“Our second quarter results demonstrate our significant progress in executing our Reinvent SEE strategy. In constant dollars, we delivered 12% Adjusted EBITDA growth on 4% higher sales. Adjusted EPS increased 25% compared to last year, as a result of profitable growth, lower tax expense and share repurchases,” says Ted Doheny, Sealed Air president/CEO.
In addition, the company completed the acquisition of Automated Packaging Systems, Inc. (APS), a leading manufacturer of automated-bagging systems (including the iconic Autobag® brand), for $510 million on a cash and debt-free basis.
“We are excited that APS is now part of the Sealed Air family,” adds Doheny. “APS expands the breadth of our automated solutions and sustainable packaging offerings and aligns with our Reinvent SEE goal of doubling our innovation rate over the next five years.”
Food Care net sales of $711 million decreased less than 1% as reported. Currency fluctuations had a negative impact on Food Care net sales of 4%, or $31 million. On a constant dollar basis, net sales increased 4%, primarily driven by volume growth and favorable price of more than 2% and 1%, respectively. Volume growth was led by 7%, 4% and 1% increases in South America, North America and EMEA, respectively, partially offset by a decline of 2% in APAC. Adjusted EBITDA increased 15% to $156 million, and margin expanded 290 basis points to 22%. Currency fluctuations had a $5 million unfavorable impact on Adjusted EBITDA. Adjusted EBITDA performance was driven by Reinvent SEE initiatives, including productivity improvements and restructuring savings, favorable price cost spread and volume growth, partially offset by unfavorable currency and higher operating costs, primarily labor inflation and non-material manufacturing costs.
Product Care net sales of $450 million increased 2% as reported. Currency fluctuations had a negative impact on Product Care net sales of 2%, or $10 million. On a constant dollar basis, net sales increased 4%, including 6%, or $26 million, from acquisitions and 1% on favorable pricing. Volume, excluding acquisitions, declined 3%, primarily due to 6% and 3% declines in APAC and EMEA, respectively. North America was down 1%. Despite lower volumes, Product Care increased Adjusted EBITDA to $84 million, up 7% from $79 million. Adjusted EBITDA margin of 19% increased 90 basis points due to the Company's Reinvent SEE initiatives, partially offset by higher operating costs, primarily labor inflation and non-material manufacturing costs, lower volumes and unfavorable currency.
Completes APS Acquisition
Sealed Air completed the acquisition of APS on August 1 for a purchase price of $510 million on a cash and debt-free basis. Approximately $60 million of the $510 million purchase price will be paid to APS’s European employees over the next three years in accordance with the closure of an APS deferred incentive compensation plan.