What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-07 compared with 2024-05-09 · 175 added, 76 removed, 454 unchanged (36% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

March 31, December 31,

June 30, December 31,

Current assets:

29 unchanged sentences

Shareholders’ equity:

Common stock, no par value (authorized shares 150,000,000 , issued and outstanding 34,533,870 shares at March 31, 2024 and 34,408,638 shares at December 31, 2023)

Common stock, no par value (authorized shares 150,000,000 , issued and outstanding 34,484,893 shares at June 30, 2024 and 34,408,638 shares at December 31, 2023)

62,493 61,606

Common stock held in trust for savings restoration plan ( 118,543 shares at March 31, 2024 and 118,543 shares at December 31, 2023)

Common stock held in trust for savings restoration plan ( 118,543 shares at June 30, 2024 and December 31, 2023)

( 2,233 ) ( 2,233 )

10 unchanged sentences

(In Thousands, Except Per Share Data)

Three Months Ended March 31,

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

2024 2023 2024 2023

Revenues and other items:

11 unchanged sentences

Asset impairments and costs associated with exit and disposal activities, net of adjustments 80 — 587 69

Goodwill impairment — 15,413 — 15,413

Total 179,798 200,400 351,597 392,483

12 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Net income (loss) $ 8,792 $ ( 18,922 )

Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax expense of $ 221 in 2024 and net of tax expense of $ 436 in 2023)

Unrealized foreign currency translation adjustment (net of tax benefit of $ 691 in 2024 and net of tax expense of $ 179 in 2023)

( 5,288 ) 1,621

Derivative financial instruments adjustment (net of tax benefit of $ 253 in 2024 and net of tax expense of $ 500 in 2023)

Amortization of prior service costs and net gains or losses (net of tax benefit of $ 8 in 2024 and net of tax expense of $ 637 in 2023)

Other comprehensive income (loss) ( 6,177 ) 4,275

Comprehensive income (loss) $ 2,615 $ ( 14,647 )

Six Months Ended June 30,

Net income (loss) $ 12,080 $ ( 19,934 )

Other comprehensive income (loss):

Unrealized foreign currency translation adjustment (net of tax benefit of $ 470 in 2024 and net of tax expense of $ 615 in 2023)

( 7,236 ) 2,741

Derivative financial instruments adjustment (net of tax benefit of $ 393 in 2024 and net of tax expense of $ 1,336 in 2023)

( 1,365 ) 1,637

Amortization of prior service costs and net gains or losses (net of tax benefit of $ 16 in 2024 and net of tax expense of $ 1,274 in 2023)

5 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Reduction of right-of-use lease asset 1,178 1,075

Goodwill impairment — 15,413

Deferred income taxes 2,248 ( 3,731 )

21 unchanged sentences

Dividends paid — ( 8,884 )

Debt financing costs ( 587 ) —

Net cash provided by (used in) financing activities ( 4,909 ) ( 4,884 )

7 unchanged sentences

(In Thousands, Except Share and Per Share Data)

The following summarizes the changes in shareholders’ equity for the three month period ended March 31, 2024:

The following summarizes the changes in shareholders’ equity for the three month period ended June 30, 2024:

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

Balance April 1, 2024

$ 61,959 $ 181,265 $ ( 2,233 ) $ ( 84,176 ) $ 156,815

Net income (loss) — 8,792 — — 8,792

Foreign currency translation adjustment — — — ( 5,288 ) ( 5,288 )

Derivative financial instruments adjustment — — — ( 861 ) ( 861 )

Amortization of prior service costs and net gains or losses — — — ( 28 ) ( 28 )

Stock-based compensation expense 534 — — — 534

Balance June 30, 2024

$ 62,493 $ 190,057 $ ( 2,233 ) $ ( 90,353 ) $ 159,964

The following summarizes the changes in shareholders’ equity for the six month period ended June 30, 2024:

Stock Retained

Earnings Trust for

Plan Accumulated Other

Comprehensive Income (Loss) Total

Shareholders’

Balance January 1, 2024

5 unchanged sentences

Stock-based compensation expense 1,113 — — — 1,113

Repurchase of employee common stock for tax

withholdings (226) — — — (226)

Balance March 31, 2024

Repurchase of employee common stock for tax withholdings ( 226 ) — — — ( 226 )

Balance June 30, 2024

$ 62,493 $ 190,057 $ ( 2,233 ) $ ( 90,353 ) $ 159,964

The following summarizes the changes in shareholders’ equity for the three month period ended March 31, 2023:

The following summarizes the changes in shareholders’ equity for the three month period ended June 30, 2023:

Stock Retained

3 unchanged sentences

Shareholders’

Balance at April 1, 2023 $ 59,423 $ 287,308 $ ( 2,203 ) $ ( 142,919 ) $ 201,609

Net income (loss) — ( 18,922 ) — — ( 18,922 )

Foreign currency translation adjustment — — — 1,621 1,621

Derivative financial instruments adjustment — — — 368 368

Amortization of prior service costs and net gains or losses — — — 2,286 2,286

Cash dividends declared (0.13 per share)

— ( 4,468 ) — — ( 4,468 )

Stock-based compensation expense 655 — — — 655

Tredegar common stock purchased by trust for savings restoration plan — 15 ( 15 ) — —

Balance at June 30, 2023 $ 60,078 $ 263,933 $ ( 2,218 ) $ ( 138,644 ) $ 183,149

The following summarizes the changes in shareholders’ equity for the six month period ended June 30, 2023:

Stock Retained

Earnings Trust for

Plan Accumulated Other

Comprehensive Income (Loss) Total

Shareholders’

Balance at January 1, 2023 $ 58,824 $ 292,721 $ ( 2,188 ) $ ( 147,595 ) $ 201,762

8 unchanged sentences

Tredegar common stock purchased by trust for savings restoration plan — 30 ( 30 ) — —

Balance at March 31, 2023 $ 59,423 $ 287,308 $ ( 2,203 ) $ ( 142,919 ) $ 201,609

Balance at June 30, 2023 $ 60,078 $ 263,933 $ ( 2,218 ) $ ( 138,644 ) $ 183,149

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

In the opinion of management, the accompanying condensed consolidated financial statements of Tredegar Corporation and its subsidiaries (“Tredegar,” “the Company,” “we,” “us” or “our”) contain all adjustments necessary to state fairly, in all material respects, Tredegar’s condensed consolidated financial position as of March 31, 2024, the condensed consolidated results of operations for the three months ended March 31, 2024 and 2023, the condensed consolidated cash flows for the three months ended March 31, 2024 and 2023, and the condensed consolidated changes in shareholders’ equity for the three months ended March 31, 2024 and 2023, in accordance with U.S.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In the opinion of management, the accompanying condensed consolidated financial statements of Tredegar Corporation and its subsidiaries (“Tredegar,” “the Company,” “we,” “us” or “our”) contain all adjustments necessary to state fairly, in all material respects, Tredegar’s condensed consolidated financial position as of June 30, 2024, the condensed consolidated results of operations for the three and six months ended June 30, 2024 and 2023, the condensed consolidated cash flows for the six months ended June 30, 2024 and 2023, and the condensed consolidated changes in shareholders’ equity for the six months ended June 30, 2024 and 2023, in accordance with U.S.

generally accepted accounting principles (“GAAP”).

1 unchanged sentence

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

As such, the fiscal first quarter for 2024 and 2023 for this segment references 13-week periods ended March 31, 2024 and March 26, 2023, respectively.

As such, the fiscal second quarter for 2024 and 2023 for this segment references 13-week periods ended June 30, 2024 and June 25, 2023, respectively.

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

2 unchanged sentences

These financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the 2023 Form 10-K.

The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the full year.

Sale of Flexible Packaging Films

2 unchanged sentences

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.

As part of the Brazilian merger review process regarding the sale of Terphane to Oben Group, on May 13, 2024, the General Superintendence of the Administrative Council for Economic Defense ("SG-CADE") issued a non-binding opinion ("SG Opinion") recommending the rejection of the transaction.

Following this first stage of the two-stage Brazilian merger review process for complex transactions, the case has been submitted to the CADE Tribunal, in accordance with the customary Brazilian merger review process.

The parties are given a full opportunity to present evidence in favor of clearing the transaction.

The final decision regarding the transaction will eventually be rendered by the Tribunal, which has begun its independent analysis.

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.

The Colombian authority cleared the merger review regarding the transaction in early February 2024.

Closure of PE Films Technical Center

3 unchanged sentences

All activities ceased at the PE Films technical center in Richmond, VA as of the end of the first quarter of 2024.

The Company recognized expense incurred through March 31, 2024 associated with the exit activities of $ 0.2 million for building closure costs.

The Company recognized expense incurred through June 30, 2024 associated with the exit activities of $ 0.2 million for building closure costs.

In addition, the Company recognized a non-cash loss on the lease abandonment ($ 0.3 million).

Supply Chain Financing

As of March 31, 2024 and December 31, 2023, $ 8.8 million and $ 15.8 million, respectively, of the Company’s accounts payable were financed by participating suppliers through third-party financial institutions.

As of June 30, 2024 and December 31, 2023, $ 6.8 million and $ 15.8 million, respectively, of the Company’s accounts payable were financed by participating suppliers through third-party financial institutions.

Impairment of 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).

As of June 30, 2023, the Company’s reporting units with goodwill were Surface Protection in PE Films ("Surface Protection") and Futura in Aluminum Extrusions (“Futura”).

No events or circumstances were identified during the second quarter of 2023 that indicated that Futura’s fair value was more likely than not less than its carrying amount.

However, manufacturers in the supply chain for consumer electronics continue to experience reduced capacity utilization and inventory corrections.

In light of the continued uncertainty about the timing of a recovery for this market and the expected adverse future impact to the Surface Protection business, the Company performed a Step 1 goodwill impairment analysis of the Surface Protection component of PE Films using projections that contemplate the expected market recovery and business conditions, as these events indicated Surface Protection’s fair value was more likely than not less than its carrying amount.

The Company estimated the fair value of Surface Protection at June 30, 2023 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 since Surface Protection’s projections reflect the expected recovery from the weak market demand, competitive pricing and cash flows associated with new surface protection products, applications, customers, production efficiencies, and cost savings.

The analysis concluded that the fair value of Surface Protection was less than its carrying value, thus a non-cash partial goodwill impairment of $ 15.4 million ($ 11.9 million after deferred income tax benefits) was recognized during the second quarter of 2023.

No events or circumstances were identified during the second quarter of 2024 that indicate that Surface Protection's fair value is more likely than not less than its carrying amount.

Accounting standards not yet adopted

9 unchanged sentences

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.

The Company has three reportable segments and continues to evaluate additional disclosures that may be required in its Form 10-K for the year ended December 31, 2024.

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.

5 unchanged sentences

ACCOUNTS AND OTHER RECEIVABLES

As of March 31, 2024 and December 31, 2023, accounts and other receivables, net include the following:

(In thousands) March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, accounts and other receivables, net include the following:

(In thousands) June 30, 2024 December 31, 2023

Customer receivables $ 82,854 $ 67,183

4 unchanged sentences

The components of inventories are as follows:

(In thousands) March 31, 2024 December 31, 2023

(In thousands) June 30, 2024 December 31, 2023

Finished goods $ 29,239 $ 29,821

11 unchanged sentences

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

Pension expense recognized for this plan was immaterial in the three months ended March 31, 2024 and 2023.

Pension expense recognized for this plan was immaterial in the three and six months ended June 30, 2024 and 2023.

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

The components of net periodic benefit cost for the pension and other postretirement benefit programs reflected in the condensed consolidated statements of income for the three months ended March 31, 2024 and 2023, are shown below:

The components of net periodic benefit cost for the pension and other postretirement benefit programs reflected in the condensed consolidated statements of income for the three and six months ended June 30, 2024 and 2023, are shown below:

Pension Benefits Other Post-Retirement Benefits

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

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

(In thousands) 2024 2023 2024 2023

4 unchanged sentences

Net periodic benefit cost $ 25 $ 3,403 $ 29 $ 15

Pension and other postretirement liabilities were $ 7.2 million and $ 7.3 million at March 31, 2024 and December 31, 2023, respectively ($ 0.6 million and $ 0.7 million included in “Accrued expenses” at March 31, 2024 and December 31, 2023, respectively, with the remainder included in “Pension and other postretirement benefit obligations, net” in the condensed consolidated balance sheets).

Pension Benefits Other Post-Retirement Benefits

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

(In thousands) 2024 2023 2024 2023

Service cost $ — $ — $ 5 $ 6

Interest cost 38 6,056 137 142

Expected return on plan assets — ( 5,214 ) — —

Amortization of prior service costs, (gains) losses and net transition asset 11 5,965 ( 82 ) ( 118 )

Net periodic benefit cost $ 49 $ 6,807 $ 60 $ 30

Pension and other postretirement liabilities were $ 7.2 million and $ 7.3 million at June 30, 2024 and December 31, 2023, respectively ($ 0.7 million included in “Accrued expenses” at June 30, 2024 and December 31, 2023 with the remainder included in “Pension and other postretirement benefit obligations, net” in the condensed consolidated balance sheets).

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

3 unchanged sentences

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

Three Months Ended March 31,

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

(In thousands) 2024 2023 2024 2023

3 unchanged sentences

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

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 2,870,670 for the three months ended March 31, 2024.

If the Company had reported net income for the three months ended March 31, 2023, 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 would have been 2,645,365 .

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 2,427,051 and 2,648,861 for the three and six months ended June 30, 2024, respectively.

If the Company had reported net income for the three and six months ended June 30, 2023, the average out-of-the-money options to purchase shares that would be excluded from the calculation of incremental shares attributable to stock options and restricted stock would have been 3,019,333 and 2,830,849 , respectively.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2024.

The changes in accumulated other comprehensive income (loss) by component for the three months ended June 30, 2024.

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

Balance at April 1, 2024 $ ( 84,985 ) $ 297 $ 512 $ ( 84,176 )

Other comprehensive income (loss) ( 5,979 ) ( 1,981 ) — ( 7,960 )

Income tax (expense) benefit 691 430 — 1,121

Other comprehensive income (loss), net of tax ( 5,288 ) ( 1,551 ) — ( 6,839 )

Reclassification adjustment to net income (loss) — 866 ( 36 ) 830

Income tax (expense) benefit — ( 176 ) 8 ( 168 )

Reclassification adjustment to net income (loss), net of tax — 690 ( 28 ) 662

Other comprehensive income (loss), net of tax ( 5,288 ) ( 861 ) ( 28 ) ( 6,177 )

Balance at June 30, 2024

$ ( 90,273 ) $ ( 564 ) $ 484 $ ( 90,353 )

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2024.

(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, 2024 $ ( 83,037 ) $ 801 $ 539 $ ( 81,697 )

6 unchanged sentences

Other comprehensive income (loss), net of tax ( 7,236 ) ( 1,365 ) ( 55 ) ( 8,656 )

Balance at March 31, 2024

Balance at June 30, 2024

$ ( 90,273 ) $ ( 564 ) $ 484 $ ( 90,353 )

The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2023.

The changes in accumulated other comprehensive income (loss) by component for the three months ended June 30, 2023.

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

Balance at April 1, 2023 $ ( 84,959 ) $ ( 1,211 ) $ ( 56,749 ) $ ( 142,919 )

Other comprehensive income (loss) 1,800 2,488 — 4,288

Income tax (expense) benefit ( 179 ) ( 945 ) — ( 1,124 )

Other comprehensive income (loss), net of tax 1,621 1,543 — 3,164

Reclassification adjustment to net income (loss) — ( 1,621 ) 2,923 1,302

Income tax (expense) benefit — 446 ( 637 ) ( 191 )

Reclassification adjustment to net income (loss), net of tax — ( 1,175 ) 2,286 1,111

Other comprehensive income (loss), net of tax 1,621 368 2,286 4,275

Balance at June 30, 2023

$ ( 83,338 ) $ ( 843 ) $ ( 54,463 ) $ ( 138,644 )

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2023.

(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, 2023 $ ( 86,079 ) $ ( 2,480 ) $ ( 59,036 ) $ ( 147,595 )

6 unchanged sentences

Other comprehensive income (loss), net of tax 2,741 1,637 4,573 8,951

Balance at March 31, 2023

Balance at June 30, 2023

$ ( 83,338 ) $ ( 843 ) $ ( 54,463 ) $ ( 138,644 )

5 unchanged sentences

In the normal course of business, Aluminum Extrusions enters into fixed-price forward sales contracts with a small subset of its 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 have durations generally no longer than 12 months.

The notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $ 6.8 million ( 5.1 million pounds of aluminum) at March 31, 2024 and $ 7.7 million ( 5.6 million pounds of aluminum) at December 31, 2023.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

The notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $ 4.9 million ( 3.6 million pounds of aluminum) at June 30, 2024 and $ 7.7 million ( 5.6 million pounds of aluminum) at December 31, 2023.

The table below summarizes the location and gross amounts of aluminum futures contract fair values (Level 2) in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

(In thousands) Balance Sheet

3 unchanged sentences

Aluminum futures contracts

Other assets 28 Other assets —

Prepaid expenses and other $ 283 Prepaid expenses and other $ —

Liability derivatives:

9 unchanged sentences

had the following outstanding foreign exchange average forward rate contracts to purchase Brazilian Real and sell U.S.

Dollars as of March 31, 2024:

Dollars as of June 30, 2024:

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

$ 1,827 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 %

9 unchanged sentences

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

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

The table below summarizes the location and gross amounts of foreign currency forward contract fair values (Level 2) in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

(In thousands) Balance Sheet

8 unchanged sentences

Accrued expenses ( 685 ) Other non-current liabilities —

Foreign currency forward contracts Other non-current liabilities ( 2 ) Other non-current liabilities —

Net asset (liability) $ ( 437 ) $ 2,196

3 unchanged sentences

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

The pre-tax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for the three month periods ended March 31, 2024 and 2023 is summarized in the table below:

The pre-tax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for the three and six month periods ended June 30, 2024 and 2023 is summarized in the table below:

Cash Flow Derivative Hedges

Three Months Ended March 31,

Three Months Ended June 30,

Aluminum Futures Contracts Foreign Currency Forwards

3 unchanged sentences

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ ( 1,028 ) $ 885 $ 15 $ 147 $ 15 $ 721

As of March 31, 2024, the Company expects $ 0.4 million of unrealized after-tax gains on aluminum and foreign currency derivative instruments reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the three month periods ended March 31, 2024 and 2023, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

Tredegar recorded tax expense (benefit) of $ 0.7 million on pre-tax income (loss) of $ 3.9 million in the first three months of 2024.

The effective tax rate in the first three months of 2024 was 16.7 % and ( 48.8 )% in the first three months of 2023.

The change in effective tax rate was primarily due to pre-tax income in the first quarter of 2024 versus a pre-tax loss in the first three months of 2023.

The effective tax rate for the first three months of 2024 varies from the 21% statutory rate primarily due to foreign rate differences and non-deductible expenses offset by Brazilian tax incentives and federal tax credits.

Six Months Ended June 30,

Aluminum Futures Contracts Foreign Currency Forwards

2024 2023 2024 2023

Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) $ 46 $ 1,959 $ — $ ( 1,743 ) $ — $ 3,606

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

Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income (loss) to net income (effective portion) $ ( 509 ) $ 1,157 $ 30 $ 540 $ 30 $ 1,007

As of June 30, 2024, the Company expects $ 0.2 million of unrealized after-tax losses on aluminum and foreign currency derivative instruments reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months.

For the three and six month periods ended June 30, 2024 and 2023, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.

Tredegar recorded tax expense (benefit) of $ 2.6 million on pre-tax income (loss) of $ 14.7 million in the first six months of 2024.

The effective tax rate in the first six months of 2024 was 17.9 % and 13.1 % in the first six months of 2023.

The change in effective tax rate was primarily due to pre-tax income in the first six months of 2024 versus a pre-tax loss in the first six months of 2023.

The effective tax rate for the first six months of 2024 varies from the 21% statutory rate primarily due to foreign rate differences and non-deductible expenses offset by Brazilian tax incentives and federal tax credits.

Brazil income tax was deemed deductible but not creditable in the U.S.

in the first three months of 2023.

in the first six months of 2023.

As a result of guidance released by the U.S.

3 unchanged sentences

The incentives have been granted for a 10-year period, from the commencement date of January 1, 2015 and expiring at the end of 2024.

Terphane Ltda.

has been granted an additional three years of tax incentives through the end of 2027.

BUSINESS SEGMENTS

7 unchanged sentences

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

The following table presents net sales and EBITDA from ongoing operations by segment for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table presents net sales and EBITDA from ongoing operations by segment for the three and six months ended June 30, 2024 and 2023:

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

(In thousands) 2024 2023 2024 2023

17 unchanged sentences

Plant shutdowns, asset impairments, restructurings and other ( 80 ) — ( 584 ) 2

Goodwill impairment — ( 15,413 ) — ( 15,413 )

Flexible Packaging Films:

8 unchanged sentences

Gain on investment in kaleo, Inc.

144 — 144 262

Stock option-based compensation costs — — — 231

3 unchanged sentences

Net income (loss) $ 8,792 $ ( 18,922 ) $ 12,080 $ ( 19,934 )

The following table presents identifiable assets by segment at March 31, 2024 and December 31, 2023:

(In thousands) March 31, 2024 December 31, 2023

The following table presents identifiable assets by segment at June 30, 2024 and December 31, 2023:

(In thousands) June 30, 2024 December 31, 2023

Aluminum Extrusions $ 269,068 $ 255,756

5 unchanged sentences

Total $ 450,412 $ 446,461

The following tables disaggregate the Company’s revenue by geographic area and product group for the three months ended March 31, 2024 and 2023:

The following tables disaggregate the Company’s revenue by geographic area and product group for the three and six months ended June 30, 2024 and 2023:

Net Sales by Geographic Area (a)

Three Months Ended March 31,

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

(In thousands) 2024 2023 2024 2023

7 unchanged sentences

Brazil 23,263 24,975 44,594 46,603

Asia 104 55 266 160

Total $ 183,153 $ 170,968 $ 352,223 $ 356,046

3 unchanged sentences

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

to Asia, and include net sales of $ 6.1 million and $ 3.4 million in the first quarter of 2024 and 2023, respectively.

to Asia, and include net sales of $ 6.7 million and $ 3.4 million in the second quarter of 2024 and 2023, respectively, and $ 12.8 million and $ 6.8 million in the first six months of 2024 and 2023, respectively.

Net Sales by Product Group

Three Months Ended March 31,

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

(In thousands) 2024 2023 2024 2023

14 unchanged sentences

On December 27, 2023, the Company entered into Amendment No.

3 (the “ABL Facility”) to the Second Amended and Restated Credit Agreement, which provides the Company with a $ 180 million senior secured asset-based revolving credit facility that will expire on June 30, 2026.

On April 16, 2024, the Company entered into Amendment No.

2 unchanged sentences

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.

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 September 30, 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 March 31, 2024, availability under the ABL Facility was $ 22.2 million, after reducing the borrowing base by the aggregate outstanding borrowings of $ 128.3 million, standby letters of credit of $ 13.1 million, and the Minimum Liquidity (as defined in the ABL Facility) financial covenant.

As of June 30, 2024, Minimum Liquidity (as defined in the ABL Facility) of $ 45.1 million, after reducing the borrowing base by the aggregate outstanding borrowings of $ 122.0 million and standby letters of credit of $ 12.9 million, was in excess of the $10 million Minimum Liquidity financial covenant.

Outstanding borrowings accrue interest at the rates elected by the Company depending on the type of loan and denomination of such borrowing.

21 unchanged sentences

The financial covenants in the ABL Facility are as follows:

• Until the ABL Adjustment Date, the Company is required to maintain (i) a 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)

March 2024 $ 16,640

April 2024 19,780

May 2024 19,660

June 2024 $ 19,450

22 unchanged sentences

Accordingly, the Company believes the likelihood that lenders would exercise the subjective acceleration clause whereby prohibiting future borrowings is remote.

As of March 31, 2024, the Company was in compliance with all debt covenants.

As of June 30, 2024, the Company was in compliance with all debt covenants.

Terphane Brazil Loan

1 unchanged sentence

Dollar borrowing matures on October 30, 2028, with interest payable quarterly at an annual floating interest rate of the SOFR plus 5.99 %.

The SOFR rate was 5.31 % as of March 31, 2024.

The SOFR rate was 5.35 % as of June 30, 2024.

Quarterly principal payments of $ 1.7 million begin starting in year 3 of the loan.

4 unchanged sentences

The Company will repay the Intercompany Loan in conjunction with the closing of the Contingent Terphane Sale.

PE Films Guangzhou Loan

On June 25, 2024, PE Films' business location in Guangzhou, China, Guangzhou Tredegar Film Products Co., Ltd.

(“Guangzhou Tredegar”), entered into a 9.5 million Chinese Yuan, which is equivalent to $ 1.3 million as of June 30, 2024, revolving loan with the Industrial and Commercial Bank of China.

The loan matures one year after the first withdrawal, which occurred on July 4, 2024, in the amount of 5 million Chinese Yuan.

The interest rate is the one year loan prime rate published by the National Interbank Funding Center for the working day immediately preceding the drawdown date, minus 0.45 %.

As of June 30, 2024, the National Interbank Funding Center rate was 3.45 %.

The revolving loan is secured by a mortgage contract listing the Guangzhou Tredegar factory building as collateral.

The mortgage contract has a maximum value of 30 million Chinese Yuan and is effective from June 25, 2024 through May 31, 2027.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements