Tredegar Corporation (NYSE:TG, also the “Company” or “Tredegar”)
today reported third quarter financial results for the period ended
September 30, 2021.
Third quarter 2021 net income from continuing operations was
$6.2 million (0.19 per diluted share) compared to net loss from
continuing operations of $17.0 million ($0.51 per diluted share) in
the third quarter of 2020. Net income from ongoing operations,
which excludes special items and discontinued operations, was $7.2
million ($0.22 per diluted share) in the third quarter of 2021
compared with $13.2 million ($0.39 per diluted share) in the third
quarter of 2020. 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 from ongoing operations, a non-GAAP financial measure, for
the three and nine months ended September 30, 2021 and 2020, is
provided in Note (a) of the Notes to the Financial Tables in this
press release.
Third Quarter Financial Results Highlights
- Earnings before interest, taxes, depreciation and amortization
("EBITDA") from ongoing operations for Aluminum Extrusions of $12.0
million was $4.5 million lower than the third quarter of 2020
- EBITDA from ongoing operations for PE Films of $4.8 million was
$1.2 million lower than the third quarter of 2020
- EBITDA from ongoing operations for Flexible Packaging Films of
$7.4 million was $2.2 million lower than the third quarter of
2020
John Steitz, Tredegar’s president and chief executive officer
said, “Bonnell Aluminum's production and sales continue to fall
below robust demand and bookings due to a shortage of labor while
backlog continues to grow. Price increases have helped keep pace
with inflationary cost pressures.”
Mr. Steitz also stated, “PE Films' profitability has been
adversely impacted by previously disclosed customer product
transitions and resin price increases. In addition, competitive
pricing pressures are anticipated to further erode profitability by
$6 million in 2022. PE Films is very focused on generating sales of
new surface protection products, applications and customers and
driving production efficiencies and cost savings.”
Mr. Steitz added, “Terphane continues to perform well while
overcoming pandemic-related and other obstacles. Debt, net of cash,
declined to $96.7 million at the end of the third quarter, which
was $25.5 million lower than the beginning of the year due to
strong cash generation.”
THE IMPACT OF COVID-19 AND RELATED FINANCIAL
CONSIDERATIONS
Essential Business and Employee Considerations
The Company’s priorities during the coronavirus ("COVID-19")
pandemic continue to be to protect the health and safety of
employees while keeping its manufacturing sites open due to the
essential nature of many of its products. The Company has continued
to manufacture the full range of products at its facilities.
The Company’s protocols to protect the health and well-being of
its employees from COVID-19 continue to evolve as the Centers for
Disease Control ("CDC"), the Office of the Surgeon General and
other state and local health departments learn more about the virus
and its variants. Consistent with recommendations and mandates from
government agencies and health authorities, the Company has
implemented multiple layers of COVID-19 protections and
interventions.
The Company has engaged in an education campaign that provides
employees with the most accurate and up-to-date information related
to COVID-19 vaccines and has offered different monetary and/or
time-away-from-work incentives to encourage employees to get
vaccinated. While the Company believes that these efforts have
encouraged employees to be vaccinated, vaccination rates in its
U.S. manufacturing sites vary widely, ranging from 23% to 78%, with
most U.S. sites having vaccination rates above 50%. The Company
will continue to monitor available information to assess safeguards
that may be taken to try to prevent a COVID-19 outbreak in the
workplace.
Bonnell Aluminum continues to experience higher than normal
absenteeism and hiring difficulties, which it attributes to
COVID-19-related factors. While the average number of direct labor
employees at Bonnell Aluminum facilities increased approximately 6%
in the third quarter of 2021, compared with the abnormally low
levels related to the pandemic in the second and third quarters of
2020, there continues to be a shortage of labor to meet existing
demand and desired shipment levels. Moreover, onboarding new
employees has resulted in higher hiring and training costs in 2021
versus last year.
All three of the Company's business segments are managing
through supply chain disruptions and escalating costs, including
raw material cost increases, shortages, transportation cost
increases and delays. To offset growing cost pressures, Bonnell
Aluminum implemented its second selling price increase in 2021,
which became effective April 26, 2021, and is preparing for an
upcoming price increase effective January 3, 2022. In response to
unprecedented cost increases and supply issues for polyethylene and
polypropylene resin, PE Films implemented a quarterly resin cost
pass-through mechanism, effective July 1, 2021, for all products
and customers not previously covered by such arrangements.
Terphane, the Company's flexible packaging business headquartered
in Brazil, continues to monitor cost escalations to adjust selling
prices as market dynamics permit.
Financial Considerations
Approximately 62% of Bonnell Aluminum’s sales volume in 2020 was
related to building and construction (“B&C”) markets
(non-residential B&C of 55% and residential B&C of 7%).
Non-residential B&C volume started to decline in the fourth
quarter of 2020 after the fulfillment of contracts that existed at
the start of the COVID-19 pandemic. Recently, market demand in this
sector has been strong but was not reflected in Bonnell Aluminum's
third quarter 2021 results, due to pandemic-related labor shortages
and resulting production inefficiencies. Non-residential B&C
volume declined 13.1% versus the third quarter of last year.
However, current bookings and backlog remain at record high levels
which we believe will bode well for future operations and results
when production constraints are alleviated.
The Surface Protection component of PE Films had record EBITDA
from ongoing operations in 2020 but is experiencing a decline in
volume in 2021, primarily related to a previously disclosed
customer product transition unrelated to the pandemic. In addition,
the lag in the pass-through of significant pandemic-related
increases in resin costs, and some of such cost increases incurred
prior to mid-year that will not be recovered even on a lagging
basis, have adversely impacted PE Films' profitability in 2021.
At Terphane, the Company believes that the pandemic-related
surge in demand for flexible packaging films that began in early
2020 returned to lower pre-pandemic levels during the second
quarter of 2021. Also, production and sales volumes for Terphane
during the third quarter of 2021 were adversely impacted by an
equipment failure on a manufacturing line that was unrelated to the
pandemic and supply chain restrictions, which Terphane believes are
impacting others in the industry as well. While the equipment
failure is not expected to be fixed until early in 2022, Terphane
has adjusted operations for the interim period to meet anticipated
customer demand.
OPERATIONS REVIEW
Aluminum Extrusions
Aluminum Extrusions, which is also referred to as Bonnell
Aluminum, produces high-quality, soft-alloy and medium-strength
custom fabricated and finished aluminum extrusions primarily for
the following markets: 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:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2021
2020
2021
2020
Sales volume (lbs)
45,407
48,859
(7.1
)%
138,793
139,985
(0.9
)%
Net sales
$
137,086
$
115,621
18.6
%
$
394,492
$
339,566
16.2
%
Ongoing operations:
EBITDA
$
12,038
$
16,540
(27.2
)%
$
45,062
$
41,496
8.6
%
Depreciation & amortization
(3,900
)
(4,251
)
8.3
%
(12,062
)
(12,632
)
4.5
%
EBIT*
$
8,138
$
12,289
(33.8
)%
$
33,000
$
28,864
14.3
%
Capital expenditures
$
5,183
$
1,784
$
11,956
$
4,713
* See the net sales and EBITDA from
ongoing operations by segment statements in the Financial
Statements of this press release for a reconciliation of this
non-GAAP measure to the most directly comparable measure calculated
in accordance with GAAP.
Third Quarter 2021 Results vs. Third
Quarter 2020 Results
Net sales (sales less freight) in the third quarter of 2021
increased versus the third quarter of 2020, primarily due to the
pass-through of higher metal costs and an increase in average
selling prices to cover higher operating costs, partially offset by
lower volume. Sales volume in the third quarter of 2021 decreased
by 7.1% versus the third quarter of 2020. Sales volume associated
with the non-residential B&C market, which represented 55% of
volume in 2020, declined 13.1% in the third quarter of 2021 versus
the third quarter of 2020. Sales volume associated with specialty
markets, which represented 31% of total volume in 2020, increased
11.4% in the third quarter of 2021 versus the third quarter of
2020, and sales volume associated with the automotive market, which
represented 9% of total volume in 2020, decreased 34.9% in the
third quarter of 2021 versus the third quarter of 2020. A portion
of the decline in automotive sales was attributed to the supply
chain issues in the automotive industry. See “The Impact of
COVID-19 and Related Financial Considerations” section for more
information on business conditions.
EBITDA from ongoing operations in the third quarter of 2021
decreased by $4.5 million in comparison to the third quarter of
2020, primarily due to lower volume ($1.8 million), increased labor
and employee-related costs ($2.4 million), other operating costs
($4.0 million), freight expenses ($1.3 million) and higher general,
selling and administrative expenses ($0.3 million), partially
offset by higher pricing ($5.5 million). Refer to Item 3.
Quantitative and Qualitative Disclosures About Market Risk of the
Company's Form 10-Q for the period ended September 30, 2021 for
additional information on aluminum price trends.
First Nine Months of 2021 Results vs.
First Nine Months 2020 Results
Net sales in the first nine months of 2021 increased versus the
first nine months of 2020, primarily due to the pass-through of
higher metal costs and an increase in average selling prices to
cover higher operating costs, partially offset by lower volume.
Sales volume in the first nine months of 2021 decreased by 0.9%
versus the first nine months of 2020.
EBITDA from ongoing operations in the first nine months of 2021
increased by $3.6 million in comparison to the first nine months of
2020 due to higher pricing ($10.2 million), partially offset by
higher labor and employee-related costs ($5.4 million) and other
operational costs ($5.3 million), higher general, administrative
and selling expenses ($1.3 million) and higher freight costs ($2.3
million). In addition, inventories accounted for under the first-in
first-out method resulted in a benefit of $5.8 million in the first
nine months of 2021 versus a charge of $1.9 million in the first
nine months of 2020.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for Bonnell Aluminum are projected to be
$19 million in 2021, including $3 million for infrastructure
upgrades at the Carthage, Tennessee and Newnan, Georgia facilities
and $5 million for strategic projects. In addition, approximately
$11 million will be required to support continuity of current
operations. Depreciation expense is projected to be $14 million in
2021. Amortization expense is projected to be $3 million in
2021.
PE Films
PE Films is composed of surface protection films, polyethylene
overwrap and packaging films and polypropylene films for other
markets. All historical results for the Personal Care component,
which was sold in the fourth quarter of 2020, have been presented
as discontinued operations. The Surface Protection component of the
PE Films segment now includes the packaging lines and operations
located at the Pottsville, Pennsylvania manufacturing site
("Pottsville Packaging"), which was previously reported within the
Personal Care component of PE Films. A summary of results for PE
Films is provided below:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2021
2020
2021
2020
Sales volume (lbs)
9,283
9,556
(2.9
)%
30,066
33,348
(9.8
)%
Net sales
$
28,501
$
26,440
7.8
%
$
87,885
$
103,444
(15.0
)%
Ongoing operations:
EBITDA
$
4,821
$
6,041
(20.2
)%
$
21,035
$
33,928
(38.0
)%
Depreciation & amortization
(1,591
)
(1,785
)
10.9
%
(4,681
)
(4,868
)
3.8
%
EBIT*
$
3,230
$
4,256
(24.1
)%
$
16,354
$
29,060
(43.7
)%
Capital expenditures
$
1,023
$
187
$
2,757
$
3,231
* See the net sales and EBITDA from
ongoing operations by segment statements in the Financial
Statements of this press release for a reconciliation of this
non-GAAP measure to the most directly comparable measure calculated
in accordance with GAAP.
Third Quarter 2021 Results vs. Third
Quarter 2020 Results
Net sales increased by $2.1 million in the third quarter of 2021
versus the third quarter of 2020, primarily due to higher pricing
associated with the pass-through of increased resin costs,
partially offset by lower volume associated with the previously
disclosed customer product transitions in Surface Protection.
EBITDA from ongoing operations in the third quarter of 2021
decreased by $1.2 million versus the third quarter of 2020,
primarily due to:
- A $1.3 million decrease from Surface Protection related to
lower sales associated with the customer product transitions ($1.6
million), margin erosion associated with higher resin costs that
occurred before the resin index pricing plan was fully implemented
($0.5 million) and the pass-through lag associated with higher
resin costs ($0.3 million), partially offset by higher sales for
products unrelated to the customer product transitions ($0.3
million), lower fixed costs ($0.5 million) and lower selling,
general, and administrative expenses ($0.3 million);
- A $0.4 million decrease from Pottsville Packaging primarily
related to the pass-through lag associated with higher resin costs;
and
- A $0.9 million favorable variance associated with the
divestiture of Bright View Technologies at the end of 2020.
Refer to Item 3. Quantitative and Qualitative Disclosures About
Market Risk of the Company's Form 10-Q for the period ended
September 30, 2021 for additional information on resin price
trends.
Customer Product Transitions and Other Factors in Surface
Protection
The Surface Protection component of PE Films supports
manufacturers of optical and other specialty substrates used in
flat panel display products. These films are primarily used by
customers to protect components of displays in the manufacturing
and transportation processes and then discarded.
The Company previously reported the risk that a portion of its
film products used in surface protection applications would be made
obsolete by customer product transitions to less costly alternative
processes or materials. The Company estimates that these
transitions, which principally relate to one customer, adversely
impacted EBITDA from ongoing operations for PE Films by $14.6
million during the first nine months of 2021 versus 2020. No
additional adverse impacts from the transitions are anticipated
during the fourth quarter of 2021 versus 2020. However, a further
decline of $7 million in EBITDA from ongoing operations due to the
transitions is expected in 2022 versus 2021, at which time the
transitions are expected to be complete.
The Surface Protection business is also experiencing competitive
pricing pressures, unrelated to the customer product transitions,
that are expected to adversely impact EBITDA from ongoing
operations by approximately $6 million in 2022 versus 2021. To
offset the expected adverse impact of the customer transitions and
pricing pressures, the Company is aggressively pursuing and making
progress in generating contribution from sales of new surface
protection products, applications and customers and driving
production efficiencies and cost savings. Annual contribution to
EBITDA from ongoing operations for PE Films from sales of new
surface protection products, applications and customers has
increased by approximately $12 million during the past two calendar
years.
First Nine Months of 2021 Results vs.
First Nine Months 2020 Results
Net sales in the first nine months of 2021 decreased versus the
first nine months 2020, primarily due to lower volume and
unfavorable mix associated with the previously disclosed customer
product transitions in Surface Protection, partially offset by
higher pricing associated with the pass-through of increased resin
costs.
EBITDA from ongoing operations in the first nine months of 2021
decreased by $12.9 million versus the first nine months of 2020
primarily due to:
- A $12.5 million decrease from Surface Protection primarily
related to lower sales and unfavorable mix associated with the
customer product transitions ($14.6 million), margin erosion
associated with higher resin costs that occurred before the resin
index pricing plan was fully implemented ($1.4 million) and the
pass-through lag associated with higher resin costs ($1.0 million),
partially offset by higher sales of products unrelated to the
customer product transitions ($0.9 million) and production
efficiencies and cost savings ($2.8 million);
- A $1.4 million decrease from Pottsville Packaging primarily
related to the pass-through lag associated with higher resin costs;
and
- A $1.6 million favorable variance associated with the
divestiture of Bright View Technologies at the end of 2020.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for PE Films are projected to be $4 million
in 2021, including $2 million for productivity projects and $2
million for capital expenditures required to support continuity of
current operations. Depreciation expense is projected to be $6
million in 2021. There is no amortization expense for PE Films.
Flexible Packaging Films
Flexible Packaging Films, which is also referred to as Terphane,
produces polyester-based films for use in packaging applications
that have specialized properties, such as heat resistance,
strength, barrier protection and the ability to accept high-quality
print graphics. A summary of results for Flexible Packaging Films
is provided below:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2021
2020
2021
2020
Sales volume (lbs)
27,029
30,115
(10.2
)%
78,666
85,059
(7.5
)%
Net sales
$
36,666
$
35,856
2.3
%
$
102,560
$
100,534
2.0
%
Ongoing operations:
EBITDA
$
7,396
$
9,546
(22.5
)%
$
25,296
$
22,594
12.0
%
Depreciation & amortization
(493
)
(443
)
(11.3
)%
(1,466
)
(1,306
)
(12.3
)%
EBIT*
$
6,903
$
9,103
(24.2
)%
$
23,830
$
21,288
11.9
%
Capital expenditures
$
1,895
$
1,183
$
4,283
$
2,448
* See the net sales and EBITDA from
ongoing operations by segment statements in the Financial
Statements of this press release for a reconciliation of this
non-GAAP measure to the most directly comparable measure calculated
in accordance with GAAP.
Third Quarter 2021 Results vs. Third
Quarter 2020 Results
Sales volume declined by 10.2% during the third quarter of 2021
versus the third quarter of 2020, primarily due to lower demand,
reduced production capacity as a result of an equipment failure on
a production line and supply chain restrictions, which Terphane
believes are impacting others in the industry as well. While the
equipment failure is not expected to be fixed until early in 2022,
Terphane has adjusted operations for the interim period to meet
anticipated customer demand. Net sales in the third quarter of 2021
increased 2.3% compared to the third quarter of 2020, primarily due
to higher selling prices from the pass-through of higher resin
costs and favorable product mix, partially offset by lower sales
volume.
EBITDA from ongoing operations in the third quarter of 2021
decreased by $2.2 million versus the third quarter of 2020
primarily due to:
- Lower sales volume ($1.8 million), higher raw material costs
($4.8 million) and higher selling and general administration
expenses ($0.1 million), partially offset by higher selling prices
($3.4 million) from the pass-through of higher resin costs;
- Net favorable foreign currency translation of Real-denominated
operating costs ($1.1 million); and
- Higher foreign currency transaction gains ($0.2 million) in the
third quarter of 2021 versus the third quarter of 2020.
First Nine Months of 2021 Results vs.
First Nine Months 2020 Results
Sales volume declined by 7.5% during the first nine months of
2021 versus the first nine months of 2020, primarily due to
temporary resin supply issues, an equipment failure impacting
production and lower demand. The Company believes that the
pandemic-related surge in demand that began in early 2020 returned
to lower pre-pandemic levels during the second quarter of 2021. Net
sales in the first nine months of 2021 increased 2.0% compared to
the first nine months of 2020, primarily due to higher selling
prices from the pass-through of higher resin costs and favorable
product mix, partially offset by lower sales volume.
EBITDA from ongoing operations in the first nine months of 2021
increased by $2.7 million versus the first nine months of 2020
primarily due to:
- Favorable product mix ($1.7 million), higher selling prices
from the pass-through of higher resin costs ($0.8 million), and
lower selling and general administration expenses ($0.4 million),
offset by lower sales volume ($3.5 million) and higher fixed ($0.8
million) and variable ($0.4 million) costs;
- Net favorable currency translation of Real-denominated
operating costs ($4.7 million);
- Higher foreign currency transaction gains ($0.3 million) in the
first nine months of 2021 versus 2020; and
- Lower value-added tax credits received in the first nine months
of 2021 ($0.5 million) compared with the first nine months of 2020
($1.2 million).
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for Flexible Packaging Films are projected
to be $7 million in 2021, including $4 million for new capacity for
value-added products and productivity projects and $3 million for
capital expenditures required to support continuity of current
operations. Depreciation expense is projected to be $2 million in
2021. Amortization expense is projected to be $0.4 million in
2021.
Corporate Expenses, Interest, Taxes & Other
Corporate expenses, net, increased in the first nine months of
2021 versus the first nine months of 2020, primarily due to higher
professional fees related to remediation activities of previously
disclosed material weaknesses in the Company’s internal control
over financial reporting ($0.6 million).
Interest expense was $2.6 million in the first nine months of
2021 in comparison to $1.6 million in the first nine months of
2020, primarily due to higher average debt levels.
The effective tax rate used to compute income tax expense
(benefit) for continuing operations in the first nine months of
2021 was 22.7%, compared to 26.2% in the first nine months of 2020.
The effective tax rate from ongoing operations comparable to the
earnings reconciliation table provided in Note (a) of the Notes to
Financial Tables in this press release was 22.7% for the first nine
months of 2021 versus 20.4% for the first nine months of 2020 (see
also Note (f) of the Notes to Financial Tables). Refer to Note 12
of the Company's Form 10-Q for the period ended September 30, 2021
for an explanation of differences between the effective tax rate
for income (loss) from continuing operations and the U.S. federal
statutory rate for 2021 and 2020.
Pension expense was $10.5 million in the first nine months of
2021, a favorable change of $0.1 million compared to the first nine
months of 2020. The impact on earnings from pension expense is
reflected in “Corporate expenses, net” in the net sales and EBITDA
from ongoing operations by segment table. Pension expense is
projected to be $14 million in 2021, which is determined at the
beginning of the year based on the funded status of the Company’s
defined benefit pension plan and actuarial assumptions at that
time. Tredegar’s frozen defined benefit pension plan was
underfunded on a GAAP basis by $103 million at December 31, 2020,
comprised of investments at fair value of $233 million and a
projected benefit obligation (“PBO”) of $336 million. GAAP
accounting requires adjustment for changes in values of assets and
the PBO only at the end of each year, even though these values
change daily. The Company estimates that changes to the values of
pension plan assets and liabilities resulted in a decrease in the
underfunding from $103 million at December 31, 2020 to
approximately $73 million at September 30, 2021.
Tredegar owns approximately 18% of kaleo, Inc. (“kaléo”), which
makes and sells an epinephrine delivery device under the name
AUVI-Q®. The Company accounts for its investment in kaléo using a
fair value method. The Company’s estimate of the fair value of its
interest in kaléo at September 30, 2021 was $35.5 million ($30.3
million after taxes), essentially unchanged from the balance at
June 30, 2021 of $35.2 million ($30.1 million after taxes) and
December 31, 2020 of $34.6 million ($29.7 million after taxes).
kaléo’s stock is not publicly traded. The ultimate value of the
Company’s ownership interest in kaléo could be materially different
from the estimated fair value and will ultimately be determined and
realized only if and when a liquidity event occurs.
Total debt was $127.0 million at September 30, 2021 compared to
total debt of $134.0 million at December 31, 2020. Net debt (debt
in excess of cash and cash equivalents), a non-GAAP financial
measure, was $96.7 million at September 30, 2021 compared to $122.2
million at December 31, 2020. The Company's revolving credit
agreement allows for borrowings of up to $375 million and matures
in June 2024. The Company believes that its most restrictive
covenant (computed quarterly) is the leverage ratio, which permits
maximum borrowings of up to 4x EBITDA, as defined under the
revolving credit agreement for the trailing four quarters ("Credit
EBITDA"). The Company had Credit EBITDA and a leverage ratio
(calculated in the "Liquidity and Capital Resources" section of the
Company's Form 10-Q for the period ended September 30, 2021) of
$96.4 million and 1.32x, respectively, at September 30, 2021. See
Note (g) to the Financial Tables for a reconciliation of net debt
to the most directly comparable GAAP financial measure.
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. In addition, the Company's current
projections for its businesses could be materially affected by the
highly uncertain impact of the COVID-19 pandemic. As a consequence,
the Company's results could differ significantly from its
projections, depending on, among other things, the ultimate impact
of the pandemic on employees, supply chains, customers and the U.S.
and world economies. Accordingly, you should not place undue
reliance on these forward-looking statements. Factors that could
cause actual results to differ from expectations include, without
limitation, the following:
- loss or gain 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;
- inability to develop, efficiently manufacture and deliver new
products at competitive prices;
- failure of the Company's customers to achieve success or
maintain market share;
- failure to protect our intellectual property rights;
- risks of doing business in countries outside the U.S. that
affect our international operations;
- political, economic, and regulatory factors concerning the
Company's products;
- uncertain economic conditions in countries in which the Company
does business;
- competition from other manufacturers, including manufacturers
in lower-cost countries and manufacturers benefiting from
government subsidies;
- impact of fluctuations in foreign exchange rates;
- a change in the amount of the Company's underfunded defined
benefit pension plan liability;
- an increase in the operating costs incurred by the Company's
business units, including, for example, the cost of raw materials
and energy;
- inability to successfully identify, complete or integrate
strategic acquisitions; failure to realize the expected benefits of
such acquisitions and assumption of unanticipated risks in such
acquisitions;
- disruptions to the Company's manufacturing facilities,
including those resulting from labor shortages;
- the impact of public health epidemics on employees, production
and the global economy, such as the COVID-19 pandemic;
- an information technology system failure or breach;
- volatility and uncertainty of the valuation of the Company's
investment in kaléo;
- the impact of the imposition of tariffs and sanctions on
imported aluminum ingot used by Bonnell Aluminum;
- the impact of new tariffs, duties or other trade restrictions
imposed as a result of rising trade tensions between the U.S. and
other countries;
- the termination of anti-dumping duties on products imported to
Brazil that compete with products produced by Flexible
Packaging;
- failure to establish and maintain effective internal control
over financial reporting;
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 “Risk Factors” Part I, Item 1A of
the Form 10-K for the year ended December 31, 2020. 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 three
primary businesses: custom aluminum extrusions for the North
American building & construction, automotive and specialty
end-use markets; surface protection films for high-technology
applications in the global electronics industry; and specialized
polyester films primarily for the Latin American flexible packaging
market. Tredegar had 2020 sales from continuing operations of $755
million. With approximately 2,400 employees, the Company operates
manufacturing facilities in North America, South America, and
Asia.
Tredegar Corporation
Condensed Consolidated
Statements of Income (Loss)
(In Thousands, Except
Per-Share Data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Sales
$
209,517
$
184,370
$
605,468
$
562,766
Other income (expense), net (c)(d)(h)
391
(37,934
)
9,272
(63,898
)
209,908
146,436
614,740
498,868
Cost of goods sold (c)
170,756
136,008
470,733
415,212
Freight
7,264
6,453
20,531
19,222
Selling, R&D and general expenses
(c)
18,380
22,076
60,192
67,717
Amortization of intangibles
724
753
2,170
2,264
Pension and postretirement benefits
3,540
3,567
10,622
10,701
Interest expense
842
494
2,555
1,598
Asset impairments and costs associated
with exit and disposal activities, net of adjustments (c)
265
3
633
74
Goodwill impairment (e)
—
—
—
13,696
201,771
169,354
567,436
530,484
Income (loss) from continuing operations
before income taxes
8,137
(22,918
)
47,304
(31,616
)
Income tax expense (benefit) (c)
1,908
(5,942
)
10,728
(8,308
)
Net income (loss) from continuing
operations
6,229
(16,976
)
36,576
(23,308
)
Income (loss) from discontinued
operations, net of tax
(26
)
(48,237
)
(104
)
(53,031
)
Net income (loss)
$
6,203
$
(65,213
)
$
36,472
$
(76,339
)
Earnings (loss) per share:
Basic:
Continuing operations
$
0.19
$
(0.51
)
$
1.09
$
(0.70
)
Discontinued operations
—
(1.44
)
—
(1.59
)
Basic earnings (loss) per share
$
0.19
$
(1.95
)
$
1.09
$
(2.29
)
Diluted:
Continuing operations
$
0.19
$
(0.51
)
$
1.09
$
(0.70
)
Discontinued operations
—
(1.44
)
—
(1.59
)
Diluted earnings (loss) per share
$
0.19
$
(1.95
)
$
1.09
$
(2.29
)
Shares used to compute earnings (loss) per
share:
Basic
33,620
33,439
33,541
33,396
Diluted
33,649
33,439
33,678
33,396
Tredegar Corporation
Net Sales and EBITDA from
Ongoing Operations by Segment
(In Thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Net Sales
Aluminum Extrusions
$
137,086
$
115,621
$
394,492
$
339,566
PE Films
28,501
26,440
87,885
103,444
Flexible Packaging Films
36,666
35,856
102,560
100,534
Total net sales
202,253
177,917
584,937
543,544
Add back freight
7,264
6,453
20,531
19,222
Sales as shown in the Condensed
Consolidated Statements of Income
$
209,517
$
184,370
$
605,468
$
562,766
EBITDA from Ongoing Operations
Aluminum Extrusions:
Ongoing operations:
EBITDA (b)
$
12,038
$
16,540
$
45,062
$
41,496
Depreciation & amortization
(3,900
)
(4,251
)
(12,062
)
(12,632
)
EBIT (b)
8,138
12,289
33,000
28,864
Plant shutdowns, asset impairments,
restructurings and other (c)
(160
)
(720
)
(223
)
(2,637
)
Goodwill impairment (e)
—
—
—
(13,696
)
PE Films:
Ongoing operations:
EBITDA (b)
4,821
6,041
21,035
33,928
Depreciation & amortization
(1,591
)
(1,785
)
(4,681
)
(4,868
)
EBIT (b)
3,230
4,256
16,354
29,060
Plant shutdowns, asset impairments,
restructurings and other (c)
(182
)
(56
)
(457
)
(225
)
Flexible Packaging Films:
Ongoing operations:
EBITDA (b)
7,396
9,546
25,296
22,594
Depreciation & amortization
(493
)
(443
)
(1,466
)
(1,306
)
EBIT (b)
6,903
9,103
23,830
21,288
Plant shutdowns, asset impairments,
restructurings and other (c)
(7
)
(3
)
8,407
(14
)
Total
17,922
24,869
80,911
62,640
Interest income
8
11
40
43
Interest expense
842
494
2,555
1,598
Gain (loss) on investment in kaléo
accounted for under fair value method (d)
279
(36,200
)
1,197
(61,000
)
Stock option-based compensation costs
675
518
1,819
1,786
Corporate expenses, net (c)
8,555
10,586
30,470
29,915
Income (loss) from continuing operations
before income taxes
8,137
(22,918
)
47,304
(31,616
)
Income tax expense (benefit)
1,908
(5,942
)
10,728
(8,308
)
Net income (loss) from continuing
operations
6,229
(16,976
)
36,576
(23,308
)
Net income (loss) from discontinued
operations, net of tax
(26
)
(48,237
)
(104
)
(53,031
)
Net income (loss)
$
6,203
$
(65,213
)
$
36,472
$
(76,339
)
Tredegar Corporation
Condensed Consolidated Balance
Sheets
(In Thousands)
(Unaudited)
September 30, 2021
December 31, 2020
Assets
Cash & cash equivalents
$
30,253
$
11,846
Accounts & other receivables, net
97,185
86,327
Income taxes recoverable
2,013
2,807
Inventories
85,686
66,437
Prepaid expenses & other
13,502
19,679
Current assets of discontinued
operations
151
1,339
Total current assets
228,790
188,435
Property, plant & equipment, net
167,953
166,545
Right-of-use leased assets
14,453
16,037
Investment in kaléo (cost basis of
$7,500)
35,479
34,600
Identifiable intangible assets, net
16,608
18,820
Goodwill
67,708
67,708
Deferred income taxes
12,101
19,068
Other assets
2,591
3,506
Non-current assets of discontinued
operations
151
151
Total assets
$
545,834
$
514,870
Liabilities and Shareholders’
Equity
Accounts payable
$
115,879
$
89,702
Accrued expenses
31,672
40,741
Lease liability, short-term
2,086
2,082
Income taxes payable
56
706
Current liabilities of discontinued
operations
370
7,521
Total current liabilities
150,063
140,752
Lease liability, long-term
13,376
14,949
Long-term debt
127,000
134,000
Pension and other postretirement benefit
obligations, net
102,970
110,585
Other non-current liabilities
6,146
5,529
Shareholders’ equity
146,279
109,055
Total liabilities and shareholders’
equity
$
545,834
$
514,870
Tredegar Corporation
Condensed Consolidated
Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended
2021
2020
Cash flows from operating activities:
Net income (loss)
$
36,472
$
(76,339
)
Adjustments for noncash items:
Depreciation
16,169
23,218
Amortization of intangibles
2,170
2,264
Reduction of right-of-use lease asset
1,582
2,102
Goodwill impairment
—
13,696
Deferred income taxes
4,120
(19,492
)
Accrued pension income and post-retirement
benefits
10,622
10,701
Stock-based compensation expense
3,227
4,120
(Gain) loss on investment accounted for
under the fair value method
(879
)
61,000
Held for sale impairment loss on divested
assets
—
45,054
Changes in assets and liabilities:
Accounts and other receivables
(11,379
)
4,961
Inventories
(19,902
)
(2,761
)
Income taxes recoverable/payable
111
5,332
Prepaid expenses and other
3,422
(5,305
)
Accounts payable and accrued expenses
12,078
(2,112
)
Lease liability
(1,566
)
(2,245
)
Pension and postretirement benefit plan
contributions
(5,510
)
(2,254
)
Other, net
750
4,386
Net cash provided by operating
activities
51,487
66,326
Cash flows from investing activities:
Capital expenditures
(19,576
)
(13,416
)
Proceeds from the sale of assets
4,749
—
Net cash used in investing activities
(14,827
)
(13,416
)
Cash flows from financing activities:
Borrowings
69,250
25,000
Debt principal payments
(76,250
)
(60,000
)
Dividends paid
(12,114
)
(12,048
)
Other
915
(586
)
Net cash used in financing activities
(18,199
)
(47,634
)
Effect of exchange rate changes on
cash
(54
)
(1,676
)
Increase in cash and cash equivalents
18,407
3,600
Cash and cash equivalents at beginning of
period
11,846
31,422
Cash and cash equivalents at end of
period
$
30,253
$
35,022
Notes to the Financial Tables
(Unaudited)
(a) Tredegar’s presentation of net income (loss) and diluted
earnings (loss) per share from ongoing operations are non-GAAP
financial measures that exclude the effects of gains or losses
associated with plant shutdowns, asset impairments and
restructurings, gains or losses from the sale of assets, goodwill
impairment charges, discontinued operations and other items (which
includes unrealized gains and losses for an investment accounted
for under the fair value method) which have been presented
separately and removed from net income (loss) from continuing
operations and diluted earnings (loss) per share as reported under
GAAP. Net income (loss) and diluted earnings (loss) per share from
ongoing operations are key financial and analytical measures used
by management to gauge the operating performance of Tredegar’s
ongoing operations. They are not intended to represent the
stand-alone results for Tredegar’s ongoing operations under GAAP
and should not be considered as an alternative to net income (loss)
from continuing operations or earnings (loss) per share as defined
by GAAP. They exclude items that management believes do not relate
to Tredegar’s ongoing operations. A reconciliation to net income
(loss) and diluted earnings (loss) per share from ongoing
operations for the three and nine months ended September 30, 2021
and 2020 is shown below:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in millions, except per share data)
2021
2020
2021
2020
Net income (loss) from continuing
operations as reported under GAAP1
$
6.2
$
(17.0
)
$
36.6
$
(23.3
)
After-tax effects of:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
(0.1
)
—
0.2
0.1
(Gains) losses from sale of assets and
other:
(Gain) loss associated with the investment
in kaléo
(0.2
)
28.2
(1.0
)
47.7
One-time tax credit in Brazil for
unemployment/social security insurance non-income taxes resulting
from a favorable decision by Brazil’s Supreme Court regarding the
calculation of such tax2
—
—
(6.6
)
—
Other
1.3
2.0
4.2
6.1
Goodwill impairment
—
—
—
10.5
Net income (loss) from ongoing
operations1
$
7.2
$
13.2
$
33.4
$
41.1
Earnings (loss) per share from continuing
operations as reported under GAAP (diluted)
$
0.19
$
(0.51
)
$
1.09
$
(0.70
)
After-tax effects per diluted share
of:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
—
—
0.01
—
(Gains) losses from sale of assets and
other:
(Gain) loss associated with the investment
in kaléo
(0.01
)
0.84
(0.03
)
1.43
One-time tax credit in Brazil for
unemployment/social security insurance non-income taxes resulting
from a favorable decision by Brazil’s Supreme Court regarding the
calculation of such tax2
—
—
(0.20
)
—
Other
0.04
0.06
0.13
0.17
Goodwill impairment
—
—
—
0.32
Earnings (loss) per share from ongoing
operations (diluted)
$
0.22
$
0.39
$
1.00
$
1.22
1. Reconciliations of the pre-tax and
post-tax balances attributed to net income (loss) are shown in Note
(f).
2. For more information, see Note 13 in
the Notes to Financial Statements in the Form 10-Q for the quarter
ended September 30, 2021.
(b) EBITDA (earnings before interest, taxes, depreciation and
amortization) from ongoing operations is the key profitability
metric used by the Company’s chief operating decision maker to
assess segment financial performance. For more business segment
information, see Note 11 in the Notes to Financial Statements in
the Form 10-Q for the quarter ended September 30, 2021.
EBIT (earnings before interest and taxes) from ongoing
operations is a non-GAAP financial measure included in the
accompanying tables and the reconciliation of segment financial
information to consolidated results for the Company in the net
sales and EBITDA from ongoing operations by segment statements. It
is not intended to represent the stand-alone results for Tredegar’s
ongoing operations under GAAP and should not be considered as an
alternative to net income (loss) from continuing operations as
defined by GAAP. The Company believes 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.
(c) Gains and losses associated with plant shutdowns, asset
impairments, restructurings and other items for the three and nine
months ended September 30, 2021 and 2020 detailed below are shown
in the statements of net sales and EBITDA from ongoing operations
by segment 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
Nine Months Ended
September 30, 2021
September 30, 2021
($ in millions)
Pre-Tax
Net of Tax
Pre-Tax
Net of Tax
Aluminum Extrusions:
(Gains) losses from sale of assets,
investment writedowns and other items:
Environmental charges at Newnan, Georgia
plant3
$
0.1
$
0.1
$
0.1
$
—
COVID-19-related expenses, net of relief
2
0.1
0.1
0.1
0.1
Total for Aluminum Extrusions
$
0.2
$
0.2
$
0.2
$
0.1
PE Films:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
0.1
$
0.1
0.1
0.1
(Gains) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses2
0.1
0.1
0.4
0.3
Total for PE Films
$
0.2
$
0.2
$
0.5
$
0.4
Flexible Packaging Films:
(Gains) losses from sale of assets,
investment writedowns and other items:
One-time tax credit in Brazil for
unemployment/social security insurance non-income taxes resulting
from a favorable decision by Brazil’s Supreme Court regarding the
calculation of such taxes2,4
$
—
$
—
$
(8.5
)
$
(6.6
)
COVID-19-related expenses2
—
—
0.1
0.1
Total for Flexible Packaging Films
$
—
$
—
$
(8.4
)
$
(6.5
)
Corporate:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
(Gain), net of costs associated with the
sale of the Lake Zurich manufacturing facility assets
$
(0.2
)
$
(0.2
)
$
0.1
$
0.1
(Gain) losses from sale of assets,
investment writedowns and other items:
Professional fees associated with:
remediation activities and other costs relating to the Company’s
material weaknesses in internal control over financial reporting;
and business development activities1
1.5
1.1
4.4
3.5
Write-down of investment in Harbinger
Capital Partners Special Situations Fund2
—
—
0.5
0.4
Stock compensation expense associated with
the fair value remeasurement of awards granted at the time of the
2020 special dividend1
(0.1
)
(0.1
)
0.3
0.2
Transition service fees, net of corporate
costs associated with the divested Personal Care Films
business2
0.1
0.1
(0.5
)
(0.4
)
Total for Corporate
$
1.3
$
0.9
$
4.8
$
3.8
1. Included in “Selling, R&D and
general expenses” in the condensed consolidated statements of
income.
2. Included in “Other income (expense),
net” in the condensed consolidated statements of income.
3. Included in “Costs of goods sold” in
the condensed consolidated statements of income.
4. For more information, see Note 13 in
the Notes to Financial Statements in the Form 10-Q for the quarter
ended September 30, 2021.
Three Months Ended
Nine Months Ended
September 30, 2020
September 30, 2020
($ in millions)
Pre-Tax
Net of Tax
Pre-Tax
Net of Tax
Aluminum Extrusions:
(Gains) losses from sale of assets,
investment writedowns and other items:
Consulting expenses for enterprise
resource planning feasibility study2
$
0.3
$
0.2
$
1.2
$
0.9
COVID-19-related expenses, net of relief
3
0.5
0.4
1.4
1.1
Total for Aluminum Extrusions
$
0.8
$
0.6
$
2.6
$
2.0
PE Films:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
—
$
—
$
0.1
$
—
(Gains) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses3
—
—
0.2
0.1
Total for PE Films
$
—
$
—
$
0.3
$
0.1
Corporate:
Professional fees associated with:
remediation activities and other costs relating to the Company’s
material weaknesses in internal control over financial reporting;
and business development activities2
$
0.6
$
0.4
$
4.1
$
3.2
Corporate costs associated with the
divested Personal Care business2
1.1
0.9
1.1
0.9
Write-down of investment in Harbinger
Capital Partners Special Situations Fund3
0.1
0.1
0.3
0.2
Accelerated recognition of stock-based
compensation expense2
—
—
0.1
0.1
U.S. tax benefit on foreign branch
income1
—
—
—
(0.6)
Total for Corporate
$
1.8
$
1.4
$
5.6
$
3.8
1. Included in "Income tax expense
(benefit)" in condensed consolidated statements of income.
2. Included in “Selling, R&D and
general expenses” in the condensed consolidated statements of
income.
3. Included in “Other income (expense),
net” in the condensed consolidated statements of income.
(d) A gain on the Company’s investment in kaléo of $0.3 million
and $1.2 million was recognized in the three and nine months ended
September 30, 2021, respectively, compared to a loss of $36.2
million and a loss of $61.0 million in the three and nine months
ended September 30, 2020, respectively, which is reported in “Other
income (expense), net” in the condensed consolidated statements of
income. The gain in the first nine months of 2021 includes a $0.3
million dividend received from kaléo.
(e) In the first quarter of 2020, the operations of Aluminum
Extrusions’ Niles, Michigan and Elkhart, Indiana facilities (which
were acquired as “AACOA” in October 2012) was expected to be
severely impacted by the COVID-19 pandemic, with over 80% of the
aluminum extrusions manufactured at these facilities sold to
customers that make consumer durable products, such as recreational
boating and power sports vehicles, and to customers serving the
B&C and automotive markets. As a result, a goodwill impairment
charge of $13.7 million was recognized in Aluminum Extrusions,
which represented the entire amount of goodwill associated with the
acquisition of AACOA.
(f) Tredegar’s presentation of net income (loss) from ongoing
operations is a non-GAAP financial measure that excludes the
effects of gains or losses associated with plant shutdowns, asset
impairments and restructurings, gains or losses from the sale of
assets, goodwill impairment charges, discontinued operations, and
other items (which includes unrealized gains and losses for an
investment accounted for under the fair value method), which has
been presented separately and removed from net income (loss) from
continuing operations as reported under GAAP. Net income (loss)
from ongoing operations is a key financial and analytical measure
used by management to gauge the operating performance of Tredegar’s
ongoing operations. It is not intended to represent the stand-alone
results for Tredegar’s ongoing operations under GAAP and should not
be considered as an alternative to net income (loss) from
continuing operations as defined by GAAP. It excludes items that we
believe do not relate to Tredegar’s ongoing operations.
Reconciliations of the pre-tax and post-tax balances attributed
to net income (loss) from ongoing operations for the three and nine
months ended September 30, 2021 and 2020 are presented below in
order to show the impact on the effective tax rate:
($ in millions)
Pre-tax
Tax Expense (Benefit)
After-Tax
Effective Tax Rate
Three Months Ended September 30,
2021
(a)
(b)
(b)/(a)
Net income (loss) from continuing
operations reported under GAAP
$
8.1
$
1.9
$
6.2
23.5
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
(0.1
)
—
(0.1
)
(Gains) losses from sale of assets and
other
1.5
0.4
1.1
Net income (loss) from ongoing
operations
$
9.5
$
2.3
$
7.2
24.2
%
Three Months Ended September 30,
2020
Net income (loss) from continuing
operations reported under GAAP
$
(22.9
)
$
(5.9
)
$
(17.0
)
25.8
%
(Gains) losses from sale of assets and
other
38.8
8.6
30.2
Net income (loss) from ongoing
operations
$
15.9
$
2.7
$
13.2
17.1
%
Nine Months Ended September 30,
2021
Net income (loss) from continuing
operations reported under GAAP
$
47.3
$
10.7
$
36.6
22.7
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.2
—
0.2
(Gains) losses from sale of assets and
other
(4.3
)
(0.9
)
(3.4
)
Net income (loss) from ongoing
operations
$
43.2
$
9.8
$
33.4
22.7
%
Nine Months Ended September 30,
2020
Net income (loss) from continuing
operations reported under GAAP
$
(31.6
)
$
(8.3
)
$
(23.3
)
26.2
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.1
—
0.1
(Gain) loss associated with the investment
in kaléo
61.0
13.3
47.7
(Gains) losses from sale of assets and
other
8.4
2.3
6.1
Goodwill impairment
13.7
3.2
10.5
Net income (loss) from ongoing
operations
$
51.6
$
10.5
$
41.1
20.4
%
(g) Net debt is calculated as follows:
September 30,
December 31,
(in millions)
2021
2020
Debt
$
127.0
$
134.0
Less: Cash and cash equivalents
30.3
11.8
Net debt
$
96.7
$
122.2
Net debt is not intended to represent total debt as defined by
GAAP. Net debt is utilized by management in evaluating the
Company’s financial leverage and equity valuation, and management
believes that investors also may find net debt to be helpful for
the same purposes.
(h) Represents a one-time tax credit in Brazil for
unemployment/social security insurance non-income taxes
("PIS/COFINS") resulting from a favorable decision by Brazil’s
Supreme Court regarding the calculation of such tax. In May 2021,
the Brazil Supreme Court ruled in a leading case related to the
amount of Brazilian value-added tax to exclude from the calculation
of PIS/COFINS. As a result, in the second quarter of 2021, the
Company recorded a pre-tax gain of $8.5 million for certain excess
PIS/COFINS paid from 2003 to 2021, that included applicable
interest, which the Company expects to apply to future required
Brazilian federal tax payments. The pretax gain was recorded in
“Other income (expense), net” in the condensed consolidated
statements of income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211105005147/en/
Tredegar Corporation Neill Bellamy, 804-330-1211
neill.bellamy@tredegar.com
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