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EPA ruling treats
Trex
Virginia
Business
March 2003
Precious few stocks have tripled in value in the past
16 months. But thanks, in part, to the U.S. Environmental
Protection Agency, that’s what has happened to
shares of Winchester-based Trex Co., the nation’s
largest manufacturer of alternative decking products.
“Alternative”
is the key word in that company description. Trex produces
deck planks that are made from composite wood and recycled
plastic. Until last year, Trex decking was viewed as
a novel alternative to pressure-treated lumber, the
material commonly used to build residential decks.
An
EPA move was good news for Trex investors. In February
2002, the EPA announced it would ban residential uses
of wood with chromated copper arsenate (CCA) by 2004.
CCA is an arsenic-laden pesticide used in 90 percent
of all pressure-treated wood.
That
announcement pushed Trex shares from the low teens to
nearly $39 by last December; the stock is now about
$32 per share. It also helped put Trex back on the steep
revenue growth curve it had been riding since its managers
bought the company from Mobil Corp. in 1996. That year
the company’s sales were $23.7 million. Four years
later, they had grown five-fold to $117.6 million.
Income
in the third quarter of 2002 nearly doubled from a year
earlier to $6.1 million, says company president Robert
Matheny. The company hasn’t released its year-end
results yet.
The
company has also weathered a precipitous rise and fall
of its stock. The price peaked at nearly $59 in mid-2000
and then fell to the low teens when the company couldn’t
meet demand. Since then Trex, which also has a plant
in Nevada, has added two new production lines to its
existing 15 lines. “We have learned a lot over
the past two years about maintaining this balance,”
Matheny says.
by
Karl Rhodes
Virginia
Business - March 2003
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