Advanced Drainage Systems, Inc. (ADS) reported its financial results for the three and six months ended September 30, 2024, reflecting a mixed performance compared to the previous fiscal period. For the three months, net sales reached $782.6 million, a slight increase of 0.3% from $780.2 million in the same period of 2023. Year-to-date net sales for the six months totaled $1.6 billion, up 2.5% from $1.56 billion in the prior year.

Despite the revenue growth, profitability metrics showed declines. Gross profit for the three months ended September 30, 2024, was $293.9 million, down 2.9% from $302.7 million in the prior year. For the six-month period, gross profit decreased to $626.4 million from $634.1 million. Income from operations also fell, with $187.4 million reported for the three months, down from $198 million, and $413.6 million for the six months, compared to $443.5 million in the previous year.

Net income for the three months ended September 30, 2024, was $131.2 million, a decrease of 4.3% from $137 million in the same quarter of 2023. Year-to-date net income was $293.5 million, down 5.6% from $310.9 million. The decline in net income was attributed to increased selling, general, and administrative expenses, which rose by 5.6% to $188.2 million for the three months, primarily due to higher commissions and investments in talent.

Segment performance varied, with the Pipe segment generating $841.9 million in sales, a slight increase from $836.5 million, while Infiltrator sales rose significantly by 10.6% to $128.5 million. However, international sales decreased by 14.5% to $56.6 million.

In terms of strategic developments, ADS announced the acquisition of Orenco Systems, Inc. for approximately $250 million, which will be included in the Infiltrator segment. The company also declared a quarterly cash dividend of $0.16 per share, payable in December 2024.

As of September 30, 2024, total current assets increased to $1.49 billion from $1.3 billion at the end of March 2024, while total liabilities rose to $2.04 billion. Total stockholders’ equity improved to $1.39 billion, up from $1.17 billion. The company maintained a leverage ratio of 0.8, with total liquidity of $1.2 billion, including $613 million in cash.

Overall, while ADS experienced revenue growth, profitability faced challenges due to rising costs and increased operational expenses.