Sealed Air Reports Fourth Quarter and Full Year 2017 Results

• 2017 Sales from Continuing Operations of $4.5 Billion, an increase of 6% As Reported
• 2017 Net Earnings from Continuing Operations of $63 Million, Reported Net Earnings Per Share from Continuing Operations of $0.33 and Operating Cash Flow of $398 Million
• 2017 Adjusted EBITDA of $833 Million, or 18.7% of Net Sales, Adjusted EPS from Continuing Operations of $1.81 and Free Cash Flow, excluding payments related to the sale of Diversey, of $421 million, all exceeding the Company's previously provided guidance
• Provides Full Year 2018 Outlook

CHARLOTTE, N.C.--(BUSINESS WIRE)--Feb. 8, 2018-- Sealed Air Corporation (NYSE: SEE) today announced financial results for the fourth quarter and full year 2017. Commenting on these results, Ted Doheny, President and Chief Executive Officer, said, "In 2017, we exceeded our previously provided guidance for Net Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow. Our sales growth accelerated into year-end, resulting in 11% growth in the fourth quarter and 6% for the full year. We capitalized on strong end market trends within the protein and e-Commerce and fulfillment sectors and experienced increased demand for our new innovations. We executed on our share repurchase program by returning $1.3 billion of capital through the use of open market and accelerated share repurchase programs since January 1, 2017. We currently have approximately $867 million remaining under the authorized repurchase program."

Doheny continued, "I have been working closely with our leadership team to accelerate our strategy. I'm excited to see the potential that we have within Sealed Air and take our performance to the next level. In 2018, we plan to drive profitable growth, recognize and promote talent and further improve productivity with our Sealed Air Operational Excellence culture. We will continue to focus on developing sustainable solutions that leave our world, environment and communities better than we found them."

Unless otherwise stated, all results compare fourth quarter 2017 results to fourth quarter 2016 results from continuing operations. As a result of the sale of Diversey, which refers to Diversey Care and the food hygiene and cleaning business, we have changed our segment reporting structure effective as of January 1, 2017. Food Care includes the Medical Applications business, which was previously reported under 'Other.' Additionally, Food Care excludes the food hygiene and cleaning business, which is a component of Diversey and classified as discontinued operations. Year-over-year financial discussions present operating results from continuing operations as reported, and on a constant dollar basis. Constant dollar refers to unit volume and price/mix performance and excludes the impact of currency translation from all periods referenced. 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, charges related to the sale of Diversey, charges related to ceasing operations in Venezuela, cash-settled stock appreciation rights ("SARs") granted as part of the original Diversey acquisition, special tax items ("Tax Special Items") and certain other infrequent or one-time items. Please refer to the supplemental information included with this press release for a reconciliation of Non-U.S. GAAP to U.S. GAAP financial measures.

Fourth Quarter Financial and Business Highlights

• In the fourth quarter, Food Care net sales of $764 million increased 8% as reported. Currency had a positive impact on Food Care net sales of 2%, or $15 million. On a constant dollar basis, net sales increased 6% driven by volume growth of 5% and favorable price/mix of 1%. Volume trends were led by 7% growth in North America, 6% in Latin America and 4% in Europe, Middle East and Africa (EMEA), partially offset by a 2% decline in Asia Pacific. Adjusted EBITDA of $162 million or 21.2% of net sales was primarily attributable to positive volume trends and favorable foreign currency, which were offset by higher raw material and freight costs as well as non-material costs including salary and wage increases.
• Product Care net sales of $464 million in the fourth quarter were up 18% as reported. Currency had a positive impact on Product Care net sales of 2%, or $9 million. On a constant dollar basis, net sales increased 15% primarily due to the acquisition of Fagerdala, which was completed on October 2, 2017, of $24 million or 6%, increased volumes of 5% and favorable price/mix of 4%. Adjusted EBITDA of $95 million or 20.4% of net sales was attributable to volume growth, which was partially offset by non-material costs including salary and wage increases as well as higher raw material and freight costs.
• Since January 1, 2017, Sealed Air repurchased approximately $1.3 billion of shares through a combination of open market repurchases and accelerated share repurchase (ASR) programs. The Company has $867 million remaining under the current authorized repurchase program.

Fourth Quarter and Full Year 2017 U.S. GAAP Summary, Continuing Operations

Fourth quarter net sales of $1.2 billion increased 11% on an as reported basis. Currency had a positive impact on total net sales of 2%, or $25 million. For the full year 2017, net sales of $4.5 billion increased 6% on an as reported basis. Currency had a positive impact on total net sales of 1%, or $30 million. As reported, net sales increased across all regions for the fourth quarter and full year 2017.

Fourth quarter net earnings from continuing operations on a reported basis was $25 million, or $0.14 per diluted share, as compared to net earnings from continuing operations of $151 million, or $0.77 per diluted share, in the fourth quarter 2016. Net income in the fourth quarter 2017 was unfavorably impacted by $78 million of special items, including $42 million of tax related items, $21 million related to the sale of Diversey, $11 million primarily related to acquisition activity and $5 million of restructuring and other restructuring associated costs. Net earnings in the fourth quarter 2016 included $53 million of special items, including $62 million of tax related items partially offset by $8 million of charges related to restructuring and other costs associated with our restructuring programs.

Full year 2017 net earnings from continuing operations on a reported basis was $63 million, or $0.33 per diluted share, as compared to net earnings from continuing operations of $292 million, or $1.48 per diluted share, for full year 2016. Net earnings for the full year 2017 was unfavorably impacted by $280 million of special items, including $152 million of tax expense related to the sale of Diversey, as well as $55 million of charges related to the sale of Diversey, $26 million of restructuring and other restructuring associated costs and $16 million primarily related to acquisition activity. Net earnings for full year 2016 included $42 million of special items, primarily driven by $49 million related to ceasing operations in Venezuela and $22 million of restructuring and other associated costs.

The effective tax rate in the fourth quarter of 2017 was 79.0%, compared to the effective tax rate of (23.8)% in the fourth quarter of 2016. The effective tax rate in the fourth quarter of 2017 was negatively impacted primarily by the revaluation of deferred tax assets as a result of U.S. Tax Reform. The effective tax rate in the fourth quarter of 2016 was favorably impacted by changes in our repatriation strategy.

The effective tax rate for full year 2017 was 84.0%, compared to the effective tax rate of 24.6% for full year 2016. The 2017 rate was negatively impacted primarily by additional tax expenses related to the sale of Diversey and the revaluation of deferred tax assets as a result of U.S. Tax Reform.

Fourth Quarter and Full Year 2017 Non-U.S. GAAP Summary, Continuing Operations

Constant dollar net sales growth of 9% for the fourth quarter of 2017 was attributable to volume growth of 5%, favorable price/mix of 2% and $24 million in sales from the Fagerdala acquisition. By region, in constant dollars, North America sales increased 10%, EMEA 5%, Latin America 6% and Asia Pacific 17%.

Constant dollar net sales growth of 5% for full year 2017 was attributable to volume growth of 5% and $24 million in sales from the Fagerdala acquisition. By region, in constant dollars, North America sales increased 8%, EMEA 1%, Latin America 3% and Asia Pacific 5%.

Adjusted EBITDA for the fourth quarter 2017 was $238 million, or 19.4% of net sales, compared to $216 million, or 19.6% of net sales for the fourth quarter of 2016. Adjusted EBITDA included $19 million of Corporate expenses in the fourth quarter of 2017 as compared to $36 million in the fourth quarter of 2016.

Adjusted EBITDA for full year 2017 was $833 million, or 18.7% of net sales, compared to $809 million, or 19.2% of net sales for full year 2016. Adjusted EBITDA included $107 million of Corporate expenses for full year 2017 as compared to $127 million for full year 2016. The decrease in corporate expenses is due to the Company's efforts to address stranded costs associated with the sale of Diversey and cost containment actions.

Adjusted EPS was $0.58 for the fourth quarter 2017. This compares to Adjusted EPS of $0.50 in the fourth quarter 2016. The Adjusted Tax Rate was 33.7% in the fourth quarter 2017, compared to 24.9% in the fourth quarter 2016.

Adjusted EPS was $1.81 for full year 2017. This compares to Adjusted EPS of $1.70 for full year 2016. The Adjusted Tax Rate was 30.2% for full year 2017, compared to 28.0% for full year 2016.

Fourth Quarter and Full Year 2017 U.S. GAAP Summary, Discontinued Operations

The sale of Diversey was completed during the third quarter on September 6, 2017. The Company recognized a net gain on sale of $641 million for the full year 2017. Net earnings from discontinued operations was $111 million, or $0.59 per diluted share from January 1, 2017 through completion of the sale, which included net sales of $1.7 billion.

Cash Flow and Net Debt

Cash flow provided by operating activities in the year ended December 31, 2017 was $398 million, which is net of $49 million of restructuring payments and $207 million of payments related to the sale of Diversey, which included $170 million of tax payments and the remainder primarily attributable to professional fees required to facilitate the separation.

Capital expenditures were $184 million in the year ended December 31, 2017. Free Cash Flow, defined as net cash provided by operating activities less capital expenditures and payments related to the sale of Diversey, was an inflow of $421 million in the year ended December 31, 2017.

The Company repurchased 27.3 million shares for approximately $1.2 billion, with the remaining $80 million settled in the first quarter of 2018, and paid cash dividends of $120 million during the year ended December 31, 2017.

Net Debt, defined as total debt less cash and cash equivalents, decreased to $2.7 billion as of December 31, 2017 from $3.8 billion as of December 31, 2016. This decrease in net debt primarily resulted from payments of debt and net cash received as part of the sale of Diversey.

Outlook for Full Year 2018

For the full year 2018, the Company anticipates Net Sales of approximately $4.75 to $4.80 billion, a constant dollar growth rate of approximately 4.5%. Adjusted EBITDA from continuing operations is expected to be in the range of $890 million to $910 million. Currency is expected to have a favorable impact of approximately $110 million on Net Sales and $20 million on Adjusted EBITDA. The Company forecasts Adjusted EPS to be in the range of $2.35 to $2.45, which is based on 169 million shares outstanding and an anticipated Adjusted Tax Rate of 29.0%.

The outlook for Free Cash Flow is approximately $400 million, assuming capital expenditures of approximately $160 million and cash restructuring payments of approximately $20 million, which excludes restructuring payments of $30 million to address stranded costs.

Conference Call Information

A supplemental presentation accompanying the conference call will be available on the Company's website at www.sealedair.com/investors.

Conference Call Replay Information

Business

Sealed Air Corporation is a knowledge-based company focused on packaging solutions that help our customers achieve their sustainability goals in the face of today's biggest social and environmental challenges. Our portfolio of widely recognized brands, including Cryovac® brand food packaging solutions and Bubble Wrap® brand cushioning, enable a safer and less wasteful food supply chain and protect valuable goods shipped around the world. Sealed Air generated $4.5 billion in sales in 2017 and has approximately 15,000 employees who serve customers in 122 countries. To learn more, visit www.sealedair.com.

Website Information

We routinely post important information for investors on our website, www.sealedair.com, in the "Investor Relations" section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Non-U.S. GAAP Information

In this press release and supplement, we have included several non-U.S. GAAP financial measures, including Net Debt, Adjusted Net Earnings and Adjusted EPS, net sales on a "constant dollar" or "organic" basis, Free Cash Flow, Adjusted EBITDA and Adjusted Tax Rate, as our management believes these measures are useful to investors. We present results and guidance, adjusted to exclude the effects of Special Items and their related tax impact that would otherwise be included under U.S. GAAP, to aid in comparisons with other periods or prior guidance. In addition, non-U.S. GAAP measures are used by management to review and analyze our operating performance and, along with other data, as internal measures for setting annual budgets and forecasts, assessing financial performance, providing guidance and comparing our financial performance with our peers and may also be used for purposes of determining incentive compensation. The non-U.S. GAAP information has limitations as an analytical tool and should not be considered in isolation from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is not an indicator of our performance under U.S. GAAP. Non-U.S. GAAP financial measures that we present may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. For a reconciliation of these U.S. GAAP measures to non-U.S. GAAP measures and other important information on our use of non-U.S. GAAP financial measures, see the attached supplementary information entitled "Condensed Consolidated Statements of Cash Flows" (under the section entitled "Non-U.S. GAAP Free Cash Flow"), "Reconciliation of U.S. GAAP Net Earnings and U.S. GAAP Net Earnings Per Share to Non-U.S. GAAP Adjusted Net Earnings and Non-U.S. GAAP Adjusted Net Earnings Per Share" "Segment Information," "Reconciliation of U.S. GAAP Net Earnings to Non-U.S. GAAP Total Company Adjusted EBITDA," "Components of Change in Net Sales by Segment," "Components of Changes in Net Sales by Region," "Components of Organic Change in Net Sales by Segment," and "Components of Organic Changes in Net Sales by Region." Information reconciling forward-looking U.S. GAAP measures to non-U.S. GAAP measures is not available without unreasonable effort.

*We have not provided guidance for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain Special Items, including gains and losses on the disposition of businesses, the ultimate outcome of certain legal or tax proceedings, foreign currency gains or losses resulting from the volatile currency market in Venezuela, and other unusual gains and losses. These items are uncertain, depend on various factors, and could be material to our results computed in accordance with U.S. GAAP.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as "anticipates," "believes," "plan," "assumes," "could," "should," "estimates," "expects," "intends," "potential," "seek," "predict," "may," "will" and similar references to future periods. All statements other than statements of historical facts included in this press release regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, expectations regarding the results of restructuring and other programs, anticipated levels of capital expenditures and expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings. The following are important factors that we believe could cause actual results to differ materially from those in our forward-looking statements: the tax benefits associated with the Settlement agreement (as defined in our 2016 Annual Report on Form 10-K), global economic and political conditions, changes in our credit ratings, changes in raw material pricing and availability, changes in energy costs, competitive conditions, the success of our restructuring activities, currency translation and devaluation effects, the success of our financial growth, profitability, cash generation and manufacturing strategies and our cost reduction and productivity efforts, the success of new product offerings, the effects of animal and food-related health issues, pandemics, consumer preferences, environmental matters, regulatory actions and legal matters, and the other information referenced in the "Risk Factors" section appearing in our most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, and as revised and updated by our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

The calculation of the non-U.S. GAAP Adjusted income tax rate is as follows:

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Source: Sealed Air Corporation

For Sealed Air Corporation
Investor Relations
Lori Chaitman, 704-503-8841