- Adjusted EBITDA Increased 8.4% to $284
Million or 14.4% of Net Sales
- 2014 Adjusted EPS of $0.42 Increased
20%; Reported EPS of $0.28
- Repurchased Approximately 3.9 million
Shares for $130 Million and Recently Refinanced Credit
Facility
- Company Raises 2014 Financial
Outlook
Sealed Air Corporation (NYSE:SEE) today announced financial
results for the second quarter 2014. Commenting on these results,
Jerome A. Peribere, President and Chief Executive Officer, said,
“Second quarter 2014 net sales of $2.0 billion increased 3.0% on a
constant dollar basis compared to last year primarily due to
favorable price/mix of 3.4%. We delivered favorable price/mix
across all divisions, which contributed to a year-over-year
improvement of 50 basis points in gross profit margin. Adjusted
EBITDA margin in the quarter increased 90 basis points to 14.4% as
compared to 13.5% in the previous year. Based on our performance in
the first half of 2014 and outlook for the remainder of the year,
we are raising our full year 2014 guidance for Net Sales, Adjusted
EBITDA, Adjusted EPS and Free Cash Flow. Our second quarter results
and increased outlook for the full year demonstrate that our
continued focus on quality of earnings is progressing ahead of our
original expectations.”
“As part of our ‘Change the Game’ strategy and as a significant
step in transforming Sealed Air into a knowledge-based company, we
announced last week that we are relocating our global headquarters
to a new, state-of-the-art campus in Charlotte, North Carolina.
This move will create a stronger, one-company culture that enables
greater collaboration, accelerates innovation and drives operating
efficiencies. The new campus is expected to be completed by late
2016, and during this period we do not expect the cash costs to
have a material impact on our financial outlook,” Peribere
continued.
All results presented in this release include results on a
continuing operations basis and reflect the change in the Company’s
segment structure as previously disclosed in our Current Report on
Form 8-K filed with the Securities and Exchange Commission on April
16, 2014. The Rigid Medical Packaging business, which the Company
sold in December 2013, has been presented as discontinued
operations. Reported information is defined as U.S. GAAP.
Year-over-year net sales discussions present both reported and
constant dollar performance. Constant dollar sales performance
excludes the impact of currency translation. Additionally, non-U.S.
GAAP adjusted financial measures, such as Adjusted Earnings Before
Interest, Taxes and Depreciation and Amortization (“Adjusted
EBITDA”), Adjusted Net Earnings, Adjusted Diluted Earnings Per
Share (“Adjusted EPS”) and Tax Rate, exclude the impact of special
items, such as restructuring charges, cash-settled stock
appreciation rights (“SARs”) granted as part of the Diversey
acquisition and certain other one-time items.
Business and Financial
Highlights
- Net sales in the Food Care division of
$962 million increased 1.6% compared to last year and 3.7% on a
constant dollar basis. The increase in net sales was primarily due
to favorable price/mix of 4.6%, partially offset by a decline in
volume of 0.9%. Lower volume was largely attributable to a decline
in beef production in North America and PED virus impact related to
the pork market in both North America and Mexico. Food Care’s
Adjusted EBITDA increased 7.6% to $159 million, or 16.6% of net
sales. This increase was due to favorable mix and price/cost spread
as well as cost synergies, partially offset by non-material
inflation, negative currency translation and lower volumes.
- The Diversey Care division reported net
sales of $581 million, a 2.0% increase compared to last year. On a
constant dollar basis, net sales increased 2.7% as a result of
strong growth in developing regions as well as improving trends in
Europe. Diversey Care’s Adjusted EBITDA of $72 million was
essentially unchanged on a year-over-year basis. Adjusted EBITDA
margin in the second quarter was 12.4%.
- The Product Care division reported net
sales of $409 million, a 3.5% increase compared to last year. On a
constant dollar basis, net sales increased by 3.2% primarily due to
a favorable price/mix of 3.0%. Product Care’s Adjusted EBITDA
increased 15.5% to $71 million, or 17.3% of net sales. This
increase was largely attributable to favorable mix and price/cost
spread as well as cost synergies.
Second Quarter 2014
Summary
Second quarter 2014 net sales of $2.0 billion increased 1.9% on
a reported basis and 3.0% on a constant dollar basis. Favorable
product price/mix of 3.4% was offset by a 0.4% decline in volume.
The Company delivered constant dollar sales growth in all regions
with 8.0% growth in Latin America, 6.6% in AMAT1, 2.7% in North
America, 1.7% in JANZ2, and 0.7% in Europe. Additionally, second
quarter 2014 reported net sales from Developing Regions3 increased
7.6% in constant dollars, accounting for 25.5% of total net sales.
The increase in Developing Regions was primarily attributable to
strong demand in China, which delivered 12.6% constant dollar sales
growth as compared to last year.
Adjusted EBITDA for the second quarter 2014 increased 8.4% to
$284 million, or 14.4% of net sales. This compares to second
quarter 2013 of $262 million, or 13.5% of net sales. The 90 basis
point improvement in Adjusted EBITDA margin in the second quarter
2014 was primarily attributable to favorable mix and price/cost
spread and cost synergies, partially offset by non-material
inflation, lower volumes and $4 million negative currency
translation.
Reported second quarter 2014 net earnings were $60 million, or
$0.28 per share, which included special items largely comprised of
costs associated with previously announced restructuring programs.
This compares to reported net earnings of $54 million in the same
period a year ago, or $0.25 per share. Adjusted Net Earnings were
$91 million or $0.42 per share in second quarter 2014. This
compares to Adjusted Net Earnings of $74 million, or $0.35 per
share in second quarter 2013. The Tax Rate in second quarter 2014
was 29.5% as compared with 22.8% in second quarter 2013. This
year-over-year increase was primarily due to the lapse of certain
U.S. tax laws, including certain foreign rules and the research and
development credit, as well as greater earnings in the U.S. and
other jurisdictions with higher tax rates. In addition, second
quarter 2013 benefited from a favorable settlement of a tax
dispute.
Share Repurchase
As previously announced, on June 13, 2014, Sealed Air
repurchased $130 million, or 3,932,244 shares, of common stock at a
price of $33.06 per share from the WRG Asbestos PI Trust. The
Company funded the stock repurchase with $110 million from
committed credit facilities and $20 million of accumulated cash and
cash equivalents.
Credit Facility
On July 25, 2014, the Company amended and restated its senior
secured credit facilities, including repayment of the outstanding
Term Loan B. The amended and restated facility refinanced the
Company’s Term Loan A, Term Loan B and revolving facilities. The
new facilities, totaling $2.13 billion, are comprised of $1.33
billion for Term Loan A facilities and $700 million of revolving
commitments. The Company also established a new $100 million
delayed draw term Loan A facility. The amended and restated
facility will provide approximately $15 million of annualized
interest savings, in addition to a maturity extension and increased
covenant flexibility.
Cash Flow and Net Debt
Cash flow used in operating activities for the six months ended
June 30, 2014 was $762 million, which includes the $930 million
payment in February 2014 pursuant to the W. R. Grace & Co.
Settlement agreement (“Settlement agreement”). Excluding the
Settlement agreement payment, cash flow provided by operating
activities was $167 million, which is net of $50 million of
restructuring and $17 million of SARs payments. This compares with
cash provided by operating activities of $60 million in the six
months ended June 30, 2013, which is net of $45 million of
restructuring and $28 million of SARs payments. Capital
expenditures were $55 million for the six months ended June 30,
2014 compared to $51 million for the six months ended June 30,
2013.
Free Cash Flow, defined as net cash used in operating activities
less capital expenditures, was a use of $817 million in the six
months ended June 30, 2014. Excluding the Settlement agreement
payment, Free Cash Flow was a source of $112 million, compared with
a source of $9 million during the same period a year ago. Compared
to December 31, 2013, the Company’s net debt increased $80 million
to $4.4 billion as of June 30, 2014. This increase was primarily a
result of the Company’s share repurchase.
Outlook for Full Year
2014
The Company is increasing its full year 2014 outlook for Net
Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow. For Net
Sales, the Company estimates approximately $7.75 billion, a $50
million increase from previously provided guidance. This assumes an
estimated unfavorable impact of approximately 1% from foreign
currency translation. Adjusted EPS is expected to be in the range
of $1.65 to $1.70 as compared to the previously provided guidance
of $1.50 to $1.60.
Adjusted EBITDA is anticipated to be in the range of
approximately $1.085 billion to $1.095 billion, an increase from
the previously provided guidance of $1.050 billion to $1.070
billion. Free Cash Flow is estimated to be approximately $485
million as compared to the previously provided outlook of $425
million. The Company is revising its 2014 estimates for cash
restructuring charges and capital expenditures to be approximately
$135 million and approximately $150 million, respectively. The
Company’s Free Cash Flow target excludes the Settlement agreement
payment referenced above.
Conference Call
Information
Date:
July 30, 2014
Time:
8:30am (ET)
Webcast:
www.sealedair.com in the Investor Relations section
Conference Dial
In:
(888) 713-4199 (domestic) (617) 213-4861 (international)
Participant
Code:
74989830
Conference Call
Replay Information
Dates:
Wednesday, July 30, 2014 starting at 12:30pm (ET) through
Wednesday, September 6, 2014 at 11:59pm (ET)
Webcast:
www.sealedair.com in the Investor Relations section
Conference Dial
In:
(888) 286-8010 (domestic) (617) 801-6888 (international)
Participant
Code:
97762782
Business
Sealed Air Corporation creates a world that feels, tastes and
works better. In 2013, the Company generated revenue of
approximately $7.7 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, ensures 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
25,000 employees who serve customers in 175 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" basis, Adjusted Gross
Profit, Adjusted Operating Profit, Free Cash Flow, EBITDA, Adjusted
EBITDA and Tax Rate. 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. We may use Adjusted EPS, net sales on a constant dollar
basis, Adjusted Net Earnings, Adjusted Gross Profit, Adjusted
Operating Profit, measures of free cash flow, net debt, and EBITDA
figures to determine performance-based compensation. Our management
uses financial measures excluding the effects of foreign currency
translation in evaluating operating performance. Management
believes that this information may be useful to investors. For a
reconciliation of these non-U.S. GAAP metrics 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,” and “Components of Change in Net Sales by
Segment.”
Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by such words as
“anticipates,” “believes,” “plan,” “assumes,” “could,” “estimates,”
“expects,” “intends,” “may,” “plans to,” “will” and similar
expressions. These statements reflect our beliefs and expectations
as to future events and trends affecting our business, our
consolidated financial position and our results of operations.
Examples of these forward-looking statements include expectations
regarding our anticipated effective income tax rate, the potential
cash tax benefits associated with the W. R. Grace & Co.
Settlement agreement (as defined in the Company’s Annual Report on
Form 10-K), potential volume, revenue and operating growth for
future periods, expectations and assumptions associated with our
restructuring programs, availability and pricing of raw materials,
success of our growth initiatives, economic conditions, and the
success of pricing actions. A variety of factors may cause actual
results to differ materially from these expectations, including
domestic and international economic and political conditions,
changes in our raw material and energy costs, credit ratings, the
success of restructuring plans, currency translation and
devaluation effects, the competitive environment, the effects of
animal and food-related health issues, environmental matters, and
regulatory actions and legal matters. For more extensive
information, see “Risk Factors” and “Cautionary Notice Regarding
Forward-Looking Statements,” which appear 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. While we may elect to
update these forward-looking statements at some point in the
future, we specifically disclaim any obligation to do so, whether
as a result of new information, future events, or otherwise.
1 AMAT is comprised of Asia, Middle East, Africa and Turkey.
2 JANZ is comprised of Japan, Australia and New Zealand.
3 Developing Regions are Africa, Asia (excluding Japan and South
Korea), Central and Eastern Europe, and Latin America.
SEALED AIR CORPORATION SUPPLEMENTARY
INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(1) (Unaudited) (In millions, except
per share data)
Three Months Ended Six Months Ended June
30, June 30, 2014 2013 2014
2013 Revised(2) Revised(2)
Net sales $
1,973.6 $ 1,937.4 $ 3,801.3
$ 3,766.3 Cost of sales 1,293.6 1,278.3
2,480.3 2,495.0
Gross profit 680.0
659.1 1,321.0 1,271.3 As a % of total net
sales 34.5 % 34.0 % 34.8 % 33.8 % Selling, general and
administrative expenses 459.8 449.9 907.2 884.6 As a % of total net
sales 23.3 % 23.2 % 23.9 % 23.5 % Amortization expense of
intangible assets acquired 31.2 31.4 62.4 63.3 Stock appreciation
rights expense(3) 1.7 0.1 2.2 18.1 Costs related to the acquisition
and integration of Diversey 0.9 - 1.8 0.4 Restructuring and other
charges 14.1 11.9 20.2 11.7
Operating profit 172.3 165.8 327.2
293.2 Interest expense (73.9 ) (89.7 ) (152.4 ) (180.5 )
Foreign currency exchange (losses) related to Venezuelan
subsidiaries(4) 0.2 (0.5 ) (14.8 ) (13.6 ) Gain from Claims
Settlement(5) - - 21.1 - Loss on debt redemption (0.4 ) (0.1 ) (0.8
) (32.4 ) Other (expense), net (4.8 ) (3.3 ) (4.4 ) (3.0 )
Earnings from continuing operations before income tax
provision 93.4 72.2 175.9 63.7
Income tax provision 33.1 17.9 43.8 8.7
Effective income tax rate 35.4 % 24.8 % 24.9 % 13.7 %
Net
earnings from continuing operations 60.3
54.3 132.1 55.0 Net
earnings from discontinued operations(2)
- 2.0
- 4.0 Net earnings available
to common stockholders $ 60.3 $
56.3 $ 132.1 $
59.0 Net earnings per common share:
Basic : Continuing operations $ 0.28
$
0.28
$ 0.63
$ 0.28
Discontinued operations -
0.01 - 0.02
Net earnings per common
share - basic $ 0.28 $ 0.29
$ 0.63 $ 0.30
Diluted: Continuing operations $ 0.28
$ 0.25
$ 0.61
$ 0.26
Discontinued
operations - 0.01 - 0.02
Net
earnings per common share - diluted $ 0.28
$ 0.26 $ 0.61 $
0.28 Dividends per common share
$ 0.13 $ 0.13 $
0.26 $ 0.26 Weighted
average number of common shares outstanding: Basic
213.5 194.8 210.1
194.3 Diluted 214.7 213.6
214.6 213.2
(1) The
supplementary information included in this press release for 2014
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) In December 2013, we completed the sale of
our rigid medical packaging business for net cash proceeds of $122
million. The financial results of the rigid medical business is
reported as discontinued operations, net of tax, and, accordingly
all previously reported financial information has been revised. (3)
At June 30, 2014, the remaining amount of unvested cash-settled
stock appreciation rights ("SAR"s) will fully vest over the next 12
months. However, we will continue to incur expense related to these
SARs until the last expiration date of these awards (March 2021).
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. (4) Based on changes to the Venezuelan currency
exchange rate mechanisms, we changed the exchange rate we used to
remeasure our Venezuelan subsidiary’s financial statements into
U.S. dollars. As a result of the change in our excess cash position
in our Venezuelan subsidiaries being remeasured we recorded a
remeasurement loss of $15 million in the six months ended June 30,
2014.
In February 2013, the Venezuelan
government announced a devaluation of the Bolivar from an official
exchange rate of 4.3 to 6.3 bolivars per U.S. dollar. Due to this
devaluation, as of June 30, 2013, we remeasured our bolivar
denominated monetary assets and liabilities, which resulted in a
pretax loss of $1 million in the three months ended June 30, 2013
and $14 million in the six months ended June 30, 2013.
(5) As previously disclosed in our Quarterly Report on Form 10-Q
for the three months ended March 31, 2014, on February 3, 2014 we
funded the cash consideration ($930 million) and issued the shares
reserved under the Settlement agreement as defined therein. As a
result, we recognized a gain on Claims Settlement of $21 million,
which primarily consisted of the release of certain tax and other
liabilities.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION CONDENSED CONSOLIDATED BALANCE
SHEETS(1) (Unaudited) (In millions)
June 30, December
31, 2014 2013 Assets Current
assets: Cash and cash equivalents $ 356.5 $ 992.4 Trade
receivables, net(2) 961.0 1,126.4 Other receivables 371.1 147.9
Inventories 783.5 688.4 Other current assets 414.0
462.6
Total current assets 2,886.1
3,417.7 Property and equipment, net 1,099.7 1,134.5 Goodwill
3,123.1 3,114.6 Intangible assets, net 961.2 1,016.9 Other assets,
net 461.8 450.5
Total assets
$ 8,531.9 $
9,134.2 Liabilities and stockholders'
equity Current liabilities: Short-term borrowings $ 644.0 $
81.6 Current portion of long-term debt 69.8 201.5 Accounts payable
592.0 524.5 Settlement agreement and related accrued interest(3) -
925.1 Other current liabilities 904.3 968.1
Total current liabilities 2,210.1
2,700.8 Long-term debt, less current portion 4,054.9 4,116.4
Other liabilities 851.2 926.5
Total
liabilities 7,116.2 7,743.7
Total parent company stockholders' equity 1,414.3 1,389.1
Noncontrolling interests 1.4 1.4
Total stockholders' equity 1,415.7
1,390.5 Total liabilities and stockholders'
equity $ 8,531.9 $
9,134.2 CALCULATION OF NET DEBT
(1) June 30, December 31, 2014
2013 Short-term borrowings $ 644.0 $ 81.6
Current portion of long-term debt 69.8 201.5 Settlement agreement
and related accrued interest(3) - 925.1 Long-term debt, less
current portion 4,054.9 4,116.4 Total
debt 4,768.7 5,324.6 Less: cash and cash equivalents (356.5
) (992.4 )
Net debt $ 4,412.2
$ 4,332.2
(1)
The supplementary information included in this press release for
2014 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 June 30, 2014, we had $217 million
of borrowings outstanding under our accounts receivable
securitization programs, and, accordingly, the receivables utilized
as collateral under our accounts receivable securitization programs
were reclassified from trade receivables, net to other current
assets. (3) As previously disclosed in our Quarterly Report on Form
10-Q for the three months ended March 31, 2014, on February 3, 2014
we funded the cash consideration and issued the shares reserved
under the Settlement agreement.
SEALED AIR
CORPORATION SUPPLEMENTARY INFORMATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(1)
(Unaudited) (In millions)
Six Months Ended June 30, 2014 2013
Revised(2) Net earnings available to common stockholders -
continuing operations $ 132.1 $ 55.0 Adjustments to reconcile net
earnings to net cash (used in) provided by operating activities -
continuing operations(3) 189.0 191.3 Changes in: Trade receivables,
net (56.1 ) (74.1 ) Inventories (99.6 ) (114.9 ) Accounts payable
69.0 88.3 Settlement agreement and related accrued interest (4)
(929.7 ) 24.1 Changes in all other operating assets and liabilities
(67.0 ) (109.7 )
Cash flow (used in) provided by
operating activities - continuing operations (762.3
) 60.0 Capital expenditures for property and
equipment (55.1 ) (50.8 ) Other investing activities 1.1
7.5
Cash flow used in investing activities
- continuing operations (54.0 ) (43.3
) Net proceeds from short-term borrowings and
long-term debt(5) 362.2 11.1 Repurchase of common stock (130.0 ) -
Dividends paid on common stock (56.0 ) (50.9 ) Acquisition of
common stock for tax withholding obligations under our 2005
contingent stock plan (2.8 ) (3.9 ) Payments of debt issuance costs
- (7.7 ) Payments of debt extinguishment costs -
(26.2 )
Cash flow provided by (used in) financing
activities - continuing operations 173.4 (77.6
) Cash flow from discontinued operations
- 2.0 Effect of
foreign currency exchange rates on cash and cash equivalents
7.0 19.4 Cash
and cash equivalents beginning of period $ 992.4
$ 679.6 Net change in cash and cash equivalents
(635.9 ) (39.5 )
Cash and cash equivalents end of
period $ 356.5 $ 640.1
Non-U.S. GAAP Free Cash Flow: Cash flow from
operating activities - continuing operations(4) $ (762.3 ) $ 60.0
Capital expenditures for property and equipment (55.1 )
(50.8 )
Free Cash Flow(5)
$ (817.4
) $ 9.2 Additional Cash Flow
Information: Interest payments, net of amounts capitalized $ 563.1
$ 141.6 Income tax payments $ 41.2 $ 56.5
SARs payments (less amounts included in restructuring
payments) $ 17.0 $ 27.8 Restructuring payments
(including associated costs) $ 49.9 $ 45.0
(1) The supplementary information included in this
press release for 2014 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) In December 2013, we
completed the sale of our rigid medical packaging business. The
financial results of the rigid medical business are reported as
discontinued operations, net of tax, and, accordingly all
previously reported financial information has been revised. (3)
2014 primarily consists of depreciation and amortization of $164
million, and profit sharing expense of $19 million, partially
offset by gain on Settlement agreement of $(21) million. 2013
primarily consists of depreciation and amortization of $161
million, loss on debt redemption of $32 million and profit sharing
expense of $20 million, partially offset by deferred taxes, net of
$(42) million. (4) In February 2014, we used $930 million of cash
to fund the cash portion of the Settlement agreement and related
accrued interest. To fund the cash payment, we used $555 million of
cash and cash equivalents and utilized borrowings of $260 million
from our revolving credit facility and $115 million from our
accounts receivable securitization programs. (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 June 30, 2014 2013
U.S. GAAP
As Reported
Special Items(2) Non-U.S. GAAP Adjusted
U.S. GAAP As Reported
Special Items(2) Non-U.S. GAAP Adjusted
Revised(3) Revised(3)
Net sales $ 1,973.6
$ - $ 1,973.6 $ 1,937.4
$ - $ 1,937.4 Cost of sales 1,293.6
(5.3 ) 1,288.3 1,278.3 (3.5 )
1,274.8
Gross profit 680.0 5.3
685.3 659.1 3.5 662.6 As a % of total
net sales 34.5 % 34.7 % 34.0 % 34.2 % Selling, general and
administrative expenses 459.8 (5.5 ) 454.3 449.9 (7.2 ) 442.7 As a
% of total net sales 23.3 % 23.0 % 23.2 % 22.9 % Amortization
expense of intangible assets acquired 31.2
- 31.2 31.4 -
31.4 Stock appreciation rights expense 1.7 (1.7 )
- 0.1 (0.1
)
- Costs related to the acquisition and integration of
Diversey 0.9 (0.9 )
- - -
- Restructuring and other
charges (credits) 14.1 (14.1 ) - 11.9
(11.9 ) -
Operating profit 172.3
27.5 199.8 165.8 22.7 188.5 As a
% of total net sales 8.7 % 10.1 % 8.6 % 9.7 % Interest expense
(73.9 ) - (73.9 ) (89.7 ) - (89.7 ) Foreign currency exchange
(losses) related to Venezuelan subsidiaries 0.2 (0.2 ) - (0.5 ) 0.5
- Gain from Claims Settlement - - - - - - Loss on debt redemption
(0.4 ) 0.4 - (0.1 ) 0.1 - Other income (expense), net (4.8 ) 7.5
2.7 (3.3 ) 0.2 (3.1 )
Earnings from continuing operations before income tax
provision 93.4 35.2 128.6 72.2
23.5 95.7 Income tax provision 33.1 4.9
38.0 17.9 3.9 21.8
Effective income tax rate 35.4 % 29.5 % 24.8 % 22.8 %
Net
earnings from continuing operations 60.3 30.3
90.6 54.3 19.6 73.9 Net earnings from
discontinued operations - - - 2.0
(2.0 ) -
Net earnings available to common
stockholders $ 60.3 $ 30.3
$ 90.6 $ 56.3
$ 17.6 $ 73.9
Net earnings per common share: Diluted:
Continuing operations $ 0.28
$ 0.14
$
0.42
$ 0.25
$ 0.09
$ 0.35
Discontinued
operations - - - 0.01 (0.01
) -
Net earnings per common share - diluted
$ 0.28 $ 0.14 $
0.42 $ 0.26 $
0.08 $ 0.35
Weighted average number of common shares outstanding:
Diluted 214.7 214.7
214.7 213.6 213.6
213.6 Non-U.S. GAAP Adjusted EBITDA:
Non-U.S. GAAP Adjusted Operating Profit $
199.8 $ 188.5 Other income (expense), net 2.7
(3.1 ) Depreciation and amortization 81.6 81.8 Write down of
non-strategic assets, included in depreciation and amortization
- (5.0 )
Non-U.S. GAAP Adjusted EBITDA
$ 284.1 $ 262.2 As a % of
total net sales 14.4 %
13.5 %
(1) The
supplementary information included in this press release for 2014
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 consist of certain one-time
costs or charges/credits that are included in our U.S. GAAP
reported results. These special items include restructuring and
other associated costs related to our previously announced Earnings
Quality Improvement Program ("EQIP") and the Integration and
Optimization Program ("IOP") restructuring programs, foreign
currency exchange losses related to Venezuelan subsidiaries, losses
recorded on debt redemption and financing activities and stock
appreciation rights ("SARs") expense and in 2014 the gain from
Claims Settlement. (3) In December 2013, we completed the sale of
our rigid medical packaging business. The financial results of the
rigid medical business is reported as discontinued operations, net
of tax, and, accordingly all previously reported financial
information has been revised.
(4) Depreciation and amortization
includes:
Three Months Ended
June 30, 2014 2013 Depreciation of property, plant
and equipment $ 38.5 $ 43.1 Amortization of intangible assets
acquired 31.2 31.4 Amortization of deferred share-based
compensation 11.9 7.3
Total $ 81.6 $ 81.8
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) Six Months Ended June
30, 2014 2013
U.S. GAAP
As Reported
Special Items(2) Non-U.S. GAAP Adjusted
U.S. GAAP
As Reported
Special Items(2) Non-U.S. GAAP Adjusted
Revised(3) Revised(3)
Net sales $ 3,801.3
$ - $ 3,801.3 $ 3,766.3
$ - $ 3,766.3 Cost of sales 2,480.3
(6.4) 2,473.9 2,495.0 (5.0) 2,490.0
Gross profit
1,321.0 6.4 1,327.4 1,271.3 5.0
1,276.3 As a % of total net sales 34.8% 34.9% 33.8% 33.9%
Selling, general and administrative expenses 907.2 (9.0) 898.2
884.6 (11.6) 873.0 As a % of total net sales 23.9% 23.6% 23.5%
23.2% Amortization expense of intangible assets acquired 62.4 -
62.4 63.3 - 63.3 Stock appreciation rights expense 2.2 (2.2)
- 18.1 (18.1)
- Costs related to the acquisition and
integration of Diversey 1.8 (1.8)
- 0.4 (0.4)
-
Restructuring and other charges (credits) 20.2 (20.2) - 11.7 (11.7)
-
Operating profit 327.2 39.6 366.8
293.2 46.8 340.0 As a % of total net sales
8.6% 9.6% 7.8% 9.0% Interest expense (152.4) - (152.4) (180.5) -
(180.5) Foreign currency exchange (losses) related to Venezuelan
subsidiaries (14.8) 14.8 - (13.6) 13.6 - Gain from Claims
Settlement 21.1 (21.1) - - - - Loss on debt redemption (0.8) 0.8 -
(32.4) 32.4 - Other income (expense), net (4.4) 9.4 5.0 (3.0) 0.3
(2.7)
Earnings from continuing operations before income tax
provision 175.9 43.5 219.4 63.7
93.1 156.8 Income tax provision 43.8 13.6 57.4 8.7
24.3 33.0 Effective income tax rate 24.9% 26.2% 13.7% 21.0%
Net
earnings from continuing operations 132.1 29.9
162.0 55.0 68.8 123.8 Net earnings from
discontinued operations - - - 4.0 (4.0) -
Net earnings available
to common stockholders $ 132.1 $
29.9 $ 162.0 $ 59.0 $
64.8 $ 123.8 Net earnings per common
share: Diluted: Continuing operations $
0.61
$ 0.14
$ 0.75
$ 0.26
$ 0.32
$ 0.58
Discontinued operations - - - 0.02 (0.02) -
Net earnings per common share - diluted $ 0.61
$ 0.14 $ 0.75 $ 0.28
$ 0.30 $ 0.58 Weighted
average number of common shares outstanding: Diluted
214.6 214.6 214.6 213.2 213.2
213.2 Non-U.S. GAAP Adjusted EBITDA:
Non-U.S. GAAP Adjusted Operating Profit $ 366.8 $
340.0 Other income (expense), net 5.0 (2.7) Depreciation and
amortization 164.4 161.3 Write down of non-strategic assets,
included in depreciation and amortization 0.1 (5.0)
Non-U.S.
GAAP Adjusted EBITDA $ 536.3 $ 493.6 As a % of
total net sales 14.1%
13.1%
(1) The supplementary information included in this
press release for 2014 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 consist
of certain one-time costs or charges/credits that are included in
our U.S. GAAP reported results. These special items include
restructuring and other associated costs related to our previously
announced EQIP and IOP restructuring programs, foreign currency
exchange losses related to Venezuelan subsidiaries, losses recorded
on debt redemption and financing activities and stock appreciation
rights ("SARs") expense and in 2014 the gain from Claims
Settlement. (3) In December 2013, we completed the sale of our
rigid medical packaging business. The financial results of the
rigid medical business is reported as discontinued operations, net
of tax, and, accordingly all previously reported financial
information has been revised.
(4) Depreciation and amortization
includes:
Six Months Ended
June 30, 2014 2013 Depreciation of property, plant
and equipment $ 75.6 $ 83.1 Amortization of intangible assets
acquired 62.4 63.3 Amortization of deferred share-based
compensation 26.4 14.9
Total $ 164.4 $ 161.3
SEALED AIR CORPORATION SUPPLEMENTARY INFORMATION
SEGMENT INFORMATION(1) (Unaudited)
Three Months Ended Six Months
Ended June 30, % June 30, %
2014 2013 Change 2014 2013
Change Revised(2) Revised(2)
Net Sales: Food Care $
962.1 $ 947.0 1.6 % $ 1,866.4 $ 1,850.1 0.9 % As a % of Total
Company net sales 48.7% 48.9% 49.1% 49.1% Diversey Care 581.3 570.0
2.0 % 1,086.4 1,082.9 0.3 % As a % of Total Company net sales 29.5%
29.4% 28.6% 28.8% Product Care 408.7 394.8 3.5 % 802.5 782.0 2.6 %
As a % of Total Company net sales 20.7% 20.4%
21.1% 20.8%
Total Reportable Segments Net
Sales 1,952.1 1,911.8 2.1 %
3,755.3
3,715.0 1.1 % Other 21.5 25.6 (16.0) %
46.0 51.3 (10.3) %
Total Company Net Sales
$ 1,973.6 $ 1,937.4 1.9 %
$ 3,801.3 $ 3,766.3 0.9 %
Three Months Ended Six Months Ended
June 30, % June 30, % 2014
2013 Change 2014 2013 Change
Revised(2) Revised(2)
Adjusted EBITDA: Food Care $ 159.4 $
148.2 7.6 % $ 318.9 $ 293.9 8.5 % Adjusted EBITDA Margin 16.6%
15.6% 17.1% 15.9% Diversey Care 72.3 73.3 (1.4) % 116.8 115.9 0.8 %
Adjusted EBITDA Margin 12.4% 12.9% 10.8% 10.7% Product Care 70.8
61.3 15.5 % 140.9 123.9 13.7 % Adjusted EBITDA Margin 17.3%
15.5% 17.6% 15.8%
Total
Reportable Segments Adjusted EBITDA 302.5 282.8
7.0 %
576.6 533.7 8.0 % Other
(18.4) (20.6) (10.8) % (40.3) (40.1) 0.5 %
Non-U.S. GAAP Total Company Adjusted EBITDA $
284.1 $ 262.2 8.4 %
$
536.3 $ 493.6 8.7 % Adjusted EBITDA
Margin 14.4% 13.5% 14.1% 13.1%
(1) As previously announced, effective as of January
1, 2014, the Company changed its segment reporting structure in
order to reflect the way management now makes operating decisions
and manages the growth and profitability of the business. See our
Current Report on Form 8-K filed with the SEC on April 16, 2014 for
further details. The supplementary information included in this
press release for 2014 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) In December 2013, we
completed the sale of our rigid medical packaging business. The
financial results of the rigid medical business is reported as
discontinued operations, net of tax, and, accordingly all
previously reported financial information has been revised.
SEALED AIR CORPORATION SEGMENT INFORMATION -
CONTINUED SUPPLEMENTARY INFORMATION(1)
(Unaudited)
Reconciliation of Non-U.S. GAAP Total Company Adjusted EBITDA to
Net Earnings from Continuing Operations: Three Months
Ended Six Months Ended June 30, June 30,
2014 2013 2014 2013 Revised(2)
Revised(2)
Non-U.S. GAAP Total Company Adjusted EBITDA
$ 284.1 $ 262.2 $ 536.3
$ 493.6 Depreciation and amortization (3) (81.6)
(81.8) (164.4) (161.3) Special items(4): Write down of
non-strategic assets included in depreciation and amortization -
5.0 (0.1) 5.0 Restructuring and other charges(5) (14.1) (11.9)
(20.2) (11.7)
Other restructuring associated costs
included in cost of sales and selling general
and administrative expenses
(10.8) (10.7) (15.4) (16.6) SARs (1.7) (0.1) (2.2) (18.1) Costs
related to the acquisition and integration of Diversey (0.9) -
(1.8) (0.4) Foreign currency exchange (losses) related to
Venezuelan subsidiaries 0.2 (0.5) (14.8) (13.6) Loss on debt
redemption (0.4) (0.1) (0.8) (32.4) Gain from Claims Settlement in
2014 and related costs (0.5) (0.2) 20.6 (0.3) Other expense, net
(7.0) - (8.9) - Interest expense (73.9) (89.7) (152.4) (180.5)
Income tax provision (benefit) 33.1 17.9 43.8
8.7
U.S. GAAP net earnings from continuing operations
$ 60.3 $ 54.3 $ 132.1
$ 55.0
Notes: (1) The supplementary information included in
this press release for 2014 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) In December 2013,
we sold our rigid medical packaging business. The financial results
of the rigid medical business are reported as discontinued
operations, net of tax, and, accordingly all previously reported
financial information has been revised. (3) Depreciation and
amortization by segment is as follows:
Three Months Ended Six Months Ended June
30, June 30, 2014 2013 2014
2013 Revised(2) Revised(2) Food Care $ 27.1 $ 29.2 $
59.1 $ 59.4 Diversey Care 29.8 33.4 62.1 68.1 Product Care 9.9
9.7 20.5 19.4
Total reportable segments
66.8 72.3 141.7 146.9 Other 14.8
9.5 22.7 14.4
Total Company depreciation and
amortization $ 81.6 $ 81.8 $
164.4 $ 161.3 (4) 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" (5) Restructuring and other charges
by segment is as follows:
Three Months Ended Six Months
Ended June 30, June 30, 2014 2013
2014 2013 Revised(2) Revised(2) Food Care $ 7.0 $ 4.9
$ 11.1 $ 3.5 Diversey Care 3.4 5.7 3.8 4.9 Product Care 3.5
1.2 5.0 3.2
Total reportable segments 13.9
11.8 19.9 11.6 Other 0.2 0.1 0.3
0.1
Total Company restructuring and other charges $
14.1 $ 11.9 $ 20.2 $
11.7 SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION COMPONENTS OF CHANGE IN NET
SALES BY SEGMENT(1) (Unaudited) (In
millions) Three
Months Ended June 30, 2014 Food Care Diversey
Care Product Care Other Total
Company
Volume - Units $ (8.3 ) (0.9 ) % $ 4.6 0.8 % $ 0.8 0.2 % $ (5.0 )
(19.5 ) % $ (7.9 ) (0.4 ) % Product price/mix (2) 43.0 4.6 10.6 1.9
12.1 3.0 0.6 2.3 66.3 3.4 Foreign currency translation (19.6
) (2.1 ) (3.9 ) (0.7 ) 1.0 0.3
0.3 1.2 (22.2 ) (1.1 )
Total change (U.S.
GAAP) $ 15.1 1.6 %
$ 11.3 2.0 % $
13.9 3.5 % $ (4.1
) (16.0 ) % $ 36.2
1.9 % Foreign currency translation $ 19.6
2.1 % $ 3.9 0.7 % $ (1.0 ) (0.3 ) % $
(0.3 ) (1.2 ) % $ 22.2 1.1 %
Total constant dollar
change (Non-U.S. GAAP)(3)
$ 34.7
3.7 % $ 15.2 2.7
% $ 12.9 3.2
% $ (4.4 ) (17.2 )
% $ 58.4 3.0 %
Six Months Ended June 30, 2014 Food
Care Diversey Care Product Care Other
Total
Company
Volume - Units $ (9.9 ) (0.5 ) % $ (5.5 ) (0.5 ) % $ 2.6 0.3 % $
(7.0 ) (13.6 ) % $ (19.8 ) (0.5 ) % Product price/mix (2) 80.2 4.3
26.8 2.4 20.5 2.6 1.3 2.5 128.8 3.4 Foreign currency translation
(54.0 ) (2.9 ) (17.8 ) (1.6 ) (2.6 ) (0.3 )
0.4 0.8 (74.0 ) (2.0 )
Total change
(U.S. GAAP) $ 16.3 0.9
% $ 3.5 0.3 %
$ 20.5 2.6 % $
(5.3 ) (10.3 ) % $
35.0 0.9 % Foreign currency
translation $ 54.0 2.9 % $ 17.8 1.6 % $
2.6 0.3 % $ (0.4 ) (0.8 ) % $ 74.0 2.0
%
Total constant dollar change (Non-U.S. GAAP)(3)
$
70.3 3.8 % $ 21.3
1.9 % $ 23.1
2.9 % $ (5.7 )
(11.1 ) % $ 109.0
2.9 %
(1) The results above are
presented on a continuing operations basis, excluding our rigid
medical business, which we sold in December 2013. The supplementary
information included in this press release for 2014 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 product 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
product 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.
SEALED AIR CORPORATION
SUPPLEMENTARY INFORMATION COMPONENTS OF CHANGE IN NET
SALES BY REGION(1) Unaudited (In millions)
Three Months Ended June 30, 2014
North America
Europe
Latin America
AMAT(2) JANZ(3) Total Change
in Net Sales Volume - Units $ (7.2 ) $ 4.7 $ (13.5 ) $ 11.0 $
(2.9 ) $ (7.9 ) % change (0.9 ) % 0.8 % (6.3 ) % 4.9 % (2.2 ) %
(0.4 ) % Product price/mix 27.5 (0.6 ) 30.2 3.9 5.3 66.3 % change
3.6 % (0.1 ) % 14.3 % 1.7 % 3.9 % 3.4 % Foreign currency
translation (5.1 ) 31.1 (28.8 ) (11.9 ) (7.5 ) (22.2 ) % change
(0.7 ) % 5.2 % (13.6 ) % (5.3 )
% (5.6 ) % (1.1 ) %
Total change (U.S. GAAP)
$ 15.2 $ 35.2 $
(12.1 ) $ 3.0 $
(5.1 ) $ 36.2 % change 2.0 % 5.9
% (5.6 ) % 1.3 % (3.9 ) % 1.9 % Foreign currency translation
$ 5.1 $ (31.1 ) $ 28.8 $ 11.9 $ 7.5 $
22.2
Total constant dollar change (Non-U.S. GAAP)
$ 20.3 $ 4.1 $
16.7 $ 14.9 $ 2.4
$ 58.4 Constant dollar % change 2.7 %
0.7 % 8.0 % 6.6 % 1.7 % 3.0 %
Six Months Ended June 30,
2014
North America
Europe
Latin America
AMAT(2) JANZ(3) Total Change
in Net Sales Volume - Units $ (16.5 ) $ (6.7 ) $ (11.4 ) $ 19.2
$ (4.4 ) $ (19.8 ) % change (1.1 ) % (0.6 ) % (2.8 ) % 4.6 % (1.5 )
% (0.5 ) % Product price/mix 60.8 4.2 46.8 9.1 7.9 128.8 % change
4.1 % 0.3 % 11.4 % 2.2 % 2.8 % 3.4 % Foreign currency translation
(10.8 ) 45.2 (60.6 ) (24.9 ) (22.9 ) (74.0 ) % change (0.7 )
% 3.8 % (14.7 ) % (5.9 ) % (8.1
) % (2.0 ) %
Total change (U.S. GAAP) $
33.5 $ 42.7 $
(25.2 ) $ 3.4 $
(19.4 ) $ 35.0 % change 2.3 %
3.5 % (6.1 ) % 0.9 % (6.8 ) % 0.9 % Foreign currency
translation $ 10.8 $ (45.2 ) $ 60.6 $ 24.9 $
22.9 $ 74.0
Total constant dollar change (Non-U.S.
GAAP) $ 44.3 $ (2.5 )
$ 35.4 $ 28.3 $
3.5 $ 109.0 Constant dollar %
change 3.0 % (0.3 ) % 8.6 % 6.8 % 1.3 % 2.9 %
(1) The
results above are presented on a continuing operations basis,
excluding our rigid medical business, which we sold in December
2013. The supplementary information included in this press release
for 2014 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) AMAT consists of Asia, Middle East,
Africa and Turkey (3) JANZ consists of Japan, Australia and New
Zealand
Sealed Air CorporationInvestors:Lori Chaitman,
201-703-4161orMedia:Ken Aurichio, 201-703-4164
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