{"url_path":"/sec/wms/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 Form 10-K Summary","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-21","source_url":"https://www.sec.gov/Archives/edgar/data/1604028/0001604028-26-000019-index.html","accession_number":"0001604028-26-000019","cik":"0001604028","ticker":"WMS","issuer_name":"ADVANCED DRAINAGE SYSTEMS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1604028/0001604028-26-000019-index.html","primary_entity_key":"0001604028","primary_entity_name":"ADVANCED DRAINAGE SYSTEMS, INC."},"word_count":19294,"has_tables":true,"body_markdown":"Item 16.    Form 10-K Summary\n\nNone.\n\n48\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nSIGNATURES\n\nPursuant 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.\n\nDate: May 21, 2026\n\nADVANCED DRAINAGE SYSTEMS, INC.\n\nBy: /s/ D. Scott Barbour\n\nName: D. Scott Barbour\n\nTitle: President and Chief Executive Officer (Principal Executive Officer)\n\nPursuant 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.\n\n Signature\n Title\n\n   \n\n/s/ D. Scott Barbour \nDirector, President and Chief Executive Officer\n\n(Principal Executive Officer)\n\nD. Scott Barbour\n\n   \n\n/s/ Scott A. Cottrill Executive Vice President, Chief Financial Officer and Secretary (Principal Financial Officer)\n\nScott A. Cottrill\n\n   \n\n/s/ Tim A. Makowski Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)\n\nTim A. Makowski\n\n   \n\n/s/ Robert M. Eversole** Chairman of the Board of Directors and Director\n\nRobert M. Eversole  \n\n   \n\n/s/ Anesa T. Chaibi ** Director\n\nAnesa T. Chaibi  \n\n   \n\n/s/ Michael B. Coleman ** Director\n\nMichael B. Coleman  \n\n   \n\n/s/ Alexander R. Fischer** Director\n\nAlexander R. Fischer  \n\n  \n\n/s/ Tanya Fratto** Director\n\nTanya Fratto  \n\n   \n\n/s/ Kelly S. Gast** Director\n\nKelly S. Gast  \n\n   \n\n/s/ M.A. (Mark) Haney** Director\n\nM.A. (Mark) Haney  \n\n   \n\n/s/ Luther C. Kissam IV** Director\n\nLuther C. Kissam IV  \n\n   \n\n/s/ Manuel J. Perez de la Mesa** Director\n\nManuel J. Perez de la Mesa  \n\n/s/ Anil Seetharam**Director\n\nAnil Seetharam\n\n \n\n** 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.\n\n \n\n \n\nBy:\n /s/ Scott A. Cottrill\n\n  Scott A. Cottrill, Attorney-in-fact\n\n49\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nTABLE OF CONTENTS\n\n Page\n\n  \n\nAudited Consolidated Financial Statements \n\n[Reports of Independent Registered Public Accounting Firm](#ieb5bb33133ed4902a5089ffadf55276a_133)\n\nF-[1](#ieb5bb33133ed4902a5089ffadf55276a_133)\n\n[Consolidated Balance Sheets as of March 31, 2026 and 2025](#ieb5bb33133ed4902a5089ffadf55276a_136)\n\nF-[4](#ieb5bb33133ed4902a5089ffadf55276a_136)\n\n[Consolidated Statements of Operations for the fiscal years ended March 31, 2026, 2025 and 2024](#ieb5bb33133ed4902a5089ffadf55276a_139)\n\nF-[5](#ieb5bb33133ed4902a5089ffadf55276a_139)\n\n[Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2026, 2025 and 2024](#ieb5bb33133ed4902a5089ffadf55276a_142)\n\nF-[6](#ieb5bb33133ed4902a5089ffadf55276a_142)\n\n[Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2026, 2025 and 2024](#ieb5bb33133ed4902a5089ffadf55276a_145)\n\nF-[7](#ieb5bb33133ed4902a5089ffadf55276a_145)\n\n[Consolidated Statements of Stockholders’ Equity and Mezzanine Equity for the fiscal years ended March 31, 2026, 2025 and 2024](#ieb5bb33133ed4902a5089ffadf55276a_148)\n\nF-[8](#ieb5bb33133ed4902a5089ffadf55276a_148)\n\n[Notes to Consolidated Financial Statements](#ieb5bb33133ed4902a5089ffadf55276a_151)\n\nF-[10](#ieb5bb33133ed4902a5089ffadf55276a_151)\n\n[Schedule II, Consolidated Valuation and Qualifying Accounts for the fiscal years ended March 31, 2026, 2025 and 2024](#ieb5bb33133ed4902a5089ffadf55276a_226)\n\nF-[43](#ieb5bb33133ed4902a5089ffadf55276a_226)\n\n50\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the shareholders and the Board of Directors of Advanced Drainage Systems Inc.,\n\nOpinion on the Financial Statements\n\nWe 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.\n\nWe 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.\n\nBasis for Opinion\n\nThese 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.\n\nWe 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.\n\nCritical Audit Matter\n\nThe 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.\n\nAcquisition of NDS – Valuation of Customer Relationships Intangible Asset – Refer to Note 4 to the financial statements.\n\nCritical Audit Matter Description\n\nThe 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.\n\nWe 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\n\nF-1\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nof 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.\n\nHow the Critical Audit Matter Was Addressed in the Audit\n\nOur audit procedures related to testing the assumptions identified above included the following, among others:\n\n•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.\n\n•We assessed the reasonableness of management’s forecasts by comparing the forecasted information to historical results and certain peer companies.\n\n•We involved our fair value specialists to assist in evaluating the methodology used by management, ensuring it aligns with industry practices and standards.\n\n•With the assistance of our fair value specialists, we evaluated the reasonableness of the following significant valuation assumptions:\n\n◦Customer attrition rate by testing the source information underlying the determination of the rate and testing the mathematical accuracy of the calculation.\n\n◦Discount rate by developing a range of independent estimates and comparing those to the discount rate selected by management.\n\n/s/ Deloitte & Touche LLP\n\nColumbus, Ohio\n\nMay 21, 2026\n\nWe have served as the Company's auditor since 2002.\n\nF-2\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the stockholders and the Board of Directors of Advanced Drainage Systems, Inc.,\n\nOpinion on Internal Control over Financial Reporting\n\nWe 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.\n\nWe 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.\n\nAs 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.\n\nBasis for Opinion\n\nThe 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.\n\nWe 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.\n\nDefinition and Limitations of Internal Control over Financial Reporting\n\nA 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.\n\nBecause 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.\n\n/s/ Deloitte & Touche LLP\n\nColumbus, Ohio\n\nMay 21, 2026\n\nF-3\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED BALANCE SHEETS\n\n As of March 31,\n\n(Amounts in thousands, except par value)2026 2025\n\nASSETS   \n\nCurrent assets:   \n\nCash$223,012 $463,319 \n\nReceivables (less allowance for credit losses of $4,654 and $7,684, respectively)\n390,536 333,221 \n\nInventories543,381 488,269 \n\nAssets held for sale43,451 8,194 \n\nOther current assets30,449 31,780 \n\nTotal current assets1,230,829 1,324,783 \n\nProperty, plant and equipment, net1,217,165 1,051,040 \n\nOther assets:\n\nGoodwill1,042,716 720,223 \n\nIntangible assets, net848,527 448,060 \n\nOther assets166,386 146,254 \n\nTotal assets$4,505,623 $3,690,360 \n\nLIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY\n\nCurrent liabilities:\n\nCurrent maturities of debt obligations$5,865 $9,934 \n\nCurrent maturities of finance lease obligations38,136 33,143 \n\nAccounts payable237,706 218,024 \n\nLiabilities held for sale15,139 — \n\nOther accrued liabilities212,623 137,295 \n\nTotal current liabilities509,469 398,396 \n\nLong-term debt obligations (less unamortized debt issuance costs of $18,428 and $7,715, respectively)\n1,605,958 1,251,589 \n\nLong-term finance lease obligations121,935 131,000 \n\nDeferred tax liabilities220,994 190,416 \n\nOther liabilities91,303 83,171 \n\nTotal liabilities2,549,659 2,054,572 \n\nCommitments and contingencies (see Note 18)\n\nMezzanine equity:\n\nRedeemable common stock: $0.01 par value; 4,533 and 5,702 shares outstanding, respectively\n73,652 92,652 \n\nTotal mezzanine equity73,652 92,652 \n\nStockholders’ equity:\n\nCommon stock: $0.01 par value; 1,000,000 shares authorized; 85,319 and 83,750\n\n shares issued, respectively; 72,654 and 71,864 shares outstanding, respectively\n11,710 11,694 \n\nPaid-in capital1,342,091 1,277,694 \n\nCommon stock in treasury, at cost(1,325,713)(1,219,408)\n\nAccumulated other comprehensive loss(32,290)(37,178)\n\nRetained earnings1,862,936 1,492,634 \n\nTotal ADS stockholders’ equity1,858,734 1,525,436 \n\nNoncontrolling interest in subsidiaries23,578 17,700 \n\nTotal stockholders’ equity1,882,312 1,543,136 \n\nTotal liabilities, mezzanine equity and stockholders’ equity$4,505,623 $3,690,360 \n\nSee accompanying notes to consolidated financial statements.\n\nF-4\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF OPERATIONS\n\n Fiscal Year Ended March 31,\n\n(Amounts in thousands, except per share data)202620252024\n\nNet sales$3,050,376 $2,904,245 $2,874,473 \n\nCost of goods sold1,882,990 1,810,004 1,728,524 \n\nGross profit1,167,386 1,094,241 1,145,949 \n\nOperating expenses:\n\nSelling, general and administrative469,549 380,378 370,714 \n\nLoss (gain) on disposal of assets and costs from exit and disposal activities19,211 3,858 (8,365)\n\nIntangible amortization59,424 52,569 51,469 \n\nIncome from operations619,202 657,436 732,131 \n\nOther expense:\n\nInterest expense93,869 91,803 88,862 \n\nInterest income and other, net(34,455)(23,832)(23,484)\n\nIncome before income taxes559,788 589,465 666,753 \n\nIncome tax expense134,988 141,063 158,998 \n\nEquity in net income of unconsolidated affiliates(5,063)(4,171)(5,536)\n\nNet income from continuing operations429,863 452,573 513,291 \n\nNet loss from discontinued operations, net of taxes(1,090)— — \n\nNet income428,773 452,573 513,291 \n\nLess: net income attributable to noncontrolling interest2,308 2,401 3,376 \n\nNet income attributable to ADS$426,465 $450,172 $509,915 \n\nWeighted average common shares outstanding:\n\nBasic77,756 77,549 78,252 \n\nDiluted78,383 78,188 79,017 \n\nNet income from continuing operations per share available to common stockholders:\n\nBasic$5.50 $5.81 $6.52 \n\nDiluted$5.45 $5.76 $6.45 \n\nNet loss from discontinued operations per share available to common stockholders:\n\nBasic$(0.01)$— $— \n\nDiluted$(0.01)$— $— \n\nNet income per share available to common stockholders:\n\nBasic$5.48 $5.81 $6.52 \n\nDiluted$5.44 $5.76 $6.45 \n\nSee accompanying notes to consolidated financial statements.\n\nF-5\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)\n\n Fiscal Year Ended March 31,\n\n(Amounts in thousands)202620252024\n\nNet income$428,773 $452,573 $513,291 \n\nCurrency translation gain (loss)7,076 (10,851)(570)\n\nComprehensive income435,849 441,722 512,721 \n\nLess: other comprehensive gain (loss) attributable to noncontrolling interest, net of tax\n2,188 (3,503)1,680 \n\nLess: net income attributable to noncontrolling interest2,308 2,401 3,376 \n\nTotal comprehensive income attributable to ADS$431,353 $442,824 $507,665 \n\nSee accompanying notes to consolidated financial statements.\n\nF-6\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n Fiscal Year Ended March 31,\n\n(Amounts in thousands)202620252024\n\nCash Flows from Operating Activities     \n\nNet income$428,773 $452,573 $513,291 \n\nLess: Net loss from discontinued operations, net of taxes(1,090)— — \n\n Adjustments to reconcile net income to net cash provided by operating activities:\n\nDepreciation and amortization216,261 183,281 154,903 \n\nDeferred income taxes35,385 (423)(2,280)\n\nLoss (gain) on disposal of assets and costs from exit and disposal activities19,211 3,858 (8,365)\n\nStock-based compensation32,354 26,581 31,986 \n\nAmortization of deferred financing charges2,225 2,044 2,044 \n\nInventory step up related to NDS acquisition12,277 — — \n\nFair market value adjustments to derivatives(5,129)220 (972)\n\nEquity in net income of unconsolidated affiliates(5,063)(4,171)(5,536)\n\nOther operating activities806 (298)6,697 \n\nChanges in working capital:\n\nReceivables(2,288)1,414 (14,590)\n\nInventories30,609 (15,749)594 \n\nPrepaid expenses and other current assets(1,110)(3,983)(275)\n\nAccounts payable, accrued expenses and other liabilities53,960 (63,856)40,431 \n\nOperating cash flows from discontinued operations(307)— — \n\nNet cash provided by operating activities819,054 581,491 717,928 \n\nCash Flows from Investing Activities\n\nCapital expenditures(249,766)(212,944)(183,812)\n\nProceeds from disposition of assets or businesses32,541 — 27,498 \n\nAcquisition, net of cash acquired(991,064)(237,310)— \n\nOther investing activities(3,531)2,388 650 \n\nNet cash used in investing activities(1,211,820)(447,866)(155,664)\n\nCash Flows from Financing Activities\n\nProceeds from Term Loan Facility600,000 — — \n\nPayments on syndicated Term Loan Facility(413,250)(7,000)(7,000)\n\nProceeds from Revolving Credit Agreement75,500 — — \n\nPayments on Revolving Credit Agreement(75,500)— — \n\nProceeds from Senior Notes due 2034500,000 — — \n\nPayments on Senior Notes due 2027(350,000)— — \n\nProceeds from commercial loan agreement27,200 — — \n\nDebt issuance costs(17,182)— — \n\nPayments on Equipment Financing(2,937)(4,897)(7,738)\n\nPayments on finance lease obligations(40,602)(25,487)(12,145)\n\nRepurchase of common stock(91,958)(69,922)(207,308)\n\nCash dividends paid(56,124)(49,737)(43,995)\n\nProceeds from noncontrolling interest holder3,342 — — \n\nDividends paid to noncontrolling interest holder(1,960)— (3,747)\n\nProceeds from option exercises6,850 9,971 6,454 \n\nPayment of withholding taxes on vesting of restricted stock units(7,060)(10,657)(8,864)\n\nOther financing activities(2)2 — \n\nNet cash provided by (used in) financing activities156,317 (157,727)(284,343)\n\nEffect of exchange rate changes on cash1,145 (2,475)799 \n\nNet change in cash(235,304)(26,577)278,720 \n\nCash at beginning of year469,271 495,848 217,128 \n\nCash and restricted cash at end of year$233,967 $469,271 $495,848 \n\nLess: cash held for sale(9,184)— — \n\nCash and restricted cash, excluding cash held for sale, at end of year$224,783 $469,271 $495,848 \n\nSee accompanying notes to consolidated financial statements.\n\nF-7\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY\n\n Common StockPaid-in Capital\nCommon Stock\n\nin Treasury\n\nAccumulated\n\nOther\n\nComprehensive\n\nLoss\nRetained Earnings\nTotal ADS\n\nStockholders’\n\nEquity\nNon-controlling Interest in SubsidiariesTotal Stockholders'\nEquity\nRedeemable Common Stock\n\nTotal\n\nMezzanine\n\nEquity\n\n(Amounts in thousands)SharesAmountSharesAmountSharesAmount\n\nBalance April 1, 202379,057$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 \n\nNet income—— — —— — 509,915 509,915 3,376 513,291 ———\n\nOther comprehensive (loss) gain—— — —— (2,250)— (2,250)1,680 (570)———\n\nCommon stock dividend ($0.56 per share)\n—— — —— — (43,922)(43,922)— (43,922)———\n\nDividend paid to noncontrolling interest holder—— — —— — — — (3,747)(3,747)———\n\nShare repurchases—— — 1,779(210,715)— — (210,715)— (210,715)———\n\nKSOP Redeemable Common Stock Conversion2,74727 44,609 —— — — 44,636 — 44,636 (2,747)(44,636)(44,636)\n\nExercise of common stock options1592 6,452 —— — — 6,454 — 6,454 ———\n\nRestricted stock awards1001 — 25(2,468)— — (2,467)— (2,467)———\n\nPerformance-based restricted stock units2002 — 72(6,396)— — (6,394)— (6,394)———\n\nStock-based compensation—— 31,986 —— — — 31,986 — 31,986 ———\n\nESPP Issuance20— 1,927 —— — — 1,927 — 1,927 ———\n\nOther—— (4)—— — — (4)— (4)———\n\nBalance March 31, 202482,283$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 \n\nSee accompanying notes to consolidated financial statements.\n\nF-8\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY\n\n Common StockPaid-in Capital\nCommon Stock\n\nin Treasury\n\nAccumulated\n\nOther\n\nComprehensive\n\nLoss\nRetained Earnings\nTotal ADS\n\nStockholders’\n\nEquity\nNon-controlling Interest in SubsidiariesTotal Stockholders’\nEquityRedeemable Common Stock\nTotal\n\nMezzanine\n\nEquity\n\n(Amounts in thousands)SharesAmountSharesAmountSharesAmount\n\nBalance April 1, 202482,283$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 \n\nNet income—— — —— — 450,172 450,172 2,401 452,573 — — — \n\nOther comprehensive loss—— — —— (7,348)— (7,348)(3,503)(10,851)— — — \n\nCommon stock dividend ($0.64 per share)\n—— — —— — (49,746)(49,746)— (49,746)— — — \n\nShare repurchases— — — 410 (68,172)— — (68,172)— (68,172)— — — \n\nKSOP Redeemable Common Stock Conversion980 10 15,922 — — — — 15,932 — 15,932 (980)(15,932)(15,932)\n\nExercise of common stock options2442 9,969 —— — — 9,971 — 9,971 — — — \n\nRestricted stock awards1001 — 27(4,720)— — (4,719)— (4,719)— — — \n\nPerformance-based restricted stock units931 — 34(5,938)— — (5,937)— (5,937)— — — \n\nStock-based compensation—— 26,581 —— — — 26,581 — 26,581 — — — \n\nESPP Issuance501 5,391 —— — — 5,392 — 5,392 — — — \n\nOther—— (3)—— — — (3)— (3)— — — \n\nBalance March 31, 202583,750$11,694 $1,277,694 11,886$(1,219,408)$(37,178)$1,492,634 $1,525,436 $17,700 $1,543,136 5,70292,652$92,652 \n\nNet income——————426,465426,4652,308428,773———\n\nOther comprehensive gain—————4,888—4,8882,1887,076———\n\nCommon stock dividend ($0.72 per share)\n——————(56,163)(56,163)—(56,163)———\n\nContribution from noncontrolling interest holder————————3,3423,342———\n\nDividend declared to noncontrolling interest holder————————(1,960)(1,960)———\n\nShare repurchases———720(99,245)——(99,245)—(99,245)———\n\nKSOP Redeemable Common Stock Conversion1,1691218,988————19,000—19,000(1,169)(19,000)(19,000)\n\nExercise of common stock options15216,849————6,850—6,850———\n\nRestricted stock awards1001—30(3,484)——(3,483)—(3,483)———\n\nPerformance-based restricted stock units851—29(3,576)——(3,575)—(3,575)———\n\nStock-based compensation——32,354————32,354—32,354———\n\nESPP Issuance6316,207————6,208—6,208———\n\nOther——(1)————(1)—(1)———\n\nBalance March 31, 202685,319$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 \n\nSee accompanying notes to consolidated financial statements.\n\nF-9\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n1.    BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\nDescription 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.\n\nOn 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.\n\nFollowing the acquisition of NDS, the Company is managed and reports results of operations in two reportable segments: Stormwater and Wastewater (formerly Infiltrator).\n\nThe 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.\n\nPrinciples 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.\n\nPresentation - Certain prior period balance sheet captions have been recast to conform with current period presentation.\n\nEstimates - 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.\n\nReceivables 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:\n\n(Amounts in thousands)2026 2025\n\nTrade receivables, net$354,382 $314,011 \n\nIncome tax receivable27,39010,728\n\nInsurance recoverable3,8718,340\n\nOther miscellaneous receivables4,893142\n\nReceivables, net$390,536 $333,221 \n\nThe 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\n\nF-10\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nrecorded 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.\n\nInventories - 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.\n\nProperty, 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:\n\n  Years\n\nBuildings and leasehold improvements \n20 to 45 or the lease term if shorter\n\nMachinery and production equipment \n3 to 18\n\nTransportation equipment \n3 to 12\n\nCosts 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.\n\nGoodwill & 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.\n\nGoodwill - 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.\n\nIntangible 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.\n\nIntangible 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.\n\nHeld 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\n\nF-11\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nacquisition, 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.\n\nThe 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.\n\nOther 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.\n\n•See “Note 7. Leases” for further information on the operating lease right of use assets.\n\n•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.\n\n•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.\n\n•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.\n\nLeases - 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.\n\nForeign 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.\n\nNet 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.\n\nF-12\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nShipping 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.\n\nStock-Based Compensation - See “Note 15. Stock-Based Compensation” for information about the stock-based compensation award programs and related accounting policies.\n\nAdvertising - 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.\n\nSelf-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.\n\nADS 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.\n\nADS 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.\n\nIncome 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.\n\nThe 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.\n\nFair 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.\n\nConcentrations 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.\n\nF-13\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nFinancial 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.\n\nDerivatives - 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.\n\nInterest 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:\n\n(Amounts in thousands)20262025 2024\n\nInterest income$(25,000)$(23,485)$(22,047)\n\nFair market value adjustments to derivatives(5,129)— (972)\n\nNet realized losses (gains) on derivatives(1,098)649 58 \n\nForeign currency (gains) losses278 (122)436 \n\nOther(3,506)(874)(959)\n\nInterest income and other, net$(34,455)$(23,832)$(23,484)\n\nRecent Accounting Pronouncements\n\nRecently Adopted Accounting Pronouncements\n\nImprovements 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.\n\nAccounting Pronouncements Not Yet Adopted\n\nIncome 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.\n\nMeasurement 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.\n\nAccounting 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\n\nF-14\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\ncosts 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.\n\n2.    REVENUE RECOGNITION\n\nRevenue 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.\n\nThe 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.\n\n(Amounts in thousands)202620252024\n\nStormwater\n\nDomestic - Pipe$1,495,555 $1,521,939 $1,556,575 \n\nDomestic - Allied Products750,498 645,448 627,825 \n\nInternational187,827 194,630 207,769 \n\nTotal Stormwater2,433,880 2,362,017 2,392,169 \n\nWastewater714,542 629,906 566,550 \n\nIntersegment Eliminations(98,046)(87,678)(84,246)\n\nConsolidated Net sales$3,050,376 $2,904,245 $2,874,473 \n\nSignificant 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.\n\nThe 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.\n\nContract 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:\n\n(Amounts in thousands)March 31, 2026 March 31, 2025\n\nContract asset - product returns$1,383 $1,381 \n\nRefund liability4,112 4,032 \n\nPractical Expedients and Exemptions - The Company applies several practical expedients and exemptions:\n\n•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.\n\nF-15\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n•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.\n\n•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.\n\n•Further, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.\n\n3.    RESTRUCTURING AND LOSS (GAIN) ON DISPOSAL OF ASSETS AND COSTS FROM EXIT AND DISPOSAL ACTIVITIES\n\nIn 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:\n\n(Amounts in thousands)2026\n\nLoss (gain) on disposal of assets and costs from exit and disposal activities:\n\nAccelerated depreciation and impairment of property, plant and equipment$28,786 \n\nSeverance2,743 \n\nImpairment of right-of-use assets2,448 \n\nOther exit and disposal costs2,273 \n\nSelling, general and administrative expenses:\n\nRealignment expenses12,049 \n\nTotal 2026 Restructuring Plan activities$48,299 \n\nThe costs incurred under the 2026 Restructuring Plan to date are classified as operating expenses and allocated to the Stormwater segment. During the fiscal year ended March 31, 2026, the Company recorded accelerated depreciation, severance costs, impairment of right-of-use lease assets and other exit and disposal costs. Other exit and disposal activities include legal and professional fees, inventory and equipment transfer costs and other costs.\n\nThe following table summarizes the restructuring liability for the periods presented:\n\n(Amounts in thousands)2026\n\nAccrual balance at April 1$— \n\nCosts incurred48,299 \n\nNon-cash charges(31,234)\n\nExpenses paid(15,864)\n\nAccrual balance at end of period$1,201 \n\nThe restructuring liability is recorded in Other accrued liabilities in the Company’s Consolidated Balance Sheet.\n\nLoss (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.\n\nFor 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.\n\nOn 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\n\nF-16\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n$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.\n\nOn 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.\n\n4.    ACQUISITIONS\n\nAcquisition 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.\n\nSummary 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).\n\nThe following table summarizes consideration transferred and the preliminary purchase price allocation of identified assets acquired and liabilities assumed:\n\n(Amounts in thousands)Preliminary Amount\n\nCash and cash equivalents$3,189 \n\nAccounts receivable44,944 \n\nInventory93,092 \n\nOther current assets1,359 \n\nAssets held for sale(a)\n42,554 \n\nProperty, plant and equipment67,699 \n\nGoodwill317,677 \n\nIntangible assets456,920 \n\nDeferred tax assets5,751 \n\nOther assets17,212 \n\nTotal assets acquired1,050,397 \n\nAccounts payable(10,664)\n\nAccrued expenses(29,285)\n\nLiabilities held for sale(a)\n(13,779)\n\nOther liabilities(11,788)\n\nTotal liabilities acquired(65,516)\n\nTotal preliminary fair value of consideration transferred\n$984,881 \n\n(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.\n\nDuring 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.\n\nF-17\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe 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.\n\nIdentifiable 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.\n\n(Amounts in thousands)Preliminary fair valuePreliminary Useful Lives\n\nCustomer relationships$419,000 20 years\n\nTradename37,00020 years\n\nDeveloped technology92012 years\n\nTotal identifiable intangible assets$456,920 \n\nThe 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.\n\n•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.\n\n•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.\n\n•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.\n\nPro 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.\n\n(Amounts in thousands)20262025\n\nNet sales$3,289,692 $3,185,159 \n\nNet income attributable to ADS456,002 411,684 \n\nDuring 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.\n\nAcquisition 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.\n\nF-18\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe 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.\n\n(Amounts in thousands)Initial AmountValuation AdjustmentsUpdated Amount\n\nAccounts receivable$3,101 $— $3,101 \n\nInventory3,027 — 3,027 \n\nProperty, plant and equipment6,986 — 6,986 \n\nGoodwill4,964 (1,029)3,935 \n\nIntangible assets2,970 — 2,970 \n\nOther assets75 — 75 \n\nTotal assets acquired21,123 (1,029)20,094 \n\nAccounts payable(1,227)— (1,227)\n\nAccrued expenses(285)236 (49)\n\nOther liabilities(35)— (35)\n\nTotal liabilities acquired(1,547)236 (1,311)\n\nTotal preliminary fair value of consideration transferred\n$19,576 $(793)$18,783 \n\nThe 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.\n\nThe 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.\n\nThe 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.\n\n(Amounts in thousands)Preliminary fair valuePreliminary Useful Lives\n\nCustomer relationships$2,600 10 years\n\nTradename3705 years\n\nTotal identifiable intangible assets$2,970 \n\nThe Company has excluded certain disclosures required under ASC 805, Business Combinations as they are not material to the financial statements.\n\nAcquisition 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.\n\nF-19\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe following table summarizes the consideration transferred and the purchase price allocation of assets acquired and liabilities assumed:\n\n(Amounts in thousands)Initial AmountValuation AdjustmentsFinal Amount\n\nAccounts receivable$12,277 $(160)$12,117 \n\nInventory15,651 — 15,651 \n\nOther current assets219 — 219 \n\nProperty, plant and equipment8,533 (1,228)7,305 \n\nGoodwill104,007 224 104,231 \n\nIntangible assets148,000 — 148,000 \n\nOther assets9,041 — 9,041 \n\nTotal assets acquired297,728 (1,164)296,564 \n\nAccounts payable(3,618)— (3,618)\n\nAccrued expenses(15,823)— (15,823)\n\nDeferred tax liabilities(36,250)147 (36,103)\n\nOther liabilities(4,727)— (4,727)\n\nTotal liabilities acquired(60,418)147 (60,271)\n\nTotal fair value of consideration transferred\n$237,310 $(1,017)$236,293 \n\nThe 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.\n\nThe 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.\n\nThe 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.\n\n(Amounts in thousands)Fair valueUseful Lives\n\nCustomer relationships$99,000 15 years\n\nDeveloped technology42,00012 years\n\nTradename7,00020 years\n\nTotal identifiable intangible assets$148,000 \n\nThe Company has excluded certain disclosures required under ASC 805, Business Combinations as they are not material to the financial statements.\n\n5.     DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE\n\nAs 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.\n\nThe 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\n\nF-20\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nthe 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:\n\n(Amounts in thousands)\n\nCash$9,184 \n\nAccounts receivable6,957 \n\nInventory6,848 \n\nOther current assets1,284 \n\nProperty, plant and equipment18,645 \n\nOther assets533 \n\nTotal assets held for sale$43,451 \n\nCurrent maturities of debt obligations$562 \n\nAccounts payable2,776 \n\nAccrued expenses8,669 \n\nOther liabilities3,132 \n\nTotal liabilities held for sale$15,139 \n\nThe 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:\n\n(Amounts in thousands)\n\nNet sales$4,701 \n\nCost of goods sold3,427 \n\nGross profit1,274 \n\nSelling, general and administrative2,364 \n\nNet loss from discontinued operations$(1,090)\n\n6.    PROPERTY, PLANT AND EQUIPMENT\n\nProperty, plant and equipment, net as of the fiscal years ended March 31 consisted of the following:\n\n(Amounts in thousands)20262025\n\nLand, buildings and improvements$513,175 $405,417 \n\nMachinery and production equipment1,175,0021,033,820\n\nTransportation equipment224,845246,431\n\nConstruction in progress201,371190,515\n\nTotal cost2,114,3931,876,183\n\nLess: accumulated depreciation(897,228)(825,143)\n\nProperty, plant and equipment, net$1,217,165 $1,051,040 \n\nDepreciation expense related to Property, plant and equipment in each of the fiscal years ended March 31 was:\n\n(Amounts in thousands)202620252024\n\nDepreciation expense (inclusive of leased assets depreciation)\n$154,407 $128,756 $100,306 \n\n7.    LEASES\n\nNature 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\n\nF-21\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nCompany 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.\n\nSupplemental balance sheet information related to leases as of the periods presented was as follows:\n\n(Amounts in thousands) Balance Sheet Classification 20262025\n\nOperating leases      \n\nRight-of-use assets Other assets $73,757 $68,826 \n\nCurrent lease liabilities Other accrued liabilities 21,303 19,456 \n\nNon-current lease liabilities Other liabilities 52,896 48,781 \n\nTotal operating lease liabilities   $74,199 $68,237 \n\nFinance leases   \n\nRight-of-use assets Property, plant and equipment 151,536 159,553 \n\nCurrent lease liabilities Current maturities of finance lease obligations 38,136 33,143 \n\nNon-current lease liabilities Long-term finance lease obligations 121,935 131,000 \n\nTotal finance lease liabilities   $160,071 $164,143 \n\n    \n\nWeighted average lease term (in years): \n\nOperating leases   4.484.74\n\nFinance leases   4.605.04\n\nWeighted average discount rate:   \n\nOperating leases   5.74 %5.71 %\n\nFinance leases   6.45 %6.38 %\n\nLease Cost - The components of lease cost for the years ended March 31, 2026, 2025, and 2024 were:\n\n(Amounts in thousands)Income Statement Classification20262025 2024\n\nOperating lease cost     \n\nOperating lease costCost of goods sold$21,055 $20,470  $17,325 \n\nOperating lease costSelling, general and administrative1,763 1,691  1,562 \n\nShort-term lease costCost of goods sold3,425 6,237  8,856 \n\nTotal operating lease cost $26,243 $28,398  $27,743 \n\nFinance lease cost  \n\nAmortization of right-of-use assetsCost of goods sold38,519 27,974  13,707 \n\nAmortization of right-of-use assetsSelling, general and administrative415 820  820 \n\nInterest on lease liabilitiesInterest expense11,277 7,666  2,833 \n\nTotal finance lease cost $50,211 $36,460  $17,360 \n\nSupplemental cash flow information related to leases for the periods presented were as follows:\n\n(Amounts in thousands)20262025 2024\n\nCash paid for amounts included in the measurement of lease liabilities:    \n\nOperating cash flows used for operating leases$22,818 $22,161  $18,887 \n\nOperating cash flows used for finance leases10,840 7,013  2,726 \n\nFinancing cash flows used for finance leases40,602 25,487  12,145 \n\nRight-of-use assets obtained in exchange for lease obligations: \n\nOperating leases11,298 26,286  20,511 \n\nFinance leases\n42,687 110,198  53,241 \n\nF-22\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe 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:\n\n(Amounts in thousands)Operating Leases Finance Leases\n\nYear 1$23,773 $47,252 \n\nYear 218,733 42,976 \n\nYear 313,096 34,108 \n\nYear 411,289 27,342 \n\nYear 57,657 21,194 \n\nThereafter8,754 12,909 \n\nTotal minimum lease payments$83,302 $185,781 \n\nLess: amount representing interest9,103 25,710 \n\nPresent value of net minimum lease payments$74,199 $160,071 \n\n8.    INVENTORIES\n\nInventories as of the fiscal years ended March 31 consisted of the following:\n\n(Amounts in thousands)20262025\n\nRaw materials$108,856 $105,146 \n\nFinished goods434,525 383,123 \n\nTotal Inventories$543,381 $488,269 \n\nDuring 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.\n\n9.    GOODWILL AND INTANGIBLE ASSETS\n\nGoodwill - The carrying amount of goodwill by reportable segment is as follows:\n\nAs Previously Reported\n\n(Amounts in thousands)PipeInfiltrator International \nAllied Products\n\n& Other\nStormwaterWastewater Total\n\nBalance at March 31, 2024\n$65,766 $495,841 $10,441 $45,135 $— $— $617,183 \n\nAcquisition— 103,676 — — — — 103,676 \n\nCurrency translation— — (636)— — — (636)\n\nBalance at March 31, 2025\n65,766 599,517 9,805 45,135 — — 720,223 \n\nReallocation due to change in segments(65,766)(599,517)(9,805)(45,135)120,706 599,517 — \n\nAcquisitions— — — — 321,612 555 322,167 \n\nCurrency translation— — — — 326 — 326 \n\nBalance at March 31, 2026\n$— $— $— $— $442,644 $600,072 $1,042,716 \n\nF-23\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nIntangible Assets - Intangible assets as of March 31, 2026 and 2025 consisted of the following:\n\n 2026 2025\n\n(Amounts in thousands)\nGross\n\nIntangible\n Accumulated\nAmortization \nNet\n\nIntangible\n \nGross\n\nIntangible\n \nAccumulated\n\nAmortization\n \nNet\n\nIntangible\n\nDefinite-lived intangible assets           \n\nDeveloped technology$213,120 $(113,493)$99,627 $212,200 $(93,783)$118,417 \n\nSupplier and customer relationships902,700 (255,237)647,463 481,100 (220,047)261,053 \n\nPatents and non-compete agreements3,738 (3,035)703 3,738 (2,687)1,051 \n\nTrademarks and tradenames112,330 (23,439)88,891 74,960 (19,260)55,700 \n\nTotal definite lived intangible assets1,231,888 (395,204)836,684 771,998 (335,777)436,221 \n\nIndefinite-lived intangible assets (a)\n\nTrademarks11,843 — 11,843 11,839 — 11,839 \n\nTotal Intangible assets$1,243,731 $(395,204)$848,527 $783,837 $(335,777)$448,060 \n\n(a)Indefinite-lived intangible assets may fluctuate as a result of foreign currency translation.\n\nThe following table presents the amortization expense and weighted average amortization period for definite-lived intangible assets at March 31, 2026:\n\n Amortization expense (in thousands) \n Weighted Average\n\nAmortization Period\n\n(in years)\n\n 202620252024 \n\nDeveloped technology$19,710 $18,230 $16,480 7.0\n\nSupplier and customer relationships35,187 30,207 30,460 15.9\n\nPatents and non-compete agreements348 487 560 6.3\n\nTrademarks and tradenames4,179 3,645 3,969 16.3\n\nTotal$59,424 $52,569 $51,469 \n\nFuture intangible asset amortization expense based on existing intangible assets at March 31, 2026 is:\n\n Fiscal Year    \n\n(Amounts in thousands)2027 2028 2029 2030 2031 Thereafter Total\n\nAmortization expense$80,233 $84,640 $87,849 $73,341 $64,366 $446,255 $836,684 \n\n10.    FAIR VALUE MEASUREMENT AND DERIVATIVE TRANSACTIONS\n\nWhen 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.\n\nWhen 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.\n\nF-24\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nDerivatives - 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:\n\n Diesel fuel option collars and swaps\n\n Assets Liabilities\n\n(Amounts in thousands)Receivables Other assets \nOther accrued liabilities\n \nOther liabilities\n\nMarch 31, 2026$4,973 $229 $(61)$(59)\n\nMarch 31, 2025223 2 (248)(25)\n\nThere were no transfers in or out of Level 3 for the fiscal years ended March 31, 2026 and 2025.\n\nValuation 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:\n\n March 31, 2026 March 31, 2025\n\n(Amounts in thousands)Fair Value Carrying Value Fair Value Carrying Value\n\nSenior Notes due 2027$— $— $344,036 $350,000 \n\nSenior Notes due 2030505,940 500,000 500,845 500,000 \n\nSenior Notes due 2034489,230 500,000 — — \n\nEquipment Financing2,961 3,056 6,714 5,988 \n\nTotal$998,131 $1,003,056 $851,595 $855,988 \n\nThe 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.\n\n11.    INVESTMENT IN AFFILIATES\n\nADS 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.\n\nADS 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.\n\nF-25\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe 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.\n\n(Amounts in thousands)20262025\n\nAssets   \n\nCash$9,608 $7,675 \n\nOther current assets18,314 22,267 \n\nProperty, plant and equipment, net25,642 15,251 \n\nOther noncurrent assets1,687 2,112 \n\nTotal assets$55,251 $47,305 \n\nLiabilities\n\nCurrent liabilities$10,829 $8,608 \n\nNoncurrent liabilities1,991 1,591 \n\nTotal liabilities$12,820 $10,199 \n\nEQ 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.\n\nThe 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.\n\n(Amounts in thousands)2026\n\nAssets \n\nCash$396 \n\nOther current assets2,028 \n\nProperty, plant and equipment, net34,176 \n\nOther noncurrent assets141 \n\nTotal assets$36,741 \n\nLiabilities\n\nCurrent liabilities$1,664 \n\nNoncurrent liabilities27,014 \n\nTotal liabilities$28,678 \n\nSouth 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.\n\nF-26\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n12.    RELATED PARTY TRANSACTIONS\n\nADS 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.\n\nSouth 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.\n\n13.    DEBT\n\nLong-term debt as of the fiscal years ended March 31 consisted of the following:\n\n(Amounts in thousands)20262025\n\nTerm Loan Facility$600,000 $413,250 \n\nSenior Notes due 2027—350,000\n\nSenior Notes due 2030500,000500,000\n\nSenior Notes due 2034500,000—\n\nRevolving Credit Facility——\n\nOther debt30,2515,988\n\nTotal1,630,2511,269,238\n\nUnamortized debt issuance costs(18,428)(7,715)\n\nCurrent maturities(5,865)(9,934)\n\nLong-term debt obligations$1,605,958 $1,251,589 \n\nSenior 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.\n\nOn 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.\n\nOn 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\n\nF-27\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\ndefined 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.\n\nLetters 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.\n\nAt 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.\n\nThe 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%.\n\nThe 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).\n\nSenior 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.\n\nSenior 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\n\nF-28\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\ncovenants 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.\n\nThe 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.\n\nSenior 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.\n\nThe 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\n\nOther 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.\n\nThe 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.\n\nPrincipal Maturities - Maturities of long-term debt (excluding interest and deferred financing costs) as of March 31, 2026 are summarized below:\n\nFiscal Years Ending March 31,\n\n(Amounts in thousands)20272028202920302031 Thereafter Total\n\nPrincipal maturities$5,865 $8,211 $32,675 $6,000 $506,000 $1,071,500 $1,630,251 \n\nF-29\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n14.    EMPLOYEE BENEFIT PLANS\n\nKSOP 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.\n\nProfit-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.\n\nRedeemable 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.\n\nDefined 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.\n\n15.    STOCK-BASED COMPENSATION\n\nThe 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:\n\n(Amounts in thousands)202620252024\n\nCost of goods sold$6,926 $5,232 $4,708 \n\nSelling, general and administrative expenses25,42821,34927,278\n\nTotal stock-based compensation expense$32,354 $26,581 $31,986 \n\nThe following table summarizes stock-based compensation expense by award type for the fiscal years ended March 31, 2026, 2025, and 2024:\n\n(Amounts in thousands)202620252024\n\nStock options$6,831 $5,944 $5,287 \n\nRestricted stock12,27510,4037,991\n\nPerformance-based restricted stock units9,4406,58615,459\n\nEmployee Stock Purchase Plan2,0791,7361,056\n\nNon-employee director restricted stock1,7291,9122,193\n\nTotal stock-based compensation expense$32,354 $26,581 $31,986 \n\n2017 Omnibus Plan\n\nThe 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.\n\nF-30\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nStock 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:\n\n 202620252024\n\nCommon stock price$119.30 $177.38 $96.51\n\nExpected stock price volatility46.7% 45.5% 45.6%\n\nRisk-free interest rate4.2% 4.5% 3.8%\n\nWeighted-average expected life (years)6.0 6.0 6.0\n\nDividend yield0.60% 0.36% 0.58%\n\nThe stock option activity for the fiscal year ended March 31, 2026 is summarized as follows:\n\n(Share amounts in thousands)\nNumber\n\nof Shares\n \nWeighted Average Exercise Price\n \nWeighted Average Remaining Contractual Term (in years)\n\nOutstanding at beginning of year871$67.95 5.4\n\nGranted132119.37—\n\nExercised(139)46.91—\n\nForfeited(12)133.54—\n\nOutstanding at end of year85278.455.3\n\nVested at end of year62159.724.1\n\nUnvested at end of year231128.771.7\n\nFair value of options granted during the year$56.74 \n\nAs 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.\n\nRestricted Stock - The information about the unvested restricted stock grants as of March 31, 2026 is as follows:\n\n(Share amounts in thousands)\nNumber\n\nof Shares\n \nWeighted Average\n\nGrant Date Fair Value\n\nUnvested at beginning of year199$135.82 \n\nGranted135124.02\n\nVested(100)124.54\n\nForfeited(12)134.56\n\nUnvested at end of year222$133.76 \n\nAt 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.\n\nF-31\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nPerformance-based Restricted Units (“Performance units”) - The information about the performance units granted under the 2017 Omnibus Plan is as follows:\n\n(Share amounts in thousands)\nNumber\n\nof Shares\n \nWeighted Average Grant Date Fair Value\n\nUnvested at beginning of year209$122.33 \n\nGranted97147.39\n\nAdded by Performance Factor2699.29\n\nVested(85)100.61\n\nForfeited(9)131.21\n\nUnvested at end of year238$137.35 \n\nAt 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.\n\n2013 Stock Option Plan\n\nThe 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:\n\n2013 Plan\n\n(Share amounts in thousands)\nNumber\n\nof Shares\nWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (in years)\n\nOutstanding at beginning of year13$24.20 1.0\n\nGranted———\n\nExercised(13)24.20—\n\nForfeited———\n\nOutstanding at end of year———\n\nVested at end of year———\n\nUnvested at end of year—$— — \n\nThe 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.\n\nEmployee 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.\n\nF-32\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n16.    INCOME TAXES\n\nProvision for Taxes - The components of Income before income taxes for the fiscal years ended March 31 are as follows:\n\n(Amounts in thousands)202620252024\n\nUnited States$548,018 $571,649 $641,370 \n\nForeign11,77017,81625,383\n\nTotal$559,788 $589,465 $666,753 \n\nThe components of Income tax expense for the fiscal years ended March 31 consisted of the following:\n\n(Amounts in thousands)202620252024\n\nCurrent:     \n\nFederal$75,432 $112,451 $127,109 \n\nState and local22,08125,33727,028\n\nForeign2,2473,6287,121\n\nTotal current tax expense99,760141,416161,258\n\nDeferred:\n\nFederal35,391(591)(201)\n\nState and local(699)(788)(2,127)\n\nForeign5361,02668\n\nTotal deferred tax expense (benefit)35,228(353)(2,260)\n\nTotal Income tax expense$134,988 $141,063 $158,998 \n\nFor 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:\n\n(Amounts in thousands)202620252024\n\nFederal statutory rate$117,555 21.0 %$123,788 21.0 %$140,018 21.0 %\n\nState and local taxes—net of federal income tax benefit(a)\n16,686 3.0 %17,820 3.0 %19,245 2.9 %\n\nNontaxable or nondeductible items\n\nExecutive compensation4,688 0.8 %7,719 1.3 %5,507 0.8 %\n\nStock-based compensation(2,671)(0.5)%(8,273)(1.4)%(4,250)(0.6)%\n\nOther(1,270)(0.2)%9 — %(1,522)(0.3)%\n\nEffective rate$134,988 24.1 %$141,063 23.9 %$158,998 23.8 %\n\n(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.\n\nF-33\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nCash Taxes Paid - The income taxes paid (net of refunds received) for the fiscal years ended March 31 are as follows:\n\n(Amounts in thousands)202620252024\n\nFederal$91,795 $116,003 $128,139 \n\nState and local19,05120,68026,410\n\nForeign2,5085,4686,600\n\nTotal cash paid for income taxes$113,354 $142,151 $161,149 \n\nDeferred 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:\n\n(Amounts in thousands)20262025\n\nNet non-current deferred tax assets$708 $1,249 \n\nNet non-current deferred tax liabilities220,994190,416\n\nThe 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:\n\n(Amounts in thousands)20262025\n\nDeferred tax assets:   \n\nAcquisition costs$6,079 $433 \n\nOperating lease liabilities24,482 16,666 \n\nResearch and development expenses1,01615,727\n\nStock-based compensation7,6216,452\n\nNet loss on assets and liabilities held for sale12,709—\n\nOther17,98215,602\n\nTotal deferred tax assets69,88954,880\n\nLess: valuation allowance(7,572)(289)\n\nTotal net deferred tax assets62,31754,591\n\nDeferred tax liabilities:\n\nIntangible assets84,05596,076\n\nProperty, plant and equipment159,122119,703\n\nOperating lease assets24,33316,795\n\nGoodwill11,94510,326\n\nOther3,148858\n\nTotal deferred tax liabilities282,603243,758\n\nNet deferred tax liabilities$220,286 $189,167 \n\nAs 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.\n\nThe 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.\n\nF-34\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nUncertain Tax Positions - A reconciliation of the balance of unrecognized tax benefits for the years ended March 31 is as follows:\n\n(Amounts in thousands)202620252024\n\nBalance at beginning of year$9,475 $4,600 $2,451 \n\nTax positions taken in current year4,1932,8821,609\n\nIncreases in tax positions for prior years1,7622,083540\n\nLapse of statute of limitations(439)(90)—\n\nBalance at end of year$14,991 $9,475 $4,600 \n\nIncluded 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.\n\nThe 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.\n\nThe 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.\n\n17.    NET INCOME PER SHARE AND STOCKHOLDERS’ EQUITY\n\nBasic 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.\n\nF-35\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe 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:\n\n(Amounts in thousands, except per share data)202620252024\n\nNET INCOME PER SHARE — BASIC:     \n\nNet income from continuing operations available to common stockholders$427,555 $450,172 $509,915 \n\nNet loss from discontinued operations, net of tax(1,090)——\n\nNet income attributable to common stockholders426,465450,172509,915\n\nWeighted average number of common shares outstanding - Basic77,75677,54978,252\n\nNet income from continuing operations available to common stockholders per share - Basic$5.50 $5.81 $6.52 \n\nNet loss from discontinued operations per common share - Basic$(0.01)$— $— \n\nNet income per common share — Basic$5.48 $5.81 $6.52 \n\nNET INCOME PER SHARE — DILUTED:\n\nNet income from continuing operations available to common stockholders$427,555 $450,172 $509,915 \n\nNet loss from discontinued operations, net of tax(1,090)——\n\nNet income available to common stockholders426,465450,172509,915\n\nWeighted average number of common shares outstanding - Basic77,75677,54978,252\n\nAssumed restricted stock - nonparticipating596477\n\nAssumed exercise of stock options423499602\n\nAssumed performance units1457686\n\nWeighted average number of common shares outstanding - Diluted\n78,38378,18879,017\n\nNet income from continuing operations available to common stockholders per share - Diluted$5.45 $5.76 $6.45 \n\nNet loss from discontinued operations per common share - Diluted$(0.01)$— $— \n\nNet income per common share —Diluted$5.44 $5.76 $6.45 \n\nPotentially dilutive securities excluded as anti-dilutive292718\n\nStockholders’ 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.\n\n18.    COMMITMENTS AND CONTINGENCIES\n\nPurchase 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.\n\nLitigation 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.\n\nF-36\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n19.    OTHER ACCRUED LIABILITIES\n\nOther accrued liabilities as of fiscal years ended March 31 consisted of the following:\n\n(Amounts in thousands)20262025\n\nAccrued payroll, bonus and commissions$76,894 $45,270 \n\nAccrued customer rebate liability\n36,08922,382\n\nOperating lease liabilities21,30319,456\n\nProfessional fees18,5375,498\n\nAccrued interest expense12,4799,169\n\nSelf-insurance liabilities8,0858,348\n\nOther39,23627,172\n\nTotal accrued liabilities$212,623 $137,295 \n\n20.    BUSINESS SEGMENT INFORMATION\n\nFollowing 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.\n\nCertain 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.\n\nStormwater - 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.\n\nWastewater - 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.\n\nF-37\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nThe 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:\n\nFiscal Year Ended March 31, 2026\n\n(Amounts in thousands)StormwaterWastewaterIntersegment EliminationsTotal\n\nNet sales:\n\nNet sales from external customers$2,397,414 $652,962 $— $3,050,376 \n\nIntersegment net sales36,466 61,580 (98,046)— \n\nNet sales2,433,880 714,542 (98,046)3,050,376 \n\nSignificant segment expenses:\n\nCosts of goods sold1,613,170 367,963 (98,143)1,882,990 \n\nSelling, general and administrative expenses348,829 69,002 — 417,831 \n\nOther segment items(a)\n(231,194)(33,875)— (265,069)\n\nSegment Adjusted EBITDA(b)\n$703,075 $311,452 $97 \n\nCorporate and other costs(c)\n51,718 \n\nTotal consolidated Adjusted EBITDA$962,906 \n\nReconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:\n\nInterest expense93,869 \n\nInterest income(25,000)\n\nDepreciation and amortization216,261 \n\nStock-based compensation expense32,354 \n\nLoss (gain) on disposal of assets and costs from exit and disposal activities19,211 \n\nTransaction costs(d)\n40,805 \n\nOther adjustments(e)\n25,618 \n\nIncome before income taxes559,788 \n\nIncome tax expense134,988 \n\nEquity in net income of unconsolidated affiliates(5,063)\n\nNet income from continuing operations$429,863 \n\n(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.\n\n(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.\n\n(c)Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA.\n\n(d)Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions.\n\n(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).\n\nF-38\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nFiscal Year Ended March 31, 2025\n\n(Amounts in thousands)StormwaterWastewaterIntersegment EliminationsTotal\n\nNet sales:\n\nNet sales from external customers$2,326,370 $577,875 $— $2,904,245 \n\nIntersegment net sales35,647 52,031 (87,678)— \n\nNet sales2,362,017 629,906 (87,678)2,904,245 \n\nSignificant segment expenses:\n\nCosts of goods sold1,582,828 314,465 (87,289)1,810,004 \n\nSelling, general and administrative expenses282,877 55,186 — 338,063 \n\nOther segment items(a)\n(143,608)(31,757)— (175,365)\n\nSegment Adjusted EBITDA(b)\n$639,920 $292,012 $(389)\n\nCorporate and other costs(c)\n42,315 \n\nTotal consolidated Adjusted EBITDA$889,228 \n\nReconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:\n\nInterest expense91,803 \n\nInterest income(23,485)\n\nDepreciation and amortization183,281 \n\nStock-based compensation expense26,581 \n\nLoss (gain) on disposal of assets and costs from exit and disposal activities3,858 \n\nTransaction costs(d)\n9,291 \n\nOther adjustments(e)\n8,434 \n\nIncome before income taxes589,465 \n\nIncome tax expense141,063 \n\nEquity in net income of unconsolidated affiliates(4,171)\n\nNet income from continuing operations$452,573 \n\n(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.\n\n(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.\n\n(c)Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA.\n\n(d)Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions.\n\n(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).\n\nF-39\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nFiscal Year Ended March 31, 2024\n\n(Amounts in thousands)StormwaterWastewaterIntersegment EliminationsTotal\n\nNet sales:\n\nNet sales from external customers$2,361,520 $512,953 $— $2,874,473 \n\nIntersegment net sales30,649 53,597 (84,246)— \n\nNet sales2,392,169 566,550 (84,246)2,874,473 \n\nSignificant segment expenses:\n\nCosts of goods sold1,525,826 283,740 (81,042)1,728,524 \n\nSelling, general and administrative expenses275,342 40,639 — 315,981 \n\nOther segment items(a)\n(122,966)(24,746)— (147,712)\n\nSegment Adjusted EBITDA(b)\n$713,967 $266,917 $(3,204)\n\nCorporate and other costs(c)\n54,733 \n\nTotal consolidated Adjusted EBITDA$922,947 \n\nReconciliation of total consolidated Adjusted EBITDA to income from continuing operations before income taxes:\n\nInterest expense88,862 \n\nInterest income(22,047)\n\nDepreciation and amortization154,903 \n\nStock-based compensation expense31,986 \n\nLoss (gain) on disposal of assets and costs from exit and disposal activities(8,365)\n\nTransaction costs(d)\n3,444 \n\nOther adjustments(e)\n7,411 \n\nIncome before income taxes666,753 \n\nIncome tax expense158,998 \n\nEquity in net income of unconsolidated affiliates(5,536)\n\nNet income from continuing operations$513,291 \n\n(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.\n\n(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.\n\n(c)Represents certain unallocated selling, general and administrative expenses required to reconcile segment Adjusted EBITDA to consolidated Adjusted EBITDA.\n\n(d)Represents expenses recorded related to legal, accounting and other professional fees incurred in connection with business or asset acquisitions and dispositions.\n\n(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).\n\nF-40\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\nOther Segment Information - The following sets forth certain financial information for the fiscal years ended March 31:\n\n(Amounts in thousands)202620252024\n\nDepreciation and amortization\n\nStormwater$126,387 $102,574 $81,602 \n\nWastewater80,42374,06869,121\n\nOther9,4516,6394,180\n\nTotal$216,261 $183,281 $154,903 \n\nCapital expenditures\n\nStormwater$157,381 $175,918 $128,313 \n\nWastewater30,50913,73317,882\n\nOther61,87623,29337,617\n\nTotal$249,766 $212,944 $183,812 \n\nGeographic 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:\n\n(Amounts in thousands)202620252024\n\nNet Sales     \n\nUnited States$2,857,553 $2,709,615 $2,666,704 \n\nCanada119,270119,492126,050\n\nOther73,55375,13881,719\n\nTotal$3,050,376 $2,904,245 $2,874,473 \n\n(Amounts in thousands)20262025\n\nLong-Lived Assets (a)\n   \n\nUnited States$1,169,184 $1,016,681 \n\nCanada32,36730,655\n\nOther55,61039,529\n\nTotal$1,257,161 $1,086,865 \n\n(a)    For segment reporting purposes, long-lived assets include Investments in unconsolidated affiliates, Central parts and Property, plant and equipment.\n\n21.    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION\n\nSupplemental disclosures of cash flow information for the fiscal years ended March 31 were as follows:\n\n(Amounts in thousands)202620252024\n\nSupplemental disclosures of cash flow information — cash paid:\n\nInterest$87,031 $89,478 $86,263 \n\nIncome taxes113,354 142,151 161,149 \n\nF-41\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nAdvanced Drainage Systems, Inc\n\n(Amounts in thousands)2026 2025 2024\n\nSupplemental disclosures of noncash investing and financing activities:\n\nPurchases of plant, property, and equipment included in accounts payable\n$25,668 $32,377 $35,355 \n\nRepurchase of common stock pending settlement6,741 — 1,720 \n\nShare repurchase excise tax accrual546 — 1,687 \n\nESPP share issuance6,208 5,392 1,927 \n\nLease obligations retired upon disposition of leased assets\n10,828 84 2,361 \n\n(Amounts in thousands)\n\nReconciliation to Balance Sheet202620252024\n\nCash$223,012 $463,319 $490,163 \n\nRestricted cash (included in Other current assets and Other assets, respectively, in the Consolidated Balance Sheets)1,771 5,952 5,685 \n\nCash and restricted cash, excluding cash held for sale, at end of year$224,783 $469,271 $495,848 \n\n22.    SUBSEQUENT EVENTS\n\nDividends 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.\n\nShare 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.\n\n* * * * * *\n\nF-42\n\n[Table of Contents](#ieb5bb33133ed4902a5089ffadf55276a_1)\n\nSCHEDULE II\n\nADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES\n\nConsolidated Valuation and Qualifying Accounts for the Fiscal Years Ended March 31, 2026, 2025 and 2024 (in thousands):\n\nAllowance for Credit Losses:\n\nFiscal Year ended March 31,\n \nBalance at\n\nbeginning\n\nof period\n \nCharged to\n\ncosts and\n\nexpenses(1)\n \nCharged to\n\nother\n\naccounts(2)\n Deductions  \nBalance at\n\nend of\n\nperiod\n\n2026 $7,684 $(141)$1 $(2,890)$4,654 \n\n2025 4,849 3,654 (3)(816)7,684 \n\n2024 8,227 (1,816)(4)(1,558)4,849 \n\n(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.\n\n(2)Amounts represent the impact of foreign currency translation.\n\nF-43"}