Yahoo Finance Sealed Air (SEE) Q2 Earnings Beat Estimates, Sales Miss
Sealed Air Corporation SEE reported second-quarter 2022 adjusted earnings per share of $1.01, which surpassed the Zacks Consensus Estimate of 98 cents. This compares to our estimate of $1.03 for the quarter. The bottom line figure improved 28% year over year on a favorable price/cost spread.
Including special items, the company delivered net earnings per share of 77 cents compared with the prior-year quarter’s 71 cents.
Total revenues were up 6.7% year over year to $1,418 million in the reported quarter. The top line missed the Zacks Consensus Estimate of $1,445 million.
Our estimate for the quarter was $1,460 million. Currency had an unfavorable impact of 4%, while price had a favorable impact of 16.1%. Meanwhile, volumes were down 4.6%.
Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote
Sales in Americas rose 13% year on year, while EMEA and APAC witnessed declines of 4.3% and 3.1%, respectively.
Cost and Margins
Cost of sales climbed 6% year over year to $980 million. Gross profit was $438 million, which marked a 9% improvement from the year-ago quarter’s $401 million. Gross margin expanded to 30.9% from the prior-year quarter’s 30.2%.
The SG&A expenses increased 3.7% from the last-year quarter to $199 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was around $293 million in the quarter, which increased 11.5% from the prior-year period. Adjusted EBITDA margin was 20.7% compared with the prior-year quarter’s 19.8%, courtesy of favorable price/cost spread, partially negated by lower volumes and elevated operating costs.
Segment Performance
Food: Net sales increased 9% year over year to $806 million. Volumes were down 2%, owing to supply disruptions across all regions, while pricing actions had a favorable impact of 15%. Currency fluctuations had an unfavorable impact of 4%. Adjusted EBITDA was $167.6 million, up 6% from the last year’s quarter, as a positive price/cost spread helped offset higher labor and non-material cost inflation.
Protective: The segment reported net sales of $612 million during the quarter under review, up 3% from the prior-year quarter. The divestiture of Reflectix had an unfavorable impact of 2%, while currency had an unfavorable impact of 4%. Pricing had a positive impact of 17%, while volumes slumped 8% owing to normalizing demand trends in the industrial and fulfillment markets and the impact of the COVID lockdowns in China. The segment’s adjusted EBITDA increased 18% year over year to $126 million, driven by a favorable price/cost spread, partially offset by lower volumes and labor and non-material inflation.
Financial Updates
Cash flow from operating activities was around $213 million in the first half of 2022 compared with $199 million in the prior-year comparable period. The company paid cash dividends of $60 million in the first six-month period of 2022 and repurchased 3.9 million shares.
As of Jun 30, 2022, Sealed Air’s net debt was $3.4 billion, up from $3.1 billion as of Dec 31, 2021. As of the end of the second quarter of 2022, the company had $1.4 billion of liquidity available, which comprised $281 million in cash and $1.13 billion of undrawn, committed credit facilities.
2022 Guidance
For 2022, Sealed Air expects net sales between $5.85 billion and $6.05 billion. The company anticipates adjusted EBITDA in the range of $1.22 billion to $1.25 billion.
Adjusted earnings per share is now forecast in the band of $4.05 to $4.20. Sealed Air projects free cash flow to be $510-$550 million for the ongoing year.
Share Price Performance
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In a year's time, Sealed Air’s shares have gained 9.3%, compared with the industry’s growth of 4.7%.
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 Greif Inc. GEF, Titan International TWI and MRC Global MRC. All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 17% in the past year.
Titan International has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 43%.
Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. TWI’s shares have soared 101% in a year.
MRC Global has an expected earnings growth rate of 259% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 24% in the past 60 days.
MRC Global has a trailing four-quarter earnings surprise of 140.8%, on average. MRC’s shares have surged 35% in the past year.
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