What changed in this filing

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Item 2. Management’s Discussion and Analysis

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failure to realize the expected benefits of such acquisitions and assumption of unanticipated risks in such acquisitions;

• disruption to the Company's manufacturing facilities;

• disruptions to the Company's manufacturing facilities, including those resulting from labor shortages;

• the impact of public health epidemics on employees, production and the global economy, such as the COVID-19 pandemic;

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• 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 Part I, Item 1A of Tredegar’s 2020 Annual Report on Form 10-K (the “2020 Form 10-K”).

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 Part I, Item 1A of Tredegar’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”).

Readers are urged to review and consider carefully the disclosures Tredegar makes in its filings with the SEC.

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The sale did not represent a strategic shift nor did it have a major effect on the Company's historical and ongoing operations, thus all financial information for Bright View Technologies has been presented in continuing operations.

Second quarter 2021 net income from continuing operations was $20.7 million ($0.61 per diluted share) compared with net income from continuing operations of $14.3 million ($0.43 per diluted share) in the second quarter of 2020.

Second quarter 2021 results include:

• An after-tax gain of $6.6 million ($0.20 per share) related to a one-time tax credit in Brazil for unemployment/social security insurance non-income taxes resulting from a favorable decision by Brazil’s Supreme Court regarding the calculation of such taxes (see Note 13 for more details);

• An after-tax gain on the Company’s investment in kaleo, Inc.

(“kaléo”) of $0.1 million ($0.00 per share), which is accounted for under the fair value method (see Note 7 for more details).

Second quarter 2020 results include:

Third quarter 2021 net income from continuing operations was $6.2 million ($0.19 per diluted share) compared with net loss from continuing operations of $17.0 million ($0.51 per diluted share) in the third quarter of 2020.

Third quarter 2021 results include:

• An after-tax gain on the Company’s investment in kaléo of $0.2 million ($0.01 per share), which is accounted for under the fair value method (see Note 7 for more details).

Third quarter 2020 results include:

• An after-tax loss on the Company’s investment in kaléo of $28.2 million ($0.84 per diluted share).

Other losses related to asset impairments and costs associated with exit and disposal activities for continuing operations were not material for the three and six months ended June 30, 2021 and 2020, respectively.

Other losses related to asset impairments and costs associated with exit and disposal activities for continuing operations were not material for the three and nine months ended September 30, 2021 and 2020, respectively.

Gains and losses associated with plant shutdowns, asset impairments, restructurings and other items are described in Results of Operations .

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It is not intended to represent the stand-alone results for Tredegar’s ongoing operations under generally accepted accounting standards in the United States ("GAAP") and should not be considered as an alternative to net income as defined by GAAP.

EBIT is a widely understood and utilized metric that is meaningful to certain investors.

We believe 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.

We believe 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.

THE IMPACT OF COVID-19 AND RELATED FINANCIAL CONSIDERATIONS

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The Company has continued to manufacture the full range of products at its facilities.

The Company’s protocols to protect the health and well-being of its employees from COVID-19 continue to evolve with COVID-19 informed work practices and as the Company responds to recommended and mandated actions of government and health authorities.

In addition, to facilitate a return to fully functional operations, the Company has undertaken an education campaign to provide employees with the most accurate and up-to-date information available, particularly from the Centers for Disease Control (“CDC”), the Office of the Surgeon General and state and local health departments, relating to the benefits of the COVID-19 vaccines and other safeguards that may be taken to try to prevent a COVID-19 outbreak in the workplace.

The Company believes that these efforts are encouraging some employees to get vaccinated.

In the meantime, the Company continues to take other precautions, such as providing hand sanitizer throughout facilities, extra cleaning for high touch areas, mandating that employees experiencing symptoms (including fully vaccinated employees) remain at home and coordinate their return with Human Resources, and ensuring ventilation systems are properly working.

The Company’s protocols to protect the health and well-being of its employees from COVID-19 continue to evolve as the Centers for Disease Control ("CDC"), the Office of the Surgeon General and other state and local health departments learn more about the virus and its variants.

Consistent with recommendations and mandates from government agencies and health authorities, the Company has implemented multiple layers of COVID-19 protections and interventions.

The Company has engaged in an education campaign that provides employees with the most accurate and up-to-date information related to COVID-19 vaccines and has offered different monetary and/or time-away-from-work incentives to encourage employees to get vaccinated.

While the Company believes that these efforts have encouraged employees to be vaccinated, vaccination rates in its U.S.

manufacturing sites vary widely, ranging from 23% to 78%, with most U.S.

sites having vaccination rates above 50%.

The Company will continue to monitor available information to assess safeguards that may be taken to try to prevent a COVID-19 outbreak in the workplace.

Bonnell Aluminum continues to experience higher than normal absenteeism and hiring difficulties, which it attributes to COVID-19-related factors.

Bonnell Aluminum attempts to match its direct labor with demand and is facing difficulty maintaining sufficient labor to meet desired shipment levels.

All three of the Company's business units are managing through supply chain disruptions, including raw material cost increases, shortages in aluminum and plastic resin and transportation delays.

To offset growing cost pressures, Bonnell Aluminum implemented its second selling price increase in 2021, which became effective on April 26, 2021.

In response to unprecedented cost increases and supply issues for polyethylene and polypropylene resin, Tredegar Surface Protection implemented a quarterly resin cost pass-through mechanism, effective July 1, 2021, for all products and customers not previously covered by such arrangements.

While the average number of direct labor employees at Bonnell Aluminum facilities increased approximately 6% in the third quarter of 2021, compared with the abnormally low levels related to the pandemic i n the second and third quarters of 2020, there continues to be a shortage of labor to meet existing demand and desired shipment levels.

Moreover, onboarding new employees has resulted in higher hiring and training costs in 2021 versus last year.

All three of the Company's business segments are managing through supply chain disruptions and escalating costs, including raw material cost increases, shortages, tra nsportation cost increases and delays.

To offset growing cost pressures, Bonnell Aluminum implemented its second selling price increase in 2021, which became effective April 26, 2021, and is preparing for an upcoming price increase effective January 3, 2022.

In response to unprecedented cost increases and supply issues for polyethylene and polypropylene resin, PE Films implemented a quarterly resin cost pass-through mechanism, effective July 1, 2021, for all products and customers not previously covered by such arrangements.

Terphane, the Company's flexible packaging business headquartered in Brazil, continues to monitor cost escalations to adjust selling prices as market dynamics permit.

Financial Considerations

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Non-residential B&C volume started to decline in the fourth quarter of 2020 after the fulfillment of contracts that existed at the start of the COVID-19 pandemic.

Bonnell Aluminum continued to experience weakness in non-residential B&C during the second quarter of 2021 with related volume declining 10.2% versus the second quarter of last year.

In addition, a portion of the non-residential B&C volume decline was due to pandemic-related production inefficiencies and labor constraints.

However, B&C-related sales volume declines were more than offset by increases in other markets, resulting in an overall increase in volume for the second quarter and first six months of 2021 of 11.9% and 2.5%, respectively.

Moreover, Bonnell Aluminum's performance to date during the COVID-19 environment has exceeded the Company's expectations, with current bookings and backlog at record high levels.

Demand has been strong during the COVID-19 pandemic for the Company’s flexible food packaging films produced by Terphane;

however, temporary resin supply issues and customer inventory corrections adversely impacted second quarter sales volume versus the same period in the prior year.

The Surface Protection component of PE Films had record EBITDA from ongoing operations in 2020, but is experiencing a decline in volume in 2021 related to a previously disclosed customer product transition and the timing of customer orders.

In addition, significant resin cost increases since the second quarter of 2020 have adversely impacted PE Films' results, due to margin compression for products with customers that were not covered by resin pass-through arrangements.

The quarterly lag between the timing of changes in resin costs and selling prices on existing pass-through arrangements also affected PE Films' results.

See the PE Films section below for further discussion.

Recently, market demand in this sector has been strong but was not reflected in Bonnell Aluminum's third quarter 2021 results, due to pandemic-related labor shortages and resulting production inefficiencies.

Non-residential B&C volume declined 13.1% versus the third quarter of last year.

However, current bookings and backlog remain at record high levels which we believe will bode well for future operations and results when production constraints are alleviated.

The Surface Protection component of PE Films had record EBITDA from ongoing operations in 2020 but is experiencing a decline in volume in 2021, primarily related to a previously disclosed customer product transition unrelated to the pandemic.

In addition, the lag in the pass-through of significant pandemic-related increases in resin costs, and some of such cost increases incurred prior to mid-year that will not be recovered even on a lagging basis, have adversely impacted PE Films' profitability in 2021.

At Terphane, the Company believes that the pandemic-related surge in demand for flexible packaging films that began in early 2020 returned to lower pre-pandemic levels during the second quarter of 2021.

Also, production and sales volumes for Terphane during the third quarter of 2021 were adversely impacted by an equipment failure on a manufacturing line that was unrelated to the pandemic and supply chain restrictions, which Terphane believes are impacting others in the industry as well.

While the equipment failure is not expected to be fixed until early in 2022, Terphane has adjusted operations for the interim period to meet anticipated customer demand.

OPERATIONS REVIEW

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% Change Six Months Ended Favorable/

% Change Nine Months Ended Favorable/

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(In thousands, except percentages) June 30, June 30,

(In thousands, except percentages) September 30, September 30,

2021 2020 2021 2020

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*See the table in Note 11, "Business Segments," of this Form 10-Q ("Note 11") for a reconciliation of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

Second Quarter 2021 Results vs.

Second Quarter 2020 Results

Net sales (sales less freight) in the second quarter of 2021 increased versus the second quarter of 2020 , primarily due to higher volume, the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs .

Sales volume in the second quarter of 2021 increased by 11.9% v ersus the second quarter of 2020.

Sales volume associated with the non-residential B&C market, which represented 55% of volume in 2020, declined 10.2% in the second quarter of 2021 versus the second quarter of 2020.

Sales volume associated with specialty markets, which represented 31% of total volume in 2020, increased 44.2% in the second quarter of 2021 versus the second quarter of 2020, and sales volume associated with the automotive market, which represented 9% of total volume in 2020, increased 65.3% in the second quarter of 2021 versus the second quarter of 2020.

See “ The Impact of COVID-19 and Related Financial Considerations ” section for more information on business conditions.

EBITDA from ongoing operations in the second quarter of 2021 increased by $6.4 million in comparison to the second quarter of 2020, including a $5.2 million favorable variance from the timing of the flow through of aluminum raw materials costs under the first-in first-out (“FIFO”) inventory method.

This favorable FIFO variance was due to aluminum raw materials previously acquired at lower costs in a quickly rising pricing environment driving a benefit of $3.1 million in the second quarter of 2021 versus a charge of $2.1 million in the second quarter of 2020.

In addition, higher volume ($3.9 million) and higher pricing ($3.3 million) were partially offset by higher labor and other operating costs ($3.3 million), higher general, selling and administrative expenses ($1.8 million) and higher freight costs ($0.8 million).

Third Quarter 2021 Results vs.

Third Quarter 2020 Results

Net sales (sales less freight) in the third quarter of 2021 increased versus the third quarter of 2020, primarily due to the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs, partially offset by lower volume.

Sales volume in the third quarter of 2021 decreased by 7.1% v ersus the third quarter of 2020.

Sales volume associated with the non-residential B&C market, which represented 55% of volume in 2020, declined 13.1% in the third quarter of 2021 versus the third quarter of 2020.

Sales volume associated with specialty markets, which represented 31% of total volume in 2020 , increased 11.4% in the third quarter of 2021 versus the third quarter of 2020, and sales volume associated with the automotive market, which represented 9% of total volume in 2020, decreased 34.9% in the t hird quarter of 2021 versus the third quarter of 2020.

A portion of the decline in automotive sales was attributed to the supply chain issues in the automotive industry.

See “ The Impact o f COVID-19 and Related Financial Considerations ” section for more information on business conditions.

EBITDA from ongoing operations in the third quarter of 2021 decreased by $4.5 million in comparison to the third quarter of 2020, primarily due to lower volume ($1.8 million), increased labor and employee-related costs ($2.4 million), other operating costs ($4.0 million), freight expenses ($1.3 million) and higher general, selling and administrative expenses ($0.3 million), partially offset by higher pricing ($5.5 million).

R efer to Item 3.

Q uantitative and Qualitative Disclosures About Market Risk of this Form 10-Q f or additional information on aluminum prices.

First Six Months of 2021 Results vs.

First Six Months 2020 Results

Net sales in the first six months of 2021 increased versus the first six months of 2020, primarily due to higher sales volume in the specialty and automotive markets, the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs.

Sales volume in the first six months of 2021 increased by 2.5% versus the first six months of 2020.

EBITDA from ongoing operations in the first six months of 2021 increased by $8.1 million in comparison to the first six months of 2020 due to higher volumes ($2.5 million) and higher pricing ($4.7 million), partially offset by higher labor and employee-related costs ($1.8 million) and other operational costs ($3.0 million), higher general, administrative and selling expenses ($1.0 million) and higher freight costs ($1.0 million).

In addition, and consistent with second quarter results, inventories accounted for under the FIFO method resulted in a benefit of $4.1 million in the first six months of 2021 versus a charge of $3.5 million i n the first six months of 2020.

First Nine Months of 2021 Results vs.

First Nine Months 2020 Results

Net sales in the first nine months of 2021 increased versus the first nine months of 2020, primarily due to the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs, partially offset by lower volume.

Sales volume in the first nine months of 2021 decreased by 0.9% versus the first nine months of 2020.

EBITDA from ongoing operations in the first nine months of 2021 increased by $3.6 million in comparison to the first nine months of 2020 due to higher pricing ($10.2 million), partially offset by higher labor and employee-related costs ($5.4 million) and other operational costs ($5.3 million), higher general, administrative and selling expenses ($1.3 million) and higher freight costs ($2.3 million).

In addition, inventories accounted for under the first-in first-out method resulted in a benefit of $5.8 million in the first nine months of 2021 versus a charge of $1.9 million in the first nine months of 2020.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures for Bonnell Aluminum are projected to be $21 million in 2021, including $3 million for infrastructure upgrades at the Carthage, Tennessee and Newnan, Georgia facilities, $1 million for a roof replacement at the Elkhart, Indiana site and $4 million for strategic projects.

Capital expenditures for Bonnell Aluminum are projected to be $19 million in 2021, including $3 million for infrastructure upgrades at the Carthage, Tennessee and Newnan, Georgia facilities and $5 million for strategic projects.

In addition, approximately $11 million will be required to support continuity of current operations.

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% Change Six Months Ended Favorable/

% Change Nine Months Ended Favorable/

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(In thousands, except percentages) June 30, June 30,

(In thousands, except percentages) September 30, September 30,

2021 2020 2021 2020

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* See the table in Note 11 for a reconciliation of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

Second Quarter 2021 Results vs.

Second Quarter 2020 Results

Net sales declined by $8.8 million in the second quarter of 2021 versus the second quarter of 2020, primarily due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection.

EBITDA from ongoing operations in the second quarter of 2021 decreased b y $6.5 milli on versus the second quarter of 2020, primarily due to:

• A $5.7 million decrease from Surface Protection related to lower sales associated with the customer product transitions ($7.2 million) and higher resin costs, net of existing index based pricing ($1.0 million), partially offset by higher sales of products unrelated to the customer product transitions ($0.9 million), higher productivity ($0.7 million), lower research and development expenses ($0.4 million) and lower other operating costs ($0.5 million);

• A $0.6 million decrease from Pottsville Packaging primarily related to higher resin costs .

Third Quarter 2021 Results vs.

Third Quarter 2020 Results

Net sales increased by $2.1 million in the third quarter of 2021 versus the third quarter of 2020, primarily due to higher pricing associated with the pass-through of increased resin costs, partially offset by lower volume associated with the previously disclosed customer product transitions in Surface Protection.

EBITDA from ongoing operations in the third quarter of 2021 decreased by $1.2 million versus the third quarter of 2020, primarily due to:

• A $1.3 million decrease from Surface Protection related to lower sales associated with the customer product transitions ($1.6 million), margin erosion associated with higher resin costs that occurred before the resin index pricing plan was fully implemented ($0.5 million) and the pass-through lag associated with higher resin costs ($0.3 million), partially offset by higher sales for products unrelated to the customer product transitions ($0.3 million), lower fixed costs ($0.5 million) and lower selling, general, and administrative expenses ($0.3 million);

• A $0.4 million decrease from Pottsville Packaging primarily related to the pass-through lag associated with higher resin costs;

• A $0.9 million favorable variance associated with the divestiture of Bright View Technologies at the end of 2020.

R efer to Item 3.

Q uantitative and Qualitative Disclosures About Market Risk of this Form 10-Q f or additional information on resin prices.

Customer Product Transitions in Surface Protection

Customer Product Transitions and Other Factors in Surface Protection

The Surface Protection component of PE Films supports manufacturers of optical and other specialty substrates used in flat panel display products.

These films are primarily used by customers to protect components of displays in the manufacturing and transportation processes and then discarded.

The Company previously reported the risk that a portion of its film products used in surface protection applications will be made obsolete by possible future customer product transitions to less costly alternative processes or materials.

These transitions principally relate to one customer.

The Company believes that previously reported delays in this customer's transitions have been resolved by the customer and much of the remaining transitions are expected to occur by the end of 2021.

Under this scenario, the Company estimates that the contribution to EBITDA from ongoing operations for PE Films could decline due to the remaining customer product transitions by $18 million in 2021 versus 2020 (of which approximately $13 million occurred during the first six months of 2021) and $4 million in 2022 versus 2021.

To offset the expected adverse impact, the Company is aggressively pursuing and making progress in generating contribution from sales from new surface protection products, applications and customers and implementing cost savings measures.

Annual contribution to EBITDA from ongoing operations for PE Films on surface protection products unrelated to the customer product transitions have increased by approximately $12 million during the past two years.

First Six Months of 2021 Results vs.

First Six Months 2020 Results

Net sales in the first six months of 2021 decreased versus the first six months 2020, primarily due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection.

EBITDA from ongoing operation in the first six months of 2021 decreas ed by $11.7 mill ion versus the first six months of 2020 primarily due to:

• A $11.1 million decrease from Surface Protection primarily related to lower sales and unfavorable mix associated with the customer product tra nsitions ($13.0 million) and higher resin costs, net of existing index based pricing ($1.7 million), partially offset by higher sales of products unrelated to the customer product transitions ($1.8 million) and higher productivity ($2.0 million);

• A $1.0 million decrease from Pottsville Packaging primarily related to higher resin costs.

The Company previously reported the risk that a portion of its film products used in surface protection applications would be made obsolete by customer product transitions to less costly alternative processes or materials.

The Company estimates that these transitions, which principally relate to one customer, adversely impacted EBITDA from ongoing operations for PE Films by $14.6 million during the first nine months of 2021 versus 2020.

No additional adverse impacts from the transitions are anticipated during the fourth quarter of 2021 versus 2020.

However, a further decline of $7 million in EBITDA from ongoing operations due to the transitions is expected in 2022 versus 2021, at which time the transitions are expected to be complete.

The Surface Protection business is also experiencing competitive pricing pressures, unrelated to the customer product transitions, that are expected to adversely impact EBITDA from ongoing operations by approximately $6 million in 2022 versus 2021.

To offset the expected adverse impact of the customer transitions and pricing pressures, the Company is aggressively pursuing and making progress in generating contribution from sales of new surface protection products, applications and customers and driving production efficiencies and cost savings.

Annual contribution to EBITDA from ongoing operations for PE Films from sales of new surface protection products, applications and customers has increased by approximately $12 million during the past two calendar years.

First Nine Months of 2021 Results vs.

First Nine Months 2020 Results

Net sales in the first nine months of 2021 decreased versus the first nine months 2020, primarily due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection, partially offset by higher pricing associated with the pass-through of increased resin costs.

EBITDA from ongoing operations in the first nine months of 2021 decreased by $12.9 million versus the first nine months of 2020 primarily due to:

• A $12.5 million decrease from Surface Protection primarily related to lower sales and unfavorable mix associated with the customer product transitions ($14.6 million), margin erosion associated with higher resin costs that occurred before the resin index pricing plan was fully implemented ($1.4 million) and the pass-through lag associated with higher resin costs ($1.0 million), partially offset by higher sales of products unrelated to the customer product transitions ($0.9 million) and production efficiencies and cost savings ($2.8 million);

• A $1.4 million decrease from Pottsville Packaging primarily related to the pass-through lag associated with higher resin costs;

• A $1.6 million favorable variance associated with the divestiture of Bright View Technologies at the end of 2020.

Projected Capital Expenditures and Depreciation & Amortization

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% Change Six Months Ended Favorable/

% Change Nine Months Ended Favorable/

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(In thousands, except percentages) June 30, June 30,

(In thousands, except percentages) September 30, September 30,

2021 2020 2021 2020

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* See the table in Note 11 for a reconciliation of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

Second Quarter 2021 Results vs.

Second Quarter 2020 Results

Sales volume declined by 17.0% during the second quarter of 2021 versus the second quarter of 2020, primarily due to temporary resin supply issues impacting production and lower demand, which the Company believes was related to customer inventory corrections in Brazil.

Net sales in the second quarter of 2021 decreased 2.1% compared to the second quarter of 2020, primarily due to lower sales volume, partially offset by favorable product mix and higher selling prices from the pass-through of higher resin costs.

EBITDA from ongoing operations in the second quarter of 2021 increased by $1.8 million versus the second quarter of 2020 primarily due to:

• Lower sales volume ($2.8 million), partially offset by favorable product mix ($0.7 million), lower fixed ($0.5 million) and variable ($0.2 million) costs, higher selling prices from the pass-through of higher resin costs ($0.5 million) and lower selling and general administration expenses ($0.6 million);

Third Quarter 2021 Results vs.

Third Quarter 2020 Results

Sales volume declined by 10.2% during the third quarter of 2021 versus the third quarter of 2020, primarily due to lower demand, reduced production capacity as a result of an equipment failure on a production line and supply chain restrictions, which Terphane believes are impacting others in the industry as well.

While the equipment failure is not expected to be fixed until early in 2022, Terphane has adjusted operations for the interim period to meet anticipated customer demand.

Net sales in the third quarter of 2021 increased 2.3% compared to the third quarter of 2020, primarily due to higher selling prices from the pass-through of higher resin costs and favorable product mix, partially offset by lower sales volume.

EBITDA from ongoing operations in the third quarter of 2021 decreased by $2.2 million versus the third quarter of 2020 primarily due to:

• Lower sales volume ($1.8 million), higher raw material costs ($4.8 million) and higher selling and general administration expenses ($0.1 million), partially offset by higher selling prices ($3.4 million) from the pass-through of higher resin costs;

• Net favorable foreign currency translation of Real-denominated operating costs ($1.1 million);

• Higher foreign currency transaction losses of $0.1 million in the second quarter of 2021 versus the second quarter of 2020.

First Six Months of 2021 Results vs.

First Six Months 2020 Results

Sales volume declined by 6.1% during the first six months of 2021 versus the first six months of 2020, primarily due to the factors adversely impacting the second quarter of 2021 mentioned above.

Net sales in the first six months of 2021 increased 1.9% compared to the first six months of 2020, primarily due to favorable product mix and higher selling prices from the pass-through of higher resin costs, partially offset by lower sales volume.

EBITDA from ongoing operations in the first six months of 2021 increased by $4.8 million versus the first six months of 2020 primarily due to:

• Higher selling prices from the pass-through of higher resin costs ($1.6 million), favorable product mix ($1.4 million), lower variable costs ($0.4 million) and lower selling and general administration expenses ($0.5 million), partially offset by lower sales volume ($1.7 million) and higher fixed costs ($0.6 million);

• Higher foreign currency transaction gains ($0.2 million) in the third quarter of 2021 versus the third quarter of 2020.

First Nine Months of 2021 Results vs.

First Nine Months 2020 Results

Sales volume declined by 7.5% during the first nine months of 2021 versus the first nine months of 2020, primarily due to temporary resin supply issues, an equipment failure impacting production and lower demand.

The Company believes that the pandemic-related surge in demand that began in early 2020 returned to lower pre-pandemic levels during the second quarter of 2021.

Net sales in the first nine months of 2021 increased 2.0% compared to the first nine months of 2020, primarily due to higher selling prices from the pass-through of higher resin costs and favorable product mix, partially offset by lower sales volume.

EBITDA from ongoing operations in the first nine months of 2021 increased by $2.7 million versus the first nine months of 2020 primarily due to:

• Favorable product mix ($1.7 million), higher selling prices from the pass-through of higher resin costs ($0.8 million), and lower selling and general administration expenses ($0.4 million), offset by lower sales volume ($3.5 million) and higher fixed ($0.8 million) and variable ($0.4 million) costs;

• Net favorable currency translation of Real-denominated operating costs ($4.7 million);

• Foreign currency transaction loss of $0.1 million in the first six months of 2021 versus losses of $0.2 million in the first six months of 2020;

• Lower value-added tax credits received in the first six months of 2021 ($0.5 million) compared with the first six months of 2020 ($1.2 million).

• Higher foreign currency transaction gains ($0.3 million) in the first nine months of 2021 versus 2020;

• Lower value-added tax credits received in the first nine months of 2021 ($0.5 million) compared with the first nine months of 2020 ($1.2 million).

Projected Capital Expenditures and Depreciation & Amortization

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Corporate Expenses, Interest, Taxes & Other

Corporate expenses, net, increased in the first six months of 2021 versus the first six months of 2020, primarily due to higher employee-related compensation ($1.8 million), stock-based compensation ($1.3 million), costs associated with held for sale assets ($0.4 million) and write-downs related to the investment held in Harbinger Capital Partners Special Situations Fund ($0.3 million), partially offset by lower professional fees related to remediation activities of previously disclosed material weaknesses in the Company’s internal control over financial reporting and business development activities ($1.0 million) and favorable transition service fees, net of corporate costs associated with the divested Personal Care Films business ($0.6 million).

Interest expense was $1.7 million in the first six months of 2021 in comparison to $1.1 million in the first six months of 2020, primarily due to higher average debt levels.

The effective tax rate used to compute income taxes for continuing operations in the first six months of 2021 was 22.5%, compared to 27.1% in the first six months of 2020.

Corporate expenses, net, increased in the first nine months of 2021 versus the first nine months of 2020, primarily due to higher professional fees related to remediation activities of previously disclosed material weaknesses in the Company’s internal control over financial reporting ($0.6 million).

Interest expense was $2.6 million in the first nine months of 2021 in comparison to $1.6 million in the first nine months of 2020, primarily due to higher average debt levels.

The effective tax rate used to compute income taxes for continuing operations in the first nine months of 2021 was 22.7%, compared to 26.2% in the first nine months of 2020.

The differences between the U.S.

federal statutory rate and the effective tax rate for the first six months of 2021 and 2020 are shown in the table provided in Note 12.

Pension expense was $7.0 million in the first six months of 2021, a favorable change of $0.1 million compared to the first six months of 2020.

federal statutory rate and the effective tax rate for the first nine months of 2021 and 2020 are shown in the table provided in Note 12.

Pension expense was $10.5 million in the first nine months of 2021, a favorable change of $0.1 million compared to the first nine months of 2020.

The impact on earnings from pension expense is reflected in “Corporate expenses, net” in the net sales and EBITDA from ongoing operations by segment table.

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GAAP accounting requires adjustment for changes in values of assets and the PBO only at the end of each year, even though these values change daily.

The Company estimates that changes to the values of pension plan assets and liabilities resulted in a decrease in the underfunding from $103 million at December 31, 2020 to approximately $75 million at June 30, 2021.

Tredegar owns approximately 18% of kaléo, which makes and sells an epinephrine delivery device under the name AUVI-Q ® .

The Company accounts for its investment in kaléo using a fair value method.

The Company’s estimate of the fair value of its interest in kaléo at June 30, 2021 was $35.2 million ($30.1 million after taxes), essentially unchanged from the balance at March 31, 2021 of $35.0 million ($30.0 million after taxes) and December 31, 2020 of $34.6 million ($29.7 million after taxes).

The Company’s estimate of the fair value of its interest in kaléo at September 30, 2021 was $35.5 million ($30.3 million after taxes), essentially unchanged from the balance at June 30, 2021 of $35.2 million ($30.1 million after taxes) and December 31, 2020 of $34.6 million ($29.7 million after taxes).

kaléo’s stock is not publicly traded.

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Actual results could differ significantly from those estimates under different assumptions and conditions.

The Company believes the consistent application of these policies enables it to provide readers of the financial statements with useful and reliable information about our operating results and financial condition.

The Company believes the consistent application of these policies enables it to provide readers of the financial statements with useful and reliable information about

our operating results and financial condition.

Since December 31, 2020, there have been no changes in these policies that have had a material impact on results of operations or financial position.

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Results of Operations

Second Quarter of 2021 Compared with the Second Quarter of 2020

Sales in the second quarter of 2021 increased by 13.4% compared with the second quarter of 2020.

Net sales in Aluminum Extrusions increased 31.3% due to higher volume, the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs .

Net sales decreased 21.8% in PE Films, primarily due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection.

Net sales in Flexible Packaging Films decreased 2.1% primarily due to lower sales volume, partially offset by a favorable product mix and higher selling prices from the pass-through of higher resin costs.

Third Quarter of 2021 Compared with the Third Quarter of 2020

Sales in the third quarter of 2021 increased by 13.6% compared with the third quarter of 2020.

Net sales in Aluminum Extrusions increased 18.6% due to the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs, partially offset by lower volume.

Net sales increased 7.8% in PE Films, primarily due to higher pricing associated with the pass-through of increased resin costs, partially offset by lower volume associated with the previously disclosed customer product transitions in Surface Protection.

Net sales in Flexible Packaging Films increased 2.3% primarily due to higher selling prices from the pass-through of higher resin costs and favorable product mix, partially offset by lower sales volume.

For more information on net sales and volume, see the Executive Summary .

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 21.5% in the second quarter of 2021 compared to 24.9% in the second quarter of 2020.

The gross profit margin in Aluminum Extrusions increased primarily due to higher average selling prices and favorable FIFO variance in the second quarter of 2021 due to aluminum raw materials previously acquired at lower costs.

The gross profit margin in PE Films decreased primarily due to lower volume, unfavorable mix associated with the customer product transitions in Surface Protection and higher resin costs, net of existing index based pricing, partially offset by higher sales of products unrelated to the customer product transitions and higher productivity.

The gross profit margin in Flexible Packaging Films increased due to a favorable product mix and higher selling prices from the pass-through of higher resin costs.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 10.3% in the second quarter of 2021, compared with 12.6% in the second quarter of last year.

SG&A and R&D expenses were down year-over-year, while net sales increased.

Decreased spending is primarily due to nonrecurring SG&A expenses related to Bright View Technologies in the second quarter of 2020 and lower R&D spending, partially offset by higher employee-related compensation expense.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in the second quarters of 2021 and 2020 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment table in Note 11 and are included in “Asset impairments and costs associated with exit and

disposal activities, net of adjustments” in the consolidated statements of income, unless otherwise noted.

Three Months Ended June 30,

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 15.0% in the third quarter of 2021 compared to 22.7% in the third quarter of 2020.

The gross profit margin in Aluminum Extrusions decreased primarily due to lower volume, increased operating costs and freight expenses, partially offset by higher pricing.

The gross profit margin in PE Films decreased primarily due to lower sales associated with the customer product transitions and the pass-throu gh lag associated with higher resin costs, partially offset by higher sales for products unrelated to the customer product transitions.

The gross profit margin in Flexible Packaging Films decreased due to a lower sales volume and higher raw material costs, partially offset by higher selling prices from the pass-through of higher resin costs.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 8.8% in the third quarter of 2021, compared with 12.0% in the third quarter of last year.

SG&A expenses were down year-over-year, while net sales increased.

Decreased SG&A spending is primarily due to nonrecurring corporate costs associated with the divested Personal Care Films business, lower professional fees associated with business development activities and nonrecurring SG&A expenses related to Bright View Technologies in the third quarter of 2020.

R&D expense remained consistent with prior year.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in the third quarters of 2021 and 2020 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment table in Note 11 and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the consolidated statements of income, unless otherwise noted.

Three Months Ended September 30,

($ in millions) 2021 2020

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Consulting expenses for enterprise resource planning feasibility study 1

Environmental charges at Newnan, Georgia plant 3

COVID-19-related expenses, net of relief 2

Total for Aluminum Extrusions $ 0.2 $ 0.8

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Other restructuring costs - severance $ 0.1 $ —

(Gains) losses from sale of assets, investment writedowns and other items:

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Total for PE Films $ 0.2 $ —

Flexible Packaging Films:

(Gains) losses from sale of assets, investment writedowns and other items:

One-time tax credit in Brazil for unemployment/social security insurance non-income taxes resulting from a favorable decision by Brazil’s Supreme Court regarding the calculation of such taxes 2,3

Total for Flexible Packaging Films $ (8.5) $ —

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Maintenance costs associated with held-for-sale assets $ 0.2 $ —

(Gain), net of costs associated with the sale of the Lake Zurich manufacturing facility assets $ (0.2) $ —

(Gains) losses from sale of assets, investment writedowns and other items:

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Transition service fees, net of corporate costs associated with the divested Personal Care Films business 2

Accelerated recognition of stock-based compensation expense 1

Total for Corporate $ 1.3 $ 1.8

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Included in “Other income (expense), net” in the consolidated statements of income.

See Note 13 to the Consolidated Financial Statements.

See Note 2 to the Consolidated Financial Statements.

Included in “Cost of goods sold” in the consolidated statements of income.

Average debt outstanding and interest rates were as follows:

Three Months Ended June 30,

Three Months Ended September 30,

(In millions) 2021 2020

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Average interest rate 1.8 % 1.7 %

First Six Months of 2021 Results vs.

First Six Months 2020 Results

Sales in the first six months of 2021 increased by 4.6% compared with the first six months of 2020.

Net sales increased 14.9% in Aluminum Extrusions due to higher sales volume in the specialty and automotive markets and the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs.

First Nine Months of 2021 Results vs.

First Nine Months 2020 Results

Sales in the first nine months of 2021 increased by 7.6% compared with the first nine months of 2020.

Net sales increased 16.2% in Aluminum Extrusions due to the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs, partially offset by lower volume.

Net sales decreased 15.0% in PE Films primarily due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection.

Net sales in Flexible Packaging Films increased 1.9% primarily due to a favorable product mix and higher selling prices from the pass-through of higher resin costs, partially offset by lower sales volume.

Net sales in Flexible Packaging Films increased 2.0% primarily due to higher selling prices from the pass-through of higher resin costs and favorable product mix, partially offset by lower sales volume.

For more information on net sales and volume, see the Executive Summary .

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 20.9% in the first six months of 2021 compared to 22.8% in the first six months of 2020.

The gross profit margin in Aluminum Extrusions increased primarily due to higher average selling prices and favorable FIFO variance in the first six months of 2021 due to aluminum raw materials previously acquired at lower costs.

The gross profit margin in Flexible Packaging Films increased due to favorable product mix and higher selling prices from the pass-through of higher resin costs, partially offset by lower sales volume.

As a percentage of sales, SG&A and R&D expenses were 10.6% in the first six months of 2021, compared with 12.1% in the first six months of last year.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 18.9% in the first nine months of 2021 compared to 22.8% in the first nine months of 2020.

The gross profit margin in Aluminum Extrusions decreased primarily due to higher freight, labor and employee-related costs and other operational costs.

The gross profit margin in PE Films decreased primarily due to lower sales and unfavorable mix associated with the customer product transitions in Surface Protection and margin erosion associated with higher resin costs that occurred before the resin index pricing plan was fully implemented, partially offset by higher sales of products unrelated to the customer product transitions and production efficiencies and cost savings.

The gross profit margin in Flexible Packaging Films decreased due to lower sales volume and higher fixed and variable costs partially offset by favorable product mix.

As a percentage of sales, SG&A and R&D expenses were 9.9% in the first nine months of 2021, compared with 12.0% in the first nine months of last year.

SG&A and R&D expenses were down year-over-year, while net sales increased.

Decreased spending is primarily due to nonrecurring SG&A expenses related to Bright View Technologies in the first six months of 2020, lower R&D spending, lower professional fees related to remediation activities of previously disclosed material weaknesses in the Company’s internal control over financial reporting and business development activities, partially offset by higher employee-related compensation and higher stock compensation.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in the first six months of 2021 and 2020 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment table in Note 11 and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the consolidated statements of income, unless otherwise noted.

Six Months Ended June 30,

Decreased spending is primarily due to nonrecurring corporate costs associated with the divested Personal Care Films business, lower R&D spending, and nonrecurring SG&A expenses related to Bright View Technologies in the first nine months of 2020.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for continuing operations in the first nine months of 2021 and 2020 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment table in Note 11 and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the consolidated statements of income, unless otherwise noted.

Nine Months Ended September 30,

($ in millions) 2021 2020

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Consulting expenses for enterprise resource planning feasibility study 1

Environmental charges at Newnan, Georgia plant 3

COVID-19-related expenses, net of relief 2

Total for Aluminum Extrusions $ 0.2 $ 2.6

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Other restructuring costs - severance $ 0.1 $ 0.1

(Gains) losses from sale of assets, investment writedowns and other items:

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(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Maintenance costs associated with held-for-sale assets 4

Costs, net of gain associated with the sale of the Lake Zurich manufacturing facility assets $ 0.1 $ —

(Gains) losses from sale of assets, investment writedowns and other items:

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Included in “Other income (expense), net” in the consolidated statements of income.

See Note 13 to the Consolidated Financial Statements.

Included in “Cost of goods sold” in the consolidated statements of income.

See Note 13 to the Consolidated Financial Statements.

Average debt outstanding and interest rates were as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2021 2020

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Measures such as days sales outstanding (“DSO”), days inventory outstanding (“DIO”) and days payables outstanding (“DPO”) are used to evaluate changes in working capital.

Changes in operating assets and liabilities from continuing operations from December 31, 2020 to June 30, 2021 are summarized below.

Changes in operating assets and liabilities from continuing operations from December 31, 2020 to September 30, 2021 are summarized below.

Cash flows for discontinued operations have not been separately disclosed in the consolidated statements of cash flows.

• Accounts and other receivables increased $10.9 million (12.6%).

◦ Accounts and other receivables in Aluminum Extrusions increased by $14.5 million primarily due to higher selling prices from the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs, partially offset with improved collection efforts during the second quarter of 2021.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 45.9 days for the 12 months ended June 30, 2021 and 47.5 days for the 12 months ended December 31, 2020.

◦ Accounts and other receivables in PE Films decreased by $3.1 million due to lower sales volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection, partially offset by higher selling prices of packaging products as a result of the pass-through of increased resin costs.

DSO was approximately 30.1 days for the 12 months ended June 30, 2021 and 30.2 days for the 12 months ended December 31, 2020.

◦ Accounts and other receivables in Flexible Packaging Films increased by $2.7 million primarily due to a one-time tax credit in Brazil for PIS/COFINS social contribution non-income taxes, partially offset by higher sales volume to customers that have shorter payment terms.

DSO was approximately 38.9 days for the 12 months ended June 30, 2021 and 41.0 days for the 12 months ended December 31, 2020.

◦ Accounts and other receivables in Aluminum Extrusions increased by $13.8 million primarily due to higher selling prices from the pass-through of higher metal costs and an increase in average selling prices to cover higher operating costs, partially offset by lower volume and improved collection efforts during the nine months ended 2021.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 47.2 days for the 12 months ended September 30, 2021 and 47.5 days for the 12 months ended December 31, 2020.

◦ Accounts and other receivables in PE Films decreased by $3.4 million due to lower volume and unfavorable mix associated with the previously disclosed customer product transitions in Surface Protection, partially offset by higher pricing associated with the pass-through of increased resin costs.

DSO was approximately 28.7 days for the 12 months ended September 30, 2021 and 30.2 days for the 12 months ended December 31, 2020.

◦ Accounts and other receivables in Flexible Packaging Films increased by $1.1 million primarily due to a one-time tax credit in Brazil for unemployment/social security insurance non-income taxes ("PIS/COFINS") received during the second quarter of 2021.

DSO was approximately 39.8 days for the 12 months ended September 30, 2021 and 41.0 days for the 12 months ended December 31, 2020.

• Inventories increased $19.2 million (29.0%).

◦ Inventories in Aluminum Extrusions increased by $15.4 million due to higher average aluminum prices and the impact of COVID-19-related operational and production inefficiencies on the timing of shipments.

DIO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of inventory balances calculated on the FIFO basis) was approximately 38.9 days for the 12 months ended June 30, 2021 and 39.3 days for the 12 months ended December 31, 2020.

◦ Inventories in PE Films remained flat as of June 30, 2021 compared to December 31, 2020.

DIO of approximately 64.7 days for the 12 months ended June 30, 2021 was higher compared 59.2 days for the 12 months ended December 31, 2020 due to the higher Surface Protection 12-month average of raw materials inventory.

◦ Inventories in Flexible Packaging Films increased by $6.4 million primarily due to higher planned raw material levels due to temporary resin supply issues and higher finished good levels due to lower than anticipated sales volume.

DIO was approximately 92.4 days for the 12 months ended June 30, 2021 and 89.4 days for the 12 months ended December 31, 2020.

• Net property, plant and equipment increased $2.0 million (1.2%) primarily due to depreciation expense of $10.9 million, offset by capital expenditures of $12.3 million and a reduction from the effect of changes in foreign exchange rates of $0.9 million.

• Identifiable intangible assets, net decreased by $1.4 million (7.5%) due to amortization expense of $1.4 million.

DIO (represents trailing 12 months costs of goods sold calculated on a first-in first-out basis divided by a rolling 12-month average of inventory balances calculated on the first-in first-out basis) was approximately 40.0 days for the 12 months ended September 30, 2021 and 39.3 days for the 12 months ended December 31, 2020.

◦ Inventories in PE Films decreased $1.2 million due to lower planned raw material and finished good levels due to declining sales volume relative to 2020, partially offset by increased resin costs.

DIO of approximately 62.4 days for the 12 months ended September 30, 2021 was higher compared 59.2 days for the 12 months ended December 31, 2020 due to the lower Surface Protection 12-month average of costs of goods sold as a result of lower sales volume.

◦ Inventories in Flexible Packaging Films increased by $5.1 million primarily due to higher finished good levels due to lower than anticipated sales volume and higher planned raw material levels due to anticipated freight delays.

DIO was approximately 94.4 days for the 12 months ended September 30, 2021 and 89.4 days for the 12 months ended December 31, 2020.

• Net property, plant and equipment increased $1.4 million primarily due to capital expenditures of $19.0 million, partially offset by depreciation expense of $16.2 million, disposals, net of cash proceeds of $0.5 million and unfavorable changes in foreign exchange rates of $0.6 million.

• Identifiable intangible assets, net decreased by $2.2 million (11.8%) due to amortization expense.

• Accounts payable increased $26.2 million (29.2%).

◦ Accounts payable in Aluminum Extrusions increased by $22.0 million primarily due to higher average aluminum prices and favorable payment terms with certain vendors.

DPO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of accounts payable balances) was approximately 55.2 days for the 12 months ended June 30, 2021 and 53.1 days for the 12 months ended December 31, 2020.

◦ Accounts payable in PE Films increased by $5.8 million primarily due to higher resin costs related to raw material purchases during the second quarter of 2021.

DPO of approximately 35.0 days for the 12 months ended June 30, 2021 declined from 36.8 days for the 12 months ended December 31, 2020 due to the lower Surface Protection 12-month average of costs of goods sold as a result of lower sales volume.

◦ Accounts payable in Flexible Packaging Films increased $3.1 million due to higher raw material purchases during the first six months of 2021.

DPO was approximately 67.0 days for the 12 months ended June 30, 2021 and 61.7 days for the 12 months ended December 31, 2020.

Net cash provided by operating activities was $41.5 million in the first six months of 2021 compared to $36.1 million in the first six months of 2020.

The increase was primarily due to higher net working capital ($3.5 million) and higher EBITDA for business segments of $1.0 million in the first six months of 2021 versus the first six months of 2020.

Net cash used in investing activities increased during the first six months of 2021 compared to the first six months of 2020 due to higher capital expenditure spending of $2.5 million.

Net cash used in financing activities of $24.2 million in the first six months of 2021, compared to $16.6 million in the first six months of 2020, increased primarily due to higher net repayments ($9.0 million) under the Credit Agreement (as defined below), partially offset by repurchases of employee common stock for tax withholdings of $0.6 million in the first six months of 2020.

DPO (represents trailing 12 months costs of goods sold calculated on a first-in first-out basis divided by a rolling 12-month average of accounts payable balances) was

approximately 58.7 days for the 12 months ended September 30, 2021 and 53.1 days for the 12 months ended December 31, 2020.

◦ Accounts payable in PE Films increased by $4.2 million primarily due to higher resin costs and favorable payment terms with certain vendors.

DPO was approximately 38.7 days for the 12 months ended September 30, 2021 and 36.8 days for the 12 months ended December 31, 2020.

◦ Accounts payable in Flexible Packaging Films increased $1.5 million due to higher resin costs and favorable payment terms with certain vendors.

DPO was approximately 68.2 days for the 12 months ended September 30, 2021 and 61.7 days for the 12 months ended December 31, 2020.

Net cash provided by operating activities was $51.5 million in the first nine months of 2021 compared to $66.3 million in the first nine months of 2020.

The decrease was primarily due to lower net working capital ($10.6 million) and lower EBITDA for business segments of $6.6 million in the first nine months of 2021 versus the first nine months months of 2020.

Net cash used in investing activities increased during the first nine months of 2021 compared to the first nine months of 2020 due to higher capital expenditure spending of $6.2 million, partially offset by $4.7 million cash proceeds from the sale of the Lake Zurich manufacturing facility assets.

Net cash used in financing activities of $18.2 million in the first nine months of 2021, compared to $47.6 million in the first nine months of 2020, decreased primarily due to higher net repayments ($28.0 million) in 2020 under the Credit Agreement (as defined below), partially offset by $0.9 million of proceeds from the exercise of stock options in the first nine months of 2021 and repurchases of employee common stock for tax withholdings of $0.6 million in the first nine months of 2020.

Tredegar has a five-year secured revolving credit agreement (the “Credit Agreement”) providing for aggregate borrowings in an amount of $375 million, which matures in June 2024.

Net capitalization and indebtedness as defined under the Credit Agreement as of June 30, 2021 were as follows:

Net Capitalization and Indebtedness as of June 30, 2021

Net capitalization and indebtedness as defined under the Credit Agreement as of September 30, 2021 were as follows:

Net Capitalization and Indebtedness as of September 30, 2021

(In thousands)

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<= 1.0x 150.0 20

At June 30, 2021, the interest rate on debt under the Credit Agreement existing at that date was priced at one-month LIBOR plus the applicable credit spread of 162.5 basis points.

At September 30, 2021, the interest rate on debt under the Credit Agreement existing at that date was priced at one-month LIBOR plus the applicable credit spread of 162.5 basis points.

The most restrictive covenants in the Credit Agreement include:

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The Credit Agreement is secured by substantially all of the Company’s and its domestic subsidiaries’ assets, including equity in certain material first-tier foreign subsidiaries.

At June 30, 2021, based upon the most restrictive covenant within the Credit Agreement, available credit under the Credit Agreement was approximately $258 million.

Total debt outstanding was $117 million and $134 million as of June 30, 2021 and December 31, 2020, respectively.

At September 30, 2021, based upon the most restrictive covenant within the Credit Agreement, available credit under the Credit Agreement was approximately $248 million.

Total debt outstanding was $127 million and $134 million as of September 30, 2021 and December 31, 2020, respectively.

Credit EBITDA is not intended to represent net income (loss) or cash flow from operations as defined by GAAP and should not be considered as an alternative to either net income (loss) or to cash flow.

The computations of Credit EBITDA and the leverage ratio and interest coverage ratio as defined in the Credit Agreement are presented below.

Computations of Credit EBITDA and Leverage Ratio and Interest Coverage Ratio as Defined in the Credit Agreement Along with Related Most Restrictive Covenants as of and for the Twelve Months Ended June 30, 2021 (In Thousands)

Computation of Credit EBITDA for the twelve months ended June 30, 2021:

Computation of Credit EBITDA for the twelve months ended September 30, 2021:

Net income (loss) $ 37,366

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Credit EBITDA as defined in Credit Agreement $ 96,369

Computations of leverage and interest coverage ratios as defined in the Credit Agreement at June 30, 2021:

Computations of leverage and interest coverage ratios as defined in the Credit Agreement at September 30, 2021:

Leverage ratio (indebtedness-to-Credit EBITDA) 1.32x

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Minimum interest coverage ratio permitted 3.00x

Tredegar was in compliance with all of its debt covenants as of June 30, 2021.

Tredegar was in compliance with all of its debt covenants as of September 30, 2021.

Noncompliance with any of the debt covenants may have a material adverse effect on its financial condition or liquidity, in the event such noncompliance cannot be cured or should the Company be unable to obtain a waiver from the lenders.

Renegotiation of the covenant through an amendment to the Credit Agreement may effectively cure the noncompliance, but may have an effect on its financial condition or liquidity depending upon how the covenant is renegotiated.

At June 30, 2021, the Company had cash and cash equivalents of $18.3 million, including cash and cash equivalents held by locations outside the U.S.

At September 30, 2021, the Company had cash and cash equivalents of $30.3 million, including cash and cash equivalents held by locations outside the U.S.

of $17.7 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis