Trex (TREX) Goldman Sachs Global Consumer and Retail Conference summary

Industry trends and demand drivers

• Early 2024 expectations were for a slow year, but Q2 showed encouraging demand shifts, especially in wood-to-composite conversion.

• Persistent high interest rates and home prices are causing homeowners to invest in their current homes, with outdoor living spaces being a top priority.

• Survey data indicates homeowners value outdoor upgrades for enjoyment and resale, with composite decking seen as a value-adding feature.

• Growth in lower-end product segments was achieved through targeted promotions and marketing, with traction improving from May onward.

• Cautious optimism remains for the rest of the year, with no definitive trend called yet.

Strategic distribution and growth initiatives

• Shifted to an exclusive national distribution partnership with SBP, complemented by strong regional players, to simplify and accelerate growth.

• The new model is expected to drive contractor pull-through and capture up to $100 million in business from smaller brands over the next few years.

• Little Rock facility ramped up ahead of schedule, targeting 50% capacity by year-end, with modern technology and proximity to raw materials reducing costs.

• Little Rock's modular design allows for scalable growth with relatively low capital intensity per new production line.

Long-term targets and growth strategy

• Revenue target of $2 billion by 2030, with $500 million expected from organic growth and $250 million from M&A.

• Organic growth driven by repair/remodel market outperformance, wood conversion, and market share gains.

• M&A focus is on bolt-on, tuck-in deals that leverage existing assets or channels, with a high bar for value creation versus share buybacks.

• Composite decking is expected to reach 50% of the industry over time, up from 25% today, due to superior performance and narrowing cost differentials with wood.