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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 31, 2007
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 July 31, 2007, Trex Company, Inc. issued a press release announcing
financial results for the quarter ended June 30, 2007. 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.
Item 9.01 Financial Statements and Exhibits
(d) Trex Company herewith files the following exhibit:
Exhibit
Number Description of Exhibit
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99.1 Press release dated July 31, 2007
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 31, 2007 /s/ Anthony Cavanna
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Anthony Cavanna
Chairman and Chief Executive Officer
Exhibit 99.1
Trex Company Announces Second Quarter 2007 Results
WINCHESTER, Va.--(BUSINESS WIRE)--July 31, 2007--Trex Company,
Inc. (NYSE: TWP), manufacturer of Trex(R) decking, railing and
fencing, today announced financial results for the second quarter
ended June 30, 2007.
Net sales for the second quarter of 2007 totaled $118.8 million,
compared to net sales of $121.5 million for the second quarter of
2006. The Company reported net income for the 2007 second quarter of
$2.6 million, or $0.17 per diluted share, compared to net income of
$7.5 million, or $0.50 per diluted share, for the 2006 second quarter.
For the six months ended June 30, 2007, Trex Company reported net
sales of $234.7 million, compared to net sales of $226.8 million for
the six months ended June 30, 2006. Net income for the 2007 six-month
period totaled $6.3 million, or $0.42 per diluted share, compared to
$11.6 million, or $0.78 per diluted share, for the 2006 six-month
period.
Chairman and Chief Executive Officer Anthony J. Cavanna commented,
"Throughout the year, Trex's sales have held up well in a difficult
market. Our brand leadership, compelling array of products and
expanding distribution presence have all helped sustain revenue
despite persistent weakness in the homebuilding and remodeling sectors
and declining lumber prices. In the second quarter, we successfully
launched our new consumer brand building campaign, and sales of our
new decking products, Trex Brasilia(R) and Trex Contours(TM), were
strong. Demand for our railing products also increased, driven by our
innovative boxed rail and hollow post sleeve offerings. Business in
the 'big box' marketing arena grew, complementing our leading position
in the pro lumberyard channel. In total, Trex(R) products are now
stocked in more than 5,500 retail locations nationwide.
"During the quarter, we continued to focus on our strategic
productivity projects, which are designed to improve quality and lower
manufacturing cost. By the end of the quarter, equipment supporting
our major productivity projects had been installed and was operating,
and manufacturing efficiency began to improve. We continued to
experience high plant labor costs and overheard expenses as a result
of the quality initiatives, but expect to see reductions in these
costs in the second half of 2007. In addition, as previously
announced, net income was adversely affected by increasing product
replacement and consumer relations costs related to product quality.
"The completion of our $97.5 million 6% convertible senior
subordinated note offering was an important accomplishment. With the
proceeds, we retired higher-cost senior debt and paid off the balance
on our existing revolving line of credit. The refinancing decreased
our weighted average cost of debt and provided us with a more flexible
capital structure that will allow us to optimize the use of our
current revolver.
"We are pleased with our decking and railing product offerings and
will continue the national roll-out of our new fencing product, Trex
Seclusions(R), during the remainder of 2007. As the year progresses,
we expect to realize additional benefits from our new manufacturing
equipment and look forward to manufacturing improved quality product
at lower costs. We anticipate that SG&A will decrease as branding
expenditures decline as usual at the end of the decking season.
Although the direction of the homebuilding and remodeling markets
continues to be very uncertain, which could negatively impact sales as
well as plant utilization in the second half of the year, we continue
to expect net sales for 2007 to be in the range of $330 to $350
million."
Trex will hold a conference call to discuss its 2007 second
quarter results on Tuesday, July 31 at 10:00 a.m. ET. 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 websites for 30 days. A
telephone replay of the call will also be available for 7 days,
beginning at 1:00 p.m. ET on July 31. To listen to the telephone
replay, dial 706-645-9291 and enter conference ID #7316775.
About Trex Company
Trex Company is the nation's largest manufacturer of composite
decking, railing and fencing, with over 15 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, railing and fencing 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 Brasilia(R), Trex Contours(TM),
and Trex Seclusions(R) 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
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 April 2, 2007 and its subsequent filings on Form 10-Q
and Form 8-K 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 June 30, Six Months Ended June 30,
2006 2007 2006 2007
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Net sales $ 121,454 $ 118,779 $ 226,751 $ 234,692
Cost of sales 85,655 89,615 165,812 180,899
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Gross profit 35,799 29,164 60,939 53,793
Selling, general
and
administrative
expenses 23,589 22,860 41,319 39,899
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Income from
operations 12,210 6,304 19,620 13,894
Interest
expense, net 904 2,526 1,846 4,220
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Income before
income taxes 11,306 3,778 17,774 9,674
Provision for
income taxes 3,816 1,190 6,219 3,361
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Net income $ 7,490 $ 2,588 $ 11,555 $ 6,313
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Diluted earnings
per share $ 0.50 $ 0.17 $ 0.78 $ 0.42
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Diluted weighted
average shares
outstanding 14,912,805 14,916,648 14,891,577 14,917,496
============= ============= ============ ============
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
31-Dec-06 30-Jun-07
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 672 $ 5,937
Accounts receivable, net 18,140 41,979
Inventories 111,434 79,676
Prepaid expenses and other assets 3,201 3,861
Income taxes receivable 6,480 3,985
Deferred income taxes 3,180 2,839
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Total current assets 143,107 138,277
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Property, plant and equipment, net 198,525 205,361
Goodwill 6,837 6,837
Debt-related derivatives 359 461
Other assets 3,489 7,202
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Total assets $ 352,317 $ 358,138
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 60,301 $ 43,399
Line of credit 44,132 --
Current portion long-term debt 9,115 1,153
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Total current liabilities 113,548 44,552
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Deferred income taxes 17,217 18,751
Debt-related derivatives 747 545
Long-term debt, net of current portion 51,390 119,837
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Total liabilities 182,902 183,685
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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; 14,913,889 and
15,096,010 shares issued and outstanding at
December 31, 2006 and June 30, 2007 149 151
Additional paid-in capital 62,986 64,510
Accumulated other comprehensive income
(loss) (278) (343)
Retained earnings 106,558 110,135
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Total stockholders' equity 169,415 174,453
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Total liabilities and stockholders'
equity $ 352,317 $ 358,138
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TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30,
2006 2007
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OPERATING ACTIVITIES
Net income $ 11,555 $ 6,313
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,083 10,571
Other non-cash charges 1,530 1,485
Changes in operating assets and liabilities 2,247 (8,403)
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Net cash provided by operating activities $ 25,415 $ 9,966
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INVESTING ACTIVITIES $ (7,067) $ (17,412)
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FINANCING ACTIVITIES $ (12,706) $ 12,711
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Net increase in cash and cash equivalents $ 5,642 $ 5,265
Cash and cash equivalents at beginning of
period $ 1,395 $ 672
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Cash and cash equivalents at end of period $ 7,037 $ 5,937
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CONTACT: Trex Company, Inc.
Paul Fletcher, 540-542-6300
Chief Financial Officer
or
Lippert/Heilshorn & Assoc.
Harriet Fried, 212-838-3777