Solid Q2, closes APS acquisition fueling
growth, raises Adj. EBITDA & EPS guidance
- Net Sales of $1.2 billion increased 1% as reported and 4% in
constant dollars
- Net Earnings of $26 million or $0.16 per share, down 69%
Adjusted Net Earnings of $125 million or $0.80 per share, up
25%
- Reinvent SEE driving Adjusted EBITDA growth of 9% to $237
million Adjusted EBITDA margin expanded 160 bps to 20% of
sales
- Completes strategic acquisition of Automated Packaging Systems
on August 1, 2019
- Raises 2019 Adjusted EBITDA and Adjusted EPS guidance
Sealed Air Corporation (NYSE: SEE) today announced financial
results for the second quarter 2019.
“Our second quarter results demonstrate our significant progress
in executing our Reinvent SEE strategy. In constant dollars, we
delivered 12% Adjusted EBITDA growth on 4% higher sales. Adjusted
EPS increased 25% compared to last year, as a result of profitable
growth, lower tax expense and share repurchases,” said Ted Doheny,
Sealed Air's President and CEO.
In addition, the Company completed the acquisition of Automated
Packaging Systems, Inc. (APS), a leading manufacturer of automated
bagging systems (including the iconic Autobag® brand), for $510
million on a cash and debt free basis.
“We are excited that APS is now part of the Sealed Air family,”
continued Doheny. “APS expands the breadth of our automated
solutions and sustainable packaging offerings and aligns with our
Reinvent SEE goal of doubling our innovation rate over the next
five years.”
Unless otherwise stated, all results compare second quarter 2019
results to second quarter 2018 results from continuing operations.
Year-over-year financial discussions present operating results from
continuing operations as reported, on an organic basis and on a
constant dollar basis. Organic refers to changes in unit volume and
price performance and excludes acquisitions in the first year after
closing, and divestiture activity and the impact of currency
translation. Constant dollar refers to changes in unit volume,
price performance and acquisitions and divestitures and excludes
the impact of currency translation. Additionally, non-U.S. GAAP
adjusted financial measures, such as Adjusted Earnings Before
Interest Expense, Taxes, Depreciation and Amortization ("Adjusted
EBITDA"), Adjusted Net Earnings, Adjusted Diluted Earnings Per
Share ("Adjusted EPS") and Adjusted Tax Rate, exclude the impact of
specified items ("Special Items"), such as restructuring charges,
restructuring associated costs, gains and losses related to
acquisition and divestiture of businesses, special tax items ("Tax
Special Items") and certain other infrequent or one-time items.
Please refer to the supplemental information included with this
press release for a reconciliation of U.S. GAAP to Non-U.S. GAAP
financial measures.
Business Highlights
Food Care net sales of $711 million decreased less than 1% as
reported. Currency fluctuations had a negative impact on Food Care
net sales of 4%, or $31 million. On a constant dollar basis, net
sales increased 4%, primarily driven by volume growth and favorable
price of more than 2% and 1%, respectively. Volume growth was led
by 7%, 4% and 1% increases in South America, North America and
EMEA, respectively, partially offset by a decline of 2% in APAC.
Adjusted EBITDA increased 15% to $156 million, and margin expanded
290 basis points to 22%. Currency fluctuations had a $5 million
unfavorable impact on Adjusted EBITDA. Adjusted EBITDA performance
was driven by Reinvent SEE initiatives, including productivity
improvements and restructuring savings, favorable price cost spread
and volume growth, partially offset by unfavorable currency and
higher operating costs, primarily labor inflation and non-material
manufacturing costs.
Product Care net sales of $450 million increased 2% as reported.
Currency fluctuations had a negative impact on Product Care net
sales of 2%, or $10 million. On a constant dollar basis, net sales
increased 4%, including 6%, or $26 million, from acquisitions and
1% on favorable pricing. Volume, excluding acquisitions, declined
3%, primarily due to 6% and 3% declines in APAC and EMEA,
respectively. North America was down 1%. Despite lower volumes,
Product Care increased Adjusted EBITDA to $84 million, up 7% from
$79 million. Adjusted EBITDA margin of 19% increased 90 basis
points due to the Company's Reinvent SEE initiatives, partially
offset by higher operating costs, primarily labor inflation and
non-material manufacturing costs, lower volumes and unfavorable
currency.
Completes APS Acquisition
Sealed Air completed the acquisition of APS on August 1, 2019
for a purchase price of $510 million on a cash and debt-free basis.
Approximately $60 million of the $510 million purchase price will
be paid to APS’s European employees over the next three years in
accordance with the closure of an APS deferred incentive
compensation plan.
The transaction includes expected cash tax benefits, with a net
present value of approximately $70 million as the result of the
structure of the transaction, which creates depreciable/amortizable
“stepped-up” tax basis to fair market value in the acquired assets
and liabilities. In 2018, APS generated $290 million in net sales
and $40 million in Adjusted EBITDA. With the integration of APS,
Sealed Air is expected to generate approximately $15 million
annualized, run-rate productivity synergies by the end of 2021.
Second Quarter 2019 U.S. GAAP Summary
Net sales of $1.2 billion increased 1% on an as reported basis.
Currency had a negative impact on total net sales of $41 million.
Net earnings on an as reported basis was $26 million, or $0.16 per
diluted share, which was unfavorably impacted by $100 million of
Special Items, after tax. This compares to second quarter 2018 net
earnings of $83 million, or $0.52 per diluted share, which was
unfavorably impacted by $19 million of Special Items.
Special Items included a charge of $59 million ($44 million, net
of taxes) recorded in connection with a settlement agreement with
Novipax Holdings LLC, pursuant to which the Company would make a
one-time cash payment as well as enter into a supply agreement
under which it would continue to purchase materials from Novipax
for a specified period. The settlement is related to a claim filed
over Novipax's 2015 purchase of Sealed Air Food Care's North
America foam trays and absorbent pads business. Special Items
recorded during the quarter also included $51 million ($36 million,
net of taxes) of restructuring charges and associated costs.
The effective tax rate in the second quarter 2019 was 32.5%,
compared to 28.7% in the second quarter 2018.
Second Quarter 2019 Non-U.S. GAAP Summary
Net sales increased 4% in constant dollars reflecting a
favorable price impact of 1%, an increase in volume of 50 basis
points and contribution from acquisitions of 2.5%. On a constant
dollar basis, sales increased 4% in North America, 1% in Asia
Pacific and 30% in South America. South America growth was driven
by USD-based indexed pricing combined with a 5% increase in volume.
EMEA constant dollar sales were relatively flat.
Adjusted EBITDA increased 9% to $237 million, or 20% of net
sales, compared to $218 million, or 19% in 2018. Currency
fluctuations had an unfavorable $7 million, or 3%, impact on
Adjusted EBITDA in the second quarter 2019. On a constant dollar
basis, Adjusted EBITDA increased 12%. The improvement in Adjusted
EBITDA was primarily due to the Company's Reinvent SEE initiatives,
including productivity improvements and restructuring savings, and
favorable price cost spread, partially offset by higher operating
costs primarily labor inflation and non-material manufacturing
costs.
Adjusted earnings per diluted share was $0.80 for the second
quarter 2019 compared to $0.64 in the second quarter 2018.
The Adjusted Tax Rate was 19.4% in the second quarter 2019,
compared to 22.6% in the second quarter 2018 primarily due to the
release of a valuation allowance in South America, related to
improved profitability in the region from Reinvent SEE
initiatives.
Cash Flow and Net Debt
Cash flow provided by operating activities for the six months
ended June 30, 2019 was an inflow of $169 million, compared to an
inflow of $37 million for the six months ended June 30, 2018.
Capital expenditures were $94 million for the six months ended
June 30, 2019 versus $74 million in the six months ended June 30,
2018. Free Cash Flow, defined as net cash provided by operating
activities less capital expenditures, was an inflow of $75 million
in the six months ended June 30, 2019, compared to an outflow of $5
million, excluding $33 million in payments related to the sale of
Diversey, in the six months ended June 30, 2018.
During the six months ended June 30, 2019, the Company used cash
in financing activities of $98 million, which includes share
repurchases of $67 million, or approximately 1,560,000 shares, and
cash dividends paid of $50 million. In the same period, Sealed Air
used cash in investing activities of $23 million to fund targeted
acquisition activity related to food packaging.
Net Debt, defined as total debt less cash and cash equivalents,
increased to $3.4 billion as of June 30, 2019 from $3.2 billion as
of December 31, 2018.
Updated Outlook for Full Year 2019
For the full year 2019, the Company’s outlook includes a
five-month contribution from the APS acquisition.
The Company now expects net sales of approximately $4.85
billion, an increase of approximately 2% as reported and 5% in
constant dollar. This compares to the previously provided sales
guidance of $4.8 billion. Acquisitions are now expected to account
for $190 million, or 4% growth, of which APS will contribute
approximately $120 million. The Company continues to expect
currency to have an unfavorable impact of approximately $130
million on net sales.
Adjusted EBITDA is now expected to be in the range of $950 to
$960 million, including a $10 to $12 million contribution from APS,
which includes an estimated one-time non-cash inventory step-up
charge of $6 million associated with the acquisition. The Company
continues to expect currency to have an unfavorable impact of
approximately $25 million on Adjusted EBITDA. This compares to the
previously provided guidance for Adjusted EBITDA of $925 to $945
million.
The Company now expects Adjusted EPS of $2.70 to $2.80. This
outlook includes $0.07 dilution from the APS acquisition, which is
net of an estimated $0.09 in charges related to the non-cash
purchase accounting items of acquired intangible amortization and
the one-time inventory charge. This compares to the previously
provided guidance for Adjusted EPS of $2.65 to $2.75.
The Company expects 155 million diluted average shares
outstanding and an anticipated Adjusted Tax Rate of 26% for the
full year 2019.
The Company now expects Free Cash Flow to be approximately $180
million compared to the previously provided guidance of $250
million. This revision accounts for the cash payments related to
the Novipax settlement of approximately $59 million and a deferred
incentive compensation plan payment to APS’s European employees of
$20 million. The Company expects capital expenditures of $210
million, including $10 million from APS, and cash restructuring and
other related payments of $115 million.
Conference Call Information
Date:
Friday, August 2, 2019
Time:
10:00 a.m. (ET)
Webcast:
www.sealedair.com/investors
Conference Dial In:
(855) 472-5411 (domestic)
(330) 863-3389 (international)
Participant Code:
4999788
A supplemental presentation will be available on the Company’s
website at www.sealedair.com/investors.
Conference Call Replay Information
Date:
Friday, August 2, 2019 at 1:00 p.m. (ET)
through
Sunday, September 1, 2019 at 1:00 p.m.
(ET)
Webcast:
www.sealedair.com/investors
Conference Dial In:
(855) 859-2056 (domestic)
(404) 537-3406 (international)
Participant Code:
4999788
About Sealed Air
Sealed Air partners with customers to solve their most critical
packaging challenges with innovative solutions that leave our
world, environment, and communities better than we found them. Our
portfolio of widely recognized brands includes Cryovac® food
packaging and Bubble Wrap® protective packaging which respectively
enable a safer, more efficient food supply chain and protect
valuable goods shipped around the world. Sealed Air generated $4.7
billion in sales in 2018 and has approximately 15,500 employees who
serve customers in 123 countries. To learn more, visit
www.sealedair.com.
Website Information
We routinely post important information for investors on our
website, www.sealedair.com, in the Investors section. We use this
website as a means of disclosing material, non-public information
and for complying with our disclosure obligations under Regulation
FD. Accordingly, investors should monitor the Investors section of
our website, in addition to following our press releases, SEC
filings, public conference calls, presentations and webcasts. The
information contained on, or that may be accessed through, our
website is not incorporated by reference into, and is not a part
of, this document.
Non-U.S. GAAP Information
In this press release and supplement, we have included several
non-U.S. GAAP financial measures, including Net Debt, Adjusted Net
Earnings and Adjusted EPS, net sales on an "organic" and a
“constant dollar” basis, Free Cash Flow, Adjusted EBITDA and
Adjusted Tax Rate, as our management believes these measures are
useful to investors. We present results and guidance, adjusted to
exclude the effects of Special Items and their related tax impact
that would otherwise be included under U.S. GAAP, to aid in
comparisons with other periods or prior guidance. In addition,
non-U.S. GAAP measures are used by management to review and analyze
our operating performance and, along with other data, as internal
measures for setting annual budgets and forecasts, assessing
financial performance, providing guidance and comparing our
financial performance with our peers and may also be used for
purposes of determining incentive compensation. The non-U.S. GAAP
information has limitations as an analytical tool and should not be
considered in isolation from or as a substitute for U.S. GAAP
information. It does not purport to represent any similarly titled
U.S. GAAP information and is not an indicator of our performance
under U.S. GAAP. Non-U.S. GAAP financial measures that we present
may not be comparable with similarly titled measures used by
others. Investors are cautioned against placing undue reliance on
these non-U.S. GAAP measures. For a reconciliation of these U.S.
GAAP measures to non-U.S. GAAP measures and other important
information on our use of non-U.S. GAAP financial measures, see the
attached supplementary information entitled “Condensed Consolidated
Statements of Cash Flows” (under the section entitled “Non-U.S.
GAAP Free Cash Flow”), “Reconciliation of Net Earnings and Net
Earnings Per Common Share to Non-U.S. GAAP Adjusted Net Earnings
and Non-U.S. GAAP Adjusted Net Earnings Per Common Share,”
“Reconciliation of Net Earnings to Non-U.S. GAAP Total Company
Adjusted EBITDA,” “Components of Change in Net Sales by Segment”
and “Components of Change in Net Sales by Region.” Information
reconciling forward-looking U.S. GAAP measures to non-U.S. GAAP
measures is not available without unreasonable effort.
We have not provided guidance for the most directly comparable
U.S. GAAP financial measures, as they are not available without
unreasonable effort due to the high variability, complexity, and
low visibility with respect to certain Special Items, including
restructuring charges, gains and losses related to acquisition and
divestiture of businesses, the ultimate outcome of certain legal or
tax proceedings, and other unusual gains and losses. These items
are uncertain, depend on various factors, and could be material to
our results computed in accordance with U.S. GAAP.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 concerning our business, consolidated
financial condition and results of operations. Forward-looking
statements are subject to risks and uncertainties, many of which
are outside our control, which could cause actual results to differ
materially from these statements. Therefore, you should not rely on
any of these forward-looking statements. Forward-looking statements
can be identified by such words as “anticipate,” “believe,” “plan,”
“assume,” “could,” “should,” “estimate,” “expect,” “intend,”
“potential,” “seek,” “predict,” “may,” “will” and similar
references to future periods. All statements other than statements
of historical facts included in this press release regarding our
strategies, prospects, financial condition, operations, costs,
plans and objectives are forward-looking statements. Examples of
forward-looking statements include, among others, statements we
make regarding expected future operating results, expectations
regarding the results of restructuring and other programs,
anticipated levels of capital expenditures and expectations of the
effect on our financial condition of claims, litigation,
environmental costs, contingent liabilities and governmental and
regulatory investigations and proceedings.
The following are important factors that we believe could cause
actual results to differ materially from those in our
forward-looking statements: global economic and political
conditions, currency translation and devaluation effects, changes
in raw material pricing and availability, competitive conditions,
the success of new product offerings, consumer preferences, the
effects of animal and food-related health issues, pandemics,
changes in energy costs, environmental matters, the success of our
restructuring activities, the success of our financial growth,
profitability, cash generation and manufacturing strategies and our
cost reduction and productivity efforts, changes in our credit
ratings, the tax benefit associated with the Settlement agreement
(as defined in our 2018 Annual Report on Form 10-K), regulatory
actions and legal matters and the other information referenced in
the “Risk Factors” section appearing in our most recent Annual
Report on Form 10-K, as filed with the Securities and Exchange
Commission, and as revised and updated by our Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K. Any forward-looking
statement made by us is based only on information currently
available to us and speaks only as of the date on which it is made.
We undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether because of new information, future developments or
otherwise.
Sealed Air Corporation Supplemental
Information Condensed Consolidated Statements of
Operations(1)
Three Months Ended June 30,
(unaudited)
Six Months Ended June 30,
(unaudited)
(In millions, except per share
data)
2019
2018
2019
2018
Net sales
$
1,161.0
$
1,155.2
$
2,273.7
$
2,286.2
Cost of sales
782.7
791.7
1,530.2
1,548.7
Gross profit
378.3
363.5
743.5
737.5
Selling, general and administrative
expenses
266.2
192.8
478.3
386.8
Amortization expense of intangible assets
acquired
4.4
3.4
9.0
7.3
Restructuring charges
29.3
7.1
36.7
15.7
Operating profit
78.4
160.2
219.5
327.7
Interest expense, net
(43.2
)
(44.5
)
(88.1
)
(86.5
)
Foreign currency exchange loss due to
highly inflationary economies
(1.3
)
—
(2.1
)
—
Other income (expense), net
3.9
1.1
3.2
(10.9
)
Earnings before income tax provision
37.8
116.8
132.5
230.3
Income tax provision
12.3
33.5
42.7
355.0
Net earnings (loss) from continuing
operations
25.5
83.3
89.8
(124.7
)
Gain on sale of discontinued operations,
net of tax
7.7
31.1
0.9
38.5
Net earnings (loss)
$
33.2
$
114.4
$
90.7
$
(86.2
)
Basic:
Continuing operations
$
0.16
$
0.52
$
0.58
$
(0.77
)
Discontinued operations
0.06
0.19
0.01
0.24
Net earnings (loss) per common share -
basic
$
0.22
$
0.71
$
0.59
$
(0.53
)
Diluted:
Continuing operations
$
0.16
$
0.52
$
0.58
$
(0.77
)
Discontinued operations
0.05
0.19
—
0.24
Net earnings (loss) per common share -
diluted
$
0.21
$
0.71
$
0.58
$
(0.53
)
Dividends per common share
$
0.16
$
0.16
$
0.32
$
0.32
Weighted average number of common shares
outstanding:
Basic
154.5
159.7
154.6
162.5
Diluted
155.3
160.6
155.3
162.5
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission.
Sealed Air Corporation Supplemental
Information Condensed Consolidated Balance Sheets(1)
(In millions)
June 30, 2019
(unaudited)
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
222.2
$
271.7
Trade receivables, net
485.2
473.4
Income tax receivables
53.4
58.4
Other receivables
91.7
81.3
Inventories, net
596.1
544.9
Current assets held for sale
0.6
0.6
Prepaid expenses and other current
assets
127.4
124.5
Total current assets
1,576.6
1,554.8
Property and equipment, net
1,050.1
1,036.2
Goodwill
1,957.2
1,947.6
Identifiable intangible assets, net
100.5
101.7
Deferred taxes
175.5
170.5
Other non-current assets
356.6
239.4
Total assets
$
5,216.5
$
5,050.2
Liabilities and Stockholders'
Deficit
Current liabilities:
Short-term borrowings
$
265.3
$
232.8
Current portion of long-term debt
31.6
4.9
Accounts payable
753.0
765.0
Accrued restructuring costs
52.4
33.5
Income tax payable
24.6
23.5
Other current liabilities
460.5
428.9
Total current liabilities
1,587.4
1,488.6
Long-term debt, less current portion
3,291.7
3,236.5
Deferred taxes
20.6
20.4
Other non-current liabilities
658.0
653.3
Total liabilities
5,557.7
5,398.8
Stockholders’ deficit:
Preferred stock
—
—
Common stock
23.2
23.2
Additional paid-in capital
2,053.0
2,049.6
Retained earnings
1,876.4
1,835.5
Common stock in treasury
(3,382.4
)
(3,336.5
)
Accumulated other comprehensive loss, net
of taxes
(911.4
)
(920.4
)
Total stockholders’ deficit
(341.2
)
(348.6
)
Total liabilities and stockholders’
deficit
$
5,216.5
$
5,050.2
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission.
Calculation of Net Debt(1)
June 30, 2019
(unaudited)
December 31, 2018
Short-term borrowings
$
265.3
$
232.8
Current portion of long-term debt
31.6
4.9
Long-term debt, less current portion
3,291.7
3,236.5
Total debt
3,588.6
3,474.2
Less: cash and cash equivalents
(222.2
)
(271.7
)
Net Debt
$
3,366.4
$
3,202.5
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission.
Sealed Air Corporation Supplemental
Information Condensed Consolidated Statements of Cash
Flows(1)
Six Months Ended June 30,
(unaudited)
(In millions)
2019
2018
Net earnings (loss)
$
90.7
$
(86.2
)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating activities(2)
89.7
121.9
Changes in operating assets and
liabilities:
Trade receivables, net
(4.2
)
(24.2
)
Inventories, net
(48.2
)
(92.6
)
Accounts payable
(10.4
)
58.7
Income tax receivable/payable
6.3
72.8
Other assets and liabilities
45.4
(13.8
)
Net cash provided by operating
activities
$
169.3
$
36.6
Cash flows from investing activities:
Capital expenditures
(94.5
)
(73.7
)
(Payments of) Proceeds from, net sale of
business and property and equipment
(2.7
)
8.3
Businesses acquired, net of cash
acquired
(23.1
)
—
Investment in cost method investments
—
(7.5
)
Settlement of foreign currency forward
contracts
(4.1
)
(5.3
)
Other investing activities
—
(2.6
)
Net cash used in investing
activities
$
(124.4
)
$
(80.8
)
Cash flows from financing activities:
Changes in short term borrowings
29.4
105.7
Payments of debt
modification/extinguishment costs
—
(0.4
)
Dividends paid on common stock
(49.7
)
(54.0
)
Impact of tax withholding on share-based
compensation
(10.6
)
(6.1
)
Repurchases of common stock
(67.3
)
(407.9
)
Net cash used in financing
activities
$
(98.2
)
$
(362.7
)
Effect of foreign currency exchange
rate changes on cash and cash equivalents
$
3.8
$
(7.0
)
Cash and cash equivalents
271.7
594.0
Balance, beginning of period
$
271.7
$
594.0
Net change during the period
$
(49.5
)
$
(413.9
)
Balance, end of period
$
222.2
$
180.1
Non-U.S. GAAP Free Cash Flow:
Cash flow from operating activities
$
169.3
$
36.6
Capital expenditures for property and
equipment
(94.5
)
(73.7
)
Free Cash Flow
$
74.8
$
(37.1
)
Supplemental Cash Flow Information:
Interest payments, net of amounts
capitalized
$
95.6
$
95.6
Income tax payments, net of cash
refunds
$
29.4
$
97.1
Payments related to the sale of
Diversey
$
—
$
32.5
Restructuring payments including
associated costs
$
49.2
$
3.7
Non-cash items:
Transfers of shares of common stock from
treasury for 2018 and 2017 profit-sharing contributions
$
21.9
$
23.8
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission. (2) 2019 adjustments primarily consist of
depreciation and amortization of $66 million, share based
compensation expense of $13 million, and profit sharing expense of
$11 million. 2018 adjustments primarily consist of depreciation and
amortization of $66 million, $51 million of deferred taxes,
share-based compensation expense of $15 million and profit sharing
expense of $10 million.
Sealed Air Corporation Supplemental
Information(1) Reconciliation of Net Earnings (Loss) and Net
Earnings (Loss) Per Common Share to Non-U.S. GAAP Adjusted
Net Earnings and Non-U.S. GAAP Adjusted Net Earnings Per Common
Share (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(In millions, except per share
data)
Net Earnings
Diluted EPS
Net Earnings
Diluted EPS
Net Earnings
Diluted EPS
Net (Loss) Earnings
Diluted EPS
U.S. GAAP net earnings (loss) and
diluted EPS from continuing operations(2)
$
25.5
$
0.16
$
83.3
$
0.52
$
89.8
$
0.58
$
(124.7
)
$
(0.77
)
Special Items(3)
99.8
0.64
19.1
0.12
127.7
0.82
312.5
1.92
Non-U.S. GAAP adjusted net earnings and
adjusted diluted EPS from continuing operations
$
125.3
$
0.80
$
102.4
$
0.64
$
217.5
$
1.40
$
187.8
$
1.15
Weighted average number of common
shares outstanding - Diluted
155.3
160.6
155.3
162.5
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission. (2) Net earnings (loss) per common share
is calculated under the two-class method. (3) Special Items include
the following:
Three Months Ended June
30,
Six Months Ended June
30,
(In millions, except per share
data)
2019
2018
2019
2018
Special Items:
Restructuring charges
$
29.3
$
7.1
$
36.7
$
15.7
Other restructuring associated
costs(i)
21.3
(0.4
)
38.0
1.8
Foreign currency exchange loss due to
highly inflationary economies
1.3
—
2.1
—
(Income) charges related to acquisition
and divestiture activity
(0.5
)
7.0
3.2
17.8
Charges related to the Novipax Settlement
Agreement
59.0
—
59.0
—
Loss (gain) from class-action litigation
settlement
—
0.1
—
(12.6
)
Other Special Items(ii)
7.3
1.7
14.7
1.9
Pre-tax impact of Special Items
117.7
15.5
153.7
24.6
Tax impact of Special Items and Tax
Special Items(iii)
(17.9
)
3.6
(26.0
)
287.9
Net impact of Special Items
$
99.8
$
19.1
$
127.7
$
312.5
Weighted average number of common
shares outstanding - Diluted
155.3
160.6
155.3
162.5
Loss per share impact from Special
Items
$
(0.64
)
$
(0.12
)
$
(0.82
)
$
(1.92
)
(i) Other restructuring associated costs for three and six
months ended June 30, 2019, primarily relate to fees paid to
third-party consultants in support of Reinvent SEE and costs
related to property consolidations resulting from Reinvent SEE.
(ii) Other Special Items for the three and six months ended June
30, 2019, primarily included fees related to professional services.
(iii) Refer to Note 1 of the table below for a description of
Special Items related to tax.
The calculation of the non-U.S. GAAP Adjusted income tax rate is
as follows:
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2019
2018
2019
2018
U.S. GAAP Earnings before income tax
provision from continuing operations
$
37.8
$
116.8
$
132.5
$
230.3
Pre-tax impact of special items
117.7
15.5
153.7
24.6
Non-U.S. GAAP Adjusted Earnings before
income tax provision from continuing operations
$
155.5
$
132.3
$
286.2
$
254.9
U.S. GAAP Income tax provision from
continuing operations
$
12.3
$
33.5
$
42.7
$
355.0
Tax Special Items(1)
(10.9
)
(6.7
)
(11.7
)
(293.9
)
Tax impact of Special Items
28.8
3.1
37.7
6.0
Non-U.S. GAAP Adjusted Income tax
provision from continuing operations
$
30.2
$
29.9
$
68.7
$
67.1
U.S. GAAP Effective income tax rate
32.5
%
28.7
%
32.2
%
154.1
%
Non-U.S. GAAP Adjusted income tax rate
19.4
%
22.6
%
24.0
%
26.3
%
(1) For the three months ended June 30, 2019, the Tax Special
Items include expense associated with a U.S audit assessment
associated with foreign tax credit utilization in 2011. For the six
months ended June 30, 2018, the Tax Special Items included $290
million of provisional tax expense for one-time tax on
unrepatriated foreign earnings pursuant to the Tax Cut and Jobs Act
("TCJA").
Automated Packaging Systems, Inc.(1)
Reconciliation of Net Earnings to Non-U.S. GAAP Adjusted
EBITDA(1)
(In millions)
Twelve Months Ended
December 31, 2018
U.S. GAAP Net earnings per Audited
Financial Statements
$
10.4
Interest expense, net
1.0
Income tax provision
2.5
Depreciation and amortization
15.4
Special Items:
Employee stock ownership expenses (cease
at closing)(2)
14.4
Founding family costs (cease at
closing)
2.0
Transaction related expenses
1.0
Gain related to successful patent
litigation
(5.2
)
Other
(1.4
)
Pre-tax impact of Special Items
10.8
Non-U.S. GAAP APS Adjusted
EBITDA
$
40.1
(1) Reconciliation is based on information provided to Sealed
Air by Automated Packaging Systems. (2) Employee stock ownership
expense adjustment is shown net of estimated cost of Sealed Air
401(k) and profit sharing expenses.
Sealed Air Corporation Supplemental
Information(1) Components of Change in Net Sales by
Segment (Unaudited)
Three Months Ended June
30,
(In millions)
Food Care
Product Care
Total Company
2018 Net Sales
$
713.0
61.7
%
$
442.2
38.3
%
$
1,155.2
Price
9.5
1.3
%
2.4
0.5
%
11.9
1.0
%
Volume(2)
16.7
2.4
%
(11.4
)
(2.5
)%
5.3
0.5
%
Total organic change (Non-U.S.
GAAP)(3)
26.2
3.7
%
(9.0
)
(2.0
)%
17.2
1.5
%
Acquisitions
3.0
0.4
%
26.4
5.9
%
29.4
2.5
%
Total constant dollar change (Non-U.S.
GAAP)(3)
29.2
4.1
%
17.4
3.9
%
46.6
4.0
%
Foreign currency translation
(31.2
)
(4.4
)%
(9.6
)
(2.1
)%
(40.8
)
(3.5
)%
Total change (U.S. GAAP)
(2.0
)
(0.3
)%
7.8
1.8
%
5.8
0.5
%
2019 Net Sales
$
711.0
61.2
%
$
450.0
38.8
%
$
1,161.0
Six Months Ended June
30,
(In millions)
Food Care
Product Care
Total Company
2018 Net Sales
$
1,409.3
61.6
%
$
876.9
38.4
%
$
2,286.2
Price
30.5
2.1
%
6.5
0.7
%
37.0
1.6
%
Volume(2)
19.5
1.4
%
(30.5
)
(3.4
)%
(11.0
)
(0.5
)%
Total organic change (non-U.S.
GAAP)(3)
50.0
3.5
%
(24.0
)
(2.7
)%
26.0
1.1
%
Acquisitions
3.0
0.3
%
52.1
5.9
%
55.1
2.4
%
Total constant dollar change (non-U.S.
GAAP)(3)
53.0
3.8
%
28.1
3.2
%
81.1
3.5
%
Foreign currency translation
(71.3
)
(5.1
)%
(22.3
)
(2.5
)%
(93.6
)
(4.0
)%
Total change (U.S. GAAP)
(18.3
)
(1.3
)%
5.8
0.7
%
(12.5
)
(0.5
)%
2019 Net Sales
$
1,391.0
61.2
%
$
882.7
38.8
%
$
2,273.7
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly report on Form 10-Q with the Securities
and Exchange Commission. (2) Our volume reported above includes the
net impact of changes in unit volume as well as the
period-to-period change in the mix of products sold. (3) Total
organic change is a non-U.S. GAAP financial measure which excludes
acquisition and divestiture activity and the impact of foreign
currency translation. Total constant dollar change is a non-U.S.
GAAP financial measure which excludes the impact of foreign
currency translation. Since we are a U.S. domiciled company, we
translate our foreign currency denominated financial results into
U.S. dollars. Due to changes in the value of foreign currencies
relative to the U.S. dollar, translating our financial results from
foreign currencies to U.S. dollars may result in a favorable or
unfavorable impact. It is important that we consider the effects of
foreign currency translation when we view our results and plan our
strategies. Nonetheless, we cannot control changes in foreign
currency exchange rates. Consequently, when our management looks at
our financial results to measure the core performance of our
business, we exclude the impact of foreign currency translation by
translating our current period results at prior period foreign
currency exchange rates. We also may exclude the impact of foreign
currency translation when making incentive compensation
determinations. As a result, our management believes that these
presentations are useful internally and may be useful to our
investors.
Sealed Air Corporation Supplemental
Information(1) Components of Change in Net Sales by
Region (Unaudited)
Three Months Ended June
30,
(In millions)
North America(2)
EMEA(2)
South America(2)
APAC(2)
Total
2018 Net Sales
$
660.2
57.2
%
$
262.5
22.7
%
$
55.3
4.8
%
$
177.2
15.3
%
$
1,155.2
Price
(2.7
)
(0.4
)%
0.7
0.3
%
13.7
24.8
%
0.2
0.1
%
11.9
1.0
%
Volume(3)
10.9
1.6
%
(1.4
)
(0.6
)%
2.9
5.2
%
(7.1
)
(4.0
)%
5.3
0.5
%
Total organic change (Non-U.S.
GAAP)(4)
8.2
1.2
%
(0.7
)
(0.3
)%
16.6
30.0
%
(6.9
)
(3.9
)%
17.2
1.5
%
Acquisitions
21.3
3.3
%
—
—
%
—
—
%
8.1
4.6
%
29.4
2.5
%
Total constant dollar change (Non-U.S.
GAAP)(4)
29.5
4.5
%
(0.7
)
(0.3
)%
16.6
30.0
%
1.2
0.7
%
46.6
4.0
%
Foreign currency translation
(1.1
)
(0.2
)%
(15.2
)
(5.8
)%
(15.7
)
(28.4
)%
(8.8
)
(5.0
)%
(40.8
)
(3.5
)%
Total change (U.S. GAAP)
28.4
4.3
%
(15.9
)
(6.1
)%
0.9
1.6
%
(7.6
)
(4.3
)%
5.8
0.5
%
2019 Net Sales
$
688.6
59.3
%
$
246.6
21.2
%
$
56.2
4.8
%
$
169.6
14.6
%
$
1,161.0
Six Months Ended June
30,
(In millions)
North America(2)
EMEA(2)
South America(2)
APAC(2)
Total
2018 Net Sales
$
1,299.2
56.8
%
$
520.4
22.8
%
$
114.3
5.0
%
$
352.3
15.4
%
$
2,286.2
Price
6.0
0.4
%
2.2
0.4
%
28.5
24.9
%
0.3
0.1
%
37.0
1.6
%
Volume(3)
(2.9
)
(0.2
)%
(4.4
)
(0.8
)%
2.8
2.5
%
(6.5
)
(1.9
)%
(11.0
)
(0.5
)%
Total organic change (non-U.S.
GAAP)(4)
3.1
0.2
%
(2.2
)
(0.4
)%
31.3
27.4
%
(6.2
)
(1.8
)%
26.0
1.1
%
Acquisitions
42.6
3.3
%
—
—
%
—
—
%
12.5
3.6
%
55.1
2.4
%
Total constant dollar change (non-U.S.
GAAP)(4)
45.7
3.5
%
(2.2
)
(0.4
)%
31.3
27.4
%
6.3
1.8
%
81.1
3.5
%
Foreign currency translation
(4.1
)
(0.3
)%
(35.8
)
(6.9
)%
(34.6
)
(30.3
)%
(19.1
)
(5.4
)%
(93.6
)
(4.0
)%
Total change (U.S. GAAP)
41.6
3.2
%
(38.0
)
(7.3
)%
(3.3
)
(2.9
)%
(12.8
)
(3.6
)%
(12.5
)
(0.5
)%
2019 Net Sales
$
1,340.8
59.0
%
$
482.4
21.2
%
$
111.0
4.9
%
$
339.5
14.9
%
$
2,273.7
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission. (2) As part of the Company's Reinvent SEE
strategy, we have evaluated and adjusted our regional operating
model. Effective January 1, 2019, our regions are: North America,
EMEA, South America and APAC. Our North American operations
includes Canada, the United States, Mexico and Central America.
Mexico and Central America were previously included in Latin
America. EMEA consists of Europe, Middle East, Africa and Turkey.
APAC refers to our collective Asia Pacific region, including
Greater China, India, Southeast Asia, Japan, Korea, Australia and
New Zealand. (3) Our volume reported above includes the net impact
of changes in unit volume as well as the period-to-period change in
the mix of products sold. (4) Total organic change is a non-U.S.
GAAP financial measure which excludes acquisition and divestiture
activity and the impact of foreign currency translation. Total
constant dollar change is a non-U.S. GAAP financial measure which
excludes the impact of foreign currency translation. Since we are a
U.S. domiciled company, we translate our foreign currency
denominated financial results into U.S. dollars. Due to changes in
the value of foreign currencies relative to the U.S. dollar,
translating our financial results from foreign currencies to U.S.
dollars may result in a favorable or unfavorable impact. It is
important that we take into account the effects of foreign currency
translation when we view our results and plan our strategies.
Nonetheless, we cannot control changes in foreign currency exchange
rates. Consequently, when our management looks at our financial
results to measure the core performance of our business, we exclude
the impact of foreign currency translation by translating our
current period results at prior period foreign currency exchange
rates. We also may exclude the impact of foreign currency
translation when making incentive compensation determinations. As a
result, our management believes that these presentations are useful
internally and may be useful to our investors.
Sealed Air Corporation Supplemental
Information(1) Segment Information Reconciliation of
Net Earnings to Non-U.S. GAAP Total Company Adjusted EBITDA
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2019
2018
2019
2018
Net Sales:
Food Care
$
711.0
$
713.0
$
1,391.0
$
1,409.3
As a % of Total Company net sales
61.2
%
61.7
%
61.2
%
61.6
%
Product Care
450.0
442.2
882.7
876.9
As a % of Total Company net sales
38.8
%
38.3
%
38.8
%
38.4
%
Total Company Net Sales
$
1,161.0
$
1,155.2
$
2,273.7
$
2,286.2
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2019
2018
2019
2018
Adjusted EBITDA from continuing
operations:
Food Care
$
155.6
$
135.4
$
298.5
$
270.1
Adjusted EBITDA Margin
21.9
%
19.0
%
21.5
%
19.2
%
Product Care
84.0
78.5
159.0
156.9
Adjusted EBITDA Margin
18.7
%
17.8
%
18.0
%
17.9
%
Corporate
(2.9
)
3.6
(5.0
)
(4.7
)
Non-U.S. GAAP Total Company Adjusted
EBITDA from continuing operations
$
236.7
$
217.5
$
452.5
$
422.3
Adjusted EBITDA Margin
20.4
%
18.8
%
19.9
%
18.5
%
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2019
2018
2019
2018
U.S. GAAP Net earnings (loss) from
continuing operations
$
25.5
$
83.3
$
89.8
$
(124.7
)
Interest expense, net
43.2
44.5
88.1
86.5
Income tax provision
12.3
33.5
42.7
355.0
Depreciation and amortization, net of
adjustments(2)
38.0
40.7
78.2
80.9
Special Items:
Restructuring charges(3)
29.3
7.1
36.7
15.7
Other restructuring associated
costs(4)
21.3
(0.4
)
38.0
1.8
Foreign currency exchange loss due to
highly inflationary economies
1.3
—
2.1
—
(Income) charges related to acquisition
and divestiture activity
(0.5
)
7.0
3.2
17.8
Charges related to the Novipax Settlement
Agreement
59.0
—
59.0
—
Loss (gain) from class-action litigation
settlement
—
0.1
—
(12.6
)
Other Special Items(5)
7.3
1.7
14.7
1.9
Pre-tax impact of Special items
117.7
15.5
153.7
24.6
Non-U.S. GAAP Total Company Adjusted
EBITDA from continuing operations
$
236.7
$
217.5
$
452.5
$
422.3
(1) The supplementary information included in this press release
for 2019 is preliminary and subject to change prior to the filing
of our upcoming Quarterly Report on Form 10-Q with the Securities
and Exchange Commission. (2) Depreciation and amortization by
segment are as follows:
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2019
2018
2019
2018
Food Care
$
25.0
$
27.2
$
51.2
$
54.1
Product Care
13.1
13.6
28.0
27.1
Total Company depreciation and
amortization(i)
38.1
40.8
79.2
81.2
Depreciation and amortization
adjustments
(0.1
)
(0.1
)
(1.0
)
(0.3
)
Depreciation and amortization, net of
adjustments
$
38.0
$
40.7
$
78.2
$
80.9
(i) Includes share-based incentive compensation of $4.8 million
and $13.2 million for the three and six months ended June 30, 2019,
respectively, and $7.7 million and $15.3 million for the three and
six months ended June 30, 2018, respectively.
(3) Restructuring charges by segment is as follows:
Three Months Ended June
30,
Six Months Ended June
30,
(In millions)
2019
2018
2019
2018
Food Care
$
18.6
$
1.5
$
22.4
$
6.1
Product Care
10.7
5.6
14.3
9.6
Total Company restructuring
charges
$
29.3
$
7.1
$
36.7
$
15.7
(4) Other restructuring associated costs for three and six
months ended June 30, 2019, primarily relate to fees paid to
third-party consultants in support of Reinvent SEE and costs
related to property consolidations resulting from Reinvent SEE. (5)
Other Special Items for the three and six months ended June 30,
2019 primarily included fees related to professional services.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190802005066/en/
Investors Lori Chaitman
lori.chaitman@sealedair.com 516.458.4455 Media Pam Davis pam.davis@sealedair.com
980.833.4084
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