Trex Company 2012 Net Sales Increase 15% to $307 Million
4Q 2012 Net Sales of $46 Million Exceed Guidance
Expanded High-Performance Product Platform Positions Trex for Strong 2013
1Q 2013 Revenue Guidance of $107 Million
WINCHESTER, Va.--(BUSINESS WIRE)-- Trex Company, Inc. (NYS: TREX) , the world's largest manufacturer of wood-alternative decking and railing products, today announced financial results for the fourth quarter ended December 31, 2012.
Net sales for the fourth quarter of 2012 totaled $46.2 million compared to net sales of $51.5 million for the 2011 fourth quarter. The Company reported a net loss of $3.6 million, or $0.22 per diluted share, for the 2012 quarter compared to a net loss of $18.3 million, or $1.18 per diluted share, for the prior-year period. During the 2012 quarter, the Company recognized a $1.5 million provision for costs related to the mold class action. Before giving effect to that charge, the 2012 net loss was $2.1 million, or $0.13 per diluted share. During the 2011 quarter, the Company recognized a $10.0 million increase to the warranty reserve for decking material manufactured at its Nevada plant prior to 2007. Before giving effect to that charge, the 2011 net loss was $8.3 million, or $0.54 per share.
"We brought 2012 to a successful close with a solid fourth quarter," said Chairman, President and CEO Ronald W. Kaplan. "We exceeded our revenue guidance for the period and achieved sales growth of 15% for the year. This, coupled with continued growth in Trex dealers and contractors, indicates that we continued to advance our industry-leading market share.
"Demonstrating our commitment to innovative leadership, including the expansion of our high-performance shelled decking products, we introduced a 'good, better, best' high-performance product platform for both our decking and railing product lines. Today's product line-up represents the most comprehensive and robust platform in our Company's history. During 2012 we also made further progress with our industry-leading, low-cost manufacturing process and achieved another record in manufacturing line rates.
"Our new and expanded product offerings have significantly increased the markets in which Trex participates. We believe we are well positioned for 2013, during which we expect to benefit from the growing momentum in the housing sector.
"With consumers increasingly aware of the beauty and performance features of Trex's wood-alternative outdoor living products, we have turned our branding focus to consumer engagement. Our communications are targeted and customized to encourage the whole spectrum of consumers to engage with Trex to create and build their ultimate and unique outdoor project.
"With our expanded array of products, operational enhancements, innovative sales and marketing programs and an improving housing market, we expect 2013 to be a strong year for Trex. For the first quarter of 2013, we expect net sales to total $107 million, an increase of approximately 11 percent from the 2012 period.
For the full year ended December 31, 2012, Trex Company reported net sales of $307.4 million compared to net sales of $266.8 million for 2011. The Company reported net income of $2.7 million, or $0.16 per share, compared to a net loss of $11.6 million, or $0.75 per share, for 2011. The 2012 results reflect a $21.5 million pre-tax increase to its warranty reserve for decking material manufactured at its Nevada plant prior to 2007, the $1.5 million provision for costs related to the mold class action, and $0.7 million of severance charges. The 2011 results reflect a $10.0 million increase to the Company's warranty reserve in the fourth quarter and a net $2.3 million non-cash benefit recognized in prior quarters. Before giving effect to these adjustments, net income for 2012 was $26.4 million, or $1.55 per diluted share, compared to a net loss for 2011 of $3.9 million, or $0.25 per share.
Fourth-Quarter 2012 Conference Call and Webcast Information
Trex will hold a conference call to discuss its fourth-quarter 2012 results on Tuesday, February 19, 2013 at 10:00 a.m. ET. To participate in the live call by telephone, please dial 706-634-1218 or 888-803-7566 and reference conference ID #92520167. A live webcast of the conference call will also be available in the Investor Relations section of the Trex Company website at trex.com.
For those who cannot listen to the live broadcast, an audio replay of the earnings call will be available on the Trex website for 30 days. A telephone replay of the call will also be available through February 26, 2013. To listen to the telephone replay, dial 404-537-3406 and enter conference ID #92520167.
The statements in this press release regarding the Company's expected future performance and condition constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to risks and uncertainties that could cause the Company's actual operating results to differ materially. Such risks and uncertainties include the extent of market acceptance of the Company's products; the costs associated with the development and launch of new products and the market acceptance of such new products; the sensitivity of the Company's business to general economic conditions; the Company's ability to obtain raw materials at acceptable prices; the Company's ability to maintain product quality and product performance at an acceptable cost; the level of expenses associated with product replacement and consumer relations expenses related to product quality; and the highly competitive markets in which the Company operates. Documents filed with the Securities and Exchange Commission by the Company, including in particular its latest annual report on Form 10-K and quarterly reports on Form 10-Q, discuss some of the important factors that could cause the Company's actual results to differ materially from those expressed or implied in these forward-looking statements. The Company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
About Pro-Forma Net Income and Related Earnings Per Share (EPS)
To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, the Company uses the following non-GAAP financial measures: net income on a pro-forma basis and related EPS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.
The Company defines net income on a pro-forma basis as net income before certain charges. The fourth quarter of 2012 includes a $1.5 million provision for costs related to the mold class action. The 2011 period includes a $10.0 million increase to the Company's warranty reserve for decking material manufactured at its Nevada plant prior to 2007.
The Company's full-year 2012 results include a $21.5 million pre-tax increase to its warranty reserve, the $1.5 million provision for costs related to the mold class action, and $0.7 million of severance charges. Its full-year 2011 results reflect a $10.0 million increase to the Company's warranty reserve and a net $2.3 million non-cash benefit resulting primarily from the favorable resolution of an uncertain tax position.
The Company defines related EPS as net income on a pro-forma basis divided by the weighted average outstanding shares, on a fully diluted basis. The Company uses these pro-forma financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company also believes that investors and analysts benefit from referring to these pro-forma financial measures in assessing the performance and expectations of the Company's future performance.
For more information on the reconciliation of GAAP and pro-forma financial terms, please see the two tables titled "Reconciliations of Pro-Forma Results of Operations Measures to the Nearest Comparable GAAP Measures Three Months Ended December 31, 2012" and "Reconciliations of Pro-Forma Results of Operations Measures to the Nearest Comparable GAAP Measures Twelve Months Ended December 31, 2012" at the end of this release.
About Trex Company
Trex Company is the world's largest manufacturer of wood-alternative decking and railing, with more than 20 years of product experience. Stocked in more than 6,000 retail locations throughout the world, Trex® outdoor living products offer a wide range of style options with fewer ongoing maintenance requirements than wood, as well as a truly environmentally responsible choice. For more information, visit trex.com.
TREX COMPANY, INC.
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