TREX - Earnings call transcript Q1 2024

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Operator

Good evening, and welcome to the Trex Company Inc.

First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Casey Kotary. ahead. go Please

Casey Kotary

Officer. for call everyone, Officer; today. us Chief With Brenda Thank Bryan joining Fairbanks, the Financial and President are Senior Executive President on Lovcik, you, Vice us and and Chief

Legal XXXX. Joining Bryan and company of Secretary; results is close Amy issued members the a well other quarter management. today for Officer after containing President, as market Fernandez, as Trex and Vice Brenda Chief of The press first release financial

the company's being on for This conference be This at also available release Relations website website. call is the webcast available is XX days. company's will and page the Investor of

the I turn call will to Amy now Fernandez. Amy? over

Amy Fernandez

Casey. Thank you,

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

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

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

call Bryan the to I turn over will Fairbanks.

Bryan Fairbanks

discuss business outstanding today's call Thank you quarter outlook. evening. This Trex, for growing category. to performance our quarter living Amy, position reflecting for in first an and leadership in outdoor participating you, good Thank was review our our the and all

and across demonstrated execution products. for channel strong demand organization we Trex-branded quarter, the Within with railing along decking our excellent

season early of restocked shift million added first range. as ending sales partners came after end of guidance in season our low historically the our high quarter with of ahead incremental First sales the the buy The quarter approximately channel XXXX inventories. in above our $XX

we helping season. Trex Beyond double-digit quarter and additions Trex to the and These traction, our saw portfolio are to of products strong sell-through inventory quarter. channel during gain premium to demand the partner launches, recent the levels service drive continued Transcend appropriate our first ending normalized decking premium from busy Trex Signature. decking consumer lineage product to seasonal at the contribution build, growth Trex's inventories have in

indicates larger Feedback they from ranging and have contractor trending from products our of with network to average backlogs many strong weeks, towards times premium projects X our and X while deck lead sizes through summer. our over gathered platinums the TrexPro contractors These of Trexpro during leadership have platinum late times XXX shared indicators our with team with of month April. consistently lead were largest

our every of points, at more internal the a other complement to continue with conditions, continued railing data, view which end designed complete products be reflect support has These and our normal offer to business sell-through data of price return our total in increases product line market of options at the a first quarter, the mid-single-digit along includes see high to and to In of seasonality. to decking. range price now portfolio, broader we point been favorable that especially

There support Trex's are a continue growth. demand to drivers have numerous that

of existence X the replacement. continues XX age prime XX at age homes In over years. that for record million decks. many cases, estimate have in to the homes stock to average decks for remodeling next years are the of or these growth XX homes housing We will either half are also beyond million approximately the First, projects. in XX These and between yielding candidates old increase,

gain higher with investments rising that in of in them rates of outdoor their their are to existing and mortgage enjoyment spaces the prioritizing enable consumers cost homes housing, and fuller longer remain their Next, footprint.

of functional areas, home the add beyond to to areas. outdoor well the walls take deck. trend fireplaces, Trex to advantage with is most of square add is and of positioned the with spaces a One footage affordable share of home couches, ways creating the cooking complete living TVs

a long-term see estimate shelf and to portfolio, decks Lastly, positioned more product and share that dealer comprehensive this and robust the occurring benefit center We network conversion a to of Trex at we wood the XXX and continue convert leading XXX strongest to industry's year. well from sales, With wood to distribution space basis railing. composite branding points decking a to opportunity a average Trex home of program, be conversion. and per marketing to is

financial margin Our to for production with quarter. utilization continued first combination the gross a the related primarily fast-return was expansion. in gross projects cost-saving margin outperformance to led quarter high of XX% exceptional The and efficiencies

margin in with appropriate channel to it indicator this this in not level serve the season. To our do and tandem support strong ability and capacity we replicate year, existing growth. inventories our railing to quarters a decking leverage While expect are to volume is of subsequent that ensure

the year running high utilization been has decrease capacity Trex progresses. utilization. at will This as

recycling materials the future developing as materials. of new pipeline. development contaminated projects notable project also and for quarter, projects process a processing cost-saving the Trex that the new more implemented variety is we During efficiently larger for our recycled planned, will allowed to and allow plastics of technologies new while cost-saving One

continue investments spaces railing serve a decking, living with in to our outdoor to broadest price at seeking and we to increase of points branding range income their update the living programs products array household are outdoor other engage of with and in These and other large homeowners levels. sales Additionally, marketing to programs.

Investor growth to priority noted key as future for market. of product new a Day, share the As addressable prior expand our Trex is we development in and and calls driver a seek our

railing portfolio. the Series T-Rail select glass our X added modern Signature year, high-performance last options value specialty we our of system, railing cable available launch the frameless and to price infills. Trex in both Following premium X

high-end into this now quarter. as to railing translate response new shipping these positive these orders begin announcements product products The

Additionally, in we first shipment the fasteners decking for Trex-branded orders second quarter. in the began quarter taking for

has broadly sold match decking plugs, and now engineered debt expanding into market-leading system Hideaway clips. [BIPs], solutions long and Trex screws color hidden facial we're the traditional fastening of and fastening and our with launch specialty setters

products clean market we leadership efficient are partners. aesthetic further This competitive to and channel while example All contractors decking railing and related of is more making directly installation and position adjacent core for penetrating alike. strengthening to are our great which easier designed a where cohesive DIY for and installers our an a deliver while creating of of our advantages

Trex and the third Other independent consumers to of During we received the Year Supplier choice commitment enduring overall responsibility brand. Trex Builders awards by our FirstSource National supplier many America's was the most the and accolades consecutive as Award. for recognized Morris-Holly innovation quarter, of sustainability, winning from from which decking highlights recognize parties. corporate connection naming the outdoor trusted fourth Trex between and year the the

as all And their these to are important honored team us as for I suppliers recognitions. our to at well channel Trex to these awards. receive our and humbled partners Trex contributions of want thank members our and All

CFO, Now Lovcik, Brenda I'll review. President over our for the call Brenda? our turn to Vice and financial Senior

Brenda Lovcik

part million, everyone. exceptionally good quarter, above $XXX first of approximately start million support of in review incremental the the evening, and XX% you, which quarter. net our sales million XXXX In represented this the I from quarter driven first for $XXX strong year buy beginning our of QX, first resulting in am last to growth XXXX, sales in in XXXX in results, were of year's reported year's Thank first sales pleased net early and by was growth XXXX. into program expectations $XX our to quarter. the shift excellent Bryan, This above-market the

and more the channel basis costs. Sales the continued Increased with Gross of drivers the offset inventories in of XXXX benefited expansion and a out XX.X% of performance, labor along the production from than key were benefit point cost XXX programs quarter efficiencies of restocking the margin volumes preparation successional of the beginning utilization, expectations. railing season. which the higher decking above related for capacity first was XX.X% from and in margin also

the our DNA of to continue the company the levels impressed at and programs. part be by and has within discipline success is all organization. around I is embraced continuous It improvement the

we of our the were not XX.X% Bryan quarters a expect $XX noted, to net to sales do in to and Selling, As ago. of net operating drive of this expenses or million indicator year general level good while first sales $XX or leverage. it compared substantial this XX.X% in year, a quarter subsequent administrative ability million margin is replicate

The of branding year's spend as marketing is quarter. new leverage busy and related due made in preparing sales spend, performance considerable product and Representing to a the branding year-over-year dollar to to increase percent to the levels. in due our We the decision launches primarily sales this back mainly increase XXXX strong season. historical for to accelerated first

in to invest diluted income year. the Trex $XX per diluted share. level $X.XX drive reported products. More the $X.XX quarter the million to this in As of Net market double share we million evidence see at we continue was it $XX per to or XXXX, helping first than or last

sales compared in with to of $XX compared increase of used of year due quarter sales ago in shift needs. higher primarily in the EBITDA subsequent by million Consistent $XXX cash XX.X% the sales flow working from represented early in program Cash quarter, buy delivered net historical the first XXXX, was operations operations million or of capital increased We $XXX trends, in cash for volume million timing operations of margins. gross to sales QX to driven cash and and volume. used use $XXX of XX.X% in a or primarily net million

manufacturing in $XX invested build-out million the facility. to related primarily of the Arkansas We capital expenditures,

expectations in As substantial for first Our our growth release, support quarter XXXX. above-market in today's noted earnings results

for pleased are to reaffirm year. year We full guidance our this

range million midpoint. XX XX% QX, $XXX billion XX% our range to early XX.X%. to to from to year year-on-year growth XX basis expenses points billion, buy With range drive to are approximately to sales of rate of XX% EBITDA of is margin in SG&A effective $XXX to sales are we the completed to $X.XXX $X.XXX from assuming XX%. and the Full expected representing expected million. QX of tax net an expect we expect program We leverage, in at

remarks. I'll call closing for now to Bryan the back that, With his turn

Bryan Fairbanks

Thank you, Brenda.

and As conference in brand, I our have Trex capabilities, product of our confidence the call, I growth our noted potential. channel partners in our level high development consumer, last Trex's in and products a

further are well that outdoor a is introductions Our living from to quarter distinguishing continue of and competitive from strength confidence. first to us the positioned results standpoint. only benefit Trex new category have strengthened the product

channel decking of and X,XXX any attributes Trex build. are products best our industry. in partners at consumer are Our other the and more of brand recognition Trex available than the far industry over products railing continues to locations, in

ahead share of We and years. a for for Trex in the looking the market much of to greater are in strong coming XXXX a addressable year capturing growth larger

we'll the questions. open Operator, now call for

Operator

Stanley with [Operator comes Instructions] from Your Stifel. Elliott first question

Stanley Elliott

help framework? Congratulations you with in full could that what on happens guidance? And strong based the sell-through the embedded for of expectations at the upon start inventories year to with the the maybe end year. maybe Bryan, the year us

Bryan Fairbanks

as end our we be Sure. the year increase the mid-single-digit sales We're to level within were full still on is basis. inventories a -- at of year last we in a to similar the overall that the we And end get of to guide expect year. embedded

So that little the in, really at of and starts inventories And But plan, of years. first couple way more which kicks the that QX. past we've earlier quarter. does operates peaking back out the bit is than then channel the channel as the to into decreasing if time a to we've put end what a inventory frame, sure more in we making season this normalized getting this back take the of QX done inventory built pre-pandemic are through

Stanley Elliott

being luxury strong the so channel? up market feedback consumer nice what's hear driving digits, you've thus much received kind of especially any the with the And trade down, about maybe double And end to outgrowth? far higher around from

Bryan Fairbanks

an as economic that higher end households. it those see We Yes. indicator overall

business and things are easier And not the them lower potential impacted for food, strategies our way. had in and wanted of lower the economy the to a of with we entry that those launched along homes between And those see as a existing mortgage that the in So, invest that difference there We premium there's times, Signature. to had sure It's hitting level fuel rates we've they're we able the that to end end make would at And the marketplace. be in one for as seen we with of be high-end the higher-end results understood by lineage higher to consumer products. just was versus of consumer. that products right bit those and as And consumers. difficult more to either consumer appeal other that heavily that families. some their inflation all we

Stanley Elliott

Congratulations. Perfect.

Operator

next Your with from question comes Wojs Tim Baird.

Timothy Wojs

a bit as math guess, Very on just decline suggests sequence think flavor of year gross little little envelope Just you Could kind maybe bit through progresses. a nice that the us, my the the results. back of Maybe year? a it imply year-over-year how job start of the I on to those margins. the you give of does should

want kind make the sure just to of I understand gross kind through of I of margin pace year. So the

So.

Brenda Lovcik

typical bring see see and gross -- to half, QX those year it's perspective. the first of the higher start would you to a as nice the improvement margin, still we that and expecting, factories, again, for the in but right, in the to you'll declines have half year so start then full QX, QX, in utilization full in us both a from the Yes, the back down margin year. gross And QX

Timothy Wojs

Okay.

the math somewhere range the the Okay. margins you're to I like mean, in year right XX% kind EBITDA to guide? that my of is gross get in for for XX.X%, probably

Brenda Lovcik

yes. range, the within You're

Timothy Wojs

you some of that just, you getting guess share got you. are secondly, are industry back? COVID, supply And due like in Bryan, wholesale chain Got Where then kind players to terms shelf in that journey? that shelf of of space smaller space I in And in some the some of of during of the some in where regaining I kind constraints. think Okay. just

Bryan Fairbanks

further out back capacity product trusted forced start again. that their to that them saw they've a excess year that quarter selling take come suppliers some all have brands into that saw meaningfully of we the during last didn't seen around turn to as We turn the We've and seen to we're really and XXXX the before, of existing at time. fourth because in the back year, selling now season we were lot and in those enough consumers we've Trex that to accounts those the

Operator

Our Next with Ryan Blair. question Merkel William comes from

Ryan Merkel

the April, us you how for thinking comment year Bryan, And full I guidance that then the were know can on quarter? tell you revenue? just about looked on season. it's if first like early maybe in

Bryan Fairbanks

Yes.

quarter. So it saw we season, in It the encouraged are first is early your what and key we the comment is during with there.

get we marketplace. the We in we've also that looking in We encouraged meat the dealers, continue those is They're to our part, contractors, out deliver to of we in be We've projects type our ourselves. type well of To to to get busiest feeling month too But to there. going in to consumer talked still mid-single-digit level really of growth that, of want and don't the is that saw the level. QX. with to above need be QX, talked far the into that the do season confidence of there's that April. that what consumer ahead

if year, number capacity we of that higher, To in continue that is to we'll run later see some back Brenda's the pulling comments capacity of that longer.

in revenue improvement also gross that higher margin. So results in and

Ryan Merkel

All want strong one there drivers outs for to portfolio you Yes. out by Any frame as growth. category Perfect. that expanded of the called Makes second us? you of My sense. right. the an question, product call

Bryan Fairbanks

out We've those not on the broken but across of revenue specific mitigation with well the all really product lineage products, doing extremely new is heat technology in marketplace. products. It's the

decking is on is Our channel of of Trex for $X, hardwood discerning national product, well. nicely just signature It for that seeing truly of composite We're went board. a a the a buyer as the the $XX look maintenance that's product move high-end We that into real looking but linear foot. ease that.

sell-through on and being to up are starting inventories the that. So are see pick we built,

through launched last we T-Rail, midway year.

really So a with about to takeaway into the And course, story entering second And to that we've a in, growth. And got now. product. going market we're in again, good some here that of continuing new products that's company the to quarter. see starting then, coming year products of new our be drive the

Operator

Your next question with comes Jadrosich from Bank of America. Rafe

Rafe Jadrosich

half sort of Like do in second about was tracking Like your now that of line come revenue X% margins? of does you quarter, up see quarter. strong. in the guidance second saw really second margin kind the where Just what staying first -- the year-over-year. How performance in incremental implies think takes declines tracking first margin start that we puts half impacting we're and would revenue line are in wasn't quarter? second in first better. If we kind obviously, half with what and more the the do you the with ends margins for half If

Brenda Lovcik

Yes. Thank you Rafe. for the question,

break So, continuous impact the as highlighted QX of if down improvement our gross utilization. production efficiencies just programs, as we margin, we well

those apart, X/X, And X/X, did you that break so we X/X if from area. about

you'll utilization, continue we So strong pull-through the help to half see will experiencing think in back that the if you we're that if -- right about now. us definitely

Rafe Jadrosich

if just back is have like we -- XX% look at the around XX then midpoint is long-term growth. the And helpful. That's for you step and guidance revenue

relative piece around from year that, the think is, Can is this buy. X% year? early what to of gets trend about do a this for tailwind the long-term but have you you timing the talk I the guidance just underlying you growth revenue guidance midpoint to to Your X%

Bryan Fairbanks

Yes.

where long-term We average have economic still expectations those will at that. XXXX growth differences than that It the that will that, type lower XX% and in I think I targets number. So come out September. time years in expect deliver revenue are along. some there'll we this consumer to do through other that now There just said, higher years mean last we conservative we than those see that confidence year deliver be great probably we're be I every have be doesn't that we'll some frame. as being point. on laid

Operator

question comes Susan with Our Goldman Stack. next from Maklari

Susan Maklari

mix My in you Good flowing that you. through a positive is of Can a lift business? afternoon, that just these some shift, mix bit there higher engaged that the is mean for the in and are more larger everyone. some metrics talk Thank would in on how question, coming you housing the a of eventually of to the What and taking the getting that results? about seeing margins you end see Is first Bryan, consumer projects. is with And does you're if normalize consumers we the those lower-end other margin? some that back. noted do

Bryan Fairbanks

we upsell next it's possible. Xx as then much to let's XXXX, with a that door and when them launched go to when afford back just that wood sell our recall, Having price wasn't to bring as about the up product, have in with and the attractive the that can in at the a opportunity. those the product line margin Now consumer volume move naturals. in, X of mix enhanced It product products. the It about between strategy was those enhanced they level. you really out composite entry-level was there very bring an and people product products, basics And that Show our step-up product that then line consumer Trex

the are level sales DIY that will more we bit quite part that of even kind entry see So when margins you channel. coming saw into we the season when the a heading the through we of was And stronger. delivered

summertime more That of QX. up being QX, ends a

come So we'll more that of see back heavily some in in QX.

the from sure about we're as with of new concerned we've that. of the the needs And to at income as in, This us. can growth margin got that not focused well expecting I'm organization that highly margins you're expecting we're as meet understanding is appropriate look driving we're the to margins. And products performance. that So making coming we on so that going have kind levels all we deliver

Susan Maklari

Yes.

get high bit? perhaps sense. And running to at the rate there you in makes start you a a do that deceleration you some for there you the where just add mentioned And as That Okay. you then offset that year. capacity sequential And back in to? think perhaps? quantify that, were fairly utilization half is about you to any Can in that do as expect

Bryan Fairbanks

Yes.

we our size we And quantified that that say the capacity organization capacity earlier can't we fair as and an capacity extensively. able see up level to on important that difference. build a at we hit higher that is We be given year. the in we are have busy it's If run today, that haven't the are the what demand during utilization to running make to enough season, turn to inventory

inventory So to be has that there.

into And forward, so And we consistent part we move utilization. that's why we of you I see a pulling as be higher enter will year. that as latter back. that start the and expect the capacity then

As that capacity into consumer running comes down level. in the upside of before, get heavy quickly, I we is a season, that part at the keep more channel and stronger, higher that the we the remains inventory mentioned

Operator

Phil with from Ng Your comes Jefferies. question next

Philip Ng

Congrats on other quarter. strong the

are rates of in consumer sell-out, lower of a pretty is out heard called mean, obviously seeing little But you've I been end on steady just your Bryan, what interest seen It's So any your if you and are maybe it channel higher sound kind correctly, like squishier. doesn't partners you and strong. I've based slowdown. the the

macro decline. some sales do Or that have looking they're at in your signaled down? what inventory sales full well? I channel draw as more guided what baking that just your guidance, the Is back if you've is And first all X% backdrop? effectively to with year implies you're So half, choppy half to a that effectively conservatism look X% a partners

Bryan Fairbanks

center point our sell-through. selling well It that's at that locations our they Are as is of provide And of me be let that sale is selling digits. partner. think pro pure Well, home more? year-over-year. mid-single they we And as how to definition less? Are are just channel we using the going

So to on, turns there able there all yes, service be of needs out it the the get there to point, inventory those your We be will the products to right of the When season needed early. really channel. drawdown. in be will to mix

So that we'll move that, drive is what's driving and inventory we QX into QX. as down see and that

Philip Ng

that But the the at because as kind lows a the inventory partner least, of hard think channel historical like least their I have signal in down or pretty they to work desire at finished last at channel? year, year you really

Bryan Fairbanks

Yes, starts needs I all we of to That we amount to level the as that But don't to of There's November probably same is not again. no product market inventory in at the December. to that run, want year and of down the know. serve They fair hold as of out really are back reason that it. ensure want It's way the and want there. have thing industry do, to the go -- we right inventory moves coming they the ensure after the historical end say we on, to to go if back the

early Then into over all that build season enter buy next we again. the inventory

think I unhealthy see that's channel part that necessarily either. of I So And don't don't changing. the

Philip Ng

helpful. That's Okay.

year-end? on larger that your called in Or else, guess, of is fair last night effectively? out they that won someone XXXX. amount major of I a losses shelf One competitors Any space

Bryan Fairbanks

moved with that exclusive a worked the the locations up as up us channel as stocking year-over-year locations picked well centers as this number year. pro a into of we've home on We've within basis. for We've picked additional we some Yes.

Philip Ng

Okay.

the event right? think horizon, negative about no big we when So XXXX, on .

Bryan Fairbanks

Correct.

Operator

John Lovallo Your question UBS. comes from next with

John Lovallo

competitors is your question inventories about one channel the have of below being talked about XX% first norms. The in historical

inventory of I characterized less it is the mean, suggesting is going believe that think appropriate. you channel you we as that just forward? being to that as move I kind carry

Bryan Fairbanks

busy going what of guess appropriate serve to the we in expected out would I if the marketplace. in higher We we the appropriate see to as growth of our into see has is it's the type part inventory. serve suggest Trex And the ability season. here levels inventory that marketplace that Well, growth, service of we have of then the I that's

difference be bit is the channel. not I'm sheet but may between managed familiar balance exactly a strategy of being in how So there little inventory of and

John Lovallo

Okay. price likely? cost thinking much you it That's And you is then deflation cost about move year? as And the through How your firm for an are would there helpful. thinking pricing is bit? how we are if guys a opportunity

Bryan Fairbanks

price of another -- We year. items labor have this pressures, you'd been a have go we've expect, are had seeing some There up, up. other couple as that gone

Of course, capital equipment is more expensive.

are a that All out offset prior hit ability have know process. and increases. That's those able we those such developed expensive we those are us year, going come to sort known why out highly of be increases have things. more be Energy West continuous were there have to costs of to than they year. improvement That the to we that every

have increases be to the are large in Now do some where pricing the marketplace. so there cost situations may that you take

when the And it's own able be right we continuous if that. not pricing are market ability the costs necessarily to see time do to offset well So take improvement. our in to we're to through afraid our expanding

Operator

Your next question from comes Loop Stevenson Jeffrey Capital. with

Jeffrey Stevenson

date success wondering and start in by was what partners channel whether you a plan as XXXX? in early view replicating to you the strategy heard the the shift I January from on and it feedback regarding

Bryan Fairbanks

and program. was XXXX, the run inventory, come of pandemic of success. wanting a the advanced as as low for they've of off sure going But gave the how is that years XXXX given what of not get We as it notice for to volatile the yet. channel plenty We're absolutely some dragging plan to out possible. we were

we to as possible. wanted our channel much work with as So

to are at consumers we deliver the able always quarter. inventory that the to And also their on the that's what what hands the have While get end products to that Trex our jointly we of laid need. need make expectations we targets out sure they drove of that the first

did Pro center comments seeing, excellent prepared channel board from the I'm the the the from extremely from encouraged job and channels. think season our dealers as demand And Trex an and home that about well across I as the getting our the for contractors

Jeffrey Stevenson

to great hear, industry working That's as railing to continue of you rate to product dealer grow railing Trex that how Bryan. products And with have your the how now? Trex been then and fragmented of kind your given portfolio railing receptive partners right attachment is increase just distribution

Bryan Fairbanks

there decking ago, Whereas marketplace. a were So decking the then ones back a have the see a years X a the like X% ones XX XX there the decking, This of Railings manufacturers of we out all significant a Trex majority in today larger in share. of couple I is up dollar bit the brand. There about that make you years And manufacturers with was X XX a basis opportunity ago. the there on But still of were you was probably Trex industry. the take the using leverage in smaller leads were way in market. lot marketplace. overall little of marketplace. the

looking all is the with railing Trex We consumer on deck Trex have for. it. when a options So a don't today that along consumer putting is that a they're getting

same to product there's a I'd to provide a able to So suppliers. single railing suppliers. have opportunity manage multiple lot It say their of and through we've can sell, buying in to training staff have everybody how of development-wise there out additional bring options. to That's got all one how our XX install, sales from together, those opportunity build their put stock those versus the the XX, than your it And be business. you're on team overhead XX, them of SKUs, of rather going help channel supplier. to gives also how the one location same a more additional different We to truck them. to it say significant supplier all sales

Operator

question Trey comes with from next Stephens. Our Grooms

Unknown Analyst

on [indiscernible] is This for Trey.

a I pretty number? guys quarter. you to XX SG&A, as for should leverage bps in about of So the be good think thinking to year. leverage the Any leverage we color forward? how mentioned what Is that was on XX was strong still going

Brenda Lovcik

number. That Yes. correct. That's good a is

the branding we're return in in see marketing space. investments on to continue again, we, yes, making the that So -- and the that

the throughout even those points that spending, highlighted. we'll XX continue we leverage to XX in the year. expect that that we see remainder invest of So increased basis or -- But the of had quarter to to throughout with

Unknown Analyst

then, Bryan, kind the Anything it. to meaningful performed how And did out call in compared the channel of pro there? wholesale Got Helpful. the quarter? to

Bryan Fairbanks

the pro overall an on season basis. a has consistent more Well, channel

So through impacted first by more be and probably they're quarter fourth quarter. weather. going the to They're building

channel building all long, snow is But seasonal. a center quoting focused coming whereas heavy to the third home the and in degree That on center consumer otherwise, heavy more got of course, the DIY much quarter is much they're can't larger Pro you've building. be they out they're quarter. well. is year out And during If or channel second home out and as rain, that

it So over continue they time, execute as that to share. more probably to strategy the be seasonal won't Pro gain of as quite

Operator

with Keith Hughes Truist. from next question Your comes

Keith Hughes

on Or just That the on would remaining signaling? call? about be SG&A is there conservatism on leverage. Now the you're that imply to the XX, more a Is deleverage quarters the question of this of so of XX would this some much of year. function basis what talked the we've points

Brenda Lovcik

had as in start decline percentage a QX, that bit revenue. see right, QX very to say, QX first little would we have continue I of in We QX. a to right, view, will high and sales high revenue. a

XX of -- might to nice will XX So as that leverage. the like percentage basis that year, deleverage. still for look full the points you it's But see

Keith Hughes

Okay.

So but rates last Is year-over-year, will reduced that guess for the saw, far SG&A example, up we're dollar what what directionally year. it doing? I spend in we be

Brenda Lovcik

Sorry, . say time? one more that

Keith Hughes

question I in not many past going but a were when trying that you reaching that year-over-year you've seen years XXXX? talked the in to to Are we get has up, Maybe were top to you this I'm point. -- what in you times. spend see happen. been at the guess there on SG&A a So is to reinvestment about point spend that

Bryan Fairbanks

The of second value the those year. largest dollar third occurs and quarter of quarter investments the during

in guided those we quarter. bring to Historically, down yet numbers that quarter, that. through. see will to revenue market it's the continue and extremely you start Obviously, to in important the consumers So in revenue higher we've third come second does

year that's will you a some expect percentage. So lumpiness leverage. basis, to where full in But on see that we the see

Operator

Davidson. from next with Kurt D.A. Yinger Your comes question

Kurt Yinger

Great.

a Bryan, different high one the any, around and think guess, a time of just in margins kind quick how of one color investment? of and assets, the in directional you line we incremental of I I me. us the for maybe operations with should fixed you level, going And around could that light Just facilities just give some have Arkansas. kind about forward for just refresher start-up new new at down of startup costs guess added

Bryan Fairbanks

Yes.

and start perspective, first line time the at XXXX operations part a up as from then into our we up from So decking. looking we're plastic processing starting of mid-XXXX

is so expected material that is moving flowing perspective. there as we've schedule everything will through. from be sizable we'll bringing costs It on up, a So operation a be

we'll in are. to then this of the in fourth material mentioned as little more bit start costs we've quarter year, As We'll those be see to very transparent XXXX. much past, that the will what a start-up of become some in

And then show what we'll be like. underlying But frame. time through everybody margin to looks XXXX the gross sure

and in great the model as within business the with is see utilization Trex think higher existing at we're gross you example our that these inherent running leverage rates capacity margin. what does the I

XXX% some as highlight We're quarter each train got We'll into be going one. some utilized yes, run that There detail. going to we we'll that So on you day sure start not We've this will new They're but expenses. day not fully course, when that of provide to on, one. be be we're additional point, those at getting to prepared to some bring on capacity to inefficiency. at in not people. do

Operator

next Your with Ketan BMO Capital. comes from question Mamtora

Ketan Mamtora

start on any level entry strong of of the or overall the with, of the of that side of and Bryan, side can quarter. sort perhaps business? to just is the a about doing mid-level market trends sort Congrats bit performance -- a intra-quarter you talk how little

Bryan Fairbanks

make to see and in using products center heavily my careful in engaged building and more home extremely I'm first high-end those we premium So any that kick center broad more quarter are towards because home predictions off highly off more we the channels what channels tailored those of and the I contractors talk comments, QX. in products are as mentioned contractors, consumer out seeing of are But They're QX larger to there. we decks. the our

seeing what We'll it's drive. of the business summer entry-level and we trend time, jumps now. consumer a So we're see in right they get into kind how as the that

see is growth. part to mid-single-digit that think that I the upside of we the And

Operator

Your Rehaut next from with comes question JPMorgan. Michael

Michael Rehaut

pointed double-digit First, on like a try day, I'd sell-through of the for the to circle competitor sell-through and down and in little maybe other quarter. kind your to a break bit. that the

the that drivers I'm other you in And thoughts so different any that the to of home weightings was or your slightly you that again, might channels about your terms other kind towards particular, in in kind difference. see perhaps of curious market business of And versus that such? have explain and were what curious I that around pretty in might extent center different channels

Bryan Fairbanks

the the well sales, season, of as both definition seasonal any at building i.e., center does of So positioning sell-through building inventory It within point for along way. include home our is not Pro the channel. the as

is sell-through but pure we speak it. to that may So doing I is. definition Trex doing how it, to as a be to what And others can't how keep that's try

Michael Rehaut

of bit little guess bigger picture. a I love Okay. pull back to I'd secondly, kind of kind

of fully to think next time? growth the your I'm it weren't the builder kind capacity still thinking sort sizable that the and could do when growth there the you of Day? feel your that that sold you after you've kind be you Do thoughts for Investor maybe add, on years. as you're more gradual those channels Or over you and opportunities how more there's laid capacity the that side, love a opportunities? attack were lot And the would of at over be to of several in just into international playing of With the different relatively you you those with about out attacking able step-ups could still obviously go that added algorithm planning on of opportunity perhaps even kind particular, channel, out kind

Bryan Fairbanks

of all attacking we're say to fair those opportunities. it's Well,

I into XXXX, there year, As in serve some normalized start to itself. needed our wouldn't set team That sales quite in hitting and allowed we all, accounts may other it pandemic the there consumers inventory brought during the go out channel. moved call at products a -- the of was first plenty it was whatever free point. the it available that capacity was was that us to of and really have Again, but more

there, nice builder traction are are those out of seeing them. Some that we with opportunities which

that in our of list Of team is our with international opportunities course, performance closely We going opportunities our a after. against whole track pipeline architects. There's sales them that.

not expectations along normally the deliver than we've going overall also way. XX% to perfectly as our going included organization. And everything we what have in opportunities. committed growth that's way. to to And is here we we along with an have recognize what's the the that And the operate that is we're way to bag things work of more going

that us. on those expectations make delivering your expectations sure we're to of need our we So additional opportunities and

Operator

Anthony Your Pettinari next from with question comes Citi.

Anthony Pettinari

Day, in I you're Analyst you the could and And additional a universe. there bit little Or I the you think was adjacencies that does is opportunity a kind billion talk 'XX? opportunity? fasteners you extensions at impact of $X.X more about sort if just wondering on of that from fasteners. if -- how taking offering about and of today, this any give an orders rank And within more on can color talked

Bryan Fairbanks

overall were being Trex when product. within recognized stacking. to say, something me-too up. go split for Trex the we've the what But that's also also revenue. out we had the who out we'll a that that is. opportunity the buy system able there from the at "Here's understand be no share It's that, industry to It's that but with just and we included that and a a couldn't ground have great specifically, meaningful have experience We've our channel and to just We them. what didn't coordinated Trex out our pleased. products of fastener". contractors within that we competitors would most I'm take in we look There's got to adjacencies, shouldn't at lot next of sell marketplace did why that Trex, engineered on reason something for fastener We the split couldn't Yes. call. people

was to flow now started channel. into seen now. on the the into It's pro that center late basis, and last starting side actually It into So of great the interest. and home really much we've larger year the channel just channel selling we a

of decide be of Trex to in, the then building take shelf really will It's switch on. industry. put period else their off, Those product else opportunities. take things as And else happen this to infill and bring don't overnight the see larger tend we'll a somebody off people So year kind make somebody more of things. to of somebody

that that fastener Trex of about is a business make built, to sizable sure locations. we great because the convert Trex of in trucks, each to have, that opportunity feel the deck on with We our to it. But going service same if a on support the our brand portion these name, sales the Trex is one and have of opportunity a ability being ability

Anthony Pettinari

could some then be it. there the talked from of that And furniture, feel be feel more are hearing you're are you -- that other you about, clouding, could it. you maybe soon? on some we Got closer little Got a fencing, on adjacencies bit or

Bryan Fairbanks

sizable looking sizable opportunity. materials a And into revenue small That's there are variety that we do is. that adjacency that market. in a of a Fencing We that growth have manufacture marketplace, we're our that Nevada fencing today program is a part things the what of other opportunity different fall at of out facility.

Operator

Your next Bouley with Barclays. Matthew comes question from

Matthew Bouley

the second half. the the decline revenue implied on topic of in Back

mentioned behaviors normalized. sort channel of the You

earlier that in done channel in put the earlier the the past years. you've than said into inventory you you think of couple year I more

of would year? the shift? new a half question in the real is, is So headwind the that sales early material XXXX really Or buy second shape that kind Is year-over-year enough my of it actually the be norm? a there to is of just

Bryan Fairbanks

the operate customers, and our We foremost. right to the first service way organization

the is a revenue we upon versus channel at the buy the growth, And environment. early get a we back inventory to at and of is correct look in this much the back talk million and X-month historical look we more amount the level. of $XXX of that's million marketplace. to additional As that of had. that I of what's that early An depending $XX normalizing normal X-month to timing getting million buy year appropriate to to When happening we've that channel relating about going $XX inventories in

see support season back have itself. way to to a went we additional our in If when mentioned, all channel million consumers call, I you the liked go would $XX an I this the to as were year ago million specifically we having $XX through the correctly to

quarterly in If about $XX growth So approximately we is the we of right but delivered right the We normalizing the as performance would the $XX continued growth quarter, purely everything would year-over-year. for for our what and have entering seasonality X% now. is see at there sell-through. normal normalized, fourth then absolutely second, million channel that accounting in level. at third is growth to had And then into look looked of probably quarter, the inventory million is have the normalizing that just to you quarter, last related to then X%

Matthew Bouley

Perfect.

you as year. then then talking leads go course, Okay. to back gross That's about the of We're helpful, And utilization question. the That, Bryan. margin reducing through

kind of So of any revenues it's of sounds that like Is cadence to largely related I of work the to revenues? mean Or levels? inventories cadence matching just incremental the from kind there simply of down need really current sort it year. through that's

Bryan Fairbanks

as And through cadence working -- down have either down channel overall works will that of down second, to need normally quarter. ground, second no marketplace behaviors. It's way the through The It's as which there's matching will no, inventory back on we just quarter. be to pre-pandemic third work itself type and normalizes the our the the third channel we that move the revenues. itself work inventory

Operator

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

Bryan Fairbanks

upcoming participating seeing look for conferences. We to of call. you today's you many at day. the in forward Thank Good

Trex (TREX) 9 May 242024 Q1 Earnings call transcript