# ADVANCED DRAINAGE SYSTEMS, INC. (WMS) Informational only - not investment advice. CIK: 0001604028 SIC: 3086 Plastics Foam Products SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 30](/major-group/30/) > [SIC 3086 Plastics Foam Products](/industry/3086/) Latest 10-K filed: 2026-05-21 SEC page: https://www.sec.gov/edgar/browse/?CIK=1604028 Filing source: https://www.sec.gov/Archives/edgar/data/1604028/000160402826000019/wms-20260331.htm ## At a glance FY2026 · period end 2026-03-31 · filed 2026-05-21 · accession 0001604028-26-000019 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001604028.json | Metric | Value | FY | Provenance | | --- | ---: | ---: | --- | | Revenue | 3,050,376,000 USD | 2026 | verified | | Net income | 426,465,000 USD | 2026 | verified | | Assets | 4,505,623,000 USD | 2026 | verified | | Free cash flow | 569,288,000 USD | 2026 | computed | | Net margin | 13.98% | 2026 | computed | | Operating margin | 20.30% | 2026 | computed | | Revenue YoY | +5.03% | 2026 | computed | | ROE | 22.94% | 2026 | computed | Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2026 revenue ÷ FY2025 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity. No market price, no rating, no forecast on this site. Not investment advice. ### Peer percentile fingerprint | Ratio | WMS | Peer median | Percentile | N | | --- | ---: | ---: | ---: | ---: | | Net margin | 14.0% | 6.7% | 79 | 15 | | Operating margin | 20.3% | 13.3% | 83 | 13 | | Revenue growth | 5.0% | 0.3% | 57 | 15 | | FCF margin | 18.7% | 8.1% | 86 | 15 | | ROE | 22.9% | 11.9% | 79 | 15 | | ROA | 9.5% | 4.9% | 71 | 15 | | Liabilities / equity | 1.37 | 1.14 | 57 | 15 | | Current ratio | 2.42 | 2.30 | 64 | 15 | Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC major-group 30 SIC Major Group 30, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking. ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 3050376000 | USD | 2026 | 2026-05-21 | | Net income | 426465000 | USD | 2026 | 2026-05-21 | | Assets | 4505623000 | USD | 2026 | 2026-05-21 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-21. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001604028.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2014 | 2015 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | 1,257,261,000 | 1,330,354,000 | 1,384,733,000 | 1,673,805,000 | 1,982,780,000 | 2,769,315,000 | 3,071,121,000 | 2,874,473,000 | 2,904,245,000 | 3,050,376,000 | | Net income | | | 62,007,000 | 62,007,000 | 77,772,000 | -193,174,000 | 224,230,000 | 271,331,000 | 507,086,000 | 509,915,000 | 450,172,000 | 426,465,000 | | Operating income | | | 76,328,000 | 88,254,000 | 129,413,000 | -95,349,000 | 344,525,000 | 411,918,000 | 719,310,000 | 732,131,000 | 657,436,000 | 619,202,000 | | Gross profit | | | 295,810,000 | 302,481,000 | 326,967,000 | 316,479,000 | 690,082,000 | 800,384,000 | 1,118,408,000 | 1,145,949,000 | 1,094,241,000 | 1,167,386,000 | | Diluted EPS | | | 0.99 | 0.99 | 1.22 | -3.21 | 2.59 | 3.15 | 6.08 | 6.45 | 5.76 | 5.44 | | Operating cash flow | | | 104,239,000 | 137,120,000 | 151,678,000 | 306,189,000 | 452,216,000 | 274,888,000 | 707,810,000 | 717,928,000 | 581,491,000 | 819,054,000 | | Capital expenditures | | | 46,676,000 | 41,709,000 | 43,412,000 | 67,677,000 | 78,757,000 | 149,083,000 | 166,913,000 | 183,812,000 | 212,944,000 | 249,766,000 | | Dividends paid | | | | | | 92,127,000 | 30,685,000 | 37,023,000 | 39,612,000 | 43,995,000 | 49,737,000 | 56,124,000 | | Share buybacks | 1,063,000 | 3,000 | | 7,947,000 | | 0.00 | 0.00 | 292,000,000 | 575,027,000 | 207,308,000 | 69,922,000 | 91,958,000 | | Assets | | | 1,046,285,000 | 1,043,242,000 | 1,042,159,000 | 2,369,888,000 | 2,413,832,000 | 2,649,758,000 | 2,901,125,000 | 3,268,913,000 | 3,690,360,000 | 4,505,623,000 | | Liabilities | | | 695,850,000 | 609,433,000 | 541,524,000 | 1,585,306,000 | 1,350,406,000 | 1,544,713,000 | 1,906,265,000 | 1,988,214,000 | 2,054,572,000 | 2,549,659,000 | | Stockholders' equity | | | 222,703,000 | 307,596,000 | 384,327,000 | 525,723,000 | 819,784,000 | 893,039,000 | 824,147,000 | 1,153,313,000 | 1,525,436,000 | 1,858,734,000 | | Cash and cash equivalents | | | 6,450,000 | 17,587,000 | 8,891,000 | 174,233,000 | 195,009,000 | 20,125,000 | 217,128,000 | 490,163,000 | 463,319,000 | 223,012,000 | | Free cash flow | | | 57,563,000 | 95,411,000 | 108,266,000 | 238,512,000 | 373,459,000 | 125,805,000 | 540,897,000 | 534,116,000 | 368,547,000 | 569,288,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2014 | 2015 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | 4.93% | 4.66% | 5.62% | -11.54% | 11.31% | 9.80% | 16.51% | 17.74% | 15.50% | 13.98% | | Operating margin | | | 6.07% | 6.63% | 9.35% | -5.70% | 17.38% | 14.87% | 23.42% | 25.47% | 22.64% | 20.30% | | Return on equity | | | 27.84% | 20.16% | 20.24% | -36.74% | 27.35% | 30.38% | 61.53% | 44.21% | 29.51% | 22.94% | | Return on assets | | | 5.93% | 5.94% | 7.46% | -8.15% | 9.29% | 10.24% | 17.48% | 15.60% | 12.20% | 9.47% | | Liabilities / equity | | | 3.12 | 1.98 | 1.41 | 3.02 | 1.65 | 1.73 | 2.31 | 1.72 | 1.35 | 1.37 | | Current ratio | | | 1.72 | 2.07 | 2.26 | 2.80 | 2.33 | 2.23 | 2.69 | 2.96 | 3.33 | 2.42 | ## As-reported value updates 3 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period. Ledger: /company/WMS/revisions/ ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-08-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001604028.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2021-Q1 | 2020-06-30 | 508,639,000 | 70,466,000 | 0.83 | reported discrete quarter | | 2022-Q1 | 2021-06-30 | 669,300,000 | 75,987,000 | 0.87 | reported discrete quarter | | 2021-Q2 | 2021-09-30 | 706,471,000 | 75,359,000 | 0.88 | reported discrete quarter | | 2021-Q3 | 2021-12-31 | 715,357,000 | 73,678,000 | 0.86 | reported discrete quarter | | 2023-Q1 | 2022-06-30 | 914,186,000 | 187,146,000 | 2.22 | reported discrete quarter | | 2023-Q2 | 2022-09-30 | 884,209,000 | 152,007,000 | 1.80 | reported discrete quarter | | 2023-Q3 | 2023-12-31 | 662,367,000 | 105,639,000 | 1.34 | reported discrete quarter | | 2024-Q1 | 2024-06-30 | 815,336,000 | 161,402,000 | 2.06 | reported discrete quarter | | 2025-Q1 | 2025-06-30 | 829,880,000 | 143,922,000 | 1.84 | reported discrete quarter | | 2025-Q2 | 2025-09-30 | 850,381,000 | 156,017,000 | 1.99 | reported discrete quarter | | 2025-Q3 | 2025-12-31 | 693,354,000 | 93,626,000 | 1.19 | reported discrete quarter | | 2027-Q1 | 2026-06-30 | 1,001,112,000 | 168,521,000 | 2.19 | reported discrete quarter | ## Filed narrative (10-K & 10-Q) ## Business Verbatim Item 1 Business section from WMS's latest 10-K: [/company/WMS/business/](/company/WMS/business/). ## Risk Factors Verbatim Item 1A Risk Factors from WMS's latest 10-K: [/company/WMS/risk-factors/](/company/WMS/risk-factors/). ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1604028/000160402826000037/wms-20260630.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-08-06 Report date: 2026-06-30 Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations Unless the context otherwise indicates or requires, as used in this Quarterly Report on Form 10-Q (“Form 10-Q”), the terms “we,” “our,” “us,” “ADS” and the “Company” refer to Advanced Drainage Systems, Inc. and its directly- and indirectly-owned subsidiaries as a combined entity, except where it is clear that the terms mean only Advanced Drainage Systems, Inc. exclusive of its subsidiaries. We consolidate our joint ventures for purposes of GAAP, except for our South American Joint Venture. Our fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, references to “year” pertain to our fiscal year. For example, 2027 refers to fiscal 2027, which is the period from April 1, 2026 to March 31, 2027. The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our Condensed Consolidated Financial Statements and related footnotes included elsewhere in this Form 10-Q and with the audited Consolidated Financial Statements included in our Fiscal 2026 Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2026. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in the forward-looking statements. For more information, see the section entitled “Forward-Looking Statements.” Overview ADS is the leading manufacturer of innovative water management solutions in the stormwater and onsite septic wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplaces. Our innovative products, for which we hold many patents, are used across a broad range of end markets and applications, including non-residential, residential, infrastructure and agriculture applications. We have established a leading position in many of these end markets by leveraging our national sales and distribution platform, industry-acclaimed engineering support, overall product breadth and scale plus manufacturing excellence. Executive Summary First Quarter Fiscal 2027 Results •Net sales increased 20.6% to $1,001.1 million •Net income from continuing operations increased 22.5% to $176.6 million •Adjusted EBITDA, a non-GAAP measure, increased 28.8% to $358.3 million 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. 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. Adjusted EBITDA, a non-GAAP measure, increased $80.1 million, or 28.8%, to $358.3 million, as compared to $278.2 million in the prior year. As a percentage of Net sales, Adjusted EBITDA was 35.8% as compared to 33.5% in the prior year. - 21 - Table of Contents Results of Operations Comparison of the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025 The following table summarizes our operating results as a percentage of Net sales that have been derived from our Condensed Consolidated Financial Statements for the periods presented. We believe this presentation is useful to investors in comparing historical results. [[GREPCENT_TABLE]] [["Consolidated Statements of Operations data:","For the Three Months Ended June 30,"],["(In thousands)","2026","","2025"],["Net sales","$","1,001,112","","","100.0","%","","$","829,880","","","100.0","%"],["Cost of goods sold","593,065","","","59.2","","","499,442","","","60.2"],["Gross profit","408,047","","","40.8","","","330,438","","","39.8"],["Selling, general and administrative","130,818","","","13.1","","","103,961","","","12.5"],["Loss on disposal of assets and costs from exit and disposal activities","2,621","","","0.3","","","7,024","","","0.8"],["Intangible amortization","20,060","","","2.0","","","13,707","","","1.7"],["Income from operations","254,548","","","25.4","","","205,746","","","24.8"],["Interest expense","27,040","","","2.7","","","23,029","","","2.8"],["Interest income and other, net","(1,452)","","","(0.1)","","","(6,705)","","","(0.8)"],["Income before income taxes","228,960","","","22.9","","","189,422","","","22.8"],["Income tax expense","53,689","","","5.4","","","46,674","","","5.6"],["Equity in net income of unconsolidated affiliates","(1,297)","","","(0.1)","","","(1,343)","","","(0.2)"],["Net income from continuing operations","176,568","","","17.6","","","144,091","","","17.4"],["Net loss from discontinued operations","(5,653)","","","(0.6)","","","\u2014","","","\u2014"],["Net income","170,915","","","17.1","","","144,091","","","17.4"],["Less: net income attributable to noncontrolling interest","2,394","","","0.2","","","169","","","\u2014"],["Net income attributable to ADS","$","168,521","","","16.8","%","","$","143,922","","","17.3","%"]] [[/GREPCENT_TABLE]] Net sales - The following table presents Net sales to external customers by reportable segment for the three months ended June 30, 2026 and 2025. [[GREPCENT_TABLE]] [["(Amounts in thousands)","2026","","2025","","$ Variance","","% Variance"],["Stormwater","$","809,376","","","$","651,527","","","$","157,849","","","24.2","%"],["Wastewater","191,736","","","178,353","","","13,383","","","7.5"],["Total Consolidated","$","1,001,112","","","$","829,880","","","$","171,232","","","20.6","%"]] [[/GREPCENT_TABLE]] 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 $94.7 million and an increase in volume in both Pipe and Allied Products. The increase in Wastewater sales was primarily driven by volume. Cost of goods sold and Gross profit - The following table presents gross profit by reportable segment for the three months ended June 30, 2026 and 2025. [[GREPCENT_TABLE]] [["(Amounts in thousands)","2026","","2025","","$ Variance","","% Variance"],["Stormwater","$","302,130","","","$","233,484","","","$","68,646","","","29.4","%"],["Wastewater","104,320","","","97,711","","","6,609","","","6.8"],["Intersegment eliminations","1,597","","","(757)","","","2,354","","","(311.0)"],["Total gross profit","$","408,047","","","$","330,438","","","$","77,609","","","23.5","%"]] [[/GREPCENT_TABLE]] 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 $77.6 million, or 23.5%, compared to the same period in fiscal 2026. The increase in gross profit for Stormwater is primarily due to the acquisition of NDS, volume growth, and favorable price/cost and manufacturing costs, partially offset by higher transportation costs. The increase in gross profit for Wastewater was driven by volume. - 22 - Table of Contents Selling, general and administrative expenses [[GREPCENT_TABLE]] [["","Three Months Ended June 30,"],["(Amounts in thousands)","2026","","2025"],["Selling, general and administrative expenses","$","130,818","","","$","103,961"],["% of Net sales","13.1","%","","12.5","%"]] [[/GREPCENT_TABLE]] 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. 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. Intangible amortization - Intangible amortization increased by $6.4 million primarily due to the increase in intangible assets due to the NDS acquisition. 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. 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. Income tax expense - The following table presents the effective tax rates for the periods presented: [[GREPCENT_TABLE]] [["","Three Months Ended June 30,"],["","2026","","2025"],["Effective tax rate","23.4","%","","24.6","%"]] [[/GREPCENT_TABLE]] 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. 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. 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. Adjusted EBITDA and Adjusted EBITDA Margin are included in this Form 10-Q because they are key metrics used by management and our board of directors to assess our consolidated financial performance. These non-GAAP financial measures are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. In addition to covenant compliance and executive performance evaluations, we use these non-GAAP financial measures to supplement GAAP measures of performance to evaluate the effectiveness of our consolidated business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. We use Adjusted EBITDA Margin to evaluate our ability to generate profitable sales. Adjusted EBITDA and Adjusted EBITDA Margin contain certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs, cash expenditures to replace assets being depreciated and amortized and interest expense, or the cash requirements necessary to service interest on principal payments on our indebtedness. In evaluating Adjusted EBITDA [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A (excerpt) Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1604028/000160402826000019/wms-20260331.htm Complete FY 2026 MD&A: /company/WMS/mda/fy2026/ Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-05-21 Report date: 2026-03-31 Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations Our fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, references to “year” pertain to our fiscal year. For example, “2026” refers to fiscal 2026, which is the period from April 1, 2025 to March 31, 2026. The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the sections titled “Item 1A. Risk Factors” and “Cautionary Statement About Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K. Please read the following discussion together with the sections titled “Item 1A. Risk Factors” and our consolidated financial statements, including the related notes, included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K. Overview We are the leading manufacturer of innovative water management solutions in the stormwater and onsite wastewater industries, providing superior drainage solutions for use in the construction and agriculture marketplaces. Our innovative products, for which we hold many patents, are used across a broad range of end markets and applications, including non-residential, infrastructure and agriculture applications. We have established a leading position in many of these end markets by leveraging our national sales and distribution platform, industry-acclaimed engineering support, overall product breadth and scale plus manufacturing excellence. Key Factors Affecting Our Results of Operations Product Demand - There are numerous factors that influence demand for our products. Our businesses are cyclical in nature and sensitive to general economic conditions, primarily in the United States, Canada, Mexico and South America. The non-residential, residential, agricultural and infrastructure markets we serve are affected by the availability of credit, lending practices, interest rates and unemployment rates. Demand for new homes, farm income, commercial development and highway infrastructure spending have a direct impact on our financial condition and results of operations. Accordingly, the following factors may have a direct impact on our business in the markets in which our products are sold: •the strength of the economy; •the amount and type of non-residential and residential construction; •funding for infrastructure spending; •farm income and agricultural land values; •inventory of improved housing lots; •changes in raw material and commodity prices; •the availability and cost of credit; •non-residential occupancy rates; and •demographic factors such as population growth and household formation. Growth in Allied Products - Our Allied Products include storm and onsite wastewater chambers, PVC drainage structures, fittings, stormwater filters and water separators. These products complement our pipe products and allow us to offer a comprehensive water management solution to our customers and drive organic growth. Our leading market position in pipe products allows us to cross-sell Allied Products effectively. Our comprehensive offering of Allied Products can also increase pipe sales in certain markets. Allied Products are less sensitive to resin prices since resin prices represent a smaller percentage of the cost for Allied Products. Our leading position in the pipe market has allowed us to increase organic growth of our Allied Products, and we also expect to expand our Allied Product offerings through acquisitions, including our recent acquisition of NDS. Product Pricing - The price of our products is impacted by competitive pricing dynamics in our industry as well as by raw material costs. Our industry is highly competitive and the sales prices for our products may vary based on the sales policies of our competitors. Raw material costs represent a significant portion of the cost of goods sold for our products. We aim to increase our product selling prices in order to cover raw material price increases, including increases due to tariffs, but the inability to do so could impact our profitability. Movements in raw material, logistics or other overhead costs and resulting changes in the selling prices may also impact changes in period-to-period comparisons of net sales. Material Conversion - Our HDPE and PP pipe, plastic leachfield chambers, onsite wastewater tanks and related water management product lines compete with other manufacturers of similar products as well as manufacturers of alternative products made with traditional materials, such as concrete, steel and PVC. Our net sales are driven by market trends, including the adoption of thermoplastic corrugated pipe products as a replacement for traditional materials. Thermoplastic corrugated pipe is generally lighter, more durable, more cost effective and easier to install than comparable products made 27 Table of Contents Advanced Drainage Systems, Inc from traditional materials. We believe customers will continue to acknowledge the superior attributes and compelling value proposition of our thermoplastic products and expanded regulatory approvals allow for their use in new markets and geographies. In addition, we believe that PP pipe products will also help accelerate conversion given the additional applications for which our PP pipe products can be used. Raw Material Costs - Our raw material cost and product selling prices fluctuate with changes in the price of resins utilized in production. We actively manage our resin purchases and pass fluctuations in the cost of resin through to our customers, where possible, in order to maintain our profitability. Fluctuations in the price of crude oil and natural gas prices may impact the cost of resin. In addition, changes in and disruptions to existing capacities could also significantly increase resin prices, often within a short period of time. Our ability to pass through raw material price increases to our customers may lag the increase in our costs of goods sold. Sharp rises in raw material prices over a short period of time have historically occurred with a significant supply disruption, which may increase prices to levels that cannot be fully passed through to customers due to pricing of competing products or the anticipated length of time the raw material pricing will stay elevated. We currently purchase in excess of 1.0 billion pounds of virgin and recycled resin annually from approximately 450 suppliers in North America. As a high-volume buyer of resin, we are able to achieve economies of scale to negotiate favorable terms and pricing. Our purchasing strategies differ based on the material (virgin resin versus recycled material). The price movements of the different materials vary, resulting in the need to use a number of strategies to reduce volatility. In order to reduce the volatility of raw material costs in the future, our raw material strategies for managing our costs include the following: •increasing the use of low cost resin in place of virgin resin while meeting or exceeding industry standards; •internally processing greater amounts of our recycled resin in order to closely monitor quality and minimize costs; •managing a resin price risk program that may entail both physical fixed price and volume contracts; and •maintaining supply agreements with our major resin suppliers that provide multi-year terms and volumes that are in excess of our projected consumption. We also consume a large amount of energy and other petroleum products in our operations, including the electricity we use in our manufacturing process as well as the diesel fuel consumed in delivering a significant volume of products to our customers through our in-house fleet. As a result, our operating profit also depends upon our ability to manage the cost of the energy and fuel we require, as well as our ability to pass through increased prices or surcharges to our customers. Seasonality - Our operating results are impacted by seasonality. Historically, sales of our products have been higher in the first and second quarters of each fiscal year due to favorable weather and longer daylight conditions accelerating construction project activity during these periods while fourth quarter results are impacted by the timing of spring in the northern United States and Canada. Seasonal variations in operating results may also be significantly impacted by inclement weather conditions, which can delay projects, resulting in decreased net sales for one or more quarters, but we believe that these delayed projects generally result in increased net sales during subsequent quarters. In the non-residential, residential and infrastructure markets in the northern United States and Canada, the construction season typically begins to gain momentum in late March and lasts through November, before winter significantly slows the construction markets. In the southern and western United States, Mexico, Central America and South America, the construction markets are less seasonal. The agricultural drainage market is concentrated in the early spring just prior to planting and in the fall just after crops are harvested prior to freezing of the ground in winter. Currency Exchange Rates - Although we sell and manufacture our products in many countries, our sales and production costs are primarily denominated in U.S. dollars. We have wholly-owned facilities in Canada, the Netherlands and joint venture facilities in Mexico, Chile, Brazil, Argentina, Colombia and Peru. The functional currencies in the areas in which we have wholly-owned facilities and joint venture facilities other than the U.S. dollar are the Canadian dollar, Euro, Mexican peso, Chilean peso, Brazilian real and Colombian peso. From time to time, we use derivatives to reduce our exposure to currency fluctuations. 28 Table of Contents Advanced Drainage Systems, Inc Executive Summary of Our Fiscal 2026 Results •Net sales increased 5.0% to $3.1 billion •Net income from continuing operations decreased 5.0% to $429.9 million •Adjusted EBITDA increased 8.3% to $962.9 million •Cash provided by operating activities increased $237.6 million to $819.1 million •Free cash flow increased $200.7 million to $569.3 million Net sales increased $146.1 million, or 5.0%, to $3,050.4 million, as compared to $2,904.2 million in the prior year. Stormwater sales increased $71.0 million, or 3.1%, to $2,397.4 million. Wastewater sales increased $75.1 million, or 13.0%, to $653.0 million. Gross profit increased $73.1 million, or 6.7%, to $1,167.4 million as compared to $1,094.2 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 acquisitions. Adjusted EBITDA, a non-GAAP financial measure, increased $73.7 million, or 8.3%, to $962.9 million, as compared to $889.2 million in the prior year. The increase is primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 31.6% as compared to 30.6% in the prior year. Description of our Segments Following the acquisition of NDS, the Company realigned its reportable segments to align with the manner in which the CODM assesses performance and makes resource allocation decisions. The Company’s revised reportable segments consist [Excerpt truncated for page length; the complete text is on the linked full-MD&A page.] Read the full FY 2026 MD&A: /company/WMS/mda/fy2026/ All MD&A years: /company/WMS/mda/ ## MD&A history Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page. - [FY 2025 MD&A](/company/WMS/mda/fy2025/): filed 2025-05-15; accession 0001604028-25-000012 (https://www.sec.gov/Archives/edgar/data/1604028/000160402825000012/wms-20250331.htm) - [FY 2024 MD&A](/company/WMS/mda/fy2024/): filed 2024-05-16; accession 0001604028-24-000011 (https://www.sec.gov/Archives/edgar/data/1604028/000160402824000011/wms-20240331.htm) - [FY 2023 MD&A](/company/WMS/mda/fy2023/): filed 2023-05-18; accession 0001604028-23-000015 (https://www.sec.gov/Archives/edgar/data/1604028/000160402823000015/wms-20230331.htm) - [FY 2022 MD&A](/company/WMS/mda/fy2022/): filed 2022-05-19; accession 0001604028-22-000025 (https://www.sec.gov/Archives/edgar/data/1604028/000160402822000025/wms-20220331.htm) ## Macro cross-references Indicators mapped to this company's SIC classification (industry 3086 Plastics Foam Products) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim. - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm Macro-to-micro threads including this sector: [Inflation (CPI / PCE / PPI)](/thread/inflation-cpi-pce-ppi/), [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/), [Industrial orders & inventories](/thread/industrial-orders/), [Trade & external](/thread/trade-external/). All macro indicators: /indicators/ ## For LLMs & downloads Markdown twin: /company/WMS.md · JSON record: /company/WMS.json · verified financials: /company/WMS/financials.json / /company/WMS/financials.csv · machine TOC for the whole site: /llms.txt