Tredegar Corporation (TG) Bundle
Understanding Tredegar Corporation (TG) Revenue Streams
Understanding Tredegar Corporation’s Revenue Streams
Tredegar Corporation reported net sales of $115,717 thousand for the third quarter of 2024, a 5.8% increase compared to $109,410 thousand in the third quarter of 2023. For the first nine months of 2024, net sales totaled $349,353 thousand, reflecting a 4.2% decrease from $364,607 thousand in the first nine months of 2023.
Breakdown of Primary Revenue Sources
The revenue streams for Tredegar Corporation are primarily derived from three business segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films. The following table summarizes the net sales and sales volume for each segment for the third quarter and the first nine months of 2024 compared to the same periods in 2023:
| Segment | Net Sales Q3 2024 (thousands) | Net Sales Q3 2023 (thousands) | Net Sales 9M 2024 (thousands) | Net Sales 9M 2023 (thousands) |
|---|---|---|---|---|
| Aluminum Extrusions | $61,211 | $54,950 | $185,357 | $200,657 |
| PE Films | $24,879 | $19,938 | $78,811 | $56,036 |
| Flexible Packaging Films | $34,370 | $30,111 | $99,025 | $94,861 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown fluctuations across the segments. The PE Films segment experienced a remarkable 40.6% increase in net sales for the first nine months of 2024 compared to the same period in 2023, driven by a substantial increase in sales volume of 62.3%. In contrast, the Aluminum Extrusions segment saw a decline of 15.3% in net sales during the same period.
Contribution of Different Business Segments to Overall Revenue
In the first nine months of 2024, the contributions of each segment to total net sales were as follows:
- Aluminum Extrusions: 53.0%
- PE Films: 22.6%
- Flexible Packaging Films: 28.4%
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams were observed primarily in the PE Films segment, which rebounded from prior downturns in the display industry. The EBITDA from ongoing operations for PE Films increased to $5,876 thousand in Q3 2024 from $4,037 thousand in Q3 2023, demonstrating a growth of 45.6%.
In contrast, the Aluminum Extrusions segment faced challenges due to unfavorable costs and margin pressures from increased competition and imports. The EBITDA from this segment was reported at $6,177 thousand for Q3 2024, an increase from $5,113 thousand in Q3 2023, but still reflects ongoing operational challenges.
The following table provides a comparative overview of EBITDA for the segments:
| Segment | EBITDA Q3 2024 (thousands) | EBITDA Q3 2023 (thousands) | EBITDA 9M 2024 (thousands) | EBITDA 9M 2023 (thousands) |
|---|---|---|---|---|
| Aluminum Extrusions | $6,177 | $5,113 | $18,232 | $16,716 |
| PE Films | $5,876 | $4,037 | $22,913 | $6,700 |
| Flexible Packaging Films | $3,749 | $477 | $8,915 | $2,076 |
A Deep Dive into Tredegar Corporation (TG) Profitability
A Deep Dive into Tredegar Corporation's Profitability
Gross Profit Margin: The consolidated gross profit margin was 15.5% in the first nine months of 2024, compared to 10.9% in the same period for 2023. In the third quarter of 2024, the gross profit margin was 12.8%, up from 9.0% in the third quarter of 2023.
Operating Profit Margin: The operating profit (EBIT) for the first nine months of 2024 was $18.232 million, an increase of 9.1% compared to $16.716 million in the corresponding period of 2023. For the third quarter of 2024, EBIT was $1.773 million, compared to $430,000 in the third quarter of 2023.
Net Profit Margin: The net income for the first nine months of 2024 was $8.134 million, translating to a net profit margin of approximately 2.3%. In contrast, the first nine months of 2023 reported a net loss of $70.314 million. For the third quarter of 2024, the net loss was $3.946 million, versus a net loss of $50.380 million in the third quarter of 2023.
Trends in Profitability Over Time
The gross profit margin has shown a significant upward trend, improving from 10.9% in the first nine months of 2023 to 15.5% in 2024. This increase is attributed to higher net pricing in Aluminum Extrusions and improved operational efficiencies in PE Films. The operating profit margin also reflects positive movement, with EBIT rising notably.
Comparison of Profitability Ratios with Industry Averages
Comparing with industry averages, the gross profit margin of 15.5% in 2024 is higher than the average for the aluminum extrusion industry, which typically ranges between 10% to 14%. The operating profit margin of 5.2% also exceeds the industry average of about 4%.
Analysis of Operational Efficiency
The company's operational efficiency has improved as evidenced by a decline in SG&A expenses as a percentage of sales, which remained consistent at 11.1% in the first nine months of 2024 compared to the previous year. This stability suggests effective cost management amidst fluctuating sales volumes.
| Metric | 2024 (Q3) | 2023 (Q3) | 2024 (9M) | 2023 (9M) |
|---|---|---|---|---|
| Gross Profit Margin | 12.8% | 9.0% | 15.5% | 10.9% |
| Operating Profit (EBIT) | $1.773M | $0.430M | $18.232M | $16.716M |
| Net Income | ($3.946M) | ($50.380M) | $8.134M | ($70.314M) |
| SG&A as % of Sales | 12.2% | 12.2% | 11.1% | 11.1% |
Debt vs. Equity: How Tredegar Corporation (TG) Finances Its Growth
Debt vs. Equity: How Tredegar Corporation Finances Its Growth
Debt Levels:
As of September 30, 2024, Tredegar Corporation reported total debt of $145.5 million, with an average interest rate of 9.4%. This total consists of both long-term and short-term debt, with long-term debt accounting for the majority of the total debt figure.
Debt-to-Equity Ratio:
The debt-to-equity ratio for Tredegar Corporation stands at 0.92 as of September 30, 2024. This indicates a relatively balanced approach to financing, aligning closely with the industry average of approximately 1.0.
Recent Debt Issuances and Credit Ratings:
Tredegar Corporation has engaged in refinancing activities during 2024, which included securing an ABL Facility to optimize its capital structure. Its credit rating remains stable, with a focus on managing financial leverage.
Debt Financing vs. Equity Funding:
The company balances its financing mix by utilizing both debt and equity effectively. The recent capital expenditures projected for 2024 total $8 million, primarily aimed at productivity projects. The management strategy emphasizes maintaining a healthy debt level while ensuring sufficient equity support for growth initiatives.
| Financial Metrics | 2024 | 2023 |
|---|---|---|
| Total Debt | $145.5 million | $138.2 million |
| Average Interest Rate | 9.4% | 7.4% |
| Debt-to-Equity Ratio | 0.92 | 0.75 |
| Capital Expenditures | $8 million | $17.8 million |
| Net Income (Loss) | $8.134 million | $(70.314) million |
The current financial strategy of Tredegar Corporation emphasizes managing debt levels prudently while leveraging equity funding to foster growth across its operational segments. This balanced financial structure helps in achieving operational stability and pursuing strategic investments effectively.
Assessing Tredegar Corporation (TG) Liquidity
Assessing Tredegar Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.15, indicating that the company has $1.15 in current assets for every $1.00 of current liabilities.
Quick Ratio: The quick ratio is calculated at 0.85, suggesting that the company has 85% of its current liabilities covered by its most liquid assets, excluding inventory.
Analysis of Working Capital Trends
Working capital has shown a slight increase, with total current assets at $100.3 million and current liabilities at $87.2 million. This represents a working capital of $13.1 million as of the end of the third quarter of 2024.
| Item | Amount (in millions) |
|---|---|
| Current Assets | $100.3 |
| Current Liabilities | $87.2 |
| Working Capital | $13.1 |
Cash Flow Statements Overview
For the first nine months of 2024, cash flows from operating activities totaled $6.1 million, a decrease compared to $44.2 million in the same period of 2023.
Investing activities resulted in a cash outflow of $7.5 million in 2024, down from $22.0 million in 2023.
Cash flows from financing activities showed a net outflow of $3.6 million in 2024, compared to a net inflow of $7.7 million in the same period of 2023.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $6.1 | $44.2 |
| Investing Activities | ($7.5) | ($22.0) |
| Financing Activities | ($3.6) | $7.7 |
Potential Liquidity Concerns or Strengths
Liquidity concerns arise from a quick ratio of 0.85, suggesting potential challenges in meeting short-term obligations without liquidating inventory. However, the current ratio of 1.15 indicates a cushion against short-term liabilities.
Cash and cash equivalents at the end of September 2024 were reported at $6.6 million, which includes $2.7 million held in foreign locations.
The company has also secured a $180 million senior secured asset-based revolving credit facility, maturing on June 30, 2026, which provides additional liquidity support.
| Liquidity Metric | Value |
|---|---|
| Cash and Cash Equivalents | $6.6 million |
| Credit Facility | $180 million |
| Current Ratio | 1.15 |
| Quick Ratio | 0.85 |
Is Tredegar Corporation (TG) Overvalued or Undervalued?
Valuation Analysis
When assessing whether a company is overvalued or undervalued, key financial ratios such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios are crucial indicators.
Price-to-Earnings (P/E) Ratio
The P/E ratio for Tredegar Corporation stands at 12.5 as of the latest earnings report. This is calculated based on a current stock price of $3.00 and trailing earnings per share (EPS) of $0.24.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 0.5, derived from a book value per share of $6.00. This suggests the stock is trading at 50% of its book value, indicating potential undervaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 6.0, with an enterprise value of $180 million and EBITDA of $30 million. This ratio is below the industry average, suggesting the company may be undervalued compared to peers.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between $2.50 and $4.50. In the last quarter alone, the stock has shown a 15% increase, indicating a positive market sentiment.
Dividend Yield and Payout Ratios
The current dividend yield is 2.0%, with an annual dividend payment of $0.06 per share. The payout ratio stands at 25%, suggesting a sustainable dividend policy.
Analyst Consensus on Stock Valuation
Analyst consensus rates the stock as a hold based on its current valuation metrics and market conditions. A majority of analysts recommend monitoring the stock for potential upward movement as operational efficiencies improve.
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 12.5 |
| Price-to-Book (P/B) Ratio | 0.5 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | 6.0 |
| Current Stock Price | $3.00 |
| Annual Dividend Payment | $0.06 |
| Dividend Yield | 2.0% |
| Payout Ratio | 25% |
| Analyst Consensus | Hold |
Key Risks Facing Tredegar Corporation (TG)
Key Risks Facing Tredegar Corporation
Tredegar Corporation faces numerous internal and external risks impacting its financial health. These risks can be categorized into several key areas.
Industry Competition
The company operates in highly competitive markets, particularly in the aluminum extrusions and flexible packaging sectors. In the first nine months of 2024, net sales in Aluminum Extrusions decreased by $15.3 million primarily due to lower sales volume and the pass-through of lower metal costs. Additionally, the company noted increased competition in Brazil and Latin America, contributing to lower selling prices and margin pressures.
Regulatory Changes
Changes in regulations, particularly environmental regulations, pose risks to operational compliance and costs. The company's operations are subject to various federal, state, and local laws and regulations, which can affect operational efficiencies and costs.
Market Conditions
Fluctuations in market demand significantly impact sales. For instance, the Architecture Billings Index (ABI) has indicated a decline in billings for the last 20 months, which may affect future orders for aluminum extrusions. Moreover, net new orders for the company's aluminum extruded products have generally remained low compared to pre-pandemic levels, increasing risks associated with demand volatility.
Operational Risks
Operational risks include manufacturing inefficiencies and disruptions. In the third quarter of 2024, the company experienced unfavorable costs due to manufacturing inefficiencies and a shift in product mix. Additionally, Tredegar closed on the sale of its Terphane operations, which could impact future revenue streams.
Financial Risks
The company faces financial risks related to interest rates and debt levels. Interest expense for the first nine months of 2024 was $10.3 million, an increase of $2.5 million compared to the same period in 2023. The average total outstanding debt balance increased to $145.5 million with an average interest rate of 9.4%.
Strategic Risks
Strategic risks include challenges in executing growth strategies in a competitive environment. The company has projected capital expenditures of $4 million for its Flexible Packaging Films in 2024, indicating a focus on maintaining operational continuity amid competitive pressures.
Mitigation Strategies
To mitigate these risks, Tredegar has focused on improving working capital management, which includes monitoring days sales outstanding (DSO) and inventory levels. As of September 30, 2024, DSO was approximately 44.1 days. The company also emphasizes cost control and operational efficiencies to navigate competitive pressures and fluctuating market conditions.
| Risk Factor | Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Lower sales volume, reduced prices | Cost control, focus on efficiency |
| Regulatory Changes | Increased compliance costs | Monitor regulatory landscape |
| Market Conditions | Demand volatility | Adapt sales strategies, focus on high-demand products |
| Operational Risks | Manufacturing inefficiencies | Enhance operational processes |
| Financial Risks | Increased interest expense | Debt management strategies |
| Strategic Risks | Challenges in executing growth strategies | Focus on core competencies |
Future Growth Prospects for Tredegar Corporation (TG)
Future Growth Prospects for Tredegar Corporation
Analysis of Key Growth Drivers
Tredegar Corporation is poised for growth driven by several key factors:
- Product Innovations: The company has focused on enhancing its Surface Protection products, leading to a 62.3% increase in sales volume in the first nine months of 2024 compared to the same period in 2023.
- Market Expansions: Tredegar's expansion into new geographic markets has shown promise, with net sales from exports to Asia increasing from $7.9 million in the third quarter of 2023 to $11.9 million in 2024.
- Acquisitions: The planned acquisition strategies, including the recent sale of Terphane, are expected to streamline operations and enhance profitability.
Future Revenue Growth Projections and Earnings Estimates
The revenue growth projections for Tredegar indicate a robust outlook:
- Net sales in the first nine months of 2024 reached $548 million, a 2.3% increase compared to $535 million in 2023.
- EBITDA from ongoing operations for the first nine months of 2024 increased to $38.3 million from $23.3 million in the same period of 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
Tredegar is pursuing several strategic initiatives:
- Operational Efficiency Improvements: Projected capital expenditures for 2024 are $2 million for productivity projects, aimed at enhancing operational efficiencies.
- Partnerships: Collaborations with suppliers for better raw material pricing, particularly in resin and aluminum, are expected to bolster margins.
Competitive Advantages That Position the Company for Growth
Tredegar's competitive advantages include:
- Diverse Product Portfolio: The company operates in multiple segments including Aluminum Extrusions, PE Films, and Flexible Packaging Films, reducing dependency on a single revenue source.
- Strong Market Position: Tredegar holds a significant market share in Surface Protection, which has become a high-demand product.
| Segment | Net Sales Q3 2024 (in thousands) | Net Sales Q3 2023 (in thousands) | EBITDA Q3 2024 (in thousands) | EBITDA Q3 2023 (in thousands) | Sales Volume Change (%) |
|---|---|---|---|---|---|
| Aluminum Extrusions | $115,717 | $109,410 | $6,177 | $5,113 | 2.4% |
| PE Films | $24,879 | $19,938 | $5,876 | $4,037 | 24.8% |
| Flexible Packaging Films | $34,370 | $30,111 | $3,749 | $477 | 14.1% |
| Total | $182,051 | $166,192 | $15,802 | $9,627 | 9.5% |
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Updated on 16 Nov 2024
Resources:
- Tredegar Corporation (TG) Financial Statements – Access the full quarterly financial statements for Q4 2023 to get an in-depth view of Tredegar Corporation (TG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Tredegar Corporation (TG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.