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By the numbers: Q4 and full-year 2023
Q4 net sales: $1.4B
Down 2% year over year
2023 net sales: $5.5B
Down 3% year over year
Q4 net earnings: $125M
Up 32% year over year
2023 net earnings: $339M
Down 31% year over year
- Q4 results: SEE’s end-of-year 2023 performance was impacted by “challenging protein cycles and trade downs in our food business as well as a muted fourth quarter seasonal pick up in our protective segment,” interim co-CEO Emile Chammas said during a fourth-quarter and full-year earnings call Tuesday. Q4 organic sales were down 3% in SEE’s food packaging business and down 10% in its protective packaging business.
- CEO search: Chammas, the company’s chief operating officer, and CFO Dustin Semach have served as co-CEOs since the company parted ways with former CEO and board member Ted Doheny in October. In its earnings release, the company reported that the CEO search process “is well underway” and it’s targeting completion “over the coming months.”
- Restructuring progress: SEE announced a three-year restructuring program last August. The company expects to have $90 million in year-over-year cost savings as a result of program initiatives in 2024. SEE completed three plant closures in 2023 and is in the process of closing four additional sites, with more sites under review, Chammas said. The company’s recent Worker Adjustment and Retraining Notification notice in New Jersey indicates 83 workers at a site in Saddle Brook will be laid off between June and September 2024. The company is also “rightsizing” operations in Argentina, Chammas said. Another reorganization step the company has taken is to reestablish food and protective operating units within each region, after determining that the previously blended commercial teams “contributed to a loss of customer centricity and reduced commercial rigor,” Chammas said.
- Muted expectations for recovery: “On a positive note, the destocking of downstream inventories is largely complete,” said Chammas. Still, “we have not yet seen this translate into improving demand for our customers’ businesses and subsequent restocking or uptick in volumes for our packaging solutions.” Chammas said the company expects end markets to be better this year than in 2023, but there is not a near-term growth catalyst. Semach said that the team will focus on “transformation at SEE” in 2024, including “restoring business fundamentals.” He pegged 2025 as the likely year for growth to normalize.
- Food packaging and protective packaging trends: Semach said food business volumes are expected to grow about 1% in 2024. SEE continues to integrate its 2023 Liquibox acquisition, which contributed $70 million in Q4, or 5% of total company sales, Semach reported. Meanwhile, the company expects a slower-than-previously-anticipated market recovery in the protective packaging business; 2024 volumes are now expected to decline by 1%. “Protective volumes are expected to recover towards the end of 2024 as our new commercial model gains traction and market dynamics improve,” Semach said.
- Marketing sustainability: Executives touted SEE’s recently released bio-based, industrially compostable tray for protein packaging; 54% of the tray’s material is from “cellulose renewable sources,” with the rest being acetic acid and other processing aids, Chammas said. SEE also plans to introduce more “recycle-ready” products in 2024. Chammas said the company was previously “slow” as the protective packaging market shifted to adopt fiber, but that it’s introducing a paper solution in its Autobag business, which could have a small impact this year.
- Outlook: SEE expects net sales will total between $5.2 billion and $5.6 billion in 2024. The company projects free cash flow between $325 million and $425 million, and capital expenditures of approximately $230 million.
