Sealed Air Corporation (NYSE:SEE) today announced financial results for the first quarter 2018. Commenting on these results, Ted Doheny, President and Chief Executive Officer, said, “In the first three months of the year, Net Sales and Adjusted EBITDA increased 10% and 13%, respectively. Business momentum continued with growth across the global protein and e-Commerce markets as well as our recent acquisition of Fagerdala in Asia. We executed on our strategy by reducing costs, driving operational excellence and commercializing new innovations. Our performance in Q1, combined with favorable global business trends, gives us confidence in our 2018 outlook.”
Unless otherwise stated, all results compare first quarter 2018 results to first quarter 2017 results from continuing operations. Year-over-year financial discussions present operating results from continuing operations as reported, and on a constant dollar basis. Constant dollar refers to unit volume and price/mix performance and excludes the impact of currency translation from all periods referenced. Additionally, non-U.S. GAAP adjusted financial measures, such as Adjusted Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Adjusted Net Earnings, Adjusted Diluted Earnings Per Share (“Adjusted EPS”) and Adjusted Tax Rate, exclude the impact of specified items (“Special Items”), such as restructuring charges, charges related to the sale of Diversey, gains and losses related to acquisition and divestiture of businesses, special tax items (“Tax Special Items”) and certain other infrequent or one-time items. Please refer to the supplemental information included with this press release for a reconciliation of Non-U.S. GAAP to U.S. GAAP financial measures.
Business Highlights
To accelerate productivity improvements and elimination of operational redundancies, the Company implemented a change in allocation of Corporate expenses. These expenses are now allocated to Food Care and Product Care segments. For comparison purposes, the Company presented 2017 results to reflect the revised allocation of these costs. This segment reporting change has no impact on total Company Adjusted EBITDA.
Food Care first quarter net sales of $696 million increased 6% as reported. Currency had a positive impact on Food Care net sales of 3%, or $20 million. On a constant dollar basis, net sales increased 3% due to 8% growth in Latin America and 4% in North America and EMEA. This was offset by a 3% decline in Asia Pacific. Incorporating the segment change described above, Adjusted EBITDA increased 10% to $135 million or 19.3% of net sales. Year-over-year margin expansion of 70 basis points was primarily attributable to volume trends, restructuring savings and favorable foreign currency partially offset by higher raw material and freight costs.
Product Care first quarter net sales of $435 million increased 15% as reported. Currency had a positive impact on Product Care net sales of 4%, or $15 million. On a constant dollar basis, net sales increased 11%, including $21 million from Fagerdala. Constant dollar growth was driven by an increase of 8% in North America, 3% in EMEA and 44% in Asia Pacific. Incorporating the segment change discussed above, Adjusted EBITDA increased 24% to $78 million or 18.0% of net sales. Year-over-year margin expansion of 120 basis points was primarily attributable to profitable volume growth and restructuring savings partially offset by higher raw material and freight costs.
From January 1, 2018 through April 30, 2018, Sealed Air repurchased approximately $426 million or 9.3 million shares through a combination of open market repurchases and the completion of an Accelerated Share Repurchase program. Additionally, Sealed Air’s Board of Directors reset the Company’s share repurchase program authorization on May 2, 2018, to $1 billion, continuing its commitment to return value to shareholders. This new program has no expiration date and replaces the previous authorizations, representing an increase of nearly $500 million.
First Quarter 2018 U.S. GAAP Summary
Net sales of $1.1 billion increased 10% on an as reported basis. Currency had a positive impact on total net sales of 4%, or $36 million. As reported, net sales increased across all regions.
Net loss from continuing operations on an as reported basis was $208 million, or $(1.25) per diluted share, as compared to $54 million, or $(0.27) per diluted share, in the first quarter 2017. Net loss in the first quarter 2018 was unfavorably impacted by $293 million of special items, primarily related to $290 million of provisional tax expense for one-time tax on unrepatriated foreign earnings pursuant to the U.S. Tax Cuts and Jobs Act of 2017 (“TCJA”). Net income in the first quarter 2017 was unfavorably impacted by $139 million of special items, including $127 million of tax expense recorded relating to the sale of Diversey as well as restructuring and other restructuring associated costs.
The effective tax rate in the first quarter of 2018 was negatively impacted a provisional tax expense related to the one-time mandatory tax on unrepatriated foreign earnings pursuant to the TCJA. This one-time expense was $290 million resulting in an effective tax rate for the quarter of 283.3%, compared to 164.9% in the first quarter of 2017. The 2017 rate was negatively affected by tax expense related to the sale of Diversey.
more detail at: http://ir.sealedair.com/phoenix.zhtml?c=104693&p=irol-newsArticle&ID=2346679