Tredegar Corporation |
(Exact Name of Registrant as Specified in its Charter) |
Virginia | 1-10258 | 54-1497771 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1100 Boulders Parkway Richmond, Virginia | 23225 | |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | ¨ |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit No. | Description |
99 |
TREDEGAR CORPORATION | ||
(Registrant) | ||
Date: August 2, 2018 | By: | /s/ D. Andrew Edwards |
D. Andrew Edwards | ||
Vice President and Chief Financial Officer |
• | Operating profit from ongoing operations for PE Films of $8.7 million was $2.0 million lower than the second quarter of 2017 |
• | Operating profit from ongoing operations for Flexible Packaging Films was $1.3 million, which was favorable by $1.6 million versus the operating loss in the second quarter of 2017 |
• | Operating profit from ongoing operations for Bonnell Aluminum of $13.2 million was $1.4 million higher than the second quarter of 2017 |
Three Months Ended | Favorable/ (Unfavorable) % Change | Six Months Ended | Favorable/ (Unfavorable) % Change | ||||||||||||||||||
(In Thousands, Except Percentages) | June 30, | June 30, | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Sales volume (lbs) | 30,099 | 34,166 | (11.9 | )% | 64,922 | 69,222 | (6.2 | )% | |||||||||||||
Net sales | $ | 82,457 | $ | 89,639 | (8.0 | )% | $ | 175,707 | $ | 176,050 | (0.2 | )% | |||||||||
Operating profit from ongoing operations | $ | 8,678 | $ | 10,682 | (18.8 | )% | $ | 22,712 | $ | 19,713 | 15.2 | % |
• | Lower contribution to profits from personal care films, primarily due to lower volume as noted above ($2.0 million) and higher variable costs due to timing of resin pass-through ($0.3 million), partially offset by improved pricing on certain products ($0.6 million), net favorable impact from the change in U.S. Dollar value of currencies for operations outside of the U.S. ($0.6 million) and lower sales, general and administrative costs ($0.5 million); |
• | Lower contribution to profits from surface protection films, primarily due to a sales return reserve for a quality claim ($1.5 million), manufacturing inefficiencies ($0.8 million) and inventory adjustments ($0.3 million), partially offset by improved mix ($0.9 million); |
• | Additional costs of $0.5 million associated with business development activities related to optical films; and |
• | Realized cost savings associated with the previously announced project to consolidate domestic manufacturing facilities in PE Films ($0.8 million). |
• | Higher contribution to profits from surface protection films, primarily due to higher volume and improved mix ($3.8 million), partially offset by a sales return reserve for a quality claim ($1.5 million); |
• | Lower contribution to profits from personal care films, primarily due to lower volume in topsheet, elastics and other products ($3.4 million), partially offset by improved pricing on certain products ($1.3 million), net favorable impact from the change in U.S. Dollar value of currencies for operations outside of the U.S. ($0.9 million) and lower sales, general and administrative costs ($0.5 million); |
• | Additional costs of $0.5 million associated with business development activities related to optical films; and |
• | Realized cost savings associated with the previously announced project to consolidate domestic manufacturing facilities in PE Films ($1.8 million). |
Three Months Ended | Favorable/ (Unfavorable) % Change | Six Months Ended | Favorable/ (Unfavorable) % Change | ||||||||||||||||||
(In Thousands, Except Percentages) | June 30, | June 30, | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Sales volume (lbs) | 23,701 | 21,966 | 7.9 | % | 47,018 | 44,028 | 6.8 | % | |||||||||||||
Net sales | $ | 28,304 | $ | 26,588 | 6.5 | % | $ | 56,741 | $ | 53,297 | 6.5 | % | |||||||||
Operating profit (loss) from ongoing operations | $ | 1,294 | $ | (319 | ) | NA | $ | 3,008 | $ | (2,317 | ) | NA |
• | Significantly lower depreciation and amortization of $2.2 million resulting from the $101 million non-cash asset impairment loss recognized in the fourth quarter of 2017; |
• | A benefit of $0.6 million primarily from higher volume and favorable foreign currency translation of Real-denominated operating costs, partially offset by a $0.4 million loss on foreign currency forward contracts that partially hedged Real-denominated operating costs; |
• | One-time costs of $0.4 million related to the restarting of the idled production line referenced above; and |
• | Net foreign currency transaction losses of $0.5 million (losses of $0.3 million in 2018 versus gains of $0.2 million in 2017). |
• | Significantly lower depreciation and amortization of $4.5 million resulting from the $101 million non-cash asset impairment loss recognized in the fourth quarter of 2017; |
• | A benefit of $1.9 million primarily from higher volume and favorable foreign currency translation of Real-denominated operating costs, partially offset by a $0.4 million loss on foreign currency forward contracts that partially hedged Real-denominated operating costs; |
• | One-time costs of $0.5 million related to the restarting of the idled production line referenced above; and |
• | Net foreign currency transaction losses of $0.3 million (losses of $0.4 million in 2018 versus $0.1 million in 2017). |
Three Months Ended | Favorable/ (Unfavorable) % Change | Six Months Ended | Favorable/ (Unfavorable) % Change | |||||||||||||||||||
(In Thousands, Except Percentages) | June 30, | June 30, | ||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Sales volume (lbs) * | 55,057 | 51,976 | 5.9 | % | 91,174 | 87,357 | 4.4 | % | ||||||||||||||
Net sales | $ | 144,558 | $ | 123,208 | 17.3 | % | $ | 272,793 | $ | 222,807 | 22.4 | % | ||||||||||
Operating profit from ongoing operations | $ | 13,156 | $ | 11,772 | 11.8 | % | $ | 23,355 | $ | 21,601 | 8.1 | % | ||||||||||
* Sales volume for the six months ended June 30, 2018 and 2017 excludes sales volume associated with Futura Industries Corporation (“Futura”), acquired on February 15, 2017. |
• | Higher volume, improved mix and inflation-related sales prices ($5.1 million), partially offset by increased operating costs, including employee-related expenses and higher depreciation ($3.2 million); and |
• | Continued inefficiencies associated with the new extrusion line at the Niles, Michigan plant ($1.5 million). |
• | loss or gain of sales to significant customers on which our business is highly dependent; |
• | inability to achieve sales to new customers to replace lost business; |
• | ability to develop, efficiently manufacture and deliver new products at competitive prices; |
• | failure of our customers to achieve success or maintain market share; |
• | failure to protect our intellectual property rights; |
• | risks of doing business in countries outside the U.S. that affect our substantial international operations; |
• | political, economic, and regulatory factors concerning our products; |
• | uncertain economic conditions in countries in which we do business; |
• | competition from other manufacturers, including manufacturers in lower-cost countries and manufacturers benefiting from government subsidies; |
• | impact of fluctuations in foreign exchange rates; |
• | a change in the amount of our underfunded defined benefit (pension) plan liability; |
• | an increase in the operating costs incurred by our operating companies, including, for example, the cost of raw materials and energy; |
• | inability to successfully identify, complete or integrate strategic acquisitions; failure to realize the expected benefits of such acquisitions and assumption of unanticipated risks in such acquisitions; |
• | disruption to our manufacturing facilities; |
• | occurrence or threat of extraordinary events, including natural disasters and terrorist attacks; |
• | an information technology system failure or breach; |
• | volatility and uncertainty of the valuation of our cost-basis investment in kaléo; |
• | the impact of the imposition of tariffs and sanctions on imported aluminum ingot used in our aluminum extrusions; |
Tredegar Corporation | ||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(In Thousands, Except Per-Share Data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Sales | $ | 263,759 | $ | 247,347 | $ | 522,470 | $ | 468,372 | ||||||||
Other income (expense), net (b)(c) | 5,857 | 34,735 | 14,089 | 38,022 | ||||||||||||
269,616 | 282,082 | 536,559 | 506,394 | |||||||||||||
Cost of goods sold (b) | 210,667 | 195,286 | 413,856 | 375,047 | ||||||||||||
Freight | 8,440 | 7,912 | 17,229 | 16,218 | ||||||||||||
Selling, R&D and general expenses (b) | 25,592 | 26,198 | 51,732 | 50,705 | ||||||||||||
Amortization of intangibles | 1,025 | 1,652 | 2,054 | 2,893 | ||||||||||||
Pension and postretirement benefits | 2,578 | 2,632 | 5,156 | 5,264 | ||||||||||||
Interest expense | 1,577 | 1,642 | 3,221 | 2,822 | ||||||||||||
Asset impairments and costs associated with exit and disposal activities, net of adjustments (b) | 468 | (271 | ) | 590 | 293 | |||||||||||
250,347 | 235,051 | 493,838 | 453,242 | |||||||||||||
Income before income taxes | 19,269 | 47,031 | 42,721 | 53,152 | ||||||||||||
Income taxes | 4,547 | 2,827 | 9,834 | 5,246 | ||||||||||||
Net income | $ | 14,722 | $ | 44,204 | $ | 32,887 | $ | 47,906 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.45 | $ | 1.34 | $ | 1.00 | $ | 1.45 | ||||||||
Diluted | $ | 0.44 | $ | 1.34 | $ | 1.00 | $ | 1.45 | ||||||||
Shares used to compute earnings per share: | ||||||||||||||||
Basic | 33,074 | 32,961 | 33,028 | 32,941 | ||||||||||||
Diluted | 33,108 | 33,051 | 33,048 | 32,999 |
Tredegar Corporation | ||||||||||||||||
Net Sales and Operating Profit by Segment | ||||||||||||||||
(In Thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net Sales | ||||||||||||||||
PE Films | $ | 82,457 | $ | 89,639 | $ | 175,707 | $ | 176,050 | ||||||||
Flexible Packaging Films | 28,304 | 26,588 | 56,741 | 53,297 | ||||||||||||
Aluminum Extrusions | 144,558 | 123,208 | 272,793 | 222,807 | ||||||||||||
Total net sales | 255,319 | 239,435 | 505,241 | 452,154 | ||||||||||||
Add back freight | 8,440 | 7,912 | 17,229 | 16,218 | ||||||||||||
Sales as shown in the Condensed Consolidated Statements of Income | $ | 263,759 | $ | 247,347 | $ | 522,470 | $ | 468,372 | ||||||||
Operating Profit (Loss) | ||||||||||||||||
PE Films: | ||||||||||||||||
Ongoing operations | $ | 8,678 | $ | 10,682 | $ | 22,712 | $ | 19,713 | ||||||||
Plant shutdowns, asset impairments, restructurings and other (b) | (1,135 | ) | (904 | ) | (2,187 | ) | (2,972 | ) | ||||||||
Flexible Packaging Films: | ||||||||||||||||
Ongoing operations | 1,294 | (319 | ) | 3,008 | (2,317 | ) | ||||||||||
Plant shutdowns, asset impairments, restructurings and other (b) | — | 11,856 | — | 11,856 | ||||||||||||
Aluminum Extrusions: | ||||||||||||||||
Ongoing operations | 13,156 | 11,772 | 23,355 | 21,601 | ||||||||||||
Plant shutdowns, asset impairments, restructurings and other (b) | (46 | ) | 1,571 | (99 | ) | (2,769 | ) | |||||||||
Total | 21,947 | 34,658 | 46,789 | 45,112 | ||||||||||||
Interest income | 228 | 55 | 284 | 129 | ||||||||||||
Interest expense | 1,577 | 1,642 | 3,221 | 2,822 | ||||||||||||
Gain (loss) on investment in kaleo accounted for under fair value method (c) | 5,800 | 21,500 | 14,000 | 24,800 | ||||||||||||
Stock option-based compensation costs | 305 | 38 | 391 | 41 | ||||||||||||
Corporate expenses, net (b) | 6,824 | 7,502 | 14,740 | 14,026 | ||||||||||||
Income before income taxes | 19,269 | 47,031 | 42,721 | 53,152 | ||||||||||||
Income taxes | 4,547 | 2,827 | 9,834 | 5,246 | ||||||||||||
Net income | $ | 14,722 | $ | 44,204 | $ | 32,887 | $ | 47,906 |
Tredegar Corporation | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In Thousands) | ||||||||
(Unaudited) | ||||||||
June 30, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Cash & cash equivalents | $ | 62,321 | $ | 36,491 | ||||
Accounts & other receivables, net | 128,301 | 120,135 | ||||||
Income taxes recoverable | 5,572 | 32,080 | ||||||
Inventories | 84,890 | 86,907 | ||||||
Prepaid expenses & other | 8,776 | 8,224 | ||||||
Total current assets | 289,860 | 283,837 | ||||||
Property, plant & equipment, net | 217,296 | 223,091 | ||||||
Investment in kaléo (cost basis of $7,500) | 68,000 | 54,000 | ||||||
Identifiable intangible assets, net | 38,225 | 40,552 | ||||||
Goodwill | 128,205 | 128,208 | ||||||
Deferred income taxes | 3,946 | 16,636 | ||||||
Other assets | 8,957 | 9,419 | ||||||
Total assets | $ | 754,489 | $ | 755,743 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Accounts payable | $ | 121,266 | $ | 108,391 | ||||
Accrued expenses | 40,192 | 42,433 | ||||||
Total current liabilities | 161,458 | 150,824 | ||||||
Long-term debt | 123,000 | 152,000 | ||||||
Pension and other postretirement benefit obligations, net | 94,335 | 98,837 | ||||||
Deferred income taxes | — | 2,123 | ||||||
Other noncurrent liabilities | 8,287 | 8,179 | ||||||
Shareholders’ equity | 367,409 | 343,780 | ||||||
Total liabilities and shareholders’ equity | $ | 754,489 | $ | 755,743 |
Tredegar Corporation | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In Thousands) | ||||||||
(Unaudited) | ||||||||
Six Months Ended | ||||||||
June 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 32,887 | $ | 47,906 | ||||
Adjustments for noncash items: | ||||||||
Depreciation | 14,688 | 15,993 | ||||||
Amortization of intangibles | 2,054 | 2,893 | ||||||
Deferred income taxes | 8,996 | 2,000 | ||||||
Accrued pension income and post-retirement benefits | 5,156 | 5,264 | ||||||
(Gain)/loss on investment accounted for under the fair value method | (14,000 | ) | (24,800 | ) | ||||
(Gain)/loss on asset impairments and divestitures | — | 50 | ||||||
Net (gain)/loss on sale of assets | (109 | ) | 307 | |||||
Changes in assets and liabilities, net of effects of acquisitions and divestitures: | ||||||||
Accounts and other receivables | (15,205 | ) | (20,197 | ) | ||||
Inventories | (810 | ) | (7,261 | ) | ||||
Income taxes recoverable/payable | 26,277 | (6,120 | ) | |||||
Prepaid expenses and other | (2,057 | ) | 735 | |||||
Accounts payable and accrued expenses | 13,879 | 6,178 | ||||||
Pension and postretirement benefit plan contributions | (2,912 | ) | (2,106 | ) | ||||
Other, net | 2,926 | 1,126 | ||||||
Net cash provided by operating activities | 71,770 | 21,968 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (14,528 | ) | (26,692 | ) | ||||
Acquisition | — | (87,110 | ) | |||||
Return of escrowed funds relating to acquisition earn-out | 4,250 | — | ||||||
Proceeds from the sale of assets and other | 1,095 | 95 | ||||||
Net cash used in investing activities | (9,183 | ) | (113,707 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings | 28,000 | 148,750 | ||||||
Debt principal payments | (57,000 | ) | (56,500 | ) | ||||
Dividends paid | (7,293 | ) | (7,268 | ) | ||||
Proceeds from exercise of stock options and other | 926 | 695 | ||||||
Net cash provided by (used in) financing activities | (35,367 | ) | 85,677 | |||||
Effect of exchange rate changes on cash | (1,390 | ) | 577 | |||||
Increase (decrease) in cash and cash equivalents | 25,830 | (5,485 | ) | |||||
Cash and cash equivalents at beginning of period | 36,491 | 29,511 | ||||||
Cash and cash equivalents at end of period | $ | 62,321 | $ | 24,026 |
(in millions, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income as reported under GAAP | $ | 14.7 | $ | 44.2 | $ | 32.9 | $ | 47.9 | ||||||||
After-tax effects of: | ||||||||||||||||
Losses associated with plant shutdowns, asset impairments and restructurings | 0.6 | — | 0.7 | 0.6 | ||||||||||||
(Gains) losses from sale of assets and other: | ||||||||||||||||
Unrealized (gain) loss associated with the investment in kaléo | (4.5 | ) | (15.7 | ) | (10.9 | ) | (18.2 | ) | ||||||||
Gain associated with the settlement of an escrow agreement | — | (11.9 | ) | — | (11.9 | ) | ||||||||||
Income tax benefit associated with the write-off of the stock basis of a certain U.S. subsidiary | — | (8.1 | ) | — | (8.1 | ) | ||||||||||
Other | 0.7 | (0.2 | ) | 1.8 | 4.0 | |||||||||||
Net income from ongoing operations | $ | 11.5 | $ | 8.3 | $ | 24.5 | $ | 14.3 | ||||||||
Earnings per share as reported under GAAP (diluted) | $ | 0.44 | $ | 1.34 | $ | 1.00 | $ | 1.45 | ||||||||
After-tax effects per diluted share of: | ||||||||||||||||
Losses associated with plant shutdowns, asset impairments and restructurings | 0.02 | — | 0.02 | 0.02 | ||||||||||||
(Gains) losses from sale of assets and other: | ||||||||||||||||
Unrealized (gain) loss associated with the investment in kaléo | (0.14 | ) | (0.47 | ) | (0.33 | ) | (0.55 | ) | ||||||||
Gain associated with the settlement of an escrow agreement | — | (0.36 | ) | — | (0.36 | ) | ||||||||||
Income tax benefit associated with the write-off of the stock basis of a certain U.S. subsidiary | — | (0.25 | ) | — | (0.25 | ) | ||||||||||
Other | 0.03 | (0.01 | ) | 0.05 | 0.12 | |||||||||||
Earnings per share from ongoing operations (diluted) | $ | 0.35 | $ | 0.25 | $ | 0.74 | $ | 0.43 |
• | Pretax charges of $0.6 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films (included in “Cost of goods sold” in the condensed consolidated statements of income); and |
• | Pretax charges of $0.7 million associated with the shutdown of PE Films’ manufacturing facility in Shanghai, China, which consists of severance and other employee-related accrued costs of $0.4 million, accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income) and other facility consolidation-related expenses of $0.2 million. |
• | Pretax charges of $1.5 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films (included in “Cost of goods sold” in the condensed consolidated statements of income); |
• | Pretax charges of $0.3 million for professional fees associated with the Terphane Limitada worthless stock deduction, the impairment of assets of Flexible Packaging Films and determining the effect of the new U.S. federal income tax law (included in “Selling, R&D and general expenses” in the statements of net sales and operating profit by segment and “Corporate expenses, net” in the statements of net sales and operating profit by segment); and |
• | Pretax charges of $0.7 million associated with the shutdown of PE Films’ manufacturing facility in Shanghai, China, which consists of severance and other employee-related accrued costs of $0.4 million, accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income) and other facility consolidation-related expenses of $0.2 million. |
• | Pretax income of $11.9 million related to the settlement of an escrow arrangement established upon the acquisition of Terphane in 2011 (included in “Other income (expense), net” in the condensed consolidated statements of income). In settling the escrow arrangement, the Company assumed the risk of the claims (and associated legal fees) against which the escrow previously secured the Company. While the ultimate amount of such claims is unknown, the Company believes that it is reasonably possible that it could be liable for some portion of these claims, and currently estimates the amount of such future claims at approximately $3.5 million; |
• | Pretax charges of $1.0 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films of $0.9 million and by Bonnell of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income); |
• | Pretax income of $0.9 million related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, for the expected recovery of excess production costs of $0.6 million incurred in 2016 and $0.3 million incurred in the first quarter of 2017 for which recovery from insurance carriers was not previously considered to be reasonably assured (included in “Cost of goods sold” in the condensed consolidated statements of income); |
• | Pretax income of $0.7 million related to the fair valuation of an earnout provision from the acquisition of Futura (included in “Other income (expense), net” in the condensed consolidated statements of income); |
• | Pretax charges of $0.6 million associated with a business development project (included in “Selling, R&D and general expenses” in the condensed consolidated statements of income and “Corporate expenses, net” in the statements of net sales and operating profit by segment); and |
• | Pretax charges of $0.3 million associated with the consolidation of domestic PE Films’ manufacturing facilities, which consists of facility consolidation-related expenses of $0.2 million and accelerated depreciation of $0.1 million (included in “Cost of goods sold” in the condensed consolidated statements of income), offset by pretax income of $0.3 million related to a reduction of severance and other employee-related accrued costs. |
• | Pretax income of $11.9 million related to the settlement of an escrow arrangement established upon the acquisition of Terphane in 2011 (included in “Other income (expense), net” in the condensed consolidated statements of income). In settling the escrow arrangement, the Company assumed the risk of the claims (and associated legal fees) against which the escrow previously secured the Company. While the ultimate amount of such claims is unknown, the Company believes that it is reasonably possible that it could be liable for some portion of these claims, and currently estimates the amount of such future claims at approximately $3.5 million; |
• | Pretax charges of $3.3 million related to the acquisition of Futura, i) associated with accounting adjustments of $1.7 million made to the value of inventory sold by Aluminum Extrusions after its acquisition of Futura (included in “Cost of goods sold” in the condensed consolidated statements of income), ii) acquisition costs of $1.5 million and iii) integration costs of $0.1 million (both ii and iii included in “Selling, R&D and general expenses” in the condensed consolidated statements of income), offset by pretax income of $0.7 million related to the fair valuation of an earnout provision (included in “Other income (expense), net” in the condensed consolidated statements of income); |
• | Pretax charges of $2.8 million related to estimated excess costs associated with the ramp-up of new product offerings and additional expenses related to strategic capacity expansion projects by PE Films of $2.4 million and by Aluminum Extrusions of $0.4 million (included in “Cost of goods sold” in the condensed consolidated statements of income); |
• | Pretax income of $0.5 million related to the explosion that occurred in the second quarter of 2016 at the aluminum extrusions manufacturing facility in Newnan, Georgia, which includes the expected recovery of excess production costs of $0.6 million incurred in 2016 for which recovery from insurance carriers was not previously considered to be reasonably assured (included in “Cost of goods sold” in the condensed consolidated statements of income), partially offset by legal and consulting fees of $0.1 million (included in “Selling, R&D and general expenses” in the condensed consolidated statements of income); |
• | Pretax charges of $0.7 million associated with the consolidation of domestic PE Films’ manufacturing facilities, which consists of asset impairments of $0.1 million, accelerated depreciation of $0.2 million (included in “Cost of goods sold” in the condensed consolidated statements of income) and other facility consolidation-related expenses of $0.4 million ($0.3 million is included in “Cost of goods sold” in the condensed consolidated statements of income), offset by pretax income of $0.1 million related to a reduction of severance and other employee-related accrued costs; |
• | Pretax charges of $0.3 million related to expected future environmental costs at the aluminum extrusions manufacturing facility in Carthage, Tennessee (included in “Cost of goods sold” in the condensed consolidated statements of income); |
• | Pretax charges of $0.9 million associated with a business development project (included in “Selling, R&D and general expenses” in the condensed consolidated statements of income and “Corporate expenses, net” in the statements of net sales and operating profit by segment); and |
• | Pretax charges of $0.3 million for severance and other employee-related costs associated with restructurings in Corporate (included in “Corporate expenses, net” in the statements of net sales and operating profit by segment). |
(d) | Net debt is calculated as follows: |
(in millions) | June 30, | December 31, | ||||||
2018 | 2017 | |||||||
Debt | $ | 123.0 | $ | 152.0 | ||||
Less: Cash and cash equivalents | 62.3 | 36.5 | ||||||
Net debt | $ | 60.7 | $ | 115.5 |
(e) | Tredegar’s presentation of net income and earnings per share from ongoing operations are non-GAAP financial measures that exclude the effects of gains or losses associated with plant shutdowns, asset impairments and restructurings, gains or losses from the sale of assets, goodwill impairment charges and other items (which includes unrealized gains and losses for an investment accounted for under the fair value method), which have been presented separately and removed from net income and diluted earnings per share as reported under GAAP. Net income and earnings per share from ongoing operations are key financial and analytical measures used by management to gauge the operating performance of Tredegar’s ongoing operations. They are 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 or earnings per share as defined by GAAP. They exclude items that we believe do not relate to Tredegar’s ongoing operations. A reconciliation of the pre-tax and post-tax balances attributed to net income from ongoing operations for the three and six months ended June 30, 2018 and 2017 are shown below in order to show the impact on the effective tax rate: |
(In Millions) | Pre-tax | Taxes Expense (Benefit) | After-Tax | Effective Tax Rate | ||||||||||
Three Months Ended June 30, 2018 | (a) | (b) | (b)/(a) | |||||||||||
Net income reported under GAAP | $ | 19.3 | $ | 4.5 | $ | 14.7 | 23.6 | % | ||||||
Losses associated with plant shutdowns, asset impairments and restructurings | 0.6 | — | 0.6 | |||||||||||
(Gains) losses from sale of assets and other | (5.0 | ) | (1.2 | ) | (3.8 | ) | ||||||||
Net income from ongoing operations | $ | 14.8 | $ | 3.3 | $ | 11.5 | 22.4 | % | ||||||
Three Months Ended June 30, 2017 | ||||||||||||||
Net income reported under GAAP | $ | 47.0 | $ | 2.8 | $ | 44.2 | 6.0 | % | ||||||
Losses associated with plant shutdowns, asset impairments and restructurings | — | — | — | |||||||||||
(Gains) losses from sale of assets and other | (33.4 | ) | 2.5 | (35.9 | ) | |||||||||
Net income from ongoing operations | $ | 13.6 | $ | 5.3 | $ | 8.3 | 38.9 | % | ||||||
Six Months Ended June 30, 2018 | ||||||||||||||
Net income reported under GAAP | $ | 42.7 | $ | 9.8 | $ | 32.9 | 23.0 | % | ||||||
Losses associated with plant shutdowns, asset impairments and restructurings | 0.7 | — | 0.7 | |||||||||||
(Gains) losses from sale of assets and other | (12.0 | ) | (2.9 | ) | (9.1 | ) | ||||||||
Goodwill impairment charge | — | — | — | |||||||||||
Net income from ongoing operations | $ | 31.4 | $ | 6.9 | $ | 24.5 | 22.2 | % | ||||||
Six Months Ended June 30, 2017 | ||||||||||||||
Net income reported under GAAP | $ | 53.2 | $ | 5.3 | $ | 47.9 | 9.9 | % | ||||||
Losses associated with plant shutdowns, asset impairments and restructurings | 0.9 | 0.3 | 0.6 | |||||||||||
(Gains) losses from sale of assets and other | (30.6 | ) | 3.6 | (34.2 | ) | |||||||||
Goodwill impairment charge | — | — | ||||||||||||
Net income from ongoing operations | $ | 23.5 | $ | 9.2 | $ | 14.3 | 39.1 | % |