Trex Company Inc (TREX) 2015 Q4 法說會逐字稿

Good morning and welcome to the Trex fourth-quarter earnings conference call. At this time all participants are in a listen-only mode.

(Operator Instructions)

As a remainder this conference is being recorded February 23rd, 2016. I would now lake to turn the conference over to Harriet Fried. Please go ahead, ma'am.

Thank you everyone for joining us today. With us on the call are Jim Cline, President and Chief Executive Officer, and Bryan Fairbanks, Vice President and Chief Financial Officer. Joining Jim and Bryan are Brad McDonald, Senior Director and Controller, Brian Bertaux, Senior Director of Financial Planning and Analysis, and Bill Gupp, Senior Vice President, General Counsel and Secretary.

The company issued a press release this morning containing financial results for the fourth quarter of 2015. This release is available on the company's website as well as on various financial websites. The call is also being webcast on the Investor Relations page of the company's website where it will be available for 30 days.

I would now like to turn the call over to Bill Gupp. Bill.

Thank you, Harriet. Before we begin, let me remind everyone that statements on this call regarding the company's future expected performance and condition constitute forward-looking statements within the meaning of federal securities laws. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see our most recent Form 10-K and Form 10-Qs as well as our 33 and other 34 Act filings with the S.E.C. The company expressly disclaims any obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events, or otherwise.

With that introduction I will turn the call over to Jim Cline.

Thank you, Bill. Throughout 2015 we successfully executed on our core strategies of building the Trex leading brand position, strengthening our extensive and unmatched global distribution network and leveraging our product development expertise and low-cost position. We are pleased to report these strategies resulted in record revenues and earnings for the fourth-quarter and full-year 2015 and that we have entered 2016 with positive momentum. Full-year revenue increased by 13%, substantially outpacing the industry's mid single-digit growth as we continue to drive our market share expansion strategies. Throughout 2015 we also continued to implement operational improvements, increasing our gross margin excluding warranty reserves by 110 basis points to 37%.

More and more consumers are learning that we don't simply offer a deck solution. Rather, we offer them the opportunity to design a unique ideal outdoor living space, one that suits their particular lifestyle and that's guaranteed to last almost as long as a conventional mortgage.

In 2015 we made further advancements to our distribution network. Specifically in the fourth quarter we strengthened our industry leading distribution network by adding Boise Cascade representation in a key southwest market which includes California. This firm established the Trex distribution network as best in class. Boise Cascade is a national leader in the building products distribution and has been a valued Trex partner since the late 1990s.

On the operations side we continue to improve efficiency and cost reduction. I am pleased to announce that we recently appointed a new vice president of Operations, Jay Scripter. Jay joined the organization about a month ago and has responsibility for all manufacturing operations and R&D functions. Jay came to us from FXI where he was senior vice president of Operations. During his career Jay has also worked with other large manufacturing organizations such as HB Fuller and Owens Illinois, in addition to several building products companies. We look forward to Jay's leadership and taking our operations to the next level.

Now turning to specialty materials. Sales have been growing but only modestly so far. The significant drop in oil prices has put pressure on our pricing as virgin pellets dropped from $1.09 per pound to $0.60 per pound over the last 13 months. We've identified a number of new applications for recycled pellets using our compounding expertise to combine our pellets with other polymers. These new recycled products can provide a compelling value proposition to our customers while providing margins more consistent with our original business plan even in the current challenging price environment.

We continue to view this market as a key opportunity for Trex. We expect sales for these new products to begin in the second quarter of this year. We are running two of our four lines and expect with the growing demand for our recycled pellets and our new initiatives we will increase production beyond the two lines in the second quarter. We will continue to focus our leverage on the Trex brand with new organically developed and acquired products.

In addition, we will continue to view stock repurchases as an important initiative to optimize our capital structure. Over the last three years, we have repurchased $120 million of company stock. We received authorization from our board in the fourth quarter of 2015 for a $3.15 million share repurchase program.

While we did not repurchase shares under this program in the fourth quarter 2015, we have been very active thus far in 2016. We recently increased our borrowing capacity to allow us to accelerate opportunistic share repurchases with funding from both cash generation as well as debt. We will provide you an update on our share repurchases in the first quarter of this year during the next quarterly earnings call.

In 2016 we will continue to pursue the same strategies that worked so well in 2015. Additionally, we will introduce a fundamental change to continue to drive long-term growth in excess of the industry's projected growth. This involves refocusing a significant portion of our energy and branding campaign to drive accelerated conversion from wood decking and railing to Trex wood alternative products.

Over the last two years we have seen the conversion from wood to wood alternative products begin to take place again. Wood represents 84% of the of the lineal feet sold in North America and is the greatest opportunity for share growth. Our campaign will be aimed at generating further awareness of the esthetics and functional advantages of Trex high-performance decking and railing that offers consumers compared to wood products, driving them to the Trex solution.

We've spent the last eight years at Trex rebuilding products branding and personnel in order to maximize returns. Train willing be the next lever that we will pull in order to enhance the education of our customer base on why to make the Trex decision, enabling us to accelerate Trex's market share gains.

Trex has built a state of the art training facility in Winchester for our customers to visit. They will leave Trex University knowing Trex is the only outdoor living company within decking and railing focused on educating their customers at this level and providing the best brand and product platform in the building industry. This training will provide them with specific market product and consumer data to enable them to expand their sales growth. Trex University will open to customers on March 1st of 2016.

Our first quarter guidance is for sales of $131 million, an 8% over the first quarter of 2015. I think a little color is appropriate to better understand the 2016 numbers.

In the past, a portion of our recycling involved buying poly material in excess of our requirements and selling that excess poly. Historically we made a small profit on these sales, but as oil prices have declined, so has the profitability.

Trex will significantly reduce the purchase and sale of excess scrap material in 2016 versus 2015. As a result, our annual sales related to scrap poly will decline year-over-year by approximately $10 million. The reduction in sales will be about evenly distributed across the year.

Excluding the effect of the reduction of scrap poly, first quarter growth is forecasted to be 10%. It's important to note there will be no adverse gross or net profit impact as a result of this $10 million sales reduction.

With that I will hand the call over the Bryan for more detailed review on our financial performance.

Thank you, Jim. Good morning. The press release containing our fourth quarter financial results was issued this morning. Net sales for the fourth quarter were a record $89 million, 20% higher than the 2014 quarter. The fourth quarter was favorably impacted by strong sales driven by unseasonably good weather and a strong start to the 2016 early buy season.

Gross margin for the quarter was 35.8% consistent with the same quarter prior year. SG&A for the quarter totaled $18.7 million which was $800,000 higher than the 2014 quarter. Excluding $1.1 million of one-time charges recorded in the fourth quarter of 2014, related to breakage fees on a terminated transaction and charges on our Dulles office lease, SG&A was up $1.9 million resulting from personnel-related expenses and $0.5 million charge taken in relation to the sale of Olive Branch Mississippi Properties.

During the quarter, Trex signed two sale agreements for the Olive Branch site. These two transactions closed in January, net of transaction fees for $4.3 million. Trex continues to hold 62 acres of undeveloped property in Olive Branch. The land is presently held for sale.

Excluding the $1.1 million for 2014 charges, SG&A as a percent of net sales was down by 170 basis points from 22.7% to 21% for the quarter. The company posted net income of $8.1 million or $0.26 per diluted share in the fourth quarter, compared to net income of $5.2 million, or $0.16 per diluted share in the fourth quarter of 2014. Free cash flow for the quarter totaled $45.4 million driven primarily by net income, significantly reduced accounts receivable balances and other positive working capital changes.

Our full-year 2015 net sales and earnings set new records for the company. 2015 net sales were $441 million, a 13% increase over 2014. 2015 sales reflected strong demand for Trex's high-performance outdoor products led by our good, better, best decking and railing product strategy.

Sales volume accounted for 10.4% of the net sales increase, much stronger than market growth rates, indicating that our market share advancement initiatives continue to be effective. The remainder of the growth resulted from mix and pricing.

2015 full-year gross margin was 35.1% reflecting a 70-basis-point decrease from prior year. Excluding charges to the warranty reserve of $7.8 million, primarily related to a revision in the surface flaking warranty reserve taken during the third quarter, gross margin was 36.9%, 110 basis point improvement over 2014.

Also, excluding the warranty charges, Trex overachieved on the 45% incremental gross margin guidance that was given for 2015. The improvement in gross margin excluding warranty charges was due to increases in pricing, cost reduction initiatives, increases in capacity utilization, and other operating efficiencies. We expect to further increase margins in 2016 with numerous efforts specifically targeting cost improvements, leveraging our capacity and pricing benefits similar to 2015.

SG&A for full-year 2015 was $77.5 million compared to $72.4 million in 2014. Excluding one-time charges recorded during 2014 of $2.1 million, related to breakage fees on a terminated transaction and charges against our Dulles office lease, SG&A was up $7.2 million. The increase was primarily due to branding, personnel-related expenses, and the charge for Olive Branch asset sale which were partially offset with general cost reductions.

For the full-year 2015 the company had record net earnings of $48.1 million or $1.52 per share, compared to income of $41.5 million or $1.27 per diluted share for the full-year 2014. The previously mentioned 2015 warranty charges reduced full-year earnings per share by $0.15. Before giving effect to the net of tax 2015 warranty charges and the 2014 one-time charges related to the terminated transaction and the Dulles office lease, 2015 earnings per share was favorable to 2014 by $0.37, a 28% improvement. The 2014 figures exclude the charges for the Dulles office lease and the terminated transaction.

For the full-year 2015, the company generated $39.3 million of free cash flow compared to $45.8 million for 2014. The variance is primarily due to an increase in capital expenditures of $10 million related to investment in our specialty materials business and property acquisition adjacent to our Winchester manufacturing site.

In January of 2016, we completed an amendment to our credit facility. This increased Trex's borrowing capacity by $100 million to facilitate further share repurchases and extended the maturity date by one year with no other changes to the underlying structure. As Jim noted, we've been opportunistically purchasing stock under the buyback authority during the first quarter of 2016.

Finally, I would like to turn to our revenue guidance. I would like to reaffirm first quarter revenue guidance at $131 million. As noted earlier with our targeted focus on cost improvement, in addition to volume leverage, we're increasing our incremental margin guidance from 45% to 50% for 2016. We're also projecting 2016 capital spending of $25 million to support the business and drive cost improvements.

Operator, we would now like to open the call up to questions after which Jim will provide his closing statements.

(Operator Instructions)

The first question will come from Keith Hughes with SunTrust. Please go ahead with your question.

Thank you.

The increase in the contribution margin. Let's talk about some of the details associated with that. I assume you're talking about a contribution margin on the operating income line. Is that correct?

It will be on the gross margin line, and a couple of specifics around that: Jim mentioned the reduction in poly sales of $10 million in 2016. So we won't be seeing any losses flow through from that material. It will be reduced sales. And then, more importantly, we'll be seeing improvements in gross margin related to targeted cost improvements that we've identified within the organization, and we're making advancements on those now.

As you begin the year, where do you see inventory in the channel as we approach the end of February?

As you can imagine, the weather conditions that we have seen this year, both in the fourth quarter and so far this quarter have indicated to us that we are in a reasonably good shape from an inventory standpoint. Remember that from December through March, we typically see a growth in inventory as the distributors and dealers do bring product into their operations so they're ready to service that turn when it occurs during the early part of the season.

Having said that, I've talked with a couple of installers and one group in the Philadelphia area. They've been building decks all through the winter from December through January. So the weather conditions are very favorable. We have seen continued organic demand through the month of February and the early part of the year in general. So we're very pleased with where we see the inventory right now, and we think it's conducive for a good season.

Thank you.

The next question will come from Trey Grooms with Stephens.

Good morning, Bryan and Jim, and great work and congrats on a good quarter and 2015.

Thank you.

Just to follow up to Keith's question on the 50% incremental margin -- just to be clear, I know they can move around from quarter to quarter. Are you guys suggesting that for the full year of 2016? Or specifically for the 1Q? Or how should we think about that?

That's correct. It would be for the full year of 2016.

Okay. Perfect. Thanks for that.

And then, looking at the multi-year ad campaign that you were talk about, from transitioning from wood to composite and increasing the awareness there. How much of an incremental spend do you see there? Bryan, that on SG&A? Is that going to be incremental or is it largely focusing ad dollars from one thing to another?

It's really refocusing the ad dollars for the most part. There is a minor increase to the spend, but it's taking existing dollars and redeploying those for a very specific, focused ad campaign.

So when you talk about an increase, that will start in the second quarter and run through the end of the year? Well, at least through the end of the year?

That's correct.

Okay. And then if could I just touch on international, can you tell us how much -- what's the contribution there? How much revenue does that contribute to you guys? I think you guys have mentioned it's around 10%, but also if you could just talk about any opportunities that may be out there and how we should be thinking the about that part of your business looking into 2016?

Yes, we've not provided the exact figures around international, but it still is a key strategic growth area for the Company. We see opportunities in the major economies within Europe, Middle East, and Australia, primarily for the Trex product line. We did grow the business in 2015 and have plans laid out for nice growth in 2016 as well. We're specifically targeting DIY accounts in Europe in 2016 as well as expansion of our efforts within the pro channel operating through our normal distribution channels. So as that continues to grow as a part of the business, we will provide more details around that as a size But today suffice to the say it is a nicely growing part of the business that does deliver incremental gross margin to the organization.

Great. So it sounds like you guys are focusing not only on the normal wholesale channel, but also big box as well. Is that what I heard there?

Yes, that is correct.

Okay. Perfect.

And my last one before I jump -- just on the pellets, just a little bit of clarity there. You're going to be selling the new products in the second quarter, it sounded like -- and thanks for the color around that. But is there any way for us to -- as we're thinking about modeling -- any way for us to get some color on how we should be thinking about top line potential contribution in 2016 from pellets?

Initially provide guidance of 20% EBITDA margin for the pellet business. With the weakness in virgin polyethylene pricing and a slower volume ramp than planned, due to the items that Jim discussed, we are running the operations today at slightly less than half the EBITDA margin planned. Excluding certain start-up costs to achieve that EBITDA margin. And start-up costs related to start-up, shake-out, spare parts, et cetera. With the focus of loading up the next two lines and targeting higher-value compounded material, that original target is achievable. But the key focus there has been to focus on organizations who have an interest in using recycled material content, whether that be a strict polyethylene pellet or a higher-value compounded pellet.

Okay. Well, on those lines, is there any way for us to ballpark an approximate revenue contribution per line, and then we could make assumptions around utilization and that sort of thing?

Trey, we've identified how many lines we're running today, when we think we'll ramp up to the third line. I think you probably have about as much as what we can provide at this point for you.

Okay. Fair enough, Jim. Thanks a lot. And again, good work and good luck.

Thank you, Trey.

The next question will come from Al Kaschalk with Wedbush Securities.

Good morning, guys.

Good morning.

Just to maybe delve into the pellets, but on the CapEx spending, certainly higher than we had thought. I think it's up about 7% year over year. But could you provide a little more granularity on where the dollars may be allocated, whether those are growth initiatives? You spoke about cost improvements, maybe generating some of that? Where's the increase in spending being allocated in 2016?

The lion's share of the spending is split into two areas. It's new product development and it's cost reduction initiatives. About six or nine months ago we accelerated activities related to cost reduction initiatives. We had a number of initiatives that we needed additional manpower to be able to support. We brought that manpower on, and the spending related to those began occurring in the fourth quarter, but we'll see more of that throughout 2016.

New products is key to Trex. We have a track record of introducing some fairly exciting products, and we're very focused on developing those products and bringing those to the marketplace to support our initiative, which is basically focused on taking market share from wood.

That's helpful.

Is there additional lines on the pellet side that you're ordering? Or is that still less clear on the ramp that you would need to perhaps set aside some dollars for that potential in 2016?

Yes. I think we need probably another couple of quarters before we decide how much further we go with regard to the pellet opportunity. We've got some very interesting new products that we'll be bringing to market beginning in the second quarter. And the adoption rate of those will certainly help guide us on the additional spend that we would like to have.

Finally, just to close up a little bit -- on the media spend, or the branding, are you at the level that you thought you were going to be for 2016? Or are you seeing that you need to be a little more aggressive with the spending and helping the product campaign? And then, secondly, the other piece of that: what specific mediums are you using to spend those dollars?

The spend for 2016 will be slightly more than 2015 on the branding. It will be more of a redeployment of assets. It will be focused on television, radio, and electronic media, primarily.

Okay. Very good. Good luck, guys.

Thanks a lot, Al.

The next question will come from Matt McCall with BB&T Capital Markets.

Thank you. Good morning, guys.

Good morning, Matt.

So the 50% -- the 45% going to 50% -- that's the gross line. And if I looked the last few years the average for the operating contribution margin has been in that 35% range. When I take into account the higher starting point from the higher gross contribution margin, and layer in that marketing spend, should we start looking at that operating contribution margin moving up to that 40% range? If I remember correctly, there's about five points of variable SG&A. That the way to look at that? Or am I forgetting something?

We haven't really modeled it out that way to look at it from the operating line perspective. From an SG&A perspective, we've talked in the past about branding tending to grow in lockstep with the top line, while we continue to generate efficiencies and leverage across the rest of the SG&A spend. I would recommend looking at it that way rather than trying to apply a specific number to it.

Okay. All right. That's fine. So then, the guidance for Q1, I think Jimmy said that 8% -- or Bryan, might have been you -- is actually 10% when you take out the poly scrap sales and the impact there. When you look at that 10 points of growth, what part of that is market, price, share, sale of other products like the pellets? How can we look at the different components of that 10 points of growth?

The majority of that growth is going to be from a volume perspective. There is a small piece of it that is related to price. Price will be very similar to what you saw in 2015 on an overall basis. So the vast majority of it is going to be related to volume, and that will be primarily on the decking side of the business -- decking and railing side of the business.

And if you broke out volume, Bryan, between market, growth, and share gains -- on the decking side, what's the mix?

Market growth versus share gains.

We believe we'll still grow twice the market, continue where we were at in 2015.

Okay.

Generally we're seeing the market growing in the mid single digits.

Okay. Mid single digit market growth. And then pricing last year was about two points?

Yes, it was a little bit under two points, and this year will be around 1.5.

1.5 this year. Okay. Thank you.

And then the last question I had -- I know it's early in the initiative, but you have talked about this push into servicing the big box customers a little bit better. Can you give us any update on how that's progressing, the success to date?

Sure. We've expanded that staff to where we had targeted by the end of the year. So it was a relatively slow ramp up. We saw the regions where we had people in there for an extended period of time that was supplying the types of results we had expected. Our focus again is insuring that the associates at the big boxes are familiar with Trex, they understand Trex, they know what the advantages are versus other products, specifically wood. And we think that the results we have seen so far in 2015 will be built upon in 2016. This is a case where you need to be in there on a repetitive basis to help develop that relationship and make sure that they get the message on a fairly routine basis. We believe it's being very successful.

Okay. Perfect.

And then one follow-up. The market growth for 2015 -- what was the total market growth, or estimate?

It's mid single digit.

Okay. It's the same. All right. Congrats on a good quarter. Thank you.

Thank you.

The next question will come from Jim Barrett with CL King & Associates.

Good morning, everyone.

Good morning.

Bryan, can you talk about the fourth quarter results? How much of that do you estimate did benefit from the extended and very warm weather you had in the quarter?

Difficult to say exactly how much. Clearly, we did see benefit from the good weather there. I think it would be fair to say, about 50% related to good weather and 50% related to additional dealers joining in on our 2015 December early buy program.

And your recycled pellet business -- heard what you said that sales will start kicking in, in Q2, and your comments about what the current EBITDA margins are. Assuming it kicks in according to plan, would you expect that business to be neutral, accretive, or dilutive to your guidance of 50% incremental gross margins?

It will be dilutive to a 50% gross margin.

Okay. But apparently it doesn't change the overall -- it's not a big enough part of the mix to really change your guidance, or presumably you wouldn't have increased it, right?

That's correct.

Okay. Those are my questions. Thank you very much.

The next question will come from John Baugh with Stifel.

Thank you and congrats on a great year, great quarter. Two quick questions.

First, the comment about mid single-digit growth for the industry. Was that a composite only? Or is that all decking and railing? And if it was composite only, I guess it would imply there was very little, maybe slight share gain from wood?

Yes. Wood is increasing about low single digits. Composites are growing mid single digits. We're in double digits. That's pretty much the layout.

It's fair to say that we expect there was a slight conversion from wood to composite, and we've seen that starting in late 2014, carrying into 2015. And then we'll be directly targeting that as we go forward with the multi-year campaign to convert wood to Trex.

Great. Thanks for that clarity.

The second question simply is the increase in the incremental margin. Is that due solely to the fact you won't be selling as much of the recycled material? Or are there increased conversion, if you will, from the decking and railing business?

The main driver is going to be additional volume coming through, as well as the cost savings initiatives that we have in place. And then the third piece of it would be reduced sales of the polyethylene film.

Great. And any comment on raw materials? Up, down, sideways?

The raw polyethylene market is basically drifting downwards. We saw that occurring in 2015. It's been a very slow movement. We continue to see a slow drift downwards that we think will continue, probably through the end of the first quarter, maybe early part of second quarter, then stabilizing.

Great. Thank you and good luck in 2016.

Thanks a lot, John.

The next question will come from Min Cho with FBR.

Great. Good morning. Thank you. I have a couple of questions last.

Bryan, could you talk a little bit about the 2016 early buying program and compare it to what you saw in the year-ago period?

Yes. We were very pleased with what we've seen with the 2016 program thus far. The overall structure of the program didn't change significantly from 2015, so our sales team has been out in the marketplace working with our dealers and distributors to make sure that they have the appropriate inventory on the ground for when the season kicks off.

Okay. And then, can you provide an update on the warehouse consolidation effort that you spoke of a couple of quarters ago?

Yes. We have two warehouses that we are consolidating other warehouses into. The first one is our railing warehouse, where we consolidated one location here in Winchester and another location in Fernley, Nevada, into a single railing distribution point for North America. The second warehouse conversion will take place during late second quarter, and that will consolidate a number of warehouses, smaller warehouses today that we have where we manage our poly inventories, into a single location for warehousing. And then we'll have the operations where we have all of the pellet lines and our sort lines under a separate roof.

Okay. And then just finally -- I am just curious about the branding campaign. Just wondering why the change in the campaign now? What has caused you to alter what you've been doing in the past?

During the economic downturn, it was very evident to us that, because of the price of wood and the economic conditions that people were faced with, there was essentially no movement from wood/plastic composite to wood. And in fact, we saw a slight drift going the other direction. The last two years we've seen an opportunity open up for us again to start driving that difference between wood and wood/plastic composite. And with the opportunity to grow that business, we thought it was a perfect time to continue our education of consumers. Consumers spend a great deal of time on the Internet, researching. But to get them to make that first movement there, we believe that the television/radio campaign in particular will be considerably more effective at this time.

Previously, it basically was an economic situation. People were just not ready to spend the additional money to move away from wood.

Great. That makes sense. Thank you very much. Good luck.

Thank you.

(Operator Instructions)

The next question will come from Kenneth Smith with Lennox Equity Research.

Thank you. Good morning.

Given your increased emphasis on going after the wood market and so forth, are you also going to have a financing option that's out there? Or if not you, can you please talk about what is the state of financing options available for these purchases that people previously bought wood decks for?

We have a small program in place today for Trex consumers to be able to finance. It is not -- there is no recourse back to the Trex Company. There are separate banking partners that are involved with it. But it is a small program today. It takes a number of years to get these programs up and going and really begin to drive success through that. So it's available to our consumers if they find it's something that they want to take advantage of.

Okay. Thank you.

The next question is a follow up from Keith Hughes with SunTrust.

Thank you.

Regarding the branding program, is there something that's changed within the relationship between wood prices and composite prices that pushes you to do this now? I know that lumber prices have been off pretty hard here in the last six to nine months. Is it reaction to that? Or is there some other opportunity that you see in the market?

When we look back over the last couple of years in particular, there are certain markets where certain organizations have banded together to sell the attributes of wood versus wood-alternative products. We believe -- and a good example is the West Coast where they promote redwood. We believe it's an opportunity for us to counter that argument and drive the sales with a very specific focused ad. So our ads will basically focus on the variety of wood from that region that we think is the most susceptible. And Redwood would be a great example in the western part of the United States.

It will be a comparison ad which will show the aging process of a new wood deck versus a Trex board. And the optics are, basically, you see all the maintenance required with the board; you see the susceptibility to warping, staining, as well as insects. We believe that countering those types of ads are very important, will be meaningful, and will move the needle. And in reality, if you think about it, with 84% market share for wood, a single percentage point moving from wood to wood-alternative products yields a fairly substantial opportunity for the industry.

Jim, where do you think -- you mentioned the unit number, but where do you think market share of composites is in dollars right now?

Bryan, have you got that?

On a linear foot, it's 84/16. About 30% in dollars.

About 30%, Bryan advises.

Thank you.

You bet.

There are no further questions at this time. I would like to turn the conference back over to Mr. Jim Cline for any closing remarks.

Thank you.

The outstanding performance by the employees of Trex and our business partners has made another record-setting year possible. And I want to thank all of them for their contributions. Trex continues to lead the outdoor living trend with our powerful global brand reach, extensive product lineup, and design flexibility. We remain focused on the opportunities for continued market share growth and delivering increased shareholder value in 2016.

Thank you for participating in the call today.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.