Tredegar Q1 Earnings Down Y/Y as Aluminum Costs Weigh on Margins

Shares of Tredegar Corporation TG have gained 3.8% since the company reported its earnings for the quarter ended March 31, 2025. This compares to the S&P 500 index’s 4.5% growth over the same time frame. Over the past month, the stock has gained 15.8% compared with the S&P 500’s 8.8% growth.Tredegar reported first-quarter 2025 net income from continuing operations of 2 cents per share, down from 8 cents per share in the first quarter of 2024. On an adjusted basis, net income from ongoing operations fell to 10 cents per share from 14 cents per share a year ago. (See the Zacks Earnings Calendar to stay ahead of market-making news.)The company’s net sales of $164.7 million denoted a 14.4% increase from $144 million in the year-ago quarter. However, net income from continuing operations declined to $0.7 million from $2.6 million in the first quarter of 2024. On an adjusted basis, net income from ongoing operations fell to $3.6 million from $4.7 million a year ago.Tredegar Corporation Price, Consensus and EPS Surprise Tredegar Corporation price-consensus-eps-surprise-chart | Tredegar Corporation QuoteSegment Results Show Mixed DynamicsAluminum Extrusions (Bonnell Aluminum)Net sales rose 17% year over year to $133.6 million, driven by a 12% increase in sales volume and the pass-through of higher metal costs. EBITDA from ongoing operations in this segment declined 27% to $9.2 million from $12.5 million in the prior-year quarter. The drop was attributed to an unfavorable shift in sales mix, higher input costs, increased labor and maintenance expenses, and elevated SG&A costs. Specialty products led the volume growth, jumping 52.8%, primarily due to increased shipments for solar panel applications and TSLOTS framing systems.PE FilmsThe PE Films segment delivered an 8.9% improvement in EBITDA to $7.5 million, despite a 4% drop in sales volume. Net sales edged up 3.2% to $25.5 million, reflecting strength in surface protection films. The improvement in EBITDA was driven by favorable sales mix, pricing, and cost improvements in Surface Protection, which more than offset declines in overwrap films volume and pricing.Management Commentary Highlights Recovery and Strategic PositioningCEO John Steitz noted that the recovery in Bonnell Aluminum appears to be gaining traction, supported by a tenth consecutive quarterly increase in net new orders, which rose 36% year over year. Open orders reached 25 million pounds, the highest in two years. Steitz emphasized the benefit of new Section 232 tariffs, which raise the rate on aluminum imports from 10% to 25% and expand coverage to downstream products. These measures have started to restore market share previously lost to underpriced imports.On PE Films, Steitz acknowledged that while first-quarter results were strong, normalization is expected in subsequent quarters. The company has not yet seen a decline in demand stemming from U.S. tariff actions on imported electronics, although management remains cautious amid ongoing global trade developments.Factors Behind the Headline FiguresThe decline in Aluminum Extrusions’ EBITDA was driven by a lower spread between selling prices and metal costs, unfavorable manufacturing yields, and higher expenses related to labor, maintenance, dies, and utilities. Timing mismatches in aluminum pricing under the FIFO method slightly mitigated these effects, contributing a $1.7 million benefit versus a $1.3 million charge in the prior year.Increased SG&A costs in this segment (up 38.5%) stemmed mainly from compensation, travel, and consulting fees. PE Films, in contrast, benefited from $1.5 million in incremental contribution from surface protection, offset by a $0.7 million decline from overwrap films due to weaker volume and less favorable pricing.Guidance and Financial PositionFor 2025, Tredegar forecasts capital expenditures of $17 million for Bonnell Aluminum and $3 million for PE Films, largely directed toward productivity and operational continuity. Depreciation and amortization expenses are projected at $16 million and $2 million, respectively, for Aluminum Extrusions, and $5 million for PE Films.Tredegar’s balance sheet remains conservative. Total debt declined to $56.6 million as of March 31, 2025, from $61.9 million at year-end 2024. Net debt stood at $52.9 million, with a net leverage ratio of 1.1x. The company refinanced its $125 million asset-based lending facility in May for a new five-year term, ensuring continued liquidity to support operations.Other DevelopmentsDuring the quarter, Tredegar completed the sale of its Terphane business and received $9.8 million from a post-closing settlement. This contributed to a $9.4 million gain from discontinued operations. Restructuring activities continued in line with previously disclosed plans, including the closure of the Richmond, VA, PE Films technical center, which concluded at the end of the first quarter of 2024.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tredegar Corporation (TG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks