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Not-real-wood company Trex posts a very real earnings bump

Outside the Trex factory in Winchester, Va., forklift operator Chad Minghini scans a bundle of decking materials in December 2013. Trex on Monday reported quarterly increases in sales and earnings. (Jeffrey MacMillan/Capital Business)

The wood may be fake, but the recent financial success is very real.

In the past three months, Trex, the world’s largest manufacturer of wood-alternative decking and railing, recorded sales of $121.3 million, a 23 percent increase over the $98.6 million in revenue posted during the same period last year and a 10 percent bump over the first quarter.

Profits ticked up, too, from $13.2 million, or 38 cents per share, during the second quarter of 2013 to $15.2 million, or 46 cents per share, during the same stretch in 2014.

The firm’s stock price shot up 15 percent Monday in the hours following the announcement.

Started in 1996 and headquartered in Winchester, Va., the company has its faux-wood offerings stocked in more than 6,700 retail outlets around the world.

Trex chief executive Ron Kaplan in his office at the decking manufacturer’s headquarters in Winchester, Va., in December 2013. Trex sales rose 23 percent in the second quarter compared to the same period last year. (Jeffrey MacMillan/Capital Business)

Its products are composed largely of a mix of wood scraps and sawdust with recycled plastic, much of it from those disposable shopping bags you might take home from Target or Wal-Mart.

During a call with analysts, Ronald W. Kaplan, Trex’s chairman and chief executive, credited the company’s strong second-quarter earnings to pent-up demand for new outdoor decks, a new marketing campaign and the company’s growing distributor network, which includes Home Depot and Lowe’s.

In addition, he noted that Trex recently added a stream of revenue by creating what he described as polyethylene pellets out of some of the company’s leftover plastic materials, which it then sells to plastic bag and film manufacturers.

“One production line is installed and operational,” Kaplan said, while “others are in the pipeline.”

Kaplan added that the company is “beginning to realize the benefits” of a series of procedural changes it adopted earlier this year that are meant to lower its manufacturing costs.

He declined to go into detail regarding the initiatives for fear of sharing strategic secrets with company’s rivals.

“I can see I have competitors listening to this phone call,” Kaplan said.

Looking ahead, Trex’s executives aren’t expecting any sort of slowdown this fall.

Jim Cline, the firm’s chief financial officer, noted that poor weather earlier this year seems to have pushed the peak buying period for the company’s deck products from mid-June to mid-July.

Buoyed by that development, Kaplan said the company expects sales to hit $92 million this quarter. That figure would represent 27 percent growth over last year.

Capital Business is The Post’s publication focusing on the region’s business community. For a daily roundup of Washington business news, sign up for CapBiz A.M at

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.



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