Tredegar Corporation

11/06/2026 | Press release | Distributed by Public on 11/06/2026 07:19

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking and Cautionary Statements
Some of the information contained in this Quarterly Report on Form 10-Q ("Form 10-Q") may constitute "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. When the Company uses the words "believe," "estimate," "anticipate," "appear to," "expect," "project," "plan," "likely," "may" and similar expressions, it does so to identify forward-looking statements. Such statements are based on the Company's then current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those addressed in the forward-looking statements. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these forward-looking statements. Factors that could cause actual results to differ materially from expectations include, without limitation, the following:
•the impact of trade policies and prolonged geopolitical conflicts on raw materials and supply chain constraints;
•the impact of macroeconomic factors, such as inflation, interest rates and recession risks;
•an increase in the operating costs incurred by the Company's business units, including, for example, the cost of raw materials and energy;
•the risks associated with our cost-reduction and operational-improvement initiatives, including our ability to achieve the expected benefits within the expected timeframe or at all;
•failure to continue to attract, develop and retain certain key officers or employees;
•disruptions to the Company's manufacturing facilities, including those resulting from labor shortages;
•an information technology system failure or breach;
•risks of doing business in countries outside the U.S. that affect our international operations;
•the impact of public health epidemics on employees, production and the global economy;
•political, economic and regulatory factors concerning the Company's products;
•the impact of the imposition of tariffs and sanctions on imported aluminum ingot used by Bonnell Aluminum;
•inability to replace aging equipment and information technology systems with necessary capital expenditures;
•inability to develop, efficiently manufacture and deliver new products at competitive prices;
•loss of sales to significant customers on which the Company's business is highly dependent;
•inability to achieve sales to new customers to replace lost business;
•failure of the Company's customers to achieve success or maintain market share;
•noncompliance with any of the financial and other restrictive covenants in the ABL Facility (defined below);
•failure to protect our intellectual property rights;
and the other factors discussed in the reports Tredegar files with or furnishes to the Securities and Exchange Commission (the "SEC") from time to time, including the risks and important factors set forth in additional detail in Part I, Item 1A of Tredegar's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). Readers are urged to review and consider carefully the disclosures Tredegar makes in its filings with the SEC.
Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement to reflect any change in management's expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.
References herein to "Tredegar," "the Company," "we," "us" and "our" are to Tredegar Corporation and its subsidiaries, collectively, unless the context otherwise indicates or requires.
Unless otherwise stated or indicated, all comparisons are to the prior year period. References to "Notes" are to notes to our condensed consolidated financial statements found in Part I, Item 1 of this Form 10-Q.
Critical Accounting Policies and Estimates
In the ordinary course of business, the Company makes a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of financial statements in conformity with generally accepted accounting standards in the United States ("GAAP"). The Company believes the estimates, assumptions and judgments described in the section "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Form 10-K") have the greatest potential impact on our financial statements, so Tredegar considers these to be its critical accounting policies. Since December 31, 2025, there have been no changes in these policies or estimates that have had a material impact on our results of operations or financial position.
Business Overview
Tredegar Corporation is an industrial manufacturer with two primary businesses: custom aluminum extrusions for the building & construction ("B&C"), automotive and specialty end-use markets in the United States through its Aluminum Extrusions segment (with exports comprising less than 5% of total sales volume) and surface protection films for high-technology applications in the global electronics industry through its High Performance Films segment. With approximately 1,700 employees, the Company operates manufacturing facilities in the U.S. and China.
In the fourth quarter of 2025, the Company renamed the segment formerly known as "PE Films." This segment is now referred to as "High Performance Films." The product previously known as polyethylene overwrap films was renamed to advanced packaging films. There were no changes to the operations reported within the High Performance Films segment. The Company continues to have two reportable segments: Aluminum Extrusions and High Performance Films.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations is the measure of segment profit and loss used by Tredegar's chief operating decision maker ("CODM") for purposes of assessing financial performance. The Company uses sales less freight ("net sales") as its measure of revenues from external customers at the segment level. This measure is separately included in the financial information regularly provided to the CODM.
Earnings before interest and taxes ("EBIT") from ongoing operations is a non-GAAP financial measure included in the reconciliation of segment financial information to consolidated results for the Company in the Segment Operations Review section below. 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. We believe that EBIT is a widely understood and utilized metric that is meaningful to certain investors and 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.
Third quarter 2026 net income (loss) from continuing operations was $(2.8) million ($(0.08) per diluted share) compared to $7.1 million ($0.20 per diluted share) in the third quarter of 2025.
Third Quarter Financial Results Highlights
•EBITDA from ongoing operations for Aluminum Extrusions was $2.5 million in the third quarter of 2026 versus $16.8 million in the third quarter of 2025 and versus $14.5 million in the second quarter of 2026.
•EBITDA from ongoing operations for High Performance Films was $4.6 million in the third quarter of 2026 versus $7.2 million in the third quarter of 2025 and versus $5.8 million in the second quarter of 2026.
Results of Operations
Third Quarter of 2026 Compared with the Third Quarter of 2025 Results
The following table presents a bridge of consolidated net income (loss) from continuing operations from the third quarter of 2025 to the third quarter of 2026 with management's related discussion and analysis below the table.
(In thousands)
Net income (loss) from continuing operations for the three months ended September 30, 2025
$ 7,109
Income tax expense (benefit) 2,014
Income (loss) from continuing operations before income taxes for the three months ended September 30, 2025
9,123
Change in income (loss) from increases (decreases) in the following items:
Sales 12,232
Other income (expense), net 17
Total 12,249
Change in income (loss) from (increases) decreases in the following items:
Cost of goods sold (29,007)
Freight 461
Selling, general and administrative 3,936
Interest expense 242
Other (493)
Total (24,861)
Income (loss) from continuing operations before income taxes for the three months ended September 30, 2026
(3,489)
Income tax expense (benefit) (663)
Net income (loss) from continuing operations for the three months ended September 30, 2026
$ (2,826)
Sales in the third quarter of 2026 increased by $12.2 million compared with the third quarter of 2025. Net sales (sales less freight) in Aluminum Extrusions increased $14.8 million, primarily due to the pass-through of higher metal costs, partially offset by lower volume. Net sales in High Performance Films decreased $2.1 million, primarily due to a decrease in sales volume and unfavorable mix, partially offset by favorable pricing for surface protection films. For more information on net sales and volume, see the Segment Operations Review below.
Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 7.2% in the third quarter of 2026 compared to 16.0% in the third quarter of 2025. The gross profit margin in Aluminum Extrusions decreased primarily due to higher labor rates, unfavorable labor productivity, higher maintenance expense and higher freight expense, partially offset by favorable pricing and mix and favorable manufacturing costs primarily associated with casting capabilities due to scrap spreads and higher scrap utilization. The gross profit margin in High Performance Films decreased primarily due to a lower surface protection films contribution margin associated with unfavorable volume and mix and the pass-through lag associated with higher resin costs, partially offset by cost improvements.
As a percentage of sales, selling, general and administrative ("SG&A") and research and development ("R&D") expenses were 8.0% in the third quarter of 2026 compared with 10.5% in the third quarter of 2025. Third quarter sales increased 6.3% while SG&A decreased 19.5% compared to the prior period. Lower SG&A spending was primarily due to lower professional fees associated with business development activities ($1.2 million), lower stock-based compensation ($1.0 million) and lower employee compensation ($0.9 million).
Interest expense was $0.5 million in the third quarter of 2026 in comparison to $0.8 million in the third quarter of 2025. The decrease in interest expense was primarily due to lower weighted average total debt outstanding and lower interest rates.
The effective tax rate from continuing operations in the third quarter of 2026 was 19.0% compared to 22.1% in the third quarter of 2025. The effective tax rate for the third quarter of 2026 varied from the statutory rate of 21% due to research and development tax credits while the effective tax rate for the third quarter of 2025 was consistent with the statutory rate of 21%.
Average total debt outstanding and interest rates were as follows:
Three Months Ended September 30,
(In millions, except percentages) 2026 2025
Floating-rate debt with interest charged on a rollover basis plus a credit spread:
Average total outstanding debt balance $ 48.1 $ 59.0
Average interest rate 5.9 % 6.5 %
First Nine Months of 2026 Compared with the First Nine Months of 2025 Results
The following table presents a bridge of consolidated net income (loss) from continuing operations from the first nine months of 2025 to the first nine months of 2026 with management's related discussion and analysis below the table.
(In thousands)
Net income (loss) from continuing operations for the nine months ended September 30, 2025
$ 9,609
Income tax expense (benefit) 3,575
Income (loss) from continuing operations before income taxes for the nine months ended September 30, 2025
13,184
Change in income (loss) from increases (decreases) in the following items:
Sales 71,103
Other income (expense), net (1,278)
Total 69,825
Change in income (loss) from (increases) decreases in the following items:
Cost of goods sold (83,109)
Freight 210
Selling, general and administrative 8,614
Interest expense 2,216
Other (549)
Total (72,618)
Income (loss) from continuing operations before income taxes for the nine months ended September 30, 2026
10,391
Income tax expense (benefit) 2,100
Net income (loss) from continuing operations for the nine months ended September 30, 2026
$ 8,291
Sales in the first nine months of 2026 increased by $71.1 million compared with the first nine months of 2025. Net sales (sales less freight) in Aluminum Extrusions increased $76.4 million, primarily due to the pass-through of higher metal costs, partially offset by lower volume. Net sales in High Performance Films decreased $5.1 million, primarily due to lower volume and unfavorable mix in surface protection films. For more information on net sales and volume, see the Segment Operations Review below.
Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 11.0% in the first nine months of 2026 compared to 14.7% in the first nine months of 2025. The gross profit margin in Aluminum Extrusions decreased primarily due to higher labor rates, unfavorable labor productivity, and higher maintenance and supply expense, die expense, and freight, partially offset by favorable mix and favorable manufacturing costs primarily associated with casting capabilities due to scrap spreads and higher scrap utilization. The gross profit margin in High Performance Films decreased due to a lower Surface Protection contribution margin associated with lower volume, unfavorable pricing and mix, and the pass-through lag associated with higher resin costs, partially offset by favorable productivity and cost improvements.
As a percentage of sales, SG&A and R&D expenses were 8.8% in the first nine months of 2026 compared with 11.5% in the first nine months of 2025. Sales increased 13.2% while SG&A decreased 14.0% compared to the prior period. Lower SG&A spending was primarily due to lower professional fees associated with business development activities ($5.9 million), lower stock-based compensation ($1.8 million) and lower employee compensation ($0.7 million).
Interest expense was $1.4 million in the first nine months of 2026 in comparison to $3.6 million in the first nine months of 2025. The decrease was primarily due to the write-off of deferred financing fees related to the amendment to our credit agreement ("ABL Facility") of $0.8 million during the first nine months of 2025, lower weighted average total debt outstanding and lower interest rates during the first nine months of 2026.
The effective tax rate from continuing operations in the first nine months of 2026 was 20.2% compared to 27.1% in the first nine months of 2025. The effective tax rate for the first nine months of 2026 varied from the statutory rate of 21% due to research and development tax credits while the effective tax rate for the first nine months of 2025 varied from the statutory rate due to higher nondeductible discrete items as a percentage of pre-tax income.
Average total debt outstanding and interest rates were as follows:
Nine Months Ended September 30,
(In millions, except percentages) 2026 2025
Floating-rate debt with interest charged on a rollover basis plus a credit spread:
Average total outstanding debt balance $ 42.9 $ 60.0
Average interest rate 5.7 % 6.8 %
Segment Operations Review
Aluminum Extrusions
A summary of results for Aluminum Extrusions (also "Bonnell Aluminum") is provided below:
Three Months Ended Favorable/ Nine Months Ended Favorable/
(In thousands, except percentages) September 30, (Unfavorable) September 30, (Unfavorable)
2026 2025 % Change 2026 2025 % Change
Sales volume (lbs) 36,509 41,303 (11.6)% 109,990 119,911 (8.3)%
Net sales $ 177,270 $ 162,470 9.1% $ 520,856 $ 444,470 17.2%
Variable costs 152,323 124,462 (22.4)% 426,252 344,043 (23.9)%
Manufacturing fixed costs1
12,715 11,906 (6.8)% 36,854 34,879 (5.7)%
Selling, general and administrative costs1
9,332 8,948 (4.3)% 29,265 28,489 (2.7)%
Other2
364 346 (5.2)% (244) 1,808 NM*
EBITDA from ongoing operations $ 2,536 $ 16,808 (84.9)% $ 28,729 $ 35,251 (18.5)%
Depreciation & amortization (4,192) (4,190) -% (12,436) (12,509) 0.6%
EBIT from ongoing operations3
$ (1,656) $ 12,618 NM* $ 16,293 $ 22,742 (28.4)%
Capital expenditures $ 4,194 $ 3,079 $ 12,543 $ 7,835
1. Excludes related depreciation and amortization
2. Includes segment allocated employee-related benefit expense (income).
3. See the reconciliation below of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP. *Not meaningful ("NM")
The following table presents the sales volume by end use market for the three and nine months ended September 30, 2026 and 2025, and the three months ended June 30, 2026.
Three Months Ended Favorable/ Three Months Ended Favorable/ Nine Months Ended Favorable/
(In millions of lbs) September 30, (Unfavorable) June 30, (Unfavorable) September 30, (Unfavorable)
2026 2025 % Change 2026 % Change 2026 2025 % Change
Sales volume by end-use market:
Non-residential B&C 19.2 22.3 (13.9) % 18.9 1.6 % 56.2 64.1 (12.3) %
Residential B&C 2.3 2.3 - % 2.6 (11.5) % 7.1 6.5 9.2 %
Automotive 2.4 2.9 (17.2) % 2.7 (11.1) % 7.6 9.2 (17.4) %
Specialty products 12.6 13.8 (8.7) % 14.1 (10.6) % 39.1 40.1 (2.5) %
Total 36.5 41.3 (11.6) % 38.3 (4.7) % 110.0 119.9 (8.3) %
Third Quarter 2026 Results vs. Third Quarter 2025 Results
Net sales in the third quarter of 2026 increased 9.1% versus the third quarter of 2025 primarily due to the pass-through of higher metal costs, partially offset by lower volume. Sales volume in the third quarter of 2026 decreased 11.6% versus the third quarter of 2025 and decreased 4.7% versus the second quarter of 2026. The Architecture Billings Index (ABI), a key leading indicator for nonresidential building and construction volume, has demonstrated a decline in billings (i.e., an index below 50) during 2026, including a recent sharp decrease in September of 2026. Nonresidential building and construction volume, which represented approximately 51% of total volume, decreased 14% driven by higher pricing, including significantly higher metal costs, and ongoing economic uncertainty. Within the specialty market, consumer durables volume decreased 22% due to cautionary consumer spending on discretionary purchases. Automotive and transportation volume declined 17%, reflecting continued economic uncertainty, higher input costs and trade related pressures affecting manufacturers, compared to the prior-year period, which benefited from customer orders placed in advance of higher tariffs. Partially offsetting the declines, within the specialty market, TSLOTSTM shipments increased 48%, supported by growing demand for modular aluminum framing systems.
Net new orders in the third quarter of 2026 increased slightly to an average of 2.8 million pounds per week versus an average of 2.6 million pounds per week in the third quarter of 2025, supported by increased activity in TSLOTSTM for modular aluminum framing systems. Open orders at the end of the third quarter of 2026 were 24 million pounds versus 19 million pounds at the end of the third quarter of 2025 and 23 million pounds at the end of the second quarter of 2026. This level of open orders falls within the normalized level that is typically associated with stable demand patterns and healthy market dynamics.
EBITDA from ongoing operations in the third quarter of 2026 decreased $14.3 million versus the third quarter of 2025, primarily due to:
•A $13.1 million decrease in contribution margin (net sales less variable costs) associated with:
◦Lower volume ($4.4 million), higher labor rates ($2.1 million), unfavorable labor productivity primarily due to a more labor intensive production mix ($0.4 million), higher maintenance associated with down equipment ($1.6 million) and higher freight expense ($0.4 million), partially offset by favorable pricing and mix ($2.4 million) and favorable manufacturing costs primarily associated with casting capabilities due to scrap spreads, reflecting a wider cost differential between primary aluminum and recycled scrap input, and higher scrap utilization ($0.8 million favorable in the third quarter of 2026 versus $0.5 million favorable in the third quarter of 2025).
◦The timing of the flow-through under the first-in, first-out ("FIFO") method of aluminum raw materials costs, which were previously acquired in a dynamic pricing environment, causing a temporary mismatch in the change in the cost of raw materials included in variable costs and the pass through to customers included in sales, resulted in a charge of $2.8 million in the third quarter of 2026 versus a benefit of $4.3 million in the third quarter of 2025.
•Higher fixed costs primarily associated with wage and benefits increases ($0.8 million).
First Nine Months of 2026 Results vs. First Nine Months of 2025 Results
Net sales in the first nine months of 2026 increased 17.2% versus the first nine months of 2025 primarily due to the pass-through of higher metal costs, partially offset by lower sales volume. Sales volume in the first nine months of 2026 decreased 8.3% versus the first nine months of 2025.
EBITDA from ongoing operations in the first nine months of 2026 decreased $6.5 million in comparison to the first nine months of 2025 primarily due to:
•A $5.8 million decrease in contribution margin associated with:
◦Lower volume ($8.4 million), higher labor rates ($5.8 million), unfavorable labor productivity primarily due to a more labor intensive production mix ($1.0 million), higher maintenance and supply expense, primarily associated with downed equipment and tariff impacts ($2.8 million), higher die expense, including tariff impact ($1.4 million) and higher freight ($1.6 million), partially offset by favorable mix ($7.9 million) and favorable manufacturing costs primarily associated with casting capabilities due to scrap spreads and higher scrap utilization ($7.8 million favorable in the first nine months of 2026 versus $0.3 million unfavorable in the first nine months of 2025).
◦The timing of the flow-through under the FIFO method of aluminum raw material costs, which were previously acquired in a dynamic pricing environment and passed through to customers, resulted in a benefit of $5.0 million in the first nine months of 2026 versus a benefit of $5.4 million in the first nine months of 2025.
•Higher fixed costs primarily associated with wage and benefits-related expense increases ($2.0 million).
•Higher SG&A expenses of $0.8 million primarily associated with higher incentive compensation, partially offset by lower routine environmental compliance expense.
•Lower other expense for lower employee-related medical costs associated with medical claims ($2.1 million).
Market conditions remain impacted by U.S. trade policy. Changes to the tariff structure announced in April 2026, which include measures intended to close the loophole that allowed undervalued aluminum extrusions to enter the U.S., appear to be contributing to a more balanced competitive environment.
Tariffs and duties continue to be passed through to customers under the Company's metal-cost adjustment mechanism. The Company implemented additional price increases in the first quarter of 2026 and the third quarter of 2025 to offset tariff-related costs not covered by that mechanism.
Conflict-driven disruptions in the Strait of Hormuz beginning in March 2026 have constrained shipments and raised costs, contributing to historically low U.S. inventory levels of aluminum. In response to ongoing geopolitical tensions in the Middle East and resulting contraction of the global aluminum market, we have proactively diversified Bonnell Aluminum's supply chain portfolio to support long-term stability. Through the remainder of 2026, we have successfully secured nearly all of Bonnell Aluminum's anticipated aluminum supply requirements and are proactively reviewing Bonnell Aluminum's 2027 supply needs and sources to minimize exposure to the Middle East. Simultaneously, we are optimizing billet casting operations at our Carthage, TN and Newnan, GA facilities to overcome localized production constraints. These strategic shifts in our supply chain and internal capabilities are intended to strengthen our operational resilience, positioning Bonnell Aluminum to be a provider of innovative, custom-engineered aluminum solutions.
Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk in this Form 10-Q for additional information on aluminum price trends.
Projected Capital Expenditures and Depreciation & Amortization
Capital expenditures for Bonnell Aluminum are projected to be $17 million in 2026, including $4 million for productivity projects and $13 million for capital expenditures required to support continuity of operations. Depreciation expense is projected to be $15 million in 2026. Amortization expense is projected to be $2 million in 2026.
High Performance Films
A summary of results for High Performance Films is provided below:
Three Months Ended Favorable/ Nine Months Ended Favorable/
(In thousands, except percentages) September 30, (Unfavorable) September 30, (Unfavorable)
2026 2025 % Change 2026 2025 % Change
Sales volume (lbs) 8,359 9,656 (13.4)% 27,054 29,093 (7.0)%
Net sales $ 23,776 $ 25,883 (8.1)% $ 70,944 $ 76,017 (6.7)%
Variable costs 12,457 11,922 (4.5)% 36,264 35,586 (1.9)%
Manufacturing fixed costs1
3,961 3,785 (4.6)% 11,084 10,487 (5.7)%
Selling, general and administrative costs1
2,675 2,961 9.7% 8,125 8,420 3.5%
Other2
35 (6) NM* (31) 70 NM*
EBITDA from ongoing operations $ 4,648 $ 7,221 (35.6)% $ 15,502 $ 21,454 (27.7)%
Depreciation & amortization (1,072) (1,224) 12.4% (3,472) (3,705) 6.3%
EBIT from ongoing operations3
$ 3,576 $ 5,997 (40.4)% $ 12,030 $ 17,749 (32.2)%
Capital expenditures $ 469 $ 529 $ 1,300 $ 1,411
1. Excludes related depreciation and amortization
2. Includes segment allocated employee-related benefit expense (income).
3. See the reconciliation below of this non-GAAP measure to the most comparable measure calculated in accordance with GAAP. *Not meaningful ("NM")
Third Quarter 2026 Results vs. Third Quarter 2025 Results
Net sales in the third quarter of 2026 decreased 8.1% versus the third quarter of 2025 due to a decrease in sales volume and unfavorable mix, partially offset by favorable pricing for surface protection films. Surface Protection sales volume decreased 18.6% in the third quarter of 2026 versus the third quarter of 2025 primarily due to weakened consumer electronics display market demand and inventory corrections. Volume for advanced packaging films, which are predominantly manufactured and sold in the U.S. and used in consumer staple items, decreased 6.8% in the third quarter of 2026 versus the third quarter of 2025.
EBITDA from ongoing operations in the third quarter of 2026 decreased $2.6 million versus the third quarter of 2025, primarily due to:
•A decrease in contribution margin of $2.6 million resulting from:
◦A $3.3 million decrease from Surface Protection primarily due to unfavorable volume and mix ($3.4 million) and the pass-through lag associated with higher resin costs (a charge of $0.5 million in the third quarter of 2026 versus a charge of $0.1 million in the third quarter of 2025), partially offset by cost improvements ($0.7 million).
◦A $0.7 million increase from advanced packaging films primarily due to favorable mix ($0.3 million), cost improvements ($0.2 million) and the pass-through lag associated with higher resin costs (a benefit of $0.2 million in the third quarter of 2026 versus no charge or benefit in the third quarter of 2025).
•Higher fixed costs associated with wages and benefits increases ($0.2 million).
•Lower SG&A expense associated with lower employee-related incentive compensation ($0.4 million).
•A foreign currency transaction loss of $0.1 million in the third quarter of 2026 and in the third quarter of 2025.
The memory chip market pressures may continue to affect customer's production levels and High Performance Films' product mix through the remainder of 2026. Despite significant quarterly volatility since the first quarter of 2022, EBITDA from ongoing operations has normalized to approximately $5.0 million per quarter.
First Nine Months of 2026 Results vs. First Nine Months of 2025 Results
Net sales in the first nine months of 2026 decreased 6.7% compared to the first nine months of 2025 primarily due to lower volume and unfavorable mix, partially offset by favorable pricing in surface protection films. Surface Protection sales volume decreased 7.1% in the first nine months of 2026 versus the first nine months of 2025. Sales volume for surface protection films declined in the first nine months of 2026 versus the first nine months of 2025 as expected due to a significant customer's inventory correction and scheduled maintenance activity for another customer in the first nine months of 2026. Volume for advanced packaging films decreased 6.9% in the first nine months of 2026 versus the first nine months of 2025 associated with lower margin product. The top four customers comprised 85% of the net sales for High Performance Films for the first nine months of 2026 and first nine months of 2025.
EBITDA from ongoing operations in the first nine months of 2026 decreased $6.0 million versus the first nine months of 2025, primarily due to:
•A decrease in contribution margin of $5.8 million resulting from:
◦A $6.0 million decrease from Surface Protection associated with lower volume and unfavorable pricing and mix ($7.1 million) and the pass-through lag associated with higher resin costs (a charge of $1.1 million in the first nine months of 2026 versus a charge of $0.2 million in the first nine months of 2025), partially offset by favorable productivity and cost improvements ($1.9 million).
◦A $0.3 million increase from advanced packaging films primarily due to higher volume and favorable mix ($1.1 million), partially offset by unfavorable pricing ($0.3 million), unfavorable productivity, net of cost improvements ($0.2 million) and the pass-through lag associated with higher resin costs (a charge of $0.5 million in the first nine months of 2026 versus a charge of $0.1 million in the first nine months of 2025).
•Higher fixed costs primarily associated with wages and benefits increases ($0.6 million).
•Lower SG&A expense associated with lower employee-related incentive compensation ($1.0 million).
•A foreign currency transaction loss of $0.8 million in the first nine months of 2026 versus a loss of $0.1 million in the first nine months of 2025.
Although the conflict-driven disruptions in the Strait of Hormuz beginning in March 2026 have caused an increase to resin costs, High Performance Films maintains pass-through mechanisms with customers and has not experienced supply issues to date.
Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk in this Form 10-Q for additional information on resin prices.
Projected Capital Expenditures and Depreciation & Amortization
Capital expenditures for High Performance Films are projected to be $2 million in 2026, for productivity projects and capital expenditures required to support continuity of current operations. Depreciation expense is projected to be $4 million in 2026. There is no amortization expense for High Performance Films.
Corporate Expenses
Corporate expenses, net in the first nine months of 2026 decreased $6.8 million compared to the first nine months of 2025 due to lower professional fees associated with business development activities ($5.8 million), lower stock based compensation ($1.2 million) and lower employee-related incentive compensation ($1.6 million), partially offset by a gain in 2025 on the sale of corporate-owned land ($1.5 million). The Company does not expect significant expenses from business development activities in 2026.
Net capitalization and other credit measures are provided in Liquidity and Capital Resources below.
Reconciliation of Net Sales and EBITDA from Ongoing Operations by Segment
A reconciliation of segment financial information to consolidated results for the Company for the three and nine months ended September 30, 2026 and 2025.
Three Months Ended Nine Months Ended
September 30, September 30,
2026 2025 2026 2025
Net Sales
Aluminum Extrusions $ 177,270 $ 162,470 $ 520,856 $ 444,470
High Performance Films 23,776 25,883 70,944 76,017
Total net sales 201,046 188,353 591,800 520,487
Add back freight 6,128 6,589 18,099 18,309
Sales as shown in the condensed consolidated statements of income (loss) $ 207,174 $ 194,942 $ 609,899 $ 538,796
EBITDA from Ongoing Operations
Aluminum Extrusions:
Ongoing operations:
EBITDA $ 2,536 $ 16,808 $ 28,729 $ 35,251
Depreciation & amortization (4,192) (4,190) (12,436) (12,509)
EBIT (1,656) 12,618 16,293 22,742
Plant shutdowns, asset impairments, restructurings and other (1,208) (927) (1,796) (2,151)
High Performance Films:
Ongoing operations:
EBITDA $ 4,648 $ 7,221 $ 15,502 $ 21,454
Depreciation & amortization (1,072) (1,224) (3,472) (3,705)
EBIT 3,576 5,997 12,030 17,749
Plant shutdowns, asset impairments, restructurings and other 12 12 12 13
Total 724 17,700 26,539 38,353
Interest expense, net 503 762 1,298 3,550
Corporate expenses, net 3,710 7,815 14,850 21,619
Income (loss) from continuing operations before income taxes (3,489) 9,123 10,391 13,184
Income tax expense (benefit) (663) 2,014 2,100 3,575
Net income (loss) from continuing operations (2,826) 7,109 8,291 9,609
Income (loss) from discontinued operations, net of tax 5 (35) 566 9,297
Net income (loss) $ (2,821) $ 7,074 $ 8,857 $ 18,906
Liquidity and Capital Resources
The Company continues to focus on improving working capital management. Measures such as days sales outstanding ("DSO"), days inventory outstanding ("DIO") and days payables outstanding ("DPO") are used to evaluate changes in working capital. Changes in operating assets and liabilities from December 31, 2025 to September 30, 2026 are summarized below.
•Accounts and other receivables increased $15.0 million (18.4%).
◦Accounts and other receivables in Aluminum Extrusions increased $14.8 million primarily due to the pass-through of higher metal costs. DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 45.9 days for the 12 months ended September 30, 2026 and 44.8 days for the 12 months ended December 31, 2025.
◦Accounts and other receivables in High Performance Films increased $0.3 million primarily due to favorable pricing in surface protection films. DSO was approximately 26.5 days for the 12 months ended September 30, 2026 and 25.4 days for the 12 months ended December 31, 2025.
•Inventories increased $13.1 million (20.1%).
◦Inventories in Aluminum Extrusions increased $13.5 million primarily due to increased raw material levels from seasonally low levels at the end of last year, higher metal costs and raw material stocking as a result of the geopolitical uncertainty impacting aluminum-related supply chains. DIO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of inventory balances calculated on the FIFO basis) was approximately 52.4 days for the 12 months ended September 30, 2026 and 48.8 days for the 12 months ended December 31, 2025.
◦Inventories in High Performance Films decreased $0.4 million primarily due to lower raw material levels. DIO was approximately 56.8 days for the 12 months ended September 30, 2026 and 54.6 days for the 12 months ended December 31, 2025.
•Net property, plant and equipment decreased $0.5 million primarily due to depreciation expense of $14.7 million and production equipment asset disposals of $0.5 million, partially offset by capital expenditures of $14.6 million and favorable foreign exchange of $0.2 million.
•Identifiable intangible assets, net decreased $1.3 million (23.7%) due to amortization expense.
•Accounts payable increased $10.0 million (13.2%).
◦Accounts payable in Aluminum Extrusions increased $10.6 million primarily due to increased raw material levels from seasonally low levels at the end of last year, higher metal costs and raw material levels. DPO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of accounts payable balances) was approximately 46.5 days for the 12 months ended September 30, 2026 and 46.6 days for the 12 months ended December 31, 2025.
◦Accounts payable in High Performance Films remained consistent with the prior year period. DPO was approximately 38.7 days for the 12 months ended September 30, 2026 and 40.6 days for the 12 months ended December 31, 2025. The decrease in DPO was primarily related to unfavorable terms with respect to large resin suppliers.
Net cash provided by operating activities was $8.2 million in the first nine months of 2026 compared to net cash provided by operating activities of $17.3 million in the first nine months of 2025. The change primarily reflects increased working capital needs and lower segment EBITDA from ongoing operations in the first nine months of 2026 compared to the first nine months of 2025.
Net cash used in investing activities was $13.3 million in the first nine months of 2026 compared to net cash provided by investing activities of $2.5 million in the first nine months of 2025. The change is primarily due to decreased post-closing settlement proceeds associated with the sale of Terphane ($9.3 million) and proceeds in 2025 on the sale of corporate-owned land ($1.9 million), partially offset by higher capital expenditures ($4.6 million).
Net cash provided by financing activities of $13.9 million in the first nine months of 2026 compared to net cash used in financing activities of $13.7 million in the first nine months of 2025. The change is primarily due to higher debt borrowings, net of principal payments ($26.4 million) under the ABL Facility in the first nine months of 2026, partially offset by deferred financing fees paid associated with Amendment No. 5 to the ABL Facility during the first nine months of 2025.
At September 30, 2026, the Company had cash and cash equivalents of $16.3 million, including cash and cash equivalents held in locations outside the U.S. of $3.5 million.
Debt and Credit Agreements
ABL Facility
The ABL Facility provides the Company with a $125 million senior secured asset-based revolving credit facility. The ABL Facility is secured by substantially all assets of the Company and its domestic subsidiaries, including equity in certain material first-tier foreign subsidiaries. Availability for borrowings under the ABL Facility is governed by a borrowing base, determined by the application of specified advance rates against eligible assets, including a portion of trade accounts receivable, inventory, cash and cash equivalents, and owned machinery and equipment. The maturity date of the ABL Facility is May 6, 2030. As of September 30, 2026, funds available to borrow under the ABL Facility were $74 million, or 59% of the aggregate commitment of $125 million. During 2025, the Company's letters of credit were reduced from approximately $12 million to $3 million, which directly increased the Company's borrowing availability.
Outstanding borrowings accrue interest at the rates elected by the Company depending on the type of loan and denomination of such borrowing. With respect to revolving loans denominated in U.S. Dollars, the Company may elect interest rates at:
•Alternate Base Rate ("ABR") plus the applicable ABR Spread (as defined in the ABL Facility) determined in accordance with an excess availability-based pricing grid. ABR is defined, in part, as the greater of (a) the Prime Rate in effect on such day, (b) the Federal Reserve Bank of New York Rate in effect on such day plus one-half of 1% and (c) the Adjusted Term SOFR Rate (defined below) for a one-month period plus 1%, or
•The Adjusted Term Secured Overnight Financing Rate ("SOFR") Rate plus the applicable Term Benchmark Spread (as defined in the ABL Facility) determined in accordance with an excess availability-based pricing grid. Adjusted Term SOFR Rate is defined as the Term SOFR Rate plus 0.10%, subject to an initial Floor (as defined in the ABL Facility) of 0%.
Based upon the quarterly average of daily availability under the ABL Facility, the interest rate pricing grid, is as follows:
Pricing under the ABL Facility (Basis Points)
Quarter Average of Daily Availability Term Benchmark
Spread 		ABR
Spread
> 66% of $125 million aggregate commitment 175.0 75.0
≤ 66% but > 33% of $125 million aggregate commitment 200.0 100.0
≤ 33% of $125 million aggregate commitment 225.0 125.0
The commitment fee is (i) 0.25% if the Average Usage (as defined in the ABL Facility) is greater than or equal to 50% and (ii) 0.375% if Average Usage is less than 50%.
The financial covenant is a minimum fixed charge coverage ratio (as defined in the ABL Facility) of 1.00:1.00 that will be triggered in the event that availability is less than the greater of (x) 10% of the Line Cap (as defined in the ABL Facility) and (y) $10 million and will continue until availability is equal to or greater than the greater of (x) 10% of the Line Cap and (y) $10 million for 30 consecutive days, as long as no events of default are continuing.
If at any time the availability under the ABL Facility is less than the greater of (x) 20% of the Line Cap and (y) $20 million and until such subsequent date, if any, on which availability is greater than the greater of (x) 20% of the Line Cap and (y) $20 million for a period of thirty (30) consecutive calendar days, the Company's current monthly reporting requirement to lenders changes to a weekly cadence.
A Cash Dominion Period (as defined in the ABL Facility) is triggered when (x) availability falls below the greater of (i) 12.5% of the Line Cap and (ii) $12.6 million or (y) during the continuation of an event of default and continuing until (x) availability is above the greater of (i) 12.5% of the Line Cap and (ii) $12.6 million for 30 consecutive days and (y) no events of default are continuing. During a Cash Dominion Period, receipts that have not yet been applied to the ABL Facility are classified as restricted cash in the Company's consolidated balance sheets.
The ABL Facility has customary representations and warranties including, as a condition to each borrowing, that all such representations and warranties are true and correct in all material respects (including a representation that no Material Adverse Effect (as defined in the ABL Facility) has occurred since December 31, 2024). In the event that the Company cannot certify that all conditions to the borrowing have been met, the lenders can restrict the Company's future borrowings under the ABL Facility.
In accordance with the ABL Facility, the lenders have been provided with the Company's financial statements, covenant compliance certificates and projections to facilitate their ongoing assessment of the Company. Accordingly, the Company
believes the likelihood that lenders would exercise the subjective acceleration clause whereby prohibiting future borrowings is remote.
The computation of Credit EBITDA and fixed charge coverage ratio, as defined in the ABL Facility, is presented below.
Computations of Credit EBITDA (as defined in the ABL Facility) as of and for the
Twelve Months Ended September 30, 2026 *
Computations of Credit EBITDA for the twelve months ended September 30, 2026 (in thousands):
Net income (loss) $ 23,427
Plus:
After-tax losses related to discontinued operations -
Total income tax expense for continuing operations 5,109
Interest expense 1,787
Depreciation and amortization expense for continuing operations 21,419
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 $2,817)
3,747
Charges related to stock option grants and awards accounted for under the fair value-based method -
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 -
Fees, costs and expenses incurred in connection with the amendment process (Amendment No. 3) 260
Fees, costs and expenses incurred in connection with the amendment process (Amendment No. 5) -
Minus:
After-tax income related to discontinued operations (660)
Total income tax benefits for continuing operations -
Interest income (72)
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 (6,265)
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 or minus, as applicable, pro forma EBITDA adjustments associated with acquisitions and asset dispositions -
Credit EBITDA $ 48,752
Fixed charge coverage ratio**:
Credit EBITDA $ 48,752
Unfinanced capital expenditures $ 21,887
Fixed charges $ 4,039
Fixed charge coverage ratio 6.65
*Credit EBITDA is not intended to represent net income (loss) or cash flow from operations as defined by GAAP and should not be considered as an alternative to either net income (loss) or to cash flow.
** Fixed Charge Coverage Ratio is computed as the ratio of (a) Credit EBITDA minus Unfinanced Capital Expenditures to (b) Fixed Charges.
High Performance Films Guangzhou Loan
In October 2025, High Performance Films' business location in Guangzhou, China, Guangzhou Tredegar Film Products Co., Ltd. ("Guangzhou Tredegar"), entered into a 3.5 million Chinese Yuan, which is equivalent to $0.5 million as of December 31, 2025, unsecured revolving loan with the Industrial and Commercial Bank of China. During the second quarter of 2026, Guangzhou Tredegar fully repaid all outstanding borrowings under the unsecured revolving loan. As of September 30, 2026, there were no borrowings outstanding under the unsecured revolving loan, which matured on October 20, 2026.
For more information on the ABL Facility and the High Performance Films Guangzhou Loan, see Note 7 in the Company's 2025 Form 10-K.
As of September 30, 2026, the Company was in compliance with all debt covenants.
The Company believes that existing borrowing availability, current cash balances and cash flow from operations will be sufficient to satisfy short term material cash requirements related to working capital, capital expenditures, and debt repayments for at least the next 12 months. In the longer term, liquidity will depend on many factors, including the results of operations, the timing and extent of capital expenditures, changes in operating plans, or other events that would cause the Company to seek additional financing in future periods.
Tredegar Corporation published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 13:19 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]