Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems Second Quarter of Fiscal 2020 Results Conference Call. My name is Rob, and I am your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to turn the presentation over to your host for today’s call, Mr. Mike Higgins, Vice President of 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 Relations section of our website, a copy of the release has also been included in the 8-K submitted to the SEC. We will make a replay of this conference call available via webcast on the company’s website. With that, I’ll turn the call over to 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 and strategic priorities. There are a couple of points I would like to hit right up front. 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. This strong cash flow generation puts us well on our way to be back within our targeted guardrails of two to three times leverage 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. Overall, this was a very good quarter, which positions us well for a strong second half of the year. With that I’d like to provide a little bit more color on our performance for the quarter, starting with the top line. Top line growth at 22% was driven by organic growth of 9% plus the two-month contribution from Infiltrator Water Technologies. Because the acquisition is so new for today’s call, I will primarily separate and have a discussion of the two businesses. Starting with our legacy ADS business, domestic construction market sales grew 10%, well in excess of the low-single digit growth of these end markets. Our above-market growth was driven by the continued execution of our conversion and water management solution strategies as well as our focus on the key growth regions of the United States. We continue to see steady strength in the domestic construction markets through fiscal 2020 supported by favorable tailwinds including low interest rates, favorable housing, and healthy consumer confidence. Our backlog and order trends reflect this. Turning to the domestic agriculture end market, sales were up 38% in the quarter due to the prevented plant acres and pent-up demand. We were able to capitalize on these favorable market dynamics and accelerate our growth through some organizational changes, new product introductions and focused execution in the quarter. Overall, organic domestic sales were up 13% driven by the factors I’ve mentioned as well as strong execution on the strategic growth initiatives. We experienced double-digit growth of key products such as our HP pipe, StormTech retention and detention chambers, and Nyloplast catch basins. We also generated broad-based growth across all of our regions in the United States with particular strength in Texas, Florida, California, Georgia, New Jersey, and Virginia. We experienced another challenging quarter in the international business, however. In Canada, our sales were impacted by poor construction activity in our primary markets of Ontario and Quebec. Additionally, Mexican infrastructure spending continues to be very low due to the decrease in public funding. Our export business continues to grow nicely. Moving on to profitability. Organic adjusted EBITDA grew 31% this quarter and margins expanded 360 basis points. The improvement was driven by the traditional ADS legacy levers of strong top line growth, favorable pricing in both pipe and allied products, as well as favorable resin and recycling costs. We continue to work these familiar levers of profitability very hard. As we grow the company it is important to build new leverage for improving profitability. We have been talking about transportation and logistics initiatives for several quarters and we are beginning to see these initiatives gain traction with better payload efficiency and logistics planning. We have also developed a partnership with a common carrier to narrow the number of providers while improving service and pricing and this allowed us to use a common carrier to move interplant freight, which gives us better leverage on our company assets to drive revenue and customer service. Another important initiative is improving efficiency within our four-wall manufacturing network. We are developing maintenance programs to improve the performance of our equipment, and are seeing some better performance from that. These initiatives and several others are in flight, and we expect to see more benefit from these as we move forward. On Slide 6, we present Infiltrator Water Technologies’ results for August and September. Revenue was in line to slightly ahead of our expectations. Double-digit growth over the prior year period in both leach field chambers and tank sales was driven by the successful long-term material conversion strategy, which is similar to the ADS material conversion story and one of the reasons this acquisition was such a good fit. Sales were strong in the East, South and Midwest regions and growth in key states such as North Carolina, Georgia, and Florida outpaced single-family housing starts over the same period. This integration is on track and we are working on the identified synergy projects to deliver the expected synergies of $4 million to $6 million in year one. Additionally, we have approved capital projects to support the growth of this business. We’ve included that spending in today’s updated CapEx projection. On Slide 7, we present our capital deployment priorities, which remain focused on investing in growth, productivity and efficiency of the combined businesses, and paying down the debt to get our leverage ratio back within our two to three times guardrails in the next 12 months. Today we announced a $0.09 quarterly dividend to shareholders payable this December. Upon payment, our year-to-date total cash return to shareholders will be $96 million in fiscal 2020. This quarterly dividend demonstrates our commitment to shareholder returns as well as our confidence in the strength of our balance sheet to be able to return this cash without impacting our ability to execute on our other capital deployment priorities. All in all, we did a good job executing in the quarter, meeting our commitments, and positioning ourselves for a strong second half of the year. We will continue to mitigate inflationary pressures and deliver continuous improvement in manufacturing and logistics to deliver improved and sustainable profitability. Finally, we will continue to execute on our strategic capital deployment plan with a focus on working capital and debt pay down. With that, I’ll turn it over to Scott, who will further discuss our second quarter performance.

Thanks, Scott. Good morning everyone. Moving to Slide 8, we present a snapshot of our Second Quarter Fiscal 2020 financial performance. Organic net sales increased $37 million or 9% to $443 million. Infiltrator Water Technologies contributed an additional $65 million in August and September to bring our consolidated net sales to $496 million, an increase of 22% over the prior year. Organic pipe sales increased 8% driven by strong domestic construction and agricultural market sales. Organic allied product sales increased 13% primarily driven by strength in our domestic markets. Consolidated adjusted EBITDA increased $47 million or 65% to $118.2 million and our consolidated adjusted EBITDA margin increased 620 basis points to 21.2%. Organic adjusted EBITDA increased $23 million and our organic adjusted EBITDA margin increased 360 basis points to 21.2% in the second quarter. The improvement was driven by sales growth in both pipe and allied products, favorable material cost and pricing, as well as effective cost containment. Additionally, we benefited from modestly lower transportation expense due to improved efficiency as well as favorable diesel and common carrier rates. This improvement was offset by an increase in selling, general and administrative expenses, which reflects investments in our sales team to drive various growth initiatives, as well as higher compensation expense due to our current and expected performance for the year. Infiltrator Water Technologies contributed an additional $25.1 million to adjusted EBITDA and delivered an additional 260 basis points of improvement to the consolidated adjusted EBITDA margin. Standalone, the adjusted EBITDA margin of the Infiltrator Water Technologies business was 38.6%. Moving to Slide 9, we highlight our year-to-date free cash flow performance. The business generated $146 million of free cash flow year-to-date, an increase of $107 million over the same period last year. Our very strong free cash flow performance was driven primarily by higher profitability and favorable working capital performance, which improved by $74 million during the quarter. This improvement in working capital was driven by better enforcement of our collection policies, greater inventory turns from reductions in our slow-moving inventory and improving the sell-through of our existing inventories and was further boosted by lower resin cost. Finally, we worked hard to negotiate and better manage payment terms on our payables. All of which drove the favorable performance year-over-year. We’re very happy with our performance to date and the traction our working capital initiatives are producing, which we expect to continue throughout the balance of this year. On Slide 10, we detail our new capital structure updated since our first quarter results. We secured long-term permanent financing during the second quarter to finance the acquisition and close out our prior debt. During the quarter we issued 10,350,000 shares of common stock at $29.75 per share, raising $294 million net of offering costs. We also issued $350 million of 5% senior notes due in 2027 and entered into a new senior secured credit facility, which includes a $700 million term loan and a $350 million revolving credit facility at LIBOR plus 225. We ended the quarter with no balance on our cash flow revolver and due to our strong cash position, we paid down an additional $50 million on our term loan at the end of October. Importantly, there was strong demand for each of these financing transactions, and we were able to secure more favorable pricing than we had initially expected. Our weighted average maturities now extend to seven years from under four years previously, and our weighted average cost of debt has increased to approximately 4.5%. We ended the quarter with a leverage ratio of 3.8 times on a trailing 12-month pro forma basis for both companies; our leverage ratio was 2.9 times, which is well ahead of our original expectations primarily due to the strong free cash flow performance as well as the strong demand we experienced for the September equity offering. On Slide 11, we present our updated financial guidance for the combined companies in fiscal 2020, which includes eight months of Infiltrator Water Technologies results. Based on our order activity, backlog, and current market trends, we have increased the midpoint of our net sales guidance by $25 million. We now expect consolidated revenue to be in the range of $1.6 billion to $1.650 billion representing year-over-year growth of between 16% and 19%. We also raised the midpoint of our adjusted EBITDA guidance by $15 million due to our strong year-to-date performance, our updated sales guidance as well as favorable input costs. We now expect adjusted EBITDA to be in the range of $325 million to $345 million, representing growth of 40% to 49%. These ranges represent an adjusted EBITDA margin of 20.3% to 20.9% or margin expansion of 360 basis points to 420 basis points. Today’s increase in guidance is due to the strong performance in the legacy ADS business during the first half of fiscal 2020 and our projected performance throughout the remainder of the year, which is reflected in the legacy ADS guidance, also presented on this slide. Slide 12. Finally on Slide 12, we present our updated market outlook for the remainder of 2020 that supports our guidance. Overall, our outlook for the domestic construction market remains unchanged. Though the domestic residential market is stronger than anticipated, supported by consumer confidence, low interest rates and improving housing trends. Going into the year, we were cautious about the agricultural end market. However, due to the prevented plant acres, pent-up demand and investments in drainage, we expect this market to grow double-digits in fiscal 2020. Finally, the international market is weaker than we initially expected, due to a softer construction market in Canada and very weak infrastructure spending in Mexico. Exports continue to grow and perform in line with our expectations. With that, I’ll open the call for questions. Operator, please open the line.

Thank you. Your first question comes from Mike Halloran of Baird. Your line is open.

Good morning, everyone. This is an analyst on for Mike this morning. If we could start with Infiltrator, the sales contribution and EBITDA margin was impressive. Can you speak to the sustainability of that margin going forward? And then secondarily, now that you’re two months into having the Infiltrator contribution, can you maybe talk about what you’re seeing as you’ve gotten a closer look under the hood? I know that you guys have a deep relationship with these guys going back about 15 years, but maybe if you could talk about what you’re seeing under the hood as well?

I think I’m going to take the second question first about under the hood because I think it speaks a bit to the sustainability of the profitability of the business. You’re right, we know these guys well organizationally and individually, and they are everything that we thought they were and more. The Infiltrator team, Roy Moore and his team are very solid operators, very execution-focused. They are true professionals in every respect. Given that, they’ve built a business over a long period of time, and many of these people have been there quite a long period of time. They’ve built a business that has a lot of sustainable features in it. To replicate the technology in both injection molding and in design of product is really hard to replicate; there is a lot of expertise, a lot of intellectual property, and a lot of capital deployed. It would be hard to do a knockout blow on them. You could hit them around the edges but it would be hard to be a knockout blow. They back that up with tremendous engineering skills, not only in product design and in the machinery and automation piece, but in the material science piece. When you add those things together, it shows they have a very sustainable profit margin because they use a lot of recycled material that is not as volatile as virgin material. They have very good execution; their conversion is very steady. It’s basically in one big campus or set of facilities in Kentucky, so they can really keep their eye on it. And because of their scale across the country and in onsite septic, you are not going to replicate taking all those distributors away from them at one time, nor sneak up on them. There is not an obvious technology replacement for what they do. Now, that leads to some of the real benefits under the hood that we’re seeing, which is, as we expected, many opportunities for ADS and Infiltrator to work together because ADS is a big recycler and Infiltrator is a big recycler using different but some common materials, to gain better scale in materials recycling and material sciences. Frankly, that’s what we spend probably 80-plus percent of our time together on — working those programs — and that will be what fuels these synergy programs going forward, and many are already in motion, in production, or in very good engineering stages.

Great. That color is really helpful. Thank you. Now, kind of looking back at some of the commentary around construction trends, can you maybe discuss a little bit more and provide perhaps a little bit more color on what you’re seeing in some of those underlying trends across markets, and then maybe a little bit more color on the trajectory of those trends into 2020?

We continue to see good construction activity in what we call the crescent states, starting in the Mid-Atlantic coming down the coast across Florida, the Southeast, Texas, and on up through Southwest into California. We’re highly focused on those states. Other key pockets like Denver, Columbus, and Minneapolis continue to see good quoting and order activity. Now this is the part of the year where seasonally things slow down and we’re seeing the seasonal effects, but the underlying trends in the market we are affirming today and continue to see those into next year. I think of it this way: low interest rates, good consumer confidence, and probably government actions are not going to do anything to upset the economy before the election. There is still that runway there that we expect will remain favorable as we go through calendar 2020.

Great, that’s really helpful. Thank you. And then moving to agriculture — obviously a pretty dramatic shift in expectations from flat to low single-digits to double digits. Some of the trends you’re experiencing are certainly better than what some of the other companies that play in agriculture markets are discussing. Can you talk about and give a little bit more color on the outperformance and how we should think about that going forward into calendar 2020?

We wrote it down hard, so we’re kind of enjoying writing it up right now. There are a couple of things going on in the agriculture segment for us. The biggest factor — probably 80% of the improvement — is the prevented plant acres. There was a wet spring, and if farmers didn’t plant by certain dates they could go into a program and get some assistance on acreage they chose not to plant. The epicenter of those prevented plant acres are in northwest Iowa, southwest Minnesota, and northwest Ohio, where we have factories and good agriculture participation and visibility, so we clearly benefited from that program where acres were not planted and farmers chose to do a fair amount of drainage work and tiling. So that’s probably 80% of it. The other 20% is that we reorganized, have different organizational leadership working several programs with us in focused areas and with focused accounts. We have a new product that we’ve done very well with this year; it will be over $1 million this year versus just hundreds of thousands last year. So we have done some things operationally and the team deserves credit for that hard work. We did get a bit fortunate with the prevented plant acres, but we’ll take it. Looking forward, it will be hard to recreate that same environment next year. On a normalized basis, my expectation is that we ought to be growing in that segment by perhaps $5 million to $8 million, or roughly 5% to 7%. That is the challenge I’ve put to the team as we plan for next year: capture growth areas regionally, introduce new products, and pursue new service opportunities. A big part of the business is service-related — transportation and logistics to fields and tiling contractors.

Great. That’s really helpful. Thanks for that. And then, I guess last question for me and just a couple of quick modeling ones. Now if we’re thinking about segmentation, do you plan on reporting Infiltrator as a separate segment on a go-forward basis or were you trying to maybe strip it out to just emphasize legacy versus Infiltrator performance in the quarter? And then I’ll follow up with the second one after that.

Yes, the current plan right now is to keep Infiltrator as a separate segment.

Great. Okay. And then secondarily, should we be thinking about depreciation and amortization in this quarter as the correct quarterly run rate going forward?

No. The way to think about run rate: once we complete our purchase accounting adjustments, Infiltrator will probably be somewhere around a $60 million clip, a lot of that is amortization of the identifiable intangibles. Approximately $475 million will go on the balance sheet for those identifiable intangibles. So you have about $60 million of D&A for Infiltrator on a run-rate basis. Then you’ve got the historical ADS number of $70 to $75 million, so about $130 to $135 million all in.

Great, thank you so much. Thanks for the help this morning guys, and I’ll pass it on.

Your next question comes from the line of Matthew Bouley from Barclays. Your line is open.

Hi, this is actually Christina Chiu on for Matt. My first question is on the raised guidance of about $15 million. Was the guidance raise just reflective of a stronger second quarter or do you have a stronger outlook for the second half?

It’s everything, Christina. When you look at it again, our performance and the drivers thereof, we see continued strength all the way from the top line and outgrowing our performance last year. Our performance in the markets, all the way from our pipe to our allied products — you look at what’s going on with how we’ve been doing in our pricing and our resin cost, we kind of talk to those together as our net spread. Again, we continue to see favorability as we look at the back half on a year-over-year basis. Our transportation efficiencies are starting to come through, so those are factored in and our manufacturing guys have a lot of initiatives that are in flight, and we’re just starting to see some of those come through. So I’d tell you right now it’s every one of those items factored into our updated guidance, as well as the fact that we’re investing in our sales group and our organization to support some of our strategic growth initiatives. You have to bundle them all together. That’s how we looked at it to come up with the guidance rates that we released.

Okay, great. And could you also provide just an update on what you’re seeing in your international markets, as sales are still pretty soft, particularly in Mexico? Have you made any progress in making up for lost performance from losses of publicly funded projects? And in Canada, is there any sign of recovery in sight?

Let me tackle Mexico first. There is a big downdraft in public spending in our areas of infrastructure. The new government has shifted spending priorities and I don’t think that will return in this administration. It’s going to be difficult to change that over the next couple of years. So we need to pivot to private construction and to different areas of the country where investment will occur. That requires redeploying sales and distribution and we are in the early stages of that. Repositioning sales and distribution from the public to the private sector will be a multi-year effort and not an easy hill to climb. For Canada, the construction market is pretty soft in Ontario and Quebec, which represent about half of our sales up there and where we had been focusing growth efforts. I think that will smooth out. We are gaining some participation with our allied products. Agriculture has been good in Ontario but poor in Quebec. Overall, our agriculture business in Canada, which is about half of our sales there, is in a much better competitive environment than it was two years ago, so I think it will be steady. We will focus on executing our market share model, running our factories to plan and paying attention to our products and quality. Our export business, while not as large as the other two, is growing strongly and we will likely put more resources there to stimulate growth. Between those three items — Mexico, Canada, and exports — that’s our work in the international business right now.

Okay. Thanks for taking the questions. I’ll pass it on.

And we have no further questions. I will turn the call back to Scott Barbour for closing remarks.

All right, thanks. We appreciate all of you joining us today. We appreciate the questions. We’re off to a great start to the first half of fiscal 2020 and we expect to continue the momentum we have as we move forward. We are focused on our strategic initiatives and the continued integration of Infiltrator. We remain committed to the execution of our 3-year plan, as we continue providing best-in-class water management solutions to our customers and maximizing shareholder value. Thanks again to our employees for all their hard work; it’s been great to get to know the broader Infiltrator team and together, we look forward to another strong quarter and a good year. We certainly do appreciate the participation in the call today. Operator, that concludes our call. Thanks.

Thank you, ladies and gentlemen. Thank you for your participation. This concludes today’s conference call and you may now disconnect.