“The end of the process is near” but Advanced Drainage Systems will miss another target date to complete the restatement and filing of its annual report for the fiscal year ended March 31, 2015, as well as amended quarterly reports, CEO Joe Chlapaty said.
The Hilliard, Ohio-based manufacturer of thermoplastic corrugated pipe and waste management systems started trading shares on the New York Stock Exchange under the ticker name WMS in July 2014. However, soon after the company asked for filing extensions from the Securities Exchange Commission (SEC), saying it had to finalize an inventory cost analysis and review its journal entry control process.
ADS officials had said they would file their annual report by the end of the February, but in a Feb. 23 conference call, Chlapaty said the company won't meet the targeted deadline and would not provide a revised timeline. The company is moving forward in a “thoughtful and reliable manner,” he added.
“We have dedicated a significant amount of time and resources to this effort, which is a reflection of the complexity and sheer volume of work that goes into a restatement as well as our commitment to getting it right,” Chlapaty said.
ADS staff, including the newly appointed CFO Scott Cottrill, are working with independent auditors “to ensure our historical financial statements and FY2016 results properly incorporate all the necessary changes,” Chlapaty added.
Cottrill said his time and energy has been focused on accounting and control issues. He listed four remediation efforts to date as: adding financial and accounting staff, including a director of SEC reporting and technical accounting and an international controller; continuing to use third-party consultants to supplement the staff; enhancing corporate governance both domestically and internationally to improve accountability and oversight; and beefing up controls over financial reporting related to approving journal entries and performing account reconciliations.
“We also have established a cross-functional disclosure committee and have implemented a robust certification and sub-certification process to support all of our SEC filings going forward,” Cottrill said.
Founded in 1966, ADS has a global network of 61 manufacturing plants and 30 distribution centers. With $1.17 billion of sales (as of March 31, 2015), the company is the No. 2 pipe, profile and tubing extruder in North America, according to Plastics News' latest rankings.