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Advanced Drainage Systems Announces First Quarter Fiscal 2021 Results

08/06/2020

HILLIARD, Ohio--(BUSINESS WIRE)-- Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and on-site septic waste water industries today announced financial results for the first quarter ended June 30, 2020.

First Quarter Fiscal 2021 Results

  • Net sales increased 22.9% to $508.6 million
  • Net income increased to $70.7 million, compared to a net loss of $227.5 million in the prior year
  • Adjusted EBITDA (Non-GAAP) increased 98.6% to $159.5 million
  • Cash provided by operating activities increased 112.8% to $133.7 million
  • Free cash flow (Non-GAAP) increased 132.4% to $123.4 million

Scott Barbour, President and Chief Executive Officer of ADS commented, “We had a strong start to fiscal 2021 as demand and business activity remained stable overall in the first quarter, with underlying variability by geography and end market. Strong performance in key growth states like the Carolinas, Florida, the Southeast and Utah was partially offset early in the quarter by states that reduced construction activity due to the COVID pandemic. Additionally, we experienced a strong selling season in the domestic Agriculture market with 36% growth in the first quarter. As a whole, ADS benefitted from our national presence as well as our geographic and end market exposure, including the increased exposure to the Residential end market that Infiltrator provides.”

Barbour continued, “We also achieved record profitability in the first quarter. Organic* Adjusted EBITDA margin increased 830 basis points driven by favorable material cost, lower manufacturing and transportation costs driven by our operational initiatives, contributions from the proactive cost mitigation steps announced in March, and leverage from the sales growth in both pipe and Allied products. Consolidated Adjusted EBITDA margin increased 1200 basis points including the impact of the Infiltrator acquisition announced August 1, 2019. Infiltrator achieved record profitability in the quarter due to favorable material costs, the impact from our synergy programs and continued execution of their proven business model.”

Barbour concluded, “The second quarter continues similarly to the first quarter at both ADS and Infiltrator. Our order book, project tracking, book to bill ratio and backlog all remain positive year-over-year. We expect the normal seasonal patterns to apply as the year progresses. However, uncertainties exist regarding the future market environment. Disciplined execution and focusing on the basics are particularly important in the current market environment and we will be focused on these as we build on our strong start to fiscal 2021.”

*Organic growth (Non-GAAP) excludes net sales growth from Infiltrator Water Technologies.

First Quarter Fiscal 2021 Results

Net sales increased $94.9 million, or 22.9%, to $508.6 million, as compared to $413.7 million in the prior year. Domestic pipe sales increased $11.5 million, or 4.4%, to $273.7 million. Domestic allied products & other sales increased $4.7 million, or 4.2%, to $116.9 million. These increases were driven by growth in both the U.S. construction and agriculture end markets. Infiltrator Water Technologies contributed an additional $102.2 million to net sales in the quarter.

Gross profit increased $250.7 million to $188.5 million as compared to ($62.2) million in the prior year. The prior year gross profit includes $168.6 million of ESOP special dividend compensation expense. The remaining increase is primarily due to the acquisition of Infiltrator Water Technologies, favorable material cost, an increase in operational efficiency and increases in both pipe and allied product sales.

Adjusted EBITDA (Non-GAAP) increased $79.2 million, or 98.6%, to $159.5 million, as compared to $80.3 million in the prior year. The increase is primarily due to the factors mentioned above. Infiltrator Water Technologies contributed an additional $42.0 million to Adjusted EBITDA in the quarter. As a percentage of net sales, Adjusted EBITDA was 31.4% as compared to 19.4% in the prior year.

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.”

Balance Sheet and Liquidity

Net cash provided by operating activities increased $70.9 million, or 112.8%, to $133.7 million, as compared to $62.8 million in the prior year, primarily due to the increase in profitability. Free cash flow (Non-GAAP) increased $70.3 million, or 132.4%, to $123.4 million, as compared to $53.1 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $870.4 million as of June 30, 2020, a decrease of $117.6 million from March 31, 2020.

ADS had total liquidity of $524 million, comprised of cash of $235 million as of June 30, 2020 and $289 million of availability under committed credit facilities. As of June 30, 2020, the Company’s leverage ratio was 1.9 times on a trailing-twelve-month, proforma basis (2.0 times on a reported basis).

Fiscal 2021 Outlook

ADS continues to carefully monitor the pandemic and the impact on its business. However, given the market uncertainty, the Company is currently unable to predict the extent to which the pandemic will impact future operations and financial results and therefore is not issuing financial guidance at this time. In fiscal 2021, capital expenditures are expected to be in the range of $60 million to $65 million.

Webcast Information

Participants may Register Here for this conference call or copy and paste the following text into your browser: http://www.directeventreg.com/registration/event/5793176. 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. 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 one year following the call.

About the Company

Advanced Drainage Systems is a leading provider of innovative water management solutions in the stormwater and on-site septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplace. For over 50 years, the Company has been manufacturing a variety of innovative and environmentally friendly alternatives to traditional materials. Its innovative products are used across a broad range of end markets and applications, including non-residential, residential, infrastructure and agriculture 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 30 distribution centers. To learn more about 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. 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 the adverse impact on the U.S. and global economy of the COVID-19 global pandemic, and the impact of COVID-19 in the near, medium and long-term on our business, results of operations, financial position, liquidity or cash flows, and other 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; uncertainties surrounding the integration of acquisitions and similar transactions, including the acquisition of Infiltrator Water Technologies and the integration of Infiltrator Water Technologies; our ability to realize the anticipated benefits from the acquisition of Infiltrator Water Technologies; risks that the acquisition of Infiltrator Water Technologies and related transactions may involve unexpected costs, liabilities or delays; our ability to continue to convert current demand for concrete, steel and polyvinyl chloride (“PVC”) pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products; the effect of any claims, litigation, investigations or proceedings; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; our ability to remediate the material weakness in our internal control over financial reporting, including remediation of the control environment for our joint venture affiliate ADS Mexicana, S.A. de C.V.; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets, including risks associated with new markets and products associated with our recent acquisition of Infiltrator Water Technologies; 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, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; fluctuations in our effective tax rate; 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 weaknesses of which we are not currently aware or which have not been detected; additional uncertainties related to accounting issues generally; 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

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

Three Months Ended

 

 

June 30,

 

(Amounts in thousands, except per share data)

2020

 

 

2019

 

Net sales

$

508,639

 

 

$

413,708

 

Cost of goods sold

 

320,136

 

 

 

307,256

 

Cost of goods sold - ESOP special dividend compensation

 

-

 

 

 

168,610

 

Gross profit

 

188,503

 

 

 

(62,158

)

Operating expenses:

 

 

 

 

 

 

 

Selling

 

28,160

 

 

 

26,365

 

General and administrative

 

33,616

 

 

 

31,433

 

Selling, general and administrative - ESOP special dividend compensation

 

-

 

 

 

78,142

 

Loss on disposal of assets and costs from exit and disposal activities

 

1,647

 

 

 

707

 

Intangible amortization

 

17,982

 

 

 

1,542

 

Income (loss) from operations

 

107,098

 

 

 

(200,347

)

Other expense:

 

 

 

 

 

 

 

Interest expense

 

9,970

 

 

 

5,264

 

Derivative loss (gains) and other expense (income), net

 

(567

)

 

 

(96

)

(Loss) income before income taxes

 

97,695

 

 

 

(205,515

)

Income tax (benefit) expense

 

27,200

 

 

 

22,370

 

Equity in net (income) loss of unconsolidated affiliates

 

(173

)

 

 

(434

)

Net income (loss)

 

70,668

 

 

 

(227,451

)

Less: net income attributable to noncontrolling interest

 

202

 

 

 

(1,095

)

Net income (loss) attributable to ADS

 

70,466

 

 

 

(226,356

)

Dividends to redeemable convertible preferred stockholders

 

(1,366

)

 

 

(6,841

)

Dividends paid to unvested restricted stockholders

 

(2

)

 

 

(328

)

Net income (loss) available to common stockholders and participating securities

 

69,098

 

 

 

(233,525

)

Undistributed income allocated to participating securities

 

(11,242

)

 

 

-

 

Net income (loss) available to common stockholders

$

57,856

 

 

$

(233,525

)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

69,380

 

 

 

57,576

 

Diluted

 

70,126

 

 

 

57,576

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.83

 

 

$

(4.06

)

Diluted

$

0.83

 

 

$

(4.06

)

Cash dividends declared per share

$

0.09

 

 

$

1.09

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

As of

 

(Amounts in thousands)

June 30, 2020

 

 

March 31, 2020

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash

$

235,210

 

 

$

174,233

 

Receivables, net

 

241,830

 

 

 

200,028

 

Inventories

 

239,239

 

 

 

282,398

 

Other current assets

 

13,085

 

 

 

9,552

 

Total current assets

 

729,364

 

 

 

666,211

 

Property, plant and equipment, net

 

477,100

 

 

 

481,380

 

Other assets:

 

 

 

 

 

 

 

Goodwill

 

598,200

 

 

 

597,819

 

Intangible assets, net

 

537,457

 

 

 

555,338

 

Other assets

 

72,910

 

 

 

69,140

 

Total assets

$

2,415,031

 

 

$

2,369,888

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current maturities of debt obligations

$

7,963

 

 

$

7,955

 

Current maturities of finance lease obligations

 

19,586

 

 

 

20,382

 

Accounts payable

 

96,654

 

 

 

106,710

 

Other accrued liabilities

 

105,148

 

 

 

101,116

 

Accrued income taxes

 

29,550

 

 

 

2,050

 

Total current liabilities

 

258,901

 

 

 

238,213

 

Long-term debt obligations, net

 

1,037,470

 

 

 

1,089,368

 

Long-term finance lease obligations

 

40,611

 

 

 

44,501

 

Deferred tax liabilities

 

173,270

 

 

 

175,616

 

Other liabilities

 

40,266

 

 

 

37,608

 

Total liabilities

 

1,550,518

 

 

 

1,585,306

 

Mezzanine equity:

 

 

 

 

 

 

 

Redeemable convertible preferred stock

 

269,529

 

 

 

269,529

 

Deferred compensation — unearned ESOP shares

 

(19,605

)

 

 

(22,432

)

Total mezzanine equity

 

249,924

 

 

 

247,097

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock

 

11,557

 

 

 

11,555

 

Paid-in capital

 

839,765

 

 

 

827,573

 

Common stock in treasury, at cost

 

(10,853

)

 

 

(10,461

)

Accumulated other comprehensive loss

 

(32,494

)

 

 

(35,325

)

Retained (deficit) earnings

 

(205,669

)

 

 

(267,619

)

Total ADS stockholders’ equity

 

602,306

 

 

 

525,723

 

Noncontrolling interest in subsidiaries

 

12,283

 

 

 

11,762

 

Total stockholders’ equity

 

614,589

 

 

 

537,485

 

Total liabilities, mezzanine equity and stockholders’ equity

$

2,415,031

 

 

$

2,369,888

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

Three Months Ended June 30,

 

(Amounts in thousands)

2020

 

 

2019

 

Cash Flow from Operating Activities

 

 

 

 

 

 

 

Net (loss) income

$

70,668

 

 

$

(227,451

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

35,781

 

 

 

16,694

 

Deferred income taxes

 

(2,357

)

 

 

2,191

 

Loss on disposal of assets and costs from exit and disposal activities

 

1,647

 

 

 

707

 

ESOP and stock-based compensation

 

12,462

 

 

 

7,425

 

ESOP special dividend compensation

 

-

 

 

 

246,752

 

Amortization of deferred financing charges

 

98

 

 

 

174

 

Fair market value adjustments to derivatives

 

(1,082

)

 

 

1,789

 

Equity in net (income) loss of unconsolidated affiliates

 

(173

)

 

 

(434

)

Other operating activities

 

269

 

 

 

(2,880

)

Changes in working capital:

 

 

 

 

 

 

 

Receivables

 

(42,093

)

 

 

(44,494

)

Inventories

 

44,140

 

 

 

34,803

 

Prepaid expenses and other current assets

 

(3,520

)

 

 

(3,089

)

Accounts payable, accrued expenses, and other liabilities

 

17,893

 

 

 

30,653

 

Net cash provided by operating activities

 

133,733

 

 

 

62,840

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Capital expenditures

 

(10,295

)

 

 

(9,723

)

Other investing activities

 

435

 

 

 

(13

)

Net cash used in investing activities

 

(9,860

)

 

 

(9,736

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Payments on syndicated Term Loan Facility

 

(1,750

)

 

 

-

 

Payments on Revolving Credit Agreement

 

(50,000

)

 

 

-

 

Proceeds from PNC Credit Agreement

 

-

 

 

 

137,400

 

Payments on PNC Credit Agreement

 

-

 

 

 

(115,600

)

Payments on capital lease obligations

 

(5,700

)

 

 

(6,047

)

Cash dividends paid

 

(7,737

)

 

 

(69,641

)

Proceeds from exercise of stock options

 

2,239

 

 

 

1,513

 

Other financing activities

 

-

 

 

 

(258

)

Net cash used in financing activities

 

(62,948

)

 

 

(52,633

)

Effect of exchange rate changes on cash

 

52

 

 

 

(5

)

Net change in cash

 

60,977

 

 

 

466

 

Cash at beginning of period

 

174,233

 

 

 

8,891

 

Cash at end of period

$

235,210

 

 

$

9,357

 

Selected Financial Data

The following tables set forth net sales by reportable segment for each of the periods indicated.

 

Three Months Ended

 

 

June 30, 2020

 

 

June 30, 2019

 

 

Net Sales

 

 

Intersegment
Net Sales

 

 

Net Sales
from External
Customers

 

 

Net Sales

 

 

Intersegment
Net Sales

 

 

Net Sales
from External
Customers

 

Pipe

$

273,652

 

 

$

(1,845

)

 

$

271,807

 

 

$

262,181

 

 

$

 

 

$

262,181

 

Infiltrator Water Technologies

 

102,153

 

 

 

(18,068

)

 

 

84,085

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International - Pipe

 

26,950

 

 

 

 

 

 

26,950

 

 

 

29,284

 

 

 

 

 

 

29,284

 

International - Allied Products

 

8,879

 

 

 

 

 

 

8,879

 

 

 

10,049

 

 

 

 

 

 

10,049

 

Total International

 

35,829

 

 

 

 

 

 

35,829

 

 

 

39,333

 

 

 

 

 

 

39,333

 

Allied Products & Other

 

116,918

 

 

 

 

 

 

116,918

 

 

 

112,194

 

 

 

 

 

 

112,194

 

Intersegment Eliminations

 

(19,913

)

 

 

19,913

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consolidated

$

508,639

 

 

$

 

 

$

508,639

 

 

$

413,708

 

 

$

 

 

$

413,708

 

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 (Loss)

The impact of the ESOP on net (loss) income includes the ESOP deferred compensation attributable to the preferred shares 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

 

 

June 30,

 

(Amounts in thousands)

2020

 

 

2019

 

Net income (loss) attributable to ADS

$

70,466

 

 

$

(226,356

)

ESOP deferred stock-based compensation

$

6,863

 

 

$

5,584

 

ESOP special dividend compensation

$

-

 

 

$

246,752

 

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

 

 

June 30,

 

(Shares in thousands)

2020

 

 

2019

 

Weighted average common shares outstanding - Basic

 

69,380

 

 

 

57,576

 

Conversion of preferred shares

 

16,585

 

 

 

17,468

 

Unvested restricted shares

 

2

 

 

 

42

 

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 organic results, 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 Segment Adjusted Gross Profit to Gross profit

 

Three Months Ended

 

 

June 30,

 

(Amounts in thousands)

2020

 

 

2019

 

Segment Adjusted Gross Profit

 

 

 

 

 

 

 

Pipe

$

90,599

 

 

$

57,493

 

International

 

11,408

 

 

 

9,227

 

Infiltrator Water Technologies

 

47,928

 

 

 

-

 

Allied Products & Other

 

60,468

 

 

 

57,187

 

Intersegment Elimination

 

(358

)

 

 

-

 

Total Segment Adjusted Gross Profit

 

210,045

 

 

 

123,907

 

Depreciation and amortization

 

16,423

 

 

 

13,684

 

ESOP and stock-based compensation expense

 

4,939

 

 

 

3,771

 

ESOP special dividend compensation

 

-

 

 

 

168,610

 

COVID-19 related expenses

 

180

 

 

 

-

 

Total Gross Profit

$

188,503

 

 

$

(62,158

)

Reconciliation of Adjusted EBITDA to Net Income

 

Three Months Ended

 

 

June 30,

 

(Amounts in thousands)

2020

 

 

2019

 

Net income (loss)

$

70,668

 

 

$

(227,451

)

Depreciation and amortization

 

35,781

 

 

 

16,694

 

Interest expense

 

9,970

 

 

 

5,264

 

Income tax expense

 

27,200

 

 

 

22,370

 

EBITDA

 

143,619

 

 

 

(183,123

)

Loss on disposal of assets and costs from exit and disposal activities

 

1,647

 

 

 

707

 

ESOP and stock-based compensation expense

 

12,462

 

 

 

7,425

 

ESOP special dividend compensation

 

-

 

 

 

246,752

 

Transaction costs

 

656

 

 

 

4,245

 

Strategic growth and operational improvement initiatives

 

1,755

 

 

 

2,195

 

COVID-19 related expenses (a)

 

564

 

 

 

-

 

Other adjustments(b)

 

(1,233

)

 

 

2,095

 

Adjusted EBITDA

$

159,470

 

 

$

80,296

 

(a)

Includes expenses directly related to our response to the COVID-19 pandemic, including adjustments to our pandemic pay program and expenses associated with our 3rd party crisis management vendor.

(b)

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. The other adjustments in fiscal 2020 also includes expenses related to the ADS Mexicana’s investigation.

Reconciliation of Segment Adjusted EBITDA

 

Three Months Ended

 

 

June 30,

 

(Amounts in thousands)

2020

 

 

2019

 

Legacy ADS Adjusted EBITDA

 

 

 

 

 

 

 

Pipe Adjusted Gross Profit

$

90,599

 

 

$

57,493

 

International Adjusted Gross Profit

 

11,408

 

 

 

9,227

 

Allied Products & Other Adjusted Gross Profit

 

60,468

 

 

 

57,187

 

Unallocated corporate and selling expenses

 

(44,644

)

 

 

(43,611

)

Legacy ADS Adjusted EBITDA

 

117,831

 

 

 

80,296

 

Legacy Infiltrator Water Technologies Adjusted EBITDA

 

 

 

 

 

 

 

Infiltrator Water Technologies

 

47,928

 

 

 

-

 

Unallocated corporate and selling expenses

 

(5,931

)

 

 

-

 

Legacy Infiltrator Water Technologies Adjusted EBITDA

$

41,997

 

 

$

-

 

Intersegment Eliminations

 

(358

)

 

 

-

 

Consolidated Adjusted EBITDA

$

159,470

 

 

$

80,296

 

Reconciliation of Free Cash Flow to Cash flow from Operating Activities

 

Three Months Ended June 30,

 

(Amounts in thousands)

2020

 

 

2019

 

Net cash flow from operating activities

$

133,733

 

 

$

62,840

 

Capital expenditures

 

(10,295

)

 

 

(9,723

)

Free cash flow

$

123,438

 

 

$

53,117

 

 

Michael Higgins
VP, Corporate Strategy & Investor Relations
(614) 658-0050
Mike.Higgins@ads-pipe.com

Source: Advanced Drainage Systems, Inc.

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