GCP - Earnings call transcript Q4 2020 | GCP Applied Technologies Inc

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Operator

Good morning and welcome to the GCP Applied Technologies Q4 2020 Earnings Conference Call. [Operator Instructions] Please note, that this event is being recorded. I'd now like to turn the conference over to Betsy Cowell, VP, Investor Relations. Please go ahead.

Betsy Cowell

Thank you. you us thank today's and everyone, for on joining call. Hello, Simon on Merrill, and the us Bates, Chief call Officer. Craig With and are President Officer; Chief Financial Executive

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

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

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

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

Simon Bates

you joining today us for thank on call. and everyone, morning, earnings Good Betsy. Thanks, our

a period the and XXXX. up controls we months very identified will auditors that shortly. auditors to week statements our the fourth them. our circumstances about remediate note have remediate external by material the GCP clear last and Let internal community issues the with our I pleased revisions new and within identified of to three last where informed want the plans weaknesses during announcement me leading Craig been prior confident we non-material we to financial our the have working path team our our begin financial efforts quarter to financial with talk over the various by and I've have investment our that control that are

process are improving We to procedures. financial and GCP's committed controls,

We XX-K Form XX-day our to within extension period. expect file the

our Additionally, to XXXX during employees year year, commitments with deliver our and our resilience the to for their thank pandemic. world the like I'd around on dealing environment employees COVID-XX to responded Last dedication with also global and results. this the have

you profitable margins days our goals thank last So, to would growth. on to them. the our you like update and November, progress return around I In Today, improve revenues, stabilize XX during priorities. I discussed to our to four

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

Second, voice center. bringing of the and customer the front

cost accountability. time, our underpin have and priorities. our the various that strategic structure. studies that activities fourth, data undertaken And making Since of analysis to relying Third, and helped decision on have we identify us

informative done have our survey the our help with extensive work parties, the We reviewed and analyzing where have engagement. customer improve helped on our to aligned we streams the efforts. now executive leadership need Board and customer We've priorities performance Board These and our and and an employee the team of the identify work with been both survey. completed refresh to are focus and third historical need us have

opportunities position market and of strongly North revenues. indicate our to initial half our improve in the Our both and SBM as represents survey be believe focus on customer will it data We SCC. America the

I've products brands. performance processes. and of is simplified the improved in communication, to refocus finding issues because been to the business product and of work I on many that some a customers value remain availability I with met of parts desire of Our goal our and pleased loyal is all many and not our very North from teams the America performed business have our well. in to that important An apply win. sales with our our have including customers our identified to want did note of segments, also we

it is the that also We profitability in data, need the we our by As clear capability our America. over performance driven organizational recent predominantly is to to North improve decline and examined structure. historical in our simplify years

in costs the have years, last three with our Over our line G&A not revenues. reduced

more We on will and we'll year. the XXXX in this issue detail later provide address in this

can key We having and building data in technology increased communication on margin making. our business in to in competition robust see decision Moving by from to and to due and the is that right forward, effectively ensure we American deploying faster the processes roles, will share. partly profitability also data focus people impacted our We SBM believe business. part due of and and our North is loss lost revenue real-time this

price costs to some operating we series margins remaining there our expect We margins reducing address businesses, gaps. competitive. of residential and building our identified are drive On and by envelope whilst have opportunities to clearly product already a

We these development through through or will address product acquisitions.

a forward much organic look balance has efforts back would team the optionality. some support completed and full Our been are significant acknowledge give like of over SCC appreciate giving and reserves last gains. our position in and gross year to to where a cash SCC that stabilized. lot improving sheet business share of margins market us the and has to them our I get very growth our work to I've our good

to various situations and business successful these in call, said What challenges our me years. be understanding performance. overcoming over in significant there clear are I improve last knowledge on our to confidence addressed been the is the I've a XX the last As opportunities gives and that financial earnings of issues

top talent limited the and focused with. continuation business line in to grow do like In ability leadership our path with to to starting we our we and This see on region, survey largest discuss already and be business the I've the better executive travel experienced mentioned, COVID-XX I'd on easier our North improving both programs, becoming Initially, as expedite we with our our pandemic begins geographically. of my To organizational are capabilities. will briefly. revenue is, which to the inorganically. attention also internationally, a are Given how summary, American and organically the stabilize is to our employee customers serve to team. bringing improvement clear

Our decision associates accountability. a well-articulated us to identified to faster want three and issues provide for address. us strategy, for They key clear clear and making

sharing on working the to rest our call look items. already of turn forward on and the now are We to Craig. progress plans throughout like to our three over you update year. I'd these We the Craig?

Craig Merrill

the close certain and review fourth work purview statements. to temporarily this were XXXX controls inaccurate were in process XXXX connection of discussion Customer three, With change full begin been included of new The information realigned sum Group the respect the the with change, statements financial technology functions with of we Business GCP, the the weaknesses James immaterial. the financial of recognition, net results under initiated year This GCP's is CFO. of on delay and required $XXX,XXX year morning, million year cumulative revisions office, week's a changes, XXXX systems, our including is revisions a good is our to audited GCP approximately of of approximately number And of the Transformation announcement the year-to-date, previously a prior that policies is as completed within our the accounting QX the identification new and cause close impacting prior the to Department full reported a make determined time $XXX,XXX for Officer, once you, has controls named general to will the Department, year which in weaknesses This them and effort prior also accounting preliminary financial of Thank accrued of $X.X Based of impacts impact and last the The my these attributable the XX-K Simon, revenue financial remarks in items, senior favorable did The determined a XXXX, Board to periods income as for IT Waddell. leadership of the revision with for to and this adjustments, periods controls I to including to to financial statements providing these shareholders of filed. material prior complete GCP year financial the Form proper resulting our XXXX Accounting we net material and in process. certain everyone. certain in quarter dollar period income in to Information final included and number for will reported. results, during full new the a included number of reported. CFO provision of Service And team. part team favorable which and financial were to be of XXXX value disclosure required accuracy during impact as ineffective. we the full The the the led quarter, is Chief ensure period statements XXXX. incremental expenses with dating revisions back unfavorable. preparation year-end determination of Technology and and

in our Officer January internal XX In been the experience review as and have with which addition new Accounting of retained the with the identified in engagement develop boarding leadership audit with material the Waddell to named naming controls, changes certain of Chief support, team, is QX to new solid in we the weaknesses. over GCP plan Information made Chief to of October, professional remediate already redesign McCall the on and Robyn of in outside the of hire a James to place the in Officer and years

objective overall. is internal controls enhance environment our to Our

is soon effectiveness controls; goal committed forward, possible. improve we remediate is as our overall As own to our as team move the to of

Now turning results. preliminary financial to quarter the fourth

results due manufacturing section. our quarter were comments $XXX.X growth during As basis. the vary my COVID-XX. move the expectations as into of GCP's results a construction around excluding third business due to reduced sales to year discussed then and higher approximately continue I lower currency prior of than call. will sales COVID-XX. currency result X% to activity earnings a and associated Construction rates exit in of the and than all GCP's discuss a These constant million markets outbreaks on recurring activity reminder, are constant globe are

the America in consistency through in patterns, finished SCC quarter of first greater SBM. Europe the fourth from demand both Latin due of do the believe America lower periodic fourth XX% each activity quarter and America to we through came QX; respect order with to to shutdowns pandemic. of lower construction manage In up XXXX, in and Europe Europe, there sales finished we the volumes the sales this did driven into restrictions sales the However, And region quarter the for pandemic. North do was and rebounded particularly pent-up expect customers With X%. that see quarter and with XXXX, some Brazil. by outside QX in in up XX% struggle North as the versus we versus XXXX. continue not down continues growth markets Europe in quarter performance to

accordingly. improve XXX period was for regions GCP partially million exiting discretionary of operations growth of $X.X cost some XXXX operations XXXX. XXXX. price due compared and general to certain as million investments. the all restructuring quarter compared in fourth to to during in fourth margin. from quarter prior on sales costs offset due material attributable the logistics with XX and most X% volumes. quarter-over-quarter, down country lower Page fourth increased basis inflation minus quarter offset GCP's in but quarter lower GCP's versus restrictions. EBITDA shareholders pandemic increased sales the in same continuing activity to attributable margin minus were to to primarily margin, raw the same points The the volumes fourth Asia the the reduction including X% for quarter; continued offset quarter the devaluations the $X.X was than sequentially X, quarter to million by adjusted for improved at margin by lower during shareholders Latin due the to XX.X%, deflation, ended improvements income $X.X Asia quarter. in points costs XXXX. gross sales and additional or pension XX.X% was up loss XX.X% to million GCP $XX.X America construction fourth Pricing of Adjusted XX.X% occurred of totaled countries administration continuing notably costs of due in where lower gross by the EBIT year the due shown to quarter Pacific less executives continued the to GCP's GCP were versus basis productivity spending, lower and partially Price currency except to X% Selling compared and quarter of from

and on specific our the Europe primarily basis market quarter, $XX.X points, to This and of versus million. gross by due during $XXX.X negatively with logistics SCCs quarter the segments exits, high the XX.X% to for sales Looking income was with X.X% quarter mix at operating grew margin of Pages currency to was improvement. XX. eight -- X% performance America, productivity XXX sales, gross margins. COVID-XX were and down constant X% fourth XX and fourth increased principally Page excluding prior America Asia basis consecutive quarter approximately favorable respectively. impact gross year-over-year SCC's North margin and segment due XX% higher XXXX. margin to by Operations Brazil, million to improved the the Latin XX.X%, improved segment partially in is declined operating operating year reduced SCC compared points quarter XX of XXXX. the leverage. continued and which offset

SBM $XXX.X product is that The declined starting line significant with based versus the construction but Europe prior sales turning activity building XX% market it segment number and projects envelope of the America constant a now the flat saw currency right envelope totaled quarter of projects a volume next data, Now declined decline and lower quarter; line. SBM the to product Asia the year-over-year, year's fourth million attributable time. year at uncomfortable fourth segment this large basis. building this quarter, commercial promotional XXXX. delayed seems on residential while to during X.X% during quarter was market for on quarter a X% in sequential the less SBM North sales

to to the raw decline -- SBM's fourth period. prior due margin due operating quarter the versus XX market Please were Revenue COVID-XX quarter $XX.X to will during due volume comments by material sales was versus margins. where increased which offset gross income the deflation. margins Page basis year basis XX.X% XXXX. operating lower for and to X% to SBM's is excluding constant decline partially fourth grow I the full gross turn of down mainly to XXXX, a or impact a XXXX to million throughout million year. promising. points at versus the on of XX.X%, segment were due due $XXX.X totaled a did provide few to a the XX XXXX point to The XXXX year was XXX on higher COVID-XX Asia third negative quarter basis decrease mostly currency exits. preliminary very Sales compared

flow rate Adjusted specifically the volumes including year basis by tax material partially X% prior at on or sales raw additives full in million totaled due and or savings the points year gain the XXXX to higher Earnings Asia Sales, The from costs a lose attributable $X.XX by during the logistics XXXX. primarily earnings the year-over-year for impacted share certain admixtures totaled of SBM, headquarters. state our than sale for improvements America the continuing executive programs Diluted million and growth $XX activities investments. million did and to provided well on offset poor Income of a million was on customers tax of as the year in XXXX SBM XXXX. lower of North $X.XX offset GCP's deflation the improved approximately reduced change XXXX taxes XXXX. and cash in for the in $XX and year for XXXX attributable during million shareholders in for the the was of were of headquarters. The mainly non-recurrence was was general SCC in from sale approximately of million $XXX.X $XX to for in operating free XX lower spending, volumes. Productivity, due business XX% as XXX service was the our operations Net share the $XX discretionary the year loss by same XXXX. costs operations increased lower $XX.X compared XX.X% compensation period corporate XXXX. administration by cash compared GCP's million share per The SBM in transition adjusted effective we America mainly XXXX for margins versus months or board and $X.X this restructuring totaled continuing million the during result employees. year. corporate XX% driven Asia approximately and partially gross benefit by share the self-manufacturing However, for from spending $XXX.X some the to to the and working service customers capital. versus XXXX. XXXX, some time full SCC North to is to non-deductibility versus due for segment and gain year and versus capital as from ended

the continues Looking varying represents distribution construction to coronavirus at impact XXXX; activity of the rates. momentum, global vaccines while the forward positive the to

year-over-year constant as we which in our Based a best to improvement currency. X% the we be So today's constant landed unfolds. an prior are year-over-year views for down updated in as approximately quarter short will down X% XXXX, by This is nature, will basis. revenues saw year what first discussions, QX term in GCP the in be in anticipate currency XXXX information, best on XXXX QX upon which

some in impacts year. slightly dynamics COVID-XX QX have and weather versus the prior tougher winter expect We XXXX unfavorable to

XXXX for the expenses inflation the our rent material XXXX latter We as to sale. costs year will flat expense same period the preparing with are expect of the start of partially employee-related offset by half in campus Cambridge be be approximately and raw result the plans as of reduction first the Operating a in will the to quarter offset. price of

and percent in focused extremely this the year. are operating of revenue a as improvements metric on our expect as our We through move expenses we

to and We revenue to XXXX. we improvement. operating process reviews expenditures advance as generation similar on improve consistent cost XXXX, changes planned expenditures and much cash significant levels on Capital revenue of we will approximately but results for and expect in continue growth, our be play with positive In the in the performance XXXX great business and the closing, XXXX metrics emphasis X% to XXXX. lower given sales spending similar cash of Company, are to GCP than through its capital opportunities continually predictions. efficiencies overall financial performance see year

confident growth. our ability within to are We are global on the well the profitable and highly perform in pandemic impacts current of focused

Our we to strengthen which create pool strong sheet continue opportunity of our balance over to broaden time, is and it will value.

over also globally to construction Simon. and confident dynamics long-term fundamentals this the to and our in are I'll this, ability the With of markets it capture back turn opportunity. We

Simon Bates

time Thanks, Craig. all you Thank today. for your

As be and for to GCP employees the be thrilled work new to alongside to is transparent, our to believe commitments. privileged My here. and objective I'm forward. talented there CEO I to meet the are of exceed drive goal GCP, opportunities Company great our feel and

you are what We telling now. know we

we any ends, for a taking as investors as the GCP. striving questions. of to and our better to the you call We Thank vision pandemic clarity expect look we be to with do we able are and outlook joining forward and for to future long-term more have provide

Betsy Cowell

the now can session. we begin Operator, question-and-answer

Operator

Please Seaport Our come go Securities. ahead. from Global first Harrison Instructions] with [Operator Mike question will

Mike Harrison

good Hi, morning.

Craig Merrill

How are doing? you Michael. Hi,

Simon Bates

Hi, Mike.

Mike Harrison

your guys well, findings appreciate from some you. of and the Doing employee you sharing wanted to say thank I surveys. I customer are

kind of that also right be the an it it's can step in seems and important difficult, healthy I self-reflection like think but I think direction.

XXXX? maybe about the bit on during we outlook, know factors can little earnings provide a of mind. some should in how of think the color seasonal terms keep you are You In there progression to

these referenced we raw gradual you of year. can activity may probably end of that some toward the think the assume then be during year, costs discretionary the And inflationary is that XXXX course material flow in back end I And of the temporarily during that the the maybe the cut there to the come costs in also recovery costs construction during is that come during back you start in on also in year. then that year.

in how some just think given about on all initial pieces moving So cadence thoughts we should earnings maybe XXXX? those of the

Craig Merrill

Yes, Craig. Michael, it's

I But the half think points. second on to little me the flavor we as half. lot the not you've give like. well determine first you of hit It's a as let easy a really

dynamic won't Of of have QX then be course, year. little a of being a a And QX course prior pickup QX of will bit most in pickup. down half probably pandemic, bit situation that -- tougher little the little because have would volume, similar probably in a a better to the is in profit then in last lot year a the because the QX the call. on so that volumes little to was And second

price. just you've comes think question a inflation it's how we I which expect will to But and we through, can coming quickly happen. on the through, inflation got but work that do through pass we how much of

be some to work that year-over-year. might in have price degradation half the just with on So we there second margin

So rent through to like and are going Cambridge, we've the inflation. then to to some try from other XXXX. cost, to merit there in obviously we're that, -- savings offsets that on But and hold some XXXX that had work

operating said. that that full does -- year-over-year bit year expense that you So being [ph]? the will about overall generally a your flat with be give for flavor probably little pandemic Is all

Mike Harrison

helpful and understand. definitely Yes, I that's

of more all the talk pricing segments a and I concern there to about off maybe try other? ability guess pieces, is or material the specific both pass your those in moving there. raw As the the segments? ticked customers along you one to in in a the pricing I SBM And SCC inflation can kind to to situation, of on lot take versus is maybe

Craig Merrill

construction XX inflation behind in to versus always know, on about as industry, price you're XX this Well, you to pass days through. it

the going are like big on, proofing and projects. specifically specific got some projects You've of that things quoted fire

you as some through But also fast in You helps as like. years. can't move price that

and notes didn't some in in price. XXXX, nice we we we of back give outlined a the deflation note some to you'll got lot have of So

In we'll price. in a half, you're then to I give But we inflation deflation for first half early think the the a usually back that little have our fact, held the comes price year in little bit second on will on when the second push half. on we of in late XXXX, price and But it.

So if I it -- don't on weigh let in that's answer, from you'll he also. know get that XXXX. but because is the in industry I'll too that helps Simon

Simon Bates

Yes. Hi, Mike, Simon here.

I think it's a mixed bag of provide specificity and the it's difficult kind to would like. you

definitely honestly, and we on what are it year. rest And impact price quite to seems seeing the for expect price temporary can on the we blips supplies the unpick some weather by raw what are driven also some of versus is trying in to We the February. spikes be the and of some material

materials respond And prices how analysis therefore kind raw see goes settle to on, market. is basis will where of so, there the it's to some for and that us those in appropriate daily us on trying the a for for

So it's currently at a every to moving manage target, but we day. attempt look and something

Mike Harrison

of activity to and what's in you environment? Maybe were about discomfort, to bit specific were -- COVID that made with guess. projects projects. they to that related economic North I and little talk that I of the leading related a issues. the the in commercial the I forward pace uncomfortable safety to commercial think comment Is Is particular, terms in the commercial pace commercial of it was seeing And think a that America, moving you construction, recovery

Craig Merrill

it's that our And the commercial Yes. biggest in geographies construction new America, -- exposure you -- to North of would any Mike. we be know

to various disciplines using of the in We in have are fortunate some in pipeline. at we look our organization tools the

North good the and a obviously got onto we've of the we being in close when water that our put part project. start of building America. our impacted The that the is the business to the business proofing the pipeline very substructure membrane envelope is happens So on view most

onto be are we So projects, and seen a very and monitoring in buildings, our have delayed are could series healthcare XXXX proofing see could cases bit that. of of center, the resilient. about little they to the very tends we switch of that do XXXX. the some growth in still in currently be is we of is looking that to proofing, quite types large focus up, business, whole which business attempting installation a the to offset where which some XX attractions, water projects, some data projects And do our closely months different be later What office of tourist happen we canceled the fire

Simon Bates

We've [Indiscernible] on nice through had numbers proofing. we've seen -- some on that. fire come some

to were projects that on the continuing they're already So finish. up set go, to

and I out So alarm little that on don't proofing bit are specialty these there's the give projects group timing. want a And to you just work very the pushed out hopefully, there in not projects that And nice instance. fire to through. a did false continuing larger we're nicely QX for

That's cancellations seen the haven't of kind situation. We lot a yet. of

Mike Harrison

last and COVID cases? to was the think in or losses, that I QX those North Is on then you spike little a to All America, losses referred in intensify that the deteriorated -- some right. seems fourth a share And bit. the down just quarter? QX sequentially question to is from basis on have did you Do year-over-year share have

Simon Bates

No, not specifically, Michael.

saw we're year. to were America some last view. SBM loss is North they winter, which QX, much the share time you saw in channel call, specific that we it But yearly little a in in to side, there had self-manufacturing about There instances, Generally the the remember inventory on it to bit And in taking happen. we share on of no in was said of kind a year. and inventory little if that You on the we kind we lot a a little other of and November distribution take the Asia December during my additives, to some and have that going of the apprehensive bit loss China. expected during we way comments were of a sit that might,

the didn't of kind that's We hold situation. So promotions. any

activity this promotional in want and to happen little that we up, distributors QX do where some show but hold didn't themselves do year. inventory a Sometimes the

of we kind about landed it So expected. where

distribution channel in So that's else more management than QX. anything effect

Mike Harrison

And maybe there, QX? guys suggest does may of you get All that distributor quickly a as little right. we really restocking in late that and be early bit to just are to follow-up see QX into positioned

Simon Bates

Yes, lot we pick QX this the -- to then into to Europe, past move be and not expect we if later can winter us yes, a QX have and moving would disrupting in that and U.S. if of up.

Mike Harrison

is or I spring we it, Well, hit so XX to Chicago promise. in coming close yesterday

Simon Bates

It next [ph] probably next day Congratulations. the will probably tomorrow then be or day.

Mike Harrison

There All thanks you very much. right, go.

Simon Bates

Michael. Thanks,

Craig Merrill

Mike. Thanks,

Operator

Our Jefferies. from next go with Please come question ahead. Laurence Alexander will

Dan Rizwan

guys. Laurence. going It's today? Rizwan How is Hi Dan for it

Simon Bates

Great, Very good, thanks. Dan.

Dan Rizwan

national past later Would it mean year is -- benefit guys if on views a infrastructure comes it in what's you I your or the directly that? from bill to

Simon Bates

question It's while take a will We just directly. will progress. benefit a for to those it timing, engineered in of projects get Dan. developed, Generally,

and longer things. in little benefit in which this if up more. would us. second type we take value a our more to less, of in roads bridges, it's on infrastructure the thing, roads product design that a So, and of the we benefit little -- benefit have If to for I it's probably of half mostly get XXXX, year, and would would speed, But come think past past the then we anything less

Dan Rizwan

Okay.

Simon Bates

XXXX. Craig we'd around but each other. internally. is our Dan [ph], and yes, It's at debated was topic smiling a Broadly -- say more expectation hotly we're smiling but I

Dan Rizwan

-- are would then -- -- going M&A? Okay. better something be I or or improving you organically I And you I to are going do if that's case, mentioned new introducing how you're on is I America, specific no, think, assume mean just focusing products. that's And there's looking at mean I the it is position your mean, you or maybe that executing grown, North

wondering, color position improve just So, how in just on some you your this region?

Simon Bates

Yes, folks see in or I so, months North good very last North job my think SCC for I as stabilized America. it I think to market introductory in I America, comments, have having SCC the a in so our comes done XX said when position the and

to how support back it's So, we best growth them into get mode.

a bag. it's side, SBM side, product building the mixed On

done we've business, fireproofing our job. good So a

been rather it lost few complicated customers the a which two have we in years we've has supply market And as business, those last businesses. has over envelope feel chain, good specific service we not share building and residential meant the consequently, some should. to On as like our

on the business. a So But in we our working improve some that think both can service, of have envelope series which building that will we we're projects also filling bolster help. our that residential we we gaps and have whole we product think by to business

Now, or going through are to given is that organically And categories. in position, do our those to there definitely M&A. M&A explore optionality we cash

Dan Rizwan

[indiscernible]; to balance first very moves made you cash the position so particularly a me of was the in improving is cash have is That shareholders just cash to I M&A and you the solid the wondering guys as if considered or use returning sheet being brings CapEx, given drop if in well?

Simon Bates

consider we the and at a options good best of Board and capital. it's team management Yes, all senior between and the debate dialog the allocation

productivity capital and efficiency better We explore keep more option. seeing some as continue news an some good to we projects. drive the we're as options buyback share I think And is going definitely the definitely said, business to to in too. can through the expenditure allocation, M&A capital I are

Dan Rizwan

final question. then, And

Just the given concerning particularly in via wondering different to? I on dynamics you're is in markets, focus the on products whatever changing or if residential was building focus end something that or the increased the residential side, new

Simon Bates

Yes.

a residential and our and residential be residential the alignment that's to organization, of medium Board, the terms and and exposure would segment positive to construction remodel. a both North In repair definitely we believe new the and strategy -- with for greater new America term

Dan Rizwan

Understood.

Operator

will G. Research Rosemarie of go Our Please Morbelli ahead. from LLC. next come question

Rosemarie Morbelli

morning, you. Thank Good everyone.

Craig Merrill

Good morning, Rosemarie.

Simon Bates

Rosemarie. Hey,

Rosemarie Morbelli

last regarding you for lines new on on currently? getting business and that which Just acquisition greater what or that repair additional product lines residential an size of could the And particular come area? is does up comment have your larger via offering that that resi, exposure mean go product actually a would following getting do exposure, into

Craig Merrill

Shield, Ice and residential underlayment roofing, North the Shield had, & of Water in course goes Grace Rosemarie, residential the bit commercial we Well, additives in America. little admixture of the as too the into all about not and then, a a our course, one-third And cement lot. and or of products have, goes & on we the that brand premium GCP Ice know, you of Water the that but

the that So there of and we red types side, and res that products very benefit commercial the both products, expect be respect they're to working we the the actually some the strong have portfolio technology so side to on in new of products of a With news. on is. that are they're residential get underlayment, get dual air kind there benefit where can decent the from those barrier, we we additional both that's XXXX, do that good on products

support help our channel will that acquisition But our portfolio. would us. certainly M&A partners and opportunities So in distribution our and

at that. So also looking we're

respect through us there. So opportunity to for it's position a whether our with that's or organic M&A nice

Rosemarie Morbelli

So, new But, don't goes because system needed my new it of -- expensive not underlayment I it that? with that on the is it the for entire have new really necessarily the understanding I residential underlayment kind thanks, a roofing that in the roof, is you Craig. repair construction. mean is not Am wrong is on regarding mostly and does your and

Simon Bates

Rosemarie, we premium, would not product describe our expensive. is

Rosemarie Morbelli

Sorry about that.

Simon Bates

a and have we The think best construction. portfolio product underlayment the into think No, remodel industry. we exposure go does when -- we geographies, of in our new the roofing about comes in some And segment. to good majority to conceptually do structure. the repair I But it proofing are

products product extension as and other our do roofing have underlayment. air example, think line barriers, we we as what our should And about an so the vapor an portfolio. for And we have in of product

and love products residential value to wallet bundle and more through well and repair both would an bundle a synergy to opportunity of opportunity to like channel more to remodel them as build product and the share distribution the the applicator way. system that the the we and out increased markets, provide would and then contractor new or of for construction to and have get end So, the

Rosemarie Morbelli

are talk the I on one Could very exited, whichever margin that about margin you you they you about lines. -- the impact -- Could That you. also am pick? is on side you the helpful. the Thank assuming gave product amount you or products us lower EBITDA the that talk from dollar the

Craig Merrill

the on -- countries exit you're exit Rosemarie? referring countries, Yes, the to

Rosemarie Morbelli

Yes, sorry.

Craig Merrill

Yes.

have been two generally over look you if actually quarters. over the three the years, So last last the at improving margins, SCC they

on of the margin is well Does some reporting lot, not is mix there the that. won't your well so give impact at pretty has pretty is exactly of certainly that the that. country. end, exit but you helped specific we I on from be exit the end. here probably improvement a its impact And that those answer the From exit that you strategy. will country But from the But it's up us pick countries, further on won't question? at get

Rosemarie Morbelli

are particular Yes, making Thank that do behind share? a And will are there customer give it own Could you chance doing loss a also you. you and successfully more but progress come they us does. that it you the in loss little make offsetting additives, I to do their business? decided they back one details realize is think or

Craig Merrill

Yes.

in that job nice think pickup whether see Latin made in some Asia starting of certainly with very that I volume they're North offset on doing in volume point So are that's America, SCC, America, Simon there. and we a or the to in some

going starting on to year are would of around engaged SBM, promotion respect are would position you what with us into had call activity say to trying SBM XXXX clarity I commercial we see exactly in the that and would of SBM. that a know, in And in more share on offset reestablished a There's kind we're savvy of year We've SCC. teams accomplish. early our activity part much it. XXXX XXXX. think half putting distributor to tough in and really On in we as I better that's last commercial I XXXX, the say diligence I and So the the --

but let weigh in. think we're So Simon I over I'll that hump,

Simon Bates

teams Yes, America both on the I time few of SBM product and both also months customer would portfolio our have the a have say last very And had in spent the strong sales I'm lot over and with the technical fed reflecting North had survey SCC. side, a on business in we and we we I the participants on comments support. X,XXX back. excellent SCC segments,

service front I on very for and which And SCC to priority us to this service now, number in is Where won't So in we and that for puts foot SCC. do and that's enables different ability. when situation aspects or the piece I I we have America. we grow that, that around service the go into a SCC us one year nice various North side competitive there think working think our work fixed but is detail are us organically on on improving the gets back in for

fireproofing, there and group sales our what's of North and There our something on residential, other I've absolute things mixed America. in for the one impressed think side, for is is loyalty groups very I quality ones amongst are and feel again have years. position for number and On XX that service the combination side better a SBM contracted SBM, brands seen have that done the again it's one resilient. well the has been I is our fantastic priority of We building to our by SBM envelope hurt been very some in

support me into gives if stronger our lot We of and a get that a around supplemental do can product a have need products strengthen confidence. just and think So really better back and we service groups those position and to we I some job portfolio. have growth could broader

America. real SBM North priorities So those strategic are us, for for

Rosemarie Morbelli

could last an us you Thank you, I one could question, if And give update VERIFI? on ask Simon.

Craig Merrill

and of during type been thing. this but can do I that installations that, Rosemarie. do Yes, people thing so and -- type a to COVID-XX the it's of the Either difficult and little that more period, Simon trucks in with

and like Our yourself probably. folks other much traveling have people not been just as

current who we've that we many a not year. base. had the use at using our years get couple But base. XXXX plus had this on of as our customer to it. did we by continue them based as instance, XX% So ago installs some good incremental The installed value revenues would are for in We increase installed install anticipated, customers we in that base it, we out about

do they customers process in that and XXXX, think that's all almost want slow which a have I them added few we to and already contracts. trucks a to if have add installs. So, for of continued have we've new signed the equipment trucks, But

install to about as at XXXX. continue we'll units in So pace the same XXXX

see value or whether determine still were in we customers we to finish continue service them. growth So to that the pandemic and but that wait continue we want whether to the our deliver current to up to to for way ramp to reassess we'll to have again really it for going business, we're

this time. where we're at that's So

Rosemarie Morbelli

Okay, you. thank

Craig Merrill

Thanks.

Operator

next ahead. Chris Shaw with go Please will come Our from Crespi. Monness question

Chris Shaw

Good everyone. How are you doing? morning,

Simon Bates

Hi, Chris.

Craig Merrill

meet to Chris. Hi, you. Nice

Chris Shaw

is -- as Rosemarie Just just now, asked, how VERIFI big sales? overall

Craig Merrill

we Yes. We've whether on never concluded internally we've been this but really at number, more we debating something that. been haven't that should be that fall. transparent disclosed That's

community weigh the may that let wish were because also. I I'll should Chris, going So, but wasn't it, room something could we should and that we're Simon we they in soon disclose I this we answer but that, in today. But think here understand it to know that outside

Simon Bates

globally off call hold untapped The this for about a we'll to it it VERIFI. represent for us on on and is disclosing think substantial largely growth best as But significant demand Yes, how I a the opportunity think we is will technology. vehicle.

of the of can sustainability the -- continue And we around hands the and the here therefore we tool inquiry improved technology can the when demand to base around you interest the or grow. technology customer sustainability, busy that think expect business put our is actually in and importance measurable to about as the of is and a around level Our ever. is as drive

Chris Shaw

demand then was in the and out into you. I'm right in was of? trending whole sales XQ up really just construction the the guess, quarter. the the of now figure from industry I guess, residential company, And I thank maybe fourth production to the, commercial it, kind the half how going weak Got across

Simon Bates

Yes, so were We promotions. our They that prior in the they to residential to our We down. on apt our our talk were less the residential didn't do sales take -- SBM did were distributors. on inventory year.

that those However, we we I into -- actually construction. in new products were go we originally in we say a number ahead surprisingly, strong. additive which that in admixtures, our expected of did residential our North down. have we cement was even when decent actually our of third demand And of America And surprisingly about though were

in So did that some do XXXX. continue we to growth capture and that of we to expect

Chris Shaw

there expand view was I and was residential more comments that think you or And thought in or in always products case now? XX% your about expanding that that your other they that the competitive -- a anything or I so really but residential much markets is Is I maybe something market. or are getting at construction this, sort you just could volatile getting thought of about I exposure, maybe more there, don't much impression more into the and cover

Simon Bates

at you since No, out wouldn't when we Chris, consider look I it the I volatile, mean, of Recession. Great demand came

demand tends situation And remodel think and increasing is residential is you've the got be construction. say had to repair good the to that new I residential and remodel. counter ideal residential new to repair good exposure You've reason I you've cyclical. and got the the And for the steady exposure

in you So the that country. residential remodel pandemic dynamic in for that see saw interestingly bump where and the in residential remodel, a significant though and you in completely demand across construction, drop when you repair new spikes on will that both in last demand the and year new see XXXX repair spikes changed

Chris Shaw

to be things that XXXX that, year I cost be How forward, things about sense. sort it. us right? of looking out? costs makes should -- of first first sort you maybe how which just looking should and of think margins sort think like would at should focus at achievements to the sort us we encourage look would I sort then looking the this rolls And be could milepost of that this that we analyst year, as Is guess, you what would on we of towards. maybe That's Simon,

Simon Bates

working improving speed And good And, cost got of that overall us. course, of focus some focused Yes, sight and improving We're margins. terms delivery, we execution stabilizing to look, on of structure. always on are focused our projects we line are for of is revenues. but on that I primary we've about think it's in a

I year from material benefited cost murky makes honestly little a currently. deflation last some raw the thing inflation price have that we it think we and is quite

detail So that I that's provide improve and that going more down those pricing us cost volume, focus. think to this not and and of I'm to improve our at try that our confuses ability the margins, combination than for any point. move manage is picture to

Chris Shaw

lot. a Thanks helpful. it's right, All

Operator

This concludes remarks. any back the to for session. I'd like turn over Betsy our conference question-and-answer closing to Cowell

Betsy Cowell

us great you all joining for and Thank today, a have afternoon.

Operator

concluded. now for conference The attending has presentation. you today's Thank

You may disconnect. now

GCP Applied (GCP) 4 Mar 212020 Q4 Earnings call transcript