Trex Company, Inc. Q3 FY2025 earnings call

• Positioning in pro and home center channels remains a long-term advantage. • New products accounted for 25% of trailing 12-month sales, up from 18% in 2024 Q3. • Railing strategy, in its second year, yielded positive results with Q3 sales in line with expectations. • Profitability was strong with gross profit benefiting from higher volumes and efficiencies, adjusted EBITDA up 33%. • Launched new Performance-Engineered for Your Life Outdoors campaign, seeing increases in purchase intent. • Progress on Arkansas facility with production rates and yields surpassing initial expectations. • Adjusted SG&A spending related to branding, IT, and new product innovation.

In the third quarter of 2025, net sales were $285 million, an increase of 22% compared to $234 million in 2024. Gross profit was $115 million, a 23.9% increase from $93 million, with gross margin at 40.5% (a 60 basis point expansion from prior year). New products accounted for 25% of the trailing 12-month sales, demonstrating alignment with consumer preferences. Railing sales were robust, contributing to the overall growth.

• Revised full-year net sales guidance: $1.15 billion to $1.16 billion, flat with prior year. • Adjusted EBITDA margin guidance: 28% to 28.5%. • SG&A expenses expected to be 16.5% to 17% of net sales. • Capital expenditures projected to be approximately $210 million to $220 million for the full year. • Anticipate muted fourth quarter sales with similar sell-through to third quarter.

• Market uncertainties including consumer demand easing post-July. • Competitive spending from other market participants affecting market share and pricing. • Economic factors such as job security concerns impacting consumer confidence. • Impact of tariffs on new products (aluminum, steel) affecting gross margin mix.

Q: What was the sell-through in the third quarter and where was the slowdown?

A: On a year-to-date basis, low single-digit sell-through. Slowdown was across all channels after July.

Q: Why is marketing spend increasing?

A: Important in softer market to get Trex name in front of buyers, with competitive spending from others.

Q: Any offsets to gross margin headwinds in 2026?

A: Continuous improvement programs offset some costs, but depreciation from Arkansas facility and railing mix not offset in 2026.

Q: Thoughts on share shifts among competitors?

A: Not seeing indications of share shifts at ground level.

Q: How will 18% SG&A next year translate to demand?

A: Increased branding led to higher purchase indicators, but need economic tailwind to convert to sales growth.