Tredegar Reports Fourth Quarter and Full Year 2024 Results

Tredegar Corporation (NYSE:TG, also the "Company" or "Tredegar")) today reported fourth quarter and full year financial results for the period ended December 31, 2024.

Fourth quarter 2024 net income (loss) from continuing operations was $(7.3) million ($(0.21) per diluted share) compared to $(34.1) million ($(1.00) per diluted share) in the fourth quarter of 2023. Net income (loss) from ongoing operations, which excludes special items, was $2.0 million ($0.06 per diluted share) in the fourth quarter of 2024 compared to $1.1 million ($0.03 per diluted share) in the fourth quarter of 2023.

Full year 2024 net income (loss) from continuing operations was $1.0 million ($0.03 per diluted share) compared to $(99.2) million ($(2.91) per diluted share) in 2023. Net income (loss) from ongoing operations was $17.2 million ($0.50 per diluted share) in 2024 compared to $(2.0) million ($(0.07) per diluted share) in 2023. A reconciliation of net income (loss) from continuing operations, a financial measure calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), to net income (loss) from ongoing operations, a non-GAAP financial measure, for the three months and year ended December 31, 2024 and 2023, is provided in Note (a) to the Financial Tables in this press release.

Fourth Quarter Financial Results Highlights

• Earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations for Aluminum Extrusions was $9.7 million in the fourth quarter of 2024 versus $8.0 million in the fourth quarter of 2023 and versus $6.2 million in the third quarter of 2024.
  • Sales volume was 35.8 million pounds in the fourth quarter of 2024 versus 32.9 million pounds in the fourth quarter of 2023.
  • Net new orders, which remain low compared to pre-2020 historical levels, increased 23% in the fourth quarter of 2024 versus the fourth quarter of 2023 and 2% versus the third quarter of 2024. Open orders at the end of the fourth quarter of 2024 were approximately 17 million pounds versus 14 million pounds at the end of the fourth quarter of 2023 and versus 16 million pounds at the end of the third quarter of 2024.
• EBITDA from ongoing operations for PE Films was $7.6 million in the fourth quarter of 2024 versus $4.5 million in the fourth quarter of 2023 and versus $5.9 million in the third quarter of 2024.
  • Sales volume was 9.1 million pounds in the fourth quarter of 2024 versus 8.5 million pounds in the fourth quarter of 2023.

John Steitz, Tredegar's president and chief executive officer, said, "Both businesses finished 2024 with solid performances in the typically seasonally low fourth quarter. Net new orders have continued to grow at Bonnell Aluminum so far in 2025. PE Films results are encouraging as well."

Mr. Steitz continued, "Our balance sheet was strong at the end of 2024 with a net leverage ratio of 1.1x, which was a dramatic improvement from 3.7x at the end of 2023, due to the cyclical recovery underway in our businesses and the completion of the sale of Terphane on November 1, 2024. We received additional post-closing settlement proceeds of $9.8 million in the first quarter of 2025."

Mr. Steitz concluded, "We support actions to increase the Section 232 tariffs on aluminum, to close loopholes that allowed foreign companies to evade the tariffs and to apply the tariffs to downstream products like the extrusions that we produce. We believe that these improved tariffs will go a long way towards leveling the playing field for U.S. aluminum extruders, strengthening American manufacturing in critical industries like aluminum, and supporting America's manufacturing workers."

OPERATIONS REVIEW

Aluminum Extrusions

Aluminum Extrusions (or Bonnell Aluminum) produces high-quality, soft-alloy and medium-strength custom fabricated and finished aluminum extrusions primarily for the following markets: building and construction ("B&C"), automotive, and specialty (which consists of consumer durables, machinery and equipment, electrical and renewable energy, and distribution end-use products). A summary of results for Aluminum Extrusions is provided below:

The following table presents the sales volume by end use market for the three months and years ended December 31, 2024 and 2023, and the three months ended September 30, 2024.

Fourth Quarter 2024 Results vs. Fourth Quarter 2023 Results

Net sales (sales less freight) in the fourth quarter of 2024 increased 11.1% versus the fourth quarter of 2023 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 fourth quarter of 2024 increased 8.8% versus the fourth quarter of 2023 and 3.5% versus the third quarter of 2024.

Net new orders increased 23% in the fourth quarter of 2024 versus the fourth quarter of 2023 and 2% versus the third quarter of 2024, largely due to improving sales opportunities. While net new orders continue to be below pre-pandemic levels, the fourth quarter of 2024 marked the ninth consecutive quarterly increase for this metric, supporting the Company's belief that a steady recovery is underway.

Open orders at the end of the fourth quarter of 2024 were 17 million pounds, which is up from 16 million pounds at the end of the third quarter of 2024 and 14 million pounds at the end of the fourth quarter of 2023. This level is below the quarterly range of 21 to 27 million pounds in 2019 before pandemic-related disruptions that resulted in long lead times, driving a peak in open orders of approximately 100 million pounds during the first quarter of 2022.

The Company participated as a member of the U.S. Aluminum Extruders Coalition which filed a trade case with the Department of Commerce ("USDOC") and the U.S. International Trade Commission ("USITC") against 15 countries in response to alleged large and increasing volumes of unfairly priced imports of aluminum extrusions since 2019. In November 2023, the USITC found that there is a reasonable indication that the American aluminum extrusions industry is materially injured or threatened with injury due to imports from 14 countries, including China. In September 2024, the USDOC announced its final determinations that aluminum extrusion producers and exporters in 14 countries, including China, sold aluminum extrusions at less-than-fair value in the U.S. In October 2024, the USITC found that U.S. producers had not been materially injured by reason of the subject imports, despite the USDOC findings of less-than-fair value pricing by those imports. The coalition has appealed the decision. The USITC negative determination in October did not impact the existing duties on aluminum extrusions from China, which were extended by the USITC in October 2022, for a period of five years. 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 expands 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 actual timing and level of the tariffs remains a fluid situation.

EBITDA from ongoing operations in the fourth quarter of 2024 increased $1.7 million versus the fourth quarter of 2023, primarily due to:

• A $4.9 million increase in contribution margin (net sales less variable costs) associated with:
  • Higher volume ($2.4 million), increased labor productivity ($1.1 million), and favorable variable manufacturing costs ($1.1 million), partially offset by higher labor and employee-related costs ($0.7 million), and lower spread (the difference between selling prices and metal costs) associated with a shift in sales mix ($1.6 million); and
  • 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 $2.5 million in the fourth quarter of 2024 versus a charge of $0.2 million in the fourth quarter of 2023.
• Inventories accounted for under the last-in first-out ("LIFO") method resulted in a charge of $1.2 million in the fourth quarter of 2024 versus a benefit of $0.9 million in the fourth quarter of 2023; and
• Higher selling, general and administrative ("SG&A") expenses of $1.3 million primarily associated with employee-related incentive compensation ($0.9 million) and headquarters rent expenses ($0.1 million).

Full Year 2024 Results vs. Full Year 2023 Results

Net sales in 2024 were relatively flat versus 2023 primarily due to flat 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.

EBITDA from ongoing operations increased $3.4 million in 2024 versus 2023, primarily due to:

• A $7.9 million increase in contribution margin associated with:
  • Favorable variable manufacturing costs ($4.8 million), higher labor productivity ($2.5 million) and higher volume ($0.5 million), partially offset by higher labor and employee-related costs ($2.2 million) and lower spread associated with a shift in sales mix ($1.4 million); and
  • The timing of the flow-through under the FIFO method of aluminum raw material 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 $1.4 million in 2024 versus a charge of $1.0 million in 2023.
• Inventories accounted for under the LIFO method resulted in a charge of $1.2 million in 2024 versus a benefit of $0.9 million in 2023;
• Lower manufacturing fixed costs of $0.9 million primarily due to lower employee-related compensation and reduced outside services ($1.2 million); and
• Higher SG&A expenses of $3.9 million primarily due to employee-related incentive compensation ($2.7 million) and headquarters rent expenses ($0.6 million).

Aluminum Extrusions believes that it has adequate supply agreements for aluminum and other product cost components in 2025. See discussion of Quantitative and Qualitative Disclosures about Market Risk in Item 7a of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 ("Form 10-K") for additional information on aluminum price trends.

Goodwill Impairment at Bonnell

During the fourth quarter of 2024, the Company recognized a special item for the non-cash write-off of goodwill of $13.3 million ($10.4 million after deferred income tax benefits) associated with the Clearfield, Utah operation ("Clearfield") acquired in February 2017 (formerly Futura). Clearfield exceeded expectations in performance, including exceptional customer service, from the date of acquisition until before pandemic-related disruptions that resulted in long lead times during periods of 2021 and 2022. Long lead times resulted in customers seeking supply from other sources to meet their demand, including imports. Some business lost at Clearfield during this time has been regained during the recovery underway, but not at the level that the Company previously anticipated would eventually replicate the EBITDA and net cash flow generation that existed prior to the pandemic-related disruptions. As a consequence, using projections that assume the continuation of lower sales and profitability, the estimated fair value of Clearfield during the fourth quarter of 2024 fell below its carrying value by more than the amount of goodwill causing the write-off. For more information, see Note 1 "Nature of Operations and Summary of Significant Accounting Policies" to the Consolidated Financial Statements included in Item 15. Exhibits and Financial Statements Schedules ("Item 15") of the Form 10-K.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures for Bonnell Aluminum are projected to be $17 million in 2025, including $5 million for productivity projects and $12 million for capital expenditures required to support continuity of operations. Depreciation expense is projected to be $16 million in 2025. Amortization expense is projected to be $2 million in 2025.

PE Films

PE Films produces surface protection films, polyethylene overwrap films and films for other markets. A summary of results for PE Films is provided below:

Fourth Quarter 2024 Results vs. Fourth Quarter 2023 Results

Net sales in the fourth quarter of 2024 increased 27.3% versus the fourth quarter of 2023, due to higher net sales in surface protection films. Surface Protection sales volume increased 43% in the fourth quarter of 2024 versus the fourth quarter of 2023. Although fourth quarter volume in Surface Protection is typically low due to seasonality, sales volume in the fourth quarter of 2024 increased 13% versus the third quarter of 2024. Surface Protection sales volume began to moderate as expected in the third quarter of 2024, following extremely high sales volume in the first half of 2024 associated with restocking of Surface Protection customer inventories. Overwrap sales volume in the fourth quarter of 2024 decreased 23% versus a strong volume performance in the fourth quarter of 2023.

EBITDA from ongoing operations in the fourth quarter of 2024 increased $3.1 million versus the fourth quarter of 2023, primarily due to:

• Higher contribution margin of $4.1 million resulting from:
  • A $4.0 million increase from Surface Protection associated with increased volume and favorable sales mix ($3.7 million) and operating efficiencies and cost improvements ($0.3 million);
  • A $0.3 million decrease from overwrap films primarily due to lower volume and unfavorable sales mix ($0.2 million) and unfavorable pricing ($0.1 million); and
  • The pass-through lag associated with resin costs (no impact in the fourth quarter of 2024 versus a charge of $0.3 million in the fourth quarter of 2023).
• Inventories accounted for under the LIFO method that resulted in a benefit of $0.2 million in the fourth quarter of 2024 versus a benefit of $1.3 million in the fourth quarter of 2023.

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 three years (2024, 2023 and 2022) has averaged approximately $4.5 million per quarter.

Full Year 2024 Results vs. Full Year 2023 Results

Net sales in 2024 increased 37.0% versus 2023 due to higher net sales in Surface Protection. Sales volume in 2024 for surface protection films increased 57% versus 2023, with extremely high sales volumes in the first half of 2024 associated with the restocking of Surface Protection customers' inventories. Overwrap films volume increased 14% versus 2023, primarily due to volume increases associated with lower margin business.

EBITDA from ongoing operations in 2024 increased $19.3 million versus 2023 primarily due to:

• Higher contribution margin of $19.0 million resulting from:
  • A $19.4 million increase from Surface Protection associated with substantially higher volume and favorable pricing ($13.4 million), and operating efficiencies and variable cost savings ($6.0 million);
  • Relatively flat contribution margin from overwrap films, associated with a shift in sales mix and unfavorable pricing ($1.0 million), offset by operating efficiencies and variable cost savings ($1.0 million); and
  • The pass-through lag associated with resin costs ($1.0 million charge in 2024 versus a charge of $0.5 million in 2023).
• Inventories accounted for under the LIFO method that resulted in a benefit of $0.2 million in 2024 versus a benefit of $1.3 million in 2023.
• Lower SG&A of $0.9 million primarily due to decreased research and development costs ($1.6 million), partially offset by increased employee-related incentive compensation ($1.2 million).

Refer to Item 7a. Quantitative and Qualitative Disclosures About Market Risk in the Form 10-K for additional information on resin price trends.

Projected Capital Expenditures and Depreciation & Amortization

Capital expenditures for PE Films are projected to be $3 million in 2025, including $2 million for productivity projects and $1 million for capital expenditures required to support continuity of current operations. Depreciation expense is projected to be $5 million in 2025. There is no amortization expense for PE Films.

Corporate Expenses, Interest, Taxes and Other

Corporate expenses, net in 2024 decreased by $9.2 million compared to 2023, primarily due to lower pension expense as a result of the pension plan termination completed in 2023 ($10.7 million), a non-recurring charge in 2023 associated with the pension plan transition ($2.3 million) and lower software maintenance fees ($0.6 million), partially offset by higher employee-related incentive compensation ($4.7 million).

Interest expense was $4.7 million in 2024 in comparison to $6.3 million in 2023, primarily due to lower weighted average total debt outstanding, partially offset by higher interest rates.

The effective tax rate used to compute income taxes (benefit) from continuing operations in 2024 was (18.8)% compared to 34.1% in 2023. The change in effective tax rate was primarily due to pre-tax income in 2024 versus a pre-tax loss in 2023. The tax rate in 2023 was also significantly impacted by the release of stranded taxes upon termination of the pension plan. As of December 31, 2024, the Company had U.S. foreign tax and research and development credit carryforwards totaling $24.3 million that can be utilized against income taxes that would otherwise be payable on future taxable income (including capital gains). There are no valuation allowances associated with these credit carryforwards. See Note (e) to Financial Tables in this Press Release for information related to the effective tax rate from ongoing operations. For an explanation of differences between the effective tax rate and the U.S. federal statutory rate for 2024 and 2023, see Note 11. Income Taxes to the Consolidated Financial Statements included in Item 15 of the Form 10-K.

On November 1, 2024, the Company completed the sale of its flexible packaging films business (also referred to as "Terphane") headquartered in Brazil to Oben Group. Commencing in the fourth quarter of 2024, all historical results for Terphane have been presented as discontinued operations. On February 28, 2025, the Company received $9.8 million from post-closing settlement of the transaction, which was $2.8 million higher than expected mainly due to higher cash held at Terphane in Brazil than estimated at closing. For more information on this transaction, see Note 16. Divestitures to the Consolidated Financial Statements included in Item 15 of the Form 10-K.

Debt, Financial Leverage, Debt Covenants and Debt Refinancing

Total debt was $61.9 million at December 31, 2024 and $126.3 million at December 31, 2023. Cash, cash equivalents and restricted cash were $7.1 million at December 31, 2024 and $13.1 million at December 31, 2023. Net debt (total debt in excess of cash, cash equivalents and restricted cash), a non-GAAP financial measure, was $54.8 million at December 31, 2024 and $113.2 million at December 31, 2023. See Note (f) to the Financial Tables in this Press Release for a reconciliation of net debt to the most directly comparable GAAP financial measure.

The Company has been focused on managing net working capital, capital expenditures and costs since a slowdown in business began in 2023. Total debt decreased $64.4 million and net debt decreased $58.4 million at the end of 2024 versus the end of 2023 due to the use of the proceeds from the sale of Terphane to pay down debt during the fourth quarter of 2024.

As of December 31, 2024, the Company was in compliance with all covenants under its $125 million asset-based credit agreement, which matures June 30, 2026 (the "ABL Facility"). 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 trade accounts receivable, inventory, owned real properties and owned machinery and equipment. As of December 31, 2024, funds available to borrow under the ABL Facility were approximately $44 million. The median daily liquidity under the ABL Facility during the fourth quarter of 2024 was favorable at $42 million compared with a median of $30 million during the third quarter of 2024. Refer to Note 7. Debt and Credit Agreements to the Consolidated Financial Statements included in Item 15 of the Form 10-K for additional details on the primary debt covenants.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

Some of the information contained in this press release may constitute "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. When the Company uses the words "believe," "estimate," "anticipate," "appear to," "expect," "project," "plan," "likely," "may" and similar expressions, it does so to identify forward-looking statements. Such statements are based on the Company's then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these forward-looking statements. Factors that could cause actual results to differ materially from expectations include, without limitation, the following:

• the impact of macroeconomic factors, such as inflation, interest rates and recession risks;
• an increase in the operating costs incurred by the Company's business units, including, for example, the cost of raw materials and energy;
• noncompliance with any of the financial and other restrictive covenants in the ABL Facility;
• failure to continue to attract, develop and retain certain key officers or employees;
• disruptions to the Company's manufacturing facilities, including those resulting from labor shortages;
• an information technology system failure or breach;
• risks of doing business in countries outside the U.S. that affect our international operations;
• the impact of public health epidemics on employees, production and the global economy, such as the COVID-19 pandemic;
• political, economic and regulatory factors concerning the Company's products;
• inability to develop, efficiently manufacture and deliver new products at competitive prices;
• the impact of the imposition of tariffs and sanctions on imported aluminum ingot used by Bonnell Aluminum;
• failure by governmental entities to prevent foreign companies from evading antidumping and countervailing duties;
• unanticipated problems or delays with the implementation of the enterprise resource planning and manufacturing executions systems, or security breaches and other disruptions to the Company's information technology infrastructure;
• loss of sales to significant customers on which the Company's business is highly dependent;
• inability to achieve sales to new customers to replace lost business;
• failure of the Company's customers to achieve success or maintain market share;
• failure to protect our intellectual property rights;
• inability to successfully complete strategic acquisitions or dispositions, failure to realize the expected benefits of such acquisitions or dispositions, and assumption of unanticipated risks in such acquisitions or dispositions;

and the other factors discussed in the reports Tredegar files with or furnishes to the Securities and Exchange Commission (the "SEC") from time to time, including the risks and important factors set forth in additional detail in Part I, Item 1A. Risk Factors of the Form 10-K. Readers are urged to review and consider carefully the disclosures Tredegar makes in its filings with the SEC.

Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.

To the extent that the financial information portion of this press release contains non-GAAP financial measures, it also presents both the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the difference between any such non-GAAP measures and such comparable GAAP financial measures. Reconciliations of non-GAAP financial measures are provided in the Notes to the Financial Tables included with this press release and can also be found within "Presentations" in the "Investors" section of our website, www.tredegar.com.

Tredegar uses its website as a channel of distribution of material company information. Financial information and other material information regarding Tredegar is posted on and assembled in the "Investors" section of its website.

Tredegar Corporation is an industrial manufacturer with two primary businesses: custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets and surface protection films for high-technology applications in the global electronics industry. Tredegar had 2024 sales of $598 million. With approximately 1,500 employees, the Company operates manufacturing facilities in North America and Asia.