Net sales increased 3% to $1.3 billion in Q4 and 1% to $4.8 billion in 2019
Q4 net earnings of $124 million or $0.80 per share declined 38%;
2019 net earnings of $294 million or $1.89 per share increased 101%
Adjusted EPS increased 4% to $0.78 in Q4 and 13% to $2.82 in 2019
Adjusted EBITDA increased 9% to $271 million in Q4 and 8% to $965 million in 2019
Net cash provided by operating activities of $511 million increased 19% in 2019
Capital Expenditures of $190 million, up 13%, to support future growth and automation
Sealed Air Corporation (NYSE: SEE) today reported financial results for the fourth quarter and full year 2019.
“In 2019, we exceeded our commitments on earnings and cash flow despite weak global industrial activity and modest sales growth. Our fourth quarter and full year results reflect strong execution of our strategy,” said Ted Doheny, Sealed Air’s President and CEO.
“We continue to make great progress on our journey to world-class with Reinvent SEE improving productivity and strengthening our earnings power. In 2020, we expect sales growth of 2% to 3% and Adjusted EBITDA growth of 5% to 7%, with solid free cash flow. Our focus on delivering the best products at the right price and making them sustainable is creating value for our customers, shareholders, employees and society,” continued Doheny.
Unless otherwise stated, all results compare fourth quarter 2019 results to fourth quarter 2018 results from continuing operations. Year-over-year financial discussions present operating results from continuing operations as reported. Year-over-year comparisons are also made on an organic basis or constant dollar basis, which are non-U.S. GAAP measures. Organic refers to changes in unit volume and price performance and excludes acquisitions in the first year after closing, divestiture activity and the impact of currency translation. Constant dollar refers to changes in net sales and earnings, excluding the impact of currency translation. 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, restructuring associated costs, gains and losses related to acquisition and divestiture of businesses, special tax items (“Tax Special Items”) and certain infrequent or one-time items. Please refer to the supplemental information included with this press release for a reconciliation of U.S. GAAP to Non-U.S. GAAP financial measures.
Fourth Quarter Financial and Business Highlights
Food Care net sales of $760 million decreased 2%, as reported, compared to prior year results. Currency negatively impacted Food Care by $16 million or 2%. Organic sales were essentially flat. Adjusted EBITDA grew 5% to $171 million, or 22.5% of net sales, up 150 basis points compared to the prior year. The increase in Adjusted EBITDA was primarily attributable to Reinvent SEE initiatives, including productivity improvements, restructuring savings and favorable price/cost spread. Currency fluctuations had a $4 million unfavorable impact on Adjusted EBITDA.
Product Care net sales of $539 million were up 10% as reported. Currency negatively impacted Product Care by $3 million or 1%. Sales generated from the acquisition of Automated Packaging Systems contributed $70 million, or approximately 14%. Organic sales declined $17 million, or 4%, primarily due to the global industrial slowdown. Adjusted EBITDA grew 25% to $107 million, or 19.8% of net sales, up 230 basis points compared to the prior year. The increase in Adjusted EBITDA was primarily attributable to Reinvent SEE initiatives, the addition of Automated Packaging Systems and favorable price/cost spread, partially offset by organic volume decline.
Fourth Quarter and Full Year 2019 U.S. GAAP Summary
Fourth quarter net sales of $1.3 billion increased 3% as reported. Currency had a negative impact on total net sales of $19 million or 2%.
Fourth quarter 2019 net earnings were $124 million, or $0.80 per diluted share. Net earnings included a benefit of $3 million from Special Items, after tax, primarily related to the benefit of Tax Special Items of $29 million. Tax Special Items were largely driven by a one-time net tax benefit resulting from tax optimization initiatives associated with Reinvent SEE and restructuring activities. The tax benefit was mostly offset by other Special Items, the largest of which were a $12 million loss, net of tax, recognized on the redemption of 6.50% notes due 2020 and $7 million, in restructuring associated costs, net of tax. This compares to fourth quarter 2018 net earnings of $199 million, or $1.28 per diluted share. Prior year results were favorably impacted by $129 million of tax benefits resulting from nonrecurring items including a decrease to the previously recognized estimate of the one-time tax on unrepatriated earnings (U.S. Tax Reform transition tax) and the recognition of deferred tax assets associated with tax optimization initiatives.
The effective tax rate in the fourth quarter 2019 was 8.2%, compared to (68.3)% in the fourth quarter 2018. The effective tax rate in the fourth quarter 2019 was favorably impacted by tax optimization initiatives associated with Reinvent SEE and restructuring activities. The effective tax rate in the fourth quarter 2018 was favorably impacted by the finalization of the transition tax calculation associated with U.S. Tax Reform.
For the full year 2019, net sales of $4.8 billion increased 1% as reported. Currency had a negative impact on total net sales of $137 million or 3%.
Full year 2019 net earnings were $294 million, or $1.89 per diluted share. Net earnings were unfavorably impacted by $145 million of Special Items, after tax. Restructuring and restructuring associated costs of $76 million, net of tax and $44 million, net of tax, recorded in the second quarter in connection with a settlement agreement with Novipax Holdings LLC were the largest components of Special Items during the year. Net earnings for the full year 2018 of $150 million, or $0.94 per diluted share, were unfavorably impacted by $251 million of Special Items, including $222 million for Tax Special Items such as the U.S. Tax Reform transition tax.
The effective tax rate for full year 2019 was 20.7%, compared to 67.2% for full year 2018. The 2019 tax rate was favorably impacted by tax optimization initiatives associated with Reinvent SEE and restructuring activities. The 2018 rate was negatively impacted by the transition tax associated with U.S. Tax Reform.
more detail at: https://ir.sealedair.com/news-releases/news-release-details/sealed-air-reports-fourth-quarter-and-2019-results