Sealed Air Reports 3Q 2014 Results

Sealed Air Corporation announced financial results for the third quarter 2014. Third quarter 2014 net sales of $2.0 billion increased 3.4% on a reported basis and 3.6% on a constant dollar basis. Favorable product price/mix was 3.1% and volume increased 0.5%.

Adjusted EBITDA for the third quarter 2014 increased 8.4% to $300 million, or 15.2% of net sales. This compares to third quarter 2013 of $277 million, or 14.5% of net sales. The 70 basis point improvement in Adjusted EBITDA margin in the third quarter 2014 was primarily attributable to favorable mix and price/cost spread and cost synergies, partially offset by non-material inflation.

“Our financial and operational performance in the third quarter exceeded our expectations across all key metrics,” said Jerome A. Peribere, president and CEO. “Net sales increased 3.6% on a constant dollar basis, Adjusted EBITDA margin surpassed 15%, and Adjusted EPS increased 24%. Adjusted gross profit margin increased 120 basis points as a result of our continued disciplines and value-added selling approach across all regions and divisions. Despite macro-economic uncertainties, currency headwinds and volume declines in the North American protein market, we are increasing our 2014 outlook for Adjusted EBITDA and Adjusted EPS and expect to generate approximately $540 million in free cash flow.”

Net sales in the Food Care division of $983 million increased 3.4% compared to last year and 3.9% on a constant dollar basis. The increase in net sales was due to favorable price/mix of 4.0% on volumes that were essentially unchanged compared to last year. Adjusted EBITDA increased 11.1% to $178 million, or 18.1% 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.

The Diversey Care division reported net sales of $551 million, a 3.5% increase compared to last year. On a constant dollar basis, net sales increased 3.9% with a volume increase of 3.7% and favorable price/mix of 0.2%. Latin America increased 15% on a constant currency basis and 4% on an as reported basis. AMAT increased 12% on a constant currency basis and 10% on a reported currency basis. Adjusted EBITDA increased 15.2% to $70 million, or 12.7% of net sales. This increase was primarily due to higher volume, cost synergies and favorable mix and price/cost spread, partially offset by non-material inflation.

The Product Care division reported net sales of $421 million, a 4.4% increase compared to last year. On a constant dollar basis, net sales increased by 3.9% primarily due to a favorable price/mix of 4.5%, partially offset by a 0.6% decline in volume. North America delivered a 6% increase in net sales on an as reported basis and in constant dollars. Product Care’s Adjusted EBITDA increased 7.2% to $74 million, or 17.7% of net sales. This increase was largely attributable to favorable mix and price/cost spread as well as cost synergies.

The company estimates net sales to be approximately $7.7 billion for the full year 2014, which assumes an unfavorable impact of approximately 2% from foreign currency translation. Despite unfavorable currency translation, the company is increasing its 2014 full year outlook for adjusted EBITDA, adjusted EPS and free cash flow. Adjusted EBITDA is anticipated to be approximately $1.110 billion, an increase from the previously provided forecast of $1.085 billion to $1.095 billion. Adjusted EPS is expected to be in the range of $1.70 to $1.75 as compared to the previously provided guidance of $1.65 to $1.70. Free cash flow is estimated to be approximately $540 million as compared to the previously provided outlook of $485 million.