Sealed Air Corporation (SEE - Free Report) reported second-quarter 2021 adjusted earnings per share of 79 cents, missing the Zacks Consensus Estimate of 80 cents. The bottom line, however, improved 4% year over year.
Including special items, the company delivered net earnings per share of 71 cents compared with the prior-year quarter figure of 64 cents.
Total revenues were up 15.4% year over year to $1,329 million in the reported quarter, highlighting healthy demand for automated and sustainable packaging solutions. Further, the top line beat the Zacks Consensus Estimate of $1,272 million.
Cost and Margins
Cost of sales climbed 21.8% year over year to $928 million. Gross profit increased 3% year over year to $401 million. Gross margin contracted to 30.1% from the prior-year quarter’s 33.8%.
SG&A expenses flared up 4% to $192 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $263 million in the quarter, up 1% from the prior-year period. Adjusted EBITDA margin was 19.7% compared with the prior-year quarter’s 22.5%. Benefits from higher sales and productivity were offset by supply-chain disruptions and inflationary pressure.
Segment Performance
Food: Net sales jumped 9% year over year to $737 million. The company witnessed strength in automation and year-over-year higher food service demand. Adjusted EBITDA was down 6.5% year over year to $158 million. Volume growth and productivity improvements were offset by negative price/cost related to higher input costs. The segment also incurred higher freight costs to meet increased customer demand, while managing global supply disruptions.
Protective: The segment reported net sales of $592 million during the quarter under review, up 24% from the prior-year period led by continued strength in e-Commerce and automation, coupled with year-over-year higher industrial demand. Adjusted EBITDA advanced 17% year over year to $107 million on sales growth, partially negated by negative price/cost.
Financial Updates
Cash flow from operating activities was $199.5 million in the six-month period ended on Jun 30, 2021 compared with the year-ago period’s $213 million. During the reported quarter, Sealed Air hiked quarterly cash dividend by 25% to 20 cents per share.
The company paid cash dividends of $56 million during the first six months of 2021 and repurchased $299 million shares. On Aug 2, Sealed Air’s board authorized a new share-repurchase program of $1 billion.
As of Jun 30, 2021, Sealed Air’s net debt was $3.5 billion, up from $3.2 billion as of Dec 31, 2020. As of the end of the quarter, the company had $1.4 billion of liquidity available, which comprised $273 million in cash and $1,144 million of undrawn, committed credit facilities.
2021 Guidance Updated
For 2021, Sealed Air expects net sales in the range of $5.4 billion to $5.5 billion, higher than the prior expectation of $5.25 billion to $5.35 billion. This indicates an increase of 10-12% as reported and 8-10% in constant dollars.
The company expects adjusted EBITDA to lie between $1.12 billion and $1.15 billion for the current year. The adjusted earnings per share are now anticipated in the band of $3.45 to $3.60. The company had earlier provided a guidance range of $3.40-$3.55. Sealed Air projects free cash flow to be between $520 million and $570 million for the current year.
Share Price Performance
Over the past year, Sealed Air’s shares have gained 56.4% compared with the industry’s growth of 29%.
Zacks Rank and Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Industrial Products sector include Greif, Inc. (GEF - Free Report) , Lindsay Corp. (LNN - Free Report) and Pentair plc (PNR - Free Report) . While Greif and Lindsay sport a Zacks Rank #1 (Strong Buy) Pentair carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained 29.9%, in the past year.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 22.3%.
Pentair has a projected earnings growth rate of 26% for 2021. The stock has appreciated 36.7%, over the past year.
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Sealed Air Corporation (SEE - Free Report) reported second-quarter 2021 adjusted earnings per share of 79 cents, missing the Zacks Consensus Estimate of 80 cents. The bottom line, however, improved 4% year over year.
Including special items, the company delivered net earnings per share of 71 cents compared with the prior-year quarter figure of 64 cents.
Total revenues were up 15.4% year over year to $1,329 million in the reported quarter, highlighting healthy demand for automated and sustainable packaging solutions. Further, the top line beat the Zacks Consensus Estimate of $1,272 million.
Cost and Margins
Cost of sales climbed 21.8% year over year to $928 million. Gross profit increased 3% year over year to $401 million. Gross margin contracted to 30.1% from the prior-year quarter’s 33.8%.
SG&A expenses flared up 4% to $192 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $263 million in the quarter, up 1% from the prior-year period. Adjusted EBITDA margin was 19.7% compared with the prior-year quarter’s 22.5%. Benefits from higher sales and productivity were offset by supply-chain disruptions and inflationary pressure.
Segment Performance
Food: Net sales jumped 9% year over year to $737 million. The company witnessed strength in automation and year-over-year higher food service demand. Adjusted EBITDA was down 6.5% year over year to $158 million. Volume growth and productivity improvements were offset by negative price/cost related to higher input costs. The segment also incurred higher freight costs to meet increased customer demand, while managing global supply disruptions.
Protective: The segment reported net sales of $592 million during the quarter under review, up 24% from the prior-year period led by continued strength in e-Commerce and automation, coupled with year-over-year higher industrial demand. Adjusted EBITDA advanced 17% year over year to $107 million on sales growth, partially negated by negative price/cost.
Financial Updates
Cash flow from operating activities was $199.5 million in the six-month period ended on Jun 30, 2021 compared with the year-ago period’s $213 million. During the reported quarter, Sealed Air hiked quarterly cash dividend by 25% to 20 cents per share.
The company paid cash dividends of $56 million during the first six months of 2021 and repurchased $299 million shares. On Aug 2, Sealed Air’s board authorized a new share-repurchase program of $1 billion.
As of Jun 30, 2021, Sealed Air’s net debt was $3.5 billion, up from $3.2 billion as of Dec 31, 2020. As of the end of the quarter, the company had $1.4 billion of liquidity available, which comprised $273 million in cash and $1,144 million of undrawn, committed credit facilities.
2021 Guidance Updated
For 2021, Sealed Air expects net sales in the range of $5.4 billion to $5.5 billion, higher than the prior expectation of $5.25 billion to $5.35 billion. This indicates an increase of 10-12% as reported and 8-10% in constant dollars.
The company expects adjusted EBITDA to lie between $1.12 billion and $1.15 billion for the current year. The adjusted earnings per share are now anticipated in the band of $3.45 to $3.60. The company had earlier provided a guidance range of $3.40-$3.55. Sealed Air projects free cash flow to be between $520 million and $570 million for the current year.
Share Price Performance
Over the past year, Sealed Air’s shares have gained 56.4% compared with the industry’s growth of 29%.
Zacks Rank and Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Industrial Products sector include Greif, Inc. (GEF - Free Report) , Lindsay Corp. (LNN - Free Report) and Pentair plc (PNR - Free Report) . While Greif and Lindsay sport a Zacks Rank #1 (Strong Buy) Pentair carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained 29.9%, in the past year.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 22.3%.
Pentair has a projected earnings growth rate of 26% for 2021. The stock has appreciated 36.7%, over the past year.
Free Report – The Bitcoin Profit Phenomenon
Zacks Investment Research has released a Special Report to help you pursue massive profits from the world’s first and largest decentralized form of money.
No guarantees for the future, but in the past three presidential election years, Bitcoin’s returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%.
Zacks predicts another significant surge. Click below for Bitcoin: A Tumultuous Yet Resilient History.
Download Now – Today It’s FREE >>
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