Trex Company Reports Second Quarter 2023 Results
- Trex Company, Inc. achieved strong second quarter 2023 results with net sales of $357 million and a gross margin of 43.9%.
- The company's margin expansion was driven by production optimization and cost-saving programs.
- Trex raised its full-year EBITDA margin guidance to 28% to 29%.
- The company expects third quarter 2023 revenues of $280 million to $290 million and full-year 2023 revenue guidance of $1.04 billion to $1.06 billion.
- None.
- Stronger-Than-Expected Sales Performance Demonstrates Resilient Consumer Demand
- Production Optimization and Cost-Out Programs Driving Substantial Margin Expansion
-
Raising Full-Year EBITDA Margin Guidance to
28% to29% Reflecting First Half Performance and Improved Visibility -
Guiding to Third Quarter 2023 Revenues of
to$280 million ; Initiating Full Year 2023 Revenue Guidance of$290 million to$1.04 billion $1.06 billion
Second Quarter 2023 Highlights
-
Net sales of
$357 million -
Second quarter gross margin of
43.9% -
Net income of
and diluted earnings per share of$77 million $0.71 -
EBITDA of
and EBITDA margin of$117 million 32.8%
CEO Comments
“This was an excellent quarter for the Trex Company, reflecting resilient consumer demand that resulted in mid-single digit growth in channel sell through. Sales were
“With production optimizations and successful implementations of cost-out projects, we delivered an industry-leading gross margin of
“In the second quarter, our commitment to innovation was demonstrated again with the launch of the Trex Select® T-Rail system featuring the beauty and convenience of Trex’s composite and aluminum railing and a T-shaped design that enables quick, easy assembly. With this introduction, Trex brings to market a value priced composite railing that not only rounds out our portfolio to be more comprehensive, but also allows us – and our channel partners – to compete more aggressively at the entry level. Trex Select T-Rail is designed to compete favorably with PVC vinyl railing, thereby expanding the addressable audience for Trex railing and, when coupled with existing Trex high-performance, low-maintenance composite and aluminum railings, supports our overall strategy to offer products at all price points across our decking systems.
“Meanwhile, progress continued on the modular construction of our
Second Quarter 2023 Results
Second quarter 2023 consolidated net sales were
Consolidated gross profit as a percentage of net sales, gross margin, was
Selling, general and administrative expenses were
Net income for the 2023 second quarter was
Year-to-Date Results
Year-to-date consolidated net sales were
Selling, general and administrative expenses were
Net income year-to-date was
Recent Developments and Recognitions
- Introduced Trex Select® T-Rail, a new style-centric, entry level composite railing system.
- 16th consecutive year that Trex has earned top honors in the Composite Decking and Deck Railing categories in the Builder Magazine’s 2023 Brand Use Study.
- Trex Transcend® Lineage™ named "Sustainable Product of the Year" by Green Builder Media.
- Trex Signature® Decking was fully commercialized in limited markets on the east and west coast.
Summary and Outlook
“We are pleased with our first half performance, which we believe demonstrates the strength of our team at Trex, the resilience of the outdoor living category, the appeal of our brand and product portfolio to a broad consumer base, and our industry-leading manufacturing proficiency.
“Based on first half results and our improving visibility, we now are positioned to provide guidance for full year 2023 revenues. We expect revenues to range from
“Additionally, we are pleased to raise our guidance for full year EBITDA margin to a range of
“Demonstrating our confidence in the long-term outlook for the Trex Company, we repurchased 264,896 Trex shares in the second quarter for
Second Quarter 2023 Conference Call and Webcast Information
Trex will hold a conference call to discuss its second quarter 2023 results on Monday, July 31, 2023 at 5:00 p.m. ET. To participate on the day of the call, dial 1-844-792-3734, or internationally 1-412-317-5126, approximately ten minutes before the call and tell the operator you wish to join the Trex Company Conference Call.
A live webcast of the conference call will be available in the Investor Relations section of the Trex Company website at 2Q23 Earnings Webcast. For those who cannot listen to the live broadcast, an audio replay of the conference call will be available on the Trex website for 30 days.
Use of Non-GAAP Measures
The Company reports its financial results in accordance with accounting principles generally accepted in
Reconciliation of net income (GAAP) to EBITDA (non-GAAP) is as follows:
Three Months Ended |
Six Months Ended |
|||||||||||
Trex Company, Inc. | June 30, |
June 30, |
||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||
($ in thousands) | ||||||||||||
Net Income | $ |
77,036 |
|
$ |
88,916 |
|
$ |
118,167 |
|
$ |
160,127 |
|
Interest expense (income), net |
|
1,305 |
|
|
(116 |
) |
|
3,289 |
|
|
(104 |
) |
Income tax expense |
|
26,426 |
|
|
29,009 |
|
|
40,258 |
|
|
52,737 |
|
Depreciation and amortization |
|
12,283 |
|
|
11,331 |
|
|
24,198 |
|
|
21,805 |
|
EBITDA | $ |
117,050 |
|
$ |
129,140 |
|
$ |
185,912 |
|
$ |
234,565 |
|
Net income as a percentage of net sales |
|
21.6 |
% |
|
23.0 |
% |
|
19.9 |
% |
|
22.1 |
% |
EBITDA as a percentage of net sales (EBITDA margin) |
|
32.8 |
% |
|
33.4 |
% |
|
31.2 |
% |
|
32.3 |
% |
About Trex Company
For more than 30 years, Trex Company [NYSE: TREX] has invented, reinvented and defined the composite decking category. Today, the Company is the world’s #1 brand of sustainably made, wood-alternative decking and deck railing – all proudly manufactured in the
*2023 DISCLAIMER: Trex received the highest numerical score in the proprietary Lifestory Research 2023 America’s Most Trusted® Outdoor Decking study. Study results are based on experiences and perceptions of people surveyed. Your experiences may vary. Visit www.lifestoryresearch.com.
Forward-Looking Statements
The statements in this press release regarding the Company’s expected future performance and condition constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to risks and uncertainties that could cause the Company’s actual operating results to differ materially. Such risks and uncertainties include, but are not limited to: the extent of market acceptance of the Company’s current and newly developed products; the costs associated with the development and launch of new products and the market acceptance of such new products; the sensitivity of the Company’s business to general economic conditions; the impact of seasonal and weather-related demand fluctuations on inventory levels in the distribution channel and sales of the Company’s products; the availability and cost of third-party transportation services for the Company’s products; the Company’s ability to obtain raw materials at acceptable prices; increasing inflation in the macro-economic environment; the Company’s ability to maintain product quality and product performance at an acceptable cost; the level of expenses associated with product replacement and consumer relations expenses related to product quality; the highly competitive markets in which the Company operates; cyber-attacks, security breaches or other security vulnerabilities; the impact of upcoming data privacy laws and the General Data Protection Regulation and the related actual or potential costs and consequences; material adverse impacts from global public health pandemics and global conflicts; and material adverse impacts related to labor shortages or increases in labor costs. Documents filed with the
TREX COMPANY, INC. | ||||||||||||||
Condensed Consolidated Statements of Comprehensive Income | ||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
(Unaudited) | ||||||||||||||
Net sales | $ |
356,538 |
$ |
386,249 |
|
$ |
595,256 |
$ |
725,477 |
|
||||
Cost of sales |
|
200,090 |
|
228,872 |
|
|
344,380 |
|
433,188 |
|
||||
Gross profit |
|
156,448 |
|
157,377 |
|
|
250,876 |
|
292,289 |
|
||||
Selling, general and administrative expenses |
|
51,681 |
|
39,568 |
|
|
89,162 |
|
79,529 |
|
||||
Income from operations |
|
104,767 |
|
117,809 |
|
|
161,714 |
|
212,760 |
|
||||
Interest expense (income), net |
|
1,305 |
|
(116 |
) |
|
3,289 |
|
(104 |
) |
||||
Income before income taxes |
|
103,462 |
|
117,925 |
|
|
158,425 |
|
212,864 |
|
||||
Provision for income taxes |
|
26,426 |
|
29,009 |
|
|
40,258 |
|
52,737 |
|
||||
Net income | $ |
77,036 |
$ |
88,916 |
|
$ |
118,167 |
$ |
160,127 |
|
||||
Basic earnings per common share | $ |
0.71 |
$ |
0.79 |
|
$ |
1.09 |
$ |
1.41 |
|
||||
Basic weighted average common shares outstanding |
|
108,770,204 |
|
113,099,561 |
|
|
108,771,077 |
|
113,864,741 |
|
||||
Diluted earnings per common share | $ |
0.71 |
$ |
0.79 |
|
$ |
1.09 |
$ |
1.40 |
|
||||
Diluted weighted average common shares outstanding |
|
108,871,440 |
|
113,259,514 |
|
|
108,893,848 |
|
114,052,447 |
|
||||
Comprehensive income | $ |
77,036 |
$ |
88,916 |
|
$ |
118,167 |
$ |
160,127 |
|
TREX COMPANY, INC. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands, except share data) | ||||||||
(unaudited) | ||||||||
June 30, |
|
December 31, |
||||||
2023 |
|
2022 |
||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ |
4,226 |
|
$ |
12,325 |
|
||
Accounts receivable, net |
|
266,808 |
|
|
98,057 |
|
||
Inventories |
|
74,007 |
|
|
141,355 |
|
||
Prepaid expenses and other assets |
|
24,403 |
|
|
35,105 |
|
||
Total current assets |
|
369,444 |
|
|
286,842 |
|
||
Property, plant and equipment, net |
|
645,656 |
|
|
589,892 |
|
||
Operating lease assets |
|
29,099 |
|
|
30,991 |
|
||
Goodwill and other intangible assets, net |
|
18,372 |
|
|
18,582 |
|
||
Other assets |
|
7,244 |
|
|
7,398 |
|
||
Total assets |
$ |
1,069,815 |
|
$ |
933,705 |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ |
32,228 |
|
$ |
19,935 |
|
||
Accrued expenses and other liabilities |
|
79,803 |
|
|
44,064 |
|
||
Accrued warranty |
|
4,766 |
|
|
4,600 |
|
||
Line of credit |
|
206,000 |
|
|
222,000 |
|
||
Total current liabilities |
|
322,797 |
|
|
290,599 |
|
||
Deferred income taxes |
|
68,224 |
|
|
68,224 |
|
||
Operating lease liabilities |
|
21,916 |
|
|
23,974 |
|
||
Non-current accrued warranty |
|
21,793 |
|
|
20,999 |
|
||
Other long-term liabilities |
|
11,560 |
|
|
11,560 |
|
||
Total liabilities |
|
446,290 |
|
|
415,356 |
|
||
Preferred stock, |
|
— |
|
|
— |
|
||
Common stock, |
|
1,409 |
|
|
1,408 |
|
||
Additional paid-in capital |
|
134,293 |
|
|
131,539 |
|
||
Retained earnings |
|
1,248,841 |
|
|
1,130,674 |
|
||
Treasury stock, at cost, 29,235,381 and 25,586,601 shares at June 30, 2022 and December 31, 2021, respectively |
|
(761,018 |
) |
|
(745,272 |
) |
||
Total stockholders’ equity |
|
623,525 |
|
|
518,349 |
|||
Total liabilities and stockholders’ equity | $ |
1,069,815 |
|
$ |
933,705 |
|
TREX COMPANY, INC. | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In thousands) | |||||||
Six Months Ended
|
|||||||
2023 |
|
2022 |
|||||
(unaudited) | |||||||
Operating Activities | |||||||
Net income | $ |
118,167 |
|
$ |
160,127 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization |
|
24,198 |
|
|
21,804 |
|
|
Stock-based compensation |
|
4,562 |
|
|
3,282 |
|
|
Loss (gain) on disposal of property, plant and equipment |
|
1,081 |
|
|
(43 |
) |
|
Other non-cash adjustments |
|
(388 |
) |
|
(365 |
) |
|
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
|
(168,751 |
) |
|
(26,988 |
) |
|
Inventories |
|
67,348 |
|
|
(17,119 |
) |
|
Prepaid expenses and other assets |
|
2,046 |
|
|
949 |
|
|
Accounts payable |
|
13,816 |
|
|
32,943 |
|
|
Accrued expenses and other liabilities |
|
20,686 |
|
|
13,175 |
|
|
Income taxes receivable/payable |
|
25,016 |
|
|
2,227 |
|
|
Net cash provided by operating activities |
|
107,781 |
|
|
189,992 |
|
|
Investing Activities | |||||||
Expenditures for property, plant and equipment |
|
(82,357 |
) |
|
(66,606 |
) |
|
Proceeds from sales of property, plant and equipment |
|
- |
|
|
45 |
|
|
Net cash used in investing activities |
|
(82,357 |
) |
|
(66,561 |
) |
|
Financing Activities | |||||||
Borrowings under line of credit |
|
330,000 |
|
|
- |
|
|
Principal payments under line of credit |
|
(346,000 |
) |
|
- |
|
|
Repurchases of common stock |
|
(18,192 |
) |
|
(247,921 |
) |
|
Proceeds from employee stock purchase and option plans |
|
639 |
|
|
951 |
|
|
Financing costs |
|
30 |
|
|
(866 |
) |
|
Net cash used in financing activities |
|
(33,523 |
) |
|
(247,836 |
) |
|
Net decrease in cash and cash equivalents |
|
(8,099 |
) |
|
(124,405 |
) |
|
Cash and cash equivalents at beginning of period |
|
12,325 |
|
|
141,053 |
|
|
Cash and cash equivalents at end of period | $ |
4,226 |
|
$ |
16,648 |
|
TREX COMPANY, INC. | |||||||||
Segment Data | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
Three Months Ended June 30, 2022 |
Trex Consolidated |
Trex Commercial |
Trex Residential |
||||||
Net sales | $ |
386,249 |
|
$ |
12,327 |
|
$ |
373,922 |
|
Cost of sales |
|
228,872 |
|
|
10,776 |
|
|
218,096 |
|
Gross profit |
|
157,377 |
|
|
1,551 |
|
|
155,826 |
|
Selling, general and administrative expenses |
|
39,568 |
|
|
2,243 |
|
|
37,325 |
|
Income (loss) from operations |
|
117,809 |
|
|
(692 |
) |
|
118,501 |
|
Interest income, net |
|
(116 |
) |
|
- |
|
|
(116 |
) |
Income (loss) before income taxes |
|
117,925 |
|
|
(692 |
) |
|
118,617 |
|
Provision (benefit) for income taxes |
|
29,009 |
|
|
(171 |
) |
|
29,180 |
|
Net income (loss) | $ |
88,916 |
|
$ |
(521 |
) |
$ |
89,437 |
|
EBITDA | $ |
129,140 |
|
$ |
(410 |
) |
$ |
129,550 |
|
Depreciation and amortization | $ |
11,331 |
|
$ |
282 |
|
$ |
11,049 |
|
Capital expenditures | $ |
44,318 |
|
$ |
67 |
|
$ |
44,251 |
|
Total assets | $ |
887,294 |
|
$ |
41,182 |
|
$ |
846,112 |
|
TREX COMPANY, INC. | |||||||||
Segment Data | |||||||||
(in thousands) | |||||||||
(unaudited) | |||||||||
Six Months Ended June 30, 2022 |
Trex Consolidated |
Trex Commercial |
Trex Residential |
||||||
Net sales | $ |
725,477 |
|
$ |
24,360 |
|
$ |
701,117 |
|
Cost of sales |
|
433,188 |
|
|
21,558 |
|
|
411,630 |
|
Gross profit |
|
292,289 |
|
|
2,802 |
|
|
289,487 |
|
Selling, general and administrative expenses |
|
79,529 |
|
|
4,833 |
|
|
74,696 |
|
Income (loss) from operations |
|
212,760 |
|
|
(2,031 |
) |
|
214,791 |
|
Interest (income) expense, net |
|
(104 |
) |
|
- |
|
|
(104 |
) |
Income (loss) before income taxes |
|
212,864 |
|
|
(2,031 |
) |
|
214,895 |
|
Provision (benefit) for income taxes |
|
52,737 |
|
|
(506 |
) |
|
53,243 |
|
Net income (loss) | $ |
160,127 |
|
$ |
(1,525 |
) |
$ |
161,652 |
|
EBITDA | $ |
234,565 |
|
$ |
(1,466 |
) |
$ |
236,031 |
|
Depreciation and amortization | $ |
21,805 |
|
$ |
565 |
|
$ |
21,240 |
|
Capital expenditures | $ |
66,606 |
|
$ |
72 |
|
$ |
66,534 |
|
Total assets | $ |
887,294 |
|
$ |
41,182 |
|
$ |
846,112 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230731458730/en/
Lynn Morgen/Viktoriia Nakhla, ADVISIRY Partners
212-750-5800
lynn.morgen@advisiry.com; vicky.nakhla@advisiry.com
Source: Trex Company, Inc.
FAQ
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