Trex Co.’s net loss shrank to $8.7 million in the third quarter from a $22.5 million loss in the year-earlier period on a 2.1% drop in net sales to $60.6 million, the maker of decking and railing products reported today. Excluding special items this year and last, the net loss on a pro-forma basis declined to $4.9 million from an $800,000 profit.
“After a very active and successful first half, the environment for Trex and other companies in the building materials sector changed abruptly in mid-summer,” chairman, president and CEO Ronald W. Kaplan said in a statement. “Consumer sentiment declined rapidly, reducing the solid flow of orders we had been receiving. As a result, we had to decrease capacity utilization, a key contributor to gross margin. … Notwithstanding the tough economic environment, based on recent strengthening in demand and our distributors’ very positive response to our sales programs and pricing strategy, we expect a solid fourth quarter with sales of $60 million compared to $51.2 million in the 2009 period.”
This year’s special items included $3.1 million related to a supplyu contract and an $800,000 addition to Trex’s warranty reserve for decking material made at its Nevada plant before mid-2006. The third quarter in 2009 included a non-cash impairment charge of $23.3 million related to its Olive Branch, Miss., facility.
