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Trex Company Announces Fourth Quarter and Year-End 2005 Results
WINCHESTER, Va.--(BUSINESS WIRE)--Feb. 16, 2006--Trex Company, Inc. (NYSE: TWP), manufacturer of Trex(R) decking and railing, today announced financial results for the fourth quarter and full year ended December 31, 2005.
Net sales for the fourth quarter of 2005 totaled $44.0 million, compared to net sales of $29.6 million for the fourth quarter of 2004, which represented a 49% increase. The Company reported a net loss for the 2005 fourth quarter of $10.1 million, or $0.68 per diluted share, compared to a net loss of $0.4 million, or $0.02 per diluted share, for the 2004 fourth quarter.
For the full 2005 year, Trex Company reported net sales of $294.1 million, compared to net sales of $253.6 million for 2004, which represented a 16% increase. Net income for 2005 was $2.5 million, or $0.17 per diluted share, compared to net income of $ 27.2 million, or $1.83 per diluted share, for 2004.
Chairman and Chief Executive Officer Anthony J. Cavanna commented, "We are pleased with Trex's strong revenue growth in the fourth quarter, which reflected low inventory levels in the channel combined with favorable weather conditions and our dealers' anticipation of a strong 2006.
"This positive top-line performance was offset by lower utilization of the company's manufacturing facilities and the resulting underabsorption of fixed plant costs. Continued increases in the cost of plastic raw materials and a series of ongoing initiatives to improve product quality and packaging also negatively affected our bottom line.
"2005 was clearly a challenging year for Trex, due in great part to the aggressive manufacturing and new product agenda we set for the company. Our plan for 2006 is to achieve better absorption of fixed overhead by bringing plant utilization up to a more normal level. We successfully opened our facility in Olive Branch, Mississippi in the second quarter of 2005, and the new facility is already producing at rates and quality levels comparable to those of our Winchester and Fernley plants. Rather than introducing any new decking products in 2006, we will focus on achieving more consistent and efficient plant production of our Trex Accents(R), Trex Brasilia(TM), and Trex Artisan Series Railing(TM) products, all of which have been enthusiastically received by the market. Although investing in our brand is still an important priority for Trex, we expect total SG&A costs to decline as a percentage of net sales in 2006."
Mr. Cavanna concluded, "As a result of the many steps we have taken to enhance product quality, improve our manufacturing operations and achieve better control of our costs, we believe Trex is well positioned to continue to lead the conversion of the market from wood to composite decking. For the first half of 2006, we expect net sales to range from $220 million to $230 million and earnings per diluted share to range from $0.57 to $0.62. This compares to net sales of $173 million and earnings per diluted share of $0.50 in the first half of 2005."
Trex will hold a conference call to discuss its fourth-quarter and year-end 2005 results on Thursday, February 16 at 10:00 a.m. ET. A live webcast of the conference call will be available to all investors at the Trex Company website at www.trex.com. The call will also be simulcast at www.streetevents.com.
About Trex Company
Trex Company is the nation's largest manufacturer of composite decking and railing, with over 13 years of product experience. Products are marketed under the brand name Trex(R). Made from a unique formulation of reclaimed wood and plastic, combined through a proprietary process, Trex decking and railing offer significant design flexibility with fewer ongoing maintenance requirements than wood. For more information, visit the Company's website, www.trex.com. Trex(R), Trex Accents(R), Trex Brasilia(TM) and Artisan Series Railing(TM) are trademarks of Trex Company, Inc., Winchester, Va.
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 16, 2005 and its subsequent filings on Form 10-Q for the first, second and third quarters of 2005 discuss 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 and per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2004 2005 2004 2005
---- ---- ---- ----
Net sales............ $ 29,614 $ 43,993 $ 253,628 $ 294,133
Cost of sales........ 18,920 44,309 151,286 213,904
----------- ----------- ----------- -----------
Gross profit (loss).. 10,694 (316) 102,342 80,229
Selling, general and
administrative
expenses............ 10,768 15,455 56,382 76,989
----------- ----------- ----------- -----------
Income (loss) from
operations.......... (74) (15,771) 45,960 3,240
Interest expense,
net................. 515 949 3,064 2,612
----------- ----------- ----------- -----------
Income (loss) before
income taxes........ (589) (16,720) 42,896 628
Provision (benefit) for
income taxes........ (238) (6,664) 15,741 (1,871)
----------- ----------- ----------- -----------
Net income (loss).... $ (351) $ (10,056) $ 27,155 $ 2,499
=========== =========== =========== ===========
Diluted earnings
(loss) per share.... $ (0.02) $ (0.68) $ 1.83 $ 0.17
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding......... 14,705,706 14,792,896 14,834,718 14,880,020
=========== =========== =========== ===========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
31-Dec-04 31-Dec-05
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents........................ $ 23,925 $ 1,931
Restricted cash.................................. 20,959 --
Accounts receivable.............................. 21,964 12,364
Inventories...................................... 44,357 56,726
Prepaid expenses and other assets................ 4,162 3,750
Income taxes receivable.......................... 497 8,297
Deferred income taxes............................ 2,975 1,711
-------- --------
Total current assets..................... 118,839 84,779
-------- --------
Property, plant and equipment, net................ 158,389 191,210
Goodwill.......................................... 6,837 6,837
Debt-related derivatives.......................... -- 292
Other assets...................................... 2,986 3,151
-------- --------
Total assets............................. $287,051 $286,269
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............ $ 31,496 $ 31,919
Line of credit................................... -- 4,070
Current portion of long-term debt................ 8,932 9,031
-------- --------
Total current liabilities................ 40,428 45,020
-------- --------
Deferred income taxes............................ 15,808 15,158
Debt-related derivatives......................... 1,736 1,053
Long-term debt, net of current portion........... 69,565 60,505
-------- --------
Total liabilities........................ 127,537 121,736
-------- --------
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; 14,843,820 and 14,890,600 shares
issued and outstanding at December 31, 2004
and 2005, respectively........................ 148 149
Additional paid-in capital....................... 60,182 61,901
Deferred compensation............................ (1,259) (1,076)
Accumulated other comprehensive loss............. (1,098) (481)
Retained earnings................................ 101,541 104,040
-------- --------
Total stockholders' equity.............. 159,514 164,533
-------- --------
Total liabilities and stockholders'
equity................................. $287,051 $286,269
======== ========
TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Twelve Months Ended
December 31,
2004 2005
---- ----
OPERATING ACTIVITIES
Net income........................................ $27,155 $2,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 13,713 16,139
Other non-cash charges............................ 3,721 2,959
Changes in operating assets and liabilities....... 699 (9,734)
--------- ---------
Net cash provided by operating activities......... $45,288 $11,863
--------- ---------
INVESTING ACTIVITIES.............................. ($56,373) ($29,425)
--------- ---------
FINANCING ACTIVITIES.............................. $26,859 ($4,432)
--------- ---------
Net increase (decrease) in cash and cash
equivalents...................................... $15,774 $(21,994)
Cash and cash equivalents at beginning of period.. $8,151 $23,925
--------- ---------
Cash and cash equivalents at end of period........ $23,925 $1,931
========= =========
CONTACT: Trex Company, Inc.
Paul Fletcher, 540-542-6300
or
Lippert/Heilshorn & Assoc.
Harriet Fried, 212-838-3777
SOURCE: Trex Company, Inc.