1 unchanged sentence
If applicable to a particular segment, we have specified the respective segment subject to the risk factor.
+Added: Risks Related to the Distribution and Sale of Our Product
We may not be able to grow unless we increase market acceptance of our products, compete effectively and develop new products and applications.
29 unchanged sentences
We expect that a significant portion of our Trex Residential sales will continue to be sold through a small number of customers, and certain customers will continue to account for a significant portion of our sales.
−Removed: Our Trex Residential business is dependent on consistently producing a product which is available when needed to meet the demands of our customers.
−Removed: As our business grows, we must adjust capacity to meet customer needs and provide increased throughput on our existing capacity.
−Removed: Our Trex Residential sales growth and profitability could suffer from our failure to effectively pair supply and demand for our products.
−Removed: Our customers’ demands for varying quantities of products and delivery items throughout the year, and increased demand year to year, require monitoring and the ability to adjust production in accordance with these demands.
−Removed: Failure to do so can lead to lost or reduced sales and have a negative effect on earnings.
−Removed: In order to meet Trex Residential customer demand in a timely manner, we must adjust capacity to meet customer needs and provide increased throughput on our existing capacity.
−Removed: Our sourcing team must obtain raw materials on a timely basis at an appropriate volume.
−Removed: Our prospects for sales growth and profitability may be adversely affected if we fail to maintain product quality and product performance at an acceptable cost.
−Removed: If we are unable to produce high-quality products at standard manufacturing rates and yields, unit costs may be higher.
−Removed: A lack of product performance could impede acceptance of our products in the marketplace and negatively affect our profitability.
−Removed: Future increases to our Trex Residential warranty reserve could have a material adverse effect on our profitability and cash flows.
−Removed: In the event lawsuits relating to alleged product quality issues are brought against us in the future, such lawsuits may be costly and could cause adverse publicity, which in turn could result in a loss of consumer confidence in our products and reduce our sales.
−Removed: Product quality claims could increase our expenses, have a material adverse effect on demand for our products and decrease net sales, net income and liquidity.
−Removed: In order to expand our net sales and sustain profitable operations we must maintain the quality and performance of our products.
−Removed: Trex Residential continues to receive and settle claims and maintain a warranty reserve related to decking product produced at our Nevada facility prior to 2007 that exhibits surface flaking.
−Removed: We have limited our financial exposure by settling a nationwide class action lawsuit that provides that a consumer’s remedy is limited to the replacement of product and a partial labor reimbursement.
−Removed: However, because the establishment of reserves is an inherently uncertain process involving estimates of the number of future claims and the average cost of claims, our ultimate losses may differ from our warranty reserve.
−Removed: Increases to the warranty reserve and payments for related claims have had a material adverse effect on our profitability and cash flows.
−Removed: A number of class action lawsuits alleging defects in our products have been brought against us, all of which have been settled.
−Removed: Our business is subject to risks in obtaining the raw materials we use at acceptable prices.
−Removed: Our business could suffer from the termination of significant sources of raw materials, the payment of higher prices for raw materials, the quality of available raw materials, or from the failure to obtain sufficient additional raw materials to meet planned increases in production.
−Removed: The manufacture of our Trex Residential composite decking and railing products requires substantial amounts of wood fiber and scrap polyethylene.
−Removed: Our business strategy is to create a substantial cost advantage over our competitors by using scrap polyethylene.
−Removed: Our ability to obtain adequate supplies of wood fiber and scrap polyethylene depends on our success in developing new sources that meet our quality requirements, maintaining favorable relationships with suppliers and managing the collection of supplies from geographically dispersed locations.
−Removed: In addition to wood fiber and scrap polyethylene, we also use a small percentage of other materials in making our products, which are sometimes subject to volatility in supply and pricing and could negatively affect our profitability.
−Removed: The manufacture of our Trex Commercial products requires substantial amounts of aluminum, steel, glass and wood.
−Removed: These materials are also sometimes subject to volatility in pricing, which could negatively affect our profitability.
We have limited ability to project inventory build-ups
31 unchanged sentences
The demand for Trex Commercial railing and staging system products is influenced by the general health of the economy and the level of commercial construction activity, building variances, funding availability for large public use facilities, including sports stadiums and arenas, and the construction schedules of our projects.
+Added: Risks Related to the Manufacture of Our Product
+Added: Our Trex Residential business is dependent on consistently producing a product which is available when needed to meet the demands of our customers.
+Added: As our business grows, we must adjust capacity to meet customer needs and provide increased throughput on our existing capacity.
+Added: Our Trex Residential sales growth and profitability could suffer from our failure to effectively pair supply and demand for our products.
+Added: Our customers’ demands for varying quantities of products and delivery items throughout the year, and increased demand year to year, require monitoring and the ability to adjust production in accordance with these demands.
+Added: Failure to do so can lead to lost or reduced sales and have a negative effect on earnings.
+Added: In order to meet Trex Residential customer demand in a timely manner, we must adjust capacity to meet customer needs and provide increased throughput on our existing capacity.
+Added: Our sourcing team must obtain raw materials on a timely basis at an appropriate volume.
+Added: Our prospects for sales growth and profitability may be adversely affected if we fail to maintain product quality and product performance at an acceptable cost.
+Added: If we are unable to produce high-quality products at standard manufacturing rates and yields, unit costs may be higher.
+Added: A lack of product performance could impede acceptance of our products in the marketplace and negatively affect our profitability.
+Added: Future increases to our Trex Residential warranty reserve could have a material adverse effect on our profitability and cash flows.
+Added: In the event lawsuits relating to alleged product quality issues are brought against us in the future, such lawsuits may be costly and could cause adverse publicity, which in turn could result in a loss of consumer confidence in our products and reduce our sales.
+Added: Product quality claims could increase our expenses, have a material adverse effect on demand for our products and decrease net sales, net income and liquidity.
+Added: In order to expand our net sales and sustain profitable operations we must maintain the quality and performance of our products.
+Added: Trex Residential continues to receive and settle claims and maintain a warranty reserve related to decking product produced at our Nevada facility prior to 2007 that exhibits surface flaking.
+Added: We have limited our financial exposure by settling a nationwide class action lawsuit that provides that a consumer’s remedy is limited to the replacement of product and a partial labor reimbursement.
+Added: However, because the establishment of reserves is an inherently uncertain process involving estimates of the number of future claims and the average cost of claims, our ultimate losses may differ from our warranty reserve.
+Added: Increases to the warranty reserve and payments for related claims have had a material adverse effect on our profitability and cash flows.
+Added: A number of class action lawsuits alleging defects in our products have been brought against us, all of which have been settled.
+Added: Our business is subject to risks in obtaining the raw materials we use at acceptable prices.
+Added: Our business could suffer from the termination of significant sources of raw materials, the payment of higher prices for raw materials, the quality of available raw materials, or from the failure to obtain sufficient additional raw materials to meet planned increases in production.
+Added: The manufacture of our Trex Residential composite decking and railing products requires substantial amounts of wood fiber and scrap polyethylene.
+Added: Our business strategy is to create a substantial cost advantage over our competitors by using scrap polyethylene.
+Added: Our ability to obtain adequate supplies of wood fiber and scrap polyethylene depends on our success in developing new sources that meet our quality requirements, maintaining favorable relationships with suppliers and managing the collection of supplies from geographically dispersed locations.
+Added: In addition to wood fiber and scrap polyethylene, we also use a small percentage of other materials in making our products, which are sometimes subject to volatility in supply and pricing and could negatively affect our profitability.
+Added: The manufacture of our Trex Commercial products requires substantial amounts of aluminum, steel, glass and wood.
+Added: These materials are also sometimes subject to volatility in pricing, which could negatively affect our profitability.
+Added: Labor shortages or increases in labor costs could adversely impact our business and results of operations.
+Added: We rely heavily on our employees and any shortage of qualified labor could adversely affect our business.
+Added: If we are not successful in our recruiting and retention efforts, we could encounter a shortage of qualified employees in future periods.
+Added: Any such shortage would decrease our ability to produce sufficient quantities of our product to serve our customers effectively.
+Added: Such a shortage may also require us to pay higher wages for employees and incur a corresponding reduction in our profitability.
+Added: Labor is one of the primary components of our production process.
+Added: Our success is dependent upon recruiting qualified employees to manufacture our product.
+Added: Our future success depends on, among other things, our ability to identify, attract, hire, train, retain and motivate operational personnel on a timely basis as we continue our pace of growth.
+Added: If we fail to do so, our ability to maintain and grow our business could be adversely impacted.
+Added: Further, improvements in the economy and labor markets could impact our ability to attract and retain key personnel.
We have significant capital invested in assets that may become obsolete or impaired and result in a charge to our earnings.
5 unchanged sentences
These investments sometimes involve the implementation of new technology and replacement of existing equipment at our manufacturing facilities, which may result in charges to our earnings if the existing equipment is not fully depreciated.
+Added: Risks Related to the Availability of Capital
Our ability to continue to obtain financing on favorable terms, and the level of any outstanding indebtedness, could adversely affect our financial health and ability to compete.
6 unchanged sentences
Accordingly, our future level of indebtedness and the terms of our borrowings could have important consequences.
+Added: Risks Related to Other Matters
+Added: Our business, results of operations and financial condition may be disrupted and adversely affected by global public health pandemics, including the strain of coronavirus known as COVID-19.
+Added: If our employees or the employees of our suppliers or transportation providers are unable to work because of illness related to the COVID-19
+Added: pandemic, or if we or our suppliers or transportation providers are forced to temporarily cease operations, either on a voluntary or mandatory basis, then we may have a period of reduced operations and be unable to supply our customers in a timely manner, which could have a material negative impact on our business.
+Added: If the COVID-19
+Added: outbreak disrupts the operations of our distributors and retail outlets and negatively impacts economies in the United States, Canada and the rest of the world, our business, results of operations and financial condition may be adversely affected.
+Added: In December 2019, a novel strain of coronavirus, COVID-19,
+Added: was reported to have surfaced in Wuhan, China.
+Added: It spread to other countries, including the United States, and efforts to contain COVID-19
+Added: have intensified.
+Added: In March 2020, the World Health Organization characterized COVID-19
+Added: as a pandemic.
+Added: Our business, results of operations and financial condition may be adversely affected if COVID-19
+Added: interferes with the ability of our employees, suppliers and other business partners to perform their respective responsibilities and obligations relative to the conduct of our business.
+Added: We continue to monitor the recent outbreak of COVID-19
+Added: and evaluate its impact on our business, including new information as it emerges concerning its severity and the continuation of the outbreak or a new surge in cases, and any actions to prevent, contain or treat it, among others.
+Added: The extent to which COVID-19
+Added: may impact our business will depend on future developments, which are highly uncertain and cannot be predicted.
Cyberattacks and other security breaches could compromise our proprietary and confidential information which could harm our business and reputation.
7 unchanged sentences
We also collect limited information on consumers.
−Removed: Although we do not collect any highly sensitive information, there is a risk that a cybersecurity attack could compromise consumer’s names, addresses and other personal information.
+Added: Although we do not collect any highly sensitive information, there is a risk that a cybersecurity attack
+Added: could compromise consumer’s names, addresses and other personal information.
+Added: Proactive measures that reduce our risk of a cybersecurity incident include:
+Added: • Maintaining cybersecurity insurance to protect against risks related to cyber-attacks and other security breaches.
+Added: • Partnering with an enterprise grade security solutions integrator (SSI) that leverages deep industry expertise to help us build and run holistic cybersecurity programs designed to reduce our overall risk profile.
+Added: The SSI performs regular audits to evaluate our current security posture and prioritize our improvement plans.
+Added: • Implementing an information security training and compliance program for employees.
+Added: We test our employees monthly with simulated “phishing” attacks.
+Added: Additionally, we run annual security awareness video training programs and occasional ad hoc awareness sessions as needed.
+Added: Despite these proactive measures, there is no guarantee that these measures will prevent a cybersecurity incident.
Unresolved Staff Comments
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.