What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-08 · 233 added, 142 removed, 206 unchanged (65% of the section changed)

38 unchanged sentences

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.

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 1,600 employees, the Company operates manufacturing facilities in the U.S.

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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.

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.

Second quarter 2025 net income (loss) from continuing operations was $1.8 million ($0.05 per diluted share) compared to $9.2 million ($0.27 per diluted share) in the second quarter of 2024.

Second Quarter Financial Results Highlights

• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) from ongoing operations for Aluminum Extrusions was $9.3 million in the second quarter of 2025 versus $12.9 million in the second quarter of 2024 and versus $9.2 million in the first quarter of 2025.

◦ Sales volume was 40.7 million pounds in the second quarter of 2025 versus 34.9 million pounds in the second quarter of 2024.

◦ Net new orders increased 21% in the second quarter of 2025 versus the second quarter of 2024 and declined 11% versus the first quarter of 2025.

Open orders at the end of the second quarter of 2025 were 25 million pounds, which was up from 14 million pounds at the end of the second quarter of 2024 and flat with the end of the first quarter of 2025.

• EBITDA from ongoing operations for PE Films was $6.7 million in the second quarter of 2025 versus $10.1 million in the second quarter of 2024 and versus $7.5 million in the first quarter of 2025.

◦ Sales volume was 9.8 million pounds in the second quarter of 2025 versus 10.5 million pounds in the second quarter of 2024.

Results of Operations

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.

Second Quarter of 2025 Compared with the Second Quarter of 2024 Results

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

(In thousands)

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

Net income (loss) from continuing operations for the three months ended June 30, 2024

Income tax expense (benefit) (38)

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

Income (loss) from continuing operations before income taxes for the three months ended June 30, 2024

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

4 unchanged sentences

Selling, general and administrative (1,474)

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

Interest expense (646)

Total (32,559)

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

Income (loss) from continuing operations before income taxes for the three months ended June 30, 2025

Income tax expense (benefit) 984

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.

Net income (loss) from continuing operations for the three months ended June 30, 2025

Sales in the second quarter of 2025 increased by $25.2 million compared with the second quarter of 2024.

Net sales (sales less freight) in Aluminum Extrusions increased $29.0 million, primarily due to higher sales volume and the pass-through of higher metal costs.

Net sales in PE Films decreased $4.6 million, primarily due to lower net sales in surface protection films.

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 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,

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 13.6% in the second quarter of 2025 compared to 19.2% in the second quarter of 2024.

The gross profit margin in Aluminum Extrusions decreased compared to the prior year period primarily due to higher variable manufacturing costs associated with material yield, higher labor rate, unfavorable labor productivity associated with onboarding new employees, higher expense for externally produced billet related to the increase in volume, unfavorable maintenance and supply expense, higher utilities and higher fixed costs, partially offset by higher sales volume and the pass-through of higher metal costs.

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 charge of $0.7 million in the second quarter of 2025 versus a benefit of $1.1 million in the second quarter of 2024.

The gross profit margin in PE Films decreased due to a lower Surface Protection contribution margin associated with lower volume, partially offset by cost improvements and favorable pricing and the pass-through lag associated with resin costs.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 11.6% in the second quarter of 2025 compared with 12.4% in the second quarter of 2024.

Higher SG&A spending was primarily due to higher stock-based compensation and higher employee-related incentive compensation, partially offset by lower external and internal audit fees.

Interest expense was $1.8 million in the second quarter of 2025 in comparison to $1.1 million in the second quarter of 2024.

The increase was primarily due to the write-off of deferred financing fees related to the entry into Amendment No.

5 to the Second and Restated Credit Agreement of $0.8 million, partially offset by lower weighted average total debt outstanding and lower interest rates.

The effective tax rate used to compute income taxes (benefit) from continuing operations in the second quarter of 2025 was 35.0% compared to (0.4)% in the second quarter of 2024.

The effective tax rate in the second quarter of 2025 was impacted by taxable discrete items, including stock-based compensation, and lower book income.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the second 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 June 30,

(In millions) 2025 2024

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

Total for Aluminum Extrusions $ — $ 1.3

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

Richmond, Virginia Technical Center closure expenses, including severance 2

Total for PE 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 3

Professional fees associated with the transition to the ABL Facility 1

Proceeds on the sale of corporate-owned land 3

Total for Corporate $ — $ 0.2

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

See Note 1 for additional information.

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

Average total debt outstanding and interest rates were as follows:

Three Months Ended June 30,

(In millions, except percentages) 2025 2024

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

Average total outstanding debt balance $ 61.2 $ 126.9

Average interest rate 6.7 % 9.1 %

First Six Months of 2025 Compared with the First Six Months of 2024 Results

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

(In thousands)

Net income (loss) from continuing operations for the six months ended June 30, 2024

Income tax expense (benefit) 2,346

Income (loss) from continuing operations before income taxes for the six months ended June 30, 2024

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

Other income (expense), net 1,048

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

Cost of goods sold (50,059)

Freight (1,376)

Selling, general and administrative (5,601)

Interest expense (475)

Total (57,049)

Income (loss) from continuing operations before income taxes for the six months ended June 30, 2025

Income tax expense (benefit) 1,560

Net income (loss) from continuing operations for the six months ended June 30, 2025

Sales in the first six months of 2025 increased by $45.9 million compared with the first six months of 2024.

Net sales (sales less freight) in Aluminum Extrusions increased $48.4 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 in the first quarter of 2025.

Net sales in PE Films decreased $3.8 million, primarily due to a decrease in sales volume 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 13.9% in the first six months of 2025 compared to 17.9% in the first six months of 2024.

The gross profit margin in Aluminum Extrusions decreased compared to the prior year period primarily due to lower spread in the first quarter of 2025 (the difference between selling prices and metal costs) associated with a shift in sales mix, higher variable manufacturing costs associated with material yield in the first five months of 2025, which was unfavorable to projected rates, higher labor rates, decreased labor productivity associated with onboarding new employees, higher maintenance expense, primarily associated with downed equipment and extreme winter weather events in the first quarter of 2025, higher die expense associated with the timing of purchases in the first quarter of 2025, higher expense for externally produced billet related to increasing volume in the second quarter of 2025 and higher utilities, partially offset by higher volume and the pass-through of higher metal costs.

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 $1.1 million in the first six months of 2025 versus a charge of $0.1 million in the first six months of 2024.

The gross profit margin in PE Films decreased due to a lower volume associated with Surface Protection, partially offset by cost improvements and favorable pricing and the pass-through lag associated with resin costs.

As a percentage of sales, SG&A and R&D expenses were 12.1% in the first six months of 2025, consistent with the first six months of 2024.

Interest expense was $2.8 million in the first six months of 2025 in comparison to $2.3 million in the first six months of 2024.

The increase was primarily due to the write-off of deferred financing fees related to the entry into Amendment No.

5 to the Second and Restated Credit Agreement of $0.8 million, partially offset by lower weighted average total debt outstanding and lower interest rates.

The effective tax rate used to compute income taxes (benefit) from continuing operations in the first six months of 2025 was 38.4% compared to 16.6% in the first six months of 2024.

The effective tax rate in the first six months of 2025 was impacted by taxable discrete items, including stock-based compensation, and lower book income.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the first six months 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.

Six Months Ended June 30,

(In millions) 2025 2024

Aluminum Extrusions:

(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 and other matters 1

Aluminum premium charge as a result of unplanned maintenance interruptions 2

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Professional fees associated with the transition to the ABL Facility 1

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

Proceeds on the sale of corporate-owned land 4

Total for Corporate $ 2.8 $ 1.5

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Average total debt outstanding and interest rates were as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In millions, except percentages) 2025 2024

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A summary of results for Aluminum Extrusions is provided below:

Three Months Ended Favorable/

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

2025 2024 % Change

Three Months Ended Favorable/ Six Months Ended Favorable/

(In thousands, except percentages) June 30, (Unfavorable) June 30, (Unfavorable)

2025 2024 % Change 2025 2024 % Change

Sales volume (lbs) 40,690 34,906 16.6% 78,608 68,747 14.3%

14 unchanged sentences

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.

Second Quarter 2025 Results vs.

Second Quarter 2024 Results

Net sales (sales less freight) in the second quarter of 2025 increased 24.2% versus the second quarter of 2024 primarily due to higher sales volume and the pass-through of higher metal costs.

Sales volume in the second quarter of 2025 increased 16.6% versus the second quarter of 2024 and 7.4% versus the first quarter of 2025.

The Company saw increased shipments for curtainwall, storefront and institutional walkway covers within the nonresidential B&C market and TSLOTS TM aluminum framing systems, for both year-over-year and sequential periods.

Within the specialty market, shipments for solar panels within the electrical product group and consumer durables increased versus the second 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, while the growth in consumer durables could be associated with a pull-forward of demand in anticipation of higher tariff-related pricing.

Net new orders in the second quarter of 2025 increased 21% versus the second quarter of 2024 and decreased 11% versus the first quarter of 2025.

The second quarter of 2025 marked the first quarterly decline for this metric, following 10 consecutive quarterly increases.

Open orders at the end of the second quarter of 2025 were 25 million pounds, versus 14 million pounds at the end of the second quarter of 2024 and 25 million pounds at the end of the first quarter of 2025.

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).

Effective June 4, 2025, the Section 232 tariffs were increased to 50%, except for the United Kingdom, after previously being increased from 10% to 25%, effective March 12, 2025.

These measures are in addition to existing antidumping and countervailing duties.

There are no country-specific or product-specific exclusions occurring to date, except for an alternative arrangement with the United Kingdom.

Tariffs and duties are part of the mechanical pass-through to customers in the U.S.

market for aluminum extrusions for changes in metal costs.

In addition, the Company implemented price increases during the third quarter of 2025 to offset other tariff-related cost increases that are not part of the metal cost pass-through mechanism.

The trend of net new orders declined after the most recent tariff increase to 50% from an average of 3.4 million pounds per week for the weekly periods ending from January 5 to June 1, 2025, to an average of 2.7 million pounds per week for the weekly periods ending June 8, 2025 through August 1, 2025.

The Company believes that the 20% decline in orders after the step-up in tariff to 50% is due to a combination of lower demand for extrusions in the U.S.

and customers pausing orders to evaluate the permanency of the new higher tariff.

The favorable shift in market share from imports to U.S.

producers has not offset the lower demand at the stepped-up tariff level.

EBITDA from ongoing operations in the second quarter of 2025 decreased $3.6 million versus the second quarter of 2024, primarily due to:

• A $0.7 million increase in contribution margin (net sales less variable costs) associated with:

◦ Higher volume ($5.2 million), offset by higher variable manufacturing costs associated with material yield ($0.7 million unfavorable in the second quarter of 2025 versus $0.1 million unfavorable in the second quarter of 2024);

higher labor rate ($0.6 million);

unfavorable labor productivity associated with onboarding new employees ($0.7 million);

higher expense for externally produced billet related to the increase in volume ($0.5 million);

unfavorable maintenance and supply expense ($0.3 million);

and higher utilities ($0.2 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 charge of $0.7 million in the second quarter of 2025 versus a benefit of $1.2 million in the second quarter of 2024.

▪ The underlying average U.S.

Midwest transaction prices for aluminum (which includes tariffs and duties) and the main factor causing the flow-through timing issue for the related periods compared, were $1.49 and $1.57 per pound in May and February of 2025, and $1.36 and $1.17 per pound in May and February of 2024.

The average U.S.

Midwest transaction prices for aluminum for the second and first quarters of 2025 and second and first quarters of 2024 were $1.56, $1.52, $1.34 and $1.18 per pound, respectively.

• Higher fixed costs associated with wage increases and compensation-related costs ($0.8 million), higher maintenance and utilities expenses ($0.3 million) and added resources to support increasing volume ($0.3 million).

• Higher SG&A expenses primarily associated with employee-related compensation ($0.7 million).

• Higher other expense for employee-related medical costs caused by an increase in the number of high-cost medical claims versus favorable experience in recent years ($1.2 million).

The Company is self-insured for medical claims with stop loss coverage for claims of over $0.3 million.

• Manufacturing costs versus expectations during the second quarter of 2025 were unfavorable by approximately $3 million, which occurred in April and May due to inefficiencies from the ramp-up of production and hiring to fulfill the higher order rate.

The Company believes that these issues have been resolved.

First Six Months of 2025 Results vs.

First Six Months of 2024 Results

Net sales in the first six months of 2025 increased 20.7% versus the first six months 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 in the first quarter of 2025.

Sales volume in the first six months of 2025 increased 14.3% versus the first six months of 2024.

EBITDA from ongoing operations in the first six months of 2025 decreased $7.0 million in comparison to the first six months of 2024 primarily due to:

• A $1.4 million increase in contribution margin associated with:

◦ Higher volume ($8.6 million), significantly offset by lower spread in the first quarter of 2025 (the difference between selling prices and metal costs) associated with a shift in sales mix ($2.1 million);

higher variable manufacturing costs associated with material yield in the first five months of 2025, which was unfavorable to projected rates ($1.4 million unfavorable in the first six months of 2025 versus $0.5 million favorable in the first six months of 2024);

higher labor rates ($1.4 million);

decreased labor productivity associated with onboarding new employees ($0.5 million);

higher maintenance expense, primarily associated with downed equipment and extreme winter weather events in the first quarter of 2025 ($1.0 million);

higher die expense associated with the timing of purchases in the first quarter of 2025 ($1.0 million);

higher expense for externally produced billet related to increasing volume in the second quarter of 2025 ($0.5 million);

and higher utilities ($0.4 million).

◦ The timing of the flow-through under the FIFO method of aluminum raw material costs, which were previously acquired at lower prices in a quickly changing commodity pricing environment and passed through to customers, resulted in a benefit of $1.1 million in the first six months of 2025 versus a charge of $0.1 million in the first six months of 2024.

• Higher fixed costs associated with wage increases and compensation-related costs ($1.8 million), higher maintenance and utilities ($0.7 million) and added resources to support increasing volume ($0.6 million).

• Higher SG&A expenses primarily associated with employee-related compensation ($2.4 million), increased training and onboarding expense ($0.5 million) and routine environmental compliance costs ($0.4 million).

• Higher other expense for employee-related medical costs caused by an increase in the number of high-cost medical claims versus favorable experience in recent years ($1.2 million).

R efer to Item 3.

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A summary of results for PE Films is provided below:

Three Months Ended Favorable/

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

2025 2024 % Change

Three Months Ended Favorable/ Six Months Ended Favorable/

(In thousands, except percentages) June 30, (Unfavorable) June 30, (Unfavorable)

2025 2024 % Change 2025 2024 % Change

Sales volume (lbs) 9,798 10,548 (7.1)% 19,437 20,583 (5.6)%

14 unchanged sentences

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;

Second Quarter 2025 Results vs.

Second Quarter 2024 Results

Net sales in the second quarter of 2025 decreased 15.8% versus the second quarter of 2024 due to lower sales volume in surface protection films, which decreased 18.2% in the second quarter of 2025 versus exceptionally strong volume in the second quarter of 2024 and 10.1% versus the first quarter of 2025.

Recent volume performance for Surface Protection has exceeded expectations and is expected to moderate for the remainder of the year.

Volume for overwrap films, which are predominantly manufactured and sold in the U.S.

and used in consumer staple items, increased 6.1% in the second quarter of 2025 versus the second quarter of 2024.

To date, Surface Protection has not experienced an adverse impact on customer demand related to 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.

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

• A decrease in contribution margin of $3.1 million resulting from:

◦ A $3.3 million decrease from Surface Protection associated with lower volume ($4.2 million), partially offset by cost improvements and favorable pricing ($0.7 million) and the pass-through lag associated with resin costs (no charge or benefit in the second quarter of 2025 versus a charge of $0.2 million in the second quarter of 2024).

◦ A $0.2 million increase from overwrap films primarily due to cost improvements ($0.2 million) and the pass-through lag associated with resin costs (no charge or benefit in the second quarter of 2025 versus a charge of $0.1 million in the second quarter of 2024), partially offset by 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 3.5 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 past 3.5 years (first six months of 2025, full year 2024, 2023 and 2022) has averaged approximately $4.8 million per quarter.

First Six Months of 2025 Results vs.

First Six Months of 2024 Results

Net sales in the first six months of 2025 decreased 7.0% compared to the first six months of 2024 primarily due to a decrease in sales volume in Surface Protection, as a result of the factors noted above.

Sales volume decreased 7.8% in Surface Protection in the first six months of 2025 versus the first six months of 2024.

Sales volume for overwrap films decreased 3.1% in the first six months of 2025 versus the first six months of 2024.

EBITDA from ongoing operations in the first six months of 2025 decreased $2.8 million versus the first six months of 2024, primarily due to:

• A decrease in contribution margin of $2.2 million resulting from:

◦ A $1.8 million decrease in Surface Protection associated with lower volume ($3.9 million), partially offset by cost improvements and favorable pricing ($1.8 million) and the pass-through lag associated with resin costs (a charge of $0.1 million in the first six months of 2025 versus a charge of $0.4 million in the first six months of 2024).

◦ A $0.5 million decrease in overwrap films primarily due to lower volume and unfavorable mix and pricing ($0.8 million), partially offset by cost improvements ($0.1 million) and the pass-through lag associated with resin costs (a charge of $0.1 million in the first six months of 2025 versus a charge of $0.2 million in the first six months of 2024).

• Higher fixed costs primarily associated with wage increases and compensation-related costs ($0.4 million).

• Higher SG&A expenses primarily associated with increased R&D expenses ($0.2 million).

R efer to Item 3.

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There is no amortization expense for PE Films.

Corporate Expenses, Interest & Other

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.

Corporate Expenses

Corporate expenses, net in the first six months of 2025 increased $2.6 million compared to the first six months of 2024 primarily due to higher professional fees associated with business development activities ($3.5 million), higher employee-related incentive compensation ($1.1 million) and higher stock-based compensation ($0.6 million), partially offset by a gain on the sale of corporate-owned land ($1.5 million), lower external and internal audit fees ($0.7 million) and lower professional fees associated with remediation activities related to internal control over financial reporting ($0.4 million).

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

A reconciliation of segment financial information to consolidated results for the Company for the three and six months ended June 30, 2025 and 2024.

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Aluminum Extrusions $ 148,367 $ 119,413 $ 281,999 $ 233,636

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Interest expense 1,785 1,139 2,798 2,323

Gain on investment in kaleo, Inc.

Corporate expenses, net 6,024 5,426 13,804 11,177

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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, 2024 to March 31, 2025 are summarized below.

Changes in operating assets and liabilities from December 31, 2024 to June 30, 2025 are summarized below.

• Accounts and other receivables increased $14.0 million (21.6%).

◦ 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.

◦ Accounts and other receivables in Aluminum Extrusions increased $12.9 million primarily due to higher sales volume and the pass-through of lower metal costs, partially offset by a lower average conversion price add-on to metal costs associated with a shift in sales mix in the first quarter of 2025.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 44.8 days for the 12 months ended June 30, 2025 and 44.7 days for the 12 months ended December 31, 2024.

◦ Accounts and other receivables in PE Films increased $1.1 million primarily due to higher sales volume related to overwrap films during the second quarter of 2025 compared to the fourth quarter of 2024.

DSO was approximately 25.8 days for the 12 months ended June 30, 2025 and 24.9 days for the 12 months ended December 31, 2024.

• Inventories increased $15.3 million (29.7%).

◦ Inventories in Aluminum Extrusions increased $14.7 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.

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 49.6 days for the 12 months ended June 30, 2025 and 47.4 days for the 12 months ended December 31, 2024.

◦ Inventories in PE Films increased $0.6 million primarily due to higher finished goods levels.

DIO was approximately 51.1 days for the 12 months ended June 30, 2025 and 50.3 days for the 12 months ended December 31, 2024.

• Net property, plant and equipment decreased $5.5 million primarily due to depreciation expense of $10.0 million, partially offset by capital expenditures of $5.1 million.

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◦ Accounts payable in Aluminum Extrusions increased $2.7 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 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.

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 46.1 days for the 12 months ended June 30, 2025 and 44.5 days for the 12 months ended December 31, 2024.

◦ Accounts payable in PE Films decreased $0.8 million primarily due to lower raw material purchases.

DPO was approximately 38.9 days for the 12 months ended June 30, 2025 and 41.3 days for the 12 months ended December 31, 2024.

Net cash used in operating activities was $2.9 million in the first six months of 2025 compared to net cash provided by operating activities of $7.3 million in the first six months of 2024.

The change in operating activities from the Company's continuing business segments is primarily due to higher working capital and lower segment EBITDA from ongoing operations.

Net cash provided by investing activities was $6.1 million in the first six months of 2025 compared to net cash used in investing activities of $4.6 million the first six 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 and proceeds on the sale of corporate-owned land ($1.9 million), partially offset by higher capital expenditures ($0.9 million).

Net cash used in financing activities of $0.6 million in the first six months of 2025 compared to net cash used in financing activities of $4.9 million in the first six months of 2024.

The change is primarily due to lower debt principal payments, net of borrowings ($5.0 million) under the ABL Facility (as defined below) in the first six months of 2025, partially offset by higher deferred financing fees paid associated with Amendment No.

5 (defined below) to the ABL Facility in the first six months of 2025.

At June 30, 2025, the Company had cash and cash equivalents of $9.8 million, including cash and cash equivalents held in locations outside the U.S.

of $1.8 million.

Debt and Credit Agreements

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.

3 and Amendment No.

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

(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.

In May 2025, the Company entered into Amendment No.

5 (“Amendment No.

5”) to the Second Amended and Restated Credit Agreement (the "ABL Facility"), which provides the Company with a $125 million senior secured asset-based revolving credit facility.

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 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.

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, and owned machinery and equipment.

Amendment No.

5 extended the maturity date of the ABL Facility to May 6, 2030.

As of June 30, 2025, funds available to borrow under the ABL Facility was $50.6 million, or 40.5% of the aggregate commitment of $125 million.

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 the greater of (x) 10% of the Line Cap (as defined in the ABL Facility) 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.

In accordance with the ABL Facility, the lenders have been provided with the Company’s financial statements, covenant compliance certificates and projections to facilitate their ongoing assessment of the Company.

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

As of June 30, 2025, the Company was in compliance with all debt covenants.

The computation of Credit EBITDA, as defined in the ABL Facility, and fixed charge coverage ratio is presented below.

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

Twelve Months Ended March 31, 2025 *

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

Twelve Months Ended June 30, 2025 *

Computations of Credit EBITDA for the twelve months ended June 30, 2025 (in thousands):

Net income (loss) $ (64,814)

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Losses related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting —

Fees, costs and expenses incurred in connection with the amendment process 355

Terphane sale transaction costs in an amount not to exceed $10,000 —

Fees, costs and expenses incurred in connection with the amendment process (Amendment No.

3 “ABL Transition”) 412

Fees, costs and expenses incurred in connection with the amendment process (Amendment No.

After-tax income related to discontinued operations —

5 unchanged sentences

Income related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting —

Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period —

Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions —

Plus or minus, as applicable, pro forma EBITDA adjustments to pension expense associated with the early payment of pension obligations (181)

Credit EBITDA $ 41,950

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PE Films Guangzhou Loan

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

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

(“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 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.

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

This loan matured on July 3, 2025.

The interest rate was 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, 2025, the interest rate on the outstanding loan balance was 2.90%.

The revolving loan was 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.

Guangzhou Tredegar has the option to enter into additional loan contracts with the Industrial and Commercial Bank of China for the duration of the mortgage contract.

As of June 30, 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.

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 expenditures, 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.

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