• Net Sales: $1.35 billion in Q2, down 2% on a constant currency basis.
• Adjusted EBITDA: $285 million, up 2% compared to last year, with margins of 21.2%.
• Adjusted Earnings Per Share (EPS): $0.83, up 4% year-over-year.
• Free Cash Flow: $207 million year-to-date, compared to $45 million in the same period last year.
• Food Segment Sales: $894 million, up 2% on an organic basis.
• Food Segment Adjusted EBITDA: $205 million, up 7%, with margins at 22.9%.
• Protective Segment Sales: $451 million, down 9% organically.
• Protective Segment Adjusted EBITDA: $82 million, down 15%, with margins at 18.1%.
• Net Leverage Ratio: 3.8 times, with a goal to reduce to below 3.5 times by the end of 2025.
• Total Liquidity: $1.4 billion, including $389 million in cash.

• Warning! GuruFocus has detected 5 Warning Signs with SEE.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sealed Air Corp (NYSE:SEE) reported strong sales of $1.35 billion and adjusted EBITDA of $285 million for Q2 2024, indicating robust performance despite challenging market conditions.
• The food segment showed mid-single-digit volume growth across all regions, driven by increased consumer demand and competitive wins.
• Sealed Air Corp (NYSE:SEE) achieved positive free cash flow of $207 million year-to-date, significantly higher than the $45 million generated in the same period last year.
• The company won the GOLD Sustainability Award at the 2024 WorldStar Packaging Awards for sustainable innovations in its food business, highlighting its commitment to sustainability.
• Sealed Air Corp (NYSE:SEE) is actively working on portfolio optimization initiatives and strategic efforts to enhance its protective business, focusing on market trends and pivot strategies.

Negative Points

• The protective segment continues to face challenges, with sales performance in line with expectations but showing weakness in industrial portfolios and volume declines.
• Sealed Air Corp (NYSE:SEE) does not anticipate an inflection in protective volumes in 2024, with expectations of continued weakness into 2025.
• The company experienced a 3% lower year-over-year pricing across both food and protective segments, primarily in the Americas and EMEA regions.
• Protective adjusted EBITDA decreased by 15% in the second quarter, with margins down 110 basis points due to lower volume and unfavorable net price realization.
• Sealed Air Corp (NYSE:SEE) faces ongoing challenges in the protective segment, including sustainability pressures and a slowdown in equipment automation sales.

Q & A Highlights

Q: Patrick, what's going to be different at Sealed Air under your leadership compared to past strategies? A: Patrick Kivits, President, emphasized completing the senior leadership team and addressing commercial challenges, particularly in the protective segment. He aims to enhance transparency, empowerment, and accountability within the organization, focusing on customer needs and driving specialization where necessary.

Q: Can you elaborate on the updated volume expectations for both food and protective segments for the second half of the year? A: Patrick Kivits noted strong growth in the food segment, driven by share gains and market conditions, while the protective segment faces challenges due to sustainability pressures and market weakness. Dustin Semach, Interim Co-President and Co-CEO, added that food volumes are expected to grow by 4% for the year, while protective volumes are projected to decline by 4%.

Q: How is the CTO2Grow initiative impacting the protective segment, and what lessons from your past experiences can help turn it around? A: Patrick Kivits highlighted the importance of recalibrating the sales force and focusing on sales compensation and accountability. Dustin Semach mentioned that CTO2Grow is on track, with a higher run rate expected in 2025, helping to offset protective segment challenges.

Q: Can you provide more details on the strategic efforts concerning the protective business? A: Patrick Kivits is focusing on reviewing the portfolio, particularly in void fill and paper mailers, to address gaps and enhance the value proposition. The aim is to develop a coherent strategy for the protective segment, leveraging strengths and addressing weaknesses.

Q: What are the expectations for free cash flow in the second half of the year, given the strong first-half performance? A: Dustin Semach characterized the guidance as conservative, noting that the first half benefited from one-time factors like reduced incentive compensation payments. The company expects strong performance in the second half, with updates to be provided in the third quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.