Composite wood deck maker Trex Co. Inc. put another quarter and year in the record books with sales coming in at $95.3 million for the final three months of 2016 and $479.6 million for all of last year.
That's a 9 percent increase compared to 2015 with broad growth across decking and accessory products for the Winchester, Va.-based business. Net profit for 2016 totaled $67.8 million.
Trex sales continued to edge up last year despite a $7.6 million “planned reduction” in the company's poly film sales and a one-time charge of $1.3 million to “support sales expansion in 2017 and beyond,” company officials told investment bankers during a conference call Feb. 21.
Made from reclaimed wood, sawdust and recycled polyethylene bags, Trex decks are sold mostly in North America through major retailers, including Home Depot and Lowe's, as well as professional lumber yards and distribution partners.
“We are still in the very early innings of our campaign targeting a wood market conversion and are quite pleased with the progress,” Trex CEO Jim Cline said during the call.
Every 1 percent of market share that composites take from wood represents about $50 million, he added. In 2015, alternative-wood decks made up about 16 percent of the decking market compared to 84 percent for wood, according to a Trex presentation for investors.
This year, Trex has had a strong response to its early-buy program and is benefitting from moderate-to-strong growth in the repair-and-remodeling sector. For the first quarter, Cline provided revenue guidance of $144 million.
Trex officials also have said they are watching for chances to penetrate the private label market for decking, which is typically done through a bidding process. Cline was asked to give an update.
“One of the things that we have been very mindful of is that we don't discuss individual customer opportunities that are completed,” he responded. “Certainly, both of the major retailers in the category have been doing a fair amount of review and evaluation of their full product lines, not just private label. At some point, if they see fit, they'll discuss that in detail, but it's not really appropriate for us to have that discussion here.”
Trex also has a pellet business that was launched in 2015. It recently received certification from the International Code Council confirming that two brands of its linear low density polyethylene pellets contain 100 percent post-consumer content. Cline said the certification is beginning to generate interest with bag manufacturers in the U.S. and overseas.
“It remains to be seen how impactful that will be,” Cline said. “At this point, I would not include any significant impact for that in 2017.”
