whole or in part, at any time and from time to time at their option. | ||||
Preferred stock par or stated value per share | $ 0.001 | $ 0.001 | |||
Preferred stock, shares issued | 0 | 0 | |||
Conversion of Units of Limited Liability Company [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 108,162,741 | ||||
Conversion of Membership Interests in Limited Liability Company [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 108,162,741 | ||||
Common Class A [Member] | |||||
Class of Stock [Line Items] | |||||
Shares issued during period | 38,237,500 | ||||
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 | |||
Common stock par or stated value per share | $ 0.001 | $ 0.001 | |||
Common stock member interests converted | 33,068,863 | ||||
Common stock, shares issued | 154,637,240 | 75,093,778 | |||
Common stock, shares outstanding | 154,637,240 | 75,093,778 | |||
Common Class A [Member] | Conversion of Units of Limited Liability Company [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 75,093,778 | ||||
Common Class A [Member] | Conversion of Profit Interests [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 2,703,243 | ||||
Common Class A [Member] | Conversion of Membership Interests in Limited Liability Company [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 75,093,778 | ||||
Common Class B [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||
Common stock par or stated value per share | $ 0.001 | $ 0.001 | |||
Common stock member interests converted | 33,068,863 | (33,068,863) | |||
Common stock, shares issued | 100 | 33,068,963 | |||
Common stock, shares outstanding | 100 | 33,068,963 | |||
Common Class B [Member] | Conversion of Units of Limited Liability Company [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 33,068,963 | ||||
Common Class B [Member] | Conversion of Membership Interests in Limited Liability Company [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 33,068,963 | ||||
Class A Restricted Stock [Member] | Conversion of Profit Interests [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock member interests converted | 5,532,057 | ||||
IPO [Member] | |||||
Class of Stock [Line Items] | |||||
Shares issued during period | 38,237,500 | ||||
Shares issued price | $ 23 | ||||
IPO [Member] | Common Class A [Member] | |||||
Class of Stock [Line Items] | |||||
Shares issued during period | 38,237,500 | ||||
Over-Allotment Option [Member] | |||||
Class of Stock [Line Items] | |||||
Shares issued during period | 4,987,500 | ||||
Over-Allotment Option [Member] | Common Class A [Member] | |||||
Class of Stock [Line Items] | |||||
Shares issued during period | 3,750,000 | ||||
Shares issued price | $ 33.25 | ||||
Employee Stock [Member] | Common Class A [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock shares reserved for future issuance | 3,477,413 | ||||
Secondary Offering [Member] | Common Class A [Member] | |||||
Class of Stock [Line Items] | |||||
Shares issued during period | 28,750,000 | ||||
Common stock par or stated value per share | $ 0.001 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 15, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation expenses | $ 120,517 | $ 3,682 | $ 3,099 | |
Income tax benefit stock based compensation expenses | 6,300 | 0 | 0 | |
Unvested stock compensation not recognised | $ 25,400 | |||
Unvested stock awards weighted average remaining period of recognition | 3 years 1 month 6 days | |||
Exercise of vested stock options | $ 41 | |||
Exercise of vested stock options (in shares) | 1,800 | |||
Percentage of stock options released from the lock in requirements | 26.40% | |||
Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise of vested stock options | $ 100 | |||
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based payment arrangement incremental compensation | 103,400 | |||
Stock based compensation expenses | 120,500 | $ 3,300 | $ 2,500 | |
Selling, General and Administrative Expenses [Member] | IPO [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based payment arrangement incremental compensation | 103,400 | |||
Share based compensation by share based payment arrangement accelarated vesting incremental compensation | $ 43,100 | |||
2020 Omnibus Incentive Compensation Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares authorised under share based compensation plan | 15,852,319 | |||
Common stock shares reserved for future issuance | 5,040,776 | |||
Stock based compensation period of expiry of stock options | 10 years | |||
2020 Omnibus Incentive Compensation Plan [Member] | Service Based Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based payment lock in description | 180-day |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Stock Awards Granted (Detail) | 12 Months Ended |
Sep. 30, 2020 | |
Performance Shares And Restricted Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 0.75% |
Expected volatility | 40.00% |
Expected term (in years) | 6 months |
Expected dividend yield | 0.00% |
Service Based Stock Options And Restricted Stock Awards [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 35.00% |
Expected dividend yield | 0.00% |
Service Based Stock Options And Restricted Stock Awards [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 0.47% |
Expected term (in years) | 6 years 3 months |
Service Based Stock Options And Restricted Stock Awards [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 0.56% |
Expected term (in years) | 7 years |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock Option Activities (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Option, Exercised | (1,800) |
Performance Shares [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Option, Outstanding | |
Number of Option, Granted | 1,706,098 |
Number of Option, Exercised | (600) |
Number of Option, Cancelled/Forfeited | |
Number of Option, Expired | |
Number of Option, Outstanding | 1,705,498 |
Number of Option, Vested and exercisable | 1,705,498 |
Weighted Average Exercise Price Per Share, Outstanding | $ / shares | |
Weighted Average Exercise Price Per Share, Granted | $ / shares | 23 |
Weighted Average Exercise Price Per Share, Exercised | $ / shares | 23 |
Weighted Average Exercise Price Per Share, Cancelled/Forfeited | $ / shares | |
Weighted Average Exercise Price Per Share, Expired | $ / shares | |
Weighted Average Exercise Price Per Share, Outstanding | $ / shares | 23 |
Weighted Average Exercise Price Per Share, Vested and exercisable | $ / shares | $ 23 |
Weighted Average Remaining Contract Term, Outstanding | 9 years 8 months 12 days |
Weighted Average Remaining Contract Term, Vested and exercisable | 9 years 8 months 12 days |
Weighted Aggregate Intrinsic Value, Outstanding | $ | $ 20,142 |
Weighted Aggregate Intrinsic Value, Vested and exercisable | $ | $ 20,142 |
Service Based Stock Option Activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Option, Outstanding | |
Number of Option, Granted | 3,384,147 |
Number of Option, Exercised | (1,200) |
Number of Option, Cancelled/Forfeited | |
Number of Option, Expired | |
Number of Option, Outstanding | 3,382,947 |
Number of Option, Vested and exercisable | 979,583 |
Weighted Average Exercise Price Per Share, Outstanding | $ / shares | |
Weighted Average Exercise Price Per Share, Granted | $ / shares | 23 |
Weighted Average Exercise Price Per Share, Exercised | $ / shares | 23 |
Weighted Average Exercise Price Per Share, Cancelled/Forfeited | $ / shares | |
Weighted Average Exercise Price Per Share, Expired | $ / shares | |
Weighted Average Exercise Price Per Share, Outstanding | $ / shares | 23 |
Weighted Average Exercise Price Per Share, Vested and exercisable | $ / shares | $ 23 |
Weighted Average Remaining Contract Term, Outstanding | 9 years 8 months 12 days |
Weighted Average Remaining Contract Term, Vested and exercisable | 9 years 8 months 12 days |
Weighted Aggregate Intrinsic Value, Outstanding | $ | $ 39,953 |
Weighted Aggregate Intrinsic Value, Vested and exercisable | $ | $ 11,569 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Stock Awards Activity Other Than Options (Detail) | 12 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Shares, Granted | 191,443 |
Number of Shares, Forfeited | 6,592 |
Number of Shares, Outstanding and unvested | 184,851 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 23 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Outstanding and unvested | $ / shares | $ 23 |
Performance Based Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Shares, Outstanding and unvested | |
Number of Shares, Granted | 3,884,615 |
Number of Shares, Vested | (3,884,615) |
Number of Shares, Forfeited | 0 |
Number of Shares, Outstanding and unvested | 0 |
Weighted Average Grant Date Fair Value, Outstanding and unvested | $ / shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 23 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 23 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Outstanding and unvested | $ / shares | $ 0 |
Service Based Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Shares, Outstanding and unvested | |
Number of Shares, Granted | 1,647,442 |
Number of Shares, Vested | (161,831) |
Number of Shares, Forfeited | 0 |
Number of Shares, Outstanding and unvested | 1,485,611 |
Weighted Average Grant Date Fair Value, Outstanding and unvested | $ / shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 23 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 23 |
Weighted Average Grant Date Fair Value, Outstanding and unvested | $ / shares | $ 23 |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of Restricted Stock Unit Awards Activity (Detail) | 12 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Number of Shares, Granted | 191,443 |
Number of Shares, Forfeited | (6,592) |
Number of Shares, Outstanding and unvested | 184,851 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 23 |
Weighted Average Grant Date Fair Value, Forfeited | $ | $ 23 |
Weighted Average Grant Date Fair Value, Outstanding and unvested | $ / shares | $ 23 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Defined Contribution Plan Disclosure [Line Items] | |||||
Percentage of employee salary contributed to plan | 85.00% | ||||
Defined contribution plan, description | increase the Company match to be 100% of the first 1% of employee contributions, plus 50% of the next 5% of employee contributions. Prior to January 1, 2018, the Company matched 50% of the first 5% of employee contributions. | ||||
Company contribution to the plan | $ 3.2 | $ 2.7 | $ 1.7 | ||
First One Percent Employee [Member] | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Percentage of employee salary contributed to plan | 100.00% | ||||
Next Five Percent Employee [Member] | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Percentage of employee salary contributed to plan | 50.00% | ||||
First Five Percent Employee [Member] | |||||
Defined Contribution Plan Disclosure [Line Items] | |||||
Percentage of employee salary contributed to plan | 50.00% |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Numerator: | |||||||||||||||
Net income (loss) | $ (64,359) | $ (52,116) | $ 4,088 | $ (9,846) | $ (920) | $ 1,511 | $ (1,516) | $ (19,271) | $ (4,564) | $ (10,228) | $ 9,072 | $ 12,465 | $ (122,233) | $ (20,196) | $ 6,745 |
Net income (loss) attributable to common stockholders — basic and diluted | $ (122,233) | $ (20,196) | $ 6,745 | ||||||||||||
Denominator: | |||||||||||||||
Weighted average shares of common stock — basic and diluted | 120,775,717 | 108,162,741 | 108,162,741 | ||||||||||||
Net income (loss) per share attributable to common stockholders — basic and diluted | $ (1.01) | $ (0.19) | $ 0.06 |
Earnings Per Share - Summary _2
Earnings Per Share - Summary of Antidilutive Securities Excluded From Computation of Earnings Per Share (Detail) - shares | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restricted Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,064,897 | ||
Stock Options [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 268,177 | ||
Restricted Stock Units [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 19,724 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Effective income tax reconcilation percentage | 6.30% | 16.40% | ||
Effective income tax rate, Percent | 21.00% | 21.00% | 21.00% | 35.00% |
Deferred Tax Assets, Valuation Allowance | $ 5,530 | $ 5,250 | $ 5,230 | |
Unrecognized Tax Benefits | 996 | 961 | 924 | |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 1,000 | 1,000 | ||
Income tax benefit | (8,278) | (3,955) | $ (23,112) | |
Effective income tax rate reconciliation, deduction, Amount | 1,000 | |||
Maximum [Member] | ||||
Effective income tax rate, Percent | 24.50% | |||
Deferred Income Tax Charge [Member] | ||||
Unrecognized Tax Benefits | 500 | 500 | ||
Domestic Tax Authority [Member] | ||||
Operating Loss Carryforwards, subject to expiration | $ 85,800 | |||
Operating Loss Carryforwards, Expiration Year | 2031 | |||
Operating Loss Carryforwards, not subject to expiration | $ 27,900 | |||
Income tax benefit | $ 22,500 | |||
State and Local Jurisdiction [Member] | ||||
Operating Loss Carryforwards, subject to expiration | $ 94,300 | |||
Operating Loss Carryforwards, Expiration Year | 2038 | |||
Deferred Tax Assets, Valuation Allowance | $ 5,500 | $ 5,300 |
Income Taxes - Schedule of comp
Income Taxes - Schedule of components of the income tax expense (benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |||
Federal | $ (55) | $ (62) | $ (41) |
State and local | 1,887 | 1,428 | 1,054 |
Total current | 1,832 | 1,366 | 1,013 |
Federal | (7,408) | (3,128) | (25,534) |
State and local | (2,702) | (2,193) | 1,409 |
Total deferred | (10,110) | (5,321) | (24,125) |
Income tax benefit | $ (8,278) | $ (3,955) | $ (23,112) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit / federal statutory rate | $ (27,407) | $ (5,072) | $ (3,437) | |
State and local taxes — net of federal benefit | (960) | (667) | 275 | |
Increase in valuation allowance | 280 | 20 | 140 | |
Increase in valuation allowance — impact of U.S. tax reform | 902 | |||
Stock-based compensation | 19,344 | 685 | 558 | |
State tax law change | 1,453 | |||
Deferred impact of U.S. tax reform rate change | (23,409) | |||
Non-deductible transaction costs | 411 | 407 | ||
Executive compensation | 235 | |||
Federal research and development credit | (465) | |||
Meals and entertainment | 262 | 350 | 206 | |
Other | 22 | 322 | 200 | |
Income tax benefit | $ (8,278) | $ (3,955) | $ (23,112) | |
Income tax benefit / federal statutory rate | 21.00% | 21.00% | 21.00% | 35.00% |
State and local taxes - net of federal benefit | 0.60% | 2.80% | (1.70%) | |
Increase in valuation allowance | (0.20%) | (0.10%) | (0.90%) | |
Increase in valuation allowance - impact of U.S. tax reform | (5.50%) | |||
Stock-based compensation | (14.80%) | (2.80%) | (3.40%) | |
State tax law change | (8.90%) | |||
Deferred impact of U.S. tax reform rate change | 143.00% | |||
Non-deductible transaction costs | (0.30%) | (1.70%) | ||
Executive compensation | (0.20%) | |||
Federal research and development credit | 0.40% | |||
Meals and entertainment | (0.20%) | (1.50%) | (1.30%) | |
Other | (1.30%) | (1.20%) | ||
Income tax benefit / effective tax rate | 6.30% | 16.40% | 141.20% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 |
Income Tax Disclosure [Abstract] | |||
Federal net operating loss carryforwards | $ 23,389 | $ 19,706 | |
State loss carryforwards and other benefits | 9,797 | 8,866 | |
Inventory reserves | 5,181 | 7,867 | |
Warranty reserves | 3,016 | 2,819 | |
Legal reserves | 365 | 451 | |
Accrued expenses | 7,876 | 7,407 | |
Disallowed interest carryforward | 12,019 | 9,222 | |
Stock-based compensation | 6,325 | ||
Federal research and development credit | 465 | ||
Valuation allowance | (5,530) | (5,250) | $ (5,230) |
Total deferred tax Assets | 62,903 | 51,088 | |
Intangible assets — net | 45,509 | 51,823 | |
Property, plant and equipment | 37,617 | 32,747 | |
Indemnification receivable related to warranty reserves | 1,037 | 521 | |
Total deferred tax liabilities | 84,163 | 85,091 | |
Net deferred tax liability | $ 21,260 | $ 34,003 |
Income Taxes - Summary of Valua
Income Taxes - Summary of Valuation Allowance (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance | $ 5,250 | $ 5,230 |
Expense | 280 | 20 |
Ending balance | $ 5,530 | $ 5,250 |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits Roll Forward (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance | $ 961 | $ 924 |
Unrecognized tax benefits related to prior years | 35 | 37 |
Ending balance | $ 996 | $ 961 |
Commitments And Contingencies -
Commitments And Contingencies - Additional Information (Detail) - USD ($) $ in Millions | Jun. 18, 2018 | Mar. 31, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2020 |
Loss Contingencies [Line Items] | ||||||
Finance lease right of use asset | $ 9.2 | $ 9.2 | $ 9.2 | |||
Finance lease incremental borrowing rate | 8.40% | |||||
Lease rental expenses | 1.6 | 1.3 | $ 1.4 | |||
Future minimum sublease income receivable | 0.9 | |||||
Litigation settlement amount | $ 7.5 | |||||
Purchase Obligation | 1.5 | 0.7 | $ 3.1 | |||
Insurance Claims [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation claims received | 7.7 | |||||
Litigation settlment income | 7.7 | |||||
Workmen Compensation [Member] | Minimum [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate Of Possible Loss | 0.4 | |||||
Workmen Compensation [Member] | Maximum [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate Of Possible Loss | $ 0.5 | |||||
Versatex [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency Accrual | $ 5.8 | $ 5.8 | ||||
Leasehold Improvements [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Lease improvements expenditure incurred | $ 3.4 |
Commitments And Contingencies_2
Commitments And Contingencies - Summary of Future Minimum Annual Payments Under Noncancelable Leases (Detail) $ in Thousands | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 1,635 |
2022 | 1,522 |
2023 | 1,118 |
2024 | 735 |
2025 | 598 |
Thereafter | 2,191 |
Total Payments | 7,799 |
Less amount representing interest | (3,843) |
Present value of minimum capital lease payments | 3,956 |
Finance Lease, Liability, to be Paid, Year One | 776 |
Finance Lease, Liability, to be Paid, Year Two | 787 |
Finance Lease, Liability, to be Paid, Year Three | 806 |
Finance Lease, Liability, to be Paid, Year Four | 826 |
Finance Lease, Liability, to be Paid, Year Five | 846 |
Thereafter | 3,823 |
Total Payments | 7,864 |
2021 | 2,646 |
2022 | 2,555 |
2023 | 2,355 |
2024 | 1,974 |
2025 | 1,569 |
Thereafter | 3,397 |
Total Payments | $ 14,496 |
Quarterly Financial Informati_3
Quarterly Financial Information (Unaudited) - Summary of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||||||
Net sales | $ 263,920 | $ 223,711 | $ 245,585 | $ 166,043 | $ 215,534 | $ 221,307 | $ 219,931 | $ 137,431 | $ 191,137 | $ 184,406 | $ 200,863 | $ 105,399 | $ 899,259 | $ 794,203 | $ 681,805 |
Gross profit | 90,264 | 75,123 | 79,372 | 51,291 | 69,476 | 75,410 | 67,405 | 40,906 | 56,003 | 51,361 | 65,211 | 29,461 | 296,050 | 253,197 | 202,036 |
Net income (loss) | $ (64,359) | $ (52,116) | $ 4,088 | $ (9,846) | $ (920) | $ 1,511 | $ (1,516) | $ (19,271) | $ (4,564) | $ (10,228) | $ 9,072 | $ 12,465 | $ (122,233) | $ (20,196) | $ 6,745 |
Net income (loss) per common share: | |||||||||||||||
Basic and Diluted | $ (0.43) | $ (0.44) | $ 0.04 | $ (0.09) | $ (0.01) | $ 0.01 | $ (0.01) | $ (0.18) | $ (0.04) | $ (0.09) | $ 0.08 | $ 0.12 | $ (1.01) | $ (0.19) | $ 0.06 |
Condensed Financial Informati_3
Condensed Financial Information of Registrant (Parent Company Only) - Schedule of Balance Sheets (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 |
Non-current assets: | ||||
Total assets | $ 1,931,856 | $ 1,788,263 | $ 1,779,180 | |
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||
Total liabilities | 627,968 | 1,298,240 | ||
Stockholders' equity: | ||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized and no shares issued and outstanding at September 30, 2020 and September 30, 2019, respectively | 0 | |||
Additional paid-in capital | 1,587,208 | 652,493 | ||
Accumulated deficit | (283,475) | (162,578) | ||
Total stockholders' equity | 1,303,888 | 490,023 | 505,553 | $ 456,373 |
Total liabilities and stockholders' equity | 1,931,856 | 1,788,263 | ||
Parent Company [Member] | ||||
Non-current assets: | ||||
Investments in subsidiaries | 1,303,888 | 490,023 | ||
Total non-current assets | 1,303,888 | 490,023 | ||
Total assets | 1,303,888 | 490,023 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||
Total liabilities | ||||
Stockholders' equity: | ||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized and no shares issued and outstanding at September 30, 2020 and September 30, 2019, respectively | ||||
Additional paid-in capital | 1,587,208 | 652,493 | ||
Accumulated deficit | (283,475) | (162,578) | ||
Total stockholders' equity | 1,303,888 | 490,023 | ||
Total liabilities and stockholders' equity | 1,303,888 | 490,023 | ||
Common Class A [Member] | ||||
Stockholders' equity: | ||||
Common stock value | 155 | 75 | ||
Total stockholders' equity | 155 | 75 | 75 | 75 |
Common Class A [Member] | Parent Company [Member] | ||||
Stockholders' equity: | ||||
Common stock value | 155 | 75 | ||
Common Class B [Member] | ||||
Stockholders' equity: | ||||
Common stock value | 0 | 33 | ||
Total stockholders' equity | 33 | $ 33 | $ 33 | |
Common Class B [Member] | Parent Company [Member] | ||||
Stockholders' equity: | ||||
Common stock value | $ 33 |
Condensed Financial Informati_4
Condensed Financial Information of Registrant (Parent Company Only) - Schedule of Balance Sheets (Parenthetical) (Detail) - $ / shares | Sep. 30, 2020 | Sep. 30, 2019 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock par or stated value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 154,637,240 | 75,093,778 |
Common stock, shares outstanding | 154,637,240 | 75,093,778 |
Common Class B [Member] | ||
Common stock par or stated value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 100 | 33,068,963 |
Common stock, shares outstanding | 100 | 33,068,963 |
Parent Company [Member] | ||
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Parent Company [Member] | Common Class A [Member] | ||
Common stock par or stated value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 154,637,240 | 75,093,778 |
Common stock, shares outstanding | 154,637,240 | 75,093,778 |
Parent Company [Member] | Common Class B [Member] | ||
Common stock par or stated value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 100 | 33,068,963 |
Common stock, shares outstanding | 100 | 33,068,963 |
Condensed Financial Informati_5
Condensed Financial Information of Registrant (Parent Company Only) - Schedule of Statements of Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Statement of Income Captions [Line Items] | |||
Comprehensive income (loss) | $ (122,233) | $ (20,196) | $ 6,745 |
Parent Company [Member] | |||
Condensed Statement of Income Captions [Line Items] | |||
Net income (loss) of subsidiaries | (122,233) | (20,196) | 6,745 |
Net income (loss) of subsidiaries | (122,233) | (20,196) | 6,745 |
Comprehensive income (loss) | $ (122,233) | $ (20,196) | $ 6,745 |
Condensed Financial Informati_6
Condensed Financial Information of Registrant (Parent Company Only) - Additional Information (Detail) | Sep. 30, 2020 |
Parent Company [Member] | |
Condensed Statement of Income Captions [Line Items] | |
Minimum threshold percentage of restricted net assets | 25.00% |