ADVANCED DRAINAGE SYSTEMS, INC.
Unless the context otherwise indicates or requires, as used in this Quarterly
Report on Form 10-Q ("Form 10-Q"), the terms "we," "our," "us," "ADS" and the
"Company" refer to Advanced Drainage Systems, Inc. and its directly- and
indirectly-owned subsidiaries as a combined entity, except where it is clear
that the terms mean only Advanced Drainage Systems, Inc. exclusive of its
subsidiaries.
Our fiscal year begins on April 1 and ends on March 31 . Unless otherwise noted,
references to "year" pertain to our fiscal year. For example, 2023 refers to
fiscal 2023, which is the period from April 1, 2022 to March 31, 2023 .
The following discussion and analysis of the financial condition and results of
our operations should be read in conjunction with our Condensed Consolidated
Financial Statements and related footnotes included elsewhere in this Form 10-Q
and with the audited Consolidated Financial Statements included in our Fiscal
2022 Form 10-K, as filed with the Securities and Exchange Commission (the "SEC")
on May 19, 2022 . In addition to historical condensed consolidated financial
information, the following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. This
discussion contains forward-looking statements that are based on the beliefs of
our management, as well as assumptions made by, and information currently
available to, our management. Our actual results could differ materially from
those discussed in the forward-looking statements. For more information, see the
section below entitled "Forward Looking Statements."
We consolidate our joint ventures for purposes of GAAP, except for our South American Joint Venture.
Overview ADS is the leading manufacturer of innovative water management solutions in the stormwater and onsite septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplaces. Our innovative products, for which we hold many patents, are used across a broad range of end markets and applications, including non-residential, infrastructure and agriculture applications. We have established a leading position in many of these end markets by leveraging our national sales and distribution platform, industry-acclaimed engineering support, overall product breadth and scale plus manufacturing excellence. Executive Summary
First Quarter Fiscal 2023 Results
•Net sales increased 36.6% to$914.2 million •Net income increased 144.4% to$188.5 million •Adjusted EBITDA, a non-GAAP measure, increased 79.5% to$299.0 million Net sales increased$244.9 million , or 36.6%, to$914.2 million , as compared to$669.3 million in the prior year quarter. Domestic Pipe sales increased$150.8 million , or 40.3%, to$524.9 million . Domestic Allied Products & Other sales increased$71.9 million , or 56.6%, to$198.9 million . Infiltrator sales increased$39.5 million , or 31.2%, to$166.3 million . These increases were driven by double-digit sales growth in theU.S. construction end markets. International sales increased$6.1 million , or 9.4%, to$71.5 million , driven by strong sales growth in the Canadian, Mexican and Exports businesses. Gross profit increased$151.0 million , or 75.1%, to$352.1 million as compared to$201.1 million in the prior year. The increase in gross profit is primarily due to the increase in sales volume and favorable pricing on pipe, onsite septic and allied products. The increase in our gross profit was due to an increase in net sales from improved pricing partially offset by inflationary pressures of higher material and transportation costs along with higher manufacturing costs.
Adjusted EBITDA, a non-GAAP measure, increased
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Results of Operations
Comparison of the Three Months ended
The following table summarizes our operating results as a percentage of net sales that have been derived from our Condensed Consolidated Financial Statements for the periods presented. We believe this presentation is useful to investors in comparing historical results.
For
the Three Months Ended
2022 2021
Consolidated Statements of Operations data: (In thousands)
Net sales $ 914,186 100.0 % $ 669,300 100.0 %
Cost of goods sold 562,079 61.5 468,179 70.0
Gross profit 352,107 38.5 201,121 30.0
Selling, general and administrative 86,520 9.5 76,221 11.4
Loss on disposal of assets and costs from exit and
disposal activities 303 - (11) - Intangible amortization 13,677 1.5 15,645 2.3 Income from operations 251,607 27.5 109,266 16.3 Interest expense 11,072 1.2 7,907 1.2 Derivative gains and other income, net (1,902) (0.2) (2,014) (0.3) Income before income taxes 242,437 26.5 103,373 15.4 Income tax expense 55,065 6.0 26,455 4.0 Equity in net (income) loss of unconsolidated affiliates (1,110) (0.1) (205) - Net income 188,482 20.6 77,123 11.5 Less: net income attributable to noncontrolling interest 1,336 0.1 1,136 0.2 Net income attributable to ADS$ 187,146 20.5 %$ 75,987 11.4 %
Net sales - The following table presents net sales to external customers by
reportable segment for the three months ended
(Amounts in thousands) 2022 2021 $ Variance % Variance Pipe$ 514,983 $ 372,107 $ 142,876 38.4 % Infiltrator 137,384 107,705 29,679 27.6 International 65,655 62,452 3,203 5.1 Allied Products & Other 196,164 127,036 69,128 54.4 Total Consolidated$ 914,186 $ 669,300 $ 244,886 36.6 %
Our consolidated net sales for the three months ended
Our Pipe segment experienced growth primarily through improved pricing/mix of products sold partially offset by lower volumes in the agriculture market. Infiltrator achieved growth through improved price/mix of products sold and higher volumes associated with the residential market. The increase in our International segment was driven by growth in the Canadian and Mexican businesses. Growth in Allied Products & Other was driven mainly by improved price/mix of products offerings and higher volume.
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Cost of goods sold and Gross profit - The following table presents gross profit
by reportable segment for the three months ended
(Amounts in thousands) 2022 2021 $ Variance % Variance Pipe$ 155,099 $ 63,300 $ 91,799 145.0 % Infiltrator 70,869 55,869 15,000 26.8 International 19,109 19,904 (795) (4.0) Allied Products & Other 107,845 62,062 45,783 73.8 Intersegment eliminations (815) (14) (801) 5,721.4 Total gross profit$ 352,107 $ 201,121 $ 150,986 75.1 % Our consolidated Cost of goods sold for the three months endedJune 30, 2022 increased by$93.9 million , or 20.1%, and our consolidated Gross profit increased by$151.0 million , or 75.1%, compared to the same period in fiscal 2022. The increase in our gross profit was due to an increase in net sales from improved pricing partially offset by inflationary pressures of higher material and transportation costs along with higher manufacturing costs.
Selling, general and administrative expenses
Three Months Ended June 30 ,
(Amounts in thousands) 2022 2021
Selling, general and administrative expenses$ 86,520 $ 76,221 % of Net sales 9.5 % 11.4 % Selling, general and administrative expenses for three months endedJune 30, 2022 increased$10.3 million from the same period in fiscal 2022 and as a percentage of sales, decreased by 1.9%. The increase in Selling, general and administrative expenses is the result of increased headcount to support business growth. Loss (gain) on disposal of assets and costs from exit and disposal activities - The change in Loss (gain) on disposal of assets and costs from exit and disposal activities is primarily due to asset disposals.
Intangible amortization - Intangible amortization decreased
Interest expense - Interest expense increased$3.2 million in the three months endedJune 30, 2022 compared to the same period in the previous fiscal year. The increase was primarily due to increased average debt levels.
Derivative gains and other income, net - Derivative gain and other income
decreased by
Income tax expense - The following table presents the effective tax rates for
the three months ended
Three Months Ended June 30,
2022 2021
Effective tax rate 22.7 % 25.6 %
The change in the effective tax rate for the three months ended June 30, 2022
was primarily related to the transition of the Company's Employee Stock
Ownership Plan ("ESOP") and the repayment of the ESOP loan in the prior year.
See "Note 10. Income Taxes" for additional information.
Equity in net income of unconsolidated affiliates - The Equity in net income of
unconsolidated affiliates increased for the three months ended June 30, 2022 as
compared to the same period in the previous fiscal year due to an increase in
the current period income at our South American Joint Venture.
Net income attributable to noncontrolling interest - Net income attributable to
noncontrolling interest increased for three months ended June 30, 2022 due to an
increase in net income at our ADS Mexicana joint venture.
Adjusted EBITDA and Adjusted EBITDA Margin - Adjusted EBITDA and Adjusted EBITDA
Margin, which are non-GAAP financial measures, have been presented in this Form
10-Q as supplemental measures of financial performance that
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are not required by, or presented in accordance with GAAP and should not be considered as alternatives to net income as measures of financial performance or cash flows from operations or any other performance measure derived in accordance with GAAP. We calculate Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation and amortization, stock-based compensation expense, non-cash charges and certain other expenses. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales. Adjusted EBITDA and Adjusted EBITDA Margin are included in this Form 10-Q because they are key metrics used by management and our board of directors to assess our consolidated financial performance. These non-GAAP financial measures are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. In addition to covenant compliance and executive performance evaluations, we use these non-GAAP financial measures to supplement GAAP measures of performance to evaluate the effectiveness of our consolidated business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. We use Adjusted EBITDA Margin to evaluate our ability to generate profitable sales. Adjusted EBITDA and Adjusted EBITDA Margin contain certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs, cash expenditures to replace assets being depreciated and amortized and interest expense, or the cash requirements necessary to service interest on principal payments on our indebtedness. In evaluating Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as stock-based compensation expense, derivative fair value adjustments, and foreign currency transaction losses. Management compensates for these limitations by relying on our GAAP results and using non-GAAP measures on a supplemental basis.
The following table presents a reconciliation of Adjusted EBITDA to Net income, the most comparable GAAP measure, for each of the periods presented.
Three Months Ended
June 30,
2022 2021
(In thousands)
Net income $ 188,482 $ 77,123
Depreciation and amortization 35,578 34,656
Interest expense 11,072 7,907
Income tax expense 55,065 26,455
EBITDA 290,197 146,141Loss (gain) on disposal of assets and costs from exit and disposal activities
303 (11)
Stock-based compensation expense 6,273 6,651
ESOP compensation expense - 14,155
Transaction costs(a) 1,715 43
Other adjustments(b) 555 (397)
Adjusted EBITDA $ 299,043 $ 166,582
Adjusted EBITDA Margin 32.7 % 24.9 %
(a)Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions.
(b)Includes derivative fair value adjustments, foreign currency transaction (gains) losses, the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense.
Liquidity and Capital Resources
Historically we have funded our operations through internally generated cash
flow supplemented by debt financings, equity issuance and finance and operating
leases. These sources have been sufficient historically to fund our primary
liquidity requirements, including working capital, capital expenditures, debt
service and dividend payments for our common stock. From time to time, we may
explore additional financing methods and other means to raise capital. There can
be no assurance that any additional financing will be available to us on
acceptable terms or at all.
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The following table presents key liquidity metrics utilized by management. The
table includes the Non-GAAP measure, Free Cash Flow, which is further discussed
and defined below, and Leverage ratio which is calculated as net debt divided by
the trailing twelve months Adjusted EBITDA.
Three Months Ended June 30,
(Amounts in thousands) 2022 2021
Net cash provided by operating activities $ 249,765 $ 104,348
Capital expenditures (36,189) (25,546)
Free Cash Flow 213,576 78,802
Total debt (debt and finance lease obligations) 1,313,945
Cash
463,696
Net debt (total debt less cash) 850,249 LeverageRatio 1.1 Free Cash Flow - Free cash flow is a non-GAAP financial measure that comprises cash flow from operations less capital expenditures. Free cash flow is a measure used by management and our Board of Directors to assess our ability to generate cash. Accordingly, free cash flow has been presented in this Form 10-Q as a supplemental measure of liquidity that is not required by, or presented in accordance with GAAP, because management believes that free cash flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. Free cash flow is not a GAAP measure of our liquidity and should not be considered as an alternative to cash flow from operating activities as a measure of liquidity or any other liquidity measure derived in accordance with GAAP. Our measure of free cash flow is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.
Net cash provided by operating activities increased
The following table summarizes our available liquidity for the periods presented.
(Amounts in thousands) June 30, 2022 Revolver capacity$ 600,000 Less: outstanding borrowings - Less: letters of credit (5,150)
Revolver available liquidity
In addition to the available liquidity above, we have the ability to borrow up
to
Working Capital and Cash Flows
As ofJune 30, 2022 , we had$1,058.5 million in liquidity, including$463.7 million of cash,$594.9 million in borrowings available under our Revolving Credit Agreement, net of$5.2 million of outstanding letters of credit. We believe that our cash on hand, together with the availability of borrowings under our Credit Agreement and other financing arrangements and cash generated from operations, will be sufficient to meet our working capital requirements, anticipated capital expenditures, and scheduled principal and interest payments on our indebtedness for at least the next twelve months. Working Capital - Working capital increased to$896.6 million as ofJune 30, 2022 , from$480.7 million as ofMarch 31, 2022 . The increase in working capital is primarily due to increased cash from the issuance of our Senior Notes due 2030 and an increase in accounts receivable consistent with our increase in sales and partially offset by an increase in accounts payable. - 22 -
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Three Months Ended June 30,
(Amounts in thousands) 2022 2021
Net cash provided by operating activities $ 249,765 $ 104,348
Net cash used in investing activities (83,668) (25,493)
Net cash provided by (used in) financing activities 277,677 (131,321)
Operating Cash Flows - Cash flows from operating activities increased
Investing Cash Flows - Cash flows used in investing activities during the three months endedJune 30, 2022 increased by$58.2 million compared to the same period in fiscal 2022. The increase in cash used in investing activities was primarily due to the acquisition of Cultec, net of cash acquired. Capital expenditures totaled$36.2 million and$25.5 million for the three months endedJune 30, 2022 and 2021, respectively. Our capital expenditures for the three months endedJune 30, 2022 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives. We currently anticipate that we will make capital expenditures of approximately$150 to$180 million in fiscal year 2023. Such capital expenditures are expected to be financed using funds generated by operations. Financing Cash Flows - During the three months endedJune 30, 2022 , cash provided by financing activities included the issuance of$500.0 million of 2030 Notes and proceeds of$123.2 million on our revolving credit facilities. Cash used in financing activities during the three months endedJune 30, 2022 included payments of$237.5 million on our revolving credit facilities, repurchase of common stock of$57.7 million ,$22.8 million of shares withheld for tax purposes, and$10.1 million of dividend payments. During the three months endedJune 30, 2021 , cash used in financing activities included the repurchase of common stock of$102.0 million ,$13.0 million of shares withheld for tax purposes,$9.5 million of dividend payments and payments on our finance lease obligations of$5.4 million . Cash held by Foreign Subsidiaries - As ofJune 30, 2022 , we had$11.2 million in cash that was held by our foreign subsidiaries, including$3.1 million held by our Canadian subsidiaries. We continue to evaluate our strategy regarding foreign cash, but our earnings in foreign subsidiaries still remain indefinitely reinvested, except forCanada . We plan to repatriate earnings from Canada and believe that there will be no additional tax costs associated with the repatriation of such earnings other than any potential non-U.S. withholding taxes.
Financing Transactions
Senior Secured Credit Facility - InJuly 2019 , the Company entered into the Base Credit Agreement by and among the Company, as borrower, Barclays Bank PLC, as administrative agent, the several lenders from time to time party thereto. InSeptember 2019 , the Company amended the Base Credit Agreement. InMay 2022 , the Company entered into a Second Amendment to the Company's Base Credit Agreement. The Senior Secured Credit Facility provides the Term Loan Facility in an initial aggregate principal amount of$700 million , the Revolving Credit Facility in an initial aggregate principal amount of up to$600 million , the L/C Facility in the initial aggregate available amount of up to$60 million , as a sublimit of such Revolving Credit Facility and a swing line sub-facility in the aggregate available amount of up to$50 million , as a sublimit of the Revolving Credit Facility. As ofJune 30, 2022 , the outstanding principal drawn on Term Loan Facility was$432.5 million and there were no borrowings on the Revolving Credit Facility. The Company had$594.9 million available to be drawn on the Revolving Credit Facility, net of$5.2 million of outstanding letters of credit. ADS Mexicana Revolving Credit Facility - The Company and ADS Mexicana amended its Intercompany Revolving Credit Promissory Note (the "Intercompany Note") with a capacity of$9.5 million onJune 6, 2022 . The Intercompany Note matures onJune 22, 2022 . The Intercompany Note indemnifies the ADS Mexicana joint venture partner for 49% of any unpaid borrowing. The interest rates under the Intercompany Note are determined by certain base rates or LIBOR rates plus an applicable margin based on the Leverage Ratio. As ofJune 30, 2022 andMarch 31, 2022 , there were no borrowings and$1.5 million borrowings, respectively, outstanding under the Intercompany Note. Issuance of Senior Notes due 2027 - OnSeptember 23, 2019 , the Company issued$350.0 million aggregate principal amount of its 2027 Notes, pursuant to the 2027 Indenture among the Company, the Guarantors and the Trustee. The 2027 Notes are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that is a guarantor under the Company's Senior Secured Credit Facility. The 2027 Notes were offered and sold either to - 23 -
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persons reasonably believed to be "qualified institutional buyers" pursuant to Rule 144A under the Securities Act or to persons outsidethe United States under Regulation S of the Securities Act. Interest on the 2027 Notes will be payable semi-annually in cash in arrears onMarch 31 andSeptember 30 of each year, commencing onMarch 31, 2020 , at a rate of 5.000% per annum. The 2027 Notes will mature onSeptember 30, 2027 . The Company used the majority of the net proceeds from the offering of the 2027 Notes for the repayment of$300.0 million of its outstanding borrowings under the Company's Base Credit Agreement. The Company may redeem the 2027 Notes, in whole or in part, at any time on or afterSeptember 30, 2022 at established redemption prices. At any time prior toSeptember 30, 2022 , the Company may also redeem up to 40% of the 2027 Notes with net cash proceeds of certain equity offerings at a redemption price equal to 105.000% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior toSeptember 30, 2022 , the Company may redeem the 2027 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable "make-whole" premium. The 2027 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2027 Indenture or the 2027 Notes and certain provisions related to bankruptcy events. The 2027 Indenture also contains customary negative covenants. Issuance of Senior Notes Due 2030 - OnJune 9, 2022 the Company issued$500.0 million aggregate principal amount of 6.375% 2030 Notes pursuant to an Indenture, datedJune 9, 2022 (the "2030 Indenture"), among the Company, the Guarantors and the Trustee. The Senior Notes were offered and sold either to persons reasonably believed to be "qualified institutional buyers" pursuant to the Securities Act or to persons outsidethe United States under Regulation S of the Securities Act. Interest on the 2030 Notes will be payable semi-annually in cash in arrears onJanuary 15 andJuly 15 of each year, commencing onJanuary 15, 2023 , at a rate of 6.375% per annum. The Senior Notes will mature onJuly 15, 2030 . The Company used the majority of the net proceeds from the offering of the 2030 Notes to repay in full the outstanding borrowings under its Revolving Credit Facility and the remainder for general corporate purposes. The deferred financing costs associated with the 2030 Notes totaled$9.0 million and are recorded as a direct reduction from the carrying amount of the related debt. The Company may redeem the Notes, in whole or in part, at any time on or afterJuly 15, 2025 at certain specified redemption prices set forth in the Indenture. In addition, at any time prior toJuly 15, 2025 , the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable "make-whole" premium. At any time prior toJuly 15, 2025 , the Company may also redeem up to 40% of the aggregate principal amount of Notes issued under the Indenture with net cash proceeds of certain equity offerings at a redemption price equal to 106.375% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The 2030 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2030 Indenture or the 2030 Notes and certain provisions related to bankruptcy events. The 2030 Indenture also contains customary negative covenants. Equipment Financing - InNovember 2021 , the Company purchased material handling equipment, trucks and trailers previously leased under a master lease agreement and classified as finance leases. The purchase was funded with debt through the Master Lease Agreement and Interim Funding Schedule with Fifth Third. The assets acquired are titled to the Company and included in Property, plant and equipment, net on the Company's Condensed Consolidated Balance Sheet. The equipment financing of has a balance of$27.7 million and has a term of between 12 and 84 months, based on the life of the equipment. The equipment financing bears a weighted average interest of 1.4%.
Covenant Compliance - The Senior Secured Credit Facility requires, if the
aggregate amount of outstanding exposure under the Revolving Facility exceeds
The Senior Secured Credit Facility also includes other covenants, including
negative covenants that, subject to certain exceptions, limit the Company's and
its restricted subsidiaries' (as defined in the Credit Agreement) ability to,
among other things: (i) incur additional debt, including guarantees; (ii) create
liens upon any of their property; (iii) enter into any merger, consolidation or
amalgamation, liquidate, wind up or dissolve, or dispose of all or substantially
all of their property or business; (iv) dispose of assets; (v) pay subordinated
debt; (vi) make certain investments; (vii) enter into swap
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agreements; (viii) engage in transactions with affiliates; (ix) engage in new lines of business; (x) modify certain material contractual obligations, organizational documents, accounting policies or fiscal year; or (xi) create or permit restrictions on the ability of any subsidiary of anyLoan Party (as defined in the Senior Secured Credit Facility) to pay dividends or make distributions to the Company or any of its subsidiaries. The Senior Secured Credit Facility also contains customary provisions requiring the following mandatory prepayments (subject to certain exceptions and limitations): (i) annual prepayments (beginning with the fiscal year endingMarch 31, 2021 ) with a percentage of excess cash flow (as defined in the Senior Secured Credit Facility); (ii) 100% of the net cash proceeds from any non-ordinary course sale of assets and certain casualty or condemnation events; and (iii) 100% of the net cash proceeds of indebtedness not permitted to be incurred under the Senior Secured Credit Facility.
For further information, see "Note 11. Debt" to the Consolidated Financial
Statements in our Fiscal 2022 Form 10-K. We are in compliance with our debt
covenants as of
Off-Balance Sheet Arrangements
Excluding the guarantees of 50% of certain debt of our unconsolidated South American Joint Venture as further discussed in "Note 7.Related Party Transactions" to the Condensed Consolidated Financial Statements, we do not have any other off-balance sheet arrangements. As ofJune 30, 2022 , our South American Joint Venture had approximately$8.6 million of outstanding debt subject to our guarantees. We do not believe that this guarantee will have a current or future effect on our financial condition, results of operations, liquidity, or capital resources.
Critical Accounting Policies and Estimates
There have been no changes in critical accounting policies from those disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Fiscal 2022 Form 10-K, except as disclosed in "Note 1. Background and Summary of Significant Accounting Policies".
Forward-Looking Statements
This Form 10-Q includes forward-looking statements. Some of the forward-looking statements can be identified by the use of terms such as "believes," "expects," "may," "will," "would," "should," "could," "seeks," "predict," "potential," "continue," "intends," "plans," "projects," "estimates," "anticipates" or other comparable terms. These forward-looking statements include all matters that are not related to present facts or current conditions or that are not historical facts. They appear in a number of places throughout this Form 10-Q and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our consolidated results of operations, financial condition, liquidity, prospects, growth strategies, and the industries in which we operate and include, without limitation, statements relating to our future performance. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond our control. We caution you that forward-looking statements are not guarantees of future performance and that our actual consolidated results of operations, financial condition, liquidity and industry development may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. In addition, even if our actual consolidated results of operations, financial condition, liquidity and industry development are consistent with the forward-looking statements contained in this Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including those reflected in forward-looking statements relating to our operations and business, the risks and uncertainties discussed in this Form 10-Q (including under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"), and those described from time to time in our other filings with theSEC . Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include: •fluctuations in the price and availability of resins and other raw materials and our ability to pass any increased costs of raw materials on to our customers in a timely manner;
•the risks related to the COVID-19 pandemic or other pandemics in the future;
•disruption or volatility in general business and economic conditions in the markets in which we operate;
•cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending;
•the risks of increasing competition in our existing and future markets;
•uncertainties surrounding the integration and realization of anticipated benefits of acquisitions and similar transactions;
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•the effect of any claims, litigation, investigations or proceedings, including those described under "Item 1. Legal Proceedings" of this Quarterly Report;
•the effect of weather or seasonality;
•the loss of any of our significant customers;
•the risks of doing business internationally;
•the risks of conducting a portion of our operations through joint ventures;
•our ability to expand into new geographic or product markets;
•our ability to achieve the acquisition component of our growth strategy;
•the risk associated with manufacturing processes;
•the effect of global climate change;
•cybersecurity risks;
•our ability to manage our supply purchasing and customer credit policies;
•our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel;
•our ability to protect our intellectual property rights;
•changes in laws and regulations, including environmental laws and regulations;
•the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes;
•other risks and uncertainties, including those listed under "Item 1A. Risk Factors." in the Fiscal 2022 Form 10-K.
All forward-looking statements are made only as of the date of this report and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
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