02.10.16
Sealed Air Corporation announced financial results for fourth quarter and full year 2015.
Fourth quarter 2015 net sales of $1.75 billion decreased 11.1% on an as reported basis and 1.5% on a constant dollar basis. For the full year 2015, net sales totaled $7.0 billion, a decrease of 9.3% as reported and 0.6% in constant dollars. Currency had a negative impact on net sales of $190 million in the fourth quarter and $764 million in 2015. Food Care related divestitures also had a negative impact on net sales in the quarter and in 2015. Adjusting for currency translation and divestitures, organic net sales growth was 1.7% in the fourth quarter and 2.8% in the full year as a result of favorable price/mix trends on essentially flat volumes.
Full year 2015 adjusted EBITDA was $1.17 billion, or 16.7% of net sales, compared to $1.12 billion, or 14.4% of net sales, in 2015. Adjusted EBITDA results were negatively impacted by currency of $126 million, and divestitures of $33 million. Adjusted EBITDA margins expanded 230 basis points compared to last year.
“In 2015, net sales increased 3% on an organic basis to $7.0 billion,” said Jerome A. Peribere, president and CEO. “Adjusted EBITDA margins expanded 230 basis points and free cash flow was $595 million. This is the third consecutive year where we executed on our commitments and delivered year-over-year operational improvements irrespective of the economic environment.
“In 2016, we estimate organic net sales growth of 3.5%, and adjusted EBITDA to be in the range of $1.17 billion to $1.19 billion, an organic increase of 7% to 9%,” Peribere added. “Additionally, we expect to generate approximately $550 million in free cash flow in 2016, including a planned increase in capital expenditures to $275 million from $184 million in 2015. Our performance in 2016 will be driven by ongoing productivity improvements, further adoption of our more advanced product portfolio, and early successes with our Change the Game initiatives. All of this will accelerate future growth and drive margin expansion.”
For the full year, Food Care delivered positive price/mix of 2.6% with favorable trends across all regions. This was complemented by volume growth of 1.3% primarily attributable to increases in North America, Europe, Middle East and Africa (EMEA) and Asia Pacific. Positive price/mix and volume growth were a result of new product adoption, increased market penetration of advanced packaging solutions and pricing disciplines. Food Care Adjusted EBITDA margins expanded 280 basis points to 20.3% for the full year 2015
In Diversey Care, favorable price/mix was 1.9% and volume increased 1.2%. Favorable price/mix was positive across all regions and volume increased in North America, EMEA and Asia Pacific. This performance was attributable to growth within its core customer base and new customer wins primarily in healthcare, building service contractors and food and retail services sectors. Adjusted EBITDA margins expanded 30 basis points to 11.6% for the full year 2015.
In Product Care, strong growth in the e-Commerce and third party logistics markets were offset by rationalization efforts in North America, Latin America and to a smaller extent in EMEA, and weakness in the industrial sectors. This led to a 2.3% decline in volume, partially offset by favorable price/mix of 1.4% for the full year 2015. Price/mix was favorable across all regions. Product Care substantially completed its rationalization efforts in Latin America and its efforts in North America and EMEA are expected to continue through the first half of 2016. While sales declined slightly, Product Care expanded Adjusted EBITDA margins 310 basis points to 20.8% for the full year 2015.
Adjusted EBITDA for the fourth quarter 2015 was $282 million, or 16.1% of net sales, compared to $282 million, or 14.3% of net sales, in fourth quarter 2014. Adjusted EBITDA results were negatively impacted by currency of $30 million, and divestitures of $11 million. Adjusted EBITDA margins expanded 180 basis points compared to the fourth quarter of 2014.
Fourth quarter 2015 net earnings on a reported basis were $124 million, or $0.62 per diluted share as compared to $66 million, or $0.31 per diluted share in the fourth quarter 2014. Net earnings in the fourth quarter of 2015 included $27 million of special items, primarily consisting of restructuring and other associated costs, as well as a loss on the divestiture of our European food trays business. Net earnings in the fourth quarter of 2014 included $60 million of special items, primarily consisting of restructuring and other associated costs, and loss on debt redemption and refinancing activities. Adjusted EPS was $0.76 for the fourth quarter 2015. This compares to Adjusted EPS of $0.59 in the fourth quarter 2014. The Adjusted Tax Rate was 7.6% in the fourth quarter 2015, compared to 9.2% in the fourth quarter 2014. The reduction in the Adjusted Tax Rate was primarily attributable to the recording of net foreign tax credits that were previously deemed not recognizable and a more tax efficient means to repatriate offshore earnings.
Full year 2015 net earnings on a reported basis were $335 million or $1.62 per diluted share as compared to $258 million, or $1.20 per diluted share in the full year 2014. Net earnings in 2015 included $201 million of special items.
Cash flow provided by operating activities in 2015 was $968 million. In March 2015, the company received a tax refund of $235 million related to the payment of funds in connection with the Settlement agreement. Excluding the tax refund, cash flow provided by operating activities in 2015 was $733 million, which is net of $98 million of restructuring and $21 million of SARs payments. This compares with cash used by operating activities of $215 million in 2014, which is net of $108 million of restructuring, $21 million of SARs payments and $930 million related to the Settlement agreement. Capital expenditures were $184 million in the full year 2015 compared to $154 million in 2014.
Free cash flow, defined as net cash provided by (used in) operating activities (excluding the Settlement agreement and excess tax benefit) less capital expenditures, was an inflow of $595 million in 2015, compared with $599 million in 2014.
Compared to December 31, 2014, the Company’s net debt increased $73 million to $4.2 billion as of December 31, 2015. This increase was primarily a result of amounts paid for share repurchases and dividends, partially offset by cash reflecting the tax refund related to the Settlement agreement payment and cash generated from operating activities.
The company estimates net sales to be approximately $6.8 billion for the full year 2016, which assumes an unfavorable impact of approximately $400 million or 6% from foreign currency translation. Adjusted for unfavorable currency and a $102 million decline related to 2015 divestitures, net sales in 2016 are expected to increase approximately 3.5% on an organic basis.
Adjusted EBITDA is estimated to be in the range of $1.17 billion to $1.19 billion, which assumes $65 million of unfavorable currency translation. On an organic basis, which excludes unfavorable currency and a reduction of $21 million related to 2015 divestitures, Adjusted EBITDA is expected to increase in the range of 7% to 9%.
Adjusted EPS is expected to be in the range of $2.52 to $2.60. The company anticipates 2016 free cash flow to be approximately $550 million, including capital expenditures of approximately $275 million and cash restructuring payments of approximately $110 million.
Fourth quarter 2015 net sales of $1.75 billion decreased 11.1% on an as reported basis and 1.5% on a constant dollar basis. For the full year 2015, net sales totaled $7.0 billion, a decrease of 9.3% as reported and 0.6% in constant dollars. Currency had a negative impact on net sales of $190 million in the fourth quarter and $764 million in 2015. Food Care related divestitures also had a negative impact on net sales in the quarter and in 2015. Adjusting for currency translation and divestitures, organic net sales growth was 1.7% in the fourth quarter and 2.8% in the full year as a result of favorable price/mix trends on essentially flat volumes.
Full year 2015 adjusted EBITDA was $1.17 billion, or 16.7% of net sales, compared to $1.12 billion, or 14.4% of net sales, in 2015. Adjusted EBITDA results were negatively impacted by currency of $126 million, and divestitures of $33 million. Adjusted EBITDA margins expanded 230 basis points compared to last year.
“In 2015, net sales increased 3% on an organic basis to $7.0 billion,” said Jerome A. Peribere, president and CEO. “Adjusted EBITDA margins expanded 230 basis points and free cash flow was $595 million. This is the third consecutive year where we executed on our commitments and delivered year-over-year operational improvements irrespective of the economic environment.
“In 2016, we estimate organic net sales growth of 3.5%, and adjusted EBITDA to be in the range of $1.17 billion to $1.19 billion, an organic increase of 7% to 9%,” Peribere added. “Additionally, we expect to generate approximately $550 million in free cash flow in 2016, including a planned increase in capital expenditures to $275 million from $184 million in 2015. Our performance in 2016 will be driven by ongoing productivity improvements, further adoption of our more advanced product portfolio, and early successes with our Change the Game initiatives. All of this will accelerate future growth and drive margin expansion.”
For the full year, Food Care delivered positive price/mix of 2.6% with favorable trends across all regions. This was complemented by volume growth of 1.3% primarily attributable to increases in North America, Europe, Middle East and Africa (EMEA) and Asia Pacific. Positive price/mix and volume growth were a result of new product adoption, increased market penetration of advanced packaging solutions and pricing disciplines. Food Care Adjusted EBITDA margins expanded 280 basis points to 20.3% for the full year 2015
In Diversey Care, favorable price/mix was 1.9% and volume increased 1.2%. Favorable price/mix was positive across all regions and volume increased in North America, EMEA and Asia Pacific. This performance was attributable to growth within its core customer base and new customer wins primarily in healthcare, building service contractors and food and retail services sectors. Adjusted EBITDA margins expanded 30 basis points to 11.6% for the full year 2015.
In Product Care, strong growth in the e-Commerce and third party logistics markets were offset by rationalization efforts in North America, Latin America and to a smaller extent in EMEA, and weakness in the industrial sectors. This led to a 2.3% decline in volume, partially offset by favorable price/mix of 1.4% for the full year 2015. Price/mix was favorable across all regions. Product Care substantially completed its rationalization efforts in Latin America and its efforts in North America and EMEA are expected to continue through the first half of 2016. While sales declined slightly, Product Care expanded Adjusted EBITDA margins 310 basis points to 20.8% for the full year 2015.
Adjusted EBITDA for the fourth quarter 2015 was $282 million, or 16.1% of net sales, compared to $282 million, or 14.3% of net sales, in fourth quarter 2014. Adjusted EBITDA results were negatively impacted by currency of $30 million, and divestitures of $11 million. Adjusted EBITDA margins expanded 180 basis points compared to the fourth quarter of 2014.
Fourth quarter 2015 net earnings on a reported basis were $124 million, or $0.62 per diluted share as compared to $66 million, or $0.31 per diluted share in the fourth quarter 2014. Net earnings in the fourth quarter of 2015 included $27 million of special items, primarily consisting of restructuring and other associated costs, as well as a loss on the divestiture of our European food trays business. Net earnings in the fourth quarter of 2014 included $60 million of special items, primarily consisting of restructuring and other associated costs, and loss on debt redemption and refinancing activities. Adjusted EPS was $0.76 for the fourth quarter 2015. This compares to Adjusted EPS of $0.59 in the fourth quarter 2014. The Adjusted Tax Rate was 7.6% in the fourth quarter 2015, compared to 9.2% in the fourth quarter 2014. The reduction in the Adjusted Tax Rate was primarily attributable to the recording of net foreign tax credits that were previously deemed not recognizable and a more tax efficient means to repatriate offshore earnings.
Full year 2015 net earnings on a reported basis were $335 million or $1.62 per diluted share as compared to $258 million, or $1.20 per diluted share in the full year 2014. Net earnings in 2015 included $201 million of special items.
Cash flow provided by operating activities in 2015 was $968 million. In March 2015, the company received a tax refund of $235 million related to the payment of funds in connection with the Settlement agreement. Excluding the tax refund, cash flow provided by operating activities in 2015 was $733 million, which is net of $98 million of restructuring and $21 million of SARs payments. This compares with cash used by operating activities of $215 million in 2014, which is net of $108 million of restructuring, $21 million of SARs payments and $930 million related to the Settlement agreement. Capital expenditures were $184 million in the full year 2015 compared to $154 million in 2014.
Free cash flow, defined as net cash provided by (used in) operating activities (excluding the Settlement agreement and excess tax benefit) less capital expenditures, was an inflow of $595 million in 2015, compared with $599 million in 2014.
Compared to December 31, 2014, the Company’s net debt increased $73 million to $4.2 billion as of December 31, 2015. This increase was primarily a result of amounts paid for share repurchases and dividends, partially offset by cash reflecting the tax refund related to the Settlement agreement payment and cash generated from operating activities.
The company estimates net sales to be approximately $6.8 billion for the full year 2016, which assumes an unfavorable impact of approximately $400 million or 6% from foreign currency translation. Adjusted for unfavorable currency and a $102 million decline related to 2015 divestitures, net sales in 2016 are expected to increase approximately 3.5% on an organic basis.
Adjusted EBITDA is estimated to be in the range of $1.17 billion to $1.19 billion, which assumes $65 million of unfavorable currency translation. On an organic basis, which excludes unfavorable currency and a reduction of $21 million related to 2015 divestitures, Adjusted EBITDA is expected to increase in the range of 7% to 9%.
Adjusted EPS is expected to be in the range of $2.52 to $2.60. The company anticipates 2016 free cash flow to be approximately $550 million, including capital expenditures of approximately $275 million and cash restructuring payments of approximately $110 million.