Trex Earnings Lag Estimates, Up YoY

Zacks Equity Research

Trex Co. Inc. (TREX) reported record second-quarter 2013 adjusted earnings of 86 cents per share, up 46% from the year-ago adjusted earnings of 59 cents. The results however fell short the Zacks Consensus Estimate of $1.01.
 
Including charges of 10 cents per share related to the mold class action, earnings came at 76 cents a share. However, prior-year quarter’s earnings including warranty reserve cost and severance charge of 11 cents were 48 cents.

Operational Update

Total revenue improved 4.5% year over year to $98.6 million but missed the Zacks Consensus Estimate of $104 million. The improvement was driven by a shift in sales mix to high-performance decking and railing products.
 
Cost of sales increased 1.5% year over year to $61 million. Gross profit grew 9.9% year over year to $36.9 million. Gross margin improved 180 basis points (bps) to 37.5% aided by lower sales-related cost, reduced start-up cost and favorable capacity utilization.
 
Selling, general and administrative expenses increased 12% to $23 million from $20.1 million in the year-ago quarter. Operating profit increased 6% year over year to $13.5 million. Consequently, operating margin expanded 20 bps to 13.7%.
 
Financial Updates

 
As of Jun 30, 2013, cash and cash equivalents were $15.5 million versus $2.1 million as of Dec 31, 2012. Cash from operating activities for the first half of 2013 was $23 million compared to $35.9 million in the same period of the prior-year.

Outlook

For the third quarter of 2013, Trex expects sales of $72 million, indicating an increase of 2% over 2012. The reduction in capacity utilization from the second to third quarter will be more than the prior year and will push third quarter gross margin below last year's level. SG&A spending will likely be down more than $1 million from the prior-year quarter.

The company has initiated a stock repurchase program for the first time. It will buyback shares of up to $25 million over six-month period. This will also contribute to long-term growth demonstrating a healthy cash flow and balance sheet.

Our Take

Trex’s strategy of offering a full line-up of best-in-class, high-performance decking and railing products this year has been effective so far. These products offer a higher level of fade, scratch and stain resistance. In addition, with expanded high-performing platforms, the company will able to attract more consumers.

Trex’s decision to go beyond the WPC market and offer products that compete in the PVC and aluminum railing segments is also showing early signs of success. The company now offers an unparalleled portfolio of 1,200 different decking and railing combinations. It also offers a number of design tools to help contractors and consumers visualize their decking and railing options.

Trex is also expanding internationally. Moreover, the company will likely be benefited by its share repurchase program, strong financial condition and better rapport with distributors, dealers and contractors.
 
Winchester, Va.-based Trex Company, Inc. manufactures and distributes wood/plastic composite products and related accessories, primarily for residential and commercial decking and railing applications in the United States. The stock currently retains a Zacks Rank #3 (Hold).

Other companies in the building and construction industry with favorable Zacks Rank are James Hardie Industries plc (JHX) and Masco Corporation (MAS) which retain a Zacks Rank #2 (Buy). One of Trex’s peers Aegion Corporation (AEGN) reported second-quarter adjusted earnings from continuing operations of 47 cents per share, up 57% from 30 cents in the year-earlier quarter. The results surpassed the Zacks Consensus Estimate of 38 cents.
 

Read the Full Research Report on MAS

Read the Full Research Report on JHX

Read the Full Research Report on TREX

Read the Full Research Report on AEGN

Zacks Investment Research



More From Zacks.com

  • Business

    4 Ways Successful Middle Class Families Invest

    Although the U.S. government clearly defines what it means to live in poverty, it doesn’t provide the same clarity for what it means to be “middle class." You tend to hear a lot about this group during presidential election years, as middle class families make up the majority of American households. What exactly is “middle class" ? Economists slice and dice it in many ways, but the most typical definition categorizes families as middle class by their annual household income. The Pew Research Center defines middle class families as those that earn between $46,960 and $140,900 annually. Other sources draw the line around typical middle class aspirations like home ownership, vacations, and college

    Investopedia
  • Business

    ‘Rich Dad’ author Robert Kiyosaki: If you’re investing for the long term, ‘you’re crazy’

    Robert Kiyosaki, author of several best-selling books including “Rich Dad Poor Dad,” joined MarketWatch for a live interview on Facebook today. He offered up insights on making money, becoming an entrepreneur and even touched on politics. Here are some highlights from the talk, or you can listen to the full interview here. His advice on how to get rich: “The rich do not work for money. Most people do not understand that, because they’re taught to go to school and get a job for money. The rich don’t work for money. And one of the reasons for that is money is no longer money. One of the reasons for that is in 1971, President Nixon took the U.S. Dollar off the gold standard and basically screwed

    MarketWatch
  • Technology

    Is Samsung far ahead of Apple? Marc Benioff appears to think so

    Technically Incorrect offers a slightly twisted take on the tech that's taken over our lives. I rather thought that tech CEOs all go around being nice to each other in public and only offering criticisms of other CEOs' companies through Masonic-like winks, nods and code words. I was moved, therefore, on Saturday night when I saw splendidly forthright Salesforce CEO Marc Benioff retweet this: "Crazy seeing Apple trying to catch Samsung. Battery life, waterproofing, blue color, front led light, &curved screens. Samsung set the standard." The original tweet was emitted by basketball coach Dennis Marshall. But did Benioff's apparent endorsement mean that a man who said there'd be no Salesforce without

    CNET
  • Business

    Wheels up for China's new aero-engine group

    China officially launched a new multi-billion dollar jet engine conglomerate with almost 100,000 employees at the weekend, as Beijing seeks to become an aerospace power and compete with the likes of Rolls Royce and General Electric. The Aero Engine Corporation of China (AECC) has registered capital of 50 billion yuan ($7.5 billion), and previous reports said it would incorporate subsidiaries of a series of state-owned firms, including the Aviation Industrial Corp. of China (AVIC). President Xi Jinping said founding the company was a "strategic move" to make China an aviation power and modernise the military, the official Xinhua news agency reported.

    AFP
  • Politics

    Cleaning Up After Trump Talks About Race: Worst Job in Politics?

    Jobs don’t get much more thankless than being the person designated to clean up after Donald Trump. Campaign manager Kellyanne Conway found that out this morning in a deeply uncomfortable interview with Fox News Sunday host Chris Wallace focused largely on the GOP nominee’s supposed outreach to African-Americans. The discussion was civil and measured, but Wallace was unsparing when he asked Conway to account for the way Trump has positioned himself thus far in the race with respect to the black community.

    The Fiscal Times
  • Science

    China's Electric-Car Startups Face Wipeout

    Aug. 29 -- New regulations are expected to pull the plug on many of the 200 plus companies that make up China's electric car industry. The government is imposing strict standards on technology and could cap the number of manufacturers. Bloomberg's Kongho Chua reports on "Daybreak Asia."

    Bloomberg Video
  • Politics

    Brexit may send EU 'down the drain' - German vice chancellor

    Germany's vice-chancellor has warned the future of the EU could be in doubt if the UK's exit is handled badly. Sigmar Gabriel said the EU would go "down the drain" if other states followed Britain's lead and that the UK could not keep the "nice things" about Europe while taking no responsibility. It comes as Theresa May summoned ministers for a meeting on Wednesday to discuss ideas for the UK's withdrawal. Downing Street said Brexit was "top" of the prime minister's agenda. But a report in The Sunday Times suggested her cabinet was split over leaving the single market. The UK voted to leave the European Union in a referendum vote on 23 June. Mr Gabriel, who is also economy minister in Germany's

    BBC News
  • Politics

    You'll Be Shocked That Most People Don't Know These 4 Things About Social Security -- The Motley Fool

    Social Security is one of the most important social program for seniors in retirement. Research from Gallup suggests that almost 60% of current retirees rely on Social Security income to comprise a major part of their monthly income, while another 30% rely on Social Security as a minor income source. In theory, 90% of today's retirees could be in some degree of financial trouble if they didn't have Social Security in their corner. But the honest truth is that most people -- especially those who've yet to retire -- aren't well versed on the ins and outs of Social Security. When it comes to Social Security, ignorance is far from bliss, as ignorance to the program's rules could wind up costing you

    The Motley Fool
  • Business

    Saudi Seen Unconcerned by Fed Plan

    A potential U.S. interest rate hike next month is unlikely to deter Saudi Arabia's plans to sell at least $10B of bonds. Bloomberg's Matthew Martin reports on "Bloomberg Markets Middle East."

    Bloomberg
  • Technology

    Are AT&T's and Verizon's no-overage policies really a good deal?

    Nobody likes getting socked with a charge for going over a monthly wireless data cap. And thanks to changes made by the nation's two largest carriers, those days may be over forever. Earlier this summer AT&T and Verizon said they'd eliminate charges for customers who bust their data caps, in exchange for slowing service to 2G speeds. It's a policy competitors T-Mobile and Sprint have offered for years. And it's likely to be a welcome change for many customers, who cringe every month when the phone bill arrives. But are the two big carriers really offering a good deal? In this edition of Ask Maggie, I help answer that question. Dear Maggie, I have two teenagers on my Verizon family plan, and they

    CNET
  • Business

    Why Dennis Gartman thinks these two assets 'don't make any sense' right now

    Call it the curious case of gold and bonds. Typically, the yellow metal and U.S. Treasurys move in opposition as investors shift from one to the other in search of a safe haven amid changing economic conditions. However, Dennis Gartman, editor

    CNBC
  • Business

    Uber, rival Careem suspend services in UAE capital Abu Dhabi

    Ride-hailing service Uber said Sunday that it and competitor Careem have abruptly suspended services in the United Arab Emirates capital of Abu Dhabi due to "unforeseen circumstances," suggesting potential difficulties with local regulators. San Francisco-based Uber described the move as temporary and said it hopes to have more information in the next two days. "We want to let you know that this was a decision taken by both companies, and our goal is to resume operations in Abu Dhabi as soon as possible," Uber said in a statement.

    Associated Press
  • Business

    3 Great Reasons to Sell General Electric Company -- The Motley Fool

    Between divesting its massive financial services business, investing heavily to expand its digital offerings, and working to transform itself into a highly focused industrial company, General Electric (NYSE:GE) is in the process of reinventing itself for the 21st century. Along this journey, General Electric has several notable opportunities it can tap into for growth. However, tapping into new growth may not necessarily translate into a higher stock price. After all, GE is a massive company and it takes a lot to move the needle. At the same time, the company is dealing with a sluggish and volatile global growth environment that's inhibiting its ability to drive revenue growth. Finally, there's

    The Motley Fool
  • Business

    14 Things You Really Should Know About 401(k) Retirement Plans -- The Motley Fool

    Americans have a bounty of investment tools to choose from when preparing for retirement, but no investment vehicle is more popular in the United States than the employer-sponsored 401(k). As of 2010, based on data released by the Federal Reserve in 2013, there were 88.7 million workers in the U.S. participating in a 401(k) with roughly $4.5 trillion in assets being managed by mid-2013. The data also shows that more than 638,000 different 401(k) plans were being offered. As America's preferred retirement plan, it's important that you understand the ins and outs of what makes the 401(k) tick, because you retirement could very well depend on it. With this in mind, here are 14 things you should

    The Motley Fool
  • Business

    This negative 3.5% 'buy the market' signal has been a moneymaker 81% of the time

    In the history of the stock market, some of the best buying opportunities occurred after sharp sell-offs, with some of the single best days following the single worst days. Adviser Investments’ Daniel Wiener reviewed the performance of the S&P 500 (^GSPC) — via the Vanguard 500 Index Fund (VFINX) — to see how the stock market did in the year following one-day sell-offs of 3.5% or more.

    Sam Ro
  • HLF

    Short-seller: Herbalife may have misled investors and SEC on impact of FTC deal

    After U.S. multi-level marketing company Herbalife (HLF.N) settled a probe of its sales practices with the U.S. Federal Trade Commission last month, top executives assured investors that the company would be able to thrive under the new rules. Billionaire investor William Ackman in 2012 claimed the company was running a pyramid scheme, recruiting members with a promise of payment for enrolling others in distribution, rather than depending on the actual sale of its nutritional supplements and weight management products. In its July 15 ‎settlement Herbalife agreed to restructure its U.S. business so distributors are rewarded for sales rather than for recruitment of sales agents and it agreed to pay a $200 million fine.

    Reuters
  • Politics

    Obamacare Price Hikes Could Cost Democrats Control of the Senate

    The odds remain fairly good that the Democrats can regain control of the Senate in November, especially if Democratic presidential nominee continues her strong showing against Republican businessman Donald Trump in the polls. Four other races -- including veteran Republican Sen. John McCain’s reelection effort in Arizona -- are deemed competitive by political experts. Despite years of Republican vows to dismantle and replace the Affordable Care Act, Obamacare has received relatively little attention in the presidential and congressional races until now.

    The Fiscal Times
  • News

    Mylan's EpiPen goes generic, Herbalife saga far from over, Caesars tanks on lawsuit ruling

    Mylan, Herbalife, Caesars Entertainment and Symantec are among the stocks to watch.

    Yahoo Finance Video
  • Business

    Half of the high-paying jobs in America now require this skill

    This high number is thanks, in part, to the fact that it’s not just technology jobs that now require at least some coding knowledge, says Alison Derbenwick Miller, the vice president of Oracle Academy. Employers and employees — even those who aren’t in the technology field — say the same. Angela Copeland, who majored in computer science at Rensselaer Polytechnic Institute in Troy, NY but subsequently moved to a marketing career, agrees: “Although I transitioned away from computer programming and into marketing, having a coding background has really helped me.

    MarketWatch
  • Business

    Fico vs. Experian vs. Equifax: Their Pros and Cons (FICO, EFX)

    Lenders have an array of data available to make credit decisions on borrowers. Three major credit bureaus compile information about consumers' borrowing habits and use that information to create detailed credit reports, while another organization, the Fair Isaac Corporation (NYSE: FICO), or FICO, developed a proprietary algorithm that scores borrowers numerically from 300 to 850 on their creditworthiness. Some lenders make credit decisions strictly based on a borrower's FICO score, while others examine the data contained in one or more of the borrower's credit bureau reports. When seeking a loan, it is helpful for borrowers to know their FICO score as well as what is on their credit bureau reports, such as those from Experian PLC (EXPN.L) and Equifax Inc. (NYSE: EFX).

    Investopedia
  • World

    Truck carrying Takata air bag inflators explodes in U.S., killing one

    The truck, operated by a subcontractor, was traveling to a Takata warehouse in Eagle Pass, Texas, early on Aug. 22 when an accident occurred, causing an explosion that incinerated a nearby home, local media reports said. The truck “was involved in an accident," Takata said in a statement on Monday. Texas state officials did not immediately return calls for comment early on Monday.

    Reuters
  • Business

    Billionaire George Soros' Fund Dumped These 3 Biotech Holdings. Should You? -- The Motley Fool

    George Soros is widely considered one of the greatest hedge fund managers of all time, and for good reason. During his tenure at the Quantum Fund, Soros reportedly generated average returns in excess of 30% per year, crushing the broader markets in the process.  As such, his namesake fund, Soros Fund Management, remains one of the most closely watched hedge funds in the world, despite his retirement in 2015. And the fact that the Soros Fund has over $4.6 billion under management means it can have a real impact on the market, giving investors all the more reason to keep tabs on its quarterly buys and sells.  Biotech investors in particular may want to dig deeper into the fund's quarterly transactions

    The Motley Fool
  • Business

    5 reasons middle class savers should be optimistic

    Editors' pick: Originally published August 25. While many American families are still wondering when the economic recovery will benefit them, there are a number of bright spots in the economy to provide hope as the second half of 2016 gathers steam. To be sure, there are many observers who wonder when the recover will benefit the middle class, whose incomes have stagnated. That is a byproduct of the near collapse of the financial services industry eight years ago. Many companies have remained cautious about ramping up hiring or increasing wages. That has impacted middle class savers and retirees.  Still, the signs are pointing upward. Main Street should feel bullish about the remainder of the

    The Street
  • Business

    China state firms account for two-thirds of debt defaults this year - media

    China's government-run enterprises account for 66.5 percent of total debt defaults so far this year, China's official Securities Daily newspaper reported on Monday, citing information from the state asset regulator. The State-Owned Asset Supervision and Administration Commission (SASAC) will strengthen the way it monitors maturing debts in the coming three months in a bid to reduce the risk of defaults, the paper said, citing an official with the commission. China could allow industrial firms to convert their debts into equity stakes as early as next month, with the government now putting the finishing touches to a new plan, the official China Securities Journal reported on Monday.

    Reuters
  • Politics

    East Timor, Australia open talks on maritime border dispute

    East Timor and Australia opened conciliation talks Monday in their bitter legal battle to set a permanent maritime boundary that will carve up billions of dollars in oil and gas reserves underneath the seabed. East Timor, one of the world's most impoverished nations, is seeking to draw a border midway between the two countries that would give it more of the sea bed than under current agreements with its wealthy neighbor to the south. Australia says the government in Dili should stick to treaties negotiated between the two countries that it says fairly carves up revenue and provides resource companies a stable legal framework that gives them confidence to invest in exploiting the rich underground reserves.

    Associated Press