Sealed Air Corp Earnings Cheat Sheet: Margins Suffer for Five Quarters Straight, Profit Drops

S&P 500 (NYSE:SPY) component Sealed Air Corporation (NYSE:SEE) reported its results for the third quarter. Sealed Air, through its subsidiaries, is a global manufacturer of a variety of packaging materials and equipment systems. Its product brands include Bubble Wrap and Instapak. These offerings are used in a range of food, industrial, medical and consumer applications.

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Sealed Air Earnings Cheat Sheet for the Third Quarter

Results: Net income for Sealed Air Corporation fell to $73.7 million (41 cents per share) vs. $76.5 million (43 cents per share) a year earlier. This is a decline of 3.7% from the year earlier quarter.

Revenue: Rose 10.4% to $1.25 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SEE reported adjusted net income of 48 cents per share. By that measure, the company fell short of mean estimate of 49 cents per share. Analysts were expecting revenue of $1.23 billion.

Quoting Management: William V. Hickey, President and Chief Executive Officer, stated: “Our third quarter results demonstrate our balanced approach in managing our core business in an unsteady economic environment by remaining focused on our strategic growth programs, developing region expansion, margin performance and cash flow, while successfully completing the final stages of our Diversey acquisition and progressing with our integration planning. We achieved a constant dollar sales growth rate of over 3% in all regions with most reporting a pick-up in customer demand in September. Although this average rate of growth is slower than in the first half of the year, we are pleased with our ability to strategically manage volume and price for long-term sustainable growth.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the second quarter, net income fell 3% while the figure fell 2.5% in the first quarter and 21.2% in the fourth quarter of the last fiscal year.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 1.4 percentage points to 26.9% from the year earlier quarter. Over that time, margins have contracted on average 1.1 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 11.3% to $1.21 billion in the second quarter. The figure rose 6.3% in the first quarter from the year earlier and climbed 5.5% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 40 cents versus a mean estimate of net income of 38 cents per share.

Looking Forward: Over the last 30 days, analysts have not been optimistic about the company’s next quarter performance. The average estimate for the fourth quarter is now 50 cents per share, down from 53 cents. In the past month, the average estimate for the fiscal year has fallen from $1.77 per share to $1.74 abs.

Competitors to Watch: Bemis Company, Inc. (NYSE:BMS), AptarGroup, Inc. (NYSE:ATR), Rock-Tenn Company (NYSE:RKT), AEP Industries (NASDAQ:AEPI), Sonoco Products Company (NYSE:SON), Graham Packaging Co. Inc (NYSE:GRM), UFP Technologies, Inc. (NASDAQ:UFPT), Constar Intl., Inc. (NASDAQ:CNST), and Binh Duong PP Pack Making JSC (HBD).

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(Source: Xignite Financials)