Advanced Drainage Systems Stock Falls After Mixed Q1 Results, Raises FY22 Revenue Outlook

Advanced Drainage Systems Stock Falls After Mixed Q1 Results, Raises FY22 Revenue Outlook

Advanced Drainage Systems Inc WMS reported first-quarter sales growth of 31.6% year-over-year to $669.3 million, beating the consensus estimate of $624.84 million.

  • Sales by segments: Pipe $374.01 million (+36.7% Y/Y), Infiltrator Water Technologies $126.74 million (+24.1% Y/Y), International $65.67 million (+82.4% Y/Y) and Allied Products & Other $127.04 million (+8.6% Y/Y).
  • Gross profit increased by 6.7% Y/Y to $201.1 million, reflecting an increase in sales volume and pricing on pipe, on-site septic, and allied product. Margin contracted by 700 bps to 30.1%.
  • Adjusted EPS improved to $0.87 from $0.83 million in 1Q21, missing estimates of $1.26.
  • The operating income increased by 2% Y/Y to $109.27 million, and the margin contracted by 473 bps to 16.3%.
  • Advanced Drainage generated a YTD operating cash flow of $ 104.35 million. Free cash flow of $78.8 million.
  • Adjusted EBITDA was $166.58 million, and margin contracted by 646 bps to 24.9%.
  • WMS had total liquidity of $480 million, comprised of cash of $143 million and availability under committed credit facilities $337 million, in Q2. The leverage ratio was 1.2 times.
  • It repurchased 1.1 million shares for $115.4 million in Q2 and had ~$176.7 million available under its existing share repurchase authorization.
  • The company also declared a quarterly cash dividend of $0.11 per share, payable September 15, 2021, to shareholders of record at the close of business on September 1, 2021.
  • FY22 Outlook: Advanced Drainage expects Net sales of $2.5 billion to $2.6 billion vs. a consensus of $2.27 billion (prior guidance $2.22 billion to $2.30 billion) and Adjusted EBITDA of $635 to $665 million. Capital expenditures of $130 million to $150 million.
  • Price Action: WMS shares tumble by 4.21% at $116.92 on the last check Thursday.

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