Reinvent SEE Drives 2019 Earnings Growth
Continued Growth Expected in 2020
- Net sales increased 3% to $1.3 billion in Q4 and 1% to $4.8
billion in 2019
- Q4 net earnings of $124 million or $0.80 per share declined
38%; 2019 net earnings of $294 million or $1.89 per share increased
101% Adjusted EPS increased 4% to $0.78 in Q4 and 13% to $2.82 in
2019 Adjusted EBITDA increased 9% to $271 million in Q4 and 8% to
$965 million in 2019
- Net cash provided by operating activities of $511 million
increased 19% in 2019 Capital Expenditures of $190 million, up 13%,
to support future growth and automation
Sealed Air Corporation (NYSE: SEE) today reported financial
results for the fourth quarter and full year 2019.
“In 2019, we exceeded our commitments on earnings and cash flow
despite weak global industrial activity and modest sales growth.
Our fourth quarter and full year results reflect strong execution
of our strategy,” said Ted Doheny, Sealed Air's President and
CEO.
“We continue to make great progress on our journey to
world-class with Reinvent SEE improving productivity and
strengthening our earnings power. In 2020, we expect sales growth
of 2% to 3% and Adjusted EBITDA growth of 5% to 7%, with solid free
cash flow. Our focus on delivering the best products at the right
price and making them sustainable is creating value for our
customers, shareholders, employees and society,” continued
Doheny.
Unless otherwise stated, all results compare fourth quarter 2019
results to fourth quarter 2018 results from continuing operations.
Year-over-year financial discussions present operating results from
continuing operations as reported. Year-over-year comparisons are
also made on an organic basis or constant dollar basis, which are
non-U.S. GAAP measures. Organic refers to changes in unit volume
and price performance and excludes acquisitions in the first year
after closing, divestiture activity and the impact of currency
translation. Constant dollar refers to changes in net sales and
earnings, excluding the impact of currency translation.
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 specified items ("Special Items"), such as
restructuring charges, restructuring associated costs, gains and
losses related to acquisition and divestiture of businesses,
special tax items ("Tax Special Items") and certain infrequent or
one-time items. Please refer to the supplemental information
included with this press release for a reconciliation of U.S. GAAP
to Non-U.S. GAAP financial measures.
Fourth Quarter Financial and Business Highlights
Food Care net sales of $760 million decreased 2%, as reported,
compared to prior year results. Currency negatively impacted Food
Care by $16 million or 2%. Organic sales were essentially flat.
Adjusted EBITDA grew 5% to $171 million, or 22.5% of net sales, up
150 basis points compared to the prior year. The increase in
Adjusted EBITDA was primarily attributable to Reinvent SEE
initiatives, including productivity improvements, restructuring
savings and favorable price/cost spread. Currency fluctuations had
a $4 million unfavorable impact on Adjusted EBITDA.
Product Care net sales of $539 million were up 10% as reported.
Currency negatively impacted Product Care by $3 million or 1%.
Sales generated from the acquisition of Automated Packaging Systems
contributed $70 million, or approximately 14%. Organic sales
declined $17 million, or 4%, primarily due to the global industrial
slowdown. Adjusted EBITDA grew 25% to $107 million, or 19.8% of net
sales, up 230 basis points compared to the prior year. The increase
in Adjusted EBITDA was primarily attributable to Reinvent SEE
initiatives, the addition of Automated Packaging Systems and
favorable price/cost spread, partially offset by organic volume
decline.
Fourth Quarter and Full Year 2019 U.S. GAAP Summary
Fourth quarter net sales of $1.3 billion increased 3% as
reported. Currency had a negative impact on total net sales of $19
million or 2%.
Fourth quarter 2019 net earnings were $124 million, or $0.80 per
diluted share. Net earnings included a benefit of $3 million from
Special Items, after tax, primarily related to the benefit of Tax
Special Items of $29 million. Tax Special Items were largely driven
by a one-time net tax benefit resulting from tax optimization
initiatives associated with Reinvent SEE and restructuring
activities. The tax benefit was mostly offset by other Special
Items, the largest of which were a $12 million loss, net of tax,
recognized on the redemption of 6.50% notes due 2020 and $7
million, in restructuring associated costs, net of tax. This
compares to fourth quarter 2018 net earnings of $199 million, or
$1.28 per diluted share. Prior year results were favorably impacted
by $129 million of tax benefits resulting from nonrecurring items
including a decrease to the previously recognized estimate of the
one-time tax on unrepatriated earnings (U.S. Tax Reform transition
tax) and the recognition of deferred tax assets associated with tax
optimization initiatives.
The effective tax rate in the fourth quarter 2019 was 8.2%,
compared to (68.3)% in the fourth quarter 2018. The effective tax
rate in the fourth quarter 2019 was favorably impacted by tax
optimization initiatives associated with Reinvent SEE and
restructuring activities. The effective tax rate in the fourth
quarter 2018 was favorably impacted by the finalization of the
transition tax calculation associated with U.S. Tax Reform.
For the full year 2019, net sales of $4.8 billion increased 1%
as reported. Currency had a negative impact on total net sales of
$137 million or 3%.
Full year 2019 net earnings were $294 million, or $1.89 per
diluted share. Net earnings were unfavorably impacted by $145
million of Special Items, after tax. Restructuring and
restructuring associated costs of $76 million, net of tax and $44
million, net of tax, recorded in the second quarter in connection
with a settlement agreement with Novipax Holdings LLC were the
largest components of Special Items during the year. Net earnings
for the full year 2018 of $150 million, or $0.94 per diluted share,
were unfavorably impacted by $251 million of Special Items,
including $222 million for Tax Special Items such as the U.S. Tax
Reform transition tax.
The effective tax rate for full year 2019 was 20.7%, compared to
67.2% for full year 2018. The 2019 tax rate was favorably impacted
by tax optimization initiatives associated with Reinvent SEE and
restructuring activities. The 2018 rate was negatively impacted by
the transition tax associated with U.S. Tax Reform.
Fourth Quarter and Full Year 2019 Non-U.S. GAAP
Summary
In the fourth quarter 2019, on a constant dollar basis, net
sales increased $57 million, or approximately 5%, reflecting sales
from acquisitions of $78 million, or 6.2%, partially offset by an
organic sales decline of $21 million or 1.6%.
Adjusted EBITDA was $271 million, or 20.9% of net sales,
compared to $248 million, or 19.7% of net sales for the fourth
quarter 2018. The improvement in Adjusted EBITDA was primarily due
to Reinvent SEE initiatives, price/cost spread and acquisitions,
partially offset by higher operating costs, lower organic volume
and the impact of unfavorable foreign currency.
Adjusted EPS was $0.78 for the fourth quarter 2019. This
compares to Adjusted EPS of $0.75 in the fourth quarter 2018.
The Adjusted Tax Rate was 28.8% in the fourth quarter 2019
compared to 28.9% in the fourth quarter 2018.
For the full year 2019, on a constant dollar basis, net sales
increased 4% reflecting sales from acquisitions of $195 million.
Organic sales were flat compared to full year 2018. By region,
organic sales increased 27% in South America, primarily on U.S.
Dollar-based indexed pricing, and declined in North America and
Asia Pacific (APAC). Organic sales in Europe, Middle East and
Africa (EMEA) were relatively flat.
Adjusted EBITDA was $965 million, or 20.1% of net sales,
compared to $890 million, or 18.8% of net sales for full year 2018.
The improvement in Adjusted EBITDA was primarily due to Reinvent
SEE initiatives, price/cost spread and acquisitions, partially
offset by the impact of higher operating costs, unfavorable foreign
currency and lower volume.
Adjusted EPS was $2.82 for full year 2019, including $0.04
dilution from Automated Packaging Systems. The Company had 155.2
million diluted shares outstanding. This compares to Adjusted EPS
of $2.50 for full year 2018 based on 160.2 million diluted shares
outstanding.
The Adjusted Tax Rate was 26.4% for full year 2019, compared to
27.5% for full year 2018.
Cash Flow and Net Debt
Cash flow provided by operating activities for the full year
2019 was $511 million, compared to cash provided by operating
activities of $428 million in the prior year. The increase in
operating cash flow was primarily driven by higher Adjusted EBITDA
and working capital improvements. Capital expenditures were $190
million for the year ended December 31, 2019 compared to $169
million in the year ended December 31, 2018. The increase in
capital expenditures is primarily driven by increased investment to
drive growth and improve cost productivity. Free cash flow, defined
as net cash provided by operating activities, less capital
expenditures, was $321 million for the full year, compared to $259
million in the prior year.
The Company repurchased 1.6 million shares for net cash outflow
of $67 million during the year ended December 31, 2019. The Company
has $708 million remaining under the current authorized share
repurchase program. The Company also paid cash dividends of $99
million, which represents $0.64 per share, during the year ended
December 31, 2019.
During the fourth quarter, $425 million 4.00% senior notes due
2027 were issued. The proceeds of the offering were used to
repurchase and discharge the $425 million 6.50% senior notes which
were due in 2020.
Net Debt, defined as total debt less cash and cash equivalents,
increased to $3.6 billion as of December 31, 2019 from $3.2 billion
as of December 31, 2018. The increase in Net Debt is primarily
attributable to the term loan A, used to finance the Automated
Packaging Systems acquisition.
Outlook for Full Year 2020
For the full year 2020, Sealed Air expects net sales in the
range of $4.9 billion to $4.95 billion, which represents an
increase of 2% to 3% growth as reported and 3% to 4% in constant
dollars. Adjusted EBITDA is expected to be in the range of $1.01
billion to $1.03 billion. The Company forecasts Adjusted EPS to be
in the range of $2.85 to $2.95, which is based on approximately 156
million shares outstanding and an anticipated Adjusted Tax Rate of
approximately 27%.
Free Cash Flow in 2020 is expected to be approximately $350
million, with capital expenditures of approximately $200 million
and Reinvent SEE and other restructuring associated payments of
approximately $100 million.
Conference Call Information
Sealed Air Corporation will host a conference call and webcast
on Tuesday, February 11, 2020 at 10:00 a.m. (ET) to discuss our
Fourth Quarter and Full Year 2019 Results. The conference call will
be webcast live on the Investors homepage at
www.sealedair.com/investors. A replay of the webcast will also be
available thereafter.
About Sealed Air
Sealed Air is in business to protect, to solve critical
packaging challenges and to leave our world better than we found
it. Our portfolio of leading packaging solutions includes CRYOVAC®
brand food packaging, SEALED AIR® brand protective packaging and
BUBBLE WRAP® brand packaging, which collectively enable a safer,
more efficient food supply chain and protect valuable goods shipped
around the world. Sealed Air generated $4.8 billion in sales in
2019 and has approximately 16,500 employees who serve customers in
124 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 Investors 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 Investors 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 Net Debt, Adjusted Net
Earnings and Adjusted EPS, net sales on an “organic” and a
“constant dollar” 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 Balance Sheets” (under the section entitled “Calculation
of Net Debt”), “Condensed Consolidated Statements of Cash Flows”
(under the section entitled “Non-U.S. GAAP Free Cash Flow”),
“Reconciliation of Net Earnings and Net Earnings Per Common Share
to Non-U.S. GAAP Adjusted Net Earnings and Non-U.S. GAAP Adjusted
Net Earnings Per Common Share,” “Reconciliation of Net Earnings to
Non-U.S. GAAP Total Company Adjusted EBITDA,” “Components of Change
in Net Sales by Segment,” “Components of Change 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
restructuring charges, gains and losses related to acquisition and
divestiture of businesses, the ultimate outcome of certain legal or
tax proceedings 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 “anticipate,” “believe,” “plan,”
“assume,” “could,” “should,” “estimate,” “expect,” “intend,”
“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: global economic and political
conditions, currency translation and devaluation effects, changes
in raw material pricing and availability, competitive conditions,
the success of new product offerings, consumer preferences, the
effects of animal and food-related health issues, pandemics,
changes in energy costs, environmental matters, the success of our
restructuring activities, the success of our financial growth,
profitability, cash generation and manufacturing strategies and our
cost reduction and productivity efforts, changes in our credit
ratings, the tax benefit associated with the Settlement agreement
(as defined in our 2018 Annual Report on Form 10-K), 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 because of new information, future developments or
otherwise.
Sealed Air Corporation
Supplemental
Information
Condensed Consolidated
Statements of Operations(1)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
(In millions, except per
share data)
2019
2018
2019
2018
Net sales
$
1,298.9
$
1,260.3
$
4,791.1
$
4,732.7
Cost of sales
869.6
861.2
3,226.3
3,230.6
Gross profit
429.3
399.1
1,564.8
1,502.1
Selling, general and administrative
expenses
215.6
203.4
915.5
782.3
Amortization expense of intangible assets
acquired
10.4
4.8
28.9
15.7
Restructuring charges
(1.7
)
25.5
41.9
47.8
Operating profit
205.0
165.4
578.5
656.3
Interest expense, net
(47.5
)
(46.6
)
(184.1
)
(177.9
)
Foreign currency exchange loss due to
highly inflationary economies
(1.2
)
(2.9
)
(4.6
)
(2.5
)
Other (expense) income, net(2)
(20.8
)
2.6
(19.5
)
(18.1
)
Earnings before income tax provision
135.5
118.5
370.3
457.8
Income tax provision (benefit)
11.1
(80.9
)
76.6
307.5
Net earnings from continuing
operations
124.4
199.4
293.7
150.3
(Loss) Gain on sale of discontinued
operations, net of tax(3)
(20.1
)
0.9
(30.7
)
42.8
Net earnings
$
104.3
$
200.3
$
263.0
$
193.1
Basic:
Continuing operations
$
0.81
$
1.28
$
1.90
$
0.94
Discontinued operations
(0.13
)
0.01
(0.20
)
0.27
Net earnings per common
share - basic
$
0.68
$
1.29
$
1.70
$
1.21
Diluted:
Continuing operations
$
0.80
$
1.28
$
1.89
$
0.94
Discontinued operations
(0.13
)
—
(0.20
)
0.26
Net earnings per common
share - diluted
$
0.67
$
1.28
$
1.69
$
1.20
Weighted average number of common shares
outstanding:
Basic
154.0
155.2
154.3
159.4
Diluted
155.0
156.1
155.2
160.2
________________
(1)
The supplementary information
included in this press release for 2019 is preliminary and subject
to change prior to the filing of our upcoming Annual Report on Form
10-K with the Securities and Exchange Commission.
(2)
Other (expense) income, net
includes $16.1 million charge related to the fourth quarter debt
redemption of our 6.50% $425 million notes due 2020.
(3)
The (loss) on sale of discontinued
operations recorded in the three months and year ended December 31,
2019 relates primarily to changes in balance sheet positions
associated with the sale of Diversey including tax-related
indemnification reserves and other receivable or payable positions
arising from the sale. The gain on sale of discontinued operations
recorded in the three months and year ended December 31, 2018
relates to the final net working capital settlement as well as the
release of tax indemnity reserves upon expiration of statute of
limitations.
Sealed Air Corporation
Supplemental
Information
Condensed Consolidated Balance
Sheets(1)
(Unaudited)
(In millions)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
262.4
$
271.7
Trade receivables, net
556.5
473.4
Income tax receivables
32.8
58.4
Other receivables
80.3
81.3
Inventories, net
570.3
544.9
Prepaid expenses and other
current assets
61.7
125.1
Total current assets
1,564.0
1,554.8
Property and equipment, net
1,146.2
1,036.2
Goodwill
2,216.9
1,947.6
Identifiable Intangible assets, net
177.8
101.7
Deferred taxes
238.6
170.5
Operating lease right-of-use-assets
90.1
—
Other non-current assets
331.6
239.4
Total assets
$
5,765.2
$
5,050.2
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Short-term borrowings
$
98.9
$
232.8
Current portion of long-term
debt
16.7
4.9
Current portion of operating
lease liabilities
26.2
—
Accounts payable
738.5
765.0
Accrued restructuring costs
29.5
33.5
Income tax payable
12.3
23.5
Other current liabilities
514.8
428.9
Total current liabilities
1,436.9
1,488.6
Long-term debt, less current portion
3,698.6
3,236.5
Long-term operating lease liabilities,
less current portion
65.7
—
Deferred taxes
30.7
20.4
Other non-current liabilities
729.5
653.3
Total liabilities
5,961.4
5,398.8
Stockholders’ deficit:
Preferred stock
—
—
Common stock
23.2
23.2
Additional paid-in capital
2,073.5
2,049.6
Retained earnings
1,998.5
1,835.5
Common stock in treasury
(3,382.4
)
(3,336.5
)
Accumulated other comprehensive
loss, net of taxes
(909.0
)
(920.4
)
Total stockholders’ deficit
(196.2
)
(348.6
)
Total liabilities and stockholders’
deficit
$
5,765.2
$
5,050.2
_______________
(1)
The supplementary information included in
this press release for 2019 is preliminary and subject to change
prior to the filing of our upcoming Annual Report on Form 10-K with
the Securities and Exchange Commission.
CALCULATION OF NET
DEBT(1)
December 31, 2019
December 31, 2018
Short-term borrowings
$
98.9
$
232.8
Current portion of long-term debt
16.7
4.9
Long-term debt, less current portion
3,698.6
3,236.5
Total debt
3,814.2
3,474.2
Less: cash and cash equivalents
(262.4
)
(271.7
)
Net debt
$
3,551.8
$
3,202.5
_______________
(1)
The supplementary information included in
this press release for 2019 is preliminary and subject to change
prior to the filing of our upcoming Annual Report on Form 10-K with
the Securities and Exchange Commission.
Sealed Air Corporation
Supplemental
Information
Condensed Consolidated
Statements of Cash Flows(1)
(Unaudited)
Year Ended December
31,
(In millions)
2019
2018
Net earnings available to common
stockholders
$
263.0
$
193.1
Adjustments to reconcile net earnings to
net cash provided by operating activities(2)
220.8
182.3
Changes in operating assets and
liabilities:
Trade receivables, net
38.1
(0.9
)
Inventories
12.4
(61.2
)
Income tax
receivable/payable
20.9
(16.4
)
Accounts payable
(37.0
)
42.6
Other assets and
liabilities
(7.1
)
88.5
Net cash provided by
operating activities
$
511.1
$
428.0
Cash flows from investing activities:
Capital expenditures
$
(189.7
)
$
(168.6
)
Investment in equity
investments
—
(7.5
)
Investment in marketable
securities
(12.5
)
—
(Payments) Proceeds, related to
sale of business and property and equipment
(2.4
)
6.8
Businesses acquired in purchase
transactions, net of cash acquired
(452.8
)
(68.4
)
Impact of sale of Diversey
—
(15.3
)
Settlement of foreign currency
forward contracts
(8.2
)
(11.1
)
Other investing activities
—
(2.6
)
Net cash used in investing
activities
$
(665.6
)
$
(266.7
)
Cash flows from financing activities:
Net (payments) proceeds on
short-term borrowings
$
(127.5
)
$
224.0
Proceeds from long term
debt
894.9
—
Payments of borrowings
(425.0
)
—
Dividends paid on common
stock
(99.1
)
(104.1
)
Repurchases of common stock
(67.3
)
(582.6
)
Payments for debt
extinguishment/modification costs
(15.5
)
(6.1
)
Impact of tax withholding on
share-based compensation
(10.8
)
(7.9
)
Principal payments related to
financing leases
(9.3
)
(1.6
)
Other financing activities
(0.5
)
—
Net cash provided by (used
in) financing activities
$
139.9
$
(478.3
)
Effect of foreign currency exchange
rate changes on cash and cash equivalents
$
5.3
$
(5.3
)
Cash and cash equivalents
271.7
594.0
Restricted cash and cash
equivalents
—
—
Balance, beginning of
period
$
271.7
$
594.0
Net change during the
period
$
(9.3
)
$
(322.3
)
Cash and cash equivalents
262.4
271.7
Restricted cash and cash
equivalents
—
—
Balance, end of
period
$
262.4
$
271.7
Non-U.S. GAAP Free Cash Flow:
Cash flow from operating activities
$
511.1
$
428.0
Capital expenditures for property and
equipment
(189.7
)
(168.6
)
Free Cash Flow(3)
$
321.4
$
259.4
Supplemental Cash Flow Information:
Interest payments, net of
amounts capitalized
$
194.9
$
191.4
Income tax payments, net of
cash refunds
$
94.7
$
155.0
Payments related to the sale of
Diversey and efforts to address stranded costs
$
—
$
51.6
Restructuring payments
including associated costs
$
90.9
$
12.1
Non-cash items:
Transfers of shares of our
common stock from treasury for our profit-sharing plan
contributions
$
21.9
$
23.5
_______________
(1)
The supplementary information
included in this press release for 2019 is preliminary and subject
to change prior to the filing of our upcoming Annual Report on Form
10-K with the Securities and Exchange Commission.
(2)
2019 primarily consists of
depreciation and amortization of $151 million, share based
compensation expense of $33 million, profit sharing expense of $25
million, loss on discontinued operations of $31 million, loss on
bond redemption of $16 million and amortization of bond discount of
$6 million, partially offset by $55 million reduction in deferred
taxes. 2018 primarily consists of depreciation and amortization of
$131 million, share based compensation expense of $29 million,
profit sharing expense of $22 million and foreign currency losses
of $14 million, partially offset by $43 million gain on the sale of
Diversey.
(3)
Free cash flow was $311 million
in 2018 excluding the payment of charges related to the sale of
Diversey of $52 million.
Sealed Air Corporation
Supplemental
Information(1)
Reconciliation of Net Earnings
and Net Earnings Per Common Share to Non-U.S. GAAP Adjusted
Net Earnings and Non-U.S. GAAP
Adjusted Net Earnings Per Common Share
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
(In millions, except per share
data)
Net Earnings
Diluted EPS
Net Earnings
Diluted EPS
Net Earnings
Diluted EPS
Net Earnings
Diluted EPS
U.S. GAAP net earnings and diluted EPS
from continuing operations(2)
$
124.4
$
0.80
$
199.4
$
1.28
$
293.7
$
1.89
$
150.3
$
0.94
Special Items(3)
(2.9
)
(0.02
)
(82.4
)
(0.53
)
145.0
0.93
250.6
1.56
Non-U.S. GAAP adjusted net earnings and
adjusted diluted EPS from continuing operations
$
121.5
$
0.78
$
117.0
$
0.75
$
438.7
$
2.82
$
400.9
$
2.50
Weighted average number of common
shares outstanding - Diluted
155.0
156.1
155.2
160.2
_______________
(1)
The supplementary information included in
this press release for 2019 is preliminary and subject to change
prior to the filing of our upcoming Annual Report on Form 10-K 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 December
31,
Year Ended December
31,
(In millions, except per share
data)
2019
2018
2019
2018
Special Items:
Restructuring
charges(i)
$
(1.7
)
$
25.5
$
41.9
$
47.8
Other restructuring
associated costs(ii)
9.5
13.3
60.3
15.8
Foreign currency
exchange loss due to highly inflationary economies
1.2
2.9
4.6
2.5
Loss on debt
redemption and refinancing activities
16.1
—
16.1
1.9
Charges related to
acquisition and divestiture activity
5.7
2.9
14.9
34.2
Charges related to the
Novipax settlement agreement
—
—
59.0
—
Gain from class-action
litigation settlement
—
(2.3
)
—
(14.9
)
Other Special
Items(iii)
4.3
3.8
29.1
7.5
Pre-tax impact of Special
Items
35.1
46.1
225.9
94.8
Tax impact of Special
Items and Tax Special Items(iv)
(38.0
)
(128.5
)
(80.9
)
155.8
Net impact of Special
Items
$
(2.9
)
$
(82.4
)
$
145.0
$
250.6
Weighted average
number of common shares outstanding -
Diluted
155.0
156.1
155.2
160.2
Loss (Earnings) per
share impact from Special Items
$
0.02
$
0.53
$
(0.93
)
$
(1.56
)
_______________
(i)
The net restructuring charge reversal for
the three months ended December 31, 2019 was related to
management's fourth quarter decision to no longer cease operations
in one of our manufacturing facilities as well as the reversal of a
number of headcount-reduction accruals incurred earlier in the
year.
(ii)
Other restructuring associated costs for
three months and year ended December 31, 2019, primarily relate to
fees paid to third-party consultants in support of Reinvent SEE and
costs related to property consolidations resulting from Reinvent
SEE.
(iii)
Other Special Items for the three months
and year ended December 31, 2019 primarily included fees related to
professional services, mainly legal fees, directly associated with
Special Items or events that are considered one-time or infrequent
in nature.
(iv)
Refer to Note 1 in 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 December
31,
Year Ended December
31,
(In millions)
2019
2018
2019
2018
U.S. GAAP Earnings before income tax
provision (benefit) from continuing operations
$
135.5
$
118.5
$
370.3
$
457.8
Pre-tax impact of Special Items
35.1
46.1
225.9
94.8
Non-U.S. GAAP Adjusted Earnings before
income tax provision from continuing operations
$
170.6
$
164.6
$
596.2
$
552.6
U.S. GAAP Income tax provision (benefit)
from continuing operations
$
11.1
$
(80.9)
$
76.6
$
307.5
Tax Special Items(1)
29.3
116.7
25.5
(178.3
)
Tax impact of Special Items
8.7
11.8
55.4
22.5
Non-U.S. GAAP Adjusted Income tax
provision from continuing operations
$
49.1
$
47.6
$
157.5
$
151.7
U.S. GAAP Effective income tax rate
8.2
%
(68.3)
%
20.7
%
67.2
%
Non-U.S. GAAP Adjusted income tax rate
28.8
%
28.9
%
26.4
%
27.5
%
_______________
(1)
For the three months ended December 31,
2019, Tax Special Items reflects tax optimization initiatives
associated with Reinvent SEE and restructuring activities. For the
three months ended December 31, 2018, Tax Special Items reflects
benefit resulting from nonrecurring items including an adjustment
related to the finalization of the one-time tax on unrepatriated
earnings (transition tax) and the release of valuation allowances
associated with tax initiatives. For the year ended December 31,
2019, tax special items reflects net benefits from tax optimization
initiatives and research and development credits. For the year
ended December 31, 2018, Tax Special Items includes $222 million of
expense for transition tax which is partially offset by benefit
related to the release of valuation allowances associated with tax
initiatives.
Sealed Air Corporation
Supplemental
Information(1)
Components of Change in Net
Sales by Segment
(Unaudited)
Three Months Ended December
31,
(In millions)
Food Care
Product Care
Total Company
2018 Net Sales
$
771.6
61.2
%
$
488.7
38.8
%
$
1,260.3
Price
(0.4
)
(0.1
)%
1.4
0.3
%
1.0
0.1%
Volume(2)
(3.1
)
(0.4
)%
(18.5
)
(3.8
)%
(21.6)
(1.7)%
Total organic change (non-U.S.
GAAP)(3)
(3.5
)
(0.5
)%
(17.1
)
(3.5
)%
(20.6)
(1.6)%
Acquisition
8.1
1.1
%
69.9
14.3
%
78.0
6.2%
Total constant dollar change (non-U.S.
GAAP)(3)
4.6
0.6
%
52.8
10.8
%
57.4
4.6%
Foreign currency translation
(16.3
)
(2.1
)%
(2.5
)
(0.5
)%
(18.8)
(1.5)%
Total change (U.S. GAAP)
(11.7
)
(1.5
)%
50.3
10.3
%
38.6
3.1%
2019 Net Sales
$
759.9
58.5
%
$
539.0
41.5
%
$
1,298.9
Year Ended December
31,
(In millions)
Food Care
Product Care
Total Company
2018 Net Sales
$
2,908.1
61.4
%
$
1,824.6
38.6
%
$
4,732.7
Price
32.7
1.1
%
9.8
0.5
%
42.5
0.9
%
Volume(2)
30.3
1.1
%
(72.2
)
(3.9
)%
(41.9
)
(0.9
)%
Total organic change (non-U.S.
GAAP)(3)
63.0
2.2
%
(62.4
)
(3.4
)%
0.6
—
%
Acquisition
16.6
0.5
%
178.4
9.8
%
195.0
4.1
%
Total constant dollar change
(non-U.S.GAAP)(3)
79.6
2.7
%
116.0
6.4
%
195.6
4.1
%
Foreign currency translation
(107.2
)
(3.6
)%
(30.0
)
(1.7
)%
(137.2
)
(2.9
)%
Total change (U.S. GAAP)
(27.6
)
(0.9
)%
86.0
4.7
%
58.4
1.2
%
2019 Net Sales
$
2,880.5
60.1
%
$
1,910.6
39.9
%
$
4,791.1
________________
(1)
The supplementary information included in
this press release for 2019 is preliminary and subject to change
prior to the filing of our upcoming Annual Report on Form 10-K with
the Securities and Exchange Commission.
(2)
Our volume reported above includes the net
impact of changes in unit volume as well as the period-to-period
change in the mix of products sold.
(3)
Total organic change is a non-U.S. GAAP
financial measure which excludes acquisitions within the first
twelve months after acquisition, divestiture activity and the
impact of foreign currency translation. 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 Corporation
Supplemental
Information(1)
Components of Change in Net
Sales by Region(2)
(Unaudited)
Three Months Ended December
31,
(In millions)
North America
EMEA
South America
APAC
Total
2018 Net Sales
$
732.1
58.1
%
$
271.2
21.5
%
$
59.4
4.7
%
$
197.6
15.7
%
$
1,260.3
Price
(7.5
)
(1.0
)%
(1.2
)
(0.4
)%
10.9
18.3
%
(1.2
)
(0.6
)%
1.0
0.1
%
Volume(3)
(27.2
)
(3.7
)%
(1.6
)
(0.6
)%
7.3
12.3
%
(0.1
)
(0.1
)%
(21.6
)
(1.7
)%
Total organic change (non-U.S.
GAAP)(4)
(34.7
)
(4.7
)%
(2.8
)
(1.0
)%
18.2
30.6
%
(1.3
)
(0.7
)%
(20.6
)
(1.6
)%
Acquisition
59.3
8.1
%
13.6
5.0
%
0.1
0.2
%
5.0
2.6
%
78.0
6.2
%
Total constant dollar change (non-U.S.
GAAP)(4)
24.6
3.4
%
10.8
4.0
%
18.3
30.8
%
3.7
1.9
%
57.4
4.6
%
Foreign currency translation
1.2
0.1
%
(4.0
)
(1.5
)%
(13.2
)
(22.2
)%
(2.8
)
(1.4
)%
(18.8
)
(1.5
)%
Total change (U.S. GAAP)
25.8
3.5
%
6.8
2.5
%
5.1
8.6
%
0.9
0.5
%
38.6
3.1
%
2019 Net Sales
$
757.9
58.3
%
$
278.0
21.4
%
$
64.5
5.0
%
$
198.5
15.3
%
$
1,298.9
Year Ended December
31,
(In millions)
North America
EMEA
South America
APAC
Total
2018 Net Sales
$
2,734.9
57.8
%
$
1,038.5
21.9
%
$
229.5
4.8
%
$
729.8
15.4
%
$
4,732.7
Price
(7.3
)
(0.3
)%
1.0
0.1
%
49.4
21.5
%
(0.6
)
(0.1
)%
42.5
0.9
%
Volume(3)
(42.8
)
(1.5
)%
(3.8
)
(0.4
)%
11.6
5.1
%
(6.9
)
(0.9
)%
(41.9
)
(0.9
)%
Total organic change (non-U.S.
GAAP)(4)
(50.1
)
(1.8
)%
(2.8
)
(0.3
)%
61.0
26.6
%
(7.5
)
(1.0
)%
0.6
—
%
Acquisition
147.5
5.4
%
24.1
2.4
%
0.2
0.1
%
23.2
3.2
%
195.0
4.1
%
Total constant dollar change (non-U.S.
GAAP)(4)
97.4
3.6
%
21.3
2.1
%
61.2
26.7
%
15.7
2.2
%
195.6
4.1
%
Foreign currency translation
(4.2
)
(0.2
)%
(49.4
)
(4.8
)%
(56.9
)
(24.8
)%
(26.7
)
(3.7
)%
(137.2
)
(2.9
)%
Total change (U.S. GAAP)
93.2
3.4
%
(28.1
)
(2.7
)%
4.3
1.9
%
(11.0
)
(1.5
)%
58.4
1.2
%
2019 Net Sales
$
2,828.1
59.0
%
$
1,010.4
21.1
%
$
233.8
4.9
%
$
718.8
15.0
%
$
4,791.1
________________
(1)
The supplementary information included in
this press release for 2019 is preliminary and subject to change
prior to the filing of our upcoming Annual Report on Form 10-K with
the Securities and Exchange Commission.
(2)
As part of the Company's Reinvent SEE
strategy, we have evaluated and adjusted our regional operating
model. Effective January 1, 2019, our regions are: North America,
EMEA, South America and APAC. Our North American operations
includes Canada, the United States, Mexico and Central America.
Mexico and Central America were previously included in Latin
America. EMEA consists of Europe, Middle East, Africa and Turkey.
APAC refers to our collective Asia Pacific region, including
Greater China, India, Southeast Asia, Japan, Korea, Australia and
New Zealand.
(3)
Our volume reported above includes the net
impact of changes in unit volume as well as the period-to-period
change in the mix of products sold.
(4)
Total organic change is a non-U.S. GAAP
financial measure which excludes acquisitions within the first
twelve months after acquisition, divestiture activity and the
impact of foreign currency translation. 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 Corporation
Supplemental
Information(1)
Segment Information
Reconciliation of Net Earnings
to Non-U.S. GAAP Total Company Adjusted EBITDA
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
(In millions)
2019
2018
2019
2018
Net Sales:
Food Care
$
759.9
$
771.6
$
2,880.5
$
2,908.1
As a % of Total Company net sales
58.5
%
61.2
%
60.1
%
61.4
%
Product Care
539.0
488.7
1,910.6
1,824.6
As a % of Total Company net sales
41.5
%
38.8
%
39.9
%
38.6
%
Total Company Net Sales
$
1,298.9
$
1,260.3
$
4,791.1
$
4,732.7
Three Months Ended December
31,
Year Ended December
31,
(In millions)
2019
2018
2019
2018
Adjusted EBITDA from continuing
operations:
Food Care
$
171.2
$
162.3
$
629.3
$
577.8
Adjusted EBITDA Margin
22.5
%
21.0
%
21.8
%
19.9
%
Product Care
106.9
85.3
349.9
318.6
Adjusted EBITDA Margin
19.8
%
17.5
%
18.3
%
17.5
%
Corporate
(6.9
)
0.7
(14.4
)
(6.9
)
Non-U.S. GAAP Total Company Adjusted
EBITDA from continuing operations
$
271.2
$
248.3
$
964.8
$
889.5
Adjusted EBITDA Margin
20.9
%
19.7
%
20.1
%
18.8
%
________________
(1)
The supplementary information included in
this press release for 2019 is preliminary and subject to change
prior to the filing of our upcoming Annual Report on Form 10-K with
the Securities and Exchange Commission.
Three Months Ended December
31,
Year Ended December
31,
(In millions)
2019
2018
2019
2018
U.S. GAAP Net earnings from continuing
operations
$
124.4
$
199.4
$
293.7
$
150.3
Interest expense, net
47.5
46.6
184.1
177.9
Income tax (benefit)
provision
11.1
(80.9
)
76.6
307.5
Depreciation and amortization, net of
adjustments(1)
53.1
37.1
184.5
159.0
Special Items:
Restructuring charges(2)
(1.7
)
25.5
41.9
47.8
Other restructuring associated
costs(3)
9.5
13.3
60.3
15.8
Foreign currency exchange loss
due to highly inflationary economies
1.2
2.9
4.6
2.5
Loss on debt redemption and
refinancing activities
16.1
—
16.1
1.9
Charges related to acquisition
and divestiture activity
5.7
2.9
14.9
34.2
Charges related to the Novipax
settlement agreement
—
—
59.0
—
Gain from class-action
litigation settlement
—
(2.3
)
—
(14.9
)
Other Special Items(4)
4.3
3.8
29.1
7.5
Pre-tax impact of Special
items
35.1
46.1
225.9
94.8
Non-U.S. GAAP Total Company Adjusted
EBITDA from continuing operations
$
271.2
$
248.3
$
964.8
$
889.5
_______________
(1)Depreciation and amortization
by segment are as follows:
Three Months Ended December
31,
Year Ended December
31,
(In millions)
2019
2018
2019
2018
Food Care
$
28.5
$
25.6
$
110.3
$
105.4
Product Care
24.3
13.5
75.0
56.0
Total Company depreciation and
amortization(i)
$
52.8
$
39.1
$
185.3
$
161.4
Depreciation and amortization
adjustments
0.3
(2.0
)
(0.8
)
(2.4
)
Depreciation and amortization,
net of adjustments
$
53.1
$
37.1
$
184.5
$
159.0
_______________ (i)
Includes share-based incentive
compensation of $9.2 million and $34.4 million for the three months
and year ended December 31, 2019, respectively, and $6.3 million
and $29.9 million for the three months and year ended December 31,
2018, respectively.
(2) Restructuring charges by segment is as
follows:
Three Months Ended December
31,
Year Ended December
31,
(In millions)
2019
2018
2019
2018
Food Care(i)
$
(2.8
)
$
9.3
$
23.5
$
17.7
Product Care
1.1
16.2
18.4
30.1
Total Company restructuring
charges
$
(1.7
)
$
25.5
$
41.9
$
47.8
________________
(i)
The net restructuring charge reversal for
the three months ended December 31, 2019 was related to
management's fourth quarter decision to no longer cease operations
in one of our manufacturing facilities as well as the reversal of a
number of headcount-reduction accruals incurred earlier in the
year.
(3)
Other restructuring associated costs for
three months and year ended December 31, 2019, primarily relate to
fees paid to third-party consultants in support of Reinvent SEE and
costs related to property consolidations resulting from Reinvent
SEE.
(4)
Other Special Items for the three months
and year ended December 31, 2019 primarily included fees related to
professional services, mainly legal fees, directly associated with
Special Items or events that are considered one-time or infrequent
in nature.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200211005416/en/
Media Pam Davis pam.davis@sealedair.com 980.833.4084 Investor
Relations Lori Chaitman lori.chaitman@sealedair.com
516.458.4455
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