- Sales of $1.6 Billion and Adjusted
EBITDA of $243 Million or 15.3% of Net Sales
- Adjusted EPS of $0.50; Reported EPS of
$0.46
- Reaffirm 2016 outlook for Sales,
Adjusted EBITDA, Adjusted EPS and Free Cash Flow
Sealed Air Corporation (NYSE:SEE) today announced financial
results for first quarter 2016. Commenting on these results, Jerome
A. Peribere, President and Chief Executive Officer, said, “Our
first quarter results were in line with the guidance we provided on
February 10, 2016 for sales and Adjusted EBITDA of approximately
$1.6 billion and $245 million, respectively. We delivered first
quarter net sales on positive volume and favorable price/mix
despite the ongoing economic instability in Latin America. As we
anticipated, Adjusted EBITDA was negatively impacted by currency
headwinds, divestitures and product rationalization efforts, and
formula pricing in our Food Care division. Looking ahead, we are on
track to achieve our 2016 outlook for net sales, Adjusted EBITDA,
Adjusted EPS and Free Cash Flow and expect our results to
strengthen throughout the year. Strong customer acceptance of our
new and innovative product portfolios across all divisions,
positive trends in the global protein market and rapid growth in
e-Commerce, combined with our ongoing commitment to productivity
gains, will drive future performance.”
Unless otherwise stated, all results compare first quarter 2016
results to first quarter 2015 results. Year-over-year financial
discussions present operating results as reported, and on an
organic or constant dollar basis. Constant dollar refers to unit
volume and price/mix performance and excludes the impact of
currency translation from all periods referenced. Organic refers to
unit volume and price/mix performance and excludes the impact of
currency translation and the results from the divestiture of the
North American foam trays and absorbent pads business, which was
divested on April 1, 2015, and the divestiture of the European food
trays business in November 2015 (together “divestitures”), 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, Venezuela remeasurement, cash-settled stock
appreciation rights (“SARs”) granted as part of the Diversey
acquisition and certain other infrequent or one-time items. Please
refer to the financial statements included with this press release
for a reconciliation of Non-U.S. GAAP to U.S. GAAP financial
measures.
First Quarter 2016
Highlights
- Food Care organic sales volumes
increased 1.6% on volume growth of 3.7% in North America and 3.5%
Europe, Middle East and Africa (EMEA). Growth in these regions was
partially offset by a 6% volume decline in Latin America reflecting
economic instability in Venezuela and Brazil. Sales price/mix was
favorable 0.7% due to positive trends in EMEA and Latin America.
Food Care continued to experience strong product adoption and
increased market penetration of advanced packaging solutions. Food
Care Adjusted EBITDA of $148 million, or 19.3% of net sales, was
negatively impacted by higher non-material manufacturing expenses,
divestitures of non-core assets, unfavorable currency translation,
and formula pricing, which were partially offset by positive volume
trends and restructuring savings. In 2015, Food Care completed
divestitures of non-core assets, which resulted in a decrease of
$67 million of net sales and $14 million of Adjusted EBITDA in the
first quarter 2016.
- Diversey Care net sales results were
driven by favorable price/mix of 1.7% with positive trends across
all regions. Volumes grew by 4% in Asia Pacific and Latin America,
offset by weakness in the Middle East related to political unrest,
and declines in North America due to lower sales into our
distribution channel and the ERP implementation. The Company
expects North America to return to growth for the remainder of the
year as sales within its core customer base and to new customers
increase primarily in the food service and food retail sectors.
Higher expenses related to targeted investments and unfavorable
currency translation more than offset positive price/mix and cost
spread and restructuring savings, resulting in Adjusted EBITDA of
$36.3 million, or 8.2% of net sales.
- Product Care sales volumes increased
1.0% in the quarter with more than 6% volume growth in EMEA and
essentially flat trends in North America. These results were
attributable to ongoing strength in the e-Commerce and third party
logistics markets offset by rationalization efforts and weakness in
the manufacturing and electronics sectors. Rationalization efforts
in Latin America and North America are completed, while those
efforts in EMEA are expected to continue through the second quarter
2016. While sales were relatively unchanged, Product Care increased
Adjusted EBITDA to $77 million, or 21.0% of net sales. Margins
expanded 90 basis points primarily as a result of positive volume
trends partially offset by unfavorable currency translation.
First Quarter 2016
Summary
First quarter 2016 net sales of $1.6 billion decreased 8.9% on
an as reported basis and 2.4% on a constant dollar basis, but
increased 1.5% on an organic basis. Currency had a negative impact
on net sales of $113 million in the first quarter. On a regional
basis, in constant dollars, Latin America increased 9.2% and Asia
Pacific was up 0.8%. On an organic basis, EMEA increased 3.4% and
North America declined 2.0% in the first quarter.
Adjusted EBITDA for the first quarter 2016 was $243 million, or
15.3% of net sales, compared to $284 million, or 16.3% of net
sales, in first quarter 2015. Adjusted EBITDA results in the first
quarter 2016 were negatively impacted by currency of $18 million,
and divestitures of $14 million. Organic performance reflected
positive volume trends and restructuring savings, which were more
than offset by higher non-material manufacturing expenses as well
as salary and wage inflation.
First quarter 2016 net earnings on a reported basis were $91.9
million, or $0.46 per diluted share as compared to $97.2 million,
or $0.46 per diluted share in the first quarter 2015. Net earnings
in the first quarter 2016 included $6.3 million of special items,
primarily consisting of other costs associated with our
restructuring programs, as well as a loss on the divestiture of our
European food trays business and a loss on the remeasurement of our
Venezuelan subsidiaries. Net earnings in the first quarter 2015
included $17.4 million of special items, primarily consisting of
restructuring and other associated costs. Adjusted EPS was $0.50
for the first quarter 2016. This compares to Adjusted EPS of $0.54
in the first quarter 2015.
The effective tax rate in the first quarter of 2016 was 18.2%,
compared to the effective tax rate of 26.0% in the first quarter of
2015. The Adjusted Tax Rate was 21.5% in the first quarter 2016,
compared to 25.2% in the first quarter 2015. The reduction in the
effective and Adjusted Tax Rates reflected the Company’s ability to
repatriate earnings in a tax-efficient manner and a more favorable
earnings mix with earnings in jurisdictions with lower tax rates.
The reduction in the effective rate was also attributable to the
release of certain reserves due to the expiration of the statute of
limitations and settlements with taxing authorities.
For the first time since 2010, the Company announced that the
Board of Directors approved an increase in the Company’s quarterly
dividend. The dividend was increased by 23%, from $0.13 per share
to $0.16 per share. The Company also repurchased 0.7 million shares
of its common stock for approximately $32 million in the first
quarter of 2016. The average diluted shares outstanding as of March
31, 2016 were 197 million as compared to 212 million shares as of
March 31, 2015.
Cash Flow and Net Debt
Cash flow provided by operating activities in the first three
months of 2016 was $4 million, which is net of $19 million of
restructuring payments. This compares with cash provided by
operating activities of $325 million in the first three months of
2015. In March 2015, the Company received a tax refund of $235
million related to the payment of funds in connection with the
Settlement agreement (as defined in our 2015 Annual Report on Form
10-K). Excluding the tax refund, cash flow provided by operating
activities in the first three months of 2015 was $90 million, which
is net of $22 million of restructuring and $4 million of SARs
payments. The anticipated decline in cash flow in the first three
months of 2016 compared to the same period a year ago was primarily
due to working capital and lower net earnings.
Free Cash Flow, defined as net cash provided by (used in)
operating less capital expenditures, was an outflow of $48 million
in the first three months of the year. This compares to an inflow
of $69 million in the first three months of 2015, excluding the
Settlement agreement and excess tax benefit. Capital expenditures
increased as planned to $52 million in the first three months of
2016 and compares to $21 million in first three months of 2015.
Compared to December 31, 2015, the Company’s net debt increased
$182 million to $4.4 billion as of March 31, 2016. This increase in
borrowings primarily resulted from a use of working capital, higher
capital expenditures, and amounts paid for share repurchases and
dividends.
Reaffirm Outlook for Full Year
2016
The Company reaffirms its guidance provided on February 10, 2016
for Net Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow.
For the full year 2016, the Company is on track to achieve
approximately $6.8 billion in Net Sales and $1.17 to $1.19 billion
in Adjusted EBITDA. The outlook for Adjusted EPS is unchanged and
is expected to be in the range of $2.52 to $2.60. The outlook
assumes an Adjusted Tax Rate of 24%. Adjusted EPS guidance excludes
the impact of special items. The Company continues to anticipate
2016 Free Cash Flow to be approximately $550 million, including
capital expenditures of approximately $275 million and cash
restructuring payments of approximately $110 million.
Conference Call
Information
Date:
Thursday, April 28, 2016
Time:
10:00am (ET)
Webcast:
www.sealedair.com in the Investor Relations section
Conference Dial
In:
(888) 713-4214 (domestic) (617) 213-4866 (international)
Participant
Code:
71904198
Conference Call
Replay Information
Dates:
Thursday, April 28, 2016 at 3:00pm (ET) through Saturday, May 28,
2016 at 2:59pm (ET)
Webcast:
www.sealedair.com in the Investor Relations section
Conference Dial
In:
(888) 286-8010 (domestic) (617) 801-6888 (international)
Participant
Code:
28828516
Business
Sealed Air Corporation creates a world that feels, tastes and
works better. In 2015, the Company generated revenue of
approximately $7.0 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 169 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” or “organic” basis,
Adjusted Gross Profit, Adjusted Operating Profit, 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 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. 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 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,” “Reconciliation of Non-U.S. GAAP Total
Company Adjusted EBITDA to U.S. GAAP Net Earnings from Continuing
Operations,” “Components of Change in Net Sales by Segment,” and
“Components of 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.
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 2015 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, 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 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, 2016 2015
Net sales $
1,590.6 $ 1,746.4 Cost of sales
1,001.3 1,096.8
Gross profit
589.3 649.6 As a % of total net sales 37.0 % 37.2 %
Selling, general and administrative expenses 396.0 427.8 As a % of
total net sales 24.9 % 24.5 % Amortization expense of intangible
assets acquired 21.4 22.6 Stock appreciation rights expense(2) 0.3
2.9 Restructuring and other charges —
12.7
Operating profit 171.6
183.6 Interest expense (54.7 ) (58.5 ) Foreign currency
exchange (loss) gain related to Venezuelan subsidiaries(3) (1.7 )
0.8 Other (expense) income, net (2.9 )
5.4
Earnings before income tax provision
112.3 131.3 Income tax provision
20.4 34.1 Effective income tax rate 18.2 %
26.0 %
Net income $ 91.9
$ 97.2 Net earnings per common
share(4): Basic : $
0.47 $ 0.46 Diluted:
0.46 0.46
Dividends per common share $
0.13 $ 0.13 Weighted average
number of common shares outstanding: Basic
195.2 208.9
Diluted 197.0
211.7
____________
(1) The supplementary information included in this press
release for 2016 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 remaining amount of
cash-settled stock appreciation rights (“SARs”) were fully vested
as of March 31, 2015. However, we will continue to incur expense
related to these SARs until the last expiration date of these
awards (February 2020). 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. (3) Based on changes to the Venezuelan
currency exchange rate mechanisms, in the first quarter of 2015, we
changed the exchange rate we used to remeasure our Venezuelan
subsidiaries’ financial statements into U.S. dollars. As a result,
as of March 31, 2015, our excess cash position in our Venezuelan
subsidiaries was remeasured at the SIMADI rate resulting in a $1
million gain for the three months ended March 31, 2015. As of March
31, 2016, based on further changes in the Venezuelan exchange rate
mechanisms whereby the SIMADI rate was eliminated and replaced by
the DICOM rate, we used the DICOM rate to remeasure our bolivar
denominated monetary assets and liabilities. As a result of this
evaluation, the Company reported a remeasurement loss of $2 million
as of March 31, 2016. (4) Net earnings per common share are
calculated under the two-class method. See our Annual Report on
Form 10-K for period ended December 31, 2015 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, 2016 2015(1) Assets
Current assets: Cash and cash
equivalents $ 315.7 $ 358.4 Trade receivables, net 787.6 758.4
Other receivables 167.1 147.5 Inventories 736.5 660.8 Assets held
for sale 3.5 10.3 Other current assets
308.7 280.2
Total current assets
2,319.1 2,215.6 Property and equipment, net 954.4
930.7 Goodwill 2,929.4 2,909.5 Intangible assets, net 783.6 784.3
Other assets, net 552.8
549.9
Total assets $
7,539.3 $ 7,390.0 Liabilities
and stockholders' equity Current liabilities: Short-term
borrowings $ 353.1 $ 241.9 Current portion of long-term debt 61.6
46.6 Accounts payable 719.7 675.3 Other current liabilities
765.5 843.3
Total
current liabilities 1,899.9 1,807.1 Long-term
debt, less current portion 4,280.0 4,266.8 Other liabilities
798.3 789.0
Total
liabilities 6,978.2
6,862.9 Stockholders' equity
561.1 527.1
Total liabilities
and stockholders' equity $
7,539.3 $ 7,390.0
____________
(1) During the first quarter of 2016, the Company
adopted ASU 2015-03, Interest—Imputation of Interest (Subtopic
835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU
2015-03”) and ASU 2015-15, Interest—Imputation of Interest
(Subtopic 835-30), Presentation and Subsequent Measurement of Debt
Issuance Costs Associated with Line-of-Credit Arrangements (“ASU
2015-15”), which resulted in a decrease in other assets of $36
million and a decrease in long-term debt of $36 million as of
December 31, 2015 on the Condensed Consolidated Balance Sheets.
CALCULATION OF NET DEBT
(1)
March 31,
December 31, 2016 2015(2)
Short-term borrowings $ 353.1 $ 241.9 Current
portion of long-term debt 61.6 46.6 Long-term debt, less current
portion 4,280.0 4,266.8 Total
debt 4,694.7 4,555.3 Less: cash and cash equivalents
(315.7 ) (358.4 )
Net debt $
4,379.0 $ 4,196.9
____________
(1) The supplementary information included in this
press release for 2016 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) During the first
quarter of 2016, the Company adopted ASU 2015-03 & ASU 2015-15
which resulted in a decrease in other assets of $36 million and a
decrease in long-term debt of $36 million as of December 31, 2015
on the Condensed Consolidated Balance Sheets.
SEALED AIR CORPORATION SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(1)
(Unaudited) (In millions)
Three Months Ended March 31, 2016
2015 Revised(2) Net income $
91.9 $ 97.2 Adjustments to reconcile net earnings to
net cash provided by operating activities(3) 62.8 100.5 Changes in:
Trade receivables, net (22.3 ) 8.5 Inventories (65.1 ) (83.8 )
Accounts payable 39.0 75.0 Settlement agreement, and related items
(4) — 235.2 Changes in all other operating assets and liabilities
(102.3 ) (107.5 )
Cash
flow provided by operating activities 4.0 325.1
Capital expenditures for property and equipment (51.8 )
(20.7 ) Proceeds, net from sale of businesses 4.2 — Business
acquired in purchase transactions, net of cash and cash equivalents
acquired — (8.5 ) Proceeds from sales of property, equipment and
other assets 1.3 25.4 Settlement of foreign currency forward
contracts (22.4 ) 32.0
Cash flow (used in) provided by investing activities
(68.7 ) 28.2 Net proceeds from
borrowings 106.8 (39.1 ) Cash used as collateral on borrowing
arrangements (0.2 ) (14.2 ) Repurchase of common stock (32.0 )
(69.2 ) Excess tax benefit from stock based compensation 6.8 —
Dividends paid on common stock (26.2 ) (27.5 )
Acquisition of common stock for tax
withholding obligations under our Omnibus stock plan and
2005Contingent Stock Plan
(22.3 ) (6.2 )
Cash
flow provided (used in) by financing activities 32.9
(156.2 ) Effect of foreign currency
exchange rates on cash and cash equivalents
(10.9 ) 2.5
Cash and cash equivalents beginning of period $
358.4 $ 286.4 Net change in cash and cash
equivalents (42.7 ) 199.6
Cash and cash equivalents end of period $
315.7 $ 486.0
Non-U.S. GAAP Free Cash Flow: Cash flow from operating
activities $ 4.0 $ 325.1 Capital expenditures for property and
equipment (51.8 ) (20.7 )
Free Cash Flow(5)
$ (47.8 ) $
304.4 Settlement agreement and related items (4)
— (235.2 )
Free Cash Flow
excluding Settlement agreement and related items $
(47.8 ) $
69.2 Additional Cash Flow Information: Interest
payments, net of amounts capitalized $ 48.9 $
58.7 Income tax payments $ 29.6 $
23.8 SARs payments (less amounts included in restructuring
payments) $ 0.1 $ 3.7 Restructuring
payments (including associated costs) $ 18.7 $
22.0
____________
(1) The supplementary information included in this
press release for 2016 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) For the three months
ended March 31, 2015, certain amounts related to foreign currency
gains and losses, including the remeasurement loss related to
Venezuelan subsidiaries in 2015, and the settlement of foreign
currency forward contracts were misclassified on the Condensed
Consolidated Statement of Cash Flows. The reclassification of these
items resulted in an increase in cash used in operating activities
of $6 million, an increase to cash used in investing activities of
$32 million, and a decrease of $38 million due to the effect of
foreign currency exchange rate changes in cash. Additionally,
certain amounts related to compensating balance arrangements were
misclassified in the Condensed Consolidated Balance Sheet and
Condensed Consolidated Statement of Cash Flows. The
reclassification resulted in $14 million decrease in financing
activities, $36 million decrease in Cash and cash equivalents
beginning of period, and $50 million decrease in Cash and cash
equivalents end of period. (3) 2016 primarily consists of
depreciation and amortization of $62 million, profit sharing
expense of $7 million, loss on sale of businesses of $3 million, a
remeasurement loss of $2 million, partially offset by excess tax
benefits related to stock based compensation of $7 million. 2015
primarily consists of depreciation and amortization of $73 million,
deferred tax expense of $16 million, and profit sharing expense of
$10 million. (4) During the first quarter of 2015, the Company
received the tax refund of $235 million related to the Settlement
agreement payment. (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, 2016 2015
U.S.GAAPAsReported
Less:SpecialItems(2)
Non-U.S.GAAPAdjusted
U.S.GAAPAsReported
Less:SpecialItems(2)
Non-U.S.GAAPAdjusted
Net sales $ 1,590.6 $
— $ 1,590.6 $ 1,746.4
$ — $ 1,746.4 Cost of sales
1,001.3 (1.2 ) 1,000.1
1,096.8 (0.9 ) 1,095.9
Gross
profit 589.3 1.2 590.5 649.6
0.9 650.5 As a % of total net sales 37.0 % 37.1 %
37.2 % 37.2 % Selling, general and administrative expenses 396.0
(6.1 ) 389.9 427.8 (8.7 ) 419.1 As a % of total net sales 24.9 %
24.5 % 24.5 % 24.0 % Amortization expense of intangible assets
acquired 21.4
— 21.4 22.6
— 22.6 Stock appreciation
rights expense 0.3 (0.3 )
— 2.9 (2.9 )
—
Restructuring and other charges — —
— 12.7 (12.7 )
—
Operating profit 171.6 7.6
179.2 183.6 25.2 208.8 As a % of total
net sales 10.8 % 11.3 % 10.5 % 12.0 % Interest expense (54.7 ) —
(54.7 ) (58.5 ) — (58.5 ) Foreign currency exchange loss related to
Venezuelan subsidiaries (1.7 ) 1.7 — 0.8 (0.8 ) — Other (expense)
income, net (2.9 ) 3.4
0.5 5.4 (2.5 ) 2.9
Earnings before income tax provision
112.3 12.7 125.0
131.3 21.9
153.2 Income tax provision 20.4
6.4 26.8 34.1 4.5
38.6 Effective income tax rate(3) 18.2 %
21.5 % 26.0 %
25.2 %
Net income
$ 91.9 6.3 $
98.2 $ 97.2 $
17.4 $ 114.6 Net earnings per common
share(4): Diluted: $
0.46 $ 0.04 $ 0.50
$ 0.46 $ 0.08 $
0.54 Weighted average number of common
shares
outstanding:
Diluted 197.0
197.0 197.0 211.7
211.7 211.7
Non-U.S. GAAP Adjusted EBITDA: Non-U.S. GAAP Adjusted
Operating Profit $ 179.2 $ 208.8
Other income (expense), net 0.5 2.9 Depreciation and
amortization(5) 63.5 73.1 Write down of non-strategic assets,
included in depreciation and amortization (0.1 )
(0.6 )
Non-U.S. GAAP Adjusted EBITDA $
243.1 $ 284.2 As a % of total
net sales 15.3 % 16.3 %
____________
(1) The supplementary information included in this
press release for 2016 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 are
certain specified infrequent, non-operational or one-time
costs/credits that are included in our U.S. GAAP reported results.
These special items include restructuring and other associated
costs, foreign currency exchange losses related to Venezuelan
subsidiaries, stock appreciation rights (“SARs”) expense, and
gains/losses on sale of businesses. (3) Our Adjusted Tax Rate is
defined as the effective income tax rate on Non-U.S. GAAP Adjusted
Net Earnings. (4) Net earnings per common share are calculated
under two-class method. See our Annual Report on Form 10-K for
period ended December 31, 2015 for more information on the
two-class method. (5) Depreciation and amortization includes:
Three Months Ended March 31,
2016 2015 Depreciation of
property, plant and equipment $ 27.7 $
32.2 Amortization of intangible assets acquired 21.4
22.6 Amortization of deferred share-based compensation
14.4 18.3
Total $ 63.5 $
73.1 SEALED AIR
CORPORATION SUPPLEMENTARY INFORMATION
SEGMENT INFORMATION(1)
(Unaudited) (In millions)
Three Months Ended March
31, %
2016
2015(2)
Change
Net Sales: Food Care $
764.7 $ 879.8 (13.1 ) % As a % of Total Company net sales 48.1 %
50.4 % Diversey Care 441.4 467.9 (5.7 ) % As a % of Total Company
net sales 27.8 % 26.8 % Product Care 367.2 379.9 (3.3 ) % As a % of
Total Company net sales 23.1 %
21.8 %
Total Reportable Segments Net
Sales 1,573.3 1,727.6 (8.9 ) %
Other 17.3 18.8
(8.0 ) %
Total Company Net Sales $
1,590.6 $ 1,746.4
(8.9 ) %
Three Months Ended March 31, %
2016
2015(2)
Change
Adjusted EBITDA: Food Care $
147.8 $ 190.5 (22.4 ) % Adjusted EBITDA Margin 19.3 % 21.7 %
Diversey Care 36.3 41.1 (11.7 ) % Adjusted EBITDA Margin 8.2 % 8.8
% Product Care 77.1 76.4 0.9 % Adjusted EBITDA Margin
21.0 % 20.1 %
Total Reportable Segments
Adjusted EBITDA
261.2 308.0 (15.2 ) % Other
(18.1 ) (23.8 ) (23.9 ) %
Non-U.S. GAAP Total
Company Adjusted EBITDA
$ 243.1 $
284.2 (14.5 ) % Adjusted EBITDA Margin
15.3 % 16.3 %
____________
(1) The supplementary information included in this
press release for 2016 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, 2016,
our Kevothermal business was moved from Other to our Product Care
division. This resulted in a reclassification of $3 million of net
sales and $1 million of adjusted EBITDA for the three months ended
March 31, 2015.
SEALED AIR CORPORATION
SEGMENT INFORMATION – CONTINUED
SUPPLEMENTARY
INFORMATION(1)
RECONCILIATION OF NON-U.S. GAAP TOTAL COMPANY ADJUSTED EBITDA
TO U.S. GAAP NET EARNINGS FROM CONTINUING OPERATIONS
(Unaudited) (In millions)
Three Months Ended March 31,
2016
2015
Non-U.S. GAAP Total Company Adjusted
EBITDA $ 243.1 $
284.2 Depreciation and amortization (2) (63.5 ) (73.1 )
Special items(3): Accelerated depreciation of non-strategic assets
related to restructuring programs — 0.6 Restructuring and other
charges(4) — (12.7 )
Other restructuring associated costs
included in cost ofsales and selling, general and administrative
expenses
(6.1 ) (8.6 ) SARs (0.3 ) (2.9 ) Gain from sale of building in
connection with relocation — 3.5
Foreign currency exchange (loss) gains
related toVenezuelan subsidiaries
(1.7 ) 0.8 Loss from sale of European food trays business (1.6 ) —
Other (2.9 ) (2.0 ) Interest expense (54.7 ) (58.5 ) Income tax
provision 20.4
34.1
U.S. GAAP net income $
91.9 $ 97.2
____________
(1) The supplementary information included in this
press release for 2016 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) Depreciation and
amortization by segment are as follows:
Three Months Ended March 31,
2016
2015
Food Care $ 25.7 $ 28.5
Diversey Care 23.0 26.1 Product Care
9.6 10.1
Total reportable
segments 58.3 64.7 Other
5.2 8.4
Total Company
depreciation and amortization $
63.5 $ 73.1 (3)
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,” for further information. (4) Restructuring and other
charges by segment is as follows:
Three Months Ended March 31,
2016
2015
Food Care $ — $ 6.9
Diversey Care — 3.2 Product Care —
2.6
Total reportable segments
— 12.7 Other —
—
Total Company restructuring and other
charges $ — $
12.7 SEALED AIR
CORPORATION SUPPLEMENTARY INFORMATION
COMPONENTS OF CHANGE IN NET SALES BY
SEGMENT(1)
Three Months
Ended March 31 (Unaudited)
(In millions)
Food Care Diversey Care
Product Care(4)
Other(4)
TotalCompany
2015 Net Sales $ 879.8 $ 467.9
$ 379.9 $ 18.8
$ 1,746.4
Volume - Units 12.8 1.5 % (1.1 ) (0.3 ) % 3.7 1.0 % (0.9 ) (4.8 ) %
14.5 0.8 % Price/mix (2) 5.9 0.7 % 7.9 1.7 % (4.8 ) (1.3 ) % 0.8
4.3 % 9.8 0.6 % Divestitures (67.1 ) (7.6 ) %
— — % — — % —
— % (67.1 ) (3.8 ) %
Total constant
dollar change (Non-U.S. GAAP)(3)
(48.4 )
(5.4 ) % 6.8 1.4 %
(1.1 ) (0.3 ) % (0.1
) (0.5 ) % (42.8 )
(2.4 ) % Foreign currency translation
(66.7 ) (7.7 ) % (33.3 ) (7.1 ) %
(11.6 ) (3.0 ) % (1.4 )
(7.5 ) % (113.0 ) (6.5 ) %
Total change
(U.S. GAAP) (115.1 ) (13.1
) % (26.5 )
(5.7 ) % (12.7 )
(3.3 ) % (1.5
) (8.0 ) %
(155.8 ) (8.9 ) %
2016 Net Sales $
764.7 $ 441.4 $
367.2 $ 17.3 $
1,590.6
COMPONENTS OF ORGANIC CHANGE IN NET
SALES BY SEGMENT(1)
Three Months Ended March 31
(Unaudited) (In millions) Food Care
Diversey Care Product
Care(4) Other(4)
TotalCompany
2015 Net Sales $ 879.8 $ 467.9
$ 379.9 $
18.8 $ 1,746.4
Less: Divestitures (67.1 ) —
— — (67.1
)
2015 Net Sales, Excluding Divestitures (Non-US GAAP)
812.7 467.9 379.9 18.8 1,679.3
Volume - Units 12.8 1.6 % (1.1 ) (0.3 ) % 3.7 1.0 % (0.9 )
(4.8 ) % 14.5 0.9 % Price/mix (2) 5.9 0.7 %
7.9 1.7 % (4.8 ) (1.3 ) %
0.8 4.3 % 9.8 0.6 %
Total Organic change (Non-US GAAP) (3) 18.7
2.3 % 6.8 1.4 % (1.1
) (0.3 ) % (0.1 )
(0.5 ) % 24.3 1.5 %
Foreign Currency Translation (66.7 ) (8.2 ) %
(33.3 ) (7.1 ) % (11.6 )
(3.0 ) % (1.4 ) (7.5 ) % (113.0
) (6.7 ) % Total change (Non-US GAAP) (48.0 )
(5.9 ) % (26.5 ) (5.7 ) %
(12.7 ) (3.3 ) % (1.5 ) (8.0 ) %
(88.7 ) (5.2 ) %
2016 Net Sales $ 764.7 $
441.4 $ 367.2 $
17.3 $ 1,590.6
____________
(1) The supplementary information included in this
press release for 2016 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) 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. (4) As of January 1, 2016, our Kevothermal business was
moved from Other to our Product Care division. This resulted in a
reclassification of $3 million of net sales and $1 million of
adjusted EBITDA for the three months ended March 31, 2015.
SEALED AIR CORPORATION SUPPLEMENTARY
INFORMATION
COMPONENTS OF CHANGE IN NET SALES BY
REGION(1)(2)
Three
Months Ended March 31 (Unaudited) (In millions) North
America EMEA(3)
Latin America
APAC(4) Total 2015 Net
Sales(1) $ 737.1 $ 580.7
$ 177.8 $ 250.8
$ 1,746.4
Volume - Units 6.8 0.9 % 14.8 2.5 % (8.1 ) (4.6 ) % 1.0 0.4 % 14.5
0.8 % Price/mix (20.3 ) (2.8 ) % 4.6 0.8 % 24.5 13.8 % 1.0 0.4 %
9.8 0.6 % Divestitures (52.9 ) (7.2 ) %
(14.2 ) (2.4 ) % — — %
— — % (67.1 ) (3.8 ) %
Total
constant dollar change (Non-U.S. GAAP) (66.4 )
(9.1 ) % 5.2 0.9 %
16.4 9.2 % 2.0 0.8 %
(42.8 ) (2.4 ) % Foreign
currency translation (6.7 ) (0.8 ) %
(38.0 ) (6.5 ) % (49.8 ) (28.0 )
% (18.5 ) (7.4 ) % (113.0 )
(6.5 ) %
Total change (U.S. GAAP)
(73.1 ) (9.9 ) %
(32.8 ) (5.6 ) %
(33.4 ) (18.8 )
% (16.5 ) (6.6
) % (155.8 )
(8.9 ) %
2016 Net Sales $ 664.0 $
547.9 $ 144.4 $
234.3 $ 1,590.6
COMPONENTS OF ORGANIC CHANGE IN NET
SALES BY REGION(1)(2)
Three Months Ended March 31
(Unaudited) (In millions) North America
EMEA(3) Latin
America APAC(4)
Total 2015 Net Sales $ 737.1
$ 580.7 $ 177.8
$ 250.8 $
1,746.4 Less: Divestitures (52.9 )
(14.2 ) — — (67.1 )
2015 Net Sales, Excluding Divestitures (Non-US GAAP)
684.2 566.5 177.8 250.8 1,679.3
Volume - Units 6.8 1.0 % 14.8 2.6 % (8.1 ) (4.6 ) % 1.0 0.4
% 14.5 0.9 % Price/mix (20.3 ) (3.0 ) %
4.6 0.8 % 24.5 13.8 %
1.0 0.4 % 9.8 0.6 %
Total
Organic change (Non-US GAAP) (3) (13.5 )
(2.0 ) % 19.4 3.4 %
16.4 9.2 % 2.0 0.8 %
24.3 1.5 % Foreign Currency Translation
(6.7 ) (1.0 ) % (38.0 ) (6.7 ) %
(49.8 ) (28.0 ) % (18.5 )
(7.4 ) % (113.0 ) (6.7 ) % Total change
(Non-US GAAP) (20.2 ) (3.0 ) %
(18.6 ) (3.3 ) % (33.4 ) (18.8 ) %
(16.5 ) (6.6 ) % (88.7 )
(5.2 ) %
2016 Net
Sales $ 664.0 $ 547.9
$ 144.4 $ 234.3 $
1,590.6
____________
(1) The supplementary information included in this
press release for 2016 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) During the second
quarter of 2015, the Company underwent a reorganization of its
Asia, Middle East, Africa and Turkey region (AMAT). This
reorganization involved the transition of the AMAT region to an
Asia Pacific region (APAC) and moving the Middle East, Africa and
Turkey countries into the Company’s existing European regional
organization (EMEA). (3) EMEA consists of Europe, Middle East,
Africa and Turkey. (4) 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005482/en/
Sealed Air CorporationInvestors:Lori Chaitman, 201-703-4161
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