Sealed Air (SEE) Q2 EPS Jumps 7%

Sealed Air (SEE -2.27%), the global packaging company behind widely recognized brands such as BUBBLE WRAP and CRYOVAC, released its second quarter 2025 results on August 5, 2025. The headline news is a significant earnings beat: adjusted earnings per share (non-GAAP) came in at $0.89, well above analyst expectations of $0.71 (non-GAAP). While GAAP revenue, at $1.33 billion, slightly exceeded forecasts, it declined by less than 1% on a GAAP basis compared to Q2 2024. Management reaffirmed full-year 2025 guidance, signaling caution amid ongoing volume pressures. Overall, the quarter saw strong execution on cost discipline, but continued volume softness and lower free cash flow (non-GAAP).

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Strategic Focus

Sealed Air is a packaging company known for protective and food packaging products used globally. Its portfolio features brands such as CRYOVAC (proteins and perishable food packaging), AUTOBAG (automated bagging systems), and BUBBLE WRAP (protective cushioning). The company operates in two reporting segments: Food and Protective.

In recent years, Sealed Air has emphasized sustainable packaging, automation, and operational efficiency. The CTO2Grow program—a cost and productivity initiative—is at the core of these efforts, targeting substantial annual savings. Ongoing product innovation, supply chain optimization, and global market access are other key drivers for the business.

Quarter Highlights and Segment Performance

Adjusted EPS jumped to $0.89, driven mainly by improved operating leverage and lower interest expense. The earnings release highlighted that the gain came from disciplined execution on productivity, including cost savings delivered by the CTO2Grow program. The adjusted EBITDA margin rose by 80 basis points compared to the prior year, despite continued volume headwinds.

Revenue was marginally below the prior year's level, with a slight decline in reported GAAP net sales. This top-line contraction resulted from lower volumes rather than price, particularly in North America. The Food segment reported GAAP net sales of $896 million, which was essentially flat compared to the prior year. Volume in Food declined 1%, mainly due to softness in North America, but was offset by pricing actions. Adjusted EBITDA margin in Food improved to 23.4%, supported by productivity gains and the ongoing CTO2Grow program. CEO Dustin Semach commented that markets outside the U.S, such as Australia and Latin America in protein packaging, "continue to perform incredibly well." while North America remains the primary area of focus.

In the Protective segment, sales decreased by 3% (GAAP), reflecting both lower volume (down 2%) and price declines (down 2%). Protective continues to face residual weakness, particularly in fulfillment-related packaging, but saw offsetting growth in the industrial portfolio. Adjusted EBITDA in Protective fell by about 5%, with margin dropping to 17.8%. Management described the turnaround in Protective as ongoing, noting gains from reduced churn and improved go-to-market strategies in North America, but also acknowledged further work is needed.

Management attributed margin improvement at the Adjusted EBITDA level to ongoing cost savings efforts, including productivity benefits from the CTO2Grow program. Operating cash flow (GAAP) and free cash flow (non-GAAP) both declined sharply, mostly due to higher incentive compensation payments and increased taxes. The company paid out $60 million in dividends, which was flat from the first half of 2024.

Product Families and Innovation

Sealed Air’s core product lines address a wide range of customer needs. CRYOVAC food packaging targets fresh proteins, cheeses, and liquids; AUTOBAG delivers automated packaging systems to efficient bagging lines; BUBBLE WRAP products provide cushioning and protection for shipping. The company's intellectual property portfolio includes more than 2,400 patents and over 2,200 trademarks, reinforcing its position in packaging innovation.

Sustainability remains a central pillar. Sealed Air's sustainable packaging solutions focus on recyclable and renewable materials and innovations for a more circular economy. However, the company did not report measurable progress on new sustainability milestones in the quarter. Automation also remains a key investment area, with CTO2Grow aiming for $160 million in annualized savings by the end of 2025. This focus on efficiency supports both cost reduction and environmental goals.

Looking Ahead: Guidance and Investor Watchpoints

Management reaffirmed its full-year outlook, despite outperformance during the period. The guidance projects net sales in the range of $5.1 billion to $5.5 billion, adjusted EBITDA (non-GAAP) between $1,075 million and $1,175 million, and adjusted EPS (non-GAAP) between $2.90 and $3.30. Free cash flow (non-GAAP) is expected to reach $350 million to $450 million. By holding guidance steady, leadership signaled ongoing uncertainty about the second half of the year, particularly reflecting global trade policy shifts and ongoing North American volume softness.

For investors, several areas require monitoring in the coming quarters. First, the decline in free cash flow (non-GAAP) is notable and attributed primarily to incentive compensation and tax timing, but ongoing cash generation is worth watching. Second, further progress in the turnaround of the Protective business will be essential as market dynamics evolve. Finally, the impact of macroeconomic trends—such as changes in trade policy and consumer sentiment—may continue to influence both the Food and Protective segments.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.