Trex slid further into the red during the fourth quarter, from the same period a year ago, with an $18.3 million loss for the period ended Dec. 31, the company announced today. The composite decking and railing products manufacturer posted a net loss of $512,000 during 2010’s fourth quarter.

The Winchester, Va.-based company reported a 32% drop in fourth-quarter net sales to $51.5 million. Trex suffered a $14.6 million operating loss during the quarter, a huge swing from the $3.9 million in income from operations reported a year ago.

The company attributed the negative numbers to a $10 million increase to its warranty reserve for decking material manufactured at its Nevada plant prior to mid-2006; the company faced $4.1 million of unusual charges during the 2010 period. “Although the rate of new claims and actual cash expenditures declined significantly since 2009 – and we expect that decline to continue – we expect claims to continue for a longer period and the cost per claim to be slightly higher than previously anticipated, necessitating an adjustment to the warranty reserve,” James E. Cline, company vice president and CFO, said in a statement. 

Trends in consumer buying habits also contributed to the losses, the company said. “Our fourth-quarter sales were right in line with our guidance,” said Ronald W. Kaplan, Trex chairman, president, and CEO. “While an announced price increase for Trex Transcend drove significant buying in the fourth quarter of 2010, this season we maintained pricing, with the result that more sales have shifted to the first quarter of 2012.”

For the year, Trex saw net sales drop 16% to $266.8 million from 2010. Net loss also dipped 15% to $11.6 million for the year. In addition to the fourth-quarter warranty reserve increase, the year-end results also reflect a $2.3 million non-cash benefit recognized in prior quarters. Before giving effect to these adjustments, the company’s net loss for the year totaled $3.9 million, down from the year prior’s adjusted net income of $11.3 million.

The company expects first quarter net sales for 2012 to grow by 30% from the 2011 period to total $90 million, facilitated in part by an increase in production from the year-ago period.