SEE Q3 2025: Protective Materials Volume Turns Positive for First Time Since 2021
SEE’s Q3 marked a pivotal inflection as protective materials volumes grew for the first time in four years, signaling early traction in the company’s transformation program despite persistent demand headwinds. Food segment resilience and disciplined cost execution supported margin expansion, even as North American consumer weakness and negative price realization intensified. With transformation levers scaling and network optimization underway, SEE’s forward narrative hinges on the pace of consumer recovery and the realization of structural cost and commercial changes into 2026.
Summary
- Protective Materials Growth Returns: Segment volume inflected positive, validating transformation momentum.
- Cost Controls Offset Demand Drag: Productivity and SG&A discipline protected margins against pricing and volume pressure.
- 2026 Outlook Hinges on Consumer and Execution: Transformation benefits and macro stabilization remain key watchpoints.
Performance Analysis
SEE delivered Q3 sales of $1.35 billion, with adjusted EBITDA up 4% year-over-year and margin expanding to 21.3%. Volume declines moderated to less than 1%, driven by stabilization in both the food and protective segments. Food volumes were flat, as shrink bag declines were offset by 4% growth in food service, while protective volumes dipped less than 2% but achieved a key milestone: materials volume grew 1% year-over-year, the first positive print since 2021.
Price realization remained negative, reflecting competitive and input cost pressures—most notably in labor and non-direct materials. Disciplined productivity initiatives and SG&A reduction (down $10 million sequentially) were critical in offsetting these headwinds, helping both segments lift EBITDA margins (food up 70bps, protective up 80bps). Free cash flow generation of $120 million in Q3 kept SEE on track for its $400 million annual target, aided by tighter capital deployment and seasonal inventory drawdowns.
- Protective Segment Volume Inflection: Materials growth signals transformation traction, despite equipment softness.
- Food Service Outperformance: Volumes up 4% globally, offsetting U.S. beef-driven industrial declines.
- Cost Productivity as Margin Anchor: SG&A and operational savings shielded EBITDA from price and volume drag.
Despite muted demand and price pressure, SEE’s execution on controllable levers enabled margin and cash flow resilience—a critical proof point as macro uncertainty clouds the outlook for 2026.
Executive Commentary
"Our protective turnaround remains on track. Our performance in the third quarter continues to demonstrate improving fundamentals, despite market indicators... pointing to a subdued demand environment and a cautious consumer. Sales sequentially improved with material volumes inflecting to growth for the first time since 2021."
Dustin Simak, President and CEO
"Despite persisting market headwinds, our teams executed above expectations... The strong adjusted EBITDA performance was primarily driven by lower operating costs, including favorable productivity savings and cost control actions, partially offset by slightly lower volumes and negative net price realization."
Kristen Actis-Grande, Chief Financial Officer
Strategic Positioning
1. Protective Segment Transformation Reaches Inflection
Protective materials volume growth for the first time since 2021 marks a critical milestone in SEE’s turnaround efforts. Commercial playbook enhancements, including increased seller headcount, improved distributor engagement, and a reset large account strategy, have begun yielding national account wins—especially in fulfillment and specialty foam. Network optimization initiatives, such as holistic footprint and logistics reviews, are underway to unlock further cost leverage and customer responsiveness.
2. Food Segment: Navigating Consumer Rotation and Supply Cycles
Food’s flat volumes masked significant mix shifts, as U.S. consumers traded down from fresh deli and shrink bags to lower-margin, pre-sliced and roll-stock formats. Food service portfolios outperformed, with global volume up 4%, supported by new product innovation in fluids and liquids (e.g., FlexPrep, ZeroPrep). Strategic focus is shifting toward retail and food service, aiming to reduce volatility from beef supply cycles and industrial exposure.
3. Scaling Productivity and Back Office Transformation
SG&A discipline and productivity initiatives remain central, with continued back office restructuring (notably the Manila G&A hub) and IT modernization producing double-digit cost reductions. SEE’s transformation playbook, now extending from protective into food, targets both operational rigor and talent upgrades to drive sustainable margin improvement and growth capability.
4. Capital Allocation and Network Optimization
CapEx was reduced to $175 million, reflecting a sharper focus on return on invested capital (ROIC) and transformation-aligned investments. Network optimization is being approached holistically, with facility, asset, and logistics reviews spanning both segments—expected to drive future unit economics and service levels.
5. Portfolio Review and Shareholder Value Lens
While management emphasized heads-down execution, the company remains open to portfolio optimization as segment strategies mature. Maximizing shareholder value remains a stated priority, but near-term focus is on delivering sustainable, profitable growth in both food and protective before considering structural changes.
Key Considerations
SEE’s Q3 demonstrates that transformation levers can counterbalance macro headwinds, but the durability of recent gains will be tested as volume and price pressures intensify into 2026.
Key Considerations:
- Protective Materials Inflection: Positive volume growth validates commercial and operational changes, but sustainability into 2026 depends on macro demand recovery.
- Food Service and Retail Rotation: Strategic pivot toward higher-growth, less cyclical segments aims to offset ongoing beef supply and consumer trade-down headwinds.
- Cost Control as Margin Backbone: Productivity and SG&A discipline have shielded margins, but further price realization headwinds could pressure future quarters.
- Transformation Execution Pace: The breadth and specificity of SEE’s transformation roadmap is a strength, but full benefits hinge on continued talent upgrades and operating system maturity.
- Capital Discipline and Network Rationalization: Lower CapEx and holistic footprint review set the stage for improved ROIC and future optionality.
Risks
SEE faces persistent demand uncertainty, especially in North American food, where consumer trade-downs and beef supply cycles remain unpredictable. Negative net price realization and labor cost inflation could erode margin gains if productivity initiatives stall or competitive pricing intensifies. Transformation execution risk lingers, as full benefits require continued talent upgrades and operating model discipline. External risks include SNAP funding uncertainty, tariff volatility, and broader industrial production weakness.
Forward Outlook
For Q4 2025, SEE guided to:
- Adjusted EBITDA of $274 million, reflecting continued cost discipline offset by lower volumes and price headwinds.
- Free cash flow generation weighted to Q4 due to seasonal inventory drawdown.
For full-year 2025, management raised adjusted EBITDA guidance to $1.12–$1.14 billion and reaffirmed free cash flow at $400 million, with CapEx trimmed to $175 million. Management signaled caution on Q4 and 2026 volume trends, citing deepening consumer weakness and price pressure, especially in North American food. Visibility on transformation benefits and demand recovery will shape the 2026 outlook, to be detailed in February.
- Q4 and early 2026 expected to remain pressured by consumer and industrial softness.
- Transformation milestones and network optimization updates expected in early 2026.
Takeaways
SEE’s Q3 marked a turning point for the protective segment, as material volumes grew for the first time in four years, underscoring the early impact of transformation initiatives. Food segment resilience and cost productivity protected margins, but the business remains exposed to U.S. consumer and supply-side volatility. Transformation execution and macro stabilization are the swing factors for 2026 and beyond.
- Protective Segment Inflection: Volume growth and national account wins provide a foundation, but durability depends on sustained execution and demand recovery.
- Food Segment Mix Shift: Strategic rotation to retail and food service is underway, but margin impact from consumer trade-down and beef cycle will persist into 2026.
- Transformation as Performance Hedge: Breadth and depth of productivity and talent initiatives are offsetting near-term headwinds, but require continued focus to realize full benefits.
Conclusion
SEE’s Q3 results showcase the power of disciplined transformation, as operational and commercial gains in protective and food segments offset persistent macro headwinds. Investor focus now turns to the sustainability of volume and margin gains, and the ability of ongoing transformation and network optimization to deliver structural improvement as the cycle turns.
Industry Read-Through
SEE’s experience illustrates that transformation levers—commercial playbook overhaul, cost productivity, and network optimization—can buffer packaging suppliers against cyclical and consumer-driven shocks. Protective segment’s volume inflection and food service outperformance highlight the value of portfolio breadth and end-market diversification. For peers in packaging, industrial, and food supply chains, the quarter underscores the need to accelerate cost and commercial agility, diversify beyond legacy cyclical exposures, and invest in talent and operating system upgrades to drive resilience and optionality in uncertain macro environments.