What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-09 · 186 added, 79 removed, 438 unchanged (38% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

March 31, December 31,

June 30, December 31,

Current assets:

29 unchanged sentences

Shareholders’ equity:

Common stock, no par value (issued and outstanding 33,837,815 shares at March 31, 2022 and 33,736,629 shares at December 31, 2021)

Common stock, no par value (issued and outstanding 33,965,478 shares at June 30, 2022 and 33,736,629 shares at December 31, 2021)

56,911 55,174

Common stock held in trust for savings restoration plan ( 109,494 shares at March 31, 2022 and 108,433 shares at December 31, 2021)

Common stock held in trust for savings restoration plan ( 110,564 shares at June 30, 2022 and 108,433 shares at December 31, 2021)

( 2,161 ) ( 2,135 )

10 unchanged sentences

(In Thousands, Except Per Share Data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenues and other items:

31 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Net income (loss) $ 14,869 $ 21,236

Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax expense of $ 728 in 2022 and net of tax benefit of $ 272 in 2021)

Unrealized foreign currency translation adjustment (net of tax benefit of $ 482 in 2022 and net of tax expense of $ 463 in 2021)

( 5,230 ) 3,993

Derivative financial instruments adjustment (net of tax expense of $ 2,916 in 2022 and net of tax benefit of $ 188 in 2021)

Derivative financial instruments adjustment (net of tax benefit of $ 3,359 in 2022 and net of tax expense of $ 547 in 2021)

( 9,161 ) 1,468

Amortization of prior service costs and net gains or losses (net of tax expense of $ 712 in 2022 and net of tax of $ 924 in 2021)

Amortization of prior service costs and net gains or losses (net of tax expense of $ 712 in 2022 and net of tax expense of $ 922 in 2021)

Other comprehensive income (loss) ( 11,835 ) 8,779

Comprehensive income (loss) $ 3,034 $ 30,015

Six Months Ended June 30,

Net income (loss) $ 31,292 $ 30,267

Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax expense of $ 246 in 2022 and net of tax expense of $ 191 in 2021)

Derivative financial instruments adjustment (net of tax benefit of $ 443 in 2022 and net of tax expense of $ 359 in 2021)

( 3,231 ) 1,232

Amortization of prior service costs and net gains or losses (net of tax expense of $ 1,424 in 2022 and net of tax expense of $ 1,846 in 2021)

Other comprehensive income (loss) 2,169 9,214

Comprehensive income (loss) $ 33,461 $ 39,481

See accompanying notes to financial statements.

2 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

20 unchanged sentences

Capital expenditures ( 13,514 ) ( 11,324 )

Proceeds from the sale of kaléo 1,406 —

Net cash used in investing activities ( 12,108 ) ( 11,324 )

3 unchanged sentences

Dividends paid ( 8,135 ) ( 8,070 )

Debt financing costs ( 1,245 ) —

Other ( 396 ) 915

Net cash provided by financing activities 53,795 5,890

Net cash provided by (used in) financing activities 18,724 ( 24,155 )

Effect of exchange rate changes on cash ( 246 ) 424

6 unchanged sentences

(In Thousands, Except Share and Per Share Data)

The following summarizes the changes in shareholders’ equity for the three month period ended March 31, 2022:

The following summarizes the changes in shareholders’ equity for the three month period ended June 30, 2022:

Common Stock Retained Earnings Trust for Savings Restoration Plan Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

Balance April 1, 2022

$ 55,953 $ 293,563 $ ( 2,148 ) $ ( 135,500 ) $ 211,868

Net income (loss) — 14,869 — — 14,869

Foreign currency translation adjustment — — — ( 5,230 ) ( 5,230 )

Derivative financial instruments adjustment — — — ( 9,161 ) ( 9,161 )

Amortization of prior service costs and net gains or losses — — — 2,556 2,556

Cash dividends declared ($ 0.12 per share)

— ( 4,075 ) — — ( 4,075 )

Stock-based compensation expense 958 — — — 958

Tredegar common stock purchased by trust for savings restoration plan — 13 ( 13 ) — —

Balance June 30, 2022

$ 56,911 $ 304,370 $ ( 2,161 ) $ ( 147,335 ) $ 211,785

The following summarizes the changes in shareholders’ equity for the six month period ended June 30, 2022:

Common Stock Retained Earnings Trust for Savings Restoration Plan Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity

Balance January 1, 2022

10 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 26 ( 26 ) — —

Balance March 31, 2022

Balance June 30, 2022

$ 56,911 $ 304,370 $ ( 2,161 ) $ ( 147,335 ) $ 211,785

The following summarizes the changes in shareholders’ equity for the three month period ended March 31, 2021:

The following summarizes the changes in shareholders’ equity for the three month period ended June 30, 2021:

Stock Retained

3 unchanged sentences

Shareholders’

Balance at April 1, 2021 $ 51,557 $ 244,496 $ ( 2,097 ) $ ( 177,969 ) $ 115,987

Net income (loss) — 21,236 — — 21,236

Foreign currency translation adjustment — — — 3,993 3,993

Derivative financial instruments adjustment — — — 1,468 1,468

Amortization of prior service costs and net gains or losses — — — 3,318 3,318

Cash dividends declared ($ 0.12 per share)

— ( 4,045 ) — — ( 4,045 )

Stock-based compensation expense 1,383 — — — 1,383

Tredegar common stock purchased by trust for savings restoration plan — 12 ( 12 ) — —

Balance at June 30, 2021 $ 52,940 $ 261,699 $ ( 2,109 ) $ ( 169,190 ) $ 143,340

The following summarizes the changes in shareholders’ equity for the six month period ended June 30, 2021:

Stock Retained

Earnings Trust for

Plan Accumulated Other

Comprehensive Income (Loss) Total

Shareholders’

Balance at January 1, 2021 $ 50,066 $ 239,480 $ ( 2,087 ) $ ( 178,404 ) $ 109,055

8 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 22 ( 22 ) — —

Balance at March 31, 2021 $ 51,557 $ 244,496 $ ( 2,097 ) $ ( 177,969 ) $ 115,987

Balance at June 30, 2021 $ 52,940 $ 261,699 $ ( 2,109 ) $ ( 169,190 ) $ 143,340

See accompanying notes to financial statements.

2 unchanged sentences

BASIS OF PRESENTATION

In the opinion of management, the accompanying condensed consolidated financial statements of Tredegar Corporation and its subsidiaries (“Tredegar,” “the Company,” “we,” “us” or “our”) contain all adjustments necessary to state fairly, in all material respects, Tredegar’s condensed consolidated financial position as of March 31, 2022, the condensed consolidated results of operations for the three months ended March 31, 2022 and 2021, the condensed consolidated cash flows for the three months ended March 31, 2022 and 2021, and the condensed consolidated changes in shareholders’ equity for the three months ended March 31, 2022 and 2021, in accordance with U.S.

In the opinion of management, the accompanying condensed consolidated financial statements of Tredegar Corporation and its subsidiaries (“Tredegar,” “the Company,” “we,” “us” or “our”) contain all adjustments necessary to state fairly, in all material respects, Tredegar’s condensed consolidated financial position as of June 30, 2022, the condensed consolidated results of operations for the three and six months ended June 30, 2022 and 2021, the condensed consolidated cash flows for the six months ended June 30, 2022 and 2021, and the condensed consolidated changes in shareholders’ equity for the six months ended June 30, 2022 and 2021, in accordance with U.S.

generally accepted accounting principles (“GAAP”).

1 unchanged sentence

The Company operates on a calendar fiscal year except for the Aluminum Extrusions segment, which operates on a 52/53-week fiscal year basis.

As such, the fiscal first quarter for 2022 and 2021 for this segment references 13-week periods ended March 27, 2022 and March 28, 2021.

As such, the fiscal second quarter for 2022 and 2021 for this segment references 13-week periods ended June 26, 2022 and June 27, 2021.

The Company does not believe the impact of reporting the results of this segment as stated above is material to the consolidated financial results.

The Company may fund or receive cash from the Aluminum Extrusions segment based on Aluminum Extrusion’s cash flows from operations during the intervening period from Aluminum Extrusion’s fiscal quarter end and the Company’s fiscal quarter end.

There was no intercompany funding with Aluminum Extrusions between March 27, 2022 and March 31, 2022.

There was no intercompany funding with Aluminum Extrusions between June 26, 2022 and June 30, 2022.

The financial position data as of December 31, 2021 that is included herein was derived from the audited consolidated financial statements provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”) but does not include all disclosures required by GAAP.

These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the 2021 Form 10-K.

The results of operations for the three months ended March 31, 2022, are not necessarily indicative of the results to be expected for the full year.

Accounting Standards Not Yet Adopted .

The results of operations for the three and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for the full year.

Accounting Standards Adopted .

In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate or by another reference rate expected to be discontinued because of reference rate reform.

1 unchanged sentence

In January 2021, the FASB issued ASU 2021-01, which clarified the scope and application of the original guidance.

The Company is currently evaluating the potential impact of adopting this guidance, but does not expect it to have a material impact on the consolidated financial statements.

In the second quarter of 2022, the Company adopted ASU 2020-04, which did not have a material impact on the Company’s consolidated financial statements.

ACCOUNTS AND OTHER RECEIVABLES

As of March 31, 2022 and December 31, 2021, accounts receivable and other receivables, net include the following:

March 31, December 31,

As of June 30, 2022 and December 31, 2021, accounts receivable and other receivables, net include the following:

June 30, December 31,

(In thousands) 2022 2021

5 unchanged sentences

The components of inventories are as follows:

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Finished goods $ 30,486 $ 25,199

11 unchanged sentences

Effective December 31, 2005, further participation in this plan was terminated and benefit accruals for existing participants were frozen.

Pension expense recognized for this plan was immaterial in the first quarter of 2022 and 2021, respectively.

Pension expense recognized for this plan was immaterial in the second quarter of 2022 and 2021, respectively.

This information has been included in the pension benefit table below.

The components of net periodic benefit cost for the pension and other postretirement benefit programs reflected in the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021, are shown below:

The components of net periodic benefit cost for the pension and other postretirement benefit programs reflected in the condensed consolidated statements of income for the three and six months ended June 30, 2022 and 2021, are shown below:

Pension Benefits Other Post-Retirement Benefits

Three Months Ended March 31, Three Months Ended March 31,

Three Months Ended June 30, Three Months Ended June 30,

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Amortization of prior service costs, (gains) losses and net transition asset 3,302 4,266 ( 34 ) ( 24 )

3,284 4,265 ( 34 ) ( 24 )

Net periodic benefit cost $ 3,484 $ 3,505 $ 22 $ 35

Pension and other postretirement liabilities were $ 29.0 million and $ 78.9 million at March 31, 2022 and December 31, 2021, respectively ($ 0.7 million included in “Accrued expenses” at March 31, 2022 and December 31, 2021, respectively, with the remainder included in “Pension and other postretirement benefit obligations, net” in the condensed consolidated balance sheets).

Pension Benefits Other Post-Retirement Benefits

Six Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

Service cost $ — $ — $ 10 $ 17

Interest cost 4,450 4,204 102 101

Expected return on plan assets ( 4,098 ) ( 5,725 ) — —

Amortization of prior service costs, (gains) losses and net transition asset 6,586 8,531 ( 68 ) ( 48 )

Net periodic benefit cost $ 6,938 $ 7,010 $ 44 $ 70

Pension and other postretirement liabilities were $ 29.1 million and $ 78.9 million at June 30, 2022 and December 31, 2021, respectively ($ 0.7 million included in “Accrued expenses” at June 30, 2022 and December 31, 2021, respectively, with the remainder included in “Pension and other postretirement benefit obligations, net” in the condensed consolidated balance sheets).

Tredegar funds its other postretirement benefits on a claims-made basis;

2 unchanged sentences

Other income (expense), net consists of the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

Gain on investment in kaléo (a)

$ 1,406 $ 200 $ 1,406 $ 918

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 tax — 8,486 — 8,486

Transition service fees, net of corporate costs associated with the divested Personal Care business ( 16 ) 267 ( 48 ) 571

5 unchanged sentences

Total $ 1,261 $ 8,122 $ 994 $ 8,882

(a) The gain in the first three months of 2021 includes a $ 0.3 million dividend received from kaléo in the first quarter of 2021.

(a) In May 2022, additional cash consideration of $ 1.4 million was received related to customary post-closing adjustments.

See Note 12 for additional information.

(b) Costs associated with operating under COVID-19 conditions include employee overtime expenses associated with absenteeism, personal protective equipment supplies and facility maintenance.

(c) Represents the unrealized loss on the Company’s investment in Harbinger Capital Partners Special Situations Fund L.P.

that had a fair value of $ 0.2 million as of March 31, 2022 and $ 0.2 million as of December 31, 2021 reported in "Other assets" in the condensed consolidated balance sheet.

that had a fair value of $ 0.2 million as of June 30, 2022 and $ 0.2 million as of December 31, 2021 reported in "Other assets" in the condensed consolidated balance sheet.

In May 2021, the Brazil Supreme Court ruled in a leading case related to the amount of Brazilian value-added tax to exclude from the calculation of unemployment/social security insurance non-income taxes ("PIS/COFINS").

As a result, in the second quarter of 2021, the Company recorded a pre-tax gain of $ 8.5 million for certain excess PIS/COFINS paid from 2003 to 2021, plus applicable interest, which the Company applied to required Brazilian federal tax payments during 2021.

EARNINGS PER SHARE

1 unchanged sentence

Diluted earnings per share is computed by dividing net income (loss) from continuing and discontinued operations by the weighted average common and potentially dilutive common equivalent shares outstanding, determined as follows:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Incremental shares attributable to stock options and restricted stock are computed under the treasury stock method using the average market price during the related period.

The average out-of-the-money options to purchase shares that were excluded from the calculation of incremental shares attributable to stock options and restricted stock were 2,477,708 and 411,516 for the three months ended March 31, 2022 and 2021, respectively.

The average out-of-the-money options to purchase shares that were excluded from the calculation of incremental shares attributable to stock options and restricted stock were 2,525,104 and 2,501,406 for the three and six months ended June 30, 2022, respectively, and 996,400 and 703,958 for the three and six months ended June 30, 2021, respectively.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component are summarized as follows:

Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component for the three months ended June 30, 2022.

(In thousands) Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

Balance at April 1, 2022 $ ( 80,256 ) $ 6,831 $ ( 62,075 ) $ ( 135,500 )

Other comprehensive income (loss) ( 5,712 ) ( 11,681 ) — ( 17,393 )

Income tax (expense) benefit 482 3,110 — 3,592

Other comprehensive income (loss), net of tax ( 5,230 ) ( 8,571 ) — ( 13,801 )

Reclassification adjustment to net income (loss) — ( 840 ) 3,268 2,428

Income tax (expense) benefit — 250 ( 712 ) ( 462 )

Reclassification adjustment to net income (loss), net of tax — ( 590 ) 2,556 1,966

Other comprehensive income (loss), net of tax ( 5,230 ) ( 9,161 ) 2,556 ( 11,835 )

Balance at June 30, 2022 $ ( 85,486 ) $ ( 2,330 ) $ ( 59,519 ) $ ( 147,335 )

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2022.

(In thousands) Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

Balance at January 1, 2022 $ ( 85,792 ) $ 901 $ ( 64,613 ) $ ( 149,504 )

6 unchanged sentences

Other comprehensive income (loss), net of tax 306 ( 3,231 ) 5,094 2,169

Balance at March 31, 2022 $ ( 80,256 ) $ 6,831 $ ( 62,075 ) $ ( 135,500 )

Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

Balance at June 30, 2022 $ ( 85,486 ) $ ( 2,330 ) $ ( 59,519 ) $ ( 147,335 )

The changes in accumulated other comprehensive income (loss) by component for the three months ended June 30, 2021.

(In thousands) Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

Balance at April 1, 2021 $ ( 86,797 ) $ 2,028 $ ( 93,200 ) $ ( 177,969 )

Other comprehensive income (loss) 4,456 3,257 — 7,713

Income tax (expense) benefit ( 463 ) ( 808 ) — ( 1,271 )

Other comprehensive income (loss), net of tax 3,993 2,449 — 6,442

Reclassification adjustment to net income (loss) — ( 1,241 ) 4,240 2,999

Income tax (expense) benefit — 260 ( 922 ) ( 662 )

Reclassification adjustment to net income (loss), net of tax — ( 981 ) 3,318 2,337

Other comprehensive income (loss), net of tax 3,993 1,468 3,318 8,779

Balance at June 30, 2021 $ ( 82,804 ) $ 3,496 $ ( 89,882 ) $ ( 169,190 )

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2021.

(In thousands) Foreign Currency Translation Gain (Loss) on Derivative Financial Instruments Pension & Other Postretirement Benefit Adjust Total Accumulated Other Comprehensive Income (Loss)

Balance at January 1, 2021 $ ( 84,149 ) $ 2,264 $ ( 96,519 ) $ ( 178,404 )

6 unchanged sentences

Other comprehensive income (loss), net of tax 1,345 1,232 6,637 9,214

Balance at March 31, 2021 $ ( 86,797 ) $ 2,028 $ ( 93,200 ) $ ( 177,969 )

Balance at June 30, 2021 $ ( 82,804 ) $ 3,496 $ ( 89,882 ) $ ( 169,190 )

The amounts reclassified out of accumulated other comprehensive income (loss) related to pension and other postretirement benefits is included in the computation of net periodic pension costs, see Note 4 for additional details.

4 unchanged sentences

In order to hedge margin exposure created from the fixing of future sales prices relative to volatile raw material (aluminum) costs, Aluminum Extrusions enters into a combination of forward purchase commitments and futures contracts to acquire or hedge aluminum, based on the scheduled purchases for the firm sales commitments.

The fixed-price firm sales commitments and related hedging instruments generally have durations of not more than 12 months.

The notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $ 24.2 million ( 14.3 million pounds of aluminum) at March 31, 2022 and $ 22.1 million ( 14.9 million pounds of aluminum) at December 31, 2021.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

The fixed-price firm sales commitments and related hedging instruments have durations generally no longer than 24 months.

The notional amount of aluminum futures contracts that hedged future

purchases of aluminum to meet fixed-price forward sales contract obligations was $ 32.7 million ( 19.1 million pounds of aluminum) at June 30, 2022 and $ 22.1 million ( 14.9 million pounds of aluminum) at December 31, 2021.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:

June 30, 2022 December 31, 2021

(In thousands) Balance Sheet

4 unchanged sentences

Prepaid expenses and other $ 153 Prepaid expenses and other $ 2,085

Aluminum futures contracts Other assets 521 Other assets —

Liability derivatives:

1 unchanged sentence

Accrued expenses ( 1,893 ) Accrued expenses ( 119 )

Net asset $ 7,143 $ 1,966

Aluminum futures contracts Other non-current liabilities ( 1,332 ) Other non-current liabilities —

Net asset (liability) $ ( 3,072 ) $ 1,966

In the event that a counterparty to an aluminum fixed-price forward sales contract chooses not to take delivery of its aluminum extrusions, the customer is contractually obligated to compensate Aluminum Extrusions for any losses on the related aluminum futures and/or forward contracts through the date of cancellation.

The Company's earnings are exposed to foreign currency exchange risk primarily through the translation of the financial statements of subsidiaries that have a functional currency other than the U.S.

The Company estimates that the net mismatch translation exposure for the Flexible Packaging Film's business unit in Brazil (“Terphane Ltda.”) of its sales and raw

materials quoted or priced in U.S.

The Company estimates that the net mismatch translation exposure for the Flexible Packaging Film's business unit in Brazil (“Terphane Ltda.”) of its sales and raw materials quoted or priced in U.S.

Dollars and its variable conversion, fixed conversion and sales, general and administrative costs (before depreciation and amortization) quoted or priced in Brazilian Real ("R$") is annual net costs of R$ 150 million for the full year of 2022.

3 unchanged sentences

R$ Operating Cost Exposure Hedged

$ 1,615 5.4247 R$ 8,761 Apr-22 68 %

$ 1,647 5.4545 R$ 8,984 May-22 70 %

$ 1,596 5.4890 R$ 8,760 Jun-22 68 %

$ 1,719 5.5200 R$ 9,489 Jul-22 74 %

21 unchanged sentences

Dollar sales, the derivatives have the effect of offsetting operating costs quoted or priced in Brazilian Real and decreasing the net exposure to Brazilian Real in the condensed consolidated statements of income.

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:

June 30, 2022 December 31, 2021

(In thousands) Balance Sheet

8 unchanged sentences

Accrued expenses ( 132 ) Accrued expenses ( 1,255 )

Foreign currency forward contracts Other non-current liabilities ( 234 ) Other non-current liabilities —

Net asset (liability) $ 303 $ ( 1,255 )

3 unchanged sentences

The counterparties to the Company’s foreign currency cash flow hedge contracts are major financial institutions.

The pre-tax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for the three month periods ended March 31, 2022 and 2021 is summarized in the table below:

The pre-tax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for the three and six month periods ended June 30, 2022 and 2021 is summarized in the table below:

Cash Flow Derivative Hedges

Three Months Ended March 31,

Three Months Ended June 30,

Aluminum Futures Contracts Foreign Currency Forwards

(In thousands) 2022 2021 2022 2021

Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) $ ( 9,923 ) $ 2,195 $ — $ ( 1,758 ) $ — $ 1,061

Location of gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion) Cost of goods sold Cost of goods sold Cost of goods sold Selling, general & admin Cost of goods sold Selling, general & admin

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ 293 $ 1,372 $ 15 $ 532 $ 16 $ ( 147 )

Six Months Ended June 30,

Aluminum Futures Contracts Foreign Currency Forwards

2022 2021 2022 2021

2 unchanged sentences

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ 1,298 $ 2,012 $ 30 $ 669 $ 33 $ ( 149 )

As of March 31, 2022, the Company expects $ 3.5 million of unrealized after-tax gains on aluminum and foreign currency derivative instruments reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the three month periods ended March 31, 2022 and 2021, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

Tredegar recorded tax expense of $ 0.8 million on pre-tax income from continuing operations of $ 17.2 million in the first three months of 2022.

Therefore, the effective tax rate in the first three months of 2022 was 4.5 %, compared to 24.4 % in the first three months of 2021.

As of June 30, 2022, the Company expects $ 1.0 million of unrealized after-tax losses on aluminum and foreign currency derivative instruments reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the three and six month periods ended June 30, 2022 and 2021, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

Tredegar recorded tax expense of $ 6.3 million on pre-tax income from continuing operations of $ 37.6 million in the first six months of 2022.

Therefore, the effective tax rate in the first six months of 2022 was 16.9 %, compared to 22.5 % in the first six months of 2021.

The decrease in the effective tax rate for continuing operations is primarily due to a discrete benefit recorded in the first quarter of 2022 resulting from the implementation of new U.S.

10 unchanged sentences

for the foreseeable future.

Total deferred tax assets declined during the first quarter of 2022 compared to December 31, 2021 primarily due to changes in other comprehensive income and the projected utilization of foreign tax credits partially offset by the change in the deferred tax liability discussed above.

Total deferred tax assets declined during the second quarter of 2022 compared to December 31, 2021 primarily due to changes in other comprehensive income and the projected utilization of foreign tax credits partially offset by the change in the deferred tax liability discussed above.

Tredegar accrues U.S.

4 unchanged sentences

The Brazilian federal statutory income tax rate is a composite of 34.0 % ( 25.0 % of income tax and 9.0 % of social contribution on income).

Terphane Ltda.’s manufacturing facility in Brazil is the beneficiary of certain income tax incentives that allow for a reduction in the statutory Brazilian federal income tax rate to 15.25 % levied on the operating profit on certain of its products.

its products.

The incentives have been granted for a 13-year period, from the commencement date of January 1, 2015.

The benefit from the tax incentives was $ 1.5 million in the first three months of 2022 and 2021.

The benefit from the tax incentives was $ 2.6 million in the first six months of 2022 and $ 5.9 million in 2021.

Tredegar and its subsidiaries file income tax returns in the U.S., various states, and jurisdictions outside the U.S.

1 unchanged sentence

states and non-U.S.

jurisdictions, Tredegar and its subsidiaries are no longer subject to U.S.

jurisdictions, Tredegar and its subsidiaries as of June 30, 2022 are no longer subject to U.S.

federal, state or non-U.S.

9 unchanged sentences

This measure is separately included in the financial information regularly provided to the CODM.

The following table presents net sales and EBITDA from ongoing operations by segment for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The following table presents net sales and EBITDA from ongoing operations by segment for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

34 unchanged sentences

Net income (loss) $ 14,869 $ 21,236 $ 31,292 $ 30,267

The following table presents identifiable assets by segment at March 31, 2022 and December 31, 2021:

(In thousands) March 31, 2022 December 31, 2021

The following table presents identifiable assets by segment at June 30, 2022 and December 31, 2021:

(In thousands) June 30, 2022 December 31, 2021

Aluminum Extrusions $ 318,534 $ 280,521

6 unchanged sentences

Total $ 571,814 $ 523,584

The following tables disaggregate the Company’s revenue by geographic area and product group for the three months ended March 31, 2022 and 2021:

The following tables disaggregate the Company’s revenue by geographic area and product group for the three and six months ended June 30, 2022 and 2021:

Net Sales by Geographic Area (a)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

12 unchanged sentences

Amounts associated with this intercompany tolling arrangement are reported in the table above as export sales from the U.S.

to Asia, and include net sales of $ 6.5 million and $ 6.9 million in the first three months of 2022 and 2021, respectively.

to Asia, and include net sales of $ 5.3 million and $ 10.8 million in the second quarters of 2022 and 2021, respectively, and $ 11.7 million and $ 17.7 million in the first six months of 2022 and 2021, respectively.

Net Sales by Product Group

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

17 unchanged sentences

Personal Care Films was previously reported in the PE Films segment.

The following table summarizes the financial results of discontinued operations reflected in the condensed consolidated statements of income for the three and three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The following table summarizes the financial results of discontinued operations reflected in the condensed consolidated statements of income for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

2 unchanged sentences

Adjustment to the fair value estimates used in the disposal of Personal Care Films (a)

— ( 819 ) — ( 1,118 )

Total ( 81 ) ( 650 ) ( 37 ) 101

Income (loss) from discontinued operations before income taxes 81 650 37 ( 101 )

2 unchanged sentences

(a) Represents a net increase to the estimated fair value of Personal Care Films primarily due to lower costs associated with IT transition-related services to provide the seller developed assets, which did not exist at the time of the sale, to support the seller's IT infrastructure.

The assets and liabilities of the discontinued operations reflected in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively, were as follows:

March 31, December 31,

The assets and liabilities of the discontinued operations reflected in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively, were as follows:

June 30, December 31,

(In thousands) 2022 2021

1 unchanged sentence

Accrued expenses (a)

(a) The condensed consolidated balance sheet of discontinued operations as of March 31, 2022 includes $ 0.2 million of other receivables related to the settlement of customary post-closing adjustments and other miscellaneous accrued expenses of $ 0.2 million.

(a) The condensed consolidated balance sheet of discontinued operations as of June 30, 2022 includes $ 0.2 million of other receivables related to the settlement of customary post-closing adjustments and other miscellaneous accrued expenses of $ 0.1 million.

The condensed consolidated balance sheet of discontinued operations as of December 31, 2021 includes $ 0.2 million of other receivables related to the settlement of customary post-closing adjustments and other miscellaneous accrued expenses of $ 0.2 million.

The following table provides significant operating and investing cash flow information for discontinued operations:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2022 2021

6 unchanged sentences

kaléo’s stock is not publicly traded.

On December 27, 2021, the Company completed the sale of its investment interests in kaléo (Series A-3 Preferred Stock, Series B Preferred Stock and common stock) that, taken together, represented on a fully-diluted basis an approximate 18% interest in kaléo.

Tredegar received closing cash proceeds of $ 47.1 million.

A pre-tax gain of $ 0.7 million on the Company’s investment in kaléo was recognized in the first quarter ended March 31, 2021 which is reported in “Other income (expense), net” in the condensed consolidated statements of income.

The gain in 2021 includes a $ 0.3 million dividend received from kaléo in the first quarter of 2021.

In the first six months ended June 30, 2021, a pre-tax gain of $ 0.9 million was recognized on the Company’s investment in kaléo, which included a $ 0.3 million dividend received from kaléo.

On December 27, 2021, the Company completed the sale of its investment interests in kaléo (Series A-3 Preferred Stock, Series B Preferred Stock and common stock) and received closing cash proceeds of $ 47.1 million.

Subsequently, in May 2022, additional cash consideration of $ 1.4 million was received related to customary post-closing adjustments, which is reported in “Other income (expense), net” in the condensed consolidated statements of income.

On June 29, 2022, Tredegar entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) that replaced its existing $ 375 million five-year, secured revolving credit facility that was due to expire on June 28, 2024.

The Credit Agreement is a five-year, revolving, secured credit facility that permits aggregate borrowings of $ 375 million and matures on June 29, 2027.

Borrowings under the Credit Agreement bear an interest rate equal to Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of 10 basis points ("Adjusted Term SOFR Rate") and an amount depending on the type of borrowing and commitment fees charged on the unused amount under the Credit Agreement at various Total Net Leverage Ratio levels as follows:

Pricing Under the Credit Agreement (Basis Points)

Total Net Leverage Ratio Term Benchmark Spread Commitment

<= 1.0x 150.0 20

>1.0x but <=2.0x 162.5 25

>2.0x but <=3.0x 175.0 30

>3.0x but <=3.5x 187.5 35

>3.5x 200.0 40

At June 30, 2022, $ 101.5 million of the outstanding debt was principally priced at an interest rate equal to the Adjusted Term SOFR Rate plus the applicable credit spread of 150.0 basis points.

Prior to the Credit Agreement, the interest rate was based on London Inter-Bank Offered Rate plus an applicable credit spread.

The primary restrictive covenants in the Credit Agreement include:

• Total Net Leverage Ratio of 4.00 x;

• Interest Coverage Ratio of 3.00 x;

• Unlimited payments for dividends and stock repurchases during the term of the Credit Agreement so long as the Total Net Leverage Ratio is equal to or less than 2.00 x, and otherwise restrictions on payments for dividends and stock repurchases for the term of the Credit Agreement at $ 75 million (provided that the $ 75 million basket will reset at the end of each fiscal quarter when the Total Net Leverage ratio is less than or equal to 2.00 x).

Under the Credit Agreement:

• Total Net Leverage Ratio is defined as the ratio of (a)(i) total indebtedness minus (ii) liquidity (the lesser of $ 50,000,000 and the aggregate amount of cash and cash equivalents) to (b) EBITDA (as defined in Credit Agreement "Credit EBITDA");

• Interest Coverage Ratio is defined as the ratio of (a) Credit EBITDA to (b) interest expense.

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.

Tredegar was in compliance with all of its debt covenants as of June 30, 2022.

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.

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 1. Financial Statements