HILLIARD, Ohio--(BUSINESS WIRE)--
Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a
leading global manufacturer of water management products and solutions
for commercial, residential, infrastructure and agricultural
applications, today announced that the Company will restate its prior
period financial statements and related financial information as filed
with the Securities and Exchange Commission (“SEC”). The restated
financial information will include the consolidated financial statements
for the annual periods ended March 31, 2016, 2015 and 2014, selected
annual financial information for the annual periods ended 2013 and 2012,
as well as the associated consolidated financial statements for the
quarterly periods for fiscal years 2016 and 2015. Accordingly, the
financial statements, including the related report of independent
registered public accounting firm thereon, and all press releases and
similar communications issued by the Company relating to those periods
should not be relied upon pending completion of the restatement. The
Company intends to file its restated financial information as soon as
possible.
Historically, the Company has classified its share-based awards as
equity awards and recorded the associated compensation expense based on
the award’s grant date fair value. Based upon an internal review of its
share-based award agreements and related administrative procedures, the
Company has concluded that it should have accounted for these awards as
liability-classified instead of equity-classified. The fair value of
liability-classified awards is remeasured at each reporting period until
settlement.
Certain tax withholding provisions that were added to award agreements
beginning in fiscal 2009 allowed award recipients to use net shares upon
exercise of their award to satisfy tax withholding requirements in
amounts greater than the minimum statutory withholding obligations. In
addition, prior to the Company’s initial public offering in fiscal 2015,
the Company had periodically repurchased shares resulting from option
exercises within six months of the exercise date. Both of these
practices would result in the liability classification for awards.
As part of its review of the foregoing compensation expense issues, the
Company also determined that additional adjustments are required for
historic compensation expense associated with certain executive
employment agreements as well as certain stock repurchase agreements in
place with members of senior management, whereby the Company was
required to repurchase shares upon the employee’s death. The stock
repurchase agreements were entered into in fiscal 2007 and terminated at
the time of the Company’s initial public offering in fiscal 2015.
While the Company continues to assess the impact of adjusting the
accounting for its compensation related agreements described above, the
effect of such treatment will result in the recognition of either
compensation expense or compensation benefit (reduction in compensation
expense) for various reporting periods. This recognition of compensation
expense or compensation benefit will have a corresponding impact to the
Company’s previously reported net income. The Company is in the process
of finalizing the impact these adjustments will have to its previously
reported financial statements, including the impact to net income.
However, due to the nature of the adjustments, the Company does not
anticipate that the restatement will impact revenue or Adjusted EBITDA,
a non-GAAP financial measure. The Company’s definition of Adjusted
EBITDA excludes the impact of share-based compensation and in its
restated filings will exclude the impact of retirement or termination
related compensation expense. Additional information regarding Adjusted
EBITDA is set forth below under “Non-GAAP Financial Measures”.
The Company’s review of its prior period accounting with respect to its
share-based awards and other compensation matters are ongoing and
subject to change.
About ADS
Advanced Drainage Systems (ADS) is the leading manufacturer of high
performance thermoplastic corrugated pipe, providing a comprehensive
suite of water management products and superior drainage solutions for
use in the construction and infrastructure marketplace. Its innovative
products are used across a broad range of end markets and applications,
including non-residential, residential, agriculture and infrastructure
applications. The Company has established a leading position in many of
these end markets by leveraging its national sales and distribution
platform, its overall product breadth and scale and its manufacturing
excellence. Founded in 1966, the Company operates a global network of 61
manufacturing plants and 29 distribution centers.
Non-GAAP Financial Measures
This press release includes references to Adjusted EBITDA, a non-GAAP
financial measure. This non-GAAP financial measure is used in addition
to and in conjunction with results presented in accordance with GAAP.
This measure is not intended to be a substitute for those reported in
accordance with GAAP. Adjusted EBITDA may be different from non-GAAP
financial measures used by other companies, even when similar terms are
used to identify such measures.
Adjusted EBITDA is a non-GAAP financial measure that comprises 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.
Forward Looking Statements
Certain statements in this press release may be deemed to be
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.
Such statements include, but are not limited to, statements regarding
the anticipated restatements and expected impact of the Company’s
accounting adjustments on its financial statements and other financial
data for the non-reliance periods and for future periods, and the
anticipated timing of filing of the restated filings. 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” 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
include, but are not limited to, the risk that additional information
may arise during the course of the Company’s ongoing accounting review
that would require the Company to make additional adjustments or
revisions or to restate further the financial statements and other
financial data for the non-reliance periods and any future periods, any
further delay in the filing of the Company’s filings with the SEC or
restated filings with the SEC, a conclusion that the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) were ineffective, the review of potential
weaknesses or deficiencies in the Company’s disclosure controls, and
discovering further weaknesses of which we are not currently aware or
which have not been detected, additional uncertainties related to
accounting issues generally 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 risks and 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161129006302/en/
Advanced Drainage Systems, Inc.
Michael Higgins, 614-658-0050
Director
of Investor Relations and Business Strategy
mike.higgins@ads-pipe.com
Source: Advanced Drainage Systems, Inc.