News Release

• Bonnell Aluminum’s operating profit of $0.9 million increased $2.5 million from the fourth quarter of 2010 as volume rose 11.5%.
• Film Products successfully closed on its acquisition of Terphane Holdings LLC on October 24, 2011.
• Film Products’ operating profit was 19% below the fourth quarter of 2010 as a result of lower volumes in surface protection materials and personal care films.
• In Film Products, weakened consumer demand continues to adversely affect the markets for our customers’ products, especially impacting our surface protection volumes.

RICHMOND, Va.--(BUSINESS WIRE)--Mar. 1, 2012-- Tredegar Corporation (NYSE:TG) reported fourth-quarter net income from continuing operations of $3.8 million (12 cents per share) compared to $7.3 million (23 cents per share) in the fourth quarter of 2010. Results from continuing operations in the fourth quarter of 2011 include a net after-tax loss of $3.0 million (9 cents per share) for special items primarily related to expenses incurred in relation to the acquisition of Terphane Holdings LLC (“Terphane”). Income from ongoing operations in the fourth quarter was $6.8 million (21 cents per share) versus $8.9 million (28 cents per share) in the fourth quarter last year.

Net income from continuing operations for 2011 was $29.2 million (91 cents per share) compared to $27.0 million (83 cents per share) in 2010. Results from continuing operations in 2011 include a net after-tax gain of $0.6 million (2 cents per share) for special items primarily related to the divestiture of our film products business in Italy and expenses incurred in relation to the acquisition of Terphane. Income from ongoing operations in 2011 was $28.6 million (89 cents per share) versus $28.9 million (89 cents per share) in the fourth quarter last year. Further details regarding these special items are provided in the financial tables included with this press release.

A summary of results for ongoing operations for the three and twelve months ended December 31, 2011 and 2010 is shown below:

* Ongoing operations include operating profit (loss) of Film Products, Aluminum Extrusions and the Other segment 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 between net income (loss) and diluted earnings per share, in each case, as reported under GAAP (defined above) and income from ongoing operations and diluted earnings per share from ongoing operations, each being a non-GAAP financial measure. 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: “Weak demand in the LCD market, especially in the high-end TV segment, continued to adversely impact our Film Products business in the fourth quarter. We do not expect a dramatic change in the market dynamics for our surface protection business in the near-term but may see fluctuations from quarter to quarter.”

Ms. Taylor continued: “Bonnell Aluminum enjoyed profitability again this quarter, versus a loss of $1.5 million in the fourth quarter of 2010. This solid quarterly performance is evidence that Bonnell’s efforts to focus on operational excellence and develop new business opportunities, while maintaining a low breakeven point, are paying off as we experienced volume growth. Unfortunately, this does not indicate that we see evidence of a meaningful recovery in the building and construction market, particularly the residential segment. Consequently, on February 1, 2012, we announced our decision to close our plant in Kentland, Indiana.”

OPERATIONS REVIEW

Film Products

A summary of fourth quarter and full year operating results for Film Products is provided below:

Net sales (sales less freight) in Film Products for the fourth quarter of 2011 and full year 2011 increased compared to the same periods in 2010 primarily due to the acquisition of Terphane on October 24, 2011 and an increase in average selling prices from the pass-through of higher resin prices to customers, partially offset by lower volumes in surface protection materials and personal care films. As highlighted last quarter, the slowdown in end-user demand for large-sized LCD panels, particularly in the high-end TV segment, has negatively impacted the volumes of our surface protection materials. In addition, reduced consumer demand for applications that utilize our premium personal care films has also contributed to the reduction in sales volumes. Terphane generated net sales of $28.3 million subsequent to its acquisition.

Operating profit from ongoing operations in the fourth quarter of 2011 decreased compared to the fourth quarter of the prior year primarily due to lower volumes in surface protection materials and personal care films. The impact of lower volumes was partially offset by additional profit generated by Terphane, the favorable impact of the lag in the pass-through of higher resin costs and cost reduction efforts and improved manufacturing efficiencies in 2011. The estimated impact on operating profits of the projected quarterly lag in the pass-through of average resin costs was a favorable $1.0 million in the fourth quarter of 2011 and an unfavorable $1.8 million in the fourth quarter of 2010. Terphane had operating profit of $3.0 million from the acquisition date through December 31, 2011, which included $0.9 million of one-time reimbursements for customs duties.

Operating profit from ongoing operations for 2011 decreased compared to 2010 due to the same factors referenced above for the quarterly results. In addition, operating profit from ongoing operations for the full year period was favorably impacted by the effect of the change in the U.S. dollar value of currencies for operations outside the U.S. The estimated impact of the resin pass-through lag was an unfavorable $0.8 million for 2011 versus an unfavorable $6.4 million for 2010. The company estimates that the change in the U.S. dollar value of currencies for operations outside the U.S. had a favorable impact of approximately $1.8 million in 2011 compared to 2010.

Capital expenditures in Film Products were $12.9 million in 2011 compared with $15.7 million in 2010. Film Products currently estimates that capital expenditures will be approximately $48 million in 2012, which includes approximately $27 million in capital expenditures for a project that will expand our capacity at the newly acquired manufacturing facility in Brazil. This multi-year project will increase capacity that primarily serves specialized polyester films customers in Latin America. Depreciation expense was $34.6 million in 2011 and $33.6 million in 2010, and is projected to be approximately $39 million in 2012.

Aluminum Extrusions

A summary of fourth quarter and full year operating results for Aluminum Extrusions, which is also referred to as Bonnell Aluminum, is provided below:

Net sales in the fourth quarter of 2011 were higher than in the fourth quarter of the previous year, largely due to increased volume. Operating profit from ongoing operations for the fourth quarter of 2011 was primarily driven by higher volumes and lower expenses for supplies, maintenance and utilities in the current year. Higher volumes in Bonnell Aluminum can be attributed to developing new customer opportunities and supporting key customers who continue to demonstrate strength in a difficult business environment. The improvements in net sales and operating profit from ongoing operations for 2011 versus 2010 were primarily driven by the previously noted higher volumes.

Capital expenditures for Bonnell were $2.7 million in 2011 compared with $4.3 million last year. Capital expenditures are estimated to be approximately $4.5 million in 2012. Depreciation expense was $8.3 million in 2011 compared with $9.1 million in 2010, and is estimated to be approximately $12 million in 2012. Higher depreciation expense in 2012 is primarily due to accelerated depreciation of approximately $4 million on property, plant and equipment at the Kentland, Indiana manufacturing facility, which is scheduled to close by September 30, 2012.

Other

The Other segment is comprised of the start-up operations of Bright View Technologies Corporation (Bright View Technologies) and Falling Springs, LLC (Falling Springs). Bright View Technologies is a developer and producer of high-value microstructure-based optical films for the LED (light emitting diode) and fluorescent lighting markets. Falling Springs develops, owns and operates multiple mitigation banks. Through the establishment of perpetual easements to restore, enhance and preserve wetlands, streams or other protected environmental resources, these mitigation banks create saleable credits that are used by the purchaser of credits to offset the negative environmental impacts from private and public development projects.

Net sales for this segment can fluctuate from quarter-to-quarter as Bright View is a late-stage developmental company and Falling Springs’ revenue can vary based upon the timing of development projects within its markets. Operating losses from ongoing operations for this segment were $0.4 million in the fourth quarter of 2011 and $2.8 million for the full year.

Corporate Expenses, Interest and Taxes

Pension expense was $0.6 million in the fourth quarter of 2011 and $2.3 million in 2011, an unfavorable change of $0.4 million and $1.6 million, respectively, from the comparable periods in 2010. 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 decreased in 2011 versus 2010 due to lower performance-based incentives, partially offset by the unfavorable impact of pension expense noted above.

The effective tax rate for income taxes from continuing operations was 26.7% in 2011 compared to 33.7% in 2010. Income taxes for continuing operations for 2011 reflect the recognition of estimated tax benefits of approximately $5 million related to the divestiture of the film products subsidiary in Italy, partially offset by the impact of non-deductible acquisition-related expenses associated with the purchase of Terphane by Film Products. Significant differences between the effective tax rate for continuing operations and the U.S. federal statutory rate for 2011 and 2010 will be provided in the notes to the consolidated interim financial statements in our Form 10-K filed with the Securities and Exchange Commission. The change in the effective tax rate for the fourth quarter primarily reflects the impact to income taxes during the fourth quarter to adjust the effective tax rate to that for the entire year.

CAPITAL STRUCTURE

Net debt (debt in excess of cash and cash equivalents) was $56.1 million at December 31, 2011, compared with net cash (cash and cash equivalents in excess of debt) of $72.7 million at December 31, 2010. In 2011, we borrowed $125 million under our revolving credit agreement and used approximately $56 million of cash on hand to fund the acquisition of Terphane. Net debt and net cash are financial measures that are not calculated or presented in accordance with GAAP. See the Notes to the Financial Tables for reconciliation of these non-GAAP financial measures 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, may not achieve the levels of revenue, profit, productivity, or otherwise perform as we expect; acquisitions, including our acquisition of Terphane, involve special risks, including without limitation, diversion of management’s time and attention to 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 Securities and Exchange Commission (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 2010 Annual Report on 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.

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, http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.tredegar.com&esheet=50183974&lan=en-US&anchor=www.tredegar.com&index=1&md5=20c46ec9b560e07fc2e2bdf00b9f31a1. 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 sales of $800 million in 2011. With approximately 2,200 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