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Trex Company Reports First Quarter 2021 Results
─ First Quarter Residential Revenue Growth of 25% ─
─ Capacity Expansion to be Completed Ahead of Schedule ─
─ 36% Revenue Growth Expected in 2Q 2021 at Midpoint of Guidance ─
─ Reaffirms Full Year 2021 Incremental EBITDA Margin Guidance of 35% to 40% ─
First Quarter 2021 Highlights
- Consolidated net sales increased 23% to
- Diluted earnings per share of
- EBITDA increased 20% to
-
“Sustained demand for Trex Residential products and accelerated market share gains from wood drove first quarter sales growth, laying the foundation for another year of strong double-digit revenue growth in 2021. At the same time, capacity expansion at our new state-of-the-art manufacturing facility in
First Quarter 2021 Results
Consolidated net sales for the 2021 first quarter were
Gross margin for the quarter was 39% after absorbing the impact of start-up costs and increased depreciation related to the company’s capital expansion program, as well as inflationary pressures and reduced overhead absorption due to a fire at the
Selling, general and administrative expenses were
Net income for the 2021 first quarter was
The company repurchased 504,275 shares of its outstanding common stock for
Recent Developments and Recognitions
-
Trex Company was named to Forbes’ 2021 List of America’s Best Mid-Size Companies, ranking #12 overall on this year’s list of 100 companies. - For the 14th consecutive year, Trex topped Builder magazine’s annual Brand Use Study for “brand familiarity”, “brand used the most” and “brand used in the past two years” across both the composite/PVC decking and deck railings categories.
-
For the 11th consecutive year, Trex has been named the “greenest” decking in the industry by the readers of
Green Builder magazine and received the highest score for decking in the Green Builder Media Brand Index. - Green Builder also named the company’s Signature® Railing as one of its “Hot 50 Products” for 2021, demonstrating that Trex’s leadership extends beyond its world-famous decking.
- Trex introduced NexTrex Packaging Label initiative, which allows for packaging to be branded with an official certification that it has been tested, verified, and certified as acceptable for recycling into high-performance Trex decking.
Summary and Outlook
“The dedication and collaboration of the Trex organization and our extended family of retailers, dealers, contractors and distributors has been the driving force in enabling us to report 25% higher residential sales while undertaking a transformational capacity expansion program and managing through the pandemic. We appreciate their efforts and the industry recognitions we regularly receive that honor Trex products for their performance, appeal and sustainability.
“As the recognized leader in product performance, aesthetics, quality and the use of 95% recycled content, Trex experienced robust demand, achieving broad-based growth across all of our residential product lines. In April, traffic to our Trex.com and Decks.com websites reached the same high levels that we usually see in June and July, our seasonally strongest months of the year, underscoring our brand leadership in the outdoor living category and the accelerated pace at which we are taking share from the traditional wood market.
“For the second quarter of 2021, we expect consolidated net sales to range from
First Quarter 2021 Conference Call and Webcast Information
Trex will hold a conference call to discuss its first quarter 2021 results and other corporate matters on
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, but are not limited to: the extent of market acceptance of the Company’s current and newly developed 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 seasonal and weather-related demand fluctuations on inventory levels in the distribution channel and sales of the Company’s products; the availability and cost of third-party transportation services for 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; the highly competitive markets in which the Company operates; cyber-attacks, security breaches or other security vulnerabilities; the impact of upcoming data privacy laws and the General Data Protection Regulation and the related actual or potential costs and consequences; material adverse impacts from global public health pandemics, including the strain of coronavirus known as COVID-19; and material adverse impacts related to labor shortages or increases in labor costs. Documents filed with the
Use of Non-GAAP Measures
In addition to the financial measures prepared in accordance with
Reconciliation of net income (GAAP) to EBITDA (non-GAAP) is as follows:
|
Three Months ended
|
|||||
|
2021 |
2020 |
||||
|
(000s omitted) |
|||||
Net income |
$ |
48,545 |
|
$ |
42,402 |
|
Interest income, net |
|
(3 |
) |
|
(522 |
) |
Income tax expense |
|
15,947 |
|
|
13,255 |
|
Depreciation and amortization |
|
6,423 |
|
|
3,851 |
|
EBITDA |
$ |
70,912 |
|
$ |
58,986 |
|
|
|
|
||||
Net income as a percentage of net sales |
|
19.8 |
% |
|
21.2 |
% |
EBITDA as a percentage of net sales (EBITDA margin) |
|
28.9 |
% |
|
29.4 |
% |
About
Condensed Consolidated Statements of Comprehensive Income | ||||||||||
(In thousands, except share and per share data) | ||||||||||
Three Months Ended |
||||||||||
2021 |
2020 |
|||||||||
(Unaudited) | ||||||||||
Net sales |
$ |
245,524 |
|
$ |
200,395 |
|
||||
Cost of sales |
|
149,723 |
|
|
110,699 |
|
||||
Gross profit |
|
95,801 |
|
|
89,696 |
|
||||
Selling, general and administrative expenses |
|
31,312 |
|
|
34,561 |
|
||||
Income from operations |
|
64,489 |
|
|
55,135 |
|
||||
Interest income, net |
|
(3 |
) |
|
(522 |
) |
||||
Income before income taxes |
|
64,492 |
|
|
55,657 |
|
||||
Provision for income taxes |
|
15,947 |
|
|
13,255 |
|
||||
Net income |
$ |
48,545 |
|
$ |
42,402 |
|
||||
Basic earnings per common share |
$ |
0.42 |
|
$ |
0.37 |
|
||||
Basic weighted average common shares outstanding |
|
115,663,366 |
|
|
116,259,058 |
|
||||
Diluted earnings per common share |
$ |
0.42 |
|
$ |
0.36 |
|
||||
Diluted weighted average common shares outstanding |
|
116,017,400 |
|
|
116,647,442 |
|
||||
Comprehensive income |
$ |
48,545 |
|
$ |
42,402 |
|
Condensed Consolidated Balance Sheets | |||||||||
(In thousands, except share data) | |||||||||
2021 | 2020 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents |
$ |
8,221 |
|
$ |
121,701 |
|
|||
Accounts receivable, net |
|
309,527 |
|
|
106,748 |
|
|||
Inventories |
|
75,012 |
|
|
68,238 |
|
|||
Prepaid expenses and other assets |
|
17,322 |
|
|
25,310 |
|
|||
Total current assets |
|
410,082 |
|
|
321,997 |
|
|||
Property, plant and equipment, net |
|
378,167 |
|
|
336,537 |
|
|||
|
73,560 |
|
|
73,665 |
|
||||
Operating lease assets |
|
33,672 |
|
|
34,382 |
|
|||
Other assets |
|
4,809 |
|
|
3,911 |
|
|||
Total assets |
$ |
900,290 |
|
$ |
770,492 |
|
|||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable |
$ |
39,167 |
|
$ |
38,622 |
|
|||
Accrued expenses and other liabilities |
|
55,058 |
|
|
62,331 |
|
|||
Accrued warranty |
|
5,400 |
|
|
5,400 |
|
|||
Line of credit |
|
136,000 |
|
|
- |
|
|||
Total current liabilities |
|
235,625 |
|
|
106,353 |
|
|||
Operating lease liabilities |
|
27,420 |
|
|
28,579 |
|
|||
Non-current accrued warranty |
|
24,145 |
|
|
24,073 |
|
|||
Deferred income taxes |
|
22,956 |
|
|
22,956 |
|
|||
Total liabilities |
|
310,146 |
|
|
181,961 |
|
|||
Preferred stock, |
|
— |
|
|
— |
|
|||
Common stock, |
|
1,406 |
|
|
1,406 |
|
|||
Additional paid-in capital |
|
124,678 |
|
|
126,087 |
|
|||
Retained earnings |
|
785,856 |
|
|
737,311 |
|
|||
|
(321,796 |
) |
|
(276,273 |
) |
||||
Total stockholders’ equity |
|
590,144 |
|
|
588,531 |
|
|||
Total liabilities and stockholders’ equity |
$ |
900,290 |
|
$ |
770,492 |
|
Condensed Consolidated Statements of Cash Flows | |||||||
(In thousands) | |||||||
Three Months Ended |
|||||||
2021 |
2020 |
||||||
Operating Activities | |||||||
Net income |
$ |
48,545 |
|
$ |
42,402 |
|
|
Adjustments to reconcile net income to net cash | |||||||
used in operating activities: | |||||||
Depreciation and amortization |
|
6,423 |
|
|
3,851 |
|
|
Stock-based compensation |
|
2,176 |
|
|
2,775 |
|
|
Gain on disposal of property, plant and equipment |
|
(98 |
) |
|
(123 |
) |
|
Other non-cash adjustments |
|
77 |
|
|
32 |
|
|
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
|
(202,781 |
) |
|
(162,780 |
) |
|
Inventories |
|
(6,774 |
) |
|
(2,610 |
) |
|
Prepaid expenses and other assets |
|
(809 |
) |
|
1,059 |
|
|
Accounts payable |
|
10,494 |
|
|
8,865 |
|
|
Accrued expenses and other liabilities |
|
(14,453 |
) |
|
(14,089 |
) |
|
Income taxes receivable/payable |
|
14,626 |
|
|
11,850 |
|
|
Net cash used in operating activities |
|
(142,574 |
) |
|
(108,768 |
) |
|
Investing Activities | |||||||
Expenditures for property, plant and equipment |
|
(58,093 |
) |
|
(22,733 |
) |
|
Proceeds from sales of property, plant and equipment |
|
293 |
|
|
2,136 |
|
|
Net cash used in investing activities |
|
(57,800 |
) |
|
(20,597 |
) |
|
Financing Activities | |||||||
Borrowings under line of credit |
|
142,000 |
|
|
36,500 |
|
|
Principal payments under line of credit |
|
(6,000 |
) |
|
(8,000 |
) |
|
Repurchases of common stock |
|
(49,566 |
) |
|
(42,929 |
) |
|
Proceeds from employee stock purchase and option plans |
|
460 |
|
|
300 |
|
|
Net cash provided by (used in) financing activities |
|
86,894 |
|
|
(14,129 |
) |
|
Net decrease in cash and cash equivalents |
|
(113,480 |
) |
|
(143,494 |
) |
|
Cash and cash equivalents at beginning of period |
|
121,701 |
|
|
148,833 |
|
|
Cash and cash equivalents at end of period |
$ |
8,221 |
|
$ |
5,339 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005771/en/
Senior Vice President and CFO
540-542-6300
ADVISIR
212-750-5800
Source: