☒ | 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.) | |
Winchester, Virginia | ||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock | TREX | New York Stock Exchange |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
TREX COMPANY, INC.
INDEX
Page | ||||||
2 | ||||||
Item 1. | 2 | |||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
Item 2. | 18 | |||||
Item 3. | ||||||
30 | ||||||
Item | 30 | |||||
31 | ||||||
Item 1. | 31 | |||||
Item 1A. | 31 | |||||
Item 2. | ||||||
Item 5. | ||||||
Item 6. |
1
Item 1. | Condensed Consolidated Financial Statements |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Net sales | $ | 188,472 | $ | 335,872 | $ | 913,950 | $ | 892,991 | $ | 303,836 | $ | 188,472 | $ | 899,092 | $ | 913,950 | ||||||||||||||||
Cost of sales | 142,264 | 207,622 | 575,452 | 550,668 | 172,941 | 142,264 | 517,321 | 575,452 | ||||||||||||||||||||||||
Gross profit | 46,208 | 128,250 | 338,498 | 342,323 | 130,895 | 46,208 | 381,771 | 338,498 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 26,857 | 33,931 | 106,387 | 102,880 | 44,532 | 26,857 | 133,694 | 106,387 | ||||||||||||||||||||||||
Gain on insurance proceeds | — | (3,777 | ) | — | (5,497 | ) | ||||||||||||||||||||||||||
Income from operations | 19,351 | 98,096 | 232,111 | 244,940 | 86,363 | 19,351 | 248,077 | 232,111 | ||||||||||||||||||||||||
Interest income, net | — | (10 | ) | (103 | ) | — | ||||||||||||||||||||||||||
Interest (income) expense, net | (734 | ) | — | 2,555 | (103 | ) | ||||||||||||||||||||||||||
Income before income taxes | 19,351 | 98,106 | 232,214 | 244,940 | 87,097 | 19,351 | 245,522 | 232,214 | ||||||||||||||||||||||||
Provision for income taxes | 4,928 | 24,311 | 57,665 | 61,235 | 21,831 | 4,928 | 62,089 | 57,665 | ||||||||||||||||||||||||
Net income | $ | 14,423 | $ | 73,795 | $ | 174,549 | $ | 183,705 | $ | 65,266 | $ | 14,423 | $ | 183,433 | $ | 174,549 | ||||||||||||||||
Basic earnings per common share | $ | 0.13 | $ | 0.64 | $ | 1.55 | $ | 1.59 | $ | 0.60 | $ | 0.13 | $ | 1.69 | $ | 1.55 | ||||||||||||||||
Basic weighted average common shares outstanding | 110,140,496 | 115,344,015 | 112,609,684 | 115,455,543 | 108,583,009 | 110,140,496 | 108,707,699 | 112,609,684 | ||||||||||||||||||||||||
Diluted earnings per common share | $ | 0.13 | $ | 0.64 | $ | 1.55 | $ | 1.59 | $ | 0.60 | $ | 0.13 | $ | 1.69 | $ | 1.55 | ||||||||||||||||
Diluted weighted average common shares outstanding | 110,300,017 | 115,625,760 | 112,787,994 | 115,767,426 | 108,702,495 | 110,300,017 | 108,829,374 | 112,787,994 | ||||||||||||||||||||||||
Comprehensive income | $ | 14,423 | $ | 73,795 | $ | 174,549 | $ | 183,705 | $ | 65,266 | $ | 14,423 | $ | 183,433 | $ | 174,549 | ||||||||||||||||
September 30, 2022 | December 31, 2021 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 5,885 | $ | 141,053 | ||||
Accounts receivable, net | 88,753 | 151,096 | ||||||
Inventories | 132,115 | 83,753 | ||||||
Prepaid expenses and other assets | 18,647 | 25,152 | ||||||
Total current assets | 245,400 | 401,054 | ||||||
Property, plant and equipment, net | 536,359 | 460,365 | ||||||
Operating lease assets | 34,933 | 34,571 | ||||||
Goodwill and other intangible assets, net | 18,687 | 19,001 | ||||||
Other assets | 6,519 | 5,330 | ||||||
Total assets | $ | 841,898 | $ | 920,321 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 21,880 | $ | 24,861 | ||||
Accrued expenses and other liabilities | 76,495 | 58,041 | ||||||
Accrued warranty | 6,300 | 5,800 | ||||||
Line of credit | 76,000 | — | ||||||
Total current liabilities | 180,675 | 88,702 | ||||||
Deferred income taxes | 43,967 | 43,967 | ||||||
Operating lease liabilities | 27,909 | 28,263 | ||||||
Non-current accrued warranty | 21,249 | 22,795 | ||||||
Other long-term liabilities | 11,560 | 11,560 | ||||||
Total liabilities | 285,360 | 195,287 | ||||||
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, 360,000,000 shares authorized; and 140,820,228 and 140,734,753 shares issued, respectively | 1,408 | 1,407 | ||||||
Additional paid-in capital | 129,784 | 127,787 | ||||||
Retained earnings | 1,120,598 | 946,048 | ||||||
Treasury stock, at cost, 30,946,057 and 25,586,601 shares, respectively | (695,252 | ) | (350,208 | ) | ||||
Total stockholders’ equity | 556,538 | 725,034 | ||||||
Total liabilities and stockholders’ equity | $ | 841,898 | $ | 920,321 | ||||
September 30, 2023 | December 31, 2022 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 4,644 | $ | 12,325 | ||||
Accounts receivable, net | 200,909 | 98,057 | ||||||
Inventories | 60,384 | 141,355 | ||||||
Prepaid expenses and other assets | 7,130 | 35,105 | ||||||
Total current assets | 273,067 | 286,842 | ||||||
Property, plant and equipment, net | 671,035 | 589,892 | ||||||
Operating lease assets | 27,286 | 30,991 | ||||||
Goodwill and other intangible assets, net | 18,267 | 18,582 | ||||||
Other assets | 7,157 | 7,398 | ||||||
Total assets | $ | 996,812 | $ | 933,705 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 31,795 | $ | 19,935 | ||||
Accrued expenses and other liabilities | 88,919 | 44,064 | ||||||
Accrued warranty | 5,092 | 4,600 | ||||||
Line of credit | 56,500 | 222,000 | ||||||
Total current liabilities | 182,306 | 290,599 | ||||||
Deferred income taxes | 68,224 | 68,224 | ||||||
Operating lease liabilities | 20,197 | 23,974 | ||||||
Non-current accrued warranty | 17,874 | 20,999 | ||||||
Other long-term liabilities | 16,560 | 11,560 | ||||||
Total liabilities | 305,161 | 415,356 | ||||||
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, 360,000,000 shares authorized; 140,958,411 and 140,841,833 shares issued and 108,595,105 and 108,743,423 share outstanding, at September 30, 2023 and December 31, 2022, respectively | 1,410 | 1,408 | ||||||
Additional paid-in capital | 137,088 | 131,539 | ||||||
Retained earnings | 1,314,107 | 1,130,674 | ||||||
Treasury stock, at cost, 32,363,306 shares at September 30, 2023 and 32,098,410 shares at December 31, 2022 | (760,954 | ) | (745,272 | ) | ||||
Total stockholders’ equity | 691,651 | 518,349 | ||||||
Total liabilities and stockholders’ equity | $ | 996,812 | $ | 933,705 | ||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2021 | 115,148,152 | $ | 1,407 | $ | 127,787 | $ | 946,048 | 25,586,601 | $ | (350,208 | ) | $ | 725,034 | |||||||||||||||
Net income | — | — | — | 71,211 | — | — | 71,211 | |||||||||||||||||||||
Employee stock plans | 9,081 | — | 523 | — | — | — | 523 | |||||||||||||||||||||
Shares withheld for taxes on awards | (35,856 | ) | — | (2,912 | ) | — | — | — | (2,912 | ) | ||||||||||||||||||
Stock-based compensation | 79,926 | 1 | 2,225 | — | — | — | 2,226 | |||||||||||||||||||||
Repurchases of common stock | (833,963 | ) | — | — | — | 833,963 | (75,017 | ) | (75,017 | ) | ||||||||||||||||||
Balance, March 31, 2022 | 114,367,340 | $ | 1,408 | $ | 127,623 | $ | 1,017,259 | 26,420,564 | $ | (425,225 | ) | $ | 721,065 | |||||||||||||||
Net income | — | — | — | 88,916 | — | — | 88,916 | |||||||||||||||||||||
Employee stock plans | 8,834 | — | 429 | — | — | — | 429 | |||||||||||||||||||||
Stock-based compensation | 2,024 | — | 1,057 | — | — | — | 1,057 | |||||||||||||||||||||
Repurchases of common stock | (2,814,817 | ) | — | — | — | 2,814,817 | (169,992 | ) | (169,992 | ) | ||||||||||||||||||
Balance, June 30, 2022 | 111,563,381 | $ | 1,408 | $ | 129,109 | $ | 1,106,175 | 29,235,381 | $ | (595,217 | ) | $ | 641,475 | |||||||||||||||
Net income | — | — | — | 14,423 | — | — | 14,423 | |||||||||||||||||||||
Employee stock plans | 11,003 | — | 429 | — | — | — | 429 | |||||||||||||||||||||
Shares withheld for taxes on awards | (57 | ) | — | (3 | ) | — | — | — | (3 | ) | ||||||||||||||||||
Stock-based compensation | 10,520 | — | 249 | — | — | — | 249 | |||||||||||||||||||||
Repurchases of common stock | (1,710,676 | ) | — | — | — | 1,710,676 | (100,035 | ) | (100,035 | ) | ||||||||||||||||||
Balance, September 30, 2022 | 109,874,171 | $ | 1,408 | $ | 129,784 | $ | 1,120,598 | 30,946,057 | $ | (695,252 | ) | $ | 556,538 | |||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2022 | 108,743,423 | $ | 1,408 | $ | 131,539 | $ | 1,130,674 | 32,098,410 | $ | (745,272 | ) | $ | 518,349 | |||||||||||||||
Net income | — | — | — | 41,131 | — | — | 41,131 | |||||||||||||||||||||
Employee stock plans | 8,504 | — | 316 | — | — | — | 316 | |||||||||||||||||||||
Shares withheld for taxes on awards | (28,773 | ) | — | (1,592 | ) | — | — | — | (1,592 | ) | ||||||||||||||||||
Stock-based compensation | 80,362 | 1 | 1,972 | — | — | — | 1,973 | |||||||||||||||||||||
Balance, March 31, 2023 | 108,803,516 | $ | 1,409 | $ | 132,235 | $ | 1,171,805 | 32,098,410 | $ | (745,272 | ) | $ | 560,177 | |||||||||||||||
Net income | — | — | — | 77,036 | — | — | 77,036 | |||||||||||||||||||||
Employee stock plans | 7,971 | — | 323 | — | — | — | 323 | |||||||||||||||||||||
Shares withheld for taxes on awards | (15,663 | ) | — | (855 | ) | — | — | — | (855 | ) | ||||||||||||||||||
Stock-based compensation | 36,888 | — | 2,590 | — | — | — | 2,590 | |||||||||||||||||||||
Repurchases of common stock | (264,896 | ) | — | — | — | 264,896 | (15,746 | ) | (15,746 | ) | ||||||||||||||||||
Balance, June 30, 2023 | 108,567,816 | $ | 1,409 | $ | 134,293 | $ | 1,248,841 | 32,363,306 | $ | (761,018 | ) | $ | 623,525 | |||||||||||||||
Net Income | — | — | — | 65,266 | — | — | 65,266 | |||||||||||||||||||||
Employee stock plans | 5,448 | — | 286 | — | — | — | 286 | |||||||||||||||||||||
Shares withheld for taxes on awards | (4,140 | ) | — | (312 | ) | — | — | — | (312 | ) | ||||||||||||||||||
Stock-based compensation | 25,981 | 1 | 2,821 | — | — | — | 2,822 | |||||||||||||||||||||
Repurchases of common stock | — | — | — | — | — | 64 | 64 | |||||||||||||||||||||
Balance, September 30, 2023 | 108,595,105 | $ | 1,410 | $ | 137,088 | $ | 1,314,107 | 32,363,306 | $ | (760,954 | ) | $ | 691,651 | |||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2020 | 115,799,503 | $ | 1,406 | $ | 126,087 | $ | 737,311 | 24,777,502 | $ | (276,273 | ) | $ | 588,531 | |||||||||||||||
Net income | — | — | — | 48,545 | — | — | 48,545 | |||||||||||||||||||||
Employee stock plans | 28,286 | — | 460 | — | — | — | 460 | |||||||||||||||||||||
Shares withheld for taxes on awards | (38,212 | ) | — | (4,045 | ) | — | — | — | (4,045 | ) | ||||||||||||||||||
Stock-based compensation | 76,094 | — | 2,176 | — | — | — | 2,176 | |||||||||||||||||||||
Repurchases of common stock | (504,275 | ) | — | — | — | 504,275 | (45,523 | ) | (45,523 | ) | ||||||||||||||||||
Balance, March 31, 2021 | 115,361,396 | $ | 1,406 | $ | 124,678 | $ | 785,855 | 25,281,777 | $ | (321,796 | ) | $ | 590,143 | |||||||||||||||
Net income | — | — | — | 61,366 | — | — | 61,366 | |||||||||||||||||||||
Employee stock plans | 20,341 | — | 400 | — | — | — | 400 | |||||||||||||||||||||
Shares withheld for taxes on awards | (13,491 | ) | — | (1,446 | ) | — | — | — | (1,446 | ) | ||||||||||||||||||
Stock-based compensation | 17,210 | 1 | 2,132 | — | — | — | 2,133 | |||||||||||||||||||||
Repurchases of common stock | (40,751 | ) | — | — | — | 40,751 | (3,820 | ) | (3,820 | ) | ||||||||||||||||||
Balance, June 30, 2021 | 115,344,705 | $ | 1,407 | $ | 125,764 | $ | 847,221 | 25,322,528 | $ | (325,616 | ) | $ | 648,776 | |||||||||||||||
Net income | — | — | — | 73,795 | — | — | 73,795 | |||||||||||||||||||||
Employee stock plans | 36,590 | — | 464 | — | — | — | 464 | |||||||||||||||||||||
Shares withheld for taxes on awards | (10,946 | ) | — | (1,159 | ) | — | — | — | (1,159 | ) | ||||||||||||||||||
Stock-based compensation | 10,565 | — | 1,887 | — | — | — | 1,887 | |||||||||||||||||||||
Repurchases of common stock | (31,688 | ) | — | — | — | 31,688 | (2,954 | ) | (2,954 | ) | ||||||||||||||||||
Balance, September 30, 2021 | 115,349,226 | $ | 1,407 | $ | 126,956 | $ | 921,016 | 25,354,216 | $ | (328,570 | ) | $ | 720,809 | |||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2021 | 115,148,152 | $ | 1,407 | $ | 127,787 | $ | 946,048 | 25,586,601 | $ | (350,208 | ) | $ | 725,034 | |||||||||||||||
Net income | — | — | — | 71,211 | — | — | 71,211 | |||||||||||||||||||||
Employee stock plans | 9,081 | — | 523 | — | — | — | 523 | |||||||||||||||||||||
Shares withheld for taxes on awards | (35,856 | ) | — | (2,912 | ) | — | — | — | (2,912 | ) | ||||||||||||||||||
Stock-based compensation | 79,926 | 1 | 2,225 | — | — | — | 2,226 | |||||||||||||||||||||
Repurchases of common stock | (833,963 | ) | — | — | — | 833,963 | (75,017 | ) | (75,017 | ) | ||||||||||||||||||
Balance, March 31, 2022 | 114,367,340 | $ | 1,408 | $ | 127,623 | $ | 1,017,259 | 26,420,564 | $ | (425,225 | ) | $ | 721,065 | |||||||||||||||
Net income | — | — | — | 88,916 | — | — | 88,916 | |||||||||||||||||||||
Employee stock plans | 8,834 | — | 429 | — | — | — | 429 | |||||||||||||||||||||
Stock-based compensation | 2,024 | — | 1,057 | — | — | — | 1,057 | |||||||||||||||||||||
Repurchases of common stock | (2,814,817 | ) | — | — | — | 2,814,817 | (169,992 | ) | (169,992 | ) | ||||||||||||||||||
Balance, June 30, 2022 | 111,563,381 | $ | 1,408 | $ | 129,109 | $ | 1,106,175 | 29,235,381 | $ | (595,217 | ) | $ | 641,475 | |||||||||||||||
Net income | — | — | — | 14,423 | — | — | 14,423 | |||||||||||||||||||||
Employee stock plans | 11,003 | — | 429 | — | — | — | 429 | |||||||||||||||||||||
Shares withheld for taxes on awards | (57 | ) | — | (3 | ) | — | — | — | (3 | ) | ||||||||||||||||||
Stock-based compensation | 10,520 | — | 249 | — | — | — | 249 | |||||||||||||||||||||
Repurchases of common stock | (1,710,676 | ) | — | — | — | 1,710,676 | (100,035 | ) | (100,035 | ) | ||||||||||||||||||
Balance, September 30, 2022 | 109,874,171 | $ | 1,408 | $ | 129,784 | $ | 1,120,598 | 30,946,057 | $ | (695,252 | ) | $ | 556,538 | |||||||||||||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 174,549 | $ | 183,705 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 33,269 | 25,604 | ||||||
Stock-based compensation | 3,531 | 6,195 | ||||||
Gain on disposal of property, plant and equipment | (43 | ) | (1,057 | ) | ||||
Other non-cash adjustments | (171 | ) | (40 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 62,343 | (158,813 | ) | |||||
Inventories | (48,362 | ) | (5,399 | ) | ||||
Prepaid expenses and other assets | 7,125 | (4,311 | ) | |||||
Accounts payable | (3,769 | ) | 17,219 | |||||
Accrued expenses and other liabilities | 8,842 | 28,472 | ||||||
Income taxes receivable/payable | 7,079 | 21,484 | ||||||
Net cash provided by operating activities | 244,393 | 113,059 | ||||||
INVESTING ACTIVITIES | ||||||||
Expenditures for property, plant and equipment | (108,163 | ) | (124,451 | ) | ||||
Proceeds from sales of property, plant and equipment | 45 | 1,355 | ||||||
Net cash used in investing activities | (108,118 | ) | (123,096 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Borrowings under line of credit | 156,000 | 416,000 | ||||||
Principal payments under line of credit | (80,000 | ) | (416,000 | ) | ||||
Repurchases of common stock | (347,957 | ) | (58,945 | ) | ||||
Proceeds from employee stock purchase and option plans | 1,381 | 1,323 | ||||||
Financing costs | (867 | ) | — | |||||
Net cash used in financing activities | (271,443) | (57,622 | ) | |||||
Net decrease in cash and cash equivalents | (135,168 | ) | (67,659 | ) | ||||
Cash and cash equivalents, beginning of period | 141,053 | 121,701 | ||||||
Cash and cash equivalents, end of period | $ | 5,885 | $ | 54,042 | ||||
Supplemental Disclosure: | ||||||||
Cash paid for interest, net of capitalized interest | $ | — | $ | — | ||||
Cash paid for income taxes, net | $ | 50,585 | $ | 39,750 |
Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 183,433 | $ | 174,549 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 37,194 | 33,269 | ||||||
Stock-based compensation | 7,384 | 3,531 | ||||||
Loss (gain) on disposal of property, plant and equipment | 1,081 | (43 | ) | |||||
Other non-cash adjustments | (169 | ) | (171 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (102,852 | ) | 62,343 | |||||
Inventories | 80,971 | (48,362 | ) | |||||
Prepaid expenses and other assets | 4,376 | 7,125 | ||||||
Accounts payable | 10,678 | (3,769 | ) | |||||
Accrued expenses and other liabilities | 39,039 | 8,842 | ||||||
Income taxes receivable/payable | 27,090 | 7,079 | ||||||
Net cash provided by operating activities | 288,225 | 244,393 | ||||||
INVESTING ACTIVITIES | ||||||||
Expenditures for property, plant and equipment | (112,920 | ) | (108,163 | ) | ||||
Proceeds from sales of property, plant and equipment | — | 45 | ||||||
Net cash used in investing activities | (112,920 | ) | (108,118 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Borrowings under line of credit | 509,500 | 156,000 | ||||||
Principal payments under line of credit | (675,000 | ) | (80,000 | ) | ||||
Repurchases of common stock | (18,441 | ) | (347,957 | ) | ||||
Proceeds from employee stock purchase and option plans | 925 | 1,381 | ||||||
Financing costs | 30 | (867 | ) | |||||
Net cash used in financing activities | (182,986 | ) | (271,443 | ) | ||||
Net decrease in cash and cash equivalents | (7,681 | ) | (135,168 | ) | ||||
Cash and cash equivalents, beginning of period | 12,325 | 141,053 | ||||||
Cash and cash equivalents, end of period | $ | 4,644 | $ | 5,885 | ||||
Supplemental Disclosure: | ||||||||
Cash paid for interest, net of capitalized interest | $ | 4,165 | $ | — | ||||
Cash paid for income taxes, net | $ | 35,106 | $ | 50,585 | ||||
Supplemental non-cash investing and financing disclosure: | ||||||||
Capital expenditures in accounts payable | $ | 1,183 | $ | 787 |
1. | BUSINESS AND ORGANIZATION |
2. | BASIS OF PRESENTATION |
3. |
4. |
5. | INVENTORIES |
September 30, 2022 | December 31, 2021 | September 30, 2023 | December 31, 2022 | |||||||||||||
Finished goods | $ | 89,551 | $ | 58,401 | $ | 43,180 | $ | 107,114 | ||||||||
Raw materials | 71,092 | 56,441 | 52,255 | 69,292 | ||||||||||||
Total FIFO (first-in, first-out) inventories | 160,643 | 114,842 | 95,435 | 176,406 | ||||||||||||
Reserve to adjust inventories to LIFO value | (36,467 | ) | (36,467 | ) | (35,051 | ) | (35,051 | ) | ||||||||
Total LIFO inventories | $ | 124,176 | $ | 78,375 | $ | 60,384 | $ | 141,355 | ||||||||
6. | PREPAID EXPENSES AND OTHER ASSETS |
September 30, 2022 | December 31, 2021 | September 30, 2023 | December 31, 2022 | |||||||||||||
Prepaid expenses | $ | 12,412 | $ | 15,061 | $ | 6,859 | $ | 10,787 | ||||||||
Revenues in excess of billings | 4,306 | 9,109 | ||||||||||||||
Income tax receivable | 1,176 | 406 | — | 23,979 | ||||||||||||
Other | 753 | 576 | 271 | 339 | ||||||||||||
Total prepaid expenses and other assets | $ | 18,647 | $ | 25,152 | $ | 7,130 | $ | 35,105 | ||||||||
7. | GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
8. | ACCRUED EXPENSES AND OTHER LIABILITIES |
September 30, 2022 | December 31, 2021 | September 30, 2023 | December 31, 2022 | |||||||||||||
Sales and marketing | $ | 43,564 | $ | 16,439 | $ | 45,374 | $ | 19,194 | ||||||||
Compensation and benefits | 9,075 | 25,450 | 24,470 | 8,646 | ||||||||||||
Operating lease liabilities | 7,596 | 7,066 | 7,409 | 7,488 | ||||||||||||
Manufacturing costs | 3,503 | 4,110 | 3,507 | 3,425 | ||||||||||||
Income taxes | 7,850 | — | 3,111 | — | ||||||||||||
Billings in excess of revenues | 1,213 | 1,436 | ||||||||||||||
Other | 3,694 | 3,540 | 5,048 | 5,311 | ||||||||||||
Total accrued expenses and other liabilities | $ | 76,495 | $ | 58,041 | $ | 88,919 | $ | 44,064 | ||||||||
9. | DEBT |
10. | LEASES |
Nine Months Ended September 30, | ||||||||
Supplemental cash flow information | 2022 | 2021 | ||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 6,532 | $ | 6,196 | ||||
Operating ROU assets obtained in exchange for lease liabilities | $ | 7,332 | $ | 7,047 |
Nine months Ended September 30, | ||||||||
Supplemental cash flow information | 2023 | 2022 | ||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 6,236 | $ | 6,532 | ||||
Operating ROU assets obtained in exchange for lease liabilities | $ | 1,882 | $ | 7,332 |
Supplemental balance sheet information | September 30, 2022 | December 31, 2021 | September 30, 2023 | December 31, 2022 | ||||||||||||
Operating lease ROU assets | $ | 34,933 | $ | 34,571 | $ | 27,286 | $ | 30,991 | ||||||||
Operating lease liabilities: | ||||||||||||||||
Accrued expenses and other current liabilities | $ | 7,596 | $ | 7,066 | $ | 7,409 | $ | 7,488 | ||||||||
Operating lease liabilities | 27,909 | 28,263 | 20,197 | 23,974 | ||||||||||||
Total operating lease liabilities | $ | 35,505 | $ | 35,329 | $ | 27,606 | $ | 31,462 | ||||||||
Maturities of operating lease liabilities | ||||||||
2022 | $ | 2,147 | ||||||
2023 | 7,775 | $ | 1,893 | |||||
2024 | 6,962 | 7,386 | ||||||
2025 | 5,627 | 5,552 | ||||||
2026 | 4,977 | 4,851 | ||||||
2027 | 4,446 | |||||||
Thereafter | 10,158 | 4,845 | ||||||
Total lease payments | 37,646 | 28,973 | ||||||
Less imputed interest | (2,141 | ) | (1,367 | ) | ||||
Total operating lease liabilities | $ | 35,505 | $ | 27,606 | ||||
11. | FINANCIAL INSTRUMENTS |
12. | STOCKHOLDERS’ EQUITY |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Net income available to common shareholders | $ | 14,423 | $ | 73,795 | $ | 174,549 | $ | 183,705 | $ | 65,266 | $ | 14,423 | $ | 183,433 | $ | 174,549 | ||||||||||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Basic weighted average shares outstanding | 110,140,496 | 115,344,015 | 112,609,684 | 115,455,543 | 108,583,009 | 110,140,496 | 108,707,699 | 112,609,684 | ||||||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||||||||
Stock appreciation rights and options | 85,396 | 171,514 | 101,967 | 190,680 | 80,256 | 85,396 | 72,580 | 101,967 | ||||||||||||||||||||||||
Restricted stock | 74,125 | 110,231 | 76,343 | 121,203 | 39,230 | 74,125 | 49,095 | 76,343 | ||||||||||||||||||||||||
Diluted weighted average shares outstanding | 110,300,017 | 115,625,760 | 112,787,994 | 115,767,426 | 108,702,495 | 110,300,017 | 108,829,374 | 112,787,994 | ||||||||||||||||||||||||
Basic earnings per share | $ | 0.13 | $ | 0.64 | $ | 1.55 | $ | 1.59 | $ | 0.60 | $ | 0.13 | $ | 1.69 | $ | 1.55 | ||||||||||||||||
Diluted earnings per share | $ | 0.13 | $ | 0.64 | $ | 1.55 | $ | 1.59 | $ | 0.60 | $ | 0.13 | $ | 1.69 | $ | 1.55 | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Stock appreciation rights | 47,303 | 14,409 | 41,627 | 12,206 | 86,250 | 47,303 | 95,467 | 41,627 | ||||||||||||||||||||||||
Restricted stock | 68,008 | 1,844 | 48,552 | 8,308 | — | 68,008 | 69,764 | 48,552 |
13. | REVENUE FROM CONTRACTS WITH CUSTOMERS |
Three Months Ended September 30, 2022 | 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 | $ | 177,776 | $ | — | $ | 177,776 | ||||||
Products transferred over time and fixed price contracts | — | 10,696 | 10,696 | |||||||||
$ | 177,776 | $ | 10,696 | $ | 188,472 | |||||||
Three Months Ended September 30, 2021 | 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 | $ | 319,207 | $ | — | $ | 319,207 | ||||||
Products transferred over time and fixed price contracts | — | 16,665 | 16,665 | |||||||||
$ | 319,207 | $ | 16,665 | $ | 335,872 | |||||||
Three Months Ended September 30, 2023 | ||||
Trex Residential and Consolidated | ||||
Timing of Revenue Recognition and Type of Contract | ||||
Products transferred at a point in time and variable consideration contracts | $ | 303,836 | ||
$ | 303,836 | |||
Three Months Ended September 30, 2022 | 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 | $ | 177,776 | $ | — | $ | 177,776 | ||||||
Products transferred over time and fixed price contracts | — | 10,696 | 10,696 | |||||||||
$ | 177,776 | $ | 10,696 | $ | 188,472 | |||||||
Nine months Ended September 30, 2023 | ||||
Trex Residential and Consolidated | ||||
Timing of Revenue and Type of Contract | ||||
Products transferred at a point in time and variable consideration contracts | $ | 899,092 | ||
$ | 899,092 | |||
Nine Months Ended September 30, 2022 | 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 | $ | 878,892 | $ | — | $ | 878,892 | ||||||
Products transferred over time and fixed price contracts | — | 35,058 | 35,058 | |||||||||
$ | 878,892 | $ | 35,058 | $ | 913,950 | |||||||
Nine Months Ended September 30, 2021 | 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 | $ | 850,909 | $ | — | $ | 850,909 | ||||||
Products transferred over time and fixed price contracts | — | 42,082 | 42,082 | |||||||||
$ | 850,909 | $ | 42,082 | $ | 892,991 | |||||||
14. | STOCK-BASED COMPENSATION |
Stock Awards Granted | Weighted-Average Grant Price Per Share | |||||||
Time-based restricted stock units | 56,818 | $ | 56.18 | |||||
Performance-based restricted stock units (a) | 72,152 | $ | 76.14 | |||||
Stock appreciation rights | 32,971 | $ | 82.01 |
Stock Awards Granted | Weighted-Average Grant Price Per Share | |||||||
Time-based restricted stock units | 91,742 | $ | 58.67 | |||||
Performance-based restricted stock units (a) | 96,103 | $ | 56.79 | |||||
Stock appreciation rights | 51,916 | $ | 56.80 |
(a) | Includes |
Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||
Weighted-average fair value of grants | $ | 33.9 | $ | 51.84 | $ | 27.19 | $ | 33.9 | ||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Average risk-free interest rate | 1.9 | % | 0.6 | % | 4.0 | % | 1.9 | % | ||||||||
Expected term (years) | 5 | 5 | 5 | 5 | ||||||||||||
Expected volatility | 44.85 | % | 58.7 | % | 49.50 | % | 44.85 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Stock appreciation rights | $ | 196 | $ | 94 | $ | 547 | $ | 352 | $ | 248 | $ | 196 | $ | 660 | $ | 547 | ||||||||||||||||
Time-based restricted stock and restricted stock units | 1,012 | 692 | 2,818 | 2,133 | 1,098 | 1,012 | 2,904 | 2,818 | ||||||||||||||||||||||||
Performance-based restricted stock and restricted stock units | (1,012 | ) | 1,047 | (5 | ) | 3,487 | 1,425 | (1,012 | ) | 3,470 | (5 | ) | ||||||||||||||||||||
Employee stock purchase plan | 52 | 54 | 171 | 223 | 50 | 52 | 350 | 171 | ||||||||||||||||||||||||
Total stock-based compensation | $ | 248 | $ | 1,887 | $ | 3,531 | $ | 6,195 | $ | 2,821 | $ | 248 | $ | 7,384 | $ | 3,531 | ||||||||||||||||
15. | INCOME TAXES |
16. | SEGMENT INFORMATION |
Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | |||||||||||||||||||||||
Trex Residential | Trex Commercial | Total | Trex Residential | Trex Commercial | Total | |||||||||||||||||||
Net sales | $ | 177,776 | $ | 10,696 | $ | 188,472 | $ | 319,207 | $ | 16,665 | $ | 335,872 | ||||||||||||
Net income (loss) | $ | 15,287 | $ | (864 | ) | $ | 14,423 | $ | 72,603 | $ | 1,192 | $ | 73,795 | |||||||||||
EBITDA | $ | 31,692 | $ | (876 | ) | $ | 30,816 | $ | 106,135 | $ | 1,862 | $ | 107,997 | |||||||||||
Depreciation and amortization | $ | 11,194 | $ | 271 | $ | 11,465 | $ | 9,643 | $ | 258 | $ | 9,901 | ||||||||||||
Income tax expense (benefit) | $ | 5,211 | $ | (283 | ) | $ | 4,928 | $ | 23,899 | $ | 412 | $ | 24,311 | |||||||||||
Capital expenditures | $ | 41,403 | $ | 154 | $ | 41,557 | $ | 29,554 | $ | 66 | $ | 29,620 | ||||||||||||
Total assets | $ | 802,926 | $ | 38,972 | $ | 841,898 | $ | 858,330 | $ | 95,121 | $ | 953,451 |
Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | |||||||||||||||||||||||
Trex Residential | Trex Commercial | Total | Trex Residential | Trex Commercial | Total | |||||||||||||||||||
Net income (loss) | $ | 15,287 | $ | (864) | $ | 14,423 | $ | 72,603 | $ | 1,192 | $ | 73,795 | ||||||||||||
Interest income, net | — | — | — | (10) | — | (10) | ||||||||||||||||||
Income tax expense (benefit) | 5,211 | (283) | 4,928 | 23,899 | 412 | 24,311 | ||||||||||||||||||
Depreciation and amortization | 11,194 | 271 | 11,465 | 9,643 | 258 | 9,901 | ||||||||||||||||||
EBITDA | $ | 31,692 | $ | (876) | $ | 30,816 | $ | 106,135 | $ | 1,862 | $ | 107,997 | ||||||||||||
Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||||||||||||
Trex Residential and Consolidated | Trex Residential | Trex Commercial | Consolidated | |||||||||||||
Net sales | $ | 303,836 | $ | 177,776 | $ | 10,696 | $ | 188,472 | ||||||||
Net Income (loss) | $ | 65,266 | $ | 15,287 | $ | (864 | ) | $ | 14,423 | |||||||
EBITDA | $ | 99,359 | $ | 31,692 | $ | (876 | ) | $ | 30,816 | |||||||
Depreciation and amortization | $ | 12,996 | $ | 11,194 | $ | 271 | $ | 11,465 | ||||||||
Income tax expense (benefit) | $ | 21,831 | $ | 5,211 | $ | (283 | ) | $ | 4,928 | |||||||
Capital expenditures | $ | 30,563 | $ | 41,403 | $ | 154 | $ | 41,557 | ||||||||
Total assets | $ | 996,812 | $ | 802,926 | $ | 38,972 | $ | 841,898 |
Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||||||||||||
Trex Residential and Consolidated | Trex Residential | Trex Commercial | Consolidated | |||||||||||||
Net Income (loss) | $ | 65,266 | $ | 15,287 | $ | (864 | ) | $ | 14,423 | |||||||
Interest (income), net | (734 | ) | — | — | — | |||||||||||
Income tax expense (benefit) | 21,831 | 5,211 | (283 | ) | 4,928 | |||||||||||
Depreciation and amortization | 12,996 | 11,194 | 271 | 11,465 | ||||||||||||
EBITDA | $ | 99,359 | $ | 31,692 | $ | (876 | ) | $ | 30,816 | |||||||
Nine months Ended September 30, 2023 | Nine months Ended September 30, 2022 | |||||||||||||||
Trex Residential and Consolidated | Trex Residential | Trex Commercial | Consolidated | |||||||||||||
Net sales | $ | 899,092 | $ | 878,892 | $ | 35,058 | $ | 913,950 | ||||||||
Net Income (loss) | $ | 183,433 | $ | 176,939 | $ | (2,390 | ) | $ | 174,549 | |||||||
EBITDA | $ | 285,271 | $ | 267,725 | $ | (2,344 | ) | $ | 265,381 | |||||||
Depreciation and amortization | $ | 37,194 | $ | 32,435 | $ | 835 | $ | 33,270 | ||||||||
Income tax expense (benefit) | $ | 62,089 | $ | 58,454 | $ | (789 | ) | $ | 57,665 | |||||||
Capital expenditures | $ | 112,920 | $ | 107,937 | $ | 226 | $ | 108,163 | ||||||||
Total assets | $ | 996,812 | $ | 802,926 | $ | 38,972 | $ | 841,898 |
Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | |||||||||||||||||||||||
Trex Residential | Trex Commercial | Total | Trex Residential | Trex Commercial | Total | |||||||||||||||||||
Net sales | $ | 878,892 | $ | 35,058 | $ | 913,950 | $ | 850,909 | $ | 42,082 | $ | 892,991 | ||||||||||||
Net income (loss) | $ | 176,939 | $ | (2,390) | $ | 174,549 | $ | 182,437 | $ | 1,268 | $ | 183,705 | ||||||||||||
EBITDA | $ | 267,725 | $ | (2,344) | $ | 265,381 | $ | 268,107 | $ | 2,437 | $ | 270,544 | ||||||||||||
Depreciation and amortization | $ | 32,435 | $ | 835 | $ | 33,270 | $ | 24,873 | $ | 731 | $ | 25,604 | ||||||||||||
Income tax expense (benefit) | $ | 58,454 | $ | (789) | $ | 57,665 | $ | 60,797 | $ | 438 | $ | 61,235 | ||||||||||||
Capital expenditures | $ | 107,937 | $ | 226 | $ | 108,163 | $ | 122,631 | $ | 1,820 | $ | 124,451 | ||||||||||||
Total assets | $ | 802,926 | $ | 38,972 | $ | 841,898 | $ | 858,330 | $ | 95,121 | $ | 953,451 |
Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | Nine months Ended September 30, 2023 | Nine months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||
Trex Residential | Trex Commercial | Total | Trex Residential | Trex Commercial | Total | Trex Residential and Consolidated | Trex Residential | Trex Commercial | Consolidated | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 176,939 | $ | (2,390) | $ | 174,549 | $ | 182,437 | $ | 1,268 | $ | 183,705 | ||||||||||||||||||||||||||||
Interest income, net | (103) | — | (103) | — | — | — | ||||||||||||||||||||||||||||||||||
Net Income (loss) | $ | 183,433 | $ | 176,939 | $ | (2,390 | ) | $ | 174,549 | |||||||||||||||||||||||||||||||
Interest expense (income), net | 2,555 | (103 | ) | — | (103 | ) | ||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 58,454 | (789) | 57,665 | 60,797 | 438 | 61,235 | 62,089 | 58,454 | (789 | ) | 57,665 | |||||||||||||||||||||||||||||
Depreciation and amortization | 32,435 | 835 | 33,270 | 24,873 | 731 | 25,604 | 37,194 | 32,435 | 835 | 33,270 | ||||||||||||||||||||||||||||||
EBITDA | $ | 267,725 | $ | (2,344) | $ | 265,381 | $ | 268,107 | $ | 2,437 | $ | 270,544 | $ | 285,271 | $ | 267,725 | $ | (2,344 | ) | $ | 265,381 | |||||||||||||||||||
17. | SEASONALITY |
18. | COMMITMENTS AND CONTINGENCIES |
Nine Months Ended September 30, 2022 | ||||||||||||
Surface Flaking | Other Residential | Total | ||||||||||
Beginning balance, January 1 | $ | 18,542 | $ | 10,053 | $ | 28,595 | ||||||
Provisions and changes in estimates | — | 3,098 | 3,098 | |||||||||
Settlements made during the period | (2,243 | ) | (1,901 | ) | (4,144 | ) | ||||||
Ending balance, September 30 | $ | 16,299 | $ | 11,250 | $ | 27,549 | ||||||
Nine months Ended September 30, 2023 | ||||||||||||
Surface Flaking | Other Residential | Total | ||||||||||
Beginning balance, January 1 | $ | 15,905 | $ | 9,694 | $ | 25,599 | ||||||
Provisions (changes in estimates) | (3,800 | ) | 4,824 | 1,024 | ||||||||
Settlements made during the period | (1,522 | ) | (2,135 | ) | (3,657 | ) | ||||||
Ending balance, September 30 | $ | 10,583 | $ | 12,383 | $ | 22,966 | ||||||
Nine Months Ended September 30, 2021 | ||||||||||||
Surface Flaking | Other Residential | Total | ||||||||||
Beginning balance, January 1 | $ | 21,325 | $ | 8,148 | $ | 29,473 | ||||||
Provisions and changes in estimates | — | 3,743 | 3,743 | |||||||||
Settlements made during the period | (2,315 | ) | (1,539 | ) | (3,854 | ) | ||||||
Ending balance, September 30 | $ | 19,010 | $ | 10,352 | $ | 29,362 | ||||||
Nine months Ended September 30, 2022 | ||||||||||||
Surface Flaking | Other Residential | Total | ||||||||||
Beginning balance, January 1 | $ | 18,542 | $ | 10,053 | $ | 28,595 | ||||||
Provisions (changes in estimates) | — | 3,098 | 3,098 | |||||||||
Settlements made during the period | (2,243 | ) | (1,901 | ) | (4,144 | ) | ||||||
Ending balance, September 30 | $ | 16,299 | $ | 11,250 | $ | 27,549 | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following management discussion should be read in conjunction with the Trex Company, Inc. (Trex)(Trex, Company, we or our) Annual Report on Form20212022 filed with the U.S. Securities and Exchange Commission (SEC) and the condensed consolidated financial statements and notes thereto included in Part I, Item 1. “Financial Statements” of this quarterly report. Trex has one wholly-owned subsidiary, Trex Commercial Products, Inc. Together, Trex and Trex Commercial Products, Inc. are referred to as the Company, we or our.
NOTE ON FORWARD-LOOKING STATEMENTS
This management’s discussion and analysis contains 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. All statements regarding our expected financial position and operating results, our business strategy, our financing plans, forecasted demographic and economic trends relating to our industry and similar matters are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” “intend” or similar expressions. We cannot promise you that our expectations in such forward-looking statements will turn out to be correct. Our actual results could be materially different from our expectations because of various factors, including the factors discussed under “Item 1A. Risk Factors” in our Annual Report on Form
OVERVIEW
The following MD&A is intended to help the reader understand the operations and current business environment of the Company. The MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes thereto contained in “
• | Operations and Products — a general description of our business, a brief overview of our reportable segments’ products, and a discussion of our operational highlights. |
• | Highlights and Financial Performance – a summary of financial performance and highlights for the three months and nine months ended September 30, 2023, a general discussion of factors that may affect our operations, and a description of relevant financial statement line items. |
• | Results of Operations — an analysis of our consolidated results of operations for the three months and nine months ended September 30, 2023 compared to three months and nine months ended September 30, 2022, respectively. |
• | Liquidity and Capital Resources — an analysis of cash flows; contractual obligations, and a discussion of our capital and other cash requirements. |
OPERATIONS AND PRODUCTS
Prior to December 30, 2022, a general discussion of factors that may affect our operations, and a description of relevant financial statement line items.
18
Trex Residential
Trex offers the following products through Trex Residential:
Decking and Accessories | Our principal decking products are Trex Transcend ® Lineage™ , Trex Transcend® , Trex Signature®,Trex Select® , and Trex Enhance® . In addition, our Trex Transcend decking product can also be used as cladding. Our high-performance,low-maintenance, eco-friendly composite decking products are comprised of a blend of 95 percent reclaimed wood fibers and recycled polyethylene film and feature a protective polymer shell for enhanced protection against fading, staining, mold and scratching. Trex Transcend Lineage is the next generation of design and performance in composite decking and is available in four luxurious, on-trend hues inspired by some of the most picturesque locales in the United States. Our Trex Transcend decking provides elevated aesthetics paired with the highest level of performance and is available in eight multi-tonal monochromatic classical earth tones and premium tropical colors. Trex Signature decking offers realistic woodgrain aesthetics that raises the bar for beauty, performance and sustainability and is available in two luxurious hues inspired by stunning natural settings. Trex Select decking offers the perfect pairing of price and minimal maintenance and is available in five nature-inspired earth tone colors. Our Trex Enhance boards pair the beauty of authentic wood-grain appearance with the durability of composite with minimal maintenance and the affordability of wood and is available in natural and basic colors. We also offer accessories to our decking ® ™ , an outdoor lighting |
19
Railing | Our | |
Fencing | Our Trex Seclusions ® composite fencing product is offered through two specialty distributors. This product consists of structural posts, bottom The top and bottom rails of Trex fencing are designed to provide a “picture frame’ element and the deep rich colors have a matte surface to prevent harsh sunlight reflections. |
We are a licensor in a number of licensing agreements with third parties to manufacture and sell products under the Trex Commercial
Trex® Outdoor Furniture™ | A line of outdoor furniture products manufactured and sold by PolyWood, Inc. | |
Trex® RainEscape® and Trex® Protect® | An above joist deck drainage system manufactured and sold by DriDeck Enterprises, LLC. Trex Protect Joist, Beam and Rim tape is a self-adhesive butyl tape that protects wooden deck framing/substructure elements. | |
Trex® Pergola™ | Pergolas made from low maintenance cellular PVC and all-aluminum product, manufactured by Home & Leisure, Inc. dba Structureworks Fabrication. | |
Trex® Latticeworks™ | Outdoor lattice boards manufactured and sold by Structureworks Fabrication. | |
Trex® Cornhole™ | Cornhole boards manufactured and sold by IPC Global Marketing LLC. | |
Trex® Blade™ | A specialty saw blade for wood-alternative composite decking manufactured and sold by Freud America, Inc. | |
Trex® SpiralStairs | A staircase alternative for use with all deck substructures manufactured and sold by M. Cohen and Sons, Inc. dba The Iron Shop. | |
Trex® Outdoor Kitchens™ | Outdoor kitchen cabinetry manufactured and sold by Danver Stainless Outdoor Kitchens. |
Trex Commercial designsdesigned and engineersengineered custom solutions which are prevalent in professional and collegiate sports facilities, commercial and high-rise applications, performing arts, sports, and event production and rentals. With a team of devoted engineers, and industry-leading reputation for quality and dedication to customer service, Trex Commercial marketsmarketed to architects, specifiers, contractors, and building owners.
Trex offersoffered the following products through Trex Commercial:Commercial through December 30, 2022:
Architectural railing systems;
Aluminum railing systems; and
Staging equipment and accessories.
20
HIGHLIGHTS AND FINANCIAL PERFORMANCEQUARTER-TO-DATEANDYEAR-TO-DATE
Highlights:
• | Trex Named a 2023 Eco Leader by Green Builder Media. Trex earned highest honors awarded by Green Builder Media in the Eco Leader category. This is the second time Trex has earned this prestigious honor having previously been recognized in 2019. Trex is the only decking brand ever to be awarded Eco Leader status, which signifies companies across the building products arena that are working to quantify ESG concepts in meaningful ways. |
• | Trex and Keep Arkansas Beautiful Awarded “Recycling Education Program of the Year.” A joint initiative by Trex Company and Keep Arkansas Beautiful was celebrated in September as the “2023 Recycling Education Program of the Year” by the Arkansas Recycling Coalition (ARC). The annual ARC Awards honors organizations that have made significant contributions to the education and advancement of waste reduction, recycling, and sustainability in Arkansas over the previous year. |
• | Trex Hosts Investor Day in New York. In September, Bryan Fairbanks, President and CEO laid out the company’s five-year financial targets for organic growth. |
• | Trex Launches New Community Recycling Challenge. The updated NexTrex Recycling Challenge combines the company’s award-winning community and school recycling programs and moves from competition-driven model to self-initiated challenge. Additionally, Trex has made the process easier and more equitable, so more participants have the opportunity to earn recognition and rewards for their recycling efforts. Under the new structure, any participating organization that collects at least 1,000 pounds of recycled plastic film during a 12-month period qualifies to receive a composite bench from the Trex Outdoor Furniture Collection. |
• | Trex Transcend Lineage Recognized in Good Housekeeping’s Renovation Awards. Trex Transcend Lineage has been recognized in Good Housekeeping’s 2023 Home Renovation Awards in the Exterior Enhancements category. Enhancing its appeal, Trex Transcend Lineage offers the look and feel of real wood, but without the environmental impact of deforestation. |
Financial performance. Performance:
The following table presents
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Net sales | $ | 188,472 | $ | 335,872 | $ | 913,950 | $ | 892,991 | ||||||||
Gross profit | $ | 46,208 | $ | 128,250 | $ | 338,498 | $ | 342,323 | ||||||||
Net income | $ | 14,423 | $ | 73,795 | $ | 174,549 | $ | 183,705 | ||||||||
Diluted earnings per share | $ | 0.13 | $ | 0.64 | $ | 1.55 | $ | 1.59 | ||||||||
EBITDA | $ | 30,816 | $ | 107,997 | $ | 265,381 | $ | 270,544 |
Three Months Ended September 30, | ||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
($000s omitted, except per share data) | ||||||||||||||||
Net sales | $ | 303,836 | $ | 188,472 | $ | 115,364 | 61.2 | % | ||||||||
Gross profit | $ | 130,895 | $ | 46,208 | $ | 84,687 | 183.3 | % | ||||||||
Net income | $ | 65,266 | $ | 14,423 | $ | 50,843 | 352.5 | % | ||||||||
EBITDA | $ | 99,359 | $ | 30,816 | $ | 68,543 | 222.4 | % | ||||||||
Diluted earnings per share | $ | 0.60 | $ | 0.13 | $ | 0.47 | 361.5 | % |
Nine months Ended September 30, | ||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||
($000s omitted, except per share data) | ||||||||||||||||
Net sales | $ | 899,092 | $ | 913,950 | $ | (14,858 | ) | (1.6 | )% | |||||||
Gross profit | $ | 381,771 | $ | 338,498 | $ | 43,273 | 12.8 | % | ||||||||
Net income | $ | 183,433 | $ | 174,549 | $ | 8,884 | 5.1 | % | ||||||||
EBITDA | $ | 285,271 | $ | 265,381 | $ | 19,890 | 7.5 | % | ||||||||
Diluted earnings per share | $ | 1.69 | $ | 1.55 | $ | 0.14 | 9.0 | % |
Capital expenditures
Repurchases of common shares
21
RESULTS OF OPERATIONS
General.
Towards the end of June 2022, Trex Residential experienced a reduction in demand from its distribution partners, spurred by concerns over a potential easing in consumer demand due to rising interest rates, declining consumer sentiment and expectations of a general slowing in the economy. As a result, beginning in the third quarter of 2022 Trex Residential’s channel partners met demand partially through inventory drawdown. The drawdown negatively impacted third quarter sales and will impact fourth quarter 2022 sales. In response to this changed environment, Trex Residential immediately took measures to manage a production slowdown, including labor force reductions, production optimization,organization, as well as other cost actions.
Sale of Substantially All of the Assets of Trex Commercial Products, Inc. On December 30, 2022, we completed the sale of substantially all of the assets of our wholly-owned subsidiary and reportable segment, Trex Commercial, for net proceeds of $7.3 million. The divestiture of Trex Commercial reflects our decision to focus on driving the most profitable growth strategy for the Company and its shareholders through the execution of our outdoor living strategy. The divestiture did not represent a strategic shift with a major effect on the Company’s operations and financial results. As such, the results of operations of Trex Commercial are consolidated in the Company’s results of operations for the three months and nine months ended September 30, 2022.
Net Sales
Gross Profit.
Selling, General and Administrative Expenses.
Below is the discussion and analysis of our operating results and material changes in our operating results for the three months ended September 30, 2022 (20222023 (2023 quarter) compared to the three months ended September 30, 2021 (20212022 (2022 quarter), and for the nine months ended September 30, 2022 (20222023 (2023 nine-month period) compared to the nine months ended September 30, 2021 (20212022 (2022 nine-month period).
22
Three Months Ended September 30, 20222023 Compared To The Three Months Ended September 30, 2021
Net Sales
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total net sales | $ | 188,472 | $ | 335,872 | $ | (147,400 | ) | (43.9 | )% | |||||||
Trex Residential net sales | $ | 177,776 | $ | 319,207 | $ | (141,431 | ) | (44.3 | )% | |||||||
Trex Commercial net sales | $ | 10,696 | $ | 16,665 | $ | (5,969 | ) | (35.8 | )% |
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total net sales | $ | 303,836 | $ | 188,472 | $ | 115,364 | 61.2 | % | ||||||||
Trex Residential net sales | $ | 303,836 | $ | 177,776 | $ | 126,060 | 70.9 | % | ||||||||
Trex Commercial net sales | N/A | $ | 10,696 | N/A | N/A |
Total net sales decreased by 43.9%in the 2023 quarter were higher compared to net sales in the 2022 quarter compared to the 2021 quarter reflecting a 44.3% decreaseresulting in Trex Residential net sales and a 35.8% decreasean increase of $115.4 million, or 61.2%. The increase in Trex Commercial net sales. The decrease in Trex Residential net sales was primarilysubstantially all due to a 48.2% decline in volume. Beginningincreased volume which was the result of strong secular trends in the third quarter, ouroutdoor living category and by the non-recurrence of the channel partners looked to rightsize their inventory and meet demand partially through inventory drawdown rather than reordering products, which adversely impacted third quarter sales.
Gross Profit
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Cost of sales | $ | 142,264 | $ | 207,622 | $ | (65,358 | ) | (31.5 | )% | |||||||
% of total net sales | 75.5 | % | 61.8 | % | ||||||||||||
Gross profit | $ | 46,208 | $ | 128,250 | $ | (82,042 | ) | (64.0 | )% | |||||||
Gross margin | 24.5 | % | 38.2 | % |
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Cost of sales | $ | 172,941 | $ | 142,264 | $ | 30,677 | 21.6 | % | ||||||||
% of total net sales | 56.9 | % | 75.5 | % | ||||||||||||
Gross profit | $ | 130,895 | $ | 46,208 | $ | 84,687 | 183.3 | % | ||||||||
Gross margin | 43.1 | % | 24.5 | % |
Gross profit as a percentage of net sales, gross margin, was 43.1% in the 2023 quarter compared to 24.5% in the 2022 quarter compared to 38.2% inquarter. Excluding the 2021 quarter. Gross$3.8 million dollar benefit from a reduction of the surface flaking warranty reserve, gross margin for Trex Residential andthe 2023 quarter was 41.8%. Excluding Trex Commercial, was 25.4% and 10.2%, respectively, ingross margin for the 2022 quarter compared to 38.9% and 24.0%, respectively,was 25.4%. The increase in gross margin in the 2021 quarter.2023 quarter was the result of higher volume, cost out initiatives, and positive plant performance. The decrease in consolidated gross margin2022 quarter was drivennegatively impacted by the decrease in Trex Residential gross margin. The decrease was primarily due to reduced production resulting from our channel partners inventory drawdown to rightsize their inventories and additional costs as we rightsizerestructured our inventory with currentoperations for reduced production levels. The decrease was offset by labor force reductions, production optimization, and other actions to improve our cost position.
Selling, General and Administrative Expenses
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Selling, general and administrative expenses | $ | 26,857 | $ | 33,931 | $ | (7,074 | ) | (20.8 | )% | |||||||
% of total net sales | 14.2 | % | 10.1 | % |
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Selling, general and administrative expenses | $ | 44,532 | $ | 26,857 | $ | 17,675 | 65.8 | % | ||||||||
% of total net sales | 14.7 | % | 14.2 | % |
Selling, general and administrative expenses decreased $7.1increased $17.7 million in the 20222023 quarter. Excluding the $1.2 million severance chargeThe increase was primarily related to labor force reductions in the 2022 quarter, the decrease in selling, general and administrative expenses in the 2022 quarter was $8.3a $10.6 million compared to the 2021 quarter. The $8.3 million decrease was primarily the result of a $10.2 million decreaseincrease in personnel related expenses offset byincluding incentive compensation. The 2022 quarter included a $1.9$2.9 million reduction in incentive compensation related to restructuring of our operations to support our channel partner inventory drawdown. Other changes to the 2023 quarter included a $5.8 million increase in marketing and branding spend,expenses and a $1.7$1.5 million increase into other operating expenses.
Provision for Income Taxes
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Provision for income taxes | $ | 4,928 | $ | 24,311 | $ | (19,383 | ) | (79.7 | )% | |||||||
Effective tax rate | 25.5 | % | 24.8 | % |
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Provision for income taxes | $ | 21,831 | $ | 4,928 | $ | 16,903 | 343.0 | % | ||||||||
Effective tax rate | 25.1 | % | 25.5 | % |
The effective tax rate for the 20222023 quarter of 25.5% and25.1% was 0.7% higher thancomparable to the effective tax rate of 24.8%25.5% for the 20212022 quarter.
23
Net Income and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
Reconciliation of net income (GAAP) to EBITDA and EBITDA margin
Three Months Ended September 30, 2022 | ||||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Net income (loss) | $ | 15,287 | $ | (864 | ) | $ | 14,423 | |||||
Interest (income) expense, net | — | — | — | |||||||||
Income tax expense (benefit) | 5,211 | (283 | ) | 4,928 | ||||||||
Depreciation and amortization | 11,194 | 271 | 11,465 | |||||||||
EBITDA | $ | 31,692 | $ | (876 | ) | $ | 30,816 | |||||
Net income as a percentage of net sales | 7.7 | % | ||||||||||
EBITDA as a percentage of net sales (EBITDA margin) | 16.4 | % | ||||||||||
Three Months Ended September 30, 2021 | ||||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Net income | $ | 72,603 | $ | 1,192 | $ | 73,795 | ||||||
Interest (income), net | (10 | ) | — | (10 | ) | |||||||
Income tax expense | 23,899 | 412 | 24,311 | |||||||||
Depreciation and amortization | 9,643 | 258 | 9,901 | |||||||||
EBITDA | $ | 106,135 | $ | 1,862 | $ | 107,997 | ||||||
Net income as a percentage of net sales | 22.0 | % | ||||||||||
EBITDA as a percentage of net sales (EBITDA margin) | 32.2 | % | ||||||||||
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total EBITDA | $ | 30,816 | $ | 107,997 | $ | (77,181 | ) | (71.5 | )% | |||||||
Trex Residential EBITDA | $ | 31,692 | $ | 106,135 | $ | (74,443 | ) | (70.1 | )% | |||||||
Trex Commercial EBITDA | $ | (876 | ) | $ | 1,862 | $ | (2,738 | ) | (147.0 | )% |
Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||||||||||||
Trex Residential and Consolidated | Trex Residential | Trex Commercial | Consolidated | |||||||||||||
Net Income (loss) | $ | 65,266 | $ | 15,287 | $ | (864 | ) | $ | 14,423 | |||||||
Interest (income), net | (734 | ) | — | — | — | |||||||||||
Income tax expense (benefit) | 21,831 | 5,211 | (283 | ) | 4,928 | |||||||||||
Depreciation and amortization | 12,996 | 11,194 | 271 | 11,465 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
EBITDA | $ | 99,359 | $ | 31,692 | $ | (876 | ) | $ | 30,816 | |||||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total EBITDA | $ | 99,359 | $ | 30,816 | $ | 68,543 | 222.4 | % | ||||||||
Trex Residential EBITDA | $ | 99,359 | $ | 31,692 | $ | 67,667 | 213.5 | % | ||||||||
Trex Commercial EBITDA | N/A | $ | (876 | ) | N/A | N/A |
Total EBITDA decreased 71.5%increased 222.4% to $99.4 million for the 2023 quarter compared to $30.8 million for the 2022 quarter compared to $108 million for the 2021 quarter. EBITDA as a percentage of net sales, EBITDA margin, was 16.4% for the 2022 quarter compared to 32.2% in the 2021 quarter. The decreaseincrease in EBITDA and EBITDA margin was driven primarily by a 70.1% decrease in Trex Residential EBITDA, primarily due to the decreasean increase in net sales and gross margin.
Nine Months Ended September 30, 2023 Compared To The Nine Months Ended September 30, 2022
Net Sales
Nine months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total net sales | $ | 899,092 | $ | 913,950 | $ | (14,858 | ) | (1.6 | )% | |||||||
Trex Residential net sales | $ | 899,092 | $ | 878,892 | $ | 20,200 | 2.3 | % | ||||||||
Trex Commercial net sales | N/A | $ | 35,058 | N/A | N/A |
Total net sales decreased by $14.9 million, or 1.6%, in the 2023 nine-month period compared to the 2022 nine-month period. The reduction in total net sales was the result of the divesture of Trex Commercial at the end of 2022. The $20.2 million, or 2.3%, increase in Trex Residential net sales was primarily due to the launch of premium performance products and their associated pricing designed to support the high end of the market.
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 Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP and are not meant to be considered superior to or a substitute for our GAAP results. |
24
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total net sales | $ | 913,950 | $ | 892,991 | $ | 20,959 | 2.3 | % | ||||||||
Trex Residential net sales | $ | 878,892 | $ | 850,909 | $ | 27,983 | 3.3 | % | ||||||||
Trex Commercial net sales | $ | 35,058 | $ | 42,082 | $ | (7,024 | ) | (16.7 | )% |
Gross Profit
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Cost of sales | $ | 575,452 | $ | 550,668 | $ | 24,784 | 4.5 | % | ||||||||
% of total net sales | 63.0 | % | 61.7 | % | ||||||||||||
Gross profit | $ | 338,498 | $ | 342,323 | $ | (3,825 | ) | (1.1 | )% | |||||||
Gross margin | 37.0 | % | 38.3 | % |
Nine months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Cost of sales | $ | 517,321 | $ | 575,452 | $ | (58,131 | ) | (10.1 | )% | |||||||
% of total net sales | 57.5 | % | 63.0 | % | ||||||||||||
Gross profit | $ | 381,771 | $ | 338,498 | $ | 43,273 | 12.8 | % | ||||||||
Gross margin | 42.5 | % | 37.0 | % |
Gross profit as a percentage of net sales, gross margin, was 42.5% in the 2023 nine-month period compared to 37.0% in the 2022 nine-month period compared to 38.3%period. Excluding Trex Commercial, gross margin for the 2022 quarter was 38.1%. The increase in the 2021 nine-month period. Gross margin for Trex Residential and Trex Commercial products in the 20222023 nine-month period were 38.1%was primarily the result of cost efficiencies, positive plant performance and 11.1%, respectively, compared to 39.2% and 21.2%, respectively, in the 2021 nine-month period.materials management. The decrease in consolidated gross marginincrease was driven primarilypartially offset by a slight decrease in gross margin at Trex Residential primarilylower absorption due to reduced production volume.
Selling, General and Administrative Expenses
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Selling, general and administrative expenses | $ | 106,387 | $ | 102,880 | $ | 3,507 | 3.4 | % | ||||||||
% of total net sales | 11.6 | % | 11.5 | % |
Nine months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Selling, general and administrative expenses | $ | 133,694 | $ | 106,387 | $ | 27,307 | 25.7 | % | ||||||||
% of total net sales | 14.9 | % | 11.6 | % |
Selling, general and administrative expenses increased $3.5$27.3 million duringin the 20222023 nine-month periods.period. The $3.5 million increase resulted primarily fromrelated to a $12.3$19.9 million increase in marketing and branding spend, offset by a $10.7 million reduction in personnel related expenses including incentive compensation, a $4.5 million increase in branding expenses, a $2.9 million increase in research and development expenses and other expenses.
Provision for Income Taxes
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Provision for income taxes | $ | 57,665 | $ | 61,235 | $ | (3,570 | ) | 5.8 | % | |||||||
Effective tax rate | 24.8 | % | 25.0 | % |
Nine months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Provision for income taxes | $ | 62,089 | $ | 57,665 | $ | 4,424 | 7.7 | % | ||||||||
Effective tax rate | 25.3 | % | 24.8 | % |
The effective tax rate for the 20222023 nine-month period of 25.3% was comparable to the effective tax rate of 24.8% for the 20212022 nine-month period.
Net Income and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
Nine Months Ended September 30, 2022 | ||||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Net income (loss) | $ | 176,939 | $ | (2,390 | ) | $ | 174,549 | |||||
Interest income, net | (103 | ) | — | (103 | ) | |||||||
Income tax expense (benefit) | 58,454 | (789 | ) | 57,665 | ||||||||
Depreciation and amortization | 32,435 | 835 | 33,270 | |||||||||
EBITDA | $ | 267,725 | $ | (2,344 | ) | $ | 265,381 | |||||
Net income as a percentage of net sales | 19.1 | % | ||||||||||
EBITDA as a percentage of net sales (EBITDA margin) | 29.0 | % | ||||||||||
Nine Months Ended September 30, 2021 | ||||||||||||
Trex Residential | Trex Commercial | Total | ||||||||||
Net income | $ | 182,437 | $ | 1,268 | $ | 183,705 | ||||||
Interest expense, net | — | — | — | |||||||||
Income tax expense | 60,797 | 438 | 61,235 | |||||||||
Depreciation and amortization | 24,873 | 731 | 25,604 | |||||||||
EBITDA | $ | 268,107 | $ | 2,437 | $ | 270,544 | ||||||
Net income as a percentage of net sales | 20.6 | % | ||||||||||
EBITDA as a percentage of net sales (EBITDA margin) | 30.3 | % | ||||||||||
Nine Months Ended September 30, | $ Change | % Change | ||||||||||||||
2022 | 2021 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total EBITDA | $ | 265,381 | $ | 270,544 | $ | (5,163 | ) | (1.9 | )% | |||||||
Trex Residential EBITDA | $ | 267,725 | $ | 268,107 | $ | (382 | ) | (0.1 | )% | |||||||
Trex Commercial EBITDA | $ | (2,344 | ) | $ | 2,437 | $ | (4,781 | ) | (196.2 | )% |
2 | 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 Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP and are not meant to be considered superior to or a substitute for our GAAP results. |
25
Nine months Ended September 30, 2023 | Nine months Ended September 30, 2022 | |||||||||||||||
Trex Residential and Consolidated | Trex Residential | Trex Commercial | Consolidated | |||||||||||||
Net Income (loss) | $ | 183,433 | $ | 176,939 | $ | (2,390 | ) | $ | 174,549 | |||||||
Interest expense (income), net | 2,555 | (103 | ) | — | (103 | ) | ||||||||||
Income tax expense (benefit) | 62,089 | 58,454 | (789 | ) | 57,665 | |||||||||||
Depreciation and amortization | 37,194 | 32,435 | 835 | 33,270 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
EBITDA | $ | 285,271 | $ | 267,725 | $ | (2,344 | ) | $ | 265,381 | |||||||
|
|
|
|
|
|
|
|
Nine months Ended September 30, | $ Change | % Change | ||||||||||||||
2023 | 2022 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||
Total EBITDA | $ | 285,271 | $ | 265,381 | $ | 19,890 | 7.5 | % | ||||||||
Trex Residential EBITDA | $ | 285,271 | $ | 237,725 | $ | 47,546 | 20.0 | % | ||||||||
Trex Commercial EBITDA | N/A | $ | (2,344 | ) | N/A | N/A |
Total EBITDA increased 7.5% to $285.3 million for the 2023 nine-month period compared to $265.4 million for the 2022 nine-month period. The increase in EBITDA was driven primarily by an increase in gross profit.
LIQUIDITY AND CAPITAL RESOURCES
We finance operations and growth primarily with cash flows from operations, borrowings under our revolving credit facilities, operating leases and normal trade credit terms from operating activities. AtAs of September 30, 20222023 we had $5.9$4.6 million of cash and cash equivalents.
S
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Net cash provided by operating activities | $ | 244,393 | $ | 113,059 | ||||
Net cash used in investing activities | (108,118 | ) | (123,096 | ) | ||||
Net cash used in financing activities | (271,443 | ) | (57,622 | ) | ||||
Net decrease in cash and cash equivalents | $ | (135,168 | ) | $ | (67,659 | ) | ||
Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Net cash provided by operating activities | $ | 288,225 | $ | 244,393 | ||||
Net cash used in investing activities | (112,920 | ) | (108,118 | ) | ||||
Net cash used in financing activities | (182,986 | ) | (271,443 | ) | ||||
|
|
|
| |||||
Net decrease in cash and cash equivalents | $ | (7,681) | $ | (135,168 | ) | |||
|
|
|
|
Operating Activities
Cash provided by operationsoperating activities was $244.4$288.2 million during the 20222023 nine-month period compared to cash provided by operations of $113.1$244.4 million during the 20212022 nine-month period. TheIn general, the $43.8 million increase in cash provided by operating activities reflects higher earnings and reduced investment in working capital in the 2023 period. Specifically, cash provided by operating activities was impacted significantly by two offsetting factors, an increase in accounts receivable and a decrease in inventory.
The increase in accounts receivable in the 2023 period was primarily due to increased sales in the three months ended September 2023 compared to sales in the three months ended September 2022, and, to a lesser extent, a result of differences in payment terms offered to customers in 2023 compared to those offered in 2022. We expect substantially all of the accounts receivables balances as of September 30, 2023 will be collected during the fourth quarter of 2023.
The effect of the increase in accounts receivable was offset, in part, by a decrease in accounts receivable, offset byinventory in the 2023 nine-month period compared to an increase in inventories andinventory in the 2022 nine-month period. The increase in inventory in the 2022 period was a result of the decline in sales that occurred as our distribution partners met demand partially through inventory drawdowns. The decrease in accounts payable and accrued expenses.inventory in the 2023 period reflects a return to more normal purchase patterns from our distribution partners.
26
Investing Activities
Capital expenditures in the 20222023 nine-month period were $107.9$112.9 million at Trex Residential, primarily related to $65.1 million for the Arkansas manufacturing facility, $17.9 million in cost reduction initiatives, the new Arkansas manufacturing facility, capacity expansion in our existing facilities,$12.2 million for our new corporate headquarters, and $9.5 million related to other capacity expansion, safety, environmental and general support.
Financing Activities
Net cash used in financing activities in the 20222023 nine-month period consisted primarily of $348 million innet borrowings under our line of credit and repurchases of our outstanding common stock, offset by net borrowings of $76 million.
Stock Repurchase Program.
Indebtedness Onon and Afterafter May
Under the Credit Agreement, the Lenders agreed to provide the Company with one or more Revolving Loans in a collective maximum principal amount of $400,000,000 (Loan Limit) throughout the term, which ends May 18, 2027 (Term). Included within the Loan Limit are sublimits for a Letter of Credit facility in an amount not to exceed $60,000,000; and Swing Line Loans in an aggregate principal amount at any time outstanding not to exceed $20,000,000. The Revolving Loans, the Letter of Credit facility and the Swing Line Loans are for the purpose of raising working capital and supporting general business operations.
The FacilityCredit Agreement provides the Company, in the aggregate, the ability to borrow an amount up to the Loan Limit during the Term. The Company is not obligated to borrow any amount under the Loan Limit. Within the Loan Limit, the Company may borrow, repay and reborrow at any time or from time to time while the Notes are in effect. Base Rate Loans (as defined in the Credit Agreement) under the Revolving Loans and the Swing Line Loans accrue interest at the Base Rate plus the Applicable Rate (as defined in the Credit Agreement) and Term SOFR Loans for the Revolving Loans accrue interest at the rate per annum equal to the sum of Term SOFR for such interest period plus the Applicable Rate (as defined in the Credit Agreement). The Base Rate for any day is a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced from time to time by BOA as its prime rate, and (c) the Term SOFR plus 1.0% subject to certain interest rate floors. Repayment of all then outstanding principal, interest, fees and costs is due at the end of the Term.
The Company and BofA Securities Inc. as a sustainability coordinator, are entitled to establish specified key performance indicators (KPIs) with respect to certain environmental, social and governance targets of the Company and its subsidiaries. The sustainability coordinator and the Company may amend the Credit Agreement for the purpose of incorporating the KPIs and other related provisions, unless the Lenders object to such amendment on or prior to the date that is ten business days after the date on which such amendment is posted for review by the Lenders. Based on the performance of the Company and its subsidiaries against the KPIs, certain adjustments (increase, decrease or no adjustment) to otherwise applicable pricing will be made; provided that the amount of such adjustments shall not exceed certain aggregate caps as in the definitive loan documentation.
Under the terms of the Security and Pledge Agreement, the Company and TCP,Trex Commercial, subject to certain permitted encumbrances, as collateral security for the above-stated loans and all other present and future indebtedness of the Company owing to the Lenders grants to BOA, as Administrative Agent for the Lenders, a continuing security interest in certain collateral described and defined in the Security and Pledge Agreement but excluding the Excluded Property (as defined in the Security and Pledge Agreement).
27
Indebtedness Prior to May
Under the First Amendment, the Lenders agreed to provide the Company with a Revolving B Loan consisting of one or more revolving loans in a collective maximum principal amount of $150,000,000 (Revolving B Loan Limit) throughout the term, which ends December 22, 2024 (Revolving B Loan Term). Previously, under the Credit Agreement, there was no Revolving B Loan. The First Amendment also provided that TD would serve as Syndication Agent.
As of December 22, 2022, the Credit Agreement was amended and restated to refer to this loan as the Revolving A Loan. The amended and restated Credit Agreement was made an Exhibit A to the First Amendment. All of the terms of the Credit Agreement apply to the Revolving B CommitmentLoan. The Credit Agreement continues to include sublimits under the Revolving A Loan for BOAa Letter of 47.5%, Well FargoCredit facility in an amount not to exceed $60,000,000; and Swing Line Loans in an aggregate principal amount at any time outstanding not to exceed $20,000,000. The Revolving Loans, the Letter of 28.0%Credit facility and Regionsthe Swing Line Loans under Revolving A Loan are for the purpose of 24.5%.
The Company’sNotes provide the Company, in the aggregate, the ability to borrow an amount up to the Revolving A Loan Limit during the Revolving A Loan Term and Revolving B Loan Limit during the Revolving B Loan Term. The Company is not obligated to borrow any amount under the revolving credit facility executed November 5, 2019 was completely replaced byloans. Within the Company’s revolving credit facility executed May 18, 2022. respective loan limit, the Company may borrow, repay and reborrow at any time or from time to time while the Notes are in effect. With respect to Revolving B Loans, for any day, the rate per annum is a tiered pricing based upon the Consolidated Debt to Consolidated EBITDA Ratio. The applicable rate for Revolving B Loans that are Base Rate Loans range between 1.20% and 2.15% and the applicable rate for Revolving B Loans that are Term SOFR/Term SOFR Daily Floating Rate range between 0.20% and 1.15%.
At September 30, 2022,2023, we had $76$56.5 million in outstanding borrowings under the revolving credit facility and borrowing capacity under the facility of $324$493.5 million.
Compliance with Debt Covenants.
We believe that cash on hand, cash from operations and borrowings expected to be available under our revolving credit facilities 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.
Capital Requirements.
Our capital expenditure guidance for 20222023 is $170$145 million to $180$155 million. In addition to the construction of our third facility which will be located in Arkansas, our capital allocation priorities include expenditures for internal growth opportunities, manufacturing cost reductions, upgrading equipment and support systems, and acquisitions which fit our long-term growth strategy as we continue to evaluate opportunities that would be a good strategic fit for Trex, and return of capital to shareholdersshareholders.
28
Inventory in Distribution Channels.
Product Warranty.
Products sold on or after January 1, 2023: The warranty period for residential use is 50 years for Transcend® decking, 35 years for Select® decking and Universal Fascia, and 25 years for Enhance® decking and Transcend, Select, Enhance and Signature® railing. The warranty periods ranging fromperiod for commercial use is 10 years, excluding Signature railing and Transcend cladding, which each have a warranty period of 25 years. The Company further warrants that Trex Transcend, Trex Enhance and Trex Select decking and cladding and Universal Fascia products will not fade in color from light and weathering exposure more than a certain amount and will be resistant to 25 years, depending onpermanent staining from food and beverage substances or mold and mildew, provided the product and its use.stain is cleaned within seven days of appearance, for the warranty period referred to above. If there is a breach of such warranties, we havethe Company has an obligation either to replace the defective product or refund the purchase price. Depending on
Products sold prior to January 1, 2023: The warranty period is 25 years for residential use and 10 years for commercial use. With respect to Trex Signature railing, the productwarranty period is 25 years for both residential and its use, we also warrant ourcommercial use. The Company further warrants that Trex CommercialTranscend, Trex Enhance, Trex Select and Universal Fascia products will not fade in color more than a certain amount and will be freeresistant to permanent staining from food substances or mold, provided the stain is cleaned within seven days of manufacturing defectsappearance, for periods ranging from 1 yearthe warranty period referred to 3 years.
Trex Residential continues to receive and settle claims for decking products manufactured at our Trex Residentialits Nevada facility prior to 2007 that exhibit surface flaking and maintainmaintains a warranty reserve to provide for the settlement of these claims. We monitorEstimating the warranty reserve for surface flaking claims requires management to estimate (1) the number of claims to be settled with payment and (2) the average cost to settle each claim.
To estimate the number of claims to be settled with payment, the Company utilizes actuarial techniques to determine a reasonable possible range of claims to be received and the percentage of those claims that will ultimately require payment (collectively, elements). Estimates for these elements are quantified using a range of assumptions derived from claim count history and the identification of factors influencing the claim counts to determine its best estimate of future claims for which to record a related liability. 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.
The Company monitors surface flaking claims activity each quarter for indications that ourits 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.
Average cost per claim experienced in the nine months ended September 30, 2023 was lower than that experienced in the nine months ended September 30, 2022, which was elevated due to the closure of three large claims, and lower than the Company’s expectations for 2023. The number of incoming claims received in the nine months ended September 30, 2023 was lower than the number of claims received in the nine months ended September 30, 2022, and lower than the Company’s expectations for 2023. After evaluating the declining trend in incoming claims in its actuarial analysis, the Company decreased its estimate of the number of future claims to be settled with payment. As a result of the decrease in estimated future claims, in the three-month period ended September 30, 2023, the Company recorded a reduction of $3.8 million to its warranty reserve for the future settlement of surface flaking claims. The Company believes the reserve at September 30, 2023 is sufficient to cover future surface flaking obligations.
29
The Company’s analysis is based on currently known facts and a number of assumptions.assumptions, as discussed above, and current expectations. 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 ourthe Company’s financial condition, results of operations or cash flows.
The Company also maintains a warranty reserve for the settlement of other residential product warranty claims and records the provision at the time of product sale.
The following table details surface flaking claims activity related to our warranty:
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Claims open, beginning of period | 1,759 | 1,799 | ||||||
Claims received (1) | 507 | 788 | ||||||
Claims resolved (2) | (506 | ) | (785 | ) | ||||
Claims open, end of period | 1,760 | 1,802 | ||||||
Average cost per claim (3) | $ | 5,200 | $ | 3,492 |
Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Claims open, beginning of period | 1,729 | 1,759 | ||||||
Claims received (1) | 451 | 507 | ||||||
Claims resolved (2) | (453 | ) | (506 | ) | ||||
|
|
|
| |||||
Claims open, end of period | 1,727 | 1,760 | ||||||
|
|
|
| |||||
Average cost per claim (3) | $ | 3,977 | $ | 5,200 |
(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. |
Seasonality
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of the Company’s Annual Report on Form
Item 4. | Controls and Procedures |
The Company’s management, with the participation of its President and Chief Executive Officer who is the(the Company’s principal executive officer,officer) and its Senior Vice President andActing Chief Financial Officer who is the(the Company’s principal financial officer,officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2022.2023. Based on this evaluation, the President and Chief Executive Officer and the Senior Vice President andActing Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective. There have been no changes in the Company’s internal control over financial reporting during the nine-monththree-month period ended September 30, 2022,2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
30
PART II
OTHER INFORMATION
Item 1. | Legal Proceedings |
The Company has lawsuits, as well as other claims, pending against it which are ordinary routine litigation and claims incidental to the business. Management has evaluated the merits of these lawsuits and claims and believes that their ultimate resolution will not have a material effect on the Company’s consolidated financial condition, results of operations, liquidity or competitive position.
Item 1A. | Risk Factors |
Since December 31, 2022, there have been no material changes to the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. You should carefully consider the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2022 and our other filings made with the SEC. You should be aware that such risk factors and other information may not describe every risk we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
(c) The following table provides information relating to the purchases of our common stock during the three months ended September 30, 20222023 in accordance with Item 703 of Regulation
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 | ||||||||||||
July 1, 2022 – July 31, 2022 | 1,709,785 | $ | 58.47 | 1,709,785 | 2,629,558 | |||||||||||
August 1, 2022 – August 31, 2022 | 891 | $ | 64.51 | 891 | 2,628,667 | |||||||||||
September 1, 2022 – September 30, 2022 | 57 | $ | 47.40 | — | 2,628,667 | |||||||||||
Quarterly period ended September 30, 2022 | 1,710,733 | 1,710,676 | ||||||||||||||
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 | ||||||||||||
July 1, 2023 – July 31, 2023 | — | — | — | 10,535,104 | ||||||||||||
August 1, 2023 – August 31, 2023 | 3,454 | $ | 75.95 | — | 10,535,104 | |||||||||||
September 1, 2023 – September 30, 2023 | 686 | $ | 72.75 | — | 10,535,104 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Quarterly period ended September 30, 2022 | 4,140 | — | ||||||||||||||
|
|
|
|
(1) | During the three months ended September 30, |
On May 4, 2023, the Trex Board of Directors adopted a new stock repurchase program (2023 Stock Repurchase Program) of up to 10.8 million shares of its outstanding common stock, and terminated the existing Stock Repurchase Program. The 2023 Stock Repurchase Program has no set expiration date and 264,896 shares were repurchased under the 2023 Stock Repurchase Program as of September 30, 2023.
Other Information |
Amended and Restated By-Laws of the 50 Best U.S. Manufacturers. In its first yearCompany dated October 25, 2023. On October 25, 2023 the Board of eligibility, Trex ranked #6 on the exclusive annual ranking of
31
A copy of the Amended and Restated By-Laws, as amended October 25, 2023, is attached as Exhibit 3.3 hereto and is incorporated by reference.
Appointment of Adam D. Zambanini as Executive Vice President and Chief Operating Officer. On October 25, 2023, our Board of Directors appointed Adam Zambanini to serve as our Executive Vice President and Chief Operating Officer. Mr. Zambanini, age 46, previously served as President of Trex Residential Products since July 2018. There was no change to Mr. Zambanini’s compensation, and the information related to Mr. Zambanini’s compensation set forth in our definitive proxy statement filed on revenue. The “50 Best” formula then examines profit margin, revenue growth and inventory over a three-year period, as well as returnSchedule 14A on assets and return on equity over a five-year timeframe, with the most recent numbers weighted most heavily.
Item 6. | Exhibits |
See Exhibit Index at the end of the Quarterly Report on Form
32
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TREX COMPANY, INC. | ||||||
Date: October | By: | /s/ | ||||
( Duly Authorized Officer and Principal Financial Officer |
EXHIBIT INDEX
Incorporated by reference | ||||||||||||||||||
Exhibit Number | Description | Form | Exhibit | Filing Date | File No. | |||||||||||||
3.1 | Restated Certificate of Incorporation of Trex Company, Inc. dated July 28, 2021. | 10-Q | 3.6 | August 2, 2021 | 001-14649 | |||||||||||||
3.2 | First Certificate of Amendment to the Restated Certificate of Incorporation of Trex Company, Inc. dated May 5, 2022 | 10-Q | 3.2 | May 9, 2022 | 001-14649 | |||||||||||||
3.3 | Amended and Restated By-Laws of the Company. | 8-K | 3.2 | May 1, 2019 | 001-14649 | |||||||||||||
10.1 | AIA document A141 – 2014 Agreement dated July 7, 2022 by and between Trex Company, Inc. and Gray Construction, Inc. | 8-K | 10.1 | July 12, 2022 | 001-14649 | |||||||||||||
31.1* | Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |||||||||||||||||
31.2* | Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |||||||||||||||||
32*** | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350). | |||||||||||||||||
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. | |||||||||||||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||||||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||||||||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||||||||||||
104.1 | Cover Page Interactive Data File—The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
Incorporated by reference | ||||||||||||||||||
Exhibit Number | Description | Form | Exhibit | Filing Date | File No. | |||||||||||||
104.1 | Cover Page Interactive Data File—The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
* | Filed herewith. |
** | Management contract or compensatory plan or agreement. |
*** | Furnished herewith. |