Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Information

16. SEGMENT INFORMATION

Through December 30, 2022, the Company operated in two reportable segments. On December 30, 2022, the Company completed the sale of its wholly-owned subsidiary and reportable segment, Trex Commercial. Subsequent to the sale of Trex Commercial, the Company operates in one reportable segment, Trex Residential:

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

The Company’s reportable segments are determined in accordance with its internal management structure, which, through December 30, 2022, was based on residential and commercial sales activities and, subsequent to December 30, 2022, is based on its residential 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, 2023 and September 30, 2022 includes data for its reportable segments (in thousands):

Segment Data:

	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022
	Trex Residential and Consolidated		Trex Residential		Trex Commercial			Consolidated
Net sales	$	303,836	$	177,776	$	10,696		$	188,472
Net Income (loss)	$	65,266	$	15,287	$	(864	)	$	14,423
EBITDA	$	99,359	$	31,692	$	(876	)	$	30,816
Depreciation and amortization	$	12,996	$	11,194	$	271		$	11,465
Income tax expense (benefit)	$	21,831	$	5,211	$	(283	)	$	4,928
Capital expenditures	$	30,563	$	41,403	$	154		$	41,557
Total assets	$	996,812	$	802,926	$	38,972		$	841,898

Reconciliation of Net Income to EBITDA:

	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
	Trex Residential and Consolidated			Trex Residential		Trex Commercial			Consolidated
Net Income (loss)	$	65,266		$	15,287	$	(864	)	$	14,423
Interest (income), net		(734	)		—		—			—
Income tax expense (benefit)		21,831			5,211		(283	)		4,928
Depreciation and amortization		12,996			11,194		271			11,465
EBITDA	$	99,359		$	31,692	$	(876	)	$	30,816

Segment Data:

	Nine months Ended September 30, 2023		Nine months Ended September 30, 2022
	Trex Residential and Consolidated		Trex Residential		Trex Commercial			Consolidated
Net sales	$	899,092	$	878,892	$	35,058		$	913,950
Net Income (loss)	$	183,433	$	176,939	$	(2,390	)	$	174,549
EBITDA	$	285,271	$	267,725	$	(2,344	)	$	265,381
Depreciation and amortization	$	37,194	$	32,435	$	835		$	33,270
Income tax expense (benefit)	$	62,089	$	58,454	$	(789	)	$	57,665
Capital expenditures	$	112,920	$	107,937	$	226		$	108,163
Total assets	$	996,812	$	802,926	$	38,972		$	841,898

Reconciliation of Net Income to EBITDA:

	Nine months Ended September 30, 2023		Nine months Ended September 30, 2022
	Trex Residential and Consolidated		Trex Residential			Trex Commercial			Consolidated
Net Income (loss)	$	183,433	$	176,939		$	(2,390	)	$	174,549
Interest expense (income), net		2,555		(103	)		—			(103	)
Income tax expense (benefit)		62,089		58,454			(789	)		57,665
Depreciation and amortization		37,194		32,435			835			33,270
EBITDA	$	285,271	$	267,725		$	(2,344	)	$	265,381