Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Q3 2017 Earnings Presentation
17 slides from Advanced Drainage Systems's earnings presentation, Feb 9, 2017
Slide 1: Third Quarter Fiscal 2017 Financial Results
Third Quarter Fiscal 2017 Financial Results Exhibit 99.2
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 *
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 Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include,
Slide 4: Q3 2017 Highlights
Third quarter net sales decline as expected due primarily to continued weakness in domestic and Canadian Ag markets. 1 Q3 2017 Highlights 2 3 4 Continued track record of delivering above market growth in non-residential construction. Benefit from lower resin cost offset by lower volume. Favorable ca
Slide 5: Introducing HPXR
Introducing HPXR 75 Higher stiffness for demanding installations (75 pii). Yields significant cost benefits for customers. Enables significant inroads in infrastructure and public construction markets, particularly for large diameter pipe. Enhanced installation benefits. HPXR 75 represents significa
Slide 6: Fiscal Year-to-Date Financial Performance
Fiscal Year-to-Date Financial Performance Revenue Gross Margin Adjusted EBITDA Margin Despite lower revenues, earnings exceeded the prior year driven by disciplined pricing and a favorable cost environment. FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 FY 2016 - 3.1% +270 bps +190 bps (USD, in millions) $
Slide 7: Q3 2017 Financial Performance
Q3 2017 Financial Performance Revenue Gross Margin Adjusted EBITDA Margin Despite lower revenues, strong earnings driven by disciplined pricing and a favorable cost environment. Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 - 5.8% - 30 bps - 110 bps (USD, in millions) $313 Revenue Adjusted EBITDA
Slide 8: Domestic End Market Performance
Q3 2016 Q3 2017 Q3 2017 Domestic End Market Performance Non-Residential Infrastructure Residential Agriculture 3Q performance impacted by slower Ag market and lower growth in our construction end markets. + 4% - 1% - 4% Pipe +2% Allied Products +7% Retail (7%) New residential construction +6% Pipe (
Slide 9: Free Cash Flow Performance
Nine months ended December 31, 2015 Nine months ended December 31, 2016 Free Cash Flow¹ Free Cash Flow Performance % of Sales 2.7% 3.5% All figures in USD, mm Working Capital² CapEx Net Debt³ $31 $37 $402 $370 $297 $306 FY 2017 FY 2016 Change Adjusted EBITDA $181 $166 $15 Working Capital $(23) $10 $
Slide 10: Capital Structure and Deployment Priorities
Capital Structure and Deployment Priorities Cash and Leverage Cash Flow from Operations Sources Uses Top priorities for FY2017 include: completion of new manufacturing facility in Harrisonville, MO to serve a growing market, expanding HP production capacity as well as non-virgin material initiatives
Slide 11: FY2017 Financial Outlook
FY2017 Financial Outlook Key Metric FY 2016 FY 2017 Y-o-Y Change Comments Net Sales (in Billions) $1,291 $1,225 - $1,250 Down 3% to 5% Driven by softer domestic construction market and further weakness in Ag and Mexico Adj. EBITDA (in Millions) $187 $190 - $210 Up 2% to 12% Favorable resin costs off
Slide 12: Key Net Sales Drivers – Market Outlook
Market FY2017 Outlook FY2018 Outlook Comments Domestic Construction End Markets ADS anticipates LSD to MSD growth in our domestic construction markets Agriculture End Market Softness expected to continue throughout FY2018 International End Market Modest improvement expected in Mexico, contingent on
Slide 13: Q&A Session
Q&A Session *
Slide 14: Closing Remarks
Closing Remarks Strong results in non-residential and new residential construction markets 1 2 3 Generated double digit growth in HP Pipe sales as well as solid growth in Allied products Focused on accelerating growth through innovation and M&A 4 Committed to returning excess cash to shareholders th
Slide 15: Appendix
Appendix *
Slide 16: EBITDA Reconciliation
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 Nine Months Ended December 31, December 31, (
Slide 17: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Nine Months Ended December 31, (Amounts in thousands) 2016 2015 Cash flow from operating activities $ 116,631 $ 129,441 Capital expenditures (36,504) (31,474) Free Cash Flow $ 80,127 $ 97,967 *
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