\nTrex Company, Inc. (NYSE:TREX), the world\u2019s largest manufacturer of wood-alternative decking and railing and a leader in high-performance, low-maintenance outdoor living products, today announced financial results for the second quarter of 2025.<\/p>\n
Second Quarter 2025 Financial Highlights<\/span><\/b><\/p>\n CEO Comments<\/span><\/b><\/p>\n \n\u201cOur prominent position in both the pro channel and home centers enabled Trex to deliver another quarter of sales performance that exceeded expectations,\u201d said Bryan Fairbanks, President and CEO. \u201cThis unique positioning is the result of decades of relationship-building with our channel partners and is an integral part of our strategy to market our broad portfolio of Trex-branded products wherever consumers are making their decking and railing choices.<\/p>\n \n\u201cProduct innovation remains central to our long-term strategy, and new products were once again a key contributor to our sales performance. Products launched within the last 36 months represented 22% of second quarter sales, significantly ahead of the 13% contribution in the same period last year. We continue to invest in innovation, which is an important part of Trex Company\u2019s heritage, and look forward to building on our success to-date with the launch of new performance-engineered products in 2026 and 2027.<\/p>\n \n\u201cWithin decking, we recently launched an expanded Trex Select\u00ae<\/sup> line, featuring the industry\u2019s first mid-priced decking board with integrated Sun Comfortable\u2122<\/sup> heat-mitigating technology*, and we are encouraged by the early positive response from consumers. As a market leader, our goal is to provide innovative, high-performing, aesthetically refined outdoor living products \u2013 offering consumers a broad portfolio of options across every price point. Our year-to-date railing sales are tracking in line with our goal of achieving double-digit growth in these products in 2025. The momentum we have built this year supports our long-term vision of doubling our market share within the $3 billion railing market over the next five years.<\/p>\n \n\u201cSales trends in the second quarter remained consistent with the past six to nine months, reflecting resilient consumer demand for Trex decking led by strong performance in Transcend Lineage\u00ae<\/sup>, recent momentum from our expanded mid-priced Select\u00ae<\/sup> line, and the continued stable performance of our value-priced offerings. In addition, we continue to see strong demand for our products across the western U.S., where both new and long-standing distributor relationships, as well as dealer conversions, are driving increased market penetration.<\/p>\n \n\u201cIn the first quarter, we began production at our new state-of-the-art plastic processing facility in Arkansas, and the early performance results have been very promising. Production rates and yields are already surpassing our initial expectations, and the facility is helping reduce the need for external material purchases at our decking operations in Virginia and Nevada. Importantly, these production results reaffirm our expectations that, once fully built out, Arkansas will be a model for efficient, vertically integrated, and self-sufficient production. These benefits strengthen our ability to serve our channel partners and position us to capitalize on growth opportunities well into the future. The advanced processing technology used in this new facility will enable us to expand our sourcing of cost-efficient recycled materials, while reinforcing our commitment to sustainability,\u201d Mr. Fairbanks noted.<\/p>\n Second Quarter 2025 Results<\/span><\/b><\/p>\n \nNotwithstanding adverse weather conditions, net sales for the second quarter of 2025 increased by 3% year-over-year, totaling $388 million, compared to $376 million in the prior-year period. This increase was driven by the strength of the Trex brand, new product introductions, and increased investments driving national brand awareness across the most relevant traditional and digital platforms. The new \u201cTrex VS\u201d brand campaign launched in early May, and we are exceeding growth expectations on trex.com, samples sold, and new leads. We also launched new trade marketing campaigns and a record number of merchandising tools across dealers and retailers.<\/p>\n \nGross profit was $158 million, and gross margin was 40.8%, compared to gross profit of $168 million and gross margin of 44.7% in last year\u2019s second quarter. This decrease was due to our revised inventory strategy to level-load our production facilities, which resulted in lower second quarter production compared to the prior year. Additionally, during the quarter, we recorded costs related to performance refinements to our Enhance\u00ae<\/sup> decking boards that required changes to our production process, railing conversion costs, and start-up expenses associated with our Arkansas plastic processing plant, which also contributed to the decrease. Adjusted gross profit, which excludes one-time railing conversion costs of approximately $1.4 million and start-up costs of approximately $1.3 million, was $161 million. The Enhance\u00ae<\/sup> decking refinement costs, which have not been adjusted out of gross profit, are now behind us.<\/p>\n \nThroughout the quarter, we continued to make additional investments in branding resulting in selling, general, and administrative expenses of $56 million, or 14.4% of net sales, compared to $51 million, or 13.6% of net sales, in the second quarter of 2024. Excluding expenses of approximately $1.1 million related to the start-up of recycled plastic processing operations in Arkansas and digital transformation activities, SG&A expenses were $55 million.<\/p>\n \nNet income was $76 million, or $0.71 per diluted share, compared to $87 million, or $0.80 per diluted share, reported in the second quarter of 2024. Excluding the one-time charges incurred in the second quarter, adjusted net income was $79 million and adjusted diluted earnings per share was $0.73. Adjusted EBITDA was $122 million.<\/p>\n Year-to-Date Results<\/span><\/b><\/p>\n \nYear-to-date net sales were $728 million, 3% below the $750 million in the year-ago period. The decrease was due to our revised inventory and level-load production strategies.<\/p>\n \nGross profit was $296 million, and gross margin was 40.7%, down from $338 million and 45.0% during the same period in 2024. Adjusted gross profit, which excludes one-time railing conversion costs of approximately $5.3 million and start-up costs of $1.3 million, was $302 million.<\/p>\n \nSelling, general, and administrative expenses were $112 million, or 15.4% of net sales, compared to $102 million, or 13.6% of net sales, in the year-ago period. Excluding one-time expenses of approximately $2.6 million related to the start-up of recycled plastic processing operations in Arkansas and digital transformation activities, SG&A expenses were $109 million.<\/p>\n \nNet income year-to-date was $136 million, or $1.27 per share, representing a 23% decrease from the $176 million, or $1.62 per share, reported in the first half of 2024. Excluding one-time charges incurred year-to-date, adjusted net income was $143 million, adjusted diluted earnings per share was $1.33, and adjusted EBITDA was $223 million.<\/p>\n Summary and Outlook<\/span><\/b><\/p>\n \n\u201cOur first-half results are aligned with the key assumptions underpinning our full-year 2025 guidance \u2013 namely, the continued resilience of the Trex consumer, improved demand for entry-level decking products, and double-digit growth in our railing product sales, all within a Repair and Remodel market that is now projected to be below 2024 levels,\u201d continued Mr. Fairbanks.<\/p>\n \n\u201cOver the past 18 months, we have advanced several strategic initiatives that have further strengthened our market leadership \u2013 most notably, the launch of new decking products featuring our SunComfortable\u2122 technology, the expansion of our industry-leading railing portfolio, and the roll out of our Trex-engineered fastening solutions. These new products, along with our existing portfolio, further establish Trex as a comprehensive, one-stop source for decking, railing, and deck-related hardware \u2013 delivering a fully integrated system to builders and consumers.<\/p>\n \n\u201cAdditionally, our revised inventory strategy reduces the volatility typically associated with channel stocking and de-stocking. By level-loading our production, we can better manage inventory cycles, enhance operational efficiency, and reduce volatility in our quarterly results within the context of a seasonal business.<\/p>\n \n\u201cCurrently, less than 5% of our cost of sales is projected to be impacted by tariffs, with the majority related to purchases of aluminum and steel used in our railing and fastener products. We believe we have mitigated a meaningful amount of the impact on our cost of sales through strategic actions such as pre-buying, negotiations, and pricing.<\/p>\n \n\u201cLooking ahead, we are pleased to reaffirm our full-year 2025 guidance for sales growth of 5% to 7% and adjusted EBITDA margin to exceed 31% amid lower Repair and Remodel spending. We currently expect third quarter sales to range from $295 million to $305 million, and to achieve an estimated 100-basis point sequential expansion in gross margin as the gross margin impact of the Enhance\u00ae<\/sup> decking refinement subsides, we begin to realize the seasonal benefits from level-loading, and we gain the efficiencies of our continuous improvement projects. Our guidance for the second half of the year assumes considerable net sales and EBITDA growth as compared to the same period in the prior year.<\/p>\n \n\u201cLonger term, we are confident in our market leadership position based on our tremendous brand equity, our differentiated channel positioning, our expanded product portfolio, and the partnerships we have built over the years with the industry\u2019s most respected dealers, home centers, contractors, and distributors. Together, we partner every day to bring the highest-quality, performance-driven products to the marketplace,\u201d Mr. Fairbanks concluded.<\/p>\n Second Quarter 2025 Conference Call and Webcast Information<\/span><\/b><\/p>\n \nTrex will hold a conference call to discuss its second quarter 2025 results on Monday, August 4, 2025, at 4:30 p.m. ET. To participate on the day of the call, dial 1-844-792-3734, or internationally 1-412-317-5126, approximately ten minutes before the call, and tell the operator you wish to join the Trex Company Conference Call.<\/p>\n \nA live webcast of the conference call will be available in the Investor Relations section of the Trex Company website at 2Q25 Earnings Webcast<\/a>. For those who cannot listen to the live broadcast, an audio replay of the conference call will be available within 24 hours of the call on the Trex website. The audio replay will be available for 30 days.<\/p>\n Use of Non-GAAP Measures<\/span><\/b><\/p>\n \nThe Company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). To supplement our consolidated financial statements reported on a GAAP basis, we provide the following non-GAAP financial measures, adjusted gross profit, adjusted net income, adjusted diluted earnings per share, earnings before interest, income taxes, depreciation and amortization (EBITDA), and adjusted EBITDA. Management believes these non-GAAP financial measures provide investors with additional meaningful financial information that should be considered when assessing our underlying business performance and trends. Further, management believes these non-GAAP financial measures also enhance investors\u2019 ability to compare period-to-period financial results. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company\u2019s reported results prepared in accordance with GAAP and are not meant to be considered superior to or a substitute for our GAAP results. Our non-GAAP financial measures do not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of these non-GAAP financial measures to GAAP information are included below. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the Company\u2019s performance. Disclosing these non-GAAP financial measures allows investors and management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.<\/p>\n \nReconciliation of gross profit (GAAP) to adjusted gross profit (non-GAAP) is as follows:<\/p>\n\n
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