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Segment Reporting | 9 Months Ended
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Sep. 30, 2020
Segment Reporting [Abstract] |
Segment Reporting | The Company’s business segments are Aluminum Extrusions, PE Films, and Flexible Packaging Films. Information by business segment is reported below. There are no accounting transactions between segments and no allocations to segments. All historical results for the Personal Care business have been presented as discontinued operations. The surface protection component of the PE Films segment now includes Pottsville Packaging. The Company’s reportable segments are based on its method of internal reporting, which is generally segregated by differences in products. Accounting standards for presentation of segments require an approach based on the way the Company organizes the segments for making operating decisions and how the chief operating decision maker (“CODM”) assesses performance. EBITDA from ongoing operations is the key profitability measure used by the CODM (Tredegar’s President and Chief Executive Officer) for purposes of assessing financial performance. The Company uses sales less freight (“net sales”) from continuing operations 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. The following table presents net sales and EBITDA from ongoing operations by segment for the three and nine months ended September 30, 2020 and 2019:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Net Sales |  |  |  |  |  |  |
Aluminum Extrusions | $ | 115,621 |  |  | $ | 129,505 |  |  | $ | 339,566 |  |  | $ | 405,310 |
PE Films | 26,440 |  |  | 34,487 |  |  | 103,444 |  |  | 99,313 |
Flexible Packaging Films | 35,856 |  |  | 34,888 |  |  | 100,534 |  |  | 101,950 |
Total net sales | 177,917 |  |  | 198,880 |  |  | 543,544 |  |  | 606,573 |
Add back freight | 6,453 |  |  | 7,088 |  |  | 19,222 |  |  | 21,438 |
Sales as shown in the Consolidated Statements of Income | $ | 184,370 |  |  | $ | 205,968 |  |  | $ | 562,766 |  |  | $ | 628,011 |
EBITDA from Ongoing Operations |  |  |  |  |  |  |
Aluminum Extrusions: |  |  |  |  |  |  |
Ongoing operations: |  |  |  |  |  |  |
EBITDA | $ | 16,540 |  |  | $ | 16,464 |  |  | $ | 41,496 |  |  | $ | 51,231 |
Depreciation & amortization | (4,251) |  |  | (4,317) |  |  | (12,632) |  |  | (12,481) |
EBIT | 12,289 |  |  | 12,147 |  |  | 28,864 |  |  | 38,750 |
Plant shutdowns, asset impairments, restructurings and other | (720) |  |  | (610) |  |  | (2,637) |  |  | (667) |
Goodwill impairment | — |  |  | — |  |  | (13,696) |  |  | — |
Trade name accelerated amortization | — |  |  | (2,510) |  |  | — |  |  | (2,510) |
PE Films: |  |  |  |  |  |  |
Ongoing operations: |  |  |  |  |  |  |
EBITDA | 6,041 |  |  | 10,257 |  |  | 33,928 |  |  | 30,452 |
Depreciation & amortization | (1,785) |  |  | (1,458) |  |  | (4,868) |  |  | (4,380) |
EBIT | 4,256 |  |  | 8,799 |  |  | 29,060 |  |  | 26,072 |
Plant shutdowns, asset impairments, restructurings and other | (56) |  |  | (60) |  |  | (225) |  |  | (555) |
Flexible Packaging Films: |  |  |  |  |  |  |
Ongoing operations: |  |  |  |  |  |  |
EBITDA | 9,546 |  |  | 4,394 |  |  | 22,594 |  |  | 10,477 |
Depreciation & amortization | (443) |  |  | (394) |  |  | (1,306) |  |  | (1,101) |
EBIT | 9,103 |  |  | 4,000 |  |  | 21,288 |  |  | 9,376 |
Plant shutdowns, asset impairments, restructurings and other | (3) |  |  | — |  |  | (14) |  |  | — |
Total | 24,869 |  |  | 21,766 |  |  | 62,640 |  |  | 70,466 |
Interest income | 11 |  |  | 11 |  |  | 43 |  |  | 25 |
Interest expense | 494 |  |  | 859 |  |  | 1,598 |  |  | 3,354 |
Gain (loss) on investment in kaléo accounted for under fair value method | (36,200) |  |  | 4,300 |  |  | (61,000) |  |  | 28,482 |
Stock option-based compensation costs | 518 |  |  | 791 |  |  | 1,786 |  |  | 2,060 |
Corporate expenses, net | 10,586 |  |  | 9,198 |  |  | 29,915 |  |  | 25,538 |
Income (loss) from continuing operations before income taxes | (22,918) |  |  | 15,229 |  |  | (31,616) |  |  | 68,021 |
Income tax expense (benefit) | (5,942) |  |  | 177 |  |  | (8,308) |  |  | 10,550 |
Income (loss) from continuing operations | (16,976) |  |  | 15,052 |  |  | (23,308) |  |  | 57,471 |
Income (loss) from discontinued operations, net of tax | (48,237) |  |  | 2,081 |  |  | (53,031) |  |  | (6,076) |
Net income (loss) | $ | (65,213) |  |  | $ | 17,133 |  |  | $ | (76,339) |  |  | $ | 51,395 |
The following table presents identifiable assets by segment at September 30, 2020 and December 31, 2019:
(In thousands) | September 30, 2020 |  | December 31, 2019
Aluminum Extrusions | $ | 238,683 |  |  | $ | 265,027 |
PE Films | 169,195 |  |  | 122,136 |
Flexible Packaging Films | 61,903 |  |  | 74,016 |
Subtotal | 469,781 |  |  | 461,179 |
General corporate | 16,882 |  |  | 111,788 |
Cash and cash equivalents | 35,022 |  |  | 31,422 |
Assets of discontinued operations | 45,955 |  |  | 108,279 |
Total | $ | 567,640 |  |  | $ | 712,668 |
The following tables disaggregate the Company’s revenue by geographic area and product group for the three and nine months ended September 30, 2020 and 2019:
Net Sales by Geographic Area (a)
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
United States | $ | 129,654 |  |  | $ | 145,629 |  |  | $ | 395,207 |  |  | $ | 455,509 |
Exports from the United States to: |  |  |  |  |  |  |
Asia | 14,255 |  |  | 23,163 |  |  | 59,816 |  |  | 61,037 |
Latin America | 465 |  |  | 880 |  |  | 1,953 |  |  | 1,359 |
Canada | 7,200 |  |  | 2,120 |  |  | 13,359 |  |  | 10,352 |
Europe | 1,468 |  |  | 1,494 |  |  | 4,272 |  |  | 4,227 |
Operations outside the United States: |  |  |  |  |  |  |
Brazil | 24,875 |  |  | 25,594 |  |  | 68,937 |  |  | 73,864 |
China | — |  |  | — |  |  | — |  |  | 225 |
Total | $ | 177,917 |  |  | $ | 198,880 |  |  | $ | 543,544 |  |  | $ | 606,573 |
(a) Export sales relate primarily to PE Films. Operations in China relate to PE Films. Operations in Brazil are primarily related to Flexible Packaging Films. The Company’s facilities in Pottsville, PA (“PV”) and Guangzhou, China (“GZ”) have a tolling arrangement whereby certain surface protection films are manufactured in GZ for a fee with raw materials supplied from PV that are then shipped by GZ directly to customers principally in the Asian market, but paid by customers directly to PV. Amounts associated with this intercompany tolling arrangement are reported in the table above as export sales from the U.S. to Asia, and include net sales of $32.1 million in 2019, $5.9 million and $8.6 million in the third quarters of 2020 and 2019, respectively, and $25.1 million and $21.3 million in the first nine months of 2020 and 2019, respectively.
Net Sales by Product Group
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Aluminum Extrusions: |  |  |  |  |  |  |
Nonresidential building & construction | $ | 62,611 |  |  | $ | 64,340 |  |  | $ | 190,476 |  |  | $ | 202,998 |
Consumer durables | 11,160 |  |  | 12,939 |  |  | 31,491 |  |  | 44,865 |
Automotive | 10,332 |  |  | 11,091 |  |  | 25,375 |  |  | 36,214 |
Residential building & construction | 10,149 |  |  | 11,110 |  |  | 29,016 |  |  | 33,060 |
Electrical | 5,992 |  |  | 10,468 |  |  | 18,006 |  |  | 31,910 |
Machinery & equipment | 7,581 |  |  | 10,191 |  |  | 23,147 |  |  | 29,585 |
Distribution | 7,796 |  |  | 9,366 |  |  | 22,055 |  |  | 26,678 |
Subtotal | 115,621 |  |  | 129,505 |  |  | 339,566 |  |  | 405,310 |
PE Films: |  |  |  |  |  |  |
Surface protection films | 19,868 |  |  | 27,053 |  |  | 79,919 |  |  | 76,194 |
Packaging | 5,042 |  |  | 5,607 |  |  | 17,262 |  |  | 17,305 |
LED lighting products & other films | 1,530 |  |  | 1,827 |  |  | 6,263 |  |  | 5,814 |
Subtotal | 26,440 |  |  | 34,487 |  |  | 103,444 |  |  | 99,313 |
Flexible Packaging Films | 35,856 |  |  | 34,888 |  |  | 100,534 |  |  | 101,950 |
Total | $ | 177,917 |  |  | $ | 198,880 |  |  | $ | 543,544 |  |  | $ | 606,573 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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