News Release
A summary of results for continuing operations for the three and nine months ended
(In Millions, Except Three Months Nine Months
Per-Share Data) Ended Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Sales $175.7 $228.7 $486.8 $691.2
Income (loss) from continuing
operations as reported under
generally accepted accounting
principles (GAAP) $11.0 $11.1 $(11.3) $23.7
After-tax effects of:
Goodwill impairment relating to
aluminum extrusions business - - 30.6 -
(Gains) losses associated with
plant shutdowns, asset
impairments and restructurings - - .9 3.8
(Gains) losses from sale of assets
and other items (.4) (5.0) 3.5 (5.8)
--- ---- --- ----
Income from continuing
manufacturing operations* $10.6 $6.1 $23.7 $21.7
----- ---- ----- -----
Diluted earnings (loss) per share from
continuing operations as reported
under GAAP $.32 $.33 $(.33) $.69
After-tax effects per diluted share of:
Goodwill impairment relating to
aluminum extrusions business - - .90 -
(Gains) losses associated with
plant shutdowns, asset
impairments and restructurings - - .01 .11
(Gains) losses from sale of assets
and other items (.01) (.15) .12 (.17)
---- ---- --- ----
Diluted earnings per share from
continuing manufacturing
operations* $.31 $.18 $.70 $.63
---- ---- ---- ----
* 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
"The environment for our aluminum business continues to be difficult. Shipments were down in most markets as volume in the third quarter declined 30% from the third quarter of 2008. The timing of any recovery in the nonresidential construction market, which accounted for approximately 72% of our aluminum volume in 2008, remains uncertain. As a result, our short-term focus in the aluminum business continues to be on reducing our breakeven point."
Mr. Gottwald further stated: "Our balance sheet remains strong which positions us well for opportunities that may result as business conditions improve."
MANUFACTURING OPERATIONS
Film Products
Third-quarter net sales (sales less freight) in Film Products were
Net sales declined in the third quarter of 2009 compared with the third quarter of 2008 primarily due to the impact of lower selling prices from the pass-through of reduced resin prices and unfavorable changes in the U.S. dollar value of currencies for operations outside of the U.S., partially offset by the favorable effect of a change in product mix driven mostly by an increase in sales of high-value surface protection materials. Higher sales on a sequential quarter basis, most notably in surface protection and personal care materials, are believed to include a rebuilding of inventory at the customer level. Operating profit from ongoing operations increased in the third quarter of 2009 versus the same period in 2008 due primarily to the positive impact of the change in product mix noted above, cost reduction efforts, productivity gains and the lag in the pass-through of substantially higher resin costs in 2008, partially offset by the unfavorable effect of currency changes.
Net sales in Film Products for the first nine months of 2009 were
Net sales in the first nine months of 2009 declined primarily due to lower volume in all market segments, most notably personal care materials and packaging films, and the factors noted above for the current quarter. Operating profit from ongoing operations increased in the first nine months of 2009 versus the same period in 2008 as cost reduction efforts, productivity gains and the lag in the pass-through of lower resin costs offset lower volumes and the unfavorable effect of currency changes.
The company estimates that the impact on operating profit of the lag in the pass-through of changes in average resin costs was a negative
Capital expenditures in Film Products were
Aluminum Extrusions
Third-quarter net sales from continuing operations in Aluminum Extrusions were
Net sales in Aluminum Extrusions for the first nine months of 2009 declined 49.6% to
The net sales declines in the third quarter and first nine months of 2009 compared with last year were mainly due to lower sales volume and lower average selling prices driven by lower average aluminum costs. Weak market conditions led to decreased shipments in most markets. Operating losses from ongoing U.S. operations reported in the third quarter and first nine months of the year were primarily driven by lower sales volumes.
Capital expenditures for continuing operations in Aluminum Extrusions were
OTHER ITEMS
Net pension income from continuing operations was
Interest expense, which includes the amortization of debt issue costs, was
The effective tax rate used to compute income taxes from continuing manufacturing operations was 36.8% in the third quarter of 2009 compared with 43.6% in the third quarter of 2008, and 35.0% in the first nine months of 2009 compared with 39.3% in the first nine months of 2008. The decrease in the effective tax rate for continuing manufacturing operations for 2009 versus 2008, which had a favorable impact of approximately
Overall results for continuing operations for the quarter and year-to-date periods 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 an after-tax net gain of
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)
Third Quarter Nine Months
Ended Ended
September 30 September 30
------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Sales $175,662 $228,709 $486,843 $691,197
Other income (expense),
net (a) (d) (e) 300 7,709 1,657 8,929
--- ----- ----- -----
175,962 236,418 488,500 700,126
------- ------- ------- -------
Cost of goods sold (a) 135,779 195,438 386,652 585,926
Freight 4,692 5,450 11,791 16,348
Selling, R&D and general expenses 18,621 16,629 53,171 52,737
Amortization of intangibles 30 30 90 93
Interest expense 197 483 585 1,921
Asset impairments and costs
associated with exit and disposal
activities (a) - - 1,482 5,159
Goodwill impairment charge (b) - - 30,559 -
--- --- ------ ---
159,319 218,030 484,330 662,184
------- ------- ------- -------
Income from continuing operations
before income taxes 16,643 18,388 4,170 37,942
Income taxes (e) 5,647 7,310 15,504 14,214
----- ----- ------ ------
Income (loss) from continuing
operations 10,996 11,078 (11,334) 23,728
Loss from discontinued
operations (f) - - - (930)
--- --- --- ----
Net income (loss) (c) $10,996 $11,078 $(11,334) $22,798
------- ------- -------- -------
Earnings (loss) per share:
Basic:
Continuing operations $.32 $.33 $(.33) $.70
Discontinued operations - - - (.03)
--- --- --- ----
Net income (loss) $.32 $.33 $(.33) $.67
---- ---- ----- ----
Diluted:
Continuing operations $.32 $.33 $(.33) $.69
Discontinued operations - - - (.03)
--- --- --- ----
Net income (loss) $.32 $.33 $(.33) $.66
---- ---- ----- ----
Shares used to compute earnings
(loss) per share:
Basic 33,878 33,672 33,873 34,042
Diluted 33,922 33,903 33,873 34,262
Tredegar Corporation
Net Sales and Operating Profit by Segment
(In Thousands)
(Unaudited)
Third Quarter Nine Months
Ended Ended
September 30 September 30
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Film Products $123,397 $131,187 $335,984 $399,030
Aluminum Extrusions 47,573 92,072 139,068 275,819
------ ------ ------- -------
Total net sales 170,970 223,259 475,052 674,849
Add back freight 4,692 5,450 11,791 16,348
----- ----- ------ ------
Sales as shown in the
Consolidated Statements of
Income $175,662 $228,709 $486,843 $691,197
-------- -------- -------- --------
Operating Profit (Loss)
Film Products:
Ongoing operations $21,750 $10,454 $48,978 $34,719
Plant shutdowns, asset
impairments, restructurings
and other (a) - - (660) (4,649)
Aluminum Extrusions (f):
Ongoing operations (927) 3,861 (2,090) 7,809
Goodwill impairment charge (b) - - (30,559) -
Plant shutdowns, asset
impairments, restructurings
and other (a) (111) - (1,417) (615)
AFBS:
Gain on sale of investments in
Theken Spine and
Therics, LLC (d) - 1,499 150 1,499
--- ----- --- -----
Total 20,712 15,814 14,402 38,763
Interest income 215 209 649 655
Interest expense 197 483 585 1,921
Gain on the sale of corporate
assets (e) - 1,001 404 1,001
Gain from write-up of an
investment accounted for under
the fair value method (e) - 5,000 - 5,000
Stock option-based
compensation costs 424 178 1,227 516
Corporate expenses, net (a) 3,663 2,975 9,473 5,040
----- ----- ----- -----
Income before income taxes 16,643 18,388 4,170 37,942
Income taxes (e) 5,647 7,310 15,504 14,214
----- ----- ------ ------
Income (loss) from continuing
operations 10,996 11,078 (11,334) 23,728
Loss from discontinued
operations (f) - - - (930)
--- --- --- ----
Net income (loss) (c) $10,996 $11,078 $(11,334) $22,798
------- ------- -------- -------
Tredegar Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
September 30, December 31,
2009 2008
---- ----
Assets
Cash & cash equivalents $82,053 $45,975
Accounts & notes receivable, net 85,840 91,400
Income taxes recoverable 1,300 12,549
Inventories 30,663 36,809
Deferred income taxes 6,055 7,654
Prepaid expenses & other 3,933 5,374
-------- --------
Total current assets 209,844 199,761
Property, plant & equipment, net 233,219 236,870
Other assets 40,692 38,926
Goodwill & other intangibles (b) 104,729 135,075
-------- --------
Total assets $588,484 $610,632
-------- --------
Liabilities and Shareholders' Equity
Accounts payable $57,737 $54,990
Accrued expenses 35,129 38,349
Current portion of long-term debt 862 529
-------- --------
Total current liabilities 93,728 93,868
Long-term debt 746 22,173
Deferred income taxes 53,279 45,152
Other noncurrent liabilities 25,691 29,023
Shareholders' equity 415,040 420,416
-------- --------
Total liabilities and
shareholders' equity $588,484 $610,632
-------- --------
Tredegar Corporation
Condensed Consolidated Statement of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended
September 30
------------------
2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $(11,334) $22,798
Adjustments for noncash items:
Depreciation 29,607 32,844
Amortization of intangibles 90 93
Goodwill impairment charge 30,559 -
Deferred income taxes 3,647 17,515
Accrued pension income and
postretirement benefits (2,219) (3,354)
Loss on asset impairments and
divestitures - 3,337
Gain on the write-up of an
investment accounted for
under the fair value method (e) - (5,000)
Gain on sale of assets (1,004) (2,500)
Changes in assets and liabilities,
net of effects of acquisitions
and divestitures:
Accounts and notes receivables 7,087 (22,101)
Inventories 7,088 16,430
Income taxes recoverable 11,249 (13,544)
Prepaid expenses and other 1,466 (1,600)
Accounts payable and
accrued expenses 10,425 12,120
Other, net (1,154) 3,359
------ -----
Net cash provided by
operating activities 85,507 60,397
------ ------
Cash flows from investing activities:
Capital expenditures (including
settlement of related accounts
payable of $1,709 in 2009) (25,507) (13,849)
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 1,118 3,682
Investments - (2,059)
--- ------
Net cash provided by (used in)
investing activities (24,389) 11,390
------- ------
Cash flows from financing activities:
Dividends paid (4,071) (4,090)
Debt principal payments (21,094) (75,657)
Borrowings - 22,000
Repurchases of Tredegar common
stock (including settlement of
payable of $3,368 in 2008) (1,523) (19,792)
Proceeds from exercise of stock
options and other 224 4,069
--- -----
Net cash used in financing
activities (26,464) (73,470)
------- -------
Effect of exchange rate
changes on cash 1,424 90
----- ---
Increase (decrease) in cash
and cash equivalents 36,078 (1,593)
Cash and cash equivalents at
beginning of period 45,975 48,217
------ ------
Cash and cash equivalents at end
of period $82,053 $46,624
------- -------
Selected Financial Measures
(In Millions)
(Unaudited)
For the Twelve Months Ended September 30, 2009
----------------------------------------------
Film Aluminum
Products Extrusions Total
-------- ---------- -----
Operating profit from continuing
ongoing operations $68.2 $0.2 $68.4
Allocation of corporate overhead (12.3) (2.3) (14.6)
Add back depreciation and
amortization from continuing
operations 32.3 7.6 39.9
---- --- ----
Adjusted EBITDA from continuing
operations (g) $88.2 $5.5 $93.7
----- ---- -----
Selected balance sheet and other
data as of September 30, 2009 :
Net debt (cash) (h) $(80.4)
Shares outstanding 33.9
Notes to the Financial Tables
(a) Plant shutdowns, asset impairments, restructurings and other in the third quarter of 2009 include:
-- Pretax losses of $111,000 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).
Plant shutdowns, asset impairments, restructurings and other in the first nine months 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 $1.5 million 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);
-- Pretax gain of $276,000 (included in "Cost of goods sold" in the
condensed consolidated statements of income) related to the reduction of
future environmental costs expected to be incurred by Aluminum
Extrusions;
-- 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 ;
-- Pretax gain of $175,000 on the sale of a previously shutdown aluminum
extrusions manufacturing facility in El Campo, Texas (included in "Other
income (expense), net" in the condensed consolidated statements of
income); and
-- Pretax gain of $149,000 related to the reversal to income of certain
inventory impairment accruals in Film Products.
There were no plant shutdowns, asset impairments, restructurings and other charges in the third quarter of 2008. Plant shutdowns, asset impairments, restructurings and other in the first nine months of 2008 include:
-- Pretax charges of $2.7 million for severance and other employee-related
costs in connection with restructurings in Film Products ($2.2 million )
and Aluminum Extrusions ($510,000) ;
-- Pretax charges of $2.5 million for asset impairments in Film Products;
and
-- A pretax charge of $105,000 related to expected future environmental
costs at the aluminum extrusions facility in Newnan, Georgia (included
in "Cost of goods sold" in the condensed consolidated statements of
income).
(b) Goodwill impairment charge of
(c) Comprehensive income (loss), defined as net income and other comprehensive income (loss), was income of $15.3 million in the third quarter of 2009 and income of $1.3 million in the third quarter 2008. Comprehensive income (loss) was a loss of $1.1 million in the first nine months of 2009 and income of $13.1 million in the nine months of 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
(e) Gain on sale of corporate assets in the first nine months of 2009 includes a realized gain on the sale of corporate real estate
Income taxes for 2009 include the recognition of valuation allowances of
(f) On
Third Quarter Ended Nine Months Ended
September 30 September 30
----------------- ----------------
(In thousands) 2009 2008 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 - - - (1,337)
Income tax cost (benefit)
on asset impairments and
costs associated with
disposal activities - - - (700)
--- --- --- ----
- - - (637)
--- --- --- ----
Income (loss) from
discontinued operations $- $- $- $(930)
--- --- --- ----
(g) Adjusted EBITDA for the twelve months ended
(h) Net debt (cash) is calculated as follows (in millions):
Debt $1.6
Less: Cash and cash equivalents (82.0)
------
Net debt (cash) $(80.4)
======
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.
SOURCE
Tredegar Corporation, Corporate Communications, invest@tredegar.com; D. Andrew Edwards, Phone: +1-804-330-1041, Fax: +1-804-330-1777, daedward@tredegar.com
