Good day and thank you for standing by. Welcome to the Sealed Air Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today’s conference call is being recorded. I would now like to hand the conference over to your first speaker today, Mark Stone.

Thank you, and good morning, everyone. This is Mark Stone, Sealed Air’s Vice President, Investor Relations. With me today are Dustin Semach, our President and CEO; and Roni Johnson, our Interim CFO. Before we begin our call, I would like to note that we have provided a slide presentation to supplement today’s discussion. This presentation, along with our first quarter earnings release, is available to download from our Investor Relations page on our website at sealedair.com. I would like to remind everyone that during today’s call, we may make forward-looking statements, including our outlook or estimates for future periods. These statements are based solely on information that is currently available to us. Please review the information in the Forward-Looking Statement section of our earnings release and slide presentation. These sections also apply to this call. Our future performance may differ due to a number of factors. Many of these factors are listed in our most recent filings with the SEC. Additionally, we will discuss financial measures that do not conform to U.S. GAAP. Information on these measures and their reconciliation to U.S. GAAP can be found in our earnings release or the appendix of our slide presentation. I will now turn the call over to Dustin and Roni. Operator, please turn to Slide 3. Dustin?

Thank you, Mark, and thank you all for joining us for our first quarter earnings call. Today, I will discuss the progress we are making on our transformation, give an update on current market conditions, including our response to the recent trade policies and walk through how we will navigate the second half. Over the last year, we have been fixing the foundation of the business by reorganizing back into two market-focused businesses, Food and Protective. We recently completed the last major step by integrating our supply chains, including our planning and production, back into each business. This now aligns all our commercial, innovation and supply chain teams all the way down to the respective end markets, putting us in a better position to serve our customers. This is especially important in periods of volatility. Now, each business is better positioned to adapt quickly to their unique market dynamics and customer needs. With clear accountability and incentive alignment, we continue to see improvements in fundamentals throughout each business. In parallel, we continue to enhance leadership across the organization with a strong orientation towards growth and ownership mindsets. I am confident the actions we are taking continue to better position each business for long-term sustainable growth and will help us successfully navigate the uncertainty ahead of us. Before I give updates on each segment, I would like to address the dynamic macro environment we continue to operate in, focusing on the changing global trade landscape and subsequent tariff impacts. Since our discussion in February, the landscape has continued to evolve, with our focus first on potential tariffs in Canada and Mexico, then on broader reciprocal tariffs, including China. As a reminder, we are largely domestic production for domestic consumption, which positions us well against direct tariffs. In addition, most of our products are exempt under USMCA, which has put us in a better position on direct impacts since February, as the U.S. has shifted its focus to the rest of the world. Since November, we have been actively reviewing our supply chain and optimizing production and procurement to mitigate potential tariffs and minimize inflation. Where we have exposure that cannot be mitigated, we are actively taking pricing actions, largely in Food. At this point, based on current policy, the net tariff impact to our bottom line is minimal and reflected in our outlook. More importantly, we are assessing the downstream impact on our customers’ businesses driven by a potentially weakening demand environment. In Protective, we are closely monitoring consumer and industrial sentiment and the potential knock-on effects in our fulfillment and industrial end markets. Food is a more resilient business in any economic cycle. With that said, we are continuing to monitor for protein trade-outs and trade-outs if the consumer comes under more pressure, to ensure we are adapting to our customer needs and mitigating mixed impact. We are working closely with our top customers and distribution partners to better understand the impacts on their businesses and how we can help them navigate the volatility in the market. While there is some indication of softness in the market to come, the trade policies are still not settled and it’s too early to be definitive on the second half. Lastly, as the trade policies continue to evolve, we are assessing areas where our global footprint across both businesses could put us at an advantage relative to our competitor’s footprint, creating opportunities to win further share. For now, we are contemplating tariffs that are in effect and some modest volume softness in both businesses driven by our customers’ cautiousness in this environment. This is offset by an improved FX outlook due to a weakening U.S. dollar. We are taking further cost control and productivity actions in the second half to help offset potential further volume softness and/or drive increased operational leverage. As a result, we are being prudent and reconfirming our full year guidance, which continues to contemplate tariffs in effect and our mitigation efforts related to them. As we progress through the second quarter, we expect to gain more visibility into trade policies and market demand and the impact of our mitigation actions. We will now move to each of our market-focused business segments. During the first quarter, our Food segment delivered modest volume growth against a strong first quarter last year that benefited from carryover demand. As part of our go-to-market strategy within Food, we are focused on taking market share in our retail end markets. Our case rate solutions grew low single digits in the first quarter compared to the prior year. Our strategy in accelerating growth in retail allows us to capitalize on market trends where consumers are looking to replace dining out and on-demand food delivery service with grocery store spending, creating a balanced opportunity between away versus at-home consumption. Further, end-user shifts from processed and frozen foods towards fresh foods benefit the retail market. Putting this together, this portion of the business is expected to continue to perform throughout the back half of the year, benefiting from evolving consumer preferences and the strength of our product offerings. Industrial food processing markets were relatively flat in the first quarter compared to last year. The South American cattle cycle remains strong. In Australia, the cycle remains near peak levels, which is now expected to last through 2027, given favorable weather patterns and growing export demand. Within the U.S., the beef market was slightly better than expected and offset by weaker pork and turkey markets. Cattle herd sizes continue to hover around 50-year lows, though changing consumer sentiment and weakening spending may reduce demand for premium beef cuts and re-accelerate herd rebuilding. We continue to pursue growth opportunities within our fluids business as we move towards the summer season, when many of our fluids solutions are in peak demand. Dairy is a growing end market, particularly in Europe, Australia and New Zealand, which is creating opportunities in both cheese and milk packaging applications. Looking forward, we expect our Food end markets to be stable outside of China and the U.S., which are operating in a higher period of volatility due to the trade environment. While some large industrial food processors in the U.S. are indicating potential trade-owns away from premium beef, based on our current volumes, we are not seeing trade-owns and trade-outs in our U.S. business at this point in time. However, if we do see mid-shift, CRYOVAC’s portfolio covers a wide range of fresh proteins across the trade-down spectrum, from ground beef, poultry and smoked and processed proteins, putting us in position to move with the consumer. I am confident our Food business continues to be well-positioned to fully achieve its underlying long-term potential. It is a longer-cycle business that has previously demonstrated strength and resilience amidst prior economic cycles. Transitioning to Protective, our first quarter performance was in line with our expectations. Throughout the first quarter and into early weeks of the second quarter, we did not see significant shifts in order patterns or buying behaviors. Turning to market trends in Protective, as a reminder, approximately 60% of our product offerings largely serve the industrial end markets. Overall, industrials are proceeding with caution in the current low-visibility environment, with PMI hovering around 50 and trending down as we approach the end of the quarter. The remaining 40% of the Protective portfolio primarily serves fulfillment in markets where sentiment is weakening. Flocks shipments in the U.S., our largest market, were down most single digits in the first quarter, coupled with a declining consumer confidence throughout the quarter. As I mentioned in February, the Protective turnaround will take time to realize. However, I am encouraged by the progress we are making on our transformation. The reorganized North American go-to-market team has now been in place for over a quarter, with our investment in field sales now fully ramped. By strengthening our customer distribution relationships, we are gaining better insights into their needs in the state of our end market. We remain confident that our revised go-to-market approach will continue to increase customer satisfaction, reduce churn and improve our right to win in the market. As a proof point, we minimized large customer churn throughout 2024 that now fully lapped key customer losses from the beginning of last year, improving our prior year comparisons for the second quarter of 2025 and beyond. While there may be headwinds on the horizon in our end market, based on our transformation initiatives, we see headroom in the markets we served win back share lost over the last couple of years, with early signs of traction building throughout the first quarter. Following the success of the go-to-market reorganization in North America, we are now focused on enhancing our commercial organizations and market strategies in other key geographies. The reorganization has positioned the Protective team to better identify opportunities to drive efficiencies and effectiveness within the business, lowering our cost to serve, improving speed of decision making and increasing operational leverage. We are targeting to capitalize further on these opportunities in the second half of 2025. While the Protective business is short-cycle and more sensitive to global trade dynamics versus Food, we are heads down focused on controlling the controllables and improving fundamentals in the business. I’m confident that the actions we are taking continue to better position the business in the market. Before turning the call to Roni to review our first quarter financial results, I’d like to reiterate my confidence that as an organization, we are on the right path. Our priorities are unchanged and remain keeping the customer front and center, operating with urgency, driving further productivity, and transforming the business to deliver long-term sustainable growth.

Thank you, Dustin, and good morning, everyone. Let’s turn to Slide 4 to review Sealed Air’s first quarter performance. The team executed well in the quarter and we came in ahead of expectations. Net sales were $1.27 billion in the quarter, down 2% on a constant currency basis. Adjusted EBIT in the quarter was $276 million, up 2% on a constant currency basis. Adjusted earnings per share in the quarter of $0.81 was up 4% as reported, and 9% on a constant currency basis compared to a year ago. Our adjusted tax rate was 25.7%, compared to 25.9% in the same period last year. Our weighted average diluted shares outstanding in the first quarter were $147 million. Turning to Slide 5. During the first quarter, volumes were down 2%, primarily on anticipated declines in Protective due to prior year business churn and continued softness in our fulfillment and industrial portfolios. Protective weakness was partially offset by modest volume growth in Food of less than 1%. Price was flat for the quarter with Protective down 1%, fully offsetting marginal pricing gains in Food. First quarter adjusted EBITDA of $276 million decreased $2 million or less than 1% as reported, and increased 2% on a constant currency basis compared to last year with margins of 21.7% up 80 basis points. This performance was mainly driven by cost takeout and productivity efficiencies, partially offset by unfavorable net price realization. Moving to Slide 6. In the first quarter, Food net sales of $852 million were up 1% on an organic basis, primarily driven by pricing actions and formula pass-throughs combined with marginal volume growth due to continued growth in our case-ready solutions. The protein markets overall were flat from the prior year and slightly worse than our initial expectations. While the U.S. beef slaughter was better than expected, this was more than offset by reductions in pork and poultry. From a regional perspective, volumes continue to grow in our EMEA, Latin American and Australian businesses, partially offset by sluggish volumes in North America and declines in Asia. Food adjusted EBITDA of $203 million in the first quarter was up 7% as reported or 10% in constant currency. Adjusted EBITDA margin was 23.8%, up 200 basis points compared to last year. The increase in adjusted EBITDA was mainly driven by productivity and cost takeout savings, partially offset by unfavorable net price realization. Protective first quarter net sales of $420 million were down 8% organically, driven primarily by volume declines of 6%, with growth in Asia and Latin America being more than offset by declines in other geographies, primarily North America. As a reminder, all of our large customer churn came from North America last year and will have fully wrapped in the second quarter. North America was where much of our transformation effort was initially focused and we expect results in this region to improve throughout the year. EMEA continued to show signs of stabilization, having its best quarter since 2021, with volumes down just 1%. Protective adjusted EBITDA of $74 million was down 18% in the first quarter as reported or 16% on a constant currency basis. The adjusted EBITDA margin was 17.6%, down 180 basis points from the prior year. The year-over-year decrease in adjusted EBITDA was primarily attributable to lower volumes and unfavorable net price realization, partially offset by productivity and cost takeout savings. On a sequential basis, margin improved 280 basis points compared to the fourth quarter, driven by continued productivity and cost takeout initiatives. Now let’s turn to free cash flow and leverage on Slide 7. Through the first quarter, free cash flow was a use of $12 million, compared to a source of $78 million in the same period a year ago. The primary driver of the anticipated use of cash was an increase in incentive compensation and tax payments, partially offset by lower interest payments. At the end of the quarter, our total liquidity position was $1.3 billion, including $335 million in cash and the remaining amount in a committed and fully undrawn revolver. Our net debt leverage ratio was 3.7 times, down from 3.9 times a year ago. We remain on track to drive net debt to adjusted EBITDA to approximately 3.0 times by the end of 2026. Let’s turn to Slide 8 to review our 2025 outlook. During the first quarter, we generated strong earnings against sales that were slightly ahead of our expectations as we navigated a shifting landscape, executed business fundamentals and continued our ongoing efforts to turn around Protective. We continue to operate in a low visibility environment, especially in Protective, and anticipate we will have better visibility into how tariffs are impacting our end markets and the translation into second half performance during our next call. As Dustin mentioned, we are reaffirming our full year 2025 outlook ranges across sales, earnings, and free cash flow. We see a softer volume outlook offsetting improved foreign currency in both Food and Protective, reflecting a slight shift in industrial and consumer sentiment. Foreign currency headwinds are now expected to be approximately 1% better than previously anticipated in our February outlook. Our net price realization assumptions across the total company remain relatively the same for the full year. Looking ahead to the second quarter, we anticipate a sequential increase in sales in both segments, reflecting an improving trend within the Protective portfolio and more favorable turkey and pork outlooks than in the first quarter in Food. As a result, we expect second quarter net earnings and net sales of approximately $1.3 billion, adjusted EBITDA of $270 million and adjusted earnings per share around $0.71. We remain committed to restoring underlying fundamentals by executing in the market, progressing our transformation, navigating the changing trade policy and deleveraging the balance sheet.

Thank you very much. Our first call comes from the line of Ghansham Panjabi. Your line is open.

Thank you, Operator. Good morning, everybody. I guess first off on the comments, Dustin, on Protective volumes, as it relates to progress that you’re seeing over the past year, if we kind of zoom out, that segment had seen volumes down on a yearly basis since the first quarter of 2022. So I’d love to hear some color as to what specific progress you’re referring to as it relates to other businesses unfolding. And if you gave this, I missed it, but what were the volumes by vertical, industrial versus fulfillment?

Sure. It's great to talk to you today, Ghansham, and I appreciate your question. To provide some clarity, we've observed a volume decline of about 6% in Q1, along with some pricing pressures. As mentioned in our prepared remarks, both Roni and I discussed the impact of customer churn. Specifically, the significant churn from a large customer, associated with our fill air business linked to Amazon, concluded in Q1 of 2024. We've effectively minimized churn since then, and there's been no major customer loss since the start of 2024. You'll notice a positive wrap-around effect beginning in Q2, reflecting a sequential improvement of approximately 2 points year-over-year. While we're down approximately 6% in volume now, we expect that will decrease to 4%. If you analyze previous years, particularly 2021 and 2022, most regions and product lines experienced declines. However, we're now seeing growth in Asia, stabilization in EMEA with a slight decrease, and growth in LatAm as well. Our focus has really been on North America. The positive aspect stems from our efforts to reduce churn and our go-to-market reorganization. While it's still early to make definitive statements, the feedback from our distribution partners and major customers has been overwhelmingly encouraging regarding our customer-centric approach and service improvements. We're making strides in refining our business fundamentals and enhancing execution, which is showing results. You’ll notice these impacts reflected in the Q2 guidance for our Protective segment. Regarding your inquiry about our fulfillment industrials, the industrial sector has consistently outperformed fulfillment, maintaining this trend in Q1. It's important to note that the churn I've mentioned is mostly affecting fulfillment linked to the Sealed Air business with Amazon. As we move forward, we expect fulfillment to become more positive and align more closely in performance with our industrials, which have been steadily improving. I hope that answers your question and provides insight into our progress.

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

Hi. Thanks, everyone. Good morning. Thanks for the details. Dustin, I just want to talk to you a bit on how you’re measuring your customer improvement and whether you’re doing Net Promoter Scores or anything to that effect. And how you’re managing that and how you’re trying to improve your scoring with customers for all the right reasons, while at the same time, you’re taking out costs, which is kind of a difficult balancing act, right? You’re taking out in some ways people while also trying to improve your position with your customers. So how is that going? And then broadly, if you could give us a view relative to where you sit today versus say when you were talking about fourth quarter, would it be fair to say that Protective is maybe trending a bit better than you would have expected relative to Food or vice versa? How would you have us think about that as we think about momentum in the second half? Thank you. Good luck in the quarter.

Yeah. Yeah. Thank you, George. And I appreciate the question. I’ll give it to you in the three parts, right? So the first one is, yes, to customer satisfaction. If you think about going back even a year and a half ago, two years ago, that was really the starting point to really go out there and get our customers’ feedback, which is something that had been lost along the way. And since then, we’ve repeatedly gone back and checked it. And beyond that, it’s also just being out there in front of our distribution partners personally and with our customers and having our executive team be out in the field a lot more than they have been historically. And so the combination of those three things are what we think about customer scoring. That’s absolutely, there’s the analytical side of it and then there’s the softer side of it of just actually being out in the field. And in both cases, that’s how we’re getting the feedback today to make sure that we’re certain that things are improving. And the answer would be so far, the answer is, yes, it is improving. It’s not where it needs to be. So I don’t want to leave you with that. There’s still a lot more work for us to do to continue to do that and that will continue to happen through the efforts that we’re talking about. On the balancing acts, if you go back to the prepared remarks, because it’s a great question, this balance between how do you continue to drive effectiveness in the business and efficiencies while at the same time maximizing growth. And it really comes from the starting point. Do you think you’re organized effectively, structured effectively? Are your processes effective? And so where are we focused? And if you go back to the prepared remarks, we’ve actually been investing back into Protective sales, right? So we’ve been putting more feet on the street, particularly in North America over the past, I would say, 90 days. This really started as part of our planning effort in Q4 and then we’ve executed across Q1 and this is really a restoration. If I go back to prior cycles, there were areas where we touched, I go back, think of it as four years or five years ago where feet on the street were touched as part of some of these restructuring processes. That’s not been the case this time around and it’s really about trying to find efficiencies in other areas of the business. A perfect example of that is we shifted a significant portion of our back office operations to Manila. And as a result of that, we’re able to take some of those savings and put it back into the field and still drive net leverage in the business. And so I still think there’s plenty of opportunities across the business for us to become more effective and efficient. So it’s not just about cost takeout for cost sake, but how do we actually drive that in a way that brings about organizational agility, speed of decision-making, reducing spans and layers, getting us closer to the customer, so it doesn’t have to be perceived as a negative or impaired growth. And then your question on the last and the third part around is Protective trending better than I’d originally thought or it’s relative to Food. And I would say right now, both businesses are kind of performing in line with our expectations kind of coming into the year. We talk about the backdrop in the second half, but these transformational efforts of Protective have been ongoing for the past year and they’ve been in waves of implementation and execution. And from that perspective, I feel good about where that’s at and keep in mind over the past couple months, we’ve actually accelerated a number of those initiatives, but the benefits of that acceleration will happen more in the second half. So I feel good about, we go back to some of the language we’ve used around urgency and pace and how do we drive those improvements. So I do feel that stepping up, but the strategy has been the same and it’s just about how quickly we can pull-forward those results and that’s what we’re focused on.

Thank you. Our next call comes from Matt Roberts of Raymond James. Your line is open.

Hey. Good morning, Dustin, Roni, and Mark. Thanks for taking the question. On the price side, you noted that net price was relatively unchanged, but maybe in each segment, Protective or are you seeing any changes in the competitive landscape or how do you think about price through the year, particularly now that the areas where you saw churn are out of the portfolio. Similarly, on Food, any changes or impacts from underlying resins and it seems like everybody I listen to seems to be gaining share in Food. So any changes in the competitive environment, how that impacts price through the rest of the year? Thanks for taking the question.

Hey, Matt. That’s a great question, and I’ll break it down for you. When we say relatively unchanged, just to clarify, we were down by about $63 in our previous guidance, and now we are down to roughly $57. So there's been slight improvement, but it’s not material for the full year. The segment composition is also quite similar. As we mentioned back in February, most of the negative price realization is in Protective due to prolonged low volumes and competitive pressure, particularly in areas like fill air. When Amazon exited that market, it led to increased supply and pricing pressures. Everyone, including us at IPG and Store Pack, is feeling the impact of that decision. Those dynamics remain unchanged and align with our expectations. There hasn’t been a significant shift in material inflation. Specifically regarding resins, there’s a connection to the tariff discussion. Recently, China exempted polyethylene from tariffs, which has stabilized that market. We’re seeing relatively flat movements, but overall, it's still considered inflationary for the full year, which is factored into our pricing formula. This change means the PE market has settled, addressing our previous concerns about potential oversupply in the U.S., where most polyethylene is produced for domestic use. The pressure we are facing is in specialty products, many of which are sourced from outside the U.S. This situation could lead to indirect inflationary pressures due to tariffs, but we haven't felt that impact significantly in Q2. Overall, net price realization remains relatively stable at this time.

Thank you very much. Our next call comes from Anthony Pettinari of Citigroup. Your line is open.

Thanks for taking my question and congrats on the Q1 there. I’m just curious on the guidance. So it’s not like, you guys kept guidance as soon as understanding there is a lot of uncertainty out there. But I guess, have you seen any slowdown in momentum maybe in Food volumes you can outperform there? And maybe if I ask another way, in keeping the guidance as is, are you saying that there’s maybe some pull-forward or is it mainly just on that kind of 9% swing in volumes that you’ve kind of maintained your guide and just building in some conservatism?

Yeah. All great questions. And so a couple of things I would say. One is going back to the question around kind of the first quarter and then what we’re seeing in the month of April and the question around pull-forwards. There was, I would say in Q1, very minimal pull-forward, particularly in our Canadian business, where you saw some customers being concerned around the current tariffs that were intact. But this is really de minimis relative to the overall kind of performance for the company. And so in terms of slowdown overall, we haven’t really seen a slowdown in the business other than I would say the concern around premium beef and those cuts. And that’s more of a recent phenomenon that we’re looking out for. But in general, we haven’t seen any material change. The concern on is really what’s to come, right, relative to the economic outlook in the second half and what can we do to mitigate it if those outcomes do play out the way they may. And that’s where we’re focused right now. But this is the challenging part of where we sit today is just that the business itself for the first quarter, as well as kind of heading into April, has been performing really in line with expectations.

Thank you very much. Our next question comes from the line of Edlain Rodriguez of Mizuho Securities. Your line is open.

Okay. Thank you. Good morning, everyone. I mean, Dustin, a quick one for me. If we see supply chain and other costs increasing because of tariffs, do you believe like you position well to raise prices to pass through those costs or do you think you need like stronger volume to be able to do that? And also, which segments will have like an easier or harder time to pass through those costs?

I appreciate the tariff question, and I want to highlight a few points regarding it. Generally, the change allowing USMCA exemptions has significantly reduced our exposure across both of our businesses. There is slightly more exposure in our Food segment compared to Protective. However, in many cases, our contract allows our Food business to adjust prices if necessary, and we currently view the impact as quite minimal. I don't want to exaggerate the exposure in either business, as it remains relatively small in both Food and Protective. As mentioned earlier, we believe we can address any challenges through pricing strategies and supply chain adjustments, which we've been developing since November and have focused on over the last several months. Additionally, we are closely monitoring how these factors will play out for the year, managing our relationships with suppliers to explore options, such as sourcing specialty items from other countries where production is feasible. The same applies to our equipment business, where we're examining ways to source various parts and components from different regions. At this point, we see a feasible path to achieve this, though timing remains an important factor. It's worth noting that trade policies are continuously evolving, and we anticipate this evolution will persist throughout the latter half of the year, so the situation is still somewhat unstable. Overall, we feel confident about our positions in both segments. Regarding your question about needing higher volume, the answer is no. In most instances, we align closely with our competitors, so if one of us adjusts prices, it is likely that we will see a corresponding market response.

Thank you very much. At this time, I am showing no further questions. I would now like to turn it back to Dustin Semach for closing remarks.

I’d like to thank everyone for joining us this morning. I look forward to updating you over the coming quarters on our ongoing transformation and how we will continue to successfully navigate the environment. We have weathered similar challenges before and learn lessons that made us more resilient and prepared from navigating past economic cycles to the turbulence of COVID-19. Our business has demonstrated strength, resilience and adaptivity. This challenge is no different. And I’m confident that we will navigate the landscape accordingly. I’d like to close by thanking the global Sealed Air team. You continue to focus on what’s important, delivering outcomes for our customers’ day in and day out and each other. Thank you.

Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.