Advanced Drainage Systems Announces Fourth Quarter and Fiscal Year 2024 Results

HILLIARD, Ohio--()--Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and onsite septic wastewater industries today announced financial results for the fourth quarter and fiscal year ended March 31, 2024.

Fourth Quarter Fiscal 2024 Results

  • Net sales increased 5.9% to $653.8 million
  • Net income increased 10.6% to $95.5 million
  • Diluted net income per share increased 14.5% to $1.21
  • Adjusted EBITDA (Non-GAAP) increased 11.2% to $191.2 million

Fiscal 2024 Results

  • Net sales decreased 6.4% to $2,874.5 million
  • Net income increased 0.4% to $513.3 million
  • Diluted net income per share increased 6.1% to $6.45
  • Adjusted EBITDA (Non-GAAP) increased 2.1% to $922.9 million
  • Cash provided by operating activities increased $10.1 million to $717.9 million
  • Free cash flow (Non-GAAP) decreased $6.8 million to $534.1 million

Scott Barbour, President and Chief Executive Officer of ADS commented, "Fiscal 2024 was ADS' ninth consecutive year of record profitability. Adjusted EBITDA increased 2% to $923 million due to the effective management of price/cost and strong operational execution. In addition, Adjusted EBITDA margin increased 270 basis points to 32.1%, the highest annual profit margin in the Company’s history. The profitability results for the year are especially impressive given the weaker demand environment in the first half of the year, which drove a 6% overall decrease in net sales to $2.9 billion. We are proud of this year’s results and remain committed to driving above market performance as we advance the stormwater and onsite septic wastewater industries. Our focus on highly engineered solutions positions us as a pivotal player in successfully managing water – the world’s most precious resource."

"The fourth quarter net sales and Adjusted EBITDA results came in above our guidance due to favorable volume growth in our core construction and agriculture markets, as well as productivity improvements from previous capital investments and continuous improvement programs. Adjusted EBITDA margin increased to a new fourth quarter record of 29.2%, 140 basis points above the prior year."

"In Fiscal 2025, we expect to see favorable demand drive volume growth in the residential and infrastructure markets, and stability in the non-residential construction market. Improved fixed cost absorption, increasing contributions from previous capital investments as well as effective management of price/cost should lead to healthy Adjusted EBITDA margins that at least equal Fiscal 2024 levels with potential for margin expansion."

Barbour concluded, "More broadly, our success will continue to be driven by ADS’ position as a pure-play water company that provides advanced sustainable water management solutions to protect and manage water. In the face of changing climate patterns, ADS and Infiltrator solutions play a critical role in protecting communities. In 2023, there were 27 large-scale storm events that inflicted an estimated $88 billion in damage in the U.S. These events, ranging from severe storms and tropical cyclones to floods and droughts, have devastating impacts on our communities and highlight how existing stormwater infrastructure has not kept pace with increasing climate challenges. The products and solutions that we provide along with the expertise we have at the local level across North America are key to solving these issues for communities, providing ADS with a long runway of secular growth."

Fourth Quarter Fiscal 2024 Results

Net sales increased $36.3 million, or 5.9%, to $653.8 million, as compared to $617.6 million in the prior year quarter. Domestic pipe sales increased $11.5 million, or 3.3%, to $358.7 million. Domestic allied products & other sales increased $4.3 million, or 2.9%, to $152.7 million. Infiltrator sales increased $18.4 million, or 21.0%, to $106.1 million. The overall increase in domestic net sales was primarily driven by the continued improvement in the U.S. residential, infrastructure construction and agriculture end markets. International sales increased $2.0 million, or 5.8%, to $36.4 million.

Gross profit increased $29.5 million, or 13.3%, to $252.0 million as compared to $222.4 million in the prior year. The increase in gross profit is primarily due to the favorable volume growth as well as better fixed cost absorption and productivity from capital investments.

Adjusted EBITDA (Non-GAAP) increased $19.2 million, or 11.2%, to $191.2 million, as compared to $172.0 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 29.2% as compared to 27.8% 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 Year 2024 Results

Net sales decreased $196.6 million, or 6.4%, to $2,874.5 million, as compared to $3,071.1 million in the prior year. Domestic pipe sales decreased $172.9 million, or 10.1%, to $1,544.3 million. Domestic allied products & other sales decreased $18.4 million, or 2.7%, to $673.4 million. Infiltrator sales increased $6.7 million, or 1.5%, to $449.0 million. The decrease in overall domestic net sales was driven by lower demand in the U.S. construction and agriculture end markets during the first half of the year. The increase in sales at Infiltrator was driven by better-than-expected single-family housing construction and new product introductions. International sales decreased $12.1 million, or 5.5%, to $207.8 million.

Gross profit increased $27.5 million, or 2.5%, to $1,145.9 million as compared to $1,118.4 million in the prior year. The increase in gross profit is primarily due to favorable material cost, partially offset by the decrease in volume and unfavorable fixed cost absorption.

Adjusted EBITDA (Non-GAAP) increased $19.0 million, or 2.1%, to $922.9 million, as compared to $904.0 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 32.1% as compared to 29.4% in the prior year.

Balance Sheet and Liquidity

Net cash provided by operating activities was $717.9 million, as compared to $707.8 million in the prior year. Free cash flow (Non-GAAP) was $534.1 million, as compared to $540.9 million in the prior year. Capital expenditures increased $16.9 million over the prior year as we continue to invest in safety, capacity and productivity. Net debt (total debt and finance lease obligations net of cash) was $860.9 million as of March 31, 2024, a decrease of $246.9 million from March 31, 2023.

ADS had total liquidity of $1,079 million, comprised of cash of $490.2 million as of March 31, 2024 and $588.9 million of availability under committed credit facilities. As of March 31, 2024, the Company’s leverage ratio was 0.9 times.

In the twelve months ended March 31, 2024, the Company repurchased 1.8 million shares of its common stock for a total cost of $207.3 million. Between common stock repurchased and dividends paid, the Company returned $251.3 million to shareholders in the year ended March 31, 2024. As of March 31, 2024, the Company has $215.9 million remaining under its share repurchase authorization.

Fiscal Year 2025 Outlook

Based on current visibility, backlog of existing orders and business trends, the Company issued the following targets for fiscal 2025. Net sales are expected to be in the range of $2.925 billion to $3.025 billion. Adjusted EBITDA is expected to be in the range of $940 million to $980 million. Capital expenditures are expected to be in the range of $250 million to $300 million.

Conference Call Information

Webcast: Interested investors and other parties can listen to a webcast of the live conference call by logging in through the Investor Relations section of the Company's website at https://investors.ads-pipe.com/events-and-presentations. An online replay will be available on the same website following the call.

Teleconference: To participate in the live teleconference, participants may register at https://registrations.events/direct/Q4I457863. 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.

About the Company

Advanced Drainage Systems is a leading manufacturer of innovative stormwater and onsite septic wastewater solutions that manages the world’s most precious resource: water. ADS provides superior drainage solutions for use in a wide variety of markets and applications including commercial, residential, infrastructure and agriculture. ADS delivers tremendous service to its customers with the industry’s largest company-owned fleet, an expansive sales team, and a vast manufacturing network of approximately 70 manufacturing plants and 40 distribution centers. ADS is the largest plastic recycling company in North America, ensuring over half a billion pounds of plastic is kept out of landfills every year. Founded in 1966, ADS’ water management solutions are designed to last for decades. To learn more, 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; disruption or volatility in general business and economic conditions in the markets in which we operate; 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; uncertainties surrounding the integration and realization of anticipated benefits of acquisitions; the effect of weather or seasonality; the loss of any of our significant customers; the risks of doing business internationally; the risks of conducting a portion of our operations through joint ventures; our ability to expand into new geographic or product markets; the risk associated with manufacturing processes; the effect of global climate change; cybersecurity risks; our ability to manage our supply purchasing and customer credit policies; 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; the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; and 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 March 31,

 

Fiscal Year Ended March 31,

(In thousands, except per share data)

2024

 

2023

 

2024

 

2023

Net sales

$

653,840

 

 

$

617,559

 

 

$

2,874,473

 

 

$

3,071,121

 

Cost of goods sold

 

401,877

 

 

 

395,138

 

 

 

1,728,524

 

 

 

1,952,713

 

Gross profit

 

251,963

 

 

 

222,421

 

 

 

1,145,949

 

 

 

1,118,408

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

101,189

 

 

 

78,409

 

 

 

370,714

 

 

 

339,504

 

(Gain) loss on disposal of assets and costs from exit and disposal activities

 

2,304

 

 

 

4,544

 

 

 

(8,365

)

 

 

4,397

 

Intangible amortization

 

13,093

 

 

 

13,837

 

 

 

51,469

 

 

 

55,197

 

Income from operations

 

135,377

 

 

 

125,631

 

 

 

732,131

 

 

 

719,310

 

Other expense:

 

 

 

 

 

 

 

Interest expense

 

22,878

 

 

 

20,848

 

 

 

88,862

 

 

 

70,182

 

Interest income and other, net

 

(7,657

)

 

 

(2,340

)

 

 

(23,484

)

 

 

(7,972

)

Income before income taxes

 

120,156

 

 

 

107,123

 

 

 

666,753

 

 

 

657,100

 

Income tax expense

 

26,333

 

 

 

21,948

 

 

 

158,998

 

 

 

150,589

 

Equity in net income of unconsolidated affiliates

 

(1,656

)

 

 

(1,137

)

 

 

(5,536

)

 

 

(4,842

)

Net income

 

95,479

 

 

 

86,312

 

 

 

513,291

 

 

 

511,353

 

Less: net income attributable to noncontrolling interest

 

657

 

 

 

419

 

 

 

3,376

 

 

 

4,267

 

Net income attributable to ADS

$

94,822

 

 

$

85,893

 

 

$

509,915

 

 

$

507,086

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

77,637

 

 

 

80,554

 

 

 

78,252

 

 

 

82,315

 

Diluted

 

78,491

 

 

 

81,379

 

 

 

79,017

 

 

 

83,336

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

1.22

 

 

$

1.07

 

 

$

6.52

 

 

$

6.16

 

Diluted

$

1.21

 

 

$

1.06

 

 

$

6.45

 

 

$

6.08

 

Cash dividends declared per share

$

0.14

 

 

$

0.12

 

 

$

0.56

 

 

$

0.48

 

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(unaudited)

 

 

As of

(Amounts in thousands)

March 31, 2024

 

March 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

490,163

 

 

$

217,128

 

Receivables, net

 

323,576

 

 

 

306,945

 

Inventories

 

464,200

 

 

 

463,994

 

Other current assets

 

22,028

 

 

 

29,422

 

Total current assets

 

1,299,967

 

 

 

1,017,489

 

Property, plant and equipment, net

 

876,351

 

 

 

733,059

 

Other assets:

 

 

 

Goodwill

 

617,183

 

 

 

620,193

 

Intangible assets, net

 

352,652

 

 

 

407,627

 

Other assets

 

122,760

 

 

 

122,757

 

Total assets

$

3,268,913

 

 

$

2,901,125

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current maturities of debt obligations

$

11,870

 

 

$

14,693

 

Current maturities of finance lease obligations

 

18,015

 

 

 

8,541

 

Accounts payable

 

254,401

 

 

 

210,111

 

Other accrued liabilities

 

154,260

 

 

 

142,400

 

Accrued income taxes

 

1,076

 

 

 

3,057

 

Total current liabilities

 

439,622

 

 

 

378,802

 

Long-term debt obligations, net

 

1,259,522

 

 

 

1,269,391

 

Long-term finance lease obligations

 

61,661

 

 

 

32,272

 

Deferred tax liabilities

 

156,705

 

 

 

159,056

 

Other liabilities

 

70,704

 

 

 

66,744

 

Total liabilities

 

1,988,214

 

 

 

1,906,265

 

Mezzanine equity:

 

 

 

Redeemable convertible preferred stock

 

108,584

 

 

 

153,220

 

Total mezzanine equity

 

108,584

 

 

 

153,220

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock

 

11,679

 

 

 

11,647

 

Paid-in capital

 

1,219,834

 

 

 

1,134,864

 

Common stock in treasury, at cost

 

(1,140,578

)

 

 

(920,999

)

Accumulated other comprehensive loss

 

(29,830

)

 

 

(27,580

)

Retained earnings

 

1,092,208

 

 

 

626,215

 

Total ADS stockholders’ equity

 

1,153,313

 

 

 

824,147

 

Noncontrolling interest in subsidiaries

 

18,802

 

 

 

17,493

 

Total stockholders’ equity

 

1,172,115

 

 

 

841,640

 

Total liabilities, mezzanine equity and stockholders’ equity

$

3,268,913

 

 

$

2,901,125

 

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

Fiscal Year Ended March 31,

(Amounts in thousands)

2024

 

2023

Cash Flow from Operating Activities

 

 

 

Net income

$

513,291

 

 

$

511,353

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

154,903

 

 

 

145,149

 

Deferred income taxes

 

(2,280

)

 

 

(9,855

)

(Gain) loss on disposal of assets and costs from exit and disposal activities

 

(8,365

)

 

 

4,397

 

Stock-based compensation

 

31,986

 

 

 

21,659

 

Amortization of deferred financing charges

 

2,044

 

 

 

1,419

 

Fair market value adjustments to derivatives

 

(972

)

 

 

3,639

 

Equity in net income of unconsolidated affiliates

 

(5,536

)

 

 

(4,842

)

Other operating activities

 

6,697

 

 

 

1,513

 

Changes in working capital:

 

 

 

Receivables

 

(14,590

)

 

 

37,487

 

Inventories

 

594

 

 

 

30,224

 

Prepaid expenses and other current assets

 

(275

)

 

 

(5,296

)

Accounts payable, accrued expenses and other liabilities

 

40,431

 

 

 

(29,037

)

Net cash provided by operating activities

 

717,928

 

 

 

707,810

 

Cash Flows from Investing Activities

 

 

 

Capital expenditures

 

(183,812

)

 

 

(166,913

)

Proceeds from disposition of assets or businesses

 

27,498

 

 

 

 

Acquisition, net of cash acquired

 

 

 

 

(48,010

)

Other investing activities

 

650

 

 

 

446

 

Net cash used in investing activities

 

(155,664

)

 

 

(214,477

)

Cash Flows from Financing Activities

 

 

 

Payments on syndicated Term Loan Facility

 

(7,000

)

 

 

(7,000

)

Proceeds from Revolving Credit Agreement

 

 

 

 

26,200

 

Payments on Revolving Credit Agreement

 

 

 

 

(140,500

)

Proceeds from Amended Revolving Credit Agreement

 

 

 

 

97,000

 

Payments on Amended Revolving Credit Agreement

 

 

 

 

(97,000

)

Proceeds from Senior Notes due 2030

 

 

 

 

500,000

 

Debt issuance costs

 

 

 

 

(11,575

)

Payments on Equipment Financing

 

(7,738

)

 

 

(12,532

)

Payments on finance lease obligations

 

(12,145

)

 

 

(7,686

)

Repurchase of common stock

 

(207,308

)

 

 

(575,027

)

Cash dividends paid

 

(43,995

)

 

 

(39,612

)

Dividends paid to noncontrolling interest holder

 

(3,747

)

 

 

(5,323

)

Proceeds from option exercises

 

6,454

 

 

 

5,700

 

Payment of withholding taxes on vesting of restricted stock units

 

(8,864

)

 

 

(28,663

)

Other financing activities

 

 

 

 

(260

)

Net cash used in financing activities

 

(284,343

)

 

 

(296,278

)

Effect of exchange rate changes on cash

 

799

 

 

 

(52

)

Net change in cash

 

278,720

 

 

 

197,003

 

Cash at beginning of year

 

217,128

 

 

 

20,125

 

Cash and restricted cash at end of year

$

495,848

 

 

$

217,128

 

 

 

 

 

RECONCILIATION TO BALANCE SHEET

 

 

 

Cash

$

490,163

 

 

 

Restricted cash (included in Other assets in the Consolidated Balance Sheets)

 

5,685

 

 

 

Total cash and restricted cash

$

495,848

 

 

 

Selected Financial Data

The following tables set forth net sales by reportable segment for each of the periods indicated.

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

(In thousands)

Net Sales

 

Intersegment
Net Sales

 

Net Sales from
External Customers

 

Net Sales

 

Intersegment
Net Sales

 

Net Sales from
External Customers

Pipe

$

369,316

 

 

$

(10,656

)

 

$

358,660

 

$

357,407

 

 

$

(10,289

)

 

$

347,118

Infiltrator Water Technologies

 

124,875

 

 

 

(18,804

)

 

 

106,071

 

 

102,723

 

 

 

(15,046

)

 

 

87,677

International

 

 

 

 

 

 

 

 

 

 

 

International - Pipe

 

30,143

 

 

 

(4,862

)

 

 

25,281

 

 

25,136

 

 

 

(706

)

 

 

24,430

International - Allied Products & Other

 

11,283

 

 

 

(125

)

 

 

11,158

 

 

9,998

 

 

 

 

 

 

9,998

Total International

 

41,426

 

 

 

(4,987

)

 

 

36,439

 

 

35,134

 

 

 

(706

)

 

 

34,428

Allied Products & Other

 

156,026

 

 

 

(3,356

)

 

 

152,670

 

 

150,166

 

 

 

(1,830

)

 

 

148,336

Intersegment Eliminations

 

(37,803

)

 

 

37,803

 

 

 

 

 

(27,871

)

 

 

27,871

 

 

 

Total Consolidated

$

653,840

 

 

$

 

 

$

653,840

 

$

617,559

 

 

$

 

 

$

617,559

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

March 31, 2024

 

March 31, 2023

(In thousands)

Net Sales

 

Intersegment
Net Sales

 

Net Sales from
External Customers

 

Net Sales

 

Intersegment
Net Sales

 

Net Sales from
External Customers

Pipe

$

1,586,618

 

 

$

(42,328

)

 

$

1,544,290

 

$

1,758,961

 

 

$

(41,772

)

 

$

1,717,189

Infiltrator Water Technologies

 

531,236

 

 

 

(82,209

)

 

 

449,027

 

 

523,643

 

 

 

(81,363

)

 

 

442,280

International

 

 

 

 

 

 

 

 

 

 

 

International - Pipe

 

163,930

 

 

 

(14,081

)

 

 

149,849

 

 

179,898

 

 

 

(19,215

)

 

 

160,683

International - Allied Products & Other

 

58,072

 

 

 

(152

)

 

 

57,920

 

 

59,170

 

 

 

 

 

 

59,170

Total International

 

222,002

 

 

 

(14,233

)

 

 

207,769

 

 

239,068

 

 

 

(19,215

)

 

 

219,853

Allied Products & Other

 

684,329

 

 

 

(10,942

)

 

 

673,387

 

 

700,319

 

 

 

(8,520

)

 

 

691,799

Intersegment Eliminations

 

(149,712

)

 

 

149,712

 

 

 

 

 

(150,870

)

 

 

150,870

 

 

 

Total Consolidated

$

2,874,473

 

 

$

 

 

$

2,874,473

 

$

3,071,121

 

 

$

 

 

$

3,071,121

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 Adjusted EBITDA, Free Cash Flow and Adjusted Earnings per Share, 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.

Adjusted Earnings per Share excludes (gains) losses on disposals of assets or business, restructuring expenses, impairment charges and transaction costs. Adjusted Earnings per Share is a measure used by management and may be useful for investors to evaluate the Company's operational performance.

The following tables present a reconciliation of EBITDA and Adjusted EBITDA to Net Income, Free Cash Flow to Cash Flow from Operating Activities, and Adjusted Earnings per Share to Diluted Earnings per Share, the most comparable GAAP measures, for each of the periods indicated.

Reconciliation of Segment Adjusted Gross Profit to Gross Profit

 

Three Months Ended March 31,

 

Fiscal Year Ended March 31,

(Amounts in thousands)

2024

 

2023

 

2024

 

2023

Segment adjusted gross profit

 

 

 

 

 

 

 

Pipe

$

113,318

 

 

$

111,540

 

$

515,444

 

 

$

532,551

Infiltrator Water Technologies

 

65,358

 

 

 

40,011

 

 

281,677

 

 

 

233,580

International

 

11,198

 

 

 

10,225

 

 

62,578

 

 

 

61,681

Allied Products & Other

 

91,192

 

 

 

82,827

 

 

391,766

 

 

 

376,299

Intersegment Eliminations

 

(126

)

 

 

595

 

 

(4,557

)

 

 

924

Total Segment Adjusted Gross Profit

 

280,940

 

 

 

245,198

 

 

1,246,908

 

 

 

1,205,035

Depreciation and amortization

 

27,742

 

 

 

22,373

 

 

96,251

 

 

 

84,048

Stock-based compensation expense

 

1,235

 

 

 

404

 

 

4,708

 

 

 

2,579

Total Gross Profit

$

251,963

 

 

$

222,421

 

$

1,145,949

 

 

$

1,118,408

Reconciliation of Adjusted EBITDA to Net Income

 

Three Months Ended March 31,

 

Fiscal Year Ended March 31,

(Amounts in thousands)

2024

 

2023

 

2024

 

2023

Net income

$

95,479

 

 

$

86,312

 

 

$

513,291

 

 

$

511,353

 

Depreciation and amortization

 

42,889

 

 

 

37,803

 

 

 

154,903

 

 

 

145,149

 

Interest expense

 

22,878

 

 

 

20,848

 

 

 

88,862

 

 

 

70,182

 

Income tax expense

 

26,333

 

 

 

21,948

 

 

 

158,998

 

 

 

150,589

 

EBITDA

 

187,579

 

 

 

166,911

 

 

 

916,054

 

 

 

877,273

 

(Gain) loss on disposal of assets and costs from exit and disposal activities

 

2,304

 

 

 

4,544

 

 

 

(8,365

)

 

 

4,397

 

Stock-based compensation expense

 

8,350

 

 

 

1,747

 

 

 

31,986

 

 

 

21,659

 

Transaction costs (a)

 

390

 

 

 

486

 

 

 

3,444

 

 

 

3,903

 

Interest income

 

(6,906

)

 

 

(3,840

)

 

 

(22,047

)

 

 

(9,782

)

Other adjustments (b)

 

(539

)

 

 

2,132

 

 

 

1,875

 

 

 

6,512

 

Adjusted EBITDA

$

191,178

 

 

$

171,980

 

 

$

922,947

 

 

$

903,962

 

a.

 

Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions.

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 (benefit).

Reconciliation of Free Cash Flow to Cash flow from Operating Activities

 

Fiscal Year Ended March 31,

 

(Amounts in thousands)

2024

 

2023

 

Net cash flow from operating activities

$

717,928

 

 

$

707,810

 

 

Capital expenditures

 

(183,812

)

 

 

(166,913

)

 

Free cash flow

$

534,116

 

 

$

540,897

 

 

Reconciliation of Diluted Earnings per Share to Adjusted Earnings per Share

The following table diluted presents earnings per share on an adjusted basis to supplement the Company's discussion of its results of operations herein.

 

Three Months Ended March 31,

 

Fiscal Year Ended March 31,

 

2024

 

2023

 

2024

 

2023

Diluted Earnings Per Share

$

1.21

 

 

$

1.06

 

 

$

6.45

 

 

$

6.08

 

Loss (gain) on disposal of assets and costs from exit and disposal activities

 

0.03

 

 

 

0.06

 

 

 

(0.11

)

 

 

0.05

 

Transaction costs

 

0.00

 

 

 

0.01

 

 

 

0.04

 

 

 

0.05

 

Income tax impact of adjustments (a)

 

(0.01

)

 

 

(0.01

)

 

 

0.01

 

 

 

(0.02

)

Adjusted Earnings per Share

$

1.23

 

 

$

1.12

 

 

$

6.39

 

 

$

6.16

 

a.

 

The income tax impact of adjustments to each period is based on the statutory tax rate.

 

Contacts

Michael Higgins
VP, Corporate Strategy & Investor Relations
(614) 658-0050
Mike.Higgins@ads-pipe.com

Contacts

Michael Higgins
VP, Corporate Strategy & Investor Relations
(614) 658-0050
Mike.Higgins@ads-pipe.com