Segment Information

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Information

16. SEGMENT INFORMATION

The Company operates in two reportable segments:

• Trex Residential manufactures wood-alternative decking and residential railing and related products marketed under the brand name Trex®. Trex Residential products are sold to distributors and home centers for final resale primarily to the residential market, which includes replacement, remodeling and new construction related to outdoor living products.

• Trex Commercial designs, engineers, and markets modular and architectural railing and staging systems for the commercial and multi-family market, including sports stadiums and performing arts venues. Trex Commercial products are marketed to architects, specifiers, contractors, and others doing business within the commercial and multi-family market.

The Company’s reportable segments have been determined in accordance with its internal management structure, which is organized based on residential and commercial sales activities. The Company evaluates performance of each segment primarily based on net sales and earnings before interest, income taxes, depreciation and amortization (EBITDA). The Company uses net sales to assess performance and allocate resources as this measure represents the amount of business the segment engaged in during a given period of time, is an indicator of market growth and acceptance of segment products, and represents the segment’s customers’ spending habits along with the amount of product the segment sells relative to its competitors. The Company uses EBITDA to assess performance and allocate resources because it believes that EBITDA facilitates performance comparison between the segments by eliminating interest, income taxes, and depreciation and amortization charges to income. The below segment data for the three months and six months ended June 30, 2022 and June 30, 2021 includes data for Trex Residential and Trex Commercial (in thousands):

Segment Data:

	Three Months Ended June 30, 2022							Three Months Ended June 30, 2021
	Trex Residential		Trex Commercial			Total		Trex Residential		Trex Commercial		Total
Net sales	$	373,922	$	12,327		$	386,249	$	298,632	$	12,964	$	311,596
Net income (loss)	$	89,437	$	(521	)	$	88,916	$	61,089	$	277	$	61,366
EBITDA	$	129,550	$	(410	)	$	129,140	$	91,008	$	627	$	91,635
Depreciation and amortization	$	11,049	$	282		$	11,331	$	9,020	$	258	$	9,278
Income tax expense (benefit)	$	29,180	$	(171	)	$	29,009	$	20,886	$	92	$	20,978
Capital expenditures	$	44,251	$	67		$	44,318	$	36,514	$	224	$	36,738
Total assets	$	846,112	$	41,182		$	887,294	$	807,713	$	91,107	$	898,820

Reconciliation of Net Income to EBITDA:

	Three Months Ended June 30, 2022									Three Months Ended June 30, 2021
	Trex Residential			Trex Commercial			Total			Trex Residential		Trex Commercial		Total
Net income (loss)	$	89,437		$	(521	)	$	88,916		$	61,089	$	277	$	61,366
Interest (income) expense, net		(116	)		—			(116	)		13		—		13
Income tax expense (benefit)		29,180			(171	)		29,009			20,886		92		20,978
Depreciation and amortization		11,049			282			11,331			9,020		258		9,278
EBITDA	$	129,550		$	(410	)	$	129,140		$	91,008	$	627	$	91,635

Segment Data:

	Six Months Ended June 30, 2022							Six Months Ended June 30, 2021
	Trex Residential		Trex Commercial			Total		Trex Residential		Trex Commercial		Total
Net sales	$	701,117	$	24,360		$	725,477	$	531,702	$	25,418	$	557,120
Net income (loss)	$	161,652	$	(1,525	)	$	160,127	$	109,833	$	77	$	109,910
EBITDA	$	236,031	$	(1,466	)	$	234,565	$	161,973	$	575	$	162,548
Depreciation and amortization	$	21,240	$	565		$	21,805	$	15,231	$	472	$	15,703
Income tax expense (benefit)	$	53,243	$	(506	)	$	52,737	$	36,899	$	26	$	36,925
Capital expenditures	$	66,534	$	72		$	66,606	$	93,077	$	1,754	$	94,831
Total assets	$	846,112	$	41,182		$	887,294	$	807,713	$	91,107	$	898,820

Reconciliation of Net Income to EBITDA:

	Six Months Ended June 30, 2022									Six Months Ended June 30, 2021
	Trex Residential			Trex Commercial			Total			Trex Residential		Trex Commercial		Total
Net income (loss)	$	161,652		$	(1,525	)	$	160,127		$	109,833	$	77	$	109,910
Interest (income) expense, net		(104	)		—			(104	)		10		—		10
Income tax expense (benefit)		53,243			(506	)		52,737			36,899		26		36,925
Depreciation and amortization		21,240			565			21,805			15,231		472		15,703
EBITDA	$	236,031		$	(1,466	)	$	234,565		$	161,973	$	575	$	162,548