Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Investor Presentation (February 2015)
33 slides from Advanced Drainage Systems's investor presentation, Feb 10, 2015
Slide 1: New York Presentations
Exhibit 99.1 New York Presentations February 2015 LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH
Slide 2: Forward Looking Statements and Non-GAAP Financial Metrics
Forward Looking Statements 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. These stat
Slide 3: Management Presenters
Management Presenters Joseph Chlapaty Chairman, President & CEO Years at the Company: 34 Years in the Industry: 34 Mark Sturgeon Executive Vice President, Finance & CFO Years at the Company: 33 Years in the Industry: 33 Ron Vitarelli Co-Chief Operating Officer & Executive Vice President for Sales an
Slide 4: ADS – An Industrial Growth Company
ADS – An Industrial Growth Company The leading player in the industry The only complete solutions provider for the water management industry, with a history of product innovation Track record of market share gains with material conversion growing steadily over time Large addressable opportunity acro
Slide 5: ADS At A Glance
ADS At A Glance Company Snapshot FYTD2015 Sales by Geography (1) Significant management / ESOP ownership International 13% ADS is the leading manufacturer of high performance thermoplastic corrugated pipe, providing a comprehensive suite of water management products and superior Domestic 87% drainag
Slide 6: Comprehensive Product Portfolio
Comprehensive Product Portfolio Pipe Products Portfolio: Allied Products Portfolio: $738mm of FYTD2015 Net Sales $233mm of FYTD2015 Net Sales Dual Wall (N-12) HP Storm & Sanitary Fittings Chambers StormTech® Chambers Single Wall Triple Wall Structures Water Quality & Other Inserta Water Quality Nylo
Slide 7: Water Management Solutions
Water Management Solutions StormTech Chambers Foundation / Sump Wells Fittings Wastewater Pipe Disposal Nyloplast Structures Water Quality Downspout / Landscape / Culverts / Edge Drains Window Well Drainage Project Life Cycle Technical Design Concept & & Permit Bid Construction Initiation Financial
Slide 8: The Clear Market Leader
The Clear Market Leader Unmatched Operating Platform Clear market leading positions across all key product categories Unmatched operating scale and distribution network: ~10x larger than nearest domestic HDPE competitor based on revenues Fleet of approximately 625 tractor-trailers combined with our
Slide 9: Extensive Network of Distributors
Extensive Network of Distributors Leading Sales Force Extensive Network of Distributor Relationships Network of over 230 dedicated direct sales professionals with technical or engineering backgrounds Wholesale Highly trained and qualified to educate design specialists and engineers Supported by appr
Slide 10: Significant Competitive Advantages
Significant Competitive Advantages Customers Customer Service, Supply Chain, & Logistics Field Personnel / Relationships Approvals / Specifications Comprehensive Product Offering Competitors ADS’ product portfolio, technical expertise, history of approvals, supply chain and logistics capabilities su
Slide 11: A Superior Product Compared to Alternatives
A Superior Product Compared to Alternatives HDPE / PP Reinforced Concrete (RCP) Corrugated Metal (CMP) Commentary HDPE / PP is generally 20% less expensive on a fully- Fully-installed cost installed basis than RCP HDPE / PP is lighter and Ease / speed of installation comes in longer lengths than RCP
Slide 12: Multi-Pronged Growth Strategy
Multi-Pronged Growth Strategy Market Conversion Allied Products Market Recovery International Growth Focus on displacing Portfolio of storm Current addressable Creating strong growth alternative materials – water management market opportunity platforms utilizing local concrete, steel & PVC product l
Slide 13: A Strong History of Market Conversion
A Strong History of Market Conversion Corrugated HDPE pipe has been displacing traditional products such as reinforced concrete, corrugated steel and PVC pipe, across an ever expanding range of end markets since the late 1980’s Contractors, engineers, and municipalities continue to acknowledge the s
Slide 14: Allied Products and Innovative Pipe Offerings
Allied Products and Innovative Pipe Offerings New Product Introduction & Ventures Allied Product Growth ($ mm) Product introduction: Bend-A-Drain (Retail Market) 2014 Established Tigre-USA PVC Fittings joint venture 2013 Acquired Flexstorm product line, established Baysaver joint venture 2012 Acquir
Slide 15: Addressable Market Opportunity
Addressable Market Opportunity FYTD2015 Domestic Sales by End Use U.S. Non-Residential Building Construction Put in Place(1) ($ bn) Non- Residential 52% Agriculture 19% Total U.S. Housing Starts(2) Thousands of units Infrastructure 10% Residential 19% Construction: 81% Domestic markets served still
Slide 16: Track Record of Above Market Growth
Track Record of Above Market Growth FY2010A – FY2014A Domestic Revenue CAGR vs. End Use CAGR Non-Residential Residential Infrastructure Agriculture (1) ADS Growth Market Growth Our holistic water management solutions has propelled above market growth across the cycle 1. Based on management estimates
Slide 17: YTD Domestic End Market Performance
YTD Domestic End Market Performance Domestic Net Sales Growth – Three & Nine Months Ended December 31 st Non-Residential Residential Infrastructure Agriculture Three months ended Nine months ended Dec 31, 2014 Dec 31, 2014 Compared to previous years, stronger growth is being seen in the non-resident
Slide 18: International Market Growth Opportunities
International Market Growth Opportunities Canada Mexico / Central America South America The leading HDPE producer in ~30 exclusive territory distribution Infrastructure primarily concrete-based Canada; expanding market share agreements in Mexico with widespread storm drainage 100% owned problems Rec
Slide 19: Ideal Pipe Acquisition
Ideal Pipe Acquisition Purchase price of ~$56.8 million CDN Trailing 12 months sales of ~$43 million CDN, trailing 12 months EBITDA of $7.8 million CDN Acquisition increases manufacturing footprint from 2 to 5 facilities Opportunities to apply best practices from both companies to improve cost struc
Slide 20: Strong and Deep Management Team
Strong and Deep Management Team 34 Years Dedicated management team, averaging over 23 years of industry experience High level of management and employee ownership ensures aligned objectives Track record of success across economic cycles Joseph Chlapaty Chairman, President & CEO 33 Years 24 Years 26
Slide 21: Operational Excellence & Technical Expertise
Operational Excellence & Technical Expertise Scale and Capacity Industry Leading Technical Expertise 61 manufacturing locations and 29 distribution centers serving Team of 50 field-based engineers work closely with key all 50 states, Canada, Mexico and South America agencies to obtain regulatory app
Slide 22: Raw Material Cost Management
Raw Material Cost Management Effectively passed on historical increases in resin costs via price increases Focused on increasing the use of less costly and less volatile recycled resin in our production process while maintaining product quality and performance characteristics We hedge ~50% of antici
Slide 23: North America Polyethylene Capacity Expansions
North America Polyethylene Capacity Expansions • 2014 – LyondellBasell - U.S. Gulf Coast The next wave of capacity expansion will be in • 2015 • 220 MM lbs HDPE (debottleneck) North America – Nova - Joffre, Alberta, Canada • 1,000 MM lbs LLDPE Low cost natural gas liquids from shale gas production •
Slide 24: Financial Overview
Financial Overview LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH
Slide 25: Financial Highlights
Financial Highlights Unmatched track record in driving market conversion to our products from traditional products Above-Market with a long runway ahead Growth Ability to deliver complete solutions through our comprehensive portfolio of products and expansive distribution network Attractive End Well
Slide 26: Historical Financial Performance
Historical Financial Performance Commentary FY Revenue Revenue ($ mm) Actively drive market share gains through material conversion and Allied Product growth Muted demand in the non-residential end market over the past several years; however, broader end markets in midst of recovery Improving profit
Slide 27: FY2015 Q3 Financial Results
FY2015 Q3 Financial Results Summary Financial Highlights Detailed Financial Results Quarterly net sales increased 6.4%, to $278.2 million Adjusted EBITDA of $27.7 million Adjusted earnings per fully converted share of $0.03, compared to a net loss of $.12 in the prior year Declared quarterly dividen
Slide 28: FY2015 9-Month Financial Results
FY2015 9-Month Financial Results Summary Financial Highlights Detailed Financial Results Net sales have increased 9.4%, to $971.2 million Adjusted EBITDA of $137.3 million, an increase of 5.2% Adjusted earnings per fully converted share of $0.62 compared to $.45 in the prior year Note: As of Decembe
Slide 29: Current Capitalization
Current Capitalization 1. Revolving Credit Facility has a borrowing capacity of $325mm. LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 29
Slide 30: ADS – An Industrial Growth Company
ADS – An Industrial Growth Company The leading player in the industry The only complete solutions provider for the water management industry, with a history of product innovation Track record of market share gains with material conversion growing steadily over time Large addressable opportunity acro
Slide 31: Appendix
Appendix LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH
Slide 32: Shares Outstanding
Shares Outstanding July 30, 2014 (Post-IPO) December 31, 2014 (FY15 Q3 Earnings) As of July 30, 2014 (Post-IPO), the Company had As of December 31, 2014, the Company had 73,201,560 fully converted shares of common 73,280,294 fully converted shares of common stock outstanding. The following table ill
Slide 33: EBITDA and Adjusted EBITDA Reconciliation
EBITDA and Adjusted EBITDA Reconciliation EBITDA and Adjusted EBITDA Reconciliation Note: Fiscal year end March 31. 1. EBITDA as net income attributable to ADS before interest, income taxes, depreciation and amortization. 2. Adjusted EBITDA as EBITDA before stock based compensation expense, non-cash
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