ADVANCED DRAINAGE SYSTEMS, INC.
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 6, 2025
WMS$124.31+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001604028-25-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001604028-25-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 58 previous paragraphs and 79 current paragraphs.
33 unchanged; 19 reworded; 21 added; 6 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 10 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Second Quarter Fiscal 2026 Results
Current report
•Net sales increased 8.7% to $850.4 million
Current report
•Net income increased 19.3% to $156.5 million
Current report
•Adjusted EBITDA, a non-GAAP measure, increased 17.1% to $287.5 million
Current report
Gross profit increased $46.2 million, or 15.7%, to $340.1 million as compared to $293.9 million in the prior year. The increase in gross profit is primarily driven by volume growth, favorable price/cost, and favorable mix of Allied products and Infiltrator.
Current report
Adjusted EBITDA, a non-GAAP measure, increased $42.0 million, or 17.1%, to $287.5 million, as compared to $245.6 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 33.8% as compared to 31.4% in the prior year.
Current report
Year-to-date Fiscal 2026 Results
Current report
•Net sales increased 5.2% to $1,680.3 million
Current report
•Net income increased 2.4% to $300.6 million
Current report
•Adjusted EBITDA, a non-GAAP measure, increased 8.6% to $565.7 million
Current report
Net sales increased $82.3 million, or 5.2%, to $1,680.3 million, as compared to $1,597.9 million in the prior year. Domestic Pipe sales decreased $4.2 million to $828.6 million. Domestic Allied Products & Other sales increased $26.4 million, or 7.3%, to $386.5 million. Infiltrator sales increased $67.2 million, or 23.1%, to $358.1 million. The overall increase in domestic net sales was primarily driven by growth in the core non-residential and residential construction end markets. International sales decreased $7.1 million, or 6.2%, to $107.1 million.
Current report
Selling, general and administrative expenses increased $35.0 million, or 18.6% to $223.2 million, as compared to $188.2 million. As a percentage of Net sales, Selling, general and administrative expense increased to 13.3% as compared to 11.8% in the prior year the acquisition of Orenco, as well as transaction costs associated with the acquisition of NDS.
Current report
Adjusted EBITDA, a non-GAAP measure, increased $44.7 million, or 8.6%, to $565.7 million, as compared to $521.0 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 33.7% as compared to 32.6% in the prior year.
Current report
Our consolidated Net sales for the three months ended September 30, 2025 increased by $67.8 million, or 8.7%, compared to the same period in fiscal 2025. The overall increase in Domestic Pipe Net sales was primarily driven by volume of the non-residential construction market. Net sales of $26.4 million of Orenco and demand in the residential market drove the increase in Net sales for Infiltrator. Allied Products & Other increased due to demand in the residential and non-residential construction markets.
Current report
(Gain) loss on disposal of assets and costs from exit and disposal activities - The gain on disposal in fiscal 2026 was due to the sale of a property held-for-sale partially offset by exit and disposal activities. See “Note 2. Restructuring and (Gain) Loss on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Current report
Comparison of the Six Months Ended September 30, 2025 to the Six Months Ended September 30, 2024
Current report
Selling, general and administrative expenses
Current report
Selling, general and administrative expenses for six months ended September 30, 2025 increased $35.0 million from the same period in fiscal 2025 and as a percentage of Net sales, increased by 1.5%. The increase in Selling, general and administrative expenses was also due to realignment expenses of $8.4 million, transaction costs of $10.1 million and operating expenses for Orenco.
Current report
(Gain) loss on disposal of assets and costs from exit and disposal activities - The gain on disposal in fiscal 2026 was due to the sale of properties held-for-sale partially offset by exit and disposal activities. See “Note 2. Restructuring and Gain (Loss) on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Current report
As disclosed in “Note 3. Acquisitions”, we expect to fund our acquisition of NDS in the fourth fiscal quarter of 2026 with cash on hand and capacity on our existing Revolving Credit Facility.
Current report
As of September 30, 2025, we have $409.8 million of debt under our Term Loan facility maturing within twelve months on its scheduled maturity. We have classified this debt as long-term debt as we have the intent and the ability to refinance these borrowings on a long-term basis as supported by the available capacity under the Revolving Credit Facility.
Removed paragraphs (6)
Previous report
First Quarter Fiscal 2026 Results
Previous report
•Net sales increased 1.8% to $829.9 million
Previous report
•Net income decreased 11.2% to $144.1 million
Previous report
•Adjusted EBITDA, a non-GAAP measure, increased 1.0% to $278.2 million
Previous report
Adjusted EBITDA, a non-GAAP measure, increased $2.7 million, or 1.0%, to $278.2 million, as compared to $275.5 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 33.5% as compared to 33.8% in the prior year.
Previous report
Interest expense- Interest expense increased $0.2 million in the three months ended June 30, 2025 compared to the same period in the previous fiscal year. The increase was primarily due to an increase in interest rates.
Reworded paragraphs (19)
Previous wording
•Net income per diluted share decreased 10.7% to $1.84
Current wording
•Net income per diluted share increased 19.2% to $1.99
Previous wording
Net sales increased $14.5 million, or 1.8%, to $829.9 million, as compared to $815.3 million in the prior year quarter. Domestic pipe sales decreased $10.9 million, or 2.5%, to $415.5 million. Domestic allied products & other sales increased $3.6 million, or 1.9%, to $187.5 million. Infiltrator sales increased $31.1 million, or 21.1%, to $178.4 million. The overall increase in domestic Net sales was primarily driven by acquisitions, as well as growth in the non-residential and residential construction end markets. International sales decreased $9.2 million, or 16.0%, to $48.5 million.
Current wording
Net sales increased $67.8 million, or 8.7%, to $850.4 million, as compared to $782.6 million in the prior year quarter. Domestic Pipe sales increased $6.7 million, or 1.6%, to $413.0 million. Domestic Allied Products & Other sales increased $22.9 million, or 13.0%, to $199.0 million. Infiltrator sales increased $36.1 million, or 25.2%, to $179.7 million. The overall increase in domestic Net sales was primarily driven by acquisitions, as well as growth in the non-residential and residential construction end markets. International sales increased $2.1 million, or 3.7%, to $58.7 million.
Previous wording
Selling, general and administrative expenses increased $9.9 million, or 10.5% to $104.0 million, as compared to $94.1 million in the prior year. As a percentage of Net sales, selling, general and administrative expenses increased to 12.5% as compared to 11.5% in the prior year, primarily driven by the acquisition of Orenco.
Current wording
Selling, general and administrative expenses increased $25.1 million, or 26.7% to $119.2 million, as compared to $94.1 million in the prior year. As a percentage of Net sales, Selling, general and administrative expenses increased to 14.0% as compared to 12.0% in the prior year, primarily driven by the acquisition of Orenco, as well as transaction costs associated with the acquisition of NDS.
Previous wording
Gross profit decreased $2.0 million, or 0.6%, to $330.4 million as compared to $332.5 million in the prior year. The decrease in gross profit is primarily driven by unfavorable pricing and material cost, as well as the mix impact from the inclusion of Orenco. This unfavorability was partially offset by favorable volume, price/cost and mix of construction market and Infiltrator sales.
Current wording
Gross profit increased $44.2 million, or 7.1%, to $670.6 million as compared to $626.4 million in the prior year. The increase in gross profit is primarily driven by favorable volume, price/cost and mix of construction market and Infiltrator sales, partially offset by unfavorable fixed cost absorption as well as the mix impact from the inclusion of Orenco.
Previous wording
Our consolidated Cost of goods sold for the three months ended June 30, 2025 increased by $16.6 million, or 3.4%, and our consolidated Gross profit decreased by $2.0 million, or 0.6%, compared to the same period in fiscal 2025. The decrease in
Current wording
Our consolidated Cost of goods sold for the three months ended September 30, 2025 increased by $21.6 million, or 4.4%, and our consolidated Gross profit increased by $46.2 million, or 15.7%, compared to the same period in fiscal 2025. The increase in gross profit for Domestic Pipe is primarily driven by favorable material costs, partially offset by manufacturing and transportation costs. The increase in gross profit for Infiltrator was primarily driven by Orenco.
Previous wording
Selling, general and administrative expenses for the three months ended June 30, 2025 increased $9.9 million from the same period in fiscal 2025 and as a percentage of Net sales, increased by 1.0%. The increase in selling, general and administrative expenses was primarily due to the operating expenses of Orenco.
Current wording
Selling, general and administrative expenses for the three months ended September 30, 2025 increased $25.1 million from the same period in fiscal 2025 and as a percentage of Net sales, increased by 2.0%. The increase in Selling, general and administrative expenses was primarily due to realignment expenses of $5.5 million, transaction costs of $9.3 million and the operating expenses of Orenco.
Previous wording
Our consolidated Net sales for the three months ended June 30, 2025 increased by $14.5 million, or 1.8%, compared to the same period in fiscal 2025. The overall decrease in domestic Pipe Net sales was primarily driven by demand in the infrastructure end market partially offset by improvement in the non-residential market. Net sales of $30.0 million of Orenco drove the increase in Net sales for Infiltrator. For the International segment, the decrease was driven by decreased volume.
Current wording
Our consolidated Net sales for the six months ended September 30, 2025 increased by $82.3 million, or 5.2%, compared to the same period in fiscal 2025. The overall decrease in Domestic Pipe Net sales was primarily driven by lower demand in the residential and infrastructure end markets partially offset by improved demand in the non-residential construction market. Net sales for Infiltrator were also driven by volume in the residential market and the acquisition of Orenco. For the international segment, the decrease was driven by decreased volume. Allied Products & Other increased due to demand in the residential and non-residential construction markets.
Previous wording
19 - gross profit for Domestic Pipe is primarily driven by unfavorable fixed cost absorption, partially offset by material cost. The increase in gross profit for Infiltrator was primarily driven by Orenco. For the International segment, the decrease was driven by decreased volume.
Current wording
Our consolidated Cost of goods sold for the six months ended September 30, 2025 increased by $38.1 million, or 3.9%, and our consolidated Gross profit increased by $44.2 million, or 7.1%, compared to the same period in fiscal 2025. The increase in gross profit for Domestic Pipe is primarily driven by favorable material cost partially offset by unfavorable fixed cost absorption. The increase in gross profit for Infiltrator was driven by volume and the acquisition of Orenco. For the International segment, the decrease was driven by decreased volume.
Previous wording
The change in the effective tax rate for the three months ended June 30, 2025 was primarily related to the decrease of the discrete income tax benefit related to the stock-based compensation windfall. See “Note 11. Income Taxes” for additional information.
Current wording
The change in the effective tax rate for the six months ended September 30, 2025 was primarily driven by the decrease of the discrete income tax benefit related to the stock-based compensation windfall. See “Note 11. Income Taxes” for additional information.
Previous wording
(a)Includes Loss on disposal of assets and costs from exit and disposal activities, which includes costs associated with plant closures, as well as professional fees incurred in connection with supporting enterprise-wide restructuring and realignment initiatives.
Current wording
(a)Includes costs associated with closure of one recycling facility, one offsite storage location and one distribution yard, as well as professional fees incurred in connection with supporting enterprise-wide restructuring and realignment initiatives. Excludes gain on sale of properties previously held-for-sale and equipment. See “Note 2. Restructuring and Gain (Loss) on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Previous wording
As of June 30, 2025, we had $16.0 million in cash that was held by our foreign subsidiaries, including $9.4 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 for Canada. 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.
Current wording
As of September 30, 2025, we had $26.2 million in cash that was held by our foreign subsidiaries, including $15.8 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 for Canada. 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.
Previous wording
As of June 30, 2025, we had $1,228.1 million in liquidity, including $638.3 million of cash and $589.9 million in borrowings available under our Revolving Credit Agreement, net 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.
Current wording
As of September 30, 2025, we had $1,402.7 million in liquidity, including $812.9 million of cash and $589.9 million in borrowings available under our Revolving Credit Agreement, net 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.
Previous wording
Working Capital - Working capital increased to $1,045.4 million as of June 30, 2025, from $926.4 million as of March 31, 2025. The increase in working capital is primarily due to increased cash on hand and the seasonality of accounts receivable offset by changes in inventory and accrued liabilities due to the timing of tax and rebate payments.
Current wording
Working Capital - Working capital increased to $1,192.0 million as of September 30, 2025, from $926.4 million as of March 31, 2025. The increase in working capital is primarily due to increased cash on hand and the seasonality of accounts receivable offset by changes in inventory and accrued liabilities due to the timing of tax and rebate payments.
Previous wording
Operating Cash Flows -Cash flows from operating activities increased $91.6 million during the three months ended June 30, 2025 primarily driven by changes in working capital.
Current wording
Operating Cash Flows -Cash flows from operating activities increased $159.5 million during the six months ended September 30, 2025 primarily driven by changes in working capital.
Previous wording
Investing Cash Flows- Cash flows used in investing activities during the three months ended June 30, 2025 increased by $12.7 million compared to the same period in fiscal 2025. The increase in cash used in investing activities was due to the acquisition of River Valley Pipe.
Current wording
Investing Cash Flows- Cash flows used in investing activities during the six months ended September 30, 2025 decreased by $6.2 million compared to the same period in fiscal 2025. The decrease in cash used in investing activities was due to the proceeds from the sale of properties held-for-sale offset by the acquisition of River Valley Pipe.
Previous wording
Capital expenditures totaled $52.6 million and $57.7 million for the three months ended June 30, 2025 and 2024, respectively. Our capital expenditures for the three months ended June 30, 2025 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives. We also acquired $21.2 million of property, plant and equipment under finance leases, which includes material handling transportation equipment to update our fleet of forklifts, trucks and trailers.
Current wording
Capital expenditures totaled $111.0 million and $112.2 million for the six months ended September 30, 2025 and 2024, respectively. Our capital expenditures for the six months ended September 30, 2025 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives. We also acquired $33.1 million of property, plant and equipment under finance leases, which includes material handling transportation equipment to update our fleet of forklifts, trucks and trailers.
Previous wording
We currently anticipate that we will make capital expenditures of approximately $200 million to $225 million in fiscal year 2026, including approximately $105 million of open orders as of June 30, 2025. Such capital expenditures are expected to be financed using funds generated by operations.
Current wording
We currently anticipate that we will make capital expenditures of approximately $200 million to $225 million in fiscal year 2026, including approximately $80 million of open orders as of September 30, 2025. Such capital expenditures are expected to be financed using funds generated by operations.
Previous wording
Financing Cash Flows- During the three months ended June 30, 2025, cash used in financing activities included $14.0 million of dividend payments, $8.3 million of payments of finance lease obligations and $6.7 million for shares withheld for tax purposes.
Current wording
Financing Cash Flows- During the six months ended September 30, 2025, cash used in financing activities included $28.1 million of dividend payments, $17.2 million of payments of finance lease obligations and $6.7 million for shares withheld for tax purposes.
Previous wording
During the three months ended June 30, 2024, cash used in financing activities included the repurchase of common stock of $49.2 million, $12.4 million of dividend payments, and $10.6 million for shares withheld for tax purposes.
Current wording
During the six months ended September 30, 2024, cash used in financing activities included the repurchase of common stock of $69.9 million, $24.9 million of dividend payments, $11.8 million of payments of finance lease obligations and $10.6 million for shares withheld for tax purposes.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
•Net income per diluted share increased 2.7% to $3.83
Current report — wording carried from elsewhere
The change in the effective tax rate for the three months ended September 30, 2025 wasprimarily driven by the decrease of the discrete income tax benefit related to the stock-based compensation windfall and the additional tax expense recorded to adjust prior quarter income tax expense to the annual effective tax rate. See “Note 11. Income Taxes” for additional information.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Net sales -The following table presents Net sales to external customers by reportable segment for the six months ended September 30, 2025 and 2024.
Current report — wording carried from elsewhere
Cost of goods sold and Gross profit -The following table presents gross profit by reportable segment for the six months ended September 30, 2025 and 2024.
Current report — wording carried from elsewhere
Income tax expense - The following table presents the effective tax rates for the six months ended September 30, 2025 and 2024.