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  "documentTitle": "GCP Applied Technologies (GCP)",
  "authorId": "03_Starboard_Value",
  "authorName": "Starboard Value",
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  "presentationDate": "2020-04-30 00:00:00",
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  "pageNumber": 33,
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  "notes": "Uses direct quotes and financial disclosures to highlight the contradiction between management's framing of 'savings' and the reality of revenue loss.",
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      "kind": "callout",
      "text": "Revenue Impact from SCC Market Exits",
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      "kind": "callout",
      "text": "Majority of Cost Savings from the 2018 Restructuring Plan Should Not Come From Market Exits",
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      "text": "Rather than holding management accountable for right-sizing the cost structure of GCP’s SCC business and actually improving operations, the Board has settled on accepting market exits to stem the significant losses generated by GCP’s fundamental operating inefficiencies.",
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      "text": "Rather than holding management accountable for right-sizing the cost structure of GCP’s SCC business and actually improving operations, the Board has settled on accepting market exits to stem the significant losses generated by GCP’s fundamental operating inefficiencies. This is not a long term strategy.",
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      "text": "incurred under the 2018 Plan since its inception were $22.0 million for restructuring and asset impairments and $10.6 million for repositioning. During 2019, we achieved annualized pre-tax cost savings of $25 million under the 2018 Plan. Approximately 75% and 25% of the total pre-tax cost savings were attributable to SCC and SBM, respectively, and related primarily to a reduction in cost of goods sold and selling, general and administrative expenses. By the end of 2020, we expect a total SCC revenue reduction of $65 million to $75 million as a result of exiting non-profitable geographic markets under the 2018 Plan. Such revenue reductions amounted to $49 million and $10 million , respectively, in 2019 and 2018.",
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      "kind": "paragraph",
      "text": "GCP claims “cost savings” for the removal of operating expenses in businesses that it exits. We believe this is misleading, because market exits also reduce both revenue and gross profit. Further, market exits ultimately indicate a business failure in certain geographies, and should not be viewed as accomplishments.",
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      "kind": "quote",
      "text": "“Looking at 2019 guidance, ... Of the $28 million in savings, the largest contribution is the $18 million that's coming from the market exit program, followed by our supply chain and G&A programs respectively.” - Craig Merrill, Interim CFO, 11/6/2019",
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      "text": "Looking at 2019 guidance, ... Of the $28 million in savings, the largest contribution is the $18 million that's coming from the market exit program, followed by our supply chain and G&A programs respectively. — Craig Merrill, Interim CFO, 11/6/2019",
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      "kind": "source-note",
      "text": "Source: GCP's public filings and transcripts.",
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      "kind": "title",
      "text": "We Believe the Lack of Profitability Improvements May Be In Part Due to GCP’s Atypical Recognition of “Cost Savings”",
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