Earnings call transcript: Sealed Air Q2 2025 Earnings Beat Expectations

Sealed Air Corporation (SEE) reported its second-quarter earnings for 2025, surpassing analyst expectations with an adjusted EPS of $0.89 against a forecast of $0.71, marking a 25.35% surprise. Revenue reached $1.34 billion, slightly above the anticipated $1.31 billion. The company’s stock price reacted positively, increasing by 4.59% to $30.01 in pre-market trading. According to InvestingPro data, the company maintains a "GOOD" financial health score of 2.58, with particularly strong profitability metrics.

Key Takeaways

• Sealed Air’s Q2 2025 EPS exceeded forecasts by 25.35%.
• Revenue also surpassed expectations, reaching $1.34 billion.
• The stock price rose by 4.59% in pre-market trading.
• The company maintained its full-year sales and adjusted EBITDA guidance.
• Strategic initiatives include R&D transformation and manufacturing optimization.

Company Performance

Sealed Air’s performance in Q2 2025 demonstrated resilience despite a challenging market environment. The company reported net sales of $1.34 billion, a slight decline of 1% on a constant currency basis. However, adjusted EBITDA increased by 3%, reflecting operational efficiencies. This performance is notable given the broader industry trends, such as decreased global protein production and shifting consumer spending habits.

Financial Highlights

• Revenue: $1.34 billion, down 1% on a constant currency basis year-over-year.
• Adjusted EBITDA: $293 million, up 3% on a constant currency basis.
• Adjusted EPS: $0.89, up 7% as reported, 10% on a constant currency basis.

Earnings vs. Forecast

Sealed Air’s Q2 2025 results exceeded expectations, with an EPS of $0.89 compared to the forecasted $0.71, resulting in a 25.35% surprise. Revenue also came in higher than anticipated at $1.34 billion versus the expected $1.31 billion. This marks a significant achievement, as the company continues to outperform its projections.

Market Reaction

Following the earnings announcement, Sealed Air’s stock price increased by 4.59% to $30.01 in pre-market trading. This positive market reaction reflects investor confidence in the company’s ability to deliver strong financial results amidst challenging conditions. The stock is trading closer to its 52-week high of $38.85, indicating a robust recovery from its 52-week low of $22.78. InvestingPro analysis suggests the stock is currently undervalued, with analysts setting price targets ranging from $31 to $50. The stock also offers an attractive free cash flow yield, one of several key metrics available in the comprehensive Pro Research Report.

Outlook & Guidance

Sealed Air maintained its full-year sales guidance of $5.1 to $5.5 billion and adjusted EBITDA guidance of $1.075 to $1.175 billion. The company expects adjusted EPS to be slightly above the midpoint of its $2.90 to $3.30 range. Strategic initiatives include a focus on R&D transformation and manufacturing optimization to drive long-term growth.

Executive Commentary

CEO Dustin Simak emphasized the company’s strategic focus: "We are on the right path. Our priorities are unchanged and remain keeping the customer front and center, operating with urgency, driving further productivity, and transforming the business to deliver long-term sustainable growth." Interim CFO Ronnie Johnson highlighted the disciplined approach to capital deployment, stating, "We continue to improve our discipline around capital deployment, reducing our outlays while improving our returns."

Risks and Challenges

• Supply Chain Disruptions: Ongoing global supply chain issues could impact production and delivery.
• Market Saturation: Increased competition in key segments may affect market share.
• Macroeconomic Pressures: Fluctuating consumer spending patterns and economic conditions could influence demand.
• Protein Production Decline: A 1% drop in global protein production may affect the Food segment.
• Cost Pressures: Rising costs could impact profitability despite cost-saving measures.

Q&A

During the earnings call, analysts inquired about the impact of the cattle cycle on the Food segment and the company’s strategy for external R&D partnerships. Pricing pressures in the Protective segment and the performance of the industrial portfolio were also discussed, providing insights into the company’s operational strategies and market positioning.

Full transcript - Sealed Air Corporation (SEE) Q2 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Second Quarter twenty twenty five Sealed Air Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during your session, you will need to press 11 on your telephone.

You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 11 again. Please be advised that today’s conference call is being recorded. I would now like to hand the conference over to your first speaker today, Mark Stone, Vice President, Investor Relations. Please go ahead.

Mark Stone, Vice President, Investor Relations, Sealed Air: Thank you, and good morning, everyone. This is Mark Stone, CEO of Air’s Vice President, Investor Relations. With me today are Dustin Simak, our President and CEO and Ronnie Johnson, our Interim CFO. Before we begin our call, I would like to note we have provided a slide presentation to supplement today’s discussion. This presentation, along with our second quarter earnings release, is available to download from our Investor Relations page on our website at sealedair.com.

I’d like to remind everyone that during today’s call, we make forward looking statements, including our outlook or estimates for future periods. These statements are based solely on information that is currently available to us. Please review the information in the forward looking statements section of our earnings release and slide presentation. These sections also apply to this call. Our future performance may differ due to a number of factors.

Many of these factors are listed in our most recent filings with the SEC. Additionally, we will discuss financial measures that do not conform to U. S. GAAP. Information on these measures and their reconciliation to U.

S. GAAP can be found in our earnings release or the appendix of our slide presentation. I will now turn the call over to Dustin. Operator, please turn to slide three.

Dustin Simak, President and CEO, Sealed Air: Thank you, Mark. Good morning, everyone, and thank you for joining our second quarter earnings call. Today, I will give an update on our leadership team, the impacts of shifting global trade policies on the markets we serve and our ongoing transformation. Later, Ronnie will provide an update on our financial results and details on our outlook. Yesterday, we announced that for a thorough search process, Kristin Actis Grande will be Hildare’s new Chief Financial Officer.

We are excited to have Kristen come on board later this month and leverage her experience driving transformations across complex manufacturing and distribution businesses to accelerate the transformation we are driving here at Silverdair. She has a proven track record of creating shareholder value, and I’m looking forward to the impact she will make across both of our businesses, food and protective. I want to personally thank Ronnie for all her contribution during this interim period. Ronnie has been a trusted business partner since I joined the company, and I’m deeply grateful for her willingness to step up and support me through my transition to CEO, all while continuing to advance our finance strategy and drive outcomes across the business. She will continue to be an integral part of our leadership team.

My sincerest thank you to you, Ronnie. Moving on to trade policies. Since our discussion in May, we continue to monitor the changing global trade landscape. As a reminder, we are largely domestic production for domestic consumption, and most of our products remain exempt under USMCA, both of which position us well against direct tariffs. The net impact of tariffs was not material to our second quarter results.

While the situation remains dynamic, the second quarter was more stable than expected with a pause on broader tariff decisions until the third quarter. However, there are pockets of the business, particularly certain specialty resins that are procured for partners in countries being impacted by increased tariffs. We continue to focus on mitigating the impact of tariffs through production and procurement optimization and limited pricing actions. The net tariff impact included in our second half outlook is minimal, and we will continue to provide updates as the longer term impact becomes more clear. Let’s now move to economic outlook and discuss each of our market focused business segments.

Globally, are closely watching our end markets to understand the extent of demand impacts due to lower economic growth outlooks, shifting industrial production, and changes in consumer spending patterns on the back half of this year and on a go forward basis. Beginning with our Protective segment. We continue to be in full swing in our turnaround and are seeing early signs of progress. As a reminder, last year, most of our efforts were focused on our new go to market strategy with a strong emphasis on getting closer to our customers and executing well against the basics. We stepped up our field engagement, invested in frontline sales, refreshed our commercial excellence programs, and reorganized our teams.

We are beginning to see the impact of our actions and our results. Our second quarter volumes were down 2%, with Protective’s Industrial portfolio up slightly, marking the most stable year on year quarterly volume results we’ve delivered since 2021. Additionally, sales were up 4% sequentially and adjusted EBITDA was up 6% sequentially, marking the second quarter in a row with sequential adjusted EBITDA growth, and the first time in two years we have seen sequential growth in sales and adjusted EBITDA. We remain focused on getting closer to and reestablishing trust with our distribution partners and customers. As a part of that effort, I continue to spend time in the field.

More importantly, they are also recognizing the step change in field alignment and engagement. We will continue to build on this momentum as we progress throughout the second half. While turnarounds are typically nonlinear, this is a step in the right direction, and we plan on continuing to control the controllables by improving business fundamentals irrespective of market conditions. We are expanding our go to market strategies more fully across Protective’s EMEA and Asia footprint, and we’ll share more on the rest of the world go to market strategy as we make further progress. We continue to work on addressing fiber portfolio gaps in our Protective business as we advance towards a substrate agnostic solution set.

Our previously announced Jiffy embossed paper mailer is gaining traction in the market and our hybrid auto vac solution that can run either fiber or poly materials is being brought to market now. The process of bringing these innovations to market has led us to further transform our research and development strategy to increase our use of external partners and suppliers. This will reduce time to market and ensure we are addressing our customers’ most pressing challenges faster. This is especially important during a period where we are focused on paying down debt and are not actively leveraging M and A to bolt on new solutions. Lastly, we continue to optimize Protective’s network to improve customer service and quality.

We recently opened a Lakeland, Florida manufacturing facility to better serve our customers in the Southeast Of The U. S. We are assessing the entire manufacturing footprint to identify additional opportunities to enhance service and quality, while improving our cost positions. Our network optimization efforts will be outlined in more detail over the coming quarters. While we over delivered in the volume in the first half against expectations, and expect our turnaround in Protective to continue to deliver iterative progress, we are being prudent on expectations for the second half, reflecting the market uncertainty ahead of us amid global trade policies that have lower growth expectations across many markets, but primarily in The US.

Transitioning to food. Our food business remains resilient and continue to perform throughout the 2025, despite market pressures accelerating in the second quarter. As a reminder, our Food business is focused on serving fresh protein markets across industrial food processing, retail and foodservice. Our International business, while tempered from a market perspective, continues to perform well and we expect full year volume growth outside The U. S.

As we capitalize on opportunities. Our EMEA region is a standout, where we have continued to take share in the market throughout the 2025, building on momentum coming out of 2024. The pressures on the North American market that we outlined at the beginning of the year accelerated in the second quarter, putting even more pressure on the second half. I’ll start by focusing on the demand side before shifting to the supply side dynamics. Despite choppy consumer sentiment, consumer spending continues to be relatively stable in The US.

What is shifting, however, is where consumers are placing their dollars, especially as inflation continues to escalate across all food categories. The overarching theme is a shift into value grocery, which is affecting each of our end markets. These changes are particularly pronounced in lower and middle income households. Within industrial food processing, the shifting spend landscape is resulting in pressure on premium beef cuts. Consumers are trading down to lower end cuts in ground beef.

While the shift is compressing our shrink bag volumes, it’s being partially offset by a pickup in our retail solutions. Within retail, the shift is away from high end consumer packaging good brands into private label, away from the deli counter to prepackaged goods, and from smaller portions into more economical bulk and family size packaging formats, reducing the packaging volume per protein weight sold. Overall, changes in consumer spending are resulting in lower outlooks for foodservice, with a mix shift from fast casual and quick service restaurants into retail, where we have a broad solution set and increasing focus, but lower market share than our industrial and foodservice portfolios. We continue to bring new solutions that include new packaging formats, expanded printing capabilities, and enhanced equipment offerings to capture more demand. While we are making progress, this strategy will take time to fully capture the market opportunity ahead of us.

Shifting to the supply side. The U. S. Beef slaughter rates are declining at an accelerated pace, leading to volatility in the beef markets. While we’ve been closely watching the North American beef cycle, which are at fifty year lows, this quarter we saw an inflection point in the market, with slaughter rates decreasing 7%, worse than our previous expectations of down 1% for the quarter.

This second quarter USB production and a softer second half is now resulting in lower full year volume assumptions compared to what we anticipated at the start of the year. While herd rebuilding has begun, it’s only the first step in a lengthy return to a more normalized and predictable part of the cattle cycle. As a reminder, the time between heifer retention and the resulting cattle going to market is approximately three years. An improved FX outlook on the weaker U. S.

Dollars helping to offset the top line softness in North America. And as a result, we are reiterating our sales guidance. As we mentioned during the last call, with the anticipated slowdown in The U. S. Market and the visibility we have into the structures that support each business, we continue to further streamline each business to make them fit for purpose for their respective long term strategies.

The overarching themes remain simplifying our organization, moving closer to the markets we serve, and becoming easier to do business with, which will result in long term sustainable growth in earnings. Shifting gears. I continue to be pleased with our disciplined approach to capital allocation. We are below $4,000,000,000 of net debt for the first time since the 2022. We are on track for the full year free cash flow guidance, but we’ll continue to solely focus on debt pay down.

Before turning the call to Ronnie to review our second quarter financial results, I’d like to reiterate my confidence that as an organization, we are on the right path. Our priorities are unchanged and remain keeping the customer front and center, operating with urgency, driving further productivity and transforming the business to deliver long term sustainable growth. Ronnie?

Ronnie Johnson, Interim CFO, Sealed Air: Thank you, Dustin, and good morning, everyone. Let’s turn to slide four to review Sealed Air’s second quarter performance. As Dustin mentioned, we executed well in the quarter and came in ahead of expectations. Net sales were 1,340,000,000 in the quarter, down 1% on a constant currency basis. Adjusted EBITDA in the quarter was $293,000,000 up 3% on a constant currency basis.

Adjusted earnings per share in the quarter of $0.89 was up 7% as reported and 10% on a constant currency basis. Our adjusted tax rate was 24.4% compared to 25.5% in the same period last year. Our weighted average diluted shares outstanding in the quarter was 147,000,000. Turning to slide five. During the second quarter, volumes were down 2% across both businesses.

Food volume weakness was primarily due to softer than anticipated volumes for industrial food processing, predominantly in North America. Protected volumes were down 2% in the second quarter, our lowest volume reduction since the 2021. The fulfillment portion of the portfolio, which represents about 40% of the Protective business, was down mid single digits as we lapped the tail end of material customer churn. The fulfillment declines were partially offset by volume increases within the Industrial portfolio. Price was up 50 basis points, primarily on formula contract pricing in Food, which was partially offset by pricing declines in Protective of about 2%.

Second quarter adjusted EBITDA of $293,000,000 increased 3% on a constant currency basis. Margin of 22% was up 70 basis points. This performance was mainly driven by cost takeout, productivity efficiencies and a one time benefit of $7,000,000 from a lease buyout related to G and A network optimization, partly offset by unfavorable net price realization. Moving to slide six. In the second quarter, Food net sales of $896,000,000 were flat as favorable pricing and formula pass throughs were offset by softer volumes.

As Dustin mentioned, protein markets decelerated more rapidly than we initially anticipated entering the quarter. The global protein markets we serve were down approximately 1%, the largest of which was The U. S. Beef cycle, which was down 7%. Despite these market headwinds, our case ready retail solutions benefited from prior share gains with volume up slightly.

From a regional standpoint, Food’s EMEA and Asia businesses showed strength with volumes up low single digits in both regions. Food adjusted EBITDA of $210,000,000 in the second quarter was up 3%. Adjusted EBITDA margin remained strong at 23.4%, up 50 basis points compared to last year. The increase in adjusted EBITDA was primarily driven by productivity and cost takeout savings, combined with favorable net price realization. These were partially offset by lower volumes.

Protective second quarter net sales of $439,000,000 were down 3% as reported and 4% in constant currency. While volumes declined 2% overall, declines in our fulfillment portfolio were partially offset with slight growth within our industrial portfolio. Protected adjusted EBITDA of $78,000,000 was down 5% in the second quarter reported. Adjusted EBITDA margin of 17.8% was up 20 basis points from the first quarter. On a year over year basis, cost takeout and productivity savings partially offset negative net price realization.

Now let’s turn to free cash flow and leverage on slide seven. During the six months, we generated $81,000,000 in free cash flow as compared to $2.00 $7,000,000 in the first six months of twenty twenty four. The primary driver of this anticipated reduction was an increase in incentive compensation payments and the timing of tax payments, partially offset by lower interest payments and capital expenditures. At the end of the quarter, our total liquidity position was $1,200,000,000 including $354,000,000 in cash and approximately $830,000,000 available under our revolver. Our net leverage ratio was 3.6 times.

We remain on track to drive net debt to adjusted EBITDA to approximately three point zero times by the 2026. Let’s turn to slide eight to review our outlook. We continue to operate in a low visibility and more volatile environment within both our Food and Protective businesses. As a result, the strong first half performance and improved foreign currency assumptions will be offset by softer volume expectations, primarily in Food, in the second half and slightly lower pricing across both segments due to deflationary raw materials driven by the global trade impacts. Foreign currency impacts are now expected to be approximately 1% better than anticipated in our previous outlook.

We are maintaining our previous sales guidance range of 5,100,000,000.0 to $5,500,000,000 and adjusted EBITDA guidance range of 1,075,000,000.000 to 1,175,000,000.000 Our net price realization assumptions across the total company remain relatively consistent for the full year. We regularly monitor legislative changes to determine impacts to the company’s performance. In early July, the One Big Beautiful Bill Act was signed. We are currently evaluating the impact of these provisions and their impact on our effective tax rate and cash tax payments. For now, we still expect our adjusted tax rate to be ranged between 2627% for the year.

Based on our outperformance in the 2025, we now expect adjusted earnings per share for the year to be slightly above the midpoint of our previous guidance range of $2.9 to $3.3 per share. Lastly, regarding free cash flow, we are maintaining the midpoint of our previous guide of $400,000,000 We continue to improve our discipline around capital deployment, reducing our outlays while improving our returns. As a result, we expect capital expenditures to come in lower than our original expectations, though slightly offset by higher working capital. While our cash generation was more linear in 2024, we typically generate more cash in the second half of the year, mainly due to the seasonality of the business. Looking ahead to the third quarter, we remain prudent given the uncertainty around consumer spending primarily in North America, combined with a faster than anticipated deceleration in The U.

S. Beef market. As a result, we expect net sales of approximately $1,300,000,000 adjusted EBITDA of $270,000,000 and adjusted earnings per share around $0.68 With that, Dustin and I welcome your questions. Operator, we would like to begin the Q and A session.

Conference Operator: Thank you. At this time, we will conduct a question and answer Our first question comes from Matt Roberts of Raymond James. Your line is now open.

Matt Roberts, Analyst, Raymond James: Hey, good morning, everybody. Thank you for taking the questions. Dustin, you gave a lot of good color on the beef headwinds. It seems pretty well documented, but certainly appreciate that. What does that translate into volume impact for second half or any annualized impact we should expect in food?

And maybe just broadly, any additional color on protective volume expectations for second half, how about product line or end market? Sounds like you’re seeing good wins there. So maybe any incremental color on new customers or products and lift contribution? And just probably how you’re thinking about volumes for that segment in 3Q and second half? Thank you for taking my Yes,

Dustin Simak, President and CEO, Sealed Air: of course, Matt. And I appreciate the question. So starting with food is in the cattle cycle. As we kind of made comments in the call itself, just keep in mind that the main area that we’re focused on is really where the consumer is at. So I’ll get into the supply side in a second.

But just in general, we talked a lot about is really more on the demand side relative to where consumer spending is. As we mentioned, it’s relatively stable, but where it’s going into retail, especially because you’re seeing parts of food service and parts of industrial processing shift into that end market. And we’re just making sure that we’re positioned to capture that demand. Still very optimistic about where we’re at, what we’re doing to get after it. And so, but I’ll go back to the supply side and I’ll give you more color on that.

So on the cattle cycle itself, just as a reminder, if you think about the business it’s impacting, it’s really about $400,000,000 out of our $3,500,000 right? This is shrink bags that go into the beef end market. Right now for the year, we’re expecting 3% to 4% for 25%, down 3% to 4% for 26%, flat in 27% and then ’28 is sort of return back to growth. Now keep in mind, it’s volatile. As we mentioned, you’re seeing acceleration in herd rebuilding right now, but it’s still slow relative to HEPA retention.

So you’re seeing a little bit more elongation, but a little bit shallow now than our original expectations. But I’ll just reiterate that it’s more volatile as we go forward. But the rate the way to contextualize that if you think about the roughly $400,000,000 and you take the 3% to 4% off that, that’s kind of the year to year headwind. If you think about in the context of a $3,500,000,000 business, we’re still very optimistic that that while it’s a headwind and it’s worth calling out, it’s not something that we can’t overcome as an organization. And that’s what we’re focused on, going back to the end markets that we’re targeting, really trying to rotate more into retail and to foodservice.

If you think about volume expectations in the second half, particularly for the food business, what we’re looking at is roughly down two points relative to where we were. And you’re looking at the volume mix in the second half being around down three points in Q3 and Q4 from a volume perspective. And obviously two points down relative to where we were back in May. And that’s kind of kind of shift overall the business. But most of that’s related to where we see, again, going back to the end of the consumer.

And it’s still too early to talk about 2026 as we’ll have a lot more clarity as we progress throughout Q3 and Q4. So when we shift to Protective, obviously really pleased with our performance in the second quarter. While we’re still down, it is a mark in progress. Our Industrial portfolio took a step up. Fulfillment, as Ronnie mentioned in her commentary, is down mid single digits.

As we think about the second half, so you had to roughly think there’s a couple of points ahead of our own expectations in the second quarter. And what we’ve done as we think about Q3 and Q4 is we really maintained our outlook for the second half despite the overperformance in 2Q. And that’s really just around what Ronnie mentioned during the prepared remarks around just being prudent around the second half as we closely watch our end markets. Now we talked about the industrial portfolio, just to give you some color where some of that the opportunity was. Our CoreView business performed really well.

Our shrink business is performing well. Our Instapack, while still slightly down, performed better than it has over the past, think of it as probably six, seven, eight quarters. And so we’re really pleased. There’s pockets of it. It’s not perfect.

Like I said, it’s holistic with the portfolio level and mixed around each individual region. But again, pleased with where we’re at. And a lot of that benefit is coming from the work as we talked about in North America that we’re now going to be extending across the rest of the world, because that’s where we had the biggest pressure point. The other area as well, I’ll give the last color commentary I’ll give on it is really around our electronics business and end markets that we see there. Very strong in the first half of the year.

And while we’re looking at it, trying to make sure it’s not transitory related pre buying during tariffs, etcetera. It’s what we’re thinking about now is really where is it going to be in the second half. And so far as we’ve gotten off to the start here in Q3, it’s on tracks. We haven’t really seen any shift in the end market dynamics at this point. But again, staying close to it, and really excited about where we’re headed and really positive about what we’ve been able to do in relatively short period of time in terms of really beginning to turn the tide.

Conference Operator: Thank you. Our next question comes from Gansham Pajabi. Your line is now open.

Ghansham Pajabi, Analyst: Hey guys, good morning. I guess, Dustin, on the food business, I mean, you’re pretty much at a high watermark for margins for that segment. With your commentary on food and for the outlook through 2027, etcetera, you know, I have to assume that red meat is more profitable, especially North American beef. You have the tariff uncertainty as it relates to Brazil, etcetera. How should we think about the near term outlook for margins specific to food?

And then also, as you think out to 2627, the natural headwinds associated with this large profitable market being a headwind? Thanks.

Dustin Simak, President and CEO, Sealed Air: Hey Ghansham, good question. So as it relates to kind of food margins where we’re at now, you’re right. I mean, we’re really pleased with where we’re at from overall margin perspective. We’ve talked in the past around shrink bags in general, which is what’s serving that market and the specialty properties around that particular performance of that application and the equipment offers we bring with it. It is a high margin business for us.

What I would tell you is, if I go back to it, you think about ’25 and ’26, and 2027, you’re talking about a $400,000,000 business with a slight impact relative to 3% to 4%. So in the scheme of things relative to our overall shrink bag business, which is about $1,400,000,000 in size, it’s still relatively contained, particularly to North America. And while there is absolutely a margin impact relative to loss of volume associated with that, we still believe the network optimization efforts or transformation efforts relative to productivity are going to continue to buoy and balance out our margins as we have over the past and demonstrated over the past couple of years. So we feel still very confident that we’re not going to have a material mix impact relative to Bags relative to the rest of the business that would bring down margins and that we’re still able to drive earnings power despite that headwind. But again, we’ll continue to monitor as we go forward throughout the second half of the year.

And to understand, it does the outlook for 2016 become more acute or not, but as of right now, down 3% to 4% and that $400,000,000 business within North America, we feel it’s relatively contained and something that we can overcome. And so we’re not as concerned about it. Thank you.

Conference Operator: Thank you. Our next question comes from George Staphos of Bank of America Securities. Your line is now open.

George Staphos, Analyst, Bank of America Securities: Hi, everyone. Thanks for the details. And congratulations on Kristin and Roni. Congratulations to you on all you did in the interim role and your work going forward. I guess my question

Ghansham Pajabi, Analyst: is

George Staphos, Analyst, Bank of America Securities: twofold. One, Dustin, you said that you’re maintaining guidance despite what’s been an accelerated decline in Food. Can you talk about the specific controllables that you’re controlling? So the specific cost outs, things like that, that you expect for the second half, I guess particularly within Food, but wherever you want to talk about what will bolster your earnings in the second half relative to your guidance? Is there a way you can give us a bit of cadence Food versus Protective in third quarter?

And then the second part of the question, your release last night mentioned, and I’m paraphrasing, that one of the reasons that Kristin was selected as CFO is that she has experience creating value with complex portfolios. How does that apply to Sealed Air? Where think do that to be most applicable? Thank you and good luck in the quarter.

Dustin Simak, President and CEO, Sealed Air: Yeah. Thank you, George. So a couple pieces. So as we talked about earlier in the year, we really focused on cost takeout. We cited this roughly $90,000,000 number that we’re well on track to achieve for the full year.

And as we looked in the out years, the hope was at that point in time that we could drive even further operating leverage in the business. And obviously, as our outlook and volume has come down, keep in mind that now a lot of that cost takeout effort is really balancing out earnings to get us to the $11.25 midpoint that we were calling out as the middle part of our guidance. And specifically, lot of these initiatives while we’re continuing to kick off new things, network optimization we mentioned, a couple of the areas that we think will be able to yield benefit in 2026 and 2027 and beyond. Right now, it’s a lot of activities that we’ve been in earnest over the past two years. Areas like that, which we talked about in the past, which is our G and A optimization around our back office in Manila.

That started from concept a year and a half ago as an idea. And now we’re in full swing. The office is open. We’ve already hit our 200 plus employee there. Same thing with Mexico City, which is staggered behind it.

We’re now ramping that up. Those are two examples of it. But there’s a litany of them relative to the reorganization work we’ve done. That’s been able to streamline the organization, delayer it, actually improve accountability, improve speed of decision making, while at the same time driving earnings power in this case, even offsetting some of that volume weakness that we have in the second half. So, it’s a lot of stuff we’ve had in motion and we talked during May around, there’s other opportunity now to continue to do that going into 2026 and 2027 and we’ll continue to work on it.

And as we progress throughout the second half of the year, we’ll give you more color about what’s to come and what does that mean for 2026 going back to even Ghansham’s question in terms of what we can do more to balance out where we see any pressures in the business. We’re now more than ever being really proactive about it and making sure that we have a pipeline of actions that we’re taking that not only improve the business outcomes, but at the same time help balance out the earnings power. So when you think about the question on Kristen, really if you take a step back, she has a background, obviously, spent her entire career in industrials. And lastly, at MSC was doing distribution works. There’s a lot of in our background relative to managing.

If you think about Ingersoll Rand, complex portfolio, international business. If you think about our protected business, complex portfolio, international business. If you think about our food business, very similar, right? So even within underneath the food and protective kind of segments, there’s obviously a lot of complexity in proliferation of solutions and applications we have. And most recently in MSC, she actually led a lot of the transformation work in that business.

And so we think a lot of her direct experience is really applicable here to accelerate the work that we’re already doing and also bring new ideas. If you go back even my own background where I don’t have a natural background in manufacturing except for my time here at Soldier, she really is going to come in and complement that and bring a different lens to what we’re already working on and even bring a new perspective. So we’re really excited about her coming on board. And I’ll just take a moment with that said also, again, just to thank Ronnie for all she did. I appreciate your words there.

I guess she’s done a tremendous job over the past six months.

Conference Operator: Thank you. Our next question comes from Phil Ng of Jefferies. Your line is now open.

Matt Roberts, Analyst, Raymond James: Hey, guys. Congrats on another strong quarter in a dynamic environment. So Dustin, I think you guys kept your outlook for Protective unchanged in the back half despite progress, which makes sense. But are you actually seeing any slowdown in bidding and order activity throughout 2Q and going into July? And then some

Dustin Simak, President and CEO, Sealed Air: of the uptick you’re seeing on

Matt Roberts, Analyst, Raymond James: the industrial side of your portfolio. Can you kind of size up how much of that is internal initiatives versus the cycle turning in? That would be helpful.

Dustin Simak, President and CEO, Sealed Air: Yes. So going down to point about July, as I mentioned, I think it’s early on maybe in the Q and A, we really haven’t seen a change in order pattern, right? And I was talking specifically the time about our fabrication business. But in general, I wouldn’t say we’ve seen a real shift. We’re still on track kind of early here starting in Q3.

And so I feel good about where that business is headed right now. And a lot of that is order entry activity in the market. But keep in mind, Phil, what we’re trying to balance out is that a lot of that’s being driven from the fact that we invest in sales. If you think about just and we’ve lost significant amount of volume since 2019. So we’re going back to customers that we lost.

We’re going to existing customers to expand our business. And so a lot of the work we’ve done in our go to markets was giving us that confidence in our ability to take not just grow existing business, but take share in the marketplace, particularly in areas where we’ve lost it in the past. If I contextualize that with industrial portfolios, what I would tell you is that to me that’s not really a cycle turning. If anything, I would say there’s been more market pressure here recently. If you think about areas like the automotive industry, where our foam and plate solutions used widely, we’re obviously concerned about tariffs and what that could potentially mean for our end markets, but we continue to perform really well.

And I think that speaks to now that we have that go to market motion really beginning to really work beyond the fact, keep in mind too that we’ve also minimized churn and that’s not just a Q2 twenty twenty five, that’s for the past six, seven quarters. It’s really begin to bear itself in the results. And so we’re still cautious obviously about the second half. That’s part of your commentary. We obviously had a beat expectations in 2Q.

We held the second half relative to volume expectations, which implies a slight uptick in volume in Q4. And so we’re kind of heads down and really focused just focused on executing against those internal initiatives. But when I say internal, but keep in mind a lot of this is really just being back out in front of customers, back out in the field, back out engaging with our distribution partners. So it’s really been a lot more about I think engagement is really the first wave of that benefit when some of these other things are going to continue to yield. And I’m really excited about kind of cascading this across our European as well as our Asian footprint and getting further leverage out that, particularly as we head into 2020

Matt Roberts, Analyst, Raymond James: Okay, thank you.

Conference Operator: Thank you. Our next question comes from Jeff Zukauskas of JPMorgan. Your line is now open.

Jeff Zukauskas, Analyst, JPMorgan: Thanks very much. Your adjusted EBITDA range for 2025 is $100,000,000 and you only have two quarters to go, and your EBITDA was roughly flat in the first half. Why is the range so wide? Is that because of conservatism or is the uncertainty about second half EBITDA that large?

Dustin Simak, President and CEO, Sealed Air: Thank you, Jeff. Yeah, so just to answer it very directly, it’s really just conservatism. As we think about the second half of the year, again, we don’t the volatility just relative to the end markets that we serve and us being cautious around it, it really just being prudent with low visibility. And rather than touch the ranges at this point in time, our thought process was, let’s work through the third quarter once we have more visibility into the obviously 3Q, we can then not just touch the range as we indicated, keep in mind in the guidance side of it, there are EPS is above we expect it to be slightly above the midpoint, but we’ll come out more fully and kind of give you a sense of where we’re landing across all the dimensions of our guidance and do that at that point in time when we have a little bit more certainty. It really speaks to the dynamic environment we’re operating in, particularly as it relates to tariff impacts.

I think as you obviously as we’re all aware right here recently in August, a lot of those decisions were made, but it actually takes time. And I don’t think people always fully appreciate that relative to what is it going to do to inflation, what’s going to to price and it takes us time to work through the system. And so a lot of that’s just reflecting that. But I would say in general, it’s not that we believe, we’re concerned about the outcomes of that, those far into the range up or down. It’s more around just conservatism and and looking to get through 3Q and give you a more full update.

Jeff Zukauskas, Analyst, JPMorgan: Okay. And then secondly, can you describe a little bit of your issue with procuring specialty resins and why things seem to be a little bit more difficult for you?

Dustin Simak, President and CEO, Sealed Air: Yes, it’s not difficult to procure them. This is just really speaking about our footprint and just giving you a little color where we’re seeing more impacts on tariffs. Now keep in mind, I’ll reiterate that no real impact in the second quarter. We don’t see any real impact full year relative to our outlook at this point in time. But there are certain resins.

As we’ve gone through this process with tariffs, we’ve really been shifting around production, we’ve been shifting around procurement, in terms of being able to try to mitigate the impact as much as possible. It did happen on its own right and not just ourselves, but most of the companies are going through this relative to how we’re optimizing where we buy from. There are examples where we’re not able just to mitigate it because certain specialty resins are only available in Europe. And you can’t have a large chemical manufacturer shifted to another asset or shifted to another location. And this is just an example we’re having to and we talked about limited pricing actions where we have to embed that into our cost structure and then price accordingly to mitigate it.

And it’s just giving you some of that color. But no issue with procuring, we don’t have an issue this point in time of procuring anything.

Conference Operator: Thank you. Our next question comes from Anthony Pettinari of Citi. Your line is now open.

Dustin Simak, President and CEO, Sealed Air: Good morning.

Matt Roberts, Analyst, Raymond James: Just following up on Jeff’s question on the full year EBITDA bridge. I’m wondering if you can put a finer point on maybe the total level of cost saves that you expect to achieve this year and how that offsets net price, which I think you said that, that was sort of unchanged. But if you can just go through the bridge items for sort of cost saves versus net price falls and FX, that would be helpful.

Dustin Simak, President and CEO, Sealed Air: Yeah, sure. I’ll just Anthony, I’ll just walk you down and give you a sense of kind of where there’s some slight changes. The first thing I’m going to talk about before, because I’m to talk about net price realization and some of the embedded assumptions there. And when you think about net price realization, really what’s happened is prices come down, right? And that’s being offset by Jirani’s commentary, deflationary aspects of our raw materials.

So it’s remained relatively unchanged. It’s actually gotten a little bit worse by about $7,000,000 for the full year. But the dynamics and it actually changed pretty materially, which is price coming down and raw materials coming down to offset it. So when you think about the volume bridge, and excuse me, the EBITDA bridge starting with volume, the volume, we’re expecting, if you go back to the roughly $100,000,000 we talked about holistically that drops the bottom line about $44,000,000. Then you get a net price realization down 65.

The CTO is 90 and there’s about another 16 of actions that we’re taking on top of that, which brings you to a total of 106. But think of this is not just structural savings. This is cost takeout across the business relative to just being also fiscally disciplined. And then we’ve talked about the compensation programs relative to how they paid out last year versus where we’re on track this year. That’s roughly $20,000,000 and FX is a drag of about $3,000,000 and that bridges you down to the roughly $14,000,000 year over year.

Conference Operator: Thank you. Our next question comes from Edlain Rodriguez of Mizuho Securities. Your line is now open.

Edlain Rodriguez, Analyst, Mizuho Securities: Thank you. Good morning, everyone. I mean, just one quick one on the price raw material gap, especially in Protective. I mean, it’s still negative. Like can you have any success in raising prices there that could narrow that gap in the second half of the year?

Mean, again, it’s been that persistently negative, like will we ever see that gap now completely as we get into the second half and into next year?

Dustin Simak, President and CEO, Sealed Air: So to answer your question, I’ll start with the second half. And so when you think about and I’ll go to what we think about 2026. So keep in mind, the change coming into this year relative to expectations that we’re all wrestling with is really what’s going on in the resin environment was really kicked off with the announcements back the March timeframe around just tariffs in general, what that did to the polyethylene market. When you think about that, what’s happened is it’s actually created a more deflationary environment across the board. The pricing effect you’re seeing protected and this has really been an ongoing theme, right, for the past two or three years kind of coming from resin highs going back into, I want to say, it’s 2023 coming down to 2022 to 2023, 2024, 2025.

We expected this year to be getting back into a slightly inflationary environment, which is, I would say positive for us, but positive for the industry and sector as a whole. And that obviously did not happen. So what you’ve seen is kind of seen a flat line, kind of where it dropped in the March timeframe and kind of cascade throughout the rest of the year, which is what’s creating that deflationary pricing aspect. And that’s a market impact. It’s not an issue with our products.

It’s for a while there, there was the resins coming down and we were also reducing our price gap relative to competition. We’re really beyond that now. And this is to me a market dynamic that’s happening in the second half and what we’ve given for guidance, fully expect from that perspective. If we have optimism is what we can potentially do on the volume side. When you think about going into 2026, it’s really what happens to the underlying resin markets that will help drive that particularly in protective foods a little different for variety of reasons.

But when you think about the primary piece really being low density, high density polyethylene that goes into our Protective business, you’re really looking at what’s where resin is going to go. And at this point in time, we don’t have a clear view of that in terms of 2026. As we progress through Q3 and Q4, we’ll get a lot more clarity and be to give you an update. But our general view is right now where we’re at. As long as we get this kind of a stable inflationary environment, our pricing will go along with it.

And you’ll begin and begin to narrow that net price realization and be able to bring it back to positive. And TBD of ’26 will be that year. Thank you. We’re gonna have the next question.

Conference Operator: Thank you. Our next question comes from Nico Pasini of Truist. Your line is now open.

Nico Pasini, Analyst, Truist: Hi, guys. I’m sitting in for Mike Rockson today. Thanks for all the color so far. I just had two quick ones. One is how’s the cattle cycle faring right now in South America and Australia?

And then previously, I think you had mentioned targeting growth in fluids. Is there just any update in that area?

Dustin Simak, President and CEO, Sealed Air: Yes. So on the cattle cycle itself, I’d say there’s still you’re kind of peak ish in both Latin America as well as Australia. And we still expect very strong obviously, less strong relative to underlying cycle, but still strong years on a relative basis and going into next year in both of those regions. In The U. S, which I mentioned beforehand is obviously accelerated this year, which was making 2025 really the first year of those three years where we went into this year thinking it may be like 24% and it may be elongated.

And so you’re down 3% or 4% similar outlook for 26% and then flat in 27% and back to growth in 28%. And that cycle will obviously go generally for the next seven years. On fluids performance, that business continues to perform well. So you think about fluids again, just to break it down, it’s really combination of our Cryovac fluids and liquid solutions as well as our Liquibox acquisition that we closed back in February 2023. And so again, we’ve talked about the cryovac side of it, which has continued to perform well.

We expect it to perform well this year and continue to be a growth driver for the business overall. Liquibox, we obviously went through our own kind of destocking and down cycle in that business in 2023. We’ve stabilized it since then. It’s not performing to where we would like it to be, which we talked about historically that end market being able to generate mid single digits, which is what our Fluids business has done historically. If you look at the CAGR of that business, it’s mid single to high single digits.

And so we’re still working on getting a local box there, but we feel really good about the progress we’ve made on continuing to stabilize that business and are now beginning to work out of what I would say some of the operational challenges we went through and getting back towards just focus solely on growth. So still more to come and we’ll give a lot more dialogue around this as we progress throughout the second half and we fully expect it to be a growth driver in 2026.

Conference Operator: Thank you. Our next question comes from Gabe Hattie from Wells Fargo. Your line is now open.

Mark Stone, Vice President, Investor Relations, Sealed Air0: Dustin, good morning. Ronnie, thanks for all your help. I wanted to revisit a comment you made in your prepared remarks, Dustin, about utilizing some external partners. And I think it was Protective. You mentioned speed to market and maybe intimated a reduction in capital intensity.

If maybe you can elaborate on the concept a little bit. I don’t if it’s a function of maybe customers being a little bit more dynamic in their own strategies and decision making or what’s driving it. And then maybe quantify for us, I’m assuming CapEx, but maybe op costs as well, What that could save you?

Dustin Simak, President and CEO, Sealed Air: Sure, Dave. So a couple of things. So keep in mind that ours, for the past, if you go back pre maybe ten years ago, a majority of our new solutions were actually developed with external partners. And I mean people coming in to actually help us design and build. Think of it as leveraging outsourcing some of your R and D on equipment design, outsourcing R and D on even material.

But in a lot of ways, it was around applications. And over the past ten years, we’ve really taken an approach of vertical integration relative to doing internal development and not just development of new applications, materials and equipment, but also developing our own internal manufacturing technology. And so we’ve really begin to rethink that broadly speaking, it goes back to the situation we’ve been in with our balance sheet over the past couple of years. And what I mean by that is, for there’s a period of time in our mailer strategy, where we were leveraging our existing lines. Now we’re looking at to be very specific.

Now we’re leveraging other manufacturing technology to still produce our application, our product, but in a new form and in a much more cost effective way. And it speeds the time to actually get the lines up running speeds we need is able gives us the ability to scale up much faster in the market relative to where you place those lines. And that’s an example where it’s not just application itself, but it’s also thinking rethinking manufacturing technology. In our food business, we’ve talked at length about our industrial food processing, the strength of our kind of that three legged stool around material science equipment and our service capabilities. But as you think about that broadly for retail, that’s what we’re thinking about.

Is it really our equipment or do we leverage external partnerships? So we’ve talked about this a little bit in the past, but we’re being a lot more intentional now about how we go after it. And it’s really about leveraging people that are good at what they’re doing is their core competency and getting us time to market versus trying to be everything being great at everything effectively. And so that is bringing down some of our capital intensity. If you look at this year for our outlook, we brought it down to roughly is what’s embedded in Ronnie’s numbers is roughly $200,000,000 for the full year.

And if you go back to 2023, we are at that point talking about doing $280,000,000 at the beginning of the year. We brought it down to $240,000,000 $220,000,000 last year, 200,000,000 this year. And this is all while increasing our returns. I think addressing some of our performance issues. And so I think that this approach that we’re doing, it’s not that we’re actually under investing the business.

To me, we’re investing more now than we ever have before. We’re just doing it in the right areas. They’re going to yield better results for us longer term. You know, it’s hopefully that gives you some color.

Conference Operator: Thank you. Our next question comes from Brian Dong of RBC. Your line is now open.

Matt Roberts, Analyst, Raymond James: Hey, this is Brian Dong on for Arun Viswanathan. Thanks for taking my question. Can you walk us through your CTO to grow cost savings? What are the different buckets to that? And are you still targeting $90,000,000 of savings for the end of the year?

Thanks.

Dustin Simak, President and CEO, Sealed Air: Yes. So, question. So, the buckets have remained unchanged. You really think about three broader areas that we’ve been going after. One is on the go to market side, how do we reorganize?

This goes back to how do we reorganize back into Food and Protective? How do we reorganize our P and Ls back to the regional P and Ls underneath it? What do we do with our on the go to market side relative to marketing, sales, R and D? That’s that first bucket that we did, which is really in the frontline, which is really about while it generate cost savings is much more around how do we get to the market closer to our customers, delayer the business and drive growth. And just again, the outcome of that was also being able to drive further productivity in the business.

Another big piece in supply chain, right? And so again, I’m not quantifying each bucket because these are shifting all the time where we find better opportunities. So you kind of see a play between all three of the buckets. Network optimization, we’re down about five plants holistically right now just over the past two years. And we talked about on the call, we’re beginning to outline broader plans there as we think about 2026, 2027 and 2028.

And so we more to come on that topic. And then the last buckets around G and A optimization. I used an example in the Q and A earlier around our Manila facility and it’s really about leveraging a global footprint relative to where we need to be. To give you an idea, it’s roughly when you break down the numbers, it’s really between sixty five and thirty five between CTO and productivity. And so just to give you a sense.

Conference Operator: Thank you. Our next question comes from Josh Spector of UBS. Your line is now open.

Mark Stone, Vice President, Investor Relations, Sealed Air1: Yes, hi, good morning. Thanks for all the details around food and the assumptions there. But I kind of want to ask about the non red meat assumptions as you look at the second half. I guess, really rough numbers, you talked about $400,000,000 in sales down high single digits. You roll that through to food, that’s kind of a point headwind or so I think.

So then the other 90% is down a couple of points. Can you maybe unpack that and some of the assumptions between, I guess, the retail market versus maybe some of the processed foods and meats, which I think would be somewhat of an offset for what you’re seeing there? But more detail there would be helpful. Thank you.

Dustin Simak, President and CEO, Sealed Air: Yes, appreciate the question, Josh. And so again, when you think about overall, I think if you go back to prepared commentary and Ronnie’s comments, we talked about the overall business protein, global protein production being down about a point this year, right. And so keep in mind, that’s what’s weighing on some of the broader volumes and I go back to even the consumer itself, or the consumer spending where you’re seeing that shift out of industrial food processing into retail and food service. Some of the markets, if you really look across every area, whether it’s dairy, whether it’s poultry, smoked and processed, they’ve all come down slightly, which is why you see that broader impact across the business. And again, we don’t see that as a longer term headwind for 2026 and 2027.

We see it as a condition right now of just the market we’re operating in really more on demand side. And so but I’ll leave you with that. And that’s really what’s driving that broader impact.

Conference Operator: Thank you. Our last question comes from Stephane Dias from Morgan Stanley. Thank you. Your line is now open.

Mark Stone, Vice President, Investor Relations, Sealed Air2: Hi, Justin. Hi, Ronnie. Thanks for taking my question. So you noted industrial strength, which is nice to see just considering some mixed macro indicators on the industrial side. I was just wondering if any of that industrial end market strength was due to your automation business.

And then maybe how are you just thinking about your industrial portfolio for the second half and into 2026? And maybe how are you thinking about your automation business as well? Thanks.

Dustin Simak, President and CEO, Sealed Air: Good question. So just keep in mind, we think of it as an automation business. The way we think about it is we’re bringing a solution to the market, that’s really combining where we are the strongest. And I think if you go back to an example for Protective is our APS business, our auto backing solutions, right, it’s an example where you’re bringing the piece of equipment, you’re bringing out the hybrid one, now you can bring the great materials, whether it’s fiber or poly, and you’re bringing great technical service. And it’s really all about throughput, yield, the ability to protect that particular item, etcetera, and packaging.

And then food business is very similar. So keep in mind that we think it is less, I know it was talked about a lot going back three, four, five years ago, automation for automation sake. We’re much more around that solution sell and bringing solutions to market that combine that which creates a lot of value for our customers. Again, on the industrial side, if you really look at our business, if you think about Instapack, right? Same thing, great equipment, great material science, great service.

You think about APS, very similar, right? And so as you look across the different solutions that we have in protective and food, in general, that’s where we drive. They’re generally higher margin businesses, deliver more customer value. And I think across the board, our approach to doing that and going back to what made us great solution sell is really making a difference in the market and is absolutely contributing to the some of the industrial performance you see in the numbers. And I talked about Instapac as an example, which has performed a lot better than it has historically.

Conference Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to the President and CEO, Dustin Simak, for closing remarks.

Dustin Simak, President and CEO, Sealed Air: Thank you for joining us this morning. I look forward to updating you in November on our ongoing turnaround in Protective and the growth transformation we are driving in food to meet the market challenges ahead of us head on. Finally, thank you to the 16,000 plus Sodaire employees and our customers who are at the center of our transformation. Thank you.

Conference Operator: Thank you for participation in today’s conference. This does conclude the program. You may now disconnect.

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