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Sealed Air (SEE) Q2 Earnings Surpass Estimates, Increase Y/Y
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Sealed Air Corporation (SEE - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 83 cents, which surpassed the Zacks Consensus Estimate of 64 cents by a margin of 29.7%. The bottom line increased 4% year over year.
Results benefited from the company’s cost take-out to grow program (CTO2Grow Program) and cost-control initiatives. Improvements in the Food segment’s results helped offset the continued weakness in the Protective segment. This was partially offset by unfavorable price realization.
Including special items, the company delivered EPS from continuing operations of 67 cents compared with the year-ago quarter’s 65 cents.
Total revenues were $1.35 billion, which beat the Zacks Consensus Estimate of $1.31 billion. The figure was down 2.6% from revenues of $1.38 billion in the second quarter of 2023.
Sealed Air Corporation Price, Consensus and EPS Surprise
Pricing and currency had unfavorable impacts of 3% and 0.9%, respectively. Volumes improved 1.3% year over year as higher volumes in the Food segment helped offset the weak volumes in the Protective segment.
Our model predicted pricing to have an unfavorable impact of 4.1% and we expected volumes to decrease 1.4% year over year. The variance was mainly due to the better-than-expected volume performance in the Food segment.
Sales in the Americas inched down 1.7% year over year to $893.7 million and sales in EMEA were down 5.3% to $273.8 million. Sales in APAC dipped 2.6% year over year to $177.6 million.
Costs & Margins
The cost of sales went down 3.5% year over year to $929 million. The gross profit was $416 million, which marked a 0.5% dip from the year-ago quarter’s $418 million. The gross margin was 30.9%, a marginal expansion from the year-ago quarter’s 30.3%.
SG&A expenses were $192 million, up 3% from the year-ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $286 million, up 2% from the year-ago period. The improvement was attributed to lower operating costs aided by productivity benefits related to the CTO2Grow Program and higher volumes, partially offset by unfavorable net price realization. The adjusted EBITDA margin was 21.2% indicating a 90-basis point expansion from the year-ago quarter.
Segment Performances
Food: Net sales increased 1.5% year over year to $894 million. The figure surpassed our estimate of $847 million.
Pricing actions had an unfavorable impact of 3% while volumes were up 5.3%. Foreign currency had an unfavorable impact of 0.8%. We expected volumes to be flat and pricing to be down 3.8%.
Adjusted EBITDA was around $205 million, up 7% from last year’s quarter aided by higher volumes. The reported figure surpassed our estimate of $182 million.
Protective: The segment reported net sales of $451 million, down 10% from the year-ago quarter. We expected net sales of $459 million.
Currency had an unfavorable impact of 0.9%. Pricing had a negative impact of 3.1% and volumes fell 5.8% due to a slowdown in automation sales and the ongoing weakness in industrial and fulfillment portfolios. We expected a volume decline of 3.8% and an unfavorable pricing impact of 4.5%.
The segment’s adjusted EBITDA decreased 15% year over year to $82 million, due to weak volumes and unfavorable net price realization, somewhat offset by a decline in operating cost. We expected adjusted EBITDA to be $86 million.
Cash Flow & Balance Sheet
Cash flow generated from operating activities was around $313 million in the first half of 2024 against an outflow of $7 million in the year-ago comparable period. Sealed Air paid out cash dividends of $60 million in the first half of 2024.
As of Jun 30, 2024, Sealed Air’s net debt was $4.23 billion compared with $4.34 billion as of Dec 31, 2023. As of the end of the second quarter, the company had $1.4 billion of liquidity available, which comprised $389 million in cash and $1 billion of undrawn, committed credit facilities.
Q3 & 2024 Guidance
For the third quarter, SEE expects net sales to be around $1.33 billion. Adjusted EBITDA is projected at $265 million while adjusted EPS is expected to be 67 cents.
Sealed Air expects net sales to be in the range of $5.2-$5.6 billion and an adjusted EBITDA in the band of $1.05-$1.15 billion for 2024. Adjusted EPS is forecast to be in the range of $2.65-$3.05.
Free cash flow 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 lost 13% against the industry’s 8.9% growth.
Packaging Corporation of America (PKG - Free Report) reported adjusted EPS of $2.20 in the second quarter, which beat the Zacks Consensus Estimate of $2.12. The reported figure was higher than the company’s guidance of $2.07. However, the bottom line decreased 5% year over year.
Sales grew 6.3% year over year to $2.08 billion. The top line beat the Zacks Consensus Estimate of $2.03 billion.
AptarGroup, Inc. (ATR - Free Report) reported second-quarter adjusted EPS of $1.37, which beat the Zacks Consensus Estimate of $1.36. The bottom line increased 12% year over year from $1.22 (including comparable exchange rates).
Total revenues increased 1.6% year over year to $910 million. The reported figure missed the consensus estimate of $923 million. Core sales, excluding currency and acquisition effects, improved 3% year over year. The upside was driven by the solid performance in the Pharma segment.
Graphic Packaging (GPK - Free Report) reported quarterly earnings of 60 cents per share, which beat the Zacks Consensus Estimate of 56 cents. This compares with earnings of 66 cents per share in the year-ago quarter.
GPK’s revenues were $2.24 billion, which missed the consensus estimate of $2.29 billion. Revenues were down 6.5% from the year-ago quarter’s $2.39 billion.
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Sealed Air (SEE) Q2 Earnings Surpass Estimates, Increase Y/Y
Sealed Air Corporation (SEE - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of 83 cents, which surpassed the Zacks Consensus Estimate of 64 cents by a margin of 29.7%. The bottom line increased 4% year over year.
Results benefited from the company’s cost take-out to grow program (CTO2Grow Program) and cost-control initiatives. Improvements in the Food segment’s results helped offset the continued weakness in the Protective segment. This was partially offset by unfavorable price realization.
Including special items, the company delivered EPS from continuing operations of 67 cents compared with the year-ago quarter’s 65 cents.
Total revenues were $1.35 billion, which beat the Zacks Consensus Estimate of $1.31 billion. The figure was down 2.6% from revenues of $1.38 billion in the second quarter of 2023.
Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote
Pricing and currency had unfavorable impacts of 3% and 0.9%, respectively. Volumes improved 1.3% year over year as higher volumes in the Food segment helped offset the weak volumes in the Protective segment.
Our model predicted pricing to have an unfavorable impact of 4.1% and we expected volumes to decrease 1.4% year over year. The variance was mainly due to the better-than-expected volume performance in the Food segment.
Sales in the Americas inched down 1.7% year over year to $893.7 million and sales in EMEA were down 5.3% to $273.8 million. Sales in APAC dipped 2.6% year over year to $177.6 million.
Costs & Margins
The cost of sales went down 3.5% year over year to $929 million. The gross profit was $416 million, which marked a 0.5% dip from the year-ago quarter’s $418 million. The gross margin was 30.9%, a marginal expansion from the year-ago quarter’s 30.3%.
SG&A expenses were $192 million, up 3% from the year-ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $286 million, up 2% from the year-ago period. The improvement was attributed to lower operating costs aided by productivity benefits related to the CTO2Grow Program and higher volumes, partially offset by unfavorable net price realization. The adjusted EBITDA margin was 21.2% indicating a 90-basis point expansion from the year-ago quarter.
Segment Performances
Food: Net sales increased 1.5% year over year to $894 million. The figure surpassed our estimate of $847 million.
Pricing actions had an unfavorable impact of 3% while volumes were up 5.3%. Foreign currency had an unfavorable impact of 0.8%. We expected volumes to be flat and pricing to be down 3.8%.
Adjusted EBITDA was around $205 million, up 7% from last year’s quarter aided by higher volumes. The reported figure surpassed our estimate of $182 million.
Protective: The segment reported net sales of $451 million, down 10% from the year-ago quarter. We expected net sales of $459 million.
Currency had an unfavorable impact of 0.9%. Pricing had a negative impact of 3.1% and volumes fell 5.8% due to a slowdown in automation sales and the ongoing weakness in industrial and fulfillment portfolios. We expected a volume decline of 3.8% and an unfavorable pricing impact of 4.5%.
The segment’s adjusted EBITDA decreased 15% year over year to $82 million, due to weak volumes and unfavorable net price realization, somewhat offset by a decline in operating cost. We expected adjusted EBITDA to be $86 million.
Cash Flow & Balance Sheet
Cash flow generated from operating activities was around $313 million in the first half of 2024 against an outflow of $7 million in the year-ago comparable period. Sealed Air paid out cash dividends of $60 million in the first half of 2024.
As of Jun 30, 2024, Sealed Air’s net debt was $4.23 billion compared with $4.34 billion as of Dec 31, 2023. As of the end of the second quarter, the company had $1.4 billion of liquidity available, which comprised $389 million in cash and $1 billion of undrawn, committed credit facilities.
Q3 & 2024 Guidance
For the third quarter, SEE expects net sales to be around $1.33 billion. Adjusted EBITDA is projected at $265 million while adjusted EPS is expected to be 67 cents.
Sealed Air expects net sales to be in the range of $5.2-$5.6 billion and an adjusted EBITDA in the band of $1.05-$1.15 billion for 2024. Adjusted EPS is forecast to be in the range of $2.65-$3.05.
Free cash flow 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 lost 13% against the industry’s 8.9% growth.
Image Source: Zacks Investment Research
Zacks Rank & 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 Q2?
Packaging Corporation of America (PKG - Free Report) reported adjusted EPS of $2.20 in the second quarter, which beat the Zacks Consensus Estimate of $2.12. The reported figure was higher than the company’s guidance of $2.07. However, the bottom line decreased 5% year over year.
Sales grew 6.3% year over year to $2.08 billion. The top line beat the Zacks Consensus Estimate of $2.03 billion.
AptarGroup, Inc. (ATR - Free Report) reported second-quarter adjusted EPS of $1.37, which beat the Zacks Consensus Estimate of $1.36. The bottom line increased 12% year over year from $1.22 (including comparable exchange rates).
Total revenues increased 1.6% year over year to $910 million. The reported figure missed the consensus estimate of $923 million. Core sales, excluding currency and acquisition effects, improved 3% year over year. The upside was driven by the solid performance in the Pharma segment.
Graphic Packaging (GPK - Free Report) reported quarterly earnings of 60 cents per share, which beat the Zacks Consensus Estimate of 56 cents. This compares with earnings of 66 cents per share in the year-ago quarter.
GPK’s revenues were $2.24 billion, which missed the consensus estimate of $2.29 billion. Revenues were down 6.5% from the year-ago quarter’s $2.39 billion.