Advanced Drainage Systems, Inc. (NYSE:WMS) Q2 2020 Earnings Conference Call Transcript
Nov 07, 2019 • 09:00 am ET
Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems' Second Quarter Fiscal 2020 Results Conference Call. My name is Rob and I am your operator for today's call. [Operator Instructions]. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the presentation over to your host for today's call, Mr. Mike Higgins, Vice President, Corporate Strategy and Investor Relations. Sir, you may begin.
Thank you 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 Relation 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.
D. Scott Barbour
Thanks Mike, and good morning everyone. We're happy to have you all join us today on the call. Our second quarter financial results were very strong, building on a solid Q1 as we continue to execute on our growth in strategic priorities.
There are a couple of points I would like to hit right upfront. First, the legacy ADS business continues to outpace the broader market and we feel very good about where the business is positioned as we head into the second half of the year. The traditional ADS profitability levers of strong growth, favorable pricing and material cost as well as disciplined execution drove margin expansion and improved profitability during the quarter.
The recently acquired Infiltrator Water Technologies business is also performing well. They were right in line, if not slightly ahead of our expectations, driven by double-digit growth of both chambers and tanks. The integration remains on track, including the synergies we discussed on our last call.
The combination of strong growth, improved profitability, execution on our working capital initiatives resulted in an increase of over $100 million in free cash flow year-to-date compared to the prior year period. The strong cash flow generation puts us well on our way to being back within our targeted guardrails of two times to three times levered in the next 12 months.
Additionally, due to the very strong demand, we secured financing for a new long-term capital structure at favorable rates. And finally, we are raising our fiscal 2020 net sales and adjusted EBITDA guidance primarily due to the strong first half performance of the legacy ADS business.