TREX CO INC Q4 FY2024 earnings call

• New product development: Prioritized new products, including Transcend Lineage with SunComfortable technology, new Select Decking, and expanded railing portfolio. Products launched in last 36 months made up ~20% of full-year revenues.
• Distribution partnerships: Strengthened relationships with distributors like Snavely Forest Products, Boise Cascade, Weyerhaeuser, etc., expanding market reach in key geographies.
• Branding: Substantial investments in branding, named America's most trusted outdoor decking for fifth year. Highlighted outdoor living trends and product advantages like SunComfortable technology.
• Arkansas campus: Recycled plastic processing operation scheduled to go online in Q1 2025, reducing reliance on external recycled materials, making Arkansas the most efficient production site.

In the fourth quarter of 2024, Trex saw net sales of $168 million, a 14% decrease from the prior year. For the full-year 2024, net sales totaled $1.2 billion, a 5% increase. EBITDA was $360 million, up 10% from the prior year. Premium decking products had strong demand in the fourth quarter, with entry-level products showing sequential growth. Railing product sales are expected to have double-digit growth in 2025. Products launched in the last 36 months accounted for approximately 20% of full-year revenues.

• Full-year 2025 net sales expected $1.21 billion to $1.23 billion, 5%-7% growth year-over-year.
• Adjusted EBITDA margin expected over 31% excluding one-time costs like Arkansas startup, digital transformation, and railing transition costs (~$15M-$20M).
• SG&A expenses expected ~16% of net sales. Interest expense $4M-$6M, depreciation $60M-$63M. Effective tax rate ~25%-26%.
• Q1 2025 revenues guided $325M-$330M, with ~$40M shifting from Q1 to rest of year due to revised inventory strategy.

• Forward-looking statements subject to risks in SEC filings. Actual results may differ from forward-looking statements.
• Tariff impacts on cost of goods sold, with efforts underway to mitigate through supplier negotiations and dual sourcing.
• Digital transformation restructuring costs associated with hiring new CIO and accelerating internal and channel digital initiatives.

Q: Talk about distribution changes and future outlook A: Bryan Fairbanks said 2025 will be calmer, with distribution changes related to decking and railing alignment, and infill of distributors to occur.

Q: Railing growth and visibility A: Bryan Fairbanks mentioned double-digit growth in railing sales, with three stages of commitment including getting product to market, pro-channel and retail placement, and end consumer pull-through.

Q: Demand acceleration at lower price points A: Bryan Fairbanks noted high single-digit overall growth in fourth quarter, with premium side up double-digit, and confidence in 5%-7% growth due to new products and channel support.

Q: 2Q sales flat and inventory strategy A: Bryan Fairbanks said $40M shift from Q1 to rest of year, with Q2 sales flat due to revised inventory strategy to manage channel inventory.