Sealed Air Reports Q2 2021 Results

Sealed Air Corporation announced financial results for the second quarter 2021.

“Demand for our automated and sustainable packaging solutions drove a net sales increase of 15%, supported by a 9% volume growth. Adjusted EBITDA increased 1% as higher sales and productivity improvements were offset by widespread supply challenges and dramatic inflationary pressure. Despite this adverse environment, our SEE Operating Engine is delivering,” said Ted Doheny, SEE’s President and CEO.

“We are raising our 2021 sales and EPS outlook and reaffirming Adjusted EBITDA and Free Cash Flow guidance.

We are accelerating our journey to world-class by increasing our investment in ‘touchless’ automation, digital and sustainability, while returning capital to shareholders, as demonstrated by our announced 25% dividend increase and share repurchases,” continued Doheny.

Unless otherwise stated, all results compare second quarter 2021 to second quarter 2020 results from continuing operations. Year-over-year financial discussions present operating results from continuing operations as reported. Year-over-year comparisons are also made on a constant dollar basis, which is a non-U.S. GAAP measure. Constant dollar refers to changes in net sales and earnings, including changes in unit volume and price performance, but excluding 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 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

Second quarter net sales in Food were $737 million, an increase of 9% as reported. Currency had a favorable impact of $26 million. On a constant dollar basis, net sales increased $37 million, or 6%, with volumes up $28 million, or 4%. Strength in automation, combined with higher food service demand as compared to last year, contributed to a constant dollar growth of 8% in the Americas and 3% in EMEA, while APAC saw a decline of 2%. Adjusted EBITDA of $158 million, or 21.5% of net sales, compares to $169 million, or 25.1% of net sales, in the prior year. Volume growth and productivity improvements were more than offset by negative price/cost spread related to higher input costs, combined with the delayed timing of formula-based price increases. Food also incurred higher freight costs in an effort to meet increased customer demand while managing global supply disruptions.

Second quarter net sales in Protective were $592 million, an increase of 24% as reported. Currency had a favorable impact of $20 million, or 4%. On a constant dollar basis, net sales increased $94 million, or 20%, driven by a 15% increase in volumes. Continued strength in eCommerce and automation, combined with higher industrial demand as compared to last year, contributed to constant dollar growth of 38% in EMEA and 19% in the Americas. Adjusted EBITDA increased 17% to $107 million, or 18.1% of sales, as compared to $92 million, or 19.1% of net sales, in the prior year. The increase in Adjusted EBITDA was primarily attributable to sales growth, partially offset by negative price/cost spread related to higher input costs to help meet customer demand.

Second Quarter 2021 U.S. GAAP Summary

Net sales of $1.3 billion increased 15% as reported. Currency contributed $46 million, or approximately 4%, to net sales growth, as compared to second quarter 2020.

Net earnings in second quarter 2021 were $109 million, or $0.71 per diluted share, as compared to net earnings of $100 million, or $0.64 per diluted share, in second quarter 2020.

The effective tax rate in second quarter 2021 was 29.7%, as compared to 30.8% in second quarter 2020.

Second Quarter 2021 Non-U.S. GAAP Summary

Net sales increased $131 million, or 11%, on a constant dollar basis. Volumes increased $101 million, or approximately 9%, and price had a favorable impact of $30 million, or approximately 3%. By region, in constant dollars, EMEA and the Americas increased 16% and 13%, respectively, and APAC was essentially flat.

Adjusted EBITDA was $263 million, or 19.8% of net sales in second quarter 2021, as compared to $260 million, or 22.6% in second quarter 2020. Currency fluctuations had a favorable impact of $9 million, or 3%, in second quarter 2021.

The Adjusted Tax Rate was 25.6% in second quarter 2021, as compared to 27.5% in second quarter 2020.

Adjusted earnings per diluted share were $0.79 in second quarter 2021, as compared to $0.76 in second quarter 2020.

Cash Flow and Net Debt

Cash flow provided by operating activities in the first six months of 2021 was a source of $200 million, as compared to a source of $213 million during the same period in the prior year.

Capital expenditures in the first six months of 2021 were $97 million, as compared to $84 million during the same period last year. Free Cash Flow, defined as net cash provided by operating activities less capital expenditures, was a source of $102 million during the six months ended June 30, 2021, as compared to a source of $129 million during the same period last year.

Total debt was $3.7 billion as of June 30, 2021, as compared to $3.8 billion as of December 31, 2020. Net Debt, defined as total debt less cash and cash equivalents, was $3.5 billion as of June 30, 2021, as compared to $3.2 billion as of December 31, 2020. As of June 30, 2021, SEE had approximately $1.4 billion of available liquidity, comprised of $273 million of cash and $1,144 million of undrawn, committed credit facilities.