What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-26 compared with 2023-02-27 · 175 added, 195 removed, 971 unchanged (28% of the section changed)

23 unchanged sentences

February 26, 2024

/S/ D ENNIS C.

/S/ B RENDA K.

Senior Vice President and Chief Financial Officer

28 unchanged sentences

Other Information

Trex Residential Arkansas Manufacturing Facility

In October 2021, we announced plans to add a third U.S.-based Trex Residential manufacturing facility located 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.

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 2022, and in July 2022, the Company entered into a design-build agreement.

As previously announced, the Company anticipates 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 the Company’s ongoing cash generation or its line of credit.

Sale of Trex Commercial Products, Inc.

On December 30, 2022, we completed the sale of substantially all of the assets of our wholly-owned subsidiary and reportable segment, Trex Commercial, for net proceeds of $7.3 million.

The divestiture reflects our decision to focus on driving the most profitable growth strategy for the Company and its shareholders through the execution of our outdoor living strategy.

With the sale complete, we will dedicate our resources to accelerating conversion to composites from wood and further strengthen our leadership position in the outdoor living category.

The divestiture of this segment did not represent a strategic shift with a major effect on the Company’s operations and financial results.

As such, the results of operations of Trex Commercial are consolidated in the Company’s results of operations for the year ended December 31, 2022, through the date of sale.

Refer to Note 17, Segment Information, for additional information on the Trex Commercial segment.

Amended and Restated By-Laws of the Company dated February 21, 2024

On February 21, 2024 the Board of Directors of the Company approved and adopted amendments to Article III, Section 2 and Article IV, Section 1 of the Company’s Amended and Restated By-laws, effective immediately, to (a) clarify that that notwithstanding the statement that Directors need not be stockholders of the Corporation, if the Corporation has in effect at any time any Stock Ownership Guidelines applicable to Directors, Directors shall comply with such Guidelines and (b) to provide that if the Chairman is unavailable to preside over a meeting of the Board of Directors, then, if there is a Vice Chairman and/or a Lead Independent Director serving at the time of such meeting, the Vice Chairman or the Lead independent Director, in that order, shall serve as Chairman of the Board of Directors for such meeting.

Insider Trading Arrangements

During the quarter ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as identified in Item 408(c) of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions the Prevent Inspections

Directors, Executive Officers and Corporate Governance

2 unchanged sentences

The code is available on our corporate web site and in print to any stockholder who requests a copy.

We also make available on our web site, at www.trex.com/our-company/corporate-governance , and in print to any stockholder who requests them, copies of our corporate governance principles and the charters of each standing committee of our board of directors.

Requests for copies of these documents should be directed to Corporate Secretary, Trex Company, Inc., 160 Exeter Drive, Winchester, Virginia 22603-8605.

We also make available on our web site, at www.trex.com/our-company/corporate-governance

, and in print to any stockholder who requests them, copies of our corporate governance principles and the charters of each standing committee of our board of directors.

Requests for copies of these documents should be directed to Corporate Secretary, Trex Company, Inc., 2500 Trex Way, Winchester, Virginia 22601.

To the extent required by SEC rules, we intend to disclose any amendments to our code of conduct and ethics, and any waiver of a provision of the code with respect to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our web site referred to above within four business days following any such amendment or waiver, or within any other period that may be required under SEC rules from time to time.

19 unchanged sentences

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable or not material and, therefore, have been omitted.

(a)(3) See Exhibit Index at the end of the Annual Report on Form 10-K for the information required by this Item.

(a)(3) See Exhibit Index at the end of the Annual Report on Form 10-K

for the information required by this Item.

TREX COMPANY, INC.

16 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2023 expressed an unqualified opinion thereon.

Control—Integrated

Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission

(2013 framework),

and our report dated February 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

10 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that

communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

9 unchanged sentences

We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s process to estimate the number of claims to be settled with payment.

To test the estimated number of claims to be settled with payment, our audit procedures included, among others, evaluating the methodologies and the significant assumptions used by management.

To test the estimated number of claims to be settled with payment, our audit procedures included, among others, evaluating the methodology and the significant assumptions used by management.

We also involved an actuarial specialist to assist us in independently calculating a range of the expected number of claims to be settled with payment and compared that to the Company’s range.

12 unchanged sentences

Income from operations

Interest income, net

Interest expense (income), net

Income before income taxes

72 unchanged sentences

Stock-based compensation

Gain on disposal of property, plant and equipment

Loss (gain) on disposal of property, plant and equipment

Other non-cash

24 unchanged sentences

Cash paid for income taxes, net

Supplemental non-cash

investing and financing disclosure:

Capital expenditures in accounts payable

8 unchanged sentences

are referred to as the Company.

During the three years ended December 31, 2022, the Company operated in two reportable segments, Trex Residential Products (Trex Residential) and Trex Commercial Products (Trex Commercial).

Through December 30, 2022, the Company operated in two reportable segments, Trex Residential Products (Trex Residential) and Trex Commercial Products (Trex Commercial).

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

Refer to Note 3 below for more information on the sale.

Subsequent to December 30, 2022, the Company operates in one reportable segment, Trex Residential.

The Company’s principal business based on net sales is the manufacture and distribution of Trex Residential high-performance, low-maintenance

2 unchanged sentences

Trex Commercial designed, engineered and marketed modular and architectural railing and staging systems for the commercial and multi-family market, including sports stadiums and performing arts venues.

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

The principal executive offices are located at 2500 Trex Way, Winchester, Virginia 22601, and the telephone number at that address is (540) 542-6300.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 unchanged sentences

Intercompany accounts and transactions have been eliminated in consolidation.

The Company’s results of operations are affected by a number of factors, including, but not limited to, the cost to manufacture and distribute products, cost of raw materials, inflation, consumer spending and preferences, interest rates, the impact of any supply chain disruptions, economic conditions, and/or any adverse effects from pandemics and geopolitical conflicts.

Towards the end of June 2022, we experienced a reduction in demand from our distribution partners, spurred by concerns over a potential easing in consumer demand due to rising interest rates, declining consumer sentiment and expectations of a general slowing in the economy.

As a result, beginning in the third quarter our channel partners met demand partially through inventory drawdown rather than reordering products and maintaining current inventories.

The drawdown negatively impacted third quarter and fourth quarter sales.

Towards the end of June 2022, the Company experienced a reduction in demand from its distribution partners, spurred by concerns over a potential easing in consumer demand due to rising interest rates, declining consumer sentiment and expectations of a general slowing in the economy.

As a result, beginning in the third quarter of 2022 the Company’s channel partners met demand partially through inventory drawdown rather than reordering products and maintaining current inventories.

The drawdown was completed by year end 2022.

Use of Estimates

5 unchanged sentences

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable.

The Company from time to time may have bank

deposits in excess of insurance limits of the Federal Deposit Insurance Corporation.

The Company from time to time may have bank deposits in excess of insurance limits of the Federal Deposit Insurance Corporation.

As of December 31, 2023, substantially all deposits are maintained in one financial institution.

1 unchanged sentence

The Company routinely assesses the financial strength of its customers and believes that its trade receivables credit risk exposure is limited.

Trade receivables are recognized at the amount of revenue recognized on each shipment for Trex Residential products and for satisfied performance obligations for Trex Commercial products as the Company has an unconditional right to consideration from the customer and payment is due based solely on the passage of time.

Trade receivables are recognized at the amount of revenue recognized on each shipment for Trex Residential products as the Company has an unconditional right to consideration from the customer and payment is due based solely on the passage of time.

An estimate of expected credit losses is recognized as a valuation allowance and adjusted each reporting period.

2 unchanged sentences

In the years ended December 31, 2023, 2022, and 2021, 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, 2022 three customers of Trex Residential represented 64 % of the Company’s total net sales.

For the year ended December 31, 2023, three customers of Trex Residential represented approximately 72 % of the Company’s total net sales.

For the year ended December 31, 2022, three customers of Trex Residential represented 64 % of the Company’s total net sales.

For the year ended December 31, 2021, three customers of Trex Residential represented approximately 61 % of the Company’s total net sales.

At December 31, 2022, two customers represented 35 % and 26 %, respectively, of the Company’s total accounts receivable balance.

No other customer represented 10% or more of the Company’s total net sales.

At December 31, 2023, three customers represented 27 %, 23 %, and 20 %, respectively, of the Company’s total accounts receivable balance.

At December 31, 2022, two customers represented 35 % and 26 %, respectively, of the Company’s total accounts receivable balance.

5 unchanged sentences

At December 31, 2023, the excess of the replacement cost of inventory over the LIFO value of inventory was approximately $ 33.4 million.

Due to the nature of the LIFO valuation methodology, liquidations of inventories will result in a portion of the Company’s cost of sales being based on historical rather than current year costs.

There were no LIFO inventory liquidations or related impact on cost of sales in 2022.

During the year ended December 31, 2023, the Company had a liquidation of inventories produced in the prior year ended December 31, 2022.

As a result, a portion of the Company’s cost of sales is based on prior year costs rather than on current year costs.

However, the prior year cost of inventory closely approximates the current year cost of inventory and the resulting effect of the liquidation of inventories on the Company’s cost of sales in the year ended December 31, 2023, was immaterial.

A majority of the products at Trex Residential are made in a proprietary process that combines reclaimed wood fibers and scrap polyethylene.

1 unchanged sentence

The reclaimed material is valued at the costs of the raw material components of the material.

Inventories for the railing and staging products at Trex Commercial for the commercial and multi-family market were valued at the lower of cost (first-in,

or FIFO method), using actual cost, and net realizable value.

Property, Plant and Equipment

Property, plant and equipment are stated at historical

Property, plant and equipment are stated at historical cost.

The costs of additions and improvements are capitalized, while maintenance and repairs are expensed as incurred.

Cash flows for capital expenditures as

reported in cash flows from investing activities in the Consolidated Statements of Cash Flows are adjusted to exclude unpaid amounts accrued at period end.

Cash flows for capital expenditures as reported in cash flows from investing activities in the Consolidated Statements of Cash Flows are adjusted to exclude unpaid amounts accrued at period end.

Depreciation is provided using the straight-line method generally over the following estimated useful lives:

45 unchanged sentences

The Company identified its reporting units based on the way it manages its operating segments.

The Company has determined that it has three reporting units:

Prior to December 30, 2022, the Company had three reporting units:

a residential reporting unit in the Trex Residential reportable segment, and a commercial railing reporting unit and a staging reporting unit in the Trex Commercial reportable segment.

Subsequent to the sale of Trex Commercial on December 30, 2022, the Company has one reporting unit in the Trex Residential reportable segment.

Each reporting unit constitutes a business with discrete financial information and operating segment management, at a level below the Company’s chief operating decision maker, regularly reviews the operating results of the reporting unit.

6 unchanged sentences

The Company measures fair value of the reporting units based on a combination of the Income Approach (i.e., the Discounted Cash Flow Method) and a Market Approach.

The Discounted Cash Flow Method is a multiple period discounting model in which the fair value of the reporting units are determined by discounting the projected free cash flows using an appropriate discount rate and indicates the fair value of the reporting units based on the present value of the cash flows that the reporting unit is expected to generate in the future.

based on the present value of the cash flows that the reporting unit is expected to generate in the future.

Significant assumptions in the Discounted Cash Flow Method include:

8 unchanged sentences

The Company performs the annual impairment testing of its goodwill as of October 31 of each year.

For fiscal years 2022 2021 and 2020, the Company completed its annual impairment test of goodwill for its residential reporting unit utilizing the qualitative assessment and concluded it was not more likely than not that the fair value of the residential reporting unit was less than its carrying amount.

For fiscal years 2023, 2022 and 2021, the Company completed its annual impairment test of goodwill for its Trex Residential reporting segment residential reporting unit utilizing the qualitative assessment and concluded it was not more likely than not that the fair value of the residential reporting unit was less than its carrying amount.

Qualitative factors the Company considered include events and circumstances such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other relevant Company-specific events, as applicable.

For the fiscal year 2020, the Company completed its annual impairment test of goodwill for its commercial railing reporting unit and its staging reporting unit utilizing the qualitative assessment and concluded that it was not more likely than no t that the fair value of the respective reporting unit was less than its carrying amount.

For fiscal year 2021, the Company determined that it was necessary to perform the goodwill impairment test for its railing and staging reporting units utilizing the quantitative assessment.

For fiscal year 2021, the Company determined that it was necessary to perform the goodwill impairment test for its Trex Commercial reportable segment railing and staging reporting units utilizing the quantitative assessment.

The Company performed a quantitative assessment primarily due to a reduction in project commitments, which adversely impacted project backlog and forecasted net sales and EBITDA.

5 unchanged sentences

goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss.

On December 30, 2022, the Company sold its Trex Commercial reportable segment.

As such, there were no impairment considerations for Trex Commercial as of December 31, 2022 or December 31, 2023.

The Company uses assumptions that are consistent with those it believes a market participant would use.

5 unchanged sentences

decking, 35 years for Select

decking and Universal Fascia, and 25 years for Enhance ®

decking and Universal Fascia, and

25 years for Enhance ®

decking and Transcend, Select, Enhance and Signature ®

8 unchanged sentences

If there is a breach of such warranties, the Company has an obligation either to replace the defective product or refund the purchase price.

Reserve estimates are based on management’s judgment, considering such factors as cost per claim, historical experience, anticipated rates of claims, and other available information.

The Company maintains a warranty reserve for the settlement of its product warranty claims.

The Company accrues for the estimated cost of product warranty claims at the time revenue is recognized based on such factors as historical claims experience and expected future claims experience.

Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates.

Additionally, the Company accrues for warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated, as necessary.

Treasury Stock

16 unchanged sentences

Trex Commercial contracts had a single performance obligation as the promise to transfer the individual goods or services was not separately identifiable from other promises in the contract and was, therefore, not distinct.

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

Trex Commercial satisfied its performance obligation over time as work progressed because control transferred continuously to its customers.

Revenue and estimated profit were recognized over time based on the proportion of actual costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation.

Revenue and estimated profit were recognized over time based on the proportion of actual costs incurred to date relative to total estimated costs at completion to measure progress

toward satisfying the performance obligation.

Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

1 unchanged sentence

The Company reviewed and updated its estimates regularly and recognized adjustments in estimated profit on contracts under the cumulative catch-up

Under this method, the

impact of the adjustment on revenue and estimated profit to date on a contract is recognized in the period

the adjustment is identified.

Under this method, the impact of the adjustment on revenue and estimated profit to date on a contract is recognized in the period the adjustment is identified.

If at any time the estimate of contract profitability indicated an anticipated loss on the contract, the Company recognized the total loss in the period it was identified.

26 unchanged sentences

The Company considers the recorded value of its financial assets and liabilities, consisting primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities, and debt to approximate the fair value of the respective assets and liabilities on the Consolidated Balance Sheets at December 31, 2023 and 2022.

Recently Adopted Accounting Standards

In November 2021, the FASB issued ASU No.

“ Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance

The guidance requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model, such as IAS 20, ASC 958-605.

The annual disclosure requirements include:

the nature of the transactions, the entities related accounting policy used, the line items on the balance sheet and income statement that are affected and the amounts applicable to each financial statement line item, and significant terms and conditions of the transactions.

The disclosure requirements could be applied either prospectively to all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date of initial application, or retrospectively.

The guidance was effective for fiscal years beginning after December 15, 2021, with early application permitted.

Adoption of the guidance did not have a material effect on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU No.

“ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

The guidance provides temporary optional expedients and exceptions related to contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates.

The new guidance allows entities to elect not to apply certain modification accounting requirements, if certain criteria are met, to contracts affected by what the guidance calls reference rate reform.

An entity that makes this election would consider changes in reference rates and other contract modifications related to reference rate reform to be events that do not require contract remeasurement at the modification date or reassessment of a previous accounting determination.

The ASU notes that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition.

The guidance is effective upon issuance and generally can be applied as of March 12, 2020 through December 31, 2022.

The guidance did not have a material effect on the Company’s consolidated financial statements.

New Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

“Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The guidance requires disclosure of significant segment expenses which are regularly provided to the chief operating decision maker (CODM), the composition of and amount of other segment items, the CODM’s title and position within the organization, and how the CODM uses the reported measure(s) of segment’s profit or loss to assess the performance of the segment.

In addition, on an interim basis, all segment profit or loss and asset disclosures currently required on an annual basis must be reported, as well as those required by Topic 280.

The guidance allows for multiple measure of a segment’s profit or loss to be reported.

Entities which have a single reportable segment must apply Topic 280 in its entirety.

The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

Early adoption is permitted.

Entities are required to apply the amendments of this update retrospectively for all prior periods presented in the financial statements.

The Company does not intend to early adopt the standard and does not expect adoption of this guidance to have a material effect on its consolidated results of operations and financial position.

In December 2023, the FASB issued ASU No.

“Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The guidance requires public entities to disclose additional categories of information related to federal, state, and foreign income taxes and additional details related to reconciling items should they meet a quantitative threshold.

The guidance requires disclosure of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and to disaggregate the information by jurisdiction based on quantitative thresholds.

The guidance is effective for fiscal year beginning after December 15, 2024.

Early adoption is permitted.

The guidance should be applied on a prospective basis, retrospective application is permitted.

The Company does not expect adoption of the guidance to have a material effect on its consolidated results of operations and financial position.

SALE OF TREX COMMERCIAL PRODUCTS, INC.

On December 30, 2022, the Company completed the sale of substantially all of the assets of its wholly-owned subsidiary and reportable segment, Trex Commercial, for net proceeds of $ 7.3 million.

The divestiture reflects the Company’s decision to focus on driving the most profitable growth strategy for the Company and its shareholders through the execution of its outdoor living strategy.

With the sale complete, the Company will dedicate its resources to accelerating conversion to composites from wood and further strengthen its leadership position in the outdoor living category.

The divestiture reflected the Company’s decision to focus on driving the most profitable growth strategy for the Company and its shareholders through the execution of its outdoor living strategy.

With the sale complete, the Company has dedicated its resources to accelerating conversion to composites from wood and further strengthen its leadership position in the outdoor living category.

The sale resulted in a loss on sale of $ 15.4 million and is reported in the Consolidated Statements of Comprehensive Income.

The divestiture did not represent a strategic shift with a major effect on the Company’s operations and financial results and therefore is not reported as a discontinued operation.

As such, the results of operations of Trex Commercial are consolidated in the Company’s results of operations for the year ended December 31, 2022, through the date of sale.

The divestiture did not represent a strategic shift with a major effect on the Company’s operations and financial results and, therefore, was not reported as a discontinued operation.

As such, the results of operations of Trex Commercial are consolidated in the Company’s results of operations for the years ended December 31, 2022, and December 31, 2021.

Refer to Note 17, Segment Information, for additional information on the Trex Commercial segment.

8 unchanged sentences

Under the LIFO method, reductions in inventory cause a portion of the Company’s cost of sales to be based on historical costs rather than current year costs.

There was no inventory reduction during 2022 or 2021.

Inventories valued at lower of cost (FIFO method) and net realizable value as of December 31, 2021, were $ 5.4 million consisting primarily of raw materials.

The Company utilized the FIFO method of accounting related to its Trex Commercial products.

During the year ended December 31, 2023, the Company had a liquidation of inventories produced in the prior year ended December 31, 2022.

As a result, a portion of the Company’s cost of sales is based on prior year costs rather than on current year costs.

However, the prior year cost of inventory closely approximates the current year cost of inventory and the resulting effect of the liquidation of inventories on the Company’s cost of sales was immaterial in the year ended December 31, 2023,.

PREPAID EXPENSES AND OTHER ASSETS

1 unchanged sentence

Prepaid expenses

Revenues in excess of billings

Income tax receivable

3 unchanged sentences

For fiscal years 2023, 2022 and 2021, the Company completed its annual impairment test of goodwill for its residential reporting unit in Trex Residential utilizing the qualitative assessment and concluded it was not more likely than not that the fair value of the residential reporting unit was less than its carrying amount.

For fiscal year 2020, the Company completed its annual impairment test of goodwill for its commercial railing reporting unit and its staging reporting unit in Trex Commercial utilizing the qualitative assessment and concluded that it was not more likely than not that the fair value of the respective reporting unit was less than its carrying amount.

For fiscal year 2021, the Company elected to perform the impairment test of goodwill for its commercial railing reporting unit and its staging reporting unit utilizing the quantitative assessment.

The Company performed a quantitative assessment primarily due to a reduction in project commitments, which adversely impacted project backlog and forecasted net sales and EBITDA.

The reduction in project commitments was influenced by a continued delay in new projects due to lingering uncertainty created in the commercial railing and staging

markets by the COVID-19

The reduction in project commitments was influenced by a continued delay in new projects due to lingering uncertainty created in the commercial railing and staging markets by the COVID-19

The delay in new projects, coupled with the Company’s successful fulfillment of its pre-pandemic

1 unchanged sentence

In performing the quantitative assessment, the Company employed a combination of the Income Approach (i.e., Discounted Cash Flow Method) and the Market Approach.

The Discounted Cash Flow Method is a multiple period discounting model in which the fair values of the reporting units are determined by discounting the projected free cash flows using an appropriate discount rate.

The Market Approach uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets and liabilities, such as a business.

3 unchanged sentences

goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss.

On December 30, 2022, the Company sold Trex Commercial.

As such, there were no impairment considerations for Trex Commercial as of December 31, 2022, or December 31, 2023.

Level 3 inputs used to determine the fair value of each reporting unit include management’s future cash flow projections, a weighted average cost of capital and a residual growth rate.

7 unchanged sentences

The Company evaluates the recoverability of intangible assets periodically and considers events or circumstances that may warrant revised estimates of useful lives or that may indicate an impairment.

Intangible asset amortization expense for the year ended December 31, 2022 and December 31, 2021, was $ 0.4 million and $ 0.4 million, respectively.

Intangible asset amortization expense for the year ended December 31, 2023, December 31, 2022, and December 31, 2021, was $ 0.4 million, $ 0.4 million, and $ 0.4 million, respectively.

PROPERTY, PLANT AND EQUIPMENT

10 unchanged sentences

The Company had construction in process as of December 31, 2023, of approximately $ 248 million.

The Company expects that substantially all of the above noted construction in process will be completed and put into service in the year ending December 31, 2025.

Depreciation expense for the years ended December 31, 2022, 2021, and 2020, totaled $ 43.9 million, $ 35.5 million, and $ 17.5 million, respectively.

The Company expects that substantially all of the above noted construction in process will be completed and put into service during or before the year ending December 31, 2026.

Depreciation expense for the years ended December 31, 2023, 2022, and 2021, was $ 49.8 million, $ 43.9 million, and $ 35.5 million, respectively.

ACCRUED EXPENSES AND OTHER LIABILITIES

2 unchanged sentences

Compensation and benefits

Op erating lease liabilities

g lease liabilitie

Manufacturing costs

Billings in excess of revenues

Customer deposits

Total accrued expenses and other liabilities

Revolving Credit Facility

Indebtedness prior to May

On November 5, 2019, the Company entered into a Fourth Amended and Restated Credit Agreement (Fourth Amended Credit Agreement) as borrower, Trex Commercial Products, Inc., as guarantor;

Bank of America, N.A.

as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer;

and certain other lenders including Wells Fargo Bank, N.A., who is also Syndication Agent, and Truist Bank, arranged by BOA Securities, Inc., as Sole Lead Arranger and Sole Bookrunner, to amend and restate the Third Amended and Restated Credit Agreement (Third Amended Credit Agreement), dated as of January 12, 2016, as amended.

The Fourth Amended Credit Agreement provides the Company with one or more Revolving Loans in a collective maximum principal amount of $ 250 million from January 1 through June 30 of each year and a maximum principal amount of $ 200 million from July 1 through December 31 of each year throughout the term, which ends November 5, 2024 .

On May 26, 2020, the Company entered into a First Amendment to the Original Credit Agreement (the First Amendment) to provide for an additional $ 100 million line of credit through May 26, 2022.

As a matter of convenience, the parties incorporated the amendments to the Original Credit Agreement made by the First Amendment into a new Fourth Amended and Restated Credit Agreement (New Credit Agreement).

In the New Credit Agreement, the revolving commitments under the Original Credit Agreement are referred to as Revolving A Commitments and the new $ 100 million line of credit is referred to as Revolving B Commitments.

In the New Credit Agreement, all of the material terms and conditions related to the original line of credit (Revolving A Commitments) remained unchanged from the Original Credit Agreement.

The Company’s revolving credit facility executed November 5, 2019, was completely replaced by the Company’s revolving credit facility executed May 18, 2022.

Indebtedness on and after May

Indebtedness Prior to December

On May 18, 2022, the Company, as borrower;

Trex Commercial Products, Inc.

Trex Commercial, as guarantor;

Bank of America, N.A.

BOA, as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer;

Wells Fargo Bank, National Association (Wells Fargo), as lender and

Syndication Agent;

Regions Bank, PNC Bank, National Association, and TD Bank, N.A.

(each, a Lender and collectively, the Lenders), arranged by BofA Securities, Inc.

Wells Fargo, as lender and Syndication Agent;

Regions Bank, PNC Bank, National Association (PNC), and TD Bank, N.A.

(TD) (each, a Lender and collectively, the Lenders), arranged by BofA Securities, Inc.

as Sole Lead Arranger and Sole Bookrunner, entered into a Credit Agreement (Credit Agreement) to amend and restate the Fourth Amended and Restated Credit Agreement dated as of November 5, 2019.

9 unchanged sentences

Repayment of all then outstanding principal, interest, fees and costs is due at the end of the Term.

The Company and BofA Securities, Inc.

as a sustainability coordinator, are entitled to establish specified key performance indicators (KPIs) with respect to certain environmental, social and governance targets of the Company and its subsidiaries.

The sustainability coordinator and the Company may amend the Credit Agreement for the purpose of incorporating the KPIs and other related provisions, unless the Lenders object to such amendment on or prior to the date that is ten business days after the date on which such amendment is posted for review by the Lenders.

Based on the performance of the Company and its subsidiaries against the KPIs, certain adjustments (increase, decrease or no adjustment) to otherwise applicable pricing will be made;

The Company and BofA Securities, as a sustainability coordinator, are entitled to establish specified key performance indicators (KPIs) with respect to certain environmental, social and governance targets of the Company and its subsidiaries.

after the date on which such amendment is posted for review by the Lenders.

Based on the performance of the Company and its subsidiaries against the KPIs, certain

adjustments (increase, decrease or no adjustment) to otherwise applicable pricing will be made;

provided that the amount of such adjustments shall not exceed certain aggregate caps as in the definitive loan documentation.

2 unchanged sentences

As of December 22, 2022, the Company entered into a First Amendment to the Credit Agreement (First Amendment) by and among the Company, as borrower, the guarantors party thereto;

Bank of America, N.A.

BOA as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer;

TD Bank, N.A.

as lender and Syndication Agent;

Regions Bank, PNC Bank, National Association, and Wells Fargo Bank, National Association (each, a Lender and collectively, the Lenders), arranged by BofA Securities, Inc.

TD as lender and Syndication Agent;

Regions Bank, PNC, and Wells Fargo (each, a Lender and collectively, the Lenders), arranged by BofA Securities, Inc.

as Sole Lead Arranger and Sole Bookrunner, amending that certain Credit Agreement dated as of May 18, 2022, by and among the Company, as borrower, the guarantors party thereto, BOA, as a Lender, Administrative Agent, Swing Line Lender and L/C Issuer and the other lenders identified therein (as so amended, the “Credit Agreement”).

The First Amendment removes Trex Commercial as a guarantor to any and all indebtedness under the Credit Agreement.

As a part of the First Amendment, the Credit Agreement was amended and restated to provide for an additional Revolving B Loan (as hereinafter defined).

B Loan Limit) throughout the term, which ends December 22, 2024 (Revolving B Loan Term).

Under the First Amendment, the Lenders agreed to provide the Company with a Revolving B Loan consisting of one or more revolving loans in a collective maximum principal amount of $ 150,000,000 (Revolving B Loan Limit) throughout the term, which ends December 22, 2024 (Revolving B Loan Term).

Previously, under the Credit Agreement, there was no Revolving B Loan.

The First Amendment also provided that TD Bank, N.A.

would serve as Syndication Agent.

The First Amendment also provided that TD would serve as Syndication Agent.

As of December 22, 2022, the Credit Agreement was amended and restated to refer to this loan as the Revolving A Loan.

8 unchanged sentences

With respect to Revolving B Loans, for any day, the rate per annum is a tiered pricing based upon the Consolidated Debt to Consolidated EBITDA Ratio.

The applicable rate for Revolving B Loans that are Base Rate Loans range between 1.20 % and 2.15 % and the applicable rate for Revolving B Loans that are Term SOFR/Term SOFR Daily Floating Rate range between 0.20 % and 1.15 %.

The applicable rate for Revolving B Loans that are Base Rate Loans range between 1.20 % and 2.15

% and the applicable rate for Revolving B Loans that are Term SOFR/Term SOFR Daily Floating Rate range between 0.20 % and 1.15 %.

The Company had $ 5.5 million in borrowings outstanding under its revolving credit facility and available borrowing capacity of $ 544.5 million at December 31, 2023.

7 unchanged sentences

The weighted average discount rate at December 31, 2023 and December 31, 2022 was 2.32 % and 2.10 %, respectively.

The following table includes supplemental cash flow information for the years ended December 31, 2022 and December 31, 2021 and December 31, 2020 and supplemental balance sheet information at December 31, 2022 and December 31, 2021 related to operating leases (in thousands):

The following table includes supplemental cash flow information for the years ended December 31, 2023, December 31, 2022, and December 31, 2021 and supplemental balance sheet information at December 31, 2023 and December 31, 2022 related to operating leases (in thousands):

Supplemental Cash Flow Information

20 unchanged sentences

Basic weighted average shares outstanding

Year Ended December 31,

Effect of dilutive securities:

10 unchanged sentences

Stock Repurchase Program

On February 16, 2018, the Board of Directors adopted a stock repurchase program of up to 11.6 million shares of the Company’s outstanding common stock (Stock Repurchase Program).

During 2022, the Company repurchased 6.5 million shares of the Company’s outstanding common stock under the Stock Repurchase Program.

On February 16, 2018, the Board of Directors adopted the 2018 Stock Repurchase Program of up to 11.6 million shares of the Company’s outstanding common stock (Stock Repurchase Program).

During 2023, the Company did no t repurchase shares of its outstanding common stock under the Stock Repurchase Program.

On May 4, 2023, the Trex Board of Directors adopted a new stock repurchase program (2023 Stock Repurchase Program) of up to 10.8 million shares of its outstanding common stock, and terminated the existing Stock Repurchase Program.

The 2023 Stock Repurchase Program has no set expiration date.

The Company repurchased 264,896 shares of its outstanding common stock under the 2023 Stock Repurchase Program during 2023.

REVENUE FROM CONTRACTS WITH CUSTOMERS

12 unchanged sentences

Any performance obligation that remains unsatisfied at the end of a reporting period is part of a contract that has an original expected duration of one year or less.

included in “Accrued expenses and other liabilities, Sales and marketing” in Note 8 to the Consolidated Financial Statements.

Any variable consideration related to the unsatisfied performance obligation is allocated wholly to the unsatisfied performance obligation and recognized when the product ships and the performance obligation is satisfied and is included in “Accrued expenses and other liabilities, Sales and marketing” in Note 8 to the Consolidated Financial Statements.

For each product shipped, the transaction price by product is specified in the purchase order.

15 unchanged sentences

Trex Commercial Products

Trex Commercial generated revenue from the manufacture and sale of its modular and architectural railing and staging systems.

On December 30, 2022, the Company completed the sale of its wholly-owned subsidiary and reportable segment, Trex Commercial.

Prior to December 30, 2022, Trex Commercial generated revenue from the manufacture and sale of its modular and architectural railing and staging systems.

All of its revenues were from fixed-price contracts with customers.

On December 30, 2022, the Company completed the sale of Trex Commercial.

Trex Commercial satisfied its performance obligation over time as work progressed because control transferred continuously to its customers.

Revenue and estimated profit was recognized over time based on the proportion of actual costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation.

Revenue and estimated profit was recognized over time based on the proportion of actual costs incurred to date relative to total estimated costs at completion to measure progress

toward satisfying the performance obligation.

Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

18 unchanged sentences

Year Ended December 31, 2023

Reportable Segment

Timing of Revenue Recognition and Type of Contract

Products transferred at a point in time and variable consideration contracts

Products transferred over time and fixed price contracts

Year Ended December 31, 2022

9 unchanged sentences

STOCK-BASED COMPENSATION

On April 30, 2014, Trex stockholders approved the Trex Company, Inc.

2014 Stock Incentive Plan (Plan), which was previously approved by the Board of Directors on February 19, 2014.

The Plan is administered by the Compensation Committee of the Trex Board of Directors.

Stock-based compensation is granted to officers, directors and certain key employees in accordance with the provisions of the Plan.

The Plan provides for grants of stock options, restricted stock, restricted stock units, stock appreciation rights (SARs), and unrestricted stock.

The total aggregate number of shares of the Trex common stock that may be issued under the Plan is 25,680,000 and as of December 31, 2022, the total number of shares available for future issuance was 11,047,894 .

At the annual meeting of stockholders of the Company held on May 4, 2023, the Company’s stockholders approved the Trex Company, Inc.

2023 Stock Incentive Plan (Plan).

The Company’s board of directors unanimously approved the Plan on April 10, 2023, subject to stockholder approval.

The Plan amends and restates in its entirety the Trex Company, Inc.

2014 Stock Incentive Plan (2014 Plan), which was last approved by the Company’s stockholders at the annual meeting held on April 30, 2014.

The Plan, which will be administered by the compensation committee of the board of directors, provides for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights and unrestricted stock, which are referred to collectively as “awards.” Awards may be granted under the Plan to officers, directors (including non-employee

directors) and other employees of the Company or any subsidiary thereof, to any adviser, consultant, or other provider of services to the Company (and any employee thereof), and to any other individuals who are approved by the board of directors as eligible to participate in the Plan.

Only employees of the Company or any subsidiary thereof are eligible to receive incentive stock options.

Subject to certain adjustments as provided in the Plan, the total aggregate number of shares of common stock that may be granted under the Plan is 4,000,000 shares.

As of December 31, 2023, the total number of shares of available for future grants was 3,979,521 .

The Company recognizes stock-based compensation expense ratably over the period from grant date to the earlier of (1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award.

11 unchanged sentences

The fair value of time-based restricted stock and time-based restricted stock units is determined based on the closing price of Trex shares on the grant date.

Time-based restricted stock and time-based restricted stock units vest based on the terms of the awards.

Time-based restricted stock and time-based restricted stock units

vest based on the terms of the awards.

Unvested time-based restricted stock and unvested time-based restricted stock units are generally forfeitable upon the resignation of employment or termination of employment with cause.

14 unchanged sentences

The number of shares that will vest, with respect to each vesting, will be between 0 % and 200 % of the target number of shares.

At December 31, 2022, 2021 and 2020 there was $ 0.3 million, $ 2.8 million, and $ 1.7 million, respectively, of total compensation expense related to unvested performance-based restricted stock and unvested performance-based restricted stock units remaining to be recognized over a weighted-average period of approximately one year .

At December 31, 2023, 2022, and 2021 there was $ 4.3 million, $ 0.3 million, $ 2.8 million, respectively, of total compensation expense related to unvested performance-based restricted stock and unvested performance-based restricted stock units remaining to be recognized over a weighted-average period of approximately one year .

Performance-based restricted stock activity under the Plan is as follows:

3 unchanged sentences

Restricted Stock

Weighted-Average

Nonvested at December 31, 2020

30 unchanged sentences

SAR activity under the Plan and all predecessor stock incentive plans is as follows:

Weighted-Average

Outstanding at December 31, 2020

11 unchanged sentences

EMPLOYEE BENEFIT PLANS

The Company has two 401(k) Profit Sharing Plans for the benefit of its employees who meet certain eligibility requirements and it matches qualifying employee contributions.

At December 31, 2023 the Company has a 401(k) Profit Sharing Plan for the benefit of its employees who meet certain eligibility requirements and it matches qualifying employee contributions.

The Company’s contributions to the plans totaled $ 6.8 million, $ 8.1 million, and $ 6.6 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

4 unchanged sentences

Total income tax provision

The Company’s effective tax rate for the year ended December 31, 2022 was 25.2 % and was comparable to the effective tax rate for the year ended December 31, 2021, which resulted in income tax expense of $ 62.2 million and $ 66.7 million, respectively.

The Company’s effective tax rate for the year ended December 31, 2023, was 25.6 % and was comparable to the effective tax rate for the year ended December 31, 2022, of 25.2 %, which resulted in income tax expense of $ 70.8 million and $ 62.2 million, respectively.

The income tax provision differs from the amount of income tax determined by applying the U.S.

11 unchanged sentences

Deferred tax assets:

Net operating losses

Operating lease liability

Product and surface flaking warranty reserves

State tax credit carryforwards

Deferred revenue

Tax Cut and Jobs Act capitalization of research and development costs

Residential product warranty reserve

Stock-based compensation

Accruals not currently deductible and other

Operating lease liability

Deferred revenue

Goodwill amortization

State tax credit carryforwards

Net Operating Losses

Gross deferred tax assets, before valuation allowance

15 unchanged sentences

Such examinations may result in future assessments by these taxing authorities, and the Company has accrued a liability when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with accounting standards.

As of December 31, 2022,

for certain tax jurisdictions, tax years 2018 through 2022 remain subject to examination.

As of December 31, 2023, for certain tax jurisdictions, tax years 2019 through 2023 remain subject to examination.

The Company believes that adequate provisions have been made for all tax returns subject to examination.

Sales made to foreign distributors are not taxable in any foreign jurisdictions as

the Company does not have a taxable presence.

Sales made to foreign distributors are not taxable in any foreign jurisdictions as the Company does not have a taxable presence.

SEGMENT INFORMATION

Through December 30, 2022, the Company operated in two reportable segments.

On December 30, 2022, the Company completed the sale of its wholly-owned subsidiary and reportable segment, Trex Commercial.

Subsequent to the sale of Trex Commercial, the Company operates in one reportable segment, Trex Residential.

Trex Residential manufactures composite decking and railing and related products marketed under the brand name Trex ®

4 unchanged sentences

Refer to Note 3 to these consolidated financial statements for additional information on the sale of Trex Commercial.

The Company’s reportable segments have been determined in accordance with its internal management structure, which is organized based on residential and commercial operations.

The Company’s reportable segments are determined in accordance with its internal management structure, which, through December 30, 2022, was based on residential and commercial operations.

The Company evaluates performance of each segment primarily based on net sales and earnings before interest, taxes, depreciation, and amortization (EBITDA).

4 unchanged sentences

Trex Residential

Trex Commercial

December 31, 2022

4 unchanged sentences

Trex Commercial

For the year ended December 31, 2022, total consolidated net income and net loss at Trex Commercial includes a loss on sale of Trex Commercial on December 30, 2022 of $ 15.4 million.

For the year ended December 31, 2021, total consolidated net income and net loss at

Trex Commercial includes a goodwill impairment charge of $ 54.2 million.

For the year ended December 31, 2022, consolidated net income and net loss at Trex Commercial includes a loss on sale of Trex Commercial on December 30, 2022, of $ 15.4 million.

For the year ended December 31, 2021, consolidated net income and net loss at Trex Commercial includes a goodwill impairment charge of $ 54.2 million.

Reconciliation of Net Income (Loss) to EBITDA (in thousands):

1 unchanged sentence

Trex Residential

Trex Commercial

December 31, 2022

5 unchanged sentences

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

Seasonal, erratic or prolonged adverse weather conditions in certain geographic regions reduce the level of home improvement and construction activity and can shift demand for its products to a later period.

Seasonal, erratic, or prolonged adverse weather conditions may reduce the level of home improvement and construction activity and can shift demand for its products to a later period.

As part of its normal business practice and consistent with industry practice, Trex Residential has historically offered incentive programs to its distributors and dealers to build inventory levels before the start of the prime deck-building season in order to ensure adequate availability of its product to meet anticipated seasonal consumer demand.

7 unchanged sentences

In the year ended December 31, 2023, the Company purchased reclaimed wood fiber requirements under purchase orders and long-term supply commitments not exceeding four years.

All of the Company’s scrap polyethylene, aluminum and stainless-steel purchases are under short-term supply contracts that may average 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 the Company’s scrap polyethylene, aluminum and stainless-steel purchases are under short-term supply contracts that may average approximately one year, for which pricing is negotiated as needed, or under purchase orders that do not involve long-term supply commitments.

The wood and polyethylene supply contracts generally provide that the Company is obligated to purchase all wood or polyethylene a supplier provides, if the wood or polyethylene meets certain specifications.

16 unchanged sentences

If there is a breach of such warranties, the Company has an obligation either to replace the defective product or refund the purchase price.

The Company maintains a warranty reserve for the settlement of its product warranty claims.

The Company accrues for the estimated cost of product warranty claims at the time revenue is recognized based on such factors as historical claims experience and future claims experience.

Management reviews and adjusts these estimates, if necessary, based on the differences between actual experience and historical estimates.

Additionally, the Company accrues for warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated, as necessary.

Trex Residential continues to receive and settle claims for decking products manufactured at its Nevada facility prior to 2007 that exhibit surface flaking and maintains a warranty reserve to provide for the settlement of these claims.

6 unchanged sentences

It has been the Company’s practice to utilize the actuarial techniques discussed above during the third quarter, after a significant portion of all claims has been received for the fiscal year and variances to annual claims expectations are more meaningful.

The number of incoming claims received in the year ended December 31, 2022 was significantly lower than the number of claims received in the year ended December 31, 2021, and lower than the Company’s expectations for 2022.

Average cost per claim experienced in the year ended December 31, 2022 was significantly higher than that experienced in the year ended December 31, 2021, and higher than the Company’s expectations for 2022.

The elevated average cost per claim experienced in the year ended December 31, 2022, was primarily the result of the closure of three large claims, which were considered in the Company’s estimation of the surface flaking reserve.

The Company believes the reserve at December 31, 202 2

is sufficient to cover future surface flaking obligations.

Average cost per claim experienced in the year ended December 31, 2023, was lower than that experienced in the year ended December 31, 2022, which was elevated due to the closure of three large claims, and lower than the Company’s expectations for 2023.

The number of incoming claims received in the year ended December 31, 2023, was lower than the number of claims received in the year ended December 31, 2022, and lower than the Company’s expectations for 2023.

After evaluating the declining trend in incoming claims in its actuarial analysis, the Company decreased the estimate of the number of future claims to be settled with payment.

As a result of the decrease in estimated future claims, in the three-month period ended September 30, 2023, the Company recorded a reduction of $ 3.8 million to its warranty reserve for the future settlement of surface flaking claims.

The Company believes the reserve at December 31, 2023 is sufficient to cover future surface flaking obligations.

The Company’s analysis is based on currently known facts and a number of assumptions, as discussed above, and current expectations.

2 unchanged sentences

If the level of claims received or average cost per claim differs materially from expectations, it could result in additional increases or decreases to the warranty reserve and a decrease or increase in earnings and cash flows in future periods.

The Company estimates that a

10 % change in the expected number of remaining claims to be settled with payment or the expected cost to settle claims may result in approximately a $

1.6 million change in the surface flaking warranty reserve.

The Company also maintains a warranty reserve for the settlement of other residential product warranty claims and records the provision at the time of product sale.

The following is a reconciliation of the Company’s residential product warranty reserve (in thousands):

The Company estimates that a 10 % change in the expected number of remaining claims to be settled with payment or the expected cost to settle claims may result in approximately a $ 1.0 million change in the surface flaking warranty reserve.

The following is a reconciliation of the Trex Residential product warranty and surface flaking reserves (in thousands):

Year Ended December 31, 2023

12 unchanged sentences

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

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

The Company anticipates spending approximately $ 450 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 the Company’s ongoing cash generation or its line of credit.

20 unchanged sentences

President and Chief Executive Officer (Principal Executive Officer);

/S/ D ENNIS C.

/S/ B RENDA K.

Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

2 unchanged sentences

Vice Chairman

/S/ M ICHAEL F.

/S/ K RISTINE L.

/S/ M ELKEYA M C D UFFIE

Melkeya McDuffie

/S/ P ATRICIA B.

7 unchanged sentences

dated May 5, 2022

Amended and Restated By-Laws of the Company.

Amended and Restated By-Laws of the Company dated February 21, 2024.

Specimen certificate representing the Company’s common stock.

17 unchanged sentences

Note dated May 18, 2022 payable by the Company to Regions Bank in the amount of the lesser of $40,000,000 or the outstanding revolver advances made by Regions Bank.

Incorporated by reference

Note dated May 18, 2022 payable by the Company to PNC Bank, National Association in the amount of the lesser of $30,000,000 or the outstanding revolver advances made by PNC Bank, National Association.

4 unchanged sentences

as Administrative Agent (including Notices of Grant of Security Interest in Copyrights and Trademarks).

Incorporated by reference

Fourth Amended and Restated Credit Agreement dated as of November 5, 2019 between the Company, as borrower;

16 unchanged sentences

as Sole Lead Arranger and Sole Bookrunner, dated May 26, 2020.

Incorporated by reference

Note dated November 5, 2019 payable by the Company to Bank of America, N.A.

13 unchanged sentences

November 6, 2019

Incorporated by reference

Description of Securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

February 22, 2021

Description of Management Compensatory Plans and Arrangements.

February 14, 2019

Trex Company, Inc.

Amended and Restated 2014 Stock Incentive Plan.

November 2, 2020

2023 Stock Incentive Plan.

Trex Company, Inc.

Amended and Restated 1999 Incentive Plan for Outside Directors as amended on February 23, 2022.

February 28, 2022

Amended and Restated 1999 Incentive Plan for Outside Directors as amended on July 26, 2023.

July 31, 2023

Form of Trex Company, Inc.

4 unchanged sentences

July 31, 2023

Incorporated by reference

Form of Trex Company, Inc.

3 unchanged sentences

Amended and Restated 1999 Incentive Plan for Outside Directors Restricted Stock Unit Agreement.

August 3, 2015

Change in Control Severance Agreement dated February 21, 2020 by and between Trex Company, Inc.

February 25, 2020

Amended and Restated Severance Agreement dated February 21, 2020 by and between Trex Company, Inc.

February 25, 2020

Form of Change in Control Severance Agreement between Trex Company, Inc.

and Officers other than the Chief Executive Officer.

February 21, 2017

July 31, 2023

Amended and Restated Severance Agreement dated July 31, 2023 by and between Trex Company, Inc.

July 31, 2023

Form of Severance Agreement between Trex Company, Inc.

and Officers other than the Chief Executive Officer.

Form of Retention Agreement for Company Officers dated May 2, 1018.

July 31, 2023

AIA document A141 – 2014 Agreement dated July 7, 2022 by and between Trex Company, Inc.

15 unchanged sentences

December 30, 2022

Incorporated by reference

Insider Trading Policy

Subsidiaries of the Company.

1 unchanged sentence

Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

Incorporated by reference

Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

Recovery of Compensation for Accounting Restatements Policy

Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

9 unchanged sentences

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 9A. Controls and Procedures