Trex (NYSE:TREX) executives emphasized market share gains, product innovation, and expanding distribution as key drivers heading into 2026, even as the repair-and-remodel (R&R) environment remains pressured. On the company’s fourth-quarter 2025 earnings call, management also outlined a CEO transition plan, reviewed the impact of accounting methodology changes on reported margins, and provided 2026 financial guidance that assumes growth in a slightly down-to-flat R&R market.
Leadership transition and strategic priorities
CEO Bryan Fairbanks said he plans to retire in late April, with COO Adam Zambanini set to become Trex’s next President and CEO. Fairbanks highlighted several 2025 accomplishments he said position the company for continued outperformance versus the broader market, including product innovation, progress in railing, and distribution wins.
Product momentum, railing strategy, and distribution gains
Fairbanks said products introduced over the last 36 months accounted for 24% of 2025 sales, up from 18% in the prior year, which he characterized as evidence of strong product development and alignment with consumer preferences. He cited expanding the company’s heat-mitigating technology to additional decking products as a notable example.
Management repeatedly pointed to traction in railing as a major growth driver. Fairbanks said Trex achieved “robust double-digit growth” in railing during 2025 and is encouraged by stocking wins and displacement of competing products in both pro and home center channels. The company reiterated its longer-term goal of doubling its share of the railing market by the end of 2028.
Executives also discussed distribution expansion in 2025, citing broadened relationships with International Wood Products (expanded into Salt Lake City and the Intermountain West), Weekes Forest Products (Upper Midwest coverage), and Specialty Building Products (expanded relationship in Michigan). Fairbanks said Trex remains the only wood-alternative supplier with a significant presence in both of the country’s largest home centers, “both on-shelf and special order.”
Arkansas facility and operational focus
Fairbanks said development of Trex’s Arkansas campus remains on schedule and includes on-site production of plastic pellets, which he said reduces reliance on more expensive external sourcing. He argued the added capacity should support long-term growth and create cost optimization and margin opportunities, even though industry growth has moderated from the peak COVID period.
On the demand backdrop, Fairbanks referenced a third consecutive down year for the R&R sector, but said Trex delivered strong fourth-quarter results and mid-single-digit sell-through for full-year 2025. In the Q&A, management noted contractor backlogs were still present, describing top-tier contractors as booked out roughly four to six weeks in harsher weather regions and six to eight weeks in better weather markets.
Q4 results included accounting changes and warranty reserve adjustment
CFO Prith Gandhi reported fourth-quarter net sales of $161 million, down 4% from $168 million a year earlier. He said results were about $17 million above the midpoint of Q4 revenue guidance, primarily due to higher-than-anticipated railing sales late in the quarter, with decking shipments also slightly better than forecast.
Gross profit in Q4 was $49 million versus $71 million in the prior year period, and gross margin was 30.2% versus 42.3%. Gandhi said the year-over-year decline was “primarily the result of two changes in accounting methodology” adopted in Q4 2025:
- Inventory accounting change from LIFO to FIFO: Gandhi said this change had no impact on the 2025 income statement or cash flow statement, but resulted in an upward restatement of Q4 2024 gross margin, contributing to most of the year-over-year gross margin decline in Q4 2025.
- Warranty reserve estimate methodology: The company recorded a $6 million expense in Q4 tied to the change.
Gandhi added that these impacts were partially offset by plant efficiencies from higher utilization, and Q4 results included $1 million of one-time start-up costs related to the Arkansas facility and one-time railing conversion costs. Trex reported Q4 net income of $2 million, or $0.02 per diluted share, compared with $22 million, or $0.20 per diluted share, a year earlier. Excluding the one-time charges cited on the call, adjusted net income was $4 million and adjusted EPS was $0.04, according to Gandhi.
Full-year 2025 results, capital allocation, and 2026 guidance
For full-year 2025, Gandhi reported net sales of $1.17 billion, up 2% from $1.15 billion, driven primarily by pricing across product categories and expanded railing placements. Net income was $190 million, or $1.78 per diluted share, compared with $238 million, or $2.20 per diluted share, in 2024. Operating cash flow was $358 million, up from $144 million, which the company attributed primarily to inventory reductions compared with the prior year’s inventory build and higher collections.
Trex repurchased about 1.5 million shares in 2025 for $50 million at an average price of $32.75, and invested $233 million in capital expenditures, largely related to the Arkansas facility. The board authorized a $150 million share repurchase program to be completed in the first half of 2026, subject to market conditions, and Gandhi said the company intends to remain opportunistic on additional repurchases later in the year as capital expenditures decline with Arkansas “substantially complete.” He also said Trex may become more active in pursuing “strategic tuck-in acquisitions” to expand its outdoor living portfolio, but emphasized a disciplined approach that compares acquisition returns against share repurchases.
For 2026, the company guided:
- Net sales: $1.185 billion to $1.23 billion, which management described as low- to mid-single-digit growth in an R&R market expected to be slightly down to flat versus 2025.
- Adjusted EBITDA: $315 million to $340 million, including about $8 million of expected adjustments primarily tied to digital transformation initiatives and railing conversion, split evenly between cost of goods sold and SG&A.
- SG&A: Approximately 18% of net sales for the full year.
- Interest expense: $10 million to $12 million, with Gandhi noting that interest had been capitalized during construction of the Arkansas facility in 2024 and 2025 and is expected to return to the income statement in 2026 as construction completes.
- Depreciation and amortization: About $85 million, with roughly 45% in the first half and about 20% in Q1, driven by bringing new Arkansas decking lines to production-ready status.
- Capital expenditures: Approximately $100 million to $120 million.
- Q1 net sales: $335 million to $345 million.
In the Q&A, management said it expects railing growth to remain double-digit in 2026 and described net pricing for the year as flat due to pricing actions being offset by higher market incentives. Executives also acknowledged that railing carries lower gross margins than deck board, but said they expect scale, continuous improvement, and additional vertical integration over time to help close that gap.
About Trex (NYSE:TREX)
Trex Company, Inc is a leading manufacturer of wood-alternative decking and railing systems designed for residential and commercial outdoor living environments. The company’s core offerings feature composite decking products made from a proprietary blend of recycled wood fibers and plastic film, which deliver enhanced durability, resistance to rot and insect damage, and low maintenance compared to traditional wood. Trex also provides matching railing, lighting, fencing and cladding solutions that allow customers to create cohesive, high-performance outdoor spaces.
Trex’s product portfolio is organized into multiple performance tiers, including premium, mid-range and value-oriented lines.
