Sealed Air Corporation

(NYSE: SEE)
Recommendation - Buy
Target Price: $69.09

Current Price: $53.56

Implied Upside: +29.0%

Sam Gao | Queen’s Commerce Class of 2026

February 3rd, 2023
QUIC x RBC Stock Pitch Competition
Agenda
Company Overview

Company Overview

Industry Overview

Investment Theses

Risks & Catalysts

Valuation

Recommendation

2
 Company Overview
General Overview
Business Description Management Team
▪ Sealed Air Corporation is a global leader in plastic packaging solutions based in
Charlotte, North Carolina and was founded in 1960

▪ The company produces and distributes plastic packaging solutions to

manufacturers, retailers and distributors that mainly serve the food and consumer Name Edward Doheny II Christopher J. Stephens Emile Chammas
goods industry Position CEO & President CFO COO
Years of Experience
▪ Sealed Air’s operating model achieves value creation through more sustainable, Within Industry
30+ 20+ 20+
automated, and digitally connected packaging solutions that create a less wasteful
CEO of Joy Global, a CFO of Barnes Group VP, Worldwide Supply
global food supply chain Background mining equipment Inc, a global provider of Chain of Wm. Wrigley Jr
manufacturer engineered products Company

Revenue Breakdown Revenue & Adjusted EBITDA Growth ($B)

By Segment By Region $8.0 40%
Long-term revenue & margins growth

15% $6.0 30%

20.7% 21.3% 20.1% 21.3% 21.7%
18.3% 18.6% 20.3%
44% $4.0 20%
$5,534 M 22% $5,534 M
56%
64% $2.0 10%

$0.0 0%
2016 2017 2018 2019 2020 2021 2022E 2023E
Food Care Revenue Product Revenue Americas EMEA APAC Revenue Adjusted EBITDA Margin (%)

3 Source(s): Bloomberg, S.E.C. Filing, SEE Company Website

Note: Market data as of 27-Jan-23
 Company Overview
Operations Overview
Business Model
Research Manufacturing Packaging Distributing Customer
Broad range of end market customers

Food Service and Hospitality

Businesses
Develops Manufacturing Automated 3rd party
Packaging solutions Food and Beverage
packaging facilities with packaging process distributors ships
delivered to end Companies
solutions and automated monitored by packaged products
market customers
automated systems equipment trained employees globally
Medical & Pharmaceutical
Global Sales and Distribution Network End Market Segmentation manufacturers

E-Commerce Online Retailers

Food and beverage
manufacturers and 14%
retailers
Construction and Facilities
Other markets 41% Management
15%
Transportation and Logistics
Pharmaceutical,
medical and hygiene Companies
manufacturers
Manufacturing facilities or distribution centers in 46 countries Industrial industries 30% Government and Public
to capitalize on growth opportunities around the world Entities

4 Source(s): S.E.C. Filing, SEE Company Website

Note: Market data as of 27-Jan-23
 Company Overview
5-Year Price-Volume Chart & Capitalization Data
$80.00 8,000 K Capitalization
Feb-22-2022 Share Price (27-Jan-23) $53.56
Releases FY2021
Fully Diluted Shares Outstanding 144.7 M
$70.00 Earnings 7,000 K
Market Capitalization $7,840.4 M
Less: Cash & Equivalents $248.8 M
$60.00 Feb-11-2020 6,000 K Add: Total Debt $3,721.8 M
Canceled the acquisition
of packaging business Enterprise Value $11,313.4 M
$50.00 from MGM Food 5,000 K
Trading Multiples

$40.00 Nov-1-2022 4,000 K EV/EBITDA 2022 9.2x

Announces EV/EBITDA 2023 8.9x
acquisition of EV/Revenue 2022 2.0x
$30.00 Liquibox for $1.15 B 3,000 K
EV/Revenue 2023 2.0x
P/E 2022 13.2x
$20.00 2,000 K P/E 2023 13.1x

$10.00 1,000 K Market Data

Market Data
52-Week
52-Week High
High $70.73
$70.73
Current
Current Discount %
Discount % 31.3%
30.5%
$0.00 0K
2018-01-18 2019-01-18 2020-01-18 2021-01-18 2022-01-18 2023-01-18 52-Week Low $41.24
Beta 1.24
(NYSE: SEE）-Volume (NYSE: SEE）-Share Pricing

5 Source(s): Bloomberg, Capital IQ, S.E.C. Filing, SEE Company Website

Note: Market data as of 18-Jan-23
Agenda
Industry Overview

Company Overview

Industry Overview

Investment Theses

Risks & Catalysts

Valuation

Recommendation

6
 Industry Overview
Plastic Film Packaging
Industry Scope Plastic Film Packaging Industry Revenue Growth ($B)
▪ The global plastic film packaging industry designs packaging solutions that help
protect and preserve products to ensure their quality and extend their shelf life $166.4
while also preparing delivered goods that may need to be packaged specifically $150.2 $158.1
$135.6 $142.7
$123.8 $128.8
▪ Industry growth is driven by rising demand for essential products, shift in consumer
behavior towards e-commerce, and a focus on eco-friendly packaging

▪ Plastic film packaging is only a part of the overall packaging solutions market, but
plastic is far more resilient and less likely to be replaced than other bio sourced
materials due to its lightweight and lower cost
2021 2022E 2023E 2024E 2025E 2026E 2027E
Major Players by Revenue ($B) Competitive Landscape
Large Conglomerates Pureplay Competitors
Reynolds $3.6 Sealed Air is the largest
pure-play plastic packaging
ALPLA $4.5 player

Sealed Air $5.5

Mondi $8.7
Larger packaging conglomerates have Pure-play plastic packaging firms lack
Berry Global $13.9 extensive capital and resources that the scale Sealed Air has and cannot
consists of many smaller granular pose a threat in terms of market share,
Amcor $14.5 businesses, but lack concentration and so they have to offer discounted prices
competitive advantages in order to compete with SEE

7 Source(s): IBIS World, Mckinsey, S.E.C. Filing, SEE Company Website

Note: Market data as of 27-Jan-23
 Industry Overview
Industry Characteristics & Trends
Industry Trends
▪ E-Commerce: Increased online shopping after COVID-19 have changed the
requirements for packaging fundamentally and this trend is especially prominent in
younger generations as their preferences have changed drastically
▪ Sustainability: Growing global demand for eco-friendly packaging requires firms
to adapt to biodegradable packaging materials and incorporate recycled content into
production methods
▪ Digitization: As raw material and labor costs remain high, digital enablement in
customer engagement, the supply chain, and manufacturing automation are crucial
to generating competitive margins and achieving superior service
Key Characteristics
High Barriers to Entry
Generational R&D
▪ Firms rely on long-term contracts with distributors and
suppliers which establishes high switching costs
▪ Difficult for entrants to win over initial contracts due to
their long period nature and this provides protection for
incumbent firms because of their superior reputation
▪ New packaging technology requires significant research
and development that will discourage new entrants
▪ Impossible for new entrants to compete without
extensive capital to catch up to generational R&D
progress and patents incumbents have already acquired

Global E-Commerce Sales ($B) U.S. Grocery E-Commerce Activity by Age

Pandemic accelerated younger
$8,000
generation’s preference of online
grocery shopping 8.3%
7.6%
$6,000 6.5%
5.7% 5.3%
$4,000 4.2% 4.0%
3.6% 3.3% 3.6%
2.1%
$2,000 0.9%

$0 Feb, 2020 Aug, 2020 Feb, 2021

2020 2021 2022E 2023E 2024E 2025E 2026E 19-35 36-45 46-65 66+

8 Source(s): Bloomberg, IBIS World, Mckinsey, S.E.C. Filing, SEE Company Website, Statista
Note: Market data as of 27-Jan-23
Agenda
Investment Theses

Company Overview

Industry Overview

Investment Theses

Risks & Catalysts

Valuation

Recommendation

9
 Investment Thesis I
Uniquely Positioned to Capitalize on Growth of E-Commerce
Defensible Economic Moats Provides Competitive Edge E-Commerce Food & Beverage Market Share
▪ COVID-19 fast-tracked the arrival of grocery delivery services and packaging is 8.0% Total addressable market for e-commerce
essential to this new grocery distribution center market space packaging will grow due to demand for
6.0% digitized packaging solutions
▪ Sealed Air’s partnership with UPS optimizes freight costs and allows Sealed Air a
platform to connect with small to medium sized businesses that have capacity for 4.0%
additional e-commerce growth
2.0%
▪ Sealed Air’s large distribution network and manufacturing supply chains also
will turn away new entrants trying to capitalize on this e-commerce tailwind because 0.0%
the research & development barrier to entry is far too high and Sealed Air 2019 2020 2021 2022E 2023E 2024E 2025E
possesses economic moats to defend its e-commerce packaging market share Europe North America
Patented PrismIQ Digital Packaging Market Misjudgment of E-Commerce Impact on SEE
▪ Creates a unique QR code for each packaged product and allows its Market’s View My View
information to be easily accessed in Sealed Air’s product cloud
1. Packaging companies will benefit 1. Revenue for packaging companies
from e-commerce, but margins will be may be high but Sealed Air will
▪ Each QR code scan from the customer will generate personalized data
reduced due to competition dominate with superior margins
from that scan and be collected by Sealed Airs cloud-based system

2. Current packaging market is highly 2. Growth of e-commerce will only

▪ Engagement data is analyzed for each product and PrismIQ can fragmented, more and more players will eliminate competition as smaller
provide insights for new marketing strategies or new product lines want to enter this space firms cannot keep up with the trend
▪ Although e-commerce will benefit all incumbents in the plastic packaging industry, ▪ The market is missing the fact that the growth doesn’t end at the top line for
Sealed Air’s PrismIQ digital packaging model is more likely to obtain captive Sealed Air because its operational efficiencies and bargaining power from their
customers due to high switching costs as firms will require their analytics aspect digitization aspect are competitive advantages that secure market share for SEE

10 Source(s): S.E.C. Filing, SEE Company Website, Statista

Note: Market data as of 27-Jan-23
 Investment Thesis II
Competitive Edge in Sustainability Creates Consolidation Opportunity
Net Positive Circular Manufacturing Process & Supply Chain
▪ As global regulations for packaging waste have
increased, incumbents must allocate capital
Automated systems Sustainable solutions Product quality and Auto box system towards the sustainability aspect of their business
produces efficient with minimal material shelf life prevents ensures efficient
packaging solutions use food waste transport of packages ▪ Sustainability and net carbon emissions regulations in
the future will only further increase the barrier to
entry, turning away new entrants

Recycled plastics are Renewable energy Packaging is curbside ▪ Sealed Air has positioned itself as a leader in
reused for new facilities reduces recyclable once sustainability within the industry and are on course
solutions greenhouse emissions consumed to reach its zero net carbon emissions goal by 2040

Global Recyclable Packaging Market Size ($B) First Mover Advantage in Sustainability Packaging Market
Huge total addressable market for Sealed Air to acquire market share first ▪ As more food suppliers and e-commerce delivery services make the transition
towards being ESG friendly, there will be an increase in demand for eco-friendly
$41.8 specialized packaging for those firms with ESG priorities
$38.1 $39.9
$34.7 $36.3
$31.5 $33.1
$28.7 $30.1 ▪ Customers are more likely to switch from their original packaging suppliers
moving forward to sign contracts with more eco-friendly ones to meet
regulations, posing an opportunity for Sealed Air to capture more market share

▪ The trend of adapting to sustainable plastic packaging not only enlarges the total
addressable market for Sealed Air’s products but also provides SEE a chance to
consolidate its current market share in plastic packaging
2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

11 Source(s): Mckinsey, S.E.C. Filing, SEE Company Website, Statista

Note: Market data as of 27-Jan-23
 Investment Thesis III
Automation Segment Massively Undervalued by The Market
Automation Packaging Creates Margin Expansion Value Creation Through Automation Strategy
▪ Sealed Air’s use of automation machines for their packaging supply chain can
expand margins through economies of scale because their large scale of
automated facilities and equipment would require extensive costs to replicate
▪ Automation can mitigate the risks of economic uncertainties and especially the
rising costs of manual labor, while maximizing productivity, quality, and
Automated Technical service Digital integration Digital sustainable
employee safety
production and operations of PrismIQ packaging
▪ Sealed Airs automated machines also rely on Sealed Air materials, and since there is
▪ Sealed Air can provide insight behind its customer’s service and operations and make
an embedment between the two, customers cannot switch suppliers for either
according adjustments to their automation process which is a significant value add
parts of the packaging supply chain, establishing significant bargaining power
because now Sealed Air is not only selling its products but also its service

Product Segment Revenue Performance ($B) Automation Secures Sticky Customers & Market Share
$3.0 30%
▪ Most of Sealed Air’s customers are food and beverage manufacturers or
retailers, and these companies have a set of required secondary
packaging supply chain standards that they must meet
$2.0 20%
▪ Since automation packaging possess an advantage in cost reduction,
retailers are more likely to choose larger and reliable firms such as
$1.0 10% Sealed Air even if these firms possess a certain level of pricing power
over them
▪ Sealed Air’s reputation for its automation packaging segment’s quality and scale can
$0.0 0% create customer stickiness that prevents other packaging firms from acquiring
2017 2018 2019 2020 2021 market share in this niche space and provide pricing power over its customers who
won’t switch suppliers even if SEE places small pricing adjustments
Product Segment Revenue ROIC

12 Source(s): Bloomberg, S.E.C. Filing, SEE Company Website, Tegus

Note: Market data as of 27-Jan-23
 Investment Thesis III
Automation Segment Massively Undervalued by The Market
High Barriers of Entry for Automation Packaging Superior Gross Margin % Compared to Competitors
▪ High barriers of entry are stopping competitors from entering this niche space Superior margins as a result of UPS partnership
and operational efficiencies
High Upfront Costs: Extensive capital required to initiate manufacturing
process and setting up the facilities needed. However, this barrier does not 31.7%
apply to large conglomerates with sufficient capital and facilities 21.7% 19.1% 17.6% 16.4%
Generation Research & Development: Developing and incorporating
automated machines into the supply chain can take many steps and current
incumbents have already achieved this beforehand by securing patents Sealed Air Sonoco Products Amcor plc Ball Corporation Berry Global
Group
Access to Distribution Channels: It is difficult to acquire distribution
channels and access to markets, even for large firms with capital because Market Undervaluing SEE’s Automation Segment
firms like SEE have secured exclusive partnerships and contracts
Market’s View My View
1. Automation segment will replace 1. SEE is positioned to defend its
Runways for Growth via Competitive Advantages traditional packaging in the future which current market share and acquire even
means heavy competition more through its economic moats
▪ The lead Sealed Air has gained over its competitors in R&D is too large to
overcome, especially in such a rapidly involving industry, which means Sealed Air 2. Sealed Air has many competitors such 2. Market is overestimating competition
will be the firm that dominates this industry for years to come as Berry Global, Amcor, and Sonoco, due to their size and capital but
limiting SEE’s pricing power overlooking proprietary technologies

▪ Large number of distribution channels worldwide and partnership with UPS ▪ Sealed Air will outperform others in its automation segment because of its
creates economies of scale that other firms cannot acquire or replicate. This longstanding proprietary technologies which it continues to develop. Despite the
economic moat will only become more prominent as the overall automated market and investors seeing competition as a determinant for mediocre
packaging market grows as a result of e-commerce growth performance, SEE will continue to innovate and perform as the market leader

13 Source(s): Pitchbook, S.E.C. Filing, SEE Company Website

Note: Market data as of 27-Jan-23
 Investment Thesis IV
Capturing Industry White Space via Organic and Inorganic Growth
PrismIQ Provides Entry into ~$10B+ of New Markets $1.15 B Acquisition of Liquibox Enables Cross Selling
▪ On November 1st, 2022, Sealed Air announced that it has acquired 100% ownership
Connected Packaging of Liquibox, a global leader in Bag-in-Box solutions, the most efficient and
$6B+ TAM | 10% CAGR sustainable way to package and dispense fluids and liquids

Digital Printing ▪ Sealed Air can deploy cash flow from its core business into developing more
manufacturing facilities focused on Liquibox operations, creating a formidable
$2B+ TAM | 12% CAGR
compounding power

Design Services ▪ Due to concentrated nature of the packaging industry’s customer base, it is harder
$1B+ TAM | 7% CAGR to capture market share directly from competitors, but this acquisition allows SEE to
cross sell additional products to Liquibox customers in a more fragmented space

Patent Development Differentiates Sealed Air Market Misjudgment of Fluids & Liquids Market Potential
Industry leader in developing proprietary technologies ▪ Expanding market share in plastic packaging is difficult but it is
which drives organic growth to capture new industry white easier to capture the fragmented market in fluids & liquids
space in digitization aspects involved with customer services packaging and Sealed Air can become the dominant incumbent
327
through its economies of scale
161 75
53
381 302 370 ▪ This acquisition has not been fully priced in by the market
222 44
118 because the synergies generated presents significant revenue
Sealed Air Sonoco Products Amcor plc Berry Global Ball Corporation potential for Sealed Air while there is still a price-value
dislocation for SEE’s share price after this acquisition
Active Pending Group
▪ Sealed Air’s organic growth strategy is able to create entry opportunities into ▪ Sealed Air’s inorganic growth strategy creates cross-selling opportunities while
new markets because of its consistent investments towards R&D positioning itself to capture white space created by new packaging markets

14 Source(s): Capstone Partners, Mckinsey, S.E.C. Filing, SEE Company Website, Tegus
Note: Market data as of 27-Jan-23
Agenda
Risks & Catalysts

Company Overview

Industry Overview

Investment Theses

Risks & Catalysts

Valuation

Recommendation

15
 Risks & Catalysts
Risks & Catalysts
Short-Term Catalysts Risks & Mitigations

Exceeded Q2 Earnings Highly

Sealed Air has had a consistent history of over-delivering against Likely
analyst expectations, SEE notably witnessed a 12% increase in
adjusted EBITDA from first quarter
MR1 CR1
OR1 MR2
Rebound From Disrupted Supply Chains Not
Likely
CR2
Shipping fees and long wait times for delivery have decreased since
the peak of supply chain challenges and gross margins will increase Low High
in the short-run Impact Impact

Rapid consolidation of packaging industry threatens market share (CR1)

Long-Term Catalysts
Recyclable Materials Reduces Cost Curve
Adoption of recycled materials in the packaging industry has
reduced production costs and improved margins, this catalyst is
especially crucial for Sealed Air’s sustainability value chain
Advanced Analytics Creates Value Creation
Introduction of more advanced technology has increased customer
engagement with packaged products and pricing power with
retailers have surged as a result
Mitigation: Unique automation segment and moats can defend market share
Company
Risk Customers want to avoid having only one packaging supplier (CR2)
Mitigation: Embedment of customer data analytics leads to sticky customers
Forced to invest more capital towards R&D due to competition (MR1)
Macro Mitigation: Acquisitions and patents provide advantageous technologies
Risk Long term trend of removing plastic from environment threatens SEE (MR2)
Mitigation: Usage of recycled materials back into making new solutions
Operating Packaging and distribution supply chains become vulnerable (OR1)
Risk Mitigation: Diversified manufacturing facilities and networks globally

16 Source(s): Mckinsey, S.E.C. Filing, SEE Company Website

Note: Market data as of 27-Jan-23
Agenda
Valuation

Company Overview

Industry Overview

Investment Theses

Risks & Catalysts

Valuation

Recommendation

17
Valuation
Comparable Companies Analysis
($ USD MM) Market Data Trading Multiples
Price Equity Value EV P/E EV/EBITDA EV/EBIT
Ticker Company
$ / Share $M $M 2022E 2023E 2022E 2023E 2022E 2023E
BERY Berry Global Group Inc $59.87 7,236 15,738 10.3x 7.9x 7.5x 7.5x 12.2x 11.8x
SON Sonoco Products Co $59.84 5,779 9,046 9.3x 10.2x 7.8x 8.0x 9.9x 10.5x
BALL Ball Corporation $59.02 18,280 27,160 19.6x 17.8x 13.5x 12.5x 18.5x 16.7x
MATV Mativ Holdings, Inc $26.08 1,398 3,144 9.2x 9.1x 10.6x 8.1x 14.8x 11.2x
AVY Avery Dennison Corporation $191.90 15,424 18,399 19.7x 18.7x 12.9x 12.4x 16.2x 15.5x
AMCR Amcor plc $12.00 17,344 24,367 21.5x 15.1x 11.0x 11.4x 16.1x 14.2x
Mean 14.9x 13.1x 10.6x 10.0x 14.6x 13.3x
Median 15.0x 12.7x 10.8x 9.8x 15.5x 13.0x

SEE Sealed Air $53.87 7,840 11,313 13.2x 13.1x 9.2x 8.9x 11.5x 11.1x

Multiples Implied Share Price Implied Return

Ratio Lower Limit Mean Upper Limit Lower Limit Mean Upper Limit Lower Limit Mean Upper Limit
▪ The comparable companies
P/E 2022E 14.2x 14.9x 16.4x $56.69 $59.67 $65.64 5.2% 10.8% 21.8% analysis yields an average implied
P/E 2023E 12.5x 13.1x 14.4x $49.85 $52.48 $57.73 -7.5% -2.6% 7.2% share price of $61.73 with a
EV/EBITDA 2022E 10.0x 10.6x 11.6x $58.49 $62.92 $71.78 8.6% 16.8% 33.2% corresponding 14.6% implied
EV/EBITDA 2023E 9.5x 10.0x 11.0x $53.97 $58.16 $66.54 0.2% 8.0% 23.5%
EV/EBIT 2022E 13.9x 14.6x 16.1x $68.03 $72.96 $82.83 26.3% 35.4% 53.8% return
EV/EBIT 2023E 12.7x 13.3x 14.6x $59.70 $64.19 $73.18 10.8% 19.2% 35.8%

Peer Universe Commentary:

▪ There is a lack of truly comparable competitors within the public space for Sealed Air due to most of its primary competitors not being pure-play plastic packaging players
▪ The peer universe consists of large market cap packaging companies in the United States that all takes up part of the overall market share for consumer goods packaging market
▪ The EV/Revenue multiple was not used due to the maturity of this industry
▪ Sealed Air’s EV/EBITDA and EV/EBIT multiples are lower than the average of the comps due to its excellent margins resulting from its strong pricing power, efficient
distribution channels, and its highly sustainable and automated manufacturing and supply chain

18 Source(s): Bloomberg, Capital IQ, S.E.C. Filing

Note: Market data as of 27-Jan-23
 Valuation
Discounted Cash Flow Analysis
USD ($MM) Historical Forecast Gordon Growth Method
2019A 2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E NPV of PVF 5,740
Revenue 4,791 4,903 5,534 5,821 6,102 6,380 6,657 6,917 7,130 7,308 7,468 7,625 7,778 % of EV 42.4%
Terminal Year FCF 1,041
% Growth 1.2% 2.3% 12.9% 5.2% 4.8% 4.6% 4.3% 3.9% 3.1% 2.5% 2.2% 2.1% 2.0%
Perpetuity Growth Rate 2.0%
Operating Expenses, excld. D&A 3,819 3,861 4,423 4,558 4,729 4,926 5,112 5,326 5,468 5,612 5,743 5,871 5,989 WACC 8.2%
Adjusted EBITDA 972 1,043 1,111 1,263 1,373 1,455 1,544 1,591 1,661 1,695 1,725 1,754 1,789 Terminal Value 17,131
% Margin 20.3% 21.3% 20.1% 21.7% 22.5% 22.8% 23.2% 23.0% 23.3% 23.2% 23.1% 23.0% 23.0% PV of Terminal Value 7,790
(-) D&A (151) (174) (186) (204) (226) (230) (246) (263) (278) (292) (314) (305) (311) % of EV 57.6%
% of Revenue 3.1% 3.6% 3.4% 3.5% 3.7% 3.6% 3.7% 3.8% 3.9% 4.0% 4.2% 4.0% 4.0% Enterprise Value 13,530
Adjusted EBIT 821 868 924 1,059 1,147 1,225 1,298 1,328 1,383 1,403 1,412 1,449 1,478 Add: Cash & Equivalents 249
% Margin 17.1% 17.7% 16.7% 18.2% 18.8% 19.2% 19.5% 19.2% 19.4% 19.2% 18.9% 19.0% 19.0% Less: Net Debt 3,722
Equity Value 10,057
(-) Unlevered Taxes (170) (197) (290) (296) (320) (342) (362) (371) (386) (391) (394) (404) (412)
Fully Diluted Shares Outstanding 144.7
Tax Rate 20.7% 22.7% 31.4% 27.9% 27.9% 27.9% 27.9% 27.9% 27.9% 27.9% 27.9% 27.9% 27.9% Implied Share Price $69.50
NOPAT 651 671 634 764 827 883 936 957 997 1,012 1,018 1,045 1,066 Current Share Price $53.56
(+) D&A 151 174 186 204 226 230 246 263 278 292 314 305 311 Premium to Current Share Price 29.8%
(-) CapEx (190) (181) (213) (262) (287) (306) (280) (311) (299) (300) (299) (297) (303) Exit Multiple Method
% of Revenue 4.0% 3.7% 3.9% 4.5% 4.7% 4.8% 4.2% 4.5% 4.2% 4.1% 4.0% 3.9% 3.9% NPV of PVF 5,740
(-) Change in NWC (38) 25 (8) (15) (23) (35) (40) (42) (45) (37) (35) (32) (32) % of EV 40.0%
Unlevered Free Cash Flows 574 689 599 691 743 772 863 867 931 967 998 1,020 1,041 Terminal Year EBITDA 1,789
Discount Period 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 EV/EBITDA 10.6x
Discount Factor 92.4% 85.4% 78.9% 73.0% 67.4% 62.3% 57.6% 53.2% 49.2% 45.5% WACC 8.2%
PV of UFCF 638 635 609 629 585 580 557 531 502 473 Terminal Value 18,963
PV of Terminal Value 8,623
% of EV 60.0%
DCF Commentary: Enterprise Value 14,363
Add: Cash & Equivalents 249
▪ The discounted cash flow analysis yields an average implied share price of $72.38 with a corresponding implied return of +35.1% Less: Net Debt 3,722
▪ Revenue growth projections was segmented into food care and products (see appendix for revenue growth forecasts) Equity Value 10,890
▪ D&A, CapEx, and operating expenses were forecasted to continue increasing gradually due to the growth of Sealed Air’s automation Fully Diluted Shares Outstanding 144.7
production scale and further investment towards patent development and expansion of distribution channels Implied Share Price $75.26
Current Share Price $53.56
▪ The EV/EBITDA multiple of 10.6x was based on the average 2022E EV/EBITDA multiple from the comparable companies analysis
Premium to Current Share Price 40.5%

19 Source(s): Bloomberg, Capital IQ, S.E.C. Filing

Note: Market data as of 27-Jan-23
Agenda
Recommendation

Company Overview

Industry Overview

Investment Theses

Risks & Catalysts

Valuation

Recommendation

20
 Recommendation
Buy With a Price Target of ~$69.09 (+29.0%)
Valuation Range Price Target
Price Target: ~$69.09
Valuation Summary
Gordon Analysis Price Weight
Growth
Comparable Analysis $61.73 20%
Method
Gordon Growth Method $69.50 35%
Exit Exit Multiple Method $75.26 35%
Multiple Street Consensus $60.75 10%
Method Weighted Average $69.09 100%

Comparable Broker Analyst Summary

Analysis 1/28/2023 10/19/2022 1/12/2023 1/5/2023 11/2/2022

$69.09
$65.00 $61.00
Street $59.00 $58.00
Consensus

52-Week
Range
Sam Gao
Price Morgan Mizuho Truist RBC Capital
$0.00 $20.00 $40.00 $60.00 $80.00 $100.00 Stanley Securities
Target

21 Source(s): Bloomberg, Capital IQ, Equity Research, S.E.C. Filing

Note: Market data as of 27-Jan-23
Appendices
I. Revenue Model & Commentary
II. WACC & Sensitivity Analysis
III. Shareholder Summary & Ownership Structure
IV. Sealed Air’s Diverse Product Portfolio

22
Appendix I
Revenue Model & Commentary
Revenue Model
Forecast
(USD $MM)
2019A 2020A 2021A 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E
Food Care Revenue 2880.5 2825.5 3112.8 3206.2 3286.3 3358.6 3435.9 3518.3 3588.7 3653.3 3715.4 3778.6 3835.3
% of Total Revenue 60.1% 57.6% 56.3% 55.1% 53.9% 52.6% 51.6% 50.9% 50.3% 50.0% 49.7% 49.6% 49.3%
Product Revenue 1910.6 2077.7 2421.0 2614.7 2816.0 3021.6 3221.0 3398.2 3540.9 3654.2 3752.9 3846.7 3942.8
% of Total Revenue 39.9% 42.4% 43.7% 44.9% 46.1% 47.4% 48.4% 49.1% 49.7% 50.0% 50.3% 50.4% 50.7%
Total Revenue 4791.1 4903.2 5533.8 5820.9 6102.3 6380.2 6656.9 6916.5 7129.6 7307.5 7468.3 7625.3 7778.1

Assumptions
Food Care Segment Revenue Growth (0.9%) (1.9%) 10.2% 3.0% 2.5% 2.2% 2.3% 2.4% 2.0% 1.8% 1.7% 1.7% 1.5%
Product Segment Revenue Growth 4.7% 8.7% 16.5% 8.0% 7.7% 7.3% 6.6% 5.5% 4.2% 3.2% 2.7% 2.5% 2.5%
Total Revenue Growth 2.3% 12.9% 5.2% 4.8% 4.6% 4.3% 3.9% 3.1% 2.5% 2.2% 2.1% 2.0%

Food Care Segment Revenue Growth 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E
Upside 3.6% 3.0% 2.6% 2.8% 2.9% 2.4% 2.2% 2.0% 2.0% 1.8%
Base 3.0% 2.5% 2.2% 2.3% 2.4% 2.0% 1.8% 1.7% 1.7% 1.5%
Downside 2.4% 2.0% 1.8% 1.8% 1.9% 1.6% 1.4% 1.4% 1.4% 1.2%

Product Segment Revenue Growth 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E
Upside 9.6% 9.2% 8.8% 7.9% 6.6% 5.0% 3.8% 3.2% 3.0% 3.0%
Base 8.0% 7.7% 7.3% 6.6% 5.5% 4.2% 3.2% 2.7% 2.5% 2.5%
Downside 6.4% 6.2% 5.8% 5.3% 4.4% 3.4% 2.6% 2.2% 2.0% 2.0%

▪ Organic revenue growth from Sealed Air’s product segment is forecasted to grow consistently in the high single digits from rapid growth of its automation segment and
ability to defend and capture further market share due to the economic moats Sealed Air possesses over its competitors in this segment
▪ Sealed Air’s food care segment will remain growing steadily due to the constant demand in food and increased e-commerce activity related to grocery deliveries
▪ Within the next 5-10 years Sealed Air’s product segment is forecasted to outgrow the food care segment mainly because of the expansion of SEE’s automation segment

23 Source(s): Bloomberg, Capital IQ, S.E.C. Filing

Note: Market data as of 27-Jan-23
 Appendix II
WACC & Sensitivity Analysis

Gordon Growth Method Gordon Growth Method

Perpetuity Growth Rate Perpetuity Growth Rate
1.0% 1.5% 2.0% 2.5% 3.0% 1.0% 1.5% 2.0% 2.5% 3.0%
WACC 7.2% $68.97 $73.93 $79.85 $87.03 $95.91 7.2% 29% 38% 49% 62% 79%
7.7% $64.99 $69.24 $74.22 $80.17 $87.38 7.7% 21% 29% 39% 50% 63%
Cost of Equity
WACC 8.2% $61.57 $65.24 $69.50 $74.51 $80.48 WACC 8.2% 15% 22% 30% 39% 50%
10 Year US Treasury 3.6%
Market Risk Premium 6.0% 8.7% $58.59 $61.80 $65.48 $69.76 $74.80 8.7% 9% 15% 22% 30% 40%
Beta 1.24 9.2% $55.97 $58.80 $62.02 $65.73 $70.03 9.2% 4% 10% 16% 23% 31%
Cost of Equity 11.0%

Cost of Debt
Exit Multiple Method Exit Multiple Method
Perpetuity Growth Rate 2.0%
Cost of Debt 4.5% Exit Multiple Exit Multiple
Tax Rate 27.9% 9.6x 10.1x 10.6x 11.1x 11.6x 9.6x 10.1x 10.6x 11.1x 11.6x
After-Tax Cost of Debt 3.3% 7.2% $74.89 $77.97 $81.05 $84.14 $87.22 7.2% 40% 46% 51% 57% 63%
7.7% $72.19 $75.14 $78.08 $81.03 $83.97 7.7% 35% 40% 46% 51% 57%
WACC 8.2%
WACC 8.2% $69.63 $72.45 $75.26 $78.07 $80.88 WACC 8.2% 30% 35% 41% 46% 51%
8.7% $67.20 $69.89 $72.57 $75.26 $77.94 8.7% 25% 30% 35% 41% 46%
9.2% $64.89 $67.45 $70.02 $72.58 $75.15 9.2% 21% 26% 31% 36% 40%

24 Source(s): Bloomberg, Capital IQ, S.E.C. Filing

Note: Market data as of 27-Jan-23
 Appendix III
Shareholder Summary & Ownership Structure
Shareholder Summary Ownership Structure
($ MM) #Shares Held % of Shares Outstanding Blackrock, Inc

Insiders
6% 14% The Vanguard Group, Inc
Edward Doheny (CEO) 0.5 0.35%
Emilie Chammas (COO) 0.2 0.14% T. Rowe Price Group, Inc
Sergio Pupkin (Chief Growth & Strategy Officer) 0.1 0.07% Shares 11%
Total Insiders 1.1 0.76% Outstanding: Janus Henderson Group
144.7MM plc
Institutions 50% 9%
State Street Global
Blackrock, Inc 20.2 13.96% Advisors, Inc
The Vanguard Group, Inc 16.6 11.47%
5%
5% Other Institutions
T. Rowe Price Group, Inc 13.2 9.12%
Janus Henderson Group plc 6.8 4.70%
State Street Global Advisors, Inc 6.5 4.49% Public Float
Geode Capital Management, LLC 2.9 2.00% Commentary
Kensico Capital Management Corp 2.7 1.87%
Other 65.4 45.20% ▪ Significant ownership from well-known institutions such as Blackrock and Vanguard
Total Institutions 134.3 92.81% demonstrates their faith in the quality of the business

Public & Other 9.3 6.43% ▪ Insignificant insider ownership means little to no risk of poor performance due to
Total Basic Shares Outstanding 144.7 100.00% market speculation of insider selling of shares

25 Source(s): Capital IQ
Note: Market data as of 27-Jan-23
 Appendix IV
Sealed Air’s Diverse Product Portfolio
High-Speed Bag and Pouch System Cryovac Automated Vacuum Packaging System

PrismIQ Digital Packaging Increases Brand Engagement BubbleWrap Packaging Using Recycled Materials

26 Source(s): SEE Company Website

Note: Market data as of 27-Jan-23