Advanced Drainage Systems, Inc. (NYSE:WMS) Q3 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 10:00 am ET


Advanced Drainage Systems, Inc. (NYSE:WMS) Q3 2019 Earnings Conference Call Transcript


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Good day. My name is Jack, and I will be your conference operator today. At this time, I would like to welcome everyone to the Advanced Drainage Systems Third Quarter Fiscal 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mike Higgins, Vice President of Corporate Strategy and Investor Relations, you may begin your conference.

Michael Higgins

Thank you everyone, and good morning. With me today, I have Scott Barbour, our President and CEO; and Scott Cottrill, our CFO. I would also like to remind you that we will discuss forward-looking statements. Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today.

Lastly, the press release we issued earlier this morning is posted on the Investor Relations section of our website. A copy of the release has also been included in an 8-K submitted to the SEC. We will make a replay of this conference call available via webcast on the Company website.

With that, I'll turn the call over to Scott Barbour.

Donald Scott Barbour

Thanks, Mike, and good morning everyone. We are on track to meet our financial guidance for the year despite unseasonably wet weather conditions throughout the United States and Canada in November and December, which shifted some sales volume out of our third quarter and into our fourth quarter. Fortunately, we've been able to get much of that loss volume back in January as activity picked up once poor weather conditions subsided. Despite the wet weather, our core domestic construction market sales grew 6% in the third quarter and we saw double-digit growth at key products such as our HP pipe, StormTech retention, detention systems, Nyloplast catch basins and our wallet -- water quality product lines.

Our construction market growth was driven by strength in the nonresidential and residential end markets, demonstrating the success of our complete solution strategy. Residential sales were overall up 12% this quarter, with new residential housing up a very strong 15% as we continue to capitalize on the success of our material conversion strategy, even in the softer housing environment, we are seeing today. In addition, our retail sales were up 8% in the quarter due to our strong partnerships with our retail and national account customers.

In the infrastructure market, our sales were down 9% this quarter. Our infrastructure sales are more vectored to the Midwest and Northeast where we have better public approvals, but unfortunately funding has not been as strong. However, there are areas where we are seeing very strong growth. In the West, Colorado and Nevada infrastructure sales have more than doubled and Utah