Advanced Drainage Systems Announces Third Quarter Fiscal 2024 Results
- Net sales increased 1.1% to $662.4 million
- Net income increased 28.5% to $106.9 million
- Adjusted EBITDA increased 20.3% to $204.2 million
- Record adjusted EBITDA margin of 30.8% achieved during the third quarter
- Cash provided by operating activities increased 6.0% to $700.3 million
- Free cash flow increased 5.7% to $563.9 million
- Total liquidity of $1,149.6 million as of December 31, 2023
- Company repurchased 1.6 million shares of its common stock for a total cost of $178.2 million
- Year-to-date fiscal 2024 results showed a decrease in net sales by 9.5% to $2,220.6 million
- Outlook for the non-residential end market remains uncertain due to high interest rates and tight credit standards
The reported financial results by Advanced Drainage Systems, Inc. (ADS) for the fiscal third quarter of 2024 reflect a mixed performance with a modest increase in net sales by 1.1% and a more significant increase in net income by 28.5%. The 35.4% increase in net income per diluted share is particularly noteworthy, as it indicates a robust growth in profitability on a per-share basis, which is often a key metric for investors. The record Adjusted EBITDA margin of 30.8% represents a substantial improvement over the prior year, signaling enhanced operational efficiency and effective cost management strategies.
ADS's strategic focus on diversifying its product offerings and entering into partnerships, such as with Rainwater Management Solutions, suggests a proactive approach to capturing market share in sustainable water management solutions. This aligns with the increasing environmental regulations and the demand driven by climate events. Their new product launch, the ECOPOD-NX, designed for higher nitrogen reduction, indicates responsiveness to market needs and regulatory changes, which could provide a competitive edge.
However, the year-to-date net sales decrease of 9.5% raises concerns about the company's performance in a broader time frame, possibly reflecting challenges in the construction and agriculture markets. The flat Adjusted EBITDA (Non-GAAP) year-to-date, despite a decrease in net income, suggests that the company may be maintaining operational profitability even amidst declining sales. The free cash flow increase by 5.7% is a positive indicator of the company's liquidity and financial health.
The updated fiscal 2024 outlook, with net sales expected to be in the range of $2.800 billion to $2.850 billion and Adjusted EBITDA in the range of $880 to $910 million, provides a forward-looking perspective for stakeholders. This guidance, coupled with the company's strategic initiatives and the resilience of its business model, may be of particular interest to investors considering the long-term value proposition of ADS.
The water management industry is experiencing a growing demand due to the increasing frequency of water-related climate events. Advanced Drainage Systems' focus on innovation and sustainability through products like the ECOPOD-NX and strategic partnerships for rainwater harvesting systems positions the company favorably within this trend. The company's emphasis on sustainable solutions is likely to resonate with both the market's demand and regulatory trends towards environmental responsibility.
ADS's ability to outperform in specific segments such as Infiltrator sales, which increased by 16.8%, showcases the company's strength in niche markets that may be less sensitive to general economic pressures. This specialization could offer a buffer against broader market downturns and may attract investors looking for companies with a strong foothold in resilient market segments.
The uncertain outlook for the non-residential end market, as mentioned by the CEO, reflects broader economic concerns that may affect construction-related industries. Investors may exercise caution given the potential impact of high interest rates and tight credit standards on the non-residential construction sector. However, the company's diversified revenue streams and strategic focus on profitable growth through product innovation and partnerships could mitigate some of these risks.
The financial results of Advanced Drainage Systems, Inc. provide insights into the broader economic landscape, particularly within the construction and infrastructure sectors. The reported increase in net sales and net income in the fiscal third quarter suggests resilience in the face of economic uncertainties such as higher interest rates and credit tightening. The improved demand environment in residential and infrastructure construction end markets could be indicative of underlying economic growth or targeted fiscal spending in these areas.
ADS's report of a decrease in year-to-date net sales, contrasted with an increase in profitability metrics like net income per diluted share, may suggest that the company is successfully navigating a challenging economic environment through cost efficiencies and a favorable sales mix. The reported record Adjusted EBITDA margin points to strong operational leverage, which could be a result of past investments in automation and tooling that are now yielding efficiency gains.
The company's strategic investments and product launches, such as the ECOPOD-NX, are aligned with global efforts to address climate change and environmental sustainability. This suggests that ADS is well-positioned to benefit from potential government infrastructure initiatives aimed at climate resilience, which could drive long-term demand for their products and services.
Third Quarter Fiscal 2024 Results
-
Net sales increased
1.1% to$662.4 million -
Net income increased
28.5% to$106.9 million -
Net income per diluted share increased
35.4% to$1.34 -
Adjusted EBITDA (Non-GAAP) increased
20.3% to$204.2 million -
Adjusted Earnings per share (Non-GAAP) increased
35.6% to$1.37
Year-to-Date Fiscal 2024 Results
-
Net sales decreased
9.5% to$2,220.6 million -
Net income decreased
1.7% to$417.8 million -
Net income per diluted share increased
4.4% to$5.24 -
Adjusted EBITDA (Non-GAAP) remained flat at
$731.8 million -
Adjusted Earnings per share (Non-GAAP) increased
2.4% to$5.17 -
Cash provided by operating activities increased
6.0% to$700.3 million -
Free cash flow (Non-GAAP) increased
5.7% to$563.9 million
Scott Barbour, President and Chief Executive Officer of ADS commented, "In the third quarter, we saw net sales return to growth as the Infiltrator business and Allied products portfolio continued to outperform expectations. Despite ongoing headwinds from higher interest rates, credit tightening and economic uncertainty, volume increased in the quarter, primarily driven by stronger demand in the infrastructure, residential and agriculture markets. Importantly, our business model continues to demonstrate resilience, as evidenced by the record Adjusted EBITDA margin of
"The secular trend of larger-scale and more frequent water-related climate events continues to drive demand for the sustainable water management solutions ADS and Infiltrator provide. As part of our ongoing commitment to manage and protect water, the world’s most precious natural resource, Infiltrator recently launched the ECOPOD-NX. This product is the next generation of advanced wastewater treatment technology designed for higher nitrogen reduction. Many geographies are updating regulations to require higher levels of nitrogen removal, and the ECOPOD-NX leverages Infiltrator's leading market knowledge and distribution relationships. In addition, we established a strategic partnership with Rainwater Management Solutions, a provider of cutting-edge rainwater harvesting and reuse systems. These two programs demonstrate ADS' strategic commitment to improving the environment and communities through our water management solutions."
Barbour concluded, "As we move into the final quarter of this fiscal year, we updated our guidance ranges to reflect the improved demand environment and increased profitability. Outlook for the non-residential end market remains uncertain due to high interest rates and tight credit standards. We will continue to focus on delivering exceptional service to our customers and pursuing profitable growth through attractive products, markets and partnerships, while at the same time continuing to invest capital and resources at both ADS and Infiltrator to drive growth and profitability."
Third Quarter Fiscal 2024 Results
Net sales increased
Gross profit increased
Net income per diluted share increased
Adjusted EBITDA (Non-GAAP) increased
Segment sales results are based on Net sales to external customers. Reconciliations of GAAP to Non-GAAP financial measures for Adjusted EBITDA, Free Cash Flow and Adjusted Earnings per Share have been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Year-to-Date Fiscal 2023 Results
Net sales decreased
Gross profit decreased
Net income per diluted share increased
Adjusted EBITDA (Non-GAAP) decreased
Balance Sheet and Liquidity
Net cash provided by operating activities was
ADS had total liquidity of
In the nine months ended December 31, 2023, the Company repurchased 1.6 million shares of its common stock for a total cost of
Fiscal 2024 Outlook
Based on current visibility, backlog of existing orders and business trends, the Company updated its financial targets for fiscal 2024. Net sales are now expected to be in the range of
Conference Call Information
Webcast: Interested investors and other parties can listen to a webcast of the live conference call by logging in through the Investor Relations section of the Company's website at https://investors.ads-pipe.com/events-and-presentations. An online replay will be available on the same website following the call.
Teleconference: To participate in the live teleconference, participants may register at https://conferencingportals.com/event/TTnYXFWe using Conference ID: 45786. After registering, participants will receive a confirmation through email, including dial in details and unique conference call codes for entry. Registration is open through the live call. To ensure participants are connected for the full call, please register at least 10 minutes before the start of the call.
About the Company
Advanced Drainage Systems is a leading manufacturer of innovative stormwater and onsite septic wastewater solutions that manages the world’s most precious resource: water. ADS and its subsidiary, Infiltrator Water Technologies, provide superior stormwater drainage and onsite septic wastewater products used in a wide variety of markets and applications including commercial, residential, infrastructure and agriculture, while delivering unparalleled customer service. ADS manages the industry’s largest company-owned fleet, an expansive sales team, and a vast manufacturing network of approximately 70 manufacturing plants and 40 distribution centers. The company is one of the largest plastic recycling companies in
Forward Looking Statements
Certain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “confident” and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner; disruption or volatility in general business and economic conditions in the markets in which we operate; cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our existing and future markets; uncertainties surrounding the integration and realization of anticipated benefits of acquisitions; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets; the risk associated with manufacturing processes; the effect of global climate change; cybersecurity risks; our ability to manage our supply purchasing and customer credit policies; our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel; our ability to protect our intellectual property rights; changes in laws and regulations, including environmental laws and regulations; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; and other risks and uncertainties described in the Company’s filings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Financial Statements
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||
(unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
December 31, |
|
December 31, |
|||||||||||||
(In thousands, except per share data) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net sales |
$ |
662,367 |
|
|
$ |
655,167 |
|
|
$ |
2,220,633 |
|
|
$ |
2,453,562 |
|
Cost of goods sold |
|
402,518 |
|
|
|
431,250 |
|
|
|
1,326,647 |
|
|
|
1,557,575 |
|
Gross profit |
|
259,849 |
|
|
|
223,917 |
|
|
|
893,986 |
|
|
|
895,987 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Selling, general and administrative |
|
91,289 |
|
|
|
85,936 |
|
|
|
269,525 |
|
|
|
261,095 |
|
Loss (gain) on disposal of assets and costs from exit and disposal activities |
|
2,512 |
|
|
|
(348 |
) |
|
|
(10,669 |
) |
|
|
(147 |
) |
Intangible amortization |
|
12,782 |
|
|
|
13,842 |
|
|
|
38,376 |
|
|
|
41,360 |
|
Income from operations |
|
153,266 |
|
|
|
124,487 |
|
|
|
596,754 |
|
|
|
593,679 |
|
Other expense: |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
22,331 |
|
|
|
20,001 |
|
|
|
65,984 |
|
|
|
49,334 |
|
Derivative gain and other income, net |
|
(4,772 |
) |
|
|
(4,125 |
) |
|
|
(15,827 |
) |
|
|
(5,632 |
) |
Income before income taxes |
|
135,707 |
|
|
|
108,611 |
|
|
|
546,597 |
|
|
|
549,977 |
|
Income tax expense |
|
30,131 |
|
|
|
26,068 |
|
|
|
132,665 |
|
|
|
128,641 |
|
Equity in net income of unconsolidated affiliates |
|
(1,304 |
) |
|
|
(639 |
) |
|
|
(3,880 |
) |
|
|
(3,705 |
) |
Net income |
|
106,880 |
|
|
|
83,182 |
|
|
|
417,812 |
|
|
|
425,041 |
|
Less: net income attributable to noncontrolling interest |
|
1,241 |
|
|
|
1,142 |
|
|
|
2,719 |
|
|
|
3,848 |
|
Net income attributable to ADS |
$ |
105,639 |
|
|
$ |
82,040 |
|
|
$ |
415,093 |
|
|
$ |
421,193 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
77,857 |
|
|
|
82,067 |
|
|
|
78,455 |
|
|
|
82,891 |
|
Diluted |
|
78,586 |
|
|
|
82,987 |
|
|
|
79,188 |
|
|
|
83,980 |
|
Net income per share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.36 |
|
|
$ |
1.00 |
|
|
$ |
5.29 |
|
|
$ |
5.08 |
|
Diluted |
$ |
1.34 |
|
|
$ |
0.99 |
|
|
$ |
5.24 |
|
|
$ |
5.02 |
|
Cash dividends declared per share |
$ |
0.14 |
|
|
$ |
0.12 |
|
|
$ |
0.42 |
|
|
$ |
0.36 |
|
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(unaudited) |
|||||||
|
As of |
||||||
(Amounts in thousands) |
December 31, 2023 |
|
March 31, 2023 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash |
$ |
560,744 |
|
|
$ |
217,128 |
|
Receivables, net |
|
240,810 |
|
|
|
306,945 |
|
Inventories |
|
405,409 |
|
|
|
463,994 |
|
Other current assets |
|
31,459 |
|
|
|
29,422 |
|
Total current assets |
|
1,238,422 |
|
|
|
1,017,489 |
|
Property, plant and equipment, net |
|
810,887 |
|
|
|
733,059 |
|
Other assets: |
|
|
|
||||
Goodwill |
|
617,397 |
|
|
|
620,193 |
|
Intangible assets, net |
|
365,631 |
|
|
|
407,627 |
|
Other assets |
|
129,622 |
|
|
|
122,757 |
|
Total assets |
$ |
3,161,959 |
|
|
$ |
2,901,125 |
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Current maturities of debt obligations |
$ |
12,275 |
|
|
$ |
14,693 |
|
Current maturities of finance lease obligations |
|
12,844 |
|
|
|
8,541 |
|
Accounts payable |
|
207,902 |
|
|
|
210,111 |
|
Other accrued liabilities |
|
162,275 |
|
|
|
142,400 |
|
Accrued income taxes |
|
13,829 |
|
|
|
3,057 |
|
Total current liabilities |
|
409,125 |
|
|
|
378,802 |
|
Long-term debt obligations, net |
|
1,261,742 |
|
|
|
1,269,391 |
|
Long-term finance lease obligations |
|
37,947 |
|
|
|
32,272 |
|
Deferred tax liabilities |
|
159,296 |
|
|
|
159,056 |
|
Other liabilities |
|
71,980 |
|
|
|
66,744 |
|
Total liabilities |
|
1,940,090 |
|
|
|
1,906,265 |
|
Mezzanine equity: |
|
|
|
||||
Redeemable common stock |
|
121,686 |
|
|
|
153,220 |
|
Total mezzanine equity |
|
121,686 |
|
|
|
153,220 |
|
Stockholders’ equity: |
|
|
|
||||
Common stock |
|
11,670 |
|
|
|
11,647 |
|
Paid-in capital |
|
1,195,893 |
|
|
|
1,134,864 |
|
Common stock in treasury, at cost |
|
(1,110,670 |
) |
|
|
(920,999 |
) |
Accumulated other comprehensive loss |
|
(26,601 |
) |
|
|
(27,580 |
) |
Retained earnings |
|
1,008,270 |
|
|
|
626,215 |
|
Total ADS stockholders’ equity |
|
1,078,562 |
|
|
|
824,147 |
|
Noncontrolling interest in subsidiaries |
|
21,621 |
|
|
|
17,493 |
|
Total stockholders’ equity |
|
1,100,183 |
|
|
|
841,640 |
|
Total liabilities, mezzanine equity and stockholders’ equity |
$ |
3,161,959 |
|
|
$ |
2,901,125 |
|
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(unaudited) |
|||||||
|
Nine Months Ended December 31, |
||||||
(Amounts in thousands) |
2023 |
|
2022 |
||||
Cash Flow from Operating Activities |
|
|
|
||||
Net income |
$ |
417,812 |
|
|
$ |
425,041 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
112,014 |
|
|
|
107,346 |
|
Deferred income taxes |
|
335 |
|
|
|
(4,165 |
) |
Gain on disposal of assets and costs from exit and disposal activities |
|
(10,669 |
) |
|
|
(147 |
) |
Stock-based compensation |
|
23,636 |
|
|
|
19,912 |
|
Amortization of deferred financing charges |
|
1,533 |
|
|
|
909 |
|
Fair market value adjustments to derivatives |
|
(162 |
) |
|
|
2,309 |
|
Equity in net income of unconsolidated affiliates |
|
(3,880 |
) |
|
|
(3,705 |
) |
Other operating activities |
|
5,720 |
|
|
|
2,732 |
|
Changes in working capital: |
|
|
|
||||
Receivables |
|
67,230 |
|
|
|
99,958 |
|
Inventories |
|
59,752 |
|
|
|
34,871 |
|
Prepaid expenses and other current assets |
|
(534 |
) |
|
|
(4,532 |
) |
Accounts payable, accrued expenses, and other liabilities |
|
27,475 |
|
|
|
(20,091 |
) |
Net cash provided by operating activities |
|
700,262 |
|
|
|
660,438 |
|
Cash Flows from Investing Activities |
|
|
|
||||
Capital expenditures |
|
(136,385 |
) |
|
|
(126,858 |
) |
Proceeds from disposition of assets |
|
19,979 |
|
|
|
— |
|
Acquisition, net of cash acquired |
|
— |
|
|
|
(48,010 |
) |
Other investing activities |
|
527 |
|
|
|
46 |
|
Net cash used in investing activities |
|
(115,879 |
) |
|
|
(174,822 |
) |
Cash Flows from Financing Activities |
|
|
|
||||
Payments on syndicated Term Loan Facility |
|
(5,250 |
) |
|
|
(5,250 |
) |
Proceeds from Revolving Credit Agreement |
|
— |
|
|
|
26,200 |
|
Payments on Revolving Credit Agreement |
|
— |
|
|
|
(140,500 |
) |
Proceeds from Amended Revolving Credit Agreement |
|
— |
|
|
|
97,000 |
|
Payments on Amended Revolving Credit Agreement |
|
— |
|
|
|
(97,000 |
) |
Proceeds from Senior Notes due 2030 |
|
— |
|
|
|
500,000 |
|
Debt issuance costs |
|
— |
|
|
|
(11,575 |
) |
Payments on Equipment Financing |
|
(6,361 |
) |
|
|
(10,213 |
) |
Payments on finance lease obligations |
|
(8,624 |
) |
|
|
(4,954 |
) |
Repurchase of common stock |
|
(178,187 |
) |
|
|
(375,027 |
) |
Cash dividends paid |
|
(33,111 |
) |
|
|
(30,111 |
) |
Dividends paid to noncontrolling interest holder |
|
— |
|
|
|
(3,652 |
) |
Proceeds from exercise of stock options |
|
3,956 |
|
|
|
5,145 |
|
Payment of withholding taxes on vesting of restricted stock units |
|
(8,859 |
) |
|
|
(28,653 |
) |
Net cash used in financing activities |
|
(236,436 |
) |
|
|
(78,590 |
) |
Effect of exchange rate changes on cash |
|
1,271 |
|
|
|
(461 |
) |
Net change in cash |
|
349,218 |
|
|
|
406,565 |
|
Cash and restricted cash at beginning of period |
|
217,128 |
|
|
|
20,125 |
|
Cash and restricted cash at end of period |
$ |
566,346 |
|
|
$ |
426,690 |
|
|
|
|
|
||||
RECONCILIATION TO BALANCE SHEET |
|
|
|
||||
Cash |
$ |
560,744 |
|
|
|
||
Restricted cash |
|
5,602 |
|
|
|
||
Total cash and restricted cash |
$ |
566,346 |
|
|
|
||
Selected Financial Data
The following tables set forth net sales by reportable segment for each of the periods indicated.
|
Three Months Ended |
||||||||||||||||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||||||||||||||||
(In thousands) |
Net Sales |
|
Intersegment Net Sales |
|
Net Sales from External Customers |
|
Net Sales |
|
Intersegment Net Sales |
|
Net Sales from External Customers |
||||||||||
Pipe |
$ |
360,733 |
|
|
$ |
(14,680 |
) |
|
$ |
346,053 |
|
$ |
375,719 |
|
|
$ |
(10,839 |
) |
|
$ |
364,880 |
Infiltrator |
|
131,144 |
|
|
|
(27,273 |
) |
|
|
103,871 |
|
|
103,895 |
|
|
|
(14,961 |
) |
|
|
88,934 |
International |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
International - Pipe |
|
44,203 |
|
|
|
(2,369 |
) |
|
|
41,834 |
|
|
44,882 |
|
|
|
(5,311 |
) |
|
|
39,571 |
International - Allied Products & Other |
|
14,166 |
|
|
|
(1 |
) |
|
|
14,165 |
|
|
14,075 |
|
|
|
— |
|
|
|
14,075 |
Total International |
|
58,369 |
|
|
|
(2,370 |
) |
|
|
55,999 |
|
|
58,957 |
|
|
|
(5,311 |
) |
|
|
53,646 |
Allied Products & Other |
|
159,162 |
|
|
|
(2,718 |
) |
|
|
156,444 |
|
|
149,044 |
|
|
|
(1,337 |
) |
|
|
147,707 |
Intersegment Eliminations |
|
(47,041 |
) |
|
|
47,041 |
|
|
|
— |
|
|
(32,448 |
) |
|
|
32,448 |
|
|
|
— |
Total Consolidated |
$ |
662,367 |
|
|
$ |
— |
|
|
$ |
662,367 |
|
$ |
655,167 |
|
|
$ |
— |
|
|
$ |
655,167 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Nine Months Ended |
||||||||||||||||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||||||||||||||||
|
Net Sales |
|
Intersegment Net Sales |
|
Net Sales from External Customers |
|
Net Sales |
|
Intersegment Net Sales |
|
Net Sales from External Customers |
||||||||||
Pipe |
$ |
1,217,302 |
|
|
$ |
(36,974 |
) |
|
$ |
1,180,328 |
|
$ |
1,401,554 |
|
|
$ |
(31,483 |
) |
|
$ |
1,370,071 |
Infiltrator |
|
406,361 |
|
|
|
(63,405 |
) |
|
|
342,956 |
|
|
420,920 |
|
|
|
(66,317 |
) |
|
|
354,603 |
International |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
International - Pipe |
|
133,787 |
|
|
|
(3,917 |
) |
|
|
129,870 |
|
|
154,762 |
|
|
|
(18,509 |
) |
|
|
136,253 |
International - Allied Products & Other |
|
46,789 |
|
|
|
(27 |
) |
|
|
46,762 |
|
|
49,172 |
|
|
|
— |
|
|
|
49,172 |
Total International |
|
180,576 |
|
|
|
(3,944 |
) |
|
|
176,632 |
|
|
203,934 |
|
|
|
(18,509 |
) |
|
|
185,425 |
Allied Products & Other |
|
528,303 |
|
|
|
(7,586 |
) |
|
|
520,717 |
|
|
550,153 |
|
|
|
(6,690 |
) |
|
|
543,463 |
Intersegment Eliminations |
|
(111,909 |
) |
|
|
111,909 |
|
|
|
— |
|
|
(122,999 |
) |
|
|
122,999 |
|
|
|
— |
Total Consolidated |
$ |
2,220,633 |
|
|
$ |
— |
|
|
$ |
2,220,633 |
|
$ |
2,453,562 |
|
|
$ |
— |
|
|
$ |
2,453,562 |
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in
Reconciliation of Non-GAAP Financial Measures
This press release includes references to Adjusted EBITDA, Free Cash Flow and Adjusted earnings per share, non-GAAP financial measures. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These measures are not intended to be substitutes for those reported in accordance with GAAP. Adjusted EBITDA and Free Cash Flow may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures.
EBITDA and Adjusted EBITDA are non-GAAP financial measures that comprise net income before interest, income taxes, depreciation and amortization, stock-based compensation, non-cash charges and certain other expenses. The Company’s definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess financial performance and evaluate the effectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided below reconciliations of Adjusted EBITDA to net income.
Free Cash Flow is a non-GAAP financial measure that comprises cash flow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. In order to provide investors with a meaningful reconciliation, the Company has provided below a reconciliation of cash flow from operating activities to Free Cash Flow.
Adjusted Earnings per Share excludes (gains) losses on disposals of assets or business, restructuring expenses, impairment charges and transaction costs. Adjusted Earnings per Share are measures used by management and may be useful for investors to evaluate the Company's operational performance.
The following tables present a reconciliation of EBITDA and Adjusted EBITDA to Net Income, Free Cash Flow to Cash Flow from Operating Activities, and Adjusted Earnings per Share to Diluted Earnings per Share, the most comparable GAAP measures, for each of the periods indicated.
Reconciliation of Adjusted Gross Profit to Gross Profit
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||
(Amounts in thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
Segment Adjusted Gross Profit |
|
|
|
|
|
|
|
||||||
Pipe |
$ |
115,621 |
|
|
$ |
106,279 |
|
$ |
402,126 |
|
|
$ |
421,011 |
Infiltrator |
|
68,392 |
|
|
|
46,497 |
|
|
216,319 |
|
|
|
193,569 |
International |
|
14,012 |
|
|
|
13,342 |
|
|
51,380 |
|
|
|
51,456 |
Allied Products & Other |
|
88,150 |
|
|
|
78,401 |
|
|
300,574 |
|
|
|
293,472 |
Intersegment Elimination |
|
(1,922 |
) |
|
|
714 |
|
|
(4,431 |
) |
|
|
329 |
Total Segment Adjusted Gross Profit |
|
284,253 |
|
|
|
245,233 |
|
|
965,968 |
|
|
|
959,837 |
Depreciation and amortization |
|
23,088 |
|
|
|
20,573 |
|
|
68,509 |
|
|
|
61,675 |
Stock-based compensation expense |
|
1,316 |
|
|
|
743 |
|
|
3,473 |
|
|
|
2,175 |
Total Gross Profit |
$ |
259,849 |
|
|
$ |
223,917 |
|
$ |
893,986 |
|
|
$ |
895,987 |
Reconciliation of Adjusted EBITDA to Net Income
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
(Amounts in thousands) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income |
$ |
106,880 |
|
|
$ |
83,182 |
|
|
$ |
417,812 |
|
|
$ |
425,041 |
|
Depreciation and amortization |
|
38,053 |
|
|
|
35,846 |
|
|
|
112,014 |
|
|
|
107,346 |
|
Interest expense |
|
22,331 |
|
|
|
20,001 |
|
|
|
65,984 |
|
|
|
49,334 |
|
Income tax expense |
|
30,131 |
|
|
|
26,068 |
|
|
|
132,665 |
|
|
|
128,641 |
|
EBITDA |
|
197,395 |
|
|
|
165,097 |
|
|
|
728,475 |
|
|
|
710,362 |
|
Loss (gain) on disposal of assets and costs from exit and disposal activities |
|
2,512 |
|
|
|
(348 |
) |
|
|
(10,669 |
) |
|
|
(147 |
) |
Stock-based compensation expense |
|
7,402 |
|
|
|
6,179 |
|
|
|
23,636 |
|
|
|
19,912 |
|
Transaction costs |
|
1,030 |
|
|
|
1,334 |
|
|
|
3,054 |
|
|
|
3,417 |
|
Interest income |
|
(6,515 |
) |
|
|
(3,834 |
) |
|
|
(15,141 |
) |
|
|
(5,942 |
) |
Other adjustments(a) |
|
2,382 |
|
|
|
1,309 |
|
|
|
2,414 |
|
|
|
4,380 |
|
Adjusted EBITDA |
$ |
204,206 |
|
|
$ |
169,737 |
|
|
$ |
731,769 |
|
|
$ |
731,982 |
|
| (a) | Includes derivative fair value adjustments, foreign currency transaction (gains) losses, the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense. |
Reconciliation of Free Cash Flow to Cash flow from Operating Activities
|
Nine Months Ended December 31, |
||||||
(Amounts in thousands) |
2023 |
|
2022 |
||||
Net cash flow from operating activities |
$ |
700,262 |
|
|
$ |
660,438 |
|
Capital expenditures |
|
(136,385 |
) |
|
|
(126,858 |
) |
Free cash flow |
$ |
563,877 |
|
|
$ |
533,580 |
|
Reconciliation of Diluted Earnings per Share to Adjusted Earnings per Share
The following table diluted presents earnings per share on an adjusted basis to supplement the Company's discussion of its results of operations herein.
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
|||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||
Diluted Earnings Per Share |
$ |
1.34 |
|
|
$ |
0.99 |
|
$ |
5.24 |
|
|
$ |
5.02 |
|
Loss (gain) on disposal of assets and costs from exit and disposal activities |
|
0.03 |
|
|
|
— |
|
|
(0.13 |
) |
|
|
— |
|
Transaction costs |
|
0.01 |
|
|
|
0.02 |
|
|
0.04 |
|
|
|
0.04 |
|
Income tax impact of adjustments (a) |
|
(0.01 |
) |
|
|
— |
|
|
0.02 |
|
|
|
(0.01 |
) |
Adjusted Earnings per Share |
$ |
1.37 |
|
|
$ |
1.01 |
|
$ |
5.17 |
|
|
$ |
5.05 |
|
| (a) | The income tax impact of adjustments to each period is based on the statutory tax rate. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240208251947/en/
Michael Higgins
VP, Corporate Strategy & Investor Relations
(614) 658-0050
Michael.Higgins@adspipe.com
Source: Advanced Drainage Systems, Inc.
