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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.05pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.20pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.09pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
litigation+8
closing+8
adversely+7
adverse+6
failure+5
Positive rising
satisfied+3
successful+2
advancements+2
able+1
successfully+1
Risk Factors (Item 1A)
11,110 words
Item 1A. Risk Factors
Introduction
The risks described below should be carefully considered before making an investment decision. These are the most significant risk factors, but they are not the only risk factors that should be considered in making an investment decision. This Form 10-K also contains and may incorporate by reference forward-looking statements that involve risks and uncertainties. See the “Cautionary Notice Regarding Forward-Looking Statements,” immediately preceding Part I of this Form 10-K. Our business, consolidated financial condition, results of operations, or cash flows could be materially adversely affected by any of these risks. The trading price of our securities could decline due to any of these risks, and investors in our securities may lose all or part of their investment.
Pending Merger Risks
The Merger may not be completed on the terms or timeline currently contemplated, or at all, and failure to complete the Merger may result in adverse effects on our business, financial condition, results of operations, and stock price.
On November 16, 2025, we entered into the Merger Agreement with Parent and Merger Sub. of the Merger is subject to the or waiver of certain customary conditions set forth in the Merger Agreement, including (i) the receipt of the affirmative vote to adopt the Merger Agreement by the holders of at least a majority of the outstanding shares of Company Common Stock entitled to vote thereon (obtained at a special meeting of Sealed Air’s stockholders on February 25, 2026); (ii) the expiration or earlier of the waiting period under the Hart-Scott-Rodino Act of 1976, as amended (early of which was received on December 23, 2025), and approvals under certain other laws, foreign investment laws and other applicable laws as agreed between the parties; (iii) the of any applicable law, order, judgment, decree, or ruling prohibiting the consummation of the Merger; (iv) the accuracy of the representations and warranties contained in the Merger Agreement and compliance with the covenants contained in the Merger Agreement, in each case, subject to certain customary materiality qualifications set forth in the Merger Agreement; (v) no Company Material Effect (as defined in the Merger Agreement) having occurred; and (vi) the receipt of certificates certifying that the applicable conditions have been . We have incurred, and will continue to incur, significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger. Many of the fees and costs will be payable by us even if the Merger is not completed. There is no assurance that the remaining conditions to the Merger will be before the End Date (as defined in the Merger Agreement) or at all, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
unfavorable+5
termination+5
terminated+3
discontinued+1
divestiture+1
Positive rising
effective+2
gain+2
positive+2
benefit+1
favorable+1
MD&A (Item 7)
16,092 words
Item 7.
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 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 Merger may be delayed, and may ultimately not be completed, due to a number of factors, including:
• the failure to obtain remaining regulatory approvals, clearances, or conditions that are or may become applicable to the Merger before the End Date or at all;
• the failure by Parent and Merger Sub to obtain the Debt Financing (as defined in the Merger Agreement) on the terms set forth in the Debt Commitment Letter (as defined in the Merger Agreement), or any difficulties of Parent in obtaining any necessary financing for the Merger, including as a result of uncertainty or adverse developments in the credit and capital markets or otherwise; and
• the failure of any other remaining closing conditions to be satisfied on the expected timeframe or at all, including the possibility that a Company Material Adverse Effect would permit Parent not to close the Merger.
If the Merger does not close, we may suffer other consequences that could adversely affect our business, financial condition, results of operations, and stock price, and our stockholders would be exposed to additional risks, including:
• to the extent the current market price of our stock reflects an assumption that the Merger will be completed, the market price of our common stock could decrease if the Merger is not completed;
• investor confidence in us could decline and stockholder litigation could be brought against us;
• the Merger and its announcement could have an adverse effect on our ability to retain customers and maintain relationships with customers, suppliers, stockholders and other business counterparties, including with respect to concerns about possible changes to our platform, product and services or policies, and on our operating results and business generally;
• the risks related to the diversion of attention of our management or employees from the day-to-day business of the Company to the consummation of the Merger, the uncertainty our employees may have about their roles upon consummation of the Merger, and the ability for us to attract and retain key talent, including senior leaders, during the pendency of the Merger to the same extent that we have previously been able to attract and retain employees prior to the announcement of the Merger; and
• the requirement that we pay Parent a termination fee of $205.1 million under certain circumstances that give rise to the termination of the Merger Agreement.
There can be no assurance that our business, relationships with other parties, liquidity or our financial condition will not be adversely affected, as compared to our business, relationships, liquidity and financial condition prior to the announcement of the Merger, if the Merger is not consummated. Even if successfully completed, there are certain risks to our stockholders from the Merger, including:
• we may experience a departure of employees prior to the closing of the Merger;
• the amount of cash to be paid under the Merger Agreement is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or operating results or in the event of any change in the market price of, analyst estimates of, or projections related to, our common stock;
• receipt of the all-cash per share merger consideration under the Merger Agreement is taxable to stockholders that are treated as U.S. holders for U.S. federal income tax purposes; and
• if the Merger is completed, our stockholders will forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent, publicly traded company.
While the Merger is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition, results of operations, and business.
During the period from the announcement of the Merger to prior to the closing of the Merger and pursuant to the terms of the Merger Agreement, our business is exposed to certain inherent risks and contractual restrictions that could harm our business relationships, financial condition, results of operations, and business, including:
• potential uncertainty in the marketplace, which could lead current and prospective customers to purchase products and services from other providers or delay purchasing from us;
• the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Merger, and other restrictions on our ability to conduct our business;
• our inability to freely issue securities, incur certain indebtedness, declare or authorize certain dividends or distributions, or make certain material capital expenditures without Parent’s approval;
• our inability to solicit other acquisition proposals during the pendency of the Merger under the terms of the Merger Agreement following the expiration of the “go-shop” period on December 16, 2025;
• the amount of the costs, fees, expenses, and charges related to the Merger Agreement and the Merger, including but not limited to the cost of professional services, insurance, and any legal proceeding that may be instituted against us, which may materially and adversely affect our financial condition; and
• other developments beyond our control, including, but not limited to, changes in domestic or global economic conditions that may affect the timing or success of the Merger.
If any of these effects were to occur, it could adversely impact our business, cash flow, results of operations or financial condition, as well as the market price of our common stock and our perceived value, regardless of whether the Merger is completed.
Litigation has arisen in connection with the Merger, which could be costly, prevent consummation of the Merger, divert management’s attention, and otherwise harm our business.
Putative stockholder complaints, including stockholder class action complaints, and other complaints have been filed against us, our Board of Directors and others in connection with the Merger. Regardless of the outcome of the existing and any future litigation related to the Merger, such litigation may be time-consuming and expensive and may distract our management from running the day-to-day operations of our business. The litigation costs and diversion of management’s attention and resources to address the claims and counterclaims in any litigation related to the Merger may adversely affect our business, results of operations, prospects, and financial condition. If the Merger is not consummated for any reason, litigation could be filed in
connection with the failure to consummate the Merger. Any litigation related to the Merger may result in negative publicity or an unfavorable impression of us, which could adversely affect the price of our common stock, impair our ability to recruit or retain employees, damage our relationships with our customers, suppliers, and other business partners, or otherwise harm our operations and financial performance.
Strategic Risks
We may be unable to successfully execute on our growth initiatives, business strategies or operating plans.
We may not be able to fully implement our business strategy to realize, in whole or in part within the expected time frame, the anticipated benefits of our growth and other initiatives. Our various business strategies and initiatives are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.
As our business environment changes, we have adjusted and may need to further adjust our business strategies or restructure our operations or particular businesses. Over time, we have implemented a number of restructuring programs, including various cost savings and reorganization initiatives.
We have also made assumptions on the expected cash spend to achieve the anticipated savings. These assumptions may turn out to be incorrect due to a variety of factors. In addition, our ability to realize and sustain the expected benefits from these programs is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. If we are unsuccessful in implementing these programs, do not achieve our expected results or are unable to maintain the savings on a long-term basis, our consolidated results of operations and cash flows could be adversely affected or our business operations could be disrupted.
Our ability to adopt or implement new technologies effectively, including Artificial Intelligence (“AI”), may be unsuccessful and may not result in enhanced productivity and operational efficiency within our business.
Our competitors may outpace and outspend us in incorporating new technologies, including AI, into their new product innovation, marketing and engagement with consumers and into their manufacturing, distribution and cost savings initiatives, which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity. Our efforts to utilize new technological advancements may not be successful, may result in substantial integration and maintenance costs, and may expose us to additional legal and operational risks. If we incorporate AI into our business, the content, analyses, or recommendations generated by AI, if deficient, inaccurate, or biased, could adversely impact our business, consolidated financial condition, results of operations or liquidity, as well as our reputation. Moreover, ethical concerns associated with artificial intelligence or other new technologies could lead to brand damage, competitive disadvantages or legal repercussions. In addition, the rapid evolution and increased adoption of new technologies, including AI, and our obligations to comply with emerging laws and regulations may require additional compliance costs and require us to adopt technology-specific governance programs. Any problems with our implementation or use of technological advancements, including AI, could negatively impact our business, consolidated financial condition, results of operations or liquidity.
Uncertain global economic conditions may have an adverse effect on our consolidated financial condition, results of operations, or cash flows.
Uncertain global economic conditions, including the impact of inflationary pressure and general economic slowdowns across the global economy, may have an adverse impact on our business in the form of lower volumes sold due to weakened demand, unfavorable changes in product price/mix or lower profit margins. For example, in the past, global economic downturns have adversely impacted some of our customers and end-users, such as food processors, distributors, supermarket retailers, restaurants, industrial manufacturers, retail establishments, business service contractors and e-commerce and mail order fulfillment firms, and other end-users that are particularly sensitive to business and consumer spending. Our production levels and inventory management goals for our products are based on estimates of demand, taking into account production capacity, timing of shipments and inventory levels. If market conditions change, resulting in us overestimating or underestimating demand for any of our products during a given season, we may not maintain appropriate inventory levels, which could materially and adversely affect our business, financial condition and results of operations.
During economic downturns or recessions, there can be a heightened competition for sales and increased pressure to reduce selling prices as our customers may reduce their volume of purchases from us. If we lose significant sales volume or reduce selling prices significantly, there could be a negative impact on our consolidated financial condition, results of operations, profitability or cash flows.
Also, reduced availability of credit may adversely affect the ability of some of our customers and suppliers to obtain funds for operations and capital expenditures. This could negatively impact our ability to obtain necessary supplies as well as our sales of materials and equipment to affected customers. This could also result in reduced or delayed collections of outstanding accounts receivable.
Unfavorable customer responses to price increases could have a material adverse impact on our sales and earnings.
From time to time, and especially in periods of rising raw material costs, we increase the prices of our products. Significant price increases could impact our earnings depending on, among other factors, the pricing by competitors of similar products and the response by customers to higher prices. Such price increases may result in lower sales volume and a subsequent decrease in gross margin and adversely impact our results of operations.
Raw material pricing, including how our selling prices reflect the cost of raw materials, availability and allocation by suppliers as well as energy-related costs may negatively impact our results of operations, including our profit margins.
We use petrochemical-based raw materials to manufacture many of our products. The prices for these raw materials are cyclical and increases in market demand or fluctuations in the global trade for petrochemical-based raw materials and energy could increase our costs.
While historically we have been able to successfully manage the impact of higher raw material costs by increasing our selling prices, if we were unable to minimize the effects of increased raw material costs through sourcing, pricing or other actions, our business, consolidated financial condition or results of operations may be materially adversely affected. A portion of our sales prices, specifically within Food's North American and APAC business, is determined using formula based pricing which reflects changes in underlying raw material indices. On average, formula based pricing lags raw material cost movement by approximately six months. We may experience a benefit (when resin prices decrease) or detriment (when resin prices increase) to our cost of sales before those price changes are reflected in our selling prices. As such, trends in raw material pricing may have a negative impact on future profit margins. Our reliance on some sole-source suppliers, and/or the lack of availability of supplies, including equipment components, could have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Natural disasters, such as a hurricane, tornado, earthquake or other severe weather event, as well as political instability, global tariffs or other trade actions, and terrorist activities, may negatively impact the production or delivery capabilities of refineries and natural gas and petrochemical suppliers and suppliers of other raw materials in the future. These factors could lead to increased prices for our raw materials, curtailment of supplies, allocation of raw materials and other force majeure events of our suppliers and harm relations with our customers which could have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition, results of operations or cash flows.
We operate in 46 countries/territories, and our products are distributed in 119 countries/territories around the world. A large portion of our manufacturing operations are located outside of the U.S., and in 2025, 49% of our net sales were generated outside of the U.S. These operations, particularly those in developing regions, are subject to various risks that may not be present in or as significant for our U.S. operations. Economic uncertainty in some of the geographic regions in which we operate, including developing regions, could result in the disruption of commerce and negatively impact cash flows from our operations in those markets.
Risks inherent in our international operations include:
• inflationary pressures, including wage inflation and input cost inflation, as well as the impact of fiscal policy interventions by national or regional governments to control inflation;
• foreign currency exchange controls, rate fluctuations, including devaluations, and foreign tax rates;
• adverse impacts resulting from regional or global human health related illnesses;
• restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including anti-dumping duties, tariffs, embargoes, sanctions and prohibitions or restrictions on acquisitions or joint ventures;
• changes in laws and regulations, including the laws and policies of the U.S. and foreign countries affecting trade and foreign investment;
• the impact of customer perceptions or regulatory developments related to sustainability concerns including the use of plastics;
• the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;
• variations in protection of intellectual property and other legal rights;
• more expansive legal rights of foreign unions or works councils;
• changes in labor conditions and difficulties in staffing and managing international operations;
• import and export delays caused, for example, by an extended strike at the port of entry, could cause a delay in our supply chain operations;
• social plans that prohibit or increase the cost of certain restructuring actions;
• the potential for governmental actions that may result in expropriation or nationalization of our facilities or other assets in that country; and
• unsettled political conditions and possible terrorist attacks against U.S. or other interests.
These and other factors may have a material adverse effect on our international operations and, consequently, on our consolidated financial condition, results of operations or cash flows.
We experience competition in the markets for our products and services and in the geographic areas in which we operate .
Our packaging products and equipment solution offerings compete with similar products made by other manufacturers and with a number of other types of materials or products. We compete on the basis of performance characteristics of our products, as well as service, price, sustainability and innovations in technology. A number of competing domestic and foreign companies are well-established.
Customers in the e-commerce and food service industry and peers in the packaging industry have been consolidating in recent years, which may continue in the future. Such consolidation could have an adverse impact on the pricing of our products and services and our ability to retain customers, which could in turn adversely affect our business, consolidated financial condition, results of operations or cash flows.
Our inability to maintain a competitive advantage could result in lower prices or lower sales volumes for our products. Additionally, we may not successfully implement our pricing actions. These factors may have an adverse impact on our consolidated financial condition, results of operations or cash flows.
Demand for our products could be adversely affected by changes in consumer preferences or if we are not able to innovate and bring new products to market.
Our sales depend heavily on the volumes of sales by our customers in food processing and service industries, the industrial manufacturing and electronics sectors and e-commerce. Consumer preferences for food and durable goods packaging can influence our sales. Consumer preferences for fresh and unpackaged foods and the global e-commerce and industrial market change over time. Changes in consumer behavior, including changes driven by cost, availability, durability, sustainability, including the negative consumer sentiment regarding the use of plastics, innovation or various health or environmental-related concerns and perceptions, could negatively impact demand for our products.
Innovation, particularly related to our sustainability offerings, is key to our strategy. Our performance and prospects for future growth could be adversely affected if new products do not meet sales or margin expectations and we are not able to meet our innovation goals. Our customers' preferences continue to trend towards sustainable packaging solutions. Our success is dependent on continued innovation in sustainability and our ability to bring new products to market in an efficient manner.
Our competitive advantage is due in part to our ability to develop and introduce new and sustainable products in a timely manner at favorable margins. The development and commercialization cycle of new products can be lengthy and involve high levels of investment. New products may not meet sales or margin expectations due to many factors, including our inability to (i) accurately predict demand, end-user preferences and evolving industry and regulatory standards; (ii) resolve technical and technological challenges in a timely and cost-effective manner; or (iii) achieve manufacturing efficiencies.
Political and economic instability and risk of government actions affecting our business and our customers or suppliers may adversely impact our business, consolidated financial condition, results of operations or cash flows.
We are exposed to risks inherent in doing business in each of the countries or territories in which we or our customers or suppliers operate including: civil unrest, acts of terrorism, sabotage, epidemics, force majeure, war or other armed conflict and
related government actions, including the imposition of tariffs or other trade barriers, sanctions/embargoes, the deprivation of contract rights, the inability to obtain or retain licenses required by us to operate our plants or import or export our goods or raw materials, the expropriation or nationalization of our assets, and restrictions on travel, payments or the movement of funds.
The ongoing conflict between Russia and Ukraine has had and will likely continue to have a negative impact on our operations both within and outside the region. As a result of the conflict and the global response, including the current and potential future sanctions and export controls, our operations may continue to be adversely impacted by, among other things, disruptions to our supply chain and logistics, increases in costs particularly for our raw materials and energy-related costs, and an inability to repatriate income earned in Russia. For the year ended December 31, 2025, approximately 2% of our consolidated net sales were derived from products sold in Russia. While our industry is not currently the primary target of sanctions or export controls, the evolution and potential escalation of the conflict and actions taken by governments in response to such conflict, and the consequences, economic or otherwise, are unpredictable.
Geopolitical events, including the ongoing conflict between Russia and Ukraine, the existing or potential increased hostilities in the Middle East, the increasing tensions between China and Taiwan, and the imposition of tariffs by the U.S. and reciprocal tariffs by its trading partners, may have a negative impact on the global industrial macro-economic environment and could materially adversely impact our consolidated financial condition, results of operations or cash flows.
If we are not able to protect our trade secrets or maintain our trademarks, patents and other intellectual property, we may not be able to prevent competitors from developing similar products or from marketing their products in a manner that capitalizes on our trademarks, and this loss of a competitive advantage may adversely impact our business, consolidated financial condition, results of operations or cash flows.
Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our owned and licensed intellectual property. If we were unable to maintain the proprietary nature of our intellectual property and our significant current or future products, the resulting loss of associated competitive advantage could lead to decreased sales or increased operating costs, either of which could have a material adverse effect on our business, consolidated financial condition or results of operations.
We rely on trade secrets to maintain our competitive position, including protecting the formulation and manufacturing techniques of many of our products. As such, we have not sought U.S. or international patent protection for some of our principal product formulas and manufacturing processes. Accordingly, we may not be able to prevent others from developing products that are similar to or competitive with our products.
We own a large number of patents and pending patent applications on our products, aspects thereof, methods of use and/or methods of manufacturing. There is a risk that our patents may not provide meaningful protection and patents may never be issued for our pending patent applications.
We own, or have licenses to use, all of the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products both in the U.S. and in other countries/territories where our products are principally sold. Trademark and trade name protection is important to our business. Although most of our trademarks are registered in the U.S. and in the foreign countries/territories in which we operate, we may not be successful in asserting trademark or trade name protection. In addition, the laws of some foreign countries/territories may not protect our intellectual property rights to the same extent as the laws of the U.S. The costs required to protect our trademarks and trade names may be substantial.
We cannot be certain that we will be able to assert these intellectual property rights successfully in the future or that they will not be invalidated, circumvented or challenged. Other parties may infringe on our intellectual property rights and may thereby dilute the value of our intellectual property in the marketplace. Third parties, including competitors, may assert intellectual property infringement or invalidityclaimsagainst us that could be upheld. Intellectual property litigation, which could result in substantial cost to and diversion of effort by us, may be necessary to protect our trade secrets or proprietary technology or for us to defendagainst claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all.
Any failure by us to protect our trademarks and other intellectual property rights may have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
Large-scale animal health issues as well as other health issues affecting the food industry and disruptive forces of nature, including those resulting from climate change, such as significant regional droughts, prolongedsevere weather conditions, floods and natural disasters, may lead to decreased revenues.
We manufacture and sell food packaging products, among other products. Various forces of nature affecting the food industry have in the past and may in the future have a negative effect on the sales of food packaging products. Outbreaks of animal diseases may lead governments to restrict exports and imports of potentially affected animals and food products, leading to decreased demand for our products and possibly also to the culling or slaughter of significant numbers of the animal population otherwise intended for food supply. Other disruptive forces of nature such as droughts, floods and other severe weather can lead to agricultural market disruptions resulting in reduced herd size or modifications to the traditional herd cycles which could affect supply or demand for our products. Also, consumers may change their eating habits as a result of perceived problems with certain types of food. These factors may lead to reduced sales of food packaging products, which could have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Health epidemics, pandemics and other outbreaks could adversely impact the health and safety of our employees, our business continuity, consolidated financial condition, results of operations, or cash flows.
Health epidemics, pandemics and other outbreaks, have had and may in the future have adverse impact on the global economy and our business. We and some of our customers have experienced in the past, and could face in the future, facility shutdowns or reductions in operations due to pandemics, such as the COVID-19 pandemic, or other health events and adverse impacts to staffing levels in our operations. These health events had and may result in future supply chain and operational disruptions such as the availability and transportation of raw materials or the ability for our packaging and equipment specialists to visit customer facilities. Unpredictabledisruptions to the Company’s operations or our customers’ operations could reduce our future revenues and negatively impact the Company’s financial condition.
In addition, economic and market volatility due to pandemics and other outbreaks may negatively impact consumer buying habits, which could adversely affect the Company’s financial results.
The extent to which our operations may be impacted in the future by health epidemics, pandemics and other outbreaks is highly uncertain and cannot be accurately predicted, and will depend largely on the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact, including the effectiveness and distribution of vaccines.
Operational Risks
Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows .
We are subject to an increasing number of cybersecurity threats which pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyberattacks or security breaches of our networks or systems, or networks or systems of our customers and key vendors, could result in the loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensatory costs, and additional compliance costs, any of which could materially adversely affect our business, consolidated financial condition and results of operations. In addition, geopolitical tensions and instability may heighten our risk of cybersecurity incidents. To mitigate these threats to our business, we maintain a cybersecurity program aligned with industry frameworks designed to protect, detect, and respond to internal and external threats. For additional discussion of our cybersecurity risk management, strategy, and governance, see Part I, Item 1C., “Cybersecurity,” below. While we have experienced, and expect to continue to experience, cyber attacks on our network and systems, none have resulted in a breach with material impact or any penalties or settlement for the three years ended December 31, 2025.
We also maintain and have access to sensitive, confidential or personal data or information in certain of our businesses that is subject to privacy and security laws, regulations and customer controls. Despite our continued efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, theft, misplaced or lost data, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could adversely affect our business, consolidated financial condition, results of operations or cash flows.
The regulatory environment surrounding cybersecurity and data privacy is increasingly demanding, with new and changing regulations. We could be required to expend additional resources, which could be material, to comply with any such regulations, and failure to comply could subject us to significant penalties or claims.
If we are unable to successfully manage leadership transition, our consolidated financial condition or results of operations may be adversely affected, or we may not be able to execute our strategies.
Leadership transitions can be inherently difficult to manage, and failure to timely or successfully implement transitions may cause disruption to our Company. The execution and success of our business plan and strategy depends largely on the efforts and abilities of our management team. Changes in our organization as a result of executive management transition may have a disruptive impact on our ability to implement our strategy and could have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Supply chain disruptions related to the transport of raw materials, components and/or finished goods may delay the timing of when we are able to manufacture our product or serve our customers, which could adversely affect our business, consolidated financial condition, results of operations or cash flows.
We rely on third-party logistics suppliers for the distribution and transportation of raw materials, components, operating supplies and products. Delays, fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure may adversely impact our ability to manufacture and distribute products. The Company may also incur higher tariffs and duties to obtain materials from suboptimized sourcing locations. Additionally, transportation costs may increase as freight carriers raise prices to address the overall market conditions. There is no guarantee that we will be able to recover any past or future increases in transportation costs. While we have a geographically diverse international presence and are situated in close proximity to many significant customers, future supply chain disruptions related to the transport of raw materials and/or finished goods could adversely affect our business, consolidated financial condition, results of operations or cash flows.
If we are unable to retain key employees or experience disruptions in operations and/or increased labor costs, our consolidated financial condition or results of operations may be adversely affected or we may not be able to execute our strategies.
The execution and success of our strategy depends largely on the efforts and abilities of our management team and other key personnel. Their experience and industry contacts significantly benefit us, and we need their expertise to execute our business strategies. If any such employee were to cease working for us and we were unable to replace them, our business, consolidated financial condition, results of operations or cash flows may be materially adversely affected.
We depend on the skills, working relationships, and continued services of employees, including our direct manufacturing employees. The labor market in many geographic regions, including the U.S., is becoming increasingly competitive. Higher turnover may lead to reductions in operational efficiencies. Additionally, in Europe and Latin America, many of our employees are represented by either labor unions or workers' councils and are covered by collective bargaining agreements that are generally renewable on an annual basis. As is the case with any negotiation, we may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. A shortage in the labor pool and other general inflationary pressures or changes, the results of our labor negotiations and changes to applicable laws and regulations could increase labor costs, or cause a disruption in operations, which could materially adversely affect our business.
A major loss of or disruption in our manufacturing and distribution operations or our information systems and telecommunication resources could adversely affect our business, consolidated financial condition, results of operations, or cash flows.
If we were to experience a natural disaster, such as a hurricane, tornado, earthquake or other severe weather event, a casualty loss from an event such as a fire or flood, at one of our larger strategic facilities, or experience adverse impacts, such as plant shutdowns or travel restrictions due to regional or global human health related illness or if such events were to affect a key supplier, our supply chain or our information systems and telecommunication resources, then there could be a material adverse effect on our consolidated financial condition or results of operations. We are dependent on internal and third-party information technology networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for fulfilling and invoicing customer orders, applying cash receipts, placing purchase orders with suppliers, making cash disbursements, conducting marketing activities, data processing, and electronic communications among business locations.
We also depend on telecommunication systems for communications between company personnel and our customers and suppliers. Future system disruptions, security breaches or shutdowns could significantly disrupt our operations or result in lost or misappropriated information and may have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
Acquisitions present many risks, and we may not achieve the financial and strategic goals that were contemplated at the time of a transaction or realize the full carrying value of our acquired goodwill and intangible assets as a result of prior acquisitions.
We review and consider strategic acquisitions from time to time. Any acquisitions we may undertake, and their integration, involves risks and uncertainties, such as:
• our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities;
• we may have difficulties (1) managing an acquired company’s technologies or lines of business; (2) entering new markets where we have no, or limited, direct prior experience or where competitors may have stronger market positions; or (3) retaining key personnel from the acquired companies;
• an acquisition may not further our business strategy as we expected, we may not integrate an acquired company or technology as successfully as we expected, we may impose our business practices or alter go-to-market strategies that adversely impact the acquired business or we may overpay for, or otherwise not realize the expected return on our investments, each or all of which could adversely affect our business or operating results and potentially cause impairment to assets that we recorded as a part of an acquisition, including intangible assets and goodwill;
• our operating results or financial condition may be adversely impacted by (1) claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition; (2) pre-existing contractual relationships that we assume from an acquired company, the termination or modification of which may be costly or disruptive to our business; and (3) unfavorable revenue recognition or other accounting treatment as a result of an acquired company’s business practices;
• we may not realize any anticipated increase in our revenues from an acquisition for a number of reasons, including (1) if a larger than predicted number of customers decline to renew or terminate their contracts with the acquired company; (2) if we are unable to sell the acquired products or service offerings to our customer base; (3) if acquired customers do not elect to purchase our technologies due to differing business practices; or (4) if contract models utilized by an acquired company do not allow us to recognize revenues in a manner that is consistent with our current accounting practices;
• we may encounter deficiencies in internal controls at the acquired business, as well as when implementing our own management information systems, operating systems and internal controls for the acquired operations;
• our due diligence process may fail to identify significant issues with the acquired business’ products, financial disclosures, accounting practices, legal, tax and other contingencies, compliance with local laws and regulations (and interpretations thereof) in the U.S. and multiple international jurisdictions;
• additional acquisition-related debt could increase our leverage and potentially negatively affect our credit ratings resulting in more restrictive borrowing terms or increased borrowing costs thereby limiting our ability to borrow; and
• inaccuracies in our original estimates and assumptions used to assess a transaction, which may result in us not realizing the expected financial or strategic benefits of any such transaction.
The occurrence of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition.
As a result of past acquisitions, we have recorded a significant amount of goodwill and other identifiable intangible assets, including customer relationships, trademarks, and developed technologies. In the event that we determine that events or circumstances exist that indicate that the carrying value of goodwill or identifiable intangible assets may no longer be recoverable, we might have to recognize a non-cash impairment of goodwill or other identifiable intangible assets, which could have a material adverse effect on our consolidated financial condition or results of operations.
Legal, Regulatory and Compliance Risks
Regulations on recycling or environmental sustainability could adversely impact our business.
A number of governmental authorities, both in the U.S. and abroad, have adopted or are considering legislation aimed at reducing the amount of plastic waste. Such legislation includes design requirements for recyclability and source reduction of plastic, banning or restricting the use of certain materials in packaging products (such as polyvinylidene chloride), mandating certain rates of recycling and/or the use of recycled materials, imposing taxes on plastic packaging materials, requiring retailers or manufacturers to take back packaging used for their products, and establishing other Extended Producer Responsibility requirements for plastic packaging users and manufacturers. Such legislation, as well as voluntary initiatives, aimed at reducing the level of plastic wastes could, among other things, reduce the demand for certain plastic packaging products, force the
adoption of alternative materials, limit the availability of certain raw materials, and result in greater costs for manufacturers of plastic packaging products. If we are unable to successfully manage these risks, our business, financial condition and results of operations could be materially and adversely affected.
Multiple U.S. states have passed laws regulating the use of PFAS in food packaging materials. In addition, the EU, Australia, and Canada have either passed laws or expressed intent to regulate PFAS in packaging materials. Currently, we are in compliance with U.S. regulations and have reformulated certain of our U.S. food packaging products to be in compliance with anticipated regulations. We are continuing the effort to extend those actions to product formulations in other regions to comply with future requirements. To the best of our knowledge, we are in compliance with all current global regulations regarding the use of PFAS in food packaging materials. If the regulations extend to non-food products, there may be risks (such as additional costs) associated with the manufacture and use of those products.
As countries progress towards long-term environmental stewardship goals, we expect laws and tax policy to continue to advance in this regard.
Future changes in global trade policies and regulations, as well as overall uncertainty surrounding international trade relations, could have a material adverse effect our consolidated financial condition, results of operations or cash flows.
Future changes in global trade policies and regulations, including tariffs on products we import and export, may introduce uncertainty in the market and could affect the demand for our products. During fiscal year 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and materials. Several countries also implemented or proposed retaliatory tariffs on imports from the U.S., as well as other barriers to trade. If additional retaliatory trade measures are enacted by affected countries, it could negatively impact global economic conditions and consumer confidence, which could negatively impact our business. Additionally, future trade policies and regulations are due in part to international relations and other geopolitical factors outside of our control. In order to mitigate the impact of these trade-related increases on our costs of products sold, we may increase prices in certain markets and, over the longer term, make changes in our supply chain and, potentially, our global manufacturing strategy. Implementing price increases may cause our customers to find alternative sources for their products. We may be unable to successfully pass along these costs through price increases; adjust our supply chain without incurring significant costs; or locate alternative suppliers for raw materials or finished goods at acceptable costs or in a timely manner. Our inability to effectively manage the negative impacts of changing U.S. and foreign trade policies could materially adversely impact our consolidated financial condition, results of operations or cash flows.
We are the subject of various legal proceedings, and may be subject to future claims and litigation, that could have a material adverse effect on our business, results of operations or cash flows.
We are involved from time to time in various legal proceedings. These claims relate to litigation matters, environmental matters, product liability matters, and other risk management matters (e.g., general liability, automobile, and workers’ compensation claims). Litigation, in general, can be expensive and disruptive. Some of these proceedings may involve parties seeking large and/or indeterminate amounts, including punitive or exemplarydamages, and may remain unresolved for several years. Litigation and other adverse legal proceedings could have a material adverse effect our businesses, operating results and/or cash flows because of reputational harm to us caused by such proceedings, the cost of defending such proceedings, the cost of settlement or judgments against us or the changes in our operations that could result from such proceedings. Although we maintain legal liability insurance coverage, potential litigationclaims could be excluded or exceed coverage limits under the terms of our insurance policies or could result in increased costs for such coverage.
Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our brands.
Claims for losses or injuriespurportedly caused by some of our products arise in the ordinary course of our business. In addition to the risk of substantial monetary judgments, product liability claims or regulatory actions could result in negative publicity that could harm our reputation in the marketplace or adversely impact the value of our brands or our ability to sell our products in certain jurisdictions. We could also be required to recall possibly defective products, or voluntarily do so, which could result in adverse publicity and significant expenses. Although we maintain product liability insurance coverage, potential product liability claims could be excluded or exceed coverage limits under the terms of our insurance policies or could result in increased costs for such coverage.
Our operations are subject to a variety of environmental and other laws that expose us to regulatory scrutiny, potential financial liability, and increased operating costs.
Our operations are subject to a number of federal, state, local, and foreign environmental, health and safety laws and regulations that govern, among other things, the manufacture of our products, handling, transportation, storage and disposal of hazardous materials and the discharge of pollutants into the air, soil, and water along with similar legislation aimed at addressing climate change issues.
Many jurisdictions require us to have operating permits for our production and warehouse facilities and operations. Any failure to obtain, maintain or comply with the terms of these permits could result in fines or penalties, revocation or nonrenewal of our permits or orders to cease certain operations, and may have a material adverse effect on our business, financial condition, results of operations or cash flows.
We generate, use and dispose of hazardous materials in our manufacturing processes. In the event our operations result in the release of hazardous materials into the environment, we may become responsible for the costs associated with the investigation and remediation of sites at which we have released pollutants, or sites where we have disposed or arranged for the disposal of hazardous wastes, even if we fully complied with applicable environmental laws at the time of disposal. We have been, and may continue to be, responsible for the cost of remediation at some locations.
We are also subject to various federal, state, local, and foreign laws and regulations that regulate products manufactured and sold by us for controlling microbial growth on humans, animals, and processed foods. In the U.S., these requirements are generally administered by the FDA. We maintain programs designed to comply with these laws and regulations and to monitor their evolution. To date, the cost of complying with product registration requirements and FDA compliance has not had a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
We cannot predict with reasonable certainty the future cost to us of environmental compliance, product registration or other regulatory requirements. Environmental laws and other regulatory requirements have become more stringent and complex over time. Our environmental costs and operating expenses will be subject to evolving regulatory requirements and will depend on the scope and timing of the effectiveness of requirements in various jurisdictions. As a result of such requirements, we may be subject to an increased regulatory burden. Non-compliance with environmental and other regulatory requirements may result in enforcement actions, contractual or regulatory penalties or damage our reputation and harm our business. Increased compliance costs, increasing risks and penalties associated with violations or our inability to market some of our products in certain jurisdictions, may have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
We are subject to taxation and tax audits or investigations in multiple jurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement by the tax authorities with our tax positions could have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied.
Recent tax legislation and regulations, including provisions of the 2025 One Big Beautiful Bill Act (“OBBBA”), make significant changes to the U.S. tax regime and could materially impact how our earnings are taxed. In addition, the Organization for Economic Cooperation and Development (“OECD”) reached agreement with over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as the Pillar Two Inclusive Framework. Many jurisdictions continue to announce changes in their tax laws and regulations based on the Pillar Two Inclusive Framework. While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. As additional changes in tax laws, as a result of Pillar Two or otherwise, are adopted, our tax expense could increase and our business, consolidated financial condition or results of operations could be adversely affected in a material way.
We are also subject to tax audits or investigations in various jurisdictions that can result in assessments against us and the tax authorities in any applicable jurisdiction, including the U.S., may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. Successfulchallenge by the tax authorities of the tax treatment or characterization of any of our transactions, or developments in an audit, investigation or other tax dispute can have a material effect on our operating results or cash flows in the period or periods in which that development occurs. We regularly assess the likelihood of an adverse outcome resulting from these proceedings to determine the adequacy of our tax accruals.
Although we believe our tax estimates are reasonable, the final outcome of audits, investigations, and any other tax controversies could be materially different from our historical accruals.
Financial Risks
Fluctuations between foreign currencies and the U.S. dollar could materially impact our consolidated financial condition or results of operations.
Approximately 49% of our net sales in 2025 were generated outside the U.S. We translate sales and other results denominated in a foreign currency into U.S. dollars for our Consolidated Financial Statements. As a result, the Company is exposed to currency fluctuations both in receiving cash from its international operations and in translating its financial results into U.S. dollars. During periods of a strengthening U.S. dollar, our reported international sales and net earnings could be reduced because foreign currencies may translate into fewer U.S. dollars. Foreign exchange rates can also impact the competitiveness of products produced in certain jurisdictions and exported for sale into other jurisdictions. These changes may impact the value received for the sale of our goods versus those of our competitors. The Company cannot predict the effects of exchange rate fluctuations on its future operating results. As exchange rates vary, the Company's results of operations and profitability may be adversely impacted. While we use financial instruments to hedge certain foreign currency exposures, this does not insulate us completely from foreign currency effects and exposes us to counterparty credit risk for non-performance. See Note 16, “Derivatives and Hedging Activities,” for additional information. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial effect resulting from foreign currency variations. The gains or losses associated with hedging activities may negatively impact the Company's results of operations.
In all jurisdictions in which we operate, we are also subject to laws and regulations that govern foreign investment, foreign trade, and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the U.S. and may limit our ability to convert foreign currency cash flows into U.S. dollars.
We have recognized foreign exchange losses related to the currency devaluations in Argentina and its designation as a highly inflationary economy. See Note 2, “Summary of Significant Accounting Policies and Recently Adopted and Issued Accounting Standards,” for additional information.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on time or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to affect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The credit agreement governing our senior secured credit facilities, the indentures that govern our senior notes and the agreements covering our accounts receivable securitization programs restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
In addition, we conduct a substantial portion of our operations through our subsidiaries, certain of which are not guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. The indentures governing certain of our senior notes and the credit agreement governing the senior secured credit facilities limit the ability of certain of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us. These limitations are subject to qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our consolidated financial condition, results of operations or cash flows.
If we cannot make scheduled payments on our debt, we will be in default, our note holders and lenders could accelerate the repayment of our borrowings, the lenders could terminate their commitments to loan money and/or forecloseagainst the assets securing the borrowings and we could be forced into bankruptcy or liquidation.
The terms of our senior secured credit facilities, our accounts receivable securitization programs, our supply chain financing programs and our senior notes indentures may restrict our current and future operations, particularly our ability to respond to changes in market conditions or to take certain actions.
Our senior secured credit facilities, our accounts receivable securitization programs and our senior notes indentures contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:
• incur additional indebtedness;
• pay dividends or make other distributions or repurchase or redeem capital stock;
• prepay, redeem or repurchase certain debt;
• make loans and investments;
• sell assets;
• incur liens;
• enter into transactions with affiliates;
• alter the businesses we conduct;
• enter into agreements restricting our subsidiaries’ ability to pay dividends; and
• consolidate, merge or sell all or substantially all of our assets.
In addition, the restrictive covenants in our senior credit facilities require us to maintain a specified net leverage ratio. Our ability to meet this financial ratio can be affected by events beyond our control.
A breach of the covenants under our senior notes indentures or under our senior secured credit facilities could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under our senior secured credit facilities would permit the lenders under our senior secured credit facilities to terminate all commitments to extend further credit under those facilities. Furthermore, if we were unable to repay the amounts due and payable under our senior secured credit facilities or our senior secured notes, those lenders or note holders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or note holders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:
• limited in how we conduct our business;
• unable to respond to changing market conditions;
• unable to raise additional debt or equity financing to operate during general economic or business downturns or to repay other indebtedness when it becomes due; or
• unable to compete effectively or to take advantage of new business opportunities.
In addition, amounts available under our accounts receivable securitization programs and/or utilization of our supply chain financing programs can be impacted by a number of factors, including but not limited to our credit ratings, accounts receivable or payable balances, the creditworthiness of us or our customers, our receivables collection experience and/or our trade payable payment history.
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. If our credit ratings were to be downgraded, particularly our corporate rating, there could be a negative impact on our ability to access capital markets and borrowing costs could increase.
The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of on-going planning strategies.
We have deferred tax assets including state and foreign net operating loss carryforwards, accruals not yet deductible for tax purposes, employee benefit items, and other items. We have established valuation allowances to reduce the deferred tax assets to an amount that is more likely than not to be realized. Our ability to utilize the deferred tax assets depends in part upon our ability to generate future taxable income within each respective jurisdiction during the periods in which these temporary differences reverse or our ability to carryback any losses created by the deduction of these temporary differences. We expect to realize the assets over an extended period. If we are unable to generate sufficient future taxable income in the U.S. and/or 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. Our effective tax rate would increase if we were required to increase our valuation allowances against our deferred tax assets.
The impact of our tax expense on operating results or cash flows can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities.
Our tax expense and liabilities are affected by a number of factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, losses incurred in jurisdictions for which we are not able to realize related tax benefits, the applicability of special or extraterritorial tax regimes, changes in foreign currency exchange rates, the level of interest expense we incur, changes in our stock price, changes to our forecasts of income and loss and the mix of jurisdictions to which they relate, and changes in our tax assets and liabilities and their valuation. In the ordinary course of our business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Significant judgment is required in evaluating and estimating our tax expense, assets and liabilities.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Borrowings under our senior secured credit facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. As of December 31, 2025, we had $372 million of long-term borrowings under our senior secured credit facilities at variable interest rates. A 1/8% increase or decrease in the assumed interest rates on the senior secured credit facilities would result in a $0.5 million increase or decrease in annual interest expense. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.
Disruption and volatility of the financial and credit markets could affect our external liquidity sources.
Our principal sources of liquidity are accumulated cash and cash equivalents, short-term investments, cash flow from operations and amounts available under our lines of credit, including our senior secured credit facilities, and our accounts receivable securitization programs. We may be unable to refinance any of our indebtedness, including our senior notes, our accounts receivable securitization programs and our senior secured credit facilities, on commercially reasonable terms or at all.
Additionally, conditions in financial markets could affect financial institutions with which we have relationships and could result in adverse effects on our ability to utilize fully our committed borrowing facilities. For example, a lender under the senior secured credit facilities may be unwilling or unable to fund a borrowing request, and we may not be able to replace such lender.
Our insurance policies may not cover all operating risks and a casualty loss beyond the limits of our coverage could materially and adversely impact our business.
Our business is subject to operating hazards and risks relating to handling, storing, transporting and use of the products we sell. We maintain insurance policies in amounts and with coverage and deductibles that we believe are reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all liabilities and expenses that may arise from claims for personal injury or death or property damage arising in the ordinary course of business, and our current levels of insurance may not be maintained or available in the future at economical prices. If a significant liability claim is brought against us that is not adequately covered by insurance, we may have to pay the claim with our own funds, which could have a material adverse effect on our business, consolidated financial condition, results of operations or cash flows.
leading
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 cautionedagainst 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)
Net earnings from continuing operations
Interest expense, net
Income tax provision
Depreciation and amortization, net of adjustments (1)
Special Items:
Liquibox intangible amortization
Liquibox inventory step-up amortization
Restructuring charges
Other restructuring associated costs
Foreign currency exchange loss due to highly inflationary economies
Loss on debt redemption and refinancing activities
Impairment of debt investment
Contract terminations
Charges related to acquisition and divestiture activity
CEO severance and separation costs
Accelerated share-based compensation expense (1)
Other Special Items
Pre-tax impact of Special Items
Non-GAAP Consolidated Adjusted EBITDA from continuing operations
(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,
(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
Special Items (1)
Non-GAAP Adjusted net earnings and adjusted diluted EPS from continuing operations
Weighted average number of common shares outstanding - Diluted
(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)
GAAP Earnings before income tax provision from continuing operations
Pre-tax impact of Special Items
Non-GAAP Adjusted Earnings before income tax provision from continuing operations
GAAP Income tax provision from continuing operations
Tax Special Items (1)
Tax impact of Special Items (2)
Non-GAAP Adjusted Income tax provision from continuing operations
GAAP Effective income tax rate
Non-GAAP Adjusted income tax rate
(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 Flow for 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 Indebtedness for 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)
Net sales
Gross profit
As a % of net sales
Operating profit
As a % of net sales
Net earnings from continuing operations
Gain (Loss) on sale of discontinued operations, net of tax
Net earnings
Basic:
Continuing operations
Discontinued operations
Net earnings per common share - basic
Diluted:
Continuing operations
Discontinued operations
Net earnings per common share - diluted
Weighted average number of common shares outstanding:
Basic
Diluted
Non-GAAP Consolidated Adjusted EBITDA from continuing operations (1)
Non-GAAP Adjusted EPS from continuing operations (2)
# 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)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Non-GAAP Adjusted EBITDA
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
Price
Volume (1)
Total constant currency change (non-GAAP)
Foreign currency translation
Total change (GAAP)
2025 Net Sales
(In millions)
Food
Protective
Total Company
2023 Net Sales
Price
Volume (1)
Total organic change (non-GAAP)
Acquisition
Total constant currency change (non-GAAP)
Foreign currency translation
Total change (GAAP)
2024 Net Sales
(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)
Net sales
Cost of sales
As a % of net sales
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)
Food
Protective
Other
Consolidated Gross Profit
# 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)
Selling, general and administrative expenses
As a % of net sales
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)
Amortization expense of intangible assets
As a % of net sales
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)
Interest expense on our various debt instruments:
Term Loan A due March 2027 (4)
Term Loan A2 due March 2027
Term Loan A due October 2030 (4)
Revolving credit facility due March 2027
4.500% Senior Notes due September 2023 (1)
5.125% Senior Notes due December 2024 (2)
5.500% Senior Notes due September 2025 (3)
1.573% Senior Secured Notes due October 2026
4.000% Senior Notes due December 2027
6.125% Senior Notes due February 2028 (1)
5.000% Senior Notes due April 2029
7.250% Senior Notes due February 2031 (2)
6.500% Senior Notes due July 2032 (3)
6.875% Senior Notes due July 2033
Other interest expense (5)
Less: capitalized interest
Less: interest income
Total
(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.
Impairmentloss 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
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)
Net earnings from continuing operations
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)
Gain (Loss) on sale of discontinued operations, net of tax
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 discloserestructuring 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)
Food
Adjusted EBITDA Margin
Protective
Adjusted EBITDA Margin
Corporate
Non-GAAP Consolidated Adjusted EBITDA
Adjusted EBITDA Margin
# 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)
Cash and cash equivalents
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
Senior Unsecured Rating
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)
Short-term borrowings
Current portion of long-term debt
Total current debt
Total long-term debt, less current portion (1)
Total debt
Less: Cash and cash equivalents
Non-GAAP net debt
(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)
Net cash provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by financing activities
Effect of foreign currency exchange rate changes on cash and cash equivalents
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)
Cash flow provided by operating activities
Capital expenditures
Non-GAAP free cash flow
Operating Activities
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.
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
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.
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
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.
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)
Change
Working capital (current assets less current liabilities)
Current ratio (current assets divided by current liabilities)
Quick ratio (current assets, less inventories divided by current liabilities)
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 impairmentloss 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 impairmentloss 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
Effect on 2026 expected net periodic benefit cost
100 Basis Point Increase
(In millions)
100 Basis Point Decrea s e
(In millions)
Return on Assets
Effect on 2026 expected net periodic benefit cost
International
25 Basis Point Increase
(In millions)
25 Basis Point Decrease
(In millions)
Discount Rate
Effect on 2025 projected benefit obligation
Effect on 2026 expected net periodic benefit cost
100 Basis Point Increase
(In millions)
100 Basis Point Decrea s e
(In millions)
Return on Assets
Effect on 2026 expected net periodic benefit cost
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.
