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Segment Information | 9 Months Ended
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Sep. 30, 2019
Segment Reporting [Abstract] |
Segment Information |
16. | SEGMENT INFORMATION
The Company operates in two reportable segments:
| • | Trex Residential manufactures wood-alternative decking and residential railing and related products marketed under the brand name Trex ® . Trex Residential products are sold to distributors and home centers for final resale primarily to the residential market, which includes replacement, remodeling and new construction related to outdoor living products. Trex Residential net sales were $541.7 million and $491.4 million in the nine months ended September 30, 2019 and 2018, respectively.
| • | Trex Commercial designs, engineers, and markets modular and architectural railing and staging systems for the commercial and multi-family market, including sports stadiums and performing arts venues. Trex Commercial products are marketed to architects, specifiers, contractors, and others doing business within the commercial and multi-family market. Trex Commercial net sales were $38.9 million and $52.9 million in the nine months ended September 30, 2019 and 2018, respectively.
The Company’s reportable segments have been determined in accordance with its internal management structure, which is organized based on residential and commercial sales activities. The Company evaluates performance of each segment primarily based on net sales and earnings before interest, taxes, depreciation and amortization (EBITDA). The Company uses net sales to assess performance and allocate resources as this measure represents the amount of business the segment engaged in during a given period of time, is an indicator of market growth and acceptance of segment products, and represents the segment’s customers’ spending habits along with the amount of product the segment sells relative to its competitors. The Company uses EBITDA to assess performance and allocate resources because it believes that EBITDA facilitates performance comparison between the segments by eliminating interest, taxes, and depreciation and amortization charges to income. The below segment data for the three and nine months ended September 30, 2019 and 2018 includes data for Trex Residential and Trex Commercial (in thousands): Segment Data:
|  | Three Months Ended September 30, 2019 |  |  | Three Months Ended September 30, 2018 |
|  | Trex Residential |  |  | Trex Commercial |  |  | Total |  |  | Trex Residential |  |  | Trex Commercial |  |  | Total |
Net sales |  | $ | 182,775 |  |  | $ | 11,776 |  |  | $ | 194,551 |  |  | $ | 146,998 |  |  | $ | 19,382 |  |  | $ | 166,380 |
Net income |  | $ | 41,381 |  |  | $ | 595 |  |  | $ | 41,976 |  |  | $ | 27,755 |  |  | $ | 1,716 |  |  | $ | 29,471 |
EBITDA |  | $ | 57,639 |  |  | $ | 970 |  |  | $ | 58,609 |  |  | $ | 40,067 |  |  | $ | 2,780 |  |  | $ | 42,847 |
Depreciation and amortization |  | $ | 3,422 |  |  | $ | 165 |  |  | $ | 3,587 |  |  | $ | 3,275 |  |  | $ | 494 |  |  | $ | 3,769 |
Income tax expense |  | $ | 13,580 |  |  | $ | 210 |  |  | $ | 13,790 |  |  | $ | 9,259 |  |  | $ | 570 |  |  | $ | 9,829 |
Capital expenditures |  | $ | 17,766 |  |  | $ | 99 |  |  | $ | 17,865 |  |  | $ | 3,693 |  |  | $ | 221 |  |  | $ | 3,914 |
Total assets |  | $ | 482,825 |  |  | $ | 87,945 |  |  | $ | 570,770 |  |  | $ | 352,014 |  |  | $ | 82,895 |  |  | $ | 434,909 |
Reconciliation of Net Income to EBITDA:
|  | Three Months Ended September 30, 2019 |  |  | Three Months Ended September 30, 2018 |
|  | Trex Residential |  |  | Trex Commercial |  |  | Total |  |  | Trex Residential |  |  | Trex Commercial |  |  | Total |
Net income |  | $ | 41,381 |  |  | $ | 595 |  |  | $ | 41,976 |  |  | $ | 27,755 |  |  | $ | 1,716 |  |  | $ | 29,471 |
Interest income, net |  |  | (744 | ) |  |  | — |  |  |  | (744 | ) |  |  | (222 | ) |  |  | — |  |  |  | (222 | )
Income tax expense |  |  | 13,580 |  |  |  | 210 |  |  |  | 13,790 |  |  |  | 9,259 |  |  |  | 570 |  |  |  | 9,829 |
Depreciation and amortization |  |  | 3,422 |  |  |  | 165 |  |  |  | 3,587 |  |  |  | 3,275 |  |  |  | 494 |  |  |  | 3,769 |
EBITDA |  | $ | 57,639 |  |  | $ | 970 |  |  | $ | 58,609 |  |  | $ | 40,067 |  |  | $ | 2,780 |  |  | $ | 42,847 |
Segment Data:
|  | Nine Months Ended September 30, 2019 |  |  | Nine Months Ended September 30, 2018 |
|  | Trex Residential |  |  | Trex Commercial |  |  | Total |  |  | Trex Residential |  |  | Trex Commercial |  |  | Total |
Net sales |  | $ | 541,722 |  |  | $ | 38,853 |  |  | $ | 580,575 |  |  | $ | 491,399 |  |  | $ | 52,880 |  |  | $ | 544,279 |
Net income |  | $ | 107,859 |  |  | $ | 1,382 |  |  | $ | 109,241 |  |  | $ | 107,449 |  |  | $ | 1,952 |  |  | $ | 109,401 |
EBITDA |  | $ | 150,058 |  |  | $ | 2,282 |  |  | $ | 152,340 |  |  | $ | 151,839 |  |  | $ | 5,663 |  |  | $ | 157,502 |
Depreciation and amortization |  | $ | 9,947 |  |  | $ | 433 |  |  | $ | 10,380 |  |  | $ | 10,004 |  |  | $ | 3,063 |  |  | $ | 13,067 |
Income tax expense |  | $ | 33,046 |  |  | $ | 474 |  |  | $ | 33,520 |  |  | $ | 34,009 |  |  | $ | 648 |  |  | $ | 34,657 |
Capital expenditures |  | $ | 35,584 |  |  | $ | 1,342 |  |  | $ | 36,926 |  |  | $ | 14,274 |  |  | $ | 1,050 |  |  | $ | 15,324 |
Total assets |  | $ | 482,825 |  |  | $ | 87,945 |  |  | $ | 570,770 |  |  | $ | 352,014 |  |  | $ | 82,895 |  |  | $ | 434,909 |
Reconciliation of Net Income to EBITDA:
|  | Nine Months Ended September 30, 2019 |  |  | Nine Months Ended September 30, 2018 |
|  | Trex Residential |  |  | Trex Commercial |  |  | Total |  |  | Trex Residential |  |  | Trex Commercial |  |  | Total |
Net income |  | $ | 107,859 |  |  | $ | 1,382 |  |  | $ | 109,241 |  |  | $ | 107,449 |  |  | $ | 1,952 |  |  | $ | 109,401 |
Interest (income) expense, net |  |  | (794 | ) |  |  | (7 | ) |  |  | (801 | ) |  |  | 377 |  |  |  | — |  |  |  | 377 |
Income tax expense |  |  | 33,046 |  |  |  | 474 |  |  |  | 33,520 |  |  |  | 34,009 |  |  |  | 648 |  |  |  | 34,657 |
Depreciation and amortization |  |  | 9,947 |  |  |  | 433 |  |  |  | 10,380 |  |  |  | 10,004 |  |  |  | 3,063 |  |  |  | 13,067 |
EBITDA |  | $ | 150,058 |  |  | $ | 2,282 |  |  | $ | 152,340 |  |  | $ | 151,839 |  |  | $ | 5,663 |  |  | $ | 157,502 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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