Advanced Drainage Systems, Inc. (WMS) SEC Filing 10-Q Quarterly report for the period ending Sunday, June 30, 2019

Exhibit 99.1

ADVANCED DRAINAGE SYSTEMS ANNOUNCES FIRST QUARTER FISCAL 2020 RESULTS

HILLIARD, Ohio – (August 1, 2019) – Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading global manufacturer of water management products and solutions for non-residential, residential, infrastructure and agricultural applications, today announced financial results for the first quarter ended June 30, 2019.

First Quarter Fiscal 2020 Results

Scott Barbour, President and Chief Executive Officer of ADS commented, “We are off to a good start in fiscal 2020, with continued strong sales growth in our core domestic construction markets. Additionally, agriculture market sales increased 15% compared to the prior year, despite poor weather and uncertain agriculture economic conditions. We experienced solid growth across our domestic geographies, with particular strength in the Southeast, Atlantic Coast and Western regions of the United States, and our sales and operations teams did an excellent job executing to our plan and meeting our commitments this quarter. Overall, our top line performance demonstrates the success of our material conversion strategies, best-in-class solutions strategies and focus on key growth regions of the United States. This gives us confidence we will continue delivering above market growth in fiscal 2020 and beyond.”

Barbour continued, “We also generated very good profitability in the quarter. Through strong growth in both pipe and Allied products, favorable material cost and disciplined execution, we were able to offset the inventory absorption headwind from retention of key manufacturing employees in the fourth quarter despite a reduction in production pounds. Additionally, execution on our working capital initiatives resulted in significant free cash flow generation in the period. We remain on track to deliver on our margin expansion goals imbedded in our fiscal 2020 guidance and will continue to focus on maintaining favorable pricing, mitigating inflationary pressures and delivering continuous improvement in manufacturing and logistics activities.”

“Finally, in line with our capital deployment strategy as discussed at our Investor Day, we returned $82 million of capital to shareholders in June dividends, including $75 million in special dividends. In addition, today we announced the strategic acquisition of Infiltrator Water Technologies, a leader in on-site septic wastewater treatment, in a separate press release. We are very excited to build on our existing platform, expand our addressable market opportunity and enhance our sales growth, margin profile and cash flow generation through this exciting acquisition.”

First Quarter Fiscal 2020 Results

Net sales increased 6.7% to $413.7 million, as compared to $387.8 million in the prior year. Domestic net sales increased 9.3% to $374.4 million as compared to $342.5 million in the prior year, driven by strong performance in both the construction and agriculture end markets. International net sales decreased 13.3% to $39.3 million as compared to $45.3 million in the prior year, driven primarily by a decrease in Mexico sales.

As part of the Company’s capital allocation strategy, the Company paid a dividend of $1.09 per share in the first quarter of fiscal 2020, including a $1.00 special dividend to all shareholders of record. The Employee Stock Ownership Plan (“ESOP”) used a portion of its proceeds to payback a portion of its loan from the Company, resulting in an allocation of approximately 11.6 million shares to participants and $246.8 million of non-cash, stock-based compensation expense. The Company recorded $168.6 million of this expense in Cost of goods sold – ESOP special dividend compensation and $78.1 million of this expense in Selling, general and administrative – ESOP special dividend compensation.

Gross profit decreased $161.8 million to ($62.2) million due to the $168.6 million ESOP compensation expense described above. Excluding the one-time ESOP compensation, gross profit increased $6.8 million primarily due to an increase in both pipe and allied

1