- Completed sale of Diversey to Bain
Capital Private Equity on September 6, 2017 for $3.2 Billion
- Third Quarter 2017 Sales from
Continuing Operations of $1.1 Billion, an increase of 6% As
Reported
- Net Earnings from Continuing Operations
of $62 Million and Reported Net Earnings Per Share from Continuing
Operations of $0.33
- Adjusted Net Income from Continuing
Operations of $87 Million, Adjusted EPS from Continuing Operations
of $0.46 per share and Adjusted EBITDA of $217 Million, or 19.2% of
Net Sales
- Outlook for Full Year 2017 includes Net
Sales of approximately $4.4 Billion, Adjusted EBITDA of
approximately $830 Million, Adjusted EPS of $1.75 to $1.80 from
Continuing Operations and Free Cash Flow of $400 Million
Sealed Air Corporation (NYSE:SEE) today announced financial
results for the third quarter 2017. Commenting on these results,
Jerome A. Peribere, President and Chief Executive Officer, said,
“For the third consecutive quarter, we are delivering on our
accelerated growth strategy, led by favorable volume trends across
all regions. North America was once again our fastest growing
region with an increase in volumes of 7%. Our top-line performance
continues to be driven by the adoption of our innovative solutions
coupled with strong end market demand across all proteins and
within the e-commerce and fulfillment sectors. We expect top-line
growth to continue into year-end and sequential profitability
improvements through operational disciplines and increased sales of
value-added solutions."
Peribere continued, “Our journey as a knowledge-based company
continues with many exciting opportunities ahead. We are pleased to
have Ted Doheny join Sealed Air as our Chief Operating Officer and
CEO-Designate, and will assume the role of President and CEO
effective January 1, 2018. Furthermore, we recently announced that
our current Chief Accounting Officer and Controller, Bill Stiehl,
has assumed the additional position of Acting Chief Financial
Officer. Under both Ted and Bill’s leadership, the organization
will continue to thrive and generate significant value for our
global customers, shareholders and employees."
Unless otherwise stated, all results compare third quarter 2017
results to third quarter 2016 results from continuing operations.
As a result of the sale of Diversey, which refers to Diversey Care
and the food hygiene and cleaning business, we have changed our
segment reporting structure effective as of January 1, 2017. Food
Care now includes the Medical Applications business, which was
previously reported under 'Other.' Additionally, Food Care now
excludes the food hygiene and cleaning business, which is a
component of Diversey and classified as discontinued operations.
Year-over-year financial discussions present operating results from
continuing operations as reported, and on a constant dollar basis.
Constant dollar refers to unit volume and price/mix performance and
excludes the impact of currency translation from all periods
referenced. 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 special items, such as
restructuring charges, charges related to the sale of Diversey,
charges related to ceasing operations in Venezuela, cash-settled
stock appreciation rights (“SARs”) granted as part of the original
Diversey acquisition and certain other infrequent or one-time
items. Please refer to the supplemental information included with
this press release for a reconciliation of Non-U.S. GAAP to U.S.
GAAP financial measures.
Business Highlights
- In the third quarter, Food Care net
sales of $716 million increased 6% as reported. Currency had a
positive impact on Food Care net sales of 2%, or $10 million. On a
constant dollar basis, net sales increased 4% almost entirely due
to positive volume growth. Volume trends were led by 9% growth in
North America, 3% in Latin America and 1% in EMEA. This was offset
by a decline in Asia Pacific. Adjusted EBITDA of $158 million or
22.1% of net sales was primarily attributable to positive volume
trends and favorable foreign currency, which were offset by higher
raw material costs and non-material costs including salary and wage
increases.
- Product Care net sales of $415 million
in the third quarter were up 7% as reported. Currency had a
positive impact on Product Care net sales of 1%, or $3 million. On
a constant dollar basis, net sales and volumes increased 6% due to
continued strength in e-commerce and fulfillment. Volume increased
4% in North America, over 7% in EMEA and Latin America, and 17% in
Asia Pacific. Adjusted EBITDA of $87 million or 20.8% of net sales
was attributable to volume growth, which was offset by unfavorable
price/cost spread primarily due to higher raw material and freight
costs as well as unfavorable product mix.
- On September 6, 2017, Sealed Air
completed the sale of Diversey to Bain Capital for $3.2 billion.
The sale provided the Company the financial flexibility to
accelerate share repurchases, pay down approximately $1.1 billion
in debt and target selective acquisitions. Most recently, on
October 2, 2017, Sealed Air acquired Fagerdala Singapore Pte Ltd.,
a manufacturer and fabricator of polyethylene foam, for $100
million in cash. Fagerdala generated approximately $80 million in
sales in 2016.
- From January 1, 2017 through September
30, 2017, Sealed Air repurchased approximately $677 million or 15.5
million shares through a combination of open market repurchases and
Accelerated Share Repurchase (ASR) programs. The Company
repurchased approximately $426 million or 9.7 million shares during
the third quarter.
Third Quarter 2017 U.S. GAAP Summary,
Continuing Operations
Net sales of $1.1 billion increased 6% on an as reported basis.
Currency had a positive impact on total net sales of 1%, or $13
million. As reported, net sales increased across all regions.
Net income from continuing operations on a reported basis was
$62 million, or $0.33 per diluted share, as compared to net income
from continuing operations of $64 million, or $0.32 per diluted
share, in the third quarter 2016. Net income in the third quarter
2017 was unfavorably impacted by $24 million of special items,
including $9 million of restructuring and other restructuring
associated costs, $7 million related to acquisition and divestiture
activity and $5 million of tax special items. Net income in the
third quarter 2016 included $17 million of special items, including
$7 million of charges related to restructuring and other costs
associated with our restructuring programs and $9 million related
to tax special items.
The effective tax rate in the third quarter of 2017 was 41.2%,
compared to the effective tax rate of 45.9% in the third quarter of
2016. The effective tax rate in the third quarter of 2017
was negatively affected by additional tax expenses related to
the sale of Diversey. The effective tax rate in the third
quarter of 2016 was negatively impacted by an increase in
unrecognized tax benefits.
Third Quarter 2017 Non-U.S. GAAP
Summary, Continuing Operations
Net sales on a constant dollar increased 5% primarily on volume
growth. On constant dollar basis, North America sales increased 7%,
Asia Pacific was up 3%, and EMEA and Latin America were up 2%.
Adjusted EBITDA for the third quarter 2017 was $217 million, or
19.2% of net sales, compared to $213 million, or 20.0% of net sales
for the third quarter of 2016. Adjusted EBITDA included $28 million
of Corporate expenses in the third quarter of 2017, of which $3
million reflected costs that were previously allocated to Diversey
but not included in net income from discontinued operations.
Corporate expenses were $31 million in the third quarter of 2016,
and included $4 million of costs that were previously allocated to
Diversey, but which were not included in net income from
discontinued operations.
Adjusted EPS was $0.46 for the third quarter 2017. This compares
to Adjusted EPS of $0.41 in the third quarter 2016. The Adjusted
Tax Rate was 30.7% in the third quarter 2017, compared to 35.6% in
the third quarter 2016. The Adjusted Tax Rate in the third quarter
of 2016 was negatively impacted by an increase in unrecognized
tax benefits.
Third Quarter 2017 U.S. GAAP Summary,
Discontinued Operations
The sale of Diversey was completed during the quarter on
September 6, 2017. The Company recognized a net gain on the sale of
$699.3 million. The calculation of net earnings from discontinued
operations included third quarter net sales of $435 million. Net
income from discontinued operations on a reported basis was $26
million, or $0.14 per diluted share.
Cash Flow and Net Debt
Cash flow provided by operating activities in the nine months
ended September 30, 2017 was $333 million, which is net of $49
million of restructuring payments and $61 million of payments
related to the sale of Diversey, which included $33 million of tax
payments made in the second quarter and the remainder primarily
attributable to professional fees required to facilitate the
separation.
Capital expenditures were $127 million in the nine months ended
September 30, 2017. Free Cash Flow, defined as net cash
provided by operating activities less capital expenditures and
payments related to the sale of Diversey, was an inflow of $267
million in the nine months ended September 30, 2017.
The Company repurchased 15.5 million shares for approximately
$677 million, and paid cash dividends of $92 million during the
nine months ended September 30, 2017.
Net Debt, defined as total debt less cash and cash equivalents,
decreased to $2.0 billion as of September 30, 2017 from $3.8
billion as of December 31, 2016. This decrease in net debt
primarily resulted from payments of debt and net cash received as
part of the sale of Diversey.
Outlook for Full Year 2017, Continuing
Operations
For the full year 2017, the Company increased its outlook for
Net Sales to approximately $4.4 billion from approximately $4.3
billion. Adjusted EBITDA from continuing operations is expected to
be approximately $830 million as compared to previously provided
guidance of $825 million to $835 million. Currency is expected to
have a favorable impact of approximately $40 million on Net Sales
and $7 million on Adjusted EBITDA. The Company continues to
forecast Adjusted EPS to be in the range of $1.75 to $1.80, which
is based on 190 million shares outstanding and an Adjusted Tax Rate
of 30%.
The outlook for Free Cash Flow remains unchanged at
approximately $400 million. Free Cash Flow guidance is based on
consolidated results, including continuing and discontinuing
operations, and assumes capital expenditures of approximately
$175 million and cash restructuring payments of approximately $55
million. Free Cash Flow outlook excludes cash flow generation from
working capital related to Diversey
post-separation, restructuring charges to address stranded
costs, and any payments made in relation to the sale of
Diversey.
Conference Call
Information
Date:
Wednesday, November 8, 2017
Time:
10:00 a.m. (ET)
Webcast:
www.sealedair.com/investors
Conference Dial
In:
(855) 472-5411 (domestic) (330) 863-3389 (international)
Participant
Code:
96077061
A supplemental presentation accompanying the conference call
will be available on the Company’s website at
www.sealedair.com/investors.
Conference Call
Replay Information
Dates:
Wednesday, November 8, 2017 at 1:00 p.m. (ET)
through Friday, December 8, 2017 at 12:59 p.m. (ET)
Webcast:
www.sealedair.com/investors
Conference Dial
In:
(855) 859-2056 (domestic) (404) 537-3406 (international)
Participant
Code:
96077061
Business
Sealed Air Corporation is a knowledge-based company focused on
packaging solutions that help our customers achieve their
sustainability goals in the face of today’s biggest social and
environmental challenges. Our portfolio of widely recognized
brands, including Cryovac® brand food packaging solutions and
Bubble Wrap® brand cushioning, enable a safer and less
wasteful food supply chain and protect valuable goods shipped
around the world. Sealed Air generated $4.2 billion in sales in
2016 and has approximately 14,000 employees who serve customers in
117 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 "Investor Relations" 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 Investor
Relations 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 a “constant dollar” or
“organic” 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 U.S. GAAP Net Earnings
and U.S. GAAP Net Earnings Per Share to Non-U.S. GAAP Adjusted Net
Earnings and Non-U.S. GAAP Adjusted Net Earnings Per Share”
“Segment Information,” “Reconciliation of U.S. GAAP Net Earnings to
Non-U.S. GAAP Total Company Adjusted EBITDA,” “Components of Change
in Net Sales by Segment,” “Components of Changes in Net Sales by
Region,” “Components of Organic Change in Net Sales by Segment,”
and “Components of Organic Changes 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
gains and losses on the disposition of businesses, the ultimate
outcome of certain legal or tax proceedings, foreign currency gains
or losses resulting from the volatile currency market in Venezuela,
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 “anticipates,” “believes,”
“plan,” “assumes,” “could,” “should,” “estimates,” “expects,”
“intends,” “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: the tax benefits associated with the Settlement
agreement (as defined in our 2016 Annual Report on Form 10-K),
global economic and political conditions, changes in our credit
ratings, changes in raw material pricing and availability, changes
in energy costs, competitive conditions, the success of our
restructuring activities, currency translation and devaluation
effects, the success of our financial growth, profitability, cash
generation and manufacturing strategies and our cost reduction and
productivity efforts, the success of new product offerings, the
effects of animal and food-related health issues, pandemics,
consumer preferences, environmental matters, 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 as a result of new information, future developments or
otherwise.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(1)
(Unaudited)
(In millions, except per share
data)
Three Months EndedSeptember 30,
(unaudited)
Nine Months EndedSeptember 30,
(unaudited)
(In millions, except share data) 2017 2016
2017 2016 Net sales $ 1,131.3 $ 1,065.1 $ 3,233.8 $
3,109.9 Cost of sales(2) 769.2 708.4 2,191.0
2,068.0 Gross profit 362.1 356.7 1,042.8 1,041.9 Selling,
general and administrative expenses(2) 192.7 184.2 590.2 566.7
Amortization expense of intangible assets acquired 3.1 4.1 9.2 10.4
Restructuring and other charges(2) 6.2 1.3 9.2
1.4 Operating profit 160.1 167.1 434.2 463.4 Interest
expense (54.0 ) (49.6 ) (153.7 ) (151.4 ) Foreign currency exchange
loss related to Venezuelan subsidiaries — — — (1.6 ) Charge related
to Venezuelan subsidiaries(2) — — — (46.0 ) Other (expense) income,
net — 0.4 (6.2 ) 1.4 Earnings before income
tax provision 106.1 117.9 274.3 265.8 Income tax provision 43.7
54.1 236.5 124.7 Net earnings from
continuing operations 62.4 63.8 37.8 141.1 Gain on sale of
discontinued operations, net of tax 699.3 — 699.3 — Net earnings
from discontinued operations, net of tax(3) 25.7 99.5
111.3 174.2
Net earnings available to common
stockholders
$ 787.4 $ 163.3 $ 848.4 $ 315.3
Basic: Continuing operations $ 0.33 $ 0.33 $ 0.20 $ 0.71
Discontinued operations(3) 3.86 0.51 4.22 0.89
Net earnings per common share - basic $ 4.19 $ 0.84
$ 4.42 $ 1.60
Diluted: Continuing
operations $ 0.33 $ 0.32 $ 0.19 $ 0.71 Discontinued operations(3)
3.82 0.51 4.18 0.88 Net earnings per
common share - diluted $ 4.15 $ 0.83 $ 4.37 $
1.59 Dividends per common share $ 0.16 $ 0.16
$ 0.48 $ 0.45 Weighted average number of common
shares outstanding: Basic 186.9 194.1 190.9
195.0 Diluted 188.9 196.7 192.9 197.5
_______________
(1) The supplementary information included in this press
release for 2017 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) Due to the ongoing
challenging economic situation in Venezuela, the Company approved a
program in the second quarter of 2016 to cease operations in the
country. This resulted in total costs of $47.3 million being
incurred which included a voluntary reduction in headcount
including severance and termination benefits for employees of
approximately $0.3 million recorded in restructuring and other
charges, depreciation and amortization expense related to fixed
assets and intangibles of approximately $0.6 million recorded in
selling, general and administrative expenses, inventory reserves of
$0.4 million recorded in costs of sales and the reclassification of
cumulative translation adjustment of approximately $46.0 million
recorded in charges related to Venezuelan subsidiaries. (3) For the
nine months ended September 30, 2017, there was a revision to net
earnings from discontinued operations, net of tax, on the Condensed
Consolidated Statement of Operations related to depreciation and
amortization on Diversey assets held for sale. As a result, net
earnings from discontinued operations, net of tax, increased $16.4
million and increased basic and diluted shares by $0.09 per share.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATED BALANCE
SHEETS(1)
(Unaudited)
(In millions)
(In millions, except share data)
September 30,2017
(unaudited)
December 31,2016
ASSETS Current assets: Cash and cash equivalents $ 1,304.7 $
333.7 Trade receivables, net 540.5 460.5 Income tax receivables
16.7 11.5 Other receivables 81.7 72.7 Inventories, net 547.7 456.7
Current assets held for sale 20.8 825.7 Prepaid expenses and other
current assets 63.6 54.5 Total current assets 2,575.7
2,215.3 Property and equipment, net 951.0 889.6 Goodwill 1,898.3
1,882.9 Intangible assets, net 44.8 40.1 Deferred taxes 275.7 169.9
Non-current assets held for sale — 2,026.0 Other non-current assets
193.9 175.4 Total assets $ 5,939.4 $ 7,399.2
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Short-term borrowings $ 84.0 $ 83.0 Current portion of
long-term debt 2.0 297.0 Accounts payable 778.2 539.2 Current
liabilities held for sale 1.8 683.3 Accrued restructuring costs
16.1 44.8 Income tax payable 183.6 48.3 Other current liabilities
451.2 423.4 Total current liabilities 1,516.9 2,119.0
Long-term debt, less current portion 3,219.4 3,762.6 Deferred taxes
4.7 4.9 Non-current liabilities held for sale — 501.0 Other
non-current liabilities 437.8 402.0 Total liabilities
5,178.8 6,789.5 Stockholders’ equity: Preferred stock — — Common
stock 23.0 22.8 Additional paid-in capital 1,933.3 1,974.1 Retained
earnings 1,796.0 1,040.0 Common stock in treasury (2,155.8 )
(1,478.1 ) Accumulated other comprehensive loss, net of taxes
(835.9 ) (949.1 ) Total stockholders’ equity 760.6 609.7
Total liabilities and stockholders’ equity $ 5,939.4
$ 7,399.2
_______________
(1) The supplementary information included in this press
release for 2017 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)
September 30,2017
(unaudited)
December 31,2016
Short-term borrowings $ 84.0 $ 83.0 Current portion of long-term
debt 2.0 297.0 Long-term debt, less current portion 3,219.4
3,762.6 Total debt 3,305.4 4,142.6 Less: cash and
cash equivalents (1,304.7 ) (333.7 )
Net debt
$ 2,000.7 $ 3,808.9
_______________
(1) The supplementary information included in this press
release for 2017 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
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(1)
(Unaudited)
(In millions)
Nine Months Ended September
30,(unaudited)
(In millions) 2017 2016(2) Net earnings
available to common stockholders $ 848.4 $ 315.3 Adjustments to
reconcile net earnings to net cash provided by operating
activities(3) (332.7 ) 309.6 Changes in operating assets and
liabilities: Trade receivables, net (87.5 ) (58.5 ) Inventories
(100.5 ) (100.5 ) Accounts payable 135.2 140.5 Other assets and
liabilities (130.4 ) (138.0 )
Net cash provided by operating
activities 332.5 468.4 Cash flows
from investing activities: Capital expenditures (126.5 ) (190.2 )
Proceeds, net from sale of business and property and equipment 4.4
8.4 Business acquired in purchase transactions, net of cash
acquired (25.4 ) (5.8 ) Impact of sale of Diversey(4) 2,053.0 —
Settlement of foreign currency forward contracts (1.1 ) (43.1 )
Net cash provided by (used in) investing activities
1,904.4 (230.7 ) Cash flows from
financing activities: Changes in short term borrowings (21.5 ) 85.5
Payments of borrowings(4) (369.5 ) (12.8 ) Change in cash used as
collateral on borrowing arrangements (1.8 ) 1.5 Proceeds from cross
currency swap 17.4 6.2 Dividends paid on common stock (92.4 ) (90.1
) Acquisition of common stock for tax withholding (21.9 ) (22.7 )
Repurchases of common stock(5) (757.3 ) (217.0 ) Other financing
activities — (0.1 )
Net cash used in financing
activities (1,247.0 ) (249.5 )
Effect of foreign currency exchange rate changes on cash and
cash equivalents (18.9 ) (15.9 )
Balance, beginning of period 333.7 321.7 Net change during the
period 971.0 (27.7 )
Balance, end of period $ 1,304.7
$ 294.0
Non-U.S. GAAP Free Cash Flow:
Cash flow from operating activities $ 332.5 $ 468.4 Capital
expenditures for property and equipment (126.5 ) (190.2 )
Free
Cash Flow(6) $ 206.0 $
278.2 Supplemental Cash Flow Information:
Interest payments, net of amounts capitalized $ 156.5 $
157.4 Income tax payments $ 126.6 $ 93.5
Payments related to the sale of Diversey(4) $ 61.2 $ —
Stock appreciation rights payments (less amounts included in
restructuring payments) $ — $ 1.9 Restructuring
payments including associated costs $ 48.7 $ 51.0
_______________
(1) The supplementary information included in this press
release for 2017 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)
Due to changes in the accounting treatment
of a factoring agreement the Company reclassified amounts from cash
and cash equivalents to other receivables of $9 million as of
September 30, 2016. This reclassification resulted in an increase
in cash provided by operating activities of $2 million for the nine
months ended September 30, 2016.
(3) 2017 primarily consists of $699 million related to the gain on
sale from Diversey partially offset by $161 million of deferred
taxes, depreciation and amortization $114 million, share based
compensation expense of $39 million and profit sharing expense of
$19 million. 2016 primarily consists of depreciation and
amortization of $161 million, share based compensation expense of
$45 million, profit sharing expense of $30 million, charges related
to ceasing operations in Venezuela of $46 million, a remeasurement
loss of $3 million and loss on sale of business of $2 million. (4)
Payments of borrowings included in financing activities excludes
amounts which were paid using cash proceeds from the sale of
Diversey. As a result, $755 million of payments of borrowings is
included within investing activities for a total payment of
borrowings of $1.1 billion through the nine months ended September
30, 2017. (5) The Company entered into an accelerated share
repurchase agreement with a third-party financial institution to
repurchase $400 million of the Company’s common stock. The full
amount was paid as of September 30, 2017 however, only $320 million
was used to repurchase shares at that point in time. The ASR
program is expected to conclude in the fourth quarter of 2017. (6)
Free cash flow was $267 million in 2017 excluding the payment of
charges related to the sale of Diversey of $61 million. These
payments include $33 million related to tax payments and the
remainder primarily attributable to professional fees. Free cash
flow does not represent residual cash available for discretionary
expenditures, including mandatory debt servicing requirements or
non-discretionary expenditures that are not deducted from this
measure.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION
RECONCILIATION OF U.S. GAAP NET
EARNINGS AND U.S. GAAP NET EARNINGS PER COMMON SHARE TO
NON-U.S. GAAP ADJUSTED NET EARNINGS AND
NON-U.S. GAAP ADJUSTED NET EARNINGS PER COMMON
SHARE(1)
(Unaudited)
(In millions, except per share
data)
Three Months Ended September 30, Nine Months Ended
September 30, 2017 2016 2017 2016
(In millions, except per share data)
NetEarnings
EPS
NetEarnings
EPS NetEarnings EPS
NetEarnings EPS
U.S. GAAP net earnings and EPS
available
to common stockholders from
continuing operations(2)
$ 62.4 $ 0.33 $ 63.8 $ 0.32 $ 37.8 $ 0.19 $ 141.1 $ 0.71 Special
items(3) 24.2 0.13 17.0 0.09 201.7
1.05 95.6 0.48
Non-U.S. GAAP adjusted net earnings
and
adjusted EPS available to
common
stockholders from continuing
operations
$ 86.6 $ 0.46 $ 80.8 $ 0.41 $ 239.5
$ 1.24 $ 236.7 $ 1.19
Weighted average number of common
sharesoutstanding - Diluted
188.9 196.7 192.9 197.5
_______________
(1) The supplementary information included in this press
release for 2017 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 per common
share is calculated under the two-class method. (3) Special Items
include the following:
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
(In millions, except per share data) 2017 2016
2017
2016(1)
Special Items: Restructuring and other charges $ (6.2 ) $ (1.3 ) $
(9.2 ) $ (1.1 )
Other restructuring associated costs
included in cost of sales
and selling, general and administrative
expenses
(2.9 ) (5.2 ) (12.7 ) (13.2 ) SARs — 0.3 — (0.7 )
Foreign currency exchange loss related to
Venezuelan
subsidiaries
— — — (1.6 ) Charges related to ceasing operations in Venezuela(1)
— — — (47.3 )
Gain (loss) on sale of North American foam
trays and
absorbent pads business and European food
trays
business
0.2 — 2.3 (1.6 )
(Loss) gain related to the sale of other
businesses,
investments and property, plant and
equipment
(6.9 ) 2.1 (7.1 ) — Charges related to the sale of Diversey (13.7 )
— (47.6 ) —
Settlement/curtailment benefits related to
retained Diversey
retirement plans
13.5 — 13.5 — Other special items(2) (2.9 ) (3.5 ) (0.2 ) (3.2 )
Pre-tax impact of special items (18.9 ) (7.6 ) (61.0 ) (68.7
) Tax impact of special items and tax special items(3) (5.3 ) (9.4
) (140.7 ) (26.9 ) Net impact of special items $ (24.2 ) $
(17.0 ) $ (201.7 ) $ (95.6 )
Weighted average number of common shares
outstanding -
Diluted
188.9 196.7 192.9 197.5 Earnings
per share impact from special items $ (0.13 ) $ (0.09 ) $ (1.05 ) $
(0.48 )
_______________
(1) Due to the ongoing challenging economic situation in
Venezuela, the Company approved a program in the second quarter of
2016 to cease operations in the country. This resulted in total
costs of $47.3 million being incurred which included a voluntary
reduction in headcount including severance and termination benefits
for employees of approximately $0.3 million recorded in
restructuring and other charges, depreciation and amortization
expense related to fixed assets and intangibles of approximately
$0.6 million recorded in selling, general and administrative
expenses, inventory reserves of $0.4 million recorded in costs of
sales and the release of cumulative translation adjustment of
approximately $46.0 million recorded in charges related to
Venezuelan subsidiaries. (2) Other special items for the three and
nine months ended September 30, 2017 primarily included transaction
fees related to various divestitures and acquisitions. Other
special items for the three and nine months ended September 30,
2016 primarily included a reduction in a non-income tax reserve
following the completion of a governmental audit partially offset
by legal fees associated with restructuring and acquisitions. (3)
Refer to Note 1 to 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
September30,
Nine months ended
September30,
(In millions) 2017 2016 2017
2016
U.S. GAAP Earnings before income tax
provision from
continuing operations
$ 106.1 $ 117.9 $ 274.3 $ 265.8 Pre-tax impact of special items
(18.9 ) (7.6 ) (61.0 ) (68.7 )
Non-U.S. GAAP Adjusted Earnings before
income tax
provision from continuing operations
$ 125.0 $ 125.5 $ 335.3 $ 334.5
U.S. GAAP Income tax provision from continuing operations $ 43.7 $
54.1 $ 236.5 $ 124.7 Tax Special Items(1) (0.4 ) (5.6 ) (150.3 )
(26.8 ) Tax impact of Special Items (4.9 ) (3.8 ) 9.6 (0.1 )
Non-U.S. GAAP Adjusted Income tax
provision from
continuing operations
$ 38.4 $ 44.7 $ 95.8 $ 97.8 U.S.
GAAP Effective income tax rate 41.2 % 45.9 % 86.2 % 46.9 % Non-U.S.
GAAP Adjusted income tax rate 30.7 % 35.6 % 28.6 % 29.2 %
_______________
(1) For the nine months ended September 30, 2017, the
special tax items included $145 million of tax expense recorded in
accordance with the pending sale of Diversey.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION
SEGMENT INFORMATION(1)
(Unaudited)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, (In millions) 2017
2016 2017 2016 Net Sales: Food Care $
716.0 $ 676.2 $ 2,051.1 $ 1,979.2 As a % of Total Company net sales
63.3 % 63.5 % 63.4 % 63.6 % Product Care 415.3 388.9 1,182.7
1,130.7 As a % of Total Company net sales 36.7 % 36.5 % 36.6 % 36.4
%
Total Company Net Sales $ 1,131.3
$ 1,065.1 $ 3,233.8
$ 3,109.9 Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, (In millions) 2017 2016 2017
2016 Adjusted EBITDA from continuing
operations(2): Food Care $ 158.3 $ 155.6 $ 446.0
$ 440.7 Adjusted EBITDA Margin 22.1 % 23.0 % 21.7 % 22.3 % Product
Care 86.5 88.0 237.7 243.8 Adjusted EBITDA Margin 20.8 % 22.6 %
20.1 % 21.6 % Corporate(3) (28.0
)
(30.7
)
(88.7
)
(91.7
)
Non-U.S. GAAP Total Company Adjusted
EBITDA from
continuing operations
$ 216.8 $ 212.9 $
595.0 $ 592.8 Adjusted EBITDA
Margin 19.2 % 20.0 % 18.4 % 19.1 %
_______________
(1) The supplementary information included in this press
release for 2017 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 of January 1, 2017 we
modified our calculation of Adjusted EBITDA to exclude interest
income. The impact in this modification was $1.6 million and $5.3
million for the three and nine months ended September 30, 2016,
respectively. (3) Unallocated costs related to Diversey that have
been included in adjusted EBITDA for Corporate were as follows:
Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, (In millions) 2017 2016 2017
2016 Unallocated costs $ 2.8 $ 3.5 $ 13.7 $ 10.4
SEALED AIR CORPORATION
SEGMENT INFORMATION – CONTINUED
SUPPLEMENTARY
INFORMATION(1)
RECONCILIATION OF U.S. GAAP NET
EARNINGS TO
NON-U.S. GAAP TOTAL COMPANY ADJUSTED
EBITDA
(Unaudited)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, (In millions) 2017
2016 2017 2016(2) U.S. GAAP Net
earnings from continuing operations $ 62.4 $ 63.8 $ 37.8 $
141.1 Interest expense (54.0 ) (49.6 ) (153.7 ) (151.4 ) Interest
income 4.9 1.7 10.3 5.3 Income tax provision 43.7 54.1 236.5 124.7
Depreciation and amortization(4) (42.7 ) (39.6 ) (116.3 ) (113.0 )
Accelerated depreciation and amortization
of fixed assets
and intangible assets for Venezuelan
subsidiaries
— 0.1 — 0.8 Special Items: Restructuring and other charges(5) (6.2
) (1.3 ) (9.2 ) (1.1 )
Other restructuring associated costs
included in cost of
sales and selling, general and
administrative expenses
(2.9 ) (5.2 ) (12.7 ) (13.2 ) SARs — 0.3 — (0.7 )
Foreign currency exchange loss related to
Venezuelan
subsidiaries
— — — (1.6 ) Charges related to ceasing operations in Venezuela — —
(47.3 )
Gain (loss) on sale of North American foam
trays and
absorbent pads business and European food
business
0.2 — 2.3 (1.6 )
(Loss) gain related to the sale of other
businesses,
investments and property, plant and
equipment
(6.9 ) 2.1 (7.1 ) — Charges incurred related to the sale of
Diversey (13.7 ) — (47.6 ) —
Settlement/curtailment benefits related to
retained
Diversey retirement plans
13.5 — 13.5 — Other special items(3) (2.9 ) (3.5 ) (0.2 ) (3.2 )
Pre-tax impact of Special items (18.9 ) (7.6 ) (61.0 ) (68.7 )
Non-U.S. GAAP Total Company Adjusted
EBITDA from
continuing operations
$ 216.8 $ 212.9 $
595.0 $ 592.8
_______________
(1) The supplementary information included in this press
release for 2017 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) Due to the ongoing
challenging economic situation in Venezuela, the Company approved a
program in the second quarter of 2016 to cease operations in the
country. This resulted in total costs of $47.3 million being
incurred which included a voluntary reduction in headcount
including severance and termination benefits for employees of
approximately $0.3 million recorded in restructuring and other
charges, depreciation and amortization expense related to fixed
assets and intangibles of approximately $0.6 million recorded in
selling, general and administrative expenses, inventory reserves of
$0.4 million recorded in costs of sales and the release of
cumulative translation adjustment of approximately $46.0 million
recorded in charges related to Venezuelan subsidiaries. (3) For the
three and nine months ended September 30, 2017, primarily included
transaction fees related to various divestitures and acquisitions.
Other special items for the three and nine months ended September
30, 2016 primarily included a reduction in a non-income tax reserve
following the completion of a governmental audit partially offset
by legal fees associated with restructuring and acquisitions. (4)
Depreciation and amortization by segment are as follows:
Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, (In millions) 2017 2016 2017
2016 Food Care $ 26.4 $ 23.1 $ 75.8 $ 68.3 Product Care 11.7
9.6 34.2 28.6 Corporate 4.6 6.9 6.3 16.1
Total Company depreciation and amortization(1)
$ 42.7 $ 39.6 $
116.3 $ 113.0
_______________
(1) Includes share-based incentive compensation of $12.3
million and $31.2 million for the three and nine months ended
September 30, 2017, respectively, and $12.2 million and $37.6
million for the three and nine months ended September 30, 2016,
respectively.
(5)
Restructuring and other charges by segment
is as follows:
Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, (In millions) 2017 2016 2017
2016 Food Care $ 3.9 $ 0.8 $ 5.8 $ 0.7 Product Care 2.3
0.5 3.4 0.4
Total Company restructuring and
other charges(1) $ 6.2 $
1.3 $ 9.2 $ 1.1
_______________
(1) For the nine months ended September 30, 2016
restructuring and other charges excludes $0.3 million related to
severance and termination benefits for employees in our Venezuelan
subsidiaries.
SEALED AIR
CORPORATION SUPPLEMENTARY INFORMATION COMPONENTS OF
CHANGE IN NET SALES BY SEGMENT(1) Three Months
Ended September 30, (Unaudited) (In millions) Food
Care Product Care Total Company 2016 Net Sales $
676.2
$
388.9 $
1,065.1
Volume - Units 31.1 4.6 % 23.9 6.1 % 55 5.2 % Price/mix(2) (1.1 )
(0.2 )% (0.9 ) (0.2 )% (2.0 ) (0.2 )%
Total constant dollar change (Non-U.S.
GAAP)(3)
30.0
4.4 %
23.0
5.9 %
53.0
5.0
%
Foreign currency translation
9.8 1.5 % 3.4 0.9 % 13.2 1.2 %
Total change (U.S. GAAP)
39.8 5.9 % 26.4 6.8 %
66.2 6.2 %
2017 Net Sales $
716.0
$ 415.3 $
1,131.3
Nine Months Ended September 30,
(Unaudited) (In millions) Food Care Product
Care Total Company 2016 Net Sales $
1,979.2
$ 1,130.70 $
3,109.9
Volume - Units 68.8 3.5 % 65.2 5.8 %
134.0
4.4 % Price/mix(2) (7.7 ) (0.4 )% (7.7 ) (0.7 )% (15.4 ) (0.5 )%
Total constant dollar change (Non-
U.S. GAAP)(3)
61.1 3.1 % 57.5 5.1 % 118.6 3.9 % Foreign currency translation 10.8
0.5 % (5.5 ) (0.5 )% 5.3 0.1 %
Total change (U.S. GAAP)
71.9 3.6 %
52.0
4.6 % 123.9
4.0
%
2017 Net Sales $
2,051.1
$
1,182.7
$
3,233.8
_______________
(1) The supplementary information included in this press
release for 2017 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 price/mix reported
above includes the net impact of our pricing actions and rebates as
well as the period-to-period change in the mix of products sold.
Also included in our reported price/mix is the net effect of some
of our customers purchasing our products in non-U.S. dollar or
euro-denominated countries at selling prices denominated in U.S.
dollars or euros. This primarily arises when we export products
from the U.S. and euro-zone countries. (3) 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 SUPPLEMENTARY INFORMATION COMPONENTS OF
CHANGE IN NET SALES BY REGION(1) Three Months
Ended September 30, (Unaudited) (In millions) North
America EMEA(2) Latin America
APAC(3) Total 2016 net sales $ 581.4 $ 232.3 $
98.8 $ 152.6 $
1,065.1
Volume - Units 38.6 6.6 % 6.6 2.8 % 3.2 3.2 % 6.6 4.3 %
55.0
5.2 % Price/mix(4) 1.8 0.3 % (1.3 ) (0.6 )% (0.9 ) (0.9 )%
(1.6 ) (1.0 )% (2.0 ) (0.2 )% Total constant dollar change
(Non-U.S. GAAP)(5) 40.4 6.9 % 5.3 2.2 % 2.3 2.3 %
5.0
3.3 %
53.0
5.0
% Foreign currency translation 1.4 0.2 % 10.2 4.4 %
0.4 0.4 % 1.2 0.8 % 13.2 1.2 %
Total change
(U.S. GAAP) 41.8 7.2 % 15.5
6.7 % 2.7 2.7 % 6.2
4.1 % 66.2 6.2 %
2017 net sales $
623.2 $ 247.8 $
101.5 $ 158.8 $
1,131.3
Nine Months Ended September 30,
(Unaudited) (In millions) North America
EMEA(2) Latin America APAC(3)
Total 2016 net sales $
1,657.8
$ 716.5 $ 289.1 $ 446.5 $
3,109.9
Volume - Units 127.7 7.7 % 1.1 0.2 % (1.4 ) (0.5 )% 6.6 1.4 %
134.0
4.4 % Price/mix(4) (8.7 ) (0.5 )% (7.4 ) (1.0 )% 4.4 1.5 %
(3.7 ) (0.8 )% (15.4 ) (0.5 )% Total constant dollar change
(Non-U.S. GAAP)(5)
119.0
7.2 % (6.3 ) (0.8 )%
3.0
1.0
% 2.9 0.6 % 118.6 3.9 % Foreign currency translation 1.1 — %
(3.5 ) (0.6 )% 2.1 0.7 % 5.6 1.3 % 5.3 0.1 %
Total change (U.S. GAAP) 120.1 7.2 %
(9.8 ) (1.4 )% 5.1 1.7
% 8.5 1.9 % 123.9
4.0
%
2017 net
sales $
1,777.9
$ 706.7 $ 294.2
$
455.0
$
3,233.8
_______________
(1) The supplementary information included in this press
release for 2017 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) EMEA consists of Europe,
Middle East, Africa and Turkey. (3) APAC refers collectively to our
Asia Pacific region. This region consists of i) Greater China, ii)
India/Southeast Asia and iii) Australia, New Zealand, Japan and
Korea. (4) Our price/mix reported above includes the net impact of
our pricing actions and rebates as well as the period-to-period
change in the mix of products sold. Also included in our reported
price/mix is the net effect of some of our customers purchasing our
products in non-U.S. dollar or euro-denominated countries at
selling prices denominated in U.S. dollars or euros. This primarily
arises when we export products from the U.S. and euro-zone
countries. (5) 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171108005472/en/
For Sealed Air CorporationInvestor RelationsLori Chaitman,
704-503-8841
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