Trex Company, Inc. Goldman Sachs Global Consumer and Retail Conference

Thanks for having us. Of course.

Yeah. When the year started and when we were looking at kind of setting up what we thought 2026 was going to be like. At the start of the year, we thought it was going to be another slow year with some potential recovery in the back half. That was the underpinning of our overall guidance at the start of the year. As we went through the first quarter and then the second quarter in particular, we did start to see a shift in some of the demand. Some of this is deliberate, kind of strategic moves made by us. One of the things that we sort of haven't focused on over the last three years is really that wood conversion part of our strategy, which is really core to our growth and our ability to move composite decking into wood.

We really focused our efforts there, and we started to see sort of some good, encouraging green shoots around that in Q2, which we talked about during earnings. That led to us overall kind of increasing our guidance for the full year. We started the year with sort of low single-digit type net sales growth for the full year. We are now kind of guiding to more of a mid single-digit type full year. Some of it is driven by that. The other piece is, we have been talking to all of you about this pent-up demand in our markets. We have been saying it for 3 years. We are actually starting to, I think, see some of that come through finally. I think what is driving that is essentially the persistence of high interest rates, persistence of inflation, persistence of high home prices.

It is really causing people's ability to move to really sort of be very constrained. A number of homeowners are sort of making the decision now to just say, "Look, we are just going to stay put in our home." Then they look at, okay, if I am going to be here for another 5, 10 years, where are the areas in the home where I want to make some investment, either to improve the quality of my life or make investments in the projects that I have been deferring for these last 2, 3 years because I thought I would move? What is interesting is, and we did a survey about this about a month ago. We published the results in one of our press releases, so you can have a look at that. We surveyed about 2,000 homeowners across the country, different price points of homes and so forth.

One of the things that came out from that is, yeah, as they have decided to stay put, one of the first places that rises up for investment is kind of the outdoor living space, because that allows them to enjoy their existing home more. They spend time outside with their family, friends, barbecues, all that stuff. The size and the dollar value of those projects is also lower than doing a full kitchen remodeling and what have you. Some of these things came out in that survey. Also, I think what is unique about the Trex brand is it pays back in kind of value. Homeowners, when they are selling their homes, they list the appliances they have, if they have the high-end appliances. If they have a Trex deck, you can be sure they list that in the listing as well.

I think some of that is starting to happen. It has only been a quarter, so we are not calling a trend as yet, but we just remain cautiously optimistic for the rest of the year.

Yeah. This was deliberate, and we had CEO change earlier in the year. Adam's someone who's been sort of focused on this. Over the last three years, our low-end price point, our low-end products, which are Trex Enhance and Basics, which typically sell against wood, we'd really seen no growth in those categories. We really focused on driving growth there, and a lot of that was through promotional activity and sort of marketing efforts that we've also been talking about, that we started ramping up about a year ago with focused campaigns around why composite versus wood, et cetera. We started to see those things actually kind of come into play in the second quarter early. April was a tough month. I hate to blame the weather, but it really was about that.

Starting in May, we really started to see good traction from those investments and that activity.

Yeah. Good question. Just for those who are less familiar with Trex, we have had a long-term partnership with Boise Cascade, and we made the decision to shift away from them and have an exclusive national relationship with SBP, Specialty Building Products, which again, for those of you who do not know them, they are large within specialty building products distribution. They are one of the largest players. They are private equity-owned, growing very aggressively, both through acquisition as well as through greenfields and the like. They are very well-aligned with us in terms of their ambition for growth, their willingness to invest in leading brands, and move them forward. From those perspectives, that is very aligned with our vision.

The other thing we did with this change was we used to have a model where we had a strong national player, used to be Boise Cascade, and then we had a handful of really strong regional players. We kind of shifted to have even third players in some markets and things got a little more complex. With this move, we also made the decision to go back to that model where we had one strong national distributor, that is SBP, and then several strong regional players. We added some new names like BlueLinx and Coastal and the others that we were already with. That has been the reason for making the change. Strategically, we think this will enable us to grow faster, will enable us to kind of drive more of the contractor pull through that we see, and are in alignment with SBP.