Integrated packaging solutions provider Sealed Air Corporation (NYSE:SEE) announced better-than-expected revenue in Q1 CY2025, but sales fell by 4.3% year on year to $1.27 billion. The company expects the full year’s revenue to be around $5.3 billion, close to analysts’ estimates. Its non-GAAP profit of $0.81 per share was 20.9% above analysts’ consensus estimates.
Revenue: $1.27 billion vs analyst estimates of $1.27 billion (4.3% year-on-year decline, 0.5% beat)
Adjusted EPS: $0.81 vs analyst estimates of $0.67 (20.9% beat)
Adjusted EBITDA: $276.3 million vs analyst estimates of $260.3 million (21.7% margin, 6.2% beat)
The company reconfirmed its revenue guidance for the full year of $5.3 billion at the midpoint
Management reiterated its full-year Adjusted EPS guidance of $3.10 at the midpoint
EBITDA guidance for the full year is $1.13 billion at the midpoint, above analyst estimates of $1.1 billion
Operating Margin: 14.4%, in line with the same quarter last year
Free Cash Flow was -$12 million, down from $78 million in the same quarter last year
Sales Volumes fell 2% year on year (0.5% in the same quarter last year)
Market Capitalization: $4.75 billion
StockStory’s Take
Sealed Air’s first quarter results reflected ongoing transformation efforts, with management attributing performance to organizational changes and market-focused strategies. CEO Dustin Semach highlighted the completion of the company's supply chain integration into its Food and Protective segments, stating this move was designed to increase adaptability and customer responsiveness. The team also addressed the impact of evolving global trade policies and tariffs, noting that domestic production and USMCA exemptions have minimized direct effects so far.
Looking ahead, management reconfirmed full-year guidance, citing confidence in ongoing cost control and productivity initiatives to offset potential volume softness. Semach emphasized the company's focus on controlling “what we can” amid uncertain demand, particularly in the Protective segment, while leveraging the strengths of the Food segment’s product portfolio and global positioning. The leadership team outlined plans to monitor evolving tariff policies, customer sentiment, and macroeconomic trends that could affect the second half of the year.
Key Insights from Management’s Remarks
Sealed Air’s leadership focused on segment-specific transformation, the evolving tariff landscape, and customer-focused realignment as key themes for the quarter. The deviation from Wall Street’s expectations was mainly due to stronger-than-expected cost controls and progress on organizational transformation, which helped offset market volume declines.
Segment-Focused Reorganization: Management completed the realignment of supply chain, commercial, and innovation teams into Food and Protective business units, aiming for faster adaptation to market conditions.
Tariff Mitigation Efforts: The company actively reviewed its supply chain and product sourcing to address new and potential tariffs, with most direct impacts mitigated through domestic manufacturing and USMCA exemptions. Pricing actions in Food are being taken when exposure remains.
Protective Business Turnaround: Leadership discussed ongoing transformation in the Protective segment, including a new go-to-market structure and increased field sales investment. Early results include reduced customer churn in North America and stabilization in EMEA and Asia.
Customer Engagement Initiatives: The company intensified direct engagement with customers and distribution partners, using both quantitative feedback and executive outreach to guide improvements and measure satisfaction. These efforts are intended to drive long-term share gains, particularly in segments where Sealed Air lost ground over the past two years.
Productivity and Cost Management: CEO Semach and Interim CFO Johnson highlighted ongoing cost takeout and productivity programs as core to margin maintenance. These measures—such as shifting back-office work to lower-cost locations and optimizing production—helped offset unfavorable price realization and volume declines.
Drivers of Future Performance
Management’s outlook for the remainder of the year centers on navigating trade policy uncertainty, continued cost discipline, and segment-level transformation to maintain profitability and position for growth.
Protective Segment Recovery: The team expects volume declines in Protective to moderate as customer churn from prior years is fully lapped and new commercial strategies take hold, but acknowledged ongoing market caution and low demand visibility.
Food Segment Stability: Management projects relative stability in Food, supported by resilient demand in retail and industrial markets outside the U.S. and product diversity that allows for flexibility if consumer trade-downs accelerate domestically.
Tariff and Supply Chain Adaptation: The company believes its domestic production focus and supply chain adjustments will help limit tariff-related risks, but will continue to monitor potential downstream effects and adjust pricing as needed. FX trends and further operational efficiencies may also buffer unexpected headwinds.
Top Analyst Questions
Ghansham Panjabi (Baird): Asked about progress in Protective’s volume trends and customer churn. CEO Semach explained that most large customer churn is now fully lapped, with sequential improvement expected as transformation initiatives mature.
George Staphos (BofA Securities): Inquired about balancing cost takeout with improving customer satisfaction. Semach described increased field sales investment and back-office relocation as strategies for driving efficiency without sacrificing customer engagement.
Matt Roberts (Raymond James): Queried about price realization and competitive pressures in each segment. Management indicated price was flat overall, with negative realization in Protective due to competitive dynamics and supply overhang, particularly following Amazon’s exit from a key line.
Josh Spector (UBS): Asked for specifics on Protective volume assumptions and equipment sourcing risks from tariffs. Semach stated volume declines will lessen in the second half, with minimal direct tariff impact due to supply chain adjustments and domestic sourcing.
Stefan Diaz (Morgan Stanley): Sought clarity on holding guidance amid trade policy changes and international exposure. Management noted that guidance reflects expected modest volume softness offset by improved FX, with most business structured for domestic consumption to reduce tariff exposure.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) whether the Protective segment’s transformation leads to sustained improvements in volume and customer retention, (2) how effectively Sealed Air manages evolving tariff and trade policy impacts, especially with ongoing global uncertainty, and (3) the Food segment’s ability to maintain stability amid potential consumer trade-downs and changing protein demand. The success of further productivity initiatives and operational efficiencies will also be a key focus.
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