News Release

• Film Products’ operating profit of $17.0 million increased $1.5 million from the first quarter of 2012 as volume rose for surface protection films and personal care materials.
• Bonnell Aluminum’s operating profit of $4.6 million increased $2.9 million from the first quarter of 2012 primarily due to margin improvements and the fourth quarter 2012 acquisition of AACOA, Inc. (“AACOA”).
• Tredegar Corporation increased its quarterly dividend by 16.7% to 7 cents per share in February 2013.

RICHMOND, Va.--(BUSINESS WIRE)--May 2, 2013-- Tredegar Corporation (NYSE:TG) reported first-quarter net income from continuing operations of $9.5 million (29 cents per share) compared to $7.7 million (24 cents per share) in the first quarter of 2012. Results from continuing operations in the first quarter of 2013 included a net after-tax gain of $0.5 million (1 cent per share) for special items primarily related to an unrealized gain for an investment accounted for under the fair value method. Results from continuing operations in the first quarter of 2012 included a net after-tax loss of $0.2 million (1 cent per share) for special items primarily related to charges associated with the shutdown of our Kentland, Indiana aluminum extrusions manufacturing facility and an unrealized loss on our investment in the Harbinger Capital Partners Special Situations Fund, L.P., offset by an unrealized gain for an investment accounted for under the fair value method. Income from ongoing operations in the first quarter of 2013, which excludes special items, was $9.0 million (28 cents per share) versus $7.9 million (25 cents per share) in the first quarter of last year.

Further details regarding the special items that reconcile income from ongoing operations to net income from continuing operations are provided in the financial tables to this press release.

A summary of results for ongoing operations for the three months ended March 31, 2013 and 2012 is shown below:

* Ongoing operations include operating profit (loss) of Film Products and Aluminum Extrusions as well as Corporate Expenses, Interest and Taxes. See Notes to the Financial Tables included with this press release for further detail regarding the items included in the reconciliation of income from ongoing operations and diluted earnings per share from ongoing operations, each being a non-GAAP financial measure, to net income and diluted earnings per share as reported under GAAP. In addition, Note (h) within the Notes to the Financial Tables provides the definition of income from ongoing operations and the reasons why the measure is presented.

Nancy M. Taylor, Tredegar’s president and chief executive officer, said: “Film Products had higher volumes in surface protection and personal care in the first quarter compared to last year. We are seeing improvement in these product categories, especially surface protection, as some of our key customers have gained market share despite challenging market conditions. While we saw some strength in the first quarter, the markets in which we participate continue to experience headwinds, and we anticipate fluctuations from quarter to quarter.”

Ms. Taylor continued, “Bonnell Aluminum delivered a strong performance in the first quarter. The cost savings associated with the shutdown of the Kentland facility in 2012 and the addition of AACOA were key factors in Bonnell’s performance for the quarter. In February, Bonnell announced that it is adding a new extrusion press in its Newnan facility which will primarily serve the automotive market. This project, along with the broad capabilities and diversified market presence that AACOA provides, will advance our growth in markets outside of building and construction.”

Ms. Taylor added, “In February, we raised our quarterly dividend from six cents to seven cents per share, our third increase in less than three years.”

OPERATIONS REVIEW

Film Products

A summary of first quarter operating results for Film Products is provided below:

Net sales (sales less freight) in the first quarter of 2013 increased in comparison to the first quarter of 2012 primarily due to higher volumes and improved product mix, partially offset by the negative impact of competitive pricing pressures. Higher sales volumes and improved product mix in Film Products had a favorable impact of approximately $3.2 million in the first quarter of 2013 compared to the first quarter of 2012, which is primarily related to higher volumes in surface protection films and personal care materials, partially offset by lower volumes in polyethylene overwrap films. Competitive pricing pressures in personal care materials and flexible packaging films, partially offset by a more favorable product mix, negatively impacted net sales for the current quarter versus prior year by approximately $2.3 million. The change in the U.S. dollar value of currencies for operations outside the U.S. had an unfavorable impact on net sales of approximately $0.3 million in the first quarter of 2013 compared to the prior year.

Operating profit from ongoing operations of $17.0 million for the first quarter of 2013 represents an increase of $1.5 million from the first quarter of 2012. Higher sales volumes noted above had a favorable impact of approximately $1.8 million in comparison to the prior year. Volume for higher-value surface protection films increased as some of our key customers in the display market have gained market share despite challenging market conditions. Margins were impacted by approximately $3.5 million, primarily driven by price reductions of approximately $1.7 million from global supply and demand imbalances in flexible packaging films and operational inefficiencies of approximately $1.4 million in other product areas. Selling, general and administrative expenses decreased $1.7 million as a result of lower depreciation expense and the timing of certain legal and administrative expenses.

In our flexible packaging facility in Brazil, we have experienced production inefficiencies associated with manufacturing equipment component failures in the quarter. Although not directly related to the production issues associated with the upgrade of an existing line that were highlighted in the first quarter of 2012, these inefficiencies had a comparable impact on operating profit from ongoing operations in the first quarter of this year.

The change in the dollar value of currencies for operations outside the U.S. had a favorable impact of approximately $1.5 million in the first quarter of 2013 compared to the first quarter of 2012. The estimated impact on operating profit from ongoing operations of the quarterly lag in the pass-through of average resin costs was approximately a negative $0.5 million in the first quarters of 2013 and 2012.

Capital expenditures in Film Products were $9.4 million in the first three months of 2013 compared to $4.9 million in 2012, which included approximately $7.2 million in capital expenditures for a previously announced project that will expand our capacity at the manufacturing facility in Cabo de Santo Agostinho, Brazil. Film Products currently estimates that capital expenditures will be approximately $74 million in 2013, which includes approximately $42 million for the capacity expansion project in Brazil. This multi-year project will significantly increase capacity in Brazil and primarily serve flexible packaging films customers in Latin America. Depreciation expense was $7.6 million in the first three months of 2013 and $9.2 million in the first three months of 2012, and is projected to be approximately $31 million in 2013.

Aluminum Extrusions

A summary of first quarter results for Aluminum Extrusions, which is also referred to as Bonnell Aluminum, is provided below:

Net sales in the first quarter of 2013 increased in comparison to the same period of the prior year primarily due to the addition of AACOA. AACOA, which was acquired on October 1, 2012, had net sales of $21.8 million in the first quarter of 2013. Excluding the impact of the acquisition of AACOA and the Kentland shutdown, net sales increased by approximately $3 million due to higher average selling prices and improved volume of approximately 3.5% in the first quarter of 2013 compared to the first quarter of 2012. Approximately half of the volume that was produced at Kentland has been transferred to our other facilities.

Operating profit from ongoing operations increased in the first quarter of 2013 compared to the first quarter of 2012 primarily as a result of cost savings associated with the shutdown of the Kentland facility, improved pricing and the addition of AACOA. The impact on operating profit from ongoing operations directly attributable to the acquisition of AACOA, including synergies, was $1.2 million for the first quarter of 2013. Amortization expense associated with AACOA was $0.5 million in the first quarter of 2013. The shutdown of our Kentland manufacturing facility had a net favorable impact on operating profit from ongoing operations of approximately $1.2 million for the first three months of 2013 compared to the first three months of 2012.

Capital expenditures for Bonnell Aluminum were $0.9 million in the first three months of 2013 compared to $0.5 million in the first three months of 2012. Capital expenditures are projected to be approximately $17 million in 2013, which includes approximately $13 million for an 18-month project that will expand our capacity at the manufacturing facility in Newnan, Georgia. This additional capacity will primarily serve the automotive industry. Depreciation expense was $1.8 million in the first three months of 2013 compared with $2.6 million in the first three months of 2012, and is projected to be approximately $8 million in 2013. Higher depreciation expense in 2012 was primarily related to approximately $0.7 million in accelerated depreciation on property, plant and equipment at the Kentland manufacturing facility.

Corporate Expenses, Interest and Taxes

Pension expense was $3.3 million in the first quarter of 2013, an unfavorable change of $1.4 million from the first quarter of 2012. Most of the pension impact on earnings is reflected in “Corporate expenses, net” in the net sales and operating profit by segment table. Corporate expenses, net increased in 2013 versus 2012 primarily due to the increase in pension expenses noted above, higher stock-based compensation and the unfavorable fluctuations in the timing of certain corporate-related expenses. Corporate expenses, net in the first quarter of 2012 also included an unrealized loss on our investment in the Harbinger Capital Partners Special Situations Fund, L.P. (see Note (e) within the Notes to the Financial Tables for additional detail).

Interest expense, which includes the amortization of debt issue costs, was $0.7 million in the first three months of 2013 in comparison to $1.0 million in the first three months of 2012 as a result of a decrease in the average interest rate on borrowings under our revolving credit facility.

The effective tax rate used to compute income taxes from continuing operations was 28.3% in the first quarter of 2013 compared with 34.8% in the first quarter of 2012. Income taxes from continuing operations in the first quarter of 2013 primarily reflect the benefit of current year foreign tax incentives and the timing of a research and development tax credit. Income taxes for continuing operations in the first quarter of 2012 primarily reflect the foreign tax rate incentives, partially offset by the recognition of additional valuation allowances related to the expected limitations on the utilization of assumed capital losses on certain investments recognized in previous years. Significant differences between the estimated effective tax rate for continuing operations and the U.S. federal statutory rate for 2013 and 2012 will be provided in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 that will be filed with the Securities and Exchange Commission (the “SEC”).

CAPITAL STRUCTURE

Net debt (debt in excess of cash and cash equivalents) was $80.3 million at March 31, 2013, compared with $79.2 million at December 31, 2012. Net debt is a financial measure that is not calculated or presented in accordance with GAAP. See the Notes to the Financial Tables for reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

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 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 from expectations include, without limitation: acquired businesses, including Terphane Holdings LLC (“Terphane”) and AACOA, may not achieve the levels of revenue, profit, productivity, or otherwise perform as we expect; acquisitions, including our acquisitions of Terphane and AACOA, involve special risks, including without limitation, diversion of management’s time and attention from our existing businesses, the potential assumption of unanticipated liabilities and contingencies and potential difficulties in integrating acquired businesses and achieving anticipated operational improvements; Film Products is highly dependent on sales to one customer — The Procter & Gamble Company; growth of Film Products depends on its ability to develop and deliver new products at competitive prices; sales volume and profitability of Aluminum Extrusions are cyclical and highly dependent on economic conditions of end-use markets in the U.S., particularly in the construction sector, and are also subject to seasonal slowdowns; our substantial international operations subject us to risks of doing business in foreign countries, which could adversely affect our business, financial condition and results of operations; our future performance is influenced by costs incurred by our operating companies, including, for example, the cost of energy and raw materials; and the other factors discussed in the reports Tredegar files with or furnishes to the SEC from time-to-time, including the risks and important factors set forth in additional detail in “Risk Factors” in Part I, Item 1A of Tredegar’s 2012 Annual Report on Form 10-K (the “2012 Form 10-K”) filed with the SEC. Readers are urged to review and consider carefully the disclosures Tredegar makes in its filings with the SEC, which include the 2012 Form 10-K.

Tredegar does not undertake, and expressly disclaims any duty, to update any forward-looking statement made in this press release to reflect any change in management’s expectations or any change in conditions, assumptions or circumstances on which such statements are based.

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 Tredegar’s financial condition and results of operations. Reconciliations of non-GAAP financial measures are provided in the Notes to the Financial Tables included with this press release and can also be found within Presentations in the Investor Relations section of our website, www.tredegar.com. Tredegar uses its website as a channel of distribution of material company information. Financial information and other material information regarding Tredegar is posted on and assembled in the Investor Relations section of our website.

Tredegar Corporation is primarily a manufacturer of plastic films and aluminum extrusions. A global company headquartered in Richmond, Virginia, Tredegar had 2012 sales of $882 million. With approximately 2,700 employees, the company operates manufacturing facilities in North America, South America, Europe, and Asia.

Source: Tredegar Corporation

Tredegar Corporation
Neill Bellamy, 804-330-1211
Fax: 804-330-1777
neill.bellamy@tredegar.com