Tredegar (TG) - 2025 Q1 - Quarterly Results

Executive Summary Overall Financial Performance Tredegar Corporation's net income from continuing operations for Q1 2025 was $0.7 million, down from $2.6 million in Q1 2024, with adjusted net income from continuing operations also decreasing to $3.6 million from $4.7 million 2025 Q1 Key Financial Metrics (Continuing Operations) | Metric | Q1 2025 | Q1 2024 | | :--------------------------------- | :--------------- | :--------------- | | Net Income from Continuing Operations (million USD) | 0.7 | 2.6 | | Diluted EPS from Continuing Operations | 0.02 | 0.08 | | Net Income from Continuing Operations (Non-GAAP, million USD) | 3.6 | 4.7 | | Diluted EPS from Continuing Operations (Non-GAAP) | 0.10 | 0.14 | CEO Commentary & Strategic Highlights CEO John Steitz noted Bonnell Aluminum's sales, net new orders, and backlog recovery, benefiting from new Section 232 aluminum tariffs, while PE Films performed well with full-year normalization expected, and the company maintained a strong balance sheet with a 1.1x net leverage ratio and a five-year extension of its $125 million ABL facility - Bonnell Aluminum's sales volume, net new orders, and backlog continue to recover, with the company believing it has moved past the Q3 2023 trough, further benefiting from new Section 232 aluminum import tariffs implemented without country or product-specific exclusions[5] - PE Films performed exceptionally well in the first quarter, with expectations for normalization throughout the remainder of the year, and has not yet experienced adverse customer demand impacts from potential tariff actions[5] - The company's balance sheet remains strong, with a net leverage ratio of 1.1x as of March-end, and on May 6, the company successfully extended its $125 million asset-backed loan facility for five years to support business needs[5] 2025 Q1 EBITDA and Volume Highlights by Business Segment | Business Segment | Metric | Q1 2025 | Q1 2024 | Q4 2024 | Change (YoY) | Change (QoQ) | | :--------- | :--- | :------------- | :------------- | :------------- | :---------- | :---------- | | Aluminum Extrusions | EBITDA (million USD) | 9.2 | 12.5 | 9.7 | (26.4%) | (5.2%) | | | Volume (million lbs) | 37.9 | 33.8 | - | 12.1% | - | | | Net New Orders (YoY) | 36% | - | - | - | - | | | Net New Orders (QoQ) | 24% | - | - | - | - | | | Backlog (million lbs) | 25 | 15 | 17 | 66.7% | 47.1% | | PE Films | EBITDA (million USD) | 7.5 | 6.9 | 7.6 | 8.7% | (1.3%) | | | Volume (million lbs) | 9.6 | 10.0 | - | (4.0%) | - | Operations Review Aluminum Extrusions Bonnell Aluminum achieved $133.6 million in net sales for Q1 2025, up 17.0% with a 12.0% volume increase, but EBITDA from continuing operations declined 27.0% to $9.2 million due to lower price-cost spread, increased variable manufacturing costs, and higher fixed and SG&A expenses, despite recovering solar market share and new tariff benefits Aluminum Extrusions Financial Summary | Metric (thousand USD, except percentages) | March 31, 2025 | March 31, 2024 | % Change | | :--------------------------- | :------------- | :------------- | :------- | | Volume (lbs) | 37,918 | 33,841 | 12.0% | | Net Sales | 133,635 | 114,222 | 17.0% | | Variable Costs | 103,523 | 84,786 | (22.1)% | | EBITDA from Continuing Operations | 9,160 | 12,540 | (27.0)% | | Depreciation & Amortization | (4,225) | (4,542) | 7.0% | | EBIT from Continuing Operations | 4,935 | 7,998 | (38.3)% | | Capital Expenditures | 2,370 | 1,550 | - | Financial Performance Aluminum Extrusions Financial Summary | Metric (thousand USD, except percentages) | March 31, 2025 | March 31, 2024 | % Change | | :--------------------------- | :------------- | :------------- | :------- | | Volume (lbs) | 37,918 | 33,841 | 12.0% | | Net Sales | 133,635 | 114,222 | 17.0% | | Variable Costs | 103,523 | 84,786 | (22.1)% | | EBITDA from Continuing Operations | 9,160 | 12,540 | (27.0)% | | Depreciation & Amortization | (4,225) | (4,542) | 7.0% | | EBIT from Continuing Operations | 4,935 | 7,998 | (38.3)% | | Capital Expenditures | 2,370 | 1,550 | - | Sales Volume and Market Trends Aluminum Extrusions Volume by End Market (million lbs) | End Market | March 31, 2025 | March 31, 2024 | % Change (YoY) | December 31, 2024 | % Change (QoQ) | | :------------------- | :------------- | :------------- | :------------ | :------------- | :------------ | | Non-Residential Building & Construction | 19.2 | 20.1 | (4.5)% | 18.2 | 5.5% | | Residential Building & Construction | 2.0 | 1.6 | 25.0% | 2.4 | (16.7)% | | Automotive | 3.1 | 3.2 | (3.1)% | 2.6 | 19.2% | | Specialty Products | 13.6 | 8.9 | 52.8% | 12.6 | 7.9% | | Total | 37.9 | 33.8 | 12.0% | 35.8 | 5.9% | - Net sales increased by 17.0% year-over-year in Q1 2025, primarily due to higher sales volume and the pass-through of increased metal costs, partially offset by a lower average fabrication add-on due to changes in sales mix[11] - Sales volume increased by 12.0% year-over-year and 5.9% quarter-over-quarter, driven by higher shipments in specialty markets (particularly solar panels) and TSLOTS aluminum framing systems, with the company estimating solar market growth is partly due to regaining market share previously lost to imported aluminum extrusions[11] - Net new orders increased by 36% year-over-year and 24% quarter-over-quarter, benefiting from improved selling opportunities and strong demand for solar products, curtain wall, and institutional sidewalk covers in non-residential building and construction, marking the tenth consecutive quarter of growth for this metric, supporting the company's view of a steady recovery[11] - Backlog volume at the end of Q1 2025 was 25 million pounds, up from 15 million pounds at the end of Q1 2024 and 17 million pounds at the end of Q4 2024, reaching its highest level in nearly two years[12] - On February 10, 2025, Section 232 tariffs on all aluminum imports increased from 10% to 25%, with certain country and product-specific exclusions eliminated, leading the company to believe it has begun to regain some previously import-related market share, especially in specialty markets[13] Operational Costs and Profitability Drivers - EBITDA from continuing operations decreased by $3.4 million year-over-year in Q1 2025, primarily due to flat contribution margin (a $2.4 million reduction from changes in sales mix leading to lower price-cost spread, and increased variable manufacturing costs for material utilization, labor, maintenance, dies, and utilities), and a $1.7 million benefit from the timing of aluminum raw material cost flow under the FIFO method (compared to a $1.3 million charge in the prior year period)[14][16] - Fixed costs increased by $1.0 million, mainly due to higher wages and increased resources to support sales volume growth[16] - Selling, general, and administrative (SG&A) expenses increased by $2.6 million, primarily related to employee compensation ($1.7 million), travel and consulting fees ($0.3 million), and routine environmental compliance costs ($0.4 million)[16] Capital Expenditures and Depreciation - Bonnell Aluminum's projected capital expenditures for 2025 are $17 million, with $5 million allocated for productivity projects and $12 million for capital expenditures to support ongoing operations[15] - Expected depreciation expense for 2025 is $16 million, and amortization expense is $2 million[15] PE Films PE Films' Q1 2025 net sales grew 3.2% to $25.5 million, driven by surface protection film, while EBITDA from continuing operations increased 8.9% to $7.5 million, primarily due to higher surface protection film contribution margin, partially offset by lower encapsulation film volume and unfavorable sales mix, with projected 2025 capital expenditures of $3 million PE Films Financial Summary | Metric (thousand USD, except percentages) | March 31, 2025 | March 31, 2024 | % Change | | :--------------------------- | :------------- | :------------- | :------- | | Volume (lbs) | 9,639 | 10,036 | (4.0)% | | Net Sales | 25,537 | 24,735 | 3.2% | | Variable Costs | 11,977 | 12,024 | 0.4% | | EBITDA from Continuing Operations | 7,520 | 6,904 | 8.9% | | Depreciation & Amortization | (1,250) | (1,329) | 5.9% | | EBIT from Continuing Operations | 6,270 | 5,575 | 12.5% | | Capital Expenditures | 587 | 394 | - | Financial Performance PE Films Financial Summary | Metric (thousand USD, except percentages) | March 31, 2025 | March 31, 2024 | % Change | | :--------------------------- | :------------- | :------------- | :------- | | Volume (lbs) | 9,639 | 10,036 | (4.0)% | | Net Sales | 25,537 | 24,735 | 3.2% | | Variable Costs | 11,977 | 12,024 | 0.4% | | EBITDA from Continuing Operations | 7,520 | 6,904 | 8.9% | | Depreciation & Amortization | (1,250) | (1,329) | 5.9% | | EBIT from Continuing Operations | 6,270 | 5,575 | 12.5% | | Capital Expenditures | 587 | 394 | - | Sales Volume and Market Trends - Net sales increased by 3.2% year-over-year in Q1 2025, primarily due to higher net sales of surface protection films, with surface protection film volume increasing by 4% year-over-year but decreasing by 5.6% quarter-over-quarter[19] - The company believes some display volumes may have been pulled forward due to anticipated U.S. tariffs on imported televisions and mobile devices, and while surface protection films have not yet experienced adverse customer demand impacts from potential tariff actions, the situation remains unclear[19] - Encapsulation film volume decreased by 11.9% year-over-year, following a strong performance in Q1 2024[19] Operational Costs and Profitability Drivers - EBITDA from continuing operations increased by $0.6 million year-over-year in Q1 2025, primarily due to a $0.9 million increase in contribution margin[20] - Surface protection film contribution margin increased by $1.5 million, driven by higher volume, favorable sales mix and pricing ($0.7 million), and cost improvements ($0.8 million)[23] - Encapsulation film contribution margin decreased by $0.7 million, primarily due to lower volume, unfavorable sales mix ($0.5 million), and unfavorable pricing ($0.1 million)[23] - PE Films' volume and EBITDA from continuing operations have fluctuated significantly over the past three years, largely due to an unprecedented downturn in the display industry during the second half of 2022 and the first half of 2023, with the average quarterly EBITDA from continuing operations over the past 3.25 years (Q1 2025, full years 2024, 2023, and 2022) being approximately $4.7 million[20] Capital Expenditures and Depreciation - PE Films' projected capital expenditures for 2025 are $3 million, with $2 million allocated for productivity projects and $1 million for capital expenditures to support ongoing operations[22] - Expected depreciation expense for 2025 is $5 million, with no amortization expense for PE Films[22] Corporate Financials & Debt Management Corporate Expenses, Interest, and Taxes Q1 2025 corporate net expenses increased by $2.0 million due to business development professional fees and incentive compensation, partially offset by reduced audit and software maintenance costs, while interest expense decreased due to lower debt and rates, and the effective tax rate was influenced by taxable discrete items and a lower estimated annual rate - Corporate net expenses increased by $2.0 million year-over-year for the first three months of 2025, primarily due to higher professional fees related to business development ($2.2 million) and employee incentive compensation ($1.0 million), partially offset by lower external and internal audit fees ($0.4 million), professional fees related to internal control over financial reporting remediation activities ($0.4 million), and software maintenance fees ($0.1 million)[24] - Interest expense for the first three months of 2025 was $1.0 million, down from $1.2 million in the prior year period, mainly due to a lower weighted average total debt and reduced interest rates[25] - The effective tax rate for income from continuing operations was 46.2% for the first three months of 2025, lower than 47.8% in the prior year period, influenced by taxable discrete items and a lower estimated annual effective tax rate, partially offset by lower book income[26] Debt, Financial Leverage, and Refinancing As of March 31, 2025, total debt was $56.6 million and net debt was $52.9 million, both down from year-end 2024, with the company remaining compliant with all debt covenants and successfully extending its $125 million asset-backed loan facility for five years to ensure long-term liquidity Debt and Cash Position (million USD) | Metric | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :------------- | | Total Debt | 56.6 | 61.9 | | Cash and Cash Equivalents | 3.7 | 7.1 | | Net Debt | 52.9 | 54.8 | - Total debt decreased by $5.3 million and net debt decreased by $1.9 million during the first three months of 2025, primarily due to $9.8 million in settlement proceeds from the Terphane sale and an increase in net working capital after a seasonal low[28] - As of March 31, 2025, the company was in compliance with all covenants under its $125 million asset-backed loan agreement, which was originally set to mature on June 30, 2026[29] - Approximately $51 million was available for borrowing under the asset-backed loan agreement as of March 31, 2025, with the median daily liquidity under the agreement being $44 million in Q1 2025, up from $42 million in Q4 2024[29] - On May 6, 2025, the company entered into the Fifth Amendment, extending its $125 million senior secured asset-backed loan facility for five years, maturing on May 6, 2030[30] Net Leverage Ratio (Twelve Months Ended March 31, 2025) | Metric | Amount (million USD) | | :------------- | :--------------- | | Net Debt | 52.9 | | Credit EBITDA | 47.8 | | Net Leverage Ratio | 1.1 | Forward-Looking Statements & Company Information Forward-Looking and Cautionary Statements This press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, including macroeconomic factors, increased operating costs, debt covenant non-compliance, loss of key personnel, production disruptions, IT system failures, international business risks, tariff impacts, failure to prevent tariff evasion, ERP/MES implementation issues, customer loss, intellectual property protection failures, and M&A risks, with no obligation to update these statements - This press release contains forward-looking statements that could cause actual results to differ materially due to various risks and uncertainties[32] - Risk factors include macroeconomic factors (such as inflation, interest rates, and recession risks), increased operating costs (raw material and energy costs), non-compliance with financial and other restrictive covenants of the ABL facility, failure to continuously attract and retain key personnel, manufacturing facility disruptions (including labor shortages), information technology system failures or breaches, risks of overseas operations, the impact of tariffs and sanctions, failure of governmental entities to prevent foreign companies from circumventing anti-dumping and countervailing duties, ERP and MES system implementation issues, loss of sales to significant customers, failure to obtain new customers to offset lost business, customer failure to succeed or maintain market share, failure to protect intellectual property, and failure to successfully complete strategic acquisitions or dispositions[32][38] - The company undertakes no obligation to update any forward-looking statements in this press release, except as required by applicable law[34] Company Overview Tredegar Corporation is an industrial manufacturer specializing in custom aluminum extrusions for North American construction, automotive, and specialty markets, and surface protection films for global high-tech electronics, employing approximately 1,500 people across North America and Asia - Tredegar Corporation is an industrial manufacturer with primary businesses including: 1) custom aluminum extrusions for North American building and construction, automotive, and specialty end markets; and 2) surface protection films for high-tech applications in the global electronics industry[37] - The company employs approximately 1,500 people and operates manufacturing facilities in North America and Asia[37] Financial Tables (Unaudited) Condensed Consolidated Statements of Income In Q1 2025, the company's sales increased to $164.7 million, but net income from continuing operations decreased to $0.7 million, while total net income reached $10.1 million due to income from discontinued operations Condensed Consolidated Statements of Income Summary | Metric (thousand USD, except per share data) | March 31, 2025 | March 31, 2024 | | :----------------------------- | :------------- | :------------- | | Sales | 164,738 | 143,972 | | Income (Loss) from Continuing Operations Before Income Taxes | 1,248 | 4,988 | | Income Tax Expense (Benefit) from Continuing Operations | 577 | 2,384 | | Net Income (Loss) from Continuing Operations | 671 | 2,604 | | Net Income (Loss) from Discontinued Operations, Net of Tax | 9,430 | 684 | | Net Income (Loss) | 10,101 | 3,288 | | Diluted Earnings (Loss) Per Share: | | | | Continuing Operations | 0.02 | 0.08 | | Discontinued Operations | 0.27 | 0.02 | | Total Diluted Earnings (Loss) Per Share | 0.29 | 0.10 | Net Sales and EBITDA from Ongoing Operations by Segment Q1 2025 saw increased net sales and EBITDA from continuing operations for Aluminum Extrusions, while PE Films experienced net sales growth but a slight EBITDA decline, resulting in overall continuing operations EBITDA decreasing from $14.9 million in Q1 2024 to $11.5 million Net Sales and EBITDA from Ongoing Operations by Segment | Metric (thousand USD) | March 31, 2025 | March 31, 2024 | | :------------------------- | :------------- | :------------- | | Net Sales | | | | Aluminum Extrusions | 133,635 | 114,222 | | PE Films | 25,537 | 24,735 | | Total Net Sales | 159,172 | 138,957 | | EBITDA from Continuing Operations | | | | Aluminum Extrusions | 9,160 | 12,540 | | PE Films | 7,520 | 6,904 | | Total | 10,038 | 11,902 | | Corporate Expenses, Net | 7,782 | 5,750 | | Income (Loss) from Continuing Operations Before Income Taxes | 1,248 | 4,988 | | Net Income (Loss) from Continuing Operations | 671 | 2,604 | | Net Income (Loss) from Discontinued Operations | 9,430 | 684 | | Net Income (Loss) | 10,101 | 3,288 | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $374.2 million and total liabilities to $103.8 million, with cash and cash equivalents decreasing while accounts receivable and inventory rose Condensed Consolidated Balance Sheets Summary | Metric (thousand USD) | March 31, 2025 | December 31, 2024 | | :------------------------- | :------------- | :------------- | | Assets | | | | Cash and Cash Equivalents | 3,657 | 7,062 | | Accounts and Other Receivables, Net | 79,749 | 64,817 | | Inventories | 68,895 | 51,381 | | Total Current Assets | 161,727 | 139,827 | | Property, Plant, and Equipment, Net | 134,535 | 137,032 | | Total Assets | 374,217 | 356,357 | | Liabilities and Stockholders' Equity | | | | Accounts Payable | 83,190 | 64,704 | | Short-Term Debt | 627 | 1,322 | | Total Current Liabilities | 103,803 | 91,708 | | ABL Revolving Credit Facility | 56,000 | 60,600 | | Stockholders' Equity | 191,370 | 180,968 | | Total Liabilities and Stockholders' Equity | 374,217 | 356,357 | Condensed Consolidated Statements of Cash Flows Q1 2025 saw a $5.0 million cash outflow from operating activities, a $6.9 million inflow from investing activities primarily from the Terphane sale, and a $5.3 million outflow from financing activities, resulting in cash and cash equivalents ending at $3.7 million Condensed Consolidated Statements of Cash Flows Summary | Metric (thousand USD) | March 31, 2025 | March 31, 2024 | | :------------------------- | :------------- | :------------- | | Net Income (Loss) | 10,101 | 3,288 | | Net Cash from Operating Activities | (5,006) | (7,719) | | Net Cash from Investing Activities | 6,878 | (2,378) | | Net Cash from Financing Activities | (5,297) | 2,008 | | Cash and Cash Equivalents, End of Period | 3,657 | 4,792 | - Cash inflow from investing activities primarily includes $9.8 million from the sale of Terphane[46] Notes to the Financial Tables Non-GAAP Financial Measures Reconciliation (Net Income/EPS from Ongoing Operations) This section reconciles non-GAAP net income and diluted EPS from continuing operations to GAAP reported figures, excluding after-tax impacts of plant shutdowns, asset impairments, restructuring, asset sale gains/losses, goodwill impairment, discontinued operations, and other special items to better measure ongoing operational performance Reconciliation of Net Income (Loss) from Continuing Operations (million USD, except per share data) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------------- | :------------- | :------------- | | GAAP Reported Net Income (Loss) from Continuing Operations | 0.7 | 2.6 | | After-Tax Impact of: | | | | (Gains) Losses Related to Plant Shutdowns, Asset Impairments, and Restructuring | — | 0.4 | | (Gains) Losses Related to Asset Sales and Other | 2.9 | 1.7 | | Net Income (Loss) from Continuing Operations | 3.6 | 4.7 | | Diluted Earnings (Loss) Per Share: | | | | GAAP Reported Continuing Operations | 0.02 | 0.08 | | After-Tax Impact of: | | | | (Gains) Losses Related to Plant Shutdowns, Asset Impairments, and Restructuring | — | 0.01 | | (Gains) Losses Related to Asset Sales and Other | 0.08 | 0.05 | | Diluted Earnings (Loss) Per Share from Continuing Operations | 0.10 | 0.14 | Segment Profitability Metrics (EBITDA/EBIT from Ongoing Operations) EBITDA from continuing operations serves as a key profitability metric for the company's Chief Operating Decision Maker to assess segment financial performance, while EBIT from continuing operations provides investors with useful information for analyzing core operations as a non-GAAP financial measure - EBITDA from continuing operations is a key profitability metric used by the company's Chief Operating Decision Maker (CODM) to assess the financial performance of its business segments[48] - EBIT (Earnings Before Interest and Taxes) from continuing operations is a non-GAAP financial measure that the company believes is meaningful to certain investors and provides useful information for analyzing the company's core operations[48] Details of Special Items and Adjustments This section details pre-tax and after-tax gains and losses for Q1 2025 and 2024 related to plant shutdowns, asset impairments, restructuring, and other items, including ERP/MES project consulting fees, legal fees, aluminum premium charges, business development professional fees, and internal control remediation costs Special Items and Adjustments for the Three Months Ended March 31, 2025 (million USD) | Item | Pre-Tax | After-Tax | | :--------------------------------------- | :--- | :--- | | Aluminum Extrusions: | | | | ERP/MES Project Consulting Fees | 0.4 | 0.3 | | Legal Fees for Aluminum Extruders Trade Cases and Other Matters | 0.3 | 0.3 | | Aluminum Premium Charges Due to Unplanned Maintenance Disruptions | 0.3 | 0.2 | | Total Aluminum Extrusions | 1.0 | 0.8 | | Corporate: | | | | Professional Fees Related to Business Development Activities | 2.5 | 2.0 | | Professional Fees Related to Internal Control Over Financial Reporting Remediation Activities | 0.2 | 0.1 | | Group Annuity Contract Premium Adjustment | 0.1 | — | | Professional Fees Related to ABL Facility Transition | 0.1 | 0.1 | | Gain on Initial Installment Payment for Sale of Corporate Land | (0.1) | (0.1) | | Total Corporate | 2.8 | 2.1 | Special Items and Adjustments for the Three Months Ended March 31, 2024 (million USD) | Item | Pre-Tax | After-Tax | | :--------------------------------------- | :--- | :--- | | Aluminum Extrusions: | | | | ERP/MES Project Consulting Fees | 0.6 | 0.4 | | Storm Damage at New South Georgia Facility | 0.1 | 0.1 | | Legal Fees for Aluminum Extruders Trade Cases | 0.2 | 0.2 | | Total Aluminum Extrusions | 0.9 | 0.7 | | PE Films: | | | | Richmond, Virginia Technical Center Closure Costs | 0.2 | 0.1 | | Richmond, Virginia Technical Center Lease Modification | 0.3 | 0.3 | | Total PE Films | 0.5 | 0.4 | | Corporate: | | | | Professional Fees Related to Business Development Activities | 0.2 | 0.2 | | Professional Fees Related to Internal Control Over Financial Reporting Remediation Activities | 0.9 | 0.7 | | Professional Fees Related to ABL Facility Transition | 0.2 | 0.1 | | Total Corporate | 1.3 | 1.0 | Effective Tax Rate Reconciliation This section provides a reconciliation of pre-tax and after-tax balances for net income from continuing operations (non-GAAP) to illustrate its impact on the effective tax rate, showing an effective tax rate of 28.0% for Q1 2025 net income from continuing operations, lower than the GAAP reported 46.2% Effective Tax Rate Reconciliation for Net Income (Loss) from Continuing Operations (million USD) | Metric | Pre-Tax | Income Tax Expense (Benefit) | After-Tax | Effective Tax Rate | | :--------------------------------------- | :--- | :----------------- | :--- | :------- | | Three Months Ended March 31, 2025 | | | | | | GAAP Reported Net Income (Loss) from Continuing Operations | 1.2 | 0.5 | 0.7 | 46.2% | | (Gains) Losses Related to Asset Sales and Other | 3.8 | 0.9 | 2.9 | | | Net Income (Loss) from Continuing Operations | 5.0 | 1.4 | 3.6 | 28.0% | | Three Months Ended March 31, 2024 | | | | | | GAAP Reported Net Income (Loss) from Continuing Operations | 5.0 | 2.4 | 2.6 | 47.8% | | (Gains) Losses Related to Plant Shutdowns, Asset Impairments, and Restructuring | 0.5 | 0.1 | 0.4 | | | (Gains) Losses Related to Asset Sales and Other | 2.2 | 0.5 | 1.7 | | | Net Income (Loss) from Continuing Operations | 7.7 | 3.0 | 4.7 | 39.0% | Net Debt and Net Leverage Ratio Reconciliation This section provides the calculation and reconciliation of net debt and net leverage ratio, which are non-GAAP financial measures used to assess the company's financial leverage, with net debt at $52.9 million and a net leverage ratio of 1.1x as of March 31, 2025 Net Debt Calculation (million USD) | Metric | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :------------- | | Short-Term Debt | 0.6 | 1.3 | | ABL Revolving Credit Facility | 56.0 | 60.6 | | Total Debt | 56.6 | 61.9 | | Less: Cash and Cash Equivalents | 3.7 | 7.1 | | Net Debt | 52.9 | 54.8 | - Net debt and net leverage ratio are non-GAAP financial measures used by management to assess the company's financial leverage[55][56] Net Leverage Ratio Calculation (Twelve Months Ended March 31, 2025) | Metric | Amount (million USD) | | :------------- | :--------------- | | Net Debt | 52.9 | | Credit EBITDA | 47.8 | | Net Leverage Ratio | 1.1 | Consolidated EBITDA from Ongoing Operations Reconciliation This section provides a reconciliation of consolidated EBITDA from ongoing operations, a non-GAAP financial metric used to measure the company's performance from continuing operations, excluding items such as depreciation and amortization, share-based compensation, interest, and income taxes Reconciliation of Consolidated EBITDA from Ongoing Operations (million USD) | Metric | March 31, 2025 | March 31, 2024 | | :--------------------------------------- | :------------- | :------------- | | GAAP Reported Net Income (Loss) from Continuing Operations | 0.7 | 2.6 | | After-Tax Impact of: | | | | (Gains) Losses Related to Plant Shutdowns, Asset Impairments, and Restructuring | — | 0.4 | | (Gains) Losses Related to Asset Sales and Other | 2.9 | 1.7 | | Net Income (Loss) from Continuing Operations | 3.6 | 4.7 | | Add: Depreciation and Amortization | 5.5 | 6.0 | | Add: Interest Expense | 1.0 | 1.2 | | Add: Income Taxes from Continuing Operations | 1.4 | 3.0 | | Consolidated EBITDA from Ongoing Operations | 11.5 | 14.9 | - Consolidated EBITDA from ongoing operations is a non-GAAP financial measure used to assess the company's performance from continuing operations, excluding the impact of plant shutdowns, asset impairments, restructuring, asset sale gains/losses, goodwill impairment, discontinued operations, net periodic benefit cost for pensions, and other items, while also excluding depreciation and amortization, share-based compensation costs, interest, and income taxes[58] PE Films Technical Center Closure The company decided in August 2023 to close its PE Films Technical Center in Richmond, Virginia, and reduce development and sales efforts for semiconductor market films, with all activities ceasing by the end of Q1 2024, and future R&D to be conducted at the Pottsville, Pennsylvania, manufacturing facility - In August 2023, the company decided to close its PE Films Technical Center in Richmond, Virginia, and reduce development and sales efforts for films related to the semiconductor market[58] - All activities ceased by the end of Q1 2024, with future research and development activities to be conducted at the Pottsville, Pennsylvania, manufacturing facility[58] - New business opportunities for the PE Films segment remain, primarily related to surface protection films for protecting flat and flexible display components[58] Credit EBITDA Computation This section provides the computation of Credit EBITDA as defined by the ABL facility, a metric used to assess the company's financial condition and fixed charge coverage, with Credit EBITDA at $47.8 million and a fixed charge coverage ratio of 6.44 for the twelve months ended March 31, 2025 Credit EBITDA Computation (Twelve Months Ended March 31, 2025, thousand USD) | Item | Amount | | :--------------------------------------- | :------- | | Net Income (Loss) | (57,752) | | Add: Loss from Discontinued Operations, Net of Tax | 56,864 | | Add: Total Income Tax Expense from Continuing Operations | — | | Add: Interest Expense | 4,493 | | Add: Depreciation and Amortization Expense from Continuing Operations | 22,784 | | Add: Non-Cash Losses and Expenses from Continuing Operations, and Cash Losses and Expenses Not Exceeding $10,000, Classified as Extraordinary, Unusual, or Related to Plant Shutdowns, Asset Impairments, and/or Restructuring | 23,389 | | Add: Share-Based Compensation Expense | — | | Less: Total Income Tax Benefit from Continuing Operations | (1,972) | | Less: Interest Income | (21) | | Less: Income Related to Fair Value Adjustments of Assets | (144) | | Less: Pension Expense Adjustment | (181) | | Credit EBITDA | 47,815 | | Fixed Charge Coverage Ratio: | | | Credit EBITDA | 47,815 | | Unfinanced Capital Expenditures | 12,871 | | Fixed Charges | 5,424 | | Fixed Charge Coverage Ratio | 6.44 | - Credit EBITDA is a non-GAAP financial measure as defined by the ABL facility, and it does not represent net income (loss) or cash flow from operating activities as defined by GAAP[60] - The fixed charge coverage ratio is calculated as (Credit EBITDA minus unfinanced capital expenditures) divided by fixed charges[60]