Sealed Air Corp. Earnings Cheat Sheet: Shrinking Margins for Fifth Consecutive Quarter, Net Income Falls

S&P 500 (NYSE:SPY) component Sealed Air Corporation (NYSE:SEE) reported its results for the second quarter. Sealed Air Corporation, through its subsidiaries, is a global manufacturer of a variety of packaging materials and equipment systems. Its product brands include Bubble Wrap and Instapak, and 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 Second Quarter

Results: Net income for the packaging and containers company fell to $65 million (37 cents per share) vs. $67 million (38 cents per share) a year earlier. This is a decline of 3% from the year earlier quarter.

Revenue: Rose 11.3% to $1.21 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SEE reported adjusted net income of 40 cents per share. By that measure, the company beat the mean estimate of 38 cents per share. It beat the average revenue estimate of $1.18 billion.

Quoting Management: William V. Hickey, President and Chief Executive Officer, stated: “We are excited about the pending Diversey acquisition. This transaction brings together two industry-leading organizations with a shared vision that leverages a strong heritage of innovating new market spaces and developing unique, proprietary solutions that generate measurable value for customers. We believe the acquisition complements our current R&D investments in food safety and hygiene and broadens growth initiatives focused on providing end-to-end service-based solutions for the food processing and food service industries. Additionally, the acquisition expands our reach in developing regions, a key growth area for Sealed Air.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.8 percentage point to 26.7% from the year earlier quarter. Over that time, margins have contracted on average 0.9 percentage point per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 6.3% to $1.13 billion in the first quarter. The figure rose 5.5% in the fourth quarter of the last fiscal year from the year earlier and climbed 4.6% in the third quarter of the last fiscal year from the year-ago quarter.

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

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 34 cents versus a mean estimate of net income of 38 cents per share.

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).

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(Source: Xignite Financials)