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Trex Company Announces First-Quarter 2010 Results
Retrofitting Additional Transcend Manufacturing Lines
Solid Second Quarter Sales Expected
WINCHESTER, Va., Apr 30, 2010 (BUSINESS WIRE) --Trex Company, Inc. (NYSE: TREX), manufacturer and distributor of Trex(R) decking, railing, fencing and trim, today announced financial results for the first quarter ended March 31, 2010.
Net sales for the first quarter of 2010 totaled $66.3 million compared to net sales of $67.7 million for the 2009 first quarter. Gross margin declined 60 basis points from Q1 2009 due primarily to start-up costs associated with Trex Transcend(R). The company reported a net loss of $4.6 million, or $0.31 per diluted share, for the 2010 first quarter compared to a net loss of $3.1 million, or $0.21 per diluted share, for the 2009 period.
President and CEO Ronald W. Kaplan commented, "Demand for our new ultra-low-maintenance product, Trex Transcend(R), has been exceptionally strong. Transcend's recent launch generated widespread excitement in the market place due to the offering's unique combination of aesthetics and practicality, as well as our industry-leading warranty. The complementary Transcend railing system, which lets consumers mix or match decking and railing components to create the customized look they want, is also proving very popular.
"To capitalize on the potential of this groundbreaking product offering - and build even stronger brand awareness and product demand - our marketing campaign shifted into high gear in March, with extensive ad campaigns in print publications and on television. Our 'Walk the Walk' tours, designed to educate trade professionals about our latest product innovations, continue to be an integral and very effective part of our program.
"Using our strengthened balance sheet, we tailored our 2010 'early buy' program to support our new product launch. To enable us to fill the strong demand we experienced in the first quarter, and continue to see as we move into the peak consumer season, we have retrofitted additional manufacturing lines to produce Transcend.
"We are also pleased by the continued demand for our other products. The enhancements we made to our decking platform in the fall of 2009 are opening up sales opportunities and contributing to our paramount objective of increasing market share. Our first brand extension licensing agreement, with Dri-Deck Enterprises, a proven leader in the deck water drainage systems category, is also off to a good start.
"In short, we are investing in our game-changing new product offering with the goal of further expanding our leading market share. Due to the widespread demand and expanded manufacturing capacity for Trex Transcend(R), we expect a solid second quarter with sales of $110 million. This would bring total first-half-2010 sales to $176 million, as compared to $159 million in the first six months of 2009."
First-Quarter-2010 Conference Call and Webcast Information
Trex will hold a conference call to discuss its first-quarter-2010 results on Friday, April 30, 2010 at 10:00 a.m. ET. To participate in the live call by telephone, please dial 706-634-1218 and reference conference ID #68645020. A live webcast of the conference call will also be available to all investors in the Investor Relations section of the Trex Company website at www.trex.com. The call will also be simulcast at www.streetevents.com.
For those who cannot listen to the live broadcast, the webcast will be available on Trex's website for 30 days. A telephone replay of the call will also be available for seven days, beginning at approximately 1:00 p.m. ET on April 30, 2010. To listen to the telephone replay, dial 706-645-9291 and enter conference ID #68645020.
About Trex Company
Trex Company is the nation's largest manufacturer of composite decking, railing and fencing, with nearly 20 years of product experience. Built on "green" principles and values, Trex makes its products from a unique formulation of reclaimed wood and waste plastic, combined through a proprietary process. Trex decking, railing and fencing offer significant design flexibility with fewer ongoing maintenance requirements than wood, as well as a truly environmentally responsible choice. In addition, Trex distributes ultra-low maintenance PVC decking under the trademark Trex Escapes(R) and PVC trim under the trademark TrexTrim(TM). For more information, visit the Company's website, www.trex.com. Trex(R), Trex Transcend(R), Trex Escapes(R) and TrexTrim(TM) are trademarks of Trex Company, Inc., Winchester, Va.
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 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. The Company's report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2010 discusses 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.
| TREX COMPANY, INC. | |||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||
| (In thousands, except share and per share data) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
|
2009 |
2010 |
||||||||||
| Net sales | $ | 67,650 | $ | 66,340 | |||||||
| Cost of sales | 50,896 | 50,260 | |||||||||
| Gross profit | 16,754 | 16,080 | |||||||||
| Selling, general and administrative expenses | 16,550 | 17,053 | |||||||||
| Income (loss) from operations | 204 | (973 | ) | ||||||||
| Interest expense, net | 3,440 | 3,803 | |||||||||
| Loss before income taxes | (3,236 | ) | (4,776 | ) | |||||||
| Provision (benefit) for income taxes | (120 | ) | (134 | ) | |||||||
| Net loss | $ | (3,116 | ) | $ | (4,642 | ) | |||||
| Diluted loss per common share | $ | (0.21 | ) | $ | (0.31 | ) | |||||
| Diluted weighted average common shares outstanding | 15,011,376 | 15,142,665 | |||||||||
| TREX COMPANY, INC. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands, except share data) | ||||||||
| (unaudited) | ||||||||
|
31-Dec-09 |
31-Mar-10 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 19,514 | $ | 5,615 | ||||
| Accounts receivable | 31,429 | 72,069 | ||||||
| Inventories | 45,485 | 52,031 | ||||||
| Prepaid expenses and other assets | 2,368 | 2,052 | ||||||
| Income taxes receivable | 7,775 | 163 | ||||||
| Total current assets | 106,571 | 131,930 | ||||||
| Property, plant and equipment, net | 137,027 | 134,445 | ||||||
| Goodwill | 6,837 | 6,837 | ||||||
| Other assets | 6,024 | 5,403 | ||||||
| Total assets | $ | 256,459 | $ | 278,615 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 16,514 | $ | 21,458 | ||||
| Accrued expenses | 19,126 | 13,457 | ||||||
| Accrued warranty | 9,256 | 7,347 | ||||||
| Deferred income taxes | 485 | 485 | ||||||
| Line of credit | -- | 28,000 | ||||||
| Current portion of long-term debt | 545 | 556 | ||||||
| Total current liabilities | 45,926 | 71,303 | ||||||
| Deferred income taxes | 1,925 | 1,925 | ||||||
| Accrued taxes | 3,735 | 3,456 | ||||||
| Non-current accrued warranty | 2,268 | 1,947 | ||||||
| Debt-related derivatives | 392 | 382 | ||||||
| Long-term debt, net of current portion | 76,634 | 78,438 | ||||||
| Total liabilities | 130,880 | 157,451 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding | -- | -- | ||||||
|
Common stock, $0.01 par value, 40,000,000 shares authorized;
15,397,093 and 15,454,984 shares |
154 | 154 | ||||||
| Additional paid-in capital | 96,197 | 96,413 | ||||||
| Accumulated other comprehensive loss | (265 | ) | (254 | ) | ||||
| Retained earnings | 29,493 | 24,851 | ||||||
| Total stockholders' equity | 125,579 | 121,164 | ||||||
| Total liabilities and stockholders' equity | $ | 256,459 | $ | 278,615 | ||||
| TREX COMPANY, INC. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (In thousands) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
|
2009 |
2010 |
||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net loss | $ | (3,116 | ) | $ | (4,642 | ) | |||||
| Adjustments to reconcile net income to net cash provided by | |||||||||||
| operating activities: | |||||||||||
| Depreciation and amortization | 7,734 | 7,510 | |||||||||
| Other non-cash charges, net | 928 | 1,061 | |||||||||
| Changes in operating assets and liabilities | (6,529 | ) | (42,409 | ) | |||||||
| Net cash used in operating activities | $ | (983 | ) | $ | (38,480 | ) | |||||
| INVESTING ACTIVITIES | $ | (2,007 | ) | $ | (2,659 | ) | |||||
| FINANCING ACTIVITIES | $ | (651 | ) | $ | 27,240 | ||||||
| Net decrease in cash and cash equivalents | $ | (3,641 | ) | $ | (13,899 | ) | |||||
| Cash and cash equivalents at beginning of period | $ | 23,189 | $ | 19,514 | |||||||
| Cash and cash equivalents at end of period | $ | 19,548 | $ | 5,615 | |||||||
SOURCE: Trex Company, Inc.
Trex Company, Inc.
James Cline, 540-542-6300
Chief Financial Officer
or
Lippert/Heilshorn & Associates
Harriet Fried, 212-838-3777