Sealed Air(US:SEE)2025-05-06 15:02Financial Data and Key Metrics Changes - Net sales for the first quarter were $1.27 billion, down 2% on a constant currency basis [23] - Adjusted EBITDA was $276 million, up 2% on a constant currency basis [23] - Adjusted earnings per share increased by 4% as reported and 9% on a constant currency basis, reaching $0.81 [24] - Adjusted EBITDA margin improved to 21.7%, up 80 basis points [25] Business Line Data and Key Metrics Changes - Food segment net sales were $852 million, up 1% on an organic basis, driven by pricing actions and marginal volume growth [26] - Protective segment net sales were $420 million, down 8% organically, primarily due to volume declines [27] - Food adjusted EBITDA was $203 million, up 7% as reported and 10% in constant currency, with an adjusted EBITDA margin of 23.8% [26][28] - Protective adjusted EBITDA was $74 million, down 18% as reported, with an adjusted EBITDA margin of 17.6%, down 180 basis points [28] Market Data and Key Metrics Changes - The industrial food processing markets were relatively flat compared to the previous year, with some regions showing growth while others faced declines [15][17] - In the Protective segment, box shipments in the U.S. were down low single digits, reflecting declining consumer confidence [19] - EMEA showed signs of stabilization, with volumes down just 1%, marking the best quarter since 2021 [28] Company Strategy and Development Direction - The company is focused on transforming its operations by reorganizing into two market-focused businesses: Food and Protective [6][7] - There is an emphasis on enhancing leadership and aligning commercial, innovation, and supply chain teams to better serve customers [8] - The company is actively reviewing its supply chain and optimizing production to mitigate potential tariff impacts and inflation [10][12] Management's Comments on Operating Environment and Future Outlook - Management noted a cautious outlook due to potential softness in market demand and ongoing trade policy uncertainties [11][13] - The company is reaffirming its full-year guidance while anticipating better visibility into trade policies and market demand in the second half of the year [30][31] - Management expressed confidence in the food business's resilience and long-term potential despite current market volatility [17][18] Other Important Information - The company reported a cash flow use of $12 million in the first quarter, compared to a source of $78 million in the same period last year [29] - Total liquidity at the end of the quarter was $1.3 billion, with a net debt leverage ratio of 3.7 times [29] Q&A Session Summary Question: Comments on protective volumes and progress - Management indicated that protective volumes were down approximately 6% in Q1, but churn from large customers has been minimized, leading to expected sequential improvement in Q2 [35][36] Question: Measuring customer improvement - Management confirmed they are using customer feedback mechanisms and have seen improvements in customer satisfaction, although there is still work to be done [42][45] Question: Price changes and competitive landscape - Management noted that net price realization remains relatively unchanged, with competitive pressures particularly affecting the protective segment [53][55] Question: Gross margins despite sales decline - Management attributed margin expansion to ongoing productivity initiatives and cost takeout efforts, which have improved cost positions [61][62] Question: Timing for protective turnaround - Management indicated that the protective turnaround is ongoing, with expectations for improvements over the next 90 days to six months [72][75] Question: Volume assumptions for the second half - Management stated that they expect a modest decline in protective volumes of about 1% in the second half, with ongoing monitoring of market conditions [82][86]