Advanced Drainage Systems Reports Fiscal Second Quarter 2025 Results

authorIntellectia.AI2024-11-08
2
WMS.N
Illustration by Intellectia.AI

Advanced Drainage Systems Reports Fiscal Second Quarter 2025 Results

Advanced Drainage Systems, Inc. (NYSE:WMS), a leader in water management solutions, announced its financial results for the fiscal second quarter ended September 30, 2024.

Key Financial Metrics

Metric Q2 FY2025 Q1 FY2025 Q2 FY2024 YoY Change QoQ Change
Total Revenue (in millions) $782.6 $815.3 $780.2 +0.3% -4.0%
Net Income (in millions) $131.2 $162.3 $137.1 -4.3% -19.1%
EPS (Diluted) $1.67 $2.06 $1.71 -2.3% -18.9%
Adjusted EPS (Non-GAAP) $1.70 $2.10 $1.70 Flat -19.0%
Adjusted EBITDA (in millions) $245.6 $275.4 $246.3 -0.3% -10.9%

Overall, Advanced Drainage Systems reported flat revenue and adjusted earnings per share compared to the prior year. The decline in net income and diluted EPS partly reflects challenges in non-residential markets, as stated by CEO Scott Barbour.

Revenue Breakdown by Segment

Segment Q2 FY2025 Revenue (in millions) Q2 FY2024 Revenue (in millions) YoY Change
Domestic Pipe $410.5 $415.7 -1.3%
Domestic Allied Products & Other $187.1 $182.2 +2.7%
Infiltrator $128.5 $116.2 +10.6%
International $56.6 $66.2 -14.5%

Revenue from Infiltrator and Domestic Allied Products grew notably, thanks to strong demand in residential and infrastructure markets. However, overall growth was hindered by a decrease in domestic pipe sales and significant declines in international markets.

Key Developments and Operational Highlights

  • Acquisition of Orenco Systems, Inc. finalized in the fiscal third quarter, expanding opportunities in the advanced wastewater treatment sector.
  • Notable increase in organic capital investments by 36% in the first half of Fiscal 2025.

Executive Commentary

Scott Barbour, President and CEO, noted continued strong demand in several segments despite headwinds from non-residential markets and significant storm events. Barbour emphasized ongoing opportunities in water management infrastructure, citing the $630 billion need projected by the Environmental Protection Agency for U.S. water infrastructure over the next 20 years.

Shareholder Returns and Capital Allocation

  • No new dividend announcements were made.
  • ADS repurchased 0.4 million shares for $69.9 million during the first half of Fiscal 2025, with $147.7 million remaining under the current repurchase authorization.

Fiscal 2025 Guidance

The company revised its fiscal 2025 financial targets, now projecting: - Net sales between $2.900 billion to $2.975 billion. - Adjusted EBITDA ranging from $880 million to $920 million. - Approximately $250 million in capital expenditures.

Stock Movement

The share price of Advanced Drainage Systems fell by 2.76% following the release of the earnings report, reflecting investor reactions to the near-term financial performance and revised guidance.

Share