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Trex trudges through 2006, new production hits snag

Composite lumber manufacturer Trex Co. (Winchester, VA) survived a rough fourth quarter due to new production delays, rising resin costs, and a housing slowdown to post 2006 sales of $337 million, up 14.6% from $294.1 million, but it saw flat net income for 2006 of $2.3 million, the same as 2005. “Considering the soft market conditions, we are particularly pleased with our full-year top-line growth,” Anthony Cavanna, chairman and CEO, said in a statement. The company lost $13.8 million in the fourth quarter, which is a seasonally slow time of year, but it was impeded further due to lower production yields and delays in installing new equipment.
As part of a broader attempt to improve quality and manufacturing, Trex plans to spend $25 million on equipment in 2007, but it doesn’t expect to see the full impact on its bottom line until 2008. In 2006, the company expanded beyond its Winchester, VA and Fernley, NV production facilities, building a greenfield operation in Olive Branch, MS. Because of startup issues, only three extrusion lines were operational at launch, giving the company 23 production lines in all (see the December 2006 MPW article in Tech Trends for initial report). According to industry analyst The Freedonia Group (Cleveland, OH) the demand for decking in the U.S. is forecast to grow more than 2% annually through 2009 to 5.6 billion board feet worth $5.9 billion. Trex and others have been attempting to move beyond decking into items like railing and fencing.—[email protected]
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