Sealed Air Corporation Q3 FY2025 earnings call

Macro Environment

• Softer global growth outlooks, muted industrial production, and a consumer with decreasing purchasing power, especially in North America lower to middle income households.

Protective Segment

• Turnaround on track, materials volume inflected growth since 2021, North American business stabilized, progress in EMEA and APAC, R&D focus on better product market fit, network optimization.

Food Segment

• Resilient despite headwinds, retail end markets see trade downs, foodservice markets in US flat but international resilient, rotation into retail and foodservice end markets, talent upgrade.

In the third quarter, Food net sales were $910 million, consistent with last year on a constant currency basis, with adjusted EBITDA of $215 million, up 3% in constant currency. Protective sales were $442 million, down 3% on a constant currency basis, with adjusted EBITDA of $78 million, up 3% as reported and 1.5% in constant currency.

Full Year Outlook

• Targeting $5.3 billion midpoint for sales.
• Adjusted EBITDA expected range raised to $1.12 billion to $1.14 billion.
• Full year adjusted EPS expected $3.25 to $3.35.
• Full year free cash flow expected ~$400 million.
• Capital expenditure projection lowered to $175 million.

• Market pressures accelerating in Q4, particularly in North America Food.
• Uncertainty around U.S. government shutdown and impact on SNAP program.
• Persistent inflation and labor costs affecting pricing.

Q: George Staphos from Bank of America Securities asked about food segment, beef production and 2026 EBITDA.

A: Dustin Semach discussed U.S. beef cycle dynamics, consumer rotation into value grocery, and uncertainty around 2026 due to market and transformation factors.

Q: Ghansham Panjabi from Baird asked about EMEA segment operating environment and share gains.

A: Dustin Semach mentioned EMEA region as strong performer, broad-based strength across portfolios.

Q: Philip Ng from Jefferies asked about Q4 demand correction and price degradation.

A: Kristen Actis-Grande and Dustin Semach discussed softer macro environment, volume pressure, and ongoing execution efforts.

Q: Matthew Roberts of Raymond James asked about Protective playbook, capital allocation, and margin preservation.

A: Dustin Semach talked about borrowing from Protective playbook, capital allocation linked to transformation, and margin preservation through productivity.

Q: Edlain Rodriguez from Mizuho asked about Protective volume inflection and sustainability.

A: Dustin Semach discussed Protective volume inflection, stabilization in Q4, and cautious outlook for 2026.

Q: Jeffrey Zekauskas from JPMorgan asked about SG&A costs and restructuring.

A: Dustin Semach discussed SG&A cost reduction, ongoing restructuring, and sustainable initiatives.

Q: Anthony Pettinari from Citi asked about EBITDA bridge and CapEx offset.

A: Kristen Actis-Grande and Dustin Semach explained EBITDA bridge components and free cash flow guidance.

Q: Anojja Shah from UBS asked about network optimization.

A: Dustin Semach discussed holistic network optimization for both segments.

Q: Christopher Parkinson from Wolfe Research asked about portfolio assessment.

A: Dustin Semach mentioned always looking for shareholder value opportunities while focused on transformation.

Q: Mike Roxland from Truist Securities asked about Protective large account wins and Kristen's view on Sealed Air.

A: Dustin Semach talked about Protective large account wins, and Kristen discussed transformation opportunity and operating system improvement.

Q: Stefan Diaz from Morgan Stanley asked about foodservice volume strength.

A: Dustin Semach discussed foodservice volume strength from fluids and liquids portfolio, new products, and labor optimization.

Q: Gabe Hajde from Wells Fargo asked about facility disentanglement and pricing.

A: Dustin Semach discussed facility disentanglement, labor inflation impact, and pricing dynamics.

Q: Arun Viswanathan from RBC asked about volume growth weakness and duration.

A: Dustin Semach discussed Q4 volume weakness, consumer rotation into value grocery, and expected persistence into first half of 2026