Advanced Drainage Systems Stock

Advanced Drainage Systems, Inc. operates as a manufacturer of water management solutions in the stormwater and on-site septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplaces.

The company’s innovative products are used across a broad range of end markets and applications, including residential, non-residential, infrastructure and agriculture applications. The company has established a leading position in many of these end markets by leveraging its national sales and distribution platform, market share model, industry-acclaimed engineering support, overall product breadth and scale plus manufacturing excellence.

The company’s trademarked green stripe, which is prominently displayed on many of its products, serves as clear identification of its commitment to the customers and markets it serves, and fortifies its brand recognition and presence. The company’s approach to water management is to manage the lifecycle of a raindrop from the moment water hits the ground until it is released back into the ecosystem. The company’s product portfolio is built around four steps of this lifecycle: Capture, Conveyance, Storage, and Treatment. The company’s solutions safely and efficiently manage stormwater with environmentally friendly products. The company is the only water management solutions company that manages stormwater from when the rain first hits the ground until the moment it is returned to lakes and streams. The company provides a broad range of high performance thermoplastic corrugated pipe and related water management products to a highly diversified set of end markets and geographies.

Products

The company designs, manufactures and markets a complete line of high performance thermoplastic corrugated pipe and related water management products for use in a wide range of end markets. The company’s product line includes: single, double and triple wall corrugated polypropylene and polyethylene pipe (Pipe), plastic leachfield chambers and systems, septic tanks and accessories (or Infiltrator), and a variety of additional water management products (Allied Products & Other or Allied Products), including: storm retention/detention and septic chambers (Chambers); polyvinyl chloride drainage structures (Structures); fittings (Fittings); and water quality filters and separators (Water Quality). The company also sells various complementary products distributed through resale agreements, including geotextile products, drainage grates and other products (Other Resale).

The company’s products and engineering project designs have been continuously and frequently recognized by the industry. This includes being honored many times during the past decade as the Plastics Pipe Institute’s Project of the Year. The company has won numerous awards from organizations, such as the Wisconsin Department of Natural Resources for its local recyclingprogram, the American Society of Testing & Materials (ASTM), the American Society of Civil Engineers, and many others.

Pipe

Dual Wall Corrugated Pipe - The company’s N-12 pipe is a dual wall high-density polyethylene (HDPE) pipe with a corrugated exterior for strength and a smooth interior wall for hydraulics and flow capacity. The company’s N-12 pipe competes in the storm sewer and drainage markets that are also served by concrete pipe. The company’s N-12 pipe is available in a wide range of diameters and sections of length. N-12 provides joint integrity, with integral bell and spigot joints for fast push-together installations and is sold either with watertight or soil-tight coupling and fitting systems. The company’s corrugated polyethylene pipe offers many benefits, including ease of installation, job-site handling and resistance to corrosion and abrasion. Corrugated pipe can easily be cut or coupled together, providing precise laying lengths while minimizing installation waste and difficulty.

HP Storm Pipe and SaniTite HP Pipe - The company’s HP Storm pipe utilizes polypropylene (PP) resin, which provides: increased pipe stiffness relative to HDPE; higher Environmental Stress Crack Resistance (ESCR); and improved thermal properties, which improves joint performance. These improved physical characteristics result in a reduced need for select backfill, which creates installation savings for customers and expands the range of possible product applications.

The company’s SaniTite HP pipe utilizes the same polypropylene resins as its HP Storm pipe but includes a smooth third exterior wall in 30 inches to 60 inches pipe. The highly engineered polypropylene resin along with the triple wall design enables SaniTite HP to surpass the stiffness requirement for sanitary sewer applications. SaniTite HP offers cost and performance advantages relative to reinforced concrete pipe (such as improved hydraulics and better joint integrity) and polyvinyl chloride (PVC) pipe (such as impact resistance).

Single Wall Corrugated Pipe - The company’s single wall corrugated HDPE pipe is ideal for drainage projects where flexibility, light weight and low cost are important. Single wall HDPE pipe products have been used for decades in agricultural drainage, highway edge drains, septic systems and other construction applications. In the agricultural market, improved technology has highlighted the favorable impact of drainage on crop yields. For homeowners, it is an economical and easily installed solution for downspout run-off, foundation drains, driveway culverts and general lawn drainage. Single wall pipe is also used for golf courses, parks and athletic fields to keep surfaces dry by channeling away excess underground moisture. Standard single wall products are available in a wide range of diameters and sold in varying lengths. Pipe can be either perforated or non-perforated depending on the particular drainage application.

Triple Wall Corrugated Pipe and Smoothwall HDPE Pipe - The company’s ADS-3000 Triple Wall pipe, small diameter triple wall corrugated pipe, consists of a corrugated polyethylene core molded between a smooth white outer wall and a smooth black inner wall. This combination of the three wall design adds strength and stiffness, while reducing weight as compared to PVC 2729. Triple Wall is produced and sold through its distribution network. The company also manufactures smoothwall HDPE pipe sold into the residential drainage and onsite septic systems markets.

Infiltrator

Infiltrator is the leading designer and manufacturer of highly engineered plastic chambers, synthetic aggregate leachfields, combined treatment and dispersal systems, plastic tanks, active treatment systems, and related accessories that are used in septic systems and decentralized commercial wastewater treatment systems. The onsite wastewater (septic) market is heavily reliant on rural homes and communities that do not have access to centralized sewer and will require an onsite wastewater or septic solution. Onsite wastewater technologies are scalable and can easily meet the needs of churches, schools, light commercial and small community construction projects.

Leachfield Products – The company’s Quick4 and Arc line of septic leachfield chambers are injection molded using recycled polyolefin materials. There are Quick4 and Arc line chamber models available to meet a wide variety of regulatory and market needs. The Quick4 and Arc chambers are engineered for strength and performance, easy to install, and offer the user greater design flexibility, including a smaller footprint, as compared with traditional stone and pipe products. The product advantages are cost savings on labor, materials and time savings on the job.

EZflow - EZflow synthetic aggregate bundles replace stone and pipe leachfields for effluent and drainage applications. The EZflow proprietary products are a modular design that incorporates recycled polystyrene aggregate bundles and corrugated polyethylene pipe that act as a replacement to the traditional materials stone and pipe.

Tank Products – The company’s IM-Series line of septic tanks are injection-molded polypropylene plastic tanks manufactured from recycled materials. IM-Series septic tanks are available in various capacities for wastewater storage. The company’s IM-Series is the only two-piece construction, injection molded septic tank design in North America. In comparison to traditional concrete tanks, its IM-Series septic tanks are easier to transport to the job site and require less time and energy to install.

The company’s IM-Series line of potable tanks are injection-molded polypropylene plastic tanks manufactured from virgin materials suitable for water reuse and drinking water storage. IM-Series potable tanks are available in various capacities for water storage. IM-Series potable tanks are commonly used in water cistern applications, such as rainwater harvesting systems.

Delta Treatment Systems – The company’s Delta Treatment Systems’ (Delta) wastewater treatment systems provide a higher level of wastewater purification through mechanical aeration wastewater for residential and commercial systems with daily flows up to 100,000 gallons per day.

Presby Treatment Dispersal Systems - The company’s Presby Environmental Enviro-Septic and Advanced Enviro-Septic systems are proprietary combined treatment and dispersal systems made with a twelve-inch diameter corrugated extrusion product that is encapsulated in fibrous materials and geotextiles. These systems when installed in a bed of sand provide combined treatment and dispersal in the same small footprint and at a reduced cost with minimal long-term maintenance.

Advanced Treatment Leachfield - The company’s Advanced Treatment Leachfield (ATL) product is an alternative combined treatment and dispersal system that provides advanced wastewater treatment. The ATL is a profile of polystyrene aggregates and geotextiles installed in a bed of sand.

Allied Products & Other

The company produces a range of Allied Products that are complementary to its Pipe products. The company’s Allied Products offer adjacent technologies to its core Pipe offering, presenting a complete drainage solution for its clients and customers with this combination forming a key strategy in its sales growth, profitability and market share penetration. The company aggressively seeks and evaluates new products, technologies and regulatory changes that impact its customers’ needs for Allied Products.

Storm Chambers - The company’s StormTech and Cultec, acquired in April 2022, chambers are used for stormwater retention, detention and first flush underground water storage on residential and non-residential site development along with public projects. These highly engineered chambers are injection molded or thermoformed from HDPE and PP resins into a proprietary design which provides strength, durability, and resistance to corrosion. The chambers allow for the efficient storage of stormwater volume, reducing the underground construction footprint and costs to the contractors, developers, and property owners.

Structures - The company’s Nyloplast PVC drainage structures are used in non-residential, residential and municipal site development, road and highway construction, as well as landscaping, recreational, industrial and mechanical applications. The product family includes inline drains, drain basins, curb inlets and water control structures which move surface-collected stormwater vertically down to pipe conveyance systems. These custom structures are fabricated from sections of PVC pipe using a thermoforming process to achieve exact site-specific hydraulic design requirements. The company’s Nyloplast products are a preferred alternative to heavier and larger concrete structures, by offering greater design flexibility and improved ease of installation which reduces overall project costs and timelines. The structures incorporate rubber gaskets to ensure watertight connections, preventing soil infiltration which plagues competitive products.

Fittings - The company produces fittings and couplings utilizing blow molding, injection molding and custom fabrication on its pipe products. The company’s innovative coupling and fitting products are highly complementary to ots broader product suite, and include both soil-tight and water-tight capabilities across the full pipe diameter spectrum. The company’s fittings are sold in all end markets where it sells its current pipe products.

Other Products - The company’s ARC, BioDiffuser, Contactor and Recharger products are chambers that are used in septic systems for residential and small volume non-residential wastewater treatment and disposal. The innovative design of the comopany’s chambers are generally approved for a footprint reduction, further reducing the cost of the septic system. Injection-molded or thermoformed from HDPE or PP, these products are strong, durable, and chemical-resistant. These interconnecting chambers are favored by septic contractors because they are lightweight and easy to install and the Arc chamber offers articulating features which increase site-specific design flexibility. The ARC chamber products are manufactured by Infiltrator.

The company’s Water Quality product line targets the removal of sediment, debris, oils and suspended solids throughout a stormwater rain event by separating and/or filtering unwanted pollutants.

The company purchases and distributes construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage. Constructed of woven and non-woven PP, geotextile products provide permanent, cost-efficient site-development solutions. Construction fabrics and geotextiles have applications in all of its end markets.

The company’s Inserta Tee product line consists of a PVC hub, rubber sleeve and stainless steel band. Inserta Tee is compression fit into the cored wall of a mainline pipe and can be used with all pipe material types and profiles. This product offers an easy tap-in to existing sanitary and storm sewers by limiting the excavation needed for installation compared to competitive products.

Manufacturing and Distribution Platform

The company has a leading domestic and international manufacturing and distribution infrastructure, serving customers throughout the United States, Canada, Mexico and other countries worldwide through 66 manufacturing plants and 40 distribution centers, including eight manufacturing plants and nine distribution centers owned or leased by its joint ventures. The company manufactures its corrugated pipe products using a continuous extrusion process, where polyethylene or polypropylene is extruded through a die into a moving series of corrugated U-shaped molds. The company utilizes customized and proprietary production equipment, which produces higher quality final products and is more cost efficient than other pipe making equipment generally available in the market.

Domestically, the company can produce more than one billion pounds of pipe annually. Additional capacity is in place to support seasonal production needs and expected growth. The company’s production equipment is built to accept transportable molds and die tooling over a certain range of sizes so each plant is not required to house the full range of tooling at any given time. This transportability provides the company with the flexibility to optimize its capacity through centrally coordinated production planning, which helps to adapt to shifting sales demand patterns while reducing the capital needed for tooling.

The company produces storm and septic chambers, tanks and accessories using injection molding machines ranging in size.

International Presence – The company owns manufacturing facilities in Canada to produce its products for sale in the Canadian markets. The company serves international markets primarily in Mexico, Central America and South America through joint venture operations with local partners. The company’s joint venture strategy has provided it with local and regional access to key markets, such as Mexico, Brazil, Chile, Argentina, and Peru. The company’s international joint ventures produce pipe and related products to be sold in their respective regional markets. The company also has wholly-owned subsidiaries that distribute its pipe and related products in Europe and the Middle East. Combining local partners’ customer relationships, brand recognition and local management talent, with its world-class manufacturing and process expertise, broad product portfolio and innovation creates a powerful solution driven platform and opportunities for continued profitable international expansion.

Fleet – The company also operates an in-house fleet of approximately 700 tractors. The company’s effective shipping radius is approximately 300 miles from one of its manufacturing plants or distribution centers. The combination of a dedicated fleet and team of company drivers allows greater flexibility and responsiveness in meeting dynamic customer job site delivery expectations.

The company’s North American truck fleet incorporates approximately 1,300 trailers that are specially designed to haul its lightweight pipe and Allied Products.

Sales and Marketing

The company’s sales and marketing strategy is divided into four components: comprehensive market coverage, diverse product offerings, readily-available local inventory and specification efforts. The company strives to use its manufacturing footprint, product portfolio and market expertise to efficiently service its customers.

Customers

The company has a large, active customer base of approximately 16,000 customers, with two customers representing 10% or more of fiscal 2023 net sales. Ferguson Enterprises (Ferguson) accounted for 13.7% and Core and Main accounted for 11.8% of fiscal 2023 net sales. The company’s customer base is diversified across the range of end markets that it serves.

A majority of the company’s sales are made through distributors, including many of the largest national and independent waterworks distributors, with whom it has long-standing distribution relationships and who sell primarily to the storm sewer and sanitary sewer markets. The company also utilizes a network of hundreds of small to medium-sized independent distributors across the United States. The company has strong relationships with major national retailers that carry drainage products. The company offers the most complete line of HDPE products in the industry and are the only national manufacturer that can service the Big-Box retailers from coast-to-coast. The company also sells to buying groups and co-ops in the United States that serve the plumbing, hardware, irrigation and landscaping markets. Selling to buying groups and co-ops provides the company a further presence on a national, regional and local basis for the distribution of the company’s products. The company’s preferred vendor status with these groups allows it to reach thousands of locations in an effective manner. Members of these groups and co-ops generally are independent businesses with strong relationships and brand recognition with smaller contractors and homeowners in their local markets. The combination of the company’s large sales force, long-standing retail and contractor customer relationships and extensive network of manufacturing and distribution facilities complements and strengthens its broad customer and market coverage.

The company’s customer service organization is supplemented by the employees of its manufacturing plants, distribution centers and drivers of its tractor-trailers.

Seasonality

Historically, sales of the company’s products have been higher in the first and second quarters of each fiscal year (year ended March 31, 2023) due to favorable weather and longer daylight conditions accelerating construction activity during these periods.

Regulation

The company is subject to safety requirements governing interstate operations prescribed by the U.S. Department of Transportation (U.S. DOT). The company’s U.S. facilities follow the Occupational Safety and Health Act (OSHA) safety and health general industry standards under the Department of Labor and Federal Motor Carrier Safety Administration under the Department of Transportation, as required by law; its Canadian facilities follow the Canada Occupational Health and Safety Regulations under the Canada Labour Code for the Minister of Labour and Canada Motor Vehicle Safety Standards (CMVSS) under Transport Canada as required by law; and its Mexico locations follow the NOMs as required by the Federal Labor Law for the Labor Ministry (STPS) and Secretary of Communication and Transportation as required by law.

History

Advanced Drainage Systems, Inc., a Delaware corporation, was founded in 1966. The company was incorporated in 1966.