Trex Co Inc (NYSE:TREX) stock fell 1.60% (As on February 27, 11:32:57 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY 23. Net income for the 2023 fourth quarter was $22 million, compared to $10 million, reported in the 2022 fourth quarter. EBITDA was $41 million, compared to $26 million and EBITDA margin was 21.0%, compared to 13.4%.

TREX in the fourth quarter of FY 23 has reported the adjusted earnings per share of 20 cents, beating the analysts’ estimates for the adjusted earnings per share of 19 cents. The company had reported the adjusted revenue of $195.7 million in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $193.2 million. The growth in net sales was due primarily to increased volume and the absence of the residual channel inventory drawdown that occurred in the 2022 fourth quarter. Gross margin was 36.1% in the fourth quarter of 2023 compared, to reported consolidated gross margin of 34.1% and Trex Residential gross margin of 36.1% in the same quarter last year.

For Q1, the company said it expects sales to be in the range of $360 million to $370 million. Analysts in a Capital IQ poll expect $308.3 million. This is inclusive of $60 million to $80 million from the Early Buy program.

For full-year 2024, it expects net sales of $1.22 billion to $1.24 billion. Analysts in a Capital IQ survey are looking for $1.22 billion. The EBITDA margin is expected to be in the range of 30.0% to 30.5%, representing margin expansion of approximately 75 basis points. Approximately 60% of full year revenues are expected to occur in the first half of the year. Capital expenditures are expected to be approximately $220 million primarily tied to the development of our new Arkansas campus, including the addition of a warehouse facility.

In 2024, the company plans to continue to invest in areas that have yielded substantial returns for our Company, notably branding and sales and marketing programs, which have been very effective in driving sales growth, and cost-out programs, which have enabled us to expand gross margin on less-than-full capacity. New product development will remain a priority in 2024, as will the build-out of our world class Arkansas facility. These investments are aligned with the strategy to capture an increasing share of decking, railing, and adjacent products, which together represent a $14 billion addressable market for Trex.