Trex Company Reports First Quarter 2024 Results

Robust First Quarter Sales Reflect Double-Digit Sell-Through for Premium Products and Early Buy Program

Gross Margin Expansion Driven by Higher Utilization and Cost Efficiencies

Guiding to Second Quarter Revenues of $380 million to $390 million

Reaffirms Full Year 2024 Guidance

Trex Company, Inc. (Trex or Company), the world’s #1 brand of high-performance, low-maintenance and eco-friendly composite decking and railing and a leading brand in outdoor living products, announced financial results for the first quarter of 2024.

First Quarter Financial 2024 Highlights

• Net sales of $374 million
• Gross margin of 45.4%
• Net income of $89 million and diluted earnings per share of $0.82
• EBITDA of $133 million and EBITDA margin of 35.6%

CEO Comments

“This was an exceptionally strong quarter for Trex, reflecting the continued appeal of the Outdoor Living category and demonstrating strong consumer demand for Trex branded products. Sell-through for premium products was at double-digit levels in the first quarter, as our expanded portfolio drove strong end-market demand, and our channel partners took advantage of our Early Buy program, after ending the year with historically low inventories,” said Bryan Fairbanks, President and CEO.

“First quarter trends and feedback from the Trex dealer and distributor network indicate that the industry has returned to stability and normalized stocking behaviors. Channel inventories are at appropriate levels, and those inventories were built to support our partners’ ability to meet the seasonal nature of the decking and railing business.

“Profitability outpaced sales growth once again as higher utilization and our investments in production efficiencies more than offset the expected increase in SG&A costs.

“Supporting our strategy to gain share and expand addressable markets through the development of new ancillary products, we announced and began accepting orders for Trex^®-branded deck fasteners in the first quarter. This category expansion, when fully seeded in 2024, will include solutions for every composite deck fastening and finishing need, and is engineered to make installation easier and more efficient for contractors. In addition, the new Trex-branded deck fasteners will deliver a clean, cohesive esthetic to the consumer, make it easy for customers to choose Trex for their entire project and position Trex as a one-stop supplier for decking, railing, and accessories,” Mr. Fairbanks noted.

First Quarter 2024 Results

First quarter 2024 net sales were $374 million, up 57% compared to $239 million reported in the prior-year quarter. The growth in net sales was driven, in part, by the shift of our Early Buy season from the fourth quarter of 2023 that added approximately $75 million in incremental first quarter 2024 sales, the channel recalibrating inventories to prepare for the seasonal demand and increased consumer demand. Total sell-through increased at a mid-single digit rate in the first quarter.

Gross profit was $170 million and gross margin was 45.4%, up 80% and 580 basis points, respectively, compared to the $94 million and 39.6% reported in the same quarter last year. Gross margin benefitted from a combination of increased capacity utilization along with related production efficiencies, and continued implementation of our cost improvement initiatives.

Selling, general and administrative expenses were $51 million, or 13.5% of net sales, compared to $37 million, or 15.7% of net sales, in the 2023 first quarter. This increase is aligned with accelerated branding and marketing program spend for newly launched products, and new product development initiatives.

Net income for the 2024 first quarter was $89 million, or $0.82 per diluted share, compared to $41 million, or $0.38 per diluted share, reported in the 2023 first quarter. EBITDA was $133 million, compared to $69 million, and EBITDA margin was 35.6%, compared to 28.8% in the prior year period.

Recent Developments & Recognitions

• Builders FirstSource honored Trex with the Morris Tolly National Supplier of the Year award and as Supplier of the Year for the Northeast Region.
• Barron’s recognized Trex as one of the “100 Most Sustainable U.S. Companies”, a reflection on Trex’s commitment to sustainability, innovation, and corporate responsibility. Trex is the only decking brand to be included on this year’s list.
• Trex was named Green Builder Media’s Sustainable Brand Leader in the decking category. Trex is the only brand in the building industry to win top honors in its category every year since the program started in 2010.
• Trex was recognized as a winner in Good Housekeeping’s 2024 Sustainable Innovation Awards for its innovative Trex Transcend^® Lineage^™ decking.
• Trex was named “America’s Most Trusted^® Outdoor Decking*” for the fourth consecutive year in a nationwide study conducted by Lifestory Research, highlighting the connection between consumers and the Trex brand.

Summary and Outlook

“Robust first quarter performance represented an excellent start to the year and supports our expectations for substantial growth in 2024. The Outdoor Living category continues to thrive as consumers remain in their homes longer and prioritize investments that offer fuller enjoyment of their outdoor spaces, while increasing the value of their homes. As the market leader, Trex remains the primary beneficiary of the ongoing conversion from wood to composites that is estimated at an average pace of approximately 200 basis points a year,” continued Mr. Fairbanks.

“With our Early Buy program completed in the first quarter, we expect our second quarter sales to be in the $380 million to $390 million range.

“We are pleased to reaffirm our full year guidance for revenues of $1.215 billion to $1.235 billion and EBITDA margin to be in the range of 30.0% and 30.5%, representing year-on-year revenue growth of 12% at the midpoint. In 2024, we plan to continue to invest in marketing and branding programs, R&D, new product development, and cost-out programs, all areas that have yielded substantial returns for Trex,” Mr. Fairbanks concluded.

For full first quarter results click here.

About Trex Company

For more than 30 years, Trex Company [NYSE: TREX] has invented, reinvented and defined the composite decking category. Today, the Company is the world’s #1 brand of sustainably made, wood-alternative decking and deck railing – all proudly manufactured in the U.S.A. – and a leader in high performance, low-maintenance outdoor living products. Trex boasts the industry’s strongest distribution network with products sold through more than 6,700 retail outlets across six continents. Through strategic licensing agreements, the Company offers a comprehensive outdoor living portfolio that includes deck drainage, flashing tapes, LED lighting, outdoor kitchen components, pergolas, spiral stairs, fencing, lattice, cornhole and outdoor furniture – all marketed under the Trex^® brand. Based in Winchester, Va., Trex is proud to have been honored with Lowe’s 2023 Sustainability Award, recognized as one of the 100 Best ESG Companies for 2023 by Investor’s Business Daily, and ranked by Newsweek magazine as one of America’s Most Responsible Companies. For more information, visit Trex.com. You may also follow Trex on Facebook (trexcompany), Instagram (trexcompany), X (Trex_Company), LinkedIn (trex-company), TikTok (trexcompany), Pinterest (trexcompany) and Houzz (trex-company-inc), or view product and demonstration videos on the brand’s YouTube channel (TheTrexCo).

Contact:

Lynn Morgen – ADVISIRY Partners – lynn.morgen@advisiry.com – (212) 750-5800

Source: Trex Company, Inc.