GCP - Earnings call transcript Q3 2018 | GCP Applied Technologies Inc

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Operator

Good morning, ladies and gentlemen and welcome to the GCP Applied Technologies Third Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Joe DeCristofaro, Vice President of Investor Relations. Please go ahead, sir.

Joe DeCristofaro

Thank you. you us thank today's and everyone, for on joining call. Hello, Freeman, Greg on Chief Executive Dean Chief the us Poling, Officer. Operating President Financial call and and With President are Chief and Dearth, Officer; Officer; Vice Randall

for Investors earnings are quarter's tab. download please available Our and gcpat.com To results go website. this to presentation our click and corresponding copies, release slides on on the

projected today Federal differ our comments will implied those Securities materially Actual of statements U.S. be a Some under to may laws. results from factors. variety or due forward-looking of

described will more release non-GAAP We certain financial discuss our on on measures, earnings which morning's are in this website. detail and

or release. EBIT press on prepared EBIT, a and refer include both gross statements forward-looking and to financial financial non-GAAP in margin, references today to Greg update. to comments results will EBIT margin highlights Dean's remarks margin measures defined the the with to refer us commentary apply will out to our to business Our as and our adjusted adjusted adjusted of start and outlook. References Q&A.

results discussing basis Darex We to Technologies. these the sale are continuing of a account Packaging on for operations

the in XXXX. over on adjusts Additionally, as Venezuela of growth July call to impact of are a the for Greg. that, discussion revenue we turn and With associated X, rates I'll comparable constant-currency deconsolidated which this stated All basis, currency. foreign

Greg Poling

Thank you, good and Joe, morning.

welcome operations. lower Sales GCP. increased commercial, able margins with sequentially. into Asia our Adjusted and Randall SCC EBIT and to on leading XX% good President the Randy chain in and role our in XXX Officer. introduce Before Chief I'd and call capture He's joined especially today, us in Dearth, in year-over-year, increased basis X% to improved new produced both with September. his We and our regions. to I results is manufacturing were America we the expenses. right by like adjusted begin, North points solid him our supply GCP GCP Randy EBIT third price and and SBM, jumped growth Operating quarter.

pleased system also also quarter. In-transit admixture are system developments ready VERIFI VERIFI a like comment our and flow quality of in system. the We Market and performance our the few the key to to our our improvements minutes to on Management continues with customers. grow mix penetration I'd with to offers take productivity cash due

the excited advantage program. we VERIFI's with new enable In of trials opportunity addition our to the commercialize to these With We're the dramatic of and laboratory significantly of takes through can benefits, concrete. dosage Management expect field to system, improved these them breakthroughs to cost about the material provide both this The mix the data in system ability usage. analytics reduce developments creation designs VERIFI's new we're to new additional capture performance dosing enhance for we admixture in-transit value on strength as admixture customers' commercial admixture seeing system. combined increase or in opportunities, and an in-transit In-Transit

will about mix margins customers increase further opportunity our SCC's at million value to VERIFI change as over on the $XX Randy and admixture EBIT While by delivering in the like system. call the VERIFI In-Transit programs. for of keep provide first as we for our million to deliver market turn opportunity We'll produce and update we're XXXX business way and to significantly I'd now well to an update repositioning to we our XXXX for the concrete. quarter forecast on Management we and that clear a now see our restructuring an ready additional the to $XX see profitability, improve industry

Randall Dearth

the and company's really I'm good team contributing to of the everyone. and forward GCP success. excited be morning, part Greg, to to Thanks, looking

As making progress good SCC. Greg we're said, repositioning

is overall higher-margin our on and structure. admixture improve plan and reducing markets to increasing Our technologies focusing by cost VERIFI, margins of penetration designed

SCC, to strong are our positioned As markets, captured increases higher-margin in margins. the where quarter margins we core, generate as well improving price admixture and in we we of focus on X.X%

We differentiated will support of continue businesses. and in technologies to admixture to invest the growth cement our

SCC. program program or is annualized restructuring revenue of well annual is sales of $XX XX% Our is cost of will reduction approximately million, million underway. which to about XX% The savings targeting SCC's $XX million. estimated benefit $XX The

began we million well revenue a quarter, of third with the business as reduction as approximately the in $X savings. to $X During about rationalize million

million, of the approximately now with $XX impact the little offices of By and to as part $X eight close revenue be profit impact XXXX, and about restructuring. expect no gross four year-end, million. For or expect on to plants we savings total we

estimate remains Our $XX million $XX costs to plant million. for total

Dean SCC, performance. growth of price call X%. capture for to our on performed improved in Beyond well like SBM quarter over with would to the turn the revenue financial on details margins and now over I

Dean Freeman

everyone. morning, good and Randy, Thanks,

Just growth GCP's a revenue all in year-over-year basis. $XXX revenues X% on million. constant-currency are reminder, a associated my to rates comments grew and consolidated

sales, third the averaged July with strong August months. quarter as and two The began between XX% growth

growing growth down year-over-year, weather points increased compared due over forecast. North pace Asia, in X%. the by well, perform our about In quarter, SCC September. primarily placement and was negatively America to and X% America third and which sales reduced year, month of X% third wet were North our in quarter in wet Cement grew to X prior sales additives the up also weather concrete of September storm-related continued However, impacting disruptions sales to the VERIFI despite the revenue Admixture XX% percentage XX%.

new slower specialty by was was America due base in the were markets. sales. and quarter. admixture, we admixtures in to by materialized which third from Building Envelope grew particularly lower expected. at concrete rates. project X% as truck to as SBM's certain Envelope growth sales was Middle partially GCP as America Building increased revenues North increased began Mexico Asia offset due in cement in to the Building a both quarter and with XX% was business down Brazil as X%, businesses. revenue activity, in third residential for the we declined quarter. XX% the product products residential businesses, and revenue increased shifted year-over-year exit quarter, Envelope the to win due On into Building growth primarily year-over-year, growing quarter project sales East. Specialty a X% up that in continued we year-over-year. XX% Our double-digit our basis Growth and cement decline the X% second X%, sales installed in offset In revenue the Latin EMEA to was due Envelope, up grew XX% down revenues timing. regional in Pacific, to VERIFI our admixture

and price as performance. was as the inflation. operating and and offset our margin margin volumes acquisitions strong to anticipated the We positive to about SEC's SBM's impact $XXX improved material sequentially. sales captured GCP's X% million. impact in and price Moving were performance the of amount increased negative earnings by quarter, we logistics partially well adjusted Higher the of profit earnings $X our of raw million. gross

XXXX declined basis offsetting basis SCC volatility XXX higher the price business in totaled estimate. quarter. as was lower points SBM's costs logistics and pressures, Middle our and of partially material with than and America, GCP's about by points inflation. in XX the margins capture year-over-year, increased foreign to third above savings, offset million lower XX% quarter Rounding the inflation up was continued by compared gross which results inflation more gross $X impacted be specifically GCP costs to margins to raw Turkey exchange segment operating the million $XX Latin adjusted up East. However, restructuring operating consolidated income, the for EBIT and due SBM corporate SCC's income.

loan financing year expense our to as and repayment million $X $XX result of were full costs of and a our XXXX. last related debt in the compared the quarter refinancing interest third Our of term transactions million

capital, effective $X Adjusted $XX adjusted was improved as due EPS interest cash was result in admixture in about outstanding. last the tax well lower improved position Adjusted Our was earnings. count to of cash a and of rationalization working low-profit free diluted was markets compared flow as our partially million $X.XX, to third as rate our million year's payments, quarter shares million share XX XX%.

our growth X% of to Mexico markets. This We our and Airport City at $XX guidance. the to in exit admixture sales updated includes weather of now September, approximately XXXX for due the impact million expect X%. Looking orders certain from lower

also anticipate impact certain We continued exchange driven emerging foreign by in markets. of inflation

of $XXX due of million now Our impact inflation the volumes additional guidance to fourth quarter adjusted in million and the XXXX. the lower EBIT $XXX to is

million $X to cash Our revising expect accordingly our million XXXX rate And adjusted XX%, we in from $XX to are remains and and effective adjusted EPS flow. range guidance XX% continue to between per share. tax $X.XX free $XX we

XXXX. continue to business executing our developing on to driving The markets, improve for is best-in-class plan expand leading on our cement growing admixture our margins. Looking restructuring businesses, penetration forward, and rationalization our SBM our we're operating focused plan while core and business VERIFI plan in growing

for markets. indication demand core early is for XXXX our Our healthy relatively a in

the the sales countries, excluding mid-single a flat the however, like-for-like we expect we However, exit basis, expect exit impact sales growth. due digit of to SCC On countries.

Our early operating for reduced due margin earnings to approximately indication XX% growth X% to and is costs. improvement

closing I'll our usual, February turn fourth we've with over quarter And earnings full Greg in operating for call in our comments. we'll completed provide year guidance that, after to it As plan.

Greg Poling

GCP performance Thank you, and flow quarter. sales, produced solid in the Dean. cash earnings third

This SBM acquisitions, profitability, our and cost cement going continue our As commercializing admixture improve best-in-class structure we'd on your like take focused business bolt-on in you to reduce thank We'll plans with our growth overall questions. overall potential. I'd technologies. now of flow. be penetration result focus business, plan pleased our to to and higher-margin earnings for differentiated in-transit look joining while we our and long-term GCP's forward to with will admixture with the continue management accretive increase call to to and are We're high-quality markets VERIFI a grow cash XXXX, growth system. our

Operator

We’ll Laurence question-and-answer will Thank the first Instructions] now question Alexander Jefferies. of from session. the [Operator begin And you, Poling. Mr. be

Dan Rizzo

on Laurence. It's for Dan Rizzo

just challenges that year? the that any rate of kind higher initial thought could earnings you the a to run you could anything there in? on next had XXXX, Is given of factors see kick XXXX Just do and slingshot

Greg Poling

that Well, rate. I balanced we've in growth think market our been

-- little than rate softer So a still growth year. growing is that we a this little a have but market

So built our is market, positive. pricing And expect. the nice has would what if would construction very the clearly about VERIFI get technologies, margins, and we as be penetration frankly, stronger our VERIFI. we that new be then models And into a that up especially we our we -- see a a And in help we've could of looking thing could we're other the we the business Dan, would for those, model as help. contributor course, that and ramp good that earnings. that also that we of as bolt fit always acquisitions business, then is find

Dan Rizzo

a it matter I in was And relation of where like just the acquisitions have has ago. to the bit or XX getting in if don't and if timing? landscape seems could to from or terms but if I pace bolt-ons months too high, changed timing thing, cooled the valuations of it's were, -- a wondering know, a we be are just

Greg Poling

No, Dan, model. businesses look. our for looking that We're fit

As those we create to want synergies. you know, some and in build

really pipeline's our -- do I'm to pretty Our confident RIW our the continue hasn't It bolt-ons. recently we on to really pipeline's good. announced and the most ability strong.

Operator

Mike question of Securities. be next Harrison from will the Seaport And Global

Jacob Schowalter

Mike. This for is on Jacob

Materials, last you and primarily to the June from expected double notes a double it digits. sort said was and bit then the on to track program. some in digits, -- July quarter, then my be be discounting because up of digit was were Building low May little Specialty discontinuation of at guys of double And up was up down Looking April of

to at growth, be was ended July X% digits. double we and track on So up

what year-over-year September, happened what sort like and August of and the QX, cadence in does moving growth? then that of Sort look of into

Greg Poling

Yes, to great. talk Thanks for -- like to that. I'd

that about we talked in business discounts, to and to quarter were the had in we our come being the talking back we had business third quarter, off stopped expected the second that. and specifically because I think residential we

able our to in the fact, business XX% and SBM margins In third you was can in quarter, residential the see we were about recapture business. growth that

about we're with was So business that pretty the Overall, BE X%. pleased up strategy.

strong quite was Asia bit having primarily up. the in business market, we're the a little America X%, in softness North European East. of Middle at Our Where was

there projects good get the very pretty some those have to We managing flow frankly, not cash on we're out but basis. conservatively

we month we there's fireproofing our America the BE were that's had discounts eliminating last in are talking But pretty any business about, and So where, res there. softness, that And very good if it's Asia year. we've business delays growth. really pleased in that the grew frankly, in the of rain with some had North well the

that we come the So we're see way back glad to expected.

Operator

additional for at attending [Operator session. this the call Instructions] will And thank your you may And showing this will conclude questions, also conference question-and-answer We no the for today's you conclude time, we presentation. disconnect And today. lines.

GCP Applied (GCP) 10 Nov 182018 Q3 Earnings call transcript