Trex Company Continues Record-Setting Year

  • Q2 2015 Net Sales Increase 13% to $137 Million
  • EPS Rises 26% to $0.58

WINCHESTER, Va.--()--Trex Company, Inc. (NYSE:TREX), the world’s largest manufacturer of wood-alternative decking and railing products, today announced financial results for the second quarter ended June 30, 2015.

Net sales for the second quarter of 2015 totaled $136.8 million, a 13% increase compared to net sales of $121.3 million for the 2014 period. The Company reported net income of $18.7 million, or $0.58 per diluted share, for the second quarter of 2015 compared to net income of $15.2 million, or $0.46 per diluted share, for the prior-year period, a 26% increase.

For the six months ended June 30, 2015, the Company reported net sales of $257.6 million compared to net sales of $222.0 million for the prior-year period, an increase of 16%. The Company reported net income of $36.3 million, or $1.13 per diluted share, for the first six months of 2015 compared to net income of $27.5 million, or $0.82 per diluted share, for the 2014 period, a 38% increase.

Chairman, President and CEO Ronald W. Kaplan commented, “We continued our record-setting performance in the second quarter, reaching new highs in revenue and earnings for both the quarter and the first half of the year. We are executing well on our business strategies and, in the process, advancing our industry-leading market share. This year’s branding campaign – Engineering What’s Next in Outdoor Living – has been striking a strong chord with consumers, and our growing emphasis on digital marketing is helping us reach new audiences and reinforce Trex’s image and status as the premier provider of outdoor living products. The many manufacturing efficiencies we have implemented continued to bear fruit during the second quarter, helping lift our gross margin to 38.4%, an increase of 128 basis points over the prior-year period. We incurred non-operating charges of $0.9 million during the 2015 quarter. Excluding the after-tax impact of these charges, our net income would have been $19.3 million, or $0.60 per diluted share.”

Mr. Kaplan continued, “For Q3, we expect revenue of approximately $96 million. This is comparable to last year’s third quarter. The 2014 third quarter was favorably impacted by a seasonal shift in demand resulting from harsh winter weather that delayed the start to the decking season. Our 2015 third quarter revenue guidance reflects the return to a normal seasonal demand trend. Our trailing twelve month sales guidance through the end of Q3 2015 is $428 million, or 12% above the comparable prior-year period. We are pleased with our 2015 sales, which reflect continued strong execution in our market share advancement initiatives.”

Second-Quarter 2015 Conference Call and Webcast Information

Trex will hold a conference call to discuss its second-quarter 2015 results and other corporate matters on Monday, August 3, 2015 at 10:00 a.m. ET. To participate in the live call by telephone, please dial 706-634-1218 or 888-803-7638 and reference conference ID #75134733. A live webcast of the conference call will also be available in the Investor Relations section of the Trex Company website at trex.com.

For those who cannot listen to the live broadcast, an audio replay of the earnings call will be available on the Trex website for 30 days.

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 the extent of market acceptance of the Company's 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 weather-related demand fluctuations on inventory levels in the distribution channel and sales of the Company’s products; the Company's ability to obtain raw materials at acceptable prices; 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; and the highly competitive markets in which the Company operates. Documents filed with the Securities and Exchange Commission by the Company, including in particular its latest annual report on Form 10-K and quarterly reports on Form 10-Q, discuss some of the important factors that could cause the Company's actual results to differ materially from those expressed or implied in these forward-looking statements. The Company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

About Trex Company

Trex Company is the world’s largest manufacturer of wood-alternative decking and railing, with more than 20 years of product experience. Stocked in more than 6,700 retail locations throughout the world, Trex® outdoor living products offer a wide range of style options with fewer ongoing maintenance requirements than wood, as well as a truly environmentally responsible choice. For more information, visit trex.com.

 
TREX COMPANY, INC.
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except share and per share data)
(Unaudited)
 
 
    Three Months Ended

June 30,

  Six Months Ended

June 30,

2015   2014 2015   2014
 
 
Net sales $ 136,779 $ 121,311 $ 257,579 $ 221,956
 
Cost of sales   84,255   76,285   156,808   138,764
 
Gross profit 52,524 45,026 100,771 83,192
 
Selling, general and administrative expenses   22,472   20,344   43,064   38,566
 
Income from operations 30,052 24,682 57,707 44,626
 
Interest expense, net   188   301   325   623
 
Income before income taxes 29,864 24,381 57,382 44,003
 
Provision for income taxes   11,149   9,220   21,114   16,547
 
Net income $ 18,715 $ 15,161 $ 36,268 $ 27,456
 
Basic earnings per common share $ 0.59 $ 0.46 $ 1.14 $ 0.83
 
Basic weighted average common shares outstanding   31,735,333   32,898,288   31,709,645   33,012,845
 
Diluted earnings per common share $ 0.58 $ 0.46 $ 1.13 $ 0.82
 
Diluted weighted average common shares outstanding   32,142,939   33,307,463   32,119,026   33,452,814
 
Comprehensive income $ 18,715 $ 15,161 $ 36,268 $ 27,456
 
 
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
 
    June 30,   December 31,
2015 2014
   
 
ASSETS
Current assets:
 
Cash and cash equivalents $ 4,149 $ 9,544
Accounts receivable, net 124,465 36,391
Inventories 18,626 23,747
Prepaid expenses and other assets 2,045 6,288
Deferred income taxes   9,860     9,271  
Total current assets 159,145 85,241
Property, plant and equipment, net 105,530 98,716
Goodwill and other intangibles 10,530 10,534
Other assets   1,559     1,333  
Total assets $ 276,764   $ 195,824  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
Accounts payable $ 19,946 $ 20,050
Accrued expenses 28,464 20,660
Accrued warranty 8,186 8,744
Line of credit   37,500     -  
Total current liabilities 94,096 49,454
Deferred income taxes 3,708 3,708
Non-current accrued warranty 23,185 25,097
Other long-term liabilities   4,285     4,180  
Total liabilities   125,274     82,439  
Stockholders’ equity:
 
Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding - -
Common stock, $0.01 par value, 80,000,000 shares authorized; 34,832,045 and 34,800,552 shares issued and 32,051,616 and 32,020,123 shares outstanding at June 30, 2015 and December 31, 2014, respectively 348 348
Additional paid-in capital 118,577 116,740
Retained earnings 107,565 71,297
Treasury stock, at cost, 2,780,429 shares at June 30, 2015 and December 31, 2014   (75,000 )   (75,000 )
Total stockholders’ equity   151,490     113,385  
Total liabilities and stockholders’ equity $ 276,764   $ 195,824  
 
     
TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
Six Months Ended June 30,
2015 2014
 
Operating Activities
Net income $ 36,268 $ 27,456
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 7,322 7,660
Deferred income taxes (589 ) -
Stock-based compensation 2,717 2,455
Gain on disposal of property, plant and equipment (3 ) (48 )
Excess tax benefits from stock compensation (1,771 ) (12,533 )
Other non-cash adjustments (270 ) (245 )
Changes in operating assets and liabilities:
Accounts receivable (88,074 ) (22,794 )
Inventories 5,121 1,373
Prepaid expenses and other assets 979 (206 )
Accounts payable (104 ) 4,583
Accrued expenses and other liabilities (856 ) (6,007 )
Income taxes receivable/payable   11,360     9,764  
 
Net cash (used in)/provided by operating activities   (27,900 )   11,458  
 
Investing Activities
Expenditures for property, plant and equipment (14,088 ) (4,927 )
Proceeds from sales of property, plant and equipment 3 48
Purchase of acquired company, net of cash acquired (31 ) (44 )
Notes receivable, net   -     39  
 
Net cash used in investing activities   (14,116 )   (4,884 )
 
Financing Activities
Borrowings under line of credit 118,000 120,000
Principal payments under line of credit (80,500 ) (85,000 )
Repurchases of common stock (2,847 ) (52,892 )
Proceeds from employee stock purchase and option plans 197 585
Excess tax benefits from stock compensation   1,771     12,533  
 
Net cash provided by (used in) financing activities   36,621     (4,774 )
 

Net (decrease) increase in cash and cash equivalents

(5,395 ) 1,800
Cash and cash equivalents at beginning of period   9,544     3,772  
 
Cash and cash equivalents at end of period $ 4,149   $ 5,572  
 
Supplemental Disclosure:
Cash paid for interest, net of capitalized interest $ 284 $ 384
Cash paid for income taxes, net $ 10,342 $ 6,783
 

Contacts

Trex Company
James Cline, 540-542-6300
SVP & CFO
or
LHA
Harriet Fried, 212-838-3777

Contacts

Trex Company
James Cline, 540-542-6300
SVP & CFO
or
LHA
Harriet Fried, 212-838-3777