Trex Company — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales increased 26.0% year-over-year to $360 million from $285 million in the prior-year period.
• Gross margin was 36.0% compared to 40.5% in the prior year; adjusted gross margin was 36.9%.
• Net income was $52 million ($0.52 per diluted share), compared to $52 million ($0.48 per diluted share) in the prior year.
• Adjusted net income was $56 million, with adjusted diluted earnings per share of $0.55, compared to $55 million and $0.51 in the prior year.
• Adjusted EBITDA increased 10% to $100 million from $90 million in the prior-year period.
• Free cash flow for the quarter was $135 million, driven by strong operating performance, seasonal working capital benefits, and lower capital expenditures.
• Selling, general, and administrative (SG&A) expenses were $56 million (15.7% of net sales), up from $45 million (15.8% of net sales) in the prior year.
• The company repurchased approximately 1.2 million shares for $55 million during the quarter.
• The company repaid $83 million outstanding under its revolving credit facility.
• Total share repurchases for 2026 are anticipated to reach approximately $300 million, with the $150 million Board-authorized program expected to be completed by year-end.

Guidance and Future Outlook:

• Full-year 2026 net sales guidance raised to a range of $1,296 million to $1,306 million.
• Full-year 2026 adjusted EBITDA guidance raised to a range of $355 million to $360 million.
• Full-year 2026 depreciation and amortization is estimated at approximately $85 million.
• Full-year 2026 adjusted SG&A is estimated at approximately 17% of net sales.
• Full-year 2026 interest expense is estimated between $4 million and $6 million.
• Full-year 2026 effective tax rate is estimated between 26.0% and 27.0%.
• Full-year 2026 capital expenditures (CapEx) are estimated at approximately $100 million.
• Fourth quarter 2026 net sales guidance is set between $175 million and $185 million.
• The Arkansas facility is on schedule to operate at approximately 50% of its existing decking production capacity by year-end.

Business Segments and Product Lines:

• Growth was overwhelmingly volume-driven with minimal benefit from pricing.
• The Trex Enhance® product line led broad-based volume growth.
• Approximately $30 million in revenue was attributed to initial distribution load-ins.
• The company expanded its outdoor living portfolio with an upgraded Trex Lighting collection and new finishing solutions, including aluminum gates and marine-grade stainless-steel fastening options.
• The company celebrated its 30th anniversary and outlined a strategy to double the business over the next four years.
• Brian J. Taylor was appointed as the first Chief Commercial Officer (CCO), consolidating sales, marketing, and information technology functions.
• A strategic relationship was announced with Do it Best Group, granting Do it Best members and True Value retailers access to Trex products and the cooperative's rebate program.

Market and Competitive Landscape:

• Growth was driven primarily by Trex-specific initiatives and continued market share gains rather than broader end-market condition improvements.
• Demand remained strong across all levels of decking products, supporting the wood conversion strategy.
• The company maintains the industry's strongest distribution network, selling through more than 6,700 retail outlets across six continents.
• The enhanced distribution strategy was executed successfully, completing inventory placements with new and expanded partners while reducing inventory held by former partners.
• Overall channel inventory remained comparable to the prior year despite temporary increases at selected partners during the transition.

Risks and Challenges:

• Gross margin performance was impacted by higher transportation-related input costs due to increased diesel prices and higher depreciation from recent capacity investments.
• Arkansas facility startup costs were higher than anticipated due to temporary mechanical issues, though these have been resolved.
• The company faces risks related to the availability and cost of raw materials, including scrap polyethylene and wood fiber.
• Potential risks include inflation, oil prices, tariffs, and the impact of seasonal and weather-related demand fluctuations.
• Risks associated with the startup, construction, and operational transition of the Arkansas facility remain.
• Risks related to changes in the distribution model, including potential disruption to sales channels and customer relationships, are noted.

Management Commentary and Tone:

• CEO Adam Zambanini described the quarter as "exceptional," citing successful execution of the enhanced distribution strategy and record revenue.
• Management expressed confidence that underlying performance was driven by Trex-specific initiatives and market share gains.
• CFO Prith Gandhi highlighted significant free cash flow generation and a focus on capital allocation priorities including growth investment, share repurchases, and strategic acquisitions.
• Management noted that the transition to the new distribution model was completed with minimal disruption and has strengthened route-to-market capabilities.
• The tone reflected strong confidence in strategic initiatives, demand momentum, and the ability to capitalize on future market share opportunities.

Other Key Points:

• The Arkansas facility was designed with future expansion in mind to allow for efficient addition of production lines and capacity increases.
• The company released its 2025 Sustainability Report highlighting commitments to product quality, durability, and sustainable manufacturing practices.
• The company was named America's Most Trusted® Outdoor Decking for the past six years (2021-2026).
• The company holds a place on Barron's list of the 100 Most Sustainable U.S. Companies (2024 and 2025).
• The company was named the Sustainable Brand Leader in the decking category by Green Builder Media for the 16th consecutive year.
• Non-GAAP financial measures provided include adjusted gross profit, adjusted net income, adjusted diluted earnings per share, adjusted EBITDA, and free cash flow.