The paragraph introduces the Q4 2024 Sealed Air Earnings Conference Call, which is in listen-only mode for participants until the Q&A session. Mark Stone, the new Vice President of Investor Relations, speaks about his new role and introduces key personnel, including the new president and CEO, Dustin Semach, and interim CFO, Ronnie Johnson. He mentions the availability of a supplemental slide presentation and covers the forward-looking statements and non-GAAP financial measures discussed in the call. Relevant information can be found on Sealed Air's website and in their financial reports.

In the paragraph, Dustin Semach, the new CEO of Sealed Air, addresses the recent CEO transition and reassures stakeholders that the company's strategic direction remains unchanged. He emphasizes the progress made in stabilizing business performance, strengthening the leadership team, and focusing on two main segments: food and protective. Semach outlines the company's commitment to accelerating execution to improve outcomes for customers and shareholders. He reports that Sealed Air exceeded expectations in the fourth quarter of 2024, surpassing targets in adjusted EBITDA, adjusted EPS, and free cash flow, and maintaining consistent performance across six quarters.

In 2024, the company’s food business performed well, compensating for challenges in the protective segment, achieving mid-single-digit adjusted EBITDA growth despite a 2% sales drop. They have operationalized and fully integrated commercial innovation and supply chain teams, aiming to streamline costs and enhance agility. In 2025, the focus will be on unlocking potential in each business, targeting mid-single-digit earnings growth and high cash flow conversion. They plan to deleverage the balance sheet over two years, enabling balanced capital allocation, including M&A and shareholder returns. The reorganization by segment offers better visibility into cost structures and aids resource allocation to maximize long-term customer value.

The company is undergoing a transformation by shifting its investment strategy and improving its commercial execution and service levels. The focus is on creating a high-performing, engaged, and accountable culture by empowering teams to make decisions and own customer outcomes. Despite progress, particularly in the food sector, adjustments continue to ensure the right talent is in place. The company faces challenges from macroeconomic factors like global trade uncertainty, tariff impacts, input costs, and foreign exchange fluctuations. While most of its operations are domestic, the company plans to mitigate tariff impacts by adjusting the supply chain and potentially passing costs to customers. The company is partnering with customers to navigate these impacts and currently only considers tariffs that are in effect. With a solid foundation, the focus is on execution in its food and protective businesses. In 2025, the food business, which grew in 2024, will continue to emphasize core values that established Cryovac's brand strength.

The paragraph discusses the company's efforts in providing top packaging solutions, which enhance customer outcomes by improving processing yields and product shelf life. Despite challenges in the North American beef cycle affecting shrink bag volumes, the company is focusing on less volatile growth areas like Case Ready and Fluids. The company expects mid-single-digit earnings growth in 2025, supported by innovations in automation and sustainable options. The protective segment is undergoing repositioning to enhance customer focus and stabilize business volumes. Several transformation initiatives from the previous year have been completed to restore customer-centricity.

The company reorganized its North American go-to-market team to simplify operations and strengthen relationships with distribution partners. This includes aligning their field operations, streamlining pricing, and implementing growth-oriented incentives. These changes enhance flexibility and control over their product mix, shifting focus to high-value solutions like AutoBag and Instapack. They aim to diversify their offerings, particularly in consumer markets like e-commerce, by commercializing fiber mailers and hybrid auto bags. Progress has been made with the Jiffy and Boss Mailer but industrialization has been slow. They plan to expand into multiple US markets, with positive customer and partner interactions following a product launch at PAC Expo. The fiber mailer market is substantial, with offerings growing faster than alternatives.

The paragraph discusses the company's strategy to regain market share in e-commerce by scaling up its offerings in mailers and auto bagging, aiming for a growth in volumes in the second half of the year. The firm focuses on improving performance metrics like win rates and customer retention while managing costs proactively. It highlights progress in reorganizing business segments for better resource allocation and productivity, leading to the closure of two plants to optimize operations. The company anticipates returning to top-line growth, driven by momentum in the food sector, and aims for mid-single-digit EBITDA growth through productivity initiatives and cost-saving measures, while enhancing free cash flow and reducing debt.

The paragraph discusses the financial performance and strategic focus of Sealed Air amid challenges such as tariffs and unfavorable foreign exchange (FX) movements. Despite these challenges, the company remains committed to managing controllable aspects like customer care and cost structure. Ronnie Johnson, the interim CFO, reviews Sealed Air's financial results for the fourth quarter and full year of 2024, noting that net sales were slightly up on a constant currency basis for the quarter but down for the full year. Adjusted EBITDA and EPS saw slight declines due to higher tax expenses. The company did not repurchase any shares, and the adjusted EPS decrease was primarily due to increased tax expenses. Sales remained flat in the quarter due to FX headwinds, with growth in food being offset by declines in protective products.

In the fourth quarter, the company's adjusted EBITDA decreased by $3 million (1%) to $271 million, with a margin decline to 19.7%. The decline was due to the restoration of the incentive compensation pool and unfavorable pricing, despite positive volume and productivity gains. Food sales increased by 5% to $923 million, driven by volume growth in all regions, particularly in the shrink bag business and Case Ready solutions. The food segment's adjusted EBITDA rose by 7% to $208 million, with a margin increase to 22.5%, due to productivity and volume growth offsetting higher compensation costs and unfavorable foreign exchange effects. The protective business saw a 7% decrease in net sales to $450 million, with adjusted EBITDA falling by 26% due to lower volume and unfavorable pricing. In regional terms, the Americas experienced 1% growth due to food strength, EMEA 1% growth due to solid volume in food, and APAC 1% growth driven by Australian meat cycles, with weakness in Asia's protective segment.

Starting in Q1 2025, the company will shift its reporting focus from sales by region to sales by segments to better align with business management strategies. Despite increased restructuring costs, the company generated $454 million in free cash flow in 2024, slightly down from $467 million in the previous year. Efforts to deleverage the balance sheet reduced the net leverage ratio to 3.6 times by the end of 2024 from a peak of 4.1 times earlier in 2023. The company aims to further decrease this ratio to 3.5 times by 2025 and approximately 3 times by 2026. With $1.4 billion in total liquidity, the company projects 1% net sales growth for 2025, excluding a 2% foreign exchange headwind. Food segment sales are expected to grow by 2%, while the protective segment is anticipated to decline by 3% year over year.

The company anticipates ongoing challenges in the first half of the year, with expected improvements in the second half leading to an overall 2% decline in annual volume. Pricing pressures and unfavorable foreign exchange impacts are expected to reduce revenues and adjusted EBITDA by 1% and $25 million, respectively. Full-year adjusted EBITDA is projected between $1.075 billion and $1.175 billion, marking approximately 1% growth at the midpoint with a 21% margin. Cost savings of $90 million are anticipated to offset pricing and FX challenges. Adjusted EPS is estimated between $2.90 and $3.30 per share, assuming a 27% tax rate. The company expects $400 million in free cash flow and plans $220 million in capital expenditures. For Q1 2025, they project net sales of $1.26 billion, adjusted EBITDA of $260 million, and adjusted EPS between $0.65 and $0.70. The first quarter outlook includes 3% FX headwinds and pressures from protective sales and the North American beef market. The company will update forecasts as conditions evolve.

The company performed better than expected this year and is well-positioned for growth in 2025, despite ongoing uncertainty. They are focusing on stabilizing their protective business while continuing to excel in food. With a solid leadership structure and strategy, they aim to drive market outperformance and shareholder returns. In the Q&A, Anthony Pettinari from Citi asks about the negative protective volumes, to which Dustin Semach responds that the trends in 2025 are expected to be similar to 2024, with industrial and fulfillment sectors seeing significant downturns except for some bright spots like shrink films.

The paragraph discusses Sealed Air's business outlook, noting a shift in volume trends for 2024 and 2025, with lighter volumes expected in the first half before evening out in the second half. The company experienced some churn in the previous year, notably losing business from Amazon as they switched to paper-based systems. In terms of tariffs, the company is only considering those already enacted, specifically mentioning new Chinese tariffs that are expected to have minimal impact on their business. Most of Sealed Air's operations involve domestic production for domestic consumption, which limits the impact of cross-border tariff issues.

The paragraph discusses the potential impact of North American trade, particularly with Mexico and Canada, on a company's business. The company is adjusting its supply chain and may pass on costs to customers if needed. During a Q&A session, Josh Dessley, filling in for Ghansham Panjabi, asks new CEO Dustin Semach about his initial priorities. Semach highlights focusing on accelerating customer engagement and fully integrating their food and protective businesses, emphasizing the importance of a relentless focus on customer needs.

The paragraph outlines the company's strategic initiatives, focusing on stabilizing their protective business by executing existing plans and addressing pressure in shrink bags within food due to industrial protein market exposure. They aim to pivot to higher growth areas like case ready and fluid solutions for retail markets, requiring innovation and partnership with Steve. Results are expected by 2025. Additionally, the company is adopting a new operating model to better manage costs and address potential volume weaknesses in protective areas. A focus on leadership and ensuring the right personnel is emphasized to support ongoing growth and success.

In the paragraph, Phil Ng of Jefferies asks about the company's expectations for performance in the protective segment, noting issues like Amazon's influence and a slow ramp-up in products like auto bag and fiber mailer. Dustin Semach responds by acknowledging underperformance in the business, partly due to Amazon and some customer churn, but notes an improved position compared to previous years. He emphasizes a positive outlook, especially regarding churn with significant customers, and discusses the implementation of a new go-to-market model in North America, which is expected to cause initial choppiness but show benefits starting in the second quarter.

The paragraph discusses the company's current position and future expectations regarding pricing, competition, and the scale-up of fiber mailers. The company is fully recovering from last year's churn and anticipates slight price increases due to rising resin costs. They face continued competition in certain areas, like polyvoid fill, but expect stable conditions in 2024. They acknowledge a slow scale-up of fiber mailers but highlight positive market reception and significant customer wins. The focus now is on accelerating execution and market implementation to enhance scale-up efforts.

In the paragraph, Dustin Semach discusses the company's focus on enhancing the profitability of its business segments without providing specific long-term guidance. He notes that the markets they serve currently exhibit low single-digit growth in terms of volume. They aim to drive low to mid-single-digit earnings growth, considering the current market conditions and their business portfolio. Semach highlights achievements in their food business in 2024 and expects strong performance in 2025, while noting that their protected business is undergoing a turnaround process. He mentions plans for further innovation and capital deployment to enhance both segments in the future.

In the paragraph, Joshua inquires about the drivers behind a reported 2% growth in food pricing, asking about visibility through contracts or pass-throughs. Dustin Semach responds by explaining that this growth is largely driven by formula pricing, particularly in the North American market, where pass-through mechanisms exist. This benefit is expected to continue into 2025 due to shifts in resin costs and synergies. While pricing changes are modest and reflect the value of portfolios, this stability represents a shift from the volatility seen from pre-COVID times to 2024. The discussion then transitions to the next question from Stefan Diaz of Morgan Stanley.

In the paragraph, Dustin Semach discusses the importance of the automation segment within Sealed Air's business strategy. He highlights that automation, combined with material science and service, forms a critical component of their value proposition to customers for packaging solutions. Although equipment sales have historically declined due to customers' capital constraints, parts and services have continued to perform well. Looking forward to 2025, Semach expresses optimism about automation as a growth vector, particularly when considering the food and protective sectors. He notes that recent trends, such as increased interest in nearshoring, may lead to changes in customer conversations and potential growth opportunities in the automation sector.

The paragraph discusses a business's strategy for growth, particularly focusing on its auto bagging equipment that can handle both poly and fiber with minimal changeovers. The emphasis is on acquiring new customers and placing new equipment to drive material sales, rather than replacing old equipment. The speaker mentions ongoing pressures in the food sector but attributes them to industry dynamics rather than product strength. The conversation then shifts to a question from Michael Roxland about the progress of shifting organizational culture to be high-performing, engaged, and accountable, with decision-making pushed down. Dustin Semach responds that the company has been on a journey in this area over the past few years, particularly highlighting progress in the food sector, and implies continued work is needed in the protective sector.

The paragraph discusses the company's efforts to align its leadership, structure, and strategy to support a cohesive culture among its 16,000 employees. It highlights the progress in streamlining the organizational structure in the food sector compared to the protective sector, which is described as complex due to its diverse portfolios and geographic reach. The North American go-to-market transformation, implemented earlier in the year, received positive feedback from distribution partners and customers, suggesting it is heading in the right direction, although more work remains. Additionally, during a Q&A session, Jeffrey Zekauskas of JPMorgan asks about the growth rates and business split between the industrial and e-commerce sides of the protective segment for 2024, and seeks clarification on a significant reduction in the company's cost of goods sold.

In the paragraph, Dustin Semach discusses the breakdown of the company's protective segment between industrial (60%) and fulfillment (40%) for 2024, noting a decline in volume for both areas. The industrial segment experienced a low to mid-single-digit decline, while fulfillment saw a mid to high-single-digit decline. Despite these declines, there were positive areas, such as shrink film, inflatables, auto bagging equipment, and material sales. Ronnie Johnson adds that there is a correlation between the reduction in the cost of goods sold and sales reductions, along with some benefits from lower raw material prices. Dustin further mentions cost takeout actions implemented last year, initially aiming for $90 million and ending at $89 million, impacting the cost of goods sold. Arun Viswanathan from RBC Capital Markets then asks for more information on the guidance ranges.

In the paragraph, Dustin Semach explains the potential factors that could drive their company's performance to the upper end of their projected EBITDA and EPS range. He identifies three components: the food business, the protective business, and macroeconomic factors. In the food business, the North American beef stock's impact is noted, with a potential improvement if conditions become more favorable. For the protective business, the focus is on when they can increase volumes, with the expectation of improvement in the second half of the year. Overall, while there is potential for exceeding the midpoint of the range, it heavily depends on external conditions and the timing of business improvements.

The paragraph features a conversation between Matt Roberts from Raymond James and Dustin Semach regarding the closure of two plants by year-end. Matt inquires about whether these closures will affect specific product lines and how the company plans to rebalance its portfolio while considering underperforming assets versus innovation investments. Dustin responds by indicating that the plant closures are part of a network optimization effort, primarily within the protective segment, and involve consolidating operations rather than reducing contributions from any specific product line.

The paragraph discusses the company's focus on improving cost positions through network optimization, particularly in relation to specific products and geographic markets. They emphasize the importance of domestic production for domestic consumption and highlight their careful evaluation of which metropolitan markets to serve. While they acknowledge potential for further network optimization, they prioritize decisions that create long-term value rather than short-term cost savings. They stress the importance of not excluding themselves from markets with potential growth, and their current focus is on commercial execution and increasing plant volumes to benefit from future growth opportunities.

In the paragraph, Chris Parkinson from Wolfe Research asks about the expectations for global protein markets in 2025, particularly focusing on red meat and poultry. Dustin Semach responds by highlighting that the Latin American and Australian markets are at their peak, while North America saw unexpected stability last year instead of an anticipated decline. He notes slight growth prospects globally, despite a previous downturn in various markets, including poultry. He mentions that opportunities are arising in retail markets rather than industrial food processing, and although there are concerns about turkey, which they are less exposed to, poultry consumption overall is expected to increase.

The paragraph discusses a company's strategic focus on long-term growth beyond 2025, particularly in the case-ready segment. Gabe Hajde from Wells Fargo questions Dustin Semach about Amazon's investment in a fiber-based competitor and its potential impact on the company's strategies, particularly in the protective segment. Gabe also inquires about cost savings goals for 2024, asking if the target has increased from an initially stated $150 million to $180 million. Dustin Semach responds by referencing Rampak and explains that while Amazon's investment strategy may seem unique in e-commerce, it's consistent with their approach in other areas, such as AWS. Semach then defers to Ronnie to elaborate on cost savings, the EBITDA bridge, and net price realization.

The paragraph discusses a company's strategy concerning supply continuity and growth opportunities in packaging, particularly with fiber-based discrete mailers and auto bagging equipment. It highlights a recent business win related to paper void fill solutions for Amazon but emphasizes a broader focus on mailers rather than box void fill. The strategy aims to double down on mailer formats, seeing potential opportunities from competitors' actions. The paragraph also touches on financial aspects, addressing a minor discrepancy in cost projections for 2024 and mentioning an upcoming discussion on EBITDA and net price utilization. Ronnie Johnson is set to provide further financial insights.

The paragraph discusses the financial challenges and savings strategies of a company from an EBITDA perspective. They face foreign exchange (FX) headwinds of $25 million and unfavorable net price realization of $65 million due to a $105 million cost increase from inflation, partly mitigated by $40 million in pricing increases. These challenges are offset by $90 million in savings, split between $65 million in cost-cutting measures and $25 million in productivity efficiencies. The company aims to achieve $140 to $160 million in savings through its CTO program, having realized $100 million so far, with an additional $65 million expected to reach the target. Productivity savings, driven by plant optimization and automation, account for $25 million, facilitated by increased visibility and opportunities for adjustments within their operations.

The paragraph discusses the company's approach to maintaining flexibility and being proactive throughout the year in evaluating its cost structure and initiatives. If the initiatives aren't progressing as planned, adjustments will be made. The speaker, Dustin Semach, expresses excitement about the future and looks forward to providing updates on their growth strategy for Sealed Air by 2025, while also expressing gratitude to team members for their hard work and dedication. The operator concludes the conference call, indicating it has ended.

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