Trex Co.'s net sales jumped 75% in the fourth quarter to $51.2 million from $29.3 million a year earlier, but it was an unexpected tax windfall that appears to have made it possible for the make of decking, railing, fencing and trim to announce today that it had swung to a $1.8 million net profit in the quarter from an $11.5 million loss in the fourth quarter of 2008.

Trex's fourth-quarter results included an income tax benefit of $5.6 million that was primarily due to a change in tax laws late last year affecting the Internal Revenue Service's Net Operating Loss (NOL) provision. Before the change, a company could apply current losses against profits booked in the previous two years. The change permitted losses to be applied against the previous five years--back to when homebuilding was at its peak. As a result of the new NOL rules, builders, dealers, and manufacturers have claimed billions of dollars in tax benefits on their latest financial reports.

For all 2009, Winchester, Va.-based Trex swung to a net loss of $16.4 million from 2008's net income of $7.5 million. Sales slumped 17.3% to $272.3 million from $329.2 million.

"Our 75% increase in sales for the fourth quarter demonstrates the success of our recent enhancements to Trex's existing decking platform," president and CEO Ronald W. Kaplan said in a statement. Trex recently introduced the Transcend line, which is priced between that of composite and PVC decking. "...We began the rollout of Trex Transcend at retailers nationwide on schedule in January, and are extremely pleased by the initial flow of orders. The increased volume of dealer-direct shipments for Trex Transcend is a key indication of the strong acceptance for this new product throughout the marketplace."

Net sales for the first three months of this year should total near $70 million, it said.

Kaplan also noted that Trex's gross margins rose by 3 points in 2009 to nearly 30%. "This increase reflects the effectiveness of our continuing drive to implement fundamental productivity and process improvements," he said. "This accomplishment is especially significant given that we operated at reduced levels of capacity utilization in 2009. We are pleased with the continued improvement in our financial position in 2009, which was accomplished despite the headwinds of the most severe recession in decades. For the full year, we generated free cash flow of $28 million, allowing us to retire more than $30 million of debt. In addition, we replaced our revolving credit facility with a new $85 million facility in November and our cash balance at year end was $20 million."