TREDEGAR CORP 10-K

Item 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures In connection with the preparation of this Form 10-K, pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation with the participation of its management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023. Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective. Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed by or under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, and overseen by the Board of Directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with the authorization of its management and directors; and 32 • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the Company’s consolidated financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting using the criteria in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 COSO Framework”). Based on management’s assessment, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 15 “ Exhibits and Financial Statement Schedules ”. Remediation of Previously Disclosed Material Weaknesses As previously disclosed under “Item 9a – Controls and Procedures” in our annual report on Form 10-K for the period ended December 31, 2022, the Company did not sufficiently attract, develop, and retain competent resources to fulfill internal control responsibilities and did not have an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting. As a consequence of these material weaknesses, the Company did not effectively design, implement and operate process-level controls across its financial reporting processes. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. During the year ended December 31, 2023, the Company, with the oversight of the Audit Committee of our Board of Directors, continued to design and implement measures pursuant to management’s overall internal controls over financial reporting remediation plan and also completed testing of the design and operating effectiveness of all remediated controls. The remediation efforts to date included the following: • Performed walkthroughs of the Company’s financial reporting processes including identifying all information used within the Company’s control environment; • Completed a comprehensive review of, and update to, the documentation of relevant processes with respect to the Company’s internal control over financial reporting; • Developed internal control remediation plans to enhance controls for deficiencies associated with the material weaknesses above, including an assessment of personnel skills and experience related to the design and operation of internal control activities; • Implemented all new and revised internal controls to address the previously identified deficiencies associated with the material weaknesses above; • Expanded the internal control compliance department with personnel who have appropriate internal control experience and identified resources for control owner positions that had previously experienced turnover; and • Executed a targeted training program to educate control owners on the requirements of internal control activities, including maintaining adequate documentary evidence for internal control activities. Based on management’s evaluation of the effectiveness of the Company’s internal controls as of December 31, 2023, including newly remediated controls, management concluded that the Company’s internal control over financial reporting framework was effectively designed and operated effectively for a sufficient period of time to enable us to conclude that all previously identified material weaknesses have been remediated as of December 31, 2023. Changes in Internal Control Over Financial Reporting Except as noted above with respect to the completion of the steps in the remediation plan, there has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Item 9B. OTHER INFORMATION None. 33 Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 34 PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information concerning directors and persons nominated to become directors of Tredegar to be included in the Proxy Statement under the headings “Proposal 1: Election of Directors” and “Tredegar’s Board of Directors” is incorporated herein by reference. The information concerning corporate governance to be included in the Proxy Statement under the headings “Board Meetings, Meetings of Independent Directors and Board Committees” and “Corporate Governance and Risk Oversight” is incorporated herein by reference. Set forth below are the names, ages and titles of the Company’s executive officers: Name Age Title John M. Steitz 65 President and Chief Executive Officer D. Andrew Edwards 65 Executive Vice President and Chief Financial Officer Kevin C. Donnelly 49 Vice President, General Counsel and Corporate Secretary John M. Steitz. Mr. Steitz was elected President and Chief Executive Officer effective March 19, 2019. He previously served as President and Chief Executive Officer of Addivant Corporation, a leading global supplier of antioxidants, intermediates, inhibitors, modifiers, UV stabilizers and other additives to the plastic and rubber industries, from March 2015 until January 2019, as President and Chief Operating Officer of PQ Corporation, a leading worldwide producer of specialty inorganic performance chemicals and catalysts, from October 2013 until March 2015, as President and Chief Executive Officer of Avantor Performance Materials, a global supplier of ultra-high-purity life sciences materials with strict regulatory and performance specifications, from September 2012 through September 2013, as President and Chief Operating Officer of Albemarle Corporation, a global specialty chemicals company, from March 2012 through August 2012, and as Chief Operating Officer and Executive Vice President of Albemarle from April 2007 until March 2012. D. Andrew Edwards. Mr. Edwards was named Executive Vice President and Chief Financial Officer effective August 6, 2020. Mr. Edwards served as Vice President and Chief Financial Officer from July 20, 2015 until August 2020. He previously served as the Chief Financial Officer of United Sporting Companies, Inc., a wholesale distributor of outdoor sporting goods, from February 2013 until July 2015 and as Vice President, Controller and Chief Accounting Officer of Owens & Minor, Inc., a distributor of acute medical products, from April 2010 to February 2013 and as Acting Chief Financial Officer of Owens & Minor, Inc. from March 2012 to February 2013. Mr. Edwards also served as Vice President, Finance, of Owens & Minor, Inc. from December 2009 until April 2010. Mr. Edwards previously served as the Company’s Vice President, Chief Financial Officer and Treasurer from August 2003 to December 2009 and as the Company’s Vice President, Finance from November 1998 to August 2003. Mr. Edwards also served as the Company’s Treasurer from May 1997 to December 2009 and as the Company’s Controller from October 1992 until July 2000. Kevin C. Donnelly . Mr. Donnelly was elected Vice President, General Counsel and Corporate Secretary effective January 1, 2021. He joined Tredegar in 2010 and served as its Associate General Counsel from 2013 to 2020. Prior to joining Tredegar, Mr. Donnelly was an associate at Hunton & Williams LLP (now Hunton Andrews Kurth LLP). He received a B.A. degree from the University of Richmond and a J.D. from the University of Virginia. Tredegar has a Code of Conduct that applies to all of its directors, officers and employees (including its chief executive officer, chief financial officer and principal accounting officer) and has posted the Code of Conduct on its website. All amendments to or waivers from any provision of the Company’s Code of Conduct applicable to the chief executive officer, chief financial officer and principal accounting officer will be disclosed on the Company’s website. The Company’s internet address is www.tredegar.com . Item 11. EXECUTIVE COMPENSATION The information to be included in the Proxy Statement under the headings “Compensation of Directors,” “Compensation Discussion and Analysis,” “Executive Compensation Committee Report” and “Compensation of Executive Officers” is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information to be included in the Proxy Statement under the heading “Equity Compensation Plan Information” is incorporated herein by reference. 35 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information to be included in the Proxy Statement under the headings “Certain Relationships and Related Transactions,” “Tredegar’s Board of Directors” and “Board Meetings, Meetings of Independent Directors and Board Committees” is incorporated herein by reference. Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Our independent registered public accounting firm is KPMG LLP , Richmond, Virginia , Audit Firm ID: 185 . The following is incorporated herein by reference: • Information on accounting fees and services to be included in the Proxy Statement under the heading “Audit and Non-Audit Fees;” and • Information on the Audit Committee’s procedures for pre-approving certain audit and non-audit services to be included in the Proxy Statement under the heading “Board Meetings, Meetings of Non-Management Directors and Board Committees—Audit Committee Matters.” 36 PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List of documents filed as a part of the report: (1) Financial statements: Tredegar Corporation Index to Financial Statements and Supplementary Data Page Auditors’ Opinions: Report of Independent Registered Public Accounting Firm 38 Opinion on Internal Control Over Financial Reporting 40 Financial Statements: Consolidated Balance Sheets 41 Consolidated Statements of Income (Loss) 42 Consolidated Statements of Comprehensive Income (Loss) 43 Consolidated Statements of Cash Flows 44 Consolidated Statements of Shareholders' Equity 45 Notes to Financial Statements 46 (2) Financial statement schedules: None (3) Exhibit Index 74 37 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Tredegar Corporation: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Tredegar Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), cash flows, and shareholders’ equity for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 15, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill impairment in the Surface Protection reporting unit As discussed in Notes 1 and 5 to the consolidated financial statements, the Company’s goodwill balance as of December 31, 2023 was $35.7 million, including $22.4 million related to the Surface Protection reporting unit, within the PE Films reportable segment. The Company assesses goodwill for impairment when events or circumstances indicate that the carrying value may not be recoverable, or, at a minimum, on an annual basis (December 1st of each year). During the three months ended June 30, 2023 and September 30, 2023, events and circumstances indicated that the Surface Protection reporting unit might be impaired. The Company performed quantitative impairment tests of the Surface Protection reporting unit as of June 30, 2023 and September 30, 2023, and concluded that an impairment existed as of June 30, 2023 and September 30, 2023. Management estimated the fair value of the Surface Protection reporting unit utilizing the discounted cash flow method. We identified the assessment of goodwill impairment of the Surface Protection reporting unit as a critical audit matter. The estimation of fair value of the reporting unit is complex and includes estimation uncertainties that required a higher level of subjective auditor judgment. Specifically, the revenue growth projections used in the discounted cash flow method required subjective and challenging auditor judgment as they represented subjective determinations of market and economic conditions. Additionally, the audit effort associated with the discount rate and the revenue growth projections required specialized skills 38 and knowledge. Changes to those assumptions could have had a significant effect on the Company’s estimate of the fair value of the reporting unit. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment assessment process, including controls over the selection of the discount rate and development of the revenue growth projections. We assessed the revenue growth projections by considering correspondence with customers, as well as the underlying business strategies and growth plans of the Company. We also evaluated the revenue growth projections by comparing them to third-party market data and to historical actual results. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in: • evaluating the Company’s discount rate by comparing it to a discount rate that was independently developed using publicly available third-party market data for comparable entities • evaluating the Company’s revenue growth projections by comparing them to projections that were independently developed using external market and industry data. /s/ KPMG LLP We have served as the Company’s auditor since 2018. Richmond, Virginia March 15, 2024 39 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Tredegar Corporation: Opinion on Internal Control Over Financial Reporting We have audited Tredegar Corporation and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), cash flows, and shareholders’ equity for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated March 15, 2024 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Richmond, Virginia March 15, 2024 40 CONSOLIDATED BALANCE SHEETS Tredegar Corporation and Subsidiaries December 31 2023 2022 (In thousands, except share data) Assets Current assets: Cash and cash equivalents $ 9,660 $ 19,232 Restricted cash 3,795 — Accounts and other receivables, net 67,938 84,544 Income taxes recoverable 1,182 733 Inventories 82,037 127,771 Prepaid expenses and other 12,065 10,304 Total current assets 176,677 242,584 Property, plant and equipment, at cost: Land and land improvements 4,867 4,832 Buildings 73,160 71,129 Machinery and equipment 463,019 455,960 Total property, plant and equipment 541,046 531,921 Less: accumulated depreciation ( 357,591 ) ( 345,510 ) Net property, plant and equipment 183,455 186,411 Right-of-use leased assets 11,848 14,021 Identifiable intangible assets, net 9,851 11,690 Goodwill 35,717 70,608 Deferred income tax assets 25,034 13,900 Other assets 3,879 2,879 Total assets $ 446,461 $ 542,093 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 95,023 $ 114,938 Accrued expenses 24,442 31,603 Lease liability, short-term 2,107 2,035 ABL revolving facility (matures on June 30, 2026) 126,322 — Income taxes payable 1,210 1,137 Total current liabilities 249,104 149,713 Lease liability, long-term 10,942 12,738 Long-term debt 20,000 137,000 Pension and other postretirement benefit obligations, net 6,643 35,046 Other non-current liabilities 4,119 5,834 Total liabilities 290,808 340,331 Contingencies (Note 16) Shareholders’ equity: Common stock, no par value (authorized 150,000,000 shares, issued and outstanding— 34,408,638 shares at December 31, 2023 and 34,000,642 at December 31, 2022) 61,606 58,824 Common stock held in trust for savings restoration plan ( 118,543 shares at December 31, 2023 and 113,316 at December 31, 2022) ( 2,233 ) ( 2,188 ) Accumulated other comprehensive income (loss): Foreign currency translation adjustment ( 83,037 ) ( 86,079 ) Gain (loss) on derivative financial instruments 801 ( 2,480 ) Pension and other postretirement benefit adjustments 539 ( 59,036 ) Retained earnings 177,977 292,721 Total shareholders’ equity 155,653 201,762 Total liabilities and shareholders’ equity $ 446,461 $ 542,093 See accompanying notes to financial statements. 41 CONSOLIDATED STATEMENTS OF INCOME (LOSS) Tredegar Corporation and Subsidiaries Years Ended December 31 2023 2022 2021 (In thousands, except share data) Revenues and other: Sales $ 704,825 $ 938,564 $ 826,455 Other income (expense), net ( 2,147 ) 1,009 20,265 702,678 939,573 846,720 Costs and expenses: Cost of goods sold 599,110 764,042 649,690 Freight 26,933 34,982 28,232 Selling, general and administrative 76,207 78,790 74,964 Research and development 3,761 6,214 6,347 Amortization of identifiable intangibles 1,897 2,520 1,704 Pension and postretirement benefits 10,844 14,569 14,160 Interest expense 11,607 4,990 3,386 Asset impairments and costs associated with exit and disposal activities, net of adjustments 5,167 622 1,127 Pension settlement loss 92,291 — — Goodwill impairment 34,891 — — Total 862,708 906,729 779,610 Income (loss) before income taxes ( 160,030 ) 32,844 67,110 Income tax expense (benefit) ( 54,125 ) 4,389 9,284 Net income (loss) $ ( 105,905 ) $ 28,455 $ 57,826 Earnings (loss) per share: Basic $ ( 3.10 ) $ 0.84 $ 1.72 Diluted $ ( 3.10 ) $ 0.84 $ 1.72 Shares used to compute earnings (loss) per share: Basic 34,133 33,806 33,563 Diluted 34,133 33,826 33,670 See accompanying notes to financial statements. 42 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Tredegar Corporation and Subsidiaries Years Ended December 31 2023 2022 2021 (In thousands) Net income (loss) $ ( 105,905 ) $ 28,455 $ 57,826 Other comprehensive income (loss): Unrealized foreign currency translation adjustment (net of tax expense of $ 469 in 2023, net of tax expense of $ 290 in 2022 and net of tax benefit of $ 365 in 2021) 3,042 ( 287 ) ( 1,643 ) Derivative financial instruments adjustment (net of tax expense of $ 933 in 2023, net of tax benefit of $ 336 in 2022 and net of tax benefit of $ 351 in 2021) 3,281 ( 3,381 ) ( 1,363 ) Pension & other postretirement benefit adjustments: Recognition in earnings of actuarial loss for pension settlement (net of tax expense of $ 41,294 ) 50,997 — — Net gains (losses) and prior service costs (net of tax expense of $ 422 in 2023, net of tax benefit of $ 1,400 in 2022 and net of tax expense of $ 5,212 in 2021) 1,513 ( 5,064 ) 18,720 Amortization of prior service costs and net gains or losses (net of tax expense of $ 1,968 in 2023, net of tax expense of $ 2,965 in 2022 and net of tax expense of $ 3,676 in 2021) 7,065 10,641 13,186 Other comprehensive income (loss) 65,898 1,909 28,900 Comprehensive income (loss) $ ( 40,007 ) $ 30,364 $ 86,726 See accompanying notes to financial statements. 43 CONSOLIDATED STATEMENTS OF CASH FLOWS Tredegar Corporation and Subsidiaries Years Ended December 31 2023 2022 2021 (In thousands) Cash flows from operating activities: Net income (loss) $ ( 105,905 ) $ 28,455 $ 57,826 Adjustments for noncash items: Depreciation 25,786 23,882 22,080 Amortization of identifiable intangibles 1,897 2,520 1,704 Goodwill impairment 34,891 — — Reduction of right-of-use lease asset 2,220 2,098 2,086 Deferred income taxes ( 56,098 ) 544 ( 4,944 ) Accrued pension and postretirement benefits 10,844 14,602 14,160 Pension settlement loss 92,291 — — Stock-based compensation expense 1,978 3,619 5,167 Gain on investment in kaléo ( 262 ) ( 1,406 ) ( 12,462 ) Impairment of Richmond, Virginia Technical Center assets 3,454 — — Changes in assets and liabilities: Accounts and other receivables 17,400 18,569 ( 16,993 ) Inventories 47,607 ( 37,771 ) ( 23,132 ) Income taxes recoverable/payable ( 406 ) ( 6,423 ) 8,956 Prepaid expenses and other 1,204 ( 2,526 ) 3,612 Accounts payable and accrued expenses ( 25,165 ) ( 14,916 ) 19,835 Lease liability ( 2,299 ) ( 2,301 ) ( 1,935 ) Pension and postretirement benefit plan contributions ( 28,269 ) ( 50,660 ) ( 5,687 ) Other, net 2,827 870 310 Net cash provided by (used in) operating activities 23,995 ( 20,844 ) 70,583 Cash flows from investing activities: Capital expenditures ( 26,446 ) ( 36,875 ) ( 27,361 ) Proceeds from the sale of kaléo 262 1,406 47,062 Proceeds from the sale of assets and other — 10 4,749 Net cash provided by (used in) investing activities ( 26,184 ) ( 35,459 ) 24,450 Cash flows from financing activities: Borrowings 116,134 313,500 75,500 Debt principal payments ( 107,713 ) ( 249,500 ) ( 136,500 ) Dividends paid ( 8,884 ) ( 16,974 ) ( 16,167 ) Debt financing costs ( 4,021 ) ( 1,245 ) — Other — ( 396 ) 325 Net cash provided by (used in) financing activities: ( 4,484 ) 45,385 ( 76,842 ) Effect of exchange rate changes on cash 896 ( 371 ) 484 Increase (decrease) in cash, cash equivalents and restricted cash ( 5,777 ) ( 11,289 ) 18,675 Cash, cash equivalents and restricted cash at beginning of period 19,232 30,521 11,846 Cash, cash equivalents and restricted cash at end of period $ 13,455 $ 19,232 $ 30,521 Supplemental cash flow information: Interest payments $ 10,499 $ 4,423 $ 2,923 Income tax payments, net $ 2,282 $ 10,814 $ 4,706 See accompanying notes to financial statements. 44 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY Tredegar Corporation and Subsidiaries Common Stock Retained Earnings Trust for Savings Restoration Plan Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity (In thousands, except share and per-share data) Shares Amount Balance at January 1, 2021 33,457,176 $ 50,066 $ 239,480 $ ( 2,087 ) $ ( 178,404 ) $ 109,055 Net income (loss) — — 57,826 — — 57,826 Foreign currency translation adjustment — — — — ( 1,643 ) ( 1,643 ) Derivative financial instruments adjustment — — — — ( 1,363 ) ( 1,363 ) Net gains or (losses) and prior service costs — — — — 18,720 18,720 Amortization of prior service costs and net gains or losses — — — — 13,186 13,186 Cash dividends declared ($ 0.48 per share) — — ( 16,167 ) — — ( 16,167 ) Stock-based compensation expense 229,014 4,783 — — — 4,783 Repurchase of employee common stock for tax withholdings ( 17,266 ) ( 590 ) — — — ( 590 ) Issued upon exercise of stock options 67,705 915 — — — 915 Tredegar common stock purchased by trust for savings restoration plan — — 48 ( 48 ) — — Balance at December 31, 2021 33,736,629 55,174 281,187 ( 2,135 ) ( 149,504 ) 184,722 Net income (loss) — — 28,455 — — 28,455 Foreign currency translation adjustment — — — — ( 287 ) ( 287 ) Derivative financial instruments adjustment — — — — ( 3,381 ) ( 3,381 ) Net gains or (losses) and prior service costs — — — — ( 5,064 ) ( 5,064 ) Amortization of prior service costs and net gains or losses — — — — 10,641 10,641 Cash dividends declared ($ 0.50 per share) — — ( 16,974 ) — — ( 16,974 ) Stock-based compensation expense 294,764 4,046 — — — 4,046 Repurchase of employee common stock for tax withholdings ( 30,751 ) ( 396 ) — — — ( 396 ) Tredegar common stock purchased by trust for savings restoration plan — — 53 ( 53 ) — — Balance at December 31, 2022 34,000,642 58,824 292,721 ( 2,188 ) ( 147,595 ) 201,762 Net income (loss) — — ( 105,905 ) — — ( 105,905 ) Foreign currency translation adjustment — — — — 3,042 3,042 Derivative financial instruments adjustment — — — — 3,281 3,281 Net gains or (losses) and prior service costs — — — — 1,513 1,513 Amortization of prior service costs and net gains or losses — — — — 7,065 7,065 Recognition in earnings of net actuarial loss for pension settlement — — — — 50,997 50,997 Cash dividends declared ($ 0.26 per share) — — ( 8,884 ) — — ( 8,884 ) Stock-based compensation expense 407,996 3,036 — — — 3,036 Repurchase of employee common stock for tax withholdings — ( 254 ) — — — ( 254 ) Tredegar common stock purchased by trust for savings restoration plan — — 45 ( 45 ) — — Balance at December 31, 2023 34,408,638 $ 61,606 $ 177,977 $ ( 2,233 ) $ ( 81,697 ) $ 155,653 See accompanying notes to financial statements. 45 NOTES TO FINANCIAL STATEMENTS Tredegar Corporation and Subsidiaries 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations. Tredegar Corporation and subsidiaries (collectively “Tredegar,” “the Company,” “we,” “us” or “our”) is an industrial manufacturer with three primary businesses: custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets; surface protection films for high-technology applications in the global electronics industry and polyethylene overwrap films used for bathroom tissue and paper towels; and polyester-based films for use in packaging applications that have specialized properties primarily for the Latin American and the United States (“U.S.”) flexible packaging markets. The Company’s business segments are Aluminum Extrusions (also referred to as Bonnell Aluminum), PE Films, and Flexible Packaging Films (also referred to as Terphane). More information on the Company’s business segments is provided in Note 13. 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 Colombia. On October 27, 2023, the Company filed the requisite competition forms with the Administrative Council for Economic Defense (“CADE”) in Brazil. The regulatory review process is ongoing and in line with the Company’s expectations. CADE’s maximum deadline for completing its review is no later than November 18, 2024. The merger review regarding the transaction was cleared by the Colombian authority in early February 2024. Basis of Presentation and Principles of Consolidation. The consolidated financial statements include the accounts and operations of the Company and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Intercompany balances and transactions have been eliminated in consolidation. Certain amounts for the prior years have been reclassified to conform to current year presentation. Fiscal Year End. The Company operates on a calendar fiscal year except for the Aluminum Extrusions segment, which operates on a 52/53-week fiscal year basis. References to Aluminum Extrusions for 2023, 2022 and 2021 relate to the 53-week fiscal years ended December 31, 2023 and 52-week fiscal years ended December 25, 2022 and December 26, 2021, respectively. The Company does not believe the impact of reporting the results of this segment in this manner 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 year end to the Company’s calendar year end. There was no intercompany funding with Aluminum Extrusions between December 25, 2022 and December 31, 2022. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosure of contingent assets and liabilities (if any). On an ongoing basis, the Company evaluates its estimates, including those related to provisions for transaction and credit losses, income taxes, pension, and the valuation of goodwill and intangible assets, among others. Tredegar bases its estimates on historical experience and various other assumptions which the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. Foreign Currency Translation. The financial statements of subsidiaries located outside the U.S., where the local currency is the functional currency, are translated into U.S. Dollars using exchange rates in effect at the period end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from the translation of these financial statements are reflected as a separate component of shareholders’ equity. There are no operating subsidiaries located outside the U.S. where the U.S. Dollar is the functional currency. Transaction and remeasurement gains or losses included in income were gains of $ 0.2 million, losses of $ 0.4 million and losses of $ 0.5 million in 2023, 2022 and 2021, respectively. These amounts do not include the effects between reporting periods that exchange rate changes have on income of the locations outside the U.S. that result from translation into U.S. Dollars. Cash, Cash Equivalents and Restricted cash. Cash, cash equivalents and restricted cash consist of cash on hand in excess of daily operating requirements and highly liquid investments with original maturities of three months or less. At December 31, 2023 and 2022, Tredegar had cash, cash equivalents and restricted cash of $ 13.5 million and $ 19.2 million, respectively, including funds held in locations outside the U.S. of $ 9.8 million and $ 10.3 million, respectively. The Company’s policy permits investment of excess cash in marketable securities that have the highest credit ratings and maturities of less than one year. The primary objectives of the policy are safety of principal and liquidity. 46 The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the consolidated statements of cash flows: December 31, December 31, (In thousands) 2023 2022 Cash and cash equivalents $ 9,660 $ 19,232 Restricted cash 3,795 — Total cash, cash equivalents and restricted cash $ 13,455 $ 19,232 Restricted cash as of December 31, 2023 consists of $3.4 million of receipts that have not yet been applied to the ABL Facility (defined below). See Note 7 for additional information. Accounts and Other Receivables, net. Accounts receivables are stated at the amount invoiced to customers less allowances for doubtful accounts. Accounts receivables are non-interest bearing and arise from the sale of products to customers under typical industry trade terms. Notes receivables are immaterial. Past due amounts are determined based on established terms and charged-off when deemed uncollectible. The allowance for doubtful accounts is determined based on an assessment of probable losses taking into account past due amounts, customer credit profile, historical experience and current economic conditions. For receivables that do not have a specific allowance, the loss rate is computed by segment to apply to the remaining receivables balance, using each segment’s historic loss rate. Other receivables include value-added taxes related to certain foreign subsidiaries and other miscellaneous receivables due within one year. For certain customers, the Company has arrangements in place with financial institutions whereby certain customer receivables are sold to the financial institution at a discount and without recourse. Upon sale, the associated receivable is unrecognized, and the discount is recognized. For more information on accounts and other receivables, net, see Note 2. Inventories. Inventories are stated at the lower of cost or market, with cost determined using the last in, first out (“LIFO”) method, the weighted average cost or the first in, first out (“FIFO”) method. Cost elements included in work-in-process and finished goods inventories are raw materials, direct labor and manufacturing overhead. Finished goods, work-in-process, raw materials and supplies, stores and other inventory are reviewed to determine if inventory quantities are in excess of forecasted usage or if they have become obsolete. Property, Plant and Equipment. Accounts include costs of assets constructed or purchased, related delivery and installation costs and interest incurred on significant capital projects during their construction periods. Expenditures for renewals and betterments also are capitalized, but expenditures for repairs and maintenance are expensed as incurred. The cost and accumulated depreciation applicable to assets retired or sold are removed from the respective accounts, and gains or losses thereon are included in income. Capital expenditures for property, plant and equipment include capitalized interest. Capitalized interest included in capital expenditures for property, plant and equipment was immaterial. Depreciation is computed primarily by the straight-line method based on the estimated useful lives of the assets that generally range from 5 to 40 years for buildings and land improvements and 2 to 20 years for machinery and equipment. Goodwill and Identifiable Intangibles. The excess of the purchase price over the fair value of identifiable net assets of acquired companies is allocated to goodwill. The Company assesses goodwill for impairment when events or circumstances indicate that the carrying value may not be recoverable, or, at a minimum, on an annual basis (December 1st of each year). When assessing goodwill for impairment, accounting guidance allows the Company to first perform a qualitative assessment (“Step 0 analysis”), which evaluates certain qualitative factors, including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, as well as company and reporting unit factors. If the Company's Step 0 analysis indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company would perform a quantitative impairment test (“Step 1 analysis”). During 2023, uncertainty about the timing of a recovery in the consumer electronics market persisted, and manufacturers in the supply chain for consumer electronics continued to experience reduced capacity utilization and inventory corrections. In light of the limited visibility on the timing of a recovery and the expected adverse future impact to the Surface Protection business, coupled with a cautious outlook on new product development opportunities, the Company performed a Step 1 goodwill impairment analysis, as of June 30, 2023 and September 30, 2023, of the Surface Protection component of PE Films. The analyses concluded that the fair value of Surface Protection was less than its carrying value, thus a non-cash partial goodwill impairment of $ 34.9 million ($ 27.0 million after deferred income tax benefits) was recognized during 2023. The Company estimated the fair value of Surface Protection by: (i) computing an estimated enterprise value (“EV”) utilizing the discounted cash flow method (the “DCF Method”), (ii) applying adjustments for any surplus or deficient working capital, (iii) adding cash and cash equivalents, and (iv) subtracting interest-bearing debt. The DCF Method was used, incorporating Surface Protection’s latest projections, which reflect updated expected market recovery levels, feasibility of 47 launching new product applications, competitive pricing and cash flows associated with production efficiencies, as well as consideration of cost savings and inventory corrections. As of December 1, 2023, the Company’s reporting units with goodwill were Surface Protection in PE Films and Futura in Aluminum Extrusions. Both of these reporting units have separately identifiable operating net assets (operating assets including goodwill and identifiable intangible assets net of operating liabilities). The Company's Step 0 analysis of these reporting units concluded that it is more likely than not that the fair value of each reporting unit was greater than its carrying value. Therefore, the Step 1 quantitative goodwill impairment tests for these reporting units were not necessary. The Surface Protection and Futura reporting units had goodwill in the amounts of $ 22.4 million and $ 13.3 million, respectively, at December 31, 2023. For more information on goodwill and identifiable intangibles, see Note 5. Impairment of Long-Lived Assets. The Company reviews long-lived assets for possible impairment when events indicate that an impairment may exist. For assets that are held and used in operations, if events indicate that an asset may be impaired, the Company estimates the future unlevered pre-tax cash flows expected to result from the use of the asset and its eventual disposition. Assets are grouped for this purpose at the lowest level for which there are identifiable and independent cash flows. If the sum of these undiscounted pre-tax cash flows is less than the carrying amount of the asset group, an impairment loss is calculated. Measurement of the impairment loss is the amount by which the carrying amount exceeds the estimated fair value of the asset group. Assets that are held for sale are reported at the lower of their carrying amount or estimated fair value less cost to sell, with an impairment loss recognized for any write-down required. As of December 31, 2023 and 2022, no events, other than the Richmond Technical Center assets that went held for sale in the third quarter of 2023, were identified that indicated long-lived assets may be impaired. Pension Costs and Postretirement Benefit Costs Other than Pensions. Pension costs and postretirement benefit costs other than pensions have been accrued over the period employees provided service to Tredegar. Liabilities and expenses for pension plans and other postretirement benefits are determined using actuarial methodologies and incorporate significant assumptions, including the rate used to discount the future estimated liability, the long-term rate of return on plan assets, and several assumptions relating to the employee workforce. The Company recognizes the funded status of its pension and other postretirement plans in the accompanying consolidated balance sheets. Tredegar’s policy has been to fund its pension plans at amounts not less than the minimum requirements of the Employee Retirement Income Security Act (“ERISA”) of 1974 and to fund postretirement benefits other than pensions when claims are incurred. In February 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan through lump sum distributions and the purchase of annuity contracts. On November 3, 2023, the pension plan termination and settlement process for the Company was completed. For more information, see Note 8. Revenue Recognition. The Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single performance obligation and revenue is recognized at the point in time when control of the product is transferred to customers, along with the title, risk of loss and rewards of ownership. Depending on the arrangement with the customer, these criteria are met either at the time the product is shipped or when the product is made available or delivered to the destination specified in the agreement with the customer. Sales revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for that finished product. The Company offers various discounts, rebates and allowances to customers, (collectively, “allowances”), all of which are considered when determining the transaction price. Certain allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenues. Other allowances can vary depending on future outcomes such as sales returns and customer sales volume, thus representing variable consideration. Amounts billed to customers related to freight are classified as sales revenue and the cost of freight is classified as a separate line in the accompanying consolidated statements of income. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction between Tredegar and its customers (such as value-added taxes) are accounted for on a net basis and therefore excluded from revenues. See Note 13 for disaggregation of revenue by segment and type. See Note 2 for a table showing accounts and other receivables, net of allowance for bad debts. Revenue expected to be recognized in any future period related to remaining performance obligations, excluding i) revenue pertaining to contracts that have an original expected duration of one year or less, ii) contracts where revenue is recognized as invoiced and iii) variable consideration related to unsatisfied performance obligations, is not expected to materially impact the Company’s financial results. Research and Development (“R&D”) Costs. R&D costs are expensed as incurred and include primarily salaries, wages, employee benefits, equipment depreciation, facility costs and the cost of materials consumed relating to R&D efforts. R&D costs include a reasonable allocation of indirect costs. 48 In August 2023, the Company adopted a plan to close the PE Films technical center in Richmond, VA and reduce its efforts to develop and sell films supporting the semiconductor market. Future research and development activities for PE Films will be performed at the facility in Pottsville, PA. PE Films continues to have new business opportunities primarily relating to surface protection films that protect components of flat panel and flexible displays. The Company anticipates all activities to cease at the PE Films technical center in Richmond, VA, by the end of the first quarter of 2024. The Company recognized total expense incurred through December 31, 2023 associated with exit activities of $ 1.3 million for: (i) severance and related costs ($ 0.9 million) and (ii) building closure costs ($ 0.4 million). In addition, the Company recognized a non-cash asset impairment ($ 3.5 million), accelerated depreciation ($ 0.3 million) and a gain on the lease modification ($ 0.1 million). A reconciliation of the beginning and ending balances of accrued expense associated with exit and disposal activities and charges associated with asset impairments reported as "Asset impairments and costs associated with exit and disposal activities, net of adjustments" in the consolidated statements of income for the year ended December 31, 2023 is shown below. (In thousands) Severance Asset impairment Other Total Balance at January 1, 2023 $ — $ — $ — $ — Richmond Technical Center 895 3,454 628 4,977 Charges 895 3,454 628 4,977 Cash Spend 510 — 312 822 Charges against assets — 3,454 188 3,642 Balance at December 31, 2023 $ 385 $ — $ 128 $ 513 Leases. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. The Company has elected to not record short-term leases with an original lease term of one year or less in the consolidated balance sheet. To the extent such leases contain renewal options that the Company intends to exercise, the related Right-of-Use (“ROU”) asset and lease liability are included in the consolidated balance sheet. Some of the Company’s lease arrangements contain lease components (e.g., minimum rent payments) and non-lease components (e.g., maintenance, labor charges, etc.). The Company generally accounts for the lease and non-lease components as a single lease component. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for an index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating leases are included in “Right-of-use lease assets”, “Lease liabilities - short-term” and “Lease liabilities - long-term” on the consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates, adjusted for term and geographic location using country-based swap rates. As a result of the Company’s review of new and existing lease contracts, there were no instances where the Company could readily determine a rate implicit in the lease. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Depending upon the specific use of the ROU asset, lease expense is included in the “Cost of goods sold”, “Freight”, “Selling, general and administrative”, and “Research and development” line items on the consolidated statements of income. Lease income is not material to the results of operations for the years ended December 31, 2023 and 2022, respectively. Additional disclosure regarding Tredegar’s leases is included in Note 4. Income Taxes. Income taxes are recognized during the period in which transactions enter into the determination of income for financial reporting purposes, with deferred income taxes being provided at enacted statutory tax rates on the differences between the financial reporting and tax bases of assets and liabilities (see Note 12). Tredegar’s policy is to accrue U.S. federal income taxes to the extent required under GAAP on unremitted earnings of all foreign subsidiaries where required. However, Tredegar only records U.S. federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries. Because of the accumulation of significant losses related to foreign currency translations at Terphane Limitada, there were no unrecorded deferred income tax liabilities associated with U.S. federal income taxes and foreign withholding taxes on Terphane Limitada’s undistributed earnings as of December 31, 2023 and December 31, 2022. A valuation allowance is recorded in the period when the Company determines that it is more likely than not that all or a portion of deferred income tax assets may not be realized. The establishment and removal of a valuation allowance requires the Company to consider all positive and negative evidence and make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The benefit of an uncertain tax position is included in the accompanying financial statements when the Company determines that it is more likely than not that the position will be sustained, based on the 49 technical merits of the position, if the taxing authority examines the position and the dispute is litigated. This determination is made on the basis of all the facts, circumstances and information available as of the reporting date. Earnings Per Share. Basic earnings per share is computed using the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed using the weighted average common and potentially dilutive common equivalent shares outstanding, determined as follows: 2023 2022 2021 Weighted average shares outstanding used to compute basic earnings per share 34,133,078 33,805,530 33,562,684 Incremental shares attributable to stock options and restricted stock — 20,900 107,566 Shares used to compute diluted earnings per share 34,133,078 33,826,430 33,670,250 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 Company had a net loss for the year ended December 31, 2023, so there is no dilutive impact for such shares. If the Company had reported net income for the year ended December 31, 2023, 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 would have been 2,925,091 . 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 2,760,983 and 1,582,222 for the years ended December 31, 2022 and 2021, respectively. Stock-Based Employee Compensation Plans. The cost of all share-based payments is recognized using the calculated fair value at the grant date, or the date of any later modification, over the requisite service period under the graded-vesting method. See Note 11 for additional information. Financial Instruments. Tredegar uses derivative financial instruments for the purpose of hedging aluminum price volatility and currency exchange rate exposures that exist as part of transactions associated with ongoing business operations. The Company’s derivative financial instruments are designated as and qualify as cash flow hedges and are recognized in the accompanying balance sheet at fair value. A change in the fair value of the derivative that is highly effective and that is designated and qualifies as a cash flow hedge is recorded in other comprehensive income. Gains and losses reported in other comprehensive income (loss) are reclassified to earnings in the periods in which earnings are affected by the variability of cash flows of the hedged transaction. Such gains and losses are reported in the same line as the underlying hedged item, and the cash flows related to financial instruments are classified in the consolidated statements of cash flows in a manner consistent with those of the transactions being hedged. The Company’s policy requires that it formally document all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also uses regression analysis, unless the hedge qualifies for other methods of assessing effectiveness, to formally assess (both at the hedge’s inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value or cash flows of hedged items and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, the Company discontinues hedge accounting prospectively. As a policy, Tredegar does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. Additional disclosure of the utilization of derivative hedging instruments is included in Note 10. Comprehensive Income (Loss). Comprehensive income (loss) is defined as net income or loss as adjusted by other comprehensive income or loss items. Other comprehensive income (loss) includes changes in foreign currency translation adjustments; unrealized gains and losses on derivative financial instruments; prior service costs and net gains or losses from pension and other postretirement benefit plans arising during the period; and amortization of these prior service costs and net gain or loss adjustments; and during the period, realized net actuarial loss for pension settlement all recorded net of deferred income taxes. 50 The changes in accumulated other comprehensive income (loss) by component are summarized as follows: (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 ) Other comprehensive income (loss) ( 2,008 ) 3,800 23,932 25,724 Income tax (expense) benefit 365 ( 842 ) ( 5,212 ) ( 5,689 ) Other comprehensive income (loss), net of tax ( 1,643 ) 2,958 18,720 20,035 Reclassification adjustment to net income (loss) — ( 5,513 ) 16,862 11,349 Income tax (expense) benefit — 1,192 ( 3,676 ) ( 2,484 ) Reclassification adjustment to net income (loss), net of tax — ( 4,321 ) 13,186 8,865 Other comprehensive income (loss), net of tax ( 1,643 ) ( 1,363 ) 31,906 28,900 Balance at December 31, 2021 ( 85,792 ) 901 ( 64,613 ) ( 149,504 ) Other comprehensive income (loss) 3 ( 1,256 ) ( 6,464 ) ( 7,717 ) Income tax (expense) benefit ( 290 ) ( 374 ) 1,400 736 Other comprehensive income (loss), net of tax ( 287 ) ( 1,630 ) ( 5,064 ) ( 6,981 ) Reclassification adjustment to net income (loss) — ( 2,461 ) 13,606 11,145 Income tax (expense) benefit — 710 ( 2,965 ) ( 2,255 ) Reclassification adjustment to net income (loss), net of tax — ( 1,751 ) 10,641 8,890 Other comprehensive income (loss), net of tax ( 287 ) ( 3,381 ) 5,577 1,909 Balance at December 31, 2022 ( 86,079 ) ( 2,480 ) ( 59,036 ) ( 147,595 ) Other comprehensive income (loss) 3,511 11,794 1,935 17,240 Income tax (expense) benefit ( 469 ) ( 2,977 ) ( 422 ) ( 3,868 ) Other comprehensive income (loss), net of tax 3,042 8,817 1,513 13,372 Reclassification adjustment to net income (loss) — ( 7,580 ) 101,323 93,743 Income tax (expense) benefit — 2,044 ( 43,261 ) ( 41,217 ) Reclassification adjustment to net income (loss), net of tax — ( 5,536 ) 58,062 52,526 Other comprehensive income (loss), net of tax 3,042 3,281 59,575 65,898 Balance at December 31, 2023 $ ( 83,037 ) $ 801 $ 539 $ ( 81,697 ) The amounts reclassified out of accumulated other comprehensive income (loss) related to pension and other postretirement benefits are included in the computation of net periodic pension costs, see Note 8 for additional details. 51 Recently Issued Accounting Standards. New accounting pronouncements adopted in 2023: In July 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Updated ("ASU") 2023-03 to amend various Securities and Exchange Commission (“SEC”) paragraphs in the Accounting Standards Codification (“ASC”) to primarily reflect the issuance of SEC Staff Accounting Bulletin No. 120. ASU No. 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force ("EITF") Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 EITF Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a material impact on the Company's consolidated financial statements. Accounting standards not yet adopted: In October 2023, the FASB issued ASU 2023-06 to amend various paragraphs in the ASC to primarily reflect the issuance of SEC Staff Bulletin No. 33-10532. ASU 2023-06 will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives, and transfers of financial assets. The amendments in this ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is not permitted. The Company does not expect a material impact from the adoption of this standard on our consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU 2023-07 to improve reportable segment disclosure and requirements, primarily through the enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. This ASU is effective for fiscal years beginning after December 15, 2023 and interim period beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU are to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09 to improve the income tax disclosures related to the rate reconciliation and income taxes paid information and to improve the effectiveness of income tax disclosures. The amendments in this ASU will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. This ASU is effective for annual periods beginning after December 15, 2024, early adoption is permitted. The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. 2. ACCOUNTS AND OTHER RECEIVABLES As of December 31, 2023 and 2022, accounts receivable and other receivables, net, include the following: (In thousands) 2023 2022 Customer receivables $ 67,183 $ 83,667 Other receivables 3,056 3,874 Total accounts and other receivables 70,239 87,541 Less: Allowance for bad debts ( 2,301 ) ( 2,997 ) Total accounts and other receivables, net $ 67,938 $ 84,544 52 A reconciliation of the beginning and ending balances of the allowance for doubtful accounts for the three years ended December 31, 2023 is as follows: (In thousands) 2023 2022 2021 Balance, beginning of year $ 2,997 $ 1,736 $ 2,797 Charges to expense 882 1,926 1,440 Recoveries 102 2 35 Write-offs and settlements ( 1,734 ) ( 639 ) ( 1,246 ) Foreign exchange and other 54 ( 28 ) ( 1,290 ) Balance, end of year $ 2,301 $ 2,997 $ 1,736 3. INVENTORIES Inventories consist of the following: (In thousands) 2023 2022 Finished goods $ 29,821 $ 34,686 Work-in-process 7,830 15,604 Raw materials 21,939 58,262 Stores, supplies and other 22,447 19,219 Total $ 82,037 $ 127,771 Inventories stated on the LIFO basis amounted to $ 7.2 million at December 31, 2023 and $ 25.3 million at December 31, 2022, which were below replacement costs by $ 13.2 million at December 31, 2023 and $ 15.6 million at December 31, 2022. Inventories stated on the weighted average cost basis were $ 45.3 million and $ 62.9 million at December 31, 2023 and 2022, respectively, while inventories stated on the FIFO method amounted to $ 29.6 million and $ 39.5 million at December 31, 2023 and 2022, respective ly. 4. LEASES Tredegar has various operating lease agreements with remaining terms up to 9 years, including leases of real estate, office equipment and vehicles. As of December 31, 2023 and 2022, the Company had no finance lease agreements. Some leases include options to purchase the leased asset, terminate the agreement or extend the term of the agreement for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The following table presents a maturity analysis of the Company’s operating leases as of December 31, 2023: (In thousands) Future Lease Payments 2024 $ 2,635 2025 2,458 2026 2,078 2027 1,786 2028 1,557 Thereafter 4,600 Total undiscounted operating lease payments 15,114 Less: Imputed interest 2,065 Present value of operating lease liabilities $ 13,049 53 The following table summarizes lease costs, related cash flow and other information for the years ended December 31, 2023 and 2022. These costs are primarily related to long-term operating leases, but also include amounts for variable leases and short-term leases. (In thousands) 2023 2022 Operating lease expense $ 2,882 $ 2,718 Other Information: Weighted-average remaining lease term for operating leases 7 years 8 years Weighted-average discount rate for operating leases 4.46 % 4.27 % 5. GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS A reconciliation of goodwill at December 31, 2023 and 2022 is as follows: (In thousands) Aluminum Extrusions (a) PE Films (a) Total Net carrying value of goodwill at December 31, 2021 $ 13,270 $ 57,338 $ 70,608 Net carrying value of goodwill at December 31, 2022 13,270 57,338 70,608 Goodwill impairment — ( 34,891 ) ( 34,891 ) Net carrying value of goodwill at December 31, 2023 $ 13,270 $ 22,447 $ 35,717 (a) The goodwill of Aluminum Extrusions and PE Films is carried by the Futura and Surface Protection reporting units, respectively. A reconciliation of identifiable intangibles at December 31, 2023 and 2022 is as follows: (In thousands) Customer Relationships Proprietary Technology Trade Names Total Gross carrying value at December 31, 2022 $ 26,549 $ 3,726 $ 13,394 $ 43,669 Accumulated amortization ( 15,467 ) ( 3,672 ) ( 12,840 ) ( 31,979 ) Net carrying value at December 31, 2022 $ 11,082 $ 54 $ 554 $ 11,690 Gross carrying value at December 31, 2023 $ 26,575 $ 3,732 $ 13,460 $ 43,767 Accumulated amortization ( 17,270 ) ( 3,687 ) ( 12,959 ) ( 33,916 ) Net carrying value at December 31, 2023 $ 9,305 $ 45 $ 501 $ 9,851 Amortization expense over the next five years is expected to be as $ 1.9 million per year. 6. ACCRUED EXPENSES Accrued expenses consist of the following: (In thousands) 2023 2022 Payrolls, related taxes and medical and other benefits 6,261 5,916 Vacation 2,602 3,502 Workers’ compensation and disabilities 2,178 2,051 Group annuity contract premium liability 2,000 — Customer rebates 1,891 1,154 Environmental liabilities 1,563 1,627 Accrued utilities 1,321 2,099 Accrued interest 1,236 407 Incentive compensation 612 6,103 Derivative contract liability 483 3,260 Accrued freight 440 2,298 Other 3,855 3,186 Total $ 24,442 $ 31,603 54 7. DEBT AND CREDIT AGREEMENTS ABL Facility On August 3, 2023, the Company entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement (collectively the “Prior Credit Agreement”), which amended the financial covenants and decreased aggregate borrowings from $ 375 million to $ 200 million. On December 27, 2023, the Company entered into Amendment No. 3 (the “ABL Facility”) to the Prior Credit Agreement, which provides the Company with $ 180 million senior secured asset-based revolving credit facility that will expire on June 30, 2026. The ABL Facility is secured by substantially all assets of the Company and its domestic subsidiaries, including equity in certain material first-tier foreign subsidiaries. Availability for borrowings under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including a portion of trade accounts receivable, inventory, cash and cash equivalents, owned real properties, and owned machinery and equipment. Upon the earlier of March 31, 2025 or the date the Company receives the proceeds from the sale of Terphane (the “ABL Adjustment Date”), the $ 180 million ABL Facility will be reduced to $ 125 million. As of December 31, 2023, availability under the ABL Facility was $ 22.9 million, after reducing the availability by the aggregate outstanding borrowings of $ 126.3 million, standby letters of credit of $ 13.1 million, and the Minimum Liquidity (as defined in the ABL Facility) financial covenant. The Company incurred $ 2.6 million of debt issuance costs in conjunction with the ABL Facility, which are being amortized on a straight-line basis over the remaining term of the ABL Facility. Outstanding borrowings accrue interest at the rates elected by the Company depending on the type of loan and denomination of such borrowing. With respect to revolving loans denominated in U.S. Dollars, the Company may elect interest rates at: • Alternate Base Rate (“ABR”) plus 2.50 % before the ABL Adjustment Date and the applicable ABR Spread (as defined in the ABL Facility) after the ABL Adjustment Date are determined in accordance with an excess availability-based pricing grid. ABR is defined, in part, as the greater of (a) the Prime Rate in effect on such day, (b) the Federal Reserve Bank of New York Rate in effect on such day plus ½ of 1% and (c) the Adjusted Term SOFR Rate (defined below) for a one-month period plus 1%; or • The Adjusted Term SOFR Rate plus 3.50 % before the ABL Adjustment Date and the applicable Term Benchmark Spread (as defined in the ABL Facility) are determined in accordance with an excess availability-based pricing grid after the ABL Adjustment Date. Adjusted Term SOFR Rate is defined as the Term SOFR Rate plus 0.10%, subject to an initial Floor (as defined in the ABL Facility) of 0%. Interest rate indices for select non-U.S. dollar borrowings, including borrowings denominated in Euro, Pounds Sterling, Swiss Francs and Japanese Yen, remain consistent with the terms of the Prior Credit Agreement. Based upon the quarterly average of daily availability under the ABL Facility, the interest rate pricing grid applicable after the ABL Adjustment Date will be as follows: Pricing under the ABL Facility (Basis Points) Quarter Average of Daily Availability Term Benchmark Spread ABR Spread Commitment Fee* > 66% of $125 million aggregate commitment 225.0 125.0 40.0 ≤ 66% but > 33% of $125 million aggregate commitment 250.0 150.0 40.0 ≤ 33% of $125 million aggregate commitment 275.0 175.0 40.0 * The Commitment Fee before the ABL Adjustment Date and after the ABL Adjustment Date remain the same as reflected in this table. Under the terms of the ABL Facility, certain domestic bank accounts are subject to blocked account agreements, each of which contains a springing feature whereby the lenders may exercise control over those accounts during a cash dominion period (any such period, a “Cash Dominion Period”). A Cash Dominion Period was implemented on the date of the closing of the ABL Facility and will remain in effect at all times prior to the ABL Adjustment Date. After the ABL Adjustment Date, a Cash Dominion Period goes into effect if availability under the ABL Facility falls below 12.5 % or an Event of Default (as defined in the ABL Facility) occurs. The Company would then be subject to the Cash Dominion Period until the Event of Default is waived or ABL Facility availability is above 12.5 % of the $ 125 million aggregate commitment for 30 consecutive days. Receipts that have not yet been applied to the ABL Facility are classified as restricted cash in the Company’s consolidated balance sheets. 55 The financial covenants in the ABL Facility, which are reported to lenders on a monthly basis, include: • Until the ABL Adjustment Date, the Company is required to maintain (i) minimum Credit EBITDA (as defined in the ABL Facility), as of the end of each fiscal month for the 12-month period then ended (presented below) and (ii) a Minimum Liquidity (as defined in the ABL Facility) of $ 10.0 million. Minimum Credit EBITDA (In thousands) December 2023 $ 21,070 January 2024 21,110 February 2024 18,750 March 2024 16,640 April 2024 19,780 May 2024 19,660 June 2024 19,450 July 2024 21,860 August 2024 22,830 September 2024 25,370 October 2024 26,070 November 2024 27,640 December 2024 29,640 January 2025 29,740 February 2025 29,850 March 2025 $ 29,980 • Following the ABL Adjustment Date, the foregoing financial covenants will cease to exist and will be replaced with a minimum fixed charge coverage ratio of 1.00:1.00 that will be triggered in the event that availability is less than 10 % of $ 125 million commitment amount and continuing thereafter until availability is greater than 10 % of the $ 125 million commitment amount for 30 consecutive days. In addition to the financial covenants, the ABL Facility contains restrictive covenants, including covenants that restrict the Company’s ability to pay dividends and repurchase shares of its common stock. If at any time the availability under the ABL facility is less than 10 % (but on and after the ABL Adjustment Date, 20 %) of the maximum aggregate principal amount in effect at such time or an Event of Default occurs, the Company’s current monthly reporting requirements to lenders changes to a weekly cadence until the Event of Default is waived, cured or the availability under the ABL facility is above 10 % (but on and after the ABL Adjustment Date, 20%) of the maximum aggregate principal amount for 30 consecutive days. The ABL Facility has customary representations and warranties including, as a condition to each borrowing, that all such representations and warranties are true and correct in all material respects (including a representation that no Material Adverse Effect (as defined in the ABL Facility) has occurred since December 31, 2022). In the event that the Company cannot certify that all conditions to the borrowing have been met, the lenders can restrict the Company’s future borrowings under the ABL Facility. Because a Cash Dominion Period is currently in effect and the Company is required to represent that no Material Adverse Effect has occurred as a condition to borrowing, the outstanding debt under the ABL Facility (all contractual payments due on June 30, 2026) is classified as a current liability in the consolidated balance sheets. In accordance with the ABL Facility, the lenders have been provided with the Company’s financial statements, covenant compliance certificates and projections to facilitate their ongoing assessment of the Company. Accordingly, the Company believes the likelihood that lenders would exercise the subjective acceleration clause whereby prohibiting future borrowings is remote. As of December 31, 2023, the Company was in compliance with all debt covenants. 56 Terphane Brazil Loan On October 26, 2023, Flexible Packaging Film's business unit in Brazil (“Terphane Ltda.”), the Company’s wholly owned subsidiary in Brazil, borrowed $ 20 million secured by certain of its assets (“Terphane Brazil Loan”). This U.S. Dollar borrowing matures on October 30, 2028, with interest payable quarterly at an annual floating interest rate of the Secured Overnight Financing Rate (“SOFR”) plus 5.99 %. The SOFR rate was 5.36 % as of December 31, 2023. Quarterly principal payments of $ 1.7 million begin starting in year 3 of the loan. There are no prepayment penalties. The Company expects that the Terphane Brazil Loan will be repaid (and collateral released) upon the closing of the Contingent Terphane Sale. On October 26, 2023, the Company borrowed $ 20 million from Terphane Brazil (the “Intercompany Loan”) at the same interest rate as the Terphane Brazil Loan, thereby transferring the funds to the U.S. The Company will repay the Intercompany Loan in conjunction with the closing of the Contingent Terphane Sale. 8. RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS Tredegar sponsored a noncontributory defined benefit (pension) plan covering certain current and former U.S. employees. The plan for salaried and hourly employees was based on a formula using the participant’s years of service and compensation or using the participant’s years of service and a dollar amount. The plan is closed to new participants and pay for active plan participants for benefit calculations was frozen as of December 31, 2007. As of January 31, 2018, the plan no longer accrued benefits associated with crediting employees for service, thereby freezing all future benefits under the plan. On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan through lump sum distributions and the purchase of annuity contracts. In connection therewith, on February 9, 2022, the Company contributed $ 50 million to the pension plan. During the third quarter of 2023, the Company remeasured the pension plan, which resulted in a pre-tax pension settlement loss in the consolidated results of operation of $ 25.6 million. The remeasurement of the pension benefit obligation and plan assets was triggered by $ 64.5 million of lump sum distributions from the pension plan assets which exceeded the pension plan's service and interest cost. On September 27, 2023, the Company borrowed $ 30 million under the Prior Credit Agreement in anticipation of the final funding expected for terminating its defined benefit pension plan obligation. On October 31, 2023, the Company used this cash to contribute $ 27.7 million to fully fund the pension plan with the amount necessary to purchase from Massachusetts Mutual Life Insurance Company a nonparticipating single premium group annuity contract for $ 157.5 million. On November 3, 2023, the pension plan termination and settlement process was completed, and the Company’s relevant pension plan obligation was transferred to Massachusetts Mutual Life Insurance Company. This completed the pension plan termination process that began in February 2022. As a result of the routine administrative process to transition the pension plan, the Company recognized a $ 2.0 million charge to adjust the initial purchase price of the nonparticipating single premium group annuity contract. During the fourth quarter of 2023, the Company recognized a pre-tax pension settlement loss of $ 66.7 million. Tredegar also has a non-qualified supplemental pension plan covering certain employees. Effective December 31, 2005, further participation in this plan was terminated and benefit accruals for existing participants were frozen. The plan was designed to restore all or a part of the pension benefits that would have been payable to designated participants from the principal pension plans if it were not for limitations imposed by income tax regulations. The projected benefit obligation relating to this unfunded plan was $ 1.6 million and $ 1.7 million at December 31, 2023 and December 31, 2022, respectively. Pension expense recognized for this plan was $ 0.1 million in 2023, 2022 and 2021. This information has been included in the pension benefit tables below. In addition to providing pension benefits, the Company provides postretirement life insurance and health care benefits for certain groups of employees. Tredegar and retirees share in the cost of postretirement health care benefits, with employees hired on or before January 1, 1993, receiving a fixed subsidy to cover a portion of their health care premiums. The Company eliminated prescription drug coverage for Medicare-eligible retirees as of January 1, 2006. Consequently, Tredegar is not eligible for any federal subsidies. 57 The following tables reconcile the changes in benefit obligations and plan assets in 2023 and 2022, and reconcile the funded status to prepaid or accrued cost at December 31, 2023 and 2022: Pension Benefits Other Post- Retirement Benefits (In thousands) 2023 2022 2023 2022 Change in benefit obligation: Benefit obligation, beginning of year $ 248,114 $ 316,169 $ 5,726 $ 7,370 Service cost — — 10 18 Interest cost 9,623 8,945 288 207 Effect of actuarial (gains) losses related to the following: Discount rate change ( 10,751 ) ( 61,519 ) 99 ( 1,483 ) Other ( 6,459 ) 1,513 12 90 Plan participant contributions — — 490 554 Benefits paid ( 16,957 ) ( 16,994 ) ( 913 ) ( 1,030 ) Settlement payments and annuity purchase ( 221,970 ) — — — Benefit obligation, end of year $ 1,600 $ 248,114 $ 5,712 $ 5,726 Change in plan assets: Plan assets at fair value, beginning of year $ 218,119 $ 244,612 $ — $ — Actual return on plan assets ( 7,053 ) ( 59,683 ) — — Employer contributions 27,861 50,184 423 476 Plan participant contributions — — 490 554 Benefits paid ( 16,957 ) ( 16,994 ) ( 913 ) ( 1,030 ) Settlement payments and annuity purchase ( 221,970 ) — — — Plan assets at fair value, end of year $ — $ 218,119 $ — $ — Funded status of the plans $ ( 1,600 ) $ ( 29,995 ) $ ( 5,712 ) $ ( 5,726 ) Amounts recognized in the consolidated balance sheets: Accrued expenses (current) $ 180 $ 180 $ 489 $ 489 Pension and other postretirement benefit obligations, net 1,420 29,815 5,223 5,237 Net amount recognized $ 1,600 $ 29,995 $ 5,712 $ 5,726 58 The following table sets forth the assumptions used in accounting for the pension and other post-retirement benefits, and the components of net periodic benefit cost: Pension Benefits Other Post- Retirement Benefits (In thousands, except percentages) 2023 2022 2021 2023 2022 2021 Weighted-average assumptions used to determine benefit obligations: Discount rate 4.89 % 5.07 % 2.90 % 4.98 % 5.17 % 2.86 % Expected long-term return on plan assets n/a 4.99 % 3.05 % n/a n/a n/a Weighted-average assumptions used to determine net periodic benefit cost: Discount rate (a) 5.07 %/ 5.37 % 2.90 % 2.57 % 5.17 % 2.86 % 2.54 % Expected long-term return on plan assets n/a 3.05 % 5.00 % n/a n/a n/a Components of net periodic benefit cost: Service cost $ — $ — $ — $ 10 $ 18 $ 21 Interest cost 9,623 8,945 8,398 288 207 195 Expected return on plan assets ( 8,109 ) ( 8,174 ) ( 11,316 ) — — — Amortization of prior service costs and gains or losses 9,245 13,746 17,003 ( 213 ) ( 140 ) ( 141 ) Net periodic benefit cost $ 10,759 $ 14,517 $ 14,085 $ 85 $ 85 $ 75 Pension settlement loss 92,291 — — — — — Total benefit cost $ 103,050 $ 14,517 $ 14,085 $ 85 $ 85 $ 75 (a) Prior to the pension lump sum distributions in August 2023, a discount rate of 5.07% was used to determine the net periodic benefit cost. Subsequent to August 2023, a discount rate of 5.37% was used to determine the net periodic benefit cost until the Company purchased a nonparticipating single premium group annuity contract in October 2023. Net periodic benefit cost is determined using assumptions at the beginning of each year. Funded status is determined using assumptions at the end of each year. The amount of the accumulated benefit obligation is the same as the projected benefit obligation. At December 31, 2023, the effect of a 1 % change in the health care cost trend rate assumptions would not impact the post-retirement obligation. Expected benefit payments over the next five years and in the aggregate for 2028—2032 are as follows: (In thousands) Pension Benefits Other Post- Retirement Benefits 2024 $ 180 $ 481 2025 172 470 2026 165 456 2027 157 445 2028 148 433 2028—2032 620 1,998 The pre-tax amounts recorded in 2023, 2022 and 2021 in accumulated other comprehensive income (loss) consist of: Pension Benefits Other Post-Retirement Benefits (In thousands) 2023 2022 2021 2023 2022 2021 Net actuarial (gain) loss $ 415 $ 103,998 $ 109,893 $ ( 1,250 ) $ ( 1,574 ) $ ( 320 ) The amounts in accumulated other comprehensive income, before related deferred income taxes, which are expected to be recognized as components of net periodic cost during 2024 are approximately $ 0.1 million of benefit for other post-retirement plans. 59 There were no plan assets as of December 31, 2023. The percentage composition of assets held by the pension plan at December 31, 2022 was as follows: % Composition of Plan Assets at December 31, 2022 Pension plan: Fixed income mutual fund 13.9 % Private equity and hedge funds 4.8 Collective investment trust 69.9 Cash and cash equivalents 11.4 Total 100.0 % Following the announcement to terminate and settle the pension plan in 2022, the Company contributed $ 50 million to the pension plan and implemented (through consultation with its investment advisors) a liability-matching bond portfolio investment strategy (including a derivative overlay) that hedged the estimated settlement funding gap, which was approximately $ 24 million (before plan administration costs) at that time. The overall objective of this hedging program was to minimize the volatility of the estimated settlement funding gap such that, as applicable interest rates moved up or down causing a decrease or increase in the estimated value of the settlement liability, the value of the matching bond portfolio and derivative overlay decreased or increased by a similar amount. Accordingly, the expected long-term rate return of 3.05% used in 2022 and 4.99% used in 2023 contemplated the liability-driven investment strategy. A lower expected return on plan assets increased the amount of expense and vice versa. Decreases in the level of actual plan assets would also serve to increase the amount of pension expense. The total return on plan assets (net of fees and plan expenses), which was primarily affected by the change in fair value of plan assets, current year contributions and current year payments to participants, was approximately negative 15.1 % in 2022 and positive 10.4 % in 2021. Estimates of the fair value of assets held by the Company’s pension plan were provided by unaffiliated third parties. Investments in collective investment trusts, private equity, hedge funds and certain international equity securities were measured at net asset value, which was a practical expedient for measuring fair value. These assets were therefore excluded from the fair value hierarchy for each of the year presented. At December 31, 2022, the pension plan assets are categorized by level within the fair value measurement hierarchy as follows: (In thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balances at December 31, 2022 Cash and cash equivalents (a) $ 24,796 $ 24,796 $ — $ — Fixed income mutual fund 30,284 30,284 — — Private equity and hedge funds (b) 10,250 — — 10,250 Total plan assets at fair value $ 65,330 $ 55,080 $ — $ 10,250 Investments measured at net asset value: Collective investment trust (c) 152,389 Private equity and hedge funds 141 Total investments measured at net asset value $ 152,530 Securities sold and interest receivable 259 Total plan assets, December 31, 2022 $ 218,119 (a) This category represents investments in cash and cash equivalents, which includes: 1.) cash held in the plan used for investments in U.S. Treasury futures which were entered into to minimize the volatility of the estimated settlement funding gap; and 2.) short term money market fund in which the amortized cost approximates fair value. These investments were highly liquid and therefore were classified as Level 1 securities. (b) Represents the estimated fair market value of the Company’s ownership in private equity and hedge funds which were probable of being sold for an amount different from the net asset value per share in connection with the expected termination of the pension plan. (c) The collective investment trust contains liability hedging fixed income investments and were valued at the net asset value of the collective investment trust. The net asset value was used as a practical expedient to estimate fair value. The net asset value was based on the fair value of the underlying investments held by the fund less its liabilities. (d) Represents investments in certain commodity funds measured using quoted market prices. 60 9. OTHER INCOME (EXPENSE), NET Other income (expense), net consists of the following: (In thousands) 2023 2022 2021 Gain on investment in kaléo (a) $ 262 $ 1,406 $ 12,780 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 COVID-19-related expenses (b) ( 9 ) ( 350 ) ( 624 ) Group annuity contract premium expense (c) ( 2,000 ) — — Other ( 400 ) ( 47 ) ( 377 ) Total $ ( 2,147 ) $ 1,009 $ 20,265 (a) In January 2023 and May 2022, additional cash consideration of $ 0.3 million and $ 1.4 million, respectively was received related to customary post-closing adjustments. The gain in 2021 includes a $ 0.3 million dividend received from kaléo in the first quarter of 2021. (b) Costs associated with operating under COVID-19 conditions include employee overtime expenses associated with absenteeism, personal protective equipment supplies and facility maintenance. (c) See Note 8 for more information. On December 27, 2021, the Company completed the sale of its investment interests in kaleo, Inc. (“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. 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, that included applicable interest, which the Company applied to required Brazilian federal tax payments during 2021. The pre-tax gain was recorded in “Other income (expense), net” in the consolidated statements of income. 10. DERIVATIVES Tredegar uses derivative financial instruments for the purpose of hedging margin exposure from fixed-price forward sales contracts in Aluminum Extrusions and exposure from currency volatility that exist as part of ongoing business operations (primarily in Flexible Packaging Films). These derivative financial instruments are designated as and qualify as cash flow hedges and are recognized in the consolidated balance sheet at fair value. The fair value of derivative instruments recorded on the consolidated balance sheets is based upon Level 2 inputs. If individual derivative instruments with the same counterparty can be settled on a net basis, the Company records the corresponding derivative fair values as a net asset or net liability. In the normal course of business, Aluminum Extrusions enters into fixed-price forward sales contracts with certain customers for the future sale of fixed quantities of aluminum extrusions at scheduled intervals. 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, and the notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $ 7.7 million ( 5.6 million pounds of aluminum) at December 31, 2023 and $ 30.7 million ( 20.3 million pounds of aluminum) at December 31, 2022. The table below summarizes the location and gross amounts of aluminum derivative contract fair values (Level 2) in the consolidated balance sheets as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 (In thousands) Balance Sheet Account Fair Value Balance Sheet Account Fair Value Derivatives Designated as Hedging Instruments Asset derivatives: Aluminum futures contracts Prepaid expenses & other $ — Prepaid expenses & other $ 48 Liability derivatives: Aluminum futures contracts Accrued expenses ( 483 ) Accrued expenses ( 3,260 ) Aluminum futures contracts Other non-current liabilities ( 9 ) Other non-current liabilities ( 369 ) Net asset (liability) $ ( 492 ) $ ( 3,581 ) 61 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. Dollar. The Company estimates that the net mismatch translation exposure for the 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 is annual net costs of R$ 139 million Brazilian Real ("R$"). Terphane Ltda. has the following outstanding foreign exchange average forward rate contracts to purchase Brazilian Real and sell U.S. Dollars: USD Notional Amount (000s) Average Forward Rate Contracted on USD/BRL R$ Equivalent Amount (000s) Applicable Month Estimated % of Terphane Ltda. R$ Operating Cost Exposure Hedged $ 1,784 5.2993 R$ 9,454 Jan-24 82 % $ 1,766 5.3188 R$ 9,393 Feb-24 81 % $ 1,781 5.3346 R$ 9,501 Mar-24 82 % $ 1,827 5.3373 R$ 9,751 Apr-24 84 % $ 1,798 5.3588 R$ 9,635 May-24 83 % $ 1,812 5.3708 R$ 9,732 Jun-24 84 % $ 1,804 5.3848 R$ 9,714 Jul-24 84 % $ 1,806 5.4014 R$ 9,755 Aug-24 84 % $ 1,857 5.4107 R$ 10,048 Sep-24 87 % $ 1,851 5.4225 R$ 10,037 Oct-24 87 % $ 1,837 5.4403 R$ 9,994 Nov-24 86 % $ 1,801 5.4580 R$ 9,830 Dec-24 85 % $ 21,724 5.3786 R$ 116,844 84 % These foreign currency exchange contracts have been designated and qualify as cash flow hedges of Terphane Ltda.’s forecasted sales to customers quoted or priced in U.S. Dollars over that period. By changing the currency risk associated with these U.S. 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 consolidated statements of income. The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the consolidated balance sheets as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 (In thousands) Balance Sheet Account Fair Value Balance Sheet Account Fair Value Derivatives Designated as Hedging Instruments Asset derivatives: Foreign currency forward contracts Prepaid expenses and other $ 2,050 Prepaid expenses and other $ 781 Foreign currency forward contracts Other non-current assets 146 Other non-current assets 33 Liability derivatives: Foreign currency forward contracts Other non-current liabilities — Other non-current liabilities ( 3 ) Net asset (liability) $ 2,196 $ 811 These derivative contracts involve elements of market risk that are not reflected on the consolidated balance sheet, including the risk of dealing with counterparties and their ability to meet the terms of the contracts. The counterparties to any forward purchase commitments are major aluminum brokers and suppliers, and the counterparties to any aluminum futures contracts are major financial institutions. Fixed-price forward sales contracts are only made available to the best and most creditworthy customers. The counterparties to the Company’s foreign currency cash flow hedge contracts are major financial institutions. 62 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 years ended December 31, 2023, 2022, and 2021 is summarized in the tables below: (In thousands) Cash Flow Derivative Hedges Aluminum Futures Contracts Years Ended December 31, 2023 2022 2021 Amount of pre-tax gain (loss) recognized in other comprehensive income $ 7,598 $ ( 4,525 ) $ 6,215 Location of gain (loss) reclassified from accumulated other comprehensive income into net income (effective portion) Cost of goods sold Cost of goods sold Cost of goods sold Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income to net income (effective portion) $ 4,508 $ 1,022 $ 5,787 (In thousands) Cash Flow Derivative Hedges Foreign Currency Forward Contracts Years Ended December 31, 2023 2022 2021 Amount of pre-tax gain (loss) recognized in other comprehensive income $ — $ 4,196 $ — $ 3,269 $ — $ ( 2,415 ) Location of gain (loss) reclassified from accumulated other comprehensive income into net income (effective portion) Cost of goods sold Selling, general & admin 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 to net income (effective portion) $ 61 $ 3,011 $ 61 $ 1,378 $ 63 $ ( 337 ) As of December 31, 2023, the Company expects $ 0.8 million of unrealized after-tax net gains on aluminum and foreign currency derivative contracts reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months. For the years ended December 31, 2023, 2022 and 2021, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material. 11. STOCK OPTION AND STOCK AWARD PLANS As of December 31, 2023, the Company had one stock-based compensation plan that permits the grants of stock options, stock appreciation rights (“SARs”), stock, restricted stock, and stock unit awards. Awards available for grant totaled 342,709 shares at December 31, 2023. Stock options may be granted to purchase a specified number of shares of common stock at a price no lower than the fair market value on the date of grant and for a term not to exceed 10 years. Stock options granted by the Company in 2021 vest after 2 years and have a 7-year life or vest after 3 years and have a 5-year life. Stock options exercisable totaled 3,019,333 and 2,719,919 shares at December 31, 2023 and 2022, respectively. A summary of stock options outstanding at December 31, 2023, 2022 and 2021, and changes during those years, is presented below: Option Exercise Price/Share Number of Options Range Weighted Average Outstanding at January 1, 2021 2,827,438 $ 10.75 to $ 22.49 $ 13.55 Granted 388,822 16.37 to 16.37 16.37 Forfeited and expired ( 22,611 ) 14.47 to 19.64 18.14 Exercised ( 67,705 ) 10.75 to 17.29 13.51 Outstanding at December 31, 2021 3,125,944 10.75 to 22.49 13.82 Forfeited and expired ( 17,203 ) 14.47 to 19.64 15.33 Outstanding at December 31, 2022 3,108,741 10.75 to 22.49 13.81 Forfeited and expired ( 89,408 ) 13.78 to 19.64 19.60 Outstanding at December 31, 2023 3,019,333 $ 10.75 to $ 22.49 $ 13.64 63 No options were granted in 2023 nor 2022. The assumptions used in the Black-Scholes options-pricing model for valuing Tredegar stock options originally granted in 2021, and the related estimated fair values at the date of grant, were as follows: 2021 Dividend yield 2.6 % Weighted average volatility percentage 48.3 % Weighted average risk-free interest rate 0.9 % Holding period (years) 5 Weighted average exercise price at date of grant (also weighted average market price at date of grant) $ 16.37 Estimated weighted average fair value of options per share at date of grant $ 5.57 Total estimated fair value of stock options granted (in thousands) $ 2,165 The dividend yield is the actual dividend yield on Tredegar’s common stock at the date of grant, which the Company believes is a reasonable estimate of the expected yield during the holding period. The expected volatility is based on the historical volatility of Tredegar’s common stock using a sequential period of historical data equal to the expected holding period of the option. The Company has no reason to believe that future volatility for this period is likely to differ from the past. The assumed risk-free interest rate is based on observed interest rates for U.S. Treasury debt securities appropriate for the expected holding period. The following table summarizes additional information about stock options outstanding and exercisable at December 31, 2023: Options Outstanding at December 31, 2023 Options Exercisable at December 31, 2023 Weighted Average Aggregate Intrinsic Value Aggregate Intrinsic Value Range of Exercise Prices Shares Remaining Contractual Life Exercise Price Shares Weighted Average Exercise Price $ 10.75 to $ 16.37 2,939,509 1.9 years $ 13.47 $ — 2,939,509 $ 13.47 $ — 17.29 to 25.94 79,824 0.2 years 19.90 — 79,824 19.90 — Total 3,019,333 1.9 years $ 13.64 $ — 3,019,333 $ 13.64 $ — The total intrinsic value of stock options exercised was $ 0.2 million in 2021. There were no stock options exercised in 2023 and 2022. The grant-date fair value of stock option-based awards vested in 2023, 2022 and 2021 was $ 2.2 million, $ 5.4 million, and $ 3.5 million, respectively. As of December 31, 2023, there was no unrecognized compensation cost related to stock option-based awards. 64 Restricted stock grants ordinarily vest three years from the date of grant based upon continued employment. The fair value of restricted stock awards is estimated as of the grant date using the closing stock price on that date. Stock unit awards vest upon the achievement of certain performance targets. The following table summarizes additional information about unvested restricted stock outstanding at December 31, 2023, 2022 and 2021: Unvested Restricted Stock Maximum Unvested Restricted Stock Units Issuable Upon Satisfaction of Certain Performance Criteria Number of Shares Weighted Avg. Grant Date Fair Value/Share Grant Date Fair Value (In thousands) Number of Shares Weighted Avg. Grant Date Fair Value/Share Grant Date Fair Value (In thousands) Outstanding at January 1, 2021 234,979 $ 16.68 $ 3,919 112,502 $ 21.82 $ 2,455 Granted 200,073 15.63 3,127 14,669 15.24 224 Vested ( 87,636 ) 15.78 ( 1,383 ) ( 73,930 ) 17.17 ( 1,269 ) Forfeited ( 11,616 ) 16.38 ( 190 ) ( 2,523 ) 17.63 ( 44 ) Outstanding at December 31, 2021 335,800 16.30 5,473 50,718 17.63 1,366 Granted 301,969 11.88 3,587 — — — Vested ( 144,317 ) 15.10 ( 2,179 ) — — — Forfeited ( 18,474 ) 14.94 ( 276 ) ( 50,718 ) 17.63 1,366 Outstanding at December 31, 2022 474,978 13.82 6,564 — — — Granted 454,623 7.67 3,487 — — — Vested ( 167,077 ) 11.29 ( 1,886 ) — — — Forfeited ( 26,445 ) 11.60 ( 307 ) — — — Outstanding at December 31, 2023 736,079 $ 10.68 $ 7,861 — $ — $ — As of December 31, 2023, the unrecognized compensation cost related to non-vested restricted stock awards was $ 3.6 million. This cost is expected to be recognized over the remaining weighted average period of 1.9 years. SARs granted by the Company in 2021 vest after 2 years and have a 7-year life. There were no SARs granted in 2023 or 2022. SARs may be settled in cash upon exercise and therefore are classified as liabilities and included in accrued expenses in the consolidated balance sheet. The fair value of these liability awards is remeasured at each reporting period until the date of settlement. Increases and decreases in stock-based compensation expense are recognized over the vesting period, or immediately, for vested awards. A summary of SARs outstanding at December 31, 2023, 2022 and 2021, and changes during those years, is presented below: Exercise Price/Share Number of SARs Range Weighted Average Outstanding at January 1, 2021 376,440 $ 10.75 to $ 19.64 $ 11.64 Granted 164,464 16.37 to 16.37 16.37 Forfeited and expired ( 10,043 ) 10.75 to 16.37 13.01 Exercised ( 9,260 ) 10.75 to 15.25 13.87 Outstanding at December 31, 2021 521,601 10.75 to 16.37 13.55 Forfeited and expired ( 22,914 ) 10.75 to 16.37 14.83 Outstanding at December 31, 2022 498,687 10.75 to 16.37 13.49 Forfeited and expired ( 53,969 ) 10.75 to 16.37 12.78 Outstanding at December 31, 2023 444,718 $ 10.75 to $ 16.37 $ 13.57 The grant-date fair value of SARs awards vested in 2022 and 2021 was $ 0.5 million and $ 0.1 million, respectively. The grant-date fair value of SARs awards vested in 2023 was immaterial. As of December 31, 2023, there was no unrecognized compensation cost related to SARs . 65 12. INCOME TAXES Income (loss) before income taxes and income tax expense (benefit) are as follows: (In thousands) 2023 2022 2021 Income (loss) before income taxes: Domestic $ ( 175,510 ) $ 3,259 $ 22,774 Foreign 15,480 29,585 44,336 Total $ ( 160,030 ) $ 32,844 $ 67,110 Current income tax expense (benefit): Federal $ 19 $ 2 $ 1,232 State — 772 764 Foreign 1,954 3,071 13,521 Total 1,973 3,845 15,517 Deferred income tax expense (benefit): Federal ( 57,220 ) 24 ( 7,862 ) State ( 280 ) ( 537 ) 125 Foreign 1,402 1,057 1,504 Total ( 56,098 ) 544 ( 6,233 ) Total income tax expense (benefit) $ ( 54,125 ) $ 4,389 $ 9,284 The significant differences between the U.S. federal statutory rate and the effective income tax rate are as follows: 2023 2022 2021 (In thousands, except percentages) Amount % Amount % Amount % Income tax expense (benefit) at federal statutory rate $ ( 33,622 ) 21.0 $ 6,882 21.0 $ 14,116 21.0 Stranded taxes released with termination of pension ( 21,912 ) 13.7 — — — — Changes in estimates related to prior year tax provision ( 1,322 ) 0.8 ( 175 ) ( 0.5 ) ( 383 ) ( 0.6 ) Brazilian tax incentive ( 876 ) 0.5 ( 3,873 ) ( 11.8 ) ( 7,019 ) ( 10.4 ) Research and development tax credit ( 766 ) 0.5 ( 1,489 ) ( 4.5 ) ( 928 ) ( 1.4 ) Tax on Prodepe tax incentive ( 488 ) 0.3 ( 1,024 ) ( 3.1 ) 2,858 4.3 State taxes, net of federal income tax benefit ( 437 ) 0.3 48 0.1 933 1.4 Foreign currency translation variation on intercompany loans — — — — 1,374 2.0 Dividend received deduction net of foreign withholding tax — — — — ( 109 ) ( 0.2 ) Foreign derived intangible income deduction — — ( 763 ) ( 2.3 ) — — Tax contingency accruals and tax settlements 1 — 88 0.3 202 0.3 Changes in federal valuation allowance 237 ( 0.1 ) — — ( 5,415 ) ( 8.1 ) Non-deductible other 594 ( 0.4 ) 381 1.2 1,053 1.6 Foreign rate differences 1,746 ( 1.1 ) 2,924 8.9 8,269 12.3 U.S. tax on foreign branch income 2,720 ( 1.7 ) 1,390 4.1 ( 5,667 ) ( 8.4 ) Income tax expense (benefit) at effective income tax rate $ ( 54,125 ) 33.8 $ 4,389 13.4 $ 9,284 13.8 Provision (benefit) for income taxes for the year ended December 31, 2023 was $( 54.1 ) million compared to $ 4.4 million for the year ended December 31, 2022. The effective tax rates for the years ended December 31, 2023 and 2022 were 33.8 % and 13.4 %, respectively. The change in effective tax rate is primarily attributed to tax benefits previously recorded in other comprehensive income (loss) that were released as a result of the pension plan termination, partially offset by a reduction in Brazilian tax incentives as a percentage of income. The stranded taxes released with the termination of the pension plan represent the effect of the change in federal and state tax rates on pension-related deferred tax items initially recorded in other comprehensive income. The related stranded taxes were released in full in 2023. The effective tax rate in 2022 was impacted by a large discrete benefit recorded in the first quarter of 2022, resulting from the implementation of new U.S. tax regulations associated with foreign tax credits published by the U.S. Treasury and Internal Revenue Service (“IRS”) on January 4, 2022. These regulations overhauled various components of the foreign tax credit regime including the determination of creditable foreign taxes and limit the amount of foreign taxes that are creditable against U.S. income taxes. As the result of these regulations, future Brazilian income tax under Brazil tax law in place at that time 66 would have been deductible, but not creditable, in the U.S. The accounting rules require a reduction of the U.S. deferred tax liability previously established related to anticipated future income from Brazil. The IRS released guidance in 2023 that provides temporary relief for tax years after 2021 from the regulations published by the U.S. Treasury and Internal Revenue Service on January 4, 2022. As a result of the IRS guidance released in 2023, the reduction in the first quarter of 2022 of the U.S. deferred tax liability previously established related to anticipated future income from Brazil was reversed in 2023. The effective tax rate in 2021 was impacted by the strong earnings of Terphane Ltda, which are included in Tredegar’s U.S. consolidated tax return and, the tax impact of the local statutory tax rates of Tredegar’s foreign subsidiaries being higher than the current U.S. tax rate of 21%, the benefit of tax incentives in Brazil and the release of the valuation allowance for capital loss carryforwards. Tredegar accrues U.S. federal income taxes on unremitted earnings of all foreign subsidiaries where required. However; Tredegar will only record U.S. federal income taxes on unremitted earnings of its foreign subsidiaries where Tredegar cannot take steps to eliminate any potential tax on future distributions from its foreign subsidiaries. Because of the accumulation of significant losses related to foreign currency translations at Terphane Ltda., there were no deferred income tax liabilities associated with the U.S. federal income taxes and foreign withholding taxes on Terphane Ltda.’s undistributed earnings as of December 31, 2023 and 2022. 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’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 levied on the operating profit of its products. These incentives produce a current tax rate of 15.25 % for Terphane ( 6.25 % of income tax and 9.0 % social contribution on income). The incentives were originally granted for a 10-year period commencing January 1, 2015 and expiring at the end of 2024. Terphane Brazil has been granted an additional three years of tax incentives through the end of 2027. The benefit from the tax incentives was $ 0.9 million, $ 3.9 million and $ 7.0 million in 2023, 2022 and 2021, respectively. Deferred income tax assets and deferred income tax liabilities at December 31, 2023 and 2022, are as follows: (In thousands) 2023 2022 Deferred income tax assets: Pension and other postretirement obligations $ — $ 7,535 Employee benefits 5,821 7,558 Basis difference in capital assets 2,131 2,098 Inventory 2,643 3,952 Asset write-offs, divestitures and environmental accruals 1,025 1,075 U.S. federal and state NOL and credit carryforwards 33,247 24,914 Capitalized R&D expenditures 6,543 4,874 Other 2,364 1,220 Lease liabilities 2,711 3,328 Interest expense limitation 2,592 — Foreign currency translation gain adjustment 591 1,224 Deferred income tax assets before valuation allowance 59,668 57,778 Less: Valuation allowance 15,078 13,807 Total deferred income tax assets 44,590 43,971 Deferred income tax liabilities: Goodwill and identifiable intangibles $ 3,392 $ 10,533 Property, plant and equipment 10,330 14,950 Foregone tax credits on foreign branch income 1,880 719 Right-of-use leased assets 2,409 3,147 Other 1,545 722 Total deferred income tax liabilities 19,556 30,071 Net deferred income tax assets (liabilities) $ 25,034 $ 13,900 Amounts recognized in the consolidated balance sheets: Deferred income tax assets (noncurrent) $ 25,034 $ 13,900 Deferred income tax liabilities (noncurrent) — — Net deferred income tax assets (liabilities) $ 25,034 $ 13,900 67 Except as noted below, the Company believes that it is more likely than not that future taxable income will exceed future tax-deductible amounts thereby resulting in the realization of deferred income tax assets the Company had U.S. federal and state tax credits of $ 16.7 million, net operating loss carryforwards of $ 16.5 million and a deferred interest limitation of $ 2.6 million at December 31, 2023. The Company had U.S. federal and state tax credits of $ 15.3 million and net operating loss carryforwards of $ 9.6 million at December 31, 2022. The U.S. federal net operating loss and deferred interest limitation can be carried forward indefinitely. The U.S. federal foreign tax credits will expire between 2027-2033 and the U.S. federal research and development tax credits will expire by 2044. The U.S. state carryforwards expire at different points over the next 20 years. Valuation allowances of $ 12.9 million, $ 10.3 million and $ 9.4 million at December 31, 2023, 2022 and 2021, respectively, are recorded against the tax benefit on U.S. federal and state tax credits and net operating loss carryforwards generated by domestic subsidiaries that may not be recoverable in the carryforward period. The valuation allowance for unrealized capital losses from investments and other related items was $ 0.7 million at December 31, 2022 and 2021. The amount of the deferred income tax asset considered realizable, however, could be adjusted in the near term if estimates of the fair value of certain investments during the carry-forward period change. As circumstances and events warrant, allowances will be reversed when it is more likely than not that future taxable income will exceed deductible amounts, thereby resulting in the realization of deferred income tax assets. Valuation allowances of $ 2.2 million, $ 2.8 million and $ 2.5 million at December 31, 2023, 2022 and 2021, respectively, were recorded against certain deferred state tax assets. A reconciliation of the Company’s unrecognized uncertain tax positions since January 1, 2021, is shown below: Years Ended December 31, (In thousands) 2023 2022 2021 Balance at beginning of period $ 628 $ 648 $ 628 Increase (decrease) due to tax positions taken in: Current period 25 2 — Prior period 23 44 40 Reductions due to lapse of statute of limitations ( 17 ) ( 66 ) ( 20 ) Balance at end of period $ 659 $ 628 $ 648 Additional information related to unrecognized uncertain tax positions since January 1, 2021 is summarized below: Years Ended December 31, (In thousands) 2023 2022 2021 Gross unrecognized tax benefits on uncertain tax positions (reflected in current income tax, other noncurrent liability accounts, or deferred tax assets in the balance sheet) $ 659 $ 628 $ 648 Deferred income tax assets related to unrecognized tax benefits on uncertain tax positions (reflected in deferred income tax accounts in the balance sheet) 98 143 48 Net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized 757 771 696 Interest and penalties accrued on deductions taken relating to uncertain tax positions (approximately $ 20 , $ 16 and $ 26 reflected in income tax expense in the income statement in 2023, 2022 and 2021, respectively, with the balance shown in current income tax and other noncurrent liability accounts in the balance sheet) 169 149 133 Related deferred income tax assets recognized on interest and penalties ( 39 ) ( 34 ) ( 31 ) Interest and penalties accrued on uncertain tax positions net of related deferred income tax benefits, which would impact the effective tax rate if recognized 130 115 102 Total net unrecognized tax benefits on uncertain tax positions reflected in the balance sheet, which would impact the effective tax rate if recognized $ 887 $ 886 $ 798 Tredegar, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and jurisdictions outside the U.S. With few exceptions, Tredegar is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2020. The Company anticipates that it is reasonably possible that Federal and state income tax audits or statutes may settle or close within the next 12 months and are not expected to result in a material change in unrecognized tax positions, including any payments that may be made. 68 13. BUSINESS SEGMENTS The Company's business segments are Aluminum Extrusions, PE Films and Flexible Packaging Films. 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. PE Films produces surface protection films, polyethylene overwrap films and films for other markets. Flexible Packaging Films produces polyester 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. The Company’s reportable segments are based on its method of internal reporting, which is generally segregated by differences in products. Accounting standards for presentation of segments require an approach based on the way the Company organizes the segments for making operating decisions and how the chief operating decision maker (“CODM”) assesses performance. EBITDA from ongoing operations is the key profitability measure used by the CODM (Tredegar’s President and Chief Executive Officer) for purposes of assessing financial performance. The Company uses sales less freight (“net sales”) as its measure of revenues from external customers at the segment level. This measure is separately included in the financial information regularly provided to the CODM. Earnings before interest and taxes ("EBIT") from ongoing operations is a non-GAAP financial measure included in the reconciliation of segment financial information to consolidated results for the Company below. Information by business segment and geographic area for the last three years is provided in the segment tables below. There were no accounting transactions between segments and no allocations to segments. Net Sales (In thousands) 2023 2022 2021 Aluminum Extrusions $ 474,803 $ 637,872 $ 539,325 PE Films 76,763 97,571 118,920 Flexible Packaging Films 126,326 168,139 139,978 Total net sales 677,892 903,582 798,223 Add back freight 26,933 34,982 28,232 Sales as shown in consolidated statements of income (loss) $ 704,825 $ 938,564 $ 826,455 Refer to Notes to Financial Tables that follow these tables. 69 EBITDA from Ongoing Operations (In thousands) 2023 2022 2021 Aluminum Extrusions: Ongoing operations: EBITDA $ 37,976 $ 66,800 $ 55,948 Depreciation & amortization ( 17,927 ) ( 17,414 ) ( 16,272 ) EBIT 20,049 49,386 39,676 Plant shutdowns, asset impairments, restructurings and other (a) ( 3,557 ) ( 310 ) 3,237 PE Films: Ongoing operations: EBITDA 11,217 11,949 27,694 Depreciation & amortization ( 6,522 ) ( 6,280 ) ( 6,263 ) EBIT 4,695 5,669 21,431 Plant shutdowns, asset impairments, restructurings and other (a) ( 4,972 ) ( 646 ) ( 371 ) Goodwill impairment (34,891) — — Flexible Packaging Films: Ongoing operations: EBITDA 4,383 27,452 31,684 Depreciation & amortization ( 2,865 ) ( 2,444 ) ( 1,988 ) EBIT 1,518 25,008 29,696 Plant shutdowns, asset impairments, restructurings and other (a) ( 113 ) ( 91 ) 8,439 Total ( 17,271 ) 79,016 102,108 Interest income 522 57 73 Interest expense 11,607 4,990 3,386 Gain on investment in kaléo (a) 262 1,406 12,780 Stock option-based compensation expense 231 1,424 2,495 Pension settlement loss 92,291 — — Corporate expenses, net (a) 39,414 41,221 41,970 Income (loss) before income taxes ( 160,030 ) 32,844 67,110 Income tax expense (benefit) (a) ( 54,125 ) 4,389 9,284 Net income (loss) $ ( 105,905 ) $ 28,455 $ 57,826 Refer to Notes to Financial Tables that follow these tables. Identifiable Assets (In thousands) 2023 2022 Aluminum Extrusions $ 255,756 $ 293,308 PE Films 56,536 102,431 Flexible Packaging Films 84,062 103,448 Subtotal 396,354 499,187 General corporate 36,652 23,674 Cash, cash equivalents and restricted cash (b) 13,455 19,232 Total $ 446,461 $ 542,093 70 Depreciation and Amortization Capital Expenditures (In thousands) 2023 2022 2021 2023 2022 2021 Aluminum Extrusions $ 17,927 $ 17,414 $ 15,326 $ 20,339 $ 23,664 $ 18,914 PE Films 6,522 6,280 6,263 1,772 3,289 2,997 Flexible Packaging Films 2,865 2,444 1,988 4,323 8,151 5,603 Subtotal 27,314 26,138 23,577 26,434 35,104 27,514 General corporate (d) 369 264 207 12 1,771 ( 153 ) Total $ 27,683 $ 26,402 $ 23,784 $ 26,446 $ 36,875 $ 27,361 Net Sales by Geographic Area (c) (In thousands) 2023 2022 2021 United States $ 537,818 $ 717,049 $ 614,987 Exports from the United States to: Asia 26,239 41,995 59,242 Canada 15,597 15,264 17,776 Europe 1,905 3,885 4,489 Latin America 6,704 6,867 4,937 Operations outside the United States: Brazil 89,077 117,896 96,792 Asia 552 626 — Total $ 677,892 $ 903,582 $ 798,223 Identifiable Assets by Geographic Area (c) Property, Plant & Equipment, Net by Geographic Area (c) (In thousands) 2023 2022 2023 2022 United States $ 320,604 $ 413,512 $ 143,729 $ 146,437 Operations outside the United States: Brazil 65,495 72,725 28,121 25,385 China 10,255 12,950 9,361 11,903 General corporate 36,652 23,674 2,244 2,686 Cash, cash equivalents and restricted cash (b) 13,455 19,232 n/a n/a Total $ 446,461 $ 542,093 $ 183,455 $ 186,411 Refer to Notes to Financial Tables that follow these tables. 71 The Company’s facilities in Pottsville, PA (“PV”) and Guangzhou, China (“GZ”) have a tolling arrangement whereby certain surface protection films are manufactured in GZ for a fee with raw materials supplied from PV that are then shipped by GZ directly to customers principally in the Asian market but paid by customers directly to PV. 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 $ 15.9 million in 2023, $ 20.1 million in 2022 and $ 32.7 million in 2021. Net Sales by Product Group (In thousands) 2023 2022 2021 Aluminum Extrusions: Nonresidential building & construction $ 264,780 $ 338,981 $ 269,252 Consumer durables 38,897 62,541 53,578 Automotive 48,046 51,286 43,256 Machinery & equipment 43,759 63,326 42,721 Distribution 14,331 29,732 45,639 Residential building & construction 38,388 64,268 52,236 Electrical 26,602 27,738 32,643 Subtotal 474,803 637,872 539,325 PE Films: Surface protection films 47,463 68,140 88,436 Packaging 29,300 29,431 30,484 Subtotal 76,763 97,571 118,920 Flexible Packaging Films 126,326 168,139 139,978 Total $ 677,892 $ 903,582 $ 798,223 (a) See Notes 1, 5, 9 and 12 for more information on losses associated with plant shutdowns, asset impairments and restructurings, unusual items, gains or losses from sale of assets, gains or losses on an investment accounted for under the fair value method and other items. (b) Cash, cash equivalents and restricted cash includes funds held in locations outside the U.S. of $ 9.8 million and $ 10.3 million at December 31, 2023 and 2022, respectively. (c) Export sales relate mostly to PE Films. Operations in Brazil relate to Flexible Packaging Films. (d) Corporate depreciation and amortization are included in corporate expenses, net, on the EBITDA from ongoing operations table above. 14. SAVINGS PLAN Tredegar has a savings plan that allows eligible employees to voluntarily contribute a percentage of their compensation, up to IRS limitations. Charges recognized for the savings plan were $ 4.0 million in 2023, $ 3.9 million in 2022 and $ 3.3 million in 2021. The provisions of the savings plan provided the following benefits for salaried and certain hourly employees: • The Company makes matching contributions to the savings plan of $ 1 for every $ 1 an employee contributes per pay period up to a maximum of 5 % of eligible compensation. • The savings plan includes immediate vesting of matching contributions and automatic enrollment at 3 % of eligible compensation unless the employee opts out or elects a different percentage. The Company also has a non-qualified plan that restores matching benefits for employees suspended from the savings plan due to certain limitations imposed by income tax regulations (“restoration plan”). The Company’s liability under the restoration plan was $ 0.4 million at December 31, 2023 (consisting of 79,124 phantom shares of common stock) and $ 0.7 million at December 31, 2022 (consisting of 70,266 phantom shares of common stock) and valued at the closing market price on those dates. Charges recognized for the restoration plan were immaterial for the years 2023, 2022 and 2021. The Tredegar Corporation Benefits Plan Trust (the “Trust”) purchased 7,200 shares of the Company’s common stock in 1998 for $ 0.2 million and 46,671 shares of its common stock in 1997 for $ 1.0 million. There have been no shares purchased since 1998 except for re-invested dividends. The cost of the shares held by the Trust is shown as a reduction to shareholders’ equity in the consolidated balance sheets. 72 15. SUPPLY CHAIN FINANCING The Company has supply chain finance service agreements with third-party financial institutions to provide platforms that facilitate the ability of participating suppliers to finance payment obligations from the Company with the third-party financial institution. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers’ decisions to finance amounts under the supply chain finance agreements. As of December 31, 2023 and 2022, $ 15.8 million and $ 25.9 million, respectively, of the Company’s accounts payable were financed by participating suppliers through third-party financial institutions. A reconciliation of the beginning and ending balances of the supply chain financing for the year ended December 31, 2023 is as follows: (In thousands) 2023 Balance, beginning of year $ 25,927 New obligations entered 79,630 Less payments made ( 90,365 ) Foreign exchange 588 Balance, end of year $ 15,780 16. CONTINGENCIES Tredegar is involved in various stages of investigation and remediation relating to environmental matters at certain current and former plant locations. Where the Company has determined the nature and scope of any required environmental remediation activity, estimates of cleanup costs have been obtained and accrued. As efforts to maintain compliance with applicable environmental laws and regulations, additional contingencies may be identified continue. If additional contingencies are identified in the future, the Company’s practice is to determine at that time the nature and scope of those contingencies, obtain and accrue estimates of the cost of remediation, and perform remediation. While the Company believes it is currently adequately accrued for known environmental issues, it is possible that unexpected future costs for known or unknown environmental issues could have a material adverse effect on its financial condition, results of operations and cash flows at that time. The Company is involved in various other legal actions arising in the normal course of business. After taking into consideration the relevant information, the Company believes that it has sufficiently accrued for probable losses and that the actions will not have a material adverse effect on its financial position. From time to time, the Company enters into transactions with third parties in connection with the sale of assets or businesses in which it agrees to indemnify the buyers or third parties involved in the transaction, or in which the sellers or third parties involved in the transaction agree to indemnify Tredegar, for certain liabilities or risks related to the assets or business. Also, in the ordinary course of its business, the Company may enter into agreements with third parties for the sale of goods or services that may contain indemnification provisions. In the event that an indemnification claim is asserted, liability for indemnification would be subject to an assessment of the underlying facts and circumstances under the terms of the applicable agreement. For these reasons, Tredegar is unable to estimate the maximum amount of the potential future liability under the indemnity provisions of these agreements. The Company does, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and the amount is reasonably estimable. The Company discloses contingent liabilities if the probability of loss is reasonably possible and considered to be material. Item 16. FORM 10-K SUMMARY Not Applicable. 73 EXHIBIT INDEX 2.1 Purchase and Sale Agreement, dated as of September 1, 2023, by and among Packfilm US LLC, Film Trading Importacao e Representacao Ltda., Terphane LLC, Terphane Limitada, Tredegar Film Products (Latin America), Inc., Terphane Acquisition Corporation II, TAC Holdings, LLC, Tredegar Investments LLC, Tredegar Corporation and Oben Holding Group S.A.C. (filed as Exhibit 2.1 of Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on September 5, 2023, and incorporated herein by reference). 3.1 Amended and Restated Articles of Incorporation of Tredegar (filed as Exhibit 3.1 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) 3.1.1 Articles of Amendment to Amended and Restated Articles of Incorporation of Tredegar (filed as Exhibit 3.3 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) 3.1.2 Articles of Amendment to Amended and Restated Articles of Incorporation of Tredegar, as of May 24, 2013 (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on May 29, 2013 and incorporated herein by reference) 3.1.3 Articles of Amendment to Amended and Restated Articles of Incorporation of Tredegar, as of May 4, 2016 (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on May 6, 2016, and incorporated herein by reference) 3.2 Amended and Restated Bylaws of Tredegar (filed as Exhibit 3.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on August 7, 2023 , and incorporated herein by reference) 3.3 Amended and Restated Bylaws of Tredegar Corporation, as of August 4, 2023 (filed as Exhibit 3.1 of Tredegar's Current Report on Form 8-K (File No. 1-10258), filed on August 7, 2023, and incorporated herein by reference). 4.1 Description of Registered Securities (filed as Exhibit 4.1 to Tredegar’s Annual Report on Form 10-K (File No 1-10258) for the year ended December 31, 2019, and incorporated herein by reference) 10.1 Second Amended and Restated Credit Agreement, dated as of June 29, 2022, among Tredegar, as borrower, the lenders named therein, JPMorgan Chase Bank N.A., as administrative agent, Citizens Bank N.A and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S. Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 4.1 to Tredegar's Current Report on Form 8-K (File No. 1-10258), filed on June 30, 2022, and incorporated herein by reference) 10.1.1 Second Amended and Restated Guaranty, dated as of June 29, 2022, by and among the subsidiaries of Tredegar listed on the signature pages thereto in favor of JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Holders of Guaranteed Obligations (as defined therein) (filed as Exhibit 4.2 to Tredegar's Current Report on Form 8-K (File No. 1-10258), filed on June 30, 2022, and incorporated herein by reference) 10.1.2 Second Amended and Restated Pledge Agreement, dated as of June 29, 2022, by and among Tredegar and the subsidiaries of Tredegar listed on the signature pages thereto and JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Secured Parties (as defined therein) (filed as Exhibit 4.3 to Tredegar's Current Report on Form 8-K (File No. 1-10258), filed on June 30, 2022, and incorporated herein by reference) 10.1.3 Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of November 29, 2022, among Tredegar Corporation, as borrower, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A. and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S. Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 10.1 of Tredegar's Second Quarter 2023 Form 10-Q (File No. 1-10258), filed on August 9, 2023, and incorporated herein by reference). 10.1.4 Amendment No. 2 to Second Amended and Restated Credit Agreement, dated as of August 3, 2023, among Tredegar Corporation, as borrower, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A. and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S. Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto (filed as Exhibit 10.2 of Tredegar's Second Quarter 2023 Form 10-Q (File No. 1-10258), filed on August 9, 2023, and incorporated herein by reference). 10.1.5 Amendment No. 3, dated December 27, 2023, to the Second Amended and Restated Credit Agreement, dated June 29, 2022, by and among Tredegar Corporation, as borrower, certain of Tredegar Corporation’s material domestic subsidiaries, as guarantors, the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Citizens Bank, N.A. and PNC Bank, National Association, as co-syndication agents, and Bank of America, N.A., U.S. Bank National Association and Wells Fargo Bank, National Association, as co-documentation agents (filed as Exhibit 4.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on December 28, 2023, and incorporated herein by reference). 10.1.6 Third Amended and Restated Pledge and Security Agreement, dated as of December 27, 2023, by and among Tredegar Corporation and the subsidiaries of Tredegar Corporation listed on the signature pages thereto and JPMorgan Chase Bank, N.A., as administrative agent, for the ratable benefit of the Secured Parties (as defined therein) (filed as Exhibit 4.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on December 28, 2023, and incorporated herein by reference). 74 10.2 Reorganization and Distribution Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.1 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) *10.3 Employee Benefits Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.2 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) 10.4 Tax Sharing Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.3 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) 10.5 Indemnification Agreement, dated as of June 1, 1989, between Tredegar and Ethyl Corporation (filed as Exhibit 10.4 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) *10.6 Tredegar Industries, Inc. Retirement Benefit Restoration Plan (filed as Exhibit 10.7 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) *10.6.1 Amendment to the Tredegar Industries, Inc. Retirement Benefit Restoration Plan (filed as Exhibit 10.7.1 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2004, and incorporated herein by reference) *10.7 Tredegar Industries, Inc. Savings Plan Benefit Restoration Plan (filed as Exhibit 10.6 to Tredegar’s Annual Report on Form 10-K (File No. 1-10258) for the year ended December 31, 2013, and incorporated herein by reference) *10.7.1 Resolutions of the Executive Committee of the Board of Directors of Tredegar adopted on December 28, 2004 (effective as of December 31, 2004) amending the Tredegar Corporation Retirement Savings Plan Benefit Restoration Plan (filed as Exhibit 10.9.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on December 30, 2004, and incorporated herein by reference) *10.8 Tredegar 2004 Equity Incentive Plan as Amended and Restated Effective March 27, 2009 (filed as Annex 1 to Tredegar’s Definitive Proxy Statement on Schedule 14A (File No. 1-10258) filed on April 14, 2009 and incorporated herein by reference) *10.9 Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.3 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on February 27, 2013, and incorporated herein by reference) *10.10 Form of Notice of Stock Unit Award and Stock Unit Award Terms and Conditions (filed as Exhibit 10.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on March 1, 2016, and incorporated herein by reference) *10.11 Form of Notice of Stock Award and Stock Award Terms and Conditions (filed as Exhibit 10.2 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on March 1, 2016, and incorporated herein by reference) *10.12 Form of Notice of Stock Award and Stock Award Terms and Conditions (filed as Exhibit 10.18 to Tredegar’s Quarterly Report on Form 10-Q (File No. 1-10258) for the quarterly period ended March 31, 2020, and incorporated herein by reference) *10.13 Form of Notice of Stock Appreciation Right Grant and Stock Appreciation Right Terms and Conditions (filed as Exhibit 10.19 to Tredegar’s Quarterly Report on Form 10-Q (File No. 1-10258) for the quarterly period ended March 31, 2020, and incorporated herein by reference) *10.14 Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.20 to Tredegar’s Quarterly Report on Form 10-Q (File No. 1-10258) for the quarterly period ended March 31, 2020, and incorporated herein by reference) *10.15 Tredegar 2018 Equity Incentive Plan, as amended and restated (filed as Annex A to Tredegar’s Definitive Proxy Statement on Schedule 14A (File No. 1-10258) filed on March 25, 2021, and incorporated herein by reference) *10.16 Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.1 to Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on May 7, 2018, and incorporated herein by reference) *10.17 Form of Notice of Nonstatutory Stock Option Grant and Nonstatutory Stock Option Terms and Conditions (filed as Exhibit 10.3 to Tredegar Corporation’s Registration Statement on Form S-8 (Registration No. 333-230386), filed on March 19, 2019, and incorporated herein by reference) *10.18 Form of Executive Change-in-Control Severance Agreement (filed as Exhibit 10.1 of Tredegar’s Current Report on Form 8-K (File No. 1-10258), filed on October 4, 2023, and incorporated herein by reference). 10.19 Standard Buyout Commitment Agreement, dated October 31, 2023, by and between Tredegar Corporation and Massachusetts Mutual Life Insurance Company (filed as Exhibit 10.1 of Tredegar's Current Report on Form 8-K (File No. 1-10258), filed on November 6, 2023, and incorporated herein by reference). +21 Subsidiaries of Tredegar +23 Consent of KPMG LLP, Independent Registered Public Accounting Firm +31.1 Certification of President and Chief Executive Officer (Principal Executive Officer) of Tredegar, pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 75 +31.2 Certification of Vice President and Chief Financial Officer (Principal Financial Officer) of Tredegar, pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 +32.1 Certification of President and Chief Executive Officer (Principal Executive Officer) of Tredegar, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 +32.2 Certification of Vice President and Chief Financial Officer (Principal Financial Officer) of Tredegar, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 +97 Executive Incentive-based Compensation Recoupment Policy +101 XBRL Instance Document and Related Items +104 Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) * Denotes compensatory plans or arrangements or management contracts. + Filed herewith 76 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TREDEGAR CORPORATION (Registrant) Dated: March 15, 2024 By /s/ John M. Steitz John M. Steitz President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 15, 2024. Signature Title /s/ John M. Steitz President, Chief Executive Officer and Director (John M. Steitz) (Principal Executive Officer) /s/ D. Andrew Edwards Executive Vice President and Chief Financial Officer (D. Andrew Edwards) (Principal Financial Officer) /s/ Frasier W. Brickhouse, II Corporate Treasurer and Controller (Frasier W. Brickhouse, II) (Principal Accounting Officer) /s/ Gregory A. Pratt Chairman of the Board of Directors (Gregory A. Pratt) /s/ George C. Freeman, III Director (George C. Freeman, III) /s/ Kenneth R. Newsome Director (Kenneth R. Newsome) /s/ Thomas G. Snead, Jr. Director (Thomas G. Snead, Jr.) /s/ Carl E. Tack, III Director (Carl E. Tack, III) 77