$TREX
TREX CO INC

2018 Q2 Form 10-Q Financial Statement

#000119312518231658 Filed on July 30, 2018

View on sec.gov

Income Statement

Concept 2018 Q2 2017 Q2 2016 Q4
Revenue $206.7M $157.9M $95.32M
YoY Change 30.87% 7.85% 6.86%
Cost Of Revenue $115.6M $85.93M $57.20M
YoY Change 34.51% 1.04% 0.0%
Gross Profit $91.12M $72.01M $38.11M
YoY Change 26.52% 17.27% 19.27%
Gross Profit Margin 44.08% 45.6% 39.98%
Selling, General & Admin $33.51M $27.22M $18.40M
YoY Change 23.11% 9.78% -1.6%
% of Gross Profit 36.78% 37.8% 48.28%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $4.600M $3.700M $3.600M
YoY Change 24.32% 2.78% 2.86%
% of Gross Profit 5.05% 5.14% 9.45%
Operating Expenses $33.51M $27.22M $18.40M
YoY Change 23.11% 9.78% -1.6%
Operating Profit $57.60M $44.79M $19.71M
YoY Change 28.6% 22.34% 48.72%
Interest Expense $369.0K $251.0K $0.00
YoY Change 47.01% -45.2% -100.0%
% of Operating Profit 0.64% 0.56% 0.0%
Other Income/Expense, Net
YoY Change
Pretax Income $57.23M $44.54M $19.70M
YoY Change 28.49% 23.19% 50.38%
Income Tax $14.41M $15.76M $5.500M
% Of Pretax Income 25.18% 35.38% 27.92%
Net Earnings $42.82M $28.78M $12.63M
YoY Change 48.77% 21.32% 56.18%
Net Earnings / Revenue 20.72% 18.22% 13.25%
Basic Earnings Per Share $0.73 $0.49 $0.43
Diluted Earnings Per Share $0.73 $0.49 $0.43
COMMON SHARES
Basic Shares Outstanding 58.76M shares 58.78M shares 29.32M shares
Diluted Shares Outstanding 59.05M shares 59.10M shares 29.54M shares

Balance Sheet

Concept 2018 Q2 2017 Q2 2016 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $2.900M $8.600M $18.70M
YoY Change -66.28% 230.77% 211.67%
Cash & Equivalents $2.901M $8.576M $18.66M
Short-Term Investments
Other Short-Term Assets $806.0K $168.0K $167.0K
YoY Change 379.76% -76.0% -25.45%
Inventory $36.19M $26.94M $28.55M
Prepaid Expenses $5.466M $2.507M $6.209M
Receivables $171.1M $129.9M $48.04M
Other Receivables $900.0K $0.00 $4.100M
Total Short-Term Assets $228.4M $168.1M $105.6M
YoY Change 35.87% 28.99% 6.68%
LONG-TERM ASSETS
Property, Plant & Equipment $107.7M $101.6M $103.3M
YoY Change 5.94% 2.71% 2.34%
Goodwill $68.50M $10.52M
YoY Change 0.22%
Intangibles $6.620M
YoY Change
Long-Term Investments
YoY Change
Other Assets $3.316M $2.313M $1.972M
YoY Change 43.36% 13.55% 29.91%
Total Long-Term Assets $186.1M $114.5M $115.8M
YoY Change 62.59% 2.65% 2.49%
TOTAL ASSETS
Total Short-Term Assets $228.4M $168.1M $105.6M
Total Long-Term Assets $186.1M $114.5M $115.8M
Total Assets $414.4M $282.5M $221.4M
YoY Change 46.69% 16.84% 4.45%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $24.82M $15.14M $10.77M
YoY Change 63.95% -13.86% -39.28%
Accrued Expenses $45.30M $36.30M $40.60M
YoY Change 24.79% 20.2% 13.73%
Deferred Revenue
YoY Change
Short-Term Debt $8.500M $0.00 $0.00
YoY Change -100.0% -100.0%
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $85.71M $57.33M $51.39M
YoY Change 49.49% -40.81% -14.99%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00 $0.00
YoY Change
Other Long-Term Liabilities $1.970M $2.880M $3.223M
YoY Change -31.6% -20.24% -14.98%
Total Long-Term Liabilities $1.970M $2.880M $3.223M
YoY Change -31.6% -20.24% -14.98%
TOTAL LIABILITIES
Total Short-Term Liabilities $85.71M $57.33M $51.39M
Total Long-Term Liabilities $1.970M $2.880M $3.223M
Total Liabilities $116.4M $91.84M $87.27M
YoY Change 26.79% -29.09% -8.65%
SHAREHOLDERS EQUITY
Retained Earnings $362.3M $244.0M $187.2M
YoY Change 48.5% 46.91% 56.83%
Common Stock $122.2M $120.2M $120.4M
YoY Change 1.68% 0.43% 2.67%
Preferred Stock
YoY Change
Treasury Stock (at cost) $186.5M $173.5M $173.5M
YoY Change 7.51% 0.0% 44.32%
Treasury Stock Shares 11.24M shares 5.494M shares 5.494M shares
Shareholders Equity $298.0M $190.7M $134.2M
YoY Change
Total Liabilities & Shareholders Equity $414.4M $282.5M $221.4M
YoY Change 46.69% 16.84% 4.45%

Cashflow Statement

Concept 2018 Q2 2017 Q2 2016 Q4
OPERATING ACTIVITIES
Net Income $42.82M $28.78M $12.63M
YoY Change 48.77% 21.32% 56.18%
Depreciation, Depletion And Amortization $4.600M $3.700M $3.600M
YoY Change 24.32% 2.78% 2.86%
Cash From Operating Activities $96.40M $86.50M $1.700M
YoY Change 11.45% -14.27% -96.63%
INVESTING ACTIVITIES
Capital Expenditures -$12.30M -$2.800M -$6.100M
YoY Change 339.29% 0.0% 22.0%
Acquisitions
YoY Change
Other Investing Activities $100.0K $0.00 $0.00
YoY Change -100.0%
Cash From Investing Activities -$12.20M -$2.800M -$6.000M
YoY Change 335.71% 7.69% 20.0%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -84.00M -77.00M 100.0K
YoY Change 9.09% -22.69% -100.24%
NET CHANGE
Cash From Operating Activities 96.40M 86.50M 1.700M
Cash From Investing Activities -12.20M -2.800M -6.000M
Cash From Financing Activities -84.00M -77.00M 100.0K
Net Change In Cash 200.0K 6.700M -4.200M
YoY Change -97.01% -615.38% -223.53%
FREE CASH FLOW
Cash From Operating Activities $96.40M $86.50M $1.700M
Capital Expenditures -$12.30M -$2.800M -$6.100M
Free Cash Flow $108.7M $89.30M $7.800M
YoY Change 21.72% -13.89% -85.92%

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us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="PAGE-BREAK-INSIDE: avoid"> <td valign="top" width="4%" align="left"><b>4.</b></td> <td valign="top" align="left"> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt" align="left"><b>NEW ACCOUNTING STANDARDS NOT YET ADOPTED</b></p> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> In June 2018, the FASB issued ASU <font style="WHITE-SPACE: nowrap">No.&#xA0;2018-07,</font> &#x201C;<i>Compensation &#x2013; Stock Compensation (Topic 718)</i>.&#x201D; The ASU expands the scope of Topic 718, which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods or services. The ASU supersedes Subtopic <font style="WHITE-SPACE: nowrap">505-50,</font> &#x201C;<i>Equity&#x2014;Equity-Based Payment to <font style="WHITE-SPACE: nowrap">Non-Employees</font></i>.&#x201D; Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU is effective for fiscal years beginning after December&#xA0;15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company intends to adopt the guidance on January&#xA0;1, 2019 and does not believe adoption will have a material impact on its financial condition or results of operations.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"> In January 2017, the FASB issued ASU <font style="WHITE-SPACE: nowrap">No.&#xA0;2017-04,</font> &#x201C;<i>Intangibles&#x2014;Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment</i>.&#x201D; The guidance removes Step 2 of the goodwill impairment test and eliminates the need to determine the fair value of individual assets and liabilities to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit&#x2019;s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The guidance will be applied prospectively, and is effective for annual and interim goodwill impairment tests in fiscal years beginning after December&#xA0;15, 2019. Early adoption is permitted for any impairment tests performed on testing dates after January&#xA0;1, 2017. The Company intends to adopt the guidance on January&#xA0;1, 2020 and does not believe adoption will have a material impact on its financial condition or results of operations.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt"> In February 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">No.&#xA0;2016-02,</font> &#x201C;<i>Leases (Topic 842),</i>&#x201D; and issued a subsequent amendment to the initial guidance in January 2018 within ASU <font style="WHITE-SPACE: nowrap">No.&#xA0;2018-01.</font> The standard requires lessees to recognize leases on the balance sheet as a <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">right-of-use</font></font> asset and a lease liability, other than leases that meet the definition of a short-term lease. The liability will be equal to the present value of the lease payments. The asset will be based on the liability, subject to adjustment. Currently, under existing U.S. generally accepted accounting principles, the Company does not recognize on the balance sheet a <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">right-of-use</font></font> asset or lease liability related to its operating leases. For income statement purposes, the leases will continue to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) and finance leases will result in a front-loaded expense pattern (similar to current capital leases). The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December&#xA0;15, 2018. Early adoption is permitted. The standard must be adopted using the modified retrospective transition method and provides for the option to elect a package of practical expedients upon adoption. The Company intends to adopt the standard in the first quarter of fiscal 2019 and has begun the process of assessing its lease population and the impact of adoption of the standard on its consolidated financial statements and related note disclosures. The Company has not made any decision on the option to elect adoption of the practical expedients.</p> </div>
dei Document Fiscal Period Focus
DocumentFiscalPeriodFocus
Q2
dei Document Fiscal Year Focus
DocumentFiscalYearFocus
2018
dei Document Type
DocumentType
10-Q
us-gaap Effective Income Tax Rate Continuing Operations
EffectiveIncomeTaxRateContinuingOperations
0.237 pure
us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
1.35
us-gaap Effective Income Tax Rate Reconciliation At Federal Statutory Income Tax Rate
EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate
0.21 pure
dei Entity Central Index Key
EntityCentralIndexKey
0001069878
dei Entity Registrant Name
EntityRegistrantName
TREX CO INC
dei Document Period End Date
DocumentPeriodEndDate
2018-06-30
us-gaap Earnings Per Share Basic
EarningsPerShareBasic
1.36
us-gaap Effective Income Tax Rate Reconciliation Deductions Qualified Production Activities
EffectiveIncomeTaxRateReconciliationDeductionsQualifiedProductionActivities
0.105 pure
us-gaap Effect Of Lifo Inventory Liquidation On Income
EffectOfLIFOInventoryLiquidationOnIncome
0
dei Entity Filer Category
EntityFilerCategory
Large Accelerated Filer
us-gaap Income Taxes Paid Net
IncomeTaxesPaidNet
19618000
us-gaap Increase Decrease In Income Taxes Payable Net Of Income Taxes Receivable
IncreaseDecreaseInIncomeTaxesPayableNetOfIncomeTaxesReceivable
5195000
us-gaap Increase Decrease In Accounts Receivable
IncreaseDecreaseInAccountsReceivable
104250000
us-gaap Interest Expense
InterestExpense
598000
us-gaap Gain Loss On Sale Of Property Plant Equipment
GainLossOnSaleOfPropertyPlantEquipment
29000
us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
104758000
us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
24828000
us-gaap Increase Decrease In Accounts Payable
IncreaseDecreaseInAccountsPayable
14863000
us-gaap Increase Decrease In Accrued Liabilities And Other Operating Liabilities
IncreaseDecreaseInAccruedLiabilitiesAndOtherOperatingLiabilities
-5705000
us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
2616000
us-gaap Gross Profit
GrossProfit
167828000
us-gaap Increase Decrease In Inventories
IncreaseDecreaseInInventories
1664000
us-gaap Interest Paid Net
InterestPaidNet
385000
us-gaap Nature Of Operations
NatureOfOperations
<div> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="PAGE-BREAK-INSIDE: avoid"> <td valign="top" width="4%" align="left"><b>1.</b></td> <td valign="top" align="left"> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt" align="left"><b>BUSINESS AND ORGANIZATION</b></p> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> Trex Company, Inc. (Company) is the world&#x2019;s largest manufacturer of wood-alternative decking and railing products, with more than 25 years of product experience, which are marketed under the brand name Trex<sup style="FONT-SIZE: 85%; VERTICAL-ALIGN: top">&#xAE;</sup>. The Company manufactures and distributes high-performance, <font style="WHITE-SPACE: nowrap">low-maintenance</font> wood/plastic composite outdoor living products and related accessories. A majority of its products are manufactured in a proprietary process that combines reclaimed wood fibers and scrap polyethylene. On July&#xA0;31, 2017, through its newly-formed, wholly-owned subsidiary, Trex Commercial Products, Inc., the Company acquired certain assets and assumed certain liabilities of Staging Concepts Acquisition, LLC (SC Company) and thus expanded its markets to also become a market leader for the design, engineering and marketing of modular and architectural railing, staging, acoustical and seating systems for the commercial and multi-family market, including sports stadiums and performing arts venues. Additional information on the acquisition of SC Company is presented in Note 5. Subsequent to the acquisition, the Company began operating in two reportable segments, Trex Residential Products and Trex Commercial Products. The Company is incorporated in Delaware. The principal executive offices are located at 160 Exeter Drive, Winchester, Virginia 22603, and the telephone number at that address is <font style="WHITE-SPACE: nowrap">(540)&#xA0;542-6300.</font></p> </div>
us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
-17614000
us-gaap Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
-8325000
us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
-1674000
us-gaap Net Income Loss
NetIncomeLoss
79930000
us-gaap Other Noncash Income Expense
OtherNoncashIncomeExpense
406000
us-gaap Number Of Reportable Segments
NumberOfReportableSegments
2 Segment
us-gaap Operating Income Loss
OperatingIncomeLoss
105356000
us-gaap Payments For Repurchase Of Common Stock
PaymentsForRepurchaseOfCommonStock
17230000
us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
17697000
us-gaap Proceeds From Issuance Of Shares Under Incentive And Share Based Compensation Plans Including Stock Options
ProceedsFromIssuanceOfSharesUnderIncentiveAndShareBasedCompensationPlansIncludingStockOptions
405000
us-gaap Proceeds From Sale Of Property Plant And Equipment
ProceedsFromSaleOfPropertyPlantAndEquipment
83000
us-gaap Proceeds From Lines Of Credit
ProceedsFromLinesOfCredit
167750000
us-gaap Repayments Of Lines Of Credit
RepaymentsOfLinesOfCredit
159250000
us-gaap Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Explanation
RevenueRemainingPerformanceObligationExpectedTimingOfSatisfactionExplanation
The Company discloses only the transaction price allocated to its remaining performance obligations on contracts with an original duration greater than one year
us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
377899000
us-gaap Share Based Compensation
ShareBasedCompensation
3645000
us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
62472000
dei Trading Symbol
TradingSymbol
TREX
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
59125258 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
58807694 shares
trex Number Of Stock Based Compensation Plan
NumberOfStockBasedCompensationPlan
1 Plan
CY2017Q2 us-gaap Net Income Loss
NetIncomeLoss
28782000
CY2017Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
44793000
CY2017Q2 us-gaap Gross Profit
GrossProfit
72014000
CY2017Q2 us-gaap Interest Expense
InterestExpense
251000
CY2017Q2 us-gaap Comprehensive Income Net Of Tax
ComprehensiveIncomeNetOfTax
28782000
CY2017Q2 us-gaap Cost Of Goods And Services Sold
CostOfGoodsAndServicesSold
85927000
CY2017Q2 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.49
CY2017Q2 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.49
CY2017Q2 us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
44542000
CY2017Q2 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
15760000
us-gaap Number Of Reportable Segments
NumberOfReportableSegments
1 Segment
CY2017 us-gaap Number Of Reportable Segments
NumberOfReportableSegments
2 Segment
CY2017Q2 us-gaap Allocated Share Based Compensation Expense
AllocatedShareBasedCompensationExpense
912000
CY2017Q2 us-gaap Business Acquisition Pro Forma Earnings Per Share Basic
BusinessAcquisitionProFormaEarningsPerShareBasic
0.49
CY2017Q2 us-gaap Business Acquisitions Pro Forma Revenue
BusinessAcquisitionsProFormaRevenue
172063000
CY2017Q2 us-gaap Business Acquisitions Pro Forma Net Income Loss
BusinessAcquisitionsProFormaNetIncomeLoss
28633000
CY2017Q2 us-gaap Business Acquisition Pro Forma Earnings Per Share Diluted
BusinessAcquisitionProFormaEarningsPerShareDiluted
0.48
CY2017Q2 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
157941000
CY2017Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
27221000
CY2017Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
59100836 shares
CY2017Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
58778916 shares
CY2018Q2 us-gaap Allocated Share Based Compensation Expense
AllocatedShareBasedCompensationExpense
1345000
CY2018Q2 us-gaap Comprehensive Income Net Of Tax
ComprehensiveIncomeNetOfTax
42820000
CY2018Q2 us-gaap Cost Of Goods And Services Sold
CostOfGoodsAndServicesSold
115577000
CY2018Q2 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.73
CY2018Q2 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.73
CY2018Q2 us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest
57233000
CY2018Q2 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
14413000
CY2018Q2 us-gaap Gross Profit
GrossProfit
91115000
CY2018Q2 us-gaap Interest Expense
InterestExpense
369000
CY2018Q2 us-gaap Net Income Loss
NetIncomeLoss
42820000
CY2018Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
57602000
CY2018Q2 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
RevenueFromContractWithCustomerExcludingAssessedTax
206692000
CY2018Q2 us-gaap Selling General And Administrative Expense
SellingGeneralAndAdministrativeExpense
33513000
CY2018Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
59051413 shares
CY2018Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
58760753 shares

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