Trex Company, Inc. Reports Strong Financial Results for Second Quarter 2021

Strategic Insights -

Trex Company, Inc. has reported a 41.2% increase in net sales to $311.6 million for the second quarter of 2021, compared to $220.6 million in the same period last year. This growth was driven by a 43.0% increase in Trex Residential net sales and a 10.1% increase in Trex Commercial net sales. The company's net income also rose to $61.4 million, or $0.53 per diluted share, compared to $47.2 million, or $0.41 per diluted share, in the same period last year. The company's EBITDA (earnings before interest, income tax, and depreciation and amortization) increased by 35.8% to $91.6 million in the second quarter of 2021, compared to $67.5 million in the same period last year.

Key Takeaways:

  • Trex Residential net sales increased by 43.0% in the second quarter of 2021, compared to the same period last year, due to volume growth across all Trex Residential product lines.
  • The company's capacity expansion program, which delivered a 70% improvement over 2019 levels, was fully operational as of the end of May 2021, enabling the company to capture additional growth.
  • Labor shortages impacted the extent of the growth, but the company was still able to achieve significant volume growth.
  • The increase in net sales was substantially all due to volume growth, which was driven by sustained broad-based demand for Trex Residential products and market share gains from wood.
  • The company implemented a price increase effective January 1, 2021, to address inflationary pressures in key raw materials and transportation.
  • Gross profit as a percentage of net sales, gross margin, was favorably impacted by a $4.6 million decrease in raw material cost, but unfavorably impacted by inflationary pressures on key raw materials and transportation.
  • Selling, general, and administrative expenses increased by $5.1 million in the second quarter of 2021, primarily due to a $4.6 million increase in personnel-related expenses and a $1.5 million increase in branding and advertising spend, as well as travel and entertainment expenses.
  • The effective tax rate for the second quarter of 2021 of 25.5% was relatively unchanged compared to the effective tax rate of 25.6% for the second quarter of 2020.

Statistics:

  • Net sales increased by 41.2% in the second quarter of 2021, to $311.6 million, compared to $220.6 million in the same period last year.
  • Trex Residential net sales increased by 43.0% in the second quarter of 2021, compared to the same period last year.
  • Trex Commercial net sales increased by 10.1% in the second quarter of 2021, compared to the same period last year.
  • Net income increased to $61.4 million, or $0.53 per diluted share, for the second quarter of 2021, compared to $47.2 million, or $0.41 per diluted share, for the same period last year.
  • EBITDA increased by 35.8% to $91.6 million in the second quarter of 2021, compared to $67.5 million in the same period last year.

Sources:

  • Trex Company, Inc.'s Quarterly Report on Form 10-Q filed with the SEC on August 2, 2021.
  • Trex Company, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2020.
  • Trex Company, Inc.'s website.