Operating Segment and Geographic Information

3 Months Ended

Mar. 31, 2020

Operating Segment and Geographic Information

GCP is engaged in the production and sale of specialty construction chemicals and specialty building materials through two operating segments. Specialty Construction Chemicals ("SCC") operating segment manufactures and markets concrete admixtures and cement additives and supplies in-transit monitoring systems for concrete producers. Specialty Building Materials ("SBM") operating segment manufactures and markets sheet and liquid membrane systems that protect structures from water, air and vapor penetration, as well as fireproofing and other products designed to protect the building envelope.

Operating Segment Data

The following table presents information related to GCP's operating segments:


	Three Months Ended March 31,
(In millions)	2020		2019
Net Sales
Specialty Construction Chemicals	$	125.4	$	131.7
Specialty Building Materials	91.3		94.4
Total net sales	$	216.7	$	226.1
Segment Operating Income
Specialty Construction Chemicals segment operating income	$	8.0	$	7.9
Specialty Building Materials segment operating income	14.1		15.9
Total segment operating income	$	22.1	$	23.8

Reconciliation of Operating Segment Data to Financial Statements

Corporate expenses directly related to the operating segments are allocated to the segment's operating income. GCP excludes from the segments' operating income certain functional costs, certain impacts of foreign currency exchange, as well as certain corporate costs and other costs included in the table below. GCP also excludes from the segment's operating income certain ongoing defined benefit pension costs recognized during each reporting period, which include service and interest costs, the effect of expected returns on plan assets and amortization of prior service costs/credits. GCP believes that the exclusion of certain corporate costs and pension costs provides a better indicator of its operating segment performance since such costs are not managed at an operating segment level.

Total segment operating income for the three months ended March 31, 2020 and 2019 is reconciled below to "Loss from continuing operations before income taxes" presented in the accompanying unaudited Consolidated Statements of Operations:


	Three Months Ended March 31,
(In millions)	2020		2019
Total segment operating income	$	22.1	$	23.8
Corporate costs	(5.8)		(9.9)
Certain pension costs	(1.3)		(1.9)
Shareholder activism and other related costs⁽¹⁾	(3.6)		(2.5)
COVID-19-related costs⁽²⁾	(0.5)		—
Repositioning expenses	(2.7)		(5.4)
Restructuring expenses and asset impairments	(3.1)		(0.6)


Third-party and other acquisition-related costs	(0.5)		(0.1)


Net income attributable to noncontrolling interests	0.1		0.2

Interest expense, net	(5.1)		(5.2)

Loss from continuing operations before income taxes	$	(0.4)	$	(1.6)

__________________________

⁽¹⁾Shareholder activism and other related costs consist primarily of professional fees incurred in connection with the actions by certain of our shareholders seeking changes in the composition of our Board of Directors and nomination of candidates to stand for election at the 2019 and 2020 Annual Shareholders' Meetings, as well as other related matters.

⁽²⁾COVID-19- related costs consist of fixed manufacturing costs and discretionary direct labor costs incurred during temporary closure of our manufacturing facilities as a direct result of the outbreak.

Disaggregation of Total Net Sales

The Company disaggregates its revenue from contracts with customers by operating segments, which it believes best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Geographic Area Data

The table below presents information related to the geographic areas in which GCP operates.


	Three Months Ended March 31,
(In millions)	2020		2019
Net Sales
United States	$	113.0	$	107.8
Canada and Other	6.2		5.7
Total North America	119.2		113.5
Europe Middle East Africa	44.3		46.4
Asia Pacific	40.3		50.7
Latin America	12.9		15.5
Total	$	216.7	$	226.1

Sales are attributed to geographic areas based on customer location. With the exception of the U.S. presented in the table above, there were no individually significant countries with sales exceeding 10% of total sales during the three months ended March 31, 2020 and 2019. There were no customers that individually accounted for 10% or more of the Company's accounts receivable balance as of March 31, 2020 and December 31, 2019.