TREDEGAR CORP (TG)

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking and Cautionary Statements

Some of the information contained in this Quarterly Report on Form 10-Q ("Form 10-Q") may constitute “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When the Company uses the words “believe,” “estimate,” “anticipate,” “appear to,” “expect,” “project,” “plan,” “likely,” “may” and similar expressions, it does so to identify forward-looking statements. Such statements are based on the Company's 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 the Company's 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 materially from expectations include, without limitation, the following:

•the impact of trade policies and prolonged geopolitical conflicts on raw materials and supply chain constraints;

•the impact of macroeconomic factors, such as inflation, interest rates and recession risks;

•an increase in the operating costs incurred by the Company’s business units, including, for example, the cost of raw materials and energy;

•the risks associated with our cost-reduction and operational-improvement initiatives, including our ability to achieve the expected benefits within the expected timeframe or at all;

•failure to continue to attract, develop and retain certain key officers or employees;

•disruptions to the Company’s manufacturing facilities, including those resulting from labor shortages;

•an information technology system failure or breach;

•risks of doing business in countries outside the U.S. that affect our international operations;

•the impact of public health epidemics on employees, production and the global economy;

•political, economic and regulatory factors concerning the Company’s products;

•the impact of the imposition of tariffs and sanctions on imported aluminum ingot used by Bonnell Aluminum;

•inability to replace aging equipment and information technology systems with necessary capital expenditures;

•inability to develop, efficiently manufacture and deliver new products at competitive prices;

•loss of sales to significant customers on which the Company’s business is highly dependent;

•inability to achieve sales to new customers to replace lost business;

•failure of the Company’s customers to achieve success or maintain market share;

•noncompliance with any of the financial and other restrictive covenants in the ABL Facility;

•failure to protect our intellectual property rights;

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 Part I, Item 1A of Tredegar’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). 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 to reflect any change in management’s expectations or any change in conditions, assumptions or circumstances on which such statements are based, except as required by applicable law.

References herein to “Tredegar,” “the Company,” “we,” “us” and “our” are to Tredegar Corporation and its subsidiaries, collectively, unless the context otherwise indicates or requires.

Unless otherwise stated or indicated, all comparisons are to the prior year period. References to "Notes" are to notes to our condensed consolidated financial statements found in Part I, Item 1 of this Form 10-Q.

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Critical Accounting Policies and Estimates

In the ordinary course of business, the Company makes a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of financial statements in conformity with generally accepted accounting standards in the United States ("GAAP"). The Company believes the estimates, assumptions and judgments described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates”in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Form 10-K") have the greatest potential impact on our financial statements, so Tredegar considers these to be its critical accounting policies. Since December 31, 2025, there have been no changes in these policies or estimates that have had a material impact on our results of operations or financial position.

Business Overview

Tredegar Corporation is an industrial manufacturer with two primary businesses: custom aluminum extrusions for the building & construction (“B&C”), automotive and specialty end-use markets in the United States through its Aluminum Extrusions segment (with exports comprising less than 5% of total sales volume) and surface protection films for high-technology applications in the global electronics industry through its High Performance Films segment. With approximately 1,800 employees, the Company operates manufacturing facilities in the U.S. and China.

In the fourth quarter of 2025, the Company renamed the segment formerly known as “PE Films.” This segment is now referred to as “High Performance Films.” The product previously known as polyethylene overwrap films was renamed to advanced packaging films. There were no changes to the operations reported within the High Performance Films segment. The Company continues to have two reportable segments: Aluminum Extrusions and High Performance Films.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") from ongoing operations is the measure of segment profit and loss used by Tredegar’s chief operating decision maker ("CODM") for purposes of assessing financial performance. The Company uses sales less freight (“net sales”) as its measure of revenues from external customers at the segment level. This measure is separately included in the financial information regularly provided to the CODM.

Earnings before interest and taxes ("EBIT") from ongoing operations is a non-GAAP financial measure included in the reconciliation of segment financial information to consolidated results for the Company in the Segment Operations Review section below. It is not intended to represent the stand-alone results for Tredegar's ongoing operations under GAAP and should not be considered as an alternative to net income as defined by GAAP. We believe that EBIT is a widely understood and utilized metric that is meaningful to certain investors and that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations.

Second quarter 2026 net income (loss) from continuing operations was $6.0 million ($0.17 per diluted share) compared to $1.8 million ($0.05 per diluted share) in the second quarter of 2025.

Second Quarter Financial Results Highlights

•EBITDA from ongoing operations for Aluminum Extrusions was $14.5 million in the second quarter of 2026 versus $9.3 million in the second quarter of 2025 and versus $11.7 million in the first quarter of 2026.

•EBITDA from ongoing operations for High Performance Films was $5.8 million in the second quarter of 2026 versus $6.7 million in the second quarter of 2025 and versus $5.1 million in the first quarter of 2026.

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Results of Operations

Second Quarter of 2026 Compared with the Second Quarter of 2025 Results

The following table presents a bridge of consolidated net income (loss) from continuing operations from the second quarter of 2025 to the second quarter of 2026 with management's related discussion and analysis below the table.

Sales in the second quarter of 2026 increased by $37.1 million compared with the second quarter of 2025. Net sales (sales less freight) in Aluminum Extrusions increased $35.8 million, primarily due to the pass-through of higher metal costs, partially offset by lower volume. Net sales in High Performance Films increased $1.0 million, primarily due to an increase in sales volume in surface protection films, partially offset by unfavorable mix in surface protection films. For more information on net sales and volume, see the Segment Operations Review below.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 13.4% in the second quarter of 2026 compared to 13.6% in the second quarter of 2025. The gross profit margin in Aluminum Extrusions remained consistent with the prior period. The gross profit margin in High Performance Films decreased primarily due to a lower advanced packaging contribution margin associated with the pass-through lag associated with higher resin costs.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 9.4% in the second quarter of 2026 compared with 11.6% in the second quarter of 2025. Second quarter sales increased 20.7% while SG&A decreased 2.1% compared to the prior period. Lower SG&A spending was primarily due to lower professional fees associated with business development activities ($1.1 million) and lower stock-based compensation ($0.4 million), partially offset by higher employee compensation ($0.8 million).

Interest expense was $0.5 million in the second quarter of 2026 in comparison to $1.8 million in the second quarter of 2025. The decrease in interest expense was primarily due to the write-off of deferred financing fees related to Amendment No. 5 to the Company's Second Amended and Restated Credit Agreement of $0.8 million during the second quarter of 2025, lower weighted average total debt outstanding and lower interest rates.

The effective tax rate from continuing operations in the second quarter of 2026 was 22.3% compared to 35.0% in the second quarter of 2025. The effective tax rate for the second quarter of 2026 was consistent with the U.S. statutory rate of 21% while the effective tax rate for the second quarter of 2025 varied from the statutory rate due to a mix of lower pre-tax income and higher nondeductible discrete items as a percentage of pre-tax income.

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Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings

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Item 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations focuses on and is intended to clarify the results of our operations, certain changes in our financial position, liquidity, capital structure and business developments for the periods covered by the consolidated financial statements included in this Form 10-K. This discussion should be read in conjunction with, and is qualified by reference to, the other related information including, but not limited to, the audited consolidated financial statements (including the notes thereto) and the description of our business, all as set forth in this Form 10-K, as well as the risk factors discussed above in Item 1A.

This section provides discussion and a year-to-year comparison for the years ended December 31, 2025 and 2024.

Business Overview

General

Tredegar Corporation is an industrial manufacturer with two primary businesses: custom aluminum extrusions for the B&C, automotive and specialty end-use markets in the United States through its Aluminum Extrusions segment (with exports comprising less than 5% of total sales volume) and surface protection films for high-end technology applications in the global electronics industry and packaging films for consumer and industrial products through its High Performance Films segment. With approximately 1,700 employees, the Company operates manufacturing facilities in the U.S. and China.

EBITDA from ongoing operations is the measure of segment profit and loss used by Tredegar’s chief operating decision maker (“CODM”) for purposes of assessing financial performance. The Company uses sales less freight (“net sales”) as its measure of revenues from external customers at the segment level. This measure is separately included in the financial information regularly provided to the CODM.

Earnings before interest and taxes (“EBIT”) from ongoing operations is a non-GAAP financial measure included in the reconciliation of segment financial information to consolidated results for the Company in the Segment Operations Review section below. EBIT is not intended to represent the stand-alone results for Tredegar's ongoing operations under GAAP and should not be considered as an alternative to net income (loss) as defined by GAAP. We believe that EBIT is a widely understood and utilized metric that is meaningful to certain investors and that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations.

Sales were $722.9 million in 2025 compared to $598.0 million in 2024. Net income (loss) from continuing operations was $24.1 million ($0.69 per diluted share) in 2025, compared with net income (loss) from continuing operations of $1.0 million ($0.03 per diluted share) in 2024.

2025 Financial Results Highlights

•EBITDA from ongoing operations for Aluminum Extrusions of $51.0 million was $9.6 million higher than the year of 2024.

•EBITDA from ongoing operations for High Performance Films of $27.1 million was $3.3 million lower than the year of 2024.

Gains and losses associated with exit and disposal activities, plant shutdowns, asset impairments, restructurings and other items are described in Results of Operations below.

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Results of Operations

2025 versus 2024

The following table presents a bridge of consolidated net income (loss) from continuing operations from the year of 2024 to the year of 2025 with related management’s discussion and analysis below the table.

Sales in 2025 increased by 20.9% compared with 2024. Net sales increased 27.0% in Aluminum Extrusions primarily due to higher sales volume and the pass-through of higher metal costs. Net sales decreased 5.2% in High Performance Films primarily due to lower net sales in Surface Protection and advanced packaging films. For more information on changes in net sales and volume, see the Segment Operations Review section below.

Other income (expense), net was $1.4 million in 2025 compared to $(1.0) million in 2024. The amount in other income (expense), net for 2025 was primarily related to a gain on the sale of corporate-owned land of $1.5 million. The amount in other income (expense), net for 2024 was primarily related to $1.3 million of deferred and discretionary incentive payments made in 2024 subsequent to the sale of Terphane.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 15.1% in 2025 versus 16.1% in 2024.

•The gross profit margin in Aluminum Extrusions remained flat primarily due to higher volume, favorable pricing and lower manufacturing costs associated with material yield, offset by higher labor rates, unfavorable productivity, higher maintenance and supply expense, partially due to the impact of tariffs and severe weather and downed equipment in the first half of 2025, higher expense for externally produced billet associated with the increase in volume and higher die expense associated with timing of purchases and increasing volume. Additionally, inventories accounted for under the last-in first-out (“LIFO”) inventory method resulted in a net benefit of $2.6 million in 2025 compared to a net benefit of $0.1 million in 2024 due to a favorable current cost adjustment associated with higher metal prices ($9.3 million benefit in 2025 and $1.3 million benefit 2024), partially offset by a corresponding increase in the LIFO reserve, which resulted in a charge of $6.7 million in the fourth quarter 2025 versus a charge of $1.2 million in the fourth quarter 2024. The timing of the flow-through under the first-in first-out (“FIFO”) method of aluminum raw material costs, which were previously acquired in a quickly changing commodity pricing environment, causing a temporary mismatch in the change in the cost of raw materials included in variable costs and the pass through to customers included in sales, resulted in a benefit of $8.7 million in 2025 versus a benefit of $0.1 million in 2024.

•The gross profit margin in High Performance Films slightly decreased primarily due to lower contribution margin (net sales less variable costs) from Surface Protection associated with lower volume, unfavorable mix, partially offset by favorable pricing, variable cost savings and operating efficiencies. Inventories accounted for under the LIFO method

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resulted in a charge of $0.2 million in 2025 versus a benefit of $0.2 million in 2024, and the pass-through lag associated with resin costs resulted in a charge of $0.3 million in 2025 versus a charge of $1.0 million in 2024.

For more information on changes in operating costs and expenses, see the Segment Operations Review section below.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development (“R&D”) expenses were 11.0% in 2025 compared with 12.3% in 2024. While SG&A expense increased 8.3% and R&D remained flat year-over-year, sales increased $124.8 million or 20.9% compared with the prior year period. Higher SG&A spending was primarily due to higher employee-related compensation and higher professional fees associated with business development activities.

During 2025, the Company terminated the Other Post-Retirement Benefits (“OPEB”) program. The OPEB total obligation and unrecognized pre-tax actuarial gain reported in the consolidated balance sheets was $5.0 million and $1.3 million, respectively, which was realized in the income statement during the fourth quarter of 2025. See Note 8 “Retirement Benefits and Other Postretirement Benefits” to the Consolidated Financial Statements in Item 15 for more information.

During 2024, a non-cash goodwill impairment of $13.3 million was recognized associated with the Clearfield, Utah operation reporting unit in Aluminum Extrusions. See Note 1 “Nature of Operations and Summary of Significant Accounting Policies” to the Consolidated Financial Statements in Item 15 for more information.

The effective tax rate from continuing operations for 2025 was 21.5%, compared to (18.8)% in 2024. The increase in the effective tax rate was primarily due to higher pre-tax income from continuing operations in 2025 than in 2024. The tax rate in 2024 was impacted by the release of valuation allowance on deferred taxes. See Note 11 “Income Taxes” to the Consolidated Financial Statements in Item 15 for additional information.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items in 2025 detailed below are shown in the reconciliation of net sales and EBITDA from ongoing operations by segment in the Segment Operations Review below and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the consolidated statements of income, unless otherwise noted.

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