ADVANCED DRAINAGE SYSTEMS, INC.
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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.
Jun 30, 2026 · Filed Aug 6, 2026
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 2025-12-31; filed 2026-02-05.
0001604028-26-000007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001604028-26-000037
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 79 previous paragraphs and 58 current paragraphs.
30 unchanged; 16 reworded; 12 added; 27 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 10 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 (12)
Current report
First Quarter Fiscal 2027 Results
Current report
•Net sales increased 20.6% to $1,001.1 million
Current report
•Net income from continuing operations increased 22.5% to $176.6 million
Current report
•Adjusted EBITDA, a non-GAAP measure, increased 28.8% to $358.3 million
Current report
Net sales increased $171.2 million, or 20.6%, to $1,001.1 million, as compared to $829.9 million in the prior year quarter. Stormwater sales increased $157.8 million, or 24.2%, to $809.4 million. Stormwater sales include $94.7 million of revenue from the acquisition of NDS. Wastewater sales increased $13.4 million, or 7.5%, to $191.7 million.
Current report
Gross profit increased $77.6 million, or 23.5%, to $408.0 million as compared to $330.4 million in the prior year. The increase in gross profit is primarily driven by the acquisition of NDS, volume growth, and favorable price/cost and manufacturing costs, partially offset by higher transportation costs.
Current report
Adjusted EBITDA, a non-GAAP measure, increased $80.1 million, or 28.8%, to $358.3 million, as compared to $278.2 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 35.8% as compared to 33.5% in the prior year.
Current report
Our consolidated Net sales for the three months ended June 30, 2026 increased by $171.2 million, or 20.6%, compared to the same period in fiscal 2026. The increase in Stormwater sales was primarily driven by NDS net sales of $94.7 million and an increase in volume in both Pipe and Allied Products. The increase in Wastewater sales was primarily driven by volume.
Current report
Intangible amortization -Intangible amortization increased by $6.4 million primarily due to the increase in intangible assets due to the NDS acquisition.
Current report
Interest expense -Interest expense for the three months ended June 30, 2026 increased by $4.0 million from the same period in fiscal 2026. The increase was primarily due to increased debt levels.
Current report
Interest income and other, net - Interest income and other, net decreased by $5.3 million for the three months ended June 30, 2026 compared to the same period in fiscal 2026. The decrease was primarily due to decreased cash balances.
Current report
Net loss from discontinued operations - The loss from discontinued operations was attributable to the NDS International entities classified as held for sale as of June 30, 2026.
Removed paragraphs (27)
Previous report
Third Quarter Fiscal 2026 Results
Previous report
•Net sales increased 0.4% to $693.4 million
Previous report
•Net income increased 14.3% to $94.0 million
Previous report
•Net income per diluted share increased 14.4% to $1.19
Previous report
•Adjusted EBITDA, a non-GAAP measure, increased 9.3% to $209.2 million
Previous report
Net sales increased $2.8 million, or 0.4%, to $693.4 million, as compared to $690.5 million in the prior year quarter. Domestic Pipe sales decreased $12.9 million, or 3.8%, to $326.7 million. Domestic Allied Products & Other sales increased $14.1 million, or 9.4%, to $164.7 million. Infiltrator sales increased $2.9 million, or 1.9%, to $152.9 million, primarily due to growth in tanks and advanced treatment products. The overall increase in domestic net sales was primarily driven by growth in the Company's core non-residential construction end market. International sales decreased $1.3 million, or 2.5%, to $49.1 million.
Previous report
Gross profit increased $17.6 million, or 7.3%, to $259.2 million as compared to $241.6 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 & Other and Infiltrator.
Previous report
Selling, general and administrative expenses increased $8.0 million, or 7.9% to $108.7 million, as compared to $100.8 million in the prior year. As a percentage of Net sales, Selling, general and administrative expenses increased to 15.7% as compared to 14.6% in the prior year, primarily driven by transaction costs associated with the acquisition of NDS.
Previous report
Adjusted EBITDA, a non-GAAP measure, increased $17.7 million, or 9.3%, to $209.2 million, as compared to $191.5 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 30.2% as compared to 27.7% in the prior year.
Previous report
Year-to-date Fiscal 2026 Results
Previous report
•Net sales increased 3.7% to $2,373.6 million
Previous report
•Net income increased 5.0% to $394.6 million
Previous report
•Net income per diluted share increased 5.2% to $5.02
Previous report
•Adjusted EBITDA, a non-GAAP measure, increased 8.8% to $774.9 million
Previous report
Net sales increased $85.1 million, or 3.7%, to $2,373.6 million, as compared to $2,288.5 million in the prior year. Domestic Pipe sales decreased $17.1 million to $1,155.3 million. Domestic Allied Products & Other sales increased $40.6 million, or 7.9%, to $551.1 million. Infiltrator sales increased $70.0 million, or 15.9%, to $511.0 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 $8.4 million, or 5.1%, to $156.2 million.
Previous report
Gross profit increased $61.7 million, or 7.1%, to $929.7 million as compared to $868.0 million in the prior year. The increase in gross profit is primarily driven by favorable volume 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 report
Selling, general and administrative expenses increased $43.0 million, or 14.9% to $331.9 million, as compared to $289.0 million. As a percentage of Net sales, Selling, general and administrative expense increased to 14.0% as compared to 12.6% in the prior year. The increase was primarily driven by the acquisition of Orenco, as well as realignment expenses and transaction costs associated with the acquisition of NDS.
Previous report
Adjusted EBITDA, a non-GAAP measure, increased $62.4 million, or 8.8%, to $774.9 million, as compared to $712.5 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 32.6% as compared to 31.1% in the prior year.
Previous report
Our consolidated Net sales for the three months ended December 31, 2025 increased by $2.8 million, or 0.4%, compared to the same period in fiscal 2025. The overall decrease in Domestic Pipe Net sales was primarily driven by lower volume of sales in the residential and infrastructure end markets. Net sales of Infiltrator increased due to increased demand in the residential markets, primarily from growth in tanks and advanced treatment products. Allied Products & Other increased due to growth in the residential, non-residential and infrastructure end markets.
Previous report
Comparison of the Nine Months Ended December 31, 2025 to the Nine Months Ended December 31, 2024
Previous report
Our consolidated Net sales for the nine months ended December 31, 2025 increased by $85.1 million, or 3.7%, 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 driven by volume in the residential markets 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 report
Our consolidated Cost of goods sold for the nine months ended December 31, 2025 increased by $23.4 million, or 1.6%, and our consolidated Gross profit increased by $61.7 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. The increase in gross profit for Allied Products & Other was driven by volume.
Previous report
Selling, general and administrative expenses
Previous report
Selling, general and administrative expenses for nine months ended December 31, 2025 increased $43.0 million from the same period in fiscal 2025 and as a percentage of Net sales, increased by 1.4%. The increase in Selling, general and administrative expenses was due to realignment expenses of $10.0 million, transaction costs of $17.3 million and operating expenses for Orenco.
Previous report
In addition to the available liquidity above, we have the ability to borrow up to $1.3 billion under our Senior Secured Credit Facility, subject to leverage ratio restrictions.
Previous report
As disclosed in “Note 15. Subsequent Events”, we primarily funded our acquisition of NDS in the fourth fiscal quarter of 2026 with cash on hand and the remainder with availability under our Revolving Credit Facility.
Previous report
As of December 31, 2025, we have $408.0 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.
Reworded paragraphs (16)
Previous wording
Our consolidated Cost of goods sold for the three months ended December 31, 2025 decreased by $14.7 million, or 3.3%, and our consolidated Gross profit increased by $17.6 million, or 7.3%, 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 transportation costs. The increase in gross profit for both Infiltrator and Allied Products & Other was primarily driven by volume.
Current wording
Our consolidated Cost of goods sold for the three months ended June 30, 2026 increased by $93.6 million, or 18.7%, and our consolidated Gross profit increased by $77.6 million, or 23.5%, compared to the same period in fiscal 2026. The increase in gross profit for Stormwater is primarily due to the acquisition of NDS, volume growth, and favorable price/cost and manufacturing costs, partially offset by higher transportation costs. The increase in gross profit for Wastewater was driven by volume.
Previous wording
Selling, general and administrative expenses for the three months ended December 31, 2025 increased $8.0 million from the same period in fiscal 2025 and as a percentage of Net sales, increased by 1.1%. The increase in Selling, general and administrative expenses was primarily due to transaction costs of $7.2 million related to the acquisition of NDS.
Current wording
Selling, general and administrative expenses for the three months ended June 30, 2026 increased $26.9 million from the same period in fiscal 2026 and as a percentage of Net sales, increased by 0.6%. The increase in Selling, general and administrative expenses was primarily due to the operating expenses of NDS, integration costs of $3.2 million and increased stock-based compensation due to performance.
Previous wording
Loss (gain) on disposal of assets and costs from exit and disposal activities - The loss on disposal in fiscal 2026 was due to exit and disposal activities. See “Note 2. Restructuring and Loss (Gain) on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Current wording
Loss on disposal of assets and costs from exit and disposal activities - The loss on disposal in fiscal 2026 was due to exit and disposal activities. See “Note 3. Restructuring and Loss (Gain) on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Previous wording
The change in the effective tax rate for the nine months ended December 31, 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.
Current wording
The change in the effective tax rate for the three months ended June 30, 2026 was primarily related to a discrete income tax benefit for the change in valuation allowance on deferred tax assets for net losses on outside basis differences. See “Note 11. Income Taxes” for additional information.
Previous wording
Adjusted EBITDA and Adjusted EBITDA Margin -Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures, have been presented in this Form 10-Q as supplemental measures of financial performance that are not required by, or presented in accordance with GAAP and should not be considered as alternatives to net income as measures of financial performance or cash flows from operations or any other performance measure derived in accordance with GAAP. We calculate Adjusted EBITDA as net income before interest, income taxes, depreciation and amortization, stock-based compensation expense, non-cash charges and certain other expenses. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by Net sales.
Current wording
Adjusted EBITDA and Adjusted EBITDA Margin -Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures, have been presented in this Form 10-Q as supplemental measures of financial performance that are not required by, or presented in accordance with GAAP and should not be considered as alternatives to net income as measures of financial performance or cash flows from operations or any other performance measure derived in accordance with GAAP. We calculate Adjusted EBITDA as net income from continuing operations before interest, income taxes, depreciation and amortization, stock-based compensation expense, non-cash charges and certain other expenses. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by Net sales.
Previous 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 (Loss) Gain on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Current wording
(a)Includes costs associated with closure of 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 3. Restructuring and (Loss) Gain on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Previous wording
(c)Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, inventory step-up costs, and the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense.
Current wording
(c)Includes derivative fair value adjustments, foreign currency transaction (gains) losses, the proportionate share of interest, income taxes, depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirement expense.
Previous wording
As of December 31, 2025, we had $41.1 million in cash that was held by our foreign subsidiaries, including $26.1 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 June 30, 2026, we had $24.8 million in cash that was held by our foreign subsidiaries, including $9.8 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 December 31, 2025, we had $1,598.1 million in liquidity, including $1,008.2 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 June 30, 2026, we had $900.9 million in liquidity, including $162.3 million of cash and $738.6 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 $1,291.7 million as of December 31, 2025, from $926.4 million as of March 31, 2025. The increase in working capital is primarily due to increased cash on hand offset by changes in inventory and accounts receivable due to seasonality.
Current wording
Working Capital - Working capital decreased to $655.3 million as of June 30, 2026, from $721.4 million as of March 31, 2026. The decrease in working capital is primarily due to decreased cash on hand and increased accounts payable offset by increased accounts receivable due to seasonality.
Previous wording
Operating Cash Flows -Cash flows from operating activities increased $238.9 million during the nine months ended December 31, 2025 primarily driven by changes in working capital.
Current wording
Operating Cash Flows -Cash flows from operating activities decreased $14.6 million during the three months ended June 30, 2026 primarily driven by changes in working capital.
Previous wording
Investing Cash Flows- Cash flows used in investing activities during the nine months ended December 31, 2025 decreased by $216.3 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 and the acquisition of Orenco in the prior year offset by the acquisition of River Valley Pipe.
Current wording
Investing Cash Flows- Cash flows used in investing activities during the three months ended June 30, 2026 decreased by $14.9 million compared to the same period in fiscal 2026. The decrease in cash used in investing activities was due to the prior period acquisition of River Valley Pipe.
Previous wording
Capital expenditures totaled $196.7 million and $166.4 million for the nine months ended December 31, 2025 and 2024, respectively. Our capital expenditures for the nine months ended December 31, 2025 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives. We also acquired $36.6 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 $57.2 million and $52.6 million for the three months ended June 30, 2026 and 2025, respectively. Our capital expenditures for the three months ended June 30, 2026 were used primarily to support facility expansions, equipment replacements and technology improvement initiatives. We also acquired $2.8 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 $250 million in fiscal year 2026, including approximately $95 million of open orders as of December 31, 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 in fiscal year 2027, including approximately $110 million of open orders as of June 30, 2026. Such capital expenditures are expected to be financed using funds generated by operations.
Previous wording
During the nine months ended December 31, 2024, cash used in financing activities included the repurchase of common stock of $69.9 million, $37.3 million of dividend payments, $17.8 million of payments of finance lease obligations and $10.6 million for shares withheld for tax purposes.
Current wording
Financing Cash Flows- During the three months ended June 30, 2026, cash used in financing activities included the repurchase of common stock of $233.2 million, $15.3 million of dividend payments, $10.7 million for shares withheld for tax purposes and $9.5 million of payments of finance lease obligations.
Previous wording
Financing Cash Flows- During the nine months ended December 31, 2025, cash used in financing activities included $42.1 million of dividend payments, $31.2 million of payments of finance lease obligations and $7.0 million for shares withheld for tax purposes. Cash provided by financing activities includes proceeds from the commercial loan agreement of $27.2 million.
Current wording
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.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
See “Note 11. Income Taxes” for additional information.
Previous report — wording carried 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.
Previous report — wording carried elsewhere
Net sales -The following table presents Net sales to external customers by reportable segment for the nine months ended December 31, 2025 and 2024.
Previous report — wording carried elsewhere
Cost of goods sold and Gross profit -The following table presents gross profit by reportable segment for the nine months ended December 31, 2025 and 2024.
Previous report — wording carried elsewhere
Loss (gain) 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 (Loss) Gain on Disposal of Assets and Costs from Exit and Disposal Activities” for additional information.
Previous report — wording carried elsewhere
Income tax expense - The following table presents the effective tax rates for the nine months ended December 31, 2025 and 2024.