Tredegar (TG) - 2025 Q2 - Quarterly Results

Executive Summary Tredegar Corporation reported a significant decline in net income from continuing operations and ongoing operations in Q2 2025, with both Aluminum Extrusions and PE Films segments experiencing decreased EBITDA Overall Financial Performance Tredegar Corporation reported a significant decline in net income from continuing operations for Q2 2025 compared to Q2 2024, with ongoing operations also showing a substantial decrease. The CEO highlighted improved sales volume for Bonnell but noted profit declines due to manufacturing inefficiencies and potential impacts from increased tariffs Net Income (Loss) from Continuing Operations | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Net Income (Loss) | $1.8 | $9.2 | (80.4%) | | Diluted EPS | $0.05 | $0.27 | (81.5%) | Net Income (Loss) from Ongoing Operations (Non-GAAP) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Net Income (Loss) | $1.8 | $10.3 | (82.5%) | | Diluted EPS | $0.05 | $0.30 | (83.3%) | - Bonnell sales volume improved significantly in Q2 2025 versus last year, but profits declined mainly due to manufacturing inefficiencies in April and May, which are believed to be resolved. Operating performance has since improved[5] - PE Films had another good quarter, though below the exceptional performance in Q2 2024, with expectations for moderation in H2 2025. No adverse impact on customer demand related to tariff actions has been experienced to date, but the situation remains fluid[5] - The balance sheet remains strong with ample liquidity from a new five-year $125 million asset-based lending facility[5] Key Segment Highlights Both Aluminum Extrusions and PE Films experienced a decrease in EBITDA from ongoing operations in Q2 2025 compared to Q2 2024. Aluminum Extrusions saw increased sales volume but a decline in net new orders post-tariff increase, while PE Films' sales volume decreased EBITDA from Ongoing Operations (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 ($M) | Q2 2024 ($M) | Change (YoY) | | :------------------ | :----------- | :----------- | :----------- | | Aluminum Extrusions | 9.3 | 12.9 | (27.9%) | | PE Films | 6.7 | 10.1 | (33.7%) | Sales Volume (Q2 2025 vs. Q2 2024) | Segment | Q2 2025 (million lbs) | Q2 2024 (million lbs) | Change (YoY) | | :------------------ | :-------------- | :-------------- | :----------- | | Aluminum Extrusions | 40.7 | 34.9 | 16.6% |\ | PE Films | 9.8 | 10.5 | (6.7%) | - Aluminum Extrusions' net new orders increased 21% YoY in Q2 2025 but declined 11% QoQ, marking the first quarterly decline after 10 consecutive increases. Open orders at the end of Q2 2025 were 25 million pounds, up from 14 million pounds in Q2 2024[6] Operations Review The operations review details the financial and operational performance of Aluminum Extrusions and PE Films, highlighting volume changes, cost impacts, and market dynamics Aluminum Extrusions (Bonnell Aluminum) Bonnell Aluminum, producing custom aluminum extrusions for B&C, automotive, and specialty markets, saw significant sales volume and net sales increases in Q2 and H1 2025 compared to the prior year. However, EBITDA from ongoing operations declined due to manufacturing inefficiencies and higher costs. The segment experienced a decline in net new orders after the Section 232 tariff increase to 50%, indicating potential future demand challenges - Bonnell Aluminum produces high-quality, soft-alloy and medium-strength custom fabricated and finished aluminum extrusions primarily for building and construction (B&C), automotive, and specialty markets[8] Financial Performance Summary (Q2 & H1 2025) This section summarizes Bonnell Aluminum's key financial metrics for Q2 and H1 2025, showing increased sales volume and net sales but decreased EBITDA from ongoing operations Aluminum Extrusions Key Financials (Q2 & H1 2025 vs. Prior Year) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :-------------------------- | :--------- | :--------- | :------- | :--------- | :--------- | :------- | | Sales volume (thousand lbs) | 40,690 | 34,906 | 16.6% | 78,608 | 68,747 | 14.3% | | Net sales | $148,367 | $119,413 | 24.2% | $281,999 | $233,636 | 20.7% | | Variable costs | $116,059 | $87,825 | (32.1)% | $219,582 | $172,610 | (27.2)% | | Manufacturing fixed costs | $11,760 | $9,881 | (19.0)% | $22,973 | $19,507 | (17.8)% | | SG&A costs | $10,129 | $8,972 | (12.9)% | $19,541 | $15,770 | (23.9)% | | EBITDA from ongoing operations | $9,283 | $12,907 | (28.1)% | $18,441 | $25,447 | (27.5)% | | EBIT from ongoing operations | $5,190 | $8,461 | (38.7)% | $10,122 | $16,459 | (38.5)% | | Capital expenditures | $2,386 | $1,463 | | $4,757 | $3,012 | | Sales Volume by End-Use Market This section presents Bonnell Aluminum's sales volume breakdown by end-use market for Q2 and H1 2025, indicating growth across most segments Sales Volume by End-Use Market (Millions of lbs) | End-Use Market | Q2 2025 (million lbs) | Q2 2024 (million lbs) | % Change (YoY) | Q1 2025 (million lbs) | % Change (QoQ) | H1 2025 (million lbs) | H1 2024 (million lbs) | % Change (YoY) | | :---------------- | :------ | :------ | :------------- | :------ | :------------- | :------ | :------ | :------------- |\ | Non-residential B&C | 22.5 | 20.3 | 10.8% | 19.2 | 17.2% | 41.7 | 40.4 | 3.2% | | Residential B&C | 2.3 | 2.2 | 4.5% | 2.0 | 15.0% | 4.3 | 3.8 | 13.2% | | Automotive | 3.2 | 2.9 | 10.3% | 3.1 | 3.2% | 6.3 | 6.1 | 3.3% | | Specialty products | 12.7 | 9.5 | 33.7% | 13.6 | (6.6)% | 26.3 | 18.4 | 42.9% | | Total | 40.7| 34.9| 16.6% | 37.9| 7.4% | 78.6| 68.7| 14.3% | Second Quarter 2025 vs. Second Quarter 2024 Analysis This analysis details the drivers behind Bonnell Aluminum's Q2 2025 performance, including sales growth, order trends, tariff impacts, and manufacturing cost inefficiencies - Net sales increased 24.2% in Q2 2025 due to higher sales volume (16.6% YoY, 7.4% QoQ) and the pass-through of higher metal costs. Increased shipments were noted in non-residential B&C (curtainwall, storefront, institutional walkway covers) and specialty markets (solar panels, consumer durables)[11] - Net new orders increased 21% YoY but decreased 11% QoQ, marking the first quarterly decline after 10 consecutive increases. Open orders at quarter-end were 25 million pounds, up from 14 million pounds in Q2 2024[11][12] - Section 232 tariffs increased to 50% effective June 4, 2025. Net new orders declined by 20% after this increase (from 3.4 million lbs/week to 2.7 million lbs/week), attributed to lower U.S. demand and customers evaluating tariff permanency. The favorable shift in market share to U.S. producers has not offset this lower demand[13][14] - EBITDA from ongoing operations decreased by $3.6 million, primarily due to approximately $3 million in unfavorable manufacturing costs in April and May from inefficiencies during production ramp-up and hiring, which are believed to be resolved[15] First Six Months 2025 vs. First Six Months 2024 Analysis This section analyzes Bonnell Aluminum's H1 2025 performance, focusing on net sales growth, EBITDA decline, and the impact of various cost increases and sales mix shifts - Net sales increased 20.7% in H1 2025, driven by higher sales volume (14.3%) and the pass-through of higher metal costs, partially offset by a lower average conversion price add-on due to sales mix shift in Q1 2025[16] - EBITDA from ongoing operations decreased by $7.0 million, primarily due to[17] - A $0.7 million increase in contribution margin, offset by higher variable manufacturing costs (material yield, labor rates, labor productivity, externally produced billet, maintenance, utilities)[17] - A $0.7 million charge from FIFO timing of aluminum raw materials costs in Q2 2025 (vs. $1.2 million benefit in Q2 2024)[17] - Higher fixed costs ($0.8 million) from wage increases, compensation, maintenance, utilities, and added resources[17] - Higher SG&A expenses ($0.7 million) primarily from employee-related compensation[17] - Higher other expense ($1.2 million) for employee-related medical costs due to increased high-cost claims[17] - A $1.4 million increase in contribution margin, significantly offset by lower spread in Q1 2025 due to sales mix shift ($2.1 million)[18][19] - Higher variable manufacturing costs ($1.4 million unfavorable in H1 2025 vs. $0.5 million favorable in H1 2024) from material yield, labor rates, decreased labor productivity, higher maintenance (downed equipment, winter weather), higher die expense, higher externally produced billet expense, and higher utilities[18][19] Projected Capital Expenditures and Depreciation & Amortization This section outlines Bonnell Aluminum's projected capital expenditures, depreciation, and amortization for 2025, distinguishing between productivity and continuity projects Projected Capital Expenditures and Depreciation & Amortization for Bonnell Aluminum (2025) | Metric | Amount ($ million) | | :-------------------------- | :---------- | | Total Capital Expenditures | 17 | | - Productivity projects | 5 | | - Continuity of operations | 12 | | Depreciation expense | 15 | | Amortization expense | 2 | PE Films PE Films experienced a decline in net sales and EBITDA from ongoing operations in Q2 and H1 2025, primarily due to lower sales volume in surface protection films. Despite this, overwrap films showed some volume increase in Q2. The segment's performance has been subject to significant cyclical swings, particularly from the display industry downturn - PE Films produces surface protection films, polyethylene overwrap films, and films for other markets[22] Financial Performance Summary (Q2 & H1 2025) This section summarizes PE Films' key financial metrics for Q2 and H1 2025, showing declines in sales volume, net sales, and EBITDA from ongoing operations PE Films Key Financials (Q2 & H1 2025 vs. Prior Year) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | % Change | | :-------------------------- | :--------- | :--------- | :------- | :--------- | :--------- | :------- | | Sales volume (thousand lbs) | 9,798 | 10,548 | (7.1)% | 19,437 | 20,583 | (5.6)% | | Net sales | $24,596 | $29,197 | (15.8)% | $50,134 | $53,932 | (7.0)% | | Variable costs | $11,688 | $13,183 | 11.3% | $23,664 | $25,228 | 6.2% | | Manufacturing fixed costs | $3,243 | $3,115 | (4.1)% | $6,702 | $6,336 | (5.8)% | | SG&A costs | $2,867 | $2,791 | (2.7)% | $5,459 | $5,307 | (2.9)% | | EBITDA from ongoing operations | $6,711 | $10,133 | (33.8)% | $14,233 | $17,037 | (16.5)% | | EBIT from ongoing operations | $5,481 | $8,816 | (37.8)% | $11,753 | $14,392 | (18.3)% | | Capital expenditures | $295 | $216 | | $882 | $610 | | Second Quarter 2025 vs. Second Quarter 2024 Analysis This analysis details the drivers behind PE Films' Q2 2025 performance, including decreased sales volume in surface protection, increased overwrap volume, and the impact of cyclical market swings - Net sales decreased 15.8% in Q2 2025 due to lower sales volume in surface protection films, which decreased 18.2% YoY and 10.1% QoQ. Overwrap films volume increased 6.1% YoY[25] - Surface Protection has not experienced adverse impact from tariff actions, but the situation remains fluid, and impact on consumer electronics is uncertain[26] - EBITDA from ongoing operations decreased by $3.4 million, primarily due to a $3.1 million decrease in contribution margin, with Surface Protection seeing a $3.3 million decrease from lower volume, partially offset by cost improvements and favorable pricing[26][30] - PE Films has experienced significant cyclical swings in sales volume and EBITDA over the last 3.5 years, largely due to the downturn in the display industry[26] First Six Months 2025 vs. First Six Months 2024 Analysis This section analyzes PE Films' H1 2025 performance, focusing on decreased net sales and EBITDA from ongoing operations due to lower sales volume and increased costs - Net sales decreased 7.0% in H1 2025, mainly due to a 7.8% decrease in Surface Protection sales volume. Overwrap films sales volume decreased 3.1%[27] - EBITDA from ongoing operations decreased by $2.8 million, primarily due to[28] - A $2.2 million decrease in contribution margin, with Surface Protection seeing a $1.8 million decrease from lower volume, partially offset by cost improvements and favorable pricing[31] - Overwrap films experienced a $0.5 million decrease primarily due to lower volume, unfavorable mix and pricing, partially offset by cost improvements[31] - Higher fixed costs ($0.4 million) associated with wage increases and compensation-related costs[31] - Higher SG&A expenses ($0.2 million) primarily from increased R&D expenses[31] - Note: The original document contains a section (chunk 24) under PE Films that discusses 'aluminum raw material costs' and other general cost increases. While the general cost increases (fixed costs, SG&A, medical costs) could apply to PE Films, the specific mention of 'aluminum raw material costs' is inconsistent with PE Films' business and is likely a misplacement from the Aluminum Extrusions section[24] Projected Capital Expenditures and Depreciation & Amortization This section outlines PE Films' projected capital expenditures, depreciation, and amortization for 2025, distinguishing between productivity and continuity projects Projected Capital Expenditures and Depreciation & Amortization for PE Films (2025) | Metric | Amount ($ million) | | :-------------------------- | :---------- | | Total Capital Expenditures | 2 | | - Productivity projects | 1 | | - Continuity of operations | 1 | | Depreciation expense | 5 | | Amortization expense | 0 | Corporate Expenses, Interest, Taxes and Other This section reviews the changes in corporate expenses, interest expense, and the effective tax rate for H1 2025, highlighting key drivers for each Summary Corporate expenses increased in H1 2025 due to higher professional fees, incentive compensation, and stock-based compensation, partially offset by a gain on land sale and lower audit/remediation fees. Interest expense rose due to deferred financing fee write-offs, and the effective tax rate significantly increased - Corporate expenses, net, increased by $2.6 million in H1 2025 compared to H1 2024, primarily due to higher professional fees for business development ($3.5 million), employee-related incentive compensation ($1.1 million), and stock-based compensation ($0.6 million)[32] - These increases were partially offset by a $1.5 million gain on the sale of corporate-owned land, lower external and internal audit fees ($0.7 million), and reduced professional fees for internal control remediation ($0.4 million)[32] Interest Expense (H1 2025 vs. H1 2024) | Metric | H1 2025 ($ million) | H1 2024 ($ million) | Change (YoY) | | :-------------- | :----------- | :----------- | :----------- | | Interest expense | 2.8 | 2.3 | 21.7% | - The increase in interest expense was primarily due to an $0.8 million write-off of deferred financing fees related to an amendment to the credit agreement, partially offset by lower weighted average total debt and interest rates[33] Effective Tax Rate (H1 2025 vs. H1 2024) | Metric | H1 2025 | H1 2024 | Change (percentage points) | | :---------------- | :------ | :------ | :----------- | | Effective tax rate | 38.4% | 16.6% | 21.8 pp | - The higher effective tax rate in H1 2025 was impacted by taxable discrete items, including stock-based compensation, and lower book income[34] Debt, Financial Leverage, Debt Covenants and Debt Refinancing This section provides an overview of Tredegar's debt position, financial leverage, compliance with ABL Facility covenants, and available liquidity Summary Tredegar's total debt slightly increased, while net debt decreased in H1 2025. The company remains in compliance with its $125 million ABL Facility covenants, maintaining significant borrowing availability and improved median daily liquidity Debt and Cash Position | Metric | June 30, 2025 ($ million) | Dec 31, 2024 ($ million) | Change ($ million) | | :---------------------- | :----------------- | :---------------- | :---------- | | Total debt | 62.6 | 61.9 | 0.7 | | Cash & cash equivalents | 9.8 | 7.1 | 2.7 | | Net debt (Non-GAAP) | 52.8 | 54.8 | (2.0) | - The decrease in net debt was due to $9.8 million received from the post-closing settlement of the Terphane sale in Q1 2025, partially offset by higher net working capital resulting from seasonally low levels at the end of 2024 and the impact of tariffs in 2025[36] - As of June 30, 2025, the Company was in compliance with all covenants under its $125 million asset-based credit agreement (ABL Facility), which matures May 6, 2030[37] - Funds available to borrow under the ABL Facility were approximately $51 million at June 30, 2025. Median daily liquidity under the ABL Facility improved to $54 million in Q2 2025 from $44 million in Q1 2025[37] Forward-Looking and Cautionary Statements This section outlines the inherent risks and uncertainties associated with forward-looking statements, covering macroeconomic, operational, regulatory, and strategic factors Summary This section highlights that certain statements in the press release are forward-looking and subject to various risks and uncertainties that could cause actual results to differ materially. Key risk factors include macroeconomic conditions, operating costs, compliance with debt covenants, talent retention, manufacturing disruptions, IT failures, international business risks, public health epidemics, regulatory factors, product development, tariffs, evasion of duties, ERP/MES implementation, customer dependence, intellectual property, and strategic transactions - The press release contains forward-looking statements, identified by words like 'believe,' 'estimate,' 'anticipate,' 'expect,' and 'project,' which are based on current expectations and subject to risks and uncertainties[39] - Impact of macroeconomic factors (inflation, interest rates, recession risks)[39][40][45] - Increase in operating costs (raw materials, energy)[39][40][45] - Noncompliance with financial and restrictive covenants in the ABL Facility[39][40][45] - Failure to attract, develop, and retain key officers or employees[39][40][45] - Disruptions to manufacturing facilities, including labor shortages[39][40][45] - Information technology system failure or breach[39][40][45] - Risks of doing business in countries outside the U.S[39][40][45] - Impact of public health epidemics (e.g., COVID-19)[39][40][45] - Political, economic, and regulatory factors concerning products[39][40][45] - Inability to develop, efficiently manufacture, and deliver new products at competitive prices[39][40][45] - Impact of tariffs and sanctions on imported aluminum ingot for Bonnell Aluminum[39][40][45] - Failure by governmental entities to prevent foreign companies from evading antidumping and countervailing duties[39][40][45] - Unanticipated problems or delays with ERP and MES implementation, or security breaches[39][40][45] - Loss of sales to significant customers or inability to achieve sales to new customers[39][40][45] - Failure of customers to achieve success or maintain market share[39][40][45] - Failure to protect intellectual property rights[39][40][45] - Inability to successfully complete strategic acquisitions or dispositions, or failure to realize expected benefits[39][40][45] - Readers are urged to review and consider carefully the disclosures Tredegar makes in its SEC filings, including the risk factors in Part I, Item 1A of the Company's Form 10-K for the year ended December 31, 2024[40] Non-GAAP Financial Measures & Company Information This section explains the use of non-GAAP financial measures, provides company information, and describes Tredegar's primary industrial manufacturing businesses Summary This section clarifies the use of non-GAAP financial measures, providing reconciliations to GAAP equivalents. It also states that Tredegar uses its website as a primary channel for distributing material company information and provides a brief overview of its industrial manufacturing businesses - The press release includes non-GAAP financial measures, which are reconciled to the most directly comparable GAAP financial measures in the Notes to the Financial Tables and on the Company's website[42] - Tredegar Corporation is an industrial manufacturer with two primary businesses: custom aluminum extrusions for North American markets (building & construction, automotive, specialty) and surface protection films for high-technology applications in the global electronics industry[44] - The Company has approximately 1,600 employees and operates manufacturing facilities in North America and Asia[44] Financial Tables This section presents the condensed consolidated financial statements, including statements of income, balance sheets, and cash flows, along with segment-level net sales and EBITDA Condensed Consolidated Statements of Income The consolidated statements of income show a significant decrease in net income from continuing operations for Q2 and H1 2025 compared to the prior year, alongside a decrease in total net income. Diluted EPS from continuing operations also declined substantially Condensed Consolidated Statements of Income (Unaudited, In Thousands) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :---------------------------------------- | :--------- | :--------- | :--------- | :--------- | | Sales | $179,116 | $153,940 | $343,853 | $297,912 | | Income (loss) from continuing operations before income taxes | $2,812 | $9,132 | $4,060 | $14,120 | | Income tax expense (benefit) | $984 | $(38) | $1,560 | $2,346 | | Net income (loss) from continuing operations | $1,828 | $9,170 | $2,500 | $11,774 | | Income (loss) from discontinued operations, net of tax | $(97) | $(378) | $9,332 | $306 | | Net income (loss) | $1,731 | $8,792 | $11,832 | $12,080 | | Diluted EPS (Continuing operations) | $0.05 | $0.27 | $0.07 | $0.34 | | Diluted EPS (Total) | $0.05 | $0.26 | $0.34 | $0.35 | Net Sales and EBITDA from Ongoing Operations by Segment This segment-level breakdown highlights that while Aluminum Extrusions saw increased net sales, its EBITDA from ongoing operations decreased. PE Films experienced declines in both net sales and EBITDA from ongoing operations for both the quarter and six-month periods Net Sales by Segment (Unaudited, In Thousands) | Segment | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :------------------ | :--------- | :--------- | :--------- | :--------- | | Aluminum Extrusions | $148,367 | $119,413 | $281,999 | $233,636 | | PE Films | $24,596 | $29,197 | $50,134 | $53,932 | | Total net sales | $172,963 | $148,610 | $332,133 | $287,568 | EBITDA from Ongoing Operations by Segment (Unaudited, In Thousands) | Segment | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :------------------ | :--------- | :--------- | :--------- | :--------- | | Aluminum Extrusions | $9,283 | $12,907 | $18,441 | $25,447 | | PE Films | $6,711 | $10,133 | $14,233 | $17,037 | | Total | $10,615 | $15,548 | $20,651 | $27,451 | Condensed Consolidated Balance Sheets The balance sheet indicates an increase in total assets and shareholders' equity from December 31, 2024, to June 30, 2025, driven by higher cash, receivables, and inventories. Total current liabilities also saw a slight increase Condensed Consolidated Balance Sheets (Unaudited, In Thousands) | Metric | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | | :-------------------------------- | :------------ | :----------- | | Cash & cash equivalents | $9,795 | $7,062 | | Accounts & other receivables, net | $78,833 | $64,817 | | Inventories | $66,648 | $51,381 | | Total current assets | $163,753 | $139,827 | | Total assets | $371,585 | $356,357 | | Accounts payable | $68,181 | $64,704 | | Total current liabilities | $92,844 | $91,708 | | ABL revolving facility | $62,000 | $60,600 | | Shareholders' equity | $194,106 | $180,968 | | Total liabilities and shareholders' equity | $371,585 | $356,357 | Condensed Consolidated Statements of Cash Flows Cash flows from operating activities turned negative in H1 2025, a significant shift from positive flows in H1 2024, primarily due to changes in working capital. Investing activities provided net cash, largely from the sale of Terphane, while financing activities used less cash compared to the prior year Condensed Consolidated Statements of Cash Flows (Unaudited, In Thousands) | Metric | H1 2025 ($ thousands) | H1 2024 ($ thousands) | | :-------------------------------------- | :--------- | :--------- | | Net income (loss) | $11,832 | $12,080 | | Net cash provided by (used in) operating activities | $(2,852) | $7,329 | | Net cash provided by (used in) investing activities | $6,101 | $(4,555) | | Net cash provided by (used in) financing activities | $(569) | $(4,909) | | Increase (decrease) in cash and cash equivalents | $2,733 | $(4,786) | | Cash and cash equivalents at end of period | $9,795 | $8,669 | - Operating cash flow was negatively impacted by changes in accounts and other receivables ($14.0 million), and inventories ($15.3 million) in H1 2025[53] - Investing cash flow benefited from $9.8 million in proceeds from the sale of Terphane in H1 2025[53] Notes to the Financial Tables This section provides detailed reconciliations and definitions for non-GAAP financial measures, special items, effective tax rates, and debt-related metrics Note (a): Net Income (Loss) from Ongoing Operations Reconciliation This note provides a reconciliation of GAAP net income from continuing operations to non-GAAP net income from ongoing operations, excluding special items like plant shutdowns, asset impairments, and gains/losses from asset sales, to offer a clearer view of core operating performance - Net income (loss) from ongoing operations is a non-GAAP measure that excludes effects of plant shutdowns, asset impairments, restructurings, asset sales, discontinued operations, and other special items[55] Net Income (Loss) from Ongoing Operations Reconciliation (In Millions) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | H1 2025 ($ million) | H1 2024 ($ million) | | :---------------------------------------- | :------ | :------ | :------ | :------ | | Net income (loss) from continuing operations (GAAP) | $1.8 | $9.2 | $2.5 | $11.8 | | After-tax effects of: | | | | | | (Gains) losses associated with plant shutdowns, etc. | — | 0.1 | — | 0.5 | | (Gains) losses from sale of assets and other | — | 1.0 | 2.9 | 2.7 | | Net income (loss) from ongoing operations | $1.8 | $10.3 | $5.4 | $15.0 | | Diluted EPS from ongoing operations | $0.05 | $0.30 | $0.15 | $0.44 | Note (b): EBITDA and EBIT from Ongoing Operations Definition This note defines EBITDA and EBIT from ongoing operations as key non-GAAP segment profitability metrics used by management and provided for investor analysis, emphasizing they are not GAAP alternatives - EBITDA from ongoing operations is the key segment profitability metric used by the Company's chief operating decision maker (CODM) to assess segment financial performance[55] - EBIT from ongoing operations is a non-GAAP financial measure provided as a widely understood and utilized metric for investors to analyze the Company's core operations[55] Note (c): Gains and Losses from Special Items This note details the pre-tax and net-of-tax impacts of various special items, including consulting expenses for ERP/MES, legal fees, storm damage, aluminum premium charges, business development fees, and land sale proceeds, affecting both Aluminum Extrusions and Corporate segments Special Items for Aluminum Extrusions (H1 2025, In Millions) | Item | Pre-Tax ($ million) | Net of Tax ($ million) | | :---------------------------------------- | :------ | :--------- | | Consulting expenses for ERP/MES project | $0.8 | $0.6 | | Legal fees (Aluminum Extruders Trade Case) | $0.1 | $0.2 | | Storm damage to Newnan, Georgia plant | $(0.2) | $(0.1) | | Aluminum premium charge (unplanned maintenance) | $0.3 | $0.2 | | Total for Aluminum Extrusions | $1.0| $0.9 | Special Items for Corporate (H1 2025, In Millions) | Item | Pre-Tax ($ million) | Net of Tax ($ million) | | :---------------------------------------- | :------ | :--------- | | Professional fees (business development) | $3.8 | $2.9 | | Professional fees (internal control remediation) | $0.2 | $0.1 | | Group annuity contract premium adjustment | $0.1 | $0.1 | | Professional fees (ABL Facility transition) | $0.2 | $0.2 | | Proceeds on the sale of corporate-owned land | $(1.5) | $(1.2) | | Total for Corporate | $2.8| $2.1 | Special Items for Aluminum Extrusions (H1 2024, In Millions) | Item | Pre-Tax ($ million) | Net of Tax ($ million) | | :---------------------------------------- | :------ | :--------- | | Consulting expenses for ERP/MES project | $1.4 | $1.1 | | Storm damage to Newnan, Georgia plant | $0.3 | $0.2 | | Legal fees (Aluminum Extruders Trade Case) | $0.5 | $0.4 | | Total for Aluminum Extrusions | $2.2| $1.7 | Special Items for PE Films (H1 2024, In Millions) | Item | Pre-Tax ($ million) | Net of Tax ($ million) | | :---------------------------------------- | :------ | :--------- | | Richmond, VA Technical Center closure expenses | $0.3 | $0.2 | | Richmond, VA Technical Center lease modification | $0.3 | $0.3 | | Total for PE Films | $0.6| $0.5 | Note (d): Effective Tax Rate Reconciliation This note reconciles pre-tax and post-tax balances for net income from ongoing operations, illustrating the impact on the effective tax rate, which significantly increased in H1 2025 compared to H1 2024 Effective Tax Rate Reconciliation (In Millions) | Metric | Pre-Tax (a) ($ million) | Taxes Expense (b) ($ million) | After-Tax ($ million) | Effective Tax Rate (b)/(a) | | :---------------------------------------- | :---------- | :---------------- | :-------- | :------------------------- | | Three Months Ended June 30, 2025 | | | | | | Net income (loss) from continuing operations (GAAP) | $2.8 | $1.0 | $1.8 | 35.0% | | Net income (loss) from ongoing operations | $2.8 | $1.0 | $1.8 | 35.0% | | Three Months Ended June 30, 2024 | | | | | | Net income (loss) from continuing operations (GAAP) | $9.1 | $(0.1) | $9.2 | (0.4)% | | Net income (loss) from ongoing operations | $10.6 | $0.3 | $10.3 | 2.8% | | Six Months Ended June 30, 2025 | | | | | | Net income (loss) from continuing operations (GAAP) | $4.1 | $1.6 | $2.5 | 38.4% | | Net income (loss) from ongoing operations | $7.9 | $2.5 | $5.4 | 31.3% | | Six Months Ended June 30, 2024 | | | | | | Net income (loss) continuing operations (GAAP) | $14.1 | $2.3 | $11.8 | 16.6% | | Net income (loss) from ongoing operations | $18.3 | $3.3 | $15.0 | 18.0% | Note (e): Net Debt Calculation This note defines and calculates net debt as a non-GAAP measure, showing a decrease in net debt from December 31, 2024, to June 30, 2025, which management uses to evaluate financial leverage - Net debt is a non-GAAP financial measure calculated as total debt less cash and cash equivalents, used by management and investors to evaluate financial leverage[61] Net Debt Calculation (In Millions) | Metric | June 30, 2025 ($ million) | Dec 31, 2024 ($ million) | | :---------------------- | :------------ | :----------- | | Short-term debt | $0.6 | $1.3 | | ABL revolving facility | $62.0 | $60.6 | | Total debt | $62.6 | $61.9 | | Less: Cash and cash equivalents | $9.8 | $7.1 | | Net debt | $52.8 | $54.8 | Note (f): Consolidated EBITDA from Ongoing Operations Reconciliation This note provides a reconciliation of consolidated EBITDA from ongoing operations, a non-GAAP measure, to GAAP net income from continuing operations, excluding various non-operating items to reflect core operational performance - Consolidated EBITDA from ongoing operations is a non-GAAP measure that excludes special items, depreciation & amortization, stock option-based compensation, interest, and income taxes, used to gauge operating performance[63] Consolidated EBITDA from Ongoing Operations Reconciliation (In Millions) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | H1 2025 ($ million) | H1 2024 ($ million) | | :---------------------------------------- | :------ | :------ | :------ | :------ | | Net income (loss) from continuing operations (GAAP) | $1.8 | $9.2 | $2.5 | $11.8 | | Net income (loss) from ongoing operations | $1.8 | $10.3 | $5.4 | $15.0 | | Plus: | | | | | | Depreciation and amortization | 5.4 | 5.9 | 10.9 | 11.8 | | Interest expense | 1.8 | 1.1 | 2.8 | 2.3 | | Income taxes from ongoing operations | 1.0 | 0.3 | 2.5 | 3.3 | | Consolidated EBITDA from ongoing operations | $10.0 | $17.6 | $21.6 | $32.4 | Note (g): PE Films Technical Center Closure This note details the company's plan to close the PE Films technical center in Richmond, VA, and reduce efforts in the semiconductor market, consolidating R&D activities at the Pottsville, PA facility - In August 2023, the Company adopted a plan to close the PE Films technical center in Richmond, VA, and reduce efforts to develop and sell films supporting the semiconductor market[63] - Future research & development activities for PE Films will be performed at the production facility in Pottsville, PA. All activities ceased at the Richmond, VA technical center by the end of Q1 2024[63] Note (h): Credit EBITDA and Fixed Charge Coverage Ratio This note presents the computation of Credit EBITDA, as defined in the ABL Facility, and the Fixed Charge Coverage Ratio, which are key metrics for assessing the Company's compliance with debt covenants and overall financial health - Credit EBITDA, as defined in the ABL Facility, is a non-GAAP measure used for debt covenant compliance and financial leverage assessment[65][66] Credit EBITDA and Net Leverage Ratio (As of/for Twelve Months Ended June 30, 2025) | Metric | Amount ($ million) | | :---------------- | :---------- | | Net debt | 52.8 | | Credit EBITDA | 42.0 | | Net leverage ratio | 1.3 | Fixed Charge Coverage Ratio (As of/for Twelve Months Ended June 30, 2025) | Metric | Amount ($ million) | | :------------------------ | :---------- | | Credit EBITDA | 41.950 | | Unfinanced capital expenditures | 13.873 | | Fixed charges | 5.716 | | Fixed charge coverage ratio | 4.91 |