What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-27 compared with 2022-02-28 · 124 added, 170 removed, 209 unchanged (58% of the section changed)

Trex Company, Inc.

(Company, we, us or our), was incorporated as a Delaware corporation in 1998.

The Company is the world’s largest manufacturer of composite decking and railing products, which are marketed under the brand name Trex ®

and manufactured in the United States.

In addition, Trex is a leading national provider of custom-engineered railing and staging systems for the commercial and multi-family market, including sports stadiums and performing arts venues.

(Trex), was incorporated as a Delaware corporation in 1998.

Through December 30, 2022, Trex had one wholly-owned subsidiary, Trex Commercial Products, Inc.

Together, Trex and Trex Commercial Products, Inc.

are referred to as the Company, we or our.

The Company is the world’s largest manufacturer of composite decking and railing products, which are marketed under the brand name Trex ® and manufactured in the United States.

In addition, Trex provided custom-engineered railing and staging systems for the commercial and multi-family market, including sports stadiums and performing arts venues.

Our principal executive offices are located at 160 Exeter Drive, Winchester, Virginia 22603, and our telephone number at that address is (540) 542-6300.

Operations and Products:

The Company currently operates in two reportable segments:

The Company operated in two reportable segments during the three years ended December 31, 2022:

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, with 30 years of product experience.

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

and manufactured in the United States.

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 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.

On December 30, 2022, the Company sold substantially all of the assets of its wholly-owned subsidiary and reportable segment, Trex Commercial Products, Inc.

See related information in Note 3 to the Consolidated Financial Statements to this Form 10-K.

Trex Residential is the world’s largest manufacturer of high-performance, low-maintenance, eco-friendly wood-alternative composite decking and railing, with more than 30 years of product experience.

Trex outdoor living products are marketed under the brand name Trex ® and manufactured in the United States.

Stocked in more than 6,700 retail locations worldwide, Trex Residential offers a comprehensive set of aesthetically appealing and durable, low-maintenance product offerings in the decking, railing, fencing, cladding and outdoor lighting categories.

A majority of the products are eco-friendly 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 Residential one of the largest recyclers of waste polyethylene plastic film in North America.

Our composite deck boards do not rot, warp, or splinter and the versatile colors feature a refined wood grain that adds depth and luxury to any backyard.

Trex Residential products are sold to distributors and home centers for final resale primarily to the residential market.

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Decking and Accessories

Our principal decking products are Trex Transcend ®

, Trex Select ®

, and Trex Enhance ®

Our principal decking products are Trex Transcend ® Lineage ™ , Trex Transcend ® , Trex Signature ® , Trex Select ® , and Trex Enhance ® .

In addition, our Trex Transcend decking product can also be used as cladding.

Our high-performance, low-maintenance,

composite decking products are comprised of a blend of 95 percent reclaimed wood fibers and recycled polyethylene film and feature a protective polymer shell for enhanced protection against fading, staining, mold and scratching.

We also offer accessories to our decking products, including Trex Hideaway ®

and Trex DeckLighting ™

, an outdoor lighting system.

Trex DeckLighting is a line of energy-efficient LED dimmable deck lighting, which is designed for use on posts, floors and steps.

The line includes a post cap light, deck rail light, riser light and a recessed deck light.

Our railing products are Trex Transcend Railing, Trex Select Railing, Trex Enhance Railing and Trex Signature ®

aluminum railing.

Our high-performance, low-maintenance, eco-friendly composite decking products are comprised of a blend of 95 percent reclaimed wood fibers and recycled polyethylene film and feature a protective polymer shell for enhanced protection against fading, staining, mold and scratching.

Trex Transcend Lineage is the next generation of design and performance in composite decking and is available in four luxurious, on-trend hues inspired by some of the most picturesque locales in the United States.

Our Trex Transcend decking provides elevated aesthetics paired with the highest level of performance and is available in eight multi-tonal monochromatic classical earth tones and premium tropical colors.

Trex Signature decking offers realistic woodgrain aesthetics that raises the bar for beauty, performance and sustainability and is available in two luxurious hues inspired by stunning natural settings.

Trex Select decking offers the perfect pairing of price and minimal maintenance and is available in five nature-inspired earth tone colors.

Our Trex Enhance boards pair the beauty of authentic wood-grain appearance with the durability of composite with minimal maintenance and the affordability of wood and is available in natural and basic colors.

We also offer accessories to our decking products.

Trex Hideaway ® , a self-gapping universal hidden fastener designed to give a seamless finish to every project.

Trex DeckLighting ™ , an outdoor lighting system, is a line of energy-efficient LED dimmable deck lighting designed to use 75% less energy compared to incandescent lighting.

It can be installed into the railing, stair risers or the deck itself.

The line includes a post cap light, deck rail light, riser light, a soffit light and a recessed deck light.

Pre-assembled stair panels that allow for easier installation and are designed to save time on the jobsite.

Our railing products are Trex Transcend Railing, Trex Select Railing, and Trex Signature ® aluminum railing.

Our high-performance composite and aluminum deck railing kits and systems are sustainably manufactured, easy to install and durable.

Trex railing systems are built with the same durability as Trex decking and won’t rot, warp, peel or splinter and resist fading and corrosion.

Trex Transcend Railing, made from approximately 40 percent recycled content, is available in the colors of Trex Transcend decking and finishes that make it appropriate for use with Trex decking products as well as other decking materials, which we believe enhances the sales prospects of our railing products.

Trex Select Railing, made from approximately 40 percent recycled content, is offered in a white finish and is ideal for consumers who desire a simple clean finished look for their deck.

Trex Enhance, made from approximately 40 percent recycled content, is available in three colors and is offered through home improvement retailers in kits that contain the complete railing system.

Trex Signature aluminum railing, made from a minimum of 40 percent recycled content, is available in three colors and designed for consumers who want a sleek, contemporary look.

Our Trex Seclusions ®

fencing product is offered through two specialty distributors.

Our Trex Seclusions ® composite fencing product is offered through two specialty distributors.

This product consists of structural posts, bottom rail, pickets, top rail and decorative post caps.

The top and bottom rails of Trex fencing are designed to provide a “picture frame’ element and the deep rich colors have a matte surface to prevent harsh sunlight reflections.

Trex Residential products offer a number of significant aesthetic advantages over wood while eliminating many of wood’s major functional disadvantages, which include warping, splitting and other damage from moisture.

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Trex Pergola ™

Pergolas made from low maintenance cellular PVC and all-aluminum

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 lattice boards manufactured and sold by Structureworks Fabrication.

Trex Cornhole ™

Trex Cornhole ™ Boards

Cornhole boards manufactured and sold by IPC Global Marketing LLC.

Diablo ® Trex Blade

A specialty saw blade for wood-alternative composite decking manufactured and sold by Freud America, Inc.

Trex SpiralStairs ™

and Structural Steel Posts

Trex SpiralStairs ™ and Structural Steel Posts and Trex Signature Assembled Stair Panels

A staircase alternative and structural steel posts for use with all deck substructures manufactured and sold by M.

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

Trex Commercial

is a leading national provider of custom-engineered railing and staging systems.

Trex Commercial designs and engineers custom railing solutions, which are prevalent in professional and collegiate sports facilities, standardized architectural and aluminum railing systems, which target commercial and high-rise applications, and portable staging equipment for the performing arts, sports, and event production and rental market.

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:

Trex Commercial designed and engineered custom railing solutions, which are prevalent in professional and collegiate sports facilities, standardized architectural and aluminum railing systems, which targeted commercial and high-rise applications, and custom staging systems for the performing arts, sports, and event production and rental market.

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

Through the date of sale of Trex Commercial on December 30, 2022, Trex offered the following products through Trex Commercial:

Architectural Railing Systems

Our architectural railing systems are pre-engineered

guardrails with options to accommodate styles ranging from classic and elegant wood top rail combined with sleek stainless components and glass infill, to modern and minimalist stainless cable and rod infill choices.

Trex Commercial can also design, engineer and manufacture custom railing systems tailored to the customer’s specific material, style and finish.

Many railing styles are achievable, including glass, mesh, perforated railing and cable railing.

The architectural railing systems were pre-engineered guardrails with options to accommodate styles ranging from classic and elegant wood top rail combined with sleek stainless components and glass infill, to modern and minimalist stainless cable and rod infill choices.

Trex Commercial also designed, engineered and manufactured custom railing systems tailored to the customer’s specific material, style and finish.

Many railing styles included glass, mesh, perforated railing and cable railing.

Aluminum Railing Systems

Our Trex Signature aluminum railings, made from a minimum of 40 percent recycled content, are a versatile, cost-effective and low-maintenance

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.

Aluminum railings come in a variety of colors and stock lengths to accommodate project needs.

The Trex Signature aluminum railings, made from a minimum of 40 percent recycled content, were a versatile, cost-effective and low-maintenance choice for a variety of interior and exterior applications that blended form, function and style.

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

Aluminum railings were available in a variety of colors and stock lengths to accommodate project needs.

Staging Equipment and Accessories

Our advanced modular, lightweight custom staging systems include portable platforms, orchestral shells, guardrails, stair units, barricades, camera platforms, VIP viewing decks, ADA infills, DJ booths, pool covers, and other custom applications.

Our systems provide superior staging product solutions for facilities and venues with custom needs.

Our modular stage equipment is designed to appear seamless, feel permanent, and maximize the functionality of the space.

The advanced modular, lightweight custom staging systems, including portable platforms and other custom applications, provided superior staging product solutions for facilities and venues with custom needs.

The modular stage equipment was designed to appear seamless, feel permanent, and maximize the functionality of the space.

Customers and Distribution

We are committed to conducting business activities with the highest standards of business ethics and in accordance with all applicable laws and regulations.

Our Vendor and Customer Code of Conduct and Ethics (Code), available at www.trex.com/our-company, applies to all parties providing goods and services to the Company, and all channel partners who distribute, sell and/or install our products (collectively, Business Partners).

We expect all Business Partners, and all of their employees, agents and subcontractors to follow our high ethical standards set forth in the Code while they are conducting business with us or on our behalf.

In addition, we expect our Business Partners to understand and comply with the Trex Company Code of Conduct and Ethics, available at www.trex.com/our-company, to do business with Business Partners who share the same commitment to human rights that we have and as set forth in our Human Rights Policy, available at www.trex.com/our-company .

Trex Residential:

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Contractor-installed decks generally are larger installations with professional craftsmanship.

Our retail dealers generally provide sales personnel trained in Trex Residential products, contractor training, inventory commitment and point-of-sale

display support.

Our retail dealers generally provide sales personnel trained in Trex Residential products, contractor training, inventory commitment and point-of-sale display support.

We believe that attracting wholesale distributors, who are committed to our products and marketing approach and can effectively sell higher value products to contractor-oriented lumber yards and other retail outlets, is important to our future growth.

Our distributors provide value-added service in marketing our products because they sell premium wood decking products and other innovative building materials that typically require product training and personal selling efforts.

We typically appoint two distributors within a specified area to sell only Trex Residential decking products on an exclusive basis.

We typically appoint two to three distributors within a specified area to sell only Trex Residential decking products on an exclusive basis.

The distributor purchases our products at prices in effect at the time we ship the product to the distributor.

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They also purchase product through our wholesale distributors for special orders placed by consumers.

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

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

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

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Trex Commercial:

We sell our modular and architectural railing and staging systems to the commercial and multifamily market, including sports stadiums and performing arts venues, primarily to facility owners and general contractors throughout the country.

We market these products through our direct sales staff, independent sales representatives, and bidding on projects.

We are committed to conducting business activities with the highest standards of business ethics and in accordance with all applicable laws and regulations.

Our Vendor and Customer Code of Conduct and Ethics (Code), available at www.trex.com/our-company,

applies to all parties providing goods and services to the Company, and all channel partners who distribute, sell and/or install our products (collectively, Business Partners).

We expect all Business Partners, and all employees, agents and subcontractors to follow our high ethical standards set forth in the Code while they are conducting business with us or on our behalf.

In addition, we expect our Business Partners to understand and comply with the Trex Company Code of Conduct and Ethics, available at www.trex.com/our-company,

to do business with Business Partners who share the same commitment to human rights that we have and as set forth in our Human Rights Policy, available at www.trex.com/our-company

We sold our modular and architectural railing and staging systems to the commercial and multifamily market, including sports stadiums and performing arts venues, primarily to facility owners and general contractors throughout the country.

We marketed these products through our direct sales staff, independent sales representatives, and bidding on projects.

Manufacturing Process

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Our primary manufacturing process for the products involves mixing wood particles with plastic, heating and then extruding, or forcing, the highly viscous and abrasive material through a profile die.

We use many proprietary and skill-based advantages in our eco-friendly

manufacturing process.

Products manufactured at our Trex Commercial manufacturing facility in Minnesota are primarily manufactured from aluminum and stainless steel.

Our primary manufacturing process for these products involves cutting, machining, welding and finishing.

We use many proprietary and skill-based advantages in our eco-friendly manufacturing process.

Products manufactured at our Trex Commercial manufacturing facility in Minnesota were primarily manufactured from aluminum and stainless steel.

The primary manufacturing process for these products involved cutting, machining, welding and finishing.

We use Six Sigma and Lean Manufacturing methodologies throughout our Company within our plant operations and in the planning and execution of certain projects.

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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 October 2021, we announced plans to add a third U.S.-based Trex Residential manufacturing facility located in Little Rock, Arkansas, that will sit on approximately 300 acres of land.

The development approach for the new campus will be modular and calibrated to demand trends for Trex Residential outdoor living products.

Construction began on the new facility in the second quarter of 2022, and in July 2022, we entered into a design-build agreement.

As previously announced, we anticipate spending approximately $400 million on the facility and the budget for the design-build agreement is contained within this amount.

Construction for the new facility will be funded primarily through our ongoing cash generation or our line of credit.

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.

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We conduct supply chain assessments when considered necessary in relation to the significance of the purchase and business opportunity for the Company.

Assessments include in-person

reviews and tours of operating facilities.

Assessments include in-person reviews and tours of operating facilities.

The Company is committed to conducting business activities with the highest standards of business ethics and in accordance with all applicable laws and regulations.

As stated above, our Vendor and Customer Code of Conduct and Ethics, our Company Code of Conduct and Ethics, and our Human Rights Policy apply to all suppliers of the Company.

As stated above, our Vendor and

Customer Code of Conduct and Ethics, our Company Code of Conduct and Ethics, and our Human Rights Policy apply to all suppliers of the Company.

The production of most of our decking products requires a supply of reclaimed wood fiber and scrap polyethylene.

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In addition, we outsource the production of certain products to third-party manufacturers.

The production of our commercial products requires a supply of aluminum, stainless steel and glass components.

We use multiple sources for each material to ensure consistent availability of material and competitive pricing.

We purchase substantially all of our aluminum, stainless steel and glass under purchase orders, which do not involve long-term supply commitments.

Trex University is our state-of-the-art

training facility located near our Virginia manufacturing plant designed to educate and train retailers, contractors and other partners on the benefits of Trex Residential aesthetically pleasing, high-performance, low-maintenance,

outdoor living products.

The production of our commercial products required a supply of aluminum, stainless steel and glass components.

We used multiple sources for each material to ensure consistent availability of material and competitive pricing.

We purchased substantially all of our aluminum, stainless steel and glass under purchase orders, which did not involve long-term supply commitments.

Trex University is our state-of-the-art training facility located near our Virginia manufacturing plant designed to educate and train retailers, contractors and other partners on the benefits of Trex Residential aesthetically pleasing, high-performance, low-maintenance, eco-friendly outdoor living products.

In addition, in the 2022 second quarter we launched Trex Academy, an online multimedia content hub dedicated to helping the Trex Residential Do-It-Yourself customer bring their deck dreams to life by providing how-to content.

Growth Strategies

Our long-term goals are to continue leading the category with beautiful, high-performance, low-maintenance

Trex products, including our outdoor living products, such as composite decking and railing for the residential market and custom-engineered railing systems for the commercial market.

Our long-term goals are to continue leading the category with beautiful, high-performance, low-maintenance Trex products, including our outdoor living products, such as composite decking and railing for the residential market and custom-engineered railing systems for the commercial market.

To do this, we will increase market share and expand into new product categories and geographic markets through the design, creation and marketing of outdoor living products that offer superior aesthetics and quality and by expanding our sales to the commercial market.

Trex Residential will expand its offering of eco-friendly

decking and railing products for a breadth of audiences, whether by converting wood buyers who have not previously considered composite decking or appealing to the most discriminating high-end

homeowners seeking superior aesthetics and quality.

Trex Commercial will extend its position as a leading national provider of custom-engineered railing for the commercial and multi-family market, including sports stadiums.

Trex Residential will expand its offering of eco-friendly decking and railing

products for a breadth of audiences, whether by converting wood buyers who have not previously considered composite decking or appealing to the most discriminating high-end homeowners seeking superior aesthetics and quality.

Additionally, Trex will continue to explore opportunities that leverage our manufacturing and extrusion expertise and recycling heritage.

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Leverage omnichannel efforts to extend the Trex brand presence, both nationally and globally.

Achieve comprehensive market segment and geographic coverage for Trex products by increasing the number of stocking dealers and retailers and expanding our international presence for our eco-friendly

wood-alternative outdoor living products, thereby making our products available wherever our customers choose to purchase their decking or railing , and by continuing to develop our commercial market penetration for our railing systems.

Achieve comprehensive market segment and geographic coverage for Trex products by increasing the number of stocking dealers and retailers and expanding our international presence for our eco-friendly wood-alternative outdoor living products, thereby making our products available wherever our customers choose to purchase their decking or railing , and by continuing to develop our commercial market penetration for our railing systems.

Continuously advance the quality of all operational and business processes, with the goal of achieving superior product quality and service levels, thereby giving us a sustainable competitive advantage.

Through capital investments and process engineering, continuously seek to lower the cost to manufacture Trex residential and commercial products.

Through capital investments and process engineering, continuously seek to lower the cost to manufacture Trex residential products.

Investments in polyethylene recycling capabilities will allow us to expand our ability to use a wider breadth of waste materials thereby lowering raw material costs of our outdoor living products.

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We believe that the principal competitive factors in the decking and railing market include product quality, price, aesthetics, maintenance cost, and distribution and brand strength.

We believe we compete favorably with respect to these factors.

We believe we compete

favorably with respect to these factors.

We believe that our products offer aesthetic and cost advantages over the life of a deck when compared to other types of decking and railing materials.

maintenance required for a pressure-treated deck and are, therefore, less costly over the life of the deck.

We believe that our manufacturing process and utilization of relatively low-cost

raw material sources provide us with a competitive cost advantage relative to other manufacturers of wood-alternative decking and railing products.

Although a contractor-installed deck built with Trex products using a pressure-treated wood substructure generally costs more than a deck made entirely from pressure-treated wood, Trex products are low maintenance compared to the on-going maintenance required for a pressure-treated deck and are, therefore, less costly over the life of the deck.

We believe that our manufacturing process and utilization of relatively low-cost raw material sources provide us with a competitive cost advantage relative to other manufacturers of wood-alternative decking and railing products.

The scale of our operations also confers cost efficiencies in manufacturing, sales and marketing.

Our primary competition for our products in the commercial and multi-family market consists of companies that provide components to assemble guard rails, including C.R.

Laurence Co., Inc., a CRH Group company, regional railing and metal fabricators, and Wenger Corporation.

Our ability to compete depends on our product design advantages, relationships with architects and general contractors, and competitive manufacturing costs.

We believe we have a competitive advantage in products and markets in which we have established a leading market share versus our competition, including the stadium and arena railing market.

We do not yet experience those favorable dynamics in markets in which we are a relatively new entrant, including the aluminum balcony market.

These dynamics derive from familiarity with project and customer requirements, technical product requirements, and contractor and architect relationships.

Our operating results for Trex Residential have historically varied from quarter to quarter.

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The seasonal effects are often offset by the positive effect of the incentive programs.

The operating results for Trex Commercial have not historically varied from quarter to quarter as a result of seasonality.

However, they are driven by the timing of individual projects, which may vary significantly each period.

Government Regulation

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We are also 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 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.

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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.

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

Our compliance efforts include safety awareness and training programs for our production and maintenance employees.

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Intellectual property rights may be challenged by third parties and may not exclude competitors from using the same or similar technologies, brands or works.

We seek to secure effective rights for our intellectual property but cannot provide assurance that third parties will not successfully challenge, or avoid infringing, our intellectual property rights.

We seek to secure effective rights for our intellectual property

but cannot provide assurance that third parties will not successfully challenge, or avoid infringing, our intellectual property rights.

We consider our trademarks to be of material importance to our business plans.

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This law provides protection to authors of original works, whether published or unpublished, and whether registered or unregistered.

We hold a number of U.S.

Patents and U.S.

Patent Applications for various technologies.

We have one current U.S.

Patent for decking technology and four U.S.

Patents for various staging systems, accessories and related technologies.

We intend to maintain our existing patents in effect until they expire as well as to seek additional patents as we consider appropriate.

Patent for decking technology.

We intend to maintain our existing patent in effect until it expires as well as to seek additional patents as we consider appropriate.

We enter into confidentiality agreements with our employees and limit access to and distribution of our proprietary information.

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Human Capital

We are committed to furthering our stature as the highest quality, pre-eminent

decking brand in the world, while delivering robust value to our shareholders.

We are committed to furthering our stature as the highest quality, pre-eminent decking brand in the world, while delivering robust value to our shareholders.

As we continue to grow, a differentiating factor continues to be the caliber of our talent.

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We accomplish this through broad and transparent employment branding efforts, competitive and equitable compensation philosophies, proactive employee relations, and by offering a work environment with meaningful career growth opportunities.

At December 31, 2021, Trex Residential employed 1,924 full-time employees and Trex Commercial employed 150 full-time employees.

At December 31, 2022, Trex Residential employed 1,636 full-time employees.

Our employees are not covered by collective bargaining agreements.

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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 are undergoing a new approach for employee communications to further elevate employee engagement while also acting to foster inclusiveness across the organization.

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

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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 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;

Further expanding the number of roles for exclusively Spanish speaking employees while offering English as a second language and Spanish as a second language courses;

Leveraging large, diverse recruiting platforms to reach broader audiences and increasing our presence at regional universities to recruit interns and new graduates to help further diversify our talent pool;

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;

Further developing the Trex culture to improve retention and employee engagement at our manufacturing locations in a variety of ways;

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 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.

We are also looking to expand our focus on developing our existing employees so that Trex is well prepared for the future and our employees know they can grow with us.

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.

We are planning a refreshed version of our employee survey for the first quarter of 2023.

Our recruitment strategy includes advanced education recruitment and veteran recruitment.

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Environmental

The Company’s commitment to managing environmental impact includes developing and offering more sustainable products to the market as well as reducing the environmental impact of its corporate activities.

From continuous improvement in its manufacturing practices that reduce the use of energy to making products using industry leading high levels of reclaimed and recycled materials, the Company is able to improve its use of resources, its greenhouse gas emissions, and its waste streams.

Our Environmental Policy, located on our web site at www.trex.com/our-company,

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

Key policy tenets include:

The Company has been committed to sustainability since our inception more than 30 years ago, creating eco-friendly products from reclaimed and recycled materials.

Trex Residential’s high-performance, low-maintenance composite decking is made from 95% recycled and reclaimed materials.

The Company’s commitment to improving our environmental footprint includes developing and offering more sustainable products to the market as well as advancing sustainability and efficiency in our operations.

From continuous improvement in our manufacturing practices that reduce the use of energy to making products using industry leading high levels of reclaimed and recycled materials, the Company is able to improve the use of resources,

greenhouse gas emissions, and waste streams.

The foundation for our commitment to sustainability includes, but is not limited to:

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

Preventing pollution by maintaining environmental management as a core value;

Reducing waste generated in our manufacturing and business operations;

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

Identifying and complying with all legal and statutory requirements.

Our Environmental Policy, located on our web site at www.trex.com/our-company, outlines our commitment to conducting business in an ethical and socially responsible manner that respects the environment.

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

processing method minimizes greenhouse gas emissions and our bi-coastal

factories reduce fuel consumption and CO 2

Periodically, the Committee reviews the Company’s ESG strategy, initiatives and policies and receives updates from the Vice President, Marketing and ESG Development, who oversees the Company’s ESG initiatives.

Also, environmental matters relevant to the Company’s operations are the responsibility of 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 Vice President, General Counsel and Assistant Secretary.

Trex Residential’s proprietary, eco-friendly processing method minimizes greenhouse gas emissions and our bi-coastal factories reduce fuel consumption and CO 2 emissions.

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

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

In addition, it is Trex Commercial’s goal to provide eco-friendly

products for the architectural railing market and promote an effort for design innovation that decreases the environmental footprint.

The Company’s primary resource usage consists of water, natural gas and electricity.

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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.

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.

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

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 was named one of 2022’s 50 Best U.S.

Manufacturers by Industry Week and was named to Forbes’ 2021 List of America’s Best Mid-Sized Companies – ranking #12 overall on the list of 100 companies.

For the 12 th consecutive year, in 2022 Trex earned the designation “greenest” decking in the industry by the readers of Green Builder magazine and received the highest score for decking in the Green Builder Media Brand Index.

Trex was also honored with the 2022 Green Builder Sustainable Product of the Year for Trex AR Deck Visualizer.

In addition, 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 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 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 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.

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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:

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;

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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.

Each of our manufacturing sites has a dedicated health and safety (EHS) manager and committee.

The Site EHS Managers ensure safety is at the forefront of our manufacturing operations every day.

Employee representatives on the Site Safety Committee meet monthly to collect, discuss and act upon safety feedback from their colleagues.

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.

Also, we support all EHS staff in becoming Certified Occupational Safety Specialists and obtaining the Certificate for Occupational Safety Managers through programs offered by the Federal Occupational Health and Safety Administration.

Websites and Additional Information

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

that contains reports, proxy statements, and other information regarding our Company.

Securities and Exchange Commission (SEC) maintains an Internet web site at www.sec.gov that contains reports, proxy statements, and other information regarding our Company.

In addition, we maintain an Internet corporate web site at www.trex.com/our-company/investor-relations.

We make available through our web site our annual reports on Form 10-K,

quarterly reports on Form 10-Q,

current reports on Form 8-K,

and all amendments to those reports, as soon as reasonably practicable after we electronically file with or furnish such material to the SEC.

We make available through our web site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after we electronically file with or furnish such material to the SEC.

We do not charge any fees to view, print or access these reports on our web site.

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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