Advanced Drainage Systems, Inc. (NYSE:WMS) Q1 2024 Earnings Call Transcript

Scott Barbour: That horizontal on rise construction. And Josh, I think we’ve done a nice job with these business development resources, which is a team we’ve built starting before the pandemic of pivoting them starting about probably 18 months ago, pivoting them on to the engineering firms, the GCs that really do these big onshoring projects. And between — I would say, those guys sitting in at the top and our local guys because ultimately, these get executed locally has been a nice combination and I think allowed us to be super agile in this.

Josh Pokrzywinski: Got it. That’s helpful. Maybe taking a step back, trying to piece together some of the comments you guys have made thus far. I mean, seems like current quarter is off to the start you expected. It sounds like as much as maybe there are some reasons to be cautious on the non-res side. There are also reasons to be optimistic. Scott, I guess what would sort of inform being just call it at the high end of your range or maybe even closer to the midpoint because I would have guessed before the call started it’s the more traditional non-res stuff maybe rolling over, but it doesn’t really sound like that’s what you’re seeing in the business. Just wondering where you see kind of the real sensitivity there outside of the fact that, hey, it’s just early in the year, and we want to wait and see some more.

Scott Barbour: Well, part of it is it’s kind of early in the year. Don’t underestimate our — the learning we have — the three of us versus last year in — it’s early in the year. However, your question is very good because I really think this is a question of demand. I think material, price, price cost, our ability to execute in the factories, et cetera, we feel pretty darn good about that stuff. So what we worry about and what would inform us as we move to 90 days from now, is really that demand picture that we see. And in 90 days, it’s going to be all about kind of how did the fall ag season develop? How is the Sun Belt continued to build out? Are these onshoring and large projects? Are we winning where we think we should be winning there?

It will be demand-driven for sure. And we like that because we know demand eventually comes back. And we’re really — Scott kind of said it around some of those SG&A questions. We’re building our cost structure to be able to take that uptick and execute super well against that and not only in kind of our manufacturing space — in our manufacture and engineering space, but also our engineering, the investments we’re making in that to staff that Engineering and Technology Center and increase the use of recycled materials, our pace of product improvement and innovation. We think that’s going to win, and we want to be ready for that.

Operator: [Operator Instructions] Your next question comes from Bryan Blair with Oppenheimer.

Bryan Blair: You noted the dollar level of quoting activity is higher year-on-year with a pretty notable shift in mix or composition that should ultimately be favorable for your team. I’m wondering if you could drill down a bit more on regional quoting activity and if there’s any notable sequential change to call out there?

Scott Barbour: I wouldn’t say there’s much change in that. This is Scott Barbour, by the way. Good question. What we would tell you is that the robust areas of the geographies continue to be robust. We have seen the Northeast and the Northwest, particularly in California come back up. So I guess that is a sequential change where they had been rather down for almost 9: months, 12 months. So that’s been good news. And we believe that there’s probably — that will kind of steady state as we go through. But Florida is still strong. The California and New England, those places kind of coming back, which has been good. The Midwest good with some of these very large projects. So I don’t think there’s — I wouldn’t characterize a big change there besides kind of the California and the Northeast.