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Sealed Air (SEE) Beats on Q1 Earnings, Suspends '20 View

Zacks Equity Research

Sealed Air Corporation SEE reported first-quarter 2020 adjusted earnings per share of 73 cents, surpassing the Zacks Consensus Estimate of 59 cents. The bottom line also improved  24% year over year. The results can be attributed to strong execution of Reinvent SEE strategy, which was introduced in December 2018 to drive earnings growth and productivity improvements. Acquisitions, higher volumes and favorable price/cost spread also contributed to the results.

Including special items, the company reported net earnings per share of 74 cents compared with the prior-year quarter figure of 41 cents.

Total revenues of $1,174 million in the reported quarter were up 6% from the year-ago quarter figure. The top line beat the Zacks Consensus Estimate of $1,148 million. While currency negatively impacted sales by 3%, acquisitions contributed 7% to the same.

Sealed Air Corporation Price, Consensus and EPS Surprise

Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation Price, Consensus and EPS Surprise

Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote

Cost and Margins

Cost of sales increased 5% year over year to $783 million. Gross profit improved 7% year over year to $391 million. Gross margin came in at 33.3% compared with 32.8% in the prior-year quarter.

SG&A expenses declined 8% to $194 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $253 million in the quarter compared with $216 million in the prior-year quarter. Adjusted EBITDA margin was 21.6% compared with 19.4% in the prior-year quarter, driven by the company’s Reinvent SEE initiatives, favorable price cost spread, higher volumes and acquisitions. This was partially offset by higher operating costs, lower volumes and unfavorable foreign currency impact.

Segment Performance

Food Care: Net sales rose 2% year over year to $690 million. Adjusted EBITDA improved 9% year over year to $156 million.

Product Care: The segment reported net sales of $484 million in the reported quarter, up 12% from the prior-year quarter. Adjusted EBITDA was up 24% year over year to $93 million.

Financial Updates

Cash and cash equivalents were $275 million as of Mar 31, 2020, up from $262 million as of Dec 31, 2019. Cash flow from operating activities was around $41 million in the reported quarter compared with $65 million in the prior-year quarter. Capital expenditures came in at $48.7 million in the reported quarter compared with $49.4 million in the prior-year quarter. As of Mar 31, 2020, Sealed Air’s net debt came in at $3.6 billion, flat compared with Dec 31, 2019.

Suspends Guidance

Sealed Air has suspended full-year 2020 guidance citing the uncertainty in the markets owing to the coronavirus pandemic.

Share Price Performance

Over the past year, Sealed Air’s shares have fallen 35.0%, compared with the industry’s decline of 43.7%.

Zacks Rank & Stocks to Consider

Sealed Air currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Ampco-Pittsburgh Corporation AP, Silgan Holdings Inc. SLGN and Intellicheck, Inc. IDN. While Ampco-Pittsburgh and Silgan Holdings sport a Zacks Rank #1 (Strong Buy), Intellicheck carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ampco-Pittsburgh has an expected earnings growth rate of 2.70% for the current year. The stock has appreciated 11.7% in a year’s time.

Silgan has a projected earnings growth rate of 11.3% for 2020. The company’s shares have rallied 11.8% over the past year.

Intellicheck has an estimated earnings growth rate of 112.5% for the ongoing year. The company’s shares have gained 60.5% in the past year.

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Silgan Holdings Inc. (SLGN) : Free Stock Analysis Report
 
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