GCP Applied Technologies Inc. (GCP) Q1 2021 Earnings Call Transcript

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GCP Applied Technologies Inc. (GCP)
Q1 2021 Earnings Call
May 4, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the GCP Applied Technologies First Quarter 2021 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Betsy Cowell. Please go ahead.

Betsy Cowell -- Investor Relations

Thank you, operator. Hello, everyone, and thank you for joining us on today's call. With us on the call are Simon Bates, President and Chief Executive Officer; and Craig Merrill, Chief Financial Officer. Our earnings release and corresponding presentation slides for this quarter's results are available on our website. To download copies of the presentation, please go to gcpat.com and click on the Investor tab. Some of our comments today will include 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, including, but not limited to, the impacts of COVID-19.

Please see a full description of information used in forward-looking statements in our earnings release. 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 revenues and associated growth rates in this discussion are stated on a comparable constant currency basis, which adjusts for the impact of foreign currency.

I will now turn the call over to Simon.

Simon Bates -- President and Chief Executive Officer

Thanks, Betsy. Good morning, everyone, and thank you for joining today's call. As I've said in our previous discussions, we continue to work on our key objectives for GCP. First is improving our customer focus and delivering high-quality products and great service. This is essential to stabilizing market share and revenues. Second, we have to build our organizational capability to help reduce complexity and improve our cost position. Third, we have to drive accountability for improving performance across the organization. And fourth, we have to improve our return on the cash we invest in the business. Greg and I would like to discuss some changes and some progress that we have made in delivering on these objectives over the last few months.

As we announced in March, we have reorganized our business around three geographies: the Americas, Europe, including the Middle East and Asia Pacific. We believe this creates more focus and accountability and allows us to simplify our corporate structure. As part of this change, I would like to welcome [Indecipherable] Gary Dee, who started as our leader for Europe and the Middle East. Gary has a great track record of improving performance and growing revenues. We also announced the relocation of our corporate headquarters to the metro Atlanta area following the sale of the Cambridge facility last year. We believe that metro Atlanta will provide us with access to a diverse talent pool to enable us to build our new team and improve performance.

We are busy recruiting in Atlanta and have already filled a number of key roles. Therefore, I'd also like to welcome Sherry Monange who will start next week as our new Chief of Human Resources. She will be instrumental in helping us build our organizational capability and improve our processes for performance and talent management. Our U.S.-based research and development group will remain in the Greater Boston area so that we can retain key talent and drive continuity. However, we would like to see a greater return on our significant investment in R&D globally. And therefore, I am also very pleased to announce that Dr. Amy Randall will join us next week as our new Global Head of R&D and Product Development.

In conjunction with relocating our headquarters, we announced the restructuring program aimed at reducing our general and administrative costs, but we still have further work to do to eliminate complexity and duplication. As mentioned, the regional structure is designed to push accountability and decision-making to our local leaders who are closest to the markets and the customers they serve. We have also hired Chris Scocos as Head of Operations for North America. He has responsibility for customer service, manufacturing and supply chain. Through these changes, we expect to better service our customers, improve productivity, enhance our innovation platform and improve profitability and cash flow.

Although we have more to do, we are beginning to see changes within our organization, and it has translated into some positive momentum. We would like to thank Betsy Cowell for supporting GCP in the Investor Relations role over the last year. I would also like to welcome Will Kent as our new Vice President of Investor Relations, who is with us today. In summary, we continue to move forward with our plans to repair and rebuild GCP, providing a clear path to stabilize revenue, growing both the top line and the bottom line organically and inorganically.

I'd now like to turn the call over to Greg. Greg?

Craig Merrill -- Chief Financial Officer

Thank you, Simon. Good morning, everyone, and thank you for joining us today. As a reminder, all sales and associated growth rates in my comments are on a constant currency basis. I will discuss GCP's preliminary first quarter results, including comments on each of our business segments. Lastly, I will provide commentary on second quarter and a general outlook for the year. Starting with the preliminary first quarter financial results. GCP's constant currency sales of $219.6 million were 1.3% higher than prior year. While volumes were soft at the beginning of the quarter, demand did pick up in March. Quarterly revenue growth was driven by strong residential sales due to demand for our roofing products and timing of promotional activity. Sales volumes improved in both Asia and Latin America as construction activity improved versus the negative impacts of the pandemic in the first quarter of 2020.

Commercial construction activity in North America and Europe continued to be constrained, which we expected, where we saw a decline in revenues in our product lines versus first quarter 2020. Price for the quarter was essentially flat compared to first quarter 2020 coming off a deflationary 2020. However, GCP's gross margin increased 60 basis points to 38.8%, primarily due to operational productivity, partially offset by product and geographic mix. Selling, general and administrative costs of $66.6 million decreased 2% during the quarter due to a favorable net effect of the shareholder activism expenses in 2020, Q1 and lower employee-related costs resulting from restructuring programs. GCP's income from continuing operations attributable to GCP shareholders totaled $1.5 million compared with $2 million for the first quarter 2020.

The reduction of $0.5 million was due to additional restructuring costs and tax expense, partially offset by higher gross margin and lower general and administrative costs. GCP's adjusted EBIT, shown on page seven of the earnings presentation, totaled $16.9 million compared to $15.4 million in prior year quarter, up approximately 10%. Adjusted EBIT margin improved 50 basis points to 7.6% attributable to higher SBM operating income, partially offset by lower SCC operating income. Adjusted EBITDA margin was 12.7% for the first quarter or 50 basis points higher versus the same period in 2020. Net cash provided by operating activities from continuing operations during the first quarter 2021 was approximately $700,000 compared to $14.3 million for 2020.

The timing of sales with a strong March adversely affected accounts receivable performance versus prior year, and inventory increased during the quarter to support March and Q2 sales volumes. Prebuys were also instituted on raw material inventories once we expected higher prices in Q2 and Q3 on raw materials. First quarter is generally our weakest cash generation quarter, and we do not expect this to impact our cash performance for the full year. Looking at the specific performance of our two segments for the first quarter on pages eight and nine. SCC's constant currency sales were down approximately 2.1% to $122.8 million, attributable to lower sales volumes in North America and Europe, partially offset by stronger sales volumes in Latin America and Asia Pacific. Asia Pacific demand for our products exceeded our expectations as the market had a strong quarter as Chinese New Year and other holidays were shortened due to the COVID-19 restrictions.

We expect North America demand to progressively improve as the market opens up in the second half of 2021, and our year-over-year North America comparisons will improve for SCC as we move through the year. Commercial construction activity continues to be spotty across Europe. However, we are pleased with March's activity and performance. SCC's gross margin declined year-over-year by 140 basis points to 36.6% during the first quarter 2021 due to the unfavorable impacts of product mix, partially offset by lower costs resulting in improved productivity. SCC gross margins will be unfavorably impacted throughout the year in comparison to 2020 due to the inflation headwinds in raw material prices globally. SCC segment operating income was $6.1 million, with segment operating margin of 4.9%, a decrease of 190 basis points compared with the prior year quarter, primarily due to lower gross margins on volume leverage.

Turning now to the SBM segment for the quarter. SBM sales, constant currency totaled $96.8 million during the first quarter, a 6% improvement versus the first quarter of 2020. North America residential sales increased 62% due to strong roofing demands and the timing of promotion activities. Building envelope and specialty construction products volumes declined due to lower commercial construction activity. We do expect improvements in these product lines as we move through the year while at a modest pace. SBM's gross margin increased 290 basis points to 41.9% compared to the first quarter of 2020 due to improved raw material utilization, operations efficiencies and higher sales volumes favorably impacting fixed cost absorption. SBM segment operating income totaled $19.4 million with operating margins at 19.6%, a 420 basis point improvement versus prior year.

The improvement was due mainly to higher gross margins. Now looking forward to the second quarter. We remain positive on our product offerings to the residential end markets, and we see signs of commercial activity improvement as financing remains favorable. Construction activity resumes on these larger projects and social distancing requirements are relaxed as vaccinations ramp up. In addition, revenue comparisons between the second quarter of 2021 and the second quarter of 2020, favor 2021 due to the onset of the pandemic across the globe in 2020. As in prior discussions, our best views are short-term in nature, and we are pleased with the demand for our products in April and our bookings, which have been solid throughout the first part of the second quarter. Based upon today's best information, we estimate GCP will be up in revenues for the second quarter 2021 year-over-year by approximately 25% in constant currency and adjusted EBIT is expected to approximately double in the second quarter 2021 versus second quarter 2020.

As mentioned during the March earnings call, we expect inflation to impact the second quarter and the second half of 2021. In response, we have announced price increases in all of our product lines and have shifted prioritization to materials and logistics productivity. Price will start to come through in Q2, but to a lesser degree than Q3 and Q4 as contracts and project committed pricing rolls over as we move through the year. Gross margins will compress in the latter half of quarter two and in quarter three versus prior year and then stabilize in quarter four as price absorption catches up with the inflation impact. The impacts on gross margins will have a slightly more unfavorable impact on the SCC segment versus the SBM segment. We expect to overcome current inflation trends with price by the end of the first half of 2022.

Adjusted EBIT and EBITDA margins, even with the compressed gross margins should end the year approximately equal to prior year, with the support of price and volume leverage overcoming the inflation impacts on margin by the fourth quarter. Operating expenses for the second quarter of 2021 will be slightly higher versus prior year due to the timing of incentive compensation costs and the rent for the Cambridge facility. Full year 2021 operating expenses are expected to be approximately flat with the same period 2020 as the announced restructuring program in March mostly impacts 2022 with a $10 million to $12 million reduction in operating expenses expected in 2022. We will continue to place significant emphasis on cash generation and expect results on operating cash metrics similar to 2020. Capital expenditures for the year 2021 are on track to be approximately 4% of sales, consistent with spending levels in 2020 and much lower than 2018 and 2019.

In closing, we remain on track to our original 2021 planned financial performance objectives and have implemented a number of management actions to overcome the newly forecast impacts of higher global inflation on raw materials and logistics. Over the past six months, we have identified significant opportunities within the core business to drive efficiencies related to an overall improvement in business process, freight optimization, sales pipeline management and manufacturing productivity. Our strong balance sheet will continue to strengthen throughout the year and is providing significant flexibility and opportunity to deliver on our short- and long-term objectives, focused on growth and value, both organically and inorganically to create shareholder value.

With that, I now will turn it back over to Simon.

Simon Bates -- President and Chief Executive Officer

Thanks, Greg, and thank you all for the time today. Although we see some significant cost inflation for the rest of the year, we are pleased with the progress we have made on our objectives and our plans for 2021. Implementing positive change will continue to be our primary focus, and we intend to be transparent on our progress with you, our employees, investor community and our shareholders. Our goal is to make GCP a stronger and more competitive company.

Thank you for joining our call, and we look forward to taking any questions.

Betsy Cowell -- Investor Relations

Operator, you can now begin the question-and-answer session.

Questions and Answers:

Operator

[Operator Instructions] Today's first question comes from Mike Harrison with Seaport Global Securities.

Mike Harrison -- Seaport Global Securities -- Analyst

Hi Good Morning. Simon, maybe we can start on the restructuring. GCP has been through multiple programs since becoming a public company. I'm sure you're aware of that. Can you walk us through your approach to this restructuring? It seems like you're making a number of pretty major changes all at once. Obviously, one of those being the relocation of the headquarters to the Atlanta area. And maybe just talk about whether you -- your plan at this point is for this to be the last restructuring program that will be needed at GCP for a long time.

Simon Bates -- President and Chief Executive Officer

Mike, for future reference, all difficult questions to be directed at Craig, please. No, I'm happy to answer that, Mike. Look, I think the data speaks for itself. And when we look at prior restructurings the company has done, they have not impacted the bottom line in the way we would want. So the restructuring is really built around our reorganization to the three principal geographies we operate in. And the idea really is to de-complicate the organization and push decision-making and accountability into the regions. That provides us with the opportunity to really de-complicate or un-complicate our corporate structure, which as -- from a G&A basis, has been a significant burden on the organization. And so we're trying to do two things. Push decision-making or speed of decision-making and accountability locally, and we are trying to simplify our corporate structure. And moving to Atlanta enables us to do that probably quicker and also enables us to refresh and build some more organizational capability. As to -- is it the last restructuring? I can't say that at this point, but I would suspect it's more of an iterative process and a gradual process from here on in as opposed to major restructuring programs. Does that answer your question Mike?

Mike Harrison -- Seaport Global Securities -- Analyst

Yes, that's very helpful. Thank you. Maybe just in terms of Asia, I think you referenced that, that came in better than you anticipated. I know that as we look at last year, the pace of recovery in some of the countries where you operate has been slowed by COVID and by restrictions on access, but it seems like that activity is picking up. What are you seeing there?

Simon Bates -- President and Chief Executive Officer

I think there's a couple of things. As you may know, China is our most significant market in the APAC region. Secondly, one of our major production facilities is close to Wuhan. And so, it would have been the part of our business that was most quickly impacted last year from the COVID pandemic. And so I think what we are seeing is a faster post COVID recovery in APAC, particularly with strong revenues and -- coming from China and other countries in that region.

Mike Harrison -- Seaport Global Securities -- Analyst

And then the residential business, the 60 -- I believe you said 62% improvement in North America. Can you walk through some of the product lines that drove that improvement? And I believe you mentioned some promotion timing, just maybe how should we think about the sustainability of that residential strength as we go into Q2 and the rest of the year?

Simon Bates -- President and Chief Executive Officer

Yes. So the majority of our SBM business is in North America. And as you're aware, Mike, we have three product lines: waterproofing, fireproofing and our roofing underlayment business. We saw a slowdown in commercial new construction in Q1. And in terms of the project life cycle, our building envelope or waterproofing business is most quickly impacted. And so we did see a reduction in revenues for our building envelope business. Our fireproofing business remained resilient that tends to be on -- operated different -- slightly different geographies, some differences in the type of projects. But actually, the fireproofing goes on much later in the project cycle. So those revenues remain robust.

And where we really saw the improvement was in our roofing underlayment business, which Mike, as you're aware, is residential new construction and residential repair and remodel primarily. So strong residential market. Yes, the timing of the winter buy, we moved for some of our customers out of Q4 last year into Q1 this year, which is more comfortable for the customers. And there was more time and attention spent on the SBM business from a production standpoint in Q1, which partly accounts for the improvement in margin. So we would expect some continued challenges in SBM, North America this year for our building envelope business, but we have a strong project pipeline, and we just need to work that pipeline well. We would expect the residential business for the roofing underlayment to remain strong. And at the moment, the pipeline for fireproofing is also robust.

Craig Merrill -- Chief Financial Officer

And Michael, maybe I'll just add that the bookings, our bookings for residential and -- are strong in April also. So April is strong and our bookings going into May are strong. So we do expect the residential or the underlayments to continue with good strength, and we see that. We're quite happy with that because that's an area where we struggled. As far as the product lines, most of it is the underlayments, the roofing underlayments and flashing, by core, some of the window flashing that we sell and those type of products that are kind of residential refit, redo those kind of products there. So they're really strong.

Mike Harrison -- Seaport Global Securities -- Analyst

Alright. And then in the SCC business, you mentioned that mix was a negative there. Can you maybe give a little more color on what was going on with mix? And if that was a one-off or something that's going to be lasting longer into the year?

Craig Merrill -- Chief Financial Officer

So it was a little bit of a one-off as the Asia market picked up. Matter of fact, we had our strongest volumes in Asia and Latin America from a growth perspective year-over-year. They tend to have slightly lower gross margin than the North American European business. There's less operating cost under it, but they do have slightly lower gross margin. So that's where the mix came in. And we were pleasantly surprised in Asia on how Singapore, Hong Kong, China all came back, as Simon mentioned. And so that kind of just offset us a little bit from our forecast and versus prior year.

Operator

Our next question today comes from Rosemarie Morbelli with G. Research LLC.

Rosemarie Morbelli -- G. Research LLC -- Analyst

Thank you! Good Morning Everyone.You mentioned that you were doing -- or you are seeing better trends on the commercial side. Is this because of large projects picking up again? I mean, restarting, let me use the proper term, restarting? Or is it that you are actually seeing new construction on the commercial side, which is kind of surprising, considering that there is a glut of office buildings and so on. So if you see a pick up, can you talk about the areas where you are actually seeing it?

Craig Merrill -- Chief Financial Officer

Yes. So yes, do you want to go, Simon?

Simon Bates -- President and Chief Executive Officer

Sure, sure. For us, Rosemarie last year for the SBM business in North America. We were most impacted in the Northeast and the West Coast. And that was a combination of some cancellations of projects and some postponements of projects. Some areas of the country remain pretty robust in terms of their demand. We still saw a strong growth in the Southeast and in Texas, for example. In terms of our pipeline, we are seeing a number of projects restarting. And the Northeast seems to be picking back up faster than the West Coast. And we are seeing a combination in New York, for example, of projects restarting and new projects starting, which provides us with some optimism. And it remains to be seen. It's something that we manage very carefully and very closely, and we review monthly with our teams.

Rosemarie Morbelli -- G. Research LLC -- Analyst

Could you talk about the percentage increase you are seeing on the raw material side and whether it is mostly a shortfall from raw material? Or is it more of delivery issues on the transportation side? And then what type of price increases are you anticipating?

Craig Merrill -- Chief Financial Officer

So generally, we're looking at around 6% to 10% increases in raw materials, depending on the product line. I would say, SBM is more in the 4% to 7% on raw materials. SCC tends to be up around the 10%, unfortunately. So we are going to have some margin compression on the SCC side as we go through Q2 and 3, and we're hoping to get that back on price in Q4 and into Q1 of next year. SBM has less inflation, although we have gone out for price for both globally, almost every product line. And generally, the prices have been anywhere from 3% on the low end, right up to 10% or 15% products like fibers on the polypropylene end. They got hit by oil, increased price and some supply chain issues. So some of those are 10% or 15% price or raw material increases. I would say we have a lot of different raw materials and a lot of unique products.

But in a general sense, I would say about half of it right now seems to be supply chain related, whether that's shortage because of COVID-19 last year or that type of thing. And then the other half, I would say, is more of the dynamic of the industry with the oil prices up and just the streams coming in at a higher price to make the raw materials. So -- but I'm not an expert on that, but I would say probably for us, it's probably half and half. I would have expected about a 5% inflation. We forecasted 3% to give you an idea. So I would expect it maybe 5% at the top end. And unfortunately, it's somewhere between 6% and 10%. So our prices are in line with what the raw material increases are. I will say everybody has gone up for price increase. I think you've probably found it in your home life. I mean, prices are all going up everywhere, and everybody seems to be accepting that to some extent, the prices are going up. So that is a good sign that we think we will get the price. It's just a question of time.

Rosemarie Morbelli -- G. Research LLC -- Analyst

I was wondering also, if it is too early to -- for you to start looking at M&A. I mean, you ended the quarter with a positive net cash position, but you are also in the middle of doing a lot of things. So is -- when do you have time to look at M&A? Or is it something that we would see more in -- toward the end of 2022 when the dust settles on all of your projects?

Simon Bates -- President and Chief Executive Officer

So when we met with the Board in January, and we highlighted some of the opportunities for the business, Rosemarie. One of the opportunities is really to strengthen our product portfolio in North America. And really, we're prioritizing the SBM business because of the outlook for residential construction and also because of the significant margins that we earn in that business. So actually, we have been very active looking at the landscape, and we have two active targets we're considering, and I think it would be a great achievement for the business if we could close on one of those in 2021.

Rosemarie Morbelli -- G. Research LLC -- Analyst

And can you touch on the potential size of these opportunities? Are we talking -- I mean, really substantial type of acquisitions or more of a bolt on?

Simon Bates -- President and Chief Executive Officer

We're looking -- we've looked at a range, Rosemarie, and that's about as far as I'm prepared to go in this conversation.

Rosemarie Morbelli -- G. Research LLC -- Analyst

Can you talk about the range?

Simon Bates -- President and Chief Executive Officer

I'd rather not.

Rosemarie Morbelli -- G. Research LLC -- Analyst

And if you could give us an update, lastly on VERIFI, have you seen some pick up as the economies are reopening in North America, particularly the U.S.?

Simon Bates -- President and Chief Executive Officer

Yes. And the outlook for VERIFI from a revenue standpoint is very strong. That's partially because of the delay in fulfilling contracts that we signed in 2019, which are now being fulfilled as the various parts of the world come out of the pandemic. And partly because the significant interest in the product. And so, we would expect to see some very healthy growth in the revenues for VERIFI this year. And I think where it plays extremely well is both in driving productivity for the end user, but also driving sustainability and a demonstrable improvement in things like fuel, timing and CO2 footprint. So we would expect the demand for VERIFI to remain robust.

Operator

And our next question today comes from Laurence Alexander with Jefferies.

Dan Rizzo -- Jefferies -- Analyst

Good Morning. This is Dan Rizzo on for Lawrence. How are you? You mentioned hiring in Atlanta because it has a robust pipeline. I was just wondering just overall, given what we're seeing and hearing from others in terms of labor availability and labor costs. If you could provide color of just making things more difficult and what you expect going forward?

Simon Bates -- President and Chief Executive Officer

Yes. I think, particularly in our manufacturing operations and particularly in North America, we've seen some significant challenges in recruitments for hourly folks and also for salaried folks within the operation. As regards more senior management, I think the war on talent is high. And therefore, we probably takes us a little bit longer than we want, but I would tell you, we have been very pleased with the quality of candidates that we've been able to hire over the last few months.

Dan Rizzo -- Jefferies -- Analyst

And then you mentioned a little bit about sustainability. I was wondering just in terms of the push for energy efficiency in buildings, what could that -- what that can mean to you guys in the coming years, particularly for, I guess, for your SBM business with, I guess, the wind business? Or waterproofing just everything really?

Simon Bates -- President and Chief Executive Officer

Yes. When I think about the image and the positioning of GCP, I think there's a much, much stronger story for us to tell around sustainability. And that goes for our SCC business, where we just talked about VERIFI. But also, for example, our cement additives, have proven improvements to drive a reduction in CO2, I think we could do a better job of highlighting and selling that. And as we think about our SBM business, I have in my mind, we would be proofing structures and proofing against the elements, but also driving energy efficiency through the system and the products that we sell. So I think we can do a better job of promoting it, but I think we also have to do some infill in terms of our SBM product range to be able to push that better.

Operator

Our next question today comes from Chris Shaw with Monness, Crespi.

Chris Shaw -- Monness, Crespi. -- Analyst

Hi Good Morning Everyone, How are you doing? I wanted to follow-up, I guess, on the answer you had given to one of Rosemarie's questions about some of the pockets of strength in commercial construction. I think you specifically talked about the Northeast, but they were seeing some new projects. I mean, I guess, in general, I'm trying to figure out where -- looking forward, where there might eventually be some pick up in commercial construction and just having a hard time figuring out what area that might be. And you were saying there were some new projects that were actually getting -- coming on board, I think, in the Northeast. And what's your sense at what areas are those coming from? Because I can't -- unless there's going to be a large, obviously, government infrastructure spill or spending outside of that. Obviously, Rosemarie mentioned office should be pretty weak. I would think a lot of the other institutions like universities, hospitals would be undergoing some large projects right now. I mean with the projects that you're seeing that are new? Were they pre-funded I mean I just -- I'm trying to sense what might be coming back first in commercial construction, looking forward, I don't know, 12, 18 months in North America, specifically, I guess.

Simon Bates -- President and Chief Executive Officer

Yes. Look, I think there's a combination. And I think everybody would have some skepticism about office space in the near future. But we are seeing projects that were postponed, be -- coming back online. But we are also seeing that the healthcare sector, the federal sector. And for example, some elements of infrastructure such as data centers, that there is a robust pipeline of new work coming through. And we've had to shift our focus as an organization into moving away from maybe what may be our more traditional targets and segments to those segments that are growing.

Chris Shaw -- Monness, Crespi. -- Analyst

And then just looking at the SCC business, it's hard to tell, and you guys told a little bit of the story, but just looking at the numbers from this quarter, it's hard to tell what the progress that is being made there. Obviously, margins came down, some of that was mix, some of that sounds like volume deleveraging. Sales were strong in Asia and Latin America, but some of the -- it sounded Asia, you had an easy comp versus maybe COVID last year. I mean, what should we be -- it's just not coming through the numbers. What should -- what do you want to tell there that's really happening that we should be excited about going forward with that business?

Craig Merrill -- Chief Financial Officer

Well, I'll answer that, Chris. We did have a little weaker January, February in North America than what we wanted. So hence, the reason why the mix, not just the Latin America and Asia coming up, but we had less demand in February because of Texas. And I think we mentioned that on the call actually the last call for the Q4 call. And then we got a little bit of volume back in March. So that's why the mix was a little bit different than we expected, but that doesn't answer your question. Long-term question is, we've done quite a bit of work actually on the pipeline and working with our sales management team globally, to work on getting some of our share back or at least starting to gain share.

As you know, we were soft in that area for -- with SCC. We did a lot of work around exiting countries and then getting the margin up over the past couple of years, which we've done by a couple of hundred basis points. And now, we have to work on getting share. So we have had some small wins recently on that. We had one in Canada. We had one recently in Asia in April against some of our competitors. So I think we'd like to get a little more stabilization of the revenue going forward. So we can have a little more consistency in that business moving forward on the volumes.

And then there is quite a bit of productivity in that area on freight, freight lanes, formulation relative to the inflation that's coming through. And so I think we've made some changes there. We've got Salesforce in as a pipeline management tool, and we've got some -- a little bit change. Simon's changed some of the structure on the sales side. And I think the regional structure is going to help too in the stabilization of those revenues.

Simon Bates -- President and Chief Executive Officer

Yes. Look, I think each geography has different elements and different challenges, be it from a competitive sets or kind of its product portfolio. I would say, broadly, where historically, the organization has done well is in the cement additives that we have a highly competitive offering from a product standpoint and from a technical knowledge standpoint. And I am pleased at the progress that we are making there, globally. And I see us growing share this year. When it comes to the concrete additives, it's quite different by geography. Latin America, I've been super impressed by the team in Latin America, both stabilizing share. And I think we'll see growth of share in Latin America this year. I think in North America, on the concrete additives, the team has done well over the last year or two in stabilizing share.

I think what's crucial in North America as we build out our product portfolio, and we get back on the front foot and get more competitive and enable share take. I think the -- historically, where we've been most challenged on the concrete additive side is in Europe and bringing a new team on board in Europe in terms of Gary Dee joining. We'd like to see that we get back on the front foot, in particular, on the concrete additives side and get more competitive. We have very good products broadly. We have fantastic technical support and technical knowledge. And I think it's down to us to be more competitive in front of the customer and go get some of that share back.

Chris Shaw -- Monness, Crespi. -- Analyst

And then just a quick one. Both segments had a slight decline in pricing. I know you're going after pricing. Is it just -- does it just take too long? I mean, I thought we'd be a little bit in the first quarter. Is it just too slow in the way the business works to have seen that, any sort of price increases in the first quarter?

Simon Bates -- President and Chief Executive Officer

Yes. Most of our price went out to take effect in April. So we didn't expect to see much price in Q1, honestly. So it's just a timing. And then we're wanting to see it in Q2. We'll see the most price in Q3 and 4. That's just more of a timing and when we went out. We did go out early on cement. But sometimes, that takes a little while, it probably takes thirty or sixty days to take in effect. So we haven't seen a lot of that in Q1 either.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Betsy Cowell for any final remarks.

Betsy Cowell -- Investor Relations

Thank you, Roco. We appreciate your call today and everyone who joined us. Have a great afternoon.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Betsy Cowell -- Investor Relations

Simon Bates -- President and Chief Executive Officer

Craig Merrill -- Chief Financial Officer

Mike Harrison -- Seaport Global Securities -- Analyst

Rosemarie Morbelli -- G. Research LLC -- Analyst

Dan Rizzo -- Jefferies -- Analyst

Chris Shaw -- Monness, Crespi. -- Analyst

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