Advanced Drainage Systems, Inc. · NYSE:WMS
Advanced Drainage Systems — Q2 FY2017 Earnings Presentation
19 slides from Advanced Drainage Systems's earnings presentation, Jan 12, 2017
Slide 1: Second Quarter Fiscal 2017 Financial Results
Exhibit 99.2 Second Quarter Fiscal 2017 Financial Results LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH
Slide 2: Management Presenters
Management Presenters Joe Chlapaty Chairman and Chief Executive Officer Scott Cottrill Executive Vice President, Chief Financial Officer, Secretary and Treasurer Mike Higgins Director, Investor Relations & Business Strategy LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 2
Slide 3: Safe Harbor and Non-GAAP Financial Metrics
Safe Harbor and Non-GAAP Financial Metrics Certain statements in this presentation may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended. Such statements include, b
Slide 4: Q2 2017 Highlights
Q2 2017 Highlights Second quarter net sales decline as expected due to softer core domestic construction markets and continued weakness in Ag and Mexico. 1H17 continued track record of delivering above market growth in non- residential construction. Strong profits and margins driven by lower raw mat
Slide 5: Summary of Financial Restatement Impact
Summary of Financial Restatement Impact Summary of Restatement Impact – FY2012 to FY2016 FiscalYear Ended March 31, (in thousands) FY2012 FY2013 FY2014 FY2015 FY2016 As Reported FY2016 10-K Net sales $1,015,667 $1,017,102 $1,067,780 $1,180,073 $1,290,678 Incomebefore income taxes $61,119 $38,141 $33
Slide 6: Restatement Filings Update
Restatement Filings Update Q2 FY17 Form 10-Q expected January 2017. Q3 FY17 Form 10-Q anticipated to be filed timely. LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 6
Slide 7: Q2 2017 Financial Performance
Q2 2017 Financial Performance Revenue Gross Margin Adjusted EBITDA Margin (USD, in millions) - 5.9% +250 bps +160 bps $383 25.1% $361 22.6% 18.2% 16.6% Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 Revenue Adjusted EBITDA Margin By Geography Domestic Markets Q2 FY16 16.6% - Domestic - 5% + Non-Res
Slide 8: Q2 2017 Domestic Performance
Q2 2017 Domestic Performance Revenue Gross Margin Adjusted EBITDA Margin (USD, in millions) - 4.7% +230 bps +140 bps $327 25.6% $312 23.3% 18.3% 16.9% Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 Revenue Performance Highlights Adjusted EBITDA Margin By Application Domestic sales down 4.7% YoY Q2
Slide 9: Q2 2017 Domestic End Market Performance
Q2 2017 Domestic End Market Performance Non-Residential Residential $200 + 1% $200 Pipe (2%) Retail (5%) $150 $178 $179 Allied Products +8% $150 Subdivision construction +2% $100 $100 - 2% $50 $50 $62 $61 $0 $0 Infrastructure Agriculture $200 $200 $150 $150 $100 Pipe (7%) $100 Allied Products +1% -
Slide 10: Free Cash Flow Performance
Free Cash Flow Performance Free Cash Flow¹ CapEx FY 2017 FY 2016 Change Adjusted EBITDA $137 $116 $21 $30 Working Capital $(61) $(79) $18 $25 Cash Tax $(3) $(17) $14 CashInterest $(9) $(9) $0 $20 $22 $24 Restatement related costs $(19) $(7) $(12) $15 Other $1 $13 $(12) $10 Cash flowfrom operating ac
Slide 11: Capital Structure and Deployment Priorities
Capital Structure and Deployment Priorities Top priorities for FY2017 include: completion of new Cash and manufacturing facility in Harrisonville, MO to serve a Capital Expenditures growing market, expanding HP production capacity as Leverage well as non-virgin material initiatives Continue quarterl
Slide 12: FY2017 Financial Outlook
FY2017 Financial Outlook Fiscal Year 2017 Expectations Key Metric Previous Guidance* Current Guidance Comments Driven by softer domestic Net Sales construction market and (in Billions) $1,270 - $1,310 $1,225 - $1,250 further weakness in Ag and Mexico Impacted by volume Adj. EBITDA $200 - $225 $190 -
Slide 13: Key Net Sales Drivers – FY17 Market Outlook
Key Net Sales Drivers –FY17 Market Outlook Fiscal Year 2017 Market Outlook (Prior vs. Current) Market PreviousOutlook* Current Outlook Comments Domestic ADS anticipates mid-single digit Construction 0-4% 0-2% growth in domestic construction End Markets markets Agriculture End Softness expected to co
Slide 14: Q&A Session
Q&A Session LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 14
Slide 15: Closing Remarks
Closing Remarks Year to date net sales growth in domestic construction markets offset by softness in agriculture and international. Year to date construction end market sales have increased 3.5%. Continued outperformance in the construction market this year led by double digit growth of HP Pipe and
Slide 16: Appendix
Appendix LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 16
Slide 17: EBITDA Reconciliation
EBITDA Reconciliation Three Months Ended Six Months Ended September 30, September 30, (Amounts in thousands) 2016 2015 2016 2015 Net income $ 24,281 $ 15,928 $ 43,702 $ 28,710 Depreciation and amortization 18,010 17,367 36,036 34,751 Interest expense 4,546 4,947 9,330 9,233 Income tax expense 15,348
Slide 18: Segment EBITDA Reconciliation
Segment EBITDA Reconciliation Three Months Ended ThreeMonths Ended September 30, 2016 September 30, 2015 (Amounts in thousands) Domestic International Domestic International Net income $ 21,049 $ 3,232 $ 8,641 $ 7,287 Depreciation and amortization 15,829 2,181 15,243 2,124 Interest expense 4,436 110
Slide 19: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Six Months Ended September 30, (Amounts in thousands) 2016 2015 Cashflowfromoperatingactivities $ 45,576 $ 16,924 Capital expenditures (23,796) (21,534) Free Cash Flow $ 21,780 $ (4,610) LEADERSHIP • GROWTH • MOMENTUM THROUGH STRENGTH 19
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