Trex Co. Inc. sales were up 18 percent to $881 million in 2020 for another record year with more capacity coming on line in 2021 to meet continued demand from home renovators, and possibly soon new home builders.
Usually the fourth quarter is a slower time used by the Winchester, Va.-based company to build inventory.
However, homeowners' desires to upgrade their outdoor living spaces never let up in 2020 and Trex's residential products generated sales of $228 million — a 39 percent increase compared to the prior fourth quarter.
"The fourth quarter performance was driven by continued success of our premium Select and Transcend decking and railings and strong sell-through of our Enhanced product line that has a specific focus on the more cost-conscious consumer who may otherwise choose wood," President and CEO Bryan Fairbanks said Feb. 22 in an after-market quarterly conference call.
Trex has prepared for the increased demand. The company began manufacturing decking in January at its new Winchester facility, which should be completed in June.
That expansion comes on the heels of extra capacity added to the Trex plant in Fernley, Nev., last summer.
"Those are the first new lines this company brought up since ... the 2005-2006 time frame," Fairbanks said.
The two projects are expected to increase capacity by about 70 percent at a time Trex is benefiting from strong trends, including growth in the outdoor living category, renewed focus on the home, the shift in population from urban to suburban and smaller metropolitan areas, and consumer preference for sustainable products.
Trex's long-term strategy is to convert consumers from wood decking to its eco-friendly Trex decking, which is made from 95 percent recycled content, mainly used polyethylene film and wood flour.
The company says it is one of the largest recyclers of PE film in North America, diverting some 2.5 billion pounds of used plastic from landfills in the last decade.
The conversion from wood decking to alternate materials is still in the early stages, providing Trex with a significant runway, according to Fairbanks.
"With the gains in 2020, it's estimated that composite products have approximately 22 percent share of the decking market in linear foot volume terms, leaving significant conversion opportunity," he said.
Trex will add lines in Virginia through the first half of 2021, according to Trex Chief Financial Officer Dennis Schemm.
He said first quarter sales are in track to range from $235 million to $245 million, which would be year-over-year growth of 20 percent.
"We expect growth to expand in the second quarter as our capacity and capabilities increase and in the third quarter as we backfill channel inventory," he added.
With the additional capacity, Trex will focus on working directly with the new homebuilders.
"I think there'll be some news on that probably as we move through later into the year," Fairbanks said.
The company also sees opportunities overseas to export products.
"So that tends to be your larger economies in Europe and Australia. We ship product to over 40 countries around the world, so it's not limited just to those large economies. Some of the smaller countries that once you add them all up together in Central and South America, end up becoming a very nice business for Trex along the way," Fairbanks said.