Sealed Air Reports First Quarter 2016 Results

• Sales of $1.6 Billion and Adjusted EBITDA of $243 Million or 15.3% of Net Sales
• Adjusted EPS of $0.50; Reported EPS of $0.46
• Reaffirm 2016 outlook for Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow

CHARLOTTE, N.C.--(BUSINESS WIRE)--Apr. 28, 2016-- Sealed Air Corporation (NYSE:SEE) today announced financial results for first quarter 2016. Commenting on these results, Jerome A. Peribere, President and Chief Executive Officer, said, "Our first quarter results were in line with the guidance we provided on February 10, 2016 for sales and Adjusted EBITDA of approximately $1.6 billion and $245 million, respectively. We delivered first quarter net sales on positive volume and favorable price/mix despite the ongoing economic instability in Latin America. As we anticipated, Adjusted EBITDA was negatively impacted by currency headwinds, divestitures and product rationalization efforts, and formula pricing in our Food Care division. Looking ahead, we are on track to achieve our 2016 outlook for net sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow and expect our results to strengthen throughout the year. Strong customer acceptance of our new and innovative product portfolios across all divisions, positive trends in the global protein market and rapid growth in e-Commerce, combined with our ongoing commitment to productivity gains, will drive future performance."

Unless otherwise stated, all results compare first quarter 2016 results to first quarter 2015 results. Year-over-year financial discussions present operating results as reported, and on an organic or constant dollar basis. Constant dollar refers to unit volume and price/mix performance and excludes the impact of currency translation from all periods referenced. Organic refers to unit volume and price/mix performance and excludes the impact of currency translation and the results from the divestiture of the North American foam trays and absorbent pads business, which was divested on April 1, 2015, and the divestiture of the European food trays business in November 2015 (together "divestitures"), 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 special items, such as restructuring charges, Venezuela remeasurement, cash-settled stock appreciation rights ("SARs") granted as part of the Diversey acquisition and certain other infrequent or one-time items. Please refer to the financial statements included with this press release for a reconciliation of Non-U.S. GAAP to U.S. GAAP financial measures.

First Quarter 2016 Highlights

• Food Care organic sales volumes increased 1.6% on volume growth of 3.7% in North America and 3.5% Europe, Middle East and Africa (EMEA). Growth in these regions was partially offset by a 6% volume decline in Latin America reflecting economic instability in Venezuela and Brazil. Sales price/mix was favorable 0.7% due to positive trends in EMEA and Latin America. Food Care continued to experience strong product adoption and increased market penetration of advanced packaging solutions. Food Care Adjusted EBITDA of $148 million, or 19.3% of net sales, was negatively impacted by higher non-material manufacturing expenses, divestitures of non-core assets, unfavorable currency translation, and formula pricing, which were partially offset by positive volume trends and restructuring savings. In 2015, Food Care completed divestitures of non-core assets, which resulted in a decrease of $67 million of net sales and $14 million of Adjusted EBITDA in the first quarter 2016.
• Diversey Care net sales results were driven by favorable price/mix of 1.7% with positive trends across all regions. Volumes grew by 4% in Asia Pacific and Latin America, offset by weakness in the Middle East related to political unrest, and declines in North America due to lower sales into our distribution channel and the ERP implementation. The Company expects North America to return to growth for the remainder of the year as sales within its core customer base and to new customers increase primarily in the food service and food retail sectors. Higher expenses related to targeted investments and unfavorable currency translation more than offset positive price/mix and cost spread and restructuring savings, resulting in Adjusted EBITDA of $36.3 million, or 8.2% of net sales.
• Product Care sales volumes increased 1.0% in the quarter with more than 6% volume growth in EMEA and essentially flat trends in North America. These results were attributable to ongoing strength in the e-Commerce and third party logistics markets offset by rationalization efforts and weakness in the manufacturing and electronics sectors. Rationalization efforts in Latin America and North America are completed, while those efforts in EMEA are expected to continue through the second quarter 2016. While sales were relatively unchanged, Product Care increased Adjusted EBITDA to $77 million, or 21.0% of net sales. Margins expanded 90 basis points primarily as a result of positive volume trends partially offset by unfavorable currency translation.

First Quarter 2016 Summary

First quarter 2016 net sales of $1.6 billion decreased 8.9% on an as reported basis and 2.4% on a constant dollar basis, but increased 1.5% on an organic basis. Currency had a negative impact on net sales of $113 million in the first quarter. On a regional basis, in constant dollars, Latin America increased 9.2% and Asia Pacific was up 0.8%. On an organic basis, EMEA increased 3.4% and North America declined 2.0% in the first quarter.

Adjusted EBITDA for the first quarter 2016 was $243 million, or 15.3% of net sales, compared to $284 million, or 16.3% of net sales, in first quarter 2015. Adjusted EBITDA results in the first quarter 2016 were negatively impacted by currency of $18 million, and divestitures of $14 million. Organic performance reflected positive volume trends and restructuring savings, which were more than offset by higher non-material manufacturing expenses as well as salary and wage inflation.

First quarter 2016 net earnings on a reported basis were $91.9 million, or $0.46 per diluted share as compared to $97.2 million, or $0.46 per diluted share in the first quarter 2015. Net earnings in the first quarter 2016 included $6.3 million of special items, primarily consisting of other costs associated with our restructuring programs, as well as a loss on the divestiture of our European food trays business and a loss on the remeasurement of our Venezuelan subsidiaries. Net earnings in the first quarter 2015 included $17.4 million of special items, primarily consisting of restructuring and other associated costs. Adjusted EPS was $0.50 for the first quarter 2016. This compares to Adjusted EPS of $0.54 in the first quarter 2015.

The effective tax rate in the first quarter of 2016 was 18.2%, compared to the effective tax rate of 26.0% in the first quarter of 2015. The Adjusted Tax Rate was 21.5% in the first quarter 2016, compared to 25.2% in the first quarter 2015. The reduction in the effective and Adjusted Tax Rates reflected the Company's ability to repatriate earnings in a tax-efficient manner and a more favorable earnings mix with earnings in jurisdictions with lower tax rates. The reduction in the effective rate was also attributable to the release of certain reserves due to the expiration of the statute of limitations and settlements with taxing authorities.

For the first time since 2010, the Company announced that the Board of Directors approved an increase in the Company's quarterly dividend. The dividend was increased by 23%, from $0.13 per share to $0.16 per share. The Company also repurchased 0.7 million shares of its common stock for approximately $32 million in the first quarter of 2016. The average diluted shares outstanding as of March 31, 2016 were 197 million as compared to 212 million shares as of March 31, 2015.

Cash Flow and Net Debt

Cash flow provided by operating activities in the first three months of 2016 was $4 million, which is net of $19 million of restructuring payments. This compares with cash provided by operating activities of $325 million in the first three months of 2015. In March 2015, the Company received a tax refund of $235 million related to the payment of funds in connection with the Settlement agreement (as defined in our 2015 Annual Report on Form 10-K). Excluding the tax refund, cash flow provided by operating activities in the first three months of 2015 was $90 million, which is net of $22 million of restructuring and $4 million of SARs payments. The anticipated decline in cash flow in the first three months of 2016 compared to the same period a year ago was primarily due to working capital and lower net earnings.

Free Cash Flow, defined as net cash provided by (used in) operating less capital expenditures, was an outflow of $48 million in the first three months of the year. This compares to an inflow of $69 million in the first three months of 2015, excluding the Settlement agreement and excess tax benefit. Capital expenditures increased as planned to $52 million in the first three months of 2016 and compares to $21 million in first three months of 2015.

Compared to December 31, 2015, the Company's net debt increased $182 million to $4.4 billion as of March 31, 2016. This increase in borrowings primarily resulted from a use of working capital, higher capital expenditures, and amounts paid for share repurchases and dividends.

Reaffirm Outlook for Full Year 2016

The Company reaffirms its guidance provided on February 10, 2016 for Net Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow. For the full year 2016, the Company is on track to achieve approximately $6.8 billion in Net Sales and $1.17 to $1.19 billion in Adjusted EBITDA. The outlook for Adjusted EPS is unchanged and is expected to be in the range of $2.52 to $2.60. The outlook assumes an Adjusted Tax Rate of 24%. Adjusted EPS guidance excludes the impact of special items. The Company continues to anticipate 2016 Free Cash Flow to be approximately $550 million, including capital expenditures of approximately $275 million and cash restructuring payments of approximately $110 million.

Business

Sealed Air Corporation creates a world that feels, tastes and works better. In 2015, the Company generated revenue of approximately $7.0 billion by helping 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, Bubble Wrap® brand cushioning and Diversey® cleaning and hygiene solutions, enables a safer and less wasteful food supply chain, protects valuable goods shipped around the world, and improves health through clean environments. Sealed Air has approximately 23,000 employees who serve customers in 169 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 Adjusted Net Earnings and EPS, net sales on a "constant dollar" or "organic" basis, Adjusted Gross Profit, Adjusted Operating Profit, 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 certain specified items ("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 non-U.S. GAAP measures to U.S. GAAP 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 Condensed Consolidated Statements of Operations to Non-U.S. GAAP Adjusted Condensed Consolidated Statements of Operations and Non-U.S. GAAP Adjusted EBITDA," "Segment Information," "Reconciliation of Non-U.S. GAAP Total Company Adjusted EBITDA to U.S. GAAP Net Earnings from Continuing Operations," "Components of Change in Net Sales by Segment," and "Components of Changes in Net Sales by Region." Information reconciling forward-looking non-U.S. GAAP measures to U.S. GAAP measures is not available without unreasonable effort.

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 2015 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, 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 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.