Advanced Drainage Systems Announces Fourth Quarter and Fiscal 2019 Results
Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a
leading global manufacturer of water management products and solutions
for non-residential, residential, infrastructure and agricultural
applications, today announced financial results for the fourth quarter
and fiscal year ended March 31, 2019.
Fourth Quarter Fiscal 2019 Results
- Net sales increased 8.8% to $272.2 million
- Net income increased 139.0% to $1.9 million
- Adjusted EBITDA (Non-GAAP) increased 36.5% to $36.9 million
Fiscal 2019 Results
- Net sales increased 4.1% to $1,384.7 million
- Net income increased 25.8% to $81.5 million
- Adjusted EBITDA (Non-GAAP) increased 10.3% to $232.0 million
-
Cash provided by operating activities increased 10.6% to $151.7
million - Free cash flow (Non-GAAP) increased 13.5% to $108.3 million
Scott Barbour, President and Chief Executive Officer of ADS commented,
“We closed out another strong year by achieving fourth quarter top and
bottom-line results, driven by disciplined execution of our market share
model and conversion strategy. The strength in our fourth quarter
results reflect increased volume across our key geographies for both
Pipe and Allied products, favorable pricing and operational efficiency
in manufacturing and transportation.”
Barbour continued, “Our commitment to continuous improvement and
best-in-class water management solutions propelled us to outperform our
core domestic construction markets by approximately 400 basis points in
fiscal 2019 and grow our share in the storm water market. In addition,
we delivered margin expansion of 100 basis points for the year driven by
price attainment, Allied product growth as well as disciplined execution
and cost containment. Looking ahead to fiscal 2020, we will continue to
deliver on our three-year plan to increase shareholder value by
capitalizing on our leadership position and strength in our end markets
to drive growth, while achieving sustained profitability and maintaining
a strong balance sheet.”
Fourth Quarter Fiscal 2019 Results
Net sales increased 8.8% to $272.2 million, as compared to $250.1
million in the prior year. Domestic net sales increased 11.1% to $251.2
million as compared to $226.2 million in the prior year, driven by a
12.8% increase in construction market sales. International net sales
decreased 12.1% to $21.0 million as compared to $23.9 million in the
prior year, driven primarily by a decrease in Mexico sales.
Gross profit increased 23.7% to $59.5 million, as compared to $48.1
million the prior year quarter. As a percentage of net sales, gross
profit increased 270 basis points to 21.9%, compared to 19.2% in the
prior year. The margin expansion is primarily due to an increase in
volume, favorable pricing and successful cost containment efforts.
Adjusted EBITDA (Non-GAAP) increased 36.5% to $36.9 million, as compared
to $27.0 million in the prior year quarter. As a percentage of net
sales, Adjusted EBITDA increased 270 basis points to 13.5% as compared
to 10.8% in the prior year. The increase in Adjusted EBITDA margin was
largely attributed to the factors mentioned above.
Reconciliations of GAAP to Non-GAAP financial measures for Adjusted
EBITDA and Free Cash Flow have been provided in the financial statement
tables included in this press release. An explanation of these measures
is also included below under the heading “Non-GAAP Financial Measures.”
Fiscal 2019 Results
Net sales increased 4.1% to $1,384.7 million, as compared to $1,330.4
million in the prior year. Domestic net sales increased 4.2% to $1,224.1
million, as compared to $1,174.4 million in the prior year, primarily
driven by solid construction market demand, favorable pricing and strong
Allied product sales. International net sales increased 2.9% to $160.6
million, as compared to $155.9 million in the prior year, driven
primarily by growth in our Exports business.
Gross profit increased 8.1% to $327.0 million, as compared to $302.5
million the prior year. As a percentage of net sales, gross profit
increased 90 basis points to 23.6%, compared to 22.7% in the prior year.
The margin increase is primarily due to favorable pricing and successful
cost containment efforts, partially offset by higher inflationary costs
on resin, transportation and wages, among others.
Adjusted EBITDA (Non-GAAP) increased 10.3% to $232.0 million, as
compared to $210.2 million in the prior year. As a percentage of net
sales, Adjusted EBITDA increased 100 basis points to 16.8% as compared
to 15.8% in the prior year. The increase in Adjusted EBITDA margin was
largely attributed to the factors mentioned above.
Net cash from operating activities increased 10.6% to $151.7 million, as
compared to $137.1 million in the prior year. Free cash flow (Non-GAAP)
increased 13.5% to $108.3 million, as compared to $95.4 million in the
prior year. Net debt (total debt and capital lease obligations net of
cash) was $310.3 million as of March 31, 2019, a decrease of $51.8
million from March 31, 2018.
Fiscal 2020 Outlook
Based on current visibility, backlog of existing orders and business
trends, the Company has provided its net sales and Adjusted EBITDA
targets for fiscal 2020. Net sales are expected to be in the range of
$1.425 billion to $1.475 billion and Adjusted EBITDA is expected to be
in the range of $245 to $265 million. Capital expenditures are expected
to be in the range of $55 million to $65 million.
Webcast Information
The Company will host an investor conference call and webcast on
Thursday, May 23, 2019 at 10:00 a.m. Eastern Time. The live call can be
accessed by dialing 1-844-484-0244 (US toll-free) or 1-647-689-5142
(international) and asking to be connected to the Advanced Drainage
Systems, Inc. call. The live webcast will also be accessible via the
"Events Calendar” section of the Company’s Investor Relations website, www.investors.ads-pipe.com.
An archived version of the webcast will be available for one year
following the call.
About the Company
Advanced Drainage Systems is the leading manufacturer of high
performance thermoplastic corrugated pipe, providing a comprehensive
suite of water management products and superior drainage solutions for
use in the construction and infrastructure marketplace. Its innovative
products are used across a broad range of end markets and applications,
including non-residential, residential, agriculture and infrastructure
applications. The Company has established a leading position in many of
these end markets by leveraging its national sales and distribution
platform, overall product breadth and scale and manufacturing
excellence. Founded in 1966, the Company operates a global network of
approximately 55 manufacturing plants and over 30 distribution centers.
To learn more about ADS, please visit the Company’s website at www.ads-pipe.com.
Forward Looking Statements
Certain statements in this press release may be deemed to be
forward-looking statements. These statements are not historical facts
but rather are based on the Company’s current expectations, estimates
and projections regarding the Company’s business, operations and other
factors relating thereto. Words such as “may,” “will,” “could,” “would,”
“should,” “anticipate,” “predict,” “potential,” “continue,” “expects,”
“intends,” “plans,” “projects,” “believes,” “estimates,” “confident” and
similar expressions are used to identify these forward-looking
statements. Factors that could cause actual results to differ from those
reflected in forward-looking statements relating to our operations and
business include: fluctuations in the price and availability of resins
and other raw materials and our ability to pass any increased costs of
raw materials on to our customers in a timely manner; volatility in
general business and economic conditions in the markets in which we
operate, including, without limitation, factors relating to availability
of credit, interest rates, fluctuations in capital and business and
consumer confidence; cyclicality and seasonality of the non-residential
and residential construction markets and infrastructure spending; the
risks of increasing competition in our existing and future markets,
including competition from both manufacturers of high performance
thermoplastic corrugated pipe and manufacturers of products using
alternative materials; our ability to continue to convert current demand
for concrete, steel and PVC pipe products into demand for our high
performance thermoplastic corrugated pipe and Allied Products; the
effect of weather or seasonality; the loss of any of our significant
customers; the risks of doing business internationally; the risks of
conducting a portion of our operations through joint ventures; our
ability to expand into new geographic or product markets; our ability to
achieve the acquisition component of our growth strategy; the risk
associated with manufacturing processes; our ability to manage our
assets; the risks associated with our product warranties; our ability to
manage our supply purchasing and customer credit policies; the risks
associated with our self-insured programs; our ability to control labor
costs and to attract, train and retain highly-qualified employees and
key personnel; our ability to protect our intellectual property rights;
changes in laws and regulations, including environmental laws and
regulations; our ability to project product mix; the risks associated
with our current levels of indebtedness; fluctuations in our effective
tax rate, including from the recently enacted Tax Cuts and Jobs Act;
changes to our operating results, cash flows and financial condition
attributable to the recently enacted Tax Cuts and Jobs Act; our ability
to meet future capital requirements and fund our liquidity needs; the
risk that additional information may arise that would require the
Company to make additional adjustments or revisions or to restate the
financial statements and other financial data for certain prior periods
and any future periods, any delay in the filing of any filings with the
Securities and Exchange Commission (“SEC”); the review of potential
weaknesses or deficiencies in the Company’s disclosure controls and
procedures, and discovering weaknesses of which we are not currently
aware or which have not been detected and the other risks and
uncertainties described in the Company’s filings with the SEC. New risks
and uncertainties emerge from time to time and it is not possible for
the Company to predict all risks and uncertainties that could have an
impact on the forward-looking statements contained in this press
release. In light of the significant uncertainties inherent in the
forward-looking information included herein, the inclusion of such
information should not be regarded as a representation by the Company or
any other person that the Company’s expectations, objectives or plans
will be achieved in the timeframe anticipated or at all. Investors are
cautioned not to place undue reliance on the Company’s forward-looking
statements and the Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
Financial Statements
| ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended | Fiscal Year Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| (Amounts in thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net sales | $ | 272,218 | $ | 250,114 | $ | 1,384,733 | $ | 1,330,354 | ||||||||
| Cost of goods sold | 212,714 | 201,999 | 1,057,766 | 1,027,873 | ||||||||||||
| Gross profit | 59,504 | 48,115 | 326,967 | 302,481 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling | 24,179 | 22,416 | 96,335 | 92,764 | ||||||||||||
| General and administrative | 24,610 | 24,041 | 89,692 | 98,392 | ||||||||||||
|
Loss on disposal of assets and costs from exit and disposal |
2,075 | 4,535 | 3,647 | 15,003 | ||||||||||||
| Intangible amortization | 1,935 | 1,997 | 7,880 | 8,068 | ||||||||||||
| Income from operations | 6,705 | (4,874 | ) | 129,413 | 88,254 | |||||||||||
| Other expense: | ||||||||||||||||
| Interest expense | 4,590 | 2,642 | 18,618 | 15,262 | ||||||||||||
| Derivative loss (gains) and other expense (income), net | (729 | ) | 506 | (815 | ) | (3,950 | ) | |||||||||
| Income before income taxes | 2,844 | (8,022 | ) | 111,610 | 76,942 | |||||||||||
| Income tax expense (benefit) | 1,081 | (4,401 | ) | 30,049 | 11,411 | |||||||||||
| Equity in net (income) loss of unconsolidated affiliates | (130 | ) | 1,235 | 95 | 739 | |||||||||||
| Net income | 1,893 | (4,856 | ) | 81,466 | 64,792 | |||||||||||
| Less: net income attributable to noncontrolling interest | 883 | 847 | 3,694 | 2,785 | ||||||||||||
| Net income attributable to ADS | 1,010 | (5,703 | ) | 77,772 | 62,007 | |||||||||||
| Dividends to redeemable convertible preferred stockholders | (497 | ) | (443 | ) | (2,047 | ) | (1,858 | ) | ||||||||
| Dividends paid to unvested restricted stockholders | (13 | ) | (2 | ) | (69 | ) | (49 | ) | ||||||||
|
Net income available to common stockholders and participating |
500 | (6,148 | ) | 75,656 | 60,100 | |||||||||||
|
Undistributed income allocated to participating securities |
- | - | (5,474 | ) | (4,514 | ) | ||||||||||
| Net income available to common stockholders | $ | 500 | $ | (6,148 | ) | $ | 70,182 | $ | 55,586 | |||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 57,325 | 56,302 | 57,025 | 55,696 | ||||||||||||
| Diluted | 57,823 | 56,302 | 57,611 | 56,334 | ||||||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.01 | $ | (0.11 | ) | $ | 1.23 | $ | 1.00 | |||||||
| Diluted | $ | 0.01 | $ | (0.11 | ) | $ | 1.22 | $ | 0.99 | |||||||
| Cash dividends declared per share | $ | 0.08 | $ | 0.07 | $ | 0.32 | $ | 0.28 | ||||||||
| ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (unaudited) | ||||||||
| As of | ||||||||
| (Amounts in thousands) | March 31, 2019 | March 31, 2018 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 8,891 | $ | 17,587 | ||||
| Receivables, net | 186,991 | 171,961 | ||||||
| Inventories | 264,540 | 263,792 | ||||||
| Other current assets | 6,091 | 5,113 | ||||||
| Total current assets | 466,513 | 458,453 | ||||||
| Property, plant and equipment, net | 398,891 | 399,381 | ||||||
| Other assets: | ||||||||
| Goodwill | 102,638 | 103,017 | ||||||
| Intangible assets, net | 37,177 | 44,437 | ||||||
| Other assets | 36,940 | 37,954 | ||||||
| Total assets | $ | 1,042,159 | $ | 1,043,242 | ||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current maturities of debt obligations | $ | 25,932 | $ | 26,848 | ||||
| Current maturities of capital lease obligations | 23,117 | 22,007 | ||||||
| Accounts payable | 93,577 | 105,521 | ||||||
| Other accrued liabilities | 61,901 | 60,560 | ||||||
| Accrued income taxes | 1,758 | 6,307 | ||||||
| Total current liabilities | 206,285 | 221,243 | ||||||
| Long-term debt obligations, net | 208,602 | 270,900 | ||||||
| Long-term capital lease obligations | 61,555 | 59,963 | ||||||
| Deferred tax liabilities | 45,963 | 32,304 | ||||||
| Other liabilities | 19,119 | 25,023 | ||||||
| Total liabilities | 541,524 | 609,433 | ||||||
| Mezzanine equity: | ||||||||
| Redeemable convertible preferred stock | 282,638 | 291,247 | ||||||
| Deferred compensation — unearned ESOP shares | (180,316 | ) | (190,168 | ) | ||||
| Redeemable noncontrolling interest in subsidiaries | - | 8,471 | ||||||
| Total mezzanine equity | 102,322 | 109,550 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 11,436 | 11,426 | ||||||
| Paid-in capital | 391,039 | 364,908 | ||||||
| Common stock in treasury, at cost | (9,863 | ) | (8,277 | ) | ||||
| Accumulated other comprehensive loss | (25,867 | ) | (21,247 | ) | ||||
| Retained earnings (deficit) | 17,582 | (39,214 | ) | |||||
| Total ADS stockholders’ equity | 384,327 | 307,596 | ||||||
| Noncontrolling interest in subsidiaries | 13,986 | 16,663 | ||||||
| Total stockholders’ equity | 398,313 | 324,259 | ||||||
| Total liabilities, mezzanine equity and stockholders’ equity | $ | 1,042,159 | $ | 1,043,242 | ||||
| ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (unaudited) | ||||||||
| Fiscal Year Ended March 31, | ||||||||
| (Amounts in thousands) | 2019 | 2018 | ||||||
| Cash Flow from Operating Activities | ||||||||
| Net income | $ | 81,466 | $ | 64,792 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 71,900 | 75,003 | ||||||
| Deferred income taxes | 12,813 | (11,239 | ) | |||||
|
Loss on disposal of assets and costs from exit and disposal activities |
3,647 | 12,655 | ||||||
| ESOP and stock-based compensation | 21,828 | 18,845 | ||||||
| Amortization of deferred financing charges | 735 | 934 | ||||||
| Fair market value adjustments to derivatives | 2,346 | (3,244 | ) | |||||
| Equity in net loss (income) of unconsolidated affiliates | 95 | 739 | ||||||
| Other operating activities | (5,219 | ) | 1,010 | |||||
| Changes in working capital: | ||||||||
| Receivables | (17,953 | ) | (4,327 | ) | ||||
| Inventories | (2,034 | ) | (4,841 | ) | ||||
| Prepaid expenses and other current assets | (1,004 | ) | 1,648 | |||||
| Accounts payable, accrued expenses, and other liabilities | (16,942 | ) | (14,855 | ) | ||||
| Net cash provided by operating activities | 151,678 | 137,120 | ||||||
| Cash Flows from Investing Activities | ||||||||
| Capital expenditures | (43,412 | ) | (41,709 | ) | ||||
| Cash paid for acquisitions, net of cash acquired | - | (1,990 | ) | |||||
| Proceeds from sale of corporate-owned life insurance | - | 13,644 | ||||||
| Other investing activities | 868 | (390 | ) | |||||
| Net cash used in investing activities | (42,544 | ) | (30,445 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from Revolving Credit Facility | 405,700 | 487,850 | ||||||
| Payments on Revolving Credit Facility | (442,800 | ) | (512,150 | ) | ||||
| Payments on Term Loan | - | (72,500 | ) | |||||
| Proceeds from Senior Notes | - | 75,000 | ||||||
| Payments on Senior Notes | (25,000 | ) | (25,000 | ) | ||||
| Debt issuance costs | - | (2,268 | ) | |||||
| Equipment financing loans | (909 | ) | - | |||||
| Payments of notes, mortgages, and other debt | (940 | ) | (1,905 | ) | ||||
| Payments on capital lease obligations | (24,284 | ) | (24,214 | ) | ||||
| Acquisition of noncontrolling interest in BaySaver | (8,800 | ) | - | |||||
| Cash dividends paid | (26,148 | ) | (18,478 | ) | ||||
| Proceeds from exercise of stock options | 5,908 | 9,087 | ||||||
| Repurchase of common stock | - | (7,947 | ) | |||||
| Other financing activities | (382 | ) | (2,428 | ) | ||||
| Net cash provided by financing activities | (117,655 | ) | (94,953 | ) | ||||
| Effect of exchange rate changes on cash | (175 | ) | (585 | ) | ||||
| Net change in cash | (8,696 | ) | 11,137 | |||||
| Cash at beginning of period | 17,587 | 6,450 | ||||||
| Cash at end of period | $ | 8,891 | $ | 17,587 | ||||
Selected Financial Data
The following tables set forth net sales by reportable segment for each
of the periods indicated.
| Three Months Ended | Fiscal Year Ended | |||||||||||||||||||||||
|
(Amounts in thousands |
March 31, | % | March 31, | % | ||||||||||||||||||||
| 2019 | 2018 | Variance | 2019 |
2018 |
Variance | |||||||||||||||||||
| Domestic | ||||||||||||||||||||||||
| Pipe | $ | 180,780 | $ | 161,364 | 12.0 | % | $ | 868,805 | $ | 844,875 | 2.8 | % | ||||||||||||
| Allied Products | 70,405 | 64,815 | 8.6 | % | 355,326 | 329,557 | 7.8 | % | ||||||||||||||||
| Domestic net sales | $ | 251,185 | $ | 226,179 | 11.1 | % | $ | 1,224,131 | $ | 1,174,432 | 4.2 | % | ||||||||||||
| International | ||||||||||||||||||||||||
| Pipe | $ | 14,800 | $ | 17,647 | (16.1 | %) | $ | 122,836 | $ | 119,207 | 3.0 | % | ||||||||||||
| Allied Products | 6,233 | 6,288 | (0.9 | %) | 37,766 | 36,715 | 2.9 | % | ||||||||||||||||
| International net sales | $ | 21,033 | $ | 23,935 | (12.1 | %) | $ | 160,602 | $ | 155,922 | 3.0 | % | ||||||||||||
| Consolidated | ||||||||||||||||||||||||
| Pipe | $ | 195,580 | $ | 179,011 | 9.3 | % | $ | 991,641 | $ | 964,082 | 2.9 | % | ||||||||||||
| Allied Products | 76,638 | 71,103 | 7.8 | % | 393,092 | 366,272 | 7.3 | % | ||||||||||||||||
| Net sales | $ | 272,218 | $ | 250,114 | 8.8 | % | $ | 1,384,733 | $ | 1,330,354 | 4.1 | % | ||||||||||||
Employee Stock Ownership Plan (“ESOP”)
The Company established an ESOP to enable employees to acquire stock
ownership in ADS in the form of redeemable convertible preferred shares
(“preferred shares”). All preferred shares will be converted to common
shares by plan maturity, which will be no later than March 2023. The
ESOP’s conversion of preferred shares into common shares will have a
meaningful impact on net income, net income per share and common shares
outstanding. The common shares outstanding will be greater after
conversion.
Net Income
The impact of the ESOP on net income includes the ESOP deferred
compensation attributable to the preferred shares allocated to employee
accounts during the period, which is a non-cash charge to our earnings
and not deductible for income tax purposes.
| Three Months Ended | Fiscal Year Ended | ||||||||||||||
| March 31, | March 31, | ||||||||||||||
| (Amounts in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Net income attributable to ADS | $ | 1,010 | $ | (5,703 | ) | $ | 77,772 | $ | 62,007 | ||||||
| ESOP deferred compensation | 4,183 | 3,778 | 15,296 | 11,724 | |||||||||||
Common shares outstanding
The conversion of the preferred shares will increase the number of
common shares outstanding. Preferred shares will convert to common
shares at plan maturity, or upon retirement, disability, death or vested
terminations over the life of the plan.
| Three Months Ended | Fiscal Year Ended | |||||||||||||
| March 31, | March 31, | |||||||||||||
| (Shares in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Weighted average common shares outstanding - Basic | 57,325 | 56,302 | 57,025 | 55,696 | ||||||||||
| Conversion of preferred shares | 17,460 | 18,030 | 17,640 | 18,298 | ||||||||||
| Unvested restricted shares | 43 | 270 | 43 | 270 | ||||||||||
Non-GAAP Financial Measures
This press release contains financial information determined by methods
other than in accordance with accounting principles generally accepted
in the United States of America (“GAAP”). ADS management uses non-GAAP
measures in its analysis of the Company’s performance. Investors are
encouraged to review the reconciliation of non-GAAP financial measures
to the comparable GAAP results available in the accompanying tables.
Reconciliation of Non-GAAP Financial Measures
This press release includes references to Adjusted EBITDA and Free Cash
Flow, non-GAAP financial measures. These non-GAAP financial measures are
used in addition to and in conjunction with results presented in
accordance with GAAP. These measures are not intended to be substitutes
for those reported in accordance with GAAP. Adjusted EBITDA and Free
Cash Flow may be different from non-GAAP financial measures used by
other companies, even when similar terms are used to identify such
measures.
EBITDA and Adjusted EBITDA are non-GAAP financial measures that comprise
net income before interest, income taxes, depreciation and amortization,
stock-based compensation, non-cash charges and certain other expenses.
The Company’s definition of Adjusted EBITDA may differ from similar
measures used by other companies, even when similar terms are used to
identify such measures. Adjusted EBITDA is a key metric used by
management and the Company’s board of directors to assess financial
performance and evaluate the effectiveness of the Company’s business
strategies. Accordingly, management believes that Adjusted EBITDA
provides useful information to investors and others in understanding and
evaluating our operating results in the same manner as the Company’s
management and board of directors. In order to provide investors with a
meaningful reconciliation, the Company has provided below
reconciliations of Adjusted EBITDA to net income.
Free Cash Flow is a non-GAAP financial measure that comprises cash flow
from operating activities less capital expenditures. Free Cash Flow is a
measure used by management and the Company’s board of directors to
assess the Company’s ability to generate cash. Accordingly, management
believes that Free Cash Flow provides useful information to investors
and others in understanding and evaluating our ability to generate cash
flow from operations after capital expenditures. In order to provide
investors with a meaningful reconciliation, the Company has provided
below a reconciliation of cash flow from operating activities to Free
Cash Flow.
The following tables present a reconciliation of EBITDA and Adjusted
EBITDA to Net Income and Free Cash Flow to Cash Flow from Operating
Activities, the most comparable GAAP measures, for each of the periods
indicated.
Reconciliation of Adjusted EBITDA to Net Income
| Three Months Ended | Fiscal Year Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| (Amounts in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net income | $ | 1,893 | $ | (4,856 | ) | $ | 81,466 | $ | 64,792 | |||||||
| Depreciation and amortization | 18,988 | 19,210 | 71,900 | 75,003 | ||||||||||||
| Interest expense | 4,590 | 2,642 | 18,618 | 15,262 | ||||||||||||
| Income tax expense (benefit) | 1,081 | (4,401 | ) | 30,049 | 11,411 | |||||||||||
| EBITDA | 26,552 | 12,595 | 202,033 | 166,468 | ||||||||||||
| Derivative fair value adjustments | (575 | ) | 292 | 634 | (443 | ) | ||||||||||
| Foreign currency transaction (gains) losses | 90 | 1,130 | 314 | (1,748 | ) | |||||||||||
|
Loss on disposal of assets and costs from exit and disposal |
2,075 | 4,535 | 3,647 | 15,003 | ||||||||||||
|
Unconsolidated affiliates interest, tax, depreciation and |
226 | 632 | 1,463 | 2,692 | ||||||||||||
| Contingent consideration remeasurement | 9 | 6 | (6 | ) | 39 | |||||||||||
| Stock-based compensation expense | 1,503 | 1,981 | 6,532 | 7,121 | ||||||||||||
| ESOP deferred stock-based compensation | 4,183 | 3,778 | 15,296 | 11,724 | ||||||||||||
| Executive retirement (benefit) expense | 50 | 491 | (178 | ) | 1,473 | |||||||||||
| Restatement-related (benefit) costs | 14 | 837 | (1,924 | ) | 4,227 | |||||||||||
| Legal settlement | - | 200 | - | 2,000 | ||||||||||||
| Transaction costs | 295 | 213 | 699 | 1,362 | ||||||||||||
| Impairment of investment in unconsolidated affiliate | - | 312 | - | 312 | ||||||||||||
| Strategic growth and operational improvement initiatives | 2,440 | - | 3,450 | - | ||||||||||||
| Adjusted EBITDA | $ | 36,862 | $ | 27,002 | $ | 231,960 | $ | 210,230 | ||||||||
Reconciliation of Segment Adjusted EBITDA to Net Income
| Three Months Ended March 31, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| (Amounts in thousands) | Domestic | International | Domestic | International | ||||||||||||
| Net income | $ | (243 | ) | $ | 2,136 | $ | (4,558 | ) | $ | (298 | ) | |||||
| Depreciation and amortization | 17,169 | 1,819 | 17,253 | 1,957 | ||||||||||||
| Interest expense | 4,540 | 50 | 2,566 | 76 | ||||||||||||
| Income tax expense (benefit) | 2,156 | (1,075 | ) | (3,384 | ) | (1,017 | ) | |||||||||
| EBITDA | 23,622 | 2,930 | 11,877 | 718 | ||||||||||||
| Derivative fair value adjustments | (575 | ) | - | 292 | - | |||||||||||
| Foreign currency transaction (gains) losses | - | 90 | - | 1,130 | ||||||||||||
|
Loss on disposal of assets and costs from exit and disposal |
1,862 | 213 | 3,995 | 540 | ||||||||||||
|
Unconsolidated affiliates interest, tax, depreciation and |
- | 226 | 295 | 337 | ||||||||||||
| Contingent consideration remeasurement | 9 | - | 6 | - | ||||||||||||
| Stock-based compensation expense | 1,503 | - | 1,981 | - | ||||||||||||
| ESOP deferred stock-based compensation | 4,183 | - | 3,778 | - | ||||||||||||
| Executive retirement (benefit) expense | 50 | - | 491 | - | ||||||||||||
| Restatement-related (benefit) costs | 14 | - | 837 | - | ||||||||||||
| Legal settlement | - | - | 200 | - | ||||||||||||
| Transaction costs | 295 | - | 213 | - | ||||||||||||
| Impairment of investment in unconsolidated affiliate | - | - | 312 | - | ||||||||||||
| Strategic growth and operational improvement initiatives | 2,440 | - | - | - | ||||||||||||
| Adjusted EBITDA | $ | 33,403 | $ | 3,459 | $ | 24,277 | $ | 2,725 | ||||||||
| Fiscal Year Ended March 31, | ||||||||||||||||
| 2019 | 2018 | |||||||||||||||
| (Amounts in thousands) | Domestic | International | Domestic | International | ||||||||||||
| Net income | $ | 70,296 | $ | 11,170 | $ | 57,279 | $ | 7,513 | ||||||||
| Depreciation and amortization | 64,450 | 7,450 | 66,978 | 8,025 | ||||||||||||
| Interest expense | 18,352 | 266 | 14,929 | 333 | ||||||||||||
| Income tax expense (benefit) | 28,816 | 1,233 | 9,199 | 2,212 | ||||||||||||
| EBITDA | 181,914 | 20,119 | 148,385 | 18,083 | ||||||||||||
| Derivative fair value adjustments | 634 | - | (443 | ) | - | |||||||||||
| Foreign currency transaction gains (losses) | - | 314 | - | (1,748 | ) | |||||||||||
|
Loss on disposal of assets and costs from exit and disposal |
2,823 | 824 | 14,248 | 755 | ||||||||||||
|
Unconsolidated affiliates interest, tax, depreciation and |
- | 1,463 | 1,181 | 1,511 | ||||||||||||
| Contingent consideration remeasurement | (6 | ) | - | 39 | - | |||||||||||
| Stock-based compensation expense | 6,532 | - | 7,121 | - | ||||||||||||
| ESOP deferred stock-based compensation | 15,296 | - | 11,724 | - | ||||||||||||
| Executive retirement expense (benefit) | (178 | ) | - | 1,473 | - | |||||||||||
| Restatement-related costs | (1,924 | ) | - | 4,227 | - | |||||||||||
| Legal settlement | - | - | 2,000 | - | ||||||||||||
| Transaction costs | 693 | 6 | 1,362 | - | ||||||||||||
| Impairment of investment in unconsolidated affiliate | - | - | 312 | - | ||||||||||||
| Strategic growth and operational improvement initiatives | 3,450 | - | - | - | ||||||||||||
| Adjusted EBITDA | $ | 209,234 | $ | 22,726 | $ | 191,629 | $ | 18,601 | ||||||||
Reconciliation of Free Cash Flow to Cash flow from Operating
Activities
| Fiscal Year Ended March 31, | ||||||||
| (Amounts in thousands) | 2019 | 2018 | ||||||
| Net cash flow from operating activities | $ | 151,678 | $ | 137,120 | ||||
| Capital expenditures | (43,412 | ) | (41,709 | ) | ||||
| Free cash flow | $ | 108,266 | $ | 95,411 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190523005207/en/