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Trex Company Reports Third Quarter And Nine Months Results
WINCHESTER, Va.--(BUSINESS WIRE)--Nov. 2, 1999--

Revenues Increase 65%

Supplemental Pro Forma EPS $0.29 vs $0.11

Trex Company, Inc. (NYSE:TWP), manufacturer of Trex(R) Easy Care Decking(R), today announced financial results for the third quarter and nine months ended September 30, 1999.

Revenues for the 1999 third quarter increased 65% to $20.0 million compared to $12.1 million in the third quarter of 1998. Income from operations for the 1999 third quarter increased 191% to $6.7 million from $2.3 million. Net income for the third quarter increased 140% to $4.1 million from $1.7 million for the 1998 third quarter. Supplemental pro forma net income for the 1999 third quarter increased 170% to $4.0 million, or $0.29 per share, compared to supplemental pro forma net income of $1.5 million, or $0.11 per share, for the 1998 third quarter.

Revenues for the nine-month period ended September 30, 1999 increased 50% to $62.1 million compared to $41.4 million for the comparable period of 1998. Income from operations in the 1999 nine-month period increased 68% to $19.7 million from $11.7 million. Supplemental pro forma net income for the 1999 nine-month period increased 61% to $11.9 million, or $0.84 per share, compared to supplemental pro forma net income of $7.4 million, or $0.52 per share, for the 1998 nine-month period.

The Company completed a reorganization on April 7, 1999 and its initial public offering of common stock on April 13, 1999 and incurred related, one-time charges of $2.6 million for deferred taxes and $1.1 million for the early extinguishment of debt. Net income for the 1999 nine-month period including these charges was $10.7 million compared to $9.8 million for the first nine months of 1998.

Consistent with Trex's strategy to continue development of brand identity, advertising and promotional expenditures increased by approximately 58% during the 1999 third quarter compared to the third quarter of 1998. Selling, general and administrative expenses including the branding activities increased by 21% to $3.9 million compared to the 1998 third quarter. In addition to the higher advertising and promotional expenditures, the SG&A increase is attributable to expenses incurred to support the expansion of the Company's business and the establishment of a second manufacturing site in Fernley, Nevada.

Robert Matheny, President, stated, "We are very pleased with our performance for the quarter, which reflected a very high level of enthusiasm for our product. Resulting from our aggressive brand building campaign and high quality product consumers continue to embrace Trex. For example, visits to our web site increased approximately 700% and consumer inquiry calls to 800-BUY-TREX increased 135% versus all of last year. Because of this strong consumer demand we continue to provide product on allocation and currently have a list of several hundred dealers who would like to sell our product."

"At the beginning of the quarter, we began initial shipments from the first two production lines at our new facility in Fernley, Nevada. These lines were originally targeted for completion in September, but we were able to begin production 60 days early. We are currently building lines three and four and remain on track to have those running in the first quarter of next year."

Mr. Matheny continued, "We also continue to see significant endorsement for our product in the media. For example, Consumer Reports Television produced a feature on Trex that was aired in 22 major television markets in the U.S. Many of these stations customized the report featuring show case installations in their area, such as the Presidential Trail at Mount Rushmore, the Spring Lake Boardwalk in Spring Lake, N.J., the Western Beaches in Toronto and the Carson Beach Boardwalk in Boston, MA. Additionally, Michael Holigan's Your New House, the top rated show on The Discovery Channel, will be featuring Trex decking on two upcoming shows, November 8th and 9th. The segments will feature a plant tour, a deck remodeling with Trex decking replacing a pressure treated deck, and the building of a Trex stair case and railings."

Trex Company is the nation's largest manufacturer of non-wood decking alternative products, which are marketed under the brand name Trex(R). Trex is a Wood-Polymer(TM) Lumber that offers an attractive appearance and the workability of wood without the ongoing need for protective sealants or repairs. Trex 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 55 wholesale distribution locations, which in turn sell Trex to more than 2,000 independent contractor-oriented retailer lumberyards across the United States. Company sales have increased from $3.5 million in 1993 to $46.8 million in 1998.

Trex, Easy Care Decking and Wood-Polymer Lumber are either federally registered trademarks or trade dress of Trex Company, Inc., Winchester, VA. 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 Company's ability to increase its manufacturing capacity, 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 8-K filed with the Securities and Exchange Commission on May 25, 1999 discusses some of the important factors that could cause the Company's actual results to differ materially from those in these forward looking statements.

                          TREX COMPANY, INC.
            Condensed Consolidated Statements of Operations
                   (In thousands, except share data)
                              (Unaudited)

                              Three Months Ended     Nine Months Ended
                                 September 30,          September 30,

                                1999       1998        1999       1998
                                ----       ----        ----       ----

Net sales                    $19,955    $12,058     $62,095    $41,386

Cost of sales                  9,358      6,537      27,554     19,812
                               -----      -----      ------     ------

Gross profit                  10,597      5,521      34,541     21,574
Selling, general and
 administrative expenses       3,885      3,199      14,855      9,883
                               -----      -----      ------      -----

Income from operations         6,712      2,322      19,686     11,691

Interest expense, net          (181)      (598)     (1,268)    (1,854)
                               -----       ---      -------    -------

Income before taxes and
 extraordinary item            6,531      1,724      18,418      9,837
Income taxes                   2,394                  6,674
                               -----      -----      ------     ------
Income before
 extraordinary item            4,137      1,724      11,744      9,837
                               -----      -----      ------     ------
Extraordinary loss
  on the early
  extinguishment
  of debt, net of taxes           --         --     ( 1,056)        --
                               -----      -----      ------     ------

Net income                    $4,137     $1,724     $10,688    $ 9,837
                              ======     ======     =======    =======


Basic earnings per common share
      Income before
       extraordinary item      $0.29      $0.17       $0.94      $1.00
      Extraordinary item          --         --       (0.09)        --
                               -----      -----      ------     ------
      Net income               $0.29      $0.17       $0.85      $1.00
                               =====      =====       =====      =====

Weighted average
 shares outstanding       14,117,981  9,500,000  12,420,021  9,500,000
                          ==========  =========  ==========  =========

Supplemental Pro Forma Information:(a)

                             Three Months Ended     Nine Months Ended
                               September 30,          September 30,

                              1999        1998      1999        1998
                              ----        ----      ----        ----

Historical income
 from operations           $ 6,712     $ 2,322     $19,686    $11,691
Supplemental pro
 forma interest income        (181)         96        (483)       227
 (expense), net
Supplemental pro
 forma income taxes         (2,482)       (919)     (7,297)    (4,529)
                           -------        -----     -------   -------
Supplemental pro
 forma net income          $ 4,049     $ 1,499     $11,906    $ 7,389
                            =======     =======    =======    =======

Supplemental pro
 forma earnings per share    $0.29       $0.11       $0.84      $0.52
                             =====       =====       =====      =====

Supplemental pro forma
 weighted average shares
 outstanding(b)         14,117,981  14,115,450  14,116,303  14,115,450
                        ==========  ==========  ==========  ==========
*T

(a)  The supplemental pro forma information presents the Company's
     operating results as if the Company's initial public offering and
     the conversion of TREX Company, LLC from a partnership for
     federal income tax purposes to a corporation taxed in accordance
     with Subchapter C of the Internal Revenue Code (a "C
     corporation") occurred on January 1 of each period presented. The
     supplemental pro forma income taxes reflect federal and state
     income taxes at an assumed 38% combined effective tax rate. The
     supplemental pro forma information excludes (i) interest expense
     of $694,000 for the three-month period ended September 30, 1998
     and $2,081,000 and $785,000 for the nine-month periods ended
     September 30, 1998 and 1999, respectively, relating to debt
     repaid from the net proceeds of the offering, (ii) a $1.1 million
     extraordinary charge in the nine-month period ended September 30,
     1999 for the early extinguishment of debt repaid from the net
     proceeds of the offering and (iii) a net deferred tax liability
     of $2.6 million in the nine-month period ended September 30,
     1999, recorded by the Company from TREX Company, LLC's conversion
     to C corporation status on April 7, 1999.

(b)  Assumes that the 9,500,000 shares of Common Stock issued by the
     Company in exchange for junior units in TREX Company, LLC on
     April 7, 1999 and the 4,615,450 shares subsequently sold by the
     Company in its initial public offering were outstanding for each
     period presented.