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.
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