☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 54-1910453 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
160 Exeter Drive Winchester, Virginia | 22603-8605 | |
(Address of principal executive offices) | (Zip Code) |
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulationand post such files). Yes or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company,” and “emerging growth company” in Rule Non-accelerated filer ☐
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock | TREX | New York Stock Exchange LLC |
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Item 1A. | 25 | |||||||
Item 2. | 25 | |||||||
Item 5. | 26 | |||||||
Item 6. | 27 |
Item 1. | Condensed Consolidated Financial Statements |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net sales | $ | 140,194 | $ | 106,168 | $ | 442,941 | $ | 384,294 | ||||||||
Cost of sales | 84,910 | 76,223 | 250,473 | 235,312 | ||||||||||||
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Gross profit | 55,284 | 29,945 | 192,468 | 148,982 | ||||||||||||
Selling, general and administrative expenses | 24,919 | 19,379 | 75,409 | 64,786 | ||||||||||||
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Income from operations | 30,365 | 10,566 | 117,059 | 84,196 | ||||||||||||
Interest expense, net | 59 | 77 | 515 | 1,108 | ||||||||||||
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Income before income taxes | 30,306 | 10,489 | 116,544 | 83,088 | ||||||||||||
Provision for income taxes | 10,208 | 2,702 | 39,715 | 27,871 | ||||||||||||
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Net income | $ | 20,098 | $ | 7,787 | $ | 76,829 | $ | 55,217 | ||||||||
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Basic earnings per common share | $ | 0.68 | $ | 0.27 | $ | 2.61 | $ | 1.88 | ||||||||
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Basic weighted average common shares outstanding | 29,404,049 | 29,295,284 | 29,385,722 | 29,419,958 | ||||||||||||
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Diluted earnings per common share | $ | 0.68 | $ | 0.26 | $ | 2.60 | $ | 1.86 | ||||||||
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Diluted weighted average common shares outstanding | 29,578,216 | 29,516,718 | 29,563,497 | 29,635,796 | ||||||||||||
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Comprehensive income | $ | 20,098 | $ | 7,787 | $ | 76,829 | $ | 55,217 | ||||||||
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Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net sales | $ | 200,395 | $ | 179,571 | ||||
Cost of sales | 110,699 | 110,206 | ||||||
Gross profit | 89,696 | 69,365 | ||||||
Selling, general and administrative expenses | 34,561 | 30,166 | ||||||
Income from operations | 55,135 | 39,199 | ||||||
Interest income, net | (522 | ) | (56 | ) | ||||
Income before income taxes | 55,657 | 39,255 | ||||||
Provision for income taxes | 13,255 | 7,700 | ||||||
Net income | $ | 42,402 | $ | 31,555 | ||||
Basic earnings per common share | $ | 0.73 | $ | 0.54 | ||||
Basic weighted average common shares outstanding | 58,129,529 | 58,543,478 | ||||||
Diluted earnings per common share | $ | 0.73 | $ | 0.54 | ||||
Diluted weighted average common shares outstanding | 58,323,721 | 58,829,177 | ||||||
Comprehensive income | $ | 42,402 | $ | 31,555 | ||||
September 30, 2017 | December 31, 2016 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 25,541 | $ | 18,664 | ||||
Accounts receivable, net | 70,802 | 48,039 | ||||||
Contract retainage | 1,893 | — | ||||||
Inventories | 26,029 | 28,546 | ||||||
Prepaid expenses and other assets | 3,912 | 10,400 | ||||||
Revenues in excess of billings | 4,706 | — | ||||||
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Total current assets | 132,883 | 105,649 | ||||||
Property, plant and equipment, net | 102,788 | 103,286 | ||||||
Goodwill and other intangibles | 72,544 | 10,523 | ||||||
Other assets | 2,981 | 1,972 | ||||||
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Total assets | $ | 311,196 | $ | 221,430 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 15,960 | $ | 10,767 | ||||
Accrued expenses and other liabilities | 41,327 | 34,693 | ||||||
Accrued warranty | 6,725 | 5,925 | ||||||
Billings in excess of revenues | 1,353 | — | ||||||
Customer deposits | 953 | — | ||||||
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Total current liabilities | 66,318 | 51,385 | ||||||
Deferred income taxes | 894 | 894 | ||||||
Non-current accrued warranty | 29,733 | 31,767 | ||||||
Other long-term liabilities | 2,676 | 3,223 | ||||||
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Total liabilities | 99,621 | 87,269 | ||||||
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Commitments and contingencies | — | — | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding | — | — | ||||||
Common stock, $0.01 par value, 80,000,000 shares authorized; 34,918,427 and 34,894,233 shares issued and 29,424,746 and 29,400,552 shares outstanding at September 30, 2017 and December 31, 2016, respectively | 349 | 349 | ||||||
Additionalpaid-in capital | 120,667 | 120,082 | ||||||
Retained earnings | 264,071 | 187,242 | ||||||
Treasury stock, at cost, 5,493,681 shares at September 30, 2017 and December 31, 2016 | (173,512 | ) | (173,512 | ) | ||||
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Total stockholders’ equity | 211,575 | 134,161 | ||||||
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Total liabilities and stockholders’ equity | $ | 311,196 | $ | 221,430 | ||||
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March 31, 2020 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,339 | $ | 148,833 | ||||
Accounts receivable, net | 241,242 | 78,462 | ||||||
Inventories | 58,716 | 56,106 | ||||||
Prepaid expenses and other assets | 16,582 | 19,803 | ||||||
Total current assets | 321,879 | 303,204 | ||||||
Property, plant and equipment, net | 193,099 | 171,300 | ||||||
Goodwill and other intangible assets, net | 73,980 | 74,084 | ||||||
Operating lease assets | 38,329 | 40,049 | ||||||
Other assets | 3,569 | 3,602 | ||||||
Total assets | $ | 630,856 | $ | 592,239 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 28,917 | $ | 15,227 | ||||
Accrued expenses and other liabilities | 54,355 | 58,265 | ||||||
Accrued warranty | 5,178 | 5,178 | ||||||
Line of credit | 28,500 | — | ||||||
Total current liabilities | 116,950 | 78,670 | ||||||
Operating lease liabilities | 32,440 | 34,242 | ||||||
Deferred income taxes | 9,831 | 9,831 | ||||||
Non-current accrued warranty | 19,912 | 20,317 | ||||||
Other long-term liabilities | — | 4 | ||||||
Total liabilities | 179,133 | 143,064 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.01 par value, 3,000,000 shares authorized; NaN issued and outstanding | — | — | ||||||
Common stock, $0.01 par value, 120,000,000 shares authorized; 70,241,911 and 70,187,463 shares issued and 57,853,160 and 58,240,721 shares outstanding at March 31, 2020 and December 31, 2019, respectively | 702 | 702 | ||||||
Additional paid-in capital | 123,214 | 123,996 | ||||||
Retained earnings | 604,082 | 561,680 | ||||||
Treasury stock, at cost, 12,388,751 and 11,946,742 shares at March 31, 2020 and December 31, 2019, respectively | (276,275 | ) | (237,203 | ) | ||||
Total stockholders’ equity | 451,723 | 449,175 | ||||||
Total liabilities and stockholders’ equity | $ | 630,856 | $ | 592,239 | ||||
Changes in Stockholders’ Equity
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Operating Activities | ||||||||
Net income | $ | 76,829 | $ | 55,217 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 12,065 | 10,893 | ||||||
Stock-based compensation | 3,913 | 3,806 | ||||||
Loss (gain) on disposal of property, plant and equipment | 1,720 | (189 | ) | |||||
Othernon-cash adjustments | (405 | ) | (285 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (14,407 | ) | 1,580 | |||||
Contract retainage | 55 | — | ||||||
Inventories | 4,860 | 6,597 | ||||||
Prepaid expenses and other assets | 2,987 | (771 | ) | |||||
Revenues in excess of billings | (1,243 | ) | — | |||||
Accounts payable | 1,203 | (6,761 | ) | |||||
Accrued expenses and other liabilities | (1,430 | ) | 5,005 | |||||
Billings in excess of revenues | (399 | ) | — | |||||
Customer deposits | (609 | ) | — | |||||
Income taxes receivable/payable | 7,698 | 8,487 | ||||||
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Net cash provided by operating activities | 92,837 | 83,579 | ||||||
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Investing Activities | ||||||||
Expenditures for property, plant and equipment | (11,108 | ) | (8,534 | ) | ||||
Proceeds from sales of property, plant and equipment | — | 4,349 | ||||||
Acquisition of business | (71,523 | ) | — | |||||
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Net cash used in investing activities | (82,631 | ) | (4,185 | ) | ||||
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Financing Activities | ||||||||
Borrowings under line of credit | 201,000 | 242,700 | ||||||
Principal payments under line of credit | (201,000 | ) | (249,700 | ) | ||||
Repurchases of common stock | (3,617 | ) | (55,185 | ) | ||||
Financing costs | — | (485 | ) | |||||
Proceeds from employee stock purchase and option plans | 288 | 218 | ||||||
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Net cash used in financing activities | (3,329 | ) | (62,452 | ) | ||||
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Net increase in cash and cash equivalents | 6,877 | 16,942 | ||||||
Cash and cash equivalents, beginning of period | 18,664 | 5,995 | ||||||
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Cash and cash equivalents, end of period | $ | 25,541 | $ | 22,937 | ||||
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Supplemental Disclosure: | ||||||||
Cash paid for interest | $ | 416 | $ | 849 | ||||
Cash paid for income taxes, net | $ | 32,016 | $ | 19,435 |
thousands, except share data)
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2019 | 58,240,721 | $ | 702 | $ | 123,996 | $ | 561,680 | 11,946,742 | $ | (237,203 | ) | $ | 449,175 | |||||||||||||||
Net income | — | — | — | 42,402 | — | — | 42,402 | |||||||||||||||||||||
Employee stock plans | 16,386 | — | 299 | — | — | — | 299 | |||||||||||||||||||||
Shares withheld for taxes on awards | (38,142 | ) | — | (3,856 | ) | — | — | — | (3,856 | ) | ||||||||||||||||||
Stock-based compensation | 76,204 | — | 2,775 | — | — | — | 2,775 | |||||||||||||||||||||
Repurchases of common stock | (442,009 | ) | — | — | — | 442,009 | (39,072 | ) | (39,072 | ) | ||||||||||||||||||
Balance, March 31, 2020 | 57,853,160 | $ | 702 | $ | 123,214 | $ | 604,082 | 12,388,751 | $ | (276,275 | ) | $ | 451,723 | |||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2018 | 58,551,653 | $ | 700 | $ | 124,224 | $ | 416,942 | 11,446,683 | $ | (198,903 | ) | $ | 342,963 | |||||||||||||||
Net income | — | — | — | 31,555 | — | — | 31,555 | |||||||||||||||||||||
Employee stock plans | 24,472 | — | 302 | — | — | — | 302 | |||||||||||||||||||||
Shares withheld for taxes on awards | (74,010 | ) | — | (5,727 | ) | — | — | — | (5,727 | ) | ||||||||||||||||||
Stock-based compensation | 160,359 | 1 | 2,793 | — | — | — | 2,794 | |||||||||||||||||||||
Repurchases of common stock | (124,989 | ) | — | — | — | 124,989 | (8,730 | ) | (8,730 | ) | ||||||||||||||||||
Balance, March 31, 2019 | 58,537,485 | $ | 701 | $ | 121,592 | $ | 448,497 | 11,571,672 | $ | (207,633 | ) | $ | 363,157 | |||||||||||||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Operating Activities | ||||||||
Net income | $ | 42,402 | $ | 31,555 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 3,851 | 3,394 | ||||||
Stock-based compensation | 2,775 | 2,793 | ||||||
(Gain) loss on disposal of property, plant and equipment | (123 | ) | 10 | |||||
Other non-cash adjustments | 32 | 31 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (162,780 | ) | (128,182 | ) | ||||
Inventories | (2,610 | ) | 7,645 | |||||
Prepaid expenses and other assets | 1,059 | 1,214 | ||||||
Accounts payable | 8,865 | (7,556 | ) | |||||
Accrued expenses and other liabilities | (14,089 | ) | (27,332 | ) | ||||
Income taxes receivable/payable | 11,850 | 6,438 | ||||||
Net cash used in operating activities | (108,768 | ) | (109,990 | ) | ||||
Investing Activities | ||||||||
Expenditures for property, plant and equipment | (22,733 | ) | (8,647 | ) | ||||
Proceeds from sales of property, plant and equipment | 2,136 | — | ||||||
Net cash used in investing activities | (20,597 | ) | (8,647 | ) | ||||
Financing Activities | ||||||||
Borrowings under line of credit | 36,500 | 35,000 | ||||||
Principal payments under line of credit | (8,000 | ) | — | |||||
Repurchases of common stock | (42,929 | ) | (14,457 | ) | ||||
Proceeds from employee stock purchase and option plans | 300 | 302 | ||||||
Net cash (used in) provided by financing activities | (14,129 | ) | 20,845 | |||||
Net decrease in cash and cash equivalents | (143,494 | ) | (97,792 | ) | ||||
Cash and cash equivalents, beginning of period | 148,833 | 105,699 | ||||||
Cash and cash equivalents, end of period | $ | 5,339 | $ | 7,907 | ||||
Supplemental Disclosure: | ||||||||
Cash paid for interest | $ | 1 | $ | 11 | ||||
Cash paid for income taxes, net | $ | 1,405 | $ | 1,262 |
(Unaudited).
2019
1. | BUSINESS AND ORGANIZATION |
2. | BASIS OF PRESENTATION |
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Trex Wood-Polymer Espana, S.L,Commercial Products, Inc., for all periods presented. The Condensed Consolidated Statements of Comprehensive IncomeIntercompany accounts and the Condensed Consolidated Statements of Cash Flows of the Company include the operations and cash flows of Trex Commercial Products, Inc., its newly-formed, wholly-owned subsidiary, from July 31, 2017 through September 30, 2017. The Company’s Condensed Consolidated Balance Sheet includes the assets and liabilities of Trex Commercial Products, Inc. at September 30, 2017. Trex Commercial Products, Inc. was formed to acquire certain assets and assume certain liabilities of SC Company on July 31, 2017. Additional information on the acquisition of SC Company is presentedtransactions have been eliminated in Note 6.
consolidation.
3. |
In addition to the critical accounting policies included in the Company’s Annual Report on Form10-K for the year ended December 31, 2016, the Company’s critical accounting policies also currently include the following policies implemented subsequent to and in connection with the SC Company acquisition:
Revenue Recognition
For Trex Commercial Products, the Company recognizes revenue using the percentage of completion method measured by the ratio of direct costs incurred to date to estimated total costs for each contract. Contract costs include all direct material, labor, subcontract and certain indirect costs. Administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are recognized when such losses are determined. Changes in job performance, conditions and estimated profitability may result in revisions to costs and income and are recognized in the period they are determined. Revenues recognized in excess of amounts billed are classified under current assets. Billings in excess of revenues are classified under current liabilities.
Concentrations and Credit Risk
In addition to its trade receivables, the Company assesses the credit risk exposure of its customers’ contracts receivable by considering the length of time receivables may be past due, the customer’s financial condition and ability to repay the obligation, historical and expected credit loss experience, and other factors. Contracts receivable are carried at the original invoice amount in accounts receivable in the Company’s Condensed Consolidated Balance Sheet and are generally due when billed, and contract retainage is generally due at the completion of the construction contract.
RECENTLY ADOPTED ACCOUNTING |
Three Months Ended September 30, 2016 | ||||||||
As Reported | Adjusted | |||||||
(in thousands, except share and per share data) | ||||||||
Provision for income taxes | $ | 3,591 | $ | 2,702 | ||||
Net Income | $ | 6,898 | $ | 7,787 | ||||
Basic net income per share | $ | 0.24 | $ | 0.27 | ||||
Diluted net income per share | $ | 0.23 | $ | 0.26 | ||||
Diluted weighted average common shares outstanding | 29,457,653 | 29,516,718 |
Nine Months Ended September 30, 2016 | ||||||||
As Reported | Adjusted | |||||||
(in thousands, except share and per share data) | ||||||||
Provision for income taxes | $ | 29,510 | $ | 27,871 | ||||
Net Income | $ | 53,578 | $ | 55,217 | ||||
Basic net income per share | $ | 1.82 | $ | 1.88 | ||||
Diluted net income per share | $ | 1.81 | $ | 1.86 | ||||
Diluted weighted average common shares outstanding | 29,581,578 | 29,635,796 | ||||||
Cash flows provided by operating activities | $ | 81,880 | $ | 83,579 | ||||
Cash flows used in financing activities | $ | (60,573 | ) | $ | (62,452 | ) |
The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share for 2016, which did not materially increase the diluted weighted average common shares outstanding.
In May 2017, the FASB issued ASUNo. 2017-09, “Compensation—Stock Compensation (Topic 718), Scope Modification Accounting.” The guidance clarified when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance modification accounting is required only if the fair value (or calculated intrinsic value, if those amounts are being usedeither prospectively to measure the award under ASC 718), the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for annual periods beginningeligible costs incurred on or after December 15, 2017. Early adoptionthe date the guidance is permitted.first applied or retrospectively. The Company intends to adoptadopted the guidance prospectively on the effective date and doesJanuary 1, 2020. Adoption did not believe adoption will have a material impact on its consolidated financial condition or results of operations.
4. | NEW ACCOUNTING STANDARDS NOT YET ADOPTED |
credit agreement accounted for under Codification topic ASC 470, “
In May 2014, the FASB issued ASUNo. 2014-09, “Revenue from Contracts with Customers (Topic 606),” and issued subsequent amendments to the initial guidance in August 2015 within ASUNo. 2015-14, in March 2016 within ASUNo. 2016-08, in April 2016 within ASUNo. 2016-10, in May 2016 within ASUNo. 2016-12, and in December 2016 within ASUNo. 2016-20 (collectively, the new standard). The new standard provides a single, comprehensive model for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The new standard requires an entity to recognize revenue when it satisfies a performance obligation at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring control of goods or services to a customer. The Company intends to adopt the new standard in the first quarter of fiscal 2018. Currently, the Company intends to use the retrospective application to each reporting period presented, with the option to elect certain practical expedients as defined in the new standard. The Company has substantially completed evaluation of its Trex Residential Products segment and believes that
adoption of the new standard will not have a significant impact on that segment. The Company continues to evaluate the impact of the new standard on its recently acquired Trex Commercial Products segment and expects to complete the evaluation during the fourth quarter of 2017. The Company expects expanded financial statement note disclosure. The Company continues to evaluate the impacts of the pending adoption. As such, the Company’s preliminary assessments are subject to change.
On July 31, 2017, through its newly-formed, wholly-owned subsidiary, Trex Commercial Products, the Company acquired certain assets and assumed certain liabilities of SC Company for $71.8 million in cash, subject to adjustment pending final determination of working capital at closing. The Company used cash on hand and $30.0 million of funding from its existing revolving credit facility, which was fully paid on August 17, 2017, to acquire the assets. The acquired business designs, engineers and markets modular architectural railing systems and solutions for the commercial and multifamily markets, and provides staging, acoustical and seating systems for commercial markets, including sports stadiums and performing arts venues. As a result of the purchase, the Company gained access to growing commercial markets, expanded its custom design and engineering capabilities, and added the contract architect and specifier communities as new channels for its products.
The acquisition was accounted for using the acquisition method of accounting under U.S. Generally Accepted Accounting Principles, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The fair values of consideration transferred and net assets acquired were determined using a combination of Level 2 and Level 3 inputs as specified in the fair value hierarchy in ASC 820, “Fair Value Measurements and Disclosures.” The Company believes that the fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions. The Company’s consolidated results of operations for the quarterly and nine-month period ended September 30, 2017 include the operating results of the acquired business from the date of acquisition through quarter end. The Company’s consolidated balance sheet at September 30, 2017 includes the acquired assets and any liabilities assumed.
Based on the Company’s preliminary valuation, a total estimated consideration of $71.8 million has been allocated on a preliminary basis to the assets acquired and liabilities assumed, as follows (in thousands). A final determination of the purchase price and adjustment to the fair values of assets acquired and liabilities assumed and finalization of the valuation report will be completed upon the final determination of working capital at closing:
Accounts receivable, net | $ | 8,357 | ||
Contract retainage | 1,948 | |||
Inventories, net | 2,344 | |||
Prepaid expenses and other assets | 1,223 | |||
Revenues in excess of billings | 3,463 | |||
Fixed assets, net | 1,264 | |||
Intangible assets | 4,900 | |||
Goodwill | 57,938 | |||
Accounts payable | (3,990 | ) | ||
Accrued liabilities and other expenses | (2,329 | ) | ||
Billings in excess of revenues | (1,752 | ) | ||
Customer Deposits | (1,562 | ) | ||
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Total estimated consideration | $ | 71,804 | ||
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The preliminary goodwill of $57.9 million is primarily attributable to the potential opportunity for the Company to offer full service railing systems in the growing commercial and multi-family markets, access to a complementary product category with a track record of substantial revenue growth, the ability to achieve economies of scale around raw material procurement, an increase in the range of products the Company may offer its core customers, and intangible assets that do not qualify for separable or legal criterion, such as an assembled workforce. The amount of goodwill that is expected to be amortized and deductible for tax purposes in 2017 is $1.1 million. All of the goodwill was recorded to the Trex Commercial Products reportable segment. The fair value attributed to intangible assets, which consists of production backlog and trade names and trademarks, is being amortized straight line over 12 months and is based on the estimated economics of the assets. The fair value attributed to the intangible assets acquired and goodwill was based on assumptions and other information compiled by management, including independent valuations that utilized established valuation techniques.
From July 31, 2017, through September 31, 2017, Trex Commercial Products generated $9.2 million of revenue and incurred a net loss of $75 thousand. The Company incurred $0.5 million of acquisition-related expenses during the nine months ended September 30, 2017, which are included in selling, general and administrative expense.
The following pro forma results are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the years presented or the results which may occur in the future. The following unaudited pro forma results of operations assume the acquisition occurred on January 1, 2016 (in thousands, except per share amounts):
Nine Months Ended September 30 | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Actual | Pro Forma | |||||||||||||||
Net sales | $ | 442,941 | $ | 384,294 | $ | 475,076 | $ | 427,043 | ||||||||
Net income | $ | 76,829 | $ | 55,217 | $ | 77,570 | $ | 54,978 | ||||||||
Basic earnings per common share | $ | 2.61 | $ | 1.88 | $ | 2.64 | $ | 1.87 | ||||||||
Diluted earnings per common share | $ | 2.60 | $ | 1.86 | $ | 2.62 | $ | 1.86 |
Significant pro forma adjustments included in the above pro forma information include an adjustment to amortization expense for the intangible assets acquired (see Note 9), elimination of transaction costs related to the acquisition as such costs are considered to benon-recurring in nature, an adjustment to compensation expense related to restricted stock units granted in connection with the acquisition, the income tax effects of the adjustments based on a blended statutory rate of 38.0%, and an adjustment to SC Company’s income taxes to the blended statutory rate, as SC Company was treated as a limited liability company for Federal and state income tax purposes.
INVENTORIES |
September 30, 2017 | December 31, 2016 | |||||||
Finished goods | $ | 23,486 | $ | 29,686 | ||||
Raw materials | 21,344 | 20,231 | ||||||
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|
| |||||
Total FIFO(first-in,first-out) inventories | 44,830 | 49,917 | ||||||
Reserve to adjust inventories to LIFO value | (21,371 | ) | (21,371 | ) | ||||
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| |||||
Total LIFO inventories | $ | 23,459 | $ | 28,546 | ||||
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|
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March 31, 2020 | December 31, 2019 | |||||||
Finished goods | $ | 43,458 | $ | 42,281 | ||||
Raw materials | 33,050 | 31,686 | ||||||
Total FIFO (first-in, first-out) inventories | 76,508 | 73,967 | ||||||
Reserve to adjust inventories to LIFO value | (19,062 | ) | (19,062 | ) | ||||
Total LIFO inventories | $ | 57,446 | $ | 54,905 | ||||
March 31, 2020.
September 30, 2017 | December 31, 2016 | |||||||
Work-in-process | $ | 580 | $ | — | ||||
Raw materials | 1,990 | — | ||||||
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Total FIFO inventories | $ | 2,570 | $ | — | ||||
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raw materials. The
PREPAID EXPENSES AND OTHER ASSETS |
September 30, 2017 | December 31, 2016 | |||||||
Prepaid expenses | $ | 3,190 | $ | 6,209 | ||||
Income tax receivable | — | 4,024 | ||||||
Other | 722 | 167 | ||||||
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Total prepaid expenses and other assets | $ | 3,912 | $ | 10,400 | ||||
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March 31, 2020 | December 31, 2019 | |||||||
Prepaid expenses | $ | 6,901 | $ | 8,282 | ||||
Revenues in excess of billings | 6,247 | 6,664 | ||||||
Contract retainage | 2,273 | 1,832 | ||||||
Income tax receivable | 513 | 2,675 | ||||||
Other | 648 | 350 | ||||||
Total prepaid expenses and other assets | $ | 16,582 | $ | 19,803 | ||||
GOODWILL AND OTHER INTANGIBLE ASSETS |
2017 | ||||
Beginning balance, January 1 | $ | 10,523 | ||
Goodwill recognized from acquisition of SC Company | 57,938 | |||
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Ending balance, September 30 | $ | 68,461 | ||
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Intangibleby reportable segment at March 31, 2020 and December 31, 2019 was $14.2 million for Trex Residential and $54.3 million for Trex Commercial.
Net Carrying Amount (in thousands) | Amortization Period | |||||||
(in months) | ||||||||
Intangible assets: | ||||||||
Customer backlog | $ | 4,000 | 12 | |||||
Trade names and trademarks | 900 | 12 | ||||||
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Total intangible assets | 4,900 | |||||||
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Accumulated amortization: | ||||||||
Customer backlog | (683 | ) | ||||||
Trade name | (134 | ) | ||||||
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Total accumulated amortization | (817 | ) | ||||||
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Intantible assets, net | $ | 4,083 | ||||||
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domain names. At March 31, 2020 and December 31, 2019, intangible assets were $6.3 million and accumulated amortization
ACCRUED EXPENSES AND OTHER LIABILITIES |
September 30, 2017 | December 31, 2016 | |||||||
Sales and marketing | $ | 21,013 | $ | 16,707 | ||||
Compensation and benefits | 10,727 | 13,298 | ||||||
Income taxes | 3,674 | — | ||||||
Manufacturing costs | 1,215 | 1,799 | ||||||
Rent obligations | 739 | 632 | ||||||
Other | 3,959 | 2,257 | ||||||
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Total accrued expenses and other liabilities | $ | 41,327 | $ | 34,693 | ||||
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March 31, 2020 | December 31, 2019 | |||||||
Sales and marketing | $ | 18,392 | $ | 28,402 | ||||
Income taxes | 9,688 | — | ||||||
Compensation and benefits | 7,721 | 13,475 | ||||||
Operating lease liabilities | 7,111 | 7,079 | ||||||
Customer deposits | 3,232 | 2,905 | ||||||
Manufacturing costs | 2,504 | 2,564 | ||||||
Billings in excess of revenues | 2,125 | 816 | ||||||
Other | 3,582 | 3,024 | ||||||
Total accrued expenses and other liabilities | $ | 54,355 | $ | 58,265 | ||||
DEBT |
The Company had $28.5 million in outstanding borrowings under its revolving credit facility and remaining available borrowing capacity of $221.5 million at March 31, 2020.
The Company had no outstanding borrowings under its revolving credit facility and remaining available borrowing capacity of $200 million at September 30, 2017.
November 5, 2024.
The Company’s ability
As of September 30, 2017, thecompliance covenants. The Company was in compliance with all covenants as of the covenants contained in its debt agreements.March 31, 2020. Failure to comply with the loanfinancial covenants might cause lenders to accelerate thecould be considered a default of repayment obligations under the credit facility, which may be declared payable immediately based on a default.
LEASES |
Three Months Ended | ||||||||
Supplemental cash flow information | March 31, 2020 | March 31, 2019 | ||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 2,143 | $ | 2,118 | ||||
Operating ROU assets obtained in exchange for lease liabilities | $ | — | $ | 388 |
Supplemental balance sheet information | March 31, 2020 | December 31, 2019 | ||||||
Operating lease ROU assets | $ | 38,329 | $ | 40,049 | ||||
Operating lease liabilities: | ||||||||
Accrued expenses and other current liabilities | $ | 7,111 | $ | 7,079 | ||||
Operating lease liabilities | 32,440 | 34,242 | ||||||
Total operating lease liabilities | $ | 39,551 | $ | 41,321 | ||||
Maturities of operating lease liabilities | ||||
2020 | $ | 6,329 | ||
2021 | 8,279 | |||
2022 | 6,464 | |||
2023 | 6,109 | |||
2024 | 6,146 | |||
Thereafter | 11,079 | |||
Total lease payments | 44,406 | |||
Less imputed interest | (4,855 | ) | ||
Total operating liabilities | $ | 39,551 | ||
11. | FINANCIAL INSTRUMENTS |
2019.
12. | STOCKHOLDERS’ EQUITY |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Numerator: | ||||||||||||||||
Net income available to common shareholders | $ | 20,098 | $ | 7,787 | $ | 76,829 | $ | 55,217 | ||||||||
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Denominator: | ||||||||||||||||
Basic weighted average shares outstanding | 29,404,049 | 29,295,284 | 29,385,722 | 29,419,958 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock appreciation rights and options | 97,315 | 116,803 | 98,905 | 133,907 | ||||||||||||
Restricted stock | 76,852 | 104,631 | 78,870 | 81,931 | ||||||||||||
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Diluted weighted average shares outstanding | 29,578,216 | 29,516,718 | 29,563,497 | 29,635,796 | ||||||||||||
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Basic earnings per share | $ | 0.68 | $ | 0.27 | $ | 2.61 | $ | 1.88 | ||||||||
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Diluted earnings per share | $ | 0.68 | $ | 0.26 | $ | 2.60 | $ | 1.86 | ||||||||
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Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Numerator: | ||||||||
Net income available to common shareholders | $ | 42,402 | $ | 31,555 | ||||
Denominator: | ||||||||
Basic weighted average shares outstanding | 58,129,529 | 58,543,478 | ||||||
Effect of dilutive securities: | ||||||||
Stock appreciation rights and options | 90,723 | 154,076 | ||||||
Restricted stock | 103,469 | 131,623 | ||||||
Diluted weighted average shares outstanding | 58,323,721 | 58,829,177 | ||||||
Basic earnings per share | $ | 0.73 | $ | 0.54 | ||||
Diluted earnings per share | $ | 0.73 | $ | 0.54 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Stock appreciation rights | 17,957 | — | 14,156 | 6,174 | ||||||||||||
Restricted stock | 330 | 46 | 110 | 15 |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Stock appreciation rights | 9,135 | 12,813 |
Program
On February 16, 2017, the Board of Directors authorized a common stock repurchase program of up to 2,960,000 shares of the Company’sits outstanding common stock (February 2017under the Stock Repurchase Program).Program.
13. | REVENUE FROM CONTRACTS WITH CUSTOMERS |
Three Months Ended March 31, 2020 | Reportable Segment | |||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Timing of Revenue Recognition and Type of Contract | ||||||||||||
Products transferred at a point in time and variable consideration contracts | $ | 186,874 | $ | — | $ | 186,874 | ||||||
Products transferred over time and fixed price contracts | — | 13,521 | 13,521 | |||||||||
$ | 186,874 | $ | 13,521 | $ | 200,395 | |||||||
Three Months Ended March 31, 2019 | Reportable Segment | |||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Timing of Revenue Recognition and Type of Contract | ||||||||||||
Products transferred at a point in time and variable consideration contracts | $ | 165,479 | $ | — | $ | 165,479 | ||||||
Products transferred over time and fixed price contracts | — | 14,092 | 14,092 | |||||||||
$ | 165,479 | $ | 14,092 | $ | 179,571 | |||||||
14. | STOCK-BASED COMPENSATION |
12,840,000 and as of March 31, 2020, the total number of shares available for future issuance are 5,335,353.
Stock Awards Granted | Weighted-Average Grant Price Per Share | |||||||
Time-based restricted stock units | 36,105 | $ | 72.50 | |||||
Performance-based restricted stock units (a) | 43,307 | $ | 57.54 | |||||
Stock appreciation rights | 18,739 | $ | 70.75 |
Stock Awards Granted | Weighted-Average Grant Price Per Share | |||||||
Time-based restricted stock units | 19,769 | $ | 101.53 | |||||
Performance-based restricted stock units (a) | 36,510 | $ | 78.18 | |||||
Stock appreciation rights | 19,792 | $ | 101.66 |
(a) | Includes |
Nine Months Ended September 30, 2017 | ||||
Weighted-average fair value of grants | $ | 27.97 | ||
Dividend yield | 0 | % | ||
Average risk-free interest rate | 2.0 | % | ||
Expected term (years) | 5 | |||
Expected volatility | 42.2 | % |
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||
Weighted-average fair value of grants | $ | 35.65 | $ | 29.56 | ||||
Dividend yield | 0 | % | 0 | % | ||||
Average risk-free interest rate | 1.4 | % | 2.5 | % | ||||
Expected term (years) | 5 | 5 | ||||||
Expected volatility | 37.8 | % | 39.1 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Stock appreciation rights | $ | 28 | $ | — | $ | 220 | $ | 184 | ||||||||
Time-based restricted stock | 417 | 368 | 1,557 | 1,847 | ||||||||||||
Performance-based restricted stock | 538 | 450 | 2,044 | 1,680 | ||||||||||||
Employee stock purchase plan | 54 | 43 | 92 | 95 | ||||||||||||
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Total stock-based compensation | $ | 1,037 | $ | 861 | $ | 3,913 | $ | 3,806 | ||||||||
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Three Months Ended March 31 | ||||||||
2020 | 2019 | |||||||
Stock appreciation rights | $ | 354 | $ | 295 | ||||
Time-based restricted stock and restricted stock units | 1,256 | 1,149 | ||||||
Performance-based restricted stock and restricted stock units | 1,135 | 1,314 | ||||||
Employee stock purchase plan | 30 | 35 | ||||||
Total stock-based compensation | $ | 2,775 | $ | 2,793 | ||||
15. | INCOME TAXES |
16. | SEGMENT INFORMATION |
Prior to July 31, 2017, the Company operated in one reportable segment. Subsequent to the acquisition of certain assets and assumption of certain liabilities of SC Company on July 31, 2017, the
Nine Months Ended September 30, 2017 | ||||||||||||
Residential | Commercial | Total | ||||||||||
Net sales | $ | 433,790 | $ | 9,151 | $ | 442,941 | ||||||
Net income (loss) | $ | 76,904 | $ | (75 | ) | $ | 76,829 | |||||
EBITDA | $ | 128,221 | $ | 806 | $ | 129,027 | ||||||
Depreciation and amortization | $ | 11,087 | $ | 881 | $ | 11,968 | ||||||
Income tax expense | $ | 39,715 | $ | — | $ | 39,715 | ||||||
Capital expenditures | $ | 11,068 | $ | 40 | $ | 11,108 | ||||||
Total assets | $ | 232,663 | $ | 78,533 | �� | $ | 311,196 |
Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||||||
Trex Residential | Trex | Total | Trex | Trex | Total | |||||||||||||||||||
Net sales | $ | 186,874 | $ | 13,521 | $ | 200,395 | $ | 165,479 | $ | 14,092 | $ | 179,571 | ||||||||||||
Net income | $ | 41,020 | $ | 1,382 | $ | 42,402 | $ | 31,255 | $ | 300 | $ | 31,555 | ||||||||||||
EBITDA | $ | 56,950 | $ | 2,036 | $ | 58,986 | $ | 42,067 | $ | 526 | $ | 42,593 | ||||||||||||
Depreciation and amortization | $ | 3,664 | $ | 187 | $ | 3,851 | $ | 3,268 | $ | 126 | $ | 3,394 | ||||||||||||
Income tax expense | $ | 12,788 | $ | 467 | $ | 13,255 | $ | 7,600 | $ | 100 | $ | 7,700 | ||||||||||||
Capital expenditures | $ | 22,416 | $ | 317 | $ | 22,733 | $ | 7,694 | $ | 953 | $ | 8,647 | ||||||||||||
Total assets | $ | 539,352 | $ | 91,504 | $ | 630,856 | $ | 448,303 | $ | 87,342 | $ | 535,645 |
Nine Months Ended September 30, 2017 | ||||||||||||
Residential | Commercial | Total | ||||||||||
Net income (loss) | $ | 76,904 | $ | (75 | ) | $ | 76,829 | |||||
Interest | 515 | — | 515 | |||||||||
Taxes | 39,715 | — | 39,715 | |||||||||
Depreciation and amortization | 11,087 | 881 | 11,968 | |||||||||
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| |||||||
EBITDA | $ | 128,221 | $ | 806 | $ | 129,027 | ||||||
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Three Months Ended September 30, 2017 | ||||||||||||
Residential | Commercial | Total | ||||||||||
Net sales | $ | 131,043 | $ | 9,151 | $ | 140,194 | ||||||
Net income (loss) | $ | 20,173 | $ | (75 | ) | $ | 20,098 | |||||
EBITDA | $ | 34,079 | $ | 806 | $ | 34,885 | ||||||
Depreciation and amortization | $ | 3,639 | $ | 881 | $ | 4,520 | ||||||
Income tax expense | $ | 10,208 | $ | — | $ | 10,208 | ||||||
Capital expenditures | $ | 3,943 | $ | 40 | $ | 3,983 | ||||||
Total assets | $ | 232,663 | $ | 78,533 | $ | 311,196 |
Reconciliation of net income to EBITDA:
Three Months Ended September 30, 2017 | ||||||||||||
Residential | Commercial | Total | ||||||||||
Net income (loss) | $ | 20,173 | $ | (75 | ) | $ | 20,098 | |||||
Interest | 59 | — | 59 | |||||||||
Taxes | 10,208 | — | 10,208 | |||||||||
Depreciation and amortization | 3,639 | 881 | 4,520 | |||||||||
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EBITDA | $ | 34,079 | $ | 806 | $ | 34,885 | ||||||
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Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |||||||||||||||||||||||
Trex Residential | Trex | Total | Trex | Trex | Total | |||||||||||||||||||
Net income | $ | 41,020 | $ | 1,382 | $ | 42,402 | $ | 31,255 | $ | 300 | $ | 31,555 | ||||||||||||
Interest income, net | (522 | ) | — | (522 | ) | (56 | ) | — | (56 | ) | ||||||||||||||
Income tax expense | 12,788 | 467 | 13,255 | 7,600 | 100 | 7,700 | ||||||||||||||||||
Depreciation and amortization | 3,664 | 187 | 3,851 | 3,268 | 126 | 3,394 | ||||||||||||||||||
EBITDA | $ | 56,950 | $ | 2,036 | $ | 58,986 | $ | 42,067 | $ | 526 | $ | 42,593 | ||||||||||||
17. | SEASONALITY |
18. | COMMITMENTS AND CONTINGENCIES |
Contract Termination Costs
The Company leases 55,047 square feet of office and storage space that it does not occupy, but has sublet all of the office space for the remainder of the term of its lease obligation, which ends June 30, 2019. The Company estimates that the future sublease receipts will be less than the remaining minimum lease payment obligations under its lease and has recorded a liability for the present value of the expected shortfall.
As of September 30, 2017, minimum payments remaining under the Company’s lease relating to its reconsidered corporate relocation over the years ending December 31, 2017, 2018, and 2019 are $0.5 million, $2.0 million and $1.0 million, respectively. Net minimum receipts remaining under the Company’s existing subleases over the years ending December 31, 2017, 2018 and 2019 are $0.3 million, $1.3 million and $0.7 million, respectively.
The following table provides information about the Company’s liability related to the lease (in thousands):
2017 | 2016 | |||||||
Beginning balance, January 1 | $ | 1,475 | $ | 2,106 | ||||
Net rental payments | (430 | ) | (536 | ) | ||||
Accretion of discount | 78 | 113 | ||||||
Decrease in net estimated contract termination costs | (23 | ) | (85 | ) | ||||
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Ending balance, September 30 | $ | 1,100 | $ | 1,598 | ||||
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defect and communications by the Company in 2013 informing homeowners of potential hazards associated with products exhibiting surface flaking that are not timely replaced, have obscured observable trends in historical claims activity. The cost per claim varies due to a number of factors, including the size of affected decks, the availability and type of replacement material used, the cost of production of replacement material and the method of claim settlement.
obligations and no adjustments were required in the current period.
2017 | 2016 | |||||||
Beginning balance, January 1 | $ | 33,847 | $ | 29,673 | ||||
Changes in estimates related topre-existing warranties | — | 9,835 | ||||||
Settlements made during the period | (4,425 | ) | (4,188 | ) | ||||
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Ending balance, September 30 | $ | 29,422 | $ | 35,320 | ||||
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The remainder of the Company’s warranty reserve represents amounts accrued fornon-surface flaking claims.
Three Months Ended March 31, 2020 | ||||||||||||
Surface Flaking | Other Residential | Total | ||||||||||
Beginning balance, January 1 | $ | 19,024 | $ | 6,470 | $ | 25,494 | ||||||
Provisions and changes in estimates | — | 321 | 321 | |||||||||
Settlements made during the period | (557 | ) | (168 | ) | (725 | ) | ||||||
Ending balance, March 31 | $ | 18,467 | $ | 6,623 | $ | 25,090 | ||||||
Three Months Ended March 31, 2019 | ||||||||||||
Surface Flaking | Other Residential | Total | ||||||||||
Beginning balance, January 1 | $ | 23,951 | $ | 6,803 | $ | 30,754 | ||||||
Provisions and changes in estimates | — | 505 | 505 | |||||||||
Settlements made during the period | (633 | ) | (292 | ) | (925 | ) | ||||||
Ending balance, March 31 | $ | 23,318 | $ | 7,016 | $ | 30,334 | ||||||
operates; cyber-attacks, security breaches or other security vulnerabilities; the impact of upcoming data privacy laws and the EU General Data Protection Regulation and the related actual or potential costs and consequences; and material adverse impacts from global public health pandemics, including the strain of coronavirus known as
Products (Trex Commercial). The Company is focused on using renewable resources within both our Residential and Commercial segments.
Trex Residential Products offers the following products:
Decking and Accessories | Our principal decking products are Trex Transcend ® , Trex ® and Trex ® . Differentiating the Enhance collection is a scalloped profile that is lighter weight for easier handling and installation. Our high-performance,low-maintenance, eco-friendly composite decking products are comprised of a blend of 95 percent We also offer Trex Hideaway ® , a hidden fastening system for grooved ™ , an outdoor lighting system. Trex DeckLighting is a line of energy-efficient LED dimmable deck lighting, which is designed for use on posts, floors and steps. The line includes a post cap light, deck rail light, riser light and a recessed deck light. |
Railing | Our residential railing products are Trex Transcend Railing, Trex Select Railing, Trex Enhance Railing and Trex Signature ® aluminum railing. Trex Transcend Railing, made from approximately 40 percent recycled content, is available in the colors of Trex Transcend decking and finishes that make it appropriate for use with Trex decking products as well as other decking materials, which we believe enhances the sales prospects of our railing products. Trex Select Railing, made from approximately 40 percent recycled content, is offered in a white finish and is ideal for consumers who desire a simple clean finished look for their deck. Trex Enhance, made from approximately 40 percent recycled content, is available in three colors and is offered through home improvement retailers in kits that contain the complete railing system. Trex Signature | ||
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Fencing | Our Trex Seclusions ® fencing product is offered through two specialty distributors. This product consists of structural posts, bottom rail, pickets, top rail and decorative post caps. | ||
Framing | Our triple-coated steel deck framing system called Trex Elevations ® leverages the strength and dimensional stability of steel to create a flat surface for our decking. Trex Elevations provides consistency and reliability that wood does not and is fire resistant. |
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Trex Commercial Products offers the following products:
Architectural Railing Systems | Our architectural railing systems are pre-engineered guardrails with options to accommodate styles ranging from classic and elegant wood top rail combined with sleek stainless components and glass infill, to modern and minimalist stainless cable and rod infill choices. | ||
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Trex Commercial can also design, engineer and manufacture custom railing systems tailored to the customer’s specific material, style and finish. Many railing styles are achievable, including glass, mesh, perforated railing and cable railing. | |||
Aluminum Railing Systems | Trex Signature ® aluminum railing collection, made from a minimum of 50 percent recycled content, combines superior styling with the unparalleled strength of aluminum – making it an ideal railing choice for a variety of commercial settings. Its straightforward, unobtrusive design features traditional balusters and contemporary vertical rods, and can be installed with continuously graspable rail options for added safety, comfort and functionality. Trex Signature is available in three colors – charcoal black, bronze and classic white – and is available in a variety of stock lengths. | ||
Staging Equipment and Accessories | Our advanced modular, lightweight custom staging systems include portable platforms, orchestra shells, guardrails, stair units, barricades, camera platforms, VIP viewing decks, ADA infills, DJ booths, pool covers, and other custom applications. Our systems provide superior staging product solutions for facilities and venues with custom needs. Our modular stage equipment |
September 30, 2017:◾The acquisition of certain assets and the assumption of certain liabilities of Stadium Concepts Acquisition, LLC (SC Company) on July 31, 2017, by the Company’s newly-formed, wholly-owned subsidiary, Trex Commercial Products, Inc.◾Net sales of $140.2 million for the three months ended September 30, 2017, an increase of 32.0% over net sales of $106.2 million for the three months ended September 30, 2016.◾Gross profit as a percentage of net sales, gross margin, of 39.4% for the three months ended September 30, 2017, an increase of 11.2% over the gross margin of 28.2% for the three months ended September 30, 2016.◾Net income of $20.1 million for the three months ended September 30, 2017, or $0.68 per diluted share, compared to $7.8 million, or $0.26 per diluted share, for the same period in 2016.Business Acquisition.On JulyMarch 31, 2017, through2020:
program as March 31, 2020.
As part of our normal business practice and consistent with industry practices,practice, we have historically provided our distributors and dealers of our Trex Residential Productsproducts incentives to build inventory levels before the start of the prime deck-building season to ensure adequate availability of our product to meet anticipated seasonal consumer demand and to enable production planning. These incentives include payment discounts and favorable payment terms. In addition, we offer price discounts or volume rebates on specified products and other incentives based on increases in purchases as part of specific promotional programs. The timing of sales incentive programs can significantly impact sales, receivables and inventory levels during the offering period. However, the timing and terms of the majority of our programs are generally consistent from year to year.
In addition, the operating results for Trex Commercial are driven by the timing of individual projects, which may vary significantly each period.
We monitor surface flaking claims activity each quarter for indications that our estimates require revision. Typically, a majority of surface flaking claims received in a fiscal year are received during the summer outdoor season, which spans the second and third fiscal quarters. It has been our practice to utilize actuarial techniques during the third quarter, after a significant portion of all claims has been received for the fiscal year and variances to annual claims expectations are more meaningful. Our actuarial analysis is based on currently known facts and a number of assumptions. Projecting future events such as the number of claims to be received, the
number of claims that will require payment and the average cost of claims could cause the actual warranty liabilities to be higher or lower than those projected, which could materially affect our financial condition, results of operations or cash flows. The number of incoming claims received in the ninethree months ended September 30, 2017March 31, 2020 was lowerconsistent with our expectations but higher than the number of claims received in the ninethree months ended September 30, 2016, continuing the historical year-over-year decline in incoming claims, and consistent with our expectations. The averageMarch 31, 2019. Average settlement cost per claim experienced in the ninethree months ended June 30, 2017 decreased compared toMarch 31 2020 was slightly higher than our expectations, considerably higher than that experienced in the average settlement cost per claim experienced during the ninethree months ended June 30, 2016,March 31, 2019, due to an increase in larger claims settled and was consistent with expectations for 2017.changes in the mix of settlement methods, and slightly lower than that experienced in the year ended December 31, 2019. We believe that our reserve at September 30, 2017March 31, 2020 is sufficient to cover future surface flaking obligations.
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Claims open, beginning of period | 2,755 | 2,500 | ||||||
Claims received (1) | 1,931 | 2,257 | ||||||
Claims resolved (2) | (2,003 | ) | (1,774 | ) | ||||
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Claims open, end of period | 2,683 | 2,983 | ||||||
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Average cost per claim (3) | $ | 2,553 | $ | 2,670 |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Claims open, beginning of period | 1,724 | 2,021 | ||||||
Claims received (1) | 205 | 176 | ||||||
Claims resolved (2) | (195 | ) | (255 | ) | ||||
Claims open, end of period | 1,734 | 1,942 | ||||||
Average cost per claim (3) | $ | 3,331 | $ | 2,407 |
(1) | Claims received include new claims received or identified during the period. |
(2) | Claims resolved include all claims settled with or without payment and closed during the period. |
(3) | Average cost per claim represents the average settlement cost of claims closed with payment during the period. |
Ended March 31, 2019 Total net sales Residential net sales Commercial net sales 2019 quarter. Cost of sales % of total net sales Gross profit Gross marginincludeincludes salaries, commissions, incentive compensation, and benefits of personnel engaged in sales and marketing, accounting, information technology, corporate operations, research and development, and other business functions. Another component of selling, general and administrative expenses is branding and other sales and marketing costs, which are used to build brand awareness. These costs consist primarily of advertising, merchandising, and other promotional costs. Other general and administrative expenses include professional fees, office occupancy costs attributable to the business functions previously referenced, and consumer relations expenses. As a percentage of net sales, selling, general and administrative expenses may vary from quarter to quarter due, in part, to the seasonality of our business.On July 31, 2017, Trex Commercial Products, our newly-formed, wholly-owned subsidiary, acquired certain assets and assumed certain liabilities of SC Company for $71.8 million in cash, subject to adjustment pending final determination of working capital at closing. The Company used cash on hand and $30.0 million of funding from its existing revolving credit facility to acquire the assets. The acquired business designs, engineers and markets modular architectural railing systems and solutions for the commercial and multifamily markets, and provides staging, acoustical and seating systems for commercial markets, including sports stadiums and performing arts venues. As a result of the purchase, we will gain access to growing commercial markets, expand our custom design and engineering capabilities, and add the contract architect and specifier communities as new channels for its products. Our consolidated results of operations include the operating results of the acquired business following the date of acquisition. Our consolidated balance sheet at September 30, 2017 includes the acquired assets and any liabilities assumed.September 30, 2017 (2017March 31, 2020 (2020 quarter) compared to the three months ended September 30, 2016 (2016March 31, 2019 (2019 quarter), and for the nine months ended September 30, 2017 (2017 nine-month period) compared to the nine months ended September 30, 2016 (2016 nine-month period).September 30, 2017March 31, 2020 Compared To The Three Months September 30, 2016 Three Months Ended September 30, $ Change % Change 2017 2016 (dollars in thousands) $ 140,194 $ 106,168 $ 34,026 32.0 % $ 131,043 $ 106,168 $ 24,875 23.4 % $ 9,151 — $ 9,151 N/A The 32.0% increase in $ $ $ % $ $ $ % $ $ $ ) )% 20172020 quarter compared to the 20162019 quarter reflecting an increase in Trex Residential net sales, offset by a small decrease in Trex Commercial net sales. The increase of 12.9% in Trex Residential net sales during the 2020 quarter was primarily driven by volume growth of our residential decking and railing products, strong demand for our outdoor living products, a strong residential repair and remodeling sector and our initiatives to accelerate conversion from wood. The 4.1% decrease in Trex Commercial net sales during the 2020 quarter was due primarily to volume growth in our Trex branded decking and railing products. The volume growth was positively impacted by continued strength infewer large projects compared to the remodeling sector, our marketing programs aimed at taking market share from wood, and the healthy demand across our full suite of outdoor living products with decking and railing products as the major growth contributors. The remaining increase resulted from net sales of our recently acquired commercial products segment for the period from the date of acquisition of July 31, 2017 through quarter end. Three Months Ended September 30, $ Change % Change 2017 2016 (dollars in thousands) $ 84,910 $ 76,223 $ 8,687 11.4 % 60.6 % 71.8 % $ 55,284 $ 29,945 $ 25,339 84.6 % 39.4 % 28.2 % $ $ $ % % % $ $ $ % % % increased to 39.4%was 44.8% in the 20172020 quarter from 28.2%compared to 38.6% in the 20162019 quarter an improvement of 11.2%. Gross profitand reflects the increase in gross margin for Trex Residential and Trex Commercial to 45.6% and 33.6%, respectively, in the 20162020 quarter included a $9.8 millioncompared to 40.2% and 20.5%, respectively, in the 2019 quarter. The increase in Trex Residential gross margin in the 2020 quarter compared to the warranty reserve2019 quarter was primarily due tosurface flaking. Excluding this charge,reduced throughput, equipment failures and other inefficiencies at Trex Residential manufacturing facilities in 2019. Also, a number of manufacturing lines were retrofitted during the 2017 quarter to allow production of the reduced weight Enhance profile. We expect to be essentially at the original design target for Enhance by the end of the third quarter of 2020. The increase in gross margin increased by 2.0%, reflectingat Trex Commercial was primarily due to3.1% improvementmix of higher margin contracts in residential throughthe 2020 quarter, and initiatives aimed at improving project estimating, project management, and manufacturing cost reduction initiatives, lower salessavings initiatives.
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2017 | 2016 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Selling, general and administrative expenses | $ | 24,919 | $ | 19,379 | $ | 5,540 | 28.6 | % | ||||||||
% of total net sales | 17.8 | % | 18.3 | % |
Three Months Ended March 31, | $ Change | % Change | ||||||||||||||
2020 | 2019 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Selling, general and administrative expenses | $ | 34,561 | $ | 30,166 | $ | 4,395 | 14.6 | % | ||||||||
% of total net sales | 17.3 | % | 16.8 | % |
programs.
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2017 | 2016 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Provision for income taxes | $ | 10,208 | $ | 2,702 | $ | 7,506 | 278 | % | ||||||||
Effective tax rate | 33.7 | % | 25.8 | % |
Three Months Ended March 31, | $ Change | % Change | ||||||||||||||
2020 | 2019 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Provision for income taxes | $ | 13,255 | $ | 7,700 | $ | 5,555 | 72.1 | % | ||||||||
Effective tax rate | 23.8 | % | 19.6 | % |
Three Months Ended September 30 | 2017 Residential | 2017 Commercial | 2017 Total | 2016 Total | ||||||||||||
Net income (loss) | $ | 20,173 | $ | (75 | ) | $ | 20,098 | $ | 7,787 | |||||||
Interest | 59 | — | 59 | 77 | ||||||||||||
Taxes | 10,208 | — | 10,208 | 2,702 | ||||||||||||
Depreciation and amortization | 3,639 | 881 | 4,520 | 3,444 | ||||||||||||
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EBITDA | $ | 34,079 | $ | 806 | $ | 34,885 | $ | 14,010 | ||||||||
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Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2017 | 2016 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total EBITDA | $ | 34,885 | $ | 14,010 | $ | 20,875 | 149 | % | ||||||||
Residential EBITDA | $ | 34,079 | $ | 14,010 | $ | 20,069 | 143 | % | ||||||||
Commercial EBITDA | $ | 806 | — | $ | 806 | N/A |
The Company uses EBITDA to assess performance as it believes EBITDA facilitates performance comparison between its reportable segments by eliminating interest, taxes, depreciation and amortization charges to income. Total EBITDA increased 149% to $34.9 million for the 2017 quarter compared to $14.0 million for the 2016 quarter. EBITDA in the 2016 quarter included a $9.8 million increase to warranty reserve related to surface flaking. Excluding this charge, the 2017 quarter increase in Total EBITDA was 46.5%, with Residential EBITDA growth of 43.1% and Commercial EBITDA contributing 3.4%. The 43.1% Residential EBITDA growth was driven by increased revenue and EBITDA margin expansion.
Nine Months Ended September 30, 2017 Compared To The Nine Months Ended September 30, 2016
Net Sales
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2017 | 2016 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total net sales | $ | 442,941 | $ | 384,294 | $ | 58,647 | 15.3 | % | ||||||||
Residential net sales | $ | 433,790 | $ | 384,294 | $ | 49,496 | 12.9 | % | ||||||||
Commercial net sales | $ | 9,151 | — | $ | 9,151 | N/A |
The 15.3% increase in total net sales in the 2017 nine-month period compared to the 2016 nine-month period was primarily due to volume growth of our Trex branded decking and railing products. Volume growth was positively impacted by continued strength in the remodeling sector and the healthy demand across our full suite of outdoor living products, which we believe resulted from our marketing programs aimed at taking market share from wood. The increase in net sales from volume growth of our decking and railing products was offset by the ongoing reduction in the sale of recycled polyethylene film.
Gross Profit
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2017 | 2016 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Cost of sales | $ | 250,473 | $ | 235,312 | $ | 15,161 | 6.4 | % | ||||||||
% of net sales | 56.5 | % | 61.2 | % |
Three Months Ended March 31, 2020 | ||||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Net income | $ | 41,020 | $ | 1,382 | $ | 42,402 | ||||||
Interest income, net | (522 | ) | — | (522 | ) | |||||||
Income tax expense | 12,788 | 467 | 13,255 | |||||||||
Depreciation and amortization | 3,664 | 187 | 3,851 | |||||||||
EBITDA | $ | 56,950 | $ | 2,036 | $ | 58,986 | ||||||
Three Months Ended March 31, 2019 | ||||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Net income | $ | 31,255 | $ | 300 | $ | 31,555 | ||||||
Interest income, net | (56 | ) | — | (56 | ) | |||||||
Income tax expense | 7,600 | 100 | 7,700 | |||||||||
Depreciation and amortization | 3,268 | 126 | 3,394 | |||||||||
EBITDA | $ | 42,067 | $ | 526 | $ | 42,593 | ||||||
1 | EBITDA represents net income before interest, income taxes, depreciation and amortization. EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States (GAAP). We have included data with respect to EBITDA because management believes it facilitates performance comparison between the Company and its competitors, and management evaluates the performance of |
Gross profit Gross margin $ 192,468 $ 148,982 $ 43,486 29.2 % 43.5 % 38.8 %
Gross profit as a percentage
Three Months Ended March 31, | $ Change | % Change | ||||||||||||||
2020 | 2019 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total EBITDA | $ | 58,986 | $ | 42,593 | $ | 16,393 | 38.5 | % | ||||||||
Trex Residential EBITDA | $ | 56,950 | $ | 42,067 | $ | 14,883 | 35.4 | % | ||||||||
Trex Commercial EBITDA | $ | 2,036 | $ | 526 | $ | 1,510 | 287.1 | % |
gross margin.
At September 30, 2017,March 31, 2020 we had $25.5$5.3 million of cash and cash equivalents.
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Net cash provided by operating activities | $ | 92,837 | $ | 83,579 | ||||
Net cash used in investing activities | $ | (82,631 | ) | $ | (4,185 | ) | ||
Net cash used in financing activities | $ | (3,329 | ) | $ | (62,452 | ) | ||
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Net increase in cash and cash equivalents | $ | 6,877 | $ | 16,942 | ||||
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Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net cash used in operating activities | $ | (108,768 | ) | $ | (109,990 | ) | ||
Net cash used in investing activities | (20,597 | ) | (8,647 | ) | ||||
Net cash used in financing activities | (14,129 | ) | 20,845 | |||||
Net decrease in cash and cash equivalents | $ | (143,494 | ) | $ | (97,792 | ) | ||
Net cash provided by operating activities
accounts receivable.
On July 31, 2017, through its newly-formed, wholly-owned subsidiary, Trex Commercial Products, the Company acquired certain assets and assumed certain liabilities of SC Company for $71.8 million in cash, subject to adjustment pending final determination of working capital at closing. The Company used cash on hand and $30 million of funding from its existing revolving credit facility to acquire the assets.
other production improvements.
under our Stock Repurchase Programs.
Program of $39.1 million, offset by net borrowings under our revolving credit facility of $28.5 million.
On February 16, 2017, the Board of Directors authorized a common stock repurchase program of up to 2.961.4 million shares of the Company’s outstanding common stock (February 2017under the Stock Repurchase Program).Program.
Program remains in effect and we may determine to resume repurchases at any time.
Weliquidity for fiscal year 2020 is uncertain, we have stress tested our financials and we believe that cash on hand, cash from operations and borrowings expected to be available under our revolving credit facility will provide sufficient funds to fund planned capital expenditures, make scheduled principal and interest payments, fund warranty payments, and meet other cash requirements. We currently expect to fund future capital expenditures from operations and financing activities. The actual amount and timing of future capital requirements may differ materially from our estimate depending on the demand for Trex products and new market developments and opportunities.
Our capital expenditure guidance for 2020 is $140 million to $160 million.
Product Warranty. We continue to receive and settle claims related to products manufactured at our Nevada facility prior to 2007March 31, 2019 that exhibit surface flaking, which has had a material adverse effect on cash flow from operations, and regularly monitor the adequacy of the warranty reserve.
In the 2017 nine-month period and the 2016 nine-month period we paid $4.4 million and $4.2 million, respectively, to settle surface flaking claims. We estimate that the number of claims received will continue to decline over time and that the average settlement cost per claim will increase slightly, primarily due to inflation. If the level of claims received or average settlement cost per claim differs materially from our expectations, it could result in additional increases or decreases to the warranty reserve and a decrease or increase in earnings and cash flowwould adversely impact net sales in future periods.
Business Acquisition.On July 31, 2017, through our wholly-owned subsidiary,
Seasonality. Our operating resultsResidential have historically varied from quarter to quarter. Seasonal, erratic or prolonged adverse weather conditions in certain geographic regions reduce the level of home improvement and construction activity and can shift demand for ourits products to a later period. As part of ourits normal business practice and consistent with industry practice, we haveTrex Residential has historically offered incentive programs to ourits distributors and dealers to build inventory levels before the start of the prime deck-building season in order to ensure adequate availability of ourits product to meet anticipated seasonal consumer demand. The seasonal effects are often offset by the positive effect of the incentive programs.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In addition The operating results for Trex Commercial have not historically varied from quarter to the critical accounting policies included in the Company’s Annual Report on Form10-K for the year ended December 31, 2016, critical accounting policies and estimates also include the following policies subsequent to and in connection with the SC Company acquisition:
Revenue Recognition
We recognize revenue using the percentagequarter as a result of completion method measuredseasonality. However, they are driven by the ratiotiming of direct costs incurred to date to estimated total costs forindividual projects, which may vary significantly each contract. Contract costs include all direct material, labor, subcontract and certain indirect costs. Administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are recognized when such losses are determined. Changes in job performance, conditions and estimated profitability may result
in revisions to costs and income and are recognized in the period they are determined. Revenues recognized in excess of amounts billed are classified under current assets as costs and estimated earnings in excess of billings. Billings in excess of revenues are classified under current liabilities as billings in excess of costs and estimated earnings.
Goodwill
The Company evaluates the recoverability of goodwill in accordance with Accounting Standard Codification Topic 350, “Intangibles – Goodwill and Other,” annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount. Goodwill is considered to be impaired when the net book value of the reporting unit exceeds its estimated fair value. The Company first assesses qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount to determine if it should proceed with the evaluation of goodwill for impairment. If the Company proceeds with thetwo-step impairment test, the Company first compares the fair value of the reporting unit to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and step two of the impairment analysis is performed. In step two of the analysis, an impairment loss is recorded equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value should such a circumstance arise. The Company measures fair value of the reporting unit based on a present value of future discounted cash flows and a market valuation approach.
Item | 3. Quantitative and Qualitative Disclosures About Market Risk |
Item | 4. Controls and Procedures |
Item | 1A. Risk Factors |
Risk | Discussion | |||
Description: Our business, results of operations and financial condition may be disrupted and adversely affected by global public health pandemics, including the strain of coronavirus known as COVID-19. Impact: If our employees or the employees of our suppliers or transportation providers are unable to work because of illness related to the COVID-19 pandemic, or if we or our suppliers or transportation providers are forced to temporarily cease operations, either on a voluntary or mandatory basis, then we may have a period of reduced operations and be unable to supply our customers in a timely manner, which could have a material negative impact on our business.If the COVID-19 outbreak disrupts the operations of our distributors and retail outlets and negatively impacts economies in the United States, Canada and the rest of the world, our business, results of operations and financial condition may be adversely affected. | In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. It spread to other countries, including the United States, and efforts to containCOVID-19 have intensified. In March 2020, the World Health Organization characterizedCOVID-19 as a pandemic. Our business, results of operations and financial condition may be adversely affected ifCOVID-19 interferes with the ability of our employees, suppliers and other business partners to perform their respective responsibilities and obligations relative to the conduct of our business.We continue to monitor the recent outbreak of COVID-19 and evaluate its impact on our business, including new information as it emerges concerning its severity and any actions to prevent, contain or treat it, among others. The extent to whichCOVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted. |
Item | 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Period | (a) Total Number of Shares (or Units) Purchased (1) | (b) Average Price Paid per Share (or Unit) ($) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum number of Shares (or Units) that May Yet Be Purchased Under the Plan or Program | ||||||||
July 1, 2017 – July 31, 2017 | — | — | Not applicable | Not applicable | ||||||||
August 1, 2017 – August 31, 2017 | 918 | $ | 73.76 | Not applicable | Not applicable | |||||||
September 1, 2017 – September 30, 2017 | — | — | Not applicable | Not applicable | ||||||||
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Quarter ended September 30, 2017 | 918 | Not applicable | ||||||||||
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Period | (a) Total Number of Shares (or Units) Purchased (1) | (b) Average Price Paid per Share (or Unit) ($) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) | (d) Maximum number of Shares (or Units) that May Yet Be Purchased Under the Plan or Program | ||||||||||||
January 1, 2020 – January 31, 2020 | 47,062 | $ | 96.61 | 42,238 | 4,798,382 | |||||||||||
February 1, 2020 – February 29, 2020 | 71,626 | $ | 101.46 | 38,292 | 4,760,090 | |||||||||||
March 1, 2020 – March 31, 2020 | 361,479 | $ | 86.08 | 361,479 | 4,398,611 | |||||||||||
Quarterly period ended March 31, 2020 | 480,167 | 442,009 | ||||||||||||||
(1) |
(2) | On February 16, 2018, the Company’s Board of Directors authorized a common stock repurchase program of up to 5.8 million shares of the Company’s outstanding common stock (Stock Repurchase Program). The Stock Repurchase Program was publicly announced on February 21, 2018. During the three months ended March 31, 2020, the Company repurchased 442,009 shares under the Stock Repurchase Program. |
total of 55,433,633 shares of common stock (95.24%), constituting a quorum, were represented in person or by valid proxies at the Annual Meeting.
For | Against | Abstain | Broker Non-Votes | |||||||||||||
Jay M. Gratz | 48,040,385 | 2,538,485 | 62,250 | 4,792,513 | ||||||||||||
Kristine L. Juster | 48,961,427 | 1,175,968 | 503,725 | 4,792,513 | ||||||||||||
Ronald W. Kaplan | 47,377,257 | 3,201,360 | 62,503 | 4,792,513 | ||||||||||||
Gerald Volas | 49,121,078 | 1,010,571 | 509,471 | 4,792,513 |
For | Against | Abstain | Broker Non-Votes | |||
49,322,107 | 946,485 | 372,528 | 4,792,513 |
For | Against | Abstain | Broker Non-Votes | |||
50,004,012 | 5,353,216 | 76,405 | — |
For | Against | Abstain | Broker Non-Votes | |||
54,467,137 | 904,751 | 61,745 | — |
Contents
TREX COMPANY, INC. | ||||||
Date: May 4, 2020 | By: | /s/ Bryan H. Fairbanks | ||||
Bryan H. Fairbanks | ||||||
President and Chief | ||||||
(Duly Authorized |
Incorporated by reference | ||||||||||||||||||||
Exhibit No. | Description | Form | Exhibit | Filing Date | File No. | |||||||||||||||
3.1 | S-1/A | 3.1 | March 24, 1999 | 333-63287 | ||||||||||||||||
3.2 | 10-Q | 3.2 | May 5, 2014 | 001-14649 | ||||||||||||||||
3.3 | 10-Q | 3.3 | May 7, 2018 | 001-14649 | ||||||||||||||||
3.4 | 8-K | 3.1 | May 1, 2019 | 001-14649 | ||||||||||||||||
3.5* | ||||||||||||||||||||
3.6 | 8-K | 3.2 | May 1, 2019 | 001-14649 | ||||||||||||||||
10.1*** | 8-K | 10.1 | February 25, 2020 | 001-14649 | ||||||||||||||||
10.2*** | 8-K | 10.2 | February 25, 2020 | 001-14649 | ||||||||||||||||
10.3*** | 8-K | 10.3 | February 25, 2020 | 001-14649 | ||||||||||||||||
31.1* | ||||||||||||||||||||
31.2* | ||||||||||||||||||||
32** | ||||||||||||||||||||
101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||||||||||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
* | Filed herewith |
** | Furnished herewith |
*** | Management contract or compensatory plan or agreement |