Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2024 | Jul. 23, 2024 | |
Cover [Abstract] | ||
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Type | 10-Q | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001069878 | |
Current Fiscal Year End Date | --12-31 | |
Document Transition Report | false | |
Entity Registrant Name | Trex Company, Inc. | |
Document Period End Date | Jun. 30, 2024 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Trading Symbol | TREX | |
Entity Shell Company | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 108,706,697 | |
Entity File Number | 001-14649 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 54-1910453 | |
Entity Address, Address Line One | 2500 Trex Way | |
Entity Address, City or Town | Winchester | |
Entity Address, Postal Zip Code | 22601 | |
Entity Address, State or Province | VA | |
City Area Code | 540 | |
Local Phone Number | 542-6300 | |
Title of 12(b) Security | Common stock | |
Security Exchange Name | NYSE | |
Document Quarterly Report | true |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Statement [Abstract] | ||||
Net sales | $ 376,470 | $ 356,538 | $ 750,105 | $ 595,256 |
Cost of sales | 208,360 | 200,090 | 412,384 | 344,380 |
Gross profit | 168,110 | 156,448 | 337,721 | 250,876 |
Selling, general and administrative expenses | 51,206 | 51,681 | 101,806 | 89,162 |
Income from operations | 116,904 | 104,767 | 235,915 | 161,714 |
Interest expense (income), net | 1,305 | (6) | 3,289 | |
Income before income taxes | 116,904 | 103,462 | 235,921 | 158,425 |
Provision for income taxes | 29,906 | 26,426 | 59,853 | 40,258 |
Net income | $ 86,998 | $ 77,036 | $ 176,068 | $ 118,167 |
Basic earnings per common share | $ 0.8 | $ 0.71 | $ 1.62 | $ 1.09 |
Basic weighted average shares outstanding | 108,693,887 | 108,770,204 | 108,667,028 | 108,771,077 |
Diluted earnings per common share | $ 0.8 | $ 0.71 | $ 1.62 | $ 1.09 |
Diluted weighted average common shares outstanding | 108,810,296 | 108,871,440 | 108,803,081 | 108,893,848 |
Comprehensive income | $ 86,998 | $ 77,036 | $ 176,068 | $ 118,167 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 1,172 | $ 1,959 |
Accounts receivable, net | 270,037 | 41,136 |
Inventories | 148,858 | 107,089 |
Prepaid expenses and other assets | 13,747 | 22,070 |
Total current assets | 433,814 | 172,254 |
Property, plant and equipment, net | 774,009 | 709,402 |
Operating lease assets | 38,006 | 26,233 |
Goodwill and other intangible assets, net | 17,953 | 18,163 |
Other assets | 6,152 | 6,833 |
Total assets | 1,269,934 | 932,885 |
Current liabilities | ||
Accounts payable | 59,267 | 23,963 |
Accrued expenses and other liabilities | 116,953 | 56,734 |
Accrued warranty | 5,181 | 4,865 |
Line of credit | 63,000 | 5,500 |
Total current liabilities | 244,401 | 91,062 |
Deferred income taxes | 67,226 | 72,439 |
Operating lease liabilities | 28,322 | 18,840 |
Non-current accrued warranty | 18,526 | 17,313 |
Other long-term liabilities | 16,559 | 16,560 |
Total liabilities | 375,034 | 216,214 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.01 par value, 360,000,000 shares authorized; 141,069,074 and 140,974,843 shares issued and 108,705,768 and 108,611,537 shares outstanding, at June 30, 2024 and December 31, 2023, respectively | 1,411 | 1,410 |
Additional paid-in capital | 142,317 | 140,157 |
Retained earnings | 1,512,126 | 1,336,058 |
Treasury stock, at cost, 32,363,306 and 32,363,306 shares at June 30, 2024 and December 31, 2023 | (760,954) | (760,954) |
Total stockholders' equity | 894,900 | 716,671 |
Total liabilities and stockholders' equity | $ 1,269,934 | $ 932,885 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 360,000,000 | 360,000,000 |
Common stock, shares issued | 141,069,074 | 140,974,843 |
Common stock, shares outstanding | 108,705,768 | 108,611,537 |
Treasury stock, shares | 32,363,306 | 32,363,306 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] |
Beginning Balance at Dec. 31, 2022 | $ 518,349 | $ 1,408 | $ 131,539 | $ 1,130,674 | $ (745,272) |
Beginning Balance, Shares at Dec. 31, 2022 | 108,743,423 | 32,098,410 | |||
Net Income (Loss) | 41,131 | 41,131 | |||
Employee stock plans | 316 | 316 | |||
Employee stock plans, Shares | 8,504 | ||||
Shares withheld for taxes on awards | (1,592) | (1,592) | |||
Shares withheld for taxes on awards, Shares | (28,773) | ||||
Stock-based compensation | 1,973 | $ 1 | 1,972 | ||
Stock-based compensation, Shares | 80,362 | ||||
Ending Balance at Mar. 31, 2023 | 560,177 | $ 1,409 | 132,235 | 1,171,805 | $ (745,272) |
Ending Balance, Shares at Mar. 31, 2023 | 108,803,516 | 32,098,410 | |||
Beginning Balance at Dec. 31, 2022 | 518,349 | $ 1,408 | 131,539 | 1,130,674 | $ (745,272) |
Beginning Balance, Shares at Dec. 31, 2022 | 108,743,423 | 32,098,410 | |||
Net Income (Loss) | 118,167 | ||||
Ending Balance at Jun. 30, 2023 | 623,525 | $ 1,409 | 134,293 | 1,248,841 | $ (761,018) |
Ending Balance, Shares at Jun. 30, 2023 | 108,567,816 | 32,363,306 | |||
Beginning Balance at Mar. 31, 2023 | 560,177 | $ 1,409 | 132,235 | 1,171,805 | $ (745,272) |
Beginning Balance, Shares at Mar. 31, 2023 | 108,803,516 | 32,098,410 | |||
Net Income (Loss) | 77,036 | 77,036 | |||
Employee stock plans | 323 | 323 | |||
Employee stock plans, Shares | 7,971 | ||||
Shares withheld for taxes on awards | (855) | (855) | |||
Shares withheld for taxes on awards, Shares | (15,663) | ||||
Stock-based compensation | 2,590 | 2,590 | |||
Stock-based compensation, Shares | 36,888 | ||||
Repurchases of common stock | (15,746) | $ (15,746) | |||
Repurchases of common stock, Shares | (264,896) | 264,896 | |||
Ending Balance at Jun. 30, 2023 | 623,525 | $ 1,409 | 134,293 | 1,248,841 | $ (761,018) |
Ending Balance, Shares at Jun. 30, 2023 | 108,567,816 | 32,363,306 | |||
Beginning Balance at Dec. 31, 2023 | 716,671 | $ 1,410 | 140,157 | 1,336,058 | $ (760,954) |
Beginning Balance, Shares at Dec. 31, 2023 | 108,611,537 | 32,363,306 | |||
Net Income (Loss) | 89,070 | 89,070 | |||
Employee stock plans | 397 | 397 | |||
Employee stock plans, Shares | 5,640 | ||||
Shares withheld for taxes on awards | (5,146) | (5,146) | |||
Shares withheld for taxes on awards, Shares | (55,103) | ||||
Stock-based compensation | 3,154 | $ 1 | 3,153 | ||
Stock-based compensation, Shares | 130,683 | ||||
Ending Balance at Mar. 31, 2024 | 804,146 | $ 1,411 | 138,561 | 1,425,128 | $ (760,954) |
Ending Balance, Shares at Mar. 31, 2024 | 108,692,757 | 32,363,306 | |||
Beginning Balance at Dec. 31, 2023 | 716,671 | $ 1,410 | 140,157 | 1,336,058 | $ (760,954) |
Beginning Balance, Shares at Dec. 31, 2023 | 108,611,537 | 32,363,306 | |||
Net Income (Loss) | 176,068 | ||||
Ending Balance at Jun. 30, 2024 | 894,900 | $ 1,411 | 142,317 | 1,512,126 | $ (760,954) |
Ending Balance, Shares at Jun. 30, 2024 | 108,705,768 | 32,363,306 | |||
Beginning Balance at Mar. 31, 2024 | 804,146 | $ 1,411 | 138,561 | 1,425,128 | $ (760,954) |
Beginning Balance, Shares at Mar. 31, 2024 | 108,692,757 | 32,363,306 | |||
Net Income (Loss) | 86,998 | 86,998 | |||
Employee stock plans | 341 | 341 | |||
Employee stock plans, Shares | 5,408 | ||||
Shares withheld for taxes on awards | (424) | (424) | |||
Shares withheld for taxes on awards, Shares | (5,020) | ||||
Stock-based compensation | 3,839 | 3,839 | |||
Stock-based compensation, Shares | 12,623 | ||||
Ending Balance at Jun. 30, 2024 | $ 894,900 | $ 1,411 | $ 142,317 | $ 1,512,126 | $ (760,954) |
Ending Balance, Shares at Jun. 30, 2024 | 108,705,768 | 32,363,306 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
OPERATING ACTIVITIES | ||
Net income | $ 176,068 | $ 118,167 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 27,606 | 24,198 |
Deferred Income Taxes | (5,212) | 0 |
Stock-based compensation | 6,992 | 4,562 |
Loss on disposal of property, plant and equipment | 2,262 | 1,081 |
Other non-cash adjustments | 243 | (388) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (228,901) | (168,751) |
Inventories | (41,769) | 67,348 |
Prepaid expenses and other assets | (850) | 2,046 |
Accounts payable | 35,768 | 13,816 |
Accrued expenses and other liabilities | 28,688 | 20,686 |
Income taxes receivable/payable | 18,746 | 25,016 |
Net cash provided by operating activities | 19,641 | 107,781 |
INVESTING ACTIVITIES | ||
Expenditures for property, plant and equipment | (73,202) | (82,357) |
Proceeds from sales of property, plant and equipment | 106 | 0 |
Net cash used in investing activities | (73,096) | (82,357) |
FINANCING ACTIVITIES | ||
Borrowings under line of credit | 438,300 | 330,000 |
Principal payments under line of credit | (380,800) | (346,000) |
Repurchases of common stock | (5,570) | (18,192) |
Proceeds from employee stock purchase and option plans | 738 | 639 |
Financing costs | 0 | 30 |
Net cash provided by (used in) financing activities | 52,668 | (33,523) |
Net decrease in cash and cash equivalents | (787) | (8,099) |
Cash and cash equivalents, beginning of period | 1,959 | 12,325 |
Cash and cash equivalents, end of period | 1,172 | 4,226 |
Supplemental Disclosure: | ||
Cash paid for interest, net of capitalized interest | 0 | 2,602 |
Cash paid for income taxes, net | 46,320 | 15,348 |
Supplemental non-cash investing and financing disclosure: | ||
Capital expenditures in accounts payable and accrued expenses | $ 21,169 | $ 1,523 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ 86,998 | $ 89,070 | $ 77,036 | $ 41,131 | $ 176,068 | $ 118,167 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | 1. BUSINESS AND ORGANIZATION Trex Company, Inc. (Trex or Company), is the world’s largest manufacturer of high-performance, low-maintenance wood-alternative decking and residential railing and outdoor living products and accessories, marketed under the brand name Trex ® , with more than 30 years of product experience. A majority of its products are manufactured in a proprietary process that combines reclaimed wood fibers and scrap polyethylene. The Company is incorporated in Delaware. The principal executive offices are located at 2500 Trex Way, Winchester, Virginia 22601, and the telephone number at that address is (540) 542-6300. The Company operates in a single reportable segment. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 2. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and U.S. Securities and Exchange Commission instructions to Form 10-Q and Article 10 of Regulation S-X and, accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring adjustments, except as otherwise described herein) considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. Certain reclassifications have been made to prior period balances to conform to current year presentation. The unaudited condensed consolidated financial statements include the accounts of the Company for all periods presented. The unaudited consolidated results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. The Company’s results of operations are affected by a number of factors, including, but not limited to, the cost to manufacture and distribute products, cost of raw materials, inflation, consumer spending and preferences, interest rates, the impact of any supply chain disruptions, economic conditions, and/or any adverse effects from global health pandemics and geopolitical conflicts. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report of Trex Company, Inc. on Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission. |
Recently Adopted Accounting Sta
Recently Adopted Accounting Standards | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Adopted Accounting Standards | 3. RECENTLY ADOPTED ACCOUNTING STANDARDS In December 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-06 "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848." The amendments in this update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. ASU No. 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The FASB included a sunset provision within Topic 848 based on the expectations of when the LIBOR would cease being published intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2024 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The amendments did not have a material effect on the Company’s consolidated financial statements. |
New Accounting Standards Not Ye
New Accounting Standards Not Yet Adopted | 6 Months Ended |
Jun. 30, 2024 | |
New Accounting Standards Not Yet Adopted [Abstract] | |
New Accounting Standards Not Yet Adopted | 4. NEW ACCOUNTING STANDARDS NOT YET ADOPTED In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The guidance requires disclosure of significant segment expenses which are regularly provided to the chief operating decision maker (CODM), the composition of and amount of other segment items, the CODM’s title and position within the organization, and how the CODM uses the reported measure(s) of segment profit or loss to assess the performance of the segment. In addition, on an interim basis, all segment profit or loss and asset disclosures currently required on an annual basis must be reported, as well as those required by Topic 280. The guidance allows for multiple measures of segment profit or loss to be reported. Entities which have a single reportable segment must apply Topic 280 in its entirety. The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. Early adoption is permitted. Entities are required to apply the amendments of this update retrospectively for all prior periods presented in the financial statements. The Company does not intend to early adopt the standard and does not expect adoption of this guidance to have a material effect on its consolidated results of operations and financial position. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The guidance requires public entities to disclose additional categories of information related to federal, state, and foreign income taxes and additional details related to reconciling items should they meet a quantitative threshold. The guidance requires disclosure of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and to disaggregate the information by jurisdiction based on quantitative thresholds. The guidance is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance should be applied on a prospective basis, retrospective application is permitted. The Company does not intend to early adopt the standard and does not expect adoption of the guidance to have a material effect on its consolidated results of operations and financial position. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2024 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. INVENTORIES Inventories valued at LIFO (last-in, first-out), consist of the following (in thousands): June 30, December 31, Finished goods $ 111,286 $ 88,840 Raw materials 71,011 51,688 Total FIFO (first-in, first-out) inventories 182,297 140,528 Reserve to adjust inventories to LIFO value ( 33,439 ) ( 33,439 ) Total LIFO inventories $ 148,858 $ 107,089 The Company utilizes the LIFO method of accounting, which generally provides for the matching of current costs with current revenues. However, under the LIFO method, reductions in annual inventory balances may cause a portion of the Company’s cost of sales to be based on historical costs rather than current year costs (LIFO liquidation). Reductions in interim inventory balances expected to be replenished by year-end do not result in a LIFO liquidation. Accordingly, interim LIFO calculations are based, in part, on management’s estimates of expected year-end inventory levels and costs and may differ from actual results. Since inventory levels and costs are subject to factors beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation. There were no LIFO inventory liquidations or related impact on the cost of sales in the six months ended June 30, 2024. |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 6 Months Ended |
Jun. 30, 2024 | |
Text Block [Abstract] | |
Prepaid Expenses and Other Assets | 6. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets consist of the following (in thousands): June 30, December 31, Prepaid expenses $ 13,118 $ 11,830 Income tax receivable — 9,611 Other 629 629 Total prepaid expenses and other assets $ 13,747 $ 22,070 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets, Net | 7. GOODWILL AND OTHER INTANGIBLE ASSETS, NET The carrying amount of goodwill at June 30, 2024, and December 31, 2023, was $ 14.2 million. The Company’s intangible assets, purchased in 2018, consist of domain names. At June 30, 2024, and December 31, 2023, intangible assets were $ 6.3 million and accumulated amortization was $ 2.6 million and $ 2.4 million, respectively. Intangible asset amounts were determined based on the estimated economics of the asset and are amortized over the estimated useful lives on a straight-line basis over 15 years, which approximates the pattern in which the economic benefits are expected to be received. The Company evaluates the recoverability of intangible assets periodically and considers events or circumstances that may warrant revised estimates of useful lives or that may indicate an impairment. Intangible asset amortization expense for the six months ended June 30, 2024, and June 30, 2023, was $ 0.2 million and $ 0.2 million, respectively. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 6 Months Ended |
Jun. 30, 2024 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | 8. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consist of the following (in thousands): June 30, December 31, Sales and marketing $ 47,965 $ 15,496 Capital Projects 21,632 — Compensation and benefits 17,907 25,859 Operating lease liabilities 9,847 7,663 Income Taxes 9,134 — Manufacturing costs 4,730 3,382 Other 5,738 4,334 Total accrued expenses and other liabilities $ 116,953 $ 56,734 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
Debt | 9. DEBT Revolving Credit Facility On May 18, 2022, the Company entered into a Credit Agreement (Credit Agreement) with certain lending parties thereto (Lenders) to amend and restate the Fourth Amended and Restated Credit Agreement dated as of November 5, 2019. 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. On December 22, 2022, the Company entered into a First Amendment to the Credit Agreement (First Amendment). As a part of the First Amendment, the Credit Agreement was amended and restated to provide for an additional Revolving B Loan (as hereinafter defined). 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 Bank, N.A. would serve as Syndication Agent. In conjunction with the First Amendment, on 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 Loan. The Notes 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 loans. Within the respective 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 A Loan 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. With respect to Revolving B Loans (as defined in the First Amendment), 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 %. Under the terms of the Security and Pledge Agreement, the Company, 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 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). The Company had $ 63 million in borrowings outstanding under its revolving credit facility and available borrowing capacity of $ 487 million at June 30, 2024. The weighted average interest rate on the revolving credit facility was 6.24 % as of June 30, 2024. Compliance with Debt Covenants and Restrictions Pursuant to the terms of the Credit Agreement, the Company is subject to certain loan compliance covenants. The Company was in compliance with all covenants as of June 30, 2024. Failure to comply with the financial covenants could be considered a default of repayment obligations and, among other remedies, could accelerate payment of any amounts outstanding. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
Leases | 10. LEASES The Company leases manufacturing and training facilities, storage warehouses, office space, and certain plant equipment under various operating leases. The Company’s operating leases have remaining lease terms of 1 year to 8 years. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For the six months ended June 30, 2024 and June 30, 2023, total operating lease expense was $ 4.5 million and $ 4.2 million, respectively. The weighted average remaining lease term at June 30, 2024 and December 31, 2023 was 4.6 years and 4.4 years, respectively. The weighted average discount rate at June 30, 2024 and December 31, 2023 was 3.85 % and 2.32 %, respectively. The following table includes supplemental cash flow information for the six months ended June 30, 2024 and June 30, 2023, and supplemental balance sheet information at June 30, 2024 and December 31, 2023 related to operating leases (in thousands): Six Months Ended Supplemental cash flow information 2024 2023 Cash paid for amounts included in the measurement of $ 4,653 $ 4,302 Operating ROU assets obtained in exchange for lease $ 15,882 $ 1,882 Supplemental balance sheet information June 30, December 31, Operating lease ROU assets $ 38,006 $ 26,233 Operating lease liabilities: Accrued expenses and other current liabilities $ 9,847 $ 7,663 Operating lease liabilities 28,322 18,840 Total operating lease liabilities $ 38,169 $ 26,503 The following table summarizes maturities of operating lease liabilities at June 30, 2024 (in thousands): Maturities of operating lease liabilities 2024 $ 5,272 2025 9,114 2026 8,472 2027 8,031 2028 7,155 Thereafter 4,070 Total lease payments 42,114 Less imputed interest ( 3,945 ) Total operating lease liabilities $ 38,169 |
Financial Instruments
Financial Instruments | 6 Months Ended |
Jun. 30, 2024 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | 11. FINANCIAL INSTRUMENTS The Company considers the recorded value of its financial assets and liabilities, consisting primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, other current liabilities, and debt to approximate the fair value of the respective assets and liabilities on the Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
Stockholders' Equity | 12. STOCKHOLDERS’ EQUITY Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (in thousands, except share and per share data): Three Months Ended Six Months Ended 2024 2023 2024 2023 Numerator: Net income available to common shareholders $ 86,998 $ 77,036 $ 176,068 $ 118,167 Denominator: Basic weighted average shares outstanding 108,693,887 108,770,204 108,667,028 108,771,077 Effect of dilutive securities: Stock appreciation rights and options 54,233 67,479 62,718 68,742 Restricted stock 62,176 33,757 73,335 54,029 Diluted weighted average shares outstanding 108,810,296 108,871,440 108,803,081 108,893,848 Basic earnings per share $ 0.80 $ 0.71 $ 1.62 $ 1.09 Diluted earnings per share $ 0.80 $ 0.71 $ 1.62 $ 1.09 Diluted earnings per share is computed using the weighted average number of shares determined for the basic earnings per share computation plus the dilutive effect of common stock equivalents using the treasury stock method. The computation of diluted earnings per share excludes the following potentially dilutive securities because the effect would be anti-dilutive: Three Months Ended Six Months Ended 2024 2023 2024 2023 Stock appreciation rights 73,050 91,402 64,091 100,076 Restricted stock — 101,722 24,299 104,646 Stock Repurchase Program On February 16, 2018, the Board of Directors adopted the 2018 Stock Repurchase Program of up to 11.6 million shares of the Company’s outstanding common stock (Stock Repurchase Program). 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. During the six months ended June 30, 2024, Trex did no t repurchase any shares of its outstanding common stock under the 2023 Stock Repurchase Program. |
Revenue From Contracts With Cus
Revenue From Contracts With Customers | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue From Contracts With Customers | 13. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company principally generates revenue from the manufacture and sale of its high-performance, low-maintenance, eco-friendly wood-alternative composite decking and railing products and accessories. Substantially all of its revenues are from contracts with customers, which are purchase orders of short-term duration of less than one year. Its customers, in turn, sell primarily to the residential market, which includes replacement, remodeling and new construction related to outdoor living products. The Company satisfies its performance obligations at a point in time. The shipment of each product is a separate performance obligation as the customer is able to derive benefit from each product shipped and no performance obligation remains after shipment. Upon shipment of the product, the customer obtains control over the distinct product and Trex satisfies its performance obligation. Any performance obligation that remains unsatisfied at the end of a reporting period is part of a contract that has an original expected duration of one year or less. Any variable consideration related to the unsatisfied performance obligation is allocated wholly to the unsatisfied performance obligation, is recognized when the product ships and the performance obligation is satisfied and is included in “Accrued expenses and other liabilities, Sales and marketing” in Note 8 to the Condensed Consolidated Financial Statements. For the three months ended June 30, 2024 and June 30, 2023, the Company’s net sales were $ 376,470 and $ 356,538 , respectively. For the six months ended June 30, 2024 and June 30, 2023 , the Company's net sales were $ 750,105 and $ 595,256 , respectively. During these periods, revenues were recognized at a point in time upon transfer of its outdoor living products under variable consideration contracts into the building products market. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2024 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 14. STOCK-BASED COMPENSATION At the annual meeting of stockholders of the Company held on May 4, 2023, the Company’s stockholders approved the Trex Company, Inc. 2023 Stock Incentive Plan (Plan). The Company’s board of directors unanimously approved the Plan on April 10, 2023, subject to stockholder approval. The Plan amends and restates in its entirety the Trex Company, Inc. 2014 Stock Incentive Plan (2014 Plan), which was last approved by the Company’s stockholders at the annual meeting held on April 30, 2014. The Plan, which will be administered by the compensation committee of the board of directors, provides for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights and unrestricted stock, which are referred to collectively as “awards.” Awards may be granted under the Plan to officers, directors (including non-employee directors) and other employees of the Company or any subsidiary thereof, to any adviser, consultant, or other provider of services to the Company (and any employee thereof), and to any other individuals who are approved by the board of directors as eligible to participate in the Plan. Only employees of the Company or any subsidiary thereof are eligible to receive incentive stock options. Subject to certain adjustments as provided in the Plan, the total number of shares of common stock available for future grants under the Plan is 3,842,577 shares. The following table summarizes the Company’s stock-based compensation grants for the six months ended June 30, 2024: Stock Awards Weighted- Time-based restricted stock units 48,654 $ 90.81 Performance-based restricted stock units (a) 80,371 $ 81.01 Stock appreciation rights 33,277 $ 84.72 (a) Includes 55,384 of target performance-based restricted stock unit awards granted during the six months ended June 30, 2024, and adjustments of 25,315 , and ( 778 ) to grants due to the actual performance level achieved for restricted stock and restricted stock units award ed in 2023 and 2021, r espectively. The fair value of each SAR is estimated on the date of grant using a Black-Scholes option-pricing formula. For SARs issued in the six months ended June 30, 2024 and June 30, 2023, the data and assumptions shown in the following table were used: Six Months Ended Six Months Ended Weighted-average fair value of grants $ 44.83 $ 27.19 Dividend yield 0 % 0 % Average risk-free interest rate 4.3 % 4.0 % Expected term (years) 5 5 Expected volatility 51.2 % 49.5 % The Company recognizes stock-based compensation expense ratably over the period from the grant date to the earlier of: (1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award. For performance-based restricted stock and performance-based restricted stock units, expense is recognized ratably over the performance and vesting period of each tranche based on management’s judgment of the ultimate award that is likely to be paid out based on the achievement of the predetermined performance measures. For the employee stock purchase plan, compensation expense is recognized related to the discount on purchases. Stock-based compensation expense is included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Comprehensive Income. The following table summarizes the Company’s stock-based compensation expense (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Stock appreciation rights $ 408 $ 198 $ 680 $ 412 Time-based restricted stock and restricted stock units 1,452 871 2,526 1,806 Performance-based restricted stock and restricted stock units 1,919 1,320 3,561 2,044 Employee stock purchase plan 60 201 225 300 Total stock-based compensation $ 3,839 $ 2,590 $ 6,992 $ 4,562 Total unrecognized compensation cost related to unvested awards as of June 30, 2024 was $ 17.3 million. The cost of these unvested awards is being recognized over the requisite vesting period of each award. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 15. INCOME TAXES The Company’s effective tax rate for the six months ended June 30, 2024 and June 30, 2023, was 25.4 % and 25.4 %, which resulted in income tax expense of $ 59.9 million and $ 40.3 million, respectively. During the six months ended June 30, 2024 and June 30, 2023, the Company realized $ 0.7 million and $ 0.2 million, respectively, of excess tax benefits from stock-based awards and recorded a corresponding benefit to income tax expense. The Company analyzes its deferred tax assets each reporting period, considering all available positive and negative evidence in determining the expected realization of those deferred tax assets. As of June 30, 2024, the Company maintains a valuation allowance of $ 3.3 million against deferred tax assets primarily related to state tax credits it estimates will expire before they are realized. The Company operates in multiple tax jurisdictions, and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations may result in future assessments by these taxing authorities, and the Company accrues a liability when it believes that it is more likely than not that benefits of tax positions will not be realized. The Company believes that adequate provisions have been made for all tax returns subject to examination. As of June 30, 2024, for certain tax jurisdictions tax years 2020 through 2023 remain subject to examination. The Company believes that adequate provisions have been made for all tax returns subject to examination. Sales made to foreign distributors are not taxable in any foreign jurisdiction as the Company does not have a taxable presence in any foreign jurisdiction. |
Seasonality
Seasonality | 6 Months Ended |
Jun. 30, 2024 | |
Text Block [Abstract] | |
Seasonality | 16. SEASONALITY The operating results for Trex have historically varied from quarter to quarter. Seasonal, erratic or prolonged adverse weather conditions in certain geographic regions reduce the level of home improvement and construction activity and can shift demand for its products to a later period. As part of its normal business practice and consistent with industry practice, Trex has historically offered incentive programs to its distributors and dealers to build inventory levels before the start of the prime deck-building season in order to ensure adequate availability of its product to meet anticipated seasonal consumer demand. The seasonal effects are often offset by the positive effect of the incentive programs. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 17. COMMITMENTS AND CONTINGENCIES Product Warranty The Company warrants that for the applicable warranty period its products, when properly installed, used and maintained, will be free from material defects in workmanship and materials and its decking, cladding, fascia and railing products will not split, splinter, rot or suffer structural damage from termites or fungal decay. 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 period 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 permanent staining from food and beverage substances or mold and mildew, provided the stain is cleaned within seven days of appearance, for the warranty period referred to above. If there is a breach of such warranties, the Company has an obligation either to replace the defective product or refund the purchase price. 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 warranty period is 25 years for both residential and commercial use. The Company further warrants that Trex Transcend, Trex Enhance, Trex Select and Universal Fascia products will not fade in color more than a certain amount and will be resistant to permanent staining from food substances or mold, provided the stain is cleaned within seven days of appearance, for the warranty period referred to above. If there is a breach of such warranties, the Company has an obligation either to replace the defective product or refund the purchase price. The Company maintains a warranty reserve for the settlement of its product warranty claims. The Company accrues for the estimated cost of product warranty claims at the time revenue is recognized based on such factors as historical claims experience and estimated future claims. Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates. Additionally, the Company accrues for warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated, as necessary. The Company continues to receive and settle claims for decking products manufactured at its Nevada facility prior to 2007 that exhibit surface flaking and maintains a warranty reserve to provide for the settlement of these claims. Estimating 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 its estimates require revision. Typically, a majority of surface flaking claims received in a year are received during the summer outdoor season, which spans the second and third quarters. It has been the Company’s practice to utilize the actuarial techniques discussed above during the third quarter, after a significant portion of all claims has been received for the fiscal year and variances to annual claims expectations are more meaningful. The number of incoming claims received in the six months ended June 30, 2024, was higher than the number of claims received in the six months ended June 30, 2023, but lower than the Company’s expectations for 2024. Average cost per claim experienced in the six months ended June 30, 2024, was lower than that experienced in the six months ended June 30, 2023 and lower than the Company’s expectations for 2024. The Company believes the reserve at June 30, 2024 is sufficient to cover future surface flaking obligations. The Company’s analysis is based on currently known facts and a number of 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 the Company’s financial condition, results of operations or cash flows. The Company estimates that the annual number of claims received will continue to decline over time and that the average cost per claim will increase slightly, primarily due to inflation. If the level of claims received or average cost per claim differs materially from expectations, it could result in additional increases or decreases to the warranty reserve and a decrease or increase in earnings and cash flows in future periods. The Company estimates that a 10 % change in the expected number of remaining claims to be settled with payment or the expected cost to settle claims may result in approximately a $ 0.8 million change in the surface flaking warranty reserve. The following is a reconciliation of the Company’s product warranty reserve (in thousands): Six Months Ended June 30, 2024 Product Warranty Surface Flaking Total Beginning balance, January 1 $ 12,066 $ 10,112 $ 22,178 Provisions and changes in estimates 4,668 — 4,668 Settlements made during the period ( 2,459 ) ( 680 ) ( 3,139 ) Ending balance, June 30 $ 14,275 $ 9,432 $ 23,707 Six Months Ended June 30, 2023 Product Warranty Surface Flaking Total Beginning balance, January 1 $ 9,694 $ 15,905 $ 25,599 Provisions and changes in estimates 4,029 — 4,029 Settlements made during the period ( 2,178 ) ( 891 ) ( 3,069 ) Ending balance, June 30 $ 11,545 $ 15,014 $ 26,559 Legal Matters 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. Arkansas Facility In October 2021, the Company announced plans to add a third U.S.-based manufacturing facility located in Little Rock, Arkansas, on approximately 300 acres of land. The development approach and related expenditures for the new campus will be modular and calibrated to demand trends for the Company’s outdoor living products. Construction began on the new facility in the second quarter of 2022, and in July 2022, the Company entered into a design-build agreement. Construction for the new facility will be funded primarily through the Company’s ongoing cash generation or its line of credit. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories valued at LIFO (last-in, first-out), consist of the following (in thousands): June 30, December 31, Finished goods $ 111,286 $ 88,840 Raw materials 71,011 51,688 Total FIFO (first-in, first-out) inventories 182,297 140,528 Reserve to adjust inventories to LIFO value ( 33,439 ) ( 33,439 ) Total LIFO inventories $ 148,858 $ 107,089 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Text Block [Abstract] | |
Summary of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consist of the following (in thousands): June 30, December 31, Prepaid expenses $ 13,118 $ 11,830 Income tax receivable — 9,611 Other 629 629 Total prepaid expenses and other assets $ 13,747 $ 22,070 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consist of the following (in thousands): June 30, December 31, Sales and marketing $ 47,965 $ 15,496 Capital Projects 21,632 — Compensation and benefits 17,907 25,859 Operating lease liabilities 9,847 7,663 Income Taxes 9,134 — Manufacturing costs 4,730 3,382 Other 5,738 4,334 Total accrued expenses and other liabilities $ 116,953 $ 56,734 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Leases [Abstract] | |
Supplemental Cash Flow information and Supplemental balance sheet information related to operating leases to operating leases | The following table includes supplemental cash flow information for the six months ended June 30, 2024 and June 30, 2023, and supplemental balance sheet information at June 30, 2024 and December 31, 2023 related to operating leases (in thousands): Six Months Ended Supplemental cash flow information 2024 2023 Cash paid for amounts included in the measurement of $ 4,653 $ 4,302 Operating ROU assets obtained in exchange for lease $ 15,882 $ 1,882 Supplemental balance sheet information June 30, December 31, Operating lease ROU assets $ 38,006 $ 26,233 Operating lease liabilities: Accrued expenses and other current liabilities $ 9,847 $ 7,663 Operating lease liabilities 28,322 18,840 Total operating lease liabilities $ 38,169 $ 26,503 |
Maturities of operating lease liabilities | The following table summarizes maturities of operating lease liabilities at June 30, 2024 (in thousands): Maturities of operating lease liabilities 2024 $ 5,272 2025 9,114 2026 8,472 2027 8,031 2028 7,155 Thereafter 4,070 Total lease payments 42,114 Less imputed interest ( 3,945 ) Total operating lease liabilities $ 38,169 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except share and per share data): Three Months Ended Six Months Ended 2024 2023 2024 2023 Numerator: Net income available to common shareholders $ 86,998 $ 77,036 $ 176,068 $ 118,167 Denominator: Basic weighted average shares outstanding 108,693,887 108,770,204 108,667,028 108,771,077 Effect of dilutive securities: Stock appreciation rights and options 54,233 67,479 62,718 68,742 Restricted stock 62,176 33,757 73,335 54,029 Diluted weighted average shares outstanding 108,810,296 108,871,440 108,803,081 108,893,848 Basic earnings per share $ 0.80 $ 0.71 $ 1.62 $ 1.09 Diluted earnings per share $ 0.80 $ 0.71 $ 1.62 $ 1.09 |
Antidilutive Securities Excluded from Computation of Earnings Per Share | The computation of diluted earnings per share excludes the following potentially dilutive securities because the effect would be anti-dilutive: Three Months Ended Six Months Ended 2024 2023 2024 2023 Stock appreciation rights 73,050 91,402 64,091 100,076 Restricted stock — 101,722 24,299 104,646 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock-Based Compensation Expense | The following table summarizes the Company’s stock-based compensation grants for the six months ended June 30, 2024: Stock Awards Weighted- Time-based restricted stock units 48,654 $ 90.81 Performance-based restricted stock units (a) 80,371 $ 81.01 Stock appreciation rights 33,277 $ 84.72 (a) Includes 55,384 of target performance-based restricted stock unit awards granted during the six months ended June 30, 2024, and adjustments of 25,315 , and ( 778 ) to grants due to the actual performance level achieved for restricted stock and restricted stock units award ed in 2023 and 2021, r espectively. |
Summary of Assumptions Used to Estimate Fair Value of Each SAR | The fair value of each SAR is estimated on the date of grant using a Black-Scholes option-pricing formula. For SARs issued in the six months ended June 30, 2024 and June 30, 2023, the data and assumptions shown in the following table were used: Six Months Ended Six Months Ended Weighted-average fair value of grants $ 44.83 $ 27.19 Dividend yield 0 % 0 % Average risk-free interest rate 4.3 % 4.0 % Expected term (years) 5 5 Expected volatility 51.2 % 49.5 % |
Summary of Stock-Based Compensation Grants | The following table summarizes the Company’s stock-based compensation expense (in thousands): Three Months Ended Six Months Ended 2024 2023 2024 2023 Stock appreciation rights $ 408 $ 198 $ 680 $ 412 Time-based restricted stock and restricted stock units 1,452 871 2,526 1,806 Performance-based restricted stock and restricted stock units 1,919 1,320 3,561 2,044 Employee stock purchase plan 60 201 225 300 Total stock-based compensation $ 3,839 $ 2,590 $ 6,992 $ 4,562 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Reconciliation of Company's Residential Product Warranty Reserve | The following is a reconciliation of the Company’s product warranty reserve (in thousands): Six Months Ended June 30, 2024 Product Warranty Surface Flaking Total Beginning balance, January 1 $ 12,066 $ 10,112 $ 22,178 Provisions and changes in estimates 4,668 — 4,668 Settlements made during the period ( 2,459 ) ( 680 ) ( 3,139 ) Ending balance, June 30 $ 14,275 $ 9,432 $ 23,707 Six Months Ended June 30, 2023 Product Warranty Surface Flaking Total Beginning balance, January 1 $ 9,694 $ 15,905 $ 25,599 Provisions and changes in estimates 4,029 — 4,029 Settlements made during the period ( 2,178 ) ( 891 ) ( 3,069 ) Ending balance, June 30 $ 11,545 $ 15,014 $ 26,559 |
Business and Organization - Add
Business and Organization - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2024 Segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 111,286 | $ 88,840 |
Raw materials | 71,011 | 51,688 |
Total FIFO (first-in, first-out) inventories | 182,297 | 140,528 |
Reserve to adjust inventories to LIFO value | (33,439) | (33,439) |
Total LIFO inventories | $ 148,858 | $ 107,089 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets - Summary of Prepaid Expenses and Other Assets (Detail) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Prepaid Expense and Other Assets [Abstract] | ||
Prepaid expenses | $ 13,118 | $ 11,830 |
Income tax receivable | 0 | 9,611 |
Other | 629 | 629 |
Total prepaid expenses and other assets | $ 13,747 | $ 22,070 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Goodwill [Line Items] | |||
Amortization of intangible asset | $ 0.2 | $ 0.2 | |
Intangible Assets | 6.3 | $ 6.3 | |
Accumulated Amortization | 2.6 | 2.4 | |
Residential [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 14.2 | $ 14.2 | |
Domain Names [Member] | |||
Goodwill [Line Items] | |||
Amortization period | 15 years |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities - Summary of Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Payables and Accruals [Abstract] | ||
Sales and marketing | $ 47,965 | $ 15,496 |
Capital Projects | 21,632 | 0 |
Compensation and benefits | 17,907 | 25,859 |
Operating lease liabilities | 9,847 | 7,663 |
Income Taxes | 9,134 | 0 |
Manufacturing costs | 4,730 | 3,382 |
Other | 5,738 | 4,334 |
Total accrued expenses and other liabilities | $ 116,953 | $ 56,734 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total accrued expenses and other liabilities | Total accrued expenses and other liabilities |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 6 Months Ended | ||
Jun. 30, 2024 | Dec. 31, 2023 | May 18, 2022 | |
Line of Credit Facility [Line Items] | |||
Remaining available borrowing capacity | $ 487,000,000 | ||
Outstanding borrowing capacity | $ 63,000,000 | $ 5,500,000 | |
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt, Weighted Average Interest Rate | 6.24% | ||
Revolving Credit Facility [Member] | Fifth Amendment And Restated Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving loans in a collective maximum principal amount | $ 400,000,000 | ||
Termination date of the Credit Agreement | May 18, 2027 | ||
Revolving Credit Facility [Member] | Fifth Amendment And Restated Agreement [Member] | Letter of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving loans in a collective maximum principal amount | 60,000,000 | ||
Revolving Credit Facility [Member] | Fifth Amendment And Restated Agreement [Member] | Swingline Letter Of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving loans in a collective maximum principal amount | $ 20,000,000 | ||
Revolving Credit Facility [Member] | Base Rate [Member] | Fifth Amendment And Restated Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 0.50% | ||
Debt instrument, description of variable rate basis | the Federal Funds Rate plus 0.50% | ||
Revolving Credit Facility [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Fifth Amendment And Restated Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 1% | ||
Debt instrument, description of variable rate basis | the Term SOFR plus 1.0% | ||
Revolving B Loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-Term Line of Credit | $ 150,000,000 | ||
Revolving B Loan [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, Interest rate, Stated percentage | 2.15% | ||
Revolving B Loan [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt instrument, Interest rate, Stated percentage | 1.20% | ||
Revolving B Loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 1.15% | ||
Revolving B Loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate | 0.20% |
Leases - Additional Information
Leases - Additional Information (Detail) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Weighted average discount rate | 3.85% | 2.32% | |
Operating lease cost | $ 4.5 | $ 4.2 | |
Weighted average remaining lease term | 4 years 7 months 6 days | 4 years 4 months 24 days | |
Minimum [Member] | |||
Operating Lease terms | 1 year | ||
Maximum [Member] | |||
Operating Lease terms | 8 years |
Leases - Supplemental Cash flow
Leases - Supplemental Cash flow Information to operating leases (Detail) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Supplemental cash flow information | |||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 4,653 | $ 4,302 | |
Operating ROU assets obtained in exchange for lease liabilities | 15,882 | $ 1,882 | |
Supplemental balance sheet information | |||
Operating lease ROU assets | 38,006 | $ 26,233 | |
Operating lease liabilities: | |||
Accrued expenses and other current liabilities | 9,847 | 7,663 | |
Operating lease liabilities | 28,322 | 18,840 | |
Total operating lease liabilities | $ 38,169 | $ 26,503 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Operating Lease Liabilities, Payments Due [Abstract] | ||
2024 | $ 5,272 | |
2025 | 9,114 | |
2026 | 8,472 | |
2027 | 8,031 | |
2028 | 7,155 | |
Thereafter | 4,070 | |
Total lease payments | 42,114 | |
Less imputed interest | (3,945) | |
Total operating lease liabilities | $ 38,169 | $ 26,503 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - shares | 6 Months Ended | ||
May 04, 2023 | Jun. 30, 2024 | Feb. 16, 2018 | |
2018 Stock Repurchase Program [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Common stock repurchase program, authorized shares | 11,600,000 | ||
2023 Stock Repurchase Program [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Number of shares repurchased by the Company | 10,800,000 | ||
Stock repurchased during period, shares | 0 |
Stockholders' Equity - Computat
Stockholders' Equity - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Numerator: | ||||||
Net income available to common shareholders | $ 86,998 | $ 89,070 | $ 77,036 | $ 41,131 | $ 176,068 | $ 118,167 |
Denominator: | ||||||
Basic weighted average shares outstanding | 108,693,887 | 108,770,204 | 108,667,028 | 108,771,077 | ||
Effect of dilutive securities: | ||||||
Diluted weighted average shares outstanding | 108,810,296 | 108,871,440 | 108,803,081 | 108,893,848 | ||
Basic earnings per share | $ 0.8 | $ 0.71 | $ 1.62 | $ 1.09 | ||
Diluted earnings per share | $ 0.8 | $ 0.71 | $ 1.62 | $ 1.09 | ||
Stock appreciation rights [Member] | ||||||
Effect of dilutive securities: | ||||||
Dilutive securities | 54,233 | 67,479 | 62,718 | 68,742 | ||
Restricted stock [Member] | ||||||
Effect of dilutive securities: | ||||||
Dilutive securities | 62,176 | 33,757 | 73,335 | 54,029 |
Stockholders' Equity - Antidilu
Stockholders' Equity - Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Stock appreciation rights [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from the computation of diluted earnings per share | 73,050 | 91,402 | 64,091 | 100,076 |
Restricted stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from the computation of diluted earnings per share | 0 | 101,722 | 24,299 | 104,646 |
Revenue From Contracts With C_2
Revenue From Contracts With Customers - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | ||||
Net sales | $ 376,470 | $ 356,538 | $ 750,105 | $ 595,256 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2024 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to unvested awards | $ | $ 17.3 |
2014 Stock Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total aggregate number of shares of common stock that may be issued | shares | 3,842,577 |
Stock Appreciation Rights (SARs) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-Based Payment Arrangement, Valuation Technique [Extensible Enumeration] | us-gaap:BlackScholesMertonModelMember |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-Based Compensation Grants (Detail) | 6 Months Ended |
Jun. 30, 2024 $ / shares shares | |
Time Based Restricted Stock Units [Member] | |
Stock Awards Granted | shares | 48,654 |
Weighted-Average Grant Price Per Share | $ / shares | $ 90.81 |
Performance Based Restricted Stock Units [Member] | |
Stock Awards Granted | shares | 80,371 |
Weighted-Average Grant Price Per Share | $ / shares | $ 81.01 |
Stock appreciation rights [Member] | |
Stock Awards Granted | shares | 33,277 |
Weighted-Average Grant Price Per Share | $ / shares | $ 84.72 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock-Based Compensation Expenses (Parenthetical) (Details) - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2021 | |
Performance Based Restricted Stock And Performance Based Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares or rights issued | 55,384 | ||
Stock Appreciation Rights (SARs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares or rights issued | 33,277 | ||
Performance Based Restricted Stock Adjustment [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares or rights issued | 25,315 | (778) |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Assumptions Used to Estimate Fair Value of Each SAR (Detail) - Stock appreciation rights [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Share Based Compensation Arrangement by Share Based Payment Award Fair Value Assumptions and Methodology [Line Items] | ||
Weighted-average fair value of grants | $ 44.83 | $ 27.19 |
Dividend yield | 0% | 0% |
Average risk-free interest rate | 4.30% | 4% |
Expected term (years) | 5 years | 5 years |
Expected volatility | 51.20% | 49.50% |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of Stock-Based Compensation Expenses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 3,839 | $ 2,590 | $ 6,992 | $ 4,562 |
Stock appreciation rights [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 408 | 198 | 680 | 412 |
Time-Based Restricted Stock and Restricted Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 1,452 | 871 | 2,526 | 1,806 |
Performance-Based Restricted Stock and Restricted Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | 1,919 | 1,320 | 3,561 | 2,044 |
Employee Stock Purchase Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 60 | $ 201 | $ 225 | $ 300 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Tax Contingency [Line Items] | ||||
Valuation allowance | $ 3,300 | $ 3,300 | ||
Income tax expense (benefit) | $ 29,906 | $ 26,426 | $ 59,853 | $ 40,258 |
Effective tax rate | 25.40% | 25.40% | ||
Excess tax benefits from stock based awards | $ 700 | $ 200 | ||
Federal Tax Jurisdiction [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Tax years subject to examination | 2020 2021 2022 2023 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 6 Months Ended | |
Jun. 30, 2024 USD ($) | Oct. 26, 2021 a | |
Schedule Of Commitments And Contingencies [Line Items] | ||
Change in warranty reserve for disclosure purposes only | $ | $ 0.8 | |
Area of Land | a | 300 | |
Surface Flaking Warranty Reserve [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Percentage change in warranty claims used as a threshold for disclosure | 10% | |
Residential Use [Member] | Products Sold Prior to January One, Two Thousand and Twenty Three [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 25 years | |
Commercial Use [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 10 years | |
Commercial Use [Member] | Products Sold Prior to January One, Two Thousand and Twenty Three [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 10 years | |
Signature Railing And Transcend Cladding [Member] | Commercial Use [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 25 years | |
Transcend Decking [Member] | Residential Use [Member] | Products Sold on or After January One, Two Thousand and Twenty Three [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 50 years | |
Select Decking And Universal Fascia [Member] | Residential Use [Member] | Products Sold on or After January One, Two Thousand and Twenty Three [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 35 years | |
Enhance Decking And Transcend, Select, Enhance And Signature Railing [Member] | Residential Use [Member] | Products Sold on or After January One, Two Thousand and Twenty Three [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 25 years | |
Signature Railing [Member] | Residential and Commercial Use [Member] | Products Sold Prior to January One, Two Thousand and Twenty Three [Member] | ||
Schedule Of Commitments And Contingencies [Line Items] | ||
Warranty period | 25 years |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Reconciliation of Company's Residential Product Warranty Reserve (Detail) - Surface Flaking Warranty Reserve [Member] - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Product Warranty Liability [Line Items] | ||
Beginning balance | $ 22,178 | $ 25,599 |
Provisions and changes in estimates | 4,668 | 4,029 |
Settlements made during the period | (3,139) | (3,069) |
Ending balance | 23,707 | 26,559 |
Product Warranty [Member] | ||
Product Warranty Liability [Line Items] | ||
Beginning balance | 12,066 | 9,694 |
Provisions and changes in estimates | 4,668 | 4,029 |
Settlements made during the period | (2,459) | (2,178) |
Ending balance | 14,275 | 11,545 |
Surface Flaking [Member] | ||
Product Warranty Liability [Line Items] | ||
Beginning balance | 10,112 | 15,905 |
Provisions and changes in estimates | 0 | 0 |
Settlements made during the period | (680) | (891) |
Ending balance | $ 9,432 | $ 15,014 |