Exhibit 99.1
Trex Company Announces Fourth Quarter and Year-End 2005 Results
WINCHESTER, Va.--(BUSINESS WIRE)--Feb. 16, 2006--Trex Company,
Inc. (NYSE:TWP), manufacturer of Trex(R) decking and railing, today
announced financial results for the fourth quarter and full year ended
December 31, 2005.
Net sales for the fourth quarter of 2005 totaled $44.0 million,
compared to net sales of $29.6 million for the fourth quarter of 2004,
which represented a 49% increase. The Company reported a net loss for
the 2005 fourth quarter of $10.1 million, or $0.68 per diluted share,
compared to a net loss of $0.4 million, or $0.02 per diluted share,
for the 2004 fourth quarter.
For the full 2005 year, Trex Company reported net sales of $294.1
million, compared to net sales of $253.6 million for 2004, which
represented a 16% increase. Net income for 2005 was $2.5 million, or
$0.17 per diluted share, compared to net income of $ 27.2 million, or
$1.83 per diluted share, for 2004.
Chairman and Chief Executive Officer Anthony J. Cavanna commented,
"We are pleased with Trex's strong revenue growth in the fourth
quarter, which reflected low inventory levels in the channel combined
with favorable weather conditions and our dealers' anticipation of a
strong 2006.
"This positive top-line performance was offset by lower
utilization of the company's manufacturing facilities and the
resulting underabsorption of fixed plant costs. Continued increases in
the cost of plastic raw materials and a series of ongoing initiatives
to improve product quality and packaging also negatively affected our
bottom line.
"2005 was clearly a challenging year for Trex, due in great part
to the aggressive manufacturing and new product agenda we set for the
company. Our plan for 2006 is to achieve better absorption of fixed
overhead by bringing plant utilization up to a more normal level. We
successfully opened our facility in Olive Branch, Mississippi in the
second quarter of 2005, and the new facility is already producing at
rates and quality levels comparable to those of our Winchester and
Fernley plants. Rather than introducing any new decking products in
2006, we will focus on achieving more consistent and efficient plant
production of our Trex Accents(R), Trex Brasilia(TM), and Trex Artisan
Series Railing(TM) products, all of which have been enthusiastically
received by the market. Although investing in our brand is still an
important priority for Trex, we expect total SG&A costs to decline as
a percentage of net sales in 2006."
Mr. Cavanna concluded, "As a result of the many steps we have
taken to enhance product quality, improve our manufacturing operations
and achieve better control of our costs, we believe Trex is well
positioned to continue to lead the conversion of the market from wood
to composite decking. For the first half of 2006, we expect net sales
to range from $220 million to $230 million and earnings per diluted
share to range from $0.57 to $0.62. This compares to net sales of $173
million and earnings per diluted share of $0.50 in the first half of
2005."
Trex will hold a conference call to discuss its fourth-quarter and
year-end 2005 results on Thursday, February 16 at 10:00 a.m. ET. A
live webcast of the conference call will be available to all investors
at the Trex Company website at www.trex.com. The call will also be
simulcast at www.streetevents.com.
About Trex Company
Trex Company is the nation's largest manufacturer of composite
decking and railing, with over 13 years of product experience.
Products are marketed under the brand name Trex(R). Made from a unique
formulation of reclaimed wood and plastic, combined through a
proprietary process, Trex decking and railing offer significant design
flexibility with fewer ongoing maintenance requirements than wood. For
more information, visit the Company's website, www.trex.com. Trex(R),
Trex Accents(R), Trex Brasilia(TM) and Artisan Series Railing(TM) are
trademarks of Trex Company, Inc., Winchester, Va.
The statements in this press release regarding the Company's
expected sales performance and operating results, its projections of
net sales, net income, earnings per share and costs, its anticipated
financial condition and its business strategy constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These statements are subject to risks and uncertainties that
could cause the Company's actual operating results to differ
materially. Such risks and uncertainties include the extent of market
acceptance of the Company's products, the sensitivity of the Company's
business to general economic conditions, the Company's ability to
continue to obtain raw materials at acceptable prices, the Company's
ability to increase production levels to meet increasing demand for
its products, and the highly competitive markets in which the Company
operates. The Company's report on Form 10-K filed with the Securities
and Exchange Commission on March 16, 2005 and its subsequent filings
on Form 10-Q for the first, second and third quarters of 2005 discuss
some of the important factors that could cause the Company's actual
results to differ materially from those expressed or implied in these
forward-looking statements. The Company expressly disclaims any
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.
TREX COMPANY, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2004 2005 2004 2005
---- ---- ---- ----
Net sales............ $ 29,614 $ 43,993 $ 253,628 $ 294,133
Cost of sales........ 18,920 44,309 151,286 213,904
----------- ----------- ----------- -----------
Gross profit (loss).. 10,694 (316) 102,342 80,229
Selling, general and
administrative
expenses............ 10,768 15,455 56,382 76,989
----------- ----------- ----------- -----------
Income (loss) from
operations.......... (74) (15,771) 45,960 3,240
Interest expense,
net................. 515 949 3,064 2,612
----------- ----------- ----------- -----------
Income (loss) before
income taxes........ (589) (16,720) 42,896 628
Provision (benefit) for
income taxes........ (238) (6,664) 15,741 (1,871)
----------- ----------- ----------- -----------
Net income (loss).... $ (351) $ (10,056) $ 27,155 $ 2,499
=========== =========== =========== ===========
Diluted earnings
(loss) per share.... $ (0.02) $ (0.68) $ 1.83 $ 0.17
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding......... 14,705,706 14,792,896 14,834,718 14,880,020
=========== =========== =========== ===========
TREX COMPANY, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
31-Dec-04 31-Dec-05
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents........................ $ 23,925 $ 1,931
Restricted cash.................................. 20,959 --
Accounts receivable.............................. 21,964 12,364
Inventories...................................... 44,357 56,726
Prepaid expenses and other assets................ 4,162 3,750
Income taxes receivable.......................... 497 8,297
Deferred income taxes............................ 2,975 1,711
-------- --------
Total current assets..................... 118,839 84,779
-------- --------
Property, plant and equipment, net................ 158,389 191,210
Goodwill.......................................... 6,837 6,837
Debt-related derivatives.......................... -- 292
Other assets...................................... 2,986 3,151
-------- --------
Total assets............................. $287,051 $286,269
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............ $ 31,496 $ 31,919
Line of credit................................... -- 4,070
Current portion of long-term debt................ 8,932 9,031
-------- --------
Total current liabilities................ 40,428 45,020
-------- --------
Deferred income taxes............................ 15,808 15,158
Debt-related derivatives......................... 1,736 1,053
Long-term debt, net of current portion........... 69,565 60,505
-------- --------
Total liabilities........................ 127,537 121,736
-------- --------
Stockholders' equity:
Preferred stock, $0.01 par value, 3,000,000
shares authorized; none issued and outstanding.. -- --
Common stock, $0.01 par value, 40,000,000 shares
authorized; 14,843,820 and 14,890,600 shares
issued and outstanding at December 31, 2004
and 2005, respectively........................ 148 149
Additional paid-in capital....................... 60,182 61,901
Deferred compensation............................ (1,259) (1,076)
Accumulated other comprehensive loss............. (1,098) (481)
Retained earnings................................ 101,541 104,040
-------- --------
Total stockholders' equity.............. 159,514 164,533
-------- --------
Total liabilities and stockholders'
equity................................. $287,051 $286,269
======== ========
TREX COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Twelve Months Ended
December 31,
2004 2005
---- ----
OPERATING ACTIVITIES
Net income........................................ $27,155 $2,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 13,713 16,139
Other non-cash charges............................ 3,721 2,959
Changes in operating assets and liabilities....... 699 (9,734)
--------- ---------
Net cash provided by operating activities......... $45,288 $11,863
--------- ---------
INVESTING ACTIVITIES.............................. ($56,373) ($29,425)
--------- ---------
FINANCING ACTIVITIES.............................. $26,859 ($4,432)
--------- ---------
Net increase (decrease) in cash and cash
equivalents...................................... $15,774 $(21,994)
Cash and cash equivalents at beginning of period.. $8,151 $23,925
--------- ---------
Cash and cash equivalents at end of period........ $23,925 $1,931
========= =========
CONTACT: Trex Company, Inc.
Paul Fletcher, 540-542-6300
or
Lippert/Heilshorn & Assoc.
Harriet Fried, 212-838-3777