Sealed Air Corporation (SEE) Bundle
Understanding Sealed Air Corporation (SEE) Revenue Streams
Understanding Sealed Air Corporation’s Revenue Streams
Primary Revenue Sources:
- Food Segment: Contributed $2,660.1 million or 66.2% of total net sales in 2024.
- Protective Segment: Contributed $1,359.7 million or 33.8% of total net sales in 2024.
Year-over-Year Revenue Growth Rate
In 2024, the company reported total net sales of $4,019.8 million, a decrease of 2.2% compared to $4,111.4 million in 2023.
The breakdown is as follows:
| Period | Net Sales (in millions) | Year-over-Year Change (%) |
|---|---|---|
| 2024 | $4,019.8 | -2.2% |
| 2023 | $4,111.4 | N/A |
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to total revenue in 2024 is detailed below:
| Segment | Net Sales (in millions) | Percentage of Total Revenue (%) |
|---|---|---|
| Food | $2,660.1 | 66.2% |
| Protective | $1,359.7 | 33.8% |
| Total | $4,019.8 | 100% |
Analysis of Significant Changes in Revenue Streams
In the nine months ended September 30, 2024, net sales decreased by $125 million, or 8%, compared to the same period in 2023. The breakdown of this change includes:
- Lower Volumes: Decreased by $76 million primarily in the Americas and EMEA regions.
- Unfavorable Pricing: Decreased by $43 million across all regions, driven by raw material cost deflation.
The revenue changes by segment for the nine months ended September 30, 2024 are as follows:
| Segment | Net Sales (in millions) | Year-over-Year Change (%) |
|---|---|---|
| Food | $2,660.1 | +1% |
| Protective | $1,359.7 | -8% |
| Total | $4,019.8 | -2.2% |
A Deep Dive into Sealed Air Corporation (SEE) Profitability
A Deep Dive into Sealed Air Corporation's Profitability
Gross Profit Margin: For the three months ended September 30, 2024, gross profit was $401.5 million, representing a margin of 29.8% of net sales. This compares to a gross profit of $413.3 million and a margin of 29.9% during the same period in 2023. For the nine months ended September 30, 2024, gross profit was $1,218.3 million, with a margin of 30.3% compared to $1,236.4 million and a margin of 30.1% in 2023.
Operating Profit: The operating profit for Q3 2024 was $186.3 million, an increase of 18.2% from $157.6 million in Q3 2023. The operating margin improved to 13.9% from 11.4%. For the nine months ended September 30, 2024, operating profit stood at $576.9 million, up 6.2% from $543.4 million in 2023, with a margin of 14.4% compared to 13.2%.
Net Profit: Net earnings from continuing operations for Q3 2024 were $88.7 million, a 54.0% increase from $57.6 million in Q3 2023. The nine-month results reflect net earnings of $269.9 million, up 25.9% from $214.4 million in 2023.
| Metric | Q3 2024 | Q3 2023 | Change (%) | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Net Sales | $1,345.1 million | $1,381.8 million | (2.7%) | $4,019.8 million | $4,111.4 million | (2.2%) |
| Gross Profit | $401.5 million | $413.3 million | (2.9%) | $1,218.3 million | $1,236.4 million | (1.5%) |
| Operating Profit | $186.3 million | $157.6 million | 18.2% | $576.9 million | $543.4 million | 6.2% |
| Net Earnings | $91.7 million | $56.6 million | 62.0% | $272.0 million | $217.6 million | 25.0% |
Trends in Profitability: The gross profit margin has shown a slight decline, while operating profit has increased significantly year-over-year, indicating improved operational efficiency. The net earnings growth is substantial, reflecting effective cost management strategies and a focus on higher-margin products.
Industry Comparison: In comparison to industry averages, the operating margin of 13.9% for Q3 2024 is above the industry average of approximately 12%, indicating stronger operational efficiency. The gross margin of 29.8% also exceeds the industry average of 28%, showcasing effective cost management practices.
Operational Efficiency Analysis: The company has effectively managed costs, with a decrease in cost of sales as a percentage of net sales from 70.1% in Q3 2023 to 70.2% in Q3 2024, despite facing raw material cost deflation. The increase in operating profit margin suggests that the company is successfully controlling its operating expenses while maintaining sales levels.
Debt vs. Equity: How Sealed Air Corporation (SEE) Finances Its Growth
Debt vs. Equity: How Sealed Air Corporation Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the company had total debt of $4,531.8 million, which includes:
- Short-term borrowings: $139.7 million
- Current portion of long-term debt: $58.1 million
- Total long-term debt, less current portion: $4,334.0 million
The cash and cash equivalents stood at $386.0 million, resulting in a non-GAAP net debt of $4,145.8 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a critical measure of financial leverage. As of September 30, 2024, this ratio is calculated as follows:
| Total Debt | Total Equity | Debt-to-Equity Ratio |
|---|---|---|
| $4,531.8 million | $771.2 million | 5.87 |
This ratio significantly exceeds the industry average of approximately 1.5, indicating a high level of financial leverage.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In 2024, the company issued:
- $400 million of 6.500% senior notes due July 2032.
- $425 million of 7.250% senior notes due February 2031.
Credit ratings from major agencies include:
- Moody’s: Corporate Rating Ba1, Senior Unsecured Rating Ba2
- Standard & Poor’s: Corporate Rating BB+, Senior Unsecured Rating BB+
The outlook is negative for Moody's and stable for S&P.
How the Company Balances Between Debt Financing and Equity Funding
The company has maintained a balance between debt and equity funding through strategic financing activities. In the nine months ended September 30, 2024, net cash used in financing activities was ($281.7 million), compared to a net source of $974.2 million in the previous year.
Additionally, the company has not engaged in share repurchases in 2024, contrasting with $80 million in share repurchases in 2023.
Assessing Sealed Air Corporation (SEE) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio was 1.3x, unchanged from December 31, 2023.
Quick Ratio: The quick ratio also remained stable at 0.8x for both periods.
Working Capital: Working capital (current assets less current liabilities) increased to $466.6 million from $454.3 million, reflecting a $12.3 million increase or 3% over the nine months ended September 30, 2024.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Ratio | 1.3x | 1.3x |
| Quick Ratio | 0.8x | 0.8x |
| Working Capital | $466.6 million | $454.3 million |
Cash Flow from Operating Activities: For the nine months ended September 30, 2024, cash flow provided by operating activities was $483.8 million, compared to $192.5 million for the same period in 2023, representing an increase of $291.3 million.
Cash Flow from Investing Activities: Net cash used in investing activities was ($165.2 million) in 2024, significantly lower than ($1,326.0 million) in 2023, primarily due to reduced acquisition activity.
Cash Flow from Financing Activities: In 2024, net cash flows from financing activities amounted to ($281.7 million), a decrease from a positive $974.2 million in 2023.
| Cash Flow Category | 2024 (Nine Months) | 2023 (Nine Months) | Change |
|---|---|---|---|
| Operating Activities | $483.8 million | $192.5 million | $291.3 million |
| Investing Activities | ($165.2 million) | ($1,326.0 million) | $1,160.8 million |
| Financing Activities | ($281.7 million) | $974.2 million | ($1,255.9 million) |
Liquidity Concerns: As of September 30, 2024, cash and cash equivalents totaled $386 million, with approximately $334 million (or 87%) located outside the U.S. The company believes that its U.S. cash balances and committed liquidity facilities are sufficient to meet operational needs and current debt obligations.
Debt Obligations: Total debt stood at $4,531.8 million, with $197.8 million classified as current debt. Net debt, defined as total debt less cash and cash equivalents, was $4,145.8 million.
| Debt Category | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Debt | $4,531.8 million | $4,690.3 million |
| Current Debt | $197.8 million | $176.4 million |
| Net Debt | $4,145.8 million | $4,344.2 million |
Is Sealed Air Corporation (SEE) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the company are as follows:
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 16.3 |
| Price-to-Book (P/B) Ratio | 2.0 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | 10.5 |
Over the last 12 months, the stock price has shown the following trends:
| Month | Stock Price ($) |
|---|---|
| December 2023 | 45.30 |
| March 2024 | 48.75 |
| June 2024 | 50.10 |
| September 2024 | 43.20 |
The dividend yield and payout ratio are as follows:
| Metric | Value |
|---|---|
| Dividend Yield | 1.4% |
| Payout Ratio | 32.5% |
Analyst consensus on stock valuation indicates the following recommendations:
| Analyst Recommendation | Count |
|---|---|
| Buy | 8 |
| Hold | 5 |
| Sell | 2 |
The net earnings from continuing operations for the nine months ended September 30, 2024, were:
| Period | Net Earnings ($ millions) |
|---|---|
| 2024 | 269.9 |
| 2023 | 214.4 |
Overall, the financial health and valuation metrics suggest a comprehensive view of the company's market position as of 2024.
Key Risks Facing Sealed Air Corporation (SEE)
Key Risks Facing Sealed Air Corporation
Sealed Air Corporation faces several internal and external risk factors that could impact its financial health in 2024. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The packaging industry is highly competitive, with numerous players vying for market share. In the three months ended September 30, 2024, net sales decreased by $41 million, or 8%, compared to the same period in 2023. This decline was attributed to lower volumes of $28 million across the Americas and EMEA regions, indicating pressure from competitors and market saturation.
Regulatory Changes
Changes in environmental regulations and packaging standards can impose additional costs on operations. The company has reported unfavorable price impacts totaling $71 million due to raw material cost deflation, which could be exacerbated by compliance costs associated with new regulations.
Market Conditions
Market conditions, including economic downturns and shifts in consumer demand, can significantly affect sales. For instance, net sales for the nine months ended September 30, 2024, decreased by $125 million, or 8%, with an unfavorable foreign currency impact of $6 million.
Operational Risks
Operational inefficiencies or disruptions can hinder performance. The company's adjusted EBITDA decreased by $25 million in 2024 compared to 2023, primarily due to lower volumes and unfavorable net price realization.
Financial Risks
Financial risks include high levels of debt. As of September 30, 2024, total debt was reported at $2.4 billion, with a net debt of $2.0 billion after accounting for cash and cash equivalents of $386 million.
Strategic Risks
Strategic risks involve challenges in integrating acquisitions. The company incurred $79 million in special items related to restructuring and acquisition costs in the nine months ended September 30, 2024.
Mitigation Strategies
To mitigate these risks, the company has implemented cost control measures and productivity initiatives, such as the CTO2Grow Program. These strategies have resulted in lower operating costs, providing some buffer against external pressures.
| Risk Type | Description | Impact ($ millions) |
|---|---|---|
| Industry Competition | Net sales decrease due to competitive pressure. | 41 |
| Regulatory Changes | Cost increases from compliance with new packaging regulations. | 71 |
| Market Conditions | Economic downturn affecting consumer demand. | 125 |
| Operational Risks | Decrease in adjusted EBITDA due to inefficiencies. | 25 |
| Financial Risks | Total debt levels impacting financial flexibility. | 2,400 |
| Strategic Risks | Integration costs from recent acquisitions. | 79 |
Future Growth Prospects for Sealed Air Corporation (SEE)
Future Growth Prospects for Sealed Air Corporation
Analysis of Key Growth Drivers
Sealed Air Corporation is focusing on several key growth drivers to enhance its market position and revenue potential. These include:
- Product Innovations: The company is investing in new product development, particularly in sustainable packaging solutions. This includes innovations aimed at reducing waste and enhancing efficiency.
- Market Expansions: Expansion into emerging markets is a priority. The Asia-Pacific region, particularly, is expected to see increased sales due to rising demand for packaging solutions.
- Acquisitions: The acquisition of Liquibox has added significant capabilities and revenue streams. This acquisition is projected to contribute approximately $23.5 million to revenues in 2024.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, Sealed Air Corporation is projecting net sales of approximately $4,019.8 million, reflecting a slight decrease of 2.2% compared to 2023. The company anticipates that the Food segment will experience low-single-digit volume growth driven by competitive wins and new product launches, while the Protective segment is expected to face ongoing challenges.
Strategic Initiatives and Partnerships
The company is implementing several strategic initiatives aimed at driving future growth:
- CTO2Grow Program: This program is designed to enhance operational efficiency and reduce costs, thereby increasing profitability.
- Sustainability Partnerships: Collaborations with organizations focused on sustainability can enhance brand reputation and drive demand for eco-friendly products.
Competitive Advantages
Sealed Air Corporation possesses several competitive advantages that position it favorably for future growth:
- Strong Brand Recognition: The company is well-known in the packaging industry, which helps secure customer loyalty.
- Diverse Product Portfolio: A wide range of packaging solutions allows the company to cater to various industries, reducing dependency on any single market segment.
- Global Distribution Network: A robust distribution system enables efficient delivery of products worldwide, enhancing customer satisfaction and retention.
Financial Performance Overview
Below is a summary of the financial performance metrics for Sealed Air Corporation as of September 30, 2024:
| Metric | 2024 (in millions) | 2023 (in millions) | Change (%) |
|---|---|---|---|
| Net Sales | $4,019.8 | $4,111.4 | (2.2) |
| Gross Profit | $1,218.3 | $1,236.4 | (1.5) |
| Operating Profit | $576.9 | $543.4 | 6.2 |
| Net Earnings | $272.0 | $217.6 | 25.0 |
| Basic EPS | $1.87 | $1.51 | 23.8 |
In summary, the financial outlook for Sealed Air Corporation reveals a focus on innovation and strategic expansion, with projections indicating resilience despite a slight decline in overall sales.
Sealed Air Corporation (SEE) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- Sealed Air Corporation (SEE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Sealed Air Corporation (SEE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Sealed Air Corporation (SEE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.