The operator introduces the Q3 2023 Sealed Air Earnings Conference Call and reminds participants that the call is being recorded. Brian Sullivan, Investor Relations, introduces the speakers and mentions that a slide presentation is available for download. He also notes that statements made during the call are forward-looking and may differ due to various factors. The use of non-U.S. GAAP financial measures is also mentioned, with corresponding U.S. GAAP results provided in the presentation. Emile Chammas and Dustin Semach will be speaking on the call.

Emile Chammas, Interim Co-CEO of SEE, discusses the company's leadership transition and provides an update on the markets they serve. He explains the Co-CEO operating model and how it will accelerate the company's turnaround and improve execution. Chammas also mentions the focus on addressing current market dynamics and meeting customers' evolving packaging needs. The company is facing multiple challenges, including soft retail demand and a global capital cycle that is net down.

Despite a slow recovery in Asia and a recession in Europe, the Protective packaging business has performed well. The company is focusing on acquiring new customers and improving their competitive positioning in the market by investing in lead generation and marketing, rationalizing costs, and financing innovation efforts. They are also continuing to prioritize Automation, which provides customers with a single point of contact for materials and equipment. The company has already achieved $40 million in cost savings and has exited over 600 positions in order to optimize their workforce.

In the third quarter, the company completed the closure of the Kevothermal temperature assurance business and decided to exit the plant-based roll-stock business. The company will continue to focus on bringing sustainable solutions while maintaining competitiveness in the market. The company is also working on cost reduction and portfolio optimization. The new co-leader, Dustin, has quickly become a trusted business partner and they are looking for opportunities to grow and improve efficiency. In the third quarter, net sales were flat and adjusted EBITDA was down 6% compared to last year.

In the third quarter, the company saw improved volumes and adjusted EBITDA, excluding M&A and FX. Adjusted earnings per share were down compared to last year, mainly due to lower adjusted EBITDA and higher interest expense. Liquibox contributed 6% to total sales, but organic declines and weakness in food retail markets offset this. Food net sales were flat, with price offsetting volume declines, and adjusted EBITDA increased by 7% due to contributions from Liquibox.

In the third quarter, protective net sales declined by 15% due to lower volume and market pressures. Adjusted EBITDA also decreased by 15%, but margins improved by 30 basis points due to cost control. Net sales were flat in EMEA and declined in Americas, while Asia Pac remained flat. Free cash flow improved by 33% compared to the same period last year, primarily due to inventory reduction. The company plans to focus on debt reduction and aims to drive below 3.5x net debt to adjusted EBITDA over the next 2 years. They also plan to refinance their December 2024 notes. The company's outlook for 2023 will be discussed on Slide 9.

The company's full year 2023 guidance remains unchanged, with Q3 top line performance meeting expectations and adjusted EBITDA exceeding expectations. However, Q4 sales are expected to be slightly below the midpoint of the full year range due to FX headwinds. The company expects an L-shape recovery through 2023 and into 2024, with flattish revenue growth in fiscal year 2024. The company's cost reduction and operational excellence initiatives are expected to drive adjusted EBITDA growth next year. The company's leadership transition will not disrupt their plans to navigate the current market and maximize value for shareholders.

The speaker thanks the SEE team and announces a Q&A session. They then answer a question about their plans to get closer to the market and customers, which includes investing in revenue operations and moving resources from global projects to local ones. They also mention balancing longer and shorter term projects to address customers' immediate needs.

The company is shifting its focus to resource allocation and investing in marketing and revenue operations. The new leadership is planning to visit plants and meet with customers in the next two weeks. There is a reevaluation of the automation and solutions offering, but the company is not abandoning these areas and will continue to pursue both short-term and long-term growth opportunities.

The company's key enablers for executing their strategy and winning in the marketplace include automation and driving into more capabilities. While they work on longer-term improvements, they are also focused on executing and winning in the marketplace by shifting and allocating resources. The interim designation of two co-CEOs does not change the current balance of prioritizing both cost take-out and commercial efforts. The two leaders continue to work together and the company is dedicated to balancing both areas.

The speaker emphasizes the company's focus on execution and improving day-to-day operations to improve overall results. They mention a decline in automation and eCommerce, which is due to uncertainty in the current economic environment. The company is actively working to create automation solutions and is balancing resources between long-term projects and immediate market success.

Emile Chammas and Dustin Semach from Liquibox discuss the company's growth initiatives and pricing environment during a Q&A session with Jeff Zekauskas from JPMorgan. Chammas mentions that the CRYOVAC fluid side has been making good progress, while Liquibox has faced operational issues that have been addressed and the portfolio has been expanded. Semach adds that the pricing environment is beginning to shift, with resin prices affecting Protective more in the spot market.

The company's fourth quarter has seen a slight increase in competition, leading to a decrease in volumes and intensifying competition. This, coupled with other trends, has caused the company to be cautious about their 2024 outlook. In response to a question about their guidance for the year, the company reiterated their conservative stance due to limited visibility and the impact of the GDP in Europe on their bottom line.

The company is focused on optimizing its portfolio and exiting certain product lines, such as the roll-stock business. The new management approach is accelerating this effort, and they are looking at the entire portfolio to determine the best course of action to create value and reduce debt.

The company has amended its bylaws in response to an SEC rule regarding universal proxy and to improve corporate governance. This is a common practice among companies and is not related to any potential activists. The company is also still considering pairing its Protective portfolio, but there are no updates on the progress or amount of the portfolio that may be paired.

The speaker discusses the Protective portfolio and the company's efforts to optimize it. They mention Kevothermal as an example and state that they are currently in the process of dissecting various aspects of the portfolio. There is no update on progress, but they are accelerating the pace. In response to a question about the synergies between the two businesses and potential separation of the Protective portfolio, the speaker mentions that there are similarities in terms of raw materials and purchasing power. They do not provide a definitive answer but suggest that the company's scale and purchasing power are key advantages.

The speaker discusses the potential for action between the two businesses and reminds everyone that Protective is currently at the bottom of a cycle, which should be taken into consideration for timing. They also mention the independent strategies for each business but highlight the overall benefits of combining materials and equipment for customers. The next question asks about a customer's press release about migrating to 100% paper-based and if this is related to working closely with customers and if it requires additional investment in the P&L or CapEx.

The speaker asks about the potential impact on P&L and the $140 million to $160 million Cost Take-Out to Grow goal. They also inquire about a $30 million discrete fourth quarter revenue item and the impact of polyethylene pricing on Q4. Dustin explains that the $30 million item is due to nonoperational FX issues and that underlying volume estimates are still intact. Emile discusses the company's focus on sustainable offerings and mentions that they have seen some share loss in parts of their portfolio.

The company is making progress in automating and developing sustainable solutions for its Protective and Food segments. While the Food segment is facing headwinds due to customer preferences and a slowdown in automation, the company is pursuing initiatives to improve growth. Excluding the impact of the Liquibox acquisition, Food volumes would have grown in the third quarter.

The company is seeing strong demand for their automation solutions and is focused on bringing them to market. They are also focused on improving their competitive positioning in the food industry and reducing costs in order to drive growth in 2024. They are expecting flat sales, increased volumes, and higher EBITDA in 2024.

The company is still in the process of determining its 2024 projections and is facing challenges in the beef cycle and competitive positioning. They expect to gain share in the Food business and see growth in Protective if markets improve. Overall, they are expecting low single-digit volume growth in Food and mid single-digit volume decline in Protective.

The speaker discusses positive news about volume stabilization in 2023 and the strength of the fourth quarter cycle. They mention Cost Take-Out to Grow as a way to improve their competitive positioning within Protective. The questioner asks about the percentage of their portfolio that is disadvantaged on the cost curve and how CTO2Grow and other imperatives can catch them up. They also ask about small wins in the protein markets and why the company is gaining share despite headwinds.

The speaker discusses the company's performance in the protein market and states that they do not see any significant competition in their bags business or automation solutions. They are confident in their ability to continue gaining market share and taking away large customers from competitors. They estimate that only about 10-15% of their Food business is price-sensitive, and they are working on reducing production costs to remain competitive.

The Protective segment of SEE's business is focused on addressing price sensitivity and areas without automation, which make up about 20-25% of their portfolio. However, these areas have simpler problem-solving processes due to fewer product offerings. In contrast, the roll-stock business has been limited to niche premium markets, but SEE plans to expand into broader opportunities. Emile and Dustin are optimistic about SEE's future and look forward to their next conference in February.

This summary was generated with AI and may contain some inaccuracies.