Good day, and thank you for standing by. Welcome to the Q2 2024 Sealed Air Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brian Sullivan, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. With me today are Sealed Air's Chairman of the Board, Henry Keizer, along with Patrick Kivits, CEO; and Dustin Semach, President and CFO. Before beginning our call, I would like to note that we have provided a slide presentation to supplement the call. Please visit sealedair.com where today's webcast and presentation can be downloaded from our Investor Relations page. Statements made during this call, stating management's outlook or estimates for future periods are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the information in the section entitled Forward-Looking Statements in our earnings release and slide presentation, which applies to this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K as revised and updated on our quarterly reports on Form 10-Q and current reports on Form 8-K. We discuss financial measures that do not conform to US GAAP. You will find important information on our use of these measures and the reconciliation to US GAAP in our earnings release. Including the appendix of today's presentation, you will find US GAAP financial results that correspond to the non-US GAAP measures we reference throughout the presentation. I'll now turn the call over to Henry, Patrick and Dustin. Operator, please turn to Slide 3. Henry?

Thank you, Brian, and thank you for joining our second-quarter earnings call. Before we dive into today's earnings discussion, I would like to take a moment to discuss how we are further strengthening our leadership team with the hiring of Patrick Kivits as Sealed Air's CEO. First, I want to thank both Dustin and Emile for their leadership over the last eight months. They navigated the company through a period of volatility and corrected our long-term trajectory. The biggest challenge facing the company is the ability to consistently deliver volume growth. Patrick has a strong commercial background in a space that is relevant to ours and a track record of demonstrating the ability to drive growth and transform businesses. Emile will continue to be the backbone of our operations. Dustin, who has been a catalyst for change, has been promoted to President and CFO, reflecting the broad impact he has had on the organization well beyond his CFO responsibilities. With several other hires made over the past couple of months and the remaining searches nearing conclusion, we are on the verge of completing our entire management team. Patrick is ramping up quickly and is expected to accelerate the ongoing transformation to restore underlying business fundamentals and drive long-term profitable growth across our two market-leading packaging businesses: Food and Protective. I am confident in our future and look forward to seeing the transformation this team will drive to accelerate Sealed Air's evolution into a world-class provider of packaging solutions delivering substantial long-term value to our shareholders. With that, I'll turn it over to Patrick.

Thank you, Henry. First, I am thrilled to join the company at this pivotal point in its journey. Sealed Air has great people, great products, and great customers. I have known Sealed Air for many years and have always respected both packaging businesses, each with an incredible history and strong brand equity. They have both set the gold standard within their respective markets. Although I've only been with the company for a month, I'm even more excited about the opportunities ahead of us. While the markets we operate in remain challenging, we see this as an opportunity to accelerate the transformation initiated eight months ago. Over the coming months, my focus will be on finalizing the management team and accelerating our commercial transformation. Separately, we are adjusting our cost optimization programs initiated last year to address the persisting market challenges in this lower-for-longer environment within Protective. In the near term, I'm quickly coming up to speed on the business. I am meeting with our top customers and channel partners as well as visiting our global facilities to gain insights into our manufacturing technologies. I am looking to better understand our customers' challenges and how our value proposition resonates with them. This will guide future enhancements to our commercial, innovation, and operational strategies, including our investments in both digital and automation. Additionally, we are continuing to advance portfolio optimization initiatives. I am actively involved in strategic efforts concerning our Protective business, focusing on analyzing market trends over the medium to long term, developing a comprehensive pivot strategy, and determining the future of portfolios that do not align with our core strategy. Lastly, Dustin and I plan to travel in the coming weeks to meet with investors, gather their perspectives, and update them on our ongoing progress. I look forward to quickly getting up to speed and sharing updates on our progress in the months ahead. With that, let's turn to Sealed Air's second-quarter performance. We closed the quarter with sales of $1.35 billion and adjusted EBITDA of $285 million, delivering strong results despite the continued challenging market dynamics in the Protective segment. Our second-quarter results reflected a step-up in performance in Food with mid-single-digit volume growth across all regions, continued weakness in Protective, and strong execution related to our CTO2Grow initiatives. Through the focused efforts of our teams around the world, we delivered positive cash flow of $207 million as of the second quarter year-to-date. This is well above the $45 million free cash flow generated in the same period a year ago. Dustin will provide a more comprehensive overview of our financial performance shortly. On the sustainability front, I am pleased to share that Sealed Air Australia has won the coveted GOLD Sustainability Award at the 2024 WorldStar Packaging Awards for sustainable innovations within our Food business where we are extending the shelf life of lamb while simultaneously reducing the packaging materials. This is another example like our compostable tray where we are developing and introducing solutions that help our customers and stakeholders in achieving their sustainability goals, meeting regulatory requirements and advancing circularity initiatives. Now let's move on to our market and business update. Our Food segment continued the strong momentum from the first quarter, delivering approximately 5% year-over-year volume growth during the quarter. The growth was driven by increased consumer demand in both the proteins and fluid markets across all regions combined with competitive wins. Both portfolios achieved mid to high single-digit volume growth, except for equipment, where customers' capital constraints continue to put pressure on bookings and sales. In the second quarter, beef production was better than anticipated with US slaughter rate nearly flat, while the South American and Australian cycles continue at their peaks. Protein producers increased packaging inventory and anticipated the oncoming peak season. In the fluids and liquids sector, foodservice demand remained strong, further boosted by the early start of the US tomato season. With the US cattle cycle weakening in the second half and considering the pull-forward benefits mentioned earlier, we anticipate a lighter seasonal pattern for the rest of the year. Transitioning to Protective. Sales performance in the second quarter was in line with expectations. Industrial portfolios remained weak as manufacturing PMI registered below or around 50 for the Eurozone and the US respectively in the quarter. Volume and fulfillment portfolios declined by high single digits, driven by a slowdown in equipment automation and increasing pressure within void fill product lines, but partially offset by a strong recovery in our APS business. In the Americas, volume declined by mid-single digits during the quarter, impacted by the difficult comparison of box rightsizing automation in the prior year, the deteriorating void-fill sector, and ongoing weakness in industrial. EMEA continued to decline, though at a slower pace than in the first quarter as the destocking within our APS product line reached completion. Server-related electronic businesses showed improvement in Asia, and we continue to help customers navigate the shift to other Asian countries outside of China. Given the sustained soft demand across all regions, we do not see volumes in Protective inflecting in 2024 and expect the weakness to persist into 2025. With our renewed focus on Protective and Food through our recently established operating units, we are continuing to ramp up our transformation efforts. While our primary focus in both businesses is to accelerate volume growth, we are also increasing our cost optimization strategies in Protective where we have limited visibility to volume recovery. We have made solid progress with the foresight closures discussed in previous calls, following the three planned shutdowns completed last year. With the measures implemented thus far, we have achieved an annual savings run rate of over $100 million and are confident of achieving approximately $90 million in year-over-year cost savings in 2024. Now I would like to turn it over to Dustin to review our financial results.

Thank you, Patrick, and good morning, everyone. Moving to second-quarter results. Let's turn to Slide 4. Net sales were $1.35 billion in the quarter, down 2% on a constant currency basis. Adjusted EBITDA in the quarter was $285 million, up 2% compared to last year. Volumes were up 1% year-over-year for the quarter, with growth in the Food segment across all regions, offset by declines in Protective primarily in the Americas and EMEA. As reported, adjusted earnings per share in the quarter of $0.83 were up 4% compared to a year ago. Our adjusted tax rate was 25.5% compared to 26.9% in the same period last year. Decrease in the tax rate year-over-year was driven by the jurisdictional mix of income and nonrecurring discrete items in the prior year. Our weighted average diluted shares outstanding in the second quarter of 2024 was 146 million. Turning to Slide 5. In the second quarter, we saw a 3% lower year-over-year pricing across both the Food and Protective segments, primarily in the Americas and EMEA regions, reflecting the carryover pricing actions following input cost reductions in 2023. Volume returned to 1% growth as the strong momentum in proteins and fluid sectors more than offset the slowdown of equipment automation and the continued weakness in Protective. Second-quarter adjusted EBITDA of $285 million increased $5 million or approximately 2% compared to last year, with margins of 21.2%, up 90 basis points. This performance was mainly driven by volume growth in the Food segment, productivity efficiencies, including savings from our CTO2Grow program, partially offset by unfavorable net price realization and protective volume declines. Moving to Slide 6. In the second quarter, Food net sales of $894 million were up 2% on an organic basis. Lower resin cost-related pricing was more than offset by strong volume growth in all regions, driven by both strength in end market demand and share gains within our case-ready solutions. Second-quarter volume growth partially benefited from the protein processors restocking for the peak season and the pull-forward effect of the US tomato season. Food adjusted EBITDA of $205 million in the second quarter was up 7%, with margins at 22.9%, up 120 basis points compared to last year. The increase in adjusted EBITDA was mainly driven by volume growth, cost takeout actions, and productivity improvements, partially offset by higher operating costs, including the restoration of incentive plans. Protective second-quarter net sales of $451 million were down 9% organically, driven by lower pricing, mainly in the Americas and EMEA. Volume declines across all regions, primarily due to the slowdown in automation sales, sustainability pressures on void-fill product lines, and continued weakness in industrial portfolios. Protective adjusted EBITDA of approximately $82 million was down 15% in the second quarter, with margins at 18.1%, down 110 basis points. The decrease in adjusted EBITDA was driven by lower volume and unfavorable net price realization of approximately $11 million, partially offset by CTO2Grow savings. On Slide 7, we review our second-quarter net sales by region. On an organic basis, Americas was down 2%, primarily due to lower pricing. Volumes were up 1% as strong volume in proteins and fluid spaces more than offset automation slowdowns and continued soft demand in Protective. EMEA declined 4% organically on lower pricing. Strengths in Food consumer demand offset persisting market softness in the Protective segment. APAC was up 1% organically as tailwinds from the Australian cattle cycle more than offset continued weakness in industrial markets and lower pricing. Now let's turn to free cash flow and leverage on Slide 8. As of the second quarter year-to-date, we have generated strong free cash flow of $207 million compared to $45 million a year ago when excluding the $175 million deposit resolution of certain US tax matters. This improvement was primarily driven by higher earnings, reduced incentive compensation payments, and enhanced working capital management, partially offset by higher interest costs. Since the second quarter of 2023, we remain focused on deleveraging the balance sheet, reducing our total debt by approximately $355 million, ending the quarter with a net leverage ratio of 3.8 times. Our total liquidity position was $1.4 billion, including $389 million in cash and the remaining amount in committed and fully undrawn revolver. We remain on track to drive net debt to adjusted EBITDA to below 3.5 times by the end of 2025. Let's turn to Slide 9 to review our 2024 outlook. While we are pleased with the strong finish to the second quarter and the momentum building in our Food business, we do not see any inflection in volumes in our Protective business due to end market weakness and continued challenges. We now expect these market conditions to persist throughout 2024 into 2025. The weakness in our Protective volumes is fully offsetting the strength in our Food business. We are accelerating our transformation in Protective to address underlying fundamentals. Our reorganization back in February is taking hold and we are beginning to execute better within our markets. We continue to work on closing sustainability-related gaps in our portfolio, primarily on fiber mailers, so we can drive higher participation in higher growth end market segments and mitigate churn. Lastly, we continue to operate in a limited visibility environment and see pressure within our fulfillment and industrial end markets, in line with our channel partners' observations. We are staying close to our channel partners and large customers to better understand the impact of the weakening consumer and macroeconomic trends and their impact on the upcoming holiday season and our volume outlook. Separately, based on ongoing working capital improvements and resulting free cash flow performance in the first half, we are outpacing our original expectations on free cash flow generation and are well positioned to close the year on a strong note. Also, we continue to focus on minimizing our interest expense through cash management initiatives despite the rising rate environment's impact on our refinancing activities and floating interest rate debt. We are on track to have lower net interest expense in 2024 versus the prior year, and this positions us well to achieve our adjusted EPS outlook. Turning to Slide 10, we remain committed to restoring underlying fundamentals by progressing our transformation, driving growth by executing in the market, delivering our CTO2Grow savings, and deleveraging the balance sheet. With that, Patrick and I look forward to your questions.

Our first question comes from the line of Ghansham Panjabi of Baird. Your line is now open.

Hey, guys, good morning. Patrick, congrats on your new role. I look forward to working with you.

Thank you.

And maybe I'll start with a question for you. As it relates to what's going to be different at Sealed Air under your leadership versus all the strategic initiatives over the past decade and maybe you could also touch on your management style. And if Henry's still on the call, what's the Board going to do differently going forward relative to the past decade also? Thanks.

Thank you, Ghansham, for the question and for your kind wishes. I want to start by acknowledging the excellent work Emile and Dustin have done in turning the business around before I joined. I've noticed significant positive changes, and I'm committed to building on that in my initial months here. A key focus is completing the senior leadership team. We have identified some gaps, and I am confident that we will fill those positions in the coming months to create a strong team of top performers moving forward. Regarding priorities, we need to tackle some of the commercial challenges we face. We are addressing protective challenges in our space and working to clarify our product portfolio. We have a diverse range of offerings, and it's essential to activate our commercial engine, ensuring clear lines of accountability within the sales team to steer our efforts effectively. My management approach emphasizes transparency, empowering the team, and ensuring decisions are made at all levels. It's vital to have a clear understanding of our customers' needs and to actively listen to their feedback, as this presents significant opportunities for us. We will also focus on accountability and increase our specialization in crucial areas.

One moment for our next question. Our next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is now open.

Yes, thank you. Good morning, everyone, and Patrick, welcome.

Thank you.

So my question is really around the outlook for the second half and the pieces of guidance haven't changed. It seems like the underlying mix of business has. So I'd love to just hear a bit more about the updated volume expectations for both Food and Protective and how those have shifted relative to three or six months ago. And within that, maybe some of the contrasting kind of share opportunities that are presenting themselves on the Food side, maybe quantify some of the growth that you're seeing from the new case-ready offerings that you've got in place and contrast that with on the Protective side, what would seem like some market share losses in void-fill as you've seen an acceleration in shift to fiber certainly in the US. Thank you.

Yeah. Thank you for the question. I'll start answering at a high level and then pass it over to Dustin for more detail on the various markets and regions. So I will say on the Food side, I think we've had quite strong growth in the last quarter, which is fueled by some of the cattle cycle that is going to slow down a little bit. So it was some forward movement towards this quarter this year, which we saw — which we addressed in the opening remarks. But there's also been some share gains that we had in certain areas by having that stronger focus and line of sight that I talked about earlier and Dustin can elaborate on that a little bit. As far as the Protective market goes, obviously, there are some challenges there in terms of headwinds from a sustainability point of view. We have a very broad portfolio. We just need to make sure that we review our portfolio and drive success across those areas of the portfolio that have over-proportional growth as opposed to others that may be more depressed in terms of market. I'll pass it over to Dustin to give a little bit more color.

Hey, Adam, this is Dustin. I have a few comments to share. Looking at the Food business for the entire year, three months ago, we anticipated around 3% volume growth, and now we expect to be in the 4% range. This reflects the strengthening we've seen over the past six months, with each quarter showing improvement, particularly from Q1 to Q2. This trend is evident across the board, and I’d like to provide further details on where we are noticing this growth. Firstly, our North American market has been improving, which has positively impacted this year's performance. Initially, we predicted a decline of mid-single digits in that sector, but it's now coming down, and we project around 3% to 4% for the full year. In Latin America, we've achieved several competitive wins, which has contributed to the continued acceleration of that business. In EMEA, we are also experiencing strong performance overall, and we noted that the consumer sentiment has shifted from a recessionary environment a year or two ago to now feeling stronger, aided by our competitive victories. Conversely, the Protective business is experiencing challenges. Overall, in Q2 and looking ahead to the second half of the year, Food continues to perform well while our Protective business is declining. For the full year, we initially forecasted a decline of about 2% relative to our volume expectations, combined with price adjustments, but now we’re seeing a decline of roughly 4%. This change reflects expectations for the second half, where we originally thought volume would stabilize and improve in the fourth quarter, but it is now trending towards low single digits. Moving into next year, we anticipate that these challenges in the Protective sector will continue. These challenges are framed by three factors: ongoing market concerns, sustainability issues we need to address, and our continuous commitment to improving commercial execution.

One moment for our next question. Our next question comes from the line of George Staphos of Bank of America Securities. Your line is now open.

Thanks. Hi, everyone. Good morning. Henry, Patrick, Dustin, Brian, nice to speak with you all again. Thanks for all the details. I guess my question will be kind of a hybrid of the ones that have already been asked. So I guess when you think about CTO2Grow, part of its effort was to drive the resources to reinvest in the areas that you wanted to grow and with Protective not yet getting that inflection point, is it causing you to maybe rethink the effectiveness of CTO2Grow or what you need to do differently within that effort? And relatedly, why are we not seeing the traction yet in Protective that you had expected? Related point, Patrick, what from your experiences at WestRock with MPS within consumer do you think will be helpful in ultimately turning around Protective and along with Dustin and the team making Sealed Air a much more predictable return-accruing company? Thanks, guys. Good luck in the quarter.

Thank you, George, and great question. Let me start with the second question and then Dustin can give you some color on the first one, CTO2Grow. As far as the experiences that I had in prior roles, it's really part of CTO2Grow has only just started. So we dealt with the most important areas, and yes, there's some recalibration and some refocus, but if I say, if you say use the words becoming more pointed in terms of where do we invest our resources, these are the things that we're looking into now. So the sales force effectiveness as opposed to, as you call it, the CTO2Grow effectiveness is going to be critically important, and we're just in the starting phases of that, and that bridges the question nicely to my prior experience where we had to do some of that, so recalibration sales force, looking at sales compensation and other areas where you actually pay for performance and making sure that we have stronger accountability that is so important in this space, and I think you will see more of that as we go forward in the next quarter. So that will be my prime focus, and then Dustin can give you some color on CTO2Grow's early stages.

Sure. George, this is Dustin. I’d like to make a few comments. First, we’re on track to meet our targets for 2023 as we head into 2024, and we're actually at a higher run rate for 2025. This has helped us maintain some level of profitability despite the weaknesses we've observed in the Protective segment. To clarify, we are investing in that commercial area. The new operating units we established aim to create focused opportunities on Protective while enhancing accountability. We are still committed to investing in package point and addressing various other areas, including the commercial execution for Protective. There are still portfolio gaps we need to address. If you consider the current market, the sector related to void fill is deteriorating; everything involving secondary packaging materials is facing pressure while items outside the box, like fiber mailers, are performing better, and we are working to close those gaps. Additionally, the market overall continues to be challenging, especially regarding our large direct customers and channel partners. We are actively working through these issues and accelerating efforts with Patrick's onboarding to improve the situation for Protective. However, we anticipate these challenges will persist throughout 2024 and into 2025.

One moment for our next question. Our next question comes from the line of Josh Spector of UBS. Your line is now open.

Yeah, hi, good morning. I had a question on free cash flow. Just, I mean, as you noted, your first-half performance was really strong. You didn't change your guidance range and if I look at the last few years, on average, you've done about $300 million to $400 million of free cash flow in the second half. So I think if I add that to the $200 million you'd be meaningfully above your guidance range. So are we missing something that we need to consider in the bridge or would you just characterize it as conservative? Thanks.

Yes, great question, Josh, and I would characterize it as conservatism. We feel really good about the first half. Keep in mind, there are some one-offs in there that we call out relative to the lack of incentive compensation payments that were paid out in terms of executive compensation pools that benefited the first half, which is unusual for us, but again, the number is conservative overall, and if you look at the commentary, even the quote in the earnings release, it's really focused on the fact that we obviously feel really good about where we're at in the first half, really proud of the team's accomplishment, a lot of work across the board from teams all over who really led to that result. But again, we still expect the second half to be strong, and we're well ahead from pacing relative to our original guidance and more to come, and this is also an area of focus, and we'll give you an update on it for the full year and the third quarter.

One moment for our next question. Our next question comes from the line of Arun Viswanathan of RBC Capital Markets. Your line is now open.

Great. Thanks for taking my question. Congrats, Patrick, on the new role and, Emile and Dustin, congrats on the progress you guys have made as well. So, I guess, my question is just thinking about where you guys are right now. Looks like you've been outperforming in Food, Protective continues to lag. When you look into the back half of this year and then into next year, you guys were able to provide some fairly straightforward buckets of EBITDA growth. I don't know if you could maybe update those for us at this point. Is price still kind of a net $90 million headwind? What are you guys thinking about volumes and how that impacts EBITDA as well as incentive comp and maybe anything else on CTO2Grow? Is that $90 million target potentially, does it have some upside now given some of the gains you've had? Or was it pull forward really mainly? Thanks a lot.

Thank you, Arun. This is Dustin speaking, and that's a great question. I want to make a couple of points. Regarding net price realization, last quarter we were approximately $80 million down, and now we're at about $70 million down. This shift indicates a pricing benefit in our Protective business. Looking at other factors like resin costs, labor inflation, and non-material inflation, everything aligns with our initial expectations. The overall situation remains consistent. As for our guidance for the second half compared to the first half, it reflects the strength we saw in the second quarter, particularly in Food, driven by the early start of the US tomato season and our largest customers preparing for the busy period in Q3 and Q4. In the overall outlook for the second half, we anticipate a $70 million decline in net price realization, a $20 million increase in volume, a $40 million reduction due to bonus restoration, and a $90 million addition from Cost take-out to Grow. These are the key components.

One moment for our next question. Our next question comes from the line of Michael Roxland of Truist Securities. Your line is now open.

Thanks, Henry, Patrick, Dustin, and the IR team for taking my questions. And Patrick, congrats on the role, and I look forward to working with you.

Thank you.

My question is on food automation sales. You mentioned that last quarter it grew double digits, seems to have slowed now again in 2Q. Would love to get any additional color you have on what's happening in food automation. And then Patrick, you mentioned being actively involved in strategic efforts concerning Protective. Can you provide more color on what some of those efforts are?

Okay. So let's start with automation, right? So and Dustin can give that a little bit more color in terms of the numbers, but I think looking at Sealed Air's automation portfolio, particularly in the food segment is really, really strong and has a very strong support technically by salespeople and service people. So that's something that actually helps us to cement our business going forward because of the retention rates for customers, pull-through of materials, there's a lot of positives related to that. Now obviously, it has been a little bit more depressed with the interest rates being the way they are. Hopefully, during the second half of the year that will get better and then we can get more traction as people make decisions to get more automation as they prepare for the upturn. So if you think about the Protective strategy priorities that we have, we really need to address a couple of things. So there's the void fill area, and there is the area of paper mailers that we are looking into more deeply. So we're doing deep dives in all of those and trying to understand what our value proposition is, how our proposition is better than that of competition, and are there any deficiencies or gaps in our portfolio that we need to address to become more effective in those markets, and those things are critically important for us to really come to a more coherent strategy on the Protective side. So, Dustin, maybe some color on the equipment?

There are a few points I would like to address regarding your question. You are correct that the first quarter remained strong as we continue to reduce some of the backlog from the previous year. We previously discussed the strength of our bookings from 2021 and 2022 that have carried through into 2023 and are expected to extend into 2024. However, we are experiencing a slowdown in bookings, which began in the latter half of 2023. Additionally, capital constraints are limiting some of our largest customers from investing in their current infrastructure. On a positive note, this situation primarily represents deferred maintenance, and we anticipate that this will shift over time. Our expectation is that this situation reflects pent-up demand that we will ultimately be able to capitalize on. Currently, our book-to-bill ratio stands at about 1, indicating stability. This suggests that, in the short term, sales for food automation are likely to remain flat until we navigate through this period. Furthermore, with Pat joining the team, we are actively reevaluating our portfolio and considering new commercial offerings to better support our customers during this time and reinvigorate our sales efforts in this sector. I share Patrick's enthusiasm as we remain confident about our position and continue to be well-positioned relative to our competitors in the markets we operate in, particularly in the food sector.

One moment for our next question. Our next question comes from the line of Anthony Pettinari of Citi. Your line is now open.

Hi. This is actually Bryan Burgmeier on for Anthony. Thank you for taking the question. Maybe just following up on Arun's question on net price. So your full-year outlook, I guess, improved a little bit from minus $80 million to minus $70 million. What drove that improvement? Are you seeing lower costs? Is it about receiving better value for your products? And then is it possible to say, if net price headwinds are accelerating, slowing into year-end, any kind of color you can put on sort of how those negotiations are going with customers right now? Thanks.

Just maybe as a broad statement, Bryan, I think it's important to remember that most of the material deflationary effects came at the end of last year. So most of those are behind us. And as we go forward, it's still uncertain what's going to happen in the next six months with raw material inflation or deflation. But overall, the majority of that is behind us, and Dustin can give you more color on the differences.

Yeah. So going back to Arun's point, and if you look at the net price realization, it was roughly down negative $80 million as a net number in the prior call. And as we've rolled forward, what we've been able to do is specifically in Protective where we've helped pricing, and pricing has held up better in the marketplace right now across all of our products. There's obviously issues in terms of the void-fill sector where there's excess capacity in the market right now, but holistically for Protective, we've done a nice job in terms of being able to maintain price. And net price realization is negative 4% in the second half. That's really a factor of how labor inflation cost rolls through the P&L throughout the fiscal year. As a narrowing concept, in other words, on the resin point and being the largest input cost, that one, as Patrick mentioned, came down very hard in the second half of '23. So as you get into the second half of '24, you have a much more narrowing between resin input pricing deflation. And the expectation right now is that at this point, whether it deflates or inflates from here, we don't see it materially changing at this point in time, barring some broader shift in the market.

Our next question comes from the line of Christopher Parkinson of Wolfe Research. Your line is now open.

Hi, good morning, everyone. This is actually Andrew on for Chris. Main question is, can you talk about the liquids franchise, the performance of Liquibox and that integration? And then kind of going off of that, what you're seeing from the foodservice business and fast food restaurants, QSRs and the like? Thank you.

Thank you for the question. So it's still early days for me trying to understand the full portfolio, including the Liquibox portfolio. What I will tell you, though, is that the market in that bag-in-box space is actually a growing market. So this is an area that should, longer term, give us some upside. And I do believe that we need to think about how to actively manage our portfolio here, how do we in-source into the traditional more Sealed Air-like equipment manufacturing, and equipment offerings that we have there. So we're looking at a lot of things right now to make sure that we have that portfolio well taken care of. Dustin can provide you just a little bit more color on the background of that.

Yeah. So a couple of comments there, just to follow up on. Keep in mind on the integration side, we're really looking at this business now as fluids and liquids in total. This is a reminder—we already had a preexisting CRYOVAC fluids business that's been performing quite well. And we talked about originally when we looked at that market overall, but we saw that as a mid-single-digit grower. If you think about those businesses today, they're still in that range relative to growth. If you look at that on a combined basis, behind, and that's largely due to the integration efforts. We're in a much better place than we were in 2023. We've talked openly about some of the integration issues and product issues that we've had that we largely feel are behind us at this point. And now it's just about market execution. Going back to the market stuff on foodservice, which is primarily the space, I would say that—or one of the spaces that Liquibox really gave us an entry point into beyond our pre-existing business; that marketplace has weakened a little bit since we last were on the call about last quarter. But even Liquibox, for the first half of the year, has performed well, and we look forward to kind of giving you more updates as we move forward as we think about that business holistically together. And just as the last point I want to remind everybody, it's about $500 million, $600 million on a full combined basis.

One moment for our next question. Our next question comes from the line of Philip Ng of Jefferies. Your line is now open.

Hey, guys. Patrick, welcome. Looking forward to working with you. I think in Henry's prepared remarks and your commentary, you want to take a different commercial approach and reaccelerate volumes, right? So I guess how are you guys going to tackle that differently? Is it innovation, KPIs on the sales force? Just give us a little more perspective on that? And then just given your background in paper packaging, certainly Protective had seen share loss accelerate. How do you plan to go after this market? What are some of the things that you want to do to kind of accelerate growth? And do you think you have the right to win on the paper side of things for Protective packaging?

Yeah. So a great question, Phil. So let's start with the commercial excellence, if you will. I think we have an opportunity. We have great technical salespeople in this organization that have been supporting this market for a long time. I think as we got a broader proliferation of our offerings, it's really important that we monetize the opportunity to actually focus a little bit more. I think there has been a challenge that people have to sell different cycles, different products, and we become the expert of almost everything and now making sure that from a management down, we have that very clear accountability in the various product segments that we have, identifying the ones that are actually more core to us as opposed to the ones that are less core where we have to maybe deemphasize a little bit and driving the growth in those areas where we have the right to win. There's a lot of that in the organization, and I do think by refocusing and rebalancing that opportunity area, we will be more successful. And then going through the background, obviously, with the fiber background, that's one of the things that I'm looking at hard, as I said earlier in one of the other questions, particularly around void filling and paper mailers. Those are the two areas where I actually think that the fiber transition is a little bit stronger than in some of the other areas. I will say this though, you have to remember that in our broad portfolio, sustainability isn't just about plastic being replaced by paper. There is a large if you look at more holistically for food safety, food protection, and shelf life issues, and all of those kind of things play into sustainability in certain aspects even more than just the material that the products are packaged in. If you can increase the shelf life and you can avoid a lot of food waste. So that is an important area that we're really driving hard in this space as we are redeveloping our portfolio strategies and looking into what are the areas we need to grow and addressing those gaps. Why do certain products work better or worse than some of our peers in the market? These are the areas that we will focus on in the next couple of quarters to drive more success in those spaces. Thank you.

One moment for our next question. Our next question comes from the line of Edlain Rodriguez of Mizuho. Your line is now open.

Thank you and good morning everyone and welcome Patrick. A quick one on Protective. When you look at all the issues going on in there, the challenges, like how much of it you think is secular in nature and how much of it is just like cyclical? And then so you can gain that volume back? And also at the end of the day, looking at the portfolio as a whole, how core is Protective to Sealed Air, in the sense that not a lot of synergies with food care, a lot of challenges in Protective, yes, like how core is Protective?

Well, thank you for the question. Let me just start with the secular versus cyclical. Let's look at the execution of things, right, in the Protective business. So there's a couple of elements that play ball. And in my experience over the last more than 25 years in packaging, there always is this phenomenon of dematerialization going on, meaning people want to do more with less, whether that be in adhesives on the labels, whether that be in paper packaging. There's always going to be this challenge that people want to have less packaging materials as they go forward. And we are not immune to that. So that is part of a generic market trend that actually is across the entire industry, but every single industry has found solutions to actually grow despite all of those challenges. And I think we're in a good position to have that, too. Some of that is more like the situation we're in with the cyclicality of the market. If you look at other packaging materials, it's not like some of those volumes are all of a sudden, well above the area — the growth that we have been demonstrating, right? So it's more like it has been more depressed over the years that will come back eventually. And then the third element, which we just addressed in a prior question is all about the execution of it commercially. So how much of that is down to how do we execute commercially going forward, and we definitely will get that under control. So then your question about is Protective core to Sealed Air. What is important here is that we have a great portfolio across the Board where you see the synergies may not be necessarily obvious on the outside, but it is really on the automation side, the way we sell. Yes, from a customer point of view, it may be a little bit overlap but not that much. But definitely, from that point of view, we are going to have to review over the next couple of quarters how core certain parts of that Protective segment is or are and maybe make some decisions on that as we go forward. But in general terms, there's a very nice combination of having both in the portfolio. We just need to be shopping a pencil on the portfolio in general.

One moment for our next question. Our next question comes from the line of Matt Roberts of Raymond James. Your line is now open.

Hey, good morning everybody, and Patrick, I'll echo the others and say welcome and congratulations on the role.

Thank you.

I'd like to ask about protective volume and price. I know you noted the pressures are expected to continue in 2025 or into that year. When should we expect that to inflect positive? And should we expect volume growth in 2025 partially as a function of math? And on the price side of that business, while still seeing pressures, it also seems like it didn't really worsen in 2Q on a sequential basis and getting easier comps here in the second half. So should we expect sequential improvements or something changed there, whether it be incremental competitive pressures or the resin timing and investment? I think you might have hit on that resin timing earlier, so my apologies if I missed it.

Yeah. So, Matt, I appreciate the question. A really good one. A couple of comments I would make to you is right now at this point in time, we don't see positive volume inflection in 2025, right? So if you think about some of the challenges that we're facing and Patrick laid them out well relative to some of the sustainability gaps that we need to close and you mentioned the void-filling and fiber mailers. So our participation in some of the higher-growth end markets in Protective today despite the market overall being tepid, we're not getting our fair share, right? And that's where some of the churn that we've had, some of the share loss that we've had, those are the specific areas. That's why we're so intent on working on them. The commercial execution piece will take time. We see that improvement already happening going back to the beginning of the reorganization that happened in February. But again, from a volume perspective, we see that weakness into next year. And we're going to continue to focus on our overall kind of—going back to the few comments George made around general focus on kind of CTO2Grow and any further cost optimization and Patrick alluded to that in his earlier remarks. Going back to pricing, going back to resin, we talked about it happening. If you look at some of the indices, particularly around low-density polyethylene in the first—in 2023, it came down sharply in the middle of the year. So think of it as at the end, I think, of June 30 and 2023, it came down. So you have a wrap-over effect in the first half of '24 and that's really narrowing in the second half. Now the difference is if you look at overall kind of resin pricing in general, I would say it's more in line with pre-pandemic kind of pricing. So barring some exogenous event that we can't see at this point in time, it could inflate into flight, but I don't see it at the same level of volatility. And I think this is probably one of the most important things I want to leave with everyone is that as we think about that price-cost mix, which we've had a challenge managing over the past three or four years due to so many different input costs having volatility and pricing as a subsequent result having significant volatility, we see that kind of really easing out now in 2024. As we get into 2025, we'll see that as a more kind of year-over-year comps to be much more normal relative to those kind of price-cost dynamics with resin being the largest input cost.

One moment for our next question. Our next question comes from the line of George Staphos of Bank of America Securities. Your line is now open.

Hi, thanks for taking the follow on. So I was hoping we could get a bit more color on where the share gains are coming from within Case Ready recognizing some of this is competitive and to the extent that you've been able to study it, Dustin and Patrick, Case Ready was a business that CRYOVAC invented, and now to some degree, you're on par at parity with others. So where did the share loss, if you agree with that premise, come from? And then total aside, different question, when do you think you'll be in a position to have an Analyst Day or an event where we get the longer-term bigger picture for Sealed Air? It's been, I think since 2015 that we've not had an Analyst Day, and do you have any sort of initial goals gentlemen in terms of what the longer-term EBITDA, cash flow, stock price might look like for Sealed Air for investors who are in the stock right now? Thank you, guys. Good luck in the quarter.

Yeah. Thank you, George. I'm going to take that one first. So a couple of comments. We talked about some of the poultry gains that we've had. That was largely in North America, and that's in that Case Ready solution. But specifically within poultry in this example, we're talking largely about overwrap film that goes around the trade. In general, and I agree with the comments you made relative to your perspective on CRYOVAC and over time. But what I would tell you is when we talked about it beforehand, one of the areas that we're really focused on is making sure that we're rounding out our automation solutions in that space, where you have a much bigger proliferation of equipment manufacturers, and then we talked about the partnership that we led with Austin in terms of bringing that to market. And we're really excited about kind of going forward there and continuing to build out partners in that space and really building that kind of three legs of the stool around that offering kind of in line with what we do with strength bags today. So going back to leading-edge materials science, which we already have, great technical service, field service, which we already have, and we're really completing that third leg of the stool on the equipment piece of it. Going back to share losses, we talked about this openly going back to roughly the 2022 timeframe where we had a specialty resin crisis that negatively impacted our roll stock business, I mean created share loss in churn, just as a result of the simple issue that we could supply back in 2022 and so a lot of the wins, there's a focus there just in terms of winning back, going back and wanting to come back to CRYOVAC and recognizing some of those other elements we talked about in terms of our value proposition relative to competition. And so the last piece in terms of other areas of competitive wins, largely strength bags. So we talk about Latin America. It's largely strength bags where we're seeing a significant number of wins. And obviously, the cattle cycle is performing very well. But very pleased there. It's actually some of the large companies, but we've also picked up a lot of smaller customers there as well and feel really good about our position in Latin America. And then on EMEA, we talked about that. There's a number of competitive wins in that space that we've really benefited from. And those, I would say, are the three big blocks. We've talked already about the Australian cycle, which is at a peak. We continue to do well there, but that's not really new; that's been performing for quite some time at this point. And then the last point on the Analyst Day, and I'll say this on behalf of Patrick, which is it's early days, right? I mean, he's been here just a little bit over a month, and we're still working obviously closely in terms of next steps and some of the challenges we talked about today that we're working to address and maximizing some of the opportunities we talked about. But we recognize your point about 2015 and recognize the need to do that. But in fairness, we need some time to really take a step back, understand how 2025 is going to shape up and then the fact that longer term, and we're working through some of the strategic pieces today, as Patrick alluded to in his earlier comments on the script.

Thanks so much. Appreciate the color.

Of course. Thanks, George.

This concludes the question-and-answer session. I would now like to turn it back to Patrick for closing remarks.

Thank you, operator. I'd like to thank everyone for their time today, and I'm looking forward to updating you over the coming quarters on the progress we're making to transform Sealed Air. And lastly, I'd like to close by thanking the global Sealed Air team, who at the center of the transformation for their efforts in solving our customers' most critical packaging challenges every day. Thank you very much.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.