TREDEGAR CORP (TG)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered stronger top-line but weaker profitability: Sales rose 16.3% YoY to $179.12M while diluted EPS from continuing operations fell to $0.05 from $0.27; consolidated EBITDA from ongoing operations declined to $10.0M from $17.6M YoY, reflecting inefficiencies and cost headwinds at Bonnell and normalization in PE Films versus an exceptional prior-year quarter .
• Aluminum Extrusions (Bonnell) volume rose 16.6% YoY to 40.7M lbs and 7.4% QoQ, but segment EBITDA fell to $9.3M (down 28% YoY) as April–May manufacturing inefficiencies (~$3M unfavorable), higher variable/fixed costs, and FIFO timing offset higher volumes and pricing pass-throughs .
• PE Films EBITDA fell to $6.7M (down 34% YoY) on 15.8% lower net sales amid Surface Protection normalization from last year’s exceptional volumes; management expects second-half performance to moderate after a strong first half .
• Section 232 tariff step-up to 50% (effective June 4) coincided with a 20% decline in weekly net new orders at Bonnell (2.7M lbs/wk post-step-up vs. 3.4M lbs/wk earlier in 2025), signaling potential near-term demand elasticity despite favorable import-share shifts; open orders held at 25M lbs .
• Liquidity remains solid (approx. $51M available under the $125M ABL; net debt $52.8M; net leverage 1.3x), providing flexibility as demand and tariffs evolve .

What Went Well and What Went Wrong

• What Went Well

  • Aluminum Extrusions volumes and sales improved materially YoY (40.7M lbs, +16.6%; net sales +24%), with strength in non-res B&C (curtainwall/storefront/walkway covers), TSLOTS framing, solar components, and consumer durables .
  • PE Films overwrap volumes grew YoY (+6.1%) and cost improvements contributed modestly, while overall segment EBITDA remained positive at $6.7M despite tough comps .
  • Balance sheet and liquidity: new five-year $125M ABL and ~$51M borrowing availability; net debt $52.8M; management emphasized “plenty of liquidity” .

• What Went Wrong

  • Bonnell profitability compressed: segment EBITDA down $3.6M YoY driven by April–May manufacturing inefficiencies (~$3M unfavorable), elevated labor/material/maintenance/utilities, and FIFO timing ($0.7M charge vs. $1.2M prior-year benefit) .
  • Order momentum slowed after tariffs increased to 50%: average weekly net new orders fell ~20% to 2.7M lbs/wk for the nine weeks ended Aug 1 (vs. 3.4M lbs/wk earlier in 2025); management attributes this to lower U.S. demand and customer pauses to assess tariff permanency .
  • PE Films faced Surface Protection normalization: net sales fell 15.8% YoY and volume declined 18.2% YoY; management expects moderation in 2H after strong 1H -.

Financial Results

Consolidated results vs prior periods

Segment breakdown

Key KPIs

Narrative drivers

• Bonnell’s YoY sales growth reflected higher volumes and pass-through of higher metal costs, aided by regaining share in solar and demand for non-res B&C/TSLOTS; however, profits were pressured by ramp-related inefficiencies, higher variable/fixed costs, and FIFO timing -.
• PE Films’ YoY declines reflect normalization of Surface Protection after exceptional 2024 levels; overwrap grew YoY with cost improvements, but the segment expects moderation in 2H 2025 -.

Guidance Changes

No explicit revenue/EPS/segment margin targets were provided; management emphasized liquidity and operational actions while monitoring tariff impacts .

Earnings Call Themes & Trends

Management Commentary

• “Bonnell sales volume improved significantly... However, profits declined for the period mainly due to manufacturing inefficiencies in April and May that we believe have been resolved.” — John Steitz, President & CEO .
• “PE Films again had another good quarter albeit below the exceptional performance in the second quarter of last year. We believe that the second half performance in 2025 will moderate from the strong first half.” — John Steitz .
• “Average weekly net new orders after the Section 232 tariff increase from 25% to 50% declined to 2.7 million pounds... We believe... due to a combination of lower demand... and customers pausing orders to evaluate the permanency of the new higher tariff.” — John Steitz -.
• “We believe that our balance sheet remains strong with plenty of liquidity available from our new five-year $125 million asset-based lending facility.” — John Steitz .

Q&A Highlights

• An earnings call transcript was not available alongside the Q2 2025 results; analysis relies on the 8-K/press release disclosures for management commentary - -.
• Key areas management addressed in disclosures included: (i) the source and resolution of Bonnell production inefficiencies (~$3M unfavorable in Apr–May), (ii) tariff-related order dynamics and customer behavior, and (iii) expected moderation in PE Films 2H 2025 -.

Estimates Context

• S&P Global consensus for Q2 2025 EPS and revenue was not available in our data pull; therefore, we cannot assess beat/miss versus Street for this quarter. Future updates should reassess as estimates populate.
• Where estimates may need to adjust: (i) near-term Bonnell margins given April–May inefficiencies and cost profile, and (ii) PE Films run-rate in 2H given management’s moderation commentary, despite stable demand to date -.

Key Takeaways for Investors

• Mixed quarter: Healthy volume and sales growth at Bonnell masked by cost/mix/FIFO headwinds and a tariff-related slowdown in net new orders; watch order run-rates into Q3 as customers assess tariff permanency -.
• PE Films normalization: Expect 2H moderation after strong 1H; track Surface Protection volume trajectory and any downstream electronics tariff effects (none seen to date) -.
• Liquidity intact: ~$51M availability and net leverage 1.3x provide cushion to navigate demand volatility and execute productivity investments ($17M Bonnell capex; PE Films capex reduced to $2M) -.
• Near-term trading setup: Stock likely most sensitive to weekly order trends at Bonnell post-50% tariff, confirmation that production inefficiencies are resolved, and visibility on whether import-share gains offset demand elasticity -.
• Medium-term thesis: Specialty/solar and non-res B&C exposures plus TSLOTS support volume; execution on costs and pricing pass-throughs is key to restoring margins; PE Films contributes profitable cash flow but at normalized levels - -.
• Watchlist: Aluminum Midwest transaction prices (FIFO timing), labor/productivity, medical claims costs (self-insured), and any further tariff or trade-case developments .

Additional Data Points and Disclosures

• Q2 2025 consolidated: Sales $179.12M; EPS (cont. ops) $0.05; Net income (cont. ops) $1.83M; Operating lines detailed in 8-K .
• Balance sheet/liquidity: Net debt $52.8M; funds available under ABL ~$51M; median daily liquidity $54M in Q2 (vs. $44M in Q1) .
• Non-GAAP reconciliations for ongoing operations and consolidated EBITDA provided in Notes; Q2 consolidated EBITDA from ongoing ops $10.0M vs $17.6M YoY .