 Second Quarter 2020 Highlights Net sales of 418.7 million, down 18.5, reflecting the impact of COVID-19 Diluted EPS of 0.11, down 1.25 compared with 1.14 a year ago, including a 0.47 charge related to changes in our Refining Technologies manufacturing operations and global footprint to drive capital and operating efficiencies Adjusted EPS of 0.49, down 0.67 Strong year-to-date operating cash flow up 27.4 and Adjusted Free Cash Flow up 61.1 Raising full year cash flow benefit of proactive actions from 100 million to 125 millionSee Analysis of Operations and Notes for information on Non-GAAP financial measures; all results based on year-over-year comparison unless otherwise noted.COLUMBIA, Md., July 30, 2020 GLOBE NEWSWIRE -- W. R. Grace Co. NYSE: GRA today announced financial results for the second quarter of 2020, which were impacted by the COVID-19 pandemic.Im very pleased with how our teams are managing the unique challenges of the pandemic and recession. Our workforce remains safe and healthy, and we have experienced no business continuity issues in our global operations or supply chain, said Hudson La Force, Graces President and Chief Executive Officer. I want to publicly thank my leadership team and our 4,000 employees for the results they are delivering. Their creativity, adaptability, and commitment make a significant difference to our customers, their customers, and our fellow employees.The pandemic has significantly disrupted our markets in the short-term, but it has not changed the value of our technology to our customers, our long-term growth potential, or the strategic value of our specialty chemicals franchise. We continue to make strategic investments and are well positioned to capture growth opportunities as our end markets recover.Sales and earnings were better than expected. Our value selling and commercial excellence efforts continue to be robust and our technical teams continue to work closely with customers to deliver the full value of our technologies.Cash flow performance was exceptional. Year-to-date Adjusted Free Cash Flow is 60 higher than last year, even though Adjusted EBIT is almost 40 lower. Weve taken decisive actions to mitigate the economic effects of the pandemic and to ensure we generate strong free cash flow this year. We are ahead of plan on these actions and have identified additional opportunities to further improve cash flow this year.Second Quarter Consolidated PerformanceSummary Financial Results - Total Grace In millions, except per share amounts2Q20 2Q19 Change Net sales418.7 513.6 18.5 Net sales, constant currency1 17.7 Net income7.3 76.2 109.6 Net income margin1.7 14.8 16.5 pts Adjusted EBIT164.1 127.3 49.6 Adjusted EBIT margin115.3 24.8 9.5 pts Diluted EPS0.11 1.14 109.6 Adjusted EPS10.49 1.16 57.8 Dividends per share0.30 0.27 11.1 YTD 2020 YTD 2019 Change Net cash provided by operating activities184.6 144.9 27.4 Adjusted Free Cash Flow1109.7 68.1 61.1 TTM 2Q20 TTM 2Q19 Change Return on Equity17.2 48.1 30.9 pts Adjusted EBIT ROIC116.8 20.3 3.5 pts 1 See Analysis of Operations and Notes for information on Non-GAAP financial measures. Second quarter sales of 418.7 million decreased 18.5, down 17.7 on constant currency. Sales declined primarily due to lower sales volumes -18.3 resulting from the COVID-19 pandemic, partially offset by improved pricing 0.6. Adjusted EBIT of 64.1 million was down 49.6 and Adjusted EPS of 0.49 was down 57.8, primarily due to lower sales volumes and the impact to gross margins of lower production volumes and inventory reductions, partially offset by cost mitigation actions and improved pricing. See Other Developments - Inventory and Working Capital for additional detail Net income was 7.3 million, down 83.5 million, and Diluted EPS was 0.11, down 1.25, including a charge of 36.9 million pretax, or 0.47 per share, related to changes in our Refining Technologies manufacturing operations and global footprint to drive capital and operating efficiencies see Other Developments below. Year-to-date, net cash provided by operating activities of 184.6 million, increased 27.4 and Adjusted Free Cash Flow of 109.7 million increased 61.1 year-over-year, highlighting the strong execution of cash and cost mitigation actions taken in response to the pandemic.Delivering on Our Strategic InitiativesThe pandemic does not change our profitable growth strategy or the long-term value of our strategic growth initiatives, continued La Force. We have strong leadership positions in end-markets that are critical to consumers and the global economy, with more than 80 of our sales in segments where we are number one or two. In recent years, weve made significant investments in capacity, capability and people to accelerate our growth and extend our competitive advantages. These investments are producing visible results. Our Grace Manufacturing System investments added 75 basis points to gross margins last year and I fully expect that value to increase as demand returns to normal levels.Graces strategic framework for profitable growth includes four elements: Invest to accelerate growth and extend our competitive advantages Invest in great people to strengthen our high-performance culture Execute the Grace Value Model to drive operating excellence Acquire to build our technology and manufacturing capabilities for our customersSecond Quarter Segment PerformanceCatalysts TechnologiesCatalysts Technologies includes catalysts and related products and technologies used in petrochemical, refining, and other chemical manufacturing applications.Summary Financial Results - Catalysts Technologies In millions2Q20 2Q19 Change Net sales309.0 395.7 21.9 Net sales, constant currency1 21.4 Gross margin36.6 43.8 7.2 pts Operating income71.7 125.8 43.0 Operating margin23.2 31.8 8.6 pts 1 See Analysis of Operations and Notes for information on Non-GAAP financial measures. Second quarter sales of 309.0 million decreased 21.9, down 21.4 on constant currency. Sales declined primarily due to lower sales volumes -22.1 resulting from the COVID-19 pandemic, partially offset by improved pricing 0.7. Refining Technologies sales decreased 28.4 as global refinery operating rates and demand for transportation fuels were significantly impacted by the COVID-19 pandemic. For the trailing twelve months, FCC catalysts pricing improved more than 200 bps. Specialty Catalysts sales decreased 14.7 as lower demand in durable end-market applications, notably construction, automotive and consumer, due to the COVID-19 pandemic more than offset higher demand in non-durable end-market applications such as hygiene and medical and food packaging. In addition, customer inventory reductions in response to the pandemic reduced sales by more than 10. Gross margin of 36.6 decreased 720 bps, primarily due to lower production volumes and inventory reductions, partially offset by lower raw materials and energy costs 160 bps, improved pricing, and actions to align manufacturing costs with demand levels. See Other Developments - Inventory and Working Capital for additional detail Operating income of 71.7 million was down 54.1 million, or 43.0, primarily due to lower gross profit and lower income from our ART joint venture -2.6 million, partially offset by lower operating expense and 8.3 million of insurance recoveries in the quarter. In July 2019, a North American FCC catalysts customer filed for bankruptcy protection after announcing it would not resume refinery operations following a fire in its refinery. Grace received insurance recoveries of 16.3 million in 1H20 under its business interruption insurance policy. Including the 8.0 million received in 4Q19, Grace received 24.3 million of insurance recoveries related to this event, reflecting approximately eight quarters of the impacts of the incident on earnings. This claim has now been fully resolved.Materials TechnologiesMaterials Technologies includes specialty materials, including silica-based and silica-alumina-based materials, used in consumerpharma, coatings, and chemical process applications.Summary Financial Results - Materials Technologies In millions2Q20 2Q19 Change Net sales109.7 117.9 7.0 Net sales, constant currency1 5.3 Gross margin26.9 36.2 9.3 pts Operating income12.6 24.1 47.7 Operating margin11.5 20.4 8.9 pts 1 See Analysis of Operations and Notes for information on Non-GAAP financial measures. Second quarter sales of 109.7 million decreased 7.0, down 5.3 on constant currency. Sales volumes declined -5.6 primarily due to lower demand in coatings and industrial end-markets resulting from the COVID-19 pandemic. These impacts were partially offset by improved pricing 0.3 and strong demand in consumerpharma end-markets 15.3, including COVID-19 diagnostic and treatment applications. Gross margin of 26.9 decreased 930 bps, primarily due to lower production volumes and inventory reductions, partially offset by favorable mix, lower raw materials and energy costs 90 bps and actions to align manufacturing costs with demand levels. See Other Developments - Inventory and Working Capital for additional detail Operating income of 12.6 million was down 11.5 million, or 47.7, primarily due to lower gross profit, partially offset by lower operating expense. 