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Advanced Drainage Systems, Inc. (WMS) SEC Filing 10-Q Quarterly Report for the period ending Saturday, December 31, 2022

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Advanced Drainage Systems, Inc.

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CIK: 1604028 Ticker: WMS
Exhibit 99.1
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ADVANCED DRAINAGE SYSTEMS ANNOUNCES THIRD QUARTER
FISCAL 2023 RESULTS
HILLIARD, Ohio – (February 2, 2023) – Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and onsite septic wastewater industries today announced financial results for the fiscal third quarter ended December 31, 2022.
Third Quarter Fiscal 2023 Results
•Net sales decreased 8.4% to $655.2 million
•Net income increased 11.7% to $83.2 million
•Adjusted EBITDA (Non-GAAP) decreased 3.6% to $169.7 million

Year-to-Date Fiscal 2023 Results
•Net sales increased 17.3% to $2,453.6 million
•Net income increased 86.5% to $425.0 million
•Adjusted EBITDA (Non-GAAP) increased 44.2% to $732.0 million
•Cash provided by operating activities increased 240.7% to $660.4 million
•Free cash flow (Non-GAAP) increased $440.1 million to $533.6 million

Scott Barbour, President and Chief Executive Officer of ADS commented, "The Company executed well in the fiscal third quarter despite a challenging demand environment. Through October and November, demand was largely in line with expectations, but in December domestic construction market demand slowed significantly. As a result, consolidated net sales declined 8% in the fiscal third quarter. The ADS business was down 3%, primarily due to weakness in the non-residential and retail businesses. The 30% decline in Infiltrator sales was a result of the lower residential market demand and inventory destocking, which completed in the fiscal third quarter as we previously communicated."

Barbour continued, "Importantly, though we are facing a challenging demand environment, our market leading position, value proposition and execution enabled us to manage costs, maintain favorable price/material cost and generate significant cash flow. As a result, the Company’s Adjusted EBITDA margin expanded 130 basis points and free cash flow increased $440 million, or 370% over the prior year. It is also important to point out that Net Income increased 11.7%. As demonstrated with the margin performance in the fiscal third quarter, our business model remains resilient in a lower demand environment. Going forward, we expect annual margin performance to be consistent with what we communicated at Investor Day in March 2022."

"As we look at the significant change in market dynamics that impact construction activity since the beginning of the fiscal year – interest rates nearly doubling and significant inflation – there is no doubt this is creating economic uncertainty. This combination has slowed down demand for the ADS and Infiltrator products. We expect the majority of calendar 2023 to remain a challenging demand environment."

Barbour concluded, "The need for the water management solutions and services we provide is as relevant as ever. The Company’s industry leading water management products have significant competitive advantages that will continue to drive above market results. We will work through this period of lower demand by managing our costs, including reducing headcount and optimizing our network. The long-term fundamentals and position of both ADS and Infiltrator remain intact, and we will manage the business through the external conditions appropriately to continue delivering value to our customers and shareholders."
Third Quarter Fiscal 2023 Results
Net sales decreased $60.2 million, or 8.4%, to $655.2 million, as compared to $715.4 million in the prior year quarter. Domestic pipe sales decreased $24.3 million, or 6.1%, to $375.7 million. Domestic allied products & other sales increased $1.6 million, or 1.1%, to $149.0 million. Infiltrator sales decreased $44.8 million, or 30.1%, to $103.9 million. The decrease in domestic net sales was driven by sales in the U.S. construction end markets. International sales increased $3.1 million, or 5.6%, to $59.0 million, driven by growth in the Canadian and Mexican businesses.
1
The following information was filed by Advanced Drainage Systems, Inc. (WMS) on Thursday, February 2, 2023 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Advanced Drainage Systems, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2023 10-K Annual Report includes:

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Inside Advanced Drainage Systems, Inc.'s 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Cover
Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical)
Condensed Consolidated Statements Of Cash Flows (Unaudited)
Condensed Consolidated Statements Of Comprehensive Income (Unaudited)
Condensed Consolidated Statements Of Operations (Unaudited)
Condensed Consolidated Statements Of Stockholders' Equity And Mezzanine Equity (Unaudited)
Condensed Consolidated Statements Of Stockholders' Equity And Mezzanine Equity (Unaudited) (Parenthetical)
Acquisitions
Acquisitions (Tables)
Acquisitions - Additional Information (Detail)
Acquisitions - Summary Of Consideration Transferred And Preliminary Purchase Price Allocation Of Assets Acquired And Liabilities Assumed (Detail)
Acquisitions - Summary Of Identifiable Intangible Assets (Detail)
Background And Summary Of Significant Accounting Policies
Background And Summary Of Significant Accounting Policies (Detail)
Background And Summary Of Significant Accounting Policies (Policies)
Business Segments Information
Business Segments Information (Tables)
Business Segments Information - Additional Information (Detail)
Business Segments Information - Reconciliation Of Gross Profit To Segment Adjusted Gross Profit (Detail)
Business Segments Information - Schedule Of Financial Information Attributable To Reportable Segments (Detail)
Business Segments Information - Schedule Of Revenue From Reportable Segments By Product Type (Detail)
Commitments And Contingencies
Commitments And Contingencies (Detail)
Debt
Debt (Tables)
Debt - Equipment Financing (Details)
Debt - Long-Term Debt (Detail)
Debt - Senior Notes (Detail)
Debt - Senior Secured Credit Facility (Detail)
Debt - Valuation Of Debt (Details)
Income Taxes
Income Taxes (Detail)
Inventories
Inventories (Tables)
Inventories - Schedule Of Inventories (Detail)
Leases
Leases (Detail)
Net Income Per Share And Stockholders' Equity
Net Income Per Share And Stockholders' Equity (Tables)
Net Income Per Share And Stockholders' Equity - Narrative (Details)
Net Income Per Share And Stockholders' Equity - Summary Of Net Income Per Share (Detail)
Related Party Transactions
Related Party Transactions (Detail)
Revenue Recognition
Revenue Recognition (Tables)
Revenue Recognition - Schedule Of Contract Asset And Liability (Detail)
Stock-Based Compensation
Stock-Based Compensation (2017 Omnibus Plan) - Additional Information (Detail)
Stock-Based Compensation (Tables)
Stock-Based Compensation - Summary Of Assumption Used To Estimate Fair Value Of Stock Options (Detail)
Stock-Based Compensation - Summary Of Stock-Based Compensation Expense (Detail)
Subsequent Events
Subsequent Events (Detail)

Material Contracts, Statements, Certifications & more

Advanced Drainage Systems, Inc. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification
Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification
Exhibit 32.1: Section 1350 Certification
Exhibit 32.2: Section 1350 Certification
Ticker: WMS
CIK: 1604028
Form Type: 10-Q Quarterly Report
Accession Number: 0001604028-23-000009
Submitted to the SEC: Thu Feb 02 2023 4:04:28 PM EST
Accepted by the SEC: Thu Feb 02 2023
Period: Saturday, December 31, 2022
Industry: Plastics Foam Products

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