Trex Co Inc (TREX) Reports Q3 2023 Earnings: Strong Sales Growth and Improved Profitability
Net sales of $304 million, a significant increase from $188 million in the prior-year quarter.
Gross margin of 43.1%; 41.8% excluding $3.8 million warranty reserve benefit.
Net income of $65 million and diluted earnings per share of $0.60.
Adjusted EBITDA of $96 million and Adjusted EBITDA margin of 31.5%.
On October 30, 2023, Trex Co Inc (NYSE:TREX) released its third quarter 2023 earnings report. The company reported robust sales growth and strong profit growth, driven by resilient consumer demand and improved operational efficiencies. The company also raised its full-year 2023 revenue and adjusted EBITDA guidance.
Financial Highlights
For the third quarter of 2023, Trex Co Inc (NYSE:TREX) reported net sales of $304 million, a significant increase from $188 million in the prior-year quarter. The increase in net sales was primarily due to increased volume, which resulted from strong secular trends and the non-recurrence of the channel inventory drawdown that occurred during the 2022 quarter.
The company's gross margin was 43.1%, compared to a consolidated gross margin of 24.5% and Trex Residential gross margin of 25.4% in the same quarter last year. The increase in gross margin was the result of increased volume, cost out initiatives, and positive plant performance.
Net income for the 2023 third quarter was $65 million, or $0.60 per diluted share, compared to net income of $14 million, or $0.13 per diluted share, reported in the 2022 third quarter. EBITDA was $99 million, compared to $31 million and EBITDA as a percentage of net sales, EBITDA margin, was 32.7%, compared to 16.4%.
CEO Commentary
The third quarter was another quarter of strong results as underlying consumer demand for Trex products, together with operating efficiencies and improved utilization, drove robust performance across all key financial metrics," said Bryan Fairbanks, President and Chief Executive Officer.
Outlook
Based on current market visibility, Trex Co Inc (NYSE:TREX) is projecting fourth quarter revenues of $185 million to $195 million. This would imply full year revenue of $1.09 billion using the mid-point of the guidance, an increase from the prior guidance of $1.04 billion to $1.06 billion for the year. The company now expects its full year adjusted EBITDA margin to range from 29% to 29.5% compared to the 28% to 29% range previously provided.
Recent Developments and Recognitions
Trex Co Inc (NYSE:TREX) has been recognized for its Trex Transcend Lineage decking in Good Housekeepings 2023 Home Renovation Awards in the Exterior Enhancements category. The company has also been named a 2023 Eco-Leader, the highest honor awarded by Green Builder Media, North Americas leading media group focused on green building and responsible growth.
Explore the complete 8-K earnings release (here) from Trex Co Inc for further details.
This article first appeared on GuruFocus.
