![]() ![]() But it was way better than in 3Q 2022 and 4Q 2022 with only 10% and 16%. The operating margin was 24% versus 28% in 1Q 2022. Although the impact of the lower volume was higher, the company remained profitable. Doing so allowed it to partially offset the massive revenue decrease. Their combined amount decreased as the company reduced its production volume. In fact, costs and expenses remained within company expectations. What made it a durable company was its efficient asset management. It was still lower than in 1Q 2022 but higher than in the second half of 2022. This aspect attracted more customers while stabilizing its production level. More importantly, the company had increased pricing flexibility. ![]() The company enjoyed a substantial increase in demand from its 3Q 2022 trough. In turn, building products became more of a staple in the first quarter. It was most evident in the property market as home sales and loan demand bounced back in the first three months of 2023. It increased the purchasing power of customers as their income adjusted to inflation. The decreasing inflation was also vital in the rebounding demand. Given this, the strategy of the company paid off in the next two quarters. It had the lowest demand and pricing flexibility. It is mainly due to the peak of inflation at 9.1%, the highest in four decades. ![]() The most recent five quarters revealed 3Q 2022 as the weakest one. Also, we can see the continued rebound since 4Q 2022. Even so, it was a wise move to deal with the weaker demand compared to the same quarter in 2022. We can still attribute it to the lower production volume due to inflationary headwinds. In 1Q 2023, the operating revenue amounted to $238.72 million, a 30% year-over-year decrease. Despite this, it remained durable and resilient to withstand headwinds and rebound. Trex can also be considered a part of the consumer discretionary sector, making it vulnerable to lower consumer spending. As such, the demand softened and property sales dropped in 2022. This uptrend raised property prices by almost 50% in only two years. However, the demand became overwhelming and raised property shortages. The near-zero interest and mortgage rates led to a massive demand influx. The real estate and construction market has enjoyed its boom in the past two years. Even so, it remains lower than its intrinsic value with decent upside potential. It is logical due to its hammered performance and bleak macroeconomic outlook. Meanwhile, the stock price remains in a downtrend after the massive drop in 2021. But its current capacity shows it can withstand more headwinds and rebound. There may be more challenges ahead as recession fears intensify. Despite this, the company proved its resilience as it started the year with a robust performance. Unsurprisingly, the past two quarters showed massive revenue and margin contraction. ( NYSE: TREX) received negative spillovers from real estate and construction companies. Building material providers were not exempt as demand softened in the second half of 2022. Inflation, interest, and mortgage rate hikes have been challenging for businesses across industries. ![]()
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