TREX - Earnings call 3 2023 | Trex Company, Inc.

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Operator

Good afternoon, and welcome to the Trex Company Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Viki Nakhla. Please go ahead.

Viktoriia Nakhla

Thank you, everyone, for joining us today. Strosnider, call is Fairbanks, Brad Officer, President as Lovcik. joined Accounting including and named the Executive and McDonald, recently Amy on Planning the members Officer; He Financial Chief of General and Brenda Officer; by Kara with Fernandez us Vice are as Vice Counsel, President Bryan Financial Chief Chief and President, With Analysis of together well other Director Senior finance management, executives, Trex

release after available webcast XXXX. conference market website press company's financial a the for the of also containing and This issued quarter results available company's on for This Investor company The XX being today be call is website. on Relations days. close will the third page is release the of

like turn Fernandez. over to now would call to Amy the Amy? I

Amy Fernandez

Thank you, Viktoriia.

let call this that subject conditions meaning actual begin, expressed to statements laws. statements we performance regarding results could forward-looking These the me in of statements those remind materially that and and expected differ statements. uncertainties within certain the risks forward-looking future securities constitute everyone on the from cause Before federal to company's are

For uncertainties, our recent as please XX-K risks such most XXXX XX-Qs a XXXX well and with see Form and our the SEC. of Form as other discussion filings and Act

events earnings whether the future new financial to any forward-looking at will release obligation to measure result revise reconciliation as or GAAP publicly comparable be disclaims otherwise. in press a of measures measures expressly non-GAAP these financial our Additionally, be referenced or A in call. statements, trex.com. The information, of this update any can company found

to will turn Fairbanks. With that Bryan I call the over introduction,

Bryan Fairbanks

our robust benefited consumers for resonate from resilient evening, maintenance XXXX us to with Trex Amy. quarter demand the Sales third another with improvements Building aesthetics with digits. quarter and products all low delivered new the products, products our in performance, Trex value along and brand joining successful the in our off quarter traditional metrics. products with growth for financial of who Consumer growth of over channel These thank you Good sell-through wood. second launch also strong advantages quarter the across key you, Trex results. and mid-single investments. Thank discuss remain marketing

We capabilities, reductions continue industry-leading to increased our gross of in further XX.X%. efficiencies. manufacturing cost an leverage Resulting through driving margin production adjusted

This capacity is continued performance a indication than strong EBITDA model. the in business and reached our investments. inclusive margin less full leverage the branding of Trex clear of XX.X%, on inherent Adjusted marketing

market at to remain we focused needs to consumer Day, our new decking convert across market Innovative and wood to points. continuing meet recent we our continue grow we As portfolio we strategy highlighted more to on expand to central preferences the all our Trex. growth remain Analyst our price share and of products as traditional

in third mitigation a consumer, look to recently and Trex proprietary marketplace. the more its been Trex continued heat we higher-end with Transcend X received lineage the Signature In quarter, our has the products, lines targeting technology experienced positive launched clean market well refined and lineage response

consumers. both are for testing many spent the national And developing successful market. end high from signature game-changing a years seeing after channel geographies, these in the our of We partners is reception plan we products at which well with rollout competing selected and the we're decking, pleased and

billion. driven fencing, fasteners, overall to and addressable significant broader residential segment, cladding which see brings railing, $XX in potential by together approximately market our with decking also We opportunity growth our

point. preferences solutions each to in match at railing substantial We growth with price in be will growth potential. opportunities attachment alone rates coupled offer The driven expanded consumer believe by attractive

still While on quality. delivering Trex

penetrate the manufactured early we efforts years, our have recently to since accelerated products our and sold we further While Trex railing market.

the in this of start, second The category. is we as priced Notably, system and vital launch every expanding the to aesthetics introduced in against our of composite off Trail outperforms vinyl performance. railing quarter. Select have rail our great continues yet both system competitively a terms railing we decking. is share and This Trex Trail strategy low-cost at providing our railing done in Trex greater product awareness and important in price building of point successfully Trail brand

into our new to products we drive production are disciplined opportunities, expanding capacity As range of continue in innovation a we through and growth new a tap manner.

Arkansas will develop that efficiency. match capacity modular a to enabling in incorporate production continue new emerging us We with to approach, new us will while further market allowing using optimize to our anticipated technologies facility demand

investment, a in our facility lowest the AI quality of industry. and product improve further As to the planned cost manufacturing incorporate part we to intend create

and since We manner. shareholders value continue of sustainability profitability goals sustainable focus to long-term it's on in targets. align growth inception our company's DNA its us to is important leadership been ESG to with delivering our a and as part

valuable water our efforts in and build and operate empowering strong consumption we waste, recycling volunteer our healthy of where reduction employee and the programs, charitable donations. to a committed energy remain employees communities and through and helping We investing

McDonald, Now a of for turn financial review Accounting call I the our will performance. over Chief to Brad Officer,

Brad McDonald

Thank you, evening. Bryan, and good

sales, XX.X%. efficiencies XXXX. were the third significant gross utilization previous to last were more to meaningful of margin XXXX will financial improvement residential which in our Trex $XXX in expectations in the comments from our of Improved quarter destocking. benefits the investments Residential quarter cost-out inventory my rates results. divestiture higher above production a to significantly million production exceeded and drove volumes sales As third our and XXXX products by compare performance commercial of million at the year's provide of programs given channel impacted from and $XXX the of comparison, Net Trex And net quarter, end a

a legacy prior portion reserve to we a to that flaking the manufactured quarter, the to products in at the Nevada plant the reduction of During issue warranty of XXXX. affected due recognized million related $X.X surface benefit a the

or XX.X% third the quarter. benefit, year's and of was warranty $XX the Selling, residential margin XX.X%, of administrative Trex and last or residential XX.X% XX.X% general million sales compared gross were sales $XX XXXX net in million gross Excluding margin quarter. expenses in net to to of compared

previous discussed XXXX SG&A on of XXXX. year Residential of was margin third the returning EBITDA Residential share was XX.X% Trex per to with income or the EBITDA EBITDA $XX margin prior million, the million $XX to EBITDA EBITDA Net the $X.XX per diluted we're percentage was sales R&D. and a XX.X% spending of As or as in income levels Trex during more in compared compared marketing $XX and focus of million or branding, a to in $XX quarter, net quarter of quarter quarter. share normalized and diluted $X.XX net million

per in Excluding Net were $XXX million diluted compared warranty $XX the income $XX margin share, benefit XXXX and was and million EBITDA adjusted was XX.X%. net EBITDA or to quarter $X.XX million, was Year-to-date sales year million $XXX the in income the diluted period. was million of $X.XX or sales share residential income net trucks million $XXX residential in per of compared $X.XX net ago or XXXX. Net per $XXX share to XXXX diluted

Year-to-date EBITDA to $XXX XXXX. Residential in XXXX in Trex million, of EBITDA and margin Compared of margin XX.X%. an EBITDA XX.X% million EBITDA of resulting was $XXX

$XXX we million or Excluding year-to-date margin in XX.X%. through as updated EBITDA reduction. year-to-date, related into XXXX Arkansas income of was to period to compared $XXX expenditures Capital operating facility. inventory to was build-out the significant amounted primarily $XXX converted working turn of cash I was million, will guidance. cash $XXX flow million per million $X.XX our and adjusted benefit EBITDA the Year-to-date warranty capital net the now adjusted million $XXX the was comparable share, diluted XXXX to

the in discussed seasonally of in our and fourth of quarter projecting last $XXX conference lower and reflecting are revenues $XXX of quarter prebuy million million, quarter's the as to range first the We to XXXX call. demand shift both

is of guidance. $X.XX assuming year projected that the XXXX update. revenues impact is This resulting provided billion from our increase to revenue are $X.XX range the billion The an $X.XX midpoint fourth last full the to billion, during be quarter

adjusted the our $XXX and previous SG&A expectation previously at Depreciation to XX%. increasing To to $XX XX% to range end million estimated guidance. XX.X% at provided. higher XX% be that XX% of XX%. between Capital of are will XX% This of the EBITDA be and projected to We net million at guidance full our also range year tax includes guidance of compared margin the of range the to $XX XX% end sales. will from spending to million the $XXX higher amortization remains and million is guidance rate our

back now that, With to turn Bryan. I'll the call

Bryan Fairbanks

Thank you, Brad.

and operations most and gained Chief leadership executive companies addition recent Financial wanted Vice Senior finish Trex at Brenda? over track Lovcik, team, in our experience, record President a financial Brenda manufacturing the my to brings remarks, strong I skills. of XX years deep introduce Officer. to Before new business With the experience global I Brenda proven

Brenda Lovcik

we for Thank with Trex, in an good stakeholders. everyone. value and delighted join and This evening, team for person speaking to is time and am months. Trex look I you, the forward as over meeting build strategy you to long-term coming I and Bryan, exciting the

Bryan Fairbanks

successfully clearly Thank Trex leveraging our advantages dynamic competitive this is to distinguish continuing competitors. navigate environment, Trex you, our Brenda. that industry-leading from

in to focus market, launches education on addressable want continued thank value. shareholder working look and members innovation, Our will we more together. partners our laser growth forward please consumer gains hard share of for complemented and the for channel call ensure team their I many questions. product long-term expanding . by many to drive years and our the from work Trex productive open Operator, investment years an to

Operator

question Lovallo of our from And comes first Instructions] John [Operator UBS.

John Lovallo

quarter the $XXX about be million growth in million is improved sort The this would said, $XXX to at expectations And was still XX% quarter of implied the implied fourth to revenue quarter the first That last year-over-year the represent $XXX actually from to EBITDA fourth fourth $XXX XXXX. year-over-year. would XX% the million down of versus to X quarter today. million what

than So the weighing bucket us year-over-year fourth SG&A? you EBITDA the higher that drivers help the quarter of other on sort can maybe just are

Bryan Fairbanks

that be the driver next We coming biggest products going The SG&A do to spend. that related to have year. new into on be the is marketplace will branding

goes the merchandising So creating we be around will samples, literature all that. creating of that

you have will launch for come prepare see than as do the higher a has when been historically will we products. you'll bit to modeling quite those we what -- that, that in SG&A, So it

John Lovallo

Understood.

exit rate? from then October? quarter? Okay. how high you sort And did things things how characterize -- would just a September level, through in of look trend are the demand did How maybe And

Bryan Fairbanks

third a would what with a low mid-single-digit the pleased for our And a single-digit fourth guidance. our with products provided saw we before. point, consumer better were quarter, slightly in inclusive consumer the fourth quarter I than I now, growth. the in your sales to expect throughout growth assumed flat reaction roughly We We the to type type quarter. And demand.

that conditions North we're consumer, positive across Trex we're So our most . marketing, the also of seeing weather on still of the effectiveness the America.

Operator

next Goldman comes Sachs. from of Susan question The Maklari

Susan Maklari

as Maybe of just a -- bit can a you still mean, you're appreciating But thinking how I think do there. the start setup it's early with how volumes out 'XX? talk in the you more bit about end inventories that industry for year outpacing the potential as perhaps next about year, you and of maybe the think pull sell-in Trex channel well as sell-out? in to will terms especially

Bryan Fairbanks

might feeling the up take best this year-end. I if basis, at to being full today about mid-single inventory digits. were to making being feeling [indiscernible]. XXXX but are end these think often way I interest look value a reacting than they're move. the how am not, values it not year, those I provided to myself any at are homes, to that it up the installing consumers with home, excluding was hear impacts changes digits looking of point, see move high a their be these the this of And Trex time I high positive Trex ago. We from guidance that of up looking more year we in we've at on year at rates last normally back more and consumers down because mid-single that will consumer at I

as Trex tailwind their the on to I remodel move that improving they're and be side existing a to benefit expect continue we repair for forward. So spaces.

marginally more end was the feeling I'm of year. last than positive at So today I

Susan Maklari

Okay. That's maybe following bit. helpful color. up on And John's a then question

margin support You for launching. you'd a expect products mentioned highlight should think SG&A the about you'll that in for Any be to of bit next how items in year? new we you key be fourth thoughts quarter. on Any cadence 'XX? higher the

Bryan Fairbanks

Is end out at this the would we nothing to We'll on of ensure provide as early material. recognizes we of I detail into year expect and that, margin we that lot to the there. see from call amount appropriate provide point. as that will a a XXXX really more get stronger But the need cadence the else channel buy aside

Operator

from Ryan question next Blair. William comes of Merkel The

Ryan Merkel

then positive the just expect new mentioned way? as we do rolling one, you're measure bigger Bryan, How a you in pop decking a response the out is products. year My next that you first . should And that? to bigger

Bryan Fairbanks

does Yes, in products believe to absolutely. yes, lineage answer colors colors of year take launched market. XXXX. last was X in the of your and additional of some May We I time December It in get second these question, line to then product X our it

mitigating we've year. see build updated more more that the seen lineage heat And Transcend course technology. that year colors. familiar build continue the with as So next the gone the through to we product to we've people expect the as of line, get

seeing actually what market. we're it based in the So calling of what we're off

really more the premium that's of on niche looking the feel product. of to aesthetics signature From designed tropical be a hardwood. real expect that to perspective, will super It's for of that a hold that we buyer

turn So markets launched channel the of seeing that in that we will national it and are rollout year. we we've that in the through have a new the into, test

Ryan Merkel

financing I'm my your uses -- of follow-up, getting the consumer about risk on us your you for consumer just Perfect. thinking there think refresh you asked Can just how of products? again. And then and for percent financing what the

Bryan Fairbanks

for asking tools back to doesn't marketplace. the selling in And is top us show It less with Data XX financing them about they're selling used. for way. that we Consumer than tools along our of help contractors. contractors contractors, our deck something up we not shy things that marketplace. XX% the the hear not extensively our have for are of in not that talking It's for, even looking from in projects it's the

Operator

of comes next Joe Ahlersmeyer from Deutsche The question Bank.

Joseph Ahlersmeyer

to channel important inventory, good think, $XX XXXX. pre-buy. we I goods. quarter particularly at than That year, finished think finished in just on people lower And sure if looking about service this hasn't the to guess, little planning, and put take it's your the stronger what is how around your in than to assuming. you're changed quarter fourth that out? then the you you've assume actually do always I think just I I'm And number might also the prebuy you bit even number it's guidance third production the as a what I'm but XQ make is that either. to wondering pushed actions might want with I in far that is more million, line last is

Bryan Fairbanks

we to year, significantly the channel. last Remember, Yes. of need our back sales the because in inventory guidance pulled reduce

were perspective. of it putting for was sheet a looks a inventory. finish inventory And lowest it end this we and normal more that with we like from on building the quarter quarter our your year, to third inventory Whereas the where the year. So third usually balance point, regular

normally our quarter, the then and inventory able do second next be of use addition in will we as to that go we production of the service the the to to building and we'll during the As early we buy year, into end quarter through be year. fourth

Joseph Ahlersmeyer

quarter the margin, about thinking reflective of XQ. that's so rate gross probably fourth the production of And implied

And so Is a in we about way inventory see decent as build might a . you to it? XQ, fair step. think pretty that

Bryan Fairbanks

bit marginally we be higher in will roughly Production third made, made quarter. the in than we little maybe what even line a with Yes. what

Operator

Stevenson comes question Jeffrey Capital. from The next of Loop

Jeffrey Stevenson

strong results. the on Congrats

your interest conservatism Or impact So rates strong more existing is and become given and there remain demand the sentiment about concerns the incrementally talk there distributor wondering home optimistic current of slowing sales? another partners. Bryan, sell-through of does some I'm just if quarter. you can higher about at dealer they

Bryan Fairbanks

hearing Yes. What the are that strong is from of there's better while holding concern from channel are than up brands consumers, that those we're the marketplace, parts commodity based. more have consumer which other

going as those tailwind XX than the comments overall, have into like next or ensure on feeling are they those to in those my that right to Trex business decks. they able So ground that inventory continue year We've consumers going we to about the want the much to see existing the support in more decks. earlier, into the be XXXX. And wood they're did about in the call, a they And there million about XX to half of talked are their at homes upgrading being wood point either million they're staying from past homeowners replacement. of needing passed positive

Jeffrey Stevenson

become second opportunity my with share And pullback helpful. very an your that's to here? there's aggressive if repurchase recent after No, Okay. is program the more market-driven question

Bryan Fairbanks

have the program filings. expect filed. capital to operate allocation. Those do it's part a are important the parameters is preset and that for XXbX-X continuing program We of We continued I our a program shares, our when

is organic priority growth then top our share and second buyback. would be Our

Operator

Keith SunTrust. question from Hughes of Next comes

Keith Hughes

for If You've the 'XX, kind ? same into capital given of us order spending 'XX. a for view we look of what magnitude be

Bryan Fairbanks

of color We'll equipment the as get as on expanded year year. will I of capital that, adding heavy quite to the into to capital as warehouse a that be that course XXXX site build-out of well building as do onto within of provide and really for the purchasing the significant the decking additional most a be of the potentially we spending well the expect but and part

Keith Hughes

units was on And the the was revenue all there was price or quarter growth, in number? mix some that the

Bryan Fairbanks

no price. you. Thank was There

Operator

Trey Grooms The next Stephens. from question of comes

Noah Merkousko

Merkousko for Noah Trey. is on This

pricing anticipate take do you XXXX? First, any in the need to

Bryan Fairbanks

if were to talking the we investment decisions the would on made that. take on prior to pricing, haven't community with -- We with we channel We pricing. talk would

certain things few consider here along that but have it there move smaller be been and overall material. way, upward there in seen expect significant wouldn't any the our to -- might lines some I a product on not specific have We we cost

Noah Merkousko

for million And million the potential still makes then about in way sense. to inventory right it. follow-up, Got is my 'XX? to That build think $XX XQ, $XX

Bryan Fairbanks

expect buy. inventory be it period, than inventory we X-month as to December call necessarily March. we'll $XX time would Last those over through did year, million sales build from I to in X to larger that December of $XX March. do otherwise our wouldn't year, part The early I time a through a have occurred would million it specifically the build. This that. month over January period refers

Operator

Rygiel next question The from FBR. Riley of Alex comes B.

Alexander Rygiel

more here. versus bit relative quarter Could sales color inventory rebounding? channel to the in provide a nice very guidance Bryan you increase sell-through on

Bryan Fairbanks

for quarter? fourth talk the specific You

Alexander Rygiel

Yes.

Bryan Fairbanks

So for a fourth flattish be originally, would that quarter. quarter, expected the we looking had at we fourth

Now a I'm of well see then the type itself. inventory end there'll When last build below low single-digit expecting And just channel third growth. things was within a little to where the the looking year. at be bit quarter, were of

And year. quarter. small And just I build the within quarter meaningful would then next rebound so the during occur the expect inventory will fourth of a

Alexander Rygiel

That's a that? about rail any could then are there XX% about And I you talk change in how could Is to rates that helpful. And that how little in believe Maybe talk that's range. more attachment bit XXXX? specific maybe in way changed in XX% be XXXX?

Bryan Fairbanks

anywhere It's within going a marketplace, spot we regions metric railing of to the us and the a the XX%, of hitting not profiles for it back those across where lower that But wide upon reference all are work to work to it depending rate be to existing trying pick overall all to see the that means variance that operate attachment what way the and we a And upon attractiveness on significant be opportunity we they're can have get able metric up XX% that there. to there's we're that going those and board. variance expand for but such how for today better That's to regions the over and ] that rate rate areas to us. XX% rates, things depending on they're have out to the to [ we're the a to we attachment there attachment the of area. single one that marketplace looking can from on our that sweet it XX% that up do what is for all attachment doesn't well

Operator

question The Jefferies. of Phil next comes from Ng

Philip Ng

maybe in a to to products was on with working companies have forward and going Congrats tough R&R. single-digit obviously a I forward. strong R&R sellout Bryan, quarter flat XXXX. you to down backdrop pretty in quite impressive talked A low building guess for Brenda, few looking about

the like to in that's assuming growth. this expect grow organic Investor know right backdrop, something low you And I So that double-digit your Is in environment? that at that's guided do achievable environment? you current Day,

Bryan Fairbanks

I'll year back the in brands in. for to my continue next the is absolutely think cards growth bring go comments consumers Trex. around I to

to as segment be and when quite We also pull do consumers operate that higher consumers back tend our back to little tend income, in hard. bit they'll a a pull

we stand So good the feel we in market. about where

Philip Ng

out good be it share And capture differently And this here. helpful. you trying attachment railing, today. -- all Is And stuff? you call it outlook as a think do on called Day and you past? have impact are it that you wins to than that Investor That's mix well you incremental at Okay. the your talked about it on rate that margin how to business any we at rollout? you've product and [indiscernible] then Have want Does your have substantial? about could any your when and material wins margins, out years in approaching

Bryan Fairbanks

think fair I to you've we've X us about past decking. talked talk so, over listened to it's when the or say, years

go been we we're of our market of a but will not bit and we're we in little ensuring system. real railing. to focus perspective resources, from be And a team Trail great fair getting from is our opportunity brought a There a with there. where as launch marketplace. the continue shelves do nice in shift. to heard that a couple They we're vinyl decking, a understand the of market. of both that take it product systems that program, And out had of there's lot example low-cost railing the for [ a able share sales you've railing moving see We've to how Trex more if ]. in the the in as product an great of playing to Trail, we've and There's other Trex, with rest off It's as not but people wins today. the in R&D put they install the also away bundled opportunity that and about competitor a so well from we want We the of profiles

Philip Ng

incrementals? impact margins Any on and

Bryan Fairbanks

on focus on ongoing our continually We improving an margins basis.

And some of our because but improvement. I some significant continuous of our products lower have expect railing. higher, see some for the along just change overall additional wouldn't have looking to a little way, bit focus a of we're on

Operator

next Stanley Elliott of from Stifel. The question comes

Stanley Elliott

process X mentioned you're the moving and macro? of you I you know seeing other. the just breakdown -- you're on cost would you versus or from Bryan, of Is curious that of just -- be the not a kind function really spent just guys kind prices? in downstream the lot what energy overall a I of environment of more on guess way recycling, I'm sort what the commodity moving improvement the

Bryan Fairbanks

generate a, ongoing of can from the programs EBITDA continuous strategies inflation is call it, course of to of improvement perspective. margin year. that overall One over amount our improvement offset our the have normal let's And

only thing fuel the go quarter, where electric not that would it. then out continue type prior take X to those in expect prices course, to years, over and offset that seen, say continually inflation pricing I we really environment, we've up last of Really, then Western back we had the let's to are prices, gone But has So of a down we're can that cover again, rate. a the we up. would type X% the get that I saw to compared with to continuous back diesel we that say, normal significant to the footprint improvement. inflation

Stanley Elliott

some reference. categories new in slated some you a in year, terms at on kind in of adjacent you've of the got Should we more the then category more that decking the product the touched Analyst next you launches recent kind to guys for expect those of Day? mentioned be of of had And

Bryan Fairbanks

will forthcoming later quarter. There that. the on tuned news Stay some be on

Operator

next of Tim Wojs comes The question Baird. from

Timothy Wojs

mid-single just there service? Guys, variance types of different sell-through, about, kind digit the talked any good afternoon. you channels of you on was Maybe between that that the

Bryan Fairbanks

tended a say when That sells also sell [indiscernible] big during the channel third quarter. than I those DIY but pure contractors, customer stronger would are Pro the the and to to so to be somewhat contractor, to pro I say Pro channel our boxes customers.

Timothy Wojs

Okay.

Okay. you've any Good. And did just last there you just what buy, to change X on winter of And is month QX one is, about all? changes the that then kind the guess, quarter shift to QX? the at talked any before? just million from to less Or it had program I structural $XX winter you is than make buy really

Bryan Fairbanks

done off the off from that relatively do make some not far That's based year things the similar. it's feedback in focus X the -- is program get partners otherwise, we that on. we specifically probably too biggest difference it's is our But each adjustments past. to last and month. the we've channel the Otherwise, want We what

Operator

of question from next Bank Rafe America. The of comes Jadrosich

Rafe Jadrosich

you would be to able it we of maybe should flattish on And quantify be investments? little investments, a that bit for a about marketing XQ Like quarter-over-quarter? us? dollars SG&A is pull Bryan, any . just forward the of thinking

Bryan Fairbanks

it flattish. be I expect don't will

quarter. XX%, XX% it and to end into can a where being You for with the back the back that fourth guidance the about part at we SG&A of of talked number the but guidance higher into

Rafe Jadrosich

the do the a on the that's into it think this effective in like as XXXX year, spend And appropriate right the rate there's big we that been run do of think go step-up level we going you mean, Okay. driving demand been it's level? seems is SG&A I How then And forward? about and next sell-through. year,

Bryan Fairbanks

XX of time. over But driving We've XX the don't excuse I I SG&A. looking annual we're to type XX leverage as on leverage that continue see that me, basis improvement EBITDA opportunities one -- XX about think basis we'll point to level, absolutely. going to for XX that to talked improvement. XX, our be type before at

Rafe Jadrosich

it. Got

you Okay. railing the there you're the then sellout now range? one more of them bigger able that or is -- did talk sellout your in quick part more to Would just about outperform how focusing the that one. trends becoming mid-single-digit that business and railing other a one both versus did -- decking And be of trend

Bryan Fairbanks

of range. Both in were them that

Operator

The Rehaut Michael JPMorgan. from of next question comes

Michael Rehaut

we I that of So expect about to it into million. like heard due XQ. first, that just $XX of sure Just want XQ like about terms higher XQ Are greater make XXXX should you right way in million $XX it? understanding another versus XXXX, a in XQ. saying sales of before It from want seasonal a million from or maybe million that think I correctly than the sure I to to was be to move that make $XX $XX by looks you to shift correctly? month Is to to little you

Bryan Fairbanks

I from think important at. is more the those a we're years looking that bigger today company part you're

in So months. extremely before that really the yes, pre-staged inventory the on season the changed higher. peak marketplace turns that, it's where hasn't during gets number the the But would be important really seasonal model

Michael Rehaut

sales your Any channel just the either opportunities last be builder ramping some railing any And attachment next year? in additional the market XXXX, I Got additional obviously, on what whatever additional above for rates capacity growth about those it. efforts about up from be the of the through your would or think turned way Got capacity you and rail baseline on have do the secondly, additional the opportunity that And opportunity there years. the or channels. guess side market also think you've pursuing over it. you talking there? to about to think other just Okay. Is way the couple what might opportunities

Bryan Fairbanks

about next look inclusive We'll the that term, as you XX% end we Investor a XXX and year the into longer our and get I talk call. points our Day year of think But EBITDA of of through top That's by growing growth. basis the decking over margin more of railing when line the inclusive at XXXX.

Operator

of Davidson. Kurt next question from Yinger comes The D.A.

Kurt Yinger

Great.

X of on kind of a dealers And is growth, is some we based reflective thinking number year of of as that steps at When think QX to next guide start about wanted talk realistic $X.XX of out then sale in XXXX? as about think the retailers sales about in we on Just the of being year kind and billion of off that more themselves. start $X.XX we and of Is or billion kind of point starting point reasonable the sell-through. into sell-through the about you that sales, kind of a full year, sales. mid-single-digit sales full pushed in

Bryan Fairbanks

next call the specifically, was We'll between about more would I the to 'XX I related kind of it say, talk . sell-through consistent, really guess, on [indiscernible]

inventory. So not necessarily out the at that you any movements takes in Trex have would that side,

Kurt Yinger

maybe that And network? then out demand cases, we that those of normal contractor a project the this stage. Okay. at just shifts last of underlying And one thinning on Is how does quarter, heard your of in . Got kind side you've all some being that was notable this it. going theme view the below contractor backlogs forward? more around impact of trends of and your of a kind heard

Bryan Fairbanks

good some for and be there. product is But some projects, are of there a We're that there's the for quite to backlog projects. robust those demand projects hearing thinning smaller continues larger the bigger out

Operator

Reuben The The next question comes from Company. of Benchmark Garner

Reuben Garner

you about from margins there how of on how are so, in near-term did increasing the that? If impact doing going mentioned near Bryan, capacity I you And much? kind term? doing investment quantify that? you hear is any Did -- or

Bryan Fairbanks

back pulled our last capacity July. significantly we Remember, No. quite

is I back just fourth the marginally to quarter. third . bringing And be quarter that this higher we So the than where of would some were in just capacity. on expect

Reuben Garner

opportunity? initiatives, on inventory And there guys potential the might or there any railing of carry that or situation the $XX that material? kind is million as build you kind they opportunity year where that something I separate. amount your about sizable a be of ramp hand number customers kind that Or you kind Okay. a product be bill of talked Great. that out? as of then that next would probably some that not keep into I that's of that Or million to of is assume assume not $XX Is is . based,

Bryan Fairbanks

back links. we of infill. or colors, X it example, different we a to for degree to when launched onetime I we we Clearly, up as, a be These same Enhance was not infills there XXXX, and onetime going different asking to the add had the you're what are products, it. infills. was is It basics, had related in a bunch think X We there nearly had enhanced new infill material think with I the product. as are

growth its will of buy. some normal will there level going piece the railing of but early be to our the part be And on it's not own. drive infill, So

Operator

question Ramsey The of Steven Group. from Research Thompson comes next

Steven Ramsey

to quick clarify Pro a question DIY. Just Did first. outpaced

You meaningfully positive? said a was or that just better, Pro both DIY, but was drag

Bryan Fairbanks

is sure Well, clarify both what both Lowes contractor. Depot that we sell the and pro Home to I'm to make trying

channel stronger Anybody I doing the was bifurcate That any from be to folks pro growth. that's if of and may my that of they and So drove Pro it channel buying themselves. somewhat be my the -- and part they're it are the to weaker. more buying of part continued selling

Steven Ramsey

Helpful. Okay. the demand spending nuance higher into high much like higher at there railing? driving how but is think that getting amount way a versus as higher to products a of ancillary of decking still to Is dollar then percentage a well. spend like-for-like on SG&A spending SG&A the the related of on sales, on end in And

Bryan Fairbanks

split to that We've not out. tried

at to the bring hold door of end up to our focus here everything branding we buy effort continues season. Trex in that those weather are to we're to the a on sure especially can We product, while continued to customers make doing the the

Operator

Bouley from comes question Matthew next Barclays. of The

Matthew Bouley

high to So I full even step still on guide, margin I quarter the the fourth SG&A quarter. fourth gross year think in end implies down with mean, guide, your of getting that it the margin in

conservatism said the degree QX, sort think going play to production margins was just in that guess, anything in is, But you QX. there I economics into enough the your take in of of question some of gross earlier is that it. Is production in down quarter? to your building else margin Or hitting there? I are fourth you gross was to the my timing the

Bryan Fairbanks

economics. the related primarily It's to production

Not So the up is the costs in revenue it end getting all of manufacturing is that put go than inventory. QX. lower through into significantly

last year impact the fourth that saw in quarter. You

continued that's part just the costs of through so the a flow the from and And inventory. way impact the balance sheet

Matthew Bouley

Perfect. Got it.

retail last seen Is second My Historically, sort do true of that one, you comment do have not? that, tad different pro you just perhaps the read or DIY And weaker consumers? really you types is lead that? that Bryan? on -- how a it DIY question make was into Okay. of of . what that,

Bryan Fairbanks

cost the it that side to consumer using at short I'm that an of term. looking that is larger has But more decking seeing the do things, think in We back projects is that material rates, contractors body. And lower of our impact there. absolutely as story the well everything about higher-end higher line hearing the we're and probably the the talked from interest up. dealer as continued people from to preventing move a tailwinds as our I coming

Operator

back I closing over session. would question-and-answer the our like remarks. to concludes turn This Fairbanks to any Bryan for conference

Bryan Fairbanks

to evening. coming you and our look participation and Company today Good We speaking in everybody's of your for many objectives. Trex growth the forward the support weeks. with Thanks of

Operator

for may disconnect. concluded. now presentation, now Thank you has conference you The attending and today's

Trex (TREX) 30 Oct 232023 Q3 Earnings call transcript