According to Trex CEO, demand for composite decks is increasing thanks to a DIY boon
Bryan Fairbanks, CEO of Trex, told CNBC on Friday that sales for the company’s alternative wood products rose during the Covid-19 pandemic as consumers embark on more home improvement projects.
In addition to increasing demand for composite decks from homeowners, the manufacturer has increased capacity and lowered prices to make its products more affordable, Fairbanks said in a “Mad Money” appearance.
“People are really starting to understand what the long-term cost of owning a wooden deck will be,” he told CNBC’s Jim Cramer. “Another thing that we’re seeing significant pulling power is people who want to make the green choice.”
The housewares and remodeling markets benefited from increased interest in home improvement and outdoor projects during the pandemic as residents found new ways to stay busy amid lockdowns and travel restrictions over the past year.
In the final quarter of 2020 – which is typically slower for the company due to a decline in construction – Trex’s residential product sales grew 40% year over year.
Fairbanks found that many customers find their way to Trex when looking for more sustainable materials to use on their DIY projects. He added that the company’s decks are 95% made from recycled material, as opposed to the environmental impact of pressure treated wood, which is high in chemicals.
While Trex competes with Azek in the alternative wood space, the company is focused on disrupting wood, which accounts for about 78% of the total market, he added. North America has an installation base of 40 million wooden decks, he said.
“There is absolutely a lot of space in the market,” Fairbanks said when asked about composites competition. “As we continue to grow as an organization, we are aiming for the largest segment of the market that is under pressure [wood]is very important to us and we look forward to this opportunity. “
Trex’s total revenue rose 18% to $ 881 million in 2020, the company said in late February. This is double the revenue growth rate that Trex saw in 2019. The company expects further double-digit sales growth in 2021, but did not make a forecast for the full year.
The shares of the $ 10 billion company rose 3.6% to $ 88.24 on Friday, breaking a three-day streak of bad luck.