What changed in this filing

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Item 1. Business

2022-03-11 compared with 2021-03-16 · 52 added, 42 removed, 99 unchanged (49% of the section changed)

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In December 2020, the Company entered into a definitive agreement and completed the sale of Bright View Technologies (“Bright View”).

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

Bright View historically has been reported in the PE Films segment.

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 has been presented as continuing operations within the PE Films segment.

For more information on these transactions, see Note 15 “Discontinued Operations” to the Consolidated Financial Statements included in Item 15.

“Exhibits and Financial Statement Schedules” of this Form 10-K (“Item 15”).

“Exhibits and Financial Statement Schedules” (“Item 15”) of this Annual Report on Form 10-K for the year ended December 31, 2021 (“Form 10-K”).

Aluminum Extrusions

Aluminum Extrusions, also referred to as Bonnell Aluminum, produces high-quality, soft-alloy and medium-strength custom fabricated and finished aluminum extrusions for the building and construction, automotive and transportation, consumer durables, machinery and equipment, electrical and renewable energy, and distribution markets.

Aluminum Extrusions, also referred to as Bonnell Aluminum, produces high-quality, soft and medium-strength alloyed aluminum extrusions, custom fabricated and finished for the building and construction, automotive and transportation, consumer durables goods, machinery and equipment, electrical and renewable energy, and distribution markets.

Bonnell Aluminum has manufacturing facilities located in the United States (“U.S.”).

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Sales are made predominantly in the U.S.

The end-use markets for Aluminum Extrusions are cyclical and seasonal in nature.

The end-uses in each of Aluminum Extrusions’ primary market segments include:

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Automotive and transportation Automotive and light truck structural components, spare parts, after-market automotive accessories, grills for heavy trucks, travel trailers and recreation vehicles

Consumer durables Furniture, pleasure boats, refrigerators and freezers, appliances and sporting goods

Machinery & equipment Material handling equipment, conveyors and conveying systems, medical equipment, and aluminum framing systems (TSLOTS TM )

Consumer durables Office furniture, pleasure boats, refrigerators and freezers, appliances and sporting goods

Machinery & equipment Material handling equipment, conveyors and conveying systems, medical equipment, industrial fans and aluminum framing systems (TSLOTS TM )

Distribution (metal service centers specializing in stock and release programs and custom fabrications to small manufacturers) Various custom profiles including storm shutters, pleasure boat accessories, theater set structures and various standard profiles (including rod, bar, tube and pipe)

Electrical and renewable energy Lighting fixtures, electronic apparatus, solar panel brackets and rigid and flexible conduits

Aluminum Extrusions’ net sales (sales less freight) by market segment for the three years ended December 31, 2020 is shown below:

Aluminum Extrusions’ net sales (sales less freight) by market segment for the years ended December 31, 2021, 2020 and 2019 is shown below:

% of Aluminum Extrusions Net Sales by Market Segment

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Total 100% 100% 100%

In 2020, 2019 and 2018, nonresidential building and construction accounted for approximately 35%, 34% and 35% of Tredegar’s consolidated net sales, respectively.

In 2021, 2020 and 2019, Aluminum Extrusions net sales accounted for approximately 67%, 63% and 66% of Tredegar’s consolidated net sales, respectively.

Overall backlog in Aluminum Extrusions was approximately $306.4 million at December 31, 2021 compared to approximately $74.2 million at December 31, 2020, an increase of $232.2 million, or approximately 313%.

The increased backlog in 2021 compared to 2020 is primarily due to increased demand (33% increase in bookings), while experiencing a shortage of labor to meet existing demand and desired shipment levels.

Net sales for Aluminum Extrusions, which the Company believes are cyclical in nature due to the seasonal nature of end-use markets, were $539.3 million in 2021, $455.7 million in 2020 and $529.6 million in 2019.

Raw Materials .

The primary raw materials used by Aluminum Extrusions consist of aluminum ingot, aluminum scrap and various alloys, which are purchased from domestic and foreign producers in open-market purchases and under annual contracts.

Aluminum Extrusions believes that it has adequate supply agreements for aluminum and other required raw materials and supplies in the foreseeable future.

PE Films is composed of surface protection films, polyethylene overwrap films and films for other markets.

Refer to Quantitative and Qualitative Disclosures About Market Risk in Item 7.

"Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K (“Item 7”) for additional information on aluminum price trends.

Aluminum Extrusions believes that it has adequate supply agreements for aluminum raw materials in 2022 and is in the process of securing supply sources to meet expected needs in 2023.

Aluminum Extrusions continues to navigate through supply chain issues for paint and other non-aluminum raw materials.

PE Films produces surface protection films, polyethylene overwrap films and films for other markets.

Tredegar’s Surface Protection unit produces single- and multi-layer surface protection films sold under the UltraMask®, ForceField™, ForceField PEARL ® and Pearl A™ brand names.

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and China, support manufacturers of optical and other specialty substrates used in high-technology applications, most notably protecting high-value components of flat panel and flexible displays used in televisions, monitors, notebooks, smartphones, tablets, e-readers, automobiles and digital signage, during the manufacturing and transportation process.

In 2020, 2019 and 2018, surface protection films accounted for approximately 15%, 13% and 12% of Tredegar’s consolidated net sales, respectively.

In 2021, 2020 and 2019, PE Films accounted for approximately 15%, 19% and 17% of Tredegar’s consolidated net sales, respectively.

In October 2020, the Surface Protection unit assumed responsibility for Pottsville Packaging, which was previously reported within the Personal Care component of PE Films.

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These raw materials are obtained from domestic and foreign suppliers at competitive prices.

Refer to Quantitative and Qualitative Disclosures About Market Risk in Item 7 for additional information on resin price trends.

PE Films believes that there will be an adequate supply of polyethylene and polypropylene resins in the foreseeable future.

Research and Development .

Tredegar’s spending for research and development (“R&D”) activities in 2021, 2020 and 2019 was primarily related to PE Films.

R&D spending by the PE Films was approximately $5.7 million, $7.7 million and $7.0 million in 2021, 2020 and 2019, respectively.

PE Films’ products are sold primarily in the U.S.

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These differentiated, high-value films are primarily manufactured in Brazil and sold in Latin America and the U.S.

under the Terphane ® and Sealphane ® brand names.

under the Terphane ® , Sealphane ® and Ecophane ® brand names.

Major end uses include food packaging and industrial applications.

Flexible Packaging Films competes in all of its markets on the basis of product quality, service and price.

In 2021, 2020 and 2019, Terphane accounted for approximately 18%, 18% and 17% of Tredegar’s consolidated net sales, respectively.

Raw Materials .

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These raw materials are obtained from Brazilian and foreign suppliers at competitive prices.

Flexible Packaging Films believes that there will be an adequate supply of polyester resins, PTA and MEG in the foreseeable future.

Terphane c ontinues to monitor cost escalations to adjust selling prices as market dynamics permit and believes that there will be an adequate supply of polyester resins, PTA and MEG in the foreseeable future.

Intellectual Property .

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As of December 31, 2021, these patents had remaining terms of 2.5 to 17.5 years.

Research and Development .

Tredegar’s spending for research and development (“R&D”) activities in 2020, 2019 and 2018 was primarily related to PE Films.

R&D spending by the Company was approximately $8.4 million, $7.9 million and $6.7 million in 2020, 2019 and 2018, respectively.

Overall backlog in Aluminum Extrusions was approximately $74.2 million at December 31, 2020 compared to approximately $52.8 million at December 31, 2019, an increase of $21.4 million, or approximately 41%.

Backlogs are not material to the operations in PE Films or Flexible Packaging Films.

Net sales for Aluminum Extrusions, which the Company believes are cyclical in nature, were $455.7 million in 2020, $529.6 million in 2019 and $573.1 million in 2018.

Government Regulation .

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Several of the Company’s manufacturing operations result in emissions of carbon dioxide or GHG and are subject to the current GHG regulations.

The Company’s compliance with these regulations has yet to require significant capital expenditures;

The Company’s compliance with environmental regulations has yet to require significant capital expenditures;

however, environmental standards tend to become more stringent over time.

Therefore, in order to comply with current or future environmental legislation or regulations, the Company may be subject to additional capital expenditures, operating expenses or other compliance costs, the amounts and timing of which are not presently determinable but which could be significant, including constructing new facilities or modifying existing facilities.

For further discussion regarding certain privacy and anti-corruption and anti-bribery laws and regulations to which the Company is subject, see Item 1A.

Risk Factors below.

Like environmental regulations, current or future privacy and anti-corruption and anti-bribery legislation or regulations may subject the Company to additional capital expenditures, operating expenses or other compliance costs, the amounts and timing of which are not presently determinable but could be significant.

Finally, any failure to comply with current or future laws and regulations could subject Tredegar to substantial penalties, fines, costs and expenses.

Any failure to comply with current or future laws and regulations, including environmental, privacy and anti-corruption and anti-bribery laws and regulations, could subject Tredegar to substantial penalties, fines, costs and expenses.

For further discussion regarding certain environmental, privacy and anti-corruption and anti-bribery laws and regulations to which the Company is subject, see Item 1A below.

Human Capital Management.

Tredegar employed approximately 2,400 people at December 31, 2020 located in the U.S., Brazil, and Asia.

Tredegar employed approximately 2,400 people at December 31, 2021 located in the U.S., Brazil, and Asia, of which 80% are located in the U.S.

Approximately 15% of the Company’s employees are represented by labor unions located in the U.S.

and Brazil under various collective bargaining agreements with varying durations and expiration dates.

under various collective bargaining agreements with varying durations and expiration dates, none of which expire before 2025.

All of Tredegar’s Brazilian employees are represented by a national labor union.

Generally, the total number of employees of Tredegar does not significantly fluctuate throughout the year.

However, acquisition or divestiture activity, or changes in the level of business activity may impact employee levels.

Health and Safety

Tredegar has continuously exceeded the industry standards for safety.

The Company uses various forms of employee safety metrics to assess the health and safety performance of its Aluminum Extrusions, PE Films and Flexible Packaging operations, including employee safety data which is available on the Company’s website at https://tredegar.com/about-tredegar/committed-to-our-employees .

Tredegar has also instituted additional safety precautions during the ongoing COVID-19 pandemic as described in "The Impact of COVID-19" included in Item 7.

Additionally, Aluminum Extrusions has on-site health clinics at its Carthage and Clearfield facilities.

These clinics allow Aluminum Extrusions to invest in its people, provide more personal and more thorough healthcare to employees, and enhance the employer-employee relationship.

The Carthage and Clearfield clinics serve over 540 and 380 employees, respectively.

Talent and Development

The Company believes its employees are its most valuable asset and are critical to the success of the Company.

Tredegar strictly complies with all applicable state, local and international laws governing nondiscrimination in employment in every location where Tredegar and its businesses have facilities to ensure healthy and positive working conditions.

This applies to all terms and conditions of employment, including recruiting, hiring, job assignments, promotion, termination, layoff, recall, transfer, leaves of absence, compensation and training.

All applicants and employees are treated with the same high level of respect regardless of their race, creed, color, religion, sex, sexual orientation, gender identity, age, pregnancy, national origin, ethnicity, political affiliation, union membership, marital status, citizenship status, veteran status, disability or other protected category.

Employees who experience or witness discriminatory behavior are encouraged to report such behavior to their supervisor, Human Resources or Tredegar’s toll-free anonymous reporting hotline.

Additionally, the Company spends significant resources in developing its employees.

Among the five core principles of the “The Tredegar Way” that the Company uses to guide its organization, the “Leadership” principle is focused on building a team of motivated and engaged leaders at every level of the Company.

Each business unit has identified specific action plans to promote the Leadership

principle among its employees.

Action plans include talent development, skills training, reinforcement of strong cultural values, and robust systems to ensure a safe working environment.

The Company seeks to retain employees by offering competitive wages, benefits and training opportunities.

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Additionally, the objectives of our executive compensation programs are to attract, motivate and retain highly qualified executive officers.

To accomplish these objectives, we rely on a pay strategy that emphasizes performance-based compensation through annual and long-term incentives.

We believe that this pay strategy creates a strong link between pay and performance and aligns with our business strategy of generating strong operating results and shareholder value creation while controlling fixed costs.

We are committed to holistically supporting our employees both at work and in their communities by:

To accomplish these objectives, the Company relies on a pay strategy that emphasizes performance-based compensation through annual and long-term incentives.

The Company believes that this pay strategy creates a strong link between pay and performance and aligns with our business strategy of generating strong operating results and shareholder value creation while controlling fixed costs.

The Company is committed to holistically supporting our employees both at work and in their communities by:

• Strictly following all applicable health, safety and non-discrimination laws in each country;

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• Providing opportunities for community outreach and supporting programs that enhance the lives of children and families.

The Company uses various forms of employee safety metrics to assess the health and safety performance of its Aluminum Extrusions, PE Films and Flexible Packaging operations, including employee safety data which is available on its website at https://tredegar.com/about-tredegar/committed-to-our-employees.

Tredegar has also instituted additional safety precautions during the ongoing COVID-19 pandemic as described in "The Impact of COVID-19" included in Item 7.

"Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K (“Item 7”).

Inclusion and Diversity

This applies to all terms and conditions of employment, including recruiting, hiring, job assignments, promotion, termination, layoff, recall, transfer, leaves of absence, compensation and training.

Employees who experience or witness discriminatory behavior are encouraged to report such behavior to their supervisor, Human Resources or Tredegar’s toll-free anonymous reporting hotline.

Additionally, the Company spends significant resources in developing its employees.

Each business unit has identified specific action plans to promote the Leadership principle among its employees.

Action plans include talent development, skills training, reinforcement of strong cultural values, and robust systems to ensure a safe working environment.

Information About Our Executive Officers.

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Information filed electronically with the SEC can be accessed on its website at www.sec.gov .

In addition, the Company’s Corporate Governance Guidelines, Code of Conduct, the charters of the Audit, Executive Compensation, and Nominating and Governance Committees and many other corporate policies are available on Tredegar’s website and are available in print to any shareholder upon request by contacting Tredegar’s Corporate Secretary at 1100 Boulders Parkway, Richmond, Virginia 23225.

The information on or that can be accessed through the Company’s website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K for the year ended December 31, 2020 (“Form 10-K”) or incorporated into other filings it makes with the SEC.

In addition, the Company’s Corporate Governance Guidelines, Code of Conduct, the charters of the Audit, Executive Compensation, Nominating and Governance Committees and Climate Change Risk Assessment and many other corporate policies are available on Tredegar’s website and are available in print to any shareholder upon request by contacting Tredegar’s Corporate Secretary at 1100 Boulders Parkway, Richmond, Virginia 23225.

The information on or that can be accessed through the Company’s website is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into other filings it makes with the SEC.

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-K

Item 1. Business