Exhibit 99
ADVANCED DRAINAGE SYSTEMS ANNOUNCES FISCAL FIRST QUARTER 2015 RESULTS
HILLIARD, Ohio – (September 3, 2014) – Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading global manufacturer of water management products and solutions for commercial, residential, infrastructure and agricultural applications, today announced financial results for the fiscal first quarter ended June 30, 2014.
Fiscal First Quarter 2015 Highlights
| • | | Quarterly net sales increased 12.0% |
| • | | Adjusted EBITDA of $49.2 million |
| • | | Earnings per diluted share of $(0.09) |
| • | | Adjusted earnings per fully converted share of $0.25 |
| • | | Company provides fiscal year 2015 guidance |
Joseph A. Chlapaty, Chairman and Chief Executive Officer of ADS commented, “I am pleased with our performance this quarter as we delivered strong top line growth aided by solid order activity in the domestic non-residential and residential construction markets. Although we are cautiously optimistic about the strength and pace of recovery in the U.S. housing market, we are not reliant on the residential market for growth and have performed well in all economic and housing market cycles. Our strong results this quarter extend our long track record of delivering above-market growth, underscore the strength of our competitive position and demonstrate our continued track record in driving material conversion.”
Chlapaty added, “We are extremely proud of the success our Company has achieved over the past fifty years, and most recently in our first quarter prior to the completion of our successful IPO in late July. However, we are even more excited about our future. As we move further into fiscal 2015, we are focused on executing our strategic growth plan, which centers on driving market conversion and utilizing our Allied Products to deliver holistic solutions. These initiatives, coupled with the ongoing recovery in the construction markets, positions us well to continue to gain market share while enhancing our significant operating leverage over time.”
Fiscal First Quarter 2015 Results
Net sales were $328.3 million for the fiscal first quarter of 2015, a 12.0% increase compared to fiscal first quarter 2014 net sales of $293.1 million. The growth this quarter was primarily driven by improved demand in the domestic construction markets for both Pipe and Allied Products, which offset slower demand in the international markets in which we operate. Allied Products sales increased 13.4% compared to prior year sales of continuing products (excluding $2.9 million of Allied Product lines sold in fiscal 2014).
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
Gross profit increased $6.0 million, or 9.1%, to $72.0 million for the fiscal first quarter of 2015, compared to $66.0 million for the same period last year. As a percentage of net sales, gross profit was 21.9% compared to 22.5% for the prior year period. The slight decrease in overall gross margin percentage was largely attributed to lower pipe gross margins due to higher raw material and freight costs, and lower international margins, partially offset by stronger margins in Allied Products.
Selling, general and administrative (“SG&A”) expenses for the fiscal first quarter of 2015 increased $4.4 million, or 12.6%, to $39.8 million from $35.4 million for the fiscal first quarter of 2014. As a percentage of net sales, SG&A expenses totaled 12.1% in the first quarter of fiscal 2015, flat compared to the prior year. The increase in SG&A expenses was driven primarily by higher variable selling expenses tied to sales volume, an increase in non-cash stock based compensation, as well as higher professional fees and other corporate expenses related to being a public company.
The Company reported Adjusted EBITDA of $49.2 million in the fiscal first quarter of 2015 compared to Adjusted EBITDA of $49.5 million in the fiscal first quarter of 2014. Results for the fiscal first quarter of 2014 included a $4.8 million one-time gain related to the sale of a non-core product line. Excluding this one-time gain, Adjusted EBITDA increased 10.1% or $4.5 million as compared to the prior year period.
Net income attributable to ADS for the fiscal first quarter of 2015 was $14.2 million, 12.6% lower compared to net income attributable to ADS of $16.3 million for the fiscal first quarter of 2014. Earnings per basic and diluted share for the fiscal first quarter of 2015 was $(0.09) based on weighted average common shares of 47.5 million shares. The loss per share for the fiscal first quarter 2015 is primarily related to a non-cash charge of $18.4 million for the increase in the fair value of the Company’s redeemable convertible preferred stock held in the Company’s ESOP, which is presented in Mezzanine Equity. This charge does not affect net income recorded in the financial statements, but is included in the determination of basic and diluted earnings per share. Excluding this fair value charge and other miscellaneous adjustments to income available to common shareholders, adjusted earnings per fully converted share for the fiscal first quarter of 2015 was $0.25. A reconciliation of earnings per share (GAAP) to net income per fully converted share (Non-GAAP) is presented below:
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
| | | | | | | | |
| | | Quarter | | | Quarter | |
| | | Ended | | | Ended | |
| Amounts in (000) Except Per Share Data | | 6/30/2013 | | | 6/30/2014 | |
Net Income (loss) available to common shareholders | | $ | 12,906 | | | $ | (4,169 | ) |
| | |
Add: Adjustments to net income available to common shareholders | | | 3,390 | | | | 18,410 | |
| | | | | | | | |
Adjusted net income attributable to ADS - (Non-GAAP) | | | 16,296 | | | | 14,241 | |
| | |
Add: Fair value of ESOP Compensation related to Convertible Preferred Stock | | | 2,520 | | | | 2,687 | |
| | |
Adjusted net income - (Non-GAAP) | | $ | 18,816 | | | $ | 16,928 | |
| | | | | | | | |
Weighted Average Common Shares Oustanding: | | | 47,190 | | | | 47,536 | |
Add: Unvested restricted stock shares | | | 319 | | | | 249 | |
Convertible Preferred Stock shares | | | 20,418 | | | | 20,099 | |
| | | | | | | | |
Total Weighted Average Common Shares Outstanding - Fully Converted | | | 67,927 | | | | 67,884 | |
| | |
Adjusted net income per share - Fully Converted - Basic (Non-GAAP) | | $ | 0.28 | | | $ | 0.25 | |
A reconciliation of GAAP to non-GAAP financial measures for Adjusted EBITDA and Adjusted earnings per fully converted 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.”
During the fiscal first quarter of 2015, the Company recorded net cash used by operating activities of $21.3 million compared to $30.0 million in the same period last year, with its traditional seasonal working capital build in the period. Compared to the prior year quarter, the lower use of net cash was realized primarily by an increase in accounts payable and accrued expenses offsetting higher accounts receivable from revenue growth.
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
Fiscal Year 2015 Outlook
Based on current market conditions, backlog of existing orders and business trends, the Company expects net sales for fiscal year 2015 to be in the range of $1.21 to $1.26 billion, and Adjusted EBITDA in the range of $165 to $175 million. Capital expenditures are expected to be approximately $35 million.
Mark Sturgeon, Executive Vice President and Chief Financial Officer of ADS noted, “As our guidance indicates, we believe our plans will produce sustainable, above-market net sales and Adjusted EBITDA growth. In addition, our strong balance sheet and ability to generate significant operating cash flows allows us to strategically deploy our capital to support growth and shareholder value. Our priorities for capital deployment in the future remain focused on investments and capital expenditures in our business to enhance organic growth, targeted acquisition opportunities that extend our product leadership and complement our existing package, and enhancements to shareholder returns including restarting our dividend program.”
Common Shares Outstanding
As of June 30, 2014, the Company had 67, 883, 736 fully converted weighted average shares of common stock outstanding. The following table illustrates the breakdown of the weighted average shares of common stock outstanding:
| | | | |
Weighted Average Shares Outstanding | |
Common Stock | | | 47,535,532 | |
Unvested Restricted Stock | | | 249,108 | |
Convertible Preferred Stock | | | 20,099,096 | |
| | | | |
Total Shares Outstanding | | | 67,883,736 | |
| | | | |
As of July 30, 2014 (Post-IPO), the Company had 73,201,560 fully converted shares of common stock outstanding. The following table illustrates the breakdown of the period ending shares of common stock outstanding:
| | | | |
Period Ending Shares Outstanding – Post IPO | |
Common Stock | | | 52,876,151 | |
Unvested Restricted Stock | | | 226,313 | |
Convertible Preferred Stock | | | 20,099,096 | |
| | | | |
Total Shares Outstanding | | | 73,201,560 | |
| | | | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
Webcast Information
The Company will host an investor conference call and webcast on Wednesday, September 3rd, 2014 at 10:00 a.m. Eastern Time. The live call can be accessed by dialing 1-877-317-6789 (US toll-free) or 1-412-317-6789 (international) and asking to be connected to the Advanced Drainage Systems, Inc. call. The live webcast will also be accessible via the “Events Calendar” section of the Company’s Investor Relations website, www.investors.ads-pipe.com. An archived version of the webcast will be available for 90 days following the call.
About ADS
Advanced Drainage Systems (ADS) is the leading manufacturer of high performance thermoplastic corrugated pipe, providing a comprehensive suite of water management products and superior drainage solutions for use in the construction and infrastructure marketplace. Its innovative products are used across a broad range of end markets and applications, including non-residential, residential, agriculture and infrastructure applications. The Company has established a leading position in many of these end markets by leveraging its national sales and distribution platform, its overall product breadth and scale and its manufacturing excellence. Founded in 1966, the Company operates a global network of 58 manufacturing plants and 29 distribution centers. To learn more about the ADS, please visit the Company’s website atwww.ads-pipe.com.
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 (“US GAAP”). ADS management uses non-US GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-US GAAP financial measures to the comparable US GAAP results available in the accompanying tables.
Forward Looking Statements
Certain statements in this press release may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the initial public offering. 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” 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
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
manner; volatility in general business and economic conditions in the markets in which we operate, including, without limitation, factors relating to availability of credit, interest rates, fluctuations in capital and business and consumer confidence; 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, including competition from both manufacturers of high performance thermoplastic corrugated pipe and manufacturers of products using alternative materials; our ability to continue to convert current demand for concrete, steel and PVC pipe products into demand for our high performance thermoplastic corrugated pipe and Allied Products; 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; our ability to achieve the acquisition component of our growth strategy; the risk associated with manufacturing processes; our ability to manage our assets; the risks associated with our product warranties; our ability to manage our supply purchasing and customer credit policies; the risks associated with our self-insured programs; 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 project product mix; the risks associated with our current levels of indebtedness; our ability to meet future capital requirements and fund our liquidity needs; and the other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission. 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., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
Financial Statements
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| | | | | | | | |
| | | Three Months Ended June 30, | |
| (Amounts in thousands, except per share data) | | 2013 | | | 2014 | |
Net sales | | $ | 293,102 | | | $ | 328,297 | |
Cost of goods sold | | | 227,099 | | | | 256,264 | |
| | | | | | | | |
Gross profit | | | 66,003 | | | | 72,033 | |
Operating expenses: | | | | | | | | |
Selling | | | 17,677 | | | | 19,246 | |
General and administrative | | | 17,659 | | | | 20,532 | |
Gain on sale of business | | | (4,848 | ) | | | — | |
Intangible amortization | | | 2,861 | | | | 2,641 | |
| | | | | | | | |
Income from operations | | | 32,654 | | | | 29,614 | |
Other expense: | | | | | | | | |
Interest expense | | | 4,101 | | | | 4,615 | |
Other miscellaneous expense, net | | | 529 | | | | 14 | |
| | | | | | | | |
Income before income taxes | | | 28,024 | | | | 24,985 | |
Income tax expense | | | 11,066 | | | | 9,695 | |
Equity in net loss of unconsolidated affiliates | | | 248 | | | | 621 | |
| | | | | | | | |
Net income | | | 16,710 | | | | 14,669 | |
Less net income attributable to non-controlling interest | | | 414 | | | | 428 | |
| | | | | | | | |
Net income attributable to ADS | | | 16,296 | | | | 14,241 | |
| | | | | | | | |
Change in fair value of Redeemable Convertible Preferred Stock | | | (1,578 | ) | | | (18,373 | ) |
Dividends to Redeemable Convertible Preferred Stockholders | | | (216 | ) | | | (37 | ) |
Dividends paid to unvested restricted stockholders | | | (8 | ) | | | — | |
| | | | | | | | |
Net income (loss) available to common stockholders and participating securities | | | 14,494 | | | | (4,169 | ) |
Undistributed income allocated to participating securities | | | (1,588 | ) | | | — | |
| | | | | | | | |
Net income (loss) available to common stockholders | | $ | 12,906 | | | $ | (4,169 | ) |
| | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | |
Basic | | | 47,190 | | | | 47,536 | |
Diluted | | | 47,689 | | | | 47,536 | |
Net income (loss) per share: | | | | | | | | |
Basic | | $ | 0.27 | | | $ | (0.09 | ) |
Diluted | | $ | 0.27 | | | $ | (0.09 | ) |
Cash dividends declared per share | | $ | — | | | $ | — | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| | | | | | | | |
| | | As of | |
| (Amounts in thousands, except par value) | | March 31, 2014 | | | June 30, 2014 | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash | | $ | 3,931 | | | $ | 4,720 | |
Receivables (less allowance for doubtful accounts of $3,977 and $4,138, respectively) | | | 150,713 | | | | 218,037 | |
Inventories | | | 260,300 | | | | 260,971 | |
Deferred income taxes and other current assets | | | 13,555 | | | | 17,000 | |
| | | | | | | | |
Total current assets | | | 428,499 | | | | 500,728 | |
Property, plant and equipment, net | | | 292,082 | | | | 290,761 | |
Other assets: | | | | | | | | |
Goodwill | | | 86,297 | | | | 86,299 | |
Intangible assets, net | | | 66,184 | | | | 63,264 | |
Other assets | | | 64,533 | | | | 71,277 | |
| | | | | | | | |
Total assets | | $ | 937,595 | | | $ | 1,012,329 | |
| | | | | | | | |
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Current maturities of debt obligations | | $ | 11,153 | | | $ | 11,667 | |
Accounts payable | | | 108,111 | | | | 123,189 | |
Other accrued liabilities | | | 37,956 | | | | 36,134 | |
Accrued income taxes | | | 7,372 | | | | 11,244 | |
| | | | | | | | |
Total current liabilities | | | 164,592 | | | | 182,234 | |
Long-term debt obligation | | | 442,895 | | | | 481,215 | |
Deferred tax liabilities | | | 69,169 | | | | 67,913 | |
Other liabilities | | | 15,324 | | | | 16,112 | |
| | | | | | | | |
Total liabilities | | | 691,980 | | | | 747,474 | |
| | |
Mezzanine equity: | | | | | | | | |
Redeemable Common Stock; $0.01 par value: 38,320 and 38,320 issued and outstanding, respectively | | | 549,119 | | | | 659,431 | |
Redeemable Convertible Preferred Stock; $0.01 par value: 47,070 authorized; 44,170 issued and 26,129 and 26,129 outstanding, respectively | | | 291,720 | | | | 348,898 | |
Deferred compensation – unearned ESOP shares | | | (197,888 | ) | | | (233,106 | ) |
| | | | | | | | |
Total mezzanine equity | | | 642,951 | | | | 775,223 | |
| | |
Stockholders’ equity: | | | | | | | | |
Common stock; $0.01 par value: 148,271 authorized: 109,951 issued: 9,141 and 9,263 outstanding respectively | | | 11,957 | | | | 11,957 | |
Paid-in capital | | | 22,547 | | | | — | |
Common stock in treasury, at cost | | | (448,439 | ) | | | (447,992 | ) |
Accumulated other comprehensive loss | | | (5,977 | ) | | | (5,672 | ) |
Retained earnings | | | — | | | | (91,219 | ) |
| | | | | | | | |
Total ADS stockholders’ equity | | | (419,912 | ) | | | (532,926 | ) |
Non-controlling interest in subsidiaries | | | 22,576 | | | | 22,558 | |
| | | | | | | | |
Total stockholders’ equity | | | (397,336 | ) | | | (510,368 | ) |
| | | | | | | | |
Total liabilities, mezzanine equity and stockholders’ equity | | $ | 937,595 | | | $ | 1,012,329 | |
| | | | | | | | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | | | | | | | |
| | | Three Months Ended June 30, | |
| (Amounts in thousands) | | 2013 | | | 2014 | |
Cash Flows from Operating Activities | | $ | (29,990 | ) | | $ | (21,258 | ) |
| | | | | | | | |
Cash Flows from Investing Activities | | | | | | | | |
Capital expenditures | | | (13,142 | ) | | | (7,450 | ) |
Proceeds from sale of assets/business | | | 5,877 | | | | — | |
Investment in unconsolidated affiliate | | | (550 | ) | | | (7,566 | ) |
Additions of capitalized software | | | (918 | ) | | | (1,320 | ) |
Other investing activities | | | (286 | ) | | | (310 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (9,019 | ) | | | (16,646 | ) |
| | | | | | | | |
Cash Flows from Financing Activities | | | | | | | | |
Cash dividends paid | | | (1,538 | ) | | | — | |
Debt issuance costs | | | (2,311 | ) | | | — | |
Proceeds from term loan | | | 22,500 | | | | — | |
Payments on term loan | | | — | | | | (1,250 | ) |
Payments of notes, mortgages, and other debt | | | (307 | ) | | | (317 | ) |
Proceeds from Revolving Credit Facility | | | 136,700 | | | | 91,000 | |
Payments on Revolving Credit Facility | | | (113,000 | ) | | | (50,600 | ) |
Other financing activities | | | (1,360 | ) | | | (40 | ) |
| | | | | | | | |
Net cash provided by financing activities | | | 40,684 | | | | 38,793 | |
| | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | — | | | | (100 | ) |
| | | | | | | | |
Net change in cash and equivalents | | | 1,675 | | | | 789 | |
Cash and equivalents at beginning of period | | | 1,361 | | | | 3,931 | |
| | | | | | | | |
Cash and equivalents at end of period | | $ | 3,036 | | | $ | 4,720 | |
| | | | | | | | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
SEGMENT REPORTING
(unaudited)
The following table sets forth reportable segment information with respect to the amount of net sales contributed by each class of similar products of our consolidated gross profit in the three months ended June 30, 2013 and 2014:
| | | | | | | | |
| | | Three Months Ended June 30, | |
| (Amounts in thousands) | | 2013 | | | 2014 | |
Domestic | | | | | | | | |
Pipe | | | 189,142 | | | | 217,307 | |
Allied Products | | | 66,447 | | | | 74,175 | |
| | | | | | | | |
Total Domestic | | $ | 255,589 | | | $ | 291,482 | |
| | | | | | | | |
International | | | | | | | | |
Pipe | | | 29,588 | | | | 29,937 | |
Allied Products | | | 7,925 | | | | 6,878 | |
| | | | | | | | |
Total International | | $ | 37,513 | | | $ | 36,815 | |
| | | | | | | | |
Total net sales | | $ | 293,102 | | | $ | 328,297 | |
| | | | | | | | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
The following sets forth certain additional financial information attributable to our reportable segments for the three months ended June 30, 2013, and 2014, respectively:
| | | | | | | | |
| | | Three months ended June 30, | |
| (Amounts in thousands) | | 2013 | | | 2014 | |
Net sales | | | | | | | | |
Domestic | | | 255,589 | | | | 291,482 | |
International | | | 37,513 | | | | 36,815 | |
| | | | | | | | |
Total | | $ | 293,102 | | | $ | 328,297 | |
| | | | | | | | |
Gross profit | | | | | | | | |
Domestic | | | 57,552 | | | | 64,790 | |
International | | | 8,451 | | | | 7,243 | |
| | | | | | | | |
Total | | $ | 66,003 | | | $ | 72,033 | |
| | | | | | | | |
Segment Adjusted EBITDA | | | | | | | | |
Domestic | | | 45,078 | | | | 45,769 | |
International | | | 4,464 | | | | 3,436 | |
| | | | | | | | |
Total | | $ | 49,542 | | | $ | 49,205 | |
| | | | | | | | |
Interest expense, net | | | | | | | | |
Domestic | | | 4,089 | | | | 4,613 | |
International | | | 12 | | | | 2 | |
| | | | | | | | |
Total | | $ | 4,101 | | | $ | 4,615 | |
| | | | | | | | |
Capital expenditures | | | | | | | | |
Domestic | | | 10,938 | | | | 6,937 | |
International | | | 2,204 | | | | 513 | |
| | | | | | | | |
Total | | $ | 13,142 | | | $ | 7,450 | |
| | | | | | | | |
Depreciation and amortization | | | | | | | | |
Domestic | | | 12,868 | | | | 12,466 | |
International | | | 1,233 | | | | 1,237 | |
| | | | | | | | |
Total | | $ | 14,101 | | | $ | 13,703 | |
| | | | | | | | |
Equity in net income (loss) of unconsolidated affiliates | | | | | | | | |
Domestic | | | — | | | | 153 | |
International | | | (248 | ) | | | (774 | ) |
| | | | | | | | |
Total | | $ | (248 | ) | | $ | (621 | ) |
| | | | | | | | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
Reconciliation of Non-GAAP Measures
We present EBITDA and Adjusted EBITDA because they are key metrics used by management and our board of directors to assess our financial performance, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures.
EBITDA is calculated as net income attributable to ADS before interest, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation expense, non-cash charges and certain other expenses.
EBITDA and Adjusted EBITDA are not GAAP measures of our financial performance or liquidity. They should not be considered as alternatives to net income as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP. In addition, they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not reflect certain cash requirements such as tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future. EBITDA and Adjusted EBITDA contain certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as stock based compensation expense, derivative fair value adjustments, and foreign currency transaction losses.
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net Income attributable to ADS, the most comparable GAAP measure, for each of the periods indicated:
| | | | | | | | |
| | | Three Months Ended June 30, | |
| (Amounts in thousands) | | 2013 | | | 2014 | |
Net income attributable to ADS | | $ | 16,296 | | | $ | 14,241 | |
Depreciation and amortization(a) | | | 14,444 | | | | 14,329 | |
Interest expense, net | | | 4,101 | | | | 4,615 | |
Income tax expense | | | 11,066 | | | | 9,695 | |
| | | | | | | | |
EBITDA | | | 45,907 | | | | 42,880 | |
Derivative fair value adjustments | | | (81 | ) | | | 96 | |
Foreign currency transaction losses | | | 94 | | | | 130 | |
Unconsolidated affiliates interest and tax | | | 130 | | | | 177 | |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
| | | | | | | | |
Management fee to minority interest holder JV | | | 194 | | | | 235 | |
Share-based compensation | | | 660 | | | | 2,285 | |
ESOP deferred compensation | | | 2,520 | | | | 2,687 | |
Transaction costs(b) | | | 118 | | | | 715 | |
| | | | | | | | |
Adjusted EBITDA | | $ | 49,542 | | | $ | 49,205 | |
| | | | | | | | |
| (a) | Includes our proportionate share of depreciation and amortization expense of $343 and $626 related to our Tigre ADS joint venture, BaySaver joint venture and Tigre ADS-USA joint venture, which is included in Net income of unconsolidated affiliates in our Condensed Consolidated Statements of Income for the three months ended June 30, 2013 and 2014, respectively. |
| (b) | Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our debt refinancing and completion of the IPO. |
The following table presents a reconciliation of Segment EBITDA and Segment Adjusted EBITDA to Net Income attributable to ADS, the most comparable GAAP measure, for each of the periods indicated:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | |
| (Amounts in thousands) | | 2013 | | | 2014 | |
| | | Domestic | | | International | | | Domestic | | | International | |
Reconciliation of Segment EBITDA and Segment Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Net income attributable to ADS | | $ | 14,457 | | | $ | 1,839 | | | $ | 13,442 | | | $ | 799 | |
Depreciation and amortization(a) | | | 12,869 | | | | 1,575 | | | | 12,674 | | | | 1,655 | |
Interest expense, net | | | 4,089 | | | | 12 | | | | 4,613 | | | | 2 | |
Income tax expense | | | 10,446 | | | | 620 | | | | 9,216 | | | | 479 | |
| | | | | | | | | | | | | | | | |
Segment EBITDA | | | 41,861 | | | | 4,046 | | | | 39,945 | | | | 2,935 | |
Derivative fair value adjustments | | | (81 | ) | | | — | | | | 96 | | | | — | |
Foreign currency transaction losses | | | — | | | | 94 | | | | — | | | | 130 | |
Unconsolidated affiliates interest and tax | | | — | | | | 130 | | | | 41 | | | | 136 | |
Management fee to minority interest holder JV | | | — | | | | 194 | | | | — | | | | 235 | |
Share-based compensation | | | 660 | | | | — | | | | 2,285 | | | | — | |
ESOP deferred compensation | | | 2,520 | | | | — | | | | 2,687 | | | | — | |
Transaction costs(b) | | | 118 | | | | — | | | | 715 | | | | — | |
| | | | | | | | | | | | | | | | |
Segment Adjusted EBITDA | | $ | 45,078 | | | $ | 4,464 | | | $ | 45,769 | | | $ | 3,436 | |
| | | | | | | | | | | | | | | | |
| (a) | Includes our proportionate share of depreciation and amortization expense of $343 and $626 related to our Tigre ADS joint venture, BaySaver joint venture and Tigre ADS-USA joint venture, which is included in Net income of unconsolidated affiliates in our Condensed Consolidated Statements of Income for the three months ended June 30, 2013 and 2014, respectively. |
| (b) | Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with our debt refinancing and completion of the IPO. |
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
For more information, please contact:
Michael Higgins
(614) 658-0050
Mike.Higgins@ads-pipe.com
ADVANCED DRAINAGE SYSTEMS, INC., 4640 TRUEMAN BLVD., HILLIARD, OH 43026 PHONE: 800/733-7473
E-mail:info@ads-pipe.com Web site:www. ads-pipe.com
