Advanced Drainage Systems Inc (WMS) Reports Decrease in Q2 Fiscal 2024 Earnings
Advanced Drainage Systems Inc (NYSE:WMS) reported a decrease in net sales by 11.8% to $780.2 million in Q2 Fiscal 2024.
Net income also decreased by 10.7% to $137.0 million.
Despite the decrease in sales and income, cash provided by operating activities increased by 5.0% to $458.9 million.
The company's CEO, Scott Barbour, highlighted the resilience of the business model amidst a lower demand environment.
Advanced Drainage Systems Inc (NYSE:WMS), a leading provider of innovative water management solutions, announced its financial results for the fiscal second quarter ended September 30, 2023, on November 2, 2023. The company reported a decrease in net sales by 11.8% to $780.2 million and a decrease in net income by 10.7% to $137.0 million. Despite these decreases, the company saw an increase in cash provided by operating activities by 5.0% to $458.9 million.
Financial Highlights
Advanced Drainage Systems Inc (NYSE:WMS) reported a decrease in net sales by 11.8% to $780.2 million and a decrease in net income by 10.7% to $137.0 million. Net income per diluted share decreased by 4.8% to $1.71. Adjusted EBITDA (Non-GAAP) decreased by 6.4% to $246.3 million, and Adjusted Earnings per share (Non-GAAP) decreased by 4.8% to $1.71.
Year-to-date fiscal 2024 results showed a decrease in net sales by 13.4% to $1,558.3 million and a decrease in net income by 9.0% to $310.9 million. However, cash provided by operating activities increased by 5.0% to $458.9 million, and free cash flow (Non-GAAP) increased by 4.1% to $376.2 million.
CEO Commentary
In the second quarter, we saw better than expected performance in the Infiltrator business and Allied products portfolio continue, despite demand headwinds from higher interest rates, credit tightening and economic uncertainty. Results from the ADS pipe portfolio remain in line with expectations. Importantly, we demonstrated the resilience of the business model through the 180 basis point expansion in Adjusted EBITDA margin, even with the lower demand environment. The margin performance this quarter benefited from sales mix, as well as previous investments in the business including automation and tooling, effective management of price/cost as well as continuous improvement within our operations." - Scott Barbour, President and Chief Executive Officer of ADS
Financial Outlook
Based on current visibility, backlog of existing orders and business trends, the company updated its financial targets for fiscal 2024. Net sales are now expected to be in the range of $2.700 billion to $2.800 billion. Adjusted EBITDA is expected to be in the range of $800 to $850 million. The outlook for capital expenditures is unchanged, expected to be in the range of $200 million to $225 million.
Balance Sheet and Liquidity
Net cash provided by operating activities was $458.9 million, as compared to $437.0 million in the prior year. Free cash flow (Non-GAAP) was $376.2 million, as compared to $361.5 million in the prior year. Net debt (total debt and finance lease obligations net of cash) was $850.2 million as of September 30, 2023, a decrease of $257.6 million from March 31, 2023. ADS had total liquidity of $1,059.3 million, comprised of cash of $470.4 million as of September 30, 2023 and $588.9 million of availability under committed credit facilities.
Explore the complete 8-K earnings release (here) from Advanced Drainage Systems Inc for further details.
This article first appeared on GuruFocus.
