ADS Increases Profits Despite Rising PCR Costs
Advanced Drainage Systems, now the largest plastics collector in North America, increased its product sales by nearly 40% last year.
A publicly traded company, based in Hilliard, Ohio Advanced Drainage System (ADS) reported net sales of $2.8 billion in fiscal year 2022 (fiscal year ended March 31, 2022). This was almost 40% more than the previous year. ADS net income was $275 million, up 22% from fiscal 2021.
Manufacturer of pipes, septic systems and related products, ADS uses hundreds of millions of pounds of recycled HDPE, PP and PS each year. According to its annual report, it now consumes approximately 600 million pounds of post-consumer HDPE per year.
Earlier this month, Plastics News put ADS tops its latest ranking of North American recyclers and recycled resin brokers, estimating that it recycles 647 million pounds of recycled plastic annually.
ADS has been affected by rapidly changing recycled plastic prices over the past year.
According to RecyclingMarkets.net, the average North American price for colored HDPE balls has fluctuated significantly over the past year. It reached a record high of over 58 cents per pound in September 2021, falling to less than 20 cents in February 2022. Two years ago it was 3.6 cents per pound.
In its annual report, ADS noted that rising material costs have dampened its profits to some extent. ADS’ gross profit was more than $800 million, up 16% from a year earlier, with the company attributing the overall increase to higher sales volume and favorable pricing on pipes, on-site septic tanks and related products.
But the increases were partially offset by higher raw material, transportation and labor costs, as well as an increase in the use of third-party logistics services, the report notes. Earlier this year, two ADS executives discussed the impacts of fluctuating recycled resin prices in an interview with Plastics Recycling Update.