Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Investor Presentation (August 2017)
35 slides from Advanced Drainage Systems's investor presentation, Aug 8, 2017
Slide 1: Investor Presentation August 2017
Investor Presentation August 2017
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 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 statements are not
Slide 3: ADS at a Glance
ADS at a Glance
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 Leading manufacturer of high performance thermoplastic corrugated pipe, providing comprehensive suite of water management products and superior drainage solutions for use in the construction and infrastructure marketplace Core products include thermoplastic corrugated pipe, fittings,
Slide 6: Innovative Water Management Solutions
Innovative Water Management Solutions Foundation / Sump Wells Culverts / Edge Drains Wastewater Disposal Downspout / Landscape / Window Well Drainage StormTech® Chambers Fittings Pipe Water Quality Nyoplast The only complete solutions provider for the water management industry
Slide 7: Our Competitive Advantages
Our Competitive Advantages
Slide 8: Our Competitive Advantages
Our Competitive Advantages ADS’ product portfolio, technical expertise, history of approvals, supply chain and logistics capabilities support our leading market position Comprehensive Extensive Distribution Network Track Record Of Innovation Superior Product Portfolio Unmatched Scale & Distribution
Slide 9: Unmatched Scale and Distribution
Unmatched Scale and Distribution Extensive Operating Platform Manufacturing Plant Distribution Center Approximately 60 manufacturing plants(1) Over 30 distribution centers(1) Fleet of approximately 700 tractor-trailers Advanced, versatile and portable tooling equipment Competitive Advantages Unmatch
Slide 10: Comprehensive Product Portfolio
Comprehensive Product Portfolio Dual Wall (N-12) HP Storm & Sanitary Single Wall Triple Wall Pipe Products Portfolio Allied Products Portfolio StormTech® Chambers Fittings Water Quality Flex Storm Nyoplast Inserta Tee HPXR 75 Comprehensive product offering with attractive growth opportunities
Slide 11: A Superior Product Compared to Alternatives
A Superior Product Compared to Alternatives HDPE / PP is generally 20% less expensive on a fully-installed basis than RCP Fully-installed cost Ease / speed of installation Installation sensitivity Structural integrity Resistance to corrosion Resistance to abrasion Joint integrity Flow characteristic
Slide 12: Track Record of Innovation
HPXR 75 Track Record of Innovation 30” – 60” High-Performance Fiber Reinforced Polypropylene Pipe Higher stiffness for demanding installation (75 pii) Yields significant cost benefits for customers Enables significant inroads in infrastructure and public construction markets, particularly for large
Slide 13: Extensive Distribution Network
Extensive Distribution Network Network of approximately 285 dedicated direct sales professionals with technical or engineering backgrounds Highly trained and qualified to educate design specialists and engineers Supported by approximately 55 field-based engineers Help educate design engineers and go
Slide 14: Our Strategy
Our Strategy
Slide 15: Superior Performance Program (SPP)
Superior Performance Program (SPP) Strategic Growth Operational Excellence Commercial Excellence Developing new engineering design suite Implementing new CRM platform for sales team Building a pricing optimization tool Driving HPXR 75 market share growth in large diameter pipe Tapping international
Slide 16: Strategic Growth
Strategic Growth Strategic Growth Expanding our portfolio of products to meet all solution sets through new product innovation and M&A Further strengthening our position as a water management solutions provider Storm Water Solutions Sanitary Solutions Potable Water Storm Pipe & Fittings Retention/De
Slide 17: Operational Excellence – Network Optimization
Operational Excellence – Network Optimization Operational Excellence Optimizing the network to ensure we have the right product, at the right plant, at the right time Winter Inventory Build Add Key Tooling Setups Rationalize Network Increase Capacity Winter Inventory Build Add Key Tooling Setups Low
Slide 18: Commercial Excellence – Sales Force Effectiveness
Commercial Excellence – Sales Force Effectiveness Commercial Excellence 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 Optimizat
Slide 19: Operational Excellence – Continuous Improvement
Faster Start-Ups Quicker Change Overs Offset Rising Variable Cost Reduce Scrap Operational Excellence – Continuous Improvement Operational Excellence Implementing continuous improvement initiatives beginning with start-ups and changeovers Lower operational costs, increase uptime/capacity and improve
Slide 20: A Strong History of Conversion Driven Growth
A Strong History of Conversion Driven Growth Commentary HDPE/PP Share of Storm Sewer Market(1) <1% <10% Focus on displacing alternative materials – concrete, steel & PVC pipe – both domestically and internationally Provide a strong value proposition with our superior High Density Polyethylene (HDPE)
Slide 21: Allied Products Growth
Allied Products Growth Allied Product Growth FY 13 – FY 17 CAGR: + 8.8% Select New Product Introductions StormTech® Chambers Nyoplast® Septic Chambers Water Quality Stormwater detention, retention and “first flush” storage systems Custom built PVC drainage structures Plastic leaching chambers for se
Slide 22: Capital Structure and Deployment Priorities
Capital Structure and Deployment Priorities Cash and Leverage Cash Flow from Operations Sources Uses Top priorities for FY2018 include: supporting growth in certain diameters and geographies, productivity and efficiency initiatives (SPP) Focus on M&A to leverage our national footprint and sales and
Slide 23: Non-Virgin Raw Material Sourcing
Non-Virgin Raw Material Sourcing We purchase and process a wide variety of reusable HDPE products through Green Line Polymers, a wholly owned subsidiary. ADS extends life of the plastic by recycling post-consumer and post-industrial HDPE plastic scrap then grinding, cleaning, pelletizing and consumi
Slide 24: Raw Material Cost Management
Raw Material Cost Management Increase use of recycled resin in production process while maintaining overall quality and performance Through our wholly owned subsidiary Green Line Polymers, we self-process 88% of the Company’s non-virgin plastic Pass on resin cost increases to customers via price inc
Slide 25: Our End Markets
Our End Markets
Slide 26: Non-Residential End Market
Non-Residential End Market Focus on civil engineering design firms to increase specifications and contractors for product acceptance Highest concentration of Allied Products sales Solid demand driven by construction activity and increased regulations around the management of storm water quantity and
Slide 27: Residential End Market
Market Growth(1) FY13 – FY17 CAGR Residential End Market ~53% is sold to the retail channel (i.e., Home Depot, Lowe’s) ~47% is related to new residential construction development (single-family, multi-family) Strong housing market growth is forecasted; new subdivision development should benefit stor
Slide 28: Infrastructure End Market
Market Growth(1) FY13 – FY17 CAGR Infrastructure End Market Focus on gaining key approvals with state and local agencies Market is heavily reliant on public funding New product offering (HPXR-75) should help grow our market share in this end market Market vs. ADS Growth Highlights Domestic Revenue C
Slide 29: Agriculture End Market
Market Growth(1) FY13 – FY17 CAGR Agriculture End Market Systematic drainage has been proven to increase crop yields Key economic drivers are farm income and crop prices; specifically corn and soybeans Sales are concentrated in the Midwest Market vs. ADS Growth Highlights Domestic Revenue Concentrat
Slide 30: Appendix
Appendix
Slide 31: Q1 2018 Financial Performance
Q1 2018 Financial Performance Favorable domestic construction market demand in the quarter offset by weakness in Ag and International markets Adjusted EBITDA Margin - 330 bps (USD, in millions) Revenue Adjusted EBITDA Margin Q1 FY17 20.1% Price/Material Costs (2.4)% Allied Products 0.4% Transportati
Slide 32: FY2018 Market Outlook
Market FY2018 Outlook Comments Domestic Construction End Markets Anticipated end market growth intact, though at a slower pace than previously anticipated Agriculture End Market Softness expected to continue throughout FY2018 International End Market Modest improvement expected in Mexico; Canada exp
Slide 33: FY 2018 Financial Outlook
FY 2018 Financial Outlook Key Metric FY 2017 FY 2018 Y-o-Y Change Net Sales (in Billions) $1,257 $1,275 - $1,325 Up 1% to 5% Adj. EBITDA (in Millions) $193 $200 - $220 Up 4% to 14% Adj. EBITDA Margin 15.4% 15.7% - 16.6% +30 to +120 basis points Fiscal Year 2018 Expectations Net sales growth driven b
Slide 34: 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 Fiscal Year Ended March 31, (Amounts in thousands) 2017 2016 Net
Slide 35: 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) 2017
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