Trex Company, Inc. Q4 FY2025 earnings call

• Bryan Fairbanks noted Trex finished 2025 with strong Q4 results and 2% y-o-y sales growth, with products introduced over 36 months showing robust growth. The multiyear railing strategy had double-digit growth in 2025. The Arkansas campus construction continued, reducing reliance on external sourcing. Strengthened distribution network with expanded relationships. Adam Zambanini discussed focusing on execution and innovation, including the launch of Trex Refuge decking. Prithvi Gandhi reviewed financial results, including inventory accounting change from LIFO to FIFO and warranty reserve estimate change.

In the fourth quarter, net sales were $161 million, down 4% y-o-y. Full year 2025 net sales totaled $1.17 billion, up 2% y-o-y. Products introduced over the last 36 months represented 24% of 2025 sales, up from 18% in 2024. Railing had robust double-digit growth in 2025. Gross profit in Q4 2025 was $49 million, down from $71 million, with gross margin at 30.2% vs. 43% in prior year. Full year 2025 net income was $190 million vs. $238 million in 2024. Operating cash flow in 2025 was $358 million vs. $144 million in prior year. Capital expenditures in 2025 were $233 million, primarily for the Arkansas facility.

For full year 2026, expect net sales in range of $1.185 billion to $1.23 billion (low single-digit to mid-single-digit growth). Adjusted EBITDA expected to range from $315 million to $340 million. SG&A expenses expected to be ~18% of net sales. Interest expense expected to be $10 million to $12 million. Depreciation and amortization ~$85 million. Effective tax rate ~25.5% to 27%. Capital expenditures projected to be $100 million to $120 million. Q1 2026 net sales expected in range of $335 million to $345 million.

Q: John Lovallo asked about implied growth and decking/railing growth.

A: Bryan Fairbanks said railing expected double-digit growth, decking also seeing benefits from new programs.

Q: Susan Maklari asked about spring outlook and data/digital transformation.

A: Bryan Fairbanks said contractors still booked out in some areas, marketing metrics solid, digital transformation showing benefits.

Q: Philip Ng asked about top line revenue guidance and bundling.

A: Bryan Fairbanks and Adam Zambanini discussed pricing, shelf space wins, and bundling including fasteners.

Q: Ketan Mamtora asked about PVC products and sell-through.

A: Unknown executive discussed PVC and targeting market share.

Q: Keith Hughes asked about railing attachment rate and portfolio.

A: Bryan Fairbanks and unknown executive discussed market share as a better metric and unbeatable railing portfolio.

Q: Ryan Merkel asked about gross margin and marketing spend.

A: Unknown executive discussed gross margin and marketing tactics.

Q: Collin Verron asked about industry growth and gross profit margin bridge.

A: Bryan Fairbanks discussed industry growth and gross margin factors.

Q: Trevor Allinson asked about railing business size and growth rate vs market.

A: Bryan Fairbanks said railing not a separate segment, Trex expected to outperform market.

Q: Michael Rehaut asked about composite decking share and distribution shifts.

A: Adam Zambanini discussed composite decking share and distribution benefits.

Q: Reuben Garner asked about shelf space costs and contractor agreements.

A: Bryan Fairbanks said no costs in Q4, contractor agreements have mix.

Q: Trey Grooms asked about EBITDA margin and strategic changes.

A: Bryan Fairbanks and Adam Zambanini discussed EBITDA margin drivers and strategic focus on innovation.

Q: Adam Baumgarten asked about gross margin number.

A: Prithvi Gandhi said full year gross margin around mid-37%.

Q: Matthew Bouley asked about revenue cadence.

A: Bryan Fairbanks discussed revenue cadence and channel inventories.

Q: Steven Ramsey asked about railing SKUs and Arkansas impact on incentives.

A: Bryan Fairbanks discussed railing SKUs and incentives being in right place