Financial Data and Key Metrics Changes - The company ended Q1 2025 with 147,157 active subscribers, up approximately 1% year over year, marking the highest number of ending subscribers in company history [31] - Total revenue for Q1 2025 was $69.6 million, down $5.4 million or 7.2% year over year [31] - Gross margins decreased to 31.5% in Q1 2025 from 37.9% in Q1 2024, reflecting higher revenue share costs and fulfillment costs [33] - Free cash flow for Q1 2025 was negative $6.4 million compared to negative $1.4 million in Q1 2024, primarily due to lower adjusted EBITDA and higher inventory purchases [35] Business Line Data and Key Metrics Changes - Subscription and reserve rental revenue decreased by 6.2% year over year in Q1 2025, primarily due to lower average revenue per subscriber [32] - Fulfillment costs were $20.4 million in Q1 2025, slightly down from $20.6 million in Q1 2024, but as a percentage of revenue, they increased to 29.3% [32] Market Data and Key Metrics Changes - The company launched 36 new brands and over 1,000 new styles, resulting in a 24% year-over-year increase in inventory volume received [8] - The spring 2025 inventory had 23% higher share of views and 46% more hearts compared to the previous year [9] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes increasing inventory breadth and depth, innovating products, and enhancing customer service [4] - Plans for Q2 2025 include launching over 40 new brands and posting over 2,700 new styles, with expectations for new receipts to be up 420% year over year [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the effectiveness of their inventory and product strategies, noting improved customer retention and subscriber growth [25][30] - The company anticipates continued improvements in ending active subscriber growth throughout the fiscal year, driven by inventory buildup and new product launches [30] Other Important Information - The company has shifted its marketing strategy towards transparency and community engagement, resulting in a 163% increase in social media engagement rates [21] - A new rewards program is planned for Q2 2025 to enhance subscriber experience [19] Q&A Session Summary Question: Why has it taken so long to implement the current strategies? - Management explained that previous focus was on managing cash consumption and reducing costs, which delayed the implementation of growth strategies until fiscal year 2025 [26][28] Question: What are the expectations for subscriber growth and revenue? - Management expects double-digit growth in ending active subscribers for fiscal year 2025, with revenue for Q2 projected between $76 million and $80 million [36][37]

Financial Data and Key Metrics Changes - In Q1 2025, net sales were $340 million, a decrease of 9% compared to $374 million in Q1 2024, primarily due to a lack of channel inventory build that occurred in the previous year [21][25] - Gross profit was $138 million with a gross margin of 40.5%, down from $170 million and 45.4% year-over-year, attributed to railing conversion costs and lower production levels [22][23] - Net income decreased by 32% to $60 million or $0.56 per diluted share, compared to $89 million or $0.82 per diluted share in the prior year [23][25] Business Line Data and Key Metrics Changes - New products launched in the last 36 months accounted for approximately 22% of trailing twelve-month sales, more than double the level from the previous year [7][17] - The company is seeing strong demand for premium products across all channels, with a notable increase in dealer conversions to the Trex brand [6][19] Market Data and Key Metrics Changes - The repair and remodel market is projected to rebound, with spending expected to return to long-term averages by 2027, driven by the aging of existing decks [14][15] - The company anticipates outperforming the repair and remodel market in 2025, supported by new product introductions and market share gains [15][25] Company Strategy and Development Direction - The company is focused on product innovation and expanding its portfolio, with a strategy to offer a comprehensive range of decking and railing products [7][17] - A new manufacturing campus in Arkansas is expected to enhance operational efficiency and reduce costs, with production of recycled plastic pellets already underway [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's market position despite macroeconomic pressures, citing strong demand for premium products and positive feedback on new offerings [26][27] - The company is maintaining its full-year guidance for 2025, expecting net sales growth between 5% to 7% and adjusted EBITDA margins exceeding 31% [25][26] Other Important Information - The company is implementing a new inventory strategy to reduce quarterly volatility and ensure adequate supply to meet consumer demand [10] - Tariff impacts are projected to affect less than 5% of cost of sales, with mitigation strategies in place to manage costs [11][84] Q&A Session Summary Question: Changes to the Enhance product line - Management explained that refinements were made based on customer feedback to improve strength and aesthetics, expecting stronger sales post-change [29][30] Question: Sell-through rates and guidance - Management confirmed strong demand for premium products and a turnaround in entry-level products, maintaining guidance for mid to high single-digit growth [38][39] Question: Seasonal trends and inventory practices - Management indicated a return to more normal seasonal patterns, with expectations for a less pronounced drop-off in Q3 compared to historical trends [42][44] Question: SG&A expenses and guidance - SG&A expenses are expected to be front-loaded due to marketing and innovation investments, with a decrease anticipated in subsequent quarters [49][50] Question: Tariff impacts and mitigation - Management noted limited exposure to China and ongoing efforts to mitigate tariff impacts through supplier negotiations and inventory strategies [84][86] Question: Capital allocation priorities - The company remains focused on organic growth, potential acquisitions, and share buybacks, with expectations for increased free cash flow in the coming years [57][115]