[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the first quarter of 2025 [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, including income, balance sheet, equity, and cash flow statements, with notes for Q1 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Unaudited) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | (In thousands, except per share data) | **2025** | **2024** | | **Net sales** | $339,993 | $373,635 | | **Gross profit** | $137,731 | $169,612 | | **Income from operations** | $81,663 | $119,012 | | **Net income** | $60,434 | $89,070 | | **Diluted earnings per common share** | $0.56 | $0.82 | Condensed Consolidated Balance Sheets (Unaudited) | | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | (In thousands) | | | | **Total current assets** | $592,190 | $318,908 | | **Total assets** | $1,641,199 | $1,324,298 | | **Total current liabilities** | $601,561 | $342,477 | | **Total liabilities** | $731,120 | $474,156 | | **Total stockholders' equity** | $910,079 | $850,142 | Condensed Consolidated Statements of Cash Flows (Unaudited) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | (In thousands) | **2025** | **2024** | | **Net cash used in operating activities** | $(154,013) | $(174,044) | | **Net cash used in investing activities** | $(79,965) | $(37,614) | | **Net cash provided by financing activities** | $237,649 | $212,752 | | **Net increase in cash and cash equivalents** | $3,671 | $1,094 | [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 analyzes Q1 2025 financial performance, detailing decreased net sales and net income, operational highlights, liquidity, and capital resources [Highlights and Financial Performance](index=18&type=section&id=Highlights%20and%20Financial%20Performance) Summarizes Q1 2025 financial results, showing year-over-year declines in key metrics and highlighting corporate achievements and sustainability recognition Key Financial Highlights (Unaudited) | | Three Months Ended March 31, | | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | (In thousands, except per share data) | **2025** | **2024** | | | | **Net sales** | $339,993 | $373,635 | $(33,642) | (9.0)% | | **Gross profit** | $137,731 | $169,612 | $(31,881) | (18.8)% | | **Net income** | $60,434 | $89,070 | $(28,636) | (32.1)% | | **EBITDA*** | $95,912 | $133,166 | $(37,254) | (28.0)% | | **Diluted earnings per share** | $0.56 | $0.82 | $(0.26) | (31.7)% | - Key achievements in Q1 2025 include: - Named America's Most Trusted® Outdoor Decking for the fifth consecutive year - Ranked among Barron's 100 Most Sustainable Companies for 2025, moving up **20 spots** - Earned top honors at the Environment + Energy Leader Awards - Named Green Builder Media's Sustainable Brand Leader in the decking category[83](index=83&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Analyzes Q1 2025 operational results, detailing decreased net sales due to lower volume, contracted gross margin, and increased SG&A expenses - Net sales decreased by **$33.6 million (9.0%)** in Q1 2025 compared to Q1 2024, primarily due to a decrease in volume as a **$40 million** channel inventory build in the prior-year quarter did not reoccur in 2025[91](index=91&type=chunk) - Gross margin decreased to **40.5%** in Q1 2025 from **45.4%** in Q1 2024, mainly due to lower production year-over-year and changes to the production process for Enhance® decking[92](index=92&type=chunk) - Selling, general and administrative expenses increased by **$5.5 million (10.8%)** in Q1 2025, primarily due to a **$3.4 million** increase in branding, a **$1.0 million** increase in personnel expenses, and **$1.0 million** in start-up expenses for the Arkansas facility[93](index=93&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Details Q1 2025 cash flow from operations, capital expenditures for the Arkansas facility, outstanding borrowings, and future capital expenditure guidance - Cash used in operations was **$154.0 million** for the first three months of 2025, a decrease from **$174.0 million** in the same period of 2024, primarily due to a decrease in inventories and reduced profitability[97](index=97&type=chunk)[98](index=98&type=chunk) - Capital expenditures for Q1 2025 totaled **$79.5 million**, with **$64.2 million** allocated to the new Arkansas manufacturing facility[84](index=84&type=chunk)[99](index=99&type=chunk) - As of March 31, 2025, the company had **$443.9 million** in outstanding borrowings under its revolving credit facility, with an available borrowing capacity of **$106.1 million**[44](index=44&type=chunk)[113](index=113&type=chunk) - The company's capital expenditure guidance for the full year 2025 is projected to be between **$190 million** and **$210 million**[116](index=116&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Confirms no material changes to market risk exposure in Q1 2025, referring to the detailed disclosure in the 2024 Annual Report on Form 10-K - There were no material changes to the Company's market risk exposure during the three months ended March 31, 2025[126](index=126&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2025, the President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective[127](index=127&type=chunk) - No changes in the Company's internal control over financial reporting occurred during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the internal controls[127](index=127&type=chunk) [PART II OTHER INFORMATION](index=25&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, equity security sales, other corporate information, and a list of exhibits for the first quarter of 2025 [Item 1. Legal Proceedings](index=25&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 is involved in lawsuits and claims that are considered ordinary and incidental to its business, which management does not expect to have a material effect on the company's financial condition or results of operations[71](index=71&type=chunk)[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the stock repurchase program in Q1 2025, though 49,949 shares were withheld for employee tax obligations - No shares were repurchased under the company's stock repurchase program during the three months ended March 31, 2025[132](index=132&type=chunk) - A total of **49,949 shares** were withheld by the company to cover tax withholding obligations for employees on restricted stock grants during the quarter[131](index=131&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading plan changes by directors or officers, and the Annual Meeting results included director elections, advisory executive compensation approval, and auditor ratification - During the quarter ended March 31, 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements[133](index=133&type=chunk) - At the Annual Meeting of Stockholders on May 6, 2025, three directors were elected, the compensation of executive officers was approved on an advisory basis, and the selection of Ernst & Young LLP as the independent registered public accounting firm for fiscal year 2025 was ratified[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Refers to the Exhibit Index at the end of the report for a comprehensive list of all exhibits filed with this Form 10-Q - A list of exhibits filed with this Quarterly Report on Form 10-Q is available in the Exhibit Index at the end of the document[138](index=138&type=chunk)

Exhibit 99.1 NEWS RELEASE TREX COMPANY REPORTS FIRST QUARTER 2025 RESULTS First Quarter Sales Exceeded Guidance Driven by Continued Demand for Premium Products New Products Accounted for 22% of Trailing Twelve-Month Sales Pro-Dealer Conversions Drive Future Growth Opportunities Second Quarter Revenue Guidance of $370 million to $380 million Full Year 2025 Guidance Reaffirmed at 5%-7% Revenue Growth and Adjusted EBITDA Margin to Exceed 31% First Quarter 2025 Results First quarter 2025 net sales were $340 mil ...

Core Insights - Trex, a leader in wood-alternative decking and railing products, held its fourth-quarter and full-year 2024 earnings call, highlighting strategic initiatives, product innovations, and financial outlook for long-term investors [1] Product Innovation - Trex is expanding its product lineup with innovations like SunComfortable heat-mitigating technology, which aims to differentiate its offerings and drive sales growth [2] - New products launched in the last 36 months accounted for approximately 20% of full-year revenues, with a record number of new products expected to support future sales growth [3] - The company reported a double-digit increase in premium products during Q4, indicating strong performance in the high-end segment despite a flat overall repair and remodel market projected for 2025 [3] Railing Market Strategy - Trex has introduced a comprehensive railing product line, aiming to increase its share of the $3.3 billion railing market from 6% to 12% over the next five years [4][5] - The company anticipates double-digit growth in the railing segment in 2025, driven by an expanded product line and new distribution partnerships [5] Manufacturing Efficiency - Investments in a new Arkansas manufacturing facility are on track, expected to enhance operational efficiency and financial performance [6] - The majority of capital spending related to the Arkansas facility will be completed this year, positioning Trex for substantial free cash flow generation starting in 2026 as capital expenditures normalize to historical levels of 5% to 6% of revenue [7] Financial Outlook - Trex projects net sales for 2025 in the range of $1.21 billion to $1.23 billion, reflecting year-over-year growth of 5% to 7% despite a flat repair and remodel market [9] - The company is positioned to capture significant growth opportunities in the industry, with the Arkansas manufacturing capacity coming online and capital expenditures set to normalize in 2026 [10]

A downtrend has been apparent in Trex (TREX) lately with too much selling pressure. The stock has declined 17% over the past four weeks. However, given the fact that it is now in oversold territory and Wall Street analysts are majorly in agreement about the company's ability to report better earnings than they predicted earlier, the stock could be due for a turnaround.Guide to Identifying Oversold StocksWe use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting wh ...

Financial Data and Key Metrics Changes - In Q4 2024, net sales were $168 million, a decrease of 14% compared to $196 million in Q4 2023 [29] - Full-year 2024 net sales totaled $1.2 billion, a 5% increase from $1.1 billion in 2023 [33] - Gross margin for Q4 2024 was 32.7%, down 340 basis points from 36.1% in Q4 2023 [31] - Net income for Q4 2024 was $10 million, or $0.09 per diluted share, a decrease of 58% from $22 million, or $0.20 per diluted share, in Q4 2023 [32] - Full-year EBITDA was $360 million, up 10% from $326 million in the prior year, with an EBITDA margin of 31.3% [33] Business Line Data and Key Metrics Changes - Products launched within the last 36 months accounted for approximately 20% of full-year revenues [11] - The company expects double-digit growth in railing product sales for 2025 [39] Market Data and Key Metrics Changes - The repair and remodel market is expected to be approximately flat compared to 2024 levels [23] - The company anticipates continued strong sell-through of premium decking products and improved demand for entry-level products [23] Company Strategy and Development Direction - The company is focused on new product development and market launches as long-term growth drivers [10] - Aiming to double market share in the $3.3 billion railing market from 6% to 12% over the next five years [15] - Significant investments in branding and marketing programs to enhance consumer recognition of Trex products [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential for 2025, despite a flat outlook for the repair and remodel market [23][110] - The company is positioned for continued growth amid expectations for strong demand for premium products [23] Other Important Information - The Arkansas campus is expected to enhance production efficiency and increase total manufacturing capacity to over $2 billion in sales [22] - The company returned over $100 million to shareholders through stock repurchases in 2024 [34] Q&A Session Summary Question: Distribution changes and future expectations - Management expects a calmer distribution environment in 2025 after extensive alignment strategies in 2024 [51] Question: Railing product commitments - Commitments involve ensuring effective product delivery to the marketplace and enhancing visibility in pro-channel dealers and retail centers [54] Question: Revenue growth breakdown - Management did not provide exact splits but indicated double-digit growth expected from railing products [61] Question: Inventory levels - Management feels confident about current inventory levels, expecting slight decreases but not increases [66] Question: Demand and consumer engagement - Management noted a high single-digit increase in demand during Q4, with confidence in achieving 5% to 7% growth in 2025 [73] Question: Margin expectations - Gross margins are expected to remain elevated, with some pressure from depreciation related to the new Arkansas facility [76] Question: Railing growth expectations - Management anticipates double-digit growth in railing products, driven by new features and benefits [160]

Trex (TREX) came out with quarterly earnings of $0.09 per share, beating the Zacks Consensus Estimate of $0.05 per share. This compares to earnings of $0.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 80%. A quarter ago, it was expected that this maker of fencing and decking products would post earnings of $0.32 per share when it actually produced earnings of $0.37, delivering a surprise of 15.63%.Over the last four quarte ...

Trex reported earnings for Q4 2024 that surpassed analyst expectations, despite reduced sales revenue and declining margins compared to last year.Trex Company Inc. (TREX 1.80%), a leading producer of composite decking and railing, released its earnings report for the fourth quarter of 2024 on Feb. 24, 2025. The company disclosed earnings per share (EPS) of $0.09, outperforming the analyst forecast of $0.0428. Revenue hit $168 million, slightly higher than the anticipated $160 million but down from $196 mill ...

Financial Performance - Net sales for the year ended December 31, 2024, reached $1,151,449, an increase of $56,612 or 5.2% compared to 2023[157] - Gross profit for 2024 was $485,668, reflecting a $33,261 increase or 7.4% from the previous year[157] - Net income for 2024 was $226,392, up by $21,008 or 10.2% from 2023[157] - EBITDA for 2024 was $360,343, representing a $33,950 increase or 10.4% year-over-year[157] - Diluted earnings per share increased to $2.09, a rise of $0.20 or 10.6% compared to 2023[157] - Total net sales for 2024 increased by $56.6 million, or 5.2%, compared to 2023, reaching $1,151.4 million[184] - Gross profit for 2024 was $485.7 million, a 7.4% increase from $452.4 million in 2023, with a gross margin of 42.2%[185] - Net income for 2024 was $226.4 million, compared to $205.4 million in 2023, reflecting a strong operational performance[189] - EBITDA for 2024 was $360.3 million, an increase from $326.4 million in 2023, indicating improved core operating performance[189] - Total EBITDA increased by 10.4% to $360.3 million for 2024 compared to $326.4 million for 2023, driven by an increase in net sales and gross profit[190] Expenses and Taxation - Selling, general and administrative expenses rose to $180.0 million in 2024, a 2.2% increase from $176.2 million in 2023, representing 15.6% of total net sales[186] - The provision for income taxes for 2024 was $79.3 million, up 12.0% from $70.8 million in 2023, with an effective tax rate of 25.9%[187] Warranty Management - A reduction of $1.5 million was recorded in the warranty reserve for future surface flaking claims in 2024, indicating improved claims management[168] - The average cost per warranty claim decreased to $3,281 in 2024 from $4,221 in 2023, reflecting a significant reduction in warranty costs[170] - The number of unresolved warranty claims at the end of 2024 was 1,674, a slight decrease from 1,695 at the end of 2023[170] - The company anticipates a continued decline in the annual number of claims received, with a slight increase in the average cost per claim due to inflation[169] - A 10% change in the expected number of remaining claims could result in approximately a $0.6 million change in the warranty reserve estimate[169] Capital Expenditures and Investments - Capital expenditures in 2024 totaled $232.3 million, with significant investments in the Arkansas facility and capacity expansions[157] - Cash used in investing activities for capital expenditures was $232.2 million in 2024, including $174.8 million for the construction of the Arkansas facility[195] - The company’s capital expenditure guidance for 2025 is between $190 million and $210 million, focusing on internal growth, manufacturing cost reductions, and strategic acquisitions[220] - The gross asset and liability associated with the industrial revenue bonds for the Arkansas facility was $100 million as of December 31, 2024[214] Liquidity and Financing - As of December 31, 2024, the company had $202.6 million in outstanding borrowings under the revolving credit facility and a borrowing capacity of $347.4 million[212] - The company’s liquidity is primarily financed through cash flow from operations, borrowings, and operating leases[192] - The company expects to fund planned capital expenditures and meet cash requirements for at least the next 12 months using cash on hand, cash flows from operations, and borrowings under its revolving credit facility[221] - As of December 31, 2024, the company had $202.6 million in debt outstanding under its revolving line of credit, with variable rate obligations exposing it to interest rate risks[226] - The company may seek additional financing through bank borrowings or equity issuance to address contingencies or changes in its business plan[221] Compliance and Accounting Standards - The company was in compliance with all financial covenants as of December 31, 2024[212] - The company adopted new accounting standards effective for fiscal years beginning after December 15, 2023, which did not impact consolidated results of operations and financial position[223] - The company is evaluating the impacts of pending accounting standards, which are expected to expand financial statement disclosures but not materially affect consolidated results[224] - The new accounting standards adopted require retrospective application for prior periods presented in financial statements[223] - The company does not expect the adoption of new income tax disclosure standards to materially affect its consolidated results of operations[225] - An increase of 1% in interest rates would not have a material adverse effect on the company's overall financial position or liquidity[226] - The company had no interest rate swap agreements outstanding as of December 31, 2024, indicating a straightforward debt structure[227] Product Development and Sustainability - Trex expanded its Canadian reach by partnering with Alexandria Moulding, enhancing distribution across Canada[155] - The company launched new products including Trex Signature X-Series Railing and two new Enhance decking hues with heat mitigating technology[161] - Trex was recognized as the most sustainable decking brand for the 14th consecutive year by Green Builder Media[161]

Financial Performance - Fourth quarter 2024 net sales were $168 million, a decrease of 14.4% compared to $196 million in the prior-year quarter, impacted by a reduction in channel inventory of approximately $45 million[9] - Full year 2024 net income was $226 million, or $2.09 per share, representing a 10.2% growth from $205 million, or $1.89 per share, in 2023[15] - Full year consolidated net sales increased 5.2% to $1.2 billion from $1.1 billion in the year-ago period[14] - EBITDA for full year 2024 was $360 million, up 10.4% from $326 million in the prior year, with an EBITDA margin expanding by 150 basis points to 31.3%[15] - Net sales for the year ended December 31, 2024, were $1,151,449,000, an increase of 5.2% from $1,094,837,000 in 2023[35] - Gross profit for the year ended December 31, 2024, was $485,668,000, compared to $452,407,000 in 2023, reflecting a gross margin improvement[35] - Net income for the year ended December 31, 2024, was $226,392,000, up from $205,384,000 in 2023, representing a growth of 10.2%[35] - Basic earnings per share for the year ended December 31, 2024, increased to $2.09 from $1.89 in 2023, a rise of 10.6%[35] Future Outlook - The company anticipates 5-7% revenue growth for 2025, with adjusted EBITDA margin expected to exceed 31%[1] - The company expects first quarter 2025 revenues to be between $325 million and $330 million, with a shift of approximately $40 million in sales timing compared to the prior year[20] Product Development and Market Strategy - Products launched within the last 36 months represented approximately 18% of 2024 revenues, indicating strong consumer response to new product innovations[6] - The company plans to introduce new railing products to significantly increase penetration of the $3.3 billion railing market[7] Shareholder Returns and Financial Position - Trex repurchased 1.6 million shares of outstanding common stock for $100 million in 2024, demonstrating confidence in long-term outlook[21] - The company reported a net cash provided by operating activities of $143,929,000 for the year ended December 31, 2024, down from $389,420,000 in 2023[39] - The company invested $232,337,000 in property, plant, and equipment during the year ended December 31, 2024, compared to $166,089,000 in 2023, reflecting ongoing expansion efforts[39] - Total liabilities increased to $474,156,000 as of December 31, 2024, from $216,214,000 in 2023, indicating increased leverage[37] - The company repurchased $105,940,000 of common stock during the year ended December 31, 2024, compared to $18,450,000 in 2023, signaling confidence in its financial position[39] Recognition and Awards - Trex was named "America's Most Trusted Outdoor Decking" for the fifth consecutive year and topped rankings in Builder Magazine's annual Brand Use Study[17] Asset Management - Total assets as of December 31, 2024, were $1,324,298,000, a significant increase from $932,885,000 in 2023, indicating strong growth in asset base[37] - Cash and cash equivalents decreased to $1,292,000 at the end of 2024 from $1,959,000 at the end of 2023[39]

Company Overview - Trex (TREX) is expected to report a year-over-year decline in earnings, with a projected earnings per share (EPS) of $0.05, reflecting a decrease of 75% compared to the previous year [3] - Revenues for the quarter are anticipated to be $159.2 million, down 18.7% from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has been revised 1.18% higher in the last 30 days, indicating a slight bullish sentiment among analysts [4] - The Most Accurate Estimate for Trex is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +20%, suggesting a strong likelihood of beating the consensus EPS estimate [10][11] Historical Performance - Trex has a history of exceeding consensus EPS estimates, having beaten expectations in the last four quarters, including a +15.63% surprise in the most recent quarter [12][13] Industry Context - In the Zacks Building Products - Wood industry, Louisiana-Pacific (LPX) is expected to report earnings of $0.79 per share, representing a year-over-year increase of 11.3% [17] - Louisiana-Pacific's revenues are projected to be $664.35 million, up 1% from the previous year, with a revised EPS estimate reflecting a 2.3% increase over the last 30 days [18]