Trex Company, Inc. (NYSE: TWP), manufacturer of Trex decking and railing, announced financial results for the fourth quarter and full year ended December 31, 2005. Net sales for the fourth quarter rose 49% to $44.0 million, compared to $29.6 million for the fourth quarter of 2004. The Company reported a net loss for quarter of $10.1 million, or $0.68 per diluted share, compared to a net loss of $0.4 million, or $0.02 per diluted share, for the 2004 fourth quarter.
For the full 2005 year, Trex reported 16% increase in net sales of $294.1 million, compared to $253.6 million for 2004. Net income for 2005 was $2.5 million, or $0.17 per diluted share, compared to $27.2 million, or $1.83 per diluted share, for 2004.
Chairman and Chief Executive Officer Anthony J. Cavanna commented, “We are pleased with Trex’s strong revenue growth in the fourth quarter, which reflected low inventory levels in the channel combined with favorable weather conditions and our dealers’ anticipation of a strong 2006.
“This positive top-line performance was offset by lower utilization of the company’s manufacturing facilities and the resulting underabsorption of fixed plant costs. Continued increases in the cost of plastic raw materials and a series of ongoing initiatives to improve product quality and packaging also negatively affected our bottom line.
“2005 was clearly a challenging year for Trex, due in great part to the aggressive manufacturing and new product agenda we set for the company. Our plan for 2006 is to achieve better absorption of fixed overhead by bringing plant utilization up to a more normal level. We successfully opened our facility in Olive Branch, Mississippi in the second quarter of 2005, and the new facility is already producing at rates and quality levels comparable to those of our Winchester and Fernley plants. Rather than introducing any new decking products in 2006, we will focus on achieving more consistent and efficient plant production of our Trex Accents, Trex Brasilia(TM), and Trex Artisan Series Railing(TM) products, all of which have been enthusiastically received by the market. Although investing in our brand is still an important priority for Trex, we expect total SG&A costs to decline as a percentage of net sales in 2006.”
Mr. Cavanna concluded, “As a result of the many steps we have taken to enhance product quality, improve our manufacturing operations and achieve better control of our costs, we believe Trex is well positioned to continue to lead the conversion of the market from wood to composite decking. For the first half of 2006, we expect net sales to range from $220 million to $230 million and earnings per diluted share to range from $0.57 to $0.62. This compares to net sales of $173 million and earnings per diluted share of $0.50 in the first half of 2005.”
About Trex Company
Trex Company is the nation’s largest manufacturer of composite decking and railing, with over 13 years of product experience. Products are marketed under the brand name Trex. Made from a unique formulation of reclaimed wood and plastic, combined through a proprietary process, Trex decking and railing offer significant design flexibility with fewer ongoing maintenance requirements than wood. For more information, visit the Company’s website, www.trex.com. Trex, Trex Accents, Trex Brasilia(TM) and Artisan Series Railing(TM) are trademarks of Trex Company, Inc., Winchester, Va.
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