Trex Company, Inc. · NYSE:TREX
Trex — Q2 2020 Earnings Presentation
23 slides from Trex's earnings presentation, August 2020
Slide 1: Investor Presentation
NYSE:TREX Investor Presentation August 2020
Slide 2: Safe Harbor / Non-GAAP Measures
Safe Harbor / Non-GAAP Measures This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to risks and uncertainties that could cause the Company’s actua
Slide 3: 25 Years and Counting of Brand Leadership
25 Years and Counting of Brand Leadership Engineering what’s next in outdoor living® – Reinforcing Trex leading presence in the decking market Drive conversion from wood – Utilizing marketing, product, and lead generation – Decks.com to target wood buyers Make the Trex® decision that’s right for you
Slide 4: Trex Company Strategic Growth Drivers
Trex Company Strategic Growth Drivers Disciplined investment strategies driving consistent profitable growth Leveraging the Expanding Optimizing Capital Trex Brand Reach Operations Allocation • Consumer • Strong • Unique • Reinvesting in engagement distribution recycling the business • Channel netwo
Slide 5: Solid Long Term Results
Solid Long Term Results Consolidated Adjusted Sales ($Ms) Consolidated Adjusted EBITDA ($Ms) Consolidated Adjusted EBITDA Margin $780 $745 $235 $690 30.1% 28.2% 28.8% 27.1% $199 $202 26.7% $565 $159 22.0% $480 $441 $128 $97 2015 2016 2017 2018** 2019 TTM Q2 2015 2016 2017 2018** 2019*** TTM Q2 2015
Slide 6: Residential Market Opportunity
Residential Market Opportunity Growing desire for unique outdoor living spaces Cumulative Trex Residential Net Sales(2) – Alternative materials to wood decking are projected to and Remodeling Activity(3) Growth experience above average annual gains in demand (1) 80% – Core market size $6 billion (3)
Slide 7: Wood is our #1 Competitor
Wood is our #1 Competitor 2019 Market Share Composite ~20% Wood +1% Market Share increase = ~80% $50M in annual composite sales 2019 market share data based on company estimate. 7
Slide 8: New Products, New Consumers
New Products, New Consumers Do-It-Yourself Consumers • Incremental focus for Trex • ~60% of deck market • Practical, thrifty • Decisions driven by price & maintenance • Products available in Pro & Retail Channels • Lightweight boards for easy installation • Leverage decks.com to reach new consumers
Slide 9: 2020 Decking Product Platform
2020 Decking Product Platform NEW in 2019 $1.75/LF Retail $2.50/LF Retail $2.50/LF Retail $4.25/LF Retail B A S I C S E A R T H T O N E S E A R T H T O N E S N A T U R A L S & T R O P I C A L S Priced to take share The beauty of wood The perfect pairing Elevated aesthetics from treated lumber with t
Slide 10: TREX: A Superior Value
TREX: A Superior Value Trex Decking vs. Wood Attractive Lifetime Economics Cost per Linear Foot $5,264 $0.85 $1.75 $2.50 $4.25 Trex High-Performance Decking Value Proposition Premium to Wood 1x 2x 3x 5x $4,688 Perpetual $2,883 Maintenance: Sand, $2,883 Paint, Stain & Seal $1,696 $1,696 $1,187 $1,187
Slide 11: Industry Leading Reach
Industry Leading Reach • Over 6,700 stocking locations HD & Lowe’s Traditional Distribution • Strongest distribution Distribution Centers Locations channel in industry HD & Lowe’s Pro Lumber Yards • Well-positioned to take on Retail Locations wood nationally Distribution Partner Locations Contractor
Slide 12: Full Suite of Outdoor Living Products
Full Suite of Outdoor Living Products Licensed Products 12
Slide 13: International Growth
International Growth • Targeted approach to new markets • Establish distributors in key markets • Roll-outs in markets with higher GDP, personal income and desire for outdoor living solutions • Apply Trex marketing capabilities to key target market opportunities – TV advertising, online ads, and pai
Slide 14: Trex Commercial Products
Trex Commercial Products • Enhances Trex presence in the Commercial Railing Market – Core market size $1 billion • Market Leader in Stadium Railing – Soccer Stadium presence Architectural Aluminum Railing Railing Systems Systems – Ascent® product awarded Best New Product by Glass Magazine • Diversif
Slide 15: Capital Allocation Strategy
Capital Allocation Strategy Putting Free Cash Flow to work through Investment in Core Business and Strategic Opportunities • $259M capital expenditures since 2015 $1.2 billion Intrinsic Gain from $276 million share repurchases since 2013 • Current projects include $200M capacity $1,600 expansion pro
Slide 16: ESG Highlights
ESG Highlights Earth-friendly Manufacturing Process Manufacturing Trex vs. wood Highlights Lifecycle • Decking is made from 95% recycled content; expansive recycling network 36% FEWER – Estimated annual recycled plastic film and 160 Million GHG Emissions reclaimed wood fiber used: 800+ million pound
Slide 17: ESG Highlights
ESG Highlights Team Sustainability Community Sustainability • Offering competitive benefits and incentives to Meeting our local communities needs encourage employee retention and engagement through focused charitable giving – Voluntary turnover rate for employees with more than one year of • Engagem
Slide 18: Response to COVID-19
Response to COVID-19 Protecting our Helping our Supporting our Optimizing our Colleagues Communities Channels/Customers Business Prioritizing health Implementing All facilities fully and safety Monetary donations business continuity operational both locally and plans Physical distancing nationally a
Slide 19: Investment Summary
Investment Summary Addresses one of the fastest growing markets for attractively-designed, customized outdoor living spaces – Brand Leader in the Industry – Consistent Market Share Gains against wood and within the composite industry – National Footprint in commercial railing market Continuous engin
Slide 20: Appendix
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Slide 21: Summary Financials
Summary Financials TTM Q2 $ Millions 2015 2016 2017 2018 2019 2020 Adjusted Sales $441 $480 $565 $690 $745 $780 Adjusted Gross Profit $160 $197 $243 $301 $307 $336 Adjusted Gross Margin % 36.4% 41.1% 43.1% 43.6% 41.1% 43.0% Adjusted SG&A $77 $83 $101 $118 $118 $116 % of Net Sales 18% 17% 18% 17% 16%
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q2 TTM Q2 TTM Q2 $ Millions 2015 2016 2017 2018 2019 2019 2020 2019 2020 GAAP Sales $441 $480 $565 $684 $745 $206 $221 $692 $780 2018 Net Sales charge for product repositioning $6 $6 Adjusted Sales $441 $480 $565 $690 $745 $206 $221 $698 $780 GAAP Gross Profit $155 $187 $
Slide 23: Trex Company, Inc. NYSE: TREX
Trex Company, Inc. NYSE: TREX Contacts: Vicky Nakhla (vicky.nakhla@advisiry.com) AdvisIRy Partners 646-625-4800 or Dennis Schemm Vice President and CFO 540-542-6300 © 2020, Trex Company, Inc.