Trex, the decking manufacturer, swung to a loss in the third quarter in part, it said, because of new line of products that has yet to reach the market.
The Winchester, Va.-based company reported a net loss of $22.5 million for the third quarter 2009 compared to a net income of $5.2 million in the third quarter 2008. The net sales of $61.9 million were down nearly 28% from the sales of $85.4 million in the third quarter a year ago.
"Trex's net sales for the third quarter were impacted by the market's anticipation of our launch of a groundbreaking new line of decking and railing, to be unveiled at this week's 2009 Trex Distributor Meeting, as well as by ongoing weakness in the home building and remodeling sector," Ronald Kaplan, president and CEO of Trex, said in a statement.
"We began discussing our new product--which has been the primary focus of our R&D efforts since the middle of last year--with Trex's major distributors this summer, after which some started implementing inventory adjustments," Kaplan said.
During the quarter, Trex had a non-cash impairment charge of $23.3 million relating to the closing of its Olive Branch, Miss., manufacturing facility. The company also recorded a $7.2 million non-cash charge related to inventory manufactured prior to 2008 that management has determined is no longer saleable or does not meet its current quality standards.
"Trex continues to weather the economic downturn better than most of our competitors," Kaplan said, noting that the company redeemed $25 million in revenue bonds last September and the company's cash balance at quarter-end was approximately $40 million. "We haven't borrowed against our revolver for almost 18 months," Kaplan added.