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Business Wire
07-08-2025
- Business
- Business Wire
Advanced Drainage Systems Announces First Quarter Fiscal 2026 Results
HILLIARD, Ohio--(BUSINESS WIRE)--Advanced Drainage Systems, Inc. (NYSE: WMS) ('ADS' or the 'Company'), a leading provider of innovative water management solutions in the stormwater and onsite wastewater industries today announced financial results for the fiscal first quarter ended June 30, 2025. First Quarter Fiscal 2026 Results Scott Barbour, President and Chief Executive Officer of ADS commented, "We delivered strong results in the fiscal first quarter, with Adjusted EBITDA margin of 33.5%. Wet weather in May and June continued to delay project installations, and elevated interest rates remain a headwind. However, the ADS and Infiltrator teams executed well and remain focused on driving profitable growth and operational performance in a challenging macroeconomic environment." "Investments in engineering, customer service, capacity, productivity and logistics all support long-term growth and profitability. We continue to develop innovative new product offerings, such as the Arcadia stormwater separator formally launched in the quarter, and Infiltrator continues to make meaningful progress in scaling our advanced treatment platform solutions at Orenco. Additionally, we acquired River Valley Pipe early in the quarter, which strengthened our presence in key geographies and provides future operational flexibility. Across the board, we are focused on the levers we can control, including managing costs, accelerating new product introductions, and most importantly, executing customer service improvements." Barbour concluded, "The highly attractive water segments we operate in are supported by secular tailwinds and the growing awareness of the value of proper stormwater and onsite wastewater management, ultimately driving long-term demand for the Company's products. While cyclical, short-term pressures exist, the fundamentals of our business are resilient and we are well positioned to continue capitalizing on our value proposition, driving market conversion, and accelerating growth in more profitable areas such as Infiltrator and Allied products." First Quarter Fiscal 2026 Results Net sales increased $14.5 million, or 1.8%, to $829.9 million, as compared to $815.3 million in the prior year quarter. Domestic pipe sales decreased $10.9 million, or 2.5%, to $415.5 million. Domestic allied products & other sales increased $3.6 million, or 1.9%, to $187.5 million. Infiltrator sales increased $31.1 million, or 21.1%, to $178.4 million, primarily due to the acquisition of Orenco Systems, Inc. ("Orenco"). Infiltrator organic revenue increased 0.7%. The overall increase in domestic net sales was primarily driven by acquisitions, as well as growth in the non-residential and residential construction end markets. International sales decreased $9.2 million, or 16.0%, to $48.5 million. Gross profit decreased $2.0 million, or 0.6%, to $330.4 million as compared to $332.5 million in the prior year. The decrease in gross profit is primarily driven by unfavorable fixed cost absorption as well as the mix impact from the inclusion of Orenco. This unfavorability was partially offset by favorable price/cost and mix of construction market and Infiltrator sales. Selling, general and administrative expenses increased $9.9 million, or 10.5% to $104.0 million, as compared to $94.1 million. As a percentage of sales, selling, general and administrative expense was 12.5% as compared to 11.5% in the prior year, primarily driven by the acquisition of Orenco. Net income per diluted share decreased $0.22, or 10.7%, to $1.84, as compared to $2.06 per share in the prior year quarter, primarily due to the factors mentioned above. Adjusted EBITDA (Non-GAAP) increased $2.7 million, or 1.0%, to $278.2 million, as compared to $275.5 million in the prior year, primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 33.5% as compared to 33.8% in the prior year. Segment sales results are based on Net sales to external customers. Reconciliations of GAAP to Non-GAAP financial measures for Adjusted EBITDA, Free Cash Flow and Adjusted Earnings per Share 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.' Balance Sheet and Liquidity Net cash provided by operating activities was $275.0 million, as compared to $183.4 million in the prior year. Free cash flow (Non-GAAP) was $222.4 million, as compared to $125.7 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $792.0 million as of June 30, 2025, a decrease of $170.4 million from March 31, 2025. ADS had total liquidity of $1,228.1 million, comprised of cash of $638.3 million as of June 30, 2025 and $589.9 million of availability under committed credit facilities. As of June 30, 2025, the Company's trailing-twelve-month leverage ratio was 0.9 times Adjusted EBITDA. In the three months ended June 30, 2025, the Company did not repurchase shares of its common stock. As of June 30, 2025, approximately $147.7 million of common stock may be repurchased under the Company's existing share repurchase authorization. Fiscal 2026 Outlook Based on current visibility, backlog of existing orders and business trends, the Company is confirming its previously issued financial targets for fiscal 2026. Net sales are expected to be in the range of $2.825 billion to $2.975 billion and Adjusted EBITDA is expected to be in the range of $850 million to $910 million. Capital expenditures are 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 An online replay will be available on the same website following the call. Teleconference: To participate in the live teleconference, participants may register at 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 wastewater solutions that manages the world's most precious resource: water. ADS and its subsidiary, Infiltrator Water Technologies, provide superior stormwater drainage and onsite 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 63 manufacturing plants and 35 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 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, new tariff policies, and our ability to pass any increased costs of raw materials and tariffs on to our customers; disruption or volatility in general business, political 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 or doing so within the intended timeframe; 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 effects of global climate change and any related regulatory responses; our ability to protect against cybersecurity incidents and disruptions or failures of our IT systems; our ability to assess and monitor the effects of artificial intelligence, machine learning, and robotics on our business and operations; 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; our ability to appropriately address any environmental, social or governance concerns that may arise from our activities; 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. ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) As of (Amounts in thousands) June 30, 2025 March 31, 2025 ASSETS Current assets: Cash $ 638,268 $ 463,319 Receivables, net 379,786 333,221 Inventories 453,695 488,269 Other current assets 45,277 39,974 Total current assets 1,517,026 1,324,783 Property, plant and equipment, net 1,078,728 1,051,040 Other assets: Goodwill 725,698 720,223 Intangible assets, net 437,326 448,060 Other assets 151,167 146,254 Total assets $ 3,909,945 $ 3,690,360 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of debt obligations $ 9,310 $ 9,934 Current maturities of finance lease obligations 35,212 33,143 Accounts payable 227,079 218,024 Other accrued liabilities 161,226 137,295 Accrued income taxes 38,777 — Total current liabilities 471,604 398,396 Long-term debt obligations, net 1,250,050 1,251,589 Long-term finance lease obligations 135,671 131,000 Deferred tax liabilities 186,784 190,416 Other liabilities 87,560 83,171 Total liabilities 2,131,669 2,054,572 Mezzanine equity: Redeemable common stock 87,985 92,652 Total mezzanine equity 87,985 92,652 Stockholders' equity: Common stock 11,700 11,694 Paid-in capital 1,294,545 1,277,694 Common stock in treasury, at cost (1,226,091 ) (1,219,408 ) Accumulated other comprehensive loss (31,603 ) (37,178 ) Retained earnings 1,622,535 1,492,634 Total ADS stockholders' equity 1,671,086 1,525,436 Noncontrolling interest in subsidiaries 19,205 17,700 Total stockholders' equity 1,690,291 1,543,136 Total liabilities, mezzanine equity and stockholders' equity $ 3,909,945 $ 3,690,360 Expand ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended June 30, (Amounts in thousands) 2025 2024 Cash Flow from Operating Activities Net income $ 144,091 $ 162,322 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 50,228 41,098 Deferred income taxes (3,748 ) (942 ) Loss on disposal of assets and costs from exit and disposal activities 7,024 292 Stock-based compensation 8,404 6,977 Amortization of deferred financing charges 511 511 Fair market value adjustments to derivatives 77 45 Equity in net income of unconsolidated affiliates (1,343 ) (1,701 ) Other operating activities 809 (3,754 ) Changes in working capital: Receivables (42,126 ) (46,991 ) Inventories 40,001 (25,025 ) Prepaid expenses and other current assets (5,945 ) (3,726 ) Accounts payable, accrued expenses, and other liabilities 76,994 54,320 Net cash provided by operating activities 274,977 183,426 Cash Flows from Investing Activities Capital expenditures (52,598 ) (57,715 ) Acquisition, net of cash acquired (19,576 ) — Other investing activities 2,240 498 Net cash used in investing activities (69,934 ) (57,217 ) Cash Flows from Financing Activities Payments on syndicated Term Loan Facility (1,750 ) (1,750 ) Payments on Equipment Financing (933 ) (1,342 ) Payments on finance lease obligations (8,335 ) (5,513 ) Repurchase of common stock — (49,245 ) Cash dividends paid (13,980 ) (12,428 ) Proceeds from exercise of stock options 549 6,978 Payment of withholding taxes on vesting of restricted stock units (6,683 ) (10,558 ) Other financing activities — (37 ) Net cash used in financing activities (31,132 ) (73,895 ) Effect of exchange rate changes on cash 1,098 (792 ) Net change in cash 175,009 51,522 Cash and restricted cash at beginning of period 469,271 495,848 Cash and restricted cash at end of period $ 644,280 $ 547,370 Cash $ 638,268 $ 541,637 Restricted cash 6,012 5,733 Total cash and restricted cash $ 644,280 $ 547,370 Expand Selected Financial Data The following tables set forth net sales by reportable segment for each of the periods indicated. Three Months Ended June 30, 2025 June 30, 2024 (a) (In thousands) Net Sales Intersegment Net Sales Net Sales from External Customers Net Sales Intersegment Net Sales Net Sales from External Customers Pipe $ 428,815 $ (13,277 ) $ 415,538 $ 441,142 $ (14,754 ) $ 426,388 Infiltrator 194,962 (16,609 ) 178,353 164,142 (16,840 ) 147,302 International International - Pipe 34,636 (1,163 ) 33,473 43,927 (3,853 ) 40,074 International - Allied Products & Other 15,097 (79 ) 15,018 17,679 (48 ) 17,631 Total International 49,733 (1,242 ) 48,491 61,606 (3,901 ) 57,705 Allied Products & Other 191,170 (3,672 ) 187,498 188,526 (4,585 ) 183,941 Intersegment Eliminations (34,800 ) 34,800 — (40,080 ) 40,080 — Total Consolidated $ 829,880 $ — $ 829,880 $ 815,336 $ — $ 815,336 Expand (a) In the first quarter of fiscal 2026, the Company realigned certain products used in wastewater applications to the Infiltrator reportable segment. The Company transitioned its ARC Septic Chambers from Allied Products & Other and certain pipe products used in wastewater applications from Pipe. Prior period segment information for fiscal 2025 has been recast to conform to the fiscal 2026 presentation. Expand 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 a reconciliation 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 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 and realignment 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. (a) In the first quarter of fiscal 2026, the Company realigned certain products used in wastewater applications to the Infiltrator reportable segment. The Company transitioned its ARC Septic Chambers from Allied Products & Other and certain pipe products used in wastewater applications from Pipe. Prior period segment information for fiscal 2025 has been recast to conform to the fiscal 2026 presentation. Expand Reconciliation of Adjusted EBITDA to Net Income Three Months Ended June 30, (Amounts in thousands) 2025 2024 Net income $ 144,091 $ 162,322 Depreciation and amortization 50,228 41,098 Interest expense 23,029 22,824 Income tax expense 46,674 49,886 EBITDA 264,022 276,130 Restructuring and realignment expense (a) 9,993 292 Stock-based compensation expense 8,404 6,977 Transaction costs 807 10 Interest income (5,405 ) (6,565 ) Other adjustments (b) 346 (1,346 ) Adjusted EBITDA $ 278,167 $ 275,498 Expand (a) Includes Loss on disposal of assets and costs from exit and disposal activities, which includes costs associated with plant closures, as well as professional fees incurred in connection with supporting enterprise-wide restructuring and realignment initiatives. (b) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, and 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. Expand Reconciliation of Diluted Earnings per Share to Adjusted Earnings per Share The following table presents diluted earnings per share on an adjusted basis to supplement the Company's discussion of its results of operations herein. (a) The income tax impact of adjustments to each period is based on the statutory tax rate. Expand
Yahoo
15-05-2025
- Business
- Yahoo
Advanced Drainage (NYSE:WMS) Misses Q1 Sales Targets
Water management company Advanced Drainage Systems (NYSE:WMS) missed Wall Street's revenue expectations in Q1 CY2025, with sales falling 5.8% year on year to $615.8 million. The company's full-year revenue guidance of $2.9 billion at the midpoint came in 7.6% below analysts' estimates. Its non-GAAP profit of $1.03 per share was 6.2% below analysts' consensus estimates. Is now the time to buy Advanced Drainage? Find out in our full research report. Revenue: $615.8 million vs analyst estimates of $660.4 million (5.8% year-on-year decline, 6.8% miss) Adjusted EPS: $1.03 vs analyst expectations of $1.10 (6.2% miss) Adjusted EBITDA: $176.7 million vs analyst estimates of $184.1 million (28.7% margin, 4% miss) Management's revenue guidance for the upcoming financial year 2026 is $2.9 billion at the midpoint, missing analyst estimates by 7.6% and implying -0.1% growth (vs 0.9% in FY2025) EBITDA guidance for the upcoming financial year 2026 is $880 million at the midpoint, below analyst estimates of $937.6 million "demand continues to be impacted by higher interest rates and economic uncertainty. In addition, the fourth quarter had unfavorable winter weather conditions this year against an already difficult comparison of very favorable weather in the prior year" Operating Margin: 19%, down from 20.7% in the same quarter last year Free Cash Flow was -$5.31 million compared to -$29.76 million in the same quarter last year Market Capitalization: $9.44 billion Scott Barbour, President and Chief Executive Officer of ADS, commented, "In Fiscal 2025, domestic construction market sales increased 3% as we continued to drive above market performance through our material conversion strategy in the stormwater and onsite wastewater markets. Importantly, organic sales in our most profitable segments, Infiltrator and Allied Products, increased 4.6% and 2.5%, respectively, and the onsite wastewater and Allied products now represent a collective 44% of revenue. The resiliency demonstrated by this year's 30.6% Adjusted EBITDA margin is due in part to our strategy to grow these more profitable products to be a higher mix of the overall sales." Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America. A company's long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Advanced Drainage grew its sales at an impressive 11.7% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Advanced Drainage's recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.8% over the last two years. Advanced Drainage also breaks out the revenue for its most important segments, Pipe and Infiltrators, which are 51.7% and 19.9% of revenue. Over the last two years, Advanced Drainage's Pipe revenue (thermoplastic corrugated pipes) averaged 6.6% year-on-year declines. On the other hand, its Infiltrators revenue (wastewater treatment systems) averaged 10% growth. This quarter, Advanced Drainage missed Wall Street's estimates and reported a rather uninspiring 5.8% year-on-year revenue decline, generating $615.8 million of revenue. Looking ahead, sell-side analysts expect revenue to grow 6.2% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. Advanced Drainage has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 21.1%. This result isn't too surprising as its gross margin gives it a favorable starting point. Analyzing the trend in its profitability, Advanced Drainage's operating margin rose by 5.3 percentage points over the last five years, as its sales growth gave it immense operating leverage. In Q1, Advanced Drainage generated an operating profit margin of 19%, down 1.7 percentage points year on year. Since Advanced Drainage's gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Advanced Drainage's EPS grew at an astounding 83.9% compounded annual growth rate over the last five years, higher than its 11.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. We can take a deeper look into Advanced Drainage's earnings to better understand the drivers of its performance. As we mentioned earlier, Advanced Drainage's operating margin declined this quarter but expanded by 5.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Advanced Drainage, its two-year annual EPS declines of 2.5% mark a reversal from its (seemingly) healthy five-year trend. We hope Advanced Drainage can return to earnings growth in the future. In Q1, Advanced Drainage reported EPS at $1.03, down from $1.23 in the same quarter last year. This print missed analysts' estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Advanced Drainage's full-year EPS of $5.87 to grow 7.7%. We struggled to find many positives in these results. Its Infiltrators revenue missed and its full-year revenue guidance fell short of Wall Street's estimates. Management stated that "demand continues to be impacted by higher interest rates and economic uncertainty. In addition, the fourth quarter had unfavorable winter weather conditions this year against an already difficult comparison of very favorable weather in the prior year". Overall, this was a weaker quarter. The stock remained flat at $120.69 immediately following the results. The latest quarter from Advanced Drainage's wasn't that good. One earnings report doesn't define a company's quality, though, so let's explore whether the stock is a buy at the current price. If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free.
Yahoo
07-02-2025
- Business
- Yahoo
Advanced Drainage Systems Inc (WMS) Q3 2025 Earnings Call Highlights: Navigating Growth Amidst ...
Net Sales: Increased 4% to $691 million, including the acquisition of Orenco. Non-Residential Sales: Increased 7%, representing about 45% of total sales. Residential Sales: Increased 9%, accounting for about 35% of total revenue. Infrastructure Sales: Decreased 6% due to a difficult comparison from the previous year. Adjusted EBITDA: Decreased 6% year-over-year to $191 million. Free Cash Flow: Generated $374 million year-to-date, compared to $564 million in the prior year. Capital Spending: Increased 22% year-over-year to $166 million, with a full-year expectation of approximately $225 million. Net Debt-to-Adjusted EBITDA Leverage: 1 time, with $489 million of cash on hand and $590 million of availability under the revolving credit facility. Capital Reinvestment: $416 million reinvested back into the business during the first nine months, compared to $136 million in the prior year. Shareholder Returns: $107 million returned through dividends and share repurchases. Warning! GuruFocus has detected 1 Warning Sign with WMS. Release Date: February 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Net sales increased by 4% to $691 million, driven by strong demand in domestic construction markets and the acquisition of Orenco. Sales in the non-residential market rose by 7%, with significant demand in the South and Southeastern United States. The residential market saw a 9% increase in sales, with Infiltrator's organic revenue growing by 6%. Expansion of the ADS recycling facility in Georgia is expected to enhance recycling capacity and service efficiency in the Southeast. The acquisition of Orenco is strategically enhancing the company's product offerings and market position in decentralized wastewater treatment. Adjusted EBITDA decreased by 6% year-over-year to $191 million, impacted by unfavorable price costs. Sales in the infrastructure markets declined by 6% due to a difficult comparison with the previous year. Free cash flow decreased to $374 million year-to-date from $564 million in the prior year. Year-to-date capital spending increased by 22%, impacting cash flow. The company faces tough year-over-year comparisons in the fourth quarter, particularly in the infrastructure and pipe business segments. Q: Can you provide more details on the fourth quarter guidance, particularly the $40 million EBITDA range? A: Scott Cottrill, CFO, explained that the fourth quarter is expected to be similar to last year, which had a tough comparison due to favorable weather conditions. Pricing remains stable, and material costs are flattening out, which supports confidence in meeting the guidance range. Q: What factors contributed to the acceleration in the non-residential market despite a tough comparison? A: Michael Higgins, VP of Corporate Strategy & Investor Relations, noted that the conversion story remains strong, with a focus on the South and Southeast regions. Scott Barbour, CEO, added that Allied Products, particularly new water quality products, contributed to the growth. Q: Are you approaching a neutral price/cost spread in the fourth quarter? A: Scott Cottrill stated that while year-over-year trends continue, sequentially, pricing is stabilizing, and material costs are flattening. This sequential stability is crucial for the company's outlook. Q: How are customer conversations and market outlooks changing compared to three to six months ago? A: Scott Barbour mentioned that customer sentiment remains unsettled, with no significant changes in outlook. The market remains choppy by region, but overall, the sentiment is stable. Q: Can you discuss the competitive and pricing landscape? A: Scott Barbour noted that competitive behavior has been steady for several months, with pricing decisions made to achieve local objectives. There have been no significant changes in competitive dynamics. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
