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Tredegar (TG) - 2025 Q1 - Quarterly Report
Tredegar Tredegar (US:TG)2025-05-08 12:03

Part I - Financial Information Financial Statements Total assets increased to $374.2 million, with Q1 2025 sales up to $164.7 million, while net income from continuing operations declined, offset by a $9.4 million gain from discontinued operations Condensed Consolidated Balance Sheets Total assets grew to $374.2 million, driven by increased current assets, with liabilities rising to $182.8 million and shareholders' equity to $191.4 million Condensed Consolidated Balance Sheet Highlights (In Thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $161,727 | $139,827 | | Inventories | $68,895 | $51,381 | | Total assets | $374,217 | $356,357 | | Total current liabilities | $103,803 | $91,708 | | ABL revolving facility | $56,000 | $60,600 | | Total liabilities | $182,847 | $175,389 | | Total shareholders' equity | $191,370 | $180,968 | Condensed Consolidated Statements of Income (Loss) Q1 2025 sales increased to $164.7 million, but net income from continuing operations decreased to $0.7 million, significantly boosted by a $9.4 million gain from discontinued operations to a total net income of $10.1 million Q1 2025 vs Q1 2024 Income Statement (In Thousands, Except Per Share Data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Sales | $164,738 | $143,972 | | Cost of goods sold | $135,643 | $115,106 | | Income from continuing operations before tax | $1,248 | $4,988 | | Net income from continuing operations | $671 | $2,604 | | Income from discontinued operations, net of tax | $9,430 | $684 | | Net income (loss) | $10,101 | $3,288 | | Diluted earnings (loss) per share | $0.29 | $0.10 | Condensed Consolidated Statements of Cash Flows Operating activities used $5.0 million in cash, an improvement from Q1 2024, while investing activities provided $6.9 million, primarily from the Terphane sale, leading to a $3.4 million decrease in cash and equivalents Q1 2025 vs Q1 2024 Cash Flows (In Thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(5,006) | $(7,719) | | Net cash provided by (used in) investing activities | $6,878 | $(2,378) | | Net cash provided by (used in) financing activities | $(5,297) | $2,008 | | Increase (decrease) in cash and cash equivalents | $(3,405) | $(8,663) | | Cash and cash equivalents at end of period | $3,657 | $4,792 | Notes to the Condensed Consolidated Financial Statements Key notes detail the Terphane sale as discontinued operations, segment performance showing varied EBITDA, and the subsequent amendment of the ABL Facility extending its maturity to 2030 * On November 1, 2024, the company completed the sale of its flexible packaging films business (Terphane), with all historical results now presented as discontinued operations23 * In Q1 2025, the company received $9.8 million from the post-closing settlement of the Terphane transaction, recorded as income from discontinued operations6770 * On May 6, 2025, the company amended its ABL Facility, extending the maturity date to May 6, 2030, reducing interest rate margins and modifying the borrowing base calculation65129 Segment EBITDA from Ongoing Operations (In Thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Aluminum Extrusions | $9,160 | $12,540 | | PE Films | $7,520 | $6,904 | | Total | $16,680 | $19,444 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a decrease in Q1 2025 income from continuing operations, driven by lower Aluminum Extrusions EBITDA despite volume growth, while PE Films EBITDA improved, with overall liquidity supported by an amended ABL facility Results of Operations Consolidated sales increased by $20.8 million in Q1 2025, primarily from Aluminum Extrusions, though gross profit margin declined to 14.3% and SG&A expenses rose due to higher professional fees and incentive compensation * Sales in Q1 2025 increased by $20.8 million compared to Q1 2024, mainly due to a $19.4 million increase in net sales from the Aluminum Extrusions segment91 * Consolidated gross profit margin decreased to 14.3% in Q1 2025 from 16.6% in Q1 2024, primarily due to lower spread and higher costs in Aluminum Extrusions, despite a favorable FIFO timing impact of $1.7 million92 * SG&A expenses as a percentage of sales increased to 12.6% in Q1 2025 from 11.6% in Q1 2024, driven by higher professional fees and increased employee-related incentive compensation93 Segment Operations Review Aluminum Extrusions saw increased sales volume but a 27% EBITDA decline due to lower spreads, while PE Films' EBITDA rose by 8.9% driven by Surface Protection films, with strong demand noted in aluminum Aluminum Extrusions Performance - Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Sales volume (lbs in thousands) | 37,918 | 33,841 | 12.0% | | Net sales (in thousands) | $133,635 | $114,222 | 17.0% | | EBITDA from ongoing operations (in thousands) | $9,160 | $12,540 | (27.0)% | * Aluminum Extrusions' net new orders increased 36% in Q1 2025, with open orders rising to 25 million pounds, indicating a steady market recovery102103 PE Films Performance - Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Sales volume (lbs in thousands) | 9,639 | 10,036 | (4.0)% | | Net sales (in thousands) | $25,537 | $24,735 | 3.2% | | EBITDA from ongoing operations (in thousands) | $7,520 | $6,904 | 8.9% | * PE Films' EBITDA improvement was driven by a $1.5 million increase in contribution from Surface Protection films, attributed to increased volume, favorable mix, and cost improvements117 Liquidity and Capital Resources The company used $5.0 million in cash from operations, while investing activities provided $6.9 million, with working capital increasing due to higher receivables and inventories, and liquidity enhanced by an amended ABL facility extending to 2030 * Net cash used in operating activities was $5.0 million in Q1 2025, compared to $7.7 million used in Q1 2024122 * Inventories increased by $17.5 million and accounts receivable by $14.9 million from December 31, 2024, reflecting higher business activity and raw material costs126 * On May 6, 2025, the company amended its credit agreement, extending the ABL facility's maturity to May 6, 2030, and reducing interest rate margins129 * As of March 31, 2025, $50.9 million was available to borrow under the ABL Facility58128 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate, foreign currency, and commodity price volatility, utilizing hedging strategies for aluminum and pass-through mechanisms for raw material costs, though time lags can impact short-term profitability * The company has exposure to volatility in interest rates, polyethylene and polypropylene resin prices, aluminum ingot and scrap prices, energy prices, and foreign currencies135 * The Aluminum Extrusions segment uses forward purchase commitments and futures contracts to hedge its exposure to aluminum price volatility for fixed-price forward sales contracts, generally with a duration of no more than 12 months137 * The PE Films segment has index-based pass-through arrangements for raw material costs, but some agreements have a 90-day lag before price changes are passed through147 Controls and Procedures As of March 31, 2025, the company's disclosure controls and procedures were deemed effective by management, with no material changes to internal control over financial reporting during Q1 2025 * The Company's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, the company's disclosure controls and procedures were effective156 * There were no material changes in the Company's internal control over financial reporting during the quarter ended March 31, 2025158 Part II - Other Information Risk Factors No material updates or changes to the company's risk factors were reported from those previously disclosed in the 2024 Form 10-K * There are no material updates or changes to our risk factors previously disclosed in the 2024 Form 10-K159 Other Information During Q1 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement * During the three months ended March 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement160 Exhibits The report includes required CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, along with interactive data files (XBRL) * Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, as well as XBRL data files161