- Adjusted EBITDA Increased 8.9% to $252
Million or 13.8% of Net Sales
- 2014 Adjusted EPS of $0.33 Increased
43%; Reported EPS of $0.33
Sealed Air Corporation (NYSE: SEE) today announced financial
results for the first quarter 2014. Commenting on these results,
Jerome A. Peribere, President and Chief Executive Officer, said,
“First quarter 2014 net sales of $1.8 billion increased 2.8% on a
constant dollar basis compared to last year primarily due to
favorable price/mix of 3.4%. We delivered favorable product
price/mix across all divisions and all regions, which contributed
to a year-over-year improvement of 160 basis points in gross profit
margin. We also increased Adjusted EBITDA margin by 110 basis
points to 13.8% as compared to 12.7% in the previous year.”
“We have made tremendous progress engaging our customers on our
value-added solutions and how we ‘Re-imagine™ the industries they
serve.’ We will continue to focus on improving our product mix and
delivering the most innovative solutions to the marketplace. Our
first quarter performance is a true testament to our strong market
leadership position and commitment to improving the quality of
earnings. We are on track to achieve the high-end of the range we
previously provided for full year Adjusted EBITDA of $1.050 billion
to $1.070 billion. We are also increasing our Free Cash Flow
outlook to approximately $425 million,” Peribere continued.
All results presented in this release include results on a
continuing operations basis and reflect the change in the Company’s
segment structure as previously disclosed in our Current Report on
Form 8-K filed with the Securities and Exchange Commission on April
16, 2014. The Rigid Medical Packaging business, which the Company
sold in December 2013, has been presented as discontinued
operations. Reported information is defined as U.S. GAAP.
Year-over-year net sales discussions present both reported and
constant dollar performance. Constant dollar sales performance
excludes the impact of currency translation. Additionally, non-U.S.
GAAP adjusted financial measures, such as Adjusted Earnings Before
Interest, Taxes and Depreciation and Amortization (“Adjusted
EBITDA”), Adjusted Net Earnings, Adjusted Diluted Earnings Per
Share (“Adjusted EPS”) and Tax Rate, exclude the impact of special
items, such as restructuring charges, cash-settled stock
appreciation rights (“SARs”) granted as part of the Diversey
acquisition and certain other one-time items.
Business and Financial
Highlights
- Net sales in the Food Care division of
$904 million were unchanged compared to last year. On a constant
dollar basis, Food Care net sales increased by 3.9% primarily due
to favorable price/mix of 4.1%, partially offset by a slight
decline in volume. Adjusted EBITDA increased 9.5% to $160 million
or 17.6% of net sales. This compares to Adjusted EBITDA in the
first quarter 2013 of $146 million or 16.1% of net sales. The 150
basis point improvement in Adjusted EBITDA margin was due to
favorable mix and price/cost spread as well as cost synergies,
partially offset by non-material inflation and negative currency
translation.
- The Diversey Care division reported net
sales of $505 million, a 1.5% decline compared to last year. On a
constant dollar basis, net sales increased 1.2% with favorable
price/mix of 3.2% partially offset by a 2.0% decline in volume.
Adjusted EBITDA increased 4.5% to $45 million or 8.8% of net sales.
This compares to Adjusted EBITDA in the first quarter 2013 of $43
million or 8.3% of net sales. The 50 basis point improvement was
primarily attributable to a more favorable customer mix, improved
pricing trends and cost synergies, partially offset by lower
volumes, non-material inflation and negative currency
translation.
- The Product Care division reported net
sales of $394 million, a 1.7% increase compared to last year. On a
constant dollar basis, net sales increased by 2.6% primarily due a
favorable price/mix of 2.1% and a slight increase in volume.
Adjusted EBITDA increased 12.0% to $70 million or 17.8% of net
sales. This compares to Adjusted EBITDA in the first quarter 2013
of $63 million or 16.2% of net sales. The 160 basis point
improvement was largely attributable to favorable mix and
price/cost spread as well as cost synergies.
First Quarter 2014
Summary
First quarter 2014 net sales of $1.8 billion were unchanged on a
reported basis compared with first quarter 2013. On a constant
dollar basis, net sales increased 2.8%. The Company delivered
constant dollar sales growth in all regions, except Europe which
declined 1.6%. Latin America increased 9.9%, AMAT1 increased 7.2%,
North America increased 3.5% and JANZ2 increased 1.3%.
Additionally, first quarter 2014 reported net sales from Developing
Regions3 increased 7.9% in constant dollars, accounting for 25.0%
of total net sales. Favorable product price/mix of 3.4% was
slightly offset by a 0.6% decline in volume.
Adjusted EBITDA for the first quarter 2014 increased 8.9% to
$252 million, or 13.8% of net sales. This compares to first quarter
2013 of $231 million, or 12.7% of net sales. The 110 basis point
improvement in Adjusted EBITDA margin in the first quarter 2014 was
primarily attributable to a more favorable mix and price/cost
spread and cost synergies, partially offset by non-material
inflation, lower volumes and $8 million negative currency
translation.
Reported first quarter 2014 net earnings were $72 million, or
$0.33 per share, which included special items largely comprised of
foreign currency exchange losses related to Venezuelan subsidiaries
and costs associated with previously announced restructuring
programs, offset by a gain on the W. R. Grace & Co. Settlement
agreement, which primarily consisted of the release of certain tax
and other liabilities. This compares to reported net earnings of $1
million in the same period a year ago. Adjusted Net Earnings were
$71 million or $0.33 per share in the first quarter 2014. This
compares to Adjusted Net Earnings of $50 million, or $0.23 per
share in the first quarter 2013. The tax rate in the first quarter
2014 was 21.4% as compared with 18.3% in the first quarter
2013.
Cash Flow and Net Debt
As previously disclosed, on February 3, 2014, the Company funded
the W. R. Grace & Co. Settlement and related accrued interest
with $555 million of accumulated cash and cash equivalents and $375
million from committed credit facilities, contributing to the net
cash used in operating activities of $938 million in the three
months ended March 31, 2014. Excluding the payment of the
Settlement agreement, cash used by operating activities was $8
million, which is net of $27 million of restructuring and $14
million of SARs payments. This compares with cash used in operating
activities of $38 million in the three months ended March 31, 2013,
which is net of $24 million of restructuring and $17 million of
SARs payments. Capital expenditures were $28 million for the three
months ended March 31, 2014 and $26 million for the three months
ended March 31, 2013.
Free Cash Flow, defined as net cash used in operating activities
less capital expenditures, was a use of $966 million in the three
months ended March 31, 2014. Excluding the Settlement agreement
payment, Free Cash Flow was a use of $36 million, compared with a
use of $63 million during the same period a year ago. Compared to
December 31, 2013, the Company’s net debt increased $61 million to
$4.4 billion as of March 31, 2014. This increase was a result of
net cash used for working capital items, including seasonal
inventory growth, certain annual incentive compensation payments
and higher interest payments.
Outlook for Full Year
2014
The Company reaffirmed previously provided outlook for net sales
and Adjusted EPS. Net sales are expected to be approximately $7.7
billion or relatively flat compared to 2013 with organic growth
offset by rationalization and an estimated unfavorable impact of
more than 2% from foreign currency translation. Adjusted EPS is
expected to be in the range of $1.50 to $1.60 as compared with 2013
Adjusted EPS of $1.39. The Company is increasing its expected Tax
Rate to approximately 27% from the previously provided estimate of
approximately 25% for the full year 2014.
The outlook for Adjusted EBITDA is estimated to be at the
high-end of the previously provided range of $1.050 billion to
$1.070 billion as compared with 2013 Adjusted EBITDA of $1.038
billion. The Company is increasing its Free Cash Flow outlook to
approximately $425 million from the previously provided outlook of
$410 million. The forecast for capital expenditures and cash
restructuring charges remain unchanged at approximately $170
million for capital expenditures and approximately $150 million for
restructuring. The Company’s Free Cash Flow target excludes the
Settlement payment.
Conference Call
Information
Date:
April 30, 2014
Time:
10:00am EST
Webcast:
www.sealedair.com in the Investor Relations section
Conference Dial
In:
(888) 713-4199 (domestic) (617) 213-4861 (international)
Participant Code: 41188282
Conference Call
Replay Information
Dates:
Wednesday, April 30, 2014 starting at 2:00pm (ET) through
Wednesday, June 4, 2014 at 11:59pm (ET)
Webcast:
www.sealedair.com in the Investor Relations section
Conference Dial
In:
(888) 286-8010 (domestic) (617) 801-6888 (international)
Participant
Code:
96115207
Business
Sealed Air Corporation creates a world that feels, tastes and
works better. In 2013, the Company generated revenue of
approximately $7.7 billion by helping 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, Bubble
Wrap® brand cushioning and Diversey™ cleaning and hygiene
solutions, ensures a safer and less wasteful food supply chain,
protects valuable goods shipped around the world, and improves
health through clean environments. Sealed Air has approximately
25,000 employees who serve customers in 175 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 Adjusted Net Earnings
and EPS, net sales on a "constant dollar" basis, Adjusted Gross
Profit, Adjusted Operating Profit, Free Cash Flow, EBITDA, Adjusted
EBITDA and tax rate. We present results and guidance, adjusted to
exclude the effects of certain specified items (“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. We may use Adjusted EPS, net sales on a constant dollar
basis, Adjusted Net Earnings, Adjusted Gross Profit, Adjusted
Operating Profit, measures of free cash flow, net debt, and EBITDA
figures to determine performance-based compensation. Our management
uses financial measures excluding the effects of foreign currency
translation in evaluating operating performance. Management
believes that this information may be useful to investors. For a
reconciliation of these non-U.S. GAAP metrics to U.S. GAAP and
other important information on our use of non-U.S. GAAP financial
measures, see the attached supplementary information entitled
“Non-U.S. GAAP Free Cash Flow,” “Reconciliation of U.S. GAAP
Condensed Consolidated Statements of Operations to Non-U.S. GAAP
Adjusted Condensed Consolidated Statements of Operations and
Non-U.S. GAAP Adjusted EBITDA,” “Segment Information,” and
“Components of Change in Net Sales by Segment.”
Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by such words as
“anticipates,” “believes,” “plan,” “assumes,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans to,” “will” and similar
expressions. These statements reflect our beliefs and expectations
as to future events and trends affecting our business, our
consolidated financial position and our results of operations.
Examples of these forward-looking statements include expectations
regarding our anticipated effective income tax rate, the potential
cash tax benefits associated with the W. R. Grace & Co.
Settlement agreement (as defined in the Company’s Annual Report on
Form 10-K), potential volume, revenue and operating growth for
future periods, expectations and assumptions associated with our
restructuring programs, availability and pricing of raw materials,
success of our growth initiatives, economic conditions, and the
success of pricing actions. A variety of factors may cause actual
results to differ materially from these expectations, including
domestic and international economic and political conditions,
changes in our raw material and energy costs, credit ratings, the
success of restructuring plans, currency translation and
devaluation effects, the competitive environment, the effects of
animal and food-related health issues, environmental matters, and
regulatory actions and legal matters. For more extensive
information, see “Risk Factors” and “Cautionary Notice Regarding
Forward-Looking Statements,” which appear 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. While we may elect to
update these forward-looking statements at some point in the
future, we specifically disclaim any obligation to do so, whether
as a result of new information, future events, or otherwise.
1 AMAT is comprised of Asia, Middle East, Africa and Turkey.2
JANZ is comprised of Japan, Australia and New Zealand.3 Developing
Regions are Africa, Asia (excluding Japan and South Korea), Central
and Eastern Europe, and Latin America.
SEALED AIR CORPORATION SUPPLEMENTARY
INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(1) (Unaudited) (In millions, except
per share data) Three Months Ended March
31, 2014 2013 Revised(2)
Net sales
$ 1,827.7 $ 1,828.9 Cost of sales
1,186.7 1,216.7
Gross profit 641.0
612.2 As a % of total net sales 35.1 % 33.5 % Selling,
general and administrative expenses 447.4 434.7 As a % of total net
sales 24.5 % 23.8 % Amortization expense of intangible assets
acquired 31.2 31.9 Stock appreciation rights expense(3) 0.5 18.0
Costs related to the acquisition and integration of Diversey 0.9
0.4 Restructuring and other charges (credits) 6.1 (0.2 )
Operating profit 154.9 127.4 Interest expense
(78.5 ) (90.8 ) Foreign currency exchange losses related to
Venezuelan subsidiaries(4) (15.0 ) (13.1 ) Gain on Settlement
agreement, net(5) 21.1 - Loss on debt redemption (0.4 ) (32.3 )
Other income (expense), net 0.4 0.3
Earnings
(loss) from continuing operations before income tax provision
82.5 (8.5 ) Income tax provision (benefit)
10.7 (9.2 ) Effective income tax rate 13.0 % 108.2 %
Net
earnings from continuing operations 71.8
0.7 Net earnings from discontinued operations(2)
- 2.0 Net earnings available to
common stockholders $ 71.8 $
2.7 Net earnings per common share:
Basic : Continuing operations $ 0.35
$
-
Discontinued operations - 0.01
Net
earnings per common share - basic $ 0.35
$ 0.01 Diluted: Continuing
operations $ 0.33
$ -
Discontinued
operations - 0.01
Net earnings per common
share - diluted $ 0.33 $
0.01 Dividends per common share
$ 0.13 $ 0.13
Weighted average number of common shares outstanding:
Basic 206.7 193.8 Diluted
214.5 212.7 (1) The
supplementary information included in this press release for 2014
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) In December 2013, we completed the sale of
our rigid medical packaging business for net cash proceeds of $122
million. The financial results of the rigid medical business is
reported as discontinued operations, net of tax, and, accordingly
all previously reported financial information has been revised. (3)
At March 31, 2014, the remaining amount of unvested cash-settled
stock appreciation rights ("SAR"s) will fully vest over the next 12
months. However, we will continue to incur expense related to these
SARs until the last expiration date of these awards (March 2021).
The amount of related future expense will fluctuate based on
exercise and forfeiture activity and changes in the assumptions
used in the valuation model, including the price of Sealed Air
common stock. (4) Based on recent changes to the Venezuelan
currency exchange rate mechanisms, we changed the exchange rate we
used to remeasure our Venezuelan subsidiary’s financial statements
into U.S. dollars. As a result, as of March 31, 2014 our excess
cash position in our Venezuelan subsidiaries was remeasured at
Venezuela’s Supplementary Foreign Currency Administration System
(SICAD 2) rate of 49.8 bolívars per U.S. dollar since that would be
the only mechanism available to us to access U.S. dollars to be
able to make a dividend payment. For the remaining bolívar cash
balance and all other bolívar-denominated monetary assets and
liabilities, since we still had access to and was receiving U.S.
dollars via the National Center of Foreign Commerce (CENCOEX)
official rate of 6.3 bolívars per U.S. dollar we would continue to
remeasure these items at the 6.3 rate. As a result, we recorded a
remeasurement loss of $15 million in the three months ended March
31, 2014.
In February 2013, the Venezuelan
government announced a devaluation of the Bolivar from an official
exchange rate of 4.3 to 6.3 bolivars per U.S. dollar. Due to this
devaluation, as of March 31, 2013, we remeasured our bolivar
denominated monetary assets and liabilities using the official
exchange rate of 6.3 bolivars per U.S. dollar. As a result, we
recorded a pretax loss of $13 million in the three months ended
March 31, 2013 due to this devaluation.
(5) As previously disclosed in our Annual Report on Form 10-K for
the year ended December 31, 2013, on February 3, 2014 we funded the
cash consideration and issued the shares reserved under the
Settlement agreement as defined therein. As a result, we recognized
a gain on the Settlement agreement of $21 million, which primarily
consisted of the release of certain tax and other liabilities.
SEALED AIR CORPORATION SUPPLEMENTARY
INFORMATION CONDENSED CONSOLIDATED BALANCE
SHEETS(1) (Unaudited) (In millions)
March 31, December 31, 2014 2013
Assets Current assets: Cash and cash equivalents $ 413.1 $
992.4 Trade receivables, net(2) 911.6 1,126.4 Other receivables
154.6 147.9 Inventories 774.0 688.4 Other current assets 417.2
462.6
Total current assets 2,670.5
3,417.7 Property and equipment, net 1,118.4 1,134.5 Goodwill
3,115.7 3,114.6 Intangible assets, net 990.2 1,016.9 Other assets,
net 675.5 450.5
Total assets $
8,570.3 $ 9,134.2
Liabilities and stockholders' equity Current liabilities:
Short-term borrowings $ 685.0 $ 81.6 Current portion of long-term
debt 10.6 201.5 Accounts payable 573.0 524.5 Settlement agreement
and related accrued interest(3) - 925.1 Other current liabilities
856.8 968.1
Total current liabilities
2,125.4 2,700.8 Long-term debt, less current portion
4,110.5 4,116.4 Other liabilities 854.0 926.5
Total liabilities 7,089.9 7,743.7
Total parent company stockholders' equity 1,479.0 1,389.1
Noncontrolling interests 1.4 1.4
Total
stockholders' equity 1,480.4 1,390.5
Total liabilities and stockholders' equity $
8,570.3 $ 9,134.2
CALCULATION OF NET DEBT
(1) March 31, December 31, 2014
2013 Short-term borrowings $ 685.0 $ 81.6
Current portion of long-term debt 10.6 201.5 Settlement agreement
and related accrued interest - 925.1 Long-term debt, less current
portion 4,110.5 4,116.4 Total debt 4,806.1 5,324.6
Less: cash and cash equivalents (413.1 ) (992.4 )
Net debt
$ 4,393.0 $ 4,332.2
(1) The supplementary
information included in this press release for 2014 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 March 31, 2014, we had $217 million of borrowings
outstanding under our accounts receivable securitization programs,
and, accordingly, the receivables utilized as collateral under our
accounts receivable securitization programs were reclassified from
trade receivables, net to other current assets. (3) As previously
disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2013, on February 3, 2014 we funded the cash
consideration and issued the shares reserved under the Settlement
agreement.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(1) (Unaudited) (In
millions) Three Months Ended March 31,
2014 2013 Revised(2) Net
earnings available to common stockholders - continuing operations $
71.8 $ 0.7 Adjustments to reconcile net earnings to net cash
provided by operating activities - continuing operations(3) 76.9
92.4 Changes in: Receivables, net (9.1 ) 4.6 Inventories (91.9 )
(79.6 ) Accounts payable 53.4 99.5 Settlement agreement and related
accrued interest (4) (929.7 ) 12.1 Changes in all other operating
assets and liabilities (109.4 ) (167.5 )
Cash flow
used in operating activities - continuing operations
(938.0 ) (37.8 ) Capital
expenditures for property and equipment (28.4 ) (25.5 ) Other
investing activities 1.4 1.3
Cash
flow used in investing activities - continuing operations
(27.0 ) (24.2 ) Net proceeds
from short-term borrowings and long-term debt(5) 403.0 34.7
Dividends paid on common stock (25.5 ) (25.4 ) Payments of debt
issuance costs - (7.7 ) Payments of debt extinguishment costs -
(26.2 ) Other financing activities - (4.4 )
Cash flow provided by (used in) financing activities -
continuing operations 377.5 (29.0 )
Cash flow from discontinued operations -
(1.8 ) Effect of foreign
currency exchange rates on cash and cash equivalents
8.2 39.0 Cash and cash
equivalents beginning of period $ 992.4 $
679.6 Change in cash and cash equivalents (579.3 )
(53.8 )
Cash and cash equivalents end of period
$ 413.1 $ 625.8
Non-U.S. GAAP Free Cash Flow: Cash flow from operating
activities - continuing operations(4) $ (938.0 ) $ (37.8 ) Capital
expenditures for property and equipment (28.4 ) (25.5
)
Free Cash Flow(5)
$ (966.4 ) $
(63.3 ) Additional Cash Flow Information:
Interest payments, net of amounts capitalized $ 519.1 $
109.9 Income tax payments $ 14.7 $ 31.2 SARs
payments (less amounts included in restructuring payments) $ 14.2
$ 17.0 Restructuring payments (including associated
costs) $ 26.6 $ 24.4
(1) The supplementary
information included in this press release for 2014 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) In December 2013, we completed the sale of our rigid medical
packaging business. The financial results of the rigid medical
business are reported as discontinued operations, net of tax, and,
accordingly all previously reported financial information has been
revised. (3) 2014 primarily consists of depreciation and
amortization of $83 million, and profit sharing expense of $10
million, partially offset by gain on Settlement agreement of $(21)
million. 2013 primarily consists of depreciation and amortization
of $80 million, loss on debt redemption of $32 million and profit
sharing expense of $10 million, partially offset by deferred taxes,
net of $(39) million. (4) In February 2014, we used $930 million of
cash to fund the cash portion of the Settlement agreement and
related accrued interest. To fund the cash payment, we used $555
million of cash and cash equivalents and utilized borrowings of
$260 million from our revolving credit facility and $115 million
from our accounts receivable securitization programs. (5) 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS TO NON-U.S.
GAAP ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
NON-U.S. GAAP ADJUSTED EBITDA(1) (Unaudited)
(In millions, except per share data)
Three Months Ended March 31,
2014
2013 U.S. GAAP Special Non-U.S.
GAAP U.S. GAAP Special Non-U.S. GAAP As
Reported
Items(2)
Adjusted As Reported
Items(2)
Adjusted Revised(3) Revised(3)
Net sales $
1,827.7 $ - $ 1,827.7 $
1,828.9 $ - $ 1,828.9 Cost of
sales 1,186.7 (1.1 ) 1,185.6 1,216.7 (1.5 )
1,215.2
Gross profit 641.0 1.1
642.1 612.2 1.5 613.7 As a % of total
net sales 35.1 % 35.1 % 33.5 % 33.6 % Selling, general and
administrative expenses 447.4 (3.5 ) 443.9 434.7 (4.4 ) 430.3 As a
% of total net sales 24.5 % 24.3 % 23.8 % 23.5 % Amortization
expense of intangible assets acquired 31.2 - 31.2 31.9 - 31.9 Stock
appreciation rights expense 0.5 (0.5 )
- 18.0 (18.0 )
- Costs related to the acquisition and integration of
Diversey 0.9 (0.9 )
- 0.4 (0.4 )
- Restructuring and
other charges (credits) 6.1 (6.1 ) - (0.2 ) 0.2
-
Operating profit 154.9 12.1
167.0 127.4 24.1 151.5 As a % of total
net sales 8.5 % 9.1 % 7.0 % 8.3 % Interest expense (78.5 ) - (78.5
) (90.8 ) - (90.8 ) Foreign currency exchange losses related to
Venezuelan subsidiaries (15.0 ) 15.0 - (13.1 ) 13.1 - Gain on
Settlement agreement, net 21.1 (21.1 ) - - - - Loss on debt
redemption (0.4 ) 0.4 - (32.3 ) 32.3 - Other income (expense), net
0.4 1.9 2.3 0.3 0.1 0.4
Income from continuing operations before income tax
provision 82.5 8.3 90.8 (8.5
) 69.6 61.1 Income tax provision (benefit)
10.7 8.7 19.4 (9.2 ) 20.4 11.2
Effective income tax rate 13.0 % 21.4 % 108.2 % 18.3 %
Net
earnings from continuing operations 71.8 (0.4
) 71.4 0.7 49.2 49.9 Net
earnings from discontinued operations - - -
2.0 2.0 -
Net earnings available to common
stockholders $ 71.8 $ (0.4
) $ 71.4 $ 2.7
$ 51.2 $ 49.9
Net earnings per common share: Diluted: Continuing
operations $ 0.33
$ -
$ 0.33
$ -
$ 0.23
$ 0.23
Discontinued operations -
- - 0.01 0.01 -
Net earnings
per common share - diluted $ 0.33 $
- $ 0.33 $ 0.01
$ 0.24 $ 0.23
Weighted average number of common shares outstanding:
Diluted
214.5 214.5 214.5
212.7 212.7 212.7
Non-U.S. GAAP Adjusted EBITDA: Non-U.S. GAAP Adjusted
Operating Profit $ 167.0 $ 151.5 Other income
(expense), net 2.3 0.4 Depreciation and amortization
82.8
79.5
Non-U.S. GAAP Adjusted EBITDA $ 252.1
$ 231.4 As a % of total net sales
13.8 %
12.7 %
(1) The supplementary
information included in this press release for 2014 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) Special items consist of certain one-time costs or
charges/credits that are included in our U.S. GAAP reported
results. These special items include restructuring and other
associated costs related to our previously announced Earnings
Quality Improvement Program ("EQIP") and the Integration and
Optimization Program ("IOP") restructuring programs, foreign
currency exchange losses related to Venezuelan subsidiaries, losses
recorded on debt redemption and financing activities and stock
appreciation rights ("SARs") expense and in 2014 the gain on the
Settlement agreement, which primarily consisted of the release of
certain tax and other liabilities and deferred tax valuation
reserves. (3) In December 2013, we completed the sale of our rigid
medical packaging business. The financial results of the rigid
medical business is reported as discontinued operations, net of
tax, and, accordingly all previously reported financial information
has been revised. (4) Depreciation and amortization includes:
Three Months Ended
March 31, 2014 2013 Depreciation
of property, plant and equipment $ 37.1 $ 40.0 Amortization of
intangible assets acquired 31.2 31.9 Amortization of deferred
share-based compensation 14.5 7.6
Total $ 82.8 $ 79.5
SEALED AIR CORPORATION SUPPLEMENTARY
INFORMATION SEGMENT INFORMATION(1)
(Unaudited) Three Months Ended
March 31, % 2014 2013 Change
Revised(2)
Net Trade Sales: Food Care $ 904.3 $ 903.1 0.1 %
As a % of Total Company net trade sales 49.5 % 49.4 % Diversey Care
505.1 512.9 -1.5 % As a % of Total Company net trade sales 27.6 %
28.0 % Product Care 393.8 387.2 1.7 % As a % of Total Company net
trade sales 21.5 % 21.2 %
Total Reportable
Segments Net sales 1,803.2 1,803.2 - Other
24.5 25.7 -4.7 %
Total Company Net Trade
Sales $ 1,827.7 $ 1,828.9
- Three Months
Ended March 31, % 2014 2013
Change
Revised(2)
Adjusted EBITDA: Food Care $ 159.5 $ 145.7 9.5 %
Adjusted EBITDA Margin 17.6 % 16.1 % Diversey Care 44.5 42.6 4.5 %
Adjusted EBITDA Margin 8.8 % 8.3 % Product Care 70.1 62.6 12.0 %
Adjusted EBITDA Margin 17.8 % 16.2 %
Total
Reportable Segments Adjusted EBITDA 274.1 250.9
9.2 % Other (22.0 ) (19.5 ) 12.8 %
Non-U.S. GAAP
Total Company Adjusted EBITDA $ 252.1
$ 231.4 8.9 % Adjusted EBITDA
Margin 13.8 % 12.7 %
(1) As previously announced, effective as
of January 1, 2014, the Company changed its segment reporting
structure in order to reflect the way management now makes
operating decisions and manages the growth and profitability of the
business. See our Current Report on Form 8-K filed with the SEC on
April 16, 2014 for further details.
(2) In December 2013, we completed the sale of our rigid medical
packaging business. The financial results of the rigid medical
business is reported as discontinued operations, net of tax, and,
accordingly all previously reported financial information has been
revised.
SEALED AIR CORPORATION SEGMENT
INFORMATION - CONTINUED SUPPLEMENTARY
INFORMATION(1) (Unaudited)
Reconciliation of Non-U.S. GAAP Total
Company Adjusted EBITDA to Net Earnings from Continuing
Operations:
Three Months Ended March 31, 2014
2013 Revised(2)
Non-U.S. GAAP Total Company
Adjusted EBITDA $ 252.1 $ 231.4
Depreciation and amortization (3) (82.8 ) (79.5 ) Special items(4):
Restructuring and other charges(5) (6.1 ) 0.2 Other restructuring
associated costs included in cost of sales and selling general and
administrative expenses (4.6 ) (5.9 ) SARs (0.5 ) (18.0 ) Costs
related to the acquisition and integration of Diversey (0.9 ) (0.4
) Foreign currency exchange losses related to Venezuelan
subsidiaries (15.0 ) (13.1 ) Loss on debt redemption (0.4 ) (32.3 )
Gain on Settlement agreement in 2014 and related costs 21.1 (0.1 )
Other expense, net (1.9 ) - Interest expense (78.5 ) (90.8 ) Income
tax provision (benefit) 10.7 (9.2 )
U.S.
GAAP net earnings from continuing operations $
71.8 $ 0.7
Notes: (1) The supplementary
information included in this press release for 2014 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) In December 2013, we sold our rigid medical packaging business.
The financial results of the rigid medical business are reported as
discontinued operations, net of tax, and, accordingly all
previously reported financial information has been revised. (3)
Depreciation and amortization by segment is as follows:
Three Months Ended March 31,
2014 2013 Revised(2) Food Care $ 32.0 $ 30.2 Diversey
Care 32.3 34.7 Product Care 10.6 9.7
Total
reportable segments 74.9 74.6 Other 7.9
4.9
Total Company depreciation and amortization
$ 82.8 $ 79.5 (4) Includes items we
consider unusual or special items. See Note 2 of "Reconciliation of
U.S. GAAP Condensed Consolidated Statements of Operations to
Non-U.S. GAAP Adjusted Condensed Consolidated Statements of
Operations and Non-U.S. GAAP Adjusted EBITDA" (5) Restructuring and
other charges by segment is as follows:
Three Months Ended March 31,
2014
2013 Revised(2) Food Care $ 4.1 $ (1.4 ) Diversey Care 0.4
(0.8 ) Product Care 1.5 2.0
Total reportable segments
6.0 (0.2 ) Other 0.1 -
Total Company
restructuring and other charges $ 6.1 $ (0.2
) SEALED AIR
CORPORATION SUPPLEMENTARY INFORMATION COMPONENTS OF
CHANGE IN NET SALES BY SEGMENT(1) (Unaudited)
(In millions) Three Months Ended March 31,
2014 Food Care Diversey Care Product Care
Other Total
Company
Volume - Units $ (1.6 ) (0.2 ) % $ (10.1 ) (2.0 ) % $ 1.8 0.5 % $
(1.8 ) (7.0 ) % $ (11.7 ) (0.6 ) % Product price/mix (2) 37.2 4.1
16.3 3.2 8.4 2.1 0.5 1.9 62.4 3.4 Foreign currency translation
(34.4 ) (3.8 ) (14.0 ) (2.7 ) (3.6 ) (0.9 )
0.1 0.4 (51.9 ) (2.8 )
Total change
(U.S. GAAP) $ 1.2 0.1
% $ (7.8 ) (1.5 )
% $ 6.6 1.7 %
$ (1.2 ) (4.7 ) %
$ (1.2 ) - % Foreign
currency translation $ 34.4 3.8 % $ 14.0 2.7
% $ 3.6 0.9 % $ (0.1 ) (0.4 ) % $ 51.9
2.8 %
Total constant dollar change (Non-U.S. GAAP)(3)
$ 35.6 3.9 % $
6.2 1.2 % $ 10.2
2.6 % $ (1.3 )
(5.1 ) % $ 50.7
2.8 %
(1) The results above are presented on
a continuing operations basis, excluding our rigid medical
business, which we sold in December 2013. (2) Our product 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 product 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. The impact
to our reported product price/mix of these purchases in other
countries at selling prices denominated in U.S. dollars or euros.
(3) Changes in these items excluding the impact of foreign currency
translation are non-U.S. GAAP financial measures. 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) Unaudited (In millions)
Three Months
Ended March 31, 2014 North
Latin
America Europe
America
AMAT(2)
JANZ(3)
Total Change in Net Sales Volume - Units $ (9.3 ) $
(11.4 ) $ 2.0 $ 8.3 $ (1.3 ) $ (11.7 ) % change (1.3 ) % (2.0 ) %
1.0 % 4.2 % (0.9 ) % (0.6 ) % Product price/mix 33.5 2.3 17.5 5.9
3.2 62.4 % change 4.8 % 0.4 % 8.9 % 3.0 % 2.2 % 3.4 % Foreign
currency translation (5.9 ) 14.3 (31.8 ) (13.1 ) (15.4 ) (51.9 ) %
change (0.8 ) % 2.4 % (16.3 ) %
(6.6 ) % (10.5 ) % (2.8 ) %
Total change (U.S.
GAAP) $ 18.3 $ 5.2
$ (12.3 ) $ 1.1 $
(13.5 ) $ (1.2 ) % change 2.7 %
0.8 % (6.4 ) % 0.6 % (9.2 ) % - % Foreign currency
translation $ 5.9 $ (14.3 ) $ 31.8 $ 13.1 $
15.4 $ 51.9
Total constant dollar change (Non-U.S.
GAAP) $ 24.2 $ (9.1 )
$ 19.5 $ 14.2 $
1.9 $ 50.7 Constant dollar %
change 3.5 % (1.6 ) % 9.9 % 7.2 % 1.3 % 2.8 %
(1) The results above are presented on a continuing
operations basis, excluding our rigid medical business, which we
sold in December 2013. (2) AMAT = Asia, Middle East, Africa and
Turkey. (3) JANZ = Japan, Australia and New Zealand.
Sealed Air CorporationInvestor Contact:Lori Chaitman,
201-703-4161orMedia Contact:Ken Aurichio, 201-703-4164
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