Sealed Air Corporation Q2 FY2025 earnings call

• Leadership update: Kristen Actis-Grande to be new CFO, Roni Johnson recognized for interim role. - Trade policies: Largely domestic production and USMCA exemption position well against tariffs, net tariff impact not material in Q2. - Protective segment: Turnaround in progress with early signs of progress, volumes down 2%, sales and adjusted EBITDA up sequentially, network optimization ongoing. - Food segment: Resilient but facing market pressures, shift in consumer spending to value grocery affecting end markets, U.S. beef cycle down impacting volumes. - Capital allocation: Below $4 billion net debt since Q4 2022, on track for free cash flow guidance, focus on debt paydown.

Food segment: Net sales were $896 million, flat as favorable pricing and formula pass-throughs were offset by softer volumes. Adjusted EBITDA was $210 million, up 3%. Protective segment: Net sales were $439 million, down 3%, and adjusted EBITDA was $78 million, down 5%. Volume-wise, Food volume weakness was due to softer industrial food processing in North America, while Protective volumes were down 2% with fulfillment portion down mid-single digits but industrial portfolio up. Price-wise, Food had 50 basis points increase, Protective had about 2% decline.

• Maintaining sales guidance range of $5.1 billion to $5.5 billion and adjusted EBITDA guidance range of $1.075 billion to $1.175 billion. - Adjusted earnings per share expected slightly above midpoint of previous range $2.90 to $3.30. - Free cash flow midpoint maintained at $400 million. - Foreign currency impacts better than anticipated, net price realization assumptions consistent, adjusted tax rate expected 26%-27% for the year. - Expect net sales ~$1.3 billion, adjusted EBITDA ~$270 million, adjusted EPS ~$0.68 in Q3.

• Tariff impacts on certain specialty resins and pockets of the business, need for production/procurement optimization and pricing actions. - Market uncertainty and global trade policy dynamics affecting end markets and volume expectations. - Volatility in cattle cycles and resin markets impacting Food and Protective segments respectively.

Q: What's the volume impact for Food second half and Protective volume expectations?

A: Food volume mix in second half expected down 3 points in Q3 and Q4. Protective maintained second half outlook despite overperformance in Q2, with industrial portfolio showing strength.

Q: Commentary on Food margins and near-term outlook?

A: Food margins are high, $400 million business impact is contained, network optimization and productivity efforts will balance margins.

Q: Why is the full year EBITDA range wide?

A: Conservatism due to dynamic environment, low visibility, and need to get through Q3 for more clarity.

Q: Procuring specialty resins issue?

A: No issue with procuring, but certain specialty resins in areas affected by tariffs require production/procurement optimization.

Q: Price raw material gap in Protective?

A: Deflationary resin environment causing gap, expect improvement when resin markets stabilize.

Q: Cattle cycle in South America and Australia?

A: Still peakish, strong years ahead.

Q: CTO cost savings buckets?

A: Buckets include go-to-market reorganization, supply chain, and G&A optimization.