Sealed Air Reports 2Q 2014 Results

Sealed Air Corporation announced financial results for the second quarter 2014. Second quarter 2014 net sales of $2.0 billion increased 1.9% on a reported basis and 3.0% on a constant dollar basis. Favorable product price/mix of 3.4% was offset by a 0.4% decline in volume.
 
Adjusted EBITDA for the second quarter 2014 increased 8.4% to $284 million, or 14.4% of net sales. This compares to second quarter 2013 of $262 million, or 13.5% of net sales.
 
“Second quarter 2014 net sales of $2.0 billion increased 3.0% on a constant dollar basis compared to last year primarily due to favorable price/mix of 3.4%,” said Jerome A. Peribere, president and CEO. “We delivered favorable price/mix across all divisions, which contributed to a year-over-year improvement of 50 basis points in gross profit margin. Adjusted EBITDA margin in the quarter increased 90 basis points to 14.4% as compared to 13.5% in the previous year.
 
“Based on our performance in the first half of 2014 and outlook for the remainder of the year, we are raising our full year 2014 guidance for Net Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow,” Peribere added. “Our second quarter results and increased outlook for the full year demonstrate that our continued focus on quality of earnings is progressing ahead of our original expectations.
 
“As part of our ‘Change the Game’ strategy and as a significant step in transforming Sealed Air into a knowledge-based company, we announced last week that we are relocating our global headquarters to a new, state-of-the-art campus in Charlotte, NC,” he noted. “This move will create a stronger, one-company culture that enables greater collaboration, accelerates innovation and drives operating efficiencies. The new campus is expected to be completed by late 2016, and during this period we do not expect the cash costs to have a material impact on our financial outlook.”
 
Net sales in the Food Care division of $962 million increased 1.6% compared to last year and 3.7% on a constant dollar basis. The increase in net sales was primarily due to favorable price/mix of 4.6%, partially offset by a decline in volume of 0.9%. Lower volume was largely attributable to a decline in beef production in North America and PED virus impact related to the pork market in both North America and Mexico. Food Care’s Adjusted EBITDA increased 7.6% to $159 million, or 16.6% of net sales.
 
The Diversey Care division reported net sales of $581 million, a 2.0% increase compared to last year. On a constant dollar basis, net sales increased 2.7% as a result of strong growth in developing regions as well as improving trends in Europe. Diversey Care’s Adjusted EBITDA of $72 million was essentially unchanged on a year-over-year basis. Adjusted EBITDA margin in the second quarter was 12.4%.
 
The Product Care division reported net sales of $409 million, a 3.5% increase compared to last year. On a constant dollar basis, net sales increased by 3.2% primarily due to a favorable price/mix of 3.0%. Product Care’s Adjusted EBITDA increased 15.5% to $71 million, or 17.3% of net sales. This increase was largely attributable to favorable mix and price/cost spread as well as cost synergies.
 
The company is increasing its full year 2014 outlook for Net Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow. For Net Sales, the company estimates approximately $7.75 billion, a $50 million increase from previously provided guidance. This assumes an estimated unfavorable impact of approximately 1% from foreign currency translation. Adjusted EPS is expected to be in the range of $1.65 to $1.70 as compared to the previously provided guidance of $1.50 to $1.60.
 
Adjusted EBITDA is anticipated to be in the range of approximately $1.085 billion to $1.095 billion, an increase from the previously provided guidance of $1.050 billion to $1.070 billion. Free Cash Flow is estimated to be approximately $485 million as compared to the previously provided outlook of $425 million.