Segment Information

9 Months Ended

Sep. 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 nine months ended September 30, 2022 and September 30, 2021 includes data for Trex Residential and Trex Commercial (in thousands):​​​​​​​

Segment Data:

	Three Months Ended September 30, 2022							Three Months Ended September 30, 2021
	Trex Residential		Trex Commercial			Total		Trex Residential		Trex Commercial		Total
Net sales	$	177,776	$	10,696		$	188,472	$	319,207	$	16,665	$	335,872
Net income (loss)	$	15,287	$	(864	)	$	14,423	$	72,603	$	1,192	$	73,795
EBITDA	$	31,692	$	(876	)	$	30,816	$	106,135	$	1,862	$	107,997
Depreciation and amortization	$	11,194	$	271		$	11,465	$	9,643	$	258	$	9,901
Income tax expense (benefit)	$	5,211	$	(283	)	$	4,928	$	23,899	$	412	$	24,311
Capital expenditures	$	41,403	$	154		$	41,557	$	29,554	$	66	$	29,620
Total assets	$	802,926	$	38,972		$	841,898	$	858,330	$	95,121	$	953,451

Reconciliation of Net Income to EBITDA:

	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
	Trex Residential		Trex Commercial		Total		Trex Residential		Trex Commercial		Total
Net income (loss)	$	15,287	$	(864)	$	14,423	$	72,603	$	1,192	$	73,795
Interest income, net		—		—		—		(10)		—		(10)
Income tax expense (benefit)		5,211		(283)		4,928		23,899		412		24,311
Depreciation and amortization		11,194		271		11,465		9,643		258		9,901
EBITDA	$	31,692	$	(876)	$	30,816	$	106,135	$	1,862	$	107,997