05.03.12
For first quarter 2012, Sealed Air Corporation reported sales increased 70% to $1.92 billion from a 66% increase related to the Diversey acquisition, 2% higher price/mix and 2% from higher volumes.
On a pro forma basis, sales increased 1%, or 3% on a constant dollar basis, reflecting growth in all businesses and regions, the company said. This included a modest increase in year-over-year results in North America and the Europe, Middle East and Africa (EMEA) region, and a 9% increase in developing regions.
The 5% increase in 2012 pro forma adjusted operating profit includes an estimated $15 million in cost synergies from the 2011-2014 Optimization & Integration Program achieved in the quarter and largely attributed to the Diversey segment. These synergies helped offset lower volumes primarily from European economic weakness and unfavorable mix in the Diversey segment. Adjusted EBITDA was $236 million, or 12.3% of net sales in the quarter, which held steady compared with pro forma 2011 adjusted EBITDA of $236 million, or 12.5% of pro forma net sales.
“We remain on track toward achieving our 2012 adjusted EBITDA and year-end net debt targets despite the uncertainty of the European economy and the uneven recovery in the U.S. We are confident in the cost synergies with Diversey with increased cost synergy estimates in 2012 and future years, and we believe our vision is beginning to resonate with our customer base,” commented William V. Hickey, president and CEO.
Hickey said that he was “quite pleased” with the overall performance of our Food and Protective Packaging business segments, which achieved both volume and price/mix growth during the quarter.
However, he noted that “Diversey segment sales were less than planned in the quarter due to ongoing weakness in Europe and the timing of specific customer orders in North America. We expect to see a more normalized order pattern in North America in that segment through the balance of the year. While we remain cautious about any European economic improvement, we are encouraged by high single-digit percent sales growth in developing regions and strong customer reception of our solutions resulting from our growth programs. We have built a strong foundation for growth across all of our businesses when Europe does recover.”
The Diversey segment reported sales decreased 2% to $751 million in the quarter, which would have compared to $764 million in 2011. On a constant dollar basis, first quarter 2012 sales were $767 million, which was slightly above last year. These sales results reflect an estimated 3% higher price and 2% lower volumes primarily in North America and in EMEA, specifically in Europe, the company said. Operating profit was $1 million in the quarter, which compares with $13 million in 2011. On an adjusted basis, operating profit was $8 million, or 1.1% of net sales, which compares with $21 million or 2.7% of net sales in 2011. Adjusted operating profit in 2012 was reduced by approximately $16 million due to the lower volumes noted above and unfavorable product mix.
As part of its integration of Diversey, Sealed Air is undertaking a number of actions to integrate and realign our organization, further improve operating efficiencies and lower our overall cost structure to maximize cost synergies and better meet customers’ needs.
According to Hickey, “We are maintaining our full year 2012 Adjusted EBITDA target of approximately $1.2 billion, our Free Cash Flow range of $450 to $475 million, and our Net Debt target of approximately $4.9 billion. We are also maintaining our Adjusted EPS guidance range of $1.50 to $1.60 and Cash EPS range of $2.10 to $2.20. While we remain cautious about any meaningful economic improvement in Europe this year, we have enough positive momentum and capacity elsewhere in our business to achieve our full year targets,” he said.
“We anticipate that our net sales will be at the lower end of our initial guidance range of $8.2 to $8.3 billion due to European economic conditions," Hickey added. "Our business continues to demonstrate organic growth through innovation, developing region expansion, and strong fundamentals in our Food and Protective Packaging business segments. We expect to achieve our 2012 goals through these strengths, combined with increasing price benefits, continued economic recovery in other regions, a lower core tax rate and higher cost synergies.”
On a pro forma basis, sales increased 1%, or 3% on a constant dollar basis, reflecting growth in all businesses and regions, the company said. This included a modest increase in year-over-year results in North America and the Europe, Middle East and Africa (EMEA) region, and a 9% increase in developing regions.
The 5% increase in 2012 pro forma adjusted operating profit includes an estimated $15 million in cost synergies from the 2011-2014 Optimization & Integration Program achieved in the quarter and largely attributed to the Diversey segment. These synergies helped offset lower volumes primarily from European economic weakness and unfavorable mix in the Diversey segment. Adjusted EBITDA was $236 million, or 12.3% of net sales in the quarter, which held steady compared with pro forma 2011 adjusted EBITDA of $236 million, or 12.5% of pro forma net sales.
“We remain on track toward achieving our 2012 adjusted EBITDA and year-end net debt targets despite the uncertainty of the European economy and the uneven recovery in the U.S. We are confident in the cost synergies with Diversey with increased cost synergy estimates in 2012 and future years, and we believe our vision is beginning to resonate with our customer base,” commented William V. Hickey, president and CEO.
Hickey said that he was “quite pleased” with the overall performance of our Food and Protective Packaging business segments, which achieved both volume and price/mix growth during the quarter.
However, he noted that “Diversey segment sales were less than planned in the quarter due to ongoing weakness in Europe and the timing of specific customer orders in North America. We expect to see a more normalized order pattern in North America in that segment through the balance of the year. While we remain cautious about any European economic improvement, we are encouraged by high single-digit percent sales growth in developing regions and strong customer reception of our solutions resulting from our growth programs. We have built a strong foundation for growth across all of our businesses when Europe does recover.”
The Diversey segment reported sales decreased 2% to $751 million in the quarter, which would have compared to $764 million in 2011. On a constant dollar basis, first quarter 2012 sales were $767 million, which was slightly above last year. These sales results reflect an estimated 3% higher price and 2% lower volumes primarily in North America and in EMEA, specifically in Europe, the company said. Operating profit was $1 million in the quarter, which compares with $13 million in 2011. On an adjusted basis, operating profit was $8 million, or 1.1% of net sales, which compares with $21 million or 2.7% of net sales in 2011. Adjusted operating profit in 2012 was reduced by approximately $16 million due to the lower volumes noted above and unfavorable product mix.
As part of its integration of Diversey, Sealed Air is undertaking a number of actions to integrate and realign our organization, further improve operating efficiencies and lower our overall cost structure to maximize cost synergies and better meet customers’ needs.
According to Hickey, “We are maintaining our full year 2012 Adjusted EBITDA target of approximately $1.2 billion, our Free Cash Flow range of $450 to $475 million, and our Net Debt target of approximately $4.9 billion. We are also maintaining our Adjusted EPS guidance range of $1.50 to $1.60 and Cash EPS range of $2.10 to $2.20. While we remain cautious about any meaningful economic improvement in Europe this year, we have enough positive momentum and capacity elsewhere in our business to achieve our full year targets,” he said.
“We anticipate that our net sales will be at the lower end of our initial guidance range of $8.2 to $8.3 billion due to European economic conditions," Hickey added. "Our business continues to demonstrate organic growth through innovation, developing region expansion, and strong fundamentals in our Food and Protective Packaging business segments. We expect to achieve our 2012 goals through these strengths, combined with increasing price benefits, continued economic recovery in other regions, a lower core tax rate and higher cost synergies.”