Sealed Air Corporation

03/02/2026 | Press release | Distributed by Public on 03/02/2026 13:57

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read together with our Consolidated Financial Statements and related notes set forth in Part II, Item 8, as well as the discussion included in Part I, Item 1A, "Risk Factors," of this Annual Report on Form 10-K. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our results may differ materially from those currently described in the sections entitled "Risk Factors" and "Cautionary Notice Regarding Forward-Looking Statements" disclosed in this Annual Report on Form 10-K. All amounts and percentages are approximate due to rounding and all dollars are in millions, except per share amounts.
Business Overview and Reportable Segments
Sealed Air Corporation ("Sealed Air", or the "Company," also referred to as "we," "us," or "our") is a leading global provider of packaging solutions that integrate sustainable, high-performance materials, automation, equipment and services. Sealed Air designs, manufactures and delivers packaging solutions that preserve food, protect goods and automate packaging processes. We deliver our packaging solutions to an array of end markets including fresh proteins, foods, fluids and liquids, medical and life science, e-commerce retail, logistics and omnichannel fulfillment operations, and industrials. Our portfolio of solutions includes leading brands such as CRYOVAC®brand food packaging, SEALED AIR®brand protective packaging, LIQUIBOX®brand liquids systems, AUTOBAG®brand automated packaging systems, and BUBBLE WRAP®brand packaging.
The Company's Food and Protective segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products and customers. Corporate includes certain costs that are not allocated to the reportable segments. See Note 6, "Segments," for additional information.
We employ sales, marketing and customer service personnel throughout the world who sell and market our products and services. Food solutions are largely sold directly to end customers, while Protective solutions are sold through a strategic network of distributors and directly to end customers. Approximately 45% of Food's sales are subject to formula based pricing, predominantly within North America and APAC, which lags raw material cost movement by approximately six months, on average. We generally do not impose annual minimum purchase volume requirements on our distributors. Product returns from our distributors in 2025 were not material. In 2025, 2024 and 2023, no customer or affiliated group of customers accounted for 10% or more of our consolidated net sales.
Competition for our packaging products is based primarily on packaging performance characteristics, automation, sustainability-related characteristics of the materials, service, and price. Since competition is also based upon innovations in packaging technology, we maintain ongoing research and development programs to enable us to maintain technological leadership. Competition is both global and regional in scope and includes numerous smaller, local competitors with limited product portfolios and geographic reach.
Our net sales are sensitive to developments in our customers' business or market conditions, changes in the global economy, and the effects of foreign currency translation. Our costs can vary materially due to changes in input costs, including petrochemical-related costs (primarily resin costs), which are not within our control. Consequently, our management focuses on reducing those costs that we can control and using petrochemical-based and other raw materials efficiently. Our global presence helps mitigate the impact of localized changes in business conditions.
The timing and seasonality of our results of operations may be difficult to predict if significant one-time transactions, events or non-recurring charges were to impact our business. Additionally, changes in consumer behavior have in the past impacted the timing and seasonality of results of operations.
Our balanced capital allocation strategy is designed to maximize value for our shareholders with the goal to deliver above-market profitable organic growth, attractive returns on invested capital and return capital to shareholders in the form of dividends. We enable our growth strategy by investing, scaling, and shaping our portfolio of solutions through capital expenditures, research and development spend and acquisitions. We continue to be focused on strengthening our balance sheet through the repayment of debt.
Each issue of our outstanding senior notes imposes limitations on our operations and those of specified subsidiaries. Our senior secured credit facility contains customary affirmative and negative covenants for credit facilities of this type, including limitations on our indebtedness, liens, investments, restricted payments, mergers and acquisitions, dispositions of assets,
transactions with affiliates, amendment of documents and sale leasebacks, and a covenant specifying a maximum leverage ratio of debt to EBITDA. We expect continued compliance with our debt covenants including the covenant leverage ratio over the next 12 months. See Note 15, "Debt and Credit Facilities" for further details.
Executive Summary for 2025
Overview
Net sales for 2025 of $5.4 billion decreased less than 1% compared to the prior year. The decline in sales in 2025 was due to slightly lower volumes in both the Protective and Food segments due to ongoing recovery in the Protective business, particularly within North America, and modest reduction in Food volumes, primarily on market weakness in the industrial portfolio. These declines in sales were partially offset by favorable impacts from foreign currency translation.
Net earnings from continuing operations for 2025 was $441 million compared to $270 million in the prior year. The increase is primarily a result of lower tax expense due to the favorable resolution of certain U.S. historical tax matters in 2025 and lower net interest expense as compared to the prior year.
Cash flow from operations for 2025 was $628 million compared to $728 million in the prior year. The decrease in cash flow provided by operations was largely the result of higher tax and incentive compensation payments made in 2025 as compared to the prior year. In addition, we received a $54 million refund from the IRS in 2024 related to deposits we made in 2023 to resolve certain prior-year tax matters.
We maintained our capital allocation discipline with a continued emphasis on deleveraging the balance sheet. Our sustained focus on debt repayment resulted in a $394 million reduction in total debt during 2025.
Recent Business Developments - Pending Merger
On November 16, 2025, we entered into the Merger Agreement to be acquired by affiliates of CD&R, a private investment firm with experience in the industrial and packaging sectors. Under the terms of the Merger Agreement, CD&R will acquire the Company for a total purchase price of $10.3 billion, to be paid in cash.
Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of the Company's common stock (except for certain shares specified in the Merger Agreement) will be automatically converted into the right to receive cash in an amount equal to $42.15 per share without interest.
The transaction is expected to close in mid-2026, subject to on-going regulatory clearances and the satisfaction of other customary closing conditions.
Upon consummation of the Merger, we will cease to be a publicly traded company and our common stock will be delisted from the New York Stock Exchange.
Non-GAAP Information
We present financial information that conforms to Generally Accepted Accounting Principles in the United States of America ("GAAP"). We also present financial information that does not conform to GAAP, as our management believes it is useful to investors. In addition, non-GAAP financial measures are used by management to review and analyze our operating performance and, along with other data, as internal measures for setting annual budgets and forecasts, assessing financial performance, providing guidance and comparing our financial performance with our peers. Non-GAAP financial measures also provide management with additional means to understand and evaluate the core operating results and trends in our ongoing business by eliminating certain expenses and/or gains (which may not occur in each period presented) and other items that management believes might otherwise make comparisons of our ongoing business with prior periods and peers more difficult, obscure trends in ongoing operations or reduce management's ability to make useful forecasts. Non-GAAP information does not purport to represent any similarly titled GAAP information and is not an indicator of our performance under GAAP. Investors are cautioned against placing undue reliance on these non-GAAP financial measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable GAAP financial measure to arrive at these non-GAAP financial measures, described below.
The non-GAAP financial metrics exclude certain specified items ("Special Items"), including restructuring charges and restructuring associated costs, amortization of intangible assets and inventory step-up expense related to the acquisition of Liquibox, adjustments in the valuation of our debt or equity investments, and other charges related to acquisitions and divestitures, gains and losses related to acquisitions and divestitures, special tax items or tax benefits (collectively, "Tax Special
Items"), and certain other items. We evaluate unusual or special items on an individual basis. Our evaluation of whether to exclude an unusual or special item for purposes of determining our non-GAAP financial measures considers both the quantitative and qualitative aspects of the item, including among other things (i) its nature, (ii) whether or not it relates to our ongoing business operations, and (iii) whether or not we expect it to occur as part of our normal business on a regular basis. As of 2023, the Company includes, within its definition of Special Items, amortization expenses of intangibles from the Liquibox acquisition and future significant acquisitions. The change was prospective and did not impact previously presented results. This change was made to better align the Company's definitions of Special Items with those of its peers, to better reflect the Company's operating performance, and to increase the usefulness of such measures for our stakeholders.
When we present non-GAAP forward-looking guidance, we do not also provide guidance for the most directly comparable GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain Special Items, including gains and losses on the disposition of businesses, the ultimate outcome of certain legal or tax proceedings, foreign currency gains or losses resulting from the volatile currency market in Argentina, and other unusual gains and losses. These items are uncertain, depend on various factors, and could be material to our results computed in accordance with GAAP.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as Earnings before Interest Expense, Taxes, Depreciation and Amortization, adjusted to exclude the impact of Special Items. Management uses Adjusted EBITDA as one of many measures to assess the performance of the business. Adjusted EBITDA is also a metric used to determine performance under the Company's Annual Incentive Plan. We do not believe there are estimates underlying the calculation of Adjusted EBITDA, other than those inherent in our GAAP results of operations, which would render the use and presentation of Adjusted EBITDA misleading. While the nature and amount of individual Special Items vary from period to period, we believe our calculation of Adjusted EBITDA is applied consistently to all periods and, in conjunction with other GAAP and non-GAAP financial measures, Adjusted EBITDA provides a useful and consistent comparison of our Company's performance to other periods.
The following table shows a reconciliation of GAAP Net earnings from continuing operations to non-GAAP Consolidated Adjusted EBITDA from continuing operations:
Year Ended December 31,
(In millions) 2025 2024 2023
Net earnings from continuing operations $ 441.2 $ 269.5 $ 339.3
Interest expense, net 218.9 247.6 263.0
Income tax provision 35.3 188.9 90.4
Depreciation and amortization, net of adjustments(1)
249.3 243.7 239.6
Special Items:
Liquibox intangible amortization 30.4 30.3 27.9
Liquibox inventory step-up amortization - - 10.2
Restructuring charges
39.9 57.8 15.6
Other restructuring associated costs
41.1 30.3 34.5
Foreign currency exchange loss due to highly inflationary economies
15.1 9.9 23.1
Loss on debt redemption and refinancing activities
5.8 6.8 13.2
Impairment of debt investment - 8.5 -
Contract terminations 3.9 (0.1) 14.6
Charges related to acquisition and divestiture activity
12.4 4.2 28.3
CEO severance and separation costs 7.4 - 6.1
Accelerated share-based compensation expense(1)
5.0 - -
Other Special Items 28.6 13.2 0.8
Pre-tax impact of Special Items 189.6 160.9 174.3
Non-GAAP Consolidated Adjusted EBITDA from continuing operations $ 1,134.3 $ 1,110.6 $ 1,106.6
(1)Net of Liquibox intangible amortization of $30 million, $30 million, and $28 million for the years ended December 31, 2025, 2024, and 2023, respectively, and accelerated share-based compensation expense of $5 million for the year
ended December 31, 2025, which are included under Special Items. The accelerated share-based compensation expense for the year ended December 31, 2025, primarily relates to the vesting of certain equity awards for our prior CEO upon his departure.
The Company may also assess performance using Adjusted EBITDA Margin. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by net sales. We believe that Adjusted EBITDA Margin is a useful measure to assess the profitability of sales made to third parties and the efficiency of our core operations.
Adjusted Net Earnings and Adjusted Earnings Per Share
Adjusted Net Earnings and Adjusted Earnings Per Share ("Adjusted EPS") are also used by the Company to measure total company performance. Adjusted Net Earnings is defined as GAAP net earnings from continuing operations excluding the impact of Special Items. Adjusted EPS is defined as our Adjusted Net Earnings divided by the number of diluted shares outstanding. We believe that Adjusted Net Earnings and Adjusted EPS are useful measurements of Company performance, along with other GAAP and non-GAAP financial measures, because they incorporate non-cash items of depreciation and amortization, including share-based compensation, which impact the overall performance and net earnings of our business. Additionally, Adjusted Net Earnings and Adjusted EPS reflect the impact of our Adjusted Tax Rate and interest expense on a net and per share basis. While the nature and amount of individual Special Items vary from period to period, we believe our calculation of Adjusted Net Earnings and Adjusted EPS is applied consistently to all periods and, in conjunction with other GAAP and non-GAAP financial measures, Adjusted Net Earnings and Adjusted EPS provide a useful and consistent comparison of our Company's performance to other periods.
The following table shows a reconciliation of GAAP Net earnings and Diluted earnings per share from continuing operations to non-GAAP Adjusted net earnings and Adjusted EPS from continuing operations.
Year Ended December 31,
2025 2024 2023
(In millions, except per share amounts) Net Earnings Diluted EPS Net Earnings Diluted EPS Net Earnings Diluted EPS
GAAP Net earnings and diluted EPS from continuing operations $ 441.2 $ 2.99 $ 269.5 $ 1.84 $ 339.3 $ 2.34
Special Items(1)
52.0 0.35 189.4 1.30 122.0 0.84
Non-GAAP Adjusted net earnings and adjusted diluted EPS from continuing operations $ 493.2 $ 3.34 $ 458.9 $ 3.14 $ 461.3 $ 3.18
Weighted average number of common shares outstanding - Diluted 147.5 146.0 144.9
(1)Includes pre-tax Special Items, plus/less Tax Special Items and the tax impact of Special Items as seen in the following calculation of non-GAAP Adjusted income tax rate.
Adjusted Tax Rate
We also present our adjusted income tax rate ("Adjusted Tax Rate"). The Adjusted Tax Rate is a measure of our GAAP effective tax rate, adjusted to exclude the tax impact from the Special Items that are excluded from our Adjusted Net Earnings and Adjusted EPS metrics as well as expense or benefit from any special taxes or Tax Special Items. The Adjusted Tax Rate is an indicator of the taxes on our core business. The tax circumstances and effective tax rate in the specific countries where the Special Items occur will determine the impact (positive or negative) to the Adjusted Tax Rate. While the nature and amount of Tax Special Items vary from period to period, we believe our calculation of the Adjusted Tax Rate is applied consistently to all periods and, in conjunction with our GAAP effective income tax rate, the Adjusted Tax Rate provides a useful and consistent comparison of the impact that tax expense has on our Company's performance.
The following table shows our calculation of the non-GAAP Adjusted income tax rate:
Year Ended December 31,
(In millions) 2025 2024 2023
GAAP Earnings before income tax provision from continuing operations $ 476.5 $ 458.4 $ 429.7
Pre-tax impact of Special Items 189.6 160.9 174.3
Non-GAAP Adjusted Earnings before income tax provision from continuing operations $ 666.1 $ 619.3 $ 604.0
GAAP Income tax provision from continuing operations $ 35.3 $ 188.9 $ 90.4
Tax Special Items(1)
97.9 (64.7) 20.0
Tax impact of Special Items(2)
39.7 36.2 32.3
Non-GAAP Adjusted Income tax provision from continuing operations $ 172.9 $ 160.4 $ 142.7
GAAP Effective income tax rate 7.4 % 41.2 % 21.0 %
Non-GAAP Adjusted income tax rate 26.0 % 25.9 % 23.6 %
(1)For the year ended December 31, 2025, Tax Special Items reflect the reversal of accruals for uncertain tax positions in the U.S. associated with the resolution of an IRS audit and the resolution of certain international tax matters, partially offset by the establishment of a valuation allowance in Luxembourg, the impact of the U.S. tax reform, and interest accruals for uncertain tax positions. For the year ended December 31, 2024, Tax Special Items reflect the write-off of a deferred tax asset associated with a legal entity restructuring of $46 million and accruals for uncertain tax positions. For the year ended December 31, 2023, Tax Special Items reflect adjustments related to the settlement of the IRS audit partially offset by accruals for uncertain tax positions.
(2)The tax rate used to calculate the tax impact of Special Items is based on the jurisdiction in which the item was recorded.
Organic and Constant Currency Measures
In our "Net Sales by Segment," and in some of the discussions and tables that follow, we exclude the impact of foreign currency translation when presenting net sales information, which we define as "constant currency", and we exclude acquisitions in the first year after closing, divestiture activity from the time of sale, and the impact of foreign currency translation when presenting net sales information, which we define as "organic." Changes in net sales excluding the impact of foreign currency translation and/or acquisition and divestiture activity are non-GAAP financial measures. As a worldwide business, it is important that we consider the effects of foreign currency translation when we view our results and plan our strategies. Nonetheless, we cannot control changes in foreign currency exchange rates. Consequently, when our management analyzes our financial results including performance metrics such as sales, cost of sales or selling, general and administrative expense, to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our current period results at prior period foreign currency exchange rates and then make adjustments for other items affecting comparability. We also may exclude the impact of foreign currency translation when making incentive compensation determinations. As a result, our management believes that these presentations are useful internally and may be useful to investors.
Refer to these specific tables presented later in our MD&A for reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures.
Free Cash Flow
In addition to net cash provided by operating activities, we use free cash flow as a useful measure of performance and an indication of the strength and ability of our operations to generate cash. We define free cash flow as cash provided by operating activities less capital expenditures (which is classified as an investing activity). Free cash flow is not defined under GAAP. Therefore, free cash flow should not be considered a substitute for net income or cash flow data prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. Free cash flow does not represent residual cash available for discretionary expenditures, as certain debt servicing requirements or other non-discretionary expenditures are not deducted from this measure.
Refer to the specific table presented later in our MD&A under Analysis of Historical Cash Flowfor reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measure.
Net Debt
In addition to total debt, we use Net Debt, which we define as total debt less cash and cash equivalents, as a useful measure of our total debt exposure. Net Debt is not defined under GAAP. Therefore, Net Debt should not be considered a substitute for amounts owed to creditors or other balance sheet information prepared in accordance with GAAP, and it may not be comparable to similarly titled measures used by other companies.
Refer to the specific table presented later in our MD&A under Outstanding Indebtednessfor reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measure.
Highlights of Financial Performance
Below are the highlights of our financial performance for the three years ended December 31, 2025, 2024, and 2023.
Year Ended December 31, % Change
(In millions, except per share amounts) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Net sales $ 5,359.8 $ 5,392.6 $ 5,488.9 (0.6) % (1.8) %
Gross profit $ 1,596.8 $ 1,625.1 $ 1,641.3 (1.7) % (1.0) %
As a % of net sales 29.8 % 30.1 % 29.9 %
Operating profit $ 725.7 $ 735.9 $ 754.6 (1.4) % (2.5) %
As a % of net sales 13.5 % 13.6 % 13.7 %
Net earnings from continuing operations $ 441.2 $ 269.5 $ 339.3 63.7 % (20.6) %
Gain (Loss) on sale of discontinued operations, net of tax 64.3 (4.8) 2.3 # #
Net earnings $ 505.5 $ 264.7 $ 341.6 91.0 % (22.5) %
Basic:
Continuing operations $ 3.00 $ 1.85 $ 2.35 62.2 % (21.3) %
Discontinued operations 0.44 (0.03) 0.02 # #
Net earnings per common share - basic $ 3.44 $ 1.82 $ 2.37 89.0 % (23.2) %
Diluted:
Continuing operations $ 2.99 $ 1.84 $ 2.34 62.5 % (21.4) %
Discontinued operations 0.44 (0.03) 0.02 # #
Net earnings per common share - diluted $ 3.43 $ 1.81 $ 2.36 89.5 % (23.3) %
Weighted average number of common shares outstanding:
Basic 146.9 145.5 144.4
Diluted 147.5 146.0 144.9
Non-GAAP Consolidated Adjusted EBITDA from continuing operations(1)
$ 1,134.3 $ 1,110.6 $ 1,106.6 2.1 % 0.4 %
Non-GAAP Adjusted EPS from continuing operations(2)
$ 3.34 $ 3.14 $ 3.18 6.4 % (1.3) %
#Denotes where percentage change is not meaningful.
(1)See "Non-GAAP Information" for a reconciliation of GAAP Net earnings from continuing operations to non-GAAP Consolidated Adjusted EBITDA from continuing operations.
(2)See "Non-GAAP Information" for a reconciliation of GAAP Net earnings and diluted earnings per share from continuing operations to non-GAAP Adjusted Net Earnings and Adjusted EPS from continuing operations.
Foreign Currency Translation Impact on Consolidated Financial Results
Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial results into U.S. dollars. Due to the changes in the value of foreign currencies relative to the U.S. dollar, translating our financial results from foreign currencies to U.S. dollars may result in a favorable or unfavorable impact. Historically, the most significant currencies that have impacted the translation of our consolidated financial results are the euro, the Australian dollar, the Mexican peso, the Canadian dollar, the British pound, the Chinese renminbi, the Brazilian real, the New Zealand dollar and the Argentine peso.
The following table presents the approximate favorable or (unfavorable) impact that foreign currency translation had on certain components of our consolidated financial results:
(In millions) 2025 vs. 2024 2024 vs. 2023
Net sales $ 32.7 $ (35.7)
Cost of sales (25.2) 26.0
Gross profit 7.5 (9.7)
Selling, general and administrative expenses (4.9) 3.1
Non-GAAP Adjusted EBITDA (2.7) 9.2
Net Sales by Segment
The following tables present the components of change in net sales by reportable segment for the year ended December 31, 2025 compared with 2024 and for the year ended December 31, 2024 compared with 2023.
(In millions) Food Protective Total Company
2024 Net Sales $ 3,582.6 66.4 % $ 1,810.0 33.6 % $ 5,392.6 100.0 %
Price 21.5 0.6 % (21.6) (1.2) % (0.1) - %
Volume(1)
(25.4) (0.7) % (40.0) (2.2) % (65.4) (1.2) %
Total constant currency change (non-GAAP) (3.9) (0.1) % (61.6) (3.4) % (65.5) (1.2) %
Foreign currency translation 16.0 0.4 % 16.7 0.9 % 32.7 0.6 %
Total change (GAAP) 12.1 0.3 % (44.9) (2.5) % (32.8) (0.6) %
2025 Net Sales $ 3,594.7 67.1 % $ 1,765.1 32.9 % $ 5,359.8 100.0 %
(In millions) Food Protective Total Company
2023 Net Sales $ 3,519.7 64.1 % $ 1,969.2 35.9 % $ 5,488.9 100.0 %
Price (69.5) (2.0) % (49.3) (2.5) % (118.8) (2.1) %
Volume(1)
136.5 3.9 % (101.8) (5.2) % 34.7 0.6 %
Total organic change (non-GAAP) 67.0 1.9 % (151.1) (7.7) % (84.1) (1.5) %
Acquisition 23.5 0.7 % - - % 23.5 0.4 %
Total constant currency change (non-GAAP) 90.5 2.6 % (151.1) (7.7) % (60.6) (1.1) %
Foreign currency translation (27.6) (0.8) % (8.1) (0.4) % (35.7) (0.7) %
Total change (GAAP) 62.9 1.8 % (159.2) (8.1) % (96.3) (1.8) %
2024 Net Sales $ 3,582.6 66.4 % $ 1,810.0 33.6 % $ 5,392.6 100.0 %
(1)Our volume reported above includes the net impact of changes in unit volume as well as the period-to-period change in the mix of products sold.
The following net sales discussion is on an as reported and constant currency basis:
Food
2025 compared with 2024
As reported, net sales increased $12 million, or less than 1%, in 2025 compared with 2024. Foreign currency had a positive impact of $16 million. On a constant currency basis, net sales decreased $4 million, or were essentially flat in 2025 compared with 2024, primarily due to the following:
•lower volumes of $25 million, with declines in North America, partially offset by increases in EMEA and Latin America.
This decrease was partially offset by:
•favorable price of $22 million, with increases in all regions, notably in North America, driven primarily by the impacts from contract-formula pricing.
2024 compared with 2023
As reported, net sales increased $63 million, or 2%, in 2024 compared with 2023. Foreign currency had a negative impact of $28 million. On a constant currency basis, net sales increased $91 million, or 3%, in 2024 compared with 2023 primarily due to the following:
•higher volumes of $137 million, with increases in all regions due to strength in end-market demand and competitive share gains; and
•$23 million related to the Liquibox acquisition from the additional month of contributions in 2024.
These increases were partially offset by:
•unfavorable price of $70 million, with decreases in all regions, primarily in the Americas and EMEA regions, driven by raw material cost deflation.
Protective
2025 compared with 2024
As reported, net sales decreased $45 million, or 2%, in 2025 compared with 2024. Foreign currency had a positive impact of $17 million. On a constant currency basis, net sales decreased $62 million, or 3%, in 2025 compared with 2024 primarily due to the following:
•lower volumes of $40 million, primarily in North America, resulting from prior year customer churn in our fulfillment portfolio; and
•unfavorable price of $22 million, primarily in North America, driven by raw material cost deflation and pricing pressure.
2024 compared with 2023
As reported, net sales decreased $159 million, or 8%, in 2024 compared with 2023. Foreign currency had a negative impact of $8 million. On a constant currency basis, net sales decreased $151 million, or 8%, in 2024 compared with 2023 primarily due to the following:
•lower volumes of $102 million, with decreases in all regions, primarily in the Americas and EMEA regions, resulting from continued weakness in our industrial and fulfillment portfolios; and
•unfavorable price of $49 million with decreases in all regions, primarily in the Americas and EMEA regions, driven by raw material cost deflation and pricing pressure.
Cost of Sales
Cost of sales for the years ended December 31, 2025, 2024, and 2023 were as follows:
Year Ended December 31, % Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Net sales $ 5,359.8 $ 5,392.6 $ 5,488.9 (0.6) % (1.8) %
Cost of sales 3,763.0 3,767.5 3,847.6 (0.1) % (2.1) %
As a % of net sales 70.2 % 69.9 % 70.1 %
2025 compared with 2024
As reported, cost of sales decreased by $5 million, or less than 1%, in 2025 as compared to 2024. Cost of sales was impacted by unfavorable foreign currency translation of $25 million. As a percentage of net sales, cost of sales increased by 30 basis points, from 69.9% in 2024 to 70.2% in 2025.
2024 compared with 2023
As reported, cost of sales decreased by $80 million, or 2%, in 2024 as compared to 2023. Cost of sales was impacted by favorable foreign currency translation of $26 million. As a percentage of net sales, cost of sales decreased by 20 basis points, from 70.1% in 2023 to 69.9% in 2024, primarily driven by raw material cost deflation.
Gross Profit
The Company evaluates performance of the reportable segments based on the results of each segment. The performance metric most closely aligned with our Consolidated Financial Statements used by the Company's chief operating decision maker to evaluate performance of our reportable segments is Gross Profit.
The table below sets forth the Segment Gross Profit for the years ended December 31, 2025, 2024, and 2023:
Year Ended December 31, % Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Food $ 1,098.5 $ 1,091.9 $ 1,034.7 0.6 % 5.5 %
Protective 503.9 533.8 607.1 (5.6) % (12.1) %
Other (5.6) (0.6) (0.5) # (20.0) %
Consolidated Gross Profit $ 1,596.8 $ 1,625.1 $ 1,641.3 (1.7) % (1.0) %
#Denotes where percentage change is not meaningful.
Food
2025 compared with 2024
Segment Gross Profit increased $7 million in 2025 as compared to 2024. Segment Gross Profit was impacted by favorable foreign currency translation of $2 million. On a constant currency basis, Segment Gross Profit increased $4 million, or less than 1%, in 2025 as compared to 2024, primarily due to lower operating costs, including productivity benefits, partially offset by lower sales volume and unfavorable net price realization.
2024 compared with 2023
Segment Gross Profit increased $57 million in 2024 as compared to 2023. Segment Gross Profit was impacted by unfavorable foreign currency translation of $8 million. On a constant currency basis, Segment Gross Profit increased $65 million, or 6%, in 2024 as compared to 2023, due to higher sales volumes and favorable productivity benefits.
Protective
2025 compared with 2024
Segment Gross Profit decreased $30 million in 2025 as compared to 2024. Segment Gross Profit was impacted by favorable foreign currency translation of $5 million. On a constant currency basis, Segment Gross Profit decreased $35 million, or 7%, in
2025 as compared to 2024, primarily due to unfavorable net price realization and lower sales volume, partially offset by lower operating costs, including productivity benefits.
2024 compared with 2023
Segment Gross Profit decreased $73 million in 2024 as compared to 2023. Segment Gross Profit was impacted by unfavorable foreign currency translation of $2 million. On a constant currency basis, Segment Gross Profit decreased $71 million, or 12%, in 2024 as compared to 2023, primarily due to lower sales volume and unfavorable net price realization, partially offset by lower operating costs including productivity benefits.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for the years ended December 31, 2025, 2024, and 2023 were as follows:
Year Ended December 31, % Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Selling, general and administrative expenses $ 744.9 $ 752.6 $ 759.1 (1.0) % (0.9) %
As a % of net sales 13.9 % 14.0 % 13.8 %
2025 compared with 2024
As reported, SG&A expenses decreased $8 million in 2025 as compared to 2024. SG&A expenses were impacted by unfavorable foreign currency translation of $5 million. On a constant currency basis, SG&A expenses decreased $13 million, or 2%. The decrease in SG&A expenses was due to lower operating costs, including productivity benefits, and lower bonus and other employee benefits expense, partially offset by higher share-based incentive compensation expense and transaction-related charges associated with the pending merger.
2024 compared with 2023
As reported, SG&A expenses decreased $7 million in 2024 as compared to 2023. SG&A expenses were impacted by favorable foreign currency translation of $3 million. On a constant currency basis, SG&A expenses decreased approximately $4 million, or less than 1%. The decrease in SG&A expenses was due to productivity benefits including the CTO2Grow Program and lower expenses related to the Liquibox acquisition, including transaction and integration expenses, partially offset by higher incentive compensation and CTO2Grow Program related expenses.
Amortization Expense of Intangible Assets
Amortization expense of intangible assets for the years ended December 31, 2025, 2024, and 2023 were as follows:
Year Ended December 31, % Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Amortization expense of intangible assets $ 59.5 $ 62.6 $ 62.7 (5.0) % (0.2) %
As a % of net sales 1.1 % 1.2 % 1.1 %
The decrease of amortization expense of intangible assets in 2025 compared with 2024 was primarily due to lower amortization of enterprise-wide capitalized software assets.
The amortization expense of intangible assets in 2024 was essentially flat compared with 2023 primarily due to lower amortization of enterprise-wide capitalized software assets, offset by an additional month of amortization expense of Liquibox intangible assets in 2024.
CTO2Grow Program
See Note 13, "Restructuring Activities," for additional details regarding the Company's restructuring programs.
In August 2023, the Sealed Air Board of Directors approved the 3-year cost take-out to grow program (the "CTO2Grow Program"), which concluded as of the end of the third quarter 2025. The CTO2Grow Program aimed to improve the efficiency and effectiveness of our solutions-focused go-to-market organization, optimize our portfolio, streamline our supply chain footprint, and drive SG&A productivity. The CTO2Grow Program delivered the full annualized savings target of $160 million by year-end 2025, with the entire program budget of $160 million allocated across approved projects.
The Company plans to continue to assess operational efficiencies and cost synergies. The amount and timing of future restructuring costs may vary significantly between periods.
Interest Expense, net
Interest expense, net includes the interest expense on our outstanding debt, as well as the net impact of capitalized interest, interest income, the effects of terminated interest rate swaps and the amortization of capitalized senior debt issuance costs and credit facility fees, bond discounts, and terminated treasury locks.
Interest expense, net for the years ended December 31, 2025, 2024, and 2023 was as follows:
Year Ended December 31, Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Interest expense on our various debt instruments:
Term Loan A due March 2027(4)
23.7 34.8 33.4 (11.1) 1.4
Term Loan A2 due March 2027 4.7 36.9 44.7 (32.2) (7.8)
Term Loan A due October 2030(4)
4.3 - - 4.3 -
Revolving credit facility due March 2027 6.3 1.0 8.4 5.3 (7.4)
4.500% Senior Notes due September 2023(1)
- - 1.7 - (1.7)
5.125% Senior Notes due December 2024(2)
- - 20.0 - (20.0)
5.500% Senior Notes due September 2025(3)
- 11.1 22.5 (11.1) (11.4)
1.573% Senior Secured Notes due October 2026 10.5 10.5 10.5 - -
4.000% Senior Notes due December 2027 17.6 17.6 17.6 - -
6.125% Senior Notes due February 2028(1)
49.9 49.7 45.5 0.2 4.2
5.000% Senior Notes due April 2029 21.8 21.8 21.8 - -
7.250% Senior Notes due February 2031(2)
31.3 31.3 3.6 - 27.7
6.500% Senior Notes due July 2032(3)
26.4 13.4 - 13.0 13.4
6.875% Senior Notes due July 2033 31.2 31.2 31.2 - -
Other interest expense(5)
47.1 41.3 29.7 5.8 11.6
Less: capitalized interest (9.9) (12.6) (13.1) 2.7 0.5
Less: interest income (46.0) (40.4) (14.5) (5.6) (25.9)
Total $ 218.9 $ 247.6 $ 263.0 $ (28.7) $ (15.4)
(1)On January 31, 2023, the Company issued $775 million of 6.125% senior notes due February 2028. The proceeds were used in part to finance the Liquibox acquisition and to repurchase the Company's 4.500% senior notes due September 2023. See Note 15, "Debt and Credit Facilities," for further details.
(2)On November 20, 2023, the Company issued $425 million of 7.250% senior notes due February 2031. The proceeds were used to repurchase the Company's 5.125% senior notes due December 2024. See Note 15, "Debt and Credit Facilities," for further details.
(3)On June 28, 2024, the Company issued $400 million of 6.500% senior notes due July 2032. The proceeds were used to repurchase the Company's 5.500% senior notes due September 2025. See Note 15, "Debt and Credit Facilities," for further details.
(4)On October 31, 2025, the Company and certain of its subsidiaries entered into a fifth amended and restated syndicated facility agreement (the "Credit Agreement") with Bank of America, N.A., as agent, and the other financial institutions party thereto, which amends and restates the Company existing senior secured credit facility, including the maturity of
all of the credit facilities under the Credit Agreement to October 2030. See Note 15, "Debt and Credit Facilities," for further details.
(5)Other includes expense associated with borrowings under our U.S. and European accounts receivable securitization programs, accounts receivable factoring agreements, and borrowings under various lines of credit.
Other Expense, net
Income from lease termination
During 2025, we terminated a lease with a tenant. As a result, Sealed Air received a termination fee of $7 million, which was recognized as Other income for the year ended December 31, 2025.
Impairment loss on debt and equity investments, net
Sealed Air made investments totaling approximately $9 million in another company's convertible debt. The investments were made for strategic purposes and as of December 31, 2025, Sealed Air maintains no other available-for-sale debt securities. Based on information available to Sealed Air and our current expectations of recoverability, we recorded a credit loss resulting in a $9 million impairment of the convertible debt investment for the year ended December 31, 2024.
Loss on debt redemption and refinancing activities
During 2025, we recognized a pre-tax loss of $6 million, primarily driven by the write-off of capitalized debt issuances costs associated with the incremental term loan A, which was paid off during the second quarter of 2025. See Note 15, "Debt and Credit Facilities," for further details.
In 2024, Sealed Air issued $400 million of 6.500% senior notes due 2032. The proceeds were used to repurchase the Company's outstanding 5.500% senior notes due 2025. We recognized a pre-tax loss of $7 million on the repurchase, primarily driven by the tender offer consideration beyond the principal amount of the notes tendered. See Note 15, "Debt and Credit Facilities," for further details.
In 2023, Sealed Air issued $425 million of 7.250% senior notes due 2031. The proceeds were used to repurchase the Company's 5.125% Senior Notes due 2024. We recognized an $8 million pre-tax loss on such repurchase, primarily driven by the tender offer consideration beyond the principal amount of the notes tendered. Also in 2023, the Company issued $775 million of 6.125% Senior Notes due 2028. The proceeds were used in part to finance the Liquibox acquisition and to repurchase the Company's 4.500% Senior Notes due 2023. We recognized a pre-tax loss of $5 million on such repurchase, primarily driven by the tender offer consideration beyond the principal amount of the notes tendered. See Note 15, "Debt and Credit Facilities," for further details.
See Note 24, "Other Expense, net," for the additional components of Other expense, net.
Income Taxes
The table below shows our effective income tax rate ("ETR"):
Year Ended Effective Tax Rate
2025 7.4 %
2024 41.2 %
2023 21.0 %
Our ETR for the year ended December 31, 2025 was 7.4% compared to the U.S. statutory rate of 21%. The Company's ETR was decreased by the reversal of accruals for uncertain tax positions associated with the resolution of U.S. and international tax matters and the utilization of tax credits, and increased by foreign earnings subject to higher tax rates, the establishment of a valuation allowance in Luxembourg, state income tax expense, and the impact of U.S. tax reform.
Our ETR for the year ended December 31, 2024 was 41.2% compared to the U.S. statutory rate of 21%. The Company's ETR was increased by a write-off of a deferred tax asset associated with a legal entity restructuring, state income tax expense, and foreign earnings subject to higher tax rates, and decreased by tax credits and the removal of a valuation allowance.
Our ETR for the year ended December 31, 2023 was 21.0%, which aligned with the U.S. statutory rate of 21%. The Company's ETR was increased by state income tax expense and foreign earnings subject to higher tax rates, and decreased by the reductions in unrecognized tax benefits and tax credits.
Our ETR depends upon the realization of our net deferred tax assets. We have deferred tax assets related to non-deductible interest, accruals not yet deductible for tax purposes, state and foreign net operating loss carryforwards and tax credits, employee benefit items, intangible assets and other items.
The IRS had proposed to disallow for the 2014 taxable year the entirety of the deduction of the approximately $1.49 billion in settlement payments made in 2014 to resolve all current and future asbestos-related claims made against us and our affiliates in connection with a 1998 multi-step transaction (the "Cryovac transaction") involving W.R. Grace & Co. ("Grace") which brought the Cryovac packaging business and the former Sealed Air's business under the common ownership of the Company, and the subsequent Grace bankruptcy, as well as certain related indemnification claims, and the resulting reduction of our U.S. federal tax liability by approximately $525 million. We reached a definitive agreement with the IRS Independent Office of Appeals to settle the matter during the fourth quarter of 2023. In the third quarter of 2025, we resolved IRS audits associated with the years 2017 through 2019. See Note 20, "Income Taxes," for further details.
We have established valuation allowances to reduce our deferred tax assets to an amount that is more likely than not to be realized. Our ability to utilize our deferred tax assets depends in part upon our ability to carryback any losses created by the deduction of these temporary differences, the future income from existing temporary differences, and the ability to generate future taxable income within the respective jurisdictions during the periods in which these temporary differences reverse. If we are unable to generate sufficient future taxable income in the U.S. and certain foreign jurisdictions, or if there is a significant change in the time period within which the underlying temporary differences become taxable or deductible, we could be required to increase our valuation allowances against our deferred tax assets. Conversely, if we have sufficient future taxable income in jurisdictions where we have valuation allowances, we may be able to reduce those valuation allowances. We reported a net increase in our valuation allowance for the year ended December 31, 2025 of $37 million, primarily driven by the foreign currency translation adjustments on valuation allowances and the establishment of a valuation allowance in Luxembourg. See Note 20, "Income Taxes," for additional information.
Tax expense for the year ended December 31, 2025 was reduced by $170 million for the reduction of unrecognized tax benefits, primarily related to the resolution of U.S. and international tax matters. Interest and penalties on uncertain tax positions are included in unrecognized tax benefit balances.
Net Income reflected in Discontinued Operations for the year ended December 31, 2025 was $64 million and is primarily the result of the reduction of uncertain tax positions associated with the resolution of U.S. tax matters.
Net Earnings from Continuing Operations
Net earnings from continuing operations for the years ended December 31, 2025, 2024, and 2023 are included in the table below:
Year Ended December 31, % Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Net earnings from continuing operations $ 441.2 $ 269.5 $ 339.3 63.7 % (20.6) %
For 2025, net earnings were unfavorably impacted by $52 million of Special Items after tax, primarily due to:
•restructuring and other restructuring associated costs of $81 million ($65 million, net of taxes);
•Liquibox intangible amortization of $30 million ($23 million, net of taxes);
•foreign currency loss on highly inflationary economies of $15 million ($15 million, net of taxes);
•charges related to acquisition and divestiture activity of $12 million ($9 million, net of taxes), primarily related to transaction-related expenses associated with the pending merger;
•CEO severance and separation costs of $7 million ($6 million, net of taxes);
•loss on debt redemption and refinancing activities of $6 million ($4 million, net of taxes);
•accelerated share-based compensation expense of $5 million ($4 million, net of taxes); and
•other special items of $29 million ($22 million, net of taxes), including fees related to professional services and other charges directly associated with Special Items or events that are considered one-time or infrequent.
These expenses were partially offset by:
•Tax Special Items of $98 million, due to the reversal of accruals for uncertain tax positions in the U.S. associated with the resolution of an IRS audit and the resolution of certain previous years' international tax matters, partially offset by the establishment of a valuation allowance and the impact of the U.S. tax reform.
For 2024, net earnings were unfavorably impacted by $189 million of Special Items after tax, primarily due to:
•restructuring and other restructuring associated costs of $88 million ($67 million, net of taxes);
•Tax Special Items of $65 million, primarily due to the write-off of a deferred tax asset associated with a legal entity restructuring of $46 million and increases for accruals for uncertain tax positions;
•Liquibox intangible amortization of $30 million ($23 million, net of taxes);
•foreign currency loss on highly inflationary economies of $10 million ($10 million, net of taxes);
•impairment of debt investment of $9 million ($9 million, net of taxes);
•loss on debt redemption and refinancing activities of $7 million ($5 million, net of taxes); and
•charges related to acquisition and divestiture activity of $4 million ($3 million, net of taxes).
For 2023, net earnings were unfavorably impacted by $122 million of Special Items after tax, primarily due to:
•restructuring and other restructuring associated costs of $50 million ($37 million, net of taxes);
•charges related to acquisition and divestiture activity of $28 million ($23 million, net of taxes);
•Liquibox intangible amortization of $28 million ($21 million, net of taxes);
•foreign currency loss on highly inflationary economies of $23 million ($23 million, net of taxes);
•contract terminations related to business closure activity of $15 million ($11 million, net of taxes);
•loss on debt redemption and refinancing activities of $13 million ($10 million, net of taxes); and
•Liquibox inventory step-up expense of $10 million ($8 million, net of taxes).
These expenses were partially offset by:
•Tax Special Items income of $20 million reflecting adjustments related to the settlement of the IRS audit, partially offset by accruals for uncertain tax positions.
Gain (Loss) on Sale of Discontinued Operations, net of tax
Gain (Loss) on sale of discontinued operations, net of tax for the years ended December 31, 2025, 2024, and 2023 were as follows:
Year Ended December 31,
(In millions) 2025 2024 2023
Gain (Loss) on sale of discontinued operations, net of tax $ 64.3 $ (4.8) $ 2.3
On March 25, 2017, we entered into a definitive agreement to sell our Diversey Care division and the food hygiene and cleaning business within our Food Care division (collectively, "Diversey") for gross proceeds of $3.2 billion. The transaction was completed on September 6, 2017. The sale of Diversey qualified as discontinued operations.
During 2025, we recorded a net gain of $64 million, primarily related to the reduction of uncertain tax positions associated with the resolution of U.S. tax matters. During 2024, we recorded a net loss of $5 million related to the reversal of a deferred tax asset associated with tax-related indemnifications. During 2023, we recorded a net gain of $2 million, on the sale of discontinued operations. This gain in 2023 relates primarily to the expiration of statutes on Diversey tax-related indemnification liabilities.
Adjusted EBITDA by Segment
The Company evaluates performance of the reportable segments based on the results of each segment. One of the performance metrics used by the Company's chief operating decision maker to evaluate the performance of our reportable segments is non-GAAP Segment Adjusted EBITDA. We allocate and disclose depreciation and amortization expense to our segments, although
depreciation and amortization are not included in Segment Adjusted EBITDA. We also allocate and disclose restructuring and other charges and impairment of goodwill and other intangible assets by segment, although these items are not included in Segment Adjusted EBITDA since restructuring and other charges and impairment of goodwill and other intangible assets are categorized as Special Items. The accounting policies of the reportable segments and Corporate are the same as those applied to the Consolidated Financial Statements.
See "Non-GAAP Information" for a reconciliation of GAAP net earnings from continuing operations to non-GAAP Consolidated Adjusted EBITDA from continuing operations.
The table below sets forth the Segment Adjusted EBITDA for the years ended December 31, 2025, 2024, and 2023:
Year Ended December 31, % Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Food $ 829.1 $ 807.7 $ 775.0 2.6 % 4.2 %
Adjusted EBITDA Margin 23.1 % 22.5 % 22.0 %
Protective 310.4 313.5 361.8 (1.0) % (13.3) %
Adjusted EBITDA Margin 17.6 % 17.3 % 18.4 %
Corporate (5.2) (10.6) (30.2) (50.9) % #
Non-GAAP Consolidated Adjusted EBITDA $ 1,134.3 $ 1,110.6 $ 1,106.6 2.1 % 0.4 %
Adjusted EBITDA Margin 21.2 % 20.6 % 20.2 %
#Denotes where percentage change is not meaningful.
The following is a discussion of the factors that contributed to the change in Segment Adjusted EBITDA for the year ended December 31, 2025, compared to 2024, and the year ended December 31, 2024, compared to 2023.
Food
2025 compared with 2024
Segment Adjusted EBITDA increased $21 million in 2025 as compared to 2024. Segment Adjusted EBITDA was impacted by favorable foreign currency translation of approximately $2 million. On a constant currency basis, Segment Adjusted EBITDA increased $20 million, or 2%, in 2025 as compared to 2024 primarily due to lower operating costs, partly driven by productivity benefits, and cost reduction initiatives. These increases were partially offset by unfavorable net price realization and lower volume.
2024 compared with 2023
Segment Adjusted EBITDA increased $33 million in 2024 as compared to 2023. Segment Adjusted EBITDA was impacted by unfavorable foreign currency translation of $7 million. On a constant currency basis, Segment Adjusted EBITDA increased $40 million, or 5%, in 2024 as compared to 2023 primarily due to the impact of higher volume and an additional month of contributions from the Liquibox acquisition. These increases were partially offset by higher operating costs, including higher incentive compensation expense partially offset by productivity benefits from the CTO2Grow Program and unfavorable net price realization
Protective
2025 compared with 2024
Segment Adjusted EBITDA decreased $3 million in 2025 as compared to 2024. Segment Adjusted EBITDA was impacted by favorable foreign currency translation of $4 million. On a constant currency basis, Segment Adjusted EBITDA decreased $7 million, or 2%, in 2025 as compared to 2024 primarily due to unfavorable net price realization and lower volume. These decreases were partially offset mainly by lower operating costs, primarily driven by productivity benefits, and cost reduction initiatives.
2024 compared with 2023
Segment Adjusted EBITDA decreased $48 million in 2024 as compared to 2023. Segment Adjusted EBITDA was impacted by unfavorable foreign currency translation of $1 million. On a constant currency basis, Segment Adjusted EBITDA decreased $47 million, or 13%, in 2024 as compared to 2023 primarily due to the impact of lower volume and unfavorable net price realization. These decreases were partially offset by lower operating costs, driven by productivity benefits from the CTO2Grow Program.
Corporate
2025 compared with 2024
Corporate Adjusted EBITDA increased by $5 million on an as reported basis compared to 2024, primarily due to income associated with a lease termination fee and lower pension expense, partially offset by foreign currency losses in 2025 compared to foreign currency gains in 2024.
2024 compared with 2023
Corporate Adjusted EBITDA increased by $20 million on an as reported basis compared to 2023, primarily driven by foreign currency gains in 2024 compared to foreign currency losses in 2023.
Material Commitments and Contingencies
Contractual Obligations
Our contractual obligations primarily consist of short-term borrowings, principal and interest payments on long-term debt, operating and financing leases, dividend payments, compensation and benefit related obligations, including defined benefit pension plans and other post-employment benefit plans, and other contractual obligations that arise in the normal course of business.
Sealed Air has other principal contractual obligations which include agreements to purchase an estimated amount of goods, including raw materials, or services, including energy, assumed in the normal course of business. These obligations are enforceable and legally binding and specify all significant terms, including fixed or minimum quantities to be purchased, minimum or variable price provisions and the approximate timing of the purchase. We may purchase additional goods or services above the minimum requirements of these obligations and, as a result use additional cash. See Note 21, "Commitments and Contingencies," for additional information.
Liability for Unrecognized Tax Benefits
At December 31, 2025, we had liabilities for unrecognized tax benefits and related interest of $45 million that is reflected on Other non-current liabilities on our Consolidated Balance Sheets. See Note 20, "Income Taxes," for further discussion.
Off-Balance Sheet Arrangements
We have reviewed our off-balance sheet arrangements and have determined that none of those arrangements have a material current effect or is reasonably likely to have a material future effect on our Consolidated Financial Statements, liquidity, capital expenditures or capital resources.
Income Tax Payments
We expect tax payments on our operations to be approximately $155 million in 2026. Future payments are uncertain and dependent on a number of factors including the amount of future taxable income. The results of ongoing appeals or audits by various taxing authorities, including the IRS, could increase our tax payments.
Interest Payments
Estimated future interest payments on the Company's senior notes and senior secured credit facility through fiscal 2033 are expected to be $915 million, including $201 million expected in 2026, based on interest rates at December 31, 2025.
Contributions to Defined Benefit Pension Plans and Other Post-Employment Benefit Plans
We maintain defined benefit pension plans and other post-employment benefit plans for some of our U.S. and our non-U.S. employees. We currently expect our contributions to these plans to be approximately $10 million in 2026. Additionally, we expect benefits related to these plans paid directly by the Company to be approximately $9 million in 2026. Future contributions and benefits paid directly by the Company are uncertain and rely on a number of factors including performance of underlying assets, future cash out flows of the plans, actuarial assumptions and funding discussions with boards charged with governance for some of our international plans. Refer to Note 18, "Profit Sharing, Retirement Savings Plans, and Defined Benefit Pension Plans," and Note 19, "Other Post-Employment Benefit Plans," for additional information related to these plans.
Environmental Matters
We are subject to loss contingencies resulting from environmental laws and regulations (including claims relating to the alleged use of PFAS in our products and manufacturing processes), and we accrue for anticipated costs associated with investigatory and remediation efforts when an assessment has indicated that a loss is probable and can be reasonably estimated. These accruals do not take into account any discounting for the time value of money and are not reduced by potential insurance recoveries, if any. We do not believe that it is reasonably possible that the liability in excess of the amounts that we have accrued for environmental matters will be material to our consolidated financial position and results of operations. We reassess environmental liabilities whenever circumstances become better defined or we can better estimate remediation efforts and their costs.
We evaluate these liabilities periodically based on available information, including the progress of remedial investigations at each site, the current status of discussions with regulatory authorities regarding the methods and extent of remediation and the apportionment of costs among potentially responsible parties. As some of these issues are decided (the outcomes of which are subject to uncertainties) or new sites are assessed and costs can be reasonably estimated, we adjust the recorded accruals, as necessary. We believe that these exposures are not material to our consolidated financial condition and results of operations. We believe that we have adequately reserved for all probable and estimable environmental exposures.
Indemnification Obligations
We are a party to many contracts containing guarantees and indemnification obligations. These contracts include indemnities in connection with the sale of businesses, primarily related to the sale of Diversey in 2017. Because of the conditional nature of these obligations and the unique facts and circumstances involved in each particular agreement, we are unable to reasonably estimate the potential maximum exposure associated with these items.
Capital Expenditures
We expect payments for capital expenditures to be approximately $225 million in 2026.
Liquidity and Capital Resources
Principal Sources of Liquidity
Our primary sources of cash are the collection of trade receivables generated from the sales of our products and services to our customers and amounts available under our existing lines of credit, including our senior secured credit facility, our accounts receivable securitization programs and access to the capital markets. Our primary uses of cash are payments for operating expenses, investments in working capital, capital expenditures, interest, taxes, stock repurchases, dividends, debt obligations, restructuring expenses and other long-term liabilities. We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, including all of the items mentioned above, in the next twelve months. We may seek to access the capital markets as we deem appropriate, market conditions permitting.
As of December 31, 2025, we had cash and cash equivalents of $344 million, of which approximately $306 million, or 89%, was located outside of the U.S. We believe our U.S. cash balances and committed liquidity facilities available to U.S. borrowers are sufficient to fund our U.S. operating requirements, capital expenditures, current debt obligations, and dividends for at least the next 12 months from the date of this Annual Report. The Company does not expect that, in the near term, cash located outside of the U.S. will be needed to satisfy our obligations, dividends and other demands for cash in the U.S. Of the cash balances located outside of the U.S., approximately $30 million are in the Company's subsidiaries in Russia and Ukraine. We have no other material cash balances deemed to be trapped as of December 31, 2025.
Cash and Cash Equivalents
The following table summarizes our accumulated cash and cash equivalents:
December 31,
(In millions) 2025 2024
Cash and cash equivalents $ 344.0 $ 371.8
See "Analysis of Historical Cash Flow" below.
Accounts Receivable Securitization Programs
At December 31, 2025, we had total availability of $199 million and total utilization of $144 million under our U.S. and European accounts receivable securitization programs. At December 31, 2024, we had $133 million available to us and $133 million of outstanding borrowings under the U.S. and European accounts receivable securitization programs.
Our European trade receivable securitization program represents borrowings secured by outstanding customer receivables. Therefore, the use and repayment of borrowings under such program are classified as financing activities in our Consolidated Statements of Cash Flows. We do not recognize the cash flow within operating activities until the underlying invoices have been paid by our customer. The trade receivables that serve as collateral for these borrowings are reclassified from Trade receivables, net to Prepaid expenses and other current assets on the Consolidated Balance Sheets.
Historically, our U.S. trade receivable securitization program was accounted for as secured borrowings, as the arrangements did not meet the criteria for sale accounting. Accordingly, proceeds received and repayments made under these programs were classified as financing activities in our Consolidated Statements of Cash Flows. Cash flows were not reflected in operating activities until the underlying customer invoices were collected. The trade receivables pledged as collateral for these borrowings were reclassified from Trade receivables, net to Prepaid expenses and other current assets on our Consolidated Balance Sheets.
In December 2025, we terminated our prior U.S. securitization program and entered into a new securitization arrangement that qualifies for off-balance sheet treatment, with the transfers of trade receivables now being accounted for as sales. Accordingly, proceeds received are reported within operating activities in our Consolidated Statements of Cash Flows, and the transferred receivables are derecognized from the Consolidated Balance Sheets. See Note 10, "Accounts Receivable Securitization Programs," for further details.
Accounts Receivable Factoring Agreements
We account for our participation in our customers' supply chain financing arrangements and our trade receivable factoring program in accordance with ASC Topic 860, "Transfers and Servicing" ("ASC Topic 860"), which allows the ownership transfer of accounts receivable to qualify for true-sale treatment when the appropriate criteria are met. As such, the Company excludes the balances sold under such programs from Trade receivables, net on the Consolidated Balance Sheets. We recognize cash flow from operating activities at the point the receivables are sold under such programs. See Note 11, "Accounts Receivable Factoring Agreements," for further details.
Gross amounts received under these programs for the year ended December 31, 2025 were $629 million, of which $136 million was received in the fourth quarter. Gross amounts received under these programs for the year ended December 31, 2024 were $722 million, of which $187 million was received in the fourth quarter. If these programs had not been in effect for the year ended December 31, 2025, we would have been required to collect the invoice amounts directly from the relevant customers in accordance with the agreed payment terms. Approximately $151 million in incremental trade receivables would have been outstanding at December 31, 2025 if collection on such invoice amounts were made directly from our customers on the invoice due date and not through our customers' supply chain financing arrangements or the off-balance sheet U.S. securitization program.
The decline in gross amounts factored from 2024 to 2025 primarily reflects the termination of our trade receivable factoring program upon entering into a new off-balance sheet U.S. securitization program, as well as reduced utilization of certain customers' supply chain financing arrangements during 2025.
Lines of Credit
At December 31, 2025 and 2024, we had a $1 billion revolving credit facility, with $1 billion available at December 31, 2025 and 2024, as part of our senior secured credit facility. We had no outstanding borrowings under the facility at December 31,
2025 and 2024. At December 31, 2025 and 2024, we had $6 million and $8 million outstanding under various lines of credit extended to our subsidiaries. See Note 15, "Debt and Credit Facilities," for further details.
Covenants
At December 31, 2025, we were in compliance with our financial covenants and limitations, as discussed in "Covenants" within Note 15, "Debt and Credit Facilities," which require us, among other things, to maintain a maximum leverage ratio of debt to EBITDA of 4.50 to 1.00. At December 31, 2025, as calculated under the covenant, our leverage ratio was 2.95 to 1.00. We expect to be in continued compliance with our debt covenants, including the covenant leverage ratio, over the next 12 months.
Supply Chain Financing Programs
As part of our ongoing efforts to manage our working capital and improve our cash flow, we work with suppliers to optimize our purchasing terms and conditions, including extending payment terms. We also facilitate voluntary supply chain financing programs 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.
At December 31, 2025 and 2024, our accounts payable balances included $147 million and $161 million, respectively, related to invoices from suppliers participating in the programs. The cumulative amounts settled through the supply chain financing programs for the year ended December 31, 2025 were $443 million, compared to $470 million for the year ended December 31, 2024. See Note 12, "Supply Chain Financing Programs," for further details.
Debt Ratings
Our cost of capital and ability to obtain external financing may be affected by our debt ratings, which the credit rating agencies review periodically. Below is a table that details our credit ratings by the various types of debt by rating agency.
Moody's Ratings Standard
& Poor's
Corporate Rating Ba1 BB+
Senior Unsecured Rating Ba2 BB+
Senior Secured Rating Baa2 BBB-
Outlook Under Review Watch Neg
Following the announcement of the CD&R acquisition on November 17, 2025, Standard & Poor's placed the Company on CreditWatch with negative implication and Moody's placed the Company's ratings under review for possible downgrade. As of December 31, 2025, there has been no effective change to our credit ratings.
These credit ratings are considered to be below investment grade (with the exception of the Baa2 and BBB- Senior Secured Rating from Moody's Ratings and Standard & Poor's, respectively, which are classified as investment grade). A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating.
Outstanding Indebtedness
At December 31, 2025 and 2024, our total debt outstanding and our non-GAAP net debt consisted of the amounts set forth in the following table.
December 31,
(In millions) 2025 2024
Short-term borrowings $ 99.6 $ 140.5
Current portion of long-term debt 625.2 64.6
Total current debt 724.8 205.1
Total long-term debt, less current portion(1)
3,284.9 4,198.8
Total debt 4,009.7 4,403.9
Less: Cash and cash equivalents (344.0) (371.8)
Non-GAAP net debt $ 3,665.7 $ 4,032.1
(1)Amounts are net of unamortized discounts and debt issuance costs of $22 million and $32 million as of December 31, 2025 and 2024, respectively.
See Note 15, "Debt and Credit Facilities," for further details.
Analysis of Historical Cash Flow
The following table shows the changes in our Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023:
Year Ended December 31, Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Net cash provided by operating activities $ 628.0 $ 728.0 $ 516.2 $ (100.0) $ 211.8
Net cash used in investing activities (133.6) (232.5) (1,378.2) 98.9 1,145.7
Net cash (used in) provided by financing activities (567.6) (432.8) 755.7 (134.8) (1,188.5)
Effect of foreign currency exchange rate changes on cash and cash equivalents 46.7 (37.0) (3.7) 83.7 (33.3)
In addition to net cash from operating activities, we use free cash flow as a useful measure of performance and an indication of the strength and ability of our operations to generate cash. We define free cash flow as cash provided by operating activities less capital expenditures (which is classified as an investing activity). Free cash flow is not defined under GAAP. Therefore, free cash flow should not be considered a substitute for net income or cash flow data prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. Free cash flow does not represent residual cash available for discretionary expenditures, as certain debt servicing requirements or other non-discretionary expenditures are not deducted from this measure. We historically have generated the majority of our annual free cash flow in the second half of the year. Below are the details of non-GAAP free cash flow for the years ended December 31, 2025, 2024, and 2023.
Year Ended December 31, Change
(In millions) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023
Cash flow provided by operating activities $ 628.0 $ 728.0 $ 516.2 $ (100.0) $ 211.8
Capital expenditures (169.5) (220.2) (244.2) 50.7 24.0
Non-GAAP free cash flow $ 458.5 $ 507.8 $ 272.0 $ (49.3) $ 235.8
Operating Activities
2025 vs. 2024
Net cash provided by operating activities was $628 million during 2025, as compared to $728 million during 2024.
The decrease in cash flow from operating activities was primarily driven by other assets and liabilities which unfavorably impacted cash flow by $190 million compared to 2024 largely due to the reversal of accruals for uncertain tax positions in the U.S. associated with the resolution of an IRS audit and the resolution of certain previous years' international tax matters. Incentive compensation had an unfavorable impact due to higher cash payments made during the first quarter of 2025, as compared to the prior year, coupled with a lower accrual as of December 31, 2025, as compared to the prior year.
Income taxes had a $110 million unfavorable indirect cash flow impact driven by higher tax payments made in 2025 compared to 2024, which includes the impact of a $54 million refund received from the IRS in the fourth quarter of 2024, which related to deposits made in 2023 to resolve prior-year tax matters.
There was a higher net cash used by our working capital accounts (inventories, trade receivables and accounts payable), which was $16 million unfavorable in 2025 compared to 2024. Accounts payable was unfavorable by $57 million compared to 2024, mainly due to unfavorable changes to certain vendors' payment terms and raw material price deflation. The unfavorable cash flow impact of accounts payable was partially offset by trade receivables and inventory. The impact of trade receivables on cash flow from operating activities was favorable by $31 million compared to 2024, as a result of the utilization of our accounts
receivable factoring and off-balance sheet U.S. securitization program and timing of collections. Inventory was favorable by $11 million compared to 2024, primarily due to the inventory reduction efforts actioned in 2025.
This was partially offset by higher net earnings and adjustments to reconcile net earnings to net cash provided by operating activities ("non-cash adjustments") in 2025 compared to the same period in 2024. Net earnings plus non-cash adjustments was a source of cash of $884 million in the year ended December 31, 2025 compared to $615 million in 2024.
2024 vs. 2023
Net cash provided by operating activities was $728 million during 2024, as compared to $516 million during 2023.
The increase in cash flow from operating activities was primarily driven by $195 million of tax payments and deposits made in 2023 related to the resolution of certain prior years' tax matters coupled with a $54 million refund received in the fourth quarter of 2024 related to the same tax matter. Other assets and liabilities favorably impacted cash flow by $117 million compared to 2023. This was primarily driven by the impact of incentive compensation, including lower cash payments made during the first quarter of 2024, as compared to the prior year, coupled with a higher accrual as of December 31, 2024, as compared to the prior year.
This was partially offset by lower net earnings and adjustments to reconcile net earnings to net cash provided by operating activities ("non-cash adjustments") in 2024 compared to the same period in 2023. Net earnings plus non-cash adjustments was a source of cash of $615 million in the year ended December 31, 2024 compared to $718 million in 2023.
There was a higher net cash used by our working capital accounts (inventories, trade receivables and accounts payable), which was $97 million unfavorable in 2024 compared to 2023. Inventory was unfavorable $140 million compared to 2023, primarily due to the significant inventory reduction efforts actioned in 2023. The impact of trade receivables on cash flow from operating activities was $108 million unfavorable compared to 2023, as a result of lower year over year utilization of our accounts receivable factoring program and lower sales. The unfavorable cash flow impact of trade receivables and inventory was partially offset by accounts payable, which was favorable by $151 million compared to 2023, primarily due to a low level of accounts payable in 2023 primarily driven by raw material cost deflation and lower volume of purchases due to inventory reduction efforts while in 2024 accounts payable benefited from an increase in purchases and payment term improvements.
Investing Activities
2025 vs. 2024
Net cash used in investing activities was $134 million during 2025, compared to net cash used in investing activities of $233 million during 2024.
The decrease in net cash used in investing activities was largely due to a lower use of cash for capital expenditures which were $51 million lower in 2025 as compared to the prior year. In addition, there was a source of cash from the settlement of foreign currency contracts of $31 million in 2025 as compared to a use of $20 million in 2024.
2024 vs. 2023
Net cash used in investing activities was $233 million during 2024, compared to net cash used in investing activities of $1,378 million during 2023.
The decrease in net cash used in investing activities was largely due to acquisition activities during 2023, primarily related to the Liquibox acquisition, of $1,161 million. See Note 5, "Acquisitions," for further details. In addition, there was a lower use of cash for capital expenditures which were $24 million lower in 2024 as compared to the prior year.
This was partially offset by the use of cash from the settlement of foreign currency contracts of $20 million in 2024 as compared to a source of $12 million in 2023.
Financing Activities
2025 vs. 2024
Net cash used in financing activities was $568 million during 2025, compared to net cash used in financing activities of $433 million during 2024.
The increase in net cash used in financing activities was primarily due to debt related activities, which was a $425 million use of cash during 2025 compared to a use of cash of $297 million during 2024. During 2025, we paid off the remaining $253 million of debt related to the incremental Term Loan A and made $124 million in principal payments on Term Loan A. In addition, we paid off $50 million in short-term borrowings associated with the previous U.S. securitization program, which was terminated and replaced with a new U.S. securitization program that qualifies for off-balance sheet treatment.
There were no share repurchases during 2025 and 2024.
2024 vs. 2023
Net cash used in financing activities was $433 million during 2024, compared to net cash provided by financing activities of $756 million during 2023.
The decrease in cash flows from financing activities was primarily due to debt related activities, which was a $297 million use of cash during 2024 compared to a source of cash of $984 million during 2023. During 2024, debt payments primarily included the extinguishment of the $400 million 5.5% Senior Notes due 2025 (including the early payment premiums of $6 million) and the repayment of approximately $310 million of the Term Loan A due 2027. The payments were partially offset by debt proceeds which were primarily related to the issuance of $400 million 6.500% Senior Notes due 2032, less $4 million in capitalized issuance costs.
There were no share repurchases during 2024, compared to $80 million in the prior year.
Changes in Working Capital
December 31,
(In millions, except on ratios) 2025 2024 Change
Working capital (current assets less current liabilities) $ (181.9) $ 256.3 $ (438.2)
Current ratio (current assets divided by current liabilities) 0.9 x 1.2 x
Quick ratio (current assets, less inventories divided by current liabilities) 0.6 x 0.7 x
The $438 million decrease in working capital in 2025 compared with 2024 was primarily due to the following:
•increase in current portion of long-term debt of $561 million, primarily due to the reclassification of the Senior Secured Notes due October 2026;
•decrease in other receivables of $39 million;
•decrease in prepaid expenses and other current assets of $31 million; and
•decrease in cash and cash equivalents of $28 million.
The decreases in working capital were partially offset by:
•increase in trade receivable, net of $79 million, primarily due to the utilization of factoring and timing of collections;
•decrease in short-term borrowings of $41 million, primarily due to the termination of our previous U.S. Accounts Receivable Securitization Program during the fourth quarter of 2025;
•decrease in income tax payable of $33 million;
•increase in income tax receivables of $32 million;
•increase in inventories, net of $15 million, primarily due to favorable foreign currency translation, partially offset by our continued inventory reduction efforts;
•decrease in other current liabilities of $10 million, primarily due to the decrease in uncertain tax positions due to the resolution of certain previous years' international tax matters; and
•decrease in accrued restructuring costs of $9 million, primarily related to the concluded CTO2Grow Program.
Changes in Stockholders' Equity
The $613 million increase in stockholders' equity in 2025 compared with 2024 was due to:
•net earnings of $506 million;
•Cumulative Translation Adjustment gain of approximately $208 million;
•the effect of share-based incentive compensation of $27 million, including the impact of share-based compensation expense and netting of shares to cover the employee tax withholding amounts;
•stock issued for profit sharing contribution paid in stock of $26 million; and
•a net increase in Accumulated other comprehensive loss ("AOCL") of $7 million on unrecognized pension items due primarily to market conditions impacting actuarial assumptions as of our annual pension valuation date.
These increases were partially offset by:
•dividends paid on our common stock and dividend equivalent accruals related to unvested equity awards of $120 million; and
•unrealized losses on derivative instruments of $40 million.
Derivative Financial Instruments
Interest Rate Swaps
The information set forth in Note 16, "Derivatives and Hedging Activities," under the caption "Interest Rate Swaps" is incorporated herein by reference.
Net Investment Hedge
The information set forth in Note 16, "Derivatives and Hedging Activities," under the caption "Net Investment Hedge" is incorporated herein by reference.
Other Derivative Instruments
The information set forth in Note 16, "Derivatives and Hedging Activities," under the caption "Other Derivative Instruments" is incorporated herein by reference.
Foreign Currency Forward Contracts
At December 31, 2025, we were party to foreign currency forward contracts, which did not have a significant impact on our liquidity.
The information set forth in Note 16, "Derivatives and Hedging Activities," under the caption "Foreign Currency Forward Contracts Designated as Cash Flow Hedges" and "Foreign Currency Forward Contracts Not Designated as Hedges" is incorporated herein by reference.
For further discussion about these contracts and other financial instruments, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk."
Recently Issued Statements of Financial Accounting Standards, Accounting Guidance and Disclosure Requirements
We are subject to recently issued statements of financial accounting standards, accounting guidance and disclosure requirements. Note 2, "Summary of Significant Accounting Policies and Recently Adopted and Issued Accounting Standards,"
which is contained in the Notes to Consolidated Financial Statements, describes these new accounting standards and is incorporated herein by reference.
Critical Accounting Policies and Estimates
Our discussion and analysis of our consolidated financial condition and results of operations are based upon our Consolidated Financial Statements, which are prepared in accordance with GAAP. The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities.
Our estimates and assumptions are evaluated on an ongoing basis and are based on all available evidence, including historical experience and other factors believed to be reasonable under the circumstances. To derive these estimates and assumptions, management draws from those available sources that can best contribute to its efforts. These sources include our officers and other employees, outside consultants and legal counsel, third-party experts and actuaries. In addition, we use internally generated reports and statistics, such as aging of trade receivables, as well as outside sources such as government statistics, industry reports and third-party research studies. The results of these estimates and assumptions may form the basis of the carrying value of assets and liabilities and may not be readily apparent from other sources. Actual results may differ from estimates under conditions and circumstances different from those assumed, and any such differences may be material to our Consolidated Financial Statements.
We believe the following accounting policies are critical to understanding our consolidated results of operations and affect the more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. The critical accounting policies discussed below should be read together with our significant accounting policies set forth in Note 2, "Summary of Significant Accounting Policies and Recently Adopted and Issued Accounting Standards."
Commitments and Contingencies - Litigation
On an ongoing basis, we assess the potential liabilities and costs related to any lawsuits or claims brought against us. We accrue a liability when we believe a loss is probable and when the amount of loss can be reasonably estimated. Litigation proceedings are evaluated on a case-by-case basis considering the available information, including that received from internal and outside legal counsel, to assess potential outcomes. While it is typically very difficult to determine the timing and ultimate outcome of these actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of these matters and whether a reasonable estimation of the probable loss, if any, can be made. In assessing probable losses, we consider insurance recoveries, if any. We expense legal costs, including those legal costs expected to be incurred in connection with a loss contingency, as incurred. We have historically adjusted existing accruals as proceedings have continued, been settled or for which additional information has been provided on which to review the probability and measurability of outcomes, and will continue to do so in future periods. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recovery, it is possible that disputed matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.
Impairment of Long-Lived Assets
For finite-lived intangible assets, such as customer relationships, contracts, and intellectual property, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we perform a review for impairment. The impairment model is a two step test under which we first calculate the recoverability of the carrying value by comparing the undiscounted value of the projected cash flows associated with the asset or asset group, including its estimated residual value, to the carrying amount. If the cash flows associated with the asset or asset group are less than the carrying value, we would perform a fair value assessment of the asset, or asset group. If the carrying amount is found to be greater than the fair value, we record an impairment loss for the excess of book value over the fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate.
For indefinite-lived intangible assets, such as trademarks and trade names, we review for possible impairment at least annually or whenever impairment indicators are present. If a quantitative test is performed, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any. In addition, in all cases of an impairment review we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate. We recorded no impairment to indefinite-lived assets in the current year.
Goodwill
Goodwill is reviewed for possible impairment at least annually on a reporting unit level during the fourth quarter of each year. A review of goodwill may be initiated before or after conducting the annual analysis if events or changes in circumstances indicate the carrying value of goodwill may no longer be recoverable.
A reporting unit is the operating segment, or one level below the operating segment (a "component"). A component of an operating segment may be the reporting unit if the component constitutes a business for which discrete financial information is prepared and regularly reviewed by segment management and the component has economic characteristics that are different from the economic characteristics of the other components of the operating segment.
In our annual impairment review, we may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In a qualitative assessment, we would consider the macroeconomic conditions, including any deterioration of general economic conditions, industry and market conditions, including any deterioration in the environment where the reporting unit operates, increased competition, changes in the products/services and regulatory and political developments; cost of doing business; overall financial performance, including any declining cash flows and performance in relation to planned revenues and earnings in past periods; other relevant reporting unit specific facts, such as changes in management or key personnel or pending litigation; and events affecting the reporting unit, including changes in the carrying value of net assets.
If the results of our qualitative assessment indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we are required to perform a quantitative assessment to determine the fair value of the reporting unit.
Alternatively, if an optional qualitative goodwill impairment assessment is not performed, we may perform a quantitative assessment. Under the quantitative assessment, we compare the fair value of each reporting unit to its carrying value, including the goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, there would be no indication of impairment. If the fair value of the reporting unit is less than the carrying value, an impairment charge would be recognized for the difference.
Under the quantitative assessment, we derive an estimate of fair value for each of our reporting units using a combination of an income approach and appropriate market approaches. Absent an indication of fair value from a potential buyer or similar specific transactions, we believe that the use of these methods provides a reasonable estimate of a reporting unit's fair value. Fair value computed by these models is arrived at using a number of factors and inputs. There are inherent uncertainties, however, related to fair value models, the inputs and our judgment in applying them to this analysis. Nonetheless, we believe that the combination of these methods provides a reasonable approach to estimate the fair value of our reporting units.
We believe the most significant inputs while performing a quantitative assessments include:
•Forecasted future operating results: On an annual basis, the Company prepares financial projections for the upcoming operating year. These projections are based on input from the Company's leadership, strategy, commercial leadership and finance teams and are presented to our Board of Directors. We consider overall macroeconomic conditions, our forward-looking strategies, including expected benefits to be realized from our restructuring programs, as well as historical trends, to develop growth assumptions in the medium term.
•Discount rate: Our third-party valuation specialists provide inputs into management's determination of the discount rate. The rate is dependent on a number of underlying assumptions, the most impactful of which are the risk-free rate, tax rate, equity risk premium, debt to equity ratio and pre-tax cost of debt.
•Long-term growth rate: Long-term growth rates are applied to the terminal year of our cash flow valuation approach. The long-term growth rates are tied to growth rates we expect to achieve beyond the years for which we have forecasted operating results. We also consider external benchmarks, including forecasted long-term GDP growth and other data points which we believe are applicable to our industry and the composition of our global operations.
The Company performed a qualitative assessment of goodwill by reporting unit as of October 1, 2025. Based on our qualitative assessment, we believe it is more likely than not that the fair value of each of our reporting units sufficiently exceeds the carrying value. As part of our analysis, we performed a look back over the key assumptions impacting the quantitative test performed in 2023, including forecasted operating results and discount rates.
The Company also assesses goodwill for impairment from time to time when warranted by the facts and circumstances surrounding individual reporting units. Subsequent to our annual impairment test date, we continued to assess whether there were changes in facts or circumstances that would lead us to believe goodwill may be impaired. No indication of goodwill impairment has been identified subsequent to our annual testing date.
In the fourth quarter of 2024, we performed a qualitative assessment and in the fourth quarter of 2023, we performed a quantitative assessment for our annual impairment test. No indication of goodwill impairment was identified in 2024 or 2023.
See Note 9, "Goodwill and Identifiable Intangible Assets, net," for details of our goodwill balances as of 2025, 2024, and 2023.
Pensions
For a number of our current and former U.S. and international employees, we maintain defined benefit pension plans. Under current accounting standards, we are required to make assumptions regarding the valuation of projected benefit obligations and the performance of plan assets for our defined benefit pension plans.
The projected benefit obligation and the net periodic benefit cost are based on third-party actuarial assumptions and estimates that are reviewed and approved by management on a plan-by-plan basis each fiscal year. We believe the most significant assumptions are the discount rate used to measure the projected benefit obligation and the expected future rate of return on plan assets. We revise these assumptions based on an annual evaluation of long-term trends and market conditions that may have an impact on the cost of providing retirement benefits.
In determining the discount rate, we utilize market conditions and other data sources management considers reasonable based upon the profile of the remaining service life or expected life of eligible employees. The expected long-term rate of return on plan assets is determined by taking into consideration the weighted-average expected return on our asset allocation, asset return data, historical return data, and the economic environment. We believe these considerations provide the basis for reasonable assumptions of the expected long-term rate of return on plan assets. The measurement date used to determine the benefit obligation and plan assets is December 31.
At December 31, 2025, the total projected benefit obligation for our U.S. pension plan was $126 million, and the total benefit cost for the year ended December 31, 2025 was $1 million. At December 31, 2025, the total projected benefit obligation for our international pension plans was $502 million, and the total benefit cost for the year ended December 31, 2025 was $3 million. The employer service cost of our pension plans is charged to Cost of sales and Selling, general and administrative expenses. All other components of periodic benefit income or cost are recorded to Other expense, net.
Material changes to the principal assumptions could have a material impact on the costs, and the value of assets or liabilities recognized on our Consolidated Financial Statements. A 25 basis point change in the assumed discount rate and a 100 basis point change in the expected long-term rate of return on plan assets would have resulted in the following (decreases) increases in the projected benefit obligation at December 31, 2025 and the expected net periodic benefit cost for the year ending December 31, 2026:
United States
25 Basis Point Increase
(In millions)
25 Basis Point Decrease
(In millions)
Discount Rate
Effect on 2025 projected benefit obligation $ (2.4) $ 2.5
Effect on 2026 expected net periodic benefit cost - (0.1)
100 Basis Point Increase
(In millions)
100 Basis Point Decrease
(In millions)
Return on Assets
Effect on 2026 expected net periodic benefit cost $ (1.1) $ 1.1
International
25 Basis Point Increase
(In millions)
25 Basis Point Decrease
(In millions)
Discount Rate
Effect on 2025 projected benefit obligation $ (13.3) $ 14.2
Effect on 2026 expected net periodic benefit cost - -
100 Basis Point Increase
(In millions)
100 Basis Point Decrease
(In millions)
Return on Assets
Effect on 2026 expected net periodic benefit cost $ (4.6) $ 4.6
During the fourth quarter of 2021, the Company purchased a buy-in insurance contract which covered the remaining portion of the liability for one of our defined benefit pension plans in the UK. The total projected benefit obligation of the plan is $8 million. The projected benefit obligation was developed using actuarial assumptions that would be used in a plan termination or
buy-out basis. Under a full buy-out, the liabilities are fully transferred to an insurance or annuity provider and Sealed Air would no longer maintain the liability or administrative responsibilities. We are in the process of executing a full buy-out of the plan and now expect the transaction to be completed in 2026 or 2027. As of December 31, 2025, the fair value of the assets for this plan matched the projected benefit obligation and there was no material net balance sheet position for this plan. The plan has accumulated comprehensive losses of $6 million ($5 million, net of tax), recorded within AOCL in Stockholders' equity on our Consolidated Balance Sheets as of December 31, 2025. Upon plan termination or full buy-out, the accumulated comprehensive loss would be recognized to Other expense, net within the Consolidated Statements of Operations.
Income Taxes
Estimates and judgments are required in the calculation of tax liabilities and in the determination of the recoverability of our deferred tax assets. Our deferred tax assets arise from net deductible temporary differences, carryforwards of tax losses, and tax credits. We provide a valuation allowance on deferred tax assets when it is more likely than not that all or some portion of the deferred tax asset will not be realized.
In assessing the need for a valuation allowance on deferred tax assets, we estimate future taxable earnings and consider the feasibility of ongoing planning strategies, the realizability of tax loss carryforwards, and past operating results to determine which deferred tax assets are more likely than not to be realized in the future. Changes to tax laws, statutory tax rates and future taxable earnings can impact valuation allowances related to deferred tax assets. If actual results differ from these estimates in future periods, we may need to adjust the valuation allowance, which could have a material impact on our consolidated financial position and results of operations.
In calculating our worldwide provision for income taxes, we also evaluate our tax positions for years where the statutes of limitations have not expired. Based on this review, we may establish a liability for additional taxes and interest that could be assessed upon examination by relevant tax authorities. We adjust this liability to consider changing facts and circumstances, including the results of tax audits and changes in tax law. If the payment of additional taxes and interest proves unnecessary or less than the amount of the liability, the reversal of the liability would result in tax benefit being recognized in the period when we determine the liability is no longer necessary. If an estimate of the tax liability proves to be less than the ultimate assessment, a further charge to the income tax provision would result. These adjustments to liabilities and related expenses could materially affect our consolidated financial position and results of operations.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized on the Consolidated Financial Statements from such positions are measured based on the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon settlement with tax authorities. See Note 20, "Income Taxes," for further discussion.
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