• Net Sales: $1.4 billion in Q4, up 1% on a constant currency basis; $5.4 billion for the full year, down 1% at constant currency.
• Adjusted EBITDA: $271 million in Q4, down 1% year-over-year; $1.11 billion for the full year, relatively flat with prior year.
• Adjusted EPS: $0.75 in Q4, down 15% year-over-year; $3.14 for the full year, down 1%.
• Adjusted Tax Rate: 28% in Q4, compared to 18% in the same period last year.
• Food Segment Sales: $923 million in Q4, up 5% on an organic basis.
• Food Segment Adjusted EBITDA: $208 million in Q4, up 7% with a margin of 22.5%.
• Protective Segment Sales: $450 million in Q4, down 7% year-over-year.
• Protective Segment Adjusted EBITDA: $67 million in Q4, down 26% year-over-year.
• Free Cash Flow: $454 million for the full year, compared to $467 million a year ago.
• Net Leverage Ratio: 3.6 times at the end of 2024, down from a peak of 4.1 times in Q2 2023.
• Total Liquidity: $1.4 billion, including $372 million in cash.
• 2025 Outlook - Net Sales: Expected range of $5.1 billion to $5.5 billion, assuming 1% growth at the midpoint.
• 2025 Outlook - Adjusted EBITDA: Expected range of $1.075 billion to $1.175 billion, approximately 1% year-over-year growth at the midpoint.
• 2025 Outlook - Adjusted EPS: Expected range of $2.90 to $3.30 per share.
• 2025 Outlook - Free Cash Flow: Approximately $400 million.
• 2025 Outlook - Capital Expenditures: Approximately $220 million.

• Warning! GuruFocus has detected 3 Warning Signs with SEE.

Release Date: February 25, 2025

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

Positive Points

• Sealed Air Corp (NYSE:SEE) exceeded expectations in Q4 2024, surpassing the guided midpoint for adjusted EBITDA, adjusted EPS, and free cash flow.
• The company has consistently delivered against expectations for six straight quarters, indicating improved discipline and commercial execution.
• The food business showed strength, with mid-single-digit adjusted EBITDA growth despite a 2% sales decrease.
• Sealed Air Corp (NYSE:SEE) has fully integrated its commercial innovation and supply chain teams into its food and Protective segments, streamlining operations.
• The company is targeting mid-single-digit earnings growth and high cash flow conversion over the long term, with plans to deleverage the balance sheet to 3 times within two years.

Negative Points

• The Protective segment faced challenges, with a 7% decline in net sales in Q4 2024 and a 26% decrease in adjusted EBITDA.
• Sealed Air Corp (NYSE:SEE) anticipates continued volume pressures in the Protective segment in the first half of 2025.
• The company is experiencing unfavorable net price realization and FX headwinds, impacting financial performance.
• There is uncertainty around global trade, tariffs, and foreign exchange movements, which could affect customer demand and supply chains.
• Sealed Air Corp (NYSE:SEE) is closing two plants by the end of the year as part of ongoing cost takeout efforts, indicating restructuring challenges.

Q & A Highlights

Q: Assuming Protective volumes remain negative in the first half, are there parts of that business that you expect to be a significantly larger drag on volumes than the segment average? A: Dustin Semach, President and CEO, explained that the industrial portfolio was down mid-single digits, with some bright spots like shrink films. Fulfillment was down high single digits, particularly in polyboifill and polymailers, offset by positive volumes in APS. The first half of 2025 is expected to see high single-digit declines in Q1 and mid-single-digit declines in Q2, with stabilization in the second half.

Q: Can you talk about the potential impact of tariffs on Sealed Air, particularly in regions like Mexico, Canada, Europe, and China? A: Dustin Semach noted that the new Chinese tariff is not expected to have a material impact on Sealed Air's business. Most of their business is domestic production for domestic consumption, minimizing tariff impacts. However, they do trade with Mexico and Canada, which could be affected. They are making supply chain adjustments and may pass through costs to customers if necessary.

Q: What are your initial priorities as CEO, and will there be any changes within the organization or acceleration in cost reductions? A: Dustin Semach outlined three priorities: accelerating customer focus, particularly in food and Protective segments; accelerating cost takeout with more visibility into cost structures; and ensuring the right leadership is in place to drive a growth-oriented mindset.

Q: Regarding Protective, is the weakness in the first half largely due to the Amazon hangover, and what are your expectations for pricing and scaling up auto bag and fiber mailer? A: Dustin Semach confirmed that the first half weakness is partly due to Amazon and other customer churns. Pricing is under pressure, especially in fulfillment, but resin inflation may allow for price increases. The fiber mailer scale-up has been slower than expected, but market reception is strong, and they are focused on increasing scale.

Q: What is the earnings power of each business in terms of volume and margins as we look into 2026 and beyond? A: Dustin Semach stated that both businesses serve end markets with low single-digit volume growth potential. They aim for mid-single-digit earnings growth, leveraging their portfolios and footprint. The focus for 2025 is to stabilize Protective and fully realize potential in food.

Q: Can you provide more detail on the pricing within the food segment and the visibility of that pricing? A: Dustin Semach explained that they are benefiting from formula pricing, particularly in North America, with pass-throughs based on resin indices. Modest price increases reflect underlying input costs and the value proposition of their portfolios.

Q: How much automation revenue did you have in 2024, and what are your expectations for 2025? A: Dustin Semach emphasized that automation is crucial for pulling through material sales. They expect growth in Protective through auto bagging equipment and are optimistic about food, focusing on net new placements to drive material sales.

Q: Can you discuss the global protein markets and what is embedded in your guidance for 2025? A: Dustin Semach noted that North American beef is expected to be down 3-4%, but other markets like dairy, smoke and process, foodservice, and poultry have slight upside. Poultry is expected to grow, aligning with their strategy around case-ready solutions.

Q: How do you view the recent investment by a large e-commerce player in a fiber-based competitor, and are you seeing increased M&A activity? A: Dustin Semach stated that the investment is not unusual and does not change their strategy. They see growth in fiber discrete mailers and auto bagging equipment. M&A activity is not directly addressed, but they remain focused on their strategic initiatives.

Q: Can you clarify the cost savings achieved in 2024 and what is expected in 2025? A: Veronika Johnson, Interim CFO, explained that they achieved $89 million in cost savings in 2024 and expect $90 million in 2025, split between cost takeout actions and productivity efficiencies. They are committed to further optimizing cost structures.

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