Edited Transcript of GCP earnings conference call or presentation 6-May-20 2:00pm GMT

CAMBRIDGE May 15, 2020 (Thomson StreetEvents) — Edited Transcript of GCP Applied Technologies Inc earnings conference call or presentation Wednesday, May 6, 2020 at 2:00:00pm GMT

* Craig A. Merrill

GCP Applied Technologies Inc. – Interim CFO and VP of Finance, Analytics & Strategy

GCP Applied Technologies Inc. – VP of IR

* Randall S. Dearth

GCP Applied Technologies Inc. – CEO, President & Director

Morgan Group Holding Co. – Research Analyst

Good day, everyone. Welcome to the GCP Applied Technologies First Quarter 2020 Earnings Call. Today’s conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Mr. Joe DeCristofaro. Please go ahead, sir.

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

Hello, everyone, and thank you for joining us on today’s call. With us on the call are Randy Dearth, President and Chief Executive Officer; and Craig Merrill, Interim 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 GCP80.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 in our earnings 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 EBITDA refer to adjusted EBITDA, references to EBIT refer to adjusted EBIT and references to margin refer to adjusted gross margin, adjusted EBITDA margin, or adjusted EBIT margin as defined in our press release. All revenue and associated growth rates in this discussion are stated on a comparable constant currency basis, which adjust for the impact of foreign currency.

With that, I will turn the call over to Randy.

Thank you, and good morning, everyone. So before turning to our first quarter results, I want to begin by acknowledging how much has changed in the world since our last earnings call. The COVID-19 pandemic has deeply affected and changed all of our lives seemingly overnight. So we want to express our sincere sympathies to everyone who has been impacted by the virus as well as our deep gratitude for the healthcare providers who are on the front lines every day and the essential workers who keep our lives moving as much as possible. For us at GCP, it goes without saying that ensuring the health and safety of our employees as we run the business will always be our number one priority. And to our teams, thank you. Our employees have been truly extraordinary throughout the past months and under very challenging conditions they performed admirably to meet the needs of our customers and suppliers to provide the service they have come to expect from GCP.

But I’d like to take a few minutes and discuss what we are doing to successfully manage the company through the most complex global health crisis we have seen in many years and the strategic actions we are taking at the management team to take the company to the next level.

As we manage through the crisis on a day-to-day basis, we are focusing on the following priorities and principles. Number one, the health and welfare of our employees, customers, suppliers and other stakeholders; protecting our strong balance sheet and liquidity position; providing the great service our customers expect from us to maintain our market position; and continuing to invest in the company in a prudent fashion while closely scrutinizing our expenses and reducing our capital spending plans to appropriate levels based on current market conditions.

GCP is very well positioned to successfully navigate this period of uncertainty. Our Board and management team have maintained a disciplined approach to capital management. It has resulted in a very strong balance sheet with significant liquidity and no near-term debt maturities. Our balance sheet is indeed a competitive differentiator providing substantial financial flexibility and positioning us to successfully manage through the ongoing economic challenges as well as the uncertainty caused by the COVID-19 pandemic. We will continue to preserve our balance sheet strength and explore ways to find the best value creating use for our cash once we see stability in the market.

At the same time, we will not lose sight of executing on our strategic initiatives as they are a key to driving the company’s long-term value. As a reminder these priorities include returning Specialty Building Materials to sustainable growth, continuing to build on the momentum and success we have achieved with VERIFI, further optimizing SCC’s operating model and challenging our go-to-market strategy which I’ll talk about in a few minutes, and advancing our restructuring plans removing complexity in implementing additional efficiency projects to make GCP a stronger company.

Nothing provide better evidence that our programs are working than our results. We posted our best first quarter earnings performance since 2016, delivering improved performance and maintaining the positive momentum, we have seen in business in recent quarters.

I’m very pleased with the results, especially in an environment that shifted rapidly from healthy to extremely challenging. There are number of accomplishments from the quarter that I would like to highlight including: exceeding our expectations and guidance, the sales of $290 million in 25% adjusted EBIT growth of $50 million; SBM sales growth of 6% North America, due to favorable Building Envelope project activity and wins, as well as strong performance in fire proofing; SCC sales growth of 4% in North America due to healthy construction activity in the region for most of the quarter; gross margin improvement of 170 basis points in the quarter despite reduced total sales volumes; continued improvement in the SCC’s profitability with gross margin up 400 basis points and EBITDA margin up 130 basis points. This is the fifth quarter in a row of year-over-year margin expansion.

VERIFI’s positive momentum continued with 44% year-over-year growth in our installed truck base and 23% sales growth in the quarter. On the topic of VERIFI, you may recall we also reached an agreement with Penn United in Singapore to implement VERIFI on more than 300 trucks and Penn United’s fleet — the majority of the fleet. We also secured a commitment this past week with the customer in Australia for approximately 70 trucks, the interest continues.

As you can see by the decline in our operating expenses, we continue to execute on our restructuring programs as planned and we generated $12 million in adjusted free cash flow in the first quarter, an improvement of over $20 million compared to a use of about $10 million in the first quarter of 2019. This is due to our focus on strong working capital management. Most of all, I’m very proud of how our team work together to overcome the challenges the virus presented as the quarter progressed.

So turning now to our individual business units. Our near-term strategic goal for SBM remains restoring sustainable organic growth particularly in our North American Building Envelope in residential product lines by increasing our presence in under-served segments in market geographies that are profitable and growing in the long term.

Our plan also includes expanding our product portfolio awareness to larger and adjacent market segments and accelerating the launch of new and accessory products for the premium and mid-tier segments. For SCC, we will continue to prioritize profitability by emphasizing core markets, in modernizing our operations including our service model to become more efficient.

Our strategy for SCC includes three elements. First, we plan to reinvigorate our core admixtures business by leveraging and continuing to refresh our best-in-class product portfolio and optimize our service model. The second element of our SCC strategy is driving the adoption of VERIFI by new and existing customers. Our strategy is to grow the data portion of the business with additional truck installs and in the process gain additional admixture business than we otherwise would not have had without VERIFI. The third element of our SCC strategy is to expand our specialty segments. We plan to strengthen our go-to-market approach by leveraging some of our unique products for these markets as well as new product introductions in the cement additives, precast and engineered pouring systems segment.

Turning now to GCP as a whole. If I become CEO, we are focused on meeting our financial commitments and we will continue to provide improved forecasting to our Board of Directors and to the market. We will also continue to further modify our organizational model to fit the needs of our strategy and higher specific expertise where appropriate to build out a best-in-class team of construction experts.

Pursuing cost out initiatives that eliminate complexity in our business processes and improve the quality of our earnings has been and will remain a top priority. Our restructuring initiatives are working as expected and we are targeting $26 million in savings in 2020. We are well on our plan of targeting approximately $80 million in annualized savings by 2022.

Our tax optimization project, which is designed to optimize our tax rate to provide additional earnings over time is also proceeding as planned. And as a reminder, we believe that we have the opportunity to reduce our tax rate by 2.4 percentage points over the next two to three years compared to historical rates. As a point of reference for GCP, each tax percentage point represents about $1 million in earnings. Craig will talk in more detail about our assumptions moving forward and steps we are taking to weather the continued economic uncertainty. But in terms of our operational focus, meeting the needs of our customers and suppliers is absolutely critical and we will not lose sight of or under-invest in these capabilities. We are continuing to service our customers at the highest level possible, execute on our strategy, deliver on the significant actions we’ve announced and invest in the company for the long term.

I would now like to turn the call over to Craig who will review the company’s financial performance for the quarter and thoughts on our outlook.


Craig A. Merrill, GCP Applied Technologies Inc. – Interim CFO and VP of Finance, Analytics & Strategy [4]


Greg, 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. Before we summarize our overall performance for the quarter, let me just say, we are very pleased with our financial results in Q1, particularly considering the impact of the pandemic, which started to have an impact on our production and demand in some regions and countries during the quarter. Our teams did a tremendous job working through the complexities of the situation right from the onset.

In the first quarter, North America sales were up 5%. This performance was offset mainly by lower volumes in other regions primarily due to the impact of the government-imposed restrictions on construction and manufacturing activity as a result of the COVID-19 pandemic, as well as strategic market exits that we spoke about in the past.

We were successful capturing price in both SCC and SBM in the quarter. We have substantially completed the cost reductions associated with our SCC market exit program, which has produced strong SCC margin expansion. There continues to be some trailing customer product commitments that, we expect to lap in the first half of this year but will be at the end of Q2.

GCP’s gross margin increased 170 basis points to 38.2% primarily due to improved pricing, the favorable impact of restructuring activities, as well as favorable regional and product mix, particularly in SCC driven by both market exits and our VERIFI strategy. This was partially offset by lower gross margin in SBM due to unfavorable product mix and lower productivity comparisons year-over-year.

As Randy mentioned, we had our best first quarter earnings performance since 2016. GCP EBIT margin increased 160 basis points to 6.9% primarily due to an increase in gross margin and lower corporate cost, due to our restructuring programs. GCP EBITDA margin increased 220 basis points to 12% due to higher EBIT margin and benefits from the VERIFI model compared to the prior year period.

Looking at the performance of our segments specifically, SCC sales were down 3% to $128 million, but North America had a 4% growth — offset unfortunately by Asia Pacific, which including the impact of the COVID-19 and the plan to exit markets that we spoke about in the past. The strategic actions we had undertaken in SCC continue to have a positive impact on SCC’s gross profit, which increased 7% while gross margins were up 400 basis points due to improved pricing, lower material costs, the favorable impact of restructuring as well as favorable regional and product mix.

Segment operating margin of 6.4% increased 40 basis points compared with the prior year quarter, primarily due to higher gross margin. Segment operating income increased 1% as higher gross profit was partially offset by higher operating costs, mostly attributable to an increase in depreciation as we forward-invest in the VERIFI product line and amortization and other expenses related to growth initiatives. Excluding depreciation and amortization, segment operating income in SCC increased 8% primarily due to higher gross profit.

Turning to SBM. SBM’s revenue was down 3% year-over-year with improved pricing and solid performance in North America, which was up 6% year-over-year due to strong Building Envelope fire proofing and Halex volumes, offset by lower volumes in Asia including the impact from COVID-19 and lower residential volumes year-over-year.

SBM’s gross margin declined 150 basis points compared to the first quarter of 2019 due to lower productivity and reduced sales volumes particularly in Asia due to temporary closure of our facilities resulting from the COVID-19 pandemic. SBM’s segment operating income was down 11% primarily due to lower gross profit, which offset lower operating expenses in the quarter compared to last year.

Now turning back to GCP. Just in summary, in the first quarter, our gross margin improved 170 basis points, mostly due to operational improvements, materials optimization and price. Our operating expenses declined by $3 million year-over-year overall with reduced corporate and general administration expenses all contributing to the drop. The benefit in the reduced expenses was mainly attributable to reduced head counts during 2019 as we work through 2019 restructuring and Q1 and 2020 lower expenses and lower total salary and compensation spend in Q1 of this year versus prior year. And from an overall spend reduction due to the restructuring programs and other cost savings, offset slightly by strategic investments and increased health and welfare benefits.

Corporate cost on their own of $7.1 million were down 40% compared to last year’s first quarter primarily due to lower executive and stock-based compensation, lower costs resulting from our restructuring and organizational alignment and allocation of certain cost of operating segments. Our adjusted tax rate for the quarter was approximately 26%, an improvement year-over-year largely due to the tax benefits of the CARES Act.

Adjusted free cash flow generation was very strong for the quarter resulting in $12 million compared to a use of $10 million in the quarter in 2019. That’s greater than $20 million improvement year-over-year and was due to improved demand and supply forecasting results with lower inventories, lower days on hand, better collections and greater focus on overall working capital management including vendor payables and lower capital spend year-over-year in Q1 versus prior Q1 2019.

We are continuing to move forward with initiatives that are designed to improve the management of our receivables, inventory and payables through increased transparency into our region and individual country operations. We expect these initiatives to continue to improve our efficiency and cash flow throughout the year and over time.

Now turning to our outlook for 2020. The COVID-19 pandemic has obviously created tremendous uncertainty. It is difficult to predict at this time the duration and extent of the impact of the pandemic on our business. As a result, we are not providing financial guidance for 2020 at this time but we are well-positioned to navigate this uncertainty given our strong balance sheet. The color we can share currently is as follows.

Our construction products are considered essential in many cases in most countries around the world and our plants and warehouse facilities around the world have been able to continue to operate with very few exceptions. The most substantial disruption we experienced has been in China where several facilities were shut down for more than a month in the first quarter. They since then have all reopened. At this time our base expectation is for country and regional lockdowns to begin to subside during the month of May and the global and regional economic activity slowdown will improve during the second quarter into May and will continue to be the test for the economies of the world during May and into June. And we expect volumes in April and May to be impacted the most during the transition to an economic restart.

As a result for the second quarter, we expect the impact of COVID-19 pandemic will reduce our overall demand for our products by 25% to 35% during this period depending on product line and geography. We expect demand to improve and slowly return to closer to normal levels as the year progresses beyond Q2, but obviously considerable uncertainty remains and disruptions to our facilities and to our customers are likely to continue for the remainder of 2020.

Aside from our restructuring programs we have identified additional cost savings opportunities of approximately $15 million to $20 million compared to our original plan for 2020 that we have implemented. We also expect raw material deflation to improve modestly and to offset some of the volume declines as we work our way through the year. We will continue to execute on our restructuring programs and initiatives and as previously discussed, we have reduced planned capital expenditures by about $25 million in 2020 or about 35% to 40% of our original planned capital spend for the year.

Our cash position should remain quite stable throughout the year based on the working capital programs we have instituted and our reduced capital target and the current cadence of expected revenues and volumes. In the event that actual conditions turn out to be worse than the current scenario, which I have outlined, we will respond to changing conditions with contingency plans we have developed to ensure we emerge from this period of uncertainty in strong financial shape and well-positioned for the future.

Looking beyond the pandemic, we are confident in the long-term fundamentals of the construction industry and GCP. As you can see from our Q1 results, the impact of the restructuring, savings initiatives, working capital programs are all starting to take hold to improve our financial performance and maintain our strong financial position.

We are confident that our current plans will allow us to navigate the pandemic and we will be well-positioned for when the markets and the demand patterns globally start to stabilize.

With that, I will turn it back over to Randy. Thank you.


Randall S. Dearth, GCP Applied Technologies Inc. – CEO, President & Director [5]


Thanks, Craig. Our first quarter results clearly demonstrate continued meaningful performance improvement, which I and my executive team are very proud of. Our teams are absolutely key to our success and your health and safety will continue to be our top priority.

Both during and after the crisis, we will work to ensure GCP remains an employer of choice through a myriad of programs including novel work schedules, formation of diversity groups, competitive compensation programs and employee development initiatives. We want to attract and retain the best talent to achieve our ambitious goals and that effort will not stop during this pandemic.

We will continue to closely monitor our cash position. Especially in this time of crisis, we will continue to implement working capital initiatives to ensure maximum cash performance. Today we have $320 million in cash on our balance sheet and access to additional liquidity in the form of a $350 million revolving credit facility maturing in 2023, bringing total liquidity sources to around $670 million. Maintaining this flexibility will be key in solidifying our competitive position while navigating this crisis.

We will also continue to focus on sustainability, which was one of the goals I have set when I joined GCP. I’m happy to report that we published our first sustainability report on Earth Day. The report, which is available on our website, outlines our commitment to environmental and social stewardship and our contribution to more sustainable construction practices and structures. We will continue to leverage GCP’s global product offerings, their people and production processes to optimize our sustainability footprint and build upon our first sustainability report with enhanced reporting and metrics in the future.

Before I conclude, I would like to share some thoughts on where we are and where we are going. I often tell our employees that we are a very good company with good products, good market positions in the segments where we are present and outstanding people both commercially and technically. I think this is an area where we can agree with our critics, but I will always continue to tell our employees that we can be a great company that can create a lot of value for our shareholders.

When I joined GCP, it was evident that this company had work to do in removing legacy complexity, better-utilizing resources, removing cost and setting the company up for future success. Our supply chain initiative was the first I launched in early 2019. The focus on completely overhauling our outdated sales and operations planning process, improving our global procurement processes, rationalizing product SKUs, modernizing our outsource freight processes and relationships, establishing clear site capital allocation procedures and focusing on site asset utilization. I’m happy to say our teams have addressed all of these.

And already in 2019, we saw our inventory down by 13% from this $15 million compared to 2018 and our days on-hand, improved from 56% to 53%, definitely in the right direction. In addition, our on-time deliveries are up and our outbound freight costs are down. Our current focus in supply chain is on creating the new, modernized quality management process, the task our teams are undertaking now.

Last August, I laid out my board approved, streamlined organizational model, which is aligned on clear business focus in P&L accountability. I couldn’t be more happy with how this new model is working. Teams have coalesced around the needs of their specific markets; is better aligned with corporate and business unit goals; product development focus is clear by having a global business unit lead to champion and overseeing innovation activities; and the organization is better-prepared to address the needs of our customers.

We established last year a customer engagement team who’s responsible for overseeing all of the processes related to the customer experience. Our GCP Plus ebusiness portal, which launched late last year have had tremendous success in the short time since its launch. In the first quarter, about 5% of our sales in North America went through this portal with many more customer conversions planned in the coming months. Other new tools such as GCP DASH and our implementation of salesforce.com will be gaining traction shortly.

As our Global Head of SBM, Naren, has discussed on our last two investor calls that reevaluating and efficiently executing upon our SBM global strategy has been one of his top priorities. As you may recall, we worked with a leading global consulting firm to better understand the current situation. But more importantly, to develop a plan of action for the future. This plan is being implemented with the focus on broadening our reach to adjacent markets, prioritizing new product developments, adding commercial and development resources as required and implementing new go-to-market pricing approaches. We’re doing this while ensuring we retain our leading market presence in the key areas where we have been successful in the past. It’s clear to both Naren and me that continuing to invest in our SBM business is and will be a top priority.

Thinking of R&D and new product launches, I have consistently been impressed with our global product innovation capabilities. Last year alone, we filed a 100 new product patents, we were granted 75 new patents and we registered over 50 trademarks. Our innovation department works with our global business teams on setting priorities as well as resource allocations.

Stage-gate project management have been used in conjunction with market-led data as well as clear return type metrics. We have also integrated and utilized the capability of labs and personnel through acquisition that we have made to better align global resources to the needs of the market. And I’m excited to see how innovation led by an experienced, seasoned technical expert, Dr. Jyoti Seth continues to deliver value.

The goal is very simple, make a very good company great. We are well on our way to do so. With continued question of the status quo, hiring of specific expertise where needed, a continued focus on cost management and clear accountability, I have absolutely no doubt we will get there.

Lastly, I want to spend a couple of minutes on Starboard’s efforts to replace the super majority of GCP’s Board. GCP is committed to maintaining an independent, diverse and experienced board and maintaining an active dialog with our shareholders has long been a priority for us. As we have outlined in our proxy and in other shareholder communications, we’ve made numerous attempts over the past several months to reach a reasonable resolution to this situation, offering shareholders significant board representation on our already refreshed board. More than half of the board has been appointed within the last few years. So during those discussions, our only unshakable negotiating position has been that no single shareholder or two shareholders, should be allowed to exert effective control over the board.

Despite our settlement offers that we have detailed in recent communications, we are in [balance]. We believe our board has acted responsibly and has genuinely sought to protect the interest of GCP shareholders. We will continue to take actions that we believe are in the best interest of all GCP shareholders. As such, we believe the best path forward is to allow our shareholders to determine the outcome they believe is most appropriate for the future of GCP and their investment in the company.

The purpose of today’s call is really to discuss our first quarter performance and our initiatives that were implemented to improve the company. We will not be taking further comments on the proxy contest or on our conversations with our shareholders and asking to keep your questions today focused on our results. So I would like to wrap up my comments by thanking our employees personally and on behalf of my leadership team for all of the hard work and effort they continue to devote to GCP under extremely challenging conditions. I truly appreciate it.

With that, I would like to say thank you for joining our call and we look forward to taking your questions.


Questions and Answers


Operator [1]


(Operator Instructions) We’ll take our first question from Rosemarie Morbelli with G.Research.


Rosemarie Jeanne Morbelli, Morgan Group Holding Co. – Research Analyst [2]


Randy, even though you did mention you’d not talk about it, I do have a question on one particular subject. So last year you had a strategic review of GCP operation and concluded that shareholders would benefit from the company remaining independent and you have since made progress in improving operations. I was wondering if you could help us understand what your largest shareholders learned about the value of the company that has caused them to support another hold of attempt to take control without the takeover premium for all shareholders. If you could help us on that, I would appreciate it.


Randall S. Dearth, GCP Applied Technologies Inc. – CEO, President & Director [3]


Indeed we conducted a very thorough strategic alternatives process that we have been public about. And you’re absolutely correct that at the end of that process, after much, much work and much consultation, the Board determined that the best path forward was the path that we’re taking and again that’s showing results. Now I’m not going to comment on specific comments that are made to us about that process from shareholders. I’m going to keep this conversation confidential, but I think we published quite a bit of information that’s out there regarding this context and I’ll refer you to that. But looking back at the strategic alternatives process, Rosemarie, it was indeed the right process to build at the time and again, putting forth our strategic plan was the best outcome.


Rosemarie Jeanne Morbelli, Morgan Group Holding Co. – Research Analyst [4]


And then looking at operations, could you touch a little bit more on what to expect regarding the profitability of the building material which has dropped? I understand because of COVID-19, but what are you doing which could offset the impact in the upcoming quarters?


Randall S. Dearth, GCP Applied Technologies Inc. – CEO, President & Director [5]


Well, as we mentioned in our remarks, we have contingency plans that we have implemented. We’ve done cost-cutting already, we’ve reduced our capital spending. So like everybody else right now, we’re watching to see what comes next and it’s evolving on the day-to-day basis. As Craig pointed out, we’re happy that our business has been running, the sign on the door is open and we have been able to in many countries and regions around the world continue to sell in both SBM and SCC. So as long as we can sell, we’ll continue to sell to our customers, but the world is still crazy.

For instance on Monday, we were anticipating certain countries will be opening up, to find out on Tuesday that they’re not and vice versa, countries that we were told were going to be closed for a little bit longer, we find out on Tuesday that they are open now. So it’s an ever-changing dynamic, but our management team and our crisis team will take the data that we get and we’ll make the appropriate actions and decisions as necessary to maintain the business.


Operator [6]


(Operator Instructions) We’ll next go to Laurence Alexander with Jefferies.


Daniel Dalton Rizzo, Jefferies LLC, Research Division – Equity Analyst [7]


It’s actually Dan Rizzo on for Laurence. You mentioned additional savings in coming towards what you previously announced. I was wondering if you could provide color on where exactly that savings is coming from. And I wanted to know if that savings is going to be meet to a larger extent by lower volumes and unfavorable fixed cost absorption given everything that’s going on?


Craig A. Merrill, GCP Applied Technologies Inc. – Interim CFO and VP of Finance, Analytics & Strategy [8]


Yes, I can take that, Laurence (sic) [Dan]. It’s Craig. Yes, what we went through is we got hit by the pandemic probably earlier than most in China in February and March with closures of our plants — and the leadership team went through a very diligent program. We’ve got a lot of cost that we’ve identified in discretionary, travel and entertainment, advertising, marketing that we had originally built into our plans and some of those are just current expenses that won’t happen to some extent just because of the shutdown and the country locked down. So we’ll see it there.

But then there is other ones on the advertising and marketing that we’re forward-thinking on spend, so we’ve cut those until the economy gets back to normal. And then there’s other areas that we have specifically country-by-country that they had some spend in there just on G&A and others. And then we had some AOP headcounts that we had planned to put in, just for the investment in SBM and SCC. We’ve slightly trimmed back on some of those, so that is also an offset to the volume decline.

So all in all, that number comes to about $15 million or $20 million versus our original plan and we’ve really got that tight. But you’re correct, that will be an offset to the volumes, but we’ll have to see whether that’s enough and we’ve also got contingency plans in place if we need to do more.


Daniel Dalton Rizzo, Jefferies LLC, Research Division – Equity Analyst [9]


That was actually very, very helpful. You just mentioned that you hit earlier in China than others. I guess I’m thinking about — I thought you had smaller exposure to China overall? I thought in Asia, it was mostly Southeast Asia outside China and obviously your big exposures of U.S., North America, Europe and Latin America. I mean I thought it was less than 5% of sales in China? Am I misremembering?


Randall S. Dearth, GCP Applied Technologies Inc. – CEO, President & Director [10]


No. You’re correct, Laurence. The only difference is when you’re a facility. We had our SBM facility, which is located in the Wuhan Hubei area, which is specifically was down for almost two months from production. So that did impact us even though it’s a smaller piece of our overall revenue base.


Operator [11]


All right. And it looks like there are no questions at this time. So, that will conclude today’s call. We thank you for your participation, you may now disconnect.