Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Advanced Drainage Systems Announces Fourth Quarter and Fiscal 2021 Results By: Advanced Drainage Systems, Inc. via Business Wire May 20, 2021 at 06:40 AM EDT Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and on-site septic waste water industries today announced financial results for the fourth quarter and fiscal year ended March 31, 2021. Fourth Quarter Fiscal 2021 Results Net sales increased 19.7% to $443.8 million Net income increased 488.1% to $20.8 million Adjusted EBITDA (Non-GAAP) increased 31.1% to $94.5 million Fiscal 2021 Results Net sales increased 18.5% to $2.0 billion Net income increased to $226.1 million, compared to a net loss of $191.8 million in the prior year Adjusted EBITDA (Non-GAAP) increased 56.7% to $567.0 million Cash provided by operating activities increased 47.7% to $452.2 million Free cash flow (Non-GAAP) increased 56.6% to $373.5 million Scott Barbour, President and Chief Executive Officer of ADS commented, “Advanced Drainage Systems achieved another year of record financial performance in fiscal 2021. When confronted with a challenging operating environment, our employees adapted well to the new health and safety measures we implemented and remained focused on executing our plan and delivering exceptional results. Their hard work and perseverance enabled us to not only exceed our guidance for the year, but also surpass our financial targets set at our 2018 Investor Day. Our accomplishments during the past year, combined with our proven growth strategies, give me confidence in our ability to execute as we move into fiscal 2022.” “Sales grew 19% in fiscal 2021, driven by our material conversion strategy, complete water management solutions and focus on key sales programs. We experienced strong demand in the residential and agriculture end markets, as well as horizontal construction in the non-residential market. Overall, the growing demand for our products and solutions, national presence, as well as our favorable geographic and end market exposure enabled us to outperform in a challenging year.” “We also achieved record profitability in fiscal 2021, with 700-basis points of Adjusted EBITDA margin expansion year-over-year. In addition to capturing the benefits of leverage from our strong sales growth, both ADS and Infiltrator successfully offset inflationary costs through favorable pricing, operational productivity initiatives and our synergy programs.” Barbour concluded, “Looking towards fiscal 2022, we are confident in our business outlook as our order book, project tracking, book-to-bill ratio and backlog continue to be favorable on a year-over-year basis. We are optimistic about improving forward looking market indicators, and well positioned to capitalize on growing residential development and horizontal construction. We will continue to generate above-market growth through the execution of our material conversion and water management solutions strategies. In order to offset building inflationary cost pressure on materials, labor and transportation, we are focused on disciplined execution, achieving favorable pricing and operational improvements, as well as disciplined capital spending to support our growing businesses at both ADS and Infiltrator.” Fourth Quarter Fiscal 2021 Results Net sales increased $73.0 million, or 19.7%, to $443.8 million, as compared to $370.8 million in the prior year. Domestic pipe sales increased $36.1 million, or 17.7%, to $239.2 million. Domestic allied products & other sales increased $10.1 million, or 11.5%, to $97.9 million. Infiltrator sales increased $17.2 million, or 23.3%, to $91.3 million. These increases were driven by double-digit sales growth in both the U.S. construction and agriculture end markets. International sales increased $11.3 million, or 49.3%, to $34.4 million, primarily driven by growth in the Canada business. Gross profit increased $18.5 million, or 17.0%, to $127.2 million as compared to $108.8 million in the prior year. The increase is primarily due an increase in sales volume of pipe, on-site septic and allied products; favorable pricing; and operational improvements offsetting inflationary costs. Adjusted EBITDA (Non-GAAP) increased $22.5 million, or 31.1%, to $94.5 million, as compared to $72.1 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 21.3% as compared to 19.4% in the prior year. Reconciliations of GAAP to Non-GAAP financial measures for Adjusted EBITDA and Free Cash Flow have been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.” Fiscal 2021 Results Net sales increased $309.0 million, or 18.5%, to $1.983 billion, as compared to $1.674 billion in the prior year. Domestic pipe sales increased $104.6 million, or 11.0%, to $1.059 billion. Domestic allied products & other sales increased $39.2 million, or 9.7%, to $442.4 million. These increases were driven by growth in both the U.S. construction and agriculture end markets. Infiltrator sales increased $186.8 million, or 88.5%, to $397.8 million, as compared to $211.0 million in the prior year. Gross profit increased $373.6 million to $690.1 million as compared to $316.5 million in the prior year. The prior year gross profit includes $168.6 million of ESOP special dividend compensation expense. In addition, the year-to-date gross profit includes an incremental benefit from a full year of results from the Infiltrator Water Technologies business, as compared to eight months of results in the prior year due to the timing of the acquisition. The remaining increase in gross profit was due to favorable pricing and material cost; increases in both pipe and allied product sales; and operational improvements offsetting inflationary costs. Adjusted EBITDA (Non-GAAP) increased $205.1 million, or 56.7%, to $567.0 million, as compared to $361.9 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 28.6% as compared to 21.6% in the prior year. Balance Sheet and Liquidity Net cash provided by operating activities increased $146.0 million, or 47.7%, to $452.2 million, as compared to $306.2 million in the prior year. Free cash flow (Non-GAAP) increased $134.9 million, or 56.6%, to $373.5 million, as compared to $238.5 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $646.5 million as of March 31, 2021, a decrease of $341.5 million from March 31, 2020. ADS had total liquidity of $534 million, comprised of cash of $195 million as of March 31, 2021 and $339 million of availability under committed credit facilities. As of March 31, 2021, the Company’s leverage ratio was 1.1 times. Fiscal 2022 Outlook Based on current visibility, backlog of existing orders and business trends, the Company has provided its net sales and Adjusted EBITDA targets for fiscal 2022. Net sales are expected to be in the range of $2.220 billion to $2.300 billion and Adjusted EBITDA is expected to be in the range of $635 to $665 million. Capital expenditures are expected to be in the range of $130 million to $150 million. Webcast Information Participants may Register Here for this conference call or copy and paste the following text into your browser: http://www.directeventreg.com/registration/event/3072617. After registering, participants will receive a confirmation through email, including dial in details and unique conference call codes for entry. Registration is open through the live call. To ensure participants are connected for the full call, please register at least 10 minutes before the start of the call. The live webcast will also be accessible via the "Events Calendar” section of the Company’s Investor Relations website, www.investors.ads-pipe.com. An archived version of the webcast will be available following the call. About the Company Advanced Drainage Systems is a leading provider of innovative water management solutions in the stormwater and on-site septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplace. For over 50 years, the Company has been manufacturing a variety of innovative and environmentally friendly alternatives to traditional materials. Its innovative products are used across a broad range of end markets and applications, including non-residential, residential, infrastructure and agriculture applications. The Company has established a leading position in many of these end markets by leveraging its national sales and distribution platform, overall product breadth and scale and manufacturing excellence. Founded in 1966, the Company operates a global network of approximately 60 manufacturing plants and 30 distribution centers. To learn more about ADS, please visit the Company’s website at www.adspipe.com. Forward Looking Statements Certain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “confident” and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner; volatility in general business and economic conditions in the markets in which we operate, including the adverse impact on the U.S. and global economy of the COVID-19 global pandemic, and the impact of COVID-19 in the near, medium and long-term on our business, results of operations, financial position, liquidity or cash flows, and other factors relating to availability of credit, interest rates, fluctuations in capital and business and consumer confidence; cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our existing and future markets, including competition from both manufacturers of high performance thermoplastic corrugated pipe and manufacturers of products using alternative materials; uncertainties surrounding the integration of acquisitions and similar transactions, including the acquisition of Infiltrator Water Technologies and the integration of Infiltrator Water Technologies; our ability to realize the anticipated benefits from the acquisition of Infiltrator Water Technologies; risks that the acquisition of Infiltrator Water Technologies and related transactions may involve unexpected costs, liabilities or delays; our ability to continue to convert current demand for concrete, steel and polyvinyl chloride (“PVC”) pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products; the effect of any claims, litigation, investigations or proceedings; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; our ability to remediate the material weakness in our internal control over financial reporting, including remediation of the control environment for our joint venture affiliate ADS Mexicana, S.A. de C.V.; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets, including risks associated with new markets and products associated with our recent acquisition of Infiltrator Water Technologies; our ability to achieve the acquisition component of our growth strategy; the risk associated with manufacturing processes; our ability to manage our assets; the risks associated with our product warranties; our ability to manage our supply purchasing and customer credit policies; the risks associated with our self-insured programs; our ability to control labor costs and to attract, train and retain highly-qualified employees and key personnel; our ability to protect our intellectual property rights; changes in laws and regulations, including environmental laws and regulations; our ability to project product mix; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; fluctuations in our effective tax rate; our ability to meet future capital requirements and fund our liquidity needs; the risk that additional information may arise that would require the Company to make additional adjustments or revisions or to restate the financial statements and other financial data for certain prior periods and any future periods; any delay in the filing of any filings with the Securities and Exchange Commission (“SEC”); the review of potential weaknesses or deficiencies in the Company’s disclosure controls and procedures, and discovering weaknesses of which we are not currently aware or which have not been detected; additional uncertainties related to accounting issues generally; and the other risks and uncertainties described in the Company’s filings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Financial Statements ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands, except per share data) 2021 2020 2021 2020 Net sales $ 443,809 $ 370,768 $ 1,982,780 $ 1,673,805 Cost of goods sold 316,592 262,013 1,292,698 1,188,716 Cost of goods sold - ESOP special dividend compensation - - - 168,610 Gross profit 127,217 108,755 690,082 316,479 Operating expenses: Selling, general and administrative 73,491 68,549 267,574 271,338 Selling, general and administrative - ESOP special dividend compensation - - - 78,142 Loss on disposal of assets and costs from exit and disposal activities 1,021 872 4,275 5,338 Intangible amortization 19,815 32,575 73,708 57,010 Income (loss) from operations 32,890 6,759 344,525 (95,349 ) Other expense: Interest expense 7,895 11,924 35,658 82,711 Derivative (gains) loss and other (income) expense, net (2,521 ) 1,436 (3,404 ) 1,554 Income (loss) before income taxes 27,516 (6,601 ) 312,271 (179,614 ) Income tax expense 7,091 (8,763 ) 86,382 14,092 Equity in net loss (income) of unconsolidated affiliates (351 ) (1,371 ) (201 ) (1,909 ) Net income (loss) 20,776 3,533 226,090 (191,797 ) Less: net income attributable to noncontrolling interest 1,022 1,228 1,860 1,377 Net income (loss) attributable to ADS 19,754 2,305 224,230 (193,174 ) Dividends paid to participating securities (1,606 ) (1,404 ) (5,591 ) (11,544 ) Net income (loss) available to common stockholders and participating securities 18,148 901 218,639 (204,718 ) Undistributed income allocated to participating securities (1,967 ) - (33,251 ) - Net income (loss) available to common stockholders $ 16,181 $ 901 $ 185,388 $ (204,718 ) Weighted average common shares outstanding: Basic 70,958 68,957 70,155 63,820 Diluted 72,595 69,720 71,566 63,820 Net income per share: Basic $ 0.23 $ 0.01 $ 2.64 $ (3.21 ) Diluted $ 0.23 $ 0.01 $ 2.59 $ (3.21 ) Cash dividends declared per share $ 0.09 $ 0.09 $ 0.36 $ 1.36 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) As of (Amounts in thousands) March 31, 2021 March 31, 2020 ASSETS Current assets: Cash $ 195,009 $ 174,233 Receivables, net 236,191 200,028 Inventories 300,961 282,398 Other current assets 10,817 9,552 Total current assets 742,978 666,211 Property, plant and equipment, net 504,275 481,380 Other assets: Goodwill 599,072 597,819 Intangible assets, net 482,016 555,338 Other assets 85,491 69,140 Total assets $ 2,413,832 $ 2,369,888 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of debt obligations $ 7,000 $ 7,955 Current maturities of finance lease obligations 19,318 20,382 Accounts payable 171,098 106,710 Other accrued liabilities 116,151 101,116 Accrued income taxes 4,703 2,050 Total current liabilities 318,270 238,213 Long-term debt obligations, net 782,220 1,089,368 Long-term finance lease obligations 32,964 44,501 Deferred tax liabilities 162,185 175,616 Other liabilities 54,767 37,608 Total liabilities 1,350,406 1,585,306 Mezzanine equity: Redeemable convertible preferred stock 240,944 269,529 Deferred compensation — unearned ESOP shares (11,033 ) (22,432 ) Total mezzanine equity 229,911 247,097 Stockholders’ equity: Common stock 11,578 11,555 Paid-in capital 918,587 827,573 Common stock in treasury, at cost (10,959 ) (10,461 ) Accumulated other comprehensive loss (24,220 ) (35,325 ) Retained (deficit) earnings (75,202 ) (267,619 ) Total ADS stockholders’ equity 819,784 525,723 Noncontrolling interest in subsidiaries 13,731 11,762 Total stockholders’ equity 833,515 537,485 Total liabilities, mezzanine equity and stockholders’ equity $ 2,413,832 $ 2,369,888 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Fiscal Year Ended March 31, (Amounts in thousands) 2021 2020 Cash Flow from Operating Activities Net income (loss) $ 226,090 $ (191,797 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 145,586 124,940 Deferred income taxes (13,477 ) (2,924 ) Loss on disposal of assets and costs from exit and disposal activities 4,275 5,338 ESOP and stock-based compensation 65,434 32,395 ESOP special dividend compensation - 246,752 Amortization of deferred financing charges 382 34,476 Inventory step up related to Infiltrator Water Technologies acquisition - 7,880 Fair market value adjustments to derivatives (3,355 ) 3,128 Equity in net loss (income) of unconsolidated affiliates (201 ) (1,909 ) Other operating activities 6,770 (6,005 ) Changes in working capital: Receivables (34,760 ) 5,170 Inventories (14,561 ) 19,086 Prepaid expenses and other current assets (1,208 ) (1,929 ) Accounts payable, accrued expenses, and other liabilities 71,241 31,588 Net cash provided by operating activities 452,216 306,189 Cash Flows from Investing Activities Capital expenditures (78,757 ) (67,677 ) Cash paid for acquisitions, net of cash acquired - (1,089,322 ) Other investing activities 883 6,529 Net cash used in investing activities (77,874 ) (1,150,470 ) Cash Flows from Financing Activities Proceeds from Term Loan Facility - 1,300,000 Payments on Term Loan Facility - (1,300,000 ) Proceeds from syndication of Term Loan Facility - 700,000 Payments on syndicated Term Loan Facility (207,000 ) (51,750 ) Proceeds from Senior Notes - 350,000 Proceeds from Revolving Credit Agreement - 277,900 Payments on Revolving Credit Agreement (100,000 ) (177,900 ) Debt issuance costs - (34,606 ) Proceeds from PNC Credit Agreement - 253,900 Payments on PNC Credit Agreement - (388,300 ) Payments on Prudential Senior Notes - (100,000 ) Payments on finance lease obligations (21,491 ) (27,119 ) Proceeds from common stock offering, net of offering costs - 293,648 Cash dividends paid (32,155 ) (92,127 ) Proceeds from exercise of stock options 7,553 8,163 Other financing activities (1,490 ) (237 ) Net cash used in financing activities (354,583 ) 1,011,572 Effect of exchange rate changes on cash 1,017 (1,949 ) Net change in cash 20,776 165,342 Cash at beginning of period 174,233 8,891 Cash at end of period $ 195,009 $ 174,233 Selected Financial Data The following tables set forth net sales by reportable segment for each of the periods indicated. Three Months Ended March 31, 2021 March 30, 2020 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 239,206 $ (1,487 ) $ 237,719 $ 203,150 $ (1,346 ) $ 201,804 Infiltrator Water Technologies 91,265 (14,721 ) 76,544 74,033 (15,919 ) 58,114 International International - Pipe 25,197 (2,723 ) 22,474 16,382 — 16,382 International - Allied Products 9,157 — 9,157 6,627 — 6,627 Total International 34,354 (2,723 ) 31,631 23,009 — 23,009 Allied Products & Other 97,915 — 97,915 87,841 — 87,841 Intersegment Eliminations (18,931 ) 18,931 — (17,265 ) 17,265 — Total Consolidated $ 443,809 $ — $ 443,809 $ 370,768 $ — $ 370,768 Fiscal Year Ended March 31, 2021 March 30, 2020 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 1,059,200 $ (6,280 ) $ 1,052,920 $ 954,633 $ (2,030 ) $ 952,603 Infiltrator Water Technologies 397,813 (68,669 ) 329,144 211,005 (41,657 ) 169,348 International International - Pipe 121,468 (6,589 ) 114,879 108,624 — 108,624 International - Allied Products 43,390 — 43,390 39,957 — 39,957 Total International 164,858 (6,589 ) 158,269 148,581 — 148,581 Allied Products & Other 442,447 — 442,447 403,273 — 403,273 Intersegment Eliminations (81,538 ) 81,538 — (43,687 ) 43,687 — Total Consolidated $ 1,982,780 $ — $ 1,982,780 $ 1,673,805 $ — $ 1,673,805 Employee Stock Ownership Plan (“ESOP”) The Company established an ESOP to enable employees to acquire stock ownership in ADS in the form of redeemable convertible preferred shares (“preferred shares”). All preferred shares will be converted to common shares by plan maturity, which will be no later than March 2023. The ESOP’s conversion of preferred shares into common shares will have a meaningful impact on net income, net income per share and common shares outstanding. The common shares outstanding will be greater after conversion. Net Income (Loss) The impact of the ESOP on net (loss) income includes the ESOP deferred compensation attributable to the preferred shares allocated to employee accounts during the period, which is a non-cash charge to our earnings and not deductible for income tax purposes. Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Net income (loss) attributable to ADS $ 19,754 $ 2,305 $ 224,230 $ (193,174 ) ESOP deferred stock-based compensation $ 15,475 $ 1,645 $ 44,981 $ 20,126 ESOP special dividend compensation $ - $ - $ - $ 246,752 Common shares outstanding The conversion of the preferred shares will increase the number of common shares outstanding. Preferred shares will convert to common shares at plan maturity, or upon retirement, disability, death or vested terminations over the life of the plan. Three Months Ended Fiscal Year Ended March 31, March 31, (Shares in thousands) 2021 2020 2021 2020 Weighted average common shares outstanding - Basic 70,958 68,957 70,155 63,820 Conversion of preferred shares 15,361 16,887 16,001 17,134 Unvested restricted shares - 18 - 35 Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). ADS management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results available in the accompanying tables. Reconciliation of Non-GAAP Financial Measures This press release includes references to organic results, Adjusted EBITDA and Free Cash Flow, non-GAAP financial measures. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These measures are not intended to be substitutes for those reported in accordance with GAAP. Adjusted EBITDA and Free Cash Flow may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. EBITDA and Adjusted EBITDA are non-GAAP financial measures that comprise net income before interest, income taxes, depreciation and amortization, stock-based compensation, non-cash charges and certain other expenses. The Company’s definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess financial performance and evaluate the effectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided below reconciliations of Adjusted EBITDA to net income. Free Cash Flow is a non-GAAP financial measure that comprises cash flow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. In order to provide investors with a meaningful reconciliation, the Company has provided below a reconciliation of cash flow from operating activities to Free Cash Flow. The following tables present a reconciliation of EBITDA and Adjusted EBITDA to Net Income and Free Cash Flow to Cash Flow from Operating Activities, the most comparable GAAP measures, for each of the periods indicated. Reconciliation of Segment Adjusted Gross Profit to Gross profit Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Segment Adjusted Gross Profit Pipe $ 53,100 $ 46,767 $ 322,846 $ 239,531 International 10,945 7,865 49,921 36,999 Infiltrator Water Technologies 41,612 33,366 191,163 98,245 Allied Products & Other 49,046 43,580 225,052 201,206 Intersegment Elimination 415 (36 ) (503 ) (1,895 ) Total Segment Adjusted Gross Profit 155,118 131,542 788,479 574,086 Depreciation and amortization 17,090 16,808 66,408 62,225 ESOP and stock-based compensation expense 10,811 1,406 31,792 14,319 ESOP special dividend compensation - - - 168,610 COVID-19 related expenses - 4,573 197 4,573 Inventory step up related to Infiltrator Water Technologies acquisition - - - 7,880 Total Gross Profit $ 127,217 $ 108,755 $ 690,082 $ 316,479 Reconciliation of Adjusted EBITDA to Net Income Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Net income (loss) $ 20,776 $ 3,533 $ 226,090 $ (191,797 ) Depreciation and amortization 38,265 50,508 145,586 124,940 Interest expense 7,895 11,924 35,658 82,711 Income tax expense 7,091 (8,763 ) 86,382 14,092 EBITDA 74,027 57,202 493,716 29,946 Loss on disposal of assets and costs from exit and disposal activities 1,021 872 4,275 5,338 ESOP and stock-based compensation expense 20,021 5,030 65,434 32,395 ESOP special dividend compensation - - - 246,752 Transaction costs (13 ) 247 1,415 22,896 Inventory step up related to Infiltrator Water Technologies acquisition - - - 7,880 Strategic growth and operational improvement initiatives 615 2,028 3,304 6,659 COVID-19 related expenses (a) - 5,081 806 5,081 Restatement related costs - - - 8 Other adjustments(b) (1,123 ) 1,634 (1,995 ) 4,913 Adjusted EBITDA $ 94,548 $ 72,094 $ 566,955 $ 361,868 (a) Includes expenses directly related to our response to the COVID-19 pandemic, including adjustments to our pandemic pay program and expenses associated with our 3rd party crisis management vendor. (b) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense. The other adjustments in fiscal 2020 also includes expenses related to the ADS Mexicana’s investigation. Reconciliation of Segment Adjusted EBITDA Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Legacy ADS Adjusted EBITDA Pipe Adjusted Gross Profit $ 53,100 $ 46,767 $ 322,846 $ 239,531 International Adjusted Gross Profit 10,945 7,865 49,921 36,999 Allied Products & Other Adjusted Gross Profit 49,046 43,580 225,052 201,206 Unallocated corporate and selling expenses (52,956 ) (50,864 ) (194,775 ) (190,353 ) Legacy ADS Adjusted EBITDA 60,135 47,348 403,044 287,383 Legacy Infiltrator Water Technologies Adjusted EBITDA Infiltrator Water Technologies 41,612 33,366 191,163 98,245 Unallocated corporate and selling expenses (7,610 ) (8,584 ) (27,135 ) (21,865 ) Legacy Infiltrator Water Technologies Adjusted EBITDA $ 34,002 $ 24,782 $ 164,028 $ 76,380 Intersegment Eliminations 411 (36 ) (117 ) (1,895 ) Consolidated Adjusted EBITDA $ 94,548 $ 72,094 $ 566,955 $ 361,868 Reconciliation of Free Cash Flow to Cash flow from Operating Activities Fiscal Year Ended March 31, (Amounts in thousands) 2021 2020 Net cash flow from operating activities $ 452,216 $ 306,189 Capital expenditures (78,757 ) (67,677 ) Free cash flow $ 373,459 $ 238,512 View source version on businesswire.com: https://www.businesswire.com/news/home/20210520005242/en/Contacts Michael Higgins VP, Corporate Strategy & Investor Relations (614) 658-0050 Mike.Higgins@ads-pipe.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Advanced Drainage Systems Announces Fourth Quarter and Fiscal 2021 Results By: Advanced Drainage Systems, Inc. via Business Wire May 20, 2021 at 06:40 AM EDT Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and on-site septic waste water industries today announced financial results for the fourth quarter and fiscal year ended March 31, 2021. Fourth Quarter Fiscal 2021 Results Net sales increased 19.7% to $443.8 million Net income increased 488.1% to $20.8 million Adjusted EBITDA (Non-GAAP) increased 31.1% to $94.5 million Fiscal 2021 Results Net sales increased 18.5% to $2.0 billion Net income increased to $226.1 million, compared to a net loss of $191.8 million in the prior year Adjusted EBITDA (Non-GAAP) increased 56.7% to $567.0 million Cash provided by operating activities increased 47.7% to $452.2 million Free cash flow (Non-GAAP) increased 56.6% to $373.5 million Scott Barbour, President and Chief Executive Officer of ADS commented, “Advanced Drainage Systems achieved another year of record financial performance in fiscal 2021. When confronted with a challenging operating environment, our employees adapted well to the new health and safety measures we implemented and remained focused on executing our plan and delivering exceptional results. Their hard work and perseverance enabled us to not only exceed our guidance for the year, but also surpass our financial targets set at our 2018 Investor Day. Our accomplishments during the past year, combined with our proven growth strategies, give me confidence in our ability to execute as we move into fiscal 2022.” “Sales grew 19% in fiscal 2021, driven by our material conversion strategy, complete water management solutions and focus on key sales programs. We experienced strong demand in the residential and agriculture end markets, as well as horizontal construction in the non-residential market. Overall, the growing demand for our products and solutions, national presence, as well as our favorable geographic and end market exposure enabled us to outperform in a challenging year.” “We also achieved record profitability in fiscal 2021, with 700-basis points of Adjusted EBITDA margin expansion year-over-year. In addition to capturing the benefits of leverage from our strong sales growth, both ADS and Infiltrator successfully offset inflationary costs through favorable pricing, operational productivity initiatives and our synergy programs.” Barbour concluded, “Looking towards fiscal 2022, we are confident in our business outlook as our order book, project tracking, book-to-bill ratio and backlog continue to be favorable on a year-over-year basis. We are optimistic about improving forward looking market indicators, and well positioned to capitalize on growing residential development and horizontal construction. We will continue to generate above-market growth through the execution of our material conversion and water management solutions strategies. In order to offset building inflationary cost pressure on materials, labor and transportation, we are focused on disciplined execution, achieving favorable pricing and operational improvements, as well as disciplined capital spending to support our growing businesses at both ADS and Infiltrator.” Fourth Quarter Fiscal 2021 Results Net sales increased $73.0 million, or 19.7%, to $443.8 million, as compared to $370.8 million in the prior year. Domestic pipe sales increased $36.1 million, or 17.7%, to $239.2 million. Domestic allied products & other sales increased $10.1 million, or 11.5%, to $97.9 million. Infiltrator sales increased $17.2 million, or 23.3%, to $91.3 million. These increases were driven by double-digit sales growth in both the U.S. construction and agriculture end markets. International sales increased $11.3 million, or 49.3%, to $34.4 million, primarily driven by growth in the Canada business. Gross profit increased $18.5 million, or 17.0%, to $127.2 million as compared to $108.8 million in the prior year. The increase is primarily due an increase in sales volume of pipe, on-site septic and allied products; favorable pricing; and operational improvements offsetting inflationary costs. Adjusted EBITDA (Non-GAAP) increased $22.5 million, or 31.1%, to $94.5 million, as compared to $72.1 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 21.3% as compared to 19.4% in the prior year. Reconciliations of GAAP to Non-GAAP financial measures for Adjusted EBITDA and Free Cash Flow have been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.” Fiscal 2021 Results Net sales increased $309.0 million, or 18.5%, to $1.983 billion, as compared to $1.674 billion in the prior year. Domestic pipe sales increased $104.6 million, or 11.0%, to $1.059 billion. Domestic allied products & other sales increased $39.2 million, or 9.7%, to $442.4 million. These increases were driven by growth in both the U.S. construction and agriculture end markets. Infiltrator sales increased $186.8 million, or 88.5%, to $397.8 million, as compared to $211.0 million in the prior year. Gross profit increased $373.6 million to $690.1 million as compared to $316.5 million in the prior year. The prior year gross profit includes $168.6 million of ESOP special dividend compensation expense. In addition, the year-to-date gross profit includes an incremental benefit from a full year of results from the Infiltrator Water Technologies business, as compared to eight months of results in the prior year due to the timing of the acquisition. The remaining increase in gross profit was due to favorable pricing and material cost; increases in both pipe and allied product sales; and operational improvements offsetting inflationary costs. Adjusted EBITDA (Non-GAAP) increased $205.1 million, or 56.7%, to $567.0 million, as compared to $361.9 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 28.6% as compared to 21.6% in the prior year. Balance Sheet and Liquidity Net cash provided by operating activities increased $146.0 million, or 47.7%, to $452.2 million, as compared to $306.2 million in the prior year. Free cash flow (Non-GAAP) increased $134.9 million, or 56.6%, to $373.5 million, as compared to $238.5 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $646.5 million as of March 31, 2021, a decrease of $341.5 million from March 31, 2020. ADS had total liquidity of $534 million, comprised of cash of $195 million as of March 31, 2021 and $339 million of availability under committed credit facilities. As of March 31, 2021, the Company’s leverage ratio was 1.1 times. Fiscal 2022 Outlook Based on current visibility, backlog of existing orders and business trends, the Company has provided its net sales and Adjusted EBITDA targets for fiscal 2022. Net sales are expected to be in the range of $2.220 billion to $2.300 billion and Adjusted EBITDA is expected to be in the range of $635 to $665 million. Capital expenditures are expected to be in the range of $130 million to $150 million. Webcast Information Participants may Register Here for this conference call or copy and paste the following text into your browser: http://www.directeventreg.com/registration/event/3072617. After registering, participants will receive a confirmation through email, including dial in details and unique conference call codes for entry. Registration is open through the live call. To ensure participants are connected for the full call, please register at least 10 minutes before the start of the call. The live webcast will also be accessible via the "Events Calendar” section of the Company’s Investor Relations website, www.investors.ads-pipe.com. An archived version of the webcast will be available following the call. About the Company Advanced Drainage Systems is a leading provider of innovative water management solutions in the stormwater and on-site septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplace. For over 50 years, the Company has been manufacturing a variety of innovative and environmentally friendly alternatives to traditional materials. Its innovative products are used across a broad range of end markets and applications, including non-residential, residential, infrastructure and agriculture applications. The Company has established a leading position in many of these end markets by leveraging its national sales and distribution platform, overall product breadth and scale and manufacturing excellence. Founded in 1966, the Company operates a global network of approximately 60 manufacturing plants and 30 distribution centers. To learn more about ADS, please visit the Company’s website at www.adspipe.com. Forward Looking Statements Certain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “confident” and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner; volatility in general business and economic conditions in the markets in which we operate, including the adverse impact on the U.S. and global economy of the COVID-19 global pandemic, and the impact of COVID-19 in the near, medium and long-term on our business, results of operations, financial position, liquidity or cash flows, and other factors relating to availability of credit, interest rates, fluctuations in capital and business and consumer confidence; cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our existing and future markets, including competition from both manufacturers of high performance thermoplastic corrugated pipe and manufacturers of products using alternative materials; uncertainties surrounding the integration of acquisitions and similar transactions, including the acquisition of Infiltrator Water Technologies and the integration of Infiltrator Water Technologies; our ability to realize the anticipated benefits from the acquisition of Infiltrator Water Technologies; risks that the acquisition of Infiltrator Water Technologies and related transactions may involve unexpected costs, liabilities or delays; our ability to continue to convert current demand for concrete, steel and polyvinyl chloride (“PVC”) pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products; the effect of any claims, litigation, investigations or proceedings; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; our ability to remediate the material weakness in our internal control over financial reporting, including remediation of the control environment for our joint venture affiliate ADS Mexicana, S.A. de C.V.; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets, including risks associated with new markets and products associated with our recent acquisition of Infiltrator Water Technologies; our ability to achieve the acquisition component of our growth strategy; the risk associated with manufacturing processes; our ability to manage our assets; the risks associated with our product warranties; our ability to manage our supply purchasing and customer credit policies; the risks associated with our self-insured programs; our ability to control labor costs and to attract, train and retain highly-qualified employees and key personnel; our ability to protect our intellectual property rights; changes in laws and regulations, including environmental laws and regulations; our ability to project product mix; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; fluctuations in our effective tax rate; our ability to meet future capital requirements and fund our liquidity needs; the risk that additional information may arise that would require the Company to make additional adjustments or revisions or to restate the financial statements and other financial data for certain prior periods and any future periods; any delay in the filing of any filings with the Securities and Exchange Commission (“SEC”); the review of potential weaknesses or deficiencies in the Company’s disclosure controls and procedures, and discovering weaknesses of which we are not currently aware or which have not been detected; additional uncertainties related to accounting issues generally; and the other risks and uncertainties described in the Company’s filings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Financial Statements ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands, except per share data) 2021 2020 2021 2020 Net sales $ 443,809 $ 370,768 $ 1,982,780 $ 1,673,805 Cost of goods sold 316,592 262,013 1,292,698 1,188,716 Cost of goods sold - ESOP special dividend compensation - - - 168,610 Gross profit 127,217 108,755 690,082 316,479 Operating expenses: Selling, general and administrative 73,491 68,549 267,574 271,338 Selling, general and administrative - ESOP special dividend compensation - - - 78,142 Loss on disposal of assets and costs from exit and disposal activities 1,021 872 4,275 5,338 Intangible amortization 19,815 32,575 73,708 57,010 Income (loss) from operations 32,890 6,759 344,525 (95,349 ) Other expense: Interest expense 7,895 11,924 35,658 82,711 Derivative (gains) loss and other (income) expense, net (2,521 ) 1,436 (3,404 ) 1,554 Income (loss) before income taxes 27,516 (6,601 ) 312,271 (179,614 ) Income tax expense 7,091 (8,763 ) 86,382 14,092 Equity in net loss (income) of unconsolidated affiliates (351 ) (1,371 ) (201 ) (1,909 ) Net income (loss) 20,776 3,533 226,090 (191,797 ) Less: net income attributable to noncontrolling interest 1,022 1,228 1,860 1,377 Net income (loss) attributable to ADS 19,754 2,305 224,230 (193,174 ) Dividends paid to participating securities (1,606 ) (1,404 ) (5,591 ) (11,544 ) Net income (loss) available to common stockholders and participating securities 18,148 901 218,639 (204,718 ) Undistributed income allocated to participating securities (1,967 ) - (33,251 ) - Net income (loss) available to common stockholders $ 16,181 $ 901 $ 185,388 $ (204,718 ) Weighted average common shares outstanding: Basic 70,958 68,957 70,155 63,820 Diluted 72,595 69,720 71,566 63,820 Net income per share: Basic $ 0.23 $ 0.01 $ 2.64 $ (3.21 ) Diluted $ 0.23 $ 0.01 $ 2.59 $ (3.21 ) Cash dividends declared per share $ 0.09 $ 0.09 $ 0.36 $ 1.36 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) As of (Amounts in thousands) March 31, 2021 March 31, 2020 ASSETS Current assets: Cash $ 195,009 $ 174,233 Receivables, net 236,191 200,028 Inventories 300,961 282,398 Other current assets 10,817 9,552 Total current assets 742,978 666,211 Property, plant and equipment, net 504,275 481,380 Other assets: Goodwill 599,072 597,819 Intangible assets, net 482,016 555,338 Other assets 85,491 69,140 Total assets $ 2,413,832 $ 2,369,888 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of debt obligations $ 7,000 $ 7,955 Current maturities of finance lease obligations 19,318 20,382 Accounts payable 171,098 106,710 Other accrued liabilities 116,151 101,116 Accrued income taxes 4,703 2,050 Total current liabilities 318,270 238,213 Long-term debt obligations, net 782,220 1,089,368 Long-term finance lease obligations 32,964 44,501 Deferred tax liabilities 162,185 175,616 Other liabilities 54,767 37,608 Total liabilities 1,350,406 1,585,306 Mezzanine equity: Redeemable convertible preferred stock 240,944 269,529 Deferred compensation — unearned ESOP shares (11,033 ) (22,432 ) Total mezzanine equity 229,911 247,097 Stockholders’ equity: Common stock 11,578 11,555 Paid-in capital 918,587 827,573 Common stock in treasury, at cost (10,959 ) (10,461 ) Accumulated other comprehensive loss (24,220 ) (35,325 ) Retained (deficit) earnings (75,202 ) (267,619 ) Total ADS stockholders’ equity 819,784 525,723 Noncontrolling interest in subsidiaries 13,731 11,762 Total stockholders’ equity 833,515 537,485 Total liabilities, mezzanine equity and stockholders’ equity $ 2,413,832 $ 2,369,888 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Fiscal Year Ended March 31, (Amounts in thousands) 2021 2020 Cash Flow from Operating Activities Net income (loss) $ 226,090 $ (191,797 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 145,586 124,940 Deferred income taxes (13,477 ) (2,924 ) Loss on disposal of assets and costs from exit and disposal activities 4,275 5,338 ESOP and stock-based compensation 65,434 32,395 ESOP special dividend compensation - 246,752 Amortization of deferred financing charges 382 34,476 Inventory step up related to Infiltrator Water Technologies acquisition - 7,880 Fair market value adjustments to derivatives (3,355 ) 3,128 Equity in net loss (income) of unconsolidated affiliates (201 ) (1,909 ) Other operating activities 6,770 (6,005 ) Changes in working capital: Receivables (34,760 ) 5,170 Inventories (14,561 ) 19,086 Prepaid expenses and other current assets (1,208 ) (1,929 ) Accounts payable, accrued expenses, and other liabilities 71,241 31,588 Net cash provided by operating activities 452,216 306,189 Cash Flows from Investing Activities Capital expenditures (78,757 ) (67,677 ) Cash paid for acquisitions, net of cash acquired - (1,089,322 ) Other investing activities 883 6,529 Net cash used in investing activities (77,874 ) (1,150,470 ) Cash Flows from Financing Activities Proceeds from Term Loan Facility - 1,300,000 Payments on Term Loan Facility - (1,300,000 ) Proceeds from syndication of Term Loan Facility - 700,000 Payments on syndicated Term Loan Facility (207,000 ) (51,750 ) Proceeds from Senior Notes - 350,000 Proceeds from Revolving Credit Agreement - 277,900 Payments on Revolving Credit Agreement (100,000 ) (177,900 ) Debt issuance costs - (34,606 ) Proceeds from PNC Credit Agreement - 253,900 Payments on PNC Credit Agreement - (388,300 ) Payments on Prudential Senior Notes - (100,000 ) Payments on finance lease obligations (21,491 ) (27,119 ) Proceeds from common stock offering, net of offering costs - 293,648 Cash dividends paid (32,155 ) (92,127 ) Proceeds from exercise of stock options 7,553 8,163 Other financing activities (1,490 ) (237 ) Net cash used in financing activities (354,583 ) 1,011,572 Effect of exchange rate changes on cash 1,017 (1,949 ) Net change in cash 20,776 165,342 Cash at beginning of period 174,233 8,891 Cash at end of period $ 195,009 $ 174,233 Selected Financial Data The following tables set forth net sales by reportable segment for each of the periods indicated. Three Months Ended March 31, 2021 March 30, 2020 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 239,206 $ (1,487 ) $ 237,719 $ 203,150 $ (1,346 ) $ 201,804 Infiltrator Water Technologies 91,265 (14,721 ) 76,544 74,033 (15,919 ) 58,114 International International - Pipe 25,197 (2,723 ) 22,474 16,382 — 16,382 International - Allied Products 9,157 — 9,157 6,627 — 6,627 Total International 34,354 (2,723 ) 31,631 23,009 — 23,009 Allied Products & Other 97,915 — 97,915 87,841 — 87,841 Intersegment Eliminations (18,931 ) 18,931 — (17,265 ) 17,265 — Total Consolidated $ 443,809 $ — $ 443,809 $ 370,768 $ — $ 370,768 Fiscal Year Ended March 31, 2021 March 30, 2020 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 1,059,200 $ (6,280 ) $ 1,052,920 $ 954,633 $ (2,030 ) $ 952,603 Infiltrator Water Technologies 397,813 (68,669 ) 329,144 211,005 (41,657 ) 169,348 International International - Pipe 121,468 (6,589 ) 114,879 108,624 — 108,624 International - Allied Products 43,390 — 43,390 39,957 — 39,957 Total International 164,858 (6,589 ) 158,269 148,581 — 148,581 Allied Products & Other 442,447 — 442,447 403,273 — 403,273 Intersegment Eliminations (81,538 ) 81,538 — (43,687 ) 43,687 — Total Consolidated $ 1,982,780 $ — $ 1,982,780 $ 1,673,805 $ — $ 1,673,805 Employee Stock Ownership Plan (“ESOP”) The Company established an ESOP to enable employees to acquire stock ownership in ADS in the form of redeemable convertible preferred shares (“preferred shares”). All preferred shares will be converted to common shares by plan maturity, which will be no later than March 2023. The ESOP’s conversion of preferred shares into common shares will have a meaningful impact on net income, net income per share and common shares outstanding. The common shares outstanding will be greater after conversion. Net Income (Loss) The impact of the ESOP on net (loss) income includes the ESOP deferred compensation attributable to the preferred shares allocated to employee accounts during the period, which is a non-cash charge to our earnings and not deductible for income tax purposes. Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Net income (loss) attributable to ADS $ 19,754 $ 2,305 $ 224,230 $ (193,174 ) ESOP deferred stock-based compensation $ 15,475 $ 1,645 $ 44,981 $ 20,126 ESOP special dividend compensation $ - $ - $ - $ 246,752 Common shares outstanding The conversion of the preferred shares will increase the number of common shares outstanding. Preferred shares will convert to common shares at plan maturity, or upon retirement, disability, death or vested terminations over the life of the plan. Three Months Ended Fiscal Year Ended March 31, March 31, (Shares in thousands) 2021 2020 2021 2020 Weighted average common shares outstanding - Basic 70,958 68,957 70,155 63,820 Conversion of preferred shares 15,361 16,887 16,001 17,134 Unvested restricted shares - 18 - 35 Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). ADS management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results available in the accompanying tables. Reconciliation of Non-GAAP Financial Measures This press release includes references to organic results, Adjusted EBITDA and Free Cash Flow, non-GAAP financial measures. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These measures are not intended to be substitutes for those reported in accordance with GAAP. Adjusted EBITDA and Free Cash Flow may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. EBITDA and Adjusted EBITDA are non-GAAP financial measures that comprise net income before interest, income taxes, depreciation and amortization, stock-based compensation, non-cash charges and certain other expenses. The Company’s definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess financial performance and evaluate the effectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided below reconciliations of Adjusted EBITDA to net income. Free Cash Flow is a non-GAAP financial measure that comprises cash flow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. In order to provide investors with a meaningful reconciliation, the Company has provided below a reconciliation of cash flow from operating activities to Free Cash Flow. The following tables present a reconciliation of EBITDA and Adjusted EBITDA to Net Income and Free Cash Flow to Cash Flow from Operating Activities, the most comparable GAAP measures, for each of the periods indicated. Reconciliation of Segment Adjusted Gross Profit to Gross profit Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Segment Adjusted Gross Profit Pipe $ 53,100 $ 46,767 $ 322,846 $ 239,531 International 10,945 7,865 49,921 36,999 Infiltrator Water Technologies 41,612 33,366 191,163 98,245 Allied Products & Other 49,046 43,580 225,052 201,206 Intersegment Elimination 415 (36 ) (503 ) (1,895 ) Total Segment Adjusted Gross Profit 155,118 131,542 788,479 574,086 Depreciation and amortization 17,090 16,808 66,408 62,225 ESOP and stock-based compensation expense 10,811 1,406 31,792 14,319 ESOP special dividend compensation - - - 168,610 COVID-19 related expenses - 4,573 197 4,573 Inventory step up related to Infiltrator Water Technologies acquisition - - - 7,880 Total Gross Profit $ 127,217 $ 108,755 $ 690,082 $ 316,479 Reconciliation of Adjusted EBITDA to Net Income Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Net income (loss) $ 20,776 $ 3,533 $ 226,090 $ (191,797 ) Depreciation and amortization 38,265 50,508 145,586 124,940 Interest expense 7,895 11,924 35,658 82,711 Income tax expense 7,091 (8,763 ) 86,382 14,092 EBITDA 74,027 57,202 493,716 29,946 Loss on disposal of assets and costs from exit and disposal activities 1,021 872 4,275 5,338 ESOP and stock-based compensation expense 20,021 5,030 65,434 32,395 ESOP special dividend compensation - - - 246,752 Transaction costs (13 ) 247 1,415 22,896 Inventory step up related to Infiltrator Water Technologies acquisition - - - 7,880 Strategic growth and operational improvement initiatives 615 2,028 3,304 6,659 COVID-19 related expenses (a) - 5,081 806 5,081 Restatement related costs - - - 8 Other adjustments(b) (1,123 ) 1,634 (1,995 ) 4,913 Adjusted EBITDA $ 94,548 $ 72,094 $ 566,955 $ 361,868 (a) Includes expenses directly related to our response to the COVID-19 pandemic, including adjustments to our pandemic pay program and expenses associated with our 3rd party crisis management vendor. (b) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense. The other adjustments in fiscal 2020 also includes expenses related to the ADS Mexicana’s investigation. Reconciliation of Segment Adjusted EBITDA Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Legacy ADS Adjusted EBITDA Pipe Adjusted Gross Profit $ 53,100 $ 46,767 $ 322,846 $ 239,531 International Adjusted Gross Profit 10,945 7,865 49,921 36,999 Allied Products & Other Adjusted Gross Profit 49,046 43,580 225,052 201,206 Unallocated corporate and selling expenses (52,956 ) (50,864 ) (194,775 ) (190,353 ) Legacy ADS Adjusted EBITDA 60,135 47,348 403,044 287,383 Legacy Infiltrator Water Technologies Adjusted EBITDA Infiltrator Water Technologies 41,612 33,366 191,163 98,245 Unallocated corporate and selling expenses (7,610 ) (8,584 ) (27,135 ) (21,865 ) Legacy Infiltrator Water Technologies Adjusted EBITDA $ 34,002 $ 24,782 $ 164,028 $ 76,380 Intersegment Eliminations 411 (36 ) (117 ) (1,895 ) Consolidated Adjusted EBITDA $ 94,548 $ 72,094 $ 566,955 $ 361,868 Reconciliation of Free Cash Flow to Cash flow from Operating Activities Fiscal Year Ended March 31, (Amounts in thousands) 2021 2020 Net cash flow from operating activities $ 452,216 $ 306,189 Capital expenditures (78,757 ) (67,677 ) Free cash flow $ 373,459 $ 238,512 View source version on businesswire.com: https://www.businesswire.com/news/home/20210520005242/en/Contacts Michael Higgins VP, Corporate Strategy & Investor Relations (614) 658-0050 Mike.Higgins@ads-pipe.com
Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and on-site septic waste water industries today announced financial results for the fourth quarter and fiscal year ended March 31, 2021. Fourth Quarter Fiscal 2021 Results Net sales increased 19.7% to $443.8 million Net income increased 488.1% to $20.8 million Adjusted EBITDA (Non-GAAP) increased 31.1% to $94.5 million Fiscal 2021 Results Net sales increased 18.5% to $2.0 billion Net income increased to $226.1 million, compared to a net loss of $191.8 million in the prior year Adjusted EBITDA (Non-GAAP) increased 56.7% to $567.0 million Cash provided by operating activities increased 47.7% to $452.2 million Free cash flow (Non-GAAP) increased 56.6% to $373.5 million Scott Barbour, President and Chief Executive Officer of ADS commented, “Advanced Drainage Systems achieved another year of record financial performance in fiscal 2021. When confronted with a challenging operating environment, our employees adapted well to the new health and safety measures we implemented and remained focused on executing our plan and delivering exceptional results. Their hard work and perseverance enabled us to not only exceed our guidance for the year, but also surpass our financial targets set at our 2018 Investor Day. Our accomplishments during the past year, combined with our proven growth strategies, give me confidence in our ability to execute as we move into fiscal 2022.” “Sales grew 19% in fiscal 2021, driven by our material conversion strategy, complete water management solutions and focus on key sales programs. We experienced strong demand in the residential and agriculture end markets, as well as horizontal construction in the non-residential market. Overall, the growing demand for our products and solutions, national presence, as well as our favorable geographic and end market exposure enabled us to outperform in a challenging year.” “We also achieved record profitability in fiscal 2021, with 700-basis points of Adjusted EBITDA margin expansion year-over-year. In addition to capturing the benefits of leverage from our strong sales growth, both ADS and Infiltrator successfully offset inflationary costs through favorable pricing, operational productivity initiatives and our synergy programs.” Barbour concluded, “Looking towards fiscal 2022, we are confident in our business outlook as our order book, project tracking, book-to-bill ratio and backlog continue to be favorable on a year-over-year basis. We are optimistic about improving forward looking market indicators, and well positioned to capitalize on growing residential development and horizontal construction. We will continue to generate above-market growth through the execution of our material conversion and water management solutions strategies. In order to offset building inflationary cost pressure on materials, labor and transportation, we are focused on disciplined execution, achieving favorable pricing and operational improvements, as well as disciplined capital spending to support our growing businesses at both ADS and Infiltrator.” Fourth Quarter Fiscal 2021 Results Net sales increased $73.0 million, or 19.7%, to $443.8 million, as compared to $370.8 million in the prior year. Domestic pipe sales increased $36.1 million, or 17.7%, to $239.2 million. Domestic allied products & other sales increased $10.1 million, or 11.5%, to $97.9 million. Infiltrator sales increased $17.2 million, or 23.3%, to $91.3 million. These increases were driven by double-digit sales growth in both the U.S. construction and agriculture end markets. International sales increased $11.3 million, or 49.3%, to $34.4 million, primarily driven by growth in the Canada business. Gross profit increased $18.5 million, or 17.0%, to $127.2 million as compared to $108.8 million in the prior year. The increase is primarily due an increase in sales volume of pipe, on-site septic and allied products; favorable pricing; and operational improvements offsetting inflationary costs. Adjusted EBITDA (Non-GAAP) increased $22.5 million, or 31.1%, to $94.5 million, as compared to $72.1 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 21.3% as compared to 19.4% in the prior year. Reconciliations of GAAP to Non-GAAP financial measures for Adjusted EBITDA and Free Cash Flow have been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.” Fiscal 2021 Results Net sales increased $309.0 million, or 18.5%, to $1.983 billion, as compared to $1.674 billion in the prior year. Domestic pipe sales increased $104.6 million, or 11.0%, to $1.059 billion. Domestic allied products & other sales increased $39.2 million, or 9.7%, to $442.4 million. These increases were driven by growth in both the U.S. construction and agriculture end markets. Infiltrator sales increased $186.8 million, or 88.5%, to $397.8 million, as compared to $211.0 million in the prior year. Gross profit increased $373.6 million to $690.1 million as compared to $316.5 million in the prior year. The prior year gross profit includes $168.6 million of ESOP special dividend compensation expense. In addition, the year-to-date gross profit includes an incremental benefit from a full year of results from the Infiltrator Water Technologies business, as compared to eight months of results in the prior year due to the timing of the acquisition. The remaining increase in gross profit was due to favorable pricing and material cost; increases in both pipe and allied product sales; and operational improvements offsetting inflationary costs. Adjusted EBITDA (Non-GAAP) increased $205.1 million, or 56.7%, to $567.0 million, as compared to $361.9 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 28.6% as compared to 21.6% in the prior year. Balance Sheet and Liquidity Net cash provided by operating activities increased $146.0 million, or 47.7%, to $452.2 million, as compared to $306.2 million in the prior year. Free cash flow (Non-GAAP) increased $134.9 million, or 56.6%, to $373.5 million, as compared to $238.5 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $646.5 million as of March 31, 2021, a decrease of $341.5 million from March 31, 2020. ADS had total liquidity of $534 million, comprised of cash of $195 million as of March 31, 2021 and $339 million of availability under committed credit facilities. As of March 31, 2021, the Company’s leverage ratio was 1.1 times. Fiscal 2022 Outlook Based on current visibility, backlog of existing orders and business trends, the Company has provided its net sales and Adjusted EBITDA targets for fiscal 2022. Net sales are expected to be in the range of $2.220 billion to $2.300 billion and Adjusted EBITDA is expected to be in the range of $635 to $665 million. Capital expenditures are expected to be in the range of $130 million to $150 million. Webcast Information Participants may Register Here for this conference call or copy and paste the following text into your browser: http://www.directeventreg.com/registration/event/3072617. After registering, participants will receive a confirmation through email, including dial in details and unique conference call codes for entry. Registration is open through the live call. To ensure participants are connected for the full call, please register at least 10 minutes before the start of the call. The live webcast will also be accessible via the "Events Calendar” section of the Company’s Investor Relations website, www.investors.ads-pipe.com. An archived version of the webcast will be available following the call. About the Company Advanced Drainage Systems is a leading provider of innovative water management solutions in the stormwater and on-site septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplace. For over 50 years, the Company has been manufacturing a variety of innovative and environmentally friendly alternatives to traditional materials. Its innovative products are used across a broad range of end markets and applications, including non-residential, residential, infrastructure and agriculture applications. The Company has established a leading position in many of these end markets by leveraging its national sales and distribution platform, overall product breadth and scale and manufacturing excellence. Founded in 1966, the Company operates a global network of approximately 60 manufacturing plants and 30 distribution centers. To learn more about ADS, please visit the Company’s website at www.adspipe.com. Forward Looking Statements Certain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “confident” and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner; volatility in general business and economic conditions in the markets in which we operate, including the adverse impact on the U.S. and global economy of the COVID-19 global pandemic, and the impact of COVID-19 in the near, medium and long-term on our business, results of operations, financial position, liquidity or cash flows, and other factors relating to availability of credit, interest rates, fluctuations in capital and business and consumer confidence; cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; the risks of increasing competition in our existing and future markets, including competition from both manufacturers of high performance thermoplastic corrugated pipe and manufacturers of products using alternative materials; uncertainties surrounding the integration of acquisitions and similar transactions, including the acquisition of Infiltrator Water Technologies and the integration of Infiltrator Water Technologies; our ability to realize the anticipated benefits from the acquisition of Infiltrator Water Technologies; risks that the acquisition of Infiltrator Water Technologies and related transactions may involve unexpected costs, liabilities or delays; our ability to continue to convert current demand for concrete, steel and polyvinyl chloride (“PVC”) pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products; the effect of any claims, litigation, investigations or proceedings; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; our ability to remediate the material weakness in our internal control over financial reporting, including remediation of the control environment for our joint venture affiliate ADS Mexicana, S.A. de C.V.; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets, including risks associated with new markets and products associated with our recent acquisition of Infiltrator Water Technologies; our ability to achieve the acquisition component of our growth strategy; the risk associated with manufacturing processes; our ability to manage our assets; the risks associated with our product warranties; our ability to manage our supply purchasing and customer credit policies; the risks associated with our self-insured programs; our ability to control labor costs and to attract, train and retain highly-qualified employees and key personnel; our ability to protect our intellectual property rights; changes in laws and regulations, including environmental laws and regulations; our ability to project product mix; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; fluctuations in our effective tax rate; our ability to meet future capital requirements and fund our liquidity needs; the risk that additional information may arise that would require the Company to make additional adjustments or revisions or to restate the financial statements and other financial data for certain prior periods and any future periods; any delay in the filing of any filings with the Securities and Exchange Commission (“SEC”); the review of potential weaknesses or deficiencies in the Company’s disclosure controls and procedures, and discovering weaknesses of which we are not currently aware or which have not been detected; additional uncertainties related to accounting issues generally; and the other risks and uncertainties described in the Company’s filings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Financial Statements ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands, except per share data) 2021 2020 2021 2020 Net sales $ 443,809 $ 370,768 $ 1,982,780 $ 1,673,805 Cost of goods sold 316,592 262,013 1,292,698 1,188,716 Cost of goods sold - ESOP special dividend compensation - - - 168,610 Gross profit 127,217 108,755 690,082 316,479 Operating expenses: Selling, general and administrative 73,491 68,549 267,574 271,338 Selling, general and administrative - ESOP special dividend compensation - - - 78,142 Loss on disposal of assets and costs from exit and disposal activities 1,021 872 4,275 5,338 Intangible amortization 19,815 32,575 73,708 57,010 Income (loss) from operations 32,890 6,759 344,525 (95,349 ) Other expense: Interest expense 7,895 11,924 35,658 82,711 Derivative (gains) loss and other (income) expense, net (2,521 ) 1,436 (3,404 ) 1,554 Income (loss) before income taxes 27,516 (6,601 ) 312,271 (179,614 ) Income tax expense 7,091 (8,763 ) 86,382 14,092 Equity in net loss (income) of unconsolidated affiliates (351 ) (1,371 ) (201 ) (1,909 ) Net income (loss) 20,776 3,533 226,090 (191,797 ) Less: net income attributable to noncontrolling interest 1,022 1,228 1,860 1,377 Net income (loss) attributable to ADS 19,754 2,305 224,230 (193,174 ) Dividends paid to participating securities (1,606 ) (1,404 ) (5,591 ) (11,544 ) Net income (loss) available to common stockholders and participating securities 18,148 901 218,639 (204,718 ) Undistributed income allocated to participating securities (1,967 ) - (33,251 ) - Net income (loss) available to common stockholders $ 16,181 $ 901 $ 185,388 $ (204,718 ) Weighted average common shares outstanding: Basic 70,958 68,957 70,155 63,820 Diluted 72,595 69,720 71,566 63,820 Net income per share: Basic $ 0.23 $ 0.01 $ 2.64 $ (3.21 ) Diluted $ 0.23 $ 0.01 $ 2.59 $ (3.21 ) Cash dividends declared per share $ 0.09 $ 0.09 $ 0.36 $ 1.36 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) As of (Amounts in thousands) March 31, 2021 March 31, 2020 ASSETS Current assets: Cash $ 195,009 $ 174,233 Receivables, net 236,191 200,028 Inventories 300,961 282,398 Other current assets 10,817 9,552 Total current assets 742,978 666,211 Property, plant and equipment, net 504,275 481,380 Other assets: Goodwill 599,072 597,819 Intangible assets, net 482,016 555,338 Other assets 85,491 69,140 Total assets $ 2,413,832 $ 2,369,888 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of debt obligations $ 7,000 $ 7,955 Current maturities of finance lease obligations 19,318 20,382 Accounts payable 171,098 106,710 Other accrued liabilities 116,151 101,116 Accrued income taxes 4,703 2,050 Total current liabilities 318,270 238,213 Long-term debt obligations, net 782,220 1,089,368 Long-term finance lease obligations 32,964 44,501 Deferred tax liabilities 162,185 175,616 Other liabilities 54,767 37,608 Total liabilities 1,350,406 1,585,306 Mezzanine equity: Redeemable convertible preferred stock 240,944 269,529 Deferred compensation — unearned ESOP shares (11,033 ) (22,432 ) Total mezzanine equity 229,911 247,097 Stockholders’ equity: Common stock 11,578 11,555 Paid-in capital 918,587 827,573 Common stock in treasury, at cost (10,959 ) (10,461 ) Accumulated other comprehensive loss (24,220 ) (35,325 ) Retained (deficit) earnings (75,202 ) (267,619 ) Total ADS stockholders’ equity 819,784 525,723 Noncontrolling interest in subsidiaries 13,731 11,762 Total stockholders’ equity 833,515 537,485 Total liabilities, mezzanine equity and stockholders’ equity $ 2,413,832 $ 2,369,888 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Fiscal Year Ended March 31, (Amounts in thousands) 2021 2020 Cash Flow from Operating Activities Net income (loss) $ 226,090 $ (191,797 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 145,586 124,940 Deferred income taxes (13,477 ) (2,924 ) Loss on disposal of assets and costs from exit and disposal activities 4,275 5,338 ESOP and stock-based compensation 65,434 32,395 ESOP special dividend compensation - 246,752 Amortization of deferred financing charges 382 34,476 Inventory step up related to Infiltrator Water Technologies acquisition - 7,880 Fair market value adjustments to derivatives (3,355 ) 3,128 Equity in net loss (income) of unconsolidated affiliates (201 ) (1,909 ) Other operating activities 6,770 (6,005 ) Changes in working capital: Receivables (34,760 ) 5,170 Inventories (14,561 ) 19,086 Prepaid expenses and other current assets (1,208 ) (1,929 ) Accounts payable, accrued expenses, and other liabilities 71,241 31,588 Net cash provided by operating activities 452,216 306,189 Cash Flows from Investing Activities Capital expenditures (78,757 ) (67,677 ) Cash paid for acquisitions, net of cash acquired - (1,089,322 ) Other investing activities 883 6,529 Net cash used in investing activities (77,874 ) (1,150,470 ) Cash Flows from Financing Activities Proceeds from Term Loan Facility - 1,300,000 Payments on Term Loan Facility - (1,300,000 ) Proceeds from syndication of Term Loan Facility - 700,000 Payments on syndicated Term Loan Facility (207,000 ) (51,750 ) Proceeds from Senior Notes - 350,000 Proceeds from Revolving Credit Agreement - 277,900 Payments on Revolving Credit Agreement (100,000 ) (177,900 ) Debt issuance costs - (34,606 ) Proceeds from PNC Credit Agreement - 253,900 Payments on PNC Credit Agreement - (388,300 ) Payments on Prudential Senior Notes - (100,000 ) Payments on finance lease obligations (21,491 ) (27,119 ) Proceeds from common stock offering, net of offering costs - 293,648 Cash dividends paid (32,155 ) (92,127 ) Proceeds from exercise of stock options 7,553 8,163 Other financing activities (1,490 ) (237 ) Net cash used in financing activities (354,583 ) 1,011,572 Effect of exchange rate changes on cash 1,017 (1,949 ) Net change in cash 20,776 165,342 Cash at beginning of period 174,233 8,891 Cash at end of period $ 195,009 $ 174,233 Selected Financial Data The following tables set forth net sales by reportable segment for each of the periods indicated. Three Months Ended March 31, 2021 March 30, 2020 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 239,206 $ (1,487 ) $ 237,719 $ 203,150 $ (1,346 ) $ 201,804 Infiltrator Water Technologies 91,265 (14,721 ) 76,544 74,033 (15,919 ) 58,114 International International - Pipe 25,197 (2,723 ) 22,474 16,382 — 16,382 International - Allied Products 9,157 — 9,157 6,627 — 6,627 Total International 34,354 (2,723 ) 31,631 23,009 — 23,009 Allied Products & Other 97,915 — 97,915 87,841 — 87,841 Intersegment Eliminations (18,931 ) 18,931 — (17,265 ) 17,265 — Total Consolidated $ 443,809 $ — $ 443,809 $ 370,768 $ — $ 370,768 Fiscal Year Ended March 31, 2021 March 30, 2020 Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 1,059,200 $ (6,280 ) $ 1,052,920 $ 954,633 $ (2,030 ) $ 952,603 Infiltrator Water Technologies 397,813 (68,669 ) 329,144 211,005 (41,657 ) 169,348 International International - Pipe 121,468 (6,589 ) 114,879 108,624 — 108,624 International - Allied Products 43,390 — 43,390 39,957 — 39,957 Total International 164,858 (6,589 ) 158,269 148,581 — 148,581 Allied Products & Other 442,447 — 442,447 403,273 — 403,273 Intersegment Eliminations (81,538 ) 81,538 — (43,687 ) 43,687 — Total Consolidated $ 1,982,780 $ — $ 1,982,780 $ 1,673,805 $ — $ 1,673,805 Employee Stock Ownership Plan (“ESOP”) The Company established an ESOP to enable employees to acquire stock ownership in ADS in the form of redeemable convertible preferred shares (“preferred shares”). All preferred shares will be converted to common shares by plan maturity, which will be no later than March 2023. The ESOP’s conversion of preferred shares into common shares will have a meaningful impact on net income, net income per share and common shares outstanding. The common shares outstanding will be greater after conversion. Net Income (Loss) The impact of the ESOP on net (loss) income includes the ESOP deferred compensation attributable to the preferred shares allocated to employee accounts during the period, which is a non-cash charge to our earnings and not deductible for income tax purposes. Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Net income (loss) attributable to ADS $ 19,754 $ 2,305 $ 224,230 $ (193,174 ) ESOP deferred stock-based compensation $ 15,475 $ 1,645 $ 44,981 $ 20,126 ESOP special dividend compensation $ - $ - $ - $ 246,752 Common shares outstanding The conversion of the preferred shares will increase the number of common shares outstanding. Preferred shares will convert to common shares at plan maturity, or upon retirement, disability, death or vested terminations over the life of the plan. Three Months Ended Fiscal Year Ended March 31, March 31, (Shares in thousands) 2021 2020 2021 2020 Weighted average common shares outstanding - Basic 70,958 68,957 70,155 63,820 Conversion of preferred shares 15,361 16,887 16,001 17,134 Unvested restricted shares - 18 - 35 Non-GAAP Financial Measures This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). ADS management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results available in the accompanying tables. Reconciliation of Non-GAAP Financial Measures This press release includes references to organic results, Adjusted EBITDA and Free Cash Flow, non-GAAP financial measures. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These measures are not intended to be substitutes for those reported in accordance with GAAP. Adjusted EBITDA and Free Cash Flow may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. EBITDA and Adjusted EBITDA are non-GAAP financial measures that comprise net income before interest, income taxes, depreciation and amortization, stock-based compensation, non-cash charges and certain other expenses. The Company’s definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess financial performance and evaluate the effectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided below reconciliations of Adjusted EBITDA to net income. Free Cash Flow is a non-GAAP financial measure that comprises cash flow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. In order to provide investors with a meaningful reconciliation, the Company has provided below a reconciliation of cash flow from operating activities to Free Cash Flow. The following tables present a reconciliation of EBITDA and Adjusted EBITDA to Net Income and Free Cash Flow to Cash Flow from Operating Activities, the most comparable GAAP measures, for each of the periods indicated. Reconciliation of Segment Adjusted Gross Profit to Gross profit Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Segment Adjusted Gross Profit Pipe $ 53,100 $ 46,767 $ 322,846 $ 239,531 International 10,945 7,865 49,921 36,999 Infiltrator Water Technologies 41,612 33,366 191,163 98,245 Allied Products & Other 49,046 43,580 225,052 201,206 Intersegment Elimination 415 (36 ) (503 ) (1,895 ) Total Segment Adjusted Gross Profit 155,118 131,542 788,479 574,086 Depreciation and amortization 17,090 16,808 66,408 62,225 ESOP and stock-based compensation expense 10,811 1,406 31,792 14,319 ESOP special dividend compensation - - - 168,610 COVID-19 related expenses - 4,573 197 4,573 Inventory step up related to Infiltrator Water Technologies acquisition - - - 7,880 Total Gross Profit $ 127,217 $ 108,755 $ 690,082 $ 316,479 Reconciliation of Adjusted EBITDA to Net Income Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Net income (loss) $ 20,776 $ 3,533 $ 226,090 $ (191,797 ) Depreciation and amortization 38,265 50,508 145,586 124,940 Interest expense 7,895 11,924 35,658 82,711 Income tax expense 7,091 (8,763 ) 86,382 14,092 EBITDA 74,027 57,202 493,716 29,946 Loss on disposal of assets and costs from exit and disposal activities 1,021 872 4,275 5,338 ESOP and stock-based compensation expense 20,021 5,030 65,434 32,395 ESOP special dividend compensation - - - 246,752 Transaction costs (13 ) 247 1,415 22,896 Inventory step up related to Infiltrator Water Technologies acquisition - - - 7,880 Strategic growth and operational improvement initiatives 615 2,028 3,304 6,659 COVID-19 related expenses (a) - 5,081 806 5,081 Restatement related costs - - - 8 Other adjustments(b) (1,123 ) 1,634 (1,995 ) 4,913 Adjusted EBITDA $ 94,548 $ 72,094 $ 566,955 $ 361,868 (a) Includes expenses directly related to our response to the COVID-19 pandemic, including adjustments to our pandemic pay program and expenses associated with our 3rd party crisis management vendor. (b) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense. The other adjustments in fiscal 2020 also includes expenses related to the ADS Mexicana’s investigation. Reconciliation of Segment Adjusted EBITDA Three Months Ended Fiscal Year Ended March 31, March 31, (Amounts in thousands) 2021 2020 2021 2020 Legacy ADS Adjusted EBITDA Pipe Adjusted Gross Profit $ 53,100 $ 46,767 $ 322,846 $ 239,531 International Adjusted Gross Profit 10,945 7,865 49,921 36,999 Allied Products & Other Adjusted Gross Profit 49,046 43,580 225,052 201,206 Unallocated corporate and selling expenses (52,956 ) (50,864 ) (194,775 ) (190,353 ) Legacy ADS Adjusted EBITDA 60,135 47,348 403,044 287,383 Legacy Infiltrator Water Technologies Adjusted EBITDA Infiltrator Water Technologies 41,612 33,366 191,163 98,245 Unallocated corporate and selling expenses (7,610 ) (8,584 ) (27,135 ) (21,865 ) Legacy Infiltrator Water Technologies Adjusted EBITDA $ 34,002 $ 24,782 $ 164,028 $ 76,380 Intersegment Eliminations 411 (36 ) (117 ) (1,895 ) Consolidated Adjusted EBITDA $ 94,548 $ 72,094 $ 566,955 $ 361,868 Reconciliation of Free Cash Flow to Cash flow from Operating Activities Fiscal Year Ended March 31, (Amounts in thousands) 2021 2020 Net cash flow from operating activities $ 452,216 $ 306,189 Capital expenditures (78,757 ) (67,677 ) Free cash flow $ 373,459 $ 238,512 View source version on businesswire.com: https://www.businesswire.com/news/home/20210520005242/en/