Sealed Air Reports Q1 2021 Results

Net sales of $1.3 billion, up 8% as reported; up 6% constant currency
Net earnings of $106 million, down 8%; EPS of $0.68, down 8%
Cash flow from operations of $80 million, up 95%

“Our Q1 results reflect strong performance and our focus on automation, digital and sustainability. Net sales increased 8% with strength in eCommerce, food retail and equipment, combined with increasing momentum in industrials. Adjusted EBITDA increased 6% as higher volumes and productivity improvements more than offset global supply chain disruptions related to Winter Storm Uri,” said Ted Doheny, Sealed Air’s President and CEO.

“As market opportunities move to a ‘touchless environment,’ customers are looking to Sealed Air’s leadership in automation, service, and high-performance packaging materials. Strong operational execution as well as growth opportunities give us confidence to raise our full year outlook,” continued Doheny.

Unless otherwise stated, all results compare first quarter 2021 to first quarter 2020 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 a constant dollar basis, which is a non-U.S. GAAP measure. Constant dollar refers to changes in net sales and earnings, including changes in unit volume and price performance, but 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.

Business Highlights
First quarter net sales in Food were $702 million, an increase of 2% as reported, primarily driven by a favorable currency impact of 1.5%. On a constant dollar basis, net sales were essentially flat with 5% growth in Asia Pacific (APAC) and 1% in EMEA, largely offset by a 1% decline in Americas. Americas includes both North and South America. Retail and equipment demand remained strong, while food service trends continued to trail prior year levels. Adjusted EBITDA of $157 million, or 22.3% of net sales, compares to $156 million, or 22.6% of net sales, in the prior year. Reinvent SEE productivity improvements were offset by raw material inflation and higher costs related to the winter storm supply chain disruptions.

First quarter net sales in Protective were $565 million, an increase of 17% as reported. Currency had a favorable impact of $15 million, or 3%. On a constant dollar basis, net sales increased $67 million, or 14%, driven by a 13% increase in volume. Continued momentum in e-Commerce, fulfillment and automated equipment, along with a recovery in industrial segments, contributed to constant dollar growth of 23% in APAC, 14% in EMEA and 12% in Americas. Adjusted EBITDA increased 18% to $110 million, or 19.5% of sales. The increase in Adjusted EBITDA was primarily attributable to volume growth and Reinvent SEE productivity improvements, partially offset by raw material inflation and higher costs related to the winter storm supply chain disruptions.

First Quarter 2021 U.S. GAAP Summary
Net sales of $1.3 billion increased 8% as reported. Currency contributed $25 million, or approximately 2%, to net sales as compared to first quarter 2020.

Net earnings in first quarter 2021 were $106 million, or $0.68 per diluted share, as compared to net earnings of $115 million, or $0.74 per diluted share, in first quarter 2020.

The effective tax rate in first quarter 2021 was 34.0%, as compared to 22.2% in first quarter 2020. The current year effective tax rate was unfavorably impacted by legislative and administrative changes to enacted foreign statutes. The lower prior year tax rate was favorably impacted by the resolution of specific uncertain tax positions associated with a U.S. IRS audit.
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