Trex(TREX) - 2024 Q4 - Annual Report

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$1,151.4 million[184] - Gross profit for 2024 was $485.7 million, a 7.4$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$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$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$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]