Sealed Air(US:SEE)2023-05-02 17:53Financial Data and Key Metrics Changes - In Q1 2023, net sales decreased by 2% on a constant currency basis, with adjusted EBITDA of $267 million down 18% compared to the previous year, reflecting lower volumes and unfavorable operating leverage [18][41][42] - Adjusted earnings per diluted share were $0.74, a decrease of 33% year-over-year on a constant currency basis [41] - The pro forma net leverage ratio at the end of Q1 was 3.7 times, with expectations to reduce it to approximately 3.5 times by the end of 2023 [19] Business Line Data and Key Metrics Changes - Food segment net sales were $853 million, up 1% on an organic basis, driven by a 4% increase from price realization, offset by a 2% decline in volume [8] - Protective Solutions segment net sales were $496 million, down 17% in constant dollars, primarily due to volume declines from recessionary pressures [42] - Automation sales increased by 5% in constant dollars, driven by automated protein solutions [17] Market Data and Key Metrics Changes - EMEA region grew by 4%, while the Americas and APAC regions saw declines of 4% and 1%, respectively [18] - The fastest-growing market was Fluids and Liquids, which grew double digits in Q1, representing close to 10% of total company sales [5][39] Company Strategy and Development Direction - The company is focused on transforming into a market-driven, customer-first solutions provider, with a strong emphasis on digital transformation and automation [5][39] - The acquisition of Liquibox is expected to enhance growth, contributing approximately $340 million to $360 million in sales for 2023 [19] - The company aims to exceed $1 billion in revenue from the Fluids and Liquids vertical by 2025, leveraging CRYOVAC and Liquibox technologies [39] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging first half of 2023 but expects a recovery in the second half driven by growth in Automation, Fluids, and Liquids businesses [17][19] - The company remains confident in its full-year guidance, expecting net sales in the range of $5.85 billion to $6.1 billion, with adjusted EBITDA margins around 21% [19] Other Important Information - The company repurchased approximately $80 million worth of shares in Q1 2023, with $537 million remaining under the authorized share repurchase program [18][19] - The company is implementing cost reduction efforts under the "Reinvent SEE 2.0" initiative, targeting $35 million to $45 million in savings within 12 to 18 months [17] Q&A Session Summary Question: Volume trends by region and end market - Management noted a tough quarter with Food overall volume down 3%, particularly in EMEA, while APAC faced challenges due to chaotic conditions post-lockdown in China [21][46] Question: Full year outlook and volume growth - The company is holding its full-year guidance, anticipating a slight uptick in Food volume and a decline of 2% to 3% in Protective [31][47] Question: Automation trends in a recessionary environment - Automation remains strong, with Food automation up 13% in Q1, while Protective automation was flat due to destocking [48][49] Question: Impact of destocking on Protective segment - Destocking has significantly impacted Protective volumes, with about one-third of the 18% decline attributed to this factor [53][78] Question: Price and volume expectations for 2024 - Management is addressing inflationary pressures with customers and believes automation will help maintain price realization while driving volume [81]