ADVANCED DRAINAGE SYSTEMS INC
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
WMS$124.31+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001604028-24-000032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001604028-24-000044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 79 current paragraphs.
32 unchanged; 20 reworded; 20 added; 8 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 10 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Second Quarter Fiscal 2025 Results
Current report
•Net sales increased 0.3% to $782.6 million
Current report
•Net income decreased 4.3% to $131.2 million
Current report
•Adjusted EBITDA, a non-GAAP measure, decreased 0.3% to $245.6 million
Current report
Net sales increased $2.4 million, or 0.3%, to $782.6 million, as compared to $780.2 million in the prior year quarter. Domestic pipe sales decreased $5.2 million, or 1.3%, to $410.5 million. Domestic allied products & other sales increased $4.9 million, or 2.7%, to $187.1 million. Infiltrator sales increased $12.3 million, or 10.6%, to $128.5 million. The overall increase in domestic net sales was primarily driven by demand in the residential and infrastructure end markets. International sales decreased $9.6 million, or 14.5%, to $56.6 million.
Current report
Selling, general and administrative expenses increased $2.4 million, or 2.6% to $94.1 million, as compared to $91.7 million. As a percentage of net sales, selling, general and administrative expenses were largely flat at 12.0% as compared to 11.8% in the prior year.
Current report
Year-to-date Fiscal 2025 Results
Current report
•Net sales increased 2.5% to $1,597.9 million
Current report
•Net income decreased 5.6% to $293.5 million
Current report
•Adjusted EBITDA, a non-GAAP measure, decreased 1.2% to $521.0 million
Current report
Gross profit decreased $7.7 million, or 1.2%, to $626.4 million as compared to $634.1 million in the prior year. The decrease in gross profit is primarily driven by unfavorable pricing and material cost, partially offset by favorable manufacturing costs.
Current report
Selling, general and administrative expenses increased $9.9 million, or 5.6% to $188.2 million, as compared to $178.2 million. As a percentage of net sales, selling, general and administrative expenses were largely flat at 11.8% as compared to 11.4% in the prior year.
Current report
Adjusted EBITDA, a non-GAAP measure, decreased $6.5 million, or 1.2%, to $521.0 million, as compared to $527.6 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 32.6% as compared to 33.9% in the prior year.
Current report
20 - volume growth in Domestic Pipe was offset by unfavorable price/mix impact. For the international segment, the decrease was driven by decreased volume as well as unfavorable price/mix.
Current report
Our consolidated Cost of goods sold for the three months ended September 30, 2024 increased by $11.1 million, or 2.3%, and our consolidated Gross profit decreased by $8.7 million, or 2.9%, compared to the same period in fiscal 2024. The decrease in gross profit for Domestic Pipe is primarily driven by unfavorable pricing and material cost, partially offset by favorable manufacturing costs and volume. The increase in gross profit for Infiltrator was driven by volume and improved material cost.
Current report
The change in the effective tax rate for the three months ended September 30, 2024 was primarily related to the decrease in state and local income taxes and the additional tax benefit recorded to adjust prior quarter income tax expense to the annual effective tax rate. See “Note 9. Income Taxes” for additional information.
Current report
Comparison of the Six Months Ended September 30, 2024 to the Six Months Ended September 30, 2023
Current report
Our consolidated Net sales for the six months ended September 30, 2024 increased by $39.7 million, or 2.5%, compared to the same period in fiscal 2024. The overall increase in domestic net sales was primarily driven by demand in the residential and infrastructure end markets. Net sales for Infiltrator were also driven by improved price/mix, while the volume growth in Domestic Pipe was partially offset by unfavorable price/mix impact. For the international segment, the decrease was driven by unfavorable price/mix.
Current report
Our consolidated Cost of goods sold for the six months ended September 30, 2024 increased by $47.4 million, or 5.1%, and our consolidated Gross profit decreased by $7.7 million, or 1.2%, compared to the same period in fiscal 2024. The decrease in gross profit for Domestic Pipe is primarily driven by unfavorable pricing and material cost, partially offset by favorable manufacturing costs. The increase in gross profit for Infiltrator was driven by favorable pricing and improved material cost.
Current report
Selling, general and administrative expenses
Removed paragraphs (8)
Previous report
First Quarter Fiscal 2025 Results
Previous report
•Net sales increased 4.8% to $815.3 million
Previous report
•Net income decreased 6.7% to $162.3 million
Previous report
•Adjusted EBITDA, a non-GAAP measure, decreased 2.1% to $275.5 million
Previous report
•Cash provided by operating activities decreased 24.8% to $183.4 million
Previous report
•Free cash flow, a non-GAAP measure, decreased 37.7% to $125.7 million
Previous report
Our consolidated Cost of goods sold for the three months ended June 30, 2024 increased by $36.3 million, or 8.1%, and our consolidated Gross profit increased by $1.0 million, or 0.3%, compared to the same period in fiscal 2024. The increase in
Previous report
18 - our gross profit was primarily due to increased sales discussed above partially offset by unfavorable pricing, material cost and transportation costs.
Reworded paragraphs (20)
Previous wording
•Net income per diluted share decreased 5.5% to $2.06
Current wording
•Net income per diluted share decreased 2.3% to $1.67
Previous wording
Gross profit increased $1.0 million, or 0.3%, to $332.5 million as compared to $331.5 million in the prior year. The increase in gross profit is primarily due to favorable demand as well as stronger sales mix, as Infiltrator and Allied product sales increased more than Pipe sales. This favorability was partially offset by unfavorable pricing, material cost and transportation costs.
Current wording
Gross profit decreased $8.7 million, or 2.9%, to $293.9 million as compared to $302.7 million in the prior year. The decrease in gross profit is primarily driven by unfavorable pricing and material cost, partially offset by favorable manufacturing costs.
Previous wording
Adjusted EBITDA, a non-GAAP measure, decreased $5.8 million, or 2.1%, to $275.5 million, as compared to $281.3 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 33.8% as compared to 36.2% in the prior year.
Current wording
Adjusted EBITDA, a non-GAAP measure, decreased $0.7 million, or 0.3%, to $245.6 million, as compared to $246.3 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 31.4% as compared to 31.6% in the prior year.
Previous wording
Net sales increased $37.3 million, or 4.8%, to $815.3 million, as compared to $778.0 million in the prior year quarter. Domestic pipe sales increased $10.6 million, or 2.5%, to $431.4 million. Domestic allied products & other sales increased $13.9 million, or 7.6%, to $196.0 million. Infiltrator sales increased $7.3 million, or 5.9%, to $130.2 million. The overall increase in domestic net sales was primarily driven by demand in the U.S. construction end markets. International sales increased $5.5 million, or 10.4%, to $57.7 million.
Current wording
Net sales increased $39.7 million, or 2.5%, to $1,597.9 million, as compared to $1,558.3 million in the prior year. Domestic pipe sales increased $5.4 million, or 0.6%, to $841.9 million. Domestic allied products & other sales increased $18.8 million, or 5.2%, to $383.1 million. Infiltrator sales increased $19.6 million, or 8.2%, to $258.7 million. The overall increase in domestic net sales was primarily driven by demand in the residential and infrastructure end markets. International sales decreased $4.1 million, or 3.5%, to $114.3 million.
Previous wording
Our consolidated Net sales for the three months ended June 30, 2024 increased by $37.3 million, or 4.8%, compared to the same period in fiscal 2024. The overall increase in domestic net sales was primarily driven by the improvement in the U.S. construction end markets which resulted in volume growth for Pipe, Infiltrator and Allied Products & Other.
Current wording
Our consolidated Net sales for the three months ended September 30, 2024 increased by $2.4 million, or 0.3%, compared to the same period in fiscal 2024. The overall increase in domestic net sales was primarily driven by demand in the residential and infrastructure end markets. Net sales for Infiltrator were also driven by improved price/mix, while the
Previous wording
Interest expense- Interest expense increased $1.1 million in the three months ended June 30, 2024 compared to the same period in the previous fiscal year. The increase was primarily due to an increase in interest rates.
Current wording
Interest expense- Interest expense increased $1.2 million in the three months ended September 30, 2024 compared to the same period in the previous fiscal year. The increase was primarily due to an increase in interest rates.
Previous wording
Selling, general and administrative expenses for the three months ended June 30, 2024 increased from the same period in fiscal 2024 and as a percentage of sales, increased by 0.4%. This increase is primarily due to higher commissions from the increase in volume, as well as continued investments in talent to support strategic areas such as engineering and product development.
Current wording
Selling, general and administrative expenses for six months ended September 30, 2024 increased $9.9 million from the same period in fiscal 2024 and as a percentage of net sales, increased by 0.4%. This increase is primarily due to higher commissions from the increase in volume, as well as continued investments in talent to support strategic areas such as engineering and product development.
Previous wording
Loss (gain) on disposal of assets and costs from exit and disposal activities- The gain on disposal in fiscal 2024 was due to the sale of Spartan Concrete.
Current wording
Loss (gain) on disposal of assets and costs from exit and disposal activities - The gain on disposal in fiscal 2024 was due to the sale of Spartan Concrete, Inc.
Previous wording
Interest income and other, net - Interest income and other, net increased by $3.6 million for the three months ended June 30, 2024 compared to the same period in the previous fiscal year primarily due to increased cash.
Current wording
Interest income and other, net - Interest income and other, net increased by $3.0 million for the six months ended September 30, 2024 compared to the same period in the previous fiscal year primarily due to increased cash.
Previous wording
The change in the effective tax rate for the three months ended June 30, 2024 was primarily related to the increase of the discrete income tax benefit related to the stock-based compensation windfall. See “Note 9. Income Taxes” for additional information.
Current wording
The change in the effective tax rate for the six months ended September 30, 2024 was primarily related to the decrease in state and local income taxes and the increase of the discrete income tax benefit related to the stock-based compensation windfall. See “Note 9. Income Taxes” for additional information.
Previous wording
(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.
Current wording
(b)Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, 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.
Previous wording
As of June 30, 2024, we had $15.8 million in cash that was held by our foreign subsidiaries, including $7.8 million held by our Canadian subsidiaries. We continue to evaluate our strategy regarding foreign cash, but our earnings in foreign subsidiaries still remain indefinitely reinvested, except for Canada. We plan to repatriate earnings from Canada and believe that there will be no additional tax costs associated with the repatriation of such earnings other than any potential non-U.S. withholding taxes.
Current wording
As of September 30, 2024, we had $23.5 million in cash that was held by our foreign subsidiaries, including $14.7 million held by our Canadian subsidiaries. We continue to evaluate our strategy regarding foreign cash, but our earnings in foreign subsidiaries still remain indefinitely reinvested, except for Canada. We plan to repatriate earnings from Canada and believe that there will be no additional tax costs associated with the repatriation of such earnings other than any potential non-U.S. withholding taxes.
Previous wording
As of June 30, 2024, we had $1,131.2 million in liquidity, including $541.6 million of cash and $589.6 million in borrowings available under our Revolving Credit Agreement, net of outstanding letters of credit. We believe that our cash on hand, together with the availability of borrowings under our Credit Agreement and other financing arrangements and cash generated from operations, will be sufficient to meet our working capital requirements, anticipated capital expenditures, and scheduled principal and interest payments on our indebtedness for at least the next twelve months.
Current wording
As of September 30, 2024, we had $1,202.6 million in liquidity, including $613.0 million of cash and $589.6 million in borrowings available under our Revolving Credit Agreement, net of outstanding letters of credit. We believe that our cash on hand, together with the availability of borrowings under our Credit Agreement and other financing arrangements and cash generated from operations, will be sufficient to meet our working capital requirements, anticipated capital expenditures, and scheduled principal and interest payments on our indebtedness for at least the next twelve months.
Previous wording
Working Capital - Working capital increased to $931.4 million as of June 30, 2024, from $860.3 million as of March 31, 2024. The increase in working capital is primarily due to an increase in cash, accounts receivable and inventory due to seasonality offset by changes in accrued taxes due to the timing of payments.
Current wording
Working Capital - Working capital increased to $1,024.6 million as of September 30, 2024, from $860.3 million as of March 31, 2024. The increase in working capital is primarily due to an increase in cash, accounts receivable and inventory due to seasonality offset by changes in accounts payable due to the timing of payments.
Previous wording
Operating Cash Flows -Cash flows from operating activities decreased $60.5 million during the three months ended June 30, 2024 primarily driven by changes in net working capital.
Current wording
Operating Cash Flows -Cash flows from operating activities decreased $108.5 million during the six months ended September 30, 2024 primarily driven by investment in inventory.
Previous wording
Investing Cash Flows- Cash flows used in investing activities during the three months ended June 30, 2024 increased by $35.3 million compared to the same period in fiscal 2024. The increase in cash used in investing activities was primarily due to the sale of Spartan Concrete in fiscal 2024.
Current wording
Investing Cash Flows- Cash flows used in investing activities during the six months ended September 30, 2024 increased by $49.3 million compared to the same period in fiscal 2024. The increase in cash used in investing activities was primarily due to increased capital expenditures in fiscal 2025 and the sale of Spartan Concrete in fiscal 2024.
Previous wording
Capital expenditures totaled $57.7 million and $42.1 million for the three months ended June 30, 2024 and 2023, respectively. Our capital expenditures for the three months ended June 30, 2024 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives.
Current wording
Capital expenditures totaled $112.2 million and $82.6 million for the six months ended September 30, 2024 and 2023, respectively. Our capital expenditures for the six months ended September 30, 2024 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives. We also acquired $48.5 million of property, plant and equipment under finance leases, which includes transportation equipment to update our fleet of trucks and trailers.
Previous wording
We currently anticipate that we will make capital expenditures of approximately $250 million to $300 million in fiscal year 2025, including approximately $110 million of open orders as of June 30, 2024. Such capital expenditures are expected to be financed using funds generated by operations.
Current wording
We currently anticipate that we will make capital expenditures of approximately $250 million in fiscal year 2025, including approximately $120 million of open orders as of September 30, 2024. Such capital expenditures are expected to be financed using funds generated by operations.
Previous wording
Financing Cash Flows- During the three months ended June 30, 2024, cash used in financing activities included the repurchase of common stock of $49.2 million, $12.4 million of dividend payments, and $10.6 million for shares withheld for tax purposes.
Current wording
Financing Cash Flows- During the six months ended September 30, 2024, cash used in financing activities included the repurchase of common stock of $69.9 million, $24.9 million of dividend payments, $11.8 million of payments of finance lease obligations and $10.6 million for shares withheld for tax purposes.
Previous wording
During the three months ended June 30, 2023, cash used in financing activities included the repurchase of common stock of $47.8 million, $11.1 million of dividend payments, and $8.7 million for shares withheld for tax purposes.
Current wording
During the six months ended September 30, 2023, cash used in financing activities included the repurchase of common stock of $101.6 million, $22.2 million of dividend payments, and $8.8 million for shares withheld for tax purposes.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
•Net income per diluted share decreased 4.1% to $3.73
Current report — wording carried from elsewhere
Selling, general and administrative expenses for the three months ended September 30, 2024 increased $2.4 million from the same period in fiscal 2024 and as a percentage of net sales, increased by 0.2%.
Current report — wording carried from elsewhere
The following table summarizes our operating results as a percentage of net sales that have been derived from our Condensed Consolidated Financial Statements for the periods presented. We believe this presentation is useful to investors in comparing historical results.
Current report — wording carried from elsewhere
Net sales -The following table presents Net sales to external customers by reportable segment for the six months ended September 30, 2024 and 2023.
Current report — wording carried from elsewhere
Cost of goods sold and Gross profit -The following table presents gross profit by reportable segment for the six months ended September 30, 2024 and 2023.
Current report — wording carried from elsewhere
Interest expense- Interest expense increased $2.3 million in the six months ended September 30, 2024 compared to the same period in the previous fiscal year. The increase was primarily due to increased interest rates.
Current report — wording carried from elsewhere
Income tax expense - The following table presents the effective tax rates for the six months ended September 30, 2024 and 2023.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Selling, general and administrative expense increased $7.5 million, or 8.7% to $94.1 million, as compared to $86.5 million. This increase is primarily due to higher commissions from the increase in volume, as well as continued investments in talent to support strategic areas such as engineering and product development. As a percentage of sales, selling, general and administrative expense was largely flat at 11.5% as compared to 11.1% in the prior year.