What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-16 · 26 added, 31 removed, 137 unchanged (29% of the section changed)

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Unless the context requires otherwise, all references herein to “Tredegar,” “the Company,” “we,” “us” or “our” are to Tredegar Corporation and its consolidated subsidiaries.

The Company's reportable business segments are Aluminum Extrusions, PE Films and Flexible Packaging Films.

On October 30, 2020, the Company completed the sale of its personal care films business (“Personal Care Films”).

The transaction excluded the packaging film lines and related operations located at the Pottsville, Pennsylvania manufacturing site (“Pottsville Packaging”), which are now being reported with the Surface Protection component of PE Films.

Commencing in the third quarter of 2020, all historical results for Personal Care Films have been presented as discontinued operations.

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

“Exhibits and Financial Statement Schedules” (“Item 15”) of this Annual Report on Form 10-K for the year ended December 31, 2022 (“Form 10-K”).

The Company's reportable business segments are Aluminum Extrusions, PE Films and Flexible Packaging Films (also referred to as “Terphane”).

On September 1, 2023, the Company announced that it had entered into a definitive agreement to sell Terphane to Oben Group (the “Contingent Terphane Sale”).

Completion of the sale is contingent upon the satisfaction of customary closing conditions, including the receipt of certain competition filing approvals by authorities in Brazil and Columbia.

For more information see “ Status of Current Corporate Strategic Initiatives - Agreement to Sell Terphane ” in Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for the year ended December 31, 2023 (“Form 10-K”).

Aluminum Extrusions

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Major Markets End-Uses

Building & construction - nonresidential Commercial windows and doors, curtain walls, storefronts and entrances, automatic entry doors, walkway covers, ducts, louvers and vents, office wall panels, partitions and interior enclosures, acoustical walls and ceilings, point of purchase displays, pre-engineered structures, and flooring trims (Futura Transitions TM by Bonnell Aluminum)

Building & construction - residential Residential windows and doors, shower and tub enclosures, railing and support systems, venetian blinds, and swimming pools

Building & construction (“B&C”)- nonresidential Commercial windows and doors, curtain walls, storefronts and entrances, automatic entry doors, walkway covers, ducts, louvers and vents, office wall panels, partitions and interior enclosures, acoustical walls and ceilings, point of purchase displays, pre-engineered structures, and flooring trims (Futura Transitions TM by Bonnell Aluminum)

B&C - residential Residential windows and doors, shower and tub enclosures, railing and support systems, venetian blinds, and swimming pools

Automotive & transportation Automotive and light truck structural components, battery enclosures for electric vehicles, after-market automotive accessories, grills for heavy trucks, travel trailers and recreation vehicles

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2023 2022 2021

Building and construction:

Nonresidential 56% 53% 50%

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Total 100% 100% 100%

The Company uses net sales from continuing operations as its measure of revenues from external customers at the segment level.

For more business segment information, see Note 13 “Business Segments” to the Consolidated Financial Statements in Item 15.

The Company uses net sales as its measure of revenues from external customers at the segment level.

For more business segment information, see Note 13 “Business Segments” to the Consolidated Financial Statements included in Item 15.

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

In 2023, 2022 and 2021, Aluminum Extrusions net sales accounted for approximately 70%, 71% and 67% of Tredegar’s consolidated net sales, respectively.

Open Orders .

Overall open orders in Aluminum Extrusions was approximately $136.0 million, or 41 million pounds, at December 31, 2022 compared to approximately $306.4 million, or 97 million pounds, at December 31, 2021, a decrease of $170.4 million, or approximately 56%.

The reduction in open orders in 2022 compared to 2021 is primarily due to order cancellations as customers report high inventory levels.

During the second half of 2022, the Company has observed order cancellations as customers report high inventory levels.

Aluminum Extrusions expects the confluence of orders, cancellations and shipments to drive open orders to pre-COVID-19, normalized levels during the first half of 2023.

The outlook for demand and shipments in 2023 remains uncertain given recessionary concerns.

Overall open orders in Aluminum Extrusions were approximately $48.0 million, or 14 million pounds, at December 31, 2023 compared to approximately $136.0 million, or 41 million pounds, at December 31, 2022, a decrease of $88.0 million, or approximately 65%.

This level is below the quarterly range of 21 to 27 million pounds in 2019 before pandemic-related disruptions that resulted in long lead times, driving a peak in open orders of approximately 100 million pounds during the first quarter of 2022.

We believe that current open orders are below pre-pandemic levels due to higher interest rates, tighter lender requirements and the increase in remote working, which particularly impacts the non-residential B&C end-use market.

In addition, data indicates that aluminum extrusion imports increased significantly in recent years, especially during the pandemic, and some of Aluminum Extrusions’ customers may have sourced, and continue to source, aluminum extrusions from producers outside the U.S.

Sales volume for Aluminum Extrusions, which the Company believes is cyclical and seasonal in nature due to its end-use markets, was 138.5 million pounds in 2023, 174.7 million pounds in 2022 and 183.4 million pounds in 2021.

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"Quantitative and Qualitative Disclosures About Market Risk” of this Form 10-K (“Item 7A”) for additional information on aluminum price trends.

Aluminum Extrusions believes that it has adequate supply agreements for aluminum raw materials in 2023 despite continued supply chain cost increases related to paint, chemicals, packaging and other non-aluminum raw materials.

Aluminum Extrusions believes that it has adequate supply agreements for aluminum raw materials in 2024.

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 ® , Pearl A™, Lithyn™ and Obsidian™ brand names.

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

These films, which are manufactured at facilities in the U.S.

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, digital signage, semiconductors and automobiles during the manufacturing and transportation process.

Tredegar’s Lithyn™ Series represents a new class of tapes for wafer thinning, singulation and transportation designed to enable customers’ to overcome processing challenges and reduce costs.

The Obsidian™ series of products is designed for usage in automotive applications.

In 2023, 2022 and 2021, PE Films accounted for approximately 11%, 11% and 15% 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.

Pottsville Packaging produces thin-gauge films as overwrap for bathroom tissue and paper towels.

Raw Materials .

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Tredegar’s spending for research and development (“R&D”) activities in 2023, 2022 and 2021 was primarily related to PE Films.

During the third quarter of 2023, the Company adopted a plan to close the PE Films technical center in Richmond, VA.

Future R&D activities will be performed at the facility in Pottsville, PA.

R&D spending by the PE Films was approximately $2.9 million, $5.3 million and $5.7 million in 2023, 2022 and 2021, respectively.

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

and Asia, with the top four customers, collectively, comprising 88%, 88% and 84% of its net sales in 2022, 2021 and 2020, respectively.

and Asia, with the top four customers, collectively, comprising 87% of its net sales in 2023 and 88% in 2022 and 2021.

No single PE Films customer exceeds 10% of Tredegar’s consolidated net sales.

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Flexible Packaging Films

Flexible Packaging Films is comprised of Terphane Holdings LLC (“Terphane”).

Flexible Packaging Films produces PET-based films for use in packaging applications that have specialized properties, such as heat resistance, strength, barrier protection and the ability to accept high-quality print graphics.

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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.

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.

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.

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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/our-broader-commitments/committed-to-our-employees/ .

Tredegar has continuously exceeded the industry standards for safety in each of its respective manufacturing sectors.

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 www.tredegar.com/about-tredegar/our-broader-commitments/committed-to-our-employees/ .

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 500 and 300 employees, respectively.

Collectively, the Carthage and Clearfield clinics serve over 600 employees.

Talent and Development

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Tredegar’s website address is www.tredegar.com .

The Company makes available, through its website, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such documents are electronically filed

with, or furnished to, the Securities and Exchange Commission (“SEC”).

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, 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.

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.

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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