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Sealed Air (SEE) Q1 Earnings Top Estimates, Increase Y/Y
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Sealed Air Corporation (SEE - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of 78 cents, which surpassed the Zacks Consensus Estimate of 53 cents. The bottom line increased 5% year over year, which marked its return to growth after five straight quarters.
Results benefited from the company’s cost take-out to grow program ("CTO2Grow Program") and cost-control initiatives. This was partially offset by unfavorable price realization and higher interest expense. SEE also witnessed a slight uptick in volumes driven by the Food segment, putting a break to a streak of negative volume growth that persisted for eight consecutive quarters.
Including special items, the company delivered EPS from continuing operations of 57 cents compared with the year-ago quarter’s 44 cents. Earnings were impacted by $29 million of special items, which included $22 million of restructuring and other associated costs related to the CTO2Grow Program.
Total revenues were $1.33 billion, which beat the Zacks Consensus Estimate of $1.28 billion. The figure was down 1.4% compared with revenues of $1.35 billion in the first quarter of 2023.
Pricing and currency had unfavorable impacts of 3.5% and 0.1%, respectively. Acquisitions contributed 1.7%. Volumes inched up 0.5% year over year as improvement in volumes in the Food segment helped offset the weak volumes in the Protective segment.
Our model predicted pricing to have an unfavorable impact of 2.4% and we expected volumes to decrease 2.3% year over year. The variance was mainly due to the better-than-expected volume performance in the Food segment.
Sales in the Americas inched up 0.3% year over year to $881 million while sales in EMEA were down 5.5% to $273.5 million. Sales in APAC dipped 3.3% year over year to $175 million.
Sealed Air Corporation Price, Consensus and EPS Surprise
The cost of sales went down 1.6% year over year to $929 million. The gross profit was $401 million, which marked a 1% dip from the year-ago quarter’s $405 million. The gross margin was 30.1%, a marginal expansion from the year-ago quarter’s 30.0%.
SG&A expenses were $186 million, down 16% from the year-ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $278 million, up 4% from the year-ago period. The improvement was attributed to productivity benefits stemming from the CTO2Grow Program and cost control initiatives, partially offset by unfavorable net price realization. The adjusted EBITDA margin was 20.8% indicating a 110-basis point expansion from the year-ago quarter’s 19.8%.
Segment Performances
Food: Net sales increased 2% year over year to $868 million. The figure surpassed our estimate of $816.5 million.
Pricing actions had an unfavorable impact of 3.8% while the Liquibox acquisition contributed 2.7% to the sales growth. Volumes were up 2.9% driven by demand for bags, case ready and automated solutions. The segment had witnessed negative volume growth in the past seven quarters. We expected volume to be down 1.7% and pricing to be down 2.5%.
Adjusted EBITDA was around $190 million, down 2.7% from last year’s quarter mainly due to unfavorable net price realization, partially offset by higher volumes. The reported figure surpassed our estimate of $168 million.
Protective: The segment reported net sales of $461 million, down 7% from the year-ago quarter. We expected net sales of $469 million.
Currency had an unfavorable impact of 0.3%. Pricing had a negative impact of 2.9% and volumes fell 3.8% due to weak end markets, primarily EMEA. We expected volume to fall 3.3% in the quarter and an unfavorable pricing impact of 2.1%.
The segment’s adjusted EBITDA increased 11% year over year to $90 million, driven by lower operating costs, which helped negate the impact of weak volumes and unfavorable net price realization. We expected adjusted EBITDA to be $78 million.
Cash Flow & Balance Sheet
Cash flow generated from operating activities was around $125 million, higher than $52 million reported in the year-ago quarter, reflecting continued working capital improvements. The company paid out cash dividends of $31 million in the first quarter of 2024.
As of Mar 31, 2024, Sealed Air’s net debt was $4.31 billion compared with $4.34 billion as of Dec 31, 2023. As of the end of the first quarter, the company had $1.35 billion of liquidity available, which comprised $353 million in cash and $1 billion of undrawn, committed credit facilities.
Q2 & 2024 Guidance
For the second quarter of 2024, SEE expects net sales to be around $1.3 billion. Adjusted EBITDA is projected at $260 million while adjusted earnings per share are expected between 60 cents and 70 cents.
Sealed Air expects net sales of $5.2-$5.6 billion and an adjusted EBITDA of $1.05-$1.15 billion for 2024. Adjusted earnings per share are forecast to be in the range of $2.65-$3.05.
Free cash flow for the year is expected to be in the range of $325-$425 million. Capital spending is expected to be $230 million.
Price Performance
In the past year, Sealed Air’s shares have declined 18.4% against the industry’s 7.2% growth.
Packaging Corporation of America (PKG - Free Report) reported adjusted EPS of $1.72 in the first quarter of 2024, beating the Zacks Consensus Estimate of $1.63. The bottom line decreased 22% year over year mainly due to lower prices and mix in the Packaging and Paper segments. These were partially offset by higher volumes in the Packaging and Paper segments.
PKG’s sales in the quarter rose 0.2% year over year to $1.98 billion. The top line surpassed the consensus estimate of $1.91 billion.
Amcor Plc (AMCR - Free Report) reported third-quarter fiscal 2024 (ended Mar 31, 2024) adjusted EPS of approximately 18 cents, which beat the Zacks Consensus Estimate of 17 cents. This represents a 1.7% increase from the year-ago quarter, primarily attributed to the realization of benefits from structural cost initiatives. AMCR has also delivered a turnaround performance from the four consecutive quarters of decline in earnings.
Amcor’s total revenues fell 7% year over year to $3.4 billion. The top line missed the Zacks Consensus Estimate of $3.53 billion. The price/mix had an unfavorable impact of around 3% on sales. Volume was down 4% from the year-ago quarter owing to weak demand in healthcare categories and the North America beverage business.
AptarGroup, Inc. (ATR - Free Report) reported first-quarter 2024 adjusted EPS of $1.26, beating the Zacks Consensus Estimate of $1.13. The bottom line increased 31% from 95 cents (including comparable exchange rates) per share in the year-ago quarter aided by strong sales growth in the Pharma business and continued margin expansion in the Beauty and Closures businesses.
AptarGroup’s total revenues increased 6.4% year over year to $915 million, surpassing the consensus estimate of $897 million. Core sales, excluding currency and acquisition effects, improved 5% year over year.
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Sealed Air (SEE) Q1 Earnings Top Estimates, Increase Y/Y
Sealed Air Corporation (SEE - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of 78 cents, which surpassed the Zacks Consensus Estimate of 53 cents. The bottom line increased 5% year over year, which marked its return to growth after five straight quarters.
Results benefited from the company’s cost take-out to grow program ("CTO2Grow Program") and cost-control initiatives. This was partially offset by unfavorable price realization and higher interest expense. SEE also witnessed a slight uptick in volumes driven by the Food segment, putting a break to a streak of negative volume growth that persisted for eight consecutive quarters.
Including special items, the company delivered EPS from continuing operations of 57 cents compared with the year-ago quarter’s 44 cents. Earnings were impacted by $29 million of special items, which included $22 million of restructuring and other associated costs related to the CTO2Grow Program.
Total revenues were $1.33 billion, which beat the Zacks Consensus Estimate of $1.28 billion. The figure was down 1.4% compared with revenues of $1.35 billion in the first quarter of 2023.
Pricing and currency had unfavorable impacts of 3.5% and 0.1%, respectively. Acquisitions contributed 1.7%. Volumes inched up 0.5% year over year as improvement in volumes in the Food segment helped offset the weak volumes in the Protective segment.
Our model predicted pricing to have an unfavorable impact of 2.4% and we expected volumes to decrease 2.3% year over year. The variance was mainly due to the better-than-expected volume performance in the Food segment.
Sales in the Americas inched up 0.3% year over year to $881 million while sales in EMEA were down 5.5% to $273.5 million. Sales in APAC dipped 3.3% year over year to $175 million.
Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote
Costs and Margins
The cost of sales went down 1.6% year over year to $929 million. The gross profit was $401 million, which marked a 1% dip from the year-ago quarter’s $405 million. The gross margin was 30.1%, a marginal expansion from the year-ago quarter’s 30.0%.
SG&A expenses were $186 million, down 16% from the year-ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $278 million, up 4% from the year-ago period. The improvement was attributed to productivity benefits stemming from the CTO2Grow Program and cost control initiatives, partially offset by unfavorable net price realization. The adjusted EBITDA margin was 20.8% indicating a 110-basis point expansion from the year-ago quarter’s 19.8%.
Segment Performances
Food: Net sales increased 2% year over year to $868 million. The figure surpassed our estimate of $816.5 million.
Pricing actions had an unfavorable impact of 3.8% while the Liquibox acquisition contributed 2.7% to the sales growth. Volumes were up 2.9% driven by demand for bags, case ready and automated solutions. The segment had witnessed negative volume growth in the past seven quarters. We expected volume to be down 1.7% and pricing to be down 2.5%.
Adjusted EBITDA was around $190 million, down 2.7% from last year’s quarter mainly due to unfavorable net price realization, partially offset by higher volumes. The reported figure surpassed our estimate of $168 million.
Protective: The segment reported net sales of $461 million, down 7% from the year-ago quarter. We expected net sales of $469 million.
Currency had an unfavorable impact of 0.3%. Pricing had a negative impact of 2.9% and volumes fell 3.8% due to weak end markets, primarily EMEA. We expected volume to fall 3.3% in the quarter and an unfavorable pricing impact of 2.1%.
The segment’s adjusted EBITDA increased 11% year over year to $90 million, driven by lower operating costs, which helped negate the impact of weak volumes and unfavorable net price realization. We expected adjusted EBITDA to be $78 million.
Cash Flow & Balance Sheet
Cash flow generated from operating activities was around $125 million, higher than $52 million reported in the year-ago quarter, reflecting continued working capital improvements. The company paid out cash dividends of $31 million in the first quarter of 2024.
As of Mar 31, 2024, Sealed Air’s net debt was $4.31 billion compared with $4.34 billion as of Dec 31, 2023. As of the end of the first quarter, the company had $1.35 billion of liquidity available, which comprised $353 million in cash and $1 billion of undrawn, committed credit facilities.
Q2 & 2024 Guidance
For the second quarter of 2024, SEE expects net sales to be around $1.3 billion. Adjusted EBITDA is projected at $260 million while adjusted earnings per share are expected between 60 cents and 70 cents.
Sealed Air expects net sales of $5.2-$5.6 billion and an adjusted EBITDA of $1.05-$1.15 billion for 2024. Adjusted earnings per share are forecast to be in the range of $2.65-$3.05.
Free cash flow for the year is expected to be in the range of $325-$425 million. Capital spending is expected to be $230 million.
Price Performance
In the past year, Sealed Air’s shares have declined 18.4% against the industry’s 7.2% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Did SEE’s Industry Peers Fare in Q1?
Packaging Corporation of America (PKG - Free Report) reported adjusted EPS of $1.72 in the first quarter of 2024, beating the Zacks Consensus Estimate of $1.63. The bottom line decreased 22% year over year mainly due to lower prices and mix in the Packaging and Paper segments. These were partially offset by higher volumes in the Packaging and Paper segments.
PKG’s sales in the quarter rose 0.2% year over year to $1.98 billion. The top line surpassed the consensus estimate of $1.91 billion.
Amcor Plc (AMCR - Free Report) reported third-quarter fiscal 2024 (ended Mar 31, 2024) adjusted EPS of approximately 18 cents, which beat the Zacks Consensus Estimate of 17 cents. This represents a 1.7% increase from the year-ago quarter, primarily attributed to the realization of benefits from structural cost initiatives. AMCR has also delivered a turnaround performance from the four consecutive quarters of decline in earnings.
Amcor’s total revenues fell 7% year over year to $3.4 billion. The top line missed the Zacks Consensus Estimate of $3.53 billion. The price/mix had an unfavorable impact of around 3% on sales. Volume was down 4% from the year-ago quarter owing to weak demand in healthcare categories and the North America beverage business.
AptarGroup, Inc. (ATR - Free Report) reported first-quarter 2024 adjusted EPS of $1.26, beating the Zacks Consensus Estimate of $1.13. The bottom line increased 31% from 95 cents (including comparable exchange rates) per share in the year-ago quarter aided by strong sales growth in the Pharma business and continued margin expansion in the Beauty and Closures businesses.
AptarGroup’s total revenues increased 6.4% year over year to $915 million, surpassing the consensus estimate of $897 million. Core sales, excluding currency and acquisition effects, improved 5% year over year.