Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Sealed Air First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode to prevent background noise. We will have a question-and-answer session later and the instructions will be given at that time. And as a reminder, this conference is being recorded. Now, I would like to welcome and turn the call to Ms. Lori Chaitman, Vice President of Investor Relations. You may begin.

Thank you, and good morning, everyone. Before we begin our call today, I would like to note that we have provided a slide presentation to help guide our discussion. This presentation can be found on today's webcast and can be downloaded from our IR website, at sealedair.com. I would like to remind you that statements made during this call, stating management's outlook or predictions for the future are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review this information in the section entitled, Forward-Looking Statements in our earnings release, which applies to this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent Annual Report on Form 10-K and as revised and updated on our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which you can also find on our website at sealedair.com or at the SEC's website at sec.gov. We also discuss financial measures that do not conform to U.S. GAAP. You may find important information on our use of these measures and their reconciliation to U.S. GAAP in the financial tables that we've included in our earnings press release. Included in today's presentation on slide 3 and slide 17, you will find U.S. GAAP financial results that complement some of the non-U.S. GAAP measures used throughout the presentation. In addition, on slide 16, we included a reconciliation of previously reported consolidated results to continuing operations for both Q1 and full year 2016, reflecting Diversey as discontinued operations. In the coming weeks, we will publish key metrics for Q2, Q3 and Q4 2016 continuing operations to help with your 2017 analysis for the remainder of the year. As a reminder, our Medical business was integrated into our Food Care business, which is reflected in our results and outlook. Now I'll turn the call over to Jerome Peribere, our President and CEO. Jerome?

Thank you, Lori, and good morning, everyone. We have a lot to cover on our call this morning. And during our prepared remarks, we will cover the announced sale of Diversey, and the use of proceeds and how we will address stranded and unallocated costs. We will review in detail our first quarter results and outlook for continuing operations. We will also highlight Diversey results and after our prepared remarks, we'll open up the call for your questions. So, let's get started. On March 27, we announced a definitive agreement to sell Diversey, our Diversey Care division and our related hygiene business to Bain Capital Private Equity for $3.2 billion. The transaction is expected to close early September with net proceeds of approximately $2.5 billion. This transaction marks a significant milestone for both Sealed Air and Diversey, and we are committed to a timely and successful separation. For Sealed Air, this transaction will give us an even greater focus on executing our profitable growth story and investing in our core business. The increased financial flexibility will enable us to return cash to shareholders through share repurchases and dividends, while at the same time, target value-added acquisitions. To address the dilutive impact of this transaction, we increased our share repurchase program by an additional $1.5 billion, expanding our total authorization for future repurchases to approximately $2.2 billion. We will continue our quarterly cash dividend of $0.16 per share and we will pay down approximately $1.1 billion of debt and maintain our credit profile. In reviewing our first quarter performance for continuing operations, you will see that we had a very solid start of the year. Sales were a $1 billion, an increase of 3% constant dollar growth. Food Care sales of $656 million, had constant dollar growth of 2% and Product…

Thank you, Jerome. Turning to slide 9, let me walk you through our net sales from continuing operations on a year-over-year basis. We delivered $1 billion in net sales in the first quarter. Volume contributed $38 million and was partially offset by unfavorable price/mix of $11 million. Jerome has already provided color on our top-line trends. Adjusted EBITDA from continuing operations was $182 million. Volume growth contributed $17 million in Q1. Mix and price/cost spread was $12 million unfavorable. Operating expenses increased $5 million and restructuring savings were $1 million. Currency had an unfavorable impact on adjusted EBITDA of $2 million. You can also see on the bridge that we disclose the unallocated costs as a separate item, which were $8 million in the first quarter 2017 as compared to $5 million in the first quarter 2016. I will expand on this further when we discuss the 2017 full year guidance. Adjusted earnings per share from continuing operations were $0.43 in the first quarter compared to $0.42 in Q1 2016. Our adjusted tax rate for continuing operations in Q1 2017 was 14% compared to 19% in Q1 2016. The adjusted tax rate in the first quarter was favorably impacted by a tax benefit on share-based compensation and benefits related to statute of limitations, expirations and audit settlements. Turning to slide 10, we are presenting our free cash flow on a consolidated basis, which includes results from continuing and discontinued operations. In the first quarter, consolidated free cash flow excluding payments related to the Diversey sale was a use of cash of $31 million. CapEx was $50 million. Cash interest payments $48 million. And restructuring costs were $15 million. Aligned with our typical free cash flow seasonality, working capital and other assets and liabilities were a use of cash of $115…

Thank you. And our first question is from the line of Ghansham Panjabi with Robert W. Baird. Your line is open. Mehul M. Dalia - Robert W. Baird & Co., Inc.: Hi. Good morning. This is actually Mehul Dalia sitting in for Ghansham. How are you guys doing?

Good. Good morning.

Good morning. Mehul M. Dalia - Robert W. Baird & Co., Inc.: Great. Just trying to get a better sense of what the free cash flow profile is for the company excluding Diversey and relative to the $390 million you are guiding towards for 2017, what kind of free cash flow will the new Sealed Air generate in 2018 and beyond and what are some of the parameters like CapEx, cash restructuring, cash tax and working capital going to look like going forward?

So, we're not prepared to give a number for 2018. We've referenced in my comments to the 50% free cash flow conversion rate that we will be moving to. With respect to CapEx a more normalized basis for us would be approximately $150 million to $160 million and that assumes plenty of room for us to invest for growth, because our maintenance CapEx is somewhere around $100 million for the company. So, any other questions? Mehul M. Dalia - Robert W. Baird & Co., Inc.: Yeah. And, I guess, what's driving the large swing in working capital for this year. I think it was supposed to be an $80 million source before and now it's a $65 million use of cash. Any details around that would be helpful?

So, it's largely because of the sale of Diversey. As I noted, we are heavy in our free cash flow generation in the second half of the year and that is very true for Diversey. Actually, the bulk of their free cash flow is generated within Q4. So, most of the delta from the guidance that we provided before to the update for working capital and other is largely driven because of the current planned close date for the transaction in early September. Mehul M. Dalia - Robert W. Baird & Co., Inc.: Okay. Thank you very much.

And also, your question about the restructuring, just to make sure we have clarity there, we had previously guided $85 million to $100 million in restructuring for 2017. As you see, we now have restructuring for continuing operations excluding anything associated with the separation at $50 million and you also see, as we highlighted in the deck, that we have $50 million identified for restructuring associated with addressing stranded costs. So, those two together, we are still within our $85 million to $100 million for 2017, although on the high end. We expect that the $50 million for the restructuring associated with stranded cost, that will actually spread mostly from Q4 and then into 2018 as we address those stranded costs. Mehul M. Dalia - Robert W. Baird & Co., Inc.: Okay. Thank you so much.

Operator, next question please.

Thank you. And our next question is from the line of Edlain Rodriguez with UBS. Your line is open.

Thank you. Good morning, guys. Just so we all are on the same page, can you bridge the $825 million EBITDA guidance for continuing operations versus the number you had before, like last year at the end of the fourth quarter, which I believe was closer to $860 million, $865 million. I mean, you've talked about the stranded costs, but you lowered the negative impact from currency. Like what's like the delta? Like what got worse versus what you were looking at, at the end of last year?

So, actually, we wouldn't say that there's a lot worse than at the end of last year. We've highlighted that some of the mix with Product Care, and Jerome can comment more on that, just as we continue to grow at a faster rate within our e-Commence and fulfillment does have some impact, however, we're seeing nice performance from Food Care and from Product Care top line, and unallocated costs of $25 million also was key in that bridge as well.

So there is something that you need to understand is the SEC rules with regards to unallocated costs before closing. And unless a given unallocated cost is very precisely put into a division, call it computers and cell phones, there is a cost for computers and cell phone for example which is very clearly set into the Diversey operation. But if it is a cost which is allocated as a percentage of sales or things like this, before closing, all of those costs move to Sealed Air to new Sealed Air, and that is probably part of this explanation and we have talked about $25 million of those costs, which in fact are moved to – into our accounting, since they're new to their accounting, and you're going to have – you're going to see those after closing being offset by GSAs (31:48).

Okay. And one last one. In terms of like Product Care, so how do you address the margin issue where e-Commerce sales no doubt are growing, but they tend to have lower margins in industrial sales, which are declining, and so how do you make up for that margin?

So that's a very good question. We don't have a margin issue as you said, with Product Care because actually we're really very happy with the restoration of margin in that division that we have carried throughout the years. But what you have seen is that we have actually – what we have not seen, but what we have had is somewhat flat pricing, but a negative price/mix and you have seen that for the year we said that we're going to have 3% to 4% constant dollar sales growth. The reality in the gross profit line is that we're seeing a slight degradation in the first quarter and it's going to be impacting also the second quarter because we have had hefty resin price increases, which we have not been able to immediately offset with our own price increases, which we have started. So we already are seeing some price increase – slight price increase in the first quarter which is going to continue in the second quarter but that's one part. One part is the slight margin compression that all of our competitors have had in food packaging and in product packaging and things like this because of the speed and how hefty those resin cost increases have been. The second thing is the mix. And in Product Care, we are growing as we already told you in the previous quarters, much faster in e-Commerce and fulfillment than in our industrial packaging. By the way, our industrial packaging is doing much better than it has done. We are seeing some lift, we're seeing some restoration of volume which is very pleasant to see in an industrial GDP, which is still not very good, but we're seeing this. But what is important to understand is that yes we do have some lower value-added products temporarily in e-Commerce, but we also have and you need to remember that, have launched an equipment line. Two years ago, we didn't have any equipment product. We have at Pack Expo last October shown our new line of equipments and those are starting to ramp up. You can imagine that when your production starts to ramp up, you have lower margins because you'll have to absorb volume variances in your plants and we are by far not at the margins we need to be in our equipment. But this is the nature of the beast. You ramp up your equipment and when those are going to start kicking with sizeable volume and we're doing – we have a lot of momentum in that sector. We are going to improve our margin. This is why and I'm concluding with this, this is why I said that short-term our margins in e-Commerce 3PL are lower than our total margin, but this is not going to be the case over time.

That's very helpful. Thank you.

Operator, can we take the next – Thanks, Edlain. Operator, can we take the next question please.

Thank you. And our next question is from the line of George Staphos with Bank of America Merrill Lynch. Your line is open.

Hi everyone, good morning.

Hi George.

Appreciate all the details. I want to come back to the question of performance relative to guidance, if we – and let's take it from a prior, pre-Diversey being discontinued operations basis, which will then get away from that accounting as you were talking about, Jerome. So I think prior guidance you were looking for about a $1.180 billion in EBITDA and if I talk the $825 million of continuing operations and I gross up the $215 million for full year, I'll wind up at around $1.150 billion. We also have currency which seems like it's been less negative, which is a good thing and volume trends have been at least as good it would appear as you would have been expecting. So if you agree with the premise of everything I just set up, there does appear to be some difference in what you were guiding to in terms of what you are seeing right now, what would cause that? And then my second question and then I will turn it over. Jerome, you have done a great job of driving margin in part by getting fair value for your products in the market relative to what they are to their customers, do you feel you have much more upside in that regard either in Product Care or Food Care in terms of again getting that fair value, that fair price for the value project customers or if you largely accomplished that at this juncture. Thank you guys and good luck in the quarter.

So, George one thing to note, I'm not sure because we don't breakout guidance for each of these segments and businesses and depending on what the assumption was for hygiene, that could potentially be contributing to some of the disconnect. We did provide on slide 16 of the deck what hygiene's performance was for the full-year 2016, as well as for Q1. We have had growth within the hygiene business year-over-year for 2017. And so depending on your assumptions for that, that could be causing part of the disconnect with the guidance, looking back at it. The other thing...

But Carol, presumably that would be in the $1.180 billion?

Yes.

Okay, please go ahead. I apologize.

No, I'm sorry, George, okay. So if you are looking at the total – the other thing is on some of the formula pricing in that pass through, we did have slightly higher than expected increases that we will make up in the second half of the year. So, there's a little bit of that but whereas previously we have said resins would be approximately flat for the year. They will be up slightly on a full-year basis. And so – that's timing due to the pass through. So we'll see that as well.

Okay.

So, yeah...

Thanks for that.

....in regards to our cost increases, once again, remember the cost increases, that was $0.05 in February, it was $0.03 in March, the $0.03 of April in resins has been moved to May, and we'll see if it goes through et cetera. So, yes we have been negatively impacted on the gross profit line on both divisions; one because of formula pass through, the other one because of negotiations and it is going to impact also Product Care and also Food Care in the second quarter before we see a restoration. But what you have to be sensitive also with regards to the currency, and yes indeed, the currency impact is less, but remember who it affects most. It is the Diversey side because they have a higher exposure to non-U.S. dollar than the rest of new Sealed Air. Having said that, no, we don't see a deterioration of our forecast when you compare apples-with-apples. We expect continued gross profit squeeze in the second quarter because of the reasons that I talked to you about.

And on the March to get fair value for all your products, Jerome? Thank you.

On the second comment, which is also a very good question, remember what I said several years ago, there is a catch-up to do. So, therefore, the margin increase is going to slow except for the new products and you remember that in Food Care and in Product Care, we have been moving with innovation which is – which are really doing well. We are going to update you all during our Analyst Day next autumn about this. And as a result of that we believe that we are going to be able to continue to have margin expansion. The solutions that we are bringing, adding new value to customers have a very quick and very strong payback for our customers. So, we're really pleased with our innovation.

Thank you.

Operator, can we go to the next question?

Thank you. And our next question is from Scott Gaffner with Barclays. Your line is now open.

Hi. Good morning.

Hi, Scott.

I had a follow-up on a couple of George's questions because I've got a very similar math to him on the RemainCo, if you want to call it that, EBITDA guidance of $825 million. Maybe to just ask a little bit more straightforward, are you seeing a reduction in your EBITDA guidance for the Food Care, Product care, RemainCo business and if not, maybe you just built in some conservatism into that forecast on a go-forward basis given all the moving parts?

So, our forecast is our forecast. What we have seen, as I said before, is margins squeezed in the Product Care. We used to see the sales growth move into the EBITDA and more and we are not seeing this in Product Care for the reasons I have talked about. And therefore for the full year, we're not seeing and we're not expecting to have product care have the sales growth dropped to the bottom line and more. And the reasons once again are hefty and quick resin increases and the product mix with regards to our equipment in our lower value-add products into the e-Commerce. So that's one. The second one is that we are – in Food Care, we're seeing growth and we're satisfied with what's going on in there, and we're not seeing the major EBITDA contraction or lower growth than you were expecting. Once again, remember what I said before, the ATC (43:59) accounting principles oblige us to take all of those non-directly attributable allocated costs that we have before closing into Diversey. They have to come to new Sealed Air that is having an impact.

Okay. And just a follow-up on the resin price increases on Food Care, I thought I heard you say – I'm sorry, Product Care. I thought I heard you say pricing was impacted by some negotiations and then in Food Care anything that you can do to maybe tighten the pass through on those resin price increases. I think, you said you weren't going to get it back until the second half of the year? Thanks.

So now you don't tighten because those pass-throughs because those are contracts and therefore you respect the contracts. But what goes around comes around and as a result this at the point in time, we're going to start to benefit from those and we believe that this is going to be towards the end of the year and definitely into next year. With regards to Product Care, those are negotiations because we don't have basically formulas and that has affected some gross profits in the first quarter because of the speed of those $0.05 and $0.03 and potentially some more to come. We have announced price increases on – and we have executed on price increases based on resins. We also had some benzene and MDI, very hefty price cost increases, and we have already started to implement price increases on our – Instapak product line which is important.

Thank you.

Thank you, Scott. Does that cover it?

It does. Thank you.

Great. Operator, next question please.

Thank you. And our next question is from the line of Arun Viswanathan with RBC. Your line is open.

Good morning, thanks, guys. I just wanted to go back to the plan going forward. So, we'll be losing the Diversey EBITDA, you talked about share buyback and an accelerated share repurchase program and some debt pay down and M&A. Maybe you can just help us understand how you bridge the dilution? Because we're getting quite a bit of that in expenses (46:24). How do you see that bridge playing out over the next 12 to 18 months?

So, on the dilution, I made the comment that we would cover part of it through the net proceeds, approximately if we utilize $1.1 billion and then we utilize free cash flow generation, it's approximately $1.8 billion depending on the price of the stock, to get us to a net neutral position for the separation of the Diversey business. And we will put in place open market purchases as well as an accelerated share repurchase program, and our goal again is to neutralize by the end of 2018.

And what about M&A. I imagine that some proceeds could be used in that. Is that correct and what are you seeing in the pipeline if so? Thanks.

So, yes, M&A can be part of the game. I've been very public saying that we have been doing technology bolt-ons in the past and we're going to continue looking at bolt-on operations. So therefore there is no huge M&A being discussed or being looked at at this point in time. We believe that we can do a regional bolt-on to reinforce our Product Care and our Food Care divisions.

Thanks.

Operator, next question please.

Thank you. And our next question is from the line of Brian Maguire with Goldman Sachs. Your line is open. Brian Maguire - Goldman Sachs & Co.: Hey, good morning. Thanks for taking my question. Just wanted to zero-in on the corporate expense line for a minute. Lot of moving pieces there. As I understand it, I guess you had $25 million of unallocated expenses in there. I think you made some comments that $23 million of that would get covered by some transition service agreements once the sale closes and then eventually you hope to take out half of the $40 million of stranded costs, so is it right way to think of it as a negative $130 million this year going to something like a negative $110 million next year? And I know that's not all corporate, there's some spending on growth initiatives in there. Any thoughts on changing the cadence of some of that spending and maybe pushing it out a little bit to offset some of the dilution from the sale and some of the impact from the stranded costs.

So, you are thinking about the math the correct way, so the $130 million includes the $25 million of unallocated, and not to delve into technical Generally Accepted Accounting Principles, but just to note that all those costs are, they are shift from discontinued to continuing operations, because the accounting rules are very specific, that unless something can be identified as a discrete cost, it can't sit in discontinued operations. So we have to pull it up into continuing operations, that's why we've called it out. That will be the easiest part of the cost to exit. They will firstly largely be covered by approximately $23 million in transition service agreement proceeds, over those agreements they vary across all of the work stream, some last 6 months, some are 12, some can go up to 18 months, that they should largely cover that $25 million. Then in addition to that, I highlighted the $40 million, which we will work to exit 50% of that, beginning at the close date and estimate it will probably take approximately 24 months to exit those costs. And we have included in that $50 million in the restructuring to get to the net proceeds for the sale of the business to cover the exit of those costs. If we don't have the growth to be able to cover that $20 million, that we're saying, we're not exiting, obviously we will have to take actions to address more than the $20 million, because our goal is to continue to have quality of earnings via EBITDA growth as we see top-line growth. It always doesn't happen smoothly one-for-one depending on, if we're growing in a certain sector and making investments such as with the e-Commerce and fulfillment markets where we're growing rapidly there, but we do plan to have year-over-year. Also, if we look at either our corporate expenses or what we're investing within the businesses, Jerome has created a culture here, it is still there, and we will continue to manage that way. We have to earn the right to grow, and earn the right to be able to spend and invest. And it's at the performance of the business level or in total for the company. If we're not seeing that growth and that improvement in performance, we will very aggressively manage the cost.

Having said that, you have observed I hope the dramatic shift in our volume growth. And that helps me to come back and say and remind all of what I said last year. Last year, I said that we were expecting to have a total growth of about 3%, which we did not deliver, but I was expecting this to be – the growth of last year to be ramping up towards the end of the year. So, when you step back what are you seeing? You're seeing that basically I was wrong by one to two quarters maximum, and I do confirm that I am expecting to see the volume growth and the total growth to firm up because we said 3% to 4% this year, and when you look at specifically to the volume, we have had this past quarter, about the double growth that we have had for a long time because our volume growth in New Sealed Air has been of about 0.8% to 0.7% in the first three quarters of last year, and about 2% in the fourth quarter, so what you're seeing that this growth has picked up. So, Q4 volume growth for New Sealed Air was 2%. Q1 volume growth for the first quarter was 3.8% and I do confirm that this is a very good and positive trend, which is making me very confident that our strategy was and is the right one, innovation and segmentation is the name of the game. And next to that we're going to see how it develops into 2018, but altogether we believe that this 3% to 4% growth in 2017 is going to be coming, which is the major change compared to the past. Brian Maguire - Goldman Sachs & Co.: Yeah. Thanks for that. I think no one disputes the volume growth. I think it's just some of the translation of that to the bottom-line getting offset by some of the OpEx spending and the corporate has been just a little bit frustrating, so hoping to see a little bit more of that drop to the bottom line going forward. Just one on the Food Care...

Not more frustrating than for us by the way, but this is a transition time. It is a difficult time in 2017. We have done what we felt was necessary to be done for the future of Sealed Air. This Diversey has earned the right to fly from its own wings with Bain Capital right now, and I think this is good for Sealed Air and that this is good for Diversey. And on the Product Care, having the sales growth not dropping to the bottom line, fully agree with you, we believe that this is transitional also, but it's going to be there in 2017. Brian Maguire - Goldman Sachs & Co.: Okay. Appreciate that. I just had one on Food Care and that was the price/mix was down, even the resins are up and I think the U.S. was a bigger contributor to the mix, but I thought they would have had a higher price point. Just wondering are you seeing any competition pick up there that's leading you to have to cut any like versus like pricing above and beyond just the raw pass-throughs and may be just help us understand what was driving the price/mix to be down there?

I'm a very strong believer that you do not buy your way into markets with price, and I have proven that over the past few years. What is making us win in the marketplace is our innovation, it is not only on red fresh meat, it is also on cheese, it is also on processed foods, we have customers who are converting to Grip & Tear solutions, we are making progress with OptiDure as we were expecting, we're making progress with our DOT as we were expecting. So I would say all good and this is what enables us to have the volume moves that we're having. Mostly what we're seeing is, price in the first quarter mostly North America because of the formula pricing. It's mostly a timing point situation. Brian Maguire - Goldman Sachs & Co.: Okay. Thanks very much.

Thank you.

Operator, I think we have time for one or two more question.

Thank you. And our next question is from the line of Adam Josephson with KeyBanc. Your line is open.

Thanks. Good morning, everyone. Carol just a two-part question on the dilution. So, if your buyback call it $1.8 billion, let's call it 40 million shares, so the $1.70 just by my math would go $2.15. So to get back to $2.60 would seem to require quite a bit of EBITDA growth. I'm just wondering how much of that would come from the stranded cost/unallocated cost going away? How much needs to go to get to neutral on earnings by the end of next year? That's my first question.

So, we would assume again that all of the unallocated is addressed by the end of 2018, so that full 25 million. And the 20 million of the 40 million, we would address that beginning at the date of separation and estimate that it will take approximately 24 months, cost will exit each and every quarter. And the timing of that length to be variable. But our assumptions and assume that we would exit the 25 million plus the 20 million within 24 months of the close, but the biggest portion of it being exited by the end of 2018.

Okay. And are you assuming organic growth on top of that growth?

Yes, we are assuming organic growth for EBITDA.

Okay. And just last question on the buyback, Carol. Can you just talk about the timing of it and the extent to which you intend to lever up to buy back stock before the deal closes? Thank you very much.

Yeah. So, Adam, we'll be out of our blackout now that we've had our earnings release and shared this information. We'll file our 10-Q by tomorrow at the latest, so which we'll just have all the numbers that we've presented within our earnings release. So we'll be out of the blackout, so we can be back in the market at any time, prior to going back into blackout for the Q2 earnings and we'll have to put plans in place before that to be active through that entire time period and up until the earnings release for Q2. So, we internally we've talked about what numbers make sense, as always we'll stick to the discipline we've had where we run models, we look at an intrinsic value for the stock, we review the models with the board and those ranges and we'll continue to do so as we go forward. We ended Q1 right around 3.5 times leverage, we will stick to our commitment of 3.5 times to 4 times leverage and we feel very comfortable with the amount that we will be buying in Q2 and Q3 even without a close of the Diversey transaction. While we don't see any risk to the transaction at all, we will be very prudent in how we buy the stock back.

Thank you, Carol.

Operator?

Yes, ma'am.

That ends our call for today, please. Thank you.