Tredegar (TG) - 2024 Q3 - Quarterly Report

Financial Performance - Third quarter 2024 net income was $(3.9) million ($(0.11) per diluted share), an improvement from $(50.4) million ($(1.47) per diluted share) in the third quarter of 2023[73]. - Net income for the nine months ended September 30, 2024, was $8.134 million, compared to a net loss of$70.314 million for the same period in 2023[84]. - Net sales increased by $15.9 million in Q3 2024 compared to Q3 2023, with Aluminum Extrusions contributing$6.3 million and PE Films contributing $4.9 million[76]. - Net sales in the first nine months of 2024 decreased by 4.2$27,456,000, with Credit EBITDA calculated at $59,098,000[112]. EBITDA and Profit Margins - EBITDA from ongoing operations for Aluminum Extrusions was$6.2 million in Q3 2024, up from $5.1 million in Q3 2023, with sales volume increasing to 34.6 million pounds[74]. - PE Films segment reported EBITDA of$5.9 million in Q3 2024, compared to $4.0 million in Q3 2023, with sales volume rising to 9.6 million pounds[74]. - Terphane's EBITDA was$3.7 million in Q3 2024, significantly up from $0.5 million in Q3 2023, with sales volume at 25.3 million pounds[74]. - Consolidated gross profit margin improved to 12.8$3.3 million compared to Q3 2023, driven by lower variable costs ($1.5 million) and lower raw material costs ($1.1 million) among other factors[102]. Sales and Volume Growth - Net sales in Q3 2024 increased by 5.8% compared to Q3 2023, driven by a 6.5% increase in sales volume[91]. - Net sales for PE Films in Q3 2024 were 24.8% higher than Q3 2023, with a 37.5% increase in Surface Protection sales volume[97]. - Sales volume for Surface Protection increased by 62.3% in the first nine months of 2024 compared to the same period in 2023[98]. - Net sales for Flexible Packaging Films in Q3 2024 increased by 14.1% compared to Q3 2023, primarily due to higher sales volume[100]. - Net sales in the first nine months of 2024 increased by 40.6% compared to the same period in 2023, driven by a 62.3% increase in sales volume in Surface Protection[98]. Costs and Expenses - The company faced unfavorable costs in Aluminum Extrusions due to manufacturing inefficiencies and margin pressures from imports[75]. - Selling, general, and administrative (SG&A) and research and development (R&D) expenses remained consistent at 11.1% of sales in the first nine months of 2024 compared to the same period in 2023[85]. - Interest expense increased by $2.5 million to$10.3 million in the first nine months of 2024 due to higher average debt and interest rates[85]. - The gross profit margin in Aluminum Extrusions improved due to higher net pricing and favorable variable manufacturing costs[84]. - Corporate expenses decreased by $13.7 million in the first nine months of 2024, primarily due to lower pension expenses from a plan termination completed in 2023[104]. Tax and Debt - The effective tax rate for Q3 2024 was (31.6)$145.5 million in the first three months of 2024 from $138.2 million in the same period of 2023, with an average interest rate rising to 9.4$122,000,000 as of September 30, 2024, maturing on June 30, 2026[115]. Liquidity and Cash Flow - Net cash provided by operating activities was $6.1 million in the first nine months of 2024, a decrease from$44.2 million in the same period of 2023, mainly due to lower working capital[106]. - The Company had cash, cash equivalents, and restricted cash of $6.6 million as of September 30, 2024, including$2.7 million held outside the U.S.[106]. - The ABL Facility provides a $180 million senior secured asset-based revolving credit facility, maturing on June 30, 2026[107]. - Minimum Liquidity as of September 30, 2024, was$45.1 million, exceeding the $10 million Minimum Liquidity financial covenant[107]. - Following the Terphane Sale, the company has enhanced its liquidity position, which will support future operational needs[116]. Future Projections and Capital Expenditures - Capital expenditures for Bonnell Aluminum are projected to be$8 million in 2024, with $4 million allocated for productivity projects[94]. - Capital expenditures for Flexible Packaging Films are projected to be$4 million in 2024, with depreciation expense projected at $3 million[102]. - Capital expenditures for PE Films are projected to be$2 million in 2024, with $1 million allocated for productivity projects[98]. - Minimum Credit EBITDA is projected to increase from$25,370,000 in September 2024 to $32,080,000 by September 2025, reflecting a growth of approximately 26.5%[109].