Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Investor Presentation (March 2017)
37 slides from Advanced Drainage Systems's investor presentation, Mar 13, 2017
Slide 1: Investor Presentation March 2017
Investor Presentation March 2017 Exhibit 99.1
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 1 THROUGH STRENGTH 3
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: Business Updates
Business Updates Fourth Quarter Update: Guidance for net sales is approximately 7% lower than Q4 of last year We are comfortably within our range, tracking toward the higher end of the range However, potential poor weather conditions could impact final results President, Chairman and CEO, Joe Chlapa
Slide 6: 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 7: 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 8: Our Competitive Advantages
Our Competitive Advantages
Slide 9: 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 10: The Clear Market Leader
The Clear Market Leader Storm Sewer Market Share 10x the size of the next largest competitor Only truly national manufacturing and distribution network in the United States Unrivaled technical expertise driven by our group of over 50 field based engineers Long-standing relationships with our expansi
Slide 11: Unmatched Scale and Distribution
Unmatched Scale and Distribution Extensive Operating Platform Manufacturing Plant Distribution Center 63 manufacturing plants(1) 31 distribution centers(1) Fleet of approximately 675 tractor-trailers Advanced, versatile and portable tooling equipment Competitive Advantages Unmatched operating scale
Slide 12: 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 13: 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 14: HPXR 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 15: Extensive Distribution Network
Extensive Distribution Network Network of over 250 dedicated direct sales professionals with technical or engineering backgrounds Highly trained and qualified to educate design specialists and engineers Supported by approximately 50 field-based engineers Help educate design engineers and government
Slide 16: Our Strategy
Our Strategy 1 THROUGH STRENGTH 16
Slide 17: Strategic Pillars
Strategic Pillars Increase integrated supply chain planning Optimize network footprint Improve logistics and customer sourcing Build out broader continuous improvement initiatives Operational Excellence Commercial Excellence Strategic Growth Optimize sales force effectiveness Engineering services tr
Slide 18: A Strong History of Conversion Driven Growth
A Strong History of Conversion Driven Growth Commentary HDPE 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) N-
Slide 19: Allied Products Growth
Allied Products Growth Allied Product Growth FY 11 – FY 16 CAGR: + 11.7% 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 s
Slide 20: International End Markets
International End Markets Manufacturing Plant Distribution Center CANADA Canada Mexico/Central America South America 100% wholly owned subsidiaries The leading producer of HDPE pipe in Canada Expanding market share in the construction market ~30 exclusive territory distribution agreements in Mexico
Slide 21: 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 22: Non-Virgin Raw Material Sourcing
Non-Virgin Raw Material Sourcing We purchase and processes 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 consu
Slide 23: Raw Material Cost Management
Raw Material Cost Management Increase use of recycled resin in production process while maintaining overall quality and performance Recycled resin is less costly and prices are less volatile Pass on resin cost increases to customers via price increases Leverage large fleet to backhaul non-virgin mat
Slide 24: Our End Markets
Our End Markets 1 THROUGH STRENGTH 24
Slide 25: 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 26: Residential End Market
Market Growth(1) FY13 – FY16 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 27: Infrastructure End Market
Market Growth(1) FY13 – FY16 CAGR Infrastructure End Market Focus on gaining key approvals with state and local agencies Market is heavily reliant on public funding; proposed increase in funding will provide a notable tailwind New product offering (HPXR-75) should help grow our market share in this
Slide 28: Agriculture End Market
Market Growth(1) FY13 – FY16 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 While sales have been declining, they still remain well above historical levels Sales are concentr
Slide 29: Financial Outlook
Financial Outlook 1 THROUGH STRENGTH 29
Slide 30: Market Outlook FY2017 and FY2018
Market FY2017 Outlook FY2018 Outlook Comments Domestic Construction End Markets ADS anticipates LSD to MSD growth in our domestic construction markets ADS anticipates relatively flat/stable pricing ADS expects additional growth above market due to conversion of competing materials. Agriculture End M
Slide 31: Appendix
Appendix LEADERSHI H® MOMENTUM THROUGH STRENGTH 31
Slide 32: FY2017 Financial Outlook – Full Year
FY2017 Financial Outlook – Full Year Key Metric FY 2016 FY 2017 Change Comments Net Sales ($ in millions) $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
Slide 33: Fiscal Year-to-Date Financial Performance
Fiscal Year-to-Date Financial Performance Revenue Gross Margin Adjusted EBITDA Margin FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 FY 2016 - 3.1% +270 bps +190 bps (USD, in millions) $1,045 Revenue Adjusted EBITDA Margin YTD FY16 15.9% Price/Material Costs 3.0% Transportation, Other Operations (0.5)% SG&
Slide 34: 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 35: Capitalization
Capitalization ($ in thousands) December 31, 2016 December 31, 2015 Cash and Cash Equivalents $ 12,097 $ 6,412 Revolving Credit Facility $ 152,000 $ 149,500 Term Loan 75,000 85,000 Senior Notes 75,000 100,000 Other debt 6,181 2,925 Total Debt Obligation $ 308,181 $ 337,425 Plus: Capital Leases 75,96
Slide 36: 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 37: 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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