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Sealed Air (SEE) Q2 Earnings Beat Estimates, Revenues Miss
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Sealed Air Corporation (SEE - Free Report) has reported second-quarter 2023 adjusted earnings per share of 80 cents, which surpassed the Zacks Consensus Estimate of 68 cents. The bottom line fell 21% year over year due to lower volumes.
Including special items, the company delivered net earnings per share of 65 cents compared with the prior-year quarter’s 77 cents.
Total revenues were down 2.6% year over year to $1,381 million in the reported quarter. The top line missed the Zacks Consensus Estimate of $1,416 million.
Currency had an unfavorable impact of 1.7%, while price had a favorable impact of 2%. Meanwhile, volumes were down 8.2% year over year. Our model predicted currency to have an unfavorable impact of 1% and pricing to favor sales by 1.6%. We predicted volumes to decrease 6.5% year over year. The variance is mainly due to the ongoing destocking in the industrial and fulfillment sectors.
Sales in the APAC (in constant dollars) rose 6% year over year, while sales in the Americas witnessed a decline of 2%. Sales in EMEA were flat year over year.
Sealed Air Corporation Price, Consensus and EPS Surprise
The cost of sales fell 1.7% year over year to $962 million. The gross profit was $418 million, which marked a 4.6% decline from the year-ago quarter’s $438 million. The gross margin contracted to 30.3% from the prior-year quarter’s 30.9%.
SG&A expenses decreased 6.8% from the last-year quarter to $186 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $280 million in the quarter, which decreased 4.5% from the prior-year period. The adjusted EBITDA margin was 20.3% compared with the prior-year quarter’s 20.7%, courtesy of lower volumes, partially offset by earnings generated from Liquibox.
Segmental Performance
Food: Net sales increased 9% year over year to $881 million. However, the figure missed our estimate of $904 million. Volumes were flat, while pricing actions had a favorable impact of 3%. We expected volume to be down 1% and pricing to be up 1.9%. Currency fluctuations had an unfavorable impact of 3%. Our model predicted currency to negatively impact the segment’s sales by 0.4%.
Adjusted EBITDA was $191 million, up 14% from the last year’s quarter, owing to gains from the Liquibox acquisition. The reported figure also surpassed our estimate of $188 million.
Protective: The segment reported net sales of $500 million in the quarter under review, down 18% from the prior-year quarter. We expected net sales of $525 million. Currency had an unfavorable impact of 0.4%. Pricing had a positive impact of 1%, while volumes fell 19% due to continued market pressures, and destocking in the industrial and fulfillment sectors.
Our model predicted currency to negatively impact by 1.7%, and price to positively impact by 1.2%. We expected volume to fall 13.8% in the quarter. The segment’s adjusted EBITDA decreased 24% year over year to $96 million, driven by lower volumes. We expected adjusted EBITDA to be $105 million.
Financial Updates
Cash used in operating activities was around $7 million in the first half of 2023 against an inflow of $213 million in the prior-year comparable period. The company paid out cash dividends of $60 million in the first six months of 2023.
As of Jun 30, 2023, Sealed Air’s net debt was $4.7 billion, up from $3.2 billion as of Dec 31, 2022. As of the end of the second quarter of 2023, the company had $1.10 billion of liquidity available, which comprised $285 million in cash and $811 million of undrawn, committed credit facilities.
2023 Guidance
For 2023, Sealed Air expects net sales between $5.40 and $5.60, down from the previously stated $5.85-$6.10 billion. SEE anticipates an adjusted EBITDA of $1.075-$1.125 billion compared with the previously stated $1.25-$1.30 billion. Adjusted earnings per share (EPS) are forecast to be $2.75-$2.95. Previously, the company expected an adjusted EPS of $3.50-$3.80.
Price Performance
In a year, Sealed Air’s shares have gained 9.3% compared with the industry’s growth of 4.7%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 32.8% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $2.81 per share. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. ASTE’s shares gained 25.1% in the last year.
The Zacks Consensus Estimate for AGCO Corporation’s 2023 earnings per share is pegged at $15.07. The consensus estimate for 2023 earnings has moved 3% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 16.4%. AGCO gained 20% in the last year.
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Sealed Air (SEE) Q2 Earnings Beat Estimates, Revenues Miss
Sealed Air Corporation (SEE - Free Report) has reported second-quarter 2023 adjusted earnings per share of 80 cents, which surpassed the Zacks Consensus Estimate of 68 cents. The bottom line fell 21% year over year due to lower volumes.
Including special items, the company delivered net earnings per share of 65 cents compared with the prior-year quarter’s 77 cents.
Total revenues were down 2.6% year over year to $1,381 million in the reported quarter. The top line missed the Zacks Consensus Estimate of $1,416 million.
Currency had an unfavorable impact of 1.7%, while price had a favorable impact of 2%. Meanwhile, volumes were down 8.2% year over year. Our model predicted currency to have an unfavorable impact of 1% and pricing to favor sales by 1.6%. We predicted volumes to decrease 6.5% year over year. The variance is mainly due to the ongoing destocking in the industrial and fulfillment sectors.
Sales in the APAC (in constant dollars) rose 6% year over year, while sales in the Americas witnessed a decline of 2%. Sales in EMEA were flat year over year.
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 fell 1.7% year over year to $962 million. The gross profit was $418 million, which marked a 4.6% decline from the year-ago quarter’s $438 million. The gross margin contracted to 30.3% from the prior-year quarter’s 30.9%.
SG&A expenses decreased 6.8% from the last-year quarter to $186 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $280 million in the quarter, which decreased 4.5% from the prior-year period. The adjusted EBITDA margin was 20.3% compared with the prior-year quarter’s 20.7%, courtesy of lower volumes, partially offset by earnings generated from Liquibox.
Segmental Performance
Food: Net sales increased 9% year over year to $881 million. However, the figure missed our estimate of $904 million. Volumes were flat, while pricing actions had a favorable impact of 3%. We expected volume to be down 1% and pricing to be up 1.9%. Currency fluctuations had an unfavorable impact of 3%. Our model predicted currency to negatively impact the segment’s sales by 0.4%.
Adjusted EBITDA was $191 million, up 14% from the last year’s quarter, owing to gains from the Liquibox acquisition. The reported figure also surpassed our estimate of $188 million.
Protective: The segment reported net sales of $500 million in the quarter under review, down 18% from the prior-year quarter. We expected net sales of $525 million. Currency had an unfavorable impact of 0.4%. Pricing had a positive impact of 1%, while volumes fell 19% due to continued market pressures, and destocking in the industrial and fulfillment sectors.
Our model predicted currency to negatively impact by 1.7%, and price to positively impact by 1.2%. We expected volume to fall 13.8% in the quarter. The segment’s adjusted EBITDA decreased 24% year over year to $96 million, driven by lower volumes. We expected adjusted EBITDA to be $105 million.
Financial Updates
Cash used in operating activities was around $7 million in the first half of 2023 against an inflow of $213 million in the prior-year comparable period. The company paid out cash dividends of $60 million in the first six months of 2023.
As of Jun 30, 2023, Sealed Air’s net debt was $4.7 billion, up from $3.2 billion as of Dec 31, 2022. As of the end of the second quarter of 2023, the company had $1.10 billion of liquidity available, which comprised $285 million in cash and $811 million of undrawn, committed credit facilities.
2023 Guidance
For 2023, Sealed Air expects net sales between $5.40 and $5.60, down from the previously stated $5.85-$6.10 billion. SEE anticipates an adjusted EBITDA of $1.075-$1.125 billion compared with the previously stated $1.25-$1.30 billion. Adjusted earnings per share (EPS) are forecast to be $2.75-$2.95. Previously, the company expected an adjusted EPS of $3.50-$3.80.
Price Performance
In a year, Sealed Air’s shares have gained 9.3% compared with the industry’s growth of 4.7%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. (WOR - Free Report) , Astec Industries, Inc. (ASTE - Free Report) and AGCO Corporation (AGCO - Free Report) . WOR and ASTE sport a Zacks Rank #1 (Strong Buy) at present, and AGCO has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 32.8% in the last year.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $2.81 per share. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. ASTE’s shares gained 25.1% in the last year.
The Zacks Consensus Estimate for AGCO Corporation’s 2023 earnings per share is pegged at $15.07. The consensus estimate for 2023 earnings has moved 3% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 16.4%. AGCO gained 20% in the last year.