Tredegar Corporation (NYSE:TG, also the "Company" or "Tredegar")
today reported third quarter financial results for the period ended
September 30, 2023.
Third quarter 2023 net income (loss) was $(50.4) million
($(1.47) per diluted share) compared to net income (loss) of $1.0
million ($0.03 per diluted share) in the third quarter of 2022. Net
income (loss) from ongoing operations, which excludes special
items, was $(5.1) million ($(0.15) per diluted share) in the third
quarter of 2023 compared with $4.8 million ($0.14 per diluted
share) in the third quarter of 2022. A reconciliation of net income
(loss), a financial measure calculated in accordance with U.S.
generally accepted accounting principles (“GAAP”), to net income
(loss) from ongoing operations, a non-GAAP financial measure, for
the three and nine months ended September 30, 2023 and 2022, is
provided in Note (a) to the Financial Tables in this press
release.
Third Quarter Financial Results Highlights
- Earnings before interest, taxes, depreciation and amortization
("EBITDA") from ongoing operations for Aluminum Extrusions was $5.1
million in the third quarter of 2023 versus $12.1 million in the
third quarter of last year due to sluggish market conditions.
EBITDA from ongoing operations during the last four quarters has
been weak, in a range of $5.1 million to $14.6 million.
- Sales volume of 32.5 million pounds in the third quarter of
2023 declined significantly versus 45.5 million pounds in the third
quarter of last year.
- Open orders at the end of the third quarter of 2023 were
approximately 17 million pounds (versus 20 million pounds at the
end of the second quarter of 2023), which is below the quarterly
range of 21 to 27 million pounds in 2019 before pandemic-related
disruptions that resulted in excessive open orders, which peaked in
the first quarter of 2022 at approximately 100 million pounds.
- EBITDA from ongoing operations for PE Films was $4.0 million in
the third quarter of 2023 versus $0.4 million in the third quarter
of 2022. EBITDA from ongoing operations during the last four
quarters has been low with a range of negative $2.6 million to
positive $4.0 million.
- EBITDA from ongoing operations for Flexible Packaging Films
(also referred to as "Terphane") was $0.5 million during the third
quarter of 2023 versus $7.8 million in the third quarter of 2022
primarily due to lower sales volume and lower margins that the
Company believes were driven by customer inventory corrections
earlier in the year and now are being driven by global excess
capacity and competition in Brazil from imports. See the Status
of Current Corporate Strategic Initiatives section of this
report for information on the sale of Terphane.
John Steitz, Tredegar’s president and chief executive officer,
said, “We recognized another loss for the quarter as our businesses
continued to suffer from severe down cycles in their markets that
we believe are residual impacts of the pandemic. The timing of a
recovery remains uncertain as we move into the seasonally low
winter months for Bonnell.”
Mr. Steitz continued, “Despite the disappointing and challenging
business environment in our markets, we made progress in our
corporate strategic initiatives by executing an agreement to sell
Terphane, which is subject to clearance by competition authorities,
settling our pension plan obligation and taking steps to
restructure our credit situation in light of our depressed markets
and income.”
OPERATIONS REVIEW
Aluminum Extrusions
Aluminum Extrusions (or Bonnell Aluminum) produces high-quality,
soft-alloy and medium-strength custom fabricated and finished
aluminum extrusions primarily for the following markets: building
and construction (B&C), automotive and specialty (which
consists of consumer durables, machinery and equipment, electrical
and renewable energy, and distribution end-use products). A summary
of results for Aluminum Extrusions is provided below:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2023
2022
2023
2022
Sales volume (lbs)
32,457
45,457
(28.6
)%
105,511
137,427
(23.2
)%
Net sales
$
109,410
$
161,649
(32.3
)%
$
364,607
$
510,066
(28.5
)%
Ongoing operations:
EBITDA
$
5,113
$
12,071
(57.6
)%
$
29,968
$
57,885
(48.2
)%
Depreciation & amortization
(4,683
)
(4,416
)
(6.0
)%
(13,252
)
(12,846
)
(3.2
)%
EBIT*
$
430
$
7,655
(94.4
)%
$
16,716
$
45,039
(62.9
)%
Capital expenditures
$
4,489
$
8,218
$
17,862
$
15,089
* For a reconciliation of this non-GAAP
measure to the most directly comparable measure calculated in
accordance with GAAP, see the EBITDA from ongoing operations by
segment statements in the Financial Tables in this press
release.
Third Quarter 2023 Results vs. Third
Quarter 2022 Results
Net sales (sales less freight) in the third quarter of 2023
decreased 32.3% versus the third quarter of 2022 primarily due to
lower sales volume and the pass-through of lower metal costs. Sales
volume in the third quarter of 2023 declined 28.6% versus the third
quarter of 2022. Nonresidential B&C sales volume, which
represented 53% of 2022 volume, declined 28.9% in the third quarter
of 2023 versus the third quarter of 2022. Sales volume in the
specialty market, which represented 29% of total volume in 2022,
decreased 35.6% in the third quarter of 2023 versus the third
quarter of 2022, primarily due to lower volume in the consumer
durables sector. Sales volume in the automotive market, which
represented 8% of total volume in 2022, increased 14.2% in the
third quarter of 2023 versus the third quarter of 2022.
Beginning in the third quarter of 2022, the Company observed
order cancellations and slowing order input as customers continued
to report high inventory levels, which carried into 2023.
Currently, the Company is experiencing sluggish demand in most
markets. Open orders at the end of the third quarter of 2023 were
17 million pounds (versus 20 million pounds at the end of the
second quarter of 2023 and 59 million pounds at the end of the
third quarter 2022). This level is below the quarterly range of 21
to 27 million pounds in 2019 before pandemic-related disruptions
that resulted in long lead times, driving a peak in open orders of
approximately 100 million pounds during the first quarter of 2022.
In addition, data indicates that aluminum extrusion imports have
increased significantly in recent years, and some of Bonnell
Aluminum’s customers may have sourced, and continue to source,
aluminum extrusions from producers outside of the United States.
The Company is participating as part of a coalition of members of
the Aluminum Extruders Council who have filed a trade case against
15 countries in response to alleged large and increasing volumes of
unfairly priced imports of aluminum extrusions since 2019.
EBITDA from ongoing operations in the third quarter of 2023
decreased $7.0 million or 57.6% versus the third quarter of 2022
primarily due to:
- Lower volume ($9.9 million), higher labor and employee-related
costs ($1.4 million), lower pricing ($1.0 million), higher supply
expense associated with inflationary costs ($0.1 million), higher
selling, general and administrative ("SG&A") expenses ($0.5
million) and higher freight rates ($0.4 million), partially offset
by lower utility costs ($1.0 million); and
- The timing of the flow-through under the first-in first-out
method of aluminum raw material costs passed through to customers,
previously acquired at higher prices in a quickly changing
commodity pricing environment, resulted in a charge of $1.2 million
in the third quarter of 2023 versus a charge of $3.8 million in the
third quarter of 2022. In addition, the Company recorded an
unfavorable out-of-period adjustment of $2.5 million related to
inventory and accrued labor costs in the third quarter of
2022.
First Nine Months of 2023 Results vs.
First Nine Months of 2022 Results
Net sales in the first nine months of 2023 decreased 28.5%
versus the first nine months of 2022 primarily due to lower sales
volume and the pass-through of lower metal costs, partially offset
by an increase in prices to cover higher operating costs in the
first half of 2023. Sales volume in the first nine months of 2023
decreased by 23.2% versus the first nine months of 2022.
EBITDA from ongoing operations in the first nine months of 2023
decreased $27.9 million or 48.2% in comparison to the first nine
months of 2022 primarily due to:
- Lower volume ($26.0 million), higher labor and employee-related
costs ($3.5 million), lower labor productivity ($1.0 million),
higher supply expense, including higher paint expense associated
with a shift to more painted product in the first six months of
2023 and inflationary costs for other supplies ($3.1 million) and
higher freight rates ($0.8 million), partially offset by higher
pricing ($4.6 million), lower utility costs ($1.6 million) and
lower SG&A expenses ($0.3 million); and
- The timing of the flow-through under the first-in first-out
method of aluminum raw material costs passed through to customers,
previously acquired at higher prices in a quickly changing
commodity pricing environment, resulted in a charge of $0.8 million
in the first nine months of 2023 versus a benefit of $1.7 million
in the first nine months of 2022. In addition, the Company recorded
an unfavorable out-of-period adjustment of $2.5 million related to
inventory and accrued labor costs in the third quarter of
2022.
Refer to Item 3. Quantitative and Qualitative Disclosures About
Market Risk in the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 2023 ("Third Quarter Form 10-Q") for
additional information on aluminum price trends.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for Bonnell Aluminum are projected to be
$19 million in 2023, consistent with the previously disclosed
projection. The Company has implemented stringent spending measures
to control its financial leverage (see “Net Debt, Financial
Leverage, Debt Covenants and Debt Refinancing” section for more
information). In this regard, Bonnell Aluminum reduced projected
capital expenditures in the second half of 2023 to $5 million to
mainly support continuity of current operations versus broader
spending of $14 million during the first half of the year. The most
significant reduction relates to the multi-year implementation of
new enterprise resource planning and manufacturing execution
systems ("ERP/MES"). This project has been reorganized with an
extended implementation period. As a result, the earliest “go-live”
date for the new ERP/MES is 2025. The ERP/MES project commenced in
2022, with spending to-date of approximately $21 million.
Depreciation expense is projected to be $16 million in 2023.
Amortization expense is projected to be $2 million in 2023.
PE Films
PE Films produces surface protection films for high-technology
applications in the global electronics industry and polyethylene
overwrap and polypropylene films for other markets. A summary of
results for PE Films, which does not include the goodwill
impairment discussed in the "Goodwill Impairment in Surface
Protection" section, is provided below:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2023
2022
2023
2022
Sales volume (lbs)
7,224
7,081
2.0
%
20,837
27,273
(23.6
)%
Net sales
$
19,938
$
20,059
(0.6
)%
$
56,036
$
82,613
(32.2
)%
Ongoing operations:
EBITDA
$
4,037
$
431
836.7
%
$
6,700
$
14,543
(53.9
)%
Depreciation & amortization
(2,111
)
(1,579
)
(33.7
)%
(5,305
)
(4,733
)
(12.1
)%
EBIT*
$
1,926
$
(1,148
)
(267.8
)%
$
1,395
$
9,810
(85.8
)%
Capital expenditures
$
431
$
793
$
1,506
$
2,537
* For a reconciliation of this non-GAAP
measure to the most directly comparable measure calculated in
accordance with GAAP, see the EBITDA from ongoing operations by
segment statements in the Financial Tables in this press
release.
Third Quarter 2023 Results vs. Third
Quarter 2022 Results
Net sales in the third quarter of 2023 were relatively flat
compared to the third quarter of 2022, with volume increases in
both Surface Protection and overwrap films. Surface Protection
sales volume in the third quarter of 2023 increased 1% versus the
third quarter of 2022 and 39% versus the second quarter of 2023.
The Company is projecting lower Surface Protection sales volume in
the fourth quarter of 2023, in line with typical seasonality.
EBITDA from ongoing operations in the third quarter of 2023
increased $3.6 million versus the third quarter of 2022, primarily
due to:
- A $1.7 million increase from Surface Protection:
- Higher contribution margin associated with favorable pricing
($0.5 million), lower SG&A ($0.5 million), operating
efficiencies ($0.5 million), and lower fixed costs ($0.8 million);
and
- No foreign currency transaction gain or loss in the third
quarter of 2023 versus a gain of $0.5 million in the third quarter
of 2022.
- A $1.9 million increase from overwrap films primarily due to
cost improvements.
First Nine Months of 2023 Results vs.
First Nine Months of 2022 Results
Net sales in the first nine months of 2023 decreased 32.2%
compared to the first nine months of 2022 primarily due to a
decrease in sales volume in Surface Protection, resulting from weak
demand in the consumer electronics market and customer inventory
corrections in the first six months of 2023. Sales volume declined
34.2% in Surface Protection in the first nine months of 2023.
EBITDA from ongoing operations in the first nine months of 2023
decreased $7.8 million versus the first nine months of 2022,
primarily due to:
- A $10.9 million decrease from Surface Protection:
- Lower contribution margin for non-transitioning products
associated with a market slowdown and customer inventory
corrections ($12.8 million) and for previously disclosed customer
product transitions ($0.7 million), partially offset by favorable
pricing ($0.3 million), lower SG&A and other employee-related
expenses and operating efficiencies ($2.1 million) and lower fixed
costs ($1.3 million);
- The pass-through lag associated with resin costs ($0.1 million
charge in the first nine months of 2023 versus a benefit of $0.3
million in the first nine months of 2022); and
- A foreign currency transaction gain of $0.3 million in the
first nine months of 2023 versus a gain of $1.0 million in the
first nine months of 2022.
- A $3.1 million increase from overwrap films primarily due to
cost improvements and mix.
Refer to Item 3. Quantitative and Qualitative Disclosures About
Market Risk in the Third Quarter Form 10-Q for additional
information on resin price trends.
Closure of PE Films Technical
Center
On August 3, 2023, the Company adopted a plan to close the PE
Films technical center in Richmond, VA and reduce its efforts to
develop and sell films supporting the semiconductor market. Future
research & development activities for PE Films will be
performed at the facility in Pottsville, PA. PE Films continues to
have new business opportunities primarily relating to surface
protection films that protect components of flat panel and flexible
displays. The Company anticipates all activities to cease at the PE
Films technical center in Richmond, VA, by the end of 2023.
Including costs incurred through the first nine months ended
September 30, 2023, the Company expects to recognize cash costs
associated with exit activities of $1.7 million for: (i) severance
and related costs ($0.8 million), (ii) vacating the facility lease
(($0.6 million) payable through June 2025), and (iii) building
closure costs ($0.3 million). In addition, the Company expects
non-cash asset write-downs and accelerated depreciation of up to
$3.7 million. Net annual cash savings of $3.4 million are
anticipated, beginning in the fourth quarter of 2023.
Goodwill Impairment in Surface
Protection
Manufacturers in the supply chain for consumer electronics
continue to experience reduced capacity utilization and inventory
corrections. In light of the continued uncertainty about the timing
of a recovery for this market and the expected adverse future
impact to the Surface Protection business, the Company performed a
goodwill impairment analysis of the Surface Protection component of
PE Films using projections that contemplate the expected market
recovery and business conditions, including for its three
significant customers. The analysis concluded that the fair value
of Surface Protection was less than its carrying value, thus a
non-cash partial goodwill impairment of $19.5 million ($15.1
million after deferred income tax benefits) was recognized during
the third quarter of 2023 and $34.9 million ($27.0 million after
deferred income tax benefits) during the first nine months of 2023.
The Surface Protection reporting unit had goodwill of $22.4 million
and $57.3 million as of September 30, 2023 and December 31, 2022,
respectively.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for PE Films are projected to be $2 million
in 2023, including $1 million for productivity projects and $1
million for capital expenditures required to support continuity of
current operations. Depreciation expense is projected to be $7
million in 2023. There is no amortization expense for PE Films.
Flexible Packaging Films
Flexible Packaging Films produces polyester-based films for use
in packaging applications that have specialized properties, such as
heat resistance, strength, barrier protection and the ability to
accept high-quality print graphics. A summary of results for
Flexible Packaging Films is provided below:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2023
2022
2023
2022
Sales volume (lbs)
22,163
28,889
(23.3
)%
65,732
82,210
(20.0
)%
Net sales
$
30,111
$
47,278
(36.3
)%
$
94,861
$
128,117
(26.0
)%
Ongoing operations:
EBITDA
$
477
$
7,830
(93.9
)%
$
2,076
$
20,495
(89.9
)%
Depreciation & amortization
(704
)
(590
)
(19.3
)%
(2,115
)
(1,723
)
(22.8
)%
EBIT*
$
(227
)
$
7,240
(103.1
)%
$
(39
)
$
18,772
(100.2
)%
Capital expenditures
$
1,408
$
2,501
$
2,891
$
7,310
* For a reconciliation of this non-GAAP
measure to the most directly comparable measure calculated in
accordance with GAAP, see the EBITDA from ongoing operations by
segment statements in the Financial Tables in this press
release.
Third Quarter 2023 Results vs. Third
Quarter 2022 Results
Net sales in the third quarter of 2023 decreased 36.3% compared
to the third quarter of 2022 primarily due to lower sales volume,
lower selling prices that the Company believes are driven by excess
global capacity and competition in Brazil from Asian imports, and
the pass-through of lower resin costs.
EBITDA from ongoing operations in the third quarter of 2023
decreased $7.4 million versus the third quarter of 2022, primarily
due to:
- Lower selling prices from the pass-through of lower resin costs
and margin pressures ($6.9 million) and lower sales volume ($3.7
million), partially offset by lower raw material costs ($2.3
million), lower fixed costs ($0.8 million) and lower SG&A
expenses ($0.7 million);
- Foreign currency transaction gains ($0.2 million) in the third
quarter of 2023 compared to foreign currency transaction gains
($0.1 million) in the third quarter of 2022; and
- Net unfavorable foreign currency translation of
Real-denominated operating costs ($0.6 million).
First Nine Months of 2023 Results vs.
First Nine Months of 2022 Results
Net sales in the first nine months of 2023 decreased 26.0%
compared to the first nine months of 2022 primarily due to lower
sales volume, lower selling prices that the Company believes are
driven by excess global capacity and competition in Brazil from
Asian imports, and the pass-through of lower resin costs, partially
offset by favorable product mix.
EBITDA from ongoing operations in the first nine months of 2023
decreased $18.4 million versus the first nine months of 2022
primarily due to:
- Lower sales volume ($8.3 million), lower selling prices from
the pass-through of lower resin costs and margin pressures ($11.1
million), higher fixed costs ($1.1 million, primarily due to under
absorption from lower production volumes) and higher variable costs
($2.0 million, including higher costs resulting from quality
issues), partially offset by lower raw material costs ($3.9
million), favorable product mix ($0.4 million) and lower SG&A
expenses ($0.9 million);
- Foreign currency transaction losses ($0.1 million) in the first
nine months of 2023 compared to foreign currency transaction losses
($0.3 million) in the first nine months of 2022; and
- Net unfavorable foreign currency translation of
Real-denominated operating costs ($1.1 million).
Refer to Item 3. Quantitative and Qualitative Disclosures About
Market Risk in the Third Quarter Form 10-Q for additional
information on polyester fiber and component price trends.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for Flexible Packaging Films are projected
to be $4 million in 2023, including $1 million for new capacity for
value-added products and productivity projects and $3 million for
capital expenditures required to support continuity of current
operations. Depreciation expense is projected to be $3 million in
2023. Amortization expense is projected to be $0.1 million in
2023.
Corporate Expenses, Interest & Taxes
Corporate expenses, net in the first nine months of 2023
remained flat compared to the first nine months of 2022 primarily
due to higher professional fees associated with business
development activities ($3.3 million), offset by lower accruals for
employee-related compensation ($2.5 million) and lower external and
internal audit fees ($0.6 million).
Interest expense of $7.8 million in the first nine months of
2023 increased $4.6 million compared to the first nine months of
2022 due to higher average debt levels and interest rates.
The effective tax rate used to compute income tax expense
(benefit) in the first nine months of 2023 was 18.8%, unchanged
compared to the effective tax rate in the first nine months of
2022. The effective tax rate in the first nine months of 2023 was
impacted by tax benefits related to the goodwill impairment, the
pension settlement loss, and the treatment of Brazil income tax as
creditable in 2022 and 2023. These benefits were offset by the
reversal of the discrete tax benefit recorded in the first quarter
of 2022 and an increase in the valuation allowance related to
deferred tax assets. The effective tax rate from ongoing operations
comparable to the earnings reconciliation table provided in Note
(a) to the Financial Tables in this press release was (12.0)% for
the first nine months of 2023 versus 26.6% for the first nine
months of 2022 (see also Note (e) to the Financial Tables). Refer
to Note 9 to the Company's Condensed Consolidated Financial
Statements in the Third Quarter Form 10-Q for an explanation of
differences between the effective tax rate for income (loss) and
the U.S. federal statutory rate for 2023 and 2022.
Status of Current Corporate Strategic Initiatives
The status of current corporate strategic initiatives is as
follows:
Agreement to Sell Terphane
On September 1, 2023, the Company announced that it had entered
into a definitive agreement to sell Terphane to Oben Group (the
“Contingent Terphane Sale”). Completion of the sale is contingent
upon the satisfaction of customary closing conditions, including
the receipt of certain competition filing approvals by authorities
in Brazil and Columbia. On October 27, 2023, the Company filed the
requisite competition forms with the Administrative Council for
Economic Defense (“CADE”) in Brazil. CADE published related
materials for public comment on November 6, 2023. CADE’s deadline
for completing its review is no later than September 23, 2024.
As of September 30, 2023, the Company has reported results for
Terphane as a continuing operation, given the early stage of the
approval process by authorities. If the sale transaction is
completed, the Company expects to realize after-tax cash proceeds
of $85 million after deducting projected Brazil withholding taxes,
escrow funds, U.S. capital gains taxes and transaction costs.
Actual after-tax proceeds may differ from estimates due to possible
changes in deductions and the Company's tax situation during the
potentially lengthy interim period to the closing date.
Pension Plan Termination
On September 27, 2023, the Company borrowed $30 million under
the Credit Agreement in anticipation of the final funding expected
for terminating its defined benefit pension plan obligation. On
October 31, 2023, the Company used this cash to contribute $27.7
million to fully fund the pension plan with the amount necessary to
allow for the subsequent transfer of the final annuity premium to
Massachusetts Mutual Life Insurance Company, the selected insurer
for the plan. On November 3, 2023, the pension plan termination and
settlement process for the Company was completed, and the relevant
pension plan obligation was transferred to Massachusetts Mutual
Life Insurance Company. This completed the pension plan termination
process that began in February 2022. As of September 30, 2023, the
remaining unrecognized pre-tax actuarial losses reported in the
accumulated other comprehensive income (loss) was $69.0
million.
Pension expense (all non-cash) under GAAP was $10.0 million in
the first nine months of 2023 consistent with the first nine months
of 2022, and is reflected in “Corporate expenses, net” in the
accompanying net sales and EBITDA from ongoing operations by
segment tables. Beginning in 2022, and consistent with no expected
required minimum cash contributions, no pension expense has been
included in calculating earnings before interest, taxes,
depreciation and amortization as defined in the Credit Agreement
(“Credit EBITDA”), which is used to compute certain borrowing
ratios and to compute non-GAAP net income (loss) from ongoing
operations. See related reconciliation in Note (a) to the Financial
Tables in this press release for more information on the removal of
GAAP pension expense from net income (loss) and diluted earnings
(loss) per share as reported under GAAP for purposes of determining
Tredegar’s non-GAAP presentation of net income (loss) and diluted
earnings (loss) per share from ongoing operations.
Net Debt, Financial Leverage, Debt
Covenants and Debt Refinancing
Total debt was $155.0 million at September 30, 2023, $141.0
million at June 30, 2023 and $137.0 million at December 31, 2022.
Cash and cash equivalents were $48.6 million at September 30, 2023,
$21.2 million at June 30, 2023, and $19.2 million at December 31,
2022. Net debt (debt in excess of cash and cash equivalents), a
non-GAAP financial measure but a key measure used to compute the
net leverage ratio under the Credit Agreement, was $106.4 million
at September 30, 2023, $119.8 million at June 30, 2023 and $117.8
million at December 31, 2022. See Note (f) to the Financial Tables
in this press release for a reconciliation of net debt to the most
directly comparable GAAP financial measure.
The Company has been focused on reducing net working capital to
normal operating levels and managing its costs during the current
slowdown in business. The $13.4 million decrease in net debt from
June 30, 2023, to September 30, 2023, was primarily driven by a
reduction in net working capital. The $27.4 million increase in
cash and cash equivalents from June 30, 2023, to September 30,
2023, was due to borrowings under the Credit Agreement of $30
million on September 27, 2023, in anticipation of the final funding
to terminate the pension plan (see further discussion in Pension
Plan Termination section above).
The Company had Credit EBITDA and a Total Net Leverage Ratio
(calculated in the "Liquidity and Capital Resources" section of the
Third Quarter Form 10-Q) of $31.9 million and 3.33x (and 4.21x pro
forma for final funding to terminate the pension plan),
respectively, at September 30, 2023, versus the Credit EBITDA and
Total Net Leverage Ratio at December 31, 2022 of $84.4 million and
1.39x, respectively.
The Company previously disclosed its intent to reduce the risk
of a debt covenant violation during a severe cyclical downturn
impacting all of its businesses at the same time (like the Company
is currently experiencing) by investigating a transition from the
existing “cash flow” based revolving credit facility (which uses
Credit EBITDA) to an asset based revolving credit facility
(“ABL”).
The Company took its first step in the planned migration to ABL
financing on October 26, 2023, when Terphane Limitada, the
Company’s wholly owned subsidiary in Brazil, borrowed $20 million
secured by certain of its assets (the “Terphane Brazil Loan”). This
U.S. Dollar borrowing has a maturity date in five years, on October
30, 2028, with interest payable quarterly at an annual floating
interest rate of the Secured Overnight Financing Rate (“SOFR”) plus
5.99%. The SOFR rate was 5.31% as of October 26, 2023. Quarterly
principal payments of $1.7 million begin starting in year 3 of the
loan. There are no prepayment penalties. The Company expects that
the Terphane Brazil Loan will be repaid (and collateral released)
upon a closing of the Contingent Terphane Sale. On October 26,
2023, the Company borrowed $20 million from Terphane Brazil (the
“Intercompany Loan”) at the same interest rate as the Terphane
Brazil Loan, thereby transferring the funds to the U.S. The Company
will repay the Intercompany Loan in conjunction with the closing of
the Contingent Terphane Sale.
Between the dates of November 4, 2023 and November 8, 2023, the
Company oversaw the execution of consent advice letters by a
majority of the lending group to the Credit Agreement
(collectively, the “Advice Letters”). Pursuant to the Advice
Letters, subject only to satisfactory documentation, these lending
group members confirmed their agreement to consent to an amendment
to the Credit Agreement (the “Credit Agreement Amendment”) that
amends the Credit Agreement to implement a senior secured
asset-based revolving credit facility (the “ABL Credit Facility”),
which would expire on June 30, 2026. The permitted borrowings under
the ABL Credit Facility will be based on a portion of eligible
receivables, inventories, property, plant and equipment and cash
and cash equivalents, as reduced by certain reserves. The Company
is targeting the execution of the Credit Agreement Amendment by the
end of 2023. The agreement to consent to the Credit Agreement
Amendment by the majority of the lender group members expires on
December 31, 2023. Refer to Note 13 to the Company’s Consolidated
Financial Statements in the Third Quarter Form 10-Q for an
explanation of the financial highlights and primary debt
covenants.
FORWARD-LOOKING AND CAUTIONARY
STATEMENTS
Some of the information contained in this press release may
constitute “forward-looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. When the Company uses the words “believe,”
“estimate,” “anticipate,” “appear to,” “expect,” “project,” “plan,”
“likely,” “may” and similar expressions, it does so to identify
forward-looking statements. Such statements are based on the
Company's then current expectations and are subject to a number of
risks and uncertainties that could cause actual results to differ
materially from those addressed in the forward-looking statements.
It is possible that the Company's actual results and financial
condition may differ, possibly materially, from the anticipated
results and financial condition indicated in or implied by these
forward-looking statements. Accordingly, you should not place undue
reliance on these forward-looking statements. Factors that could
cause actual results to differ materially from expectations
include, without limitation, the following:
- loss or gain of sales to significant customers on which the
Company’s business is highly dependent;
- inability to achieve sales to new customers to replace lost
business;
- inability to develop, efficiently manufacture and deliver new
products at competitive prices;
- failure of the Company’s customers to achieve success or
maintain market share;
- failure to protect our intellectual property rights;
- risks of doing business in countries outside the U.S. that
affect our international operations;
- political, economic, and regulatory factors concerning the
Company’s products;
- uncertain economic conditions in countries in which the Company
does business, including continued high inflation and the effects
of the Russian invasion of Ukraine;
- competition from other manufacturers, including manufacturers
in lower-cost countries and manufacturers benefiting from
government subsidies;
- impact of fluctuations in foreign exchange rates;
- an increase in the operating costs incurred by the Company’s
business units, including, for example, the cost of raw materials
and energy;
- unanticipated problems or delays with the implementation of an
enterprise resource planning and manufacturing executions systems,
or security breaches and other disruptions to the Company's
information technology infrastructure;
- inability to successfully identify, complete or integrate
strategic acquisitions; failure to realize the expected benefits of
such acquisitions and assumption of unanticipated risks in such
acquisitions;
- disruptions to the Company’s manufacturing facilities,
including those resulting from labor shortages;
- failure to continue to attract, develop and retain certain key
officers or employees;
- noncompliance with any of the financial and other restrictive
covenants in the Company's revolving credit facility;
- the anticipated amendment to the Credit Agreement to implement
the Company’s transition to a senior secured asset-based revolving
credit facility has not been finalized and remains subject to
satisfactory documentation, may not be completed by the end of
2023;
- the impact of public health epidemics on employees, production
and the global economy, such as the COVID-19 pandemic;
- an information technology system failure or breach;
- the impact of the imposition of tariffs and sanctions on
imported aluminum ingot used by Bonnell Aluminum;
- the impact of new tariffs, duties or other trade restrictions
imposed as a result of trade tensions between the U.S. and other
countries;
- inability to successfully complete strategic dispositions,
including the Contingent Terphane Sale, failure to realize the
expected benefits of such dispositions and assumption of
unanticipated risks in such dispositions;
- the termination of anti-dumping duties on products imported to
Brazil that compete with products produced by Flexible
Packaging;
- impairment of the Surface Protection reporting unit's
goodwill;
- failure to establish and maintain effective internal control
over financial reporting;
and the other factors discussed in the reports Tredegar files
with or furnishes to the Securities and Exchange Commission (the
“SEC”) from time to time, including the risks and important factors
set forth in additional detail in “Risk Factors” Part I, Item 1A of
the Company's Form 10-K for the year ended December 31, 2022 and
Part II, Item 1A of the Company's Form 10-Q for the quarter ended
June 30, 2023 and Part II, Item 1A the Company's Form 10-Q for the
quarter ended September 30, 2023. Readers are urged to review and
consider carefully the disclosures Tredegar makes in its filings
with the SEC.
Tredegar does not undertake, and expressly disclaims any duty,
to update any forward-looking statement made in this press release
to reflect any change in management’s expectations or any change in
conditions, assumptions or circumstances on which such statements
are based, except as required by applicable law.
To the extent that the financial information portion of this
press release contains non-GAAP financial measures, it also
presents both the most directly comparable financial measures
calculated and presented in accordance with GAAP and a quantitative
reconciliation of the difference between any such non-GAAP measures
and such comparable GAAP financial measures. Reconciliations of
non-GAAP financial measures are provided in the Notes to the
Financial Tables included with this press release and can also be
found within “Presentations” in the “Investors” section of our
website, www.tredegar.com.
Tredegar uses its website as a channel of distribution of
material Company information. Financial information and other
material information regarding Tredegar is posted on and assembled
in the “Investors” section of its website.
Tredegar Corporation is an industrial manufacturer with three
primary businesses: custom aluminum extrusions for the North
American building & construction, automotive and specialty
end-use markets; surface protection films for high-technology
applications in the global electronics industry; and specialized
polyester films primarily for the Latin American flexible packaging
market. Tredegar had 2022 sales of $939 million. With approximately
2,000 employees, the Company operates manufacturing facilities in
North America, South America, and Asia.
Tredegar Corporation
Condensed Consolidated
Statements of Income (Loss)
(In Thousands, Except
Per-Share Data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Sales
$
166,192
$
238,486
$
535,481
$
749,415
Other income (expense), net (c)(d)
(51
)
140
210
1,181
166,141
238,626
535,691
750,596
Cost of goods sold (c)
144,539
200,582
457,332
601,930
Freight
6,733
9,500
19,977
28,619
Selling, R&D and general expenses
(c)
22,144
20,594
60,619
64,015
Amortization of intangibles
465
653
1,433
1,982
Pension and postretirement benefits
3,118
3,506
9,955
10,489
Interest expense
3,106
1,138
7,791
3,158
Asset impairments and costs associated
with exit and disposal activities, net of adjustments (c)
4,633
495
4,702
621
Pension settlement loss
25,612
—
25,612
—
Goodwill impairment
19,478
—
34,891
—
Total
229,828
236,468
622,312
710,814
Income (loss) before income taxes
(63,687
)
2,158
(86,621
)
39,782
Income tax expense (benefit) (c)
(13,307
)
1,125
(16,307
)
7,460
Net income (loss)
$
(50,380
)
$
1,033
$
(70,314
)
$
32,322
Earnings (loss) per share:
Basic
$
(1.47
)
$
0.03
$
(2.06
)
$
0.96
Diluted
$
(1.47
)
$
0.03
$
(2.06
)
$
0.96
Shares used to compute earnings (loss) per
share:
Basic
34,264
33,870
34,081
33,780
Diluted
34,264
33,871
34,081
33,808
Tredegar Corporation
Net Sales and EBITDA from
Ongoing Operations by Segment
(In Thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net Sales
Aluminum Extrusions
$
109,410
$
161,649
$
364,607
$
510,066
PE Films
19,938
20,059
56,036
82,613
Flexible Packaging Films
30,111
47,278
94,861
128,117
Total net sales
159,459
228,986
515,504
720,796
Add back freight
6,733
9,500
19,977
28,619
Sales as shown in the condensed
consolidated statements of income
$
166,192
$
238,486
$
535,481
$
749,415
EBITDA from Ongoing Operations
Aluminum Extrusions:
Ongoing operations:
EBITDA (b)
$
5,113
$
12,071
$
29,968
$
57,885
Depreciation & amortization
(4,683
)
(4,416
)
(13,252
)
(12,846
)
EBIT (b)
430
7,655
16,716
45,039
Plant shutdowns, asset impairments,
restructurings and other (c)
(1,483
)
(32
)
(1,821
)
(120
)
PE Films:
Ongoing operations:
EBITDA (b)
4,037
431
6,700
14,543
Depreciation & amortization
(2,111
)
(1,579
)
(5,305
)
(4,733
)
EBIT (b)
1,926
(1,148
)
1,395
9,810
Plant shutdowns, asset impairments,
restructurings and other (c)
(4,566
)
(498
)
(4,565
)
(650
)
Goodwill impairment
(19,478
)
—
(34,891
)
—
Flexible Packaging Films:
Ongoing operations:
EBITDA (b)
477
7,830
2,076
20,495
Depreciation & amortization
(704
)
(590
)
(2,115
)
(1,723
)
EBIT (b)
(227
)
7,240
(39
)
18,772
Plant shutdowns, asset impairments,
restructurings and other (c)
—
(6
)
(79
)
(86
)
Total
(23,398
)
13,211
(23,284
)
72,765
Interest income
62
9
135
41
Interest expense
3,106
1,138
7,791
3,158
Gain on investment in kaleo, Inc. (d)
—
—
262
1,406
Stock option-based compensation costs
—
271
231
1,153
Pension settlement loss
25,612
—
25,612
—
Corporate expenses, net (c)
11,633
9,653
30,100
30,119
Income (loss) before income taxes
(63,687
)
2,158
(86,621
)
39,782
Income tax expense (benefit)
(13,307
)
1,125
(16,307
)
7,460
Net income (loss)
$
(50,380
)
$
1,033
$
(70,314
)
$
32,322
Tredegar Corporation
Condensed Consolidated Balance
Sheets
(In Thousands)
(Unaudited)
September 30, 2023
December 31, 2022
Assets
Cash & cash equivalents
$
48,604
$
19,232
Accounts & other receivables, net
70,344
84,544
Income taxes recoverable
1,700
733
Inventories
79,301
127,771
Prepaid expenses & other
11,683
10,304
Total current assets
211,632
242,584
Net property, plant and equipment
185,798
186,411
Right-of-use leased assets
11,954
14,021
Identifiable intangible assets, net
10,290
11,690
Goodwill
35,717
70,608
Deferred income taxes
21,798
13,900
Other assets
2,328
2,879
Total assets
$
479,517
$
542,093
Liabilities and Shareholders’
Equity
Accounts payable
$
94,712
$
114,938
Accrued expenses
21,835
31,603
Lease liability, short-term
2,216
2,035
Income taxes payable
426
1,137
Total current liabilities
119,189
149,713
Lease liability, long-term
11,083
12,738
Long-term debt
155,000
137,000
Pension and other postretirement benefit
obligations, net
35,660
35,046
Other non-current liabilities
4,394
5,834
Shareholders’ equity
154,191
201,762
Total liabilities and shareholders’
equity
$
479,517
$
542,093
Tredegar Corporation
Condensed Consolidated
Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
(70,314
)
$
32,322
Adjustments for noncash items:
Depreciation
19,516
17,538
Amortization of intangibles
1,433
1,982
Reduction of right-of-use lease asset
1,633
1,590
Goodwill impairment
34,891
—
Deferred income taxes
(16,820
)
3,078
Accrued pension income and post-retirement
benefits
9,955
10,519
Pension settlement loss
25,612
—
Stock-based compensation expense
1,196
2,575
Gain on investment in kaléo
(262
)
(1,406
)
Write-down of Richmond, Virginia Technical
Center assets
3,387
—
Changes in assets and liabilities:
Accounts and other receivables
14,630
(7,222
)
Inventories
49,589
(24,855
)
Income taxes recoverable/payable
(1,688
)
(7,227
)
Prepaid expenses and other
(142
)
(5,365
)
Accounts payable and accrued expenses
(27,970
)
3,624
Lease liability
(1,669
)
(1,737
)
Pension and postretirement benefit plan
contributions
(455
)
(50,503
)
Other, net
1,716
1,935
Net cash provided by (used in) operating
activities
44,238
(23,152
)
Cash flows from investing activities:
Capital expenditures
(22,270
)
(25,527
)
Proceeds on sale of investment in
kaléo
262
1,406
Net cash provided by (used in) investing
activities
(22,008
)
(24,121
)
Cash flows from financing activities:
Borrowings
87,000
279,250
Debt principal payments
(69,000
)
(228,250
)
Dividends paid
(8,884
)
(12,552
)
Debt financing fees
(1,404
)
(1,245
)
Other
—
(396
)
Net cash provided by (used in) financing
activities
7,712
36,807
Effect of exchange rate changes on
cash
(570
)
(805
)
Increase (decrease) in cash and cash
equivalents
29,372
(11,271
)
Cash and cash equivalents at beginning of
period
19,232
30,521
Cash and cash equivalents at end of
period
$
48,604
$
19,250
Notes to the Financial
Tables
(Unaudited)
(a)
Tredegar’s presentation of net income
(loss) and diluted earnings (loss) per share from ongoing
operations are non-GAAP financial measures that exclude the effects
of gains or losses associated with plant shutdowns, asset
impairments and restructurings, gains or losses from the sale of
assets, goodwill impairment charges, net periodic benefit cost for
the frozen defined benefit pension plan and other items (which
includes gains and losses for an investment accounted for under the
fair value method), which have been presented separately and
removed from net income (loss) and diluted earnings (loss) per
share as reported under GAAP. Net income (loss) and diluted
earnings (loss) per share from ongoing operations are key financial
and analytical measures used by management to gauge the operating
performance of Tredegar’s ongoing operations. They are not intended
to represent the stand-alone results for Tredegar’s ongoing
operations under GAAP and should not be considered as an
alternative to net income (loss) or earnings (loss) per share as
defined by GAAP. They exclude items that management believes do not
relate to Tredegar’s ongoing operations. A reconciliation to net
income (loss) and diluted earnings (loss) per share from ongoing
operations for the three and nine months ended September 30, 2023
and 2022 is shown below:
Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in millions, except per share data)
2023
2022
2023
2022
Net income (loss) as reported under
GAAP1
$
(50.4
)
$
1.0
$
(70.3
)
$
32.3
After-tax effects of:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
3.7
0.4
3.8
0.5
(Gains) losses from sale of assets and
other:
Gain associated with the investment in
kaléo
—
—
(0.2
)
(1.0
)
Tax expense (benefit) from adjustments to
deferred income tax liabilities under new U.S. tax regulations
related to foreign tax credits
0.7
—
1.5
(3.8
)
Other
3.4
0.7
6.0
2.8
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination2
2.4
2.7
7.6
8.1
Pension settlement loss2
20.0
—
20.0
—
Goodwill impairment3
15.1
—
27.0
—
Net income (loss) from ongoing
operations1
$
(5.1
)
$
4.8
$
(4.6
)
$
38.9
Earnings (loss) per share as reported
under GAAP (diluted)
$
(1.47
)
$
0.03
$
(2.06
)
$
0.96
After-tax effects per diluted share
of:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.11
0.01
0.11
0.01
(Gains) losses from sale of assets and
other:
Gain associated with the investment in
kaléo
—
—
(0.01
)
(0.03
)
Tax expense (benefit) from adjustments to
deferred income tax liabilities under new U.S. tax regulations
related to foreign tax credits
0.02
—
0.04
(0.11
)
Other
0.10
0.02
0.18
0.08
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination2
0.07
0.08
0.23
0.24
Pension settlement loss2
0.58
—
0.59
—
Goodwill impairment3
0.44
—
0.79
—
Earnings (loss) per share from ongoing
operations (diluted)
$
(0.15
)
$
0.14
$
(0.13
)
$
1.15
1. Reconciliations of the pre-tax and
post-tax balances attributed to net income (loss) are shown in Note
(e).
2. For more information, see "Status of
Current Corporate Strategic Initiatives" section of this press
release.
3. For more information, see "PE Films"
section of this press release.
(b)
EBITDA (earnings before interest,
taxes, depreciation and amortization) from ongoing operations is
the key segment profitability metric used by the Company’s chief
operating decision maker to assess segment financial performance.
The Company uses sales less freight ("net sales") as its measure of
revenues from external customers. For more business segment
information, see Note 10 to the Company's Condensed Consolidated
Financial Statements in the Third Quarter Form 10-Q.
EBIT (earnings before interest
and taxes) from ongoing operations is a non-GAAP financial measure
included in the accompanying tables and the reconciliation of
segment financial information to consolidated results for the
Company in the net sales and EBITDA from ongoing operations by
segment statements. It is not intended to represent the stand-alone
results for Tredegar’s ongoing operations under GAAP and should not
be considered as an alternative to net income (loss) as defined by
GAAP. The Company believes that EBIT is a widely understood and
utilized metric that is meaningful to certain investors and that
including this financial metric in the reconciliation of
management’s performance metric, EBITDA from ongoing operations,
provides useful information to those investors that primarily
utilize EBIT to analyze the Company’s core operations.
(c)
Gains and losses associated with
plant shutdowns, asset impairments, restructurings and other items
for the three and nine months ended September 30, 2023 and 2022
detailed below are shown in the statements of net sales and EBITDA
from ongoing operations by segment and are included in “Asset
impairments and costs associated with exit and disposal activities,
net of adjustments” in the condensed consolidated statements of
income, unless otherwise noted.
Three Months Ended
September 30, 2023
Nine Months Ended
September 30, 2023
($ in millions)
Pre-Tax
Net of Tax
Pre-Tax
Net of Tax
Aluminum Extrusions:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
0.1
$
0.1
$
0.1
$
0.1
(Gains) losses from sale of assets,
investment writedowns and other items:
Consulting expenses for ERP/MES
project1
1.2
0.9
1.2
0.9
Storm damage to the Newnan, Georgia
plant1
0.1
0.1
0.5
0.3
Total for Aluminum Extrusions
$
1.4
$
1.1
$
1.8
$
1.3
PE Films:
(Gains) losses from sale of assets,
investment writedowns and other items:
Write-down of Richmond, Virginia Technical
Center assets4
$
3.4
$
2.6
$
3.4
$
2.6
Richmond, Virginia Technical Center
closure expenses4
0.3
0.3
0.3
0.3
Richmond, Virginia Technical Center
severance4
0.8
0.7
0.8
0.7
Goodwill impairment4
19.5
15.1
34.9
27.0
Total for PE Films
$
24.0
$
18.7
$
39.4
$
30.6
Flexible Packaging Films:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
—
$
—
$
0.1
$
0.1
Total for Flexible Packaging Films
$
—
$
—
$
0.1
$
0.1
Corporate:
(Gain) losses from sale of assets,
investment writedowns and other items:
Professional fees associated with business
development activities1
$
2.9
$
2.2
$
4.8
$
3.8
Professional fees associated with
remediation activities related to internal control over financial
reporting1
0.2
0.2
1.2
1.0
Write-down of investment in Harbinger
Capital Partners Special Situations Fund2
—
—
0.2
0.1
Stock-based compensation expense
associated with the fair value remeasurement of awards granted at
the time of the 2020 Special Dividend1
—
—
(0.2
)
(0.1
)
Tax expense from adjustments to deferred
income tax liabilities under new U.S. tax regulations related to
foreign tax credits5
—
0.7
—
1.5
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination3
3.1
2.4
9.9
7.6
Pension settlement loss3
25.6
20.0
25.6
20.0
Total for Corporate
$
31.8
$
25.5
$
41.5
$
33.9
1. Included in “Selling, R&D and
general expenses” in the condensed consolidated statements of
income.
2. Included in “Other income (expense),
net” in the condensed consolidated statements of income.
3. For more information, see "Status of
Current Corporate Strategic Initiatives" section of this press
release.
4. For more information, see "PE Films"
section of this press release.
5. Included in "Income tax expense
(benefit)" in the condensed consolidated statements of income.
Three Months Ended
September 30, 2022
Nine Months Ended
September 30, 2022
($ in millions)
Pre-Tax
Net of Tax
Pre-Tax
Net of Tax
Aluminum Extrusions:
(Gains) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses, net of
relief1
$
—
$
—
$
0.1
$
0.1
Total for Aluminum Extrusions
$
—
$
—
$
0.1
$
0.1
PE Films:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
0.5
$
0.4
$
0.5
$
0.4
(Gains) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses1
—
—
0.2
0.1
Total for PE Films
$
0.5
$
0.4
$
0.7
$
0.5
Flexible Packaging Films:
(Gains) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses1
$
—
$
—
$
0.1
$
0.1
Total for Flexible Packaging Films
$
—
$
—
$
0.1
$
0.1
Corporate:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
—
$
—
$
0.1
$
0.1
(Gain) losses from sale of assets,
investment writedowns and other items:
Professional fees associated with business
development activities2
—
—
1.6
1.1
Professional fees associated with
remediation activities related to internal control over financial
reporting2
0.8
0.8
2.0
1.6
Stock-based compensation expense
associated with the fair value remeasurement of awards granted at
the time of the 2020 Special Dividend2
(0.1
)
(0.1
)
(0.3
)
(0.2
)
Tax benefit from adjustments to deferred
income tax liabilities under new U.S. tax regulations related to
foreign tax credits4
—
—
—
(3.8
)
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination3
3.5
2.7
10.4
8.1
Total for Corporate
$
4.2
$
3.4
$
13.8
$
6.9
1. Included in "Other income (expense),
net" in the condensed consolidated statements of income.
2. Included in "Selling, R&D and
general expenses" in the condensed consolidated statements of
income.
3. For more information, see "Corporate
Expenses, Interest, Taxes & Other" section of this press
release.
4. Included in "Income tax expense (benefit)" in the condensed
consolidated statements of income.
(d)
On December 27, 2021, the Company
completed the sale of its investment interests in kaléo and
received closing cash proceeds of $47.1 million. Subsequently, in
May 2022 and January 2023, additional cash consideration of $1.4
million and $0.3 million, respectively, was received related to
customary post-closing adjustments, which is reported in “Other
income (expense), net” in the condensed consolidated statements of
income.
(e)
Tredegar’s presentation of net
income (loss) from ongoing operations is a non-GAAP financial
measure that excludes the effects of gains or losses associated
with plant shutdowns, asset impairments and restructurings, gains
or losses from the sale of assets, goodwill impairment charges, net
periodic benefit cost for the frozen defined benefit pension plan
and other items (which includes unrealized gains and losses for an
investment accounted for under the fair value method), which has
been presented separately and removed from net income (loss) as
reported under GAAP. Net income (loss) from ongoing operations is a
key financial and analytical measure used by management to gauge
the operating performance of Tredegar’s ongoing operations. It is
not intended to represent the stand-alone results for Tredegar’s
ongoing operations under GAAP and should not be considered as an
alternative to net income (loss) as defined by GAAP. It excludes
items that we believe do not relate to Tredegar’s ongoing
operations.
Reconciliations of the pre-tax
and post-tax balances attributed to net income (loss) from ongoing
operations for the three and nine months ended September 30, 2023
and 2022 are presented below in order to show the impact on the
effective tax rate:
($ in millions)
Pre-tax
Tax Expense
(Benefit)
After-Tax
Effective
Tax Rate
Three Months Ended September 30,
2023
(a)
(b)
(b)/(a)
Net income (loss) reported under GAAP
$
(63.7
)
$
(13.3
)
$
(50.4
)
20.9
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
4.6
0.9
3.7
(Gains) losses from sale of assets and
other
4.4
0.3
4.1
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination
3.1
0.7
2.4
Pension settlement loss
25.6
5.6
20.0
Goodwill impairment
19.5
4.4
15.1
Net income (loss) from ongoing
operations
$
(6.5
)
$
(1.4
)
$
(5.1
)
21.7
%
Three Months Ended September 30,
2022
Net income (loss) reported under GAAP
$
2.1
$
1.1
$
1.0
52.6
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.5
$
0.1
0.4
(Gains) losses from sale of assets and
other
0.7
—
0.7
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination
3.5
0.8
2.7
Net income (loss) from ongoing
operations
$
6.8
$
2.0
$
4.8
29.6
%
Nine Months Ended September 30,
2023
Net income (loss) reported under GAAP
$
(86.6
)
$
(16.3
)
$
(70.3
)
18.8
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
4.7
0.9
3.8
(Gains) losses from sale of assets and
other
7.4
0.1
7.3
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination
9.9
2.3
7.6
Pension settlement loss
25.6
5.6
20.0
Goodwill impairment
34.9
7.9
27.0
Net income (loss) from ongoing
operations
$
(4.1
)
$
0.5
$
(4.6
)
(12.0
)%
Nine Months Ended September 30,
2022
Net income (loss) reported under GAAP
$
39.8
$
7.5
$
32.3
18.8
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.6
0.1
0.5
(Gains) losses from sale of assets and
other
2.3
4.3
(2.0
)
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination
10.4
2.3
8.1
Net income (loss) from ongoing
operations
$
53.1
$
14.2
$
38.9
26.6
%
(f)
Net debt is calculated as follows:
September 30,
December 31,
(in millions)
2023
2022
Debt
$
155.0
$
137.0
Less: Cash and cash equivalents
48.6
19.2
Net debt
$
106.4
$
117.8
Net debt is not intended to represent
total debt as defined by GAAP. Net debt is utilized by management
in evaluating the Company’s financial leverage and equity
valuation, and management believes that investors also may find net
debt to be helpful for the same purposes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109652508/en/
Tredegar Corporation Neill Bellamy, 804-330-1211
neill.bellamy@tredegar.com
Grafico Azioni Tredegar (NYSE:TG)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Tredegar (NYSE:TG)
Storico
Da Gen 2024 a Gen 2025
