Tredegar Corporation · NYSE:TG
Tredegar — Q2 2019 Earnings Presentation
37 slides from Tredegar's earnings presentation, Aug 8, 2019
Slide 1: 2019 Second Quarter Financial Results
2019 Second Quarter Financial Results August 8, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation are forward-looking statements. Pursuant to federal securities regulations, we have set forth cautionary statements relating to those forward-looking statements in our Annual Report on Form 10-K for the year ended December
Slide 3: 2019 Second Quarter and First Six Months Financial Results
Tredegar Corporation 2019 Second Quarter and First Six Months Year Financial Results (in millions, except per share data) 2Q 2019 2Q 2018 1H 2019 1H 2018 Net Sales1 $239.4 $255.3 $478.8 $505.2 Net Income from Ongoing Operations2 $11.7 $11.5 $19.0 $24.5 Diluted EPS from $.35 $.35 $.57 $.74 Ongoing Op
Slide 4: 2019 Second Quarter Net Sales and Net Income
Tredegar Corporation 2019 Second Quarter Net Sales and Net Income Financial Highlights Net Sales1 $ in millions • Combined segment operating profit from 266 3 ongoing operations of $24.8M in second 258 255 quarter of 2019: 239 239 • Bonnell Aluminum operating profit of $14.5M; up $1.4M Y-O-Y and up
Slide 5: Aluminum Extrusions (Bonnell Aluminum)
Aluminum Extrusions (Bonnell Aluminum) 2019 Second Quarter and Full Year Results 2nd Quarter Performance First Six Months Performance (in millions) 2Q 19 2Q 18 (in millions) 2019 2018 Volume (lbs.) 53.1 55.1 (4)% Volume (lbs.) 106.8 106.6 -% Net Sales1 $136.8 $144.6 (5)% Net Sales1 $275.8 $272.8 1%
Slide 6: PE Films
PE Films (includes Personal Care, Surface Protection & Films for Other Markets) 2019 Second Quarter and Year-to-Date Results 2nd Quarter Performance First Six Months Performance (in millions) 2Q 19 2Q 18 (in millions) 2019 2018 Volume (lbs.) 25.5 30.1 (15)% Volume (lbs.) 51.3 64.9 (21)% Net Sales1 $
Slide 7: PE Films: Customer Transitions in Surface Protection and Personal Care
PE Films Customer Transitions in Surface Protection and Personal Care • The Surface Protection component of PE Films supports manufacturers of optical and other specialty substrates used in flat panel display products. These films are primarily used by customers to protect components of displays in
Slide 8: Flexible Packaging Films (Terphane)
Flexible Packaging Films (Terphane) 2019 Second Quarter and Full Year Results 2nd Quarter Performance First Six Months Performance (in millions) (in millions) 2019 2018 2Q 19 2Q 18 Volume (lbs.) 26.5 23.7 12% Volume (lbs.) 51.9 47.0 10% Net Sales1 $33.4 $28.3 18% Net Sales1 $67.1 $56.7 18% Operating
Slide 9: 2019 First Six Months Financial Highlights
Tredegar Corporation 2019 First Six Months Financial Highlights ($ in millions) Cash Flows from Operations $68.5 Capital Expenditures $24.3 Dividends Paid (reflects quarterly dividend of $.11 per $7.3 share; dividend increased to $.12 per share in August 2019) 1 $38.3 Net Debt 2 0.7x Total Debt to A
Slide 10: Appendix
‘Tredegar an < ) Appendix
Slide 11: Tredegar at a Glance
CONFIDENTIAL Tredegar at a Glance Major Product Groups Primary End Markets Customers Competitors Aluminum Extrusions Custom aluminum extrusion profile, Building and Construction: Curtain walls and Glazing contractors and Hydro North America, custom-designed and manufactured, storefronts, commercial
Slide 12: Tredegar's Global Presence
Tredegar’s Global Presence Europe – PE Films Kerkrade, The Netherlands Rétság, Hungary North America – PE Films Lake Zurich, IL Bonnell Durham, NC Newnan, GA Pottsville, PA Carthage, TN Richmond, VA Elkhart, IN Asia – PE Films Terre Haute, IN Niles, MI Guangzhou, China Clearfield, CO Pune, India Sou
Slide 13: Tredegar at a Glance: Business Strengths
Tredegar at a Glance Business Strengths Aluminum Extrusions ➢ Industry-leading position in nonresidential building and construction and value-added OEM components in North American extrusions market ➢ Market-focused manufacturing operations and world-class capabilities in extrusion and finishing ser
Slide 14: Aluminum Extrusions Business Profile
Aluminum Extrusions Business Profile Key Market Drivers • Strong demand for finished products, including anodized $576 million LTM Net Sales1 and painted products and fabricated components • Growing aluminum content in vehicles, driven by CAFE 15% (corporate average fuel economy) standards Electrica
Slide 15: Aluminum Extrusions Key Markets: Building & Construction
Aluminum Extrusions Key Markets 1.6 14.0 1.4 12.0 Auto/Light Trucks & Specialty Building & Construction 1.2 10.0 1.0 8.0 0.8 6.0 0.6 4.0 0.4 0.2 2.0 - - 2020F 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Building & Construction Auto/Light Trucks Spec
Slide 16: Aluminum Extrusions Key Markets
Aluminum Extrusions Key Markets -- B&C/Automotive/Specialty 15
Slide 17: Automotive Aluminum Extrusion Applications
Aluminum Extrusions Automotive Aluminum Extrusion Applications ➢ Crash management systems – beams and mounting plates, crush cans ➢ Engine mounts and cradles ➢ Roof rails ➢ Electrical battery trays ➢ Air conditioner tube connectors Aluminum Overview Film Products Financials 16 Extrusions
Slide 18: Aluminum Extrusions Annual Historical Financials
Aluminum Extrusions Annual Historical Financials 1 Net Sales1 ($ in millions) Adjusted EBITDA2 ($ in millions) 2 $600 573 576 $75 69 66 467 59 375 360 47 344 $50 40 36 $300 $25 $0 $0 2014 2015 2016 2017 2018 LTM 2014 2015 2016 2017 2018 LTM Volume (lbs. in millions) Capital Expenditures ($ in millio
Slide 19: PE Films Business Profile
PE Films Business Profile $293 million LTM Net Sales1 Key Growth Drivers • Electronics and display market expanding 31% Surface • Aging baby boomers in developed markets Protection • Growth of middle class in emerging markets Customers 66% Personal • Global and regional consumer care producers Care
Slide 20: PE Films Key Market Drivers
PE Films Key Market Drivers Key Drivers for Surface Protection Films ➢ Displays will continue to grow due to “Internet of Things” ➢ Flat panel display area growth of 4 - 5% CAGR through 20221 : ➢ TVs represent highest % of total display area (70%) and are growing at 4% - 5% CAGR as consumer shift to
Slide 21: Personal Care Components for Diapers, Incontinence and Hygiene Pads
Personal Care – Components for Baby Diapers, Adult Incontinence and Feminine Hygiene Pads 20
Slide 22: PE Films Surface Protection Overview
PE Films Surface Protection Overview Typical LCD Optical Stack (examples: TVs, Smartphones) 21
Slide 23: PE Films Annual Historical Financials
PE Films Annual Historical Financials Net Sales1 ($ in millions) Adjusted EBITDA2 ($ in millions) $800 $120 82 $600 $80 464 63 386 56 51 $400 331 352 332 293 39 39 $40 $200 $0 $0 2014 2015 2016 2017 2018 LTM 2014 2015 2016 2017 2018 LTM Volume (lbs. in millions) Capital Expenditures ($ in millions)
Slide 24: Flexible Packaging Films Business Profile
Flexible Packaging Films Business Profile Key Growth Drivers $134 million LTM Net Sales1 • Growing end-user demand for convenience foods, lighter packaging and branded consumer 27% North products America • Packaging innovation driving demand for flexible packaging Customers 2% • Global and regional
Slide 25: Flexible Packaging Films End-Use and Value-Add Products
Flexible Packaging Films End-Use and Value-Add Products 24
Slide 26: Flexible Packaging Films Annual Historical Financials
Flexible Packaging Films Annual Historical Financials Net Sales1 ($ in millions) Adjusted EBITDA2 ($ in millions) $160 $20 134 124 15 114 108 108 14 $120 105 11 11 $80 $10 8 6 $40 $0 $0 2014 2015 2016 2017 2018 LTM 2014 2015 2016 2017 2018 LTM Volume (lbs. in millions) Capital Expenditures ($ in mil
Slide 27: Tredegar Annual Historical Financials
Tredegar Corporation Annual Historical Financials Net Sales1 ($ in millions) Adjusted EBITDA2 ($ in millions) $1,200 1029 $150 1003 923 928 866 101 101 $900 799 95 94 $100 90 69 $600 $50 $300 $0 $0 4 4 4 2014 2015 2016 2017 2018 LTM 2014 2015 2016 4 2017 2018 LTM Earnings Per Share from Ongoing Ops3
Slide 28: Capital Expenditures – History & Projections
Tredegar Corporation Capital Expenditures – History & Projections ($ in millions) 2014 2015 2016 2017 2018 2019 Projection2 PE Films $17.0 $21.2 $25.8 $15.0 $22.0 $33 Flexible Packaging 21.8 3.5 3.4 3.6 5.4 12 Aluminum Extrusions 6.1 8.1 15.9 25.7 13.0 17 Corporate - - 0.4 0.1 0.4 - Total $44.9 $32.
Slide 29: Cash Flow
Tredegar Corporation Cash Flow ($ in millions) 2013 2014 2015 2016 2017 2018 Cash Flows from $77 $51 $74 $49 $88 $98 Operations Capital Expenditures 80 45 33 45 44 41 Free Cash Flow1 (3) 6 41 4 44 57 Dividends 9 11 14 14 15 15 Acquisitions 0 0 0 0 87 0 1 Free cash flow represents cash flows from ope
Slide 30: Quarterly Cash Dividend History
Tredegar Corporation Quarterly Cash Dividend History $0.12 $0.12 $0.11 $.09 $0.08 $.07 $.06 $.045 $0.04 $0.00 1996---2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Dividend increase of $0.01/share announced on 8/2/2019. A special dividend of $.75 per share was paid in 2012. 29
Slide 31: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations
Slide 32: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 31
Slide 33: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (In millio ns) Flexible PE P ackaging A luminum Films Films Extrusio ns To tal 2 0 18 Operating pro fit (lo ss) fro m o ngo ing o peratio ns $ 36.2 $ 9.9 $ 48.6 $ 94.7 A dd back depreciatio n & amo rtizatio n 15.5 1.3 16.9 33.6 Less accelerated depreciatio n asso cia
Slide 34: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations (In millions) Flexible PE Packaging Aluminum Films Films Extrusions Total Quarter Ended June 30, 2019 Operating profit (loss) from ongoing operations $ 7.8 $ 2.5 $ 14.5 $ 24.8 Add back depreciation & amortization 3.7 0.4 4.1 8.1 Less accelerated depreciation associat
Slide 35: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 3. The after-tax effects of losses associated w ith plant shutdow ns, asset impairments and restructurings and gains or losses from the sale of assets and other items (w hich includes unrealized gains and losses for an investment accounted for under the fair value me
Slide 36: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations 35
Slide 37: GAAP to Non-GAAP Reconciliations: Notes (continued)
GAAP to Non-GAAP Reconciliations Notes (continued): 5. Operating profit from ongoing operations is used by management to assess profitability. A reconciliation of operating profit from ongoing operations to net income is show below: Operating profit (loss): Q2 YTD Q2 YTD (in thousands) 2014 2015 201