Sealed Air Reports Fourth Quarter and Full Year 2015 Results

• 2015 Adjusted EBITDA of $1.17 Billion or 16.7% of Net Sales; Free Cash Flow of $595 Million
• 2015 Adjusted EPS of $2.59, compared to Adjusted EPS of $1.86 in 2014; 2015 Reported EPS of $1.62, compared to 2014 Reported EPS of $1.20
• Company Provides Full Year 2016 Outlook for Net Sales, Adjusted EBITDA, Adjusted EPS and Free Cash Flow

CHARLOTTE, N.C.--(BUSINESS WIRE)--Feb. 10, 2016-- Sealed Air Corporation (NYSE:SEE) today announced financial results for fourth quarter and full year 2015. Commenting on these results, Jerome A. Peribere, President and Chief Executive Officer, said. “In 2015, net sales increased 3% on an organic basis to $7.0 billion. Adjusted EBITDA margins expanded 230 basis points and Free Cash Flow was $595 million. This is the third consecutive year where we executed on our commitments and delivered year-over-year operational improvements irrespective of the economic environment. In 2016, we estimate organic net sales growth of 3.5%, and adjusted EBITDA to be in the range of $1.17 billion to $1.19 billion, an organic increase of 7% to 9%. Additionally, we expect to generate approximately $550 million in Free Cash Flow in 2016 including a planned increase in capital expenditures to $275 million from $184 million in 2015. Our performance in 2016 will be driven by ongoing productivity improvements, further adoption of our more advanced product portfolio, and early successes with our Change the Game initiatives. All of this will accelerate future growth and drive margin expansion,” continued Mr. Peribere.

Unless otherwise stated, all results compare fourth quarter 2015 results to fourth quarter 2014 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.

Full Year 2015 Highlights

• Food Care delivered positive price/mix of 2.6% with favorable trends across all regions. This was complemented by volume growth of 1.3% primarily attributable to increases in North America, Europe, Middle East and Africa (EMEA) and Asia Pacific. Positive price/mix and volume growth were a result of new product adoption, increased market penetration of advanced packaging solutions and pricing disciplines. Food Care Adjusted EBITDA margins expanded 280 basis points to 20.3% for the full year 2015. This performance was attributable to favorable mix and price/cost spread, higher volumes, as well as cost synergies, partially offset by unfavorable currency translation, higher non-material inflationary costs and divestitures. In 2015, Food Care completed divestitures of non-core assets, which resulted in a decrease of $172 million to net sales and $33 million to Adjusted EBITDA.
• In Diversey Care, favorable price/mix was 1.9% and volume increased 1.2%. Favorable price/mix was positive across all regions and volume increased in North America, EMEA and Asia Pacific. This performance was attributable to growth within its core customer base and new customer wins primarily in healthcare, building service contractors and food and retail services sectors. Adjusted EBITDA margins expanded 30 basis points to 11.6% for the full year 2015. Margin performance was due to favorable mix and price/cost spread and cost synergies, partially offset by unfavorable currency translation and higher expenses related to targeted investments in sales and marketing, research and development, and the acquisition of Intellibot.
• In Product Care, strong growth in the e-Commerce and third party logistics markets were offset by rationalization efforts in North America, Latin America and to a smaller extent in EMEA, and weakness in the industrial sectors. This led to a 2.3% decline in volume, partially offset by favorable price/mix of 1.4% for the full year 2015. Price/mix was favorable across all regions. Product Care substantially completed its rationalization efforts in Latin America and its efforts in North America and EMEA are expected to continue through the first half of 2016. While sales declined slightly, Product Care expanded Adjusted EBITDA margins 310 basis points to 20.8% for the full year 2015. This performance was primarily attributable to favorable mix and price/cost spread and cost synergies, partially offset by lower volumes and unfavorable currency translation.

Fourth Quarter and Full Year 2015 Summary

Fourth quarter 2015 net sales of $1.75 billion decreased 11.1% on an as reported basis and 1.5% on a constant dollar basis. For the full year 2015, net sales totaled $7.0 billion, a decrease of 9.3% as reported and 0.6% in constant dollars. Currency had a negative impact on net sales of $190 million in the fourth quarter and $764 million in 2015. Food Care related divestitures also had a negative impact on net sales in the quarter and in 2015. Adjusting for currency translation and divestitures, organic net sales growth was 1.7% in the fourth quarter and 2.8% in the full year as a result of favorable price/mix trends on essentially flat volumes.

On a regional basis, Latin America increased 7.0% on a constant dollar basis in the fourth quarter, and 6.3% for the year. Asia Pacific was essentially flat in the quarter and up 2.4% in constant dollars for the year. On an organic basis, North America declined 0.1% in the fourth quarter and increased 1.6% in 2015, while EMEA was up 2.8% and 3.2% for the fourth quarter and full year, respectively. Food Care and Diversey Care increased sales in North America in the quarter and for the full year.

Adjusted EBITDA for the fourth quarter 2015 was $282 million, or 16.1% of net sales, compared to $282 million, or 14.3% of net sales, in fourth quarter 2014. Adjusted EBITDA results were negatively impacted by currency of $30 million, and divestitures of $11 million. Adjusted EBITDA margins expanded 180 basis points compared to the fourth quarter of 2014. The year-over-year margin increase was primarily attributable to favorable mix and price/cost spread, cost synergies, partially offset by unfavorable currency translation and the impact of divestitures. Excluding currency translation and the impact of divestitures, Adjusted EBITDA delivered organic growth of 14.9% in the fourth quarter.

Full year 2015 Adjusted EBITDA was $1.17 billion, or 16.7% of net sales, compared to $1.12 billion, or 14.4% of net sales, in 2015. Adjusted EBITDA results were negatively impacted by currency of $126 million, and divestitures of $33 million. Adjusted EBITDA margins expanded 230 basis points compared to last year. The 2015 margin increase as compared to 2014 was attributable to favorable mix and price/cost spread and cost synergies, partially offset by higher SG&A costs, unfavorable currency translation and the impact of the divestitures. Excluding currency translation and the impact of divestitures, Adjusted EBITDA delivered organic growth of 19.2% for the full year.

Fourth quarter 2015 net earnings on a reported basis were $124 million, or $0.62 per diluted share as compared to $66 million, or $0.31 per diluted share in the fourth quarter 2014. Net earnings in the fourth quarter of 2015 included $27 million of special items, primarily consisting of restructuring and other associated costs, as well as a loss on the divestiture of our European food trays business. Net earnings in the fourth quarter of 2014 included $60 million of special items, primarily consisting of restructuring and other associated costs, and loss on debt redemption and refinancing activities. Adjusted EPS was $0.76 for the fourth quarter 2015. This compares to Adjusted EPS of $0.59 in the fourth quarter 2014. The Adjusted Tax Rate was 7.6% in the fourth quarter 2015, compared to 9.2% in the fourth quarter 2014. The reduction in the Adjusted Tax Rate was primarily attributable to the recording of net foreign tax credits that were previously deemed not recognizable and a more tax efficient means to repatriate offshore earnings.

Full year 2015 net earnings on a reported basis were $335 million or $1.62 per diluted share as compared to $258 million, or $1.20 per diluted share in the full year 2014. Net earnings in 2015 included $201 million of special items, primarily consisting of restructuring and other associated costs, loss on debt redemption and refinancing activities, as well as a tax reserve recorded in relation to the tax refund received on the Settlement agreement (as defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014), partially offset by the release of certain tax reserves recorded at the time of the Diversey Holdings, Inc. acquisition, for which the statute of limitations had expired. Net earnings in 2014 included $141 million of special items, primarily consisting of restructuring and other associated costs, and loss on debt redemption and refinancing activities. Adjusted EPS was $2.59 for 2015. This compares to Adjusted EPS of $1.86 in 2014. The Adjusted Tax Rate was 20.2% in the full year 2015, compared to 22.1% in the full year 2014. The reduction in the Adjusted Tax Rate had a favorable impact on adjusted EPS of $0.06 and was primarily attributable to the recording of net foreign tax credits that were previously deemed not recognizable and a more tax efficient means to repatriate offshore earnings.

In 2015, the Company repurchased approximately 16.1 million shares of its common stock for approximately $802 million. The average diluted shares outstanding as of December 31, 2015 was 207 million as compared to 214 million as of December 31, 2014.

Cash Flow and Net Debt

Cash flow provided by operating activities in 2015 was $968 million. In March 2015, the Company received a tax refund of $235 million related to the payment of funds in connection with the Settlement agreement. Excluding the tax refund, cash flow provided by operating activities in 2015 was $733 million, which is net of $98 million of restructuring and $21 million of SARs payments. This compares with cash used by operating activities of $215 million in 2014, which is net of $108 million of restructuring, $21 million of SARs payments and $930 million related to the Settlement agreement. Capital expenditures were $184 million in the full year 2015 compared to $154 million in 2014.

Free Cash Flow, defined as net cash provided by (used in) operating activities (excluding the Settlement agreement and excess tax benefit) less capital expenditures, was an inflow of $595 million in 2015, compared with $599 million in 2014. The decrease was attributable to unfavorable currency impact, changes in other assets and liabilities and higher capital expenditures, partially offset by lower interest payments and higher earnings.

Compared to December 31, 2014, the Company’s net debt increased $73 million to $4.2 billion as of December 31, 2015. This increase was primarily a result of amounts paid for share repurchases and dividends, partially offset by cash reflecting the tax refund related to the Settlement agreement payment and cash generated from operating activities.

Outlook for Full Year 2016

The Company estimates net sales to be approximately $6.8 billion for the full year 2016, which assumes an unfavorable impact of approximately $400 million or 6% from foreign currency translation. Adjusted for unfavorable currency and a $102 million decline related to 2015 divestitures, net sales in 2016 are expected to increase approximately 3.5% on an organic basis.

Adjusted EBITDA is estimated to be in the range of $1.17 billion to $1.19 billion, which assumes $65 million of unfavorable currency translation. On an organic basis, which excludes unfavorable currency and a reduction of $21 million related to 2015 divestitures, Adjusted EBITDA is expected to increase in the range of 7% to 9%.

Adjusted EPS 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 anticipates 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 2014 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.