XML 39 R19.htm IDEA: XBRL DOCUMENT v3.25.0.1
Financial Instruments
 12 Months Ended
Dec. 31, 2024
Summary of Derivative Instruments [Abstract]  
Financial Instruments
Tredegar uses derivative financial instruments for the purpose of hedging margin exposure from fixed-price forward sales contracts in Aluminum Extrusions. These derivative financial instruments are designated as and qualify as cash flow hedges
and are recognized in the consolidated balance sheet at fair value. The fair value of derivative instruments recorded on the consolidated balance sheets is based upon Level 2 inputs. If individual derivative instruments with the same counterparty can be settled on a net basis, the Company records the corresponding derivative fair values as a net asset or net liability.
In the normal course of business, Aluminum Extrusions enters into fixed-price forward sales contracts with certain customers for the future sale of fixed quantities of aluminum extrusions at scheduled intervals. In order to hedge margin exposure created from the fixing of future sales prices relative to volatile raw material (aluminum) costs, Aluminum Extrusions enters into a combination of forward purchase commitments and futures contracts to acquire or hedge aluminum, based on the scheduled purchases for the firm sales commitments. The fixed-price firm sales commitments and related hedging instruments generally have durations of not more than 12 months, and the notional amount of aluminum futures contracts that hedged future purchases of aluminum to meet fixed-price forward sales contract obligations was $4.3 million (3.1 million pounds of aluminum) at December 31, 2024 and $7.7 million (5.6 million pounds of aluminum) at December 31, 2023.
The table below summarizes the location and gross amounts of aluminum derivative contract fair values (Level 2) in the consolidated balance sheets as of December 31, 2024 and 2023:
 December 31, 2024December 31, 2023
(In thousands)Balance Sheet
Account		Fair
Value		Balance Sheet
Account		Fair
Value
Derivatives Designated as Hedging Instruments
Asset derivatives:
Aluminum futures contracts		Prepaid expenses & other$172 Prepaid expenses & other$— 
Liability derivatives:
Aluminum futures contracts		Accrued expenses(57)Accrued expenses(483)
Aluminum futures contractsOther non-current liabilities— Other non-current liabilities(9)
Net asset (liability)$115 $(492)
In the event that a counterparty to an aluminum fixed-price forward sales contract chooses not to take delivery of its aluminum extrusions, the customer is contractually obligated to compensate Aluminum Extrusions for any losses on the related aluminum futures and/or forward contracts through the date of cancellation.
These derivative contracts involve elements of market risk that are not reflected on the consolidated balance sheet, including the risk of dealing with counterparties and their ability to meet the terms of the contracts. The counterparties to any forward purchase commitments are major aluminum brokers and suppliers, and the counterparties to any aluminum futures contracts are major financial institutions. Fixed-price forward sales contracts are only made available to the best and most creditworthy customers.
The pre-tax effect on net income (loss) and other comprehensive income (loss) of derivative instruments classified as cash flow hedges and described in the previous paragraphs for years ended December 31, 2024, 2023, and 2022 is summarized in the table below:
(In thousands)Cash Flow Derivative Hedges
 Aluminum Futures Contracts
Years Ended December 31,202420232022
Amount of pre-tax gain (loss) recognized in other comprehensive income$43 $7,598 $(4,525)
Location of gain (loss) reclassified from accumulated other comprehensive income into net income (effective portion)Cost of
goods sold		Cost of
goods sold		Cost of
goods sold
Amount of pre-tax gain (loss) reclassified from accumulated other comprehensive income to net income (effective portion)$(612)$4,508 $1,022 
As of December 31, 2024, the Company expects $0.1 million of unrealized after-tax net gains on aluminum derivative contracts reported in accumulated other comprehensive income (loss) to be reclassified to earnings within the next 12 months. For the years ended December 31, 2024, 2023 and 2022, net gains or losses realized, from previously unrealized net gains or losses on hedges that had been discontinued, were not material.