TREX
#Yes.
On a stick lumber, the prices you see on Random Length Lumber, I believe that most of that has already been priced into the market.
With regard to treated lumber, we have not seen a significant movement in treated lumber.
It's been relatively stable.
The demand in the first quarter was pretty well represented across the board.
The do-it-yourself channel was probably more influenced on a greater level of composite sales versus lumber sales.
So we believe, based on what we see across the board, that we're seeing an expansion there.
With regard to the margins, the margins were not significantly impacted by either channel growth.
Or product lines either.
Well, I'll give you a little bit background.
Trex worked on ways to cool decks a number of years ago.
And we were very successful in those tests to develop decks that could reduce the temperature of the decks.
At the end of the day, our findings were they did not reduce the temperature of the decks sufficiently that it was an advantage to the consumer.
We have not tested any products that reduce the temperature of a deck significantly that you would want to spend any extra money on it.
Our tests with consumers has indicated, at the price we believed we'd need to charge, they were uninterested in paying that extra amount.
By far, the lines here are still going to be the domestic market and is a good indicator ---+ gauge for this marketplace.
<UNK>, the conversion from wood is something that we ---+ based on all of the sources we've seen, we're clearly seeing movement on.
It's pretty difficult this time of year to judge share gains because, in the first quarter, most of the sales that occur in the first quarter are load-in to the distributors and into the dealers.
So until you get that sell-through, you really don't know for sure what's happening with regards to taking share from other composite manufacturers.
We have not seen anything on that.
And I think that that's scheduled to come out later in the spring, late spring, early summer.
Yes.
So the same issues with capacity utilization and our manufacturing improvements, is it doesn't reflect the financials of the company, particularly while using that as an indicator.
We did indicate last year that we were over 50%.
You can see where our sales growth is.
We're running at a higher level this year, but it still doesn't model the company at, whereas the incremental margin guidance, because of those additional efficiencies that we have in our operations, from a rate and yield perspective, provide a better capability to model the company.
<UNK>, as you're well aware, over the years, we've put a number of processes in place that actually expand our throughput and, therefore, our capacity available.
I think that level is not possible without certain expansions of certain bottlenecks.
We have a number of active programs in place that would assist us in overcoming that.
But the biggest problem any manufacturer has is dealing with the peak season, which, basically, is from May through July.
And at that point, if you didn't have the inventory or that expanded capacity, that'd be somewhat of a bottleneck.
We model that on a regular basis to make a judgment because, obviously, if you need a new plant, you've got to plan that several years in advance.
And we do not have any new plans at this point for construction of a new facility.
We believe our existing capacity is more than adequate to cover the next several years, at least, without any changes or improvements in our processes.
We're not really seeing a change in the ---+ if we're addressing poly specifically, a change in the price in the marketplace, but more so of the sourcing strategy, the types of materials we're going after.
We've mentioned before that we see that poly market being relatively stable from a price perspective.
So now it's more on the capability of our sourcing team to be finding the right materials and becoming more efficient as we go forward.
Other raw material supplies have been relatively stable as well, but what's more important are the cost-reduction initiatives that we continue to work on and the team is executing.
One of the things we have seen, as you're probably aware, Trex uses recycled polyethylene.
Over the last year, we have, in fact, seen a ---+ an increase in virgin polyethylene prices, both for linear low density, which is what we use and also high-density polyethylene.
With the off-spec resin, which some people use to fill in their demand, that has been relatively stable and quite attractive, but you can't buy your whole source from that.
So we do see a little bit of pressure on some of our competitors from a cost standpoint.
We're very comfortable with where the channel is at this point.
As Jim mentioned, first quarter is primarily a sell-in quarter.
And we look at it on a year-over-year basis.
We work with our distributors, understand what they have moving into the season.
And we're very comfortable moving into the second quarter.
Well, our distributors are focused on being able to service the market when the weather breaks.
They began taking material in, in December and that was relatively undisrupted.
The weather conditions we saw Northeast, you had the one snowfall that came in late that did slow the Northeast market a bit.
And also, you remarked on the wet weather out West, that certainly did have a temporary impact on the California and the Pac Northwest.
That seems to have picked up the shortfall by now, and that's pretty much behind us.
Let me take the pricing first.
We didn't take any pricing going into this year.
And any new pricing, we would communicate to the channel.
So that gain that you're seeing is all volume.
As we talked about last year, we do have 1 competitor who is putting aberrant programs out of there that as they try and disrupt the market and gain share back, they have been essentially ineffective with that.
It creates more distress by the people that they're trying to recruit than wins their hearts.
So we haven't seen any fallout from that.
Thank you to everyone for participating in today's call.
We look forward to seeing you at the upcoming conferences and investor meetings.
Have a good weekend.
