What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 160 added, 156 removed, 283 unchanged (53% of the section changed)

46 unchanged sentences

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.

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.

Third quarter 2025 net income (loss) from continuing operations was $7.1 million ($0.20 per diluted share) compared to $(3.4) million ($(0.10) per diluted share) in the third quarter of 2024.

Third Quarter Financial Results Highlights

• EBITDA from ongoing operations for Aluminum Extrusions was $16.8 million in the third quarter of 2025 versus $6.2 million in the third quarter of 2024 and versus $9.3 million in the second quarter of 2025.

◦ Sales volume was 41.3 million pounds in the third quarter of 2025 versus 34.6 million pounds in the third quarter of 2024 and 40.7 million pounds in the second quarter of 2025.

◦ Net new orders decreased 5% in the third quarter of 2025 versus the third quarter of 2024 and 16% versus the second quarter of 2025.

Open orders at the end of the third quarter of 2025 were 19 million pounds versus 16 million pounds at the end of the third quarter of 2024 and 25 million pounds at the end of the second quarter of 2025.

• EBITDA from ongoing operations for PE Films was $7.2 million in the third quarter of 2025 versus $5.9 million in the third quarter of 2024 and versus $6.7 million in the second quarter of 2025.

◦ Sales volume was 9.7 million pounds in the third quarter of 2025 versus 9.6 million pounds in the third quarter of 2024 and 9.8 million pounds in the second quarter of 2025.

Results of Operations

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.

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

The following table presents a bridge of consolidated net income (loss) from continuing operations from the third quarter of 2024 to the third 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 June 30, 2024

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

Income tax expense (benefit) 828

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

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

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

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Total (37,224)

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

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

Income tax expense (benefit) 2,014

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

Sales in the third quarter of 2025 increased by $48.9 million compared with the third quarter of 2024.

Net sales (sales less freight) in Aluminum Extrusions increased $46.8 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.

Net sales in PE Films increased $1.0 million, primarily due to an increase in sales volume 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 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,

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 16.0% in the third quarter of 2025 compared to 12.4% in the third quarter of 2024.

The gross profit margin in Aluminum Extrusions increased compared to the prior year period primarily due to higher volume, favorable pricing and lower manufacturing costs associated with material yield, partially offset by higher labor rates, unfavorable labor productivity associated with onboarding new employees, higher maintenance and supply expense, and higher fixed costs primarily associated with wage increases and compensation-related 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 $4.3 million in the third quarter of 2025 versus a charge of $1.0 million in the third quarter of 2024.

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

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 10.5% in the third quarter of 2025 compared with 13.0% in the third quarter of 2024.

Third quarter sales increased 33.5% while SG&A increased 8.3% compared to the prior period.

Higher SG&A spending was primarily due to employee-related incentive compensation, stock-based compensation and business development activities.

Interest expense was $0.8 million in the third quarter of 2025 in comparison to $1.2 million in the third quarter of 2024.

The decrease in interest expense was primarily due to 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 third quarter of 2025 was 22.1% compared to (32.3)% in the third quarter of 2024.

The effective tax rate in the third quarter of 2025 was impacted by taxable discrete items, including stock-based compensation.

The effective tax rate in the third quarter of 2024 was impacted by a loss from continuing operations before income taxes.

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

(In millions) 2025 2024

Aluminum Extrusions:

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

Production equipment asset impairment $ 0.4 $ —

(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

Aluminum extrusion press fire at the Newnan, Georgia plant 1

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

Resolution of customer quality complaint 2

Total for Aluminum Extrusions $ 0.9 $ 1.9

(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:

1 unchanged sentence

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 $ 1.8 $ 0.5

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.

Included in "Sales" in the condensed consolidated statements of income.

Average total debt outstanding and interest rates were as follows:

Three Months Ended June 30,

Three Months Ended September 30,

(In millions, except percentages) 2025 2024

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Average interest rate 6.5 % 9.0 %

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.

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

The following table presents a bridge of consolidated net income (loss) from continuing operations from the first nine months of 2024 to the first nine 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

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

Income tax expense (benefit) 3,175

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

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

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

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Total (94,273)

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

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

Income tax expense (benefit) 3,575

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.

Net income (loss) from continuing operations for the nine months ended September 30, 2025

Sales in the first nine months of 2025 increased by $94.8 million compared with the first nine months of 2024.

Net sales (sales less freight) in Aluminum Extrusions increased $95.1 million, primarily due to higher sales volume and the pass-through of higher metal costs.

Net sales in PE Films decreased $2.8 million, primarily due to a decrease in sales volume in Surface Protection and overwrap 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 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.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 14.7% in the first nine months of 2025 compared to 16.1% in the first nine months 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 in the first five months of 2025, 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 and tariff impacts, higher die expense associated with the timing of purchases in the first quarter of 2025, higher expense for externally purchased (versus internally produced) billet related to increasing volume, higher utilities and higher fixed costs associated with wage increases and compensation-related costs, partially offset by higher volume and favorable mix.

Additionally, 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 $5.4 million in the first nine months of 2025 versus a charge of $1.0 million in the first nine months of 2024.

The gross profit margin in PE Films remained consistent with the prior period.

As a percentage of sales, SG&A and R&D expenses were 11.5% in the first nine months of 2025 compared with 12.3% in the first nine months of 2024.

Sales increased 21.4% while SG&A increased 13.2% compared to the prior period.

Higher SG&A spending was primarily due to employee-related incentive compensation, stock-based compensation and business development activities.

Interest expense was $3.6 million in the first nine months of 2025 in comparison to $3.5 million in the first nine 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,

5 to the Second Amended 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 nine months of 2025 was 27.1% compared to 27.5% in the first nine months of 2024.

The effective tax rate in the first nine months of 2025 and the first nine months of 2024 was impacted by taxable discrete items, including stock-based compensation.

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

Nine Months Ended September 30,

(In millions) 2025 2024

Aluminum Extrusions:

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

Production equipment asset impairment $ 0.4 $ —

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

1 unchanged sentence

Storm damage to the Newnan, Georgia plant 1

Aluminum extrusion press fire at the Newnan, Georgia plant 1

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

Resolution of customer quality complaint 5

Aluminum premium charge as a result of unplanned maintenance interruptions 2

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

Included in "Sales" in the condensed consolidated statements of income.

Average total debt outstanding and interest rates were as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions, except percentages) 2025 2024

5 unchanged sentences

A summary of results for Aluminum Extrusions is provided below:

Three Months Ended Favorable/ Six Months Ended Favorable/

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

Three Months Ended Favorable/ Nine Months Ended Favorable/

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

2025 2024 % Change 2025 2024 % Change

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

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.

Third Quarter 2025 Results vs.

Third Quarter 2024 Results

Net sales (sales less freight) in the third quarter of 2025 increased 40.4% versus the third quarter of 2024 primarily due to higher sales volume and the pass-through of higher metal costs.

Sales volume in the third quarter of 2025 increased 19.5% versus the third quarter of 2024 and 1.5% versus the second quarter of 2025.

The Company increased shipments for curtainwall, storefront and institutional walkway covers within the nonresidential B&C market versus the third quarter of 2024.

Within the specialty market, shipments for solar panel products within the electrical product group, machinery and equipment, consumer durables and distribution products increased versus the third quarter of last year.

The Company attributes the increase in nonresidential B&C and consumer durables to a pull-forward of demand earlier in the year as customers placed orders in anticipation of higher tariff-related pricing ( see discussion on net new orders below) .

Year-over-year growth in shipments for TSLOTS TM aluminum framing systems was primarily associated with increased demand for infrastructure associated with data containment and data centers.

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

Net new orders in the third quarter of 2025 decreased 5% versus the third quarter of 2024 and 16% versus the second quarter of 2025.

The decrease in net new orders in the third quarter of 2025, which is largely attributed to the tariff increase to 50%, marked the second quarterly decline for this metric, following 10 consecutive quarterly increases.

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

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.

4 unchanged sentences

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.

The Company believes that the 20% decline in net new orders after the step-up in tariff to 50% is due to a combination of:

lower demand for extrusions in the U.S.;

tariffs not resulting in the expected favorable shift of market share to U.S.

aluminum extrusion producers due to the apparent undervaluing of goods by importers;

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:

When the Section 232 program was initially strengthened, while import volume remained high, U.S.

producers began to see increased market share gains against imports.

However, the U.S.

industry has seen these early gains reversed and imports have again begun gaining share at the expense of the domestic industry, which has impacted the Company’s business.

The Company is hopeful that the Administration will address the problem.

EBITDA from ongoing operations in the third quarter of 2025 increased $10.6 million versus the third quarter of 2024, primarily due to:

• A $12.7 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.

◦ Higher volume ($4.9 million), favorable pricing ($4.2 million) and lower manufacturing costs associated with material yield ($0.5 million favorable in the third quarter of 2025 versus $0.8 million unfavorable in the third quarter of 2024), partially offset by higher labor rates ($0.9 million), unfavorable labor productivity associated with onboarding new employees ($0.7 million), higher maintenance and supply expense, partially due to the impact of tariffs ($0.5 million), and higher utilities ($0.3 million).

◦ The timing of the flow-through under the 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 $4.3 million in the third quarter of 2025 versus a charge of $1.0 million in the third 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.

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 $1.89 and $1.49 per pound in August and May of 2025, and $1.25 and $1.36 per pound in August and May 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).

Midwest transaction prices for aluminum for the third and second quarters of 2025 and third and second quarters of 2024 were $1.90, $1.56, $1.27 and $1.34 per pound, respectively.

• Higher fixed costs primarily associated with wage increases and compensation-related costs ($0.6 million), higher maintenance and utilities expenses ($0.5 million) and added resources to support increasing volume ($0.3 million).

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

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:

First Nine Months of 2025 Results vs.

First Nine Months of 2024 Results

Net sales in the first nine months of 2025 increased 27.2% versus the first nine months of 2024 primarily due to higher sales volume and the pass-through of higher metal costs.

Sales volume in the first nine months of 2025 increased 16.1% versus the first nine months of 2024.

EBITDA from ongoing operations in the first nine months of 2025 increased $3.6 million in comparison to the first nine months of 2024 primarily due to:

• A $14.0 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 volume and favorable mix ($15.6 million), partially offset by higher variable manufacturing costs associated with material yield in the first five months of 2025, which was unfavorable to projected rates ($0.8 million unfavorable in the first nine months of 2025 versus $0.2 million unfavorable in the first nine months of 2024), higher labor rates ($2.3 million), decreased labor productivity associated with onboarding new employees ($1.2 million), higher maintenance expense, primarily associated with downed equipment, extreme winter weather events in the first quarter of 2025 and tariff impacts ($1.0 million), higher die expense associated with the timing of purchases in the first quarter of 2025 ($0.7 million), higher expense for externally purchased (versus internally produced) billet related to increasing volume ($1.0 million) and higher utilities ($0.7 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 $5.4 million in the first nine months of 2025 versus a charge of $1.0 million in the first nine months of 2024.

• Higher fixed costs associated with wage increases and compensation-related costs ($2.4 million), higher maintenance and utilities ($1.2 million) and added resources to support increasing volume ($0.9 million).

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• 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 ($1.1 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.

These issues were resolved and did not recur in the third quarter of 2025.

R efer to Item 3.

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A summary of results for PE Films is provided below:

Three Months Ended Favorable/ Six Months Ended Favorable/

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

Three Months Ended Favorable/ Nine Months Ended Favorable/

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

2025 2024 % Change 2025 2024 % Change

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

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.

Third Quarter 2025 Results vs.

Third Quarter 2024 Results

Net sales in the third quarter of 2025 increased 4.0% versus the third quarter of 2024 due to an increase in sales volume in surface protection films.

Sales volume increased 10.9% in surface protection films versus the third quarter of 2024 and 16.1% versus the second quarter of 2025.

Recent volume performance for Surface Protection 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.

and used in consumer staple items, decreased 11.0% in the third quarter of 2025 versus the third 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.

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:

EBITDA from ongoing operations in the third quarter of 2025 increased $1.4 million versus the third quarter of 2024, primarily due to:

• An increase in contribution margin of $1.4 million resulting from:

◦ A $1.8 million increase from Surface Protection associated with higher volume ($0.7 million), cost improvements and favorable productivity ($1.0 million) and the pass-through lag associated with resin costs

(a charge of $0.1 million in the third quarter of 2025 versus a charge of $0.2 million in the third quarter of 2024).

◦ A $0.4 million decrease from overwrap films primarily due to lower volume ($0.1 million) and unfavorable productivity ($0.3 million)

There have been significant cyclical swings in the sales volume and EBITDA from ongoing operations for PE Films since the beginning of 2022, 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 3.75 years (first nine months of 2025, full year 2024, 2023 and 2022) has averaged approximately $5.0 million per quarter.

The top four customers comprised 88% of the net sales for PE Films for the first nine months of 2025 and all of 2024.

First Nine Months of 2025 Results vs.

First Nine Months of 2024 Results

Net sales in the first nine months of 2025 decreased 3.5% compared to the first nine months of 2024 due to a decrease in sales volume in Surface Protection and overwrap films.

Sales volume decreased 1.9% in Surface Protection in the first nine months of 2025 versus the first nine months of 2024.

Sales volume for overwrap films decreased 5.7% in the first nine months of 2025 versus the first nine months of 2024.

EBITDA from ongoing operations in the first nine months of 2025 decreased $1.5 million versus the first nine months of 2024, primarily due to:

• A decrease in contribution margin of $0.8 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).

◦ Flat contribution margin in Surface Protection associated with lower volume ($3.2 million) offset by cost improvements and favorable pricing ($2.7 million) and the pass-through lag associated with resin costs (a charge of $0.2 million in the first nine months of 2025 versus a charge of $0.7 million in the first nine months of 2024).

◦ A $0.8 million decrease in overwrap films primarily due to lower volume, unfavorable mix and pricing ($0.9 million) and unfavorable productivity ($0.3 million), partially offset by cost improvements ($0.2 million) and the pass-through lag associated with resin costs (a charge of $0.1 million in the first nine months of 2025 versus a charge of $0.3 million in the first nine 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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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).

Corporate expenses, net in the first nine months of 2025 increased $4.9 million compared to the first nine months of 2024 primarily due to higher professional fees associated with business development activities ($5.3 million) and higher employee-related incentive compensation ($2.0 million), partially offset by a gain on the sale of corporate-owned land ($1.5 million) and lower external and internal audit fees ($0.7 million).

The Company does not expect significant expenses from business development activities in the fourth quarter of 2025.

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 and six months ended June 30, 2025 and 2024.

Three Months Ended Six Months Ended

June 30, June 30,

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

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

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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 June 30, 2025 are summarized below.

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

• Accounts and other receivables increased $23.1 million (35.7%).

◦ 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.

◦ Accounts and other receivables in Aluminum Extrusions increased $23.0 million primarily due to higher sales volume and the pass-through of higher metal costs.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 44.2 days for the 12 months ended September 30, 2025 and 44.7 days for the 12 months ended December 31, 2024.

◦ Accounts and other receivables in PE Films remain consistent with prior period.

DSO was approximately 25.5 days for the 12 months ended September 30, 2025 and 24.9 days for the 12 months ended December 31, 2024.

• Inventories increased $10.6 million (20.7%).

◦ Inventories in Aluminum Extrusions increased $9.1 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 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.

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 48.7 days for the 12 months ended September 30, 2025 and 47.4 days for the 12 months ended December 31, 2024.

◦ Inventories in PE Films increased $1.5 million primarily due to higher raw material levels.

DIO was approximately 52.3 days for the 12 months ended September 30, 2025 and 50.3 days for the 12 months ended December 31, 2024.

• Net property, plant and equipment decreased $6.6 million primarily due to depreciation expense of $15.0 million, partially offset by capital expenditures of $9.0 million.

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• Accounts payable increased $14.5 million (22.5%).

◦ 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 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.

◦ Accounts payable in Aluminum Extrusions increased $13.9 million primarily due to higher average aluminum prices and increased raw material purchases to support higher sales volume.

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 45.8 days for the 12 months ended September 30, 2025 and 44.5 days for the 12 months ended December 31, 2024.

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

DPO was approximately 39.5 days for the 12 months ended September 30, 2025 and 41.3 days for the 12 months ended December 31, 2024.

Net cash provided by operating activities was $17.3 million in the first nine months of 2025 compared to net cash provided by operating activities of $6.1 million in the first nine months of 2024.

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

Net cash provided by investing activities was $2.5 million in the first nine months of 2025 compared to net cash used in investing activities of $7.5 million the first nine 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 ($1.6 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.

Net cash used in financing activities of $13.7 million in the first nine months of 2025 compared to net cash used in financing activities of $3.6 million in the first nine months of 2024.

The change is primarily due to lower debt borrowings, net of principal payments ($9.5 million) under the ABL Facility (as defined below) in the first nine 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 nine months of 2025.

At September 30, 2025, the Company had cash and cash equivalents of $13.3 million, including cash and cash equivalents held in locations outside the U.S.

of $2.0 million.

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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.

As of September 30, 2025, funds available to borrow under the ABL Facility was $72.5 million, or 58.0% of the aggregate commitment of $125 million.

During the third quarter of 2025, the Company's letters of credit have been reduced from approximately $12 million to $3 million, which directly increases the Company's borrowing availability.

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.

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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.

As of September 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 June 30, 2025 *

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

Twelve Months Ended September 30, 2025 *

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

Net income (loss) $ (53,793)

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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%.

As of September 30, 2025, there was no outstanding loan balance.

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

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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.

As of December 31, 2024, this loan was 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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis