Trex (TREX) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales reached $340 million, exceeding guidance due to strong demand for premium products, successful new product launches, and pro-dealer conversions, with new products accounting for 22% of trailing 12-month sales, more than double last year’s level.

• Market leader in composite decking with 13% share of the $8B U.S. decking & railing category and strong brand recognition across consumer and professional channels.

• Investments in branding, marketing, and product innovation, including new heat-mitigating technology and expanded product lines, supported growth.

• Arkansas manufacturing campus began producing recycled plastic pellets, enhancing efficiency, reducing input costs, and supporting sustainability leadership.

• International expansion ongoing, with sales in 40+ countries and focus on key growth markets.

Financial highlights

• Q1 2025 net sales were $340 million, down 9% year-over-year due to a $40 million prior-year channel inventory build that did not repeat.

• Gross profit was $138 million (gross margin 40.5%), down from $170 million (45.4%) last year; adjusted gross profit was $142 million.

• Net income was $60 million ($0.56 per diluted share), down 32% year-over-year; adjusted net income was $64 million ($0.60 per share).

• Adjusted EBITDA was $101 million, down 24% from $133 million; Q1 2025 adjusted EBITDA margin was approximately 29.8%.

• SG&A expenses were $56 million (16.5% of sales), up from $51 million (13.5%), reflecting investments in branding and innovation.

Outlook and guidance

• Full-year 2025 net sales growth expected at 5%-7%, with adjusted EBITDA margin above 31%.

• Q2 2025 revenue guidance is $370–$380 million, with margins expected to approximate Q1 levels.

• SG&A to be about 16% of net sales; interest expense under $2 million; depreciation $55-$58 million; effective tax rate 25%-26%.

• Capital expenditures projected at $190–$210 million for 2025, mainly for Arkansas campus and system upgrades.

• Anticipates strong year-over-year comparisons in the second half as temporary margin impacts subside and gross margins improve.