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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): July 27, 2005
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 File Number) (IRS Employer
of Incorporation) 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
--------------------
(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 July 27, 2005, Trex Company, Inc. issued a press release announcing
financial results for the quarter ended June 30, 2005. 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: July 27, 2005 /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
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99.1 Press release dated July 27, 2005
Exhibit 99.1
Trex Company Announces Second Quarter 2005 Results
WINCHESTER, Va.--(BUSINESS WIRE)--July 27, 2005--Trex Company,
Inc. (NYSE: TWP), manufacturer of Trex(R) decking and railing, today
announced financial results for the second quarter ended June 30,
2005.
Net sales for the 2005 second quarter totaled $82.9 million,
compared to $83.4 million for the second quarter of 2004. The Company
reported a net loss for the 2005 second quarter of $1.0 million, or
$0.07 per diluted share, compared to net income of $11.1 million, or
$0.75 per diluted share, for the 2004 second quarter.
For the six months ended June 30, 2005, Trex Company reported net
sales of $172.8 million, compared to net sales of $159.7 million for
the six months ended June 30, 2004. Net income for the 2005 six-month
period totaled $7.4 million, or $0.50 per diluted share, compared to
$20.4 million, or $1.38 per diluted share, for the 2004 six-month
period.
Chairman and Chief Executive Officer Robert Matheny said, "As we
previously announced, 2005 has been more challenging than expected due
to a variety of factors. While our second-quarter revenues exceeded
the estimates we provided in June, our sales for the period were still
negatively affected by higher-than-anticipated trade inventory levels
entering 2005 and a resulting adjustment of inventory by retailers and
distributors. Sales of Trex products reported at the retail level
exceeded our sales growth at the Company level, reflecting a draw-down
of channel inventory. Bad weather in many parts of the U.S. further
impeded the sell-through of our products by delaying the onset of this
year's decking season, while constraints in railing production
capacity restricted our ability to capitalize on the growth in demand
in this product area and also affected related decking sales.
"Although the Company's bottom-line results for the 2005 second
quarter also exceeded the earnings estimate we provided in June, our
earnings were negatively affected by a substantial increase in the
price of plastic raw materials and a less-favorable manufacturing
performance than in last year's second quarter.
"While our results in the first half of 2005 were disappointing,
we are encouraged by the positive reaction to our new decking
products, Trex Accents(R) and Trex Brasilia(TM). Both have been
well-received and are setting the standard for aesthetics in the
composite decking market. Although trade inventories are not highly
transparent, we believe the inventory adjustment is now largely behind
us and that the stronger velocity of Trex products we have been seeing
at the retail level will gradually be reflected in our Company sales.
"In addition, we are actively pursuing a number of initiatives
that we expect will further strengthen our momentum in the second half
of the year, including retail expansion in many channels and
pull-through oriented marketing programs. We are also reducing SG&A
spending and pursuing manufacturing efficiencies at each of our three
plants. However, fixed manufacturing costs will be under-absorbed in
the second half, as we slow our production rate to achieve the optimal
finished goods inventory level at year-end.
"Beyond working to maximize results in the second half of 2005, we
are vigorously pursuing initiatives to strengthen Trex Company for
2006. We intend to continue to set the standard for market-based
innovation in the category, building on our recent success with Trex
Accents, Trex Brasilia, and the new Trex Artisan Series Railing(TM).
In particular, we will continue to leverage our leading brand to
create product awareness, assurance, and interest."
The Company confirmed its most recent guidance for 2005, announced
on June 22, 2005, which called for net sales to range from $270
million to $280 million and diluted earnings per share to range from
$0.50 to $0.60.
The Company has scheduled a conference call for 10:00 a.m. ET on
July 28, 2005 to discuss its second-quarter 2005 results. A live
webcast of the conference call will be available to all investors at
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, 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 through Wednesday,
August 3, 2005. To listen to the telephone replay, dial 706-645-9291
and enter conference ID #7806740.
About Trex Company
Trex Company is the nation's largest manufacturer of composite
decking and railing, with over 13 years of product experience.
Products are marketed under the brand name Trex(R). Made from a unique
formulation of reclaimed wood and plastic, combined through a
proprietary process, Trex decking and railing offer significant design
flexibility with fewer ongoing maintenance requirements than wood. For
more information, visit the Company's website, www.trex.com. Trex(R),
Trex Accents(R), Trex Brasilia(TM) and Trex Artisan Series Railing(TM)
are trademarks of Trex Company, Inc., Winchester, Va.
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 16, 2005 and its subsequent filing on
Form 10-Q for the first quarter of 2005 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.
TREX COMPANY, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2005 2004 2005
----------- ----------- ----------- -----------
Net sales $ 83,407 $ 82,865 $ 159,664 $ 172,769
Cost of sales 46,425 59,992 92,699 116,560
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Gross profit 36,982 22,873 66,965 56,209
Selling, general
and
administrative
expenses 18,528 25,025 32,667 44,441
----------- ----------- ----------- -----------
Income (loss) from
operations 18,454 (2,152) 34,298 11,768
Interest expense,
net (935) (720) (1,909) (1,476)
----------- ----------- ----------- -----------
Income (loss)
before income
taxes 17,519 (2,872) 32,389 10,292
Income taxes 6,451 (1,858) 11,984 2,902
----------- ----------- ----------- -----------
Net income (loss) $ 11,068 $ (1,014) $ 20,405 $ 7,390
=========== =========== =========== ===========
Diluted earnings
(loss) per common
share $ 0.75 $ (0.07) $ 1.38 $ 0.50
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding 14,771,024 14,772,498 14,765,333 14,912,299
=========== =========== =========== ===========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
31-Dec-04 30-Jun-05
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ASSETS (unaudited)
Current assets:
Cash and cash equivalents $23,925 $8,814
Restricted cash 20,959 4,631
Accounts receivable 21,964 26,842
Inventories 44,357 47,861
Prepaid expenses and other assets 4,162 3,411
Income taxes receivable 497 6,542
Deferred income taxes 2,975 1,629
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Total current assets 118,839 99,730
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Property, plant and equipment, net 158,389 189,838
Goodwill 6,837 6,837
Other assets 2,986 2,809
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Total assets $287,051 $299,214
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $31,496 $43,942
Current portion long-term debt 8,932 8,993
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Total current liabilities 40,428 52,935
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Deferred income taxes 15,808 15,534
Debt-related derivatives 1,736 1,730
Long-term debt, net of current portion 69,565 61,029
----------- -----------
Total liabilities 127,537 131,228
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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; 14,843,820 and 14,881,667
shares issued and outstanding at December
31, 2004 and June 30, 2005 148 149
Additional paid-in capital 60,182 61,750
Deferred compensation (1,259) (1,751)
Accumulated other comprehensive loss (1,098) (1,093)
Retained earnings 101,541 108,931
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Total stockholders' equity 159,514 167,986
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Total liabilities and stockholders' equity $287,051 $299,214
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TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June
30,
2004 2005
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OPERATING ACTIVITIES
Net income $ 20,405 $ 7,390
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 6,576 7,406
Other non-cash charges 1,684 3,038
Changes in operating assets and liabilities 11,159 (1,230)
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Net cash provided by operating activities $ 39,824 $ 16,604
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INVESTING ACTIVITIES ($9,059) ($23,467)
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FINANCING ACTIVITIES ($28) ($8,248)
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Net increase (decrease) in cash and cash
equivalents $ 30,737 $ (15,111)
Cash and cash equivalents at beginning of period $ 8,151 $ 23,925
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Cash and cash equivalents at end of period $ 38,888 $ 8,814
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CONTACT: Trex Company, Inc.
Paul Fletcher, 540-542-6300
or
Investor Relations:
Lippert/Heilshorn & Assoc.
Harriet Fried, 212-838-3777