10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number:

001-14649

Trex Company, Inc.

(Exact name of registrant as specified in its charter)


Delaware		54-1910453
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


160 Exeter Drive Winchester, Virginia		22603-8605
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(540) 542-6300

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	TREX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes

☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule

12b-2

of the Exchange Act): Yes

☐

No ☒

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding at October 2

, 2021 was 115,117,121 shares.

Table of Contents

TREX COMPANY, INC.

INDEX


		Page

PART I FINANCIAL INFORMATION			2

Item 1.	Condensed Consolidated Financial Statements		2

	Condensed Consolidated Statements of Comprehensive Income for the Three Months and Nine Months ended September 30, 2021 and September 30, 2020 (unaudited)		2

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)		3

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months ended September 30, 2021 and September 30, 2020 (unaudited)		4

	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2021 and September 30, 2020 (unaudited)		5

	Notes to Condensed Consolidated Financial Statements (unaudited)		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26

Item 4.	Controls and Procedures		26

PART II OTHER INFORMATION			27

Item 1.	Legal Proceedings		27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27

Item 5.	Other Information		27

Item 6.	Exhibits		27

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

TREX COMPANY, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021		2020
Net sales	$	335,872		$	231,502		$	892,991	$	652,545
Cost of sales		207,622			146,538			550,668		385,479

Gross profit		128,250			84,964			342,323		267,066
Selling, general and administrative expenses		30,154			28,027			97,383		91,598

Income from operations		98,096			56,937			244,940		175,468
Interest income, net		(10	)		(208	)		—		(801	)

Income before income taxes		98,106			57,145			244,940		176,269
Provision for income taxes		24,311			14,435			61,235		43,938

Net income	$	73,795		$	42,710		$	183,705	$	132,331

Basic earnings per common share	$	0.64		$	0.37		$	1.59	$	1.14

Basic weighted average common shares outstanding		115,344,015			115,773,030			115,455,543		115,921,463

Diluted earnings per common share	$	0.64		$	0.37		$	1.59	$	1.14

Diluted weighted average common shares outstanding		115,625,760			116,134,623			115,767,426		116,280,807

Comprehensive income	$	73,795		$	42,710		$	183,705	$	132,331

See Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

TREX COMPANY, INC.

Condensed Consolidated Balance Sheets

(In thousands)


	September 30, 2021		December 31, 2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	54,042	$	121,701
Accounts receivable, net		265,560		106,748
Inventories		73,636		68,238
Prepaid expenses and other assets		19,782		25,310

Total current assets		413,020		321,997
Property, plant and equipment, net		424,974		336,537
Goodwill and other intangible assets, net		73,351		73,665
Operating lease assets		36,137		34,382
Other assets		5,969		3,911

Total assets	$	953,451	$	770,492

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	45,415	$	38,622
Accrued expenses and other liabilities		105,193		62,331
Accrued warranty		5,400		5,400
Line of credit		—		—

Total current liabilities		156,008		106,353
Operating lease liabilities		29,716		28,579
Non-current accrued warranty		23,962		24,073
Deferred income taxes		22,956		22,956

Total liabilities		232,642		181,961

Commitments and contingencies		—		—

Stockholders’ equity:
Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding		—		—
Common stock, $0.01 par value, 180,000,000 shares authorized; 140,703,442 and 140,577,005 shares issued and 115,349,226 and 115,799,503 shares outstanding at September 30, 2021 and December 31, 2020, respectively		1,407		1,406
Additional paid-in capital		126,956		126,087
Retained earnings		921,016

SEC Form 10-Q filed by Trex Company, Inc.