Tredegar Corporation Reports Mixed Earnings Amid Rising Sales
Shares of Tredegar Corporation (TG) have increased by 3.8% following the company’s earnings report for the quarter ending March 31, 2025. In comparison, the S&P 500 index saw a growth of 4.5% during the same period. Over the last month, Tredegar’s stock has risen by 15.8%, while the S&P 500 grew by 8.8%.
For the first quarter of 2025, Tredegar reported a net income from continuing operations of 2 cents per share, down from 8 cents per share in the first quarter of 2024. On an adjusted basis, net income from ongoing operations decreased to 10 cents per share, down from 14 cents a year earlier. (Earnings Calendar.)
Net sales for the quarter totaled $164.7 million, marking a 14.4% increase from $144 million in the prior year.
However, net income from continuing operations dropped to $0.7 million from $2.6 million during the same quarter last year. On an adjusted basis, net income from ongoing operations fell to $3.6 million from $4.7 million a year ago.
Tredegar Corporation Price, Consensus, and EPS Surprise
Tredegar Corporation price-consensus-eps-surprise-chart | Tredegar Corporation Quote
Segment Performance Shows Mixed Results
Aluminum Extrusions (Bonnell Aluminum)
In the Aluminum Extrusions segment, net sales rose by 17% year-over-year to $133.6 million. This increase was driven by a 12% rise in sales volume, along with the pass-through of higher metal costs. However, EBITDA from ongoing operations in this segment declined by 27% to $9.2 million from $12.5 million in the previous year. This decrease resulted from a less favorable sales mix, higher input costs, increased labor and maintenance expenses, and elevated SG&A costs. Specialty products contributed significantly to the volume growth, soaring by 52.8%, primarily due to increased shipments for solar panel applications and TSLOTS framing systems.
PE Films
The PE Films segment experienced an 8.9% growth in EBITDA, rising to $7.5 million despite a 4% drop in sales volume. Net sales increased by 3.2% to $25.5 million, driven by strength in surface protection films. The positive EBITDA performance was attributed to an improved sales mix, pricing adjustments, and cost reductions in Surface Protection, which offset declines in volume and pricing for overwrap films.
Management Insights on Recovery and Strategy
CEO John Steitz highlighted a recovering trend in Bonnell Aluminum, noting a 36% year-over-year increase in net new orders—marking the tenth consecutive quarterly rise. Open orders have reached 25 million pounds, the highest level in two years. Steitz also pointed to the benefits of new Section 232 tariffs, which have raised the import duty on aluminum from 10% to 25%, enhancing market share previously claimed by underpriced imports.
Regarding PE Films, Steitz mentioned that while first-quarter results were strong, normalization is expected in future quarters. So far, there has been no noticeable decline in demand related to U.S. tariffs on imported electronics, though management remains cautious due to ongoing global trade concerns.
Factors Influencing Performance Metrics
The decline in EBITDA for Aluminum Extrusions was affected by a lower spread between selling prices and metal costs, unfavorable manufacturing yields, and higher costs related to labor and maintenance. Timing mismatches in aluminum pricing using the FIFO method slightly alleviated these issues, contributing a $1.7 million gain compared to a $1.3 million loss the previous year.
Increased SG&A costs in this segment rose by 38.5%, primarily due to compensation, travel, and consulting fees. In contrast, the PE Films segment saw a $1.5 million boost in contributions from surface protection products, countered by a $0.7 million decline from overwrap films due to weaker volume and less favorable pricing.
Financial Outlook and Positioning
For 2025, Tredegar anticipates capital expenditures of $17 million for Bonnell Aluminum and $3 million for PE Films, focusing on productivity and operational continuity. Depreciation and amortization expenses are expected to be $16 million and $2 million, respectively, for Aluminum Extrusions and $5 million for PE Films.
The company’s balance sheet remains solid, with total debt reduced to $56.6 million as of March 31, 2025, down from $61.9 million at the end of 2024. Net debt is at $52.9 million, with a net leverage ratio of 1.1x. Tredegar refinanced its $125 million asset-based lending facility in May for a new five-year term, securing the liquidity needed for ongoing operations.
Other Noteworthy Developments
During the quarter, Tredegar finalized the sale of its Terphane business and received $9.8 million from a post-closing settlement, contributing to a $9.4 million gain from discontinued operations. Restructuring efforts remain on track, including the closure of the Richmond, VA PE Films technical center, which wrapped up at the end of the first quarter of 2024.
