Sealed Air Reports Q1 2020 Results

Sealed Air Corporation announced financial results for the first quarter 2020.

“Our purpose ‘to protect, to solve critical packaging challenges, and to leave our world better than we found it’ is more powerful now than ever as we navigate through the COVID-19 pandemic.

Our teams have taken preemptive measures to keep people out of harm’s way and enable business continuity. We have been rapidly responding to the surge in demand for essential goods such as packaged foods for retail, consumer staples and medical supplies, while managing the slowdown in food services and industrial manufacturing.

Our first quarter results reflect our teams’ agility to respond to the unprecedented circumstances and the continued execution of our strategy. These efforts led to a strong first quarter with net sales increasing 6% and Adjusted EBITDA increasing 17%, compared to the first quarter of 2019,” said Ted Doheny, Sealed Air’s President and CEO.

“Given the uncertainty in the markets we serve, we are suspending our full year 2020 guidance. Our focus is on zero harm, business continuity and leveraging our Reinvent SEE transformation to ensure we emerge from this crisis as a better and stronger company. We are prioritizing investments to maximize cash flow and maintain a healthy balance sheet. Our capabilities and business model coupled with our strong liquidity will enable us to effectively manage through the changing environment.

I am confident that our strategy to advance automation in support of a more touchless and digital world will create value. This will enhance our ability to deliver on our core competencies of maximizing food safety, minimizing food waste and protecting valuable goods,” continued Doheny.

Unless otherwise stated, all results compare first quarter 2020 to first quarter 2019 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 an organic basis or constant dollar basis, which are non-U.S. GAAP measures. Organic refers to changes in unit volume and price performance and excludes acquisitions in the first year after closing, divestiture activity and the impact of currency translation. Constant dollar refers to changes in net sales and earnings, 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

Food Care first quarter net sales of $690 million increased 2% as reported. Currency negatively impacted Food Care sales by $25 million, or approximately 4%. On a constant dollar basis, net sales increased $35 million, or approximately 5%. Volume was up $31 million, primarily due to increased demand for protein packaging at the retail level due to COVID-19. Adjusted EBITDA grew 9% to $156 million, or 22.6% of net sales, up 160 basis points compared to the prior year. The increase in Adjusted EBITDA was primarily attributable to higher volume, favorable price/cost spread and Reinvent SEE initiatives, which included productivity improvements and restructuring savings, and was partially offset by inflationary cost increases and unfavorable foreign currency translation.

Product Care first quarter net sales of $484 million increased 12% as reported. Currency negatively impacted Product Care sales by $5 million, or 1%. On a constant dollar basis, net sales increased $56 million, or 13%. Automated Packaging Systems sales contributed $69 million. Organic volume declined $10 million due to deteriorating global industrial manufacturing, partially offset by an increase in e-commerce demand for consumer staples and medical supplies, both of which were driven by COVID-19. Adjusted EBITDA was $93 million, or 19.2% of sales, compared to $75 million, or 17.3% of sales, in the prior year. The increase in Adjusted EBITDA was primarily attributable to contributions from Automated Packaging Systems and Reinvent SEE initiatives, which included productivity improvements and restructuring savings.