Plastic pipe maker Advanced Drainage Systems plans to invest between $50 million and $55 million in its operations in 2017, primarily for a new manufacturing plant in the central Midwest.
The Hilliard, Ohio-based company is evaluating its options in this region, Chief Financial Officer Scott Cottrill said June 7 during a conference call about the company's earnings for its fiscal year that ended March 31.
“Currently one of our top [capital expenditure] initiatives includes investing in our HP [high performance] production capacity and capability — a newer product line that has been growing significantly, albeit on a smaller base,” he said, adding that a new facility in the central Midwest would put ADS closer to the market to support current and future demand.
“Based on recent approvals as well as other favorable market conditions, we see good growth opportunities within the construction markets in this region,” Cottrill continued. “Given that we are currently serving this market from other ADS locations, there are significant logistical savings that will come once the plant is operational. This plant also will help to free up production capacity in other parts of the Midwest, which is needed based on current and projected growth and demand.”
ADS, which trades under the ticker symbol WMS, currently has 58 manufacturing facilities. In the last fiscal year, ADS made about $45 million in capital expenditures, which included investing in HP and N12 (corrugated polyethylene drainage pipe) production capacity, adding production capacity in Florida, and other initiatives.
For fiscal 2016, ADS saw net sales grow 9.3 percent to $1.289 billion with a 10.6 percent increase in products sold for construction uses, which is its largest end market.
ADS continued to pick up new customers that converted from other pipe materials, such as reinforced concrete, corrugated metal and PVC, to HDPE and polypropylene pipe.
“This strategy will enable us to consistently outperform the market,” Chairman and CEO Joe Chlapaty said.
The business also saw contributions from its Ideal Pipe acquisition and experienced favorable weather conditions, he added.