Moody's Investors Service - the rating unit of
), has assigned Ba1 rating to the proposed senior secured term
loan B of
Sealed Air Corporation
). Moody's also affirmed the stable ratings outlook for Sealed
In addition, the rating agency reaffirmed Sealed Air's Ba3
corporate family rating (CFR). The rating reflects the company's
scale, its broad geographic exposure and low customer
concentration of sales. Further, Sealed Air's probability of
default (PDR) rating has been confirmed at Ba3-PD.
These ratings came on the back of Sealed Air's good customer
rapport. Sealed Air has maintained long-term relationships with
many of its top customers. The company also has sufficient
liquidity. Moreover, the confirmation of Moody's ratings reflects
successful innovation and the company's continuous investment in
research and development (R&D).
The company is also an industry leader in certain segments.
Around 50% of sales are from food and food processing related end
markets. Sealed Air is likely to gain from price hikes of most of
its products in the Food Care and Product Care units, in North
However, Moody's is cautious about weakness in certain credit
metrics, a disparate product line and the concentration of sales
in cyclical and event-risk prone segments. The rating is
also restrained due to significant competition in the fragmented
market and uncertainty of the timing of the asbestos-related
liability and related tax refunds.
However, Moody's stated that the ratings could be downgraded if
Sealed Air does not maintain adequate liquidity and deterioration
in credit metrics. Further, if debt to earnings before interest,
taxes, depreciation and amortization (EBITDA) remains above 5.3x
and EBITA interest coverage remains below 2.2 times, Moody's
could revise downward the current rating.
In the third quarter of 2013, Sealed Air's adjusted earnings from
continuing operations improved 39% year over year to 39 cents per
share. Total revenues also climbed 2% year over year to $1.93
billion. Volumes improved 1.4% and a price/mix contributed 1.5%
to the increase.
Sealed Air raised its adjusted earnings per share guidance for
2013 to the range $1.25 to $1.30 from $1.10 to $1.20. Outlook for
net sales were also modified to $7.7 billion from $7.7 to $7.9
billion. The company's Integration & Optimization Program is
expected to generate cost savings and benefits of roughly $195
million to $200 million by the end of 2014.
Recently, Sealed Air agreed to sell its rigid medical packaging
business to Milwaukee-based private equity firm Mason Wells for
$125 million. The proceeds are likely to be utilized to repay
debt and thus reduce interest expense resulting in contribution
Elmwood Park, N.J.-based Sealed Air is a major specialty
packaging service provider to a diverse range of end markets. The
company operates in the U.S. and in 50 other countries producing
packaging and performance-based materials, and equipment systems
serving food, medical, industrial and consumer applications.
Sealed Air currently holds a Zacks Rank #1 (Strong Buy).
Other favorably-ranked stocks in the same industry include
Clearwater Paper Corporation
Packaging Corporation of America
), both with a Zacks Rank #1(Strong Buy).
CLEARWATER PAPR (CLW): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
PACKAGING CORP (PKG): Free Stock Analysis
SEALED AIR CORP (SEE): Free Stock Analysis
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