TREX - Trex falls in premarket trading after Q3 revenue miss

Trex ( NYSE: TREX ) slumped 6.4% in premarket trading Tuesday after reporting revenue that missed Wall Street’s average estimate. The maker of fencing and decking products said revenue slumped by 44% from a year earlier to $188.5 million in Q3, missing estimates by $3.32 million.

The company is among the suppliers of building materials whose shares have declined amid a rise in borrowing costs that make home-buying more expensive. The Federal Reserve this year has raised interest rates to make the U.S. dollar more valuable as inflation hovers at a 40-year high.

Trex reported EPS of $0.14, matching the consensus estimate for the third quarter. Its consolidated gross margin fell to about 25% in Q3 from 38% a year earlier.

“Our distribution and dealer partners used the quarter to service demand requirements, primarily through inventory drawdowns rather than reorders,” Bryan Fairbanks, president and CEO of Trex, said in a regularly scheduled conference call with investors. “Homeowners priced out of moving tend to invest in their existing homes with their existing lower rate mortgages and pursue renovations.”

The company maintained Q4 guidance for net sales of $180 million to $190 million and EBITDA margin of 22% to 25%. It also kept its full-year guidance for an EBITDA margin of 27% to 29% and capital expenditures of $170 million to $180 million, according to an announcement.

Trex's stock this year has fallen 64%, compared with a 15% decline for the S&P 400 mid-cap stock index ( SP400 ).

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