Sealed Air(SEE) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Performance Overview Key Financial Highlights Q1 2024 net sales were $1.33 billion (-1%), with net earnings up 33% to $83 million and free cash flow at $78 million Q1 2024 Key Financial Metrics | Metric | Q1 2024 | Change vs. Q1 2023 | | :--- | :--- | :--- | | Net Sales | $1.33 billion | -1% | | Net Earnings | $83 million | +33% | | Adjusted EBITDA | $278 million | +4% | | Diluted EPS | $0.57 | +30% | | Adjusted Diluted EPS | $0.78 | +5% | | Cash Flow from Operations (YTD) | $125 million | +141% | | Free Cash Flow (YTD) | $78 million | vs. ($13) million | Management Commentary Management reported Q1 results exceeded expectations, driven by strong Food demand, stabilizing Protective, and CTO2Grow savings - Q1 results were ahead of expectations due to stronger Food demand, stabilizing Protective volumes, and savings from the CTO2Grow program[2] - The company emphasized strong free cash flow generation, reflecting operating model and working capital improvements[3] Detailed Financial Analysis Performance by Business Segment Food segment net sales increased 2% to $868 million; Protective sales decreased 7% but Adjusted EBITDA grew 11% Food Segment Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Change | | :--- | :--- | :--- | | Net Sales | $868 million | +2% | | Volume | +$25 million | +3% | | Price | -$33 million | -4% | | Adjusted EBITDA | $190 million | -3% | | Adjusted EBITDA Margin | 21.8% | from 22.8% | Protective Segment Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Change | | :--- | :--- | :--- | | Net Sales | $461 million | -7% | | Volume | -$19 million | -4% | | Price | -$15 million | -3% | | Adjusted EBITDA | $90 million | +11% | | Adjusted EBITDA Margin | 19.4% | from 16.2% | U.S. GAAP Financial Summary Q1 2024 U.S. GAAP net sales decreased 1% to $1.33 billion, with net earnings increasing to $83 million ($0.57 EPS) - Net sales saw regional variations, with EMEA down 6%, APAC down 3%, and the Americas up less than 1%[7] - Net earnings growth was supported by lower Special Items expense ($29 million in Q1 2024 vs. $44 million in Q1 2023)[8] - The effective tax rate decreased to 30.0% from 35.0% in the prior year, primarily due to lower accruals for uncertain tax positions[9] Non-U.S. GAAP Financial Summary Non-GAAP constant dollar net sales decreased 1%; Adjusted EBITDA increased to $278 million, and Adjusted EPS rose to $0.78 - Adjusted EBITDA increased to $278 million (20.9% margin) from $267 million (19.8% margin) in the prior year, mainly due to productivity benefits and cost control[11] - Adjusted EPS increased to $0.78 from $0.74, driven by higher Adjusted EBITDA and lower depreciation, despite higher interest expense[12] Cash Flow and Financial Position Q1 2024 cash flow from operations increased 141% to $125 million, with free cash flow at $78 million; total debt stable at $4.7 billion Cash Flow Summary (First Three Months) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash Flow from Operations | $125 million | $52 million | | Capital Expenditures | $47 million | $65 million | | Free Cash Flow | $78 million | ($13) million | Debt and Liquidity (as of March 31, 2024) | Metric | Value | | :--- | :--- | | Total Debt | $4.7 billion | | Net Debt | $4.3 billion | | Net Leverage Ratio | 3.9x | | Available Liquidity | $1.35 billion | Outlook Full Year 2024 Outlook SEE reaffirmed full-year 2024 guidance, projecting net sales of $5.2-$5.6 billion and Adjusted EBITDA of $1.05-$1.15 billion Full Year 2024 Guidance | Metric | Range | | :--- | :--- | | Net Sales | $5.2 to $5.6 billion | | Adjusted EBITDA | $1.05 to $1.15 billion | | Adjusted EPS | $2.65 to $3.05 | | Free Cash Flow | $325 to $425 million | | Capital Expenditures | ~$230 million | Second Quarter 2024 Outlook Q2 2024 outlook anticipates net sales of approximately $1.3 billion, Adjusted EBITDA of $260 million, and Adjusted EPS of $0.60-$0.70 Q2 2024 Guidance | Metric | Value / Range | | :--- | :--- | | Net Sales | ~$1.3 billion | | Adjusted EBITDA | ~$260 million | | Adjusted EPS | $0.60 to $0.70 | Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Operations This section presents the unaudited income statement for Q1 2024 and Q1 2023, detailing revenues, costs, and profits Condensed Consolidated Statements of Operations (Three Months Ended March 31) | (In USD millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net sales | $1,329.6 | $1,348.8 | | Gross profit | $400.8 | $405.1 | | Operating profit | $185.0 | $169.5 | | Earnings before income tax | $119.1 | $96.7 | | Net earnings | $82.0 | $61.9 | | Diluted EPS | $0.56 | $0.43 | Condensed Consolidated Balance Sheets This section provides the unaudited balance sheet as of March 31, 2024, and December 31, 2023, outlining assets, liabilities, and equity Condensed Consolidated Balance Sheets (Assets) | (In USD millions) | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $352.8 | $346.1 | | Total current assets | $1,992.8 | $1,963.3 | | Total assets | $7,199.3 | $7,200.6 | Condensed Consolidated Balance Sheets (Liabilities & Equity) | (In USD millions) | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current liabilities | $1,502.8 | $1,509.0 | | Long-term debt | $4,484.2 | $4,513.9 | | Total liabilities | $6,601.0 | $6,651.1 | | Total stockholders' equity | $598.3 | $549.5 | Condensed Consolidated Statements of Cash Flows This section details unaudited cash flows from operating, investing, and financing activities for Q1 2024 and Q1 2023 Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | (In USD millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $125.1 | $51.9 | | Net cash used in investing activities | ($38.0) | ($1,206.9) | | Net cash (used in) provided by financing activities | ($69.1) | $999.1 | | Net change in cash | $6.7 | ($153.0) | Non-U.S. GAAP Reconciliations Reconciliation of Net Debt and Adjusted EBITDA This section calculates Net Debt and reconciles U.S. GAAP Net Earnings to Non-U.S. GAAP Adjusted EBITDA, showing a 3.9x Net Leverage Ratio Calculation of Net Debt | (In USD millions) | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total debt | $4,662.3 | $4,690.3 | | Less: cash and cash equivalents | ($352.8) | ($346.1) | | Non-U.S. GAAP Net Debt | $4,309.5 | $4,344.2 | LTM Adjusted EBITDA Reconciliation (as of March 31, 2024) | (In USD millions) | LTM Mar 31, 2024 | | :--- | :--- | | U.S. GAAP Net earnings from continuing operations | $359.8 | | Interest, Taxes, D&A | $594.2 | | Pre-tax impact of Special items | $163.6 | | Non-U.S. GAAP Consolidated Adjusted EBITDA | $1,117.6 | Reconciliation of Net Earnings and EPS to Adjusted Figures This section reconciles Q1 2024 U.S. GAAP net earnings and diluted EPS to adjusted figures, showing adjusted net earnings of $112.8 million and $0.78 adjusted EPS Reconciliation to Adjusted Net Earnings and EPS (Q1 2024) | (In USD millions, except per share data) | Net Earnings | Diluted EPS | | :--- | :--- | :--- | | U.S. GAAP from continuing operations | $83.4 | $0.57 | | Special Items | $29.4 | $0.20 | | Non-U.S. GAAP adjusted | $112.8 | $0.78 | Calculation of Adjusted Tax Rate (Q1) | Rate | 2024 | 2023 | | :--- | :--- | :--- | | U.S. GAAP Effective income tax rate | 30.0% | 35.0% | | Non-U.S. GAAP Adjusted Tax Rate | 25.9% | 24.0% | Components of Change in Net Sales This section breaks down the 1.4% year-over-year decline in total net sales, showing a 3.0% organic decline driven by price and volume impacts By Segment Food segment organic sales declined 0.9% due to price impact, while Protective segment organic sales fell 6.7% from volume and price decreases Q1 2024 vs Q1 2023 Net Sales Change by Segment | Segment | Price | Volume | Organic Change | Acquisition | Total Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Food | (3.8)% | 2.9% | (0.9)% | 2.7% | 1.8% | | Protective | (2.9)% | (3.8)% | (6.7)% | 0.0% | (7.0)% | | Total Company | (3.5)% | 0.5% | (3.0)% | 1.7% | (1.4)% | By Region EMEA saw the largest organic sales decline at 7.1%, followed by Americas at 2.4%, while APAC remained flat organically Q1 2024 vs Q1 2023 Net Sales Change by Region | Region | Price | Volume | Organic Change | Acquisition | Total Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Americas | (4.0)% | 1.6% | (2.4)% | 2.0% | 0.3% | | EMEA | (4.0)% | (3.1)% | (7.1)% | 1.4% | (5.5)% | | APAC | (0.4)% | 0.4% | 0.0% | 1.3% | (3.3)% | Segment Adjusted EBITDA Reconciliation This section reconciles U.S. GAAP Net Earnings to Consolidated Adjusted EBITDA, showing Food contributed $189.6 million and Protective $89.5 million to the $278.3 million total Adjusted EBITDA by Segment (Q1) | (In USD millions) | 2024 | 2023 | | :--- | :--- | :--- | | Food | $189.6 | $194.8 | | Protective | $89.5 | $80.4 | | Corporate | ($0.8) | ($7.9) | | Consolidated Adjusted EBITDA | $278.3 | $267.3 |