SEALED AIR CORP/DE [SEE] Filings

10-Q 1 see-20240630.htm 10-Q see-20240630

PSM for /24

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-12139



SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)


Delaware		65-0654331
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
2415 Cascade Pointe Boulevard
Charlotte	North Carolina	28208
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (980) 221-3235

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.10 per share	SEE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

There were 145,672,597 shares of the registrant’s common stock, par value $0.10 per share, issued and outstanding as of July 31, 2024.

SEALED AIR CORPORATION AND SUBSIDIARIES

Table of Contents


			Page
PART I. FINANCIAL INFORMATION
Financial statements
Condensed Consolidated Balance Sheets — June 30, 2024 and December 31, 2023			4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023			5
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023			6
Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023			7
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023			8
Notes to Condensed Consolidated Financial Statements
Note 1 Organization and Basis of Presentation			9
Note 2 Recently Adopted and Issued Accounting Standards			10
Note 3 Revenue Recognition, Contracts with Customers			11
Note 4 Leases			13
Note 5 Acquisitions			15
Note 6 Segments			17
Note 7 Inventories, net			19
Note 8 Property and Equipment, net			19
Note 9 Goodwill and Identifiable Intangible Assets, net			20
Note 10 Accounts Receivable Securitization Programs			21
Note 11 Accounts Receivable Factoring Agreements			22
Note 12 Restructuring Activities			22
Note 13 Debt and Credit Facilities			24
Note 14 Derivatives and Hedging Activities			26
Note 15 Fair Value Measurements, Equity Investments and Other Financial Instruments			29
Note 16 Defined Benefit Pension Plans and Other Post-Employment Benefit Plans			31
Note 17 Income Taxes			32
Note 18 Commitments and Contingencies			32
Note 19 Stockholders’ Equity			33
Note 20 Accumulated Other Comprehensive Loss			36
Note 21 Other Expense, net			37
Note 22 Net Earnings Per Common Share			37

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			38
Item 3. Quantitative and Qualitative Disclosures About Market Risk			56
Item 4. Controls and Procedures			59
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			60
Item 1A. Risk Factors			60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			60
Item 5. Other Information			60
Item 6. Exhibits			61
Signature			62

Cautionary Notice Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words as “anticipate,” “believe,” “plan,” “assume,” “could,” “should,” “estimate,” “expect,” “intend,” “potential,” “seek,” “predict,” “may,” “will” or the negative of these terms and similar expressions. All statements contained in this report, other than statements of historical facts, such as those regarding our growth initiatives, business strategies, operating plans, business outlook, restructuring activities and market conditions, are forward-looking statements. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties that may cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements.

The following are important factors that we believe could cause actual results to differ materially from those in our forward-looking statements: global economic and political conditions, including recessionary and inflationary pressures, currency translation and devaluation effects, changes in raw material pricing and availability, competitive conditions, the success of new product offerings, failure to realize synergies and other financial benefits from acquisitions within the expected time frames, greater than expected costs or difficulties related to acquisition integrations, consumer preferences, the effects of animal and food-related health issues, the effects of epidemics or pandemics, negative impacts related to the ongoing conflict between Russia and Ukraine and related sanctions, export restrictions and other counteractions thereto, uncertainties relating to existing or potential increased hostilities in the Middle East, changes in energy costs, environmental matters, the success of our restructuring activities, the success of our merger, acquisition and equity investment strategies, the success of our financial growth, profitability, cash generation and manufacturing strategies and our cost reduction and productivity efforts, changes in our credit ratings, regulatory actions and legal matters, and the other important factors discussed in the "Risk Factors" section in Part I of our most recent Annual Report on Form 10-K, and in any of our subsequent filings with the Securities and Exchange Commission (“SEC”). Any forward-looking statements made by us in this report are based solely on management’s estimates as of the date of this report. While we may elect to update such forward-looking statements, we disclaim any obligation to do so even if subsequent events cause our views to change, except as may be required by applicable law.

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


(In USD millions, except share and per share data)	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	388.6	$	346.1
Trade receivables, net of allowance for credit losses of $14.8 in 2024 and $14.9 in 2023	471.5		442.6
Income tax receivables	20.5		44.9
Other receivables	96.7		94.2
Advances and deposits	70.2		72.8
Inventories, net of inventory reserves of $51.1 in 2024 and $43.3 in 2023 (Note 7)	806.1		774.3

Prepaid expenses and other current assets	197.3		188.4
Total current assets	2,050.9		1,963.3
Property and equipment, net (Note 8)	1,416.7		1,416.4
Goodwill (Note 9)	2,884.1		2,892.5
Identifiable intangible assets, net (Note 9)	409.9		439.0
Deferred taxes	135.3		130.8

Operating lease right-of-use-assets (Note 4)	97.2		86.5
Other non-current assets	274.3		272.1
Total assets	$	7,268.4	$	7,200.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings (Note 13)	$	134.7	$	140.7
Current portion of long-term debt (Note 13)	50.6		35.7
Current portion of operating lease liabilities (Note 4)	28.1		29.2
Accounts payable	836.6		764.6

Accrued restructuring costs (Note 12)	18.9		23.1
Income tax payable	30.5		28.7
Other current liabilities	474.7		487.0
Total current liabilities	1,574.1		1,509.0
Long-term debt, less current portion (Note 13)	4,429.6		4,513.9
Long-term operating lease liabilities, less current portion (Note 4)	77.3		66.7
Deferred taxes	34.8		35.8

Other non-current liabilities	502.5		525.7
Total liabilities	6,618.3		6,651.1
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.10 par value per share, 50,000,000 shares authorized; no shares issued in 2024 and 2023	—		—
Common stock, $0.10 par value per share, 400,000,000 shares authorized; shares issued: 154,518,689 in 2024 and 154,054,011 in 2023; shares outstanding: 145,639,987 in 2024 and 144,467,719 in 2023	15.5		15.4
Additional paid-in capital	1,431.4		1,429.5
Retained earnings	617.8		496.5
Common stock in treasury, 8,878,702 shares in 2024 and 9,586,292 shares in 2023	(404.2)		(436.4)





Accumulated other comprehensive loss, net of taxes (Note 20)	(1,010.4)		(955.5)
Total stockholders’ equity	650.1		549.5
Total liabilities and stockholders’ equity	$	7,268.4	$	7,200.6

See accompanying Notes to Condensed Consolidated Financial Statements.

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(In USD millions, except per share data)	2024		2023		2024		2023
Net sales	$	1,345.1	$	1,380.8	$	2,674.7	$	2,729.6
Cost of sales	929.1		962.8		1,857.9		1,906.5
Gross profit	416.0		418.0		816.8		823.1
Selling, general and administrative expenses	191.6		185.7		377.1		407.3

Amortization expense of intangible assets	16.3		15.4		31.1		30.6
Restructuring charges (Note 12)	2.5		0.6		18.0		(0.6)
Operating profit	205.6		216.3		390.6		385.8
Interest expense, net	(63.3)		(68.7)		(128.4)		(126.5)
Other expense, net (Note 21)	(6.8)		(8.4)		(7.6)		(23.4)
Earnings before income tax provision	135.5		139.2		254.6		235.9
Income tax provision (Note 17)	37.7		45.3		73.4		79.1
Net earnings from continuing operations	97.8		93.9		181.2		156.8
Gain (Loss) on sale of discontinued operations, net of tax	0.5		5.2		(0.9)		4.2

Net earnings	$	98.3	$	99.1	$	180.3	$	161.0
Basic:
Continuing operations	$	0.67	$	0.65	$	1.25	$	1.09
Discontinued operations	—		0.04		(0.01)		0.03
Net earnings per common share - basic (Note 22)	$	0.67	$	0.69	$	1.24	$	1.12
Diluted:
Continuing operations	$	0.67	$	0.65	$	1.24	$	1.08
Discontinued operations	—		0.03		—		0.03
Net earnings per common share - diluted (Note 22)	$	0.67	$	0.68	$	1.24	$	1.11
Weighted average number of common shares outstanding: (Note 22)
Basic	145.7		144.5		145.3		144.3
Diluted	146.0		144.8		145.7		144.8

See accompanying Notes to Condensed Consolidated Financial Statements.

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended June 30,												Six Months Ended June 30,
	2024						2023						2024						2023
(In USD millions)	Gross		Taxes		Net		Gross		Taxes		Net		Gross		Taxes		Net		Gross		Taxes		Net
Net earnings					$	98.3					$	99.1					$	180.3					$	161.0
Other comprehensive income (loss):
Recognition of pension items	$	1.4	$	(0.4)	1.0		$	1.1	$	(0.3)	0.8		$	2.6	$	(0.7)	1.9		$	2.8	$	(0.7)	2.1
Unrealized gains (losses) on derivative instruments for net investment hedge	4.8		(1.2)		3.6		(7.6)		1.9		(5.7)		16.0		(4.0)		12.0		(14.9)		3.7		(11.2)
Unrealized gains (losses) on derivative instruments for cash flow hedge	0.3		(0.1)		0.2		0.9		(0.3)		0.6		2.3		(0.7)		1.6		(2.9)		0.7		(2.2)
Foreign currency translation adjustments	(30.0)		—		(30.0)		(4.1)		—		(4.1)		(70.4)		—		(70.4)		32.5		—		32.5
Other comprehensive (loss) income	$	(23.5)	$	(1.7)	(25.2)		$	(9.7)	$	1.3	(8.4)		$	(49.5)	$	(5.4)	(54.9)		$	17.5	$	3.7	21.2
Comprehensive income, net of taxes					$	73.1					$	90.7					$	125.4					$	182.2

See accompanying Notes to Condensed Consolidated Financial Statements.

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


(In USD millions)	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock in Treasury		Accumulated Other Comprehensive Loss, Net of Taxes		Total Stockholders’ Equity
Balance at March 31, 2024	$	15.4	$	1,423.4	$	548.9	$	(404.2)	$	(985.2)	$	598.3
Effect of share-based incentive compensation	0.1		8.0		—		—		—		8.1


Recognition of pension items, net of taxes	—		—		—		—		1.0		1.0
Foreign currency translation adjustments	—		—		—		—		(30.0)		(30.0)
Unrealized gain on derivative instruments, net of taxes	—		—		—		—		3.8		3.8

Net earnings	—		—		98.3		—		—		98.3
Dividends on common stock ($0.20 per share)	—		—		(29.4)		—		—		(29.4)

Balance at June 30, 2024	$	15.5	$	1,431.4	$	617.8	$	(404.2)	$	(1,010.4)	$	650.1

Balance at December 31, 2023	$	15.4	$	1,429.5	$	496.5	$	(436.4)	$	(955.5)	$	549.5
Effect of share-based incentive compensation	0.1		8.7		—		—		—		8.8
Stock issued for profit sharing contribution paid in stock			(6.8)		—		32.2		—		25.4

Recognition of pension items, net of taxes	—		—		—		—		1.9		1.9
Foreign currency translation adjustments	—		—		—		—		(70.4)		(70.4)
Unrealized gain on derivative instruments, net of taxes	—		—		—		—		13.6		13.6

Net earnings	—		—		180.3		—		—		180.3
Dividends on common stock ($0.40 per share)	—		—		(59.0)		—		—		(59.0)

Balance at June 30, 2024	$	15.5	$	1,431.4	$	617.8	$	(404.2)	$	(1,010.4)	$	650.1

Balance at March 31, 2023	$	23.4	$	2,152.8	$	3,195.5	$	(4,076.0)	$	(949.2)	$	346.5
Effect of share-based incentive compensation	—		3.5		—		—		—		3.5


Recognition of pension items, net of taxes	—		—		—		—		0.8		0.8
Foreign currency translation adjustments	—		—		—		—		(4.1)		(4.1)
Unrealized loss on derivative instruments, net of taxes	—		—		—		—		(5.1)		(5.1)

Net earnings	—		—		99.1		—		—		99.1
Dividends on common stock ($0.20 per share)	—		—		(28.3)		—		—		(28.3)

Balance at June 30, 2023	$	23.4	$	2,156.3	$	3,266.3	$	(4,076.0)	$	(957.6)	$	412.4

Balance at December 31, 2022	$	23.3	$	2,155.3	$	3,163.4	$	(4,019.1)	$	(978.8)	$	344.1
Effect of share-based incentive compensation	0.1		0.1		—		—		—		0.2
Stock issued for profit sharing contribution paid in stock	—		0.9		—		23.0		—		23.9
Repurchases of common stock	—		—		—		(79.9)		—		(79.9)
Recognition of pension items, net of taxes	—		—		—		—		2.1		2.1
Foreign currency translation adjustments	—		—		—		—		32.5		32.5
Unrealized loss on derivative instruments, net of taxes	—		—		—		—		(13.4)		(13.4)

Net earnings	—		—		161.0		—		—		161.0
Dividends on common stock ($0.40 per share)	—		—		(58.1)		—		—		(58.1)

Balance at June 30, 2023	$	23.4	$	2,156.3	$	3,266.3	$	(4,076.0)	$	(957.6)	$	412.4

See accompanying Notes to Condensed Consolidated Financial Statements.

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
(In USD millions)	2024		2023
Net earnings	$	180.3	$	161.0
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	120.2		114.8
Share-based incentive compensation	15.3		19.5
Profit sharing expense	13.4		13.3
Loss on debt redemption and refinancing activities	6.8		4.9
Provision for allowance for credit losses on trade receivables	2.2		3.5
Provisions for inventory obsolescence	11.3		11.9
Deferred taxes, net	(15.5)		(27.4)
Net loss (gain) on disposal/sale of businesses	0.9		(4.2)


Other non-cash items	(0.3)		18.1
Changes in operating assets and liabilities:
Trade receivables, net	(43.2)		37.5
Inventories, net	(60.2)		(19.4)
Accounts payable	77.0		(95.9)
Customer advance payments	(4.9)		(0.7)
Income tax receivable/payable	26.6		(4.2)
Tax deposit	—		(175.0)
Other assets and liabilities	(16.6)		(64.3)
Net cash provided by (used in) operating activities	$	313.3	$	(6.6)
Cash flows from investing activities:
Capital expenditures	(105.8)		(123.7)
Proceeds related to sale of business and property and equipment, net	0.3		0.7
Businesses acquired in purchase transactions, net of cash acquired	4.2		(1,163.0)
(Payments) Proceeds associated with debt, equity and equity method investments	(1.1)		3.3

Investment in marketable securities	(2.2)		—
Settlement of foreign currency forward contracts	5.1		10.3
Proceeds from cross-currency swaps	1.6		—


Net cash used in investing activities	$	(97.9)	$	(1,272.4)
Cash flows from financing activities:
Net (payments) proceeds from short-term borrowings	(2.8)		306.2
Proceeds from long-term debt	404.0		1,411.4
Payments of long-term debt	(478.6)		(432.9)
Payments of debt modification/extinguishment costs and other	(6.8)		(14.1)

Dividends paid on common stock	(59.6)		(60.0)
Impact of tax withholding on share-based compensation	(8.0)		(21.0)
Repurchases of common stock	—		(79.9)
Principal payments related to financing leases	(3.9)		(4.3)

Net cash (used in) provided by financing activities	$	(155.7)	$	1,105.4
Effect of foreign currency exchange rate changes on cash and cash equivalents	$	(17.2)	$	2.6
Cash Reconciliation:
Cash and cash equivalents	346.1		456.1
Restricted cash and cash equivalents	—		—
Balance, beginning of period	$	346.1	$	456.1
Net change during the period	42.5		(171.0)
Cash and cash equivalents	388.6		285.1
Restricted cash and cash equivalents	—		—
Balance, end of period	$	388.6	$	285.1
Supplemental Cash Flow Information:
Interest payments	$	154.1	$	119.6
Income tax payments, net of cash refunds	$	57.0	$	273.4

Restructuring payments including associated costs	$	31.9	$	7.2

Non-cash items:
Transfers of shares of common stock from treasury for profit-sharing contributions	$	25.4	$	23.9

See accompanying Notes to Condensed Consolidated Financial Statements.

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 Organization and Basis of Presentation

Organization

We are a leading global provider of packaging solutions that integrate sustainable, high-performance materials, automation, equipment, and services. Sealed Air Corporation designs, manufactures and delivers packaging solutions that preserve food, protect goods, and automate packaging processes. We deliver our packaging solutions to an array of end markets including fresh proteins, foods, fluids and liquids, medical and life science, e-commerce retail, logistics and omnichannel fulfillment operations, and industrials.

Our portfolio of solutions includes CRYOVAC® brand food packaging, LIQUIBOX® brand liquids systems, SEALED AIR® brand protective packaging, AUTOBAG® brand automated packaging systems and BUBBLE WRAP® brand packaging. We have established competitive strengths in high-performance packaging solutions, well-established customer relationships, iconic brands, and global scale and market access.

Throughout this report, when we refer to “Sealed Air,” the “Company,” “we,” “our,” or “us,” we are referring to Sealed Air Corporation and all of our subsidiaries, except where the context indicates otherwise.

Basis of Presentation

Our Condensed Consolidated Financial Statements include all of the accounts of the Company and our subsidiaries. We have eliminated all significant intercompany transactions and balances in consolidation. In management’s opinion, all adjustments, consisting only of normal recurring accruals, necessary for a fair statement of our Condensed Consolidated Balance Sheet as of June 30, 2024 and our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 have been made. The results set forth in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and in our Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year. The Condensed Consolidated Balance Sheet as of December 31, 2023 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”). All amounts are in millions, except per share amounts, and are approximate due to rounding. All amounts are presented in U.S. dollar, unless otherwise specified.

Our Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by GAAP have been condensed or omitted. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates.

We are responsible for the unaudited Condensed Consolidated Financial Statements and notes included in this report. As these are condensed financial statements, they should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Form 10-K”), which was filed with the SEC on February 27, 2024, and with the information contained in our other publicly available filings with the SEC.

When we cross reference to a “Note,” we are referring to our “Notes to Condensed Consolidated Financial Statements,” unless the context indicates otherwise.

There were no significant changes to our significant accounting policies as disclosed in “Note 2 – Summary of Significant Accounting Policies and Recently Adopted and Issued Accounting Standards” of our audited consolidated financial statements and notes thereto included in our 2023 Form 10-K.

Impact of Highly Inflationary Economy

Argentina

Economic and political events in Argentina have continued to expose us to heightened levels of foreign currency exchange risk. As of July 1, 2018, Argentina was designated as a highly inflationary economy under GAAP, and the U.S. dollar replaced the Argentine peso as the functional currency for our subsidiary in Argentina. All Argentine peso-denominated monetary assets and liabilities were remeasured into U.S. dollars using the current exchange rate available to us. The impact of any changes in the exchange rate are reflected within Other expense, net on the Condensed Consolidated Statements of Operations. The Company recorded $0.6 million and $5.5 million of remeasurement losses for the three and six months ended June 30, 2024, respectively, and $3.1 million and $5.7 million of remeasurement losses for the three and six months ended June 30, 2023, respectively, related to our subsidiary in Argentina.

Note 2 Recently Adopted and Issued Accounting Standards

Recently Adopted Accounting Standards

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ("ASU 2022-04"). ASU 2022-04 requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. The Company adopted ASU 2022-04 on January 1, 2023, except for the amendment on rollforward information. The adoption did not materially impact the Company's Condensed Consolidated Financial Statements. The amendment on rollforward information was adopted on January 1, 2024 and is effective for fiscal years beginning after December 15, 2023.

We facilitate a voluntary supply chain financing program to provide some of our suppliers with the opportunity to sell receivables due from us (our accounts payables) to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. This program is administered by participating financial institutions. When a supplier utilizes the supply chain financing program, the supplier receives a payment in advance of agreed payment terms from the financial institution, net of a discount charged. Our responsibility is limited to making payments to the respective financial institutions on the terms originally negotiated with our supplier. We monitor our days payable outstanding relative to our peers and industry trends in order to assess our conclusion that the program continues to be a trade payable program and not indicative of a borrowing arrangement. The liabilities continue to be presented as Accounts payable in our Condensed Consolidated Balance Sheets until they are paid, and they are reflected as Cash flows from operating activities when settled. At June 30, 2024 and December 31, 2023, our accounts payable balances included $175.7 million and $153.0 million, respectively, related to invoices from suppliers participating in the program.

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires the annual disclosure of specific categories in the rate reconciliation and additional information for the reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 requires annual and interim disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), the disclosure and description of other segment items, the inclusion of all current annual disclosures about a reportable segment in interim periods, allows for disclosure of multiple measures of a reportable segment's profit or loss, requires disclosure of the CODM's title and position, and requires a description of how the CODM uses reported measures in assessing the performance of reportable segments and in making decisions pertaining to allocation of resources. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

Note 3 Revenue Recognition, Contracts with Customers

Description of Revenue Generating Activities

We employ sales, marketing and customer service personnel throughout the world who sell and market our products, services, equipment and systems.

As discussed in Note 6, “Segments,” our reporting segments are Food and Protective. Our Food solutions are largely sold directly to end customers, while our Protective solutions are sold through business supply distributors and directly to end customers.

Food:

Food solutions are sold to food processors in fresh red meat, smoked and processed meats, poultry, seafood, fluids and liquids, cheese, and other food markets worldwide. Food offers integrated packaging materials and automated equipment solutions to increase food safety, extend shelf life, reduce food waste, automate processes and optimize total cost. Its materials, automated equipment and service enable customers to reduce costs and enhance their brands in the marketplace.

Food solutions are utilized by food service businesses (such as restaurants and entertainment venues) (“food service”) and food retailers (such as grocery stores and supermarkets) (“food retail”), among others. Solutions serving the food service market include products such as barrier bags and pouches, and are primarily marketed under the CRYOVAC® trademark and other highly recognized trade names including CRYOVAC® brand Barrier Bags, CRYOVAC® brand Form-Fill-Seal Films, CRYOVAC® brand Auto Pouch Systems and LIQUIBOX® brand liquids systems. Solutions serving the food retail market include products such as barrier bags, film, and trays, and are primarily marketed under the CRYOVAC® trademark and other highly recognized trade names including CRYOVAC® brand Grip & TearTM, CRYOVAC® brand Darfresh®, OptiDure™, Simple Steps®, and CRYOVAC® brand Barrier Bags.

Protective:

Protective packaging solutions are utilized across many global markets to protect goods during transit and are especially valuable to e-commerce, consumer goods, pharmaceutical and medical devices and industrial manufacturing. Protective solutions are designed to increase our customers' packaging velocity, minimize packaging waste, reduce labor dependencies and address dimensional weight challenges.

Protective solutions are sold through a strategic network of distributors as well as directly to our customers, including, but not limited to, fabricators, original equipment manufacturers, contract manufacturers, logistics partners and e-commerce/fulfillment operations. Protective solutions are marketed under SEALED AIR® brand, BUBBLE WRAP® brand, AUTOBAG® brand and other highly recognized trade names and product families including BUBBLE WRAP® brand inflatable packaging, SEALED AIR® brand performance shrink films, AUTOBAG® brand bagging systems, Instapak® polyurethane foam packaging solutions and Korrvu® suspension and retention packaging.

Other Revenue Recognition Considerations:

Charges for rebates and other allowances are recognized as a deduction from revenue on an accrual basis in the period in which the associated revenue is recorded. Revenue recognized from performance obligations satisfied in previous reporting periods was $0.1 million and $1.2 million for the three and six months ended June 30, 2024, respectively, and $0.6 million and $1.4 million for the three and six months ended June 30, 2023, respectively.

The Company does not adjust consideration in contracts with customers for the effects of a significant financing component if the Company expects that the period between transfer of a good or service and payment for that good or service will be one year or less. This is expected to be the case for the majority of the Company's contracts.

Lease components within contracts with customers are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 842.

Disaggregated Revenue

For the three and six months ended June 30, 2024 and 2023, revenues from contracts with customers summarized by Segment and Geographic region were as follows:


	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
(In millions)	Food		Protective		Total		Food		Protective		Total
Americas	$	594.7	$	288.7	$	883.4	$	1,173.3	$	585.0	$	1,758.3
EMEA	176.7		96.2		272.9		349.4		195.7		545.1
APAC	111.8		65.3		177.1		222.7		128.8		351.5

Topic 606 Segment Revenue	883.2		450.2		1,333.4		1,745.4		909.5		2,654.9
Non-Topic 606 Revenue (Leasing: Sales-type and Operating)	10.6		1.1		11.7		16.8		3.0		19.8
Total	$	893.8	$	451.3	$	1,345.1	$	1,762.2	$	912.5	$	2,674.7


	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
(In millions)	Food		Protective		Total		Food		Protective		Total
Americas	$	576.1	$	319.9	$	896.0	$	1,142.2	$	626.1	$	1,768.3
EMEA	179.7		109.3		289.0		348.9		228.9		577.8
APAC	110.7		70.1		180.8		223.0		138.7		361.7
Topic 606 Segment Revenue	866.5		499.3		1,365.8		1,714.1		993.7		2,707.8
Non-Topic 606 Revenue (Leasing: Sales-type and Operating)	14.1		0.9		15.0		19.6		2.2		21.8
Total	$	880.6	$	500.2	$	1,380.8	$	1,733.7	$	995.9	$	2,729.6

Contract Balances

The time when a performance obligation is satisfied and the time when billing and payment occur are generally closely aligned, subject to agreed payment terms, with the exception of equipment accruals. An equipment accrual is a contract offering, whereby a customer is incentivized to use a portion of the materials transaction price for future equipment purchases. Long-term contracts that include an equipment accrual create a timing difference between when cash is collected and when the performance obligation is satisfied, resulting in a contract liability (unearned revenue). The following contract assets and liabilities are included within Prepaid expenses and other current assets and Other current liabilities, or Other non-current liabilities on our Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023:


(In millions)	June 30, 2024		December 31, 2023
Contract assets	$	0.3	$	0.4


Contract liabilities	$	22.1	$	19.9

The contract liability balances represent deferred revenue, primarily related to equipment accruals. Revenue recognized in the three and six months ended June 30, 2024 that was included in the contract liability balance at the beginning of the period was $2.8 million and $5.4 million, respectively, and $3.5 million and $8.1 million in the three and six months ended June 30, 2023, respectively. This revenue was driven primarily by equipment performance obligations being satisfied.

Remaining Performance Obligations

The following table summarizes the estimated transaction price from contracts with customers allocated to performance obligations or portions of performance obligations that have not yet been satisfied as of June 30, 2024 and December 31, 2023, as well as the expected timing of recognition of that transaction price.


(In millions)	June 30, 2024		December 31, 2023
Short-Term (12 months or less)(1)	$	15.2	$	13.3
Long-Term	6.9		6.6
Total transaction price	$	22.1	$	19.9

(1) Our enforceable contractual obligations tend to be short term in nature. The table above does not include the transaction price of any remaining performance obligations that are part of the contracts with expected durations of one year or less.

Note 4 Leases

Lessor

Sealed Air has contractual obligations as a lessor with respect to some of our automation and equipment solutions including "free on loan" equipment and leased equipment, both sales-type and operating. The consideration in a contract that contains both lease and non-lease components is allocated based on the standalone selling price.

Our contractual obligations for operating leases can include termination and renewal options. Our contractual obligations for sales-type leases tend to have fixed terms and can include purchase options. We utilize the reasonably certain threshold criteria in determining which options our customers will exercise.

All lease payments are primarily fixed in nature and therefore captured in the lease receivable. Our sales-type lease receivable balances at June 30, 2024 and December 31, 2023 were as follows:


(In millions)	June 30, 2024		December 31, 2023
Short-Term (12 months or less)	$	9.1	$	8.5
Long-Term	37.0		33.3
Lease receivables	$	46.1	$	41.8

Sales-type and operating lease revenue was less than 1% of net trade sales for the six months ended June 30, 2024 and the year ended December 31, 2023.

Lessee

Sealed Air has contractual obligations as a lessee with respect to warehouses, offices and manufacturing facilities, IT equipment, automobiles, and material production equipment.

The following table details our lease obligations included in our Condensed Consolidated Balance Sheets.


(In millions)	June 30, 2024		December 31, 2023
Other non-current assets:
Finance leases - ROU assets	$	40.1	$	36.0
Finance leases - Accumulated depreciation	(17.5)		(14.9)
Operating lease right-of-use-assets:
Operating leases - ROU assets	217.4		203.1
Operating leases - Accumulated depreciation	(120.2)		(116.6)
Total lease assets	$	119.8	$	107.6
Current portion of long-term debt:
Finance leases	$	(7.2)	(6.7)
Current portion of operating lease liabilities:
Operating leases	(28.1)		(29.2)
Long-term debt, less current portion:
Finance leases	(14.3)		(12.8)
Long-term operating lease liabilities, less current portion:
Operating leases	(77.3)		(66.7)
Total lease liabilities	$	(126.9)	$	(115.4)

At June 30, 2024, estimated future minimum annual rental commitments under non-cancelable real and personal property leases were as follows:


(In millions)	Finance leases		Operating leases
Remainder of 2024	$	4.8	$	17.2
2025	6.9		31.1
2026	5.0		24.7
2027	2.4		15.5
2028	1.2		10.4
Thereafter	8.1		26.8
Total lease payments	28.4		125.7
Less: Interest	(6.9)		(20.3)
Present value of lease liabilities	$	21.5	$	105.4

The following lease cost is included in our Condensed Consolidated Statements of Operations:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Lease cost(1)
Finance leases
Amortization of ROU assets	$	2.4	$	2.3	$	4.4	$	4.8
Interest on lease liabilities	0.4		0.4		0.8		0.8
Operating leases	8.9		9.6		18.3		18.6
Short-term lease cost	1.1		0.7		1.3		1.3
Variable lease cost	1.7		1.0		3.4		2.8
Total lease cost	$	14.5	$	14.0	$	28.2	$	28.3

(1) With the exception of Interest on lease liabilities, we record lease costs to Cost of sales or Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations, depending on the use of the leased asset. Interest on lease liabilities is recorded to Interest expense, net on the Condensed Consolidated Statements of Operations.

The following table details cash paid related to operating and finance leases included in our Condensed Consolidated Statements of Cash Flows and new right-of-use (“ROU”) assets included in our Condensed Consolidated Balance Sheets:


	Six Months Ended June 30,
(In millions)	2024		2023
Other information:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - finance leases	$	2.2	$	1.7
Operating cash flows - operating leases	$	19.3	$	18.5
Financing cash flows - finance leases	$	3.9	$	4.3

ROU assets obtained in exchange for new finance lease liabilities	$	6.0	$	8.3
ROU assets obtained in exchange for new operating lease liabilities	$	26.7	$	40.8


	Six Months Ended June 30,
	2024		2023
Weighted average information:
Finance leases
Remaining lease term (in years)	5.7		8.2
Discount rate	7.5	%	6.5	%
Operating leases
Remaining lease term (in years)	5.2		4.3
Discount rate	6.3	%	5.5	%

Note 5 Acquisitions

LB Holdco, Inc. Acquisition

On February 1, 2023, Sealed Air acquired 100% of the outstanding shares of capital stock of LB Holdco, Inc., the parent company of Liquibox, Inc. (collectively, "Liquibox"), a pioneer, innovator and manufacturer of Bag-in-Box fluids and liquids packaging and dispensing solutions for food, beverage, consumer goods and industrial end markets. The acquisition is included in our Food reporting segment.

Consideration paid was approximately $1.16 billion in cash. In March of 2024, subsequent to the closure of the measurement period, we reached a final purchase price settlement with the seller of $3.5 million, which was recorded as income within Other expense, net on the Condensed Consolidated Statements of Operations during the first quarter of 2024. We financed the consideration paid and related fees and expenses through borrowings under our senior secured credit facility, proceeds from the issuance of senior notes, and cash on hand. See Note 13, "Debt and Credit Facilities," for additional details. For the three and six months ended June 30, 2023, acquisition-related expenses recognized for the Liquibox acquisition were $0.1 million and $12.0 million, respectively. These expenses are included within Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Goodwill is a result of the synergies that are expected to originate from the combination of Cryovac and Liquibox solutions for the Company, as well as growth of our sustainable packaging portfolio. This goodwill is not deductible for tax purposes. The goodwill balance associated with Liquibox is included in the Food reportable segment.

Liquibox Supplemental Information

The following table presents the amounts of net sales and net loss attributed to Liquibox since the acquisition date that are included in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023:


(In millions)	Three Months Ended June 30, 2023		February 1, 2023 through June 30, 2023
Net sales	$	75.3	$	132.6
Net earnings (loss)	$	1.1	$	(4.3)

Pro Forma Financial Information

The following table presents the Company’s unaudited pro forma financial information for the three and six months ended June 30, 2023, assuming the acquisition of Liquibox had occurred on January 1, 2022. The information below reflects pro forma adjustments based on available information and certain assumptions that Sealed Air believes are factual and supportable. The unaudited pro forma information is not necessarily indicative of the results that might have occurred had the transaction actually taken place on January 1, 2022 and is not intended to be a projection of future results and gives no effect to any future synergistic benefits that may result from the combination or the costs of integrating the acquired operations with those of the Company.


(In millions)	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Net sales	$	1,380.8	$	2,755.2
Net earnings	$	100.9	$	170.9

The unaudited pro forma financial information includes, where applicable, adjustments for (i) additional expense from the fair value step-up of inventory, (ii) additional amortization expense related to acquired intangible assets, (iii) additional depreciation expense related to acquired property and equipment, (iv) transaction costs and other one-time non-recurring costs, (v) additional interest expense for borrowings related to the acquisition and amortization associated with fair value adjustments of debt assumed, and (vi) associated tax-related impacts of adjustments.

Other 2023 Acquisition Activity

During the second quarter of 2023, Food had other acquisition activity resulting in a total purchase price paid of $14.9 million. The Company finalized the allocation of the consideration transferred to the fair value of assets acquired in the third quarter of 2023, resulting in an allocation to goodwill of $7.9 million. There were no other identifiable intangible assets acquired. This acquisition activity is expected to supplement our developmental efforts for sustainable packaging and accelerate our speed to market for certain sustainable solutions. This acquisition activity was not material to our Condensed Consolidated Financial Statements.

Note 6 Segments

The Company’s segment reporting structure consists of two reportable segments as follows and a Corporate category:

•Food

•Protective

The Company’s Food and Protective segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products. Corporate includes certain costs that are not allocated to the reportable segments. The Company evaluates performance of the reportable segments based on the results of each segment. The performance metric used by the Company's chief operating decision maker to evaluate performance of our reportable segments is Segment Adjusted EBITDA. The Company allocates expense to each segment based on various factors including direct usage of resources, allocation of headcount, allocation of software licenses or, in cases where costs are not clearly delineated, costs may be allocated on portion of either net trade sales or an expense factor such as cost of sales.

We allocate and disclose depreciation and amortization expense to our segments, although depreciation and amortization are not included in the segment performance metric Segment Adjusted EBITDA. We also allocate and disclose restructuring charges by segment, although they are not included in the segment performance metric Segment Adjusted EBITDA since restructuring charges are categorized as Special Items (as identified below). The accounting policies of the reportable segments and Corporate are the same as those applied to the Condensed Consolidated Financial Statements.

The following tables show Net sales and Segment Adjusted EBITDA by reportable segment:


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2024			2023			2024			2023
Net sales:
Food	$	893.8		$	880.6		$	1,762.2		$	1,733.7
As a % of Consolidated net sales	66.4		%	63.8		%	65.9		%	63.5		%
Protective	451.3			500.2			912.5			995.9
As a % of Consolidated net sales	33.6		%	36.2		%	34.1		%	36.5		%
Consolidated Net sales	$	1,345.1		$	1,380.8		$	2,674.7		$	2,729.6

	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2024			2023			2024			2023
Segment Adjusted EBITDA:
Food	$	204.6		$	191.0		$	394.2		$	385.8
Adjusted EBITDA Margin	22.9		%	21.7		%	22.4		%	22.3		%
Protective	81.8			95.9			171.3			176.3
Adjusted EBITDA Margin	18.1		%	19.2		%	18.8		%	17.7		%
Total Segment Adjusted EBITDA	$	286.4		$	286.9		$	565.5		$	562.1

The following table shows a reconciliation of Segment Adjusted EBITDA to Earnings before income tax provision:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2024		2023		2024		2023
Food Adjusted EBITDA	$	204.6	$	191.0	$	394.2	$	385.8
Protective Adjusted EBITDA	81.8