Total GCP Applied Technologies
|1Q 2018||1Q 2017||% Change|
|Net Sales, Constant Currency*||7.8%|
|Gross margin||34.9%||37.8%||(290) bps|
|Adjusted Gross Margin*||35.1%||38.7%||(360) bps|
|Loss from continuing operations attributable to GCP shareholders||44.8%|
|Net loss attributable to GCP shareholders||60.9%|
|Diluted EPS from continuing operations attributable to GCP shareholders||45.7%|
|Adjusted EBIT Margin*||5.3%||4.9%||40 bps|
“GCP had strong sales growth in the first quarter of 2018,” said President and Chief Executive Officer Gregory E. Poling. “Net sales rose 11% due to healthy global construction markets, contributions from our acquisitions and the positive impact of foreign exchange. Adjusted EBIT grew 20% on higher sales volumes and savings from our restructuring program. GCP’s gross margin was negatively impacted by higher inflation. We started to see the positive impact of price late in the quarter and expect this trend to continue through 2018.”
“We continue to execute on our bolt-on acquisition strategy with the purchase of
First quarter 2018:
- Net sales increased 11.1% and Net Sales, Constant Currency increased 7.8% due to growth in both Specialty Construction Chemicals and Specialty Building Materials
- Gross margin of 34.9% decreased 290 basis points primarily due to increased raw materials and logistics costs. Price increases have been implemented to recover higher costs and recapture margins.
- Adjusted EBIT of
$13.2 millionincreased 20.0% and Adjusted EBIT margin increased 40 basis points due to improved operating leverage from higher sales volumes and cost savings associated with our restructuring plan, partially offset by higher selling, general and administrative expenses from our acquisitions
- Net loss from continuing operations attributable to GCP shareholders was
$13.8 millioncompared to net loss from continuing operations of $25.0 millionin the first quarter of 2017. The change was primarily due to lower interest expense, lower restructuring and repositioning expenses and an increase in other (income) expense. Net loss from continuing operations for the first quarter of 2018 includes a $12.5 millionincrease to the provisional net charge related to the 2017 Tax Act.
First Quarter Segment Performance
Specialty Construction Chemicals
|1Q 2018||1Q 2017||% Change|
|Net Sales, Constant Currency*||6.6%|
|Gross margin||31.3%||35.7%||(440) bps|
|Segment operating income||(31.4)%|
|Segment operating margin||4.0%||6.4%||(240) bps|
- Net sales increased 9.7% and Net Sales, Constant Currency increased 6.6% due to higher volumes in our Concrete and Cement businesses
- Gross margin declined 440 basis points primarily due to raw material inflation and increases in logistics costs
- Segment operating income decreased 31.4% and segment operating margin decreased 240 basis points primarily due to lower gross margin, partially offset by cost savings associated with our restructuring plan
- Comparisons with first quarter 2017 results for SCC were impacted by GCP’s deconsolidation of its
Venezuelaoperations on July 3, 2017. In the first quarter of 2017, GCP’s Venezuelaoperations contributed net sales of $3.1 million, gross profit of $2.3 millionand operating income of $2.0 million.
Specialty Building Materials
|1Q 2018||1Q 2017||% Change|
|Net Sales, Constant Currency*||9.6%|
|Gross margin||40.6%||43.3%||(270) bps|
|Segment operating income||19.1%|
|Segment operating margin||17.5%||16.6%||90 bps|
- Net sales increased 13.0% and Net Sales, Constant Currency increased 9.6% primarily due to higher volumes in our Building Envelope and Residential businesses
- Gross margin declined 270 basis points due to increases in raw material costs and the timing of price increases as projects were shipped at previously committed pricing
- Segment operating income increased 19.1% to
$18.1 million. Segment operating margin increased 90 basis points to 17.5% due to improved operating leverage from higher sales volumes and cost savings associated with our restructuring plan, partially offset by lower gross margin.
*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.
Sale of Darex Packaging Technologies
On July 3, 2017, GCP completed the sale of Darex to Henkel for
Restructuring and Repositioning Expenses
On June 28, 2017, the Board of Directors approved a restructuring and repositioning plan. Upon completion of the plan, the Company expects to achieve a net annualized cost reduction of approximately
Restructuring and asset impairments from continuing operations were
Interest Expense and Related Financing Costs
Interest expense and related financing costs were
On April 10, 2018, the Company announced the closing of several refinancing transactions including the issuance of
Income tax expense attributable to continuing operations for the quarter ended March 31, 2018 was $13.5 million compared to
Full-Year 2018 Outlook1
|Net Sales, Constant Currency||Growth of 5% to 10%||Growth of 5% to 10%|
|Adjusted Free Cash Flow|
1GCP guidance figures assume average 2017 FX rates carried forward into the guidance period.
2Includes effective tax rate of 28% to 31%, which reflects the Company’s current estimate of the impact of the Tax Cuts and Jobs Act of 2017.
3Assumes 72 million shares outstanding.
GCP has scheduled a conference call and webcast at 10:00 a.m. ET today to review its first quarter 2018 results and full-year outlook. Those who wish to listen to the conference call webcast should visit the Investors section of GCP’s website at www.gcpat.com. The live call can be accessed by dialing (844) 887-9408 in the
For those unable to participate in the live conference call, a playback will be available until May 15, 2018. To listen to the playback, please dial (877) 344-7529 in the
Non-GAAP Financial Measures
In this press release the Company refers to non-GAAP financial measures including Net Sales, Constant Currency, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EPS, and Adjusted EBIT Return On Invested Capital. These non-GAAP measures do not purport to represent income or liquidity measures as defined under
The Analysis of Operations pages included in this press release provide reconciliations of these non-GAAP financial measures to their most comparable 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.
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About GCP Applied Technologies
GCP is a leading global provider of construction products technologies that include additives for cement and concrete, the VERIFI® in-transit concrete management system, high-performance waterproofing products, and specialty systems. GCP products have been used to build some of the world’s most renowned structures. More information is available at www.gcpat.com.