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 non-residential, residential, infrastructure and agricultural
applications, today announced financial results for the fourth quarter
and fiscal year ended March 31, 2018.
Fourth Quarter Fiscal 2018 Highlights
-
Net sales increased 2.4% to $250.1 million
-
Net income increased 73.1% to $4.9 million
-
Adjusted EBITDA (Non-GAAP) increased 114.8% to $27.0 million
Fiscal Year 2018 Highlights
-
Net sales increased 5.8% to $1,330.4 million
-
Net income increased 80.4% to $64.8 million
-
Adjusted EBITDA (Non-GAAP) increased 8.7% to $210.2 million
-
Cash flow from operating activities increased 31.5% to $137.1
million
-
Free cash flow (Non-GAAP) increased 65.8% to $95.4 million
Scott Barbour, President and Chief Executive Officer of ADS commented,
“We had a strong finish to fiscal 2018, achieving our financial goals
for the year through disciplined execution of our fundamentals,
successfully converting traditional materials to our plastic pipe
products and driving our water management solutions with allied
products.”
Barbour continued, “From a top line perspective, sales in our core
domestic construction markets grew 500 basis points above the market. We
focused on improving profitability through sharper operating execution
and achieving better returns on our capital – two critical areas of
focus since I came on board last September. I am happy to report that we
have made significant strides towards these goals, which was key to
achieving our profitability targets for the year. With fiscal 2018 now
behind us, I am excited heading into the new year and look forward to
additional growth and further progress towards achieving sustained
profitability and improved performance through disciplined execution.”
Fourth Quarter Fiscal 2018 Results
Net sales increased 2.4% to $250.1 million, as compared to $244.2
million in the prior year quarter. Domestic net sales increased 1.2% to
$226.2 million as compared to $223.4 million in the prior year quarter,
driven by favorable pricing and strong allied product sales in the
construction markets. International net sales increased 15.1% to $23.9
million as compared to $20.8 million in the prior year quarter, driven
by growth in Canadian construction markets and export sales.
Gross profit increased 22.6% to $48.1 million, as compared to $39.3
million the prior year quarter. As a percentage of net sales, gross
profit increased 310 basis points to 19.2% compared to 16.1% in the
prior year, primarily due to favorable pricing as well as lower
manufacturing costs.
Adjusted EBITDA (Non-GAAP) increased 114.8% to $27.0 million, as
compared to $12.6 million in the prior year quarter. As a percentage of
net sales, Adjusted EBITDA increased 570 basis points to 10.8% as
compared to 5.1% in the prior year. The increase in Adjusted EBITDA
margin was largely attributed to the factors mentioned above as well as
a decrease in selling, general and administrative expenses.
Reconciliations of GAAP to Non-GAAP financial measures for Adjusted
EBITDA and Free Cash Flow 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.”
Fiscal Year 2018 Results
Net sales increased 5.8% to $1,330.4 million, as compared to $1,257.3
million in fiscal 2017. Domestic net sales increased 6.5% to $1,174.4
million as compared to $1,102.2 million in fiscal 2017, driven by growth
in core construction markets and favorable pricing. International net
sales increased slightly to $155.9 million as compared to $155.0 million
in fiscal 2017.
Gross profit increased 2.3% to $302.5 million, as compared to $295.8
million in fiscal 2017. As a percentage of net sales, gross profit
decreased 80 basis points to 22.7% compared to 23.5% in fiscal 2017,
primarily due to increases in raw material and operational costs.
Adjusted EBITDA (Non-GAAP) increased 8.7% to $210.2 million, as compared
to $193.4 million in fiscal 2017. As a percentage of net sales, Adjusted
EBITDA increased 40 basis points to 15.8% as compared to 15.4% in fiscal
2017. The increase in Adjusted EBITDA margin was largely attributed to
the factors mentioned above.
Income tax expense decreased 53.6% to $11.4 million and reflected the
impact of the Tax Cuts and Jobs Act (“Tax Act”), including a $16.0
million benefit to income tax expense related to the revaluation of
deferred tax attributes and a $1.0 million income tax expense on the
Company’s deemed repatriation of foreign earnings. The income tax
expense also included a $2.7 million benefit from the impact of the
change in federal statutory rate.
Net cash provided by operating activities increased 31.5% to $137.1
million, as compared to $104.2 million in fiscal 2017. Free cash flow
(Non-GAAP) increased 65.8% to $94.5 million, as compared to $57.6
million in fiscal 2017. Net debt (total debt and capital lease
obligations net of cash) was $362.1 million as of March 31, 2018, a
decrease of $60.2 million from March 31, 2017.
Fiscal Year 2019 Outlook
Based on current visibility, backlog of existing orders and business
trends, the Company has provided its net sales and Adjusted EBITDA
targets for fiscal 2019. Net sales are expected to be in the range of
$1.375 billion to $1.425 billion and Adjusted EBITDA to be in the range
of $220 to $240 million. Capital expenditures are expected to be
approximately $60 to $70 million.
Webcast Information
The Company will host an investor conference call and webcast on
Tuesday, May 29, 2018 at 10:00 a.m. Eastern Time. The live call can be
accessed by dialing 1-866-393-4306 (US toll-free) or 1-734-385-2616
(international) and asking to be connected to the Advanced Drainage
Systems, Inc. call. The live webcast will also be accessible via the
"Events Calendar” section of the Company’s Investor Relations website, www.investors.ads-pipe.com.
An archived version of the webcast will be available for 90 days
following the call.
About the Company
Advanced Drainage Systems 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, overall product breadth and scale and manufacturing
excellence. Founded in 1966, the Company operates a global network of
approximately 60 manufacturing plants and over 30 distribution centers.
To learn more about the ADS, please visit the Company’s website at www.ads-pipe.com.
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. 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; volatility in general business and economic conditions in
the markets in which we operate, including, without limitation, factors
relating to availability of credit, interest rates, fluctuations in
capital and business and consumer confidence; 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, including competition from both
manufacturers of high performance thermoplastic corrugated pipe and
manufacturers of products using alternative materials; our ability to
continue to convert current demand for concrete, steel and PVC pipe
products into demand for our high performance thermoplastic corrugated
pipe and Allied Products; 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; our ability to achieve the acquisition component of our
growth strategy; the risk associated with manufacturing processes; our
ability to manage our assets; the risks associated with our product
warranties; our ability to manage our supply purchasing and customer
credit policies; the risks associated with our self-insured programs;
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; our ability to project product mix;
the risks associated with our current levels of indebtedness;
fluctuations in our effective tax rate, including from the recently
enacted Tax Cuts and Jobs Act; changes to our operating results, cash
flows and financial condition attributable to the recently enacted Tax
Cuts and Jobs Act; our ability to meet future capital requirements and
fund our liquidity needs; the risk that additional information may arise
that would require the Company to make additional adjustments or
revisions or to restate the financial statements and other financial
data for certain prior periods and any future periods, any delay in the
filing of any filings with the Securities and Exchange Commission
(“SEC”); the review of potential weaknesses or deficiencies in the
Company’s disclosure controls and procedures, and discovering further
weaknesses of which we are not currently aware or which have not been
detected and the 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
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
|
|
|
Three Months Ended
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
(Amounts in thousands, except per share data)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net sales
|
|
$
|
250,114
|
|
|
$
|
244,184
|
|
|
$
|
1,330,354
|
|
|
$
|
1,257,261
|
|
Cost of goods sold
|
|
|
201,999
|
|
|
|
204,933
|
|
|
|
1,027,873
|
|
|
|
961,451
|
|
Gross profit
|
|
|
48,115
|
|
|
|
39,251
|
|
|
|
302,481
|
|
|
|
295,810
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
22,416
|
|
|
|
22,743
|
|
|
|
92,764
|
|
|
|
91,475
|
|
General and administrative
|
|
|
24,041
|
|
|
|
32,521
|
|
|
|
98,392
|
|
|
|
110,950
|
|
Loss on disposal of assets and costs from exit and disposal
activities
|
|
|
4,535
|
|
|
|
5,432
|
|
|
|
15,003
|
|
|
|
8,509
|
|
Intangible amortization
|
|
|
1,997
|
|
|
|
2,117
|
|
|
|
8,068
|
|
|
|
8,548
|
|
Income from operations
|
|
|
(4,874
|
)
|
|
|
(23,562
|
)
|
|
|
88,254
|
|
|
|
76,328
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
2,642
|
|
|
|
3,916
|
|
|
|
15,262
|
|
|
|
17,467
|
|
Derivative gains and other income, net
|
|
|
506
|
|
|
|
(427
|
)
|
|
|
(3,950
|
)
|
|
|
(5,970
|
)
|
Income before income taxes
|
|
|
(8,022
|
)
|
|
|
(27,051
|
)
|
|
|
76,942
|
|
|
|
64,831
|
|
Income tax (benefit) expense
|
|
|
(4,401
|
)
|
|
|
(10,913
|
)
|
|
|
11,411
|
|
|
|
24,615
|
|
Equity in net (income) loss of unconsolidated affiliates
|
|
|
1,235
|
|
|
|
1,914
|
|
|
|
739
|
|
|
|
4,308
|
|
Net income
|
|
|
(4,856
|
)
|
|
|
(18,052
|
)
|
|
|
64,792
|
|
|
|
35,908
|
|
Less: net income attributable to noncontrolling interest
|
|
|
847
|
|
|
|
58
|
|
|
|
2,785
|
|
|
|
2,958
|
|
Net income attributable to ADS
|
|
|
(5,703
|
)
|
|
|
(18,110
|
)
|
|
|
62,007
|
|
|
|
32,950
|
|
Accretion of redeemable noncontrolling interest
|
|
|
-
|
|
|
|
(419
|
)
|
|
|
-
|
|
|
|
(1,560
|
)
|
Dividends to redeemable convertible preferred stockholders
|
|
|
(443
|
)
|
|
|
(399
|
)
|
|
|
(1,858
|
)
|
|
|
(1,646
|
)
|
Dividends paid to unvested restricted stockholders
|
|
|
(2
|
)
|
|
|
(69
|
)
|
|
|
(49
|
)
|
|
|
(73
|
)
|
Net income available to common stockholders and participating
securities
|
|
|
(6,148
|
)
|
|
|
(18,997
|
)
|
|
|
60,100
|
|
|
|
29,671
|
|
Undistributed income allocated to participating securities
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,514
|
)
|
|
|
(1,700
|
)
|
Net income available to common stockholders
|
|
$
|
(6,148
|
)
|
|
$
|
(18,997
|
)
|
|
$
|
55,586
|
|
|
$
|
27,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
56,302
|
|
|
|
55,186
|
|
|
|
55,696
|
|
|
|
54,919
|
|
Diluted
|
|
|
56,302
|
|
|
|
55,186
|
|
|
|
56,334
|
|
|
|
55,624
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.11
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
1.00
|
|
|
$
|
0.51
|
|
Diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
0.99
|
|
|
$
|
0.50
|
|
Cash dividends declared per share
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.28
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(unaudited)
|
|
|
|
As of March 31,
|
|
(Amounts in thousands)
|
|
2018
|
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
17,587
|
|
|
$
|
6,450
|
|
Receivables
|
|
|
171,961
|
|
|
|
168,943
|
|
Inventories
|
|
|
263,792
|
|
|
|
258,430
|
|
Other current assets
|
|
|
5,113
|
|
|
|
6,743
|
|
Total current assets
|
|
|
458,453
|
|
|
|
440,566
|
|
Property, plant and equipment, net
|
|
|
399,381
|
|
|
|
406,858
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
103,017
|
|
|
|
100,566
|
|
Intangible assets, net
|
|
|
44,437
|
|
|
|
51,758
|
|
Other assets
|
|
|
37,954
|
|
|
|
46,537
|
|
Total assets
|
|
$
|
1,043,242
|
|
|
$
|
1,046,285
|
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Current maturities of debt obligations
|
|
$
|
26,848
|
|
|
$
|
37,789
|
|
Current maturities of capital lease obligations
|
|
|
22,007
|
|
|
|
21,450
|
|
Accounts payable
|
|
|
105,521
|
|
|
|
121,922
|
|
Other accrued liabilities
|
|
|
60,560
|
|
|
|
66,386
|
|
Accrued income taxes
|
|
|
6,307
|
|
|
|
8,207
|
|
Total current liabilities
|
|
|
221,243
|
|
|
|
255,754
|
|
Long-term debt obligations
|
|
|
270,900
|
|
|
|
310,849
|
|
Long-term capital lease obligations
|
|
|
59,963
|
|
|
|
58,710
|
|
Deferred tax liabilities
|
|
|
32,304
|
|
|
|
44,007
|
|
Other liabilities
|
|
|
25,023
|
|
|
|
26,530
|
|
Total liabilities
|
|
|
609,433
|
|
|
|
695,850
|
|
Mezzanine equity:
|
|
|
|
|
|
|
|
|
Redeemable convertible preferred stock
|
|
|
291,247
|
|
|
|
302,814
|
|
Deferred compensation — unearned ESOP shares
|
|
|
(190,168
|
)
|
|
|
(198,216
|
)
|
Redeemable noncontrolling interest in subsidiaries
|
|
|
8,471
|
|
|
|
8,227
|
|
Total mezzanine equity
|
|
|
109,550
|
|
|
|
112,825
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
11,426
|
|
|
|
12,393
|
|
Paid-in capital
|
|
|
364,908
|
|
|
|
755,787
|
|
Common stock in treasury, at cost
|
|
|
(8,277
|
)
|
|
|
(436,984
|
)
|
Accumulated other comprehensive loss
|
|
|
(21,247
|
)
|
|
|
(24,815
|
)
|
Retained deficit
|
|
|
(39,214
|
)
|
|
|
(83,678
|
)
|
Total ADS stockholders’ equity
|
|
|
307,596
|
|
|
|
222,703
|
|
Noncontrolling interest in subsidiaries
|
|
|
16,663
|
|
|
|
14,907
|
|
Total stockholders’ equity
|
|
|
324,259
|
|
|
|
237,610
|
|
Total liabilities, mezzanine equity and stockholders’ equity
|
|
$
|
1,043,242
|
|
|
$
|
1,046,285
|
|
|
|
|
|
|
|
|
|
|
|
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
|
|
Fiscal Year Ended March 31,
|
|
(Amounts in thousands)
|
|
2018
|
|
|
2017
|
|
Cash Flow from Operating Activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
64,792
|
|
|
$
|
35,908
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
75,003
|
|
|
|
72,355
|
|
Deferred income taxes
|
|
|
(11,239
|
)
|
|
|
(8,971
|
)
|
Loss on disposal of assets and costs from exit and disposal
activities
|
|
|
12,655
|
|
|
|
7,316
|
|
ESOP and stock-based compensation
|
|
|
18,845
|
|
|
|
17,875
|
|
Amortization of deferred financing charges
|
|
|
934
|
|
|
|
1,408
|
|
Fair market value adjustments to derivatives
|
|
|
(3,244
|
)
|
|
|
(10,921
|
)
|
Equity in net (income) loss of unconsolidated affiliates
|
|
|
739
|
|
|
|
4,308
|
|
Gain on bargain purchase of PTI acquisition
|
|
|
-
|
|
|
|
(609
|
)
|
Other operating activities
|
|
|
1,010
|
|
|
|
(5,871
|
)
|
Changes in working capital:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(4,327
|
)
|
|
|
15,055
|
|
Inventories
|
|
|
(4,841
|
)
|
|
|
(27,917
|
)
|
Prepaid expenses and other current assets
|
|
|
1,648
|
|
|
|
(2,548
|
)
|
Accounts payable, accrued expenses, and other liabilities
|
|
|
(14,855
|
)
|
|
|
6,851
|
|
Net cash provided by operating activities
|
|
|
137,120
|
|
|
|
104,239
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(41,709
|
)
|
|
|
(46,676
|
)
|
Cash paid for acquisitions, net of cash acquired
|
|
|
(1,990
|
)
|
|
|
(8,573
|
)
|
Purchases of property, plant and equipment through financing
|
|
|
-
|
|
|
|
(4,620
|
)
|
Proceeds from sale of corporate-owned life insurance
|
|
|
13,644
|
|
|
|
-
|
|
Other investing activities
|
|
|
(390
|
)
|
|
|
(1,390
|
)
|
Net cash used in investing activities
|
|
|
(30,445
|
)
|
|
|
(61,259
|
)
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from Revolving Credit Facility
|
|
|
487,850
|
|
|
|
412,400
|
|
Payments on Revolving Credit Facility
|
|
|
(512,150
|
)
|
|
|
(382,600
|
)
|
Payments on Term Loan
|
|
|
(72,500
|
)
|
|
|
(10,000
|
)
|
Proceeds from Senior Loan
|
|
|
75,000
|
|
|
|
-
|
|
Payments on Senior Notes
|
|
|
(25,000
|
)
|
|
|
(25,000
|
)
|
Proceeds from notes, mortgages, and other debt
|
|
|
-
|
|
|
|
1,000
|
|
Payments of notes, mortgages, and other debt
|
|
|
(1,905
|
)
|
|
|
(870
|
)
|
Payments on loans against CSV life insurance policies
|
|
|
-
|
|
|
|
(6,823
|
)
|
Equipment financing loans
|
|
|
-
|
|
|
|
4,620
|
|
Debt issuance costs
|
|
|
(2,268
|
)
|
|
|
-
|
|
Payments on capital lease obligations
|
|
|
(24,214
|
)
|
|
|
(21,760
|
)
|
Cash dividends paid
|
|
|
(18,478
|
)
|
|
|
(16,820
|
)
|
Proceeds from option exercises
|
|
|
9,087
|
|
|
|
4,011
|
|
Repurchase of common stock
|
|
|
(7,947
|
)
|
|
|
-
|
|
Other financing activities
|
|
|
(2,428
|
)
|
|
|
(983
|
)
|
Net cash used in financing activities
|
|
|
(94,953
|
)
|
|
|
(42,825
|
)
|
Effect of exchange rate changes on cash
|
|
|
(585
|
)
|
|
|
(260
|
)
|
Net change in cash
|
|
|
11,137
|
|
|
|
(105
|
)
|
Cash at beginning of period
|
|
|
6,450
|
|
|
|
6,555
|
|
Cash at end of period
|
|
$
|
17,587
|
|
|
$
|
6,450
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Data
The following tables set forth net sales by reportable segment for the
three and nine months ended December 31, 2017 and 2016, respectively.
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
(Amounts in thousands
|
|
|
March 31,
|
|
|
%
|
|
|
|
March 31,
|
|
|
%
|
|
except percentages)
|
|
|
2018
|
|
|
2017
|
|
|
Variance
|
|
|
|
2018
|
|
|
2017
|
|
|
Variance
|
|
Domestic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipe
|
|
|
$
|
159,342
|
|
|
$
|
159,149
|
|
|
|
0.1
|
%
|
|
|
$
|
835,421
|
|
|
$
|
786,546
|
|
|
|
6.2
|
%
|
Allied Products
|
|
|
|
66,837
|
|
|
|
64,239
|
|
|
|
4.0
|
%
|
|
|
|
339,011
|
|
|
|
315,690
|
|
|
|
7.4
|
%
|
Domestic net sales
|
|
|
$
|
226,179
|
|
|
$
|
223,388
|
|
|
|
1.2
|
%
|
|
|
$
|
1,174,432
|
|
|
$
|
1,102,236
|
|
|
|
6.5
|
%
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipe
|
|
|
$
|
17,505
|
|
|
$
|
16,552
|
|
|
|
5.8
|
%
|
|
|
$
|
118,644
|
|
|
$
|
122,384
|
|
|
|
(3.1
|
%)
|
Allied Products
|
|
|
|
6,430
|
|
|
|
4,244
|
|
|
|
51.5
|
%
|
|
|
|
37,278
|
|
|
|
32,641
|
|
|
|
14.2
|
%
|
International net sales
|
|
|
$
|
23,935
|
|
|
$
|
20,796
|
|
|
|
15.1
|
%
|
|
|
$
|
155,922
|
|
|
$
|
155,025
|
|
|
|
0.6
|
%
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipe
|
|
|
$
|
176,847
|
|
|
$
|
175,701
|
|
|
|
0.7
|
%
|
|
|
$
|
954,065
|
|
|
$
|
908,930
|
|
|
|
5.0
|
%
|
Allied Products
|
|
|
|
73,267
|
|
|
|
68,483
|
|
|
|
7.0
|
%
|
|
|
|
376,289
|
|
|
|
348,331
|
|
|
|
8.0
|
%
|
Net sales
|
|
|
$
|
250,114
|
|
|
$
|
244,184
|
|
|
|
2.4
|
%
|
|
|
$
|
1,330,354
|
|
|
$
|
1,257,261
|
|
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Ownership Plan (“ESOP”)
The Company established an ESOP to enable employees to acquire stock
ownership in ADS in the form of redeemable convertible preferred shares
(“preferred shares”). All preferred shares will be converted to common
shares by plan maturity, which will be no later than March 2023. The
ESOP’s conversion of preferred shares into common shares will have a
meaningful impact on net income, net income per share and common shares
outstanding. The common shares outstanding will be greater after
conversion.
Net Income
The impact of the ESOP on net income includes the ESOP deferred
compensation attributable to the preferred allocated to employee
accounts during the period, which is a non-cash charge to our earnings
and not deductible for income tax purposes.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
|
March 31,
|
(Amounts in thousands)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
Net income attributable to ADS
|
|
|
$
|
(5,703
|
)
|
|
|
$
|
(18,110
|
)
|
|
|
$
|
62,007
|
|
|
$
|
32,950
|
ESOP deferred compensation
|
|
|
|
3,778
|
|
|
|
|
2,140
|
|
|
|
|
11,724
|
|
|
|
9,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding
The conversion of the preferred shares will increase the number of
common shares outstanding. Preferred shares will convert to common
shares at plan maturity, or upon retirement, disability, death or vested
terminations over the life of the plan.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
(Shares in thousands)
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Weighted average common shares outstanding - Basic
|
|
|
|
56,302
|
|
|
|
55,186
|
|
|
|
55,696
|
|
|
|
54,919
|
Conversion of preferred shares
|
|
|
|
18,030
|
|
|
|
18,686
|
|
|
|
18,298
|
|
|
|
18,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This press release contains financial information determined by methods
other than in accordance with accounting principles generally accepted
in the United States of America (“GAAP”). ADS management uses non-GAAP
measures in its analysis of the Company’s performance. Investors are
encouraged to review the reconciliation of non-GAAP financial measures
to the comparable GAAP results available in the accompanying tables.
Reconciliation of Non-GAAP Financial Measures
This press release includes references to Adjusted EBITDA and Free Cash
Flow, 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.
The following tables present a reconciliation of EBITDA and Adjusted
EBITDA to Net Income and Free Cash Flow to Cash Flow from Operating
Activities, the most comparable GAAP measures, for each of the periods
indicated.
|
Reconciliation of Adjusted EBITDA to Net Income
|
|
|
|
Three Months Ended
|
|
|
Fiscal Year Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
(Amounts in thousands)
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net income
|
|
$
|
(4,856
|
)
|
|
$
|
(18,052
|
)
|
|
$
|
64,792
|
|
|
$
|
35,908
|
|
Depreciation and amortization
|
|
|
19,210
|
|
|
|
18,290
|
|
|
|
75,003
|
|
|
|
72,355
|
|
Interest expense
|
|
|
2,642
|
|
|
|
3,916
|
|
|
|
15,262
|
|
|
|
17,467
|
|
Income tax (benefit) expense
|
|
|
(4,401
|
)
|
|
|
(10,913
|
)
|
|
|
11,411
|
|
|
|
24,615
|
|
EBITDA
|
|
|
12,595
|
|
|
|
(6,759
|
)
|
|
|
166,468
|
|
|
|
150,345
|
|
Derivative fair value adjustments
|
|
|
292
|
|
|
|
377
|
|
|
|
(443
|
)
|
|
|
(10,921
|
)
|
Foreign currency transaction gains
|
|
|
1,130
|
|
|
|
49
|
|
|
|
(1,748
|
)
|
|
|
(1,629
|
)
|
Loss on disposal of assets and costs from exit and disposal
activities
|
|
|
4,535
|
|
|
|
5,432
|
|
|
|
15,003
|
|
|
|
8,509
|
|
Unconsolidated affiliates interest, tax, depreciation and
amortization
|
|
|
632
|
|
|
|
702
|
|
|
|
2,692
|
|
|
|
2,751
|
|
Contingent consideration remeasurement
|
|
|
6
|
|
|
|
(307
|
)
|
|
|
39
|
|
|
|
(265
|
)
|
Stock-based compensation expense (benefit)
|
|
|
1,981
|
|
|
|
5,608
|
|
|
|
7,121
|
|
|
|
8,307
|
|
ESOP deferred compensation
|
|
|
3,778
|
|
|
|
2,140
|
|
|
|
11,724
|
|
|
|
9,568
|
|
Executive retirement expense (benefit)
|
|
|
491
|
|
|
|
1,104
|
|
|
|
1,473
|
|
|
|
1,092
|
|
Inventory step up related to PTI acquisition
|
|
|
-
|
|
|
|
525
|
|
|
|
-
|
|
|
|
525
|
|
Bargain purchase gain on PTI acquisition
|
|
|
-
|
|
|
|
(609
|
)
|
|
|
-
|
|
|
|
(609
|
)
|
Restatement-related costs
|
|
|
837
|
|
|
|
2,635
|
|
|
|
4,227
|
|
|
|
24,026
|
|
Legal settlement
|
|
|
200
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
312
|
|
|
|
1,300
|
|
|
|
312
|
|
|
|
1,300
|
|
Transaction costs
|
|
|
213
|
|
|
|
372
|
|
|
|
1,362
|
|
|
|
372
|
|
Adjusted EBITDA
|
|
$
|
27,002
|
|
|
$
|
12,569
|
|
|
$
|
210,230
|
|
|
$
|
193,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Adjusted EBITDA to Net Income
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
(Amounts in thousands)
|
|
Domestic
|
|
|
International
|
|
|
Domestic
|
|
|
International
|
|
Net income
|
|
$
|
(4,558
|
)
|
|
$
|
(298
|
)
|
|
$
|
(8,586
|
)
|
|
$
|
(9,466
|
)
|
Depreciation and amortization
|
|
|
17,253
|
|
|
|
1,957
|
|
|
|
16,329
|
|
|
|
1,961
|
|
Interest expense
|
|
|
2,566
|
|
|
|
76
|
|
|
|
3,813
|
|
|
|
103
|
|
Income tax (benefit) expense
|
|
|
(3,384
|
)
|
|
|
(1,017
|
)
|
|
|
(9,533
|
)
|
|
|
(1,380
|
)
|
EBITDA
|
|
|
11,877
|
|
|
|
718
|
|
|
|
2,023
|
|
|
|
(8,782
|
)
|
Derivative fair value adjustments
|
|
|
292
|
|
|
|
-
|
|
|
|
377
|
|
|
|
-
|
|
Foreign currency transaction gains
|
|
|
-
|
|
|
|
1,130
|
|
|
|
-
|
|
|
|
49
|
|
Loss on disposal of assets and costs from exit and disposal
activities
|
|
|
3,995
|
|
|
|
540
|
|
|
|
2,753
|
|
|
|
2,679
|
|
Unconsolidated affiliates interest, tax, depreciation and
amortization
|
|
|
295
|
|
|
|
337
|
|
|
|
262
|
|
|
|
440
|
|
Contingent consideration remeasurement
|
|
|
6
|
|
|
|
-
|
|
|
|
(307
|
)
|
|
|
-
|
|
Stock-based compensation expense (benefit)
|
|
|
1,981
|
|
|
|
-
|
|
|
|
5,608
|
|
|
|
-
|
|
ESOP deferred compensation
|
|
|
3,778
|
|
|
|
-
|
|
|
|
2,140
|
|
|
|
-
|
|
Executive retirement expense (benefit)
|
|
|
491
|
|
|
|
-
|
|
|
|
1,104
|
|
|
|
-
|
|
Inventory step up related to PTI acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
525
|
|
|
|
-
|
|
Bargain purchase gain on PTI acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
(609
|
)
|
|
|
-
|
|
Restatement-related costs
|
|
|
837
|
|
|
|
-
|
|
|
|
2,635
|
|
|
|
-
|
|
Legal settlement
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
312
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,300
|
|
Transaction costs
|
|
|
213
|
|
|
|
-
|
|
|
|
372
|
|
|
|
-
|
|
Adjusted EBITDA
(a)
|
|
$
|
24,277
|
|
|
$
|
2,725
|
|
|
$
|
16,883
|
|
|
$
|
(4,314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
|
|
2018
|
|
|
2017
|
|
(Amounts in thousands)
|
|
Domestic
|
|
|
International
|
|
|
Domestic
|
|
|
International
|
|
Net income
|
|
$
|
57,279
|
|
|
$
|
7,513
|
|
|
$
|
35,118
|
|
|
$
|
790
|
|
Depreciation and amortization
|
|
|
66,978
|
|
|
|
8,025
|
|
|
|
63,747
|
|
|
|
8,608
|
|
Interest expense
|
|
|
14,929
|
|
|
|
333
|
|
|
|
17,049
|
|
|
|
418
|
|
Income tax expense
|
|
|
9,199
|
|
|
|
2,212
|
|
|
|
21,786
|
|
|
|
2,829
|
|
EBITDA
|
|
|
148,385
|
|
|
|
18,083
|
|
|
|
137,700
|
|
|
|
12,645
|
|
Derivative fair value adjustments
|
|
|
(443
|
)
|
|
|
-
|
|
|
|
(10,921
|
)
|
|
|
-
|
|
Foreign currency transaction gains
|
|
|
-
|
|
|
|
(1,748
|
)
|
|
|
-
|
|
|
|
(1,629
|
)
|
Loss on disposal of assets and costs from exit and disposal
activities
|
|
|
14,248
|
|
|
|
755
|
|
|
|
4,793
|
|
|
|
3,716
|
|
Unconsolidated affiliates interest, tax, depreciation and
amortization
|
|
|
1,181
|
|
|
|
1,511
|
|
|
|
1,088
|
|
|
|
1,663
|
|
Contingent consideration remeasurement
|
|
|
39
|
|
|
|
-
|
|
|
|
(265
|
)
|
|
|
-
|
|
Stock-based compensation expense (benefit)
|
|
|
7,121
|
|
|
|
-
|
|
|
|
8,307
|
|
|
|
-
|
|
ESOP deferred compensation
|
|
|
11,724
|
|
|
|
-
|
|
|
|
9,568
|
|
|
|
-
|
|
Executive retirement expense (benefit)
|
|
|
1,473
|
|
|
|
-
|
|
|
|
1,092
|
|
|
|
-
|
|
Inventory step up related to PTI acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
525
|
|
|
|
-
|
|
Bargain purchase gain on PTI acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
(609
|
)
|
|
|
-
|
|
Restatement-related costs
|
|
|
4,227
|
|
|
|
-
|
|
|
|
24,026
|
|
|
|
-
|
|
Legal settlement
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Impairment of investment in unconsolidated affiliate
|
|
|
312
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,300
|
|
Transaction costs
|
|
|
1,362
|
|
|
|
-
|
|
|
|
372
|
|
|
|
-
|
|
Adjusted EBITDA
(a)
|
|
$
|
191,629
|
|
|
$
|
18,601
|
|
|
$
|
175,676
|
|
|
$
|
17,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Free Cash Flow to Cash flow from Operating
Activities
|
|
|
|
|
|
Fiscal Year Ended March 31,
|
|
(Amounts in thousands)
|
|
|
|
2018
|
|
|
2017
|
|
Net cash provided by operating activities
|
|
|
|
$
|
137,120
|
|
|
$
|
104,239
|
|
Capital expenditures
|
|
|
|
|
(41,709
|
)
|
|
|
(46,676
|
)
|
Free cash flow
|
|
|
|
$
|
95,411
|
|
|
$
|
57,563
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20180529005326/en/
Advanced Drainage Systems, Inc.
Michael Higgins, 614-658-0050
Director,
Investor Relations and Business Strategy
Mike.Higgins@ads-pipe.com
Source: Advanced Drainage Systems, Inc.