CAMBRIDGE, Mass., Nov. 06, 2020 (GLOBE NEWSWIRE) -- GCP Applied Technologies Inc. (NYSE: GCP), a leading global provider of construction products technologies, today announced results for the third quarter of 2020.
For the three months ended September 30, 2020, GCP reported net sales of $248.4 million compared to $266.9 million in the prior year quarter. Net Sales Constant Currency Excluding Market Exits* were $250.0 million versus $263.7 million in the prior year quarter. Income from continuing operations attributable to GCP shareholders was $99.5 million compared to $17.0 million in the third quarter of 2019, while Adjusted EBITDA* totaled $47.0 million, an increase from $45.3 million in the prior year quarter. Adjusted EBIT* was $35.1 million compared to $34.8 million in the prior year quarter. Diluted earnings per share from continuing operations attributable to GCP shareholders was $1.36 compared to $0.23 in the third quarter of 2019, while Adjusted EPS* was $0.30 compared to $0.28 in the prior year quarter.
Simon Bates, GCP’s President and Chief Executive Officer, said, "I am excited to have joined GCP. Our team is committed to the safety of our employees and the service to our customers given the challenges created by the global pandemic. Our third quarter results were favorable year over year. As the CEO, my focus will be on sustainable performance over time. A clear benefit is our strong balance sheet, which features significant liquidity of approximately $860 million as of September 30, 2020 and provides substantial financial flexibility.”
*Non-GAAP financial measures. See the tables herein for important information regarding these measures and a reconciliation to the most comparable GAAP measures.
NM - Not meaningful.
Total GCP Applied Technologies
($ Millions)
| 3Q 2020 | 3Q 2019 | 3Q 2020 | 3Q 2019 | $110.1 | $115.1 | $109.3 | $115.1 | 42.3% | 42.2% | $25.4 | $25.9 | 23.1% | 22.5% | 60 bps | ||||||||||||||
- Net sales decreased 4.3% due to lower sales volumes in EMEA and Asia Pacific and lower pricing in North America. The decreases were partially offset by higher sales volumes in North America and the favorable impact of foreign currency translation.
- Gross margin of 42.3% increased 10 basis points primarily due to improved logistics productivity, partially offset by lower pricing.
- Segment operating margin of 23.1% increased 60 basis points primarily due to lower operating expenses, partially offset by the unfavorable impact of lower sales volumes resulting in reduced operating leverage.
The Company has been closely monitoring the impact of novel strain of coronavirus ("COVID-19") and managing its effects on its business globally as the situation continues to evolve.COVID-19 began emerging in the latter half of the first quarter resulting in temporary mandated closures of the Company's manufacturing operations, primarily in China. During the first half of the year, the pandemic spread and intensified throughout the world resulting in mandated and voluntary closures of some of the Company's manufacturing operations and administrative offices which continued, to a lesser extent, during the third quarter. During this time, the Company focused on protecting the health, safety and well-being of its employees in accordance with guidelines issued by national and other health and safety authorities, while seeking to meet the needs of its global customers and suppliers. Responsive measures the Company adopted include working remotely when possible, establishing procedures for deep cleaning of facilities, restricting business travel, providing personal protective equipment, using appropriate social distancing practices, and restricting visitor access to facilities.
COVID-19 has negatively impacted the Company's operating results during the first half of the year and, to a lesser extent during the third quarter, primarily due to periodic closures of its facilities in all regions in which GCP operates, and periodic mandatory halts of construction activity in specific cities and countries around the world by government authorities or voluntary closures due to safety concerns. Some of the GCP customers have experienced similar disruptions as a result of the pandemic. During the third quarter, while construction activity levels remained below those that existed prior to COVID-19, the Company saw business conditions and construction market activity improve as global economies began to slowly reopen. As a result, the revenue volumes in the third quarter increased compared to the second quarter. The impact of COVID-19 on the business varied across different geographies and product lines during the third quarter. GCP has taken actions to preserve our liquidity by reducing discretionary spending and certain planned capital expenditures.
It is difficult for GCP to predict at this time the duration and extent of the impact of COVID-19 on the global construction industry, the Company's business, its financial position, results of operations, or liquidity although the Company expects that managing the impacts of the pandemic will be a part of its ongoing operations for the foreseeable future. Factors the Company is monitoring to assess the potential duration and extent of the impact of COVID-19 on its operations include the health of the global economy and construction industry, specifically on demand drivers for its construction products, as well as operational disruptions including those resulting from government actions, such as mandatory halts of construction activity, travel restrictions, as well as facility and work site closures. The Company will continue to prioritize the health and safety of its employees and serving its customers while minimizing disruption to the extent possible. The Company will also continue to monitor the health of the construction industry in the geographic markets in which the Company operates and respond accordingly.
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 third quarter of 2020 was $473.4 million. The Company has reduced planned capital expenditures by approximately $25 million in 2020 to further support its cash position. 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 $860 million as of September 30, 2020. The Company’s 5.5% Senior Notes with an aggregate principal amount of $350 million mature in 2026. GCP's strong balance sheet, which features significant liquidity and no near-term debt maturities, is a competitive differentiator that provides substantial financial flexibility and positions the Company well to successfully manage through the ongoing economic challenges and uncertainty caused by the COVID-19 pandemic.
Restructuring and Repositioning Plans
GCP's restructuring and repositioning plans are focused on the Company's SCC segment, its global supply chain, as well as its general administration and business support functions. The plans are designed to reduce the Company's complexity, create a more efficient and effective organization, and generate approximately $80 million in expected savings from 2018 through 2022. These expected savings exclude savings that the Company achieved from the execution of its 2017 restructuring and repositioning plan. GCP will continue to evaluate opportunities to improve its operations and cost structure beyond its currently active initiatives.
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.
