It can be installed over, but normally replaces the
drywall in the tub area. This way it is flush
with the drywall and you can overlap your tile
at the seam for a clean looking installation.
The smooth side goes out. Use galvanized roofing
nails every 6" to install it. Cutting with a saw
makes a mess. You can score with a utility knife
and snap it the same as you would with drywall.
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