Company Quick10K Filing
Advanced Drainage Systems
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 58 $1,867
10-Q 2020-02-06 Quarter: 2019-12-31
10-Q 2019-11-12 Quarter: 2019-09-30
10-Q 2019-08-01 Quarter: 2019-06-30
10-K 2019-05-30 Annual: 2019-03-31
10-Q 2019-02-07 Quarter: 2018-12-31
10-Q 2018-11-08 Quarter: 2018-09-30
10-Q 2018-08-09 Quarter: 2018-06-30
10-K 2018-05-30 Annual: 2018-03-31
10-Q 2018-02-09 Quarter: 2017-12-31
10-Q 2017-11-06 Quarter: 2017-09-30
10-Q 2017-08-03 Quarter: 2017-06-30
10-K 2017-05-30 Annual: 2017-03-31
10-Q 2017-02-09 Quarter: 2016-12-31
10-Q 2017-01-20 Quarter: 2016-09-30
10-Q 2017-01-10 Quarter: 2016-06-30
10-K 2016-09-15 Annual: 2016-03-31
10-Q 2016-05-31 Quarter: 2015-12-31
10-Q 2016-05-31 Quarter: 2015-09-30
10-Q 2016-05-31 Quarter: 2015-06-30
10-Q 2015-02-09 Quarter: 2014-12-31
10-Q 2014-11-10 Quarter: 2014-09-30
10-Q 2014-09-05 Quarter: 2014-06-30
8-K 2020-02-06 Earnings, Regulation FD, Other Events, Exhibits
8-K 2019-11-07
8-K 2019-09-24
8-K 2019-09-23
8-K 2019-09-18
8-K 2019-09-16
8-K 2019-09-13
8-K 2019-09-05
8-K 2019-09-05
8-K 2019-09-03
8-K 2019-08-08
8-K 2019-08-01 Earnings, Regulation FD, Exhibits
8-K 2019-07-29 Enter Agreement, Leave Agreement, M&A, Off-BS Arrangement, Exhibits
8-K 2019-07-23 Shareholder Vote, Regulation FD, Exhibits
8-K 2019-06-04
8-K 2019-05-21
8-K 2019-03-31
8-K 2018-12-31 Earnings, Regulation FD, Other Events, Exhibits
8-K 2018-11-15
8-K 2018-10-16
8-K 2018-09-30
8-K 2018-09-04
8-K 2018-07-24
8-K 2018-07-10
8-K 2018-05-29
8-K 2018-03-16
8-K 2018-02-22
8-K 2017-12-31
WMS 2019-12-31
Part I. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2.Unregistered Sale of Equity Securities
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6. Exhibits
EX-31.1 wms-ex311_9.htm
EX-31.2 wms-ex312_8.htm
EX-32.1 wms-ex321_7.htm
EX-32.2 wms-ex322_6.htm

Advanced Drainage Systems Earnings 2019-12-31

WMS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
SLGN 3,307 5,111 4,498 706 201 540 5,907 16% 10.9 4%
OI 2,701 10,723 6,763 1,252 271 1,063 8,595 19% 8.1 3%
WMS 1,867 1,068 608 1,411 165 -179 -58 2,116 12% -36.6 -17%
UFPT 304 195 45 197 52 17 31 316 26% 10.1 9%
ARD 195 10,314 11,823 0 0 0 0 -299 0%
CXDC 108 2,834 1,939 1,412 225 73 139 43 16% 0.3 3%
ITP 20 195 27 102 6 -9 7 22 6% 3.2 -5%
DSS 15 20 8 19 6 -2 -1 11 34% -11.7 -12%
YTEN 11 11 7 1 0 -4 -4 7 0% -1.7 -37%
PACK

wms-10q_20191231.htm
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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, 2019

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)

 

 

Delaware

51-0105665

(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)

(614658-0050

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

WMS

New 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 Filer

Accelerated Filer

Non-Accelerated Filer

Smaller 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 30, 2020, the registrant had 68,785,918 shares of common stock outstanding. The shares of common stock trade on the New York Stock Exchange under the ticker symbol “WMS.” In addition, as of January 30, 2020, 429,723 shares of unvested restricted common stock were outstanding and 22,070,882 shares of ESOP, preferred stock, convertible into 16,976,922 shares of common stock, were outstanding. As of January 30, 2020, 86,192,563 shares of common stock were outstanding, inclusive of outstanding shares of unvested restricted common stock and on an as-converted basis with respect to the outstanding shares of ESOP preferred stock.

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited)

 

Page

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of December 31, 2019 and March 31, 2019

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2019 and 2018

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (loss) for the three and nine months ended December 31, 2019 and 2018

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2019 and 2018

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity for the three and nine months ended December 31, 2019 and 2018

 

5

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

 

7

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

50

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

50

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

51

 

 

 

 

 

Item 1A.

 

Risk Factors

 

51

 

 

 

 

 

Item 2.

 

Unregistered Sale of Equity Securities

 

56

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

56

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

56

 

 

 

 

 

Item 5.

 

Other Information

 

56

 

 

 

 

 

Item 6.

 

Exhibits

 

57

 

 

 

Signatures

 

58

 

 

 

 

 

 

 

 

 

i


Table of Contents

 

PART I. FINANCIAL INFORMATION

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except par value)

 

 

 

December 31,

2019

 

 

March 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

98,312

 

 

$

8,891

 

Receivables (less allowance for doubtful accounts of $5,150 and

   $7,653, respectively)

 

 

156,973

 

 

 

186,991

 

Inventories

 

 

261,347

 

 

 

264,540

 

Other current assets

 

 

9,153

 

 

 

6,091

 

Total current assets

 

 

525,785

 

 

 

466,513

 

Property, plant and equipment, net

 

 

488,386

 

 

 

398,891

 

Other assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

668,154

 

 

 

102,638

 

Intangible assets, net

 

 

498,113

 

 

 

37,177

 

Other assets

 

 

68,737

 

 

 

36,940

 

Total assets

 

$

2,249,175

 

 

$

1,042,159

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current maturities of debt obligations

 

$

7,954

 

 

$

25,932

 

Current maturities of finance lease obligations

 

 

21,413

 

 

 

23,117

 

Accounts payable

 

 

78,292

 

 

 

93,577

 

Other accrued liabilities

 

 

106,527

 

 

 

61,901

 

Accrued income taxes

 

 

7,899

 

 

 

1,758

 

Total current liabilities

 

 

222,085

 

 

 

206,285

 

Long-term debt obligations (less unamortized debt issuance costs of $2,507 and $2,293,

   respectively)

 

 

991,267

 

 

 

208,602

 

Long-term finance lease obligations

 

 

48,604

 

 

 

61,555

 

Deferred tax liabilities

 

 

156,707

 

 

 

45,963

 

Other liabilities

 

 

34,112

 

 

 

19,119

 

Total liabilities

 

 

1,452,775

 

 

 

541,524

 

Commitments and contingencies (see Note 12)

 

 

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

 

 

Redeemable convertible preferred stock: $0.01 par value; 47,070 shares authorized;

   44,170 shares issued; 22,072 and 22,611 shares outstanding, respectively

 

 

275,896

 

 

 

282,638

 

Deferred compensation – unearned ESOP shares

 

 

(25,471

)

 

 

(180,316

)

Total mezzanine equity

 

 

250,425

 

 

 

102,322

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock; $0.01 par value: 1,000,000 shares authorized; 69,260 and 57,964

   shares issued, respectively; 68,775 and 57,490 shares outstanding, respectively

 

 

11,549

 

 

 

11,436

 

Paid-in capital

 

 

817,028

 

 

 

391,039

 

Common stock in treasury, at cost

 

 

(10,200

)

 

 

(9,863

)

Accumulated other comprehensive loss

 

 

(24,969

)

 

 

(25,867

)

Retained (deficit) earnings

 

 

(261,986

)

 

 

17,582

 

Total ADS stockholders’ equity

 

 

531,422

 

 

 

384,327

 

Noncontrolling interest in subsidiaries

 

 

14,553

 

 

 

13,986

 

Total stockholders’ equity

 

 

545,975

 

 

 

398,313

 

Total liabilities, mezzanine equity and stockholders’ equity

 

$

2,249,175

 

 

$

1,042,159

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

- 1 -


Table of Contents

 

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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales

 

$

393,424

 

 

$

318,113

 

 

$

1,303,037

 

 

$

1,112,515

 

Cost of goods sold

 

 

270,066

 

 

 

245,714

 

 

 

926,703

 

 

 

845,052

 

Cost of goods sold - ESOP special dividend compensation

 

 

 

 

 

 

 

 

168,610

 

 

 

 

Gross profit

 

 

123,358

 

 

 

72,399

 

 

 

207,724

 

 

 

267,463

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling

 

 

29,967

 

 

 

23,260

 

 

 

86,303

 

 

 

72,156

 

General and administrative

 

 

37,023

 

 

 

22,116

 

 

 

116,486

 

 

 

65,082

 

Selling, general and administrative - ESOP special dividend compensation

 

 

 

 

 

 

 

 

78,142

 

 

 

 

Loss on disposal of assets and costs from exit and

   disposal activities

 

 

1,755

 

 

 

144

 

 

 

4,466

 

 

 

1,572

 

Intangible amortization

 

 

13,593

 

 

 

1,976

 

 

 

24,435

 

 

 

5,945

 

Income (loss) from operations

 

 

41,020

 

 

 

24,903

 

 

 

(102,108

)

 

 

122,708

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

13,191

 

 

 

5,695

 

 

 

70,787

 

 

 

14,028

 

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

 

 

39

 

 

 

634

 

 

 

118

 

 

 

(86

)

Income (loss) before income taxes

 

 

27,790

 

 

 

18,574

 

 

 

(173,013

)

 

 

108,766

 

Income tax expense

 

 

4,032

 

 

 

2,490

 

 

 

22,855

 

 

 

28,968

 

Equity in net loss (income) of unconsolidated affiliates

 

 

99

 

 

 

(466

)

 

 

(538

)

 

 

225

 

Net income (loss)

 

 

23,659

 

 

 

16,550

 

 

 

(195,330

)

 

 

79,573

 

Less: net income attributable to noncontrolling interest

 

 

371

 

 

 

738

 

 

 

149

 

 

 

2,811

 

Net income (loss) attributable to ADS

 

 

23,288

 

 

 

15,812

 

 

 

(195,479

)

 

 

76,762

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

68,508

 

 

 

57,180

 

 

 

62,119

 

 

 

56,925

 

Diluted

 

 

69,298

 

 

 

57,685

 

 

 

62,119

 

 

 

57,482

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

 

$

0.25

 

 

$

(3.31

)

 

$

1.22

 

Diluted

 

$

0.28

 

 

$

0.25

 

 

$

(3.31

)

 

$

1.20

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

- 2 -


Table of Contents

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited) (In thousands)

 

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income (loss)

 

$

23,659

 

 

$

16,550

 

 

$

(195,330

)

 

$

79,573

 

Currency translation (loss) gain

 

 

2,062

 

 

 

(5,642

)

 

 

1,316

 

 

 

(7,617

)

Comprehensive income (loss)

 

 

25,721

 

 

 

10,908

 

 

 

(194,014

)

 

 

71,956

 

Less: other comprehensive (loss) income attributable to

   noncontrolling interest

 

 

604

 

 

 

(810

)

 

 

418

 

 

 

(1,189

)

Less: net income attributable to noncontrolling interest

 

 

371

 

 

 

738

 

 

 

149

 

 

 

2,811

 

Total comprehensive income (loss) attributable to ADS

 

$

24,746

 

 

$

10,980

 

 

$

(194,581

)

 

$

70,334

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

- 3 -


Table of Contents

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

 

 

 

Nine Months Ended

December 31,

 

 

 

2019

 

 

2018

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(195,330

)

 

$

79,573

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

74,432

 

 

 

52,912

 

Deferred income taxes

 

 

(1,098

)

 

 

2,316

 

Loss on disposal of assets and costs from exit and disposal activities

 

 

4,466

 

 

 

1,572

 

ESOP and stock-based compensation

 

 

27,365

 

 

 

16,142

 

ESOP special dividend compensation

 

 

246,752

 

 

 

 

Amortization of deferred financing charges

 

 

34,380

 

 

 

561

 

Inventory step up related to Infiltrator Water Technologies acquisition

 

 

7,880

 

 

 

 

Fair market value adjustments to derivatives

 

 

903

 

 

 

1,976

 

Equity in net (income) loss of unconsolidated affiliates

 

 

(538

)

 

 

225

 

Other operating activities

 

 

(6,013

)

 

 

(3,493

)

Changes in working capital:

 

 

 

 

 

 

 

 

Receivables

 

 

50,865

 

 

 

16,768

 

Inventories

 

 

43,317

 

 

 

15,705

 

Prepaid expenses and other current assets

 

 

(1,417

)

 

 

(2,562

)

Accounts payable, accrued expenses, and other liabilities

 

 

10,354

 

 

 

(33,673

)

Net cash provided by operating activities

 

 

296,318

 

 

 

148,022

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(46,293

)

 

 

(31,130

)

Acquisition of Infiltrator Water Technologies, net of cash acquired

 

 

(1,089,322

)

 

 

 

Other investing activities

 

 

(247

)

 

 

1,109

 

Net cash used in investing activities

 

 

(1,135,862

)

 

 

(30,021

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from Term Loan Facility

 

 

1,300,000

 

 

 

 

Payments on Term Loan Facility

 

 

(1,300,000

)

 

 

 

Proceeds from syndication of Term Loan Facility

 

 

700,000

 

 

 

 

Payments on syndicated Term Loan Facility

 

 

(50,000

)

 

 

 

Proceeds from Senior Notes

 

 

350,000

 

 

 

 

Proceeds from Revolving Credit Agreement

 

 

177,900

 

 

 

 

Payments on Revolving Credit Agreement

 

 

(177,900

)

 

 

 

Debt issuance costs

 

 

(34,606

)

 

 

 

Proceeds from PNC Credit Agreement

 

 

253,900

 

 

 

331,600

 

Payments on PNC Credit Agreement

 

 

(388,300

)

 

 

(376,600

)

Payments on Prudential Senior Notes

 

 

(100,000

)

 

 

(25,000

)

Payments on finance lease obligations

 

 

(18,424

)

 

 

(17,791

)

Proceeds from common stock offering, net of offering costs

 

 

293,648

 

 

 

 

Acquisition of noncontrolling interest in BaySaver

 

 

 

 

 

(8,821

)

Cash dividends paid

 

 

(83,846

)

 

 

(21,084

)

Proceeds from exercise of stock options

 

 

6,280

 

 

 

3,937

 

Other financing activities

 

 

(236

)

 

 

(1,620

)

Net cash provided by (used in) financing activities

 

 

928,416

 

 

 

(115,379

)

Effect of exchange rate changes on cash

 

 

549

 

 

 

(451

)

Net change in cash

 

 

89,421

 

 

 

2,171

 

Cash at beginning of period

 

 

8,891

 

 

 

17,587

 

Cash at end of period

 

$

98,312

 

 

$

19,758

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

9,450

 

 

$

27,459

 

Cash paid for interest

 

 

23,992

 

 

 

11,506

 

Non-cash operating, investing and financing activities:

 

 

 

 

 

 

 

 

Balance in accounts payable for the acquisition of property, plant and equipment

 

 

4,129

 

 

 

2,381

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

- 4 -


Table of Contents

 

 

 

 

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

(Unaudited) (In thousands)

 

 

Common

Stock

 

Paid

-In

 

Common

Stock in

Treasury

 

Accumulated

Other Compre-hensive

 

Retained (Deficit)

 

Total ADS

Stockholders’

 

Non-

controlling

Interest in

 

Total

Stock-

holders’

 

 

Redeemable Convertible

Preferred Stock

 

Deferred Compensation

Unearned ESOP Shares

 

Redeemable

Non-controlling

Interest in

 

Total

Mezzanine

 

 

Shares

 

Amount

 

Capital

 

Shares

 

Amount

 

Loss

 

Earnings

 

Equity

 

Subsidiaries

 

Equity

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Subsidiaries

 

Equity

 

Balance at October 1, 2018

 

57,525

 

$

11,433

 

$

381,475

 

 

441

 

$

(9,035

)

$

(22,843

)

$