Trex(US:TREX)2026-02-25 13:50Financial Performance - Net sales for the year ended December 31, 2025, were $1,174,267, representing a 2.0% increase from $1,151,449 in 2024[172]. - Gross profit decreased by 8.4% to $459,964 in 2025 from $501,898 in 2024[172]. - Net income fell by 20.1% to $190,415 in 2025 compared to $238,446 in 2024[172]. - EBITDA decreased by 14.8% to $320,918 in 2025 from $376,573 in 2024[172]. - Total net sales for 2025 increased by $22.8 million, or 2.0%, to $1,174.3 million, primarily driven by a mid-single digit price increase on decking products[191]. - Gross profit decreased by $41.9 million, or 8.4%, to $460.0 million, with a gross margin of 39.2% compared to 43.6% in 2024, mainly due to higher raw material costs and inefficiencies at the Arkansas facility[192]. - Selling, general and administrative expenses rose by $22.0 million, or 12.2%, to $202.0 million, accounting for 17.2% of net sales, driven by increased personnel costs and branding expenses[193]. - EBITDA decreased by $55.7 million, or 14.8%, to $320.9 million, attributed to lower gross profit and higher operating expenses[195]. - Cash provided by operating activities increased significantly to $358.1 million in 2025, up from $143.9 million in 2024, due to decreased inventories and accounts receivable[199]. Capital Expenditures and Investments - Capital expenditures totaled $233.6 million in 2025, including $167.8 million for the construction of a new facility in Arkansas[172]. - Cash used in investing activities totaled $233.6 million, including $167.8 million for the construction of the Arkansas facility[200]. - Capital expenditure guidance for 2026 is set between $100 million and $120 million, focusing on internal growth, manufacturing cost reductions, and acquisitions[227]. Stock and Shareholder Activities - The company repurchased 1,526,927 shares of its common stock in 2025 under its stock repurchase programs[173]. - The company repurchased 1,526,927 shares under the 2023 Stock Repurchase Program, which allows for up to 10.8 million shares to be repurchased[202]. Tax and Financial Obligations - The effective tax rate for 2025 was 26.2%, slightly up from 25.9% in 2024, primarily due to excess tax expenses from stock-based awards[194]. - The Company has $133.5 million in outstanding borrowings under the revolving credit facility as of December 31, 2025, with total availability of $413.4 million[217]. - The Second Amendment to the Credit Agreement provides Revolving A Loans of up to $400 million and Revolving B Loans of up to $150 million, extending the maturity date of the Revolving B Loans to December 22, 2026[214]. - The applicable interest rate for Revolving B Loans ranges from 1.20% to 2.15% for Base Rate Loans and from 0.20% to 1.15% for Term SOFR Loans[211]. - The Company has purchase obligations under material supply contracts totaling $25.9 million for 2026, $24.6 million for 2027, and $9.7 million for 2028[223]. - The Company has operating lease liabilities of $12.4 million for 2026 and $32.2 million for the years 2027 through 2030[224]. - As of December 31, 2025, the gross asset and liability associated with the industrial revenue bonds was $450 million[221]. - The Company was in compliance with all debt covenants as of December 31, 2025[218]. - An increase of 1% in interest rates would not have a material adverse effect on the Company's overall financial position or liquidity[233]. - The Company does not have off-balance sheet financing arrangements[226]. Product Development and Market Position - Trex expanded its mid-tier composite decking options with new Performance Engineered™ boards, enhancing its product offerings[171]. - The company launched the Trex® Deck Railing Designer, an interactive tool to simplify the railing selection process for customers[176]. - Trex expanded its distribution reach through partnerships with International Wood Products, LLC and Weekes Forest Products, enhancing product accessibility[176]. - Trex was ranked among Barron's 100 Most Sustainable Companies for 2025, moving up 20 spots from the previous year[171]. Market Risks - Tariffs accounted for less than 5% of the cost of sales, mainly related to aluminum and steel purchases[188]. - The company has over 50 distributors worldwide, and significant increases in inventory levels without corresponding demand could adversely affect future sales[203].