Company Performance - Advanced Drainage Systems reported quarterly earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.09 per share, and down from $1.23 per share a year ago [1] - The company posted revenues of $615.76 million for the quarter, missing the Zacks Consensus Estimate by 6.51%, and down from $653.84 million year-over-year [3] - The earnings surprise for the quarter was -5.50%, and the company has surpassed consensus EPS estimates only once in the last four quarters [2] Market Outlook - Advanced Drainage shares have increased by approximately 5.3% since the beginning of the year, outperforming the S&P 500's gain of 0.2% [4] - The current consensus EPS estimate for the upcoming quarter is $2.21 on revenues of $835 million, and for the current fiscal year, it is $6.20 on revenues of $3.07 billion [8] - The estimate revisions trend for Advanced Drainage is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [7] Industry Context - The Building Products - Miscellaneous industry, to which Advanced Drainage belongs, is currently in the bottom 45% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [6]

Financial Performance - FY25 Net Sales reached $2,904 million, aligning with the guidance of $2,900 - $2,975 million[8] - FY25 Adjusted EBITDA was $889 million, within the guidance range of $880 - $920 million[8] - FY25 Adjusted EBITDA Margin was 30.6%, meeting the guidance of 30.3% - 30.9%[8] - Infiltrator's FY25 revenue increased by 15% to $516 million from $449 million in FY24[20] - Infiltrator's Adjusted Gross Profit margin improved by 60 bps to 53.6% in FY25 from 53.0% in FY24[23] - Consolidated Free Cash Flow was $369 million in FY25, compared to $534 million in FY24[29] Segment Performance and Product Mix - Allied Products and Pipe segments accounted for 56.2% and 26% of FY25 revenue, respectively[11] - Infiltrator segment accounted for 18% of FY25 revenue[11] - Infiltrator's organic advanced treatment business grew by 33% year-over-year[25] Fiscal 2026 Expectations - The company anticipates Net Sales between $2,825 million and $2,975 million for Fiscal Year 2026, representing a (3%) to +2% change[31] - The company projects Adjusted EBITDA between $850 million and $910 million for Fiscal Year 2026, a (4%) to +2% change[31] - The company expects Adjusted EBITDA Margin between 30.1% and 30.6% for Fiscal Year 2026, a (50) bps to flat change[31]

Financial Performance - Net sales for Q4 FY2025 decreased by $38.1 million, or 5.8%, to $615.8 million compared to $653.8 million in the prior year quarter[3] - For FY2025, net sales increased by $29.8 million, or 1.0%, to $2,904.2 million, driven by growth in the Infiltrator business and Allied products portfolio[8] - Net sales for the three months ended March 31, 2025, were $615,761,000, a decrease of 5.8% compared to $653,840,000 for the same period in 2024[24] Profitability - Adjusted EBITDA for Q4 FY2025 decreased by $14.5 million, or 7.6%, to $176.7 million, representing 28.7% of net sales compared to 29.2% in the prior year[7] - Gross profit for FY2025 decreased by $51.7 million, or 4.5%, to $1,094.2 million, primarily due to unfavorable pricing and material costs[9] - Net income attributable to ADS for the three months ended March 31, 2025, was $77,157,000, a decline of 18.7% from $94,822,000 in the prior year[24] - Adjusted EBITDA for the three months ended March 31, 2025, was $176,695, down from $191,178 in the same period of 2024[38] - Net income for the fiscal year ended March 31, 2025, was $452,573, down from $513,291 in 2024, a decline of 11.8%[38] Cash Flow and Debt - Free cash flow for FY2025 decreased by $165.6 million to $368.5 million, compared to $534.1 million in the prior year[13] - The company reported a net cash provided by operating activities of $581,491,000 for the fiscal year ended March 31, 2025, down from $717,928,000 in 2024, a decrease of 19.0%[28] - As of March 31, 2025, the company's net debt was $962.3 million, an increase of $101.4 million from the previous year[13] - Long-term debt obligations, net, were $1,251,589,000 as of March 31, 2025, compared to $1,259,522,000 in 2024, showing a slight decrease of 0.6%[26] Expenses - Selling, general and administrative expenses for FY2025 increased by $9.7 million, or 2.6%, to $380.4 million, representing 13.1% of sales[10] - Operating expenses for the fiscal year ended March 31, 2025, were $380,378,000, slightly higher than $370,714,000 in 2024, reflecting an increase of 2.0%[24] - Interest expense for the fiscal year ended March 31, 2025, was $91,803, slightly up from $88,862 in 2024[38] Capital Expenditures - Capital expenditures for the fiscal year ended March 31, 2025, were $212,944,000, compared to $183,812,000 in 2024, an increase of 15.9%[28] - Capital expenditures for the fiscal year ended March 31, 2025, were $212,944, an increase from $183,812 in 2024[40] Dividends and Shareholder Returns - The company declared cash dividends of $0.16 per share for the three months ended March 31, 2025, up from $0.14 per share in the same period of 2024[24] Acquisition - The company completed the acquisition of Orenco on October 1, 2024, which is expected to enhance its Infiltrator segment[14] Assets - Total assets increased to $3,690,360,000 as of March 31, 2025, compared to $3,268,913,000 as of March 31, 2024, representing a growth of 12.9%[26] - Cash and restricted cash at the end of the fiscal year was $469,271,000, down from $495,848,000 in the previous year, indicating a decrease of 5.4%[28] Earnings Per Share - Diluted earnings per share for the three months ended March 31, 2025, was $0.99, down from $1.21 in 2024, reflecting a decline of 18.2%[42] - Adjusted earnings per share for the fiscal year ended March 31, 2025, was $5.89, compared to $6.39 in 2024, representing a decrease of 7.8%[42]

Company Performance - Southland Holdings (SLND) reported a quarterly loss of $0.08 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.41, representing an earnings surprise of 80.49% [1] - The company posted revenues of $239.49 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 4.99%, although this is a decline from year-ago revenues of $288.1 million [2] - Over the last four quarters, Southland has surpassed consensus EPS estimates two times and topped consensus revenue estimates twice [2] Stock Movement and Outlook - Southland shares have increased by approximately 10.5% since the beginning of the year, contrasting with the S&P 500's decline of -0.6% [3] - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at -$0.28 for the coming quarter and -$1.01 for the current fiscal year [4][7] Industry Context - The Building Products - Miscellaneous industry, to which Southland belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Southland's stock performance [5]

Core Viewpoint - Janus International Group, Inc. reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.08 per share, but down from $0.21 per share a year ago, indicating a 62.50% earnings surprise [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates two times over the last four quarters [2] - The quarterly revenue was $210.5 million, surpassing the Zacks Consensus Estimate by 1.54%, but down from $254.5 million year-over-year [2] - The earnings surprise for the last quarter was 400%, with actual earnings of $0.05 compared to an expected $0.01 [1] Group 2: Stock Performance and Outlook - Janus International Group shares have declined approximately 2.7% year-to-date, while the S&P 500 has decreased by 4.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $212.2 million, and for the current fiscal year, it is $0.48 on revenues of $874.6 million [7] Group 3: Industry Context - The Building Products - Miscellaneous industry is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Advanced Drainage Systems, Inc. (NYSE:WMS) Q3 2024 Earnings Conference Call February 8, 2024 10:00 AM ET Company Participants Mike Higgins - VP of Corporate Strategy & IR Scott Barbour - President and CEO Scott Cottrill - EVP and CFO Conference Call Participants David Tarantino - KeyBanc Capital Markets Bryan Blair - Oppenheimer Matthew Bouley - Barclays Garik Shmois - Loop Capital Joe Ahlersmeyer - Deutsche Bank John Lovallo - UBS Noah Merkousko - Stephens, Inc. Operator Good morning, ladies and gentlemen, ...

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]

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, 2023 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. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securit ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited financial statements for the three and nine months ended December 31, 2022, compared to the prior year, including balance sheets, statements of operations, comprehensive income, cash flows, and stockholders' equity, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Mar 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $426,690 | $20,125 | | Total current assets | $1,157,366 | $871,898 | | Total assets | $3,005,658 | $2,649,758 | | **Liabilities & Equity** | | | | Total current liabilities | $370,280 | $391,241 | | Long-term debt obligations | $1,272,040 | $908,705 | | Total liabilities | $1,889,917 | $1,544,713 | | Total stockholders' equity | $958,613 | $909,661 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $655,167 | $715,357 | $2,453,562 | $2,091,128 | | Gross profit | $223,917 | $208,977 | $895,987 | $610,155 | | Income from operations | $124,487 | $110,314 | $593,679 | $331,141 | | Net income | $83,182 | $74,462 | $425,041 | $227,897 | | Diluted EPS | $0.99 | $0.86 | $5.02 | $2.61 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Nine Months Ended Dec 31 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $660,438 | $193,847 | | Net cash used in investing activities | ($174,822) | ($150,040) | | Net cash used in financing activities | ($78,590) | ($216,574) | | Net change in cash | $406,565 | ($172,836) | - Significant financing activities in the nine months ended Dec 31, 2022 included proceeds from Senior Notes of **$500.0 million** and common stock repurchases of **$375.0 million**[14](index=14&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations for the line items in the financial statements, covering business segments, the acquisition of Cultec, revenue recognition, debt structure, stock-based compensation, and segment performance data - The company operates in three reportable segments: Pipe, Infiltrator Water Technologies, and International, along with an 'Allied Products and Other' category[21](index=21&type=chunk) - On April 29, 2022, the company acquired Cultec, Inc. for a total consideration of **$48.0 million**, expanding its portfolio in stormwater and onsite septic wastewater solutions[26](index=26&type=chunk) - In June 2022, the company issued **$500.0 million** in 6.375% Senior Notes due 2030[47](index=47&type=chunk) - During the nine months ended December 31, 2022, the company repurchased **3.8 million shares** of common stock for **$375.0 million**[40](index=40&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q3 and nine-month fiscal 2023 financial performance, detailing sales, gross profit, liquidity, and capital resources [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Operating results for Q3 and nine months ended December 31, 2022, detail sales and gross profit trends, highlighting Q3 sales decrease and nine-month growth Q3 FY2023 vs Q3 FY2022 Performance (in thousands) | Metric | Q3 FY2023 | Q3 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $655,167 | $715,357 | (8.4)% | | Gross Profit | $223,917 | $208,977 | 7.1% | | Adjusted EBITDA | $169,737 | $176,155 | (3.6)% | Nine Months FY2023 vs Nine Months FY2022 Performance (in thousands) | Metric | 9M FY2023 | 9M FY2022 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,453,562 | $2,091,128 | 17.3% | | Gross Profit | $895,987 | $610,155 | 46.8% | | Adjusted EBITDA | $731,982 | $507,541 | 44.2% | - The increase in gross profit for both the three and nine-month periods was primarily driven by favorable pricing on products and favorable material costs, which offset decreased sales volume and other inflationary pressures[77](index=77&type=chunk)[82](index=82&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company details its strong liquidity, increased operating cash flow, and significant financing activities including debt issuance and share repurchases - As of December 31, 2022, the company had total liquidity of **$1,017.1 million**, comprising **$426.7 million** in cash and **$590.4 million** available under its Revolving Credit Agreement[121](index=121&type=chunk) - Free Cash Flow for the nine months ended Dec 31, 2022, was **$533.6 million**, a significant increase from **$93.5 million** in the prior-year period, driven by higher operating income and favorable working capital changes[118](index=118&type=chunk)[124](index=124&type=chunk) - Key financing activities included issuing **$500.0 million** of 2030 Senior Notes and using cash for a **$375.0 million** common stock repurchase[127](index=127&type=chunk)[135](index=135&type=chunk) - The company anticipates capital expenditures of approximately **$175 million** for the full fiscal year 2023[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rates, raw material prices, and foreign currency, with interest rate risk on variable-rate debt as the main exposure - The company is subject to interest rate risk on its variable-rate debt, including the Revolving Credit Facility and Term Loan Facility[150](index=150&type=chunk) - A hypothetical **1.0%** increase in interest rates on variable-rate debt would increase the company's annual interest expense by approximately **$4.2 million**, based on borrowings as of December 31, 2022[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded the company's disclosure controls and procedures were effective as of December 31, 2022, with no material changes to internal control - Based on their evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[152](index=152&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the ordinary course of business but does not believe they will have a material adverse impact on its financial position or results of operations - The company is involved in various legal proceedings that arise in the ordinary course of business[155](index=155&type=chunk) - Management does not believe that current litigation, claims, and administrative proceedings will have a material adverse impact on the company's financial position or results of operations[155](index=155&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors previously disclosed in the company's Fiscal 2022 Form 10-K, with no new significant risks detailed here - The report refers to the risk factors described in "Part I, Item 1A — Risk Factors" of the company's Fiscal 2022 Form 10-K for important risk disclosures[157](index=157&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company discusses its common stock repurchase program, detailing recent repurchases and the remaining authorization under the program - In February 2022, the Board of Directors authorized a **$1.0 billion** common stock repurchase program[158](index=158&type=chunk) Share Repurchases for Three Months Ended Dec 31, 2022 | Metric | Value | | :--- | :--- | | Total Shares Repurchased | 1.9 million | | Total Cost | $179.9 million | | Remaining Authorization | ~$625.0 million | [Other Items (Items 3, 4, 5, 6)](index=30&type=section&id=Other%20Items%20(Items%203,%204,%205,%206)) This section confirms no defaults on senior securities, no applicable mine safety disclosures, no other material information, and lists filed exhibits - Item 3: There were no defaults upon senior securities[160](index=160&type=chunk) - Item 4: Mine safety disclosures are not applicable[160](index=160&type=chunk) - Item 5: There was no other information to disclose[161](index=161&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Advanced Drainage Systems, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, cash flows, and stockholders' equity, with accompanying notes for the periods ended December 31, 2021 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.56 billion** as of December 31, 2021, from **$2.41 billion**, primarily due to higher inventories and property, plant, and equipment, while total liabilities rose to **$1.54 billion** from **$1.35 billion** due to increased long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Mar 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $807,019 | $742,978 | | Inventories | $465,518 | $300,961 | | **Total Assets** | **$2,555,759** | **$2,413,832** | | **Total Current Liabilities** | $364,084 | $318,270 | | Long-term Debt Obligations | $931,765 | $782,220 | | **Total Liabilities** | **$1,535,249** | **$1,350,406** | | **Total Stockholders' Equity** | $814,768 | $833,515 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales for Q3 FY2022 grew **47.1%** to **$715.4 million**, with net income attributable to ADS increasing to **$73.7 million**, while nine-month net sales rose **35.9%** to **$2.09 billion**, reaching **$225.0 million** in net income Three Months Ended December 31, (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Sales | $715,357 | $486,145 | | Gross Profit | $208,977 | $168,505 | | Income from Operations | $110,314 | $82,963 | | Net Income Attributable to ADS | $73,678 | $53,774 | | Diluted EPS | $0.86 | $0.62 | Nine Months Ended December 31, (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Sales | $2,091,128 | $1,538,971 | | Gross Profit | $610,155 | $562,865 | | Income from Operations | $331,141 | $311,635 | | Net Income Attributable to ADS | $225,024 | $204,476 | | Diluted EPS | $2.61 | $2.38 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the nine months ended December 31, 2021, decreased to **$193.8 million** from **$448.8 million**, while investing activities used **$150.0 million** and financing activities used **$216.6 million**, primarily due to stock repurchases Cash Flow Summary for Nine Months Ended December 31, (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $193,847 | $448,776 | | Net Cash Used in Investing Activities | ($150,040) | ($57,159) | | Net Cash Used in Financing Activities | ($216,574) | ($343,116) | | **Net Change in Cash** | **($172,836)** | **$49,763** | - Significant financing activities in the first nine months of fiscal 2022 included **$292.0 million** in common stock repurchases and net borrowings of **$133.5 million** from the Revolving Credit Agreement[14](index=14&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business segments, the **$49.4 million** acquisition of Jet Polymer Recycling, revenue recognition, debt structure, and segment performance, alongside subsequent events like a new **$1.0 billion** stock repurchase program and ESOP loan repayment plans - On December 3, 2021, the Company acquired Jet Polymer Recycling, Inc. for a total consideration of **$49.4 million** to expand its plastic recycling capabilities, with preliminary goodwill recorded at **$12.6 million**[25](index=25&type=chunk)[26](index=26&type=chunk)[28](index=28&type=chunk) Net Sales by Reportable Segment - Nine Months Ended Dec 31, (in thousands) | Segment | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Pipe | $1,150,655 | $815,201 | 41.1% | | Infiltrator | $353,567 | $252,600 | 40.0% | | International | $170,999 | $126,638 | 35.0% | | Allied Products & Other | $415,907 | $344,532 | 20.7% | | **Total Consolidated** | **$2,091,128** | **$1,538,971** | **35.9%** | - Subsequent to the quarter end, in February 2022, the Board approved a new **$1.0 billion** stock repurchase program, replacing the previous one which had no remaining capacity[73](index=73&type=chunk) - The company plans to repay the remaining balance of its ESOP loan on March 31, 2022, after which **16.1 million shares** of preferred stock will convert into **12.4 million shares** of common stock[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q3 and nine-month FY2022 financial performance, driven by double-digit sales growth across segments due to pricing and demand, noting gross profit increases despite inflationary pressures, and detailing liquidity, decreased operating cash flow, and financing activities [Executive Summary](index=23&type=section&id=Executive%20Summary) Q3 FY2022 net sales surged **47.1%** to **$715.4 million**, with net income up **37.8%** to **$74.5 million** and Adjusted EBITDA increasing **26.9%** to **$176.2 million**, while nine-month net sales rose **35.9%** to **$2.09 billion** and Adjusted EBITDA grew **7.4%** to **$507.5 million** Q3 Fiscal 2022 Performance Highlights | Metric | Q3 FY2022 | % Change YoY | | :--- | :--- | :--- | | Net Sales | $715.4 million | +47.1% | | Net Income | $74.5 million | +37.8% | | Adjusted EBITDA | $176.2 million | +26.9% | Nine-Month Fiscal 2022 Performance Highlights | Metric | YTD FY2022 | % Change YoY | | :--- | :--- | :--- | | Net Sales | $2,091.1 million | +35.9% | | Net Income | $227.9 million | +11.0% | | Adjusted EBITDA | $507.5 million | +7.4% | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Net sales showed significant year-over-year growth for both the three and nine-month periods ended December 31, 2021, with Q3 consolidated net sales up **47.1%** and gross profit increasing **24.0%** despite inflationary pressures, while nine-month net sales grew **35.9%** Net Sales Variance by Segment - Three Months Ended Dec 31, (in thousands) | Segment | 2021 | 2020 | % Variance | | :--- | :--- | :--- | :--- | | Pipe | $396,695 | $252,898 | 56.9% | | Infiltrator | $122,363 | $81,221 | 50.7% | | International | $50,143 | $42,407 | 18.2% | | Allied Products & Other | $146,156 | $109,619 | 33.3% | | **Total Consolidated** | **$715,357** | **$486,145** | **47.1%** | - For Q3, consolidated gross profit increased by **$40.5 million** (**24.0%**), driven by higher sales from improved pricing, but was partially offset by inflationary pressures from higher material, transportation, and manufacturing costs[94](index=94&type=chunk) Net Sales Variance by Segment - Nine Months Ended Dec 31, (in thousands) | Segment | 2021 | 2020 | % Variance | | :--- | :--- | :--- | :--- | | Pipe | $1,150,655 | $815,201 | 41.1% | | Infiltrator | $353,567 | $252,600 | 40.0% | | International | $170,999 | $126,638 | 35.0% | | Allied Products & Other | $415,907 | $344,532 | 20.7% | | **Total Consolidated** | **$2,091,128** | **$1,538,971** | **35.9%** | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, total liquidity was **$226.2 million**, with net cash from operations decreasing to **$193.8 million** from **$448.8 million**, primarily due to working capital investments, while capital expenditures rose to **$100.4 million** and the leverage ratio stood at **1.6x** Key Liquidity Metrics - Nine Months Ended Dec 31, (in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $193,847 | $448,776 | | Capital expenditures | ($100,367) | ($57,675) | | **Free Cash Flow (Non-GAAP)** | **$93,480** | **$391,101** | - As of December 31, 2021, the company had **$204.0 million** in available liquidity under its revolver, with **$133.5 million** in outstanding borrowings[130](index=130&type=chunk)[131](index=131&type=chunk) - The company anticipates capital expenditures of approximately **$130 to $150 million** for the full fiscal year 2022[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include interest rates, credit, and raw material prices, with a **1.0%** increase in interest rates potentially raising annual interest expense by approximately **$5.7 million** based on December 31, 2021, debt levels - The company is exposed to interest rate risk on its variable-rate debt, where a **1.0%** increase in interest rates would increase annual forecasted interest expense by approximately **$5.7 million** based on debt levels at December 31, 2021[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting during the quarter - Based on their evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report[170](index=170&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[171](index=171&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, which are not expected to have a material adverse impact on its financial position or results of operations - The Company states that it does not believe ongoing litigation, claims, and administrative proceedings will have a material adverse impact on its financial position or results of operations[173](index=173&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the risk factors disclosed in the Fiscal 2021 Form 10-K, indicating no material changes or new significant risks for the quarter - The report directs stakeholders to the risk factors described in the Fiscal 2021 Form 10-K for important risk disclosures[175](index=175&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock during the three months ended December 31, 2021, as the existing authorization was fully utilized, with a new program announced subsequently - No shares of common stock were repurchased during the three months ended December 31, 2021[176](index=176&type=chunk) - As of December 31, 2021, the company had no remaining repurchase authorization under its existing program[176](index=176&type=chunk)