Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — 2018 RBC Capital Markets Global Industrials Conference
38 slides from Advanced Drainage Systems's conference presentation, Sep 5, 2018
Slide 1: 2018 RBC Capital Markets Global Industrials Conference
2018 RBC Capital Markets Global Industrials Conference September 8, 2018
Slide 2: 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. 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 oth
Slide 3: Agenda
Agenda ADS at a Glance Track Record of Innovation and Growth Competitive Advantages Strategy and “SPP” Overview Appendix
Slide 4: ADS at a Glance
ADS at a Glance
Slide 5: Investment Proposition
Investment Proposition ADS is an Industrial Growth Company Leading player in the stormwater management industry Only complete solutions provider in the industry, with a track record of innovation Material conversion strategy driving market share gains Large addressable market opportunity
Slide 6: ADS at a Glance
ADS at a Glance Founded 1966 Listed 2014 NYSE WMS Products: Pipe High Density Polyethlyene (HDPE) Polypropylene (PP) Allied Products Storm & Septic Chambers Fittings Structures / Catch Basins Water Quality Segments: Domestic and International Manufacturing Plants*: 55 Distribution Facilities*: 30 AD
Slide 7: Financial Outlook
Financial Outlook Net sales growth driven by domestic construction markets. Adjusted EBITDA to increase due to favorable demand, cost reduction initiatives and operational improvements. +5.2% +10.7% ________________________________ * FY 2019 is an estimate. Percentage increases are calculated at the
Slide 8: Track Record of Innovation and Growth
Track Record of Innovation and Growth
Slide 9: A Strong History
Corrugated HDPE pipe proved far superior to materials used at the time A Strong History … Introduced in 1966 Agriculture market converted by late 1970s N-12 HDPE pipe introduced in 1980s
Slide 10: A History of Conversion Driven Growth
… of Conversion Driven Growth HDPE/PP Share of Storm Sewer Market(1) <1% <10% ________________________________ 1) Based on management estimates. We continue to drive market share gains by displacing traditional materials and driving industry conversion to our products
Slide 11: Allied Products Growth
Allied Products Growth Our allied product portfolio differentiate ADS as a complete solutions provider; with higher margin sales driving more profitable growth FY 14 – FY 18 CAGR: + 9.6%
Slide 12: Innovative Water Management Solutions
Innovative Water Management Solutions Our comprehensive portfolio makes us the only complete solutions provider for the water management industry
Slide 13: Our Competitive Advantages
Our Competitive Advantages GROWTH * MOMENTUM — THROUGH STRENGTH
Slide 14: Market Leading Position
Market Leading Position Superior Product Attributes Extensive Distribution Network ADS is the clear market leader Comprehensive Product Portfolio Unmatched Footprint
Slide 15: Comprehensive Product Portfolio
Comprehensive Product Portfolio Comprehensive product portfolio with attractive growth opportunities
Slide 16: Superior Product Attributes
Superior Product Attributes Cost Installation Performance Sustainability More Cost Effective ~20% less installed cost Fewer delivery truckloads required per project Safer handling qualities Reduced Labor & Equipment 3x faster to install Lighter weight Longer lengths Superior Performance Fewer joints
Slide 17: Unmatched Scale
Unmatched Scale Extensive network footprint is ~6x larger than our closest HDPE competitor ADS’ Extensive Operating Platform Manufacturing Plant Distribution Center
Slide 18: Extensive Distribution Network
Extensive Distribution Network Our leading sales force, technical expertise and extensive network of distributor relationships position us as the supplier of choice ~400 Sales & Engineering Professionals Waterworks Retail Recreation Buying
Slide 19: Our Strategy
Our Strategy
Slide 20: Our Strategy
Our Strategy Outpace domestic construction end market growth by 200+ basis points Operate more efficiently and drive margin expansion Generate strong earnings and cash flow Disciplined capital allocation plan
Slide 21: Superior Performance Program (SPP)
Operational Excellence Commercial Excellence Strategic Growth Superior Performance Program (SPP) SPP is aimed at driving growth and competitive advantage in the industry as well as accelerating margin expansion and profitability over time
Slide 22: Strategic Growth
Strategic Growth Strategic Growth Expanding our portfolio of products through new product innovation and M&A, to strengthen our solutions package Invest in high-growth products and highly profitable end markets Storm Water Solutions Sanitary Solutions Potable Water Storm Pipe & Fittings Retention/De
Slide 23: Operational Excellence
Operational Excellence Network Optimization Optimizing the network to ensure we have the right product, at the right plant, at the right time Drive Supply Chain Efficiency Add Key Tooling Setups Increase Capacity in High Growth Products Optimize our manufacturing footprint, lower transportation cost
Slide 24: Commercial Excellence
Commercial Excellence Sales Force Effectiveness Enabling our sales force to drive incremental growth in our storm sewer product revenue Maximize field selling activities while improving efficiency and effectiveness in the way we sell, design, price and quote Pricing Optimization Tool CRM Platform En
Slide 25: Raw Material Cost Management
Raw Material Cost Management ________________________________ Based on management estimates and other qualitative and quantitative factors. Amounts in billions of pounds. HDPE blending technique. Other defined as resin which could be allocated to either “Virgin” or “Recycled”. Well positioned to man
Slide 26: Sustainability
Sustainability Our broad portfolio of innovative products help efficiently and safely manage storm and waste water 1 of the Top 6 Largest in North America Recycling Companies >400M Pounds of plastic annually is kept from landfills because of ADS >40% of our MEGA GREENTM pipe is recycled HDPE materia
Slide 27: ADS: An Industrial Growth Company
ADS: An Industrial Growth Company Leading player in the stormwater management industry Only complete solutions provider in the industry, with a track record of innovation Material conversion strategy driving market share gains Large addressable market opportunity
Slide 28: Appendix
Appendix
Slide 29: End Markets
End Markets
Slide 30: Non-Residential End Market
Non-Residential End Market Market vs. ADS Growth Highlights Domestic Revenue Concentration(2) Market Growth(1) FY14 – FY18 CAGR Non-Residential Construction Key Products ________________________________ Based on management estimates and other quantitative and qualitative factors. Percentage of total
Slide 31: Residential End Market
Residential End Market Market vs. ADS Growth Highlights Domestic Revenue Concentration(2) Market Growth(1) FY14 – FY18 CAGR Residential Construction Key Products ________________________________ Based on management estimates and other quantitative and qualitative factors. Percentage of total domesti
Slide 32: Infrastructure End Market
Infrastructure End Market Market vs. ADS Growth Highlights Domestic Revenue Concentration(2) Market Growth(1) FY14 – FY18 CAGR Infrastructure Construction Key Products ________________________________ Based on management estimates and other quantitative and qualitative factors. Percentage of total d
Slide 33: Agriculture End Market
Agriculture End Market Market vs. ADS Growth Highlights Domestic Revenue Concentration(2) Market Growth(1) FY14 – FY18 CAGR Agriculture Key Products ________________________________ Based on management estimates and other quantitative and qualitative factors. Percentage of total domestic net sales f
Slide 34: Financials
Financials
Slide 35: Q1 FY 2019 Financial Performance
Q1 FY 2019 Financial Performance +260 bps (USD, in millions) Adjusted EBITDA +8.2% Domestic Markets + Construction +10% + Non-Residential +11% + Residential +11% − Infrastructure - 2% − Agriculture - 17% + Pipe +6% + Allied +11% By Geography + Domestic +7% + International +17% By Application + Pipe
Slide 36: Fiscal 2019 Financial Outlook
Fiscal 2019 Financial Outlook Key Metric FY 2018 FY 2019 Y-o-Y Change Previous New Net Sales (in Millions) $1,330 $1,375 - $1,425 $1,375 - $1,425 Up 3% to 7% Adj. EBITDA (in Millions) $210 $220 - $240 $225 - $240 Up 7% to 14% Adj. EBITDA Margin 15.8% 16.0% - 16.8% 16.4% - 16.8% +60 to +100 basis poi
Slide 37: Market FY2019 Outlook
Market FY2019 Outlook Comments Domestic Construction End Markets Growth driven by market conversion and continued strength in the domestic construction markets Agriculture End Market Spring selling season impacted by weather, fall selling season will be contingent on weather International End Market
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ___________________________ EBITDA as net income before interest, taxes, depreciation and amortization Adjusted EBITDA as EBITDA before stock based compensation expense, non-cash charges and certain other expenses Three Months Ended June 30, (Amounts in thousands) 2018
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