Tredegar Corporation (NYSE:TG, also the "Company" or "Tredegar")
today reported third quarter financial results for the period ended
September 30, 2022.
Third quarter 2022 net income (loss) from continuing operations
was $1.0 million (0.03 per diluted share) compared to net income
(loss) from continuing operations of $6.2 million ($0.19 per
diluted share) in the third quarter of 2021. Net income (loss) from
ongoing operations, which excludes special items, was $4.8 million
($0.14 per diluted share) in the third quarter of 2022 compared
with $7.2 million ($0.22 per diluted share) in the third quarter of
2021. 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, 2022 and 2021, is
provided in Note (a) 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 $12.1
million was consistent compared the third quarter of 2021
- EBITDA from ongoing operations for PE Films of $0.4 million was
$4.4 million lower than the third quarter of 2021
- EBITDA from ongoing operations for Flexible Packaging Films of
$7.8 million was $0.4 million higher than the third quarter of
2021
John Steitz, Tredegar’s president and chief executive officer,
said, “Bonnell’s profitability and margins, excluding inventory
adjustments, improved during the third quarter versus last year
despite flat sales volume and inflationary cost pressures. The log
of open orders, while about twice the size of pre-pandemic levels,
declined during the quarter, with shipments and order cancellations
exceeding new orders as customers focused on reducing high
inventories. The outlook for demand beyond current open orders
remains uncertain given recessionary concerns.”
Mr. Steitz continued, “PE Films EBITDA from ongoing operations
declined during the third quarter to essentially a break-even level
due to soft demand for products with flat panel displays and
customer inventory corrections. Like Bonnell, the outlook for
demand for PE Films’ products remains uncertain. On the bright
side, Terphane, our flexible packaging films business headquartered
in Brazil, had another quarter of solid performance.”
Mr. Steitz further stated, “Debt net of cash increased by $62
million during the first nine months of this year due to a $50
million contribution in February for the first step in the
termination and settlement process of our frozen pension plan,
which is expected to be completed in the middle of next year, and
higher working capital. We continue to be very focused on net cash
generation. Our financial leverage remains low under our $375
million credit facility, which has a remaining term of
approximately five years.”
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: 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:
Three Months Ended
Favorable/
(Unfavorable)
% Change
Nine Months Ended
Favorable/
(Unfavorable)
% Change
(In thousands, except percentages)
September 30,
September 30,
2022
2021
2022
2021
Sales volume (lbs)
45,457
45,407
0.1%
137,427
138,793
(1.0)%
Net sales
$ 161,649
$ 137,086
17.9%
$ 510,066
$ 394,492
29.3%
Ongoing operations:
EBITDA
$ 12,071
$ 12,038
0.3%
$ 57,885
$ 45,062
28.5%
Depreciation & amortization
(4,416)
(3,900)
(13.2)%
(12,846)
(12,062)
(6.5)%
EBIT*
$ 7,655
$ 8,138
(5.9)%
$ 45,039
$ 33,000
36.5%
Capital expenditures
$ 8,218
$ 5,183
$ 15,089
$ 11,956
* See the net sales and EBITDA from
ongoing operations by segment statements in the Financial Tables in
this press release for a reconciliation of this non-GAAP measure to
the most directly comparable measure calculated in accordance with
GAAP.
Third Quarter 2022 Results vs. Third
Quarter 2021 Results
Net sales (sales less freight) in the third quarter of 2022
increased 17.9% versus 2021 primarily due to an increase in average
selling prices to cover higher operating costs, partially offset by
the pass-through of lower metal costs. Sales volume in the third
quarter of 2022 was flat versus 2021. Sales volume in the specialty
market, which represented 34% of total volume in 2021, decreased
11.0% in the third quarter of 2022 versus 2021, primarily as a
result of exiting lower-margin business. Sales volume in the
automotive market, which represented 8% of total volume in 2021,
increased 5.3% versus the third quarter of 2021. Nonresidential
B&C sales volume, which represented 51% of 2021 volume,
increased 8.5% in the third quarter of 2022 versus 2021. The
Company has observed slowing order input and order cancellations as
customers report high inventory levels. In addition, given the
recent slowdown in orders, average labor shortage levels have been
significantly diminished. Nonetheless, onboarding new employees has
resulted in higher hiring and training costs and production
inefficiencies in 2022 versus last year. With a reduced level of
incoming orders in the third quarter of 2022, overall open orders
at the end of the quarter were 59 million lbs. versus 86 million
lbs. at the end of the second quarter of 2022.
EBITDA from ongoing operations in the third quarter of 2022 was
flat versus the third quarter of 2021 primarily due to:
- Higher pricing ($19.6 million, net of the pass-through of
aluminum raw material costs), partially offset by: higher labor and
employee-related costs ($2.1 million) and lower labor productivity
($1.3 million); higher supply expense, including significant price
increases in paint, chemicals, packaging and other supplies ($3.6
million); higher utility costs ($2.0 million); higher freight rates
($1.3 million); and increased selling, general and administrative
("SG&A") expenses ($0.8 million); and
- The timing of the flow through under the first-in first-out
method of aluminum raw material costs passed through to customers,
previously acquired at higher prices in a quickly changing
commodity pricing environment, resulted in a charge of $3.8 million
in the third quarter of 2022 versus a benefit of $1.7 million in
the third quarter of 2021. In addition, the Company recorded an
out-of-period adjustment of $2.5 million related to inventory and
accrued labor costs.
First Nine Months of 2022 Results vs.
First Nine Months of 2021 Results
Net sales in the first nine months of 2022 increased 29.3%
versus 2021 primarily due to an increase in average selling prices
to cover higher aluminum raw material costs and higher operating
costs, partially offset by lower sales volume. Sales volume in the
first nine months of 2022 decreased by 1.0% versus 2021.
EBITDA from ongoing operations in the first nine months of 2022
increased $12.8 million in comparison to the first nine months of
2021, primarily due to:
- Higher pricing ($53.7 million, net of the pass-through of
aluminum raw material costs), partially offset by: lower volume
($0.7 million); higher labor and employee-related costs ($6.0
million) and lower labor productivity ($4.6 million); higher
maintenance costs ($1.4 million); higher supply expense, including
significant price increases in paint, chemicals, packaging and
other supplies ($10.1 million); higher utilities ($2.7 million);
higher freight rates ($5.2 million); and increased SG&A
expenses ($3.2 million); and
- The timing of the flow through under the first-in first-out
method of aluminum raw material costs passed through to customers,
previously acquired at lower prices in a quickly changing commodity
pricing environment, resulted in a benefit of $1.7 million in the
first nine months of 2022 versus a benefit of $5.8 million in the
first nine months of 2021. The benefit in the first nine months of
2022 was net of an adverse impact from the lag in pricing during
the first half of 2022 ($0.3 million), in which products committed
to customers at a specified price were shipped in a later period.
In addition, the Company recorded an out-of-period adjustment of
$2.5 million related to inventory and accrued labor costs.
Aluminum Extrusions has adequate supply agreements for aluminum
raw materials in 2022 and continues to secure supply sources to
meet expected needs in 2023. Refer to Item 3. Quantitative and
Qualitative Disclosures About Market Risk in the Company's
Quarterly Report on Form 10-Q for the period ended September 30,
2022 ("Third Quarter Form 10-Q") for additional information on
aluminum price trends.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for Bonnell Aluminum are projected to be
$30 million in 2022, including $15 million for new enterprise
resource planning and manufacturing execution systems ("ERP/MES"),
$6 million for infrastructure upgrades at the facilities located in
Niles, Michigan, Carthage, Tennessee and Newnan, Georgia and $3
million for other strategic projects. The ERP/MES project is
expected to cost $28 million over a two-year time span. In addition
to strategic projects, approximately $6 million will be required to
support continuity of current operations. Depreciation expense is
projected to be $15 million in 2022. Amortization expense is
projected to be $2 million in 2022.
PE Films
PE Films produces surface protection films, polyethylene
overwrap and polypropylene films for other markets. 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,
2022
2021
2022
2021
Sales volume (lbs)
7,081
9,283
(23.7)%
27,273
30,066
(9.3)%
Net sales
$ 20,059
$ 28,501
(29.6)%
$ 82,613
$ 87,885
(6.0)%
Ongoing operations:
EBITDA
$ 431
$ 4,821
(91.1)%
$ 14,543
$ 21,035
(30.9)%
Depreciation & amortization
(1,579)
(1,591)
0.8%
(4,733)
(4,681)
(1.1)%
EBIT*
$ (1,148)
$ 3,230
(135.5)%
$ 9,810
$ 16,354
(40.0)%
Capital expenditures
$ 793
$ 1,023
$ 2,537
$ 2,757
* See the net sales and EBITDA from
ongoing operations by segment statements in the Financial Tables in
this press release for a reconciliation of this non-GAAP measure to
the most directly comparable measure calculated in accordance with
GAAP.
Third Quarter 2022 Results vs. Third
Quarter 2021 Results
Net sales in the third quarter of 2022 decreased 29.6% compared
to the third quarter of 2021. Sales volume decreased in both
Surface Protection and overwrap films versus the third quarter of
2021. Surface Protection sales volume declined 26% versus the third
quarter of 2021 and 37% versus the second quarter of 2022. Surface
Protection sales have been adversely impacted by weak market demand
and competitive pricing. Consumer demand for electronics has
significantly softened, causing manufacturers in the supply chain
to experience reduced capacity utilization and inventory
corrections. In addition, these market conditions are adversely
impacting mix through reduced sales to our highest value-added
customers and products.
EBITDA from ongoing operations in the third quarter of 2022
decreased $4.4 million versus the third quarter of 2021, primarily
due to:
- A $4.7 million decrease from Surface Protection:
- Lower contribution margin for non-transitioning products
associated with a market slowdown and customer inventory
corrections ($4.0 million) and competitive pricing ($1.1 million);
and for previously disclosed customer product transitions ($1.1
million), partially offset by lower SG&A expenses ($0.4
million);
- A foreign currency transaction gain of $0.5 million in the
third quarter of 2022 versus no gains or losses in the third
quarter of 2021; and
- The pass-through lag associated with resin costs (no benefit or
charge in the third quarter of 2022 versus a charge of $0.6 million
in the third quarter of 2021).
- A $0.3 million increase from overwrap films primarily due to a
benefit from the pass-through lag associated with resin costs (no
benefit or charge in the third quarter of 2022 versus a charge of
$0.4 million in the third quarter of 2021), partially offset by
lower sales volume ($0.1 million).
First Nine Months of 2022 Results vs.
First Nine Months of 2021 Results
Net sales in the first nine months of 2022 decreased 6% versus
the first nine months of 2021 due to lower volume in Surface
Protection and overwrap films. Sales volume and revenue declined 7%
and 11%, respectively, in Surface Protection. Despite a decline of
11% in sales volume in overwrap films, revenue increased 9% as a
result of the pricing impact associated with the pass-through of
resin costs.
EBITDA from ongoing operations in the first nine months of 2022
decreased $6.5 million versus the first nine months of 2021,
primarily due to:
- A $7.2 million decrease from Surface Protection:
- Lower contribution margin related to previously disclosed
customer product transitions ($4.8 million) and for
non-transitioning products associated with a market slowdown and
customer inventory corrections ($1.6 million) and competitive
pricing pressures ($4.4 million), partially offset by lower
SG&A expenses ($0.7 million);
- A foreign currency transaction gain ($1.0 million) in the first
nine months of 2022 versus a charge ($0.1 million) in the first
nine months of 2021; and
- The pass-through lag associated with resin costs (benefit of
$0.3 million in the first nine months of 2022 versus a charge of
$1.3 million in the first nine months of 2021).
- A $0.7 million increase from overwrap films primarily related
to a benefit from the pass-through lag associated with resin costs
(benefit of $0.2 million in the first nine months of 2022 versus a
charge of $1.3 million in the first nine months of 2021), partially
offset by lower sales volume and unfavorable mix ($0.6
million).
Refer to Item 3. Quantitative and Qualitative Disclosures About
Market Risk in the Third Quarter Form 10-Q 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 pre-tax income from continuing operations as reported
under GAAP and EBITDA from ongoing operations for PE Films by $14.8
million during 2021 versus 2020. The transitions, which were
complete as of the second quarter of 2022, have resulted in a total
decline of $7 million in pre-tax income from continuing operations
as reported under GAAP and EBITDA from ongoing operations versus
2021.
The Surface Protection business is continuing to experience
competitive pricing pressures, unrelated to the customer product
transitions, that are expected to adversely impact pre-tax income
from continuing operations as reported under GAAP and EBITDA from
ongoing operations by approximately $5 million for full year 2022
versus 2021; these competitive pricing pressures are being
exacerbated for the Company's exports to Asia with the
strengthening of the U.S. Dollar versus the local currencies of
competitors in the region. In addition, the timing of a recovery in
the consumer electronics market is highly uncertain. To offset the
expected adverse impact of the customer transitions and pricing
pressures, the Company is aggressively pursuing sales of new
surface protection products, applications and customers and driving
production efficiencies and cost savings.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for PE Films are projected to be $3 million
in 2022, 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 $6
million in 2022. 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,
2022
2021
2022
2021
Sales volume (lbs)
28,889
27,029
6.9%
82,210
78,666
4.5%
Net sales
$ 47,278
$ 36,666
28.9%
$ 128,117
$ 102,560
24.9%
Ongoing operations:
EBITDA
$ 7,830
$ 7,396
5.9%
$ 20,495
$ 25,296
(19.0)%
Depreciation & amortization
(590)
(493)
(19.7)%
(1,723)
(1,466)
(17.5)%
EBIT*
$ 7,240
$ 6,903
4.9%
$ 18,772
$ 23,830
(21.2)%
Capital expenditures
$ 2,501
$ 1,895
$ 7,310
$ 4,283
* See the net sales and EBITDA from
ongoing operations by segment statements in the Financial Tables in
this press release for a reconciliation of this non-GAAP measure to
the most directly comparable measure calculated in accordance with
GAAP.
Third Quarter 2022 Results vs. Third
Quarter 2021 Results
Net sales in the third quarter of 2022 increased 28.9% compared
to the third quarter of 2021, primarily due to higher selling
prices from the pass-through of higher resin costs, higher sales
volume and favorable product mix.
EBITDA from ongoing operations in the third quarter of 2022
increased by $0.4 million versus the third quarter of 2021,
primarily due to:
- Higher selling prices ($6.9 million) from the pass-through of
higher resin costs, higher sales volume ($0.9 million), favorable
product mix ($0.5 million), and lower variable costs ($0.4
million), partially offset by higher raw material costs ($5.6
million), higher fixed costs ($0.6 million) and higher SG&A
expenses ($0.4 million);
- Net unfavorable foreign currency translation of
Real-denominated operating costs ($1.2 million); and
- Foreign currency transaction gains ($0.1 million) in the third
quarter of 2022 compared to foreign currency transaction gains
($0.6 million) in the third quarter of 2021.
First Nine Months of 2022 Results vs.
First Nine Months of 2021 Results
Net sales in the first nine months of 2022 increased 24.9%
compared to the first nine months of 2021, primarily due to higher
selling prices from the pass-through of higher resin costs,
favorable product mix and higher sales volume.
EBITDA from ongoing operations in the first nine months of 2022
decreased by $4.8 million versus the first nine months of 2021,
primarily due to:
- Higher raw material costs ($16.3 million), higher fixed ($0.7
million) and variable costs ($1.5 million), and higher SG&A
expenses ($1.0 million), partially offset by higher selling prices
($15.5 million) from the pass-through of higher resin costs, higher
sales volume ($1.9 million) and favorable product mix ($1.3
million);
- Net unfavorable foreign currency translation of
Real-denominated operating costs ($3.1 million); and
- Foreign currency transaction losses ($0.3 million) in the first
nine months of 2022 compared to foreign currency transaction gains
($0.6 million) in the first nine months of 2021.
Refer to Item 3. Quantitative and Qualitative Disclosures About
Market Risk in the Third Quarter Form 10-Q for additional
information on polyester fiber and component price trends.
Projected Capital Expenditures and
Depreciation & Amortization
Capital expenditures for Flexible Packaging Films are projected
to be $8 million in 2022, including $4 million for new capacity for
value-added products and productivity projects and $4 million for
capital expenditures required to support continuity of current
operations. Depreciation expense is projected to be $2 million in
2022. Amortization expense is projected to be $0.4 million in
2022.
Corporate Expenses, Interest, Taxes & Other
Corporate expenses, net in the first nine months of 2022
decreased $0.3 million compared to the first nine months of 2021
primarily due to lower professional fees associated with business
development activities ($1.6 million) and lower stock-based
compensation ($1.2 million), offset by higher professional fees
associated with remediation activities related to the Company's
previously disclosed material weaknesses in internal control over
financial reporting ($2.3 million).
Interest expense of $3.2 million in the first nine months of
2022 increased $0.6 million compared to the first nine months of
2021 due to higher average interest rates during the first nine
months of 2022, partially offset by lower average debt levels.
The effective tax rate used to compute income tax expense
(benefit) for continuing operations in the first nine months of
2022 was 18.8%, compared to 22.7% in the first nine months of 2021.
The decrease in the effective tax rate for continuing operations is
primarily due to a discrete benefit recorded in the first quarter
of 2022 resulting from the implementation of new U.S. tax
regulations associated with foreign tax credits published by the
U.S. Treasury and Internal Revenue Service on January 4, 2022.
These regulations overhaul various components of the foreign tax
credit regime, including the determination of creditable foreign
taxes, and limit the amount of foreign taxes that are creditable
against U.S. income taxes. This one-time discrete benefit is
expected to reduce the effective tax rate for the remainder of
2022, which will be offset by an expected increase to the effective
tax rate as the result of Brazilian income tax no longer being
creditable in the U.S. for the foreseeable future. The effective
tax rate from ongoing operations comparable to the earnings
reconciliation table provided in Note (a) to the Financial Tables
in this press release was 26.6% for the first nine months of 2022
versus 22.7% for the first nine months of 2021 (see also Note (e)
to the Financial Tables). Refer to Note 9 to the Company's
Condensed Consolidated Financial Statements in the Third Quarter
Form 10-Q for an explanation of differences between the effective
tax rate for income (loss) from continuing operations and the U.S.
federal statutory rate for 2022 and 2021.
Pension expense under GAAP of $10.4 million in the first nine
months of 2022 remained consistent with the first nine months of
2021. On February 10, 2022, Tredegar announced the initiation of a
process to terminate and settle its frozen defined benefit pension
plan, which could take up to 24 months to complete. In connection
therewith, the Company borrowed funds under its revolving credit
agreement and made a $50 million contribution to the pension plan
(the “Special Contribution”) to reduce its underfunding and as part
of a program within the pension plan to hedge or fix the expected
future contributions that will be needed by the Company through the
settlement process. The Company expects to realize income tax cash
benefits on the Special Contribution of approximately $11 million
in 2022. Administrative costs for the pension plan through the
settlement process are estimated at $4 to $5 million.
Tredegar’s frozen defined benefit pension plan was underfunded
on a GAAP basis by $69 million at December 31, 2021, comprised of
investments at fair value of $245 million and a projected benefit
obligation (“PBO”) of $314 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 the Special Contribution and changes to the
values of pension plan assets and liabilities resulted in a
decrease in the underfunding on a GAAP basis from $69 million at
December 31, 2021 to approximately $10 million at September 30,
2022. The ultimate settlement benefit obligation may differ from
the PBO, depending on market factors for buyers of pension
obligations at the time of settlement.
Prior to the Special Contribution, GAAP pension expense was a
reasonable proxy for the Company’s required minimum cash
contribution to the pension plan. The Company estimates that, with
the Special Contribution, there will be no required minimum cash
contributions until final settlement. Pension expense under GAAP is
projected to be approximately $14 million in 2022, which is mainly
comprised of non-cash amortization of deferred net actuarial losses
reflected in the Company’s shareholders’ equity as accumulated
other comprehensive losses. Beginning in 2022, and consistent with
no expected required minimum cash contributions, no pension expense
is included in calculating earnings before interest, taxes,
depreciation and amortization as defined in the Company’s revolving
credit agreement (“Credit EBITDA”), which is used to compute
certain borrowing ratios and a significant consideration for
computing non-GAAP net income (loss) from ongoing operations.
The impact on earnings from pension expense is reflected in
“Corporate expenses, net” in the accompanying net sales and EBITDA
from ongoing operations by segment tables. However, beginning in
2022 and consistent with excluding GAAP pension expense from Credit
EBITDA as described above, GAAP pension expense has been presented
separately and removed from net income (loss) from continuing
operations and diluted earnings (loss) per share as reported under
GAAP for purposes of determining Tredegar’s non-GAAP presentation
of net income (loss) and diluted earnings (loss) per share from
ongoing operations (see related reconciliation in Note (a) to the
Financial Tables in this press release for more information).
Total debt was $124.0 million at September 30, 2022 compared to
total debt of $73.0 million at December 31, 2021. Net debt (debt in
excess of cash and cash equivalents), a non-GAAP financial measure,
was $104.7 million at September 30, 2022 compared to $42.5 million
at December 31, 2021. Tredegar has five-year, revolving, secured
credit facility that permits aggregate borrowings of $375 million
and matures on June 29, 2027 ("the Credit Agreement"). The Company
believes that its most restrictive covenant under the Credit
Agreement (computed quarterly) is the Total Net Leverage Ratio,
which permits maximum borrowings of up to 4x Credit EBITDA for the
trailing four quarters. The Company had Credit EBITDA and a Total
Net Leverage Ratio (calculated in the "Liquidity and Capital
Resources" section of the Third Quarter Form 10-Q) of $95.5 million
and 1.1x, respectively, at September 30, 2022. See Note (h) to the
Financial Tables in this press release 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. 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:
- 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, including continued high inflation and the effects
of the Russian invasion of Ukraine;
- competition from other manufacturers, including manufacturers
in lower-cost countries and manufacturers benefiting from
government subsidies;
- impact of fluctuations in foreign exchange rates;
- movement of pension plan assets and liabilities up through
initiating hedging activities to fix underfunding amounts and
assumptions thereafter relating to differences between the ultimate
settlement benefit obligation and the projected benefit obligation,
census data, administrative costs, the effectiveness of hedging
activities and discounts required to liquidate non-public
securities held by the plan;
- 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;
- failure to continue to attract, develop and retain certain key
officers or employees;
- 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;
- 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 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 Company's Form 10-K for the year ended December 31, 2021 and in
Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 2022. 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 2021 sales from continuing operations of $826
million. With approximately 2,300 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,
2022
2021
2022
2021
Sales
$
238,486
$
209,517
$
749,415
$
605,468
Other income (expense), net (c)(d)(i)
119
391
1,113
9,272
238,605
209,908
750,528
614,740
Cost of goods sold (c)
200,582
170,756
601,930
470,733
Freight
9,500
7,264
28,619
20,531
Selling, R&D and general expenses
(c)
20,594
18,380
64,015
60,192
Amortization of intangibles
653
724
1,982
2,170
Pension and postretirement benefits
3,506
3,540
10,489
10,622
Interest expense
1,138
842
3,158
2,555
Asset impairments and costs associated
with exit and disposal activities, net of adjustments (c)
495
265
621
633
Total
236,468
201,771
710,814
567,436
Income (loss) from continuing operations
before income taxes
2,137
8,137
39,714
47,304
Income tax expense (benefit) (c)
1,125
1,908
7,460
10,728
Net income (loss) from continuing
operations
1,012
6,229
32,254
36,576
Income (loss) from discontinued
operations, net of tax
21
(26
)
68
(104
)
Net income (loss)
$
1,033
$
6,203
$
32,322
$
36,472
Earnings (loss) per share:
Basic:
Continuing operations
$
0.03
$
0.19
$
0.96
$
1.09
Discontinued operations
—
—
—
—
Basic earnings (loss) per share
$
0.03
$
0.19
$
0.96
$
1.09
Diluted:
Continuing operations
$
0.03
$
0.19
$
0.96
$
1.09
Discontinued operations
—
—
—
—
Diluted earnings (loss) per share
$
0.03
$
0.19
$
0.96
$
1.09
Shares used to compute earnings (loss) per
share:
Basic
33,870
33,620
33,780
33,541
Diluted
33,871
33,649
33,808
33,678
Tredegar Corporation
Net Sales and EBITDA from
Ongoing Operations by Segment
(In Thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net Sales
Aluminum Extrusions
$
161,649
$
137,086
$
510,066
$
394,492
PE Films
20,059
28,501
82,613
87,885
Flexible Packaging Films
47,278
36,666
128,117
102,560
Total net sales
228,986
202,253
720,796
584,937
Add back freight
9,500
7,264
28,619
20,531
Sales as shown in the condensed
consolidated statements of income
$
238,486
$
209,517
$
749,415
$
605,468
EBITDA from Ongoing Operations
Aluminum Extrusions:
Ongoing operations:
EBITDA (b)
$
12,071
$
12,038
$
57,885
$
45,062
Depreciation & amortization
(4,416
)
(3,900
)
(12,846
)
(12,062
)
EBIT (b)
7,655
8,138
45,039
33,000
Plant shutdowns, asset impairments,
restructurings and other (c)
(32
)
(160
)
(120
)
(223
)
PE Films:
Ongoing operations:
EBITDA (b)
431
4,821
14,543
21,035
Depreciation & amortization
(1,579
)
(1,591
)
(4,733
)
(4,681
)
EBIT (b)
(1,148
)
3,230
9,810
16,354
Plant shutdowns, asset impairments,
restructurings and other (c)
(498
)
(182
)
(650
)
(457
)
Flexible Packaging Films:
Ongoing operations:
EBITDA (b)
7,830
7,396
20,495
25,296
Depreciation & amortization
(590
)
(493
)
(1,723
)
(1,466
)
EBIT (b)
7,240
6,903
18,772
23,830
Plant shutdowns, asset impairments,
restructurings and other (c)
(6
)
(7
)
(86
)
8,407
Total
13,211
17,922
72,765
80,911
Interest income
9
8
41
40
Interest expense
1,138
842
3,158
2,555
Gain on investment in kaléo (d)
—
279
1,406
1,197
Stock option-based compensation costs
271
675
1,153
1,819
Corporate expenses, net (c)
9,674
8,555
30,187
30,470
Income (loss) from continuing operations
before income taxes
2,137
8,137
39,714
47,304
Income tax expense (benefit)
1,125
1,908
7,460
10,728
Net income (loss) from continuing
operations
1,012
6,229
32,254
36,576
Net income (loss) from discontinued
operations, net of tax
21
(26
)
68
(104
)
Net income (loss)
$
1,033
$
6,203
$
32,322
$
36,472
Tredegar Corporation
Condensed Consolidated Balance
Sheets
(In Thousands)
(Unaudited)
September 30, 2022
December 31, 2021
Assets
Cash & cash equivalents
$
19,250
$
30,521
Accounts & other receivables, net
110,077
103,312
Income taxes recoverable
1,834
2,558
Inventories
114,103
88,569
Prepaid expenses & other
9,601
11,275
Current assets of discontinued
operations
151
178
Total current assets
255,016
236,413
Net property, plant and equipment
179,503
170,381
Right-of-use leased assets
14,356
13,847
Identifiable intangible assets, net
12,200
14,152
Goodwill
70,608
70,608
Deferred income taxes
11,820
15,723
Other assets
3,155
2,460
Total assets
$
546,658
$
523,584
Liabilities and Shareholders’
Equity
Accounts payable
$
126,848
$
123,760
Accrued expenses
36,894
33,104
Lease liability, short-term
2,003
2,158
Income taxes payable
1,391
9,333
Current liabilities of discontinued
operations
71
193
Total current liabilities
167,207
168,548
Lease liability, long-term
13,160
12,831
Long-term debt
124,000
73,000
Pension and other postretirement benefit
obligations, net
28,464
78,265
Other non-current liabilities
6,769
6,218
Shareholders’ equity
207,058
184,722
Total liabilities and shareholders’
equity
$
546,658
$
523,584
Tredegar Corporation
Condensed Consolidated
Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended
2022
2021
Cash flows from operating activities:
Net income (loss)
$
32,322
$
36,472
Adjustments for noncash items:
Depreciation
17,538
16,169
Amortization of intangibles
1,982
2,170
Reduction of right-of-use lease asset
1,590
1,582
Deferred income taxes
3,078
4,120
Accrued pension income and post-retirement
benefits
10,519
10,622
Stock-based compensation expense
2,575
3,227
Gain on investment in kaléo
(1,406
)
(879
)
Changes in assets and liabilities:
Accounts and other receivables
(7,222
)
(11,379
)
Inventories
(24,855
)
(19,902
)
Income taxes recoverable/payable
(7,227
)
111
Prepaid expenses and other
(5,365
)
3,422
Accounts payable and accrued expenses
3,624
12,078
Lease liability
(1,737
)
(1,566
)
Pension and postretirement benefit plan
contributions
(50,503
)
(5,510
)
Other, net
1,935
750
Net cash (used in) provided by operating
activities
(23,152
)
51,487
Cash flows from investing activities:
Capital expenditures
(25,527
)
(19,576
)
Proceeds from the sale of kaléo
1,406
—
Proceeds from the sale of assets
—
4,749
Net cash used in investing activities
(24,121
)
(14,827
)
Cash flows from financing activities:
Borrowings
279,250
69,250
Debt principal payments
(228,250
)
(76,250
)
Dividends paid
(12,552
)
(12,114
)
Debt financing fees
(1,245
)
—
Other
(396
)
915
Net cash provided by (used in) financing
activities
36,807
(18,199
)
Effect of exchange rate changes on
cash
(805
)
(54
)
Increase (decrease) in cash and cash
equivalents
(11,271
)
18,407
Cash and cash equivalents at beginning of
period
30,521
11,846
Cash and cash equivalents at end of
period
$
19,250
$
30,253
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, net periodic benefit cost for
the frozen defined benefit pension plan and other items (which
includes 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, 2022 and 2021 is shown
below:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in millions, except per share data)
2022
2021
2022
2021
Net income (loss) from continuing
operations as reported under GAAP1
$
1.0
$
6.2
$
32.3
$
36.6
After-tax effects of:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.4
(0.1
)
0.5
0.2
(Gains) losses from sale of assets and
other:
Gain associated with the investment in
kaléo
—
(0.2
)
(1.0
)
(1.0
)
Tax benefit from adjustments to deferred
income tax liabilities under new U.S. tax regulations related to
foreign tax credits
—
—
(3.8
)
—
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 tax3
—
—
—
(6.6
)
Other
0.7
1.3
2.8
4.2
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination2
2.7
—
8.1
—
Net income (loss) from ongoing
operations1
$
4.8
$
7.2
$
38.9
$
33.4
Earnings (loss) per share from continuing
operations as reported under GAAP (diluted)
$
0.03
$
0.19
$
0.96
$
1.09
After-tax effects per diluted share
of:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.01
—
0.01
0.01
(Gains) losses from sale of assets and
other:
Gain associated with the investment in
kaléo
—
(0.01
)
(0.03
)
(0.03
)
Tax benefit from adjustments to deferred
income tax liabilities under new U.S. tax regulations related to
foreign tax credits
—
—
(0.11
)
—
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 tax3
—
—
—
(0.20
)
Other
0.02
0.04
0.08
0.13
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination2
0.08
—
0.24
—
Earnings (loss) per share from ongoing
operations (diluted)
$
0.14
$
0.22
$
1.15
$
1.00
1. Reconciliations of the pre-tax and
post-tax balances attributed to net income (loss) are shown in Note
(e).
2. For more information, see "Corporate
Expenses, Interest, Taxes & Other" section of this press
release.
3. For more information, see Note (i) in
this press release.
(b)
EBITDA (earnings before interest, taxes,
depreciation and amortization) from ongoing operations is the key
segment profitability metric used by the Company’s chief operating
decision maker to assess segment financial performance. For more
business segment information, see Note 10 to the Company's
Condensed Consolidated Financial Statements in the Third Quarter
Form 10-Q.
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, 2022 and 2021
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 September 30,
2022
Nine Months Ended September 30,
2022
($ 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:
COVID-19-related expenses, net of relief
1
$
—
$
—
$
0.1
$
0.1
Total for Aluminum Extrusions
$
—
$
—
$
0.1
$
0.1
PE Films:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
0.5
$
0.4
$
0.5
$
0.4
(Gains) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses1
—
—
0.2
0.1
Total for PE Films
$
0.5
$
0.4
$
0.7
$
0.5
Flexible Packaging Films:
(Gain) losses from sale of assets,
investment writedowns and other items:
COVID-19-related expenses1
$
—
$
—
$
0.1
$
0.1
Total for Flexible Packaging Films
$
—
$
—
$
0.1
$
0.1
Corporate:
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings:
Other restructuring costs - severance
$
—
$
—
$
0.1
$
0.1
(Gain) losses from sale of assets,
investment writedowns and other items:
Professional fees associated with business
development activities and other2
—
—
1.6
1.1
Professional fees associated with internal
control over financial reporting2
0.8
0.8
2.0
1.6
Stock-based compensation expense
associated with the fair value remeasurement of awards granted at
the time of the 2020 Special Dividend2
(0.1
)
(0.1
)
(0.3
)
(0.2
)
Tax benefit from adjustments to deferred
income tax liabilities under new U.S. tax regulations related to
foreign tax credits4
—
—
—
(3.8
)
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination3
3.5
2.7
10.4
8.1
Total for Corporate
$
4.2
$
3.4
$
13.8
$
6.9
1. Included in “Other income (expense),
net” in the condensed consolidated statements of income.
2. Included in “Selling, R&D and
general expenses” in the condensed consolidated statements of
income.
3. For more information, see "Corporate
Expenses, Interest, Taxes & Other" section of this press
release.
4. Included in "Income tax expense
(benefit)" in the condensed consolidated statements of income.
Three Months Ended September 30,
2021
Nine Months Ended 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
relief1
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 expenses1
0.1
0.1
0.4
0.3
Total for PE Films
$
0.2
$
0.2
$
0.5
$
0.4
Flexible Packaging Films:
(Gain) 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 taxes1,4
$
—
$
—
$
(8.5
)
$
(6.6
)
COVID-19-related expenses1
—
—
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 business
development activities and other2
0.7
0.5
2.4
2.0
Professional fees associated with internal
control over financial reporting2
0.8
0.6
2.0
1.5
Transition service fees, net of corporate
costs associated with the divested Personal Care Films
business1
0.1
0.1
(0.5
)
(0.4
)
Write-down of investment in Harbinger
Capital Partners Special Situations Fund1
—
—
0.5
0.4
Stock-based compensation expense
associated with the fair value remeasurement of awards granted at
the time of the 2020 Special Dividend2
(0.1
)
(0.1
)
0.3
0.2
Total for Corporate
$
1.3
$
0.9
$
4.8
$
3.8
1. Included in "Other income (expense),
net" in the condensed consolidated statements of income.
2. Included in "Selling, R&D and
general expenses" in the condensed consolidated statements of
income.
3. Included in "Cost of goods sold" in the
condensed consolidated statements of income.
4. For more information, see Note (i) in
this press release.
(d)
In the first nine months ended September
30, 2021, a pre-tax gain of $1.2 million was recognized on the
Company’s investment in kaleo, Inc. ("kaléo"), which included a
$0.3 million dividend received from kaléo. On December 27, 2021,
the Company completed the sale of its investment interests in kaléo
and received closing cash proceeds of $47.1 million. Subsequently,
in May 2022, additional cash consideration of $1.4 million was
received related to customary post-closing adjustments, which is
reported in “Other income (expense), net” in the condensed
consolidated statements of income.
(e)
Tredegar’s presentation of net income
(loss) from ongoing operations is a non-GAAP financial measure that
excludes the effects of gains or losses associated with plant
shutdowns, asset impairments and restructurings, gains or losses
from the sale of assets, goodwill impairment charges, net periodic
benefit cost for the frozen defined benefit pension plan and other
items (which includes unrealized gains and losses for an investment
accounted for under the fair value method), which has been
presented separately and removed from net income (loss) from
continuing operations as reported under GAAP. Net income (loss)
from ongoing operations is a key financial and analytical measure
used by management to gauge the operating performance of Tredegar’s
ongoing operations. It is not intended to represent the stand-alone
results for Tredegar’s ongoing operations under GAAP and should not
be considered as an alternative to net income (loss) from
continuing operations as defined by GAAP. It excludes items that we
believe do not relate to Tredegar’s ongoing operations.
Reconciliations of the pre-tax and
post-tax balances attributed to net income (loss) from ongoing
operations for the three and nine months ended September 30, 2022
and 2021 are presented below in order to show the impact on the
effective tax rate:
($ in millions)
Pre-tax
Tax Expense (Benefit)
After-Tax
Effective Tax Rate
Three Months Ended September 30,
2022
(a)
(b)
(b)/(a)
Net income (loss) from continuing
operations reported under GAAP
$
2.1
$
1.1
$
1.0
52.6
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.5
0.1
0.4
(Gains) losses from sale of assets and
other
0.7
—
0.7
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination
3.5
0.8
2.7
Net income (loss) from ongoing
operations
$
6.8
$
2.0
$
4.8
29.6
%
Three Months Ended September 30,
2021
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
%
Nine Months Ended September 30,
2022
Net income (loss) from continuing
operations reported under GAAP
$
39.7
$
7.4
$
32.3
18.8
%
(Gains) losses associated with plant
shutdowns, asset impairments and restructurings
0.6
0.1
0.5
(Gains) losses from sale of assets and
other
2.3
4.3
(2.0
)
Net periodic benefit cost for the frozen
defined benefit pension plan in process of termination
10.4
2.3
8.1
Net income (loss) from ongoing
operations
$
53.0
$
14.1
$
38.9
26.6
%
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
%
(h)
Net debt is calculated as follows:
September 30,
December 31,
(in millions)
2022
2021
Debt
$
124.0
$
73.0
Less: Cash and cash equivalents
19.3
30.5
Net debt
$
104.7
$
42.5
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.
(i)
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, plus applicable interest, which
the Company applied to required Brazilian federal tax payments
during 2021. 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/20221109005154/en/
Tredegar Corporation Neill Bellamy, 804-330-1211
neill.bellamy@tredegar.com
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