Trex Company Reports Fourth Quarter and Full Year 2024 Results

Consumer Demand for Trex Premium Products Remained Strong in the Fourth Quarter and Throughout 2024

Record Pace of New Product Introductions in 2024

Full Year Net Income, EPS and EBITDA up 10% Year-on-Year; EBITDA Margin Reached 31.3%

Secured Commitments for Trex Railing Products with Existing and New Distribution Partners

Substantial New Product Development Underway as Part of the Company’s “Performance-Engineered for Your Life Outdoors” Campaign

2025 Guidance Anticipates 5-7% Revenue Growth and Adjusted EBITDA Margin to Exceed 31%

Trex Company, Inc., the world’s largest manufacturer of wood-alternative decking and railing products and a leader in outdoor living products, announced financial results for its fourth quarter and full year of 2024.

2024 Fourth Quarter Financial Highlights

• Net sales of $168 million
• Gross margin of 32.7%
• Net income of $10 million and diluted earnings per share of $0.09
• EBITDA of $29 million and EBITDA margin of 17.2%

2024 Full Year Financial Highlights

• Net sales of $1.2 billion increased 5.2% year-over-year
• Gross margin of 42.2% expanded 90-basis points from prior year
• Net income of $226 million and diluted earnings per share of $2.09 increased 10.2% year-on year

• EBITDA of $360 million increased 10.4% and EBITDA margin of 31.3% expanded by 150 basis points, year-over-year
• Repurchased 1.6 million shares of outstanding common stock for $100 million

CEO Comments

“The continued strong performance of our premium product lines and stable sequential demand trends for our value-priced products led to fourth quarter sales above our expectations, enabling us to exceed our full year revenue guidance. The significant EBITDA outperformance in the fourth quarter demonstrated the positive leverage of our business model on higher utilization, driven, in part, by our year-end inventory build, as well as the benefits of our continuous cost-out programs,” said Bryan Fairbanks, President and CEO.

“In 2024, we delivered on several key strategic priorities including the introduction of a record number of new decking, railing, and fastener products, and securing commitments from many of our exclusive decking distributors to also be exclusive distributors for Trex railing products. Our investments in product development continue to yield positive results. Products launched within the last 36 months represented approximately 18% of 2024 revenues, and new products will continue to be an important growth driver for Trex. We are especially pleased by the positive consumer response to our proprietary heat-mitigating technology* branded as ‘SunComfortable’^™. This technology was first introduced in our 2022 launch of Trex Transcend^® Lineage^® and was included in our 2024 launch of two new colors of the Trex Enhance^® decking line. Given the positive response to this innovative technology, we plan to incorporate this popular feature in future products currently being developed as part of our “Performance-Engineered for Your Life Outdoors” campaign.

“In addition to developing new decking products, we accelerated the pace of new railing product introductions to significantly increase our penetration of the $3.3 billion railing market. Among the products that will be available for the 2025 season are the new Trex Enhance^™ steel, Trex Select^™ aluminum, Trex Signature^® X-Series^™ cable and frameless glass railing systems, in addition to enhancements to the Trex Select^® composite railing system that is priced to compete with vinyl railing. This expanded railing portfolio has convinced many of our distributors, dealers and contractors to fully align their business with both Trex^® decking and railing, which we believe will have a multiplier effect on our future decking and railing sales,” Mr. Fairbanks noted.

Fourth Quarter 2024 Results

Fourth quarter 2024 net sales were $168 million, a decrease of 14.4% compared to $196 million reported in the prior-year quarter, impacted by a reduction in channel inventory of approximately $45 million.

Gross profit was $55 million and gross margin was 32.7%. This compares to gross profit of $71 million and gross margin of 36.1% in last year’s fourth quarter.

Selling, general, and administrative expenses were $39 million, or 23.4% of net sales, compared to $43 million, or 21.7% of net sales, in the 2023 fourth quarter.

Net income for the 2024 fourth quarter was $10 million, or $0.09 per diluted share, compared to $22 million, or $0.20 per diluted share, reported in the 2023 fourth quarter. EBITDA was $29 million down from $41 million, and EBITDA margin contracted 380 basis points to 17.2% from 21% in the prior year period.

Full Year 2024 Results

Full year consolidated net sales increased 5.2% to $1.2 billion from $1.1 billion in the year-ago period. Gross profit was $486 million and gross margin was 42.2%, up 7.4% and 90 basis points, respectively, from the $452 million and 41.3% during the same period in 2023.

Selling, general, and administrative expenses were $180 million, or 15.6% of net sales, compared to $176 million, or 16.1% of net sales, in the year-ago period.

Full year 2024 net income was $226 million, or $2.09 per share, representing 10.2% growth from $205 million, or $1.89 per share, in 2023. EBITDA was $360 million, up 10.4% from $326 million in the prior year. EBITDA margin expanded by 150 basis points to 31.3% from 29.8% in 2023.

Recent Developments & Recognitions

• Trex Company again topped the rankings in Builder Magazine’s annual Brand Use Study, receiving the highest scores for brand awareness, and Trex^® was cited as the #1 brand used by most Pro Builders and Pro Remodel Contractors in both the Composite/PVC Decking and Deck Railings categories.
• For the fifth consecutive year, Trex Company has been named “America’s Most Trusted^® Outdoor Decking”** by Lifestory Research.

Summary and Outlook

“We continue to see positive Residential sell-through growth, strong contractor backlogs, and favorable customer surveys, that all suggest optimism as we head into 2025. Our outlook anticipates continued strong sell-through of Trex premium decking products, improved demand for Trex entry-level decking products, and double-digit growth in railing product sales, amid a Repair & Remodel market that is expected to be flat with 2024 levels.

For full year 2025, Trex expects net sales to range from $1.21 billion to $1.23 billion, representing year-on-year growth of 6% at the midpoint. Adjusted EBITDA, which excludes one-time costs related to Arkansas start-up, digital transformation and the railing transition, is expected in the $378 million to $385 million range, inclusive of continued elevated investments in branding and product innovation. Adjusted EBITDA margin is expected to exceed 31%, consistent with 2024 despite the increased investment levels.

“In the second half of 2024, we revised our inventory strategy to reduce the quarterly volatility associated with the timing of channel stocking and de-stocking. Consequently, this year’s first quarter sales will include our Early Buy program but will not include channel inventory builds to the same degree as in 2024. This strategy will change the quarterly timing of 2025 sales as compared to the prior year, with approximately $40 million shifting out of the first quarter into the remainder of the year. As a result, we are guiding to first quarter 2025 revenues of between $325 million and $330 million, with second quarter revenues expected to be at similar levels to last year’s, followed by very strong year-on-year comparisons in the second half of 2025. Capital expenditures are expected to be approximately $200 million primarily tied to the development of our new Arkansas campus, including the addition of a warehouse facility,” continued Mr. Fairbanks.

“Our market leadership, brand equity and reputation, and robust product portfolio have attracted the largest and most trusted network of distributors, dealers, and home centers in North America. Together, we are positioned to capture the greatest share of the industry’s growth opportunities. Demonstrating our continued confidence in the long-term outlook for the Trex Company, we returned $100 million to our shareholders through the repurchase of 1.6 million shares of our outstanding common stock in 2024,” Mr. Fairbanks concluded.

For full results click here.

About Trex Company

For more than 30 years, Trex Company [NYSE: TREX] has invented, reinvented and defined the composite decking category. Today, the company is the world’s #1 brand of sustainably made, wood-alternative decking and deck railing, and a leader in high performance, low-maintenance outdoor living products. The undisputed global leader, Trex boasts the industry’s strongest distribution network with products sold through more than 6,700 retail outlets across six continents. Through strategic licensing agreements, the company offers a comprehensive outdoor living portfolio that includes deck drainage, flashing tapes, LED lighting, outdoor kitchen components, pergolas, spiral stairs, fencing, lattice, cornhole and outdoor furniture – all marketed under the Trex^® brand. Based in Winchester, Va., Trex is proud to have been named America’s Most Trusted^® Outdoor Decking 4 Years in a Row (2021-2024). The company was also recently included on Barron’s list of the 100 Most Sustainable U.S. Companies 2024, named one of America’s Most Responsible Companies 2024 by Newsweek and ranked as one of the 100 Best ESG Companies for 2023 by Investor’s Business Daily. For more information, visit Trex.com. You may also follow Trex on Facebook (trexcompany), Instagram (trexcompany), X (Trex_Company), LinkedIn (trex-company), TikTok (trexcompany), Pinterest (trexcompany) and Houzz (trex-company-inc), or view product and demonstration videos on the brand’s YouTube channel (TheTrexCo).

Contact:

Abigail Cox – L.C. Williams & Associates – acox@lcwa.com

Source: Trex Company