Trex Q3 sales and profits fall drastically

Composite decking manufacturer Trex reported third quarter sales dropped dramatically to $188 million compared to sales of $336 million in the third quarter 2021.

Residential net sales were $178 million compared to $319 million in the 2021 quarter. The decrease in Trex Residential net sales was primarily due to a decline in volume. 

Trex noted that our channel partners “rightsized their inventories and met demand partially through inventory drawdowns, rather than reordering products” during the quarter.

The Winchester, Va.-based company’s commercial division contributed $11 million to consolidated net sales.

Trex also posted a net income of $14 million for the quarter, falling from a net income of $74 million for the same period a year ago.

The manufacturer reported a $1.2 million severance charge for the quarter related to employee count reductions in the quarter.

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The Bottom Line: A big dropoff in consumer demand leads to Trex profits plummeting to $14 million in the third quarter.

What the CEO said: “Third quarter sales and EBITDA were in line with our expectations which we signaled last quarter, as our channel partners were able to meet demand requirements through drawdowns of existing inventory. Responding quickly to this dynamic, Trex immediately took measures to reduce production levels, right-size our employee base, and implement cost efficiency programs. While reducing our employee base, we have retained our most experienced manufacturing talent, preserving our ability to quickly and efficiently ramp up production as demand rebounds," said Bryan Fairbanks, president and CEO of Trex.

We believe the actions we have taken will not only allow us to navigate effectively through any potential economic slowdown but also position Trex for enhanced growth and profitability when demand resumes,” Fairbanks added.

Company info: Click here to read the full third quarter 2022 financial report from Trex.