Sealed Air Corp., which now goes by SEE in its branding, is searching for a new leader after Ted Doheny stepped down with no public notice.
The Charlotte, N.C.-based plastics packaging maker indicated Oct. 23 after the stock market closed that Doheny left as CEO and a board member effective immediately.
Chief Operating Officer Emile Chammas and Chief Financial Officer Dustin Semach become interim co-CEOs while keeping their current duties, the company said.
"While SEE has made progress expanding its portfolio, digitizing its global network and driving operational efficiencies, the board recognizes there is more work to position SEE for long-term profitable growth," Chairman Henry Keizer said in a statement.
"Transitioning SEE's leadership at this time will enable SEE to better navigate the market ahead of us and maximize value for our shareholders," he continued.
Doheny, while off the books as CEO and board member, will be an adviser to Semach and Chammas as they take control of the company in the transition to finding a permanent CEO.
The company indicated it will consider both internal and external candidates for permanent CEO job.
Lawrence De Maria is a stock analyst at William Blair & Co., an investment banking firm, and he downgraded SEE from "outperform" to "market perform" with the news.
"We understand that there was intense pressure on management given the very poor performance of the stock and capital allocation decisions. This has led to increased interest externally from potential activists as well as an internal review of assets," De Maria said in an Oct. 24 research note.
"While we believe the franchise overall is strong, especially on the food side, the elongated trough and destocking on top of weak markets as well as internal volatility has led to inconsistent performance," he wrote.
The departure of Doheny comes less than three months after SEE launched a new cost-cutting program aimed at eliminating $140 million to $160 million in annual costs by the end of 2025.
That decision came as SEE, which includes brand names such as Cryovac, Bubble Wrap and Liquibox, posted lower net sales and profit for the second quarter.
Dubbed "cost takeout to grow" by the company, the latest cost-cutting initiative was unveiled at a time when SEE expected to see demand weakness to continue into the second half of this year.
Sealed Air, which is still the company's legal name, previously reorganized in the couple of years prior to COVID-19, making changes that both saved money and improved earnings.
But coming out of the pandemic, the company finds itself once again facing challenges. This includes changes in consumer habits facing higher prices for products packaged in the company's films, bags and trays for food, including meats and poultry.
Market demand for the company's packaging products has fallen as inflation has impacted discretionary spending, the company previously said.
And retail demand is expected to remain soft into 2024, the company previously said.
SEE's latest approach to save money includes greater use of automation, new product lines utilizing sustainable materials and digital printing,.
SEE earned $94 million — 65 cents per diluted share — on sales of $1.38 billion during the second quarter ended June 30. This compares with earnings of $114.4 million, or 77 cents per diluted share, on sales of $1.42 billion during the same period in 2022.
The company also adjusted sales downward to a range of $5.4 billion to $5.6 billion for the year, down from a previous estimate of $5.85 billion to $6.1 billion. The company reaffirmed the updated sales guidance while announcing Doheny's departure.
Doheny, for his part, called leading see a "privilege."
"I am confident that SEE will continue to be a leader within our industry and look forward to working with Emile and Dustin to facilitate a smooth transition," Doheny said in an announcement revealing his departure as CEO.
Chammas indicated the company will continue on the cost-cutting program and Semach indicated in a statement "there are significant opportunities for SEE as we enhance our focus on financial performance, capital allocation and portfolio optimization."
Sealed Air stock ended trading at $28.58 before Doheny announced his departure, just off the company's 52-week low of $28.50 and about half of its 52-week high of $56.43. Shares jumped to more than $30 in early trading Oct. 24 on the news of the executive change.
"We obviously hate to downgrade a stock at/near the lows, especially when it is inexpensive, but we cannot justify recommending new purchases of the stock here with all of the uncertainty until a path emerges. That said, SEE reiterated its full-year guide ... as we look for signs of stabilizing end-market demand potentially exiting fourth quarter 2023," William Blair's De Maria wrote.
Doheny had been CEO at Sealed Air since January 2018 after having jointed the company in September 2017 as CEO-designee.