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Edited Transcript of GCP earnings conference call or presentation 27-Feb-19 3:00pm GMT

Q4 2018 GCP Applied Technologies Inc Earnings Call

CAMBRIDGE Mar 4, 2019 (Thomson StreetEvents) -- Edited Transcript of GCP Applied Technologies Inc earnings conference call or presentation Wednesday, February 27, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dean P. Freeman

GCP Applied Technologies Inc. - VP & CFO

* Gregory E. Poling

GCP Applied Technologies Inc. - CEO & Director

* Joseph DeCristofaro

GCP Applied Technologies Inc. - VP of IR

* Randall S. Dearth

GCP Applied Technologies Inc. - President & COO

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Conference Call Participants

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* Daniel Dalton Rizzo

Jefferies LLC, Research Division - Equity Analyst

* George James Godfrey

CL King & Associates, Inc., Research Division - Senior VP & Senior Research Analyst

* Michael Joseph Harrison

Seaport Global Securities LLC, Research Division - MD & Senior Chemicals Analyst

* Michael Joseph Sison

KeyBanc Capital Markets Inc., Research Division - MD & Equity Research Analyst

* Rosemarie Morbelli

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the GCP Applied Technologies Fourth Quarter 2018 Earnings Conference. (Operator Instructions)

And now I'd like to turn the conference over to Joe DeCristofaro. Please go ahead, sir.

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Joseph DeCristofaro, GCP Applied Technologies Inc. - VP of IR [2]

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

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

Some of our comments today will be forward-looking statements under U.S. federal securities laws. Actual results may differ materially from those projected or implied due to a variety of factors. We will discuss certain non-GAAP financial measures, which are described in more detail on this morning's release and on our website. Our comments on forward-looking statements and non-GAAP financial measures apply both to the prepared remarks and to the Q&A. References to EBIT refer to adjusted EBIT, and references to margin refer to adjusted gross margin or adjusted EBIT margin, as defined in our press release.

Greg will start us out today with a business update. Randy will discuss our commercial initiatives, and Dean's commentary will include highlights of our financial results and outlook. We are discussing these results on a continuing operations basis to account for the sale of Darex Packaging Technologies. Additionally, we deconsolidated Venezuela as of July 3, 2017. All revenue and associated growth rates in this discussion are stated on a comparable constant currency basis, which adjusts for the impact of foreign currency.

With that, I'll turn the call over to Greg.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [3]

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Good morning, everybody. In 2018, we performed well in our core markets. However, we were negatively impacted by both inflation and foreign exchange volatility in certain geographies, primarily in our admixture business. In the second half of the year, we successfully implemented a program to exit these low-margin geographies and improve SCC's profitability and cash flow. We also initiated price increases across our businesses, which partially offset the higher-than-anticipated inflation and foreign exchange volatility. We're continuing to see the benefits of these price increases as we move into 2019.

VERIFI's commercialization gained significant traction in 2018, with the sales increasing about 40% for the year. We have a healthy pipeline for VERIFI with both new and existing customers. We're in the exciting process of integrating our admixture chemical business with VERIFI data management to provide even more value to our customers.

SBM's revenue, earnings and operation -- operating margins improved in 2018, and our acquisitions are performing as expected with margins that are accretive to our overall GCP margins.

Adjusted EPS grew about 42%, and adjusted free cash flow increased significantly as a result of our reducing our debt, lowering our interest costs and improving our working capital.

I would like to comment on the announcement we made this morning to our shareholders. As outlined in our open letter, our board has approved a new cost restructuring program, the evaluation and exploration of potential strategic alternatives and continued board refreshment. We're investing in operational efficiencies designed to improve processes and execution across our supply chain. This includes our manufacturing, purchasing, logistics and warehousing operations, and we are also implementing a redesign of our service delivery model to streamline our pursuit of combined admixture and VERIFI opportunities. We expect this program to deliver $25 million in annualized savings once completed over the next 2 years and additional improvements in our working capital. Randy will provide more details on our supply chain strategy in just a moment.

Given the current market dynamics and our insights into the competitive landscape, we will be evaluating strategic alternatives for the company, which may include the sale of GCP, a strategic business combination as well as potential enhancements to the business, all of this with a view to maximizing value for our shareholders. At the same time, we remain focused on improving GCP's profitability, earnings and cash flow in 2019. We'll continue to grow our high-margin SBM business with the introduction of new products. We will improve SCC's profitability with a focus on core admixture markets as well as the growth in VERIFI, Ductilcrete and sprayable concrete, and we are executing on the additional efficiency opportunities we've identified across our supply chain.

I would like to turn the call over to Randy for more details on these key commercial initiatives and programs.

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Randall S. Dearth, GCP Applied Technologies Inc. - President & COO [4]

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Thank you, Greg, and good morning, everyone. Our strategy of focusing on core admixture markets, where we have a strong position, is showing results. I am happy to report that since we last spoke with investors, we have successfully secured a number of key admixture contracts with both new and existing strategic accounts.

In 2018, VERIFI sales grew approximately 40%. We also signed 10 contracts and built a significant pipeline of opportunities. We also improved our technology for using chemicals to manage slump in transit. For 2019, we expect VERIFI sales to grow at a higher rate than in 2018, with a significant percentage of our growth already secured with recent new business wins.

Our growth plan for VERIFI and admixtures includes implementing a redesign of our North American sales organization to integrate VERIFI into our concrete admixtures organization; the scaling, production and assembly capability for VERIFI units to reduce per unit costs for margin expansion; and commercializing the next generation of our VERIFI technology, which integrates admixtures on the truck into our material management system and is designed to more than double the value we deliver to our customers.

Our forecast for VERIFI revenues remains $50 million to $75 million by 2021 with EBIT margins that contribute significantly to SCC's profitability. I would like to report that we have substantially completed our restructuring and repositioning program that includes exiting nonprofitable geographies. You may recall, our estimate for total annualized savings is $25 million, with 75% of the savings benefiting SCC. We expect total annualized revenue reduction for SCC of $65 million to $75 million by the end of 2019. The revenue reduction in 2018 was about $10 million, and our estimate for total planned cost is approximately $31 million to $35 million.

This morning, we announced our next step towards achieving further cost and operational efficiencies. This restructuring plan is focused on GCP's global supply chain strategy, our processes and the execution. The plan also addresses our service delivery model, primarily in North America, to streamline our pursuit of combined admixture and VERIFI opportunities.

We've engaged with a leading consulting firm that I've worked with successfully in the past. This firm will help GCP with our supply chain strategy and processes. Key areas of focus include manufacturing, purchasing, logistics and warehousing. This plan will help us improve our growth and our margins. And our estimate for savings associated with this new program is approximately $25 million, with about $8 million benefiting 2019. With these 2 programs combined, we plan to remove about $50 million in costs from 2018 through 2020 as we reduce GCP's complexity and create a more efficient and effective organization.

Looking forward, I believe that as we continue to assess and refine our business model, we will identify further cost reduction and efficiency improvements, which will ultimately drive improved returns for shareholders.

I'd now like to turn the call over to Dean for details on our financial performance and guidance. Dean?

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Dean P. Freeman, GCP Applied Technologies Inc. - VP & CFO [5]

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Thank you, Randy, and good morning, everybody. Just a reminder, all revenue and associated growth rates in my comments are on a constant currency basis.

The fourth quarter GCP's consolidated revenues declined 2% to $285 million, and sales grew 1% excluding the exit countries. Volumes were lower than forecast mainly due to wet weather in North America, which impacted SCC, in particular, and continued project softness in the Middle East.

In the fourth quarter, SCC sales were down 2% to $163 million, including revenue reduction of about $10 million due to exit countries, as Randy mentioned. Admixture sales declined 6%, while cement additives were flat.

SBM's revenue was down 1% year-over-year but Building Envelope sales grew 2% and Residential sales increased 3%. Specialty products declined 11% year-over-year due to project timing on our fire and floor underlayment businesses.

GCP's adjusted gross profit declined 9% to $101 million. While we were successful in capturing price, raw material and logistics inflation and foreign exchange volatility, specifically at SCC, outpaced the benefit we achieved through these price increases.

SBM's gross margin was flat compared to the fourth quarter in 2017, with price capture offsetting raw material inflation. SCC's gross margin declined 300 basis points year-over-year as the business continued to be impacted by inflation pressures and foreign exchange volatility in Latin America and the Middle East.

GCP's adjusted EBIT declined 16% as higher SBM segment operating income and lower corporate costs were offset by lower SCC operating income.

Rounding out the consolidated results for GCP in the quarter. Our interest expense and related financing costs were $6 million compared to $14 million last year as a result of our debt refinancing transactions. EPS was $0.29 a share, an increase of 21%, primarily due to lower interest expense and lower adjusted tax rate. Adjusted free cash flow was $44 million in 2018, increased significantly due to lower cash interest payments as well as improved working capital management.

Taking a quick look at our key geographies for 2019. While we expect some moderation compared to 2018, our core North America market remains healthy. In EMEA, we expect growth excluding the exit countries. In Asia Pacific, we expect growth in Building Envelope and our sprayable concrete businesses. There are pockets of growth in Latin America; broadly, we do not expect significant improvement in this region for 2019.

Last quarter, we gave you an early indication of our expectations for 2019. We've now planned our operating plan for 2019, and I'd like to update you. We are confirming our expectations of approximately flat sales for 2019 versus 2018, which assumes that market growth, price capture and growth in key programs such as VERIFI is offset by the impact of the exit countries. We expect adjusted EBIT growth of 7% to 14%, or on a dollar basis, $127 million to $137 million, with adjusted EBIT margin improvement of 100 to 150 basis points. Our adjusted EBIT forecast assumes $27 million in restructuring plan savings, impacting our P&L in 2019, and that price will offset the impact of inflation. Other offsetting expenses will include variable incentive compensation reset, normal annual salary inflation increases, higher pension expense and further investments in growth programs such as VERIFI.

The top end of our guidance would reflect healthier-than-expected project activity, moderation of expected inflation trends and faster-than-anticipated restructuring savings. The low end of the range takes into account higher-than-expected inflation and a slowdown in construction activity that could result from a weaker economy.

For SCC, we expect segment operating margin improvement of 300 to 400 basis points due to moderating inflation, the positive impact of price increases and the impact of country exit savings and growth of higher-margin VERIFI. For SBM, we expect segment operating margin improvement of 150 to 250 basis points due to moderating inflation and price increases.

We are forecasting an adjusted tax rate for 2019 of between 27% and 29%. And as you've seen, our EPS guidance range is $1.03 to $1.14 with adjusted free cash flow guidance of $55 million to $70 million.

Overall, our sales and earnings should resemble a normal seasonal pattern in 2019. The first quarter is expected to be the weakest, but the second quarter the strongest, followed by the third quarter and the fourth quarter seasonally weaker with a stronger -- but stronger than the first quarter.

Greg?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [6]

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Yes. Thank you, Dean. I'd like to thank everybody for joining our call. This is an exciting time for GCP. And now we'd just like to take your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll go first to Mike Harrison at Seaport Global.

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Michael Joseph Harrison, Seaport Global Securities LLC, Research Division - MD & Senior Chemicals Analyst [2]

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Was wondering if you can -- we can maybe start with a little bit more color on what went into the decision to explore strategic alternatives. Was this something that shareholders were pushing for? Was it part of the long-term strategy for the company, something initiated at the board level? How much can you tell us about that?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [3]

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Look, Mike, I think it would be fair to say that as a management team and a board, we've been looking at this landscape for quite some time. We like the market that we're in. If we look at the competitive landscape today and, frankly, feedback from our investors, we've looked at our scale, we've looked at our opportunities, we've got some terrific businesses, we now have a new technology that's being launched, we think given those parameters, that this is a great time to step back and say, what's the best value creation opportunity for the company? And that's what we're going to do.

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Michael Joseph Harrison, Seaport Global Securities LLC, Research Division - MD & Senior Chemicals Analyst [4]

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All right. And then was wondering if you can talk a little bit about the restructuring program that you're announcing here. Maybe give us an update on how restructuring is progressing with the 2018 plan, which I believe was a little more focused on SG&A costs in the construction chemicals business. And it sounds like the new program is a little more focused on logistics. Just how do they -- help on how they overlap and how you're progressing on that, the previous program.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [5]

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Yes, let me take that, then I'll turn it over for Randy on the newer program. You're exactly right. I mean, if you remember, we had a program originally when we sold the Darex business, which was eliminating stranded cost, then we implemented that at the time and, in fact, came in a little bit better than we thought. The program on the exit countries and some of the lower-margin pieces of the business that we announced last year is, frankly, pretty much complete. We targeted about $25 million of savings. We had some fairly significant headcount reductions in that program in those countries and some of the support parts of the company that were backing up that business. We've completed that. It's -- we got about $8 million, I think that's the number, Dean, for that program in 2018, and now the benefits start to roll through and we're pretty much done. There might be a tail here or there. What's happened with Randy coming into the company, he's taking some of the experience that we have, looking at the supply chain operations. And Mike, I think you know and a lot of investors know, a bunch of our input costs come from our supply chain. Randy is taking a look at that and worked with some people that he's been with in the past, and we've been working on this program for a number of months. We had the board approve that. There's another $25 million. This is not really a heavy-duty headcount reduction program. It's really about efficiencies and how we go to market. I'll just have Randy add just a little color to that, see if that answers your question. But it is a separate program. The one that we had last year is pretty much wrapped up and will start to flow through.

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Randall S. Dearth, GCP Applied Technologies Inc. - President & COO [6]

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Thanks, Greg, and I'll add to that. Again, this is basically looking at every aspect of our supply chain, from how we produce product around the world, how we warehouse product, how we ship product. And all of which then ultimately will lead to the savings and the improvements that we talked about in our comments. But we're excited about this. And we think that, again, the $25 million, once this program is complete, is going to be additive to our earnings and we'll be a much more efficient, much more effective company after everything is implemented.

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Dean P. Freeman, GCP Applied Technologies Inc. - VP & CFO [7]

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Just for everyone's information, slide deck 10 -- Slide 10 in the deck that we presented has more information on the restructuring program.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [8]

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Did that answer your question, Mike?

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Michael Joseph Harrison, Seaport Global Securities LLC, Research Division - MD & Senior Chemicals Analyst [9]

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Yes. So just this one quick last question. The press release referenced the settlement associated with the Stirling Lloyd acquisition. Can you give a little bit of color of what that was and what the magnitude of that settlement was?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [10]

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Yes, Mike, that was about $3 million. What happened here was as we bought the company, there was some product work that we had to do when we integrate. Those costs flowed through our P&L pretty much through the earlier part of '18. And we were able to negotiate a settlement around that, and so we called it out. So net-net, we spent some money on the early part of the year and recovered on the back part of the year. That's really the program there, and our teams did a nice job of recovering that. So that's what it's about.

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Operator [11]

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(Operator Instructions) And we'll move next to Laurence Alexander at Jefferies.

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Daniel Dalton Rizzo, Jefferies LLC, Research Division - Equity Analyst [12]

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This is Dan Rizzo on for Laurence. Could you just put a little more color on -- I think you mentioned something about redesigning the service delivery model. Is that -- I mean, is that just change in the sales force? Could you just provide a color on exactly what that means?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [13]

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Yes, we've done a lot of work, I think you guys know -- the VERIFI program is being integrated into our sales process. And VERIFI has started to get some real traction, especially here in North America as we've rolled that out. And what we're essentially doing is investing in training, organization design to drive the combination of admixtures and VERIFI while we continue to sell the VERIFI model and sell admixture. So there's some redesign of territories. There's some significant opportunities for training. Randy, do you have anything else to add to that?

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Randall S. Dearth, GCP Applied Technologies Inc. - President & COO [14]

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No. I think, again, this is going to allow us at the end of the day to very effectively introduce the VERIFI technology into a traditional, very successful admixture business.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [15]

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And we have a strong sales organization around the world in our core markets for admixtures, and this is the energy that we need to put into bringing that organization up to be able to deal with both the new technologies as well as service admixtures the way we have in the past. So we're pretty excited about it, so is our organization.

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Daniel Dalton Rizzo, Jefferies LLC, Research Division - Equity Analyst [16]

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Okay. That's very helpful. And then you did speak extensively, and I appreciate that, about the supply chain improvements. But one thing, just a clarification, does that include like going to more sourcing levels? Like are you sole-source or dual-source and then go into multi? Is that part of the process? Or that's already been done and that's not really what you're focusing on?

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Randall S. Dearth, GCP Applied Technologies Inc. - President & COO [17]

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No, it's absolutely part of what we're focusing on. Our raw material procurement strategies are also being evaluated to be best in class and not only here in North America but around the world where we procure raw materials. So when this project is complete, we'll be much more efficient, much more effective, both costs as well as just efficiency.

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Operator [18]

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We'll move next to Rosemarie Morbelli at G. Research.

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Rosemarie Morbelli, [19]

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I was wondering if you could give us a little more details on the change in the competitive landscape. Is it a change year-over-year? Is it the competitors themselves? Is it the marketplace? If you could give us a little more on that particular.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [20]

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Yes, sure. I mean, the marketplace is consistent as we've seen it. We see the global construction market has some variability around the world with -- that's really not what we're talking about here. There has been some significant opportunities for M&A in the space. There's been some consolidation in the space. There is opportunities for us to be involved in that change. And we thought the best way to do that was to be transparent and say, we think this industry has significant opportunities. We've got some great brands, product lines and a position in the marketplace, and we want to step back and have real conversations about how to deliver that value. That's what we're talking about.

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Rosemarie Morbelli, [21]

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Good. So if we look at the large player that I am aware of, and I am most likely missing quite a few, so if you could help me with that. I can think of Sika in Switzerland. I can think of Saint-Gobain in French -- in France. Any other major competitors in the U.S.?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [22]

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I'm not sure it'd be helpful for me to speculate here. I mean, I think of many people are involved on -- as we look into landscape. But this company has a terrific opportunity, both from our global perspective and our technologies, to deliver value. And we're going to look broadly at that as we go into the coming months here. That's -- at this stage, that would be the most I can really say about it.

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Rosemarie Morbelli, [23]

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Okay. No, I appreciate it. And a totally different question on -- as you are combining VERIFI with your admixture, do you need to change the qualifications of the sales force? Do they need to have more of a technology background? Or do they already have enough and just a training will do it?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [24]

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That's a great question. I think the core of what we have is our depth of knowledge and experience around concrete, our relationships with the customers in our core markets, how to deliver mix designs. VERIFI is additive to that. And we have the capability and the data management to be able to deliver that to our customers and our sales force. It's the building of that capability. Clearly, there's some training. There's some ability to think about how to say value with our customers in a different way, not just chemistry but chemistry combined with data. But we really think we're uniquely positioned because of the people that we have in our core markets to deliver this technology. So it's not so much an upgrade. It's a, here's how we're going to do it. Here's how we get the value. Let's go out and take it to our customers.

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Operator [25]

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And we'll move next to Mike Sison at KeyBanc.

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Michael Joseph Sison, KeyBanc Capital Markets Inc., Research Division - MD & Equity Research Analyst [26]

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So just curious, in terms of your outlook for 2019, adjusted EBIT growth of 7% to 14%, it's been a while but it seems like you've raised that a little bit from October. Maybe talk about the confidence and the outlook this time around. And maybe getting to this high end, how do you get there?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [27]

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Yes, I'll just make a comment, Mike, and then I'll let Dean come in. Frankly, from October, our sort of view of the marketplace hasn't shifted very much, but what we have done is gotten granular on the additional cost reductions that Randy is bringing in to the organization on the supply chain. So that's what sort of shifted a little bit. We still see the same market dynamics. And I'll let Dean speak to it, but on the upside, construction is good. We got some big projects, that drives to the upside. And we built in a room here, if the Middle East was a little slower, some of the marketplaces don't have the construction, we're really going after the piece that we control on the costs to bring this in. But the real shift there, Mike, was on adding some of this new program that Randy is driving across the company.

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Dean P. Freeman, GCP Applied Technologies Inc. - VP & CFO [28]

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Yes, that's exactly right, Greg. And Mike, I'd just point you to the confidence around assumptions. If we think about growth assumptions, we built in very modest market growth of about 1 point. We've executed on our price, and that run rate continues to perform. So that's another couple of points for next year. And I think we're making modest conservative assumptions about foreign exchange and continued inflation. Again, as those potentially moderate, that puts us maybe on the higher end of the range.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [29]

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If I wanted to speak to the low end, we got -- as always, we got to watch this raw material movement. But Mike, some of this exit country takes a little bit of the volatility we had last year out and some of the really volatile countries on the SCC business. So that should help us on our bracketing of the outcomes.

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Dean P. Freeman, GCP Applied Technologies Inc. - VP & CFO [30]

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Yes. And as Greg pointed out, the bulk of the bridge is related to the optimization program that Randy and the operation teams are leading.

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Michael Joseph Sison, KeyBanc Capital Markets Inc., Research Division - MD & Equity Research Analyst [31]

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Okay. Great. And then just sort of a follow-up question in terms of your stock has reacted pretty positively today. Where do you think in terms of the businesses or the potential, you're still maybe a little bit undervalued relative to where the market is today, and maybe it's somewhere balanced between SCC and the potential there with all the cost savings or maybe talk about some of the growth potential at SBM that could drive more value going forward.

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [32]

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Look, we've got a world-class SBM business and great products across the chain. We have nice brands, really good customer relationships, and we're very excited about combining data and chemistry across the concrete and cement businesses. We think those are value creators. And what we're going to do is step back and say, how do we create that value through these review of alternatives? So we agree, this SBM business, we've got some of the best products in the industry, the organization to sell them. They work. On SCC, we have a very good position, but we think managing the cost side while we build out the upside on data and chemistry combination is the strategy.

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Michael Joseph Sison, KeyBanc Capital Markets Inc., Research Division - MD & Equity Research Analyst [33]

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Okay. Great. And then just one follow-up question. As I read your shareholder note this morning, it sounds like the relationship with the board is pretty collaborative. And maybe can you talk about what you're looking for in terms of the board nominees and how you're going to evaluate the process with them going forward?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [34]

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Let me put it a little more broadly. What we've outlined in this letter is the strategy that our board has backed, that we think drives value for the company. And I would tell you that we think we have some very good support from that from our shareholders, but I can't get into specific conversations on any one shareholder or not. But this initiative is designed to bring forth the value this company has, and that's how we're looking at it.

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Operator [35]

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(Operator Instructions) And moving next to George Godfrey at CL King.

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George James Godfrey, CL King & Associates, Inc., Research Division - Senior VP & Senior Research Analyst [36]

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Just following up on the initiative to increase shareholder value and reviewing all the options. Two questions. One is, what is the time frame that you're looking to complete or at least move substantially toward the conclusion of this process? And then two, is global scale ultimately the defining reason for the review?

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Gregory E. Poling, GCP Applied Technologies Inc. - CEO & Director [37]

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Good questions. I think we're going to be disciplined, diligent and also look at the opportunities as they exist today. But frankly, I think for those of you who know me, when we put something on the table, we move. And we're going to do this in a way that gets us to the right outcome. In terms of scale, it's clearly an issue we've been having discussions with our shareholders around. We think we're competitive in the marketplace, but as our results have been, there's volatility that comes with our size, and we're going to look at this opportunity to say, how do we leverage the capabilities GCP has while mitigating any of the risks. That's our intention because we think that's how you create value.

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Operator [38]

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And with no additional questions at this time, I'd like to thank everyone for joining us today, and that does conclude today's conference.