Inventories

9 Months Ended

Sep. 30, 2020

5.	INVENTORIES

Inventories valued at LIFO

(last-in,

first-out),

consist of the following (in thousands):


	September 30, 2020			December 31, 2019
Finished goods	$	32,691		$	42,281
Raw materials		36,515			31,686

Total FIFO (first-in, first-out) inventories		69,206			73,967
Reserve to adjust inventories to LIFO value		(19,062	)		(19,062	)

Total LIFO inventories	$	50,144		$	54,905

The Company utilizes the LIFO method of accounting to its Trex Residential wood-alternative decking and residential railing products, which generally provides for the matching of current costs with current revenues. However, under the LIFO method, reductions in annual inventory balances cause a portion of the Company’s cost of sales to be based on historical costs rather than current year costs (LIFO liquidation). Reductions in interim inventory balances expected to be replenished by

year-end

do not result in a LIFO liquidation. Accordingly, interim LIFO calculations are based, in part, on management’s estimates of expected

year-end

inventory levels and costs, which may differ from actual results. Since inventory levels and costs are subject to factors beyond management’s control, interim results are subject to the final

year-end

LIFO inventory valuation. As of September 30, 2020, management estimates that interim inventory balances will be replenished by

year-end

and there were no LIFO inventory liquidations or related impact on cost of sales in the nine months ended September 30, 2020.

Inventories valued at lower of cost (FIFO method) and net realizable value were $1.4 million at September 30, 2020 and $1.2 million at December 31, 2019, consisting primarily of raw materials. The Company utilizes the FIFO method of accounting to its Trex Commercial architectural railing and staging system products.