- Announced definitive agreement to sell
Diversey to Bain Capital Private Equity for $3.2 billion on March
27, 2017; Diversey reported as Discontinued Operations
- First Quarter 2017 Sales from
Continuing Operations of $1.0 Billion, an increase of 3% reflecting
6% growth in North America
- Net Loss from Continuing Operations of
$54 Million and Reported Net Loss Per Share from Continuing
Operations of $(0.27), including tax expense of $127 Million, or
$0.65 Per Diluted Share Related to Pending Sale of Diversey
- Adjusted Net Income from Continuing
Operations of $85 Million and Adjusted EPS from Continuing
Operations of $0.43 per share
- Provided Outlook for Full Year 2017
from Continuing Operations
Sealed Air Corporation (NYSE:SEE) today announced financial
results for first quarter 2017. Commenting on these results, Jerome
A. Peribere, President and Chief Executive Officer, said, “2017 is
a transformational year for Sealed Air. In March, we announced the
sale of Diversey to Bain Capital Private Equity in a transaction
valued at $3.2 billion. This transaction marks a significant
milestone for both New Sealed Air and Diversey and we are committed
to a timely and successful separation. For Sealed Air, the
divestiture gives us an even greater focus on executing our
profitable growth story and the financial flexibility to invest in
our core business.”
Peribere continued, “Our first quarter performance demonstrates
our commitment to renewed growth and high quality earnings. We were
pleased North America delivered 7% volume growth as a result of
increased demand for our protein packaging and e-Commerce
solutions. Looking forward, we expect continued momentum on the top
line and improved earnings throughout the remainder of the
year.”
Unless otherwise stated, all results compare first quarter 2017
results to first quarter 2016 results from continuing operations.
Diversey refers to the Diversey Care and food hygiene and cleaning
business. As a result of the Diversey transaction, we have also
changed our segment reporting structure effective as of January 1,
2017. Food Care now includes the Medical Applications businesses
which were previously reported under 'Other'. Additionally, Food
Care now excludes the food hygiene 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.
First Quarter 2017 Highlights by
Division
- Food Care net sales of $656 million
increased 2.7% as reported. Currency had a positive impact on Food
Care net sales of 0.6%, or $4 million. On a constant dollar basis,
net sales increased 2.1% due to positive volume growth of 3.1%
partially offset by lower price/mix of 1.0%. Volume growth of 9% in
North America and 1% in Latin America were partially offset by
declines in Europe, Middle East and Africa (EMEA) and Asia Pacific.
Adjusted EBITDA of $142 million or 21.7% of net sales was primarily
attributable to positive volume trends, which were partially offset
by unfavorable mix and price/cost spread.
- Product Care net sales of $377 million
in the first quarter were up 2.5% as reported and 3.6% on a
constant dollar basis. Currency had a negative impact on Product
Care net sales of 1.1%, or $4 million. Sales volume increased 5.0%
with positive trends across all regions. This was offset by
unfavorable price/mix of 1.4%. North America volumes were up 5.5%
as a result of continued strength in e-Commerce. Adjusted EBITDA of
$74 million or 19.7% of net sales was attributable to volume
growth, which was more than offset by higher raw material costs and
unfavorable mix of e-Commerce products.
- On March 27, 2017, Sealed Air announced
it had entered into a definitive agreement to sell Diversey to Bain
Capital Private Equity, a leading global private investment firm,
for $3.2 billion. The transaction is expected to close in early
September.
- In conjunction with the announced
divestiture, Sealed Air's Board of Directors authorized an increase
of the share repurchase program by an additional $1.5 billion of
Sealed Air common stock. With this increase, the total
authorization for future repurchases under the program is
approximately $2.2 billion.
First Quarter 2017 U.S. GAAP Summary,
Continuing Operations
Net sales of $1.0 billion increased 2.6% on an as reported
basis. Currency had a negative impact on total net sales of 0.1%,
or $1 million. As reported, net sales in Latin America and North
America increased 7.2% and 5.9% respectively. Asia Pacific was up
3.1% as reported while EMEA declined 6.7%.
Net loss from continuing operations on a reported basis was $54
million, or $(0.27) per diluted share as compared to $75 million,
or $0.37 per diluted share in the first quarter 2016. Net earnings
in the first quarter 2017 were unfavorably impacted by $139 million
of special items, including $127 million of tax expense recorded in
accordance with the pending sale of Diversey. Special items
negatively impacting the first quarter of 2017 also included costs
incurred related to the sale of Diversey, and restructuring and
other restructuring associated costs. Net earnings in the first
quarter 2016 included $8 million of special items, primarily
consisting of restructuring and other restructuring associated
costs, a loss on the sale of our European food trays business, and
a loss on the remeasurement of our Venezuelan operations.
The effective tax rate in the first quarter of 2017 was 165.1%,
compared to the effective tax rate of 19.0% in the first quarter of
2016. The effective tax rate in the first quarter of 2017 was
negatively impacted by previously discussed tax expense related to
the pending sale of Diversey, which was partially offset by a $9
million tax benefit on share-based compensation and a $5 million
benefit related to statute of limitations expirations and audit
settlements. The effective tax rate in the first quarter of 2016
was favorably impacted by a $10 million tax benefit on share-based
compensation.
First Quarter 2017 Non-U.S. GAAP
Summary, Continuing Operations
Net sales on a constant dollar basis increased 2.7%. North
America was up 5.7% followed by Latin America, which delivered
constant dollar sales growth of 5.5%. Volumes increased 3.8% with
positive trends across the all regions except EMEA. Volumes in
North America increased 7.4% and Latin America was up 1.4%.
Constant dollar sales were relatively flat in Asia Pacific while
EMEA declined 3.5%.
Adjusted EBITDA for the first quarter 2017 was $182 million, or
17.6% of net sales, compared to $186 million, or 18.5% of net sales
for the first quarter of 2016. Adjusted EBITDA included $34 million
of Corporate expenses in the first quarter of 2017, of which $8
million reflected costs that were previously allocated to Diversey
but not included in net income from discontinued operations.
Corporate expenses were $30 million in the first quarter of 2016,
and included $5 million of costs that were previously allocated to
Diversey, but which were not included in net income from
discontinued operations.
Adjusted EPS was $0.43 for the first quarter 2017. This compares
to Adjusted EPS of $0.42 in the first quarter 2016. The Adjusted
Tax Rate was 13.6% in the first quarter 2017, compared to 18.8% in
the first quarter 2016. The Adjusted Tax Rate in the first quarter
of 2017 was favorably impacted by $9 million of tax benefit on
share-based compensation and $6 million benefit related to statute
of limitations expirations and audit settlements. The Adjusted Tax
Rate in the first quarter of 2016 was favorably impacted by a $10
million tax benefit on share-based compensation.
First Quarter 2017 U.S. GAAP Summary,
Discontinued Operations.
Net sales included in the calculation of net earnings from
discontinued operations were $582 million as compared to $585
million in the first quarter of 2016. Net income from discontinued
operations on a reported basis was $11 million, or $0.05 per
diluted share, as compared to $28 million, or $0.14 per diluted
share in the first quarter 2016. Net earnings in the first quarter
2017 were negatively impacted by $19 million of tax expense related
to the planned repatriation of foreign earnings.
Cash Flow and Net Debt
Cash flow provided by operating activities in the first three
months of 2017 was $17 million, which is net of $15 million of
restructuring payments. This compares with cash provided by
operating activities of $15 million in the first three months of
2016.
Capital expenditures decreased to $50 million in the first three
months of 2017 compared to $52 million in the first three months of
2016. Free Cash Flow, defined as net cash provided by operating
activities less capital expenditures, was an outflow of $33 million
in the first three months of 2017. This compares to an outflow of
$41 million in the first three months of 2016.
Compared to December 31, 2016, the Company’s net debt increased
$89 million to $3.9 billion as of March 31, 2017. This increase in
net debt primarily resulted from a use of working capital, capital
expenditures, and amounts paid for dividends.
Updated Outlook for Full Year 2017,
Continuing Operations
For the full year 2017, the Company expects to achieve
approximately Net Sales of $4.3 billion, as compared to $4.2
billion for the full year 2016. This sales performance is based on
an expected 3% constant dollar sales growth in Food Care and 3 - 4%
constant dollar sales growth in Product Care. Currency is expected
to have a negative impact of $35 million on Net Sales in 2017.
Adjusted EBITDA from continuing operations for the full year
2017 is expected to be approximately $825 million, as compared to
$808 million for the full year 2016. The outlook for Adjusted
EBITDA assumes $25 million of costs that were previously allocated
to Diversey that were not included in net earnings from
discontinued operations, which compares to $17 million in 2016.
Currency is expected to have a negative impact of approximately $5
million on Adjusted EBITDA in 2017.
Adjusted EPS from continuing operations is expected to be
approximately $1.70 for the full year 2017 and assumes an Adjusted
Tax Rate of 28% and an estimated 196 million diluted shares
outstanding, which is in line with diluted shares outstanding in
the first quarter of 2017.
The Company's Free Cash Flow outlook assumes an early September
close on the sale of Diversey and is based on a full year of
Adjusted EBITDA from continuing operations of $825 million and
eight months from discontinued operations of $215 million. Free
Cash Flow outlook excludes cash flow generation from working
capital related to Diversey in the last four months of the year,
and does not include payments expected to be paid in relation to
the sale of Diversey. The Company anticipates 2017 Free Cash Flow
to be approximately $390 million, including capital expenditures of
approximately $175 million and cash restructuring payments of
approximately $50 million, which excludes any restructuring
programs to address stranded and unallocated costs. Full year 2016
Free Cash Flow was $631 million, including $276 million of capital
expenditures and cash restructuring payments of $66 million.
Conference Call
Information
Date:
Tuesday, May 9, 2017
Time:
10:00am (ET)
Webcast:
www.sealedair.com/investors
Conference Dial
In:
(855) 472-5411 (domestic) (330) 863-3389 (international)
Participant
Code:
6791312
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:
Tuesday, May 9, 2017 at 1:00pm (ET) through
Thursday, June 8, 2017 at 12:59pm (ET)
Webcast:
www.sealedair.com/investors
Conference Dial
In:
(855) 859-2056 (domestic) (404) 537-3406 (international)
Participant
Code:
6791312
Business
Sealed Air Corporation creates a world that feels, tastes and
works better. In 2016, the Company generated revenue of
approximately $6.8 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, enables 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
23,000 employees who serve customers in 171 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 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 non-U.S. GAAP measures to U.S. GAAP 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 non-U.S.
GAAP measures to 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 the
separation of the Diversey Care division and food hygiene business,
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 Ended March 31, 2017 2016
Net sales $ 1,032.2 $
1,005.9 Cost of sales 695.8 670.3
Gross profit 336.4 335.6 As a % of
total net sales 32.6 % 33.4 % Selling, general and administrative
expenses 195.8 185.1 As a % of total net sales 19.0 % 18.4 %
Amortization expense of intangible assets acquired 5.0 2.8
Restructuring and other charges 1.9 (0.2 )
Operating profit 133.7 147.9 Interest expense
(48.8 ) (50.9 ) Foreign currency exchange loss related to
Venezuelan subsidiaries — (1.0 ) Other expense, net (2.3 )
(3.5 )
Earnings from continuing operations before income
tax provision 82.6 92.5 Income tax provision(2)
136.4 17.6 Effective income tax rate
165.1 % 19.0 %
Net (loss) earnings from continuing
operations (53.8 ) 74.9 Net earnings from discontinued
operations, net of tax 10.6 27.5
Net
(loss) earnings available to common stockholders $
(43.2 ) $ 102.4
Basic(2)(3): Continuing operations
$
(0.27 ) $ 0.37 Discontinued operations
0.05 0.14 Net (loss)
earnings per common share - basic
$ (0.22 )
$ 0.51 Diluted(2)(3):
Continuing operations
$ (0.27 ) $
0.37 Discontinued operations
0.05
0.14 Net (loss) earnings per common share -
diluted
$ (0.22 ) $ 0.51
Dividends per common share $ 0.16
$ 0.13 Weighted average number of common
shares outstanding: Basic 193.4
195.2 Diluted(2)
195.7 197.5
__________________
(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) The Company early adopted
ASU 2016-09 on a prospective basis as required, related to the
recognition of excess tax benefits to the income statement which
were previously recorded in additional paid-in capital, effective
January 1, 2016. This resulted in an additional 404,347 diluted
weighted average number of common shares outstanding for the three
months ended March 31, 2016, and recognition of excess tax benefits
of $9.6 million in income tax provision from continuing operations
for the three months ended March 31, 2016. As a result, net
earnings per common share increased by $0.05 per share per share
for the three months ended March 31, 2016. (3) Net earnings per
common share are calculated under the two-class method. See our
Annual Report on Form 10-K for year ended December 31, 2016 for
more information on the two-class method.
SEALED
AIR CORPORATION SUPPLEMENTARY INFORMATION CONDENSED
CONSOLIDATED BALANCE SHEETS(1)
(Unaudited)
(In millions)
March 31,
December 31, 2017 2016 Assets Current
assets: Cash and cash equivalents $ 258.4 $ 333.7 Trade
receivables, net 450.5 460.5 Other receivables 84.0 84.2
Inventories 507.0 456.7 Current assets held for sale 2,891.8 825.7
Other current assets 95.8 54.6
Total current
assets 4,287.5 2,215.4 Property and equipment,
net 910.1 889.6 Goodwill 1,884.7 1,882.9 Intangible assets, net
39.3 40.1 Deferred taxes 122.4 169.9 Non-current assets held for
sale — 2,026.0 Other assets, net 177.2 175.3
Total
assets $ 7,421.2 $ 7,399.2
Liabilities and stockholders' equity Current liabilities:
Short-term borrowings $ 96.9 $ 83.0 Current portion of long-term
debt 296.5 297.0 Accounts payable 581.1 539.2 Current liabilities
held for sale 1,215.4 683.3 Other current liabilities 471.7
516.5
Total current liabilities 2,661.6
2,119.0 Long-term debt, less current portion 3,762.7 3,762.6
Deferred taxes 4.3 4.9 Non-current liabilities held for sale —
501.0 Other liabilities 397.8 402.0
Total
liabilities 6,826.4 6,789.5
Stockholders' equity 594.8 609.7
Total liabilities
and stockholders' equity $ 7,421.2 $
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)
March 31, December 31,
2017 2016 Short-term borrowings $ 96.9
$ 83.0 Current portion of long-term debt 296.5 297.0 Long-term
debt, less current portion 3,762.7 3,762.6
Total debt 4,156.1 4,142.6 Less: cash and cash equivalents
(258.4 ) (333.7 )
Net debt $
3,897.7 $ 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)
Three Months Ended March 31, 2017 2016
Revised(3) Net (loss) earnings available to common stockholders $
(43.2 ) $ 102.4 Adjustments to reconcile net earnings to net cash
provided by operating activities(2) 184.9 66.7 Changes in: Trade
receivables, net (3.3 ) (22.3 ) Inventories (64.3 ) (65.1 )
Accounts payable 56.1 39.0 Changes in all other operating assets
and liabilities (113.0 ) (106.0 )
Cash flow
provided by operating activities 17.2 14.7
Capital expenditures for property and equipment (50.4 ) (51.8 )
Proceeds, net from sale of businesses 2.3 4.2 Proceeds from sales
of property, equipment and other assets 0.1 1.3 Settlement of
foreign currency forward contracts (7.3 ) (22.4 )
Cash flow used in investing activities (55.3 )
(68.7 ) Net proceeds (payments) from
borrowings 10.2 106.8 Cash used as collateral on borrowing
arrangements (1.2 ) (0.2 ) Repurchase of common stock — (32.0 )
Dividends paid on common stock (31.4 ) (26.2 ) Acquisition of
common stock for tax withholding (21.5 ) (22.3 ) Other financing
activities (1.8 ) —
Cash flow (used in)
provided by financing activities (45.7 )
26.1 Effect of foreign currency exchange rates on
cash and cash equivalents 8.5
(10.9 ) Cash and cash equivalents beginning
of period $ 333.7 $ 321.7 Net
change in cash and cash equivalents (75.3 ) (38.8 )
Cash and cash equivalents end of period $
258.4 $ 282.9 Non-U.S.
GAAP Free Cash Flow: Cash flow from operating activities $ 17.2
$ 14.7 Capital expenditures for property and equipment (50.4
) (51.8 )
Free Cash Flow(4) $
(33.2 ) $ (37.1 )
Additional Cash Flow Information: Interest payments, net of amounts
capitalized $ 48.0 $ 48.9 Income tax payments $ 46.2
$ 29.6 SARs payments (less amounts included in
restructuring payments) $ — $ 0.1 Restructuring
payments (including associated costs) $ 15.2 $ 18.7
__________________
(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) 2017 primarily consists of
$112 million of deferred taxes, including $127 million of tax
expense recorded in accordance with the pending sale of Diversey,
depreciation and amortization of $53 million, share based
compensation expense of $9 million and profit sharing expense of $9
million. 2016 primarily consists of depreciation and amortization
of $59 million, profit sharing expense of $7 million and loss on
sale of businesses of $3 million. (3) The Company early adopted ASU
2016-09 on a retrospective basis related to the classification of
excess tax benefits on the Statement of Cash Flows, effective
January 1, 2016, which resulted in an increase in operating cash
flow of $7 million and a decrease in financing activities of $7
million for the three months ended March 31, 2016. Additionally,
due to changes in the accounting treatment of a factoring agreement
the Company reclassified amounts from cash and cash equivalents to
other receivables $3 million as of March 31, 2016. This
reclassification resulted in a decrease in cash provided by
operating activities of $4 million for the three months ended March
31, 2016. (4)
Free cash flow was $(31) million in 2017
excluding the payment of charges related to the sale of Diversey of
$2 million. 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 March 31, 2017
2016 Net Net
Earnings EPS Earnings EPS
U.S. GAAP net (loss) earnings and EPS
available to common stockholders from continuing
operations(2)
$ (53.8) $ (0.27) $ 74.9 $ 0.37 Special Items(3) 138.6
0.70 7.9 0.05
Non-U.S. GAAP adjusted net (loss)
earnings and adjusted EPS available to common
stockholders from continuing operations
$ 84.8 $ 0.43 $ 82.8 $ 0.42
Weighted average number of common
shares outstanding - Diluted
195.7 197.5
__________________
(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
Ended
March 31,
2017 2016 Special Items: Restructuring and
other charges $ (1.9 ) $ 0.2
Other restructuring associated costs
included in cost of sales andselling, general
and administrative expenses
(3.9 ) (3.9 ) SARs — (0.1 )
Foreign currency exchange loss related to
Venezuelan subsidiaries
— (1.0 )
Gain (loss) on sale of North American foam
trays and absorbent pads business and European
food trays business
2.3 (1.6 )
Loss related to the sale of other
businesses, investments and property, plant and
equipment
— (1.7 ) Charges incurred related to the sale of Diversey (16.1 ) —
Other Special Items(1) 4.1 (1.4 ) Pre-tax
impact of Special Items (15.5 ) (9.5 ) Tax impact of Special Items
and Tax Special Items(2) (123.1 ) 1.6 Net
impact of Special Items $ (138.6 ) $ (7.9 ) Weighted average number
of common shares outstanding - Diluted 195.7
197.5 Earnings per share impact from Special Items $ (0.70 )
$ (0.05 )
__________________
(1) Other Special Items for the three months ended March 31,
2017 primarily included a recovered wage tax as the result of a
court ruling partially offset by legal fees associated with
restructuring and acquisitions. Other Special Items for the three
months ended March 31, 2016 primarily included legal fees
associated with restructuring and acquisitions. (2) 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
March 31,
2017 2016
U.S. GAAP Earnings before income tax
provision from continuing operations
$ 82.6 $ 92.5 Pre-tax impact of Special Items (15.5 )
(9.5 )
Non-U.S. GAAP Adjusted Earnings before
income tax provision from continuing operations
$ 98.1 $ 102.0
U.S. GAAP Income tax (benefit) provision
from continuing operations
$ 136.4 $ 17.6 Tax Special Items(1) (128.3 ) — Tax impact of
Special Items 5.2 1.6
Non-U.S. GAAP Adjusted Income tax
provision from continuing operations
$ 13.3 $ 19.2 U.S. GAAP Effective income tax
rate 165.1 % 19.0 % Non-U.S. GAAP Adjusted income tax rate 13.6 %
18.8 %
__________________
(1) For the three months ended March 31, 2017, the special
tax items included $127 million of tax expense recorded in
accordance with the pending sale of Diversey.
SEALED AIR CORPORATION SUPPLEMENTARY INFORMATION
SEGMENT INFORMATION(1) (Unaudited)
Three Months Ended
March 31, % 2017
2016
Change Net Sales: Food Care $ 655.6 $ 638.4
2.7 % As a % of Total Company net sales 63.5 % 63.5 % Product Care
376.6 367.5 2.5 % As a % of Total Company net sales 36.5 %
36.5 %
Total Company Net Sales $
1,032.2 $ 1,005.9 2.6
% Three Months Ended March 31,
% 2017
2016
Change Adjusted EBITDA from continuing
operations(2): Food Care $ 141.5 $ 138.6 2.1 %
Adjusted EBITDA Margin 21.6 % 21.7 % Product Care 74.1 77.1 -3.9 %
Adjusted EBITDA Margin 19.7 % 21.0 % Corporate expenses and
unallocated costs(3) (33.7 ) (29.5 ) 14.2 %
Non-U.S. GAAP Total Company
Adjusted EBITDA from continuing operations
$ 181.9 $ 186.2
-2.3 % Adjusted EBITDA Margin 17.6 % 18.5 %
__________________
(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) 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 for the
three months ended March 31, 2016. (3) Unallocated costs related to
Diversey that have been included in adjusted EBITDA for Corporate
were as follows:
Three
Months Ended March 31,
2017
2016
Unallocated costs $ 8.0 $
5.1
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)
(In millions)
Three Months Ended
March 31,
2017 2016 U.S. GAAP net earnings from
continuing operations $ (53.8 ) $
74.9 Interest expense (48.8 ) (50.9 ) Interest income 2.2
1.6 Income tax provision 136.4 17.6 Depreciation and
amortization(3) (37.2 ) (34.9 ) Special Items: Restructuring and
other charges (1.9 ) 0.2
Other restructuring associated costs
included in cost of sales and selling, general and
administrative expenses
(3.9 ) (3.9 ) SARs — (0.1 )
Foreign currency exchange loss related
to Venezuelan subsidiaries
— (1.0 )
Gain (loss) on sale of North American foam
trays and absorbent pads business and European food
trays business
2.3 (1.6 )
Loss related to the sale of other
businesses, investments and property, plant and
equipment
— (1.7 ) Charges incurred related to the sale of Diversey (16.1 ) —
Other(2) 4.1 (1.4 ) Pre-tax impact of Special
Items (15.5 ) (9.5 )
Non-U.S. GAAP Total Company
Adjusted EBITDA from
continuing operations
$ 181.9 $ 186.2
__________________
(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. (2) Other Special Items for the
three months ended March 31, 2017 primarily included a recovered
wage tax as the result of a court ruling partially offset by legal
fees associated with restructuring and acquisitions. Other Special
Items for the three months ended March 31, 2016 primarily included
legal fees associated with restructuring and acquisitions. (3)
Depreciation and amortization by segment are as follows:
Three Months Ended
March 31,
2017
2016
Food Care $ 25.1 $ 22.9 Product Care 11.5 9.6 Corporate
0.6 2.4
Total Company depreciation and
amortization(1) $ 37.2 $
34.9
__________________
(1) Includes share-based incentive compensation of $8.0
million and $11.5 million for the three months March 31, 2017 and
March 31, 2016 respectively. (4) Restructuring and
other charges by segment is as follows:
Three Months Ended
March 31,
2017
2016
Food Care $ 1.2 $ (0.1 ) Product Care 0.7 (0.1
)
Total Company restructuring and other charges $
1.9 $ (0.2 ) SEALED
AIR CORPORATION SUPPLEMENTARY INFORMATION COMPONENTS
OF CHANGE IN NET SALES BY SEGMENT(1)
Three Months Ended March 31,
(Unaudited) (In millions) Food Care
Product Care
Total
Company
2016 Net Sales $ 638.4 $ 367.5 $ 1,005.9 Volume - Units 19.8
3.1 % 18.5 5.0 % 38.3 3.8 % Price/mix(2) (6.2 ) (1.0 ) %
(5.2 ) (1.4 ) % (11.4 ) (1.1 ) % Total constant
dollar change (Non-U.S. GAAP)(3) 13.6 2.1 % 13.3 3.6 % 26.9 2.7 %
Foreign currency translation 3.6 0.6 %
(4.2 ) (1.1 ) % (0.6 ) (0.1 ) %
Total change (U.S.
GAAP) 17.2 2.7 %
9.1 2.5 %
26.3 2.6 %
2017 Net Sales $ 655.6 $
376.6 $ 1,032.2
__________________
(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. (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 March 31,
(Unaudited) (In millions) North America
EMEA(2) Latin America APAC(3)
Total 2016 Net Sales $ 531.6 $ 235.4 $ 90.9 $ 148.0 $
1,005.9 Volume - Units 39.4 7.4 % (3.6 ) (1.5 ) % 1.3 1.4 %
1.2 0.8 % 38.3 3.8 % Price/mix(4) (9.2 ) (1.7 ) %
(4.7 ) (2.0 ) % 3.7 4.1 % (1.2 ) (0.8 ) %
(11.4 ) (1.1 ) % Total constant dollar change (Non-U.S. GAAP)(5)
30.2 5.7 % (8.3 ) (3.5 ) % 5.0 5.5 % — — % 26.9 2.7 % Foreign
currency translation 0.6 0.1 % (8.0 )
(3.4 ) % 1.5 1.7 % 5.3 3.6 %
(0.6 ) (0.1 ) %
Total change (U.S. GAAP) $
30.8 5.8 % $ (16.3
) (6.9 ) % $ 6.5
7.2 % $ 5.3 3.6
% $ 26.3 2.6 %
2017 Net Sales $
562.4 $ 219.1 $
97.4 $ 153.3 $ 1,032.2
__________________
(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. (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.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION
HIGHLIGHTS OF FINANCIAL
STATEMENTS
(Unaudited)
(In millions)
Year Ended
December 31, 2016 Net sales $ 4,211.3 Earnings
from continuing operations before income tax provision 380.7 Cash
flow from operating activities 906.9 Adjusted EBITDA from
continuing operations 807.6
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION
RECONCILIATION OF U.S. GAAP EARNINGS
BEFORE INCOME TAX
PROVISION TO NON-U.S. GAAP TOTAL
COMPANY ADJUSTED EBITDA
(Unaudited)
(In millions)
Year Ended
December 31, 2016 Earnings from continuing
operations before income tax provision $ 380.7
Interest expense (199.4 ) Interest income 7.5 Depreciation and
amortization (158.1 ) Depreciation and amortization adjustments 5.4
Special Items: Restructuring and other charges (4.4 )
Other restructuring associated costs
included in cost of sales and selling, general and
administrative expenses
(20.0 ) SARs (0.7 )
Foreign currency exchange loss related
to Venezuelan subsidiaries
(1.6 ) Charges related to ceasing operations in Venezuela (52.7 )
Loss on debt redemption and refinancing activities (0.1 )
Gain (loss) on sale of North American foam
trays and absorbent pads business and European food
trays business
(1.8 )
Loss related to the sale of other
businesses, investments and property, plant and
equipment
(1.6 ) Charges incurred related to the sale of Diversey (1.4 )
Other 2.0 Pre-tax impact of Special Items
(82.3 )
Non-U.S. GAAP Total Company Adjusted
EBITDA from continuing operations
$ 807.6
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version on businesswire.com: http://www.businesswire.com/news/home/20170509005551/en/
Sealed Air CorporationInvestor Relations:Lori Chaitman,
201-712-7310
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