TREX - Earnings call transcript Q2 2024

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Operator

Good day and welcome to the Trex Company Inc.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Casey Kotary, Investor Relations Representative. 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

Chief of Joining Bryan and the The members and financial is market Amy company other for XXXX. issued as as second Trex release results Legal today closed Vice well after Fernandez, Secretary, of Officer Senior company's Brenda President, quarter Management. a the press being now containing on for This conference be This on Amy also available release I Relations turn website website. call is over to the Fernandez. webcast available will is call XX days. company's will Amy? and the page the Investor of

Amy Fernandez

Casey. you, Thank

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

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

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

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

Bryan Fairbanks

results our to all for business discuss thank outlook. and our in participating Amy, you today's you, call and second-quarter Thank

on outdoor products, spaces. consumer, by enduring double-digit demand grew beautiful, buying our demonstrating of Trex-branded performance railing consumer value at products appeal from in with Our data decking a trends. living aligns This the strong seeking sales second-quarter with outdoor of Sell-through high-performance and premium their and partially recent of reflected our offset high-end entry-level products. rate, softness homeowners sales the for

performance. of Trex signature lines, launched the higher-income, Transcend resilient best the leverage our appeal the particular, higher-end well second quarter, as recently the and substantial business aesthetics to strength lineage success continuous economically Trex In seek operating model, In our demonstrated Trex inherent improvement customers along results our products, who railing financial with decking in the and in of our programs. the as

the EBITDA basis quarter, from achieved EBITDA, investments XX% growth, During product improvement SG&A capacity results margin. were XX% leveraging in in our our and resulting we while in we net existing expense. point These improvement sales growth improvement The development. was X% and XXX branding and were production a in to income able within driven generate in increased resulting efficiencies

for year contribute continue cost-out benefits and are to and Our ongoing will remainder initiatives this beyond. of the

Trex brand. New are what customized products differentiate strategic full their for with potential, to than product currently we we new options quality a growth. engineering Trex the unlock them synonymous our long-lasting offer introductions better priority to and with To through drive available, design is future

Select the consumer demonstrated contractor broader between launched market, T-Rail audience. the Select gap embraced railing appealing example, by narrow railing, by year, high-performance we T-Rail and the For mid-XXXX to In the many PVC to lower-priced first Trex its in a and been conversions. composite product thus vinyl has price dealer

Rail more product Signature introduction further flexibility that Frameless the to comprehensive out our in proposition that style only strategy railing, of choices railing aesthetic. announced but ago, giving [ Rail. achieve success consumers and build and the desired with see for consumer also Cable to for installation X-Series not market frameless and of further a specification we These the X-Series simplify versus of vinyl improve to portfolio their ] align cable offerings Two to provide with These Post Glass Railing appeals introduction -in-One will conversion Trex Enhanced new glass, outdoor premium us railing. base. value Trex's ahead broad launches We accommodate weeks opportunity significant Select our the a Trex Kit

Our objective significantly railing our these the our to increase penetration market, railing The ongoing of portfolio to will and success date, pleased with as strengthen $X.X we are is new billion our products response deck for market of million our years year. per represents with the a branded Trex pleased of come. We're to launch opportunity approximately fastener market to $XXX also recent category fasteners.

they we We expect and for as leverage center channel meaningful and to a are from solution pro positive the home decking, future. these Trex share into capture products our total partners for railing, seeing sell-through and fastening, gains

Looking the main impacting XXXX, the there half half year. the our factors are for outlook ahead to of second back of two

First, we economic current will reduction the see entry-level category, secondly, accelerated product uncertainty of weakness inventories. in in and anticipate we pro channel the result a

to a related is channel built portion projected the our year. guidance, half meaningful the respect sales With sales in our of to incremental of first inventory revised decline

better of on inventory somewhat have be of we in to that the in more worked be approximately channel for first quarter million product market in allowing this, anticipate will to by adjustments We year. described evolving partners, XX% work now that is incremental higher. softness. due to conditions. low-end decline would relates while Keep mind the inventory real-time that the remainder believe down the inventory channel the that quicker, end To tactical channel the to on We we our visibility $XX reduction, did put numbers the

positive. review, positioned locations very category-leading will remains for Trex colors. highest remodel in the home spite the market-leading short-term of brand products home products in In for our long-term of presence Trex also market awareness, has two a weakness general, remains add our centers. and the market market, new stocking to recently, More related center with opportunities. and line expanded enhanced in-store increase repair weakness, expectations outlook Despite railing we decking a availability consumer spending success, and well for long-term at and in

a decking or and age, provide general while growth primary and are value the important projects. more several continue repair secular see of a the range Trex in add in for that large category homeowners record the outdoor with beneficiary growth increasing number replacement space that is railing decks decks Trex opportunity and to of of their remains of than railing. And remodel products beyond decking homes. to resilient candidates more drivers, including broad to living U.S. and category, wood are The course, and we the remodel homes the U.S. Trex options living to more convert at of

will our is project our meet and moving quarter guidance and future demand. provide enable on when further of Our release third amounts we new timing to startup efficiently Arkansas we The costs projected forward, campus will results. Trex the

point, the call to this our I'd for At over Chief financial to review. Brenda like Financial turn Officer, a Lovcik,

Brenda Lovcik

quarter good everyone. the results. net our to X% pleased second an compared increase in and $XXX second XXXX and evening, the Bryan, am In XXXX. $XXX quarter second million quarter, reported to of review the I you, Thank -to-date sales were million, of

see below in trends. our basis were XX with consumer an Bryan products, data As second consistent double-digit while XX.X% expectations, Gross to little our expansion point buying noted, XXXX. sales we of sell-through on recent in but a from entry-level was products the premium margin quarter our XX.X%, continue of

a and the second again, focus flat fixed improvement costs from is continuous improvement or of million, on of identifying percentage well strong of as due quarter, result net of as to benefits absorption The have, margin in basis sales to once general, as We XX.X% higher delivered in expenses greater continued our on and were primarily our the but delivering programs, pleased levels. XX dollars, administrative Selling, production a sales. were improvement net $XX point absolute performance.

share, million the development as high-return expenses, and XX% net areas million, the we XX.X% continue in last or new $X.XX sales per or personnel-related EBITDA million, the higher the of in quarter, business. increase second will from future diluted product quarter. Net lower $XX growth We $XXX share, the XX% reflected delivered that costs in net compared of to offset performance was This income year. of or of XX.X% drive branding up per sales, million, which invest year-ago $XXX $X.XX reported or an diluted to of $XX

at for the months million $XXX a our restocking in channel for both point-of-sale single sell-through sales of $XXX sell-through increase digits perspective, within half million, volumes benefited first in and XX% preparation compressed compared the QX of Please approximately considers from net Sales year-to-date for transactions XXXX a of of only million XXXX. and beginning Channel. decking that totaled $XX from inventories We note of estimate volumes railing first the into as six buy, of higher in Pro digits is the This respectively. shifted a From of and low the XXXX season. definition to result single early QX at XXXX. from sales the the largely we high home QX the centers and also QX December

Net XX% noted first in ago. accounts was The increase an inventories inventory EBITDA increase we cash primarily that in the converted growth XXXX. points Bryan sales and to receivable the in an expansion higher or $X.XX in $XXX result XX% diluted million new to EBITDA highlighted is Year-to-date product margin year-to-date decrease railing to half product the from the increase introductions of share, share the sales, The accounts The half both of operating prepared the a compared of primarily for increased increase in while net per to XX%, $XX XX.X% million, million, $XXX income $X.XX compared $XXX in flow per decking production related to year million, was from the XX.X% as resulted was XXXX. launches XXX basis due in to receivable earlier. or levels. and first growth of earlier diluted

primarily currently new build-out is and the track, million XXXX. The We start up first facility. to the plastics production related the of in our on modular invested expenditures, the scheduled half Arkansas we are build-out in $XX of operation of capital manufacturing to of facility

provide facility. earnings to costs margin QX impact I and related new the will around more the detail startup During call, this

first updates $XX Based current our midpoint. upon to with into we at the visibility will million I reduced now have full year, the second sales by discuss together the guidance. our guidance of results, approximately year half half our our

in entry-level while attributable noted, the softness relates that As to balance anticipated the market, reductions, related Bryan is to primarily products. XX% channel to of approximately inventory adjustment

year-end, to market. service billion, expect full margin we distributors to sales We XXXX At branding are in guidance Full levels is appropriate dealers sales year billion $X.XX expected expect year cost net new from percentage inventory which net to be our range developments. now EBITDA our executing and the at $X.XX year we XX.X%, XX% we levels to at maintaining to of the at in continue to SG&A as effectively expense invest with out programs. our are teams be demonstrates and last to on as a line product how but

XX% addition, full be anticipate we year our tax effective to to In XX%. approximately rate

sales the QX million. expect million to $XXX range of $XXX We in

prior years, expect with deterioration gross Consistent this we levels. year's QX slight from margin

below the continue we expect SG&A as levels dollars to QX approximately percentage to also absolute with to take We 'XX be to third flat in align with quarter demand. XXXX gross be is production FY XXXX. margin expected slightly down QX

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

Bryan Fairbanks

we've We're a pleased Thanks, activities training proud to in share in our several we XXXX educational of efficiency, community in including we engagement. to Sustainability. details our continually manner, progress can published commitment taken safety record, points, key operate company named and across charts on Value sustainable expands Brenda. and circularity, actions The we're opportunities, and of Trex these second report. broad the manufacturing a the In report XXXX and Seeing report quarter, sustainability our Trex's our More spectrum

remain than making and results brand outdoor build is excellent to channel with industry. business X,XXX Our it for plan, their We organization with Trex Trex more the the operating worldwide. most available on year-to-date Trex in and consumers easy financial at retail across partners. space dream, and design, widely locations available teamwork and reflect our buy, recognized focused products

now the call I'd open questions. Operator, to to like

Operator

[Operator Instructions] from with comes Maklari Susan Our Goldman first question Sachs.

Susan Maklari

to with thinking sell-through the taking through? questions. for about be Can channel thanks that coming you're and how afternoon it's like the some we sounds de-stocking additional Good half given color start going on the now the second in

Bryan Fairbanks

looked the We makes second digits. talked first Yes, the single QX we generally We the past found at what year. sell-through first in it a But in what mid-single isn't that about low high we also data remember, sales we look on the seeing, quarter, being in I've talked that of all high. quarter year, the had, really QX of to back as are that it and It's course earnings been think developed declined totality. digit so and we digits. the were single overall all we've quarter if about originally

So of as did especially month accelerate perspective, the downside it June. moved from we a into

saw and isn't then digit month the project decline prudent QX, same then going We fourth it through Again, a And fourth decline during to of that digit we third quarter, to single behavior extreme low the July. moving volume a the during during marketplace. that high quarter single quarter. be the felt the

there So see we year. our was the reduction will third the felt in And that's where felt of from guidance that much rest the during effect for a larger the the largest you be impact quarter.

Susan Maklari

And...... helpful. that's Okay,

Bryan Fairbanks

reduction A the lot real channel. thing there. in that other One with quick serviced of inventory be will

out number from with That selling the isn't So that's inventory while to the be be addressed channel. reflective it what's low in down door. sales we the will of Trex necessarily digits, expect single

Susan Maklari

for then operating some these you've despite And the of pushing right. been environment. new Okay, you all products Thank that. tougher

you and that ramp are As on in and else term be dynamics the these near of in should terms some coming investments about we introductions? out anything aware of of think look the what you horizon coming continue to through to your that willingness new that's the is through,

Bryan Fairbanks

are think go share. railing I there's or tertiary other us where decking after better new take that engaged either and more for players no to of time try and areas to in markets

So that strategy one change bit. our won't

Susan Maklari

for luck you the Good thank with Okay, color. everything.

Operator

Truist. Keith ahead. Please from comes question next with Our Hughes go

Keith Hughes

that think on a projection. heard you the year there guess to on I revenue a sure down I margin, gross will lot like or Is you. other things I make right. are seems the It Thank commentary over third helping want be the going going I pressure more there quarter, guess numbers? that given out was said your be to modestly I two.

Brenda Lovcik

You correctly. heard us

deterioration So from there year. slight last will just be a

programs, pressures. there see weakness. that doing other on right, our But the of to You're improvement are we've we been of highlighted, the benefit continuous some as additional work that continue we'll offsetting

that, we're We half. again, staff in do first able the also have a to temp significant especially flexing more

So year yes, we're a slightly below ago. expecting just

Keith Hughes

Okay.

winter severity usually, the that's see takedowns, quarter, third sell-through come in more Second tend Bryan? in when months. inventory to a the in it and which July necessitating they question. we fell at Was move June these off just this

Bryan Fairbanks

the in inventory we normally the the We see to sell-downs during second into a quarter, Well, to the the half May, channel of works. the inventory in through we'd normally build of continues start first channel That's in move the decline year. the way end the it year. usually then and see

channel isn't all as what different market in thought what's along seen happening to end we've originally in the going it the it So was isn't past. the is from be demand for strong that our built Unfortunately, we way.

little a the out is where there's inventory excess coming against So bit inventory channel that's demand. of to reconcile

Operator

Next Merkel question Please go William comes ahead. from Blair. Ryan with

Ryan Merkel

walk And quarter a progressed for It through you Can with half us sudden start question, second been then that saw retail how you to to you might part like more June there? there are sounds is second the the what just quarter? retail have assuming second worse in slowdown. slowdown. wanted than I a the the

Bryan Fairbanks

Yes, July we is key are months what for see retail. and really June

as year. tend do more volume and You occurring did of start We promotions a of school, you have months vacations, moved of you've saw to those more everybody weak within see month well, highest your of got the retail, performance. as out getting be the month We month performance through then did the as on. went And we we June. the decline the see July

we change numbers. two revenue comes data a there felt of those though enough those as year through needed channels, was full material amount we that points the there to where data So

Ryan Merkel

Yes, move okay, that the then to to makes pro. sense. And wanted I

are You encouraging just outlook is mentioned the some the much? curious, signs, pro half, assuming is second and in not too also I'm slower changed or you that

Bryan Fairbanks

pro as read to a through do have we the Yes, well.

the dealer results, then eight web me, seeing, sales our six Now, our that searches, we're and excuse we're signs out weeks. up, finally sample are encouraging to

close tell you harder sale Now, working all at being to will are they point. this contractors our said, that that

read So the of too. sell we pro well have level the into products, hands, of entry level recognize, channel through the higher the did some some through And both basics parts business. as and

So much of is the there is impact larger but course impact there, retail. at

Operator

Our Jadrosich, go next question comes Ray from of Please the America. Bank ahead.

Rafe Jadrosich

help magnitude. us I help wanted to quantify the us up ] on understand follow if you to could the see destock or [ just

sort I year, around then guidance, Is $XX of initially midpoint, think lower that ], destock if assuming million you this coming original at the destock full around million? $XX like the that [ XX% the look And contemplating the that the million year was that your [ cut, talked into you at channel from even that guidance I And are were thought in about the I about. inventory of normal. ] coming $XX number? right is normal, than you

where inventory it the So maybe to where do levels? the to expect pre-COVID And year by or finish end now? you of is normal compared

Bryan Fairbanks

think through point, be missed I expecting there to year it mid-single digit piece that At we that's channel perspective. so support from growth. be a the when being year, look roughly higher built is to the was full flat we're the the at to Yes, this inventory sell a going

look of into year. thought So potentially next is we there growing needs that about to that, the year year excess channel. end inventory some going sell we the When at out of a

a year but of probably expect $XX numbers not decline, range million over together to it's on the year in year-end Now, basis. for we put haven't a million inventory, significant any as year we type next yet, $XX

Rafe Jadrosich

then then a isn't slowed. on for while. you define specific can has as a low recent that soft That would your trends have more would you entry been And you new of And point business how attribute that business? that's of of much level there end the Is segment? sort to the trend R&R Okay, DIY What kind helpful. anything recently of slowdown just side the to?

Bryan Fairbanks

product broken line of well roughly sales the revenue haven't to We XX% combination order. as through from XX centers. the perspective, special shelf on a home out our retail a That's overall as of revenue comes

Special within those mixed to products. premium are leans going Now, premium towards products. heavily be there order

question? second Your I Sorry, that. missed

Rafe Jadrosich

end the slowdown Just the like... entry low on level,

Bryan Fairbanks

that's Yes, right.

of an heavily the kind It's from then entry have engaged different break decking. not income that's thirds. lower more And customers three perspective, you Trex I slowdown the levels. buying So with level into two of our the and next composite

got the that and June and You've range that that customer middle And the upper doing end pretty timeframe, higher up customers were customer. range well. middle until

As we started customers. started June struggle into with what data that to and And to got we to out and as too. pullback other those mid-level we're seeing well there, see consistent July, started see

Operator

John with go from Our Please UBS. Lovallo next comes question ahead.

John Lovallo

one are of at at either low The the is, Is the first there any your middle even at entry pricing product Bryan, particularly, on level, end here end pressure some and you front? uncertain softness the macro but the given seeing what the portfolio?

Bryan Fairbanks

Well, Xx we price foot. a lumber. of start linear at let's That's From the about perspective, about end $X the sell low end. with low a

to a to low foot. linear buy You going about foot be quality a $X.XX It's treated linear lumber. in is quality lumber can pressure $X.XX that range. Medium pressure treated $X.XX

dollars that consumer from We so where we're us can haven't tells So composite willing extra seen couple market perspective. they pricing deck. hundred range up is research really and occurring move have the a in spend to much right that an a still

we perspective. from perspective, deflationary We our through in coming jump business. really from just deflationary a seen haven't factors I'll haven't that. And inflation an seen

changes. purchasing an perspective, from So of cost haven't significant seen we overall

expect be but pricing for year We next this to time, on haven't decision made relatively at a overall any environment. muted there I'd

John Lovallo

And then with opportunity are the here the understood. more given stock, stocks, Okay, a the thinking how share about you bit in of repurchases? little for tomorrow, many but some recent pullback along guys potentially pressure

Bryan Fairbanks

of a to available We XX% of us float program the have that company. purchase can to the up

active the in As in times to when seen past we've to marketplace. be been the have been opportunistic market, in able you've the be there very

Operator

from ahead. B. Our Rygiel with next Alex FBR. go Please question comes Riley

Alexander Rygiel

this, With line regards stocking, should to mostly what we is and about of it? the by of think in-store to how be and increased the review order magnitude impacted quarter going

Bryan Fairbanks

they'll of change starting that Yes, new replace perspective, this a stores. the railing probably other to well. year. that's we'll see And half two colors The going then be during quarter third of quarter in over third the from two colors, as

Alexander Rygiel

I margins mix think then sort EBITDA XXXX, early to know little but new given think And of curious shift. how hear XXXX, thoughts you about helpful. be your you how bit we'd on and about a That's it's layer in products to

Bryan Fairbanks

be. I to A be the how to the EBITDA we're capacity overall We about that we and But of philosophy what continued got talking see on back improvement to focus business that We'll a a across we can need little XXXX going our operate the margins. our volume, organization. early go benefits We've bit on in have think production implementing understand XXXX. is we XXXX. in programs great to pipeline

there's pipeline that along margin to way. organization benefits market see XXXX course, the focused projects way. gross is another that of improvement is will volumes. regardless on This continue Of And along the that do we'll EBITDA the and an for

Operator

with JPMorgan. Rehaut Michael from comes question Please ahead. go next Our

Michael Rehaut

little sell-through, digits, premium kind obviously the to enough to love challenges the sense products, more a I'd know, lower get First, talk of, you're on you end. double about

in the worsen you different a a little market, base. the market, sounds what's could quarter. expect granted guide? quarter lower the in the also trends, of expect fourth know, And know, sales you kind off sell-through of of talk about you bit it think about like of But, quarter, also, to If as in that's parts if the the how doing you the you embedded these mid-part these you fourth

Bryan Fairbanks

linear. somewhat It's

and Same perspective. from end, we're are thing be a mid-range railing be going lineup to The then and are continuing being to transcend the lowest weak, the end going and higher see in to lineage. that Your less weakest. transcend products end higher strength

Michael Rehaut

very you to broader you your love Okay. and trends, know, it's continued composite. but, you the from on, I from strength sector hard basis, a get outdoor wood not -to-quarter to on know, conversion sense also living also thoughts obviously know thesis the of but only know, a I is positive on I kind And, guess, the

And as sell-through the You I an last basis basis more any the you around this I that I think of You to of was on still is from the the know, -of-model expect the which flattish see wood just with been if overall being know, year, for some to type market. challenges right. per rate, about talking this XXX over you year, conversion have market maybe the certainly pace parts curious years that the you different if, of full these, year, some of broader you has know, concern like you today. and year you're if points XXX a you'd anything conversion if result heard Do few composite? of outpacing of sense

Bryan Fairbanks

year the turn is entire from to overall wood look the the all, call early half, as we against that it haven't first we to but we across come it through perspective, still at seen market see conversion when portfolio where from and back wood. going towards do an perspective, Too out we made

install concerns stay will to have bit materials, us. I high-quality the a but with make full underlying So great consumer any wanting behavior a little early purchase of the and don't in low-maintenance, year, affordable and that to call

Operator

go question from with Baird. ahead. Tim next comes Our Wojs Please

Timothy Wojs

of change and kind I'm of inventory. if first brought of you just greater on the the half then expect inventory the go-forward sequencing, in like kind a thinks of the channel think channel kind the structural of on about that gets kind there's in this and de-stock curious kind know, this the sense they of the on lot year acting year the back basis to a way a basis, of more the do a of they're in given kind of go-forward in that times? lead act a you year, just to just Maybe the extent year half you kind

Bryan Fairbanks

channel making Well, our in the I great and has we missed get had to things marketplace. but along there our a years overall could year SKUs delivery. the so job past way. Trex it we channel call we And timely struggled were thing is we of stock that first out partners, could lot of the were certain I'd all the in like think a sure couple we of servicing this collectively, that that over the There done do,

I think in done the at right our digits. inventory a to has single marketplace job of bringing amount to the channel it support grow in great

going to There Now an that see the grow not going at market's level. we that be is to adjustment.

along I as it's think sure way. year saw quite we first we not the quarter, probably potentially what I'm look this year, next heavy at as as

so support way. that For $XX on example, that have market point. to able the whatever year along million that ground, excess at be we our that we'll talked does We'll about, probably that may not occur the next

there's in inventory down. the manufacturers start that time structurally have marketplace. June during wouldn't bringing starting the always Distribution So and and of then I May, say anything loaded frames, seasonal and in businesses quarter the different first year

when does the midst change. And economy the in of in result a shift that, that in inventory there's an

inventories see which or pretty able and issue. much can on continue exacerbates clearly, into the it those adjustment we're the more we before Fortunately, moving make to producing an we too channel,

Timothy Wojs

Okay.

more of in know, of leverage as on little of of search, helpful. door? of where, to kind know, you or are things protection double kind And do a a branding [indiscernible] demand down kind view this that the going sell you we're scenario and kind is and then type kind get source just downside hey, like to so a a actually slower or that's of the on environment, marketing through and you the stuff, marketing Okay, some of slower

Brenda Lovcik

Tim. Yes, thank This you, is Brenda.

on investments side. returns to we're continue that those branding the on see We nice making

a softness, time in seeing bit we'll of invest. where even look a little to So we're continue ways to for

be, and that, us you but to how we invest the will continue continue to we'll see So particular in in again, invest do brand.

Operator

with Ng Phil Jefferies. Our go comes Please question from ahead. next

Philip Ng

if million I it's channel guess million? really just like is more the reversing... load assume I headwind a about year, Bryan, I think sure normalized $XX when XXXX, early, next in make know $XX we to want on we or

Bryan Fairbanks

next whether I'm as able Yes, make giving But I not about to our we'll may inventory how of distribution you not was year. support way available, to think into going be at be. the whether example first of part it's going ground quite it's heavy the to or to busy to season. on sure quarter be the what get is potentially an just it's

Philip Ng

Okay. catch just better. for to to called this guess, year, perhaps year, But like understanding I I the that up. everyone buildup $XX a that's this want I'm million sure excess just $XX million out of kind make impact perhaps, you

Bryan Fairbanks

Yes, to marketplace that where needed excess to a then XXXX. up get was to things a the bit catch inventory be bringing it where we and support back they with -single-digit to the to felt in of as similar year-end a growth were

Philip Ng

seeing That's If through you helpful. this home you're correctly, year. at via talked come heard reviews. line centers Bryan, wins that And then you the I about

from? what this opportunity that? impact or in XQ Any type up of your share of So kind way price getting guidance to the is in there sales you and terms are mix of a win of and loaded size customer account point for

Bryan Fairbanks

out couple be colors will of There be will that be enhanced the an products moving be product a be moving we'll naturals product. There we'll store. a existing It two and will of in. also basics

get discounted opportunity next those course So perspective, see through. will From over there the railing to that of stock. year. is third we'll from quarter. sold into We'll going the be the a a Really, a perspective sell-through and be

year. quarter. of to continued, the material them, that have making the next opportunity Neither one Those we're we longer-term market-leading gaining say, within we in are particularly very market home the would see we'll presence sure opportunity But important stores and that both will space. that shelf for to begin these changes a of revenue and it's more that make I centers, that,

Philip Ng

year, loaded are Bryan, see But Okay. next you the impact is more? to or more starting

Bryan Fairbanks

at will be season. in year. the loading end of more impact Sell-through We're next the

It starting it has cost when season. moving out of season our generally it of the the that occurs the shelves, elected transition. reduced already do down, occurs first recall, the customer quarter If In case, you this the change when there's during end a to is third coming the inventory sell to that at on normally of and into quarter. the

Operator

comes with Company. question Our go from next ahead. Benchmark Please the Garner Reuben

may be muted. You

Bryan Fairbanks

Let's come to back Reuben.

Operator

right. All

on move will Grooms We with Inc. questioner, to Trey ahead. Please the next go Stevens,

Trey Grooms

on So, touched elevated. bit a them they're Bryan, your here, levels, inventory you but

You new role. product a rollout mentioned playing

little by products, to sounds fact move associated the maybe could the balance year-end, a products, keep of willing do much inventory these us maybe out guess, you with your higher we new could the where on your past. inventory then level of and year? inventory also be the kind and I with parse you it you've you ground the got ballpark if bit maybe inventory help of that, is see more If you you than what given like as had through is might your in new target how

us help just great. could you with that, be it If would

Bryan Fairbanks

the make into our channel balance partners inventory discussions that marketplace. as couple sure be well led general, that, hold service more all that the to on will sheet, of willing to more our that said properly can and have in I've we in Yes. they're inventory willing carry we a to prior

do new that We talked additional detail we providing talked on new be this in. products on So of of coming have as specific some later year at on call. There'll third some but additional in the we've guidance don't have we look inventory, We've yet. about about not products can that quarter those.

Trey Grooms

is it Okay. there due relative products? we're looking level the to putting much sales at the about up sales any all you Is can that inventory kind to kind of.... us color guess, -- to How you're and on of there you're But inflated at talking fair today any new give an number the is is of I today?

Brenda Lovcik

for we've products. done it's rail as as of lot Hey, in aluminum ready pre-buy of Trey. doing hitting railing it majority it strategy. is a Brenda. getting getting This The of on our railing and aluminum, to so related new lot an the We're in with our example, part overall and a

the that expect to at finish want service our the aluminum we levels, that year. CFO company launch get love this we Bryan make the we models, But majority in in your we conversation about in do and market. when relationship point, again, great is The Again, consistent but I we're due the things cetera, that new -- we channel as product, -- sure, And constant Bryan's to producing. to ready this and I'm higher of products. do, I one one to is the inventory -- is we as expect CEO that example, So enhanced the conversation be to the of have with levels to noted, as with channel. can constant et used we

want So we're remain we with Yet, in demand. longer-term demand seeing again, what little the XXXX. they're to a in the skittish confident in

to So available we're have going that inventory here.

Operator

from go comes question ahead. Kurt next DA Our Yinger Davidson. Please with

Kurt Yinger

Just one question.

see indicators you the You and of of sell-through point seeing in business would that have were of kind guess fourth and what recognizing, quarter? guess the end positive continuing indicators we'll the you I talked about of what you to the I the are some that to kind know, into deceleration year. seeing still that happens at

Bryan Fairbanks

the down into timeframe. some metrics which year. see in itself going that to we numbers July are we we started to web with seen I'm as with not the take we've we items, the have has some our but that it's other demonstrated get market weakness the that. for to And June those specific have prudent seen then well mid-June as into moved that performance full correlated other late into track There

Operator

go with Research Please comes from question Group. Ramsey Steven next ahead. Thompson Our

Steven Ramsey

get to nuance wanted any a the if look, channel I to see there's destocking.

they Are they economic the the it's stocking than product equally, little all product down or better said high-end bit uncertainty. a are taking keeping You low-end?

Bryan Fairbanks

there I They're stocks their on sure think SKUs of are market. A stocked and that to C on B C they're through and well keeping They're make and the to product A, the B, even based is at of look of the get as as I things entry year. weeks the more weakness would say And some may SKUs the that the be see more along the adjusted it'll level. then of less that going marketplace they going off of they supply level, SKUs. through levels their the right half be selling at will probably of back what we bringing in entry all down move if way.

Steven Ramsey

coming and versus growth then July on ramp fasteners, of what Okay. growth I that those it's some base. expected? reflecting is the And And you Can products June, of had railing Helpful. to off low realize curve the slowness? you talk a and the

Bryan Fairbanks

great the to we PVC, a conversions The Vinyl over away numerous moving as from contractors Well, we're launched PVC, and seeing ago, Vinyl Trek The launched. growth. installing system making cable who Select system. were well rail seeing move Select dealer year T-Rail we're our system and just

part was this earlier Select release post. are saw market an system. the press You the there Those week now. hitting just a on -in-one That's right of

coming move that to be too we of other products And early out behind as Select So from then a system. a seeing number next what But are talk year. will about have with that. pleased we're we into we it

Operator

with from comes Anthony question Citigroup. Please go ahead. next Our Pettinari

Unknown Analyst

This is for Anthony. Gregory on

clarification, of guess, points I for few me. a Just

who consumer January doing more a mentioned the of from slowed down you called in in pretty well kind maybe middle-income So May, what's seemed to July. little to June be and Trek

previously decided there to deferring the maybe appreciated. other be not canceling if altogether? of pursue homeowners say it category voiced insight an you've Would maybe that pro-inbound Or seen for abrupt say in have you in So there. and it leads? projects slowdown So point Would a was into you whatever finer there's can was who put I'm finer any had not you are homeowners who but reason? interest the wondering would nature kind slowdown on of point the you

Bryan Fairbanks

it's an high-end think that seen lower more from they're way. -- abrupt the income been we the But the for spending some continuing don't entry-level of year, bit this at those point. income seeing along to decks, marketplace beginning the except buyers. really the are buy it's But The move where of slowdown continuing at build weren't little dollars been middle to a we people higher-end that have not to I choosy products. it being with true

seeing So I market think up change is some weakness that's probably that move of the we're biggest somewhat.

Unknown Analyst

Thank a then Okay. that. clarification. for just point of you And

to currently? at that expect of abrupt down all your if be kind and year the not does of is else it's a true weeks bit. slowing backlogs -- over So you trickle you at to eight slowdown, least but fair, little seem this from equal, to demand an the they're would that expect Would six pro balance

Bryan Fairbanks

down Well, seasonality. I to just trickle would them to due expect

December backlogs start in building good Out is where the you've areas longest be all going are as period, your QX. to once there into the through on. into have to weather where getting QX, areas tend there building quite long. you isn't You be October year certain But QX, going time got to much

general, timeframe. usually that, I will within that our from some there so excluding think decline times weakness, will be anyways lead numbers. included we've that But And and your in

that. within decline some be probably will there So

Operator

Our question Please next from ahead. comes Matthew Bouley with Barclays. go

Matthew Bouley

de-stock think uncertainty kind of kind sort to channel commentary it around I economic was pro similar of terms up inventory of in if more time, of driving at ended that reduction, back the in little So into And de-stocking. your in for market XXXX, the less quarter then baking fourth I assumption seeing and third softness in quarter. you a that think the

my at you what the is to versus XXXX level So time? channel visibility guide, you of year? end may kind near-term inventories incremental of degree what to given conservatism in is, this we that of your the patterns sort on that phasing of baking channel are question in saw informing ordering that What's terms where degree to think

Brenda Lovcik

that yes, a we And cycle. XXXX Matthew. you, Thank lot during learned

were channel QX. and And in happening so, as de-stocking highlighting, with of majority have would relationships the you the know, consistent the see great we we with XXXX,

different inventory XXXX, one the dealer Right dealer level, a And the as not well lot distributors. the those We're we've but at that service lower. the in XXXX level. again, think inventories, want now, market, worried inventory at the enough are had as about to inflated I level. the dealer thing visibility excess dealers than quite better to that's highlight is got I of at

Matthew Bouley

very the maybe that, in for And terms you in single then down Thank Brenda. quarter. secondly, helpful. third really that's term near sell Okay, through low the guiding of just digits

actually given single five I know, weeks and quarter basically a seeing worse quarter sell June the July, the to little question of Any in low of through Are all than digits color commentary better or additional there? the around down date. the is trends kind or You first you mean, here that?

Bryan Fairbanks

understand from June? Yes, from July. And through that's saw. channel what does home from as perspective. saw pro that's seeing we are center we the the And they're is that a large what what track Again, of how to as both seeing of July month month well a both in numbers the perspective we volume exactly that months, why very

Operator

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

Bryan Fairbanks

participation Thank many various you you. everybody's forward questions coming We with of speaking for today. weeks and Thank to at in the you quarter. and look conferences the third during

Operator

presentation. has conference Thank for you today's The attending now concluded.

disconnect. now may You

Trex (TREX) 6 Aug 242024 Q2 Earnings call transcript