PSM for /24

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-12139

SEALED AIR CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware		65-0654331
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
2415 Cascade Pointe Boulevard
Charlotte	North Carolina	28208
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (980) 221-3235 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.10 per share	SEE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ý

There were 144,410,149 shares of the registrant’s common stock, par value $0.10 per share, issued and outstanding as of July 31, 2023.

SEALED AIR CORPORATION AND SUBSIDIARIES

Table of Contents

	Page
PART I. FINANCIAL INFORMATION
Financial statements
Condensed Consolidated Balance Sheets — June 30, 2023 and December 31, 2022	4
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	5
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022	6
Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2023 and 2022	7
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	8
Notes to Condensed Consolidated Financial Statements
Note 1 Organization and Basis of Presentation	9
Note 2 Recently Adopted and Issued Accounting Standards	10
Note 3 Revenue Recognition, Contracts with Customers	10
Note 4 Leases	13
Note 5 Acquisitions	15
Note 6 Segments	18
Note 7 Inventories, net	20
Note 8 Property and Equipment, net	20
Note 9 Goodwill and Identifiable Intangible Assets, net	21
Note 10 Accounts Receivable Securitization Programs	22
Note 11 Accounts Receivable Factoring Agreements	23
Note 12 Restructuring Activities	24
Note 13 Debt and Credit Facilities	25
Note 14 Derivatives and Hedging Activities	27
Note 15 Fair Value Measurements, Equity Investments and Other Financial Instruments	30
Note 16 Defined Benefit Pension Plans and Other Post-Employment Benefit Plans	33
Note 17 Income Taxes	33
Note 18 Commitments and Contingencies	34
Note 19 Stockholders’ Equity	36
Note 20 Accumulated Other Comprehensive Loss	39
Note 21 Other Expense, net	40
Note 22 Net Earnings Per Common Share	41
Note 23 Subsequent Events	41
Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.      Quantitative and Qualitative Disclosures About Market Risk	62
Item 4.      Controls and Procedures	65
PART II.  OTHER INFORMATION
Item 1.      Legal Proceedings	66
Item 1A.   Risk Factors	66
Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 5. Other Information	66
Item 6.      Exhibits	67
Signature	68

2

Cautionary Notice Regarding Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition, results of operations and cash flows. The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking statements so that investors can better understand a company’s future prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as “anticipate,” “believe,” “plan,” “assume,” “could,” “should,” “estimate,” “expect,” “intend,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results, expectations regarding the results of restructuring and other programs, expectations regarding future impacts resulting from the Liquibox acquisition, anticipated levels of capital expenditures and expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings.

The following are important factors that we believe could cause actual results to differ materially from those in our forward-looking statements: global economic and political conditions, including recessionary and inflationary pressures, currency translation and devaluation effects, changes in raw material pricing and availability, competitive conditions, the success of new product offerings, failure to realize synergies and other financial benefits from the acquisition of Liquibox within the expected time frames, greater than expected costs or difficulties related to the integration of Liquibox, consumer preferences, the effects of animal and food-related health issues, the effects of epidemics or pandemics, including the Coronavirus Disease 2019 (COVID-19), negative impacts related to the ongoing conflict between Russia and Ukraine and related sanctions, export restrictions and other counteractions thereto, changes in energy costs, environmental matters, the success of our restructuring activities, the success of our merger, acquisition and equity investment strategies, the success of our financial growth, profitability, cash generation and manufacturing strategies and our cost reduction and productivity efforts, changes in our credit ratings, the tax benefit associated with the Settlement agreement (as defined in Note 18 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this report), regulatory actions and legal matters, and the other information referenced in Part I, Item 1A, "Risk Factors", of our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC, and in any of our subsequent SEC filings. Any forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

3

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets 

(Unaudited)

(In USD millions, except share and per share data)	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	285.1	$	456.1
Trade receivables, net of allowance for credit losses of $14.2 in 2023 and $11.5 in 2022	468.2		592.4
Income tax receivables	44.8		40.3
Other receivables	85.4		91.5
Advances and deposits (Note 17) and (Note 18)	190.2		12.7
Inventories, net of inventory reserves of $37.9 in 2023 and $28.9 in 2022 (Note 7)	938.8		866.3
Current assets held for sale	1.1		—
Prepaid expenses and other current assets	200.3		57.5
Total current assets	2,213.9		2,116.8
Property and equipment, net (Note 8)	1,410.0		1,275.9
Goodwill (Note 9)	2,919.3		2,174.5
Identifiable intangible assets, net (Note 9)	463.3		138.4
Deferred taxes	122.9		141.5
Operating lease right-of-use-assets (Note 4)	92.6		70.2
Other non-current assets	302.4		297.4
Total assets	$	7,524.4	$	6,214.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings (Note 13)	$	313.6	$	6.6
Current portion of long-term debt (Note 13)	20.7		434.0
Current portion of operating lease liabilities (Note 4)	29.2		24.0
Accounts payable	793.3		865.6
Accrued restructuring costs (Note 12)	6.6		14.7
Income tax payable	23.7		19.9
Other current liabilities	662.9		717.0
Total current liabilities	1,850.0		2,081.8
Long-term debt, less current portion (Note 13)	4,636.6		3,237.9
Long-term operating lease liabilities, less current portion (Note 4)	66.0		49.6
Deferred taxes	70.7		33.4
Other non-current liabilities	488.7		467.9
Total liabilities	7,112.0		5,870.6
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.10 par value per share, 50,000,000 shares authorized; no shares issued in 2023 and 2022	—		—
Common stock, $0.10 par value per share, 400,000,000 shares authorized; shares issued: 233,995,417 in 2023 and 233,233,456 in 2022; shares outstanding: 144,409,125 in 2023 and 144,672,113 in 2022	23.4		23.3
Additional paid-in capital	2,156.3		2,155.3
Retained earnings	3,266.3		3,163.4
Common stock in treasury, 89,586,292 shares in 2023 and 88,561,343 shares in 2022	(4,076.0)		(4,019.1)
Accumulated other comprehensive loss, net of taxes (Note 20)	(957.6)		(978.8)
Total stockholders’ equity	412.4		344.1
Total liabilities and stockholders’ equity	$	7,524.4	$	6,214.7

See accompanying Notes to Condensed Consolidated Financial Statements.

4

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

 

	Three Months Ended June 30,				Six Months Ended June 30,
(In USD millions, except per share data)	2023		2022		2023		2022
Net sales	$	1,380.8	$	1,418.0	$	2,729.6	$	2,835.6
Cost of sales	962.8		979.7		1,906.5		1,920.3
Gross profit	418.0		438.3		823.1		915.3
Selling, general and administrative expenses	185.7		199.2		407.3		404.2
Amortization expense of intangible assets	15.4		8.9		30.6		18.3
Restructuring charges (Note 12)	0.6		3.5		(0.6)		4.0
Operating profit	216.3		226.7		385.8		488.8
Interest expense, net	(68.7)		(39.5)		(126.5)		(78.4)
Other expense, net (Note 21)	(8.4)		(30.1)		(23.4)		(44.3)
Earnings before income tax provision	139.2		157.1		235.9		366.1
Income tax provision (Note 17)	45.3		42.7		79.1		102.1
Net earnings from continuing operations	93.9		114.4		156.8		264.0
Gain (Loss) on sale of discontinued operations, net of tax	5.2		(0.5)		4.2		(0.9)
Net earnings	$	99.1	$	113.9	$	161.0	$	263.1
Basic:
Continuing operations	$	0.65	$	0.78	$	1.09	$	1.80
Discontinued operations	0.04		—		0.03		(0.01)
Net earnings per common share - basic (Note 22)	$	0.69	$	0.78	$	1.12	$	1.79
Diluted:
Continuing operations	$	0.65	$	0.77	$	1.08	$	1.78
Discontinued operations	0.03		—		0.03		(0.01)
Net earnings per common share - diluted (Note 22)	$	0.68	$	0.77	$	1.11	$	1.77
Weighted average number of common shares outstanding: (Note 22)
Basic	144.5		146.0		144.3		146.8
Diluted	144.8		147.5		144.8		148.5

See accompanying Notes to Condensed Consolidated Financial Statements.

5

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

 

	Three Months Ended June 30,												Six Months Ended June 30,
	2023						2022						2023						2022
(In USD millions)	Gross		Taxes		Net		Gross		Taxes		Net		Gross		Taxes		Net		Gross		Taxes		Net
Net earnings					$	99.1					$	113.9					$	161.0					$	263.1
Other comprehensive (loss) income:
Recognition of pension items	$	1.1	$	(0.3)	0.8		$	1.7	$	(0.4)	1.3		$	2.8	$	(0.7)	2.1		$	2.8	$	(0.7)	2.1
Unrealized (losses) gains on derivative instruments for net investment hedge	(7.6)		1.9		(5.7)		28.6		(7.1)		21.5		(14.9)		3.7		(11.2)		35.3		(8.8)		26.5
Unrealized gains (losses) on derivative instruments for cash flow hedge	0.9		(0.3)		0.6		4.6		(1.3)		3.3		(2.9)		0.7		(2.2)		2.5		(0.7)		1.8
Foreign currency translation adjustments	(4.1)		—		(4.1)		(62.3)		—		(62.3)		32.5		—		32.5		(58.8)		—		(58.8)
Other comprehensive (loss) income	$	(9.7)	$	1.3	(8.4)		$	(27.4)	$	(8.8)	(36.2)		$	17.5	$	3.7	21.2		$	(18.2)	$	(10.2)	(28.4)
Comprehensive income, net of taxes					$	90.7					$	77.7					$	182.2					$	234.7

See accompanying Notes to Condensed Consolidated Financial Statements.

6

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In USD millions)	Common Stock		Additional Paid-in Capital		Retained Earnings		Common Stock in Treasury		Accumulated Other Comprehensive Loss, Net of Taxes		Total Stockholders’ Equity
Balance at March 31, 2023	$	23.4	$	2,152.8	$	3,195.5	$	(4,076.0)	$	(949.2)	$	346.5
Effect of share-based incentive compensation	—		3.5		—		—		—		3.5
Recognition of pension items, net of taxes	—		—		—		—		0.8		0.8
Foreign currency translation adjustments	—		—		—		—		(4.1)		(4.1)
Unrealized loss on derivative instruments, net of taxes	—		—		—		—		(5.1)		(5.1)
Net earnings	—		—		99.1		—		—		99.1
Dividends on common stock ($0.20 per share)	—		—		(28.3)		—		—		(28.3)
Balance at June 30, 2023	$	23.4	$	2,156.3	$	3,266.3	$	(4,076.0)	$	(957.6)	$	412.4
Balance at December 31, 2022	$	23.3	$	2,155.3	$	3,163.4	$	(4,019.1)	$	(978.8)	$	344.1
Effect of share-based incentive compensation	0.1		0.1		—		—		—		0.2
Stock issued for profit sharing contribution paid in stock	—		0.9		—		23.0		—		23.9
Repurchases of common stock	—		—		—		(79.9)		—		(79.9)
Recognition of pension items, net of taxes	—		—		—		—		2.1		2.1
Foreign currency translation adjustments	—		—		—		—		32.5		32.5
Unrealized loss on derivative instruments, net of taxes	—		—		—		—		(13.4)		(13.4)
Net earnings	—		—		161.0		—		—		161.0
Dividends on common stock ($0.40 per share)	—		—		(58.1)		—		—		(58.1)
Balance at June 30, 2023	$	23.4	$	2,156.3	$	3,266.3	$	(4,076.0)	$	(957.6)	$	412.4
Balance at March 31, 2022	$	23.3	$	2,122.9	$	2,909.3	$	(3,939.0)	$	(926.1)	$	190.4
Effect of share-based incentive compensation	—		11.3		—		—		—		11.3
Repurchase of common stock	—		—		—		(50.1)		—		(50.1)
Recognition of pension items, net of taxes	—		—		—		—		1.3		1.3
Foreign currency translation adjustments	—		—		—		—		(62.3)		(62.3)
Unrealized gain on derivative instruments, net of taxes	—		—		—		—		24.8		24.8
Net earnings	—		—		113.9		—		—		113.9
Dividends on common stock ($0.20 per share)	—		—		(29.6)		—		—		(29.6)
Balance at June 30, 2022	$	23.3	$	2,134.2	$	2,993.6	$	(3,989.1)	$	(962.3)	$	199.7
Balance at December 31, 2021	$	23.2	$	2,123.4	$	2,790.7	$	(3,754.7)	$	(933.9)	$	248.7
Effect of share-based incentive compensation	0.1		3.9		—		—		—		4.0
Stock issued for profit sharing contribution paid in stock	—		6.9		—		15.8		—		22.7
Repurchases of common stock	—		—		—		(250.2)		—		(250.2)
Recognition of pension items, net of taxes	—		—		—		—		2.1		2.1
Foreign currency translation adjustments	—		—		—		—		(58.8)		(58.8)
Unrealized gain on derivative instruments, net of taxes	—		—		—		—		28.3		28.3
Net earnings	—		—		263.1		—		—		263.1
Dividends on common stock ($0.40 per share)	—		—		(60.2)		—		—		(60.2)
Balance at June 30, 2022	$	23.3	$	2,134.2	$	2,993.6	$	(3,989.1)	$	(962.3)	$	199.7

See accompanying Notes to Condensed Consolidated Financial Statements.

7

SEALED AIR CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
(In USD millions)	2023		2022
Net earnings	$	161.0	$	263.1
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities
Depreciation and amortization	114.8		90.9
Share-based incentive compensation	19.5		27.6
Profit sharing expense	13.3		14.0
Loss on debt redemption and refinancing activities	4.9		11.2
Provision for allowance for credit losses on trade receivables	3.5		6.5
Provisions for inventory obsolescence	11.9		6.8
Deferred taxes, net	(27.4)		(3.1)
Net (gain) loss on sale of business	(4.2)		0.9
Impairment loss on equity investments	—		31.6
Other non-cash items	18.1		0.3
Changes in operating assets and liabilities:
Trade receivables, net	37.5		(44.1)
Inventories, net	(19.4)		(223.7)
Accounts payable	(95.9)		51.1
Customer advance payments	(0.7)		(8.3)
Income tax receivable/payable	(4.2)		24.6
Tax deposit	(175.0)		—
Other assets and liabilities	(64.3)		(36.5)
Net cash (used in) provided by operating activities	$	(6.6)	$	212.9
Cash flows from investing activities:
Capital expenditures	(123.7)		(118.9)
Proceeds related to sale of business and property and equipment, net	0.7		7.1
Businesses acquired in purchase transactions, net of cash acquired	(1,163.0)		(9.7)
Proceeds (Payments) associated with debt, equity and equity method investments	3.3		(2.2)
Settlement of foreign currency forward contracts	10.3		1.5
Net cash used in investing activities	$	(1,272.4)	$	(122.2)
Cash flows from financing activities:
Net proceeds from short-term borrowings	306.2		0.7
Proceeds from long-term debt	1,411.4		422.8
Payments of long-term debt	(432.9)		(425.0)
Payments of debt modification/extinguishment costs and other	(14.1)		(14.7)
Dividends paid on common stock	(60.0)		(60.3)
Impact of tax withholding on share-based compensation	(21.0)		(24.9)
Repurchases of common stock	(79.9)		(250.2)
Principal payments related to financing leases	(4.3)		(5.7)
Net cash provided by (used in) financing activities	$	1,105.4	$	(357.3)
Effect of foreign currency exchange rate changes on cash and cash equivalents	$	2.6	$	(13.2)
Cash Reconciliation:
Cash and cash equivalents	456.1		561.0
Restricted cash and cash equivalents	—		—
Balance, beginning of period	$	456.1	$	561.0
Net change during the period	(171.0)		(279.8)
Cash and cash equivalents	285.1		281.2
Restricted cash and cash equivalents	—		—
Balance, end of period	$	285.1	$	281.2
Supplemental Cash Flow Information:
Interest payments, net of amounts capitalized	$	119.6	$	84.4
Income tax payments, net of cash refunds	$	273.4	$	70.9
Restructuring payments including associated costs	$	7.2	$	15.4
Non-cash items:
Transfers of shares of common stock from treasury for profit-sharing contributions	$	23.9	$	22.7

See accompanying Notes to Condensed Consolidated Financial Statements.

8

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 Organization and Basis of Presentation

Organization

We are a leading global provider of packaging solutions integrating high-performance materials, automation, equipment, and services. Sealed Air Corporation designs and delivers packaging solutions that preserve food, protect goods, automate packaging processes, and enable e-commerce and digital connectivity for packaged goods. Our packaging solutions help customers automate their operations to be increasingly touchless and more resilient, safer, less wasteful, and enhance brand engagement with consumers. We deliver our packaging solutions to an array of end markets including fresh proteins, foods, fluids, medical and healthcare, e-commerce, logistics and omnichannel fulfillment operations, and industrials.

Our portfolio of packaging solutions includes CRYOVAC® brand food packaging, LIQUIBOX® fluids and liquids systems, SEALED AIR® brand protective packaging, AUTOBAG® brand automated systems, BUBBLE WRAP® brand packaging, SEE Touchless Automation™ solutions and prismiq™ digital packaging and printing. We have established leading market positions through our differentiated packaging solutions, well-established customer relationships, iconic brands, and global scale and market access.

We conduct substantially all of our business through two wholly-owned subsidiaries, Cryovac, LLC and Sealed Air Corporation (US). Throughout this report, when we refer to “Sealed Air,” “SEE,” the “Company,” “we,” “our,” or “us,” we are referring to Sealed Air Corporation and all of our subsidiaries, except where the context indicates otherwise.

Basis of Presentation

Our Condensed Consolidated Financial Statements include all of the accounts of the Company and our subsidiaries. We have eliminated all significant intercompany transactions and balances in consolidation. In management’s opinion, all adjustments, consisting only of normal recurring accruals, necessary for a fair statement of our Condensed Consolidated Balance Sheet as of June 30, 2023 and our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 have been made. The results set forth in our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and in our Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year. The Condensed Consolidated Balance Sheet as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. Some prior period amounts have been reclassified to conform to the current year presentation. These reclassifications, individually and in the aggregate, did not have a material impact on our condensed consolidated financial condition, results of operations or cash flows. All amounts are in millions, except per share amounts, and approximate due to rounding. All amounts are presented in U.S. dollar, unless otherwise specified.

Our Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates.

We are responsible for the unaudited Condensed Consolidated Financial Statements and notes included in this report. As these are condensed financial statements, they should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), which was filed with the SEC on February 21, 2023, and with the information contained in our other publicly available filings with the SEC.

When we cross reference to a “Note,” we are referring to our “Notes to Condensed Consolidated Financial Statements,” unless the context indicates otherwise.

There were no significant changes to our significant accounting policies as disclosed in “Note 2 – Summary of Significant Accounting Policies and Recently Issued Accounting Standards” of our audited consolidated financial statements and notes thereto included in our 2022 Form 10-K.

9

Impact of Highly Inflationary Economy

Argentina

Economic and political events in Argentina have continued to expose us to heightened levels of foreign currency exchange risk. As of July 1, 2018, Argentina was designated as a highly inflationary economy under U.S. GAAP, and the U.S. dollar replaced the Argentine peso as the functional currency for our subsidiaries in Argentina. All Argentine peso-denominated monetary assets and liabilities were remeasured into U.S. dollars using the current exchange rate available to us. The impact of any changes in the exchange rate are reflected within Other expense, net on the Condensed Consolidated Statements of Operations. The Company recorded $3.1 million and $5.7 million of remeasurement losses for the three and six months ended June 30, 2023, respectively, and $2.7 million and $3.7 million of remeasurement losses for the three and six months ended June 30, 2022, respectively, related to our subsidiaries in Argentina.

Note 2 Recently Adopted and Issued Accounting Standards

Recently Adopted Accounting Standards

In September 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ("ASU 2022-04"). ASU 2022-04 requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. The Company adopted ASU 2022-04 on January 1, 2023, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The adoption did not materially impact the Company's Condensed Consolidated Financial Statements.

We facilitate a voluntary supply chain financing program to provide some of our suppliers with the opportunity to sell receivables due from us (our accounts payables) to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. This program is administered by participating financial institutions. When a supplier utilizes the supply chain financing program, the supplier receives a payment in advance of agreed payment terms from the financial institution, net of a discount charged. Our responsibility is limited to making payments to the respective financial institutions on the terms originally negotiated with our supplier. No assets are pledged as collateral by the Company or any of our subsidiaries under the program. The majority of suppliers using the program are on 120 day payment terms after the end of the month in which the invoice was issued. We monitor our days payable outstanding relative to our peers and industry trends in order to assess our conclusion that the program continues to be a trade payable program and not indicative of a borrowing arrangement. The liabilities continue to be presented as Accounts payable in our Condensed Consolidated Balance Sheets until they are paid, and they are reflected as Cash flows from operating activities when settled. At June 30, 2023 and December 31, 2022, our accounts payable balances included $128 million and $140 million, respectively, related to invoices from suppliers participating in the program.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Topic 606, Revenue from Contracts with Customers. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date. The Company adopted ASU 2021-08 on January 1, 2023. The adoption did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Note 3 Revenue Recognition, Contracts with Customers

Description of Revenue Generating Activities

We employ sales, marketing and customer service personnel throughout the world who sell and market our equipment and systems, products, and services to and/or through a large number of distributors, fabricators, converters, e-commerce and mail order fulfillment firms, and contract packaging firms as well as directly to end-users such as food processors, food service businesses, supermarket retailers, pharmaceutical companies, healthcare facilities, medical device manufacturers, and other manufacturers.

As discussed in Note 6, “Segments,” our reporting segments are Food and Protective. Our Food applications are largely sold directly to end customers, while our Protective products are sold through business supply distributors and directly to end customers.

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Food:

Food solutions are sold to food processors in fresh red meat, smoked and processed meats, poultry, seafood, plant-based, fluids and liquids, and cheese markets worldwide. Food offers integrated packaging materials and automated equipment solutions to increase food safety, extend shelf life, reduce food waste, automate processes and optimize total cost. Its materials, automated equipment and service enables customers to reduce costs and enhance their brands in the marketplace.

Food solutions are utilized by food service businesses (such as restaurants and entertainment venues) (“food service”) and food retailers (such as grocery stores and supermarkets) (“food retail”), among others. Solutions serving the food service market include products such as barrier bags and pouches, and are primarily marketed under the CRYOVAC® trademark and other highly recognized trade names including CRYOVAC® brand Barrier Bags, CRYOVAC® brand Form-Fill-Seal Films, CRYOVAC® brand Auto Pouch Systems and LIQUIBOX® fluids and liquids systems. Solutions serving the food retail market include products such as barrier bags, film, and trays, and are primarily marketed under the CRYOVAC® trademark and other highly recognized trade names including CRYOVAC® brand Grip & TearTM, CRYOVAC® brand Darfresh®, OptiDure™, Simple Steps®, and CRYOVAC® brand Barrier Bags.

Protective:

Protective packaging solutions are utilized across many global markets to protect goods during transit and are especially valuable to e-commerce, consumer goods, pharmaceutical and medical devices and industrial manufacturing. Protective solutions are designed to increase our customers' packaging velocity, minimize packaging waste, reduce labor dependencies and address dimensional weight challenges.

Protective solutions are sold through a strategic network of distributors as well as directly to our customers, including, but not limited to, fabricators, original equipment manufacturers, contract manufacturers, logistics partners and e-commerce/fulfillment operations. Protective solutions are marketed under SEALED AIR® brand, BUBBLE WRAP® brand, AUTOBAG® brand and other highly recognized trade names and product families including BUBBLE WRAP® brand inflatable packaging, SEALED AIR® brand performance shrink films, AUTOBAG® brand bagging systems, Instapak® polyurethane foam packaging solutions and Korrvu® suspension and retention packaging. In addition, we provide temperature assurance packaging solutions under the KevothermalTM and TempGuardTM brands.

Other Revenue Recognition Considerations:

Charges for rebates and other allowances are recognized as a deduction from revenue on an accrual basis in the period in which the associated revenue is recorded. Revenue recognized from performance obligations satisfied in previous reporting periods was $0.6 million and $1.4 million for the three and six months ended June 30, 2023, respectively, and nominal and $0.2 million for the three and six months ended June 30, 2022, respectively.

The Company does not adjust consideration in contracts with customers for the effects of a significant financing component if the Company expects that the period between transfer of a good or service and payment for that good or service will be one year or less. This is expected to be the case for the majority of the Company's contracts.

Lease components within contracts with customers are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 842.

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Disaggregated Revenue

For the three and six months ended June 30, 2023 and 2022, revenues from contracts with customers summarized by Segment and Geography were as follows:

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
(In millions)	Food		Protective		Total		Food		Protective		Total
Americas	$	576.1	$	319.9	$	896.0	$	1,142.2	$	626.1	$	1,768.3
EMEA	179.7		109.3		289.0		348.9		228.9		577.8
APAC	110.7		70.1		180.8		223.0		138.7		361.7
Topic 606 Segment Revenue	866.5		499.3		1,365.8		1,714.1		993.7		2,707.8
Non-Topic 606 Revenue (Leasing: Sales-type and Operating)	14.1		0.9		15.0		19.6		2.2		21.8
Total	$	880.6	$	500.2	$	1,380.8	$	1,733.7	$	995.9	$	2,729.6

	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
(In millions)	Food		Protective		Total		Food		Protective		Total
Americas	$	530.7	$	411.0	$	941.7	$	1,055.6	$	810.9	$	1,866.5
EMEA	168.3		119.9		288.2		334.9		243.7		578.6
APAC	100.5		79.4		179.9		210.9		164.0		374.9
Topic 606 Segment Revenue	799.5		610.3		1,409.8		1,601.4		1,218.6		2,820.0
Non-Topic 606 Revenue (Leasing: Sales-type and Operating)	6.3		1.9		8.2		12.1		3.5		15.6
Total	$	805.8	$	612.2	$	1,418.0	$	1,613.5	$	1,222.1	$	2,835.6

Contract Balances

The time when a performance obligation is satisfied and the time when billing and payment occur are generally closely aligned, subject to agreed payment terms, with the exception of equipment accruals, which can be used to purchase both automated and standard range equipment. An equipment accrual is a contract offering, whereby a customer is incentivized to use a portion of the materials transaction price for future equipment purchases. Long-term contracts that include an equipment accrual create a timing difference between when cash is collected and when the performance obligation is satisfied, resulting in a contract liability (unearned revenue). The following contract assets and liabilities are included within Prepaid expenses and other current assets and Other current liabilities, or Other non-current liabilities on our Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022:

(In millions)	June 30, 2023		December 31, 2022
Contract assets	$	0.4	$	0.5
Contract liabilities	$	18.5	$	18.2

The contract liability balances represent deferred revenue, primarily related to equipment accruals. Revenue recognized in the three and six months ended June 30, 2023 that was included in the contract liability balance at the beginning of the period was $3.5 million and $8.1 million, respectively, and $3.8 million and $8.2 million in the three and six months ended June 30, 2022, respectively. This revenue was driven primarily by equipment performance obligations being satisfied.

Remaining Performance Obligations

The following table summarizes the estimated transaction price from contracts with customers allocated to performance obligations or portions of performance obligations that have not yet been satisfied as of June 30, 2023 and December 31, 2022,

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as well as the expected timing of recognition of that transaction price.

(In millions)	June 30, 2023		December 31, 2022
Short-Term (12 months or less)(1)	$	13.5	$	13.0
Long-Term	5.0		5.2
Total transaction price	$	18.5	$	18.2

(1) Our enforceable contractual obligations tend to be short term in nature. The table above does not include the transaction price of any remaining performance obligations that are part of the contracts with expected durations of one year or less.    

Note 4 Leases

Lessor

SEE has contractual obligations as a lessor with respect to some of our automated and equipment solutions including "free on loan" equipment and leased equipment, both sales-type and operating. The consideration in a contract that contains both lease and non-lease components is allocated based on the standalone selling price.

Our contractual obligations for operating leases can include termination and renewal options. Our contractual obligations for sales-type leases tend to have fixed terms and can include purchase options. We utilize the reasonably certain threshold criteria in determining which options our customers will exercise.

All lease payments are primarily fixed in nature and therefore captured in the lease receivable. Our sales-type lease receivable balances at June 30, 2023 and December 31, 2022 were as follows:

(In millions)	June 30, 2023		December 31, 2022
Short-Term (12 months or less)	$	6.9	$	6.5
Long-Term	25.1		18.6
Lease receivables	$	32.0	$	25.1

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Sales-type and operating lease revenue was less than 1% of net trade sales for the six months ended June 30, 2023 and year ended December 31, 2022.

Lessee

SEE has contractual obligations as a lessee with respect to warehouses, offices and manufacturing facilities, IT equipment, automobiles, and material production equipment.

The following table details our lease obligations included in our Condensed Consolidated Balance Sheets.

(In millions)	June 30, 2023		December 31, 2022
Other non-current assets:
Finance leases - ROU assets	$	59.6	$	55.0
Finance leases - Accumulated depreciation	(32.8)		(31.7)
Operating lease right-of-use-assets:
Operating leases - ROU assets	191.7		156.7
Operating leases - Accumulated depreciation	(99.1)		(86.5)
Total lease assets	$	119.4	$	93.5
Current portion of long-term debt:
Finance leases	$	(6.3)	(7.6)
Current portion of operating lease liabilities:
Operating leases	(29.2)		(24.0)
Long-term debt, less current portion:
Finance leases	(21.5)		(16.1)
Long-term operating lease liabilities, less current portion:
Operating leases	(66.0)		(49.6)
Total lease liabilities	$	(123.0)	$	(97.3)

At June 30, 2023, estimated future minimum annual rental commitments under non-cancelable real and personal property leases were as follows:

(In millions)	Finance leases		Operating leases
Remainder of 2023	$	4.7	$	17.5
2024	5.8		29.4
2025	4.2		22.6
2026	3.3		16.8
2027	3.0		9.4
Thereafter	16.9		12.8
Total lease payments	37.9		108.5
Less: Interest	(10.1)		(13.3)
Present value of lease liabilities	$	27.8	$	95.2

The following lease cost is included in our Condensed Consolidated Statements of Operations:

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	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2023		2022		2023		2022
Lease cost(1)
Finance leases
Amortization of ROU assets	$	2.3	$	2.6	$	4.8	$	5.3
Interest on lease liabilities	0.4		0.4		0.8		0.7
Operating leases	9.6		7.8		18.6		16.3
Short-term lease cost	0.7		0.9		1.3		1.3
Variable lease cost	1.0		1.8		2.8		3.4
Total lease cost	$	14.0	$	13.5	$	28.3	$	27.0

(1) With the exception of Interest on lease liabilities, we record lease costs to Cost of sales or Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations, depending on the use of the leased asset. Interest on lease liabilities is recorded to Interest expense, net on the Condensed Consolidated Statements of Operations.

The following table details cash paid related to operating and finance leases included in our Condensed Consolidated Statements of Cash Flows and new right-of-use (“ROU”) assets included in our Condensed Consolidated Balance Sheets:

	Six Months Ended June 30,
(In millions)	2023		2022
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - finance leases	$	1.7	$	2.5
Operating cash flows - operating leases	$	18.5	$	15.6
Financing cash flows - finance leases	$	4.3	$	5.7
ROU assets obtained in exchange for new finance lease liabilities	$	8.3	$	4.1
ROU assets obtained in exchange for new operating lease liabilities	$	40.8	$	14.3

	Six Months Ended June 30,
	2023		2022
Weighted average information:
Finance leases
Remaining lease term (in years)	8.2		5.9
Discount rate	6.5	%	4.7	%
Operating leases
Remaining lease term (in years)	4.3		4.2
Discount rate	5.5	%	4.5	%

Note 5 Acquisitions

LB Holdco, Inc. Acquisition

On February 1, 2023, SEE acquired 100% of the outstanding shares of capital stock of LB Holdco, Inc., the parent company of Liquibox, Inc. (collectively, "Liquibox"), a pioneer, innovator and manufacturer of Bag-in-Box sustainable fluids & liquids packaging and dispensing solutions for fresh food, beverage, consumer goods and industrial end-markets. The acquisition is included in our Food reporting segment. This acquisition accelerates our CRYOVAC® brand Fluids & Liquids business. CRYOVAC® technology, scale and market access provide a significant source of synergies. This acquisition contributes to and

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fast tracks SEE’s transformation to become a world-class, digitally-driven company automating sustainable packaging solutions.

Consideration paid was approximately $1.17 billion in cash, subject to customary adjustments. We financed the consideration paid and related fees and expenses through borrowings under our senior secured credit facility, proceeds from the issuance of senior notes, and cash on hand. See Note 13, "Debt and Credit Facilities," for additional details. For the three and six months ended June 30, 2023, acquisition related expenses recognized for the Liquibox acquisition were $0.1 million and $12.0 million, respectively. These expenses are included within Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes the consideration transferred to acquire Liquibox and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed. The allocation of purchase price is still preliminary as the Company finalizes the final purchase price adjustment with the seller and finalizes other aspects of the valuation including deferred taxes and intangible valuations. Preliminary estimates will be finalized within one year of the date of acquisition.

	Preliminary Allocation		Measurement Period		Preliminary Allocation
(In millions)	As of February 1, 2023		Adjustments		June 30, 2023
Total consideration transferred	$	1,169.2	$	—	$	1,169.2
Assets acquired:
Cash and cash equivalents	21.2		—		21.2
Trade receivables	48.6		(0.5)		48.1
Inventories	61.6		(0.2)		61.4
Prepaid expenses and other current assets	15.8		(1.0)		14.8
Property and equipment	101.1		—		101.1
Identifiable intangible assets	342.1		(1.5)		340.6
Operating lease right-of-use-assets	15.1		—		15.1
Other non-current assets	9.5		—		9.5
Total assets acquired	$	615.0	$	(3.2)	$	611.8
Liabilities assumed:
Accounts payable	27.0		(1.4)		25.6
Current portion of long-term debt	0.1		—		0.1
Current portion of operating lease liabilities	3.7		—		3.7
Other current liabilities	28.4		2.4		30.8
Long-term debt, less current portion	5.1		—		5.1
Long-term operating lease liabilities, less current portion	11.4		—		11.4
Deferred taxes	92.2		—		92.2
Other non-current liabilities	6.6		(2.7)		3.9
Total liabilities assumed	$	174.5	$	(1.7)	$	172.8
Net assets acquired	440.5		(1.5)		439.0
Goodwill	$	728.7	$	1.5	$	730.2

The following table summarizes the identifiable intangible assets and their useful lives.

	Amount		Useful life
	(In millions)		(In years)
Customer relationships	$	180.7