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Advanced Drainage Systems Announces Second Quarter Fiscal 2024 Results

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 fiscal second quarter ended September 30, 2023.

Second Quarter Fiscal 2024 Results

  • Net sales decreased 11.8% to $780.2 million
  • Net income decreased 10.7% to $137.0 million
  • Net income per diluted share decreased 4.8% to $1.71
  • Adjusted EBITDA (Non-GAAP) decreased 6.4% to $246.3 million
  • Adjusted Earnings per share (Non-GAAP) decreased 4.8% to $1.71

Year-to-Date Fiscal 2024 Results

  • Net sales decreased 13.4% to $1,558.3 million
  • Net income decreased 9.0% to $310.9 million
  • Net income per diluted share decreased 3.0% to $3.89
  • Adjusted EBITDA (Non-GAAP) decreased 6.2% to $527.6 million
  • Adjusted Earnings per share (Non-GAAP) decreased 6.0% to $3.78
  • Cash provided by operating activities increased 5.0% to $458.9 million
  • Free cash flow (Non-GAAP) increased 4.1% to $376.2 million

Scott Barbour, President and Chief Executive Officer of ADS commented, "In the second quarter, we saw better than expected performance in the Infiltrator business and Allied products portfolio continue, despite demand headwinds from higher interest rates, credit tightening and economic uncertainty. Results from the ADS pipe portfolio remain in line with expectations. Importantly, we demonstrated the resilience of the business model through the 180 basis point expansion in Adjusted EBITDA margin, even with the lower demand environment. The margin performance this quarter benefited from sales mix, as well as previous investments in the business including automation and tooling, effective management of price/cost as well as continuous improvement within our operations."

"Demand for our innovative solutions continues to be driven by the secular trend of larger-scale and more frequent water-related climate events. ADS plays an important role in providing sustainable water management solutions, while additionally being a valued resource as regulations develop. The secular trend to manage storm water, combined with our material conversion strategy, gives us confidence in our strategic investments to support the long-term growth of the business. For instance, we announced this morning we are building a manufacturing facility in Lake Wales, Florida that will position us to continue to grow in Florida and the Southeast, a very important geographic region of the United States."

Barbour concluded, "With the first half of Fiscal 2024 behind us, we have narrowed our revenue target towards the upper end of the previous range and increased the Adjusted EBITDA mid-point guidance for the year. This reflects a continuation of demand trends experienced during the first half of the year, as well as confidence in our ability to manage margin performance, as demonstrated this quarter. Consistent with the previous guidance, our uncertainty remains as to the impact of tightening credit standards and higher interest rates on the non-residential and residential markets in the second half of the fiscal year. We will continue to focus on execution, delivering service to our customers and pursuing growth through attractive products, markets and partnerships, investing in capital and resources at both ADS and Infiltrator for when the market rebounds."

Second Quarter Fiscal 2024 Results

Net sales decreased $104.0 million, or 11.8%, to $780.2 million, as compared to $884.2 million in the prior year quarter. Domestic pipe sales decreased $70.6 million, or 14.1%, to $430.4 million. Domestic allied products & other sales decreased $18.9 million, or 9.3%, to $183.3 million. Infiltrator sales decreased $17.0 million, or 11.3%, to $133.7 million. The decrease in domestic net sales was primarily driven by lower demand in the U.S. construction and agriculture end markets. International sales decreased $4.0 million, or 5.5%, to $69.4 million.

Gross profit decreased $17.3 million, or 5.4%, to $302.7 million as compared to $320.0 million in the prior year. The decrease in gross profit is primarily due to the decrease in volume and unfavorable fixed cost absorption, partially offset by favorable material costs.

Net income per diluted share decreased $0.09, or 4.8%, to $1.71, as compared to $1.80 per share in the prior year quarter, primarily due to the factors mentioned above.

Adjusted EBITDA (Non-GAAP) decreased $17.0 million, or 6.4%, to $246.3 million, as compared to $263.2 million in the prior year, primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 31.6% as compared to 29.8% 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.”

Year-to-Date Fiscal 2023 Results

Net sales decreased $240.1 million, or 13.4%, to $1,558.3 million, as compared to $1,798.4 million in the prior year quarter. Domestic pipe sales decreased $166.9 million, or 16.3%, to $859.0 million. Domestic allied products & other sales decreased $34.4 million, or 8.6%, to $366.7 million. Infiltrator sales decreased $41.8 million, or 13.2%, to $275.2 million. The decrease in domestic net sales was driven by lower demand in the U.S. construction and agriculture end markets. International sales decreased $22.8 million, or 15.7%, to $122.2 million.

Gross profit decreased $37.9 million, or 5.6%, to $634.1 million as compared to $672.1 million in the prior year. The decrease in gross profit is primarily due to the decrease in volume and unfavorable fixed cost absorption, partially offset by favorable material costs.

Net income per diluted share decreased $0.12, or 3.0%, to $3.89, as compared to $4.01 per share in the prior year quarter. Results for the fiscal 2024 include a $14.9 million gain on the sale of assets, which after considering the income tax impact of this gain impacted net income per diluted share by $0.14.

Adjusted EBITDA (Non-GAAP) decreased $34.7 million, or 6.2%, to $527.6 million, as compared to $562.2 million in the prior year, primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 33.9% as compared to 31.3% in the prior year.

Balance Sheet and Liquidity

Net cash provided by operating activities was $458.9 million, as compared to $437.0 million in the prior year. Free cash flow (Non-GAAP) was $376.2 million, as compared to $361.5 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $850.2 million as of September 30, 2023, a decrease of $257.6 million from March 31, 2023.

ADS had total liquidity of $1,059.3 million, comprised of cash of $470.4 million as of September 30, 2023 and $588.9 million of availability under committed credit facilities. As of September 30, 2023, the Company’s trailing-twelve-month leverage ratio was 1.0 times Adjusted EBITDA.

In the six months ended September 30, 2023, the Company repurchased 1.0 million shares of its common stock for a total cost of $101.6 million. As of September 30, 2023, approximately $315.9 million of common stock may be repurchased under the Company's existing share repurchase authorization.

Fiscal 2024 Outlook

Based on current visibility, backlog of existing orders and business trends, the Company updated its financial targets for fiscal 2024. Net sales are now expected to be in the range of $2.700 billion to $2.800 billion. Adjusted EBITDA is expected to be in the range of $800 to $850 million. The outlook for capital expenditures is unchanged, expected to be in the range of $200 million to $225 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://conferencingportals.com/event/TTnYXFWe using Conference ID: 45786. 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 and its subsidiary, Infiltrator Water Technologies, provide superior stormwater drainage and onsite septic wastewater products used in a wide variety of markets and applications including commercial, residential, infrastructure and agriculture, while delivering unparalleled customer service. ADS manages 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. The company is one of the largest plastic recycling companies 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

September 30,

 

Six Months Ended

September 30,

(In thousands, except per share data)

2023

 

2022

 

2023

 

2022

Net sales

$

780,220

 

 

$

884,209

 

 

$

1,558,266

 

 

$

1,798,395

 

Cost of goods sold

 

477,543

 

 

 

564,246

 

 

 

924,129

 

 

 

1,126,325

 

Gross profit

 

302,677

 

 

 

319,963

 

 

 

634,137

 

 

 

672,070

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

91,725

 

 

 

88,639

 

 

 

178,236

 

 

 

175,159

 

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

 

123

 

 

 

(102

)

 

 

(13,181

)

 

 

201

 

Intangible amortization

 

12,792

 

 

 

13,841

 

 

 

25,594

 

 

 

27,518

 

Income from operations

 

198,037

 

 

 

217,585

 

 

 

443,488

 

 

 

469,192

 

Other expense:

 

 

 

 

 

 

 

Interest expense

 

21,941

 

 

 

18,261

 

 

 

43,653

 

 

 

29,333

 

Derivative (gain) loss and other (income) expense, net

 

(7,506

)

 

 

395

 

 

 

(11,055

)

 

 

(1,507

)

Income before income taxes

 

183,602

 

 

 

198,929

 

 

 

410,890

 

 

 

441,366

 

Income tax expense

 

47,476

 

 

 

47,508

 

 

 

102,534

 

 

 

102,573

 

Equity in net income of unconsolidated affiliates

 

(901

)

 

 

(1,956

)

 

 

(2,576

)

 

 

(3,066

)

Net income

 

137,027

 

 

 

153,377

 

 

 

310,932

 

 

 

341,859

 

Less: net income attributable to noncontrolling interest

 

1,225

 

 

 

1,370

 

 

 

1,478

 

 

 

2,706

 

Net income attributable to ADS

$

135,802

 

 

$

152,007

 

 

$

309,454

 

 

$

339,153

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

78,606

 

 

 

83,466

 

 

 

78,756

 

 

 

83,306

 

Diluted

 

79,307

 

 

 

84,498

 

 

 

79,475

 

 

 

84,485

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

1.73

 

 

$

1.82

 

 

$

3.93

 

 

$

4.07

 

Diluted

$

1.71

 

 

$

1.80

 

 

$

3.89

 

 

$

4.01

 

Cash dividends declared per share

$

0.14

 

 

$

0.12

 

 

$

0.28

 

 

$

0.24

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

As of

(Amounts in thousands)

September 30, 2023

 

March 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash

$

470,409

 

 

$

217,128

 

Receivables, net

 

352,562

 

 

 

306,945

 

Inventories

 

385,090

 

 

 

463,994

 

Other current assets

 

23,855

 

 

 

29,422

 

Total current assets

 

1,231,916

 

 

 

1,017,489

 

Property, plant and equipment, net

 

773,993

 

 

 

733,059

 

Other assets:

 

 

 

Goodwill

 

620,165

 

 

 

620,193

 

Intangible assets, net

 

382,050

 

 

 

407,627

 

Other assets

 

129,850

 

 

 

122,757

 

Total assets

$

3,137,974

 

 

$

2,901,125

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Current maturities of debt obligations

$

12,950

 

 

$

14,693

 

Current maturities of finance lease obligations

 

11,698

 

 

 

8,541

 

Accounts payable

 

223,536

 

 

 

210,111

 

Other accrued liabilities

 

158,784

 

 

 

142,400

 

Accrued income taxes

 

20,899

 

 

 

3,057

 

Total current liabilities

 

427,867

 

 

 

378,802

 

Long-term debt obligations, net

 

1,264,197

 

 

 

1,269,391

 

Long-term finance lease obligations

 

31,729

 

 

 

32,272

 

Deferred tax liabilities

 

159,060

 

 

 

159,056

 

Other liabilities

 

72,942

 

 

 

66,744

 

Total liabilities

 

1,955,795

 

 

 

1,906,265

 

Mezzanine equity:

 

 

 

Redeemable common stock

 

133,349

 

 

 

153,220

 

Total mezzanine equity

 

133,349

 

 

 

153,220

 

Stockholders’ equity:

 

 

 

Common stock

 

11,663

 

 

 

11,647

 

Paid-in capital

 

1,173,574

 

 

 

1,134,864

 

Common stock in treasury, at cost

 

(1,039,717

)

 

 

(920,999

)

Accumulated other comprehensive loss

 

(29,658

)

 

 

(27,580

)

Retained earnings

 

913,551

 

 

 

626,215

 

Total ADS stockholders’ equity

 

1,029,413

 

 

 

824,147

 

Noncontrolling interest in subsidiaries

 

19,417

 

 

 

17,493

 

Total stockholders’ equity

 

1,048,830

 

 

 

841,640

 

Total liabilities, mezzanine equity and stockholders’ equity

$

3,137,974

 

 

$

2,901,125

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

Six Months Ended September 30,

(Amounts in thousands)

2023

 

2022

Cash Flow from Operating Activities

 

 

 

Net income

$

310,932

 

 

$

341,859

 

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

 

 

 

Depreciation and amortization

 

73,961

 

 

 

71,500

 

Deferred income taxes

 

519

 

 

 

(3,117

)

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

 

(13,181

)

 

 

201

 

Stock-based compensation

 

16,234

 

 

 

13,733

 

Amortization of deferred financing charges

 

1,022

 

 

 

398

 

Fair market value adjustments to derivatives

 

(1,889

)

 

 

2,183

 

Equity in net income of unconsolidated affiliates

 

(2,576

)

 

 

(3,066

)

Other operating activities

 

756

 

 

 

(713

)

Changes in working capital:

 

 

 

Receivables

 

(43,530

)

 

 

(43,680

)

Inventories

 

79,215

 

 

 

15,799

 

Prepaid expenses and other current assets

 

(2,228

)

 

 

(7,776

)

Accounts payable, accrued expenses, and other liabilities

 

39,629

 

 

 

49,703

 

Net cash provided by operating activities

 

458,864

 

 

 

437,024

 

Cash Flows from Investing Activities

 

 

 

Capital expenditures

 

(82,625

)

 

 

(75,545

)

Proceeds from disposition of assets

 

19,979

 

 

 

 

Acquisition, net of cash acquired

 

 

 

 

(48,010

)

Other investing activities

 

446

 

 

 

46

 

Net cash used in investing activities

 

(62,200

)

 

 

(123,509

)

Cash Flows from Financing Activities

 

 

 

Payments on syndicated Term Loan Facility

 

(3,500

)

 

 

(3,500

)

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

 

(4,458

)

 

 

(7,104

)

Payments on finance lease obligations

 

(5,452

)

 

 

(3,153

)

Repurchase of common stock

 

(101,564

)

 

 

(192,602

)

Cash dividends paid

 

(22,224

)

 

 

(20,367

)

Dividends paid to noncontrolling interest holder

 

 

 

 

(1,727

)

Proceeds from exercise of stock options

 

2,623

 

 

 

4,660

 

Payment of withholding taxes on vesting of restricted stock units

 

(8,811

)

 

 

(25,512

)

Net cash (used in) provided by financing activities

 

(143,386

)

 

 

124,820

 

Effect of exchange rate changes on cash

 

3

 

 

 

(1,103

)

Net change in cash

 

253,281

 

 

 

437,232

 

Cash at beginning of period

 

217,128

 

 

 

20,125

 

Cash at end of period

$

470,409

 

 

$

457,357

 

Selected Financial Data

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

 

Three Months Ended

 

September 30, 2023

 

September 30, 2022

(In thousands)

Net Sales

 

Intersegment

Net Sales

 

Net Sales

from

External

Customers

 

Net Sales

 

Intersegment

Net Sales

 

Net Sales

from

External

Customers

Pipe

$

430,389

 

 

$

(9,563

)

 

$

420,826

 

$

500,978

 

 

$

(10,770

)

 

$

490,208

Infiltrator

 

133,731

 

 

 

(17,553

)

 

 

116,178

 

 

150,735

 

 

 

(22,450

)

 

 

128,285

International

 

 

 

 

 

 

 

 

 

 

 

International - Pipe

 

52,405

 

 

 

(1,020

)

 

 

51,385

 

 

56,461

 

 

 

(7,339

)

 

 

49,122

International - Allied Products & Other

 

17,027

 

 

 

(26

)

 

 

17,001

 

 

17,002

 

 

 

 

 

 

17,002

Total International

 

69,432

 

 

 

(1,046

)

 

 

68,386

 

 

73,463

 

 

 

(7,339

)

 

 

66,124

Allied Products & Other

 

183,304

 

 

 

(8,474

)

 

 

174,830

 

 

202,200

 

 

 

(2,608

)

 

 

199,592

Intersegment Eliminations

 

(36,636

)

 

 

36,636

 

 

 

 

 

(43,167

)

 

 

43,167

 

 

 

Total Consolidated

$

780,220

 

 

$

 

 

$

780,220

 

$

884,209

 

 

$

 

 

$

884,209

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

September 30, 2023

 

September 30, 2022

 

Net Sales

 

Intersegment

Net Sales

 

Net Sales

from

External

Customers

 

Net Sales

 

Intersegment

Net Sales

 

Net Sales

from

External

Customers

Pipe

$

858,961

 

 

$

(17,707

)

 

$

841,254

 

$

1,025,835

 

 

$

(20,644

)

 

$

1,005,191

Infiltrator

 

275,217

 

 

 

(36,131

)

 

 

239,086

 

 

317,025

 

 

 

(51,356

)

 

 

265,669

International

 

 

 

 

 

 

 

 

 

 

 

International - Pipe

 

89,583

 

 

 

(1,548

)

 

 

88,035

 

 

109,880

 

 

 

(13,198

)

 

 

96,682

International - Allied Products & Other

 

32,625

 

 

 

(26

)

 

 

32,599

 

 

35,097

 

 

 

 

 

 

35,097

Total International

 

122,208

 

 

 

(1,574

)

 

 

120,634

 

 

144,977

 

 

 

(13,198

)

 

 

131,779

Allied Products & Other

 

366,749

 

 

 

(9,457

)

 

 

357,292

 

 

401,109

 

 

 

(5,353

)

 

 

395,756

Intersegment Eliminations

 

(64,869

)

 

 

64,869

 

 

 

 

 

(90,551

)

 

 

90,551

 

 

 

Total Consolidated

$

1,558,266

 

 

$

 

 

$

1,558,266

 

$

1,798,395

 

 

$

 

 

$

1,798,395

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 Adjusted Gross Profit to Gross Profit

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

(Amounts in thousands)

2023

 

2022

 

2023

 

2022

Segment Adjusted Gross Profit

 

 

 

 

 

 

 

Pipe

$

125,856

 

 

$

146,153

 

$

286,505

 

 

$

314,732

 

Infiltrator

 

73,663

 

 

 

71,278

 

 

147,927

 

 

 

147,072

 

International

 

21,339

 

 

 

17,630

 

 

37,368

 

 

 

38,114

 

Allied Products & Other

 

106,239

 

 

 

106,030

 

 

212,424

 

 

 

215,071

 

Intersegment Elimination

 

(454

)

 

 

430

 

 

(2,509

)

 

 

(385

)

Total Segment Adjusted Gross Profit

 

326,643

 

 

 

341,521

 

 

681,715

 

 

 

714,604

 

Depreciation and amortization

 

22,622

 

 

 

20,800

 

 

45,421

 

 

 

41,102

 

Stock-based compensation expense

 

1,344

 

 

 

758

 

 

2,157

 

 

 

1,432

 

Total Gross Profit

$

302,677

 

 

$

319,963

 

$

634,137

 

 

$

672,070

 

Reconciliation of Adjusted EBITDA to Net Income

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

(Amounts in thousands)

2023

 

2022

 

2023

 

2022

Net income

$

137,027

 

 

$

153,377

 

 

$

310,932

 

 

$

341,859

 

Depreciation and amortization

 

36,721

 

 

 

35,922

 

 

 

73,961

 

 

 

71,500

 

Interest expense

 

21,941

 

 

 

18,261

 

 

 

43,653

 

 

 

29,333

 

Income tax expense

 

47,476

 

 

 

47,508

 

 

 

102,534

 

 

 

102,573

 

EBITDA

 

243,165

 

 

 

255,068

 

 

 

531,080

 

 

 

545,265

 

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

 

123

 

 

 

(102

)

 

 

(13,181

)

 

 

201

 

Stock-based compensation expense

 

9,331

 

 

 

7,460

 

 

 

16,234

 

 

 

13,733

 

Transaction costs

 

52

 

 

 

368

 

 

 

2,024

 

 

 

2,083

 

Interest income

 

(5,137

)

 

 

(1,991

)

 

 

(8,626

)

 

 

(2,108

)

Other adjustments(a)

 

(1,284

)

 

 

2,399

 

 

 

32

 

 

 

3,071

 

Adjusted EBITDA

$

246,250

 

 

$

263,202

 

 

$

527,563

 

 

$

562,245

 

(a)

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.

Reconciliation of Free Cash Flow to Cash flow from Operating Activities

 

Six Months Ended

September 30,

(Amounts in thousands)

2023

 

2022

Net cash flow from operating activities

$

458,864

 

 

$

437,024

 

Capital expenditures

 

(82,625

)

 

 

(75,545

)

Free cash flow

$

376,239

 

 

$

361,479

 

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

 

Three Months Ended September 30,

 

Six Months Ended

September 30,

 

2023

 

2022

 

2023

 

2022

Diluted Earnings Per Share

$

1.71

 

$

1.80

 

$

3.89

 

 

$

4.01

 

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

 

 

 

 

 

(0.17

)

 

 

 

Transaction costs

 

 

 

 

 

0.03

 

 

 

0.02

 

Income tax impact of adjustments (a)

 

 

 

 

 

0.03

 

 

 

(0.01

)

Adjusted Earnings per Share

$

1.71

 

$

1.80

 

$

3.78

 

 

$

4.02

 

(a)

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

 

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