Advanced Drainage Systems, Inc ARS, filed Jun 3, 2026
Advanced Drainage Systems, Inc. (WMS)
ARS
2026-06-03
For: 2026-03-31
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October 18, 2026
Advanced Drainage Systems, Inc. Fiscal Year 2026 Annual Report www.adspipe.com
A Letter from our CEO Dear Fellow Shareholders, ADS executed well in Fiscal 2026 in a challenging environment, demonstrating the resilience of ADS’ business model across market cycles. For the year, ADS generated $3.1 billion in revenue and $963 million in Adjusted EBITDA, resulting in an Adjusted EBITDA margin of 31.6% – a year- over-year increase of 100 basis points that marks our second most profitable year in the Company’s history. In Fiscal 2026, new products contributed $431 million to our revenue and helped us outperform our end markets, which declined low- to mid-single digits. Investments in new products, capacity, and productivity continued to generate attractive returns. Investments in new processes and capabilities enabled the company to improve customer service and operate factories, recycling facilities, and the dedicated logistics fleet more efficiently. In the face of elevated interest rates, commodity-related headwinds and geopolitical uncertainty, our tried-and-true playbook continued to deliver for our shareholders. We aligned pricing with rising costs late in FY26, optimized production to meet demand, and maintained a focus on working capital and operational efficiency. These actions were taken while improving employee safety by 40% and delivery performance. Importantly, we continued to invest in the business, enhancing our market position and creating additional growth opportunities that will appear as market conditions improve. The most significant of the investments in FY26 was the acquisition of National Diversified Sales (“NDS”), the water management business of Norma Group SE (DAX: NOEJ). This acquisition, the second largest in the Company’s history, represents another step forward in expanding our capabilities Capital Allocation Fiscal 2026 $3.1B REVENUE $963M ADJUSTED EBITDA 31.6% ADJUSTED EBITDA MARGIN NDS Acquisition | ADS Annual Report 20262
as a complete water management solutions provider. Crucially, this acquisition is directly aligned with our strategy to diversify our product mix and increase our sales of higher-margin Allied products. Combined with ADS and Infiltrator, NDS expands our leadership position and further differentiates our platform as the leading pure-play water investment. Organically, we deployed $250 million of capital expenditures to fuel ADS’ differentiated growth strategy and to build upon areas of strength. In particular, we invested in new product development and capacity across some of our most profitable businesses, namely Infiltrator and Allied products. This included new introductions in our StormTech® storage chambers and Nyloplast® capture structures, which continue to represent an important and growing component of our portfolio. We also introduced market leading products in the Allied water treatment segment. Overall, Allied products grew 14% year over year and Infiltrator grew 13% including the fully absorbed Orenco acquisition. Free cash flow increased 54% year over year as we efficiently converted profitability to cash and executed well on our working capital initiatives. ADS also invested significantly in new go-to-market and commercial excellence strategies. Specifically, we developed unique digital engineering and design services that make our products easier for our customers to incorporate into their projects, improving our customer experience, and enhancing our fleet’s delivery capabilities. As we look ahead, ongoing secular tailwinds continue to shape a favorable long-term demand picture for our business, which addresses the costly shortcomings of ageing water infrastructure across the nation. While the near-term demand picture remains similar to last year, we will continue executing ADS’ playbook and strategies that have enabled us to outperform the market and maintain strong profitability. The fundamental drivers of our business are intact and our disciplined investment strategy will continue to deliver attractive results for our shareholders. We look forward to sharing more details at ADS’ third Investor Day in June, which will take place at our new, state-of-the-art Engineering & Technology Center in Hilliard, Ohio. We will dive deeper into how our pure-play water exposure, differentiated growth story, and resilient platform, underpinned by a disciplined capital deployment strategy, provides the foundation for sustainable growth through 2030 and beyond. Speaking on behalf of the rest of ADS’ leadership team and our Board of Directors, I would like to thank our over 6,000 employees for their hard work throughout the past year and their continued confidence in the future of our business. Without their commitment, our success would not be possible. Thank you for your continued support. Sincerely, D. Scott Barbour President and CEO ADS Annual Report 2026 | 3
A Letter from our Chair Dear Fellow Shareholders, Fiscal 2026 was another successful year for Advanced Drainage Systems, Inc. The team continued its disciplined execution in the face of a challenging macroeconomic environment, while remaining focused on long‑term value creation. This included making thoughtful and meaningful investments in innovation that enhances our value proposition to customers, as well as acquiring businesses that fit strategically and extend our reach in helping customers address their water-related needs. Most notably, ADS completed the acquisition of National Diversified Sales (“NDS”), the water management business of Norma Group SE (DAX: NOEJ). This acquisition marks another important milestone in ADS’ journey as it expands our market-leading product portfolio and increases the mix of highly profitable Allied and Infiltrator products while also empowering ADS to pursue water management projects across a broader set of applications. In addition to this important acquisition, ADS continued our track record of investing in opportunities to deliver organic growth, including $250 million in capital expenditures this year focused on new product introductions, expanding recycling capacity, enhancing productivity, safety and automation. In addition to these investments, the Board has also authorized meaningful returns of capital to shareholders through dividends and share repurchases. In Fiscal 2026, your company delivered $99 million in share repurchases and increased its annual dividend per share to $0.72, returning a collective $155 million to shareholders this year, an increase of 29% compared to Fiscal 2025. As we look ahead to Fiscal 2027 and beyond, ADS remains well positioned to continue driving above-market growth. ADS’ scale, solution set, manufacturing capabilities, and material science expertise are meaningful differentiators in the markets we serve, allowing us to capture demand for our industry leading water management solutions that support essential infrastructure development and improve the resiliency of communities we serve. On behalf of the Board, I would like to thank the leadership team and the more than 6,000 ADS employees who remain committed to executing, innovating and delivering on the Company’s strategy and initiatives, as well as our shareholders for their continued trust and support. Sincerely, Robert M. Eversole Chair of the Board of Directors | ADS Annual Report 20264
Capital Expenditures 5-Year Spending Annual Dividend per Share $963M 5-Year Total $149 $0.44 $0.48 $0.56 $0.64 $0.72 FY22 FY23 FY24 FY25 FY26 FY22 FY23 FY24 FY25 FY26 $167 $184 $213 $250 Acquisitions 13% CAGR River Valley Pipe Share Repurchases $1.3 Billion $1.2 Billion Oct 2024 May 2022 May 2025 Feb 2026 Cultec Inc. Orenco Inc. NDS Capital Expenditures 5-Year Spending Annual Dividend per Share $963M 5-Year Total $149 $0.44 $0.48 $0.56 $0.64 $0.72 FY22 FY23 FY24 FY25 FY26 FY22 FY23 FY24 FY25 FY26 $167 $184 $213 $250 Acquisitions 13% CAGR River Valley Pipe Share Repurchases $1.3 Billion $1.2 Billion Oct 2024 May 2022 May 2025 Feb 2026 Cultec Inc. Orenco Inc. NDS Capital Expenditures 5-Year Spending Annual Dividend per Share $963M 5-Year Total $149 $0.44 $0.48 $0.56 $0.64 $0.72 FY22 FY23 FY24 FY25 FY26 FY22 FY23 FY24 FY25 FY26 $167 $184 $213 $250 Acquisitions 13% CAGR River Valley Pipe Share Repurchases $1.3 Billion $1.2 Billion Oct 2024 May 2022 May 2025 Feb 2026 Cultec Inc. Orenco Inc. NDS ADS Annual Report 2026 | 5
Key Financial Highlights FY 2026 Revenue (Figures in millions) FY 2026 Adjusted EBITDA1 (Figures in millions) 1 EBITDA adjustments exclude transaction costs and certain non-cash items; Adjusted EBITDA is a Non-GAAP measure. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the accompanying Form 10-K for the definitions of non-GAAP measures and reconciliation of non-GAAP measures to GAAP measures. $2,874 $2,904 20232022 202620252024 $3,071 $3,050$2,769 $923 $889 2023 2024 $904 2025 $963 2026 $676 2022 CAGR: 2.4% FY 2026 Revenue by End Market FY 2026 Sales by Geography FY 2026 Sales by Product Category Pipe Allied Wastewater 52% 26% Domestic Canada Other International 94% 4% 2% 22% CAGR: 9.2% International 6% Non-Residential Construction 46% ADS Sales Growth +5% Non-Residential Construction International Agriculture Infrastructure Construction Residential Construction +8% +7% (10%) 0% (3%) Residential Construction 37% Infrastructure Construction 6% Agriculture 5% | ADS Annual Report 20266
Adds Complementary New Offerings in Attractive Allied Products Segment Expands Addressable Markets with Complementary Product Portfolio and Segments Enhances Go-to-Market Capabilities and Scale in Both Retail and Distributor Channels Unlocks Significant Value Creation Potential with Over $25 Million in Expected Annual Cost Synergies ADS Annual Report 2026 | 7
Industry Leading Recycling Solutions Sustainability is at the core of who we are and what we do. We are proud of the important work we are doing to have a positive environmental, operational and social impact. We are the largest plastic recycling company in North America. In Fiscal 2026, we purchased approximately 391 million pounds of recycled plastic, keeping it out of landfills and further preventing 494 million pounds of Greenhouse Gas emissions (GHG) from being released into the atmosphere. Our industry-leading resin blending programs convert this recycled plastic into pipe, chambers and other products that can support America’s stormwater and wastewater management needs. Consumed 30% of the recycled HDPE bottles in the US in 2025 One of the Largest plastic recycling company in North America 494 million pounds of GHG emissions avoided GHG emissions avoided amounts to taking 47,500 cars off the road | ADS Annual Report 20268
Board of Directors Robert M. Eversole Managing Partner, Stonehenge Partners, Inc. Scott Barbour Director, President and Chief Executive Officer, Advanced Drainage Systems Anesa Chaibi Chief Executive Officer, Global Industrial Company Michael Coleman Retired Partner, Ice Miller LLP Alexander R. Fischer Founder, Alex R. Fischer and Company Tanya Fratto Retired Chief Executive Officer, Diamond Innovations, Inc. Kelly Gast Retired Senior Vice President and Chief Financial Officer, Bayer Crop Science Executive Officers Scott Barbour Director, President and Chief Executive Officer Scott A. Cottrill Executive Vice President, Chief Financial Officer, Secretary Patrick Coyle Executive Vice President of Supply Chain Brian King Executive Vice President, Product Management, Marketing and Sustainability M.A. (Mark) Haney Retired Executive Vice President, Olefins and Polyolefins, Chevron Phillips Chemical Company LP Luther C. Kissam Senior Advisor, Bernhard Capital Partners Management, LP and Retired Chief Executive Officer, Albemarle Corporation Manuel J. Perez de la Mesa Retired President and Chief Executive Officer, Pool Corporation Anil Seetharam Managing Director, Berkshire Partners Bret Martz Executive Vice President, Sales Craig Taylor Executive Vice President, Infiltrator Water Technologies Kevin C. Talley Executive Vice President and Chief Administrative Officer Thomas Waun Executive Vice President, Engineering and International Chair Emeritus Joe Chlapaty Chlapaty Investments LLC, Retired Chair, President and Chief Executive Officer, Advanced Drainage Systems ADS Annual Report 2026 | 9
| ADS Annual Report 202610
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NO.: 001-36557 ADVANCED DRAINAGE SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 51-0105665 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 4024 Green Stripe Lane, Hilliard, Ohio 43026 (Address of principal executive offices and zip code) (800) 733-7473 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value per share Title of Each Class Trading Symbol(s) Name of Each Exchange On Which Registered Common Stock, $0.01 par value per share WMS New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one) Large Accelerated Filer ☒ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒ No ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the shares of common stock held by non-affiliates of the registrant (treating all executive officers and directors of the registrant, for this purpose, as affiliates of the registrant) was $10,679 million as of September 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, based on the reported closing price of the shares of common stock as reported on the New York Stock Exchange on September 30, 2025. As of May 14, 2026, the registrant had 76,595,708 shares of common stock outstanding. The shares of common stock trade on the New York Stock Exchange under the ticker symbol “WMS.” In addition, as of May 14, 2026, 221,893 shares of unvested restricted common stock were outstanding and a total of 76,817,601 shares of common stock were outstanding, inclusive of outstanding shares of unvested restricted common stock. DOCUMENTS INCORPORATED BY REFERENCE Part III of this report incorporates by reference specific portions of the Registrant’s Notice of Annual Meeting and Proxy Statement relating to the Annual Meeting of Stockholders to be held on July 16, 2026, which statement will be filed no later than 120 days after the end of the fiscal year covered by this report.
TABLE OF CONTENTS Page Cautionary Statement About Forward-Looking Statements iii PART I Item 1. Business 1 Item 1A. Risk Factors 12 Item 1B. Unresolved Staff Comments 22 Item 1C. Cybersecurity 22 Item 2. Properties 23 Item 3. Legal Proceedings 24 Item 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 Item 6. Reserved 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8. Financial Statements and Supplementary Data 42 Item 9. Changes in and Disagreements with Accountant on Accounting and Financial Disclosure 42 Item 9A. Controls and Procedures 42 Item 9B. Other Information 43 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 43 PART III Item 10. Directors, Executive Officers and Corporate Governance 44 Item 11. Executive Compensation 44 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 44 Item 13. Certain Relationships and Related Transactions, and Director Independence 44 Item 14. Principal Accountant Fees and Services 44 PART IV Item 15. Exhibits and Financial Statement Schedules 45 Item 16. Form 10-K Summary 48 ii
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements. Some of the forward-looking statements can be identified by the use of terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seeks,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. These forward-looking statements include all matters that are not related to present facts or current conditions or that are not historical facts. They appear in a number of places throughout this Annual Report on Form 10-K and include statements regarding our goals, intentions, beliefs or current expectations concerning, among other things, our consolidated results of operations, financial condition, liquidity, prospects, growth strategies, and the industries in which we operate and include, without limitation, statements relating to our future performance. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which are beyond our control. We caution that forward-looking statements are not guarantees of future performance and that our actual consolidated results of operations, financial condition, liquidity, and industry development may differ materially from those made in or suggested by the forward-looking statements contained in this Annual Report on Form 10-K. In addition, even if our actual consolidated results of operations, financial condition, liquidity, and industry development are consistent with the forward-looking statements contained in this Annual Report on Form 10-K, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results to differ materially from those contained in or implied by the forward-looking statements, including those reflected in forward-looking statements relating to our operations and business, the risks and uncertainties discussed in this Annual Report on Form 10-K (including under the heading “Item 1A. Risk Factors”) and those described from time to time in our other filings with the SEC. Factors that could cause actual results to differ from those reflected in forward-looking statements relating to our operations and business include, among other things: • fluctuations in the price and availability of resins and other raw materials, new tariff and international trade policies, and our ability to pass any increased costs of raw materials and tariffs on to our customers in a timely manner; • disruption or volatility in general business, political and economic conditions in the markets in which we operate; • cyclicality and seasonality of the non-residential and residential construction markets and infrastructure spending; • the risks of increasing competition in our existing and future markets; • uncertainties surrounding the integration and realization of anticipated benefits of acquisitions or doing so within the intended timeframe, including our ability to successfully integrate National Diversified Sales (“NDS”) into our business; • risks that the acquisition of NDS may involve unexpected costs, liabilities, risks that the cost savings and synergies from the acquisition of NDS may not be fully realized; • the effect of any claims, litigation, investigations or proceedings, including those described under “Item 3. Legal Proceedings” of this Annual Report; • the effect of weather or seasonality; • the loss of any of our significant customers; • the risks of doing business internationally; • the risks of conducting a portion of our operations through joint ventures; • our ability to expand into new geographic or product markets; • the risk associated with manufacturing processes; • the effects of global climate change and any related regulatory responses; • our ability to protect against cybersecurity incidents and disruptions or failures of our IT systems; • our ability to assess and monitor the effects of artificial intelligence, machine learning, robotics and blockchain or other new approaches to data mining on our business and operations; • our ability to manage our supply purchasing and customer credit policies; • our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel; • our ability to protect our intellectual property rights; • changes in laws and regulations, including environmental laws and regulations; • our ability to appropriately address any environmental, social or governance concerns that may arise from our activities; • the risks associated with our current levels of indebtedness, including borrowings under our existing credit agreement and outstanding indebtedness under our existing senior notes; and • other risks and uncertainties, including those listed under “Item 1A. Risk Factors.” Please read this Annual Report on Form 10-K completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Annual Report on Form 10-K are qualified by these cautionary statements. All forward-looking statements are made only as of the date of this Annual Report on Form 10-K, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. iii
PART I Item 1. Business COMPANY OVERVIEW Unless the context otherwise indicates or requires, as used in this Annual Report on Form 10-K, 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. The term “Infiltrator” refers to Infiltrator Water Technologies, LLC, our wholly-owned subsidiary. ADS is the leading manufacturer of innovative water management solutions in the stormwater and onsite wastewater industries, providing superior drainage solutions to manage the world’s most precious resource: water. Our innovative products are used across a broad range of end markets and applications, including residential, 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, market share model, industry-acclaimed engineering support, overall product breadth and scale plus manufacturing excellence. Our best-in-class product portfolio, go-to-market strategy and material conversion strategy helped drive consistent above market growth. On February 2, 2026, we completed the acquisition of National Diversified Sales (“NDS”). NDS is a leading designer and manufacturer of residential stormwater and drainage solutions focused on managing surface and subsurface water around homes. NDS develops durable, easy-to-install products that help homeowners and contractors control runoff, prevent water damage, and protect landscapes and foundations. This combination brings together complementary water management solutions to expand our offerings. By adding NDS’ expertise in residential water management solutions, access boxes and irrigation to our product portfolio, we further enhance our capabilities as a comprehensive provider of full-scale water management solutions. We believe the ADS brand has long been associated with quality products and market-leading performance. Our trademarked green stripe, which is prominently displayed on many of our products, serves as clear identification of our commitment to the customers and markets we serve, and fortifies our brand recognition and presence. Our approach to water management is to manage the lifecycle of a raindrop from the moment water hits the ground until it is released back into the ecosystem. The ADS product portfolio is built around four steps of this lifecycle: Capture, Conveyance, Storage, and Treatment. ADS solutions safely and efficiently manage stormwater with environmentally friendly products. We believe we are the only water management solutions company that manages stormwater from when the rain first hits the ground until the moment it is returned to lakes and streams. We estimate that the stormwater industry, including landscape irrigation, annually, is an approximately $14 billion industry. We estimate that the onsite wastewater market is a roughly $2 billion industry and that approximately 30% of new North American single-family homes utilize onsite wastewater systems. On a combined basis, we estimate that we have an addressable market opportunity of approximately $16 billion. SEGMENT INFORMATION For a discussion of segment and geographic information, see “Note 20. Business Segment Information” to our audited consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K. Table of Contents Advanced Drainage Systems, Inc 1
Following the acquisition of NDS, we realigned our reportable segments to align with the manner in which the Chief Operating Decision Maker (“CODM”) assesses performance and makes resource allocation decisions (the “Segment Realignment”). Our revised reportable segments consist of Stormwater and Wastewater (formerly referred to as the “Infiltrator” reportable segment). Further, we changed the measure used to evaluate segment profitability from adjusted gross profit to Adjusted EBITDA. Segment results for the historical periods presented in these consolidated financial statements have been recast to reflect these changes. The Segment Realignment had no impact on our previously reported consolidated net sales, income from operations, net income attributable to ADS or earnings per share. These segments are described in greater detail in “Note 20. Business Segment Information” to our audited consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K. As illustrated in the charts below, we provide a broad range of high performance thermoplastic corrugated pipe and related water management products to a highly diversified set of end markets and geographies. Fiscal 2026 Revenue OUR PRODUCTS We design, manufacture and market a complete line of high performance thermoplastic corrugated pipe and related water management products for use in a wide range of end markets. Our product line includes stormwater and wastewater management solution products. Stormwater products are designed as an integrated, end-to-end solution set which provides a comprehensive approach to managing stormwater from the moment it hits the ground until it is cleaned and returned to its natural environment. Stormwater products include single, double and triple wall corrugated polypropylene and polyethylene pipe (“Pipe”); a variety of additional water management products (“Allied Products”), including storm retention/detention and onsite wastewater chambers (“Chambers”); polyvinyl chloride drainage structures (“Structures”); fittings (“Fittings”); water quality filters and separators (“Water Quality”); and NDS channel drains, catch basins and access boxes; and various complementary products distributed through resale agreements, including geotextile products, drainage grates and other products. Wastewater products (formerly referred to as “Infiltrator”) include plastic leachfield Table of Contents Advanced Drainage Systems, Inc 2
chambers and systems, onsite wastewater tanks and accessories. The table below summarizes the percentage of Net Sales for Stormwater and Wastewater. 2026 2025 2024 Stormwater 78.6 % 80.1 % 82.2 % Wastewater 21.4 % 19.9 % 17.8 % Our products and engineering project designs have been continuously and frequently recognized by the industry. This includes being honored many times during the past decade as the Plastics Pipe Institute’s Project of the Year. We have won numerous awards from organizations such as the American Society of Testing & Materials (“ASTM”), the American Society of Civil Engineers, and many others. Stormwater Dual Wall Corrugated Pipe - Our N-12 pipe is a dual wall high-density polyethylene (“HDPE”) pipe with a corrugated exterior for strength and a smooth interior wall for hydraulics and flow capacity. Our N-12 pipe competes in the storm sewer and drainage markets that are also served by concrete pipe. Our N-12 pipe is available in a wide range of diameters and sections of length. N-12 provides joint integrity, with integral bell and spigot joints for fast push-together installations and is sold either with watertight or soil-tight coupling and fitting systems. Our corrugated polyethylene pipe offers many benefits including ease of installation, job site handling and resistance to corrosion and abrasion. Corrugated pipe can easily be cut or coupled together, providing precise laying lengths while minimizing installation waste and difficulty. HP Storm Pipe and SaniTite HP Pipe - Our HP Storm pipe utilizes polypropylene (“PP”) resin, which provides: (i) increased pipe stiffness relative to HDPE; (ii) higher Environmental Stress Crack Resistance; and (iii) improved thermal properties, which improves joint performance. These improved physical characteristics result in a reduced need for select backfill, which creates installation savings for customers and expands the range of possible product applications. Our SaniTite HP pipe utilizes the same polypropylene resins as our HP Storm pipe but includes a smooth third exterior wall in 30” to 60” pipe. The highly engineered polypropylene resin along with the triple wall design enables SaniTite HP to surpass the stiffness requirement for sanitary sewer applications. SaniTite HP offers cost and performance advantages relative to reinforced concrete pipe (such as improved hydraulics and better joint integrity) and polyvinyl chloride (“PVC”) pipe (such as impact resistance). Single Wall Corrugated Pipe - Our single wall corrugated HDPE pipe is ideal for drainage projects where flexibility, light weight and low cost are important. Single wall HDPE pipe products have been used for decades in agricultural drainage, highway edge drains, onsite wastewater systems and other construction applications. In the agricultural market, improved technology has highlighted the favorable impact of drainage on crop yields. For homeowners, it is an economical and easily installed solution for downspout run-off, foundation drains, driveway culverts and general lawn drainage. Single wall pipe is also used for golf courses, parks and athletic fields to keep surfaces dry by channeling away excess underground moisture. Standard single wall products are available in a wide range of diameters and sold in varying lengths. Pipe can be either perforated or non-perforated depending on the particular drainage application. Triple Wall Corrugated Pipe and Smoothwall HDPE Pipe - Our ADS-3000 Triple Wall pipe, small diameter triple wall corrugated pipe, consists of a corrugated polyethylene core molded between a smooth white outer wall and a smooth black inner wall. This combination of the three-wall design adds strength and stiffness, while reducing weight as compared to PVC 2729. Triple Wall is produced and sold through our distribution network. We also manufacture smoothwall HDPE pipe sold into the residential drainage and onsite wastewater systems markets. We additionally produce a range of Allied Products that are complementary to our Pipe products. Our Allied Products offer adjacent technologies to our core Pipe offering, presenting a complete drainage solution for our clients and customers with this combination forming a key strategy in our sales growth, profitability and market share penetration. The practice of selling a drainage system is attractive to both distributors and end users, by providing a broad package of products that can be sold on individual projects and strengthens our competitive advantage in the marketplace. We aggressively seek and evaluate new products, technologies and regulatory changes that impact our customers’ needs for Allied Products. The underground construction industry has historically been project (not product) driven, creating the impetus for owners, engineers and contractors to seek manufacturers that deliver solution-based product portfolios. Many of the components of underground construction are related and require linear compatibility of function, regulatory approval and technology. Table of Contents Advanced Drainage Systems, Inc 3
Storm Chambers - Our StormTech and Cultec chambers are used for stormwater retention, detention and “first flush” underground water storage on residential and non-residential site development along with public projects. These highly engineered chambers are injection molded or thermoformed from HDPE and PP resins into a proprietary design which provides strength, durability, and resistance to corrosion. The chambers allow for the efficient storage of stormwater volume, reducing the underground construction footprint and costs to the contractors, developers, and property owners. The chambers are open bottom, which allows for high density stacking in both storage and shipment. This freight-efficient feature drives favorable cost-competitiveness in serving long-distance export markets. These chamber systems typically incorporate our other product lines such as corrugated pipe, fabricated fittings, water quality units and geotextiles. Structures - Our Nyloplast PVC drainage structures are used in non-residential, residential and municipal site development, road and highway construction, as well as landscaping, recreational, industrial and mechanical applications. The product family includes inline drains, drain basins, curb inlets and water control structures which move surface-collected stormwater vertically down to pipe conveyance systems. These custom structures are fabricated from sections of PVC pipe using a thermoforming process to achieve exact site-specific hydraulic design requirements. Our Nyloplast products are a preferred alternative to heavier and larger concrete structures, by offering greater design flexibility and improved ease of installation which reduces overall project costs and timelines. The structures incorporate rubber gaskets to ensure watertight connections, preventing soil infiltration which plagues competitive products. Fittings - We produce fittings and couplings utilizing blow molding, injection molding and custom fabrication on our pipe products. Our innovative coupling and fitting products are highly complementary to our broader product suite and include both soil-tight and water-tight capabilities across the full pipe diameter spectrum. Our fittings are sold in all end markets where we sell our current pipe products. NDS - The NDS residential product portfolio includes channel drains, catch basins, grates, access boxes, and accessories engineered to capture, convey, and disperse stormwater efficiently. Designed with both performance and aesthetics in mind, NDS products are commonly used in driveways, patios, yards, and landscaped areas to reduce flooding, erosion, and pooling water. With an emphasis on quality materials, code-compliant designs, and straightforward installation, NDS supports effective stormwater management for everyday residential applications. NDS channel drains are designed to efficiently capture and redirect surface water away from residential areas, such as driveways, patios, pool decks, and walkways. Featuring a low-profile, modular design, these drains collect water along their entire length rather than at a single point, helping to prevent pooling and flooding. NDS catch basins are designed to collect and manage surface water runoff before it can cause flooding, erosion, or damage around residential properties. Installed at low points in landscapes, driveways, or yards, these basins capture rainwater and debris, directing water into underground drainage pipes while trapping sediment to help prevent clogs. NDS access boxes are designed to provide durable, below-ground access to a wide range of residential utility components. These boxes are commonly used to protect and organize irrigation valves, water shutoffs, electrical connections, lighting transformers, cleanouts, and other underground service points. Other Products - Our BioDiffuser, Contactor and Recharger products are chambers that are used in onsite wastewater systems for residential and small volume non-residential wastewater treatment and disposal. The innovative designs of our chambers are generally approved for a footprint reduction, further reducing the cost of the onsite wastewater system. Injection-molded or thermoformed from HDPE or PP, these products are strong, durable, and chemical-resistant. These interconnecting chambers are favored by onsite wastewater contractors because they are lightweight and easy to install. Our Water Quality product line targets the removal of sediment, debris, oils and suspended solids throughout a stormwater rain event by separating and/or filtering unwanted pollutants. We purchase and distribute construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage. Constructed of woven and non-woven PP, geotextile products provide permanent, cost-efficient site-development solutions. Construction fabrics and geotextiles have applications in all of our end markets. Our Inserta Tee product line consists of a PVC hub, rubber sleeve and stainless steel band. Inserta Tee is compression fit into the cored wall of a mainline pipe and can be used with all pipe material types and profiles. This product offers an easy tap-in to existing sanitary and storm sewers by limiting the excavation needed for installation compared to competitive products. Table of Contents Advanced Drainage Systems, Inc 4
Wastewater The Wastewater reportable segment (formerly referred to as the “Infiltrator” reportable segment) contains the Company’s wholly-owned subsidiary, Infiltrator Water Technologies, LLC (“Infiltrator”). Infiltrator is the leading designer and manufacturer of highly engineered plastic chambers, synthetic aggregate leachfields, combined treatment and dispersal systems, plastic tanks, advanced treatment systems, and related accessories that are used in onsite wastewater systems and decentralized commercial wastewater treatment systems. In addition to the core Wastewater products discussed below, Orenco Systems, Inc. (“Orenco”) was acquired in October of 2024 and added to the Wastewater segment. The onsite wastewater market is heavily reliant on rural homes and communities that do not have access to centralized sewer and will require an onsite wastewater solution. Onsite wastewater technologies are scalable and can easily meet the needs of churches, schools, light commercial and small community construction projects. Leachfield Products - Our Quick4, Quick5 and ARC line of onsite wastewater leachfield chambers are injection molded using recycled polyolefin materials. There are Quick4, Quick5 and ARC line chamber models available to meet a wide variety of regulatory and market needs. The Quick4, Quick5 and ARC chambers are engineered for strength and performance, easy to install, and offer the user greater design flexibility, including a smaller footprint, as compared with traditional stone and pipe products. The product advantages are cost savings on labor, materials and time savings on the job. EZflow - EZflow synthetic aggregate bundles replace stone and pipe leachfields for effluent and drainage applications. The EZflow proprietary products are a modular design that incorporates recycled polystyrene aggregate bundles and corrugated polyethylene pipe that act as a replacement to the traditional materials stone and pipe. Combined Treatment and Dispersal Products - Combined Treatment and Dispersal Products include our AeroFin, Advanced Enviro-Septic (“AES”), Enviro-Septic (“ES”), and Advanced Treatment Leachfield (“ATL”). Our AES and ES systems are proprietary combined treatment and dispersal systems made with a twelve-inch diameter corrugated extrusion product that is encapsulated in fibrous materials and geotextiles. These systems when installed in a bed of sand provide combined treatment and dispersal in the same small footprint and at a reduced cost with minimal long-term maintenance. Our ATL product is an alternative combined treatment and dispersal system that provides advanced wastewater treatment. The ATL is a profile of polystyrene aggregates and geotextiles installed in a bed of sand. Our AeroFin product is the newest innovation in combined treatment and dispersal systems designed to provide higher treatment within a small footprint reducing installation time and energy. Tank Products - Our Infiltrator tanks line, including our IM-Series and CM-Series onsite wastewater tanks, are injection or compression molded polypropylene plastic tanks manufactured from recycled materials. Our Infiltrator tanks are available in various capacities for wastewater storage. Our IM-Series is the only two-piece construction, injection molded onsite wastewater tank design in North America. In comparison to traditional concrete tanks, our Infiltrator tanks are easier to transport to the job site and require less time and energy to install. Our IM-Series line of potable tanks are injection-molded polypropylene plastic tanks manufactured from virgin materials suitable for water reuse and drinking water storage. IM-Series potable tanks are available in various capacities for water storage. IM-Series potable tanks are commonly used in water cistern applications, such as rainwater harvesting systems. Residential Advanced Treatment Products - Our Advanced Treatment Systems provide a higher level of wastewater purification through mechanical aeration wastewater for residential systems. Our advanced treatment systems product line for residential applications includes ECOPOD, ENVIRO-AIRE, Whitewater, and Orenco Advantex (AX-20 and AX-RT). Commercial Advanced Treatment Products - Our Advanced Treatment Systems for decentralized and commercial systems are ideal solutions for treatment needs up to 250,000 gallons per day. Our advanced treatment systems product line for commercial applications includes ECOPOD, ENVIRO-AIRE Package Wastewater Treatment Plants, Whitewater, and Advantex Commercial (AX-100 and AX-MAX). General Onsite Products - We offer a wide assortment of products for general onsite use. These products include Infiltrator EZsnap and EZset risers and lids and secondary tank-riser safety lids. Also included in this category are pump vaults, control panels, pumps, filters, risers, lids, basins, and miscellaneous products from the Orenco general onsite product catalog. Orenco Controls - Orenco Controls designs and builds more than 20,000 panels a year for residential, commercial, municipal, and original equipment manufacturing (“OEM”) markets. This product line includes pump controllers for Orenco wastewater systems, pump controllers for commercial systems, and OEM controls applications. Table of Contents Advanced Drainage Systems, Inc 5
Orenco Composites - Orenco Composites use filament winding and two types of closed-molding processes, resin transfer molding and vacuum infusion, to produce fiber-reinforced plastic composite parts. This product line includes large composite tanks, composite utility buildings, treatment plant lids, and custom structures. RAW MATERIALS AND SUPPLIERS Virgin HDPE and PP resins are derivatives of ethylene and propylene, respectively. Ethylene and propylene are derived from natural gas liquids or crude oil derivatives primarily in the U.S. We currently purchase in excess of 1.0 billion pounds of virgin and recycled resin annually from approximately 450 suppliers. As a high-volume buyer of resin, we achieve economies of scale to negotiate favorable terms and pricing. Our purchasing strategies differ based on the material (virgin resin versus recycled material) ordered for delivery to our production locations. The price movements of the different materials also vary, resulting in the need to use strategies to reduce volatility and successfully pass cost increases on to our customers through timely selling price increases when needed. We have relationships with most of the North American producers of virgin high-density polyethylene and impact copolymer polypropylene producers that manufacture the grades we need to produce our products. The North American capacity for ethylene derivatives has been expanded primarily as a result of supplies of natural gas liquids being produced through sustained oil and gas exploration and production. We anticipate continued growth in the availability of ethylene and propylene which are used to manufacture HDPE and PP, respectively. Fiscal 2026 Materials Purchased We leverage our raw material blending and processing technologies to produce an HDPE pipe that incorporates recycled resin. These products, which meet an ASTM International standard and an American Association of State Highway and Transportation Officials standard, replaces a majority of the virgin resin that is used with optimized recycled materials. The manufacturing of onsite wastewater leach field chambers and tanks leverage these same core competencies in the use of recycled polypropylene material streams. ADS Recycling procures and processes recycled raw materials that can be used in products we produce and sell. We believe that we are well positioned for future growth as we add additional recycled material processing facilities, add capacity to existing facilities, and expand our supplier base for recycled and virgin resin. In fiscal 2025, we broke ground on a facility expansion at our facility in Cordele, GA that will increase the total facility size to over 110,000 square feet. In October 2024, we opened the $65 million ADS Engineering and Technology Center. The 110,000 square foot research and testing facility, located near our company headquarters, is dedicated to innovation across product engineering, material science and manufacturing technology. We are one of the largest domestic recyclers of HDPE and PP. We maintain relationships with several of the largest environmental companies which provide us with post-consumer HDPE and PP recycled materials. We also maintain relationships with several key post-industrial HDPE and PP suppliers which provide us with materials that cannot otherwise be utilized in their respective production processes. Further, we are focused on a program of continuous sustainability improvement, with approximately 225 million pounds of post-consumer and post-industrial recycled HDPE and 140 million pounds of post-consumer and post-industrial recycled polypropylene converted each year to make our products. This industry-leading program keeps millions of used bottles out of the landfill and puts them to work again for more than a hundred years as part of our infrastructure. This recycling capacity not only contributes to our sustainability Table of Contents Advanced Drainage Systems, Inc 6
initiatives through the promotion of a circular economy but also allows us to better and more quickly serve the needs of our customers. OUR MANUFACTURING AND DISTRIBUTION PLATFORM We have a leading domestic and international manufacturing and distribution infrastructure, serving customers throughout the United States, Canada, Mexico and other countries worldwide through 64 manufacturing plants and 41 distribution centers, including six manufacturing plants and seven distribution centers owned or leased by our joint ventures. We manufacture our corrugated pipe products using a continuous extrusion process, where polyethylene or polypropylene is extruded through a die into a moving series of corrugated U-shaped molds. We utilize customized and proprietary production equipment, which we believe produces higher quality final products and is more cost efficient than other pipe making equipment generally available in the market. Domestically, we can produce more than one billion pounds of pipe annually. Additional capacity is in place to support seasonal production needs and expected growth. Our production equipment is built to accept transportable molds and die tooling over a certain range of sizes, so each plant is not required to house the full range of tooling at any given time. This transportability provides us with the flexibility to optimize our capacity through centrally coordinated production planning, which helps to adapt to shifting sales demand patterns while reducing the capital needed for tooling. With our large manufacturing footprint, we can support rapid seasonal demand growth while focusing on customer service and minimizing transportation costs. A wide variety of production processes and expertise allow us to provide cost-effective finished goods at competitive prices delivered in a timely fashion to our customers. Our molds and machines have been designed to maximize interchangeability in order to optimize flexibility, maximize efficiency and minimize downtime. The standard fittings products (tees, wyes, elbows, etc.) that we produce and sell to connect our pipe on job sites are blow molded or injection molded at two domestic plants. In addition, customized fabricated fittings (e.g. more complex dual wall pipe reducers, bends or structures) are produced in specific North American plants. We produce storm and onsite wastewater chambers, tanks and accessories using injection molding machines ranging in size. International Presence - We own manufacturing facilities in Canada to produce our products for sale in the Canadian markets. We serve international markets primarily in Mexico, Central America and South America through joint venture operations with local partners. Our joint venture strategy has provided us with local and regional access to key markets such as Mexico, Brazil, Chile, Argentina, and Peru. Our international joint ventures produce pipe and related products to be sold in their respective regional markets. We also have wholly-owned subsidiaries that distribute our pipe and related products in Europe and the Middle East. Combining local partners’ customer relationships, brand recognition and local management talent, with our world-class manufacturing and process expertise, broad product portfolio and innovation creates a powerful solution driven platform and opportunities for continued profitable international expansion. With the acquisition of NDS, we acquired certain NDS international entities. As discussed in “Note 1. Background and Summary of Significant Accounting Policies,” the NDS International Entities met the held for sale criteria upon acquisition. See “Note 5. Discontinued Operations and Assets and Liabilities Held for Sale” for additional information. Quality Assurance Control - We have two internal quality assurance control laboratory facilities equipped and staffed to evaluate and confirm incoming raw material and finished goods quality in addition to the quality testing that is done at our manufacturing facilities. We conduct annual safety, product and process quality audits at each of our facilities, using centralized internal resources in combination with external third-party services. In the quality area, various national and international agencies such as Product Evaluation and Audit Solutions, International Association of Plumbing and Mechanical Officials, Bureau de normalisation du Québec, Intertek for Canadian Standards Association, Entidad Mexicana de Acreditacion A.C. and NSF International and several state Departments of Transportation and municipal agencies conduct both scheduled and unscheduled audits/inspections of our plants to verify product quality and compliance to applicable standards. Fleet - We also operate an in-house fleet of approximately 600 tractors. Our effective shipping radius is approximately 250 miles from one of our manufacturing plants or distribution centers. The combination of a dedicated fleet and team of company drivers allows greater flexibility and responsiveness in meeting dynamic customer job site delivery expectations. We strive to achieve less than three-day lead-time on deliveries and have the added benefit of redeploying fleet and driver assets to respond to short-term regional spikes in sales activity. For deliveries that are outside an economic delivery radius of our truck fleet, common carrier deliveries are tendered to a third-party to ensure that lowest delivered freight costs are achieved while maintaining high levels of customer service. In addition, in line with our commitment to sustainability, we are continuously upgrading our tractors with state-of-the-art safety features, fuel economy, and digital technology to attract the driver of the future, reduce our total emissions and keep our drivers safe on and off the road. Table of Contents Advanced Drainage Systems, Inc 7
Our North American truck fleet incorporates approximately 1,100 trailers that are specially designed to haul our lightweight pipe and Allied Products. These designs maximize payload versus conventional over the road trailers and facilitate the loading and unloading of our products at the various customer delivery locations. The trailer design assists in managing the fuel efficiency of our fleet by decreasing total trailer weight and aerodynamic design. The scope of fleet operations also includes backhaul throughout our network to lower our total delivered cost and increase our asset utilization. Facility Network - Our scale and extensive network of Pipe and Allied Products facilities provide a critical cost advantage versus our competitors, as we are able to more efficiently transport products to our customers and end users and to promote faster product shipments due to our proximity to the delivery location. The optimized design of our onsite wastewater chambers and tanks provides the ability to nest products, enabling us to manufacture products from one location and efficiently ship throughout North America. SUSTAINABILITY “Our Reason is Water” and our vision is to advance the quality of life through sustainable solutions to water management challenges. We are dedicated to providing clean water management solutions to communities and delivering unparalleled service to our customers. Our commitment to sustainability was recognized when we were first named on Newsweek’s list of America’s Most Responsible Companies in 2024. We are focused on bringing highly engineered products to market that are both sustainable and resilient. These products assist our customers in meeting sustainability targets such as LEED or ENVISION certification while also allowing them to make needed repairs to aging infrastructure, plan for and mitigate future impacts from climate change and rapidly recover from catastrophic events when necessary. Our manufacturing facilities have no material process-related by-products released into the atmosphere, waterways, or solid waste discharge. During pipe production start-ups and size changeovers, non-compliant scrap and any damaged finished goods pipe are recycled for internal re-use. In fiscal 2022, we announced our 10 Year Sustainability Goals, which are available on our website. The goals are a set of targets focused on the “REASON” in “Our Reason is Water” and demonstrate our commitment to leadership in environment, social and governance. The goals include: a commitment to increase our use of recycled plastic, a commitment to operation clean sweep for plastic pellet management, implementing a supplier sustainability program, reducing our total recordable injury rate, implementing closed-loop water usage at all our manufacturing locations, continuing our efforts in culture and employee engagement and maintaining transparency in our sustainability reporting efforts. The goals are not included as part of, or incorporated by reference, into this Annual Report on Form 10-K. SALES AND MARKETING We believe we have one of the largest and most experienced sales and engineering forces in the industry. Offering the broadest product line in the industry enables our sales force to source the greatest number of new opportunities and more effectively cross-sell products than any of our competitors. We consistently maintain thousands of touch points with customers, civil engineers and municipal authorities, continuously educating them on new product innovations and their advantages relative to traditional products. We believe we are the industry leader in these efforts, and we view this work as an important part of our marketing strategy, particularly in promoting N-12 and SaniTite HP for storm and sanitary sewer systems, as regulatory approvals are essential to the specification and acceptance of these product lines. Our sales and marketing strategy is divided into four components: comprehensive market coverage, diverse product offerings, readily-available local inventory and specification efforts. Our goal is to provide the distributor/owner with the most complete, readily available product line in our industry. We strive to use our manufacturing footprint, product portfolio and market expertise to efficiently service our customers. Our sales and engineering objective is to influence, track and quote all selling opportunities as early in the project life cycle as possible. We strive to be meaningfully involved in all phases of the project cycle, including design, bidding, award and installation. Conceptual project visibility allows sales and engineering professionals the ability to influence design specifications and increase the probability of inclusion of our products in bid documents. The inclusion of our products in bid documents improves the probability of completing the sale. On-demand installation support allows us to maintain customer relationships and ensure positive installation experience. In addition to direct channel customers, we also maintain and develop relationships with federal agencies, municipal agencies, national standard regulators, private consulting engineers and architects. Our consistent interaction with these market participants enables us to continue our market penetration. This ongoing dialogue has positioned us as an industry resource for design guidance and product development and as a respected expert in water management solutions. Table of Contents Advanced Drainage Systems, Inc 8
NDS goes to market through a multi-channel distribution strategy focused on reaching both professionals and homeowners. Its primary customers include landscape contractors, irrigation installers, builders, and engineers, as well as DIY consumers. NDS products are sold through wholesale distribution partners such as landscape supply yards and irrigation distributors, along with national home improvement retailers and online channels. By supporting professional specifiers while also making products accessible at retail, NDS effectively serves a broad residential stormwater market with solutions designed for both trade and consumer use. CUSTOMERS We have a large, active customer base of approximately 16,000 customers, with two customers representing 10% or more of fiscal 2026 net sales. Ferguson Enterprises (“Ferguson”) accounted for 13.1% and Core & Main, Inc. (“Core & Main”) accounted for 12.8% of fiscal 2026 net sales. Our customer base is diversified across the range of end markets that we serve. A majority of our sales are made through distributors, including many of the largest national and independent waterworks distributors, with whom we have long-standing distribution relationships and who sell primarily to the storm sewer and sanitary sewer markets. We also utilize a network of hundreds of small to medium-sized independent distributors across the United States. We have strong relationships with major national retailers that carry drainage products. We offer the most complete line of HDPE products in the industry and are the only national manufacturer that can service the “Big-Box” retailers from coast-to-coast. We also sell to buying groups and co-ops in the United States that serve the plumbing, hardware, irrigation and landscaping markets. Selling to buying groups and co-ops provides us with a further presence on a national, regional and local basis for the distribution of our products. Our preferred vendor status with these groups allows us to reach thousands of locations in an effective manner. Members of these groups and co-ops generally are independent businesses with strong relationships and brand recognition with smaller contractors and homeowners in their local markets. The combination of our large sales force, long-standing retail and contractor customer relationships and extensive network of manufacturing and distribution facilities complements and strengthens our broad customer and market coverage. Our customer service organization is supplemented by the employees of our manufacturing plants, distribution centers and drivers of our tractor-trailers. In conjunction with our field sales and engineering team, this highly trained and competent staff allows us to maintain more customer touch points and interaction than any of our competitors. 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 activity during these periods. Seasonal variations in operating results may also be impacted by inclement weather conditions, such as cold or wet weather, which can delay projects. In the non-residential, residential and infrastructure markets in the northern United States and Canada, construction activity typically begins to increase in late March and is slower in December, January and February. 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. COMPETITION We operate in a highly fragmented industry and hold leading positions in multiple market sectors. Competition, including our competitors and specific competitive factors, varies for each market sector. Our products are generally lighter, more durable, more cost effective and easier to install than comparable alternatives made with traditional materials. Following our entrance into the non-residential construction market with the introduction of N-12 corrugated HDPE pipe in the late 1980s, our pipe has been displacing traditional materials, such as reinforced concrete, corrugated steel and PVC, across an ever-expanding range of end markets, including non-residential, residential, agriculture and infrastructure applications. In the United States, our nationwide footprint combined with our strong local presence and broad product offering make us the leader in an otherwise highly fragmented sector comprised of many smaller competitors. We believe the principal competitive factors for our market sectors include local selling coverage, product availability, breadth and cost of products, technical knowledge and expertise, customer and supplier relationships, reliability and accuracy of service, effective use of technology, delivery capabilities and timeliness, pricing of products, and the provision of credit. We believe that our competitive strengths and strategy allow us to compete effectively in our market sectors. The stormwater drainage industry, in particular, is highly fragmented with many smaller specialty and regional competitors providing a variety of product technologies and solutions. We compete against concrete pipe, corrugated steel pipe and PVC pipe producers on a national, regional and local basis. In addition, there are many HDPE pipe producers in the United Table of Contents Advanced Drainage Systems, Inc 9
States. We believe we are the only corrugated HDPE pipe producer with a national footprint, and our competitors operate primarily on a regional and local level. INTELLECTUAL PROPERTY We rely upon a combination of patents, trademarks, trade names, licensing arrangements, trade secrets, know-how and proprietary technology in order to secure and protect our intellectual property rights, both in the United States and in foreign countries. We seek to protect our new technologies with patents and trademarks and defend against patent infringement allegations. We hold a significant amount of intellectual property rights pertaining to product patents, process patents and trademarks. We continually seek to expand and improve our existing product offerings through product development and acquisitions. Although our intellectual property is important to our business operations and in the aggregate constitutes a valuable asset, we do not believe that any single patent, trademark or trade secret is critical to the success of our business as a whole. We cannot be certain that our patent applications will be issued or that any issued patents will provide us with any competitive advantages or will not be challenged by third parties. In addition, we generally control access to and use of our proprietary and other confidential information through the use of internal and external controls, including contractual protections with employees, distributors and others. See “Item 1A. Risk Factors - Risks Relating to Our Business - If we are unable to protect our intellectual property rights, or we infringe on the intellectual property rights of others, our ability to compete could be negatively impacted.” HUMAN CAPITAL RESOURCES At the core of the Company’s history are the people, many of whom have been with the Company for several decades. We are dedicated to fostering a culture that empowers employees and communities by embracing the dynamics of different backgrounds, experiences and perspectives. We are committed to creating an environment where employees feel valued, respected, and fully engaged to contribute to our future success. The ability to recruit, retain, develop and protect our global workforce is key to our success. In addition to providing competitive compensation and benefits, this includes the following categories: Health and Safety; Values; and Training. Employees - As of March 31, 2026, in our domestic and international operations, the Company and its consolidated subsidiaries had both hourly personnel and salaried employees. As of March 31, 2026, approximately 100 hourly personnel in our Mexican joint venture were covered by collective bargaining agreements. March 31, 2026 March 31, 2025 Employees by Region United States 5,785 5,330 Canada 365 345 Other 275 325 Total 6,425 6,000 Employees by Type Hourly 4,035 3,865 Salary 2,390 2,135 Total 6,425 6,000 We base hiring and promotional decisions on job qualifications, such as work records, performance history and length of service, to ensure equal opportunity to all. We also ensure equal opportunity across all relevant aspects of employment such as recruiting, job assignment, compensation, benefits, transfers, promotional opportunities, Company sponsored training, and recreation programs, among others. Health and Safety - Employee safety is our highest priority and a key component of our company culture. Our operations follow a comprehensive, proactive safety and health management system that includes a collaborative process to find and fix workplace hazards prior to injury occurrence. Our U.S. facilities follow the Occupational Safety and Health Act safety and health general industry standards under the Department of Labor and Federal Motor Carrier Safety Administration under the Department of Transportation, as required by law; our Canadian facilities follow the Canada Occupational Health and Safety Regulations under the Canada Labour Code for the Minister of Labour and Canada Motor Vehicle Safety Table of Contents Advanced Drainage Systems, Inc 10
Standards under Transport Canada as required by law; and our Mexico locations follow the NOMs as required by the Federal Labor Law for the Labor Ministry and Secretary of Communication and Transportation as required by law. Values - Our success as a company is built on the Honesty, Professionalism, and Core Values of our employees, directors, and agents. These three tenets serve as the guiding principles of our Code of Business Conduct and Ethics (the “Ethics Code”). • Honesty: We believe in always being honest in dealing with our customers, suppliers, and others and complying with all laws and regulations applicable to our business at all levels. • Professionalism: We believe in providing our products and services in a prompt and professional manner, gaining the loyalty and trust of our customers and suppliers. • Core Values: We believe in certain “core values” centered upon ensuring quality throughout our product and organization for long-term growth and profitability. The Ethics Code provides a framework by which we maintain the highest ethical standards in the conduct of our business and is an integral part of implementing our vision of ethically and sustainably maximizing value. All members of our organization are expected to adhere to each of the policies of the Ethics Code, while also employing good ethical judgment. The Ethics Code provides guidelines in relation to conflicts of interest, fair dealing, confidential information and intellectual property, fair employment practices, environmental health and safety, and improper payments to third parties, among many other areas of ethical business conduct. Training - Our operational and management training programs are core to our commitment and enablement of a safe and productive manufacturing environment. Through our ADS Academy, we deliver targeted role-specific training to our operations team members through a blended curriculum of online and hands-on training experiences covering safety, quality, product knowledge and manufacturing process. Our learning management system serves as the foundation of our operational training programs and provides us with appropriate scale, efficiency, and governance to support our growth. We have a strong commitment to the training of our manufacturing supervisors and managers in technical, management, and leadership subjects through intense role-based assimilation plans, e-learning and classroom-based development experiences. REGULATION Our operations are affected by various statutes, regulations and laws in the markets in which we operate, which historically have not had a material effect on our business. We are subject to various laws applicable to businesses generally, including laws affecting land usage, zoning, the environment, health and safety, transportation, labor and employment practices, competition, immigration and other matters. Additionally, building codes may affect the products our customers are allowed to use, and, consequently, changes in building codes may affect the salability of our products. The transportation and disposal of many of our products are also subject to federal regulations. We are subject to safety requirements governing interstate operations prescribed by the U.S. Department of Transportation (“U.S. DOT”). Vehicle dimensions and driver hours of service also remain subject to both federal and state regulation. We have been able to consistently capitalize on changes in both local and federal regulatory statutes relating to storm and sanitary sewer construction, repair and replacement. Most noteworthy is the Federal Clean Water Act of 1972 and the subsequent U.S. Environmental Protection Agency Phase I, II and sustainable infrastructure regulations relating to storm sewer construction, stormwater quantity, stormwater quality, and combined sewer separation. Our diversity of products offering a solution-based selling approach coupled with detailed market knowledge makes us an integral industry resource in both regulatory changes and compliance. An important element of our growth strategy has been our focus on industry education efforts to drive regulatory approvals for our core HDPE products at national, state and local levels. We employ field-based engineers who work closely with government agencies to obtain regulatory approvals for our products, and also with civil engineering firms to specify our products on non-residential construction and road-building projects. Additional state and local regulatory approvals will continue to present new growth opportunities in new and existing geographic markets for us. The trend of substituting traditional materials for HDPE and PP is expected to continue as more states and municipalities recognize the benefits of our HDPE N-12 pipe and our polypropylene HP pipe by approving it for use in a broader range of applications. Our onsite wastewater and decentralized wastewater treatment systems cannot be sold without regulatory approval. We have a dedicated regulatory team with a track record of gaining favorable regulatory approvals and advancing policy and legislation. Over the past 10 years, the team has successfully embarked in over 100 regulatory initiatives increasing the addressability and size of markets across the U.S. and Canada. Table of Contents Advanced Drainage Systems, Inc 11
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS We are subject to a broad range of foreign, federal, state and local environmental, health and safety laws and regulations, including those pertaining to air emissions, water discharges, the handling, disposal and transport of solid and hazardous materials and wastes, the investigation and remediation of contamination and otherwise relating to health and safety and the protection of the environment and natural resources. To a limited extent, our current and past operations, and those of many of the companies we have acquired, involve materials that are, or could be classified as, toxic or hazardous. There is an inherent risk of contamination and environmental damage in our operations and the products we handle, transport and distribute. See “Item 1A. Risk Factors — Risks Relating to Our Business — We could incur significant costs in complying with environmental, health and safety laws or permits or as a result of satisfying any liability or obligation imposed under such laws or permits.” PRACTICES RELATED TO WORKING CAPITAL ITEMS Information about the Company’s working capital practices is incorporated herein by reference to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K. CORPORATE AND AVAILABLE INFORMATION We were founded in 1966 and are a Delaware corporation. Our principal executive offices are located at 4024 Green Stripe Lane, Hilliard, Ohio 43026, and our telephone number at that address is (800) 733-7473. Our corporate website is www.adspipe.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, (“Exchange Act”) are filed with the SEC. We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements, and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge on our website at www.adspipe.com when such reports are available on the SEC’s website. We use our www.adspipe.com website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor such portions of www.adspipe.com in addition to following press releases, SEC filings and public conference calls and webcasts. The contents of the websites are not incorporated into this filing. Further, our references to these websites are intended to be inactive textual references. Item 1A. Risk Factors Please carefully consider the risks described below, together with all other information included or incorporated by reference in this Annual Report on Form 10-K. If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be materially adversely affected. In these circumstances, the market price of our common stock could decline significantly. Risks Relating to Our Business Fluctuations in the price and availability of resins, our principal raw materials, new tariff policies and our inability to obtain adequate supplies of resins from suppliers and pass on resin price increases to customers could adversely affect our business, financial condition, results of operations and cash flows. Resin prices fluctuate substantially as a result of changes in crude oil and natural gas prices, changes in existing processing capabilities and the capacity of resin suppliers. Polypropylene resin suppliers are limited, high-density polyethylene suppliers are geographically concentrated, and supply of recycled resin is also limited. Supply interruptions could arise from disruptions to existing petrochemical capacity and recycled resin sources caused by labor disputes and shortages, weather conditions or natural disasters affecting supplies or shipments, transportation disruptions or other factors beyond our control. An extended disruption in the timely availability of raw materials from our key suppliers would result in a decrease in our revenues and profitability. Additionally, our customers’ production schedules could be impacted by these shortages, which could result in reduced sales of our products. Inflation in these raw material costs could also result in significant cost increases, further affecting our business. Our ability to maintain profitability heavily depends on our ability to pass through to our customers any increase in raw material costs. If increases in the cost of raw materials or any potential tariffs cannot be passed on to our customers, our business, financial condition, results of operations and cash flows will be adversely affected. Conversely, in the event that there is deflation, we may experience pressure from our customers to reduce prices. We may not be able to reduce our cost base to offset any such price concessions which could adversely impact our results of operations and cash flows. Table of Contents Advanced Drainage Systems, Inc 12
Any disruption or volatility in general business and economic conditions in the markets in which we operate, including market uncertainty and volatility, could have a material adverse effect on the demand for our products and services. The markets in which we operate are sensitive to regional, U.S. and worldwide economic conditions, including availability of credit, interest rates, inflation, tariffs or other trade policies, fluctuations in capital and business and consumer confidence. The difficult conditions in these markets and the overall economy affect our business in a number of ways. For example: • The volatility of the U.S. economy, including market uncertainty and volatility, can have an adverse effect on our sales that are dependent on the non-residential construction market if participants in this industry may postpone spending or are otherwise unable to secure financing for construction projects. • Our business depends upon general activity levels in the agriculture market. The nature of the agriculture market is such that a downturn in demand can occur suddenly, resulting in excess inventories, underutilized production capacity and reduced prices for pipe products. • Shifts in residential housing trends (urban vs. suburban), homeowner demographics, increasing mortgage rates, and consumers ability to finance home construction impact demand for our products. • Demand for our products and services depends to a significant degree on spending on infrastructure. Infrastructure spending is affected by a variety of factors beyond our control, including interest rates, inflation, availability and commitment of public funds for municipal spending and highway spending and general economic conditions. Additionally, U.S. policies related to global trade and tariffs could have a material adverse effect on our results of operations. The current administration has suggested various new strategies regarding tariffs. In response, countries have imposed or proposed additional tariffs on certain U.S. imports, as well as additional trade restrictions. Tariffs may result in a decrease of global trade volumes due to uncertainty, may create an administrative burden and will cause companies to make difficult decisions as to how to pay the tariffs or absorb the cost into their profit margins. Weakness in the markets in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows. Bank failures and market disruptions could impact banks used by our customers, which could negatively affect our customers. Delays in the placement of new orders and extended uncertainties may reduce future sales of our products and services. The revenue growth and profitability of our business depend on the overall demand for our product and services. We may have to close under-performing facilities as warranted by general economic conditions and/or weakness in the markets in which we operate. In addition to a reduction in demand for our products, these factors may also reduce the price we are able to charge for our products and restrict our ability to pass on raw material cost increases to our customers. This, combined with an increase in excess capacity, will negatively impact our profitability, cash flows and our financial condition, generally. Demand for our products and services could decrease if we are unable to compete effectively, and our success depends largely on our ability to convert current demand for competitive products into demand for our products. Competitors may have financial and other resources that are greater than ours and may be better able to withstand price competition and inflationary pressures. In addition, consolidation by industry participants could result in competitors with increased market share, larger customer bases, greater diversified product offerings and greater technological and marketing expertise, which would allow them to compete more effectively against us. Moreover, our competitors may develop products that are superior to our products or may adapt more quickly to new technologies or evolving customer requirements or requests. In many markets in which we operate, there are no significant entry barriers that would prevent new competitors from entering the market, especially on the local level, or existing competitors from expanding in the market. Increased competition by existing and future competitors could result in reductions in sales, prices, volumes and gross margins that would materially adversely affect our business, financial condition, results of operations and cash flows. Furthermore, our success will depend, in part, on our ability to maintain our market share, generate adequate demand for our products and gain market share from competitors. We may be affected by global climate change or by legal, regulatory or market responses to such change. Many of our products are made from a material whose manufacturing process involves the emission of carbon dioxide, a greenhouse gas (“GHG”) that scientists have attributed as a cause of climate change. Our products require transportation from our facilities to the site where they are used, which consumes energy. Concerns over climate change, including the impact of global warming, has led to federal, state, and international efforts to limit GHG emissions. Although it is uncertain what actions various governmental bodies will take to address the effects of climate change and to achieve goals in response to the effects of climate change, including in what timeframe those actions would be implemented, new laws or regulations could directly and indirectly affect our customers and suppliers (through an increase in the cost of production or their ability to produce satisfactory products) and our business (through the impact on our inventory availability, cost of Table of Contents Advanced Drainage Systems, Inc 13
sales, operations or demands for the products we sell). Until the timing, scope and extent of any regulation becomes known, we cannot predict its effect on our cost structure or our operating results, but it is likely our costs will increase in relation to any climate change legislation and regulations concerning GHG, which could have an adverse effect on our future financial position, results of operations or cash flows. In January 2022, we communicated our initial 10-year goals regarding sustainability. To reduce our environmental impact, we have committed to pursuing science-based targets consistent with limiting global temperature increase to 1.5°C above pre-industrial levels. We are working to define absolute targets for reduction of scope 1 (direct) & 2 (indirect) greenhouse gas emissions that align with limiting future temperature rise to 1.5°C above baseline. These goals reflect our current plans and there is no guarantee that they will be achieved. Our ability to achieve any goal is subject to factors and conditions, many of which are outside of our control, including technology, or the availability of recycled resin. While we no longer face reporting requirements under SEC rules after the SEC stated it would no longer defend its previous rules on climate-related disclosures, we may be subject to reporting requirements as states enact reporting obligations. Regardless of whether governmental bodies enact legislation to address climate change and reduce GHG emissions or we achieve our 10-year goals, the public perception of carbon-intensive industries may change adversely over time and additional focus on environmental, social and governance issues by the public and/or investors may harm our business as it could damage our reputation, require us to expend resources in reducing our net carbon emissions, or reduce demand for our products, which could adversely impact our results of operations and cash flows. Our results of operations could be adversely affected by the effects of weather. Most of our business units experience seasonal variation as a result of the dependence of our customers on suitable weather to engage in construction projects. Generally, during the winter months, construction activity declines due to inclement weather, frozen ground and shorter daylight hours. In addition, to the extent that hurricanes, severe storms, floods, other natural disasters or similar events occur in the geographic regions in which we operate, our results of operations may be adversely affected. We anticipate that fluctuations of our operations results from period to period due to seasonality will continue in the future. Notwithstanding our commitment to advancing sustainable business practices, climate change may also have adverse physical or financial impacts on our business to the extent that it causes more severe or more frequent major storm events, flooding, drought-induced wildfires, or other shifts in weather patterns. Increases in the intensity and frequency of acute weather events have been linked to climate change, and this risk may increase to the extent global warming continues or is unabated. These types of extreme weather events may include disruptions to operations or production, disruptions to supply chains or damage to our physical plants, which could lead to reduced financial performance of our business. The loss of any of our significant customers could adversely affect our business. Our success will depend, in part, on our ability to maintain the quality of our customer service, and selling and marketing efforts, as well as our ability to develop long-term relationships with our customers. Our ten largest customers generated approximately 50% of our net sales in fiscal 2026. Because we do not have long-term arrangements with many of our customers, such customers may cease purchasing our products without notice or upon short notice to us. In addition, consolidation among customers could also result in a loss of some of our present customers to our competitors. The loss of one or more of our significant customers, a significant customer’s decision to purchase our products in significantly lower quantities than they have in the past, or deterioration in our relationship with any of them could have a material adverse effect on our business, financial condition, results of operations and cash flows. Because our business is working capital intensive, we rely on our ability to manage our supply purchasing and customer credit policies. The majority of our net sales volume is facilitated through the extension of credit to our customers whose ability to pay is dependent, in part, upon the economic strength of the industry in the areas where they operate. The inability of our customers to pay in a timely manner, or at all, would adversely affect our business, financial condition, results of operations and cash flows. Furthermore, our collections efforts with respect to non-paying or slow-paying customers could negatively impact our customer relations going forward. Our operations are working capital intensive, and our inventories, accounts receivable and accounts payable are significant components of our net asset base. We manage our inventories and accounts payable through our purchasing policies and our accounts receivable through our customer credit policies. If we fail to adequately manage our supply purchasing or customer credit policies, our working capital and financial condition may be adversely affected. Table of Contents Advanced Drainage Systems, Inc 14
Our international operations expose us to political, economic and regulatory risks not normally faced by businesses that operate only in the U.S. As a result of our international operations, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws. Our international operations are subject to risks similar to those affecting our operations in the U.S. in addition to a number of other risks, including: difficulties in enforcing contractual and intellectual property rights; impositions or increases of withholding and other taxes on remittances and other payments by subsidiaries and affiliates; difficulties in managing and complying with continually evolving data and privacy laws, such as the European Union’s General Data Protection Regulation and a number of state-specific consumer privacy laws in the U.S.; exposure to different or changing legal standards, including potential changes in government mandated regulatory product standards in those countries in which we or our joint ventures operate; fluctuations in currency exchange rates; impositions or increases of investment and other restrictions by foreign governments; the requirements of a wide variety of foreign laws; political and economic instability; war, escalating geopolitical conflicts or acts or threats of terrorism; and difficulties in staffing and managing operations, particularly in remote locations. The U.S. Foreign Corrupt Practices Act and similar foreign anti-corruption laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to wrongfully influence foreign government officials for the purpose of obtaining or retaining business or obtaining an unfair advantage, and generally require companies to maintain accurate books and records and internal controls, including at foreign controlled subsidiaries. Our internal policies provide for compliance with all applicable anti-corruption laws for both us and for our joint venture operations. Our continued operation and expansion outside the U.S., including in developing countries, could increase the risk of such violations in the future. Despite our training and compliance programs, our internal control policies and procedures may not always protect us from unauthorized, reckless or criminal acts committed by our employees, agents or joint venture partners. Conducting a portion of our operations through joint ventures exposes us to risks and uncertainties, many of which are outside of our control. With respect to our existing joint ventures, any differences in views among the joint venture participants may result in delayed decisions or in failures to agree on major issues. We also cannot control the actions of our joint venture partners, including any nonperformance, default or bankruptcy of our joint venture partners. We may be unable to control the quality of products produced by the joint ventures or achieve consistency of product quality as compared with our other operations. In addition to net sales and market share, this may have a material negative impact on our brand and how it is perceived thereafter. Moreover, if our partners also fail to invest in the joint venture in the manner that is anticipated or otherwise fail to meet their contractual obligations, the joint ventures may be unable to adequately perform and conduct their respective operations, requiring us to make additional investments or perform additional services to ensure the adequate performance and delivery of products and/or services to the joint ventures’ customers, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We may not be able to successfully expand into new products. We may develop new products and processes based on our existing manufacturing, design and engineering capabilities and services. Our business depends in part on our ability to identify future products and product lines that complement existing products and product lines and that respond to our customers’ needs. We may not be able to compete effectively unless our product selection keeps up with trends in the markets in which we compete or trends in new products. In addition, our ability to integrate new products and product lines into our distribution network could impact our ability to compete. Furthermore, the success of new products and new product lines will depend on market demand and there is a risk that new products and new product lines will not deliver expected results, which could negatively impact our future sales and results of operations. We continue to invest in our initiatives. If we fail to implement these initiatives as expected, our business, financial condition, and results of operations could be adversely affected. Our financial performance and future growth depend on our management’s ability to successfully implement our initiatives. Our operational initiatives are focused on customer experience, capacity expansion, automation, safety, order management and transportation. Automation in our plants will allow for production efficiency and improved safety for plant personnel. Any failure to successfully implement these initiatives and related strategies could adversely affect our business, financial condition, and results of operations, including increases in our severance and impairment charges. Table of Contents Advanced Drainage Systems, Inc 15
We are affected by increased fuel and energy prices, and our inability to obtain sufficient quantities of fuel to operate our in-house delivery fleet could negatively impact our business, results of operations and cash flows. Prices and availability of petroleum products are subject to political, economic and market factors that are outside our control. We consume a large amount of energy and petroleum products in our operations, including the manufacturing process and delivering products to our customers by our in-house fleet. The recent conflict in the Middle East has led to an increase in oil prices in the U.S. Oil prices may continue to surge if the conflict continues, other geopolitical conflicts arise or continue, certain oil supply routes remain blocked or additional supply routes become blocked. While we utilize a diesel hedging program associated with our in-house fleet to mitigate against higher fuel prices, our operating profit will be adversely affected if we are unable to obtain the energy and fuel we require or to fully offset the anticipated impact of higher energy and fuel prices through increased prices or surcharges to our customers or through other hedging strategies. If shortages occur in the supply of energy or necessary petroleum products and we are not able to pass along the full impact of increased energy or petroleum prices to our customers, our business, financial condition, results of operations and cash flows would be adversely affected. Internally manufacturing our products at our own facilities subjects our business to risks associated with manufacturing processes and supply chain disruption. We internally manufacture our own products at our facilities with substantial fixed costs. While we maintain insurance covering our facilities and have significant flexibility to manufacture and ship our own products from various facilities, a loss of the use of our facilities, whether short or long-term, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our business interruption insurance may not be sufficient to offset the lost revenues or increased costs that we may experience during a disruption of our operations. Unexpected failures of our equipment and machinery may result in production delays, revenue loss and significant repair costs, injuries to our employees, and customer claims. Increasing manufacturing capacity requires successful execution of capital projects, including adding, upgrading and replacing equipment, which may be subject to supply chain delays for equipment or parts. Global supply chain disruptions and the related impacts on our third-party suppliers to deliver the raw materials, components, systems and parts that we need to manufacture and service our products could also adversely impact our production. Any interruption in production may limit our ability to supply enough products to customers and may require us to make capital expenditures, which could have a negative impact on our profitability and cash flows. The nature of our business exposes us to construction defect and product liability claims as well as other legal proceedings. We are exposed to construction defect and product liability claims relating to our various products if our products do not meet customer expectations. Such liabilities may arise out of the quality of raw materials we purchase from third-party suppliers. We also operate a large fleet of trucks and other vehicles and therefore face the risk of traffic accidents. We cannot make assurances that our insurance will provide adequate coverage against claims or that we will be able to obtain such insurance on acceptable terms in the future, if at all. From time to time, we are also involved in government inquiries and investigations, as well as consumer, employment, tort proceedings and other litigation. We cannot predict with certainty the outcomes of these legal proceedings and other contingencies. The outcome of some of these legal proceedings and other contingencies could require us to take actions which would adversely affect our operations, negatively impact customer confidence in us and our products or could require us to pay substantial amounts of money. Additionally, defending against these lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources from other matters. Our operations are affected by various laws and regulations in the markets in which we operate, including government mandated regulatory product standards, and our failure to obtain or maintain approvals by municipalities, state departments of transportation, engineers and developers may affect our results of operations. While we are not engaged in a regulated industry, we are subject to various laws applicable to businesses generally, including laws affecting land usage, zoning, the environment, health and safety, transportation, labor and employment practices (including pensions), competition, immigration and other matters. Approvals by municipalities, the U.S. and state departments of transportation, engineers and developers may affect the products our customers are allowed to use, and, consequently, failure to obtain or maintain such approvals may affect the salability of our products. Building codes may also affect the products our customers use, and, consequently, changes in building codes may also affect the salability of our products. Changes in applicable regulations governing the sale of some of our products, including changes in government-mandated regulatory product standards in countries in which we or our joint ventures operate, could increase Table of Contents Advanced Drainage Systems, Inc 16
our costs. In addition, changes to applicable tax laws and regulations could increase our costs of doing business. We may incur material costs or liabilities in connection with regulatory requirements. We deliver products to many of our customers through our own fleet of vehicles. The U.S. DOT regulates our operations in domestic interstate commerce. Vehicle dimensions and driver hours of service are subject to both federal and state regulation. More restrictive limitations on vehicle weight and size, trailer length and configuration, or driver hours of service could increase our costs, which, if we are unable to pass these cost increases on to our customers, would reduce our gross profit and net income (loss) and increase our selling, general and administrative expenses. We cannot predict whether future developments or changes in law, regulations or government mandated product standards will affect our business, financial condition and results of operations in a negative manner. Similarly, we cannot assess whether we will be successful in meeting future demands of regulatory agencies in a manner which will not materially adversely affect our business, financial condition, results of operations and cash flows. Interruptions in the proper functioning of information technology systems could disrupt operations and cause unanticipated increases in costs, decreases in revenues, or both. The implementation of our technology initiatives could disrupt our operations in the near term, and our technology initiatives might not provide the anticipated benefits or might fail. Because we use our information technology (“IT”) systems to, among other things, manage inventories and accounts receivable, make purchasing decisions and monitor our results of operations, the proper functioning of our IT systems is important to the successful operation of our business. Although our IT systems are protected through physical and software safeguards and remote processing capabilities exist, IT systems are still vulnerable to natural disasters, power losses, unauthorized access, telecommunication failures and other problems. If critical IT systems fail, or are otherwise unavailable, our ability to process orders, track credit risk, identify business opportunities, maintain proper levels of inventories, collect accounts receivable and pay expenses and otherwise manage our business units would be adversely affected. Management uses IT systems to support decision making and to monitor business performance. We may fail to generate accurate financial and operational reports essential for making decisions at various levels of management. In addition, if we do not maintain adequate controls such as reconciliations, segregation of duties and verification to prevent errors or incomplete information, our ability to operate our business could be limited. We have made, and will continue to make, significant investments in technology. Our technology initiatives are designed to provide our customers a better order management and fulfillment experience, streamline our manufacturing operations and improve the quality of our internal control environment. The cost and potential problems and interruptions associated with the implementation of our technology initiatives could disrupt or reduce the efficiency of our operations in the near term. In addition, our new or upgraded technology might not provide the anticipated benefits, might take longer than expected to realize the anticipated benefits or might fail altogether. The occurrence of such issues could have a material adverse effect on our business financial condition and results of operations. Cybersecurity incidents may threaten our confidential information, disrupt operations and result in harm to our reputation and adversely impact our business and financial performance. In the conduct of our business, we collect, use, transmit and store data on information systems, which are vulnerable to disruption and an increasing threat of continually evolving cybersecurity risks. Cybersecurity incidents across industries are sophisticated and frequent and may range from uncoordinated individual attempts to targeted measures. These incidents include but are not limited to, malicious software or viruses, including “ransomware” attempts to gain unauthorized access to, or otherwise disrupt, our information systems, attempts to gain unauthorized access to business, proprietary or other confidential information, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. New developments in the fields of generative artificial intelligence (“AI”), machine learning, and robotics may create new vulnerabilities and cybersecurity risks. Cybersecurity failures may be caused by employee error, malfeasance, other corporate or governmental actors, system errors or vulnerabilities, including vulnerabilities of our vendors, suppliers, and their products. While we have been subject to cybersecurity incidents in the past that (based on information known to date) did not have a material impact on our financial condition or results of operations, we may experience such incidents in the future, potentially with more frequency or sophistication which may have a material impact on our financial condition or results of operations. The occurrence of any of these events could adversely affect our reputation and could result in litigation, regulatory action, financial loss, project delay claims and increased costs and operational consequences of implementing further data protection systems. Table of Contents Advanced Drainage Systems, Inc 17
Failures of our IT systems as a result of cybersecurity incidents or other disruptions could result in a breach of critical operational or financial controls and lead to a disruption of our operations, commercial activities or financial processes. Cybersecurity incidents or other disruptions impacting significant customers and/or suppliers could also lead to a disruption of our operations. Given the persistent and advanced nature of cybersecurity threats, we continue to invest in upgraded programs, implement advanced features, and establish adequate controls to stop or curtail these threats. However, investing in upgraded programs, advanced features and adequate controls is expensive and an ongoing, rapidly changing challenge. Further, our attempts to safeguard our systems and mitigate potential risks may not be sufficient to prevent cyberattacks or security breaches that manipulate or improperly use our systems or networks, compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations. The occurrence of such events could have a material adverse effect on our business financial condition, reputation and results of operations. All of these risks are also applicable when we rely on outside vendors to provide services. We are dependent on third-party vendors to operate secure and reliable systems which may include data transfers over the internet. Any events which deny us use of vital operating or information systems may seriously disrupt our normal business operations. Additionally, our key partners, distributors or suppliers could experience a compromise of their information security due to a cybersecurity incident, which may have an impact on our business, reputation and financial performance. Our success depends upon our ability to control labor costs and to attract, train and retain highly qualified employees and key personnel. To be successful, we must attract, train and retain a large number of highly qualified employees while controlling related labor costs. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates and health and other insurance costs. The market for highly qualified employees remains competitive and may not be able to attract or retain highly qualified employees in the future, including those employed by companies we acquire. None of our domestic employees are currently covered by collective bargaining or other similar labor agreements. However, if a number of our employees were to unionize, the effect on us may be negative. Additionally, we increasingly compete for talent within our industry. In addition, our business results of operations depend largely upon our chief executive officer and senior management team as well as our plant managers and sales personnel, including those of companies acquired, and their experience, knowledge of local market dynamics and specifications and long-standing customer relationships. Our inability to retain, develop or hire qualified employees would restrict our ability to grow our business, limit our ability to continue to successfully operate our business and result in lower operating results and profitability. If we are unable to protect our intellectual property rights, or we infringe on the intellectual property rights of others, our ability to compete could be negatively impacted. Our ability to compete effectively depends, in part, upon our ability to protect and preserve proprietary aspects of our intellectual property through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Because of the differences in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the U.S. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition. We could incur significant costs in complying with environmental, health and safety laws or permits or as a result of satisfying any liability or obligation imposed under such laws or permits. Our operations are subject to various federal, state, local and foreign environmental, health and safety laws and regulations. Violations of these laws and regulations, failure to obtain or maintain required environmental permits or non-compliance with any conditions contained in any environmental permit can result in substantial fines or penalties, injunctive relief, requirements to install pollution or other controls or equipment, civil and criminal sanctions, permit revocations and/or facility shutdowns. We could be held liable for the costs to address contamination of any real property we have ever owned, leased, operated or used, including as a disposal site. We could also incur fines, penalties, sanctions or be subject to third-party claims for property damage, personal injury or nuisance or otherwise as a result of violations of or liabilities under environmental laws in connection with releases of hazardous or other materials. In addition, changes in, or new interpretations of, existing laws, regulations or enforcement policies, the discovery of previously unknown contamination, or the imposition of other environmental liabilities or obligations in the future, including additional investigation or other obligations with respect to any potential health hazards of our products or Table of Contents Advanced Drainage Systems, Inc 18
business activities or the imposition of new permit requirements, may lead to additional compliance or other costs that could have material adverse effect on our business, financial condition, results of operations and cash flows. Risks Relating to Our Acquisition of NDS We may be unable to successfully integrate our and NDS’ businesses in order to realize the anticipated benefits of the acquisition or do so within the intended timeframe. We will be required to devote significant management attention and resources to integrating the business practices and operations of NDS with our business. We may be unable to realize the planned synergies from the acquisition or other benefits in the timeframe that we expect or at all. We continue to assess synergies that we may realize as a combined company, the realization of which will depend on a number of factors. The success of the acquisition, including anticipated synergies, benefits and cost savings, will depend, in part, on our ability to successfully combine and integrate our current operations with NDS’ business. If we experience difficulties with the integration process or other unforeseen costs, the anticipated benefits and cost savings of the acquisition may not be realized fully or at all or may take longer to realize than expected. The integration planning and implementation process will result in significant costs and divert management attention and resources. These integration matters could have an adverse effect on our combined company for an undetermined period after completion of the acquisition. In addition, the actual cost savings of the acquisition could be less than anticipated or otherwise offset by other factors. Additional difficulties we may encounter as part of the integration process include the following: • the costs of integration and compliance and the possibility that the full benefits anticipated to result from our acquisition of NDS will not be realized; • any delay in the integration of management teams, strategies, operations, products and services; • diversion of the attention of each company’s management as a result of our acquisition of NDS; • differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration; • operating in foreign jurisdictions where we have no prior operating experience, including compliance, workforce and operational challenges; • delays in the disposition of the NDS International Entities; • the ability to retain key employees; • the ability to create and enforce uniform standards, controls, procedures, policies and information systems; • the challenge of integrating complex systems, technology, networks and other assets of NDS into those of ours in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies; • potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition, including costs to integrate NDS beyond current estimates; or • the disruption of, or the loss of momentum in, each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies. Any of these factors could adversely affect each company’s ability to maintain relationships with customers, suppliers, employees and other constituencies or our ability to achieve the anticipated benefits of the acquisition or could reduce each company’s earnings or otherwise adversely affect our business and financial results after the acquisition. These risks are not limited to our acquisition of NDS and could also apply to our future acquisitions. Uncertainties associated with our acquisition of NDS may cause a loss of management personnel and other key employees, which could adversely affect our future business, operations and financial results. The acquisition of NDS could disrupt our and NDS’ businesses. We are dependent on the experience and industry knowledge of senior management and other key employees to execute our business plans, which could be disrupted by the unanticipated departure of any key member of our management team or employee base, as well as management or key employees of NDS. Our and NDS’ current and prospective employees may experience uncertainty about their roles within our company, which may have an adverse effect on the ability of each of us to attract or retain key management and other key personnel. Accordingly, no assurance can be given that we will be able to attract or retain our and NDS’ key management personnel and other key employees to the same extent that our companies have previously been able to attract or retain such employees. In addition, because of the specialized and technical nature of our business, our future performance is dependent on the continued service of, and on our ability to attract and retain, qualified management, engineering, Table of Contents Advanced Drainage Systems, Inc 19
technical, marketing and support personnel. Competition for such personnel is intense, and we may be unable to continue to attract or retain such personnel. Our results after our acquisition of NDS may suffer if we do not effectively manage our expanded operations following the acquisition or the business of NDS may underperform relative to our expectations. Following our acquisition of NDS, the size and complexity of our business will increase significantly beyond the current size of either our or NDS’ existing business. Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and new types of manufacturing processes and products and associated increased costs and complexity. There can be no assurances that we will be successful after completion of the acquisition or that we will realize the expected benefits currently anticipated from our acquisition of NDS. Additionally, we may not be able to maintain the levels of revenue, earnings or operating efficiency that we and NDS have achieved or might achieve separately. The business and financial performance of NDS is subject to certain risks and uncertainties, including the risk of the loss of, or changes to, its relationships with its customers. We may be unable to achieve the same growth, revenues and profitability that NDS has achieved in the past. Risks Relating to Our Indebtedness Our level of indebtedness could adversely affect our business, financial conditions or results of operations and prevent us from fulfilling our obligations under the agreements governing the terms of our indebtedness. Our indebtedness could have risks. For example, it could: • make it more difficult for us to satisfy our obligations with respect to the Company’s existing debt obligations; • increase our vulnerability to and compromise our flexibility to plan for, or react to, general adverse economic, industry or competitive conditions, including interest rate fluctuations, because a portion of our borrowings will be at variable rates of interest; • cause us to be unable to meet the financial covenants contained in our debt agreements, or to generate cash sufficient to make required debt payments, which circumstances would have the potential of accelerating the maturity of some or all of our outstanding indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, joint ventures and investments and other general corporate purposes, which could improve our competitive position, results of operations or share price; • require us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; • place us at a competitive disadvantage compared to our competitors that do not have the same level of indebtedness as we do and competitors that may be in a more favorable position to access additional capital resources; • limit our ability to execute business development and acquisition activities to support our strategies; • limit our ability to obtain additional indebtedness or equity due to applicable financial and restrictive covenants in our debt agreements; and • limit our ability to refinance our indebtedness on more favorable terms. We expect to pay principal and interest on current and future debt from cash provided by operating activities. Therefore, our ability to meet these payment obligations will depend on future financial performance and cash availability. If our cash flow and capital resources are insufficient to fund our debt obligations, we may be forced to reduce or delay expansion plans and capital expenditures, limit payment of dividends, sell material assets or operations, obtain additional capital or restructure our debt. Risks Relating to Our Common Stock Future sales of shares by existing stockholders could cause our stock price to decline. Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could cause the market price of our common stock to decline. Based on shares outstanding as of May 14, 2026, we have 76.6 million outstanding shares of common stock, including 0.2 million outstanding shares of our restricted stock, a significant portion of which are freely tradable without restriction under the Securities Act of 1933, as amended, (“Securities Act”) unless held by “affiliates,” as that term is defined in Rule 144 under the Securities Act. As of March 31, Table of Contents Advanced Drainage Systems, Inc 20
2026, there were stock options outstanding to purchase a total of approximately 0.9 million shares of our common stock. In addition, approximately 1.5 million shares of common stock are available for grant under our 2017 Omnibus Plan. Certain of our significant stockholders may distribute shares that they hold to their investors who themselves may then sell into the public market. Such sales may not be subject to the volume, manner of sale, holding period and other limitations of Rule 144 of the Securities Act (“Rule 144”). As resale restrictions end, the market price of our common stock could decline if the holders of those shares sell them or are perceived by the market as intending to sell them. In the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement or employee arrangement or otherwise. Any of these issuances could result in substantial dilution to our existing stockholders and could cause the trading price of our common stock to decline. Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders. The trustee of our retirement plan has certain limited powers to vote a large block of shares on matters presented to stockholders for approval. As of May 14, 2026, our directors, officers and principal stockholders and their affiliates collectively own, or have the right to own within 60 days, approximately 16% of our outstanding shares of common stock. Additionally, our tax-qualified Retirement and Stock Ownership Plan (“KSOP”) holds shares of common stock that KSOP participants with ESOP accounts are entitled to vote on a one-for-one basis on any matter requiring the vote or consent of our stockholders. Thus, the collective voting power of our directors, officers and principal stockholders and their affiliates as of May 14, 2026 is approximately 22%, inclusive of the outstanding shares of common stock held by the KSOP. As a result, these stockholders, if they act together, may be able to control our management and affairs and most matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change of control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of our other stockholders. The KSOP trustee has the ability to vote a significant block of shares on certain matters presented to stockholders for approval. Each participant with an ESOP account in the KSOP may direct the KSOP trustee on how to vote the shares of common stock allocated to the participant’s ESOP accounts in the KSOP; and the KSOP trustee may vote any shares of common stock for which no participant instructions were received in the same proportion as the allocated stock for which participants’ voting instructions have been received is voted. Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or prevent a change in control of us and may affect the trading price of our common stock. Our amended and restated certificate of incorporation and amended and restated bylaws include a number of provisions that may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. For example, our amended and restated certificate of incorporation and amended and restated bylaws, each as further amended, authorize the issuance of “blank check” preferred stock that could be issued by our board of directors to thwart a takeover attempt; provide that vacancies on our board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office; prohibit stockholders from calling special meetings of stockholders; prohibit stockholder action by written consent, thereby requiring all actions to be taken at a meeting of the stockholders; do not give the holders of our common stock cumulative voting rights with respect to the election of directors, which means that the holders of a majority of our outstanding shares of common stock can elect all directors standing for election; establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; require a super-majority stockholders vote of 75% to approve any reorganization, recapitalization, share exchange, share reclassification, consolidation, merger, conversion or sale of all or substantially all assets to which we are a party that is not approved by the affirmative vote of at least 75% of the members of our board of directors; and require the approval of holders of a majority of the outstanding shares of our voting common stock to amend the bylaws and at least 75% of the outstanding shares of our voting common stock to amend certain provisions of the certificate of incorporation. Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware General Corporation Law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock. Table of Contents Advanced Drainage Systems, Inc 21
Our amended and restated certificate of incorporation and amended and restated bylaws may also make it difficult for stockholders to replace or remove our management. These provisions may facilitate management entrenchment that may delay, deter, render more difficult or prevent a change in our control, which may not be in the best interests of our stockholders. Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by our directors, officers, employees or agents; any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our common stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us or our directors, officers, employees or agents. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. General Risk Factors As a publicly-traded manufacturing company, we are subject to a variety of risks in addition to the risks described above, each of which could adversely affect our financial position, results of operations or cash flows. These risks include but are not limited to: • taxation by multiple jurisdictions and the impact of such taxation on the effective tax rate and taxes paid; • material liabilities under our self-insured programs for workers' compensation, automobile and product/general liability coverage as well as health coverage to our employees; • fluctuations in our effective tax rate, including from the OBBBA signed July 4, 2025, Inflation Reduction Act of 2022, Tax Cuts and Jobs Act of 2017, the Coronavirus Aid, Relief, and Economic Security Act and any future tax legislation; • the impact of tariffs; • new or modified legislation related to health care; • the review of potential weaknesses or deficiencies in the Company's disclosure controls and procedures, and discovering further weaknesses of which we are not currently aware, or which have not been detected; • our inability to assure our stockholders that an active market for shares of our common stock can be sustained, and the market price of our common stock may be volatile and could decline in the future; and • failure to meet the expectations of investors, including as a result of factors beyond our control. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Risk Management and Strategy Our cybersecurity program is designed to assess, identify and manage material risks from cybersecurity threats, and is a component of our overall enterprise risk program. Our cybersecurity program is based on the National Institute of Standards and Technology Cybersecurity Framework, version 2.0. We conduct regular scans, penetration tests, and vulnerability assessments to identify potential threats or vulnerabilities in our systems. Our processes to assess, identify and manage material risks from cybersecurity threats include potential threats associated with third party service providers, including cloud-based platforms. We believe we have invested in monitoring practices to reduce cybersecurity risks and continue to monitor our systems on an ongoing basis for compliance with applicable privacy regulations and any current or potential threats. We engage third- party service providers to enhance our risk prevention and mitigation efforts. We have periodically engaged third parties to serve in a consultative and advisory manner to review current and future strategies. We also purchase insurance to help protect us against the risk of cybersecurity breaches. Table of Contents Advanced Drainage Systems, Inc 22
Cybersecurity Governance Board and Committee Oversight - Our Board of Directors has ultimate oversight of the Company’s cybersecurity programs and strategy, with the Audit Committee maintaining oversight responsibility in reviewing cybersecurity and other information technology risks. The Audit Committee assesses the steps management has taken to monitor, minimize or control such risks or exposures. The Company’s Chief Information Officer (“CIO”) presents a cybersecurity report to the Audit Committee each quarter. The report includes updates of recent cybersecurity threats, current key performance indicators of security controls and summaries of any recent incidents at the Company. Management’s Role - The Company’s CIO, supported by the Director of IT Security and Compliance, manages cybersecurity risk. Our CIO has over 25 years of experience in information technology and eight years of experience with the Company. The Company’s enterprise-wide cybersecurity strategy is supported by policies, procedures, security controls and training designed to protect the Company’s IT systems, operations and sensitive data. Specifically, our Cyber Incident Response Plan provides a process by which our Company is informed about and monitors the prevention, detection, mitigation and remediation of cybersecurity incidents and includes engaging the Cybersecurity and Risk Management Committee (“CRMC”). The CRMC is a management committee established to identify, assess and manage material cybersecurity incidents, including the incident recovery process within the Company. Depending on the significance of the incident, the Cyber Incident Response Plan could include engaging affected internal and external parties, escalating the issue to executive management, notifying one or more members of our Audit Committee, maintaining communication with users and notifying law enforcement and government agencies as warranted. For additional information regarding cybersecurity risks, see the risk factor captioned “Cybersecurity incidents may threaten our confidential information, disrupt operations and result in harm to our reputation and adversely impact our business and financial performance” under Part I, Item 1A “Risk Factors”. Item 2. Properties Property - We have a network of 64 manufacturing plant locations and 41 distribution centers, summarized in the following table: Manufacturing Plants Distribution Centers Total United States 54 29 83 Canada 4 4 8 Mexico (1) 3 3 6 South America (2) 3 4 7 Other (3) — 1 1 Total 64 41 105 (1) Manufacturing plants and distribution centers in Mexico are owned or leased by our joint venture. (2) Manufacturing plants and distribution centers owned or leased by our South America joint venture are not consolidated. (3) The other facility is located in the Netherlands. We currently own approximately 110,000 square feet in Hilliard, Ohio for our corporate headquarters through a joint venture and own our approximately 110,000 square foot ADS Engineering and Technology Center. Additionally, we lease an office space in Old Saybrook, Connecticut for our Infiltrator headquarters. Our network of 64 manufacturing plants consists of 45 that are owned and 19 that are leased. We generally prefer to own our manufacturing plant locations, with a typical pipe manufacturing facility consisting of approximately 40,000 square feet and 15 to 20 acres of land for storage of pipe and related products. Our network of 41 distribution centers consists of 4 owned and 37 leased locations. We believe that our properties have been adequately maintained and are generally in good condition. The extent to which we use our properties varies by property, but we believe the capacity of our facilities is adequate for the level of production and distribution activities necessary in our business as presently conducted. Our Wastewater Segment utilizes 10 of our properties in the United States. The remainder of our properties are utilized by the Stormwater segment. Each distribution center carries pipe, fittings and other Allied Products per needs of the local market. In-House Fleet - As of March 31, 2026, our in-house fleet consists of approximately 600 tractors and approximately 1,100 trailers that are specially designed to haul our lightweight pipe and fittings products. Table of Contents Advanced Drainage Systems, Inc 23
Item 3. Legal Proceedings The Company is involved from time to time in various legal proceedings that arise in the ordinary course of our business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions including acquisitions and divestitures. The Company does not believe that such litigation, claims, and administrative proceedings will have a material adverse impact on our financial position or our results of operations. The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated. Item 4. Mine Safety Disclosures Not applicable. Table of Contents Advanced Drainage Systems, Inc 24
PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock - Our common stock is listed and traded on the NYSE under the symbol “WMS”. During each quarter of fiscal 2026, 2025 and 2024, the Board of Directors approved a quarterly cash dividend of $0.18, $0.16 and $0.14 per share, respectively, to all common stockholders. During the first quarter of fiscal 2027, the Company declared a quarterly cash dividend of $0.20 per share of common stock. The dividend is payable on June 15, 2026 to stockholders of record at the close of business on June 1, 2026. Holders of Record - As of May 14, 2026, we had 862 holders of record of our common stock. The number of holders of record is based upon the actual number of holders registered as of such date and does not include holders of shares in “street name” or persons, partnerships, associates, corporations or other entities in security position listings maintained by depositories. Stock Performance Graph - The following graph presents a comparison from March 31, 2021 through March 31, 2026 of the cumulative return of our common stock, the Standard and Poor's Index and the Standard and Poor’s Mid Cap 400 - Capital Goods Index. The graph assumes investment of $100 on March 31, 2021 in our common stock and in each of the two indices and the reinvestment of dividends. Recent Sales of Unregistered Securities - Since the completion of our IPO, we have not sold any securities without registration under the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities - In February 2026, we announced that our Board of Directors approved a new $1.0 billion stock repurchase authorization (the “Repurchase Program”) of ADS common stock in accordance with applicable securities laws. During fiscal 2026, we repurchased 0.7 million shares of common stock at a cost of $98.7 million. With the new authorization, the Repurchase Program has a total available capacity of $1.0 billion as of March 31, 2026. The Repurchase Program does not obligate us to acquire any particular amount of common stock and may be suspended or terminated at any time at our discretion. Table of Contents Advanced Drainage Systems, Inc 25
The following table provides information with respect to repurchases of our common stock by us and our “affiliated purchasers” (as defined by Rule 10b-18(a)(3) under the Exchange Act) during the three months ended March 31, 2026. Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (amounts in thousands, except per share data) January 1, 2026 to January 31, 2026 — — — $ 147,742 February 1, 2026 to February 28, 2026 — — — 1,147,742 March 1, 2026 to March 31, 2026 720 $ 137.06 720 1,049,043 Total 720 $ 137.06 720 $ 1,049,043 Equity Compensation Plan Information - For equity compensation plan information, refer to “Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report on Form 10-K. Item 6. Reserved Table of Contents Advanced Drainage Systems, Inc 26
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 Table of Contents Advanced Drainage Systems, Inc 27
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. Table of Contents Advanced Drainage Systems, Inc 28
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 of Stormwater and Wastewater (formerly referred to as the “Infiltrator” reportable segment). Further, the Company changed the measure used to evaluate segment profitability from adjusted gross profit to Adjusted EBITDA. Segment results for the historical periods presented in these consolidated financial statements have been recast to reflect these changes. The Segment Realignment had no impact on our previously reported consolidated net sales, income from operations, net income attributable to ADS or earnings per share. We generate a greater portion of our net sales and Adjusted EBITDA in our Stormwater segment, which includes sales of high performance thermoplastic corrugated pipe and complementary products throughout the United States and certain international regions. We expect the percentage of total net sales and gross profit derived from the Wastewater segment to continue to increase in future periods as we continue to expand our wastewater management presence. See “Note 20. Business Segment Information” to our audited consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K. Stormwater - The Stormwater segment manufactures and markets high performance thermoplastic corrugated pipe and complementary products designed as an integrated, end-to-end solution set which provides a comprehensive approach to managing stormwater from the moment it hits the ground until it is cleaned and returned to its natural environment. In February 2026, the Company acquired NDS to further expand the Stormwater product offering, enhance go-to-market capabilities in retail and distributor channels, and expand the Stormwater addressable market. Stormwater products are sold and manufactured throughout the United States and certain international regions, including Company owned facilities in Canada, subsidiaries that distribute to Europe and the Middle East, and exports through the Company’s joint ventures with local partners in Mexico and South America. The Company maintains and serves these markets through product distribution relationships with many of the largest waterworks distributors, buying groups and co-ops, major retailers as well as an extensive network of hundreds of small to medium-sized distributors. Our joint venture strategy has provided us with local and regional access to new international markets. The unconsolidated sales of the South American Joint Venture were $75.6 million, $72.3 million, and $75.9 million, in fiscal 2026, 2025, and 2024, respectively. Wastewater - Wastewater (formerly “Infiltrator”) is a leading national provider of plastic leachfield chambers and systems, onsite wastewater tanks and accessories, primarily for use in residential applications. Wastewater products are used in onsite wastewater treatment systems in the United States and Canada. Table of Contents Advanced Drainage Systems, Inc 29
Results of Operations for Fiscal Year Ended March 31, 2026 Compared with Fiscal Year Ended March 31, 2025 The following table summarizes our operating results as a percentage of net sales that have been derived from our Consolidated Financial Statements for the fiscal years ended March 31, 2026 and 2025. We believe this presentation is useful to investors in comparing historical results. (Amounts in thousands) 2026 2025 Net sales $ 3,050,376 100.0 % $ 2,904,245 100.0 % Cost of goods sold 1,882,990 61.7 1,810,004 62.3 Gross profit 1,167,386 38.3 1,094,241 37.7 Selling, general and administrative expenses 469,549 15.4 380,378 13.1 Loss on disposal of assets and costs from exit and disposal activities 19,211 0.6 3,858 0.1 Intangible amortization 59,424 1.9 52,569 1.8 Income from operations 619,202 20.3 657,436 22.6 Interest expense 93,869 3.1 91,803 3.2 Interest income and other, net (34,455) (1.1) (23,832) (0.8) Income before income taxes 559,788 18.4 589,465 20.3 Income tax expense 134,988 4.4 141,063 4.9 Equity in net income of unconsolidated affiliates (5,063) (0.2) (4,171) (0.1) Net income from continuing operations 429,863 14.1 452,573 15.6 Net loss from discontinued operations, net of taxes (1,090) — — — Net income 428,773 14.1 452,573 15.6 Less: net income attributable to the non-controlling interest 2,308 0.1 2,401 0.1 Net income attributable to ADS $ 426,465 14.0 % $ 450,172 15.5 % Net sales - The following table presents net sales to external customers by reportable segment for the fiscal years ended March 31, 2026 and 2025. (Amounts in thousands) 2026 2025 $ Variance % Variance Stormwater $ 2,397,414 $ 2,326,370 $ 71,044 3.1 % Wastewater 652,962 577,875 75,087 13.0 Total Consolidated $ 3,050,376 $ 2,904,245 $ 146,131 5.0 % Our consolidated net sales for the fiscal year ended March 31, 2026 increased by $146.1 million, or 5.0%, compared to fiscal 2025. The increase in Stormwater sales was primarily driven by NDS net sales of $48.8 million and an increase in demand for our Allied Products in the non-residential construction market. The increase in Wastewater sales was primarily driven by an increase of Orenco net sales of $52.6 million to account for a full year of sales in fiscal 2026 and an increase in demand in the construction market. Cost of goods sold and Gross profit - The following table presents gross profit by reportable segment for the fiscal years ended March 31, 2026 and 2025. (Amounts in thousands) 2026 2025 $ Variance % Variance Stormwater $ 820,710 $ 779,189 $ 41,521 5.3 % Wastewater 346,579 315,441 31,138 9.9 Intersegment eliminations 97 (389) 486 (124.9) Total gross profit $ 1,167,386 $ 1,094,241 $ 73,145 6.7 % Our consolidated Cost of goods sold for the fiscal year ended March 31, 2026 increased by $73.0 million or, 4.0%, and our consolidated Gross profit decreased by $73.1 million, or 6.7%, compared to the same period in fiscal 2025. The increase in gross profit for Stormwater is primarily due to favorable material costs and the acquisition of NDS. The increase in gross profit for Wastewater was driven by Orenco and volume. Table of Contents Advanced Drainage Systems, Inc 30
Selling, general and administrative expenses - The following table presents Selling, general and administrative expenses as a percentage of sales for the fiscal years ended March 31, 2026 and 2025. (Amounts in thousands) 2026 2025 Selling, general and administrative $ 469,549 $ 380,378 % of Net Sales 15.4 % 13.1 % Selling, general and administrative expenses for the fiscal year ended March 31, 2026 increased $89.2 million from the same period in fiscal 2025. The increase in Selling, general and administrative expenses is primarily the result of an increase in transaction costs of $31.5 million due to the acquisition of NDS, incremental operating expenses of NDS and Orenco, unfavorable incentive and stock-based compensation, and realignment expenses of $12.0 million. 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 related to plant closures and asset disposals partially offset by the sale of properties held-for-sale. 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 $6.9 million primarily due to the increase in intangible assets due to the NDS acquisition and the accelerated method of amortization for customer relationships. Interest expense - Interest expense increased $2.1 million for the fiscal year ended March 31, 2026 compared to the same period in fiscal 2025. The increase was primarily due to increased debt levels. Interest income and other, net - Interest income and other, net increased by $10.6 million for the fiscal year ended March 31, 2026 compared to the same period in fiscal 2025. The increase was primarily due to increased cash balances in the fiscal year and unrealized gains related to derivatives. Income tax expense - The following table presents the effective tax rates for the fiscal years presented: 2026 2025 Effective tax rate 24.1 % 23.9 % See “Note 16. Income Taxes” for additional information. Equity in net income of unconsolidated affiliates - The Equity in net income of unconsolidated affiliates increased for the fiscal year ended March 31, 2026 compared to the same period in fiscal 2025 due to the current period income at our South American Joint Venture. Net income attributable to noncontrolling interest - Net income attributable to noncontrolling interest was relatively flat for fiscal year ended March 31, 2026 compared to the same period in fiscal 2025. Net loss from discontinued operations - The loss from discontinued operations was attributable the NDS International entities classified as held for sale as of March 31, 2026. Table of Contents Advanced Drainage Systems, Inc 31
Results of Operations for Fiscal Year Ended March 31, 2025 Compared with Fiscal Year Ended March 31, 2024 The following table summarizes our operating results as a percentage of net sales that have been derived from our Consolidated Financial Statements for the fiscal years ended March 31, 2025 and 2024. We believe this presentation is useful to investors in comparing historical results. (Amounts in thousands) 2025 2024 Net sales $ 2,904,245 100.0 % $ 2,874,473 100.0 % Cost of goods sold 1,810,004 62.3 1,728,524 60.1 Gross profit 1,094,241 37.7 1,145,949 39.9 Selling, general and administrative expenses 380,378 13.1 370,714 12.9 Loss (gain) on disposal of assets and costs from exit and disposal activities 3,858 0.1 (8,365) (0.3) Intangible amortization 52,569 1.8 51,469 1.8 Income from operations 657,436 22.6 732,131 25.5 Interest expense 91,803 3.2 88,862 3.1 Interest income and other, net (23,832) (0.8) (23,484) (0.8) Income before income taxes 589,465 20.3 666,753 23.2 Income tax expense 141,063 4.9 158,998 5.5 Equity in net income of unconsolidated affiliates (4,171) (0.1) (5,536) (0.2) Net income 452,573 15.6 513,291 17.9 Less: net income attributable to the non-controlling interest 2,401 0.1 3,376 0.1 Net income attributable to ADS $ 450,172 15.5 % $ 509,915 17.7 % Net sales - The following table presents net sales to external customers by reportable segment for the fiscal years ended March 31, 2025 and 2024. (Amounts in thousands) 2025 2024 $ Variance % Variance Stormwater $ 2,326,370 $ 2,361,520 $ (35,150) (1.5) % Wastewater 577,875 512,953 64,922 12.7 Total Consolidated $ 2,904,245 $ 2,874,473 $ 29,772 1.0 % Our consolidated net sales for the fiscal year ended March 31, 2025 increased by $29.8 million, or 1.0%, compared to fiscal 2024. The decrease in Net sales for Stormwater was primarily driven by unfavorable price/mix impact partially offset by higher demand in our Allied Products. The increase in Net sales for Wastewater was driven by improved price/mix and $46.4 million of net sales from Orenco. Cost of goods sold and Gross profit - The following table presents gross profit by reportable segment for the fiscal years ended March 31, 2025 and 2024. (Amounts in thousands) 2025 2024 $ Variance % Variance Stormwater $ 779,189 $ 866,343 $ (87,154) (10.1) % Wastewater 315,441 282,810 32,631 11.5 Intersegment eliminations (389) (3,204) 2,815 (87.9) Total gross profit $ 1,094,241 $ 1,145,949 $ (51,708) (4.5) % Our consolidated Cost of goods sold for the fiscal year ended March 31, 2025 increased by $81.5 million or, 4.7%, and our consolidated Gross profit decreased by $51.7 million, or 4.5%, compared to the same period in fiscal 2024. The decrease in gross profit for Stormwater is primarily due to unfavorable material cost and the decrease in Net sales in Pipe. The increase in gross profit for Wastewater was driven by improved pricing, improved material costs and the acquisition of Orenco. Table of Contents Advanced Drainage Systems, Inc 32
Selling, general and administrative expenses - The following table presents Selling, general and administrative expenses as a percentage of sales for the fiscal years ended March 31, 2025 and 2024. (Amounts in thousands) 2025 2024 Selling, general and administrative $ 380,378 $ 370,714 % of Net Sales 13.1 % 12.9 % Selling, general and administrative expenses for the fiscal year ended March 31, 2025 increased $9.7 million from the same period in fiscal 2024. The increase in Selling, general and administrative expenses is primarily the result of the operating and acquisition expenses of Orenco partially offset by favorable incentive and stock-based compensation expense. Loss (gain) on disposal of assets and costs from exit and disposal activities - The change in Loss (gain) on disposal of assets and costs from exit and disposal activities is primarily due to the closure of a plant and other asset disposals in fiscal 2025 compared to a gain on the sale of the assets of Spartan Concrete, Inc. in fiscal 2024, partially offset by the losses on the sale of the Paper Recycling business and disposal of other assets. Intangible amortization - Intangible amortization increased by $1.1 million primarily due to the increase in intangible assets due to the Orenco acquisition. Interest expense - Interest expense increased $2.9 million for the fiscal year ended March 31, 2025 compared to the same period in fiscal 2024. The increase was primarily due to an increase in interest rates. Interest income and other, net - Interest income and other, net increased by $0.3 million for the fiscal year ended March 31, 2025 compared to the same period in fiscal 2024. Income tax expense - The following table presents the effective tax rates for the fiscal years presented: 2025 2024 Effective tax rate 23.9 % 23.8 % The change in the effective tax rate was primarily related to the increase of the income tax benefit related to the stock- based compensation windfall and the increase of income tax expense related to the executive compensation limitation in fiscal year 2025. See “Note 16. Income Taxes” for additional information. Equity in net income of unconsolidated affiliates - The Equity in net income of unconsolidated affiliates decreased for the fiscal year ended March 31, 2025 compared to the same period in fiscal 2024 due to a decrease in the current period income at our South American Joint Venture. Net income attributable to noncontrolling interest - Net income attributable to noncontrolling interest decreased for the fiscal year ended March 31, 2025 due to decreased net income at our ADS Mexicana joint venture. Non-GAAP Financial Measures EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin - EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, non-GAAP financial measures, have been presented in this Annual Report on Form 10-K as supplemental measures of financial performance that are not required by, or presented in accordance with generally accepted accounting principles (“GAAP”) and should not be considered as alternatives to net income as measures of financial performance 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 gains and expenses. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are included in this Annual Report on Form 10-K because they are key metrics used by management and our Board of Directors to assess our financial performance. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin 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 EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. Table of Contents Advanced Drainage Systems, Inc 33
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not GAAP measures of our financial performance and should not be considered as alternatives to net income as measures of financial performance or any other performance measure derived in accordance with GAAP, and it should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin contain certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. In evaluating EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as stock-based compensation expense, derivative fair value adjustments, and foreign currency transaction losses. Management compensates for these limitations by relying on our GAAP results in addition to using EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin on a supplemental basis. Our measure of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. (Amounts in thousands) 2026 2025 2024 Net income from continuing operations $ 429,863 $ 452,573 $ 513,291 Depreciation and amortization 216,261 183,281 154,903 Interest expense 93,869 91,803 88,862 Income tax expense 134,988 141,063 158,998 EBITDA 874,981 868,720 916,054 Restructuring and realignment expense(a) 48,299 — — (Gain) loss on disposal of assets (17,039) 3,858 (8,365) Stock-based compensation expense 32,354 26,581 31,986 Transaction costs (b) 40,805 9,291 3,444 Inventory step up related to acquisition of NDS 12,277 — — Interest income (25,000) (23,485) (22,047) Other adjustments (c) (3,771) 4,263 1,875 Adjusted EBITDA $ 962,906 $ 889,228 $ 922,947 Adjusted EBITDA Margin 31.6 % 30.6 % 32.1 % (a) Includes costs associated with the optimization of the Company’s production, recycling and distribution network, 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. (b) Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions. (c) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, inventory step-up costs, 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 (benefit). Liquidity and Capital Resources Historically we have funded our operations through internally generated cash flow supplemented by debt financings, equity issuance and finance and operating leases. These sources have been sufficient historically to fund our primary liquidity requirements, including working capital, capital expenditures, debt service and dividend payments. From time to time, we may explore additional financing methods and other means to raise capital. There can be no assurance that any additional financing will be available to us on acceptable terms or at all. Free Cash Flow - Free cash flow is a non-GAAP financial measure that comprises cash flow from operations less capital expenditures. Free cash flow is a measure used by management and our Board of Directors to assess our ability to generate cash. Accordingly, free cash flow has been presented in this Annual Report on Form 10-K as a supplemental measure of liquidity that is not required by, or presented in accordance with GAAP, because management believes that free cash flow provides useful information to investors and others in understanding and evaluating our ability to generate cash flow from operations after capital expenditures. Free cash flow is not a GAAP measure of our liquidity and should not be considered as an alternative to cash flow from operating activities as a measure of liquidity or any other liquidity measure derived in Table of Contents Advanced Drainage Systems, Inc 34
accordance with GAAP. Our measure of free cash flow is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. (Amounts in thousands) 2026 2025 2024 Cash flow from operating activities $ 819,054 $ 581,491 $ 717,928 Capital expenditures (249,766) (212,944) (183,812) Free cash flow $ 569,288 $ 368,547 $ 534,116 The following table presents key liquidity metrics utilized by management: (Amounts in thousands) March 31, 2026 Total debt (debt and finance lease obligations) $ 1,771,894 Cash 223,012 Net debt (total debt less cash) 1,548,882 Leverage ratio (Net debt/Adjusted EBITDA) 1.6 The following table summarizes our available liquidity under our Revolving Credit Facility as of March 31, 2026: (Amounts in thousands) March 31, 2026 Revolver capacity $ 750,000 Less: outstanding borrowings — Less: letters of credit 10,132 Revolver available liquidity $ 739,868 As of March 31, 2026, we had $25.7 million in cash that was held by our foreign subsidiaries, of which, $13.1 million was 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. See “Note 16. Income Taxes” for additional discussion of our plans to repatriate earnings from Canada. Working Capital and Cash Flows In fiscal 2026, our cash balance decreased by $235.3 million. Cash outflows from the acquisition of NDS, repayment of the term loan and Senior Notes due 2027, and capital expenditures of $249.8 million were partially offset by cash generated from operations, issuance of the Senior Notes due 2034, proceeds from the new term loan facility, changes in working capital and dispositions of assets. Our decrease of cash in fiscal 2025 was $26.6 million. Cash generated from operations, changes in working capital and dispositions of assets was offset by the acquisition of Orenco, capital expenditures of $212.9 million, $69.9 million in share repurchases and $49.7 million of dividend payments. As of March 31, 2026, we had $962.9 million in liquidity, including $223.0 million of cash and $739.9 million in borrowings available under our Revolving Credit Agreement, excluding $10.1 million 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. Working Capital - Working capital is an indication of liquidity and potential need for short-term funding. We define working capital as current assets less current liabilities. Working capital decreased to $721.4 million as of March 31, 2026, from $926.4 million as of March 31, 2025, primarily due to a decrease in cash due to the acquisition of NDS and capital expenditures, partially offset by cash flow from operations and the incremental working capital of NDS. Operating Cash Flows - During fiscal 2026, 2025 and 2024, cash provided by operating activities was $819.1 million, $581.5 million and $717.9 million, respectively. Cash flow from operating activities for all periods was primarily driven by operating income and changes in working capital. Investing Cash Flows - During fiscal 2026, cash used for investing activities was $1,211.8 million. The cash used for investing cash flows was primarily for the acquisition of NDS and capital expenditures. Capital expenditures increased in Table of Contents Advanced Drainage Systems, Inc 35
fiscal 2026 compared to fiscal 2025. Our capital expenditures in fiscal 2026 were used primarily to support facility expansions, equipment replacements, technology improvement initiatives and our corporate headquarters. During fiscal 2025, cash used for investing activities was $447.9 million. The cash used for investing cash flows was primarily from the acquisition of Orenco and capital expenditures. Capital expenditures increased in fiscal 2025 compared to fiscal 2024. Our capital expenditures in fiscal 2025 were used primarily to support new facilities, facility expansions to increase production capacity and recycling capabilities, manufacturing equipment replacements and upgrades, and technology initiatives to improve customer service. During fiscal 2024, cash used for investing activities was $155.7 million. The cash used for investing cash flows was primarily from capital expenditures offset with the disposition of assets or businesses. Our capital expenditures in fiscal 2024 were used primarily to support new facilities, facility expansions, equipment replacements and technology improvement initiatives. We currently anticipate that we will make capital expenditures of approximately $200 million in fiscal 2027 to focus on growth and productivity through increasing our manufacturing capacity and investing in automation. Such capital expenditures are expected to be financed using funds generated by operations. We had approximately $100 million of open orders through purchase commitments as of March 31, 2026. Financing Cash Flows - During fiscal 2026, cash provided by financing activities was $156.3 million. During fiscal 2026, we received proceeds from the Term Loan Facility (as defined below) and issued 2034 Notes (as defined below) of $600.0 million and $500.0 million, respectively, we repaid the Initial Term Loan Facility (as defined below) and the 2027 Notes (as defined below) of $413.3 million and $350.0 million, respectively. Additionally, we repurchased shares at a cost of $92.0 million and made dividend payments of $56.1 million. During fiscal 2025, cash used in financing activities was $157.7 million. During fiscal 2025, we repurchased shares at a cost of $69.9 million and made dividend payments of $49.7 million. During fiscal 2024, cash used in financing activities was $284.3 million. During fiscal 2024, we repurchased shares at a cost of $207.3 million and made dividend payments of $47.7 million. Debt and Capitalized Lease Obligations See “Note 7. Leases” and “Note 13. Debt” to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for a discussion of the Company’s financing transactions, including the Secured Bank Loans, the Senior Notes and the Company’s finance lease obligations. Financing Transactions Senior Secured Credit Facility - On July 31, 2019, we entered into a credit agreement (the “Base Credit Agreement”) by and among, the Company, as borrower, Barclays Bank PLC, as administrative agent, and several lenders from time to time party thereto. Among other things, the Base Credit Agreement provided for a term loan facility in the initial aggregate principal amount of $1.3 billion (the “Initial Term Loan Facility”) and a revolving credit facility in an initial aggregate amount of up to $350 million (the “Initial Revolving Credit Facility”), which included a sub-limit for a letter of credit sub- facility in the initial aggregate amount of up to $50 million. On September 24, 2019, we entered into a First Amendment (the “First Amendment”) to the Company’s Base Credit Agreement subsequent to the common stock offering and Senior Notes due in 2027. On May 26, 2022, the Company entered into a Second Amendment (the “Second Amendment”) to the Company's Base Credit Agreement with, among others, Barclays Bank PLC, as administrative agent under the Initial Term Loan Facility, and PNC Bank, National Association, as new administrative agent under the Initial Revolving Credit Facility. Among other things, the Second Amendment (i) amended the Base Credit Agreement by increasing the Initial Revolving Credit Facility (the “Second Amended Revolving Credit Facility”) from $350.0 million to $600.0 million (including an increase of the sub-limit for the swing-line sub-facility from $50.0 million to $60.0 million) and extended the maturity date of the Revolving Credit Facility to the earlier of May 26, 2027 or the date that is six months prior to the earliest maturity date of the outstanding loans under the Initial Term Loan Facility. On November 26, 2025, the Company entered into a Third Amendment (the “Third Amendment”) to the Company’s Base Credit Agreement. Among other things, the Third Amendment modified the termination date of the Second Amended Table of Contents Advanced Drainage Systems, Inc 36
Revolving Credit Facility to remove reference to the earliest maturity date of the loans outstanding under the Initial Term Loan Facility. On February 27, 2026, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Company’s Base Credit Agreement (the Base Credit Agreement as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, the “Credit Agreement”) with, among others, certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent under the Term Loan Facility (as defined below) and PNC Bank, National Association, as administrative agent under the Revolving Credit Facility (as defined below) and as successor administrative agent, Barclays Bank PLC, as predecessor administrative agent, and the several financial institutions from time to time party thereto as lenders. Among other things, the Fourth Amendment (i) increased the Amended Revolving Credit Facility from $600 million to $750 million (the “Revolving Credit Facility”), including an increase of the sub-limit for the letter of credit sub-facility from $60 million to $75 million, (ii) refinanced the outstanding amounts owing under the Initial Term Loan Facility by providing for a new term loan facility in the initial aggregate principal amount of $600 million (the “Term Loan Facility”), (iii) extended the maturity date of the Revolving Credit Facility to February 27, 2031, (iv) extended the maturity date of the Term Credit Facility to February 28, 2033, (v) revised the “applicable margin” to provide for a range of 125 basis points to 225 basis points (for Term Benchmark based loans) and 25 basis points to 125 basis points (for base rate loans), as determined based on the consolidated senior secured net leverage ratio ranging from less than 1.50 to 1.00 to greater than or equal to 3.50 to 1.00, (vi) provides for incremental facilities in the aggregate maximum amount of the greater of $350 million or 100% of consolidated EBITDA for the most recently ended four consecutive fiscal quarters, and (vii) amended certain covenant baskets under the Credit Agreement to align with the growth of the Company. At the option of the Company, borrowings under the Term Loan Facility and under the Revolving Credit Facility (subject to certain limitations) bear interest at either a base rate (as determined pursuant to the Fourth Amendment) or at a Term Benchmark rate (as defined in the Fourth Amendment), plus the applicable margin as set forth therein from time to time. In the case of the Revolving Credit Facility, the applicable margin is based on the Company's consolidated senior secured net leverage ratio (as defined in the Fourth Amendment). All borrowings under the Term Loan Facility as described above initially bear interest at the Term Benchmark rate (as defined in the Fourth Amendment). In the case of the Term Loan Facility, the applicable margin shall be, for loans bearing interest at the Term Benchmark rate, 1.625%, and for loans bearing interest at the base rate, 0.625%. The Company is also required to pay a commitment fee that is based upon the undrawn amounts of the Revolving Credit Facility at a rate per annum based upon a calculated ratio as prescribed within the Credit Agreement. As of March 31, 2026, the rate the Company was committed to paying on the undrawn portion was equal to 0.15%. The Company’s obligations under the Credit Agreement have been secured by granting a first priority lien on substantially all of the Company’s assets (subject to certain exceptions and limitations), and each of StormTech, LLC, Infiltrator Water Technologies, LLC, and Orenco Systems, Inc. (collectively the “Guarantors”) has agreed to guarantee the obligations of the Company under the Credit Agreement and to secure the obligations thereunder by granting a first priority lien in substantially all of such Guarantor's assets (subject to certain exceptions and limitations). Issuance of Senior Notes due 2027 - On September 23, 2019, we issued $350.0 million aggregate principal amount of senior notes (“2027 Notes”), pursuant to the Indenture dated September 23, 2019 (the “2027 Indenture”), among the Company, the guarantors party thereto (the “Guarantors”) and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association), as Trustee (the “Trustee”). The 2027 Notes were offered and sold either to persons reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act or to persons outside the United States under Regulation S of the Securities Act. We may redeem the 2027 Notes, in whole or in part, at any time on or after September 30, 2022 at established redemption prices set forth in the 2027 Indenture. On February 27, 2026, we redeemed all of our outstanding 2027 Notes in the original aggregate principal amount of $350.0 million at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, to, but excluding, the redemption date in connection with our issuance of $500.0 million aggregate principal amount of 5.375% senior notes due 2034 (the “2034 Notes”). See “Note 13. Debt” for further information on the 2027 Notes and 2034 Notes. Equipment Financing - In November 2021, we purchased material handling equipment, trucks and trailers previously leased under a master lease agreement and classified as finance leases. The purchase was funded with debt through the Master Lease Agreement and Interim Funding Schedule with Fifth Third. The assets acquired are titled to the Company and included in Property, plant and equipment, net on our Consolidated Balance Sheet. The equipment financing has a balance of $3.1 million and had an initial term of between 12 and 84 months, based on the life of the equipment. The equipment financing bears a weighted average interest of 1.8% as of March 31, 2026. Issuance of Senior Notes Due 2030 - On June 9, 2022, we issued $500.0 million aggregate principal amount of 6.375% its senior notes (the “2030 Notes”) pursuant to an Indenture, dated June 9, 2022 (the “2030 Indenture”), among the Company, Table of Contents Advanced Drainage Systems, Inc 37
the Guarantors and the Trustee. The 2030 Notes were offered and sold either to persons reasonably believed to be “qualified institutional buyers” pursuant to the Securities Act or to persons outside the United States under Regulation S of the Securities Act. See “Note 13. Debt” for further information on the 2030 Notes. Issuance of Senior Notes Due 2034 - On February 27, 2026, we issued $500.0 million aggregate principal amount of 5.375% senior notes due 2034 pursuant to an Indenture, dated February 27, 2026 (the “2034 Indenture”), among the Company, the Guarantors and the Trustee. The 2034 Notes were offered and sold either to persons reasonably believed to be “qualified institutional buyers” pursuant to the Securities Act or to persons outside the United States under Regulation S of the Securities Act. See “Note 13. Debt” for further information on the 2034 Notes. Covenant Compliance The Credit Agreement requires, if, on the last day of each fiscal quarter, the aggregate amount of outstanding exposure under the Revolving Credit Facility exceeds 35% of the aggregate maximum amount of commitments under the Revolving Credit Facility then in effect, the Company is to maintain a consolidated senior secured net leverage ratio not to exceed 4.25 to 1.00 for any four consecutive fiscal quarter periods. The Credit Agreement also includes other covenants, including negative covenants that, subject to certain exceptions, limit the Company's and its restricted subsidiaries’ (as defined in the Credit Agreement) ability to, among other things: (i) incur additional debt, including guarantees; (ii) create liens upon any of their property; (iii) enter into any merger, consolidation or amalgamation, liquidate, wind up or dissolve, or dispose of all or substantially all of their property or business; (iv) dispose of assets; (v) pay subordinated debt; (vi) make certain investments; (vii) enter into swap agreements; (viii) engage in transactions with affiliates; (ix) engage in new lines of business; (x) modify certain material contractual obligations, organizational documents, accounting policies or fiscal year; or (xi) create or permit restrictions on the ability of any subsidiary of any Loan Party (as defined in the Credit Agreement) to pay dividends or make distributions to the Company or any of its subsidiaries. The Credit Agreement also contains customary provisions requiring the following mandatory prepayments (subject to certain exceptions and limitations): (i) annual prepayments (beginning with the fiscal year ending March 31, 2027) with a percentage of excess cash flow (as defined in the Credit Agreement); (ii) 100% of the net cash proceeds from any non- ordinary course sale of assets and certain casualty or condemnation events; and (iii) 100% of the net cash proceeds of indebtedness not permitted to be incurred under the Credit Agreement. For further information, see “Note 13. Debt” to the Consolidated Financial Statements. We were in compliance with our debt covenants as of March 31, 2026. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements, with the exception of the guarantee of 50% of certain debt of our unconsolidated South American Joint Venture, as further discussed in “Note 12. Related Party Transactions” of our Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data,” of this Form 10-K. Our maximum potential obligation under this guarantee totals $5.5 million as of March 31, 2026. The maximum borrowing permitted under the South American Joint Venture’s credit agreement is $11.0 million. As of March 31, 2026, our South American Joint Venture had no outstanding debt subject to our guarantee. We do not believe that this guarantee will have a current or future effect on our financial condition, results of operations, liquidity, or capital resources. Critical Accounting Policies and Estimates Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of the consolidated financial statements requires management to make estimates and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes. Certain of our accounting policies involve a higher degree of judgment and complexity in their application, and therefore, represent the critical accounting policies used in the preparation of our financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. We believe the following accounting policies may involve a higher degree of judgment and complexity in their application and represent the critical accounting policies used in the preparation of our financial statements. For additional discussion of our significant accounting policies, see “Note 1. Background and Summary of Significant Accounting Policies” to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” included in this Form 10-K. Table of Contents Advanced Drainage Systems, Inc 38
Policy Judgments and Estimates Effect if Actual Results Differ from Assumptions Revenue Recognition - We generate revenue by selling pipe and related water management products primarily to distributors, retailers, buying groups and co-operative buying groups. Products are shipped predominately by our internal fleet, and we do not provide any additional revenue generating services after product delivery. Payment terms and conditions vary by contract. Revenue is recognized at the point in-time obligations under the terms of a contract with a customer are satisfied, which generally occurs upon the transfer of control of the promised goods. In substantially all of our contracts with customers, control is transferred to the customer upon delivery. We recognize revenue in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We estimate and allocate variable consideration, such as right of return, credits or incentives, based on numerous factors, including the customer agreements and past transaction history. If our historical experience differs from future experience, our estimates of variable consideration could differ. Goodwill - Goodwill is reviewed annually for impairment in the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The fair value of goodwill is determined by considering both the income and market approach. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. In Fiscal 2026, we revised our reportable segments and allocated the goodwill balance on the former Pipe, Infiltrator, International and Allied Products reporting units to our revised reporting units. Based on the revision as of March 31, 2026, the goodwill related to Stormwater and Wastewater reportable segments is $442.6 million and $600.1 million, respectively. Estimates and assumptions include: revenue growth rates and EBITDA used to calculate projected future cash flows, risk- adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. The fair value estimates are based on assumptions management believes to be reasonable but are inherently uncertain. We performed our annual impairment test for goodwill for all reporting units in the fourth quarter of Fiscal 2026 using a quantitative approach. We determined for our goodwill that the fair value of the assets exceeded the carrying value for the fiscal year March 31, 2026. Future events and unanticipated changes to assumptions could require a provision for impairment in a future period. Table of Contents Advanced Drainage Systems, Inc 39
Policy Judgments and Estimates Effect if Actual Results Differ from Assumptions Definite-lived intangible assets - Definite-lived intangible assets are tested for recoverability whenever events or changes in circumstances indicate that carrying amounts of the asset group may not be recoverable. Asset groups are established primarily by determining the lowest level of cash flows available. If the estimated undiscounted future cash flows are less than the carrying amounts of such assets, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. Indefinite-lived intangible assets - Indefinite-lived intangible assets are tested for impairment annually as of March 31 or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. Determining the fair value of these assets is judgmental in nature and involves the use of significant estimates and assumptions. We base our fair value estimates on assumptions we believe to be reasonable, but that are inherently uncertain. To estimate the fair value of these indefinite-lived intangible assets, we use an income approach, which utilizes a market derived rate of return to discount anticipated performance. An impairment loss is recognized when the estimated fair value of the intangible asset is less than the carrying value. Determining the fair value of the definite-lived and indefinite-lived intangible assets is judgmental in nature and involves the use of significant estimates and assumptions. We did not record any impairment charges for definite-lived intangible assets in fiscal 2026, 2025, or 2024. We performed our annual impairment test for indefinite-lived intangible assets as of March 31, 2026. We performed a qualitative impairment analysis and determined for our indefinite-lived intangible assets that it was more likely than not that the fair value of the assets exceeded carrying value for fiscal years ended March 31, 2026. Future events and unanticipated changes to assumptions could require a provision for impairment in a future period. Table of Contents Advanced Drainage Systems, Inc 40
Policy Judgments and Estimates Effect if Actual Results Differ from Assumptions Business Combinations - Acquisitions, such as the acquisition of NDS, are accounted for in accordance with ASC 805, Business Combinations. We recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values and goodwill is defined as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. During the measurement period, which may take up to one year from the acquisition date, adjustments due to changes in the estimated fair value of assets acquired and liabilities assumed may be recorded as adjustments to the consideration transferred and related allocations. Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any such adjustments are charged to the consolidated statements of operations. Fair values allocated to assets acquired and liabilities assumed in business combinations require management to make significant judgments, estimates, and assumptions, especially with respect to intangible assets. Management makes estimates of fair values based upon assumptions it believes to be reasonable. These estimates are based upon historical experience, information obtained from the management of the acquired company, comparable transactions, and market and industry considerations and these estimates are inherently uncertain. The estimated fair values related to intangible assets primarily consist of customer relationships, patents and developed technology, and tradenames and trademarks. Estimates in the discounted cash flow models include, but are not limited to, certain assumptions that form the basis of the forecasted results (e.g. revenue growth rates, discount rate, royalty, customer attrition rates and EBITDA). These significant assumptions are forward looking and could be affected by future economic and market conditions. Customer Relationships - In addition to revenue growth rates, EBITDA and discount rate, a key input for customer relationships is the customer attrition rate. A higher than expected customer attrition rate could result in an impairment charge. Tradenames - The most significant driver is revenue growth rates, discount rate and royalty rate. If revenue growth rates are lower than expected, it could result in an impairment charge. Developed Technology – In addition to revenue growth rates, discount rate, royalty rate and an obsolescence factor, the timing of obsolescence of the acquired technology could result in a shorter useful life than originally determined and an acceleration of amortization expense. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see “Note 1. Background and Summary of Significant Accounting Policies” to our consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data.” Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are subject to various market risks, primarily related to changes in interest rates, credit risk, raw material supply prices, and, to a lesser extent, foreign currency exchange rates. Our financial position, results of operations or cash flows may be negatively impacted in the event of adverse movements in the respective market rates or prices in each of these risk categories. Our exposure in each category is limited to those risks that arise in the normal course of business. Interest Rate Risk - We are subject to interest rate risk associated with our debt. Changes in interest rates impact the fair value of our fixed-rate debt, but there is no impact to earnings and cash flow. Alternatively, changes in interest rates do not affect the fair value of our variable-rate debt, but they do affect future earnings and cash flow. The Revolving Credit Facility and Term Note bear interest at variable rates, either SOFR or the Prime Rate, at our option, plus applicable pricing margins. A 1.0% increase in interest rates on our variable-rate debt would increase our annual forecasted interest expense by approximately $6.0 million based on our borrowings as of March 31, 2026. Assuming the Revolving Credit Facility is fully drawn, each 1.0% increase or decrease in the applicable interest rate would change our interest expense by approximately $13.5 million, for the year ended March 31, 2026. Credit Risk - Financial instruments that potentially subject us to a concentration of credit risk consist principally of accounts receivable. We provide our products to customers based on an evaluation of the customers’ financial condition, generally without requiring collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. We monitor the exposure for credit losses and maintain allowances for anticipated losses. Concentrations of credit risk with respect to our accounts receivable are limited due to the large number of customers comprising our customer base and their dispersion among many different geographies and end markets. Raw Material and Commodity Price Risk - Our primary raw materials used in the production of our products are HDPE and PP resins. As these resins are hydrocarbon-based materials, changes in the price of feedstocks, such as crude oil Table of Contents Advanced Drainage Systems, Inc 41
derivatives and natural gas liquids, as well as changes in the market supply and demand may cause the cost of these resins to fluctuate significantly. We have supply agreements with our major resin suppliers that provide multi-year terms and volumes that are in excess of our projected consumption. These supply agreements generally do not contain fixed prices, exposing us to pricing risk. Given the significance of these costs and the inherent volatility in supplier pricing, our ability to reflect these changes in the cost of resins in our product selling prices in an efficient manner contributes to the management of our overall risk and the potential impact on our results of operations. A 1% increase in the price of resin would increase our cost of goods sold by approximately $4.3 million. Inflation Risk - Our cost of goods sold is subject to inflationary pressures and price fluctuations of the raw materials we use, primarily HDPE and PP resins. Historically, we have generally been able, over time, to recover the effects of inflation and price fluctuations through sales price increases and production efficiencies related to technological enhancements and improvements. However, we cannot reasonably estimate our ability to successfully recover any price increases. Foreign Currency Exchange Rate Risk - We have operations outside of the United States, which primarily use the respective local currency as their functional currency. Each of these operations may enter into contractual arrangements with customers or vendors that are denominated in currencies other than its respective functional currency. Consequently, our results of operations may be affected by exposure to changes in foreign currency exchange rates and economic conditions in the regions in which we sell or distribute our products. Exposure to variability in foreign currency exchange rates from these transactions is managed, to the extent possible, by natural hedges which result from purchases and sales occurring in the same foreign currency within a similar period of time, thereby potentially offsetting each other. In addition to the foreign currency transaction-related gains and losses that are reflected within the results of operations, we are subject to foreign currency translation risk, as the financial statements for our foreign subsidiaries are measured and recorded in the respective subsidiary’s functional currency and translated into U.S. dollars for financial reporting purposes. Item 8. Financial Statements and Supplementary Data The Report of Independent Registered Public Accounting Firm, Consolidated Financial Statements and supplementary financial data required for this Item are set forth on pages F-1 through F-36 of this Annual Report on Form 10-K and are incorporated herein by reference. Our independent registered public accounting firm is Deloitte & Touche LLP, Columbus, Ohio, Public Company Accounting Oversight Board ID Number: 34. Item 9. Changes in and Disagreements with Accountant on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of March 31, 2026. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified under Securities Exchange Commission (“SEC”) rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2026. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2026. In making this assessment, management used the criteria set Table of Contents Advanced Drainage Systems, Inc 42
forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (2013). A material weakness in internal controls is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Because of its inherent limitations, even appropriate internal control over financial reporting may not prevent or detect misstatements. Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of March 31, 2026. We have excluded from the scope of our assessment of internal control over financial reporting the operations and related assets of NDS which we acquired on February 2, 2026. This exclusion is in accordance with SEC guidance that an assessment of a recently acquired business's internal control over financial reporting may be omitted from management's report on internal control over financial reporting in the year of acquisition. At March 31, 2026 and for the period from acquisition through March 31, 2026, total assets, total revenues, and net income subject to NDS’ internal control over financial reporting represented 23%, 2%, and (1%) of consolidated total assets, net sales, and net income, respectively of ADS as of and for the year ended March 31, 2026. Deloitte & Touche LLP, our independent registered public accounting firm, has issued an audit report on the effectiveness of our internal control over financial reporting as of March 31, 2026 and this report is included herein. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a15(d) or 15d-15(d) of the Exchange Act during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information During the three months ended March 31, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. Table of Contents Advanced Drainage Systems, Inc 43
PART III Item 10. Directors, Executive Officers and Corporate Governance The information contained under the captions “CERTAIN INFORMATION REGARDING OUR EXECUTIVE OFFICERS,” “2026 NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS,” “DELINQUENT SECTION 16(A) REPORTS,” “CODES OF BUSINESS CONDUCT AND ETHICS,” “OTHER EXECUTIVE COMPENSATION POLICIES AND PRACTICES - Insider Trading Policy” and “COMMITTEES OF THE BOARD - AUDIT COMMITTEE” in our definitive Proxy Statement for the 2026 Annual Meeting of Shareholders, to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act (the “Proxy Statement”), is incorporated herein by reference. Item 11. Executive Compensation The information contained under the captions “DIRECTOR COMPENSATION,” “COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT,” “COMPENSATION DISCUSSION AND ANALYSIS” and “COMPENSATION OUTCOMES FOR 2026” in the Proxy Statement is incorporated herein by reference. Notwithstanding the foregoing, the information contained in the Proxy Statement under the caption “COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT” shall be deemed furnished, and not filed, in this Report on Form 10-K and shall not be deemed incorporated by reference into any filing we make under the Securities Act of 1933, as amended, or the Exchange Act. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information contained under the caption “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” and “EQUITY COMPENSATION PLAN INFORMATION” in the Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information contained under the captions “CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS” and “BOARD INDEPENDENCE” in the Proxy Statement is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information contained under the caption “OTHER INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM INFORMATION - FEES” in the Proxy Statement is incorporated herein by reference. Table of Contents Advanced Drainage Systems, Inc 44
PART IV Item 15. Exhibits and Financial Statement Schedules 1. Financial Statements. See “Table of Contents” on page 50. 2. Financial Statement Schedules. Schedule II - Consolidated Valuation and Qualifying Accounts. Other schedules are omitted because they are not required or applicable, or the required information is included in our consolidated financial statements or related notes. 3. Exhibits. See “Index to Exhibits.” INDEX TO EXHIBITS 2.1 Master Share Purchase Agreement between NORMA Group SE and Advanced Drainage Systems, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on September 23, 2025). 3.1 Amended and Restated Certificate of Incorporation of Advanced Drainage Systems, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on July 30, 2014). 3.1A Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on July 24, 2020). 3.2 Second Amended and Restated Bylaws of Advanced Drainage Systems, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on July 30, 2014). 3.2A First Amendment to Second Amended and Restated Bylaws of Advanced Drainage Systems, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on July 24, 2020). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on July 14, 2014). 4.2 Registration Rights Agreement, dated as of July 30, 2014, by and among Advanced Drainage Systems, Inc. and the stockholders from time to time party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on July 30, 2014). 4.3 Description of Registrant's Securities. 4.4 Indenture, dated September 23, 2019, among Advanced Drainage Systems, Inc., each of the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on September 23, 2019). 4.5 Form of 5.000% Senior Notes due 2027 (included with Indenture, dated September 23, 2019, among Advanced Drainage Systems, Inc., each of the guarantors party thereto and U.S. Bank National Association, as trustee) (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on September 23, 2019). 4.6 First Supplemental Indenture, dated March 31, 2021 among Advanced Drainage Systems, Inc., each of the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K (File No. 001-36557) filed with the Securities and Exchange Commission on May 27, 2021). 4.7 Shareholder Agreement, dated as of August 19, 2021, by and between Advanced Drainage Systems, Inc. and Canada Pension Plan Investment Board (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on August 20, 2021). 4.8 Registration Rights Agreement, dated as of August 19, 2021, by and between Advanced Drainage Systems, Inc. and Canada Pension Plan Investment Board (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on August 20, 2021). 4.9 Indenture, dated June 9, 2022, among Advanced Drainage Systems, Inc., each of the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities Exchange Commission on June 9, 2022). 4.10 Form of 6.375% Senior Note due 2030 (included with Indenture, dated June 9, 2022, among Advanced Drainage Systems, Inc., each of the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee) (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities Exchange Commission on June 9, 2022). Exhibit Number Description Table of Contents Advanced Drainage Systems, Inc 45
4.11 Indenture, dated February 27, 2026, among Advanced Drainage Systems, Inc., each of the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2026). 4.12 Form of 5.375% Senior Note Due 2034(incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2026). 10.1 Credit Agreement, dated as of July 31, 2019, by and among Advanced Drainage Systems, Inc., Barclays Bank PLC, as administrative agent, the several lenders from time to time party thereto, Barclays Bank PLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers, joint bookrunners, syndication agents and documentation agents (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on August 1, 2019). 10.1A First Amendment to Credit Agreement, by and among the Advanced Drainage Systems, Inc., the banks and other financial institutions or entities parties thereto, constituting all the Lenders under the Credit Agreement, the Issuing Lenders party thereto and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on September 30, 2019). 10.1B Second Amendment to Credit Agreement, by and among the Advanced Drainage Systems, Inc., the banks and other financial institutions or entities parties thereto, constituting the Required Lenders under the Credit Agreement and all the Revolving Lenders under the Credit Agreement, the Issuing Lenders party thereto, Barclays Bank PLC, as administrative agent under the Term Loan Facility and PNC Bank, National Association, as administrative agent under the Revolving Facility (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities Exchange Commission on May 27, 2022). 10.1C Third Amendment to Credit Agreement, by and among the Advanced Drainage Systems, Inc., the banks and other financial institutions or entities parties thereto, constituting the Required Lenders under the Credit Agreement and all the Revolving Lenders under the Credit Agreement, the Issuing Lenders party thereto, Barclays Bank PLC, as administrative agent under the Term Loan Facility and PNC Bank, National Association, as administrative agent under the Revolving Facility (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 5, 2026). 10.1D Fourth Amendment to Credit Agreement, by and among the Advanced Drainage Systems, Inc., the banks and other financial institutions or entities parties thereto, constituting at least the Required Lenders under the Credit Agreement, the Issuing Lenders party thereto, Bank of America, N.A., as administrative agent under the Term Facility, Barclays Bank PLC, as Predecessor Administrative Agent and PNC Bank, National Association, as administrative agent under the Revolving Facility and as Successor Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 27, 2026). 10.2 Advanced Drainage Systems, Inc. Guarantee and Collateral Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on August 1, 2019). 10.3† Advanced Drainage Systems, Inc. 2013 Stock Option Plan (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on June 20, 2014). 10.3A† First Amendment to 2013 Stock Option Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36557) filed with the Securities and Exchange Commission on August 15, 2014). 10.3B† Form of Amendment to Pre-2017 Stock Option Agreements (incorporated by reference to Exhibit 10.11B of Form 10-K filed May 10, 2017). 10.4† Executive Employment Agreement, dated as of September 1, 2017, by and between Advanced Drainage Systems, Inc. and D. Scott Barbour (incorporated by reference to Exhibit 10.3 to Form 8-K filed August 17, 2017). 10.5† Amended and Restated Executive Employment Agreement, dated as of June 20, 2014, by and between Advanced Drainage Systems, Inc. and Robert M. Klein (incorporated by reference to Exhibit 10.16 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on June 20, 2014). 10.6† Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on June 6, 2014). 10.7† Form of Non-Qualified Stock Option Agreement (other than for Joseph A. Chlapaty) pursuant to 2013 Stock Option Plan (incorporated by reference to Exhibit 10.19 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on June 20, 2014). 10.8† Form of Director Stock Agreement (incorporated by reference to Exhibit 10.21 to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on July 2, 2014). 10.9 Participation Agreement, dated as of July 17, 2000, by and between ADS Worldwide, Inc., Grupo Altima S.A. de C.V., and ADS Mexicana, S.A. de C.V. (formerly known as Sistemas Ecologicos de Drenaje, S.A. de C.V.), as amended on April 19, 2010, May 19, 2011, May 24, 2011, April 26, 2013 and January 31, 2014 (incorporated by reference to Exhibit 10.22 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on June 6, 2014). Exhibit Number Description Table of Contents Advanced Drainage Systems, Inc 46
10.10 Interestholders Agreement, dated as of June 5, 2009, by and among Tubos y Plasticos ADS Chile Limitada, Tigre Chile S.A., and Tuberias T-A Limitada, joined by Advanced Drainage Systems, Inc. and Tigre S.A. — Tubos e Conexoes, as amended on July 31, 2009, October 2009, December 15, 2009, May 18, 2010, August 10, 2010, April 1, 2011 and January 25, 2012, with First Addendum to Interestholders Agreement, dated as of June 27, 2011 (incorporated by reference to Exhibit 10.23 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-194980) filed with the Securities and Exchange Commission on June 20, 2014). 10.10A Second Addendum to Interestholders Agreement, dated as of December 1, 2013 but entered into on September 30, 2014, by and among Tubos y Plasticos ADS Chile Limitada, Tigre Chile S.A., Tuberias Tigre-ADS Limitada, Advanced Drainage Systems, Inc. and Tigre S.A. — Tubos e Conexoes (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36557) filed with the Securities and Exchange Commission on November 10, 2014). 10.11† Executive Employment Agreement dated November 9, 2015, by and between the Company and Scott A. Cottrill (incorporated by reference to Exhibit 10.1 to Form 8-K filed November 9, 2015). 10.12 Form of Non-Qualified Stock Option Agreement pursuant to 2013 Stock Option Plan (incorporated by reference to Exhibit 10.5 to Form 8-K filed February 10, 2017). 10.13 Advanced Drainage Systems, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, File No. 001-36557, filed on September 8, 2017). 10.13A First Amendment to Advanced Drainage Systems, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Annex A to the Registrant’s 2021 Proxy Statement (File No. 001-36557) filed with the Securities and Exchange Commission on June 9, 2021). 10.14 Form of Restricted Stock Award Notice and Award Agreement pursuant to 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, File No. 001-36557, filed on September 8, 2017). 10.15 Form of Notice of Grant of Stock Options and Stock Option Award Agreement pursuant to 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K, File No. 001-36557, filed on September 8, 2017). 10.16 Form of Director Restricted Stock Award Notice and Award Agreement pursuant to 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q, File No. 001-36557, filed on November 6, 2017). 10.17 Form of Performance Unit Award Agreement pursuant to 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 of Form 8-K, filed on May 30, 2018). 10.18 Confidentiality Agreement by and between the Company and Joseph A. Chlapaty (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K, File No. 001-36557, filed on August 17, 2017). 10.19† Executive Employment Agreement, dated as of November 10, 2016, by and between Advanced Drainage Systems, Inc. and Kevin C. Talley (incorporated by reference to Exhibit 10.36 of Form 10-K, filed on May 30, 2019). 10.20† Advanced Drainage Systems, Inc. Employee Stock Ownership Plan, as amended May 30, 2019 (incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36557) filed with the Securities and Exchange Commission on August 1, 2019. 10.21† Executive Employment Agreement, dated as of August 17, 2018, by and between Advanced Drainage Systems, Inc. and Darin S. Harvey (incorporated by reference to Exhibit 10.34 of Form 10-K, (File No. 001-36557) filed with the Securities and Exchange Commission on May 19, 2022). 10.22† Advanced Drainage Systems, Inc. Employee Stock Purchase Plan (incorporated by reference to Annex A to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-36557) filed with the Commission on June 9, 2022). 10.23† Executive Employment Agreement, dated as of September 1, 2020, by and between Advanced Drainage Systems, Inc. and Michael Huebert (incorporated by reference to Exhibit 10.26 of Form 10-K, (File No. 001-36557) filed with the Securities and Exchange Commission on May 16, 2024). 10.24† Executive Employment Agreement, dated as of June 1, 2023, by and between Advanced Drainage Systems, Inc. and Craig Taylor (incorporated by reference to Exhibit 10.26 of Form 10-K, (File No. 001-36557) filed with the Securities and Exchange Commission on May 15, 2025). 10.25† Executive Employment Agreement, dated as of June 15, 2020, by and between Advanced Drainage Systems, Inc. and Thomas Waun # 10.26 Form of Restricted Stock Award Notice and Award Agreement (with retirement provisions) pursuant to 2017 Omnibus Incentive Plan.# 10.27 Form of Notice of Grant of Stock Options and Stock Option Award Agreement (with retirement provisions) pursuant to 2017 Omnibus Incentive Plan.# 10.28 Form of Performance Unit Award Agreement (with retirement provisions) pursuant to 2017 Omnibus Incentive Plan.# 10.29 Form of Restricted Stock Award Notice and Award Agreement (Canada) pursuant to 2017 Omnibus Incentive Plan.# Exhibit Number Description Table of Contents Advanced Drainage Systems, Inc 47
10.30 Form of Notice of Grant of Stock Options and Stock Option Award Agreement (Canada) pursuant to 2017 Omnibus Incentive Plan.# 10.31 Form of Performance Unit Award Agreement (Canada) pursuant to 2017 Omnibus Incentive Plan.# 19.1 Advanced Drainage Systems, Inc. Policy Regarding Insider Trading, Tipping and Other Wrongful Disclosures (incorporated by reference to Exhibit 19.1 of Form 10-K, (File No. 001-36557) filed with the Securities and Exchange Commission on May 16, 2024). 21.1 List of Subsidiaries. # 23.1 Consent of Deloitte & Touche LLP. # 24.1 Power of Attorney. # 31.1 Certification of President and Chief Executive Officer of Advanced Drainage Systems, Inc. pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. # 31.2 Certification of Executive Vice President and Chief Financial Officer of Advanced Drainage Systems, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. # 32.1 Certification of Principal Executive Officer of Advanced Drainage Systems, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. # 32.2 Certification of Principal Financial Officer of Advanced Drainage Systems, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. # 97.1 Advanced Drainage Systems, Inc. Policy Regarding Recoupment of Incentive-Based Compensation Upon Restatement or Misstatement of Financial Results, or as Required by Law (incorporated by reference to Exhibit 97.1 of Form 10-K, (File No. 001-36557) filed with the Securities and Exchange Commission on May 16, 2024). 101.INS XBRL Instance Document. # 101.SCH XBRL Taxonomy Extension Schema. # 101.CAL XBRL Taxonomy Extension Calculation Linkbase. # 101.DEF XBRL Taxonomy Extension Definition Linkbase. # 101.LAB XBRL Taxonomy Extension Label Linkbase. # 101.PRE XBRL Taxonomy Extension Presentation Linkbase. # 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) Exhibit Number Description † Management contract or compensatory plan. # Filed herewith. Item 16. Form 10-K Summary None. Table of Contents Advanced Drainage Systems, Inc 48
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 21, 2026 ADVANCED DRAINAGE SYSTEMS, INC. By: /s/ D. Scott Barbour Name: D. Scott Barbour Title: President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in their indicated capacities, on May 21, 2026. Signature Title /s/ D. Scott Barbour Director, President and Chief Executive Officer (Principal Executive Officer)D. Scott Barbour /s/ Scott A. Cottrill Executive Vice President, Chief Financial Officer and Secretary (Principal Financial Officer)Scott A. Cottrill /s/ Tim A. Makowski Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) Tim A. Makowski /s/ Robert M. Eversole** Chairman of the Board of Directors and Director Robert M. Eversole /s/ Anesa T. Chaibi ** Director Anesa T. Chaibi /s/ Michael B. Coleman ** Director Michael B. Coleman /s/ Alexander R. Fischer** Director Alexander R. Fischer /s/ Tanya Fratto** Director Tanya Fratto /s/ Kelly S. Gast** Director Kelly S. Gast /s/ M.A. (Mark) Haney** Director M.A. (Mark) Haney /s/ Luther C. Kissam IV** Director Luther C. Kissam IV /s/ Manuel J. Perez de la Mesa** Director Manuel J. Perez de la Mesa /s/ Anil Seetharam** Director Anil Seetharam ** The undersigned, by signing his name hereto, does hereby sign this report on behalf of each of the above-indicated directors of the registrant pursuant to powers of attorney executed by such directors. By: /s/ Scott A. Cottrill Scott A. Cottrill, Attorney-in-fact Table of Contents Advanced Drainage Systems, Inc 49
TABLE OF CONTENTS Page Audited Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of March 31, 2026 and 2025 F-4 Consolidated Statements of Operations for the fiscal years ended March 31, 2026, 2025 and 2024 F-5 Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2026, 2025 and 2024 F-6 Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2026, 2025 and 2024 F-7 Consolidated Statements of Stockholders’ Equity and Mezzanine Equity for the fiscal years ended March 31, 2026, 2025 and 2024 F-8 Notes to Consolidated Financial Statements F-10 Schedule II, Consolidated Valuation and Qualifying Accounts for the fiscal years ended March 31, 2026, 2025 and 2024 F-43 Table of Contents Advanced Drainage Systems, Inc 50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Advanced Drainage Systems Inc., Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Advanced Drainage Systems, Inc. and subsidiaries (the “Company”) as of March 31, 2026 and 2025, the related consolidated statements of operations, comprehensive income (loss), stockholder's equity and mezzanine equity and cash flows, for each of the three years in the period ended March 31, 2026, and the related notes and schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 21, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Acquisition of NDS – Valuation of Customer Relationships Intangible Asset – Refer to Note 4 to the financial statements. Critical Audit Matter Description The Company completed the acquisition of the water management business of Norma Group SE, known as National Diversified Sales (“NDS”) on February 2, 2026. The preliminary fair value of consideration transferred was approximately $972.5 million, which represented the purchase price $984.9 million, net of cash acquired of $3.2 million and cash included in held for sale of $9.2 million. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including customer relationships intangible asset of approximately $419.0 million. The fair value determination of the customer relationships intangible asset required management to make significant estimates and assumptions related to revenue growth rates and forecasts of future cash flows (together, the “forecasts”) and the selection of appropriate customer attrition and discount rates. We identified the valuation of the customer relationships intangible asset as a critical audit matter because of the significant estimates and assumptions management used to estimate and record the fair value of the asset. This required a high degree Table of Contents Advanced Drainage Systems, Inc F-1
of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists when performing audit procedures to evaluate the reasonableness of management’s forecasts and the selection of the customer attrition and discount rates. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to testing the assumptions identified above included the following, among others: • We tested the effectiveness of controls over the valuation of the customer relationships intangible asset, including management’s controls over the forecasts, and the selection of the customer attrition and discount rates. • We assessed the reasonableness of management’s forecasts by comparing the forecasted information to historical results and certain peer companies. • We involved our fair value specialists to assist in evaluating the methodology used by management, ensuring it aligns with industry practices and standards. • With the assistance of our fair value specialists, we evaluated the reasonableness of the following significant valuation assumptions: ◦ Customer attrition rate by testing the source information underlying the determination of the rate and testing the mathematical accuracy of the calculation. ◦ Discount rate by developing a range of independent estimates and comparing those to the discount rate selected by management. /s/ Deloitte & Touche LLP Columbus, Ohio May 21, 2026 We have served as the Company's auditor since 2002. Table of Contents Advanced Drainage Systems, Inc F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Advanced Drainage Systems, Inc., Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Advanced Drainage Systems, Inc. and subsidiaries (the “Company”) as of March 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended March 31, 2026, of the Company and our report dated May 21, 2026, expressed an unqualified opinion on those financial statements. As described in Management's Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at National Diversified Sales, which was acquired on February 2, 2026, and whose financial statements constitute 23%, 2%, and (1%) of consolidated total assets, net sales, and of net income, respectively, of the consolidated financial statement amounts as of and for the year ended March 31, 2026. Accordingly, our audit did not include the internal control over financial reporting at National Diversified Sales. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Columbus, Ohio May 21, 2026 Table of Contents Advanced Drainage Systems, Inc F-3
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of March 31, (Amounts in thousands, except par value) 2026 2025 ASSETS Current assets: Cash $ 223,012 $ 463,319 Receivables (less allowance for credit losses of $4,654 and $7,684, respectively) 390,536 333,221 Inventories 543,381 488,269 Assets held for sale 43,451 8,194 Other current assets 30,449 31,780 Total current assets 1,230,829 1,324,783 Property, plant and equipment, net 1,217,165 1,051,040 Other assets: Goodwill 1,042,716 720,223 Intangible assets, net 848,527 448,060 Other assets 166,386 146,254 Total assets $ 4,505,623 $ 3,690,360 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities: Current maturities of debt obligations $ 5,865 $ 9,934 Current maturities of finance lease obligations 38,136 33,143 Accounts payable 237,706 218,024 Liabilities held for sale 15,139 — Other accrued liabilities 212,623 137,295 Total current liabilities 509,469 398,396 Long-term debt obligations (less unamortized debt issuance costs of $18,428 and $7,715, respectively) 1,605,958 1,251,589 Long-term finance lease obligations 121,935 131,000 Deferred tax liabilities 220,994 190,416 Other liabilities 91,303 83,171 Total liabilities 2,549,659 2,054,572 Commitments and contingencies (see Note 18) Mezzanine equity: Redeemable common stock: $0.01 par value; 4,533 and 5,702 shares outstanding, respectively 73,652 92,652 Total mezzanine equity 73,652 92,652 Stockholders’ equity: Common stock: $0.01 par value; 1,000,000 shares authorized; 85,319 and 83,750 shares issued, respectively; 72,654 and 71,864 shares outstanding, respectively 11,710 11,694 Paid-in capital 1,342,091 1,277,694 Common stock in treasury, at cost (1,325,713) (1,219,408) Accumulated other comprehensive loss (32,290) (37,178) Retained earnings 1,862,936 1,492,634 Total ADS stockholders’ equity 1,858,734 1,525,436 Noncontrolling interest in subsidiaries 23,578 17,700 Total stockholders’ equity 1,882,312 1,543,136 Total liabilities, mezzanine equity and stockholders’ equity $ 4,505,623 $ 3,690,360 See accompanying notes to consolidated financial statements. Table of Contents Advanced Drainage Systems, Inc F-4
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Year Ended March 31, (Amounts in thousands, except per share data) 2026 2025 2024 Net sales $ 3,050,376 $ 2,904,245 $ 2,874,473 Cost of goods sold 1,882,990 1,810,004 1,728,524 Gross profit 1,167,386 1,094,241 1,145,949 Operating expenses: Selling, general and administrative 469,549 380,378 370,714 Loss (gain) on disposal of assets and costs from exit and disposal activities 19,211 3,858 (8,365) Intangible amortization 59,424 52,569 51,469 Income from operations 619,202 657,436 732,131 Other expense: Interest expense 93,869 91,803 88,862 Interest income and other, net (34,455) (23,832) (23,484) Income before income taxes 559,788 589,465 666,753 Income tax expense 134,988 141,063 158,998 Equity in net income of unconsolidated affiliates (5,063) (4,171) (5,536) Net income from continuing operations 429,863 452,573 513,291 Net loss from discontinued operations, net of taxes (1,090) — — Net income 428,773 452,573 513,291 Less: net income attributable to noncontrolling interest 2,308 2,401 3,376 Net income attributable to ADS $ 426,465 $ 450,172 $ 509,915 Weighted average common shares outstanding: Basic 77,756 77,549 78,252 Diluted 78,383 78,188 79,017 Net income from continuing operations per share available to common stockholders: Basic $ 5.50 $ 5.81 $ 6.52 Diluted $ 5.45 $ 5.76 $ 6.45 Net loss from discontinued operations per share available to common stockholders: Basic $ (0.01) $ — $ — Diluted $ (0.01) $ — $ — Net income per share available to common stockholders: Basic $ 5.48 $ 5.81 $ 6.52 Diluted $ 5.44 $ 5.76 $ 6.45 See accompanying notes to consolidated financial statements. Table of Contents Advanced Drainage Systems, Inc F-5
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Fiscal Year Ended March 31, (Amounts in thousands) 2026 2025 2024 Net income $ 428,773 $ 452,573 $ 513,291 Currency translation gain (loss) 7,076 (10,851) (570) Comprehensive income 435,849 441,722 512,721 Less: other comprehensive gain (loss) attributable to noncontrolling interest, net of tax 2,188 (3,503) 1,680 Less: net income attributable to noncontrolling interest 2,308 2,401 3,376 Total comprehensive income attributable to ADS $ 431,353 $ 442,824 $ 507,665 See accompanying notes to consolidated financial statements. Table of Contents Advanced Drainage Systems, Inc F-6
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Year Ended March 31, (Amounts in thousands) 2026 2025 2024 Cash Flows from Operating Activities Net income $ 428,773 $ 452,573 $ 513,291 Less: Net loss from discontinued operations, net of taxes (1,090) — — Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 216,261 183,281 154,903 Deferred income taxes 35,385 (423) (2,280) Loss (gain) on disposal of assets and costs from exit and disposal activities 19,211 3,858 (8,365) Stock-based compensation 32,354 26,581 31,986 Amortization of deferred financing charges 2,225 2,044 2,044 Inventory step up related to NDS acquisition 12,277 — — Fair market value adjustments to derivatives (5,129) 220 (972) Equity in net income of unconsolidated affiliates (5,063) (4,171) (5,536) Other operating activities 806 (298) 6,697 Changes in working capital: Receivables (2,288) 1,414 (14,590) Inventories 30,609 (15,749) 594 Prepaid expenses and other current assets (1,110) (3,983) (275) Accounts payable, accrued expenses and other liabilities 53,960 (63,856) 40,431 Operating cash flows from discontinued operations (307) — — Net cash provided by operating activities 819,054 581,491 717,928 Cash Flows from Investing Activities Capital expenditures (249,766) (212,944) (183,812) Proceeds from disposition of assets or businesses 32,541 — 27,498 Acquisition, net of cash acquired (991,064) (237,310) — Other investing activities (3,531) 2,388 650 Net cash used in investing activities (1,211,820) (447,866) (155,664) Cash Flows from Financing Activities Proceeds from Term Loan Facility 600,000 — — Payments on syndicated Term Loan Facility (413,250) (7,000) (7,000) Proceeds from Revolving Credit Agreement 75,500 — — Payments on Revolving Credit Agreement (75,500) — — Proceeds from Senior Notes due 2034 500,000 — — Payments on Senior Notes due 2027 (350,000) — — Proceeds from commercial loan agreement 27,200 — — Debt issuance costs (17,182) — — Payments on Equipment Financing (2,937) (4,897) (7,738) Payments on finance lease obligations (40,602) (25,487) (12,145) Repurchase of common stock (91,958) (69,922) (207,308) Cash dividends paid (56,124) (49,737) (43,995) Proceeds from noncontrolling interest holder 3,342 — — Dividends paid to noncontrolling interest holder (1,960) — (3,747) Proceeds from option exercises 6,850 9,971 6,454 Payment of withholding taxes on vesting of restricted stock units (7,060) (10,657) (8,864) Other financing activities (2) 2 — Net cash provided by (used in) financing activities 156,317 (157,727) (284,343) Effect of exchange rate changes on cash 1,145 (2,475) 799 Net change in cash (235,304) (26,577) 278,720 Cash at beginning of year 469,271 495,848 217,128 Cash and restricted cash at end of year $ 233,967 $ 469,271 $ 495,848 Less: cash held for sale (9,184) — — Cash and restricted cash, excluding cash held for sale, at end of year $ 224,783 $ 469,271 $ 495,848 See accompanying notes to consolidated financial statements. Table of Contents Advanced Drainage Systems, Inc F-7
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY Common Stock Paid-in Capital Common Stock in Treasury Accumulated Other Comprehensive Loss Retained Earnings Total ADS Stockholders’ Equity Non- controlling Interest in Subsidiaries Total Stockholders' Equity Redeemable Common Stock Total Mezzanine Equity(Amounts in thousands) Shares Amount Shares Amount Shares Amount Balance April 1, 2023 79,057 $ 11,647 $ 1,134,864 9,539 $ (920,999) $ (27,580) $ 626,215 $ 824,147 $ 17,493 $ 841,640 9,429 $ 153,220 $ 153,220 Net income — — — — — — 509,915 509,915 3,376 513,291 — — — Other comprehensive (loss) gain — — — — — (2,250) — (2,250) 1,680 (570) — — — Common stock dividend ($0.56 per share) — — — — — — (43,922) (43,922) — (43,922) — — — Dividend paid to noncontrolling interest holder — — — — — — — — (3,747) (3,747) — — — Share repurchases — — — 1,779 (210,715) — — (210,715) — (210,715) — — — KSOP Redeemable Common Stock Conversion 2,747 27 44,609 — — — — 44,636 — 44,636 (2,747) (44,636) (44,636) Exercise of common stock options 159 2 6,452 — — — — 6,454 — 6,454 — — — Restricted stock awards 100 1 — 25 (2,468) — — (2,467) — (2,467) — — — Performance-based restricted stock units 200 2 — 72 (6,396) — — (6,394) — (6,394) — — — Stock-based compensation — — 31,986 — — — — 31,986 — 31,986 — — — ESPP Issuance 20 — 1,927 — — — — 1,927 — 1,927 — — — Other — — (4) — — — — (4) — (4) — — — Balance March 31, 2024 82,283 $ 11,679 $ 1,219,834 11,415 $ (1,140,578) $ (29,830) $ 1,092,208 $ 1,153,313 $ 18,802 $ 1,172,115 6,682 $ 108,584 $ 108,584 See accompanying notes to consolidated financial statements. Table of Contents Advanced Drainage Systems, Inc F-8
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY Common Stock Paid-in Capital Common Stock in Treasury Accumulated Other Comprehensive Loss Retained Earnings Total ADS Stockholders’ Equity Non- controlling Interest in Subsidiaries Total Stockholders’ Equity Redeemable Common Stock Total Mezzanine Equity(Amounts in thousands) Shares Amount Shares Amount Shares Amount Balance April 1, 2024 82,283 $ 11,679 $ 1,219,834 11,415 $ (1,140,578) $ (29,830) $ 1,092,208 $ 1,153,313 $ 18,802 $ 1,172,115 6,682 $ 108,584 $ 108,584 Net income — — — — — — 450,172 450,172 2,401 452,573 — — — Other comprehensive loss — — — — — (7,348) — (7,348) (3,503) (10,851) — — — Common stock dividend ($0.64 per share) — — — — — — (49,746) (49,746) — (49,746) — — — Share repurchases — — — 410 (68,172) — — (68,172) — (68,172) — — — KSOP Redeemable Common Stock Conversion 980 10 15,922 — — — — 15,932 — 15,932 (980) (15,932) (15,932) Exercise of common stock options 244 2 9,969 — — — — 9,971 — 9,971 — — — Restricted stock awards 100 1 — 27 (4,720) — — (4,719) — (4,719) — — — Performance-based restricted stock units 93 1 — 34 (5,938) — — (5,937) — (5,937) — — — Stock-based compensation — — 26,581 — — — — 26,581 — 26,581 — — — ESPP Issuance 50 1 5,391 — — — — 5,392 — 5,392 — — — Other — — (3) — — — — (3) — (3) — — — Balance March 31, 2025 83,750 $ 11,694 $ 1,277,694 11,886 $ (1,219,408) $ (37,178) $ 1,492,634 $ 1,525,436 $ 17,700 $ 1,543,136 5,702 92,652 $ 92,652 Net income — — — — — — 426,465 426,465 2,308 428,773 — — — Other comprehensive gain — — — — — 4,888 — 4,888 2,188 7,076 — — — Common stock dividend ($0.72 per share) — — — — — — (56,163) (56,163) — (56,163) — — — Contribution from noncontrolling interest holder — — — — — — — — 3,342 3,342 — — — Dividend declared to noncontrolling interest holder — — — — — — — — (1,960) (1,960) — — — Share repurchases — — — 720 (99,245) — — (99,245) — (99,245) — — — KSOP Redeemable Common Stock Conversion 1,169 12 18,988 — — — — 19,000 — 19,000 (1,169) (19,000) (19,000) Exercise of common stock options 152 1 6,849 — — — — 6,850 — 6,850 — — — Restricted stock awards 100 1 — 30 (3,484) — — (3,483) — (3,483) — — — Performance-based restricted stock units 85 1 — 29 (3,576) — — (3,575) — (3,575) — — — Stock-based compensation — — 32,354 — — — — 32,354 — 32,354 — — — ESPP Issuance 63 1 6,207 — — — — 6,208 — 6,208 — — — Other — — (1) — — — — (1) — (1) — — — Balance March 31, 2026 85,319 $ 11,710 $ 1,342,091 12,665 $ (1,325,713) $ (32,290) $ 1,862,936 $ 1,858,734 $ 23,578 $ 1,882,312 4,533 $ 73,652 $ 73,652 See accompanying notes to consolidated financial statements. Table of Contents Advanced Drainage Systems, Inc F-9
ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business - Advanced Drainage Systems, Inc. and subsidiaries (collectively referred to as “ADS” or the “Company”), incorporated in Delaware, designs, manufactures and markets innovative water management solutions in the stormwater and onsite wastewater industries, providing superior drainage solutions for use in the construction and agriculture markets. ADS’s products are used across a broad range of end markets and applications, including non-residential, residential, infrastructure and agriculture applications. On February 2, 2026, the Company completed the acquisition of National Diversified Sales (“NDS”). NDS expands the Company’s water management offering into complementary products through the addition of NDS’ residential water management, access box and irrigation solutions. See “Note 4. Acquisitions” for additional information. Following the acquisition of NDS, the Company is managed and reports results of operations in two reportable segments: Stormwater and Wastewater (formerly Infiltrator). The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, references to “year” pertain to the fiscal year. For example, 2026 refers to fiscal 2026, which is the period from April 1, 2025 to March 31, 2026. Principles of Consolidation - The consolidated financial statements include the Company, its wholly-owned subsidiaries, its majority owned subsidiaries, and variable interest entities (“VIEs”) of which the Company is the primary beneficiary. The Company uses the equity method of accounting for equity investments where it exercises significant influence but does not hold a controlling financial interest. Such investments are recorded in Other assets in the Consolidated Balance Sheets and the related equity in earnings from these investments are included in Equity in net income of unconsolidated affiliates in the Consolidated Statements of Operations. All intercompany balances and transactions have been eliminated in consolidation. Presentation - Certain prior period balance sheet captions have been recast to conform with current period presentation. Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the allowance for credit losses, valuation of inventory, useful lives of property, plant and equipment and amortizing intangible assets, determination of the proper accounting for leases, valuation of equity method investments, goodwill, intangible assets and other long-lived assets for impairment, accounting for stock- based compensation, determination of allowances for sales returns, rebates and discounts, determination of the valuation allowance, if any, on deferred tax assets, and reserves for uncertain tax positions. Management’s estimates and assumptions are evaluated on an ongoing basis and are based on historical experience, current conditions and available information. Management believes the accounting estimates are appropriate and reasonably determined; however, due to the inherent uncertainties in making these estimates, actual results could differ from those estimates. Receivables and Allowance for Credit Losses - Receivables include trade receivables, net of an allowance for credit losses, income tax receivable, insurance recoverable and other miscellaneous receivables. Receivables at March 31, 2026 and 2025 are as follows: (Amounts in thousands) 2026 2025 Trade receivables, net $ 354,382 $ 314,011 Income tax receivable 27,390 10,728 Insurance recoverable 3,871 8,340 Other miscellaneous receivables 4,893 142 Receivables, net $ 390,536 $ 333,221 The Company extends credit to customers based on an evaluation of their financial condition and collateral is generally not required. The Company records an allowance for credit losses at the time accounts receivable are Table of Contents Advanced Drainage Systems, Inc F-10
recorded based on the Company’s historical write-off activity, an evaluation of the current economic environment and the Company’s expectations of future economic conditions. Inventories - Inventories are stated at the lower of cost or net realizable value. The Company’s inventories are maintained on the first-in, first-out (“FIFO”) method. Costs include the cost of acquiring materials, including in- bound freight from vendors and freight incurred for the transportation of raw materials, tooling or finished goods between the Company’s manufacturing plants and its distribution centers, direct and indirect labor, factory overhead and certain corporate overhead costs related to the production of inventory. Property, Plant and Equipment and Depreciation Method - Property, plant and equipment are recorded at cost less accumulated depreciation, with the exception of assets acquired through acquisitions, which are initially recorded at fair value. Equipment acquired under finance lease is recorded at the present value of the future minimum lease payments. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the related assets or the lease term, if shorter, as follows: Years Buildings and leasehold improvements 20 to 45 or the lease term if shorter Machinery and production equipment 3 to 18 Transportation equipment 3 to 12 Costs of additions and major improvements are capitalized, whereas maintenance and repairs that do not improve or extend the life of the asset are charged to expense as incurred. When assets are retired or disposed, the cost and related accumulated depreciation are removed from the asset accounts and any resulting gain or loss is reflected in Loss (gain) on disposal of assets and costs from exit and disposal activities in the Consolidated Statements of Operations. Construction in progress is also recorded at cost and includes capitalized interest, capitalized payroll costs and related costs such as taxes and other fringe benefits. Goodwill & Intangible Assets - The Company records acquisitions resulting in the consolidation of an enterprise using the acquisition method of accounting. Under this method, the Company records the assets acquired, including intangible assets that can be identified, and liabilities assumed based on their estimated fair values at the date of acquisition. The purchase price in excess of the fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. Goodwill - Goodwill is reviewed annually for impairment during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. GAAP allows entities testing goodwill for impairment the option of performing a qualitative assessment before calculating the fair value of a reporting unit for the goodwill impairment test, a quantitative assessment. In fiscal 2026, the Company revised its reportable segments and allocated the goodwill balance to its revised reporting units. For the fiscal year ended March 31, 2026, the Company completed a quantitative fair value assessment for all reporting units. For the fiscal years ended March 31, 2025 and March 31, 2024, the Company completed a qualitative fair value assessment for all reporting units, except for Cultec, for which the Company completed a quantitative analysis. The Company did not incur any impairment charges for goodwill for the periods presented. Intangible Assets — Definite-Lived - Definite-lived intangible assets are amortized using the straight-line method or an accelerated method over their estimated useful lives and are tested for recoverability whenever events or changes in circumstances indicate that carrying amounts of the asset group may not be recoverable. If the estimated undiscounted future cash flows are less than the carrying amounts of such assets, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. The Company did not incur any impairment charges for Definite-Lived Intangible assets for the periods presented. Intangible Assets — Indefinite-Lived - Indefinite-lived intangible assets are tested for impairment annually in the fourth quarter or whenever events or changes in circumstances indicate the carrying value may be greater than fair value. GAAP allows entities testing indefinite-lived intangible assets for impairment the option of performing a qualitative assessment before calculating the fair value of the indefinite-lived intangible assets for the impairment test. ADS completed a qualitative fair value assessment of indefinite-lived trademarks as of March 31, 2026, March 31, 2025 and March 31, 2024. The Company did not incur any impairment charges for Indefinite-Lived Intangible assets for the periods presented. Held for Sale and Discontinued Operations Classification - Under the accounting guidance contained in Accounting Standards Codification Topic 205, Presentation of Financial Statements (“ASC 205”), businesses that, upon Table of Contents Advanced Drainage Systems, Inc F-11
acquisition, meet the held for sale criteria are not analyzed under the strategic shift test. Instead, they are reported in discontinued operations automatically based on their held for sale classification. The strategic shift test does not apply because the acquired businesses were not previously part of the acquirer. The Company determined Teco S.r.l., Kimplas Piping Systems Private Limited, Kimplas Limited, Teco Irrigation USA, Inc. and Fish Water Products Sdn. Bhd. (collectively, the “NDS International Entities”) met the held for sale criteria upon acquisition. As a result, the assets and liabilities of the NDS International Entities have been classified held for sale and are reported as assets held for sale and liabilities held for sale on the Consolidated Balance Sheet. The results of the NDS International Entities have been accounted for as discontinued operations and are reported as income or loss from discontinued operations, net of tax, on the Consolidated Statements of Operations. Other Assets - Other assets include operating lease right of use assets, capitalized software development costs, including cloud computing costs, investments in unconsolidated affiliates accounted for under the equity method, deposits, central parts, and other miscellaneous assets. • See “Note 7. Leases” for further information on the operating lease right of use assets. • The Company capitalizes development costs for internal-use software and defers implementation costs for hosting arrangements. Capitalization of software development costs and deferral of implementation costs for hosting arrangements begin in the application development stage and end when the asset is placed into service. The Company amortizes such costs using the straight-line method over estimated useful lives of 2 to 10 years, which is included in Selling, general and administrative expenses or Cost of goods sold within the Consolidated Statements of Operations depending on the nature of the asset and its intended use. • The Company evaluates its investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying amount might not be recoverable and recognizes an impairment loss when a decline in value below carrying value is determined to be other-than-temporary. Under these circumstances, the Company would adjust the investment down to its estimated fair value, which then becomes its new carrying value. • Central parts represent spare production equipment items which are used to replace worn or broken production equipment parts and help reduce the risk of prolonged equipment outages. Leases - The Company determines whether an arrangement contains an operating or finance lease at inception by determining if the contract conveys the right to control the use of identified plant, property, and equipment for a period of time in exchange for consideration and other facts and circumstances as defined by ASC 842, Leases. For each lease which has an accounting lease term of greater than 12 months, the Company records the right-of-use asset and lease liability on the balance sheet. The accounting lease term includes cancellable and renewal periods which are reasonably assured. The lease liability is measured utilizing the incremental borrowing rate unless the Company can specifically determine the rate implicit in the lease. For leases classified as finance leases at lease inception, the Company records a finance lease asset in Property, plant and equipment, net and lease financing obligation equal to the present value of the minimum lease payments. The finance lease right of use asset is amortized to its expected residual value at the end of the lease term using the straight-line method, and the lease financing obligation is amortized using the effective interest method over the lease term with the rental payments being allocated to principal and interest. For leases classified as operating leases, the Company records the operating lease right of use asset in Other assets and the operating lease obligation in Other accrued liabilities and Other liabilities. Operating lease rent expense is recognized over the useful life using the straight-line method. Foreign Currency Translation - Assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated at a monthly average exchange rate and equity transactions are translated using either the actual exchange rate on the day of the transaction or a monthly average historical exchange rate. For the fiscal years ended March 31, 2026 and 2025, the Company’s Accumulated other comprehensive loss (“AOCL”) primarily consisted of foreign currency translation gains and losses. Net Sales - The Company generates revenue by selling pipe and related water management products primarily to distributors, retailers, buying groups and co-operative buying groups. Products are shipped predominately by the Company’s internal fleet, and the Company does not provide any additional revenue generating services after product delivery. Payment terms and conditions vary by contract. Revenue is recognized at the point in-time obligations under the terms of a contract with a customer are satisfied, which generally occurs upon the transfer of control of the promised goods. In substantially all of the Company’s contracts with customers, control is transferred to the customer upon delivery. The Company recognizes revenue in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Table of Contents Advanced Drainage Systems, Inc F-12
Shipping Costs - The Company incurs shipping costs to deliver products to customers using an in-house fleet or common carrier. Typically shipping costs are prepaid and included in the product price; however, in some instances, the Company bills shipping costs to customers. Shipping costs are also incurred to physically move raw materials, tooling and products between manufacturing and distribution facilities. Shipping costs to deliver products to customers for the fiscal years ended March 31, 2026, 2025, and 2024 were $369.2 million, $340.8 million, and $284.6 million, respectively, and are included in Cost of goods sold. Stock-Based Compensation - See “Note 15. Stock-Based Compensation” for information about the stock-based compensation award programs and related accounting policies. Advertising - The Company expenses advertising costs as incurred. Advertising costs are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations. The total advertising costs were $14.3 million, $10.6 million, and $10.2 million for the fiscal years ended March 31, 2026, 2025, and 2024, respectively. Self-Insurance - The Company is self-insured for short-term disability and medical coverage it provides for substantially all eligible employees. The Company is self-insured for medical claims up to the individual and aggregate stop-loss coverage limits. The Company accrues for claims incurred but not reported based on an estimate of future claims related to events that occurred prior to the fiscal year end if it has not met the aggregate stop-loss coverage limit. Amounts expensed totaled $63.3 million, $60.0 million, and $53.3 million for the fiscal years ended March 31, 2026, 2025, and 2024, respectively, of which employees contributed $13.5 million, $13.8 million, and $13.0 million, respectively. ADS is also self-insured for various other general insurance programs to the extent of the applicable deductible limits on the Company’s insurance coverage. These programs include primarily automobile, general liability, cybersecurity and employment practices coverage with a deductible of $0.5 million per occurrence for general liability and $1 million per occurrence for automobile claim incurred. Amounts expensed during the period, including an estimate for claims incurred but not reported at year end, were $2.9 million, $3.7 million, and $3.1 million, for the years ended March 31, 2026, 2025, and 2024, respectively. ADS is also self-insured for workers’ compensation insurance with stop-loss coverage for claims that exceed $0.5 million per incident up to the respective state statutory limits. Amounts expensed, including an estimate for claims incurred but not reported, were $5.9 million, $4.7 million, and $4.9 million for the fiscal years ended March 31, 2026, 2025, and 2024, respectively. Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized and represent the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. They are measured using the enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. Valuation allowances are established against deferred tax assets when it is more likely than not that the realization of those deferred tax assets will not occur. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The deferred income tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities. Penalties and interest recorded on income taxes payable are recorded as part of Income tax expense. The Company determines whether an uncertain tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation process, based upon the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. Fair Values - The fair value framework requires the categorization of assets and liabilities into three levels based upon assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. ADS’s policy for determining when transfers between levels have occurred is to use the actual date of the event or change in circumstances that caused the transfer. Concentrations of Risk - The Company has a large, active customer base of approximately 16,000 customers with two customers, Ferguson and Core & Main, each representing more than 10% of annual net sales. These customers in aggregate accounted for 25.8%, 27.0%, and 25.8% of fiscal 2026, 2025 and 2024 net sales, respectively. The Company’s customer base is diversified across the range of end markets that it serves. Table of Contents Advanced Drainage Systems, Inc F-13
Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of Receivables. The Company provides its products to customers based on an evaluation of the customers’ financial condition, generally without requiring collateral. Exposure to losses on Receivables is principally dependent on each customer’s financial condition. The Company performs ongoing credit evaluations of its customers. The Company monitors the exposure for credit losses and maintains allowances for anticipated losses. Concentrations of credit risk with respect to Receivables are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many different geographies. One customer, Ferguson Enterprises, accounted for approximately 10.4% and 19.1% of Receivables at March 31, 2026 and 2025, respectively, and Core & Main accounted for approximately 10.4% of Receivables at March 31, 2025. Derivatives - The Company recognizes derivative instruments as either assets or liabilities and measures those instruments at fair value. These instruments do not qualify for hedge accounting treatment. ADS uses commodity options in the form of collars and swaps, and foreign currency forward contracts to manage various exposures to commodity price and exchange rate fluctuations. Changes in fair value of the derivative instruments are recognized in Interest income and other, net in the Consolidated Statements of Operations. The Company’s policy is to present all derivative balances on a gross basis. Interest income and other, net - Included in Interest income and other, net on the Company’s Consolidated Statement of Operations is interest income on invested cash and derivative gains and losses for commodity and foreign currency instruments described below for the fiscal years ended March 31, 2026, 2025, and 2024 were: (Amounts in thousands) 2026 2025 2024 Interest income $ (25,000) $ (23,485) $ (22,047) Fair market value adjustments to derivatives (5,129) — (972) Net realized losses (gains) on derivatives (1,098) 649 58 Foreign currency (gains) losses 278 (122) 436 Other (3,506) (874) (959) Interest income and other, net $ (34,455) $ (23,832) $ (23,484) Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements Improvements to Income Tax Disclosures - In December 2023, the FASB issued an accounting Pronouncement (“ASU”) to amend ASC 740, Income Taxes to enhance the transparency and usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The Company adopted this pronouncement retrospectively for the fiscal year ended March 31, 2026 and included the enhanced disclosures. See “Note 16. Income Taxes” for further discussion. Accounting Pronouncements Not Yet Adopted Income Statement Expense Disaggregation Disclosures - In November 2024, the FASB issued an ASU requiring disaggregated disclosure of income statement expenses for public business entities. The ASU requires disclosure in tabular format of disaggregation of relevant expense captions presented on the income statement by certain natural expense categories with certain related qualitative disclosures within the notes to the financial statements. The ASU does not change the expense captions an entity presents on the income statement. The ASU is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impacts this standard will have on its required disclosures. Measurement of Credit Losses for Accounts Receivable and Contract Assets - In July 2025, the FASB issued an ASU which amends ASC 326-20 to provide a practical expedient and an accounting policy election related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. An entity is required to disclose whether it has elected to use the practical expedient and, if so, whether it has also applied the accounting policy election. The ASU is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The new guidance is to be applied prospectively. The Company does not expect the adoption of this standard to have a material impact on the Consolidated Financial Statements. Accounting for and Disclosure of Software Costs - In September 2025, the FASB issued an ASU which amends certain aspects of ASC 350-40. The amended guidance eliminates project stages and requires capitalizing software Table of Contents Advanced Drainage Systems, Inc F-14
costs to begin when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. When evaluating if a project is probable to be completed, significant development uncertainty must be assessed. Additionally, disclosures for property, plant and equipment will be required for all capitalized software costs. The ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact this standard will have on the Consolidated Financial Statements. 2. REVENUE RECOGNITION Revenue is recognized at the point in-time the obligations under the terms of a contract with a customer are satisfied, which generally occurs upon the transfer of control of the promised goods. In substantially all of the Company’s contracts with customers, control is transferred to the customer upon delivery. The Company recognizes revenue in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenue is presented in the Consolidated Statements of Operations net of allowances for returns, rebates, discounts, and taxes collected concurrently with revenue-producing activities. The Company disaggregates Stormwater net sales by Domestic and International and further disaggregates Domestic by product type. This disaggregation level best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following table presents net sales (including intersegment net sales) disaggregated by product type for the Company’s Stormwater and Wastewater segments. (Amounts in thousands) 2026 2025 2024 Stormwater Domestic - Pipe $ 1,495,555 $ 1,521,939 $ 1,556,575 Domestic - Allied Products 750,498 645,448 627,825 International 187,827 194,630 207,769 Total Stormwater 2,433,880 2,362,017 2,392,169 Wastewater 714,542 629,906 566,550 Intersegment Eliminations (98,046) (87,678) (84,246) Consolidated Net sales $ 3,050,376 $ 2,904,245 $ 2,874,473 Significant Judgments - The Company’s performance obligation under contracts with customers is to sell and deliver pipe and related water management products. The Company’s contracts with customers may contain multiple performance obligations by promising to deliver multiple products to the customer. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company’s products are generally sold with a right of return, and the Company may provide credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Variable consideration is estimated at contract inception and updated at the end of each reporting period as additional information becomes available and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Contract Balances - The Company recognizes a contract asset representing the Company’s right to recover products upon the receipt of returned products and a contract liability for the customer refund. The following table presents the balance of the Company’s contract asset and liability as of March 31, 2026 and 2025: (Amounts in thousands) March 31, 2026 March 31, 2025 Contract asset - product returns $ 1,383 $ 1,381 Refund liability 4,112 4,032 Practical Expedients and Exemptions - The Company applies several practical expedients and exemptions: • The Company expenses incremental costs to obtain a contract (e.g. sales commissions) when incurred as the amortization period would have been one year or less. These costs are recorded within Selling, general and administrative expenses on the Consolidated Statements of Operations. Table of Contents Advanced Drainage Systems, Inc F-15
• The Company accounts for shipping and handling costs as activities to fulfill the promise to transfer the goods when these activities are performed after a customer obtains control of the goods. • The Company excludes from the transaction price all sales taxes that are assessed by a governmental authority and that are imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer, for example, sales, use, value added, and some excise taxes. • Further, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. 3. RESTRUCTURING AND LOSS (GAIN) ON DISPOSAL OF ASSETS AND COSTS FROM EXIT AND DISPOSAL ACTIVITIES In fiscal 2026, the Company undertook certain restructuring and realignment activities (the “2026 Restructuring Plan”) to optimize the Company’s production, recycling and distribution network and to plan and implement go-to- market and operating model enhancements to scale for future growth, including the integration of NDS. Under the 2026 Restructuring Plan, for the fiscal year ended March 31, 2026, the Company recorded expense of $48.3 million related to the optimization of the Company’s production, recycling and distribution networks, including the closure of four facilities and changes to the Company’s production footprint. The Company does not currently have an estimate of additional costs or an expected end date for the restructuring actions. The following table summarizes the activities included in Restructuring and realignment expense for the fiscal year ended March 31, 2026: (Amounts in thousands) 2026 Loss (gain) on disposal of assets and costs from exit and disposal activities: Accelerated depreciation and impairment of property, plant and equipment $ 28,786 Severance 2,743 Impairment of right-of-use assets 2,448 Other exit and disposal costs 2,273 Selling, general and administrative expenses: Realignment expenses 12,049 Total 2026 Restructuring Plan activities $ 48,299 The costs incurred under the 2026 Restructuring Plan to date are classified as operating expenses and allocated to the Stormwater segment. During the fiscal year ended March 31, 2026, the Company recorded accelerated depreciation, severance costs, impairment of right-of-use lease assets and other exit and disposal costs. Other exit and disposal activities include legal and professional fees, inventory and equipment transfer costs and other costs. The following table summarizes the restructuring liability for the periods presented: (Amounts in thousands) 2026 Accrual balance at April 1 $ — Costs incurred 48,299 Non-cash charges (31,234) Expenses paid (15,864) Accrual balance at end of period $ 1,201 The restructuring liability is recorded in Other accrued liabilities in the Company’s Consolidated Balance Sheet. Loss (Gain) on Disposal of Assets - The Company recorded $17.0 million gain on disposal of assets in the fiscal year ended March 31, 2026. The sale of properties previously held-for-sale resulted in the gain of $18.1 million. The remaining balance is due to the sale or disposal of other property, plant and equipment. For the year ended March 31, 2025, the Company recorded a $3.9 million loss primarily due to the closure of a plant and other asset disposals. On March 25, 2024, the Company completed its divestiture of substantially all of its Paper Recycling business to a third party purchaser for cash consideration of $7.5 million. The Company recognized a loss on the sale of Table of Contents Advanced Drainage Systems, Inc F-16
$2.0 million in the Consolidated Statements of Operations. Prior to the divestiture, the Company recorded the results of operations in the Stormwater reportable segment. On April 14, 2023, the Company completed its divestiture of substantially all of the assets of Spartan Concrete, Inc. to a third party purchaser for consideration of $20.0 million. The Company recognized a gain on the sale of $14.9 million in the Consolidated Statements of Operations. Prior to the divestiture, the Company recorded the results of operations in the Stormwater reportable segment. 4. ACQUISITIONS Acquisition of NDS - On February 2, 2026, the Company completed the acquisition of the water management business of Norma Group SE, known as NDS. NDS expands the Company’s water management offering into complementary products through the addition of NDS’ residential water management, access box and irrigation solutions. The preliminary fair value of consideration transferred was approximately $972.5 million, which represented the purchase price of $984.9 million, net of cash acquired of $3.2 million and cash included in held for sale of $9.2 million. The preliminary purchase price excludes transaction costs. The acquisition was primarily funded from cash on hand. NDS will be included in the Stormwater reportable segment. Summary of Consideration Transferred - The Company has applied the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”) and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. As the Company finalizes the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (up to one year from the closing date). The following table summarizes consideration transferred and the preliminary purchase price allocation of identified assets acquired and liabilities assumed: (Amounts in thousands) Preliminary Amount Cash and cash equivalents $ 3,189 Accounts receivable 44,944 Inventory 93,092 Other current assets 1,359 Assets held for sale(a) 42,554 Property, plant and equipment 67,699 Goodwill 317,677 Intangible assets 456,920 Deferred tax assets 5,751 Other assets 17,212 Total assets acquired 1,050,397 Accounts payable (10,664) Accrued expenses (29,285) Liabilities held for sale(a) (13,779) Other liabilities (11,788) Total liabilities acquired (65,516) Total preliminary fair value of consideration transferred $ 984,881 (a) Upon acquisition, certain NDS entities met the held-for-sale criteria. The Company accordingly classified the associated assets acquired and liabilities assumed as held for sale. During the period from the Closing Date through March 31, 2026, the Company’s consolidated results of operations included $48.8 million of net sales, $4.7 million of Net loss from continuing operations and $1.1 million of Net loss from discontinued operations associated with the results of operations of NDS. See “Note 5. Discontinued Operations and Assets and Liabilities Held for Sale” for additional information. Table of Contents Advanced Drainage Systems, Inc F-17
The preliminary goodwill of $317.7 million represents the excess of consideration transferred over the preliminary fair value of assets acquired and liabilities assumed and is attributable to expected cross-selling and operating efficiencies. The goodwill is assigned to the Stormwater reportable segment and $271.6 million of the preliminary goodwill is deductible for income tax purposes. Identifiable Intangible Assets Acquired - The identifiable intangible assets recorded in connection with the acquisition of NDS are based on preliminary valuations including customer relationships, tradename and developed technology totaling $456.9 million. Customer relationships will be amortized using an accelerated method over the useful life. Tradenames and developed technology will be amortized on a straight-line basis over their estimated useful lives. The preliminary fair values and useful lives of acquired intangible assets is presented in the table below. (Amounts in thousands) Preliminary fair value Preliminary Useful Lives Customer relationships $ 419,000 20 years Tradename 37,000 20 years Developed technology 920 12 years Total identifiable intangible assets $ 456,920 The preliminary estimate of the fair value of the identifiable intangible assets was determined using the methods described below. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820, Fair Value Measurements (“ASC 820”). Intangible assets consist of acquired customer relationships, patents and developed technology, and tradename and trademarks. • Customer relationships were valued using the income approach, specifically, the multi-period excess earnings method, which calculates the present value of the estimated revenues and net cash flows derived from the customer relationships. • Tradename and trademarks were valued using the income approach, specifically, the relief form royalty method, which calculates the present value of hypothetical royalty payments that would be avoided by owning the asset rather than licensing it from a third party. • Developed technology intangible assets were valued using the income approach, specifically, the relief from royalty method, which calculates the present value of hypothetical royalty payments that would be avoided by owning the technology rather than licensing it from a third party. Pro Forma Financial Information - The unaudited pro forma information for the fiscal year ended March 31, 2026 presented below includes the effects of the NDS acquisition as if it had been consummated as of April 1, 2024, with adjustments to give effect to pro forma events that are directly attributable to the acquisition of NDS. Adjustments include those related to the depreciation and amortization of acquired fixed and intangible assets, transaction costs, inventory step-up and the estimated tax impacts thereof. The unaudited pro forma information does not reflect any operating efficiency or potential cost savings that could result from the consolidation of NDS. Accordingly, the unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the actual results of the combined company if the acquisition had occurred at the beginning of the period presented, nor is it indicative of the future results of operations. (Amounts in thousands) 2026 2025 Net sales $ 3,289,692 $ 3,185,159 Net income attributable to ADS 456,002 411,684 During the fiscal year ended March 31, 2026, the Company incurred $40.3 million of transaction costs related to the acquisition such as legal, accounting, valuation and other professional services. These costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations and are reflected in pro forma earnings for the fiscal year ended March 31, 2025 in the table above. These costs are deductible for income tax purposes. Acquisition of River Valley Pipe - On May 8, 2025, the Company completed its acquisition of the assets of River Valley Pipe LLC (“River Valley Pipe”), a privately-owned pipe manufacturing company located in the Midwest region of the United States. The preliminary fair value of consideration transferred was approximately $18.8 million. The acquisition was funded from cash on hand. River Valley Pipe is included in the Stormwater reportable segment. Table of Contents Advanced Drainage Systems, Inc F-18
The following table summarizes the consideration transferred and the preliminary purchase price allocation of assets acquired and liabilities assumed. The purchase price allocation for assets acquired and liabilities assumed is preliminary and will be finalized when valuations are complete and final assessments of the fair value of acquired assets and assumed liabilities are completed. Such finalization may result in material changes from the preliminary purchase price allocation. The Company's estimates and assumptions are subject to change during the measurement period (up to one year from the closing date), as the Company continues to finalize the valuations of assets acquired and liabilities assumed. (Amounts in thousands) Initial Amount Valuation Adjustments Updated Amount Accounts receivable $ 3,101 $ — $ 3,101 Inventory 3,027 — 3,027 Property, plant and equipment 6,986 — 6,986 Goodwill 4,964 (1,029) 3,935 Intangible assets 2,970 — 2,970 Other assets 75 — 75 Total assets acquired 21,123 (1,029) 20,094 Accounts payable (1,227) — (1,227) Accrued expenses (285) 236 (49) Other liabilities (35) — (35) Total liabilities acquired (1,547) 236 (1,311) Total preliminary fair value of consideration transferred $ 19,576 $ (793) $ 18,783 The preliminary goodwill of $3.9 million represents the excess of consideration transferred over the preliminary fair value of assets acquired and liabilities assumed and is attributable to expected operating efficiencies. The goodwill is deductible for income tax purposes and is assigned to Stormwater. The preliminary purchase price excludes transaction costs. During the fiscal year ended March 31, 2026, the Company incurred $0.5 million of transaction costs related to the acquisition such as legal, accounting, valuation and other professional services. These costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations. The identifiable intangible assets recorded in connection with the acquisition of River Valley Pipe are based on preliminary valuations including customer relationships and tradename totaling $3.0 million. The intangible assets will be amortized on a straight-line basis over their estimated useful lives. (Amounts in thousands) Preliminary fair value Preliminary Useful Lives Customer relationships $ 2,600 10 years Tradename 370 5 years Total identifiable intangible assets $ 2,970 The Company has excluded certain disclosures required under ASC 805, Business Combinations as they are not material to the financial statements. Acquisition of Orenco - On October 1, 2024, the Company’s wholly-owned subsidiary, Infiltrator, completed the acquisition of Orenco Systems, Inc. (“Orenco”), a leading manufacturer of decentralized wastewater management products serving residential and non-residential end markets. The fair value of consideration transferred was approximately $236.3 million, which represented the purchase price of $255.0 million, net of cash acquired of $18.7 million. The acquisition was funded from cash on hand. Orenco is included in the Wastewater reportable segment. Table of Contents Advanced Drainage Systems, Inc F-19
The following table summarizes the consideration transferred and the purchase price allocation of assets acquired and liabilities assumed: (Amounts in thousands) Initial Amount Valuation Adjustments Final Amount Accounts receivable $ 12,277 $ (160) $ 12,117 Inventory 15,651 — 15,651 Other current assets 219 — 219 Property, plant and equipment 8,533 (1,228) 7,305 Goodwill 104,007 224 104,231 Intangible assets 148,000 — 148,000 Other assets 9,041 — 9,041 Total assets acquired 297,728 (1,164) 296,564 Accounts payable (3,618) — (3,618) Accrued expenses (15,823) — (15,823) Deferred tax liabilities (36,250) 147 (36,103) Other liabilities (4,727) — (4,727) Total liabilities acquired (60,418) 147 (60,271) Total fair value of consideration transferred $ 237,310 $ (1,017) $ 236,293 The goodwill of $104.2 million represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed and is attributable to expected operating efficiencies. The goodwill is not deductible for income tax purposes and is assigned to Wastewater. The purchase price excludes transaction costs. During the fiscal year ended March 31, 2025, the Company incurred $7.5 million of transaction costs related to the acquisition such as legal, accounting, valuation and other professional services. These costs are included in selling, general and administrative expenses in the Consolidated Statements of Operations. The identifiable intangible assets recorded in connection with the acquisition of Orenco include customer relationships, developed technology and tradename totaling $148.0 million. The intangible assets will be amortized on a straight-line basis over their estimated useful lives. (Amounts in thousands) Fair value Useful Lives Customer relationships $ 99,000 15 years Developed technology 42,000 12 years Tradename 7,000 20 years Total identifiable intangible assets $ 148,000 The Company has excluded certain disclosures required under ASC 805, Business Combinations as they are not material to the financial statements. 5. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE As discussed in “Note 1. Background and Summary of Significant Accounting Policies,” the NDS International Entities met the held for sale criteria upon acquisition. As a result, the assets and liabilities of the NDS International Entities have been classified held for sale and are reported as assets held for sale and liabilities held for sale on the Consolidated Balance Sheet. The results of the NDS International Entities have been accounted for as discontinued operations and are reported as income or loss from discontinued operations, net of tax, for the period from the date of acquisition to March 31, 2026 on the Consolidated Statements of Operations. The Company measured the net assets of the disposal group at fair value less costs to sell. Costs to sell represent incremental direct costs expected to be incurred in connection with the disposal. Fair value was determined based on Table of Contents Advanced Drainage Systems, Inc F-20
the valuation techniques noted in “Note 4. Acquisitions.” The assets and liabilities classified as held for sale on the Company’s Consolidated Balance Sheet as of March 31, 2026, include the following: (Amounts in thousands) Cash $ 9,184 Accounts receivable 6,957 Inventory 6,848 Other current assets 1,284 Property, plant and equipment 18,645 Other assets 533 Total assets held for sale $ 43,451 Current maturities of debt obligations $ 562 Accounts payable 2,776 Accrued expenses 8,669 Other liabilities 3,132 Total liabilities held for sale $ 15,139 The following table summarizes the major classes of items constituting the results from discontinued operations for presented in the Consolidated Statement of Operations for fiscal year 2026: (Amounts in thousands) Net sales $ 4,701 Cost of goods sold 3,427 Gross profit 1,274 Selling, general and administrative 2,364 Net loss from discontinued operations $ (1,090) 6. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net as of the fiscal years ended March 31 consisted of the following: (Amounts in thousands) 2026 2025 Land, buildings and improvements $ 513,175 $ 405,417 Machinery and production equipment 1,175,002 1,033,820 Transportation equipment 224,845 246,431 Construction in progress 201,371 190,515 Total cost 2,114,393 1,876,183 Less: accumulated depreciation (897,228) (825,143) Property, plant and equipment, net $ 1,217,165 $ 1,051,040 Depreciation expense related to Property, plant and equipment in each of the fiscal years ended March 31 was: (Amounts in thousands) 2026 2025 2024 Depreciation expense (inclusive of leased assets depreciation) $ 154,407 $ 128,756 $ 100,306 7. LEASES Nature of the Company’s Leases - The Company has operating and finance leases for plants, yards, corporate offices, tractors, trailers and other equipment. The Company’s leases have remaining terms of less than one year to 12 years. A portion of the Company’s real estate leases include an option to extend the leases for up to 5 years. The Table of Contents Advanced Drainage Systems, Inc F-21
Company has included renewal options which are reasonably certain to be exercised in its right-of-use assets and lease liabilities. The Company’s lease payments are generally fixed. Supplemental balance sheet information related to leases as of the periods presented was as follows: (Amounts in thousands) Balance Sheet Classification 2026 2025 Operating leases Right-of-use assets Other assets $ 73,757 $ 68,826 Current lease liabilities Other accrued liabilities 21,303 19,456 Non-current lease liabilities Other liabilities 52,896 48,781 Total operating lease liabilities $ 74,199 $ 68,237 Finance leases Right-of-use assets Property, plant and equipment 151,536 159,553 Current lease liabilities Current maturities of finance lease obligations 38,136 33,143 Non-current lease liabilities Long-term finance lease obligations 121,935 131,000 Total finance lease liabilities $ 160,071 $ 164,143 Weighted average lease term (in years): Operating leases 4.48 4.74 Finance leases 4.60 5.04 Weighted average discount rate: Operating leases 5.74 % 5.71 % Finance leases 6.45 % 6.38 % Lease Cost - The components of lease cost for the years ended March 31, 2026, 2025, and 2024 were: (Amounts in thousands) Income Statement Classification 2026 2025 2024 Operating lease cost Operating lease cost Cost of goods sold $ 21,055 $ 20,470 $ 17,325 Operating lease cost Selling, general and administrative 1,763 1,691 1,562 Short-term lease cost Cost of goods sold 3,425 6,237 8,856 Total operating lease cost $ 26,243 $ 28,398 $ 27,743 Finance lease cost Amortization of right-of-use assets Cost of goods sold 38,519 27,974 13,707 Amortization of right-of-use assets Selling, general and administrative 415 820 820 Interest on lease liabilities Interest expense 11,277 7,666 2,833 Total finance lease cost $ 50,211 $ 36,460 $ 17,360 Supplemental cash flow information related to leases for the periods presented were as follows: (Amounts in thousands) 2026 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used for operating leases $ 22,818 $ 22,161 $ 18,887 Operating cash flows used for finance leases 10,840 7,013 2,726 Financing cash flows used for finance leases 40,602 25,487 12,145 Right-of-use assets obtained in exchange for lease obligations: Operating leases 11,298 26,286 20,511 Finance leases 42,687 110,198 53,241 Table of Contents Advanced Drainage Systems, Inc F-22
The following is a schedule by year of future minimum lease payments on a rolling twelve-month basis under operating and finance leases and the present value of the net minimum lease payments as of March 31, 2026: (Amounts in thousands) Operating Leases Finance Leases Year 1 $ 23,773 $ 47,252 Year 2 18,733 42,976 Year 3 13,096 34,108 Year 4 11,289 27,342 Year 5 7,657 21,194 Thereafter 8,754 12,909 Total minimum lease payments $ 83,302 $ 185,781 Less: amount representing interest 9,103 25,710 Present value of net minimum lease payments $ 74,199 $ 160,071 8. INVENTORIES Inventories as of the fiscal years ended March 31 consisted of the following: (Amounts in thousands) 2026 2025 Raw materials $ 108,856 $ 105,146 Finished goods 434,525 383,123 Total Inventories $ 543,381 $ 488,269 During fiscal years ended March 31, 2026 and 2025, the Company incurred production-related general and administrative costs included in the cost of finished goods inventory of $65.8 million and $62.6 million, respectively, of which $18.5 million and $18.1 million remained in inventory at March 31, 2026 and 2025, respectively. 9. GOODWILL AND INTANGIBLE ASSETS Goodwill - The carrying amount of goodwill by reportable segment is as follows: As Previously Reported (Amounts in thousands) Pipe Infiltrator Internatio nal Allied Products & Other Stormwater Wastewater Total Balance at March 31, 2024 $ 65,766 $ 495,841 $ 10,441 $ 45,135 $ — $ — $ 617,183 Acquisition — 103,676 — — — — 103,676 Currency translation — — (636) — — — (636) Balance at March 31, 2025 65,766 599,517 9,805 45,135 — — 720,223 Reallocation due to change in segments (65,766) (599,517) (9,805) (45,135) 120,706 599,517 — Acquisitions — — — — 321,612 555 322,167 Currency translation — — — — 326 — 326 Balance at March 31, 2026 $ — $ — $ — $ — $ 442,644 $ 600,072 $ 1,042,716 Table of Contents Advanced Drainage Systems, Inc F-23
Intangible Assets - Intangible assets as of March 31, 2026 and 2025 consisted of the following: 2026 2025 (Amounts in thousands) Gross Intangible Accumulated Amortization Net Intangible Gross Intangible Accumulated Amortization Net Intangible Definite-lived intangible assets Developed technology $ 213,120 $ (113,493) $ 99,627 $ 212,200 $ (93,783) $ 118,417 Supplier and customer relationships 902,700 (255,237) 647,463 481,100 (220,047) 261,053 Patents and non-compete agreements 3,738 (3,035) 703 3,738 (2,687) 1,051 Trademarks and tradenames 112,330 (23,439) 88,891 74,960 (19,260) 55,700 Total definite lived intangible assets 1,231,888 (395,204) 836,684 771,998 (335,777) 436,221 Indefinite-lived intangible assets (a) Trademarks 11,843 — 11,843 11,839 — 11,839 Total Intangible assets $ 1,243,731 $ (395,204) $ 848,527 $ 783,837 $ (335,777) $ 448,060 (a) Indefinite-lived intangible assets may fluctuate as a result of foreign currency translation. The following table presents the amortization expense and weighted average amortization period for definite-lived intangible assets at March 31, 2026: Amortization expense (in thousands) Weighted Average Amortization Period (in years) 2026 2025 2024 Developed technology $ 19,710 $ 18,230 $ 16,480 7.0 Supplier and customer relationships 35,187 30,207 30,460 15.9 Patents and non-compete agreements 348 487 560 6.3 Trademarks and tradenames 4,179 3,645 3,969 16.3 Total $ 59,424 $ 52,569 $ 51,469 Future intangible asset amortization expense based on existing intangible assets at March 31, 2026 is: Fiscal Year (Amounts in thousands) 2027 2028 2029 2030 2031 Thereafter Total Amortization expense $ 80,233 $ 84,640 $ 87,849 $ 73,341 $ 64,366 $ 446,255 $ 836,684 10. FAIR VALUE MEASUREMENT AND DERIVATIVE TRANSACTIONS When applying fair value principles in the valuation of assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company has not changed its valuation techniques used in measuring the fair value of any financial assets or liabilities during the fiscal periods presented. The fair value estimates take into consideration the credit risk of both the Company and its counterparties. When active market quotes are not available for financial assets and liabilities, the Company uses industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to present value using market-based observable inputs including credit risk, interest rate curves, foreign currency rates and forward and spot prices for currencies. In circumstances where market-based observable inputs are not available, management judgment is used to develop assumptions to estimate fair value. Table of Contents Advanced Drainage Systems, Inc F-24
Derivatives - A summary of the fair values for the various derivatives, which are all measured using Level 2 inputs, at March 31, 2026 and 2025 is presented below: Diesel fuel option collars and swaps Assets Liabilities (Amounts in thousands) Receivables Other assets Other accrued liabilities Other liabilities March 31, 2026 $ 4,973 $ 229 $ (61) $ (59) March 31, 2025 223 2 (248) (25) There were no transfers in or out of Level 3 for the fiscal years ended March 31, 2026 and 2025. Valuation of Debt - The carrying amounts of current financial assets and liabilities approximate fair value because of the immediate or short-term maturity of these items, or in the case of derivative instruments, because they are recorded at fair value. The following table presents the carrying and fair value of the Company’s 2027 Notes, 2030 Notes, 2034 Notes and Equipment Financing (as further discussed in “Note 13. Debt”) for the periods presented: March 31, 2026 March 31, 2025 (Amounts in thousands) Fair Value Carrying Value Fair Value Carrying Value Senior Notes due 2027 $ — $ — $ 344,036 $ 350,000 Senior Notes due 2030 505,940 500,000 500,845 500,000 Senior Notes due 2034 489,230 500,000 — — Equipment Financing 2,961 3,056 6,714 5,988 Total $ 998,131 $ 1,003,056 $ 851,595 $ 855,988 The fair values of the 2027 Notes, 2030 Notes and 2034 Notes were determined based on quoted market data for the Company’s 2027 Notes, 2030 Notes and 2034 Notes, respectively. The fair value of the Equipment Financing was determined based on a comparison of the interest rate and terms of such borrowings to the rates and terms of similar debt available for the period. The categorization of the framework used to evaluate the 2027 Notes, 2030 Notes, 2034 Notes and Equipment Financing are considered Level 2. The Company believes the carrying amount on the remaining long-term debt, including the Term Loan Facility, Revolving Credit Facility and Commercial loan agreement, is not materially different from its fair value as the interest rates and terms of the borrowings are similar to currently available borrowings. 11. INVESTMENT IN AFFILIATES ADS Mexicana - ADS has one consolidated joint venture, ADS Mexicana, which is 51% owned by the Company’s wholly-owned subsidiary ADS Worldwide, Inc. The equity owned by the Company’s joint venture partner is shown as Noncontrolling interest in subsidiaries in the Consolidated Balance Sheets and the joint venture partner’s portion of net income is shown as Net income attributable to noncontrolling interest in the Consolidated Statements of Operations. ADS participates in joint ventures for the purpose of expanding upon the growth of manufacturing and selling HDPE corrugated pipe in emerging markets. ADS invested in ADS Mexicana for the purpose of expanding upon growth of manufacturing and selling ADS licensed HDPE corrugated pipe and related products in the Mexican and Central American markets via the joint venture partner’s local presence and expertise throughout the region. The Company executed a Technology, Patents and Trademarks Sub-License Agreement and a Distribution Agreement with ADS Mexicana that provides ADS Mexicana with the rights to manufacture and sell ADS licensed products in Mexico and Central America. The Company has concluded that it holds a variable interest in and is the primary beneficiary of ADS Mexicana based on the power to direct the most significant activities of ADS Mexicana and the obligation to absorb losses and the right to receive benefits that could be significant to ADS Mexicana. As the primary beneficiary, the Company is required to consolidate the assets and liabilities of ADS Mexicana. Table of Contents Advanced Drainage Systems, Inc F-25
The table below includes the assets and liabilities of ADS Mexicana that are consolidated as of March 31, 2026 and 2025. The balances exclude intercompany transactions that are eliminated upon consolidation. (Amounts in thousands) 2026 2025 Assets Cash $ 9,608 $ 7,675 Other current assets 18,314 22,267 Property, plant and equipment, net 25,642 15,251 Other noncurrent assets 1,687 2,112 Total assets $ 55,251 $ 47,305 Liabilities Current liabilities $ 10,829 $ 8,608 Noncurrent liabilities 1,991 1,591 Total liabilities $ 12,820 $ 10,199 EQ TruePointe One - The Company has 63% ownership of a consolidated joint venture, which owns and operates the Company’s corporate headquarters building. The equity owned by the Company’s joint venture partners is shown as Noncontrolling interest in subsidiaries in the Consolidated Balance Sheets and the joint venture partners’ portion of net income is shown as Net income attributable to noncontrolling interest in the Consolidated Statements of Operations. The Company has concluded that it holds a variable interest in and is the primary beneficiary of EQ TruePointe One based on the power to direct the most significant activities of the entity and the obligation to absorb losses and the right to receive benefits that could be significant. As the primary beneficiary, the Company is required to consolidate the assets and liabilities of EQ TruePointe One. The table below includes the assets and liabilities of EQ TruePointe One that are consolidated as of March 31, 2026. The balances exclude intercompany transactions that are eliminated upon consolidation. (Amounts in thousands) 2026 Assets Cash $ 396 Other current assets 2,028 Property, plant and equipment, net 34,176 Other noncurrent assets 141 Total assets $ 36,741 Liabilities Current liabilities $ 1,664 Noncurrent liabilities 27,014 Total liabilities $ 28,678 South American Joint Venture - The Company participates in an unconsolidated joint venture, the South American Joint Venture, which is 50% owned by the Company’s wholly-owned subsidiary ADS Chile. The Company’s investment in this unconsolidated joint venture was formed for the purpose of expanding upon the growth of manufacturing and selling HDPE corrugated pipe in the South American market via the joint venture partner’s local presence and expertise throughout the region. The Company has concluded that it is appropriate to account for this investment using the equity method, whereby the Company’s share of the income or loss of the joint venture is reported in the Consolidated Statements of Operations under Equity in net income of unconsolidated affiliates and the Company’s investment in the joint venture is included in Other assets in the Consolidated Balance Sheets. The Company is not required to consolidate the South American Joint Venture as it is not the primary beneficiary, although the Company does hold significant variable interests in the South American Joint Venture through the equity investment and debt guarantee. Table of Contents Advanced Drainage Systems, Inc F-26
12. RELATED PARTY TRANSACTIONS ADS Mexicana - On June 6, 2022, the Company and ADS Mexicana amended the Intercompany Revolving Credit Promissory Note (the “Intercompany Note”) with a borrowing capacity of $9.5 million. The Intercompany Note matures on June 8, 2027. The Intercompany Note indemnifies the ADS Mexicana joint venture partner for 49% of any unpaid borrowing. The interest rates under the Intercompany Note are determined by certain base rates or Secured Overnight Financing Rate (“SOFR”) plus an applicable margin based on the Leverage Ratio. As of March 31, 2026 and 2025, there were no borrowings under the Intercompany Note. South American Joint Venture - ADS is the guarantor for 50% of the South American Joint Venture’s credit facility, and the debt guarantee is shared equally with the joint venture partner. The maximum potential obligation under this guarantee totals $5.5 million as of March 31, 2026. The maximum borrowing permitted under the South American Joint Venture’s credit facility is $11.0 million. This credit facility allows borrowings in either Chilean pesos or U.S. dollars at a fixed interest rate determined at inception of each draw on the facility. The guarantee of the South American Joint Venture’s debt expires on December 31, 2026. ADS does not anticipate any required contributions related to the balance of this credit facility. As of March 31, 2026 and 2025, there was no outstanding principal balance or U.S. dollar denominated loans. 13. DEBT Long-term debt as of the fiscal years ended March 31 consisted of the following: (Amounts in thousands) 2026 2025 Term Loan Facility $ 600,000 $ 413,250 Senior Notes due 2027 — 350,000 Senior Notes due 2030 500,000 500,000 Senior Notes due 2034 500,000 — Revolving Credit Facility — — Other debt 30,251 5,988 Total 1,630,251 1,269,238 Unamortized debt issuance costs (18,428) (7,715) Current maturities (5,865) (9,934) Long-term debt obligations $ 1,605,958 $ 1,251,589 Senior Secured Credit Facility - On July 31, 2019, the Company entered into a credit agreement (the “Base Credit Agreement”) by and among, the Company, as borrower, Barclays Bank PLC, as administrative agent, and the several lenders from time to time party thereto. Among other things, the Base Credit Agreement provided for a term loan facility in the initial aggregate principal amount of $1.3 billion (the “Initial Term Loan Facility”) and a revolving credit facility in an initial aggregate amount of up to $350 million (the “Initial Revolving Credit Facility”), which included a sub-limit for a letter of credit sub-facility in the initial aggregate amount of up to $50 million. On September 24, 2019, the Company entered into a First Amendment (the “First Amendment”) to the Company’s Base Credit Agreement subsequent to the common stock offering and Senior Notes due in 2027. On May 26, 2022, the Company entered into a Second Amendment (the “Second Amendment”) to the Company's Base Credit Agreement with, among others, Barclays Bank PLC, as administrative agent under the Initial Term Loan Facility, and PNC Bank, National Association, as new administrative agent under the Initial Revolving Credit Facility. Among other things, the Second Amendment (i) amended the Base Credit Agreement by increasing the Initial Revolving Credit Facility (the “Second Amended Revolving Credit Facility”) from $350 million to $600 million (including an increase of the sub-limit for the swing-line sub-facility (“the L/C facility”) from $50 million to $60 million) and extended the maturity date of the Revolving Credit Facility to the earlier of May 26, 2027 or the date that is six months prior to the earliest maturity date of the outstanding loans under the Initial Term Loan Facility. On February 27, 2026, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Company’s Base Credit Agreement (the Base Credit Agreement as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, the “Credit Agreement”) with, among others, certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent under the Term Loan Facility (as defined below) and PNC Bank, National Association, as administrative agent under the Revolving Credit Facility (as Table of Contents Advanced Drainage Systems, Inc F-27
defined below) and as successor administrative agent, Barclays Bank PLC, as predecessor administrative agent, and the several financial institutions from time to time party thereto as lenders. Among other things, the Fourth Amendment (i) increased the Amended Revolving Credit Facility from $600 million to $750 million (the “Revolving Credit Facility”), including an increase of the sub-limit for the letter of credit sub-facility from $60 million to $75 million, (ii) refinanced the outstanding amounts owing under the Initial Term Loan Facility by providing for a new term loan facility in the initial aggregate principal amount of $600 million (the “Term Loan Facility”), (iii) extended the maturity date of the Revolving Credit Facility to February 27, 2031, (iv) extended the maturity date of the Term Credit Facility to February 28, 2033, (v) revised the “applicable margin” to provide for a range of 125 basis points to 225 basis points (for Term Benchmark based loans) and 25 basis points to 125 basis points (for base rate loans), as determined based on the consolidated senior secured net leverage ratio ranging from less than 1.50 to 1.00 to greater than or equal to 3.50 to 1.00, (vi) provides for incremental facilities in the aggregate maximum amount of the greater of $350 million or 100% of consolidated EBITDA for the most recently ended four consecutive fiscal quarters, and (vii) amended certain covenant baskets under the Credit Agreement to align with the growth of the Company. Letters of credit outstanding at March 31, 2026 and 2025 amounted to $10.1 million and $9.5 million, respectively, and reduced the availability of the Revolving Credit Facility. At the option of the Company, borrowings under the Term Loan Facility and under the Revolving Credit Facility (subject to certain limitations) bear interest at either a base rate (as determined pursuant to the Fourth Amendment) or at a Term Benchmark rate (as defined in the Fourth Amendment), plus the applicable margin as set forth therein from time to time. In the case of the Revolving Credit Facility, the applicable margin is based on the Company's consolidated senior secured net leverage ratio (as defined in the Fourth Amendment). All borrowings under the Term Loan Facility as described above initially bear interest at the Term Benchmark rate (as defined in the Fourth Amendment). In the case of the Term Loan Facility, the applicable margin shall be, for loans bearing interest at the Term Benchmark rate, 1.625%, and for loans bearing interest at the base rate, 0.625%. The deferred financing costs associated with the amendment to the Revolving Credit Facility totaled $3.6 million and are recorded as Other assets on the Company’s Consolidated Balance Sheet. The Company is also required to pay a commitment fee that is based upon the undrawn amounts of the Revolving Credit Facility at a rate per annum based upon a calculated ratio as prescribed within the Credit Agreement. As of March 31, 2026, the rate the Company was committed to paying on the undrawn portion was equal to 0.15%. The Company’s obligations under the Credit Agreement have been secured by granting a first priority lien on substantially all of the Company’s assets (subject to certain exceptions and limitations), and each of StormTech, LLC, Infiltrator Water Technologies, LLC, and Orenco Systems, Inc. (collectively the “Guarantors”) has agreed to guarantee the obligations of the Company under the Credit Agreement and to secure the obligations thereunder by granting a first priority lien in substantially all of such Guarantor's assets (subject to certain exceptions and limitations). Senior Notes due 2027 - On September 23, 2019, the Company issued $350.0 million aggregate principal amount of 5.0% 2027 Notes pursuant to the 2027 Indenture among the Company, the Guarantors and the Trustee. The 2027 Indenture contained customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2027 Indenture or the 2027 Notes and certain provisions related to bankruptcy events. The 2027 Indenture also contained customary negative covenants. The 2027 Notes were guaranteed by each of the Company’s present and future direct and indirect wholly-owned domestic subsidiaries that was a guarantor under the Company’s Senior Secured Credit Agreement. Interest on the 2027 Notes was payable semi-annually in cash in arrears on March 31 and September 30 of each year, commencing on March 31, 2020, at a rate of 5.0% per annum. The 2027 Notes were scheduled to mature on September 30, 2027. The Company used the majority of the net proceeds from the offering of the 2027 Notes for the repayment of $300.0 million of its outstanding borrowings. The deferred financing costs associated with the 2027 Notes totaled $2.1 million and were recorded as a direct reduction from the carrying amount of the related debt. The Company was able to redeem the 2027 Notes, in whole or in part, at any time on or after September 30, 2022 at established redemption prices. On February 27, 2026, the Company redeemed all of its outstanding 2027 Notes in the original aggregate principal amount of $350.0 million at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, to, but excluding, the redemption date in connection with its issuance of $500.0 million aggregate principal amount of the 2034 Notes. Senior Notes due 2030 - On June 9, 2022, the Company issued $500.0 million aggregate principal amount of 6.375% 2030 Notes pursuant to the 2030 Indenture, among the Company, the Guarantors and the Trustee. The 2030 Indenture contains customary events of default, including, among other things, payment default, failure to comply with Table of Contents Advanced Drainage Systems, Inc F-28
covenants or agreements contained in the 2030 Indenture or the 2030 Notes and certain provisions related to bankruptcy events. The 2030 Indenture also contains customary negative covenants. Interest on the 2030 Notes will be payable semi-annually in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2023, at a rate of 6.375% per annum. The 2030 Notes will mature on July 15, 2030. The Company used a portion of the net proceeds from the offering of the 2030 Notes to repay in full the outstanding borrowings under its Revolving Credit Facility and will use the remainder for general corporate purposes. The deferred financing costs associated with the 2030 Notes totaled $9.0 million and are recorded as a direct reduction from the carrying amount of the related debt. The Company may redeem the 2030 Notes, in whole or in part, at any time on or after July 15, 2025 at certain specified redemption prices set forth in the 2030 Indenture. In addition, at any time prior to July 15, 2025, the Company may redeem the 2030 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable “make-whole” premium. At any time prior to July 15, 2025, the Company may also redeem up to 40% of the aggregate principal amount of 2030 Notes issued under the Indenture with net cash proceeds of certain equity offerings at a redemption price equal to 106.375% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Senior Notes due 2034 - On February 27, 2026, the Company issued $500.0 million aggregate principal amount of 5.375% 2034 Notes pursuant to the 2034 Indenture, among the Company, the Guarantors and the Trustee. The 2034 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2034 Indenture or the 2034 Notes and certain provisions related to bankruptcy events. The 2034 Indenture also contains customary negative covenants. Interest on the 2034 Notes will be payable semi-annually in cash in arrears on March 1 and September 1 of each year, commencing on September 1, 2026, at a rate of 5.375% per annum. The 2034 Notes will mature on March 1, 2034. The Company used the net proceeds from the offering of the 2034 Notes, together with the proceeds of the term loan “B” portion of its existing senior secured credit facility, to refinance the outstanding balance of the Company’s senior secured credit facility and redeem the 2027 Notes in full, with the remainder for general corporate purposes. The deferred financing costs associated with the 2034 Notes totaled $7.5 million and are recorded as a direct reduction from the carrying amount of the related debt. The Company may redeem the 2034 Notes, in whole or in part, at any time on or after March 1, 2029 at certain specified redemption prices set forth in the 2034 Indenture. In addition, at any time prior to March 1, 2029, the Company may redeem the 2034 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2034 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable “make-whole” premium. At any time prior to March 1, 2029, the Company may also redeem up to 40% of the aggregate principal amount of 2034 Notes issued under the 2034 Indenture with net cash proceeds of certain equity offerings at a redemption price equal to 105.375% of the principal amount of the 2034 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date Other debt - Other debt includes equipment financing and the commercial loan related to the Company’s headquarters. In November 2021, the Company purchased material handling equipment, trucks and trailers previously leased under a master lease agreement and classified as finance leases. The purchase was funded with debt through the Master Lease Agreement and Interim Funding Schedule with Fifth Third. The assets acquired are titled to the Company and included in Property, plant and equipment, net on the Company's Consolidated Balance Sheet. The equipment financings have a term of between 12 and 84 months, based on the life of the equipment, and bear a weighted average interest of 1.8%. The current portion of the equipment financing is $1.1 million, and the long-term portion is $1.9 million at March 31, 2026. The Company entered into a commercial loan agreement of $27.2 million which matures on December 5, 2028. The agreement bears interest based on SOFR plus a margin of 285 basis points, requires interest only payments through December 5, 2026, and beginning January 5, 2027 through maturity, includes principal and interest payments. Principal Maturities - Maturities of long-term debt (excluding interest and deferred financing costs) as of March 31, 2026 are summarized below: Fiscal Years Ending March 31, (Amounts in thousands) 2027 2028 2029 2030 2031 Thereafter Total Principal maturities $ 5,865 $ 8,211 $ 32,675 $ 6,000 $ 506,000 $ 1,071,500 $ 1,630,251 Table of Contents Advanced Drainage Systems, Inc F-29
14. EMPLOYEE BENEFIT PLANS KSOP Retirement Plan (“KSOP”) - The Company’s KSOP holds shares of redeemable common stock. The common stock held by the KSOP is classified as mezzanine equity as the shares are subject to the put option requirements of the Internal Revenue Code. When participants sell or forfeit these shares, the shares would no longer be subject to the put option of the Internal Revenue Code and would no longer required to be classified in mezzanine equity. Profit-Sharing Retirement Plan - On April 11, 2022, the ESOP was merged into the existing 401(k) retirement plan effective April 1, 2022 creating the KSOP. The tax-qualified profit-sharing retirement plan has a 401(k) feature covering substantially all U.S. eligible employees. Except for employer matching contributions made on behalf of Infiltrator employee-participants, the Company made employer contributions of $15.1 million, $14.2 million and $9.2 million in the fiscal years ended March 31, 2026, 2025, and 2024 respectively. Redeemable Common Stock - The put option requirements of the Internal Revenue Code apply in the event that the Company’s common stock is not a registration type class of security, or its trading has been restricted. Therefore, the holders of common stock within the KSOP have a put right to require the Company to repurchase such shares in the event that the common stock is not listed for trading or otherwise quoted on the NYSE, AMEX, NASDAQ, or any other market more senior than the OTC Bulletin Board. Defined Contribution Postretirement Plan - The Company has defined contribution postretirement benefit plans covering Canadian employees. The Company recognized costs of $2.1 million, $2.2 million and $2.0 million in the fiscal years ended March 31, 2026, 2025, and 2024, respectively. 15. STOCK-BASED COMPENSATION The Company has several programs for stock-based payments to employees and directors, including stock options, performance-based restricted units and restricted stock. Compensation expense is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period of the grant. The Company recognized stock-based compensation expense in the following line items on the Consolidated Statements of Operations for the fiscal years ended March 31, 2026, 2025, and 2024: (Amounts in thousands) 2026 2025 2024 Cost of goods sold $ 6,926 $ 5,232 $ 4,708 Selling, general and administrative expenses 25,428 21,349 27,278 Total stock-based compensation expense $ 32,354 $ 26,581 $ 31,986 The following table summarizes stock-based compensation expense by award type for the fiscal years ended March 31, 2026, 2025, and 2024: (Amounts in thousands) 2026 2025 2024 Stock options $ 6,831 $ 5,944 $ 5,287 Restricted stock 12,275 10,403 7,991 Performance-based restricted stock units 9,440 6,586 15,459 Employee Stock Purchase Plan 2,079 1,736 1,056 Non-employee director restricted stock 1,729 1,912 2,193 Total stock-based compensation expense $ 32,354 $ 26,581 $ 31,986 2017 Omnibus Plan The 2017 Omnibus Plan Incentive Plan, as amended in July 2021, (the “2017 Omnibus Plan”) provides for the issuance of a maximum of 5.0 million shares of the Company’s common stock for awards made thereunder, which awards may consist of stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock, cash-based awards, performance awards (which may take the form of performance cash, performance units or performance shares) or other stock-based awards. The Company had approximately 1.5 million shares available for awards as of March 31, 2026. Table of Contents Advanced Drainage Systems, Inc F-30
Stock Options - Stock option awards are measured based on the grant date estimated fair value of each award. The Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The following table summarizes the assumptions used in estimating the fair value of stock options: 2026 2025 2024 Common stock price $119.30 $177.38 $96.51 Expected stock price volatility 46.7% 45.5% 45.6% Risk-free interest rate 4.2% 4.5% 3.8% Weighted-average expected life (years) 6.0 6.0 6.0 Dividend yield 0.60% 0.36% 0.58% The stock option activity for the fiscal year ended March 31, 2026 is summarized as follows: (Share amounts in thousands) Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding at beginning of year 871 $ 67.95 5.4 Granted 132 119.37 — Exercised (139) 46.91 — Forfeited (12) 133.54 — Outstanding at end of year 852 78.45 5.3 Vested at end of year 621 59.72 4.1 Unvested at end of year 231 128.77 1.7 Fair value of options granted during the year $ 56.74 As of March 31, 2026, there was a total of $8.2 million of unrecognized compensation expense related to unvested stock option awards under the 2017 Omnibus Plan, as amended, that will be recognized as an expense as the awards vest over the remaining weighted average service period of 1.7 years. All outstanding options are expected to vest. The aggregate intrinsic value for options outstanding and exercisable as of March 31, 2026 was $53.4 million and $49.2 million, respectively. The total intrinsic value of options exercised during the fiscal years ended March 31, 2026, 2025, and 2024 were $14.0 million, $20.0 million and $12.1 million, respectively. Restricted Stock - The information about the unvested restricted stock grants as of March 31, 2026 is as follows: (Share amounts in thousands) Number of Shares Weighted Average Grant Date Fair Value Unvested at beginning of year 199 $ 135.82 Granted 135 124.02 Vested (100) 124.54 Forfeited (12) 134.56 Unvested at end of year 222 $ 133.76 At March 31, 2026, there was approximately $17.5 million of unrecognized compensation expense related to the restricted stock that will be recognized over the weighted average remaining service period of 1.8 years. The total fair value of restricted stock that vested during fiscal year ended March 31, 2026, 2025 and 2024 was $12.5 million, $15.0 million and $8.4 million, respectively. The fair value of restricted stock is based on the fair value of the Company’s common stock at the date of grant. Table of Contents Advanced Drainage Systems, Inc F-31
Performance-based Restricted Units (“Performance units”) - The information about the performance units granted under the 2017 Omnibus Plan is as follows: (Share amounts in thousands) Number of Shares Weighted Average Grant Date Fair Value Unvested at beginning of year 209 $ 122.33 Granted 97 147.39 Added by Performance Factor 26 99.29 Vested (85) 100.61 Forfeited (9) 131.21 Unvested at end of year 238 $ 137.35 At March 31, 2026, there was approximately $13.7 million of unrecognized compensation expense related to the performance units that will be recognized over the weighted average remaining service period of 1.9 years. For the performance units granted in fiscal 2026, 2025 and 2024, 50% of the award is based upon the achievement of certain levels of Return on Invested Capital for the performance period and 50% is based upon the achievement of certain levels of cash flows from operations for the performance period or other specific project targets. The performance units each have a 3-year performance period. The performance units, and any accrued dividend equivalents, will be settled in shares of the Company’s common stock, if the applicable performance and service conditions are satisfied. The fair value of performance-based restricted stock units is based on the fair value of the Company’s common stock at the date of grant. 2013 Stock Option Plan The Company’s 2013 stock option plan (“2013 Plan”) generally provided for grants of stock options with the exercise price equal to fair value on the date of grant. The grants generally vest in three to five equal annual amounts beginning in year one and expire after approximately 10 years from issuance. The Company had no shares available for grant under the 2013 Plan as of March 31, 2026. The stock option activity for the fiscal year ended March 31, 2026 is summarized as follows: 2013 Plan (Share amounts in thousands) Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding at beginning of year 13 $ 24.20 1.0 Granted — — — Exercised (13) 24.20 — Forfeited — — — Outstanding at end of year — — — Vested at end of year — — — Unvested at end of year — $ — — The total intrinsic value of options exercised during the fiscal year ended March 31, 2026, 2025, and 2024 were $1.7 million, $10.9 million and $1.8 million, respectively. Employee Stock Purchase Plan (“ESPP”) - The Advanced Drainage Systems, Inc. Employee Stock Purchase Plan, which provides for a maximum of 0.4 million shares of the Company’s common stock. Eligible employees may purchase the Company's common stock at 85% of the lower of the fair market value of the Company's common stock on the first day or the last day of the offering period. Table of Contents Advanced Drainage Systems, Inc F-32
16. INCOME TAXES Provision for Taxes - The components of Income before income taxes for the fiscal years ended March 31 are as follows: (Amounts in thousands) 2026 2025 2024 United States $ 548,018 $ 571,649 $ 641,370 Foreign 11,770 17,816 25,383 Total $ 559,788 $ 589,465 $ 666,753 The components of Income tax expense for the fiscal years ended March 31 consisted of the following: (Amounts in thousands) 2026 2025 2024 Current: Federal $ 75,432 $ 112,451 $ 127,109 State and local 22,081 25,337 27,028 Foreign 2,247 3,628 7,121 Total current tax expense 99,760 141,416 161,258 Deferred: Federal 35,391 (591) (201) State and local (699) (788) (2,127) Foreign 536 1,026 68 Total deferred tax expense (benefit) 35,228 (353) (2,260) Total Income tax expense $ 134,988 $ 141,063 $ 158,998 For the fiscal years ended March 31, the effective tax rate varied from the statutory Federal income tax rate as a result of the following factors: (Amounts in thousands) 2026 2025 2024 Federal statutory rate $ 117,555 21.0 % $ 123,788 21.0 % $ 140,018 21.0 % State and local taxes—net of federal income tax benefit(a) 16,686 3.0 % 17,820 3.0 % 19,245 2.9 % Nontaxable or nondeductible items Executive compensation 4,688 0.8 % 7,719 1.3 % 5,507 0.8 % Stock-based compensation (2,671) (0.5) % (8,273) (1.4) % (4,250) (0.6) % Other (1,270) (0.2) % 9 — % (1,522) (0.3) % Effective rate $ 134,988 24.1 % $ 141,063 23.9 % $ 158,998 23.8 % (a) In 2026, state and local taxes in Florida, California, Georgia, North Carolina, Pennsylvania, and Alabama comprised the majority (greater than 50%) of the tax effect in this category. In 2025, state and local taxes in Florida, California, Georgia, North Carolina, Massachusetts, Oregon, and Pennsylvania comprised the majority (greater than 50%) of the tax effect in this category. In 2024, state and local taxes in Florida, California, Georgia, Pennsylvania, New Jersey, North Carolina, and Alabama comprised the majority (greater than 50%) of the tax effect in this category. Table of Contents Advanced Drainage Systems, Inc F-33
Cash Taxes Paid - The income taxes paid (net of refunds received) for the fiscal years ended March 31 are as follows: (Amounts in thousands) 2026 2025 2024 Federal $ 91,795 $ 116,003 $ 128,139 State and local 19,051 20,680 26,410 Foreign 2,508 5,468 6,600 Total cash paid for income taxes $ 113,354 $ 142,151 $ 161,149 Deferred Income Taxes - Net deferred tax assets and liabilities are included in Other assets and Deferred tax liabilities, respectively, on the Consolidated Balance Sheets. The related balances at March 31 were as follows: (Amounts in thousands) 2026 2025 Net non-current deferred tax assets $ 708 $ 1,249 Net non-current deferred tax liabilities 220,994 190,416 The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31 were comprised of: (Amounts in thousands) 2026 2025 Deferred tax assets: Acquisition costs $ 6,079 $ 433 Operating lease liabilities 24,482 16,666 Research and development expenses 1,016 15,727 Stock-based compensation 7,621 6,452 Net loss on assets and liabilities held for sale 12,709 — Other 17,982 15,602 Total deferred tax assets 69,889 54,880 Less: valuation allowance (7,572) (289) Total net deferred tax assets 62,317 54,591 Deferred tax liabilities: Intangible assets 84,055 96,076 Property, plant and equipment 159,122 119,703 Operating lease assets 24,333 16,795 Goodwill 11,945 10,326 Other 3,148 858 Total deferred tax liabilities 282,603 243,758 Net deferred tax liabilities $ 220,286 $ 189,167 As a result of the NDS International Entities being classified as held for sale, the Company has recorded deferred tax assets of $12.7 million as of March 31, 2026 related to net losses on outside basis differences. A valuation allowance has been recorded against $7.3 million of these deferred tax assets as of March 31, 2026. See “Note 5. Discontinued Operations and Held for Sale” for additional information. The Company intends to repatriate earnings from Canada and believes that there will be no additional tax costs associated with the repatriation of such earnings other than any potential non-U.S. withholding taxes, for which no deferred tax liability has been recognized. All other undistributed earnings from other foreign entities are intended to be reinvested indefinitely with the exception of cash dividends paid by the Company’s ADS Mexicana joint venture. It is not practicable to estimate the amount of deferred tax liability, which would primarily relate to withholding tax, that might be payable on the eventual remittance of such undistributed earnings. Table of Contents Advanced Drainage Systems, Inc F-34
Uncertain Tax Positions - A reconciliation of the balance of unrecognized tax benefits for the years ended March 31 is as follows: (Amounts in thousands) 2026 2025 2024 Balance at beginning of year $ 9,475 $ 4,600 $ 2,451 Tax positions taken in current year 4,193 2,882 1,609 Increases in tax positions for prior years 1,762 2,083 540 Lapse of statute of limitations (439) (90) — Balance at end of year $ 14,991 $ 9,475 $ 4,600 Included in the balance of unrecognized tax benefits at March 31, 2026, 2025, and 2024 were $12.2 million, $7.5 million and $3.6 million, respectively, of tax benefits that if recognized would favorably affect the Company’s effective tax rate. The unrecognized tax benefit is recorded in Other accrued liabilities, Liabilities held for sale, and Other liabilities in the Company’s Consolidated Balance Sheet. These amounts include potential accrued interest and penalties of $0.7 million and $0.4 million at March 31, 2026 and 2025, respectively. The Company is currently open to audit under the statute of limitations by the IRS for the fiscal years ended March 31, 2023 through March 31, 2026. The majority of the Company’s state income tax returns are open to audit under the statute of limitations for the years ended March 31, 2022 through March 31, 2026. The foreign income tax returns are open to audit under the statute of limitations for the years ended March 31, 2022 through March 31, 2026. 17. NET INCOME PER SHARE AND STOCKHOLDERS’ EQUITY Basic net income per share is calculated by dividing the Net income available to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is computed by dividing the Net income available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Table of Contents Advanced Drainage Systems, Inc F-35
The following table presents information necessary to calculate net income per share for the fiscal years ended March 31, 2026, 2025, and 2024, as well as potentially dilutive securities excluded from the weighted average number of diluted common shares outstanding because their inclusion would have been anti-dilutive: (Amounts in thousands, except per share data) 2026 2025 2024 NET INCOME PER SHARE — BASIC: Net income from continuing operations available to common stockholders $ 427,555 $ 450,172 $ 509,915 Net loss from discontinued operations, net of tax (1,090) — — Net income attributable to common stockholders 426,465 450,172 509,915 Weighted average number of common shares outstanding - Basic 77,756 77,549 78,252 Net income from continuing operations available to common stockholders per share - Basic $ 5.50 $ 5.81 $ 6.52 Net loss from discontinued operations per common share - Basic $ (0.01) $ — $ — Net income per common share — Basic $ 5.48 $ 5.81 $ 6.52 NET INCOME PER SHARE — DILUTED: Net income from continuing operations available to common stockholders $ 427,555 $ 450,172 $ 509,915 Net loss from discontinued operations, net of tax (1,090) — — Net income available to common stockholders 426,465 450,172 509,915 Weighted average number of common shares outstanding - Basic 77,756 77,549 78,252 Assumed restricted stock - nonparticipating 59 64 77 Assumed exercise of stock options 423 499 602 Assumed performance units 145 76 86 Weighted average number of common shares outstanding - Diluted 78,383 78,188 79,017 Net income from continuing operations available to common stockholders per share - Diluted $ 5.45 $ 5.76 $ 6.45 Net loss from discontinued operations per common share - Diluted $ (0.01) $ — $ — Net income per common share —Diluted $ 5.44 $ 5.76 $ 6.45 Potentially dilutive securities excluded as anti-dilutive 29 27 18 Stockholders’ Equity - In February 2026, the Board of Directors approved a new $1.0 billion stock repurchase authorization (the “Repurchase Program”) of ADS common stock in accordance with applicable securities laws. The repurchase program does not obligate the Company to acquire any particular amount of common stock and may be suspended or terminated at any time at the Company’s discretion. The Company repurchased 0.7 million and 0.4 million shares of common stock at a cost of $99.2 million and $68.2 million during the fiscal year March 31, 2026 and 2025, respectively. 18. COMMITMENTS AND CONTINGENCIES Purchase Commitments - The Company has historically secured supplies of resin raw material by agreeing to purchase quantities during a future given period at a fixed price. These purchase contracts typically range from 1 to 12 months and occur in the ordinary course of business. The Company does not have any outstanding purchase commitments with fixed price and quantity as of March 31, 2026. The Company also enters into equipment purchase contracts with manufacturers. Litigation and Other Proceedings - The Company is involved from time to time in various legal proceedings that arise in the ordinary course of business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions including acquisitions and divestitures. The Company does not believe that such litigation, claims, and administrative proceedings will have a material adverse impact on the Company’s financial position or results of operations. The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated. Table of Contents Advanced Drainage Systems, Inc F-36
19. OTHER ACCRUED LIABILITIES Other accrued liabilities as of fiscal years ended March 31 consisted of the following: (Amounts in thousands) 2026 2025 Accrued payroll, bonus and commissions $ 76,894 $ 45,270 Accrued customer rebate liability 36,089 22,382 Operating lease liabilities 21,303 19,456 Professional fees 18,537 5,498 Accrued interest expense 12,479 9,169 Self-insurance liabilities 8,085 8,348 Other 39,236 27,172 Total accrued liabilities $ 212,623 $ 137,295 20. BUSINESS SEGMENT INFORMATION 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. ADS operates its business in two distinct reportable segments: “Stormwater” and “Wastewater”, which are primarily organized based on products. The CODM for ADS is the Chief Executive Officer (“CEO”). The CEO reviews financial information and makes operational decisions based on Net sales and a measure of operating profit, Segment Adjusted EBITDA, a non-GAAP financial measure. Certain selling and general and administrative expenses are not allocated to the segments, including non-operating functions such as legal, facilities management, and investor relations. A measure of assets is not applicable, as segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources. The Company does not aggregate operating segments to form reportable segments. Stormwater - The Stormwater segment manufactures and markets high performance thermoplastic corrugated pipe and complementary products, including single wall pipe, N-12 HDPE pipe, high performance polypropylene pipe, StormTech, Nyloplast, Inserta Tee, Cultec, water quality filters and structures, Fittings, FlexStorm and NDS channel drains, catch basins and access boxes. Stormwater products are sold throughout the United States and certain international regions, including Company owned facilities in Canada, subsidiaries that distribute to Europe and the Middle East, and exports through the Company’s joint ventures with local partners in Mexico and South America. The Company maintains and serves these markets through product distribution relationships with many of the largest waterworks distributors, buying groups and co-ops, major retailers as well as an extensive network of hundreds of small to medium-sized distributors. Products are designed primarily for stormwater management in the construction and infrastructure marketplace across a broad range of end markets and applications, including non-residential, residential, agriculture and infrastructure. Wastewater - Wastewater (formerly Infiltrator) is a leading national provider of plastic leachfield chambers and systems, onsite wastewater tanks and accessories, primarily for use in residential applications. Infiltrator products are used in onsite wastewater treatment systems in the United States and Canada. Table of Contents Advanced Drainage Systems, Inc F-37
The following tables set forth Net sales, significant segment expenses, and Adjusted EBITDA for each of the Company’s reportable segments for the fiscal years ended March 31: Fiscal Year Ended March 31, 2026 (Amounts in thousands) Stormwater Wastewater Intersegment Eliminations Total Net sales: Net sales from external customers $ 2,397,414 $ 652,962 $ — $ 3,050,376 Intersegment net sales 36,466 61,580 (98,046) — Net sales 2,433,880 714,542 (98,046) 3,050,376 Significant segment expenses: Costs of goods sold 1,613,170 367,963 (98,143) 1,882,990 Selling, general and administrative expenses 348,829 69,002 — 417,831 Other segment items(a) (231,194) (33,875) — (265,069) Segment Adjusted EBITDA(b) $ 703,075 $ 311,452 $ 97 Corporate and other costs(c) 51,718 Total consolidated Adjusted EBITDA $ 962,906 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes: Interest expense 93,869 Interest income (25,000) Depreciation and amortization 216,261 Stock-based compensation expense 32,354 Loss (gain) on disposal of assets and costs from exit and disposal activities 19,211 Transaction costs(d) 40,805 Other adjustments(e) 25,618 Income before income taxes 559,788 Income tax expense 134,988 Equity in net income of unconsolidated affiliates (5,063) Net income from continuing operations $ 429,863 (a) Other segment items include depreciation, amortization recorded within cost of goods sold, stock-based compensation expense, inventory step-up costs, restructuring and realignment expense, and transaction costs. (b) The Company calculates Segment 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 gains and expenses. (c) Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA. (d) Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions. (e) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, inventory step-up costs, restructuring and realignment expense, and executive retirement expense (benefit). Table of Contents Advanced Drainage Systems, Inc F-38
Fiscal Year Ended March 31, 2025 (Amounts in thousands) Stormwater Wastewater Intersegment Eliminations Total Net sales: Net sales from external customers $ 2,326,370 $ 577,875 $ — $ 2,904,245 Intersegment net sales 35,647 52,031 (87,678) — Net sales 2,362,017 629,906 (87,678) 2,904,245 Significant segment expenses: Costs of goods sold 1,582,828 314,465 (87,289) 1,810,004 Selling, general and administrative expenses 282,877 55,186 — 338,063 Other segment items(a) (143,608) (31,757) — (175,365) Segment Adjusted EBITDA(b) $ 639,920 $ 292,012 $ (389) Corporate and other costs(c) 42,315 Total consolidated Adjusted EBITDA $ 889,228 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes: Interest expense 91,803 Interest income (23,485) Depreciation and amortization 183,281 Stock-based compensation expense 26,581 Loss (gain) on disposal of assets and costs from exit and disposal activities 3,858 Transaction costs(d) 9,291 Other adjustments(e) 8,434 Income before income taxes 589,465 Income tax expense 141,063 Equity in net income of unconsolidated affiliates (4,171) Net income from continuing operations $ 452,573 (a) Other segment items include depreciation, amortization recorded within cost of goods sold, stock-based compensation expense, inventory step-up cost, restructuring and realignment expense, and transaction costs. (b) The Company calculates Segment 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 gains and expenses. (c) Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA. (d) Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions. (e) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, inventory step-up costs, restructuring and realignment expense, and executive retirement expense (benefit). Table of Contents Advanced Drainage Systems, Inc F-39
Fiscal Year Ended March 31, 2024 (Amounts in thousands) Stormwater Wastewater Intersegment Eliminations Total Net sales: Net sales from external customers $ 2,361,520 $ 512,953 $ — $ 2,874,473 Intersegment net sales 30,649 53,597 (84,246) — Net sales 2,392,169 566,550 (84,246) 2,874,473 Significant segment expenses: Costs of goods sold 1,525,826 283,740 (81,042) 1,728,524 Selling, general and administrative expenses 275,342 40,639 — 315,981 Other segment items(a) (122,966) (24,746) — (147,712) Segment Adjusted EBITDA(b) $ 713,967 $ 266,917 $ (3,204) Corporate and other costs(c) 54,733 Total consolidated Adjusted EBITDA $ 922,947 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes: Interest expense 88,862 Interest income (22,047) Depreciation and amortization 154,903 Stock-based compensation expense 31,986 Loss (gain) on disposal of assets and costs from exit and disposal activities (8,365) Transaction costs(d) 3,444 Other adjustments(e) 7,411 Income before income taxes 666,753 Income tax expense 158,998 Equity in net income of unconsolidated affiliates (5,536) Net income from continuing operations $ 513,291 (a) Other segment items include depreciation, amortization recorded within cost of goods sold, stock-based compensation expense, inventory step-up costs, restructuring and realignment expense, and transaction costs. (b) The Company calculates Segment 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 gains and expenses. (c) Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA. (d) Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions. (e) Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, inventory step-up costs, restructuring and realignment expense, and executive retirement expense (benefit). Table of Contents Advanced Drainage Systems, Inc F-40
Other Segment Information - The following sets forth certain financial information for the fiscal years ended March 31: (Amounts in thousands) 2026 2025 2024 Depreciation and amortization Stormwater $ 126,387 $ 102,574 $ 81,602 Wastewater 80,423 74,068 69,121 Other 9,451 6,639 4,180 Total $ 216,261 $ 183,281 $ 154,903 Capital expenditures Stormwater $ 157,381 $ 175,918 $ 128,313 Wastewater 30,509 13,733 17,882 Other 61,876 23,293 37,617 Total $ 249,766 $ 212,944 $ 183,812 Geographic Sales and Assets Information - Net sales are attributed to the geographic location based on the location of the customer. The table below represents the Net sales and long-lived asset information by geographic location for each of the fiscal years ended March 31: (Amounts in thousands) 2026 2025 2024 Net Sales United States $ 2,857,553 $ 2,709,615 $ 2,666,704 Canada 119,270 119,492 126,050 Other 73,553 75,138 81,719 Total $ 3,050,376 $ 2,904,245 $ 2,874,473 (Amounts in thousands) 2026 2025 Long-Lived Assets (a) United States $ 1,169,184 $ 1,016,681 Canada 32,367 30,655 Other 55,610 39,529 Total $ 1,257,161 $ 1,086,865 (a) For segment reporting purposes, long-lived assets include Investments in unconsolidated affiliates, Central parts and Property, plant and equipment. 21. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Supplemental disclosures of cash flow information for the fiscal years ended March 31 were as follows: (Amounts in thousands) 2026 2025 2024 Supplemental disclosures of cash flow information — cash paid: Interest $ 87,031 $ 89,478 $ 86,263 Income taxes 113,354 142,151 161,149 Table of Contents Advanced Drainage Systems, Inc F-41
(Amounts in thousands) 2026 2025 2024 Supplemental disclosures of noncash investing and financing activities: Purchases of plant, property, and equipment included in accounts payable $ 25,668 $ 32,377 $ 35,355 Repurchase of common stock pending settlement 6,741 — 1,720 Share repurchase excise tax accrual 546 — 1,687 ESPP share issuance 6,208 5,392 1,927 Lease obligations retired upon disposition of leased assets 10,828 84 2,361 (Amounts in thousands) Reconciliation to Balance Sheet 2026 2025 2024 Cash $ 223,012 $ 463,319 $ 490,163 Restricted cash (included in Other current assets and Other assets, respectively, in the Consolidated Balance Sheets) 1,771 5,952 5,685 Cash and restricted cash, excluding cash held for sale, at end of year $ 224,783 $ 469,271 $ 495,848 22. SUBSEQUENT EVENTS Dividends on Common Stock - Subsequent to the end of the quarter, the Company declared a quarterly cash dividend of $0.20 per share of common stock. The dividend is payable on June 15, 2026 to stockholders of record at the close of business on June 1, 2026. Share Repurchase Program - Subsequent to the end of the fiscal year, 0.6 million shares of common stock at a cost of $86.7 million were repurchased under the Board of Directors’ authorization. * * * * * * Table of Contents Advanced Drainage Systems, Inc F-42
SCHEDULE II ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES Consolidated Valuation and Qualifying Accounts for the Fiscal Years Ended March 31, 2026, 2025 and 2024 (in thousands): Allowance for Credit Losses: Fiscal Year ended March 31, Balance at beginning of period Charged to costs and expenses(1) Charged to other accounts(2) Deductions Balance at end of period 2026 $ 7,684 $ (141) $ 1 $ (2,890) $ 4,654 2025 4,849 3,654 (3) (816) 7,684 2024 8,227 (1,816) (4) (1,558) 4,849 (1) Amount for the year ended March 31, 2026 and 2025 includes $0.1 million and $0.8 million due to the acquisition of NDS and Orenco, respectively. (2) Amounts represent the impact of foreign currency translation. Table of Contents F-43
About Advanced Drainage Systems, Inc. Advanced Drainage Systems is a leading manufacturer of innovative stormwater and onsite wastewater solutions that manage the world’s most precious resource: water. ADS, along with NDS and Infiltrator Water Technologies, provides superior stormwater drainage and onsite wastewater products used across commercial, residential, infrastructure, and agricultural applications, while delivering unparalleled customer service. ADS operates the industry’s largest company-owned fleet, an expansive sales team and a vast manufacturing network. As one of the largest plastic recycling companies in North America, ADS keeps hundreds of millions of pounds of plastic out of landfills each year. Founded in 1966, ADS’ water management solutions are designed to last for decades. To learn more, visit the Company’s website at www.adspipe.com. ADS Annual Report 2026 | 11
Advanced Drainage Systems, Inc. 4024 Green Stripe Ln, Hilliard, OH 43026 www.adspipe.com