Trex Company, Inc. (NYSE: TWP), manufacturer and distributor of
Trex® decking, railing, fencing and trim, today announced financial
results for the second quarter ended June 30, 2009.
Net sales for the second quarter of 2009 totaled $91.5 million
compared to net sales of $95.0 million for the 2008 second quarter.
The company reported net income of $7.4 million, or $0.49 per
diluted share, for the 2009 second quarter compared to net income
of $6.5 million, or $0.43 per diluted share, for the 2008 second
quarter. The company’s adoption of FASB Staff Position No. APB 14-1
related to embedded interest on convertible debt resulted in $1.6
million and $1.4 million of non-cash interest expense in the second
quarter of 2009 and 2008, respectively, reducing earnings per share
by $0.11 and $0.09, respectively.
For the six months ended June 30, 2009, Trex Company reported
net sales of $159.1 million compared to net sales of $214.5 million
for the prior-year period. Net income for the 2009 six-month period
totaled $4.3 million, or $0.28 per diluted share, compared to $13.9
million, or $0.93 per diluted share, for the 2008 six-month period.
These results included $3.3 million and $2.7 million of non-cash
interest expense in the first six months of 2009 and 2008,
respectively, which reduced earnings per share by $0.22 and $0.18,
respectively.
President and Chief Executive Officer Ronald W. Kaplan
commented, “The fundamental change in purchasing patterns we
predicted for 2009 continued in the second quarter. Because of the
tough economy, customers have been holding inventories low and
ordering primarily based on pull-through demand from the consumer.
This trend greatly reduced the importance of this year’s early-buy
season, shifting a larger proportion of our sales activity to the
second and third quarters. We’re pleased that in these challenging
times so many consumers have been selecting Trex® as the preferred
choice to help maximize their outdoor living experience.
“Our unwavering focus on enhancing Trex’s operations continued
to produce results. We continue to expand the use of Lean Six Sigma
manufacturing techniques throughout every phase of Trex’s
manufacturing process in both our Winchester and Fernley plants.
The resulting improvements enabled us to raise gross margin by 220
basis points to 31.2% quarter over quarter despite lower levels of
capacity utilization. Our operating cash flow for the second
quarter was strong, and we continued to execute our cash management
strategy extremely well. We believe we’ve weathered the economic
downturn better than many of our competitors. Our cash balance at
quarter-end increased to $46.4 million and we haven’t borrowed
against our revolver for more than a year.
“During the quarter, we completed the launch of our expanded
Trex Artisan Series Railing®, which offers consumers unparalleled
versatility in their deck and railing design. Our quest to add
dealers to Trex’s distribution chain and gain market share
continues to meet with receptivity. All in all, we’re proud of the
progress we’ve been making and firmly believe that our expanding
array of innovative products, enhanced operations, growing market
share and financial strength position Trex for long-term
success.”
Mr. Kaplan concluded, “Our guidance for the third quarter
reflects the shift in purchasing patterns I described earlier.
Based on our current order flow, we expect net sales to approximate
$70 million for the third quarter of 2009.”
Second-Quarter-2009 Conference Call and Webcast
Information
Trex will hold a conference call to discuss its
second-quarter-2009 results on Wednesday, July 29, 2009 at 10:00
a.m. ET. To participate in the live call by telephone, please dial
706-634-1218 and reference conference ID #18436576. A live webcast
of the conference call will also be available to all investors in
the Investor Relations section of the Trex Company website at
www.trex.com. The call will
also be simulcast at www.streetevents.com.
For those who cannot listen to the live broadcast, the webcast
will be available on Trex’s website for 30 days. A telephone replay
of the call will also be available for seven days, beginning at
approximately 1:00 p.m. ET on July 29. To listen to the telephone
replay, dial 706-645-9291 and enter conference ID #18436576.
About Trex Company
Trex Company is the nation’s largest manufacturer of composite
decking, railing and fencing, with more than 15 years of product
experience. Built on “green” principles and values, Trex makes its
products from a unique formulation of reclaimed wood and waste
plastic, combined through a proprietary process. Trex decking,
railing and fencing offer significant design flexibility with fewer
ongoing maintenance requirements than wood, as well as a truly
environmentally responsible choice. In addition, Trex distributes
ultra-low maintenance PVC decking under the trademark Trex Escapes®
and PVC trim under the trademark TrexTrim™. For more information,
visit the Company’s website, www.trex.com. Trex®, Trex Artisan Series
Railing®, Trex Escapes® and TrexTrim™ are trademarks of Trex
Company, Inc., Winchester, Va.
The statements in this press release regarding the Company's
expected future performance and condition 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 obtain raw materials at
acceptable prices; the Company's ability to maintain product
quality and product performance at an acceptable cost; the level of
expenses associated with product replacement and consumer relations
expenses related to product quality; 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 12,
2009 and its subsequent report on Form 10-Q filed on May 8, 2009
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 June 30, Six Months Ended June 30,
2008
2009
2008
2009
(Restated) (Restated) Net sales $ 94,998 $ 91,455 $ 214,527
$ 159,105 Cost of sales 67,380 62,893
154,633 113,790 Gross profit 27,618 28,562
59,894 45,315 Selling, general and administrative expenses
17,831 17,423 38,139 33,973
Income from operations 9,787 11,139 21,755 11,342
Interest expense, net 3,252 3,643 7,599
7,082 Income (loss) before income taxes 6,535 7,496
14,156 4,260 Provision (benefit) for income taxes 51
118 271 (2 ) Net income (loss) $ 6,484
$ 7,378 $ 13,885 $ 4,262 Diluted earnings (loss) per
common share $ 0.43 $ 0.49 $ 0.93 $ 0.28
Diluted weighted average common shares outstanding
15,044,943 15,107,510 15,001,972 15,094,572
TREX COMPANY, INC. Condensed Consolidated
Balance Sheets (In thousands, except share data)
31-Dec-08
30-Jun-09
(Restated)
(Unaudited)
ASSETS Current assets: Cash and cash equivalents $ 23,189 $
46,367 Accounts receivable, net 13,555 37,802 Inventories 69,397
40,078 Prepaid expenses and other assets 5,518 3,957 Income taxes
receivable 2,554 201 Deferred income taxes 2,141
2,141 Total current assets 116,354
130,546 Property, plant and equipment, net 176,336
168,712 Goodwill 6,837 6,837 Other assets 7,557
6,788 Total assets $ 307,084 $ 312,883
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable and accrued expenses $ 37,666 $
39,990 Accrued warranty 12,310 13,779 Current portion long-term
debt 1,293 1,348 Total current
liabilities 51,269 55,117 Deferred
income taxes 3,531 3,531 Accrued taxes 2,640 2,519 Non-current
accrued warranty 9,546 3,716 Debt-related derivatives 2,069 1,610
Long-term debt, net of current portion 100,201
102,791 Total liabilities 169,256
169,284 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;
15,310,343 and 15,357,479 shares issued and outstanding at December
31, 2008 and June 30, 2009 153 154 Additional paid-in capital
92,825 94,052 Accumulated other comprehensive income (loss) (1,092
) (811 ) Retained earnings 45,942 50,204
Total stockholders’ equity 137,828
143,599 Total liabilities and stockholders’ equity $ 307,084
$ 312,883
TREX COMPANY, INC. Condensed
Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Six Months Ended June 30,
2008
2009
(Restated) OPERATING ACTIVITIES Net income $ 13,885 $ 4,262
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 15,959 15,492
Other non-cash charges 1,064 1,647 Changes in operating assets and
liabilities (7,016 ) 6,910 Net cash
provided by operating activities $ 23,892 $ 28,311
INVESTING ACTIVITIES $ (5,552 ) $ (4,067 ) FINANCING
ACTIVITIES $ (731 ) $ (1,066 ) Net increase in cash and cash
equivalents $ 17,609 $ 23,178 Cash and cash equivalents at
beginning of period $ 66 $ 23,189 Cash and
cash equivalents at end of period $ 17,675 $ 46,367
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