SEE - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing-by, and welcome to the First Quarter 2020 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. [Operator Instructions] As a reminder today's program maybe recorded.

And now, I would like to introduce your host for today's program Lori Chaitman, Vice President of Investor Relations. Please go ahead.

Lori Chaitman

morning, good and you, everyone. Thank and I staying are and family hope you safe. healthy your

begin I our to Before note call can be our we today, webcast today’s site have discussion. presentation and a at found our on that downloaded would provided slide Web guide presentation from help be This can IR we to like sealedair.com.

to statements outlook are like made call. information now during information stating to forward-looking These and management’s our entitled this statements forward-looking on remind periods this statements review section future that or earnings based release you to presentation, for that I available slide applies would We predictions solely to the are statements. encourage in the call is in us. you which

to revised most report recent updated factors on of differ future Many Form sealedair.com factors. on may which as these annual or on our Additionally, at our at and are our and performance in XX-K SEC a also quarterly on number site listed Form you sec.gov. reports due current the on XX-Q Web Form on Web can site X-K, find our reports and of

conform We measures financial that do U.S. also GAAP. not discuss to

non-U.S. use our financial results the that reconciliation earnings these release. measures will U.S. GAAP You appendix reference you GAAP find the important we presentation. information Included of GAAP correspond in will find some on measures their in U.S. throughout and of to our today’s the of presentation, to

call President CEO. and I’ll turn our the Ted? With to over Doheny, Ted that,

Ted Doheny

your are unprecedented begin hope earnings during safe of quarter by staying call. to healthy you want times. Thank for families you, and and joining XXXX all I Lori. saying you that first And I thank these our

equipment on overcome this even learn stronger like our we packaging defines and staples, supplies, for out governments customers how other and through the have before, faced including necessary critical we challenges resilient. goods. Most side is we believe supplying of more from experience authorities pharmaceuticals are this pandemic, and global will our food, the come and other operations responsible manage industries, Many and and medical consumer essential. of and have us these I adversity designated

to want also people hard our in to operations our thank and working remotely. our a in we you thank testament working with world. the that to our dedicated special the business ensure to those our and say want safe organizations. around a manner to relationships are suppliers customer in supplier to table I a our I timely those It's and consumers customers goods are at and delivered and

will detail I'll normal. leveraging this results share Karl since our financial more call, four markets today's in recap we'll emerging how quarter Jim review with we this our On results first Chief and our crisis navigating lead I'll end new to and we're company Officer and we'll SEE. Reinvent and I'll discuss us Q&A. of in experiences the during We see our the Deily, join P's our Commercial the and invited how call how our outbreak. Q&A.

recap EBITDA of to points XXX We net XX% a XX% growth, our sales growth XX.X%. X delivered turn Let's adjusted expanded basis first growth. for EPS to Slide margins EBITDA adjusted quarter. Adjusted and X%

portfolio unprecedented environment. quarter nature this and the first our our to respond critical of people Our reflect product agility results to the of

operating how strategy uncertainty the results due demonstrate swings to on higher and XXXX is Our Reinvent on full year continued sales. the We're reflect the our the leverage and situation will long suspending improving current how also SEE last. guidance demand our execution of

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processes packaging critical the challenges four On than Slide solve We as more guide our of safety, and how crisis. X, ever employee found leave P's the the now year is introduced and statement business ensure them been stronger. I'm a our See us than world over and business world taken we Reinvent during continuity and driving our better to using people, to teams have our a products, our it level. sustainability impressed next have performance our purpose to to performance, around make ago

possible. people job customers and to the best responding have tremendous to our done a Our communities deliver service

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automation, core be and driver to key critical innovative, protecting Our a profitable our safety, with more food and goods even in competencies growth. will sustainable solutions

have normal. at upon cleaning sites these how turn how our social new and within equipment to enhanced implemented dependent transformation employees, the all to workers. we've measures essential non-location procedures performing me into location our we're now entrance protect accelerate our and employee for Let To remotely. by dependent and continue requiring and operating leading distancing details We've recovery protective sites a checks employees personal more work give temperature about X we Slide the we to you taken, to actions expect

travel. suspended customers. to stay our non-essential virtual to access other each implemented and We've also ways connected restrictions We're finding in visitor new

chain in support our We have our created flexibility and circumstances to portfolio our markets. supply with teams rapidly changing end and product

our I joined leaders. teams, crisis customers, with and sales, industry regional management suppliers numerous calls

Our have service levels remained strong.

environment. and well are quickly organized the adapted teams despite Our we have difficult

transformation phase. actions the reopen our economy global are into recovery accelerate will we slowly taking today the the As

with innovation our partnerships pipeline, our customers We strengthening suppliers. and have while prioritized

a we're On Slide, our to have product this swings. customer offering examples we of that showing demand quickly adapted support few

crisis. post We will stronger be

taking adopting supply workplace advantage to and achieving flexible We're partners tools connected sustainability or track digital to stay practices. content. more recycled our XX% our are our committed on chain remain We recyclable XXXX XXX% are We reusable and pledge colleagues, average customers. with with of materials

the March, COVID-XX orders, of and a Let's and well to goods packaging Six, for fluids the industry a to proteins, markets. XX% as with from which coinciding of sales implementation stay Slide at frozen impact home end derived dramatic foods, the now turn shift and food medical slowdown sciences in industries. summarizes fresh early experienced lock food In as down dramatic Sealed Approximately retail our are Air of other life one the and our or service. and

consumption. the we're snacks basis. prepackaged Sealed North shut support customers bags home For to and designed to meat remained resulting protein America COVID-XX for North production. in meals of in Air have mid-April closures forced packaging retailed including is faced fluid not and and situation outside America, in for needs. a our in their a down surge on been America, outbreaks and demand temporarily We've shift has working of plants global The customers demand our some seen strong significant North very retail with processing closely and for throughout ready, shrink case In their applications, food any

transportation, medical and X% systems, sales and of and are serve in end our ventilators, XX% test kits. our life and protected and is Many COVID-XX pharmaceuticals, reduction shutdowns consumer our from equipment, and protective essential seeing medical remaining new non a sales, net significant mask of such The we're for goods, approximately which Within as these portfolio, of packaging industrial our solutions general business sciences supplies, personal segments. spending. including monitoring suffering discretionary manufacturing, government and in for markets

slowdowns are stay that experiences experiencing we these offsetting been return goods and from environment estimate a or stores. we have in shipped demand global approximately remaining home to our time. Across and demand an support tell and immersed the medical suspend are environment, that staples. are more are would Recognizing The channels forced will demand temporarily away production. retail that facing XX% in Partially to of through extremely due end rapidly in our unpredictable shifted or as supply for for supplies increased balanced declines our we markets at us mortar business, food, brick ecommerce XX% and increases consumer

consumers Longer term, minimize and drive automation we pandemic will will around the food proteins. maximize packaged in and are the sustainable. more learnings safety, expect invest increases demand efficiency from food world demand formats that the safety secular and for will automation and waste for Producers packaging global

making for for our of are now, our people, the managing future. top customers priorities For the our safety stronger business and our business continuity the

review our to the now detail. call in I'll Jim Jim? to pass results more

Jim Sullivan

you, Thank Ted.

XX% representing index of volume of dollar increase by Let's region. was our sales XX%, X Asia have constant a pricing was XX% year-over-year; grew and we X% growth. quarter, X% down was up were the America, America, review for billion, X% North dollars, X%; South of sales company In first Pacific in In up the turn region EMEA constant and an our as of sales reported dollars. which U.S. largest Slide to where net X.X was X%

offset experienced and growth increased to New Due X% all rebounded by Slide volume driven markets, in across pricing region. rebuilding Turning to first regions demand growth quarter, conditions to X, except and largely declined sales by organic herd the we and here, Pacific, in the protein In a X% to X% food for growth, quarter, for retail dairy acquisitions decline care, product Australia highlight excluding food in trends market segment due and by volume partially care. our and volume depressed in Zealand. which packaging X% care Asia

regions. all Product declined care volumes across

the were Overall than by partially supplies. was partially demand growth medical industrial offset in partially America Lower net However, by staples in markets increase care of food mostly the the anticipated better for we South formula index U.S. offset dollar North ecommerce the selling in pricing a by mainly quarter business in that an volume in contributor consumer decline performed resin pricing and primary America. was in price base prices. offset decline declines

due peso, to about by XX present first the million quarter mostly consolidated declines translation packaging for On automated the was Organic real, Slide XX from year-over-year dollar. acquisitions sales in quarter. million, systems. the which and and contributed Argentinean our bridges we Australian adjusted negatively sales of the million impacted or the Brazilian the X, up year-over-year sales Currency euro quarter were X%, X.X%, in EBITDA XX in

where approximately on million. for would impact XXXX rates XXX translation be today, the versus Based exchange the year negative are on sales

basis Adjusted Adjusted million XX totaled XXX in EBITDA with to to or XX% year, XXX spread. EBITDA compared volumes quarter, XX million points SEE benefited in to the up savings restructuring margin systems. of million benefits operating packaging Reinvent from costs inclusive X higher also automated million increased last XX cost from of million XX XX.X%. in of contribution million and and price

in two-thirds XX.X% the About expense. quarter quarter. Currency EBITDA as Adjusted by D&A rate EBITDA last first EPS partially translation adjusted these lower in the unfavorable X higher was activity. over to was from was offset amortization incremental employee was quarter of spending year. increased first offset million primarily XX.X% the quarter included first tax due X Automated But compared the related in to acquisition. partially quarter to COVID-XX. travel $X.XX, The increase adjusted Operating of Packaging cost million Systems first $X.XX adjusted to the were the XXXX, in the compared by of expenses to appreciation in and

XX, SEE than earnest in the and by ratio Slide as significant continues on greater provide progress in XX% profit operating here structural in to quarter. Turning leverage evidenced driving the an to growth to business which is Reinvent we our transformation, the update

a work and added in SEE our have innovation and commercial to organization markets. to We new stream growth in adjacent accelerate Reinvent core

benefits incremental in half half related from the XXXX of structure last underlie reinvigorate and on coming In taken in success is adjusted us and other EBITDA which growth top-line of million and new are XXX to track on actions drive to cost XXXX, The year is roughly new to Reinvent realize targeted actions. capabilities the compared to of we processes the help business. our that will

virus. Reinvent prudently and possible the XXXX with We accelerating are largely given despite our operations actions have have been successful where been to-date intact, challenges

restructuring were SEE million Cash the associated first with XX in payments Reinvent quarter.

year. We in to cash approximately for payments million the estimate continue XXX

constant on Slide with by XX.X%. XX starting net quarter, XX food points million were higher primarily volumes XXX in up up primarily first driven to X% volumes. with EBITDA in or dollars, higher This to food care XXX care basis or by million XXX SEE X% Turning to Adjusted margin food actions. improving million million of was results were increased In in sales X%. performance sales the care, driven million, or segment XX, XX Reinvent

in for in business compared fluids, bags, quarter, account sales year. roll flat in which cryovac the food X% up packaged case Sales X% the for care applications, than essentially last of retail ready shift from food benefited care stock XX% X% Shrink care which to Our were of the for quarter. proteins. in accounted were food demand first and first more to

next industry. fluids in our few which of portfolio, for be sauces vertical negatively pouch the the condiments, by the quarters, soups will service food consists innovative impacted and Over slowdown packaging,

also of care quarter. food percent increased which for in X% sales, the Equipment accounted mid-teens first

since production, temporarily shutdown visitor levels installations. the mid-March, world With instituted have of orders peak North have led food suspending our moderated customer which since around plants March. policies, of to However, restriction some our a in has American

everything to facilities to are reopen their them. and they soon we customers there as doing can are possible support Our as

XX, product sales million the care increased XX% XX the in of offset up to SEE more basis million net highlight contribution down from sales XXX and from Automated the input of non-essential million Packaging X%, we XX of than the were EBITDA has and about adjusted cares as segment. quarter Slide impact were margin Systems. adjusted XX distribution, million expanded organic XX% sales the delivered year-over-year. ecommerce represents XXX first a cares and portfolio, On EBITDA product the a which most exposure third including decline. growth XX% of our results the consumer reported. essential benefits or value-added million Organic Product XX cost care or XX.X% Product sales solutions volume Reinvent goods points segment negative from quarter. organic lower In

cube handle demands the centers increase across performance solutions processes, The ecommerce high to for to solutions fulfillment automate level are pack cushioning of driven These to by the goods. efficient packaging ship critical and speed value-added to shipping. size was on largely the required increased optimize designed

on Automated reminder, core a and solutions, packaging demand, automated paper As along Packaging systems. equipment is value-added our as wrap shrink bubble such in I-Pack included wrap Systems systems, temperature control with and view,

traditional The industrial and declined industrials packaging. consist of in care traditional. remaining volume of the in product X% applications two-thirds and In quarter, X% first

North began We America stabilize. trends the in applications hit be expect industrial through hardest January and Demand February to the pandemic. to in

customers percent were down. as in distributors shut sales forced area, to the March However, dropped high temporarily single-digit our many of and

as ecommerce Traditional growth low-single and packaging better void more surge than result in wrap, performed this than shrink in anticipated was of But the quarter. in fill first we We bubble experienced offset digit in declines traditional a distribution. mailer the applications film. volume by

we resumes our XX% with industrial in have of April in customers continue we the decline as and half their what processes. second product to on in second reopens, we the total could to and given automate of we the in industrials, economy Based the experienced exposure care volume packaging level manufacturing to year think quarter, XX% the improvement help

on cash to Slide turn let's XX. free flow Now,

related significantly XXXX across the generation increased particular million sales to capital from of as annual the due adjusted and compensation balance higher XXXX, year-over-year, result quarter-end XX cash cash quarter rebates. of payments, compensation sales end payments many first COVID-XX volume flow free of and certain March, timing higher and a incentive of based improved accounts typically receivable EBITDA to quarter of primarily higher customer a lower back Despite and working our seasonality in First on performance demand in of is markets. half declined incentive in

back of in working seasonality underlying year and half to be expect capital source from the of management We of overall trade proactive cash metrics. the normal a capital working

reducing $XXX for generation, million also in spending delay. we year advance cash investments target light CapEx will of growth of $XXX to level the our Additionally, are economic million This but from current key without strategic allow conditions. will to near-term bolster

uncertain cash dividend in maintaining times current Overall, flow we generate free to our levels. remain confident these plan on and ability at in our

Air into that in agreement in initially to specified clawback this Diversey XXXX, of the approximately third with in claim contingently price portion million the Air to to entered submitted closing. a sale metrics we XXXX. we return obligated business a certain XX disclosed clawback a following to sale Under Sealed fail of agreement, pursuant As it that of was Diversey the Diversey, financial connection purchase renewal post of quarter if a Diversey Air received owed Sealed contracts the a Sealed achieve successful commercial

our be Form make recorded per the quarter from this Accordingly, any share filed have clawback agreement. in an discontinued we morning, matter not payment with will in have As to we gain and noted under Diversey resolved required XX-Q operations. $X.XX the this

our with adjusted trailing EBITDA XX end of ended and liquidity leverage, pro XX which quarter is profile. X.X forma Slide X.X, down the We highlights to the debt from XXXX. debt months net maturity at of

a to continue year. further balance by what sheet. the reduction now a maintain And the capital expect on take healthy we end leverage allocation will see approach We to based disciplined to of

the As a hand of committed end liquidity March, over facilities. X.X of from we cash billion on had of combination and revolving of credit undrawn

the acquisition. certain to reported XXXX, than ratio debt with covenant the the forma in to first We triggered of through credit have to maximum maximum our third in The X.X with in the ratio The is increase agreement. Automated credit in of the facility, quarter net lower XXXX. end XXXX, X.X the is adjustments calculation be to at five our reducing as to EBITDA quarter allowed covenant of EBITDA a quarter estimated the adjusted fourth Packaging X of back Systems was of a which pro covenant leverage due

do issues significant the So, accessing credit we expect under liquidity the covenants facility. any cushion financial have with and not our

gives the not support financial and XXXX, debt good flexibility do maturities to until which business. have any we operate August us Additionally,

call I Ted. will now over turn Ted? the back to

Ted Doheny

Thanks, Jim.

waste world create confident continue shipped value are that customers. the minimize to protect We that to ability our will safety, food significant our maximize are and food around goods for

automation enable already four our Our even at the make digital to technologies and them long-term our an I'm differentiator the and and and to that customers critical we best of to will deliver deliver right strategy SEE exceptional more capabilities price are emerge us become and P's Reinvent confident our will a as sustainable partner today. results. product

their business more Before be period to not we Together, to been dedication I Sealed employees for emerge commitment stronger could Their Air history. And to from proud up call remarkable. want unprecedented open unforgettable we efforts and it company. during to a our have questions, better, lead and this crisis, thank this will in continuity. our

up call Jonathan, With that, open for begin the I'll to we'd the like Q&A. now questions.

Operator

Our from America. George Instructions] from [Operator of Staphos line the first comes question Bank of

Your question please.

George Staphos

Hi, and Thanks And doing what and a you one volume morning. everyone. thanks around the Reinvent for kind relation Good details. question My part. two its for to of is are COVID.

So, XX% or offset hit expect you get please savings color would. you seeing keep partial maybe some more you. like terms ecommerce, you're kind given long Thank revenue you're XX% volume sounded Ted, a bit which hard decline, Reinvent product to the scale, from this how add detail if a it to would point, benefit the can I good would getting growth go you those drop care how at in of to and dependent very related through seeing drop, a where be but of are? numbers

Ted Doheny

volume have had question, whereas we the the marks, Actually, XX% quarter, the Slide we and in we're at if focusing you a helpful. to we And then XX% Jim I George. Reinvent we SEE, at X, think if to answer break point to could on look while question. if prepared looking George, so care, Thanks, X, reduction. in product Slide probably Okay. we're your is trying up be that if look

highlighted business, are what's look the mailer our with is the pickup at our some the automated look business ecommerce If ecommerce. significantly. sectors, those side, you and if if definitely we with as this gain you with some we systems. QX. the saw at We seeing happening QX, then saw quarter, we APS food industrial three at gain you look on But side In

side in protective The some and medical in protective food, the also the of sciences. other side, is that life

If systems the into just see something U.S. you that. X, going packaging on both XXX through interesting in million alone. some to actually or going actually going our APS need now connected the the is look to crisis the at QX the doing mask into bank economy's mask everybody's that we're We're quite we're of in QX, bringing you'll reading Slide auto

And example the also care package other ventilators. you with for there our and product our see Korrvu

that's going from QX. through QX flow to So to

the that the that feeling downside that's the shut at our XX%. hit that to the is where really look XX% to that's down of if care piece, and product instapack, is XX% and economy Now that has in What industrial slide. of we're and we industrial been in

being with we quickly growth will back. don't portfolio, what industrial and to We this know comes just is recover. So businesses the prepared portfolio think those with is we're the that moving crisis But come when quarter our the areas that economy back? when impressed were how we in

Operator

Thank you.

comes next Ghansham of Panjabi Baird. question from from Our line

please. question Your

Ghansham Panjabi

as and towards retail in year I in some some increase a the mentioned, think [indiscernible] nets cases. cases. I bottom big sense then guess it in you up food American obviously then out with in that lot to Slide at I these And Tyson on mean, volumes How question you to foods up specific that shutdown XQ you all service dynamics and plant calling us then question American the going versus call that And have April retail of North food new unfolds? George's food X. as recent shift for there's a follow do a to North XX:XX said, both give split also a that yesterday think just there's a a on call XX% specifically, service

Ted Doheny

we have Karl actually, here. Ghansham,

But flowing second to let going it. I'm a in take just of what's through So we the look piece volumes, quarter. Karl if the at

seeing with spike business that what's first But we and April. want the definitely in we're seeing that industry, rapid got we're your specific this that On definitely you going quarter, so tempered on to saw down. if question into if one? slightly April, that we've Karl, then the side, tackle we're food going We're the of in seeing food to here seeing Karl

Karl Deily

week in away were if the going and And obviously I mid was up net Absolutely. service Ghansham, the and And you in teens going back to business improvement global in saw last food our to Thank positive, a think, as the globe. X to we a business. proteins, reference Slide second the especially significant recently that market. up our if you. North in year-over-year, retail, changed, that's yesterday, Tyson's trend to on transition Europe accretive obviously held again highlighted to listen the with in quarter. the which industry a food the has And around of definite sales still retail, disruption in What American was there sequential the from very been well call you even as it's

to We were supply. may been from volumes. increased how have our competitors able were the It We quarter products a level our customers that tick occurred, very was a us to it of only also be first shift favorable production, the on fluid significant nimble market able just able impact as also very to to one area where accommodate but not and to the ability up of to and pivoted other increase provide other. and in not was

to some portfolio. global due we we breadth And respond network mentioned our to XX%. had You were up able over products of were actually and that XX% our

situation changed So but working again, be a drive cycle life predict, like How think very through, additional automated So, less favorable, quarter we and easy through operations into what's opportunity had extremely as hip we what very that volume. to with these was labor less in conversations in believe intimacy, employee also can good drive quarter, a provided the look extremely I going net we're with their versatility future they're conversation very flexibility daily and we unchartered And and connected we're post closely a manner? was definitely swings the in that has solutions. will to working we're customer obviously to the to down them waters, obviously significant we the good, at they're just first intense second on but COVID-XX working positive.

Ted Doheny

get Ghansham to your our the we're and the call, to followed accelerating. X, They described talk up question of what they equipment automation means. though on is as point crisis if at doing look about referencing question Karl and the where through it's the is we've the talked this numbers, what automation. is to crisis. part is Tyson portfolio equipment our because tough in a the business into that Slide where last conversation the This with But about you can to the moving and the installed of situation part did we were we automation the

look television, the way? so keep close pictures plants customers, at people how working you people these our allowing, automatically of in is two showing bags and there of do other, what each our you we see to we're if on where out that have these harms are with these We automation pack

object their on at to option, the is call the foreign look able thing other mentioned being detection. they automation The

actually automation on crisis, business of future. the opportunities, the make and the we and the some help the to the so an we're And with We a it it have equipment, part the working with have identify to marbling? exciting see ability And to inside that's at together and the is customers bone learning bag? table. we're our help in significant Is post better

Operator

of question comes the Anthony line Citi. next Pettinari from from Our

Your question please.

Bryan Burgmeier

in actually this sitting Burgmeier Hi, for Bryan Anthony.

changes think Just detrimental just the and to about you've in given terms of should the restructuring volume margins ongoing declines how in in product XQ, the been doing mix? care we

Ted Doheny

in have at incrementals XX% this would on many seeing we cost at maybe XX%, but Jim. don't upside. decremental so we Right if some as decrementals because a we're have decremental, to decremental now, be should right on we we Okay. would If know the going volume, with quarter, at think the we get portfolio, I'll not even detail you shift should think working, look you cost we're When we we've it the able losing we're as to talking of now being place. should, in that actions more that I been design we're first designing designing have on you I that that that in want the now in to downside. should actions Right the the to beating everything Jim, we the take same. tag you what that's that with saw but that we reinvent that beat a that, business, thinking lose say, with XX% look in the downside, with probably XX% of shot actually be the team that

Jim Sullivan

the that have. But XX% reinvest review to we're to the would That loss with that decline we of direct and you that of that the Yes. responding volume program going are course, reductions structural be cost going have on. kind beyond margin would above

decremental that [indiscernible] level. be I So will XX% do the below that

agile I the these upside. and the to I feel very organization reflect quarter think like, to do that way first and to respond do results is we're that we what going to volumes our on need

prepared downside product quarter see of the and in care we'll little in respond I second the we're a way. to on to think in challenge that right think I the the bit

we're reinvent, we the XXX we to we ability in accelerate. second probably quarter. 'XX. while about back that first 'XX. I from coming progressing confident see a versus this, the incrementally in 'XX across benefit come are mind XX% to how doing asked we that in George could reinvent Keep I that reinvent indicated, XX to million as about year, drive actions is the got benefits said, can because as comparable If talking And our we're what in we level We has took and the of quarter, prudently in in

are remainder coming And in those is our fully from So and done. the is dependent the volume somewhat XXXX profile factories. on actions it

shutdowns quickly. To facilities some we been got the we've been George's pretty have we situation, through comment, fairly well but running that our have had fortunate back

improvements in the the drive even be I product So the second with think quarter, I here to continue we'll to the think in with business. structural see that forward do we able in that decline

Operator

question Stanley. line next Our Neel from of from comes Kumar Morgan

question Your please.

Neel Kumar

volumes, two? great we protein believe comparing plays we historically. a But comparing production a underlying when in know of your I allow there role. we is haven't lag care In any it you seen North keep to of or to relationship type things correlation between American will volume? terms what continue to outperform quarterly should And mind a any the apparently the other food don't protein

Ted Doheny

Neel, did a came Karl, rough. bit you it little get? in

Karl Deily

very we the a with question is to I'm broken There's market you up delay that, to protein real do what be line North responding market our tend correctly a If your volumes from not in America. in performance. little heard were in

their We fulfillment. have customers with very integrated supply a our and of chain key order part are dynamics

without tend we a So to do track lag.

We market. tend above also to the perform

it business in significant market service in have when the our retail, you well. to positive sometimes So there's swing was the a as food way from shift a

case be ready packages market larger is the dynamics net to go which shift from a retail may is service as packaging, positive. that food So especially are there you

of while get our that's we occurring. So accretion performance

we at in customers, gone seen formats is during product fewer for they've to packages retail, change larger a What this, cuts, our also times selections.

there's we that there retail a see. dynamics should of exactly lot model typical any Producers during meet to of timeframe. So the to to went herculean try efforts demand what change of actually would in kind March

nature were other mirrors and some with things market. were think were our I able no, that issues dealing that the industry the performance with and they with, have that obviously, dealing shared global global but our to they're some There other things, well. pretty up gains footprint we of Now, pick there

Operator

question Mark Wilde of the of Bank Our Montreal. line from from comes next

question Your please.

Mark Wilde

what possible business. we're the to of plants just in off just seeing that's that. the And underlying floated sense getting like of has been growth installations, in difficulty APS is kind of things in whether term, a do get Ted technicians near to the from

Ted Doheny

point as again question, see answer Slide If Mark. where coming Good in. to on I the X you could there APS

on is we on growth, at bucket growth to Slide of APS XX% that back X. if look So APS XX%

back a bit. So little and I'll go forth

half fresh see So care they seen the we've food, profile their of some work ready we produce, That's that's is that there. if in that their they you where if the where where APS meals, you at business look pet in a XX%, at showing growth. have have do profile on growth lot up

the where this you And the automation then APS on is Slide is got -- business also if to with flip us APS in. is we where to back mass the that's slide X, helping coming ecommerce.

So the to compared net crisis, answer businesses flat to through the their your to question actually slightly been year-over-year. down

with system, that's that that's the the side where their Going in feeding side is business, pouch in auto transition. bag, the and of strong. though, really And equipment

So that. excited we're actually about

Jim we that about showed APS talking APS where showed financials, margins very you where they quickly And pretty bridge. clearly up, the the saw from then performance moved the we've today. to are where And purchased

an way the margin do that's you'll moving XX%. the see math you to on If XX% could up that, from all

helping and definitely the So They a is the The you call, really through see reinvent better helping listening into growth there, shout coming. on them efficiencies APS out have APS stronger board. are crisis the excited to beyond. our as coming to folks a become to are the and company us

Operator

question the RBC. Our Viswanathan next comes of from Arun in line

Your question please.

Arun Viswanathan

I addressed was Thanks. a of think is I as do look question North cycle incremental guess guess. in as margin other and in you then, just America guess in care are up, And looking achievable, the that just curious, where as in years, proteins the you well couple of the when follow curious kind at you XX% decremental at margin margin XX% you decremental geographies maybe still near-term. I a I'm could achievable? well? address or to we kind I is food maybe

Ted Doheny

handle part second. I'll Karl, and question. the can if good first the you do Yes,

the food our look some on quarter, question power look we resins. come with at what's issue specifically margins quarter we and structurally performance will looking reinvent, you're that had if incremental with gains if changing up really the you probably had at pricing in So your see our in if at we going and of you the question, the to

X in give of resin we had But back -- aware also food, have So marketplace. did that million. you're a roughly we well we the price benefit with we a have as pricing issue,

that So a wash. was

business engine. So you And underneath. leverage that what different a cost power on of on see But you of see where structural really helping also can that structurally that's the incremental reinvent the volume. we're the is designing net

incremental those growth real, XX% and it margins in the that with we've the feels and quarter. So described, we as saw

The strong very, XX% growth is for other which issues high that coming very volume are that quarter, with through. going on is the

structural So that Karl, to forward going question, And the right. answer our getting happen. you confident Yes, if to? that on will want margin business, short food your very cost, incremental

Karl Deily

is significant in Let walk world currently well with there's Obviously, America, the just as And markets. consumption export are, for North a demand demand in and take and up, held quick American long-term demand me on North disarray around increase. continues the market, has in positives that. the that there's the touch the as to protein positives demand

So but obviously, slightly in right their and American market. increasing assume the issues a dynamics the stable now, North to market animal availability we

we contribute it'll world add blots and they'll efficiency. the penetrate long-term. herd America inefficient. believe improve to will grow and feed export they're Latin that to to opportunity accretive great and the that market and to help to They market to and growth, market to Obviously, has a they're -- large installing very equipment They're continue poised their be continue well the have they continue typically as the and give

aware between going opportunities and after Australia, value-added supply their as herd. you've They're obviously is rebuilding domestic well herd dividing their globally.

then, more more COVID-XX retail And continues will in channels post more ecommerce to be and with a see, evolve. positive Asia the a modern, -- more stable slightly. you'll pandemic think that to so developing. is evolve to And products I And the Asia down to pre-packaged and more market

Ted Doheny

to Karl handling call herd. Karl. Thanks on for It's great the having the

Operator

Gabelli Research. Our next question comes from the line of Rosemarie Morbelli from

Your question please.

Rosemarie Morbelli

talk if this trend. could wondering on you was I Ted,

facilities, China trend reopened details could markets terms recovery in they us So are if own you and of you adjacent the the give the since some then of targeting? in

Ted Doheny

markets? What

Rosemarie Morbelli

targeting. you adjacent The markets are

Ted Doheny

Good Okay. question.

So and about China in our back hitting the XX. going what's call on first. February first we if saw in we look in China to we is China When Coronavirus, going talked we're

got issue. of to we operations. very saw dynamics We took quickly care the see China those So how our

only and the eight We safe worked not market, have We market. but still supported facilities and the local there. made end quickly those

also that with going And wet speak happening We're seeing changing. the is they're market market. is China, we changing that their as to

a If visualize in do really we protected you what and packaging markets, meat is for just It's well unprotected. need they're hanging meat. creating fresh

coming side the China into seeing also as well. We're frozen

China we think go the at other are meat especially with to disruption Again, going and that them the we're we to net-net positioned. we're So producers China's major markets. stronger opportunities. on market, for long-term the think one-time be this event is looking the we're automation with a after us table bringing

-- a good is So we Karl? China positive going that's forward. think net-net

Karl Deily

to through of definitely their will Government as by what local transition XXXX small more is it overnight, is but looking be XX% be a at markets production industry. less slow, target modernized and meat their won't protein than farmers

of meat More positive are has online have net increased in good. shipping sales through all been the So volume of channels There been indications the long-term in short-term, alternate market. meat China. is skyrocketing

ready with case We from benefited our options. that have

further booking forward to systems that. of We -- strong have a booking

a chilled more modern board markets retail. meat towards income consumers, enough, a the middle at upper by Australian for especially looking seen and to survey post and wet away and more more products significant Chinese also larger product and trend And volumes We've interestingly from often home. they're to packaged COVID-XX, more did

lot a of positive market. that So upward in dynamics

Operator

Sachs. the question for from MaGuire final comes line Our today Brian from of Goldman

Your question, please.

Brian MaGuire

just explicit it's food Just food couple kind of of X% this color have care, talked think long yes, already about liquid in exposure a is of we that machine business guys, think up. from call going wanted your I service of have than on know a said of food just the for and on can about for you on think own of from I that maybe six volume to sort negatively service related. you you installations follow-up the other XX% seems impacted like talk we kind I I gave could breakout some specifically about their thinking remember. One, if And Tyson, I that about and more mixing And applications. they've sort wonder guidance then, gave questions that product you of you to guidance, And time care foodservice. come to talked roughly I more

food So deal impacts? as of being and lockdown temporarily of the care are be that with we plants could the mid-single in some we digits kind Thanks. volumes of thinking XQ some down manufacturing down

Ted Doheny

on Brian, March weeks there guidance with reason go to just And the we dramatic you other not of we've ramp way. week-to-week, did give last pretty your the be it is incredible. seen two Yes, the up a choppiness we're And trying guidance, know. then, don't were you nice it's this cheeky saw good. the we us not to trying job math But

Our the talked portfolio the and about. on side that both food shifting care side dramatically, we care product is

your next So kind without to is What we giving math that that the change market. a the we're guidance, is where market week. we're will outperform will it. I think the message giving But of seeing

We moving portfolio are our really fast.

weeks doing, The been that high what has dramatic. volume penetration the role of in of stock, we're matter a just

we're give the pretty portfolio is thinking. to is short interesting So your we're we're things. We're some going doing market answer, going on good to to shift, math but not that our and move, grow going up what

if want to we give food food about but I But more Karl, you think the side, on any? service versus care if it. talked detail to on want retail, you So add

Karl Deily

fundamental some places thing dynamic pivots that I this the there's think One would react I thing. is, add to in market

in cases bring basically service don't back think Europe because retailers those will a advantage. it's I shut seen You've cost down.

penetration packaging live on. in increase will that So and those products

cases I question and seafood. net think we'll adjacent surface in seafood you've a markets, seen see shift a a to earlier see positive as significant you prepackaged think pivot shift on a I

live, it back, some legs. that service see and that very that We'll it back food specific have business the is to will as comes in retail some get benefits multiplier. we've of net come of service I that will shift food the a So back positive will as to seen

an automation, equipment then, where go when back to needs the touchless. to I returns, can think that'll to more and multipliers it So we be get equipment more to be. additional And,

net are those I positives. all think

Ted Doheny

questions analysts. we And actually appreciate. all sell to very thoughtful We're I side give shout really fortunate, want our out a to very

like Just make analysts good better. us good tough customers better, us make

just you of very safe. in environment. appreciate And And a also want sure really we're So that share that this good is can we're make each thoughtful. letting want our world safe this to ask place better about happen. make really to company I everyone feel that I make in we're what doing we show to this help crisis And how one and

and I stay that, call. the forward in you future speaking again safe. thank with want Jonathan call to look with to Thank everyone on So your for the and you the help we near that's And for it.

Operator

you gentlemen, thank you. does your ladies conclude Thank And for This the program. participation and in today's conference.

day. now disconnect. You Good may

Sealed Air (SEE) 5 May 202020 Q1 Earnings call transcript