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Sep 30, 2020
Tredegar Q3 2020 Earnings Report
Tredegar reported a net loss from continuing operations, but net income from ongoing operations was nearly flat compared to the same quarter last year.
Key Takeaways
Tredegar Corporation reported a net loss from continuing operations of $17.0 million, compared to a net income of $15.1 million in Q3 2019. However, net income from ongoing operations was $13.2 million, slightly lower than the $13.3 million in the same quarter of the previous year. The company divested its Personal Care Films business for gross proceeds of $60.5 million.
Net loss from continuing operations was $17.0 million ($0.51 per diluted share), compared to net income from continuing operations of $15.1 million ($0.45 per diluted share) in Q3 2019.
Net income from ongoing operations was $13.2 million ($0.39 per diluted share), compared with $13.3 million ($0.40 per diluted share) in Q3 2019.
EBITDA from ongoing operations for Aluminum Extrusions was $16.5 million, slightly higher than Q3 2019.
Strong cash flow during the third quarter with net cash in excess of debt as of September 30, 2020 of $28.0 million.
Revenue by Segment
Forward Guidance
The company expects a slowdown in the Surface Protection business in the fourth quarter of 2020, based on industry projections for products using flat panel displays and current customer inventory corrections. The company estimates that the contribution to EBITDA from ongoing operations for PE Films could decline due to the remaining customer product transitions by $18 million in 2021 versus 2020 and $4 million in 2022 versus 2021.
Positive Outlook
- The Company is aggressively pursuing and making progress in generating contribution from sales from new surface protection products, applications and customers.
- Annual contribution to EBITDA from ongoing operations for PE Films on surface protection products unrelated to the customer product transitions has increased since 2018 by approximately $11 million.
- Tredegar had debt (all under its revolving credit agreement) of $7.0 million and cash of $35.0 million at September 30, 2020.
- The revolving credit agreement allows borrowings of up to $500 million and matures in June 2024.
- The Company’s current stress testing under a COVID-19-driven recession indicates a low probability that a future leverage ratio will exceed 4.0x.
Challenges Ahead
- The PE Films segment experienced a decline in profitability during the third quarter versus last year due to previously disclosed customer product transitions in the Surface Protection component that had been delayed.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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