Decking and railing company Trex Company, Inc. (NYSE: TWP) reported strong profits for 2Q08, due in part, to a tax gain.
Net sales for 2Q08 totaled $95.0 million compared to net sales of $118.8 million for 2Q07. The Company reported net income for 2Q08 of $7.9 million, or $0.52 per diluted share, compared to net income of $2.6 million, or $0.17 per diluted share, for 2Q07.
Net income for the 2008 six-month period totaled $16.8 million, or $1.12 per diluted share, compared to $6.3 million, or $0.42 per diluted share, for the 2007 six-month period.
The Company had an effective tax rate of almost zero percent for 2Q08 as a result of recognizing a decrease in the valuation allowance against the deferred tax asset, which accounted for $0.16 of the increase in earnings per share. The Company’s effective tax rate for the first six months of 2008 was 0.6%, accounting for $0.38 of the increase in earnings per share.
President and CEO Ronald W. Kaplan said, "Trex delivered our second consecutive quarter of solid profitability and increased cash flow despite soft macroeconomic conditions as we continued to execute our business turnaround strategy. Our sales remained strong as a result of our leading brand recognition, expanded distribution presence, and successful new product introductions.
"We are proud of the success we are having in restoring Trex to financial health and providing a competitive return to our shareholders. As we look to the second half of the year, we expect the operational improvements we have made will continue to positively impact gross margin. We also expect the lower effective tax rate realized in the first six months to continue for the remainder of 2008. Our third quarter orders are currently robust, making us cautiously optimistic about revenue despite the underlying macroeconomic conditions."
Trex projected 3Q08 sales to be in the range of $90-$97 million.
About Trex Company
Trex Company is the nation’s largest manufacturer of composite decking, railing and fencing, with more than 15 years of product experience. Built on "green" principles and values, Trex makes its products from a unique formulation of reclaimed wood and waste plastic, combined through a proprietary process. Trex decking, railing and fencing offer significant design flexibility with fewer ongoing maintenance requirements than wood, as well as a truly environmentally responsible choice. In addition, Trex distributes ultra-low maintenance PVC decking under the trademark Trex EscapesTM and PVC trim under the trademark Trex TrimTM.
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