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By the numbers: Q3 2024
Net sales: $1.35B
Down 2.7% year over year
Food net sales: $897.9M
Up 0.5% year over year
Protective net sales: $447.2M
Down 8.4% year over year
Net earnings: $91.7M
Compared with $56.6M in the prior year period
- Q3 recap: Sealed Air is experiencing momentum in its newly reorganized food packaging business and ongoing challenges in its protective packaging business, according to executives. The third quarter saw lower pricing across both segments. In food, volumes grew in all regions; global protein markets were positive, but sales declined, said CFO Dustin Semach during an earnings call on Thursday. But in protective, there were volume declines in both the Americas and Europe; Semach noted depressed manufacturing activity globally, which impacted industrial portfolios.
- A new way under Kivits: CEO Patrick Kivits, who joined in July from WestRock, said he’s been talking with customers, distribution partners and investors. “Through these discussions, it became clear that reorganizing into two verticals, food and protective, was a critical foundational step to enhance our customers' experience and maximize shareholder value. Each business is distinct with unique end markets, customer base, innovation needs and manufacturing assets,” he said. “We are returning to our core value proposition as a company, combining industry-leading material science, best-in-class services and differentiated automation offering to deliver world class packaging solutions.”
- Next steps for two verticals: In the protective business, Kivits said the team is working to address “sustainability-related portfolio gaps.” Meanwhile, in food, Kivits said Sealed Air is trying to accelerate growth outside of its shrink bags business “with case-ready and fluid and liquid solutions.” The company will continue to make the food business a target of cost-cutting initiatives until it sees volume and price improvements, he said.
- Building the right team: Byron Racki is leading the turnaround of the protective vertical as of June, having previously worked at Trivium Packaging and Pactiv Evergreen. Kivits highlighted “he has successfully navigated substrate and packaging format transitions in his previous roles.” In October, Steve Flannery joined Sealed Air to lead the food vertical, following experience at Avery Dennison. “We focused on bringing in talent from other packaging companies with strong commercial and portfolio expertise, looking for leaders that have successfully improved commercial execution and navigated sustainable portfolio shifts while consistently delivering sales and profit growth,” Kivits said.
- Leaning into paper packaging: Kivits said that in interacting with attendees at Pack Expo International in Chicago this week, Sealed Air was met with some surprise at the company’s number of paper offerings. Kivits said Sealed Air, which has many plastic-based offerings, wants to be able to service existing customers looking for fiber-based options, though they are more expensive.
- Restructuring costs and savings: During the quarter, the company incurred $7.2 million in restructuring charges related to headcount reductions and $7.9 million in other costs related to its three-year “CTO2Grow Program” announced last year, which is expected to cost a total of $140 million to $160 million. From the start of the year through Sept. 30, the company said the program resulted in “incremental cost benefits of $71 million related to reductions in operating costs.”
- Outlook: The company projects sales in 2024 will total between $5.375 billion and $5.425 billion. This narrows the guidance given last quarter, which projected a range between $5.2 billion and $5.6 billion.
