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| Trex Company, Inc. |
| 20 South Cameron Street, Winchester, VA 22601 * (540) 678-4070 |
| Business Description | The Company is the nation's largest manufacturer of non-wood decking alternative products, which are marketed under the brand name Trex(R). |
| Offering Information Company has | |||
| Trading As | TWP (NYSE) | Industry | Manufacturing (SIC 3089) |
| Type of Stock Offered | Common Shares | Filing Date | 09/11/1998 |
| Domestic Shares Offered | 4,103,000 | Offer Date | 04/07/1999 |
| Foreign Shares Offered | 0 | Filing Range | $10.00 - $12.00 |
| Company Shares | 4,103,000 | Offer Price | $10.00 |
| Selling Shrhldrs Shares | 0 | Gross Spread | $0.700 |
| Gross Proceeds | $41,030,000 | Selling | $0.410 |
| Expenses | $1,250,000 | Reallowance | $0.100 |
| Post-IPO Shares | 13,500,000 | Employees | 190 |
| Primary Underwriting Group | ||
| Underwriter Name | Participation | Underwriter Phone |
| J.C. Bradford & Co. | Lead Manager | (615) 748-9347 |
| Income Statement and Cash Flow Summary | |||||||
| Prior Audited Income |
Latest Unaudited Income | ||||||
| Full Year Audited Figures | 6 Months Ending | ||||||
| Figures in U.S. millions except per share data | 12/31/1995 | 12/31/1996 | 12/31/1997 | 06/30/1997 | 06/30/1998 | ||
| Revenues | - | - | 19.635 | 23.779 | 34.137 | 19.446 | 29.327 |
| Income from Oper. | - | - | 2.423 | 3.044 | 8.371 | 4.859 | 9.370 |
| Net Income | - | - | 2.423 | 2.110 | 5.594 | 3.388 | 8.113 |
| E.P.S | - | - | - | - | - | - | - |
| Revenue Growth (%) | - | - | 21.11 | 43.559 | 50.81 | ||
| Net Income Growth (%) | - | - | -12.92 | 165.12 | 139.46 | ||
| Oper. Profit Margin (%) | - | - | 12.34 | 12.80 | 24.52 | 31.95 | 24.99 |
| Net Profit Margin (%) | - | - | 12.34 | 8.87 | 16.39 | 27.66 | 17.42 |
| Cash Flow - Oper. | 6.52 | 3.84 | 12.48 | ||||
| Cash Flow - Inv. | -3.25 | -1.48 | -4.61 | ||||
| Cash Flow - Fin. | -5.01 | -3.82 | 1.93 | ||||
| Balance Sheet Summary and Financial Ratios | |||||
| Balance sheet as of: 06/30/1998 | Financial Ratios | ||||
| Total Assets | 47.47 | Current Assets | 14.70 | Current Ratio | 3.89 |
| Total Liab. | 33.67 | Current Liab. | 3.78 | Debt Ratio | 70.93% |
| Total Equity | 13.80 | Working Cap. | 10.93 | Debt to Equity Ratio | 2.44 |
| Cash | 11.81 | Return on Assets | 17.09% | ||
| Use Of Proceeds |
The net proceeds from the Offering will be used to repay substantially all of the Company's indebtedness, to redeem all of the Company's outstanding preferred equity, to fund a portion of the LLC Distribution and to provide funds for construction of the Company's second manufacturing facility, expansion of existing operations, working capital, brand development and other general corporate purposes. |
| Legal Counsel Registrar Auditor | |
| Issuer's Law Firm | Hogan & Hartson |
| Bank's Law Firm | McDermott, Will & Emery |
| Auditor | Ernst & Young |
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| Industry Competition |
The residential and commercial decking market in which the Company principally operates is highly competitive. The primary competition for Trex is wood decking, which accounted for approximately 97% of 1997 decking sales (measured by board feet of lumber). The conventional lumber suppliers with which the Company competes in many cases have established ties to the building and construction industry and have well-accepted products. Many of the Company's competitors in the decking market that sell wood products have significantly greater financial, technical and marketing resources than the Company. The Company's ability to compete depends, in part, upon a number of factors outside its control, including the ability of its competitors to develop new non-wood decking alternatives which are competitive with Trex. Although Trex is the only non-wood decking alternative to receive a product building code listing from the NES or any of its three regional members, the Company is aware of several manufacturers of wood/plastic composite products that have publicly announced an intention to seek such a listing. In addition, the Company is aware of at least one manufacturer that has received a regional application listing of its 100% plastic lumber product, which covers specific uses of that product. There can be no assurance that one or more of the Company's competitors will not receive a listing for their non-wood decking alternative products in the immediate future. Any product receiving such a listing could be more competitive with Trex. The Company's failure to compete successfully with its competitors would have a material adverse effect on the Company's business, operating results and financial condition. |
| Business Plan |
The Company's goals are to continue to be the leading producer of a superior non-wood decking alternative product, to increase its market share of the decking market and to expand new products and geographic markets. To attain these goals, the Company employs the following strategies: (i) Continue Brand Name Development, (ii) Expand Distribution Coverage, (iii) Increase Production Capacity, (iv) Invest in Process and Product Development and (v) Increase New Product Development and Export Markets. |