Sealed Air Corporation SEE reported third-quarter 2020 adjusted earnings per share of 82 cents, surpassing the Zacks Consensus Estimate of 67 cents. The bottom line also increased 28% year over year on higher adjusted EBITDA, lower adjusted tax rate and reduced net interest expense.
Including special items, the company delivered net earnings per share of 85 cents compared with the prior-year quarter figure of 51 cents.
Total revenues inched up 1.5% year over year to $1,237 million in the reported quarter. The top line also beat the Zacks Consensus Estimate of $1,195 million. Currency negatively impacted sales by 1%.
Cost and Margins
Cost of sales inched up 0.7% year over year to $833 million. Gross profit improved 3.3% year over year to $405 million. Gross margin was 32.7% compared with the prior-year quarter’s 32.2%.
SG&A expenses slid 10.4% to $199 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $259 million in the quarter, up 7.5% from the prior-year quarter. Adjusted EBITDA margin was 21% compared with the prior-year quarter’s 19.8%, driven by the company’s Reinvent SEE initiatives and favorable price cost spread.
Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote
Food: Net sales declined 3.4% year over year to $705 million. Adjusted EBITDA was down 4.5% year over year to $152.4 million.
Protective: The segment reported net sales of $533 million in the reported quarter, up 9% from the prior-year quarter. Adjusted EBITDA climbed 29.7% year over year to $109 million.
Cash and cash equivalents were around $317 million as of Sep 30, 2020, up from the $262 million as of Dec 31, 2019. Cash flow from operating activities was around $410 million in the first nine months of 2020 compared with the $251 million witnessed in the prior-year period. As of Sep 30, 2020, Sealed Air’s net debt was $3.4 billion, down from $3.6 billion as of Dec 31, 2019.
For 2020, Sealed Air now expects net sales of $4.85 billion, up from the prior-guided range of $4.725 billion to $4.775 billion. Foreign currency is now expected to have a negative impact on net sales of approximately $90 million compared with the previous estimate of $120 million.
Adjusted EBITDA is now projected at $1.04 billion, up from the prior guidance of $1.01-$1.03 billion. Foreign currency is now expected to have a negative impact of approximately $20 million, lower than the earlier expectation of an unfavorable impact of $25 million. Adjusted earnings per share is now expected at $3.05 compared with the previous guidance of $2.85 to $2.95. Free cash flow is estimated to be $450 million compared with the previously-guided range of $350 million to $375 million.
Share Price Performance
Over the past six months, Sealed Air’s shares have gained 37%, outperforming the industry’s growth of 13.6%.
Zacks Rank and Stocks to Consider
Sealed Air carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Pentair plc PNR, Lawson Products, Inc. LAWS and Fortune Brands Home & Security, Inc. FBHS, each carrying a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pentair has a projected earnings growth rate of 2% for the current year. Shares of the company have gained 41.7% over the past six months.
Lawson Products has an estimated earnings growth rate of 3.4% for 2020. The company’s shares have rallied 59.8% in the past six months.
Fortune Brands has an expected earnings growth rate of 6.9% for the ongoing year. In the past six months, the stock has surged 105.7%.
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