Sealed Air Corporation (NYSE:SEE) today announced financial results for third quarter 2013. Net sales for the third quarter 2013 totaled $1.9 billion. Adjusted EPS was $0.39 for the third quarter and Adjusted EBITDA was $282 million, or 14.5% of net sales. On a reported basis, net income was $37.7 million, or $0.18 per share.
Unless otherwise stated, all results compare third quarter 2013 results to third quarter 2012 results and are presented on a continuing operations basis, excluding Diversey Japan, which the Company sold in November 2012 and which results have been presented as discontinued operations. Reported information is defined as U.S. GAAP. Year-over-year net sales discussions present both reported and constant dollar performance. Constant dollar performance excludes the impact of currency translation. Additionally, non-U.S. GAAP adjusted financial measures, such as Adjusted EBITDA and Adjusted EPS, exclude the impact of special items, such as restructuring charges and other one-time items. Cash-settled stock appreciation rights (“SARs”) granted as part of the Diversey acquisition resulted in expense of $8.7 million in third quarter 2013 compared with $2.9 million in 2012. Additional detail on SARs is provided in the supplementary information.
Commenting on these results, Jerome A. Peribere, President and Chief Executive Officer, said, “During the third quarter, not only have we delivered a strong financial quarter, we are continuing to re-invent the new Sealed Air. This quarter we rebranded the Company, reorganized Diversey Care, hired a new Chief Technology Officer, and launched major initiatives in line with our Get Fit and Change the Game strategy. Our transformation is well underway and moving at an accelerated pace.”
Peribere continued, “We generated $195 million of free cash flow in the nine months ended September 30, 2013 and, excluding the impact of SARs, reported a third quarter Adjusted EBITDA margin of 15.0%. We are pleased to report favorable price/mix trends across our three core divisions, but we still have more work to do. We are committed to our overall strategy and are confident that it will enable us to continue investing in our product offerings and innovation to better serve our customers. Based on our third quarter results and estimated performance for the remainder of the year, we are pleased to increase our Adjusted EBITDA, Adjusted EPS and Free Cash Flow guidance for the full year 2013, demonstrating our ongoing commitment to improve the quality of our earnings.”
Third quarter net sales of $1.9 billion increased 2.9% on a constant dollar basis and 2.0% on a reported basis. Volume and product price/mix increased by 1.4% and 1.5%, respectively. Reported regional net sales increased 6.9% for AMAT (Asia, Middle East, Africa and Turkey), 3.5% for Europe, 1.9% for North America, 1.3% for Latin America, partially offset by 9.3% lower net sales in JANZ (Japan/Australia/New Zealand). On a constant dollar basis, regional net sales increased 10.2% for AMAT, 8.6% for Latin America, 2.2% for North America, 0.9% for JANZ, partially offset by a 0.4% decline in Europe. Additionally, third quarter net sales from Developing Regions1 increased 4.7% on a reported basis, or 9% on a constant dollar basis, accounting for 25.8% of total net sales.
Adjusted EBITDA for the third quarter increased 2.7% to $282 million, or 14.5% of net sales, primarily driven by cost synergies and higher volumes. Excluding the impact of SARs, Adjusted EBITDA increased 4.8% to $290.7, or 15.0% of net sales, compared to $277.5 million, or 14.6% of net sales, in 2012. Incremental cost synergies under the 2011-2014 Integration and Optimization Program were $22 million for the third quarter of 2013 and primarily resulted from headcount reductions, elimination of redundant costs, plant consolidations and procurement and logistics savings.
Reported operating profit was $139.9 million for third quarter 2013 compared with an operating loss of $1.2 billion in 2012, which included $1.4 billion of special items, primarily consisting of an estimated $1.3 billion non-cash pre-tax charge for impairment of goodwill and certain intangible assets associated with the Diversey acquisition. Adjusted Operating Profit for the third quarter 2013 was $198.1 million, or 10.2% of net sales, compared to Adjusted Operating Profit of $185.8 million or 9.8% of net sales in the same period a year ago.