TREX CO INC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) | MarketScreener

2022-05-14 18:34:21 By : Ms. Lindy Zeng

Trex offers the following products through Trex Residential:

Decking and Our principal decking products are Trex Transcend Accessories ®

Trex offers the following products through Trex Commercial:

Aluminum Our Trex Signature aluminum railings, made from a minimum of Railing Systems 40 percent recycled content, are a versatile, cost-effective and

Highlights for the three months ended March 31, 2022:

• Increase in net sales of 38.2%, or $93.7 million, to $339.2 million for

• Increase in net income to $71.2 million, or $0.62 per diluted share, for

• Increase in EBITDA (earnings before interest, income tax and depreciation

and amortization) of 48.7%, or $34.5 million, to $105.4 million for the

three months ended March 31, 2022 compared to $70.9 million for the three

• Capital expenditures of $22.3 million at Trex Residential, primarily

related to cost reduction initiatives, the new Arkansas manufacturing

• Repurchase of 833,963 shares of our outstanding common stock during the

three months ended March 31, 2022 under our Stock Repurchase Program for

a total 4.4 million shares repurchased under the program as of March 31,

The following table details surface flaking claims activity related to our warranty:

(1) Claims received include new claims received or identified during the period.

(2) Claims resolved include all claims settled with or without payment and closed

(3) Average cost per claim represents the average settlement cost of claims

closed with payment during the period.

Below is the discussion and analysis of our operating results and material changes in our operating results for the three months ended March 31, 2022 (2022 quarter) compared to the three months ended March 31, 2021 (2021 quarter).

Selling, General and Administrative Expenses

We finance operations and growth primarily with cash flows from operations, borrowings under our revolving credit facilities, operating leases and normal trade credit terms from operating activities. At March 31, 2022 we had $115.2 million of cash and cash equivalents.

1 EBITDA represents net income before interest, income taxes, depreciation and

amortization. EBITDA is not a measurement of financial performance under

accounting principles generally accepted in the United States (GAAP). We have

included data with respect to EBITDA because management believes it

facilitates performance comparison between the Company and its competitors,

and management evaluates the performance of its reportable segments using

several measures, including EBITDA. Management considers EBITDA to be an

important supplemental indicator of our core operating performance because it

eliminates interest, income taxes, and depreciation and amortization charges

to net income or loss. In relation to competitors, EBITDA eliminates

differences among companies in capitalization and tax structures, capital

investment cycles and ages of related assets. For these reasons, management

believes that EBITDA provides important information regarding the operating

performance of the Company and its reportable segments.

financial measures should be viewed in addition to, and not as an alternative

for, the Company's reported results prepared in accordance with GAAP and are

not meant to be considered superior to or a substitute for our GAAP results.

ources and Uses of Cash. The following table summarizes our cash flows from operating, investing and financing activities (in thousands):

Net cash provided by (used in) operating activities $ 73,879 $ (142,574 ) Net cash used in investing activities

Net cash used in financing activities of $77.5 million in the 2022 quarter consisted primarily of repurchases of our common stock of $77.9 million.

At March 31, 2022, we had no outstanding borrowings under the revolving credit facilities and borrowing capacity under the facilities of $350 million.

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