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SEALED AIR CORP/DE (SEE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 came in modestly ahead on sales and meaningfully ahead on earnings: net sales $1.2725B, Adjusted EBITDA $276M and Adjusted EPS $0.81; management maintained FY2025 guidance ranges, citing prudent stance amid tariff/macro uncertainty .
  • Significant beats vs S&P Global consensus: EPS +$0.14 (+20%), revenue +$6.1M (+0.5%), and EBITDA +$16M (+6.1%) driven by productivity/cost takeout and lower net interest; price was flat and Protective volumes remained weak, but Food saw share gains in case-ready retail solutions * .
  • Protective turnaround showed early signs (sequential margin improvement, minimized churn), but management continues to flag low visibility and potential second-half demand softness linked to evolving trade policy; tariffs expected to have minimal direct bottom-line impact given domestic-for-domestic footprints and USMCA exemptions .
  • Near-term catalyst: Q2 2025 guide implies a sequential step-down in EPS to ~$0.71 and EBITDA to ~$270M while sales ~$1.3B, setting expectations before potential second-half inflection in Protective volumes .

What Went Well and What Went Wrong

  • What Went Well
    • Food segment delivered organic growth (+1% constant currency) with case-ready retail solutions growing low-single-digit and segment Adjusted EBITDA up 7% YoY; margin expanded 200 bps to 23.8% on productivity/CTO2Grow savings .
    • Consolidated Adjusted EBITDA margin expanded 80 bps to 21.7% despite flat pricing, reflecting cost takeout and productivity; Adjusted EPS rose to $0.81 largely on lower interest expense . Quote: “Margin expansion driven by continued cost take-out and productivity savings… EPS growth driven by improved operating leverage and net interest expense.” — Interim CFO Roni Johnson .
    • Management reaffirmed FY guidance and highlighted minimal net tariff impact under current policy due to domestic-for-domestic manufacturing and USMCA exemptions; active mitigation via supply chain optimization and pricing where necessary .
  • What Went Wrong
    • Protective segment net sales fell 9% (-8% constant currency) with volumes -6% on continued weakness in fulfillment and industrial portfolios; Adjusted EBITDA declined 17% and margin fell 180 bps YoY .
    • Free cash flow swung to a use of $12M in Q1 (vs +$78M YoY) on higher incentive compensation and tax payments; operating cash flow $31.9M vs $125.1M YoY .
    • FX and net price realization were headwinds; management cautioned about limited visibility in Protective and possible consumer-driven mix shift in U.S. beef toward lower-priced proteins later in the year .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$1,350 $1,372.8 $1,272.5
Adjusted EBITDA ($USD Millions)$276 $271 $276.3
Adjusted EBITDA Margin %20.5% 19.7% 21.7%
Adjusted Diluted EPS ($USD)$0.79 $0.75 $0.81
  • Segment Breakdown
Segment MetricQ3 2024Q4 2024Q1 2025
Food Net Sales ($USD Millions)$898 $923 $852.1
Food Adjusted EBITDA ($USD Millions)$206 $208 $202.7
Food Adjusted EBITDA Margin %22.9% 22.5% 23.8%
Protective Net Sales ($USD Millions)$447 $450 $420.4
Protective Adjusted EBITDA ($USD Millions)~$75 $67 $73.9
Protective Adjusted EBITDA Margin %16.9% 14.8% 17.6%
  • KPIs
KPIQ1 2024Q1 2025
Cash from Operations ($USD Millions)$125.1 $31.9
Free Cash Flow ($USD Millions)$78.0 -$12.0
Capital Expenditure ($USD Millions)$47.1 $43.9
Net Debt ($USD Millions)$4,032.1 (Dec 31, 2024) $4,069.0 (Mar 31, 2025)
Net Leverage Ratio (x)3.6x (Dec 31, 2024) 3.7x (Mar 31, 2025)
Dividend per Share ($)$0.20 (declared Feb 19, 2025) $0.20 (declared May 29, 2025)
  • Beat/Miss vs S&P Global Consensus (Q1 2025)
MetricConsensusActualSurprise
Primary EPS ($USD)0.66982*0.81 +0.14 (+20%)*
Revenue ($USD Millions)1,266.37*1,272.5 +6.1 (+0.5%)*
EBITDA ($USD Millions)260.26*276.3 +16.0 (+6.1%)*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Billions)FY 2025$5.1–$5.5 $5.1–$5.5 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$1,075–$1,175 $1,075–$1,175 Maintained
Adjusted EPS ($USD)FY 2025$2.90–$3.30 $2.90–$3.30 Maintained
Free Cash Flow ($USD Millions)FY 2025$350–$450 $350–$450 Maintained
Q2 Sales ($USD Billions)Q2 2025—~$1.3 New quarterly guide
Q2 Adjusted EBITDA ($USD Millions)Q2 2025—~$270 New quarterly guide
Q2 Adjusted EPS ($USD)Q2 2025—~$0.71 New quarterly guide

Management had guided Q1 to ~$1.26B sales, ~$260M Adjusted EBITDA, and $0.65–$0.70 EPS; actuals exceeded across all three .

Earnings Call Themes & Trends

TopicQ3 2024 (prev)Q4 2024 (prev)Q1 2025 (current)Trend
Tariffs/macroPreparing for potential tariff impacts; domestic-for-domestic footprint noted .Outlook only contemplates enacted tariffs; mitigation via supply chain/pricing .Net tariff impact minimal; USMCA exemptions; monitoring demand softness; pricing actions where needed .Cautious; minimal direct impact, more focus on downstream demand risk.
Supply chain integrationVertical reorg into Food/Protective underway .Fully integrated commercial/innovation/supply chain teams by segment .Completed last major step integrating supply chains back into segments .Structural integration completed; expected agility gains.
Protective go-to-marketTurnaround actions, portfolio shifts (fiber/mailers), automation softness .NA go-to-market reorg; minimizing churn; plant closures for optimization .Field sales fully ramped; minimized churn since Q1’24; sequential margin improvement; low visibility persists .Early execution progress; visibility still limited; potential 2H inflection.
Fiber mailers/automationBuilding fiber offerings; case-ready and fluids growing in Food .New hybrid Autobagger (substrate-agnostic) in summer; equipment growth targeted in Protective; book-to-bill ≥1 .Fiber mailer “Jiffy & Boss” iteration; equipment book-to-bill >1 in both segments .Offering breadth and traction improving; scale-up still in progress.
Protein markets (red meat/poultry)Stronger-than-anticipated U.S. beef; poultry hit by avian flu (turkey) .Expect NA beef cycle headwind in 2025; focus on case-ready/fluids .Watch for premium beef trade-down; strength in AU/LatAm; expect turkey/pork to offset later .Mixed; regional resilience, potential U.S. mix shift risk in 2H.
FXHeadwind to Q4; guided for ~2% FX headwind in FY25 EBITDA .FX expected 2% unfavorable on EBITDA .Improved FX outlook (USD weakening) vs Feb view, offsetting softer volumes .Slightly improving FX backdrop.
DeleveragingTarget <3.5x by end 2025; <3.0x by end 2026 .Net leverage 3.6x at YE2024 .Net leverage 3.7x; liquidity $1.3B; path to ~3.0x by end 2026 reaffirmed .Ongoing; near-term ratio stable, long-term path intact.

Management Commentary

  • “We achieved organic growth in our Food business… while volumes in our Protective business continued to stabilize due to our ongoing transformation efforts.” — CEO Dustin Semach .
  • “We are maintaining our full year guidance and will continue to assess evolving trade policies and the second-half demand environment.” — Interim CFO Roni Johnson .
  • “At this point, based on current policy, the net tariff impact to our bottom line is minimal… Where we have exposure that cannot be mitigated, we are actively taking pricing actions.” — CEO Dustin Semach .
  • “On a sequential basis, [Protective] margin improved 280 basis points compared to the fourth quarter driven by continued productivity and cost takeout initiatives.” — Interim CFO Roni Johnson .
  • “Looking ahead to the second quarter, we anticipate… net sales of approximately $1.3 billion, adjusted EBITDA of $270 million and adjusted earnings per share around $0.71.” — Interim CFO Roni Johnson .

Q&A Highlights

  • Protective trajectory: Year-over-year volume declines moderating (Q2 down ~4% vs Q1 ~6%); churn minimized since Q1’24; Asia/LatAm growth and EMEA stabilization; NA remains focus .
  • Pricing dynamics: Net price relatively unchanged; PE resin stabilized after China exemption; specialty materials could see inflation; pricing levers available if tariffs raise costs .
  • Equipment/automation: Book-to-bill >1 across both segments; equipment split ~$0.5B total, half equipment/half parts/services, balanced between segments; minimal tariff cost impact due to sourcing flexibility .
  • Food margins: Sustained in ~23% range; productivity and cost takeout underpin expansion; prioritizing growth over further margin lever in Food .
  • Protective timeline: Actions accelerated in last ~70–90 days; second-half inflection targeted; portfolio optimization continues but no major divestitures planned; substrate-agnostic hybrid Autobagger to aid fulfillment exposure .

Estimates Context

  • Results vs S&P Global consensus: SEE delivered an across-the-board beat in Q1 2025 — EPS $0.81 vs $0.66982 (+20%), revenue $1,272.5M vs $1,266.37M (+0.5%), EBITDA $276.3M vs $260.26M (+6.1%)* .
  • Potential estimate revisions: Food margin and EPS strength (lower interest) likely drive upward EPS revisions for FY2025, while Protective volume caution and Q2 guide (~$0.71 EPS) may cap near-term upward momentum* .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • FY2025 guidance maintained; Q1 beat driven by cost/productivity and lower interest, not price — supports near-term earnings quality and margin resilience .
  • Food’s structural strength and share gains in retail case-ready are offsetting Protective headwinds; expect stable Food margins (~23%) with ongoing productivity tailwinds .
  • Protective is stabilizing (sequential margin up, churn minimized) but remains macro-sensitive; management flags low visibility and is prudently controlling costs while scaling fiber/mailers and hybrid Autobagger .
  • Tariffs appear a manageable risk under current policy; mitigation via supply chain optimization and targeted pricing should limit direct P&L impact, but monitor downstream demand effects into 2H .
  • Deleveraging plan intact (target ~3.0x by end-2026); liquidity robust at ~$1.3B; free cash flow seasonally light in Q1 on higher bonus/tax, improving across the year .
  • Near-term trading setup: Strong Q1 print vs consensus, but Q2 guide signals sequential EPS moderation; stock likely to trade on confidence in Protective turnaround pace and tariff/demand visibility through summer .
  • Medium-term thesis: Cost takeout and segment verticalization should lift margins and strategic agility; success in fiber/mailers and automation uptake are key to Protective inflection and multiple re-rating .
Notes: All quantitative facts and statements are cited to company documents. Where marked with *, values are retrieved from S&P Global consensus data.

.
Earnings Call: Q1 2025 transcript .
Prior Quarter Materials: Q4 2024 press release and call .
Q3 2024 call for trend .
Dividends: Feb 19 and May 29 announcements .]