TREX - Trex Company Inc. (TREX) Q1 2024 Earnings Call Transcript

2024-05-09 22:11:06 ET

Trex Company, Inc. (TREX)

Q1 2024 Earnings Conference Call

May 09, 2024 5:00 PM ET

Company Participants

Casey Kotary – Head of Investor Relations

Bryan Fairbanks – President and Chief Executive Officer

Brenda Lovcik – Senior Vice President and Chief Financial Officer

Amy Fernandez – Senior Vice President, Chief Legal Officer and Secretary

Conference Call Participants

Stanley Elliott – Stifel

Tim Wjos – Baird

Ryan Merkel – William Blair

Rafe Jadrosich – Bank of America

Susan Maklari – Goldman Sachs

Phil Ng – Jefferies

John Lovallo – UBS

Jeffrey Stevenson – Loop Capital

Sid Ramesh – Stephens

Keith Hughes – Truist

Kurt Yinger – D.A. Davidson

Ketan Mamtora – BMO Capital

Michael Rehaut – JPMorgan

Anthony Pettinari – Citi

Matthew Bouley – Barclays

Presentation

Operator

Good evening, and welcome to the Trex Company, Inc. First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Casey Kotary. Please go ahead.

Casey Kotary

Thank you, everyone, for joining us today. With us on the call are Bryan Fairbanks, President and Chief Executive Officer; and Brenda Lovcik, Senior Vice President and Chief Financial Officer. Joining Bryan and Brenda is Amy Fernandez, Senior Vice President, Chief Legal Officer and Secretary, as well as other members of Trex management. The company issued a press release today after market close containing financial results for the first quarter of 2024. This release is available on the company's website. This conference call is also being webcast and will be available at the Investor Relations page of the company's website for 30 days.

I will now turn the call over to Amy Fernandez. Amy?

Amy Fernandez

Thank you, Casey. Before we begin, let me remind everyone that statements on this call regarding the company's expected future performance and conditions constitute forward-looking statements within the meaning of federal securities laws. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see our most recent Form 10-K and Form 10-Q, as well as our 1933 and other 1934 Act filings with the SEC. Additionally, non-GAAP financial measures will be referenced in this call. A reconciliation of these measures to the comparable GAAP financial measure can be found in our earnings press release at trex.com. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

With that introduction, I will turn the call over to Bryan Fairbanks.

Bryan Fairbanks

Thank you, Amy, and good evening. Thank you all for participating in today's call to review our first quarter performance and discuss our business outlook. This was an outstanding quarter for Trex, reflecting our leadership position in the growing outdoor living category. Within the quarter, we demonstrated excellent execution across our organization, along with strong channel demand for Trex branded decking and railing products. First quarter sales came in above the high end of our guidance range. The shift of our Early Buy season added approximately $75 million in incremental sales in the first quarter as our channel partners restocked ahead of the season after ending 2023 with historically low inventories. Beyond a normalized seasonal inventory build, we saw strong growth and contribution from our recent premium decking product launches: Trex Transcend Lineage and Trex Signature.

These additions to our portfolio have continued to gain traction, helping to drive double digit sell through of Trex premium products in the first quarter. Trex's channel partner inventories ending the quarter are at appropriate levels to service consumer demand during the busy decking season. Feedback from our contractor network indicates they have strong backlogs with projects trending towards larger deck sizes and premium products and average lead times ranging from six to eight weeks while many of our TrexPro Platinum's have lead times through late summer. These indicators were shared consistently when our leadership team gathered with over 300 of our largest TrexPro Platinum contractors during the month of April....

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