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Trex Company Reports 66% Revenue Growth in Second Quarter; EPS Increases to $0.39 from $0.02
Revenue for the second quarter of 2002 increased to $45.9 million from $27.7 million in the second quarter of 2001. Current quarter revenue was slightly above the guidance provided by the Company on June 24, 2002. Income from operations in the second quarter of 2002 increased to $12.4 million from $0.9 million in the second quarter of 2001. Net income for the 2002 quarter was $5.6 million, or $0.39 per diluted share, compared to $0.3 million, or $0.02 per diluted share, for the second quarter of 2001.
President Robert Matheny said, "As we entered 2002, we identified for our shareholders a number of key objectives. Our prime goal was to reduce inventory levels as a precursor to increasing utilization of our production capacity later in the year. Our finished goods inventory stood at $4.5 million at the end of June 2002, down from $27.2 million at the end of 2001. Demand to date for Trex has been much stronger than our original estimate of 15% growth year over year. This has caused us to bring on additional manufacturing capacity sooner, resulting in higher margins.
"Another goal we laid out earlier in the year was to reduce and refinance our debt. As we recently reported, the refinancing has been successfully completed, and we can also report that our debt since December 31, 2001 has been reduced by $27.1 million during the first six months of 2002. In addition, cash on hand as of June 30, 2002 was $5.7 million, and our ratio of debt to total capitalization has been reduced from 51.6% at December 31, 2001 to 39.1% at June 30, 2002.
"And most importantly, looking ahead, we remain committed to building the Trex brand. Even during the difficult period of 2001, the importance of expanding our leadership position in non-wood decking has driven our continued emphasis on marketing and product development. Our strategy to build a superior, branded product as a replacement candidate for wood in the $2.5 billion decking market continues to be the heart of our business plan.
"The outlook on demand for Trex products during the second half of 2002 appears strong, even though we are approaching the slower periods for our seasonal business," concluded Matheny. "Thus, we are raising our full-year revenue projection to a range of $150 million to $155 million, with earnings expected in the range of $1.05 to $1.10 per share."
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: As previously announced, the Company has scheduled an analyst conference call for 11:00 a.m. EDT on July 30. 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. EDT on July 30 until 11:59 p.m. EDT on August 6. To listen to the telephone replay, dial 888-266-2081 (703-925-2533 outside the U.S.) and enter passcode 6066592.
The statements in this press release regarding the Company's expected sales performance and operating results, its projections of revenues and earnings, 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 expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
TREX COMPANY, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
-------- ------- ------- --------
Net sales $ 45,924 $ 27,727 $ 97,920 $ 69,923
Cost of sales 21,676 16,060 53,710 39,038
-------- -------- -------- --------
Gross profit 24,248 11,667 44,210 30,885
Selling, general and
administrative expenses 11,823 10,721 18,959 17,124
-------- -------- -------- --------
Income from operations 12,425 946 25,251 13,761
Interest expense, net (3,341) (483) (5,811) (948)
-------- -------- -------- --------
Income before taxes 9,084 463 19,440 12,813
Income taxes 3,454 176 7,390 4,871
-------- -------- -------- --------
Net income $ 5,630 $ 287 $ 12,050 $ 7,942
======== ======== ======== ========
Fully diluted
earnings per common share $ 0.39 $ 0.02 $ 0.84 $ 0.56
======== ======== ======== ========
Weighted average
fully diluted
shares outstanding 14,404,296 14,177,454 14,343,799 14,174,866
========== ========== ========== ==========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
Dec. 31, 2001 June 30, 2002
(unaudited)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ - $ 5,729
Trade accounts receivable 2,507 15,335
Inventories 33,168 9,574
Prepaid expenses and other assets 1,306 2,485
Income tax receivable 1,137 -
------- -------
Deferred income taxes 1,946 1,946
------- -------
Total current assets 40,064 35,069
------- -------
Property, plant and equipment, net 137,223 133,448
Intangible assets, net 6,837 6,837
Other 513 1,544
-------- --------
Total assets $184,637 $176,898
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 9,495 $ 7,670
Accrued expenses 630 3,899
Income taxes payable - 1,743
Other current liabilities 964 836
Current portion long-term debt 25,759 909
-------- --------
Total current liabilities 36,848 15,057
Deferred income taxes 7,800 8,328
Line of credit 12,153 -
Debt-related derivatives 1,381 1,749
Mortgages 15,196 17,700
Long-term debt 32,986 40,000
Debt discount (3,712) -
-------- --------
Total liabilities 102,652 82,834
-------- --------
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 14,284,823
shares issued and outstanding 142 143
Additional capital 46,079 49,020
Retained earnings 36,620 48,670
Deferred compensation - (2,685)
Other comprehensive loss (856) (1,084)
-------- --------
Total stockholders' equity 81,985 94,064
-------- --------
Total liabilities
and stockholders' equity $184,637 $176,898
======== ========
CONTACT: Trex Company, Inc., Winchester
Robert G. Matheny, 540/542-6300
or
Lippert/Heilshorn & Associates, New York
John Nesbett or William Walkowiak
212/838-3777
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