Trex’s Q2 Earnings & Revenues Miss Estimates, Shares Fall

Zacks

Trex Co. Inc. TREX reported second-quarter 2015 earnings of 58 cents per share, which increased 26% from 46 cents in the prior-year quarter. Earnings, however, fell short of the Zacks Consensus Estimate of 61 cents, which led Trex’s shares to lose 13% of their value since reporting results on Aug 3.

Operational Update

Total revenue improved 13% year over year to $137 million in the quarter ahead of management’s guidance of $136 million. Revenues, however, fell short of the Zacks Consensus Estimate of $138 million.

Cost of sales increased 10% year over year to $84 million. Gross profit surged 17% to $53 million from $45 million in the year-ago quarter. Gross margin expanded 130 basis points (bps) to 38.4%. Selling, general and administrative expenses went up 10% year over year to $22.5 million. The company recorded operating income of $30 million, up from $24.7 million in the year-ago quarter.

Financial Update

Trex had cash and cash equivalents of $4.15 million at the end of the second quarter compared with $9.5 million as of 2014-end. In the first half of 2015, the company used cash flow of $28 million in operations compared with cash generated of $11.5 million in the prior-year quarter.

Guidance

Trex expects to generate revenues of $96 million in the third quarter. The prior-year quarter was favorably impacted by a seasonal shift in demand resulting from harsh winter weather that delayed the start to the decking season. The third-quarter 2015 revenue guidance reflects the return to a normal seasonal demand trend. Trex’s trailing twelve month sales guidance through the end of third-quarter 2015 is $428 million, or 12% above the comparable prior-year period.

Winchester, VA-based Trex manufactures and distributes wood/plastic composite products and related accessories, primarily for residential and commercial decking as well as railing applications in the United States.

Currently, Trex carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are Quanex Building Products Corporation NX, Gibraltar Industries, Inc. ROCK and PGT, Inc. PGTI. While Quanex Building sports a Zacks Rank #1 (Strong Buy), Gibraltar Industries and PGT carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research

Be the first to comment

Leave a Reply