Sealed Air Reports 2Q 2013 Results

Sealed Air Corporation announced financial results for second quarter 2013. Net sales for the second quarter 2013 totaled $2.0 billion. Adjusted EPS was $0.35 for the second quarter and adjusted EBITDA was $276.3 million, or 14.1% of net sales. On a reported basis, net income was $56.3 million, or $0.26 per share.

“During the second quarter, we were able to drive strong growth in AMAT and Latin America and modest growth in North America, which helped mitigate a soft global economy, particularly in Europe,” Jerome A. Peribere, president and CEO, said. “We also delivered adjusted EBITDA margin expansion on a year over year basis in our Food & Beverage and Institutional & Laundry divisions, offset by lower margin performance in Protective Packaging. Our second quarter results demonstrate the benefits we are experiencing from our pricing initiatives and focus on manufacturing and operational improvements.

“We ended the second quarter with confidence that our plan to improve Sealed Air’s quality of earnings is underway. Our performance in the second quarter across key financial and operational metrics is a true testament to our leadership team and their commitment to deliver on the objectives we have put in place. Going forward, we will continue to further penetrate the global marketplace with innovative products and value-added solutions. We are maintaining our 2013 guidance of net sales in the range of $7.7 to $7.9 billion and are tracking toward the high-end of our Adjusted EBITDA range of $1.01 billion to $1.03 billion and Adjusted EPS range between $1.10 and $1.20,” continued Mr. Peribere.

Second quarter net sales of $2.0 billion increased 3.2% on a constant dollar basis and 1.9% on a reported basis. Volume and product price/mix increased by 2.4% and 0.8%, respectively. Reported regional net sales increased 9.4% for AMAT (Asia, Middle East, Africa and Turkey), 7.6% for Latin America, and 2.1% for North America, partially offset by 1.5% lower net sales in Europe and 3.0% in JANZ (Japan/Australia/New Zealand). Additionally, second quarter net sales to Developing Regions1 increased 9.4% on a constant dollar basis and 6.8% on a reported basis, accounting for 25.7% of global net sales.

Adjusted EBITDA for the second quarter increased 21.5% to $276.3 million, or 14.1% of net sales, primarily driven by manufacturing and operating efficiencies. Reported operating profit was $168.9 million for second quarter 2013 compared with $108.4 million in 2012.

Adjusted EPS was $0.35 for the second quarter, compared with 2012 adjusted EPS of $0.16. On a reported basis, second quarter 2013 EPS was $0.26 per share as compared with a loss of $0.07 per share in 2012.

Food & Beverage (F&B) Division net sales of $946.5 million increased 3.9% on a constant dollar basis and 2.6% on a reported basis. F&B achieved 2.5% higher volumes, led by strength in AMAT and Latin America and a slight increase in North America. Volume declined slightly in Europe and JANZ. F&B Adjusted EBITDA increased 24.2% to $138.9 million, or 14.7% of net sales, compared with $111.8 million, or 12.1% of net sales, in 2012. Reported operating profit was $103.7 million for second quarter 2013, compared with $69.8 million in 2012.

Institutional & Laundry (I&L) Division net sales of $569.8 million increased 3.0% on a constant dollar basis and 1.7% on a reported basis. I&L achieved 1.5% higher volumes with growth in all regions except for Europe, which reported a 1.7% decline. Pricing was up 1.5% with positive trends in all regions. I&L Adjusted EBITDA increased 16.6% to $70.8 million, or 12.4% of net sales, compared with $60.7 million, or 10.8% of net sales, in 2012. Reported operating profit was $37.2 million for second quarter 2013, compared with $20.9 million in second quarter 2012.

Protective Packaging (PP) Division net sales of $394.3 million increased 1.8% on a constant dollar basis and 0.9% on a reported basis. Protective Packaging achieved 3.8% higher volumes, offset by 2.0% lower price/mix. Regionally, constant dollar net sales were led by 2.6% growth in North America, offset by a 0.7% decline in Europe. PP Adjusted EBITDA decreased 2.1% to $56.1 million, or 14.2% of net sales, compared with $57.3 million, or 14.7% of net sales, in 2012, primarily due to unfavorable product mix. Reported operating profit was $44.0 million for second quarter 2013, compared with $46.7 million in 2012.

Medical Applications and New Ventures (Other Category) net sales of $50.9 million increased 1.0% on a constant dollar basis and 0.4% on a reported basis. Favorable price/mix of 2.1% was partially offset by a 1.1% decline in volume. Regionally, modest growth in Europe was offset by declines in North America and AMAT.

The company is maintaining its 2013 guidance of net sales in the range of $7.7 billion to 7.9 billion and tracking toward the high-end of the adjusted EBITDA range of $1.01 billion to $1.03 billion and adjusted EPS range between $1.10 and $1.20.