Sealed Air(SEE) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights This section provides an overview of management's commentary, key financial highlights, and significant business updates for the quarter Management Commentary Management highlights Protective segment volume progress, Q2 outperformance, accelerated productivity, and maintained full-year guidance - CEO Dustin Semach noted that the Protective turnaround will be non-linear, but Q2 2025 marked progress with the best volume performance since Q4 2021 and industrial portfolio volume growth[4] - Market pressures are accelerating, primarily in North America, influenced by global trade policies and shifting consumer spending patterns[4] - Interim CFO Roni Johnson stated that Q2 results exceeded expectations across all metrics despite increasing market headwinds, and productivity initiatives are being accelerated to improve operating leverage[4] - The company is maintaining its full-year guidance range, anticipating more visibility on global trade policies and consumer buying patterns in Q3[4] Q2 2025 Financial Highlights (Summary Table) Q2 2025 financial highlights show slight GAAP net sales and earnings declines, with Adjusted EBITDA and EPS growth | ($ millions, except per share data) | Second Quarter 2025 | Second Quarter 2024 | Reported △% | Constant currency △% | | :-------------------------------- | :------------------ | :------------------ | :---------- | :------------------- | | GAAP Results | | | | | | Net Sales | $1,335 | $1,345 | (0.8)% | (1.3)% | | Net Earnings | $94 | $98 | (3.7)% | | | Diluted EPS | $0.64 | $0.67 | (4.5)% | | | Cash Flow from Operations (YTD) | $168 | $313 | (46.2)% | | | Non-GAAP Results | | | | | | Adjusted EBITDA | $293 | $285 | 2.5% | 3.4% | | Adjusted Net Earnings | $132 | $121 | 9.3% | 11.2% | | Adjusted Diluted EPS | $0.89 | $0.83 | 7.2% | 9.6% | | Free Cash Flow (YTD) | $81 | $207 | (60.9)% | | Key Business Updates Key updates include new CFO, Protective volume stabilization, flat Food sales, and focus on margin, EPS, debt reduction - Kristen Actis-Grande is joining Sealed Air as Chief Financial Officer[5] - Protective volumes stabilized in the quarter, with the industrial portfolio inflecting to volume growth due to ongoing transformation efforts[5] - Food sales were flat, as favorable pricing was offset by softer volumes driven by market pressure in the North American business[5] - Margin expansion and Adjusted EPS growth were achieved through improved operating leverage and continued business optimization[5] - The company maintained its financial outlook for 2025, with an improved FX outlook being offset by volume weakness in North America[5] Detailed Financial Performance - Q2 2025 This section provides an in-depth analysis of the company's consolidated financial results, segment performance, and cash flow dynamics for the second quarter of 2025 Consolidated Financial Results Consolidated financial results for Q2 2025 show a slight decrease in net sales, a decline in GAAP net earnings due to higher Special Items expense, but an increase in Adjusted EBITDA and Adjusted EPS driven by productivity benefits and lower interest expense - Net sales were $1.34 billion, decreasing less than 1% as reported (0.8%) and 1% on a constant currency basis. Volumes decreased by 2% ($23 million), while price increased by less than 1% ($6 million)[6] - Net earnings were $94 million ($0.64 per diluted share), down from $98 million ($0.67 per diluted share) in the prior year, primarily due to an unfavorable impact of $38 million in Special Items expense (vs. $23 million prior year)[8] - Adjusted EBITDA increased 2.5% to $293 million (21.9% of net sales) from $285 million (21.2%) in the prior year, driven by lower operating costs from productivity benefits (CTO2Grow Program), partially offset by unfavorable net price realization, lower volume, and unfavorable currency translation[9] - Adjusted earnings per diluted share increased 7% to $0.89 from $0.83 in the prior year, mainly due to higher Adjusted EBITDA and lower interest expense[10] Segment Performance Segment performance reveals flat net sales for Food, with price gains offsetting volume declines, and a decrease in Protective net sales due to volume weakness, despite some industrial portfolio growth. Both segments saw Adjusted EBITDA impacted by productivity benefits and price/volume dynamics Food Segment The Food segment reported flat net sales, with favorable pricing offsetting volume softness in North America. Adjusted EBITDA increased due to productivity benefits, despite the volume decline - Second quarter net sales in Food were $896 million, flat as reported. Price had a favorable impact of $14 million (2%), while volumes decreased $13 million (1%), primarily due to softness in the North American market[11] - Adjusted EBITDA for Food was $210 million (23.4% of net sales), an increase of 3% from $205 million (22.9%) in the prior year, driven by lower operating costs from productivity benefits (CTO2Grow Program) and slightly favorable net price realization, partially offset by lower volume[11] Protective Segment The Protective segment experienced a 3% decrease in reported net sales, with volume declines from prior year customer churn partially offset by growth in the industrial portfolio and favorable currency. Adjusted EBITDA decreased due to unfavorable net price realization - Second quarter net sales in Protective were $439 million, a decrease of 3% as reported. On a constant currency basis, net sales decreased 4% ($18 million)[12] - Volumes decreased $10 million (2%), primarily due to the remaining impact of prior year customer churn in the fulfillment portfolio, partially offset by growth in the industrial portfolio. Price had an unfavorable impact of $8 million (2%)[12] - Adjusted EBITDA for Protective was $78 million (17.8% of net sales), a decrease of approximately 5% from $82 million (18.1%) in the prior year, primarily due to unfavorable net price realization, partially offset by lower operating costs from productivity benefits (CTO2Grow Program)[12] Cash Flow and Debt Cash flow from operating activities and Free Cash Flow significantly decreased year-to-date compared to the prior year, mainly due to higher incentive compensation and tax payments. Total debt decreased slightly, while Net Debt remained stable, and the company maintained substantial liquidity - Cash flow from operating activities for the first six months of 2025 was $168 million, a decrease from $313 million in the prior year period, primarily reflecting higher incentive compensation and tax payments[13] - Free Cash Flow for the first six months of 2025 was $81 million, down from $207 million in the prior year period, with capital expenditures at $87 million (vs. $106 million prior year)[14] - Total debt was $4.3 billion as of June 30, 2025, down from $4.4 billion as of December 31, 2024. Net Debt remained stable at $4.0 billion for both periods[15] - As of June 30, 2025, Sealed Air had approximately $1.2 billion of available liquidity, including $354 million in cash and $830 million in available and unused lines of credit[15] - The net leverage ratio was 3.6x as of June 30, 2025, consistent with December 31, 2024[15] Financial Outlook & Corporate Information This section outlines the company's full-year 2025 financial guidance, provides an overview of its business, and clarifies its use of non-GAAP measures and forward-looking statements 2025 Full Year Outlook Sealed Air provided its full-year 2025 financial guidance, including ranges for Net Sales, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow, noting that non-GAAP measures are used due to the variability of certain Special Items | (in $ millions except EPS) | Range | Constant currency △% | | :------------------------- | :---------------- | :------------------- | | Net Sales | $5,100 to $5,500 | (6)% to 2% | | Adjusted EBITDA | $1,075 to $1,175 | (3)% to 6% | | Adjusted EPS | $2.90 to $3.30