Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Q3 FY2023 Earnings Presentation
19 slides from Advanced Drainage Systems's earnings presentation, Feb 2, 2023
Slide 1: Q3 Fiscal 2023 Financial Results
/IBDS Q3 Fiscal 2023 Financial Results February 2, 2023
Slide 2: Management Presenters
Management Presenters Scott Barbour President and Chief Executive Officer Scott Cottrill Executive Vice President, Chief Financial Officer Mike Higgins Vice President, Corporate Strategy & Investor Relations ISDS.
Slide 3: Forward Looking Statements and Non-GAAP Financial Metrics
Forward Looking Statements and Non-GAAP Financial Metrics 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 projection
Slide 4: Q3 Fiscal 2023 Highlights
Q3 Fiscal 2023 Highlights Demand + Rising interest rates, inflation and macroeconomic uncertainty resulting in slower demand. * Quoting activity remains positive but has slowed from peak. Lead times improved, resulting in a more normalized order pace. * Continued focus on material conversion, as wel
Slide 5: Q3 Fiscal 2023 Financial Performance
Q3 Fiscal 2023 Financial Performance HOMES Revenue Performance 9 (USD. miions) (G2) By Business Domestic Markets 7 - ADS Legacy (3%) = Construction . oocceceeeeee Alt%), - Pipe (5%) - Non-Residential (8%) + Allied Products 1% - Residential (17%) = Infiltrator (30%) + Infrastructure +1% 3 FY23 @3 FY2
Slide 6: Free Cash Flow and Capital Structure
Free Cash Flow and Capital Structure Free Cash Flow “) FY 2023 FY 2022 A Consolidated Adjusted EBITDA $732 $508 $224 Working capital) 82 (202) 284 Cash tax (136) (81) (85) Cash interest (24) (20) (4) Transaction costs) (2) (3) 1 Other 8 (8) 16 Consolidated cash flow from operations $660 $194 $466 Ca
Slide 7: Updated Fiscal Year 2023 Guidance
Updated Fiscal Year 2023 Guidance Fiscal 2023 Expectations Key Metric FY 2022 FY 2023 Y-o-Y Change Net Sales _ Up Pirie $2,769 $2,975 - $3,050 7% to 10% Adj. EBITDA _ Up (in Millions) $676 $850 - $890 26% to 32% +420 to +480 Adj. EBITDA Margin 24.4% 28.6% - 29.2% 5 : basis points ISDS.
Slide 8: Slide 8
Slide 9: Appendix
Appendix /IBDS
Slide 10: Demonstrated Ability to Outperform End Markets
Demonstrated Ability to Outperform End Markets... Non-Residential Growth Residen 50% 50% 1 Oo% Median Above- ox % Median Above- © Market Growth © Market Growth | Growth 40% 46% 44% 40% 30% 30% 20% wr 20% om 18% e T% 58% 11% 10% 1% 11% ae 10% 8% oe 4 a Th7% oe 6% . 5% we, Bex 4% ° ~ | | Dib ih & » tT
Slide 11: The Business is Better Positioned than Ever
ISDS. .... | he Business is Better Positioned than Ever Increasing Diversification; Scaled Position in Key Markets $2,769 Agriculture Infrastructure Residential Non-Residential FY22 Increasing Recycled Material Use FY FY22 Other Other \ 55% \ 50% Virgin Virgin 0.7B Ibs. 1.38 Ibs. Expanding Product M
Slide 12: ADS Adjusted EBITDA Margin vs. Historical HDPE Index
ADS Adjusted EBITDA Margin vs. Historical HDPE Index FY15 to Q3 FY23 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% $0.20 5.0% S- 0.0% a @ a @3 @ @ @ @ @ @ @ @ @ @ @ @ A @ FYIS FYI6 FYI7 FY18 FY19 FY20 FY21 FY22 FY23* HDPE $/Lb. Annual Adj. EBITDA Margin //BDS HDPE S/Lb. Source: Barclays Building Products Pric
Slide 13: Non-residential construction spending
Source: Dodge Construction Network, AIA. Commercial includes Hotels, Office, Retail and Warehouse spending. Institutional includes Dormitories, Education, Government Buildings, Healthcare, Recreation Buildings, Religious Buildings and Transportation Buildings. • • • • 13
Slide 14: Housing starts forecasts
Source: National Association of Home Builders (NAHB) Forecast December 2022; Fannie Mae Housing Forecast: December 2022; Mortgage Bankers Association (MBA) Mortgage Finance Forecast December 2022; National Association of Realtors (NAR) U.S. Economic Outlook: December 2022; Dodge Construction Network
Slide 15: Performance Through a Down Cycle
ISDS. Profitability Opportunities to optimize network and cost structure Favorable material outlook and increased use of recycled material COGS is predominantly variable cost Reducing use of high-cost transportation lanes. Performance Through a Down Cycle Balance Sheet / Cash Flow Fortified balance
Slide 16: YTD Fiscal 2023 Financial Performance
YTD Fiscal 2023 Financial Performance Revenue +17% YTD FY23 (USD, in milion) $2,091 YTD FY22 Revenue Performance YTD FY23 24.3% YTD FY22 ISDS. Preliminary results. By Business + ADS Legacy 422% + Pipe +19% + Allied Products +29% = Infiltrator (0%) $459.0 $507.6 ($52.4) — YTD FY22 Volume Price / Mix,
Slide 17: Reconciliations
Reconciliations 17 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 375,719 $ (10,839) $ 364,880 $ 400,027 $ (3,332) $ 396,695 Infiltrator Water Technologies 103,895 (14,961) 88,934 148,677 (26,314) 122,363 I
Slide 18: Reconciliations
Reconciliations 18 2022 2021 2022 2021 Segment adjusted gross profit Pipe $ 106,279 $ 92,066 $ 421,011 $ 258,681 Infiltrator Water Technologies 46,497 60,546 193,569 178,795 International 13,342 13,240 51,456 49,695 Allied Products & Other 78,401 72,785 293,472 204,063 Intersegment Eliminations 714
Slide 19: Reconciliations
Reconciliations 19 2022 2021 2022 2021 Net income (loss) $ 83,182 $ 74,462 $ 425,041 $ 227,897 Depreciation and amortization 35,846 34,837 107,346 103,687 Interest expense 20,001 8,756 49,334 25,100 Income tax expense 26,068 28,792 128,641 82,063 EBITDA 165,097 146,847 710,362 438,747 Loss on dispos
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