Record sales of composite wood decking manufactured by Trex Co. Inc. appear to have boosted market share for the Winchester, Va.-based business compared to both wood, the entrenched material, and other engineered materials.
Trex's net sales for the third quarter increased to $140.2 million, up 32 percent over the prior year, with $9 million in sales of decorative rail products from the recently acquired Stadium Consolidation LLC.
Trex generated $93 million in operating cash flow, which allowed it to pay $71.5 million in cash for Stadium Consolidation during the quarter, Chief Financial Officer Bryan Fairbanks said in an Oct. 30 quarterly results call with financial investors.
Sales of the company's decking lines, which are made from reclaimed wood and recycled polyethylene, increased 23 percent due to a robust remodeling sector and homeowners choosing composite wood products, Fairbanks said.
In 2014, wood decking and railing accounted for 84 percent of residential sales, Trex CEO James Cline said in the same call. To chip away at that share, Trex rolled out a national advertising campaign in 2015 promoting the low maintenance advantages of composite decking. Other composite decking manufacturers focused on similar marketing messages. Cline said Trex appears to have benefited from that, too.
"This increased industry spend has driven greater demand for composites," Cline said. "Based on data from Principia Partners, Trex has gained 4 percent of additional market share of the residential composite market from 2014 to 2016. This growth is a result of continuing to take direct share from other manufacturers of composites as well as successfully converting a greater share of wood market to Trex."
However, Cline did not give any specific market share figures and he later added, "We're currently analyzing the data from the latest Principia industry report, which we believe will show that Trex has continued to gain share in composites and from wood."