Q3 2020 Highlights November 6, 2020
Forward Looking Statements This presentation contains “forward - looking statements,” within the meaning of Section 27A of the Securities Act of 1933, Sectio n 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,” “esti mat es,” “suggests,” “anticipates,” “outlook,” “continues,” or similar expressions. These statements are not historical facts or guara ntees 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 GCP’s control. Actual r esults 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; 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. 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 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 GCP’s researc h 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 proceeding s; 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, which has been filed with the U.S. Securities and Exchange Commission and is available online at www.sec.gov, and subsequent quarterly reports. Readers are cautioned not to place undue reliance on GCP’s 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 presentation, or to update them to reflect events or circumstances occurring after the date of this presentation. Non-GAAP Financial Measures This presentation contains 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 measures. 2
Q3 2020 Highlights 3
Simon Bates, CEO Appointment October 1, 2020 “I am tremendously excited to be a part of GCP. It is a great Company, with a very strong tradition for innovation and with product brands that are recognized around the world.” “I look forward to working with our employees, customers, investors and the Board on rebuilding the business and driving higher employee engagement, improved customer satisfaction, and importantly growth in revenue, profitability and investor returns.” 4
Quarterly Highlights • Year over year growth in gross margin, EPS and net cash provided by operating activities from continuing operations • Sequential sales improvement due to increased construction activity • Cash balance increased 46% versus year end 2019 due to the sale of Cambridge headquarters and working capital improvements • COVID- 19 safety and operating procedures embedded into GCP’s standard operating protocols Health and safety measures maintaining business continuity 5
Cash and Liquidity Q1 2020 Q2 2020 Q3 2020 ~$ 473 M ~$ 860 M ~$ 320 M ~$ 670 M ~$ 318 M ~$ 670 M Cash balance at Total liquidity with Cash balance at Total liquidity with Cash balance at Total liquidity with end of Q3 2020 $350M revolving end of Q1 2020 $350M revolving end of Q3 2020 $350M revolving credit facility credit facility credit facility capacity capacity capacity No near-term ~$ 25 M No near-term ~$ 25 M ~$ 25 M No near-term debt maturities debt maturities debt maturities Senior Notes Senior Notes Senior Notes Reduced capital Reduced capital Reduced capital mature in 2026 mature in 2026 mature in 2026 expenditures expenditures expenditures compared to plan to compared to plan to compared to plan to further support cash further support cash further support cash position position position ~$ 59 M ~$ 14 M ~$ 20 M Net cash provided by Net cash provided by Net cash provided by operating activities operating activities operating activities from continuing from continuing from continuing operations – a) operations – a) operations – a) Sustaining overall cash and liquidity position (-a) Year to date 2020 6
Third Quarter 2020 GAAP Results $ in millions • Net sales decreases 7% YoY Q3 2020 Q3 2019 - Declines due to lower sales volumes as a result of lower Net Sales $248.4 $266.9 construction activity - Unfavorable foreign currency translation contributed 0.6% Gross Profit 101.4 105.1 - Pricing lower by one half percentage point Gross Margin 40.8% 39.4% • Gross margin increases 140 bps SG&A 65.2 66.3 - Improvement due to logistics productivity and raw material deflation which more than offset lower sales volumes Income from continuing operations attributable to 99.5 17.0 • SG&A decreases 1.7% GCP shareholders - Improvements in discretionary and restructuring savings Diluted EPS from partially offset by board defense costs and growth initiative investments continuing operations $1.36 $0.23 attributable to shareholders • Income from continuing operations Net cash provided by - Includes $110.2 million gain from sale of Cambridge operating activities from $59.3 $46.5 headquarters, $82.5 million net of taxes continuing operations (1) • Net cash provided by operating activities from continuing operations improves by $12.8 million - Lower capital expenditures and working capital improvements Positive margin and cash improvement on lower volumes (1) Net cash provided by operating activities from continuing operations nine months ending September 30, 2020 7
Third Quarter 2020 non-GAAP (1) Results $ in millions • Net sales decreases 7% YoY Q3 2020 Q3 2019 - Net sales decreases 5% on a constant currency basis Net Sales $248.4 $266.9 excluding exited markets - Declines due to lower sales volumes due to reduced Net sales constant currency 250.0 263.7 construction activity excl market exits (1) - Unfavorable foreign currency translation contributed 0.6% Adjusted Gross Profit (1) 101.7 105.4 - Price lower by one half a percentage point Adjusted Gross Margin (1) 40.9% 39.5% • Adjusted gross margin increases 140 bps - Improvement due to logistics productivity and raw material deflation partially offset by lower volumes and price Adjusted EBIT (1) 35.1 34.8 Adjusted EBIT (1) as % to 14.1% 13.0% • Adjusted EBIT margin increases 110 bps Sales - Improvement due to restructuring, lower discretionary and Adjusted EBITDA (1) 47.0 45.3 employee related spending partially offset by lower sales Adjusted EBITDA (1) as % volumes 18.9% 17.0% to Sales • Adjusted Free Cash Flow improves $29.1 million - Lower capital expenditures and working capital Adjusted EPS (1) $0.30 $0.28 improvements Adjusted Free Cash $52.4 $23.3 Flow (1,2) Continued cash flow and margin improvements on lower volumes (1) Refer to Appendix for reconciliations between GAAP and non-GAAP measures. (2) Adjusted free cash flow for nine months ending September 30, 2020 8
GCP Regional Sequential Revenue (1) Comparison 2020 YoY % Q2 Q3 (non-GAAP Constant currency) YoY % YoY % North America -17% -2% -28% 0% Latin America Europe -32% -10% Asia Pacific -30% -17% GCP -24% -6% Highlights ‒ North America end market construction activity improving versus Q2 although still below prior year levels ‒ Latin America rebounds on pent up demand, specifically Brazil ‒ Europe sequentially improves although remains challenged in UK, France and Germany ‒ Some countries remain in lockdown; construction activity slowed in some areas of Asia Pacific (1) – Constant currency 9
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