GCP Applied Technologies (GCP) Announces Organization Changes and Restructuring to Improve Performance
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GCP Applied Technologies Inc. (NYSE: GCP) (“GCP” or “the Company”), a leading construction chemicals and building products company, today announced plans to open its new corporate headquarters location in the Atlanta, Georgia metro area by the fourth quarter of fiscal year 2021. The relocation follows the $122.5 million sale of its corporate headquarters in Cambridge, Massachusetts in July 2020. GCP’s research and development (“R&D”) group will remain in the Greater Boston area.
GCP will transition to a simpler organizational model, which will reorganize the business regionally to better focus on customers. The Company will also consolidate some offices and manufacturing locations in order to achieve production efficiencies while also improving profitability and driving shareholder value.
“On behalf of the Board and management team, we are excited to open GCP’s new global headquarters in the Atlanta area – the main business center in the Southeast US region where Fortune 500 companies and innovative local startups are choosing to locate,” said Mr. Bates. “We worked with a third party to review more than six potential locations and we are confident that the Atlanta metro area will be the best possible home for our headquarters. The city has a diverse professional talent pool, strong market characteristics and its affordability makes it attractive to both employees and employers. We also believe our new regional structure will better service our customers, accelerate growth and strengthen our financial performance.” The relocation is anticipated to qualify for the Quality Jobs Tax Credit in Georgia.
GCP expects to achieve pre-tax cost structure savings of approximately $13 million to $15 million; mostly in general, administrative, and overhead expenses. The majority of the cost saving benefits are expected to be realized in 2022 once GCP’s global corporate headquarters, the new R&D facility, and the new organizational model changes have been implemented by year end 2021. The expected pre-tax cash costs from the actions, excluding capital expenditures, are approximately $19 million including approximately $13 million to $15 million of employee related and severance costs and approximately $5M million of costs representing office and facility consolidation, and other associated costs. An additional $6 million of capital is required for the new R&D facility, corporate headquarters, and upgrades to the information technology infrastructure. GCP expects an additional $8 million to $9 million of asset write off costs related to the consolidation of offices and manufacturing facilities.
“We are pleased with the progress we are making in the areas related to building organizational capability, stabilizing revenues and driving profitable growth as our Q1 2021 volumes are ahead of expectations with strong demand for our products in March,” Mr. Bates said.
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