News Release
A summary of results for continuing operations for the three months ended
Three Months
(In Millions, Except Per-Share Data) Ended
March 31
--------
2009 2008
---- ----
Sales $153.1 $228.5
Income (loss) from continuing operations as reported
under generally accepted accounting principles (GAAP) $(28.8) $3.8
After-tax effects of:
Goodwill impairment relating to aluminum
extrusions business 30.6 -
Loss associated with plant shutdowns, asset
impairments and restructurings 1.1 2.7
(Gains) losses from sale of assets and other items 1.7 (.5)
--- ---
Income from continuing manufacturing operations* $4.6 $6.0
---- ----
Diluted earnings (loss) per share from continuing
operations as reported under GAAP $(.85) $.11
After-tax effects per diluted share of:
Goodwill impairment relating to aluminum
extrusions business .90 -
Loss associated with plant shutdowns, asset
impairments and restructurings .03 .08
(Gains) losses from sale of assets and other items .06 (.02)
--- ----
Diluted earnings per share from continuing
manufacturing operations* $.14 $.17
---- ----
* The after-tax effects of unusual items, plant shutdowns, asset impairments and restructurings, and gains or losses from sale of assets and other items have been presented separately and removed from net income and earnings per share from continuing operations as reported under GAAP to determine
"Similarly, our films business experienced a volume decline of 15% in the first quarter. This weakness was broad as demand weakened and inventories were adjusted in all segments. Operating profits before restructuring charges in films increased by
Mr. Gottwald concluded: "Despite the challenging business environment, our financial condition remains strong with cash in excess of debt of
MANUFACTURING OPERATIONS
Film Products
First quarter net sales (sales less freight) in Film Products were
Net sales in the first quarter of 2009 declined due to lower volume across all market segments, most notably surface protection and personal care materials, and the unfavorable impact of changes in the U.S. dollar value of currencies for operations outside of the U.S. Volume declines are believed to be primarily driven by the economic downturn and customer inventory adjustments.
Operating profit from ongoing operations increased in the first quarter of 2009 compared with the first quarter of 2008 due primarily to the benefit of the lag in the pass-through of lower resin costs. Excluding resin lag, ongoing operating profit declined by
Capital expenditures in Film Products were
Aluminum Extrusions
First-quarter net sales from ongoing U.S. operations in Aluminum Extrusions were
The decrease in net sales and the reported operating loss from ongoing U.S. operations were primarily driven by lower volume in the first quarter of 2009 compared with the first quarter of last year. Net sales also declined from lower average selling prices driven by lower average aluminum costs. Extremely challenging market conditions led to shipment declines in all markets. Shipments for non-residential construction, which comprised approximately 72% of total volume in 2008, declined by approximately 32.6% during the first quarter of 2009 compared with the first quarter of 2008. Costs have been reduced as volume has declined. Total full-time employees in Aluminum Extrusions were 1,128 at
The Company also recognized a charge in the first quarter of 2009 of
Capital expenditures for continuing operations in Aluminum Extrusions were
OTHER ITEMS
Net pension income from continuing operations was
Interest expense was
The effective tax rate used to compute income taxes from continuing manufacturing operations was 39.7% in the first quarter of 2009 compared with 38.8% in the first quarter of 2008.
Overall results for continuing operations for the quarter include special items. After-tax charges for continuing operations for plant shutdowns, asset impairments and restructurings and gains and losses from the sale of assets and other items were
CAPITAL STRUCTURE AND ADJUSTED EBITDA
Net cash (cash and cash equivalents in excess of debt) was
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Some of the information contained in this press release may constitute "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. When we use the words "believe," "estimate," "anticipate," "expect," "project," "likely," "may" and similar expressions, we do so to identify forward-looking statements. Such statements are based on our 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 our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Factors that could cause actual results to differ from expectations include, without limitation: Film Products is highly dependent on sales to one customer -- The
To the extent that the financial information portion of this release contains non-GAAP financial measures, it also presents both the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the difference between any such non-GAAP measures and such comparable GAAP financial measures. Accompanying the reconciliation is management's statement concerning the reasons why management believes that presentation of non-GAAP measures provides useful information to investors concerning
Based in
Tredegar Corporation
Condensed Consolidated Statements of Income
(In Thousands, Except Per-Share Data)
(Unaudited)
Three Months Ended
March 31
--------
2009 2008
---- ----
Sales $153,066 $228,480
Other income (expense), net (a) (d) 869 557
--- ---
153,935 229,037
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Cost of goods sold (a) 125,258 194,239
Freight 3,229 5,101
Selling, R&D and general expenses 17,284 18,969
Amortization of intangibles 30 32
Interest expense 204 881
Asset impairments and costs associated
with exit and disposal activities (a) 1,631 3,940
Goodwill impairment charge (b) 30,559 -
------ ---
178,195 223,162
------- -------
Income (loss) from continuing operations
before income taxes (24,260) 5,875
Income taxes (e) 4,557 2,090
----- -----
Income (loss) from continuing operations (28,817) 3,785
Loss from discontinued operations (f) - (723)
--- ----
Net income (loss) (a) (c) $(28,817) $3,062
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Earnings (loss) per share:
Basic:
Continuing operations $(.85) $.11
Discontinued operations - (.02)
--- ----
Net income (loss) $(.85) $.09
----- ----
Diluted:
Continuing operations $(.85) $.11
Discontinued operations - (.02)
--- ----
Net income (loss) $(.85) $.09
----- ----
Shares used to compute earnings (loss)
per share:
Basic 33,866 34,467
Diluted 33,866 34,682
Tredegar Corporation
Net Sales and Operating Profit by Segment
(In Thousands)
(Unaudited)
Three Months Ended
March 31
--------
2009 2008
---- ----
Net Sales
Film Products $104,783 $132,314
Aluminum Extrusions 45,054 91,065
------ ------
Total net sales 149,837 223,379
Add back freight 3,229 5,101
----- -----
Sales as shown in the Consolidated
Statements of Income $153,066 $228,480
-------- --------
Operating Profit (Loss)
Film Products:
Ongoing operations $13,014 $10,786
Plant shutdowns, asset impairments,
restructurings and other (a) (809) (3,705)
Aluminum Extrusions (f):
Ongoing operations (1,797) 1,542
Goodwill impairment charge (b) (30,559) -
Plant shutdowns, asset impairments,
restructurings and other (a) (978) (235)
AFBS:
Gain on sale investments in Theken Spine and
Therics, LLC (d) 150 -
--- ---
Total (20,979) 8,388
Interest income 259 258
Interest expense 204 881
Gain on the sale of corporate assets (e) 404 -
Stock option-based compensation costs 262 60
Corporate expenses, net (a) 3,478 1,830
----- -----
Income (loss) before income taxes (24,260) 5,875
Income taxes (e) 4,557 2,090
----- -----
Income (loss) from continuing operations (28,817) 3,785
Loss from discontinued operations (f) - (723)
--- ----
Net income (loss) (a) (c) $(28,817) $3,062
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Tredegar Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, December 31,
2009 2008
---- ----
Assets
Cash & cash equivalents $53,281 $45,975
Accounts & notes receivable, net 79,914 91,400
Income taxes recoverable 10,943 12,549
Inventories 27,170 36,809
Deferred income taxes 5,681 7,654
Prepaid expenses & other 3,236 5,374
----- -----
Total current assets 180,225 199,761
Property, plant & equipment, net 231,788 236,870
Other assets 38,277 38,926
Goodwill & other intangibles 103,945 135,075
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Total assets $554,235 $610,632
-------- --------
Liabilities and Shareholders' Equity
Accounts payable $44,084 $54,990
Accrued expenses 40,696 38,349
Current portion of long-term debt 604 529
--- ---
Total current liabilities 85,384 93,868
Long-term debt 8,963 22,173
Deferred income taxes 44,602 45,152
Other noncurrent liabilities 27,675 29,023
Shareholders' equity 387,611 420,416
-------- --------
Total liabilities and
shareholders' equity $554,235 $610,632
-------- --------
Tredegar Corporation
Condensed Consolidated Statement of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended
March 31
--------
2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $(28,817) $3,062
Adjustments for noncash items:
Depreciation 9,830 11,336
Amortization of intangibles 30 32
Goodwill impairment charge 30,559 -
Deferred income taxes 2,866 8,289
Accrued pension income and postretirement
benefits (633) (1,413)
Loss on asset impairments and divestitures - 2,327
Gain on sale of assets (829) -
Changes in assets and liabilities, net of
effects of acquisitions and divestitures:
Accounts and notes receivables 9,573 (22,066)
Inventories 9,105 10,013
Income taxes recoverable 1,607 (13,841)
Prepaid expenses and other 2,046 421
Accounts payable and accrued expenses (3,640) 5,357
Other, net 1,651 2,661
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Net cash provided by operating activities 33,348 6,178
------ -----
Cash flows from investing activities:
Capital expenditures (including settlement of
related accounts payable of $1,709 in 2009) (11,014) (4,052)
Proceeds from the sale of the aluminum
extrusions business in Canada (net of cash
included in sale and transaction costs) - 23,616
Proceeds from the sale of assets and property
disposals 918 248
Investments in real estate (509) -
---- ---
Net cash provided by (used in) investing
activities (10,605) 19,812
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Cash flows from financing activities:
Dividends paid (1,358) (1,378)
Debt principal payments (13,135) (38,158)
Borrowings - 13,000
Repurchases of Tredegar common stock - (7,283)
Proceeds from exercise of stock options 112 -
--- ---
Net cash used in financing activities (14,381) (33,819)
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Effect of exchange rate changes on cash (1,056) 1,055
------ -----
Increase (decrease) in cash and cash equivalents 7,306 (6,774)
Cash and cash equivalents at beginning of period 45,975 48,217
------ ------
Cash and cash equivalents at end of period $53,281 $41,443
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Selected Financial Measures
(In Millions)
(Unaudited)
For the Twelve Months
Ended March 31, 2009
----------------------
Film Aluminum
Products Extrusions Total
---------- ------------ -------
Operating profit from continuing
ongoing operations $56.1 $6.8 $62.9
Allocation of corporate overhead (9.0) (1.7) (10.7)
Add back depreciation and amortization
from continuing operations 33.7 7.9 41.6
---- --- ----
Adjusted EBITDA from continuing
operations (g) $80.8 $13.0 $93.8
----- ----- -----
Selected balance sheet and other data
as of March 31, 2009 :
Net debt (cash) (h) $(43.7)
Shares outstanding 33.9
Notes to the Financial Tables
(a) Plant shutdowns, asset impairments, restructurings and other in the
first quarter of 2009 include:
- Pretax charges of $1.6 million for severance and other
employee-related costs in connection with restructurings in Film
Products ($1.1 million ), Aluminum Extrusions ($369,000 ) and
corporate headquarters ($178,000 , included in "Corporate expenses,
net" in the net sales and operating profit by segment table);
- Pretax losses of $609,000 associated with Aluminum Extrusions for
timing differences between the recognition of realized losses on
aluminum futures contracts and related revenues from the delayed
fulfillment by customers of fixed-price forward purchase
commitments (included in "Cost of goods sold" in the condensed
consolidated statements of income); and
- Pretax gain of $275,000 on the sale of equipment (included in
"Other income (expense) net in the condensed consolidated
statements of income) from a previously shutdown films
manufacturing facility in LaGrange, Georgia .
Plant shutdowns, asset impairments, restructurings and other in the
first quarter of 2008 include:
- Pretax charges of $2.3 million for severance and other
employee-related costs in connection with restructurings in
Film Products ($2.1 million ) and Aluminum Extrusions ($235,000 );
and
- Pretax charges of $1.6 million for asset impairments in Film
Products.
(b) Goodwill impairment charge of $30.6 million ($30.6 million after
taxes) was recognized in Aluminum Extrusions in the first quarter of
2009 upon completion of an impairment analysis performed as of March
31, 2009 . This non-cash charge, as computed under U.S. generally
accepted accounting principles, resulted from the estimated adverse
impact on the business unit's fair value of possible future losses
and the uncertainty of the amount and timing of an economic recovery.
(c) Comprehensive income (loss), defined as net income and other
comprehensive income (loss), was a loss of $31.8 million in the first
quarter of 2009 and income of $1.1 million for the first quarter
2008. Other comprehensive income (loss) includes changes in foreign
currency translation adjustments, unrealized gains and losses on
derivative financial instruments and prior service cost and net gains
or losses from pension and other postretirement benefit plans arising
during the period and the related amortization of these prior service
cost and net gains or losses recorded net of deferred taxes directly
in shareholders' equity.
(d) Gain on the sale of investments in Theken Spine and Therics, LLC
includes a post-closing contractual adjustment of $150,000 (included
in "Other income (expense), net" in the condensed consolidated
statements of income). Closing on sale of these investments occurred
in 2008. AFBS (formerly Therics, Inc. ) received these investments in
2005, when substantially all of the assets of AFBS, Inc. , a wholly-
owned subsidiary of Tredegar , were sold or assigned to a newly-created
limited liability company, Therics, LLC , controlled and managed by an
individual not affiliated with Tredegar .
(e) Gain on sale of corporate assets in the first quarter of 2009 includes
a realized gain on the sale of corporate real estate ($404,000 ). This
gain is included in "Other income (expense), net" in the condensed
consolidated statement of income.
Income taxes for the first quarter of 2009 include the recognition of
a valuation allowance of $1.9 million related to expected limitations
on the utilization of assumed capital losses on certain investments.
(f) On February 12, 2008 , Tredegar sold its aluminum extrusions business
in Canada for a purchase price of approximately $25 million to an
affiliate of H.I.G. Capital . The purchase price was subject to
adjustment based upon the actual working capital of the business at
the time of sale. All historical results for this business have been
reflected as discontinued operations in the accompanying financial
tables. The components of income (loss) from discontinued operations
are presented below:
Three Months Ended
(In thousands) March 31
------------------
2009 2008
------- --------
Income (loss) from operations before income taxes $- $(391)
Income tax cost (benefit) on operations - (98)
------- --------
- (293)
------- --------
Loss associated with asset impairments and
disposal activities - (1,130)
Income tax cost (benefit) on asset impairments
and costs associated disposal activities - (700)
------- --------
- (430)
------- --------
Income (loss) from discontinued operations $- $(723)
------- --------
(g) Adjusted EBITDA for the twelve months ended March 31, 2009 ,
represents income from continuing operations before interest, taxes,
depreciation, amortization, unusual items and losses associated with
plant shutdowns, asset impairments and restructurings, gains from the
sale of assets, investment write-downs and write-ups, charges related
to stock option awards accounted for under the fair value-based method
and other items. Adjusted EBITDA is not intended to represent cash
flow from operations as defined by GAAP and should not be considered
as either an alternative to net income (as an indicator of operating
performance) or to cash flow (as a measure of liquidity). Tredegar
uses Adjusted EBITDA as a measure of unlevered (debt-free) operating
cash flow. We also use it when comparing relative enterprise values
of manufacturing companies and when measuring debt capacity. When
comparing the valuations of a peer group of manufacturing companies,
we express enterprise value as a multiple of Adjusted EBITDA. We
believe Adjusted EBITDA is preferable to operating profit and other
GAAP measures when applying a comparable multiple approach to
enterprise valuation because it excludes the items noted above,
measures of which may vary among peer companies.
(h) Net debt is calculated as follows (in millions):
Debt $9.6
Less: Cash and cash equivalents (53.3)
Net debt (cash) $(43.7)
Net debt or cash is not intended to represent debt or cash as defined
by GAAP. Net debt or cash is utilized by management in evaluating the
company's financial leverage and equity valuation, and the company
believes that investors also may find net debt or cash to be helpful
for the same purposes.
SOURCETredegar Corporation CONTACT:D. Andrew Edwards , +1-804-330-1041, Fax: +1-804-330-1777, daedward@tredegar.com/
