Trex Sees Double-Digit Growth in Premium Products

Trex (NYSE: TREX), the leading manufacturer of wood-alternative decking and railing products, recently held its fourth-quarter and full-year 2024 earnings call on February 24, 2025. For investors focused on the long-term potential of this repair and remodel market leader, the call provided important insights into the company's strategic initiatives, product innovations, and financial outlook.

New Product Innovation Driving Strong Premium Growth

Trex is expanding its product lineup with innovations that continue to drive sales growth. One example is its SunComfortable heat-mitigating technology, which Trex is incorporating across its product portfolio to differentiate its offerings.

Products launched within the last 36 months accounted for approximately 20% of our full-year revenues. Between new products introduced in 2024 and those slated for 2025, we will launch a record number of new products that will support future sales growth.

-- Bryan Fairbanks, President and CEO

Management noted they saw a double-digit increase in premium products during the fourth quarter, demonstrating strong performance in the high-end segment even as they project the overall repair and remodel market to be flat in 2025.

Ambitious Railing Growth Strategy Could Double Market Share

Trex has introduced a comprehensive railing product line that positions the company to increase its share of the $3.3 billion railing market.

With these new offerings, which will all be available for the 2025 season, we now have a comprehensive portfolio of railing products addressing all major design preferences and price points. This accomplishment is aligned with our objective of doubling our market share of the $3.3 billion railing market over the next 5 years, moving from 6% to a 12% share.

-- Bryan Fairbanks

The company expects double-digit growth on the railing side of the business in 2025 as their expanded product line and new distribution partnerships begin to take effect, creating an important growth channel beyond their core decking business.

Arkansas Facility Will Drive Manufacturing Efficiency and Cash Flow

Trex's investments in its new Arkansas manufacturing facility are proceeding according to plan and will provide operational and financial benefits as the company completes this major expansion.

The majority of the capital spending related to the Arkansas campus will be completed this year, which will make 2026 a year of substantial free-cash-flow generation for Trex as we return to a more normalized level of capital spending and as we leverage the investments made between '23 and 2025.

-- Bryan Fairbanks

Once the facility is complete, capital expenditures will return to historical levels of 5% to 6% of revenue, which management expects will result in a significant increase in annual free cash flow beginning in 2026.

Looking Ahead

Trex management projects net sales in the range of $1.21 billion to $1.23 billion for 2025, representing year-over-year growth of 5% to 7% despite expectations for a flat repair and remodel market.

As Fairbanks emphasized, "Together, we are positioned to capture the greatest share of the industry's growth opportunities." With Arkansas manufacturing capacity coming online and capital expenditures set to normalize in 2026, Trex appears well positioned to deliver both growth and improved free cash flow in the coming years.

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David Kretzmann has positions in Trex. The Motley Fool has positions in and recommends Trex. The Motley Fool has a disclosure policy.