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Sealed Air (SEE) Q4 Earnings & Revenues Top Estimates, Up Y/Y

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Sealed Air Corporation (SEE - Free Report) reported fourth-quarter 2019 adjusted earnings per share of 78 cents, surpassing the Zacks Consensus Estimate of 74 cents and improving 4% year over year. The results can be attributed to strong execution of Reinvent SEE strategy, which was introduced in December 2018 to drive earnings growth and productivity improvements.

Including special items, the company reported net earnings per share of 80 cents compared with the prior-year quarter figure of $1.28.

Total revenues of $1,299 million in the reported quarter were up 3% from the year-ago quarter figure of $1,260 million. The figure beat the Zacks Consensus Estimate of $1,298 million. Acquisitions contributed 6.2% to total revenues, partially offset by an organic sales decline of 1.6%.

Sealed Air Corporation Price, Consensus and EPS Surprise

Cost and Margins

Cost of sales increased 1% year over year to $870 million. Gross profit improved 8% year over year to $429 million. Gross margin came in at 33.1% compared with 31.7% in the comparable period last year.

SG&A expenses climbed 6% to $216 million, year on year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $271 million in the quarter compared with $248 million in the prior-year quarter. Adjusted EBITDA margin was 21% compared with 20% in the prior-year quarter, driven by the company’s Reinvent SEE initiatives and favorable price cost spread and acquisitions. This was partially offset by higher operating costs, lower volumes and unfavorable foreign currency.

Segment Performance

Food Care: Net sales declined 2% year over year to $760 million. Adjusted EBITDA improved 5% year over year to $171 million.

Product Care: The segment reported net sales of $539 million in the reported quarter, up 10% from the prior-year quarter. Adjusted EBITDA was up 25% year over year to $107 million.

Financial Updates

Cash and cash equivalents were $262 million as of Dec 31, 2019, down from $272 million as of Dec 31, 2018. Cash flow from operating activities was around $511 million in 2019 compared with $428 million in the prior year. Capital expenditures were $190 million for 2019 compared with $169 million in 2018. The increase can primarily be attributed to increased investment to drive growth and improve cost productivity.

As of Dec 31, 2019, Sealed Air’s net debt came in at $3.6 billion, up from $3.2 billion as of Dec 31, 2018. In 2019, the company repurchased 1.6 million shares worth $67 million and paid out dividends worth $99 million. The company has $708 million remaining under its current authorized share repurchase program.

2019 Results

Sealed Air reported adjusted earnings per share of $2.82 in 2019, up 13% from the prior-year figure of $2.50. Earnings missed the Zacks Consensus Estimate of $2.78. Including one-time items, the bottom line came in at $1.89, up 101% from 94 cents in 2018. The bottom line also came in higher than management’s guidance of $2.70-$2.80.

Sales rose 1.2% year over year to around $4,791 million from the prior-year figure of $4,733 million. The top line missed the Zacks Consensus Estimate of $4,792 million.

Guidance
 
Sealed Air’s guidance for adjusted earnings per share for 2020 is at $2.85-$2.95. The mid-point of the range suggests year-over-year growth of 3%.

Net sales are projected at $4.9-$4.95 billion, indicating an improvement of 2% to 3% on a reported basis and 3% to 4% in constant dollars.  Adjusted EBITDA is estimated to lie between $1.01 billion and $1.03 billion.

Share Price Performance

Over the past year, Sealed Air’s shares have fallen 12%, compared with the industry’s decline of 28%.

Zacks Rank & Stocks to Consider

Sealed Air currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp (SMED - Free Report) , Lindsay Corporation (LNN - Free Report) and Northwest Pipe Company (NWPX - Free Report) . 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.

Sharps Compliance has an expected earnings growth rate of 767% for the current year. The stock has appreciated 53% in a year’s time.

Lindsay has a projected earnings growth rate of 85.3% for 2020. The company’s shares have rallied 22% over the past year.

Northwest Pipe Company has an estimated earnings growth rate of 19.5% for the ongoing year. The company’s shares have gained 38% in the past year.

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