GCP - Earnings call transcript Q3 2020 | GCP Applied Technologies Inc

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Operator

Good morning, and welcome to the GCP Applied Technologies Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mr. the GCP. begin to Merrill presentation for Craig Please sir. go ahead

Craig Merrill

Good hello Yes, morning. everybody.

a that. obviously call. about There technical GCP Sorry was earnings the issue to with respect

we’re Simon you and Executive for still us today, Financial you're staying So Officer; With Simon I myself, joining it. Officer. us Craig morning. you Chief is on. Thank Chief Thank and for all it. appreciate this at back Bates Bates, on. Hopefully, Merrill,

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

variety of securities factors, limited not the will laws. statements Some from information including, include impacts federal may to, Please earnings see forward-looking in of results of under in a differ description materially U.S. our implied today a release. of comments Actual used or full those but forward-looking our projected COVID-XX. statements to due

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

for are Simon EBIT as on to adjusts comparable to stated impact adjusted margin on call. discussion growth and a our gross to which or Our remarks apply and adjusted defined to in press in to rates release. basis measures foreign adjusted both turn and EBITDA, EBITDA refer financial to adjusted start this EBITDA to non-GAAP prepared margin references EBIT will it the now to statements References references adjusted the the refer refer associated All Q&A. to to revenue forward-looking currency. and constant over to margin EBIT I margin, the comments currency,

Simon Bates

coming GCP's us XXXX on my Craig. thank everyone and third I'm are to months. of your look conference Executive the conference first be GCP's you I you meeting Thanks, forward call. you to many call for today joining well, families Craig. hope with you pleased and very morning I quarter President speaking Good and earnings Thanks, over safe Officer. as on and Chief and

quarter to introduction of of details the with GCP Before we and wanted you third into first a days the brief our my thoughts initial on over XX however, about performance, job. I observations my get gathered and to some share provide

tremendously am recognized of company for with a I world. excited that to Firstly, It around brands innovation is the are part strong GCP. with be a product great and tradition

knowledge the that North Europe lived my I've think Australia, a markets good and across and I with I background America GCP are the and experience which serves. of really of worked many good local and fit have business.

years, PLC, Over I building products the CRH last XX experience have plc. and Cement, Hanson had great Heidelberg with

had Chemical. Westlake side, work On the with the chemical construction both fortune I've to Axiall good and

sides and products had operational that we am and for technology. bring with and I commercial former Also those of roles reputation industry-leading business both of delivering GCP. familiar teams very GCP, have XX significant and years, to a held lot can a as operational those and learnings improvements. its customer on During the performance variety confident I'm I developing leadership success a Atlantic. commercial I of have of management strong

also the and employees say just the to GCP's convinced pandemic. that value would its has its me outstanding that to tremendous world potential. employees. has belief deliver have past its resiliency the the learned the to of I GCP like strengthened I'm only Let month my during everything mention that I GCP has investors, around opportunity and customers over absolutely the right

worldwide personal of my some with the of just to team responded Most for dedication our thanks and all and to and you me deliver on commitments relentless which what you Our I can already current and ground drive on critical employees job employees expect to importantly, want I from are however, to a myself my to focusing. our share environment done. areas well have wanted the customers. say to

stabilize revenues, return am growth is to And heavy profitable are and committed on and be to our goals to team delivering committed Our profitable driving profitable a experienced improve but the improved This margins growth. to growth. lift, company I will will profitable be committed to board our growth. delivering everyone

will We initially key priorities. address four

where more Firstly, we strategy our and growth. to will efforts and focus our revisit drive articulate clearly we plans our will

also we determine allocate how strategy capital. should our Our

flexibility we course have We of investments have M&A very strong business, buybacks. balance a of the in for a and and sheet lot share disciplined

successful Secondly, align outstanding I with products, we be in and to We technologies front their making want to our customers center. can the customer and these our and our deliver needs. our the value if of sure only service voice bring in

this We begun will a global also through our personally. survey customer and initially out reach to key do to I've customers

our Thirdly, including structure, a we will analysis and complete overhead, our SG&A. thorough fixed cost expenses of operating

only invest appropriate Our will to react drive to improve speed where aim is significantly returns. and it to our

quality give understanding relentlessly my learned data-driven. acting the will career data course our doubt, our about be hard the be data Finally, over time. to GCP, business of internal information the to on what the business I've and our us At Improving no data. of make the improve trust a we working over capture metrics of deeper teaches we'll will us. and

Hopefully, review future with segment on the successes, you call now in to we'll I'll quickly you these financial that our look challenges forward you on about Craig, turn over towards get. what me comments goal, about who Craig? in along with transparency. quarter. performance on more the our with to transparent what and but work be will opportunities. results to rely you as the our I will company's speaking I'd just and our you always is our we learn see transparent you like to fourth about detail calls. progress important, can be As areas

Craig Merrill

on my constant basis. Simon. everyone. reminder, all again, a are Thank rates currency associated sales comments morning Good growth you, And a just and in

in focus the quarter, I our GCP's will the I currency thank million construction sales the then versus improved employees line each and to With on Before result our their significantly our results to performance XXXX. respect reduced and first of sales the into Europe focused manufacturing remain to Comparing quarter continue to quarter approximately Construction with North to performance XX% on our X% across in the level improved GCP's approximately currency prior sales region sales compared are two. our declined during for region of objectives product as than of the lines. America discussed demand when prior the business high down quarter as earnings provide our year, a and globe of summarize returned due and customers. COVID-XX. environment down third a quarter to quarter to the constant year fireproofing globe ended $XXX finished want move I the continues expectations X%. results in markets, third although a to These versus lower constant activity around second were more to X% commitment the exited excluding segments. the activity operating residential second call. quarter with vary the normalized year-over-year

and of construction same we're France quarter with activity, and expectations percentage including: sales the for with challenges revenue see asphalt as were XX% declined accordingly. but GCPs SBM X.X in Kingdom, third improved while continued in with price offset slower primarily as basis total in remaining XXX pressure we country million lower above the versus the inflation due overall was oil with SCC, in United to margin million than Latin in about larger in where and $X.X XXXX a XXXX; restrictions gross to the price the to were and America and approximately countries, X.X%. Price respect Australia its devaluations Germany raw quarter administration point sales costs logistics beginning America react the quarter due XXXX. did was Selling productivity $XX.X and increase deflation GCPs volume. third market. see We material the prices Latin the occurs, activity to down started quarter the by rubber China the some of to in points Singapore sales or in did were partially quarter flat general was construction by flat compared increased pandemic. Asia of particularly we currency impacted by anticipated XX.X% price down at about we In to accordingly our Although third segment compared quarter. prices, of year-over-year

distancing on $X logistics headquarters, of by costs to million. compared the quarter mix prior and gain versus costs negatively XX.X% continuing of by totaling margin; up results price GCPs practices impacted verify after-tax $XX GCPs in million. investment sale shareholders, partially margin period. basis was prior margin approximately million in During in board versus deflation lower year the but for to quarter. favorably adjusted million, million which the of about quarter an third year GCP $XXX quarter. of operations $XX the after up GCPs social COVID-XX at to from resulted GCP in management attributable the of shareholders was the continuing which Volume, of restructuring and ended XX% other million SG&A gain quarter Cambridge EBIT income the XXXX. income was together offset costs by pensions, partially XX.X%, the impacted selling approximately EBITDA discretionary about and and Adjusted XXX productivity operations, offset by $X totaled operations $X.X defense, from attributable points and million $X.X million These include quarter to due $XX.X

XX.X%, gross logistics in, quarter by with and mix Page Impacts down now approximately in approximately third the specific North America America expectation. which sales Looking of Operations SG&A margin reduced in XXXX XXXX. The This segments, XXX and COVID-XX the versus gross points gross is currency million. productivity slightly prior-year highest offset two in countries in XX. by COVID-XX versus XX we X% and million segment SCC the offset the due can and margins during prior periodic and third impacting volume was regions Latin quarter increased our with Collectively of higher X% the North and favorable down impact performance points, lockdowns Thailand. declined basis sales Asia constant refer margin $XX.X due these partially primarily compared play consecutive basis been year-over-year, decline. in SCCs XX% Asia, Vietnam, to to have lower of to operating quarter Europe Malaysia, of line than America. in to operating year the quarter SCCs and the deeper were with the you sales $XXX leverage. by the having quarter, primarily improved Singapore, with partially XX.X% to more SCC with due were was seventh margin segment prolonged business. income lower operating XX improvement

material raw XX Now the X% lower volume on income compared basis quarter segment point operating in I'll total volume with roofing third attributed strong leverage impacted sales increased during in a leverage, X% North price XX a deflation third the growth to for operating to XXXX operating the SBM in America demand XX% year. basis the performance. globally material on America, sales declined number to offset million and delay a the and $XXX.X product which due improvement during margin projects prior productivity. North SBM to materials The sales strong versus construction turn productivity versus SBM million residential, Lower to quarter nicely XX.X%, orders on sales quarter, XXXX partly focus third envelope demand. improved $XX.X decline fireproofing sales logistics segment. margin SBMs SBM margins offset and unfavorably XX.X% activity the of and in of of by due gross was raw improvement expenses, operating at partially about deflation due at of reduction. to reduced mainly was quarter points grew reductions Building

invited respectively let million for sale same flow associated overall. the the million in months and months on and $XX.X $XX.X back to of totaled the cash the million. from tax turn cash $XX.X operating was in versus improvement improved million prior expense gain during September net totaled me for free the months for XX.X% with million effective the operations million ended working Reduced was nine versus quarter. nine September capital to expenditure the management first headquarters GCPs $XX.X of Cambridge Now continuing XXXX. capital The activities to the for cash free by XX, adjusted the tax ended XXXX XX $XX.X compared in period in XXXX. $XX million XX.X% quarter flow. GCPS GCPs adjusted GCP rate XXth contributed year nine

versus Now Europe. are quarter X% with turning cautious into the deterioration expecting to in globally be estimate a into conditions estimate into This activity fourth the winter it XXXX. the quarter prior levels quarter while North the seasonality. XXXX. approximately fourth quarter to to third due impacts to general with construction moving activity any respect related slightly assumes pandemic, economic fourth construction due rate year activity early inventory further volumes But quarter be for as weather December run outlook; the in of or versus account will fourth to lower remain to taking we demand in exclude customers or America changes we would expect in This an aligned of QX, globally quarter going down

volume forecasted four expect declines, less We modest to the versus material to in quarter quarter but of the a also deflation raw three. benefit provide offset

to We operating fourth the remain expenses deliver expect will productivity our the With in we our focused in respect to fourth to had in we similar on the third quarter margins, expenses. as support continue quarter. performance quarter, operating

XX% operating We our to and are continue position on expect fourth original cash XXXX to capital we the plan. in positive planned XX% reduction focus. by driven our to $XX on from strong flow continued the to million grow expenditure our or cash focus in quarter, our of capital a working of And track

the perform XXXX, global Looking confident beyond the our are impacts well we ability of in to within pandemic. current

expectations to to moving and As manage quarterly costs continue expenses we forward. our volume relative

industry With forward. you. I Thank construction that, fundamentals of and it turn Simon. We the are GCP back long-term over now will moving to the in confident

Simon Bates

Craig. Thanks

hoped Firstly apologies call. earnings very the this on experienced at we my for the first was certainly sincere for had my difficulties call. what technical start of That I not

the Now of the They I capital and forward me deep full I planning beginning want take and to and being focus joining just of that our detailed first team discussed allocation to moment will clarity drive to the senior immediate to today's transparency, centric, your we updated areas and more customer which the call all XXXX. Thank to management understanding did in you to improving of and strategy strategy are reiterate providing at and of ongoing our taking community structure, for growth, on call. cost look our include the investor questions. half for financial communications a

Unidentified Company Representative

you. the session. open Q&A please Operator, Thank

Operator

[Operator from question Research. question-and-answer come G. session. go Rosemarie will Morbelli Instructions] We first now begin Please with the ahead. And our will

Rosemarie Morbelli

see you particular focus? market? customer centric more I was to particular regarding which details in but that terms Thank you do the for first little and focus, terms I anticipated give understand thought the a that little. reasonably customer which the that of one everyone. snap Well, did is company good focus you at already you up what the helm, morning you after Simon, seeing the what us with my question, the strategy which – end not come really that of Can from in very you is So to company are of month had

Simon Bates

let we information suggesting the I not very can customer I clear. is not because our be customer the survey, we of customers me keen certainly global Rosemarie, from week. on for to which the the over am growth began best am but drive company initiation last business hence and centric, time draw how Well,

Rosemarie Morbelli

industry on touch And what do you side? businesses, on early. seeing the realize to has the the you so, you Well, on. M&A willing mid-sized environment? if Can see you is for Okay. more given uncertain consolidation I what example, sell in environment? There it been Are see multiple

Simon Bates

our can XX speak speak yet, to options with the forward commitment best have not I'm the front job. I the Rosemarie, What the is in I'm to growth. drive to agreement and of have board look disciplined And profitable that would us with on really at strategy going be and of how M&A. the a in the that days to to Yes, board we I one position

Rosemarie Morbelli

that's I Okay. of lastly, a reduction be margin. other operating to permanent substantial which expenses, going is and travel of situations? resulted What if in cost quite size was is temporary reduction the versus may, a lack And of given the obviously the there what higher

Simon Bates

Rosemarie. turn Yes, that Craig, I'll one over to

Craig Merrill

Hi, are How you? Rosemarie.

Rosemarie Morbelli

thanks. Great,

Craig Merrill

we in did little slide Yes, a so, the deck. bridge

costs got by which and million board I quarter. some between some million, We've $X think T&E, versus reduction the that. the is cost this was about restructuring find $X of about XX:XX combined you'll restructuring And it offset discretionary the on impact. COVID-XX of and split course, investments then, of

Moving as to now forward, generally are total going we QX that fixed the has know looking a is rate probably at our although I QX has put into respect everybody and position a position QX. put in volume think to continue different see to at run you going – with that that We're continue up moving pandemic on pandemic we in in expectations forward. and cost showing been us the

going very, piece. we're to at the cost So very fixed much on look that

of you going the on rate what XXXX So, run in the this early year, versus back like next exactly to we're to look end today. come at year that

Rosemarie Morbelli

actually, I have do one more And question. Thanks.

Given what see it? long there the seems the benefit if to bill, launch be how a you election infrastructure from before is the of result

Craig Merrill

we're those things. generally, nine of months Yes, types on out

on funds infrastructure the a on we'll out. there's So the nine States, of months feds, release the and a push just either if there's be to generally or

that – So better some we're creating question economy. value It cash help we're there's helpful long impact have really of we'd working for about years. they certainly it unlikely We're the would three did if the but much for in the see a that would that. run. economy if the of And of in mean, GCP and the in a to injection would that in XXXX, economy no next two happens be kind excited over I lot people to be into it. position better

Rosemarie Morbelli

very you Thank much.

Operator

ahead. Global question will Our Mike Securities. go Seaport with come from Please next Harrison

Mike Harrison

Hi. Good morning.

Simon Bates

Mike. morning, Good

Craig Merrill

Good Mike. morning,

Mike Harrison

you share company now, top-line building your inheriting on the has to introductory remarks of seem restructuring steps and side. me can does are that in right on of focusing revenues. particular growth? there the kind highlighted that multiple you within been Can some needed struck want It It a Anything what you have here on thoughts cost time improve some rounds segment. stabilize maybe early like are that losses materials Simon? over there more Simon, been through you in to you comment give

Simon Bates

Like it it expect to I am lot insight feel more have the I months maybe on over spending getting time job. XX the better. do to can I position don't coming that am calls. follow-up I speak one of in a understand to comment business on yet. a days the my the on to and

Mike Harrison

are we you fair little margin your in continues That's Can segment? talk right. be All to stronger non-resi. particular markets like that residential materials is about bit I mix It performance? mentioned in weak. enough. envelope your than building impacting the that within building a seems mix How know

So maybe that. touch on

Craig Merrill

Shield are the ice equal; the same. is sell people & the doing off know, can you no margins us they're about that. question a about residential The BE helped their that's trade high-end are they're Water as those home on we when mix. on so versus period that and answer we margins the I'll Ice of demand Mike, and product, this at when water shield The product, during time roofs high

the Shield Ice segments. the play are So know, being we the of strong. lot infrastructure, I The to versus that margins kind or commercial respect We in that. and With a play residential as on we mix the the Water on in you did the & SCC about get residential the all not the and infrastructure, between get ready-mix commercial about there's a we benefit through on of the difference pulled equal mix. the it's If SCC. equal. on there margins with mean,

deflation and on the continue SBM we oil couple the benefit So same margins. forward honestly or on beneficial margin prices, was productivity getting Most of the had we quarters. that because deflation, unfavorable the I the and SBM us and don't side SCC that'll over mix truly on got the next on moving was and the of on see

Mike Harrison

right. last the All the then on maybe Asia for business. And question is now

guess that were volume serve. some that it Are thoughts XX%, Or – the down Southeast of was, You for guess activity? was those mentioned your of markets? on think very in that like there pace the segments, I I you to continuing what looks around, there recovery of mentioned conservative some countries in was key both be of; there you weakness I locked Asian are down markets those

Simon Bates

a play little because of more good the our We question. bit a of That's categories. in sophisticated arenas Yes. product

do. more have we So countries the we're social conservative Australia, And those we're in a right with which have respect to is approach the taken thing in little Singapore, distancing, been probably impacted. to

down was Singapore quite a So, bit.

come any in share Singapore, bit little XX% was haven't demand. lost but it a about customer down We year-over-year back have in They October. in

Our in better Asia numbers October. were in

So still it it in cautious pretty we intermittent we're going because improving, to Asia. be we think about see there's lockdowns but

how see and know, that we'll QX plays QX. out you in So

Mike Harrison

All very much. right. Thanks

Operator

next Our ahead? Jefferies. with come question go from Instructor] Laurence Alexander [Operator Please will

Dan Rizwan

How Hey, Dan for Rizwan guys. are you? It’s Laurence.

Simon Bates

thank Fine, you.

Dan Rizwan

more going terms with of of that You mentioned something forward. forward? way just that's the up products focus change its going was if kind at you ideas, look of a the customer wondering that Is I a kind of push. more pull develop – of new to centric coming you way in the with going versus

Simon Bates

again at I strategy, I our think and as take we look best business look we, we we want comes return. think make to get sure launches, to and a at product the our it R&D we when it

business the we understanding. some And with and it's whole I least some think speak on something maybe at seek so as months, can to authority and give I can better; an lot some, a in again, update understand future deeper

Dan Rizwan

lot was or it wondering of of if this to you materials. working part a just bring everybody that's customers about of How And is your a kind just if the was imagine customers is I a and that's world, sustainability. to with because often sustainability reason what just, how increase and there your I trying guess within as thinking up for, establish Well, process? would focus I change you're And I well. when are I

Simon Bates

would significant there we the concern that major cement contribution COX to producers around obviously and example help try help emissions. our their to business, those products good for working a with world that And are closely them with Yes, a can folks. be those develop additive for cement the their is customers reduce COX and

Dan Rizwan

Thank you very much.

Operator

our conference as concludes This for today. Thank call session as for well you our question-and-answer attending today's presentation.

You may now disconnect.

GCP Applied (GCP) 6 Nov 202020 Q3 Earnings call transcript