GCP Applied Technologies Inc. (NYSE: GCP), a
leading global provider of construction products technologies,
today announced preliminary results for the first quarter of 2021.
For the three months ended March 31, 2021, GCP reports net
sales of $222.8 million compared to $216.7 million in the prior
year quarter. Net Sales Constant Currency* are $219.6 million
versus $216.7 million in the prior year quarter. Income from
continuing operations attributable to GCP shareholders is $1.5
million compared to $2.0 million in the first quarter of 2020,
while Adjusted EBITDA* totaled $28.2 million, an increase of 6.8%
over the prior year quarter. Adjusted EBIT* is $16.9 million, an
increase of 9.7% versus prior year quarter. Diluted earnings per
share from continuing operations attributable to GCP shareholders
is $0.02 compared to $0.03 in the first quarter of 2020, while
Adjusted EPS* is $0.12 compared to $0.10 in the prior year
quarter.
Simon Bates, GCP’s President and Chief Executive Officer, said,
"We are pleased with the first quarter results and we remain
focused on improving our performance. Our restructuring plan is
progressing well and we have already hired key talent for our new
metro Atlanta headquarters. Our global research and development
center will remain in the greater Boston area for continuity and to
retain key employees. In the near term our focus has switched to
the significant cost inflation in raw materials and transportation.
We have plans to offset most of the inflation and continue to
respond to a dynamic environment.”
*Non-GAAP financial measures. See the tables herein for
important information regarding these measures and a reconciliation
to the most comparable GAAP measures.NM - Not meaningful.
Total GCP Applied Technologies($ Millions)
|
1Q 2021 |
1Q 2020 |
% Change |
Net sales |
$222.8 |
$216.7 |
2.8% |
Net Sales Constant
Currency* |
$219.6 |
$216.7 |
1.3% |
Gross margin |
38.8% |
38.2% |
60 bps |
Income from continuing
operations attributable to GCP shareholders |
$1.5 |
$2.0 |
(25.0)% |
Income from continuing
operations attributable to GCP shareholders as a percentage of net
sales |
0.7% |
0.9% |
(20) bps |
Diluted EPS from continuing
operations attributable to GCP shareholders |
$0.02 |
$0.03 |
(33.3)% |
Adjusted EPS* |
$0.12 |
$0.10 |
20.0% |
Adjusted EBIT* |
$16.9 |
$15.4 |
9.7% |
Adjusted EBIT Margin* |
7.6% |
7.1% |
50 bps |
Adjusted EBITDA* |
$28.2 |
$26.4 |
6.8% |
Adjusted EBITDA Margin* |
12.7% |
12.2% |
50 bps |
First Quarter 2021:
- Net sales increased 2.8% primarily attributable to higher sales
volumes and favorable impact of foreign currency translation.
- Gross margin increased 60 basis points to 38.8% primarily due
to improved operational productivity, partially offset by product
and geographic mix.
- Selling, general and administrative costs of $66.6 million
decreased 2.2% during the first quarter primarily due to
shareholder activism and other related costs incurred during the
prior-year quarter and lower employee-related costs resulting from
restructuring programs.
- Income from continuing operations attributable to GCP
shareholders is $1.5 million compared to $2.0 million for the prior
year quarter. The decrease was primarily attributable to higher
restructuring costs and income tax expense, partially offset by
higher gross profit and lower general and administrative
expenses.
- Adjusted EBIT* of $16.9 million increased 9.7% compared to the
prior year quarter primarily due to higher SBM operating income,
partially offset by lower SCC operating income and higher corporate
costs.
- Adjusted EBITDA* increased 6.8% to $28.2 million with a
corresponding Adjusted EBITDA Margin* of 12.7%. The increase was
due to higher Adjusted EBIT.
First Quarter Segment Performance
Specialty Construction Chemicals($
Millions)
|
1Q 2021 |
1Q 2020 |
% Change |
Net sales |
$123.9 |
$125.4 |
(1.2)% |
Net Sales Constant
Currency* |
$122.8 |
$125.4 |
(2.1)% |
Gross margin |
36.6% |
38.0% |
(140) bps |
Segment operating income |
$6.1 |
$8.5 |
(28.2)% |
Segment operating margin |
4.9% |
6.8% |
(190) bps |
- Net sales decreased 1.2% compared with the prior-year quarter
due to lower sales volumes in North America and Europe, partially
offset by higher sales volumes in Latin America and Asia Pacific
and the favorable impact of foreign currency translation.
- Gross margin decreased 140 basis points to 36.6% primarily due
to unfavorable product mix, partially offset by improvements in
operational productivity.
- Segment operating margin decreased 190 basis points primarily
due to lower gross margin.
Specialty Building Materials($ Millions)
|
1Q 2021 |
1Q 2020 |
% Change |
Net sales |
$98.9 |
$91.3 |
8.3% |
Net Sales Constant
Currency* |
$96.8 |
$91.3 |
6.0% |
Gross margin |
41.9% |
39.0% |
290 bps |
Segment operating income |
$19.4 |
$14.1 |
37.6% |
Segment operating margin |
19.6% |
15.4% |
420 bps |
- Net sales increased 8.3% due to higher residential sales
volumes and timing of promotions, partially offset by lower
commercial construction demand. Foreign currency translation impact
was favorable and pricing was essentially flat compared to prior
year quarter.
- Gross margin of 41.9% increased 290 basis points primarily due
to improved productivity related to raw material utilization and
higher sales volumes that favorably impacted operating
leverage.
- Segment operating margin of 19.6% increased 420 basis points
primarily due to higher gross margin.
Capital Allocation and Liquidity GCP remains
committed to maintaining a disciplined approach to capital
allocation and preserving the Company's strong balance sheet. GCP's
cash balance at the end of the first quarter of 2021 was $472.9
million. GCP has access to additional liquidity in the form of a
$350 million revolving credit facility maturing in 2023, which
brings total liquidity sources to approximately $862 million as of
March 31, 2021, to enable GCP to weather any effects from the
COVID-19 pandemic and invest in the business.
Restructuring and Repositioning PlansOn March
30, 2021, our Board of Directors approved a business restructuring
and repositioning plan related to the relocation of our corporate
headquarters to the Atlanta, Georgia area, the closure of the
Cambridge, Massachusetts campus, the build-out of a new global
research and development center near the Boston /Cambridge area, as
well as the consolidation of other regional facilities and offices,
including an organizational redesign, which is expected to lower
costs.
We expect to realize total pre-tax cost structure savings
associated with the 2021 Plan of approximately $13 million to $15
million mostly in general, administrative and overhead costs, with
most of the savings occurring in 2022. Substantially all of the
restructuring actions under the 2021 Plan are expected to be
completed by June 30, 2022, and with the exception of asset write
offs, substantially all of the restructuring and repositioning
activities are expected to be settled in cash. We will continue to
evaluate opportunities to improve our operations and cost structure
beyond our currently active initiatives.
Revisions of Previously Issued Consolidated Financial
StatementsIn connection with the preparation of the
consolidated financial statements for the year ended December 31,
2020, the Company identified expense accrual and other adjustments
in its previously filed unaudited quarterly consolidated financial
statements for the first three quarterly periods of 2020. Please
refer to the Form 10Q for the three months ended March 31, 2021 to
be filed with the SEC for more information.
Investor CallGCP has scheduled a conference
call and webcast at 10:00 a.m. ET today to review its first quarter
2021 results. Those who wish to listen to the conference call
webcast should visit the Investors section of the GCP website at
www.gcpat.com. The live call can be accessed by dialing +1 (844)
887-9408 in the U.S. or +1 (412) 317-9261 internationally prior to
the start of the call. Participants should ask to join the GCP
Applied Technologies call. An accompanying slide presentation will
also be available on the website.
For those unable to participate in the live conference call, a
playback will be available until May 11, 2021. To listen to the
playback, please dial +1 (877) 344-7529 in the U.S. or +1 (412)
317-0088 internationally; the access code is 10153940. An audio
webcast replay will also be available in the “Events and
Presentations” section of the Company's website for approximately
three months.
Non-GAAP Financial MeasuresIn this press
release the Company refers to non-GAAP financial measures
including: Net Sales Constant Currency, Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted EBIT, Adjusted EBIT Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow,
and Adjusted EPS. These non-GAAP measures do not purport to
represent income or liquidity measures as defined under United
States generally accepted accounting principles ("U.S. GAAP"), and
should not be considered as alternatives to such measures as an
indicator of GCP's performance. These measures are provided to
investors and others to improve the period-to-period and
peer-to-peer comparability of GCP's financial results and to ensure
that investors understand the information GCP uses to evaluate the
performance of its businesses.
The Analysis of Operations pages included in this press release
provide reconciliations of these non-GAAP financial measures to
their most comparable U.S. GAAP measures, as well as definitions
for each of these non-GAAP financial measures and explanations as
to why management finds them useful and believes they are useful to
investors, potential investors and others.
Investor RelationsBetsy CowellT +1
617.498.4568investors@gcpat.com
About GCP Applied
TechnologiesGCP is a leading global provider of
construction products technologies that include admixtures and
additives for concrete and cement, the in-transit concrete
management system, high-performance waterproofing products, and
specialty construction products. GCP products have been used to
build some of the world’s most renowned structures. More
information is available at www.gcpat.com.
This announcement contains “forward-looking statements,” within
the meaning of Section 27A of the Securities Act of 1933, Section
21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the context of the statement and
generally arise when GCP or its management is discussing its
beliefs, estimates or expectations. Such statements generally
include the words “believes,” “plans,” “intends,” “targets,”
“will,” “expects,” “estimates,” “suggests,” “anticipates,”
“outlook,” “continues,” or similar expressions. These statements
are not historical facts or guarantees of future performance but
instead represent only the beliefs of GCP and its management at the
time the statements were made regarding future events which are
subject to certain risks, uncertainties and other factors, many of
which are outside GCP’s control. Actual results and outcomes may
differ materially from what is expressed or forecast in such
forward-looking statements. Forward-looking statements include,
without limitation, statements about expected financial positions;
results of operations; cash flows; financing plans; business
strategy; operating plans; strategic alternatives; capital and
other expenditures; competitive positions; growth opportunities for
existing products; benefits from new technology and cost reduction
initiatives, plans and objectives; and markets for securities. Like
other businesses, we are subject to risks and uncertainties that
could cause our actual results to differ materially from our
projections or that could cause other forward-looking statements to
prove incorrect. Factors that could cause actual results to
materially differ from those contained in the forward-looking
statements, or that could cause other forward-looking statements to
prove incorrect, include, without limitation, risks related to: the
cyclical and seasonal nature of the industries that GCP serves;
foreign operations, especially in emerging regions; changes in
currency exchange rates; business disruptions due to public health
or safety emergencies, such as the novel strain of coronavirus
("COVID-19") pandemic; the cost and availability of raw materials
and energy; the effectiveness of GCP’s research and development,
new product introductions and growth investments; acquisitions and
divestitures of assets and gains and losses from dispositions;
developments affecting GCP’s outstanding liquidity and
indebtedness, including debt covenants and interest rate exposure;
developments affecting GCP’s funded and unfunded pension
obligations; warranty and product liability claims; legal
proceedings; the inability to establish or maintain certain
business relationships and relationships with customers and
suppliers or the inability to retain key personnel; the handling of
hazardous materials and the costs of compliance with environmental
regulations; extreme weather events and natural disasters. These
and other factors are identified and described in more detail in
GCP's on Form 10-Q, which will be filed with the U.S. Securities
and Exchange Commission and is available online at www.sec.gov, and
subsequent quarterly reports. Readers are cautioned not to place
undue reliance on GCP’s projections and other forward-looking
statements, which speak only as of the date thereof. GCP undertakes
no obligation to publicly release any revision to its projections
and other forward-looking statements contained in this
announcement, or to update them to reflect events or circumstances
occurring after the date of this announcement.
GCP Applied Technologies
Inc.Consolidated Statements of Operations
(unaudited)
|
Three Months Ended March 31, |
(In millions, except
per share amounts) |
2021 |
|
2020 |
Net sales |
$ |
222.8 |
|
|
$ |
216.7 |
|
Cost of goods sold |
136.3 |
|
|
133.9 |
|
Gross profit |
86.5 |
|
|
82.8 |
|
Selling, general and
administrative expenses |
66.6 |
|
|
68.1 |
|
Research and development
expenses |
4.5 |
|
|
4.9 |
|
Interest expense and related
financing costs |
5.6 |
|
|
5.7 |
|
Repositioning expenses |
1.3 |
|
|
2.7 |
|
Restructuring expenses and
asset write offs |
7.6 |
|
|
3.1 |
|
Other income, net |
(1.7 |
) |
|
(2.2 |
) |
Total costs and expenses |
83.9 |
|
|
82.3 |
|
Income from continuing
operations before income taxes |
2.6 |
|
|
0.5 |
|
(Provision for) benefit from
income taxes |
(1.0 |
) |
|
1.6 |
|
Income from continuing
operations |
1.6 |
|
|
2.1 |
|
Loss from discontinued
operations, net of income taxes |
— |
|
|
(0.3 |
) |
Net income |
1.6 |
|
|
1.8 |
|
Less: Net income attributable
to noncontrolling interests |
(0.1 |
) |
|
(0.1 |
) |
Net income
attributable to GCP shareholders |
$ |
1.5 |
|
|
$ |
1.7 |
|
Amounts Attributable
to GCP Shareholders: |
|
|
|
Income from continuing
operations attributable to GCP shareholders |
1.5 |
|
|
2.0 |
|
Loss from discontinued
operations, net of income taxes |
— |
|
|
(0.3 |
) |
Net income
attributable to GCP shareholders |
$ |
1.5 |
|
|
$ |
1.7 |
|
Earnings (Loss) Per
Share Attributable to GCP Shareholders |
|
|
|
Basic earnings (loss)
per share:(2) |
|
|
|
Income from continuing operations attributable to GCP
shareholders |
$ |
0.02 |
|
|
$ |
0.03 |
|
Loss from discontinued operations, net of income taxes |
$ |
— |
|
|
$ |
— |
|
Net income attributable to GCP shareholders(1) |
$ |
0.02 |
|
|
$ |
0.02 |
|
Weighted average number of basic shares |
73.2 |
|
|
72.9 |
|
Diluted earnings
(loss) per share:(2) |
|
|
|
Income from continuing operations attributable to GCP
shareholders |
$ |
0.02 |
|
|
$ |
0.03 |
|
Loss from discontinued operations, net of income taxes |
$ |
— |
|
|
$ |
— |
|
Net income attributable to GCP shareholders(1) |
$ |
0.02 |
|
|
$ |
0.02 |
|
Weighted average number of diluted shares |
73.4 |
|
|
73.0 |
|
______________________________
(1) |
Amounts may not sum due to rounding. |
|
|
(2) |
Dilutive effect only applicable
to the periods during which GCP generated net income from
continuing operations. |
GCP Applied Technologies
Inc.Consolidated Balance Sheets
(unaudited)
(In millions, except
par value and shares) |
March 31, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
472.9 |
|
|
$ |
482.7 |
|
Trade accounts receivable, net
of allowance for credit losses of $6.7 million and $7.0 million,
respectively |
161.9 |
|
|
169.4 |
|
Inventories, net |
117.1 |
|
|
98.4 |
|
Other current assets |
43.9 |
|
|
41.2 |
|
Total Current Assets |
795.8 |
|
|
791.7 |
|
Properties and equipment,
net |
216.6 |
|
|
225.6 |
|
Operating lease right-of-use
assets |
37.7 |
|
|
40.0 |
|
Goodwill |
212.8 |
|
|
215.0 |
|
Technology and other
intangible assets, net |
68.1 |
|
|
70.9 |
|
Deferred income taxes |
9.6 |
|
|
9.6 |
|
Overfunded defined benefit
pension plans |
30.0 |
|
|
29.7 |
|
Other assets |
35.2 |
|
|
35.1 |
|
Total Assets |
$ |
1,405.8 |
|
|
$ |
1,417.6 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
Current
Liabilities |
|
|
|
Debt payable within one
year |
$ |
2.4 |
|
|
$ |
2.8 |
|
Operating lease obligations
payable within one year |
7.6 |
|
|
8.0 |
|
Accounts payable |
94.0 |
|
|
87.8 |
|
Other current liabilities |
113.4 |
|
|
125.8 |
|
Total Current Liabilities |
217.4 |
|
|
224.4 |
|
Debt payable after one
year |
349.0 |
|
|
348.9 |
|
Income taxes payable |
28.4 |
|
|
28.4 |
|
Deferred income taxes |
14.8 |
|
|
14.9 |
|
Operating lease
obligations |
25.4 |
|
|
26.2 |
|
Unrecognized tax benefits |
41.2 |
|
|
41.0 |
|
Underfunded and unfunded
defined benefit pension plans |
63.0 |
|
|
62.9 |
|
Other liabilities |
16.0 |
|
|
16.8 |
|
Total Liabilities |
755.2 |
|
|
763.5 |
|
Commitments and
Contingencies |
|
|
|
Stockholders'
Equity |
|
|
|
Preferred stock, par value
$0.01; 50,000,000 shares authorized, no shares issued or
outstanding |
— |
|
|
— |
|
Common stock issued, par value
$0.01; 300,000,000 shares authorized; outstanding: 73,251,641 and
73,082,066, respectively |
0.7 |
|
|
0.7 |
|
Paid-in capital |
65.5 |
|
|
61.9 |
|
Accumulated earnings |
711.8 |
|
|
710.3 |
|
Accumulated other
comprehensive loss |
(118.5 |
) |
|
(110.5 |
) |
Treasury stock |
(11.4 |
) |
|
(10.7 |
) |
Total GCP's Shareholders' Equity |
648.1 |
|
|
651.7 |
|
Noncontrolling interests |
2.5 |
|
|
2.4 |
|
Total Stockholders' Equity |
650.6 |
|
|
654.1 |
|
Total Liabilities and Stockholders' Equity |
$ |
1,405.8 |
|
|
$ |
1,417.6 |
|
GCP Applied Technologies
Inc.Consolidated Statements of Cash Flows
(unaudited)
|
Three Months Ended March 31, |
(In
millions) |
2021 |
|
2020 |
OPERATING
ACTIVITIES |
|
|
|
Net income |
$ |
1.6 |
|
|
$ |
1.8 |
|
Less: Loss from discontinued
operations |
— |
|
|
(0.3 |
) |
Income from continuing
operations |
1.6 |
|
|
2.1 |
|
Reconciliation to net
cash provided by operating activities: |
|
|
|
Depreciation and amortization |
11.3 |
|
|
11.0 |
|
Amortization of debt discount and financing costs |
0.4 |
|
|
0.4 |
|
Stock-based compensation expense |
1.0 |
|
|
0.8 |
|
Unrealized (gain) loss on foreign currency |
(2.3 |
) |
|
0.5 |
|
Deferred income taxes |
(0.2 |
) |
|
(4.9 |
) |
Loss (gain) on disposal of property and equipment |
1.1 |
|
|
(0.1 |
) |
Changes in assets and
liabilities, excluding effect of currency
translation: |
|
|
|
Trade accounts receivable |
5.0 |
|
|
17.4 |
|
Inventories |
(19.9 |
) |
|
(11.4 |
) |
Accounts payable |
9.9 |
|
|
6.6 |
|
Pension assets and liabilities, net |
1.1 |
|
|
1.0 |
|
Other assets and liabilities, net |
(8.3 |
) |
|
(9.1 |
) |
Net cash provided by operating activities from continuing
operations |
0.7 |
|
|
14.3 |
|
Net cash used in operating activities from discontinued
operations |
— |
|
|
(0.9 |
) |
Net cash provided by operating activities |
0.7 |
|
|
13.4 |
|
INVESTING
ACTIVITIES |
|
|
|
Capital expenditures |
(8.1 |
) |
|
(9.2 |
) |
Other investing
activities |
— |
|
|
0.4 |
|
Net cash used in investing activities from continuing
operations |
(8.1 |
) |
|
(8.8 |
) |
FINANCING
ACTIVITIES |
|
|
|
Repayments under credit
arrangements |
(0.3 |
) |
|
— |
|
Payments on finance lease
obligations |
(0.2 |
) |
|
(0.2 |
) |
Payments of tax withholding
obligations related to employee equity awards |
(0.7 |
) |
|
(0.3 |
) |
Proceeds from exercise of
stock options |
1.8 |
|
|
0.4 |
|
Net cash provided by (used in) financing activities from
continuing operations |
0.6 |
|
|
(0.1 |
) |
Effect of currency exchange
rate changes on cash and cash equivalents |
(3.0 |
) |
|
(9.3 |
) |
Decrease in cash and
cash equivalents |
(9.8 |
) |
|
(4.8 |
) |
Cash and cash equivalents,
beginning of period |
482.7 |
|
|
325.0 |
|
Cash and cash equivalents, end
of period |
$ |
472.9 |
|
|
$ |
320.2 |
|
Supplemental
disclosure of non-cash investing activities: |
|
|
|
Property and equipment purchases unpaid and included in accounts
payable |
$ |
3.0 |
|
|
$ |
5.5 |
|
Analysis of Operations
The Company has set forth in the tables below GCP's key
operating statistics with percentage changes for the three months
ended March 31, 2021 and 2020.
Segment operating margin is defined as segment operating income
divided by segment net sales. It represents an operating
performance measure related to ongoing earnings and trends in GCP
operating segments that are engaged in revenue generation and other
core business activities. The Company uses this metric to allocate
resources between the segments and assess its strategic and
operating decisions related to core operations of its business.
In the table, the Company presents financial information in
accordance with U.S. GAAP, as well as certain non-GAAP financial
measures, which it describes below in further detail. GCP believes
that the non-GAAP financial information supplements its discussions
about the performance of its businesses, improves period-to-period
comparability and provides insight to the information that
management uses to evaluate the performance of its businesses.
Management uses GAAP and non-GAAP measures in financial and
operational decision-making processes, for internal reporting, and
as part of its forecasting and budgeting processes since non-GAAP
measures provide additional transparency to GCP's core
operations.
In the table, the Company has provided reconciliations of these
non-GAAP financial measures to the most directly comparable
financial measures calculated and presented in accordance with U.S.
GAAP. These non-GAAP financial measures should not be considered
substitutes for financial measures calculated in accordance with
U.S. GAAP, and the financial results that the Company calculates
and presents in the table in accordance with U.S. GAAP, as well as
the corresponding reconciliations from those results, should be
carefully evaluated.
The following are the non-GAAP financial measures presented in
the table:
- Net Sales Constant
Currency (a non-GAAP financial measure)- is defined as current
period revenue in local currency translated using prior period
exchange rates. GCP uses constant currency in assessing trends
in sales excluding the impact of fluctuations in foreign currency
exchange rates.
- Adjusted EBIT (a non-GAAP financial measure)- is defined as net
income (loss) from continuing operations attributable to GCP
shareholders adjusted for: (i) gains and losses on sales of
businesses, product lines and certain other investments; (ii)
currency and other financial losses in Venezuela; (iii) costs
related to legacy product, environmental and other claims; (iv)
restructuring and repositioning expenses, and asset write offs; (v)
defined benefit plan costs other than service and interest costs,
expected returns on plan assets and amortization of prior service
costs/credits; (vi) third-party and other acquisition-related
costs; (vii) other financing costs associated with the modification
or extinguishment of debt; (viii) amortization of acquired
inventory fair value adjustments; (ix) tax indemnification
adjustments; (x) interest income, interest expense and related
financing costs; (xi) income taxes; (xii) shareholder activism and
other related costs; (xiii) gain on sale of corporate headquarters,
net of related costs; and (xiv) certain other items that are not
representative of underlying trends. Adjusted EBIT Margin is
defined as Adjusted EBIT divided by net sales. GCP uses Adjusted
EBIT to assess and measure its operating performance and determine
performance-based employee compensation. The Company uses Adjusted
EBIT as a performance measure because it provides improved
quarter-to-quarter and year-over-year comparability for
decision-making and compensation purposes and allows management to
measure the ongoing earnings results of its strategic and operating
decisions.
- Adjusted EBITDA (a
non-GAAP financial measure)- is defined as Adjusted EBIT adjusted
for depreciation and amortization. Adjusted EBITDA Margin is
defined as Adjusted EBITDA divided by net sales. GCP uses Adjusted
EBITDA as a performance measure in making significant business
decisions.
- Adjusted Earnings Per Share (a non-GAAP financial measure)- is
defined as earnings per share ("EPS") from continuing operations on
a diluted basis adjusted for: (i) gains and losses on sales of
businesses, product lines and certain other investments; (ii)
currency and other financial losses in Venezuela; (iii) costs
related to legacy product, environmental and other claims; (iv)
restructuring and repositioning expenses and asset write offs; (v)
defined benefit plan costs other than service and interest costs,
expected returns on plan assets and amortization of prior service
costs/credits; (vi) third-party and other acquisition-related
costs; (vii) other financing costs associated with the modification
or extinguishment of debt; (viii) amortization of acquired
inventory fair value adjustments; (ix) tax indemnification
adjustments; (x) shareholder activism and other related costs; (xi)
certain discrete tax items; (xii) gain on sale of corporate
headquarters, net of related costs; and (xiii) certain other items
that are not representative of underlying trends. GCP uses Adjusted
EPS as a performance measure to review its diluted earnings per
share results on a consistent basis and in determining certain
performance-based employee compensation.
- Adjusted Gross
Profit (a non-GAAP financial measure)- is defined as gross profit
adjusted for: (i) corporate and pension-related costs included in
cost of goods sold; (ii) loss in Venezuela included in cost of
goods sold; (iii) amortization of acquired inventory fair value
adjustment; and (iv) certain other items that are not
representative of underlying trends. Adjusted Gross Margin means
Adjusted Gross Profit divided by net sales. GCP uses this
performance measure to understand trends and changes and to make
business decisions regarding core operations.
- Adjusted Free Cash
Flow (a non-GAAP financial measure)- is defined as net cash
provided by or used in operating activities minus capital
expenditures plus: (i) cash paid for restructuring and
repositioning, third party and other acquisition-related costs,
costs related to legacy product, environmental and other claims, as
well as certain other items that are not representative of
underlying trends, net of related cash taxes; (ii) capital
expenditures related to repositioning; and (iii) accelerated
payments under defined benefit pension arrangements. GCP uses
Adjusted Free Cash Flow as a liquidity measure to evaluate its
ability to generate cash to support its ongoing business
operations, to invest in its businesses, to provide a return of
capital to shareholders and to determine payments of
performance-based compensation.
Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted
EBITDA Margin, Adjusted EPS, Adjusted Gross Profit and Adjusted
Gross Margin do not purport to represent income measures as defined
in accordance with U.S. GAAP. These measures are provided to
investors and others to improve the quarter-to-quarter,
year-to-year, and peer-to-peer comparability of the Company's
financial results and to ensure that investors understand the
information it uses to evaluate the performance of its
businesses.
Adjusted EBIT has material limitations as an operating
performance measure because it excludes costs related to income and
expenses from restructuring and repositioning activities which
historically have been a material component of the Company's net
income (loss) from continuing operations attributable to GCP
shareholders. Adjusted EBITDA also has material limitations as an
operating performance measure because it excludes the impact of
depreciation and amortization expense. The Company's business is
substantially dependent on the successful deployment of capital,
and depreciation and amortization expense is a necessary element of
the Company costs. GCP compensates for the limitations of these
measurements by using these indicators together with net income
(loss) measured in accordance with U.S. GAAP to present a complete
analysis of its results of operations. Adjusted EBIT and Adjusted
EBITDA should be evaluated together with net income (loss) from
continuing operations attributable to GCP shareholders measured in
accordance with U.S. GAAP for a complete understanding of its
results of operations.
The Company does not provide U.S. GAAP financial information on
a forward-looking basis because the Company is unable to estimate
with reasonable certainty unusual or unanticipated charges,
expenses or gains without unreasonable effort. These items are
uncertain, depend on various factors, and could be material to the
Company’s results computed in accordance with U.S. GAAP.
GCP Applied Technologies
Inc.Analysis of Operations
(unaudited)
Analysis
of Operations(In millions, except per share
amounts) |
Three Months Ended March 31, |
2021 |
|
2020 |
|
% Change |
Net
sales: |
|
|
|
|
|
Specialty Construction Chemicals |
$ |
123.9 |
|
|
|
$ |
125.4 |
|
|
|
(1.2 |
) |
% |
Specialty Building Materials |
98.9 |
|
|
|
91.3 |
|
|
|
8.3 |
|
% |
Total GCP net
sales |
$ |
222.8 |
|
|
|
$ |
216.7 |
|
|
|
2.8 |
|
% |
Net sales by
region: |
|
|
|
|
|
North America |
$ |
118.1 |
|
|
|
$ |
119.2 |
|
|
|
(0.9 |
) |
% |
Europe Middle East Africa (EMEA) |
44.6 |
|
|
|
44.3 |
|
|
|
0.7 |
|
% |
Asia Pacific |
46.7 |
|
|
|
40.3 |
|
|
|
15.9 |
|
% |
Latin America |
13.4 |
|
|
|
12.9 |
|
|
|
3.9 |
|
% |
Total net sales by
region |
$ |
222.8 |
|
|
|
$ |
216.7 |
|
|
|
2.8 |
|
% |
Net Sales Constant
Currency: |
|
|
|
|
|
Specialty Construction
Chemicals |
$ |
122.8 |
|
|
|
$ |
125.4 |
|
|
|
(2.1 |
) |
% |
Specialty Building
Materials |
96.8 |
|
|
|
91.3 |
|
|
|
6.0 |
|
% |
Total GCP Net Sales
Constant Currency (non-GAAP) |
$ |
219.6 |
|
|
|
$ |
216.7 |
|
|
|
1.3 |
|
% |
Adjusted EBIT
(A): |
|
|
|
|
|
Specialty Construction Chemicals segment operating income |
$ |
6.1 |
|
|
|
$ |
8.5 |
|
|
|
(28.2 |
) |
% |
Specialty Building Materials segment operating income |
19.4 |
|
|
|
14.1 |
|
|
|
37.6 |
|
% |
Corporate costs (B) |
(7.2 |
) |
|
|
(5.9 |
) |
|
|
22.0 |
|
% |
Certain pension costs (C) |
(1.4 |
) |
|
|
(1.3 |
) |
|
|
7.7 |
|
% |
Adjusted EBIT
(non-GAAP) |
$ |
16.9 |
|
|
|
$ |
15.4 |
|
|
|
9.7 |
|
% |
Repositioning expenses |
(1.3 |
) |
|
|
(2.7 |
) |
|
|
(51.9 |
) |
% |
Restructuring expenses and asset write offs |
(7.6 |
) |
|
|
(3.1 |
) |
|
|
|
|
NM |
Shareholder activism and other related costs (D) |
— |
|
|
|
(3.6 |
) |
|
|
100.0 |
|
% |
Third-party and other acquisition-related costs |
(0.1 |
) |
|
|
(0.5 |
) |
|
|
(80.0 |
) |
% |
Interest expense, net |
(5.4 |
) |
|
|
(5.1 |
) |
|
|
5.9 |
|
% |
Income tax (provision) benefit |
(1.0 |
) |
|
|
1.6 |
|
|
|
|
|
NM |
Income from continuing
operations attributable to GCP shareholders |
$ |
1.5 |
|
|
|
$ |
2.0 |
|
|
|
(25.0 |
) |
% |
Income from continuing
operations attributable to GCP shareholders as a percentage of net
sales |
0.7 |
|
% |
|
0.9 |
|
% |
|
(0.2 |
) |
pts |
Diluted EPS from
continuing operations (U.S. GAAP) |
$ |
0.02 |
|
|
|
$ |
0.03 |
|
|
|
(33.3 |
) |
% |
Adjusted EPS
(non-GAAP) |
$ |
0.12 |
|
|
|
$ |
0.10 |
|
|
|
20.0 |
|
% |
GCP Applied Technologies
Inc.Analysis of Operations (unaudited)
(continued)
Analysis
of Operations(In millions) |
Three Months Ended March 31, |
2021 |
|
2020 |
|
% Change |
Adjusted profitability
performance measures: |
|
|
|
|
|
Gross
Profit: |
|
|
|
|
|
Specialty Construction Chemicals |
$ |
45.4 |
|
|
|
$ |
47.6 |
|
|
|
(4.6 |
) |
% |
Specialty Building Materials |
41.4 |
|
|
|
35.6 |
|
|
|
16.3 |
|
% |
Adjusted Gross Profit
(non-GAAP) |
$ |
86.8 |
|
|
|
$ |
83.2 |
|
|
|
4.3 |
|
% |
Corporate costs and pension costs in cost of goods sold (C) |
(0.3 |
) |
|
|
(0.4 |
) |
|
|
(25.0 |
) |
% |
Total GCP Gross Profit (U.S. GAAP) |
$ |
86.5 |
|
|
|
$ |
82.8 |
|
|
|
4.5 |
|
% |
Gross
Margin: |
|
|
|
|
|
Specialty Construction Chemicals |
36.6 |
|
% |
|
38.0 |
|
% |
|
(1.4 |
) |
pts |
Specialty Building Materials |
41.9 |
|
% |
|
39.0 |
|
% |
|
2.9 |
|
pts |
Adjusted Gross Margin (non-GAAP) |
39.0 |
|
% |
|
38.4 |
|
% |
|
0.6 |
|
pts |
Corporate costs and pension costs in cost of goods sold |
(0.1 |
) |
% |
|
(0.2 |
) |
% |
|
0.1 |
|
pts |
Total GCP Gross Margin (U.S. GAAP) |
38.8 |
|
% |
|
38.2 |
|
% |
|
0.6 |
|
pts |
Adjusted EBIT
(A)(B)(C): |
|
|
|
|
|
Specialty Construction Chemicals segment operating income |
$ |
6.1 |
|
|
|
$ |
8.5 |
|
|
|
(28.2 |
) |
% |
Specialty Building Materials segment operating income |
19.4 |
|
|
|
14.1 |
|
|
|
37.6 |
|
% |
Corporate and certain pension costs |
(8.6 |
) |
|
|
(7.2 |
) |
|
|
19.4 |
|
% |
Total GCP Adjusted EBIT (non-GAAP) |
$ |
16.9 |
|
|
|
$ |
15.4 |
|
|
|
9.7 |
|
% |
Depreciation and
amortization: |
|
|
|
|
|
Specialty Construction Chemicals |
$ |
6.9 |
|
|
|
$ |
6.4 |
|
|
|
7.8 |
|
% |
Specialty Building Materials |
3.8 |
|
|
|
3.6 |
|
|
|
5.6 |
|
% |
Corporate |
0.6 |
|
|
|
1.0 |
|
|
|
(40.0 |
) |
% |
Total GCP depreciation and amortization |
$ |
11.3 |
|
|
|
$ |
11.0 |
|
|
|
2.7 |
|
% |
Adjusted
EBITDA: |
|
|
|
|
|
Specialty Construction Chemicals |
$ |
13.0 |
|
|
|
$ |
14.9 |
|
|
|
(12.8 |
) |
% |
Specialty Building Materials |
23.2 |
|
|
|
17.7 |
|
|
|
31.1 |
|
% |
Corporate and certain pension costs |
(8.0 |
) |
|
|
(6.2 |
) |
|
|
29.0 |
|
% |
Total GCP Adjusted EBITDA (non-GAAP) |
$ |
28.2 |
|
|
|
$ |
26.4 |
|
|
|
6.8 |
|
% |
Adjusted EBIT
Margin: |
|
|
|
|
|
Specialty Construction Chemicals |
4.9 |
|
% |
|
6.8 |
|
% |
|
(1.9 |
) |
pts |
Specialty Building Materials |
19.6 |
|
% |
|
15.4 |
|
% |
|
4.2 |
|
pts |
Total GCP Adjusted EBIT Margin (non-GAAP) |
7.6 |
|
% |
|
7.1 |
|
% |
|
0.5 |
|
pts |
Adjusted EBITDA
Margin: |
|
|
|
|
|
|
|
Specialty Construction Chemicals |
10.5 |
|
% |
|
11.9 |
|
% |
|
(1.4 |
) |
pts |
Specialty Building Materials |
23.5 |
|
% |
|
19.4 |
|
% |
|
4.1 |
|
pts |
Total GCP Adjusted EBITDA Margin (non-GAAP) |
12.7 |
|
% |
|
12.2 |
|
% |
|
0.5 |
|
pts |
(A) |
Management allocates certain corporate costs to each operating
segment to the extent such costs are directly attributable to the
segments. |
(B) |
GCP segment operating income
includes only its share of income of consolidated joint
ventures. |
(C) |
Certain pension costs include
only ongoing costs, recognized quarterly, which include service and
interest costs, expected returns on plan assets and amortization of
prior service costs/credits. “Corporate costs and pension costs in
cost of goods sold" represent service costs related to GCP
manufacturing employees. Corporate costs do not include any amounts
for pension expense. Other pension-related costs, including annual
mark-to-market adjustments, gains or losses from curtailments and
terminations, as well as other related costs, are excluded from
Adjusted EBIT. These amounts are not used by management to evaluate
the performance of GCP businesses and significantly affect the
peer-to-peer and period-to-period comparability of its financial
results. Mark-to-market adjustments and other related costs are
primarily attributable to changes in financial market values and
actuarial assumptions and are not directly related to the operation
of GCP businesses. |
(D) |
Shareholder activism and other
related costs consist primarily of professional fees incurred in
connection with the actions by certain of GCP shareholders seeking
changes in the composition of our Board of Directors and nomination
of candidates to stand for election at the 2020 Annual
Shareholders' Meeting, as well as other related matters. |
NM |
Not meaningful. |
GCP Applied Technologies
Inc.Analysis of Operations (unaudited)
(continued)
(In
millions) |
Three Months Ended March 31, |
2021 |
2020 |
Cash flow
measure: |
|
|
|
Net cash provided by operating activities from continuing
operations |
$ |
0.7 |
|
|
$ |
14.3 |
|
Capital expenditures |
(8.1 |
) |
|
(9.2 |
) |
Cash paid for
repositioning |
1.4 |
|
|
5.2 |
|
Cash paid for
restructuring |
5.9 |
|
|
1.3 |
|
Cash paid for third-party and
other acquisition-related costs |
0.1 |
|
|
— |
|
Capital expenditures related
to repositioning |
0.1 |
|
|
1.0 |
|
Cash paid for shareholder
activism and other related costs (1) |
— |
|
|
1.8 |
|
Cash taxes related to
repositioning, restructuring, third-party and other
acquisition-related costs, shareholder activism and other related
costs |
(0.5 |
) |
|
(2.1 |
) |
Adjusted Free Cash
Flow (non-GAAP) |
$ |
(0.4 |
) |
|
$ |
12.3 |
|
__________________________
(1) |
Shareholder activism and other related costs consist primarily of
professional fees incurred in connection with the actions by
certain of GCP shareholders seeking changes in the composition of
its Board of Directors and nomination of candidates to stand for
election at the 2020 Annual Shareholders' Meeting, as well as other
related matters. |
GCP Applied Technologies
Inc.Adjusted Earnings Per Share
(unaudited)
|
Three Months Ended March 31, |
|
2021 |
|
2020 |
(In millions, except
per share amounts) |
Pre-Tax |
|
Tax Effect |
|
After-Tax |
|
PerShare |
|
Pre-Tax |
|
Tax Effect |
|
After-Tax |
|
PerShare |
Diluted EPS from continuing
operations (U.S. GAAP) |
|
|
|
|
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
$ |
0.03 |
|
Repositioning expenses |
$ |
1.3 |
|
|
$ |
0.3 |
|
|
$ |
1.0 |
|
|
0.01 |
|
|
$ |
2.7 |
|
|
$ |
0.7 |
|
|
$ |
2.0 |
|
|
0.03 |
|
Restructuring expenses and
asset write offs |
7.6 |
|
|
1.9 |
|
|
5.7 |
|
|
0.08 |
|
|
3.1 |
|
|
0.8 |
|
|
2.3 |
|
|
0.03 |
|
Shareholder activism and other
related costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.6 |
|
|
0.9 |
|
|
2.7 |
|
|
0.04 |
|
Third-party and other
acquisition-related costs |
0.1 |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
0.5 |
|
|
0.1 |
|
|
0.4 |
|
|
0.01 |
|
Discrete tax and other items,
including adjustments to uncertain tax positions |
— |
|
|
(0.4 |
) |
|
0.4 |
|
|
0.01 |
|
|
|
|
2.6 |
|
|
(2.6 |
) |
|
(0.04 |
) |
Adjusted EPS
(non-GAAP) |
|
|
|
|
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
$ |
0.10 |
|
GCP Applied Technologies (NYSE:GCP)
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GCP Applied Technologies (NYSE:GCP)
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