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 fourth quarter
and fiscal year ended March 31, 2022.
Fourth Quarter Fiscal 2022
Results
- Net sales increased 52.8% to $678.2 million
- Net income increased 126.8% to $47.1 million
- Adjusted EBITDA (Non-GAAP) increased 78.2% to $168.5
million
Fiscal 2022 Results
- Net sales increased 39.7% to $2,769.3 million
- Net income increased 21.6% to $275.0 million
- Adjusted EBITDA (Non-GAAP) increased 19.2% to $676.0
million
- Cash provided by operating activities of $274.9
million
- Free cash flow (Non-GAAP) of $125.8 million
Scott Barbour, President and Chief Executive Officer of ADS
commented, "We achieved another quarter of record revenue and
Adjusted EBITDA results in the fourth quarter of fiscal 2022. Sales
growth of 53% was driven by favorable pricing at both ADS and
Infiltrator, as well as volume growth in the domestic construction
markets. We capitalized on strong demand across our product
portfolio and geographic footprint, particularly in priority states
such as Florida, Texas and California. Leading indicators support
continued strength in demand through the calendar year as we work
through a strong backlog."
Barbour continued, "The favorable top line growth we achieved in
the fourth quarter offset inflationary cost pressure on materials,
transportation and labor. We continue to see pressure from labor
shortages, and absenteeism related to the COVID variant impacted
our manufacturing and transportation operations early in the fourth
quarter. The actions we took previously to simplify production
processes and increase production rates have been successful,
improving service levels to customers overall."
Barbour concluded, "In summary, fiscal 2022 played out largely
as we communicated, with profit improvement occurring in the second
half of the year as the multiple actions we took to improve pricing
and operations were successful. Our demand environment, strong
backlog, favorable pricing and progress on the continuous
improvement initiatives give us confidence in the guidance being
issued today for fiscal year 2023. Backlog levels remain elevated,
up double-digits over the prior year but down from fiscal 2022
peaks as a result of capacity additions and improved service
levels. We are closely monitoring our end markets, staying close to
our distribution partners, and will stay focused on executing the
fiscal 2023 plan."
Fourth Quarter Fiscal 2022
Results
Net sales increased $234.4 million, or 52.8%, to $678.2 million,
as compared to $443.8 million in the prior year quarter. Domestic
pipe sales increased $157.5 million, or 65.8%, to $396.7 million.
Domestic allied products & other sales increased $51.2 million,
or 52.3%, to $149.1 million. Infiltrator sales increased $39.3
million, or 43.1%, to $130.6 million. These increases were driven
by double-digit sales growth in the U.S. construction end markets.
International sales increased $5.6 million, or 16.3%, to $40.0
million.
Gross profit increased $63.0 million, or 49.5%, to $190.2
million as compared to $127.2 million in the prior year. The
increase in gross profit is primarily due to the increase in sales
volume and favorable pricing on pipe, on-site septic and allied
products. These increases were partially offset by inflationary
cost pressure on materials, transportation and labor, as well as an
increase in the use of third-party logistics services. Labor
shortages and absenteeism related to COVID-19 remain a challenge in
both manufacturing and transportation operations. In addition, the
Company recorded $19.2 million of non-cash, stock-based
compensation expense in Cost of goods sold - ESOP acceleration
expense as described below under the heading "Employee Stock
Ownership Plan (ESOP)".
Adjusted EBITDA (Non-GAAP) increased $74.0 million, or 78.2%, to
$168.5 million, as compared to $94.5 million in the prior year. The
increase is primarily due to the factors mentioned above. As a
percentage of net sales, Adjusted EBITDA was 24.8% as compared to
21.3% 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.”
Year-to-Date Fiscal 2022
Results
Net sales increased $786.5 million, or 39.7%, to $2,769.3
million, as compared to $1,982.8 million in the prior year.
Domestic pipe sales increased $496.0 million, or 46.8%, to $1,555.2
million. Domestic allied products & other sales increased
$126.9 million, or 28.7%, to $569.4 million. Infiltrator sales
increased $154.1 million, or 38.7%, to $551.9 million. These
increases were driven by strong sales growth in both the U.S.
construction and agriculture end markets. International sales
increased $59.9 million, or 36.3%, to $224.7 million, driven by
double-digit sales growth in the Canadian, Mexican and Exports
businesses.
Gross profit increased $110.3 million, or 16.0%, to $800.4
million as compared to $690.1 million in the prior year. The
increase is primarily due to an increase in sales volume and
favorable pricing on pipe, on-site septic and allied products.
These increases were partially offset by inflationary cost pressure
on materials, transportation and labor, as well as an increase in
the use of third-party logistics services. Labor shortages and
absenteeism related to COVID-19 remain a challenge in both
manufacturing and transportation operations. In addition, the
Company recorded $19.2 million of non-cash, stock-based
compensation expense in Cost of goods sold - ESOP acceleration
expense as described below under the heading "Employee Stock
Ownership Plan (ESOP)".
Adjusted EBITDA (Non-GAAP) increased $109.1 million, or 19.2%,
to $676.0 million, as compared to $567.0 million in the prior year.
The increase is primarily due to the factors mentioned above. As a
percentage of net sales, Adjusted EBITDA was 24.4% as compared to
28.6% in the prior year.
Employee Stock Ownership Plan
(ESOP)
On February 2, 2022, the ADS Board of Directors passed a
resolution authorizing a $0.3 million Company cash contribution to
the ESOP for the ESOP to repay the remaining balance of its ESOP
loan on March 31, 2022, one year ahead of the ESOP loan’s March 31,
2023 maturity date. Effective March 31, 2022, the remaining balance
on the Company's ESOP loan was repaid in full, and the remaining
shares of unallocated preferred stock were allocated to
participants of the ESOP. In April 2022, the 15.6 million shares of
preferred stock outstanding converted to 12.0 million shares of
common stock, resulting in $19.2 million of additional non-cash,
stock-based compensation expense recorded in Cost of goods sold -
ESOP acceleration and $11.3 of additional non-cash, stock-based
compensation expense recorded in Selling, general and
administrative - ESOP acceleration in the fourth quarter and fiscal
year ended March 31, 2022. Starting in the fiscal year ending March
31, 2023, ADS will make matching 401(k) contributions for eligible
employees, resulting in estimated incremental compensation expense
of approximately $8 million to $10 million annually.
For additional information on the Company's ESOP, please refer
to the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2021, and other reports filed by the Company with
the SEC. Additional information related to this transaction will be
included in the Company's Form 10-K and Form 8-K/A, which the
Company intends to file with the SEC after market-close today.
Balance Sheet and
Liquidity
Net cash provided by operating activities was $274.9 million, as
compared to $452.2 million in the prior year. Free cash flow
(Non-GAAP) was $125.8 million, as compared to $373.5 million in the
prior year. Net debt (total debt and finance lease obligations net
of cash) was $924.5 million as of March 31, 2022, an increase of
$278.0 million from March 31, 2021.
ADS had total liquidity of $247 million, comprised of cash of
$20 million as of March 31, 2022 and $227 million of availability
under committed credit facilities. As of March 31, 2022, the
Company’s leverage ratio was 1.4 times.
In the twelve months ended March 31, 2022, the Company
repurchased 2.6 million shares of its common stock for a total cost
of $292.0 million. As of March 31, 2022, the Company has $1 billion
remaining under its new share repurchase authorization.
Fiscal 2023 Outlook
Based on current visibility, backlog of existing orders and
business trends, the Company issued the following targets for
fiscal 2023. Net sales are expected to be in the range of $3.100
billion to $3.200 billion. Adjusted EBITDA is expected to be in the
range of $800 to $820 million. Capital expenditures are expected to
be in the range of $150 million to $180 million.
Webcast Information
The live webcast will be accessible via the "Events Calendar”
section of the Company’s Investor Relations website,
www.investors.ads-pipe.com. Participants may also register for this
conference call by copy and pasting the following text into your
browser:
https://www.incommglobalevents.com/registration/q4inc/10578/ads-fourth-quarter-fiscal-year-2022-financial-results/.
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. An archived version
of the webcast will be available 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.adspipe.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
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, and 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; uncertainties surrounding the integration and
realization of anticipated benefits of acquisitions and similar
transactions, including Infiltrator Water Technologies; 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,
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; 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; fluctuations in our effective tax rate, including from the
Tax Cuts and Jobs Act of 2017; our ability to meet future capital
requirements and fund our liquidity needs; 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 March
31,
Fiscal Year Ended March
31,
(In thousands, except per share data)
2022
2021
2022
2021
Net sales
$
678,187
$
443,809
$
2,769,315
$
1,982,780
Cost of goods sold
468,777
316,592
1,949,750
1,292,698
Cost of goods sold - ESOP acceleration
19,181
—
19,181
—
Gross profit
190,229
127,217
800,384
690,082
Operating expenses:
Selling, general and administrative
79,609
73,491
309,840
267,574
Selling, general and administrative - ESOP
acceleration
11,254
—
11,254
—
Loss on disposal of assets and costs from
exit and disposal activities
844
1,021
3,398
4,275
Intangible amortization
17,745
19,815
63,974
73,708
Income from operations
80,777
32,890
411,918
344,525
Other expense:
Interest expense
8,450
7,895
33,550
35,658
Derivative gains and other income, net
(2,352
)
(2,521
)
(5,143
)
(3,404
)
Income before income taxes
74,679
27,516
383,511
312,271
Income tax expense
28,008
7,091
110,071
86,382
Equity in net income of unconsolidated
affiliates
(458
)
(351
)
(1,586
)
(201
)
Net income
47,129
20,776
275,026
226,090
Less: net income attributable to
noncontrolling interest
822
1,022
3,695
1,860
Net income attributable to ADS
46,307
19,754
271,331
224,230
Dividends to participating securities
(1,307
)
(1,606
)
(5,940
)
(5,591
)
Net income available to common
stockholders and participating securities
45,000
18,148
265,391
218,639
Undistributed income allocated to
participating securities
(5,279
)
(1,967
)
(35,859
)
(33,251
)
Net income available to common
stockholders
$
39,721
$
16,181
$
229,532
$
185,388
Weighted average common shares
outstanding:
Basic
71,855
70,958
71,276
70,155
Diluted
73,414
72,595
72,911
71,566
Net income per share:
Basic
$
0.55
$
0.23
$
3.22
$
2.64
Diluted
$
0.54
$
0.23
$
3.15
$
2.59
Cash dividends declared per
share
$
0.11
$
0.09
$
0.44
$
0.36
ADVANCED DRAINAGE SYSTEMS,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(unaudited)
As of
(Amounts in thousands)
March 31, 2022
March 31, 2021
ASSETS
Current assets:
Cash
$
20,125
$
195,009
Receivables, net
341,753
236,191
Inventories
494,324
300,961
Other current assets
15,696
10,817
Total current assets
871,898
742,978
Property, plant and equipment, net
619,383
504,275
Other assets:
Goodwill
610,293
599,072
Intangible assets, net
431,385
482,016
Other assets
116,799
85,491
Total assets
$
2,649,758
$
2,413,832
LIABILITIES, MEZZANINE EQUITY AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt obligations
$
19,451
$
7,000
Current maturities of finance lease
obligations
5,089
19,318
Accounts payable
224,986
171,098
Other accrued liabilities
134,877
116,151
Accrued income taxes
6,838
4,703
Total current liabilities
391,241
318,270
Long-term debt obligations, net
908,705
782,220
Long-term finance lease obligations
11,393
32,964
Deferred tax liabilities
168,435
162,185
Other liabilities
64,939
54,767
Total liabilities
1,544,713
1,350,406
Mezzanine equity:
Redeemable convertible preferred stock
195,384
240,944
Deferred compensation — unearned ESOP
shares
—
(11,033
)
Total mezzanine equity
195,384
229,911
Stockholders’ equity:
Common stock
11,612
11,578
Paid-in capital
1,065,628
918,587
Common stock in treasury, at cost
(318,691
)
(10,959
)
Accumulated other comprehensive loss
(24,386
)
(24,220
)
Retained earnings (deficit)
158,876
(75,202
)
Total ADS stockholders’ equity
893,039
819,784
Noncontrolling interest in
subsidiaries
16,622
13,731
Total stockholders’ equity
909,661
833,515
Total liabilities, mezzanine equity and
stockholders’ equity
$
2,649,758
$
2,413,832
ADVANCED DRAINAGE SYSTEMS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Fiscal Year Ended March
31,
(Amounts in thousands)
2022
2021
Cash Flow from Operating
Activities
Net income
$
275,026
$
226,090
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
141,808
145,586
Deferred income taxes
2,175
(13,477
)
Loss on disposal of assets and costs from
exit and disposal activities
3,398
4,275
ESOP and stock-based compensation
77,559
65,434
ESOP acceleration
30,435
—
Amortization of deferred financing
charges
382
382
Fair market value adjustments to
derivatives
(1,392
)
(3,355
)
Equity in net income of unconsolidated
affiliates
(1,586
)
(201
)
Other operating activities
(11,679
)
6,770
Changes in working capital:
Receivables
(96,990
)
(34,760
)
Inventories
(189,715
)
(14,561
)
Prepaid expenses and other current
assets
(4,642
)
(1,208
)
Accounts payable, accrued expenses and
other liabilities
50,109
71,241
Net cash provided by operating
activities
274,888
452,216
Cash Flows from Investing
Activities
Capital expenditures
(149,083
)
(78,757
)
Acquisition, net of cash acquired
(49,309
)
—
Other investing activities
(441
)
883
Net cash used in investing activities
(198,833
)
(77,874
)
Cash Flows from Financing
Activities
Payments on syndicated Term Loan
Facility
(7,000
)
(207,000
)
Proceeds from Revolving Credit
Agreement
332,200
—
Payments on Revolving Credit Agreement
(217,900
)
(100,000
)
Proceeds from Equipment Financing
35,963
—
Payments on Equipment Financing
(4,715
)
—
Payments on finance lease obligations
(50,447
)
(21,491
)
Repurchase of common stock
(292,000
)
—
Cash dividends paid
(38,494
)
(32,155
)
Proceeds from option exercises
4,574
7,553
Payment of withholding taxes on vesting of
restricted stock units
(13,063
)
—
Other financing activities
(186
)
(1,490
)
Net cash used in financing activities
(251,068
)
(354,583
)
Effect of exchange rate changes on
cash
129
1,017
Net change in cash
(174,884
)
20,776
Cash at beginning of year
195,009
174,233
Cash at end of year
$
20,125
$
195,009
Selected Financial Data
The following tables set forth net sales by reportable segment
for each of the periods indicated.
Three Months Ended
March 31, 2022
March 31, 2021
(In thousands)
Net Sales
Intersegment Net Sales
Net Sales from External
Customers
Net Sales
Intersegment Net Sales
Net Sales from External
Customers
Pipe
$
396,690
$
(7,911
)
$
388,779
$
239,206
$
(1,487
)
$
237,719
Infiltrator Water Technologies
130,576
(23,643
)
106,933
91,265
(14,721
)
76,544
International
International - Pipe
29,390
(5,646
)
23,744
25,197
(2,723
)
22,474
International - Allied Products &
Other
10,569
—
10,569
9,157
—
9,157
Total International
39,959
(5,646
)
34,313
34,354
(2,723
)
31,631
Allied Products & Other
149,121
(959
)
148,162
97,915
—
97,915
Intersegment Eliminations
(38,159
)
38,159
—
(18,931
)
18,931
—
Total Consolidated
$
678,187
$
—
$
678,187
$
443,809
$
—
$
443,809
Twelve Months Ended
March 31, 2022
March 31, 2021
(In thousands)
Net Sales
Intersegment Net Sales
Net Sales from External
Customers
Net Sales
Intersegment Net Sales
Net Sales from External
Customers
Pipe
$
1,555,248
$
(15,814
)
$
1,539,434
$
1,059,200
$
(6,280
)
$
1,052,920
Infiltrator Water Technologies
551,906
(91,406
)
460,500
397,813
(68,669
)
329,144
International
International - Pipe
171,525
(19,430
)
152,095
121,468
(6,589
)
114,879
International - Allied Products &
Other
53,217
—
53,217
43,390
—
43,390
Total International
224,742
(19,430
)
205,312
164,858
(6,589
)
158,269
Allied Products & Other
569,352
(5,283
)
564,069
442,447
—
442,447
Intersegment Eliminations
(131,933
)
131,933
—
(81,538
)
81,538
—
Total Consolidated
$
2,769,315
$
—
$
2,769,315
$
1,982,780
$
—
$
1,982,780
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 were
converted to common shares within thirty days following the March
31, 2022 ESOP loan repayment; and the remaining shares of
unallocated preferred stock will be allocated to the participants
of the ESOP. 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.
For additional information on the Company's ESOP, please refer
to the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2021, and other reports filed by the Company with
the SEC. Additional information related to this transaction will be
included in a Current Report on Form 8-K, which the Company intends
to file with the SEC after market-close today.
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 March
31,
Fiscal Year Ended March
31,
2022
2021
2022
2021
(In thousands)
Net income attributable to ADS
$
46,307
$
19,754
$
271,331
$
224,230
ESOP acceleration compensation
30,435
—
30,435
—
ESOP deferred stock-based compensation
10,012
15,475
53,401
44,981
Common shares outstanding
The conversion of the preferred shares increased the number of
common shares outstanding.
Three Months Ended March
31,
Fiscal Year Ended March
31,
2022
2021
2022
2021
(In thousands)
Weighted average common shares
outstanding
71,855
70,958
71,276
70,155
Conversion of redeemable convertible
shares
12,663
15,361
13,635
16,001
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 March
31,
Fiscal Year Ended March
31,
(Amounts in thousands)
2022
2021
2022
2021
Segment adjusted gross profit
Pipe
$
94,501
$
53,100
$
353,182
$
322,846
Infiltrator Water Technologies
53,030
41,612
231,825
191,163
International
9,127
10,945
58,822
49,921
Allied Products & Other
80,028
49,046
284,091
225,052
Intersegment Eliminations
(1,449
)
415
(28
)
(503
)
Total Segment Adjusted Gross Profit
235,237
155,118
927,892
788,479
Depreciation and amortization
18,881
17,090
71,705
66,408
ESOP and stock-based compensation
expense
6,946
10,811
36,622
31,792
ESOP acceleration
19,181
—
19,181
—
COVID-19 related expenses
—
—
—
197
Total Gross Profit
$
190,229
$
127,217
$
800,384
$
690,082
Reconciliation of Adjusted EBITDA to Net Income
Three Months Ended March
31,
Fiscal Year Ended March
31,
(Amounts in thousands)
2022
2021
2022
2021
Net income
$
47,129
$
20,776
$
275,026
$
226,090
Depreciation and amortization
38,121
38,265
141,808
145,586
Interest expense
8,450
7,895
33,550
35,658
Income tax expense
28,008
7,091
110,071
86,382
EBITDA
121,708
74,027
560,455
493,716
Loss on disposal of assets and costs from
exit and disposal activities
844
1,021
3,398
4,275
ESOP and stock-based compensation
expense
15,659
20,021
77,559
65,434
ESOP acceleration (a)
30,435
—
30,435
—
Transaction costs
517
(13
)
3,539
1,415
Strategic growth and operational
improvement initiatives
—
615
—
3,304
COVID-19 related expenses (b)
—
—
—
806
Other adjustments (c)
(662
)
(1,123
)
656
(1,995
)
Adjusted EBITDA
$
168,501
$
94,548
$
676,042
$
566,955
(a)
In the fourth quarter of fiscal
2022, the ESOP committee notified the Company that it will instruct
the ESOP trustee to cause the repayment of the remaining balance of
the ESOP Loan in full with proceeds from a cash contribution to be
paid by the Company to the ESOP, which repayment was effective as
of March 31, 2022. The approximately 0.3 million remaining
unallocated shares of Preferred Stock were allocated on March 31,
2022.
(b)
Includes expenses in connection
with our response to the COVID-19 pandemic including pandemic
pay.
(c)
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, contingent
consideration remeasurement, executive retirement expense (benefit)
and legal settlements.
Reconciliation of Free Cash Flow to Cash flow from Operating
Activities
Fiscal Year Ended March
31,
(Amounts in thousands)
2022
2021
Net cash flow from operating
activities
$
274,888
$
452,216
Capital expenditures
(149,083
)
(78,757
)
Free cash flow
$
125,805
$
373,459
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220519005263/en/
Michael Higgins VP, Corporate Strategy & Investor Relations
(614) 658-0050 Mike.Higgins@ads-pipe.com
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