Financial Data and Key Metrics Changes - In Q2 2025, net sales were $388 million, a 3% increase from $376 million in Q2 2024, achieving record quarterly sales despite adverse weather and a declining repair and remodel market [19][7] - Gross profit was $158 million with a gross margin of 40.8%, down from $168 million and 44.7% in the prior year, primarily due to one-time strategic investments and lower production levels [20][21] - Net income decreased by 13% to $76 million or $0.71 per diluted share, compared to $87 million or $0.80 per diluted share in the previous year [22][21] - Year-to-date net sales totaled $728 million, a 3% decrease from $750 million in the first half of 2024 [22] Business Line Data and Key Metrics Changes - Demand was led by strong performance in Trex composite and aluminum railing, Trex lineage decking, and the expanded mid-price select decking line [8][7] - New products launched in the last 36 months accounted for 22% of quarterly sales, significantly up from 13% in the same period last year [11] Market Data and Key Metrics Changes - Wood alternative products gained 170 basis points of market share from wood over the past 18 months, with Trex aggressively pursuing wood conversion as a growth strategy [8][7] - Strong demand was noted across various U.S. markets, particularly in the Western Region, supported by dealer conversions and contractor recruitment [9] Company Strategy and Development Direction - The company is focused on product development as a key element of its long-term strategy, with ongoing investments in branding and marketing to enhance consumer connection [12][10] - The Arkansas manufacturing facility is expected to become a model for efficient, vertically integrated production, supporting growth opportunities [13][16] - The company plans to continue rolling out heat mitigating technology with new product launches [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming the repair and remodel market despite projected declines, citing resilient consumer demand and successful new product launches [15][14] - The company anticipates strong year-over-year comparisons in the second half of 2025, driven by improved production levels and continuous improvement initiatives [23][14] Other Important Information - The company reaffirmed its full-year 2025 guidance, expecting net sales growth of 5% to 7% and adjusted EBITDA margins to exceed 31% [23] - Capital expenditures for 2025 are projected to be approximately $200 million, primarily for the Arkansas facility [23] Q&A Session Summary Question: Clarification on gross margin comments for Q3 - Management clarified that the 100 basis point improvement refers to EBITDA margin, not gross margin, and that Q3 will benefit from the reversal of level loading and absence of enhanced costs [34][35] Question: Demand picture and outperformance versus the market - Management noted strong contractor backlogs and continued outperformance against the repair and remodel market, driven by the need for deck replacements [44][43] Question: Pricing actions taken in 2025 - A mid-single digit price increase was implemented across many decking products, but not on railing products [66] Question: Impact of adverse weather on sales - Management acknowledged weaker sales due to adverse weather but did not quantify the impact [84][83] Question: Future capital allocation strategy - The company plans to prioritize organic growth opportunities, potential acquisitions, and share buybacks as free cash flow increases [72][71]

PART I FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The financial statements for H1 2025 show decreased net income and gross profit, increased assets and liabilities, and significantly higher operating cash flow [Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details comprehensive income, showing net sales, gross profit, and net income for Q2 and H1 2025 versus 2024 Financial Performance Summary (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $387,801 | $376,470 | 3.0% | $727,794 | $750,105 | (3.0)% | | **Gross Profit** | $158,132 | $168,110 | (5.9)% | $295,863 | $337,721 | (12.4)% | | **Income from Operations** | $102,398 | $116,904 | (12.4)% | $184,062 | $235,915 | (22.0)% | | **Net Income** | $75,909 | $86,998 | (12.7)% | $136,343 | $176,068 | (22.6)% | | **Diluted EPS** | $0.71 | $0.80 | (11.3)% | $1.27 | $1.62 | (21.6)% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, outlining assets, liabilities, and equity for June 30, 2025, and December 31, 2024 Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $453,464 | $318,908 | | **Property, Plant and Equipment, net** | $1,000,852 | $922,868 | | **Total Assets** | $1,537,855 | $1,324,298 | | **Total Current Liabilities** | $419,357 | $342,477 | | **Line of Credit** | $245,447 | $202,600 | | **Total Liabilities** | $548,599 | $474,156 | | **Total Stockholders' Equity** | $989,256 | $850,142 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines cash inflows and outflows from operating, investing, and financing activities for H1 2025 and 2024 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $95,739 | $19,641 | | **Net cash used in investing activities** | $(130,987) | $(73,096) | | **Net cash provided by financing activities** | $39,479 | $52,668 | | **Net increase (decrease) in cash** | $4,231 | $(787) | | **Cash and cash equivalents, end of period** | $5,523 | $1,172 | - The significant increase in cash from operations in H1 2025 compared to H1 2024 was primarily driven by a **$65.4 million decrease in inventories**, whereas in the prior year, inventories increased by $41.8 million[18](index=18&type=chunk)[104](index=104&type=chunk) - Expenditures for property, plant, and equipment increased to **$126.3 million** in H1 2025 from **$73.2 million** in H1 2024, reflecting ongoing investment in manufacturing facilities[18](index=18&type=chunk)[85](index=85&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations on accounting policies, financial instruments, and significant financial disclosures - The company operates in a single reportable segment, **Trex Residential**, manufacturing wood-alternative decking, railing, and outdoor living products[21](index=21&type=chunk)[63](index=63&type=chunk) - As of June 30, 2025, the company had **$245.4 million** in borrowings outstanding under its revolving credit facility, with an available capacity of **$304.6 million** and a weighted average interest rate of **5.23%**[44](index=44&type=chunk) Product Warranty Reserve Reconciliation - H1 2025 (in thousands) | | Product Warranty | Surface Flaking | Total | | :--- | :--- | :--- | :--- | | **Beginning Balance, Jan 1** | $15,596 | $7,239 | $22,835 | | **Provisions** | $6,705 | $0 | $6,705 | | **Settlements** | $(3,099) | $(690) | $(3,789) | | **Ending Balance, June 30** | $19,202 | $6,549 | $25,751 | - The company's effective tax rate for the first six months of 2025 was **25.9%**, compared to **25.4%** for the same period in 2024[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 2025 net sales decline, gross margin compression, increased SG&A, and capital investments in the Arkansas facility [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section analyzes financial performance for Q2 and H1 2025, detailing changes in net sales, gross profit, gross margin, and SG&A expenses Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $387,801 | $376,470 | $11,331 | 3.0% | | **Gross Profit** | $158,132 | $168,110 | $(9,978) | (5.9)% | | **Gross Margin** | 40.8% | 44.7% | - | - | - The Q2 2025 increase in net sales was driven by higher volume, but gross margin decreased due to lower production, Arkansas facility start-up costs, and production process refinements for Enhance® decking[92](index=92&type=chunk)[93](index=93&type=chunk) H1 2025 vs H1 2024 Performance (in thousands) | Metric | H1 2025 | H1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $727,794 | $750,105 | $(22,311) | (3.0)% | | **Gross Profit** | $295,863 | $337,721 | $(41,858) | (12.4)% | | **Gross Margin** | 40.7% | 45.0% | - | - | - The **3.0% decrease** in H1 2025 net sales was due to lower volume from a revised channel inventory strategy, with gross margin declining due to lower production and Arkansas facility costs[98](index=98&type=chunk)[99](index=99&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **9.8%** in H1 2025 to **$111.8 million**, driven by higher spending on branding (**$6.6 million**), personnel (**$2.1 million**), and Arkansas start-up costs (**$1.7 million**)[100](index=100&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, capital expenditure plans, and share repurchase activities - The company's primary sources of liquidity are cash from operations and borrowings under its revolving credit facility[103](index=103&type=chunk) - Capital expenditures for H1 2025 were **$126.3 million**, with **$97.6 million** allocated to the new Arkansas manufacturing facility[85](index=85&type=chunk)[105](index=105&type=chunk) - The full-year 2025 capital expenditure guidance is between **$190 million** and **$210 million**, with approximately **$484 million** of the total anticipated **$550 million** for the Arkansas facility already invested[125](index=125&type=chunk)[126](index=126&type=chunk) - The company did not repurchase any shares of its common stock during the six months ended June 30, 2025, under its **10.8 million** share repurchase program[52](index=52&type=chunk)[109](index=109&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposure during H1 2025, consistent with its 2024 Annual Report disclosures - There were no material changes to the Company's market risk exposure during the six months ended June 30, 2025[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[136](index=136&type=chunk) - No changes in internal control over financial reporting occurred during the six-month period that have materially affected, or are reasonably likely to materially affect, the company's internal controls[136](index=136&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation and claims, which management believes will not materially affect its financial condition or operations - The company faces lawsuits and claims incidental to its business, but management does not expect their resolution to have a material financial impact[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock in Q2 2025, with its 10.8 million share repurchase program remaining active - No shares of common stock were repurchased during the three months ended June 30, 2025[140](index=140&type=chunk)[141](index=141&type=chunk) - As of June 30, 2025, the company may still purchase up to **8,954,464 shares** under its publicly announced stock repurchase program[140](index=140&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading plan changes occurred during the quarter, and the company amended severance agreements for its CEO and other officers - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[142](index=142&type=chunk) - The company amended severance agreements for the CEO and other officers, modifying the timing of severance payments to occur no later than ten days after the effective date of a written release, rather than ten days after termination[143](index=143&type=chunk)[144](index=144&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including certifications and amended severance agreements - The Exhibit Index lists documents filed with the report, including an Amended and Restated Severance Agreement for the CEO and a new Form of Severance Agreement for other officers[151](index=151&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Trex Company exceeded Q2 sales guidance with **$388 million**, driven by new products and strong market position, reaffirming full-year 2025 guidance [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Q2 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Sales | $388 million | | Gross Profit | $158 million | | Adjusted Gross Profit | $161 million | | Net Income | $76 million | | Diluted EPS | $0.71 | | Adjusted Net Income | $79 million | | Adjusted Diluted EPS | $0.73 | | Adjusted EBITDA | $122 million | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) - Product innovation is a key driver, with new products launched in the last 36 months representing **22% of second-quarter sales**, a significant increase from 13% in the prior-year period[5](index=5&type=chunk) - The company is seeing positive momentum in its railing products, with year-to-date sales tracking towards **double-digit growth in 2025**, aiming to double its market share in the **$3 billion railing market** within five years[6](index=6&type=chunk) - Consumer demand remains resilient, particularly for high-end products like Transcend Lineage® and the expanded mid-priced Select® line, with increased market penetration in the western U.S[7](index=7&type=chunk) - The new Arkansas plastic processing facility is performing above expectations, improving vertical integration and reducing the need for external material purchases[8](index=8&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) Q2 2025 net sales grew 3% to **$388 million**, but net income declined due to production strategy and start-up costs [Second Quarter 2025 Results](index=2&type=section&id=Second%20Quarter%202025%20Results) Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $388M | $376M | +3% | | Gross Profit | $158M | $168M | -6% | | Gross Margin | 40.8% | 44.7% | -390 bps | | Net Income | $76M | $87M | -13% | | Diluted EPS | $0.71 | $0.80 | -11% | - The decrease in gross margin was attributed to a revised inventory strategy to level-load production, costs for performance refinements to Enhance® decking boards, railing conversion costs, and start-up expenses for the Arkansas plant[12](index=12&type=chunk) - Selling, general, and administrative (SG&A) expenses increased to **$56 million** (14.4% of sales) from **$51 million** (13.6% of sales) in the prior year, driven by investments in branding and one-time start-up costs[13](index=13&type=chunk) [Year-to-Date Results](index=3&type=section&id=Year-to-Date%20Results) YTD 2025 vs YTD 2024 Performance | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $728M | $750M | -3% | | Gross Profit | $296M | $338M | -12% | | Gross Margin | 40.7% | 45.0% | -430 bps | | Net Income | $136M | $176M | -23% | | Diluted EPS | $1.27 | $1.62 | -22% | - The year-to-date decrease in net sales was attributed to the company's revised inventory and level-load production strategies[16](index=16&type=chunk) [Summary and Outlook](index=4&type=section&id=Summary%20and%20Outlook) Trex reaffirmed full-year 2025 guidance for 5-7% revenue growth and >31% adjusted EBITDA margin, with Q3 sales projected at **$295-305 million** [Business Summary & Strategic Initiatives](index=4&type=section&id=Business%20Summary%20%26%20Strategic%20Initiatives) - Strategic initiatives strengthening market leadership include the launch of new decking with SunComfortable™ technology, expansion of the railing portfolio, and the rollout of Trex-engineered fastening solutions[21](index=21&type=chunk) - A revised inventory strategy involving level-loading production is being implemented to reduce channel stocking volatility and enhance operational efficiency[22](index=22&type=chunk) - The company has mitigated most of the impact from tariffs, with less than **5% of its cost of sales** projected to be affected, primarily related to aluminum and steel purchases[23](index=23&type=chunk) [Full Year 2025 and Q3 2025 Guidance](index=4&type=section&id=Full%20Year%202025%20and%20Q3%202025%20Guidance) Financial Guidance | Period | Metric | Guidance | | :--- | :--- | :--- | | **Full Year 2025** | Sales Growth | 5% to 7% | | **Full Year 2025** | Adjusted EBITDA Margin | > 31% | | **Q3 2025** | Net Sales | $295M to $305M | | **Q3 2025** | Gross Margin | ~100 bps sequential expansion | [Non-GAAP Financial Measures Reconciliation](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Non-GAAP reconciliations are provided, with Q2 2025 adjustments for railing conversion, Arkansas facility start-up, and digital transformation costs [Reconciliation of Gross Profit (GAAP to Non-GAAP)](index=6&type=section&id=Reconciliation%20of%20Gross%20Profit%20(GAAP%20to%20Non-GAAP)) Q2 2025 Gross Profit Reconciliation ($ in thousands) | Description | Q2 2025 | | :--- | :--- | | Gross profit (GAAP) | $158,132 | | Railing conversion | $1,424 | | Arkansas start-up | $1,281 | | **Adjusted gross profit (non-GAAP)** | **$160,837** | [Reconciliation of Net Income (GAAP to Non-GAAP)](index=6&type=section&id=Reconciliation%20of%20Net%20Income%20(GAAP%20to%20Non-GAAP)) Q2 2025 Net Income Reconciliation ($ in thousands) | Description | Q2 2025 | | :--- | :--- | | Net income (GAAP) | $75,909 | | Railing conversion | $1,424 | | Digital transformation | $478 | | Arkansas start-up | $1,888 | | Income tax effect | ($982) | | **Adjusted net income (non-GAAP)** | **$78,717** | [Reconciliation of EBITDA (GAAP to Non-GAAP)](index=7&type=section&id=Reconciliation%20of%20EBITDA%20(GAAP%20to%20Non-GAAP)) Q2 2025 EBITDA Reconciliation ($ in thousands) | Description | Q2 2025 | | :--- | :--- | | Net income (GAAP) | $75,909 | | Interest income | ($77) | | Income tax expense | $26,566 | | Depreciation and amortization | $15,807 | | **EBITDA (non-GAAP)** | **$118,205** | | Railing conversion | $1,424 | | Digital transformation | $478 | | Arkansas start-up | $1,888 | | **Adjusted EBITDA (non-GAAP)** | **$121,995** | [Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited statements show Q2 and YTD net income decline, increased total assets to **$1.54 billion**, and improved operating cash flow to **$95.7 million** [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Income Statement Summary (In thousands) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net sales | $387,801 | $727,794 | | Gross profit | $158,132 | $295,863 | | Income from operations | $102,398 | $184,062 | | Net income | $75,909 | $136,343 | | Diluted EPS | $0.71 | $1.27 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $453,464 | $318,908 | | Total assets | $1,537,855 | $1,324,298 | | Total current liabilities | $419,357 | $342,477 | | Total liabilities | $548,599 | $474,156 | | Total stockholders' equity | $989,256 | $850,142 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary - Six Months Ended June 30 (In thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $95,739 | $19,641 | | Net cash used in investing activities | ($130,987) | ($73,096) | | Net cash provided by financing activities | $39,479 | $52,668 | | Net increase (decrease) in cash | $4,231 | ($787) | | Cash and cash equivalents at end of period | $5,523 | $1,172 | [Company Overview & Forward-Looking Statements](index=7&type=section&id=Company%20Overview%20%26%20Forward-Looking%20Statements) Trex is the 1 wood-alternative decking brand, with forward-looking statements subject to market, economic, and raw material risks [About Trex Company](index=7&type=section&id=About%20Trex%20Company) - Trex is the world's 1 brand of sustainably made wood-alternative decking and railing, with products sold through more than **6,700 retail outlets** across six continents[35](index=35&type=chunk) - The company has received numerous accolades for trust and sustainability, including being named America's Most Trusted® Outdoor Decking for **5 consecutive years** (2021-2025) and listed on Barron's 100 Most Sustainable U.S. Companies[35](index=35&type=chunk) [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) - The company's performance is subject to risks including market acceptance of new products, general economic conditions, seasonal demand fluctuations, raw material availability and cost (scrap polyethylene, wood fiber), inflation, and tariffs[39](index=39&type=chunk)

Group 1 - Trex Company (NYSE: TREX) has faced challenges for its shareholders over the past few years [1] - In November 2021, an in-depth analysis of Trex Company was initiated to understand its performance [1] Group 2 - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and growth potential [1] - The service includes a stock model account, cash flow analyses of exploration and production firms, and live sector discussions [2]

Core Insights - Trex Company has launched the Trex Deck Railing Designer, a digital platform aimed at simplifying the railing selection process for both trade professionals and homeowners [1][2][3] Group 1: Product Features - The Trex Deck Railing Designer allows users to visualize over 2,000 railing combinations from Trex's 13 railing lines, enhancing the specification process [3] - The platform is built with advanced 3D web technology, providing real-time visualization and instant material estimates across various devices [1][3] - It includes a dual mode interface: "Explorer Mode" for browsing and comparing styles, and "Expert Mode" for direct customization and material calculation [11] Group 2: User Experience - The tool significantly reduces the time needed for material estimation from 10-20 minutes to as little as one minute [11] - It is optimized for mobile use, making it suitable for professionals on the job [11] - Users can save and share their configurations easily, facilitating collaboration [11] Group 3: Company Background - Trex Company is recognized as the world's largest manufacturer of high-performance, low-maintenance composite decking and residential railing [1][6] - The company has a strong distribution network with over 6,700 retail outlets across six continents [6] - Trex has received multiple accolades, including being named America's Most Trusted Outdoor Decking for five consecutive years from 2021 to 2025 [6]

Core Viewpoint - Trex (TREX) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending June 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The consensus estimate for Trex's quarterly earnings is $0.71 per share, reflecting an 11.3% decrease year-over-year. Revenues are projected to be $377.91 million, which is a 0.4% increase from the same quarter last year [3]. Estimate Revisions - Over the past 30 days, the consensus EPS estimate has been revised 0.95% higher, indicating a collective reassessment by analysts regarding the company's earnings outlook [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that Trex's Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.07%, suggesting a bearish sentiment among analysts [12]. Historical Performance - Trex has a history of beating consensus EPS estimates, having done so in the last four quarters. In the most recent quarter, it reported earnings of $0.60 per share against an expectation of $0.58, achieving a surprise of +3.45% [13][14]. Investment Considerations - While Trex does not appear to be a strong candidate for an earnings beat, investors are advised to consider other factors that may influence stock performance ahead of the earnings release [17].

Industry Overview - The Zacks Building Products – Wood industry is currently facing challenges such as rising construction costs, potential housing project delays, and affordability concerns for consumers [1] - Spending on home repair and remodeling has decreased from pandemic highs due to elevated mortgage rates impacting consumer budgets [1][2] - There is a strong need for investments in critical replacements and modernization of aging housing stock, alongside increased funding for infrastructure and carbon/ESG-related projects [2][6] Trends Impacting the Industry - The U.S. housing market is constrained by high interest rates and low consumer confidence, affecting demand for lumber and remodeling [4] - The reimplementation of tariffs on Canadian softwood lumber could lead to supply shortages and increased material costs, as Canada supplies about 30% of U.S. softwood lumber [4] - Volatility in lumber prices remains a significant concern, impacting inventory costs and profit margins [5] Company Strategies - Companies are focusing on acquisitions, product innovation, and efficient cost-reduction strategies to navigate current challenges [7][8] - Operational excellence is being emphasized, including improvements in merchandising, harvest, and transportation efficiencies [8] Industry Performance - The Zacks Building Products – Wood industry has outperformed the broader Zacks Construction sector and the S&P 500 over the past year, gaining 21.6% compared to the sector's 8.8% and the S&P 500's 12.3% [13] - The industry currently has a Zacks Industry Rank of 155, placing it in the bottom 37% of over 250 Zacks industries, indicating dull near-term prospects [9][10] Earnings Outlook - Analysts have shown decreasing confidence in the industry's earnings growth potential, with aggregate earnings estimates for 2025 declining from $2.22 to $2.11 per share [11] - Despite the bleak near-term outlook, some companies are highlighted for their potential to capitalize on fundamental strengths [12] Notable Companies - **Worthington Enterprises, Inc. (WOR)**: Gained 48.4% over the past year, with an upward estimate revision for fiscal 2026 earnings to $3.65 from $3.14 per share [22] - **PotlatchDeltic Corporation (PCH)**: Gained 5% over the past year, with an upward estimate revision for 2025 earnings to 88 cents from 83 cents per share [26] - **Trex Company, Inc. (TREX)**: Experienced a loss of 20.9% over the past year, but has seen an upward estimate revision for 2025 earnings to $2.21 from $2.16 per share [30]

Company Overview - Trex's market capitalization is valued at $5.3 billion as of March 31, 2023, supported by brand strength, distribution network, low-cost leadership, and product breadth[15, 16, 17] - The company has recycled over 5 billion pounds of plastic film since its inception, utilizing 95% reclaimed and recycled materials in its durable decking[18, 19] - Trex has reduced its greenhouse gas emissions intensity by 33% between 2020 and 2021[19] Market Position and Growth - 82% of people say their outdoor space is more important to them than ever[32] - Trex residential growth from 2015 to 2022 was 140%, outpacing the outdoor living category's growth of 102% and the repair & remodeling sector's growth of 71%[38] - Trex holds a 12% market share of the $8 billion U S decking & railing category[39] Product Innovation and Value - Trex is launching a new luxury line with realistic wood grain and colors inspired by nature, with 2 colors available in Q1 2023 in select markets, backed by a new 50-year warranty[75] - Trex web traffic commands more than 60% of the category, generating high-quality Trex leads[99] Financial Performance and Capital Allocation - Trex has capital expenditures of $656 million since 2016[128] - The company has $745 million in share repurchases over the past 10 years, including $395 million in 2022 repurchases[129] - The company anticipates capital expenditures of $130-140 million, SG&A at 15-16% of sales, depreciation & amortization of $45-47 million, a tax rate of 25-26%, and an EBITDA margin of 26-27%[141]

SEEING MORE INVESTOR PRESENTATION | AS O F Q2 2023 NYSE:TREX AT TREX, EVEN OUR PRESENTATION DECKS SAVE TREES. Scan for our paperless investor presentation. SAFE HARBOR / NON-GAAP MEASURES This presentation contains "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 from those cont ...

SEEING MORE INVESTOR PRESENTATION | AS O F Q1 2024 NYSE:TREX AT TREX, EVEN OUR PRESENTATION DECKS SAVE TREES. Scan for our paperless investor presentation. SAFE HARBOR / NON-GAAP MEASURES This presentation contains "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 from those cont ...