10-Q · May 7, 2026
Trex Company reported Q1 2026 results with revenue of $343 million and diluted EPS of $0.58, both exceeding analyst expectations. While net sales increased slightly year-over-year by 1%, gross profit also saw a minor…
Earnings analysis · 10-Q
TREX earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Trex delivered Q2 2026 revenue of $418.019 million, up 7.8% year over year and 21.9% sequentially, but profitability weakened as gross margin fell to 37.9% and GAAP EPS declined to $0.60 from $0.71 a year earlier.…
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Trex delivered Q2 2026 revenue of $418.019 million, up 7.8% year over year and 21.9% sequentially, but profitability weakened as gross margin fell to 37.9% and GAAP EPS declined to $0.60 from $0.71 a year earlier. Implied operating margin was approximately 20.6%, down from 24.3% in Q1 2026 and 26.4% in Q2 2025, reflecting cost inflation, lower production, unfavorable mix, higher SG&A and a $4.672 million asset write-down. First-half operating cash flow held at $95.740 million, while $57.3 million of capex produced approximately $38.4 million of free cash flow and the company retained $443.9 million of revolver availability.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Reported figures
- Earnings per share
- $0.6
- Segment
- Trex Residential (sole reportable segment): $418.019 million of Q2 2026 net sales.
What stood out
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Revenue growth accelerated sequentially
Q2 net sales increased $30.218 million, or 7.8% year over year, to $418.019 million. Revenue also rose $75.019 million from $343.000 million in Q1 2026.
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Sequential EPS improved despite YoY decline
GAAP diluted EPS was $0.60, up $0.02 from $0.58 in Q1 2026, although down $0.11, or 15.5%, from $0.71 a year earlier. Net income was $61.876 million.
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Operating cash flow remained resilient
Operating cash flow was $95.740 million for the first six months, unchanged from $95.739 million a year ago; less $57.3 million of capex, implied free cash flow was approximately $38.4 million.
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Substantial revolver liquidity remains
The company had $443.9 million of revolver availability at June 30, 2026 after $253.0 million of outstanding borrowings and $3.1 million of letters of credit.
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Capital returns remain significant
Trex repurchased 3.9 million shares in the first six months of 2026, and 13,470,185 shares remained available under the 2023 authorization at June 30.
What to watch
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Margin compression offset sales growth
Gross margin fell 290 basis points year over year to 37.9% from 40.8%, and declined 260 basis points from 40.5% in Q1 2026. Management attributed the year-over-year compression to higher input/material costs, increased depreciation, lower production and unfavorable mix.
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SG&A grew faster than revenue
SG&A increased $11.746 million, or 21.1%, to $67.480 million, reaching 16.1% of sales versus 14.4% a year earlier. The increase included $4.1 million in personnel costs, $3.7 million in branding and $2.8 million in services.
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Asset write-down weighed on EBITDA
The company recorded a $4.672 million write-down of Virginia manufacturing assets in Q2, contributing to EBITDA declining $12.646 million, or 10.7%, to $105.559 million. No new Item 1A risk-factor update was disclosed in the filing.
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Tariff and input-cost exposure persists
Management projects tariffs will affect less than 5% of cost of sales, principally aluminum and steel for railing and fastening products. It intends to mitigate exposure through pre-tariff inventory and supplier negotiations, but cost pressure remains a risk.
Management's outlook
The 10-Q did not provide quantitative sales or EPS guidance. It did provide 2026 capital-expenditure guidance of $100 million to $120 million and stated that management expects cash on hand, operating cash flow and revolver availability to fund planned expenditures and other requirements.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.