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CHARLOTTE, N.C.---Nov. 8, 2017-- Sealed Air Corporation (NYSE:SEE) today announced financial results for the third quarter 2017. Commenting on these results, Jerome A. Peribere, President and Chief Executive Officer, said, "For the third consecutive quarter, we are delivering on our accelerated growth strategy, led by favorable volume trends across all regions. North America was once again our fastest growing region with an increase in volumes of 7%. Our top-line performance continues to be driven by the adoption of our innovative solutions coupled with strong end market demand across all proteins and within the e-commerce and fulfillment sectors. We expect top-line growth to continue into year-end and sequential profitability improvements through operational disciplines and increased sales of value-added solutions."

Peribere continued, "Our journey as a knowledge-based company continues with many exciting opportunities ahead. We are pleased to have Ted Doheny join Sealed Air as our Chief Operating Officer and CEO-Designate, and will assume the role of President and CEO effective January 1, 2018. Furthermore, we recently announced that our current Chief Accounting Officer and Controller, Bill Stiehl, has assumed the additional position of Acting Chief Financial Officer. Under both Ted and Bill's leadership, the organization will continue to thrive and generate significant value for our global customers, shareholders and employees."

Unless otherwise stated, all results compare third quarter 2017 results to third quarter 2016 results from continuing operations. As a result of the sale of Diversey, which refers to Diversey Care and the food hygiene and cleaning business, we have changed our segment reporting structure effective as of January 1, 2017. Food Care now includes the Medical Applications business, which was previously reported under 'Other.' Additionally, Food Care now excludes the food hygiene and cleaning business, which is a component of Diversey and classified as discontinued operations. Year-over-year financial discussions present operating results from continuing operations as reported, and on a constant dollar basis. Constant dollar refers to unit volume and price/mix performance and excludes the impact of currency translation from all periods referenced. Additionally, non-U.S. GAAP adjusted financial measures, such as Adjusted Earnings Before Interest Expense, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), Adjusted Net Earnings, Adjusted Diluted Earnings Per Share ("Adjusted EPS") and Adjusted Tax Rate, exclude the impact of special items, such as restructuring charges, charges related to the sale of Diversey, charges related to ceasing operations in Venezuela, cash-settled stock appreciation rights ("SARs") granted as part of the original Diversey acquisition and certain other infrequent or one-time items. Please refer to the supplemental information included with this press release for a reconciliation of Non-U.S. GAAP to U.S. GAAP financial measures.

Business Highlights

In the third quarter, Food Care net sales of $716 million increased 6% as reported. Currency had a positive impact on Food Care net sales of 2%, or $10 million. On a constant dollar basis, net sales increased 4% almost entirely due to positive volume growth. Volume trends were led by 9% growth in North America, 3% in Latin America and 1% in EMEA. This was offset by a decline in Asia Pacific. Adjusted EBITDA of $158 million or 22.1% of net sales was primarily attributable to positive volume trends and favorable foreign currency, which were offset by higher raw material costs and non-material costs including salary and wage increases.
Product Care net sales of $415 million in the third quarter were up 7% as reported. Currency had a positive impact on Product Care net sales of 1%, or $3 million. On a constant dollar basis, net sales and volumes increased 6% due to continued strength in e-commerce and fulfillment. Volume increased 4% in North America, over 7% in EMEA and Latin America, and 17% in Asia Pacific. Adjusted EBITDA of $87 million or 20.8% of net sales was attributable to volume growth, which was offset by unfavorable price/cost spread primarily due to higher raw material and freight costs as well as unfavorable product mix.
On September 6, 2017, Sealed Air completed the sale of Diversey to Bain Capital for $3.2 billion. The sale provided the Company the financial flexibility to accelerate share repurchases, pay down approximately $1.1 billion in debt and target selective acquisitions. Most recently, on October 2, 2017, Sealed Air acquired Fagerdala Singapore Pte Ltd., a manufacturer and fabricator of polyethylene foam, for $100 million in cash. Fagerdala generated approximately $80 million in sales in 2016.
From January 1, 2017 through September 30, 2017, Sealed Air repurchased approximately $677 million or 15.5 million shares through a combination of open market repurchases and Accelerated Share Repurchase (ASR) programs. The Company repurchased approximately $426 million or 9.7 million shares during the third quarter.

Third Quarter 2017 U.S. GAAP Summary, Continuing Operations

Net sales of $1.1 billion increased 6% on an as reported basis. Currency had a positive impact on total net sales of 1%, or $13 million. As reported, net sales increased across all regions.

Net income from continuing operations on a reported basis was $62 million, or $0.33 per diluted share, as compared to net income from continuing operations of $64 million, or $0.32 per diluted share, in the third quarter 2016. Net income in the third quarter 2017 was unfavorably impacted by $24 million of special items, including $9 million of restructuring and other restructuring associated costs, $7 million related to acquisition and divestiture activity and $5 million of tax special items. Net income in the third quarter 2016 included $17 million of special items, including $7 million of charges related to restructuring and other costs associated with our restructuring programs and $9 million related to tax special items.

The effective tax rate in the third quarter of 2017 was 41.2%, compared to the effective tax rate of 45.9% in the third quarter of 2016. The effective tax rate in the third quarter of 2017 was negatively affected by additional tax expenses related to the sale of Diversey. The effective tax rate in the third quarter of 2016 was negatively impacted by an increase in unrecognized tax benefits.

Third Quarter 2017 Non-U.S. GAAP Summary, Continuing Operations

Net sales on a constant dollar increased 5% primarily on volume growth. On constant dollar basis, North America sales increased 7%, Asia Pacific was up 3%, and EMEA and Latin America were up 2%.

Adjusted EBITDA for the third quarter 2017 was $217 million, or 19.2% of net sales, compared to $213 million, or 20.0% of net sales for the third quarter of 2016. Adjusted EBITDA included $28 million of Corporate expenses in the third quarter of 2017, of which $3 million reflected costs that were previously allocated to Diversey but not included in net income from discontinued operations. Corporate expenses were $31 million in the third quarter of 2016, and included $4 million of costs that were previously allocated to Diversey, but which were not included in net income from discontinued operations.

Adjusted EPS was $0.46 for the third quarter 2017. This compares to Adjusted EPS of $0.41 in the third quarter 2016. The Adjusted Tax Rate was 30.7% in the third quarter 2017, compared to 35.6% in the third quarter 2016. The Adjusted Tax Rate in the third quarter of 2016 was negatively impacted by an increase in unrecognized tax benefits.

Third Quarter 2017 U.S. GAAP Summary, Discontinued Operations

The sale of Diversey was completed during the quarter on September 6, 2017. The Company recognized a net gain on the sale of $699.3 million. The calculation of net earnings from discontinued operations included third quarter net sales of $435 million. Net income from discontinued operations on a reported basis was $26 million, or $0.14 per diluted share.

Cash Flow and Net Debt

Cash flow provided by operating activities in the nine months ended September 30, 2017 was $333 million, which is net of $49 million of restructuring payments and $61 million of payments related to the sale of Diversey, which included $33 million of tax payments made in the second quarter and the remainder primarily attributable to professional fees required to facilitate the separation.

Capital expenditures were $127 million in the nine months ended September 30, 2017. Free Cash Flow, defined as net cash provided by operating activities less capital expenditures and payments related to the sale of Diversey, was an inflow of $267 million in the nine months ended September 30, 2017.

The Company repurchased 15.5 million shares for approximately $677 million, and paid cash dividends of $92 million during the nine months ended September 30, 2017.

Net Debt, defined as total debt less cash and cash equivalents, decreased to $2.0 billion as of September 30, 2017 from $3.8 billion as of December 31, 2016. This decrease in net debt primarily resulted from payments of debt and net cash received as part of the sale of Diversey.

Outlook for Full Year 2017, Continuing Operations

For the full year 2017, the Company increased its outlook for Net Sales to approximately $4.4 billion from approximately $4.3 billion. Adjusted EBITDA from continuing operations is expected to be approximately $830 million as compared to previously provided guidance of $825 million to $835 million. Currency is expected to have a favorable impact of approximately $40 million on Net Sales and $7 million on Adjusted EBITDA. The Company continues to forecast Adjusted EPS to be in the range of $1.75 to $1.80, which is based on 190 million shares outstanding and an Adjusted Tax Rate of 30%.

The outlook for Free Cash Flow remains unchanged at approximately $400 million. Free Cash Flow guidance is based on consolidated results, including continuing and discontinuing operations, and assumes capital expenditures of approximately $175 million and cash restructuring payments of approximately $55 million. Free Cash Flow outlook excludes cash flow generation from working capital related to Diversey post-separation, restructuring charges to address stranded costs, and any payments made in relation to the sale of Diversey.


Conference Call Information


Date:
Wednesday, November 8, 2017

Time:
10:00 a.m. (ET)

Webcast:


www.sealedair.com/investors

Conference Dial In:
(855) 472-5411 (domestic)
(330) 863-3389 (international)

Participant Code:
96077061


A supplemental presentation accompanying the conference call will be available on the Company's website at www.sealedair.com/investors.

Conference Call Replay Information


Dates:
Wednesday, November 8, 2017 at 1:00 p.m. (ET) through
Friday, December 8, 2017 at 12:59 p.m. (ET)

Webcast:


www.sealedair.com/investors

Conference Dial In:
(855) 859-2056 (domestic)
(404) 537-3406 (international)

Participant Code:
96077061


Business

Sealed Air Corporation is a knowledge-based company focused on packaging solutions that help our customers achieve their sustainability goals in the face of today's biggest social and environmental challenges. Our portfolio of widely recognized brands, including Cryovac® brand food packaging solutions and Bubble Wrap® brand cushioning, enable a safer and less wasteful food supply chain and protect valuable goods shipped around the world. Sealed Air generated $4.2 billion in sales in 2016 and has approximately 14,000 employees who serve customers in 117 countries. To learn more, visit www.sealedair.com.

Website Information

We routinely post important information for investors on our website, www.sealedair.com, in the "Investor Relations" section. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

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