Register
Forgot your password?
Skip Navigation Links
ABOUT US
REQUEST RESIN
RESEARCH
SUPPORT CENTER
CONTACT US
Sealed Air Reports Third Quarter 2017 Results
CHARLOTTE, N.C., Nov 08, 2017 (BUSINESS WIRE) -- Copyright Business Wire 2017

--Third Quarter 2017 Sales from Continuing Operations of $1.1 Billion, an increase of 6% As Reported

--Net Earnings from Continuing Operations of $62 Million and Reported Net Earnings Per Share from Continuing Operations of $0.33

--Adjusted Net Income from Continuing Operations of $87 Million, Adjusted EPS from Continuing Operations of $0.46 per share and Adjusted EBITDA of $217 Million, or 19.2% of Net Sales

--Outlook for Full Year 2017 includes Net Sales of approximately $4.4 Billion, Adjusted EBITDA of approximately $830 Million, Adjusted EPS of $1.75 to $1.80 from Continuing Operations and Free Cash Flow of $400 Million

Sealed Air Corporation (NYSE:SEE) today announced financial results for the third quarter 2017. Commenting on these results, Jerome A. Peribere, President and Chief Executive Officer, said, "For the third consecutive quarter, we are delivering on our accelerated growth strategy, led by favorable volume trends across all regions. North America was once again our fastest growing region with an increase in volumes of 7%. Our top-line performance continues to be driven by the adoption of our innovative solutions coupled with strong end market demand across all proteins and within the e-commerce and fulfillment sectors. We expect top-line growth to continue into year-end and sequential profitability improvements through operational disciplines and increased sales of value-added solutions."

Peribere continued, "Our journey as a knowledge-based company continues with many exciting opportunities ahead. We are pleased to have Ted Doheny join Sealed Air as our Chief Operating Officer and CEO-Designate, and will assume the role of President and CEO effective January 1, 2018. Furthermore, we recently announced that our current Chief Accounting Officer and Controller, Bill Stiehl, has assumed the additional position of Acting Chief Financial Officer. Under both Ted and Bill's leadership, the organization will continue to thrive and generate significant value for our global customers, shareholders and employees."

Unless otherwise stated, all results compare third quarter 2017 results to third quarter 2016 results from continuing operations. As a result of the sale of Diversey, which refers to Diversey Care and the food hygiene and cleaning business, we have changed our segment reporting structure effective as of January 1, 2017. Food Care now includes the Medical Applications business, which was previously reported under 'Other.' Additionally, Food Care now excludes the food hygiene and cleaning business, which is a component of Diversey and classified as discontinued operations. Year-over-year financial discussions present operating results from continuing operations as reported, and on a constant dollar basis. Constant dollar refers to unit volume and price/mix performance and excludes the impact of currency translation from all periods referenced. Additionally, non-U.S. GAAP adjusted financial measures, such as Adjusted Earnings Before Interest Expense, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), Adjusted Net Earnings, Adjusted Diluted Earnings Per Share ("Adjusted EPS") and Adjusted Tax Rate, exclude the impact of special items, such as restructuring charges, charges related to the sale of Diversey, charges related to ceasing operations in Venezuela, cash-settled stock appreciation rights ("SARs") granted as part of the original Diversey acquisition and certain other infrequent or one-time items. Please refer to the supplemental information included with this press release for a reconciliation of Non-U.S. GAAP to U.S. GAAP financial measures.

Business Highlights

-- In the third quarter, Food Care net sales of $716 million increased 6% as reported. Currency had a positive impact on Food Care net sales of 2%, or $10 million. On a constant dollar basis, net sales increased 4% almost entirely due to positive volume growth. Volume trends were led by 9% growth in North America, 3% in Latin America and 1% in EMEA. This was offset by a decline in Asia Pacific. Adjusted EBITDA of $158 million or 22.1% of net sales was primarily attributable to positive volume trends and favorable foreign currency, which were offset by higher raw material costs and non-material costs including salary and wage increases.

-- Product Care net sales of $415 million in the third quarter were up 7% as reported. Currency had a positive impact on Product Care net sales of 1%, or $3 million. On a constant dollar basis, net sales and volumes increased 6% due to continued strength in e-commerce and fulfillment. Volume increased 4% in North America, over 7% in EMEA and Latin America, and 17% in Asia Pacific. Adjusted EBITDA of $87 million or 20.8% of net sales was attributable to volume growth, which was offset by unfavorable price/cost spread primarily due to higher raw material and freight costs as well as unfavorable product mix.

-- On September 6, 2017, Sealed Air completed the sale of Diversey to Bain Capital for $3.2 billion. The sale provided the Company the financial flexibility to accelerate share repurchases, pay down approximately $1.1 billion in debt and target selective acquisitions. Most recently, on October 2, 2017, Sealed Air acquired Fagerdala Singapore Pte Ltd., a manufacturer and fabricator of polyethylene foam, for $100 million in cash. Fagerdala generated approximately $80 million in sales in 2016.

-- From January 1, 2017 through September 30, 2017, Sealed Air repurchased approximately $677 million or 15.5 million shares through a combination of open market repurchases and Accelerated Share Repurchase (ASR) programs. The Company repurchased approximately $426 million or 9.7 million shares during the third quarter.

Third Quarter 2017 U.S. GAAP Summary, Continuing Operations

Net sales of $1.1 billion increased 6% on an as reported basis. Currency had a positive impact on total net sales of 1%, or $13 million. As reported, net sales increased across all regions.

Net income from continuing operations on a reported basis was $62 million, or $0.33 per diluted share, as compared to net income from continuing operations of $64 million, or $0.32 per diluted share, in the third quarter 2016. Net income in the third quarter 2017 was unfavorably impacted by $24 million of special items, including $9 million of restructuring and other restructuring associated costs, $7 million related to acquisition and divestiture activity and $5 million of tax special items. Net income in the third quarter 2016 included $17 million of special items, including $7 million of charges related to restructuring and other costs associated with our restructuring programs and $9 million related to tax special items.

The effective tax rate in the third quarter of 2017 was 41.2%, compared to the effective tax rate of 45.9% in the third quarter of 2016. The effective tax rate in the third quarter of 2017 was negatively affected by additional tax expenses related to the sale of Diversey. The effective tax rate in the third quarter of 2016 was negatively impacted by an increase in unrecognized tax benefits.

Third Quarter 2017 Non-U.S. GAAP Summary, Continuing Operations

Net sales on a constant dollar increased 5% primarily on volume growth. On constant dollar basis, North America sales increased 7%, Asia Pacific was up 3%, and EMEA and Latin America were up 2%.

Adjusted EBITDA for the third quarter 2017 was $217 million, or 19.2% of net sales, compared to $213 million, or 20.0% of net sales for the third quarter of 2016. Adjusted EBITDA included $28 million of Corporate expenses in the third quarter of 2017, of which $3 million reflected costs that were previously allocated to Diversey but not included in net income from discontinued operations. Corporate expenses were $31 million in the third quarter of 2016, and included $4 million of costs that were previously allocated to Diversey, but which were not included in net income from discontinued operations.

Adjusted EPS was $0.46 for the third quarter 2017. This compares to Adjusted EPS of $0.41 in the third quarter 2016. The Adjusted Tax Rate was 30.7% in the third quarter 2017, compared to 35.6% in the third quarter 2016. The Adjusted Tax Rate in the third quarter of 2016 was negatively impacted by an increase in unrecognized tax benefits.

Third Quarter 2017 U.S. GAAP Summary, Discontinued Operations

The sale of Diversey was completed during the quarter on September 6, 2017. The Company recognized a net gain on the sale of $699.3 million. The calculation of net earnings from discontinued operations included third quarter net sales of $435 million. Net income from discontinued operations on a reported basis was $26 million, or $0.14 per diluted share.

Cash Flow and Net Debt

Cash flow provided by operating activities in the nine months ended September 30, 2017 was $333 million, which is net of $49 million of restructuring payments and $61 million of payments related to the sale of Diversey, which included $33 million of tax payments made in the second quarter and the remainder primarily attributable to professional fees required to facilitate the separation.

Capital expenditures were $127 million in the nine months ended September 30, 2017. Free Cash Flow, defined as net cash provided by operating activities less capital expenditures and payments related to the sale of Diversey, was an inflow of $267 million in the nine months ended September 30, 2017.

The Company repurchased 15.5 million shares for approximately $677 million, and paid cash dividends of $92 million during the nine months ended September 30, 2017.

Net Debt, defined as total debt less cash and cash equivalents, decreased to $2.0 billion as of September 30, 2017 from $3.8 billion as of December 31, 2016. This decrease in net debt primarily resulted from payments of debt and net cash received as part of the sale of Diversey.

Outlook for Full Year 2017, Continuing Operations

For the full year 2017, the Company increased its outlook for Net Sales to approximately $4.4 billion from approximately $4.3 billion. Adjusted EBITDA from continuing operations is expected to be approximately $830 million as compared to previously provided guidance of $825 million to $835 million. Currency is expected to have a favorable impact of approximately $40 million on Net Sales and $7 million on Adjusted EBITDA. The Company continues to forecast Adjusted EPS to be in the range of $1.75 to $1.80, which is based on 190 million shares outstanding and an Adjusted Tax Rate of 30%.

The outlook for Free Cash Flow remains unchanged at approximately $400 million. Free Cash Flow guidance is based on consolidated results, including continuing and discontinuing operations, and assumes capital expenditures of approximately $175 million and cash restructuring payments of approximately $55 million. Free Cash Flow outlook excludes cash flow generation from working capital related to Diversey post-separation, restructuring charges to address stranded costs, and any payments made in relation to the sale of Diversey.

A supplemental presentation accompanying the conference call will be available on the Company's website at www.sealedair.com/investors.

Business

Sealed Air Corporation is a knowledge-based company focused on packaging solutions that help our customers achieve their sustainability goals in the face of today's biggest social and environmental challenges. Our portfolio of widely recognized brands, including Cryovac(R) brand food packaging solutions and Bubble Wrap(R) brand cushioning, enable a safer and less wasteful food supply chain and protect valuable goods shipped around the world. Sealed Air generated $4.2 billion in sales in 2016 and has approximately 14,000 employees who serve customers in 117 countries. To learn more, visit www.sealedair.com.

Website Information

We routinely post important information for investors on our website, www.sealedair.com, in the "Investor Relations" section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Non-U.S. GAAP Information

In this press release and supplement, we have included several non-U.S. GAAP financial measures, including Net Debt, Adjusted Net Earnings and Adjusted EPS, net sales on a "constant dollar" or "organic" basis, Free Cash Flow, Adjusted EBITDA and Adjusted Tax Rate, as our management believes these measures are useful to investors. We present results and guidance, adjusted to exclude the effects of Special Items and their related tax impact that would otherwise be included under U.S. GAAP, to aid in comparisons with other periods or prior guidance. In addition, non-U.S. GAAP measures are used by management to review and analyze our operating performance and, along with other data, as internal measures for setting annual budgets and forecasts, assessing financial performance, providing guidance and comparing our financial performance with our peers and may also be used for purposes of determining incentive compensation. The non-U.S. GAAP information has limitations as an analytical tool and should not be considered in isolation from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is not an indicator of our performance under U.S. GAAP. Non-U.S. GAAP financial measures that we present may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. For a reconciliation of these U.S. GAAP measures to non-U.S. GAAP measures and other important information on our use of non-U.S. GAAP financial measures, see the attached supplementary information entitled "Condensed Consolidated Statements of Cash Flows" (under the section entitled "Non-U.S. GAAP Free Cash Flow"), "Reconciliation of U.S. GAAP Net Earnings and U.S. GAAP Net Earnings Per Share to Non-U.S. GAAP Adjusted Net Earnings and Non-U.S. GAAP Adjusted Net Earnings Per Share" "Segment Information," "Reconciliation of U.S. GAAP Net Earnings to Non-U.S. GAAP Total Company Adjusted EBITDA," "Components of Change in Net Sales by Segment," "Components of Changes in Net Sales by Region," "Components of Organic Change in Net Sales by Segment," and "Components of Organic Changes in Net Sales by Region." Information reconciling forward-looking U.S. GAAP measures to non-U.S. GAAP measures is not available without unreasonable effort.

*We have not provided guidance for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain Special Items, including gains and losses on the disposition of businesses, the ultimate outcome of certain legal or tax proceedings, foreign currency gains or losses resulting from the volatile currency market in Venezuela, and other unusual gains and losses. These items are uncertain, depend on various factors, and could be material to our results computed in accordance with U.S. GAAP.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as "anticipates," "believes," "plan," "assumes," "could," "should," "estimates," "expects," "intends," "potential," "seek," "predict," "may," "will" and similar references to future periods. All statements other than statements of historical facts included in this press release regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, expectations regarding the results of restructuring and other programs, anticipated levels of capital expenditures and expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings. The following are important factors that we believe could cause actual results to differ materially from those in our forward-looking statements: the tax benefits associated with the Settlement agreement (as defined in our 2016 Annual Report on Form 10-K), global economic and political conditions, changes in our credit ratings, changes in raw material pricing and availability, changes in energy costs, competitive conditions, the success of our restructuring activities, currency translation and devaluation effects, the success of our financial growth, profitability, cash generation and manufacturing strategies and our cost reduction and productivity efforts, the success of new product offerings, the effects of animal and food-related health issues, pandemics, consumer preferences, environmental matters, regulatory actions and legal matters, and the other information referenced in the "Risk Factors" section appearing in our most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, and as revised and updated by our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

The calculation of the non-U.S. GAAP Adjusted income tax rate is as follows:

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20171108005472r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20171108005472/en/

SOURCE: Sealed Air Corporation


News Provided by COMTEX
Privacy Statement | Copyright © 2017 The Plastics Exchange. LLC. | Patent Protected | All Rights Reserved.