Press Release
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Trex Company Reports First Quarter 2016 Results
-- Net Sales Increased 9% to
-- Gross Margin was 43.8%, a 390 basis point improvement
-- Net Income up 33% to
-Trex Swept 2016
First Quarter 2016 Results
Net sales for the first quarter of 2016 were
“First quarter results represented an exceptionally strong start to 2016
thanks to several factors that came together in the period,” commented
“Revenue growth was in line with our expectations and demonstrated the
success of our strategy to build market share for Trex’s
high-performance outdoor living products. The Company’s recent market
recognitions for brand and green building, together with our new,
targeted advertising and marketing campaigns, position us to further
advance our growth initiatives. In support of our growth strategy, we
successfully launched
“Operating leverage drove significant upside in our first quarter results. The combination of lower input costs and manufacturing cost savings resulted in a substantial expansion in gross margin to 43.8% for the quarter. At the same time, we made a strategic decision to defer a portion of our marketing spend to the second quarter, which reduced SG&A as a percentage of sales to 15.7% from 17.0% in the comparable period last year,” Mr. Cline said.
Recent Recognitions
-
In
February 2016 ,Trex was named top brand in the state ofVirginia by Hardware +Building Supply Dealer . -
Also in February,
Trex was honored as the “Greenest Decking” brand in Green Builder Media’s 2016 Reader’s Choice Awards. -
In
April 2016 ,Trex took top honors in the Quality, Brand Familiarity, Brand Used Most, and Brand Used Most in the Past Two Years categories of the 2016 BUILDER Brand Use Study. This marked the 2nd year in a row thatTrex swept all four categories.
Summary and Outlook
“We have entered our selling season with expectations for revenues in
the second quarter of 2016 of approximately
“In the first quarter,
First-Quarter 2016 Conference Call and Webcast Information
A live webcast of the conference call will be available in the Investor
Relations section of the
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
About
TREX COMPANY, INC. | ||||||||
Condensed Consolidated Statements of Comprehensive Income |
||||||||
(In thousands, except share and per share data) |
||||||||
(Unaudited) |
||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2016 |
|
2015 | ||||||
Net sales | $ | 131,676 | $ | 120,800 | ||||
Cost of sales | 74,049 | 72,553 | ||||||
Gross profit | 57,627 | 48,247 | ||||||
Selling, general and administrative expenses | 20,612 | 20,593 | ||||||
Income from operations | 37,015 | 27,654 | ||||||
Interest expense, net | 572 | 137 | ||||||
Income before income taxes | 36,443 | 27,517 | ||||||
Provision for income taxes | 13,041 | 9,964 | ||||||
Net income | $ | 23,402 | $ | 17,553 | ||||
Basic earnings per common share | $ | 0.79 | $ | 0.55 | ||||
Basic weighted average common shares outstanding | 29,697,722 | 31,683,672 | ||||||
Diluted earnings per common share | $ | 0.78 | $ | 0.55 | ||||
Diluted weighted average common shares outstanding | 29,860,730 | 32,094,828 | ||||||
Comprehensive income | $ | 23,402 | $ | 17,553 |
TREX COMPANY, INC. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands, except share data) | ||||||||
March 31, | December 31, | |||||||
2016 | 2015 | |||||||
ASSETS | (Unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 3,804 | $ | 5,995 | ||||
Accounts receivable, net | 156,325 | 47,386 | ||||||
Inventories | 25,660 | 23,104 | ||||||
Prepaid expenses and other assets | 5,706 | 13,409 | ||||||
Deferred income taxes | 9,136 | 9,136 | ||||||
Total current assets | 200,631 | 99,030 | ||||||
Property, plant and equipment, net | 99,756 | 100,924 | ||||||
Goodwill and other intangibles | 10,524 | 10,526 | ||||||
Other assets | 1,784 | 1,518 | ||||||
Total assets | $ | 312,695 | $ | 211,998 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 17,067 | $ | 17,733 | ||||
Accrued expenses | 25,777 | 28,891 | ||||||
Accrued warranty | 6,825 | 6,825 | ||||||
Line of credit | 141,500 | 7,000 | ||||||
Total current liabilities | 191,169 | 60,449 | ||||||
Deferred income taxes | 4,597 | 4,597 | ||||||
Non-current accrued warranty | 25,715 | 26,698 | ||||||
Other long-term liabilities | 3,666 | 3,791 | ||||||
Total liabilities | 225,147 | 95,535 | ||||||
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; 34,824,224 and 34,819,259 shares issued and 29,330,543 and 30,904,530 shares outstanding at March 31, 2016 and December 31, 2015, respectively | 348 | 348 | ||||||
Additional paid-in capital | 117,916 | 116,947 | ||||||
Retained earnings | 142,797 | 119,395 | ||||||
Treasury stock, at cost, 5,493,681 and 3,914,729 shares at March 31, 2016 and December 31, 2015, respectively | (173,513 | ) | (120,227 | ) | ||||
Total stockholders’ equity | 87,548 | 116,463 | ||||||
Total liabilities and stockholders’ equity | $ | 312,695 | $ | 211,998 |
TREX COMPANY, INC. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Operating Activities | ||||||||
Net income | $ | 23,402 | $ | 17,553 | ||||
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
Depreciation and amortization | 3,829 | 3,636 | ||||||
Stock-based compensation | 1,276 | 1,454 | ||||||
Gain on disposal of property, plant and equipment | (104 | ) | — | |||||
Excess tax benefits from stock compensation | (363 | ) | (1,035 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (108,939 | ) | (100,602 | ) | ||||
Inventories | (2,556 | ) | 827 | |||||
Prepaid expenses and other assets | (1,577 | ) | 888 | |||||
Accounts payable | (666 | ) | (7,265 | ) | ||||
Accrued expenses and other liabilities | (11,327 | ) | (5,666 | ) | ||||
Income taxes receivable/payable | 12,542 | 9,166 | ||||||
Net cash used in operating activities | (84,483 | ) | (81,044 | ) | ||||
Investing Activities | ||||||||
Expenditures for property, plant and equipment | (2,439 | ) | (9,060 | ) | ||||
Proceeds from sales of property, plant and equipment | 4,249 | — | ||||||
Purchase of acquired company, net of cash acquired | — | (31 | ) | |||||
Net cash provided by (used in) investing activities | 1,810 | (9,091 | ) | |||||
Financing Activities | ||||||||
Borrowings under line of credit | 148,500 | 84,000 | ||||||
Principal payments under line of credit | (14,000 | ) | — | |||||
Repurchases of common stock | (53,968 | ) | (2,015 | ) | ||||
Financing costs | (485 | ) | — | |||||
Proceeds from employee stock purchase and option plans | 72 | 127 | ||||||
Excess tax benefits from stock compensation | 363 | 1,035 | ||||||
Net cash provided by financing activities | 80,482 | 83,147 | ||||||
Net decrease in cash and cash equivalents |
(2,191 | ) | (6,988 | ) | ||||
Cash and cash equivalents at beginning of period | 5,995 | 9,544 | ||||||
Cash and cash equivalents at end of period | $ | 3,804 | $ | 2,556 | ||||
Supplemental Disclosure: | ||||||||
Cash paid for interest | $ | 248 | $ | 59 | ||||
Cash paid for income taxes, net | $ | 498 | $ | 799 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160510005229/en/
Source:
Trex Company, Inc.
Bryan Fairbanks
VP & CFO
540-542-6300
or
MBS
Value Partners
Lynn Morgen/Jon Friedman
212-750-5800