GCP Applied Technologies

38
GCP Applied Technologies June 2016

Transcript of GCP Applied Technologies

GCP Applied Technologies

June 2016

This presentation contains “forward-looking statements,” that is, information related to future, not past, events. Such statements generally include the words “believes,” “plans,” “intends,” “targets,” “will,” “expects,” “suggests,” “anticipates,” “outlook,” “continues” or similar expressions. Forward-looking statements include, without limitation, expected financial positions; results of operations; cash flows; financing plans; business strategy; operating plans; capital and other expenditures; competitive positions; growth opportunities for existing products; benefits from new technology and cost reduction initiatives, plans and objectives; and markets for securities. Like other businesses, GCP is subject to risks and uncertainties that could cause its actual results to differ materially from its projections or that could cause other forward-looking statements to prove incorrect. Factors that could cause actual results to materially differ from those contained in the forward-looking statements, or that could cause other forward-looking statements to prove incorrect, include, without limitation, risks related to: the cyclical and seasonal nature of theindustries that GCP serves; foreign operations, especially in emerging regions; changes in currency exchange rates; the cost and availability of raw materials and energy; the effectiveness of GCP’s research and development, new product introductions and growth investments; acquisitions and divestitures of assets and gains and losses from dispositions; developments affecting GCP’s outstanding liquidity and indebtedness, including debt covenants and interest rate exposure; developments affecting GCP’s funded and unfunded pension obligations; warranty and product liability claims; legal proceedings; uncertainties related to GCP’s ability to realize the anticipated benefits of the spin-off /separation from W.R. Grace and the value of GCP’s common stock following the spin-off; the inability to establish or maintain certain business relationships and relationships with customers and suppliers or the inability to retain key personnel following the spin-off; and hazardous materials and the costs of compliance with environmental regulation. These and other factors are identified and described in more detail in the “Risk Factors” section of company’s Form 10-K filed March 29, 2016 and available online at www.sec.gov. Readers are cautioned not to place undue reliance on GCP’s projections and forward-looking statements, which speak only as the date thereof. GCP undertakes no obligation to publicly release any revision to the projections and forward-looking statements contained in this presentation, or to update them to reflect events or circumstances occurring after the date of this presentation.

Non-GAAP Financial MeasuresThese slides contain certain “non-GAAP financial measures”. Please refer to the Appendix for definitions of the non-GAAP financial measures used herein and a reconciliation of those non-GAAP financial measures to their most comparable GAAP measure.

Forward Looking Statements

2©2016 GCP Applied Technologies Inc. | Confidential

Investment Highlights

Successfully launched as a $1.4B revenue public company on February 3

Leading global provider of high-value products and technologies in the

construction and packaging industries

Capitalizing on formulation, selling capability and technical service

expertise across diverse geographies

Low capital intensity business serving a global customer base

Positioned for continued growth and focused on building shareholder value

3©2016 GCP Applied Technologies Inc. | Confidential

Leading Provider of High Value Products and

Technologies

Building Envelope Products

Residential Products

Specialty Products

Sealants and Closures

Coatings

Concrete Products

Cement Products

Net sales1: $694mm

Adj. EBITDA1: $102mm

Adj. EBITDA margin1: 14.6%

Net sales1: $326mm

Adj. EBITDA1: $78mm

Adj. EBITDA margin1: 23.8%

Net sales1: $398mm

Adj. EBITDA1: $107mm

Adj. EBITDA margin1: 27.0%

1 For the period ended December 31, 2015.2 GCP Applied Technologies internal estimates for industry size for the period ended December, 31, 2014.

See appendix for Adjusted EBITDA reconciliation.

Net sales(1)

Adj. EBITDA(1)

Adj. EBITDA margin(1)

$1,419 mm

$ 259 mm

18.2%

87%

13%

43%

44%

13%

81%

19%

Cement

Additives

$1.0bn2

Concrete

Admixtures

$6.8bn2

Building

Envelope

$1.5bn2

Specialty

$0.5bn2 Residential

$1.5bn2

Sealants

and

Closures

$0.6bn2

Coatings

$2.6bn2

$7.8bn

Industry2

$3.5bn

Industry2

$3.2bn

Industry2

4©2016 GCP Applied Technologies Inc. | Confidential

Global Presence

Facilities in over 40 countries on six continents

65 manufacturing and technical sites worldwide

GCP’s Geographic Diversity

Cambridge, MA

Hamburg, Germany Epernon,

France

Chicago, IL

Mount Pleasant, TN

Santiago, Mexico

Singapore

Dubai, UAE

Sorocaba, Brazil

Bangpoo,

Thailand

Brisbane,

Australia

Ezhou, China

Houston, TX

Passirana, Italy

Countries with offices or plants Global

Headquarters

Key Manufacturing Facilities

Other Facilities

5©2016 GCP Applied Technologies Inc. | Confidential

High-touch

Customer-

Centric Model

Best-in-Class

Product

Performance

Scalable

Geographic

Diversity

Environmental

and Food

Regulatory

Solutions

Operational

Productivity

Multiple touch

points across

selling value chain

• Customers

• Specifiers

• Brand owners

Plants and

technical sites

approximate to

customers for local

distribution and

deliveries

Global sales

organization

• ~30% in sales

and tech service

High quality

specified products

Reduce labor and

construction costs

Improve life-cycle

costs

Eliminate rejects

and rework

Conduct business

in 110 countries

Manufacture in 65

locations

Lower energy and

water consumption

Lower customer

CO2 footprint

FDA compliant

products

Solutions for

evolving consumer

preferences

Supply chain

optimization

Formulation

capabilities

Scalable

manufacturing

operations

How We Deliver Value and Growth

38%

24%

23%

15%

North

America

EMEA

Asia

Pacific

Latin

America

GCP 2015 Net Sales

©2016 GCP Applied Technologies Inc. | Confidential 6

Technologies for Construction

Portfolio of market leading brands offers solutions for nearly every aspect of the built environment

7©2016 GCP Applied Technologies Inc. | Confidential

SPECIALTY CONSTRUCTION

CHEMICALS

8©2016 GCP Applied Technologies Inc. | Confidential

Cement (4.3 billion tons/yr)Supplementary

Cementitious

Materials

Aggregate

Ready Mix or

Precast Concrete

Producer

(10 billion yd3/yr)

Job Site /

Contractor

Specifier

Building /

Structure

OwnerProduct

Equipment

Service

Product

Service

Product

Service

Product

Service

Service

Concrete Construction Value Chain

Cement Additives

Concrete Admixtures

Product

Service

Product

Service

We create value throughout the concrete construction ecosystem, but focus

primarily on value creation with cement manufacturers and concrete producers.

©2016 GCP Applied Technologies Inc. | Confidential 9

Specialty Construction Chemicals Segments

Cement

AdditivesPrecast

Sprayable

ConcreteVerifi

Leverage strong

market position

Global technology

leader

Geographic

penetration

Innovative products

for durability and

sustainability

Large and

fragmented market

Customer

rationalization may

impact growth in the

short term

“Connected

customer” concrete

management

Increase the size of

the market

Higher value $/m3

Execute over time

while introducing

software upgrades

Ready Mix

Admixtures

Improve market

position

Leverage

differentiating

technologies and

adding decorative

products to the

portfolio

Establish market

position

New technologies

for customer

productivity gains

CBA®

Extend Market Position via New Products, Technology and

Share Gain to Drive Growth and EBIT Margin©2016 GCP Applied Technologies Inc. | Confidential 10

©2016 GCP Applied Technologies Inc. | Confidential 11

Ready-Mix Admixtures

Users: Ready-mix concrete plants

Customers: Multinational building materials

companies, regional, local

concrete producers

Key Needs: Production of widely-varying

concrete types from standard

raw materials

Durable concrete

Lowered operational costs and

environmental impact

Products: Water reducers

Rheology control products

Set accelerators/retarders

Shrinkage reducing agents

Corrosion Inhibitors

Structural Fibers

Ponte Estaiada (Sao Paulo, Brazil)

The Internet of Things

Sensors

Signal Processing

Wireless Communication

Cloud Computing

Concrete Technology Knowledge

Cement Chemistry

Concrete Technology

Chemical Solutions

Users: Ready-mix concrete producers

Customers: Multinational building materials

companies, regional

Key Needs: Operational efficiency

Product consistency and

quality

Products: Sensors/software to accurately

measure/detect concrete

“slump” and truck location in

real time

Control system which adds

chemicals to adjust slump to

meet specifications

Data to enable faster

decisions, operational

efficiency and waste

minimization

Verifi®

+

12©2016 GCP Applied Technologies Inc. | Confidential

13

Users: Precast concrete facilities

Customers: Local or regional precast

companies

Key Needs: High-performance, durable

concrete

Operational efficiency

Products: Generally the same as for

Ready Mix concrete

High performance

requirements

Larger sales $/m3

Precast Products

©2016 GCP Applied Technologies Inc. | Confidential

14

Sprayable Concrete

Users: Ready-mix concrete companies;

mine owners and tunneling

contractors

Customers: Ready-mix concrete companies;

mine owners and tunneling

contractors

Key Needs: Very high early strength

Pumpability/ sprayability

Low water permeability

Extended slump life (3-8 hrs)

Low rebound and dust

Bond to rock substrate

Cost efficiency

Products: Accelerators

Rheology control agents

Water reducers

Hydration control agents

Macro synthetic fibers

Air entrainers

Sprayable Concrete

©2016 GCP Applied Technologies Inc. | Confidential

15

Cement Additives

Art Science Museum (Singapore) Users: Cement manufacturers

Customers: Multinational or regional building

materials companies

Key Needs: Low-cost production of cement to

meet national performance

standards

Increased use of fillers to

minimize cost and environmental

impacts

Products: Grinding aids to reduce mill

energy consumption

Quality improvers to modify

cement performance metrics

©2016 GCP Applied Technologies Inc. | Confidential

World-Class Technical Service Capabilities Are

Critical

Field Lab

16©2016 GCP Applied Technologies Inc. | Confidential

Innovation

GCP Applied Technologies is known

for creating products and product

categories which have become

critical to the industry

R&D and Marketing have been

concentrated in the Cambridge, MA

headquarters to get the intensity of

effort which will lead to great new

products

The staff, instrumentation, and

processes are world class

CBA®

Cement Chemistry

Key Technical Disciplines

Concrete Technology

Materials Science Civil EngineeringMechanical Engineering

MathematicsOrganic Chemistry

Chemical Engineering

17©2016 GCP Applied Technologies Inc. | Confidential

Innovation

Technological

changes

Market

dynamics

Customer

trends

Economic

drivers

Regulatory

18

Our cement and concrete customers will

continue to seek operational savings

and better quality assurance

Environmental pressures will create

change in materials selection, materials

availability, and process technologies

What is in Store?

The drive for life-cycle costing and

performance specifications will place a

greater premium on high-quality durable

concrete

Breakthroughs in cement chemistry,

materials science, and nanotechnology

will create new opportunities to solve

problems

©2016 GCP Applied Technologies Inc. | Confidential

SPECIALTY BUILDING

MATERIALS

19©2016 GCP Applied Technologies Inc. | Confidential

Balcony Protection• Silcor® Liquid Waterproofing• Bituthene® Sheet Membranes

Green Roofs & Plaza Decks• Silcor® Liquid Waterproofing• Bituthene® Sheet Membranes• YTL® Sheet Membranes

Roof• Grace Ultra® Roofing Underlayment• Grace Ice & Water Shield ® Underlayment

External Walls• Perm-A-Barrier ® Weather Barriers

Steel Structure Fire Protection• Monokote® Spray-Applied Thermal Protection

Water Features & Pools• Silcor® Liquid Waterproofing• Betec® Cementitious Waterproofing

Substructure Waterproofing • Preprufe® Pre-applied Waterproofing Membranes• Bituthene® Post-applied Waterproofing Membranes• Hydroduct® Drainage Composites• Adcor ® Hydrophilic Waterstops• De Neef ® Resin Injections

Specialty Building Materials Portfolio – Technology Leadership

20©2016 GCP Applied Technologies Inc. | Confidential

Specialty Business Materials Segments

Differentiated

waterproofing

membranes and

air barrier

technologies

Specialized

applications

Grow sales in

emerging markets

Leader in passive

fire protection for

steel-framed

buildings

Grow with the

market

Betec specialized

high performance

grouts

DeNeef repair and

renovation for

waterproofing

Invest in core

roofing

underlayment

Expand product

distribution

Grow Through High-Value, Specified

Applications and Distribution

Building

Envelope

Fire

Protection

Repair &

Specialty Residential

21

©2016 GCP Applied Technologies Inc. | Confidential

Core Product Brands

Waterproofing

Global leader in the advancement of waterproofing technologies

Preprufe® – Leading below-grade solution with a full line of accessory products. Pioneer of the

fully bonded preapplied waterproofing technology

Silcor ® – Liquid applied deck waterproofing

Bituthene® – Original rubberized asphalt self adhesive membrane

Adcor ® and Bentorub® – Hydrophilic waterstops for joint protection

Air Barriers

Specified barriers to manage movement of air, water and vapor through the building envelope

to improve energy use and indoor air quality

Perm-A-Barrier® – full line of vapor permeable and impermeable sheet and liquid applied

products

Residential

North America focused business providing Weather Protection Systems in specific channels

to improve the durability of wood constructed homes

Grace Ice & Water Shield® – category leading self adhesive underlayment for sloped roofs

Vycor ® – flashing and sheet membranes to protect and manage moisture in the wall

22©2016 GCP Applied Technologies Inc. | Confidential

22%

36%

42%

Below-grade Waterproofing

Improved leak prevention through unique

adhesive bond

Specified on major projects throughout the world

Drives full portfolio system selling

Preprufe Plus increases quality and contractor

productivity

Patented technology

The Premier Pre-Applied

Waterproofing System

Below-grade Waterproofing Market

Asia Pacific

EMEA

Americas

Museum of Islamic Arts

(Doha, Qatar)

The Morocco Mall

(Casablanca, Morocco)

23©2016 GCP Applied Technologies Inc. | Confidential

Fire Protection, Repair and Specialty Businesses

Polyurethane resins for crack injections

Ground stabilization and curtain grouting with PU,

Acrylate, Organomineral and Silica/ Silicate based

products

De Neef ®

Monokote®

- the world's most widely specified spray applied

cementitious fireproofing

Growing in new specialty applications for petrochemical and

tunnels

Fire Protection

Resin injections

for leak sealing

and ground

stabilization

Spray applied fire

protection for structural

steel

Betec®

Specializing in flowable high-strength grouts for

industrial and infrastructure applications

Growth in new segments for wind turbine construction

and specialty niche grouting applications

High-quality

engineered

cementitious

grouts and

mortars

24©2016 GCP Applied Technologies Inc. | Confidential

Project Selling Principles

Balcony

• Betec® Cementitious Waterproofing

• Procor® Liquid Waterproofing

Flat Deck

• Bituthene® Post-applied

Waterproofing

Membrane

• Betec Cementitious

Waterproofing

• Procor Liquid

Waterproofing

• Decorative Concrete

Substructure

• Preprufe 300R Waterproofing

Membrane

• MIRA® Mid-range Water Reducer

• STRUX® Synthetic Macro Fibre

Roof

• Grace Ice & Water Shield® Roofing

Underlayment

• Tri-Flex® Roofing Underlayment

External Wall

• ADVA® for Self-consolidating

Concrete

Interior Floor

• Decorative

Concrete

Steel Structure

• Monokote® Fireproofing

Wet Areas

• Betec Cementitious Waterproofing

Swimming Pool

• Betec

Cementitiou

s

Waterproofi

ng

Lift Pit

• Betec Cementitious

Waterproofing

• Monokote FireproofingSubstructure

• Preprufe® 160R Pre-applied

Waterproofing Membrane

• Bituthene Post-applied

Waterproofing Membrane

• Procor Liquid Waterproofing

• Hydroduct® Drainage Composites

The Grace Building Envelope

Technology Platforms

Differentiated technology

solutions

Systems approach

Command of local codes and

construction practice

Custom specifications and

drawings

Value Drivers

Fireproofing

Bidding

Contractors

Geotech

Structural

Engineer

Civil

Engineer

General

Contractor

Architect

Project Selling Competency

Market/project intelligence throughout

design and construction

Executive selling to

influencers and decision makers

Project Tracking – CRM

Consistent linkage throughout value

chain

International Dimension

Global designs with local

execution

Unique position to assure

designers of correct

implementation

Leverage brand awareness

Drive geographic expansion

Precast

Ground Works

Concrete

Client

Waterproofing

25©2016 GCP Applied Technologies Inc. | Confidential

Innovation

Technological

changes

Market

dynamics

Customer

trends

Economic

drivers

Regulatory

26

What is in Store?

Increasing Urbanization requires cities to

maximize land use driving taller buildings

and underground structures

Maturing Emerging Markets improve

construction practices upgrading build

quality

Environmental focus creates increasing

opportunities for energy savings and low

impact products

Demand for Construction Speed opens

opportunities for new technologies and project

delivery methods

©2016 GCP Applied Technologies Inc. | Confidential

DAREX PACKAGING

TECHNOLOGIES

27©2016 GCP Applied Technologies Inc. | Confidential

Darex Packaging Technologies Segments

Sealants Coatings Closures

Sustainable

leadership

High service level

Global key accounts

and customer

management

Customer and brand

owner loyalty

Repositioning to

specialty products

Liners with

additional

functionality

Grow with BPA-NI

products

Grow at global key

accounts

Niche segments

Grow with Market,

Maintain Margins and Cash28©2016 GCP Applied Technologies Inc. | Confidential

Can EndCan Body Flange (Curl)

Primary Sealing Area

Bacteria, Oxygen, Moisture

Container content–Food, beverage, oils, solvent, gases

Must have sufficient chemical resistance to the pack

Must have sufficient thermal and mechanical resistance to

withstand the retort or processing conditions

Must not affect the aroma or flavor of the pack contents

Sealant protects the package during the life of the can

Where applicable, must be food law compliant

Can Sealants Basics

Key Requirements

Provide hermetic seal by filling the void

created in double-seam

PEACE OF MIND

Why do We Win?

PRODUCT PERFORMANCE

BEST-IN-CLASS TECH SERVICE

QUALITY, SUPPLY, REGULATORY

PEACE OF MIND

CUSTOMER INTIMACY

30©2016 GCP Applied Technologies Inc. | Confidential

Closure Sealants Basics

Provides pressure seal

Prevents oxygen, bacteria from

coming in

Provide hermetic seal, filling natural voids between container and closure

Fills voids

Contents stay in the package

Closure Type Plastic Cap Metal Crown Lug CapRoll-on Pilfer Proof

(ROPP)

One piece Plastic

Cap

Major End UseCarbonated Soft

Drink (CSD), Water

Carbonated Soft

Drink (CSD), BeerGlass Food Jars

Water (Germany),

Spirits, WinePET Food Jars

Darex Sales Sealant Sealant and Coating Sealant and Coating Sealant and Coating OST Masterbatch

Key Requirements

Must not impart any flavor

Have low chemical migration

Be lineable at very high speeds

Adhere to the metal/plastic

Perform for the shelf life of container

Be food compliant

Brand Owner Pull-Through is Key to Closure Sealant Strategy

31©2016 GCP Applied Technologies Inc. | Confidential

Can Coatings Basics

Protect contents from the environment, and the pack from the

contents

Chemical Protection

Mechanical Protection

Decoration

Other Functionalities

Prevent interaction between

metal and contents

Easy removal of contents

(e.g. meat release)

Oxygen scavenging

Heat Seal

Improved can

appearance

Primer for inks

Key Requirements

Flexible and spread evenly

Resist physical deformation

during fabrication of container

Must not impart any flavor

Perform for the whole shelf life

of the container

Comply with global food laws

Protection against physical

abuse (scratching)

Protection against environment

Most metal containers and lids must be coated, internally and externally

32©2016 GCP Applied Technologies Inc. | Confidential

Apperta BPA-NI Technology

Product Family Summary

Four coatings as solution for almost all packs and applications:

PR 2100-01, Gold Primer

PR 2101-01, Aluminized Primer

PL 2103-01, Light Gold, Single-, Double- and Top-Coat

PL 2104-01, Aluminized, Single-, Double- and Top-Coat

Four coatings offer universality for almost all varieties of food packs and applications

Benefits of Apperta

Higher flexibility and superior sterilization and pack

resistance

Superior staining performance of gold systems

PR 2101-01 (alu) + PL 2103-01 (gold) superior

resistance to high ph and high protein packs

Improved color stability after sterilization

50% higher scratch resistance than current BPANI

polyester coatings

Improved sheet handling and forming properties

Improved adhesion to powder side stripe

Improved blocking performance

Suited for use in high ambient temperature climates

Less sensitive to poor sheet cooling conditions

Supports higher multiple sheet pallet storage

Improved Conversion performance

No “angel hairs” during EOE conversion compared to

competitive systems.

Improved functionality

Reduction of dry film weights by up to 20%

Extension of package shelf life

Packing a wider range of food types

33©2016 GCP Applied Technologies Inc. | Confidential

Investment Highlights

Successfully launched as a $1.4B revenue public company on February 3

Leading global provider of high-value products and technologies in the

construction and packaging industries

Capitalizing on formulation, selling capability and technical service

expertise across diverse geographies

Low capital intensity business serving a global customer base

Positioned for continued growth and focused on building shareholder value

34©2016 GCP Applied Technologies Inc. | Confidential

Appendix

Additional Information

GCP Applied Technologies, Inc.

Analysis of Operations

Analysis of Operations

(In millions) 2015 2014 % Change

Net sales:

Specialty Construction Chemicals $ 694.3 $ 726.3 (4.4)%

Specialty Building Materials 398.1 379.3 5.0 %

Darex Packaging Technologies 326.2 374.8 (13.0)%

Total GCP net sales $ 1,418.6 $ 1,480.4 (4.2)%

Net sales by region:

North America $ 538.2 $ 503.9 6.8 %

Europe Middle East Africa (EMEA) 341.1 396.0 (13.9)%

Asia Pacific 329.6 349.7 (5.7)%

Latin America 209.7 230.8 (9.1)%

Total net sales by region $ 1,418.6 $ 1,480.4 (4.2)%

Profitability performance measures:

Adjusted EBIT(A):

Specialty Construction Chemicals segment operating income $ 83.7 $ 72.4 15.6 %

Specialty Building Materials segment operating income 99.6 75.7 31.6 %

Darex Packaging Technologies segment operating income 72.8 74.1 (1.8)%

Corporate costs (24.3) (19.3) (25.9)%

Certain pension costs(B) (5.1) (7.5) 32.0 %

Adjusted EBIT 226.7 195.4 16.0 %

Pension MTM adjustment and other related costs, net (15.0) 18.6

Restructuring expenses and asset impairments (11.6) (18.3)

Currency and other financial losses in Venezuela (73.2) (1.0)

Interest expense, net (2.5) (4.8) 47.9 %

Provision for income taxes (84.3) (55.6) (51.6)%

Net income attributable to GCP $ 40.1 $ 134.3 (70.1)%36©2016 GCP Applied Technologies Inc. | Confidential

GCP Applied Technologies, Inc.

Analysis of Operations

Adjusted EBIT: 2015 2014

%

Change

Specialty Construction Chemicals $ 83.7 $ 72.4 15.6 %

Specialty Building Materials 99.6 75.7 31.6 %

Darex Packaging Technologies 72.8 74.1 (1.8)%

Corporate (29.4) (26.8) (9.7)%

Total GCP 226.7 195.4 16.0 %

Depreciation and amortization:

Specialty Construction Chemicals $ 18.0 $ 18.5 (2.7)%

Specialty Building Materials 7.8 8.6 (9.3)%

Darex Packaging Technologies 4.8 5.5 (12.7)%

Corporate 1.2 1.4 (14.3)%

Total GCP 31.8 34.0 (6.5)%

Adjusted EBITDA:

Specialty Construction Chemicals $ 101.7 $ 90.9 11.9 %

Specialty Building Materials 107.4 84.3 27.4 %

Darex Packaging Technologies 77.6 79.6 (2.5)%

Corporate (28.2) (25.4) (11.0)%

Total GCP 258.5 229.4 12.7 %

Adjusted EBITDA margin:

Specialty Construction Chemicals 14.6 % 12.5% 2.1 pts

Specialty Building Materials 27.0 % 22.2% 4.8 pts

Darex Packaging Technologies 23.8 % 21.2% 2.6 pts

Total GCP 18.2 % 15.5% 2.7 pts

37©2016 GCP Applied Technologies Inc. | Confidential

GCP Applied Technologies, Inc.

Adjusted EBIT means net income adjusted for interest income and expense, income taxes, restructuring and repositioning expenses and asset

impairments, pension costs other than service and interest costs, expected returns on plan assets, and amortization of prior service

costs/credits; gains and losses on sales of businesses, product lines, and certain other investments; and certain other unusual or infrequent

items that are not representative of underlying trends. Adjusted EBIT Margin means Adjusted EBIT divided by net sales.

Adjusted EBITDA means Adjusted EBIT adjusted for depreciation and amortization. Adjusted EBITDA Margin means Adjusted EBITDA divided

by net sales. GCP uses Adjusted EBIT and Adjusted EBITDA as performance measures in significant business decisions.

Adjusted EBITDA and Adjusted EBITDA Margin do not purport to represent income or liquidity measures as defined under United States

generally accepted accounting principles, and should not be considered as alternatives to such measures as an indicator of GCP's

performance. These measures are provided to distinguish the operating results of GCP's current business.

38©2016 GCP Applied Technologies Inc. | Confidential