Advanced Drainage Systems, Inc. (WMS) SEC Filing 10-Q Quarterly report for the period ending Friday, June 30, 2017

Exhibit 99.1

ADVANCED DRAINAGE SYSTEMS ANNOUNCES FIRST QUARTER FISCAL 2018 RESULTS

HILLIARD, Ohio – (August 3, 2017) – 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, 2017.

First Quarter Fiscal 2018 Highlights

Joe Chlapaty, Chairman and Chief Executive Officer of ADS commented, “From a top-line perspective, we saw 4% growth in our core domestic construction markets against a strong comparison to the first quarter of fiscal 2017. Margin pressure in the quarter was driven by material cost and pricing headwinds, which we anticipate will be partially offset in the second half of the year.”

Chlapaty continued, “We exit the first quarter positioned for growth in fiscal 2018. Our performance in our core construction markets is expected to continue to drive growth throughout the remainder of the fiscal year, driven by solid demand, continued success with our conversion strategies as well as growth of our HP product family and key Allied products. We are equally committed to improving our margin profile through performance improvement initiatives focused on operational and customer excellence as well as near-term steps to reduce our cost structure to better align with the current market conditions, both of which we believe will help to improve our margins over the near and long term. We will continue to capitalize on our leading market position to deliver above-market growth and operating leverage over time.”

Fiscal First Quarter 2018 Results compared to Fiscal First Quarter 2017 Results

Net sales increased 0.2% to $358.4 million, as compared to $357.6 million in the prior year. Domestic net sales increased 2.2% to $319.5 million as compared to $312.8 million in the prior year, driven by construction market demand, offset by decline in the agricultural market. International net sales decreased 13.3% to $38.9 million as compared to $44.8 million in the prior year.

Gross profit decreased 10.2% to $86.7 million, as compared to $96.6 million the prior year. As a percentage of net sales, gross profit decreased 280 basis points to 24.2% compared to 27.0% in the prior year, primarily due to increases in material cost and pricing headwinds in the domestic and Canadian agricultural markets and Mexico.

General and administrative expenses decreased 22.7% to $26.7 million, as compared to $34.5 million in the prior year. The decrease in general and administrative expenses is primarily due to decreases of $7.0 million in stock-based compensation and $7.7 million in restatement related costs compared to the prior year. These decreases were partially offset by an increase of $5.1 million in professional fees and an increase of $1.4 million in salaries and benefits compared to the prior year.

Adjusted EBITDA (Non-GAAP) decreased 16.0% to $60.3 million, as compared to $71.8 million in the prior year. As a percentage of net sales, Adjusted EBITDA decreased to 16.8% as compared to 20.1% in the prior year. The decrease in Adjusted EBITDA was largely attributed to the factors mentioned above.

Adjusted Earnings Per Fully Converted Share (Non-GAAP) was $0.27 based on weighted average fully converted shares of 74.1 million, as compared to $0.29 for the prior year on weighted average fully converted shares of 73.2 million.

The Company recorded net cash used in operating activities of $16.5 million, as compared to $0.1 million in the prior year. Net debt (total debt and capital lease obligations net of cash) was $479.8 million as of June 30, 2017, an increase of $57.4 million from March 31, 2017.

During the first quarter of fiscal 2018, the Company repurchased 400,000 shares of its common stock for a total cost of $7.9 million. As of June 30, 2017, the Company had approximately $42.1 million available under its existing share repurchase authorization.

A reconciliation of GAAP to Non-GAAP financial measures for Adjusted EBITDA, Free Cash Flow, Adjusted Earnings Per Diluted Share and Adjusted Loss Per Fully Converted has 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.”

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