Sealed Air Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Sealed Air Q4 earnings call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Lori Chapman. Thank you. Please go ahead, ma'am.

Thank you, and good morning, everyone. I hope you and your family are healthy and staying safe. Before we begin our call today, I'd like to note that we have provided a slide presentation to help guide our discussion. Please visit our website where today's webcast and presentation can be downloaded from our IR website at sealthere.com. I'd like to remind you that statements made during this call stating management's outlook or predictions for future periods are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the information in the section entitled Forward-Looking Statements in our earnings release and slide presentation which applies to this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K and as revised and updated on quarterly reports on Form 10-Q and current reports on Form 8-K, which you can also find on our website at sealedair.com or on the SEC's website at sec.gov. We also discussed financial measures that do not conform to U.S. GAAP. You will find important information on our use of these measures and their reconciliation to U.S. GAAP in our earnings release. Included in the appendix of today's presentation, you will find U.S. GAAP financial results that correspond to the non-U.S. GAAP measures we referenced throughout the presentation. I will now turn the call over to Ted Zuhini, our President and CEO.

Ted? Thank you, Lori. And thank all of you for joining our fourth quarter and year-end 2020 earnings call. I hope you and your families are staying healthy and safe. I want to welcome Chris Stevens to his first sealed-air conference call. Chris, we're excited to have you on our team. Throughout 2020, the pandemic presented new challenges for all of us around the world. Our purpose, which you can see here on slide three, is guiding us in the pandemic and has become even more clear. We are in the business to protect, to solve critical packaging challenges, and to leave our world better than we found it. Our employees delivered, and I'm proud of our team's tremendous commitment to our customers and our business throughout this pandemic. On today's call, I'll recap our performance in 2020. I'll share how we're accelerating growth in an uncertain environment and the exciting opportunities we see ahead. Our global markets are evolving, and we're leading the way with automation, digital, and sustainability. Jim will review our financial results in more detail, and Chris will provide our 2021 outlook. I'll close the call, and we'll end with Q&A. Let's turn to slide four for a recap of our 2020 results. Our strong sales performance in the fourth quarter, coupled with continued execution of reInvent-C, allowed us to exceed our 2020 commitments. In 2020, we delivered adjusted EBITDA growth of 9% on 2% sales growth, resulting in 130 basis points of margin expansion and an operating leverage of 77%. Adjusted earnings per share was $3.19, and we generated strong free cash flow of $556 million, which is 73% above last year. Automation, digital, and sustainability are driving growth in 2021 and beyond. This is being fueled by our reinvent seed business transformation. We want to point out on slide four that we are sharing with you the long-term direction that we are taking our business and the performance we expect to deliver. As we shared before, We're serving a stable market that grows at 1% to 3% a year. We're looking to accelerate this growth to 2% to 4% on our base business and another 100 basis points with automation. With our reInventSea operating system on 3% to 5% organic sales growth, we expect to deliver over 30% operating leverage and create world-class returns. Let's turn to slide five, our movie reel slide, which pictorially shows some new solutions powered by our iconic brands. You can see a play button on this slide, which is to encourage you to visit our website, where you will find current news stories with more to come. In 2020, approximately 63% of our sales were derived from packaging proteins, other foods, liquids and fluids, medical, and life sciences. Since March 2020, there's been an imbalance across the food industry, with strong demand in the retail channel offset by continued softness in food service from the stay-at-home pandemic environment. Food processors are working hard to meet increased retail demand, but they're still challenged with labor shortages. Our customers are focused on safety, productivity, and labor shortages, and we are responding with automated solutions to solve those challenges. This has resulted in another strong quarter in food packaging equipment and volume growth in our retail formats. In the fourth quarter, growth in retail formats and equipment was largely offset by continued declines in products with high exposure to food service. We expect this market segment to recover later this year and believe we are well positioned to take advantage of that recovery with new sustainable innovations. For example, for proteins, we've optimized materials and process for our cryovac barrier bags to make them recyclable, while maintaining our industry-leading standards for food preservation and food safety. For liquids and fluids, we have automated solutions that disrupt rigid containers and expand our bag-in-box offerings for soups, sauces, condiments, and beverages. The combination of our automated equipment, service, barrier bags and pouches, and packaging process extends shelf life, minimizes material waste, and lowers total cost of ownership. Approximately 37% of our sales serve e-commerce, retail, logistics, electronics, and industrials. Sales to e-commerce, retail, and logistics were up double digits in the second half of 2020. Automated equipment, including the portfolio acquired from automated packaging systems, mailers, bubble wrap inflatables, and our new paper-based solutions were our fastest-growing portfolios in 2020. In Q4, we also experienced increased demand for our temperature assurance packaging solutions that ensures the safe and secure distribution of COVID-19 vaccines. In 2021, we expect continued growth from our e-commerce and fulfillment solutions, particularly the offerings designed to automate the packaging process, minimize waste, and increase throughput. It was encouraging to see in the fourth quarter our sales to the industrial sector were up modestly, largely due to strength in consumer electronics and a rebound in automotives. Now turning to slide six for an update on our C automated solution strategy, which is driving growth for the next phase of our re-invent C business transformation. You can see on this chart that we expect equipment sales to grow more than 15% in 2021 to over $250 million. Our pipeline for automated equipment continues to strengthen, and we are confident in our organic target of over $500 million by 2025. When you factor in a 3x plus solutions multiplier, including growth in parts and service from the installed base, and the flow through of materials, this results in a $5 billion plus potential opportunity over the 10-year equipment lifecycle. As I mentioned before, we are solving our customers' most critical needs for safety, productivity, and labor scarcity with our touchless automated solutions. We are prioritizing these projects to those that create less than a three-year payback for our customers. With C automation, we're taking an integrated solutions approach by eliminating waste, simplifying the process, removing people from harm's way, and automating. Our customers are recognizing the tremendous value we are creating by integrating our full system. We brought new solutions to market and will continue to do that for our customers and our own operations as we lead the way to a more touchless digital environment. Let me now turn to slide seven and share how we are successfully navigating through this pandemic. Our local, regional, and corporate crisis management teams remain active and business continuity plans are still in effect. We've been proactive with our zero harm mentality And thanks to the dedication of our people, we've had minimal disruption to our operations. We are investing in digital capabilities and finding new ways to do business online. Our investments in smart packaging and digital printing are unlocking new growth opportunities by enabling our customers to increase their brand equity, enhance consumer experiences, and create significant supply chain efficiencies. I'll now pass the call to Jim to review our results in more detail.