What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-08 · 112 added, 94 removed, 530 unchanged (28% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

June 30, December 31,

September 30, December 31,

Current assets:

29 unchanged sentences

Shareholders’ equity:

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)

Common stock, no par value (issued and outstanding 33,982,479 shares at September 30, 2022 and 33,736,629 shares at December 31, 2021)

57,902 55,174

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

Common stock held in trust for savings restoration plan ( 111,861 shares at September 30, 2022 and 108,433 shares at December 31, 2021)

( 2,174 ) ( 2,135 )

10 unchanged sentences

(In Thousands, Except Per Share Data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

32 unchanged sentences

(In Thousands)

Three Months Ended June 30,

Three Months Ended September 30,

Net income (loss) $ 1,033 $ 6,203

Other comprehensive income (loss):

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

Unrealized foreign currency translation adjustment (net of tax benefit of $ 148 in 2022 and net of tax benefit of $ 294 in 2021)

( 2,340 ) ( 2,788 )

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

Derivative financial instruments adjustment (net of tax benefit of $ 818 in 2022 and net of tax benefit of $ 174 in 2021)

( 2,547 ) ( 717 )

2 unchanged sentences

Comprehensive income (loss) $ ( 1,298 ) $ 6,015

Six Months Ended June 30,

Nine Months Ended September 30,

Net income (loss) $ 32,322 $ 36,472

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)

Unrealized foreign currency translation adjustment (net of tax expense of $ 98 in 2022 and net of tax benefit of $ 103 in 2021)

( 2,034 ) ( 1,443 )

Derivative financial instruments adjustment (net of tax benefit of $ 1,261 in 2022 and net of tax expense of $ 185 in 2021)

7 unchanged sentences

(In Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

21 unchanged sentences

Proceeds from the sale of kaléo 1,406 —

Proceeds from the sale of assets — 4,749

Net cash used in investing activities ( 24,121 ) ( 14,827 )

14 unchanged sentences

(In Thousands, Except Share and Per Share Data)

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

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

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

Balance April 1, 2022

Balance July 1, 2022

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

7 unchanged sentences

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

Balance June 30, 2022

Balance September 30, 2022

$ 57,902 $ 300,996 $ ( 2,174 ) $ ( 149,666 ) $ 207,058

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

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

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

11 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 39 ( 39 ) — —

Balance June 30, 2022

Balance September 30, 2022

$ 57,902 $ 300,996 $ ( 2,174 ) $ ( 149,666 ) $ 207,058

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

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

Stock Retained

3 unchanged sentences

Shareholders’

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

Balance at July 1, 2021 $ 52,940 $ 261,699 $ ( 2,109 ) $ ( 169,190 ) $ 143,340

Net income (loss) — 6,203 — — 6,203

6 unchanged sentences

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

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:

Balance at September 30, 2021 $ 53,906 $ 263,873 $ ( 2,122 ) $ ( 169,378 ) $ 146,279

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

Stock Retained

13 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 35 ( 35 ) — —

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

Balance at September 30, 2021 $ 53,906 $ 263,873 $ ( 2,122 ) $ ( 169,378 ) $ 146,279

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 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.

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 September 30, 2022, the condensed consolidated results of operations for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated cash flows for the nine months ended September 30, 2022 and 2021, and the condensed consolidated changes in shareholders’ equity for the nine months ended September 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 second quarter for 2022 and 2021 for this segment references 13-week periods ended June 26, 2022 and June 27, 2021.

As such, the fiscal third quarter for 2022 and 2021 for this segment references 13-week periods ended September 25, 2022 and September 26, 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 June 26, 2022 and June 30, 2022.

There was no intercompany funding with Aluminum Extrusions between September 25, 2022 and September 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 and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for the full year.

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

Risks and Uncertainties

During the three months ended September 30, 2022, events and circumstances indicated that the Surface Protection reporting unit ("Surface Protection"), which is also the asset group, might be impaired.

The Company performed a goodwill and long-lived impairment analysis for Surface Protection and determined that the fair value of Surface Protection exceeded its carrying value.

Given the uncertain demand for Surface Protections products, it is reasonably possible that the cash flow estimates used in deriving such fair value measurements may change in the future.

As of September 30, 2022, the Surface Protection reporting unit had goodwill of $ 57.3 million and long-lived identifiable assets of $ 29.5 million.

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.

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

1 unchanged sentence

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.

Accounting Standards Not Yet Adopted

In September 2022, the FASB issued ASU 2022-04, which requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

The guidance is effective for annual periods beginning after December 15, 2022, with early adoption permitted.

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.

ACCOUNTS AND OTHER RECEIVABLES

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

June 30, December 31,

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

September 30, December 31,

(In thousands) 2022 2021

5 unchanged sentences

The components of inventories are as follows:

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

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

Finished goods $ 30,025 $ 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 second quarter of 2022 and 2021, respectively.

Pension expense recognized for this plan was immaterial in the third 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 and six months ended June 30, 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 nine months ended September 30, 2022 and 2021, are shown below:

Pension Benefits Other Post-Retirement Benefits

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

Three Months Ended September 30, Three Months Ended September 30,

(In thousands) 2022 2021 2022 2021

5 unchanged sentences

Pension Benefits Other Post-Retirement Benefits

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

Nine Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

4 unchanged sentences

Net periodic benefit cost $ 10,422 $ 10,517 $ 67 $ 105

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).

Pension and other postretirement liabilities were $ 29.1 million and $ 78.9 million at September 30, 2022 and December 31, 2021, respectively ($ 0.7 million included in “Accrued expenses” at September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

2 unchanged sentences

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

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

COVID-19-related expenses, net of relief (b)

( 96 ) ( 415 ) ( 308 ) ( 435 )

Write-down of investment in Harbinger Capital Partners Special Situations Fund (c)

— ( 363 ) ( 7 ) ( 511 )

Other 119 112 ( 293 ) ( 411 )

1 unchanged sentence

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

See Note 12 for additional information on the sale of the investment in kaléo.

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").

3 unchanged sentences

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 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 2,525,104 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.

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 2,932,378 and 2,645,063 for the three and nine months ended September 30, 2022, respectively, and 2,433,213 and 1,280,376 for the three and nine months ended September 30, 2021, respectively.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

The changes in accumulated other comprehensive income (loss) by component for the three months ended September 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 )

Balance at July 1, 2022 $ ( 85,486 ) $ ( 2,330 ) $ ( 59,519 ) $ ( 147,335 )

Other comprehensive income (loss) ( 2,488 ) ( 2,205 ) — ( 4,693 )

5 unchanged sentences

Other comprehensive income (loss), net of tax ( 2,340 ) ( 2,547 ) 2,556 ( 2,331 )

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.

Balance at September 30, 2022

$ ( 87,826 ) $ ( 4,877 ) $ ( 56,963 ) $ ( 149,666 )

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

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

7 unchanged sentences

Other comprehensive income (loss), net of tax ( 2,034 ) ( 5,778 ) 7,650 ( 162 )

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.

Balance at September 30, 2022

$ ( 87,826 ) $ ( 4,877 ) $ ( 56,963 ) $ ( 149,666 )

The changes in accumulated other comprehensive income (loss) by component for the three months ended September 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 )

Balance at July 1, 2021 $ ( 82,804 ) $ 3,496 $ ( 89,882 ) $ ( 169,190 )

Other comprehensive income (loss) ( 3,082 ) 1,245 — ( 1,837 )

5 unchanged sentences

Other comprehensive income (loss), net of tax ( 2,788 ) ( 717 ) 3,317 ( 188 )

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.

Balance at September 30, 2021

$ ( 85,592 ) $ 2,779 $ ( 86,565 ) $ ( 169,378 )

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

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

7 unchanged sentences

Other comprehensive income (loss), net of tax ( 1,443 ) 515 9,954 9,026

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

Balance at September 30, 2021

$ ( 85,592 ) $ 2,779 $ ( 86,565 ) $ ( 169,378 )

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 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

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 $ 33.7 million ( 18.4 million pounds of aluminum) at September 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 September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

(In thousands) Balance Sheet

17 unchanged sentences

R$ Operating Cost Exposure Hedged

$ 1,793 5.6264 R$ 10,088 Oct-22 78 %

$ 1,784 5.6597 R$ 10,097 Nov-22 78 %

$ 1,659 5.6962 R$ 9,450 Dec-22 73 %

$ 1,728 5.4310 R$ 9,385 Jan-23 64 %

$ 1,822 5.4657 R$ 9,959 Feb-23 68 %

$ 1,921 5.4995 R$ 10,565 Mar-23 72 %

$ 1,903 5.5379 R$ 10,539 Apr-23 72 %

$ 1,873 5.5753 R$ 10,443 May-23 71 %

$ 1,928 5.6118 R$ 10,820 Jun-23 74 %

$ 2,154 5.6378 R$ 12,144 Jul-23 83 %

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 June 30, 2022 and December 31, 2021:

June 30, 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 September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

(In thousands) Balance Sheet

8 unchanged sentences

Accrued expenses ( 363 ) Accrued expenses ( 1,255 )

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

Net asset (liability) $ 93 $ ( 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 and six month periods ended June 30, 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 nine month periods ended September 30, 2022 and 2021 is summarized in the table below:

Cash Flow Derivative Hedges

Three Months Ended June 30,

Three Months Ended September 30,

Aluminum Futures Contracts Foreign Currency Forwards

3 unchanged sentences

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ 837 $ 2,160 $ 16 $ 306 $ 15 $ ( 34 )

Six Months Ended June 30,

Nine Months Ended September 30,

Aluminum Futures Contracts Foreign Currency Forwards

3 unchanged sentences

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ 2,135 $ 4,172 $ 46 $ 975 $ 48 $ ( 183 )

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.

As of September 30, 2022, the Company expects $ 3.7 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 nine month periods ended September 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 $ 7.5 million on pre-tax income from continuing operations of $ 39.7 million in the first nine months of 2022.

Therefore, the effective tax rate in the first nine months of 2022 was 18.8 %, compared to 22.7 % in the first nine 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 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.

Total deferred tax assets declined during the third 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.

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 $ 2.6 million in the first six months of 2022 and $ 5.9 million in 2021.

The benefit from the tax incentives was $ 2.6 million in the first nine months of 2022 and $ 8.8 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 as of June 30, 2022 are no longer subject to U.S.

jurisdictions, Tredegar and its subsidiaries as of September 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 and six months ended June 30, 2022 and 2021:

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

34 unchanged sentences

Net income (loss) $ 1,033 $ 6,203 $ 32,322 $ 36,472

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

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

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

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

Aluminum Extrusions $ 302,392 $ 280,521

6 unchanged sentences

Total $ 546,658 $ 523,584

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:

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

Net Sales by Geographic Area (a)

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

Three Months Ended September 30, Nine Months Ended September 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 $ 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.

to Asia, and include net sales of $ 4.4 million and $ 7.4 million in the third quarters of 2022 and 2021, respectively, and $ 16.1 million and $ 25.0 million in the first nine months of 2022 and 2021, respectively.

Net Sales by Product Group

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

9 unchanged sentences

Surface protection films 13,018 20,905 58,839 65,997

Packaging 7,750 6,940 16,733 14,293

Overwrap packaging 7,041 7,596 23,774 21,888

Subtotal 20,059 28,501 82,613 87,885

5 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 six months ended June 30, 2022 and 2021:

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

8 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 June 30, 2022 and December 31, 2021, respectively, were as follows:

June 30, December 31,

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

September 30, December 31,

(In thousands) 2022 2021

1 unchanged sentence

Accrued expenses (a)

(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.

(a) The condensed consolidated balance sheet of discontinued operations as of September 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2022 2021

1 unchanged sentence

Other — ( 1,118 )

Assets Held For Sale

In July 2019, the Company committed to a plan to close its manufacturing facility in Lake Zurich, Illinois, which historically was reported by the Company within the Personal Care Films component of its PE Films segment.

During the third quarter of 2020, the disposal group carrying value of $4.6 million was reported in "Prepaid expenses and other" in the consolidated balance sheet as the held for sale criteria was met.

During the third quarter of 2021, the Company completed the sale of the remaining assets in Lake Zurich, Illinois resulting in total cash proceeds of $4.7 million.

In August 2007 and December 2008, the Company made an aggregate investment of $ 7.5 million in kaleo, Inc.

3 unchanged sentences

kaléo’s stock is not publicly traded.

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.

In the first nine months ended September 30, 2021, a pre-tax gain of $ 1.2 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.

10 unchanged sentences

>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.

At September 30, 2022, $ 124.0 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.

7 unchanged sentences

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.

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

1 unchanged sentence

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