On August 8, 2024, Sealed Air Corp (SEE, Financial) released its 8-K filing detailing the company's financial performance for the second quarter of 2024. Sealed Air Corp (SEE) operates through two main segments: Food Care, which includes food packaging products like Cryovac, Darfresh, and OptiDure, and Product Care, which includes Bubble Wrap, Instapak, Jiffy mailers, and shrink film packaging systems for industrial and e-commerce applications.
Performance Overview
Sealed Air Corp (SEE, Financial) reported net sales of $1.35 billion for Q2 2024, a 2.6% decrease from $1.38 billion in Q2 2023. The company’s net earnings were $97.8 million, up 4.2% from $93.9 million in the same period last year. Diluted earnings per share (EPS) came in at $0.67, a slight increase from $0.65 in Q2 2023. However, these results fell short of analyst estimates, which had projected an EPS of $0.69 and revenue of $1.36 billion.
Segment Performance
In the Food Care segment, net sales increased by 2% to $894 million, driven by strong end-market demand and share gains within case-ready solutions. Adjusted EBITDA for this segment rose by 7% to $205 million, reflecting higher volumes.
Conversely, the Product Care segment saw a 10% decline in net sales to $451 million, attributed to a slowdown in automation sales and continued weakness in industrial and fulfillment portfolios. Adjusted EBITDA for this segment decreased by 15% to $82 million.
Financial Achievements and Challenges
Sealed Air Corp (SEE, Financial) achieved significant milestones in cash flow and debt reduction. Cash flow from operations for the first half of 2024 was $313 million, compared to a negative $7 million in the same period last year. Free cash flow was $207 million, up from $45 million, excluding a $175 million tax deposit in 2023. Total debt decreased to $4.6 billion from $4.7 billion at the end of 2023, and the net leverage ratio improved to 3.8x from 3.9x.
Despite these achievements, the company faces challenges, particularly in the Product Care segment. "For the remainder of the year, our Food businesses’ performance is being offset by weaker than expected volumes within Protective. At this time, we do not see a catalyst for the volumes to inflect in Protective and expect this trend to continue into 2025," said Dustin Semach, Sealed Air's President and CFO.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $1.35 billion | $1.38 billion | -2.6% |
| Net Earnings | $97.8 million | $93.9 million | 4.2% |
| Diluted EPS | $0.67 | $0.65 | 3.1% |
| Adjusted EBITDA | $285.5 million | $280.3 million | 1.9% |
| Free Cash Flow (YTD) | $207.5 million | $44.7 million | 364% |
Analysis and Outlook
Sealed Air Corp (SEE, Financial) has demonstrated resilience in its Food Care segment, which continues to benefit from strong demand. However, the persistent weakness in the Product Care segment poses a significant challenge. The company's focus on cost-saving initiatives, such as the CTO2Grow program, is expected to generate $90 million in incremental savings for the full year 2024.
Looking ahead, Sealed Air Corp (SEE, Financial) has provided guidance for Q3 2024, with expected net sales of $1.33 billion, adjusted EBITDA of $265 million, and adjusted EPS of $0.67. For the full year, the company anticipates net sales between $5.2 billion and $5.6 billion, adjusted EBITDA between $1.05 billion and $1.15 billion, and free cash flow between $325 million and $425 million.
For more detailed insights and the complete financial report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Sealed Air Corp for further details.
