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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 25, 2004
TREX COMPANY, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-14649 54-1910453
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
160 Exeter Drive
Winchester, Virginia 22603-8605
(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code: (540) 542-6300
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2004, Trex Company, Inc. issued a press release
announcing financial results for the quarter ended September 30, 2004. A copy of
such press release is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
The information contained in this report on Form 8-K shall not be
deemed to be filed for the purposes of Section 18 of the Securities Exchange Act
of 1934 or otherwise subject to the liabilities of that Section.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TREX COMPANY, INC.
Date: October 25, 2004 /s/ Robert G. Matheny
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Robert G. Matheny
Chairman and Chief Executive Officer
EXHIBIT INDEX
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Exhibit Number Exhibit Description
- -------------- -------------------
99.1 Press release dated October 25, 2004.
EXHIBIT 99.1
Trex Company 2004 Third Quarter Revenue Up 56%;
EPS Up 37%; Product Introductions Offer Exciting New Options for
Consumers to 'Create Your Space' in 2005
WINCHESTER, Va.--(BUSINESS WIRE)--Oct. 25, 2004--Trex Company,
Inc. (NYSE:TWP), manufacturer of Trex(R) decking and railing, today
announced financial results for the third quarter ended September 30,
2004.
Net sales for the 2004 third quarter totaled $64.4 million
compared to $41.2 million for the 2003 third quarter. Net income for
the 2004 third quarter totaled $7.1 million, or $0.48 per diluted
share, compared to $5.1 million, or $0.35 per diluted share, for the
2003 third quarter.
For the nine months ended September 30, 2004, Trex Company
reported net sales of $224.0 million compared to $169.1 million for
the 2003 nine month period. Net income for the nine months ended
September 30, 2004 totaled $27.5 million, or $1.86 per diluted share,
compared to $21.8 million, or $1.48 per diluted share, for the 2003
nine-month period.
Chairman and Chief Executive Officer Robert Matheny commented,
"Trex Company continued to grow its business in the third quarter as
more and more consumers learned about the many benefits of composite
decking and responded enthusiastically to our expanding array of
products and styles. Our Trex Accents(TM) line, which features wood
grain texture, has become an important part of our product line-up in
a very short period of time. Demand for our Trex Designer Series
Railing(TM), a line of high-style railing components that match our
deck boards, has also been growing steadily. We are also encouraged by
our Home Depot experience to date. Results have met our expectations
and the general market awareness the Home Depot program creates for
Trex is growing independent dealer volume as well. However, while our
sales and profits were up significantly over last year, higher
manufacturing costs, especially the price of raw materials, did
adversely affect our gross margin in the quarter.
"As we move toward 2005, I am very excited by the innovative
products Trex will bring to market in the coming year, all of which
are designed to give consumers more freedom to build the deck of their
dreams. Beginning next year, we will introduce Trex Exotics(TM) deck
boards, trim profiles and railings which will offer the distinctive
look of tropical hardwoods without the high installation cost or
maintenance requirements associated with tropical hardwoods. Through a
special process, subtle shadings and natural color variations create
the rich aesthetics of rare woods.
"In another important innovation, Trex will introduce a new
railing system that has a white textured surface with the appearance
of painted wood. Crafted from a durable composite material, it offers
an elegant look and also sets a new standard for easy installation.
"To support our business and the many new product initiatives in
2005, we will kick off a major new print and television advertising
campaign that emphasizes the limitless design flexibility of Trex(R).
Built around the theme 'Create Your Space(TM)', the campaign will
emphasize to consumers that nothing looks and lasts like Trex(R)."
Mr. Matheny concluded, "2004 to date has been another successful
year for our Company. Although the seasonality of our business results
in lower sales during the fourth quarter, we remain confident in our
previously announced guidance, which calls for net sales for 2004 to
total $240 to $245 million and earnings per diluted share to total
$1.75 to $1.80. Looking forward to 2005, we expect to grow both
revenue and earnings in the range of 20 - 25% for the year."
About Trex Company
Trex Company is the nation's largest manufacturer of non-wood
decking, which is marketed under the brand name Trex(R). Trex
Wood-Polymer(R) lumber offers an attractive appearance and the
workability of wood without the ongoing need for protective sealants
or repairs. Trex decking and railing is manufactured in a proprietary
process that combines waste wood fibers and reclaimed polyethylene and
is used primarily for residential and commercial decking. The Company
sells its products through approximately 90 wholesale distribution
locations, which in turn sell Trex decking to approximately 3,300
independent contractor-oriented retail lumberyards across the United
States and Canada. In addition, the Company's products are sold in a
limited number of Home Depot stores and are available nationally in
Home Depot stores via special order.
For more information on Trex(R) decking and railing products,
visit www.trex.com. Trex(R), Trex Wood-Polymer(R), Trex Accents(TM),
Trex Origins(TM), Trex Exotics(TM) and Trex Designer Series
Railing(TM) and Create Your Space(TM) are trademarks of Trex Company,
Inc., Winchester, Va. Home Depot(R) is a trademark of The Home Depot,
Inc., Atlanta, Georgia.
Note: The Company has scheduled a conference call to discuss
third-quarter 2004 results for 11:00 a.m. ET on Tuesday, October 26. A
live webcast of the conference call will be available to all investors
at the Trex Company web site at www.trex.com. The call will also be
simulcast at www.streetevents.com. For those who cannot listen to the
live broadcast, an audio replay of the call will be available on these
web sites for 30 days. A telephone replay of the call will also be
available from 2:00 p.m. ET on October 26 until 11:59 p.m. ET on
November 2. To listen to the telephone replay, dial 800-642-1687
(706-645-9291 outside the U.S.) and enter conference ID #1264113.
The statements in this press release regarding the Company's
expected sales performance and operating results, its projections of
net sales, net income, earnings per share and costs, its anticipated
financial condition and its business strategy 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 sensitivity of the Company's
business to general economic conditions, the Company's ability to
continue to obtain raw materials at acceptable prices, the Company's
ability to increase production levels to meet increasing demand for
its products, 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 5, 2004 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.
(Tables to follow)
TREX COMPANY, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2004 2003 2004
----------- ----------- ----------- -----------
Net sales $ 41,224 $ 64,350 $ 169,100 $ 224,014
Cost of sales 21,779 39,667 92,999 132,366
----------- ----------- ----------- -----------
Gross profit 19,445 24,683 76,101 91,648
Selling, general
and administrative
expenses 10,457 12,947 38,919 45,614
----------- ----------- ----------- -----------
Income from
operations 8,988 11,736 37,182 46,034
Interest expense,
net (858) (640) (2,655) (2,549)
----------- ----------- ----------- -----------
Income before
income taxes 8,130 11,096 34,527 43,485
Income taxes 3,008 3,995 12,775 15,979
----------- ----------- ----------- -----------
Net income $ 5,122 $ 7,101 $ 21,752 $ 27,506
=========== =========== =========== ===========
Diluted earnings
per common share $ 0.35 $ 0.48 $ 1.48 $ 1.86
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding 14,731,373 14,856,343 14,715,170 14,791,463
=========== =========== =========== ===========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
31-Dec-03 30-Sep-04
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 8,151 $ 61,857
Trade accounts receivable 5,829 12,752
Inventories 45,950 21,908
Prepaid expenses and other assets 1,899 4,297
Deferred income taxes 2,169 2,471
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Total current assets 63,998 103,285
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Property, plant and equipment, net 138,062 143,700
Goodwill, net 6,837 6,837
Other assets 1,558 2,012
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Total assets $210,455 $255,834
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable and accrued expenses $ 13,297 $ 22,971
Income taxes payable 200 3,493
Current portion long-term debt 886 8,942
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Total current liabilities 14,383 35,406
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Deferred income taxes 13,174 15,239
Debt-related derivatives 2,202 1,937
Long-term debt, net of current portion 53,490 44,778
-------- --------
Total liabilities 83,249 97,360
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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; 14,702,231 and 14,808,396
shares issued and outstanding at December 31,
2003 and September 30, 2004 147 148
Additional paid-in capital 55,889 59,056
Deferred compensation (1,829) (1,402)
Accumulated other comprehensive loss (1,387) (1,220)
Retained earnings 74,386 101,892
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Total stockholders' equity 127,206 158,474
-------- --------
Total liabilities and stockholders'
equity $210,455 $255,834
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TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2003 2004
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OPERATING ACTIVITIES
Net income $ 21,752 $ 27,506
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,206 10,209
Other non-cash charges 3,665 3,120
Changes in operating assets and liabilities (13,526) 27,688
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Net cash provided by operating activities $ 21,097 $ 68,523
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INVESTING ACTIVITIES ($13,290) ($16,666)
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FINANCING ACTIVITIES $ 5,303 $ 1,849
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Net increase in cash and cash equivalents $ 13,110 $ 53,706
Cash and cash equivalents at beginning of period $ 14,893 $ 8,151
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Cash and cash equivalents at end of period $ 28,003 $ 61,857
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CONTACT: Trex Company, Inc.
Paul Fletcher, 540-542-6300
or
Lippert/Heilshorn & Associates
Harriet Fried, 212-838-3777