x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Virginia | 54-1497771 | |||||||
(State or Other Jurisdiction of
Incorporation or Organization) |
(I.R.S. Employer
Identification No.) |
1100 Boulders Parkway
Richmond, Virginia |
23225 | |||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, no par value | TG | New York Stock Exchange |
Large accelerated filer | ¨ | Accelerated filer | x | Smaller reporting company | ¨ | ||||||||||||||||||||||||
Non-accelerated filer |
¨
|
Emerging growth company | ¨ |
March 31, | December 31, | ||||||||||
2020 | 2019 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 35,059 | $ | 31,422 | |||||||
Accounts and other receivables, net of allowance for doubtful accounts and sales returns of $3,165 in 2020 and $3,036 in 2019 | 106,211 | 107,558 | |||||||||
Income taxes recoverable | 565 | 4,100 | |||||||||
Inventories | 84,215 | 81,380 | |||||||||
Prepaid expenses and other | 8,772 | 8,696 | |||||||||
Total current assets | 234,822 | 233,156 | |||||||||
Property, plant and equipment, at cost | 801,665 | 810,801 | |||||||||
Less accumulated depreciation | (568,034) | (567,911) | |||||||||
Net property, plant and equipment | 233,631 | 242,890 | |||||||||
Right-of-use leased assets | 18,559 | 19,220 | |||||||||
Investment in kaléo (cost basis of $7,500) | 69,400 | 95,500 | |||||||||
Identifiable intangible assets, net | 21,571 | 22,636 | |||||||||
Goodwill | 67,708 | 81,404 | |||||||||
Deferred income taxes | 13,218 | 13,129 | |||||||||
Other assets | 4,277 | 4,733 | |||||||||
Total assets | $ | 663,186 | $ | 712,668 | |||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 105,066 | $ | 103,657 | |||||||
Accrued expenses | 46,862 | 45,809 | |||||||||
Lease liability, short-term | 2,973 | 3,002 | |||||||||
Total current liabilities | 154,901 | 152,468 | |||||||||
Lease liability, long-term | 17,010 | 17,689 | |||||||||
Long-term debt | 43,000 | 42,000 | |||||||||
Pension and other postretirement benefit obligations, net | 105,265 | 107,446 | |||||||||
Deferred income taxes | — | 11,019 | |||||||||
Other noncurrent liabilities | 4,420 | 5,297 | |||||||||
Total liabilities | 324,596 | 335,919 | |||||||||
Shareholders’ equity: | |||||||||||
Common stock, no par value (issued and outstanding - 33,510,714 shares at March 31, 2020 and 33,365,039 shares at December 31, 2019) | 46,054 | 45,514 | |||||||||
Common stock held in trust for savings restoration plan (75,200 shares at March 31, 2020 and 74,798 shares at December 31, 2019) | (1,601) | (1,592) | |||||||||
Accumulated other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustment | (112,192) | (100,663) | |||||||||
Gain (loss) on derivative financial instruments | (5,082) | (1,307) | |||||||||
Pension and other post-retirement benefit adjustments | (92,750) | (95,681) | |||||||||
Retained earnings | 504,161 | 530,478 | |||||||||
Total shareholders’ equity | 338,590 | 376,749 | |||||||||
Total liabilities and shareholders’ equity | $ | 663,186 | $ | 712,668 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||
Revenues and other items: | |||||||||||||||||||||||||||||
Sales | $ | 228,302 | $ | 248,466 | |||||||||||||||||||||||||
Other income (expense), net | (26,211) | 17,110 | |||||||||||||||||||||||||||
202,091 | 265,576 | ||||||||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||
Cost of goods sold | 175,311 | 200,653 | |||||||||||||||||||||||||||
Freight | 8,580 | 9,021 | |||||||||||||||||||||||||||
Selling, general and administrative | 23,169 | 22,012 | |||||||||||||||||||||||||||
Research and development | 4,855 | 4,485 | |||||||||||||||||||||||||||
Amortization of identifiable intangibles | 758 | 891 | |||||||||||||||||||||||||||
Pension and postretirement benefits | 3,567 | 2,415 | |||||||||||||||||||||||||||
Interest expense | 555 | 1,232 | |||||||||||||||||||||||||||
Asset impairments and costs associated with exit and disposal activities, net of adjustments
|
461 | 1,056 | |||||||||||||||||||||||||||
Goodwill impairment
|
13,696 | — | |||||||||||||||||||||||||||
Total | 230,952 | 241,765 | |||||||||||||||||||||||||||
Income (loss) before income taxes
|
(28,861) | 23,811 | |||||||||||||||||||||||||||
Income tax expense (benefit) | (6,540) | 4,026 | |||||||||||||||||||||||||||
Net income (loss) | $ | (22,321) | $ | 19,785 | |||||||||||||||||||||||||
Earnings (loss) per share: | |||||||||||||||||||||||||||||
Basic | $ | (0.67) | $ | 0.60 | |||||||||||||||||||||||||
Diluted | $ | (0.67) | $ | 0.60 | |||||||||||||||||||||||||
Shares used to compute earnings (loss) per share: | |||||||||||||||||||||||||||||
Basic | 33,313 | 33,123 | |||||||||||||||||||||||||||
Diluted | 33,313 | 33,127 | |||||||||||||||||||||||||||
Dividends per share | $ | 0.12 | $ | 0.11 |
Three Months Ended March 31, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Net income (loss) | $ | (22,321) | $ | 19,785 | |||||||||||||
Other comprehensive income (loss): | |||||||||||||||||
Unrealized foreign currency translation adjustment (net of tax benefit of $1,283 in 2020 and tax of $0 in 2019) | (11,529) | (790) | |||||||||||||||
Derivative financial instruments adjustment (net of tax benefit of $1,226 in 2020 and tax of $83 in 2019) | (3,775) | (353) | |||||||||||||||
Amortization of prior service costs and net gains or losses (net of tax of $836 in 2020 and tax of $592 in 2019) | 2,931 | 2,079 | |||||||||||||||
Other comprehensive income (loss) | (12,373) | 936 | |||||||||||||||
Comprehensive income (loss) | $ | (34,694) | $ | 20,721 | |||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income (loss) | $ | (22,321) | $ | 19,785 | |||||||||||||
Adjustments for noncash items: | |||||||||||||||||
Depreciation | 7,557 | 7,168 | |||||||||||||||
Amortization of identifiable intangibles | 758 | 891 | |||||||||||||||
Reduction of right-of-use lease asset | 696 | 632 | |||||||||||||||
Goodwill impairment | 13,696 | — | |||||||||||||||
Deferred income taxes | (9,804) | 2,410 | |||||||||||||||
Accrued pension and post-retirement benefits | 3,567 | 2,415 | |||||||||||||||
(Gain) loss on investment in kaléo accounted for under the fair value method | 26,100 | (17,082) | |||||||||||||||
(Gain) loss on asset impairments and divestitures | — | 421 | |||||||||||||||
Net (gain) loss on disposal of assets | — | (385) | |||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||
Accounts and other receivables | (2,849) | 1,595 | |||||||||||||||
Inventories | (6,982) | (6,794) | |||||||||||||||
Income taxes recoverable/payable | 3,478 | 1,664 | |||||||||||||||
Prepaid expenses and other | (294) | 1,078 | |||||||||||||||
Accounts payable and accrued expenses | 3,588 | (2,033) | |||||||||||||||
Lease liability | (741) | (640) | |||||||||||||||
Pension and postretirement benefit plan contributions | (1,967) | (1,724) | |||||||||||||||
Other, net | 595 | 1,727 | |||||||||||||||
Net cash provided by operating activities | 15,077 | 11,128 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Capital expenditures | (4,854) | (12,879) | |||||||||||||||
Proceeds from the sale of assets and other | — | 22 | |||||||||||||||
Net cash used in investing activities | (4,854) | (12,857) | |||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Borrowings | 16,500 | 23,750 | |||||||||||||||
Debt principal payments | (15,500) | (15,250) | |||||||||||||||
Dividends paid | (4,005) | (3,652) | |||||||||||||||
Repurchase of employee common stock for tax withholdings | (586) | (815) | |||||||||||||||
Net cash (used in) provided by financing activities | (3,591) | 4,033 | |||||||||||||||
Effect of exchange rate changes on cash | (2,995) | (399) | |||||||||||||||
Increase in cash & cash equivalents | 3,637 | 1,905 | |||||||||||||||
Cash and cash equivalents at beginning of period | 31,422 | 34,397 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 35,059 | $ | 36,302 |
Accumulated Other
Comprehensive Income (Loss) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common
Stock |
Retained
Earnings |
Trust for
Savings Restoration Plan |
Foreign
Currency Translation |
Gain
(Loss) on Derivative Financial Instruments |
Pension &
Other
Post-retirement
Benefit
Adjustment
|
Total
Shareholders’ Equity |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2020
|
$ | 45,514 | $ | 530,478 | $ | (1,592) | $ | (100,663) | $ | (1,307) | $ | (95,681) | $ | 376,749 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | (22,321) | — | — | — | — | (22,321) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax benefit of $1,283) | — | — | — | (11,529) | — | — | (11,529) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments adjustment (net of tax benefit of $1,226) | — | — | — | — | (3,775) | — | (3,775) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of prior service costs and net gains or losses (net of tax of $836) | — | — | — | — | — | 2,931 | 2,931 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.12 per share) | — | (4,005) | — | — | — | — | (4,005) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 1,126 | — | — | — | — | — | 1,126 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of employee common stock for tax
withholdings |
(586) | — | — | — | — | — | (586) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tredegar common stock purchased by trust for savings restoration plan | — | 9 | (9) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | 46,054 | $ | 504,161 | $ | (1,601) | $ | (112,192) | $ | (5,082) | $ | (92,750) | $ | 338,590 |
Accumulated Other
Comprehensive Income (Loss) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common
Stock |
Retained
Earnings |
Trust for
Savings Restoration Plan |
Foreign
Currency Translation |
Gain
(Loss) on Derivative Financial Instruments |
Pension &
Other Post-retirement Benefit Adjustment |
Total
Shareholders’ Equity |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019
|
$ | 38,892 | $ | 497,511 | $ | (1,559) | $ | (96,940) | $ | (1,601) | $ | (81,446) | $ | 354,857 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | 19,785 | — | — | — | — | 19,785 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment (net of tax of $0)
|
— | — | — | (790) | — | — | (790) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments adjustment (net of tax benefit of $83)
|
— | — | — | — | (353) | — | (353) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of prior service costs and net gains or losses (net of tax of $592)
|
— | — | — | — | — | 2,079 | 2,079 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($0.11 per share)
|
— | (3,652) | — | — | — | — | (3,652) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
1,510 | — | — | — | — | — | 1,510 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of employee common stock for tax
withholdings |
(815) | — | — | — | — | — | (815) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tredegar common stock purchased by trust for savings restoration plan
|
— | 9 | (9) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | 39,587 | $ | 513,653 | $ | (1,568) | $ | (97,730) | $ | (1,954) | $ | (79,367) | $ | 372,621 |
March 31, | December 31, | ||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Customer receivables | $ | 104,604 | $ | 106,153 | |||||||||||||
Other accounts and notes receivable | 4,772 | 4,441 | |||||||||||||||
Total accounts and other receivables | 109,376 | 110,594 | |||||||||||||||
Less: Allowance for bad debts and sales returns | (3,165) | (3,036) | |||||||||||||||
Total accounts and other receivables, net | $ | 106,211 | $ | 107,558 |
(In thousands) | Severance | Asset Impairments | Other | Total | ||||||||||||||||||||||||||||
Balance at January 1, 2020 | $ | 1,294 | $ | — | $ | 86 | $ | 1,380 | ||||||||||||||||||||||||
Changes in 2020: | ||||||||||||||||||||||||||||||||
Charges:
|
||||||||||||||||||||||||||||||||
Lake Zurich plant shutdown | 128 | 239 | 19 | 386 | ||||||||||||||||||||||||||||
Other restructuring charges | 47 | — | 28 | 75 | ||||||||||||||||||||||||||||
175 | 239 | 47 | 461 | |||||||||||||||||||||||||||||
Cash payments | (721) | — | (72) | (793) | ||||||||||||||||||||||||||||
Charges against assets | — | (239) | — | (239) | ||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | 748 | $ | — | $ | 61 | $ | 809 | ||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||
Finished goods | $ | 23,116 | $ | 24,504 | |||||||||||||
Work-in-process | 13,939 | 12,328 | |||||||||||||||
Raw materials | 27,079 | 24,735 | |||||||||||||||
Stores, supplies and other | 20,081 | 19,813 | |||||||||||||||
Total | $ | 84,215 | $ | 81,380 |
Three Months Ended | |||||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||||||||||||||
Weighted average shares outstanding used to compute basic earnings per share
|
33,313 | 33,123 | |||||||||||||||||||||||||||
Incremental dilutive shares attributable to stock options and restricted stock
|
— | 4 | |||||||||||||||||||||||||||
Shares used to compute diluted earnings per share
|
33,313 | 33,127 |
(In thousands) |
Foreign
currency translation adjustment |
Gain (loss) on
derivative financial instruments |
Pension and
other post-retirement benefit adjustments |
Total | |||||||||||||||||||
Beginning balance, January 1, 2020 | $ | (100,663) | $ | (1,307) | $ | (95,681) | $ | (197,651) | |||||||||||||||
Other comprehensive income (loss) before reclassifications
|
(11,529) | (4,888) | — | (16,417) | |||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
— | 1,113 | 2,931 | 4,044 | |||||||||||||||||||
Net other comprehensive income (loss) - current period
|
(11,529) | (3,775) | 2,931 | (12,373) | |||||||||||||||||||
Ending balance, March 31, 2020 | $ | (112,192) | $ | (5,082) | $ | (92,750) | $ | (210,024) |
(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 | (790) | (1,011) | — | (1,801) | |||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 658 | 2,079 | 2,737 | |||||||||||||||||||
Net other comprehensive income (loss) - current period | (790) | (353) | 2,079 | 936 | |||||||||||||||||||
Ending balance, March 31, 2019 | $ | (97,730) | $ | (1,954) | $ | (79,367) | $ | (179,051) |
(In Thousands) |
Amount
reclassified from other comprehensive income (loss) |
Location of gain
(loss) reclassified from accumulated other comprehensive income (loss) to net income (loss) |
|||||||||
Gain (loss) on derivative financial instruments: | |||||||||||
Aluminum future contracts, before taxes | $ | (640) | Cost of sales | ||||||||
Foreign currency forward contracts, before taxes | (794) | Selling, general & administrative | |||||||||
Foreign currency forward contracts, before taxes | 15 | Cost of sales | |||||||||
Total, before taxes | (1,419) | ||||||||||
Income tax expense (benefit) | (306) | Income taxes | |||||||||
Total, net of tax | $ | (1,113) | |||||||||
Amortization of pension and other post-retirement benefits: | |||||||||||
Actuarial gain (loss) and prior service costs, before taxes | $ | (3,767) | (a) | ||||||||
Income tax expense (benefit) | (836) | Income taxes | |||||||||
Total, net of tax | $ | (2,931) |
(In Thousands) |
Amount
reclassified from other comprehensive income (loss) |
Location of gain
(loss) reclassified from accumulated other comprehensive income (loss) to net income (loss) |
|||||||||
Gain (loss) on derivative financial instruments: | |||||||||||
Aluminum future contracts, before taxes | $ | (617) | Cost of sales | ||||||||
Foreign currency forward contracts, before taxes | (191) | Selling, general & administrative | |||||||||
Foreign currency forward contracts, before taxes | 15 | Cost of sales | |||||||||
Total, before taxes | (793) | ||||||||||
Income tax expense (benefit) | (135) | Income taxes | |||||||||
Total, net of tax | $ | (658) | |||||||||
Amortization of pension and other post-retirement benefits: | |||||||||||
Actuarial gain (loss) and prior service costs, before taxes | $ | (2,671) | (a) | ||||||||
Income tax expense (benefit) | (592) | Income taxes | |||||||||
Total, net of tax | $ | (2,079) |
($ Millions) | EV-to-Adjusted EBITDA Multiple | |||||||||||||||||||||||||||||||
5.0 x | 6.0 x | 7.0 x | 8.0x | 9.0x | ||||||||||||||||||||||||||||
Weighting to DCF Method | 50 | % | $ | 58.2 | $ | 63.6 | $ | 69.0 | $ | 74.4 | $ | 79.8 | ||||||||||||||||||||
40 | % | $ | 56.1 | $ | 62.6 | $ | 69.1 | $ | 75.6 | $ | 82.1 | |||||||||||||||||||||
30 | % | $ | 54.1 | $ | 61.7 | $ | 69.3 | $ | 76.9 | $ | 84.4 | |||||||||||||||||||||
20 | % | $ | 52.1 | $ | 60.8 | $ | 69.4 | $ | 78.1 | $ | 86.7 | |||||||||||||||||||||
10 | % | $ | 50.1 | $ | 59.8 | $ | 69.6 | $ | 79.3 | $ | 89.0 | |||||||||||||||||||||
0 | % | $ | 48.0 | $ | 58.9 | $ | 69.7 | $ | 80.5 | $ | 91.3 |
March 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
(In thousands) |
Balance Sheet
Account |
Fair
Value |
Balance Sheet
Account |
Fair
Value |
|||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||
Asset derivatives:
Aluminum futures contracts
|
Accrued expenses | $ | — | Accrued expenses | $ | 6 | |||||||||||||||||||||||||||||
Liability derivatives:
Aluminum futures contracts
|
Accrued expenses | (2,207) | Accrued expenses | (1,259) | |||||||||||||||||||||||||||||||
Net asset (liability)
|
$ | (2,207) | $ | (1,253) |
March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||
(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 | $ | — | Prepaid expenses and other | $ | 83 | ||||||||||||||||||||||||||||||||
Liability derivatives:
Foreign currency forward contracts |
Accrued expenses | (5,222) | Accrued expenses | (935) | ||||||||||||||||||||||||||||||||||
Net asset (liability) | $ | (5,222) | $ | (852) |
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 | ||||||||||
$2,200 | 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% | ||||||||||
$19,650 | 3.9409 | R$77,438 | 75% |
Three Months Ended March 31, | |||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||||||||||||||
Gain (loss) on investment in kaléo accounted for under fair value method | $ | (26,100) | $ | 17,082 | |||||||||||||||||||||||||
Other | (111) | 28 | |||||||||||||||||||||||||||
Total | $ | (26,211) | $ | 17,110 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | |||||||||||||||||||||||||||
Net Sales | |||||||||||||||||||||||||||||
Aluminum Extrusions | $ | 117,887 | $ | 139,047 | |||||||||||||||||||||||||
PE Films | 71,261 | 66,779 | |||||||||||||||||||||||||||
Flexible Packaging Films | 30,574 | 33,619 | |||||||||||||||||||||||||||
Total net sales | 219,722 | 239,445 | |||||||||||||||||||||||||||
Add back freight | 8,580 | 9,021 | |||||||||||||||||||||||||||
Sales as shown in the Consolidated Statements of Income | $ | 228,302 | $ | 248,466 | |||||||||||||||||||||||||
EBITDA from Ongoing Operations | |||||||||||||||||||||||||||||
Aluminum Extrusions: | |||||||||||||||||||||||||||||
Ongoing operations: | |||||||||||||||||||||||||||||
EBITDA | 11,677 | 16,166 | |||||||||||||||||||||||||||
Depreciation & amortization | (4,113) | (4,081) | |||||||||||||||||||||||||||
EBIT | 7,564 | 12,085 | |||||||||||||||||||||||||||
Plant shutdowns, asset impairments, restructurings and other (a) | (688) | (40) | |||||||||||||||||||||||||||
Goodwill impairment | (13,696) | — | |||||||||||||||||||||||||||
PE Films: | |||||||||||||||||||||||||||||
Ongoing operations: | |||||||||||||||||||||||||||||
EBITDA | 14,189 | 6,543 | |||||||||||||||||||||||||||
Depreciation & amortization | (3,724) | (3,592) | |||||||||||||||||||||||||||
EBIT | 10,465 | 2,951 | |||||||||||||||||||||||||||
Plant shutdowns, asset impairments, restructurings and other (a) | (906) | (1,378) | |||||||||||||||||||||||||||
Flexible Packaging Films: | |||||||||||||||||||||||||||||
Ongoing operations: | |||||||||||||||||||||||||||||
EBITDA | 6,553 | 3,203 | |||||||||||||||||||||||||||
Depreciation & amortization | (428) | (344) | |||||||||||||||||||||||||||
EBIT | 6,125 | 2,859 | |||||||||||||||||||||||||||
Total | 8,864 | 16,477 | |||||||||||||||||||||||||||
Interest income | 52 | 59 | |||||||||||||||||||||||||||
Interest expense | 555 | 1,232 | |||||||||||||||||||||||||||
Gain (loss) on investment in kaléo accounted for under fair value method
|
(26,100) | 17,082 | |||||||||||||||||||||||||||
Stock option-based compensation costs | 584 | 415 | |||||||||||||||||||||||||||
Corporate expenses, net | 10,538 | 8,160 | |||||||||||||||||||||||||||
Income (loss) before income taxes
|
(28,861) | 23,811 | |||||||||||||||||||||||||||
Income tax expense (benefit) | (6,540) | 4,026 | |||||||||||||||||||||||||||
Net income (loss) | $ | (22,321) | $ | 19,785 |
(In thousands) | March 31, 2020 | December 31, 2019 | |||||||||
Aluminum Extrusions | $ | 252,844 | $ | 265,027 | |||||||
PE Films | 224,987 | 230,415 | |||||||||
Flexible Packaging Films | 65,869 | 74,016 | |||||||||
Subtotal | 543,700 | 569,458 | |||||||||
General corporate | 84,427 | 111,788 | |||||||||
Cash and cash equivalents | 35,059 | 31,422 | |||||||||
Total | $ | 663,186 | $ | 712,668 |
Net Sales by Geographic Area (a) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||
United States | $ | 146,183 | $ | 172,254 | ||||||||||||||||||||||||||||||||||
Exports from the United States to: | ||||||||||||||||||||||||||||||||||||||
Asia | 22,164 | 13,493 | ||||||||||||||||||||||||||||||||||||
Latin America | 3,134 | 2,867 | ||||||||||||||||||||||||||||||||||||
Canada | 4,898 | 3,605 | ||||||||||||||||||||||||||||||||||||
Europe | 1,501 | 1,360 | ||||||||||||||||||||||||||||||||||||
Operations outside the United States: | ||||||||||||||||||||||||||||||||||||||
Brazil | 25,948 | 28,138 | ||||||||||||||||||||||||||||||||||||
The Netherlands | 7,885 | 9,587 | ||||||||||||||||||||||||||||||||||||
Hungary | 6,604 | 6,834 | ||||||||||||||||||||||||||||||||||||
India | 1,405 | 1,077 | ||||||||||||||||||||||||||||||||||||
China | — | 230 | ||||||||||||||||||||||||||||||||||||
Total | $ | 219,722 | $ | 239,445 |
Net Sales by Product Group | ||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
(In thousands) | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||
Aluminum Extrusions: | ||||||||||||||||||||||||||||||||||||||
Nonresidential building & construction | $ | 63,139 | $ | 69,638 | ||||||||||||||||||||||||||||||||||
Consumer durables | 12,549 | 15,545 | ||||||||||||||||||||||||||||||||||||
Automotive | 9,471 | 12,627 | ||||||||||||||||||||||||||||||||||||
Residential building & construction | 9,815 | 11,672 | ||||||||||||||||||||||||||||||||||||
Electrical | 7,239 | 11,069 | ||||||||||||||||||||||||||||||||||||
Machinery & equipment | 7,936 | 9,923 | ||||||||||||||||||||||||||||||||||||
Distribution | 7,738 | 8,573 | ||||||||||||||||||||||||||||||||||||
Subtotal | 117,887 | 139,047 | ||||||||||||||||||||||||||||||||||||
PE Films: | ||||||||||||||||||||||||||||||||||||||
Personal care materials | 41,230 | 44,855 | ||||||||||||||||||||||||||||||||||||
Surface protection films | 28,353 | 19,888 | ||||||||||||||||||||||||||||||||||||
LED lighting products & other films | 1,678 | 2,036 | ||||||||||||||||||||||||||||||||||||
Subtotal | 71,261 | 66,779 | ||||||||||||||||||||||||||||||||||||
Flexible Packaging Films | 30,574 | 33,619 | ||||||||||||||||||||||||||||||||||||
$ | 219,722 | $ | 239,445 |
(In thousands, except percentages) | 2020 | 2019 | |||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Amount | % | Amount | % | |||||||||||||||||||||||||||||||
Income tax (benefit) expense at federal statutory rate | $ | (6,061) | 21.0 | $ | 5,000 | 21.0 | |||||||||||||||||||||||||||||
Foreign tax incentives | (1,430) | 5.0 | (436) | (1.8) | |||||||||||||||||||||||||||||||
Changes in estimates related to prior year tax provision | (601) | 2.1 | — | — | |||||||||||||||||||||||||||||||
Research and development tax credit | (278) | 1.0 | (86) | (0.4) | |||||||||||||||||||||||||||||||
State taxes, net of federal income tax benefit | (261) | 0.8 | 180 | 0.8 | |||||||||||||||||||||||||||||||
Valuation allowance due to foreign losses and impairments | (136) | 0.5 | (253) | (1.1) | |||||||||||||||||||||||||||||||
Tax impact of dividend received | — | — | (919) | (3.9) | |||||||||||||||||||||||||||||||
Foreign Derived Intangible Income (FDII) | — | — | (194) | (0.8) | |||||||||||||||||||||||||||||||
Valuation allowance for capital loss carry-forwards | 40 | (0.1) | — | — | |||||||||||||||||||||||||||||||
Non-deductible expenses | 232 | (0.8) | 73 | 0.3 | |||||||||||||||||||||||||||||||
Stock-based compensation | 252 | (0.9) | (133) | (0.6) | |||||||||||||||||||||||||||||||
U.S. Tax on Foreign Branch Income | 573 | (2.0) | 465 | 2.0 | |||||||||||||||||||||||||||||||
Foreign rate differences | 1,130 | (3.9) | 329 | 1.4 | |||||||||||||||||||||||||||||||
Effective income tax rate | $ | (6,540) | 22.7 | $ | 4,026 | 16.9 |
Three Months Ended |
Favorable/
(Unfavorable) % Change |
|||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except percentages) | March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Sales volume (lbs) | 47,317 | 53,616 | (11.7) | % | ||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 117,887 | $ | 139,047 | (15.2) | % | ||||||||||||||||||||||||||||||||||||||||||||
Ongoing operations: | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA | $ | 11,677 | $ | 16,166 | (27.8) | % | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation & amortization | $ | (4,113) | $ | (4,081) | (0.8) | % | ||||||||||||||||||||||||||||||||||||||||||||
EBIT* | $ | 7,564 | $ | 12,085 | (37.4) | % | ||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 1,574 | $ | 4,367 | ||||||||||||||||||||||||||||||||||||||||||||||
* See the net sales and EBITDA from ongoing operations by segment table in Note 11 for a reconciliation of this non-GAAP measure to GAAP.
|
Three Months Ended |
Favorable/
(Unfavorable) % Change |
|||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except percentages) | March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Sales volume (lbs) | 27,529 | 25,846 | 6.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 71,261 | $ | 66,779 | 6.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
Ongoing operations: | ||||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA | $ | 14,189 | $ | 6,543 | 116.9 | % | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation & amortization | $ | (3,724) | $ | (3,592) | (3.7) | % | ||||||||||||||||||||||||||||||||||||||||||||
EBIT* | $ | 10,465 | $ | 2,951 | 254.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 2,416 | $ | 6,704 | ||||||||||||||||||||||||||||||||||||||||||||||
* See the net sales and EBITDA from ongoing operations by segment table in Note 11 for a reconciliation of this non-GAAP measure to GAAP.
|
Three months ended March 31, | |||||||||||||||||||||||||||||||||||
($ in millions) | 2020 | 2019 | |||||||||||||||||||||||||||||||||
Aluminum Extrusions: | |||||||||||||||||||||||||||||||||||
Losses from sale of assets, investment writedowns and other items: | |||||||||||||||||||||||||||||||||||
Consulting expenses for ERP feasibility study2
|
$ | 0.7 | $ | — | |||||||||||||||||||||||||||||||
PE Films: | |||||||||||||||||||||||||||||||||||
(Gains) losses associated with plant shutdowns, asset impairments and restructurings: | |||||||||||||||||||||||||||||||||||
Shanghai plant shutdown: | |||||||||||||||||||||||||||||||||||
Asset-related expenses | $ | — | $ | 0.2 | |||||||||||||||||||||||||||||||
Consolidation of Personal Care manufacturing facilities - U.S. and Europe:
|
|||||||||||||||||||||||||||||||||||
Product qualifications1
|
0.1 | — | |||||||||||||||||||||||||||||||||
Lake Zurich, Illinois plant shutdown and transfer of production to new elastics lines in Terre Haute, Indiana:4
|
|||||||||||||||||||||||||||||||||||
Severance | 0.1 | — | |||||||||||||||||||||||||||||||||
Asset impairment | 0.3 | — | |||||||||||||||||||||||||||||||||
Other restructuring costs - severance | — | 0.4 | |||||||||||||||||||||||||||||||||
Write-off of Personal Care production line - Guangzhou, China facility
|
— | 0.4 | |||||||||||||||||||||||||||||||||
Subtotal for PE Films | 0.5 | 1.0 | |||||||||||||||||||||||||||||||||
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
|
0.4 | 0.3 | |||||||||||||||||||||||||||||||||
Total for PE Films | $ | 0.9 | $ | 1.3 | |||||||||||||||||||||||||||||||
Corporate: | |||||||||||||||||||||||||||||||||||
Professional fees associated with: remediation activities and other costs relating to the Company’s material weaknesses in internal control over financial reporting; business development activities; and implementation of new accounting guidance2
|
$ | 2.3 | $ | 0.9 | |||||||||||||||||||||||||||||||
Write-down of investment in Harbinger Capital Partners Special Situations Fund3
|
0.2 | — | |||||||||||||||||||||||||||||||||
Total for Corporate | $ | 2.5 | $ | 0.9 | |||||||||||||||||||||||||||||||
1. Included in “Cost of goods sold” in the consolidated statements of income.
2. Included in “Selling, general and administrative” in the consolidated statements of income. 3. Included in “Other income (expense), net” in the consolidated statements of income. 4. See additional details in Note 3. |
Three Months Ended March 31, | |||||||||||||||||
(In Millions) | 2020 | 2019 | |||||||||||||||
Floating-rate debt with interest charged on a rollover basis at one-month LIBOR plus a credit spread:
|
|||||||||||||||||
Average outstanding debt balance | $ | 43.2 | $ | 108.7 | |||||||||||||
Average interest rate | 3.3 | % | 4.1 | % | |||||||||||||
Computations of Credit EBITDA and Leverage Ratio and Interest Coverage Ratio as Defined in the Credit Agreement Along with Related Most Restrictive Covenants as of and for the Twelve Months Ended March 31, 2020 (In Thousands) | ||||||||
Computation of Credit EBITDA for the twelve months ended March 31, 2020: | ||||||||
Net income (loss) | $ | 6,152 | ||||||
Plus: | ||||||||
After-tax losses related to discontinued operations | — | |||||||
Total income tax expense for continuing operations | — | |||||||
Interest expense | 3,374 | |||||||
Depreciation and amortization expense (excluding amortization of right-of-use lease assets) for continuing operations | 44,540 | |||||||
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)
|
24,831 | |||||||
Charges related to stock option grants and awards accounted for under the fair value-based method | 4,378 | |||||||
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
|
14,700 | |||||||
Minus: | ||||||||
After-tax income related to discontinued operations | — | |||||||
Total income tax benefits for continuing operations | (653) | |||||||
Interest income | (289) | |||||||
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
|
— | |||||||
Plus cash dividends declared on investments in an amount not to exceed $10,000 for such period | — | |||||||
Plus or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions
|
— | |||||||
Credit EBITDA | 97,033 | |||||||
Computations of leverage and interest coverage ratios as defined in the Credit Agreement at March 31, 2020: | ||||||||
Leverage ratio (indebtedness-to-Credit EBITDA) | .44x | |||||||
Interest coverage ratio (Credit EBITDA-to-interest expense) | 28.76x | |||||||
Most restrictive covenants as defined in the Credit Agreement: | ||||||||
Maximum permitted aggregate amount of dividends that can be paid by Tredegar during the term of the Credit Agreement ($130,000 plus 50% of net income generated for each quarter beginning April 1, 2019)
|
$ | 145,805 | ||||||
Maximum leverage ratio permitted | 4.00 | x | ||||||
Minimum interest coverage ratio permitted | 3.00 | x | ||||||
Source: Quarterly averages computed using daily Midwest average prices provided by Platts. |
Source: Quarterly averages computed by Tredegar using monthly NYMEX settlement prices. |
Source: Quarterly averages computed by Tredegar using monthly data provided by IHS, Inc. In February 2020, IHS reflected a 32 cents per pound non-market adjustment based on their estimate of the growth of discounts in prior periods. The 4th quarter 2019 average rate of $0.51 per pound is shown on a pro forma basis as if the non-market adjustment was made in the fourth quarter of 2019.
|
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 closing data provided by Bloomberg. |
Source: Quarterly averages computed by Tredegar using daily closing data provided by Bloomberg.
|
Exhibit
Nos. |
|||||||||||
3.1 | |||||||||||
10.18 | |||||||||||
10.19 | |||||||||||
10.20 | |||||||||||
31.1 | |||||||||||
31.2 | |||||||||||
32.1 | |||||||||||
32.2 | |||||||||||
101 | XBRL Instance Document and Related Items. |
Tredegar Corporation | ||||||||||||||||||||
(Registrant) | ||||||||||||||||||||
Date: | May 11, 2020 | /s/ John M. Steitz | ||||||||||||||||||
John M. Steitz | ||||||||||||||||||||
President and Chief Executive Officer | ||||||||||||||||||||
(Principal Executive Officer) | ||||||||||||||||||||
Date: | May 11, 2020 | /s/ D. Andrew Edwards | ||||||||||||||||||
D. Andrew Edwards | ||||||||||||||||||||
Vice President and Chief Financial Officer | ||||||||||||||||||||
(Principal Financial Officer) | ||||||||||||||||||||
Date: | May 11, 2020 | /s/ Frasier W. Brickhouse, II | ||||||||||||||||||
Frasier W. Brickhouse, II | ||||||||||||||||||||
Corporate Treasurer and Controller | ||||||||||||||||||||
(Principal Accounting Officer) |
/s/ John M. Steitz | |||||
John M. Steitz | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) |
/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) | |||||
May 11, 2020 |
/s/ D. Andrew Edwards | |||||
D. Andrew Edwards | |||||
Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
May 11, 2020 |