- Second Quarter 2017 Sales from
Continuing Operations of $1.1 Billion, an increase of 3% reflecting
9% growth in North America
- Net Earnings from Continuing Operations
of $29 Million and Reported Net Earnings Per Share from Continuing
Operations of $0.14, including tax expense of $18 Million, or $0.09
Per Diluted Share Related to the Pending Sale of Diversey
- Adjusted Net Income from Continuing
Operations of $69 Million, Adjusted EPS from Continuing Operations
of $0.35 per share and Adjusted EBITDA of $196 million, or 18.3% of
Net Sales
- Raised Outlook for Adjusted EBITDA,
Adjusted EPS and Free Cash Flow
Sealed Air Corporation (NYSE:SEE) today announced financial
results for second quarter 2017. Commenting on these results,
Jerome A. Peribere, President and Chief Executive Officer, said,
“As we had predicted last year, we are delivering on our
accelerated growth strategy, led by strength in North America. In
the first half 2017, volumes in North America increased 6% and 9%
in the first and second quarters, respectively, as a result of
continued adoption of our innovative solutions and strong end
market demand across all proteins and within the e-Commerce and
fulfillment sectors. We expect top-line growth to continue into the
second half of the year and sequential profitability improvements
through operational disciplines and increased sales of value-added
solutions."
Peribere continued, “Our Diversey sale to Bain Capital Private
Equity is on track to close in September and we are committed to a
timely and successful separation. This divestiture gives us an even
greater focus on executing our profitable growth strategy. We will
continue to invest in research and development, disruptive
technologies and targeted acquisitions that enable geographic or
adjacent market expansion. The net proceeds of the transaction
provide us the financial flexibility to return value to
shareholders through share repurchases, dividends and debt
reduction. So far this year, we have already repurchased 6.5
million shares valued at $285 million and still have $1.9 billion
available under our share repurchase program."
Unless otherwise stated, all results compare second quarter 2017
results to second quarter 2016 results from continuing operations.
Diversey refers to the Diversey Care and food hygiene and cleaning
business. As a result of the pending sale of Diversey, 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.
Business Highlights
- Food Care net sales of $680 million
increased 2.2% as reported. Currency had a negative impact on Food
Care net sales of 0.4%, or $3 million. On a constant dollar basis,
net sales increased 2.6% primarily due to positive volume growth of
2.7%. Volume growth of 9% in North America and 1% in Europe, Middle
East and Africa (EMEA) were partially offset by declines in Latin
America and Asia Pacific. Adjusted EBITDA of $146 million or 21.5%
of net sales was primarily attributable to positive volume trends,
which were offset by higher raw material costs.
- Product Care net sales of $391 million
in the second quarter were up 4.4% as reported. Currency had a
negative impact on Product Care net sales of 1.3%, or $5 million.
On a constant dollar basis, net sales increased 5.7% primarily due
to positive volume growth of 6.1%. Continued strength in e-Commerce
and fulfillment resulted in volume growth of 12% in Asia Pacific
and 9% in North America. Adjusted EBITDA of $77 million or 19.7% of
net sales was attributable to volume growth, which was offset by
unfavorable price/cost spread primarily due to higher raw material
and freight costs.
- Through August 1, 2017, the Company
repurchased approximately 6.5 million shares for approximately $285
million with approximately $1.9 billion available for repurchase
under the share repurchase program.
Second Quarter 2017 U.S. GAAP Summary,
Continuing Operations
Net sales of $1.1 billion increased 3.0% on an as reported
basis. Currency had a negative impact on total net sales of 0.7%,
or $7 million. As reported, net sales in North America increased
9%. Asia Pacific declined 2% while Latin America and EMEA declined
4% each.
Net income from continuing operations on a reported basis was
$29 million, or $0.14 per diluted share, as compared to net income
from continuing operations of $2 million, or $0.01 per diluted
share, in the second quarter 2016. Net income in the second quarter
2017 was unfavorably impacted by $40 million of special items,
including $18 million of tax expense and $18 million of charges
related the pending sale of Diversey. Special items negatively
impacting the second quarter of 2017 also included costs incurred
related to the sale of Diversey, and restructuring and other
restructuring associated costs. Net income in the second quarter
2016 included $72 million of special items, including charges
related to ceasing operations in Venezuela, restructuring charges
and other costs associated with our restructuring programs, and a
loss on the remeasurement of our Venezuelan subsidiaries.
The effective tax rate in the second quarter of 2017 was 66.3%,
compared to the effective tax rate of 97.1% in the second quarter
of 2016. The effective tax rate in the second quarter of 2017 was
negatively impacted by tax expenses related to the pending
sale of Diversey, an increase in tax related to earnings mix, and
settlement of an audit in Europe for $3 million. The effective tax
rate in the second quarter of 2016 was negatively impacted by the
charges in Venezuela for which there was no tax benefit, an
increase in valuation allowance against foreign tax credits and
increases in unrecognized tax benefits.
Second Quarter 2017 Non-U.S. GAAP
Summary, Continuing Operations
Net sales on a constant dollar basis increased 3.7% on volume
growth of 3.9%. North America sales were up 8.9%, which was
partially offset by a 1.4% decline in both Asia Pacific and EMEA
and a 4.3% decline in Latin America.
Adjusted EBITDA for the second quarter 2017 was $196 million, or
18.3% of net sales, compared to $194 million, or 18.6% of net sales
for the second quarter of 2016. Adjusted EBITDA included $27
million of Corporate expenses in the second quarter of 2017, of
which $3 million reflected costs that were previously allocated to
Diversey but not included in net income from discontinued
operations. Corporate expenses were $32 million in the second
quarter of 2016, and included $4 million of costs that were
previously allocated to Diversey, but which were not included in
net income from discontinued operations.
Adjusted EPS was $0.35 for the second quarter 2017. This
compares to Adjusted EPS of $0.37 in the second quarter 2016. The
Adjusted Tax Rate was 38.9% in the second quarter 2017, compared to
31.6% in the second quarter 2016. The Adjusted Tax Rate in the
second quarter of 2017 was unfavorably impacted by earnings mix.
The Adjusted Tax Rate in the second quarter of 2016 was favorably
impacted by earnings mix.
Second Quarter 2017 U.S. GAAP Summary,
Discontinued Operations
Net sales included in the calculation of net earnings from
discontinued operations were $651 million as compared to $688
million in the second quarter of 2016. This decrease was primarily
due to the expiration of the SC Johnson & Son licensing
agreement as most recently discussed in our Form 10-Q filed May 9,
2017. Net income from discontinued operations on a reported basis
was $59 million, or $0.31 per diluted share, as compared to $48
million, or $0.24 per diluted share in the second quarter 2016. Net
earnings in the second quarter 2017 were favorably impacted by $13
million of tax benefit related to the planned repatriation of
foreign earnings.
Cash Flow and Net Debt
Cash flow provided by operating activities in the six months
ended June 30, 2017 was $141 million, which is net of $33 million
of restructuring payments and $45 million of payments related to
the sale of Diversey, including $33 million of tax payments and the
remainder primarily attributable to professional fees. This
compares with cash provided by operating activities of $187 million
in the six months ended June 30, 2016, which is net of $36 million
of restructuring payments.
Capital expenditures decreased to $93 million in the six months
ended June 30, 2017 compared to $114 million in the six months
ended June 30, 2016. Free Cash Flow, defined as net cash provided
by operating activities less capital expenditures and payments
related to the sale of Diversey, was an inflow of $93 million in
the six months ended June 30, 2017. This compares to an inflow of
$73 million in the six months ended June 30, 2016.
Compared to December 31, 2016, the Company’s net debt increased
$394 million to $4.2 billion as of June 30, 2017. This increase in
net debt primarily resulted from amounts paid for share
repurchases, dividends and capital expenditures.
Raised Outlook for Full Year 2017,
Continuing Operations
For the full year 2017, the Company continues to expect Net
Sales of approximately $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 in the
range of 3 to 4% constant dollar sales growth in Product Care.
Adjusted EBITDA from continuing operations for the full year
2017 is now expected to be in the range of $825 to $835 million, as
compared to $808 million for the full year 2016.
Adjusted EPS from continuing operations is expected to be in the
range of $1.75 to $1.80 for the full year 2017 and assumes an
Adjusted Tax Rate of 28% and an estimated 193 million diluted
shares outstanding.
Currency is not expected to have a material impact on Net Sales,
Adjusted EBITDA or Adjusted EPS for the full year 2017.
The Company's Free Cash Flow outlook assumes a September close
on the sale of Diversey and is based on a full year of Adjusted
EBITDA from continuing operations in the range of $825 to $835
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 now anticipates 2017 Free Cash
Flow to be approximately $400 million, including capital
expenditures of approximately $175 million and cash restructuring
payments of approximately $50 million, which excludes any
restructuring charges 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, August 8, 2017
Time:
10:00 a.m. (ET)
Webcast:
www.sealedair.com/investors
Conference Dial
In:
(855) 472-5411 (domestic)
(330) 863-3389 (international)
Participant
Code:
51400170
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, August 8, 2017 at 1:00 p.m. (ET) through
Thursday, September 7, 2017 at 12:59 p.m. (ET) Webcast:
www.sealedair.com/investors
Conference Dial
In:
(855) 859-2056 (domestic)
(404) 537-3406 (international)
Participant
Code:
51400170
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 U.S. GAAP measures to non-U.S. GAAP
measures 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 U.S. GAAP measures to
non-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 sale 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
CORPORATIONSUPPLEMENTARY INFORMATIONCONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS(1)(Unaudited)(In millions, except
per share data)
Three Months Ended June
30,(unaudited)
Six Months Ended June
30,(unaudited)
(In millions, except share data) 2017
2016 2017 2016 Net sales $ 1,070.3 $
1,038.9 $ 2,102.5 $ 2,044.8 Cost of sales(2) 726.0 689.3
1,421.8 1,359.6 Gross profit 344.3 349.6 680.7
685.2 Selling, general and administrative expenses(2) 201.8 197.3
397.6 382.4 Amortization expense of intangible assets acquired 1.1
3.5 6.1 6.3 Restructuring and other charges(2) 2.0 1.2
3.9 1.0 Operating profit 139.4 147.6 273.1
295.5 Interest expense (50.9 ) (50.9 ) (99.7 ) (101.8 ) Foreign
currency exchange loss related to Venezuelan subsidiaries — (0.6 )
— (1.6 ) Charge related to Venezuelan subsidiaries(2) — (46.0 ) —
(46.0 ) Other (expense) income, net (3.9 ) 4.5 (6.2 ) 1.0
Earnings before income tax provision 84.6 54.6 167.2 147.1
Income tax provision 56.1 53.0 192.5 70.6
Net earnings (loss) from continuing operations 28.5 1.6 —
(25.3 ) 76.5 Net earnings from discontinued operations, net of tax
59.3 48.0 69.9 75.5 Net earnings
available to common stockholders $ 87.8 $ 49.6 $ 44.6
$ 152.0
Basic: Continuing operations $ 0.14 $
0.01 $ (0.13 ) $ 0.38 Discontinued operations 0.31 0.24
0.36 0.38 Net earnings (loss) per common share
- basic(3) $ 0.45 $ 0.25 $ 0.23 $ 0.76
Diluted: Continuing operations $ 0.14 $ 0.01 $ (0.13 ) $
0.38 Discontinued operations 0.31 0.24 0.36
0.38 Net earnings (loss) per common share - diluted(3) $
0.45 $ 0.25 $ 0.23 $ 0.76 Dividends per
common share $ 0.16 $ 0.16 $ 0.32 $ 0.29
Weighted average number of common shares outstanding: Basic
192.5 195.6 192.9 195.4 Diluted(3)
194.8 198.4 195.3 198.0
_________________
(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) Due to the ongoing
challenging economic situation in Venezuela, the Company approved a
program in the second quarter of 2016 to cease operations in the
country. This resulted in total costs of $47.3 million being
incurred which included a voluntary reduction in headcount
including severance and termination benefits for employees of
approximately $0.3 million recorded in restructuring and other
charges, depreciation and amortization expense related to fixed
assets and intangibles of approximately $0.6 million recorded in
selling, general and administrative expenses, inventory reserves of
$0.4 million recorded in costs of sales and the reclassification of
cumulative translation adjustment of approximately $46.0 million
recorded in charges related to Venezuelan subsidiaries. (3) 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 456,352 and 436,288 diluted weighted average number of
common shares outstanding for the three and six months ended June
30, 2016, respectively, and recognition of excess tax benefits of
$9.6 million in net earnings from continuing operations and $1.0
million in net earnings from discontinued operations for the six
months ended June 30, 2016 (there was no impact for the three
months ended June 30, 2016). As a result, net earnings per common
share increased by $0.05 per share for the six months ended June
30, 2016 and no impact for the three months ended June 30, 2016.
SEALED AIR
CORPORATIONSUPPLEMENTARY INFORMATIONCONDENSED
CONSOLIDATED BALANCE SHEETS(1)(Unaudited)(In
millions)
(In millions, except share data)
June 30, 2017(unaudited)
December 31,2016
ASSETS Current assets: Cash and cash equivalents $ 243.0 $
333.7 Trade receivables, net 310.3 460.5 Income tax receivables
15.9 11.5 Other receivables 77.3 72.7 Inventories, net 532.1 456.7
Current assets held for sale 3,016.4 825.7 Prepaid expenses and
other current assets 251.9 54.5 Total current assets
4,446.9 2,215.3 Property and equipment, net 926.7 889.6 Goodwill
1,889.1 1,882.9 Intangible assets, net 41.0 40.1 Deferred taxes
129.7 169.9 Non-current assets held for sale — 2,026.0 Other
non-current assets 193.5 175.4 Total assets $ 7,626.9
$ 7,399.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: Short-term borrowings $ 358.0 $ 83.0 Current
portion of long-term debt 297.5 297.0 Accounts payable 646.7 539.2
Current liabilities held for sale 1,293.6 683.3 Accrued
restructuring costs 29.7 44.8 Other current liabilities 444.5
471.7 Total current liabilities 3,070.0 2,119.0
Long-term debt, less current portion 3,790.1 3,762.6 Deferred taxes
4.4 4.9 Non-current liabilities held for sale — 501.0 Other
non-current liabilities 422.9 402.0 Total liabilities
7,287.4 6,789.5 Stockholders’ equity: Preferred stock — — Common
stock 23.0 22.8 Additional paid-in capital 1,943.7 1,974.1 Retained
earnings 1,022.8 1,040.0 Common stock in treasury (1,729.4 )
(1,478.1 ) Accumulated other comprehensive loss, net of taxes
(920.6 ) (949.1 ) Total stockholders’ equity 339.5 609.7
Total liabilities and stockholders’ equity $ 7,626.9
$ 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)
June 30, 2017(unaudited)
December 31,2016
Short-term borrowings $ 358.0 $ 83.0 Current portion of
long-term debt 297.5 297.0 Long-term debt, less current portion
3,790.1 3,762.6 Total debt 4,445.6 4,142.6
Less: cash and cash equivalents (243.0 ) (333.7 )
Net
debt $ 4,202.6 $
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
CORPORATIONSUPPLEMENTARY INFORMATIONCONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(1)(Unaudited)(In millions)
Six Months Ended June 30,
(unaudited)
(In millions) 2017 2016
Revised(3) Net earnings available to common stockholders $ 44.6 $
152.0 Adjustments to reconcile net earnings to net cash provided by
operating activities(2) 268.0 225.5 Changes in operating assets and
liabilities: Trade receivables, net (58.3 ) (83.9 ) Inventories
(86.5 ) (82.9 ) Accounts payable 145.4 90.3 Other assets and
liabilities (171.9 ) (114.1 )
Net cash provided by operating
activities 141.3 186.9 Cash flows
from investing activities: Capital expenditures (93.2 ) (113.5 )
Proceeds, net from sale of business and property and equipment 3.6
8.2 Business acquired in purchase transactions, net of cash
acquired (3.5 ) — Settlement of foreign currency forward contracts
11.3 (31.3 )
Net cash used in investing activities
(81.8 ) (136.6 ) Cash flows from
financing activities: Net proceeds from borrowings 252.2 35.0
Change in cash used as collateral on borrowing arrangements (2.0 )
0.3 Dividends paid on common stock (61.8 ) (57.0 ) Acquisition of
common stock for tax withholding (21.5 ) (22.3 ) Repurchases of
common stock (305.3 ) (52.0 ) Other financing activities 0.3
—
Net cash used in financing activities (138.1
) (96.0 ) Effect of foreign currency
exchange rate changes on cash and cash equivalents (12.1
) (16.3 ) Balance, beginning of period 333.7
321.7 Net change during the period (90.7 ) (62.0 )
Balance, end
of period $ 243.0 $ 259.7
Non-U.S. GAAP Free Cash Flow: Cash flow from
operating activities $ 141.3 $ 186.9 Capital expenditures for
property and equipment (93.2 ) (113.5 )
Free Cash
Flow(4) $ 48.1 $ 73.4
Supplemental Cash Flow Information: Interest
payments, net of amounts capitalized $ 107.0 $ 108.0
Income tax payments $ 92.6 $ 59.9 Payments related to
the sale of Diversey(4) $ 44.8 $ — Stock appreciation
rights payments (less amounts included in restructuring payments) $
— $ 1.9 Restructuring payments including associated
costs $ 33.1 $ 36.4
________________
(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 $117 million of deferred taxes, depreciation and amortization
$105 million, share based compensation expense of $23 million and
profit sharing expense of $15 million. 2016 primarily consists of
depreciation and amortization of $107 million, share based
compensation expense of $30 million, profit sharing expense of $17
million, charges related to ceasing operations in Venezuela of $46
million, loss on sale of business of $2 million, and a
remeasurement loss 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 six months ended June 30, 2016. There was not a
material impact on the three months ended June 30, 2016. (4) Free
cash flow was $93 million in 2017 excluding the payment of charges
related to the sale of Diversey of $45 million. These payments
include $33 million related to tax payments and the remainder
primarily attributable to professional fees. 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
CORPORATIONSUPPLEMENTARY INFORMATIONRECONCILIATION OF
U.S. GAAP NET EARNINGS AND U.S. GAAP NET EARNINGS PER COMMON SHARE
TONON-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 June 30, Six Months Ended June
30, 2017 2016 2017
2016 (In millions, except per share data)
NetEarnings EPS
NetEarnings EPS
NetEarnings EPS
NetEarnings EPS
U.S. GAAP net earnings (loss) and
EPS
available to common
stockholders
from continuing
operations(2)
$ 28.5 $ 0.14 $ 1.6 $ 0.01 $ (25.3 ) $ (0.13 ) $ 76.5 $ 0.38
Special items(3) 40.0 0.21 71.6 0.36
178.5 0.91 79.5 0.40
Non-U.S. GAAP adjusted net earnings
and
adjusted EPS available to
common
stockholders from continuing
operations
$ 68.5 $ 0.35 $ 73.2 $ 0.37 $ 153.2
$ 0.78 $ 156 $ 0.78
Weighted average number of common
shares
outstanding - Diluted
194.8 198.4 195.3 198.0
________________
(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 June 30, Six Months Ended June 30, (In
millions, except per share data) 2017 2016
2017 2016 Special Items: Restructuring and
other charges(1) $ (2.0 ) $ (0.9 ) (3.9 ) (0.7 )
Other restructuring associated costs
included in cost of sales
and selling, general and administrative
expenses
(5.9 ) (4.1 ) (9.8 ) (8.0 ) SARs — (0.9 ) — (1.0 )
Foreign currency exchange loss related to
Venezuelan
subsidiaries
— (0.6 ) — (1.6 ) Charges related to ceasing operations in
Venezuela(1) — (47.3 ) — (47.3 )
(Loss) gain on sale of North American foam
trays and
absorbent pads business and European food
trays business
(0.2 ) — 2.1 (1.6 )
(Loss) gain related to the sale of other
businesses,
investments and property, plant and
equipment
(0.2 ) (0.4 ) (0.2 ) (2.1 ) Charges related to the sale of Diversey
(17.8 ) — (33.9 ) — Other special items(2) (1.5 ) 1.8 2.6
0.4 Pre-tax impact of special items (27.6 ) (52.4 )
(43.1 ) (61.9 ) Tax impact of special items and tax special
items(3) (12.4 ) (19.2 ) (135.4 ) (17.6 ) Net impact of special
items $ (40.0 ) $ (71.6 ) $ (178.5 ) $ (79.5 )
Weighted average number of common shares
outstanding -
Diluted
194.8 198.4 195.3 198.0 Earnings per
share impact from special items $ (0.21 ) $ (0.36 ) $ (0.91 ) $
(0.40 )
_________________
(1) Due to the ongoing challenging economic situation
in Venezuela, the Company approved a program in the second quarter
of 2016 to cease operations in the country. This resulted in total
costs of $47.3 million being incurred which included a voluntary
reduction in headcount including severance and termination benefits
for employees of approximately $0.3 million recorded in
restructuring and other charges, depreciation and amortization
expense related to fixed assets and intangibles of approximately
$0.6 million recorded in selling, general and administrative
expenses, inventory reserves of $0.4 million recorded in costs of
sales and the release of cumulative translation adjustment of
approximately $46.0 million recorded in charges related to
Venezuelan subsidiaries. (2) Other special items for the six months
ended June 30, 2017 primarily included a recovered wage tax as the
result of a court ruling partially offset by legal fees associated
with restructuring and acquisitions. For the three months ended
June 30, 2017 other special items primarily included an expense
related to the recovered wage tax reserve as well as legal fees
associated with restructuring and acquisitions. Other special items
for the three and six months ended June 30, 2016 primarily included
a reduction in a non-income tax reserve following the completion of
a governmental audit partially offset by legal fees associated with
restructuring and acquisitions. (3) 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 June 30, Six
Months Ended June 30, (In millions, except per share
data) 2017 2016 2017
2016
U.S. GAAP Earnings before income tax
provision from
continuing operations
$ 84.6 $ 54.6 $ 167.2 $ 147.1 Pre-tax impact of special items (27.6
) (52.4 ) (43.1 ) (61.9 )
Non-U.S. GAAP Adjusted Earnings before
income tax provision
from continuing operations
$ 112.2 $ 107.0 $ 210.3 $ 209.0
U.S. GAAP Income tax provision from continuing operations $ 56.1 $
53.0 $ 192.5 $ 70.6 Tax Special Items(1) (21.6 ) (21.1 ) (149.9 )
(21.1 ) Tax impact of Special Items 9.2 1.9 14.5
3.5
Non-U.S. GAAP Adjusted Income tax
provision from
continuing operations
$ 43.7 $ 33.8 $ 57.1 $ 53.0 U.S.
GAAP Effective income tax rate 66.3 % 97.1 % 115.1 % 48.0 %
Non-U.S. GAAP Adjusted income tax rate 38.9 % 31.6 % 27.2 % 25.4 %
__________________
(1) For the three and six months ended June 30, 2017,
the special tax items included $18 million and $145 million
respectively, of tax expense recorded in accordance with the
pending sale of Diversey.
SEALED AIR
CORPORATIONSUPPLEMENTARY INFORMATIONSEGMENT
INFORMATION(1)(Unaudited)(In millions)
Three Months EndedJune
30,
Six Months EndedJune 30, (In millions)
2017 2016 2017 2016
Net Sales: Food Care $ 679.5 $ 664.6 $ 1,335.1 $ 1,303.0 As
a % of Total Company net sales 63.5 % 64.0 % 63.5 % 63.7 % Product
Care 390.8 374.3 767.4 741.8 As a % of Total Company net sales 36.5
% 36.0 % 36.5 % 36.3 %
Total Company Net Sales $
1,070.3 $ 1,038.9 $
2,102.5 $ 2,044.8
Three Months EndedJune 30, Six Months
EndedJune 30, (In millions) 2017
2016 2017 2016 Adjusted EBITDA from
continuing operations(2): Food Care $ 146.2 $
146.5 $ 287.7 $ 285.1 Adjusted EBITDA Margin 21.5 % 22.0 % 21.5 %
21.9 % Product Care 77.1 78.7 151.2 155.8 Adjusted EBITDA Margin
19.7 % 21.0 % 19.7 % 21.0 % Corporate(3) (27.0) (31.5) (60.7)
(61.0)
Non-U.S. GAAP Total Company Adjusted
EBITDA from
continuing operations
$ 196.3 $ 193.7 $
378.2 $ 379.9 Adjusted EBITDA
Margin 18.3 % 18.6 % 18.0 % 18.6 %
_______________
(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 $2.0 million and $3.6
million for the three and six months ended June 30, 2016,
respectively. (3) Unallocated costs related to Diversey that have
been included in adjusted EBITDA for Corporate were as follows:
Three Months EndedJune 30,
Six Months EndedJune 30, (In millions)
2017 2016 2017 2016
Unallocated costs $ 2.9 $ 3.6 $ 10.9 $ 8.7
SEALED AIR CORPORATIONSEGMENT
INFORMATION – CONTINUEDSUPPLEMENTARY
INFORMATION(1)RECONCILIATION OF U.S. GAAP NET
EARNINGS TONON-U.S. GAAP TOTAL COMPANY ADJUSTED
EBITDA(Unaudited)(In millions)
Three Months EndedJune 30, Six Months
EndedJune 30, (In millions) 2017
2016 2017 2016
U.S. GAAP Net earnings (loss) from
continuing
operations
$ 28.5 $ 1.6 $ (25.3 ) $ 76.5 Interest expense (50.9 ) (50.9 )
(99.7 ) (101.8 ) Interest income 3.2 2.0 5.4 3.6 Income tax
provision 56.1 53.0 192.5 70.6 Depreciation and amortization(4)
(36.4 ) (38.5 ) (73.6 ) (73.4 )
Accelerated depreciation and amortization
of fixed assets
and intangible assets for Venezuelan
subsidiaries(2)
— 0.7 — 0.7 Special Items: Restructuring and other charges(2)(5)
(2.0 ) (0.9 ) (3.9 ) (0.7 )
Other restructuring associated costs
included in cost of
sales and selling, general and
administrative expenses
(5.9 ) (4.1 ) (9.8 ) (8.0 ) SARs — (0.9 ) — (1.0 )
Foreign currency exchange loss related
to
Venezuelan subsidiaries
— (0.6 ) — (1.6 ) Charges related to ceasing operations in
Venezuela(2) — (47.3 ) (47.3 )
(Loss) gain on sale of North American foam
trays and
absorbent pads business and European food
trays
business
(0.2 ) — 2.1 (1.6 )
Loss related to the sale of other
businesses,
investments and property, plant and
equipment
(0.2 ) (0.4 ) (0.2 ) (2.1 ) Charges incurred related to the sale of
Diversey (17.8 ) — (33.9 ) — Other special items(3) (1.5 ) 1.8
2.6 0.4 Pre-tax impact of Special items (27.6
) (52.4 ) (43.1 ) (61.9 )
Non-U.S. GAAP Total Company Adjusted
EBITDA
from continuing operations
$ 196.3 $ 193.7 $
378.2 $ 379.9
_______________
(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. (2) Due to the ongoing
challenging economic situation in Venezuela, the Company approved a
program in the second quarter of 2016 to cease operations in the
country. This resulted in total costs of $47.3 million being
incurred which included a voluntary reduction in headcount
including severance and termination benefits for employees of
approximately $0.3 million recorded in restructuring and other
charges, depreciation and amortization expense related to fixed
assets and intangibles of approximately $0.6 million recorded in
selling, general and administrative expenses, inventory reserves of
$0.4 million recorded in costs of sales and the release of
cumulative translation adjustment of approximately $46.0 million
recorded in charges related to Venezuelan subsidiaries. (3) Other
special items for the six months ended June 30, 2017 primarily
included a recovered wage tax as the result of a court ruling
partially offset by legal fees associated with restructuring and
acquisitions. For the three months ended June 30, 2017 other
special items primarily included an expense related to the
recovered wage tax reserve as well as legal fees associated with
restructuring and acquisitions. Other special items for the three
and six months ended June 30, 2016 primarily included a reduction
in a non-income tax reserve following the completion of a
governmental audit partially offset by legal fees associated with
restructuring and acquisitions. (4) Depreciation and amortization
by segment are as follows:
Three
Months EndedJune 30, Six Months EndedJune
30, (In millions) 2017 2016
2017 2016 Food Care $ 24.3 $ 22.3 $ 49.4 $
45.2 Product Care 11.0 9.4 22.5 19.0 Corporate 1.1 6.8 1.7 9.2
Total Company depreciation and amortization(1)
$ 36.4 $ 38.5 $ 73.6
$ 73.4
________________
(1) Includes share-based incentive
compensation of $10.9 million and $18.9 million for the three and
six months ended June 30, 2017, respectively, and $13.9 million and
$25.4 million for the three and six ended June 30, 2016,
respectively. (4) Restructuring and other
charges by segment is as follows:
Three Months EndedJune 30, Six Months
EndedJune 30, (In millions) 2017
2016 2017 2016 Food Care $ 1.3 $ 0.5 $
2.5 $ 0.4 Product Care 0.7 0.4 1.4 0.3
Total Company restructuring and other charges(1)
$ 2.0 $ 0.9 $
3.9 $ 0.7
_______________
(1) For the three and six months ended June
30, 2016 restructuring and other charges excludes $0.3 million
related to severance and termination benefits for employees in our
Venezuelan subsidiaries.
SEALED AIR
CORPORATIONSUPPLEMENTARY INFORMATIONCOMPONENTS OF
CHANGE IN NET SALES BY SEGMENT(1)
Three Months Ended June 30, (Unaudited) (In
millions) Food Care Product Care
Total Company 2016 Net Sales $ 664.6 $ 374.3 $
1,038.9 Volume - Units 17.9 2.7 % 22.8 6.1 % 40.7 3.9 %
Price/mix(2) (0.4 ) (0.1 )% (1.6 ) (0.4 )% (2 ) (0.2 )%
Total constant dollar change (Non-U.S.
GAAP)(3)
17.5 2.6 % 21.2 5.7 % 38.7 3.7 % Foreign currency translation (2.6
) (0.4 )% (4.7 ) (1.3 )% (7.3 ) (0.7 )%
Total change (U.S.
GAAP) $ 14.9 2.2 % $
16.5 4.4 % $ 31.4
3.0 % 2017 Net Sales
$ 679.5 $ 390.8 $
1,070.3 Six Months Ended June 30,
(Unaudited) (In millions) Food Care Product
Care Total Company 2016 Net Sales $ 1,303.0 $ 741.8 $
2,044.8 Volume - Units 37.7 2.9 % 41.3 5.6 % 79 3.9 % Price/mix(2)
(6.6 ) (0.5 )% (6.8 ) (0.9 )% (13.4 ) (0.7 )%
Total constant dollar change (Non-U.S.
GAAP)(3)
31.1 2.4 % 34.5 4.7 % 65.6 3.2 % Foreign currency translation 1.0
0.1 % (8.9 ) (1.2 )% (7.9 ) (0.4 )%
Total change (U.S.
GAAP) $ 32.1 2.5 % $
25.6 3.5 % $ 57.7
2.8 % 2017 Net Sales
$ 1,335.1 $ 767.4
$ 2,102.5
_______________
(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) 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
CORPORATIONSUPPLEMENTARY INFORMATION}COMPONENTS OF
CHANGE IN NET SALES BY REGION(1)
Three Months Ended June 30, (Unaudited) (In
millions) NorthAmerica
EMEA(2) LatinAmerica
APAC(3) Total
2016 net sales $ 544.8 $ 248.8 $ 99.4 $ 145.9 $ 1,038.9
Volume-Units 49.7 9.1 % (1.9 ) (0.8 )% (5.9 ) (5.9 )% (1.2 ) (0.8
)% 40.7 3.9 % Price/mix(4) (1.3 ) (0.2 )% (1.4 ) (0.6
)% 1.6 1.6 % (0.9 ) (0.6 )% (2.0 ) (0.2
)%
Total constant dollar
change (Non-U.S.
GAAP)(5)
$ 48.4 8.9 % $ (3.3 ) (1.4 )% $ (4.3 ) (4.3 )% $ (2.1 ) (1.4 )% $
38.7 3.7 %
Foreign currency
translation
(0.9 ) (0.2 )% (5.7 ) (2.3 )% 0.2 0.2 %
(0.9 ) (0.6 )% (7.3 ) (0.7 )%
Total change (U.S.
GAAP)
$ 47.5 8.7 % $
(9.0 ) (3.7 )% $
(4.1 ) (4.1 )% $
(3.0 ) (2.0 )% $
31.4 3.0 %
2017 net sales $ 592.3
$ 239.8 $ 95.3 $
142.9 $ 1,070.3 Six
Months Ended June 30, (Unaudited) (In millions)
NorthAmerica EMEA(2)
LatinAmerica APAC(3) Total 2016
net sales $ 1,076.4 $ 484.2 $ 190.3 $ 293.9 $ 2,044.8 Volume-Units
89.1 8.3 % (5.5 ) (1.1 )% (4.6 ) (2.4 )% — — % 79 3.9 %
Price/mix(4) (10.5 ) (1.0 )% (6.1 ) (1.3 )% 5.3
2.8 % (2.1 ) (0.7 )% (13.4 ) (0.7 )%
Total constant dollar
change (Non-U.S.
GAAP)(5)
$ 78.6 7.3 % $ (11.6 ) (2.4 )% $ 0.7 0.4 % $ (2.1 ) (0.7 )% $ 65.6
3.2 %
Foreign currency
translation
(0.3 ) — % (13.7 ) (2.8 )% 1.7 0.9 %
4.4 1.5 % (7.9 ) (0.4 )%
Total change (U.S.
GAAP)
$ 78.3 7.3 % $
(25.3 ) (5.2 )% $
2.4 1.3 % $ 2.3
0.8 % $ 57.7
2.8 %
2017 net sales $
1,154.7 $ 458.9 $
192.7 $ 296.2 $
2,102.5
________________
(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) 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170808005408/en/
For Sealed Air CorporationInvestor RelationsLori Chaitman,
704-503-8841
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