Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — FY2016 Earnings Presentation
22 slides from Advanced Drainage Systems's earnings presentation, Jun 7, 2016
Slide 1: Fiscal Year 2016 Financial Results
Exhibit 99.2 Fiscal Year 2016 Financial Results LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH
Slide 2: Management Presenters
Management Presenters Joe Chlapaty Chairman and Chief Executive Officer Scott Cottrill Executive Vice President, Chief Financial Officer, Secretary and Treasurer Mike Higgins Director, Investor Relations & Business Strategy LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 2
Slide 3: Safe Harbor and Non-GAAP Financial Metrics
Safe Harbor and Non-GAAP Financial Metrics Certain statements in this presentation may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended. Such statements include, b
Slide 4: FY2016 Financial Highlights
FY2016 Financial Highlights Commentary Fiscal Year 2016 Performance • Top-line growth driven by healthy conversion and FY2015 FY2016 Change favorable weather conditions in the majority of our end markets. Net Sales $1.180 $1.289 9.3% (in billions) • Increase in Adjusted EBITDA driven by favorable im
Slide 5: FY2016 Market Conversion
FY2016 Market Conversion DomesticEndMarket Performance– FiscalYear2016 Commentary Non-Residential Residential 15% 15% • Although our core construction markets 11% have not been as robust as anticipated 10% 10% 10% this year, our focus on conversion and Allied products is driving above-market 5% 5% 5
Slide 6: FY2016 Summary
FY2016 Summary Underlying fundamentals of our business and end markets remain strong. Our continued execution of our conversion strategies from traditional materials is yielding above-market growth. Favorable sales trends expected to continue, building off the momentum experienced throughout fiscal
Slide 7: FY2016 Detailed Financial Results
FY2016 Detailed Financial Results Summary Financial Highlights Detailed Financial Results ($ in millions) 12 Months Ended March 31 • Net sales increased 9.3% to $1.289 billion. 2016 2015 % Chg. Net Sales $1,289 $1,180 9.3% • Pipe revenue increased 6.2% and Allied Total Cost of Goods $1,009 $974 3.6%
Slide 8: Sales Performance by Entity – FY2016
Sales Performance by Entity –FY2016 $35 $1,289 $9 $2 $86 • Ideal ( + ) • FX ( - ) • Economy ( - ) $1,180 • Pipe Volume ( + ) • Pricing ( - ) • Allied Products ( + ) FY2015 Domestic Canada Mexico Other FY2016 Intl Values in USD millions LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 8
Slide 9: FY2016 Quarterly Performance
FY2016 Quarterly Performance 1 Commentary Quarterly Net Sales Growth • Domestic results got off to a slower start Domestic International to the year, driven by weaker than 24% 38% 25% 40% expected construction markets. 30% 20% 19% 20% • However, growth in our domestic 15% 12% 13% 10% construction en
Slide 10: FY2016 Quarterly End Market Performance
FY2016 Quarterly End Market Performance 1 Commentary Quarterly Domestic Net Sales Growth • Non-residential net sales growth driven Non-Residential Residential by conversion efforts and strong 25% 40% performance in Allied products, which 35% 36% 19% are primarily sold into this end market. 20% 30% 1
Slide 11: Free Cash Flow Performance
Free Cash Flow Performance Commentary Highlights • FY16 free cash flow of $90 million, Free Cash Flow¹ CapEx compared to $43 million in FY15. $75 $125 • Opportunities exist to continue lowering $100 $90 $50 $45 working capital investment to drive $75 $32 additional free cash flow. $50 $42 $25 $25 •
Slide 12: Capital Structure and Deployment Priorities
Capital Structure and Deployment Priorities Priority Commentary • Top priorities for FY2017 include: evaluation of a new manufacturing Capital Expenditures facility in the CentralMidwestto servea growingmarket,expanding HP production capacity as well as non-virgin material initiatives • On June 7, t
Slide 13: FY2017 Financial Outlook
FY2017 Financial Outlook Fiscal Year 2017 Expectations FY2016 FY2017E Change Net Sales $1.289 $1.330 – $1.380 3.1% -7.0% (in billions) Adj.EBITDA $186 $205 - $230 10.2% -23.7% (in millions) Adj. EBITDA 14.4% 15.3% –16.7% 90– 230 bps Margin LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 13
Slide 14: Key Net Sales Drivers – FY17 Outlook
Key Net Sales Drivers –FY17 Outlook Fiscal Year 2017 Expectations Business Driver Outlook Comments Domestic Construction End 4% to Anticipate 2H16 momentum to continue Markets 7% into FY2017. 5% to 12% Agriculture End Market Softness to continue into FY2017. 1% to 6% International End Market Facing
Slide 15: Sales Performance by Entity – FY2017 Expectations
Sales Performance by Entity –FY2017 Expectations $0-$5 $50-$85 $0-$5 $1,330 - $1,380 $(5)-$(10) $1,289 FY2016 Domestic Canada Mexico Other FY2017 Intl Values in USD millions LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 15
Slide 16: Adj. EBITDA FY2017 Expectations vs. FY2016
Adj. EBITDA FY2017 Expectations vs. FY2016 $5-$10 $35-$45 $205-$230 $(15)-$(21) $0-$4 $186 FY2016 Volume/ Allied SG&A* Hedges/Other FY2017 Price/ Products Expectations Material Costs Amounts in millions *Excludes ~$9 million in restatement related costs we anticipate to incur in early LEADERSHIP • G
Slide 17: Filings Update
Filings Update • FY16 Form 10-Q (Q1, Q2, Q3) filed May 31, 2016. • FY16AnnualReporton Form10-K – expectedby the end of July • Q1FY17Form10-Q– expectedbythe end of August LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 17
Slide 18: Q&A Session
Q&A Session LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 18
Slide 19: Closing Remarks
Closing Remarks Positive momentum is expected to continue into fiscal year 2017. Strong order activity should continue to support improving sales trends in coming months, weather permitting. Top-line growth complemented by lower raw material and energy costs, which remain favorable compared to the p
Slide 20: Appendix
Appendix LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 20
Slide 21: EBITDA Reconciliation
EBITDA Reconciliation Fiscal Year Ended March 31, (Amounts in thousands) 2015 2016 FY FY Net income $12,751 $26,144 Depreciation and amortization 65,472 72,264 Interest expense, net 19,368 18,460 Income tax expense 9,443 19,087 EBITDA¹ $107,034 $135,957 Derivative fair value adjustments 7,746 3,377
Slide 22: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Fiscal Year Ended March 31, (Amounts in thousands) 2016 2015 Cash flow from operating activities $ 134,757 $ 74,379 Capital expenditures (40,964) (31,479) Additions to capitalized software (3,924) (601) Free cash flow $ 89,869 $ 42,299 LEADERSHIP • GROWTH • MOMENTUM THR
Advanced Drainage Systems — FY2016 Earnings Presentation on 6ix