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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 26, 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 of (Commission File Number) (IRS Employer
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
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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 26, 2005, Trex Company, Inc. issued a press release
announcing financial results for the quarter ended September 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: October 26, 2005 /s/ Anthony J. Cavanna
-----------------------------------
Anthony J. Cavanna
Chairman and Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Exhibit Description
- -------------- -------------------
99.1 Press release dated October 26, 2005
Exhibit 99.1
Trex Company Announces Third Quarter 2005 Results
WINCHESTER, Va.--(BUSINESS WIRE)--Oct. 26, 2005--Trex Company, Inc. (NYSE:
TWP), manufacturer of Trex(R) decking and railing, today announced its financial
results for the third quarter ended September 30, 2005.
Net sales for the third quarter of 2005 totaled $77.4 million, compared to
$64.4 million for the third quarter of 2004. The Company reported net income for
the 2005 third quarter of $5.2 million, or $0.35 per diluted share, compared to
net income of $7.1 million, or $0.48 per diluted share, for the 2004 third
quarter.
For the nine months ended September 30, 2005, Trex Company reported net
sales of $250.1 million, compared to net sales of $224.0 million for the nine
months ended September 30, 2004. Net income for the 2005 nine-month period
totaled $12.6 million, or $0.84 per diluted share, compared to $27.5 million, or
$1.86 per diluted share, for the 2004 nine-month period.
Chairman and Chief Executive Officer Anthony J. Cavanna said, "Sales in the
third quarter of 2005 rose 20% over the same period in 2004, principally driven
by strong acceptance of our premium decking products, Trex Accents(R) and Trex
Brasilia(TM). This strong sales performance also indicates that the high trade
inventory levels we experienced earlier this year are behind us. Our earnings,
however, continue to be negatively affected by increases in the price of plastic
raw materials and unabsorbed fixed manufacturing costs resulting from the
temporary suspension of operations of some of the production lines at our
Winchester and Fernley plants.
"As we enter what has historically been the slow season for our Company, we
have idled additional capacity at our manufacturing sites in order to manage
finished goods inventory levels going into 2006. We are also aggressively
pursuing initiatives to improve the Company's execution in all areas so that we
can take maximum advantage of Trex's leading brand, our superior products and
the many exciting growth opportunities in our market in 2006 and beyond. We are
working to expand our retail distribution and to strengthen our pull-through
demand programs. We are also evaluating levels of SG&A spending for 2006 and
taking steps to improve manufacturing performance at each of our three plants."
The Company updated its July 27, 2005 guidance for fiscal 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 projects that net
sales for the full year 2005 will continue to be in the range of $270 million to
$280 million. However, due to continued increases in the cost of raw materials,
lower plant utilization and higher SG&A, the Company now expects earnings per
diluted share in the range of $0.18 to $0.23.
Trex will hold a conference call to discuss its third quarter 2005 results
on Thursday, October 27 at 11:00 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.
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), and Trex Brasilia(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 filings
on Form 10-Q for the first and second quarters 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 Nine Months Ended
September 30, September 30,
2004 2005 2004 2005
----------- ----------- ----------- -----------
Net sales $64,350 $77,371 $224,014 $250,140
Cost of sales 39,667 53,035 132,366 169,595
----------- ----------- ----------- -----------
Gross profit 24,683 24,336 91,648 80,545
Selling, general and
administrative
expenses 12,947 17,093 45,614 61,534
----------- ----------- ----------- -----------
Income from operations 11,736 7,243 46,034 19,011
Interest expense, net 640 187 2,549 1,663
----------- ----------- ----------- -----------
Income before income
taxes 11,096 7,056 43,485 17,348
Income taxes 3,995 1,891 15,979 4,793
----------- ----------- ----------- -----------
Net income $7,101 $5,165 $27,506 $12,555
=========== =========== =========== ===========
Diluted earnings per
common share $0.48 $0.35 $1.86 $0.84
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding 14,856,343 14,847,519 14,791,463 14,881,423
=========== =========== =========== ===========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
31-Dec-04 30-Sep-05
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $23,925 $14,705
Restricted cash 20,959 -
Accounts receivable 21,964 13,648
Inventories 44,357 51,957
Prepaid expenses and other assets 4,162 3,268
Income taxes receivable 497 5,279
Deferred income taxes 2,975 1,629
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Total current assets 118,839 90,486
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Property, plant and equipment, net 158,389 193,268
Goodwill 6,837 6,837
Debt-related derivatives - 165
Other assets 2,986 3,038
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Total assets $287,051 $293,794
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $31,496 $32,254
Current portion long-term debt 8,932 9,007
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Total current liabilities 40,428 41,261
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Deferred income taxes 15,808 16,635
Debt-related derivatives 1,736 1,224
Long-term debt, net of current portion 69,565 60,778
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Total liabilities 127,537 119,898
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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 14,886,998
shares issued and outstanding at December 31,
2004 and September 30, 2005 148 149
Additional paid-in capital 60,182 61,858
Deferred compensation (1,259) (1,536)
Accumulated other comprehensive loss (1,098) (671)
Retained earnings 101,541 114,096
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Total stockholders' equity 159,514 173,896
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Total liabilities and stockholders'
equity $287,051 $293,794
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TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2004 2005
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OPERATING ACTIVITIES
Net income $27,506 $12,555
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,209 11,280
Other non-cash charges 3,120 4,419
Changes in operating assets and liabilities 27,688 (2,414)
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Net cash provided by operating activities $68,523 $25,840
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INVESTING ACTIVITIES ($16,666) ($26,679)
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FINANCING ACTIVITIES $1,849 ($8,381)
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Net increase (decrease) in cash and cash
equivalents $53,706 $(9,220)
Cash and cash equivalents at beginning of period $8,151 $23,925
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Cash and cash equivalents at end of period $61,857 $14,705
========= =========
CONTACT: Trex Company, Inc.
Paul Fletcher, 540-542-6300
or
Lippert/Heilshorn & Assoc.
Harriet Fried, 212-838-3777