Earnings release
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NEWS RELEASE Advanced Drainage Systems Announces Second Quarter Fiscal 2027Advanced Drainage Systems Announces Second Quarter Fiscal 2027 ResultsResults 2026-11-05 Net sales increased 12.5% year-to-date Organic net sales increased 2.3% year-to-date Repurchased $375.1 million of common stock Generated $458.2 million in cash from operations Announced proposed acquisition of StormTrap HILLIARD, Ohio--(BUSINESS WIRE)-- Advanced Drainage Systems, Inc. (NYSE: WMS) (“ADS” or the “Company”), a leading provider of innovative water management solutions in the stormwater and onsite wastewater industries today announced nancial results for the scal second quarter ended September 30, 2026. Scott Barbour, President and Chief Executive O cer of ADS commented, "Our second quarter results demonstrate the resilience of our business model and the team's ability to execute in a challenging demand environment. Net sales increased 4.6% to $889.4 million, including the contribution from NDS, and we generated Adjusted EBITDA of $286.8 million, resulting in an Adjusted EBITDA margin of 32.2%. Revenue in the second quarter was impacted by a larger than previously estimated pull forward of revenue into the rst quarter. Looking back over the rst half of scal year 2027, our performance was strong, with net sales up 12.5%, organic net sales up 2.3% and Adjusted EBITDA up 14.0%. The rst half Adjusted EBITDA margin of 34.1% represents the highest rst half pro tability in the Company’s history." "We continue to see strong performance in areas where innovation and evolving regulations are creating new demand, with advanced wastewater treatment, stormwater capture and water quality products each growing double digits. We also took an important step to expand our addressable market with the proposed acquisition of StormTrap, a leader in large-volume, space- constrained and highly engineered stormwater solutions. StormTrap complements and further diversi es our portfolio, ts ADS’ 1
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speci cation-driven commercial model and creates new cross-selling opportunities to further expand the package in the non- residential and infrastructure markets." "Favorable price/cost has more than o set unfavorable volume and transportation costs, contributing to robust pro tability in the quarter, which we expect to continue into the second half of the year. We are experiencing lower in ationary pressure than initially expected on materials, mitigating the need for corresponding pricing actions that had previously been included in our net sales outlook. The demand environment is softer today than when we initially issued guidance in May, driven by higher interest rates and ongoing geopolitical uncertainty. These changes are re ected in our updated revenue outlook." "Because of our focus on new product introductions, material conversion, managing price/cost, executing on productivity and deploying capital in a disciplined manner, the Adjusted EBITDA outlook is largely the same despite the change in net sales guidance. This re ects our con dence in the resilient earnings pro le of the business and our focus on the factors within our control. We remain con dent in the long-term fundamentals of ADS as a pure-play water management company, and we believe the investments we are making today position us to deliver as our end markets recover." Second Quarter Fiscal 2027 Results Net sales increased $39.0 million, or 4.6%, to $889.4 million, as compared to $850.4 million in the prior year quarter. Stormwater sales increased $41.4 million, or 6.2%, to $712.1 million, as compared to $670.7 million in the prior year quarter. Stormwater sales include $77.3 million of revenue from the acquisition of National Diversi ed Sales (“NDS”). On an organic basis, Stormwater sales decreased 5.3%. Wastewater sales decreased $2.4 million, or 1.3%, to $177.3 million as compared to $179.7 million in the prior year quarter. Gross pro t increased $5.7 million, or 1.7%, to $345.9 million as compared to $340.1 million in the prior year quarter. The increase in gross pro t is primarily driven by the acquisition of NDS, as well as favorable price/cost more than o setting unfavorable volume and transportation costs. Selling, general and administrative expenses increased $10.4 million, or 8.7% to $129.6 million, as compared to $119.2 million. As a percentage of sales, selling, general and administrative expense was 14.6% as compared to 14.0% in the prior year quarter. The increase was primarily driven by the acquisition of NDS and associated transaction costs. Net income from continuing operations decreased $22.9 million, or 14.6%, to $133.6 million as compared to $156.5 million in the prior year quarter. Diluted earnings per share (“EPS”) from continuing operations decreased $0.22, or 11.0%, to $1.77 as compared to $1.99 in the prior year quarter. Adjusted EBITDA (Non-GAAP) decreased $0.7 million, or 0.2%, to $286.8 million, as compared to $287.5 million in the prior year quarter, primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 32.2% as compared to 33.8% in the prior year quarter. Segment sales results are based on Net sales to external customers. Reconciliations of GAAP to Non-GAAP nancial measures for Adjusted EBITDA, Organic Net Sales, Free Cash Flow and Adjusted Earnings per Share have been provided in the nancial statement 2
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tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.” Year-to-Date Fiscal 2027 Results Net sales increased $210.3 million, or 12.5%, to $1,890.5 million, as compared to $1,680.3 million in the prior year period. Stormwater sales increased $199.2 million, or 15.1%, to $1,521.4 million, as compared to $1,322.2 million in the prior year period. Stormwater sales include $172.0 million of revenue from the acquisition of NDS. On an organic basis, Stormwater sales increased 2.1%, driven by growth in the core non-residential construction end market. Wastewater sales increased $11.0 million, or 3.1%, to $369.1 million as compared to $358.1 million in the prior year period. Gross pro t increased $83.3 million, or 12.4%, to $753.9 million as compared to $670.6 million in the prior year period. The increase in gross pro t is primarily driven by the acquisition of NDS, as well as favorable volume, price/cost and mix of construction market sales more than o setting unfavorable transportation costs. Selling, general and administrative expenses increased $37.3 million, or 16.7%, to $260.4 million, as compared to $223.2 million. As a percentage of sales, selling, general and administrative expense was 13.8% as compared to 13.3% in the prior year. The increase was primarily driven by the acquisition of NDS. Net income from continuing operations increased $9.6 million, or 3.2%, to $310.2 million as compared to $300.6 million in the prior year period. Diluted EPS from continuing operations increased $0.19, or 5.0%, to $4.02, as compared to $3.83 per share in the prior year, primarily due to the factors mentioned above. Adjusted EBITDA (Non-GAAP) increased $79.4 million, or 14.0%, to $645.1 million, as compared to $565.7 million in the prior year period, primarily due to the factors mentioned above. As a percentage of net sales, Adjusted EBITDA was 34.1% as compared to 33.7% in the prior year period. Balance Sheet and Liquidity Net cash provided by operating activities was $458.2 million, as compared to $509.8 million in the prior year. Free cash ow (Non- GAAP) was $359.5 million, as compared to $398.8 million in the prior year. Net debt (total debt and nance lease obligations net of cash) was $1,619.9 million as of September 30, 2026, an increase of $71.0 million from March 31, 2026. ADS had total liquidity of $891.8 million, comprised of cash of $153.2 million as of September 30, 2026 and $738.6 million of availability under committed credit facilities. As of September 30, 2026, the Company’s trailing-twelve-month leverage ratio was 1.6 times Adjusted EBITDA. In the six months ended September 30, 2026, the Company repurchased 2.7 million shares of its common stock for a total cost of $375.1 million. As of September 30, 2026, approximately $677.3 million of common stock may be repurchased under the Company's existing stock repurchase authorization. 3
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Fiscal 2027 Outlook Based on results to date, current visibility, backlog of existing orders and business trends, the Company updated its nancial targets for scal 2027. Net sales are now expected to be in the range of $3.300 billion to $3.400 billion and Adjusted EBITDA is now expected to be in the range of $1.000 billion to $1.030 billion. Capital expenditures are expected to be approximately $200 million. Conference Call Information Interested investors and other parties can listen to a webcast of the live conference call by logging in through the Investor Relations section of the Company's website at https://investors.ads-pipe.com/events-and-presentations. An online replay will be available on the same website following the call. About the Company 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 In ltrator 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 eet, an expansive sales team and a vast manufacturing network. As one of the largest plastic recycling companies in North America, ADS keeps millions of pounds of plastic out of land lls 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. Forward Looking Statements Certain statements in this press release may be deemed to be forward-looking statements. These statements are not historical facts but rather are based on the Company’s current expectations, estimates and projections regarding the Company’s business, operations and other factors relating thereto. Words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “con dent” and similar expressions are used to identify these forward-looking statements. Factors that could cause actual results to di er from those re ected in forward-looking statements relating to our operations and business include: uctuations in the price and availability of resins and other raw materials, new tari and international trade policies, and our ability to pass any increased costs of raw materials and tari s 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 bene ts of acquisitions and the ability to do so within the intended time frame, including our ability to successfully complete the acquisition of StormTrap and to integrate NDS and/or StormTrap into our business; risks that the acquisition of NDS and/or StormTrap may involve unexpected costs, liabilities or delays, risks that the cost savings and synergies from the acquisition of NDS and/or StormTrap may not be fully realized; the e ect of any claims, litigation, investigations or proceedings; the e ect of weather or seasonality; the loss of any of our signi cant 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 e ects of global climate change and any related 4
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regulatory responses; our ability to protect against cybersecurity incidents and disruptions or failures of our IT systems; our ability to assess and monitor the e ects of arti cial intelligence, machine learning, and 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 quali ed 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 described in the Company’s lings with the SEC. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. In light of the signi cant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the Company’s expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Financial Statements ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(unaudited)Three Months EndedSeptember 30,Six Months EndedSeptember 30, (Amounts in thousands, except per share data)2026 2025 2026 2025 Net sales $ 889,406$ 850,381$ 1,890,518$ 1,680,261Cost of goods sold 543,551510,2491,136,6161,009,691 Gross pro t 345,855340,132753,902670,570Operating expenses:Selling, general and administrative129,617119,224260,435223,185Loss (gain) on disposal of assets and costs from exit and disposal activities1,302 (15,926) 3,923 (8,902)Intangible amortization 20,061 13,539 40,121 27,246 Income from operations 194,875223,295449,423429,041Other expense:Interest expense 27,515 23,116 54,555 46,145Interest income and other, net (9,136) (8,012) (10,588) (14,717) Income before income taxes 176,496208,191405,456397,613Income tax expense 44,206 52,399 97,895 99,073Equity in net income of unconsolidated a liates(1,333) (708) (2,630) (2,051) Net income from continuing operations133,623156,500310,191300,591Net loss from discontinued operations, net of taxes(23,522) — (29,175) — Net income 110,101156,500281,016300,591Less: net (loss) income attributable to noncontrolling interest(338) 483 2,056 652 Net income attributable to ADS$ 110,439$ 156,017278,960299,939 Weighted average common shares outstanding:Basic 75,367 77,752 75,943 77,697Diluted 75,787 78,310 76,566 78,240 Net income from continuing operations per share:Basic $ 1.78$ 2.01$ 4.06$ 3.86Diluted $ 1.77$ 1.99$ 4.02$ 3.83 Net loss from discontinued operations per share:Basic $ (0.31) $ —$ (0.38) $ —Diluted $ (0.31) $ —$ (0.38) $ — Net income per share:Basic $ 1.47$ 2.01$ 3.67$ 3.86Diluted $ 1.46$ 1.99$ 3.64$ 3.83 Cash dividends declared per share$ 0.20$ 0.18$ 0.40$ 0.36 5
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ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(unaudited) As of (Amounts in thousands) September 30, 2026March 31, 2026ASSETSCurrent assets:Cash $ 153,245$ 223,012Receivables, net 429,452 390,536Inventories 563,775 543,381Assets held for sale 11,415 43,451Other current assets 36,689 30,449 Total current assets 1,194,576 1,230,829Property, plant and equipment, net 1,248,456 1,217,165 Other assets:Goodwill 1,041,156 1,042,716Intangible assets, net 808,408 848,527Other assets 170,887 166,386 Total assets $ 4,463,483$ 4,505,623 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITYCurrent liabilities:Current maturities of debt obligations$ 7,955$ 5,865Current maturities of nance lease obligations40,517 38,136Accounts payable 283,525 237,706Liabilities held for sale 7,277 15,139Other accrued liabilities 210,909 212,623Accrued income taxes 11,853 — Total current liabilities 562,036 509,469Long-term debt obligations, net 1,603,242 1,605,958Long-term nance lease obligations 121,392 121,935Deferred tax liabilities 230,852 220,994Other liabilities 96,605 91,303 Total liabilities 2,614,127 2,549,659 Mezzanine equity:Redeemable common stock 69,045 73,652 Total mezzanine equity 69,045 73,652 Stockholders’ equity:Common stock 11,716 11,710Paid-in capital 1,378,920 1,342,091Common stock in treasury, at cost (1,711,567) (1,325,713)Accumulated other comprehensive loss (35,139) (32,290)Retained earnings 2,111,424 1,862,936 Total ADS stockholders’ equity 1,755,354 1,858,734Noncontrolling interest in subsidiaries 24,957 23,578 Total stockholders’ equity 1,780,311 1,882,312 Total liabilities, mezzanine equity and stockholders’ equity$ 4,463,483$ 4,505,623 ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)Six Months Ended September 30, (Amounts in thousands) 2026 2025 Cash Flows from Operating ActivitiesNet income $ 281,016$ 300,591Less: Net loss from discontinued operations, net of taxes(29,175) —Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 125,842 104,921Deferred income taxes 9,376 15,226Loss (gain) on disposal of assets and costs from exit and disposal activities3,923 (8,902)Stock-based compensation 24,531 16,981Amortization of deferred nancing charges1,909 1,022Inventory step up related to NDS acquisition14,197 —Fair market value adjustments to derivatives(1,042) (252)Equity in net income of unconsolidated a liates(2,630) (2,051)Other operating activities 2,887 778Changes in working capital:Receivables (35,545) (62,649)Inventories (35,761) 69,516Prepaid expenses and other current assets(7,812) (3,514)A bl d dhlibilii 53667 78176 6
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Accounts payable, accrued expenses, and other liabilities53,667 78,176Operating cash ows from discontinued operations(5,486) — Net cash provided by operating activities458,247 509,843 Cash Flows from Investing ActivitiesCapital expenditures (98,758) (111,018)Proceeds from disposal of assets 1,036 26,474Acquisition, net of cash acquired — (18,558)Other investing activities 489 (2,241) Net cash used in investing activities (97,233) (105,343) Cash Flows from Financing ActivitiesPayments on syndicated Term Loan Facility(1,500) (3,500)Payments on Equipment Financing (603) (1,885)Payments on nance lease obligations (19,052) (17,171)Repurchase of common stock (372,916) —Cash dividends paid (30,512) (28,085)Dividends paid to noncontrolling interest holder(980) —Proceeds from exercise of stock options 3,426 1,482Payment of withholding taxes on vesting of restricted stock units(10,736) (6,694) Net cash used in nancing activities (432,873) (55,853) E ect of exchange rate changes on cash (71) 1,017 Net change in cash (71,930) 349,664Cash and restricted cash at beginning of period233,967 469,271 Cash and restricted cash at end of period162,037818,935 Less: cash held for sale (8,660) — Cash and restricted cash, excluding held for sale, at end of period$ 153,377$ 818,935 RECONCILIATION TO BALANCE SHEETCash $ 153,245$ 812,862Restricted cash 132 6,073 Total cash and restricted cash $ 153,377$ 818,935 Non-GAAP Financial Measures This press release contains nancial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). ADS management uses non-GAAP measures in its analysis of the Company’s performance. Investors are encouraged to review the reconciliation of non-GAAP nancial measures to the comparable GAAP results available in the accompanying tables. This press release includes references to Adjusted EBITDA, Free Cash Flow, Organic Net Sales and Adjusted Earnings per Share from Continuing Operations, non-GAAP nancial measures. These non-GAAP nancial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These measures are not intended to be substitutes for those reported in accordance with GAAP and may be di erent from non-GAAP nancial measures used by other companies, even when similar terms are used to identify such measures. The following tables present reconciliations of non-GAAP nancial measures to the most comparable GAAP measures for the periods indicated. Reconciliation of Segment Adjusted EBITDA to Net Income From Continuing Operations Three Months Ended September 30, 2026 (Amounts in thousands)StormwaterWastewaterIntersegmentEliminationsTotalNet sales:Net sales from external customers$ 712,063$ 177,343$ — $ 889,406Intersegment net sales 11,034 20,232 (31,266) — Net sales 723,097 197,575 (31,266) 889,406Sii 7
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Signi cant segment expenses:Cost of goods sold 471,745 100,644 (28,838) 543,551Selling, general and administrative expenses100,386 16,556 — 116,942Other segment items(a) (62,256) (8,324) — (70,580) Segment Adjusted EBITDA(b) $ 213,222$ 88,699$ (2,428) Corporate and other costs(c) 12,675 Total consolidated Adjusted EBITDA $ 286,818 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:Interest expense 27,515Interest income (1,407)Depreciation and amortization 63,685Stock-based compensation expense 11,257Loss on disposal of assets and costs from exit and disposal activities1,302Transaction costs(d) 6,383Other adjustments(e) 1,587 Income before income taxes 176,496Income tax expense 44,206Equity in net income of unconsolidated a liates (1,333) Net income from continuing operations$ 133,623 Three Months Ended September 30, 2025 (Amounts in thousands)StormwaterWastewaterIntersegmentEliminationsTotalNet sales:Net sales from external customers$ 670,665$ 179,716$ — $ 850,381Intersegment net sales 9,346 16,652 (25,998) — Net sales 680,011 196,368 (25,998) 850,381Signi cant segment expenses:Cost of goods sold 435,834 100,525 (26,110) 510,249Selling, general and administrative expenses88,979 18,861 — 107,840Other segment items(a) (55,420) (11,204) — (66,624) Segment Adjusted EBITDA(b) $ 210,618$ 88,186$ 112 Corporate and other costs(c) 11,384 Total consolidated Adjusted EBITDA $ 287,532 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:Interest expense 23,116Interest income (7,340)Depreciation and amortization 54,693Stock-based compensation expense 8,577Gain on disposal of assets and costs from exit and disposal activities(15,926)Transaction costs(d) 9,317Other adjustments(e) 6,904 Income before income taxes 208,191Income tax expense 52,399Equity in net income of unconsolidated a liates (708) Net income from continuing operations$ 156,500 Six Months Ended September 30, 2026 (Amounts in thousands)StormwaterWastewaterIntersegmentEliminationsTotalNet sales:Net sales from external customers$ 1,521,439$ 369,079$ — $ 1,890,518Intersegment net sales 22,600 37,416 (60,016) — Net sales 1,544,039 406,495 (60,016) 1,890,518Signi cant segment expenses:Cost of goods sold 990,557 205,244 (59,185) 1,136,616Selling, general and administrative expenses201,067 34,206 — 235,273Other segment items(a) (134,508) (17,113) — (151,621) Segment Adjusted EBITDA(b) $ 486,923$ 184,158$ (831) Corporate and other costs(c) 25,162 Total consolidated Adjusted EBITDA $ 645,088 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:Interest expense 54,555Interest income (2,698)D i i d i i 125842 8
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Depreciation and amortization 125,842Stock-based compensation expense 24,531Loss on disposal of assets and costs from exit and disposal activities3,923Transaction costs(d) 9,627Inventory step up related to acquisition of NDS 14,197Other adjustments(e) 9,655 Income before income taxes 405,456Income tax expense 97,895Equity in net income of unconsolidated a liates (2,630) Net income from continuing operations$ 310,191 Six Months Ended September 30, 2025 (Amounts in thousands)StormwaterWastewaterIntersegmentEliminationsTotalNet sales:Net sales from external customers$ 1,322,192$ 358,069$ — $ 1,680,261Intersegment net sales 18,422 33,261 (51,683) — Net sales 1,340,614 391,330 (51,683) 1,680,261Signi cant segment expenses:Cost of goods sold 862,953 197,776 (51,038) 1,009,691Selling, general and administrative expenses162,761 37,205 — 199,966Other segment items(a) (99,213) (19,101) — (118,314) Segment Adjusted EBITDA(b) $ 414,113$ 175,450$ (645) Corporate and other costs(c) 23,219 Total consolidated Adjusted EBITDA $ 565,699 Reconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:Interest expense 46,145Interest income (12,745)Depreciation and amortization 104,921Stock-based compensation expense 16,981Gain on disposal of assets and costs from exit and disposal activities(8,902)Transaction costs(d) 10,124Other adjustments(e) 11,562 Income before income taxes 397,613Income tax expense 99,073Equity in net income of unconsolidated a liates (2,051) Net income from continuing operations$ 300,591 a.Other segment items include depreciation, amortization recorded within cost of goods sold, stock-based compensation expense, inventory step-up costs, restructuringand 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-basedcompensation 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, restructuring and realignment expense, and executive retirementexpense (bene t). Reconciliation of Adjusted EBITDA to Net Income - EBITDA and Adjusted EBITDA are non-GAAP nancial measures that comprise net income before interest, income taxes, depreciation and amortization, stock-based compensation, non-cash charges and certain other expenses. The Company’s de nition of Adjusted EBITDA may di er from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key metric used by management and the Company’s board of directors to assess nancial performance and evaluate the e ectiveness of the Company’s business strategies. Accordingly, management believes that Adjusted EBITDA provides useful information to investors and others in 9
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understanding and evaluating our operating results in the same manner as the Company’s management and board of directors. In order to provide investors with a meaningful reconciliation, the Company has provided a reconciliation of Adjusted EBITDA to net income. Three Months EndedSeptember 30,Six Months EndedSeptember 30, (Amounts in thousands) 2026 2025 2026 2025 Net income from Continuing Operations$ 133,623$ 156,500$ 310,191$ 300,591Depreciation and amortization63,685 54,693 125,842 104,921Interest expense 27,515 23,116 54,555 46,145Income tax expense 44,206 52,399 97,895 99,073 EBITDA 269,029 286,708 588,483 550,730Restructuring and realignment expense(a) 3,877 7,171 9,213 15,966Loss (gain) on disposal of assets649 (17,644) 1,108 (16,446)Stock-based compensation expense11,257 8,577 24,531 16,981Transaction costs 6,383 9,317 9,627 10,124Inventory step up related to acquisition of NDS— — 14,197 —Interest income (1,407) (7,340) (2,698) (12,745)Other adjustments(b) (2,970) 743 627 1,089 Adjusted EBITDA $ 286,818$ 287,532$ 645,088$ 565,699 (a)Includes costs associated with closure of facilities, as well as professional fees incurred in connection with supporting enterprise-wide restructuring and realignmentinitiatives. Excludes gain on sale of properties previously held-for-sale and equipment. (b)Includes derivative fair value adjustments, foreign currency transaction (gains) losses, legal settlements, and the proportionate share of interest, income taxes,depreciation and amortization related to the South American Joint Venture, which is accounted for under the equity method of accounting and executive retirementexpense. Reconciliation of Free Cash Flow to Cash Flow from Operating Activities - Free Cash Flow is a non-GAAP nancial measure that comprises cash ow from operating activities less capital expenditures. Free Cash Flow is a measure used by management and the Company’s board of directors to assess the Company’s ability to generate cash. Accordingly, management believes that Free Cash Flow provides useful information to investors and others in understanding and evaluating our ability to generate cash ow from operations after capital expenditures. In order to provide investors with a meaningful reconciliation, the Company has provided a reconciliation of cash ow from operating activities to Free Cash Flow. Six Months Ended September 30, (Amounts in thousands) 2026 2025 Net cash ow provided by operating activities$ 458,247$ 509,843 Capital expenditures (98,758) (111,018) Free cash ow $ 359,489$ 398,825 Organic Net Sales - Organic Net Sales is a non-GAAP nancial measure that represents net sales excluding the impact of acquisitions and is intended to provide a meaningful comparison of sales growth attributable to underlying volume and pricing changes in the Company’s continuing operations. The following table presents a reconciliation of Net Sales to Organic Net Sales for the Company: 10
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Three Months EndedSeptember 30,Six Months EndedSeptember 30, (Amounts in thousands) 2026 2025 2026 2025 Net Sales $ 889,406$ 850,381$ 1,890,518$ 1,680,261 Less: Net Sales from NDS(77,267) — (171,954) — Organic Net Sales$ 812,139$ 850,381$ 1,718,564$ 1,680,261 Reconciliation of Diluted Earnings per Share from Continuing Operations to Adjusted Earnings per Share from Continuing Operations - Adjusted Earnings per Share From Continuing Operations excludes losses (gains) on disposals of assets or business, restructuring and realignment expenses, impairment charges and transaction costs. Adjusted Earnings per Share from Continuing Operations is a measure used by management and may be useful for investors to evaluate the Company's operational performance. The following table presents diluted earnings per share from continuing operations on an adjusted basis to supplement the Company's discussion of its results of operations herein. Three Months EndedSeptember 30,Six Months EndedSeptember 30,2026 2025 2026 2025 Diluted Earnings Per Share from Continuing Operations$ 1.77$ 1.99$ 4.02$ 3.83Restructuring and realignment expense0.05 0.09 0.12 0.20Loss (gain) on disposal of assets0.01 (0.23) 0.01 (0.21)Transaction costs 0.08 0.12 0.13 0.13Inventory step up related to the acquisition of NDS— — 0.19 — Income tax impact of adjustments(a) (0.03) — (0.11) (0.03) Adjusted Earnings per Share from Continuing Operations$ 1.88$ 1.97$ 4.36$ 3.92 (a) The income tax impact of adjustments to each period is based on the statutory tax rate. For more information, please contact: Michael Higgins SVP, Corporate Strategy & Investor Relations (614) 658-0050 Michael.Higgins@adspipe.com Source: Advanced Drainage Systems, Inc. 11