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Dustin Semach

Thank you, Mark, and thank you for joining us for our fourth quarter earnings call. Before we begin, I'd like to address the recent CEO transition. Let me start by saying I am very grateful for the opportunity and privilege to be sold or CEO, and I couldn't be more excited about our future.
I recognize that quick changes at the CEO level can raise concerns for all of our stakeholders. Let me assure you, our strategy has not changed. We continue to execute against the plans developed under my leadership as Co-CEO and President, and those initiatives are already taking hold.
Over the past two years, we have stabilized our business performance, rebuilt our leadership team, strengthen our balance sheet and transform back into two market-focused business segments, food and Protective.
While we have made significant progress, there is much work ahead of us to improve outcomes for our customers and shareholders, and we plan to accelerate the pace of execution from here. I am partnering with our Board, segment presidents and the rest of the Sealed Air team to meet these challenges head on with urgency as we continue our transformation journey.
With that, I'm excited to give an update on how we closed out 2024 and provide insight into our ongoing transformation in 2025. We exceeded our expectations in the fourth quarter, including coming in higher than our guided midpoint across adjusted EBITDA, adjusted EPS and free cash flow, and driving constant currency sales growth. We have now consistently delivered against expectations for six straight quarters, reflecting improved discipline and fundamentals and better commercial execution.
The strength of our food business more than offset the challenges in Protected throughout 2024. Excluding the restoration of our incentive compensation pools, we drove mid-single-digit adjusted EBITDA growth despite a sales decrease of 2%. During the fourth quarter, we accelerated the operationalization of our food and Protective businesses. We have now fully integrated our commercial innovation and supply chain teams into each respective segment.
As we completed the full reorganization, we continue to streamline our cost structure to improve organizational agility and our cost positions. We are getting closer to the markets we serve and our customers by reducing silos, complexity and bureaucracy while building a culture of accountability and ownership.
Brian will give more detail on our fourth quarter performance in a few minutes. But first, let me shift to 2025. Our focus this year is to further unlock the underlying potential in each business based on the respective end markets and portfolios. Both businesses in market support consistent low single-digit volume growth.
With the leverage across our footprint, our strategy is to drive mid-single-digit earnings growth and deliver high cash flow conversion on an organic basis over the long term. Over the next two years, we are targeting to deleverage the balance sheet to 3 times.
Once that is accomplished, we will be able to return to a more balanced approach to capital allocation, including disciplined M&A and a return of capital to our shareholders. As we are now organized by segment, we have more visibility into the cost structures of each business, the resources devoted to each portfolio and the impact of capital allocation, giving us more levers to help each business achieve their potential.
More importantly, we are instilling an end market and customer focus throughout each business, which will guide our allocation of resources, innovation and capital towards the portfolios that drive the most long-term customer value. While the shift in investment strategy will take time to yield results, we are in parallel, actively improving commercial execution and service levels across the business. Shifting our culture to become high-performing, engaged and powered and accountable is at the center of our transformation within the company.
We continue to strengthen the end market leadership teams and in parallel push decision-making further down in the organization to empower our field and supply chain teams to own their customer outcomes. While we made progress over the last year, especially in food, we will continue to adjust and we have the right talent in our most critical positions and fully make the shift in our culture.
We've been operating in a dynamic macro environment where we have increased volatility due to uncertainty around global trade and its potential impact on our customers' demand patterns and supply chains, input costs and foreign exchange movements.
On the potential tariff impacts, while most of our business is domestic production for domestic assumption, we do have trade with countries which could be impacted by the tariff discussions. This time, we plan on mitigating tariff impacts through changes in our supply chain and by passing through additional cost to our customers, if necessary.
More importantly, we are partnering with our customers and helping them navigate the potential back to their business, which is much more difficult to predict at this stage. Our outlook only contemplates tariffs that are currently in effect.
With the foundation of each business now fully built, it's all about unyielding focus and execution within the markets our food and Protective businesses serve. I will now dive into each business' outlook in 2025. Food is coming off a strong 2024, where we are able to grow volumes mid-single digits and gain share.
Over the past year, we've refocused on the core values that make Cryovac into the brand it is today. servicing our customers day in and day out and keeping them up and running with the best packaging solutions.
Our world-class engineering and manufacturing capabilities enable us to create unmatched packaging solutions that improve our customer outcomes by improving their processing yields and throughput while extending shelf life, ensuring safety, and enhancing brand image of their products. While industrial fresh red meat end markets ended 2024 in a better position than we originally anticipated, we see compression in the North American beef cycle increasing as we progress through the year, which will put pressure on our shrink bag volumes.
The situation is dynamic as the cost of feedstock has increased significantly over the last couple of quarters, putting pressure on our customers' businesses. However, with the breadth of our portfolio, we are focusing on higher growth businesses, such as case ready and fluids, whose end markets are less volatile and represent a growth opportunity this year and beyond. The share gains made in these portfolios in 2024 will continue to ramp this year, giving us positive momentum right out the gate.
Foods growth will be further supported by new innovations in automation and sustainable offerings. Leverage across the footprint, combined with our recently streamlined structure will drive the business to a projected mid-single-digit earnings growth in 2025. While we expect foods and markets to be more dynamic this year, I'm confident this business is on the right trajectory, and we are well positioned to fully achieve its underlying long-term potential.
I'm now going to shift to our Protective segment. While we made progress last year repositioning this business by refocusing on our customers in end markets, there is more work ahead of us to stabilize the business and drive an inflection point in volumes.
We have completed several transformation programs initiated last year to restore customer focus. First, we reorganized our North American go-to-market team to simplify our coverage and minimize customer touch points internally. As part of the reorganization, we strengthened our relationships with our distribution partners by aligning our field to theirs to ensure we are going to market together.
Lastly, we implemented many commercial excellence initiatives including streamlining our pricing approach to improve time to quote and implementing a more simplified growth-oriented incentive program for our field among many others.
Combination of these market-oriented actions has laid the foundation to give us more flexibility and control over the mix of products we sell into the market. We will focus on shifting our portfolio over time to the solutions that deliver the most customer value like AUTOBAG and Instapak.
Beyond the focus on the go-to-market approach, we continue to shape the solution portfolio by becoming more substrate agnostic in the portfolios that are sold into consumer-facing end markets like e-commerce. Our immediate focus is on commercializing the fiber mailer offerings we have previously discussed and bringing to market our hybrid AUTOBAG offerings.
While we have made progress on our mailer development with the second iteration of our fiber mailer, now called the Jiffy and Boss mailer, we have been slow to fully industrialize and bring to market. We plan to accelerate the expansion by moving into multiple markets within the US, giving us the ability to serve local as well as national accounts.
Market traction with customers and distribution partners has been strong following the product launch at Pexco last November. Total mailers market represents more than $3 billion with fiber offerings outpacing their flexibles and hybrid counterparts.
As we scale up our offerings in our mailers and auto bagging, we will be able to fully participate in the underlying growth in e-commerce, where we have been losing the most share over the past few years. Our current outlook is targeting a second half inflection in volumes in Protective. We believe we are taking the right actions to stabilize the business and ensure we are participating fully in the markets we serve. So it's not a matter of if but a matter of when we inflect our performance.
While it's difficult to predict the exact timing, we are focused month-to-month on improving our win rates, reducing customer churn, and improving service levels as well as taking a more proactive approach to our cost structure. As we continue to see the actions we are taking make an impact on our performance, our confidence on timing will improve. We will continue to give you updates throughout the year as we make progress.
Finally, as I mentioned earlier, the reorganization by segment has provided us more clarity on Protective's support structure, giving us the ability to set the right level of resourcing tailored to each segment. We are leveraging this visibility to ensure we are maximizing productivity in the field and within our production facilities.
As a part of our ongoing cost takeout efforts, we will close two plants by the end of the year to further optimize our footprint. When you pull all of this together, we are returning to top line growth on a constant currency basis with continued momentum in food, partially offset by challenges in our Protective business.
When you combine the cost actions at the end of last year, with ongoing productivity initiatives throughout 2025, we are targeting mid-single-digit EBITDA growth at constant currency. We will continue to drive strong free cash flow conversion and strengthen our balance sheet through debt pay down.
With uncertainties around tariffs, their impact on our customers' business and unfavorable FX movements, we are staying focused on controlling the controllables, ensuring we are taking care of our customers taking a proactive approach to our cost structure and increasing the pace of execution. I am excited about where we are taking this business and the benefits we will drive over time for all stakeholders.
Before I turn it over to Ronnie to give a more detailed update on our fourth quarter and full year 2024 results and 2025 outlook, I want to first welcome her in her new position as our interim Chief Financial Officer. Roni, over to you.

Veronika Johnson

Thank you, Dustin, and good morning, everyone. It's a privilege to step into this interim CFO role, and I look forward to engaging with you all. Let's turn to slide 4 to review Sealed Air's fourth quarter performance.
Net sales were $1.4 billion in the quarter, up 1% on a constant currency basis and were $5.4 billion for the full year, down 1% at constant currency. Adjusted EBITDA in the quarter was $271 million, down 1% compared to last year as reported.
For the full year, adjusted EBITDA was $1.11 billion, relatively flat with prior year. As reported, adjusted EPS in the quarter of $0.75, was down 15% compared to a year ago. Our adjusted tax rate was 28% in the quarter compared to 18% in the same period last year, which benefited from the reversal of liabilities related to uncertain tax positions. We did not repurchase any shares in the quarter. Our weighted average diluted shares outstanding was $146 million. For the year, adjusted EPS of $3.14 was down 1%, primarily driven by higher tax expense, partially offset by lower net interest.
Turning to slide 5. Reported sales were flat in the quarter as volume growth was negated by FX headwinds. On a constant currency basis, sales were up 1% on higher volumes reflecting strength in food, partially offset by continued declines in Protective.
Fourth quarter adjusted EBITDA of $271 million decreased $3 million or 1% compared to last year with a margin of 19.7%, down 20 basis points. Adjusted EBITDA performance reflects positive volume and productivity benefits, including cost takeout actions, offset by the restoration of our incentive compensation pools and unfavorable net price realization.
Moving to slide 6. Food sales of $923 million for the quarter were up 5% on an organic basis primarily due to volume growth in all regions, driven by strength in our shrink bag business and continued share gain in case-ready solutions.
In the fourth quarter, the industrial food processing end market outperformed our expectations, coupled with volume growth within our fluids business. Food adjusted EBITDA of $208 million in the fourth quarter was up 7% with a margin of 22.5%, up 70 basis points.
Productivity benefits and volume growth more than offset the impact of higher incentive compensation and unfavorable FX. Transitioning to the Protective business, Fourth quarter net sales were $450 million, down 7% from the prior year and up slightly on a sequential basis.
Protected sales continue to be impacted by weakness in certain industrial portfolios and pressure within our Void-fill product lines. Protective adjusted EBITDA of $67 million was down 26% in the fourth quarter. The decrease in adjusted EBITDA was mainly driven by lower volumes and unfavorable net price realization.
On slide 7, we review our fourth quarter net sales by segment and region. On a constant dollar basis, Americas was up 1%, driven by strength in food, partially offset by continued softness in Protective portfolios.
Constant dollar growth of 1% in EMEA was driven by solid volume performance in food. Constant dollar growth of 1% in APAC was driven by strong Australian cattle and land cycles, offset by continued weakness in Asia Protective applications. With the reorganization behind us, starting in Q1 2025, we will no longer report sales by region, focusing only on our segments to better reflect how we manage the business.
Now let's turn to free cash flow and leverage on slide 8. We consistently generated free cash flow throughout the year, which totalled $454 million compared to $467 million a year ago, when adjusted for the impact of the resolution of certain prior year's tax matters in both years. This was particularly strong cash flow conversion, considering our restructuring and associated payments increased to $58 million from $19 million a year ago as we accelerated our cost takeout actions.
We maintained our capital allocation discipline through our focus on deleveraging the balance sheet and ended 2024 with a net leverage ratio of 3.6 times compared to a peak of 4.1 times in the second quarter of 2023.
We are well on track to exceed our previously communicated target of 3.5 times net debt to adjusted EBITDA by the end of 2025. Our total liquidity position was $1.4 billion, including $372 million in cash and the remaining amount in a committed and fully undrawn revolver. We are now committed to bringing down net debt to adjusted EBITDA, to approximately 3 times by the end of 2026.
Let's turn to slide 9 to review our 2025 outlook. As Dustin mentioned, several internal initiatives are underway to drive low single-digit top line growth. Some of these actions will take time to materialize. As a result, we expect net sales to be in the range of $5.1 billion to $5.5 billion, which assumes 1% growth at the midpoint, excluding the impact of FX and which we expect to represent a 2% headwind for the year.
Within food, we expect constant dollar sales growth of 2%, primarily from price. Within Protected, we project full year sales to be down 3% year-over-year. We expect challenges in the first half to continue and are targeting an inflection in volumes in the second half which will result in a full year decline of approximately 2%.
We expect pricing pressures to persist further reducing top line by 1%. We expect full year adjusted EBITDA to be in the range of $1.075 billion to $1.175 billion, representing approximately 1% year-over-year growth at the midpoint which assumes a margin of approximately 21%. FX is expected to be 2%, approximately $25 million unfavorable on adjusted EBITDA.
On a constant currency basis, the midpoint of our guidance assumes year-over-year growth of approximately 3.5%. The midpoint of our adjusted EBITDA guidance includes $90 million year-over-year cost savings more than offsetting negative net price realization and FX headwinds.
Full year adjusted EPS is expected to be in the range of $2.90 to $3.30 per share with the midpoint representing constant currency growth of 2%. The adjusted EPS guide assumes an adjusted tax rate of approximately 27% and relatively consistent year-over-year net interest expense.
We expect full year 2025 free cash flow to be approximately $400 million reflecting continued strong cash generation while absorbing higher restructuring payments associated with our cost takeout actions. Our capital expenditures are expected to be approximately $220 million.
For the first quarter of 2025, we expect net sales and adjusted EBITDA to be ranged around $1.26 billion and $260 million and adjusted EPS between $0.65 and $0.70 per share. Our Q1 expectations reflect FX headwinds of approximately 3% on the top and bottom line, continued volume pressures in Protective and downward pressure in the North American beef market impacting our shrink bag business. Our ranges and outlook reflect the dynamic environment we continue to operate in. As we gain more visibility throughout the year, we will adjust and update expectations accordingly.
Turning to slide 10. We closed out the year ahead of our expectations and have built a strong foundation for further growth in 2025. While uncertainty and limited visibility remain -- we are executing well within food, and we are accelerating our efforts to stabilize our Protective business. This year represents an important milestone as we returned back to sales and adjusted EBITDA growth with a longer-term focus on outperforming the markets we serve.
Our leadership, organizational structure and strategy are in place, and we are now focused on executing in market helping our customers navigate this dynamic environment and driving returns to our shareholders. With that, Dustin and I look forward to your questions. Operator, we would like to begin the Q&A session.

Question and Answer Session

Operator

(Operator Instructions)
Anthony Pettinari, Citi.

Anthony Pettinari

Good morning. Dustin, assuming Protective volumes remain negative in the first half, are there parts of that business that you expect to be maybe a significantly larger drag on volumes than kind of the segment average -- or conversely, are there kind of parts of the business that are already seeing a volume inflection?

Dustin Semach

Yes. So Anthony, again, thank you for the question. And a couple of comments on that. If you actually look at the past year, very similar trends that we talked about in '24, we're going into -- if you think about in '24, our industrial portfolio was largely down in kind of the mid-single digits perspective from the volume. And there were some bright spots in there largely our shrink films.
And then the fulfillment, it was down in the high single digits, and that was really the areas we've talked about historically around polyboifill as well as our polymailers being a pressure point on the fulfillment side being offset by our APS business, which again was positive volumes in '24.
When you think about '25, we expect those similar trends to continue with one major difference, which is part of what you're experiencing in the first half relative to having lighter volumes, and we kind of see the first half being in that the first quarter will be in the high single digit and you're looking at the mid-single-digit range in the second quarter and then evening out in the second half.
And what you're doing there is wrapping on some of the large churn we had in the prior year. And these are the items we discussed publicly around some of the fill air business, particularly from Amazon that we lost as they converted into fully paper voice fill.

Anthony Pettinari

Okay. That's very helpful. And then just switching gears. I think in your guidance, you said that you're only contemplating tariffs that have been enacted. And I guess there's all kinds of scenarios we could imagine. But can you talk about maybe just some of the sensitivities in terms of what regions are you moving product cross-border or maybe customers have specific sensitivities? Or I mean, when you look at Mexico, Canada, Europe, China, like where is the potential impact to seal there?

Dustin Semach

Sure. And so Anthony, keep in mind, I'll go back to the some other frame of the script, which is the comments we made around the tariffs aren't expected. This is largely the new Chinese tariff that was put into effect by about 30 days ago, which we don't see us having any material impact on our business. This is a small portion of Protected that important to the US.
As it relates to the broader comments I made, which is most of our business is domestic production for domestic consumption, which really prevents that issue holistically. But in our North American business, we do trade both with Mexico as well as Canada, which is where you would see the most pronounced potential impact for us.
And I say potential because again, if you go back to the comments in the script, right now at this point in time, we're making shifts in our supply chain to accommodate that as well. And then obviously, if we need to pass through costs to our customers, we will do that if necessary.

Anthony Pettinari

Okay. That's helpful. I'll turn it over.

Operator

Ghansham Panjabi, Baird. (Operator Instructions)

Josh Vesely

Hey, everyone. Good morning. Thanks. It's actually Josh Vesely on for Ghansham. Thanks for taking my question, and Dustin, congratulations on the new role. Maybe Dustin, and I know you gave some detail in the prepared remarks. But if you could just from a high-level standpoint, give us some additional color on what your initial priorities will be for the company as CEO, whether that might be potentially rightsizing any recent changes within the organization, maybe an acceleration in cost outs, et cetera. Just any color there would be great.

Dustin Semach

Hey, Josh, of course, and thank you for the question and congratulations. So a couple of comments I'll make, and I go back to what we discussed earlier, which is really I break it down into three buckets. The first being this acceleration around our customer focus. And again, I go back to the comments we made, which is what's been great in the fourth quarter as we finally brought to market fully our food and Protective business and operationalizing both those businesses in terms of fully integrating our commercial innovation supply chain teams.
As I think about the priorities going forward, it's about this relentless focus on the customer. I talked about some of the initiatives in Protective that were already in place and for Protective is largely about executing against those initiatives now that they're fully kind of implemented.
Within food, specifically, we talked about the fact that we see some pressure on shrink bags largely due to our exposure to the industrial protein markets. And our focus is really on case ready and fluid solutions because the retail end markets they serve represent higher growth for us. But to do that effectively, you have to rethink your go to market, you have to rethink innovation. And that's in combination of the work that we're doing with Steve.
We're working through that process now. We expect that to yield results in 2025. So first acceleration is really making those two pivots, the higher growth areas for food and as well as Protective continuing to stabilize that business.
The second piece, as we mentioned in the script as well is really around your point around accelerating cost takeout. And one of the really positives about going to this new operating model that gives us more visibility to the cost structure of each business. And so we're more intentional now going forward. But again, trying to be proactive, particularly in Protective, where you may see more volume weakness as we go and making sure that we're getting ahead of that going forward in combination with the cost takeout that we took in the fourth quarter as well.
So the third piece and the last comment I'll make is around, again, this piece around leadership Again, really pleased where we're at for the total company leadership as well as some of our end market teams. But we're going to have to -- as we go forward throughout this year, we're going to continue to make those adjustments to make sure we have the right people in the right positions to ensure that we're successful going forward and largely thinking around having that kind of growth-oriented mindset.

Operator

Phil Ng, Jefferies.

Philip Ng

Hi, guys. Congratulations, Dustin, Roni, and Mark, in your new respective roles and good luck with that. My question is on Protective. Dustin, I guess, you're calling for a back half ramp up, volume is a little more pressure in the first half.
Is the weakness in the first half largely the Amazon hangover or you're seeing more pressure in certain pockets. It just feels like demand has been a little choppier. And then on the pricing side, too, what are you seeing on that front? Are you seeing more heightened competition?
Then lastly, you talked about scaling up auto bag and your fiber mailer. That process has been probably a little slower than I would have expected. How do you kind of see that ramping up perhaps this year in [2026]?

Dustin Semach

All right, Phil. I appreciate that. And I'll break down your question to three parts you kind of laid out. The first one is just kind of the first half in Protective. And it is. It's a mix of continued, I would say, underperformance, but more but split between the underperformance of the business that we're experiencing kind of in Q4 as well as a hanger from Amazon, but also a couple of other customer turns that we had in Q1. And I think the really important point to leave you with there is that going into this year, we're in a better position from a churn perspective than we had been in the prior two years, right?
So on a positive note, particularly as it comes to more material customers, -- and so that's been a positive piece. And then the second piece is we talked about that change in the go-to-market model, particularly in North America, and some of the changes we're making, and it does take time to work through that transition.
So we expect some choppiness as we continue to work through that in the first quarter, and then you expect the benefit starting in the second quarter. So you'll benefit from those initiatives kind of fully emotion coupled with the fact that you're kind of fully wrapped now on the churn that happened last year.
As it relates to the fiber piece of it -- or excuse me, I got the pricing piece first. So pricing overall, as you know, holistically, from a resi perspective, you're seeing resins slightly flat right now. Competition in Protective, particularly in our fulfillment areas where competition is still -- if you think about the pressure you have on (inaudible).
You're seeing more pressure there from competition, but everywhere else, if you think about this kind of lower for longer volume environment Protective, you still feel that, but I wouldn't say it's a difference from 2024. And with resins now beginning to slightly inflate, you're expecting the ability to potentially take more price in the market, and it's reflected in our guidance in both food and Protective.
The second piece and the last part of your question is around fiber mailer, I acknowledge the fact that we're -- we've been slower even ourselves. We're not happy with where we're at relative to the scale up. But on a positive note, the market is receiving the mailer very well. We talked about some of the wins in the fourth quarter. And those were largely just demonstrating that we have those proof points now, not just from the local customers, but also large national accounts.
And so the focus -- when I go back to the acceleration in the pace of execution, which you've seen in the script in the press release, really when I'm talking about areas like this where we can increase that scale. We have the product, the innovation portion of it's done. It's really about implementing the lines and getting out in the market and filling them up, and that's what we're focused on.

Operator

Edlain Rodriguez, Mizuho.

Edlain Rodriguez

Good morning, everyone. And again, congrats, Dustin. I think in the prepared remarks, you've talked about enhancing the profitability of each baseband. In your view, like what is the earnings power of each business in terms of volume and margins as we look into 2026 and beyond.

Dustin Semach

Again, appreciate the congratulations, and I'll start here. So there's a couple of comments I would make. One is we have not issued longer-term guidance for both individual segments, right? And that's something that as a leadership team, we're working through in terms of how we see the business shaping up over the next two years to three years. But what I will tell you and what we put in the script is around the fact that in both businesses, the end markets that we currently serve are in the low single-digit range, and that is from a volume perspective.
And if you think about pricing over time, being somewhat linear, and what you would expect on that is the ability to drive low single-digit and mid-single-digit kind of earnings power, both based on where they're (inaudible) the markets they serve, the portfolios we have as well as the footprint we have right now and the capacity within that footprint.
Longer term, so if you think about the first phase, and I think what we talked about in 2025 is really we need to fully realize that. We recognize, if you look at our food business, very positive, the performance we had in '24, we're expecting another strong year in that similar vein in '25 for our Protected business, we're still obviously working through the turnaround, trying to stabilize it and get it back to a place where it's really achieving its underlying potential before we enhance it further with further capital deployment as well as innovation, and there'll be more to come on those topics as we progress throughout the year.

Operator

Josh Spector, UBS.

Josh Spector

Yes. Hi, good morning. I wanted to ask on the pricing within food. I think from your comments earlier, you said 2% growth in most of that price. I'm just curious about the visibility of that either through contracts or pass-throughs or if there's anything unique that's happening to drive pricing up? I mean, I know resins are up a little, but not a ton. And that seems about a point better than what I typically assume for that segment. So if you could unpack that a bit, that would be helpful. Thank you.

Dustin Semach

Hey, Josh, this is Dustin speaking. So a couple of comments I would make on that is we are already benefiting from formula pricing heading into the year. So just keep in mind, we've talked about this in the past, but a big portion of this is in our North American business, where you have the pass-throughs and really based on how resins and those indices have moved in the back half you'll see that benefit now heading into '25, right? And if you expect resins to continue to inflate, there's a lag, but that lag will continue to drive.
Beyond that, we have been able to take price in that business. Again, it's very modest, but reflecting some of the underlying inputs we have. And it really speaks to the value proposition of the portfolios. But it's really a mix of those two dynamics sitting within our business today that's driving that outcome. And I think that also the point I would leave you with is that for the first time heading into 2025, we're operating in a more stable environment where you kind of -- while you have some inflation in resins, it's more fully wrapped than you experienced all the volatility from -- think of it as pre-COVID all the way to 2024.

Operator

Stefan Diaz, Morgan Stanley.

Stefan Diaz

Hi, Dustin, Roni and Mark. Thanks for taking my question, and congrats on the new roles. Maybe Dustin, can you let us know how much automation revenue you had in 2024? And then maybe what your expectations are for this part of the business in 2025? Like, for example, are you seeing any green shoots or any conversation changes with customers, given the increased focus on near-shoring. And then maybe longer term, are you still thinking about this part of the business as a material growth vector for Sealed Air going forward? Thanks.

Dustin Semach

Hey there. I appreciate the comments and the questions. So I'm going to start with kind of your second question first, just to frame it up. look, automation continues, has been historically, and continues to be an incredibly important part of the business. But it's -- again, I go back to it one of the three legs of that total stool between material science service as well as the equipment offering and the automation offering is really that combination that creates the strength of the value proposition to our customers for our packaging solutions. And so it's continued to be that way.
I know in the past, there's been maybe a focus on potentially on that particular piece. But the way we see it is really is an enabler of, again, pulling through material sense. And we've talked about over the past couple of years where the parts and services of the business have continued to perform really well, but the actual equipment sales have declined.
Historically, that's been driven by some of the capital constraints of our customers in terms of where we're at in terms of the investment cycle. And what I would tell you is going forward, we're actually optimistic. Breaking down because really talking about it together, it really is more meaningful as you think about it between food and Protective.
When you think about Protective overall holistically, you're looking at a business that is we're really expecting to drive equipment growth going into '25, and that's really coming off the back of our renewed focus on our auto bagging equipment. We talked about it in the script a little bit about the new hybrid auto baggers, which are really substrate agnostic, allowing me around run poly as well as fiber with really limited changeovers.
Same thing on the food side, where I would say we still see some pressure in that business. But again, it's more reflective of the dynamics of the industry than less about the strength of their portfolio. And in both of them, we're really focused on net new placements. So right, as you think about us more new customers, new placements that drive new material sales rather than think of it as replacing older equipment. So that's kind of our focus right now. But -- and again, all in the spirit of driving more material sales longer term.

Operator

Michael Roxland, Truist Securities.

Michael Roxland

Thank you, Dustin, Roni, and Mark for taking my questions, and congrats on your new role. In terms of -- Dustin, you mentioned shift in the culture to become high-performing and engaged and accountable and want to put push decision-making down into the organization. The comment that you ended it with is that you made progress last year, especially through it. So it towns like progress in Protective was more muted. So just wondering if anything occur that ended more noble progress in Protective that you're trying to address currently?

Philip Ng

Great question, Michael. And a couple of comments I would make as part of this. One is, this is really important, and I want to leave you with that over the past two years, we've been on a journey in this area and every step that we've taken relative to leadership, structure, strategy. At the center of that is really making sure that we're enabling this culture because longer term, we really need all 16,000 plus of us to really be rolling in the right direction.
And the comment I made specifically in food is it was not intentional in the sense of the way it came to be, but we really got to the structure in food much more quickly than we have yet in Protective. And it's really also a statement about the complexity of Protective as a business. We've talked about this in the past, albeit it's 30%, 40% of the overall business.
It is a much -- a very complex business with multiple portfolios operating across many geographies. So it's more of a statement about the complexity of the business and how you navigate that. And as we think about the structure of the company at the very top, there's a lot more work as you kind of work it down all the way down to the field.
And again, really positive step. I would say the North American go-to-market transformation that was put into place at the beginning of the year is material. We've gotten really positive feedback from our end customers with our distribution partners. So it's moving in the right direction. There's just more work ahead of us to tackle not just to make sure that piece of it's actually working, and you're seeing it in the results. But the rest of it is actually in a similar place.

Operator

[Jeff] Zekauskas, J.P. Morgan.

Jeff Zekauskas

Thanks very much. Can you talk about the Protective segment in 2024. That is -- what the growth rate was on the industrial side and what the growth rate was on the e-commerce side and maybe what the split is now between those two businesses. And then for Roni, cost of goods sold was down about $80 million year-over-year. Can you talk about what was behind that? Was that raw materials or cost reduction? Or how do you analyse that?

Dustin Semach

Okay. So Jeff, great question. Thank you for that. If I go back to some of the earlier questions around this particular piece of it, -- if you looked at the split between the two is roughly 60% industrial, 40% fulfillment. That's within the Protective segment right now relative to 2024.
And as I mentioned earlier, our industrial portfolio was down from a volume perspective and kind of that low single-digit kind of mid-single-digit range. And then on the fulfillment side, it was a step higher on the other side of it, which was -- it was down in mid-single-digit to high single-digit range, depending on the portfolio.
Now in both areas, there were bright spots. And they could give you an idea in a couple of areas you had shrink film, as an example, we called out, we've talked about our inflatables, and we've also talked about our auto bagging equipment and material sales, which were all very positive.

Veronika Johnson

Yes. From a cost of goods sold perspective, as a percentage of sales, we do see correlation in the reduction of cost of sales, aligning with the overall sales reduction. However, that is combined with a little bit of favorability on the raw material pricing side.

Dustin Semach

Yes. And then -- and Jeff, just to complement, Keep in mind, too, that we talked about the cost takeout actions that we took last year -- we started out the year talking about roughly $90 million. We ended the year at $89 million. A significant portion of the cost takeout as well as other productivity is also hitting the cost of goods sold [plans].

Operator

Arun Viswanathan, RBC Capital Markets.

Arun Viswanathan

Hey, thanks for taking my question. Congrats on the new role as well, Dustin and Roni and Mark. So I guess I just wanted to understand the guidance ranges a little bit more. So it looks like you're up about 3.5% for EBITDA at the midpoint, 2.5% for EPS. And what would really drive you to the upper end of your range? Was that -- is that kind of very macro dependent. Is it maybe continued outperformance in food and maybe the stoppage of underperformance and Protective -- or how should we think about attaining that range? Or is the midpoint really more what you have line of sight towards? Thanks.

Dustin Semach

Hey, Arun, it's Duston speaking. I would tell you, I'll break it down into three individual components. So -- the first in our food business, as we kind of alluded to, if you go back to last year, we entered the year thinking that the North American beef cycle will be a headwind to the business. And we're down probably in the 4% range, at least at the beginning of the year, and we ended up being flat and even benefited the fourth quarter.
As we think about next year, we're in a similar position, right, where the her hasn't been rebuilt and so what you're hearing at least the initial thinking is that you're down 3% to 4% again going into the full year.
You want [to point] about macro dependent, I think one of the areas that gets you to the higher end of the range is the food business, if you see that actually become much better for the full year, which is always a possibility. Again, well, I'll just caveat it being that we're in a dynamic environment.
The second piece on Protective is, to your point, is the acceleration of -- dependent on when can we inflect volumes. And as I mentioned in the script, the timing is difficult to predict. And as part of the reason you're calling a second half inflection point, but we do believe that we're taking the right actions in the business to make that happen is at what rate and pace of speed do you actually see that improvement, right?
And then the third piece is, as we alluded to in the script, we're still thinking through while we're already committing to roughly $90 million of cost savings in 2025. We're really now taking a look at both businesses and making sure that their cost structures are fit for purpose, which could obviously yield going back to the EBITDA line, not necessarily on the sales side, that gives you potential further lift as we think about the back half of 2025.

Operator

Matt Roberts, Raymond James.

Matt Roberts

Hey, Dustin, Roni, Mark. Good morning. I'll let go everyone else sentiments. Dustin, on the -- there are two plants closing, I believe, by year-end, and these specific product lines that you're reducing the contribution mix from in those closures? And maybe when you think about that portfolio rebalance or the complexity in the Protective segment that you discussed.
When you look at the facility footprint, is there a major overlap in terms of assets or sales functions or even resins from underperforming lines versus areas that are not structurally challenged. Basically, when you think of facilities in relation to the total portfolio, how do you weigh trade-offs in either maintaining the underperforming assets versus investing in areas of innovation that you discussed? Wonder if there are potentially more closures coming with cost takeout or how you weigh the trade-off there. Thank you for taking the question.

Dustin Semach

Matt, great question. And that was a very complex one. So -- and I appreciate you asking because it's very thoughtful. And what I would tell you is that as we -- as it relates to the two specific ones, this is around specifically network optimization. We've put it in reference largely to Protective and it's largely consolidation. It's not reducing contribution from an individual product line.
It's all about improving your cost position relative to those particular products, which is what largely most of our network optimization has been done. As it relates to -- thus far, we're down about, I want to say, kind of mid-single digits in terms of facilities over the past two years.
And so as it relates to your question around, as you say about kind of going forward and how you weigh these options largely -- and specifically as it relates to Protective, we feel good about the mine go back to that domestic production for domestic assumption. And if you really take a Protective (technical difficulty) metropolitan market.
And so what's important as we evaluate those things is largely which geographic markets you want to go into and then which metropositive markets you want to serve within the countries that we operate in today, which is obviously sprawling and broadly international.
And so we feel good about the footprint we have. And in terms of where we're at today, there's always potential for more network optimization, and we're very thoughtful about how we evaluate that. Those are very big decisions that we spend a lot of time really thinking through -- and as part of the reason today, we're not announcing that.
And again, I go back to it's not just from a lens of cost takeout for cost takeout sake. It's got to create longer-term value. So Again, when you think about a Protected market, the last thing you want to do is exclude yourself from a metro politic market that you think may have longer-term growth because you have short-term challenges.
And so as I mentioned beforehand, we feel really good about the portfolio we have in Protective and it's largely right now, focusing on commercial execution as we move forward. And so -- and making sure that we obviously put volume back into our plants. So we can benefit from the other side of this and the incremental is going on the way up versus the deleveraging we've experienced. And so that's where our head's at today.

Operator

Chris Parkinson, Wolfe Research.

Chris Parkinson

Great. Thank you so much. Can you just talk a little bit more about global protein markets and kind of what you expect in 2025, what's embedded in your guidance? Just given some of the noise on the Red meat side as well as potential headwinds to poultry. Just any dynamics that you think are worth on would be very helpful. Thank you.

Dustin Semach

Sure, Chris. So a great question. And -- and again, kind of piggyback off of the comments that I made earlier. If you think about particularly, I would say, our Latin America and Australian cycles are kind of -- they're around the peaks.
And then if you think about our North American cycle. That's the area that last year we thought was going to be 3% to 4% down and then now it ended up being flat. And now we're kind of looking at this year, just [3] to [4] down kind of what's baked into our current outlook.
The flip side is that when you go back to last year and you look at most of the markets, whether it was dairy, smoke and process, foodservice, even poultry, they were slightly down for us globally to keep in mind beyond North America now. And as we go into next year, those areas have slight upside, which is really playing in well to the strategy.
I go back to it. We had very strong gains in our portfolios outside of shrinkage. But going into next year, those markets, which, in many cases, actually lend themselves more to retail end markets versus industrial food processing kind of end markets that presents more opportunity.
And we see those being positive, even poultry because largely what most people are referring to in poultry, there's concerns around as largely Turkey, where we have less exposure, and that's really tied to the varying flu. And so I think that for us, we still see poultry, poultry assumption moving up. It plays well into our strategies around case ready and we see that as a long-term source of growth, not just in the short term in '25, but in '26 and beyond.

Operator

Gabe Hajde, Wells Fargo.

Gabe Hajde

Good morning. I will echo the congratulations from everyone. Two hopefully quick ones, Dustin. First, the large player in e-com made an investment in one of your pure-play kind of fiber-based competitors. I think this move is pretty unique, at least relative to what we've observed historically. So two questions. Does this change your view at all on how to maximize value out of maybe the Protective segment. And are you seeing increased activity in the M&A world in either the so or Protective segments?
And second, you called out $89 million, I think, of cost out in 2024. I think Roni mentioned $90 million was embedded in the outlook. I don't know if you're specifically ascribing all, call it, $180 million to cost out to grow. But I think you're initially targeting $150 million. Where is the upside coming from? And then maybe if you're willing to quantify what that runway looks like. Thank you.

Dustin Semach

Thank you, Gabe. It's a great question. So I'm going to start with talking about specifically Ranpak, which I believe is what you're referring to. And then -- and then I'll turn it to Roni to not only walk you through the cost out to give you clarity there, but walk you through kind of the EBITDA bridge for the year and then talk you through a little bit about net price realization that plays into that EBITDA bridge as well.
So when you think about -- I go back to the comment around Ranpak specifically in Amazon, while it's unusual for Amazon to operate this way, I would say, with their industrial partners on the retail side is actually quite common on how they operate this way on their AWS, their cloud services or cloud infrastructure business with their services partners. So it's very similar.
And if you go back to it, really what we see from this is that it's -- one is continuity of supply, but also the -- from Ranpak specifically, and this goes back to the business they won last year on the paper side. which is paper void fill, but a much more simplified version of that in terms of how they're offering it to Amazon.
As you take our natural reaction to it, keep in mind that paper oilfield today is a relatively small part of our overall portfolio. where we see growth from a fiber perspective and particularly in fulfillment, is less around the box and what's in and how you solve for voice fill in the box. It's more around the actual packaging formats, particularly on the mailers, which is the reason why we talk about doubling down the fiber discrete mailer itself as well as our auto backing equipment, which is in itself the form of a mail, right, which we've already had a lot of success with.
And so we see -- we don't see it as unusual what they're doing. Now what it does do for us is it could potentially create an opportunity relative because just kind of publicly doubling down and strengthen their relationship, which gives us an opportunity for others that may not respond well to it. But it doesn't change our strategy. It doesn't change our thinking about how the opportunity we see in that business. We believe in what we're doing. We believe it will yield results.
And then going back to your question around the cost out, I think I'll clarify one point that [89] versus the [90] in 2024 was just talking about where we set out at the beginning the year where we landed. I'm going to turn it over to Roni to talk about the EBITDA bridge for the full year because it's similar that may create some of the confusion and then talk about net price realization.

Veronika Johnson

Yes. Thanks, Dustin. Thanks, Dave, for the question. From an EBITDA bridge perspective, as you are aware, we are facing FX headwinds of roughly $25 million. And combined with that, we are seeing unfavorable net price realization of roughly $65 million. This is split or this is driven rather by an increase in costs of $105 million due to inflation, offset by price increases of roughly $40 million.
The combination of FX and net price realization are effectively offset by the $90 million of savings that we referenced in the script. The $90 million of savings can be split between $65 million of cost takeout actions and $25 million of productivity efficiencies.
When we think about the CTO program, we set out to achieve the $140 million to $160 million of savings. As you had mentioned, through 2024, we did realize $100 million of CTO savings and the incremental $65 million will bring us to the high end of that range.
When it comes to the productivity savings, Justin talked a little bit about plant optimization, et cetera. The $25 million is largely driven by that. From a comparative perspective, it's generally difficult to guide on because it's heavily contingent on what we do within the plants.

Anthony Pettinari

And so Gabe, just to follow on to that point. So if you think about holistically and what she's referring to is really the productivity that we're driving within our plants, on that particular piece of it. But broadly speaking, it's the same categories we've been going after the past two years, just now with the new structure in place, we have a lot more visibility to each cost structure. So it's given us more tailored opportunity to make adjustments.
If you go back historically, some of the comments we've talked about, which is whether it's other back office optimization, which we continue to go after and then also areas around further automation within most of our functions and other G&A productivity enhancements.
And so what I'll leave you with on this particular piece is that we're staying flexible as we go throughout the year to make sure that we're proactive. And so while this is a starting point or outlook for the -- we were taking another hard look at the Protective cost structure, particularly as we progress off the year, if we're not seeing our initiatives take hold as quickly as we would have planned. And so I would say on this particular topic, stay tuned.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Dustin for closing remarks.

Dustin Semach

I'd like to thank everyone for their time today. I'm incredibly excited about our future, and I look forward to updating you throughout 2025 as we execute on our strategy to return Sealed Air to growth. Lastly, I'd like to close by reiterating my appreciation for all the Sealed Air team members for their tireless efforts in solving our customers most critical challenges and their continued commitment to our transformation. Thank you.

Operator

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