Trex Company Inc (NYSE:TREX) stock fell 10.87% (As on Mar 1, 12:05:12 AM UTC-4, Source: Google Finance) after the company beaten the analysts’ estimates for the fourth quarter of FY 21. Fourth quarter 2021 gross margin for Trex Residential and Trex Commercial were 39.7% and 24% compared to 41.3% and 28% in the fourth quarter of 2020. The year-over-year decrease in 2021 fourth quarter gross margins was primarily due to increased raw material cost and higher transportation costs that more than offset increased efficiencies from higher capacity utilization and previous pricing actions. In the 2021 fourth quarter, the company recognized a $54 million goodwill impairment charge at Trex Commercial, that was primarily due to a reduction in project commitments, which adversely impacted project backlog and forecasted net sales and EBITDA. The reduction in project commitments was influenced by a delay in new projects due to lingering uncertainty created in our commercial markets by the COVID-19 virus. The delay in new projects coupled with the Company’s continued successful fulfillment of pre-pandemic projects resulted in lower project backlog and reduced forecasted net sales and EBITDA.

Trex came out with quarterly earnings of $0.55 per share, beating the Zacks Consensus Estimate of $0.53 per share. The company had reported the adjusted revenue growth of 33 percent to $304 million in the fourth quarter of FY 21, beating the analysts’ estimates for revenue by 0.18%. This is led by 35% growth in net sales at Trex Residential to $288 million. The increase in sales reflects continued strong broad-based demand across all product lines in both the retail and pro channels and a favorable impact from pricing actions in Trex Residential. Trex Commercial net sales increased 6% year-on-year to $16 million. Consolidated gross margin in the fourth quarter was 38.9% compared to 40.5% in the year ago quarter.

Moreover, the adjusted net income was $64 million for the fourth quarter, representing increases of 47% from net income of $43 million in the 2020 fourth quarter. EBITDA excluding the goodwill impairment charge and the gain on insurance proceeds was $92 million, a 44% increase compared to EBITDA of $64 million reported in the year ago quarter. Fourth quarter 2021 adjusted EBITDA margin was 30.2% compared to 27.9% in the fourth quarter of 2020.

The company expects a strong 2022 with double-digit top-line growth inclusive of the one-time channel infill in 2021. First quarter consolidated net sales are expected to range from $320 million to $330 million, representing year-on-year growth of 32% at the midpoint. For the full-year 2022, the company expects revenues to return to double-digit growth rates.