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Trex Company Reports Strong Results in Second Quarter
─ Residential Revenues Grew 43% Reflecting Continued Broad-Based Demand ─
─ Additional Decking Lines to Further Boost Recently Expanded Capacity ─
─ 40% Revenue Growth at Mid-point of Guidance Expected in Third Quarter 2021 ─
Second Quarter 2021 Highlights
- Consolidated net sales increased 41% to
- Diluted earnings per share of
- EBITDA increased 36% to
“Our strong second quarter revenue growth was driven by sustained broad-based demand across all Trex Residential product lines and market share gains from wood. The completion of our
“As expected, higher raw material costs and logistic expenses pressured second quarter gross margin. Together with the start-up expenses related to our capacity expansion program, these additional costs reduced gross margin by approximately 400 basis points compared to second quarter 2020. This negative impact was partially offset by robust sales growth in the Residential segment, which resulted in EBITDA growth of 36%. The previously announced price increase that was effective
Second Quarter 2021 Results
Consolidated net sales for the 2021 second quarter were
Consolidated gross margin for the 2021 second quarter was 38.0%, after absorbing an approximately 400 basis point impact related to start-up costs and inflationary pressures on key raw materials and transportation, versus 41.9% in the 2020 second quarter. Gross margin was also impacted by labor constraints and increased depreciation related to the company’s capital expansion program at Trex Residential. Gross margin for Trex Residential and Trex Commercial were 38.7% and 21.6%, respectively, compared to 42.5% and 30.7%, respectively, in the 2020 quarter.
Selling, general and administrative expenses were
Net income for the 2021 second quarter was
Year-to-Date Performance
Net sales year-to-date were
Net income year-to-date was
ESG
In June,
- Reinforcing Trex’s commitment to environmental sustainability at the core of its products and operations, including the upcycling of more than 900 million pounds of plastic film and reclaimed wood, most of which would otherwise have ended up in landfills.
- Prioritizing employees’ health and well-being throughout the pandemic.
- Fostering a culture that upholds the values of diversity, equity and inclusion.
- Growing production capacity sustainably.
- Giving back to local communities.
Learn more in the full 2020 Trex ESG Report and by visiting ESG at Trex.
Summary and Outlook
“Our capacity expansion, which added approximately 350 jobs, was completed one month ahead of schedule and has enabled us to accommodate the continued strong broad-based demand for Trex Residential outdoor living products. Further build-out of new decking lines in
“The continued strength of the repair and remodel market together with our brand leadership and increased capacity have driven our impressive year-to-date top line growth. We are encouraged that 2021 will be another year of strong growth for Trex and enhanced value creation for our stakeholders as we execute our strategy. For the third quarter of 2021, we expect consolidated net sales to range from
Second Quarter 2021 Conference Call and Webcast Information
Trex will hold a conference call to discuss its second 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
|
Three Months ended
|
Six Months Ended
|
||||||||||
|
2021 |
2020 |
2021 |
2020 |
||||||||
Net income |
$ |
61,366 |
|
$ |
47,218 |
|
$ |
109,910 |
|
$ |
89,620 |
|
Interest expense (income), net |
|
13 |
|
(71 |
) |
|
10 |
|
(593 |
) |
||
Income tax expense |
|
20,978 |
|
|
16,249 |
|
|
36,925 |
|
|
29,504 |
|
Depreciation and amortization |
|
9,278 |
|
|
4,063 |
|
|
15,703 |
|
|
7,915 |
|
EBITDA |
$ |
91,635 |
|
$ |
67,459 |
|
$ |
162,548 |
|
$ |
126,446 |
|
Net income as a percentage of net sales |
|
19.7 |
% |
|
21.4 |
% |
|
19.7 |
% |
|
21.3 |
% |
EBITDA as a percentage of net sales (EBITDA margin) |
|
29.4 |
% |
|
30.6 |
% |
|
29.2 |
% |
|
30.0 |
% |
About
|
||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income |
||||||||||||||||
(In thousands, except share and per share data) |
||||||||||||||||
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net sales |
$ |
311,596 |
$ |
220,648 |
|
$ |
557,120 |
$ |
421,043 |
|
||||||
Cost of sales |
|
193,323 |
|
|
128,243 |
|
|
343,046 |
|
|
238,941 |
|
||||
Gross profit |
|
118,273 |
|
|
92,405 |
|
|
214,074 |
|
|
182,102 |
|
||||
Selling, general and administrative expenses |
|
35,916 |
|
|
29,009 |
|
|
67,229 |
|
|
63,571 |
|
||||
Income from operations |
|
82,357 |
|
|
63,396 |
|
|
146,845 |
|
|
118,531 |
|
||||
Interest expense (income), net |
|
13 |
|
|
(71 |
) |
|
10 |
|
|
(593 |
) |
||||
Income before income taxes |
|
82,344 |
|
|
63,467 |
|
|
146,835 |
|
|
119,124 |
|
||||
Provision for income taxes |
|
20,978 |
|
|
16,249 |
|
|
36,925 |
|
|
29,504 |
|
||||
Net income |
$ |
61,366 |
|
$ |
47,218 |
|
$ |
109,910 |
|
$ |
89,620 |
|
||||
Basic earnings per common share |
$ |
0.53 |
|
$ |
0.41 |
|
$ |
0.95 |
|
$ |
0.77 |
|
||||
Basic weighted average common shares outstanding |
|
115,362,757 |
|
|
115,733,934 |
|
|
115,512,231 |
|
|
115,996,494 |
|
||||
Diluted earnings per common share |
$ |
0.53 |
|
$ |
0.41 |
|
$ |
0.95 |
|
$ |
0.77 |
|
||||
Diluted weighted average common shares outstanding |
|
115,662,626 |
|
|
116,061,988 |
|
|
115,839,183 |
|
|
116,354,714 |
|
||||
Comprehensive income |
$ |
61,366 |
|
$ |
47,218 |
|
$ |
109,910 |
|
$ |
89,620 |
|
||||
Condensed Consolidated Balance Sheets |
||||||||
(In thousands, except share data) |
||||||||
|
|
|
||||||
2021 |
|
2020 |
||||||
ASSETS | (Unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
5,470 |
|
$ |
121,701 |
|
||
Accounts receivable, net |
|
263,863 |
|
|
106,748 |
|
||
Inventories |
|
77,232 |
|
|
68,238 |
|
||
Prepaid expenses and other assets |
|
30,386 |
|
|
25,310 |
|
||
Total current assets |
|
376,951 |
|
|
321,997 |
|
||
Property, plant and equipment, net |
|
404,990 |
|
|
336,537 |
|
||
|
73,456 |
|
|
73,665 |
|
|||
Operating lease assets |
|
37,924 |
|
|
34,382 |
|
||
Other assets |
|
5,499 |
|
|
3,911 |
|
||
Total assets |
$ |
898,820 |
|
$ |
770,492 |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable |
$ |
42,876 |
|
$ |
38,622 |
|
||
Accrued expenses and other liabilities |
|
73,780 |
|
|
62,331 |
|
||
Accrued warranty |
|
5,400 |
|
|
5,400 |
|
||
Line of credit |
|
49,500 |
|
|
- |
|
||
Total current liabilities |
|
171,556 |
|
|
106,353 |
|
||
Operating lease liabilities |
|
31,441 |
|
|
28,579 |
|
||
Non-current accrued warranty |
|
24,091 |
|
|
24,073 |
|
||
Deferred income taxes |
|
22,956 |
|
|
22,956 |
|
||
Total liabilities |
|
250,044 |
|
|
181,961 |
|
||
Preferred stock, |
|
— |
|
|
— |
|
||
Common stock, |
|
1,407 |
|
|
1,406 |
|
||
Additional paid-in capital |
|
125,764 |
|
|
126,087 |
|
||
Retained earnings |
|
847,221 |
|
|
737,311 |
|
||
|
(325,616 |
) |
|
(276,273 |
) |
|||
Total stockholders’ equity |
|
648,776 |
|
|
588,531 |
|
||
Total liabilities and stockholders’ equity |
$ |
898,820 |
|
$ |
770,492 |
|
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(In thousands) |
||||||||
Six Months Ended
|
||||||||
2021 |
|
2020 |
||||||
(Unaudited) |
||||||||
Operating Activities | ||||||||
Net income |
$ |
109,910 |
|
$ |
89,620 |
|
||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization |
|
15,702 |
|
|
7,915 |
|
||
Stock-based compensation |
|
4,308 |
|
|
4,303 |
|
||
Gain on disposal of property, plant and equipment |
|
(1,083 |
) |
|
(134 |
) |
||
Other non-cash adjustments |
|
(226 |
) |
|
(233 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable |
|
(157,117 |
) |
|
(171,220 |
) |
||
Inventories |
|
(8,994 |
) |
|
6,457 |
|
||
Prepaid expenses and other assets |
|
(6,878 |
) |
|
(2,335 |
) |
||
Accounts payable |
|
14,907 |
|
|
12,195 |
|
||
Accrued expenses and other liabilities |
|
10,763 |
|
|
(591 |
) |
||
Income taxes receivable/payable |
|
466 |
|
|
21,691 |
|
||
Net cash used in operating activities |
|
(18,242 |
) |
|
(32,332 |
) |
||
Investing Activities | ||||||||
Expenditures for property, plant and equipment |
|
(94,831 |
) |
|
(62,613 |
) |
||
Proceeds from sales of property, plant and equipment |
|
1,314 |
|
|
2,146 |
|
||
Net cash used in investing activities |
|
(93,517 |
) |
|
(60,467 |
) |
||
Financing Activities | ||||||||
Borrowings under line of credit |
|
286,000 |
|
|
173,000 |
|
||
Principal payments under line of credit |
|
(236,500 |
) |
|
(173,000 |
) |
||
Repurchases of common stock |
|
(54,832 |
) |
|
(44,124 |
) |
||
Financing Costs |
|
- |
|
|
(361 |
) |
||
Proceeds from employee stock purchase and option plans |
|
860 |
|
|
688 |
|
||
Net cash used in financing activities |
|
(4,472 |
) |
|
(43,797 |
) |
||
Net decrease in cash and cash equivalents |
|
(116,231 |
) |
|
(136,596 |
) |
||
Cash and cash equivalents at beginning of period |
|
121,701 |
|
|
148,833 |
|
||
Cash and cash equivalents at end of period |
$ |
5,470 |
|
$ |
12,237 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210802005629/en/
Senior Vice President and CFO
540-542-6300
ADVISIR
212-750-5800
Source: