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Sep 30, 2020
Trex Q3 2020 Earnings Report
Trex reported strong Q3 2020 results driven by brand leadership and secular demand.
Key Takeaways
Trex Company reported a 19% increase in consolidated net sales, reaching $232 million. Net income increased by 2% to $43 million, or $0.37 per diluted share. Excluding a warranty charge, net income was $48 million, or $0.41 per diluted share.
Consolidated net sales increased 19% to $232 million.
Trex Residential Products net sales increased 20% to $218 million.
Consolidated diluted earnings per share of $0.37; excluding the warranty charge, diluted earnings per share of $0.41.
The company expects strong double-digit sales growth for full year 2021.
Trex
Trex
Forward Guidance
For the fourth quarter of 2020, Trex expects consolidated net sales of approximately $210 million to $220 million, representing 30% growth at the midpoint. They anticipate strong double-digit sales growth in 2021.
Positive Outlook
- Expect consolidated net sales of approximately $210 million to $220 million, representing 30% growth at the midpoint of the range.
- Expect SG&A as a percentage of net sales to improve by approximately 150 basis points for the full year compared to the prior year.
- Expect 2021 to deliver another year of strong double-digit sales growth.
- Recently announced price increases on certain products that will go into effect at the beginning of the new year, combined with disciplined cost management and continuous improvement efforts, are expected to more than offset increased costs related to the new capacity ramp-up and expected inflation for raw materials.
- The Trex Board of Directors has reinstated our share buyback program.
Challenges Ahead
- Expect incremental gross margin to be at the low end of the 45% to 50% range, excluding the warranty charge, and reflecting COVID-19 related expenses, inflation and logistics costs associated with startup expenses as we approach our Virginia facility coming online.
- Material adverse impacts from global public health pandemics, including the strain of coronavirus known as COVID-19;
- Material adverse impacts related to labor shortages or increases in labor costs.
- The extent of market acceptance of the Company’s current and newly developed products
- The costs associated with the development and launch of new products and the market acceptance of such new products