The sales of two new Trex Co. Inc. decking products have exceeded expectations, prompting capacity expansions and positioning the Winchester, Va.-based business for double-digit growth.
The new products — Trex Enhance Basics and Naturals — are appealing to consumers who hadn't considered composite decking before, CEO Jim Cline said Oct. 28 in an after-market conference call with investors.
As demand increases for the company's decking made from recycled polyethylene and wood fiber, Trex's two manufacturing plants in Winchester and Fernley, Nev., have been running full tilt. Trex Enhance, in particular, is opening new doors, with its price set to compete better against pressure-treated lumber.
Net sales of Trex products increased 17 percent to $195 million for the third quarter of 2019 when compared to the prior year.
"While accurate third-party market data is not available, we are confident that the level of sales growth that Trex continues to achieve is a clear indication that there is an accelerated conversion of our products from wood," Cline said.
To meet demand, Trex improved manufacturing throughput at its two plants and added capacity in Fernley. But company officials said they need to do more. A multiyear expansion program is underway to increase capacity by at least 70 percent in 2021 and provide manufacturing efficiencies.
"In the third quarter, we installed two additional lines in our Fernley facility. And three lines will begin ramping up in the second quarter of 2021," Cline said. "One additional production line will be in operation in the Winchester facility in the fourth quarter of 2019 and the new building being constructed in Winchester will start ramping up production by early 2021 at the latest."
The extra line in Winchester was shoehorned into the existing facility.
"It will not be as strong from a performance standpoint as a full line, but it will give us additional throughput that I know our business partners will appreciate," Cline said.
Trex officials also warned that both plants will experience downtime during the fourth quarter so infrastructure can be updated for the expansion projects and maintenance work can be done.
"I don't see that is being any impact on our sales in the fourth quarter," Chief Financial Officer Bryan Fairbanks told investment bankers. "Just more of a let the market know how we're going about managing this period of time where we're running our operations at extremely high utilization levels.
For the fourth quarter, Trex officials expect sales of about $160 million, which represents year-over-year growth of 14 percent.
With annual sales of $613 million, Trex is the sixth largest pipe, profile and tubing extruder in North America, according to Plastics News' latest ranking.