Press Release
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Trex Company Reports Solid Revenue Growth in First Quarter
Revenues for the quarter were a record $52.0 million, an increase of 23% over the $42.2 million reported in the first quarter of 2001. Income from operations was even with the prior year's quarter at $12.8 million. Net income for the quarter was $6.4 million versus $7.7 million in 2001. On a fully diluted per share basis, net income for the quarter was $0.45 per share versus $0.54 per share in 2001.
Trex Company President Robert Matheny commented, "We have made substantial progress in our objective to reduce inventory levels as a precursor to increased production later in 2002. Our improving sales allowed us to reduce finished-goods inventory levels by more than 50% during the past three months. Our distributors indicate that field inventories are also at moderate levels. As a result, we are optimistic that we will need to increase manufacturing utilization rates to satisfy increasing sales requirements as the year progresses."
High finished goods inventory levels led to the temporary shutdown of production lines in the second half of 2001. Since then, production has been approximately 40% of total capacity, resulting in unabsorbed fixed manufacturing costs. Thus, in spite of the revenue increase, earnings are below last year's levels. As capacity utilization increases, profit margins are expected to improve.
The strong sales supported by inventory reduction have generated significant cash flow. This free cash flow allowed the Trex Company to reduce debt by 25.2% from $86.1 million to $64.4 million during the last quarter. Further debt reduction is expected because near term expenditures will be confined to cost reduction projects, maintenance of business projects, a new information technology system and completion of the Winchester, Virginia plastics recycling plant.
Operating highlights for the quarter included the following.
-- The company has introduced a number of product extensions,
including deck railing components and landscape edging
products made of Trex Wood-Polymer(R) lumber.
-- Trex Company has been selected for a number of new showcase
projects, including a dune over-walk project in Virginia
Beach, Virginia, a marina at Lake Pueblo Reservoir State Park
in Colorado, walkways and cabana areas at Larchmont Shore Club
in New York and walkways at several theme parks in The
Wisconsin Dells.
-- The TrexPro(TM) Network of qualified deck builders has
continued to grow rapidly, with over 1100 builders now listed.
-- The ranks of homebuilders using our products continue to grow
as well, with 270 builders utilizing our model home program.
The recent addition of Trex to the Homesphere Network should
drive increased builder usage as well.
"Overall, we are pleased with the progress being made to restore revenue growth
and our historical profit margins," concluded Matheny. "We are optimistic that
these improving trends will continue."
About Trex CompanyTrex 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 90 wholesale distribution locations, which in turn sell Trex decking to approximately 2,900 independent contractor-oriented retail lumberyards across the United States.
For a Trex decking and railing dealer near you, call 1-800-BUY-TREX (289-8739) or for dealers and product details, visit www.trex.com.
Trex(R), Trex Easy Care Decking(R)and Trex Wood-Polymer(R)are trademarks of Trex Company, Inc., Winchester, VA.
Note: The Company has scheduled an analyst conference call for 11:00 a.m. EDT on April 19. 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 1:00 p.m. EDT on April 19 until 1:00 p.m. EDT on April 26. To listen to the telephone replay, dial 800-633-8284 (858-812-6440 outside the U.S.) and enter reservation number 20491226.
The statements in this press release regarding the Company's expected sales performance and operating results, 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, 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 21, 2002 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 undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
TREX COMPANY, INC.
Consolidated Statements of Operations
(In thousands, except share and per share data)
Quarter Ended
March 31,
2002 2001
(unaudited) (unaudited)
Net sales................................... $ 51,996 42,196
Cost of sales............................... 32,034 22,978
------ ------
Gross profit................................ 19,962 19,218
Selling, general and administrative expenses 7,136 6,403
Income from operations...................... 12,826 12,815
Interest expense, net....................... (2,470) (465)
Income before taxes......................... 10,356 12,350
Income taxes................................ 3,936 4,695
Net income.................................. $ 6,420 $ 7,655
========= =========
Diluted earnings per common share........... $ 0.45 $ 0.54
========= =========
Weighted average diluted shares outstanding. 14,373,248 14,172,064
========== ==========
TREX COMPANY, INC.
Consolidated Balance Sheets
(In thousands, except share data)
December 31, March 31,
2001 2002
--------------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . $ -- $ --
Trade accounts receivable . . . . . . . 2,507 11,278
Inventories . . . . . . . . . . . . . . 33,168 14,257
Prepaid expenses and other assets . . . 1,306 3,167
Income tax receivable. . . . . . . . . . 1,137 --
Deferred income taxes . . . . . . . . . 1,946 1,946
Total current assets . . . . . . . . . . 40,064 30,648
Property, plant and equipment, net . . . . . 137,223 135,786
Intangible assets, net . . . . . . . . . . 6,837 6,837
Other . . . . . . . . . . . . . . . . . . . 513 438
Total assets . . . . . . . . . . . $ 184,637 $ 173,709
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable . . . . . . . . . $ 9,495 $ 8,730
Accrued expenses . . . . . . . . . . . 630 1,534
Income taxes payable . . . . . . . . . . -- 2,433
Other current liabilities . . . . . . . 964 981
Current portion of long-term debt . . . 25,759 56,783
------ ------
Total current liabilities . . . . . 36,848 70,461
Deferred income taxes . . . . . . . . . . . 7,800 8,249
Long-term debt . . . . . . . . . . . . . . . 58,004 6,354
Total liabilities . . . . . . . . . . . 102,652 85,064
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; 14,155,083
and 14,277,912 shares 142 143
issued and outstanding . . . . . . . . . .
Additional capital . . . . . . . . . . . 46,079 48,970
Retained earnings . . . . . . . . . . . 36,620 43,038
Deferred compensation. . . . . . . . . . -- (2,827)
Other comprehensive loss . . . . . . . . (856) (679)
Total stockholders' equity . . . . 81,985 88,645
Total liabilities and stockholders' equity $ 184,637 $ 173,709
CONTACT: Trex Company
Robert G. Matheny, 540/542-6300
or
Lippert/Heilshorn & Associates
John Nesbett / William Walkowiak, CFA, 212/838-3777
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