Sealed Air(SEE)2024-08-08 20:24Financial Performance - Net earnings from continuing operations for the three months ended June 30, 2024, were $97.8 million, compared to $93.9 million for the same period in 2023[160] - Net earnings from continuing operations for the six months ended June 30, 2024, were $181.2 million, compared to $156.8 million for the same period in 2023[160] - Adjusted EBITDA for the three months ended June 30, 2024, was $285.5 million, compared to $280.3 million for the same period in 2023[160] - Adjusted EBITDA for the six months ended June 30, 2024, was $563.8 million, compared to $547.6 million for the same period in 2023[160] - Adjusted Net Earnings for the three months ended June 30, 2024, were $120.7 million, compared to $115.5 million for the same period in 2023[164] - Adjusted Net Earnings for the six months ended June 30, 2024, were $233.5 million, compared to $222.4 million for the same period in 2023[164] - Adjusted EPS for the three months ended June 30, 2024, was $0.83, compared to $0.80 for the same period in 2023[164] - Adjusted EPS for the six months ended June 30, 2024, was $1.60, compared to $1.53 for the same period in 2023[164] - Net sales for the three months ended June 30, 2024 were $1,345.1 million, a decrease of 2.6% compared to $1,380.8 million in the same period in 2023[171] - Net earnings from continuing operations for the six months ended June 30, 2024 were $181.2 million, an increase of 15.6% compared to $156.8 million in the same period in 2023[171] - Non-GAAP Adjusted EBITDA from continuing operations for the six months ended June 30, 2024 was $563.8 million, an increase of 3.0% compared to $547.6 million in the same period in 2023[171] - Non-GAAP Adjusted EPS from continuing operations for the six months ended June 30, 2024 was $1.60, an increase of 4.6% compared to $1.53 in the same period in 2023[171] - GAAP Effective income tax rate for the three months ended June 30, 2024 was 27.8%, compared to 32.5% in the same period in 2023[166] - Non-GAAP Adjusted Earnings before income tax provision from continuing operations for the six months ended June 30, 2024 were $314.4 million, compared to $298.6 million in the same period in 2023[166] - Gross profit as a percentage of net sales for the six months ended June 30, 2024 was 30.5%, compared to 30.2% in the same period in 2023[171] - Operating profit for the six months ended June 30, 2024 was $390.6 million, an increase of 1.2% compared to $385.8 million in the same period in 2023[171] - Net earnings per common share - diluted for the six months ended June 30, 2024 was $1.24, an increase of 11.7% compared to $1.11 in the same period in 2023[171] - Net earnings from continuing operations increased by 4.2% to $97.8 million for the three months ended June 30, 2024, compared to $93.9 million in 2023[201] - Net earnings from continuing operations increased by 15.6% to $181.2 million for the six months ended June 30, 2024, compared to $156.8 million in 2023[201] - Food segment Adjusted EBITDA increased by 7.1% to $204.6 million for the three months ended June 30, 2024, compared to $191.0 million in 2023[207] - Protective segment Adjusted EBITDA decreased by 14.7% to $81.8 million for the three months ended June 30, 2024, compared to $95.9 million in 2023[207] - Non-GAAP Consolidated Adjusted EBITDA increased by 1.9% to $285.5 million for the three months ended June 30, 2024, compared to $280.3 million in 2023[207] Segment Performance - The Food segment is expected to deliver low-single-digit volume growth for the full year 2024, driven by competitive wins, momentum in fluids and liquids businesses, and new product launches, offset by pricing declines[155] - The Protective segment continues to experience softness in end markets through the first half of 2024, with challenges expected to persist throughout 2024 and into 2025[155] - Food segment net sales increased by $13.2 million (1.5%) in 2024 compared to 2023, driven by higher volumes of $46.6 million (5.3%), partially offset by unfavorable price impacts of $26.0 million (3.0%)[176] - Protective segment net sales decreased by $48.9 million (9.8%) in 2024 compared to 2023, primarily due to lower volumes of $29.1 million (5.8%) and unfavorable price impacts of $15.4 million (3.1%)[176] - Food segment net sales for the six months ended June 30, 2024, increased by $28.5 million (2%) compared to 2023, driven by higher volumes of $71.7 million and the Liquibox acquisition contributing $23.5 million, partially offset by unfavorable price impacts of $58.9 million[177] - Protective segment net sales for the six months ended June 30, 2024, decreased by $83.4 million (8.4%) compared to 2023, primarily due to lower volumes of $47.9 million (4.8%) and unfavorable price impacts of $30.0 million (3.0%)[177] Cost and Expense Management - Cost of sales for the three months ended June 30, 2024, decreased by $34 million (3.5%) compared to 2023, with cost of sales as a percentage of net sales decreasing from 69.7% to 69.1%[182] - Cost of sales for the six months ended June 30, 2024, decreased by $48.6 million (2.5%) compared to 2023, with cost of sales as a percentage of net sales decreasing from 69.8% to 69.5%[182] - Cost of sales decreased by $49 million (3%) in 2024 compared to 2023, primarily due to raw material cost deflation, with a favorable foreign currency translation impact of $11 million[183] - SG&A expenses increased by $6 million (3%) in Q2 2024 compared to Q2 2023, driven by higher incentive compensation expenses, partially offset by productivity benefits from the CTO2Grow Program[184] - SG&A expenses decreased by $30 million (7%) in H1 2024 compared to H1 2023, primarily due to productivity benefits from the CTO2Grow Program and lower expenses related to the Liquibox acquisition[185] - Amortization expense of intangible assets increased by $1 million (5.8%) in Q2 2024 compared to Q2 2023, primarily due to higher amortization of capitalized software[186] - The CTO2Grow Program aims to drive annualized savings of $140 to $160 million by the end of 2025, with total cash costs estimated in the same range, primarily incurred in 2024 and 2025[188] - The CTO2Grow Program generated incremental cost benefits of $48 million in H1 2024, with full-year 2024 benefits expected to be approximately $90 million[190] Cash Flow and Liquidity - The company had cash and cash equivalents of $389 million as of June 30, 2024, with $325 million (84%) located outside the U.S.[215] - Total availability under accounts receivable securitization programs was $130 million, with $129 million outstanding as of June 30, 2024[218] - The company had a $1.0 billion revolving credit facility with no outstanding borrowings as of June 30, 2024[222] - The leverage ratio was 3.46 to 1.00 as of June 30, 2024, well below the maximum covenant limit of 4.50 to 1.00[223] - Accounts payable balances included $176 million related to invoices from suppliers participating in the supply chain financing program as of June 30, 2024[225] - Corporate credit rating by Moody's is Ba1 and by Standard & Poor's is BB+, with a negative outlook from Moody's and stable from S&P[226] - Total debt as of June 30, 2024, is $4,614.9 million, with a net debt of $4,226.3 million after subtracting cash and cash equivalents[227] - Net cash provided by operating activities for the six months ended June 30, 2024, was $313.3 million, a significant increase from $(6.6) million in 2023[230] - Non-GAAP free cash flow for the six months ended June 30, 2024, was $207.5 million, compared to $(130.3) million in 2023[231] - Working capital increased by $22.5 million, or 5%, to $476.8 million as of June 30, 2024, compared to December 31, 2023[239] - Stockholders' equity increased by $101 million, or 18%, primarily due to net earnings of $180 million[238] - Net cash used in investing activities decreased to $98 million in 2024 from $1,272 million in 2023, primarily due to acquisition activities in 2023[235] - Capital expenditures in 2024 were $106 million, down from $124 million in 2023[236] - Net cash flows from financing activities were a use of $156 million in 2024, compared to a source of $1,105 million in 2023, primarily due to debt-related activities[236] - Accounts payable was favorable by $173 million in 2024 compared to 2023, due to increased raw material purchases and improved payment terms[233] Foreign Currency Impact - Foreign currency translation had an unfavorable impact of $11.8 million on net sales for the three months ended June 30, 2024[173] - Net sales for the three months ended June 30, 2024, decreased by $35.7 million (2.6%) compared to 2023, primarily due to unfavorable price impacts of $41.4 million (3.0%) and foreign currency translation of $11.8 million (0.9%)[174] - For the six months ended June 30, 2024, net sales decreased by $54.9 million (2.0%) compared to 2023, with unfavorable price impacts of $88.9 million (3.3%) and foreign currency translation of $13.3 million (0.5%)[177] Debt and Financing - Interest expense, net decreased by $5.4 million in Q2 2024 compared to Q2 2023, primarily due to lower interest expense on the revolving credit facility and higher interest income[192] - The company issued $400 million of 6.500% senior notes due July 2032 in June 2024, using the proceeds to repurchase 5.500% senior notes due September 2025[193] - The effective income tax rate for Q2 2024 was 28%, compared to 33% in Q2 2023, with both periods impacted by accruals for uncertain tax positions[197] - The company recognized a pre-tax gain of $3 million in H1 2024 from the final purchase price settlement of the Liquibox acquisition[195]