Tredegar A Corporate Restructuring And Downcycle Mask A Great Opportunity (NYSE:TG)

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Cross sections of extruded aluminium or aluminum channels for use in manufacturing and fabrication

kynny/iStock via Getty Images

Tredegar (NYSE:TG) is an unloved and underfollowed stock where investors lost all hope of better days ahead. The company current problems are mainly due to a downcycle in all of their divisions, and consequently lackluster results. The company enacted several corporate initiatives

Earnings Power Value ($ thousands)
Aluminum Extrusion Worst Case Base Case Best Case
Sales (lbs) 140,681 188,675 208,249
Net Price per lbs 3.46 2.92 2.92
Net Sales 486,143 550,424 607,528
EBITDA per lbs 0.28 0.33 0.33
EBITDA 39,957 61,966 68,395
EBITDA Margin 8.2% 11.3% 11.3%
Operating Income 21,957 43,966 50,395
Operating Margin 4.5% 8.0% 8.3%
Corporate expenses, net 14,721 14,721 14,721
EBT 7,236 29,245 35,673
Taxes @ 21% 1,520 6,141 7,491
Maintenance Capex 10,000 10,000 10,000
Depreciation 18,000 18,000 18,000
Earnings Power 13,716 31,103 36,182
EPV Multiple 11 11 11
EPV 150,880 342,135 398,001
PE Films Worst Case Base Case Best Case
Sales (lbs) 27,783 41,786 45,175
Net Price per lbs 2.69 2.96 2.96
Net Sales 74,715 123,783 133,824
EBITDA per lbs 0.36 0.74 0.74
EBITDA 10,099 30,773 33,269
EBITDA Margin 13.5% 24.9% 24.9%
Operating Income 3,099 23,773 26,269
Operating Margin 4.1% 19.2% 19.6%
Corporate expenses, net 2,907 2,907 2,907
EBT 191 20,865 23,362
Taxes @ 21% 40 4,382 4,906
Maintenance Capex 2,000 2,000 2,000
Depreciation 7,000 7,000 7,000
Earnings Power 5,151 21,484 23,456
EPV Multiple 13 13 13
EPV 66,966 279,288 304,923
EPV SOTP 217,846 621,423 702,924
Debt 155,000 155,000 155,000
Loan on Terphane 20,000 20,000 20,000
Cash from Terphane, net of taxes 85,000 85,000 85,000
Cash 48,600 48,600 48,600
Intrinsic Value 176,446 580,023 661,524
Shares outstanding (millions) 34 34 34
Intrinsic value per share 5.1 16.9 19.2
Upside 9% 259% 309%

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