View:
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------
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 22, 2004
TREX COMPANY, INC.
-------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 001-14649 54-1910453
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of 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
-------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 12. Results of Operations and Financial Condition.
On July 22, 2004, Trex Company, Inc. issued a press release announcing
financial results for the quarter ended June 30, 2004. 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: July 22, 2004 /s/ Robert G. Matheny
---------------------
Robert G. Matheny
Chairman and Chief Executive Officer
EXHIBIT INDEX
-------------
Exhibit Number Exhibit Description
- -------------- -------------------
99.1 Press release dated July 22, 2004
Exhibit 99.1
Trex Company Second-Quarter 2004 Revenue up 41%; EPS up 70%
WINCHESTER, Va.--(BUSINESS WIRE)--July 22, 2004--Trex Company, Inc. (NYSE:
TWP), manufacturer of Trex(R) decking and railing, today announced financial
results for the second quarter ended June 30, 2004.
Net sales for the second quarter of 2004 totaled $83.4 million compared to
$59.2 million for the second quarter of 2003. Net income for the 2004 second
quarter totaled $11.1 million, or $0.75 per diluted share, compared to $6.5
million, or $0.44 per diluted share, for the 2003 second quarter.
For the six months ended June 30, 2004, Trex Company reported net sales of
$159.7 million compared to $127.9 million for the same period last year. Net
income for the six months ended June 30, 2004 totaled $20.4 million, or $1.38
per diluted share, compared to $16.6 million, or $1.13 per diluted share, for
the 2003 six-month period.
Chairman and Chief Executive Officer Robert Matheny commented, "Our
business is proceeding according to plan in 2004. As we expected, our expanded
'early buy' program, completed at the end of April, was very successful in
stimulating increased sales. Equally important, demand for both our new Trex
Accents(TM) and Trex Origins(TM) product lines, as well as our new Trex Designer
Series Railing(TM), a line of high-style railing components that match our deck
boards, gained momentum throughout the 2004 second quarter. In addition,
increased manufacturing utilization, combined with the conclusion of the 'early
buy' program, resulted in improving gross margins throughout the quarter.
"During the 2004 second quarter, we continued our expanded print and
television advertising campaigns, which have been extremely effective in helping
Trex build recognition as the leading brand franchise in the decking and related
outdoor products market. In another important development, we launched our Home
Depot program, which is designed to complement our current distribution channel
and to help us reach a whole new set of consumers and contractors. In June, we
began selling Trex(R) decking products in Home Depot stores in selected markets
and making Trex(R) decking and railing products available nationally in Home
Depot stores via special order through Trex's existing distribution channels."
Mr. Matheny continued, "The conversion of the decking market to
wood-plastic composites is continuing at a very healthy pace. Over the next two
years, we plan to take a series of steps that will enable us to take full
advantage of this extraordinary market opportunity. During the second half of
2004, we will continue to expand our technical development efforts so that we
can continue expanding the decking and railing products Trex Company offers,
enabling homeowners to build the deck of their dreams. We will also enhance our
brand building activities, including, of course, our initiatives for promoting
the new Home Depot program. In addition, we recently closed on the acquisition
of 100 acres of land in Olive Branch, Miss., which will serve as our third and,
potentially, largest manufacturing location. We expect to begin production from
the facility in the summer of 2005.
"In summary, we are extremely pleased with the progress Trex Company is
making on all fronts, as well as with the way in which the market as a whole is
continuing to expand. We believe we are well on target to achieve our previously
announced guidance for 2004, which calls for net sales of $240 to $245 million
and earnings per diluted share of $1.75 to $1.80."
About Trex Company
Trex 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 approximately 90 wholesale
distribution locations, which in turn sell Trex decking to approximately 3,300
independent contractor-oriented retail lumberyards across the United States and
Canada. In addition, the Company's products are sold in a limited number of Home
Depot stores and are available nationally in Home Depot stores via special
order.
For more information on Trex(R) decking and railing products, visit
www.trex.com. Trex(R), Trex Wood-Polymer(R), Trex Accents(TM), Trex Origins(TM)
and Trex Designer Series Railing(TM) are trademarks of Trex Company, Inc.,
Winchester, Va. Home Depot(R) is a trademark of The Home Depot, Inc., Atlanta,
Georgia.
Note: The Company has scheduled a conference call to discuss second-quarter
2004 results for 11:00 a.m. ET on Friday, July 23. 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 2:00 p.m. ET on July 23 until 11:59 p.m. ET on July 30.
To listen to the telephone replay, dial 800-642-1687 (706-645-9291 outside the
U.S.) and enter conference ID #8260371.
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 5, 2004 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 expressly disclaims any obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
(Tables to follow)
Trex Company, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2004 2003 2004
---- ---- ---- ----
Net sales $59,198 $83,407 $127,876 $159,664
Cost of sales 32,300 46,425 71,220 92,699
------- ------- -------- ---------
Gross profit 26,898 36,982 56,656 66,965
Selling, general and
administrative expenses 15,903 18,528 28,462 32,667
------- ------- -------- ---------
Income from operations 10,995 18,454 28,194 34,298
Interest expense, net (884) (935) (1,797) (1,909)
------- ------- -------- ---------
Income before taxes 10,111 17,519 26,397 32,389
Income taxes 3,578 6,451 9,767 11,984
------- ------- -------- ---------
Net income $ 6,533 $11,068 $ 16,630 $ 20,405
======= ======= ======== =========
Diluted earnings per
common share $ 0.44 $ 0.75 $ 1.13 $ 1.38
======= ======= ======== =========
Diluted weighted average
shares outstanding 14,751,928 14,771,024 14,692,551 14,765,333
========== ========== ========== ==========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
31-Dec-03 30-Jun-04
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $8,151 $38,888
Trade accounts receivable 5,829 31,228
Inventories 45,950 18,730
Prepaid expenses and other assets 1,899 2,705
Deferred income taxes 2,169 2,453
-------- ---------
Total current assets 63,998 94,004
======== =========
Property, plant and equipment, net 138,062 139,735
Goodwill, net 6,837 6,837
Other assets 1,558 2,052
-------- ---------
Total assets $210,455 $242,628
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable and accrued
expenses $13,297 $19,686
Income taxes payable 200 3,955
Current portion long-term debt 886 16,918
------- --------
Total current liabilities 14,383 40,559
------- --------
Deferred income taxes 13,174 14,633
Debt-related derivatives 2,202 1,663
Long-term debt, net of current portion 53,490 37,023
------- --------
Total liabilities 83,249 93,878
======= ========
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; 14,702,231
and 14,720,796 shares issued and outstanding
at December 31, 2003 and June 30, 2004 147 147
Additional paid-in capital 55,889 56,405
Deferred compensation (1,829) (1,545)
Accumulated other comprehensive loss (1,387) (1,048)
Retained earnings 74,386 94,791
------- --------
Total stockholders' equity 127,206 148,750
------- --------
Total liabilities and stockholders'
equity $210,455 $242,628
======== =========
Trex Company, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended June 30,
2003 2004
---- ----
OPERATING ACTIVITIES
Net income $ 16,630 $ 20,405
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 6,075 6,576
Other non-cash charges 1,822 1,684
Changes in operating assets and
liabilities (15,148) 11,159
------------ -------------
Net cash provided by operating
activities $9,379 $39,824
------------ -------------
INVESTING ACTIVITIES ($7,891) ($9,059)
------------ ------------
FINANCING ACTIVITIES $5,248 ($28)
------------ ------------
Net increase in cash and cash
equivalents $ 6,736 $ 30,737
Cash and cash equivalents at
beginning of period $ 14,893 $ 8,151
------------ ------------
Cash and cash equivalents at
end of period $ 21,629 $ 38,888
============ ============
CONTACT: Trex Company, Inc.
Robert G. Matheny, 540-542-6300
or
Lippert/Heilshorn & Associates
Harriet Fried, 212-838-3777