GlobeNewswire Inc | Aug 5, 2021 06:00AM EDT

August 05, 2021

CAMBRIDGE, Mass., Aug. 05, 2021 (GLOBE NEWSWIRE) -- GCP Applied Technologies Inc. (NYSE: GCP) (GCP or the Company), a leading global provider of construction products, today announced financial and operating results for the second quarter 2021.

Second Quarter 2021 Highlights

-- Net sales of $253.4 million, an increase of 29.7% -- Selling, general and administrative expenses of $64.2 million, a decrease of 2.7% -- Income from continuing operations attributable to GCP shareholders of $10.4 million -- Adjusted EBIT* of $26.9 million, an increase of 92.1% -- Adjusted EPS* of $0.22

For the three months ended June30, 2021, GCP reported net sales of $253.4 million compared with $195.4 million in the prior year quarter. Net Sales Constant Currency* were $244.8 million versus $195.4 million, an increase of 25.3% over the prior year quarter. Income (loss) from continuing operations attributable to GCP shareholders was $10.4 million compared with $(0.7) million in the second quarter of 2020, while Adjusted EBIT* was $26.9 million, an increase of 92.1% versus prior year quarter. Adjusted EBITDA* totaled $38.0 million, an increase of 47.9% over the prior year quarter. Diluted earnings (loss) per share from continuing operations attributable to GCP shareholders was $0.14 compared with $(0.01) in the second quarter of 2020, while Adjusted EPS* was $0.22 compared with $0.10 in the prior year quarter.

"We are very pleased with our second quarter 2021 results, delivering our best first half year performance since 2018. These results were achieved through the hard work of all of our employees, who have kept their focus on meeting customers' needs despite significant disruptions in the supply chain", commented Simon Bates, GCPs President and Chief Executive Officer. "During the second quarter we saw increased construction activity, driving revenue growth in all regions, with the Specialty Building Materials segment, up 32.2% and our Specialty Construction Chemicals segment, up 20.5% for the quarter on a constant currency basis compared with 2020."

"In the quarter we had Adjusted EBITDA margin expansion of 180 basis points to 15%, our best second quarter margin performance since 2017, despite a significant increase in the costs of raw materials and transportation. Our biggest headwinds in the second half of the year are continued global supply chain disruptions and increases in the cost of raw materials and transportation. We have announced price increases in all regions to offset these impacts and have an extensive global program which is driving productivity improvements. However inflation continues to move ahead of our mitigating actions and we expect margin compression in the second half of the year."

*Non-GAAP financial measures. See the tables herein for important information regarding these measures and a reconciliation to the most comparable GAAP measures.NM - Not meaningful.

Total GCP Applied Technologies($ Millions)

2Q 2021 2Q 2020 % ChangeNet sales $253.4 $195.4 29.7%Net Sales Constant Currency* $244.8 $195.4 25.3%Gross margin 36.7% 39.6% (290) bpsIncome (loss) from continuing operations $10.4 $(0.7) NMattributable to GCP shareholdersIncome (loss) from continuing operations 450attributable to GCP shareholders as a 4.1% (0.4)% bpspercentage of net salesDiluted EPS from continuing operations $0.14 $ NMattributable to GCP shareholders (0.01)Adjusted EPS* $0.22 $0.10 NMAdjusted EBIT* $26.9 $14.0 92.1%Adjusted EBIT Margin* 10.6% 7.2% 340 bpsAdjusted EBITDA* $38.0 $25.7 47.9%Adjusted EBITDA Margin* 15.0% 13.2% 180 bps

Second Quarter 2021 Financial Update

-- Net sales were $253.4 million, an increase of 29.7% compared with the prior year quarter primarily attributable to higher sales volumes and favorable impact of foreign currency translation. -- Gross margin of 36.7%, a decrease of 290 basis points compared with the prior year quarter, was primarily due to higher raw material and logistics costs, partially offset by improved operational productivity and the favorable impact of higher volumes and price. -- Selling, general and administrative costs of $64.2 million, a decrease of 2.7% compared with the prior year quarter, was primarily due to shareholder activism and other related costs incurred during the prior year quarter and lower employee-related costs resulting from restructuring programs. These favorable impacts were partially offset by higher employee incentive compensation costs in-line with positive results and higher facility costs related to the Cambridge, MA corporate headquarters. -- Income from continuing operations attributable to GCP shareholders was $10.4 million compared to a loss from continuing operations of $0.7 million in the prior year quarter. The increase was primarily attributable to higher gross profit, partially offset by higher restructuring costs. -- Adjusted EBIT* of $26.9 million, an increase of 92.1% compared with the prior year quarter, was primarily due to higher Specialty Construction Chemical ("SCC") and higher Specialty Building Material ("SBM") operating income. Adjusted EBIT Margin* increased by 340 basis points to 10.6% compared with the prior year quarter. -- Adjusted EBITDA* was $38.0 million, an increase of 47.9% compared with the prior year quarter. Adjusted EBITDA Margin* increased by 180 basis points to 15.0% compared with the prior year quarter. The increase was due to higher Adjusted EBIT*.

Second Quarter Segment Performance

Specialty Construction Chemicals($ Millions)

2Q 2021 2Q 2020 % ChangeNet sales $144.6 $115.9 24.8%Net Sales Constant Currency* $139.7 $115.9 20.5%Gross margin 36.1% 39.4% (330) bpsSegment operating income $15.3 $10.0 53.0%Segment operating margin 10.6% 8.6% 200 bps

-- Net sales were $144.6 million, an increase of 24.8% compared with the prior year quarter due to higher sales volumes and the favorable impact of foreign currency translation. -- Gross margin decreased 330 basis points to 36.1% compared with the prior year quarter primarily due to higher raw material costs, partially offset by improved operational productivity. -- Segment operating margin increased 200 basis points compared with the prior year quarter primarily due to higher sales volumes positively impacting operating leverage, partially offset by lower gross margin.

Specialty Building Materials($ Millions)

2Q 2021 2Q 2020 % ChangeNet sales $108.8 $79.5 36.9%Net Sales Constant Currency* $105.1 $79.5 32.2%Gross margin 38.1% 40.5% (240) bpsSegment operating income $19.9 $11.6 71.6%Segment operating margin 18.3% 14.6% 370 bps

-- Net sales were $108.8 million, an increase of 36.9%, compared with the prior-year quarter primarily due to higher sales volumes in all regions, as well as the favorable impact of foreign currency translation. -- Gross margin decreased 240 basis points to 38.1% from the prior year quarter primarily due to higher raw material costs. -- Segment operating margin increased 370 basis points compared with the prior year quarter primarily due to higher sales volumes resulting in improved operating leverage.

Capital Allocation and Liquidity

GCP remains committed to maintaining a disciplined approach to capital allocation and preserving the Company's strong balance sheet. GCP's cash balance at the end of the second quarter of 2021 was $488.9 million. GCP has access to additional liquidity in the form of a $350.0 million revolving credit facility maturing in 2023, along with other non-US credit facilities, which brings total liquidity sources to approximately $876.1 million as of June 30, 2021, and which should enable GCP to weather any effects from the COVID-19 pandemic and invest in the business.

Revisions of Previously Issued Consolidated Financial Statements

In connection with the preparation of the consolidated financial statements for the year ended December31, 2020, the Company identified expense accrual and other adjustments in its previously filed unaudited quarterly consolidated financial statements for the first three quarterly periods of 2020. Please refer to the Quarterly Report on Form 10-Q for the six months ended June30, 2021 to be filed with the United States Securities and Exchange Commission for more information.

Second Quarter 2021 Results Conference Call

GCP has scheduled a conference call at 10:00 a.m. ET today to review its second quarter 2021 results. The conference call can be heard live through a link on the GCP website, by visiting the Events and Presentations section at investor.gcpat.com. The call may also be accessed by dialing +1 (844) 887-9408 domestically, or +1 (412) 317-9261 internationally. Attendees should log in to the webcast or dial in approximately 15 minutes prior to the calls start time. In addition, GCPs slides for the second quarter 2021 can be found on the Companys website.

A replay of the conference call will be available until August 12, 2021, by dialing +1 (877) 344-7529 domestically, or +1 (412) 317-0088 internationally and then entering conference ID# 10158842. A webcast replay will also be available in the Events and Presentations section of the Companys website for approximately three months.

Contact

Investors RelationsWilliam I. Kent, IRCVice President, Investor RelationsT +1 (617) 498-4344investors@gcpat.com

About GCP Applied TechnologiesGCP Applied Technologies (NYSE: GCP) is a leading global provider of construction products technologies that include admixtures and additives for concrete and cement, the Verifi in-transit concrete management system, high-performance waterproofing products, and specialty construction products. GCP products have been used to build some of the worlds most renowned structures.

For more information, visit GCP's website at www.gcpat.com.

Forward Looking Statements

This announcement contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when GCP or its management is discussing its beliefs, estimates or expectations. Such statements generally include the words believes, plans, intends, targets, will, expects, estimates, suggests, anticipates, outlook, continues, or similar expressions. These statements are not historical facts or guarantees of future performance but instead represent only the beliefs of GCP and its management at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors, many of which are outside GCPs control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. Forward-looking statements include, without limitation, statements about expected financial positions; results of operations; cash flows; financing plans; business strategy; operating plans; strategic alternatives; capital and other expenditures; competitive positions; growth opportunities for existing products; benefits from new technology and cost reduction initiatives, plans and objectives; the potential impacts of global supply chain disruptions, increased cost inflation and potential price increases; and markets for securities. Like other businesses, we are subject to risks and uncertainties that could cause our actual results to differ materially from our projections or that could cause other forward-looking statements to prove incorrect, including, without limitation, risks related to: the cyclical and seasonal nature of the industries that GCP serves; foreign operations, especially in emerging regions; changes in currency exchange rates; business disruptions due to public health or safety emergencies, such as the novel strain of coronavirus ("COVID-19") pandemic; the cost and availability of raw materials and energy; the effectiveness of GCPs research and development, new product introductions and growth investments; acquisitions and divestitures of assets and gains and losses from dispositions; developments affecting GCPs outstanding liquidity and indebtedness, including debt covenants and interest rate exposure; developments affecting GCPs funded and unfunded pension obligations; warranty and product liability claims; legal proceedings; the inability to establish or maintain certain business relationships and relationships with customers and suppliers or the inability to retain key personnel; the handling of hazardous materials and the costs of compliance with environmental regulations; extreme weather events and natural disasters. These and other factors are identified and described in more detail in GCP's Annual Report on Form 10-K for the year ended December 31, 2020 as well as GCPs subsequent filings and quarterly reports and is available online at www.sec.gov. Readers are cautioned not to place undue reliance on GCPs projections and other forward-looking statements, which speak only as of the date thereof. GCP undertakes no obligation to publicly release any revision to its projections and other forward-looking statements contained in this announcement, or to update them to reflect events or circumstances occurring after the date of this announcement.

GCP Applied Technologies Inc.Consolidated Statements of Operations (unaudited)

Three Months Ended Six Months Ended June30, June30,(In millions, except per 2021 2020 2021 2020share amounts)Net sales $ 253.4 $ 195.4 $ 476.2 $ 412.1 Cost of goods sold 160.3 118.0 296.6 251.9 Gross profit 93.1 77.4 179.6 160.2 Selling, general and 64.2 66.0 130.8 134.1 administrative expensesResearch and development 4.3 3.7 8.8 8.6 expensesInterest expense and 5.6 5.0 11.2 10.7 related financing costsRepositioning expenses 0.5 1.0 1.8 3.7 Restructuring expenses 6.5 0.4 14.1 3.5 and asset write offsOther income, net (5.5 ) (2.7 ) (7.2 ) (4.9 ) Total costs and expenses 75.6 73.4 159.5 155.7 Income from continuingoperations before income 17.5 4.0 20.1 4.5 taxesProvision for income (7.0 ) (4.6 ) (8.0 ) (3.0 ) taxesIncome (loss) from 10.5 (0.6 ) 12.1 1.5 continuing operationsLoss from discontinuedoperations, net of income (0.2 ) ? (0.2 ) (0.3 ) taxesNet income (loss) 10.3 (0.6 ) 11.9 1.2 Less: Net incomeattributable to (0.1 ) (0.1 ) (0.2 ) (0.2 ) noncontrolling interestsNet income (loss)attributable to GCP $ 10.2 $ (0.7 ) $ 11.7 $ 1.0 shareholdersAmounts Attributable to GCP Shareholders:Income (loss) fromcontinuing operations 10.4 (0.7 ) 11.9 1.3 attributable to GCPshareholdersLoss from discontinuedoperations, net of income (0.2 ) ? (0.2 ) (0.3 ) taxesNet income (loss)attributable to GCP $ 10.2 $ (0.7 ) $ 11.7 $ 1.0 shareholdersEarnings (Loss) Per ShareAttributable to GCP ShareholdersBasic earnings (loss) per share:^(2)Income (loss) fromcontinuing operations $ 0.14 $ (0.01 ) $ 0.16 $ 0.02 attributable to GCPshareholdersLoss from discontinuedoperations, net of income $ ? $ ? $ ? $ ? taxesNet income attributable $ 0.14 $ (0.01 ) $ 0.16 $ 0.01 to GCP shareholders^(1)Weighted average number 73.4 72.9 73.2 72.9 of basic sharesDiluted earnings (loss) per share:^(2)Income (loss) fromcontinuing operations $ 0.14 $ (0.01 ) $ 0.16 $ 0.02 attributable to GCPshareholdersLoss from discontinuedoperations, net of income $ ? $ ? $ ? $ ? taxesNet income attributable $ 0.14 $ (0.01 ) $ 0.16 $ 0.01 to GCP shareholders^(1)Weighted average number 73.5 72.9 73.4 73.0 of diluted shares

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(1)Amounts may not sum due to rounding.(2)Dilutive effect only applicable to the periods during which GCP generated net income from continuing operations.

GCP Applied Technologies Inc.Consolidated Balance Sheets (unaudited)

(In millions, except par value and shares) June 30, 2021 December 31, 2020ASSETS Current Assets Cash and cash equivalents $ 488.9 $ 482.7 Trade accounts receivable, net of allowance forcredit losses of $6.2 million and $7.0 million, 167.7 169.4 respectivelyInventories, net 128.3 98.4 Other current assets 46.3 41.2 Total Current Assets 831.2 791.7 Properties and equipment, net 216.8 225.6 Operating lease right-of-use assets 35.1 40.0 Goodwill 214.5 215.0 Technology and other intangible assets, net 66.6 70.9 Deferred income taxes 11.2 9.6 Overfunded defined benefit pension plans 30.4 29.7 Other assets 33.4 35.1 Total Assets $ 1,439.2 $ 1,417.6 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Debt payable within one year $ 2.4 $ 2.8 Operating lease obligations payable within one 7.2 8.0 yearAccounts payable 107.4 87.8 Other current liabilities 116.7 125.8 Total Current Liabilities 233.7 224.4 Debt payable after one year 348.9 348.9 Income taxes payable 23.2 28.4 Deferred income taxes 16.7 14.9 Operating lease obligations 24.7 26.2 Unrecognized tax benefits 41.1 41.0 Underfunded and unfunded defined benefit pension 64.4 62.9 plansOther liabilities 16.8 16.8 Total Liabilities 769.5 763.5 Commitments and Contingencies Stockholders' Equity Preferred stock, par value $0.01; 50,000,000shares authorized, no shares issued or ? ? outstandingCommon stock issued, par value $0.01; 300,000,000shares authorized; outstanding: 73,482,394 and 0.7 0.7 73,082,066, respectivelyPaid-in capital 70.2 61.9 Accumulated earnings 722.0 710.3 Accumulated other comprehensive loss (113.5 ) (110.5 ) Treasury stock (12.3 ) (10.7 ) Total GCP's Shareholders' Equity 667.1 651.7 Noncontrolling interests 2.6 2.4 Total Stockholders' Equity 669.7 654.1 Total Liabilities and Stockholders' Equity $ 1,439.2 $ 1,417.6

GCP Applied Technologies Inc.Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30,(In millions) 2021 2020OPERATING ACTIVITIES Net income $ 11.9 $ 1.2 Less: Loss from discontinued operations (0.2 ) (0.3 ) Income from continuing operations 12.1 1.5 Reconciliation to net cash provided by operating activities:Depreciation and amortization 22.4 22.7 Amortization of debt discount and financing costs 0.8 0.7 Stock-based compensation expense 2.5 2.3 Unrealized (gain) loss on foreign currency (2.1 ) 1.6 Deferred income taxes (1.6 ) (5.4 ) Loss on disposal of property and equipment 1.5 0.1 Changes in assets and liabilities, excluding effect of currency translation:Trade accounts receivable 0.4 30.3 Inventories (30.7 ) (5.1 ) Accounts payable 20.3 (13.5 ) Pension assets and liabilities, net 1.8 1.6 Other assets and liabilities, net (6.4 ) (16.9 ) Net cash provided by operating activities from 21.0 19.9 continuing operationsNet cash used in operating activities from discontinued (0.2 ) (2.3 ) operationsNet cash provided by operating activities 20.8 17.6 INVESTING ACTIVITIES Capital expenditures (14.9 ) (18.8 ) Other investing activities 0.1 0.4 Net cash used in investing activities from continuing (14.8 ) (18.4 ) operationsFINANCING ACTIVITIES Repayments under credit arrangements (0.3 ) ? Payments on finance lease obligations (0.3 ) (0.4 ) Payments of tax withholding obligations related to (1.6 ) (0.3 ) employee equity awardsProceeds from exercise of stock options 4.3 0.7 Payments of dividends to noncontrolling interests ? (0.4 ) Net cash provided by (used in) financing activities 2.1 (0.4 ) from continuing operationsEffect of currency exchange rate changes on cash and (1.9 ) (5.6 ) cash equivalentsIncrease (decrease) in cash and cash equivalents 6.2 (6.8 ) Cash and cash equivalents, beginning of period 482.7 325.0 Cash and cash equivalents, end of period $ 488.9 $ 318.2 Supplemental disclosure of non-cash investing activities:Property and equipment purchases unpaid and included in $ 5.5 $ 5.3 accounts payable

Analysis of Operations

The Company has set forth in the tables below GCP's key operating statistics with percentage changes for the three months ended June30, 2021 and 2020.

Segment operating margin is defined as segment operating income divided by segment net sales. It represents an operating performance measure related to ongoing earnings and trends in GCP operating segments that are engaged in revenue generation and other core business activities. The Company uses this metric to allocate resources between the segments and assess its strategic and operating decisions related to core operations of its business.

Non-GAAP Financial Measures

In this press release, the Company refers to non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with United States generally accepted accounting principles (U.S. GAAP).

GCP believes that the non-GAAP financial information supplements its discussions about the performance of its businesses, improves period-to-period comparability and provides insight to the information that management uses to evaluate the performance of its businesses. Management uses U.S. GAAP and non-GAAP measures in financial and operational decision-making processes, for internal reporting, and as part of its forecasting and budgeting processes since non-GAAP measures provide additional transparency to GCP's core operations. These non-GAAP financial measures do not purport to represent income or liquidity measures as defined under U.S. GAAP, and should not be considered as alternatives to such measures as an indicator of GCP's performance. Investors should review the reconciliation of GCPs non-GAAP financial measures to the comparable U.S. GAAP financial measures and should not rely on any single financial measure to evaluate GCPs business.

In the tables below, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. These non-GAAP financial measures should not be considered substitutes for financial measures calculated in accordance with U.S. GAAP, and the financial results that the Company calculates and presents in the table in accordance with U.S. GAAP, as well as the corresponding reconciliations from those results, should be carefully evaluated.

The following are the non-GAAP financial measures referenced in this press release and presented in the tables below:

-- Net Sales Constant Currency - is defined as current period revenue in local currency translated using prior period exchange rates. GCP uses constant currency in assessing trends in sales excluding the impact of fluctuations in foreign currency exchange rates. -- Adjusted EBIT - is defined as net income (loss) from continuing operations attributable to GCP shareholders adjusted for: (i) gains and losses on sales of businesses, product lines and certain other investments; (ii) currency and other financial losses in Venezuela; (iii) costs related to legacy product, environmental and other claims; (iv) restructuring and repositioning expenses, and asset write offs; (v) defined benefit plan costs other than service and interest costs, expected returns on plan assets and amortization of prior service costs/credits; (vi) third-party and other acquisition-related costs; (vii) other financing costs associated with the modification or extinguishment of debt; (viii) amortization of acquired inventory fair value adjustments; (ix) tax indemnification adjustments; (x) interest income, interest expense and related financing costs; (xi) income taxes; (xii) shareholder activism and other related costs; (xiii) gain on sale of corporate headquarters, net of related costs; and (xiv) certain other items that are not representative of underlying trends. Adjusted EBIT Margin is defined as Adjusted EBIT divided by net sales. GCP uses Adjusted EBIT to assess and measure its operating performance and determine performance-based employee compensation. The Company uses Adjusted EBIT as a performance measure because it provides improved quarter-to-quarter and year-over-year comparability for decision-making and compensation purposes and allows management to measure the ongoing earnings results of its strategic and operating decisions. -- Adjusted EBITDA - is defined as Adjusted EBIT adjusted for depreciation and amortization. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales. GCP uses Adjusted EBITDA as a performance measure in making significant business decisions. -- Adjusted Earnings Per Share - is defined as earnings per share ("EPS") from continuing operations on a diluted basis adjusted for: (i) gains and losses on sales of businesses, product lines and certain other investments; (ii) currency and other financial losses in Venezuela; (iii) costs related to legacy product, environmental and other claims; (iv) restructuring and repositioning expenses and asset write offs; (v) defined benefit plan costs other than service and interest costs, expected returns on plan assets and amortization of prior service costs/credits; (vi) third-party and other acquisition-related costs; (vii) other financing costs associated with the modification or extinguishment of debt; (viii) amortization of acquired inventory fair value adjustments; (ix) tax indemnification adjustments; (x) shareholder activism and other related costs; (xi) certain discrete tax items; (xii) gain on sale of corporate headquarters, net of related costs; and (xiii) certain other items that are not representative of underlying trends. GCP uses Adjusted EPS as a performance measure to review its diluted earnings per share results on a consistent basis and in determining certain performance-based employee compensation. -- Adjusted Gross Profit - is defined as gross profit adjusted for: (i) corporate and pension-related costs included in cost of goods sold; (ii) loss in Venezuela included in cost of goods sold; (iii) amortization of acquired inventory fair value adjustment; and (iv) certain other items that are not representative of underlying trends. Adjusted Gross Margin means Adjusted Gross Profit divided by net sales. GCP uses this performance measure to understand trends and changes and to make business decisions regarding core operations. -- Adjusted Free Cash Flow - is defined as net cash provided by or used in operating activities minus capital expenditures plus: (i) cash paid for restructuring and repositioning, third party and other acquisition-related costs, costs related to legacy product, environmental and other claims, as well as certain other items that are not representative of underlying trends, net of related cash taxes; (ii) capital expenditures related to repositioning; and (iii) accelerated payments under defined benefit pension arrangements. GCP uses Adjusted Free Cash Flow as a liquidity measure to evaluate its ability to generate cash to support its ongoing business operations, to invest in its businesses, to provide a return of capital to shareholders and to determine payments of performance-based compensation.

Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, Adjusted Gross Profit and Adjusted Gross Margin do not purport to represent income measures as defined in accordance with U.S. GAAP. These measures are provided to investors and others to improve the quarter-to-quarter, year-to-year, and peer-to-peer comparability of the Company's financial results and to ensure that investors understand the information it uses to evaluate the performance of its businesses.

Adjusted EBIT has material limitations as an operating performance measure because it excludes costs related to income and expenses from restructuring and repositioning activities which historically have been a material component of the Company's net income (loss) from continuing operations attributable to GCP shareholders. Adjusted EBITDA also has material limitations as an operating performance measure because it excludes the impact of depreciation and amortization expense. The Company's business is substantially dependent on the successful deployment of capital, and depreciation and amortization expense is a necessary element of the Company costs. GCP compensates for the limitations of these measurements by using these indicators together with net income (loss) measured in accordance with U.S. GAAP to present a complete analysis of its results of operations. Adjusted EBIT and Adjusted EBITDA should be evaluated together with net income (loss) from continuing operations attributable to GCP shareholders measured in accordance with U.S. GAAP for a complete understanding of its results of operations.

The Company does not provide U.S. GAAP financial information on a forward-looking basis because the Company is unable to estimate with reasonable certainty unusual or unanticipated charges, expenses or gains without unreasonable effort. These items are uncertain, depend on various factors, and could be material to the Companys results computed in accordance with U.S. GAAP.

GCP Applied Technologies Inc.Analysis of Operations (unaudited)

Analysis ofOperations Three Months Ended June30, Six Months Ended June 30,(In millions,except per shareamounts) 2021 2020 % 2021 2020 % Change Change

Net sales: SpecialtyConstruction $ 144.6 $ 115.9 24.8 % $ 268.5 $ 241.3 11.3 %ChemicalsSpecialty Building 108.8 79.5 36.9 % 207.7 170.8 21.6 %MaterialsTotal GCP net sales $ 253.4 $ 195.4 29.7 % $ 476.2 $ 412.1 15.6 %Net sales by region:North America $ 132.1 $ 112.3 17.6 % $ 250.2 $ 231.5 8.1 %Europe Middle East 54.1 34.6 56.4 % 98.7 78.9 25.1 %Africa (EMEA)Asia Pacific 52.6 39.7 32.5 % 99.3 80.0 24.1 %Latin America 14.6 8.8 65.9 % 28.0 21.7 29.0 %Total net sales by $ 253.4 $ 195.4 29.7 % $ 476.2 $ 412.1 15.6 %regionNet Sales Constant Currency:Specialty )Construction $ 139.7 $ 115.9 20.5 % $ 144.6 $ 241.3 (40.1 %ChemicalsSpecialty Building 105.1 79.5 32.2 % 108.8 170.8 (36.3 )Materials %Total GCP Net Sales )Constant Currency $ 244.8 $ 195.4 25.3 % $ 253.4 $ 412.1 (38.5 %(non-GAAP)Profitabilityperformance measures:Adjusted EBIT (A): SpecialtyConstruction $ 15.3 $ 10.0 53.0 % $ 21.4 $ 18.5 15.7 %Chemicals segmentoperating incomeSpecialty BuildingMaterials segment 19.9 11.6 71.6 % 39.3 25.7 52.9 %operating incomeCorporate costs (B) (6.8 ) (6.3 ) 7.9 % (14.0 ) (12.2 ) 14.8 %Certain pension (1.5 ) (1.3 ) 15.4 % (2.9 ) (2.6 ) 11.5 %costs (C)Adjusted EBIT $ 26.9 $ 14.0 92.1 % $ 43.8 29.4 49.0 %(non-GAAP)Repositioning (0.5 ) (1.0 ) (50.0 ) (1.8 ) (3.7 ) (51.4 )expenses % %Restructuringexpenses and asset (6.5 ) (0.4 ) NM (14.1 ) (3.5 ) NMwrite offsGain on Brazil tax 3.3 ? 100.0 % 3.3 ? 100.0 %recoveries (E)Shareholderactivism and other ? (3.8 ) 100.0 % ? (7.4 ) 100.0 %related costs (D)Third-party andother (0.4 ) (0.2 ) 100.0 % (0.5 ) (0.7 ) (28.6 )acquisition-related %costsInterest expense, (5.4 ) (4.7 ) 14.9 % (10.8 ) (9.8 ) 10.2 %netProvision for (7.0 ) (4.6 ) 52.2 % (8.0 ) (3.0 ) NMincome taxesIncome (loss) fromcontinuingoperations $ 10.4 $ (0.7 ) NM $ 11.9 $ 1.3 NMattributable to GCPshareholdersIncome (loss) fromcontinuingoperations )attributable to GCP 4.1 % (0.4 % 450 bps 2.5 % 0.3 % 220 bpsshareholders as apercentage of netsalesDiluted EPS fromcontinuing $ 0.14 $ (0.01 ) NM $ 0.16 $ 0.02 NMoperations (U.S.GAAP)Adjusted EPS $ 0.22 $ 0.10 NM $ 0.33 $ 0.20 65.0 %(non-GAAP)

GCP Applied Technologies Inc.Analysis of Operations (unaudited) (continued)

Analysis of Three Months Ended June30, Six Months Ended June 30,Operations(In millions) % % 2021 2020 Change 2021 2020 Change

Adjustedprofitability performancemeasures:Gross Profit: SpecialtyConstruction $ 52.2 $ 45.7 14.2 % $ 97.6 $ 93.3 4.6 %ChemicalsSpecialtyBuilding 41.4 32.2 28.6 % 82.8 67.8 22.1 %MaterialsAdjusted GrossProfit $ 93.6 $ 77.9 20.2 % $ 180.4 $ 161.1 12.0 %(non-GAAP)Corporate costsand pension )costs in cost (0.5 ) (0.5 ) ? % (0.8 ) (0.9 ) (11.1 %of goods sold(C)Total GCP GrossProfit (U.S. $ 93.1 $ 77.4 20.3 % $ 179.6 $ 160.2 12.1 %GAAP)Gross Margin: Specialty (330) (230)Construction 36.1 % 39.4 % bps 36.4 % 38.7 % bpsChemicalsSpecialty (240)Building 38.1 % 40.5 % bps 39.9 % 39.7 % 20 bpsMaterialsAdjusted Gross (300) (120)Margin 36.9 % 39.9 % bps 37.9 % 39.1 % bps(non-GAAP)Corporate costsand pension (0.2 ) (0.3 ) 10 bps (0.2 ) (0.2 ) ? bpscosts in cost % % % %of goods soldTotal GCP Gross (290) (120)Margin (U.S. 36.7 % 39.6 % bps 37.7 % 38.9 % bpsGAAP)Adjusted EBIT (A)(B)(C):SpecialtyConstructionChemicals $ 15.3 $ 10.0 53.0 % $ 21.4 $ 18.5 15.7 %segmentoperatingincomeSpecialtyBuildingMaterials 19.9 11.6 71.6 % 39.3 25.7 52.9 %segmentoperatingincomeCorporate andcertain pension (8.3 ) (7.6 ) 9.2 % (16.9 ) (14.8 ) 14.2 %costsTotal GCPAdjusted EBIT $ 26.9 $ 14.0 92.1 % $ 43.8 $ 29.4 49.0 %(non-GAAP)Depreciationand amortization:SpecialtyConstruction $ 6.8 $ 6.8 ? % $ 13.7 $ 13.2 3.8 %ChemicalsSpecialtyBuilding 3.8 3.6 5.6 % 7.6 7.2 5.6 %MaterialsCorporate 0.5 1.3 (61.5 ) 1.1 2.3 (52.2 ) % %Total GCPdepreciation $ 11.1 $ 11.7 (5.1 ) $ 22.4 $ 22.7 (1.3 )and % %amortizationAdjusted EBITDA:SpecialtyConstruction $ 22.1 $ 16.8 31.5 % $ 35.1 $ 31.7 10.7 %ChemicalsSpecialtyBuilding 23.7 15.2 55.9 % 46.9 32.9 42.6 %MaterialsCorporate andcertain pension (7.8 ) (6.3 ) 23.8 % (15.8 ) (12.5 ) 26.4 %costsTotal GCPAdjusted EBITDA $ 38.0 $ 25.7 47.9 % $ 66.2 $ 52.1 27.1 %(non-GAAP)Adjusted EBIT Margin:SpecialtyConstruction 10.6 % 8.6 % 200 bps 8.0 % 7.7 % 30 bpsChemicalsSpecialtyBuilding 18.3 % 14.6 % 370 bps 18.9 % 15.0 % 390 bpsMaterialsTotal GCPAdjusted EBIT 10.6 % 7.2 % 340 bps 9.2 % 7.1 % 210 bpsMargin(non-GAAP)Adjusted EBITDA Margin:SpecialtyConstruction 15.3 % 14.5 % 80 bps 13.1 % 13.1 % ? bpsChemicalsSpecialtyBuilding 21.8 % 19.1 % 270 bps 22.6 % 19.3 % 330 bpsMaterialsTotal GCPAdjusted EBITDA 15.0 % 13.2 % 180 bps 13.9 % 12.6 % 130 bpsMargin(non-GAAP)

(A) GCP segment operating income includes only its share of income of consolidated joint ventures. (B) Management allocates certain corporate costs to each operating segment to the extent such costs are directly attributable to the segments. (C) Certain pension costs include only ongoing costs, recognized quarterly, which include service and interest costs, expected returns on plan assets and amortization of prior service costs/credits. Corporate costs and pension costs in cost of goods sold" represent service costs related to GCP manufacturing employees. Corporate costs do not include any amounts for pension expense. Other pension-related costs, including annual mark-to-market adjustments, gains or losses from curtailments and terminations, as well as other related costs, are excluded from Adjusted EBIT. These amounts are not used by management to evaluate the performance of GCP businesses and significantly affect the peer-to-peer and period-to-period comparability of its financial results. Mark-to-market adjustments and other related costs are primarily attributable to changes in financial market values and actuarial assumptions and are not directly related to the operation of GCP businesses.(D) Shareholder activism and other related costs consist primarily of professional fees incurred in connection with the actions by certain of GCP shareholders seeking changes in the composition of our Board of Directors and nomination of candidates to stand for election at the 2020 Annual Shareholders' Meeting, as well as other related matters.(E) Gain on Brazil tax recoveries, net relate to a favorable court decision granting GCP the right to recover $3.3million of state value-added tax. Refer to Note 10 for additional information.bpsBasis points, defined as one hundredth of one percent.NMNot meaningful.

GCP Applied Technologies Inc.Analysis of Operations (unaudited) (continued)

(In millions) Six Months Ended June 30, 2021 2020Cash flow measure: Net cash provided by operating activities from $ 21.0 $ 19.9 continuing operationsCapital expenditures (14.9 ) (18.8 ) Cash paid for repositioning 2.3 8.5 Cash paid for restructuring 12.3 2.0 Cash paid for third-party and other acquisition-related 0.2 0.5 costsCapital expenditures related to repositioning 0.2 2.6 Cash paid for shareholder activism and other related ? 8.0 costs ^(1)Cash taxes related to repositioning, restructuring,third-party and other acquisition-related costs, (1.7 ) (4.7 ) shareholder activism and other related costsAdjusted Free Cash Flow (non-GAAP) $ 19.4 $ 18.0

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(1)Shareholder activism and other related costs consist primarily of professional fees incurred in connection with the actions by certain of GCP shareholders seeking changes in the composition of its Board of Directors and nomination of candidates to stand for election at the 2020 Annual Shareholders' Meeting, as well as other related matters.

GCP Applied Technologies Inc.Adjusted Earnings Per Share (unaudited)

Three Months Ended June30, 2021 2020(In millions, Pre- Tax After- Per Pre- Tax After- Perexcept per share Tax Effect Tax Share Tax Effect Tax Shareamounts)Diluted EPS fromcontinuing $ 0.14 $ (0.01 )operations (U.S.GAAP)Repositioning $ 0.5 $ 0.2 $ 0.3 ? $ 1.0 $ 0.2 $ 0.8 0.01 expensesRestructuringexpenses and asset 6.5 1.4 5.1 0.07 0.4 0.1 0.3 ? write offsGain on Brazil tax (3.3 ) (1.1 ) (2.2 ) (0.03 ) ? ? ? ? recoveriesShareholderactivism and other ? ? ? ? 3.8 1.0 2.8 0.04 related costsThird-party andother 0.4 ? 0.4 0.02 0.2 ? 0.2 ? acquisition-relatedcostsDiscrete tax andother items,including ? (1.1 ) 1.1 0.02 ? (3.6 ) 3.6 0.06 adjustments touncertain taxpositionsAdjusted EPS $ 0.22 $ 0.10 (non-GAAP)

Six Months Ended June 30, 2021 2021 2020(In millions, Pre- Tax After- Per Pre- Tax After- Perexcept per share Tax Effect Tax Share Tax Effect Tax Shareamounts)Diluted EPS fromcontinuing $ 0.16 $ 0.02operations (U.S.GAAP)Repositioning 1.8 0.5 1.3 0.02 3.7 0.9 2.8 0.04expensesRestructuringexpenses and asset 14.1 3.4 10.7 0.15 3.5 0.9 2.6 0.04write offsGain on Brazil tax (3.3 ) (1.1 ) (2.2 ) (0.03 ) ? ? ? ?recoveriesShareholderactivism and other ? ? ? ? 7.4 1.9 5.5 0.08related costsThird-party andother 0.5 ? 0.5 0.01 0.7 0.2 0.5 0.01acquisition-relatedcostsDiscrete tax andother items,including ? (1.4 ) 1.4 0.02 ? (1.0 ) 1.0 0.01adjustments touncertain taxpositionsAdjusted EPS $ 0.33 $ 0.20(non-GAAP)