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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 September 30, 2021
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 October 29, 2021, the registrant had 71,241,663 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 October 29, 2021, 315,017 shares of unvested restricted common stock were outstanding and 16,869,523 shares of ESOP, preferred stock, convertible into 12,976,037 shares of common stock, were outstanding. As of October 29, 2021, 84,532,717 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
   
 Page
   
 
   
 
   
 
   
 
   
 
   
 
   
   
   
   
  
   
   
   
   
  
   
   
   
- ii -

PART I. FINANCIAL INFORMATION


ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except par value)
 September 30,
2021
 March 31,
2021
ASSETS   
Current assets:   
Cash$14,005 $195,009 
Receivables (less allowance for doubtful accounts of $8,068 and $5,323, respectively)
361,466236,191
Inventories425,244300,961
Other current assets16,85810,817
Total current assets817,573742,978
Property, plant and equipment, net544,187504,275
Other assets:
Goodwill598,976599,072
Intangible assets, net450,925482,016
Other assets94,96385,491
Total assets$2,506,624 $2,413,832 
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt obligations$7,000 $7,000 
Current maturities of finance lease obligations17,46719,318
Accounts payable257,576171,098
Other accrued liabilities129,818116,151
Accrued income taxes1,9784,703
Total current liabilities413,839318,270
Long-term debt obligations (less unamortized debt issuance costs of $1,839 and $2,030,
 respectively)
901,511782,220
Long-term finance lease obligations35,14932,964
Deferred tax liabilities163,238162,185
Other liabilities61,36654,767
Total liabilities1,575,1031,350,406
Commitments and contingencies (see Note 9)
Mezzanine equity:
Redeemable convertible preferred stock: $0.01 par value; 47,070 shares authorized;
44,170 shares issued; 18,282 and 19,275 shares outstanding, respectively
228,532240,944
Deferred compensation – unearned ESOP shares(7,014)(11,033)
Total mezzanine equity221,518229,911
Stockholders’ equity:
Common stock; $0.01 par value: 1,000,000 shares authorized; 73,333 and 72,071
 shares issued, respectively; 70,137 and 71,570 shares outstanding, respectively
11,59011,578
Paid-in capital968,198918,587
Common stock in treasury, at cost(315,935)(10,959)
Accumulated other comprehensive loss(26,020)(24,220)
Retained earnings (deficit)57,386(75,202)
Total ADS stockholders’ equity695,219819,784
Noncontrolling interest in subsidiaries14,78413,731
Total stockholders’ equity710,003833,515
Total liabilities, mezzanine equity and stockholders’ equity$2,506,624 $2,413,832 
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 September 30, Six Months Ended September 30,
 2021 2020 2021 2020
Net sales$706,471 $544,187 $1,375,771 $1,052,826 
Cost of goods sold506,414 338,330 974,593 658,466 
Gross profit200,057 205,857 401,178 394,360 
Operating expenses:
Selling, general and administrative73,951 65,701 150,172 127,477 
(Gain) loss on disposal of assets and costs from exit and disposal activities
(901)627 (912)2,274 
Intangible amortization15,446 17,955 31,091 35,937 
Income from operations111,561 121,574 220,827 228,672 
Other expense:
Interest expense8,437 9,360 16,344 19,330 
Derivative (gains) loss and other (income) expense, net202 (151)(1,812)(718)
Income before income taxes102,922 112,365 206,295 210,060 
Income tax expense26,816 31,827 53,271 59,027 
Equity in net income of unconsolidated affiliates(206)(67)(411)(240)
Net income76,312 80,605 153,435 151,273 
Less: net income attributable to noncontrolling interest953 369 2,089 571 
Net income attributable to ADS75,359 80,236 151,346 150,702 
Weighted average common shares outstanding:
Basic70,464 69,843 70,993 69,612 
Diluted71,924 70,755 72,614 70,459 
Net income per share:
Basic$0.90 $0.95 $1.78 $1.78 
Diluted$0.88 $0.93 $1.74 $1.76 
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 September 30,Six Months Ended September 30,
 2021202020212020
Net income$76,312 $80,605 $153,435 $151,273 
Currency translation (loss) gain(3,406)2,406 (1,365)5,556 
Comprehensive income72,906 83,011 152,070 156,829 
Less: other comprehensive (loss) income attributable to
 noncontrolling interest
(180)338 435 657 
Less: net income attributable to noncontrolling interest953 369 2,089 571 
Total comprehensive income attributable to ADS$72,133 $82,304 $149,546 $155,601 
See accompanying Notes to Condensed Consolidated Financial Statements.
- 5 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
 Six Months Ended
September 30,
 2021 2020
Cash Flows from Operating Activities   
Net income$153,435 $151,273 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization68,85071,559
Deferred income taxes15(3,446)
(Gain) loss on disposal of assets and costs from exit and disposal activities(912)2,274
ESOP and stock-based compensation38,43727,088
Amortization of deferred financing charges191197
Fair market value adjustments to derivatives(446)(1,455)
Equity in net income of unconsolidated affiliates(411)(240)
Other operating activities441(236)
Changes in working capital:
Receivables(138,063)(60,106)
Inventories(124,429)60,663
Prepaid expenses and other current assets(6,738)(3,666)
Accounts payable, accrued expenses, and other liabilities104,50842,263
Net cash provided by operating activities94,878286,168
Cash Flows from Investing Activities
Capital expenditures(63,764)(28,959)
Other investing activities1,556455
Net cash used in investing activities(62,208)(28,504)
Cash Flows from Financing Activities
Payments on syndicated Term Loan Facility(3,500)(103,500)
Proceeds from Revolving Credit Agreement146,800
Payments on Revolving Credit Agreement(24,200)(100,000)
Payments on finance lease obligations(10,437)(10,677)
Repurchase of common stock(292,000)
Cash dividends paid(18,758)(15,402)
Dividends paid to noncontrolling interest holder(1,471)
Proceeds from exercise of stock options3,1793,275
Payment of withholding taxes on vesting of restricted stock units(12,976)
Other financing activities(230)(1,489)
Net cash used in financing activities(213,593)(227,793)
Effect of exchange rate changes on cash(81)(221)
Net change in cash(181,004)29,650
Cash at beginning of period195,009174,233
Cash at end of period$14,005 $203,883 
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes$61,813 $39,213 
Cash paid for interest15,38320,923
Non-cash operating, investing and financing activities:
Acquisition of property, plant and equipment under finance lease and incurred lease obligations11,4032,719
Balance in accounts payable for the acquisition of property, plant and equipment11,4994,100

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 Comprehensive
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 July 1, 202069,973$11,557 $839,765 500$(10,853)$(32,494)$(205,669)$602,306 $12,283 $614,589 21,562$269,529 1,624$(19,605)$249,924 
Net income80,23680,23636980,605
Other comprehensive income2,0682,0683382,406
Redeemable convertible preferred stock dividends
(1,329)(1,329)(1,329)
Common stock dividends ($0.09 per share)
(6,249)(6,249)(6,249)
Allocation of ESOP shares to participants for compensation
6,3046,3046,304(226)2,8262,826
Exercise of common stock options5911,0361,0371,037
Restricted stock awards60(6)(6)(6)
Stock-based compensation expense
5,4965,4965,496
ESOP distribution in common stock41046,6536,6576,657(532)(6,657)(6,657)
Balance at September 30, 2020
70,502$11,562 $859,254 500$(10,859)$(30,426)$(133,011)$696,520 $12,990 $709,510 21,030$262,872 1,398$(16,779)$246,093 
Balance at April 1, 202069,810$11,555 $827,573 491$(10,461)$(35,325)$(267,619)$525,723 $11,762 $537,485 21,562$269,529 1,850$(22,432)$247,097 
Adoption of ASU 2016-13(779)(779)(779)
Net income150,702150,702571151,273
Other comprehensive income4,8994,8996575,556
Redeemable convertible preferred stock dividends
(2,695)(2,695)(2,695)
Common stock dividends ($0.18 per share)
(12,620)(12,620)(12,620)
Allocation of ESOP shares to participants for compensation
10,34010,34010,340(452)5,6535,653
Exercise of common stock options15223,2753,2773,277
Restricted stock awards13019(398)(397)(397)
Stock-based compensation expense11,09511,09511,095
ESOP distribution in common stock41046,6536,6576,657(532)(6,657)(6,657)
Other318318318
Balance at September 30, 2020
70,502$11,562 $859,254 500$(10,859)$(30,426)$(133,011)$696,520 $12,990 $709,510 21,030$262,872 1,398$(16,779)$246,093 
See accompanying Notes to Condensed Consolidated Financial Statements.


- 7 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY (CONTINUED)
(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
 SharesAmountSharesAmountSharesAmountSharesAmount
Balance at July 1, 202173,227$11,589 $950,963 1,678$(139,313)$(22,794)$(8,666)$791,779 $14,525 $806,304 18,282$228,532 799$(8,942)$219,590 
Net income75,35975,35995376,312
Other comprehensive income(3,226)(3,226)(180)(3,406)
Redeemable convertible preferred stock dividends
(1,547)(1,547)(1,547)
Common stock dividends ($0.11 per share)
(7,760)(7,760)(7,760)
Dividends paid to noncontrolling interest holder(514)(514)
Share repurchases1,518(176,622)(176,622)(176,622)
Allocation of ESOP shares to participants for compensation
10,08510,08510,085(155)1,9281,928
Exercise of common stock options76 1 1,843 — — — — 1,844 — 1,844 — — — — — 
Restricted stock awards30 — — — — — —  —  — — — — — 
Stock-based compensation expense
— — 5,618 — — — — 5,618 — 5,618 — — — — — 
Other— — (311)— — — — (311)— (311)— — — — — 
Balance at September 30, 2021
73,333$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 
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 income151,346151,3462,089153,435
Other comprehensive income(1,800)(1,800)435(1,365)
Redeemable convertible preferred stock dividends
(3,097)(3,097)(3,097)
Common stock dividends ($0.22 per share)
(15,661)(15,661)(15,661)
Dividends paid to noncontrolling interest holder(1,471)(1,471)
Share repurchases2,574(292,000)(292,000)(292,000)
Allocation of ESOP shares to participants for compensation
22,14922,14922,149 (322)4,019 4,019
Exercise of common stock options12413,1793,1803,180
Restricted stock awards129129(3,231)(3,230)(3,230)
Performance-based restricted stock units245292(9,745)(9,743)(9,743)
Stock-based compensation expense
12,26912,26912,269
ESOP distribution in common stock764812,40412,41212,412(993)(12,412)(12,412)
Other(390)(390)(390)
Balance at September 30, 2021
73,333$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 
See accompanying Notes to Condensed Consolidated Financial Statements.

- 8 -

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - Advanced Drainage Systems, Inc. and subsidiaries (collectively referred to as “ADS” or the “Company”), incorporated in Delaware, designs, manufactures and markets innovative water management solutions in the stormwater and on-site septic waste water industries, providing superior drainage solutions for use in the construction and agriculture marketplace. ADS’s products are used across a broad range of end markets and applications, including non-residential, infrastructure and agriculture applications.
The Company is managed and reports results of operations in three reportable segments: Pipe, Infiltrator Water Technologies Ultimate Holdings, Inc ("Infiltrator") and International. The Company also reports the results of its Allied Products and all other business segments as Allied Products and Other.
Historically, sales of the Company’s products have been higher in the first and second quarters of each fiscal year due to favorable weather and longer daylight conditions accelerating construction activity during these periods. Seasonal variations in operating results may also be impacted by inclement weather conditions, such as cold or wet weather, which can delay projects.