Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Baird 2019 Global Industrial Conference
34 slides from Advanced Drainage Systems's conference presentation, Nov 7, 2019
Slide 1: Advanced Drainage Systems Baird 2019 Global Industrial Conference
Advanced Drainage Systems Baird 2019 Global Industrial Conference November 2019
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. Such statements include, but are not limited to, statements regarding the anticipated timing for the issuance of additional historic and future financial
Slide 3: Business Overview
Business Overview
Slide 4: Key Themes and Fiscal 2021 Targets – Legacy ADS
Key Themes Cash Flow Generation Successful execution will result in significant cash generation over the next several years Margin Expansion ADS has significant margin upside potential and action plans in place to achieve superior results ADS is an industrial growth story with a large market opportu
Slide 5: ADS' Distinct Market Leadership
ADS’ Distinct Market Leadership Leading player in the storm water management industry with a track record of gaining market share Consistent above-market growth driven by material conversion strategy and complete solutions package Best-in-class sales force, technical expertise and distribution & log
Slide 6: ADS Overview and Historical Financial Summary
Historical Financial Summary ($mm) ADS Overview FY 2019 Business Mix Net Sales by Product Net Sales by End-Market Net Sales Adj. EBITDA and Margin ADS is the leading manufacturer of high performance thermoplastic corrugated pipe, providing storm water management products and drainage solutions for c
Slide 7: Innovative Management of a Precious Resource
ADS provides innovative water management solutions, protecting a precious natural resource, while keeping millions of pounds of plastic out of landfills each year 8 Innovative Management of a Precious Resource ADS’ solutions are managing billions of gallons of storm water runoff, protecting bodies o
Slide 8: Management of a Precious Resource and Recycling
>180,000 gallons Management of a Precious Resource Recycling Our portfolio of innovative products help communities efficiently and safely manage storm and waste water ADS’ solutions are aiding in protecting regional water supplies, allowing for cost-effective use of land and creating valuable green
Slide 9: Innovative Water Management Solutions
Innovative Water Management Solutions ADS has demonstrated its commitment to management of a precious resource as a complete solutions provider
Slide 10: Infiltrator Water Technologies at a Glance
Infiltrator Water Technologies at a Glance A high-growth, high-margin platform with proven track record of innovation and conversion-driven share gains Historical Financial Summary ($mm) Infiltrator Overview CY 2018 Business Mix Net Sales by Product Net Sales by End-Market Net Sales Adj. EBITDA and
Slide 11: On-Site Wastewater System Overview
The On-site wastewater industry was an estimated $1.2 billion in 2018 Approximately 30% of new North American single-family homes utilize septic systems Replacement systems make up approximately one third of overall demand Traditionally, wastewater systems have been comprised of pipe and stone leach
Slide 12: A Market Leader in Water Management Solutions
Leader in storm water management Industry leading go-to-market model Expansive distribution network Owned logistics fleet Cost effective and well positioned manufacturing network Leading positions in storm water and septic markets Innovative products displacing traditional materials Distribution net
Slide 13: Compelling Strategic Combination
Compelling Strategic Combination Yielding Enhanced Diversification, Profitability, and Growth End Market Mix (LTM 3/31/19) Product Mix (LTM 3/31/19) Net Sales (LTM 6/30/19) $1,411 million $300 million $1,643 million (2) Adjusted EBITDA (LTM 6/30/19) $237 million $101 million $338 million (3) Adjuste
Slide 14: Evolution of a Long-standing Partnership with Infiltrator
Evolution of a Strong, Long-standing Partnership with Infiltrator ADS and Infiltrator have been partners for over 15 years Partnering for Success in Storm Water and On-Site Septic 2003 The companies formed a joint venture called StormTech LLC Infiltrator designed and manufactured the chambers for th
Slide 15: Comprehensive Portfolio of Products Driving Solutions
EZFlow Conveyance Capture Storage Treatment Delta ADS Products IWT Products Acquisition of Infiltrator enhances ADS’ portfolio of water management solutions (increases Allied Products to 40% of net sales) and expands its addressable opportunity into attractive on-site septic market HP StormTech Nylo
Slide 16: Superior Product Attributes
Superior Product Attributes 100-year design service life Superior Performance Our products perform better, are easier to install and are more cost effective than traditional materials 3x faster installation Easier Installation Reduced labor and equipment Lighter weight and longer length 20% less ins
Slide 17: Market Share Model Accelerates Conversion
Market Share Model Accelerates Conversion and Supports Industry Leadership Win Rate Coverage Acceptance Approvals Works closely with local agencies and State DOT’s Technical Engineering team leverages research, studies and relationships to develop industry standards and increase regulatory approvals
Slide 18: Sales, Distribution and Logistic Capabilities
48 US & Canada Manufacturing Facilities Company-Owned Fleet 700 Trucks & 1,250 Trailers Our vast capabilities allow us to serve the customer 26 US & Canada Distribution Centers ADS also partners with 3,000+ distribution partners, including 300+ Sales and Engineering Professionals 50+ Field Engineers
Slide 19: Why Solutions Are Important
Why Solutions Are Important Pipe Manufacturer Solutions Provider $50K Opportunity $150K Opportunity Providing solutions increases our share of wallet with our customers Opportunity amounts above are for illustrative purposes only and may not be indicative of actual project value.
Slide 20: Leadership in Recycling
Leadership in Recycling Combined Raw Material Purchases Overview Differentiated Recycling Capabilities Drive Low-Cost Operating Position ADS and Infiltrator have a long-track record of continuously refining their raw material processing capabilities to increase the recycled content in their products
Slide 21: Operations Overview
Operations Overview
Slide 22: Raw Material Strategy
Raw Material Strategy 40% SALES TRADE DELIVERY DISTRIBUTION & LOGISTICS CONVERSION RAW MATERIAL Optimize our material blending to reduce cost and maximize throughput while meeting industry standards for pipe performance
Slide 23: Raw Material Initiatives
Raw Material Initiatives Polypropylene: Cost Reduction Initiatives HDPE: Increase Consumption of Recycled Material CAGR 6% FY18 – FY21 CAGR Recycled Pellets: 27% Virgin HDPE: 5% Recycled Flake: (100%) Improving production rate and reducing scrap by investing in: High Efficiency Blending Pelletizing
Slide 24: Conversion Improvement Strategy
Conversion Improvement Strategy 25% SALES TRADE DELIVERY DISTRIBUTION & LOGISTICS CONVERSION RAW MATERIAL Through SPP, drive continuous improvement within four wall manufacturing while optimizing manufacturing network
Slide 25: Conversion Improvement Strategy
Conversion Improvement Strategy Continuous Improvement Startups & Changeovers Machine Maintenance & Upgrades Automation Network Rationalization Integrated Supply Chain Planning Tooling & Capacity Investments Manufacturing Network Optimization Inside the Four Walls
Slide 26: Logistics & Transportation
Logistics & Transportation 15% SALES TRADE DELIVERY DISTRIBUTION & LOGISTICS CONVERSION RAW MATERIAL Optimize the use of our fleet assets and national footprint to provide high-quality, cost effective and efficient service to customers
Slide 27: Logistics & Transportation Initiatives
Logistics & Transportation Initiatives People Process Technology Increase driver capacity Internal driver development programs Delivery-centric vs. Driver-centric model Optimize fleet composition and increase velocity of trips per day Centralize planning and dispatching Optimize inter-plant freight
Slide 28: Appendix
Appendix
Slide 29: Special Dividend / ESOP
Special Dividend / ESOP Special Dividend $1.00 Special Dividend paid on June 14, 2019 to all shareholders of record on June 3, 2019 $75M aggregate payment $63M to Common Shareholders $12M to Preferred Shareholders (ESOP) ESOP Background: The Company established the ESOP in 1993, funded by an existin
Slide 30: Financial Definitions
Financial Definitions Adjusted EBITDA: Net income before interest, income taxes, depreciation and amortization, stock-based compensation expense, non-cash charges and certain other expenses. Adjusted EBITDA Margin: Adjusted EBITDA calculated as a percentage of net sales. Compound Annual Growth Rate
Slide 31: ADS EBITDA and Free Cash Flow Reconciliation
ADS EBITDA and Free Cash Flow Reconciliation (Fiscal Year Ended March 31st) Source: ADS SEC filings. Free Cash Flow Conversion defined as Free Cash Flow / Adjusted EBITDA.
Slide 32: ADS EBITDA and Free Cash Flow Reconciliation (Cont'd)
ADS EBITDA and Free Cash Flow Reconciliation (Cont’d) (Fiscal Year Ended March 31st) Source: ADS SEC filings. Free Cash Flow Conversion defined as Free Cash Flow / Adjusted EBITDA.
Slide 33: IWT EBITDA and Free Cash Flow Reconciliation
IWT EBITDA and Free Cash Flow Reconciliation (Fiscal Year Ended December 31st) Source: ADS SEC filings that include IWT Regulation S-X financials. Free Cash Flow Conversion defined as Free Cash Flow / Adjusted EBITDA.
Slide 34: IWT EBITDA and Free Cash Flow Reconciliation (Cont'd)
IWT EBITDA and Free Cash Flow Reconciliation (Cont’d) (Fiscal Year Ended December 31st) Source: ADS SEC filings that include IWT Regulation S-X financials. Free Cash Flow Conversion defined as Free Cash Flow / Adjusted EBITDA.
Advanced Drainage Systems — Baird 2019 Global Industrial Conference on 6ix