What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-28 compared with 2021-02-22 · 90 added, 58 removed, 289 unchanged (34% of the section changed)

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The Company currently operates in two reportable segments:

Trex Residential Products (Trex Residential) and Trex Commercial Products (Trex Commercial).

Trex Residential Products (Trex Residential), the Company’s principal business based on net sales, and Trex Commercial Products (Trex Commercial).

Trex Residential

is the world’s largest manufacturer of high-performance, low-maintenance

wood-alternative composite decking and railing products, which are marketed under the brand name Trex ®

wood-alternative composite decking and railing, with 30 years of product experience.

Trex outdoor living products are marketed under the brand name Trex ®

and manufactured in the United States.

We offer a comprehensive set of aesthetically appealing and durable, low-maintenance

Stocked in more than 6,700 retail locations worldwide, we offer a comprehensive set of aesthetically appealing and durable, low-maintenance

product offerings in the decking, railing, fencing, and outdoor lighting categories.

A majority of the products are eco-friendly

and leverage recycled materials to the extent possible.

and leverage recycled and reclaimed materials to the extent possible.

Trex Residential decking is made in a proprietary process that combines reclaimed wood fibers and recycled polyethylene film, making Trex one of the largest recyclers of waste polyethylene plastic film in North America.

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Trex Pergola ™

Pergolas made from low maintenance cellular PVC product, manufactured by Home & Leisure, Inc.

Pergolas made from low maintenance cellular PVC and all-aluminum

product, manufactured by Home & Leisure, Inc.

dba Structureworks Fabrication.

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Outdoor kitchens, cabinetry and storage manufactured and sold by Danver Stainless Outdoor Kitchens.

Trex Outdoor Fire & Water ™

A line of outdoor fire features, water elements and decorative planters manufactured by Custom Molded Products, LLC.

Trex Commercial

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Trex Commercial has a team of devoted engineers and an industry-leading reputation for quality and dedication to customer service.

Trex Commercial markets to architects, specifiers, contractors, and building owners.

Trex offers the following products through Trex Commercial:

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choice for a variety of interior and exterior applications that we believe blend form, function and style.

Its straightforward, unobtrusive design features traditional balusters and contemporary vertical rods, and can be installed with continuously graspable rail options for added safety, comfort and functionality.

The strength and durability of Trex Signature railings make them a choice for any commercial setting, from high-rise condominiums and resort projects to public walkways and balconies.

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Home Depot and Lowe’s serve both the contractor market and the “do-it-yourself”

We believe that brand exposure through Home Depot and Lowe’s distribution promotes consumer acceptance of our products.

We believe that brand exposure through Home Depot and Lowe’s promotes consumer acceptance of our products.

In the years ended December 31, 2021, 2020, and 2019 sales to certain customers of Trex Residential accounted for 10% or more of the Company’s total net sales.

For the year ended December 31, 2020, three

customers of Trex Residential represented approximately 56% of the Company’s total net sales.

For the year ended December 31, 2019, three customers of Trex Residential represented approximately 57% of the Company’s total net sales.

For the year ended December 31, 2018, two customers of Trex Residential represented approximately 42% of the Company’s total net sales.

For the years ended December 31, 2021, 2020, and 2019 three customers of Trex Residential represented approximately 61%, 56%, and 57%, respectively, of the Company’s total net sales.

Trex Commercial:

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We have continuously invested the capital necessary to expand our manufacturing throughput and improve our manufacturing processes.

In June 2019, we announced a capital expenditure program to increase production capacity at our Trex Residential facilities in Virginia and Nevada.

The program involved the construction of a new decking facility at the existing Virginia site and the installation of additional production lines at the Nevada site.

The investment allowed us to increase production output for future projected growth related to our strategy of converting wood demand to Trex Residential wood-alternative composite decking.

Our capacity expansion program increased our Trex Residential production capacity by approximately 70 percent when compared to 2019 volume levels.

In addition to the recently completed the capacity expansion at our Virginia and Nevada facilities, our engineering team has installed incremental decking lines within our new Virginia facility that further expanded our production capability.

On October 26, 2021, we announced plans to add a third U.S.-based Trex Residential manufacturing facility in Little Rock, Arkansas.

The new campus will sit on approximately 300 acres of land and will address increased demand for Trex Residential outdoor living products.

Construction is slated to begin in early 2022 with the first production output anticipated in 2024.

Funded primarily through ongoing cash generation, we expect to invest approximately $400 million over the next five years in the development of the new Arkansas site.

Over time, we expect to create more than 500 new jobs to the Little Rock area.

We will continue our recruiting efforts to staff the facility in 2022.

In addition, we prioritize cost reduction projects and continuous improvement opportunities, primarily related to automation, modernization, energy efficiency and raw material processing, and remain focused on innovation and new product development.

We have also broadened the range of raw materials that we can use to produce a consistent and high-quality finished product.

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In the year ended December 31, 2021, we purchased our reclaimed wood fiber requirements under purchase orders and long-term supply commitments not exceeding four years.

All of our polyethylene purchases are under short-term

supply contracts that generally have a term of approximately one to two years for which pricing is negotiated as needed, or under purchase orders that do not involve long-term supply commitments.

All of our polyethylene purchases are under short-term supply contracts that generally have a term of approximately one to two years for which pricing is negotiated as needed, or under purchase orders that do not involve long-term supply commitments.

Reclaimed Wood Fiber

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These facilities generate reclaimed wood fiber as a byproduct of their manufacturing operations.

In addition, we purchase scrap select wood chips generated from various farming operations.

If the reclaimed wood fiber meets our specifications, our reclaimed wood fiber supply agreements generally require us to purchase at least a specified minimum and at most a specified maximum amount of reclaimed wood fiber.

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Government Regulation

We are subject to federal, state and local environmental regulation.

The emissions of particulates and other substances from our manufacturing facilities must meet federal and state air quality standards implemented through air permits issued to us by the Department of Environmental Quality of the Commonwealth of Virginia, and the Division of Environmental Protection of Nevada’s Department of Conservation and Natural Resources.

Our business activities are subject to various federal, state and local laws and regulations.

Costs and accruals incurred to comply with these governmental regulations are presently not material to our capital expenditures, results of operations and competitive position.

Although there is no assurance that existing or future government laws applicable to our operations or products will not have a material adverse effect on our capital expenditures, results of operations and competitive position, we do not currently anticipate material expenditures for government regulations.

We are also subject to federal, state and local environmental regulation.

and the Division of Environmental Protection of Nevada’s Department of Conservation and Natural Resources.

Our facilities are regulated by federal and state laws governing the disposal of solid waste and by state and local permits and requirements with respect to wastewater and storm water discharge.

Compliance with environmental laws and regulations has not had a material adverse effect on our business, operating results or financial condition.

Our operations also are subject to work place safety regulation by the U.S.

Our operations also are subject to workplace safety regulation by the U.S.

Occupational Safety and Health Administration, the Commonwealth of Virginia, and the States of Nevada, and Minnesota.

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We have one current U.S.

Patent for decking technology and five U.S.

Patent for decking technology and four U.S.

Patents for various staging systems, accessories and related technologies.

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The strategy we have developed aims to advance our efforts to increase the diversity of our workforce, while we continue to be a destination workplace for talent and maximize returns to our shareholders.

We believe a diverse candidate or employee is someone who is driven, bold, hard-working, determined and tenacious;

We believe the best candidate or employee is someone who is driven, bold, hard-working, determined and tenacious;

embodies our overarching ideals and identity;

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When comparing our ethnicity demographics against those in the geographies where we operate, we seek to accurately represent the diversity of our local communities and beyond.

We hired approximately 350 employees over the past year in support of our current expansion efforts and growth at Trex Residential and expect to continue to add additional employees to support our growth.

We continue to build our employer brand by accurately and transparently reflecting our work culture to attract candidates.

Recent actions include:

Developing a recruiting campaign specifically for Spanish-speaking job seekers.

Utilizing candidate assessment tools for certain roles to remove potential bias.

Leveraging large, diverse recruiting platforms to reach broad audiences.

Establishing a new training department focused solely on the training and development of our employees.

Launching a new, more robust and engaging careers website designed to attract ideal candidates in a competitive job market, which replaces our previous solo landing page approach with details about our organization, locations, people and benefits.

Increasing our employee and employment digital presence across many platforms.

We added approximately 400 employees during 2021 in support of our expansion efforts and growth at Trex Residential and expect to continue to add additional employees to support our growth.

We continue to build our employer brand by accurately and transparently reflecting our work culture to attract candidates with actions that include, but are not limited to:

Developing a recruiting campaign specifically for Spanish-speaking job seekers with supporting documents and training to continue to engage them once employed;

Leveraging large, diverse recruiting platforms to reach broader audiences;

Creating a partnership with NW Works (www.nwworks.com), a local nonprofit that provides counseling and employment services to disabled adults in the Winchester, Virginia area, and providing a number of job opportunities for their clients;

Further developing the Trex culture to improve retention and employee engagement at our manufacturing locations;

Expanding our training department to sharpen our focus on the training and development of our employees;

Completing diversity training with our workforce and partnering with a third-party firm to do a qualitative assessment of our strengths and weakness as it relates to diversity, equity and inclusion;

Further expanding a robust and engaging careers website designed to attract ideal candidates in a competitive job market, which replaces our previous solo landing page approach with details about our organization, locations, people and benefits.

Trex has taken these steps to ensure all employees feel comfortable, and to ensure that we remain an employer of choice, well-known for both innovation and opportunity.

All Trex employees will complete live diversity, equity and inclusion training, which addresses valuing differences, communicating inclusively, avoiding harassment and hostile work environment, and resolving unconscious bias.

All Trex employees have completed live diversity, equity and inclusion training facilitated by outside experts, which addresses valuing differences, communicating inclusively, avoiding harassment and hostile work environment, and resolving unconscious bias.

In addition, we provide Code of Conduct and Ethics training to our employees.

As part of our Employee Engagement Survey in 2021, we developed additional questions to help gauge the level of satisfaction with our approach and progress among our employees.

Additionally, of the employees who completed the survey, 72% of those employees are defined as “engaged”, which is above the industry norm as well as a slight increase from our 2019 survey.

Our recruitment strategy includes advanced education recruitment and veteran recruitment.

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The strategy also offers opportunities to partner with organizations that appeal to these talent groups, to increase our employer brand exposure, and to help sustain diversity and recruitment efforts.

As an equal opportunity employer, Trex is committed to providing fair and equitable pay for all employees across the Company.

We strive to be an industry leader in terms of hourly wages, salary and total compensation.

We use a compensation grade structure as part of our process to determine the appropriate grade level for each position at Trex.

As a result, we set the pay range for each position before considering who we might hire to fill that role.

In addition, we regularly review our compensation structures for signs of emerging inequities along gender or ethnicity lines as well as market competitiveness.

Corporate Governance

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outlines our foundational commitment to conducting business in an ethical and socially responsible manner that respects the environment.

Key policy tenets include:

Using recycled, reclaimed and other waste resources whenever possible in our manufacturing process;

Preventing pollution by maintaining environmental management as a core value;

Developing and using environmentally acceptable, safe and efficient production methods;

Identifying and complying with all legal and statutory requirements.

The Nominating / Corporate Governance Committee of the Board of Directors oversees the Company’s environmental, social and governance (ESG) matters that are significant to the Company.

Periodically, the Committee reviews the Company’s ESG strategy, initiatives and policies and receives updates from management on significant ESG activities.

Environmental matters relevant to the Company’s operations are the responsibility of members of the executive management team, including the President and Chief Executive Officer, the President of Trex Residential, the President of Trex Commercial, the Senior Vice President and Chief Financial Officer, the Senior Vice President, Chief Legal Officer and Secretary, and the General Counsel.

Trex Residential’s eco-friendly

composite decking products consist of a blend of 95 percent reclaimed wood and recycled polyethylene film.

Trex diverts from landfills and upcycles over 350 million pounds of plastic film, bags and wraps each year.

In addition, Trex Residential’s proprietary, eco-friendly

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factories reduce fuel consumption and CO 2

Almost 100 percent of our factory runoff and refuse are recycled back into the manufacturing line.

We strive to reduce energy use and associated greenhouse gas emissions in Trex manufacturing operations by designing our facilities to run efficiently.

In addition, almost 100 percent of our factory runoff and refuse are recycled back into the manufacturing line.

Any product that does not meet quality specifications is reprocessed, which eliminates the need for landfill.

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The Company develops budgets and plans that improve shareholder return by ensuring the optimal use of each resource, which promotes resource efficiency and minimal waste of the resource.

Water management is of critical importance to us and we prioritize energy savings as part of our ongoing evaluation and optimization of business operations and manufacturing processes.

Water management is of critical importance to us.

Our Virginia and Nevada manufacturing facilities have closed-loop recirculation systems that run water through multiple cycles of re-use

before being returned to the municipal wastewater stream.

We prioritize energy savings as part of our ongoing evaluation and optimization of business operations and manufacturing processes.

We regularly assess environmental impacts at each stage of our manufacturing process and seek to continually improve our performance.

We ensure that all manufacturing facilities meet emission standards for the locality in which they operate and certify to applicable authorities that our emissions are within the relevant locality’s standards.

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The Company’s internal standards for environmental stewardship and product integrity are recognized year-over-year in the marketplace.

In 2020, Trex received the 2020 Sustainability Leadership Award by the Business Intelligence Group, Green Builder Media’s best Brand Index score for the decking category, Green Builder Media’s Readers’ Choice Award for “Greenest Decking” – one of the most respected surveys issued by the publication – for an unprecedented 10-year

Trex was named to Fortune magazine’s 2020 list of the world’s 100 Fastest-Growing Companies and to Forbes’ 2021 List of America’s Best Mid-Size

Companies – ranking #12 overall on the list of 100 companies.

In 2021, Trex received Green Builder Media’s best Brand Index and the highest score for the decking category, Green Builder magazine’s Readers’ Choice Award for “Greenest Decking” – one of the most respected surveys issued by the publication – for an unprecedented 11-year

streak, and Lifestory Research’s America’s Most Trusted ®

survey named Trex America’s Most Trusted Outdoor Decking Brand – receiving the only five-star rating in the decking category.

Trex environmental benefits are recognized by the receipt of the Leadership in Energy and Environmental Design (LEED) certification by the United States Green Building Council.

Trex Residential decking products meet LEED requirements for builders and our commercial products have contributed to the LEED certifications of some high-profile venues.

LEED is a point-based system created in part by the U.S.

Green Building Council and designed to reward points to building projects that incorporate efficient, and safe eco-friendly

LEED is a point-based system designed to reward points to building projects that incorporate efficient, and safe eco-friendly

products, leading to a building’s designation as LEED Silver, Gold or Platinum.

Trex Residential decking can add up to five points to a project — four points in the Materials and Resources category for being composed of 95% recycled and reclaimed materials, and one point in the Innovation and Design category.

Trex Commercial railing products also typically contribute to LEED certification points in the Materials and Resources category based on recycled aluminum, steel, stainless steel and glass content.

LEED buildings attract higher demand, premium rates and longer occupancy leases, thereby supporting continued and growing demand for products that can facilitate LEED designations.

Green Building Council member, Trex works along with council members to transform the way buildings and communities are designed, built and operated with the goal of creating environmentally and socially responsible spaces that improve the quality of life.

Trex Commercial railing products also typically contribute to LEED certification points in the Materials and Resources category based on recycled aluminum, steel, stainless steel and glass content.

Occupational Safety

The Company is committed to plan and perform all operations at all facilities in a manner that is safe for its employees, and has adopted an Occupational Health and Safety Policy, located on our web site at www.trex.com/our-company.

The policy sets forth our commitment to sustaining a compliant and safety conscious work environment.

and keeping safety at the forefront of our business.

The commitment is based on:

A comprehensive understanding of worker expectations and requirements;

Compliance to statutory, regulatory and other legal requirements;

Prevention considerations in all designs and redesigns of facilities, equipment, processes, work methods and products, and incorporation of safe design methods into all phases of hazard and risk mitigation;

Demonstrating employee safety leadership in all processes while striving for world class performance;

Continual improvement by analyzing this commitment through the use of leading and lagging key performance indicators, such as safety observation audit completions, work area audit card completion, attendance at monthly safety training, safety work order completions, and targets related to recordable and lost time incident rates and days away or restricted time.

The Company applies industry best-practices for monitoring and reporting near misses, lost days and frequency of incidents and for implementing safety systems similar to OHSAS 18001 including:

Management leadership and employee involvement;

Worksite analysis;

Hazard prevention and control;

Safety and health training.

The Company’s “Design for Safety” program incorporates reviewing and building safety into every project from conception through completion, beginning with a Pre-startup

Safety Review (PSSR) that ensures safety items are addressed.

A fully empowered Plant Safety Committee performs safety audits and observations, reviews and trends all incidents, writes their own Safety Work Orders, and participates in all PSSRs.

Each member is required to successfully complete an Occupational Safety and Health Training course in General Industry Safety and Health, which is sanctioned and accredited by the U.S.

Department of Labor/Occupational Safety and Health Administration.

In addition, the Company has an Employee Health and Safety Manager who is a Certified Occupational Safety Specialist and Certified Occupational Safety Manager.

Occupational Health and Safety

The health and safety of our employees is our highest priority.

We have a strong Environmental, Health and Safety program that focuses on developing and implementing policies and effective safety training programs, as well as performing internal safety assessments to ensure a company-wide culture of safety and accountability.

The Trex Occupational Health and Safety Policy, located on our website at www.trex.com/our-company,

sets forth our commitment to sustaining a compliant and safety-conscious work environment, keeping safety at the forefront of our business, and is based on:

Compliance with statutory, regulatory and other legal requirements;

A comprehensive understanding of worker expectations;

Demonstrating employee safety leadership in all processes while striving to consistently improve performance;

Tracking company and site level safety performance metrics including common lagging indicators, such as injury rates, but also leading indicators such as safety observations, near-misses, and proactive actions taken at the sites to ensure worker safety.

Our active Site Safety Committees perform safety audits and observations, review and trend all incidents, and participate in all Pre-Startup

Safety Reviews and are an example of our robust employee engagement in safety.

Long term, the Company is committed to pursuing Occupational Health and Safety Administration Voluntary Protection Program (VPP) recognition and is an active participant in state level VPP development programs.

The Company is a member of the Voluntary Protection Program Participants Association, the National Safety Council, and the National Fire Protection Association.

Web Sites and Additional Information

Websites and Additional Information

Securities and Exchange Commission (SEC) maintains an Internet web site at www.sec.gov

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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.

What changed 10-K

Item 1. Business