What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-08 · 207 added, 366 removed, 141 unchanged (80% of the section changed)

7 unchanged sentences

Factors that could cause actual results to differ materially from expectations include, without limitation, the following:

• inability to successfully complete strategic dispositions, failure to realize the expected benefits of such dispositions and assumption of unanticipated risks in such dispositions;

• failure by governmental entities to prevent foreign companies from evading anti-dumping and countervailing duties;

• noncompliance with any of the financial and other restrictive covenants in the Company's asset-based credit facility;

• the impact of macroeconomic factors, such as inflation, interest rates, recession risks and other lagging effects of the COVID-19 pandemic;

• the impact of macroeconomic factors, such as inflation, interest rates and recession risks;

• an increase in the operating costs incurred by the Company’s business units, including, for example, the cost of raw materials and energy;

• noncompliance with any of the financial and other restrictive covenants in the ABL Facility;

• failure to continue to attract, develop and retain certain key officers or employees;

• disruptions to the Company’s manufacturing facilities, including those resulting from labor shortages;

• an information technology system failure or breach;

• risks of doing business in countries outside the U.S.

that affect our international operations;

• the impact of public health epidemics on employees, production and the global economy, such as the COVID-19 pandemic;

• political, economic and regulatory factors concerning the Company’s products;

• inability to develop, efficiently manufacture and deliver new products at competitive prices;

• the impact of the imposition of tariffs and sanctions on imported aluminum ingot used by Bonnell Aluminum;

• failure by governmental entities to prevent foreign companies from evading antidumping and countervailing duties;

• unanticipated problems or delays with the implementation of the enterprise resource planning and manufacturing executions systems, or security breaches and other disruptions to the Company's information technology infrastructure;

3 unchanged sentences

• failure to protect our intellectual property rights;

• risks of doing business in countries outside the U.S.

that affect our international operations;

• political, economic and regulatory factors concerning the Company’s products;

• competition from other manufacturers, including manufacturers in lower-cost countries and manufacturers benefiting from government subsidies;

• impact of fluctuations in foreign exchange rates;

• an information technology system failure or breach;

• the impact of public health epidemics on employees, production and the global economy, such as the COVID-19 pandemic;

• inability to successfully identify, complete or integrate strategic acquisitions;

failure to realize the expected benefits of such acquisitions and assumption of unanticipated risks in such acquisitions;

• impairment of the Surface Protection reporting unit's goodwill;

• inability to successfully complete strategic acquisitions or dispositions, failure to realize the expected benefits of such acquisitions or dispositions, and assumption of unanticipated risks in such acquisitions or dispositions;

and the other factors discussed in the reports Tredegar files with or furnishes to the Securities and Exchange Commission (the “SEC”) from time to time, including the risks and important factors set forth in additional detail in Part I, Item 1A of Tredegar’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

9 unchanged sentences

Business Overview

Tredegar Corporation is an industrial manufacturer.

As of September 30, 2024, we had three primary businesses:

custom aluminum extrusions for the North American building and construction ("B&C"), automotive and specialty end-use markets through its Aluminum Extrusions segment;

surface protection films for high-technology applications in the global electronics industry through its PE Films segment;

and specialized polyester films primarily for the Latin American flexible packaging market through its Flexible Packaging Films segment.

On November 1, 2024, we completed the sale of our Flexible Packaging Film business ("Terphane") to Oben Group ("Oben").

For more information, see Note 11.

Since the sale was completed after September 30, 2024, the historical financial results of Terphane are reported as continuing operations in this Form 10-Q.

In all future public filings, the historical financial results of Terphane will be reflected as discontinued operations under GAAP for all periods.

Tredegar Corporation is an industrial manufacturer with two primary businesses:

custom aluminum extrusions for the building & construction (“B&C”).

automotive and specialty end-use markets in the United States through its Aluminum Extrusions segment (with exports comprising less than 5% of total sales volume) and surface protection films for high-technology applications in the global electronics industry through its PE Films segment.

With approximately 1,500 employees, the Company operates manufacturing facilities in the U.S.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations is the measure of segment profit and loss used by Tredegar’s chief operating decision maker ("CODM") for purposes of assessing financial performance.

1 unchanged sentence

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 in Note 9.

It is not intended to represent the stand-alone results for Tredegar's ongoing operations under GAAP and should not be considered as an alternative to net income as defined by GAAP.

We believe that EBIT is a widely understood and utilized metric that is meaningful to certain investors and that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations.

Third quarter 2024 net income (loss) was $(3.9) million ($(0.11) per diluted share) compared to $(50.4) million ($(1.47) per diluted share) in the third quarter of 2023.

Third Quarter Financial Results Highlights

• EBITDA from ongoing operations for Aluminum Extrusions (also referred to as "Bonnell Aluminum") was $6.2 million in the third quarter of 2024 versus $5.1 million in the third quarter of last year and $12.9 million in the second quarter of 2024.

◦ Sales volume was 34.6 million pounds in the third quarter of 2024 versus 32.5 million pounds in the third quarter of last year and 34.9 million pounds in the second quarter of 2024.

◦ Open orders at the end of the third quarter of 2024 were approximately 15.5 million pounds (versus 17 million pounds in the third quarter of 2023 and 14 million pounds at the end of the second quarter of 2024).

Net new orders increased 27% in the third quarter of 2024 versus the third quarter of 2023 and increased 7% versus the second quarter of 2024.

• EBITDA from ongoing operations for PE Films was $5.9 million in the third quarter of 2024 versus $4.0 million in the third quarter of 2023 and $10.1 million in the second quarter of 2024.

Sales volume was 9.6 million pounds in the third quarter of 2024 versus 7.2 million pounds in the third quarter of 2023 and 10.5 million pounds in the second quarter of 2024.

• EBITDA from ongoing operations for Terphane was $3.7 million during the third quarter of 2024 versus $0.5 million in the third quarter of 2023 and $3.2 million during the second quarter of 2024.

Sales volume was 25.3 pounds in the third quarter of 2024 versus 22.2 million pounds in the third quarter 2023 and 25.1 million pounds in the second quarter of 2024.

Aluminum Extrusions experienced unfavorable costs, including manufacturing inefficiencies, a shift in mix and margin pressures from imports and excess industry capacity.

PE Films EBITDA performance during the third quarter moderated as expected versus the first two quarters of 2024.

Tredegar closed on the sale of Terphane on November 1, 2024.

First quarter 2025 net income (loss) from continuing operations was $0.7 million ($0.02 per diluted share) compared to $2.6 million ($0.08 per diluted share) in the first quarter of 2024.

First Quarter Financial Results Highlights

• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) from ongoing operations for Aluminum Extrusions was $9.2 million in the first quarter of 2025 versus $12.5 million in the first quarter of 2024

◦ Sales volume was 37.9 million pounds in the first quarter of 2025 versus 33.8 million pounds in the first quarter of 2024.

◦ Net new orders increased 36% in the first quarter of 2025 versus the first quarter of 2024 and 24% versus the fourth quarter of 2024.

Open orders at the end of the first quarter of 2025 were 25 million pounds, which is up from 15 million pounds at the end of the first quarter of 2024 and 17 million pounds at the end of the fourth quarter of 2024.

• EBITDA from ongoing operations for PE Films was $7.5 million in the first quarter of 2025 versus $6.9 million in the first quarter of 2024 and versus $7.6 million in the fourth quarter of 2024.

◦ Sales volume was 9.6 million pounds in the first quarter of 2025 versus 10.0 million pounds in the first quarter of 2024.

Results of Operations

Third Quarter of 2024 Compared with the Third Quarter of 2023

The following table presents a bridge of consolidated net income (loss) from the third quarter of 2023 to the third quarter of 2024 with management's related discussion and analysis below the table.

First Quarter of 2025 Compared with the First Quarter of 2024

The following table presents a bridge of consolidated net income (loss) from continuing operations from the first quarter of 2024 to the first quarter of 2025 with management's related discussion and analysis below the table.

(In thousands)

Net income (loss) for the three months ended September 30, 2023

Net income (loss) from continuing operations for the three months ended March 31, 2024

Income tax expense (benefit) 2,384

Income (loss) before income taxes for the three months ended September 30, 2023

Income (loss) from continuing operations before income taxes for the three months ended March 31, 2024

Change in income (loss) from increases (decreases) in the following items:

4 unchanged sentences

Selling, general and administrative (4,127)

Research and development 319

Pension and postretirement benefits 3,064

Asset impairments and costs associated with exit and disposal activities, net of adjustments 489

Pension settlement loss 25,612

Goodwill impairment 19,478

Income (loss) before income taxes for the three months ended September 30, 2024

Total (24,490)

Income (loss) from continuing operations before income taxes for the three months ended March 31, 2025

Income tax expense (benefit) 577

Net income (loss) for the three months ended September 30, 2024

Sales in the third quarter of 2024 increased by $15.9 million compared with the third quarter of 2023.

Net sales (sales less freight) in Aluminum Extrusions increased $6.3 million, primarily due to higher sales volume and the pass-through of higher metal costs, partially offset by lower pricing associated with a shift in mix.

Net sales in PE Films increased $4.9 million, primarily due to volume increases in both Surface Protection and overwrap films.

Net sales in Flexible Packaging Films increased $4.3 million, primarily due to higher sales volume.

Net income (loss) from continuing operations for the three months ended March 31, 2025

Sales in the first quarter of 2025 increased by $20.8 million compared with the first quarter of 2024.

Net sales (sales less freight) in Aluminum Extrusions increased $19.4 million, primarily due to higher sales volume and the pass-through of higher metal costs, partially offset by a lower average conversion price add-on to metal costs associated with a shift in sales mix.

Net sales in PE Films increased $0.8 million, primarily due to volume increases in Surface Protection.

For more information on net sales and volume, see the Segment Operations Review below.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 12.8% in the third quarter of 2024 compared to 9.0% in the third quarter of 2023.

The gross profit margin in Aluminum Extrusions increased compared to the prior year period primarily due to higher volume, favorable variable manufacturing costs, lower labor-related costs, and lower freight rates, partially offset by lower net pricing after the pass-through of metal cost changes associated with a shift in mix and manufacturing inefficiencies.

Additionally, the timing of the flow-through under the first-in first-out ("FIFO") method of aluminum raw material costs, which were previously acquired at higher prices in a quickly changing commodity pricing environment and passed through to customers, resulted in a charge of $1.0 million in the third quarter of 2024 versus a charge of $1.2 million in the third quarter of 2023.

The gross profit margin in PE Films increased due to a higher Surface Protection contribution margin associated with higher volume and manufacturing costs savings, partially offset by unfavorable pricing.

The gross profit margin in Flexible Packaging Films increased primarily due to lower variable costs, lower raw material costs, higher volume, favorable product mix, and lower fixed costs, partially offset by lower selling prices from global excess capacity and margin pressures.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses of 12.2% in the third quarter of 2024 remained consistent with the third quarter of 2023.

During the third quarter of 2023, the Company remeasured the pension plan, which resulted in a pre-tax pension settlement loss in the condensed 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.

See Note 4 for additional information.

The decrease in asset impairments and costs associated with exit and disposal activities, net of adjustments is primarily related to closure of the PE Films technical center in Richmond, VA.

See Note 1 for more information.

In the third quarter of 2023, a non-cash partial goodwill impairment of $19.5 million was recognized.

See Note 1 for more information.

The effective tax rate used to compute income taxes was (31.6)% in the third quarter of 2024 compared to 20.9% in the third quarter of 2023.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the third quarters of 2024 and 2023 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment in Note 9 and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Three Months Ended September 30,

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 14.3% in the first quarter of 2025 compared to 16.6% in the first quarter of 2024.

The gross profit margin in Aluminum Extrusions decreased compared to the prior year period primarily due to lower spread (the difference between selling prices and metal costs) associated with a shift in sales mix, higher variable manufacturing costs associated with material yield, which was unfavorable to projected rates, increased labor, net of increased labor productivity, to accommodate the rise in orders, unfavorable maintenance expense associated with extreme winter weather events and downed equipment, higher die expense associated with the timing of purchases and increasing volume and higher utilities, partially offset by higher volume.

Additionally, the timing of the flow-through under the first-in first-out (“FIFO”) method of aluminum raw materials costs, which were previously acquired in a quickly changing commodity pricing environment, causing a temporary mismatch in the change in the cost of raw materials included in variable costs and the pass through to customers included in sales, resulted in a benefit of $1.7 million in the first quarter of 2025 versus a charge of $1.3 million in the first quarter of 2024.

The gross profit margin in PE Films increased due to a higher Surface Protection contribution margin associated with increased volume, favorable sales mix and pricing and cost improvements, partially offset by decreased overwrap films contribution margin associated with lower volume and unfavorable sales mix and unfavorable pricing.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 12.6% in the first quarter of 2025 compared with 11.6% in the first quarter of 2024.

Higher SG&A spending was primarily due to higher professional fees associated with business development activities and higher employee-related incentive compensation.

The decrease in asset impairments and costs associated with exit and disposal activities, net of adjustments is due to the closure of the PE Films technical center in Richmond, VA in 2024.

The effective tax rate used to compute income taxes (benefit) from continuing operations in the first three months of 2025 was 46.2% compared to 47.8% in the first three months of 2024.

The effective tax rate in the first three months of 2025 was

impacted by lower taxable discrete items and a lower projected annual effective tax rate offset by the impact of lower book income.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the first quarters of 2025 and 2024 detailed below are shown in the reconciliation of net sales and EBITDA from ongoing operations by segment in the table in the Segment Operations Review section below and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Three Months Ended March 31,

(In millions) 2025 2024

Aluminum Extrusions:

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Other restructuring costs - severance $ — $ 0.1

(Gains) losses from sale of assets, investment writedowns and other items:

1 unchanged sentence

Storm damage to the Newnan, Georgia plant 1

Legal fees associated with the Aluminum Extruders Trade Case 1

Resolution of customer quality complaint 2

Legal fees associated with the Aluminum Extruders Trade Case and other matters 1

Aluminum premium charge as a result of unplanned maintenance interruptions 2

Total for Aluminum Extrusions $ 1.0 $ 0.9

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Write-down of Richmond, Virginia Technical Center assets 4

Richmond, Virginia Technical Center closure expenses, including severance 3

Goodwill impairment 4

Richmond, Virginia Technical Center lease modification 3

Total for PE Films $ — $ 0.5

Flexible Packaging Films:

(Gains) losses from sale of assets, investment writedowns and other items:

Professional fees associated with business development activities 1

Total for Flexible Packaging Films $ 0.1 $ —

(Gains) losses from sale of assets, investment writedowns and other items:

Professional fees associated with business development activities 1

Professional fees associated with remediation activities related to internal control over financial reporting 1

Group annuity contract premium adjustment 4

Professional fees associated with the transition to the ABL Facility 1

Net periodic benefit cost for the frozen defined benefit pension plan in process of termination 3

Pension settlement loss 3

Initial installment proceeds on the sale of corporate-owned land 4

Total for Corporate $ 2.8 $ 1.3

Included in “Selling, general and administrative expenses” in the condensed consolidated statements of income.

Included in “Sales” in the condensed consolidated statements of income.

See Note 4 for additional information.

See Note 1 for additional information.

Average total debt outstanding and interest rates were as follows:

Three Months Ended September 30,

(In millions, except percentages) 2024 2023

Floating-rate debt with interest charged on a rollover basis plus a credit spread:

Average total outstanding debt balance $ 145.5 $ 138.2

Average interest rate 9.4 % 7.4 %

First Nine Months of 2024 Compared with the First Nine Months of 2023

The following table presents a bridge of consolidated net income (loss) from the first nine months of 2023 to the first nine months of 2024 with management's related discussion and analysis below the table.

(In thousands)

Net income (loss) for the nine months ended September 30, 2023

Income tax expense (benefit) (16,307)

Income (loss) before income taxes for the nine months ended September 30, 2023

Change in income (loss) from increases (decreases) in the following items:

Other income (expense), net 100

Change in income (loss) from (increases) decreases in the following items:

Cost of goods sold 14,948

Freight (856)

Selling, general and administrative (2,696)

Research and development 2,381

Pension and postretirement benefits 9,792

Interest expense (2,523)

Asset impairments and costs associated with exit and disposal activities, net of adjustments 4,115

Pension settlement loss 25,612

Goodwill impairment 34,891

Income (loss) before income taxes for the nine months ended September 30, 2024

Income tax expense (benefit) 3,573

Net income (loss) for the nine months ended September 30, 2024

Sales in the first nine months of 2024 increased by $12.5 million compared with the first nine months of 2023.

Net sales in Aluminum Extrusions decreased $15.3 million, primarily due to lower sales volume and the pass-through of lower metal costs.

Net sales in PE Films increased $22.8 million, primarily due to an increase in sales volume in Surface Protection.

Net sales in Flexible Packaging Films increased $4.2 million primarily due to higher volume, partially offset by lower selling prices that the Company believes are driven by excess global capacity and strong competition in Brazil, Latin America and the U.S and unfavorable product mix.

For more information on net sales and volume, see the Segment Operations Review below.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 15.5% in the first nine months of 2024 compared to 10.9% in the first nine months of 2023.

The gross profit margin in Aluminum Extrusions increased compared to the prior year period primarily due to higher net pricing after the pass-through of metal cost changes and mix, favorable variable manufacturing costs, lower utilities and lower freight rates, partially offset by lower volume, manufacturing inefficiencies and higher labor and employee-related costs.

Additionally, the timing of the flow-through under the FIFO method of aluminum raw material costs, which were previously acquired at higher prices in a quickly changing commodity pricing environment and passed through to customers, resulted in a charge of $1.0 million in the first nine months of 2024 versus a charge of $0.8 million in the first nine months of 2023.

The gross profit margin in PE Films increased due to a higher Surface Protection contribution margin associated with substantially higher volume, operating efficiencies and manufacturing costs savings, favorable pricing, and lower fixed costs.

The gross profit margin in Flexible Packaging Films increased primarily due to lower raw material costs, lower fixed costs, higher sales volume, and favorable product mix, partially offset by lower selling prices from global excess capacity and margin pressures and higher variable costs.

As a percentage of sales, SG&A and R&D expenses of 11.1% in the first nine months of 2024 remained consistent with the first nine months of 2023.

During the first nine months of 2023, the Company remeasured the pension plan, which resulted in a pre-tax pension settlement loss in the condensed consolidated results of operation of $25.6 million.

See Note 4 for additional information.

Interest expense of $10.3 million in the first nine months of 2024 increased $2.5 million compared to the first nine months of 2023 due to higher average debt and higher interest rates.

See Note 10 for additional information.

The decrease in asset impairments and costs associated with exit and disposal activities, net of adjustments is primarily related to closure of the PE Films technical center in Richmond, VA.

See Note 1 for more information.

In the first nine months of 2023, a non-cash partial goodwill impairment of $34.9 million was recognized.

See Note 1 for more information.

The effective tax rate used to compute income taxes was 30.5% in the first nine months of 2024 compared to 18.8% in the first nine months of 2023.

Included in “Cost of Goods Sold” in the condensed consolidated statements of income.

See Note 1 for additional information.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the first nine months of 2024 and 2023 detailed below are shown in the statements of net sales and EBITDA from ongoing operations by segment in Note 9 and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Nine Months Ended September 30,

(In millions) 2024 2023

Aluminum Extrusions:

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Other restructuring costs - severance $ — $ 0.1

(Gains) losses from sale of assets, investment writedowns and other items:

Consulting expenses for ERP/MES project 1

Storm damage to the Newnan, Georgia plant 1

Legal fees associated with the Aluminum Extruders Trade Case 1

Resolution of customer quality complaint 5

Total for Aluminum Extrusions $ 4.1 $ 1.8

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Write-down of Richmond, Virginia Technical Center assets 4

Richmond, Virginia Technical Center closure expenses, including severance 4

Richmond, Virginia Technical Center lease abandonment 4

Goodwill impairment 4

Total for PE Films $ 0.6 $ 39.4

Flexible Packaging Films:

(Gains) losses associated with plant shutdowns, asset impairments and restructurings:

Other restructuring costs - severance $ — $ 0.1

(Gains) losses from sale of assets, investment writedowns and other items:

Professional fees associated with business development activities 1

Total for Flexible Packaging Films $ 0.1 $ 0.1

(Gains) losses from sale of assets, investment writedowns and other items:

Professional fees associated with business development activities 1

Professional fees associated with remediation activities related to internal control over financial reporting 1

Professional fees associated with the transition to the ABL Facility 1

Group annuity contract premium expense adjustment 2

Write-down of investment in Harbinger Capital Partners Special Situations Fund 2

Stock-based compensation expense associated with the fair value remeasurement of awards granted at the time of the 2020 special dividend 1

Net periodic benefit cost for the frozen defined benefit pension plan in process of termination 3

Pension settlement loss 3

Total for Corporate $ 3.3 $ 41.5

Included in “Selling, general and administrative expenses” in the condensed consolidated statements of income.

Included in “Other income (expense), net” in the condensed consolidated statements of income.

See Note 4 for additional information.

See Note 1 for additional information.

Included in “Sales” in the condensed consolidated statements of income.

Average total debt outstanding and interest rates were as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions, except percentages) 2025 2024

6 unchanged sentences

Three Months Ended Favorable/

(Unfavorable)

% Change Nine Months Ended Favorable/

(Unfavorable)

(In thousands, except percentages) September 30, September 30,

2024 2023 2024 2023

(In thousands, except percentages) March 31, (Unfavorable)

2025 2024 % Change

Sales volume (lbs) 37,918 33,841 12.0%

Net sales $ 133,635 $ 114,222 17.0%

Ongoing operations:

EBITDA $ 6,177 $ 5,113 20.8% $ 31,624 $ 29,968 5.5%

Variable costs 103,523 84,786 (22.1)%

Manufacturing fixed costs 1

11,214 9,625 (16.5)%

Selling, general and administrative costs 1

9,412 6,798 (38.5)%

326 473 31.1%

EBITDA from ongoing operations $ 9,160 $ 12,540 (27.0)%

Depreciation & amortization (4,225) (4,542) 7.0%

EBIT* $ 1,773 $ 430 NM** $ 18,232 $ 16,716 9.1%

EBIT from ongoing operations 3

$ 4,935 $ 7,998 (38.3)%

Capital expenditures $ 2,370 $ 1,550

*See the table in Note 9 for a reconciliation of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

**Not meaningful ("NM")

Third Quarter 2024 Results vs.

Third Quarter 2023 Results

Net sales (sales less freight) in the third quarter of 2024 increased 5.8% versus the third quarter of 2023 primarily due to higher sales volume and the pass-through of higher metal costs, partially offset by lower pricing associated with a shift in mix.

Sales volume in the third quarter of 2024 increased 6.5% versus the third quarter of 2023 but decreased 0.9% versus the second quarter 2024.

Net new orders, which remain low compared to pre-pandemic levels, increased 27.3% in the third quarter of 2024 versus the third quarter of 2023 and increased 7% versus the second quarter of 2024.

Since January 2021, net new orders for the Company's aluminum extruded products have generally tracked the ISM ® Manufacturing PMI ® .

In addition, the Architecture Billings Index (ABI), a key leading indicator for non-residential B&C, has demonstrated a decline in billings (i.e., an index below 50) for the last 20 months ended September 2024.

The Company believes that net new orders continue to be below pre-pandemic levels due to higher interest rates, tighter lender requirements and the increase in remote working, which particularly impacts the non-residential B&C end-use market.

In addition, data indicates that aluminum extrusion imports have increased significantly in recent years, especially during the pandemic, and some of Bonnell Aluminum’s customers have increased their sourcing of aluminum extrusions from producers outside of the U.S.

Open orders at the end of the third quarter of 2024 were 15.5 million pounds (versus 14 million pounds at the end of the second quarter of 2024 and 17 million pounds at the end of the third quarter of 2023).

This level is below the quarterly range of 21 to 27 million pounds in 2019 before pandemic-related disruptions (particularly starting in early 2021 with the re-opening of markets following the rollout of vaccines) that resulted in long lead times, driving a peak in open orders of approximately 100 million pounds during the first quarter of 2022.

The Company is part of a coalition of members of the Aluminum Extruders Council that filed a trade case with the U.S.

Department of Commerce (“USDOC”) and the U.S.

International Trade Commission (“USITC”) against 15 countries in response to alleged large and increasing volumes of unfairly priced imports of aluminum extrusions since 2019.

In November 2023, the USITC found that there is a reasonable indication that the American aluminum extrusions industry is materially injured or threatened with injury due to imports from 14 countries, including China.

On September 27, 2024, the USDOC announced its final determinations that aluminum extrusion producers and exporters in 14 countries, including China, sold aluminum extrusions at less-than-fair value in the U.S.

The final USITC vote on October 30, 2024, indicated that it believes that the industry was not materially injured by reason of the subject imports, despite the USDOC determinations of pricing below fair value and receiving unfair subsidies.

The coalition is evaluating next steps for challenging the decision.

EBITDA from ongoing operations in the third quarter of 2024 increased $1.1 million versus the third quarter of 2023 primarily due to:

• Higher volume ($1.8 million), favorable variable manufacturing costs ($1.7 million), lower labor-related costs ($0.1 million) and lower freight rates ($0.2 million), partially offset by unfavorable net pricing after the pass-through of metal cost and changes associated with a shift in mix ($1.1 million), manufacturing inefficiencies ($0.8 million), higher maintenance expense ($0.4 million) and higher SG&A expenses, including other employee-related compensation ($0.8 million);

• The timing of the flow-through under the FIFO method of aluminum raw material costs, which were previously acquired at higher prices in a quickly changing commodity pricing environment and passed through to customers, resulted in a charge of $1.0 million in the third quarter of 2024 versus a charge of $1.2 million in the third quarter of 2023.

First Nine Months of 2024 Results vs.

First Nine Months of 2023 Results

Net sales in the first nine months of 2024 decreased 4.2% versus the first nine months of 2023 primarily due to lower sales volume and the pass-through of lower metal costs.

Sales volume in the first nine months of 2024 decreased 2.1% versus the first nine months of 2023.

EBITDA from ongoing operations in the first nine months of 2024 increased $1.7 million in comparison to the first nine months of 2023 primarily due to:

• Higher net pricing after the pass-through of metal cost changes and mix ($2.0 million), favorable variable manufacturing costs ($3.7 million), lower utilities ($0.2 million) and lower freight rates ($0.9 million), partially offset by lower volume ($1.6 million), manufacturing inefficiencies ($0.8 million), higher labor and employee-related costs ($0.1 million), and higher SG&A, including other employee-related compensation ($2.4 million);

• The timing of the flow-through under the FIFO method of aluminum raw material costs, which were previously acquired at higher prices in a quickly changing commodity pricing environment and passed through to customers, resulted in a charge of $1.0 million in the first nine months of 2024 versus a charge of $0.8 million in the first nine months of 2023.

Excludes related depreciation and amortization 2.

Includes segment allocated employee compensation benefit expenses

See the reconciliation below of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

First Quarter 2025 Results vs.

First Quarter 2024 Results

Net sales (sales less freight) in the first quarter of 2025 increased 17.0% versus the first quarter of 2024 primarily due to higher sales volume and the pass-through of higher metal costs, partially offset by a lower average conversion price add-on to metal costs associated with a shift in sales mix.

Sales volume in the first quarter of 2025 increased 12.0% versus the first quarter of 2024 and 5.9% versus the fourth quarter of 2024.

The Company saw increased shipments for specialty markets, primarily for solar panels within the electrical product group for both year-over-year and sequential periods and TSLOTS TM aluminum framing systems versus the first quarter of last year.

The Company estimates that the growth in the solar market was partly due to regaining share previously lost to imported aluminum extrusions.

Net new orders increased 36% in the first quarter of 2025 versus the first quarter of 2024 and 24% versus the fourth quarter of 2024, largely due to improving sales opportunities.

The Company is experiencing strong demand and share gains for solar products within the electrical product group (as noted above) and curtainwall and institutional walkway covers within the non-residential B&C product group.

The first quarter of 2025 marked the tenth consecutive quarterly increase for this metric, supporting the Company’s belief that a steady recovery is underway.

This level falls within the quarterly range of 21 to 27 million pounds in 2019 before pandemic-related disruptions that resulted in long lead times.

On February 10, 2025, the Section 232 tariffs on all aluminum imports were increased from 10% to 25%, effective March 12, 2025, and certain country-specific and product-specific exclusions from the tariffs were revoked.

This action also expanded the scope of the tariffs to include downstream products, including certain finished aluminum goods.

These measures, which are in addition to existing antidumping and countervailing duties, are intended to prevent the circumvention of duties through the importation of downstream products.

The tariffs on aluminum imports have been implemented with no country-specific or product-specific exclusions occurring to date.

The Company believes that it has begun to regain some market share for business that was previously associated with imports, particularly in the specialty market, as noted above.

EBITDA from ongoing operations in the first quarter of 2025 decreased $3.4 million versus the first quarter of 2024, primarily due to:

• Flat contribution margin (net sales less variable costs) associated with:

◦ Lower spread (the difference between selling prices and metal costs) associated with a shift in sales mix ($2.4 million), higher variable manufacturing costs associated with material yield, which was unfavorable to projected rates ($0.7 million unfavorable in the first quarter of 2025 versus $0.6 million favorable in the first quarter of 2024), increased labor, net of increased labor productivity ($0.6 million), to accommodate the rise in orders, unfavorable maintenance expense associated with extreme winter weather events and downed

equipment ($0.7 million), higher die expense associated with the timing of purchases and increasing volume ($1.0 million) and higher utilities ($0.2 million), partially offset by higher volume ($3.4 million);

◦ The timing of the flow-through under the first-in first-out (“FIFO”) method of aluminum raw materials costs, which were previously acquired in a quickly changing commodity pricing environment, causing a temporary mismatch in the change in the cost of raw materials included in variable costs and the pass through to customers included in sales, resulted in a benefit of $1.7 million in the first quarter of 2025 versus a charge of $1.3 million in the first quarter of 2024.

• Higher fixed costs associated with wage increases and added resources to support increasing volume ($1.0 million).

• Higher selling, general and administrative ("SG&A") expenses of $2.6 million primarily associated with employee-related compensation ($1.7 million), travel and consulting fees ($0.3 million) and routine environmental compliance costs ($0.4 million).

R efer to Item 3.

2 unchanged sentences

Capital expenditures for Bonnell Aluminum are projected to be $17 million in 2025, including $5 million for productivity projects and $12 million for capital expenditures required to support continuity of operations.

The projected spending reflects stringent spending measures that the Company has implemented to control its financial leverage (See "Liquidity and Capital Resources" section below for more information).

The multi-year implementation of new enterprise resource planning and manufacturing execution systems ("ERP/MES") has been reorganized with the timing for the go-live date being uncertain.

The ERP/MES project commenced in 2022, with spending to-date of approximately $21 million.

Depreciation expense is projected to be $16 million in 2025.

2 unchanged sentences

Three Months Ended Favorable/

(Unfavorable)

% Change Nine Months Ended Favorable/

(Unfavorable)

(In thousands, except percentages) September 30, September 30,

2024 2023 2024 2023

(In thousands, except percentages) March 31, (Unfavorable)

2025 2024 % Change

Sales volume (lbs) 9,639 10,036 (4.0)%

Net sales $ 25,537 $ 24,735 3.2%

Ongoing operations:

EBITDA $ 5,876 $ 4,037 45.6% $ 22,913 $ 6,700 NM**

Variable costs 11,977 12,024 0.4%

Manufacturing fixed costs 1

3,459 3,243 (6.7)%

Selling, general and administrative costs 1

2,592 2,516 (3.0)%

(11) 48 122.9%

EBITDA from ongoing operations $ 7,520 $ 6,904 8.9%

Depreciation & amortization (1,250) (1,329) 5.9%

EBIT* $ 4,577 $ 1,926 NM** $ 18,969 $ 1,395 NM**

EBIT from ongoing operations 3

$ 6,270 $ 5,575 12.5%

Capital expenditures $ 587 $ 394

* See the table in Note 9 for a reconciliation of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

**Not meaningful ("NM")

Third Quarter 2024 Results vs.

Third Quarter 2023 Results

Net sales in the third quarter of 2024 were 24.8% higher c ompared to the third quarter of 2023, with volu me increases in Surface Protection and overwrap films.

Surface Protection sales volume in the third quarter of 2024 increased 37.5% versus the third quarter of 2023 and declined 16.5% versus the second quarter of 2024.

Surface Protection sales volume began to moderate during the third quarter of 2024, following extremely high sales volume in the second quarter associated with the restocking of Surface Protection customer inventories.

EBITDA from ongoing operations in the third quarter of 2024 increased $1.8 million versus the third quarter of 2023, primarily due to:

• A $2.4 million increase in Surface Protection primarily due to higher contribution margin associated with higher volume ($2.0 million) and manufacturing costs savings ($1.1 million), partially offset by unfavorable pricing ($0.2 million) and higher SG&A ($0.1 million);

• A foreign currency transaction loss of $0.2 million in the third quarter of 2024 versus no gain or loss in the third quarter of 2023;

• The pass-through lag associated with resin costs (a charge of $0.2 million in the third quarter of 2024 versus a benefit of $0.1 million in the third quarter of 2023);

• A $0.6 million decrease in overwrap films, primarily due to pricing and mix.

There have been significant cyclical swings in the sales volume and EBITDA from ongoing operations for PE Films in the past 2.5 years, largely due to the unprecedented downturn in the display industry during the second half of 2022 and first half of 2023.

EBITDA from ongoing operations for the first half of 2024, the second and first halves of 2023 and the second and first halves of 2022 were $17.0 million, $8.6 million, $2.7 million, $(2.2) million and $14.1 million, respectively, which averages approximately $4 million per quarter.

First Nine Months of 2024 Results vs.

First Nine Months of 2023 Results

Net sales in the first nine months of 2024 increased 40.6% compared to the first nine months of 2023 primarily due to an increase in sales volume in Surface Protection, as a result of factors noted above.

Sales volume increased 62.3% in Surface Protection in the first nine months of 2024 versus the first nine months of 2023.

EBITDA from ongoing operations in the first nine months of 2024 increased $16.2 million versus the first nine months of 2023, primarily due to:

• A $16.0 million increase in Surface Protection primarily due to higher contribution margin associated with substantially higher volume ($9.4 million), operating efficiencies and manufacturing costs savings ($5.9 million), favorable pricing ($0.3 million), lower fixed costs ($0.2 million) and lower SG&A, including lower costs associated with the closure of the Richmond Technical Center in 2023 ($1.2 million);

• A foreign currency transaction loss of $0.1 million in the first nine months of 2024 versus a gain of $0.3 million in the first nine months of 2023;

• The pass-through lag associated with resin costs (a charge of $0.7 million in the first nine months of 2024 versus a charge of $0.1 million in the first nine months of 2023);

• A $0.2 million increase from overwrap films, primarily due to cost improvements ($1.0 million), partially offset by a shift in mix ($0.8 million).

Excludes related depreciation and amortization 2.

Includes segment allocated employee compensation benefit expenses

See the reconciliation below of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

First Quarter 2025 Results vs.

First Quarter 2024 Results

Net sales in the first quarter of 2025 increased 3.2% versus the first quarter of 2024, due to higher net sales in surface protection films.

Surface Protection sales volume increased 4% in the first quarter of 2025 versus the first quarter of 2024 and decreased 5.6% versus the fourth quarter of 2024.

Recent volume performance for Surface Protection has exceeded expectations, given high sales volume in the first half of 2024 associated with restocking of Surface Protection customer inventories.

The Company believes there is the possibility that some display volume may have been pulled forward in anticipation of U.S.

tariffs on imported televisions and mobile devices.

To date, Surface Protection has not experienced an adverse impact on customer demand related to potential tariff actions;

however, the situation remains fluid and the impact on consumer electronics is uncertain.

Overwrap sales volume, which is predominantly manufactured and sold in the U.S.

and used in consumer staple items, decreased 11.9% in the first quarter of 2025 versus a strong volume performance in the first quarter of 2024.

EBITDA from ongoing operations in the first quarter of 2025 increased $0.6 million versus the first quarter of 2024, primarily due to:

• Higher contribution margin of $0.9 million resulting from:

◦ A $1.5 million increase from Surface Protection associated with increased volume, favorable sales mix and pricing ($0.7 million) and cost improvements ($0.8 million);

◦ A $0.7 million decrease from overwrap films primarily due to lower volume, unfavorable sales mix ($0.5 million) and unfavorable pricing ($0.1 million).

There have been significant cyclical swings in the sales volume and EBITDA from ongoing operations for PE Films in the last three years, largely due to the unprecedented downturn in the display industry during the second half of 2022 and first half of 2023.

EBITDA from ongoing operations for the past 3.25 years (first quarter of 2025, full year 2024, 2023 and 2022) has averaged approximately $4.7 million per quarter.

R efer to Item 3.

4 unchanged sentences

There is no amortization expense for PE Films.

Flexible Packaging Films

A summary of results for Flexible Packaging Films is provided below:

Three Months Ended Favorable/

(Unfavorable)

% Change Nine Months Ended Favorable/

(Unfavorable)

(In thousands, except percentages) September 30, September 30,

2024 2023 2024 2023

Sales volume (lbs) 25,295 22,163 14.1% 72,342 65,732 10.1%

Net sales $ 34,370 $ 30,111 14.1% $ 99,025 $ 94,861 4.4%

Ongoing operations:

EBITDA $ 3,749 $ 477 NM** $ 8,915 $ 2,076 NM**

Depreciation & amortization (708) (704) (0.6)% (2,191) (2,115) (3.6)%

EBIT* $ 3,041 $ (227) NM** $ 6,724 $ (39) NM**

Capital expenditures $ 948 $ 1,408 $ 2,108 $ 2,891

* See the table in Note 9 for a reconciliation of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP.

**Not meaningful ("NM")

Third Quarter 2024 Results vs.

Third Quarter 2023 Results

Net sales in the third quarter of 2024 increased 14.1% compared to the third quarter of 2023 primarily due to higher sales volume.

EBITDA from ongoing operations in the third quarter of 2024 increased $3.3 million versus the third quarter of 2023, primarily due to:

• Lower variable costs ($1.5 million), lower raw material costs ($1.1 million), higher volume ($1.0 million), favorable product mix ($0.8 million), lower fixed costs ($0.2 million), and lower SG&A ($0.2 million), partially offset by lower selling prices from global excess capacity and margin pressures ($0.6 million);

• Foreign currency transaction gains ($0.1 million) in the third quarter of 2024 compared to foreign currency transaction gains ($0.2 million) in the third quarter of 2023;

• Net unfavorable foreign currency translation of Real-denominated operating costs ($0.8 million).

First Nine Months of 2024 Results vs.

First Nine Months of 2023 Results

Net sales in the first nine months of 2024 increased 4.4% compared to the first nine months of 2023 primarily due to higher volume partially offset by lower selling prices that the Company believes are driven by excess global capacity and strong competition in Brazil, Latin America and the U.S and unfavorable product mix.

EBITDA from ongoing operations in the first nine months of 2024 increased $6.8 million versus the first nine months of 2023 primarily due to:

• Lower raw material costs ($5.1 million), lower fixed costs ($3.1 million), higher sales volume ($2.5 million), favorable product mix ($1.4 million), and lower SG&A ($0.6 million), partially offset by lower selling prices from global excess capacity and margin pressures ($4.0 million) and higher variable costs ($0.4 million);

• Foreign currency transaction gains ($0.1 million) in the first nine months of 2024 compared to foreign currency transaction losses ($0.1 million) in the first nine months of 2023;

• Net unfavorable foreign currency translation of Real-denominated operating costs ($1.6 million).

Refer to Item 3.

Quantitative and Qualitative Disclosures About Market Risk in this Form 10-Q f or additional information on polyester fiber and component price trends.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures for Flexible Packaging Films are projected to be $4 million in 2024 for capital expenditures required to support continuity of current operations.

Depreciation expense is projected to be $3 million in 2024.

Amortization expense is projected to be $0.1 million in 2024.

Corporate Expenses, Interest & Other

Corporate expenses, net in the first nine months of 2024 decreased $13.7 million compared to the first nine months of 2023 primarily due to lower pension expense as a result of the pension plan termination completed in 2023 ($10.1 million) and lower business development activities ($3.4 million).

Interest expense of $10.3 million in the first nine months of 2024 increased $2.5 million compared to the first nine months of 2023 due to higher average debt and higher interest rates.

Corporate expenses, net in the first three months of 2025 increased $2.0 million compared to the first three months of 2024 primarily due to higher professional fees associated with business development activities ($2.2 million) and higher employee-related incentive compensation ($1.0 million), partially offset by lower external and internal audit fees ($0.4 million), lower professional fees associated with remediation activities related to internal control over financial reporting ($0.4 million), and lower software maintenance fees ($0.1 million).

Interest expense was $1.0 million in the first three months of 2025 in comparison to $1.2 million in the first three months of 2024, primarily due to lower weighted average total debt outstanding and lower interest rates.

Net capitalization and other credit measures are provided in Liquidity and Capital Resources below.

Reconciliation of Net Sales and EBITDA from Ongoing Operations by Segment

A reconciliation of segment financial information to consolidated results for the Company for the three months ended March 31, 2025 and 2024.

Three Months Ended

Aluminum Extrusions $ 133,635 $ 114,222

PE Films 25,537 24,735

Total net sales 159,172 138,957

Add back freight 5,566 5,015

Sales as shown in the condensed consolidated statements of income $ 164,738 $ 143,972

EBITDA from Ongoing Operations

Aluminum Extrusions:

Ongoing operations:

EBITDA $ 9,160 $ 12,540

Depreciation & amortization (4,225) (4,542)

EBIT 4,935 7,998

Plant shutdowns, asset impairments, restructurings and other (1,167) (1,167)

Ongoing operations:

EBITDA $ 7,520 $ 6,904

Depreciation & amortization (1,250) (1,329)

EBIT 6,270 5,575

Plant shutdowns, asset impairments, restructurings and other — (504)

Total 10,038 11,902

Interest income 5 20

Interest expense 1,013 1,184

Corporate expenses, net 7,782 5,750

Income (loss) from continuing operations before income taxes 1,248 4,988

Income tax expense (benefit) 577 2,384

Net income (loss) from continuing operations 671 2,604

Income (loss) from discontinued operations, net of tax 9,430 684

Net income (loss) $ 10,101 $ 3,288

Liquidity and Capital Resources

1 unchanged sentence

Measures such as days sales outstanding (“DSO”), days inventory outstanding (“DIO”) and days payables outstanding (“DPO”) are used to evaluate changes in working capital.

Changes in operating assets and liabilities from December 31, 2023 to September 30, 2024 are summarized below.

Changes in operating assets and liabilities from December 31, 2024 to March 31, 2025 are summarized below.

• Accounts and other receivables increased $14.9 million (23.0%).

◦ Accounts and other receivables in Aluminum Extrusions increased $7.3 million primarily due to higher sales volume in the third quarter of 2024, partially offset by lower pricing associated with a shift in mix.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 44.1 days for the 12 months ended September 30, 2024 and 45.1 days for the 12 months ended December 31, 2023.

◦ Accounts and other receivables in PE Films increased $2.8 million primarily due to increased sales volume.

DSO was approximately 24.2 days for the 12 months ended September 30, 2024 and 26.3 days for the 12 months ended December 31, 2023.

◦ Accounts and other receivables in Flexible Packaging Films increased $3.7 million primarily due to increased sales volume.

DSO was approximately 36.0 days for the 12 months ended September 30, 2024 and 38.1 days for the 12 months ended December 31, 2023.

◦ Accounts and other receivables in Aluminum Extrusions increased $13.2 million primarily due to higher sales volume and the pass-through of higher metal costs, partially offset by a lower average conversion price add-on to metal costs associated with a shift in sales mix.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 44.9 days for the 12 months ended March 31, 2025 and 44.7 days for the 12 months ended December 31, 2024.

◦ Accounts and other receivables in PE Films increased $1.2 million primarily due to the timing of cash collections and orders related to overwrap films during the first quarter of 2025 compared to the fourth quarter of 2024.

DSO was approximately 25.2 days for the 12 months ended March 31, 2025 and 24.9 days for the 12 months ended December 31, 2024.

• Inventories increased $17.5 million (34.1%).

◦ Inventories in Aluminum Extrusions increased $1.3 million primarily due to higher average aluminum prices.

DIO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of inventory balances calculated on the FIFO basis) was approximately 47.3 days for the 12 months ended September 30, 2024 and 51.6 days for the 12 months ended December 31, 2023.

◦ Inventories in PE Films increased $1.8 million primarily due to higher raw materials and finished goods levels to support increased sales volume during the first nine months of 2024.

DIO was approximately 50.1 days for the 12 months ended September 30, 2024 and 57.2 days for the 12 months ended December 31, 2023.

◦ Inventories in Flexible Packaging Films increased $2.8 million primarily due to higher raw materials and finished goods levels to support increased sales volume during the first nine months of 2024.

DIO was approximately 104.0 days for the 12 months ended September 30, 2024 and 117.7 days for the 12 months ended December 31, 2023.

• Net property, plant and equipment decreased $14.8 million primarily due to depreciation expense of $18.4 million and a $3.0 million unfavorable change in the value of the U.S.

dollar relative to foreign currencies, partially offset by capital expenditures of $7.1 million.

◦ Inventories in Aluminum Extrusions increased $16.8 million primarily due to higher average aluminum prices and increased raw material levels from seasonally low levels at the end of last year.

DIO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of inventory balances calculated on the FIFO basis) was approximately 48.0 days for the 12 months ended March 31, 2025 and 47.4 days for the 12 months ended December 31, 2024.

◦ Inventories in PE Films increased $0.8 million primarily due to higher raw materials levels.

DIO was approximately 50.7 days for the 12 months ended March 31, 2025 and 50.3 days for the 12 months ended December 31, 2024.

• Net property, plant and equipment decreased $2.5 million primarily due to depreciation expense of $5.1 million, partially offset by capital expenditures of $2.7 million.

• Identifiable intangible assets, net decreased $0.4 million (6.0%) due to amortization expense.

• Deferred income tax assets decreased $2.3 million (9.1%).

See Note 8 for more information.

• Accounts payable decreased $6.0 million (6.3%).

◦ Accounts payable in Aluminum Extrusions decreased $10.3 million primarily due to the timing of payments.

DPO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of accounts payable balances) was approximately 45.7 days for the 12 months ended September 30, 2024 and 49.8 days for the 12 months ended December 31, 2023.

• Accounts payable increased $18.5 million (28.6%).

◦ Accounts payable in Aluminum Extrusions increased $16.0 million primarily due to higher average aluminum prices and increased raw material purchases.

DPO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of accounts payable balances) was approximately 45.4 days for the 12 months ended March 31, 2025 and 44.5 days for the 12 months ended December 31, 2024.

◦ Accounts payable in PE Films increased $0.9 million primarily due to higher raw material purchases.

DPO was approximately 42.9 days for the 12 months ended September 30, 2024 and 43.4 days for the 12 months ended December 31, 2023.

◦ Accounts payable in Flexible Packaging Films increased $3.4 million primarily due to higher raw material purchases and favorable payment terms.

DPO was approximately 75.4 days for the 12 months ended September 30, 2024 and 61.7 days for the 12 months ended December 31, 2023.

Net cash provided by operating activities was $6.1 million in the first nine months of 2024 compared to net cash provided by operating activities of $44.2 million in the first nine months of 2023.

The decrease was primarily due to lower working capital, partially offset by higher EBITDA from ongoing operations for all reportable segments in the first nine months of 2024 versus prior year.

Net cash used in investing activities was $7.5 million in the first nine months of 2024 compared to $22.0 million the first nine months of 2023.

The decrease was primarily due to lower capital expenditures ($14.6 million).

Net cash used in financing activities of $3.6 million in the first nine months of 2024 compared to net cash provided by financing activities of $7.7 million in the first nine months of 2023.

The change was primarily due to higher net debt principal payments ($21.0 million) under the ABL Facility (as defined below) during the first nine months of 2024 as compared to the first nine months of 2023 and dividends paid ($8.9 million) during the first nine months of 2023.

At September 30, 2024, the Company had cash, cash equivalents and restricted cash of $6.6 million, including cash and cash equivalents held in locations outside the U.S.

DPO was approximately 39.9 days for the 12 months ended March 31, 2025 and 41.3 days for the 12 months ended December 31, 2024.

Net cash used in operating activities was $5.0 million in the first three months of 2025 compared to net cash used in operating activities of $7.7 million in the first three months of 2024.

The change in operating activities from the Company's continuing business segments is primarily due to lower working capital, partially offset by lower EBITDA from ongoing operations.

Net cash provided by investing activities was $6.9 million in the first three months of 2025 compared to net cash used in investing activities of $2.4 million the first three months of 2024.

The change is primarily due to $9.8 million post-closing settlement proceeds associated with the sale of Terphane received in the first three months of 2025, partially offset by higher capital expenditures ($0.5 million).

Net cash used in financing activities of $5.3 million in the first three months of 2025 compared to net cash provided by financing activities of $2.0 million in the first three months of 2024.

The change is primarily due to higher debt principal payments, net of borrowings ($7.3 million) under the ABL Facility (as defined below).

At March 31, 2025, the Company had cash and cash equivalents of $3.7 million, including cash and cash equivalents held in locations outside the U.S.

of $1.3 million.

Debt and Credit Agreements

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

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

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

In December 2023, the Company entered into Amendment No.

3 to the Second Amended and Restated Credit Agreement (the "Credit Agreement”), which, prior to the ABL Adjustment Date (as defined below), provided the Company with a $180 million senior secured asset-based revolving credit facility.

In April 2024, the Company entered into Amendment No.

4 to the Credit Agreement (as amended by Amendment No.

1 unchanged sentence

4, the “ABL Facility”) that, among other items:

(i) moves the ABL Adjustment Date (defined below) from March 31, 2025 to September 30, 2025 and (ii) requires weekly reporting of the borrowing base financial covenant until the ABL Adjustment Date.

(i) moved the ABL Adjustment Date (defined below) from March 31, 2025 to September 30, 2025 and (ii) required weekly reporting of the borrowing base financial covenant until the ABL Adjustment Date.

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 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 September 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.

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.

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)

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

April 2025 30,340

May 2025 30,700

June 2025 31,030

July 2025 31,370

August 2025 31,710

September 2025 $ 32,080

• 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.

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 received the proceeds from the sale of Terphane (the “ABL Adjustment Date”), the $180 million ABL Facility was to be reduced to $125 million.

On November 1, 2024, with the closing of the sale of Terphane, the ABL Adjustment Date occurred.

The ABL Facility was to expire on June 30, 2026.

The financial covenant is a minimum fixed charge coverage ratio (as defined in the ABL Facility) of 1.00:1.00 that will be triggered in the event that availability is less than 10% of the $125 million commitment amount and continuing thereafter until availability is greater than 10% of the $125 million commitment amount for 30 consecutive days.

As of March 31, 2025, funds available to borrow under the ABL Facility was $50.9 million, or 40.7% of the aggregate commitment of $125 million.

On May 6, 2025, the Company entered into Amendment No.

5 (the "Amended ABL Facility") to the Credit Agreement.

The material terms of the Amended ABL Facility include the following:

• Provides for a $125 million asset-based facility.

• The maturity date was extended to May 6, 2030.

• The interest rate margins were reduced to a range between 1.75%-2.25% for any Term Benchmark Loan and any RFR Loan (each as defined in the Amended ABL Facility) and 0.75%-1.25% for any ABR Loan (as defined in the Amended ABL Facility), in each case, based on average quarterly availability.

• The commitment fee was decreased from 0.40% to (i) 0.25% if the Average Usage (as defined in the Amended ABL Facility) is greater than or equal to 50% and (ii) 0.375% if Average Usage is less than 50%.

• The borrowing base calculation was amended as follows:

(i) real property is no longer eligible to be included in the borrowing base, (ii) the PP&E Component (as defined in the Amended ABL Facility), as included in the borrowing base, was changed to the lesser of (a) 60% of the Net Orderly Liquidation Value (as defined in the Amended ABL Facility) in place of eligible equipment and (b) 30% of the borrowing base and (iii) the amount of eligible cash included in the borrowing base is now capped at 15% of the borrowing base.

• A Cash Dominion Period is now triggered when (x) availability falls below the greater of (i) 12.5% of the Line Cap (as defined in the Amended ABL Facility) and (ii) $12.6 million or (y) during the continuation of an event of default and continuing until (x) availability is above the greater of (i) 12.5% of the Line Cap and (ii) $12.6 million for 30 consecutive days and (y) no events of default are continuing.

• Compliance with the fixed charge coverage ratio of 1.00 to 1.00 is now triggered upon the occurrence of availability being less than the greater of (x) 10% of the Line Cap and (y) $10 million and will continue until availability is equal to or greater than the greater of (x) 10% of the Line Cap and (y) $10 million for 30 consecutive days, as long as no events of default are continuing.

The computation of Credit EBITDA, as defined in the ABL Facility, is presented below.

Computations of Credit EBITDA (as defined in the ABL Facility) as of and for the

Twelve Months Ended September 30, 2024 *

Computations of Credit EBITDA for the twelve months ended September 30, 2024 (in thousands):

Twelve Months Ended March 31, 2025 *

Computations of Credit EBITDA for the twelve months ended March 31, 2025 (in thousands):

Net income (loss) $ (57,752)

20 unchanged sentences

Credit EBITDA $ 47,815

Fixed charge coverage ratio**:

Credit EBITDA $ 47,815

Unfinanced capital expenditures $ 12,871

Fixed charges $ 5,424

Fixed charge coverage ratio 6.44

* Credit EBITDA is not intended to represent net income (loss) or cash flow from operations as defined by GAAP and should not be considered as an alternative to either net income (loss) or to cash flow.

The computation of the ABL Facility Minimum Liquidity financial covenant, as defined in the ABL Facility, is presented below.

(In thousands, except percentages) September 30, 2024 December 31, 2023

Maximum aggregate principal $ 180,000 $ 180,000

Maximum borrowing limit per the Borrowing base as defined in the ABL Facility (includes eligible domestic cash and cash equivalents of $4,282 as of September 30, 2024 and $3,846 as of December 31, 2023)

$ 180,000 $ 172,286

ABL Facility outstanding debt (matures on June 30, 2026) 122,000 126,322

Outstanding standby letters of credit 12,937 13,080

ABL Facility Minimum Liquidity $ 45,063 $ 32,884

Minimum Liquidity financial covenant $ 10,000 $ 10,000

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.

After the ABL Adjustment Date, the Company is no longer prohibited from making dividend payments and share repurchases.

All decisions with respect to the declaration and payment of future dividends and share repurchases will be made by the Board in its sole discretion based upon earnings, financial condition, anticipated cash needs and other such considerations as the Board deems relevant.

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

On November 1, 2024, with the closing of the Terphane Sale, the ABL Adjustment Date has occurred.

Terphane Brazil Loan

On October 26, 2023, Terphane Ltda., the Company’s wholly owned subsidiary in Brazil, borrowed $20 million secured by certain of its assets (“Terphane Brazil Loan”).

Dollar borrowing matures on October 30, 2028.

On October 26, 2023, the Company borrowed $20 million from Terphane Ltda.

(the “Intercompany Loan”) at the same interest rate as the Terphane Brazil Loan, thereby transferring the funds to the U.S.

In connection with the closing of the Terphane Sale, both the Terphane Brazil Loan and the Intercompany Loan were assumed by Oben.

** Fixed Charge Coverage Ratio is computed as the ratio of (a) Credit EBITDA minus Unfinanced Capital Expenditures to (b) Fixed Charges.

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 $1.4 million as of September 30, 2024, revolving loan with the Industrial and Commercial Bank of China.

(“Guangzhou Tredegar”), entered into a 9.5 million Chinese Yuan revolving loan with the Industrial and Commercial Bank of China.

The loan matures on July 3, 2025.

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 September 30, 2024, the National Interbank Funding Center rate was 3.35%.

As of March 31, 2025, the interest rate on the outstanding loan balance was 2.90%.

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.

For more information on the ABL Facility, the Terphane Brazil Loan and the PE Films Guangzhou Loan, see Note 10 for additional information.

The mortgage contract has a maximum value of 30 million Chinese Yuan

and is effective from June 25, 2024 through May 31, 2027.

As of March 31, 2025 and December 31, 2024, this loan is presented as current debt on the consolidated balance sheets.

For more information on the ABL Facility and the PE Films Guangzhou Loan, see Note 10.

The Company believes that existing borrowing availability, current cash balances and cash flow from operations will be sufficient to satisfy short term material cash requirements related to working capital, capital expenditure, and debt repayments for at least the next 12 months.

In the longer term, liquidity will depend on many factors, including the results of operations, the timing and extent of capital expenditures, changes in operating plans, or other events that would cause the Company to seek additional financing in future periods.

In addition, the completion of the Terphane Sale has provided additional liquidity.

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 2. Management’s Discussion and Analysis