Sealed Air (SEE) Q4 Earnings & Revenues Surpass Estimates
Sealed Air Corporation SEE has reported fourth-quarter 2023 adjusted earnings per share of 88 cents, which surpassed the Zacks Consensus Estimate of 62 cents. The bottom line fell 11% year over year due to lower volumes and higher interest expenses, partially offset by lower income tax expenses.
Including special items, the company delivered net earnings per share of 88 cents compared with the year-ago quarter’s 99 cents.
Total revenues were $1.38 billion in the reported quarter, which beat the Zacks Consensus Estimate of $1.37 billion. The figure was down 2% from $1.4 billion in the fourth quarter of 2022.
Currency and pricing had unfavorable impacts of 1.7% and 1.4%, respectively. Meanwhile, volumes were down 3.9% year over year.
Our model predicted currency to have an unfavorable impact of 2.1% and pricing to favor sales by 0.7%. We expected volumes to decrease 7.7% year over year.
Sales in the APAC (in constant dollars) rose 8.6% year over year to $209 million. Sales in the Americas witnessed a decline of 3% to $882.7 million and sales in EMEA were down 5.9% to $285.4 million.
Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote
Costs and Margins
The cost of sales dipped 0.9% year over year to $973 million. The gross profit was $405 million, which marked a 4.5% decline from the year-ago quarter’s $424 million. The gross margin contracted to 29.4% from the year-ago quarter’s 30.2%.
SG&A expenses were $176.5 million, which was 2% lower than $181 million in the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were around $274 million in the quarter, which decreased 8% from the year-ago period mainly dragged down by lower volumes. The adjusted EBITDA margin was 19.9% compared with the year-ago quarter’s 21.1%.
Segmental Performances
Food: Net sales increased 2% year over year to $893 million. However, the figure missed our estimate of $930 million.
Volumes were down 3.3% reflecting declines in food automation solutions and the ongoing weakness in food retail market. Pricing actions had a favorable impact of 0.7%. Currency fluctuations had an unfavorable impact of 3.2% while the Liquibox acquisition contributed 7.9%.
We expected volume to be down 1.7% and pricing to be up 0.8%. Our model predicted currency to negatively impact the segment’s sales by 2.4%.
Adjusted EBITDA was $195 million, down 3.4% from the last year’s quarter. Increase in operating costs and lower volumes were partially offset by contributions from the Liquibox acquisition and favorable net price realization, leading to the year-over-year decline. The reported figure surpassed our estimate of $169.6 million.
Protective: The segment reported net sales of $485 million in the quarter under review, down 9% from the year-ago quarter. We expected net sales of $432.7 million.
Currency had a favorable impact of 0.7%. Pricing had a negative impact of 4.9%, while volumes fell 4.7% due to continued market pressures in the industrial and fulfillment sectors.
Our model predicted currency to negatively impact by 1.7% and price to positively impact by 0.6%. We expected volume to fall 17.6% in the quarter.
The segment’s adjusted EBITDA decreased 12% year over year to $91 million, driven by lower volumes and unfavorable net price realization. We expected adjusted EBITDA to be $80.9 million.
Cash Flow & Balance Sheet
Cash flow generated from operating activities was around $516 million in 2023, lower than $613 million in the prior year. The company paid out cash dividends of $118 million in 2023.
As of Dec 31, 2023, Sealed Air’s net debt was $43 billion, up from $3.2 billion as of Dec 31, 2022. As of the end of the 2023, the company had $1.35 billion of liquidity available, which comprised $346 million in cash and $1 billion of undrawn, committed credit facilities.
2023 Results
Sealed Air’s adjusted earnings per share of $3.18 in 2023 were down 22% year over year but surpassed the Zacks Consensus Estimate of $2.92. Including special items, the company delivered net earnings per share of $2.34 in 2023 compared with $3.33 in 2022.
Total revenues were down 2.7% year over year to $5.49 billion in 2023. The top line beat the Zacks Consensus Estimate of $5.48 billion.
2024 Guidance
Sealed Air expects net sales of $5.2-$5.6 billion and an adjusted EBITDA of $1.05-$1.15 billion for 2024. Adjusted earnings per share are forecast to be $2.65-$3.05.
Free cash flow for the year is expected to be $325-$425 million. Capital spending is expected to be $230 million.
Price Performance
In the past three months, Sealed Air’s shares have gained 9.9% compared with the industry’s 5.2% growth.
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Zacks Rank and Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Cadre Holdings, Inc. CDRE, AZZ Inc. AZZ and Applied Industrial Technologies AIT. Each of these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.11 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 13% in the past three months.
The consensus estimate for AZZ’s fiscal 2024 earnings is pegged at $4.19 per share. The consensus estimate for 2024 earnings has moved 2% north in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 54% in the past three months.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 19% over the last three months.
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