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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2019
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Virginia
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54-1497771
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1100 Boulders Parkway,
Richmond, Virginia
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23225
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common Stock
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TG
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New York Stock Exchange
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Large accelerated filer
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o
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Accelerated filer
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x
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Smaller reporting company
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o
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Non-accelerated filer
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o
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Emerging growth company
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o
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*
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In determining this figure, an aggregate of 7,037,025 shares of Common Stock beneficially owned by Floyd D. Gottwald, Jr., John D. Gottwald, William M. Gottwald and the members of their immediate families has been excluded because the shares are deemed to be held by affiliates. The aggregate market value has been computed based on the closing price in the New York Stock Exchange on June 30, 2019.
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Page
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Part I
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Item 1.
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Business
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1-4
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Item 1A.
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Risk Factors
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5-10
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Part II
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Item 5.
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Market for Tredegar’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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12-13
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Item 6.
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Selected Financial Data
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14-19
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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Part III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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Part IV
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Item 15.
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Exhibits and Financial Statement Schedules
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Item 16.
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Form 10-K Summary
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Item 1.
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BUSINESS
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Major Markets
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End-Uses
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Building & construction - nonresidential
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Commercial windows and doors, curtain walls, storefronts and entrances, walkway covers, ducts, louvers and vents, office wall panels, partitions and interior enclosures, acoustical walls and ceilings, point of purchase displays, pre-engineered structures, and flooring trims (Futura TransitionsTM)
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Building & construction - residential
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Shower and tub enclosures, railing and support systems, venetian blinds, swimming pools and storm shutters
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Automotive
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Automotive and light truck structural components, spare parts, after-market automotive accessories, grills for heavy trucks, travel trailers and recreation vehicles
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Consumer durables
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Furniture, pleasure boats, refrigerators and freezers, appliances and sporting goods
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Machinery & equipment
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Material handling equipment, conveyors and conveying systems, medical equipment, and aluminum framing systems (TSLOTSTM)
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Distribution (metal service centers specializing in stock and release programs and custom fabrications to small manufacturers)
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Various custom profiles including storm shutters, pleasure boat accessories, theater set structures and various standard profiles (including rod, bar, tube and pipe)
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Electrical
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Lighting fixtures, solar panel frames, electronic apparatus and rigid and flexible conduits
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•
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Apertured film and laminate materials for use as topsheet in feminine hygiene products, baby diapers and adult incontinence products (including materials sold under the Sure&Soft™, Soft Quilt™, ComfortAire™, ComfortFeel™ and FreshFeel™ brand names);
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Elastic films and fabrics for use as components for baby diapers, adult incontinence products and feminine hygiene products (including components sold under the ExtraFlex™ and FlexAire™ brand names);
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Three-dimensional apertured film transfer layers for baby diapers and adult incontinence products sold under the AquiSoft™, AquiDry® and AquiDry Plus™ brand names;
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Thin-gauge films that are readily printable and convertible on conventional processing equipment for overwrap for bathroom tissue and paper towels; and
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Polypropylene films for various industrial applications, including tape and automotive protection.
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Item 1A.
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RISK FACTORS
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Sales volume and profitability of Aluminum Extrusions is cyclical and seasonal and highly dependent on economic conditions of end-use markets in the U.S., particularly in the construction sector. Aluminum Extrusions’ end-use markets can be cyclical and subject to seasonal swings in volume. Because of the capital intensive nature and level of fixed costs inherent in the aluminum extrusions business, the percentage drop in operating profits in a cyclical downturn will likely exceed the percentage drop in volume. In addition, during an economic slowdown, excess industry capacity often drives increased pricing pressure in many end-use markets as competitors protect their position with key customers. Any benefits associated with cost reductions and productivity improvements may not be sufficient to offset the adverse effects on profitability from pricing and margin pressure and higher bad debts (including a greater chance of loss associated with customers defaulting on fixed-price forward sales contracts) that usually accompany a downturn. In addition, higher energy costs can further reduce profits unless offset by price increases or cost reductions and productivity improvements.
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Failure to prevent competitors from evading anti-dumping and countervailing duties, or a reduction in such duties, could adversely impact Aluminum Extrusions. Effective April 25, 2017, the anti-dumping duty and countervailing duty orders on aluminum extrusions were extended for a period of five years. The orders will be reviewed again beginning in March 2022. Chinese and other overseas manufacturers continue to try to evade the anti-dumping and countervailing orders to avoid duties. A failure by, or the inability of, U.S. trade officials to curtail the evasion of these duties, or the potential reduction of applicable duties pursuant to annual administrative reviews of the orders by the Department of Commerce, could have a material adverse effect on the financial condition, results of operations and cash flows of Aluminum Extrusions.
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The duty-free importation of goods allowed under USMCA could result in lower demand for aluminum extrusions made in the U.S., which could materially and negatively affect Bonnell Aluminum’s business and results of operations. In March 2018, the U.S. imposed tariffs of 10% on aluminum ingot and semi-finished aluminum imported in the U.S. from certain countries, including countries from which Bonnell Aluminum has historically sourced aluminum products. In September 2019, the United States, Canada and Mexico entered into the United States-Mexico-Canada Agreement (“USMCA”). As a result of the 10% tariffs on aluminum ingot imported to the U.S. and the duty-free importation of goods allowed under USMCA, aluminum extrusions made in Canada and Mexico are free of the 10% tariff and can now be imported into and sold in the U.S. at very competitive prices. This could result in lower demand for aluminum extrusions made in the U.S., which could materially and negatively affect Bonnell Aluminum’s business and results of operations.
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Competition from China could increase significantly if China is granted market economy status by the World Trade Organization. China launched a formal complaint at the World Trade Organization (“WTO”) challenging its non-market economy status, claiming that as of December 11, 2016, China’s transition period as a non-market economy under its Accession Protocol to the WTO ended. China believes with respect to all Chinese-made products that it should receive market economy status and the rights attendant to that status under WTO rules. The U.S. and the European Union have each rejected that interpretation. If China is granted market economy status by the WTO, the extent to which the U.S. anti-dumping laws will be able to limit unfair trade practices from China will likely be limited because the U.S. government will be forced to utilize Chinese prices and costs that do not reflect market principles in anti-dumping duty investigations involving China, which could ultimately limit the level of anti-dumping duties applied to unfairly traded Chinese imports. The volume of unfairly traded imports of Chinese aluminum extrusions could increase as a result and this, in turn, would likely create substantial pricing pressure on Aluminum Extrusions’ products and could have a material adverse effect on the financial condition, results of operations and cash flows of Aluminum Extrusions. In June 2019, at China’s request, after certain preliminary rulings in the case went against the Chinese position, the WTO indefinitely suspended the proceedings on the Chinese WTO complaint.
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The markets for Aluminum Extrusions’ products are highly competitive with product quality, service, delivery performance and price being the principal competitive factors. Aluminum Extrusions has approximately 1,500 customers that are in a variety of end-use markets within the broad categories of building and construction, distribution, automotive and other transportation, machinery and equipment, electrical and consumer durables. No single customer exceeds 4% of Aluminum Extrusions’ net sales. Future success and prospects depend on Aluminum Extrusions’ ability to provide superior service, high quality products, timely delivery and competitive pricing to retain existing customers and participate in overall industry cross-cycle growth. Failure in any of these areas could lead to a loss of customers, which could have an adverse material effect on the financial condition, results of operations and cash flows of Aluminum Extrusions.
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PE Films is highly dependent on sales associated with its top five customers, the largest of which is P&G. PE Films’ top five customers comprised approximately 19%, 21% and 26% of Tredegar’s consolidated net sales in 2019, 2018 and 2017, respectively, with net sales to P&G alone comprising approximately 6%, 10% and 13% in 2019, 2018 and 2017, respectively. The loss or significant reduction of sales associated with one or more of these customers without replacement by new business could have a material adverse effect on the Company. Other factors that could adversely affect the business include, by way of example, (i) failure by a key customer to achieve success or maintain share in markets in which they sell products containing PE Films’ materials, including as a result of customer preferences for products other than plastics, (ii) key customers using products developed by others that replace PE Films’ business with such customer, (iii) delays in a key customer rolling out products utilizing new technologies developed by PE Films, (iv) operational decisions by a key customer that result in component substitution, inventory reductions and similar changes, and (v) the cyclicality of the electronic display markets. While PE Films is undertaking efforts to expand its customer base, there can be no assurance that such efforts will be successful, or that they will offset any delay or loss of sales and profits associated with these large customers.
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PE Films and its customers operate in highly competitive markets. PE Films competes on product innovation, quality, price and service, and its businesses and their customers operate in highly competitive markets. Global market conditions continue to exacerbate the Company’s exposure to margin compression in its Personal Care business due to competitive forces, especially as certain personal care products move into the later stages of their product and intellectual protection life cycles. In addition, the changing dynamics of consumer products retailing, including the impact of on-line retailers such as Amazon, is creating price and margin pressure on the customers of PE Films’ Personal Care business. While PE Films continually works to identify new business opportunities with new and existing customers, primarily through the development of new products with improved performance and/or cost characteristics, there can be no assurance that such efforts will be successful or that they will offset business lost from competitive dynamics or customer product transitions.
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Cost saving initiatives may not achieve the results anticipated. PE Films has undertaken and will continue to undertake cost reduction initiatives to consolidate certain production, improve operating efficiencies and generate cost savings. PE Films cannot be certain that it will be able to complete these initiatives as planned or that the estimated operating efficiencies or cost savings from such activities will be fully realized or maintained over time. In addition, PE Films may not be successful in moving production to other facilities or timely qualifying new production equipment. Failure to complete these initiatives could adversely affect PE Films’ financial condition, results of operations and cash flows.
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•
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Failure of PE Films’ customers, who are subject to cyclical downturns, to achieve success or maintain market share could adversely impact PE Films’ sales and operating margins. PE Films’ plastic films serve as components for, or are used in the production of, various consumer products sold worldwide. A customer’s ability to successfully develop, manufacture and market those products is integral to PE Films’ success. Also, consumers of premium products made with or using PE Films’ components may shift to less premium or less expensive products, reducing the demand for PE Films’ plastic films. Cyclical downturns and changing consumer preferences for plastic products generally may negatively affect businesses that use PE Films’ plastic film products, which could adversely affect sales and operating margins.
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•
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The Company’s inability to protect its intellectual property rights or its infringement of the intellectual property rights of others could have a material adverse impact on PE Films. PE Films operates in an industry where its significant customers and competitors have substantial intellectual property portfolios. The continued success of PE Films’ business depends on its ability not only to protect its own technologies and trade secrets, but also to develop and sell new products that do not infringe upon existing patents or threaten existing customer relationships. Intellectual property litigation is very costly and could result in substantial expense and diversions of Company resources, both of which could adversely affect its consolidated financial condition, results of operations and cash flows. In addition, there may be no effective legal recourse against infringement of the Company’s intellectual property by third parties, whether due to limitations on enforcement of rights in foreign jurisdictions or as a result of other factors.
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•
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An unstable economic environment could have a disruptive impact on PE Films’ supply chain. Certain raw materials used in manufacturing PE Films’ products are sourced from single suppliers, and PE Films may not be able to quickly or inexpensively re-source from other suppliers. The risk of damage or disruption to its supply chain may increase if and when different suppliers consolidate their product portfolios, experience financial distress or disruption of manufacturing operations (such as, for example, the impact of hurricanes on petrochemical production). Failure to take adequate steps to effectively manage such events, which are intensified when a product is procured from a single supplier or location, could adversely affect PE Films’ consolidated financial condition, results of operations and cash flows, as well as require additional resources to restore its supply chain.
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Overcapacity in Latin American polyester film production and a history of uncertain economic conditions in Brazil could adversely impact the financial condition, results of operations and cash flows of Flexible Packaging Films.
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•
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Governmental failure to extend anti-dumping duties in Brazil on imported products or prevent competitors from circumventing such duties could adversely impact Flexible Packaging Films. In recent years, excess global capacity in the industry has led to increased competitive pressures from imports into Brazil. The Company believes that these conditions have shifted the competitive environment from a regional to a global landscape and have driven price convergence and lower product margins for Flexible Packaging Films. Favorable anti-dumping rulings or countervailing duties are in effect for products imported from China, Egypt, India, Mexico, United Arab Emirates, Turkey, Peru and Bahrain. Competitors not currently subject to anti-dumping duties may choose to utilize their excess capacity by selling product in Brazil, which may result in pricing pressures that Flexible Packaging Films may not be able to offset with cost savings measures and/or manufacturing efficiency initiatives. There can be no assurance that efforts to extend anti-dumping duties beyond 2020 on products imported from China, India, Egypt and other countries will be successful.
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The Company has identified material weaknesses in its internal control over financial reporting at December 31, 2017, 2018 and 2019. The Company’s failure to establish and maintain effective internal control over financial reporting and to maintain effective disclosure controls and procedures increases the risk of a material misstatement in its consolidated financial statements, and its failure to meet its reporting and financial obligations, which in turn could have a negative impact on its financial condition.
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Tredegar has an underfunded defined benefit (pension) plan. Tredegar sponsors a pension plan that covers certain hourly and salaried employees in the U.S. The plan was substantially frozen to new participants in 2007, and frozen to benefit accruals for active participants in 2014. As of December 31, 2019, the plan was underfunded under U.S. generally accepted accounting principles (“GAAP”) measures by $100.4 million. Tredegar expects that it will be required to make a cash contribution of approximately $12.3 million to its underfunded pension plan in 2020, and may be required to make higher cash contributions in future periods depending on the level of interest rates and investment returns on plan assets.
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Noncompliance with any of the covenants in the Company’s $500 million revolving credit facility, which matures in June of 2024, could result in all debt under the agreement outstanding at such time becoming due and limiting its borrowing capacity, which could have a material adverse effect on consolidated financial condition and liquidity. The credit agreement governing Tredegar’s revolving credit facility contains restrictions and financial covenants that, if violated, could restrict the Company’s operational and financial flexibility. Failure to comply with these covenants could result in an event of default, which if not cured or waived, would result in all outstanding debt under the credit facility at such time becoming due, which could have a material adverse effect on the Company’s consolidated financial condition and liquidity.
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Tredegar’s performance is influenced by costs incurred by its operating companies, including, for example, the cost of raw materials and energy. These costs include, without limitation, the cost of aluminum (the raw material on which Aluminum Extrusions primarily depends), resin (the raw material on which PE Films primarily depends), PTA and MEG (the raw materials on which Flexible Packaging Films primarily depends), natural gas (the principal fuel necessary for Aluminum Extrusions’ plants to operate), electricity and diesel fuel. Aluminum, resin and natural gas prices are volatile as shown in the charts in the Quantitative and Qualitative Disclosures in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company attempts to mitigate the effects of increased costs through price increases and contractual pass-through provisions, but there are no assurance that higher prices can effectively be passed through to customers or that Tredegar will be able to offset fully or on a timely basis the effects of higher raw material and energy costs through price increases or pass-through arrangements. Further, the Company’s cost control efforts may not be sufficient to offset any increases in raw material, energy or other costs.
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Tredegar may not be able to successfully integrate strategic acquisitions. Acquisitions involve special risks, including, without limitation, meeting revenue, margin, working capital and capital expenditure expectations that substantially drive valuation, diversion of management’s time and attention from existing businesses, the potential assumption of unanticipated liabilities and contingencies and potential difficulties in integrating acquired businesses and achieving anticipated operational improvements. Acquired businesses may not achieve expected results.
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Tredegar is subject to current and future governmental regulation, including environmental laws and regulations, and could become exposed to material liabilities and costs associated with such regulation. The Company is subject to regulation by local, state, federal and foreign governmental authorities. New laws and regulations, or changes to existing laws, including those relating to environmental matters (including global climate change and plastic products), and privacy matters, could subject Tredegar to significant additional capital expenditures, operating expenses or other compliance costs. Moreover, future developments in federal, state, local and international laws and regulations, including environmental laws, are difficult to predict. Environmental laws and privacy restrictions have become and are expected to continue to become increasingly strict. As a result, Tredegar expects to be subject to new environmental and privacy laws and regulations. However, any such changes are uncertain and, therefore, it is not possible for the Company to predict with certainty the amount of additional capital expenditures or operating expenses that could be necessary for compliance with respect to any such changes. See Environmental Regulation in Item 1. “Business” for a further discussion of this risk factor.
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Material disruptions at one of the Company’s major manufacturing facilities could negatively impact financial results. Tredegar believes its facilities are operated in compliance with applicable local laws and regulations and that the Company has implemented measures to minimize the risks of disruption at its facilities. Such a disruption could be a result of any number of events: an equipment failure with repairs requiring long lead times, labor stoppages or shortages, cybersecurity attacks, utility disruptions, constraints on the supply or delivery of critical raw materials, and severe weather conditions. A material disruption in one of the Company’s operating locations could negatively impact production and its consolidated financial condition, results of operations and cash flows.
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An inability to renegotiate the Company’s collective bargaining agreements could adversely impact its consolidated financial condition, results of operations and cash flows. Approximately 19% of the Company’s employees are represented by labor unions under various collective bargaining agreements with varying durations and expiration dates. Tredegar may not be able to satisfactorily renegotiate collective bargaining agreements when they expire, which could result in strikes or work stoppages or higher labor costs. In addition, existing collective bargaining agreements may not prevent a strike or work stoppage at the Company’s facilities in the future. Any such work stoppages (or potential work stoppages) could negatively impact Tredegar’s ability to manufacture its products and adversely affect its consolidated financial condition, results of operations and cash flows. None of Tredegar’s collective bargaining agreements expire before the fourth quarter of 2021.
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Our business and operations, and the operations of our suppliers, may be adversely affected by epidemics such as the recent coronavirus (or COVID-19) outbreak. We may face risks related to health epidemics or outbreaks of communicable diseases. The outbreak of such a communicable disease could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of many countries. For example, the recent outbreak of the Coronavirus Disease 2019 (COVID-19), which began in China, has been declared by the World Health Organization to be a “pandemic,” has spread across the globe to many countries in which the Company does business and is impacting worldwide economic activity.
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Tredegar’s valuation of its $7.5 million cost-basis investment in kaléo is volatile and uncertain. Tredegar uses the fair value method to account for its fully-diluted ownership interest of approximately 18% in kaleo, Inc. (“kaléo”), a privately held specialty pharmaceutical company. There is no active secondary market for buying or selling stock in kaléo. The Company’s fair value estimates can fluctuate materially between reporting periods, primarily due to variances in kaléo’s performance versus expectations and changes in the valuation of guideline public companies as measured by their enterprise value-to-EBITDA multiples. Additionally, the estimated fair value of the Company’s investment in kaléo could decline. Public pressure to lower the price of pharmaceutical products and competitive pressures in the market could affect the price at which kaléo sells its products. The U.S. Department of Justice began an investigation of kaléo’s Evzio business in 2018, the impact of which on kaléo and on the value of the Company’s interest in kaléo cannot yet be estimated with any certainty. Kaléo initiated a plan in 2019 to reduce the cost structure of the Evzio product line and reallocate resources to its allergy and pediatric product lines, principally Auvi-Q. As a result, kaléo substantially reduced commercial activities associated with Evzio in 2019. See Note 4 to the Notes to Financial Statements (“Note 4”) for more information.
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Rising trade tensions could cause an increase in the cost of the Company’s products or otherwise negatively impact the Company. A significant portion of the Company’s business involves imports to and from the U.S. and other countries where the Company produces and sells its products. Trade tensions have been rising between the U.S. and other countries, particularly China. An increase in tariffs and other trade barriers between the U.S. and China, or between the U.S. and other countries, could cause an increase in the cost of the Company’s products or otherwise negatively impact the production and sale of the Company’s products in world markets.
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A failure in the Company’s information technology systems as a result of cybersecurity attacks or other causes could negatively affect Tredegar’s business. The Company depends on information technology (“IT”) to record and process customers’ orders, manufacture and ship products in a timely manner, secure its production processes and know-how, maintain the financial accuracy of its business records and maintain personally identified information of its employees. An IT system failure due to computer viruses, internal or external security breaches, cybersecurity attacks, or other malicious causes could disrupt our operations and prevent us from being able to process transactions with our customers, operate our manufacturing facilities and properly report transactions in a timely manner. Increased global IT security threats and cyber-crime pose a potential risk to the security and availability of the Company’s IT systems, networks, and services, including those that are managed, hosted, provided, or used by third parties, as well as to the confidentiality, availability, and integrity of the Company’s data. To date, interruptions of the Company’s IT systems have been infrequent and have not had a material impact on the Company’s operations. A significant protracted failure of or security breach of the IT systems, networks, or service providers the Company relies upon, or a loss or disclosure of business or other sensitive information, or personally identified information, as a result of a cybersecurity incident or other cause, could result in substantial costs to the Company, damage to the Company’s reputation, regulatory enforcement actions and lawsuits, and could adversely affect the Company’s results of operations, financial condition or cash flows.
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Item 1B.
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UNRESOLVED STAFF COMMENTS
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Item 2.
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PROPERTIES
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Locations in the U.S.
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Principal Operations
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Carthage, Tennessee
Elkhart, Indiana
Newnan, Georgia
Niles, Michigan
Clearfield, Utah (leased)
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Production of aluminum extrusions, fabrication and finishing
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Locations in the U.S.
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Locations Outside the U.S.
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Principal Operations
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Durham, North Carolina (technical center and production facility) (leased)
Pottsville, Pennsylvania
Richmond, Virginia (technical center) (leased)
Terre Haute, Indiana (technical center and production facility)
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Guangzhou, China
Kerkrade, The Netherlands
Pune, India
Rétság, Hungary
São Paulo, Brazil
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Production of plastic films, elastics and laminate materials
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Locations in the U.S.
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Locations Outside the U.S.
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Principal Operations
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Bloomfield, New York (technical center and production facility)
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Cabo de Santo Agostinho, Brazil
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Production of PET-based films
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Item 3.
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LEGAL PROCEEDINGS
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Item 4.
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MINE SAFETY DISCLOSURES
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Item 5.
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MARKET FOR TREDEGAR’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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2019
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2018
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||||||||||||
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High
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Low
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High
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Low
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||||||||
First quarter
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$
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19.03
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$
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15.69
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$
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20.25
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$
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15.60
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Second quarter
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18.43
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15.59
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24.60
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16.99
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||||
Third quarter
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19.78
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15.77
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26.25
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20.60
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Fourth quarter
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23.31
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18.74
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21.56
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15.00
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*$100 invested on 12/31/14 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31. Copyright© 2020 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2020 Russell Investment Group. All rights reserved. |
Item 6.
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SELECTED FINANCIAL DATA
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Years Ended December 31
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2019
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2018
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2017
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2016
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2015
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||||||||||
(In thousands, except per-share data)
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||||||||||
Results of Operations:
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||||||||||
Sales
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$
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972,358
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|
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$
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1,065,471
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|
|
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$
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961,330
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|
|
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$
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828,341
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|
|
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$
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896,177
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Other income (expense), net (g)
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34,795
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(a)
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30,459
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(a)
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51,713
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|
(a)
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2,381
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|
(b)
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(20,113
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)
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|
|||||
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1,007,153
|
|
|
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1,095,930
|
|
|
|
1,013,043
|
|
|
|
830,722
|
|
|
|
876,064
|
|
|
|||||
Cost of goods sold (i)
|
767,511
|
|
(a)
|
|
849,756
|
|
(a)
|
|
767,550
|
|
(a)
|
|
659,867
|
|
(b)
|
|
715,744
|
|
(b)
|
|||||
Freight
|
36,063
|
|
|
|
36,027
|
|
|
|
33,683
|
|
|
|
29,069
|
|
|
|
29,838
|
|
|
|||||
Selling, general & administrative expenses (i)
|
94,352
|
|
(a)
|
|
85,283
|
|
(a)
|
|
83,386
|
|
(a)
|
|
73,466
|
|
(b)
|
|
69,384
|
|
(b)
|
|||||
Research and development expenses
|
19,636
|
|
|
|
18,707
|
|
|
|
18,287
|
|
|
|
19,122
|
|
|
|
16,173
|
|
|
|||||
Amortization of identifiable intangibles
|
13,601
|
|
|
|
3,976
|
|
|
|
6,198
|
|
|
|
3,978
|
|
|
|
4,073
|
|
|
|||||
Pension and postretirement benefits (i)
|
9,642
|
|
|
|
10,406
|
|
|
|
10,193
|
|
|
|
11,047
|
|
|
|
12,242
|
|
|
|||||
Interest expense
|
4,051
|
|
|
|
5,702
|
|
|
|
6,170
|
|
|
|
3,806
|
|
|
|
3,502
|
|
|
|||||
Asset impairments and costs associated with exit and disposal activities
|
4,125
|
|
(a)
|
|
2,913
|
|
(a)
|
|
102,488
|
|
(a)
|
|
2,684
|
|
(b)
|
|
3,850
|
|
(b)
|
|||||
Goodwill impairment charge
|
—
|
|
|
|
46,792
|
|
(c)
|
|
—
|
|
|
|
—
|
|
|
|
44,465
|
|
(c)
|
|||||
|
948,981
|
|
|
|
1,059,562
|
|
|
|
1,027,955
|
|
|
|
803,039
|
|
|
|
899,271
|
|
|
|||||
Income (loss) before income taxes
|
58,172
|
|
|
|
36,368
|
|
|
|
(14,912
|
)
|
|
|
27,683
|
|
|
|
(23,207
|
)
|
|
|||||
Income tax expense (benefit)
|
9,913
|
|
|
|
11,526
|
|
|
|
(53,163
|
)
|
|
|
3,217
|
|
|
|
8,928
|
|
|
|||||
Net income (loss)
|
$
|
48,259
|
|
|
|
$
|
24,842
|
|
|
|
$
|
38,251
|
|
|
|
$
|
24,466
|
|
|
|
$
|
(32,135
|
)
|
|
Diluted earnings (loss) per share
|
$
|
1.45
|
|
|
|
$
|
0.75
|
|
|
|
$
|
1.16
|
|
|
|
$
|
0.75
|
|
|
|
$
|
(0.99
|
)
|
|
Years Ended December 31
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
(In thousands, except per-share data)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity per share (h)
|
$
|
11.29
|
|
|
$
|
10.70
|
|
|
$
|
10.41
|
|
|
$
|
9.44
|
|
|
$
|
8.35
|
|
|
Cash dividends declared per share
|
$
|
0.46
|
|
|
$
|
0.44
|
|
|
$
|
0.44
|
|
|
$
|
0.44
|
|
|
$
|
0.42
|
|
|
Weighted average common shares outstanding during the period
|
33,236
|
|
|
33,068
|
|
|
32,946
|
|
|
32,762
|
|
|
32,578
|
|
|
|||||
Shares used to compute diluted earnings (loss) per share during the period
|
33,258
|
|
|
33,092
|
|
|
32,951
|
|
|
32,775
|
|
|
32,578
|
|
|
|||||
Shares outstanding at end of period
|
33,365
|
|
|
33,176
|
|
|
33,017
|
|
|
32,934
|
|
|
32,682
|
|
|
|||||
Closing market price per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
$
|
23.31
|
|
|
$
|
26.25
|
|
|
$
|
25.00
|
|
|
$
|
25.55
|
|
|
$
|
23.76
|
|
|
Low
|
$
|
15.59
|
|
|
$
|
15.00
|
|
|
$
|
14.85
|
|
|
$
|
11.68
|
|
|
$
|
12.63
|
|
|
End of year
|
$
|
22.35
|
|
|
$
|
15.86
|
|
|
$
|
19.20
|
|
|
$
|
24.00
|
|
|
$
|
13.62
|
|
|
Total return to shareholders (d)
|
43.8
|
%
|
|
(15.1
|
)%
|
|
(18.2
|
)%
|
|
79.4
|
%
|
|
(37.6
|
)%
|
|
|||||
Financial Position:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
712,668
|
|
|
$
|
707,373
|
|
|
$
|
755,743
|
|
|
$
|
651,162
|
|
|
$
|
623,260
|
|
|
Cash and cash equivalents
|
$
|
31,422
|
|
|
$
|
34,397
|
|
|
$
|
36,491
|
|
|
$
|
29,511
|
|
|
$
|
44,156
|
|
|
Debt
|
$
|
42,000
|
|
|
$
|
101,500
|
|
|
$
|
152,000
|
|
|
$
|
95,000
|
|
|
$
|
104,000
|
|
|
Shareholders’ equity (net book value)
|
$
|
376,749
|
|
|
$
|
354,857
|
|
|
$
|
343,780
|
|
|
$
|
310,783
|
|
|
$
|
272,748
|
|
|
Equity market capitalization (e)
|
$
|
745,709
|
|
|
$
|
526,172
|
|
|
$
|
633,935
|
|
|
$
|
790,411
|
|
|
$
|
445,131
|
|
|
Net Sales (f)
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Aluminum Extrusions
|
$
|
529,602
|
|
|
$
|
573,126
|
|
|
$
|
466,833
|
|
|
$
|
360,098
|
|
|
$
|
375,457
|
|
PE Films
|
272,758
|
|
|
332,488
|
|
|
352,459
|
|
|
331,146
|
|
|
385,550
|
|
|||||
Flexible Packaging Films
|
133,935
|
|
|
123,830
|
|
|
108,355
|
|
|
108,028
|
|
|
105,332
|
|
|||||
Total net sales
|
936,295
|
|
|
1,029,444
|
|
|
927,647
|
|
|
799,272
|
|
|
866,339
|
|
|||||
Add back freight
|
36,063
|
|
|
36,027
|
|
|
33,683
|
|
|
29,069
|
|
|
29,838
|
|
|||||
Sales as shown in Consolidated Statements of Income
|
$
|
972,358
|
|
|
$
|
1,065,471
|
|
|
$
|
961,330
|
|
|
$
|
828,341
|
|
|
$
|
896,177
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
As of December 31
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Aluminum Extrusions
|
$
|
265,027
|
|
|
$
|
281,372
|
|
|
$
|
268,127
|
|
|
$
|
147,639
|
|
|
$
|
136,935
|
|
PE Films
|
230,415
|
|
|
231,720
|
|
|
289,514
|
|
|
278,558
|
|
|
270,236
|
|
|||||
Flexible Packaging Films
|
74,016
|
|
|
58,964
|
|
|
49,915
|
|
|
156,836
|
|
|
146,253
|
|
|||||
Subtotal
|
569,458
|
|
|
572,056
|
|
|
607,556
|
|
|
583,033
|
|
|
553,424
|
|
|||||
General corporate
|
111,788
|
|
|
100,920
|
|
|
111,696
|
|
|
38,618
|
|
|
25,680
|
|
|||||
Cash and cash equivalents
|
31,422
|
|
|
34,397
|
|
|
36,491
|
|
|
29,511
|
|
|
44,156
|
|
|||||
Total
|
$
|
712,668
|
|
|
$
|
707,373
|
|
|
$
|
755,743
|
|
|
$
|
651,162
|
|
|
$
|
623,260
|
|
EBITDA from Ongoing Operations (l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Aluminum Extrusions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ongoing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EBITDA
|
65,683
|
|
|
|
65,479
|
|
|
|
58,524
|
|
|
|
46,967
|
|
|
|
40,131
|
|
|
|||||
Depreciation & amortization
|
(16,719
|
)
|
|
|
(16,866
|
)
|
|
|
(15,070
|
)
|
|
|
(9,173
|
)
|
|
|
(9,698
|
)
|
|
|||||
EBIT (m)
|
48,964
|
|
|
|
48,613
|
|
|
|
43,454
|
|
|
|
37,794
|
|
|
|
30,433
|
|
|
|||||
Plant shutdowns, asset impairments, restructurings and other
|
(561
|
)
|
(a)
|
|
(505
|
)
|
(a)
|
|
321
|
|
(a)
|
|
(741
|
)
|
(b)
|
|
(708
|
)
|
(b)
|
|||||
Trade name accelerated amortization
|
(10,040
|
)
|
(j)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|||||
PE Films:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ongoing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EBITDA
|
37,803
|
|
|
|
51,058
|
|
|
|
55,889
|
|
|
|
39,350
|
|
|
|
63,398
|
|
|
|||||
Depreciation & amortization (j)
|
(14,627
|
)
|
|
|
(14,877
|
)
|
|
|
(14,343
|
)
|
|
|
(13,038
|
)
|
|
|
(15,123
|
)
|
|
|||||
EBIT (m)
|
23,176
|
|
|
|
36,181
|
|
|
|
41,546
|
|
|
|
26,312
|
|
|
|
48,275
|
|
|
|||||
Plant shutdowns, asset impairments, restructurings and other
|
(475
|
)
|
(a)
|
|
(5,905
|
)
|
(a)
|
|
(4,905
|
)
|
(a)
|
|
(4,602
|
)
|
(b)
|
|
(4,180
|
)
|
(b)
|
|||||
Goodwill impairment charge
|
—
|
|
|
|
(46,792
|
)
|
(c)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|||||
Flexible Packaging Films:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ongoing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EBITDA
|
14,737
|
|
|
|
11,154
|
|
|
|
7,817
|
|
|
|
11,279
|
|
|
|
15,149
|
|
|
|||||
Depreciation & amortization
|
(1,517
|
)
|
|
|
(1,262
|
)
|
|
|
(10,443
|
)
|
|
|
(9,505
|
)
|
|
|
(9,697
|
)
|
|
|||||
EBIT (m)
|
13,220
|
|
|
|
9,892
|
|
|
|
(2,626
|
)
|
|
|
1,774
|
|
|
|
5,452
|
|
|
|||||
Plant shutdowns, asset impairments, restructurings and other
|
—
|
|
|
|
(45
|
)
|
(a)
|
|
(89,398
|
)
|
(a)
|
|
(214
|
)
|
(b)
|
|
(185
|
)
|
(b)
|
|||||
Goodwill impairment charge
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(44,465
|
)
|
(c)
|
|||||
Total
|
74,284
|
|
|
|
41,439
|
|
|
|
(11,608
|
)
|
|
|
60,323
|
|
|
|
34,622
|
|
|
|||||
Interest income
|
296
|
|
|
|
369
|
|
|
|
209
|
|
|
|
261
|
|
|
|
294
|
|
|
|||||
Interest expense
|
4,051
|
|
|
|
5,702
|
|
|
|
6,170
|
|
|
|
3,806
|
|
|
|
3,502
|
|
|
|||||
Gain (loss) on investment in kaléo accounted for under the fair value method (g)
|
28,482
|
|
|
|
30,600
|
|
|
|
33,800
|
|
|
|
1,600
|
|
|
|
(20,500
|
)
|
|
|||||
Loss on sale of investment property
|
—
|
|
|
|
(38
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|||||
Unrealized loss on investment property
|
—
|
|
|
|
(186
|
)
|
|
|
—
|
|
|
|
(1,032
|
)
|
|
|
—
|
|
|
|||||
Stock option-based compensation expense
|
4,209
|
|
|
|
1,221
|
|
|
|
264
|
|
|
|
56
|
|
|
|
483
|
|
|
|||||
Corporate expenses, net (k)
|
36,630
|
|
(a)
|
|
28,893
|
|
(a)
|
|
30,879
|
|
(a)
|
|
29,607
|
|
(b)
|
|
33,638
|
|
(b)
|
|||||
Income (loss) before income taxes
|
58,172
|
|
|
|
36,368
|
|
|
|
(14,912
|
)
|
|
|
27,683
|
|
|
|
(23,207
|
)
|
|
|||||
Income tax expense (benefit)
|
9,913
|
|
|
|
11,526
|
|
|
|
(53,163
|
)
|
|
|
3,217
|
|
|
|
8,928
|
|
|
|||||
Net income (loss)
|
$
|
48,259
|
|
|
|
$
|
24,842
|
|
|
|
$
|
38,251
|
|
|
|
$
|
24,466
|
|
|
|
$
|
(32,135
|
)
|
|
Depreciation and Amortization
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Aluminum Extrusions
|
$
|
26,759
|
|
|
$
|
16,866
|
|
|
$
|
15,070
|
|
|
$
|
9,173
|
|
|
$
|
9,698
|
|
PE Films
|
15,822
|
|
|
15,513
|
|
|
14,609
|
|
|
13,653
|
|
|
15,480
|
|
|||||
Flexible Packaging Films
|
1,517
|
|
|
1,262
|
|
|
10,443
|
|
|
9,505
|
|
|
9,697
|
|
|||||
Subtotal
|
44,098
|
|
|
33,641
|
|
|
40,122
|
|
|
32,331
|
|
|
34,875
|
|
|||||
General corporate (k)
|
186
|
|
|
163
|
|
|
155
|
|
|
141
|
|
|
107
|
|
|||||
Total depreciation and amortization expense
|
$
|
44,284
|
|
|
$
|
33,804
|
|
|
$
|
40,277
|
|
|
$
|
32,472
|
|
|
$
|
34,982
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Aluminum Extrusions
|
$
|
17,855
|
|
|
$
|
12,966
|
|
|
$
|
25,653
|
|
|
$
|
15,918
|
|
|
$
|
8,124
|
|
PE Films
|
23,920
|
|
|
21,998
|
|
|
15,029
|
|
|
25,759
|
|
|
21,218
|
|
|||||
Flexible Packaging Films
|
8,866
|
|
|
5,423
|
|
|
3,619
|
|
|
3,391
|
|
|
3,489
|
|
|||||
Subtotal
|
50,641
|
|
|
40,387
|
|
|
44,301
|
|
|
45,068
|
|
|
32,831
|
|
|||||
General corporate
|
223
|
|
|
427
|
|
|
61
|
|
|
389
|
|
|
—
|
|
|||||
Total capital expenditures
|
$
|
50,864
|
|
|
$
|
40,814
|
|
|
$
|
44,362
|
|
|
$
|
45,457
|
|
|
$
|
32,831
|
|
(a)
|
For a description of plant shutdowns, asset impairments, restructurings and other charges for 2019, 2018, and 2017, see the plant shutdowns, asset impairments, restructurings and other tables for 2019, 2018 and 2017 in Results of Continuing Operations “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Form 10-K.
|
(b)
|
For a description of plant shutdowns, asset impairments, restructurings and other charges for 2016 and 2015, see “Selected Financial Data” in Part II, Item 6 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K“), Part II, Item 6.
|
(c)
|
Results for 2018 included a goodwill impairment charge of $46.8 million ($38.2 million after taxes) recognized in PE Films in the third quarter of 2018 upon completion of an impairment analysis performed as of September 30, 2018. Results for 2015 included a goodwill impairment charge of $44.5 million ($44.5 million after taxes) recognized in Flexible Packaging Films in the third quarter of 2015 upon completion of an impairment analysis performed as of September 30, 2015.
|
(d)
|
Total return to shareholders is defined as the change in stock price during the year plus dividends per share, divided by the stock price at the beginning of the year.
|
(e)
|
Equity market capitalization is the closing market price per share for the period multiplied by the shares outstanding at the end of the period.
|
(f)
|
Net sales represents gross sales less freight. The Company uses net sales as its measure of revenues from external customers at the segment level.
|
(g)
|
The gains and losses on the Company’s investment in kaléo are included in “Other income (expense), net” in the consolidated statements of income. See Note 4 to the Notes to financial statements for more details for the years 2019, 2018 and 2017.
|
(h)
|
Equity per share is computed by dividing shareholders’ equity at year end by the shares outstanding at year end.
|
(i)
|
For the years ended December 31, 2015 to 2017, the pension and postretirement benefit expenses recorded in Cost of goods sold and Selling, general and administrative expenses were reclassified to a new line item, Pension and postretirement benefits, on the consolidated statements of income, due to the retrospective adoption of Accounting Standards Update (“ASU”) 2017-07.
|
(j)
|
Depreciation and amortization (“D&A”) in 2019 for Aluminum Extrusions excludes $10.0 million for accelerated amortization of trade names as a result of a rebranding initiative. D&A in 2019, 2018, 2017, 2016 and 2015 for PE Films excludes $1.2 million, $0.6 million, $0.3 million, $0.6 million and $0.4 million, respectively, for accelerated depreciation associated with restructurings and plant closures.
|
(k)
|
Corporate depreciation and amortization is included in Corporate expenses, net, on the EBITDA from ongoing operations table above.
|
(l)
|
In the fourth quarter of 2019, the Company changed its segment measure of profit and loss from operating profit from ongoing operations to EBITDA (earnings before interest, taxes, depreciation and amortization) from ongoing operations. EBITDA from ongoing operations is the key profitability metric used by the Company’s chief operating decision maker to assess segment financial performance. See Note 5 to the Notes to Financial Statements in this 2019 Form 10-K for additional business segment information.
|
(m)
|
EBIT (earnings before interest and taxes) from ongoing operations is a non-GAAP financial measure included in the reconciliation of segment financial information to consolidated results for the Company. It is not intended to represent the stand-alone results for Tredegar’s ongoing operations under GAAP and should not be considered as an alternative to net income as defined by GAAP. EBIT is a widely understood and utilized metric that is meaningful to certain investors. We believe that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
An after-tax gain on the sale of the Company’s Shanghai manufacturing property of $5.9 million ($0.18 per share);
|
•
|
An after-tax dividend received from kaléo of $14.8 million ($0.45 per share); and
|
•
|
An unrealized after-tax gain on the Company’s investment in kaléo of $8.5 million ($0.26 per share), which is accounted for under the fair value method (see Note 4 for more details);
|
•
|
An after-tax impairment of the total goodwill balance of PE Films’ Personal Care division of $38.2 million ($1.15 per share after-tax). See the Customer Product Transitions in Personal Care and Surface Protection section below and Note 8 to the Notes to Financial Statements for more details; and
|
•
|
An unrealized after-tax gain on the Company’s investment in kaléo of $23.9 million ($0.72 per share);
|
|
|
|
Year Ended
|
|
Favorable/
|
|||||||
(In thousands, except percentages)
|
|
|
December 31,
|
|
(Unfavorable)
|
|||||||
|
|
2019
|
|
2018
|
|
% Change
|
||||||
Sales volume (lbs)
|
|
|
104,497
|
|
|
123,583
|
|
|
(15.4
|
)%
|
||
Net sales
|
|
|
$
|
272,758
|
|
|
$
|
332,488
|
|
|
(18.0
|
)%
|
Ongoing operations:
|
|
|
|
|
|
|
|
|||||
EBITDA
|
|
|
$
|
37,803
|
|
|
$
|
51,058
|
|
|
(26.0
|
)%
|
Depreciation & amortization
|
|
|
(14,627
|
)
|
|
(14,877
|
)
|
|
1.7
|
%
|
||
EBIT*
|
|
|
$
|
23,176
|
|
|
$
|
36,181
|
|
|
(35.9
|
)%
|
Capital expenditures
|
|
|
$
|
23,920
|
|
|
$
|
21,998
|
|
|
|
|
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP and additional information.
|
•
|
A $6.8 million increase from Surface Protection, primarily due to higher selling prices ($6.0 million), quality claims in 2018 that did not recur in 2019 ($1.2 million), production efficiencies ($1.4 million), and favorable raw material costs ($1.9 million), partially offset by unfavorable mix (net impact of $2.0 million) and higher fixed manufacturing and general and administrative costs ($1.5 million); and
|
•
|
A $19.6 million decrease from Personal Care, primarily due to lower volume and unfavorable mix ($19.3 million), unfavorable pricing ($4.8 million), and production inefficiencies ($3.8 million), partially offset by the timing in the passthrough of changes in resin prices ($2.1 million), lower fixed manufacturing ($4.4 million) and selling, general and administrative costs ($1.8 million).
|
•
|
Higher volume ($2.6 million) and higher selling prices ($1.6 million), partially offset by higher fixed and variable costs, including costs related to a restarted line ($2.0 million);
|
•
|
Net favorable foreign currency translation of Real-denominated operating costs of $0.4 million; and
|
•
|
Foreign currency transaction gains of $1.0 million in 2019 versus losses of $0.8 million in 2018.
|
(In millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Debt
|
|
$
|
42.0
|
|
|
$
|
101.5
|
|
Less: Cash and cash equivalents
|
|
31.4
|
|
|
34.4
|
|
||
Net debt
|
|
$
|
10.6
|
|
|
$
|
67.1
|
|
(In millions, except percentages)
|
2019
|
|
2018
|
||||
Floating-rate debt with interest charged on a rollover
|
|
|
|
||||
basis at one-month LIBOR plus a credit spread:
|
|
|
|
||||
Average outstanding debt balance
|
$
|
85.0
|
|
|
$
|
121.3
|
|
Average interest rate
|
4.0
|
%
|
|
3.8
|
%
|
(In thousands)
|
Year Ended
December 31, |
|
|
||||||||
|
2019
|
|
2018
|
|
Variance
|
||||||
Aluminum Extrusions
|
$
|
265,027
|
|
|
$
|
281,372
|
|
|
$
|
(16,345
|
)
|
PE Films
|
230,415
|
|
|
231,720
|
|
|
(1,305
|
)
|
|||
Flexible Packaging Films
|
74,016
|
|
|
58,964
|
|
|
15,052
|
|
|||
Subtotal
|
569,458
|
|
|
572,056
|
|
|
(2,598
|
)
|
|||
General corporate
|
111,788
|
|
|
100,920
|
|
|
10,868
|
|
|||
Cash and cash equivalents
|
31,422
|
|
|
34,397
|
|
|
(2,975
|
)
|
|||
Total
|
$
|
712,668
|
|
|
$
|
707,373
|
|
|
$
|
5,295
|
|
•
|
Higher volume ($5.1 million) and favorable mix ($5.8 million), which were offset by higher employee-related costs ($5.2 million), higher supplies and maintenance ($2.3 million), higher freight ($1.7 million), and higher utilities, primarily in the first quarter of 2018 at the Newnan, Georgia facility ($0.9 million).
|
|
|
Year Ended
|
|
Favorable/
|
||||||
(In thousands, except percentages)
|
|
December 31,
|
|
(Unfavorable)
|
||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Sales volume (lbs)
|
|
123,583
|
|
|
138,999
|
|
|
(11.1)%
|
||
Net sales
|
|
$
|
332,488
|
|
|
$
|
352,459
|
|
|
(5.7)%
|
Ongoing operations:
|
|
|
|
|
|
|
||||
EBITDA
|
|
$
|
51,058
|
|
|
$
|
55,889
|
|
|
(8.6)%
|
Depreciation & amortization
|
|
(14,877
|
)
|
|
(14,343
|
)
|
|
3.7%
|
||
EBIT*
|
|
$
|
36,181
|
|
|
$
|
41,546
|
|
|
(12.9)%
|
Capital expenditures
|
|
$
|
21,998
|
|
|
$
|
15,029
|
|
|
|
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP and additional information.
|
•
|
The volume decline in Personal Care was primarily related to topsheet business lost from competitive pressures in North America, Europe and Asia, including at the Shanghai, China, facility that was shut down in the fourth quarter of 2018. A small portion of the volume decline was associated with the start of a customer product transition. Volume for elastics products in Personal Care increased year-over-year; and
|
•
|
Slightly lower sales in Surface Protection caused by lower volume and the adverse impact of quality claims, partially offset by higher volume-based selling prices.
|
•
|
Lower contribution to profits from Personal Care, primarily due to lower volume and unfavorable product mix ($9.3 million), partially offset by volume-based higher selling pricing ($2.2 million), lower fixed and selling, general and administrative costs ($1.1 million), the timing of resin cost passthroughs ($0.7 million), productivity improvements ($0.3 million) and net favorable impact from the change in U.S. Dollar value of currencies for operations outside of the U.S. ($0.8 million);
|
•
|
Lower contribution to profits from Surface Protection, primarily due to lower volumes and unfavorable product mix ($4.1 million), the adverse impact of quality claims ($1.3 million), higher fixed and other manufacturing costs ($1.6 million), higher research and development spending and selling, general and administrative costs ($0.4 million) and higher freight costs ($0.5 million), partially offset by volume-based higher selling prices ($4.4 million); and
|
•
|
Realized cost savings associated with the North American consolidation of our PE Films manufacturing facilities completed in 2017 ($2.4 million).
|
|
Year Ended
|
|
Favorable/
(Unfavorable) % Change |
|||||||
(In thousands, except percentages)
|
December 31,
|
|
||||||||
2018
|
|
2017
|
|
|||||||
Sales volume (lbs)
|
98,994
|
|
|
89,325
|
|
|
10.8
|
%
|
||
Net sales
|
$
|
123,830
|
|
|
$
|
108,355
|
|
|
14.3
|
%
|
Ongoing operations:
|
|
|
|
|
|
|||||
EBITDA
|
$
|
11,154
|
|
|
$
|
7,817
|
|
|
42.7
|
%
|
Depreciation & amortization
|
(1,262
|
)
|
|
(10,443
|
)
|
|
(87.9
|
)%
|
||
EBIT*
|
$
|
9,892
|
|
|
$
|
(2,626
|
)
|
|
N/A
|
|
Capital expenditures
|
$
|
5,423
|
|
|
$
|
3,619
|
|
|
|
|
* See the table in Item 6 for a reconciliation of this non-GAAP measure to GAAP and additional information.
|
•
|
A benefit from higher volume ($5.5 million) and favorable tax incentives ($1.3 million), partially offset by the unfavorable impact of mix and higher resin costs, net of higher selling prices ($2.2 million);
|
•
|
Higher fixed and other manufacturing costs and selling, general and administrative costs, primarily related to higher volume ($2.0 million);
|
•
|
Favorable foreign currency translation of Real-denominated operating costs ($3.2 million), which was offset by a $1.7 million loss on foreign currency forward contracts that partially hedged Real-denominated operating costs; and
|
•
|
Unfavorable net foreign currency transaction impact ($0.6 million) resulting from foreign currency transaction losses of $0.8 million in 2018 and losses of $0.2 million in 2017.
|
($ in millions)
|
Q1
|
Q2
|
Q3
|
Q4
|
|
2017
|
|||||||||||||
Aluminum Extrusions:
|
|
|
|
|
|
|
|||||||||||||
Losses associated with plant shutdowns, asset impairments and restructurings:
|
|
|
|
|
|
|
|||||||||||||
|
Other restructuring costs - severance
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
||
|
Kentland shutdown - settlement of claims and other costs
|
—
|
|
—
|
|
0.2
|
|
—
|
|
|
0.2
|
|
|||||||
|
|
Total
|
—
|
|
—
|
|
0.2
|
|
0.1
|
|
|
0.3
|
|
||||||
|
|
|
|
|
|
|
|
|
|||||||||||
(Gains) losses from sale of assets, investment writedowns and other items:
|
|
|
|
|
|
|
|||||||||||||
Aluminum Extrusions:
|
|
|
|
|
|
|
|||||||||||||
|
Estimated excess costs associated with ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects1
|
0.3
|
|
0.1
|
|
0.1
|
|
—
|
|
|
0.5
|
|
|||||||
|
(Gains) losses related to the explosion at the Newnan, Georgia facility in June 2016:
|
|
|
|
|
|
|
||||||||||||
|
|
Gain on involuntary conversion of damaged plant3
|
—
|
|
—
|
|
—
|
|
(5.3
|
)
|
|
(5.3
|
)
|
||||||
|
|
Other excess production costs and adjustments1
|
0.3
|
|
(0.9
|
)
|
—
|
|
0.2
|
|
|
(0.4
|
)
|
||||||
|
|
Non-reimbursable legal and consulting fees2
|
0.1
|
|
—
|
|
—
|
|
—
|
|
|
0.1
|
|
||||||
|
(Gains) losses related to the acquisition and integration of Futura:
|
|
|
|
|
|
|
||||||||||||
|
|
Fair valuation of earnout provision3
|
—
|
|
(0.7
|
)
|
—
|
|
—
|
|
|
(0.7
|
)
|
||||||
|
|
Acquisition costs2
|
1.5
|
|
—
|
|
—
|
|
—
|
|
|
1.5
|
|
||||||
|
|
Integration costs2
|
0.1
|
|
—
|
|
—
|
|
—
|
|
|
0.1
|
|
||||||
|
|
Accounting adjustments upon inventory revaluation1
|
1.7
|
|
—
|
|
—
|
|
—
|
|
|
1.7
|
|
||||||
|
Environmental charges Newnan, Georgia and Carthage, Tennessee plants1
|
0.4
|
|
—
|
|
—
|
|
1.5
|
|
|
1.9
|
|
|||||||
Subtotal for Aluminum Extrusions
|
4.4
|
|
(1.5
|
)
|
0.1
|
|
(3.6
|
)
|
|
(0.6
|
)
|
||||||||
|
|
Total for Aluminum Extrusions
|
$
|
4.4
|
|
$
|
(1.5
|
)
|
$
|
0.3
|
|
$
|
(3.5
|
)
|
|
$
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
PE Films:
|
|
|
|
|
|
|
|||||||||||||
(Gains) losses associated with plant shutdowns, asset impairments and restructurings:
|
|
|
|
|
|
|
|||||||||||||
|
Lake Zurich plant downsizing and restructuring:
|
|
|
|
|
|
|
||||||||||||
|
|
Severance & employee-related expenses
|
$
|
0.2
|
|
$
|
(0.3
|
)
|
$
|
—
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
|
|
Accelerated depreciation1
|
0.2
|
|
0.1
|
|
—
|
|
—
|
|
|
0.3
|
|
||||||
|
|
Other exit & disposal costs
|
0.1
|
|
—
|
|
—
|
|
—
|
|
|
0.1
|
|
||||||
|
|
Other costs related to the downsizing1
|
0.2
|
|
0.2
|
|
0.1
|
|
—
|
|
|
0.5
|
|
||||||
|
Other restructuring costs - severance
|
—
|
|
—
|
|
0.1
|
|
0.1
|
|
|
0.2
|
|
|||||||
|
Asset impairments at the Hungary production facility
|
—
|
|
—
|
|
—
|
|
0.3
|
|
|
0.3
|
|
|||||||
Subtotal for PE Films
|
0.7
|
|
—
|
|
0.2
|
|
0.4
|
|
|
1.3
|
|
||||||||
|
|
|
|
|
|
|
|||||||||||||
Losses from sale of assets, investment writedowns and other items:
|
|
|
|
|
|
|
|||||||||||||
|
Estimated excess costs associated with ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects1
|
1.5
|
|
0.9
|
|
0.6
|
|
0.6
|
|
|
3.6
|
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Total for PE Films
|
$
|
2.2
|
|
$
|
0.9
|
|
$
|
0.8
|
|
$
|
1.0
|
|
|
$
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Flexible Packaging:
|
|
|
|
|
|
|
|||||||||||||
(Gains) losses from sale of assets, investment writedowns and other items:
|
|
|
|
|
|
|
|||||||||||||
|
Impairment of assets
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
101.3
|
|
|
$
|
101.3
|
|
||
|
Terphane acquisition escrow payout gain3
|
—
|
|
(11.9
|
)
|
—
|
|
—
|
|
|
(11.9
|
)
|
|||||||
Subtotal for Flexible Packaging
|
$
|
—
|
|
$
|
(11.9
|
)
|
$
|
—
|
|
$
|
101.3
|
|
|
$
|
89.4
|
|
|||
|
|
|
|
|
|
|
|
|
•
|
Accounts and other receivables decreased $17.2 million (13.8%).
|
•
|
Accounts and other receivables in Aluminum Extrusions decreased by $11.6 million primarily due to lower sales. DSO (computed using trailing 12 months net sales and a rolling 12-month average of accounts and other receivables balances) was approximately 48.5 days in 2019 and 44.6 days in 2018.
|
•
|
Accounts and other receivables in PE Films decreased by $7.0 million due mainly to lower net sales for Personal Care products. DSO was approximately 44.0 days in 2019 and 43.2 days in 2018.
|
•
|
Accounts and other receivables in Flexible Packaging Films increased by $1.5 million primarily due to higher sales. DSO was approximately 37.7 days in 2019 and 43.7 days in 2018.
|
•
|
Inventories decreased $12.4 million (13.3%).
|
•
|
Inventories in Aluminum Extrusions decreased by $5.4 million primarily due to a decrease in raw material prices and reduced purchases of inventory in light of lower sales. DIO (computed using trailing 12 months costs of goods sold calculated on a first in, first out basis and a rolling 12-month average of inventory balances calculated on the first-in, first-out basis) was approximately 38.6 days in 2019 and 33.5 days in 2018.
|
•
|
Inventories in PE Films decreased by $2.1 million primarily due to lower sales and the timing of raw material purchases. DIO was approximately 55.7 days in 2019 and 54.9 days in 2018.
|
•
|
Inventories in Flexible Packaging Films decreased by $5.0 million primarily due to a reduction of finished goods on hand and an overall reduction in raw material levels. DIO was approximately 94.3 days in 2019 and 77.9 days in 2018.
|
•
|
Net property, plant and equipment increased by $14.5 million (6.4%) primarily due to capital expenditures of $50.9 million, offset by depreciation of $30.7 million and the disposal of fixed assets ($2.1 million decrease).
|
•
|
Identifiable intangible assets decreased by $13.7 million (37.6%) primarily due to amortization expense of $13.6 million, including $10.0 million of accelerated amortization of trade names associated with the Bonnell Aluminum rebranding initiative. For information on the rebranding initiative, see Note 8.
|
•
|
Accounts payable decreased by $9.1 million (8.1%).
|
•
|
Accounts payable in Aluminum Extrusions decreased by $6.5 million, primarily due to lower volume, a decrease in metal prices and the normal volatility associated with the timing of payments. DPO (computed using trailing 12 months costs of goods sold calculated on a first in, first out basis and a rolling 12-month average of accounts payable balances) was approximately 49.9 days in 2019 and 49.7 days in 2018.
|
•
|
Accounts payable in PE Films decreased by $0.9 million primarily due to the normal volatility associated with the timing of payments. DPO was approximately 44.9 days in 2019 and 43.7 days in 2018.
|
•
|
Accounts payable in Flexible Packaging Films decreased by $1.3 million, primarily due to lower inventory levels and the normal volatility associated with the timing of payments. DPO was approximately 55.2 days in 2019 and 51.9 days in 2018.
|
•
|
Accrued expenses increased by $3.3 million (7.8%) from December 31, 2018 due to normal fluctuations in the accrual accounts.
|
•
|
Net noncurrent deferred income tax assets in excess of noncurrent deferred income tax liabilities decreased by $1.3 million primarily due to numerous changes between years in the balance of the components shown in the December 31, 2019 and 2018 schedule of deferred income tax assets and liabilities provided in Note 16. The Company had a current income tax receivable of $4.1 million at December 31, 2019 compared to a current income tax receivable of $6.8 million at December 31, 2018. The change is primarily due to timing of tax payments and refunds from net operating losses and tax credits carried back to prior years.
|
Computations of Adjusted EBITDA, Leverage Ratio and Interest Coverage Ratio as Defined in the Revolving Credit Agreement Along with Related Most Restrictive Covenants
|
|||
As of and for the Twelve Months Ended December 31, 2019 (In thousands)
|
|||
Computations of adjusted EBITDA as defined in revolving credit agreement for the twelve months ended December 31, 2019
|
|||
Net income
|
$
|
48,259
|
|
Plus:
|
|
||
After-tax losses related to discontinued operations
|
—
|
|
|
Total income tax expense for continuing operations
|
9,913
|
|
|
Interest expense
|
4,051
|
|
|
Depreciation and amortization expense for continuing operations
|
44,284
|
|
|
All non-cash losses and expenses, plus cash losses and expenses not to exceed $10,000, for continuing operations that are classified as unusual, extraordinary or which are related to plant shutdowns, asset impairments and/or restructurings (cash-related of $10,000)
|
11,116
|
|
|
Charges related to stock option grants and awards accounted for under the fair value-based method
|
4,209
|
|
|
Losses related to the application of the equity method of accounting
|
—
|
|
|
Losses related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting
|
—
|
|
|
Minus:
|
|
||
After-tax income related to discontinued operations
|
—
|
|
|
Total income tax benefits for continuing operations
|
—
|
|
|
Interest income
|
(296
|
)
|
|
All non-cash gains and income, plus cash gains and income in excess of $10,000, for continuing operations that are classified as unusual, extraordinary or which are related to plant shutdowns, asset impairments and/or restructurings
|
—
|
|
|
Income related to changes in estimates for stock option grants and awards accounted for under the fair value-based method
|
—
|
|
|
Income related to the application of the equity method of accounting
|
—
|
|
|
Income related to adjustments in the estimated fair value of assets accounted for under the fair value method of accounting
|
(28,482
|
)
|
|
Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period
|
10,000
|
|
|
Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions
|
—
|
|
|
Adjusted EBITDA as defined in revolving credit agreement
|
$
|
103,054
|
|
Computations of leverage and interest coverage ratios as defined in revolving credit agreement at December 31, 2019:
|
|||
Leverage ratio (indebtedness-to-adjusted EBITDA)
|
.41x
|
|
|
Interest coverage ratio (adjusted EBITDA-to-interest expense)
|
25.44x
|
|
|
Most restrictive covenants as defined in revolving credit agreement:
|
|
||
Maximum permitted aggregate amount of dividends that can be paid by Tredegar during the term of the revolving credit agreement ($100,000 plus 50% of net income generated for each quarter beginning April 1, 2019)
|
$
|
145,805
|
|
Maximum leverage ratio permitted
|
4.00x
|
|
|
Minimum interest coverage ratio permitted
|
3.00x
|
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
(In millions)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Remainder
|
|
Total
|
||||||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Principal payments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42.0
|
|
|
$
|
—
|
|
|
$
|
42.0
|
|
Estimated interest expense
|
1.4
|
|
|
1.4
|
|
|
1.4
|
|
|
1.4
|
|
|
0.7
|
|
|
—
|
|
|
6.3
|
|
|||||||
Estimated contributions required: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Defined benefit plans
|
12.3
|
|
|
11.1
|
|
|
14.3
|
|
|
13.2
|
|
|
13.9
|
|
|
29.5
|
|
|
94.3
|
|
|||||||
Other postretirement benefits
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
2.1
|
|
|
4.6
|
|
|||||||
Capital expenditure commitments
|
2.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|||||||
Leases(2)
|
4.7
|
|
|
3.6
|
|
|
2.6
|
|
|
2.4
|
|
|
2.4
|
|
|
9.8
|
|
|
25.5
|
|
|||||||
Estimated obligations relating to uncertain tax positions (3)
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
0.9
|
|
|||||||
Other (4)
|
3.7
|
|
|
2.3
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|||||||
Total
|
$
|
25.0
|
|
|
$
|
18.9
|
|
|
$
|
19.4
|
|
|
$
|
17.5
|
|
|
$
|
59.5
|
|
|
$
|
42.2
|
|
|
$
|
182.5
|
|
(1)
|
Estimated minimum required contributions for defined benefit plans and benefit payments for other postretirement plans are based on actuarial estimates using current assumptions for discount rates, long-term rate of return on plan assets, rate of compensation increases and health care cost trends. The expected defined benefit plan contribution estimates for 2020 through 2029 were determined under provisions of the Pension Protection Act of 2006 using the preliminary assumptions chosen by Tredegar for the 2020 plan year. Tredegar has determined that it is not practicable to present defined benefit contributions and other postretirement benefit payments beyond 2029.
|
(2)
|
Contractual lease payments for 2020 include $0.4 million of short term lease payments and $0.5 million of variable lease costs.
|
(3)
|
Amounts for which reasonable estimates about the timing of payments cannot be made are included in the remainder column.
|
(4)
|
Includes contractual severance and other miscellaneous contractual arrangements.
|
Source: Quarterly averages computed by Tredegar using monthly data provided by IHS, Inc. In January 2015, IHS reflected a 21 cents per pound non-market adjustment based on their estimate of the growth of discounts in prior periods. The 4th quarter 2014 average rate of $1.09 per pound is shown on a pro forma basis as if the non-market adjustment was made in the fourth quarter of 2014.
|
Source: Quarterly averages computed by Tredegar using monthly data from CMAI Global Index data.
|
Source: Quarterly averages computed by Tredegar using monthly data from CMAI Global Index data.
|
Source: Quarterly averages computed by Tredegar using daily Midwest average prices provided by Platts.
|
Source: Quarterly averages computed by Tredegar using monthly NYMEX settlement prices.
|
Tredegar Corporation - Continuing Operations
Percentage of Net Sales and Total Assets Related to Foreign Markets
|
||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||||||||
|
% of Total
|
|
% Total
Assets -
Foreign
Oper-
ations *
|
|
% of Total
|
|
% Total
Assets -
Foreign
Oper-
ations *
|
|
% of Total
|
|
% Total
Assets -
Foreign
Oper-
ations *
|
|||||||||||||||
|
Net Sales *
|
|
|
Net Sales *
|
|
|
Net Sales *
|
|
||||||||||||||||||
|
Exports
From
U.S.
|
|
Foreign
Oper-
ations
|
|
|
Exports
From
U.S.
|
|
Foreign
Oper-
ations
|
|
|
Exports
From
U.S.
|
|
Foreign
Oper-
ations
|
|
||||||||||||
Canada
|
2
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
Europe
|
1
|
|
|
7
|
|
|
5
|
|
|
1
|
|
|
8
|
|
|
6
|
|
|
1
|
|
|
9
|
|
|
6
|
|
Latin America
|
1
|
|
|
12
|
|
|
8
|
|
|
1
|
|
|
10
|
|
|
8
|
|
|
2
|
|
|
9
|
|
|
7
|
|
Asia
|
9
|
|
|
1
|
|
|
3
|
|
|
7
|
|
|
1
|
|
|
4
|
|
|
9
|
|
|
2
|
|
|
5
|
|
Total % exposure to foreign markets
|
13
|
|
|
20
|
|
|
16
|
|
|
14
|
|
|
19
|
|
|
18
|
|
|
17
|
|
|
20
|
|
|
18
|
|
*
|
The percentages for foreign markets are relative to Tredegar’s consolidated net sales and total assets .
|
Source: Quarterly averages computed by Tredegar using daily closing data provided by Bloomberg.
|
Source: Quarterly averages computed by Tredegar using daily closing data provided by Bloomberg.
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with the authorization of its management and directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.
|
•
|
Control Environment: The Company did not have a sufficient number of trained resources with assigned responsibility and accountability for the design, operation and documentation of internal control over financial reporting in accordance with the 2013 COSO Framework.
|
•
|
Risk Assessment: The Company did not have an effective risk assessment process that defined clear financial reporting objectives and evaluated risks, including fraud risks, and risks resulting from changes in the external environment and business operations, at a sufficient level of detail to identify all relevant risks of material misstatement across the entity.
|
•
|
Information and Communication: The Company did not have an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting and that communicates relevant information about roles and responsibilities for internal control over financial reporting.
|
•
|
Monitoring Activities: The Company did not have effective monitoring activities to assess the operation of internal control over financial reporting, including the continued appropriateness of control design and level of documentation maintained to support control effectiveness.
|
•
|
Control Activities: As a consequence of the material weaknesses described above, internal control deficiencies related to the design and operation of process-level controls and general information technology controls were determined to be pervasive throughout the Company’s financial reporting processes.
|
a.
|
Identified material processes and significant locations for the purpose of identifying risks of material misstatement to the Company’s financial statements,
|
b.
|
Conducted interviews with relevant parties to ensure our understanding of the activities involved in the recording of transactions within material processes,
|
c.
|
Substantially completed a comprehensive review and update, as necessary, of the documentation of relevant processes with respect to the Company’s internal control over financial reporting, and
|
d.
|
Documented significant elements of a comprehensive risk assessment and internal control gap analysis and commenced the validation thereof with key stakeholders.
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
|
Age
|
|
Title
|
|
John M. Steitz
|
|
61
|
|
|
President and Chief Executive Officer
|
D. Andrew Edwards
|
|
61
|
|
|
Vice President and Chief Financial Officer
|
Michael J. Schewel
|
|
66
|
|
|
Vice President, General Counsel and Corporate Secretary
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
|
Column (a)
|
|
Column (b)
|
|
Column (c)
|
||||
Plan Category
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights*
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans,
Excluding Securities
Reflected in Column (a)
|
|||||
Equity compensation plans approved by security holders
|
2,062,501
|
|
|
$
|
19.13
|
|
|
954,454
|
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
2,062,501
|
|
|
$
|
19.13
|
|
|
954,454
|
|
*
|
Includes performance stock units that give the holder the right to receive shares of Tredegar common stock upon the satisfaction of certain performance criteria.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
•
|
Information on accounting fees and services to be included in the Proxy Statement under the heading “Audit and Non-Audit Fees;” and
|
•
|
Information on the Audit Committee’s procedures for pre-approving certain audit and non-audit services to be included in the Proxy Statement under the heading “Board Meetings, Meetings of Non-Management Directors and Board Committees—Audit Committee Matters.”
|
Item 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)
|
List of documents filed as a part of the report:
|
(1)
|
Financial statements:
|
|
Page
|
Auditors’ Opinions:
|
|
Reports of Independent Registered Public Accounting Firm - KPMG LLP
|
|
Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP
|
|
Financial Statements:
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
Consolidated Statements of Income for the Years Ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 2019, 2018 and 2017
|
|
Notes to Financial Statements
|
(2)
|
Financial statement schedules:
|
(3)
|
Exhibits:
|
December 31
|
|
2019
|
|
2018
|
||||
(In thousands, except share data)
|
|
|
|
|||||
Assets
|
|
|
|
|||||
Current assets:
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
31,422
|
|
|
$
|
34,397
|
|
|
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $3,036 in 2019 and $2,937 in 2018
|
107,558
|
|
|
124,727
|
|
|||
Income taxes recoverable
|
4,100
|
|
|
6,783
|
|
|||
Inventories
|
81,380
|
|
|
93,810
|
|
|||
Prepaid expenses and other
|
8,696
|
|
|
9,564
|
|
|||
Total current assets
|
233,156
|
|
|
269,281
|
|
|||
Property, plant and equipment, at cost:
|
|
|
|
|||||
Land and land improvements
|
9,744
|
|
|
8,772
|
|
|||
Buildings
|
106,551
|
|
|
101,332
|
|
|||
Machinery and equipment
|
694,506
|
|
|
682,968
|
|
|||
Total property, plant and equipment
|
810,801
|
|
|
793,072
|
|
|||
Less accumulated depreciation
|
(567,911
|
)
|
|
(564,703
|
)
|
|||
Net property, plant and equipment
|
242,890
|
|
|
228,369
|
|
|||
Right-of-use leased assets
|
19,220
|
|
|
—
|
|
|||
Investment in kaléo (cost basis of $7,500)
|
95,500
|
|
|
84,600
|
|
|||
Identifiable intangible assets, net
|
22,636
|
|
|
36,295
|
|
|||
Goodwill
|
81,404
|
|
|
81,404
|
|
|||
Deferred income tax assets
|
13,129
|
|
|
3,412
|
|
|||
Other assets
|
4,733
|
|
|
4,012
|
|
|||
Total assets
|
$
|
712,668
|
|
|
$
|
707,373
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|||||
Accounts payable
|
$
|
103,657
|
|
|
$
|
112,758
|
|
|
Accrued expenses
|
45,809
|
|
|
42,495
|
|
|||
Lease liability, short-term
|
3,002
|
|
|
—
|
|
|||
Total current liabilities
|
152,468
|
|
|
155,253
|
|
|||
Lease liability, long-term
|
17,689
|
|
|
—
|
|
|||
Long-term debt
|
42,000
|
|
|
101,500
|
|
|||
Pension and other postretirement benefit obligations, net
|
107,446
|
|
|
88,124
|
|
|||
Deferred income tax liabilities
|
11,019
|
|
|
—
|
|
|||
Other noncurrent liabilities
|
5,297
|
|
|
7,639
|
|
|||
Total liabilities
|
335,919
|
|
|
352,516
|
|
|||
Shareholders’ equity:
|
|
|
|
|||||
Common stock (no par value):
|
|
|
|
|||||
Authorized 150,000,000 shares;
|
|
|
|
|||||
Issued and outstanding—33,365,039 shares in 2019 and 33,176,024 in 2018 (including restricted stock)
|
45,514
|
|
|
38,892
|
|
|||
Common stock held in trust for savings restoration plan (74,798 shares in 2019 and 72,883 in 2018)
|
(1,592
|
)
|
|
(1,559
|
)
|
|||
Accumulated other comprehensive income (loss):
|
|
|
|
|||||
Foreign currency translation adjustment
|
(100,663
|
)
|
|
(96,940
|
)
|
|||
Gain (loss) on derivative financial instruments
|
(1,307
|
)
|
|
(1,601
|
)
|
|||
Pension and other postretirement benefit adjustments
|
(95,681
|
)
|
|
(81,446
|
)
|
|||
Retained earnings
|
530,478
|
|
|
497,511
|
|
|||
Total shareholders’ equity
|
376,749
|
|
|
354,857
|
|
|||
Total liabilities and shareholders’ equity
|
$
|
712,668
|
|
|
$
|
707,373
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
2019
|
|
2018
|
|
2017
|
||||||
(In thousands, except per-share data)
|
|
|
|
|
|
|||||||
Revenues and other:
|
|
|
|
|
|
|||||||
Sales
|
$
|
972,358
|
|
|
$
|
1,065,471
|
|
|
$
|
961,330
|
|
|
Other income (expense), net
|
34,795
|
|
|
30,459
|
|
|
51,713
|
|
||||
|
1,007,153
|
|
|
1,095,930
|
|
|
1,013,043
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|||||||
Cost of goods sold
|
767,511
|
|
|
849,756
|
|
|
767,550
|
|
||||
Freight
|
36,063
|
|
|
36,027
|
|
|
33,683
|
|
||||
Selling, general and administrative
|
94,352
|
|
|
85,283
|
|
|
83,386
|
|
||||
Research and development
|
19,636
|
|
|
18,707
|
|
|
18,287
|
|
||||
Amortization of identifiable intangibles
|
13,601
|
|
|
3,976
|
|
|
6,198
|
|
||||
Pension and postretirement benefits
|
9,642
|
|
|
10,406
|
|
|
10,193
|
|
||||
Interest expense
|
4,051
|
|
|
5,702
|
|
|
6,170
|
|
||||
Asset impairments and costs associated with exit and disposal activities
|
4,125
|
|
|
2,913
|
|
|
102,488
|
|
||||
Goodwill impairment charge
|
—
|
|
|
46,792
|
|
|
—
|
|
||||
Total
|
948,981
|
|
|
1,059,562
|
|
|
1,027,955
|
|
||||
Income (loss) before income taxes
|
58,172
|
|
|
36,368
|
|
|
(14,912
|
)
|
||||
Income tax expense (benefit)
|
9,913
|
|
|
11,526
|
|
|
(53,163
|
)
|
||||
Net income
|
$
|
48,259
|
|
|
$
|
24,842
|
|
|
$
|
38,251
|
|
|
|
|
|
|
|
|
|||||||
Earnings per share:
|
|
|
|
|
|
|||||||
Basic
|
$
|
1.45
|
|
|
$
|
0.75
|
|
|
$
|
1.16
|
|
|
Diluted
|
$
|
1.45
|
|
|
$
|
0.75
|
|
|
$
|
1.16
|
|
Years Ended December 31
|
|
2019
|
|
2018
|
|
2017
|
||||||
(In thousands, except per-share data)
|
|
|
|
|
|
|||||||
Net income
|
$
|
48,259
|
|
|
$
|
24,842
|
|
|
$
|
38,251
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|||||||
Unrealized foreign currency translation adjustment (net of tax benefit of $623 in 2019, tax of $281 in 2018 and tax benefit of $371 in 2017)
|
(3,723
|
)
|
|
(10,762
|
)
|
|
7,792
|
|
||||
Derivative financial instruments adjustment (net of tax of $71 in 2019, tax benefit of $503 in 2018 and tax of $111 in 2017)
|
294
|
|
|
(2,060
|
)
|
|
(404
|
)
|
||||
Pension & other postretirement benefit adjustments:
|
|
|
|
|
|
|||||||
Net gains (losses) and prior service costs (net of tax benefit of $6,417 in 2019, tax benefit of $319 in 2018 and tax benefit of $2,518 in 2017)
|
(22,508
|
)
|
|
(1,118
|
)
|
|
(8,634
|
)
|
||||
Amortization of prior service costs and net gains or losses (net of tax of $2,359 in 2019, tax of $3,028 in 2018 and tax of $4,234 in 2017)
|
8,273
|
|
|
10,622
|
|
|
7,811
|
|
||||
Other comprehensive income (loss)
|
(17,664
|
)
|
|
(3,318
|
)
|
|
6,565
|
|
||||
Comprehensive income (loss)
|
$
|
30,595
|
|
|
$
|
21,524
|
|
|
$
|
44,816
|
|
Years Ended December 31
|
|
2019
|
|
2018
|
|
2017
|
||||||
(In thousands)
|
|
|
|
|
|
|||||||
Cash flows from operating activities:
|
|
|
|
|
|
|||||||
Net income
|
$
|
48,259
|
|
|
$
|
24,842
|
|
|
$
|
38,251
|
|
|
Adjustments for noncash items:
|
|
|
|
|
|
|||||||
Depreciation
|
30,683
|
|
|
29,828
|
|
|
34,079
|
|
||||
Amortization of identifiable intangibles
|
13,601
|
|
|
3,976
|
|
|
6,198
|
|
||||
Goodwill impairment charge
|
—
|
|
|
46,792
|
|
|
—
|
|
||||
Reduction of right-of-use lease asset
|
2,588
|
|
|
—
|
|
|
—
|
|
||||
Deferred income taxes
|
5,856
|
|
|
8,626
|
|
|
(36,414
|
)
|
||||
Accrued pension and postretirement benefits
|
9,642
|
|
|
10,406
|
|
|
10,193
|
|
||||
(Gain) loss on investment in kaléo accounted for under the fair value method
|
(10,900
|
)
|
|
(30,600
|
)
|
|
(33,800
|
)
|
||||
Loss on asset impairments
|
519
|
|
|
223
|
|
|
101,282
|
|
||||
(Gain) loss on sale of assets
|
(6,334
|
)
|
|
(46
|
)
|
|
553
|
|
||||
Gain from insurance recoveries
|
—
|
|
|
—
|
|
|
(5,261
|
)
|
||||
Changes in assets and liabilities:
|
|
|
|
|
|
|||||||
Accounts and other receivables
|
16,471
|
|
|
(11,883
|
)
|
|
(10,566
|
)
|
||||
Inventories
|
11,315
|
|
|
(9,577
|
)
|
|
(9,128
|
)
|
||||
Income taxes recoverable/payable
|
2,644
|
|
|
25,018
|
|
|
(24,449
|
)
|
||||
Prepaid expenses and other
|
795
|
|
|
(1,924
|
)
|
|
(784
|
)
|
||||
Accounts payable and accrued expenses
|
(2,937
|
)
|
|
5,571
|
|
|
21,123
|
|
||||
Lease liability
|
(2,723
|
)
|
|
—
|
|
|
—
|
|
||||
Pension and postretirement benefit plan contributions
|
(8,614
|
)
|
|
(8,907
|
)
|
|
(5,829
|
)
|
||||
Other, net
|
4,998
|
|
|
5,449
|
|
|
2,767
|
|
||||
Net cash provided by operating activities
|
115,863
|
|
|
97,794
|
|
|
88,215
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|||||||
Capital expenditures
|
(50,864
|
)
|
|
(40,814
|
)
|
|
(44,362
|
)
|
||||
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(87,110
|
)
|
||||
Return of escrowed funds relating to acquisition earn-out
|
—
|
|
|
4,250
|
|
|
—
|
|
||||
Net proceeds from the sale of investment property
|
—
|
|
|
1,384
|
|
|
—
|
|
||||
Insurance proceeds from cast house explosion
|
—
|
|
|
—
|
|
|
5,739
|
|
||||
Proceeds from the sale of assets and other
|
10,936
|
|
|
1,098
|
|
|
129
|
|
||||
Net cash used in investing activities
|
(39,928
|
)
|
|
(34,082
|
)
|
|
(125,604
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|||||||
Borrowings
|
65,500
|
|
|
76,750
|
|
|
190,750
|
|
||||
Debt principal payments
|
(125,000
|
)
|
|
(127,250
|
)
|
|
(133,750
|
)
|
||||
Dividends paid
|
(15,325
|
)
|
|
(14,592
|
)
|
|
(14,532
|
)
|
||||
Debt financing costs
|
(1,817
|
)
|
|
—
|
|
|
—
|
|
||||
Repurchase of employee common stock for tax withholdings
|
(854
|
)
|
|
(328
|
)
|
|
(124
|
)
|
||||
Proceeds from exercise of stock options and other
|
184
|
|
|
1,332
|
|
|
819
|
|
||||
Net cash provided by (used in) financing activities:
|
(77,312
|
)
|
|
(64,088
|
)
|
|
43,163
|
|
||||
Effect of exchange rate changes on cash
|
(1,598
|
)
|
|
(1,718
|
)
|
|
1,206
|
|
||||
Increase (decrease) in cash and cash equivalents
|
(2,975
|
)
|
|
(2,094
|
)
|
|
6,980
|
|
||||
Cash and cash equivalents at beginning of period
|
34,397
|
|
|
36,491
|
|
|
29,511
|
|
||||
Cash and cash equivalents at end of period
|
$
|
31,422
|
|
|
$
|
34,397
|
|
|
$
|
36,491
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|||||||
Interest payments
|
$
|
4,358
|
|
|
$
|
5,421
|
|
|
$
|
5,808
|
|
|
Income tax payments (refunds), net
|
$
|
2,595
|
|
|
$
|
(24,020
|
)
|
|
$
|
9,193
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|||||||||||||||||||
|
Common Stock
|
|
Retained
Earnings
|
|
Trust for Savings Restora-tion Plan
|
|
Foreign
Currency
Trans-lation
|
|
Gain
(Loss) on
Derivative
Financial Instruments
|
|
Pension & Other Post-
retirement Benefit Adjust.
|
|
Total
Share-
holders’ Equity
|
|||||||||||||||||
(In thousands, except share and per-share data)
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at January 1, 2017
|
32,933,807
|
|
|
$
|
32,007
|
|
|
$
|
463,507
|
|
|
$
|
(1,497
|
)
|
|
$
|
(93,970
|
)
|
|
$
|
863
|
|
|
$
|
(90,127
|
)
|
|
$
|
310,783
|
|
Net income
|
—
|
|
|
—
|
|
|
38,251
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,251
|
|
|||||||
Foreign currency translation adjustment (net of tax benefit of $371)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,792
|
|
|
—
|
|
|
—
|
|
|
7,792
|
|
|||||||
Derivative financial instruments adjustment (net of tax of $111)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(404
|
)
|
|
—
|
|
|
(404
|
)
|
|||||||
Net gains or losses and prior service costs (net of tax benefit of $2,518)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,634
|
)
|
|
(8,634
|
)
|
|||||||
Amortization of prior service costs and net gains or losses (net of tax of $4,234)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,811
|
|
|
7,811
|
|
|||||||
Cash dividends declared ($0.44 per share)
|
—
|
|
|
—
|
|
|
(14,532
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,532
|
)
|
|||||||
Stock-based compensation expense
|
49,475
|
|
|
2,018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,018
|
|
|||||||
Repurchase of employee common stock for tax withholdings
|
(7,125
|
)
|
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|||||||
Issued upon exercise of stock options
|
41,265
|
|
|
819
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
819
|
|
|||||||
Cumulative effect adjustment for adoption of stock-based compensation accounting guidance
|
—
|
|
|
27
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Tredegar common stock purchased by trust for savings restoration plan
|
—
|
|
|
—
|
|
|
31
|
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance at December 31, 2017
|
33,017,422
|
|
|
34,747
|
|
|
487,230
|
|
|
(1,528
|
)
|
|
(86,178
|
)
|
|
459
|
|
|
(90,950
|
)
|
|
343,780
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
24,842
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,842
|
|
|||||||
Foreign currency translation adjustment (net of tax of $281)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,762
|
)
|
|
—
|
|
|
—
|
|
|
(10,762
|
)
|
|||||||
Derivative financial instruments adjustment (net of tax benefit of $503)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,060
|
)
|
|
—
|
|
|
(2,060
|
)
|
|||||||
Net gains or losses and prior service costs (net of tax benefit of $319)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,118
|
)
|
|
(1,118
|
)
|
|||||||
Amortization of prior service costs and net gains or losses (net of tax of $3,028)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,622
|
|
|
10,622
|
|
|||||||
Cash dividends declared ($0.44 per share)
|
—
|
|
|
—
|
|
|
(14,592
|
)
|
|
|
|
|
|
|
|
|
|
(14,592
|
)
|
|||||||||||
Stock-based compensation expense
|
102,762
|
|
|
3,141
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,141
|
|
|||||||
Repurchase of employee common stock for tax withholdings
|
(17,558
|
)
|
|
(328
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(328
|
)
|
|||||||
Issued upon exercise of stock options
|
73,398
|
|
|
1,332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,332
|
|
|||||||
Tredegar common stock purchased by trust for savings restoration plan
|
—
|
|
|
—
|
|
|
31
|
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance at December 31, 2018
|
33,176,024
|
|
|
38,892
|
|
|
497,511
|
|
|
(1,559
|
)
|
|
(96,940
|
)
|
|
(1,601
|
)
|
|
(81,446
|
)
|
|
354,857
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
48,259
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,259
|
|
|||||||
Foreign currency translation adjustment (net of tax benefit of $623)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,723
|
)
|
|
—
|
|
|
—
|
|
|
(3,723
|
)
|
|||||||
Derivative financial instruments adjustment (net of tax of $71)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|
—
|
|
|
294
|
|
|||||||
Net gains or losses (net of tax benefit of $6,417)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,508
|
)
|
|
(22,508
|
)
|
|||||||
Amortization of net gains or losses (net of tax of $2,359)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,273
|
|
|
8,273
|
|
|||||||
Cash dividends declared ($0.46 per share)
|
—
|
|
|
—
|
|
|
(15,325
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,325
|
)
|
|||||||
Stock-based compensation expense
|
228,959
|
|
|
7,292
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,292
|
|
|||||||
Repurchase of employee common stock for tax withholdings
|
(49,444
|
)
|
|
(854
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(854
|
)
|
|||||||
Issued upon exercise of stock options
|
9,500
|
|
|
184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
184
|
|
|||||||
Tredegar common stock purchased by trust for savings restoration plan
|
—
|
|
|
—
|
|
|
33
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance at December 31, 2019
|
33,365,039
|
|
|
$
|
45,514
|
|
|
$
|
530,478
|
|
|
$
|
(1,592
|
)
|
|
$
|
(100,663
|
)
|
|
$
|
(1,307
|
)
|
|
$
|
(95,681
|
)
|
|
$
|
376,749
|
|
1
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
2019
|
|
2018
|
|
2017
|
|||
Weighted average shares outstanding used to compute basic earnings per share
|
33,236,115
|
|
|
33,067,800
|
|
|
32,945,961
|
|
Incremental shares attributable to stock options and restricted stock
|
22,022
|
|
|
24,674
|
|
|
5,327
|
|
Shares used to compute diluted earnings per share
|
33,258,137
|
|
|
33,092,474
|
|
|
32,951,288
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Dividend yield
|
2.4
|
%
|
|
2.3
|
%
|
|
1.9
|
%
|
|||
Weighted average volatility percentage
|
38.3
|
%
|
|
38.3
|
%
|
|
38.3
|
%
|
|||
Weighted average risk-free interest rate
|
2.4
|
%
|
|
2.8
|
%
|
|
1.8
|
%
|
|||
Holding period (years):
|
|
|
|
|
|
||||||
Officers
|
5
|
|
|
5
|
|
|
5
|
|
|||
Management
|
5
|
|
|
5
|
|
|
5
|
|
|||
Weighted average exercise price at date of grant (also weighted average market price at date of grant):
|
|
|
|
|
|
||||||
Officers
|
$
|
18.48
|
|
|
$
|
19.35
|
|
|
$
|
15.65
|
|
Management
|
$
|
18.48
|
|
|
$
|
19.35
|
|
|
$
|
15.65
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options granted (number of shares):
|
|
|
|
|
|
||||||
Officers
|
729,810
|
|
|
425,228
|
|
|
151,992
|
|
|||
Management
|
28,477
|
|
|
25,855
|
|
|
57,559
|
|
|||
Total
|
758,287
|
|
|
451,083
|
|
|
209,551
|
|
|||
Estimated weighted average fair value of options per share at date of grant:
|
|
|
|
|
|
||||||
Officers
|
$
|
5.43
|
|
|
$
|
5.87
|
|
|
$
|
4.69
|
|
Management
|
$
|
5.43
|
|
|
$
|
5.87
|
|
|
$
|
4.69
|
|
Total estimated fair value of stock options granted (in thousands)
|
$
|
4,117
|
|
|
$
|
2,648
|
|
|
$
|
983
|
|
(In thousands)
|
Foreign currency translation adjustment
|
|
Gain (loss) on derivative financial instruments
|
|
Pension and other post-retirement benefit adjustments
|
|
Total
|
||||||||
Beginning balance, January 1, 2019
|
$
|
(96,940
|
)
|
|
$
|
(1,601
|
)
|
|
$
|
(81,446
|
)
|
|
$
|
(179,987
|
)
|
Other comprehensive income (loss) before reclassifications
|
(3,723
|
)
|
|
(2,686
|
)
|
|
(22,508
|
)
|
|
(28,917
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
2,980
|
|
|
8,273
|
|
|
11,253
|
|
||||
Net other comprehensive income (loss) - current period
|
(3,723
|
)
|
|
294
|
|
|
(14,235
|
)
|
|
(17,664
|
)
|
||||
Ending balance, December 31, 2019
|
$
|
(100,663
|
)
|
|
$
|
(1,307
|
)
|
|
$
|
(95,681
|
)
|
|
$
|
(197,651
|
)
|
(In thousands)
|
Foreign currency translation adjustment
|
|
Gain (loss) on derivative financial instruments
|
|
Pension and other post-retirement benefit adjustments
|
|
Total
|
||||||||
Beginning balance, January 1, 2018
|
$
|
(86,178
|
)
|
|
$
|
459
|
|
|
$
|
(90,950
|
)
|
|
$
|
(176,669
|
)
|
Other comprehensive income (loss) before reclassifications
|
(10,762
|
)
|
|
(2,978
|
)
|
|
(1,118
|
)
|
|
(14,858
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
918
|
|
|
10,622
|
|
|
11,540
|
|
||||
Net other comprehensive income (loss) - current period
|
(10,762
|
)
|
|
(2,060
|
)
|
|
9,504
|
|
|
(3,318
|
)
|
||||
Ending balance, December 31, 2018
|
$
|
(96,940
|
)
|
|
$
|
(1,601
|
)
|
|
$
|
(81,446
|
)
|
|
$
|
(179,987
|
)
|
2
|
ACQUISITIONS
|
(In thousands)
|
|
||
Accounts receivable
|
$
|
6,680
|
|
Inventories
|
10,342
|
|
|
Prepaid expenses and other current assets
|
240
|
|
|
Property, plant & equipment
|
32,662
|
|
|
Identifiable intangible assets:
|
|
||
Customer relationships
|
24,000
|
|
|
Trade names
|
6,700
|
|
|
Trade payables & accrued expenses
|
(8,135
|
)
|
|
Total identifiable net assets
|
72,489
|
|
|
Adjusted Net Purchase Price
|
82,860
|
|
|
Goodwill
|
$
|
10,371
|
|
3
|
OTHER INCOME (EXPENSE), NET
|
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Gain on investment in kaléo accounted for under fair value method
|
$
|
28,482
|
|
|
$
|
30,600
|
|
|
$
|
33,800
|
|
Gain on sale of manufacturing plant in Shanghai, China
|
6,316
|
|
|
—
|
|
|
—
|
|
|||
Gain associated with the settlement of an escrow agreement related to Terphane, acquired in October 2011
|
—
|
|
|
—
|
|
|
11,856
|
|
|||
Gain from insurance recoveries
|
—
|
|
|
—
|
|
|
5,261
|
|
|||
Unrealized loss on investment property
|
—
|
|
|
(186
|
)
|
|
—
|
|
|||
Other
|
(3
|
)
|
|
45
|
|
|
796
|
|
|||
Total
|
$
|
34,795
|
|
|
$
|
30,459
|
|
|
$
|
51,713
|
|
4
|
INVESTMENTS
|
($ Millions)
|
|
EV-to-Adjusted EBITDA Multiple
|
|||||||||||||||
|
|
7.0 x
|
8.0 x
|
9.0 x
|
10.0x
|
11.0x
|
|||||||||||
Weighting to DCF Method
|
50
|
%
|
$
|
89.8
|
|
$
|
95.6
|
|
$
|
101.4
|
|
$
|
107.3
|
|
$
|
113.1
|
|
40
|
%
|
$
|
85.5
|
|
$
|
92.5
|
|
$
|
99.5
|
|
$
|
106.5
|
|
$
|
113.5
|
|
|
30
|
%
|
$
|
81.1
|
|
$
|
89.3
|
|
$
|
97.5
|
|
$
|
105.7
|
|
$
|
113.8
|
|
|
20
|
%
|
$
|
76.8
|
|
$
|
86.2
|
|
$
|
95.5
|
|
$
|
104.9
|
|
$
|
114.2
|
|
|
10
|
%
|
$
|
72.5
|
|
$
|
83.1
|
|
$
|
93.6
|
|
$
|
104.1
|
|
$
|
114.6
|
|
|
—
|
%
|
$
|
68.2
|
|
$
|
79.9
|
|
$
|
91.6
|
|
$
|
103.3
|
|
$
|
114.9
|
|
5
|
BUSINESS SEGMENTS
|
Net Sales
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Aluminum Extrusions
|
$
|
529,602
|
|
|
$
|
573,126
|
|
|
$
|
466,833
|
|
|
PE Films
|
272,758
|
|
|
332,488
|
|
|
352,459
|
|
||||
Flexible Packaging Films
|
133,935
|
|
|
123,830
|
|
|
108,355
|
|
||||
Total net sales
|
936,295
|
|
|
1,029,444
|
|
|
927,647
|
|
||||
Add back freight
|
36,063
|
|
|
36,027
|
|
|
33,683
|
|
||||
Sales as shown in consolidated statements of income
|
$
|
972,358
|
|
|
$
|
1,065,471
|
|
|
$
|
961,330
|
|
EBITDA from Ongoing Operations
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Aluminum Extrusions:
|
|
|
|
|
|
|||||||
Ongoing operations:
|
|
|
|
|
|
|||||||
EBITDA
|
$
|
65,683
|
|
|
$
|
65,479
|
|
|
$
|
58,524
|
|
|
Depreciation & amortization (c)
|
(16,719
|
)
|
|
(16,866
|
)
|
|
(15,070
|
)
|
||||
EBIT
|
48,964
|
|
|
48,613
|
|
|
43,454
|
|
||||
Plant shutdowns, asset impairments, restructurings and other (a)
|
(561
|
)
|
|
(505
|
)
|
|
321
|
|
||||
Trade name accelerated amortization
|
(10,040
|
)
|
|
—
|
|
|
—
|
|
||||
PE Films:
|
|
|
|
|
|
|||||||
Ongoing operations:
|
|
|
|
|
|
|||||||
EBITDA
|
37,803
|
|
|
51,058
|
|
|
55,889
|
|
||||
Depreciation & amortization (c)
|
(14,627
|
)
|
|
(14,877
|
)
|
|
(14,343
|
)
|
||||
EBIT
|
23,176
|
|
|
36,181
|
|
|
41,546
|
|
||||
Plant shutdowns, asset impairments, restructurings and other (a)
|
(475
|
)
|
|
(5,905
|
)
|
|
(4,905
|
)
|
||||
Goodwill impairment charge
|
—
|
|
|
(46,792
|
)
|
|
—
|
|
||||
Flexible Packaging Films:
|
|
|
|
|
|
|||||||
Ongoing operations:
|
|
|
|
|
|
|||||||
EBITDA
|
14,737
|
|
|
11,154
|
|
|
7,817
|
|
||||
Depreciation & amortization
|
(1,517
|
)
|
|
(1,262
|
)
|
|
(10,443
|
)
|
||||
EBIT
|
13,220
|
|
|
9,892
|
|
|
(2,626
|
)
|
||||
Plant shutdowns, asset impairments, restructurings and other (a)
|
—
|
|
|
(45
|
)
|
|
(89,398
|
)
|
||||
Total
|
74,284
|
|
|
41,439
|
|
|
(11,608
|
)
|
||||
Interest income
|
296
|
|
|
369
|
|
|
209
|
|
||||
Interest expense
|
4,051
|
|
|
5,702
|
|
|
6,170
|
|
||||
Gain on investment in kaléo accounted for under the fair value method (a)
|
28,482
|
|
|
30,600
|
|
|
33,800
|
|
||||
Loss on sale of investment property (a)
|
—
|
|
|
(38
|
)
|
|
—
|
|
||||
Unrealized loss on investment property (a)
|
—
|
|
|
(186
|
)
|
|
—
|
|
||||
Stock option-based compensation expense
|
4,209
|
|
|
1,221
|
|
|
264
|
|
||||
Corporate expenses, net (a)(d)
|
36,630
|
|
|
28,893
|
|
|
30,879
|
|
||||
Income (loss) before income taxes
|
58,172
|
|
|
36,368
|
|
|
(14,912
|
)
|
||||
Income tax expense (benefit) (a)
|
9,913
|
|
|
11,526
|
|
|
(53,163
|
)
|
||||
Net income (loss)
|
$
|
48,259
|
|
|
$
|
24,842
|
|
|
$
|
38,251
|
|
|
|
Depreciation and Amortization
|
|
Capital Expenditures
|
||||||||||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Aluminum Extrusions
|
$
|
26,759
|
|
|
$
|
16,866
|
|
|
$
|
15,070
|
|
|
$
|
17,855
|
|
|
$
|
12,966
|
|
|
$
|
25,653
|
|
|
PE Films
|
15,822
|
|
|
15,513
|
|
|
14,609
|
|
|
23,920
|
|
|
21,998
|
|
|
15,029
|
|
|||||||
Flexible Packaging Films
|
1,517
|
|
|
1,262
|
|
|
10,443
|
|
|
8,866
|
|
|
5,423
|
|
|
3,619
|
|
|||||||
Subtotal
|
44,098
|
|
|
33,641
|
|
|
40,122
|
|
|
50,641
|
|
|
40,387
|
|
|
44,301
|
|
|||||||
General corporate (d)
|
186
|
|
|
163
|
|
|
155
|
|
|
223
|
|
|
427
|
|
|
61
|
|
|||||||
Total
|
$
|
44,284
|
|
|
$
|
33,804
|
|
|
$
|
40,277
|
|
|
$
|
50,864
|
|
|
$
|
40,814
|
|
|
$
|
44,362
|
|
|
|
Identifiable Assets
by Geographic Area (b)
|
|
Property, Plant & Equipment,
Net by Geographic Area (b)
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States
|
$
|
458,066
|
|
|
$
|
454,178
|
|
|
$
|
181,989
|
|
|
$
|
166,550
|
|
|
Operations outside the United States:
|
|
|
|
|
|
|
|
|||||||||
Brazil
|
54,698
|
|
|
52,796
|
|
|
20,542
|
|
|
16,072
|
|
|||||
The Netherlands
|
12,579
|
|
|
15,020
|
|
|
5,729
|
|
|
6,005
|
|
|||||
Hungary
|
20,179
|
|
|
23,615
|
|
|
13,715
|
|
|
15,436
|
|
|||||
China
|
18,056
|
|
|
21,610
|
|
|
16,210
|
|
|
19,213
|
|
|||||
India
|
5,880
|
|
|
4,837
|
|
|
3,316
|
|
|
3,692
|
|
|||||
General corporate
|
111,788
|
|
|
100,920
|
|
|
1,389
|
|
|
1,401
|
|
|||||
Cash and cash equivalents (b)
|
31,422
|
|
|
34,397
|
|
|
n/a
|
|
|
n/a
|
|
|||||
Total
|
$
|
712,668
|
|
|
$
|
707,373
|
|
|
$
|
242,890
|
|
|
$
|
228,369
|
|
Net Sales by Product Group
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Aluminum Extrusions:
|
|
|
|
|
|
|||||||
Nonresidential building & construction
|
$
|
272,729
|
|
|
$
|
289,572
|
|
|
$
|
239,713
|
|
|
Consumer durables
|
57,607
|
|
|
66,416
|
|
|
54,126
|
|
||||
Automotive
|
46,461
|
|
|
48,037
|
|
|
38,261
|
|
||||
Machinery & equipment
|
38,657
|
|
|
41,899
|
|
|
33,450
|
|
||||
Distribution
|
34,753
|
|
|
40,924
|
|
|
30,202
|
|
||||
Residential building & construction
|
43,554
|
|
|
43,943
|
|
|
40,354
|
|
||||
Electrical
|
35,841
|
|
|
42,335
|
|
|
30,727
|
|
||||
Subtotal
|
529,602
|
|
|
573,126
|
|
|
466,833
|
|
||||
PE Films:
|
|
|
|
|
|
|||||||
Personal care materials
|
161,493
|
|
|
227,090
|
|
|
246,416
|
|
||||
Surface protection films
|
103,893
|
|
|
98,126
|
|
|
99,079
|
|
||||
LED-based products
|
7,372
|
|
|
7,272
|
|
|
6,964
|
|
||||
Subtotal
|
272,758
|
|
|
332,488
|
|
|
352,459
|
|
||||
Flexible Packaging Films
|
133,935
|
|
|
123,830
|
|
|
108,355
|
|
||||
Total
|
$
|
936,295
|
|
|
$
|
1,029,444
|
|
|
$
|
927,647
|
|
(a)
|
See Notes 1, 3, 4 and 17 for more information on losses associated with plant shutdowns, asset impairments and restructurings, unusual items, gains or losses from sale of assets, gains or losses on an investment accounted for under the fair value method and other items.
|
(b)
|
Information on exports and foreign operations are provided on the previous page. Cash and cash equivalents includes funds held in locations outside the U.S. of $23.0 million and $31.1 million at December 31, 2019 and 2018, respectively. Export sales relate almost entirely to PE Films. Operations outside the U.S. in The Netherlands, Hungary, China and India also relate to PE Films. Operations in Brazil are primarily related to Flexible Packaging Films, but also include PE Films operations. Sales from locations in The Netherlands and Hungary are primarily to customers located in Europe. Sales from locations in China (Guangzhou and Shanghai) are primarily to customers located in China, but also include other customers in Asia. The facility in Shanghai was shut down in the fourth quarter of 2018.
|
(c)
|
Depreciation and amortization for Aluminum Extrusions in 2019 excludes $10.0 million for accelerated amortization of trade names as a result of a rebranding initiative (see Note 8 for more information) and for PE Films in 2019, 2018 and 2017 excludes $1.2 million, $0.6 million and $0.3 million, respectively, for accelerated depreciation associated with restructurings and plant closures.
|
(d)
|
Corporate depreciation and amortization is included in Corporate expenses, net, on the EBITDA from ongoing operations table above.
|
6
|
ACCOUNTS AND OTHER RECEIVABLES
|
(In thousands)
|
|
2019
|
|
2018
|
||||
Customer receivables
|
$
|
106,153
|
|
|
$
|
122,182
|
|
|
Other accounts and notes receivable
|
4,441
|
|
|
5,482
|
|
|||
Total accounts and other receivables
|
110,594
|
|
|
127,664
|
|
|||
Less: Allowance for bad debts and sales returns
|
(3,036
|
)
|
|
(2,937
|
)
|
|||
Total accounts and other receivables, net
|
$
|
107,558
|
|
|
$
|
124,727
|
|
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning of year
|
$
|
2,937
|
|
|
$
|
3,304
|
|
|
$
|
3,102
|
|
|
Charges to expense
|
1,188
|
|
|
553
|
|
|
2,369
|
|
||||
Recoveries
|
(38
|
)
|
|
(56
|
)
|
|
(857
|
)
|
||||
Write-offs and settlements
|
(974
|
)
|
|
(710
|
)
|
|
(1,322
|
)
|
||||
Foreign exchange and other
|
(77
|
)
|
|
(154
|
)
|
|
12
|
|
||||
Balance, end of year
|
$
|
3,036
|
|
|
$
|
2,937
|
|
|
$
|
3,304
|
|
7
|
INVENTORIES
|
(In thousands)
|
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
24,504
|
|
|
$
|
24,938
|
|
|
Work-in-process
|
12,328
|
|
|
15,648
|
|
|||
Raw materials
|
24,735
|
|
|
33,741
|
|
|||
Stores, supplies and other
|
19,813
|
|
|
19,483
|
|
|||
Total
|
$
|
81,380
|
|
|
$
|
93,810
|
|
8
|
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
|
(In thousands)
|
|
2019
|
|
2018
|
|
Amortization Periods
|
||||
Goodwill
|
$
|
81,404
|
|
|
$
|
81,404
|
|
|
Not amortized
|
|
Identifiable intangible assets:
|
|
|
|
|
|
|||||
Customer relationships (cost basis of $29,550 in 2019 and $29,568 in 2018)
|
20,198
|
|
|
22,785
|
|
|
10-12 years
|
|||
Proprietary technology (cost basis of $6,181 in 2019 and $6,185 in 2018)
|
895
|
|
|
1,093
|
|
|
Not more than 15 years
|
|||
Trade names (cost basis of $13,645 in 2019 and $13,690 in 2018)
|
1,543
|
|
|
12,417
|
|
|
5 - 13 years
|
|||
Total carrying value of identifiable intangibles
|
22,636
|
|
|
36,295
|
|
|
|
|||
Total carrying value of goodwill and identifiable intangible assets
|
$
|
104,040
|
|
|
$
|
117,699
|
|
|
|
(In thousands)
|
|
|
Aluminum Extrusions
|
|
PE Films
|
|
Total
|
||||||
Net carrying value of goodwill at January 1, 2018
|
|
$
|
24,066
|
|
|
$
|
104,142
|
|
|
$
|
128,208
|
|
|
Goodwill impairment charge
|
|
—
|
|
|
(46,792
|
)
|
|
(46,792
|
)
|
||||
Increase (decrease) due to foreign currency translation
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||
Net carrying value of goodwill at December 31, 2018
|
|
24,066
|
|
|
57,338
|
|
|
81,404
|
|
||||
Goodwill impairment charge
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Increase (decrease) due to foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net carrying value of goodwill at December 31, 2019
|
|
$
|
24,066
|
|
|
$
|
57,338
|
|
|
$
|
81,404
|
|
(In thousands)
|
Customer Relationships
|
|
Proprietary Technology
|
|
Trade Names
|
|
Total
|
||||||||||
Aluminum Extrusions:
|
|
|
|
|
|
|
|
||||||||||
|
Net carrying value at January 1, 2018
|
$
|
24,613
|
|
|
$
|
495
|
|
|
$
|
11,071
|
|
|
$
|
36,179
|
|
|
|
|
Amortization expense
|
(2,489
|
)
|
|
(420
|
)
|
|
(516
|
)
|
|
(3,425
|
)
|
||||
|
Net carrying value at December 31, 2018
|
22,124
|
|
|
75
|
|
|
10,555
|
|
|
32,754
|
|
|||||
|
|
Amortization expense
|
(2,480
|
)
|
|
(20
|
)
|
|
(10,555
|
)
|
|
(13,055
|
)
|
||||
|
Net carrying value at December 31, 2019
|
$
|
19,644
|
|
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
19,699
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
PE Films:
|
|
|
|
|
|
|
|
||||||||||
|
Net carrying value at January 1, 2018
|
$
|
—
|
|
|
$
|
845
|
|
|
$
|
—
|
|
|
$
|
845
|
|
|
|
|
Amortization expense
|
—
|
|
|
(115
|
)
|
|
—
|
|
|
(115
|
)
|
||||
|
Net carrying value at December 31, 2018
|
—
|
|
|
730
|
|
|
—
|
|
|
730
|
|
|||||
|
|
Amortization expense
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
(120
|
)
|
||||
|
Net carrying value at December 31, 2019
|
$
|
—
|
|
|
$
|
610
|
|
|
$
|
—
|
|
|
$
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Flexible Packaging Films:
|
|
|
|
|
|
|
|
||||||||||
|
Net carrying value at January 1, 2018
|
$
|
831
|
|
|
$
|
360
|
|
|
$
|
2,337
|
|
|
$
|
3,528
|
|
|
|
|
Amortization expense
|
(82
|
)
|
|
(55
|
)
|
|
(299
|
)
|
|
(436
|
)
|
||||
|
|
Increase (decrease) due to foreign currency translation
|
(88
|
)
|
|
(17
|
)
|
|
(176
|
)
|
|
(281
|
)
|
||||
|
Net carrying value at December 31, 2018
|
661
|
|
|
288
|
|
|
1,862
|
|
|
2,811
|
|
|||||
|
|
Amortization expense
|
(91
|
)
|
|
(55
|
)
|
|
(280
|
)
|
|
(426
|
)
|
||||
|
|
Increase (decrease) due to foreign currency translation
|
(16
|
)
|
|
(3
|
)
|
|
(39
|
)
|
|
(58
|
)
|
||||
|
Net carrying value at December 31, 2019
|
$
|
554
|
|
|
$
|
230
|
|
|
$
|
1,543
|
|
|
$
|
2,327
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total net carrying value of identifiable intangibles at December 31, 2019
|
$
|
20,198
|
|
|
$
|
895
|
|
|
$
|
1,543
|
|
|
$
|
22,636
|
|
Year
|
Amount
(In thousands)
|
||
2020
|
$
|
3,070
|
|
2021
|
3,070
|
|
|
2022
|
2,935
|
|
|
2023
|
2,309
|
|
|
2024
|
2,269
|
|
9
|
FINANCIAL INSTRUMENTS
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
(In thousands)
|
Balance Sheet
Account
|
|
Fair
Value
|
|
Balance Sheet
Account
|
|
Fair
Value
|
||||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
||||
Asset derivatives:
Aluminum futures contracts
|
Accrued expenses
|
|
$
|
6
|
|
|
Accrued expenses
|
|
$
|
20
|
|
Liability derivatives:
Aluminum futures contracts
|
Accrued expenses
|
|
(1,259
|
)
|
|
Accrued expenses
|
|
(1,650
|
)
|
||
Net asset (liability)
|
|
|
$
|
(1,253
|
)
|
|
|
|
$
|
(1,630
|
)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
(In thousands)
|
Balance Sheet
Account
|
|
Fair
Value
|
|
Balance Sheet
Account
|
|
Fair
Value
|
||||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
||||
Asset derivatives:
Foreign currency forward contracts
|
Prepaid expenses and other
|
|
$
|
83
|
|
|
Prepaid expenses and other
|
|
$
|
37
|
|
Liability derivatives:
Foreign currency forward contracts
|
Accrued expenses
|
|
(935
|
)
|
|
Accrued expenses
|
|
(1,090
|
)
|
||
Net asset (liability)
|
|
|
$
|
(852
|
)
|
|
|
|
$
|
(1,053
|
)
|
USD Notional Amount (000s)
|
Average Forward Rate Contracted on USD/BRL
|
R$ Equivalent Amount (000s)
|
Applicable Month
|
Estimated % of Terphane Ltda. R$ Operating Cost Exposure Hedged
|
$2,100
|
3.8900
|
R$8,169
|
Jan-20
|
72%
|
$2,200
|
3.9040
|
R$8,589
|
Feb-20
|
75%
|
$2,200
|
3.9076
|
R$8,597
|
Mar-20
|
75%
|
$2,200
|
3.9131
|
R$8,609
|
Apr-20
|
75%
|
$2,200
|
3.9188
|
R$8,621
|
May-20
|
76%
|
$2,200
|
3.9249
|
R$8,635
|
Jun-20
|
76%
|
$2,200
|
3.9326
|
R$8,652
|
Jul-20
|
76%
|
$2,200
|
3.9413
|
R$8,671
|
Aug-20
|
76%
|
$2,200
|
3.9495
|
R$8,689
|
Sep-20
|
76%
|
$2,200
|
3.9579
|
R$8,707
|
Oct-20
|
76%
|
$2,200
|
3.9660
|
R$8,725
|
Nov-20
|
76%
|
$2,050
|
3.9653
|
R$8,129
|
Dec-20
|
71%
|
$26,150
|
3.9309
|
R$102,793
|
|
75%
|
(In thousands)
|
Cash Flow Derivative Hedges
|
||||||||||
|
Aluminum Futures Contracts
|
||||||||||
Years Ended December 31,
|
2019
|
|
2018
|
|
2017
|
||||||
Amount of pre-tax gain (loss) recognized in other comprehensive income
|
$
|
(2,359
|
)
|
|
$
|
(1,123
|
)
|
|
$
|
1,501
|
|
Location of gain (loss) reclassified from accumulated other comprehensive income into net income (effective portion)
|
Cost of
goods sold
|
|
|
Cost of
goods sold |
|
|
Cost of
goods sold |
|
|||
Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income to net income (effective portion)
|
$
|
(2,736
|
)
|
|
$
|
1,069
|
|
|
$
|
1,210
|
|
(In thousands)
|
Cash Flow Derivative Hedges
|
|||||||||||||||||||
|
Foreign Currency Forward Contracts
|
|||||||||||||||||||
Years Ended December 31,
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Amount of pre-tax gain (loss) recognized in other comprehensive income
|
$
|
—
|
|
$
|
(856
|
)
|
|
$
|
—
|
|
$
|
(2,105
|
)
|
|
$
|
—
|
|
$
|
(561
|
)
|
Location of gain (loss) reclassified from accumulated other comprehensive income into net income (effective portion)
|
Cost of
goods sold |
Selling, general & admin
|
|
Cost of
goods sold |
Selling, general & admin
|
|
Cost of
goods sold |
Selling, general & admin
|
||||||||||||
Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income to net income (effective portion)
|
$
|
62
|
|
$
|
(904
|
)
|
|
$
|
62
|
|
$
|
(1,796
|
)
|
|
$
|
62
|
|
$
|
(43
|
)
|
10
|
ACCRUED EXPENSES
|
(In thousands)
|
2019
|
|
2018
|
||||
Vacation
|
$
|
8,842
|
|
|
$
|
8,946
|
|
Incentive compensation
|
9,792
|
|
|
6,979
|
|
||
Payrolls, related taxes and medical and other benefits
|
6,823
|
|
|
6,600
|
|
||
Workers’ compensation and disabilities
|
3,557
|
|
|
4,048
|
|
||
Derivative contract liability
|
2,188
|
|
|
2,720
|
|
||
Accrued utilities
|
2,588
|
|
|
2,420
|
|
||
Accrued freight
|
1,547
|
|
|
2,091
|
|
||
Environmental liabilities (current)
|
2,122
|
|
|
1,990
|
|
||
Customer rebates
|
2,442
|
|
|
1,476
|
|
||
Accrued severance
|
1,389
|
|
|
637
|
|
||
Other
|
4,519
|
|
|
4,588
|
|
||
Total
|
$
|
45,809
|
|
|
$
|
42,495
|
|
11
|
DEBT AND CREDIT AGREEMENTS
|
•
|
Maximum indebtedness-to-adjusted EBITDA (“Leverage Ratio:) of 4.00x;
|
•
|
Minimum adjusted EBITDA-to-interest expense of 3.00x; and
|
•
|
Maximum aggregate distributions to shareholders over the term of the Credit Agreement of $130 million plus, beginning with the fiscal quarter ended June 30, 2019, 50% of net income and, at a Leverage Ratio of equal to or greater than 3.00x, a limitation on such payments for the succeeding quarter at the greater of (i) $4.75 million and (ii) 50% of consolidated net income for the most recent fiscal quarter.
|
12
|
STOCK OPTION AND STOCK AWARD PLANS
|
|
|
|
|
|
|
Options Outstanding at December 31, 2019
|
|
Options Exercisable at December 31, 2019
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Weighted Average
|
|
Aggregate Intrinsic Value
|
|
|
|
|
|
Aggregate Intrinsic Value
|
||||||||||||||||
Range of
Exercise Prices
|
|
Shares
|
|
Remaining Contractual Life (Years)
|
|
Exercise
Price
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
||||||||||||||||||||
$
|
—
|
|
|
to
|
|
$
|
15.00
|
|
|
—
|
|
|
0.0
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
15.01
|
|
|
to
|
|
17.50
|
|
|
163,641
|
|
|
4.4
|
|
15.65
|
|
|
1,096,395
|
|
|
104,326
|
|
|
15.65
|
|
|
698,984
|
|
||||||
17.51
|
|
|
to
|
|
20.00
|
|
|
1,255,670
|
|
|
5.3
|
|
18.83
|
|
|
4,424,405
|
|
|
46,300
|
|
|
19.40
|
|
|
136,585
|
|
||||||
20.01
|
|
|
to
|
|
25.00
|
|
|
209,592
|
|
|
3.5
|
|
23.69
|
|
|
—
|
|
|
209,592
|
|
|
23.69
|
|
|
—
|
|
||||||
Total
|
|
1,628,903
|
|
|
5.0
|
|
$
|
19.13
|
|
|
$
|
5,520,800
|
|
|
360,218
|
|
|
$
|
20.81
|
|
|
$
|
835,569
|
|
|
Unvested Restricted Stock
|
|
Maximum Unvested Restricted Stock Units Issuable Upon Satisfaction of Certain Performance Criteria
|
||||||||||||||||||
|
Number
of Shares
|
|
Weighted Avg. Grant Date Fair Value/Share
|
|
Grant Date
Fair Value
(In thousands)
|
|
Number
of Shares
|
|
Weighted Avg. Grant Date Fair Value/Share
|
|
Grant Date
Fair Value
(In thousands)
|
||||||||||
Outstanding at January 1, 2017
|
207,355
|
|
|
$
|
15.90
|
|
|
$
|
3,297
|
|
|
238,429
|
|
|
$
|
16.39
|
|
|
$
|
3,908
|
|
Granted
|
107,362
|
|
|
18.29
|
|
|
1,964
|
|
|
46,205
|
|
|
17.38
|
|
|
803
|
|
||||
Vested
|
(50,154
|
)
|
|
19.72
|
|
|
(989
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Forfeited
|
(57,887
|
)
|
|
16.16
|
|
|
(935
|
)
|
|
(112,501
|
)
|
|
17.73
|
|
|
(1,995
|
)
|
||||
Outstanding at December 31, 2017
|
206,676
|
|
|
16.15
|
|
|
3,337
|
|
|
172,133
|
|
|
15.78
|
|
|
2,716
|
|
||||
Granted
|
119,915
|
|
|
17.39
|
|
|
2,085
|
|
|
61,227
|
|
|
17.35
|
|
|
1,062
|
|
||||
Vested
|
(64,702
|
)
|
|
18.31
|
|
|
(1,185
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Forfeited
|
(17,153
|
)
|
|
15.84
|
|
|
(272
|
)
|
|
(48,651
|
)
|
|
13.23
|
|
|
(644
|
)
|
||||
Outstanding at December 31, 2018
|
244,736
|
|
|
16.20
|
|
|
3,965
|
|
|
184,709
|
|
|
16.97
|
|
|
3,134
|
|
||||
Granted
|
185,422
|
|
|
18.46
|
|
|
3,423
|
|
|
57,442
|
|
|
18.34
|
|
|
1,053
|
|
||||
Vested
|
(117,834
|
)
|
|
14.76
|
|
|
(1,739
|
)
|
|
(69,926
|
)
|
|
10.96
|
|
|
(766
|
)
|
||||
Forfeited
|
(26,389
|
)
|
|
16.11
|
|
|
(425
|
)
|
|
(24,562
|
)
|
|
11.51
|
|
|
(283
|
)
|
||||
Outstanding at December 31, 2019
|
285,935
|
|
|
$
|
18.27
|
|
|
$
|
5,224
|
|
|
147,663
|
|
|
$
|
21.25
|
|
|
$
|
3,138
|
|
13
|
RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS
|
|
Pension Benefits
|
|
|
Other Post-
Retirement Benefits
|
|||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|||||||||
Benefit obligation, beginning of year
|
$
|
287,240
|
|
|
$
|
318,123
|
|
|
|
$
|
6,889
|
|
|
$
|
7,704
|
|
|
Service cost
|
—
|
|
|
17
|
|
|
|
26
|
|
|
36
|
|
|||||
Interest cost
|
12,222
|
|
|
11,442
|
|
|
|
290
|
|
|
271
|
|
|||||
Effect of actuarial (gains) losses related to the following:
|
|
|
|
|
|
|
|
|
|||||||||
Discount rate change
|
38,919
|
|
|
(23,653
|
)
|
|
|
894
|
|
|
(546
|
)
|
|||||
Retirement rate assumptions and mortality table adjustments
|
(2,589
|
)
|
|
(914
|
)
|
|
|
21
|
|
|
6
|
|
|||||
Other
|
(1,047
|
)
|
|
(2,326
|
)
|
|
|
(176
|
)
|
|
(285
|
)
|
|||||
Plan participant contributions
|
—
|
|
|
—
|
|
|
|
649
|
|
|
656
|
|
|||||
Benefits paid
|
(15,982
|
)
|
|
(15,449
|
)
|
|
|
(943
|
)
|
|
(953
|
)
|
|||||
Benefit obligation, end of year
|
$
|
318,763
|
|
|
$
|
287,240
|
|
|
|
$
|
7,650
|
|
|
$
|
6,889
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|||||||||
Plan assets at fair value, beginning of year
|
$
|
205,367
|
|
|
$
|
226,354
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Actual return on plan assets
|
20,624
|
|
|
(14,148
|
)
|
|
|
—
|
|
|
—
|
|
|||||
Employer contributions
|
8,320
|
|
|
8,610
|
|
|
|
294
|
|
|
297
|
|
|||||
Plan participant contributions
|
—
|
|
|
—
|
|
|
|
649
|
|
|
656
|
|
|||||
Benefits paid
|
(15,982
|
)
|
|
(15,449
|
)
|
|
|
(943
|
)
|
|
(953
|
)
|
|||||
Plan assets at fair value, end of year
|
$
|
218,329
|
|
|
$
|
205,367
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Funded status of the plans
|
$
|
(100,434
|
)
|
|
$
|
(81,873
|
)
|
|
|
$
|
(7,650
|
)
|
|
$
|
(6,889
|
)
|
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|||||||||
Accrued expenses (current)
|
$
|
168
|
|
|
$
|
182
|
|
|
|
$
|
470
|
|
|
$
|
456
|
|
|
Pension and other postretirement benefit obligations, net
|
100,266
|
|
|
81,691
|
|
|
|
7,180
|
|
|
6,433
|
|
|||||
Net amount recognized
|
$
|
100,434
|
|
|
$
|
81,873
|
|
|
|
$
|
7,650
|
|
|
$
|
6,889
|
|
|
|
Pension Benefits
|
|
|
Other Post-
Retirement Benefits
|
||||||||||||||||||||
(In thousands, except percentages)
|
2019
|
|
2018
|
|
2017
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||
Weighted-average assumptions used to determine benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Discount rate
|
3.27
|
%
|
|
4.40
|
%
|
|
3.72
|
%
|
|
|
3.25
|
%
|
|
4.37
|
%
|
|
3.69
|
%
|
|||||||
Expected long-term return on plan assets
|
5.00
|
%
|
|
6.00
|
%
|
|
6.50
|
%
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||||
Weighted-average assumptions used to determine net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Discount rate
|
4.40
|
%
|
|
3.72
|
%
|
|
4.29
|
%
|
|
|
4.37
|
%
|
|
3.69
|
%
|
|
4.24
|
%
|
|||||||
Expected long-term return on plan assets
|
6.00
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
194
|
|
|
|
$
|
26
|
|
|
$
|
36
|
|
|
$
|
33
|
|
|
Interest cost
|
12,222
|
|
|
11,442
|
|
|
12,575
|
|
|
|
290
|
|
|
271
|
|
|
301
|
|
|||||||
Expected return on plan assets
|
(13,528
|
)
|
|
(15,011
|
)
|
|
(14,955
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Amortization of prior service costs and gains or losses
|
10,891
|
|
|
13,894
|
|
|
12,320
|
|
|
|
(258
|
)
|
|
(243
|
)
|
|
(275
|
)
|
|||||||
Net periodic benefit cost
|
$
|
9,585
|
|
|
$
|
10,342
|
|
|
$
|
10,134
|
|
|
|
$
|
58
|
|
|
$
|
64
|
|
|
$
|
59
|
|
(In thousands)
|
Pension
Benefits
|
|
Other Post-
Retirement
Benefits
|
||||
2020
|
$
|
17,162
|
|
|
$
|
470
|
|
2021
|
17,524
|
|
|
473
|
|
||
2022
|
17,895
|
|
|
473
|
|
||
2023
|
18,088
|
|
|
468
|
|
||
2024
|
18,325
|
|
|
463
|
|
||
2025—2029
|
91,383
|
|
|
2,202
|
|
|
Pension
|
|
Other Post-Retirement
|
||||||||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Prior service cost (benefit)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net actuarial (gain) loss
|
150,047
|
|
|
132,751
|
|
|
144,377
|
|
|
(824
|
)
|
|
(1,821
|
)
|
|
(1,238
|
)
|
(In thousands)
|
Pension
|
|
Other Post-
Retirement
|
||||
Prior service cost (benefit)
|
$
|
—
|
|
|
$
|
—
|
|
Net actuarial (gain) loss
|
15,254
|
|
|
(188
|
)
|
|
% Composition of Plan Assets
at December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Pension plans related to continuing operations:
|
|
|
|
|
|
|||
Fixed income securities
|
8.7
|
%
|
|
8.6
|
%
|
|
7.7
|
%
|
Large/mid-capitalization equity securities
|
21.3
|
|
|
18.2
|
|
|
19.0
|
|
Small-capitalization equity securities
|
7.8
|
|
|
6.8
|
|
|
6.4
|
|
International and emerging market equity securities
|
19.7
|
|
|
16.0
|
|
|
15.1
|
|
Total equity securities
|
48.8
|
|
|
41.0
|
|
|
40.5
|
|
Private equity and hedge funds
|
35.0
|
|
|
42.3
|
|
|
44.6
|
|
Other assets
|
7.5
|
|
|
8.1
|
|
|
7.2
|
|
Total for continuing operations
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
(In thousands)
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||
Balances at December 31, 2019
|
|
|
|
|
|
|
|
|||||||||
Large/mid-capitalization equity securities
|
$
|
46,440
|
|
|
$
|
46,440
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Small-capitalization equity securities
|
17,135
|
|
|
17,135
|
|
|
—
|
|
|
—
|
|
|||||
International and emerging market equity securities
|
43,079
|
|
|
19,117
|
|
|
23,962
|
|
|
—
|
|
|||||
Fixed income securities
|
18,911
|
|
|
6,209
|
|
|
12,702
|
|
|
—
|
|
|||||
Contracts with insurance companies
|
8,840
|
|
|
—
|
|
|
—
|
|
|
8,840
|
|
|||||
Other assets
|
7,585
|
|
|
7,585
|
|
|
—
|
|
|
—
|
|
|||||
Total plan assets at fair value
|
$
|
141,990
|
|
|
$
|
96,486
|
|
|
$
|
36,664
|
|
|
$
|
8,840
|
|
|
Private equity and hedge funds
|
76,339
|
|
|
|
|
|
|
|
||||||||
Total plan assets, December 31, 2019
|
$
|
218,329
|
|
|
|
|
|
|
|
|||||||
Balances at December 31, 2018
|
|
|
|
|
|
|
|
|||||||||
Large/mid-capitalization equity securities
|
$
|
37,323
|
|
|
$
|
37,323
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Small-capitalization equity securities
|
13,880
|
|
|
13,880
|
|
|
—
|
|
|
—
|
|
|||||
International and emerging market equity securities
|
32,931
|
|
|
13,389
|
|
|
19,542
|
|
|
—
|
|
|||||
Fixed income securities
|
17,769
|
|
|
5,886
|
|
|
11,883
|
|
|
—
|
|
|||||
Contracts with insurance companies
|
9,899
|
|
|
—
|
|
|
—
|
|
|
9,899
|
|
|||||
Other assets
|
6,779
|
|
|
6,779
|
|
|
—
|
|
|
—
|
|
|||||
Total plan assets at fair value
|
$
|
118,581
|
|
|
$
|
77,257
|
|
|
$
|
31,425
|
|
|
$
|
9,899
|
|
|
Private equity and hedge funds
|
86,786
|
|
|
|
|
|
|
|
||||||||
Total plan assets, December 31, 2018
|
$
|
205,367
|
|
|
|
|
|
|
|
14
|
SAVINGS PLAN
|
•
|
The Company makes matching contributions to the savings plan of $1 for every $1 an employee contributes per pay period up to a maximum of 5% of eligible compensation.
|
•
|
The savings plan includes immediate vesting of matching contributions and automatic enrollment at 3% of eligible compensation unless the employee opts out or elects a different percentage.
|
15
|
LEASES
|
(In thousands)
|
|
As of December 31, 2019
|
||
Maturity of Lease Liabilities
|
Future Lease Payments
|
|||
2020
|
|
$
|
3,820
|
|
2021
|
|
3,589
|
|
|
2022
|
|
2,622
|
|
|
2023
|
|
2,425
|
|
|
2024
|
|
2,405
|
|
|
Thereafter
|
|
9,786
|
|
|
Total undiscounted operating lease payments
|
|
24,647
|
|
|
Less: Imputed interest
|
|
3,956
|
|
|
Present value of operating lease liabilities
|
|
$
|
20,691
|
|
|
|
|
||
Balance Sheet Classification
|
|
|
||
Lease liabilities, short-term
|
|
$
|
3,002
|
|
Lease liabilities, long-term
|
|
17,689
|
|
|
Total operating lease liabilities
|
|
$
|
20,691
|
|
|
|
|
||
Other Information:
|
|
|
||
Weighted-average remaining lease term for operating leases
|
|
8 Years
|
|
|
Weighted-average discount rate for operating leases
|
|
4.32
|
%
|
16
|
INCOME TAXES
|
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income (loss) before income taxes:
|
|
|
|
|
|
|||||||
Domestic
|
$
|
35,731
|
|
|
$
|
17,663
|
|
|
$
|
67,549
|
|
|
Foreign
|
22,441
|
|
|
18,705
|
|
|
(82,461
|
)
|
||||
Total
|
$
|
58,172
|
|
|
$
|
36,368
|
|
|
$
|
(14,912
|
)
|
|
Current income tax expense (benefit):
|
|
|
|
|
|
|||||||
Federal
|
$
|
1,202
|
|
|
$
|
(187
|
)
|
|
$
|
(20,560
|
)
|
|
State
|
989
|
|
|
815
|
|
|
800
|
|
||||
Foreign
|
1,801
|
|
|
2,090
|
|
|
3,247
|
|
||||
Total
|
3,992
|
|
|
2,718
|
|
|
(16,513
|
)
|
||||
Deferred income tax expense (benefit):
|
|
|
|
|
|
|||||||
Federal
|
17,357
|
|
|
8,708
|
|
|
(23,302
|
)
|
||||
State
|
311
|
|
|
364
|
|
|
(949
|
)
|
||||
Foreign
|
(11,747
|
)
|
|
(264
|
)
|
|
(12,399
|
)
|
||||
Total
|
5,921
|
|
|
8,808
|
|
|
(36,650
|
)
|
||||
Total income tax expense (benefit)
|
$
|
9,913
|
|
|
$
|
11,526
|
|
|
$
|
(53,163
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
(In thousands, except percentages)
|
Amount
|
|
%
|
|
|
Amount
|
|
%
|
|
|
Amount
|
|
%
|
|
|||
Income tax expense (benefit) at federal statutory rate
|
$
|
12,223
|
|
21.0
|
|
|
$
|
7,638
|
|
21.0
|
|
|
$
|
(5,219
|
)
|
35.0
|
|
U.S. tax on foreign branch income
|
15,865
|
|
27.2
|
|
|
1,901
|
|
5.2
|
|
|
—
|
|
—
|
|
|||
Foreign rate differences
|
2,211
|
|
3.8
|
|
|
1,805
|
|
5.0
|
|
|
2,546
|
|
(17.1
|
)
|
|||
State taxes, net of federal income tax benefit
|
987
|
|
1.7
|
|
|
520
|
|
1.4
|
|
|
656
|
|
(4.4
|
)
|
|||
Non-deductible expenses
|
467
|
|
0.8
|
|
|
322
|
|
0.9
|
|
|
434
|
|
(2.9
|
)
|
|||
Stock-based compensation
|
283
|
|
0.5
|
|
|
175
|
|
0.5
|
|
|
199
|
|
(1.3
|
)
|
|||
Global intangible low tax income
|
68
|
|
0.1
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||
Valuation allowance for capital loss carryforwards
|
60
|
|
0.1
|
|
|
553
|
|
1.5
|
|
|
83
|
|
(0.6
|
)
|
|||
Unremitted earnings from foreign operations
|
60
|
|
0.1
|
|
|
126
|
|
0.3
|
|
|
—
|
|
—
|
|
|||
Non-deductible goodwill and asset impairment loss
|
—
|
|
—
|
|
|
1,801
|
|
5.1
|
|
|
228
|
|
(1.5
|
)
|
|||
Increase in value of kaléo investment held abroad
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(2,326
|
)
|
15.6
|
|
|||
Settlement of Terphane acquisition escrow
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(4,200
|
)
|
28.2
|
|
|||
Impact of U.S. Tax Cuts and Jobs Act
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(4,433
|
)
|
29.7
|
|
|||
Worthless stock deductions
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(61,413
|
)
|
411.9
|
|
|||
Foreign derived intangible income deduction
|
(273
|
)
|
(0.5
|
)
|
|
(1,050
|
)
|
(2.9
|
)
|
|
—
|
|
—
|
|
|||
Changes in estimates related to prior year tax provision
|
(721
|
)
|
(1.2
|
)
|
|
(303
|
)
|
(0.8
|
)
|
|
320
|
|
(2.1
|
)
|
|||
Research and development tax credit
|
(830
|
)
|
(1.4
|
)
|
|
(420
|
)
|
(1.2
|
)
|
|
(375
|
)
|
2.5
|
|
|||
Dividend received deduction net of foreign withholding tax
|
(1,016
|
)
|
(1.7
|
)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||
Brazilian tax incentive
|
(1,999
|
)
|
(3.4
|
)
|
|
(1,340
|
)
|
(3.7
|
)
|
|
—
|
|
—
|
|
|||
Tax contingency accruals and tax settlements
|
(2,543
|
)
|
(4.4
|
)
|
|
773
|
|
2.1
|
|
|
(420
|
)
|
2.8
|
|
|||
Valuation allowance due to foreign losses and impairments
|
(14,929
|
)
|
(25.6
|
)
|
|
(975
|
)
|
(2.7
|
)
|
|
20,757
|
|
(139.3
|
)
|
|||
Income tax expense (benefit) at effective income tax rate
|
$
|
9,913
|
|
17.1
|
|
|
$
|
11,526
|
|
31.7
|
|
|
$
|
(53,163
|
)
|
356.5
|
|
(In thousands)
|
2019
|
|
2018
|
||||
Deferred income tax liabilities:
|
|
|
|
||||
Amortization of goodwill and identifiable intangibles
|
$
|
12,023
|
|
|
$
|
13,416
|
|
Depreciation
|
7,065
|
|
|
—
|
|
||
Foregone tax credits on foreign branch income
|
12,361
|
|
|
—
|
|
||
Foreign currency translation gain adjustment
|
—
|
|
|
300
|
|
||
Excess of carrying value over tax basis of investment in kaléo
|
17,504
|
|
|
15,131
|
|
||
Right-of-use leased assets
|
751
|
|
|
—
|
|
||
Other
|
549
|
|
|
184
|
|
||
Total deferred income tax liabilities
|
50,253
|
|
|
29,031
|
|
||
Deferred income tax assets:
|
|
|
|
||||
Depreciation
|
—
|
|
|
2,399
|
|
||
Pensions
|
21,025
|
|
|
17,153
|
|
||
Employee benefits
|
7,964
|
|
|
6,676
|
|
||
Excess capital losses
|
1,551
|
|
|
1,519
|
|
||
Inventory
|
3,734
|
|
|
3,644
|
|
||
Asset write-offs, divestitures and environmental accruals
|
1,355
|
|
|
1,200
|
|
||
Tax benefit on U.S. federal, state and foreign NOL and credit carryforwards
|
19,658
|
|
|
23,507
|
|
||
Timing adjustment for unrecognized tax benefits on uncertain tax positions, including portion relating to interest and penalties
|
187
|
|
|
267
|
|
||
Allowance for doubtful accounts
|
383
|
|
|
382
|
|
||
Lease liabilities
|
967
|
|
|
—
|
|
||
Derivative financial instruments
|
345
|
|
|
432
|
|
||
Foreign currency translation gain adjustment
|
285
|
|
|
—
|
|
||
Deferred income tax assets before valuation allowance
|
57,454
|
|
|
57,179
|
|
||
Less: Valuation allowance
|
5,091
|
|
|
24,736
|
|
||
Total deferred income tax assets
|
52,363
|
|
|
32,443
|
|
||
Net deferred income tax (assets) liabilities
|
$
|
(2,110
|
)
|
|
$
|
(3,412
|
)
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
||||
Deferred income tax assets (noncurrent)
|
$
|
13,129
|
|
|
$
|
3,412
|
|
Deferred income tax liabilities (noncurrent)
|
11,019
|
|
|
—
|
|
||
Net deferred income tax assets (liabilities)
|
$
|
2,110
|
|
|
$
|
3,412
|
|
|
|
Years Ended December 31,
|
||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of period
|
$
|
3,361
|
|
|
$
|
1,962
|
|
|
$
|
3,315
|
|
|
Increase (decrease) due to tax positions taken in:
|
|
|
|
|
|
|||||||
Current period
|
12
|
|
|
13
|
|
|
27
|
|
||||
Prior period
|
49
|
|
|
1,430
|
|
|
(532
|
)
|
||||
Increase (decrease) due to settlements with taxing authorities
|
(151
|
)
|
|
—
|
|
|
(51
|
)
|
||||
Reductions due to lapse of statute of limitations
|
(2,390
|
)
|
|
(44
|
)
|
|
(797
|
)
|
||||
Balance at end of period
|
$
|
881
|
|
|
$
|
3,361
|
|
|
$
|
1,962
|
|
|
|
Years Ended December 31,
|
||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gross unrecognized tax benefits on uncertain tax positions (reflected in
current income tax, other noncurrent liability accounts, or deferred tax assets in the balance sheet)
|
$
|
881
|
|
|
$
|
3,361
|
|
|
$
|
1,962
|
|
|
Deferred income tax assets related to unrecognized tax benefits on uncertain tax positions (reflected in deferred income tax accounts in the balance sheet)
|
(163
|
)
|
|
(211
|
)
|
|
(153
|
)
|
||||
Net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized
|
718
|
|
|
3,150
|
|
|
1,809
|
|
||||
Interest and penalties accrued on deductions taken relating to uncertain tax positions (approximately $(144), $107 and $(1) reflected in income tax expense in the income statement in 2019, 2018 and 2017, respectively, with the balance shown in current income tax and other noncurrent liability accounts in the balance sheet)
|
100
|
|
|
243
|
|
|
136
|
|
||||
Related deferred income tax assets recognized on interest and penalties
|
(23
|
)
|
|
(56
|
)
|
|
(32
|
)
|
||||
Interest and penalties accrued on uncertain tax positions net of related deferred income tax benefits, which would impact the effective tax rate if recognized
|
77
|
|
|
187
|
|
|
104
|
|
||||
Total net unrecognized tax benefits on uncertain tax positions reflected in the balance sheet, which would impact the effective tax rate if recognized
|
$
|
795
|
|
|
$
|
3,337
|
|
|
$
|
1,913
|
|
17
|
ASSET IMPAIRMENTS AND COSTS ASSOCIATED WITH EXIT AND DISPOSAL ACTIVITIES
|
18
|
CONTINGENCIES
|
19
|
SELECTED QUARTERLY FINANCIAL DATA
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
For the year ended December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
248,466
|
|
|
$
|
248,248
|
|
|
$
|
243,217
|
|
|
$
|
232,427
|
|
Gross profit
|
38,792
|
|
|
46,780
|
|
|
42,668
|
|
|
40,546
|
|
||||
Net income (loss)
|
$
|
19,785
|
|
|
$
|
14,477
|
|
|
$
|
17,133
|
|
|
$
|
(3,135
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.60
|
|
|
$
|
0.44
|
|
|
$
|
0.51
|
|
|
$
|
(0.09
|
)
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.44
|
|
|
$
|
0.51
|
|
|
$
|
(0.09
|
)
|
Shares used to compute earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
33,123
|
|
|
33,270
|
|
|
33,271
|
|
|
33,278
|
|
||||
Diluted
|
33,127
|
|
|
33,278
|
|
|
33,285
|
|
|
33,278
|
|
||||
For the year ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Sales
|
$
|
258,711
|
|
|
$
|
263,759
|
|
|
$
|
267,294
|
|
|
$
|
275,707
|
|
Gross profit
|
46,732
|
|
|
44,652
|
|
|
40,478
|
|
|
47,826
|
|
||||
Net income
|
$
|
18,165
|
|
|
$
|
14,722
|
|
|
$
|
(34,201
|
)
|
|
$
|
26,157
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.55
|
|
|
$
|
0.45
|
|
|
$
|
(1.03
|
)
|
|
$
|
0.79
|
|
Diluted
|
$
|
0.55
|
|
|
$
|
0.44
|
|
|
$
|
(1.03
|
)
|
|
$
|
0.79
|
|
Shares used to compute earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
32,982
|
|
|
33,074
|
|
|
33,110
|
|
|
33,103
|
|
||||
Diluted
|
32,988
|
|
|
33,108
|
|
|
33,110
|
|
|
33,112
|
|
*10.7.1
|
|
|
|
*10.8
|
|
|
|
*10.9
|
|
|
|
*10.10
|
|
|
|
*10.11
|
|
|
|
10.12
|
|
|
|
*10.13
|
|
|
|
*10.13.1
|
|
|
|
*10.14
|
|
|
|
*10.15
|
|
|
|
*10.16
|
|
|
|
10.17
|
|
|
|
+21
|
|
|
|
+23.1
|
|
|
|
+23.2
|
|
|
|
+31.1
|
|
|
|
+31.2
|
|
|
|
+32.1
|
|
|
|
+32.2
|
|
|
|
+101
|
XBRL Instance Document and Related Items
|
|
|
*
|
Denotes compensatory plans or arrangements or management contracts.
|
+
|
Filed herewith
|
|
|
TREDEGAR CORPORATION
(Registrant)
|
||
|
|
|
|
|
Dated:
|
March 16, 2020
|
By
|
|
/s/ John M. Steitz
|
|
|
|
|
John M. Steitz
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
|
/s/
|
John M. Steitz
|
|
President, Chief Executive Officer and Director
|
|
(John M. Steitz)
|
|
(Principal Executive Officer)
|
|
|
|
|
/s/
|
D. Andrew Edwards
|
|
Vice President and Chief Financial Officer
|
|
(D. Andrew Edwards)
|
|
(Principal Financial Officer)
|
|
|
|
|
/s/
|
Frasier W. Brickhouse, II
|
|
Corporate Treasurer and Controller
|
|
(Frasier W. Brickhouse, II)
|
|
(Principal Accounting Officer)
|
|
|
|
|
/s/
|
John D. Gottwald
|
|
Chairman of the Board of Directors
|
|
(John D. Gottwald)
|
|
|
|
|
|
|
/s/
|
George C. Freeman, III
|
|
Director
|
|
(George C. Freeman, III)
|
|
|
|
|
|
|
/s/
|
William M. Gottwald
|
|
Director
|
|
(William M. Gottwald)
|
|
|
|
|
|
|
/s/
|
Kenneth R. Newsome
|
|
Director
|
|
(Kenneth R. Newsome)
|
|
|
|
|
|
|
/s/
|
Gregory A. Pratt
|
|
Director
|
|
(Gregory A. Pratt)
|
|
|
|
|
|
|
/s/
|
Thomas G. Snead, Jr.
|
|
Director
|
|
(Thomas G. Snead, Jr.)
|
|
|
|
|
|
|
/s/
|
Carl E. Tack, III
|
|
Director
|
|
(Carl E. Tack, III)
|
|
|
|
|
|
|
/s/
|
Anne G. Waleski
|
|
Director
|
|
(Anne G. Waleski)
|
|
|
•
|
a majority (but not less than two) of the disinterested directors of the corporation and the holders of two-thirds of the voting shares, other than the shares beneficially owned by the interested shareholder, approve the affiliated transaction; or
|
•
|
before the date the person became an interested shareholder, a majority of the disinterested directors of the corporation approved the transaction that resulted in the shareholder becoming an interested shareholder.
|
•
|
the voting rights are granted by a majority vote of all outstanding shares other than those held by the acquiring person or any officer or employee director of the corporation; or
|
•
|
the articles of incorporation or bylaws of the corporation provide that these Virginia law provisions do not apply to acquisitions of its shares.
|
•
|
restricting dividends on the common stock;
|
•
|
diluting the voting power of the common stock;
|
•
|
impairing the liquidation rights of the common stock;
|
•
|
delaying or preventing a change in control without further action by shareholders; or
|
•
|
impeding or discouraging an acquisition attempt or other transaction that some, or a majority, of the holders of common stock might believe to be in their best interests or in which the holders of common stock might receive a premium for their common stock over the market price of the common stock.
|
Tredegar Corporation
|
|
|
|
Entity
|
State of Incorporation
|
Tredegar Corporation
|
Virginia
|
Bon L Aluminum LLC
|
Virginia
|
Bon L Campo Limited Partnership
|
Texas
|
Bon L Holdings LLC
|
Virginia
|
Bonnell Aluminum (Clearfield), Inc.
|
Delaware
|
Bonnell Aluminum (Corporate), Inc.
|
Virginia
|
Bonnell Aluminum (Elkhart), Inc.
|
Virginia
|
Bonnell Aluminum, Inc.
|
Virginia
|
Bonnell Aluminum (Niles), LLC
|
Virginia
|
Bright View Technologies Corporation
|
Virginia
|
El Campo GP, LLC
|
Virginia
|
Guangzhou Tredegar Film Products Company Limited
|
China
|
Idlewood Properties, Inc.
|
Virginia
|
TAC Holdings LLC
|
Virginia
|
Terphane Acquisition Corp. II
|
Cayman Islands
|
Terphane Holdings LLC
|
Delaware
|
Terphane LLC
|
Delaware
|
Terphane Limitada
|
Brazil
|
Tredegar Brasil Industria de Plasticos Ltda.
|
Brazil
|
Tredegar Capital Holdings LLC
|
Virginia
|
Tredegar Far East Corporation
|
Virginia
|
Tredegar Film Products B.V.
|
The Netherlands
|
Tredegar Film Products Corporation
|
Virginia
|
Tredegar Film Products (Europe), Inc.
|
Virginia
|
Tredegar Film Products India Private Limited
|
India
|
Tredegar Film Products Kft.
|
Hungary
|
Tredegar Film Products (Korea), Inc.
|
Korea
|
Tredegar Film Products - Lake Zurich, LLC
|
Virginia
|
Tredegar Film Products (Latin America), Inc.
|
Virginia
|
Tredegar Film Products (U.S.) LLC
|
Virginia
|
Tredegar Films Development, Inc.
|
Virginia
|
Tredegar International Holdings Coöperatief U.A.
|
The Netherlands
|
Tredegar Investments, LLC
|
Virginia
|
Tredegar Investments II, LLC
|
Virginia
|
Tredegar Performance Films Inc.
|
Virginia
|
Tredegar Personal Care, LLC
|
Virginia
|
Tredegar Surface Protection, LLC
|
Virginia
|
(1)
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2019, of Tredegar Corporation;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
(5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ John M. Steitz
|
|
John M. Steitz
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
(1)
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2019, of Tredegar Corporation;
|
(2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
(5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ D. Andrew Edwards
|
|
D. Andrew Edwards
|
|
Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
/s/ John M. Steitz
|
|
John M. Steitz
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
March 16, 2020
|
|
/s/ D. Andrew Edwards
|
|
D. Andrew Edwards
|
|
Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
March 16, 2020
|
|