Advanced Drainage Systems (NYSE: WMS ) is facing near-term headwinds in its non-residential end market and this is pressuring its valuation multiple. However, this is a transient headwind. With the interest rate cycle reversing, we should see a recovery in this market inI have over 15 years of experience investing and have provided research services to mid-sized hedge funds with assets under management between $100 and $500 million. I also have had a brief stint as a sell-side analyst. I am now focusing pri ...

Core Viewpoint - Western Metallica Resources Corp. has successfully completed its first drill hole at the Caña Brava project, indicating the presence of a complex copper-molybdenum porphyry system and marking a significant step in its exploration efforts [1][2][3]. Group 1: Drilling Progress and Findings - The first drill hole, LM24DD001, reached a depth of 396.1 meters, with drilling of a second hole, LM24DD002, currently in progress [1]. - Logging of drill holes confirms a complex Cu-Mo porphyry system with multiple intrusion phases and alteration events [2]. - The current drill program targets a mineralization area of 500 by 300 meters, coinciding with geochemical anomalies identified in previous surveys [3]. Group 2: Geological Characteristics - Copper and molybdenum mineralization is associated with quartz veining within strong potassic alteration, extending over an area of at least 2.7 km by 1.5 km, while the drilling area covers only 5% of this total [4]. - The alteration footprint includes biotite and phyllic assemblages, indicating a significant geological system [4]. Group 3: Project Location and Potential - The Caña Brava project is located in Northern Peru, within a region known for world-class copper-molybdenum deposits, and is strategically positioned near industrial ports and major roads [12][13]. - The project encompasses a 5,700-hectare area and is adjacent to other significant mining projects, suggesting potential for high-grade mineralization [13]. Group 4: Future Exploration Plans - The company is advancing with drilling permits for the Caña Brava 1 prospect, which features a distinctive leached zone and has confirmed grades of up to 0.3% Cu from various intrusive samples [13]. - The exploration work has successfully defined a cluster of multi-stage mineralized intrusions, comparable in size to other major deposits in Peru [13].

Company Performance - Advanced Drainage Systems reported quarterly earnings of $2.06 per share, exceeding the Zacks Consensus Estimate of $1.98 per share, and showing a slight increase from $2.04 per share a year ago [1] - The earnings surprise for this quarter was 4.04%, following a previous quarter where the company reported earnings of $1.23 per share against an expectation of $0.95, resulting in a surprise of 29.47% [2] - The company posted revenues of $815.34 million for the quarter, which was 1.53% below the Zacks Consensus Estimate, but an increase from $778.05 million in the same quarter last year [3] Market Performance - Advanced Drainage shares have increased approximately 5.9% since the beginning of the year, while the S&P 500 has gained 9% [4] - The current consensus EPS estimate for the upcoming quarter is $2.02, with expected revenues of $826 million, and for the current fiscal year, the estimate is $7.19 on $3.02 billion in revenues [8] Industry Outlook - The Building Products - Miscellaneous industry, to which Advanced Drainage belongs, is currently ranked in the top 40% of over 250 Zacks industries, indicating a favorable outlook [9] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact the stock's performance [6]

The market expects Advanced Drainage Systems (WMS) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 8, 2024, might help the stock move higher if these key n ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NO.: 001-36557 ADVANCED DRAINAGE SYSTEMS, INC. (Exact name of registrant as specified in its charter) | Delaware | | 51-0105665 | | --- | --- | --- | | (State ...

Financial Performance - Adjusted EBITDA increased 2% to $923 million, with Adjusted EBITDA margin reaching a record 32.1% for fiscal year 2024[2] - Net sales decreased 6% to $2.9 billion for fiscal year 2024, driven by weaker demand in the first half of the year[2] - Fourth quarter net sales increased 5.9% to $653.8 million, with Adjusted EBITDA up 11.2% to $191.2 million[3] - Gross profit increased 13.3% to $252.0 million in Q4, driven by favorable volume growth and productivity improvements[4] - Net income for the fiscal year ended March 31, 2024, was $513,291 thousand, slightly up from $511,353 thousand in the previous year[24] - Net Income for Q1 2024 was $95.48 million, a 10.6% increase from $86.31 million in Q1 2023[34] - Diluted Earnings Per Share for Q1 2024 was $1.21, compared to $1.06 in Q1 2023[38] - Adjusted Earnings Per Share for Q1 2024 was $1.23, up from $1.12 in Q1 2023[38] Segment Performance - Domestic pipe sales increased 3.3% to $358.7 million, while Infiltrator sales surged 21.0% to $106.1 million in Q4[3] - Pipe segment net sales from external customers were $1,544,290 thousand in 2024, down from $1,717,189 thousand in 2023[26] - Infiltrator Water Technologies segment net sales from external customers increased to $449,027 thousand in 2024 from $442,280 thousand in 2023[26] - International segment net sales from external customers decreased to $207,769 thousand in 2024 from $219,853 thousand in 2023[26] - Infiltrator Water Technologies segment gross profit for Q1 2024 was $65.36 million, a 63.3% increase from $40.01 million in Q1 2023[33] - Total Segment Adjusted Gross Profit for Q1 2024 was $280.94 million, up 14.6% from $245.20 million in Q1 2023[33] Cash Flow and Capital Expenditures - Free cash flow (Non-GAAP) decreased $6.8 million to $534.1 million for fiscal year 2024[3] - Net cash provided by operating activities reached $717,928 thousand in 2024, compared to $707,810 thousand in 2023[24] - Capital expenditures for 2024 were $183,812 thousand, up from $166,913 thousand in 2023[24] - Capital Expenditures for FY 2024 were $183.81 million, up 10.1% from $166.91 million in FY 2023[36] - Capital expenditures for fiscal 2025 are anticipated to be between $250 million and $300 million[12] Debt and Shareholder Returns - Net debt decreased by $246.9 million to $860.9 million as of March 31, 2024[9] - The company repurchased 1.8 million shares for $207.3 million and returned $251.3 million to shareholders in fiscal year 2024[11] - Repurchase of common stock in 2024 amounted to $207,308 thousand, significantly lower than $575,027 thousand in 2023[24] Future Outlook - Fiscal 2025 net sales are expected to range between $2.925 billion and $3.025 billion, with Adjusted EBITDA projected between $940 million and $980 million[12] Balance Sheet and Assets - Total assets increased to $3,268,913 thousand in March 2024 from $2,901,125 thousand in March 2023, reflecting a growth of 12.7%[22] - Cash and restricted cash at the end of 2024 were $495,848 thousand, up from $217,128 thousand in 2023[24] Other Financial Metrics - Free Cash Flow for FY 2024 was $534.12 million, slightly down from $540.90 million in FY 2023[36] - Depreciation and Amortization for Q1 2024 was $42.89 million, up 13.4% from $37.80 million in Q1 2023[34] - Stock-based Compensation Expense for Q1 2024 was $8.35 million, a 378% increase from $1.75 million in Q1 2023[34] - Total consolidated net sales for the fiscal year ended March 31, 2024, were $2,874,473 thousand, a decrease from $3,071,121 thousand in 2023[26]

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 December 31, 2023 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) (State or Other Jurisdiction of Incorporation or Organization) De ...

Financial Performance - Revenue increased by 1% to $662 million in Q3 FY24 compared to $655 million in Q3 FY23[13] - Adjusted EBITDA Margin improved significantly to 30.8% in Q3 FY24, a +490 basis points increase from 25.9% in Q3 FY23[11] - The company expects Net Sales for Fiscal Year 2024 to be between $2.8 billion and $2.85 billion, representing a (9%) to (7%) year-over-year change[63] - The company expects Adjusted EBITDA for Fiscal Year 2024 to be between $880 million and $910 million, representing a (3%) to +1% year-over-year change[63] - The company expects Adjusted EBITDA Margin for Fiscal Year 2024 to be between 31.4% and 31.9%, a +200 to +250 basis points change[63] Business Segment Performance - Infiltrator business revenue increased by 17% in Q3 FY24 compared to Q3 FY23[9] - ADS Legacy pipe business revenue decreased by 1% in Q3 FY24 compared to Q3 FY23[9] - Allied Products revenue increased by 5% in Q3 FY24[14] Market and Demand - Infrastructure sector experienced a significant increase of 22% in Q3 FY24[15] - Non-Residential construction decreased by 3% in Q3 FY24[15] - Residential construction increased by 5% in Q3 FY24[15] Cash Flow and Capital Structure - Consolidated Free Cash Flow was $564 million[62]

Financial Data and Key Metrics Changes - The company reported revenue of $780 million for Q2 2024, a decrease of 12% primarily due to lower volume [20] - Adjusted EBITDA was $246 million, a decrease of 6%, with a 180-basis point expansion in adjusted EBITDA margin to 31.6% [20][14] - Free cash flow generated in the first half of fiscal 2024 was $376 million, an increase of 4% compared to $361 million in the prior year [22] Business Line Data and Key Metrics Changes - The Infiltrator business performed better than expected, while the ADS pipe portfolio continued to meet expectations despite headwinds from higher interest rates and economic uncertainty [13] - The company experienced a consistent demand for infrastructure activity, particularly in locally funded projects [13] Market Data and Key Metrics Changes - The company noted that severe storms and flooding in the eastern U.S. highlighted the inadequacy of stormwater infrastructure, increasing the demand for their products [7] - The Florida market saw ADS pipe sales increase over 6x since the approval of corrugated thermoplastic pipe for stormwater in 2014 [10] Company Strategy and Development Direction - The company announced the construction of a new manufacturing facility in Lake Wales, Florida, to meet current and future customer demand [9] - Investments are being made in an engineering and technology center in Hilliard, Ohio, aimed at increasing innovation and incorporating more recycled materials into products [11][12] - The company is committed to sustainability, aiming to consume 1 billion pounds of recycled material annually by fiscal 2032 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on commitments despite a slow demand environment, emphasizing the ongoing demand for stormwater and septic wastewater products [18] - The company updated its fiscal 2024 guidance, raising the bottom of the revenue guidance to between $2.7 billion and $2.8 billion, driven by better-than-expected demand [24] Other Important Information - The company remains focused on managing costs and production while preparing for a recovery in residential and non-residential markets [19] - The share buyback program has resulted in 7% fewer shares outstanding compared to last year, partially offsetting the impact of lower net income on earnings per share [23] Q&A Session Summary Question: Can you provide insights on residential performance across legacy pipe and Infiltrator? - Management noted that Infiltrator is performing stronger in the latter half of the build cycle, benefiting from home completions catching up with starts [29] Question: What is the status of automation investments across facilities? - Management indicated there is significant room for improvement in automation across various facilities, with plans to implement best practices in the new Lake Wales facility [31][34] Question: What are the expectations for EBITDA margins in the second half? - Management acknowledged a larger-than-normal decline in margins from the first half to the second half, driven by prudent end market guidance and increased investments in SG&A [36][38] Question: How is the non-residential project bidding and backlog tracking? - Management reported steady backlog and order activity in the non-residential market, despite challenges from higher interest rates and tightening credit standards [45][46] Question: Can you elaborate on the new manufacturing facility in Florida? - Management confirmed that the new facility will provide incremental capacity and will not displace existing high-performing facilities [49][51] Question: What is the outlook for free cash flow conversion in the second half? - Management targets a free cash flow conversion of 50% or greater, with a focus on working capital management [67] Question: What are the dynamics in the residential and non-residential markets for the back half of the year? - Management expects easier comps in the back half for residential, but does not anticipate significant changes in performance between residential and non-residential markets [86]

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, 2023 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) (State or Other Jurisdiction of Incorporation or Organization) D ...