Yahoo Finance Sealed Air (SEE) Q4 Earnings Surpass Estimates, Down Y/Y
Sealed Air Corporation SEE reported fourth-quarter 2022 adjusted earnings per share of 99 cents, which surpassed the Zacks Consensus Estimate of 98 cents. The bottom line figure declined 12% year over year due to lower volumes.
And unfavorable foreign currency impact offset the gains from favorable price realization and productivity improvements.
Including special items, the company delivered net earnings per share of 99 cents compared with the prior-year quarter’s $1.12.
Total revenues were $1.41 billion in the reported quarter, down 8% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $1.46 billion. Price had a favorable impact of 7% while volumes were down 10%.
Sales in America and APAC declined 7% and 3% year on year respectively, while EMEA witnessed growth of 5%.
Sealed Air Corporation Price, Consensus and EPS Surprise
Sealed Air Corporation price-consensus-eps-surprise-chart | Sealed Air Corporation Quote
Cost and Margins
The cost of sales declined 7% year over year to $982 million. The gross profit was $424 million, which marked a 7% decline from the year-ago quarter’s $1,056 million. The gross margin expanded to 30.2% from the prior-year quarter’s 31%. Selling, general and administrative expenses fell 12% from the last-year quarter to $181 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was around $297 million in the quarter, which declined 10% from the prior-year period. Adjusted EBITDA margin was 21.1% compared with the prior-year quarter’s 21.5% as favorable net price realization offset lower volume.
Segment Performance
Food: Net sales dipped 0.3% year over year to $874 million. Volumes were down 3%, owing to food retail market declines across the Americas and EMEA regions and the adverse impact from prior supply disruptions. Pricing actions had a favorable impact of 7%. Currency fluctuations had an unfavorable impact of 5%.
Adjusted EBITDA was $202 million, down 1% from the last year’s quarter, as favorable price realization and productivity improvements helped offset the impact of lower volumes and unfavorable currency impact.
Protective: The segment reported net sales of $532 million during the quarter under review, down 19% from the prior-year quarter. The divestiture of Reflectix had an unfavorable impact of 1%, while currency impacted sales by 4%.
Pricing had a positive impact of 6%, while volumes slumped 20% owing to recessionary pressures in the industrial and fulfillment markets and destocking through the value chain. The segment’s adjusted EBITDA plunged 19% year over year to $102 million as favorable net price realization helped offset lower volumes.
Financial Updates
The cash flow from operating activities was around $613 million in 2022 compared with $710 million in 2021. The company paid cash dividends of $118 million in 2022 and repurchased 4.5 million shares for $280 million.
As of Dec 31, 2022, Sealed Air’s net debt was $3.2 billion, up from $3.1 billion as of Dec 31, 2021. As of the end of 2022, the company had $1.6 billion of liquidity available, which comprised $456 million in cash and $1.12 billion of undrawn, committed credit facilities.
2022 Performance
Sealed Air reported adjusted earnings per share of $4.10, which beat the Zacks Consensus Estimate of $4.09. The bottom line figure increased 15% year over year. Including special items, earnings per share were $3.33 in 2022 compared with $3.22 in 2021. Total revenues increased 2% year over year to $5.6 billion in 2022. The top line missed the Zacks Consensus Estimate of $5.7 billion.
2023 Guidance
For 2023, Sealed Air expects net sales between $5.85 billion and $6.10 billion. The guidance range indicates an increase of 4% to 8%, which includes a favorable impact of the Liquibox acquisition of approximately 6% and an unfavorable currency impact of approximately 1%. SEE anticipates adjusted EBITDA in the range of $1.25 to $1.30 billion. Adjusted earnings per share are forecasted in the band of $3.50 to $3.80. The company had earlier provided a range of $4.05 to $4.20.
Share Price Performance
Image Source: Zacks Investment Research
In a year's time, Sealed Air’s shares have declined 16.8% compared with the industry’s 0.9% growth.
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 O-I Glass, Inc OI, Tenaris TS and Deere & Company DE. OI and TS sport a Zacks Rank #1 (Strong Buy) at present and DE has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.51 per share. This indicates a 15.7% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 66.9% in the past year.
Tenaris has an average trailing four-quarter earnings surprise of 20.9%. The Zacks Consensus Estimate for TS’ 2022 earnings is pegged at $4.38 per share. This indicates a 134.2% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has moved north by 2.1% in the past 60 days. Its shares gained 36.9% in the past year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $28.01, suggesting an increase of 19.6% from that reported last year. The consensus estimate for fiscal 2023 earnings has moved 2.7% upward in the past 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 11.7% in the past year.
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