Trex Company Reports 16% Revenue Growth in Third Quarter.Business Editors WINCHESTER, Va.--(BUSINESS WIRE)--Oct. 29, 2001 Trex Company, Inc. (NYSE NYSE See: New York Stock Exchange : TWP TWP Township TWP The Washington Post TWP Tropical Western Pacific TWP True Whig Party (political party in Liberia from 1878-1980) TWP Thomas Weisel Partners Group, Inc. ), manufacturer of Trex(R)Easy Care Decking(R), today announced financial results for the third quarter ended September 30, 2001. The Company's third quarter financial results were in line with the revised guidance that was announced on October 19. Revenue for the period was $29.9 million, an increase of 16% over the third quarter record revenues of $25.8 million in 2000. Income from operations was $5.7 million versus $8.5 million for the third quarter of last year. Net income for the quarter was $3.4 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $5.2 million, or $0.37 per diluted share, for the third quarter of 2000. Unabsorbed fixed manufacturing costs caused by manufacturing line shut downs have significantly influenced this unfavorable income result. For the nine months ended September 30, 2001, revenue was $99.8 million versus $101.3 million in the same period last year. Income from operations was $19.4 million versus $30.2 million for the first nine months of last year. Net income for the nine months ended September 30, 2001 was $11.3 million, compared to $18.3 million in the nine months ended September 30, 2000. On a fully diluted per share basis, net income was $0.80 per share versus $1.29 per share in 2000. "While revenue for the third quarter improved both year-over-year and sequentially, there is no doubt that the events of September 11 have had a temporary impact on our business," stated Trex Company president Robert Matheny. "This is compounded by the fact that the fourth quarter is a seasonally slow period for decking sales. Thus, it is clear that unabsorbed fixed manufacturing costs will continue to have an adverse effect on earnings for the entire fourth quarter. "One of the unknowns is the level of inventory that our distributors will maintain during the slow season. A survey of our wholesale distribution channels indicates that year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). sales exceeded that of 2000 levels by approximately 25%, indicating continued strong demand. However, the cautious stance taken by distributors and dealers over the near term has resulted in a scaling back of their inventories to below-normal levels given the economic uncertainty. We believe that we are experiencing a trough Trough The stage of the economy's business cycle that marks the end of a period of declining business activity and the transition to expansion. in our business that will reverse over the intermediate term. "There was continued interest in Trex decking among municipalities and real-estate developers A real estate developer (American English) or property developer (British English) makes improvements of some kind to real property, thereby increasing its value. In legal form the developer may be an individual, but is more often a partnership, limited liability company or in the third quarter that is translating into sales. Trex's durability du·ra·ble adj. 1. Capable of withstanding wear and tear or decay: a durable fabric. 2. , affordability and aesthetic appeal have resulted in highly visible project wins such as the BioSphere biosphere, irregularly shaped envelope of the earth's air, water, and land encompassing the heights and depths at which living things exist. The biosphere is a closed and self-regulating system (see ecology), sustained by grand-scale cycles of energy and of in Tuscon, Arizona, the Pickering, Ontario For other uses, see Pickering (disambiguation). Pickering is a city located immediately east of Toronto in Durham Region, Ontario, Canada. History Pickering Township was surveyed and established in 1791 as part of what was then York County. Boardwalk on Lake Ontario and the San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden Yacht yacht: see motorboating; sailing. yacht Sail- or motor-driven vessel used for racing or recreation. The term is popularly applied to large recreational engine-powered boats; the sailboats known as yachts and used for racing are usually light and Club. The Pickering, Ontario Boardwalk marks the second phase of a multi-year project. The city's positive experience with Trex products used in phase one, completed in 1999, led to the add-on business for phase two." Mr. Matheny continued, "In addition to securing exciting projects for our products, Trex also continues to receive industry recognition. During the quarter, the company won three prestigious awards that included Brand Leader by Remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling Magazine, the Golden Hammer A golden hammer is any tool, technology, paradigm, snake oil, buzzword or similar whose proponents enthusiastically sing its praises. They predict that it will solve multiple problems, including some for which it is obviously not suitable. (R) Award for Business-to-Consumer Advertising, and the Virginia Governor's Environmental Excellence Award. We are honored hon·or n. 1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate. 2. a. Good name; reputation. b. to receive these accolades and view them as validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of our efforts to establish Trex as the premier provider of quality decking. "To further enhance our market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , we recently hired new sales representatives to increase our coverage in some of our larger markets. During the third quarter, three new distribution locations were added bringing the total to 91 locations, 21 more than in the third quarter of 2000." Mr. Matheny concluded, "We are confident that we have effectively addressed current market conditions by temporarily shutting down excess manufacturing capacity while ensuring more-than-adequate production capabilities going forward. This included a reduction in headcount of more than seventy-five employees. While we need to deal with the uncertain near-term market conditions, our focus to establish Trex as the standard in the $2.5 billion decking market remains unchanged and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the future." The company has scheduled an analyst conference call for 9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy today. A live webcast of the conference call will be available to all investors at the Trex Company Web site at www.trex.com and on www.streetevents.com. For those who cannot listen to the live broadcast, an audio replay of the call will be available on the company's Web site for 30 days. A telephone replay of the call will also be available until 11:00 a.m. EST on Nov. 5. To listen to the telephone replay, dial 800-633-8284 (858-812-6440 outside the U.S.) and enter reservation number 19903909. About Trex Company Trex Company is the nation's largest manufacturer of non-wood decking, which is marketed under the brand name Trex(R). Trex Wood-Polymer(TM) lumber lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to offers an attractive appearance and the workability of wood without the ongoing need for protective sealants or repairs. Trex decking is manufactured in a proprietary process that combines waste wood fibers and reclaimed re·claim tr.v. re·claimed, re·claim·ing, re·claims 1. To bring into or return to a suitable condition for use, as cultivation or habitation: reclaim marshlands; reclaim strip-mined land. polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n and is used primarily for residential and commercial decking. The Company sells its products through 91 wholesale distribution locations, which in turn sell Trex decking to approximately 2,900 independent contractor-oriented retail lumberyards across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Trex(R)Easy Care Decking(R)and Wood-Polymer(TM)Lumber(TM)are trademarks of Trex Company, Inc., Winchester, VA. The statements in this press release regarding the Company's expected sales performance and operating results, its anticipated financial condition and its business strategy constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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 sensitivity of the Company's business to general economic conditions, and the highly competitive markets in which the Company operates. The Company's report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission on March 28, 2001 discusses 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 undertakes no 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 data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Net sales(a) $29,868 $25,806 $99,791 $101,308
Cost of sales(a) 16,716 12,703 55,754 52,030
Gross profit 13,152 13,103 44,307 49,278
Selling, general and
administrative expenses 7,478 4,647 24,602 19,097
Income from operations 5,674 8,456 19,435 30,181
Interest expense, net (760) (76) (1,708) (616)
Income before taxes 4,914 8,380 17,727 29,565
Income taxes 1,511 3,184 6,382 11,231
Net income $3,403 $5,196 $11,345 $18,334
Fully diluted earnings per
common share $0.24 $0.37 $0.80 $1.29
Weighted average fully diluted
shares outstanding 14,171,593 14,193,579 14,172,971 14,182,491
(a) Amounts for the three and nine months ended September 30, 2000
have been reclassified to reflect the adoption of EITF 00-10,
Accounting for Shipping and Handling Fees and Costs.
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
December 31, 2000 September 30, 2001
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $-- $--
Trade accounts receivable 10,582 5,308
Inventories 23,017 32,002
Prepaid expenses and other assets 689 741
Income taxes receivable -- $--
Deferred income taxes 478 360
Total current assets 34,766 38,411
Property, plant and equipment,
net 113,635 137,330
Intangible assets, net 7,544 7,013
Other 650 500
Total assets $156,595 $183,254
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $17,082 $10,449
Accrued expenses 2,053 1,156
Income taxes payable 574 181
Other current liabilities 664 894
Line of credit -- 66,764
Debt related derivatives -- 1,906
Current portion of long-term debt 697 10,078
Total current liabilities 21,070 91,428
Deferred income taxes 5,782 6,354
Line of credit 44,748 --
Long-term debt 15,954 6,055
Total liabilities 87,554 103,837
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;
14,135,060 and 14,145,329
shares issued and outstanding 141 142
Additional capital 41,330 41,542
Retained earnings 27,570 38,915
Other comprehensive loss -- (1,182)
Total stockholders' equity 69,041 79,417
Total liabilities and stockholders'
equity $156,595 $183,254
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