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Americans' love of outdoor living space is an economic indicator: Trex CEO

Few things say summer in America like grilling and enjoying a cool drink out on a deck. The love of outdoor living spaces has made decking a $6 billion industry, according to Trex Company (TREX), the world’s largest wood-alternative manufacturer for decking and railing.

“Business is strong,” declared Ron Kaplan, the CEO of Trex.

The company’s stock has skyrocketed since he took helm in 2008. Its most recent quarterly earnings was a record, increasing 49% from the prior year at $0.55 a share. Last year also saw a record $392 million in net sales.

A “Trex deck is a big ticket outdoor (item) and it’s really coming into its own right now,” Kaplan said.

Despite being a high-priced purchase, the CEO notes sales are more an economic indicator of consumer confidence rather than the housing market.

“I hate to say it but no one needs a Trex deck. People buy a Trex deck because they want it,” Kapaln said.

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Kaplan was keen on quashing the notion his company is joined at the hip with the now troubled Lumber Liquidators (LL). Both stocks rallied when investors looked to them as plays on the housing market rebound but now they are diverging. In March, CBS’s (CBS) “60 Minutes” accused Lumber Liquidators of selling flooring that contained illegal amounts of a cancer causing chemical, formaldehyde.

Trex is looking to expand its business globally. Kaplan said Australia, with its lifestyle simliar to that of North America, is an important overseas market for the company. However, it is keen on growing in Western Europe.

“There are three things you need to sell decks: you need contoured land, a great view, and money,” said Kaplan.

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