Good day. Thank you for standing by. Welcome to the Tredegar Corporation's annual meeting of shareholders. I will now turn it over to Greg Pratt, Chairman of the Board of Directors. Sir, please go ahead.
Good morning, ladies and gentlemen. I'm Greg Pratt, Chairman of the Board of Tredegar Corporation. Welcome to our 2026 virtual annual shareholders meeting. Here's the agenda for today's meeting. I will move quickly through the annual meeting business items. After that, Bapi Dasgupta will kick off the management presentations. Frasier Brickhouse will provide a financial report, and then we will turn it over to our Bonnell President, Brook Hamilton, for a business update. Bapi will provide an update on High Performance Films, and we will conclude with questions. Before I begin the annual meeting business items, I would like to introduce my colleagues on the board who are up for election. In addition to myself, they are Cynthia Boiter, Bapi Dasgupta, George Freeman, David Parks, Carl Tack, and Christine Vlahcevic. I'd like to welcome David Parks and Cynthia Boiter to their first annual meeting.
Cynthia brings extensive senior leadership experience, deep financial and audit experience, and a strong record of guiding complex global operations. David adds a complementary background in engineering, large-scale manufacturing, and commercial leadership across multiple industries. Both leaders have demonstrated strategic insight, disciplined execution, and a collaborative approach to governance. Their combined experience will strengthen the board's capabilities and support Tredegar's long-term direction. I'd like to take a minute to recognize Ken Newsome and Tom Snead as they retire from the board. Their leadership, judgment, and dedication have been instrumental to advancing Tredegar's strategic direction and reinforcing our culture of strong governance. Together, Ken and Tom leave a legacy of integrity, thoughtful oversight, and unwavering commitment to the company's long-term success. We are grateful for their service and wish them great health and happiness in the years ahead. Now for the annual meeting items.
Please note that proper notice of this meeting was given, and the minutes of last year's meeting are available. Tredegar has appointed Diya [audio distortion] as Inspector of Elections, and she has reported that a quorum exists. The Inspector of Elections has presented to me with copies of the notice of annual meeting, proxy statement, the form of proxy, together with proof by affidavit of the mailing on March 25th, 2026, to each shareholder of record as of the close of business on March 13, 2026. The Inspector of Elections has also presented me with a list of Tredegar shareholders entitled to vote at this meeting as of the record date. This list has been on file at Tredegar's principal office for inspection during normal business hours since April 10th.
Registered and beneficial shareholders who have logged into the event using the 16-digit control number included in their proxy materials may vote or change their vote. Only shareholders who have entered their 16-digit control number may ask questions by typing them into the question field. Shareholders who have already voted and do not wish to change their vote do not need to take any further action. There are three items of business at this annual meeting. They are to elect our seven directors to serve until the next annual meeting, to conduct a non-binding advisory vote on the compensation paid by Tredegar to our named executive officers, and to ratify the appointment of KPMG as our auditors for the 2026 fiscal year. Is the inspector ready to report their vote?
Yes. Thank you. More than 89% of the shares entitled to vote are represented in person or by proxy at this meeting. The final vote has not been certified and will be announced via the company's Form 8-K. Thank you, sir.
Thank you. The online voting will now be closed. The final vote tally will be reflected in the Form 8-K to be filed with the Securities and Exchange Commission. I declare the business portion of the meeting adjourned. Now I will turn things over to Bapi to kick off the management presentations.
Thank you, Greg. Okay, first, this slide is just a reminder that we cannot predict the future, and additional financial information is available through our financial reports, which can be found on the investor section of our website. All right. Well, good morning to all our shareholders, employees, and members of, and Board of Directors. First, I want to express how deeply honored I am to address you today. It's truly humbling to have this chance to serve as CEO and contribute to Tredegar's ongoing transformation and success. My heartfelt gratitude goes out to our remarkable team of over 1,700 employees across the U.S. and Asia for their dedication and hard work. I would also like to extend sincere appreciation to our supportive Board of Directors.
As I often say, it's a new day, and we're on the journey of growth to the next chapter of our companies as one Tredegar. Let me recap 2025. First and most important, our company delivered outstanding safety results throughout the year. The manufacturing plants for both Bonnell and High Performance Films not only surpassed industry averages but also achieved a TRIR of less than one. This accomplishment underscores our commitment to safety, which we firmly believe is directly linked to delivering excellent quality in our operations. Next, financial performance. Despite facing various headwinds, both business units delivered robust EBITDA and strong cash flow performance. Our financial discipline contributed to a notable reduction in net debt over the course of the year, and additional insights will be provided by our CFO. Finally, we experienced an important change in executive leadership.
As of January 1, we have a new CEO and CFO, marking the beginning of a new chapter for Tredegar. My sincere thanks go out to all those who came before me to pave the way. All right. I've been here a little under four months, and I'm just gonna reflect on my first 100 days. I've witnessed many strengths during these first 100 days and promising opportunities throughout our company. One of the most significant observations is the caliber of the people who make up Tredegar. Drawing from my four decades of industry experience, I can confidently say that the employees at Tredegar are among the finest I've ever worked with. They embody humility and truly the salt of the earth people, always operating with the utmost integrity and ethical standards. Their unwavering commitment to Tredegar's collective success and their loyalty to the company are remarkable.
It's especially meaningful to note that Tredegar has benefited from dedication of multiple generations within families who've chosen to build their careers here. Both businesses have deep, long-lasting relationships with our customers. Both businesses possess strong brand equity, have earned reputations as market leaders, and our ability to deliver clear, differentiated value propositions sets us apart and helps widen the moat that protects us from competitors. These relationships and our reputation for excellence are vital for our continued leadership in the industry. I also believe both of our businesses are well-positioned for future expansion. This will be achieved through disciplined market growth and pricing strategies, thoughtful capital allocation, and a continued focus on operational excellence. Additionally, we're exploring opportunities to enter adjacent markets with new products. Embracing technologies such as controlled implementation of AI and furthering automation in our manufacturing plants present additional avenues for innovation and growth.
Finally, we're making progress by deploying best practices across the organization to achieve cost savings and operational efficiencies. We aim to boost profitability, reduce costs, optimize our organization structure to become more nimble, remove redundancies, increase speed to market, and implement best practices company-wide. This approach will not only enhance our profits and cash flow but will help transition Tredegar into a more unified organization. Increased collaboration, the removal of silos will drive us forward as one Tredegar. All right. As we enter 2026, like I said, it's a new day. It's a new opportunity for Tredegar to reset and set our sights firmly on the future. We are moving from a holding company structure to more of an operating model with selective shared services to make us more efficient and avoid redundancies or minimize redundancies. Our journey starts with culture and safety.
We're committed to developing a high-performance culture as one Tredegar, where safety remains our number one priority. With change in the process, our intent is to build a culture rooted in process efficiency, collaboration, and breaking down barriers. Most importantly is to deliver results, reflecting what I call the say/do ratio, ensuring that our actions meet our promises. This year, our focus is on increasing revenue, profitability, and cash generation across both our businesses. These efforts will enable us to reinvest in the company, supporting capital projects and potential inorganic growth opportunities in the future. We will place significant emphasis on operational excellence by working to reduce costs and complexity and improve plant performances through disciplined processes. Our automation programs within the plants will also be ramped up, supporting these objectives and driving further progress.
Finally, a renewed focus on the capital allocation process, including strategic capital investments, will help us improve and prioritize returns on our investments. There are considerable opportunities to make this process more effective, efficient, and results-driven. Finally, we will reinvigorate our succession planning throughout the company, starting with senior management and extending further into the organization. A new chief human resources officer will be brought on board to help drive and implement transformation for our processes. Retaining critical skills and upgrading talent across our organization will be essential as we move forward. We will continue to prioritize debt reduction and a strong balance sheet, ensuring that Tredegar is well-positioned to invest in future growth opportunities. Looking ahead. This is our high-level view of our three-year strategic roadmap.
It's basically divided into three areas: year one on stabilization, year two optimization, and year three sustained growth. In year one, we'll place primary emphasis on establishing stability and maximizing shareholder value. To accomplish these objectives, the company is dedicated to enhancing profitability and increasing cash flow. This will be achieved through a strategic focus on targeted cost reductions and simplifying operational complexity. There are five concurrent cost reduction programs that have been launched, each designed to address specific areas such as procurement processes, where there are significant untapped opportunities for savings. In tandem with cost savings measures, we'll continue our commitment to operational excellence and continuous improvement. The company aims to reinforce process discipline across all functions, including the capital allocation process, to ensure resources are allocated efficiently and generate value for our shareholders, both in the short and long term.
A significant priority will be placed on talent development through succession planning. We'll build a deep bench of skilled professionals who can drive the company's success now and, more importantly, into the future. These collective actions are intended not only to strengthen our financial performance, but to reinforce the company's leadership position within the market. By maintaining a customer-forward approach, Tredegar will consistently deliver value and adapt to the evolving needs of our customers. The company will continue to prioritize innovation, not merely for the sake of innovation, but to provide differentiated value propositions to the market. Superior customer service, quality, supply reliability remain the hallmarks of Tredegar brand across both Bonnell and the High Performance business segments.
In the second year, the emphasis will be on continued optimization and sustainable growth, including refining our operational footprint to ensure that we have optimum value delivery to our customers and improve profitability. Key initiatives will include broadening the portfolio with value-added solutions, exploring opportunities in adjacent markets, and formulating a strategic roadmap to drive long-term growth for both organic expansion and targeted acquisitions. Attainment of these goals will depend on a strong command of the core business fundamentals and the capacity to invest in growth, whether it be capital investments or acquisitions. In year three, it's all about the growth trajectory and maintaining that. We are gonna continue on down the what we've articulated as our roadmap, and we're gonna be structured in a way that we cultivate future leadership talent within the organization.
In conclusion, I'm confident that Tredegar is on the path to becoming a forward-thinking company that is truly unbeatable in the marketplace. By developing world-class capabilities and attracting top talent, Tredegar will be well-positioned to seize opportunities for our people. The company will become synonymous with success, consistently looking at the long view and demonstrating a long vision, delivering exceptional value to shareholders both in the immediate and distant future. It's a new day, as I said, and there's a genuine sense of excitement. I'm honored to be part of this journey as Tredegar embraces its new opportunities and continues to evolve. Stay tuned. Frasier?
Thanks, Bapi. Good morning, everyone. My first slide shows the trends in consolidated EBITDA and earnings per share from ongoing operations over the past three years. For full year 2025 compared to 2024, Tredegar's consolidated EBITDA increased from $50.5 million to $58.5 million. This improvement was primarily driven by results at Bonnell, where EBITDA increased $9.6 million year-over-year on a 13% increase in sales volume and favorable pricing while managing through challenging market conditions and tariff-related cost pressures. High Performance Films generated solid cash flow in 2025, even as EBITDA declined $3.3 million from exceptional results in 2024, as lower volume and unfavorable mix was partially offset by cost savings and operating efficiencies.
On the next slide, we compare first- quarter 2026 results with the prior year for EBITDA and earnings per share from ongoing operations. Consolidated EBITDA was relatively flat year-over-year as improved results at Bonnell largely offset lower EBITDA in High Performance Films. At Bonnell, EBITDA improved despite a 7% decline in volume, driven by favorable pricing and material yield improvements. In High Performance Films, lower EBITDA was primarily due to the 17% reduction in Surface Protection volumes, reflecting an expected inventory correction at a significant customer, along with scheduled maintenance at another. This impact was partially offset by cost and productivity improvements. Brook and Bapi will discuss the outlook for Bonnell and High Performance Films during their business updates. This last slide shows the trends in net debt and our net leverage ratio.
Year-to-year challenges, excuse me, year-to-year changes in net debt largely reflect net cash flow generation. Since the sale of Terphane on November 1, 2024, net debt has declined significantly, driven by net cash flow from our businesses and divestiture-related proceeds. At the end of the first quarter, our balance sheet remained strong with net leverage below 1x . We believe net cash flow generation, together with availability under our credit facility, will be sufficient to meet the seasonally higher working capital needed to support customer demand in an elevated aluminum pricing environment. With that, I'll turn it over to Brook.
First of all, thank you, Frasier. Good morning, everyone. For those I haven't met, I'm Brook Hamilton, President of Bonnell Aluminum. I'll take a few minutes to give you a quick update on the business, what we do, how we're performing, and how we're thinking about the year ahead. At a high level, Bonnell is an aluminum extrusion business serving a broad range of end markets, everything from building and construction to automotive, machinery, and consumer products. We have 1,100 customers and produce over 100,000 unique SKUs. That diversification really matters. It allows us to balance through cycles and stay aligned with where demand is strongest at any given time. In addition to our core business, core extrusion business, we have two branded product lines that expand our reach. TSLOTS is a modular aluminum framing system used in a wide range of industrial applications.
These include everything from work tables to machine guarding to server racks in data centers. Futura Transitions provides flooring trims and transitions for both residential and commercial use. For example, our safety stair-nosing line is being specified for use in new and retrofitted sports stadiums. Together, these businesses deepen our customer relationships and give us more ways to create value beyond standard extrusions. Safety is our number one value, full stop. This slide shows our performance over time, and while we expect strong results, and we continue to perform much better than the industry overall; you can see that our Q1 results have moved in the wrong direction. We remain extremely focused on safety, and every employee and leader are doing their parts to ensure we return to the world-class performance we have had over the past five years. Our mindset has not moved.
We remain relentlessly focused on eliminating risks, raising awareness, and leadership accountability. Nothing is more important than making sure every employee goes home safe at the end of the day. Let me spend a minute on performance. This chart shows both shipment, volume and EBITDA over time. In the first quarter of 2026, we generated $11.7 million of EBITDA on 35.2 million pounds shipped. A year ago, we shipped 37.9 million pounds and generated $9.2 million of EBITDA. Even with volume down about 7%, EBITDA was up roughly 27%. That's a good example of the discipline we've built into the business, strong control of conversion costs, and continued productivity improvements in a dynamic operating environment. On the external environment, tariffs and supply dynamics continue to be a big factor.
As the slide shows, tariffs combined with global instability have driven higher metal costs and added complexity across the industry. On the Section 232 tariffs specifically, when tariffs increased to 50% in June of last year, we saw new orders drop by about 20%. More recently, the updated tariff structure announced in April looks like a step in the right direction, helping address undervalued imports and supporting a more level playing field for domestic producers. Overall, we're seeing early signs of a more constructive environment, the reshoring of supply, and increased market share for U.S. extruders. On supply, global disruptions, particularly in the Strait of Hormuz, have tightened aluminum availability and pushed costs higher. This is where Bonnell is well-positioned. We benefit from in-house billet casting capabilities at both our Carthage and Newnan facilities, along with strong supplier relationships and procurement processes.
We've also moved quickly to diversify sourcing, transitioning nearly all Middle East volume to North American suppliers, and we're continuing to strengthen our casting capacity. The result is a more resilient supply position than many of our peers, certainly those who don't have their own cast houses. Looking ahead, we remain cautiously optimistic for 2026. There are some clear positives. Investment in AI and data centers continues to drive demand, and indicators like the industrial Purchasing Managers' Index and the Architecture Billings Index are improving. At the same time, consumer spending remains something we're watching closely, and overall industry capacity utilization is still only around 65%. The good news is we have the capacity, the capabilities, and the discipline to respond to whatever the market brings and to continue serving our customers profitably with high-quality products. With that, I'll wrap up.
Thank you for your time, and I'll turn it back over to Bapi for the discussion on High Performance Films.
Thank you, Brook. Late last year, we rebranded our films business, changing its name from PE Films to High Performance Films. This new name more accurately represents the value-added products and services we deliver to the market and our customers. Our differentiation comes from operational excellence, technology leadership, outstanding service and superior quality, which sets us apart in the industry. High Performance Films, or HPF, is comprised of two businesses: Surface Protection Films and Advanced Packaging Films. Surface Protection Films manufactures high- performance, high- quality films designed to protect sensitive display components such as optical films and specialty substrates during both manufacturing and shipping. These films are essential in the display industry. Our value proposition focuses on yield savings and efficiency improvements for customers' manufacturing processes.
As you can imagine, a single damaged pixel in a TV can ruin the whole television, so quality is of paramount value in this industry. Advanced Packaging Films produces industry-leading packaging films for both consumer and industrial goods. Recently, APF, Advanced Packaging Films, introduced a new line of environmentally friendly high-performance products to meet evolving market needs. Surface Protection operates two manufacturing sites, one in the U.S. and China. In 2025, Surface Protection accounted for about 53% of volume, 72% of sales, and 78% of EBITDA. A shared characteristic of both businesses is their customer-centric approach. We collaborate closely with customers, listen to their needs, and deliver tailored solutions, i.e., it's a pull, not a push. This commitment to partnership is why we have customers who stayed with us for over 20 years. Now, the most important thing, safety and quality.
As you can see, Films has had a very good safety record, which we're very proud of. As a matter of fact, last year our TRIR was 1, and so far this year, we've had zero incidents. Very proud of the plants and the organization. Our Guangzhou plant has over 2,200 days without a recordable, and our Pottsville plant is over 230 days without a recordable. Move on. All right. Applications and markets, like I say, as said, Surface Protection Films are mainly for the display industry, some examples are automotive displays, high definition displays like 8K TVs, smartphones, and now we're getting into AR/VR. In the Advanced Packaging Films, we provide protective wraps for automobiles. We protect consumer goods like paper towels, Ziploc bags for food, and tapes.
Let me switch to our financial performance. As you know, COVID was a real black swan event for the world and our industry, but really, the trouble began after COVID when we saw the industry and our business saw its worst performance in years because of oversupply in the market. However, since 2024, I would say a recovery started, and since then, we've achieved stability, making a return to once more predictable market conditions. In response to these market dynamics, HPF has maintained a clear strategic focus. Company continues to prioritize growth in adjacent markets, enhancing operational excellence and achieving year upon year productivity improvements. Efforts remain concentrated on disciplined cost control and ongoing product differentiation, and ensuring that HPF is well-positioned to capitalize on opportunities as the industry evolves. The way we're looking at adjacent markets is we have four platforms.
The first one is barrier films, the second is automotive, third is protection for advanced features and displays, and the fourth one is sustainable packaging. In automotive displays, you can see that in most automobiles, the segment continues to expand, propelled by features such as smart cockpit integration, infotainment advancements, and in-vehicle displays. As a matter of fact, the real estate for displays in automobiles is growing larger and larger each year. Some of the latest models feature screens that span the entire length of the dashboard. To meet these evolving demands, we introduced our new product, Obsidian, specifically for the automotive market. While the automotive displays currently represent a modest portion of the overall display area, they're experiencing robust growth with a compound annual growth rate of 5%-8%.
Our next platform, Barrier Films, is a very significant opportunity. It centers primarily on the barrier properties of our films and visual benefits. They're being adopted in a variety of applications, including electronic shelf labels, e-readers, flexible solar cells, photovoltaics. The global e-paper market is expanding rapidly with a CAGR of 30% and projections to reach almost $8 billion by 2032. Meanwhile, the market for flexible solar cells is expected to grow to $1 billion by 2034 with a CAGR of 28%. Electronic shelf labels are gaining a lot of traction due to retail automation, labor reduction, dynamic pricing, omni-channel retail integration, and smart store technology, as well as issues related to preventing shrink and pricing errors.
This segment is anticipated to grow at about 14%-17% CAGR with a market size of anywhere from $4 billion-$5 billion by 2029. We also protect display surface coatings, including... Next slide. Sunglass readable, anti-glare, and anti-smudge films, as well as anti-shatter packaging backings for our smartphones. Our new high-performance, eco-friendly film line, Optennia, which we launched last year, is creating more and more opportunities for advanced performance films. Wrapping up, as we look ahead, we have a few tailwinds, a few headwinds in this industry. The good stuff, the tailwinds is the LCD segment, which was our sweet spot, is expected to maintain its dominance, holding the largest area share at 95% by 2030. That's a very good opportunity for us.
In addition to LCDs, there's another technology called Mini-LEDs, which is also utilizing Surface Protection Films. Another good opportunity for Surface Protection. As a matter of fact, Mini-LEDs have surpassed OLEDs in television applications and expanding into monitors and automotive displays, which themselves are continuing to grow, and a number of our customers are chasing this new segment. Another favorable trend is increase in screen sizes, which are expanding by about 1 in per year, which directly translates to greater surface area requiring protection, supporting ongoing opportunities for our films. The China market represents significant opportunities, having become the largest player in display manufacturing capacity. We're actively pursuing opportunities in this market with a strategic focus on avoiding commodity segments and steering clear of any kind of pricing battles with local competitors.
In the APF business, there's strong push, like I said, towards environmentally friendly consumer packaging, further broadening the scope for new business and product innovation. On the challenge front, we're yet to see what the geopolitical tensions in the Iran and Middle East do to us. Right now, we don't see an issue. There could be tighter supply, but we haven't seen it as yet. Tariffs are not a significant business to the business so far, but we continue to track developments in the area. One of our key issues is the unfavorable U.S. dollar to JPY exchange rate, which is putting our films at a disadvantage pricing-wise in the Japanese markets. Where you had a period of stability for the yen to dollar of between 2060 and 21, it was JPY 1 00-JPY 150 to dollar.
Today, it's JPY 145 to JPY 60 to a dollar. That means a 40%-50% price differential. Finally, competing technology, OLED, compared to LCD, requires less layers of films, and OLED is making inroads. They've crossed 50% market share in the smartphone market. Moving forward, our strategy emphasizes areas within our control. This includes expanding into adjacent markets and applications, maintaining operational excellence, and exercising disciplined cost management. These efforts are essential to our continued success. Finally, I want to acknowledge the HPF team for their unwavering commitment, diligence, and positive approach, which have been instrumental in prevailing in tough times and always achieving our goals. I'll now pass it on to questions.
We do have one question. The question is, do we have plans to reinstate the dividend? Greg Pratt will respond to that question.
Yeah. Thank you. Thank you. Thank you for the question. It's something that we take very seriously. It's something that we want to re-engage as soon as it makes sense. As you all know, we are coming out of some very, very tough times. We have a couple things that we are looking at, including our CapEx program. It's gonna be a marriage of, you know, how much goes to CapEx and how much goes to dividend. Once we start the dividend again, we wanna make sure that it can be sustained. That's the key item. The way things are looking, I would expect, but not promise, that we will reinstate the dividend in 2027.
I would ask any of my other colleagues, in particular, Frasier, for your comments. As you look at our net debt, which is down at $31, our leverage ratio at 0.5x, we are financially strong. With the cash flow that's generated by the business units, we will soon be in a position to go back to what I would call normal. Normal is that you have a dividend. We obviously underspent during some of our recent years in the capital area. In particular, I'm thinking about Bonnell to make sure that we can strengthen those 14 presses that we have that need attention.
Following that, and a small thing called the ERP implementation, we would then be in a position to reinstate the dividend.
Nothing yet.
Nothing further to add. Thank you.
Is there any other questions do we have?
I believe that was our only question.
Okay. Well, I wanna thank you all for your time, your attention. Thank you very much for stepping up and participating in this event. We look forward to strengthening with your help, Tredegar, going into the future. Thank you all very much. Have a great rest of your day.