1

JAY GORMAN

RAYMOND JAMES GENERAL INDUSTRIALS INVESTMENT BANKING GROUP

ANNUAL PIPE SCHOOL AND PIPE SHOW January 2016

2

BACKGROUND

Jay G. Gorman

Vice President

Mr. Gorman has over 15 years of corporate finance and capital markets experience working across a variety of

industries including water, wastewater, industrial, energy, business services, food and beverage, agriculture, and

consumer products. He has worked on a myriad of successful transactions including acquisitions, divestitures,

joint ventures, partnerships and other strategic initiatives. He began his investment banking career at National

City Capital Markets in 2008 and joined Raymond James in 2012 via its acquisition of Morgan Keegan. Prior to

entering investment banking, Mr. Gorman held a number of strategy and M&A positions at Yum! Brands, Brown-

Forman, and Procter and Gamble, including work as the Global Strategy and Planning manager for P&G’s filtration

business. He received an MBA from the Owen School of Management at Vanderbilt University and a BA in

economics from the University of Kentucky. Mr. Gorman resides in Nashville, Tennessee with his wife and two

children.

(615) 665-3632

Jay.Gorman@

RaymondJames.com

Introduction

3

TABLE OF CONTENTS

SECTION 1 | Introduction

SECTION 2 | Economic Update

SECTION 3 | ADS Overview

SECTION 4 | RCP vs. ADS

SECTION 5 | Historical Industry Comparison : Brick

SECTION 6 | Conclusion: Charting the Future for RCP

4

Introduction

SECTION 1

5

Full Range of Investment Banking Capabilities

Venture Capital Investments

Trading & Market Making

Mergers & Acquisitions Advisory

Fairness Opinions & Valuation

Private Placement of High Yield Debt & Equity

General Strategic and Financial Advisory

Recapitalization & Restructuring

Follow-on Offerings

Initial Public Offerings Public/Private Debt

Convertible Debt Offerings

Venture Stage

Mezzanine Stage

Growth Stage

Late Stage

Mature Stage

Merchant Banking

INVESTMENT BANKING OVERVIEW

• Raymond James provides a comprehensive range of

strategic and financial advisory services tailored to our

clients’ business evolution life cycle and backed by a

strategic industry focus

• Industry teams focused exclusively on 11 growth industries

• Specialized M&A, Recapitalization & Restructuring

Advisory, Private Placement, Business Development and

Financial Sponsors groups

245 PROFESSIONALS FOCUSED BY

INDUSTRY AND TRANSACTION

SPECIALTY OFFERING A FULL RANGE

OF INVESTMENT SERVICES

Communications Consumer Energy Financial Services

General Industrials

Health Care Real Estate

Security, Defense &

Government Services

Technology Technology

Services Transport &

Infrastructure Debt Origination & Restructuring

Financial Sponsors

Mergers & Acquisitions

Private Placements

Industry Focused and Specialty Transaction Investment Banking Groups

Introduction

6

INTEGRATED AND DEEP INDUSTRIAL SECTOR EXPERTISE

Introduction

Services

• Filtration /

Separation

• Distribution &

Collection

• Specialty Chemicals

• Water & Wastewater

Treatment

Equipment

WATER INFRASTRUCTURE COVERAGE LANDSCAPE

Equipment

• Treating Boiler

Water

• Manufactured /

On-site Tanks

• Irrigation

• Pump Stations

• Pool Supplies

• Disinfection

• Facility

Management

• Site Development

• Billing & Meter

Reading

• Energy

Management

• Maintenance

• Pipeline Repair

• Logistics

• Procurement

• Support Services

• Well Water Drilling

• Installation &

Tunneling

• Marine Construction

• Water and

Wastewater Plant

Construction

Representative Relationships

Industrial

Technology

Distribution

Building Products

& Infrastructure

Water

Infrastructure

Specialty Industrial & Manufacturing

Capital

Goods Niche

Manufacturing

7

Economic Update

SECTION 2

8

WATER MARKET UPDATE

U.S. Residential Construction Spending ($B)

U.S. Construction Spending ($B)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

$0

$100

$200

$300

$400

$500

$600

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

(5%)

0%

5%

10%

15%

20%

Q1-2010 Q1-2011 Q1-2012 Q1-2013 Q1-2014 Q1-2015

Growth in State Tax Revenue

• U.S. construction spending has been steadily rising and is nearing

the peak of the last cycle

• Residential construction spending has increased every month this

year and, while far from a full recovery, looks to be mid cycle with

housing starts surging 6.5% in September to a seasonally

adjusted rate of 1.2 million

• Industry constituents are seeing a gradual but inconsistent

recovery taking place in the municipal market with smaller

markets yet to show significant growth likely indicating the

recovery is still in the early innings

9

F.A.S.T. ACT OVERVIEW

• 15% increase in highway and 10% increase in transit

funding over 5 years

• Spending front-end loaded with a 5% increase in 2016

• Significant reduction in TIFIA funding from $1 billion to

$275 million

• No change to the federal gas tax

Highway Spending ($ millions) HIGHLIGHTS

Highway Trust Fund Reserves & Outlays ($ billions) • Gap in funding vs. gas tax covered by over $70 billion in

offsets

• Reduction in dividends paid to banks on Federal

Reserve shares

• Transfer of $19 billion in capital reserves from the

Federal Reserve regional banks

• Sale of $6.2 billion from the strategic [ ] reserve

• Leaves federal gas tax covering only half of necessary

investment levels

FUNDING SOURCES

$40.3

$42.4 $43.3

$44.2 $45.3

$46.4

$30

$35

$40

$45

$50

$55

FY15 FY16 FY17 FY18 FY19 FY20

$64 $61

$40

$35

$40

$45

$50

$55

$60

$65

$70

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

FAST Outlays Baseline Outlays Revenues

15.1%

increase

10

ADS Overview

SECTION 3

11

Non-Residential

Construction52%

Agriculture19%

Residential Construction

19%

Infrastructure Construction

10%

ADVANCED DRAINAGE SYSTEMS (NYSE: WMS)

• Leading producer of high performance thermoplastic

corrugated pipe for residential, non-residential,

agriculture, and infrastructure markets

• 61 manufacturing facilities and 29 distribution centers

serving all 50 states, Canada, Mexico, and South

America

• Core product categories

‒ Pipe: Full product lines of corrugated polypropylene

(PP) and high density polyethylene (HDPE) pipe for

the storm sewer, drainage, sanitary sewer, and

irrigation markets

‒ Allied Products: Related water management

technologies including: Stormwater & Septic

Chambers; Drainage Structures, Fittings, Water

Quality Structures & Filters, Geosynthetics

• Highly diversified markets poised for recovery

• Conversion and market share gains driven by superior

physical and performance characteristics compared to

substitute materials such as steel and concrete

• Significant management / ESOP ownership

COMPANY OVERVIEW

ADS Overview

FYTD 2015 Net Sales(1)

Geography Product

End Use

Pipe76%

Allied Products

24%

Construction: 81%

Source: ADS Investor Presentation dated February 2015.

(1) Fiscal year ends March 31.

Domestic87%

International13%

12

PRODUCT LINES

ADS Overview

PRODUCT PORTFOLIO

Allied Products: $278mm LTM Net Sales(1) Pipe Products: $874mm LTM Net Sales(1)

Dual Wall (N-12)

Single Wall Triple Wall

HP Storm & Sanitary Fittings

Structures Water Quality & Other

Chambers

Source: ADS Investor Presentation dated February 2015.

(1) LTM period ending 21/31/2014.

13

FINANCIAL PERFORMANCE

ADS Overview

FY Revenue ($mm) Historical Financial Performance

$863

$1,014 $1,017

$1,069

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

2011 2012 2013 2014

• Actively driving market share gains through material

conversion and Allied Product growth

• Muted demand in the non-residential end market

over the past serval years; however, broader end

markets in midst of recovery

• Improving profitability driven by operational efficiency

and product mix shift, despite raw materials

headwinds in recent years

Note: Fiscal year end March 31.

Source: ADS Investor Presentation dated February 2015.

(1) EBITDA adjustments include one-time transaction costs and certain non-cash items.

(2) Free Cash Flow defined as adjusted EBITDA less cash taxes, cash interest and capital expenditures.

WMS vs. Peers Since IPO

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Feb-15

WMS MAS MWA WTS RXN DOOR UNR1V

14

GO TO MARKET STRATEGY

ADS Overview

Concept

Initiation

Technical &

Financial

Feasibility

Design

&

Specification

Permit Bid Construction

TIME

AB

ILIT

Y T

O

INF

LU

EN

CE

PR

OJ

EC

T

Project Life Cycle

ADS Recognizes the need to influence projects during the planning phase, rather than during the construction phase

Source: ADS Investor Presentation dated February 2015.

15

PIPE MATERIAL COMPARISON – ADS VIEWPOINT

ADS Overview

Measure HDPE / PP RCP

Corrugated

Metal (CMP) Commentary

• Fully-installed cost HDPE / PP is generally 20% less

expensive on a fully installed basis than

RCP

• Ease / speed of

installation HDPE / PP is lighter and comes in

longer lengths than RCP

• Installation sensitivity HDPE / PP is flexible and more

sensitive to proper installation

• Structural integrity Equal assuming proper installation

• Resistance to

corrosion HDPE / PP is essentially inert, RCP is

corrosion resistant

• Resistance to abrasion RCP resistance to abrasion based on

greater wall thickness

• Joint integrity

• Flow characteristics RCP tests on par with HDPE / PP but

slightly underperforms in the field

• Overall

Source: ADS Investor Presentation dated February 2015.

= Strength of product attribute (full circle is strongest)

16

MARKET SHARE GROWTH(1)

• Corrugated HDPE pipe has been displacing traditional products such as reinforced concrete,

corrugated steel, and PVC pipe across an expanding range of end markets since the late 1980’s

• Contractors, engineers, and municipalities continue to acknowledge the superior physical attributes

and compelling value proposition of HDPE pipe

ADS Overview

HDPE Share of Storm Sewer Market(2) Cement Pricing(3)

80

85

90

95

100

105

110

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

(1) Information from ADS Investor Presentation dated February 2015.

(2) Based on ADS management estimates.

(3) Source: MarketLine.

1%

10%

20%

25%

0%

5%

10%

15%

20%

25%

30%

1990 2000 2010 2013

17

COMPETITIVE ADVANTAGES

ADS Overview

Scale & Capacity Technical Expertise

• 61 manufacturing locations and 29 distribution

centers serving all 50 states, Canada, Mexico and

South America

• ~160 global pipe production lines able to produce

~1.2 billion pounds annually

• Fleet of ~625 tractor-trailers and ~1,100 trailers

specially designed to haul pipe and fitting products

• Advanced, versatile and portable tooling equipment

enables unmatched manufacturing capabilities

• Significant production capacity to support growth

with minimal investment (currently ~65% capacity

utilization)

• Team of 50 field-based engineers work closely with

key agencies to obtain regulatory approvals and

with civil engineer firms to influence the

specification of its products

• Unique, proprietary production equipment that

provides a lower cost profile, dramatically higher

productivity, and faster delivery cycle

• Cutting edge resin blending technology and

expertise

− Ability to utilize both virgin and non-virgin

materials while maintaining high quality

• Vertically integrated in the recycling process

through Green Line Polymers

The Company’s leading market position is supported by its extensive manufacturing network and industry leading technical expertise

Source: ADS Investor Presentation dated February 2015.

18

RCP vs. ADS

SECTION 4

19

9.6%

6.6%

10.7%

8.7%

11.1% 11.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Under $5 million $5 - $15 million Over $15 million One Two or More ADS

31.7%

25.1%

20.7%

26.7%

22.3% 21.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Under $5 million $5 - $15 million Over $15 million One Two or More ADS

COMPARING PROFITABILITY

Gross Profit Margin

EBITDA Margin

Sales Volume Number of Plants

RCP vs. ADS

Source: 2014 National Precast Concrete Association Industry Benchmarking Report, ADS public filings.

Note: ADS results for the LTM period ending 12/31/2014.

RCP HDPE

Sales Volume Number of Plants

RCP HDPE

20

$18.75 $18.70 $13.50

$8.45 $8.30

$4.32

$10.20 $6.85

$4.04

$5.35

$6.00

$3.00

$4.10 $5.90

$2.87

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

One Two or More ADS

$6.19 $6.17

$4.05

$2.79 $2.74

$1.30

$3.37 $2.26

$1.21

$1.77

$1.98

$0.90

$1.35 $1.95

$0.86

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

One Two or More ADS

COST STRUCTURE

RCP vs. ADS

Cost Items as % of Total Revenue

Number of Plants

Source: 2014 National Precast Concrete Association Industry Benchmarking Report, ADS public filings.

Number of Plants

18” Pipe 36” Pipe

Selling Price /

Ft: $9.00

Selling Price / Ft: $16.50

Selling Price /

Ft: $30.00

Selling Price / Ft: $50.00

Freight Operations + Fixed SG&A Labor Materials

RCP HDPE RCP HDPE

21

$198,538$170,296

$199,409 $192,672 $190,779

$311,459

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Under $5 million $5 - $15 million Over $15 million One Two or More ADS

PRODUCTION EFFICIENCY

RCP vs. ADS

Sales Per Employee

Source: 2014 National Precast Concrete Association Industry Benchmarking Report, ADS public filings.

Note: ADS results for the LTM period ending 12/31/2014.

Sales Volume Number of Plants

RCP HDPE

$1,900,438

$7,411,584

$10,424,806

$5,748,124$6,856,883

$19,868,966

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Under $5 million $5 - $15 million Over $15 million One Two or More ADS

Sales Per Plant

Sales Volume Number of Plants

RCP HDPE

22

DELIVERY RANGE OF HDPE VS RCP

RCP vs. ADS

• A single delivery of HDPE may contain 5x the value of product vs. RCP

• HDPE has a feasible delivery radius of ~200 miles vs. concrete at ~100 miles

23

CAPACITY UTILIZATION

RCP vs. ADS

U.S. Quarterly Plant Utilization Rate

Plastic

Concrete

Source: U.S. Census Bureau.

0%

10%

20%

30%

40%

50%

60%

70%

80%ADS currently reports 65% utilization

24

SUMMING UP HDPE ADVANTAGE

RCP vs. ADS

• Lower cost of production

• More transportable

• Higher asset utilization and lower cost

• Less labor intensive manufacturing

• ADS has deployed a large and highly sophisticated sales force

25

Historical Industry Comparison : Brick

SECTION 5

26

BRICK A PARALLEL FOR CONCRETE PIPE

Historical Industry Comparison : Brick

• The brick industry provides several direct similarities with the

challenges facing reinforced concrete pipe

• Brick provides superior performance and reliability, but at a higher

cost than its competitors

• At one point, inexpensive plastic substitutes threatened to eliminate

the widespread use of brick in building materials….However, the

brick industry has turned the tide

27

SIMILARITIES BETWEEN BRICK AND CONCRETE PIPE

• Greater Structural Rigidity

• Higher Initial Cost

• Reduces Future Risk

• High Weight to Footage Ratio

• Lower Shipping Radius

• Greater Aesthetic Value

Historical Industry Comparison : Brick

Brick RCP

• Engineer/Contractor – Buyer/Spec Writer Relationship

28

COST COMPARISON

Historical Industry Comparison : Brick

Installed Cost Per Square Foot of Wall Area

$6.39

$3.00

$4.43

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

Brick Vinyl Fiber Cement

113% Premium

$102.0

$85.0

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

RCP HDPE

20% Premium

Installed Cost Per Foot(1)

Source: The Brick Industry Association, Southeast Region.

(1) Based 12 inch polyethylene installed cost; Underground Management, June 2007

29

SIDING MARKET SHARE

Historical Industry Comparison : Brick

Exterior Wall Material of New Single-Family Houses Completed(1)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

19

73

19

74

19

75

19

76

19

77

19

78

19

79

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Vinyl

Brick

Fiber

Cement

(1) Source: U.S. Census Bureau; vinyl and fiber cement data unavailable prior to 1992 and 2005, respectively.

30

BRICK PRODUCTION IN THE U.S.

Historical Industry Comparison : Brick

Consolidation in the Brick Industry

Source: Brighton Brickyards; The Brick Industry Association.

5,031

2,500

83 < 50

5,250

3,000

204 < 200

0

1,000

2,000

3,000

4,000

5,000

6,000

1880 1940 2000 Today

Manufacturers Plants

31

WHAT CONCRETE PIPE CAN LEARN FROM BRICK

Historical Industry Comparison : Brick

Industry Consolidation

Focus on Long-Term Value

Strong Trade Association

Drive the Spec Make Your Product the

Gold Standard

32

Conclusion: Charting the Future for RCP

SECTION 6

33

SO WHERE DO WE GO FROM HERE?

Conclusion: Charting the Future for RCP

DON’T TRY TO BE SOMETHING YOU AREN’T!

34

YOU ARE THE GOLD STANDARD SO ACT LIKE IT!!

Conclusion: Charting the Future for RCP

• Superior product

• Direct selling route to market

• Ease of installation

• Lower cost of lifetime ownership

• Much lower risk of product failure

CONCRETE REDUCES THE RISK TO THE PRODUCT OWNER

35

PIPE MATERIAL COMPARISON – PROMOTE THE RCP NARRATIVE

Conclusion: Charting the Future for RCP

Measure HDPE / PP RCP

Corrugated

Metal (CMP) Commentary

Fully-installed cost Installed cost = cost of pipe, select

backfill, disposal of material, structural

installation, and post inspection costs

Ease / speed of

installation CMP has bands, still must follow OSHA

standards

Installation sensitivity Flexible pipe + lower pipe stiffness =

more structure built by contractor

Structural integrity Equal assuming proper installation

Resistance to

corrosion HDPE / PP is essentially inert, RCP is

corrosion resistant

Resistance to abrasion RCP has greater thickness

Joint integrity Multiple joints are available for RCP,

depends on selected joint

Flow characteristics Flow is also dependent on corrugations

not being pushed to the interior of pipe

Overall

= Strength of product attribute (full circle is strongest)

36

HOW TO BEST COMPETE WITH HDPE

Conclusion: Charting the Future for RCP

• Focus on providing solutions rather than just selling a product

• Leverage direct selling network, your best asset

• Focus efforts on technical selling

• Concentrate focus on design and engineering firms, not contractors

• Make product the gold-standard for engineers

• Emphasize “risk adjusted” total cost of ownership

• Empower a strong trade association to lobby for resources & specification

and drive home your message

37

CLOSING

Conclusion: Charting the Future for RCP

Thank You !!!!