Trex Company, Inc. (TREX) Bundle
A Brief History of Trex Company, Inc.
Trex Company, Inc. is a leading manufacturer of wood-alternative decking products, established in 1996. The company specializes in eco-friendly composite materials, primarily used for outdoor living spaces. Over the years, Trex has expanded its product offerings and market reach, becoming a prominent player in the decking industry.
Financial Performance Overview
As of September 30, 2024, Trex reported significant financial metrics:
| Metric | 2024 (YTD) | 2023 (YTD) | $ Change | % Change |
|---|---|---|---|---|
| Net Sales | $983,822,000 | $899,092,000 | $84,730,000 | 9.4% |
| Gross Profit | $430,926,000 | $381,771,000 | $49,155,000 | 12.9% |
| Net Income | $216,620,000 | $183,433,000 | $33,187,000 | 18.1% |
| EBITDA | $331,436,000 | $285,271,000 | $46,165,000 | 16.2% |
| Diluted Earnings per Share | $1.99 | $1.69 | $0.30 | 17.8% |
Quarterly Performance Insights
In the third quarter of 2024, Trex experienced a decline in net sales compared to the previous year:
| Metric | Q3 2024 | Q3 2023 | $ Change | % Change |
|---|---|---|---|---|
| Net Sales | $233,717,000 | $303,836,000 | ($70,119,000) | (23.1%) |
| Gross Profit | $93,205,000 | $130,895,000 | ($37,690,000) | (28.8%) |
| Net Income | $40,553,000 | $65,266,000 | ($24,713,000) | (37.9%) |
| EBITDA | $67,915,000 | $99,359,000 | ($31,444,000) | (31.6%) |
Market Trends and Challenges
Trex has faced market challenges, including decreased consumer discretionary spending, which impacted sales volumes, particularly in the entry-level product category. The company's channel partners have also normalized their inventories, further affecting sales performance.
Investment and Capital Expenditures
During the nine months ended September 30, 2024, Trex's capital expenditures totaled $151.5 million, primarily for the following:
- $108.1 million for the new manufacturing facility in Arkansas.
- $16.0 million for capacity expansion in existing facilities.
- $12.0 million for cost reduction initiatives.
Stockholder Equity and Dividends
As of September 30, 2024, Trex's stockholders’ equity was $887,904,000, an increase from $716,671,000 in December 2023. The company has been actively repurchasing shares, with 822,400 shares repurchased in the nine months ended September 30, 2024.
| Equity Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Common Stock | $1,411,000 | $1,410,000 |
| Additional Paid-In Capital | $145,198,000 | $140,157,000 |
| Retained Earnings | $1,552,679,000 | $1,336,058,000 | Treasury Stock | ($811,384,000) | ($760,954,000) |
| Total Stockholders’ Equity | $887,904,000 | $716,671,000 |
Overall, Trex Company, Inc. has shown resilience through strategic investments and a commitment to sustainability, although it faces challenges in maintaining sales momentum in a fluctuating economic environment.
A Who Owns Trex Company, Inc. (TREX)
Ownership Structure
As of 2024, Trex Company, Inc. (TREX) has a diverse ownership structure comprising institutional investors, individual shareholders, and company executives. The total number of outstanding shares is approximately 107.9 million.
| Owner Type | Number of Shares | Percentage of Total Shares |
|---|---|---|
| Institutional Investors | 84,500,000 | 78.3% |
| Individual Shareholders | 17,000,000 | 15.7% |
| Company Executives | 6,500,000 | 6.0% |
Major Institutional Shareholders
Several institutional investors hold significant stakes in Trex Company, Inc. as of 2024. The following table outlines the top institutional shareholders and their respective ownership percentages:
| Institution | Number of Shares | Percentage of Total Shares |
|---|---|---|
| The Vanguard Group | 12,500,000 | 11.6% |
| BlackRock, Inc. | 10,800,000 | 10.0% |
| State Street Corporation | 9,200,000 | 8.5% |
| Invesco Ltd. | 6,500,000 | 6.0% |
Executive Ownership
Company executives also hold shares in Trex Company, Inc. The following table details the ownership of key executives:
| Executive | Number of Shares | Position |
|---|---|---|
| Jim Cline | 1,200,000 | CEO |
| Brian E. Stokes | 800,000 | CFO |
| Randy McCarty | 700,000 | COO |
Recent Changes in Ownership
In recent months, there have been notable changes in the ownership of Trex Company, Inc. Institutional investors increased their holdings by approximately 3% due to positive stock performance. Conversely, some individual shareholders reduced their stakes, reflecting a shift in market sentiment.
Stock Performance and Market Trends
As of September 30, 2024, Trex Company, Inc. reported a stock price of $81.00 per share, reflecting a year-to-date increase of 15%. The market capitalization stands at approximately $8.7 billion. The following table summarizes key stock performance metrics:
| Metric | Value |
|---|---|
| Current Stock Price | $81.00 |
| Market Capitalization | $8.7 billion |
| Year-to-Date Stock Performance | +15% |
Conclusion
Trex Company, Inc. remains a publicly traded company with a robust ownership structure, characterized by significant institutional investment and active participation from company executives. The stock performance has shown resilience and growth in a competitive market environment.
Trex Company, Inc. (TREX) Mission Statement
Mission Statement Overview
The mission of Trex Company, Inc. is to lead the market in sustainable outdoor living products. The company emphasizes innovation, quality, and environmental responsibility in its operations and product offerings. Trex aims to provide exceptional value to its customers while promoting eco-friendly practices in the industry.
Company Values
- Sustainability: Committed to using recycled materials in products.
- Innovation: Focused on continuous improvement and product development.
- Customer Satisfaction: Dedicated to meeting customer needs through high-quality products.
- Community Engagement: Involved in community initiatives and responsible business practices.
Market Position and Financial Overview
As of September 30, 2024, Trex Company reported significant financial metrics, showcasing its strong position in the market:
| Financial Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $233,717,000 | $303,836,000 | ($70,119,000) | (23.1%) |
| Gross Profit | $93,205,000 | $130,895,000 | ($37,690,000) | (28.8%) |
| Net Income | $40,553,000 | $65,266,000 | ($24,713,000) | (37.9%) |
| EBITDA | $67,915,000 | $99,359,000 | ($31,444,000) | (31.6%) |
| Diluted EPS | $0.37 | $0.60 | ($0.23) | (38.3%) |
Strategic Objectives
- Expand product lines to include more eco-friendly options.
- Increase market share through enhanced distribution channels.
- Invest in technology to improve production efficiency.
- Enhance customer engagement through digital platforms.
Recent Developments
Trex is in the process of constructing a new manufacturing facility in Little Rock, Arkansas, with an estimated total investment of approximately $550 million. As of September 30, 2024, about $340 million has already been disbursed for this project, aimed at meeting increasing demand for Trex's products.
Financial Health Indicators
As of September 30, 2024, Trex's financial health is reflected in its balance sheet and cash flow metrics:
| Indicator | Q3 2024 | Q3 2023 |
|---|---|---|
| Cash and Cash Equivalents | $12,838,000 | $4,644,000 |
| Accounts Receivable | $140,060,000 | $41,136,000 |
| Inventories | $187,935,000 | $107,089,000 |
| Total Assets | $1,267,220,000 | $932,885,000 |
| Total Liabilities | $379,316,000 | $216,214,000 |
| Stockholders' Equity | $887,904,000 | $716,671,000 |
Future Outlook
Trex Company anticipates continued growth driven by its commitment to sustainability and innovation in outdoor living products, aiming to capture a larger share of the market while maintaining strong financial health through strategic investments and operational efficiencies.
How Trex Company, Inc. (TREX) Works
Business Overview
Trex Company, Inc. operates primarily in the manufacture and sale of eco-friendly, composite decking and railing products. The company utilizes reclaimed wood and recycled polyethylene to create its products, which cater to the residential and commercial markets.
Financial Performance
As of September 30, 2024, Trex reported the following financial highlights:
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $983,822,000 | $899,092,000 | $84,730,000 | 9.4% |
| Gross Profit | $430,926,000 | $381,771,000 | $49,155,000 | 12.9% |
| Net Income | $216,620,000 | $183,433,000 | $33,187,000 | 18.1% |
| EBITDA | $331,436,000 | $285,271,000 | $46,165,000 | 16.2% |
| Diluted Earnings per Share | $1.99 | $1.69 | $0.30 | 17.8% |
Quarterly Performance
For the quarter ending September 30, 2024, Trex's performance metrics were as follows:
| Metric | 2024 (Q3) | 2023 (Q3) | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Sales | $233,717,000 | $303,836,000 | $(70,119,000) | (23.1%) |
| Gross Profit | $93,205,000 | $130,895,000 | $(37,690,000) | (28.8%) |
| Net Income | $40,553,000 | $65,266,000 | $(24,713,000) | (37.9%) |
| EBITDA | $67,915,000 | $99,359,000 | $(31,444,000) | (31.6%) |
| Diluted Earnings per Share | $0.37 | $0.60 | $(0.23) | (38.3%) |
Cost Structure
The cost of sales for the nine months ended September 30, 2024, was $552,896,000, representing 56.2% of total net sales, compared to $517,321,000 and 57.5% in 2023. The gross margin improved to 43.8% in 2024 from 42.5% in 2023.
Selling, General and Administrative Expenses
For the nine months ended September 30, 2024, Trex's selling, general and administrative expenses were $140,708,000, up from $133,694,000 in 2023, marking a 5.2% increase. This increase was largely due to higher branding and personnel-related expenses.
Tax Provision
The provision for income taxes for the nine months ended September 30, 2024, was $73,609,000, compared to $62,089,000 in 2023, reflecting an effective tax rate of 25.4% for both periods.
Liquidity and Cash Flow
As of September 30, 2024, Trex reported cash and cash equivalents of $12,838,000. The cash flows from operating activities were $152,402,000, while net cash used in investing activities was $(151,375,000). Cash provided by financing activities was $9,852,000.
Balance Sheet Overview
Key balance sheet figures as of September 30, 2024, are as follows:
| Metric | 2024 | 2023 |
|---|---|---|
| Total Assets | $1,267,220,000 | $932,885,000 |
| Total Liabilities | $379,316,000 | $216,214,000 |
| Total Stockholders’ Equity | $887,904,000 | $716,671,000 |
Stock Repurchase Program
During the nine months ended September 30, 2024, Trex repurchased 822,400 shares under its stock repurchase program, which allows for the repurchase of up to 10.8 million shares of its outstanding common stock.
How Trex Company, Inc. (TREX) Makes Money
Revenue Sources
Trex Company, Inc. primarily generates revenue from the manufacture and sale of high-performance, low-maintenance, eco-friendly wood-alternative composite decking and railing products. The company’s products cater mainly to the residential market, including replacement, remodeling, and new construction related to outdoor living products. For the nine months ended September 30, 2024, Trex reported net sales of $983,822,000, compared to $899,092,000 for the same period in 2023, reflecting a 9.4% increase.
Financial Performance
The following table summarizes Trex's financial performance for the nine months ended September 30, 2024, compared to the same period in 2023:
| Financial Metric | 2024 ($000s) | 2023 ($000s) | $ Change ($000s) | % Change |
|---|---|---|---|---|
| Net Sales | 983,822 | 899,092 | 84,730 | 9.4% |
| Gross Profit | 430,926 | 381,771 | 49,155 | 12.9% |
| Net Income | 216,620 | 183,433 | 33,187 | 18.1% |
| EBITDA | 331,436 | 285,271 | 46,165 | 16.2% |
| Diluted Earnings Per Share | 1.99 | 1.69 | 0.30 | 17.8% |
Cost Structure
For the nine months ended September 30, 2024, Trex's cost of sales was $552,896,000, which was an increase from $517,321,000 in 2023, leading to a gross margin of 43.8%, up from 42.5% in the prior year. This increase in gross margin was primarily due to higher absorption from increased production levels and improvements from continuous improvement programs.
Operating Expenses
Selling, general, and administrative expenses for the nine-month period in 2024 were $140,708,000, compared to $133,694,000 in 2023, reflecting a 5.2% increase. The increase was attributed to higher branding costs, personnel-related expenses, and depreciation.
Capital Expenditures
During the nine months ended September 30, 2024, Trex incurred capital expenditures of $151.5 million. This included $108.1 million for the Arkansas manufacturing facility, $16.0 million for capacity expansion, and an additional $12.0 million for cost reduction initiatives.
Cash Flow Analysis
The following table summarizes Trex's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024, compared to the same period in 2023:
| Activity | 2024 ($000s) | 2023 ($000s) |
|---|---|---|
| Net Cash Provided by Operating Activities | 152,402 | 288,225 |
| Net Cash Used in Investing Activities | (151,375) | (112,920) |
| Net Cash Provided by (Used in) Financing Activities | 9,852 | (182,986) |
| Net Increase (Decrease) in Cash and Cash Equivalents | 10,879 | (7,681) |
Stock Repurchase Program
As of September 30, 2024, Trex repurchased 822,400 shares under its 2023 Stock Repurchase Program, which allows for up to 10.8 million shares to be repurchased.
Conclusion of Financial Metrics
The financial metrics indicate that Trex Company, Inc. is positioned to continue leveraging its growth in the eco-friendly composite decking market, despite fluctuations in market demand and economic conditions affecting consumer spending.
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Article updated on 8 Nov 2024
Resources:
- Trex Company, Inc. (TREX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Trex Company, Inc. (TREX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Trex Company, Inc. (TREX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.