Trex Company Announces Third-Quarter-2009 Results
http://www.businesswire.com/news/home/20091109005391/en
Major New Decking Launch and Enhancement of Current Decking Product Platform
Underway
3Q Results Include Non-Cash Charge for Olive Branch Facility
$40 Million of Cash on Balance Sheet at Quarter-End
Symbol Change to TREX Effective November 23, 2009
WINCHESTER, Va.--(Business Wire)--
Trex Company, Inc. (NYSE: TWP), manufacturer and distributor of Trex decking,
railing, fencing and trim, today announced financial results for the third
quarter ended September 30, 2009.
Net sales for the third quarter of 2009 totaled $61.9 million compared to net
sales of $85.4 million for the 2008 third quarter. The company reported a net
loss of $22.5 million, or $1.49 per diluted share, for the 2009 third quarter
compared to net income of $5.2 million, or $0.34 per diluted share, for the 2008
period. The company recognized a non-cash impairment charge of $23.3 million in
the 2009 quarter relating to its Olive Branch, Mississippi facility. The company
also recorded a $7.2 million non-cash charge related to inventory manufactured
prior to 2008 that management has determined is no longer saleable or does not
meet its current quality standards. The inventory charge gave rise to an
offsetting favorable LIFO adjustment of $7.4 million. Excluding these charges,
the company had net income for the 2009 third quarter of $0.6 million, or $0.04
per diluted share.
For the nine months ended September 30, 2009, Trex Company reported net sales of
$221.1 million compared to net sales of $299.9 million for the prior-year
period. The company reported a net loss of $18.2 million, or $1.21 per diluted
share, compared to net income of $19.1 million, or $1.26 per diluted share, for
the first nine months of 2008. Before giving effect to the above noted non-cash
charges taken in the first nine months of 2009, the company had net income for
the period totaling $4.8 million, or $0.32 per diluted share.
President and CEO Ronald W. Kaplan commented,"Trex`s net sales for the third
quarter were impacted by the market`s anticipation of our launch of a
groundbreaking new line of decking and railing, to be unveiled at this week`s
2009 Trex Distributor Meeting, as well as by ongoing weakness in the home
building and remodeling sector. We began discussing our new product - which has
been the primary focus of our R&D efforts since the middle of last year - with
Trex`s major distributors this summer, after which some started implementing
inventory adjustments. While for competitive reasons, we can`t provide full
details on this exciting product until next week, it represents a major step
forward in technology, offering significant performance and aesthetic
improvements.
"This summer we also told our major distributors about a comprehensive
enhancement of Trex`s current decking product platform, causing some to make
additional inventory adjustments that impacted our third-quarter sales. The
enhancements, which we`re now rolling out, streamline our manufacturing process,
and provide more flexibility and design options to consumers, as well as more
convenience and efficiency to distributors and dealers.
"I`m pleased to note that our third-quarter gross margin was 29.8%, a
290-basis-point improvement over last year`s period. This increase reflects the
continued effectiveness of our focus on operations process improvements and cost
containments. Since this management team joined Trex in January 2008, we have
significantly increased the company`s manufacturing productivity by implementing
fundamental process improvements. Reflecting the extraordinary progress we`ve
made in increasing capacity at Trex`s Winchester, Va. and Fernley, Nev. plants,
we took a charge in the third quarter for our Olive Branch facility, whose
operations were suspended in September 2007.
"Trex continues to weather the economic downturn better than most of our
competitors. Even after the redemption of $25 million in revenue bonds in
September of this year, our cash balance at quarter-end was approximately $40
million and we haven`t borrowed against our revolver for almost 18 months."
Mr. Kaplan concluded, "With the launch of our groundbreaking new decking and
railing product, the overhaul of our current product line-up and our much
improved manufacturing capabilities, we are beginning a new era at Trex Company.
Consumers` interest in products that enhance their outdoor living experience is
higher than ever, and we have positioned Trex to deliver the beauty, comfort,
durability and value they`re seeking. Our goal is to elevate the entire decking
category, creating new standards for performance and aesthetics, and we expect
Trex to reap the benefits of these efforts in future years.
"Our guidance for the fourth quarter reflects the market and economic trends I
described earlier. We expect net sales to approximate $40-$45 million for the
fourth quarter of 2009."
Trex also announced that the ticker symbol of its shares on the New York Stock
Exchange will change to "TREX" from "TWP" effective at the start of trading on
Monday, November 23, 2009. Trex`s new symbol will reinforce the company's
15-plus year brand identity and align the company`s profile in the investment
community more closely with its products.
Third-Quarter-2009 Conference Call and Webcast Information
Trex will hold a conference call to discuss its third-quarter-2009 results on
Monday, November 9, 2009 at 8:00 a.m. ET. To participate in the live call by
telephone, please dial 706-634-1218 and reference conference ID #35691729. A
live webcast of the conference call will also be available to all investors in
the Investor Relations section of the Trex Company website at www.trex.com. The
call will also be simulcast at www.streetevents.com.
For those who cannot listen to the live broadcast, the webcast will be available
on Trex`s website for 30 days. A telephone replay of the call will also be
available for seven days, beginning at approximately 11:00 a.m. ET on November
9. To listen to the telephone replay, dial 706-645-9291 and enter conference ID
#35691729.
About Trex Company
Trex Company is the nation`s largest manufacturer of composite decking, railing
and fencing, with more than 15 years of product experience. Built on "green"
principles and values, Trex makes its products from a unique formulation of
reclaimed wood and waste plastic, combined through a proprietary process. Trex
decking, railing and fencing offer significant design flexibility with fewer
ongoing maintenance requirements than wood, as well as a truly environmentally
responsible choice. In addition, Trex distributes ultra-low maintenance PVC
decking under the trademark Trex Escapes® and PVC trim under the trademark
TrexTrim. For more information, visit the Company`s website, www.trex.com.
Trex®, Trex Escapes® and TrexTrim are trademarks of Trex Company, Inc.,
Winchester, Va.
The statements in this press release regarding the Company's expected future
performance and condition constitute "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. Such risks and uncertainties include the extent of market acceptance
of the Company's products;the costs associated with the development and launch
of new products and the market acceptance of such new products;the sensitivity
of the Company's business to general economic conditions; the Company's ability
to obtain raw materials at acceptable prices; the Company's ability to maintain
product quality and product performance at an acceptable cost; the level of
expenses associated with product replacement and consumer relations expenses
related to product quality; and the highly competitive markets in which the
Company operates. The Company's report on Form 10-K filed with the Securities
and Exchange Commission on March 12, 2009 and its subsequent reports on Form
10-Q filed on May 8, 2009 and August 10, 2009 discuss some of the important
factors that could cause the Company's actual results to differ materially from
those expressed or implied in these forward-looking statements. The Company
expressly disclaims any obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
TREX COMPANY, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2008 2009 2008 2009
Net sales $ 85,379 $ 61,949 $ 299,905 $ 221,054
Cost of sales 62,406 43,467 217,038 157,257
Gross profit 22,973 18,482 82,867 63,797
Selling, general and administrative expenses 14,533 13,964 52,672 47,937
Impairment of long-lived assets - 23,251 - 23,251
Income (loss) from operations 8,440 (18,733 ) 30,195 (7,391 )
Interest expense, net 3,536 3,930 11,135 11,012
Income (loss) before income taxes 4,904 (22,663 ) 19,060 (18,403 )
Provision (benefit) for income taxes (261 ) (201 ) 10 (203 )
Net income (loss) $ 5,165 $ (22,462 ) $ 19,050 $ (18,200 )
Diluted earnings (loss) per common share $ 0.34 $ (1.49 ) $ 1.26 $ (1.21 )
Diluted weighted average common shares outstanding 15,253,680 15,082,047 15,082,325 15,048,467
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
31-Dec-08 30-Sep-09
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 23,189 $ 39,791
Accounts receivable, net 13,555 14,961
Inventories 69,397 37,676
Prepaid expenses and other assets 5,518 2,531
Income taxes receivable 2,554 201
Deferred income taxes 2,141 2,141
Total current assets 116,354 97,301
Property, plant and equipment, net 176,336 140,425
Goodwill 6,837 6,837
Other assets 7,557 5,831
Total assets $ 307,084 $ 250,394
LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 37,666 $ 26,470
Accrued warranty 12,310 12,342
Current portion long-term debt 1,293 1,376
Total current liabilities 51,269 40,188
Deferred income taxes 3,531 3,531
Accrued taxes 2,640 2,224
Non-current accrued warranty 9,546 1,994
Debt-related derivatives 2,069 950
Long-term debt, net of current portion 100,201 79,204
Total liabilities 169,256 128,091
Stockholders` equity:
Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding -- --
Common stock, $0.01 par value, 40,000,000 shares authorized; 15,310,343 and 15,388,017 shares issued and outstanding at December 31, 2008 and September 30, 2009 153 154
Additional paid-in capital 92,825 95,207
Accumulated other comprehensive loss (1,092 ) (800 )
Retained earnings 45,942 27,742
Total stockholders` equity 137,828 122,303
Total liabilities and stockholders` equity $ 307,084 $ 250,394
TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30,
2008 2009
OPERATING ACTIVITIES
Net income (loss) $ 19,050 $ (18,200 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 23,756 23,826
Impairment of long lived assets -- 23,251
Other non-cash charges 1,988 2,030
Changes in operating assets and liabilities 5,833 16,873
Net cash provided by operating activities $ 50,627 $ 47,780
INVESTING ACTIVITIES $ (6,874 ) $ (4,905 )
FINANCING ACTIVITIES $ (1,062 ) $ (26,273 )
Net increase in cash and cash equivalents $ 42,691 $ 16,602
Cash and cash equivalents at beginning of period $ 66 $ 23,189
Cash and cash equivalents at end of period $ 42,757 $ 39,791
Trex Company, Inc.
James Cline, 540-542-6300
Chief Financial Officer
or
Lippert/Heilshorn & Associates
Harriet Fried, 212-838-3777
Copyright Business Wire 2009
