Good day ladies and gentlemen and welcome to the Quarter Four 2014 Sealed Air Earnings Conference Call. My name is Corrine and I will be your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. [Operator Instructions]. As a reminder this call is being recorded for recording purposes. And now I would like to hand the call over to Lori Chaitman, Vice President of Investor Relations. Please go ahead Lori.

Thank you and good morning everyone. Before we begin our call today I would like to note that we have provided a slide presentation to help guide our discussion. This presentation can be found on today's webcast and can be downloaded from our IR website at sealedair.com. I would like to remind you that statements made during this call stating management's outlook or predictions for the future 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 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 our quarterly reports on Form 10-Q which you can also find on our website at sealedair.com. We also discuss financial measures that do not conform to U.S. GAAP. You may find important information on our use of these measures and the reconciliations to the U.S. GAAP in the financial tables that we have included in our earnings release. Please note that we will end the call by 9:30 today. Now I will turn the call over to Jerome Peribere, our President and CEO. Jerome?

Thank you, Lori and good morning everyone. I am very pleased to report that 2014 was a very strong year for Sealed Air. We exceeded our financial objectives in the fourth quarter and for the full year. We delivered 8% adjusted EBITDA growth in 2014 and expanded margins by 90 basis points despite currency headwinds. We had favorable price mix in every region and in every division in the quarter and for the full year. We improved the health of our balance sheet and generated over $600 million in free cash flow. We continued on our innovation path including for example Darfresh entre, Instapak Simple, and a new TASKI XP platform. We also announced the relocation of our headquarters to Charlotte, North Carolina and launched a new website. These are just some of the many successes that we had over the last 12 months and while we are pleased with our 2014 financial results, we still believe that there is significant improvement to be had in terms of top line potential growth and further margin expansion as well as maximizing our free cash flow generation. But before we review our fourth quarter and year-end results, I want to share some insights on how we are approaching 2015. Based on foreign exchange rates today, we are assuming unfavorable currency translation of approximately $550 million in sales and $80 million on EBITDA in 2015. And while we anticipate as reported sales in 2015 to be down approximately 5% compared to 2014, we expect to grow approximately 2.5% in constant currency and are confident that we will deliver adjusted EBITDA growth and margin expansion. EBITDA growth and margin expansion will be driven not only by favorable input cost but also our continued focus on value adding selling, operational disciplines, and earnings quality improvement…

Thank you, Jerome. Turning to slide 10 and slide 11, let me walk you through our net sales and adjusted EBITDA performance on a year-over-year basis. Starting with net sales on slide 10, we delivered 2 billion in sales in the fourth quarter and 7.8 billion for the year. On a constant currency basis, sales increased approximately 3% for both periods. Sales growth was attributable to favorable price mix which was 3% or 61 million in the quarter and 3.2% or 249 million for the full year. Volume was essentially unchanged in both periods, unfavorable currency translation with 105 million in the quarter and 183 million for the full year. Approximately 20% of our total sales are exposed to the euro, approximately 4% to the Brazilian real, and then we have approximately 2% exposure to both the Russian ruble and the Turkish lira. Turning to slide 11, for the quarter adjusted EBITDA increased 4% on a year-over-year basis to $282 million or 14.3% of net sales. For the total company, the increase in adjusted EBITDA was due to favorable mix and price cost spread of $48 million. Cost synergies were $22 million in the quarter. Selling, general, and administrative and other expenses increased by $40 million of which $17 million was attributable to an increase in incentive performance based compensation and $14 million was related to salary inflation. Currency translation had a negative $17 million impact on EBITDA in the quarter. Despite currency headwinds we delivered a 100 basis point improvement in adjusted gross profit margin and a 90 basis point improvement in adjusted EBITDA margin compared to the fourth quarter last year. For the full year, adjusted EBITDA increased 8% year-over-year to $1.12 or to $1.12 billion or 14.4% of net sales. The increase in adjusted EBITDA was due…

Thank you. [Operator Instructions]. Your first question comes from the line of Ghansham Panjabi of Baird.

Hey, guys good morning.

Good morning Ghansham.

Good morning.

Good morning sir, just first off could you just give us a sense as to what the volume outlook by an operating segment is for 2015 as it relates to your guidance and I guess that’s related, your guidance is for 2.5% constant currency growth given where resin and kind of what it’s doing right now and some of your pass through in your contracts, is it fair to expect a negative price mix bios partially portfolio for the year? Thanks.

Good question Ghansham. So our volume for 2015 is going to be at about 1.5% or so. And this compares with zero volume growth that we had in 2014 and about slightly higher than 1% in 2013. We are going to see volume growth in the three divisions, led by Diversey Care and Product Care and also some in Food Care. So, the story of price mix is going to be somewhat different than the one of 2014 because obviously the resin prices have been and are coming down and as a result of that it is not so much price which is going to be important into 2015 but just margin and margin expansion. And we do believe that we are going to be having margin expansion from all kind of things. Number one, we need to remember that we are in a recovery mode. We have lost a lot of pricing over the past few years and we need to rehabilitate pricing. This is true for what I would call the commodity parts of our portfolio specifically in Product Care and in Food Care. In Product Care we still have a whole segment which is we call the general use which I would tend to call the more commoditized type of product lines and those were as they have been doing better in 2014, they are far from being at an acceptable level. So, we are going to be holding very firm and we are holding very firm on our pricing. We will only respond to competitive aggression and that's all we are going to do. On Food Care, we do have some regional weaknesses in some product lines and that is what we are going to be addressing on pricing. Obviously currency translation is hurting and as they all continue to go down because the dollar is revaluating regularly amongst almost all currencies. We are in need to adjust our pricing.

Operator next question please.

Thank you. Your next question comes from John McNulty of Credit Suisse. Go ahead please.

Hey, good morning and thanks for taking my question. With regard to resin prices having come off, have you started to see any of your customers potentially upgrade their products at this point. I know there was a lot of kind of down shifting of products that they were looking at when oil prices and resin ran up. So have you seen the reverse of that yet, and is it something you are expecting as you look into 2015?

Good morning John, I can't precisely answer your question other than make the following comments. We are working very hard at addressing the customer needs depending on the segment they want to touch. So, some -- you take Food Care as an example, some customers want more shelf life and as they want more shelf life, they need to work great in the quality of the products. Some others want portion size with potentially less shelf life but improving compared to what is on the shelf today. This is a real strong trend right now and so on. So, what we have in Sealed Air now is a whole commercial organization absolutely obsessed with understanding and satisfying customer needs. So it is going to really be on a case by case basis and more than a general approach which by the way I haven’t been told that this is the case, in terms of grading generally speaking the packaging.

Operator next question please.

Thank you. Your next question comes from George Staphos of Bank of America. Go ahead please.

Thanks everyone, good morning. Thanks for all the details and taking my question. Congratulations on the year. I guess maybe related to what Ghansham was getting at, if I take the midpoint of your range for 2015 from a margin standpoint, it is up roughly about 130 basis points if I did my math correctly versus 2014 despite the foreign exchange headwinds. So Jerome and Carol, as we think about how you have confidence in that goal which you said you did is most of the progress towards that going to come from mix and further value selling or will more of it come from productivity or other buckets and within that how would we think about the mixture across the three segments? And the last thing is, sounds like Diversey will have a tough time growing this year because of FX, would you confirm that or add color, thank you and good luck in the quarter?

Thanks George, good to talk to you. What the big hitter, the big hitter in 2015 is obviously that we’re going to have more than half a billion dollars of currency translation. Just imagine, just go back one second to the fourth quarter and imagine us publishing a constant currency EBITDA number of about $300 million in the fourth quarter which is what you would get if you add the $280 million and the $17 million of EBITDA currency translation loss. So we would have all celebrated an extraordinary quarter. I can assure you that we would have just blown away our numbers on a constant currency basis for 2015. But life is what it is and we have felt what’s coming actually very early in September actually and we have started very early to take measures hence our Fusion project. To come to the point, $550 million and more possibly of foreign currency translation equally balanced by volume about $100 million and price mix. So that’s the way we are seeing it. We are going to stay very firm in prices first of all because resin is not the only component of our cost. It is only a part of it. We have -- we are a highly serviced company. As a result of that we have a lot of manpower, we have 25,000 employees or 24,000 employees in this company, and therefore you remember my comment of two years ago about the salary match increase year-on-year. So this is a big part of the cost. And we have conversion cost, etc. Coming on to Diversey Care well by definition with 45% of our sales in Europe we are exposed to currency and the translation that I just talked about. And therefore we are anticipating a slight improvement in our profitability in dollar basis. Having said that let me remind you that we are very clearly on the right track as proven in 2013. EBITDA improvement and as proven in our 2014 EBITDA growth as we have in constant currency, we have grown about 8%. So we are making wins in the field, it happens in the field but we are very focused on margin improvement in that business which is the thing which is going to last overtime no matter what currency is doing.

And George I’ll just add just to remind everyone we highlighted the 80 million EBITDA foreign exchange expected negative hit year-over-year in our 2015 guidance. In addition for a couple of years now we have talked very publicly that we have approximately around 60 million in annual inflationary cost related to wages benefits. So if take those two as cost increases to go from the 1.18 billion to the guidance we’ve provided for EBITDA for 2015, that tells you and then you take the 50 million positive for cost synergies, you can do the math and see what’s remaining and that it’s all coming. A lot of good benefit from mix and price cost spread as well as the volume growth that Jerome highlighted for both benefitting the company and again staying firm on our good practices and policies and the cultural changes that we’re making. Also I’ll just mention real quickly back to John’s question, because of the great advances of technology I got an update from our President of our Product Care Division to answer about the quality of the products and he -- if not meaningfully up but we are starting to see a shift towards some of our core view products for e-commerce which is a much higher quality product as well as our inflatable bubble which is also higher quality than some of our general use products. So we are starting to see a little bit of that trend but it is still very minor at this point.

Thank you, Carol.

Operator next question please.

Thank you. Your next question comes from Scott Gaffner of Barclays. Please proceed.

Thanks, good morning. Just wanted to look backwards and look forwards around your pricing initiatives. I mean if I look back to 2014 maybe even over the last 18 months a lot of your pricing initiatives look like they came on the back of higher resin, maybe that made it a little bit easier for you, maybe it made it made it more difficult, but can you talk about what the decline in resin means as far as pricing initiatives going forward and can you also talk about what sort of benefits if you were to maintain pricing you would get from lower resin, thanks?

So, I am not Scott going to go too much in details there for obvious competitive reasons. But what we have embarked into is a whole program of margin restoration. I said some time ago that we were not having reinvestment economics and we did need -- we do need to have that. This is the very basis of proper business management. So we have gotten pricing as a result of resins and we have gotten other type of pricings at the very same time. In the future, we have in Europe for example last year, sorry before coming to the future, we had last year pricing power also in Europe despite a very poor environment. So, this company is in transformation and it is on the way of doing two things in a very disciplined way. The first one is good business management. You saw it in terms of margin expansion, we need margin expansion because we have -- because they have dramatically deteriorated in the past. And we are going to continue to be doing this. We are going to have mixed improvement because by definition we are not putting the resources on our lower margin products, we are shifting them towards higher margin products. And we are doing working capital management. You have seen what we have done in just one year, we moved 300 basis points from 14% of operating working capital -- from 17% operating working capital to 14%. And this is -- and we are continuing to do this kind of things. And at the very same time we have started to reinvent this company and this company is not going to be just about more plastic. It is going to be about the cutting edge of the technologies which will enable our customers to win. That is what we are going towards. That should give them higher margins and give us higher margins.

Operator next question please.

Thank you. The next question comes from Chris Manuel of Wells Fargo. Please proceed.

Good morning, this is actually Gayle Barn [ph] for Chris. Congratulations on the year. Just had a question about the state of economy across the world with the U.S. kind of emerging as being holding more strong and some of the developing regions being a little bit fragile and how you expect to sort of -- what regions and/or product lines you expect to get the 1.5% volume growth that you talked about?

Okay, well Chris good question and good morning. Well the buzz word which is not mine which is everybody's is volatility. I got it all wrong in fourth quarter when in October I said that we were anticipating, we were already into the fourth quarter and we were anticipating $10 million negative EBITDA as a result of currency translation. We got $17 million, almost double. During the fourth quarter our average exchange rate for the euro was 126 and the real at 247, the ruble at 43. Guess what, the ruble is at 66 today, the euro is at 113, the Brazilian real is at 281. So more volatile than that, I don’t know. So which is why I am stopping making projections on resin prices for example, on currencies, etc and our exchange rates for 2015 are at around those levels that we have today although possibly just a little bit more conservative. So where is it going to grow, we have –- we are expecting innovation to pull us and actually in Food Care the innovation has already pulled us. Pull our results and our product mix which is going really well. We are going to see a deceleration of the beef cycle, negative beef cycle so things should be improving a little bit in volume in North America. And we should see the hogs business have a little bit of growth in North America which would be all good. Real at 280 is good for meat exports and for local profitability. So we should benefit a little bit about this. In Diversey Care we are continuing to eliminate low margin businesses and at the same time we have had a few solid customer wins and in hospitality we’re going to have even more on healthcare, in the kitchen and on TASKI. So I am positive there, we should have some volume growth there. We continue to grow volume and nicely in emerging countries. In Latin America, in TASKI we have been hurt by very fast devaluations but we’re up in reported dollars in AMAT and we are growing very, very nicely in quite a few countries down there. And in Product Care we have -- Carol talked about our core view line. We have some specialty packaging there which are doing very well and our systems which are doing extremely well also. And that’s where we are planning to shift. You have seen that we had growth in Product Care in Europe which didn’t have for a while. We think we have a lot of momentum in North America and intend to do that. And by the way also in Asia on our Product Care division we are extremely optimistic that we’re going to be succeeding there.

Operator next question please?

Thank you. The next question comes from Chip Dillon of Vertical Research. Please proceed.

Yes, good morning and congratulations on another great year. When you look at the working capital squeeze, Carol you mentioned you got it down to 17% of sales. Could you give us and about 90 million or so I guess last year what should we look for in 2015 and 2016 and then just quickly if you could give us a breakdown of the 97 million in cost saves last year, how that was split between the EQIP Program and the one from back in 2011 I guess it was called the IOP Program?

Alright, so good morning Chip. As we think about the working capital, it contributed approximately $168 million for 2014 for our free cash flow and for 2013, it was about $145 million. And as we look towards 2015, if you go kind of looking at the $600 million that we guided we would anticipate if you do the math taking into account I gave you CAPEX and restructuring, payments, interest payments you’re going to come right somewhere around 110 million expected benefit from working capital management. We still are slightly over a 100 million and pass due receivables. So we expect some of that benefit to come from continuing to decrease our past dues. If you recall we finished 2012 at over 200 million so we’ve made great progress but there is still some additional progress that we can make. Also our management of inventory, we feel like there are continuing opportunities as we make our processes more robust around our sales and operations planning as well as SKU optimization. We also had some investments in inventory as we started to implement some of our new distribution programs that our supply chain team is working on. So, as we make those transitions, at times we carry slightly higher levels of inventory and then we right size those. So, we did have that right at year end. So, we do have opportunities in both. Our payables, we have made great progress in increasing our days table outstanding and we will continue to focus on that as well where it makes sense and where we have large dollar spend and large volume. In terms of the $97 million in savings that we provided for the improvement from 2013 to 2014 for cost synergies most of that, a large portion of that came from our EQIP Program. We still had a little bit trailing from our integration and optimization program, but the larger portion was from the EQIP Program. And as we looked to 2015, as we noted almost all of that 50 million in cost synergies will come from the EQIP Program as well with the new Fusion Program starting to give us the positive return at the beginning as we move into 2016. The new program has an internal rate of return in excess of 40% so we are really excited about what that's going to bring to our cost structure as well.

Operator next question please.

Thank you. The next question comes from the line of Philip NG of Jefferies. Please proceed.

Good morning, this is Alex Hutter on for Phil, thanks for taking my questions and congratulations on the quarter. One of your public competitors in Food appears to be taking a more proactive stance on price, which was encouraging but can you provide some color on competitive activity in Food Care and Product Care and based on those dynamics do you expect to or have you seen any players ceding price to gain share with resin prices falling?

There are some skirmishes in the field here and there by definition and -- but I would say nothing notable. Every company pursues its own strategy. We are not going to lose business that we don’t want to lose. But we are the leader therefore we have to be conservative on price reduction. And as I said before, our strategy is to recoup the margins that we have lost in the past and that's what we really want to do?

Operator next question please.

Thank you. Your next question comes from the line of Rosemarie Morbelli of Gabelli Company. Please proceed.

Thank you. Good morning and congratulations.

Good morning Rosemarie.

Thank you.

I was wondering Jerome you said something to the effect that rebuilds were above your expectations for both the quarter and the year. And I was wondering if you could give us a little more details on the areas where you were surprised on the positive side and whether there were some negative surprise which were more than offset by the positive ones?

Okay, Rosemarie good question again. The -- what surprised is not so much the results but -- because the result -- because the financials are the consequence of what we are doing. What surprises me is the speed at which from Q3 to Q4 of 2013 this organization has shifted its mind. And this organization is now a courageous organization. We have our people who believe, our people who see how we are winning and how we can continue to win. Have taken the responsibility of the price leadership and of the product mix leadership and of the need for innovation and therefore things are moving at a pace which is very different than from the past. And I could see that. As I said, sometimes late Q3, early Q4 of last year and therefore you now are seeing the results that we had. We started in the first quarter but in fact it amplified throughout the year. You should, as we have said during the prepared remarks, our Product Care and Diversey Care business had constant currency sales improving every single quarter. In Q1 our Diversey Care business improved in constant currency by 1.2% in Q1 of 2014. It went up and up and up and in the fourth quarter of 2014 it went up by 4%. And this is obviously something extremely important. And the same with our Product Care which started the year at 2.6% and finished the year at 4.6%. And this is extremely important because there is a change in pace, there is more courage in the organization, etc. Doesn’t mean that it’s going to continue to go crescendo like this because we have as I said before a very volatile environment and so on. So we are not going to take currency as an excuse, we have to do what we have to do. We are going to continue doing and forging ahead through a disciplined approach to our business to improve operationally and to start building and we have started that to start building the future. So as to what didn’t go that well, I would say I am not going to contradict myself with what I said before because I have been really positively surprised as to how we are gaining -- how we are making this cultural change and stuff. So the negative are uncontrollable factors and I don’t control currency and I don’t control the overall economy. Having said that we were not expecting the economy to improve much better, so this is going to be considered as a plus if it does come. It has been here since the last two to three years and we believe that in 2015 it is going to continue to be here.

Operator next question please?

Thank you. Your next question comes from the line of Anthony Pettinari from Citi. Please proceed.

Operator?

Hello. Can I just confirm it Anthony Pettinari or you want me to? I am assuming they don’t wish to take the call, shall I forward the next call through to you.

Yes, let’s take the last question please.

Thank you. The last question comes from Al Kabili of Macquarie. Please proceed.

Hi, thanks. Good morning. I guess Jerome you mentioned that this year is much more about margin than it is about price given the situation with the resin outlook, that said in your outlook how do you think of 2015 as far as, are we getting an outsized resin benefit this year that then makes it more difficult to expand dollar margins next year or do you very much see 2015 as very much part of the normal progression in the EBITDA margin expansion and so you would still look to continue to grow margins in 2016 as well? Thanks.

So, we are ahead of our schedule. You remember that when we had our Investor Day in September of 2013, we have given guidance with regards to our EBITDA margins. We are going to be there and more in 2015. So we are ahead of our schedule. The way it’s going to happen is going to slightly different temporarily but we are continuing to have the same kind of approach to what we wanted to have. But that’s important to understand. I am going to stop making predictions on the resins because in Q4 I was wrong and it is soft in Q1. There are wide discrepancies depending on the parts of the world which will have to be corrected. And next to that you have -- it can turn upside down very quickly depending on the demand in Asia, depending on a few factors here and there you could see resin prices move backup and therefore we have to be very careful with any price concession because as we all know it is much easier to go down then to go up. And these things can turnaround very, very quickly. We are resolutely on our way to 20% EBITDA in the mid to long-term. I really believe that with our Get Fit initiatives and with our Change the Game initiatives which are going to start to bear fruit in a meaningful way in 2016, 2017 and from there, we are going to have a portfolio which is going to be fairly different with new and differentiated technologies which should give our customers a differential advantage and improved profitability for ourselves too.

Great, thank you operator.