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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-36557
ADVANCED DRAINAGE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware51-0105665
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
4640 Trueman Boulevard, Hilliard, Ohio 43026
(Address of Principal Executive Offices, Including Zip Code)
(614) 658-0050
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareWMSNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of January 26, 2023, the registrant had 81,233,409 shares of common stock outstanding, which excludes 183,617 shares of unvested restricted common stock. The shares of common stock trade on the New York Stock Exchange under the ticker symbol “WMS.”


TABLE OF CONTENTS
   
 Page
   
 
   
 
   
 
   
 
   
 
   
 
   
   
   
   
  
   
   
   
   
  
   
   
   
- ii -

PART I. FINANCIAL INFORMATION

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except par value)
 December 31,
2022
 March 31,
2022
ASSETS   
Current assets:   
Cash$426,690 $20,125 
Receivables (less allowance for doubtful accounts of $9,311 and $8,198, respectively)
242,485341,753
Inventories459,029494,324
Other current assets29,16215,696
Total current assets1,157,366871,898
Property, plant and equipment, net685,496619,383
Other assets:
Goodwill619,275610,293
Intangible assets, net421,450431,385
Other assets122,071116,799
Total assets$3,005,658 $2,649,758 
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt obligations$15,601 $19,451 
Current maturities of finance lease obligations6,5565,089
Accounts payable174,106224,986
Other accrued liabilities170,549134,877
Accrued income taxes3,4686,838
Total current liabilities370,280391,241
Long-term debt obligations (less unamortized debt issuance costs of $12,314 and $1,648, respectively)
1,272,040908,705
Long-term finance lease obligations14,57111,393
Deferred tax liabilities163,259168,435
Other liabilities69,76764,939
Total liabilities1,889,9171,544,713
Commitments and contingencies (see Note 9)
Mezzanine equity:
Redeemable common stock: $0.01 par value; 9,669 and 0 shares outstanding, respectively
157,128
Redeemable convertible preferred stock: $0.01 par value; 0 and 47,070 shares authorized, respectively; 0 and 44,170 shares issued; 0 and 15,630 shares outstanding, respectively
195,384
Total mezzanine equity157,128195,384
Stockholders’ equity:
Common stock; $0.01 par value: 1,000,000 shares authorized; 78,785 and 75,529
 shares issued, respectively; 71,545 and 72,309 shares outstanding, respectively
11,64511,612
Paid-in capital1,128,9151,065,628
Common stock in treasury, at cost(719,702)(318,691)
Accumulated other comprehensive loss(29,871)(24,386)
Retained earnings550,011158,876
Total ADS stockholders’ equity940,998893,039
Noncontrolling interest in subsidiaries17,61516,622
Total stockholders’ equity958,613909,661
Total liabilities, mezzanine equity and stockholders’ equity$3,005,658 $2,649,758 
See accompanying Notes to Condensed Consolidated Financial Statements.
- 3 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share data)
 Three Months Ended December 31,Nine Months Ended December 31,
 2022 202120222021
Net sales$655,167 $715,357 $2,453,562 $2,091,128 
Cost of goods sold431,250 506,380 1,557,575 1,480,973 
Gross profit223,917 208,977 895,987 610,155 
Operating expenses:
Selling, general and administrative85,936 80,059 261,095 230,231 
(Gain) loss on disposal of assets and costs from exit and disposal activities
(348)3,466 (147)2,554 
Intangible amortization13,842 15,138 41,360 46,229 
Income from operations124,487 110,314 593,679 331,141 
Other expense:
Interest expense20,001 8,756 49,334 25,100 
Derivative gains and other income, net(4,125)(979)(5,632)(2,791)
Income before income taxes108,611 102,537 549,977 308,832 
Income tax expense26,068 28,792 128,641 82,063 
Equity in net income of unconsolidated affiliates(639)(717)(3,705)(1,128)
Net income83,182 74,462 425,041 227,897 
Less: net income attributable to noncontrolling interest1,142 784 3,848 2,873 
Net income attributable to ADS82,040 73,678 421,193 225,024 
Weighted average common shares outstanding:
Basic82,067 71,267 82,891 71,087 
Diluted82,987 72,789 83,980 72,752 
Net income per share:
Basic$1.00 $0.88 $5.08 $2.67 
Diluted$0.99 $0.86 $5.02 $2.61 
See accompanying Notes to Condensed Consolidated Financial Statements.

- 4 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) (In thousands)
 Three Months Ended December 31,Nine Months Ended December 31,
 2022202120222021
Net income$83,182 $74,462 $425,041 $227,897 
Currency translation gain (loss)4,973 (860)(4,688)(2,225)
Comprehensive income88,155 73,602 420,353 225,672 
Less: other comprehensive income (loss) attributable to noncontrolling interest
1,069 (199)797 236 
Less: net income attributable to noncontrolling interest1,142 784 3,848 2,873 
Total comprehensive income attributable to ADS$85,944 $73,017 $415,708 $222,563 
See accompanying Notes to Condensed Consolidated Financial Statements.
- 5 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
 Nine Months Ended
December 31,
 2022 2021
Cash Flows from Operating Activities   
Net income$425,041 $227,897 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization107,346103,687
Deferred income taxes(4,165)6,243
(Gain) loss on disposal of assets and costs from exit and disposal activities(147)2,554
ESOP and stock-based compensation19,91261,900
Amortization of deferred financing charges909286
Fair market value adjustments to derivatives2,309118
Equity in net income of unconsolidated affiliates(3,705)(1,128)
Other operating activities2,732(9,898)
Changes in working capital:
Receivables99,958(59,821)
Inventories34,871(161,878)
Prepaid expenses and other current assets(4,532)(5,199)
Accounts payable, accrued expenses, and other liabilities(20,091)29,086
Net cash provided by operating activities660,438193,847
Cash Flows from Investing Activities
Capital expenditures(126,858)(100,367)
Acquisition, net of cash acquired(48,010)(49,210)
Other investing activities46(463)
Net cash used in investing activities(174,822)(150,040)
Cash Flows from Financing Activities
Payments on syndicated Term Loan Facility(5,250)(5,250)
Proceeds from Revolving Credit Agreement26,200258,100
Payments on Revolving Credit Agreement(140,500)(124,600)
Proceeds from Amended Revolving Credit Agreement97,000
Payments on Amended Revolving Credit Agreement(97,000)
Proceeds from Senior Notes due 2030500,000
Debt issuance costs(11,575)
Proceeds from Equipment Financing35,963
Payments on Equipment Financing(10,213)(1,177)
Payments on finance lease obligations(4,954)(49,365)
Repurchase of common stock(375,027)(292,000)
Cash dividends paid(30,111)(27,826)
Dividends paid to noncontrolling interest holder(3,652)(1,471)
Proceeds from exercise of stock options5,1454,274
Payment of withholding taxes on vesting of restricted stock units(28,653)(13,055)
Other financing activities(167)
Net cash used in financing activities(78,590)(216,574)
Effect of exchange rate changes on cash(461)(69)
Net change in cash406,565(172,836)
Cash at beginning of period20,125195,009
Cash at end of period$426,690 $22,173 
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes$136,320 $81,028 
Cash paid for interest24,75720,080
Non-cash operating, investing and financing activities:
Acquisition of property, plant and equipment under finance lease and incurred lease obligations10,68416,258
Balance in accounts payable for the acquisition of property, plant and equipment14,74816,313
c
See accompanying Notes to Condensed Consolidated Financial Statements.
- 6 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited) (In thousands)
Common
Stock
Paid
-In
Capital
Common
Stock in
Treasury
Accumulated
Other Compre-hensive
Loss
Retained (Deficit) Earnings
Total ADS
Stockholders’ Equity
Non-
controlling
Interest in
 Subsidiaries
Total
Stock-
holders’
Equity
 
Redeemable Convertible
Preferred Stock
Deferred Compensation
Unearned ESOP Shares
Total
Mezzanine
Equity
SharesAmountSharesAmount  Shares Amount Shares Amount
Balance at October 1, 202173,333$11,590 $968,198 3,196$(315,935)$(26,020)$57,386 $695,219 $14,784 $710,003 18,282$228,532 644$(7,014)$221,518 
Net income73,67873,67878474,462
Other comprehensive loss(661)(661)(199)(860)
Redeemable convertible preferred stock dividends
(1,267)(1,267)(1,267)
Common stock dividends ($0.11 per share)
(7,879)(7,879)(7,879)
Allocation of ESOP shares to
participants for compensation
15,35315,353 15,353 (149)1,8681,868
Exercise of common stock options7111,0941,095 1,095 
Restricted stock awards21(114)(114)(114)
Stock-based compensation expense
6,2426,242 6,242 
ESOP distribution in common stock1,0861017,63417,64417,644(1,411)(17,644)(17,644)
Other
8989 89 
Balance at December 31, 202174,492$11,601 $1,008,610 3,197$(316,049)$(26,681)$121,918 $799,399 $15,369 $814,768 16,871$210,888 495$(5,146)$205,742 
Balance at April 1, 202172,071 $11,578 $918,587 501 $(10,959)$(24,220)$(75,202)$819,784 $13,731 $833,515 19,275 $240,944 966 $(11,033)$229,911 
Net income— — — — — — 225,024 225,024 2,873 227,897 — — — — — 
Other comprehensive (loss) income— — — — — (2,461)— (2,461)236 (2,225)— — — — — 
Redeemable convertible preferred stock dividends— — — — — — (4,364)(4,364)— (4,364)— — — — — 
Common stock dividends ($0.33 per share)
— — — — — — (23,540)(23,540)— (23,540)— — — — — 
Dividends paid to noncontrolling interest holder— — — — — — — — (1,471)(1,471)— — — — — 
Share repurchases— — — 2,574 (292,000)— — (292,000)— (292,000)
Allocation of ESOP shares to
participants for compensation
— — 37,502 — — — — 37,502 — 37,502 — — (471)5,887 5,887 
Exercise of common stock options195 2 4,273 — — — — 4,275 — 4,275 — — — — — 
Restricted stock awards131 1 — 30 (3,345)— — (3,344)— (3,344)— — — — — 
Performance-based restricted stock units245 2 — 92 (9,745)— — (9,743)— (9,743)
Stock-based compensation expense
— — 18,511 — — — — 18,511 — 18,511 — — — — — 
ESOP distribution in common stock1,850 18 30,038 — — — — 30,056 — 30,056 (2,404)(30,056)— — (30,056)
Other— — (301)— — — — (301)— (301)— — — — — 
Balance at December 31, 202174,492 $11,601 $1,008,610 3,197 $(316,049)$(26,681)$121,918 $799,399 $15,369 $814,768 16,871 $210,888 495 $(5,146)$205,742 
- 7 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited) (In thousands)
Common
Stock
Paid
-In
Capital
Common
Stock in
Treasury
Accumulated
Other Compre-hensive
Loss
Retained (Deficit) Earnings
Total ADS
Stockholders’ Equity
Non-
controlling
Interest in
 Subsidiaries
Total
Stock-
holders’
Equity
Redeemable Common Stock
Redeemable Convertible
Preferred Stock
Total
Mezzanine
Equity
 SharesAmountSharesAmountSharesAmountSharesAmount
Balance at October 1, 202278,519$11,642 $1,119,453 5,314$(536,697)$(33,775)$477,790 $1,038,413 $17,329 $1,055,742 9,840$159,928 $ $159,928 
Net income82,04082,0401,14283,182
Other comprehensive income3,9043,9041,0694,973
Common stock dividends ($0.12 per share)
(9,819)(9,819)(9,819)
Share repurchases1,891(179,864)(179,864)(179,864)
Dividends paid to noncontrolling interest holder(1,925)(1,925)
KSOP redeemable common stock conversion17122,7982,8002,800(171)(2,800)(2,800)
Exercise of common stock options17485485485
Restricted stock awards78135(3,141)(3,140)(3,140)
Stock-based compensation expense
6,1796,1796,179
Balance at December 31, 2022
78,785$11,645 $1,128,915 7,240$(719,702)$(29,871)$550,011 $940,998 $17,615 $958,613 9,669$157,128 $ $157,128 
Balance at April 1, 202275,529$11,612 $1,065,628 3,220$(318,691)$(24,386)$158,876 $893,039 $16,622 $909,661 $ 15,630$195,384 $195,384 
Net income421,193421,1933,848425,041
Other comprehensive (loss) income(5,485)(5,485)797(4,688)
Common stock dividends ($0.36 per share)
(30,058)(30,058)(30,058)
Dividends paid to noncontrolling interest holder(3,652)(3,652)— 
Share repurchases3,756(375,027)(375,027)(375,027)
ESOP share conversion
12,022195,384(15,630)(195,384)
KSOP redeemable common stock conversion2,3532438,23238,25638,256(2,353)(38,256)(38,256)
Exercise of common stock options20025,1435,1455,145