AZEK CEO Jesse Singh seeks major expansion of the company’s plastic recycling

Over the past ten years, AZEK has seen demand for its home building products in the United States rise by 18% each year. The recent softening of the U.S. economy is not hurting demand, Chief Executive Jesse Singh told CNBC today.

Chicago based AZEK manufactures building products for residential markets, including engineered decking, railing, floors, trim and other outdoor products. Some homeowners use the company’s manufactured products instead of wood. While typically more expensive than wood, the AZEK products are more durable and easier to maintain and clean.

Its commercial engineered products include outdoor graphic displays and signage as well as bathroom partitions, shower and dressing stalls, lockers, and other storage solutions for schools, parks, stadium arenas, industrial plants, and retail, recreational, and commercial facilities.

AZEK is a major recycler of plastic bags and Poly Vinyl Chloride materials, which account for about half of its overall raw materials. In fiscal year 2021, it used about 500 million pounds of waste and scrap materials from garbage landfills. Last year, about 80% of its capped composite decking and half its capped polymer decking were manufactured from recycled material. Also, most of AZEK’s products are recyclable at the end of their useful lives. In February, Singh, 56-years-old, announced that the company’s goal is to double the use of recycled materials to one billion pounds annually by the end of 2026.  

Founded in 1983, AZEK has around 2,000 employees. In the fiscal year that ended in September 2021, the company had an operating profit of $142 million – operating margin of 12% - on $1.2 billion in sales. It has a market value of $3 billion, down from about $8 billion a year ago.

Singh’s total compensation in fiscal year 2021 was $5.5 million and $36 million the previous year. He owns AZEK shares worth about $50 million. In 2016, when Singh joined AZEK as CEO, the company’s legacy management team was gone. Morale was low, and turnover was high. Singh focused on building a strong company culture.

Earlier, he worked for 14 years at 3M, a Minneapolis based company with a market value of $80 billion. His range of roles included Chief Commercial Officer; President of 3M’s Health Information Systems business; Vice President of the Stationery and Office supplies business; and was part of the team running 3M’s worldwide, customer-facing operations, which was comprised of 4,000 shared services, 12,000 sales and 5,000 marketing professionals. He also served as CEO of 3M’s joint venture in Japan and led 3M’s global electronics materials business.

For a year, Singh was a Vice President, Technology Investment Banking, at RBC Capital Markets in Minneapolis. His career flatlined after 9/11, 2001 when the investment bank laid off three quarters of its staff. He bounced between consulting gigs to support his young family.

Earlier, from 1995 to 2000, he was a Senior Manager. Strategic Solutions at Arthur Andersen Business Consulting. For 8 years, he was at GE including as an Industry Manager and Marketing Manager at GE Plastics. From 1987 to 1989, he was in GE’s Manufacturing Management Program.

In 1993, while at GE, Singh earned an MBA from the University of Chicago. He holds a BSEE from the Rensselaer Polytechnic Institute, New York, 1983 -1987. He graduated high school from the St. Paul’s Academy, a private school in London, United Kingdom. At a young age, Singh moved with his family from Saudi Arabia to Tennessee, U.S. He struggled to fit in as an Indian kid who didn’t have the same upbringing as his peers.

Rising prices are having an impact on AZEK’s costs. During the second quarter ended March, for instance, costs rose an additional $40 million due to the impact of incremental annualized inflation. “We continue to see consistent demand trends in the market and remain confident in our ability to continue to drive revenue and profit growth,” Singh stated in the company’s 2022 second quarter report. ”We are well positioned for growth and margin expansion entering fiscal 2023” and well into the future. Analysts forecast AZEK’s revenues will be about $1.6 billion in fiscal 2023, up nearly a third from fiscal 2021.

“Over the years, we have built a resilient business model with multiple levers to drive growth and margin enhancement,” Singh added. “We remain excited about the long-term opportunity to drive material conversion away from wood toward our types of materials.”

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