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Sealed Air Management Discusses Q2 2012 Results - Earnings Call Transcript

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We also discussed financial measures that do not conform to U.S. GAAP. And you may find important information on our use of these measures and the reconciliation to U.S. GAAP in the financial tables that we've included in our earnings release. Lastly, we have also used pro forma results for certain metrics in the quarter to aid in the comparison of our performance to historical combined metrics of Sealed Air and Diversey.

Now, I'll turn the call over to Bill Hickey, our CEO. Bill?

William V. Hickey

Good morning. Thank you, Amanda, and good morning to, everyone. Before we begin our discussions on the quarter, I'd like to welcome Carol Lowe as our new Chief Financial Officer, and I'm also pleased that Tod Christie, our Treasurer, is able to join us today, as well as to complete the transition.

During today's call, I will lead the discussion on our top line performance, our expanded integration and optimization program and our outlook for the balance of the year. Carol will focus on our financial results, our liquidity measures and key balance sheet items. We will then open up the call to questions and answers and text-in questions.

Getting started on Page 2 of our slide presentation. As we noted in our press release earlier today, our second quarter results fell far short of our expectations. Like many, we experienced increasing challenges in the quarter from macroeconomic conditions, which noticeably weakened in the latter part of the quarter in Europe and in export out of China. We also saw a challenging protein production trends. For example, USB production down approximately 4% to 5% in the second quarter, and lower consumer demand prompted a slowdown in our more defensive food segments.

While we are clearly disappointed, we are accomplishing a great deal against the key objectives we outlined at the beginning of the year. Namely, integrating the Diversey business, achieving our synergy targets and generating cash flow to reduce debt. Some of our accomplishments include -- we further penetrated markets with net gains. We are seeing good results from new products, targeted account penetration, and we grew solidly in the developing regions of the world. We are exceeding our targeted cost synergy benefits by aggressively accelerating and expanding our integration and optimization program in the quarter, with new cost-cutting measures that will align our cost structure to an expected lower rate of economic recovery and improved returns. And we generate over $100 million of free cash flow and continue to prepay our bank debt.

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