CAMBRIDGE, Mass., May 08, 2018 (GLOBE NEWSWIRE) — GCP Applied Technologies Inc. (NYSE:GCP) today announced first quarter 2018 results.

Total GCP Applied Technologies
($ Millions)

1Q 2018 1Q 2017 % Change
Net sales $250.2 $225.3 11.1%
Net Sales, Constant Currency* $242.9 $225.3 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 $(13.8) $(25.0) 44.8%
Net loss attributable to GCP shareholders $(6.6) $(16.9) 60.9%
Diluted EPS from continuing operations attributable to GCP shareholders $(0.19) $(0.35) 45.7%
Adjusted EPS* $0.01 $(0.06) NM
Adjusted EBIT* $13.2 $11.0 20.0%
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 U.K.-based R.I.W. Limited. The company is a supplier of specialty waterproofing products for commercial and residential construction applications in the U.K. waterproofing market.”

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 million increased 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 million compared to net loss from continuing operations of $25.0 million in 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 million increase to the provisional net charge related to the 2017 Tax Act.

First Quarter Segment Performance

Specialty Construction Chemicals
($ Millions)

1Q 2018 1Q 2017 % Change
Net sales $147.0 $134.0 9.7%
Net Sales, Constant Currency* $142.8 $134.0 6.6%
Gross margin 31.3% 35.7% (440) bps
Segment operating income $5.9 $8.6 (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 Venezuela operations on July 3, 2017. In the first quarter of 2017, GCP’s Venezuela operations contributed net sales of $3.1 million, gross profit of $2.3 million and operating income of $2.0 million.

Specialty Building Materials
($ Millions)

1Q 2018 1Q 2017 % Change
Net sales $103.2 $91.3 13.0%
Net Sales, Constant Currency* $100.1 $91.3 9.6%
Gross margin 40.6% 43.3% (270) bps
Segment operating income $18.1 $15.2 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 $1.06 billion in cash, subject to customary closing adjustments. Darex has been reclassified and reflected as “discontinued operations” on the Consolidated Statements of Operations for all periods presented.

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 $24 million to $28 million. The Company expects approximately $9 million to $13 million to benefit continuing operations, while approximately $15 million relates to discontinued operations.

Restructuring and asset impairments from continuing operations were $(0.5) million for the first quarter of 2018. Repositioning expenses related to the plan were $0.9 million for the first quarter of 2018, substantially all of which represent professional fees and employee-related costs.

Interest Expense and Related Financing Costs
Interest expense and related financing costs were $13.8 million for the first quarter of 2018 compared with $17.0 million for the prior-year quarter. The decrease reflects the repayment and extinguishment of the Company’s Term Loan in the third quarter of 2017.

Refinancing Transactions
On April 10, 2018, the Company announced the closing of several refinancing transactions including the issuance of $350.0 million aggregate principal amount of 5.5% Senior Notes due 2026, an amendment to its Credit Agreement that, among other things, increases the aggregate principal amount of revolving commitments available to $350.0 million, and the redemption of $525.0 million outstanding aggregate principal amount of its 9.5% Senior Notes due 2023.

Income Taxes
Income tax expense attributable to continuing operations for the quarter ended March 31, 2018 was $13.5 million compared to $11.6 millionfor the prior year quarter, representing effective tax rates of 6,750.0% and 86.6%, respectively. The effective tax rate for the quarter ended March 31, 2018 was impacted by a $12.5 million increase to the provisional net charge related to the 2017 Tax Act provisions. The difference between the provision for income taxes at the U.S. federal income tax rate of 21.0% and GCP’s overall income tax rate for the three months ended March 31, 2018 is primarily due to changes in estimates related to the 2017 Tax Act.

Full-Year 2018 Outlook1

Guidance Prior Current
Net Sales, Constant Currency Growth of 5% to 10% Growth of 5% to 10%
Adjusted EBIT $135 million to $150 million $135 million to $150 million
Adjusted EPS(2)(3) $0.84 to $1.03 $0.99 to $1.18
Adjusted Free Cash Flow $35 million to $45 million $35 million to $45 million

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.

Investor Call
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 The live call can be accessed by dialing (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 15, 2018. To listen to the playback, please dial (877) 344-7529 in the U.S. or +1 (412) 317-0088 internationally; the access code is 10118866.  A webcast replay will also be available in the “Events and Presentations” section of the company’s website for approximately three months.

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 United States generally accepted accounting principles (“GAAP”), and should not be considered as alternatives to such measures as an indicator of GCP’s performance. These non-GAAP measures are provided to distinguish the operating results of GCP’s current business.

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.

Media Relations
Paul Keeffe
T +1 617.498.4461
Investor Relations
Joseph DeCristofaro
T +1 617.498.2616

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