UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Registrant's Telephone Number, Including Area Code: (804) 330-1000 Securities registered pursuant to Section 12(b) of the Act: | | Trading | Name of each exchange on which | | --- | --- | -- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Tredegar Corporation (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) 1100 Boulders Parkway Richmond, Virginia 23225 (Ad ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Tredegar Corporation is an industrial manufacturer with three primary business segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films, having divested Personal Care Films and Bright View Technologies in 2020 [Description of Business](index=4&type=section&id=Description%20of%20Business) Tredegar Corporation operates through three reportable business segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films, with recent divestitures of Personal Care Films and Bright View Technologies - The company's main business segments are **Aluminum Extrusions**, **PE Films**, and **Flexible Packaging Films**[11](index=11&type=chunk) - The Personal Care Films business was sold in October 2020 and is now reported as discontinued operations[12](index=12&type=chunk) - Bright View Technologies was sold in December 2020, but its financial information remains within the PE Films segment's continuing operations[13](index=13&type=chunk) [Aluminum Extrusions](index=4&type=section&id=Aluminum%20Extrusions) The Aluminum Extrusions segment, known as Bonnell Aluminum, produces and sells soft and medium-strength alloyed aluminum extrusions primarily in the U.S., accounting for 67% of consolidated net sales in 2021 Aluminum Extrusions Net Sales Contribution | Year | % of Tredegar's Consolidated Net Sales | | :--- | :--- | | 2021 | 67% | | 2020 | 63% | | 2019 | 66% | Aluminum Extrusions Net Sales by Market Segment | Market Segment | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Nonresidential Building & Construction | 50% | 56% | 51% | | Residential Building & Construction | 10% | 9% | 8% | | Automotive | 8% | 8% | 9% | | Consumer Durables | 10% | 10% | 11% | | Machinery & Equipment | 8% | 7% | 7% | | Electrical | 6% | 4% | 7% | | Distribution | 8% | 6% | 7% | - The segment's backlog increased by **313%** from **$74.2 million** in 2020 to **$306.4 million** in 2021, driven by a **33%** increase in bookings and labor shortages impacting shipment levels[18](index=18&type=chunk) - Primary raw materials are aluminum ingot and scrap, purchased through open-market and annual contracts. The segment is navigating supply chain issues for paint and other non-aluminum materials[19](index=19&type=chunk) [PE Films](index=5&type=section&id=PE%20Films) The PE Films segment produces surface protection and polyethylene overwrap films, accounting for 15% of consolidated net sales in 2021, with significant customer concentration and $5.7 million in R&D spending PE Films Net Sales Contribution | Year | % of Tredegar's Consolidated Net Sales | | :--- | :--- | | 2021 | 15% | | 2020 | 19% | | 2019 | 17% | - The top four customers accounted for **88%** of the segment's net sales in 2021, indicating significant customer concentration[23](index=23&type=chunk) PE Films R&D Spending | Year | R&D Spending (in millions) | | :--- | :--- | | 2021 | $5.7 | | 2020 | $7.7 | | 2019 | $7.0 | [Flexible Packaging Films](index=6&type=section&id=Flexible%20Packaging%20Films) The Flexible Packaging Films segment, operating as Terphane, produces specialized PET-based films for food packaging and industrial applications, primarily manufactured in Brazil and accounting for 18% of consolidated net sales in 2021 Flexible Packaging Films Net Sales Contribution | Year | % of Tredegar's Consolidated Net Sales | | :--- | :--- | | 2021 | 18% | | 2020 | 18% | | 2019 | 17% | - The segment produces PET-based films under the **Terphane®**, **Sealphane®**, and **Ecophane®** brand names for food packaging and industrial uses[24](index=24&type=chunk) [General](index=6&type=section&id=General) This section covers general corporate matters including intellectual property, government regulations, and human capital management, with Tredegar employing approximately 2,400 people globally as of year-end 2021 - The company's operations are subject to numerous U.S. and foreign government regulations, including environmental (**Clean Air Act**, **CERCLA**), privacy, and anti-corruption laws[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk) - As of December 31, 2021, the company employed approximately **2,400** people, with **80%** in the U.S. About **15%** of U.S. employees and all Brazilian employees are represented by labor unions[30](index=30&type=chunk) - The company focuses on human capital through health and safety initiatives (including on-site clinics), talent development, competitive compensation, and a commitment to inclusion and diversity[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces several risks that could materially affect its financial condition and operations, including pandemic impacts, cost volatility, pension underfunding, and internal control weaknesses, alongside segment-specific challenges [Risks Related to all Tredegar Businesses](index=8&type=section&id=Risks%20Related%20to%20all%20Tredegar%20Businesses) Tredegar faces enterprise-wide risks including ongoing COVID-19 impacts, volatile raw material and energy costs, an underfunded pension plan, and identified material weaknesses in internal financial controls - The COVID-19 pandemic continues to adversely affect operations through increased costs of labor and materials, labor shortages, and supply chain disruptions[37](index=37&type=chunk)[39](index=39&type=chunk) - The company's performance is influenced by volatile costs of raw materials (aluminum, resin, PTA, MEG) and energy, with no assurance that price increases can fully offset these costs[39](index=39&type=chunk)[40](index=40&type=chunk) - The company has an underfunded defined benefit pension plan, which was underfunded by **$69.5 million** as of Dec 31, 2021. A process to terminate and settle the plan was initiated in February 2022 with a **$50 million** contribution[41](index=41&type=chunk) - Material weaknesses have been identified in the company's internal control over financial reporting, which increases the risk of a material misstatement in financial statements. Remediation efforts are ongoing but have been delayed[42](index=42&type=chunk)[44](index=44&type=chunk) [Risks Related to Aluminum Extrusions](index=11&type=section&id=Risks%20Related%20to%20Aluminum%20Extrusions) The Aluminum Extrusions segment is subject to cyclical demand, particularly from the U.S. construction sector, faces risks from a major ERP/MES system implementation, and potential impacts from anti-dumping duty evasion or reduction - Sales and profitability are cyclical, seasonal, and highly dependent on U.S. economic conditions, especially in the construction sector[51](index=51&type=chunk) - A new ERP/MES system implementation is planned, costing an estimated **$28 million** over two years, which poses significant implementation and financial risks[51](index=51&type=chunk) - The business could be adversely affected if competitors evade anti-dumping duties on aluminum extrusions or if such duties are reduced. The orders are up for review beginning in March 2022[51](index=51&type=chunk) [Risks Related to PE Films](index=12&type=section&id=Risks%20Related%20to%20PE%20Films) The PE Films segment faces significant customer concentration risk and ongoing profit erosion due to customer product transitions to less costly alternatives and competitive pricing pressures - The segment is highly dependent on a few large customers; the top four comprised **13%** of Tredegar's consolidated net sales in 2021[53](index=53&type=chunk) - Customer product transitions to alternative materials are expected to adversely impact PE Films' EBITDA by an additional **$7 million** in 2022, following a **$14.8 million** negative impact in 2021 vs. 2020[53](index=53&type=chunk) - Competitive pricing pressures, separate from product transitions, are expected to reduce EBITDA by approximately **$6 million** in 2022 compared to 2021[54](index=54&type=chunk) [Risks Related to Flexible Packaging Films](index=13&type=section&id=Risks%20Related%20to%20Flexible%20Packaging%20Films) The Flexible Packaging Films segment is exposed to risks from uncertain economic conditions in Brazil, including foreign exchange translation risk, overcapacity in the Latin American market, and potential changes to anti-dumping duties - The segment is exposed to foreign exchange translation risk due to a mismatch between its functional currency (Brazilian Real) and the U.S. Dollar pricing of its sales and raw materials[58](index=58&type=chunk) - Overcapacity in the Latin American polyester film market and competition from imports create pricing pressure. While anti-dumping duties are in place for some countries, they were suspended for China and Egypt in May 2021 and are set to expire for others in Q1 2023[58](index=58&type=chunk) [Unresolved Staff Comments](index=13&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[59](index=59&type=chunk) [Properties](index=13&type=section&id=Item%202.%20Properties) Tredegar owns most of its manufacturing facilities, warehouses, and other properties, which are considered to be in good condition with sufficient capacity for current production, with its corporate headquarters leased in Richmond, Virginia - The company's corporate headquarters is located at **1100 Boulders Parkway, Richmond, Virginia 23225**[61](index=61&type=chunk) Principal Manufacturing Locations as of December 31, 2021 | Segment | U.S. Locations | Outside U.S. Locations | | :--- | :--- | :--- | | **Aluminum Extrusions** | Carthage, TN; Clearfield, UT; Elkhart, IN; Newnan, GA; Niles, MI | None | | **PE Films** | Pottsville, PA; Richmond, VA (technical center) | Guangzhou, China | | **Flexible Packaging Films** | Bloomfield, NY (technical center and production) | Cabo de Santo Agostinho, Brazil | [Legal Proceedings](index=14&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 18, "Contingencies," to the Consolidated Financial Statements included in Item 15 of this report - The required information is set forth in Note 18 "Contingencies" to the Consolidated Financial Statements in Item 15[63](index=63&type=chunk) [Mine Safety Disclosures](index=14&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports that it has no mine safety disclosures - None[64](index=64&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Tredegar's common stock trades on the NYSE under "TG", with a history of regular quarterly dividends and a special dividend in 2020, and an ongoing share repurchase program with remaining authorization - Common stock is traded on the **New York Stock Exchange (NYSE)** under the ticker symbol **"TG"**[67](index=67&type=chunk) - The company has paid a regular quarterly cash dividend since July 1989. A special dividend of **$200 million** (**$5.97 per share**) was paid in December 2020[68](index=68&type=chunk) - A share repurchase program authorizes the purchase of up to **5 million** shares. As of December 31, 2021, **1,732,003** shares remained available for repurchase. No shares were repurchased in 2019, 2020, or 2021[70](index=70&type=chunk) [RESERVED](index=16&type=section&id=Item%206.%20%5BRESERVED%5D) This item is reserved and contains no information - Item 6 is reserved[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for 2021 compared to 2020, covering performance, COVID-19 impacts, segment reviews, accounting policies, liquidity, and market risks [Executive Summary](index=16&type=section&id=Executive%20Summary) In 2021, Tredegar's sales increased to $826.5 million, with net income from continuing operations of $57.9 million, significantly improved from a 2020 net loss due to a gain on the sale of its kaléo investment Financial Performance Summary (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Sales | $826.5 million | $755.3 million | | Net Income (Loss) from Continuing Operations | $57.9 million | ($16.8 million) | | Diluted EPS from Continuing Operations | $1.72 | ($0.51) | - 2021 results include a **$10.0 million** after-tax gain (**$0.30 per share**) from the sale of the company's investment in kaléo[79](index=79&type=chunk) - 2020 results were negatively impacted by a **$47.6 million** after-tax loss on the kaléo investment and a **$10.5 million** goodwill impairment in the Aluminum Extrusions segment[80](index=80&type=chunk) [The Impact of COVID-19 and Related Financial Considerations](index=17&type=section&id=THE%20IMPACT%20OF%20COVID-19%20AND%20RELATED%20FINANCIAL%20CONSIDERATIONS) The COVID-19 pandemic continues to impact Tredegar's operations through labor shortages, increased costs, and supply chain disruptions, prompting price increases and cost pass-through mechanisms across segments - The company's priorities during the pandemic are employee health and safety and keeping manufacturing sites open[83](index=83&type=chunk) - The Aluminum Extrusions segment is experiencing labor shortages, higher absenteeism, and increased hiring costs, which constrain its ability to meet high demand[86](index=86&type=chunk) - All business segments are managing supply chain disruptions and escalating costs, prompting price increases and new cost pass-through mechanisms to mitigate margin pressure[87](index=87&type=chunk) [Operations Review](index=18&type=section&id=OPERATIONS%20REVIEW) This section details the financial performance of each business segment for 2021 compared to 2020, highlighting changes in sales, EBITDA, and key drivers for Aluminum Extrusions, PE Films, and Flexible Packaging Films [Aluminum Extrusions Review](index=18&type=section&id=Aluminum%20Extrusions%20Review) In 2021, the Aluminum Extrusions segment's net sales increased by 18.3% to $539.3 million, with EBITDA from ongoing operations rising slightly by 1.5% to $55.9 million, primarily due to higher pricing offsetting increased costs Aluminum Extrusions Financial Summary (2021 vs. 2020) | Metric (in thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs) | 183,367 | 186,391 | (1.6)% | | Net Sales | $539,325 | $455,711 | 18.3% | | EBITDA from Ongoing Operations | $55,948 | $55,137 | 1.5% | - EBITDA increased by **$0.8 million** due to higher pricing (**$13.6 million**) and an inventory accounting benefit (**$6.9 million**), mostly offset by higher labor (**$7.2 million**), supply (**$6.4 million**), and freight (**$3.2 million**) costs[95](index=95&type=chunk) - Projected capital expenditures for 2022 are **$30 million**, which includes **$15 million** for a new ERP/MES system and **$6 million** for infrastructure upgrades[96](index=96&type=chunk) [PE Films Review](index=18&type=section&id=PE%20Films%20Review) The PE Films segment experienced a significant decline in 2021, with net sales falling 14.6% to $118.9 million and EBITDA dropping 38.6% to $27.7 million, primarily due to customer product transitions and higher resin costs PE Films Financial Summary (2021 vs. 2020) | Metric (in thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs) | 39,429 | 45,175 | (12.7)% | | Net Sales | $118,920 | $139,288 | (14.6)% | | EBITDA from Ongoing Operations | $27,694 | $45,107 | (38.6)% | - EBITDA decreased by **$17.4 million**, with the Surface Protection business contributing a **$19.4 million** decline. This was primarily due to customer product transitions (**$14.8 million**), the pass-through lag of higher resin costs (**$1.4 million**), and higher freight expense (**$1.0 million**)[98](index=98&type=chunk) - The customer product transitions are expected to cause a further decline of **$7 million** in EBITDA in 2022, at which point the transitions are expected to be complete[99](index=99&type=chunk) [Flexible Packaging Films Review](index=19&type=section&id=Flexible%20Packaging%20Films%20Review) In 2021, the Flexible Packaging Films segment's net sales increased by 4.0% to $140.0 million, and EBITDA from ongoing operations grew by 3.4% to $31.7 million, driven by favorable currency translation and higher selling prices Flexible Packaging Films Financial Summary (2021 vs. 2020) | Metric (in thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs) | 104,569 | 113,115 | (7.6)% | | Net Sales | $139,978 | $134,605 | 4.0% | | EBITDA from Ongoing Operations | $31,684 | $30,645 | 3.4% | - EBITDA increased by **$1.0 million**, primarily driven by a net favorable currency translation of Real-denominated operating costs (**$5.9 million**) and higher foreign currency transaction gains (**$1.2 million**)[103](index=103&type=chunk) [Corporate Expenses, Interest and Income Taxes](index=20&type=section&id=Corporate%20Expenses%2C%20Interest%20and%20Income%20Taxes) Corporate expenses decreased in 2021, interest expense increased, and the effective tax rate for continuing operations was 13.8%, with the company initiating the termination of its frozen pension plan in February 2022 - The effective tax rate for continuing operations was **13.8%** in 2021, compared to **32.8%** in 2020[106](index=106&type=chunk) - In February 2022, Tredegar began the process to terminate its frozen defined benefit pension plan, making a **$50 million** special contribution to reduce underfunding[107](index=107&type=chunk) - Total debt decreased from **$134.0 million** at year-end 2020 to **$73.0 million** at year-end 2021. Net debt decreased by **$79.7 million**, including **$47.1 million** in proceeds from the sale of the kaléo investment[109](index=109&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies critical accounting policies requiring significant estimates, including goodwill impairment, pension benefits based on actuarial assumptions, and income taxes involving judgments on tax laws and deferred tax asset realizability - Goodwill impairment is assessed annually (December 1st) or when triggering events occur. In 2021, a qualitative (Step 0) assessment for the Surface Protection and Futura reporting units concluded that a quantitative test was not necessary[116](index=116&type=chunk) - Pension benefit calculations rely on key assumptions such as the discount rate (**2.90%** in 2021) and expected return on plan assets (**3.05%** in 2021). The company announced the termination of its frozen pension plan in February 2022[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Accounting for income taxes requires significant judgment regarding the application of tax laws and estimating the future realization of deferred tax assets, for which valuation allowances are established if realization is not more likely than not[121](index=121&type=chunk)[122](index=122&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) In 2021, sales increased by 9.4% to $826.5 million due to higher selling prices, though consolidated gross profit margin decreased from 22.6% to 18.0% due to increased costs and margin erosion in PE Films - Sales in 2021 increased by **9.4%** compared to 2020, primarily due to higher average selling prices in Aluminum Extrusions and Flexible Packaging Films[126](index=126&type=chunk) - Consolidated gross profit margin decreased from **22.6%** in 2020 to **18.0%** in 2021, primarily due to higher operating costs in Aluminum Extrusions and margin erosion in PE Films[127](index=127&type=chunk) - Selling, general and administrative (SG&A) and R&D expenses as a percentage of sales decreased to **9.8%** in 2021 from **12.3%** in 2020[128](index=128&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operating activities was $70.6 million in 2021, with net debt significantly decreasing to $42.5 million, supported by proceeds from the kaléo investment sale and a $375 million revolving credit facility - Net cash provided by operating activities was **$70.6 million** in 2021, compared to **$74.4 million** in 2020[139](index=139&type=chunk) Debt and Liquidity Summary (as of Dec 31, 2021) | Metric | Amount (in millions) | | :--- | :--- | | Total Debt | $73.0 | | Cash and Cash Equivalents | $30.5 | | Net Debt | $42.5 | | Available Credit | ~$287 | - The company's leverage ratio was **0.81x** at December 31, 2021, well below the maximum permitted of **4.00x** under its credit agreement[109](index=109&type=chunk)[148](index=148&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that the required disclosures about market risk are included within Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" - The discussion of Quantitative and Qualitative Disclosures about Market Risk is located in Item 7[179](index=179&type=chunk) [Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the financial statements and supplementary data, which are set forth in Item 15 of this report - The information required by this item is set forth in Item 15[179](index=179&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=35&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there have been no changes in or disagreements with its accountants on accounting and financial disclosure - None[180](index=180&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of December 31, 2021, due to material weaknesses in internal control over financial reporting, for which a remediation plan is in progress - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2021, due to material weaknesses in internal control over financial reporting[184](index=184&type=chunk) - Material weaknesses were identified in five areas: **Control Environment**, **Risk Assessment**, **Information and Communication**, **Monitoring Activities**, and **Control Activities**[194](index=194&type=chunk) - A remediation plan is underway to address the weaknesses, with remaining activities scheduled for completion in the first half of 2022[193](index=193&type=chunk)[194](index=194&type=chunk) - The independent registered public accounting firm, **KPMG LLP**, expressed an adverse opinion on the operating effectiveness of the company's internal control over financial reporting[191](index=191&type=chunk) [Other Information](index=37&type=section&id=Item%209B.%20Other%20Information) The company reports that there is no other information to disclose under this item - None[199](index=199&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=37&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports that there is no information to disclose under this item - None[200](index=200&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=38&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on the company's executive officers and incorporates by reference information about directors and corporate governance from the upcoming Proxy Statement - Information concerning directors and corporate governance is incorporated by reference from the Proxy Statement[202](index=202&type=chunk)[203](index=203&type=chunk) Executive Officers | Name | Age | Title | | :--- | :--- | :--- | | John M. Steitz | 63 | President and Chief Executive Officer | | D. Andrew Edwards | 63 | Executive Vice President and Chief Financial Officer | | Kevin C. Donnelly | 47 | Vice President, General Counsel and Corporate Secretary | [Executive Compensation](index=38&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding director and executive compensation, including the Compensation Discussion and Analysis and committee reports, is incorporated by reference from the company's Proxy Statement - Information on executive compensation is incorporated by reference from the Proxy Statement[207](index=207&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=38&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the company's Proxy Statement - Information on security ownership and equity compensation plans is incorporated by reference from the Proxy Statement[208](index=208&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=39&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[209](index=209&type=chunk) [Principal Accounting Fees and Services](index=39&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) This section identifies KPMG LLP as the company's independent registered public accounting firm and incorporates by reference information on accounting fees and services, as well as the Audit Committee's pre-approval procedures, from the Proxy Statement - The company's independent registered public accounting firm is **KPMG LLP**[210](index=210&type=chunk) - Information on accounting fees and services is incorporated by reference from the Proxy Statement[210](index=210&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=40&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section contains the index to the company's consolidated financial statements and supplementary data, including KPMG LLP's unqualified opinion on financial statements but an adverse opinion on internal control over financial reporting - The independent auditor, **KPMG LLP**, issued an unqualified opinion on the consolidated financial statements[216](index=216&type=chunk) - **KPMG LLP** issued an adverse opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2021, due to identified material weaknesses[217](index=217&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk) [Form 10-K Summary](index=84&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to this filing - Not Applicable[375](index=375&type=chunk)

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents Tredegar Corporation's unaudited condensed consolidated financial statements for Q3 and the first nine months of 2021, including balance sheets, income statements, cash flows, and detailed notes, reflecting a significant turnaround in net income driven by non-operating items Condensed Consolidated Balance Sheet Highlights (Unaudited) | (In Thousands) | Sep 30, 2021 (In thousands) | Dec 31, 2020 (In thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $228,790 | $188,435 | | **Total Assets** | $545,834 | $514,870 | | **Total Current Liabilities** | $150,063 | $140,752 | | **Long-term Debt** | $127,000 | $134,000 | | **Total Liabilities** | $399,555 | $405,815 | | **Total Shareholders' Equity** | $146,279 | $109,055 | Condensed Consolidated Statements of Income (Loss) Highlights (Unaudited) | (In Thousands, Except Per Share Data) | Three Months Ended Sep 30, 2021 (In thousands) | Three Months Ended Sep 30, 2020 (In thousands) | Nine Months Ended Sep 30, 2021 (In thousands) | Nine Months Ended Sep 30, 2020 (In thousands) | | :--- | :--- | :--- | :--- | :--- | | **Sales** | $209,517 | $184,370 | $605,468 | $562,766 | | **Net Income (Loss) from Continuing Operations** | $6,229 | $(16,976) | $36,576 | $(23,308) | | **Net Income (Loss)** | $6,203 | $(65,213) | $36,472 | $(76,339) | | **Diluted Earnings (Loss) Per Share** | $0.19 | $(1.95) | $1.09 | $(2.29) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | (In Thousands) | Nine Months Ended Sep 30, 2021 (In thousands) | Nine Months Ended Sep 30, 2020 (In thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $51,487 | $66,326 | | **Net cash used in investing activities** | $(14,827) | $(13,416) | | **Net cash used in financing activities** | $(18,199) | $(47,634) | | **Increase in cash & cash equivalents** | $18,407 | $3,600 | [Notes to Financial Statements - Divestitures and Discontinued Operations](index=10&type=section&id=Notes%20to%20Financial%20Statements%20-%20Divestitures%20and%20Discontinued%20Operations) The company completed the sale of its Personal Care Films business in October 2020, now reported as discontinued operations, while the Bright View Technologies sale in December 2020 remains within continuing operations, with the former showing a net loss of **$0.1 million** in 2021 compared to a **$53.0 million** loss in 2020 - The sale of the Personal Care Films business was completed on October 30, 2020, and its historical results are presented as discontinued operations[25](index=25&type=chunk)[29](index=29&type=chunk) Financial Results of Discontinued Operations (In thousands) | | Nine Months Ended Sep 30, 2021 (In thousands) | Nine Months Ended Sep 30, 2020 (In thousands) | | :--- | :--- | :--- | | Sales | $0 | $98,053 | | Held for sale impairment loss | $0 | $45,054 | | Income (loss) from discontinued operations, net of tax | $(104) | $(53,031) | [Notes to Financial Statements - Goodwill and Investments](index=12&type=section&id=Notes%20to%20Financial%20Statements%20-%20Goodwill%20and%20Investments) The company recognized a **$13.7 million** goodwill impairment charge in early 2020 for its Aluminum Extrusions segment but identified no impairment in 2021, while its investment in kaléo, Inc. was valued at **$35.5 million** as of September 30, 2021, yielding a **$1.2 million** pre-tax gain for the first nine months of 2021, a significant reversal from the prior year's **$61.0 million** loss - In the first three months of 2020, the company recognized a goodwill impairment charge of **$13.7 million** (**$10.5 million** after taxes) for the Aluminum Extrusions' AACOA reporting unit, with no impairment identified in 2021[37](index=37&type=chunk) - The estimated fair value of the investment in kaléo, Inc. was **$35.5 million** as of September 30, 2021, compared to **$34.6 million** as of December 31, 2020[48](index=48&type=chunk) Gain (Loss) on kaléo Investment (In thousands) | | Nine Months Ended Sep 30, 2021 (In thousands) | Nine Months Ended Sep 30, 2020 (In thousands) | | :--- | :--- | :--- | | Gain (loss) on investment in kaléo | $1,197 | $(61,000) | [Notes to Financial Statements - Business Segments](index=19&type=section&id=Notes%20to%20Financial%20Statements%20-%20Business%20Segments) The company's Aluminum Extrusions segment saw increased net sales but modest EBITDA growth in the first nine months of 2021, while PE Films experienced declines in both, and Flexible Packaging Films achieved slightly higher net sales and improved EBITDA, with management primarily using EBITDA from ongoing operations as a profitability measure Net Sales by Segment (In thousands) | Segment | Nine Months Ended Sep 30, 2021 (In thousands) | Nine Months Ended Sep 30, 2020 (In thousands) | | :--- | :--- | :--- | | Aluminum Extrusions | $394,492 | $339,566 | | PE Films | $87,885 | $103,444 | | Flexible Packaging Films | $102,560 | $100,534 | EBITDA from Ongoing Operations by Segment (In thousands) | Segment | Nine Months Ended Sep 30, 2021 (In thousands) | Nine Months Ended Sep 30, 2020 (In thousands) | | :--- | :--- | :--- | | Aluminum Extrusions | $45,062 | $41,496 | | PE Films | $21,035 | $33,928 | | Flexible Packaging Films | $25,296 | $22,594 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's Q3 2021 return to profitability, driven by non-operating items, while operational segments face COVID-19 related challenges including labor shortages, supply chain disruptions, and cost inflation, which the company mitigates through price increases and cost pass-throughs, maintaining strong liquidity [COVID-19 Impact and Business Conditions](index=25&type=section&id=COVID-19%20Impact%20and%20Business%20Conditions) The company continues to operate all manufacturing sites as essential businesses while managing COVID-19 related challenges, with Bonnell Aluminum facing significant labor shortages and hiring difficulties, and all segments experiencing supply chain disruptions and escalating raw material and transportation costs, prompting price increases and new cost pass-through mechanisms - Bonnell Aluminum is experiencing higher than normal absenteeism and hiring difficulties, leading to a labor shortage that constrains its ability to meet demand[93](index=93&type=chunk) - To combat rising costs, Bonnell Aluminum has implemented price increases, and PE Films initiated a quarterly resin cost pass-through mechanism effective July 1, 2021[94](index=94&type=chunk) - PE Films' profitability in 2021 is adversely impacted by a customer product transition and lags in passing through significant resin cost increases[96](index=96&type=chunk) [Operations Review by Segment](index=27&type=section&id=Operations%20Review%20by%20Segment) In Q3 2021, Aluminum Extrusions' EBITDA fell **27.2%** YoY to **$12.0 million** due to lower volume and higher costs, despite higher sales from price pass-throughs, while PE Films' EBITDA declined **20.2%** to **$4.8 million** due to customer product transition and resin cost pressures, and Flexible Packaging Films' EBITDA decreased **22.5%** to **$7.4 million** driven by a **10.2%** volume drop from lower demand and an equipment failure Aluminum Extrusions Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 (In thousands) | Q3 2020 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs) | 45,407 | 48,859 | (7.1)% | | Net Sales | $137,086 | $115,621 | 18.6% | | EBITDA | $12,038 | $16,540 | (27.2)% | - The PE Films Surface Protection business is being adversely affected by customer product transitions, which are estimated to have a negative EBITDA impact of **$14.6 million** in the first nine months of 2021 and a further **$7 million** in 2022[110](index=110&type=chunk) - Flexible Packaging Films' Q3 2021 sales volume declined **10.2%** YoY due to lower demand, an equipment failure, and supply chain restrictions[115](index=115&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operating activities for the first nine months of 2021 was **$51.5 million**, a decrease from **$66.3 million** in the prior year, primarily due to changes in working capital, while the company maintained a strong liquidity position with **$127 million** in debt and approximately **$248 million** available under its **$375 million** credit facility as of September 30, 2021, remaining in full compliance with all debt covenants with a leverage ratio of **1.32x** - Net cash provided by operating activities decreased to **$51.5 million** in the first nine months of 2021 from **$66.3 million** in the same period of 2020[149](index=149&type=chunk) - As of September 30, 2021, total debt was **$127 million**, with approximately **$248 million** of available credit under the company's revolving credit agreement[154](index=154&type=chunk) Key Credit Metrics as of September 30, 2021 | Metric | Value | Covenant Limit | | :--- | :--- | :--- | | Leverage Ratio | 1.32x | < 4.00x | | Interest Coverage Ratio | 27.19x | > 3.00x | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Tredegar is exposed to market risks from volatility in interest rates, commodity prices (aluminum, resins, natural gas), and foreign currencies, particularly the Brazilian Real, which the company actively manages through futures contracts for aluminum, a quarterly resin cost pass-through mechanism for PE Films, and foreign currency forward contracts for Flexible Packaging Films - The company has exposure to volatility in prices for aluminum, polyethylene and polypropylene resin, PTA, MEG, and natural gas[159](index=159&type=chunk)[160](index=160&type=chunk) - To manage resin price volatility, PE Films implemented a quarterly resin cost pass-through mechanism for all customers not previously covered, effective July 1, 2021[169](index=169&type=chunk) - The Flexible Packaging Films business in Brazil (Terphane Ltda.) hedges its foreign exchange risk arising from U.S. Dollar-denominated sales and Brazilian Real-denominated operating costs using forward contracts[175](index=175&type=chunk)[176](index=176&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were not effective as of September 30, 2021, due to ongoing material weaknesses in internal control over financial reporting related to the control environment, risk assessment, information and communication, monitoring, and control activities, with remediation efforts delayed and now expected to be completed in the first half of 2022 - The CEO and CFO concluded that disclosure controls and procedures were not effective as of September 30, 2021, because of ongoing material weaknesses in internal control over financial reporting[183](index=183&type=chunk) - The identified material weaknesses relate to five components of the COSO framework: Control Environment, Risk Assessment, Information and Communication, Monitoring Activities, and Control Activities[194](index=194&type=chunk) - Remediation of the material weaknesses has been delayed due to factors including the COVID-19 pandemic and employee turnover, with the company now expecting to complete implementation of new controls in the first half of 2022, a delay from the previous target of year-end 2021[196](index=196&type=chunk) PART II - OTHER INFORMATION [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors.) The company reports no additional material updates or changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 - There are no material updates or changes to the risk factors previously disclosed in the 2020 Form 10-K[200](index=200&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including certifications by the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as well as the XBRL interactive data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and XBRL data files[201](index=201&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-10258 Tredegar Corporation (Exact Name of Registrant as Specified in Its Charter) Virginia 54-1497771 (State or Other Jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-10258 Tredegar Corporation (Exact Name of Registrant as Specified in Its Charter) Virginia 54-1497771 (State or Other Jurisdiction ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Tredegar operates in Aluminum Extrusions, PE Films, and Flexible Packaging Films, having divested non-core businesses in 2020 - Tredegar operates through three reportable business segments: **Aluminum Extrusions**, **PE Films**, and **Flexible Packaging Films**[11](index=11&type=chunk) - In 2020, the company completed the **sale** of its **Personal Care Films business**, which is now presented as **discontinued operations**, and also sold Bright View Technologies, which remains in continuing operations[12](index=12&type=chunk)[13](index=13&type=chunk) Aluminum Extrusions Net Sales by Market Segment (2018-2020) | Market Segment | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Building and construction:** | | | | | Nonresidential | **56%** | **51%** | **51%** | | Residential | **9%** | **8%** | **8%** | | **Automotive** | **8%** | **9%** | **8%** | | **Specialty:** | | | | | Consumer durables | **10%** | **11%** | **12%** | | Machinery & equipment | **7%** | **7%** | **7%** | | Electrical | **4%** | **7%** | **7%** | | Distribution | **6%** | **7%** | **7%** | | **Total** | **100%** | **100%** | **100%** | - The **PE Films segment** is **highly concentrated**, with its top four customers **accounting for** **84%** of its **net sales** in 2020[21](index=21&type=chunk) - The backlog for the **Aluminum Extrusions segment increased by** approximately **41%** from \\$**52.8 million** at the end of 2019 to \\$**74.2 million** at the end of 2020[25](index=25&type=chunk) - As of December 31, 2020, Tredegar employed approximately **2,400 people**, with about **34%** represented by labor unions in the U.S. and Brazil[30](index=30&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks including cyclical business, customer concentration, internal control weaknesses, underfunded pension, and COVID-19 impacts - The **sales volume** and profitability of the **Aluminum Extrusions segment** are **cyclical, seasonal**, and **highly dependent** on U.S. economic conditions, particularly in the construction sector[40](index=40&type=chunk) - The **PE Films segment** is **highly dependent** on a few large customers. A **product transition** by one key customer is expected to **reduce PE Films' EBITDA from ongoing operations by** an estimated \\$**18 million** in 2021 versus 2020[42](index=42&type=chunk) - The **Flexible Packaging Films segment** faces risks from overcapacity in Latin American polyester film production and economic uncertainty in Brazil, which could adversely impact financial results[45](index=45&type=chunk) - The company has identified **material weaknesses** in its **internal control over financial reporting**, which **increases the risk** of a **material misstatement** in its financial statements[47](index=47&type=chunk) - Tredegar has an **underfunded defined benefit pension plan**, which was **underfunded by** \\$**103.1 million** as of December 31, 2020, and requires an expected **cash contribution** of approximately \\$**11.7 million** in 2021[51](index=51&type=chunk) - The **COVID-19 pandemic** poses risks to operations, including higher absenteeism and hiring difficulties at Bonnell Aluminum, which could adversely affect financial condition and results[55](index=55&type=chunk) [Unresolved Staff Comments](index=12&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - **None**[57](index=57&type=chunk) [Properties](index=12&type=section&id=Item%202.%20Properties) Tredegar owns most manufacturing facilities in the U.S., Brazil, and China, which are in good condition with sufficient capacity Principal Manufacturing Locations by Segment | Segment | Locations in the U.S. | Locations Outside the U.S. | | :--- | :--- | :--- | | **Aluminum Extrusions** | Carthage, TN; Clearfield, UT; Elkhart, IN; Newnan, GA; Niles, MI | None | | **PE Films** | Pottsville, PA; Richmond, VA (technical center) | Guangzhou, China | | **Flexible Packaging Films** | Bloomfield, NY (technical center) | Cabo de Santo Agostinho, Brazil | [Legal Proceedings](index=13&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 18 "Contingencies" to the Consolidated Financial Statements - The required information for this item is set forth in Note 18 "**Contingencies**" to the Consolidated Financial Statements[61](index=61&type=chunk) [Mine Safety Disclosures](index=13&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - **None**[62](index=62&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=14&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Tredegar's common stock trades on NYSE, with a \$**200 million** special dividend in 2020 and an unused share repurchase program - On December 1, 2020, the Board declared a **special dividend** of \\$**200 million**, or \\$**5.97** per share, which was paid in December 2020[66](index=66&type=chunk) - The company has a share repurchase program authorizing the purchase of up to **5 million** shares, with **1,732,003 shares** remaining available for repurchase as of December 31, 2020. No shares were repurchased in 2020[68](index=68&type=chunk) [Selected Financial Data](index=15&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year financial and segment data summary from 2016 to 2020, including historical results for discontinued operations Five-Year Financial Summary (2016-2020) | Year Ended Dec 31 | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Sales (in thousands)** | \\$755,290 | \\$826,324 | \\$851,834 | \\$725,867 | \\$595,665 | | **Net Income (Loss) (in thousands)** | \\$(75,444) | \\$48,259 | \\$24,842 | \\$38,251 | \\$24,466 | | **Diluted EPS** | \\$(2.26) | \\$1.45 | \\$0.75 | \\$1.16 | \\$0.75 | | **Total Assets (in thousands)** | \\$514,870 | \\$712,668 | \\$707,373 | \\$755,743 | \\$651,162 | | **Total Debt (in thousands)** | \\$134,000 | \\$42,000 | \\$101,500 | \\$152,000 | \\$95,000 | Segment Net Sales (2016-2020, in thousands) | Segment | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Aluminum Extrusions** | \\$455,711 | \\$529,602 | \\$573,126 | \\$466,833 | \\$360,098 | | **PE Films** | \\$139,288 | \\$133,807 | \\$127,708 | \\$128,406 | \\$109,674 | | **Flexible Packaging Films** | \\$134,605 | \\$133,935 | \\$123,830 | \\$108,355 | \\$108,028 | Segment EBITDA from Ongoing Operations (2018-2020, in thousands) | Segment | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Aluminum Extrusions** | \\$55,137 | \\$65,683 | \\$65,479 | | **PE Films** | \\$45,107 | \\$41,133 | \\$32,404 | | **Flexible Packaging Films** | \\$30,645 | \\$14,737 | \\$11,154 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, sales decreased, leading to a net loss from continuing operations due to kaléo losses and goodwill impairment, while a special dividend increased net debt Financial Highlights (2019 vs. 2020) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Sales | \\$**755.3 million** | \\$**826.3 million** | | Net Income (Loss) from Continuing Operations | \\$**(16.8 million)** | \\$**58.5 million** | | Diluted EPS from Continuing Operations | \\$**(0.51)** | \\$**1.76** | - The 2020 results were significantly impacted by a \\$**47.6 million** after-tax loss on the investment in kaléo and a \\$**10.5 million** after-tax **goodwill impairment** for the **Aluminum Extrusions' AACOA reporting unit**[89](index=89&type=chunk) - The **COVID-19 pandemic** led to higher absenteeism and hiring difficulties at Bonnell Aluminum, while demand for flexible food packaging films produced by Terphane remained strong[95](index=95&type=chunk)[97](index=97&type=chunk) - The company paid a **special dividend** of \\$**200 million** in December 2020, **increasing total debt to** \\$**134 million** and **net debt to** \\$**122.2 million** at year-end[99](index=99&type=chunk) [Operations Review](index=23&type=section&id=Operations%20Review) In 2020, Aluminum Extrusions' **EBITDA** declined due to lower volumes, while PE Films' **EBITDA** grew despite expected future customer transition impacts, and Flexible Packaging Films' **EBITDA** significantly increased Aluminum Extrusions Performance (2020 vs. 2019) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs in thousands) | **186,391 lbs** | **208,249 lbs** | **(10.5%)** | | Net Sales (in thousands) | \\$455,711 | \\$529,602 | **(14.0%)** | | EBITDA from Ongoing Operations (in thousands) | \\$55,137 | \\$65,683 | **(16.1%)** | PE Films Performance (2020 vs. 2019) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs in thousands) | **45,175 lbs** | **43,983 lbs** | **2.7%** | | Net Sales (in thousands) | \\$139,288 | \\$133,807 | **4.1%** | | EBITDA from Ongoing Operations (in thousands) | \\$45,107 | \\$41,133 | **9.7%** | - A customer **product transition** in the **Surface Protection business** is projected to **decrease PE Films' EBITDA from ongoing operations by** \\$**18 million** in 2021 versus 2020 and an additional \\$**4 million** in 2022 versus 2021[109](index=109&type=chunk) Flexible Packaging Films Performance (2020 vs. 2019) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Sales Volume (lbs in thousands) | **113,115 lbs** | **105,276 lbs** | **7.4%** | | Net Sales (in thousands) | \\$134,605 | \\$133,935 | **0.5%** | | EBITDA from Ongoing Operations (in thousands) | \\$30,645 | \\$14,737 | **107.9%** | [Critical Accounting Policies](index=25&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant estimates for goodwill impairment, kaléo investment valuation, pension obligations, and income taxes, with notable impairments and fair value decreases in 2020 - In the first quarter of 2020, the company recognized a **goodwill impairment charge** of \\$**13.7 million** (\\$**10.5 million** after-tax), representing the entire goodwill amount for the **Aluminum Extrusions' AACOA reporting unit**[121](index=121&type=chunk) - The investment in privately held kaléo is accounted for under the **fair value method** (**Level 3 inputs**). Its estimated **fair value** dropped from \\$**95.5 million** at Dec 31, 2019, to \\$**34.6 million** at Dec 31, 2020[122](index=122&type=chunk)[124](index=124&type=chunk) - **Pension benefit calculations** rely on key assumptions such as **discount rates** and **expected return on plan assets**. The weighted average **discount rate decreased from** **3.27%** in 2019 to **2.57%** in 2020, while the expected long-term return on assets was **5.00%** for 2020[126](index=126&type=chunk)[127](index=127&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operations decreased in 2020, while total debt increased to fund a special dividend, but the company maintained compliance with amended credit agreement covenants and sufficient borrowing capacity - **Net cash provided by operating activities** was \\$**74.4 million** in 2020, a **decrease from** \\$**115.9 million** in 2019, primarily due to lower net working capital efficiencies and a dividend received from kaléo in 2019[160](index=160&type=chunk) - The company amended its **revolving credit agreement** on December 1, 2020, **reducing the facility from** \\$**500 million to** \\$**375 million** and permitting a one-time **special dividend** of up to \\$**200 million**[163](index=163&type=chunk)[164](index=164&type=chunk) Net Capitalization and Indebtedness (as of Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | \\$11,846 | | Debt | \\$134,000 | | **Debt, net of cash** | **\\$122,154** | | Shareholders' equity | \\$109,055 | | **Net capitalization** | **\\$231,209** | - As of December 31, 2020, the company was in **compliance with all debt covenants**, with a **leverage ratio** of **1.43x** (well below the maximum of **4.00x**)[168](index=168&type=chunk)[169](index=169&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Tredegar faces market risks from interest rates, raw material prices, energy costs, and foreign currency fluctuations, which it manages using derivative financial instruments - The company is exposed to **price volatility** for key raw materials: aluminum for **Aluminum Extrusions**, polyethylene resin for **PE Films**, and polyester resin (PTA/MEG) for **Flexible Packaging Films**[177](index=177&type=chunk) - **Aluminum Extrusions** uses forward purchase commitments and futures contracts to hedge its exposure to aluminum **price volatility** under **fixed-price forward sales contracts**, which generally have a duration of not more than 12 months[178](index=178&type=chunk) - The **Flexible Packaging Films business** in Brazil has significant **foreign exchange translation risk**, as sales and raw material costs are priced in U.S. Dollars while most operating costs are in Brazilian Real. The company uses **foreign exchange forward rate contracts** to hedge this exposure on a short-term basis[192](index=192&type=chunk)[193](index=193&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item incorporates the company's audited consolidated financial statements and supplementary data by reference to Item 15 - The information required by this item, including the **consolidated financial statements** and **supplementary data**, is set forth in Item 15[196](index=196&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=42&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants on accounting and financial disclosure - **None**[197](index=197&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of December 31, 2020, due to **material weaknesses** across all five **COSO framework** components, with an **ongoing remediation plan** - The CEO and CFO concluded that due to **material weaknesses** in **internal control over financial reporting**, the company's **disclosure controls and procedures were not effective** as of December 31, 2020[201](index=201&type=chunk) - Management's evaluation identified **material weaknesses** across all five components of the **COSO framework**: **Control Environment**, **Risk Assessment**, **Information and Communication**, **Monitoring Activities**, and **Control Activities**[213](index=213&type=chunk) - The company's **independent registered public accounting firm**, KPMG LLP, expressed an **adverse opinion** on the operating effectiveness of the company's **internal control over financial reporting**[209](index=209&type=chunk) - A **remediation plan is ongoing** to address the identified **material weaknesses**, with implementation having begun in the second quarter of 2019[211](index=211&type=chunk)[217](index=217&type=chunk) [Other Information](index=44&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[218](index=218&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=45&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details **executive officers'** backgrounds and incorporates director and **corporate governance** information by reference from the **Proxy Statement** Executive Officers | Name | Age | Title | | :--- | :--- | :--- | | John M. Steitz | 62 | President and Chief Executive Officer | | D. Andrew Edwards | 62 | Executive Vice President and Chief Financial Officer | | Kevin C. Donnelly | 46 | Vice President, General Counsel and Corporate Secretary | [Executive Compensation](index=45&type=section&id=Item%2011.%20Executive%20Compensation) Information on director and **executive compensation** is incorporated by reference from the **Proxy Statement** - Information related to **executive compensation** is incorporated by reference from the **Proxy Statement**[226](index=226&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=46&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on **security ownership** and **equity compensation plans** is incorporated by reference from the **Proxy Statement** - Information related to **security ownership** and **equity compensation plans** is incorporated by reference from the **Proxy Statement**[227](index=227&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=46&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on **related party transactions** and **director independence** is incorporated by reference from the **Proxy Statement** - Information related to **certain relationships**, **related transactions**, and **director independence** is incorporated by reference from the **Proxy Statement**[228](index=228&type=chunk) [Principal Accounting Fees and Services](index=46&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on **principal accounting fees and services**, and **Audit Committee's pre-approval policies** is incorporated by reference from the **Proxy Statement** - Information related to **principal accounting fees and services** is incorporated by reference from the **Proxy Statement**[229](index=229&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=47&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section includes the **consolidated financial statements** and KPMG's reports, noting an **unqualified opinion** on financials but an **adverse opinion** on **internal controls** due to **material weaknesses** - The **independent auditor**, KPMG LLP, issued an **unqualified opinion** on the **consolidated financial statements**[235](index=235&type=chunk) - KPMG LLP issued an **adverse opinion** on the effectiveness of the Company's **internal control over financial reporting** as of December 31, 2020, due to identified **material weaknesses**[236](index=236&type=chunk)[247](index=247&type=chunk) [Notes to Financial Statements](index=59&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed financial statement support, covering 2020 **divestitures**, kaléo investment **fair value** changes, segment performance, **debt amendments**, **pension status**, and **accounting policies** - On October 30, 2020, the company sold its **Personal Care Films business**, resulting in a **pre-tax loss** of \\$**50.0 million**. The historical results are now presented as **discontinued operations**[266](index=266&type=chunk)[314](index=314&type=chunk) - The **fair value** of the investment in kaléo **decreased from** \\$**95.5 million** at year-end 2019 to \\$**34.6 million** at year-end 2020, resulting in a **pre-tax loss** of \\$**60.9 million** for 2020[326](index=326&type=chunk) - The company's **defined benefit pension plan** was **underfunded by** \\$**103.1 million** at the end of 2020, compared to \\$**100.4 million** at the end of 2019[378](index=378&type=chunk) - In December 2020, the company amended its **credit agreement**, **reducing the facility size to** \\$**375 million** and permitting the \\$**200 million special dividend**. **Total debt outstanding** was \\$**134 million** at year-end[359](index=359&type=chunk)[362](index=362&type=chunk) [Form 10-K Summary](index=91&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is **Not Applicable** - **Not Applicable**[411](index=411&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-10258 Tredegar Corporation (Exact Name of Registrant as Specified in Its Charter) Virginia 54-1497771 (State or Other Jurisdic ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents Tredegar Corporation's unaudited consolidated financial statements, detailed notes, and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents Tredegar Corporation's unaudited consolidated financial statements, including balance sheets, income statements, comprehensive income statements, cash flow statements, and statements of shareholders' equity for the periods ended June 30, 2020, and December 31, 2019 (for balance sheet) or June 30, 2019 (for income, comprehensive income, cash flow, and shareholders' equity) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of Tredegar Corporation's financial position at June 30, 2020, and December 31, 2019 Consolidated Balance Sheet Highlights (In Thousands) | Metric | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :------------------ | | Total assets | $658,807 | $712,668 | | Total liabilities | $307,933 | $335,919 | | Total shareholders' equity | $350,874 | $376,749 | | Cash and cash equivalents | $39,930 | $31,422 | | Accounts and other receivables, net | $100,460 | $107,558 | | Inventories | $85,218 | $81,380 | | Long-term debt | $34,000 | $42,000 | - Total assets decreased by **$53.861 million** from December 31, 2019, to June 30, 2020, primarily driven by a decrease in investment in kaléo and net property, plant and equipment[5](index=5&type=chunk) - Total liabilities decreased by **$27.986 million**, mainly due to a reduction in long-term debt and deferred income taxes[5](index=5&type=chunk) - Shareholders' equity decreased by **$25.875 million**, influenced by changes in retained earnings and accumulated other comprehensive income (loss)[5](index=5&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section details Tredegar Corporation's financial performance, including sales, net income, and earnings per share, for the three and six months ended June 30, 2020 and 2019 Consolidated Statements of Income Highlights (In Thousands, Except Per Share Data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales | $218,638 | $248,248 | $446,940 | $496,714 | | Net income (loss) | $11,196 | $14,477 | $(11,126) | $34,261 | | Basic EPS | $0.33 | $0.44 | $(0.33) | $1.03 | | Diluted EPS | $0.33 | $0.44 | $(0.33) | $1.03 | | Dividends per share | $0.12 | $0.11 | $0.24 | $0.22 | - Sales decreased by **11.9%** for the three months ended June 30, 2020, and by **10.0%** for the six months ended June 30, 2020, compared to the prior year periods[7](index=7&type=chunk) - Net income for the three months ended June 30, 2020, decreased to **$11.2 million** from **$14.5 million** in the prior year, while the six-month period saw a net loss of **$11.1 million** compared to a net income of **$34.3 million** in 2019, largely due to a goodwill impairment charge and a decline in the kaléo investment value[7](index=7&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section outlines Tredegar Corporation's comprehensive income, including net income and other comprehensive income (loss), for the three and six months ended June 30, 2020 and 2019 Consolidated Statements of Comprehensive Income (Loss) Highlights (In Thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $11,196 | $14,477 | $(11,126) | $34,261 | | Other comprehensive income (loss) | $3,715 | $3,207 | $(8,658) | $4,143 | | Comprehensive income (loss) | $14,911 | $17,684 | $(19,784) | $38,404 | - Other comprehensive income (loss) for the six months ended June 30, 2020, was a loss of **$8.7 million**, a significant decrease from a gain of **$4.1 million** in the prior year, primarily due to unrealized foreign currency translation adjustments and derivative financial instruments adjustments[10](index=10&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details Tredegar Corporation's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019 Consolidated Statements of Cash Flows Highlights (In Thousands) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $36,062 | $68,496 | | Net cash used in investing activities | $(8,806) | $(24,229) | | Net cash used in financing activities | $(16,611) | $(38,431) | | Increase in cash & cash equivalents | $8,508 | $5,372 | | Cash & cash equivalents at end of period | $39,930 | $39,769 | - Net cash provided by operating activities decreased by **$32.4 million** for the six months ended June 30, 2020, primarily due to changes in working capital and the absence of a kaléo dividend received in the prior year[13](index=13&type=chunk)[157](index=157&type=chunk) - Net cash used in investing activities decreased to **$8.8 million** in 2020 from **$24.2 million** in 2019, mainly due to lower capital expenditures[13](index=13&type=chunk)[158](index=158&type=chunk) - Net cash used in financing activities decreased to **$16.6 million** in 2020 from **$38.4 million** in 2019, driven by lower net debt repayments[13](index=13&type=chunk)[159](index=159&type=chunk) [Consolidated Statement of Shareholders' Equity](index=8&type=section&id=Consolidated%20Statement%20of%20Shareholders'%20Equity) This section presents the changes in Tredegar Corporation's total shareholders' equity for the three and six months ended June 30, 2020 and 2019 Changes in Total Shareholders' Equity (In Thousands) | Period | Balance at Beginning | Net Income (Loss) | Other Comprehensive Income (Loss) | Cash Dividends Declared | Stock-based Compensation Expense | Other Adjustments | Balance at End | | :-------------------------------- | :------------------- | :---------------- | :-------------------------------- | :---------------------- | :------------------------------- | :---------------- | :------------- | | Three Months Ended June 30, 2020 | $338,590 | $11,196 | $3,715 | $(4,021) | $1,394 | $(9) | $350,874 | | Six Months Ended June 30, 2020 | $376,749 | $(11,126) | $(8,658) | $(8,025) | $2,520 | $(604) | $350,874 | | Three Months Ended June 30, 2019 | $372,621 | $14,477 | $3,207 | $(3,669) | $1,679 | $(46) | $388,276 | | Six Months Ended June 30, 2019 | $354,857 | $34,261 | $4,143 | $(7,320) | $3,189 | $(870) | $388,276 | - Total shareholders' equity decreased from **$376.7 million** at January 1, 2020, to **$350.9 million** at June 30, 2020, primarily due to a net loss and negative other comprehensive income[16](index=16&type=chunk) [NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS](index=12&type=section&id=NOTES%20TO%20THE%20CONSOLIDATED%20INTERIM%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited consolidated interim financial statements, covering accounting policies, significant estimates, and specific financial statement line items [Note 1. BASIS OF PRESENTATION](index=12&type=section&id=Note%201.%20BASIS%20OF%20PRESENTATION) This note outlines the basis of presentation for the financial statements, including GAAP compliance, fiscal year conventions, and the adoption of new accounting standards - The financial statements are prepared in accordance with U.S. GAAP and include all necessary adjustments for fair presentation, with the Aluminum Extrusions segment operating on a 52/53-week fiscal year while other segments follow a calendar year[23](index=23&type=chunk)[24](index=24&type=chunk) - The Company adopted ASU 2016-13, Financial Instruments - Credit Losses, in Q1 2020, which resulted in an immaterial adjustment of less than **$0.2 million**[26](index=26&type=chunk) Accounts and Other Receivables, Net (In Thousands) | Metric | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :------------------ | | Customer receivables | $99,520 | $106,153 | | Other receivables | $4,323 | $4,441 | | Total accounts and other receivables | $103,843 | $110,594 | | Less: Allowance for bad debts and sales returns | $(3,383) | $(3,036) | | Total accounts and other receivables, net | $100,460 | $107,558 | [Note 2. LONG-LIVED ASSETS & GOODWILL IMPAIRMENT](index=13&type=section&id=Note%202.%20LONG-LIVED%20ASSETS%20%26%20GOODWILL%20IMPAIRMENT) This note details the goodwill impairment charge recognized in the Aluminum Extrusions segment and the assessment of long-lived assets for impairment - The Company recognized a goodwill impairment charge of **$13.7 million** (**$10.5 million** after taxes) in the first three months of 2020 for the AACOA reporting unit within Aluminum Extrusions, due to severe impacts from COVID-19 on consumer durable, building & construction, and automotive markets[29](index=29&type=chunk)[30](index=30&type=chunk) - No impairment indicators were identified for long-lived assets during the three months ended June 30, 2020, but future interim tests may be required due to ongoing COVID-19 disruptions[28](index=28&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [Note 3. ASSET IMPAIRMENTS AND COSTS ASSOCIATED WITH EXIT AND DISPOSAL ACTIVITIES](index=13&type=section&id=Note%203.%20ASSET%20IMPAIRMENTS%20AND%20COSTS%20ASSOCIATED%20WITH%20EXIT%20AND%20DISPOSAL%20ACTIVITIES) This note outlines the planned shutdown of the Lake Zurich plant, including expected cash costs and non-cash asset write-offs, and details accrued expenses for exit and disposal activities - The Company plans to complete the Lake Zurich plant shutdown by the end of 2020, with total expected pre-tax cash costs of **$6.9 million** and non-cash asset write-offs/accelerated depreciation of **$1.3 million**[33](index=33&type=chunk) Accrued Expenses for Exit and Disposal Activities (In Thousands) | Metric | Severance | Asset Impairments | Other | Total | | :-------------------------------- | :-------- | :---------------- | :---- | :---- | | Balance at January 1, 2020 | $1,294 | $0 | $86 | $1,380 | | Charges in 2020 (Lake Zurich & other) | $245 | $11 | $341 | $597 | | Cash payments | $(1,148) | $0 | $(386) | $(1,534) | | Charges against assets | $0 | $(11) | $0 | $(11) | | Balance at June 30, 2020 | $391 | $0 | $41 | $432 | [Note 4. INVENTORIES](index=14&type=section&id=Note%204.%20INVENTORIES) This note provides a breakdown of inventory components and highlights changes in total inventories from December 31, 2019, to June 30, 2020 Inventory Components (In Thousands) | Component | June 30, 2020 | December 31, 2019 | | :---------------- | :------------ | :------------------ | | Finished goods | $19,565 | $24,504 | | Work-in-process | $13,123 | $12,328 | | Raw materials | $30,482 | $24,735 | | Stores, supplies and other | $22,048 | $19,813 | | Total | $85,218 | $81,380 | - Total inventories increased by **$3.8 million** from December 31, 2019, to June 30, 2020, primarily driven by increases in raw materials and stores, supplies and other[35](index=35&type=chunk) [Note 5. EARNINGS PER SHARE](index=14&type=section&id=Note%205.%20EARNINGS%20PER%20SHARE) This note details the shares used to compute basic and diluted earnings per share and explains the absence of dilutive impact for the six months ended June 30, 2020 Shares Used to Compute EPS (In Thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average shares | 33,435 | 33,270 | 33,374 | 33,197 | | Diluted weighted average shares | 33,436 | 33,278 | 33,374 | 33,203 | - For the six months ended June 30, 2020, there was no dilutive impact from stock options and restricted stock due to a net loss[36](index=36&type=chunk) [Note 6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=14&type=section&id=Note%206.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This note details the changes in accumulated other comprehensive income (loss), primarily due to foreign currency translation adjustments and derivative financial instruments Changes in Accumulated Other Comprehensive Income (Loss) (In Thousands) | Component | Jan 1, 2020 Balance | Net OCI - Current Period | June 30, 2020 Balance | | :-------------------------------- | :------------------ | :----------------------- | :-------------------- | | Foreign currency translation adjustment | $(100,663) | $(12,003) | $(112,666) | | Gain (loss) on derivative financial instruments | $(1,307) | $(2,517) | $(3,824) | | Pension and other post-retirement benefit adjustments | $(95,681) | $5,862 | $(89,819) | | Total | $(197,651) | $(8,658) | $(206,309) | - Accumulated other comprehensive loss increased by **$8.7 million** for the six months ended June 30, 2020, primarily due to negative foreign currency translation adjustments and derivative financial instrument adjustments[38](index=38&type=chunk) - The Company expects **$1.4 million** of unrealized after-tax losses on derivative instruments to be reclassified to earnings within the next 12 months[61](index=61&type=chunk) [Note 7. INVESTMENTS](index=19&type=section&id=Note%207.%20INVESTMENTS) This note discusses the Company's investment in kaléo, Inc., detailing its fair value and the factors contributing to its decline - The Company's investment in kaléo, Inc. (approx. **18% interest**) was valued at **$70.7 million** as of June 30, 2020, down from **$95.5 million** at December 31, 2019[46](index=46&type=chunk)[47](index=47&type=chunk) - The decline in kaléo's fair value during the first six months of 2020 was mainly due to lower expectations for 2020 EBITDA and net cash flow from reduced market demand for epinephrine delivery devices due to COVID-19 social distancing, and a higher private company liquidity discount (**20%** at June 30, 2020 vs. **10%** at Dec 31, 2019)[47](index=47&type=chunk)[48](index=48&type=chunk) - The fair value of kaléo is estimated using a weighted average of the EBITDA Multiple Method (**80%**) and the Discounted Cash Flow (DCF) Method (**20%**)[49](index=49&type=chunk) [Note 8. DERIVATIVE FINANCIAL INSTRUMENTS](index=21&type=section&id=Note%208.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note describes Tredegar's use of derivative financial instruments to hedge exposure to aluminum prices and foreign currency fluctuations - Tredegar uses derivative financial instruments (forward purchase commitments and futures contracts for aluminum, and foreign currency forward contracts) to hedge margin exposure from fixed-price forward sales in Aluminum Extrusions and currency volatility in Flexible Packaging Films[54](index=54&type=chunk)[55](index=55&type=chunk) Net Fair Value of Derivative Instruments (In Thousands) | Derivative Type | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :------------------ | | Aluminum futures contracts (net asset/liability) | $(1,857) | $(1,253) | | Foreign currency forward contracts (net asset/liability) | $(4,058) | $(852) | - Terphane Ltda. has outstanding foreign exchange average forward rate contracts to purchase Brazilian Real and sell U.S. Dollars, hedging approximately **76%** of its R$ operating cost exposure for the period July-Dec 2020[59](index=59&type=chunk) [Note 9. PENSION AND OTHER POSTRETIREMENT BENEFITS](index=24&type=section&id=Note%209.%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) This note details the net periodic benefit cost for pension and other post-retirement plans and outlines expected pension contributions for 2020 Net Periodic Benefit Cost (In Thousands) | Metric | Pension Benefits (6 Months Ended June 30, 2020) | Pension Benefits (6 Months Ended June 30, 2019) | Other Post-Retirement Benefits (6 Months Ended June 30, 2020) | Other Post-Retirement Benefits (6 Months Ended June 30, 2019) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :------------------------------------------------------------ | :------------------------------------------------------------ | | Service cost | $0 | $0 | $18 | $16 | | Interest cost | $5,070 | $6,135 | $120 | $146 | | Expected return on plan assets | $(5,608) | $(6,808) | $0 | $0 | | Amortization of prior service costs, (gains) losses and net transition asset | $7,628 | $5,459 | $(94) | $(115) | | Net periodic benefit cost | $7,090 | $4,786 | $44 | $47 | - Net periodic pension benefit cost increased to **$7.1 million** for the first six months of 2020 from **$4.8 million** in 2019[63](index=63&type=chunk) - The Company expects total required pension contributions for 2020 to be **$12.3 million**, with **$2.4 million** deferred until January 1, 2021, under the CARES Act[63](index=63&type=chunk) [Note 10. OTHER INCOME (EXPENSE), NET](index=25&type=section&id=Note%2010.%20OTHER%20INCOME%20(EXPENSE),%20NET) This note analyzes the components of other income (expense), net, highlighting the impact of the kaléo investment value and COVID-19 related expenses Other Income (Expense), Net (In Thousands) | Component | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gain (loss) on investment in kaléo | $1,300 | $7,100 | $(24,800) | $24,182 | | COVID-19-related expenses | $(1,294) | $0 | $(1,294) | $0 | | Other | $(19) | $(4) | $(131) | $24 | | Total | $(13) | $7,096 | $(26,225) | $24,206 | - Other income (expense), net, shifted from a gain of **$7.1 million** in Q2 2019 to a loss of **$0.013 million** in Q2 2020, and from a gain of **$24.2 million** in H1 2019 to a loss of **$26.2 million** in H1 2020, primarily due to a significant decline in the kaléo investment value and COVID-19 related expenses[65](index=65&type=chunk) [Note 11. BUSINESS SEGMENTS](index=25&type=section&id=Note%2011.%20BUSINESS%20SEGMENTS) This note provides a detailed breakdown of Tredegar's financial performance by its three business segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films - Tredegar operates in three business segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films, with EBITDA from ongoing operations as the key profitability measure used by management[67](index=67&type=chunk)[68](index=68&type=chunk) Net Sales by Segment (In Thousands) | Segment | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Aluminum Extrusions | $106,058 | $136,757 | $223,945 | $275,804 | | PE Films | $71,012 | $69,161 | $142,273 | $135,941 | | Flexible Packaging Films | $34,104 | $33,443 | $64,678 | $67,062 | | Total net sales | $211,174 | $239,361 | $430,896 | $478,807 | EBITDA from Ongoing Operations by Segment (In Thousands) | Segment | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Aluminum Extrusions | $13,279 | $18,600 | $24,956 | $34,767 | | PE Films | $15,319 | $11,160 | $29,507 | $17,703 | | Flexible Packaging Films | $6,495 | $2,880 | $13,048 | $6,084 | | Total | $35,093 | $32,640 | $67,511 | $58,554 | Net Sales by Geographic Area (In Thousands) | Geographic Area | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $141,559 | $162,788 | $287,742 | $335,042 | | Exports from the United States | $29,137 | $34,872 | $60,834 | $55,820 | | Operations outside the United States | $39,678 | $41,999 | $82,320 | $85,938 | | Total | $211,174 | $239,361 | $430,896 | $478,807 | Net Sales by Product Group (In Thousands) | Product Group | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Aluminum Extrusions | $106,058 | $136,757 | $223,945 | $275,804 | | PE Films | $71,012 | $69,161 | $142,273 | $135,941 | | Flexible Packaging Films | $34,104 | $33,443 | $64,678 | $67,062 | | Total | $211,174 | $239,361 | $430,896 | $478,807 | [Note 12. INCOME TAXES](index=28&type=section&id=Note%2012.%20INCOME%20TAXES) This note discusses the effective income tax rate, its reconciliation, and the impact of foreign tax incentives on the Company's tax expense - The effective tax rate for the first six months of 2020 was **23.8%** on a pretax loss of **$14.6 million**, compared to **19.8%** in the first six months of 2019[76](index=76&type=chunk) Effective Income Tax Rate Reconciliation (Six Months Ended June 30) | Item | 2020 Amount (In Thousands) | 2020 % | 2019 Amount (In Thousands) | 2019 % | | :-------------------------------- | :------------------------- | :----- | :------------------------- | :----- | | Federal statutory rate | $(3,066) | 21.0 | $8,972 | 21.0 | | Foreign tax incentives | $(2,630) | 18.0 | $(1,074) | (3.0) | | Foreign rate differences | $2,510 | (17.0) | $1,191 | 3.3 | | Effective income tax rate | $(3,477) | 23.8 | $8,467 | 19.8 | - Brazilian tax incentives reduced the statutory federal income tax rate for Terphane Ltda. to **15.25%** on certain products, providing a benefit of **$2.6 million** in H1 2020 and **$1.1 million** in H1 2019[79](index=79&type=chunk) [Note 13. NEW ACCOUNTING PRONOUNCEMENTS](index=29&type=section&id=Note%2013.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) This note outlines the adoption of new accounting standards and the ongoing evaluation of their potential impact on the Company's financial statements - The Company adopted ASU 2016-13 (Credit Losses) and ASU 2018-13 (Fair Value Measurement) in Q1 2020, with no material impact on its consolidated financial statements[82](index=82&type=chunk)[83](index=83&type=chunk) - The Company is currently evaluating the impact of ASU 2019-12 (Income Taxes), effective for fiscal years beginning after December 15, 2020[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on Tredegar Corporation's financial condition, liquidity, and results of operations, including the impact of COVID-19 and critical accounting policies [Forward-looking and Cautionary Statements](index=32&type=section&id=Forward-looking%20and%20Cautionary%20Statements) This section contains forward-looking statements subject to risks and uncertainties, including the highly uncertain impact of COVID-19 on the Company's results, employees, supply chains, customers, and the global economy - Forward-looking statements are identified by words like 'believe,' 'estimate,' 'anticipate,' 'expect,' and 'project,' and are subject to risks that could cause actual results to differ materially[87](index=87&type=chunk) - The Company's current projections are materially affected by the highly uncertain impact of COVID-19, which could significantly alter results depending on the pandemic's duration and impact on various stakeholders[87](index=87&type=chunk) [Executive Summary](index=34&type=section&id=Executive%20Summary) Tredegar Corporation manufactures aluminum extrusions, polyethylene plastic films, and polyester films, reporting a net income of **$11.2 million** (**$0.33** per share) for Q2 2020, down from **$14.5 million** (**$0.44** per share) in Q2 2019 - Tredegar manufactures aluminum extrusions (Aluminum Extrusions segment), polyethylene plastic films (PE Films segment), and polyester films (Flexible Packaging Films segment)[93](index=93&type=chunk) Net Income and EPS (Q2 2020 vs. Q2 2019) | Metric | Q2 2020 | Q2 2019 | | :---------------- | :------ | :------ | | Net income | $11.2M | $14.5M | | EPS | $0.33 | $0.44 | | After-tax gain on kaléo investment | $0.9M | $5.6M | [The Impact of COVID-19](index=34&type=section&id=The%20Impact%20of%20COVID-19) Tredegar's businesses are deemed essential, maintaining operations with strict health protocols, while Bonnell Aluminum faces significant sales volume and EBITDA declines, and the kaléo investment fair value declined by **$24.8 million** due to COVID-19 impacts - Tredegar's businesses are classified as 'essential services,' 'critical manufacturers,' and 'life sustaining industries,' allowing them to remain operational during the pandemic[96](index=96&type=chunk) - The Company implemented extensive health and safety protocols, including temperature checks, social distancing, face coverings, remote work, and facility disinfection[97](index=97&type=chunk)[98](index=98&type=chunk) Bonnell Aluminum 2020 Projections (Pre- vs. Post-COVID-19) | Metric | Pre-COVID-19 Plan | Current Projection (Post-COVID-19) | | :---------------- | :---------------- | :--------------------------------- | | Sales volume | 201 million lbs | 170 million lbs | | EBITDA from ongoing operations | $65 million | $42 million | - Demand for flexible food packaging films (Terphane) and hygiene/medical apertured films (PE Films Personal Care) remained strong, while Surface Protection had record performance but expects a H2 slowdown[104](index=104&type=chunk) - The defined benefit pension plan's underfunding increased from **$100 million** at December 31, 2019, to an estimated **$130 million** at June 30, 2020, due to COVID-19 related changes in asset and liability values[105](index=105&type=chunk) - The fair value of the kaléo investment declined by **$24.8 million** (**$19.5 million** after tax) from December 31, 2019, to June 30, 2020, primarily due to lower market demand for epinephrine delivery devices and a higher private company liquidity discount[106](index=106&type=chunk) - The Company reduced its 2020 capital expenditures budget from **$47 million** to **$31 million** to conserve cash and borrowing capacity[107](index=107&type=chunk) [OPERATIONS REVIEW](index=36&type=section&id=OPERATIONS%20REVIEW) This section reviews the operational performance of Tredegar's three business segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films, highlighting key financial metrics and factors influencing their results [Aluminum Extrusions](index=36&type=section&id=Aluminum%20Extrusions) This section details the operating results for the Aluminum Extrusions segment, noting decreases in sales volume, net sales, and EBITDA due to lower demand and metal costs Aluminum Extrusions Operating Results (In Thousands, Except Percentages) | Metric | Q2 2020 | Q2 2019 | % Change | H1 2020 | H1 2019 | % Change | | :------------------------ | :------ | :------ | :------- | :------ | :------ | :------- | | Sales volume (lbs) | 43,807 | 53,127 | (17.5)% | 91,124 | 106,839 | (14.7)% | | Net sales | $106,058 | $136,757 | (22.4)% | $223,945 | $275,804 | (18.8)% | | EBITDA from ongoing operations | $13,279 | $18,600 | (28.6)% | $24,956 | $34,767 | (28.2)% | | Capital expenditures | $1,355 | $4,420 | | $2,929 | $8,787 | | - Net sales decreased due to lower sales volume (**17.5%** in Q2, **14.7%** in H1) and the pass-through of lower metal costs, partially offset by higher selling prices[111](index=111&type=chunk)[113](index=113&type=chunk) - EBITDA from ongoing operations decreased by **$5.3 million** in Q2 and **$9.8 million** in H1, primarily due to lower volumes and higher labor costs, exacerbated by FIFO accounting charges in a dropping commodity price environment[112](index=112&type=chunk)[114](index=114&type=chunk) - Projected capital expenditures for Bonnell Aluminum in 2020 are **$12 million**, including investments for a new ERP system and infrastructure upgrades[115](index=115&type=chunk) [PE Films](index=37&type=section&id=PE%20Films) This section reviews the PE Films segment's performance, noting increased net sales and EBITDA driven by Surface Protection, despite challenges in Personal Care and a delayed customer product transition PE Films Operating Results (In Thousands, Except Percentages) | Metric | Q2 2020 | Q2 2019 | % Change | H1 2020 | H1 2019 | % Change | | :------------------------ | :------ | :------ | :------- | :------ | :------ | :------- | | Sales volume (lbs) | 25,818 | 25,476 | 1.3 % | 53,346 | 51,322 | 3.9 % | | Net sales | $71,012 | $69,161 | 2.7 % | $142,273 | $135,941 | 4.7 % | | EBITDA from ongoing operations | $15,319 | $11,160 | 37.3 % | $29,507 | $17,703 | 66.7 % | | Capital expenditures | $2,110 | $5,654 | | $4,525 | $12,358 | | - Net sales increased in Q2 and H1 primarily due to higher volume in Surface Protection, while Personal Care sales decreased due to unfavorable pricing and foreign currency impacts[117](index=117&type=chunk)[118](index=118&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - EBITDA from ongoing operations significantly increased by **$4.2 million** in Q2 and **$11.8 million** in H1, driven by higher volume and product mix in Surface Protection and favorable product mix, lower freight, and resin cost pass-through timing in Personal Care[119](index=119&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk) - A significant customer product transition in Surface Protection continues to be delayed, but the Company estimates a potential adverse impact of **$14 million** on EBITDA from ongoing operations over the next four quarters compared to the last four quarters ended June 30, 2020[123](index=123&type=chunk) - Projected capital expenditures for PE Films in 2020 are **$13 million**, including investments for a scale-up line in Surface Protection and other development projects[127](index=127&type=chunk) [Flexible Packaging Films](index=38&type=section&id=Flexible%20Packaging%20Films) This section details the Flexible Packaging Films segment's performance, highlighting increased sales volume and significantly higher EBITDA driven by lower raw material costs and strong demand for food packaging Flexible Packaging Films Operating Results (In Thousands, Except Percentages) | Metric | Q2 2020 | Q2 2019 | % Change | H1 2020 | H1 2019 | % Change | | :------------------------ | :------ | :------ | :------- | :------ | :------ | :------- | | Sales volume (lbs) | 29,195 | 26,460 | 10.3 % | 54,974 | 51,921 | 5.9 % | | Net sales | $34,104 | $33,443 | 2.0 % | $64,678 | $67,062 | (3.6)% | | EBITDA from ongoing operations | $6,495 | $2,880 | 125.5 % | $13,048 | $6,084 | 114.5 % | | Capital expenditures | $417 | $1,260 | | $1,265 | $2,994 | | - Net sales increased by **2.0%** in Q2 2020 due to higher sales volume, partially offset by lower selling prices from resin cost pass-throughs, while H1 2020 net sales decreased by **3.6%** due to lower selling prices despite higher sales volume[129](index=129&type=chunk)[130](index=130&type=chunk) - EBITDA from ongoing operations more than doubled in both Q2 (**$3.6 million** increase) and H1 (**$7.0 million** increase), driven by lower raw material costs, higher sales volume, production efficiencies, and favorable foreign currency translation[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Terphane experienced strong demand for food packaging materials during COVID-19, particularly for value-added products in the U.S. and Europe[129](index=129&type=chunk) - Projected capital expenditures for Flexible Packaging Films in 2020 are **$6 million**, including new capacity for value-added products[132](index=132&type=chunk) [Corporate Expenses, Interest and Taxes](index=39&type=section&id=Corporate%20Expenses,%20Interest%20and%20Taxes) This section reviews changes in corporate expenses, interest expense, and the effective tax rate, noting increases in pension expense and consulting fees, and decreases in interest expense due to lower debt - Pension expense was **$7.1 million** in H1 2020, up from **$4.8 million** in H1 2019, with a projected annual expense of approximately **$14 million** for 2020[133](index=133&type=chunk) - Corporate expenses, net, increased in H1 2020 primarily due to **$2.2 million** higher consulting fees for internal control remediation and business development activities[133](index=133&type=chunk) - Interest expense decreased to **$1.1 million** in H1 2020 from **$2.5 million** in H1 2019, mainly due to lower average debt levels[134](index=134&type=chunk) - The effective tax rate for H1 2020 was **23.8%**, compared to **19.8%** in H1 2019[134](index=134&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) The Company's critical accounting policies, involving significant estimates and judgments, include accounting for impairment of long-lived assets and goodwill, investments, pension benefits, and income taxes, with no material changes since December 31, 2019 - Critical accounting policies include impairment of long-lived assets and goodwill, investments accounted for under the fair value method, pension benefits, and income taxes[137](index=137&type=chunk) - These policies require difficult, subjective, and complex judgments due to inherent uncertainties, and actual results could differ significantly from estimates[137](index=137&type=chunk) - No material changes to these policies have occurred since December 31, 2019[137](index=137&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the Company's consolidated and segment-level financial performance for the second quarter and first six months of 2020 against the corresponding periods in 2019 [Second Quarter of 2020 Compared with the Second Quarter of 2019](index=39&type=section&id=Second%20Quarter%20of%202020%20Compared%20with%20the%20Second%20Quarter%20of%202019) This section compares Tredegar's consolidated and segment-level financial performance for the second quarter of 2020 against the second quarter of 2019, focusing on sales, gross profit, and expenses - Overall sales decreased by **11.9%** in Q2 2020, with Aluminum Extrusions sales falling **22.4%**, PE Films sales rising **2.7%**, and Flexible Packaging Films sales increasing **2.0%**[139](index=139&type=chunk) - Consolidated gross profit margin increased to **22.6%** in Q2 2020 from **18.8%** in Q2 2019, driven by higher profits in PE Films Surface Protection and Flexible Packaging Films, partially offset by lower margins in Aluminum Extrusions[140](index=140&type=chunk) - SG&A and R&D expenses as a percentage of sales increased to **13.8%** in Q2 2020 from **11.8%** in Q2 2019, due to higher consulting fees for internal control remediation and business development, despite decreased net sales[141](index=141&type=chunk) - Interest expense decreased to **$0.5 million** in Q2 2020 from **$1.3 million** in Q2 2019, primarily due to lower average debt levels and interest rates[146](index=146&type=chunk) [First Six Months 2020 Results vs. First Six Months 2019 Results](index=42&type=section&id=First%20Six%20Months%202020%20Results%20vs.%20First%20Six%20Months%202019%20Results) This section compares Tredegar's consolidated and segment-level financial performance for the first six months of 2020 against the first six months of 2019, focusing on sales, gross profit, and expenses - Overall sales decreased by **10.0%** in H1 2020, with Aluminum Extrusions sales falling **18.8%**, PE Films sales rising **4.7%**, and Flexible Packaging Films sales decreasing **3.6%**[147](index=147&type=chunk) - Consolidated gross profit margin increased to **21.0%** in H1 2020 from **17.2%** in H1 2019, driven by higher profits in PE Films Surface Protection and Flexible Packaging Films, partially offset by lower margins in Aluminum Extrusions[148](index=148&type=chunk) - SG&A and R&D expenses as a percentage of sales increased to **13.0%** in H1 2020 from **11.2%** in H1 2019, due to higher consulting fees for internal control remediation and business development, despite decreased net sales[149](index=149&type=chunk) - Interest expense decreased to **$1.1 million** in H1 2020 from **$2.5 million** in H1 2019, primarily due to lower average debt levels and interest rates[154](index=154&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Tredegar focuses on improving working capital management, with accounts receivable decreasing by **$7.1 million** and inventories increasing by **$3.8 million** from December 31, 2019, to June 30, 2020 - Accounts and other receivables decreased by **$7.1 million** (**6.6%**) from December 31, 2019, to June 30, 2020, primarily in Aluminum Extrusions and PE Films[156](index=156&type=chunk) - Inventories increased by **$3.8 million** (**4.7%**), mainly in Aluminum Extrusions and PE Films, partially offset by a decrease in Flexible Packaging Films[156](index=156&type=chunk) - Net cash provided by operating activities declined by **$32.4 million** in H1 2020, primarily due to changes in working capital and the absence of a kaléo dividend received in 2019[157](index=157&type=chunk) - Net cash used in investing activities was **$8.8 million** in H1 2020, down from **$24.2 million** in H1 2019, mainly due to reduced capital expenditures[158](index=158&type=chunk) Net Capitalization and Indebtedness (In Thousands) | Metric | Amount | | :-------------------------------- | :----- | | Cash and cash equivalents | $39,930 | | Debt (Credit Agreement) | $34,000 | | Cash and cash equivalents, net of debt | $5,930 | | Shareholders' equity | $350,874 | | Net capitalization | $344,944 | | Indebtedness | $34,000 | - At June 30, 2020, the Company had **$34.0 million** in debt under its **$500 million** revolving credit agreement, with approximately **$354 million** available to borrow[107](index=107&type=chunk)[164](index=164&type=chunk) - Tredegar was in compliance with all financial covenants in the Credit Agreement as of June 30, 2020, including a leverage ratio of **0.35x** (max **4.00x**) and an interest coverage ratio of **36.49x** (min **3.00x**)[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Tredegar is exposed to market risks from interest rates, raw material prices, energy prices, and foreign currency fluctuations, utilizing derivative financial instruments to hedge certain exposures - Tredegar is exposed to market risks from interest rates, polyethylene and polypropylene resin prices, Terephthalic Acid (PTA) and Monoethylene Glycol (MEG) prices, aluminum ingot and scrap prices, energy prices, foreign currencies, and emerging markets[169](index=169&type=chunk) - Aluminum Extrusions' profit margins are sensitive to fluctuations in aluminum ingot, scrap, and natural gas prices, while PE Films and Flexible Packaging Films are sensitive to resin prices[170](index=170&type=chunk) - The Company uses forward purchase commitments and futures contracts to hedge aluminum price volatility for fixed-price forward sales contracts, typically with durations of not more than 12 months[171](index=171&type=chunk) - Flexible Packaging Films (Terphane Ltda.) has significant foreign exchange translation risk due to a net mismatch of **R$136 million** in annual operating costs, as sales and raw materials are primarily U.S. Dollar-denominated while conversion and SG&A costs are Brazilian Real-denominated[181](index=181&type=chunk)[182](index=182&type=chunk) - Foreign currency changes had an unfavorable impact on PE Films' operating profit from ongoing operations of **$0.5 million** in Q2 2020 and **$1.1 million** in H1 2020 compared to prior year periods[183](index=183&type=chunk) [Item 4. Controls and Procedures.](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section addresses the evaluation of disclosure controls and procedures, outlining identified material weaknesses in internal control over financial reporting and the ongoing remediation plan [Evaluation of Disclosure Controls and Procedures](index=53&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The Company's CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2020, due to material weaknesses in internal control over financial reporting - The Company's disclosure controls and procedures were not effective as of June 30, 2020, due to material weaknesses in internal control over financial reporting[191](index=191&type=chunk) - Material weaknesses were identified in the control environment, risk assessment, information and communication, monitoring activities, and pervasive process-level and general information technology controls[197](index=197&type=chunk)[205](index=205&type=chunk) - These material weaknesses create a reasonable possibility that a material misstatement of financial statements may not be prevented or detected on a timely basis[198](index=198&type=chunk) [Remediation Plan](index=54&type=section&id=Remediation%20Plan) The Company's remediation efforts for the identified material weaknesses are ongoing and expected to extend into 2021, with progress made in documentation, risk assessment, and control implementation - Remediation efforts are ongoing and expected to extend into 2021, with potential negative impacts on the timeline due to COVID-19 related limitations[201](index=201&type=chunk) - Key remediation steps include identifying material processes, conducting interviews, substantially completing documentation updates, commencing risk assessment validation, designing new controls, and implementing controls in Aluminum Extrusions and corporate functions[202](index=202&type=chunk) - The Company is working with an outside consultant to assist in completing the remediation plan[203](index=203&type=chunk) [Changes in Internal Control Over Financial Reporting](index=54&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) During the quarter ended June 30, 2020, the Company began designing and implementing internal controls for certain processes within its Aluminum business and corporate functions as part of its remediation plan - During Q2 2020, the Company began designing and implementing internal controls for certain processes within its Aluminum business and corporate functions as part of the remediation plan[207](index=207&type=chunk) - No other material changes to internal control over financial reporting occurred during Q2 2020, apart from the ongoing remediation efforts[207](index=207&type=chunk) [PART II - OTHER INFORMATION](index=55&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section includes additional information not covered in Part I, specifically addressing risk factors and a list of exhibits filed with the report [Item 1A. Risk Factors.](index=55&type=section&id=Item%201A.%20Risk%20Factors.) There are no additional material updates or changes to the risk factors previously disclosed in the 2019 Form 10-K, except for the item disclosed in the First Quarter Form 10-Q - No material updates or changes to risk factors from the 2019 Form 10-K, except for those disclosed in the First Quarter Form 10-Q[208](index=208&type=chunk) [Item 6. Exhibits.](index=55&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including certifications from the President and CEO, and Vice President and CFO, pursuant to the Sarbanes-Oxley Act, as well as XBRL instance documents - Exhibits include certifications from the President and CEO (**31.1, 32.1**) and Vice President and CFO (**31.2, 32.2**) under the Sarbanes-Oxley Act[209](index=209&type=chunk) - XBRL Instance Document and Related Items (**101**) and Cover Page Interactive Data File (**104**) are also included[209](index=209&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) This section contains the official signatures of Tredegar Corporation's President and Chief Executive Officer, Vice President and Chief Financial Officer, and Corporate Treasurer and Controller, certifying the filing of the report on August 6, 2020 - The report is signed by John M. Steitz (President and CEO), D. Andrew Edwards (Vice President and CFO), and Frasier W. Brickhouse, II (Corporate Treasurer and Controller) on August 6, 2020[212](index=212&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Tredegar Corporation (Exact Name of Registrant as Specified in Its Charter) Virginia 54-1497771 (State or Other Jurisdiction of Incorporation or Organization) (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...